TIMKEN CO
For the period ended Dec 31, 2024. Filed Feb 20, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 20, 2025
TKR$102.03+2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-26.
0000098362-24-000042
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-20.
0000098362-25-000055
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 223 previous paragraphs and 200 current paragraphs.
102 unchanged; 74 reworded; 22 added; 44 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 28 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
•On September 9, 2024, the Company acquired CGI, Inc. ("CGI"), a Nevada-based manufacturer of precision drive systems serving a broad range of automation markets with a concentration in medical robotics. CGI employs approximately 130 people and has its headquarters and manufacturing facilities in Carson City, Nevada. CGI will further Timken's strategy to expand and scale its leading industrial motion product portfolio.
Current report
•Executed a CEO succession plan and welcomed Tarak Mehta to Timken as its new president and CEO in September.
Current report
Net sales decreased in 2024 compared to 2023 primarily due to lower organic sales of $276 million (lower demand, favorable pricing) as well as the unfavorable impact of foreign currency exchange of $34 million, partially offset by the favorable impact of acquisitions (net of divestitures) of $114 million.
Current report
•Cost of products sold decreased in 2024 compared to 2023 due to the impact of lower volume of $173 million and the impact of foreign currency exchange rate changes of $22 million, partially offset by the incremental cost of goods sold from acquisitions (net of divestitures) of $37 million, higher manufacturing costs of $28 million and unfavorable net material and logistics costs (net) of $5 million.
Current report
•SG&A expenses increased in 2024 compared to 2023 primarily due to the incremental SG&A expense associated with recent acquisitions. Excluding acquisitions, SG&A expenses were lower in 2024 compared to 2023 primarily due to reduced discretionary spending to align with lower demand levels and the favorable impact of foreign currency, partially offset by increased accruals for potential uncollectible accounts
Current report
•Impairment and restructuring charges decreased significantly in 2024 compared to 2023 primarily due to lower impairment charges. During 2023, the Company recorded a pretax goodwill impairment loss for one of its reporting units in the Industrial Motion segment in the amount of $28.3 million.
Current report
•Gain on sale of real estate for 2024 was due to a gain of $13.8 million on the sale of a former bearing manufacturing plant in Gaffney, South Carolina during the quarter ended September 30, 2024. Refer to Note 8 - Property, Plant and Equipment in the Notes to the Consolidated Financial Statements for additional information.
Current report
The change in the effective rate for 2024 compared with 2023 was an increase of 1.0%. The increase was partially due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21%. The increase was also the result of the 2023 net discrete impact of the accrual of withholding taxes on dividend distributions and favorable U.S. foreign tax credit utilization that did not reoccur in 2024.
Current report
•The Company acquired CGI during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment.
Current report
The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $189.0 million or 5.8% in 2024 compared with 2023, primarily driven by lower demand in China and Europe, partially offset by higher demand in Latin America and India, and higher pricing. Among market sectors, the segment experienced a significant decline in the renewable energy sector and lower demand in the off-highway and general & heavy industrial market sectors, partially offset by higher demand in the industrial distribution, rail, and aerospace sectors.
Current report
Adjusted EBITDA for the Engineered Bearings segment decreased in 2024 by $74.4 million or 10.9% compared with 2023, primarily due to the impact of lower sales net of cost of products sold, partially offset by lower SG&A expenses.
Current report
•Cost of products sold decreased in 2024 compared to 2023 due to the impact of lower volume of $116 million, the impact of foreign currency exchange rate changes of $21 million, and lower incremental cost of goods sold from acquisitions (net of divestitures) of $9 million, partially offset by unfavorable net material and logistics costs of $4 million and higher manufacturing costs of $2 million.
Current report
•SG&A expenses decreased in 2024 compared to 2023 driven primarily by lower compensation expense, reduced discretionary spending and the favorable impact of foreign currency.
Current report
•Depreciation and amortization increased slightly in 2024 compared to 2023 primarily due to the addition of property, plant and equipment assets from capital projects in China and the Americas.
Current report
The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $87.2 million or 5.8% in 2024 compared with 2023, driven primarily by lower end-market demand in Europe and North America, partially offset by higher pricing. Excluding acquisitions, sales were down across most segment platforms with the largest decreases in automatic lubrication systems, linear motion solutions, and belts and chain.
Current report
Adjusted EBITDA decreased $13.3 million or 4.2% in 2024 compared with 2023 primarily due to the impact of lower sales net of cost of products sold and higher SG&A expenses.
Current report
•Depreciation and amortization increased in 2024 compared to 2023 primarily due to the addition of property, plant and equipment assets from acquisitions completed during 2024 and 2023. Refer to Note 2 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.
Current report
(7) On March 26, 2024, the Company announced that Richard G. Kyle, President and Chief Executive Officer (“CEO”) of the Company would be retiring from his position as CEO and that Tarak Mehta would be appointed CEO on September 5, 2024. CEO succession expenses include the acceleration of certain stock compensation awards for Mr. Kyle and other one-time costs associated with the transition.
Current report
(6) On March 26, 2024, the Company announced that Richard G. Kyle, President and CEO of the Company would be retiring from his position as CEO and that Tarak Mehta would be appointed CEO on September 5, 2024. CEO Succession expenses include the acceleration of certain stock compensation awards for Mr. Kyle and other one-time costs associated with the transition.
