Group 1 - The company is responsible for the development of all transcript-related projects [1] - The company publishes thousands of quarterly earnings calls per quarter and is expanding its coverage [1] - The purpose of the profile is to share new transcript-related developments with readers [1]

Company Leadership Change - The Timken Company has appointed Lucian Boldea as the new president and CEO, effective September 1, 2025, succeeding Richard G. Kyle [1] - Boldea previously served as President and CEO of Industrial Automation at Honeywell, overseeing a segment with over $10 billion in sales and 31,000 employees [2] - The Board of Directors expressed confidence in Boldea's leadership to advance Timken's strategy and accelerate growth [3] Executive Background - Boldea has over 25 years of industry experience and a strong record in strategic leadership and innovation [2] - He has been instrumental in Honeywell's transformation towards autonomous operations, utilizing AI, IoT, and advanced sensor technologies [3] - Prior to Honeywell, Boldea held various executive roles at Eastman Chemical Company, starting as a chemist [3] Company Overview - The Timken Company is a global leader in engineered bearings and industrial motion, with $4.6 billion in sales in 2024 and approximately 19,000 employees across 45 countries [5] - The company focuses on designing next-generation products for diverse industries, emphasizing customer-centric solutions that enhance reliability and efficiency [5]

Core Insights - The Timken Company published its corporate social responsibility (CSR) report, emphasizing advancements in environmental sustainability, social impact, and product innovation [1][2] Environmental Sustainability - Timken aims to reduce aggregate Scope 1 and Scope 2 greenhouse gas emissions intensity by 50% by 2030, having already decreased emissions intensity by approximately 42% from its 2018 baseline through the end of 2024 [2] - The company doubled its capital investment in energy efficiency projects from 2023 to 2024 and achieved a 15-fold increase in renewable energy use since 2018 [4] - Timken diverted 88% of waste from landfills in 2024 and reduced total annual waste generation by 40% since 2018 [4] Social Impact - Timken expanded global employee development and well-being programs, achieving a 91% participation rate from salaried staff in its employee engagement survey [4] - The company invested $1.25 million in global STEM programming in 2024 and expanded partnerships with organizations like FIRST® and the Girl Scouts, reaching thousands of students worldwide [4] Product Innovation - Timken is delivering innovative, sustainable products such as EnviroSpexx™ bearings designed for energy savings and advanced solutions for vertical farming, precision agriculture, and medical robots [4] - The company reported $4.6 billion in sales in 2024 and operates in 45 countries with approximately 19,000 employees globally [3]

Company Overview - The Timken Company (NYSE: TKR) is a global industrial manufacturer specializing in bearings, power transmission products, power systems, and engineered steel solutions [1] - The company serves various industries, including automotive, aerospace, and heavy machinery [1] - Timken operates through two segments: Engineered [1] Analyst Background - The analyst has a master's degree in Analytics from Northwestern University and a bachelor's degree in Accounting [1] - With over 10 years of experience in the investment arena, the analyst has progressed from an analyst role to a management position [1] - Dividend investing is a personal interest of the analyst, who aims to share insights with the Seeking Alpha community [1]

Core Viewpoint - The Timken Company has appointed Michael A. Discenza as the new vice president and chief financial officer, effective immediately, succeeding Philip D. Fracassa who is leaving for another opportunity [1][3]. Company Overview - The Timken Company is a global technology leader in engineered bearings and industrial motion, with a history of over 125 years in innovation and customer-centric solutions [3]. - In 2024, Timken reported sales of $4.6 billion and employs approximately 19,000 people across 45 countries [3]. Leadership Transition - Michael A. Discenza has 25 years of experience at Timken, including the last 10 years as vice president of finance and group controller [1][2]. - Richard G. Kyle, president and CEO, expressed confidence in Discenza's leadership abilities to drive growth and performance within the company [2]. Discenza's Background - Discenza has held various financial and accounting leadership roles since joining Timken in 2000, demonstrating extensive industry knowledge and financial expertise [2]. - He holds both bachelor's and master's degrees in economics from The University of Akron and is a certified management accountant [2].

Core Points - The Timken Company declared a quarterly cash dividend of 35 cents per share, payable on August 29, 2025, to shareholders of record as of August 19, 2025 [1] - Timken has maintained a dividend payment every quarter since its listing on the NYSE in 1922, marking 413 consecutive quarters, which is one of the longest dividend streaks among NYSE-listed companies [2] - The Timken Company reported $4.6 billion in sales for 2024 and employs approximately 19,000 people globally, operating in 45 countries [3]

Core Viewpoint - Timken reported Q2 2025 results with earnings per share (Non-GAAP) of $1.42, exceeding analyst expectations of $1.36, while revenue was $1.17 billion, slightly above the estimate of $1.15 billion. However, both adjusted EBITDA margin and net income margin declined year-over-year, leading management to lower the full-year earnings outlook due to ongoing demand softness and tariffs [1][2][14]. Financial Performance - Q2 2025 EPS (Non-GAAP) was $1.42, down 12.9% from $1.63 in Q2 2024 [2] - Revenue for Q2 2025 was $1.17 billion, a decrease of 0.8% from $1.18 billion in Q2 2024 [2] - Adjusted EBITDA margin fell to 17.7%, down 1.8 percentage points from 19.5% in the prior year [2] - Net income margin decreased to 6.7% from 8.1% year-over-year [2] - Free cash flow (Non-GAAP) was $78 million, down 10.3% from $87 million in Q2 2024 [2] Business Overview and Strategy - Timken specializes in engineered bearings and power transmission products, with a strong reputation for quality and technical leadership [3] - The company operates in 45 countries, serving diverse sectors including renewable energy, transport, and industrial automation, with no single customer exceeding 6% of total sales [4] - Recent strategic focuses include maintaining leadership in bearings, expanding through acquisitions, and