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Baird Global Industrial Conference Lucian Boldea, President and CEO Mike Discenza, Vice President and CFO The Company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: fluctuations in customer demand for the Company's products or services; unanticipated changes in business relationships with customers or their purchases from the Company; changes in the financial health of the Company's customers, ...

Core Viewpoint - The article emphasizes the importance of fundamental analysis in identifying undervalued companies with long-term growth potential, advocating for a value investing approach that focuses on purchasing quality companies at a discount to their intrinsic value and holding them for compounding returns. Group 1: Investment Philosophy - The investment approach combines value investing principles with a focus on long-term growth [1] - The strategy involves buying quality companies at a discount to their intrinsic value [1] - Holding investments for the long haul allows for compounding of earnings and shareholder returns [1]

Core Insights - The Timken Company will participate in the Baird Global Industrial Conference on November 11, 2025, with a presentation scheduled at 4:05 p.m. Central Time [1][2] - Lucian Boldea, the president and CEO, and Michael A. Discenza, the CFO, will represent the company during the presentation [2] - A live webcast of the presentation will be available on the company's investor relations website, with a replay accessible until November 25, 2025 [2] Company Overview - The Timken Company is a global leader in engineered bearings and industrial motion, with a focus on designing next-generation products for various industries [3] - The company reported sales of $4.6 billion in 2024 and employs approximately 19,000 people across 45 countries [3]

Core Insights - Timken Company reported strong financial performance with an EPS of $1.35, surpassing the estimated $1.25, and revenue of approximately $1.16 billion, exceeding the estimated $1.12 billion [1][6] Financial Performance - In Q3 2025, Timken's revenue reached $1.16 billion, reflecting a 2.7% increase year-over-year and exceeding Wall Street expectations by 2.89% [2] - The company's EPS increased to $1.35 from $1.23 in the previous year, demonstrating consistent growth [2] - Timken has outperformed EPS expectations in three of the past four quarters, with a notable surprise of 5.97% in the previous quarter [3] Financial Metrics - Timken's net income margin is reported at 6.0%, with an adjusted EBITDA margin of 17.4% [4] - The company generated strong cash from operations amounting to $201 million and a free cash flow of $164 million, indicating a healthy cash position [4] Future Outlook - Timken updated its full-year 2025 outlook, expecting EPS to range between $3.90 and $4.00, with adjusted EPS projected between $5.20 and $5.30 [5][6] - The company maintains a P/E ratio of 17.05 and a debt-to-equity ratio of 0.67, indicating a moderate level of debt compared to equity [5]