Current report
CEO Succession:
Current report
On September 5, 2024, the Board of Directors (the "Board") of the Company appointed Tarak Mehta President and CEO of the Company and appointed Richard G. Kyle Advisor to the CEO. Mr. Mehta is an accomplished industry veteran who most recently served as President of the Motion business and a member of the Group Executive Committee at ABB Ltd. He succeeds Richard G. Kyle, who has served as Timken’s President and CEO since 2014.
Current report
(j)the rapidly evolving global regulatory landscape and the corresponding heightened operational complexity and compliance risks;
Removed paragraphs (44)
Previous report
•Throughout the year, the Company continued to advance its manufacturing footprint initiatives to support growth, and improve competitiveness and customer service. Timken began construction of a new facility on its manufacturing campus in Guanajuato, Mexico. The increased capacity will allow for the introduction of industrial motion operations, specifically belt manufacturing, to complement existing engineered bearing capabilities at the site. The Company also began construction of a new manufacturing facility to produce spherical and cylindrical roller bearings on its Bharuch, India, campus. Both facilities are expected to begin operations in 2025.
Previous report
•Timken enhanced its industry-leading engineered bearings portfolio through the acquisitions of American Roller Bearing Company ("ARB") in January and Engineered Solutions Group ("iMECH") in November.
Previous report
◦ARB is a U.S.-based manufacturer of industrial bearings that boasts a large U.S. installed base and strong aftermarket business. ARB reported revenues of approximately $40 million for the full year of 2023.
Previous report
◦iMECH is a North America-based manufacturer of thrust bearings, radial bearings, specialty coatings and other components primarily used in the energy industry. iMECH's full year 2023 revenues were approximately $25 million.
Previous report
•The Company continued to scale and expand its industrial motion portfolio through the acquisitions of Leonardo Top S.a.r.l. ("Nadella") in April, Rosa Sistemi S.p.A. ("Rosa") and D-C Filtration Holdings Corp. ("Des-Case") in September, and Lagersmit Holding B.V. ("Lagersmit") in December.
Previous report
◦Nadella is a Europe-based manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions. Nadella reported full year 2023 revenues of approximately $105 million.
Previous report
◦Rosa is a Europe-based designer and manufacturer of roller guideways, linear bearings, customized linear systems and actuators, commercialized ball guideways and precision ball screws. Rosa had full year 2023 revenues of approximately $15 million.
Previous report
◦Des-Case is a U.S.-based manufacturer of specialty filtration products for industrial lubricants. Des-Case had full year 2023 revenues of approximately $40 million.
Previous report
◦Lagersmit is a Europe-based manufacturer of highly engineered sealing solutions for marine, dredging, water, tidal energy and other industrial applications. Lagersmit had full year 2023 revenues of approximately $40 million.
Previous report
•The Company deployed over $1.1 billion of capital in 2023 across capital expenditures, acquisitions, dividends and share repurchases to advance its strategy and create shareholder value.
Previous report
Net sales increased in 2023 compared to 2022 primarily due to the favorable impact of acquisitions (net of divestitures) of $246 million and higher organic sales of $50 million (favorable pricing, lower volume), partially offset by the unfavorable impact of foreign currency exchange rate changes of $23 million.
Previous report
•Impairment and restructuring charges were relatively unchanged in 2023 compared to 2022. The current period included the impairment of goodwill and restructuring costs related to ongoing plant rationalization initiatives. During the first quarter of 2023, the Company reviewed the goodwill at its reporting units due to the change in reporting segments that went into effect on January 1, 2023. As a result of this analysis, a pretax impairment loss of $28.3 million was recorded in the first quarter of 2023. The prior period included impairment charges of $29.3 million related to the sale of the Timken Aerospace Drives Systems, LLC ("ADS") business, which was completed in the fourth quarter of 2022, as well as restructuring costs related to ongoing plant rationalization initiatives.
Previous report
The change in the effective rate for 2023 compared with 2022 was a decrease of 1.2%. The decrease was primarily due to the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring which was partially offset by withholding taxes accrued on planned dividend distributions expected in 2024 and prior year discrete release of accruals for uncertain tax positions.
Previous report
Effective January 1, 2023, the Company began operating under new reportable segments. The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. Segment results for 2022 and 2021 have been revised to conform to the 2023 presentation of segments.
Previous report
•The Company acquired GGB during the fourth quarter of 2022. Results for GGB are reported in the Engineered Bearings segment.
Previous report
•The Company completed the sale of ADS during the fourth quarter of 2022. Results for ADS were reported in the Industrial Motion segment.
Previous report
•The Company completed the sale of Timken-Rus Service Company ooo ("Timken Russia") during the third quarter of 2022. Results for Timken Russia were reported in the Engineered Bearings segment.
Previous report
•The Company acquired Spinea, s.r.o. ("Spinea") during the second quarter of 2022. Results for Spinea are reported in the Industrial Motion segment.