managing supply chain and raw material costs amid tariffs [4][12] Segment Insights - Revenue dipped 0.8% due to demand weakness across major business areas, with organic sales declining 2.5% [5] - Engineered Bearings sales fell 0.8%, while the Industrial Motion segment saw a 0.7% drop in sales [7] - The acquisition of CGI contributed $14 million to revenue, helping to stabilize overall sales [5] Profitability Challenges - Profitability was pressured with net income margin at 6.7%, down from 8.1%, due to lower volumes and increased costs from tariffs [6] - Both Engineered Bearings and Industrial Motion segments experienced lower adjusted EBITDA margins, decreasing by 1.5 and 1.7 percentage points, respectively [6] Cash Flow and Financial Position - Free cash flow was $78.2 million, down from $87.3 million year-over-year, but cash and equivalents increased [11] - Net debt rose to $1.78 billion, with a net debt-to-adjusted EBITDA ratio of 2.3x, up from 2.0x at the end of 2024 [11] Future Guidance - Management revised full-year earnings guidance to an adjusted EPS range of $5.10 to $5.40, with revenue expected to be flat to down 2.5% compared to 2024 [14] - Key areas to monitor include the ability to manage tariff costs, the impact of restructuring actions, and demand in growth sectors like renewable energy [15]

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements, including income, comprehensive income, balance sheets, cash flows, and related notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) **Consolidated Statements of Income (Dollars in millions, except per share data):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,173.4 | $1,182.3 | $2,313.7 | $2,372.6 | | Operating Income | $147.8 | $167.2 | $291.8 | $351.8 | | Net Income Attributable to The Timken Company | $78.5 | $96.2 | $156.8 | $199.7 | | Basic earnings per share | $1.13 | $1.37 | $2.24 | $2.84 | | Diluted earnings per share | $1.12 | $1.36 | $2.23 | $2.82 | [Consolidated Statements of Comprehensive Income](index=3&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) **Consolidated Statements of Comprehensive Income (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Income | $85.7 | $102.0 | $177.1 | $212.6 | | Other comprehensive income (loss), net of tax | $138.3 | $(31.6) | $201.7 | $(82.7) | | Comprehensive income attributable to The Timken Company | $217.2 | $64.7 | $358.3 | $117.5 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) **Consolidated Balance Sheets (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Total Current Assets | $2,719.7 | $2,516.9 | | Total Assets | $6,813.9 | $6,411.0 | | Total Current Liabilities | $869.7 | $820.5 | | Total Liabilities and Equity | $6,813.9 | $6,411.0 | | Total Equity | $3,272.8 | $2,984.1 | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Consolidated Statements of Cash Flows (Dollars in millions):** | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $169.9 | $173.9 | | Net Cash Used in Investing Activities | $(61.6) | $(59.4) | | Net Cash Used in Financing Activities | $(84.9) | $(52.0) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $420.8 | $471.0 | [Note 1 - Basis of Presentation](index=6&type=section&id=Note%201%20-%20Basis%20of%20Presentation) - The accompanying Consolidated Financial Statements are unaudited and prepared in accordance with Form 10-Q and U.S. GAAP, including normal recurring accruals[14](index=14&type=chunk) - For further information, refer to the Consolidated Financial Statements and accompanying Notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[14](index=14&type=chunk) [Note 2 - Significant Accounting Policies](index=6&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) - The FASB issued ASU 2024-03, requiring public entities to disclose detailed information about types of expenses (inventory purchases, employee compensation, depreciation, intangible asset amortization). This guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating its impact[16](index=16&type=chunk) - The FASB issued ASU 2023-09, enhancing income tax disclosures related to rate reconciliation and income taxes paid. This guidance is effective for public entities for annual periods beginning after December 15, 2024. The Company plans to adopt these new disclosure requirements starting with its Annual Report on Form 10-K for the year ending December 31, 2025[17](index=17&type=chunk) [Note 3 - Segment Information](index=7&type=section&id=Note%203%20-%20Segment%20Information) - The Company operates under **two reportable segments**: Engineered Bearings and Industrial Motion. The Chief Operating Decision Maker (CODM) uses **Adjusted EBITDA** as the primary measurement of financial performance for each segment[18](index=18&type=chunk) **Segment Net Sales (Dollars in millions):** | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Engineered Bearings | $777.4 | $783.4 | $1,538.1 | $1,585.9 | | Industrial Motion | $396.0 | $398.9 | $775.6 | $786.7 | | Total | $1,173.4 | $1,182.3 | $2,313.7 | $2,372.6 | **Segment Adjusted EBITDA (Dollars in millions):** | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Engineered Bearings | $153.4 | $166.2 | $312.6 | $347.6 | | Industrial Motion | $72.6 | $79.7 | $139.7 | $161.8 | | Total | $226.0 | $245.9 | $452.3 | $509.4 | **Assets by Segment (Dollars in millions):** | Segment | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Engineered Bearings | $3,299.8 | $3,126.1 | | Industrial Motion | $3,013.3 | $2,822.6 | | Corporate | $500.8 | $462.3 | | Total | $6,813.9 | $6,411.0 | [Note 4 - Revenue](index=10&type=section&id=Note%204%20-%20Revenue) **Net Sales by Geography (Six Months Ended June 30, Dollars in millions):** | Region | 2025 Net Sales | 2024 Net Sales | Change ($M) | Change (%) | | :-------------------------- | :------------- | :------------- | :---------- | :--------- | | United States | $1,045.3 | $1,067.2 | $(21.9) | (2.1%) | | Americas excluding the U.S. | $229.7 | $242.1 | $(12.4) | (5.1%) | | Europe / Middle East / Africa | $554.2 | $598.3 | $(44.1) | (7.4%) | | Asia-Pacific | $484.5 | $465.0 | $19.5 | 4.2% | | Total | $2,313.7 | $2,372.6 | $(58.9) | (2.5%) | **Revenue by Sales Channel (Six Months Ended June 30):** | Sales Channel | June 30, 2025 | June 30, 2024 | | :------------------------------- | :------------ | :------------ | | Original equipment manufacturers | 60% | 60% | | Distribution/direct to end users | 40% | 40% | - Approximately **9%** of total net sales for the six months ended June 30, 2025, were recognized over-time, compared to **7%** in the prior year, with the remainder recognized at a point in time[23](index=23&type=chunk) - Business with the U.S. government or its contractors