Financial Performance - Net sales for Q3 2025 increased to $1,157.1 million, a 2.7% increase from $1,126.8 million in Q3 2024, driven by favorable pricing and acquisitions[96]. - Net income for Q3 2025 decreased to $74.3 million, down 15.2% from $87.6 million in Q3 2024, primarily due to incremental tariff costs and a prior gain on real estate sale[96][97]. - For the nine months ended September 30, 2025, net sales decreased to $3,470.8 million, a decline of 0.8% compared to $3,499.4 million in the same period of 2024[96]. - The company expects full-year 2025 revenues to decline approximately 0.75% compared to 2024, primarily due to lower demand across both segments[99]. - Operating income for Q3 2025 was $139.4 million, a decrease of 4.7% from $146.3 million in Q3 2024, impacted by tariff costs and prior gains[101]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $618.0 million, with an adjusted EBITDA margin of 17.8%[147]. - Net income for the trailing twelve months ended September 30, 2025, was $326.5 million, down from $375.3 million for the same period ending December 31, 2024[151]. - Adjusted EBITDA for the trailing twelve months was $796.2 million, a decrease from $844.8 million for the same period ending December 31, 2024[152]. Costs and Expenses - Incremental tariff costs for Q3 2025 amounted to $20 million, contributing to the increase in cost of products sold[102]. - Interest expense for Q3 2025 decreased to $27.3 million, down 9.9% from $30.3 million in Q3 2024, due to lower average debt levels[103]. - Income tax expense increased by $8.6 million or 35.0% for the three months ended September 30, 2025, primarily due to the impact of withholding taxes on dividend distributions[106]. - SG&A expenses decreased for the three months ended September 30, 2025, primarily due to lower bad debt expense and professional services expenses[105]. - Cost of products sold for the Engineered Bearings segment increased by $17 million due to incremental tariff costs for the three months ended September 30, 2025[115]. - The cost of products sold increased by $20 million for the nine months ended September 30, 2025, primarily due to acquisitions and higher manufacturing costs[118]. - Unallocated corporate expenses decreased by 24.8% to $17.0 million for the three months ended September 30, 2025, compared to $22.6 million in 2024[119]. Segment Performance - For the three months ended September 30, 2025, net sales for the Engineered Bearings segment increased by $25.1 million or 3.4% compared to the same period in 2024, driven by higher pricing and renewable energy demand[114]. - Adjusted EBITDA for the Engineered Bearings segment increased by $5.8 million or 4.2% for the three months ended September 30, 2025, due to favorable pricing and lower material and logistics costs[115]. - The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased by $8.4 million or 0.4% for the nine months ended September 30, 2025 compared to the same period in 2024[115]. - The Industrial Motion segment's net sales for the three months ended September 30, 2025, were $391.3 million, a 1.3% increase from $386.1 million in the same period of 2024[117]. - Adjusted EBITDA for the three months ended September 30, 2025, was $74.5 million, reflecting a slight increase of 0.4% compared to $74.2 million in 2024[117]. - For the nine months ended September 30, 2025, net sales decreased by $51.5 million or 4.4%, totaling $1,121.3 million when excluding acquisitions and currency impacts[118]. - Adjusted EBITDA for the nine months ended September 30, 2025, decreased by $21.8 million or 9.2%, totaling $214.2 million compared to $236.0 million in 2024[118]. Cash Flow and Debt - Net cash provided by operating activities increased by $73.9 million to $371.0 million for the nine months ended September 30, 2025, compared to $297.1 million in 2024[121]. - The Company had $449.1 million in cash and cash equivalents as of September 30, 2025, with $850.0 million available under committed credit lines[128]. - The ratio of net debt to capital improved to 33.5% as of September 30, 2025, down from 36.1% at the end of 2024[127]. - The Company maintained a consolidated interest coverage ratio of 7.76 to 1.0 as of September 30, 2025, well above the minimum requirement of 3.0 to 1.0[129]. - The Company issued €600 million 2034 Notes with a 4.13% interest rate, maturing on May 23, 2034, to redeem $350 million 2024 Notes and repay other debts[133]. - The ratio of net debt to adjusted EBITDA increased to 2.1 as of September 30, 2025, compared to 2.0 as of December 31, 2024[151]. - Total net debt as of September 30, 2025, was $1,663.7 million, slightly down from $1,689.5 million as of December 31, 2024[152]. Strategic Focus and Outlook - The company is focusing on profitable growth by expanding into new markets and leveraging its expertise in materials science and friction management[92]. - The company anticipates that tariffs and related macroeconomic effects will adversely impact operating income in 2025[98]. - The company anticipates potential impacts from global economic conditions, including supply chain disruptions and changes in customer demand[153]. - The company is focused on maintaining favorable credit ratings and satisfying obligations under its debt agreements[156]. - There have been no material changes in reported market risk since the last annual report[157]. Other Notable Items - The Company acquired CGI, Inc. during the third quarter of 2024, and results for CGI are reported in the Industrial Motion segment[113]. - The Company made cash contributions of $33.7 million to global defined benefit pension plans during the first nine months of 2025, expecting to contribute approximately $36 million in 2025[135]. - For the nine months ended September 30, 2025, the Company recorded positive foreign currency translation adjustments of $199.7 million, compared to negative adjustments of $0.2 million in the same period of 2024[140]. - Free cash flow for the three months ended September 30, 2025, was $163.8 million, up from $88.2 million in the same period of 2024[150]. - Diluted earnings per share for the three months ended September 30, 2025, were $0.99, down from $1.16 in 2024, while adjusted EPS increased to $1.37 from $1.23[149]. - The Company recorded severance costs of $9.3 million related to the CEO transition during the three months ended March 31, 2025[143]. - The company does not have any off-balance sheet arrangements with unconsolidated entities[136]. - Impairment, restructuring, and reorganization charges amounted to $18.2 million for the trailing twelve months ended September 30, 2025[152]. - CEO transition expenses for the twelve months ended September 30, 2025, were primarily related to the settlement agreement with the former CEO, totaling $19.5 million[152].

