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 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]

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]

2Q 2025 Earnings Investor Presentation July 30, 2025 The Timken Company Agenda | Introduction | Neil Frohnapple Vice President of Investor Relations | | --- | --- | | Overview and | Rich Kyle | | Business Update | President and Chief Executive Officer | | Financial Review | Phil Fracassa | | | Executive Vice President and Chief Financial Officer | | Q&A | Question and Answer Session | 2 Forward-Looking Statements Safe Harbor and Non-GAAP Financial Information Certain statements in this presentation (includi ...

Core Insights - The Timken Company reported second-quarter 2025 net sales of $1.17 billion, a decrease of 0.8% compared to the same period in 2024, primarily due to lower end-market demand, although partially offset by revenue from the CGI acquisition and favorable pricing [1][12] - The company's net income for the quarter was $78.5 million, or $1.12 per diluted share, down from $96.2 million, or $1.36 per diluted share, in the same quarter last year [2][12] - Adjusted EBITDA for the quarter was $208.2 million, representing 17.7% of sales, compared to $230.2 million, or 19.5% of sales, in the prior year [3][12] Financial Performance - Net income margin decreased to 6.7% from 8.1% year-over-year, while adjusted EPS fell to $1.42 from $1.63, reflecting a 12.9% decline [2][3] - The company generated $111.3 million in net cash from operations and reported free cash flow of $78.2 million [4][12] - Timken returned $47.0 million to shareholders through dividends and share repurchases during the quarter, with a 3% increase in quarterly dividends [4][12] Segment Performance - Engineered Bearings segment sales were $777.4 million, down 0.8% year-over-year, with higher renewable energy demand offset by lower demand in other sectors [5][12] - Industrial Motion segment sales decreased by 0.7% to $396.0 million, with lower demand across most platforms despite contributions from the CGI acquisition [7][12] - Adjusted EBITDA margins for Engineered Bearings and Industrial Motion were 19.7% and 18.3%, respectively, both showing declines from the previous year [6][8] Outlook - The company has revised its full-year 2025 earnings per diluted share forecast to a range of $3.90 to $4.20, with adjusted earnings per diluted share expected to be between $5.10 and $5.40 [9][12] - Timken anticipates a challenging operating environment in the second half of 2025, driven by trade situations and macroeconomic factors [10][12] - Despite current challenges, the company expresses optimism for 2026, planning to position itself for potential industrial market expansion [10][12]

Company Overview - The Timken Company is a global technology leader in engineered bearings and industrial motion, with a focus on designing next-generation products for diverse industries [3] - The company has been operational for over 125 years, leveraging specialized expertise to innovate and create customer-centric solutions that enhance reliability and efficiency [3] - In 2024, Timken reported sales of $4.6 billion and employs approximately 19,000 people across 45 countries [3] Upcoming Financial Results - Timken will release its 2025 second-quarter financial results on July 30, 2025, prior to the opening of the New York Stock Exchange [1] - A conference call will be held on the same day at 11:00 a.m. Eastern Time to discuss the financial performance with investors and securities analysts [2] - Conference call materials and financial results will be accessible online at the company's investor relations website [1][2]