represented approximately **7%** of total net sales for the six months ended June 30, 2025, up from **6%** in the prior year[23](index=23&type=chunk) - The aggregate amount of the transaction price allocated to remaining performance obligations for contracts with a duration of more than one year was approximately **$234 million** at June 30, 2025, primarily for products and services provided to the U.S. government or its contractors[24](index=24&type=chunk) **Unbilled Receivables (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Beginning balance, January 1 | $140.8 | $144.5 | | Additional unbilled revenue recognized | $180.6 | $380.5 | | Less: amounts billed to customers | $(168.2) | $(384.2) | | Ending balance | $153.2 | $140.8 | **Deferred Revenue (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Beginning balance, January 1 | $41.4 | $45.4 | | Revenue received or billed in advance of recognition | $80.6 | $153.0 | | Less: revenue recognized | $(76.3) | $(157.7) | | Ending balance | $45.7 | $41.4 | [Note 5 - Income Taxes](index=12&type=section&id=Note%205%20-%20Income%20Taxes) **Provision for Income Taxes and Effective Tax Rate:** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $30.7 | $35.9 | $57.6 | $78.6 | | Effective tax rate | 26.4% | 26.0% | 24.5% | 27.0% | - The effective tax rate of **26.4%** for the three months ended June 30, 2025, was **higher** than the prior year primarily due to an increase in the mix of earnings in non-U.S. jurisdictions with relatively higher tax rates[30](index=30&type=chunk) - The effective tax rate of **24.5%** for the six months ended June 30, 2025, was **lower** than the prior year primarily due to the net favorable impact of discrete items, including the reversal of accruals for uncertain tax positions in non-U.S. jurisdictions, partially offset by an increased mix of earnings in non-U.S. jurisdictions with higher tax rates[31](index=31&type=chunk) [Note 6 - Earnings Per Share](index=12&type=section&id=Note%206%20-%20Earnings%20Per%20Share) **Earnings Per Share Data:** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to The Timken Company | $78.5 | $96.2 | $156.8 | $199.7 | | Basic earnings per share | $1.13 | $1.37 | $2.24 | $2.84 | | Diluted earnings per share | $1.12 | $1.36 | $2.23 | $2.82 | | Weighted average number of shares outstanding - basic | 69,751,965 | 70,364,539 | 69,877,737 | 70,301,757 | | Weighted average number of shares outstanding assuming dilution | 70,075,084 | 70,849,254 | 70,283,847 | 70,850,792 | - There were no antidilutive stock options outstanding during the three and six months ended June 30, 2025 and 2024. However, **91,425** and **70,595** antidilutive stock awards were outstanding during the three and six months ended June 30, 2025, respectively[32](index=32&type=chunk) [Note 7 - Inventories](index=13&type=section&id=Note%207%20-%20Inventories) **Inventory Composition (Dollars in millions):** | Component | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Manufacturing supplies | $45.0 | $42.8 | | Raw materials | $139.2 | $155.2 | | Work in process | $495.8 | $476.0 | | Finished products | $626.1 | $595.0 | | Subtotal | $1,306.1 | $1,269.0 | | Allowance for obsolete and surplus inventory | $(84.0) | $(73.4) | | Total inventories, net | $1,222.1 | $1,195.6 | - Inventories are valued at net realizable value, with approximately **60%** valued on the FIFO method and **40%** on the LIFO method. The majority of the Company's U.S. inventories are valued on the LIFO method[33](index=33&type=chunk) - The LIFO reserve as of June 30, 2025, was **$269.6 million**, up from **$257.2 million** at December 31, 2024[34](index=34&type=chunk) [Note 8 - Goodwill and Other Intangible Assets](index=14&type=section&id=Note%208%20-%20Goodwill%20and%20Other%20Intangible%20Assets) - The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually as of October 1st, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable[36](index=36&type=chunk) **Changes in Goodwill Carrying Amount (Six Months Ended June 30, 2025, Dollars in millions):** | Segment | Beginning Balance, January 1 | Foreign Currency Translation Adjustments and Other Changes | Ending Balance | | :---------------- | :--------------------------- | :--------------------------------------------------------- | :------------- | | Engineered Bearings | $692.0 | $13.3 | $705.3 | | Industrial Motion | $691.3 | $91.4 | $782.7 | | Total | $1,383.3 | $104.7 | $1,488.0 | **Intangible Assets (Net, Dollars in millions):** | Type | June 30, 2025 (Net Carrying Amount) | December 31, 2024 (Net Carrying Amount) | | :------------------------------------------ | :---------------------------------- | :-------------------------------------- | | Intangible assets subject to amortization | $942.7 | $910.5 | | Intangible assets not subject to amortization | $100.7 | $96.0 | | Total intangible assets | $1,043.4 | $1,006.5 | - Amortization expense for intangible assets was **$42.9 million** for the six months ended June 30, 2025, compared to **$42.6 million** for the same period in 2024. Projected amortization expense is approximately **$88 million** in 2025, **$86 million** in 2026, **$83 million** in 2027, **$81 million** in 2028, and **$78 million** in 2029[37](index=37&type=chunk) [Note 9 - Other Current Liabilities](index=15&type=section&id=Note%209%20-%20Other%20Current%20Liabilities) **Other Current Liabilities (Dollars in millions):** | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Sales rebates | $57.4 | $69.2 | | Deferred revenue | $45.7 | $41.4 | | Operating lease liabilities | $32.4 | $32.0 | | Taxes other than income and payroll taxes | $21.8 | $25.8 | | Freight and duties | $20.1 | $14.3 | | Product warranty | $17.4 | $18.0 | | Unprocessed invoices | $15.0 | $15.1 | | Professional fees | $13.3 | $11.5 | | Interest | $13.0 | $25.3 | | Current derivative liability | $9.1 | $10.4 | | Restructuring | $6.9 | $3.7 | | Other | $62.9 | $52.5 | | Total other current liabilities | $315.0 | $319.2 | [Note 10 - Financing Arrangements](index=16&type=section&id=Note%2010%20-%20Financing%20Arrangements) - Short-term debt **increased to $39.3 million** at June 30, 2025, from **$8.7 million** at December 31, 2024, primarily due to borrowings under lines of credit for foreign subsidiaries[40](index=40&type=chunk) **Long-term Debt (Dollars in millions):** | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Fixed-rate Euro Senior Unsecured Notes (2.02%, maturing Sep 2027) | $176.8 | $155.3 | | Variable-rate Term Loan (5.55%, maturing Dec 2027) | $364.7 | $369.6 | | Fixed-rate Medium-Term Notes (6.74%-7.76%, maturing through May 2028) | $154.9 | $154.8 | | Fixed-rate Senior Unsecured Notes (4.50%, maturing