TIMKEN CO
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 30, 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-Q
Period ended 2024-09-30; filed 2024-11-05.
0000098362-24-000132
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0000098362-25-000080
Item 2. 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 139 previous paragraphs and 128 current paragraphs.
61 unchanged; 51 reworded; 16 added; 24 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 33 previous and 19 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 (16)
Current report
Net income decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to the impact of lower volume, higher manufacturing costs, higher impairment and restructuring charges, unfavorable price/mix and the unfavorable impact of foreign currency exchange rate changes, partially offset by lower tax expense and the benefit of acquisitions.
Current report
In early 2025, the United States government announced the imposition of import tariffs on all countries. The baseline reciprocal tariff is 10%, with higher tariffs imposed on certain countries like China, Mexico and Canada, and sectors like steel, aluminum and automotive. The Company is taking steps to mitigate the increased costs from incremental tariffs through pricing, surcharges and other actions. Timken is also monitoring the impact that tariffs could have on global economic demand. The Company currently expects that tariffs and the related macroeconomic effects will adversely impact operating income in 2025.
Current report
Operating income decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to the impact of lower volume, higher manufacturing costs, higher impairment and restructuring charges, unfavorable price/mix and the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions.
Current report
•Selling, general and administrative ("SG&A") expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to the favorable impact of foreign currency exchange rates and reduced discretionary spending to align with the lower demand levels.
Current report
•Impairment and restructuring charges were higher for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to severance related to the CEO transition during the three months ended March 31, 2025.
Current report
The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $22.4 million or 2.8% in the three months ended March 31, 2025 compared with the three months ended March 31, 2024. The decrease was primarily driven by lower demand across most market sectors, with auto/truck and heavy industries sectors posting the largest declines, partially offset by higher renewable energy demand.
Current report
Adjusted EBITDA for the Engineered Bearings segment decreased for the three months ended March 31, 2025 by $22.2 million or 12.2% compared with the three months ended March 31, 2024, primarily due to the impact of lower volume, unfavorable price/mix and unfavorable foreign currency exchange rate changes.
Current report
•Cost of products sold decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to the impact of foreign currency exchange rate changes of $14 million and the impact of lower volume of $7 million.
Current report
•SG&A expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 driven primarily by the favorable impact of foreign currency exchange rate changes and reduced discretionary spending.
Current report
Adjusted EBITDA decreased $15.0 million or 18.3% for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to the impact of lower volume and higher manufacturing costs, partially offset by the benefit of acquisitions and lower SG&A expenses.
Current report
•Cost of products sold increased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to the impact of higher manufacturing costs of $10 million and the incremental cost of goods sold from acquisitions of $8 million, partially offset by the impact of lower volume of $5 million.
Current report
•SG&A expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to reduced discretionary spending, partially offset by the incremental SG&A expense from acquisitions.
Current report
On September 5, 2024, the Company's Board appointed Tarak B. Mehta President and CEO of the Company and appointed Richard G. Kyle Advisor to the CEO. Mr. Mehta succeeded Mr. Kyle, who had served as Timken’s President and CEO since 2014. On March 31, 2025, Timken announced that the Company and Mr. Mehta had mutually agreed that Mr. Mehta would depart from the Company, including resigning as a member of the Company’s Board, effective immediately. The Company also announced that the Board had appointed Mr. Kyle as the interim President and CEO of the Company, effective immediately. During the three months ended March 31, 2025, the Company recorded severance of $9.3 million, plus related taxes, for Mr. Mehta's settlement arrangement and release of claims. Approximately two-thirds of this amount is expected to be paid in 2025, with the remaining amounts paid in 2026 and 2027.
Current report
(6) Represents the noncontrolling interest impact of the adjustments listed above, as well as the reversal of uncertain tax positions related to Timken India Limited.
