Timken Reports First-Quarter 2024 Results; Raises Full-Year Outlook NORTH CANTON, Ohio: April 30, 2024 — The Timken Company (NYSE: TKR; www.timken.com), a global technology leader in engineered bearings and industrial motion, today reported first-quarter 2024 sales of $1.19 billion, down 5.7 percent from the same period a year ago. The decrease was driven by lower demand, including a significant decline in renewable energy in China, and unfavorable foreign currency translation, partially offset by the benef ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) The Timken Company is a global manufacturer of engineered bearings and industrial motion products, serving diverse sectors with over 19,000 employees worldwide - Timken designs and manages a portfolio of engineered bearings and industrial motion products, operating globally in 45 countries with over 19,000 employees[9](index=9&type=chunk)[10](index=10&type=chunk) - The company serves a diverse range of market sectors, including industrial distribution, renewable energy, automation, and automotive. No single customer represents **5% or more of total net sales**[11](index=11&type=chunk) [Products and Services](index=3&type=section&id=Products%20and%20Services) This section details the company's product offerings across Engineered Bearings and Industrial Motion segments, along with its industrial drivetrain services - The Engineered Bearings segment includes a wide range of products such as tapered, spherical, cylindrical, plain, and ball bearings, serving diverse applications from automotive to aerospace and heavy industry[13](index=13&type=chunk)[15](index=15&type=chunk) - The Industrial Motion Products portfolio includes linear motion products, industrial drives, lubrication systems, belts, chains, couplings, clutches, brakes, and seals, serving sectors like automation, solar, and marine[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company provides services for industrial drivetrain components, including gearboxes, motors, and generators, as well as bearing repair and remanufacturing for any brand[30](index=30&type=chunk)[31](index=31&type=chunk) [Operations and Human Capital](index=7&type=section&id=Operations%20and%20Human%20Capital) This section covers the company's raw material sourcing, global technology centers, and human capital statistics, including employee numbers and safety performance - The company's primary raw material is special bar quality (SBQ) steel. Timken manages price variability through surcharge mechanisms in some customer contracts to partially recover commodity cost increases[40](index=40&type=chunk) - Timken operates a global network of technology and engineering centers in North America, Europe, and Asia to support innovation and customer needs[43](index=43&type=chunk) - As of December 31, 2023, Timken had over **19,000 employees worldwide**, with approximately **9% of its U.S. employees** covered by collective bargaining agreements[51](index=51&type=chunk) Employee Health and Safety Performance | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Lost Time Accident Rate | 0.37 | 0.29 | | Recordable Rate | 1.10 | 1.06 | Order Backlog by Segment (2023 vs 2022) | (Dollars in millions) | 2023 | 2022 | | :--- | :--- | :--- | | **Segment:** | | | | Engineered Bearings | $1,502.0 | $1,722.1 | | Industrial Motion | $775.2 | $768.7 | | **Total Company** | **$2,277.2** | **$2,490.8** | - Services, including power systems maintenance and bearing repair, accounted for approximately **4% of the Company's net sales** for the year ended December 31, 2023[32](index=32&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including intense competition, capital intensity, raw material volatility, global operational challenges, and cybersecurity threats - The bearing and industrial motion industries are highly competitive, resulting in significant pricing pressure that could affect revenues and profitability[63](index=63&type=chunk) - The business is capital intensive, and industry downturns could lead to asset impairment or restructuring charges. The company has incurred approximately **$127 million in such charges** over the last five years[64](index=64&type=chunk) - Fluctuations in the price and availability of raw materials like steel, as well as logistics expenses, could adversely affect results of operations and profit margins[66](index=66&type=chunk)[67](index=67&type=chunk) - International operations expose the company to risks such as changes in trade policies, tariffs, political instability, and foreign currency fluctuations[81](index=81&type=chunk)[83](index=83&type=chunk) - The company is subject to cybersecurity risks, including unauthorized access to its IT systems, which could lead to misuse of confidential information, operational disruptions, and reputational