FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-1169 THE TIMKEN COMPANY (Exact name of registrant as specified in its charter) Ohio 34-0577130 (State or other jurisdiction of incorporation ...

The Timken Company (NYSE:TKR) Q2 2023 Earnings Conference Call August 3, 2023 11:00 AM ET Company Participants Neil Frohnapple - Director, IR Richard Kyle - President & CEO Philip Fracassa - EVP & CFO Conference Call Participants Stephen Volkmann - Jefferies Bryan Blair - Oppenheimer Robert Wertheimer - Melius Research Stephen Barger - KeyBanc Capital Markets Michael Feniger - Bank of America Operator Good morning. My name is Brika, and I will be your conference operator for today. At this time, I would lik ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to For the quarterly period ended March 31, 2023 Commission file number: 1-1169 THE TIMKEN COMPANY (Exact name of registrant as specified in its charter) Ohio 34-0577130 (State or other jurisdiction of incorporation ...

The Timken Company (NYSE:TKR) Q1 2023 Earnings Conference Call May 3, 2023 11:00 AM ET Company Participants Neil Frohnapple - Director of Investor Relations Richard Kyle - President and Chief Executive Officer Philip Fracassa - Executive Vice President and Chief Financial Officer Conference Call Participants Stephen Volkmann - Jefferies LLC Robert Wertheimer - Melius Research LLC Bryan Blair - Oppenheimer & Co. David Raso - Evercore ISI Steve Barger - KeyBanc Capital Markets Inc. Timothy Thein - Citigroup I ...

Financial Performance - Timken Company reported net sales of $4.5 billion in 2022, an increase of 8.8% from $4.1 billion in 2021, driven by strong organic growth and acquisitions[129]. - Net income for 2022 was $417 million, up 9.3% from $381.5 million in 2021, with diluted earnings per share increasing by 14.4% to $5.48[129]. - The Company reported net sales of $4,496.7 million for the year ended December 31, 2022, an increase of 8.8% from $4,132.9 million in 2021[236]. - Adjusted net income for 2022 was $447.8 million, compared to $363.4 million in 2021, reflecting a growth of 23.3%[207]. - Adjusted EBITDA for 2022 was $855.9 million, with an adjusted EBITDA margin of 19.0% of net sales, compared to 17.4% in 2021[207]. - Free cash flow for 2022 was $285.4 million, an increase from $239.0 million in 2021, reflecting a 19.4% growth[213]. - Net income for the trailing twelve months ended December 31, 2022, was $417.0 million, compared to $381.5 million in 2021, marking a 9.3% increase[215]. - Total assets increased to $5,772.4 million in 2022, up from $5,170.7 million in 2021, representing a growth of 11.7%[239]. - Total liabilities increased to $3,420.0 million in 2022, compared to $2,793.0 million in 2021, representing a growth of 22.4%[239]. Segment Performance - The Company reported net sales of $2,106.5 million in the Mobile Industries segment for 2022, an increase of $140.8 million or 7.2% compared to 2021[148]. - In the Process Industries segment, net sales reached $2,390.2 million in 2022, reflecting a $223.0 million increase or 10.3% from 2021[149]. - The Mobile Industries segment's EBITDA decreased by $23.0 million or 9.6% in 2022, primarily due to higher operating costs[148]. - The Process Industries segment's EBITDA increased by $115.2 million or 22.8% in 2022, driven by favorable price/mix and higher volume[149]. - Total EBITDA for reportable segments increased to $838.6 million in 2022, compared to $746.4 million in 2021, reflecting a growth of 12.3%[299]. Acquisitions and Investments - Timken completed the acquisition of GGB Bearing Technology, expected to generate annual sales of approximately $200 million, and Spinea, enhancing its robotics and automation offerings[131]. - The Company completed several acquisitions in 2022, including GGB and Spinea, which contributed to the growth in net sales[147]. - The Company acquired GGB for $302.5 million, with an estimated revenue of