Company Overview and Performance - The Timken Company was founded in 1899 and has been NYSE listed since 1922[9] - In 2024, the company reported revenue of $4.6 billion, adjusted EBITDA of $845 million, and adjusted EPS of $5.79[9] - The adjusted EBITDA margin for 2024 was 18.5%, and free cash flow was $306 million[9] - The company's dividend yield as of December 31, 2024, was 1.9%[9] - In Q1 2025, net sales were $1.14 billion, a decrease of 4.2% compared to Q1 2024[64, 65] - Adjusted EBITDA for Q1 2025 was $208 million, with a margin of 18.2%, down 250 bps from Q1 2024[64, 66] - Adjusted EPS for Q1 2025 was $1.40 per diluted share[64, 67] Business Segments and Strategy - The company operates through two segments: Engineered Bearings (66% of sales) and Industrial Motion (34% of sales)[15] - 56% of sales are from the Americas, 24% from Europe, Mid-East, Africa (EMEA), and 20% from Asia-Pacific in 2024[11] - The company targets organic growth of 4-5% CAGR and inorganic growth of 2-3% CAGR, aiming for a total growth CAGR of 6-8%[102] - The company aims for adjusted EPS CAGR of >10% and adjusted EBITDA margins of +200 bps versus the 2017-2021 period[102] Capital Allocation - The company targets capital expenditures of 3.5-4.0% of sales over the cycle[80] - The company has repurchased approximately 31 million shares for $1.55 billion since 2013, reducing basic shares outstanding by approximately 25%[101] - The company's long-term leverage target is 1.5-2.5x net debt-to-adjusted EBITDA[74, 102]

Financial Data and Key Metrics Changes - The company reported first quarter revenue of $1.14 billion, down 4.2% from the previous year, with adjusted EBITDA margins at 18.2% and adjusted earnings per share at $1.4, both lower than the prior year due to lower volumes and higher manufacturing costs [5][14][20] - Free cash flow increased compared to the prior year, ending the quarter with a solid balance sheet [6][7] Business Line Data and Key Metrics Changes - Engineered Bearings sales were $761 million, down 5.2% year-over-year, with organic sales down 2.8% due to lower demand in Europe and The Americas, partially offset by growth in Asia [22] - Industrial Motion sales were $380 million, down around 2% from last year, with organic sales declining 3.8% as lower demand was partially offset by higher pricing [24] Market Data and Key Metrics Changes - In Asia Pacific, sales increased by 10%, driven by growth in renewable energy demand, while The Americas saw a decline of about 4% and EMEA experienced an 11% drop due to industrial softness in Western Europe [16][17] Company Strategy and Development Direction - The company is focused on maintaining margins and generating strong cash flow during a soft industrial market, with a commitment to deliver $75 million in cost savings in 2025 [10][30] - A strategic review of the automotive OE business is underway, targeting more than half of this segment to improve margins by 2026 and 2027 [13][55] Management's Comments on Operating Environment and Future Outlook - Management noted that industrial market conditions are expected to remain challenging throughout the year, with a cautious view on market demand due to trade-related economic uncertainty [7][29] - The company is confident in its ability to mitigate the impact of tariffs and expects to fully offset the cost impact on a run rate basis by the end of the year [9][33] Other Important Information - The company is actively passing tariff costs into the market through repricing and expects a net direct impact from tariffs of around $25 million this year [9][32] - The CEO transition is ongoing, with a focus on maintaining strategic priorities and financial aspirations during this period [10][81] Q&A Session Summary Question: Guidance update on pricing and volume assumptions - Management indicated that pricing is expected to improve slightly due to tariffs, with a cautious outlook on volume changes, particularly in Industrial Motion [38] Question: Renewable energy trends, particularly in China - Management expressed positive surprise regarding renewable energy demand in Q1, expecting mid-single-digit growth for the full year [40][41] Question: Customer demand pull forward due to tariffs - Management stated there was no significant evidence of customers pulling forward demand in anticipation of tariffs [47][48] Question: Actions in the automotive OE business - The focus is on light vehicles and OEM, with plans to exit a significant portion of the automotive OE business to improve margins [50][55] Question: Pricing relative to competitors and supply chain positioning - Management noted that competitors are also raising prices, and the company's U.S. footprint is seen as advantageous in the current tariff environment [60][61] Question: Impact of tariffs on future earnings - Management confirmed that by the end of the year, the net impact of tariffs should be zero for 2026, with a year-over-year benefit expected [76] Question: Manufacturing footprint and facility status - The Fort Scott facility is not fully closed, and improvements in margins are expected as the company continues to manage its manufacturing footprint [87]