Previous report
The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $3.4 million or 0.1% in 2023 compared with 2022, as higher pricing across the segment was almost fully offset by lower sales volumes. Within the sectors, sales volumes were higher in rail and heavy industries compared to 2022, relatively flat in renewable energy, and lower in distribution, off highway, on-highway auto/truck, and general industrial. EBITDA increased in 2023 by $45.9 million or 7.5% compared with 2022, primarily due to favorable price/mix, lower material and logistics costs and the benefit of acquisitions net of divestitures, partially offset by higher manufacturing and SG&A costs, lower volume, and the unfavorable impact of foreign currency exchange rate changes.
Previous report
The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $46.3 million or 3.3% in 2023 compared with 2022. The increase reflects higher pricing across the segments, as well as higher sales volume. Within the segment's platforms, sales volumes were higher in drive systems and services and automatic lubrication systems, and lower in belts and chain, linear motion, and couplings, clutches and brakes. EBITDA increased $39.2 million or 17.6% in 2023 compared with 2022 primarily due to favorable price/mix, lower material and logistics costs, partially offset by higher SG&A expenses.
Previous report
2022 vs. 2021
Previous report
BUSINESS SEGMENTS
Previous report
•The Company acquired GGB during the fourth quarter of 2022. Results for GGB are reported in the Engineered Bearings segment.
Previous report
•The Company completed the sale of ADS during the fourth quarter of 2022. The results for ADS were reported in the Industrial Motion segment.
Previous report
•The Company completed the sale of Timken Russia during the third quarter of 2022. Results for Timken Russia were reported in the Engineered Bearings segment.
Previous report
•The Company acquired Spinea during the second quarter of 2022. The results for Spinea are reported in the Industrial Motion segment.
Previous report
•The Company acquired Intelligent Machine Solutions (“iMS”) during the third quarter of 2021. The results for iMS are reported in the Industrial Motion segment.
Previous report
Engineered Bearings Segment:
Previous report
The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $353.0 million or 12.5% in 2022 compared with 2021, reflecting higher demand and higher pricing across most of the segment, partially offset by lower sales volume in the aerospace sector. EBITDA increased in 2022 by $102.4 million or 19.9% compared with 2021, primarily due to favorable price/mix and the impact of higher sales volume, partially offset by higher operating costs and higher impairment and restructuring charges.
Previous report
Industrial Motion Segment:
Previous report
The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $125.0 million or 9.5% in 2022 compared with 2021, reflecting higher pricing and higher sales volume in the drive systems and services, coupling, clutches and brakes, linear motion, and lubrication platforms. EBITDA decreased in 2022 by $10.2 million or 4.4% compared with 2021, primarily due to higher operating costs, higher impairment charges and the unfavorable impact of foreign currency exchange rate changes, partially offset by favorable price/mix and higher volume.
Previous report
Unallocated Corporate:
Previous report
Unallocated corporate expense increased in 2022 compared with 2021 primarily due to higher compensation costs (including incentive-based compensation) and other spending to support increased business activity levels, partially offset by the impact of foreign currency exchange gains in 2022 as compared with foreign currency exchange losses in the prior year.
Previous report
Inventory:
Previous report
Inventories are valued at the lower of cost or market, with approximately 62% valued by the first-in, first-out ("FIFO") method and the remaining 38% valued by the last-in, first-out ("LIFO") method. The majority of the Company’s domestic inventories are valued by the LIFO method, while substantially all of the Company’s international inventories are valued by the FIFO method. An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation. The Company recognized an increase in its LIFO reserve of $3.3 million during 2023 compared to an increase in its LIFO reserve of $36.0 million during 2022.
Previous report
As of December 31, 2023, the Company had $146.4 million of indefinite-lived intangible assets on its Consolidated Balance Sheet. The Company’s indefinite-lived intangible assets primarily consist of acquired trade names. The Company chose to perform a quantitative impairment analysis in the annual impairment testing of indefinite-lived intangible assets. The Company prepares its quantitative indefinite-lived intangible analysis by comparing the estimated fair value of each indefinite-lived intangible asset, using a relief from royalty method, with its carrying value. The relief from royalty method requires several assumptions including future sales growth, terminal revenue growth rate, royalty rate and discount rate. During the fourth quarter of 2023, the Company used discount rates for its indefinite-lived intangible assets in the range of 10.7% to 14.5%, royalty rates in the range of 1.0% to 6.0% and terminal growth rates in the range of 1.0% to 3.5%.
Previous report
Based on the October 1, 2023 quantitative assessment of indefinite-lived intangible assets, there was one indefinite-lived intangible with a carrying value of $28.5 million in which the fair value exceeded the carrying value of this indefinite-lived intangible asset by 10% or less.
Previous report
Management believes the future sales growth and EBITDA margins in the long-range plan and the discount rate used in the valuations requires use of judgment. If any of the Company's reporting units or indefinite-lived intangible assets do not meet their long-range plan estimates or discount rates increase significantly, the Company could be required to perform an interim goodwill or indefinite-lived intangible asset impairment analysis and record impairment charges in future periods. The assumptions used for the indefinite-lived intangibles with fair values exceeding carrying values of 10% or less are more sensitive to future performance and will be monitored accordingly.
Previous report
Reconciliation of segment EBITDA to segment adjusted EBITDA and segment adjusted EBITDA margin:
Previous report
(5)Russia-related charges include impairments or allowances recorded against certain property, plant and equipment, inventory and trade receivables and write-down of a 51%-owned joint venture ("Russian JV") to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the third quarter of 2022. Refer to Russia Operations in Management Discussion and Analysis below for additional information.