approximately $200 million for the full year 2022[279]. - The Company also acquired Spinea for $151.2 million, with estimated 2022 full year sales of approximately $40 million[279]. - Total assets acquired in 2022 amounted to $545.7 million, with net assets acquired totaling $453.7 million[282]. Cash Flow and Debt - The Company had net cash provided by operating activities of $463.8 million in 2022, up $76.5 million from 2021[151]. - Net cash used in investing activities increased by $399.5 million in 2022, primarily due to acquisitions totaling $446.2 million[154]. - The Company's net debt increased to $1,631.6 million in 2022 from $1,207.8 million in 2021, resulting in a net debt to capital ratio of 40.9%[158]. - The Company expects higher net interest expense in 2023 compared to 2022 due to increased average debt balances and interest rates[165]. - Total debt rose to $1,963.2 million in 2022 from $1,464.9 million in 2021, reflecting a significant increase in leverage[219]. Shareholder Returns - The Company repurchased 3.25 million common shares, returning a total of $303 million to shareholders through dividends and share repurchases in 2022[131]. - The Company declared a quarterly cash dividend of $0.31 per common share, marking the 403rd consecutive quarterly dividend[226]. - The company paid cash dividends of $91.7 million to shareholders in 2022, compared to $92.2 million in 2021, a decrease of 0.5%[240]. - The company declared dividends of $1.23 per share in 2022, up from $1.19 per share in 2021, reflecting a 3.4% increase[241]. Expenses and Charges - Selling, general and administrative expenses rose by 9.8% to $637.1 million in 2022, primarily due to higher compensation costs[134]. - Impairment and restructuring charges totaled $44.1 million in 2022, significantly higher than $8.9 million in 2021, mainly due to the ADS divestiture[135]. - Interest expense increased by 26.9% to $74.6 million in 2022, attributed to higher average debt and rising interest rates[137]. - The effective tax rate for 2022 was 24.3%, an increase of 4.3% from 20.0% in 2021, primarily due to unfavorable earnings in foreign jurisdictions[140]. Pension and Benefits - The Company recognized a net periodic benefit cost of $21.0 million for defined benefit pension plans in 2022, compared to $5.9 million in 2021[193]. - The Company expects net periodic benefit cost for defined benefit pension plans to be approximately $12 million in 2023, excluding mark-to-market charges[194]. - The Company recognized a net periodic benefit credit of $21.6 million for other postretirement benefit plans in 2022, up from $12.5 million in 2021[198]. - The Company expects a net periodic benefit credit of approximately $6 million for other postretirement benefit plans in 2023, a decrease from $21.6 million in 2022[199]. Currency and Foreign Operations - The company recorded a foreign currency exchange gain of $15.4 million for the year ended December 31, 2022, contrasting with losses in the previous two years[223]. - The company reported foreign currency translation adjustments of $(162.7) million in 2022, compared to $(63.7) million in 2021, showing a significant increase in losses due to currency fluctuations[241]. - The Company anticipates potential future asset impairments or write-offs related to ongoing geopolitical events in Russia and Ukraine[224]. Assets and Liabilities - As of December 31, 2022, the Company had $331.6 million in cash and cash equivalents, with $828.2 million available under committed credit lines[159]. - Total current assets increased to $2,504.0 million in 2022, up from $2,213.5 million in 2021, reflecting a growth of 13.1%[239]. - Long-term debt increased significantly to $1,914.2 million in 2022, compared to $1,411.1 million in 2021, a rise of 35.5%[239]. - The company had $1,620.0 million in undistributed foreign earnings as of December 31, 2022, compared to $1,249.1 million in 2021[305].