damage[99](index=99&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[106](index=106&type=chunk) [Cybersecurity](index=22&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity risk management is integrated into its enterprise risk management program, with oversight from the Board of Directors and the Audit Committee - The Board of Directors and Audit Committee have oversight responsibility for cybersecurity, while management, under the direction of the Vice President of Technology, handles the day-to-day program[108](index=108&type=chunk) - The company's information security program includes assessing threats, implementing mitigation strategies, and engaging third-party consultants for testing and training[107](index=107&type=chunk) - In 2023, the Company did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[109](index=109&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) As of December 31, 2023, Timken operates 94 manufacturing, assembly, or repair plants globally, with its corporate headquarters in North Canton, Ohio - As of December 31, 2023, the Company maintained **94 plants** for manufacturing, assembly, or repair services, in addition to various sales offices and distribution centers worldwide[110](index=110&type=chunk) - The company owns the vast majority of its plants, while most sales offices and distribution centers are leased. Management believes capacity levels are adequate for present and anticipated future needs[110](index=110&type=chunk)[111](index=111&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, which management does not expect to have a material adverse effect - The company is involved in various claims and legal actions arising in the ordinary course of business, but management does not expect them to have a material adverse effect on its financial position or operations[112](index=112&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[113](index=113&type=chunk) [Information about our Executive Officers](index=23&type=section&id=Item%204A.%20Information%20about%20our%20Executive%20Officers) This section lists the executive officers of The Timken Company as of February 26, 2024, including their age, current position, and previous roles Executive Officers as of February 26, 2024 | Name | Age | Current Position | | :--- | :--- | :--- | | Christopher A. Coughlin | 63 | Executive Vice President and President of Industrial Motion | | Philip D. Fracassa | 56 | Executive Vice President and Chief Financial Officer | | Richard G. Kyle | 58 | President and Chief Executive Officer | | Hansal N. Patel | 43 | Vice President, General Counsel and Secretary | | Natasha Pollock | 49 | Vice President, Human Resources | | Andreas Roellgen | 56 | Executive Vice President and President of Engineered Bearings | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on the NYSE under 'TKR', with repurchases in Q4 2023 and a five-year stock performance outperforming key indices Issuer Purchases of Common Shares (Q4 2023) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Plan | | :--- | :--- | :--- | :--- | | Oct 2023 | 310,627 | $71.68 | 310,000 | | Nov 2023 | 130,454 | $71.30 | 130,000 | | Dec 2023 | 15,391 | $75.34 | 10,000 | | **Total** | **456,472** | **$71.70** | **450,000** | - A share repurchase plan approved in February 2021 allows the company to purchase up to **ten million common shares** through February 28, 2026. As of December 31, 2023, **2,638,990 shares** may yet be purchased under this plan[120](index=120&type=chunk) - Over a five-year period (2019-2023), an initial **$100 investment** in Timken (TKR) common shares grew to **$237**, outperforming the S&P 500 (**$207**) and the S&P 400 Industrials (**$232**)[122](index=122&type=chunk) [Selected Financial Data](index=26&type=section&id=Item%206.%20Unreserved) This section presents a five-year summary of key financial data, highlighting net sales, operating income, net income, and earnings per share for the period Five-Year Selected Financial Data (2019-2023) | (Dollars in millions, except per share data) | 2023 | 2022 | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,769.0 | $4,496.7 | $4,132.9 | $3,513.2 | $3,789.9 | | **Operating income** | $657.1 | $606.9 | $513.1 | $454.9 | $516.4 | | **Net income attributable to The Timken Company** | $394.1 | $407.4 | $369.1 | $284.5 | $362.1 | | **Diluted earnings per share** | $5.47 | $5.48 | $4.79 | $3.72 | $4.71 | | **Adjusted earnings per share (Non-GAAP)** | $7.05 | $6.46 | $5.18 | $4.56 | $5.05 | | **Net cash provided from operating activities** | $545.2 | $463.8 | $387.3 | $577.6 | $550.1 | | **Dividends per share** | $1.30 | $1.23 | $1.19 | $1.13 | $1.12 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Timken's 2023 financial performance, strategic capital deployment, and 2024 outlook, emphasizing sales growth, acquisitions, and liquidity 2023 vs. 2022 Performance Overview | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $4,769.0 M | $4,496.7 M | 6.1% | | Net income | $408.0 M | $417.0 M | (2.2%) | | Diluted EPS | $5.47 | $5.48 | (0.2%) | - The company's strategy focuses on profitable growth, operational excellence, and capital deployment to drive shareholder value, including strategic acquisitions and returning capital through dividends and share repurchases[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - In 2023, Timken deployed over **$1.1 billion in capital** across expenditures, acquisitions, dividends, and share repurchases. Key acquisitions included Nadella, Des-Case, and Lagersmit[132](index=132&type=chunk) - The company expects 2024 full-year revenue to be **down 2.5% to 4.5%** compared to 2023, as the benefit of acquisitions is expected to be more than offset by lower anticipated organic revenue[134](index=134&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's 2023 financial performance, detailing changes in net sales, operating income, interest expense, and effective tax rate Operating Income Analysis (2023 vs. 2022) | (Dollars in millions) | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,769.0 | $4,496.7 | $272.3 | 6.1% | | Cost of products sold | $3,259.9 | $3,164.7 | $95.2 | 3.0% | | SG&A expenses | $740.8 | $637.1 | $103.7 | 16.3% | | **Operating income** | **$657.1** | **$606.9** | **$50.2** | **8.3%** | | **Operating margin** | **13.8%** | **13.5%** | | 30 bps | - The **6.1% increase in 2023 net sales** was driven by acquisitions (net of divestitures) of **$246 million** and higher organic sales of **$50 million**, partially offset by unfavorable currency exchange of **$23 million**[137](index=137&type=chunk) - Interest expense increased by **48.4% to $110.7 million** in 2023 from **$74.6 million** in 2022, primarily due to increased debt levels and higher average interest rates[139](index=139&type=chunk) - The effective tax rate decreased to **23.1%** in 2023 from **24.3%** in 2022, mainly due to the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring[142](index=142&type=chunk)[144](index=144&type=chunk) [Business Segments](index=32&type=section&id=Business%20Segments) The company's performance is analyzed across its two reportable segments: Engineered Bearings and Industrial Motion, detailing their respective sales and EBITDA - Effective January 1, 2023, the company operates under two reportable segments: Engineered Bearings and Industrial Motion. Prior period results have been revised to conform to this new structure[148](index=148&type=chunk) Engineered Bearings Segment Performance (2023 vs. 2022) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,257.7 M | $3,092.6 M | 5.3% | | EBITDA | $661.7 M | $615.8 M | 7.5% | | EBITDA Margin | 20.3% | 19.9% | 40 bps | - Engineered Bearings organic sales (excluding acquisitions, divestitures, and currency) increased **0.1%** in 2023, as higher pricing was almost fully offset by lower sales volumes[152](index=152&type=chunk) Industrial Motion Segment Performance (2023 vs. 2022) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,511.3 M | $1,404.1 M | 7.6% | | EBITDA | $262.0 M | $222.8 M | 17.6% | | EBITDA Margin | 17.3% | 15.9% | 140 bps | - Industrial Motion organic sales (excluding acquisitions, divestitures, and currency) increased **3.3%** in 2023, reflecting higher pricing and higher sales volume[153](index=153&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section reviews the company's cash flow, debt levels, and liquidity position, including available credit lines and compliance with debt covenants Cash Flow Summary (2023 vs. 2022) | (Dollars in millions) | 2023 | 2022 | $ Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $545.2 | $463.8 | $81.4 | | Net cash used in investing activities | ($806.5) | ($573.3) | ($233.2) | | Net cash provided by financing activities | $347.1 | $206.8 | $140.3 | Net Debt Calculation (as of Dec 31) | (Dollars in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Total debt | $2,395.9 | $1,963.2 | | Less: Cash and cash equivalents | $418.9 | $331.6 | | **Net debt** | **$1,977.0** | **$1,631.6** | | **Ratio of net debt to capital** | **42.2%** | **40.9%** | - As of December 31, 2023, the company had strong liquidity with **$418.9 million in cash and cash equivalents**, plus **$513.4 million available** under committed credit lines[171](index=171&type=chunk) - The company was in full compliance with its debt covenants as of December 31, 2023, with a consolidated net leverage ratio of **2.09 to 1.0** (max permitted is **3.5 to 1.0**)[172](index=172&type=chunk)[177](index=177&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines key accounting estimates for inventory, goodwill impairment, income taxes, purchase accounting, and benefit plans - Key estimates include inventory valuation (using both LIFO and FIFO methods), goodwill and intangible asset impairment testing, income tax provisions, purchase accounting for acquisitions, and assumptions for benefit plans[185](index=185&type=chunk) - Goodwill