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Reworded paragraphs (74)
Previous wording
The Timken Company designs and manufactures a growing portfolio of engineered bearings and industrial motion products, and related services. With more than a century of knowledge and innovation, the Company continuously improves the reliability and efficiency of global machinery and equipment to move the world forward. The Company’s growing product and services portfolio features many strong industrial brands, such as Timken®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy® and Lagersmit®. Timken posted $4.8 billion in sales in 2023 and employs more than 19,000 people globally, operating in 45 countries. The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. The following further describes these business segments:
Current wording
The Timken Company designs and manufactures a growing portfolio of engineered bearings and industrial motion products, and related services. With more than a century of knowledge and innovation, the Company continuously improves the reliability and efficiency of global machinery and equipment to move the world forward. The Company’s growing product and services portfolio features many strong industrial brands, such as Timken®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy® and Lagersmit®. Timken posted $4.6 billion in sales in 2024 and employs approximately 19,000 people globally, operating in 45 countries. The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. The following further describes these business segments:
Previous wording
•Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, couplings, filtration systems and industrial clutches and brakes that keep systems running efficiently. Industrial Motion also includes industrial drivetrain services, which return equipment to like-new condition. The Industrial Motion portfolio features many strong brands, including Philadelphia Gear®, Cone Drive®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech® and Lagersmit®. Industrial Motion products are used across a broad range of industries, including solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more.
Current wording
•Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, couplings, filtration systems, seals, and industrial clutches and brakes that keep systems running efficiently. Industrial Motion also includes industrial drivetrain services, which return equipment to like-new condition. The Industrial Motion portfolio features many strong brands, including Philadelphia Gear®, Cone Drive®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech®, Lagersmit® and CGI. Industrial Motion products are used across a broad range of industries, including solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more.
Previous wording
Timken creates value by understanding customer needs and applying its know-how to serve a broad range of customers in attractive markets and industries across the globe. The Company’s business strengths include its product technology, end-market diversity, geographic reach and aftermarket mix. Timken collaborates with OEMs to improve equipment efficiency with its engineered products and captures subsequent equipment replacement cycles by selling largely through independent channels in the aftermarket. Timken focuses its international efforts and footprint in regions of the world where strong macroeconomic factors such as urbanization, infrastructure development and sustainability create demand for its products and services.
Current wording
Timken creates value by understanding customer needs and applying its know-how to serve a broad range of customers in attractive markets and industries across the globe. The Company’s business strengths include its product technology, end-market diversity, geographic reach and aftermarket mix. Timken collaborates with OEMs to improve equipment efficiency with its engineered products and captures subsequent equipment replacement cycles by selling largely through independent channels in the aftermarket. Timken focuses its international efforts and footprint in regions of the world where strong macroeconomic factors such as urbanization, infrastructure development, industrialization and sustainability create demand for its products and services.
Previous wording
Operational Excellence. Timken operates with a relentless drive for exceptional results and a passion for superior execution. The Company embraces a continuous improvement culture that is charged with increasing efficiency, lowering costs, eliminating waste, driving organizational advancement and agility, and building greater brand equity to fuel growth. This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world.
Current wording
Operational Excellence. Timken operates with a relentless drive for exceptional results and a passion for superior execution. The Company embraces a continuous improvement culture that is charged with increasing efficiency, lowering costs, eliminating waste, increasing cash flow, driving organizational advancement and agility, and building greater brand equity to fuel growth. This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world.
Previous wording
•In September, Timken issued its annual CSR report, including an update on progress towards its 2030 environmental emissions target, as well as its ongoing efforts to improve the lives of individuals and communities and build a more efficient and resilient world.
Current wording
•In August, Timken issued its annual CSR report, highlighting the Company's progress towards its target to reduce aggregate Scope 1 and Scope 2 greenhouse gas (GHG) emissions intensity by 50 percent by 2030, as well as providing an update on the company's actions to improve the lives of individuals and communities, benefit the planet and strengthen its business.
Previous wording
•Timken increased its quarterly dividend by 6% in the second quarter and paid its 406th consecutive quarterly dividend in the fourth quarter. The Company achieved ten straight years of higher annual dividends in 2023. Timken also repurchased 3.2 million common shares, or over 4% of its outstanding common shares, during the year.
Current wording
•Timken increased its quarterly dividend by 3% in the second quarter and paid its 410th consecutive quarterly dividend in the fourth quarter. The Company achieved eleven straight years of higher annual dividends in 2024. Timken also repurchased half a million common shares during the year.
Previous wording
•Throughout 2023, Timken received third-party recognition for the role it plays as a global industrial leader, responsible corporate citizen, innovator and employer of choice. The Company was named one of America’s Best Large Employers by Forbes, one of the World's Most Ethical Companies® for the 12th time by Ethisphere, and one of America's Most Innovative Companies by Fortune magazine and market and consumer data provider Statista.
Current wording
•Throughout 2024, Timken received third-party recognition for the role it plays as a global industrial leader, responsible corporate citizen, innovator and employer of choice. The Company was named one of the World's Most Ethical Companies® for the 13th time by Ethisphere, one of America's Most Responsible Companies for the 5th year in a row by Newsweek and Statista, one of the Best Companies to Work For by U.S. News & World Report, and one of the World's Most Innovative Companies by Fast Company.