Financial Data and Key Metrics Changes - Revenue for the third quarter was $1.16 billion, an increase of 2.7% from the previous year [12] - Adjusted EBITDA margins improved to 17.4%, a 50 basis point increase [12] - Adjusted earnings per share for the quarter was $1.37, up 11% from last year [12] Business Line Data and Key Metrics Changes - Engineered bearings sales were $766 million, up 3.4% from last year, with organic sales up 2.7% driven by higher pricing and volumes [16] - Industrial motion sales were $391 million, up 1.3% from last year, but organic sales declined 3.5% due to lower demand [18] Market Data and Key Metrics Changes - In the Americas, revenue was down 1%, with growth in North America offset by lower revenue in Latin America [13] - Asia Pacific saw a 2% increase, led by growth in China, particularly in wind energy shipments [13] - EMEA experienced a 2% growth, marking the first growth in over two years, driven by off-highway, rail, and heavy industry sectors [13] Company Strategy and Development Direction - The management team is focused on margin expansion and improving top-line performance through an 80/20 mindset, targeting profitable verticals [9] - The company aims to leverage its strong market positions and enhance cross-selling opportunities across its product portfolio [10] - Future growth is targeted in newer markets such as automation and food and beverage [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing encouraging order trends in key markets [34] - The evolving trade situation continues to impact industrial market activity, leading to cautious customer behavior [22] - The company is focused on mitigating tariff impacts and expects to recapture margins in 2026 [24] Other Important Information - The company generated operating cash flow of $201 million in the third quarter, with free cash flow of $164 million, significantly up from last year [19] - The full-year earnings guidance midpoint is reaffirmed at $5.25, with a slight increase in the sales outlook [20] Q&A Session Summary Question: Near-term outlook and order rates - Management noted that the outlook includes the latest order trends, with a seasonally declining order book but year-over-year orders up [32] Question: Organic growth implications for Q4 - Management indicated no evidence of a pull forward into Q3 and remains cautious about Q4 due to trade uncertainties [41] Question: Impact of tariffs and pricing strategies - Management is focused on controlling tariffs and expects to fully offset the tariff impact exiting this year, with pricing strategies in place [43] Question: Organic sales decline by segment for Q4 - Organic sales are expected to decline in both segments, with a more significant decline in industrial motion due to last year's military marine project [49] Question: Growth in renewable energy - Management highlighted strength in renewable energy, particularly in wind, while solar remains challenged [51] Question: Long-term capital allocation strategy - No immediate changes in capital allocation strategy, with a focus on disciplined growth and leveraging acquired businesses [65] Question: Margin drivers for 2026 - Management confirmed they are on track to deliver $75 million in cost savings, with expectations for incremental savings in the first half of next year [100]