is tested for impairment annually on October 1st. For 2023, a qualitative assessment was used for all reporting units, concluding that fair value more likely than not exceeded carrying value[187](index=187&type=chunk)[190](index=190&type=chunk) - The measurement of pension and postretirement plan liabilities is based on assumptions for discount rates and health care cost trends. The company recognizes actuarial gains and losses immediately through net periodic benefit cost[201](index=201&type=chunk)[204](index=204&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks related to interest rates, foreign currency exchange rates, and commodity prices through hedging strategies and supplier agreements - A one-percentage-point increase in market rates for short-term borrowings would increase annual interest expense by **$9.6 million**[241](index=241&type=chunk) - The company uses foreign currency forward contracts to hedge exposures. As of December 31, 2023, there were **$591.8 million of hedges** in place[242](index=242&type=chunk) - Commodity price risk for materials like steel and natural gas is managed primarily through supplier pricing agreements[243](index=243&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal years ended December 31, 2023, 2022, and 2021 [Consolidated Financial Statements](index=55&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's core financial statements, including the Consolidated Statements of Income, Balance Sheets, and Cash Flows Consolidated Statements of Income (Year Ended Dec 31) | (Dollars in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net sales | $4,769.0 | $4,496.7 | $4,132.9 | | Operating Income | $657.1 | $606.9 | $513.1 | | **Net Income Attributable to The Timken Company** | **$394.1** | **$407.4** | **$369.1** | Consolidated Balance Sheets (As of Dec 31) | (Dollars in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Total Current Assets | $2,634.9 | $2,504.0 | | Total Assets | $6,541.7 | $5,772.4 | | Total Current Liabilities | $1,471.3 | $1,012.4 | | Total Liabilities | $3,839.3 | $3,419.5 | | Total Equity | $2,702.4 | $2,352.9 | | **Total Liabilities and Equity** | **$6,541.7** | **$5,772.4** | Consolidated Statements of Cash Flows (Year Ended Dec 31) | (Dollars in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $545.2 | $463.8 | $387.3 | | Net Cash Used in Investing Activities | ($806.5) | ($573.3) | ($173.8) | | Net Cash Provided by (Used in) Financing Activities | $347.1 | $206.8 | ($269.3) | | **Increase (Decrease) In Cash** | **$78.6** | **$82.8** | **($63.2)** | [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the company's accounting policies, significant transactions, and financial statement line items - In 2023, the company completed **six acquisitions** for a total purchase price of **$641.0 million**, net of cash acquired. Key acquisitions included Lagersmit, Des-Case, and Nadella, which are reported in the Industrial Motion segment[282](index=282&type=chunk)[285](index=285&type=chunk) - In 2023, the company recorded a goodwill impairment loss of **$28.3 million** in the Industrial Motion segment's Belts and Chain reporting unit, triggered by a change in segment reporting[326](index=326&type=chunk) - The company's defined benefit pension plans had a total funded status deficit of **$179.5 million** at the end of 2023, compared to a deficit of **$166.3 million** at the end of 2022[378](index=378&type=chunk) - On June 20, 2023, the company sold **7.6 million shares** of its publicly traded subsidiary, Timken India Limited (TIL), generating net proceeds of **$229 million** and reducing its ownership from **67.8% to 57.7%**[401](index=401&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=109&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[452](index=452&type=chunk) [Controls and Procedures](index=109&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that the Company's disclosure controls and procedures were effective as of December 31, 2023[453](index=453&type=chunk) - Management's assessment of internal control over financial reporting concluded that it was effective as of December 31, 2023. This assessment excluded the six acquisitions completed during 2023[456](index=456&type=chunk)[457](index=457&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, audited and issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2023[458](index=458&type=chunk)[460](index=460&type=chunk) [Other Information](index=112&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the company - Not applicable[470](index=470&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=112&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[471](index=471&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=112&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on or about May 3, 2024[473](index=473&type=chunk) [Executive