The Timken Company (NYSE:TKR) Q4 2022 Earnings Conference Call February 6, 2023 11:00 AM ET Company Participants Neil Frohnapple - Director of Investor Relations Richard Kyle - President and Chief Executive Officer Philip Fracassa - Chief Financial Officer Conference Call Participants Steve Barger - KeyBanc Capital Markets David Raso - Evercore Rob Wertheimer - Melius Research Stephen Volkmann - Jefferies Bryan Blair - Oppenheimer Michael Feniger - Bank of America Dillon Cumming - Morgan Stanley Joe Ritchie ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-1169 THE TIMKEN COMPANY (Exact name of registrant as specified in its charter) Ohio 34-0577130 (State or other jurisdiction of incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-1169 THE TIMKEN COMPANY (Exact name of registrant as specified in its charter) Ohio 34-0577130 (State or other jurisdiction of incorporation ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) The Timken Company designs and manufactures engineered bearings and power transmission products globally, serving diverse industrial sectors - The Timken Company specializes in engineered bearings and power transmission products, operating globally in **42 countries** with over **18,000 employees**[12](index=12&type=chunk)[13](index=13&type=chunk) - The company serves diverse sectors including industrial distribution, automotive, and renewable energy, with no single customer exceeding **5% of net sales**[14](index=14&type=chunk) - The product portfolio includes Engineered Bearings (tapered, spherical, cylindrical, ball, housed, plain) and various Power Transmission Products (linear motion, industrial drives, lubrication systems, belts, chain, couplings)[16](index=16&type=chunk)[24](index=24&type=chunk) - Services, such as power systems maintenance and bearing repair, constituted approximately **4% of net sales** for the year ended December 31, 2021[35](index=35&type=chunk) Company Backlog (as of December 31) | (Dollars in millions) | 2021 | 2020 | | :--- | :--- | :--- | | **Mobile Industries** | $1,354.9 | $1,012.6 | | **Process Industries** | $1,095.0 | $1,016.2 | | **Total Company** | $2,449.9 | $2,028.8 | Employee Health & Safety Performance | Metric | 2021 | 2020 | 2020 Industry Average* | | :--- | :--- | :--- | :--- | | **Recordable Rate** | 1.20 | 0.92 | - - - | | **Lost Time Accident Rate** | 0.38 | 0.32 | - - - | *U.S. metal manufacturers (NAICS code 332) with at least 1,000 employees. [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from intense competition, raw material price volatility, global operations, and regulatory compliance - The company operates in highly competitive industries, facing significant pricing pressure that could adversely affect revenues and profitability[63](index=63&type=chunk) - The capital-intensive business is vulnerable to industry downturns, potentially leading to asset impairment and restructuring charges, totaling approximately **$46 million** over the last five years[64](index=64&type=chunk) - Fluctuations in raw material prices, especially steel, pose a significant risk, potentially impacting profit margins if cost increases cannot be fully passed on[66](index=66&type=chunk) - The COVID-19 pandemic has negatively impacted operations through demand volatility, supply chain disruptions, and inflation, potentially continuing to affect financial results[68](index=68&type=chunk) - Global operations expose the company to risks from foreign currency fluctuations, trade policy changes, and compliance with various foreign laws and regulations, including the FCPA[75](index=75&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The company is subject to extensive environmental, health, and safety laws, with substantial compliance costs, and new regulations could further increase operational expenses[90](index=90&type=chunk)[91](index=91&type=chunk)[97](index=97&type=chunk) [Properties](index=19&type=section&id=Item%202.%20Properties) The company operates 75 manufacturing plants and various offices globally, with most plants owned and adequate capacity - As of December 31, 2021, the Company operates **75 manufacturing plants** and facilities in the U.S. and **41 other countries**[109](index=109&type=chunk) - The company owns most manufacturing plants, while sales offices and distribution centers are primarily leased, with management deeming capacity adequate for future needs[109](index=109&type=chunk)[110](index=110&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various ordinary course legal actions, with no material adverse financial impact expected - The company is involved in various legal actions, with management believing ultimate outcomes will not materially affect its financial position[111](index=111&type=chunk) [Information about our Executive Officers](index=19&type=section&id=Item%204A.