Previous wording
The increase in net sales was primarily driven by the benefit of acquisitions net of divestitures and higher organic sales (favorable pricing, lower volume), partially offset by the unfavorable impact of foreign currency exchange rate changes. The decrease in net income was primarily due to the impact of lower volume, higher operating costs, the unfavorable impact of foreign currency exchange rate changes, higher pension remeasurement charges, and an increase in net interest expense, partially offset by favorable price/mix.
Current wording
The decrease in net sales was primarily driven by lower demand in China and Europe, and the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions (net of divestitures) and favorable pricing. The decrease in net income was primarily due to the impact of lower volume, higher manufacturing costs, the unfavorable impact of foreign currency exchange rate changes, and an increase in net interest expense, partially offset by favorable price/mix, lower impairment and pension remeasurement charges and a gain on the sale of certain real estate.
Previous wording
The Company expects 2024 full-year revenue to be down in the range of 2.5% to 4.5% in total compared to 2023, as the benefit of acquisitions net of divestitures completed during 2023 is expected to be more than offset by lower anticipated organic revenue based on the current demand environment. The Company's earnings are expected to be down in 2024 compared with 2023, primarily due to the impact of lower sales volume, offset partially by lower anticipated pension remeasurement and impairment charges and the favorable impact of acquisitions, including reduced acquisition related charges.
Current wording
The Company expects 2025 full-year revenue to range from down 4% to 1% in total compared to 2024, primarily driven by the unfavorable impact of foreign currency exchange rates and lower demand in Europe, partially offset by the benefit of acquisitions completed during 2024 and slightly favorable pricing. The Company's earnings are expected to be down in 2025 compared with 2024, primarily due to the impact of foreign currency exchange rate changes and lower organic sales volume, offset partially by lower operating costs and the favorable impact of acquisitions.
Previous wording
The Company expects to generate a higher amount of cash from operating activities in 2024 compared to 2023, driven by improved working capital performance and lower cash taxes. The Company expects capital expenditures for 2024 to be similar in amount to 2023 and in the range of 4% of sales.
Current wording
The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance, a lower level of capital expenditures, and lower cash taxes. The Company expects capital expenditures in 2025 to be in the range of 3.5% of sales.
Previous wording
Operating income increased in 2023 compared to 2022 due to favorable impact of higher sales net of cost of products sold, partially offset by higher selling, general and administrative ("SG&A") expenses, increased amortization expense and higher impairment and restructuring charges.
Current wording
Operating income decreased in 2024 compared to 2023 due to the impact of lower sales net of cost of products sold, higher selling, general and administrative ("SG&A") expenses, and increased amortization expense, partially offset by lower impairment and restructuring charges.
Previous wording
•Amortization of intangible assets increased in 2023 compared to 2022 due to the addition of intangible assets from the six acquisitions that were completed during 2023, as well as the GGB Bearing Technology ("GGB") acquisition, which was completed in the fourth quarter of 2022. Refer to Note 2 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.
Current wording
•Amortization of intangible assets increased in 2024 compared to 2023 due to the addition of intangible assets from the acquisitions, which were completed in 2024 and 2023. Refer to Note 2 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.
Previous wording
Interest expense increased in 2023 compared to 2022, primarily due to increased debt levels and higher average interest rates.
Current wording
Interest expense increased in 2024 compared to 2023, primarily due to higher average debt levels during the year and higher average interest rates. Interest income increased in 2024 compared to 2023, primarily due to higher average cash levels during the year and improved returns on invested cash.
Previous wording
The change in non-service pension and other postretirement expense and income was primarily due to higher net actuarial losses ("mark-to-market" charges) recorded in 2023 compared to 2022, as well as lower expected returns on pension assets and higher interest expense. In 2023, $20.6 million of mark-to-market charges were recognized, compared to $2.9 million of mark-to-market charges in 2022. Refer to Note 17 - Retirement Benefit Plansand Note 18 - Other Postretirement Benefit Plansin the Notes to the Consolidated Financial Statements for more information.
Current wording
The change in non-service pension and other postretirement expense and income was primarily due to net actuarial ("mark-to-market") gains recorded in 2024 compared to net actuarial losses in 2023. In 2024, the Company recognized $1.3 million of net mark-to-market gains, compared to $20.6 million of net mark-to-market charges in 2023. Refer to Note 17 - Retirement Benefit Plansand Note 18 - Other Postretirement Benefit Plansin the Notes to the Consolidated Financial Statements for more information.
Previous wording
The change in other (expense) income was due to net foreign currency transaction losses recognized in 2023, compared to net foreign currency transaction gains in 2022. In addition, the current period includes a gain on the divestiture of S.E. Setco Service Company, LLC ("SE Setco"), a 50%-owned joint venture.
Current wording
The change in other expense, net was primarily due to higher foreign currency exchange losses recognized in 2024 compared to 2023. In addition, 2023 includes a gain on the divestiture of S.E. Setco Service Company, LLC ("SE Setco"), a formerly 50%-owned joint venture, partially offset by the non-cash impact of deconsolidating the Company's 51%-owned joint venture in Russia ("Russian JV").