Dec 2028) | $398.3 | $398.1 | | Fixed-rate Senior Unsecured Notes (4.13%, maturing Apr 2032) | $345.8 | $345.1 | | Fixed-rate Euro Senior Unsecured Notes (4.13%, maturing May 2034) | $696.9 | $609.7 | | Fixed-rate Euro Bank Loan (2.15%, maturing Jun 2033) | $11.4 | $10.6 | | Other | $10.2 | $10.8 | | Total debt | $2,159.0 | $2,054.0 | | Less: current maturities | $19.4 | $4.3 | | Long-term debt | $2,139.6 | $2,049.7 | - The Company has a **$100 million** Amended and Restated Asset Securitization Agreement (Accounts Receivable Facility) maturing on November 30, 2026, with no outstanding borrowings at June 30, 2025[42](index=42&type=chunk) - The Fifth Amended and Restated Credit Agreement includes a **$750 million** unsecured revolving credit facility and a **$400 million** unsecured term loan facility, both maturing on December 5, 2027. At June 30, 2025, there were no outstanding borrowings under the Senior Credit Facility[43](index=43&type=chunk) - On May 23, 2024, the Company issued fixed-rate Euro senior unsecured notes (**€600 million**, **4.13%**, maturing May 23, 2034) to redeem outstanding notes and repay other debt[44](index=44&type=chunk) - At June 30, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt[45](index=45&type=chunk) **Maturities of Long-term Debt (subsequent to June 30, 2025, Dollars in millions):** | Year | Amount | | :--------- | :------- | | 2025 | $3.0 | | 2026 | $49.4 | | 2027 | $535.4 | | 2028 | $522.7 | | 2029 | $2.4 | | 2030 | $1.8 | | Thereafter | $1,061.0 | [Note 11 - Supply Chain Financing](index=18&type=section&id=Note%2011%20-%20Supply%20Chain%20Financing) - The Company offers a supplier finance program where suppliers can receive early payment from financial institutions on invoices issued to the Company[48](index=48&type=chunk) **Confirmed Obligations Outstanding for Supplier Finance Program (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Confirmed obligations outstanding, January 1 | $16.7 | $21.3 | | Invoices confirmed | $44.0 | $105.0 | | Confirmed invoices paid | $(44.1) | $(109.6) | | Confirmed obligations outstanding, ending balance | $16.6 | $16.7 | - The obligations outstanding are included in accounts payable, trade on the Consolidated Balance Sheets[49](index=49&type=chunk) [Note 12 - Contingencies](index=18&type=section&id=Note%2012%20-%20Contingencies) - The Company is responsible for environmental remediation at various facilities and has been identified as a potentially responsible party for the Ellsworth Industrial Park Site under Superfund laws[50](index=50&type=chunk)[51](index=51&type=chunk) - Governmental authorities are increasingly regulating per- and polyfluoroalkyl substances (PFAS), which may create potentially significant environmental compliance or remediation liabilities[52](index=52&type=chunk) - Total environmental accruals were **$4.7 million** at June 30, 2025, and December 31, 2024, for probable and reasonably estimable known environmental matters[53](index=53&type=chunk) - Timken India Limited (TIL) received a government order claiming approximately **$12 million** in damages related to the closure of its retirement trust. TIL is disputing the order and management believes the final resolution will not materially affect the Company's consolidated financial position or liquidity[54](index=54&type=chunk) - The Company provides limited warranties on certain products, primarily in the automotive and wind energy sectors[55](index=55&type=chunk) **Consolidated Product Warranty Accrual (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Beginning balance, January 1 | $18.0 | $15.2 | | Expense | $2.1 | $9.4 | | Payments | $(2.7) | $(6.6) | | Ending balance | $17.4 | $18.0 | [Note 13 - Equity](index=20&type=section&id=Note%2013%20-%20Equity) - Total Equity **increased** to **$3,272.8 million** at June 30, 2025, from **$2,984.1 million** at December 31, 2024[12](index=12&type=chunk) - Key changes in equity for the six months ended June 30, 2025, include net income attributable to The Timken Company of **$156.8 million**, positive foreign currency translation adjustments of **$210.7 million**, dividends paid of **$(49.5) million**, and stock purchased at fair market value (treasury shares) of **$(45.7) million**[58](index=58&type=chunk) - On May 28, 2024, the Company sold **5.0 million** shares of Timken India Limited (TIL), generating net proceeds of **$188 million** and reducing its ownership in TIL from **57.70%** to **51.05%**. The Company is not planning further sales[59](index=59&type=chunk) [Note 14 - Impairment and Restructuring Charges](index=22&type=section&id=Note%2014%20-%20Impairment%20and%20Restructuring%20Charges) **Total Impairment and Restructuring Charges (Dollars in millions):** | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total | $2.9 | $3.3 | $13.8 | $5.6 | - In Q1 2025, the Company recorded **$9.3 million** in severance expense (plus related taxes) due to the mutual agreement for Tarak B. Mehta, President and CEO, to depart, with Richard G. Kyle appointed interim President and CEO[61](index=61&type=chunk) - The Engineered Bearings segment announced the closure of its Hiddenite, North Carolina plant on February 20, 2025, expected to be completed by H1 2026, with estimated pretax costs of **$5 million to $7 million**. Severance and related benefits for H1 2025 totaled **$0.9 million**[62](index=62&type=chunk) - The Industrial Motion segment announced a reduction in force at its Springfield, Missouri facility (December 2024) and the closure of its Fort Scott, Kansas facility (November 2023). These actions are expected to affect approximately **160 employees** in total, with estimated pretax costs of **$12 million to $14 million**. Severance and related benefits for H1 2025 totaled **$0.7 million**[64](index=64&type=chunk) **Consolidated Restructuring Accrual (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Beginning balance, January 1 | $3.7 | $5.8 | | Expense | $13.8 | $9.9 | | Payments | $(8.6) | $(12.0) | | Ending balance | $8.9 | $3.7 | [Note 15 - Retirement Benefit Plans](index=24&type=section&id=Note%2015%20-%20Retirement%20Benefit%20Plans) **Net Periodic Benefit Cost for Defined Benefit Pension Plans (Six Months Ended June 30, Dollars in millions):** | Component | 2025 Total | 2024 Total | | :------------------------------------------ | :--------- | :--------- | | Service cost | $1.3 | $1.3 | | Interest cost | $14.2 | $13.6 | | Expected return on plan assets | $(8.7) | $(8.6) | | Amortization of prior service cost | $0.1 | $0.2 | | Net periodic benefit cost | $6.9 | $6.5 | [Note 16 - Other Postretirement Benefit Plans](index=24&type=section&id=Note%2016%20-%20Other%20Postretirement%20Benefit%20Plans) **Net