%20Information%20about%20our%20Executive%20Officers) Executive officers are elected annually by the Board of Directors, with all current officers having served the company for at least five years Executive Officers as of February 15, 2022 | Name | Age | Current Position | | :--- | :--- | :--- | | Christopher A. Coughlin | 61 | Executive Vice President, Group President | | Philip D. Fracassa | 53 | Executive Vice President and Chief Financial Officer | | Richard G. Kyle | 56 | President and Chief Executive Officer | | Hans Landin | 49 | Group Vice President | | Hansal N. Patel | 41 | Vice President, General Counsel and Secretary | | Andreas Roellgen | 54 | Vice President - Europe, Asia and Africa | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on the NYSE, with a new share repurchase plan approved and Q4 2021 repurchases - The company's common shares trade on the NYSE under "TKR", with an estimated **3,171 record holders** and over **80,000 beneficial shareholders** as of December 31, 2021[114](index=114&type=chunk) Issuer Purchases of Common Shares (Q4 2021) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Plan | | :--- | :--- | :--- | :--- | | Oct 2021 | — | $— | — | | Nov 2021 | 402,262 | $73.99 | 400,000 | | Dec 2021 | 101,959 | $68.49 | 100,000 | | **Total** | **504,221** | **$72.88** | **500,000** | - A new share repurchase plan, approved on February 12, 2021, authorizes the purchase of up to **ten million common shares** until February 28, 2026[117](index=117&type=chunk) [Selected Financial Data](index=22&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial and operational data from 2017 to 2021 Five-Year Summary of Operations (2017-2021) | (Dollars in millions, except per share data) | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,132.9 | $3,513.2 | $3,789.9 | $3,580.8 | $3,003.8 | | **Gross profit** | $1,102.5 | $1,009.9 | $1,141.8 | $1,040.1 | $812.1 | | **Operating income** | $513.1 | $454.9 | $516.4 | $454.5 | $299.5 | | **Net income attributable to The Timken Company** | $369.1 | $284.5 | $362.1 | $302.8 | $203.4 | | **Diluted earnings per share** | $4.79 | $3.72 | $4.71 | $3.86 | $2.58 | | **Net cash provided from operating activities** | $387.3 | $577.6 | $550.1 | $332.5 | $236.8 | | **Dividends per share** | $1.19 | $1.13 | $1.12 | $1.11 | $1.07 | Five-Year Non-GAAP Financial Information (2017-2021) | (Dollars in millions, except per share data) | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Adjusted earnings per share** | $4.72 | $4.10 | $4.60 | $4.18 | $2.63 | | **Adjusted EBITDA** | $718.0 | $658.9 | $726.3 | $646.5 | $464.8 | | **Adjusted EBITDA Margin (% of net sales)** | 17.4% | 18.8% | 19.2% | 18.1% | 15.5% | | **Free cash flow** | $239.0 | $456.0 | $409.5 | $219.9 | $132.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes 2021 financial performance, including sales, net income, segment results, cash flow, and liquidity [Results of Operations (2021 vs. 2020)](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) In 2021, net sales increased by **17.6%** to **$4.13 billion**, with net income growing **29.7%** to **$369.1 million**, driven by organic growth and a lower tax rate Financial Performance Overview (2021 vs. 2020) | Metric | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,132.9 M | $3,513.2 M | $619.7 M | 17.6% | | **Net income** | $381.5 M | $292.4 M | $89.1 M | 30.5% | | **Net income attributable to The Timken Company** | $369.1 M | $284.5 M | $84.6 M | 29.7% | | **Diluted earnings per share** | $4.79 | $3.72 | $1.07 | 28.8% | - Net sales growth was driven by **$513 million** in organic revenue, **$78 million** from favorable currency exchange, and **$29 million** from acquisitions[135](index=135&type=chunk) - Gross profit increased due to higher volume (**$196 million**) and favorable manufacturing performance (**$20 million**), partially offset by **$171 million** in higher material and logistics costs[136](index=136&type=chunk) - The effective tax rate decreased to **20.0%** in 2021 from **26.2%** in 2020, primarily due to the release of uncertain tax position accruals and favorable U.S. permanent differences[143](index=143&type=chunk)[145](index=145&type=chunk) [Business Segments](index=27&type=section&id=BUSINESS%20SEGMENTS) Both Mobile