Current report
(6) On March 31, 2025, the Company announced that Tarak B. Mehta, President and CEO of the Company would be departing from the Company, effective immediately, and Richard G. Kyle will be serving as interim President and CEO. During 2024, the Company announced that Mr. Kyle, President and CEO of the Company would be retiring from his position as CEO as of February 15, 2025 and that Mr. Mehta would be appointed CEO on September 5, 2024. CEO succession expenses for the twelve months ended March 31, 2025 relate to the cost of the settlement agreement with Mr. Mehta in connection with his departure, net of stock compensation expense for stock awards forfeited, plus the acceleration of certain stock compensation awards for Mr. Kyle in connection with his retirement, and other one-time costs associated with the transition in 2024.
Current report
•the rapidly evolving global regulatory landscape and the corresponding heightened operational complexity and compliance risks;
Removed paragraphs (24)
Previous report
The following items highlight some of the Company's more significant strategic accomplishments during the nine months ended September 30, 2024:
Previous report
•On September 9, 2024, the Company acquired 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.
Previous report
•The Company paid its 409 th consecutive quarterly dividend in the third quarter. During the second quarter, Timken increased its quarterly dividend by 3%. The Company also repurchased 0.4 million common shares during the nine months ended September 30, 2024.
Previous report
Net income decreased for the three months ended September 30, 2024 compared with the three months ended September 30, 2023 primarily due to the impact of lower volume, higher logistics costs, the unfavorable impact of foreign currency exchange rate changes, and higher selling, general, and administrative (SG&A) costs, partially offset by the gain on the sale of a former bearing manufacturing plant, favorable price/mix, lower impairment and restructuring charges and the benefit of acquisitions (net of divestitures). Net income decreased for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023 primarily due to the impact of lower volume, the unfavorable impact of foreign currency exchange rate changes, and higher interest expense, partially offset by favorable price/mix, lower impairment charges, the benefit of acquisitions (net of divestitures), the gain on the sale of a former bearing manufacturing plant, and lower manufacturing and SG&A costs.
Previous report
Operating income decreased for the three months ended September 30, 2024 compared with the three months ended September 30, 2023, due to the unfavorable impact of lower sales net of cost of products sold, higher SG&A expenses, and increased amortization expense, offset partially by the gain on the sale of a former bearing manufacturing plant and lower impairment and restructuring charges. Operating income decreased for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023, due to the unfavorable impact of lower sales net of cost of products sold, higher SG&A expenses, and increased amortization expense, partially offset by lower impairment and restructuring charges and the gain on the sale of a former bearing manufacturing plant.
Previous report
•SG&A expenses increased for the three months ended September 30, 2024 compared with the three months ended September 30, 2023, primarily due to the impact of acquisitions and bad debt expense. SG&A expenses increased for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023, primarily due to the impact of acquisitions and bad debt expense, partially offset by the reduced discretionary spending to align with the lower demand levels, and reduced compensation expense.
Previous report
•Amortization of intangible assets increased for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023, primarily due to the addition of intangible assets from the six acquisitions that were completed during 2023, as well as the CGI acquisition, which was completed in the third quarter of 2024. Refer to Note 3 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.
Previous report
•Impairment and restructuring charges were lower for the three months ended September 30, 2024 compared with the three months ended September 30, 2023, primarily due to impairment charges for the closure of the plant in Gaffney, South Carolina, during the three months ended September 30, 2023. Impairment and restructuring charges were lower for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023, primarily due to impairment charges of $28.3 million related to the goodwill impairment recorded in the Industrial Motion segment during the first quarter of 2023, partially offset by the impairment of certain engineering-related assets used in the Engineered Bearing Segment during the second quarter of 2024.
Previous report
•Gain on sale of real estate for the three and nine months ended September 30, 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 three months ended September 30, 2024. Refer to Note 3 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.
Previous report
The increase in interest income for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023 was due to increased cash levels and higher average interest rates.
Previous report
The increase in non-service pension and other postretirement expense for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023 was due to pension remeasurement gains recognized during 2023. Refer to Note 16 - Retirement Benefit Plans and Note 17 - Other Postretirement Benefit Plans in the Notes to the Consolidated Financial Statements for additional information.