Financial Data and Key Metrics Changes - The company reported first quarter sales of over $1,100,000,000, with organic revenue down approximately 3% year-over-year [6][17] - Adjusted EBITDA margins were 18.2%, and adjusted earnings per share were $1.4, both lower than the previous year due to reduced volumes and higher manufacturing costs [7][17] - Free cash flow increased compared to the prior year, contributing to a solid balance sheet [9] Business Line Data and Key Metrics Changes - Engineered Bearings sales were $761,000,000, down 5.2% from last year, with organic sales down 2.8% due to lower demand in Europe and The Americas [25][26] - Industrial Motion sales were $380,000,000, down around 2%, with organic sales declining 3.8% as lower demand was partially offset by higher pricing [28][29] Market Data and Key Metrics Changes - In Asia Pacific, sales increased by 10%, driven by growth in renewable energy demand, particularly in China [19] - The Americas saw a decline of about 4%, with significant drops in the auto truck and off-highway sectors [19] - EMEA experienced an 11% decrease due to ongoing industrial softness in Western Europe [20] Company Strategy and Development Direction - The company is focused on maintaining profitable growth and operational excellence while navigating a challenging industrial market [12][14] - A comprehensive review of the automotive OE business is underway, targeting a significant portion of this segment to enhance margins by 2026 and 2027 [15][61] - The company aims to deliver $75,000,000 in cost savings for 2025 to offset inflation in labor and other input costs [34] Management's Comments on Operating Environment and Future Outlook - Management noted that industrial market conditions are expected to remain challenging throughout the year, with no significant changes in demand observed [9][10] - The company is actively monitoring the tariff situation and plans to pass costs into the market through repricing [10][11] - There is confidence in the ability to mitigate the impact of tariffs and recover margins over time [11][38] Other Important Information - The company is committed to generating strong cash flow and enhancing profitability through disciplined capital allocation [14][15] - The transition in leadership is not expected to alter the strategic direction, with continuity in the management team [86][88] Q&A Session Summary Question: Guidance update regarding pricing and volume assumptions - Management indicated that pricing is expected to improve slightly due to tariffs, while volume is anticipated to decline, particularly in Industrial Motion [44][45] Question: Trends in renewable energy demand, especially in China - Management expressed positive surprise regarding renewable energy demand in Q1, expecting mid-single-digit growth for the full year [47][48] Question: Impact of tariffs on customer demand - Management stated there was no significant evidence of customers pulling forward demand due to tariffs [54][55] Question: Actions in the automotive OE business - The focus is on light vehicles and OEMs, with plans to exit a significant portion of the automotive OE business to improve margins [57][61] Question: Pricing strategies relative to competitors - Management noted that competitors are also raising prices, and the company is positioned to pass through costs effectively [66][68] Question: Future pricing expectations for raw materials - Management indicated that higher pricing for raw materials is likely to persist into 2026 due to limited capacity in the U.S. market [96][98]

Group 1 - Timken reported revenue of $1.14 billion for the quarter ended March 2025, a decrease of 4.2% year-over-year, with EPS at $1.40 compared to $1.77 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $1.12 billion by 1.61%, while the EPS fell short of the consensus estimate of $1.43 by 2.10% [1] - Timken's stock has returned -5.1% over the past month, underperforming the Zacks S&P 500 composite's -0.2% change, and currently holds a Zacks Rank 5 (Strong Sell) [3] Group 2 - Net Sales for Industrial Motion were reported at $379.60 million, slightly above the average estimate of $370.77 million, representing a year-over-year decline of 2.1% [4] - Net Sales for Engineered Bearings reached $760.70 million, exceeding the estimated $749.02 million, but reflecting a 5.2% decrease compared to the previous year [4] - Adjusted EBITDA for Industrial Motion was $67.10 million, below the average estimate of $71.37 million, while Engineered Bearings reported an Adjusted EBITDA of $159.20 million, surpassing the estimate of $155.62 million [4]