Periodic Benefit Credit for Other Postretirement Benefit Plans (Six Months Ended June 30, Dollars in millions):** | Component | 2025 Total | 2024 Total | | :------------------------------------------ | :--------- | :--------- | | Interest cost | $0.9 | $0.9 | | Amortization of prior service credit | $(4.1) | $(4.1) | | Net periodic benefit credit | $(3.2) | $(3.2) | [Note 17 - Accumulated Other Comprehensive Income (Loss)](index=25&type=section&id=Note%2017%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) - Accumulated Other Comprehensive Loss **improved significantly to $(100.2) million** at June 30, 2025, from **$(301.7) million** at December 31, 2024[70](index=70&type=chunk) - Key drivers for the six months ended June 30, 2025, include positive foreign currency translation adjustments of **$210.7 million**, negative pension and other postretirement liability adjustments of **$(3.3) million**, and negative changes in the fair value of derivative financial instruments of **$(5.7) million**[70](index=70&type=chunk) - Foreign currency translation adjustments at June 30, 2025, included cumulative losses of **$44.1 million** (net of deferred taxes) related to net investment hedges, compared to cumulative gains of **$27.1 million** at December 31, 2024[70](index=70&type=chunk) [Note 18 - Fair Value](index=27&type=section&id=Note%2018%20-%20Fair%20Value) - Fair value measurements are classified into a hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[74](index=74&type=chunk)[76](index=76&type=chunk) **Financial Assets and Liabilities Measured at Fair Value (June 30, 2025, Dollars in millions):** | Item | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :---- | :------ | :------ | :------ | | **Assets:** | | | | | | Cash and cash equivalents | $384.2 | $381.8 | $2.4 | — | | Restricted cash | $1.5 | $1.5 | — | — | | Short-term investments | $11.4 | — | $11.4 | — | | Foreign currency forward contracts | $3.2 | — | $3.2 | — | | **Liabilities:** | | | | | | Foreign currency forward contracts | $9.0 | — | $9.0 | — | - The fair value of the Company's long-term fixed-rate debt, based on Level 2 inputs, was **$1,780.0 million** at June 30, 2025 (carrying value **$1,786.0 million**)[78](index=78&type=chunk) [Note 19 - Derivative Instruments and Hedging Activities](index=29&type=section&id=Note%2019%20-%20Derivative%20Instruments%20and%20Hedging%20Activities) - The Company uses derivative instruments, primarily foreign currency forward contracts and interest rate swaps, to manage foreign currency exchange rate risk and interest rate risk[81](index=81&type=chunk) - The 2034 Notes (**€600 million**) were designated as a hedge against the net investment in a European subsidiary on May 23, 2024, resulting in losses of **$86.0 million** recorded to accumulated other comprehensive (loss) income for the six months ended June 30, 2025[83](index=83&type=chunk) - The Company had **$398.3 million** in outstanding foreign currency forward contracts at notional value as of June 30, 2025, with **$70.6 million** classified as cash flow hedges and **$327.7 million** not designated as hedging instruments[85](index=85&type=chunk)[87](index=87&type=chunk)[90](index=90&type=chunk) - For the six months ended June 30, 2025, foreign currency forward contracts not designated as hedging instruments resulted in a gain of **$0.5 million** recognized in 'Other expense, net', compared to a loss of **$10.0 million** in the prior year[90](index=90&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The Timken Company experienced declines in H1 2025 net sales and income due to lower demand and tariffs, but maintains strong liquidity and expects improved operating cash flow [OVERVIEW](index=31&type=section&id=OVERVIEW) - The Timken Company designs and manufactures **engineered bearings and industrial motion products**, serving diverse global markets with a focus on **profitable growth, operational excellence, and capital deployment**[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) **Financial Performance Overview (Dollars in millions, except per share data):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,173.4 | $1,182.3 | $2,313.7 | $2,372.6 | | Net income attributable to The Timken Company | $78.5 | $96.2 | $156.8 | $199.7 | | Diluted earnings per share | $1.12 | $1.36 | $2.23 | $2.82 | - Net sales **decreased** for both the three and six months ended June 30, 2025, primarily due to lower end-market demand in both segments and unfavorable foreign currency exchange rates, partially offset by favorable pricing and acquisitions[99](index=99&type=chunk) - Net income **decreased** for both periods, driven by lower volume, higher manufacturing costs, incremental tariff costs, and higher restructuring costs, partially offset by lower income tax expense, favorable pricing, and acquisitions[100](index=100&type=chunk) - The Company expects 2025 full-year revenues to be **down 2.0% to 0.5%** compared to 2024, primarily due to lower demand across both segments, partially offset by favorable pricing and acquisitions[102](index=102&type=chunk) - Earnings are expected to be **down** in 2025 due to lower organic sales volume, unfavorable mix, and incremental tariff costs, partially offset by favorable pricing, lower operating costs, and acquisitions[102](index=102&type=chunk) - Higher cash from operating activities is expected in 2025, driven by improved working capital performance and lower cash taxes, partially offset by higher pension and other postretirement benefit contributions and payments. Capital expenditures are expected to be in the range of **3.5% of sales**[103](index=103&type=chunk) [THE STATEMENT OF INCOME](index=34&type=section&id=THE%20STATEMENT%20OF%20INCOME) **Operating Income (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,173.4 | $1,182.3 | $2,313.7 | $2,372.6 | | Operating income | $147.8 | $167.2 | $291.8 | $351.8 | | Operating income % to net sales | 12.6% | 14.1% | 12.6% | 14.8% | - Operating income **decreased** for both periods, primarily due to incremental tariff costs, lower volume, unfavorable mix, and higher manufacturing costs, partially offset by favorable pricing and lower material/logistics costs[105](index=105&type=chunk) - Cost of products sold **decreased by $6.7 million (0.4%)** for the six months ended June 30, 2025, driven by lower production volume, favorable foreign currency, and lower material/logistics costs, partially offset by higher manufacturing costs, incremental tariffs, and acquisitions[105](index=105&type=chunk) - Selling, general and administrative (SG&A) expenses were **flat** for the six months ended June 30, 2025, as acquisition impacts and increased accruals for uncollectible