and Process Industries segments reported strong sales growth in 2021, driven by organic expansion, despite margin pressure from increased costs Mobile Industries Segment Performance (2021 vs. 2020) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,965.7 M | $1,671.6 M | 17.6% | | **EBITDA** | $240.1 M | $232.5 M | 3.3% | | **EBITDA Margin** | 12.2% | 13.9% | (170) bps | - Mobile Industries' organic sales increased **15.3%**, driven by growth in off-highway, automotive, and heavy truck sectors, partially offset by lower aerospace revenue[151](index=151&type=chunk) Process Industries Segment Performance (2021 vs. 2020) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $2,167.2 M | $1,841.6 M | 17.7% | | **EBITDA** | $506.3 M | $442.9 M | 14.3% | | **EBITDA Margin** | 23.4% | 24.0% | (60) bps | - Process Industries' organic sales increased **14.0%**, driven by growth in distribution, renewable energy, and general industrial sectors[153](index=153&type=chunk) [Cash Flows](index=29&type=section&id=CASH%20FLOWS) In 2021, net cash from operating activities decreased to **$387.3 million**, primarily due to increased working capital and inventory investment Consolidated Cash Flow Summary (2021 vs. 2020) | (Dollars in millions) | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $387.3 | $577.6 | ($190.3) | | **Net cash used in investing activities** | ($173.8) | ($153.5) | ($20.3) | | **Net cash used in financing activities** | ($269.3) | ($331.1) | $61.8 | - The decrease in operating cash flow was mainly due to a **$236.4 million** increase in cash used for working capital, partially offset by higher net income[157](index=157&type=chunk) - Cash used for inventories increased by **$243.2 million** year-over-year, driven by higher demand and longer supply chain lead times[158](index=158&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of December 31, 2021, Timken maintained strong liquidity with **$257.1 million** cash and **$733 million** available credit, reducing debt and improving its net debt to capital ratio to **33.7%** Net Debt and Capital Ratio (as of December 31) | (Dollars in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Total debt | $1,464.9 | $1,564.6 | | Less: Cash and cash equivalents | $257.1 | $320.3 | | **Net debt** | **$1,207.8** | **$1,244.3** | | Total equity | $2,377.7 | $2,225.2 | | **Capital (net debt + total equity)** | **$3,585.5** | **$3,469.5** | | **Ratio of net debt to capital** | **33.7%** | **35.9%** | - The company maintained strong liquidity with **$257.1 million** in cash and **$733 million** in available committed credit lines at year-end 2021[164](index=164&type=chunk) - As of December 31, 2021, the company was in full compliance with debt covenants, with a consolidated leverage ratio of **2.05 to 1.0** and an interest coverage ratio of **12.10 to 1.0**[165](index=165&type=chunk)[170](index=170&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) The company's critical accounting policies involve significant judgment in inventory, goodwill, income tax, and pension liabilities - Approximately **41%** of inventories are valued using the LIFO method, with the LIFO reserve increasing by **$27.3 million** in 2021[179](index=179&type=chunk) - Goodwill is tested for impairment at the reporting unit level; the Lubrication Systems unit's fair value exceeded its carrying value by more than **10%** in the 2021 test[182](index=182&type=chunk)[184](index=184&type=chunk)[187](index=187&type=chunk) - Three indefinite-lived intangible assets, with a total carrying value of **$67.1 million**, had fair values exceeding carrying values by **10% or less**, indicating sensitivity to future performance[189](index=189&type=chunk) - Pension and postretirement benefit liabilities are sensitive to discount rate changes; a **0.25%** change would alter the U.S. projected pension benefit obligation by approximately **$17.6 million**[200](index=200&type=chunk)[208](index=208&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency, and commodity prices, managed through hedging and agreements - A one-percentage-point increase in global short-term borrowing rates would increase annual interest expense by approximately **$3.7 million**[239](index=239&type=chunk) - The company uses forward contracts to manage foreign currency risk, with **$300.8 million** in hedges as of December 31, 2021; a **10%** U.S. dollar weakening would result in a **$6.3 million** charge[240](index=240&type=chunk) - Commodity price risk, mainly for steel and natural gas, is managed through supplier pricing