Previous wording
The effective tax rate for 2022 was 24.3%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21%. This was partially offset by the release of accruals for uncertain tax positions and favorable U.S. permanent book-tax differences.
Current wording
The effective tax rate for 2024 was 24.1%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21% and U.S. state and local income taxes. This was partially offset by the release of accruals for uncertain tax positions.
Previous wording
The effective tax rate for 2023 was 23.1%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21% and withholding taxes accrued on planned dividend distributions expected in 2024. This was partially offset by the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring.
Current wording
The effective tax rate for 2023 was 23.1%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21% and withholding taxes accrued on planned dividend distributions in 2024. This was partially offset by the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring.
Previous wording
Refer to Note 5 - Income Taxesin the Notes to the Consolidated Financial Statements for more information on the computation of the income tax expense in interim periods.
Current wording
Refer to Note 5 - Income Taxes in the Notes to the Consolidated Financial Statements for more information on the computation of the income tax expense in interim periods.
Previous wording
The Company's reportable segments are product-based business groups that serve customers in diverse industrial markets. The primary measurement used by management to measure the financial performance of each segment is EBITDA. Refer to Note 4 - Segment Informationin the Notes to the Consolidated Financial Statements for the reconciliation of EBITDA by segment to consolidated income before income taxes.
Current wording
The Company's reportable segments are product-based business groups that serve customers in diverse industrial markets. The primary measurement used by management to measure the financial performance of each segment is adjusted EBITDA. Refer to Note 4 - Segment Informationin the Notes to the Consolidated Financial Statements for the reconciliation of adjusted EBITDA by segment to consolidated income before income taxes.
Previous wording
•The Company acquired Lagersmit during the fourth quarter of 2023. Results for Lagersmit are reported in the Industrial Motion segment.
Current wording
•The Company acquired Lagersmit Holding B.V. ("Lagersmit") during the fourth quarter of 2023. Results for Lagersmit are reported in the Industrial Motion segment.
Previous wording
•The Company acquired iMECH during the fourth quarter of 2023. Results for iMECH are reported in the Engineered Bearings segment.
Current wording
•The Company acquired Engineered Solutions Group ("iMECH") during the fourth quarter of 2023. Results for iMECH are reported in the Engineered Bearings segment.
Previous wording
•The Company acquired Rosa and Des-Case during the third quarter of 2023. Results for Rosa and Des-Case are reported in the Industrial Motion segment.
Current wording
•The Company acquired Rosa Sistemi S.p.A.("Rosa") and D-C Filtrations Holding Corp. ("Des-Case") during the third quarter of 2023. Results for Rosa and Des-Case are reported in the Industrial Motion segment.
Previous wording
•The Company acquired Nadella during the second quarter of 2023. Results for Nadella are reported in the Industrial Motion segment.
Current wording
•The Company acquired Leonardo Top S.a.r.l. ("Nadella") during the second quarter of 2023. Results for Nadella are reported in the Industrial Motion segment.
Previous wording
•The Company acquired ARB during the first quarter of 2023. Results for ARB are reported in the Engineered Bearings segment.
Current wording
•The Company acquired American Roller Bearing Company ("ARB") during the first quarter of 2023. Results for ARB are reported in the Engineered Bearings segment.
Previous wording
•Cost of products sold increased in 2023 compared to 2022 due to the incremental cost of goods sold from recent acquisitions (net of divestitures) of $180 million and the impact of foreign currency exchange rate changes of $3 million, partially offset by lower material and logistics costs of $85 million and lower manufacturing costs, including lower volume and the impact of favorable mix, of $3 million.
Current wording
•Cost of products sold increased in 2024 compared to 2023 due to the impact of the incremental cost of goods sold from acquisitions of $63 million and higher manufacturing costs of $26 million, partially offset by the impact of lower volume of $58 million.
Previous wording
•SG&A expenses increased in 2023 compared to 2022 due to the incremental SG&A expense associated with recent acquisitions (net of divestitures), higher compensation costs and increased spending to support ongoing business projects and initiatives, including acquisitions.
Current wording
•SG&A expenses increased in 2024 compared to 2023 due to the incremental SG&A expense associated with recent acquisitions. Excluding acquisitions, SG&A expenses were lower versus 2023 driven primarily by lower discretionary spending.
Previous wording
Unallocated corporate expense increased in 2023 compared with 2022 primarily due to the unfavorable impact of foreign currency transaction gains and losses and the increased spending for professional and other services.
Current wording
Unallocated corporate expense increased in 2024 compared with 2023 primarily due to the unfavorable impact of foreign currency losses of $8.2 million in 2024 compared to $3.7 million in 2023.
Previous wording
The increase in net cash provided by operating activities in 2023 compared with 2022 was primarily due to the favorable impact of working capital items of $161.6 million, as well as the benefit of other items, partially offset by the unfavorable impact of income taxes on cash of $132.7 million due to higher tax payments and a decrease in net income of $9.0 million. Refer to the table below for additional detail of the impact of each line on net cash provided by operating activities.