accounts were offset by reduced discretionary spending[108](index=108&type=chunk) - Impairment and restructuring charges **increased by $8.2 million (146.4%)** for the six months ended June 30, 2025, primarily due to severance related to the CEO transition[108](index=108&type=chunk) **Interest Expense, Net (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $(29.8) | $(34.6) | $(56.3) | $(66.8) | | Interest income | $3.0 | $5.1 | $5.3 | $7.9 | | Interest expense, net | $(26.8) | $(29.5) | $(51.0) | $(58.9) | - The decrease in net interest expense was primarily due to **lower average debt levels and lower interest rates**[106](index=106&type=chunk) **Other (Expense) Income, Net (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Non-service pension and other postretirement expense | $(1.2) | $(1.0) | $(2.4) | $(2.0) | | Other (expense) income | $(3.4) | $1.2 | $(3.7) | $0.3 | | Total other (expense) income | $(4.6) | $0.2 | $(6.1) | $(1.7) | - The change in other (expense) income, net, was primarily driven by the unfavorable impact of foreign currency exchange losses[107](index=107&type=chunk) **Provision for Income Taxes (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $30.7 | $35.9 | $57.6 | $78.6 | | Effective tax rate | 26.4% | 26.0% | 24.5% | 27.0% | - Income tax expense **decreased** for the six months ended June 30, 2025, primarily due to lower pre-tax earnings and the net favorable impact of discrete items, including the reversal of accruals for uncertain tax positions in non-U.S. jurisdictions[110](index=110&type=chunk) [BUSINESS SEGMENTS](index=37&type=section&id=BUSINESS%20SEGMENTS) - The Company's reportable segments are **Engineered Bearings** and **Industrial Motion**, with financial performance measured by **Adjusted EBITDA**[114](index=114&type=chunk) - The Engineered Bearings segment's net sales (excluding currency effects) **decreased by 1.8%** for the six months ended June 30, 2025, driven by lower demand across most market sectors (auto/truck, heavy industries, off-highway), partially offset by higher renewable energy demand[118](index=118&type=chunk) - Adjusted EBITDA for Engineered Bearings **decreased by 10.1%** for the six months ended June 30, 2025, due to lower volume, unfavorable tariffs, and foreign currency, partially offset by lower SG&A expenses and material/logistics costs[118](index=118&type=chunk) - The Industrial Motion segment's net sales (excluding acquisitions and currency effects) **decreased by 4.8%** for the six months ended June 30, 2025, reflecting lower demand across most platforms (belts and chain, industrial services, lubrication systems), partially offset by growth in drive systems[120](index=120&type=chunk) - Adjusted EBITDA for Industrial Motion **decreased by 13.7%** for the six months ended June 30, 2025, due to lower volume, unfavorable mix, and higher manufacturing costs, partially offset by higher pricing and acquisitions[120](index=120&type=chunk) - Unallocated corporate expense **increased by 9.8%** for the six months ended June 30, 2025, primarily due to unfavorable foreign currency exchange rate changes[121](index=121&type=chunk) [CASH FLOW](index=41&type=section&id=CASH%20FLOW) **Cash Flow Summary (Six Months Ended June 30, Dollars in millions):** | Metric | 2025 | 2024 | $ Change | | :------------------------------------------ | :--- | :--- | :------- | | Net cash provided by operating activities | $169.9 | $173.9 | $(4.0) | | Net cash used in investing activities | $(61.6) | $(59.4) | $(2.2) | | Net cash used in financing activities | $(84.9) | $(52.0) | $(32.9) | | Effect of exchange rate changes on cash | $23.8 | $(10.8) | $34.6 | | Increase in cash and cash equivalents and restricted cash | $47.2 | $51.7 | $(4.5) | - The decrease in net cash provided by operating activities was due to the unfavorable impact of income taxes on cash (**$48.5 million**) and higher pension and postretirement payments (**$12.3 million**), largely offset by the favorable impact of working capital items (**$74.3 million**)[124](index=124&type=chunk) - Net cash used in investing activities **increased** due to a **$16.1 million** decrease in cash from the net liquidation of short-term marketable securities, partially offset by **$13.1 million** lower capital expenditures[126](index=126&type=chunk) - Net cash used in financing activities **increased** due to the **$232.3 million** proceeds from the sale of Timken India Limited shares in 2024 (not repeated in 2025) and a **$16.0 million** increase in treasury share purchases, partially offset by a **$214.5 million** favorable change in debt borrowings/payments[127](index=127&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) **Net Debt (Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total debt | $2,198.3 | $2,062.7 | | Less: Cash and cash equivalents | $419.3 | $373.2 | | Net debt | $1,779.0 | $1,689.5 | **Ratio of Net Debt to Capital:** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Net debt to capital | 35.2% | 36.1% | - At June 30, 2025, the Company had **strong liquidity** with **$419.3 million** of cash and cash equivalents (**$395.5 million** residing outside the U.S.) and **$850.0 million** available under committed credit lines[130](index=130&type=chunk) - The Company was in **full compliance** with all applicable covenants on its outstanding debt at June 30, 2025, with a consolidated net leverage ratio of **2.27 to 1.0** (maximum **3.5 to 1.0**) and a consolidated interest coverage ratio of **7.66 to 1.0** (minimum **3.0 to 1.0**)[131](index=131&type=chunk)[136](index=136&type=chunk) - The Company expects to generate a higher amount of cash from operating activities in 2025 and anticipates capital expenditures to be in the range of **3.5% of sales**[136](index=136&type=chunk) - In 2025, the Company expects to make contributions of approximately **$36 million** to its global defined benefit pension plans and **$3 million** to its other postretirement benefit plans[137](index=137&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=43&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - The Company has concluded that there have been **no significant changes** to its critical accounting policies or estimates during the six months ended June 30, 2025, as described in its Annual Report on Form 10-K for the year ended December 31, 2024[139](index=139&type=chunk) [OTHER MATTERS](index=44&type=section&id=OTHER%20MATTERS) - For the six months ended June 30, 2025, the Company recorded **positive foreign currency translation adjustments of $210.5 million** that increased shareholders' equity, compared with **negative adjustments of $79.5 million** in the prior year, driven by the weakening of