agreements to establish purchase prices for certain inputs[241](index=241&type=chunk) [Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents The Timken Company's audited consolidated financial statements for 2019-2021, with an unqualified auditor's opinion [Consolidated Statements of Income](index=49&type=section&id=Consolidated%20Statements%20of%20Income) For 2021, net sales were **$4.13 billion**, gross profit **$1.10 billion**, operating income **$513.1 million**, and net income attributable to the company was **$369.1 million** Consolidated Statements of Income (Year Ended December 31) | (Dollars in millions, except per share data) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net sales** | $4,132.9 | $3,513.2 | $3,789.9 | | **Gross Profit** | $1,102.5 | $1,009.9 | $1,141.8 | | **Operating Income** | $513.1 | $454.9 | $516.4 | | **Net Income Attributable to The Timken Company** | $369.1 | $284.5 | $362.1 | | **Diluted earnings per share** | $4.79 | $3.72 | $4.71 | [Consolidated Balance Sheets](index=50&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2021, total assets were **$5.17 billion**, total liabilities **$2.79 billion**, and total shareholders' equity **$2.30 billion** Consolidated Balance Sheets (as of December 31) | (Dollars in millions) | 2021 | 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $2,213.5 | $2,000.3 | | **Total Assets** | **$5,170.7** | **$5,041.6** | | **Total Current Liabilities** | $896.6 | $848.0 | | **Total Liabilities** | **$2,793.0** | **$2,816.4** | | **Total Shareholders' Equity** | $2,294.9 | $2,152.9 | | **Total Liabilities and Equity** | **$5,170.7** | **$5,041.6** | [Consolidated Statements of Cash Flows](index=51&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2021, net cash from operating activities was **$387.3 million**, decreasing from 2020 due to increased inventories Consolidated Statements of Cash Flows (Year Ended December 31) | (Dollars in millions) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $387.3 | $577.6 | $550.1 | | **Net Cash Used in Investing Activities** | ($173.8) | ($153.5) | ($364.9) | | **Net Cash Used in Financing Activities** | ($269.3) | ($331.1) | ($100.7) | | **(Decrease) Increase In Cash** | ($63.2) | $104.9 | $83.1 | [Controls and Procedures](index=95&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2021, affirmed by the auditor - Management concluded the company's disclosure controls and procedures were effective as of December 31, 2021[428](index=428&type=chunk) - Based on the COSO framework, management believes the company's internal control over financial reporting was effective as of December 31, 2021[431](index=431&type=chunk) - Ernst & Young LLP provided an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[432](index=432&type=chunk)[434](index=434&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Shareholder Matters](index=97&type=section&id=Items%2010,%2011,%2012,%2013%20and%2014) Information for Items 10-14, including directors, executive officers, governance, compensation, and shareholder matters, is incorporated by reference from the proxy statement - Information for Items 10-14, including Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships, and Principal Accountant Fees, is incorporated by reference from the Proxy Statement[445](index=445&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=98&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including governance documents and certifications - This section lists all exhibits filed with the Form 10-K, including governance documents, material contracts, compensation plans, and required certifications[454](index=454&type=chunk) - Schedule II - Valuation and Qualifying Accounts is provided, detailing changes in allowances for uncollectible accounts, obsolete inventory, and deferred tax asset valuation allowances for 2019-2021[453](index=453&type=chunk)[474](index=474&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Consolidated Financial Statements and accompanying notes for the periods ended September 30, 2021 and 2020 [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Net sales and net income significantly increased for the nine-month period, while third-quarter net income remained relatively flat Consolidated Statements of Income (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net sales | $3,125.6M | $2,621.5M | | Gross Profit | $869.4M | $772.9M | | Operating Income | $427.0M | $356.1M | | Net Income Attributable to The Timken Company | $306.2M | $231.4M | | Diluted earnings per share | $3.97 | $3.04 | Consolidated Statements of Income (Three Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net sales | $1,037.3M | $894.6M | | Gross Profit | $267.9M | $263.7M | | Operating Income | $124.3M | $119.0M | | Net Income Attributable to The Timken Company | $88.1M | $88.8M | | Diluted earnings per share | $1.14 | $1.16 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and equity increased due to higher business activity and retained earnings, reflecting a stronger financial position Key Balance Sheet Items | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $2,195.4M | $2,000.3M | | Total Assets | $5,145.6M | $5,041.6M | | Total Current Liabilities | $846.0M | $848.0M | | Long-term debt | $1,417.0M | $1,433.9M | | Total Equity | $2,376.4M | $2,225.2M | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased due to increased working capital, while investing and financing activities continued to utilize cash Cash Flow Summary (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $284.6M | $457.2M | | Net Cash Used in Investing Activities | ($115.9M) | ($101.4M) | | Net Cash Used in Financing Activities | ($222.4M) | ($257.7M) | | (Decrease) Increase in Cash | ($58.5M) | $97.8M | | Cash at End of Period | $262.6M | $314.0M | [Note 3 - Acquisitions](index=8&type=section&id=Note%203%20-%20Acquisitions) The company completed the acquisition of Intelligent Machine Solutions and recognized a bargain purchase gain from a prior acquisition - On August 20, 2021, the Company acquired the assets of Intelligent Machine Solutions (iMS) for a purchase price of **$7.4 million**, with an additional **$3.0 million** in contingent performance-based consideration[19](index=19&type=chunk) - A bargain purchase gain of **$0.9 million** was recognized during the first nine months of 2021 related to the acquisition of Aurora, which closed in November 2020[24](index=24&type=chunk) [Note 4 - Revenue](index=10&type=section&id=Note%204%20-%20Revenue) Total net sales increased, with both segments contributing significantly, and OEMs remaining a primary revenue source Net Sales by Segment (Nine Months Ended Sep 30, 2021) | Segment | Net Sales (2021) | Net Sales (2020) | | :--- | :--- | :--- | | Mobile Industries | $1,486.0M | $1,237.9M | | Process Industries | $1,639.6M | $1,383.6M | | **Total** | **$3,125.6M** | **$2,621.5M** | - Sales to original equipment manufacturers (OEMs) constituted **61% of revenue** for the first nine months of 2021, compared to **60%** in the same period of 2020[25](index=25&type=chunk) - The aggregate amount of transaction price allocated to remaining performance obligations for contracts with a duration of more than one year was approximately **$417.8 million** at September 30, 2021[26](index=26&type=chunk) [Note 5 - Segment Information](index=11&type=section&id=Note%205%20-%20Segment%20Information) Both Process and Mobile Industries segments reported increased EBITDA, contributing to higher total segment performance Segment EBITDA (Nine Months Ended Sep 30) | Segment | 2021 | 2020 | | :--- | :--- | :--- | | Mobile Industries | $200.1M | $177.9M | | Process Industries | $401.9M | $343.0M | | **Total Segment EBITDA** | **$602.0M** | **$520.9M** | [Note 13 - Impairment and Restructuring Charges](index=20&type=section&id=Note%2013%20-%20Impairment%20and%20Restructuring%20Charges) Impairment and restructuring charges decreased, primarily related to plant closures and asset impairments Impairment and Restructuring Charges (Nine Months Ended Sep 30) | Charge Type | 2021 | 2020 | | :--- | :--- | :--- | | Impairment charges | $4.5M | $0.1M | | Severance and related benefit costs | $3.1M | $17.8M | | Exit costs | $0.6M | $0.8M | | **Total** | **$8.2M** | **$18.7M** | - Key restructuring activities in 2021 include the announced closure of the bearing manufacturing facility in Villa Carcina, Italy, and the ongoing closure of the chain manufacturing facility in Indianapolis, Indiana[56](index=56&type=chunk)[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong financial performance, driven by sales and net income growth, while acknowledging persistent supply chain and inflationary pressures [Overview](index=29&type=section&id=Overview) Net sales and net income significantly increased, driven by organic growth and acquisitions, despite ongoing supply chain and inflationary challenges Financial Highlights (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $3,125.6M | $2,621.5M | 19.2% | | Net income | $314.8M | $237.1M | 32.8% | | Diluted EPS | $3.97 | $3.04 | 30.6% | - The company's