Current wording
The decrease in net cash provided by operating activities in 2024 compared with 2023 was primarily due to the unfavorable impact of working capital items of $43.7 million, a decrease in net income of $32.7 million, a decrease in impairment charges of $29.7 million, partially offset by the favorable impact of income taxes on cash of $56.5 million due to lower tax payments. Refer to the table below for additional detail of the impact of each line on net cash provided by operating activities.
Previous wording
The following chart displays the impact of working capital items on cash during 2023 and 2022, respectively:
Current wording
The following chart displays the impact of working capital items on cash during 2024 and 2023:
Previous wording
The following table displays the impact of income taxes on cash during 2023 and 2022, respectively:
Current wording
The following table displays the impact of income taxes on cash during 2024 and 2023:
Previous wording
The increase in net cash used in investing activities in 2023 compared with 2022 was primarily due to an increase in cash used for acquisitions of $185.1 million, a decrease in the proceeds from divestitures of $20.4 million, an increase in cash used for net investments in short-term marketable securities of $8.9 million, and an increase in capital expenditures of $9.4 million.
Current wording
The decrease in net cash used in investing activities in 2024 compared with 2023 was primarily due to a decrease in cash used for acquisitions of $471.4 million, a decrease in capital expenditures of $17.8 million and an increase in cash from the net liquidation of short-term marketable securities of $9.5 million.
Previous wording
The change in net cash provided by financing activities in 2023 compared with 2022 was primarily due to cash proceeds of $284.8 million from the sale of shares of TIL, a subsidiary of the Company, in the second quarter of 2023, partially offset by a decrease in net borrowings of $105.0 million and an increase in the purchase of treasury shares of $39.3 million.
Current wording
The change in net cash used in/provided by financing activities in 2024 compared with 2023 was primarily due to a decrease in net borrowings of $686.2 million and lower proceeds from the 2024 sale of shares of Timken India Limited ("TIL") as compared to the 2023 sale in the amount of $52.5 million, partially offset by a decrease in the purchase of treasury shares of $210.4 million.
Previous wording
At December 31, 2023, the Company had strong liquidity with $418.9 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $513.4 million available under committed credit lines. Of the $418.9 million of cash and cash equivalents, $406.3 million resided in jurisdictions outside the United States. Repatriation of non-U.S. cash could be subject to taxes and some portion may be subject to governmental restrictions. Part of the Company's strategy is to grow in attractive market sectors, many of which are outside the United States. This strategy includes making investments in facilities, equipment and potential new acquisitions. The Company plans to fund these investments, as well as meet working capital requirements, with cash and cash equivalents and unused lines of credit within the geographic location of these investments where feasible.
Current wording
At December 31, 2024, the Company had strong liquidity with $373.2 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $843.9 million available under committed credit lines. Of the $373.2 million of cash and cash equivalents, $338.6 million resided in jurisdictions outside the United States. Repatriation of non-U.S. cash could be subject to taxes and some portion may be subject to governmental restrictions. Part of the Company's strategy is to grow in attractive market sectors, many of which are outside the United States. This strategy includes making investments in facilities, equipment and potential new acquisitions. The Company plans to fund these investments, as well as meet working capital requirements, with cash and cash equivalents and unused lines of credit within the geographic location of these investments where feasible.
Previous wording
On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750.0 million unsecured revolving credit facility ("Senior Credit Facility") and a $400 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027. The Credit Amendment amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350 million term loan that was set to mature on September 11, 2023 ("2023 Term Loan"). The Credit Agreement also replaced interest rates based on London Inter-Bank Offered Rate ("LIBOR") with interest rates based on the Secured Overnight Financing Rate ("SOFR"). At December 31, 2023, the Senior Credit Facility had outstanding borrowings of $247.4 million and $1.3 million of letters of credit, which reduced the availability to $501.3 million. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio. The maximum consolidated net leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of December 31, 2023, the Company's consolidated net leverage ratio was 2.09 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of December 31, 2023, the Company's consolidated interest coverage ratio was 9.11 to 1.0.
Current wording
On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750.0 million unsecured revolving credit facility ("Senior Credit Facility") and a $400.0 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027. Interest rates under the Credit Agreement are based on the Secured Overnight Financing Rate ("SOFR"). At December 31, 2024, the Senior Credit Facility had no outstanding borrowings. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio. The maximum consolidated net leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of December 31, 2024, the Company's consolidated net leverage ratio was 2.01 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of December 31, 2024, the Company's consolidated interest coverage ratio was 7.69 to 1.0.
Previous wording
The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating. The average rate on outstanding U.S. dollar borrowings was 6.48% and the average rate on outstanding Euro borrowings was 4.85% as of December 31, 2023. In addition, the Company pays a facility fee based on the applicable rate, which is variable with a spread based on the Company's debt rating, multiplied by the aggregate commitments of all of the lenders under the Senior Credit Facility. As of December 31, 2023, the Company carried investment-grade credit ratings with Moody's (Baa2) and S&P Global (BBB-).
Current wording
The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating. In addition, the Company pays a facility fee based on the applicable rate, which is variable with a spread based on the Company's debt rating, multiplied by the aggregate commitments of all of the lenders under the Senior Credit Facility. As of December 31, 2024, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).
Previous wording
The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 6, 2023. The $100.0 million Accounts Receivable Facility matures on November 30, 2026. The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. These limitations reduced the availability of the Accounts Receivable Facility to $79.1 million at December 31, 2023. As of December 31, 2023, there were $67.0 million outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under this facility to $12.1 million.
