The Timken Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales reached $1.21 billion in Q3 2026, a 4.7% increase from $1.157 billion in Q3 2025; organic sales grew 2.8%.
• Diluted EPS was $1.34 compared to $0.99 in Q3 2025 (35.4% increase); adjusted diluted EPS was $1.65 compared to $1.37 (20.4% increase).
• Net income was $93.8 million ($1.34 per share) versus $69.3 million ($0.99 per share) in the prior year; net income margin improved to 7.7% from 6.0%.
• Adjusted net income was $115.1 million ($1.65 per share) versus $96.2 million ($1.37 per share) in the prior year.
• Adjusted EBITDA was $224.6 million (18.5% margin) versus $201.7 million (17.4% margin) in Q3 2025; the current period includes a $12.4 million net benefit for IEEPA tariff refunds.
• Net cash provided by operating activities was $256.1 million versus $201.1 million in Q3 2025 (27.3% increase).
• Free cash flow was $221.4 million versus $163.8 million in Q3 2025 (35.2% increase).
• Net debt to adjusted EBITDA was 1.7 times as of September 30, 2026.

Guidance and Future Outlook:

• Raised 2026 full-year outlook: diluted EPS now expected to be $4.05–$4.20 (previously lower); adjusted diluted EPS expected to be $6.35–$6.50.
• 2026 revenue is planned to increase approximately 5.5% total from 2025.
• Management expects 2027 organic sales to increase mid-single digits compared to 2026, driven by strategic initiatives and positive momentum in industrial markets.
• No formal outlook provided for 2027 at this time.

Business Segments and Product Lines:

• Engineered Bearings: Sales of $771.4 million, up 0.7% year-over-year, driven by higher pricing and favorable foreign currency; adjusted EBITDA margin was 20.2% (vs. 18.8% in 2025).
• Industrial Motion: Sales of $440.0 million, up 12.4% year-over-year, driven by higher volumes, the Bijur Delimon acquisition, and higher pricing; adjusted EBITDA margin was 19.8% (vs. 19.0% in 2025).
• Bijur Delimon Acquisition: Revenue from this acquisition contributed to the growth in both Industrial Motion sales and overall company sales.
• Belts Business: Completed the sale of the belts business to Gates Industrial Corporation Ltd. at the end of Q3 2026; expected to improve adjusted EBITDA margins of the Industrial Motion segment.

Market and Competitive Landscape:

• Industrial markets are showing positive momentum.
• Demand was higher across most end-market sectors and platforms within the Industrial Motion segment.
• Pricing power was utilized to drive sales growth in both segments.

Risks and Challenges:

• Forward-looking statements caution that actual results may differ due to factors including customer demand fluctuations, regulatory changes, geopolitical risks, trade disputes, tariffs, and sanctions.
• Risks include changes in raw material, energy, and shipping costs; currency fluctuations; and integration challenges with acquired companies.
• Specific risks mentioned include the impact of climate change initiatives, labor relations, and potential disruptions from pandemics or public health concerns.

Management Commentary and Tone:

• Lucian Boldea, President and CEO, stated the company delivered double-digit earnings growth and significant cash flow.
• Management expressed confidence in the 2026 outlook and the ability to achieve stronger performance in 2027 due to the execution of the "Elevate to Outperform" strategy.
• The tone is confident, highlighting the success of strategic initiatives and the positive impact of the belts business divestiture.

Other Key Points:

• Share repurchases: Approximately 505,000 shares were repurchased during the quarter.
• Total shareholder returns: $88.7 million returned via dividends and share repurchases in Q3 2026.
• CEO Transition: Tarak B. Mehta departed as CEO on March 31, 2025; Richard G. Kyle serves as interim President and CEO.
• Divestiture Impact: The sale of the belts business closed on September 28, 2026, and included the closure of the Springfield, Missouri manufacturing facility.
• Balance Sheet: Ended the quarter with $410.2 million in cash and cash equivalents.