the U.S. dollar[142](index=142&type=chunk) - Foreign currency exchange gains and losses, net of hedging activity, resulted in **$3.3 million of net losses** for the six months ended June 30, 2025, included in operating results[143](index=143&type=chunk) - On March 31, 2025, Tarak B. Mehta departed as President and CEO, and Richard G. Kyle was appointed interim President and CEO. The Company recorded **$9.3 million** in severance expense (plus related taxes) for Mr. Mehta's settlement arrangement[144](index=144&type=chunk) [NON-GAAP MEASURES](index=45&type=section&id=NON-GAAP%20MEASURES) - The Company provides non-GAAP financial measures such as adjusted net income, adjusted EPS, adjusted EBITDA, free cash flow, and net debt to adjusted EBITDA to supplement GAAP results and provide insights into core operations[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) **Adjusted Net Income and Adjusted EBITDA (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Adjusted Net Income | $99.3 | $115.2 | $197.9 | $240.9 | | Adjusted EBITDA | $208.2 | $230.2 | $416.3 | $476.6 | | Adjusted EBITDA Margin (% of net sales) | 17.7% | 19.5% | 18.0% | 20.1% | **Diluted and Adjusted EPS:** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Diluted earnings per share (EPS) | $1.12 | $1.36 | $2.23 | $2.82 | | Adjusted EPS | $1.42 | $1.63 | $2.82 | $3.40 | **Free Cash Flow (Dollars in millions):** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $111.3 | $124.6 | $169.9 | $173.9 | | Capital expenditures | $(33.1) | $(37.3) | $(68.3) | $(81.4) | | Free cash flow | $78.2 | $87.3 | $101.6 | $92.5 | **Ratio of Net Debt to Adjusted EBITDA (Trailing Twelve Months, Dollars in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Net Debt | $1,779.0 | $1,689.5 | | Adjusted EBITDA | $784.5 | $844.8 | | Ratio of Net Debt to Adjusted EBITDA | 2.3 | 2.0 | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=51&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk have occurred since the prior Annual Report on Form 10-K - There have been no material changes in reported market risk since the inclusion of this discussion in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[158](index=158&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=51&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were effective as of June 30, 2025, based on an evaluation by management, including the principal executive officer and principal financial officer[159](index=159&type=chunk) - There have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[159](index=159&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Management believes current legal proceedings will not materially affect the Company's financial position or annual results - Management believes the ultimate disposition of open legal proceedings as of June 30, 2025, will not have a material adverse effect on the Company's consolidated financial position or annual results of operations[161](index=161&type=chunk) - The Company uses a threshold of **$1 million or more** for disclosing legal proceedings where a governmental authority is a party[161](index=161&type=chunk) [Item 1A. Risk Factors](index=52&type=page&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors have occurred since the last Annual Report on Form 10-K - 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, 2024[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company purchased **347,282** common shares at an average price of **$65.29** per share during Q2 2025 under its existing plan **Issuer Purchases of Common Shares (Quarter Ended June 30, 2025):** | Period | Total number of shares purchased | Average price paid per share | | :------------------ | :----------------------------- | :--------------------------- | | 4/1/2025 - 4/30/2025 | 211,442 | $63.14 | | 5/1/2025 - 5/31/2025 | 135,613 | $68.63 | | 6/1/2025 - 6/30/2025 | 227 | $72.52 | | **Total** | **347,282** | **$65.29** | - The Company's Board of Directors approved a share purchase plan on February 12, 2021, authorizing the purchase of up to **ten million** common shares, expiring on February 28, 2026[165](index=165&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the fiscal quarter ended June 30, 2025[166](index=166&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications and financial statements in Inline XBRL format - Exhibits include certifications from Richard G. Kyle (President and CEO) and Philip D. Fracassa (EVP and CFO) pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[168](index=168&type=chunk) - Financial statements from the quarterly report are filed in Inline XBRL format[168](index=168&type=chunk) FORWARD-LOOKING STATEMENTS This section cautions that forward-looking statements are subject to risks, including economic conditions, supply chain, demand, competition, costs, and regulatory changes - Forward-looking statements are subject to **material uncertainties and risks**, and actual results may **differ materially** from those expressed or implied[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Key risk factors include **deterioration in world economic conditions** (e.g., global slowdown, tariffs, geopolitical risks), **negative impacts to supply chains**, **fluctuations in customer demand**, **competitive factors** (e.g., pricing, new products, AI), **changes in operating costs** (e.g., raw materials, energy, tariffs, warranty claims, environmental regulations, labor), **success of operating plans and acquisitions**, **labor relations, management retention, unanticipated litigation, evolving regulatory landscape, financial market conditions, debt obligations, and pension impacts**[154](index=154&type=chunk)[157](index=157&type=chunk) SIGNATURES The report was duly signed on July 30, 2025, by Richard G. Kyle, President and CEO, and Philip D. Fracassa, EVP and CFO - The report was signed by **Richard G. Kyle**, President and Chief Executive Officer, and **Philip D. Fracassa**, Executive Vice President and Chief Financial Officer, on **July 30, 2025**[172](index=172&type=chunk)