Compensation](index=112&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - Required information is incorporated by reference from the Proxy Statement[476](index=476&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=112&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's Proxy Statement - Required information is incorporated by reference from the Proxy Statement[477](index=477&type=chunk)[478](index=478&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=112&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's Proxy Statement - Required information is incorporated by reference from the Proxy Statement[479](index=479&type=chunk) [Principal Accountant Fees and Services](index=112&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement - Required information is incorporated by reference from the Proxy Statement[480](index=480&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=113&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section provides a comprehensive list of all exhibits filed with the Form 10-K, including articles of incorporation, debt indentures, various employee and director compensation plans, and required SOX certifications[482](index=482&type=chunk)[484](index=484&type=chunk)[486](index=486&type=chunk) [Form 10-K Summary](index=118&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates there is no Form 10-K summary - None[493](index=493&type=chunk)

The Timken Company (NYSE:TKR) Q4 2023 Earnings Conference Call February 5, 2024 11:00 AM ET Company Participants Neil Frohnapple - Head, IR Richard Kyle - President and CEO Philip Fracassa - CFO Conference Call Participants Steve Volkmann - Jefferies Stanley Elliott - Stifel David Raso - Evercore Steve Barger - KeyBanc Capital Markets Bryan Blair - Oppenheimer Mike Shlisky - D.A. Davidson Joe Ritchie - Goldman Sachs Angel Castillo - Morgan Stanley Chris Dankert - Loop Capital Michael Feniger - Bank of Ameri ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the company's unaudited consolidated financial statements, including income, comprehensive income, balance sheets, and cash flows, along with detailed notes for the periods ended September 30, 2023 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Consolidated Statements of Income, Comprehensive Income, Balance Sheets, and Cash Flows for the three and nine months ended September 30, 2023, compared to the same periods in 2022, including detailed notes [Acquisitions and Divestitures](index=7&type=section&id=Note%203%20-%20Acquisitions%20and%20Divestitures) During the first nine months of 2023, the company completed four acquisitions for $466.9 million, primarily expanding its Industrial Motion segment, and recorded an impairment charge for a planned divestiture - Completed four acquisitions in the first nine months of 2023: Rosa Sistemi S.p.A., Des-Case, Nadella, and American Roller Bearing Company (ARB)[16](index=16&type=chunk) 2023 Acquisitions Overview | Acquisition | Segment | Purchase Price (net) | Key Products | | :--- | :--- | :--- | :--- | | Rosa Sistemi S.p.A. | Industrial Motion | Part of $466.9M total | Linear motion components | | Des-Case | Industrial Motion | Part of $466.9M total | Specialty filtration products | | Nadella | Industrial Motion | Part of $466.9M total | Linear guides, actuators | | ARB | Engineered Bearings | Part of $466.9M total | Industrial bearings | - Agreed to sell Jiangsu TWB Bearings Co., Ltd. (TWB) and recorded a **$1.0 million impairment charge** in Q3 2023 as the carrying value exceeded the estimated sales price[26](index=26&type=chunk) [Segment Information](index=11&type=section&id=Note%204%20-%20Segment%20Information) The company operates under two reportable segments, Engineered Bearings and Industrial Motion, which collectively increased total segment EBITDA to **$738.1 million** for the nine months ended September 30, 2023 Segment Performance (Nine Months Ended Sep 30, 2023 vs 2022) | Segment (in millions) | Net Sales 2023 | Net Sales 2022 | EBITDA 2023 | EBITDA 2022 | | :--- | :--- | :--- | :--- | :--- | | **Engineered Bearings** | $2,533.5 | $2,350.4 | $538.7 | $486.2 | | **Industrial Motion** | $1,144.3 | $1,064.3 | $199.4 | $162.4 | | **Total Segments** | $3,677.8 | $3,414.7 | $738.1 | $648.6 | [Financing Arrangements](index=17&type=section&id=Note%2011%20-%20Financing%20Arrangements) As of September 30, 2023, total debt stood at **$2.2 billion**, up from **$1.96 billion** at year-end 2022, with strong liquidity maintained through **$720.9 million** available under committed credit lines - On August 16, 2023, the Company entered into a new **€200 million variable-rate term loan** maturing in August 2024[49](index=49&type=chunk) Debt Composition (as of Sep 30, 2023) | Debt Category (in millions) | Amount | | :--- | :--- | | Short-term debt, including current portion | $598.4 | | Long-term debt | $1,601.6 | | **Total Debt** | **$2,200.0** | - At September 30, 2023, the company had **$698.9 million** available under its Senior Credit Facility and **$22.0 million** under its Accounts Receivable Facility[145](index=145&type=chunk)[147](index=147&type=chunk) [Impairment and Restructuring Charges](index=23&type=section&id=Note%2015%20-%20Impairment%20and%20Restructuring%20Charges) For the nine months ended September 30, 2023, the company recorded **$40.3 million** in impairment and restructuring charges, including a **$28.3 million** goodwill impairment loss in the Industrial Motion segment Impairment & Restructuring Charges (Nine Months Ended Sep 30, 2023) | Segment (in millions) | Impairment Charges | Severance & Benefits | Exit Costs | Total | | :--- | :--- | :--- | :--- | :--- | | **Engineered Bearings** | $4.9 | $3.8 | $0.6 | $9.3 | | **Industrial Motion** | $28.3 | $2.5 | $0.2 | $31.0 | | **Total** | **$33.2** | **$6.3** | **$0.8** | **$40.3** | - A pretax goodwill impairment loss of **$28.3 million** was recorded in Q1 2023 for the Belts and Chain reporting unit within the Industrial Motion segment following a change in reporting segments[46](index=46&type=chunk)[72](index=72&type=chunk) - Charges related to the closure of the Gaffney, South Carolina bearing plant totaled **$3.1 million** for severance and related benefits in the first nine months of 2023[68](index=68&type=chunk) Consolidated Statements of Income Highlights (Q3 & YTD 2023 vs 2022) | Metric (in millions) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,142.7 | $1,136.4 | $3,677.8 | $3,414.7 | | **Operating Income** | $149.6 | $131.7 | $537.9 | $479.9 | | **Net Income Attributable to The Timken Company** | $87.9 | $87.0 | $335.4 | $310.2 | | **Diluted EPS** | $1.23 | $1.18 | $4.63 | $4.16 | Consolidated Balance Sheet Highlights (as of Sep 30, 2023 vs Dec 31, 2022) | Metric (in millions) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $2,606.9 | $2,504.0 | | **Total Assets** | $6,244.7 | $5,772.4 | | **Total Current Liabilities** | $1,503.9 | $1,012.4 | | **Total Liabilities** | $3,647.6 | $3,419.5 | | **Total Shareholders' Equity** | $2,477.8 | $2,268.3 | Consolidated Statements of Cash Flows Highlights (YTD 2023 vs 2022) | Metric (in millions) | YTD Sep 30, 2023 | YTD Sep 30, 2022 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $416.9 | $222.3 | | **Net Cash Used in Investing Activities** | ($599.1) | ($242.0) | | **Net Cash Provided by Financing Activities** | $235.6 | $88.5 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, strategic initiatives, and financial condition, highlighting Q3 2023 sales growth of **0.6%** to **$1.14 billion** and a full-year 2023 revenue outlook of **5-5.5%** growth [Company Overview and Strategy](index=34&type=section&id=Overview) Timken designs and manufactures engineered bearings and industrial motion products, focusing on profitable growth, operational excellence, and disciplined capital deployment - The company operates under two reportable segments: Engineered Bearings (tapered, spherical, cylindrical roller bearings, etc.) and Industrial Motion (drives, lubrication systems, linear motion, chains, belts, etc.)[108](index=108&type=chunk)[110](index=110&type=chunk) - The company's three-part strategy consists of: 1) Profitable Growth, 2) Operational Excellence, and 3) Capital Deployment to Drive Shareholder Value[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) For Q3 2023, net sales increased **0.6%** year-over-year, driven by acquisitions and pricing, while operating income rose **13.6%** to **$149.6 million** Q3 2023 vs Q3 2022 Operating Results (in millions) | Metric | Q3 2023 | Q3 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,142.7 | $1,136.4 | $6.3 | 0.6% | | **Operating Income** | $149.6 | $131.7 | $17.9 | 13.6% | | **Operating Margin** | 13.1% | 11.6% | +150 bps | | - The increase in nine-month sales was driven by acquisitions (net of divestitures) of **$191 million** and higher organic sales of **$107 million** (favorable pricing, lower volume)[119](index=119&type=chunk) - Net interest expense increased for both the three and nine-month periods due to increased debt levels from acquisitions and higher average interest rates[122](index=122&type=chunk) [Business Segments Performance](index=40&type=section&id=Business%20Segments) In Q3 2023, Engineered Bearings sales decreased **0.5%** while Industrial Motion sales grew **2.9%**, with both segments showing overall growth for the nine-month period due to acquisitions and pricing Engineered Bearings Segment Results (Q3 2023 vs Q3 2022) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $775.6M | $779.7M | -0.5% | | **EBITDA** | $148.2M | $150.4M | -1.5% | | **EBITDA Margin** | 19.1% | 19.3% | -20 bps | Industrial Motion Segment Results (Q3 2023 vs Q3 2022) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $367.1M | $356.7M | +2.9% | | **EBITDA** | $70.3M | $34.9M | +101.4% | | **EBITDA Margin** | 19.2% | 9.8% | +940 bps | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with **$367.9 million** in cash and **$720.9 million** available credit, while net debt increased to **$1.83 billion** primarily to fund acquisitions Net Debt to Capital Ratio | Metric (in millions) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Net Debt** | $1,832.1 | $1,631.6 | | **Total Equity** | $2,597.1 | $2,352.9 | | **Ratio of Net Debt to Capital** | 41.4% | 40.9% | - Net cash provided by operating activities increased by **$194.6 million** year-over-year for the first nine months, primarily due to a **$231.2 million** favorable impact from working capital changes[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Net cash used in investing activities increased by **$357.1 million**, mainly due to a **$312.3 million** increase in cash used for acquisitions[137](index=137&type=chunk)[140](index=140&type=chunk) - Full-year 2023 revenue is expected to be up **5% to 5.5%** compared to 2022, driven almost entirely by the benefit of acquisitions (net of divestitures)[117](index=117&type=chunk) - Strategic accomplishments in the first nine months of 2023 include four acquisitions (Rosa, Des-Case, Nadella, ARB), a **6% dividend increase**, and the repurchase of **2.7 million** common shares[114](index=114&type=chunk) - Operating cash flow is expected to be higher in 2023 compared to 2022, driven by improved working capital performance[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that 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, 2022 - There have been no material changes in reported market risk since the company's Annual Report on Form 10-K for the year ended December 31, 2022[177](index=177&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting during the quarter, excluding recent acquisitions - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023[179](index=179&type=chunk) - The assessment of internal control over financial reporting for the year will exclude the recently acquired businesses of Rosa, Des-Case, Nadella, and ARB, which in aggregate represented **10% of total assets**[180](index=180&type=chunk)[181](index=181&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security purchases, other information, and a list of exhibits filed with the Form 10-Q [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and legal actions in the ordinary course of business, which management believes will not have a material adverse effect on its financial position or results of operations - The company states that ongoing legal proceedings are not expected to have a material adverse effect on its consolidated financial position or results of operations[182](index=182&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) 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, 2022 - No material changes have occurred to the risk factors detailed in the Annual Report on Form 10-K for the year ended December 31, 2022[183](index=183&type=chunk) [Issuer Purchases of Equity Securities](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During the third quarter of 2023, the company repurchased a total of **792,317** common shares at an average price of **$81.63** per share, with approximately **3.1 million** shares remaining available under the current authorization Share Repurchases (Quarter Ended Sep 30, 2023) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Plan | | :--- | :--- | :--- | :--- | | **July 2023** | 216,032 | $91.80 | 215,000 | | **August 2023** | 446,116 | $78.74 | 430,000 | | **September 2023** | 130,169 | $74.66 | 130,000 | | **Total Q3** | **792,317** | **$81.63** | **775,000** | - As of September 30, 2023, **3,088,990** shares may yet be purchased under the company's share purchase plan, which expires on February 28, 2026[186](index=186&type=chunk)[187](index=187&type=chunk) [Other Information](index=56&type=section&id=Item%205.%20Other%20Information) During the third quarter of 2023, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended September 30, 2023[187](index=187&type=chunk) [Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and the financial statements formatted in Inline XBRL - Exhibits filed include: - CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 & 906) - Financial statements in Inline XBRL format[189](index=189&type=chunk)

The Timken Company (NYSE:TKR) Q3 2023 Earnings Conference Call November 1, 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 David Raso - Evercore ISI Robert Wertheimer - Melius Research Jacob Moore - KeyBanc Capital Markets Timothy Thein - Citi Michael Feniger - Bank of America Operator Good morning and welcome to Timken's Third Quarter Earnings Release Conference Call. My ...

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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 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) (State or other jurisdiction of incorporation or organ ...