Current wording
The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 6, 2023. The $100.0 million Accounts Receivable Facility matures on November 30, 2026. The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. These limitations reduced the availability of the Accounts Receivable Facility to $93.9 million at December 31, 2024. As of December 31, 2024, there were no outstanding borrowings under the Accounts Receivable Facility.
Previous wording
Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently allows for borrowings of up to $232.2 million. At December 31, 2023, the Company had borrowings outstanding of $25.4 million and bank guarantees of $2.1 million, which reduced the aggregate availability under these facilities to $204.7 million.
Current wording
Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently allows for borrowings of up to $226.9 million. At December 31, 2024, the Company had borrowings outstanding of $8.7 million and bank guarantees of $1.6 million, which reduced the aggregate availability under these facilities to $216.6 million.
Previous wording
On March 28, 2022, the Company issued the fixed-rate unsecured senior notes (the "2032 Notes") in the aggregate principal amount of $350 million with an interest rate of 4.125%, maturing on April 1, 2032. Proceeds from the 2032 Notes were used for general corporate purposes, which included repayment of borrowings under the Senior Credit Facility and the Accounts Receivable Facility outstanding at the time of issuance.
Current wording
On May 23, 2024, the Company issued fixed-rate unsecured senior notes ("2034 Notes") in the aggregate principal amount of €600 million with an interest rate of 4.125%, maturing on May 23, 2034. Proceeds from the 2034 Notes were used for the redemption of the Company's outstanding fixed-rate unsecured senior notes ("2024 Notes") in the aggregate principal amount of $350 million that were due to mature on September 1, 2024, as well as the repayment of other debt outstanding at the time of the issuance.
Previous wording
The Company expects to generate a higher amount of cash from operating activities in 2024 compared to 2023, driven by improved working capital performance and lower cash taxes. The Company expects capital expenditures for 2024 to be similar in amount to 2023 and in the range of 4% of sales.
Current wording
The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance, a lower level of capital expenditures, and lower cash taxes. The Company expects capital expenditures in 2025 to be in the range of 3.5% of sales.
Previous wording
In order to maintain minimum funding requirements, the Company is required to make contributions to the trusts established for its defined benefit pension plans and other postretirement benefit plans. The table above shows the expected future minimum cash contributions to the trusts for the funded plans as well as estimated future benefit payments to participants for the unfunded plans. Those minimum funding requirements and estimated benefit payments can vary significantly. The amounts in the table above are based on actuarial estimates using current assumptions for, among other things, discount rates, expected return on assets and health care cost trend rates. During 2023, the Company made cash contributions and payments of $27.1 million to its global defined benefit pension plans and $2.7 million to its other postretirement benefit plans. Refer to Note 17 - Retirement Benefit Plansand Note 18 - Other Postretirement Benefit Plansin the Notes to the Consolidated Financial Statements for additional information.
Current wording
In order to maintain minimum funding requirements, the Company is required to make contributions to the trusts established for its defined benefit pension plans and other postretirement benefit plans. The table above shows the expected future minimum cash contributions to the trusts for the funded plans as well as estimated future benefit payments to participants for the unfunded plans. Those minimum funding requirements and estimated benefit payments can vary significantly. The amounts in the table above are based on actuarial estimates using current assumptions for, among other things, discount rates, expected return on assets and health care cost trend rates. During 2024, the Company made cash contributions and payments of $24.6 million to its global defined benefit pension plans and $1.6 million to its other postretirement benefit plans. Refer to Note 17 - Retirement Benefit Plansand Note 18 - Other Postretirement Benefit Plansin the Notes to the Consolidated Financial Statements for additional information.
Showing the first 40 of 74 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
As of December 31, 2024, the Company had $96.0 million of indefinite-lived intangible assets on its Consolidated Balance Sheet. The Company’s indefinite-lived intangible assets primarily consist of acquired trade names. As mentioned above, accounting guidance permits an entity to first assess qualitative factors to determine whether additional indefinite-lived intangible asset impairment testing is required. The Company chose to utilize this qualitative assessment in the annual impairment testing for all of its indefinite-lived intangible assets in the fourth quarter of 2024. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of these indefinite-lived intangible assets would exceed their respective carrying values.
Current report — wording carried from elsewhere
(4) Represents property loss and related expenses incurred during the periods presented resulting from property loss that occurred during the second quarter of 2024 at one of the Company's plants in Slovakia.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The presentation of segment results below includes a reconciliation of the changes in net sales for each segment reported in accordance with U.S. GAAP to net sales adjusted to remove the effects of acquisitions and divestitures completed in 2022 and 2021 and foreign currency exchange rate changes. The effects of acquisitions, divestitures and foreign currency exchange rate changes on net sales are removed to allow investors and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period.
Previous report — wording carried elsewhere
The following items highlight the Company's acquisitions and divestitures completed in 2022 and 2021:
Previous report — wording carried elsewhere
The Company has outstanding fixed-rate unsecured notes ("2024 Notes") in the aggregate principal amount of $350.0 million with an interest rate of 3.875%, maturing on September 1, 2024. The Company currently intends to refinance the 2024 Notes prior to their maturity.