Financial Data and Key Metrics Changes - Total sales for the quarter were $1.17 billion, down less than 1% from last year, with organic sales down 2.5% due to lower demand in both segments, partially offset by higher pricing [6][15] - Adjusted EBITDA margins were 17.7%, and adjusted EPS was $1.42, both below prior year levels due to lower volumes, higher tariff costs, and unfavorable currency [7][15] - Free cash flow generated was $78 million, with a quarterly dividend raised by 3% and 340,000 shares repurchased [8][27] Business Segment Data and Key Metrics Changes - Engineered Bearings sales were $777 million, down 0.8% from last year, with lower end market demand in Europe and The Americas, offset by higher revenue in Asia [22] - Industrial Motion sales were $396 million, down 0.7%, with organic decline of 5.9% due to lower demand, although linear motion platform saw growth driven by new business wins [23][25] Market Data and Key Metrics Changes - In Asia Pacific, sales were up 2%, led by growth in China, while The Americas saw a decline of 3% and EMEA was down 5% [16][17] - The overall market environment remains stable, but there are signs of softness in industrial sectors, particularly in Europe and North America [9][17] Company Strategy and Development Direction - The company is focused on managing costs and driving structural cost actions to contribute to margin expansion over time, with plans to complete three plant closures in the second half of the year [10][12] - Timken is investing in high-growth applications within the automation sector, including industrial robotics and factory automation, to capitalize on market trends [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for the second half of the year due to trade uncertainties, but remains optimistic about 2026, expecting industrial markets to expand as trade stabilizes [9][11] - The company is confident in its ability to mitigate tariff impacts and anticipates positive contributions from backlog growth and pricing actions [10][12] Other Important Information - The CEO search is ongoing, with strong interest in the role, and the board is confident in identifying a new leader soon [13][14] - The company continues to pursue M&A opportunities, particularly bolt-on acquisitions, even during the CEO transition [78] Q&A Session Summary Question: Can you unpack the trend to the organic volume guide? - Management indicated a cautious approach for the second half due to trade uncertainties, despite stable market conditions [36][38] Question: What are your thoughts on humanoid robots and their potential? - The company is working on applications for humanoid robots, but expects it to be a long-term play with modest revenue growth in the near term [39][41] Question: What were month-by-month orders through Q2? - Orders have been improving, and July sales rates are in line with the midpoint of guidance, indicating a cautious but positive outlook [47][48] Question: Can you provide an update on discussions with auto OEMs? - Discussions are ongoing, with expectations for some margin uplift in 2026, but no immediate impact anticipated [52][53] Question: How are inventory levels affecting distribution? - Inventory levels are currently good, but there is caution due to potential market weakness, particularly in discretionary spending areas [63][66] Question: What is the outlook for wind energy demand? - Demand in wind energy has improved, particularly in Asia, but growth may be muted in the second half due to pull-ahead spending [68][69] Question: Are there any market share issues or pricing competition? - Management stated that they are not losing market share and expect pricing to continue to rise, which will help recover costs [106][109]

Financial Data and Key Metrics Changes - Total sales for Q2 2025 were $1.17 billion, down less than 1% from the previous year, with organic sales declining by 2.5% due to lower demand in both segments, partially offset by higher pricing [5][13] - Adjusted EBITDA margins were 17.7%, and adjusted EPS was $1.42, both below prior year levels due to lower volumes, higher tariff costs, and unfavorable currency impacts [6][21] - Free cash flow generated in the quarter was $78 million, with a quarterly dividend increase of 3% and the repurchase of 340,000 shares [6][27] Business Line Data and Key Metrics Changes - Engineered Bearings sales were $777 million, down 0.8% year-over-year, with lower demand in Europe and The Americas, offset by higher revenue in Asia [22] - Industrial Motion sales were $396 million, down 0.7% from last year, with a 5.9% organic decline due to lower demand in several platforms, although linear motion showed growth [23][25] Market Data and Key Metrics Changes - In the Asia Pacific region, sales were up 2%, driven by growth in China, particularly in wind energy shipments [15] - The Americas saw a 3% decline, while EMEA experienced a 5% drop, although the rate of decline improved compared to previous quarters [15][16] Company Strategy and Development Direction - The company is focused on managing costs in response to current market demand and is implementing structural cost actions to improve margins over time [7][8] - Timken is investing in high-growth applications within the automation sector, including industrial robotics and factory automation, to capitalize on market trends [11][12] - The company is also on track to complete three plant closures in the second half of the year to mitigate planned volume declines and positively impact margins in 2026 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for the second half of 2025 due to ongoing trade uncertainties impacting costs and demand [7][30] - Despite current challenges, management remains optimistic about 2026, anticipating industrial market expansion as trade stabilizes and end-user confidence improves [9][10] Other Important Information - The company is actively managing the impact of tariffs, with an estimated full-year net negative impact of approximately $10 million, an improvement from previous estimates [32] - The CEO search is ongoing, with strong interest in the role, and the management team is confident in executing the company's strategic path during this transition [11][12] Q&A Session Summary Question: Can you unpack the trend to the organic volume guide? - Management indicated a cautious approach for the second half of the year, not seeing acceleration or deceleration in market demand, primarily due to trade uncertainties [39] Question: What are Timken's applications for humanoid robots? - The company is working on applications for humanoid robots, expecting modest revenue growth in the coming years, while focusing on existing automation markets [42] Question: How do July orders compare to Q2? - July sales rates are in line with or slightly ahead of the midpoint of the guidance, with improving order intake rates throughout the year [48] Question: Can you provide an update on discussions with auto OEMs? - Discussions are ongoing, with expectations for some positive uplift in margins by the second half of next year, though it is too early to quantify the impact [53] Question: What is the outlook for the wind energy market? - The company has seen a step-up in demand in wind energy, particularly driven by regulatory changes in China, although growth may be muted in the second half [68]