Previous report
The change in other (expense) income for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023 was primarily driven by net foreign currency losses in the current year periods of $5.4 million and $11.0 million, respectively. In addition, a gain of $4.8 million on the divestiture of SE Setco, a 50% owned joint venture, was recognized during the nine months ended September 30, 2023.
Previous report
•The Company acquired Lagersmit during the fourth quarter of 2023. Results for Lagersmit are reported in the Industrial Motion segment.
Previous report
•The Company acquired iMECH during the fourth quarter of 2023. Results for iMECH are reported in the Engineered Bearings segment.
Previous report
•The Company completed the sale of TWB during the fourth quarter of 2023. Results for TWB were reported in the Engineered Bearings segment.
Previous report
•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.
Previous report
•The Company acquired Nadella during the second quarter of 2023. Results for Nadella are reported in the Industrial Motion segment.
Previous report
•The Company acquired ARB during the first quarter of 2023. Results for ARB are reported in the Engineered Bearings segment.
Previous report
The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $28.2 million or 3.6% in the three months ended September 30, 2024 compared with the three months ended September 30, 2023. The decrease was primarily driven by lower demand in the renewable energy, off-highway, auto/truck and general & heavy industrial sectors, partially offset by growth in the industrial distribution, rail and aerospace sectors. EBITDA increased by $1.8 million or 1.2% for the three months ended September 30, 2024 compared with the three months ended September 30, 2023, primarily due to the gain on the sale of a former bearing manufacturing facility in Gaffney, South Carolina, the impact of favorable price/mix and lower impairment charges, offset by the impact of lower volume and higher logistics and manufacturing costs.
Previous report
The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $180.8 million or 7.1% in the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023. The decrease was driven by a significant volume decline in the renewable energy sector, and lower volume in the off-highway and general & heavy industrial market sectors, partially offset by higher volume in the rail, aerospace and industrial distribution sectors, and higher pricing. EBITDA decreased by $46.7 million or 8.7% for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023, primarily due to the impact of lower volume and the unfavorable impact of foreign currency exchange rate changes, partially offset by favorable price/mix, improved operating cost performance, the gain on the sale of a former bearing manufacturing facility, lower impairment charges, and the benefit of acquisitions.
Previous report
The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $66.6 million or 5.8% in the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023. The decrease reflects lower volume across most platforms, with linear motion, lubrication systems, belts and chain, and drive systems experiencing the largest decline, partially offset by higher industrial services revenue and favorable pricing. EBITDA increased $24.4 million or 12.2% for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023 primarily due to lower impairment charges, the benefit of acquisitions, and favorable price/mix, partially offset by the impact of lower volume. The lower impairment charges were primarily due to a goodwill impairment recorded in the quarter ended March 31, 2023.
Previous report
On August 16, 2023, the Company entered into a €200 million 2024 Term Loan, maturing on August 16, 2024. Proceeds from the 2024 Term Loan were used to repay borrowings on the Senior Credit Facility and Accounts Receivable Facility, as well as for general corporate purposes. The Company repaid the 2024 Term Loan during the second quarter of 2024.
Previous report
On September 5, 2024, the Board of Directors (the "Board") of the Company appointed Tarak Mehta President and Chief Executive Officer ("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. Mr. Kyle will continue to act as the Company’s principal executive officer through this filing of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2024, after which Mr. Mehta will assume such role. Mr. Kyle will serve as Advisor to the CEO until his scheduled retirement as an employee of the Company on February 15, 2025.
Previous report
Reconciliation of segment EBITDA to segment adjusted EBITDA and segment adjusted EBITDA margin:
Reworded paragraphs (51)
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®, Lagersmit® and CGI. Timken employs more than 19,000 people globally 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 employs approximately 19,000 people globally 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®, 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.
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, encouraging organizational 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
Capital Deployment to Drive Shareholder Value. The Company is focused on providing the highest returns for shareholders through its capital allocation framework, which includes: (1) investing in the core business through capital expenditures, research and development and initiatives to drive profitable organic growth; (2) pursuing strategic acquisitions to broaden its portfolio and capabilities across diverse markets, with a focus on engineered bearings, adjacent industrial motion products and related services; (3) returning capital to shareholders through dividends and share repurchases; and (4) maintaining a strong balance sheet and sufficient liquidity to run the business. As part of this framework, the Company may also restructure, reposition or divest underperforming product lines or assets.