outlook assumes COVID-19 conditions will continue to improve, but that supply chain disruptions and inflationary pressures will persist into 2022[95](index=95&type=chunk) [The Statement of Income](index=32&type=section&id=The%20Statement%20of%20Income) Net sales increased significantly, though gross margin declined due to higher costs, while the effective tax rate decreased - For the nine months ended Sep 30, 2021, net sales increased by **$504.1 million**, comprising **$400 million** from higher organic revenue, **$81 million** from favorable currency exchange, and **$24 million** from acquisitions[99](index=99&type=chunk) - Gross profit for the nine-month period was negatively impacted by **$110 million** in higher materials and logistics costs and **$10 million** in unfavorable price/mix[101](index=101&type=chunk) - The effective tax rate for the nine months ended Sep 30, 2021, was **19.3%**, down from **26.2%** in the prior year, primarily due to the release of accruals for uncertain tax positions and favorable U.S. permanent book-tax differences[109](index=109&type=chunk)[110](index=110&type=chunk) [Business Segments](index=35&type=section&id=Business%20Segments) Both Mobile and Process Industries segments achieved strong sales growth, though EBITDA margins were impacted by rising costs Mobile Industries Segment Performance (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,486.0M | $1,237.9M | 20.0% | | EBITDA | $200.1M | $177.9M | 12.5% | | EBITDA margin | 13.5% | 14.4% | (90) bps | Process Industries Segment Performance (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,639.6M | $1,383.6M | 18.5% | | EBITDA | $401.9M | $343.0M | 17.2% | | EBITDA margin | 24.5% | 24.8% | (30) bps | [Cash Flow](index=39&type=section&id=Cash%20Flow) Operating cash flow decreased primarily due to increased working capital needs to support higher sales levels - The decrease in operating cash flow was primarily driven by a **$196.5 million** use of cash for working capital in the first nine months of 2021, compared to a **$60.6 million** source of cash in the same period of 2020[122](index=122&type=chunk)[123](index=123&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity, reduced total debt, and improved its net debt to capital ratio, remaining in compliance with covenants Net Debt Reconciliation | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total debt | $1,456.0M | $1,564.6M | | Less: Cash and cash equivalents | $261.8M | $320.3M | | **Net debt** | **$1,194.2M** | **$1,244.3M** | - The ratio of net debt to capital improved to **33.4%** at September 30, 2021, from **35.9%** at December 31, 2020[127](index=127&type=chunk) - As of September 30, 2021, the company had **$640.8 million** of availability under its **$650.0 million** Senior Credit Facility[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes in the company's reported market risk since the disclosures made in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes in reported market risk since the discussion included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2021 - Based on an evaluation as of the end of the period, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective[158](index=158&type=chunk) - There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[158](index=158&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions arising in the ordinary course of business - The Company is involved in various claims and legal actions in the ordinary course of business, which are not expected to have a material adverse effect on its financial position[160](index=160&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - There have been no material changes to the risk factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased common shares under a new plan approved in February 2021, authorizing up to ten million shares Issuer Purchases of Common Shares (Q3 2021) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Plan | Remaining Shares Authorized | | :--- | :--- | :--- | :--- | :--- | | Jul 2021 | 10 | $80.37 | — | 9,950,000 | | Aug 2021 | 360,059 | $75.94 | 360,000 | 9,590,000 | | Sep 2021 | 40,000 | $74.77 | 40,000 | 9,550,000 | | **Total** | **400,069** | **$75.82** | **400,000** | | - On February 12, 2021, the Board of Directors approved a new share purchase plan, effective March 1, 2021, authorizing the purchase of up to **ten million** common shares, expiring on February 28, 2026[165](index=165&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial statements in Inline XBRL format[169](index=169&type=chunk)