Financial Data and Key Metrics Changes - Revenue for the third quarter was $1.16 billion, an increase of 2.7% year-over-year [12] - Adjusted EBITDA margins improved to 17.4%, a 50 basis point increase from the previous year [12] - Adjusted earnings per share (EPS) for the quarter was $1.37, up 11% from last year [12] Business Line Data and Key Metrics Changes - Engineered bearings sales were $766 million, up 3.4% from last year, with organic sales growth of 2.7% driven by higher pricing and volumes [16] - Industrial motion sales were $391 million, up 1.3% from last year, but organic sales declined 3.5% due to lower demand [18] Market Data and Key Metrics Changes - In the Americas, revenue was down 1%, with growth in North America offset by lower revenue in Latin America [13] - Asia Pacific saw a 2% increase, led by growth in China, particularly in wind energy shipments [13] - EMEA experienced a 2% growth, marking the first growth in over two years, driven by off-highway, rail, and heavy industry sectors [13] Company Strategy and Development Direction - The company aims to improve margins and grow faster in profitable verticals, focusing on an 80/20 approach to enhance performance [9][10] - There is a strong emphasis on leveraging the Timken brand and global footprint to drive revenue growth in acquired businesses [10] - The company is targeting growth in newer markets such as automation and food and beverage [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing encouraging order trends in key markets [34] - The company is focused on mitigating tariff impacts and expects to recapture margins in 2026 [24][43] - Management highlighted the importance of operational discipline and cash flow generation, with a target of over $100 million in free cash flow for the fourth quarter [19] Other Important Information - The company reaffirmed its full-year earnings guidance midpoint of $5.25, despite a $0.05 headwind from tariffs [20] - The expected full-year net negative impact from tariffs is approximately $15 million, an increase from prior estimates [24] Q&A Session Summary Question: Near-term outlook and order rates - Management noted that the outlook incorporates the latest order trends, with a cautious approach due to the tariff situation and uncertain trade environment [32] Question: Organic growth implications for Q4 - Management indicated no evidence of a pull forward into Q3 and remains cautious about Q4 due to trade uncertainties [41] Question: Impact of tariffs and pricing strategies - Management is focused on controlling tariffs and expects to fully offset the tariff impact exiting this year, with pricing strategies in place [43] Question: Organic sales decline by segment - Both segments are expected to see organic sales declines in Q4, with industrial motion anticipated to decline more significantly [49] Question: Growth in renewable energy - Management highlighted strength in wind energy shipments, particularly in China, while solar remains challenged [51] Question: Long-term capital allocation strategy - No immediate changes in capital allocation strategy, with a focus on balanced capital allocation and disciplined growth [65] Question: Margin drivers and cost savings - Management confirmed they are on track to deliver $75 million in cost savings, with a portion expected to benefit the first half of next year [100]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $1.16 billion, an increase of 2.7% year-over-year [12] - Adjusted EBITDA margins improved to 17.4%, a 50 basis point increase from the previous year [12] - Adjusted earnings per share (EPS) for the quarter was $1.37, up 11% from last year [12] Business Line Data and Key Metrics Changes - Engineered bearings sales reached $766 million, up 3.4% from last year, with organic sales increasing by 2.7% [17] - Industrial motion sales were $391 million, a 1.3% increase from last year, but organic sales declined by 3.5% [18] Market Data and Key Metrics Changes - In the Americas, revenue decreased by 1%, with growth in North America offset by lower revenue in Latin America [13] - Asia Pacific saw a 2% increase, driven by growth in China, particularly in wind energy shipments [13] - EMEA also experienced a 2% growth, marking the first growth in over two years, led by off-highway, rail, and heavy industry sectors [13][84] Company Strategy and Development Direction - The company aims to improve margins and grow faster in profitable verticals, focusing on an 80/20 approach to enhance operational efficiency [9][61] - There is a strong emphasis on leveraging the Timken brand and global footprint to drive revenue growth in acquired businesses [10] - The company is targeting growth in newer markets such as automation and food and beverage [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing encouraging order trends in key markets [34][24] - The evolving trade situation and tariff impacts are acknowledged as challenges, but the company is focused on mitigating these through pricing and operational efficiencies [44][24] Other Important Information - The company generated operating cash flow of $201 million in Q3, with free cash flow of $164 million, significantly up from last year [20] - The full-year earnings guidance midpoint is reaffirmed at $5.25, with a slight increase in the sales outlook [21] Q&A Session Summary Question: Near-term outlook and order rates - Management noted that the outlook incorporates the latest order trends, with a seasonally declining order book in Q3 but year-over-year orders up [32] Question: 2026 guidance and demand environment - Management is cautiously optimistic about 2026, expecting to leverage recovery in market volumes into higher profitability [34] Question: Organic growth implications for Q4 - There was no indication of a pull forward in Q3, and management remains cautious about Q4 due to trade uncertainties [40][42] Question: Impact of tariffs and pricing strategies - Management is focused on controlling tariff impacts through pricing and expects to fully offset these impacts by 2026 [44][91] Question: Segment performance in Q4 - Organic sales are expected to decline in both segments, with a more significant decline anticipated in industrial motion due to tough comparisons [48] Question: Long-term capital allocation strategy - The company plans to maintain a balanced capital allocation strategy, focusing on growth opportunities within its existing portfolio [65] Question: Growth in EMEA and sustainability - Growth in EMEA is attributed to reaching the bottom of a prolonged decline, with new business wins in off-highway and rail sectors [84] Question: Margin expectations for Q1 2026 - A significant step up in margins is expected from Q4 to Q1, driven by pricing actions and cost savings [86]

Financial Performance - The company reported net sales of $1.157 billion in 3Q 2025, a 2.7% increase year-over-year (YOY)[13] - Organic sales increased by 0.6% YOY[6] - Adjusted EBITDA was $202 million, representing a 17.4% margin, a 50 bps increase YOY[6, 13] - Adjusted EPS was $1.37, an 11% increase YOY[6] - Free cash flow was $164 million[6] Segment Performance - Engineered Bearings segment net sales were $766 million, a 3.4% increase YOY[23] - Engineered Bearings adjusted EBITDA was $144 million, with a 18.8% margin[23] - Industrial Motion segment net sales were $391 million, a 1.3% increase YOY[28] - Industrial Motion adjusted EBITDA was $75 million, with a 19.0% margin[28] Outlook - The company reaffirmed its 2025 EPS outlook at the midpoint, with an updated range of $5.20-$5.30[6, 36] - Free cash flow for 2025 is expected to be approximately $375 million[35] - Full-year 2025 sales are expected to decrease by 0.75% at the midpoint[36] Capital Allocation - The company paid its 413th consecutive quarterly dividend of $0.35 per share[6, 32] - Net debt to adjusted EBITDA ratio was 2.1x[6, 8]