TIMKEN CO Q4 FY2024 earnings call

• Fourth quarter revenue down 1.6% vs last year, organically down 2.5% with Europe being the main weak driver. Americas up slightly, Asia Pacific modestly down. - Adjusted EBITDA margins 16.6%, down 130 basis points from last year. Adjusted earnings per share $1.16, down 15%. - 2025 outlook cautious due to continued Europe weakness and economic uncertainty; organic sales expected slightly lower, adjusted EPS range $5.30-$5.80, free cash flow expected at least $400 million. - Focus on being more customer-centric, evaluating portfolio for growth and profitability, cross-selling opportunities (e.g., LagerSmith in marine segment), and prioritizing cost savings. - Chris Copeland, leader of industrial motions business, to retire at end of year.

Engineered Bearings: Fourth quarter sales were $708 million, down 2.3% from last year. Organically, sales were down 1.1%. Adjusted EBITDA was $121 million, 17.2% of sales. Industrial Motion: Fourth quarter sales were $366 million, down slightly from last year. Organically, sales declined 5.6%. Adjusted EBITDA was $71 million, 19.3% of sales.

• Anticipates organic sales slightly lower in 2025 due to Europe weakness; expects industrial market conditions challenging at start of year with organic sales lower year-on-year in first half. - Adjusted EPS guidance $5.30-$5.80, midpoint down modestly from 2024 reflecting currency impacts and cautious demand. - Expect $75 million incremental cost savings in 2025 from footprint initiatives, supply chain, etc. - Aim to generate at least $400 million free cash flow in 2025. - Guidance includes 10% tariff on China, with mitigation expected.

• Tariffs on Mexico, Canada, and China pose potential impacts on costs and demand. - Market cycles and economic uncertainty can affect margins and revenue. - Currency fluctuations can impact financial results.

Q: Steve Volkmann asked about 2025 outlook and tariffs.

A: Tarak Mehta said outlook cautious due to Europe; Philip Fracassa discussed tariff mitigation via pricing, sourcing.

Q: David Raso asked about order book and cost savings.

A: Philip Fracassa talked about order book and cost savings phasing.

Q: Bryan Blair asked about profitable growth opportunities.

A: Tarak Mehta spoke about portfolio focus on growth, profitability, and vertical integration.

Q: Kyle Menendez asked about product portfolio and tariffs.

A: Tarak Mehta and Philip Fracassa discussed product portfolio opportunities and tariff mitigation timing.

Q: Angel Castillo asked about January trends and trade policy.

A: Tarak Mehta and Philip Fracassa commented on January trends and trade policy implications.

Q: Mike Shlisky asked about cross-selling and renewables.

A: Tarak Mehta talked about cross-selling opportunities and Philip Fracassa discussed renewables stability.

Q: Tim Thein asked about distribution and vertical integration.

A: Tarak Mehta spoke about distribution performance and vertical integration focus.

Q: Steve Barger asked about customer-centric strategy and portfolio review.

A: Tarak Mehta discussed customer-centric strategy and portfolio review plans.

Q: Michael Feniger asked about prebuy and renewables pricing.

A: Philip Fracassa responded on prebuy and renewables pricing.

Q: Joe Ritchie asked about manufacturing costs and 2025 guide.

A: Philip Fracassa discussed manufacturing cost bridge and 2025 guide construct