Current wording
Capital Deployment to Drive Shareholder Value. The Company is focused on providing the highest returns for shareholders through its capital allocation framework, which includes: (1) investing in the core business through capital expenditures, research and development and initiatives to drive profitable organic growth; (2) pursuing strategic acquisitions to broaden its portfolio and capabilities across diverse markets, with a focus on engineered bearings, industrial motion products and related services; (3) returning capital to shareholders through dividends and share repurchases; and (4) maintaining a strong balance sheet and sufficient liquidity. As part of this framework, the Company may also restructure, reposition or divest underperforming product lines or assets.
Previous wording
Net sales decreased for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023. The decrease was primarily driven by lower organic 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.
Current wording
Net sales decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024. The decrease was primarily driven by lower end-market demand in both segments, as well as the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions.
Previous wording
The Company expects 2024 full-year revenue to be down approximately 4% compared to 2023, driven by lower demand and unfavorable currency impact, partially offset by the favorable impact from acquisitions (net of divestitures) and favorable pricing. The Company's net earnings are expected to be down in 2024 compared with 2023, primarily due to the impact of lower sales volume, higher operating costs, higher interest expense and a higher income tax rate, partially offset by favorable price/mix, lower impairment and pension remeasurement charges, and the benefit of acquisitions (net of divestitures).
Current wording
As a result, the Company expects 2025 full-year revenues to be down in total compared to 2024, primarily driven by lower demand related to international trade volatility and the impact of unfavorable foreign currency exchange rates, partially offset by favorable pricing and the benefit of acquisitions completed during 2024. The Company's earnings are expected to be down in 2025 compared with 2024, primarily due to the impact of lower organic sales volume, higher tariffs and unfavorable foreign currency exchange rate changes, offset partially by lower operating costs and the favorable impact of acquisitions.
Previous wording
The Company expects to generate a lower amount of cash from operating activities in 2024 compared to 2023 primarily due to lower expected net income. The Company expects capital expenditures to remain flat in 2024 compared to 2023, and relatively in line with 2023 spending as a percentage of sales (4.0%).
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
Net sales decreased for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023. The decrease was driven by lower organic revenue of $33 million and $247 million, respectively (lower volume partially offset by favorable pricing) and the unfavorable impact of foreign currency exchange rate changes of $3 million and $23 million, respectively, partially offset by the favorable impact of acquisitions (net of divestitures) of $21 million and $92 million, respectively. The lower demand in the three and nine months ended September 30, 2024 was experienced across both the Engineered Bearings and Industrial Motion segments.
Current wording
Net sales decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024. The decrease was driven by lower organic revenue of $37 million and the unfavorable impact of foreign currency exchange rate changes of $25 million, partially offset by the favorable impact of acquisitions of $12 million.
Previous wording
•Cost of products sold decreased for the three months ended September 30, 2024 compared with the three months ended September 30, 2023, due to the impact of lower volume of $20 million, partially offset by higher net material and logistics costs of $8 million and the incremental cost of goods sold from acquisitions (net of divestitures) of $6 million. Cost of products sold decreased for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023, due to the impact of lower volume of $138 million, the impact of foreign currency exchange rate changes of $16 million, partially offset by the incremental cost of goods sold from acquisitions (net of divestitures) of $40 million and unfavorable net material and logistics costs of $4 million.
Current wording
•Cost of products sold decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, due to the impact of foreign currency exchange rate changes of $18 million and the impact of lower volume of $12 million, partially offset by higher manufacturing costs of $12 million and the incremental cost of goods sold from acquisitions of $4 million.
Previous wording
The increase in interest expense for the three months ended September 30, 2024 compared with the three months ended September 30, 2023 was due to higher average debt levels and slightly higher average interest rates. The increase in interest expense for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023 was due to increased debt levels and higher average interest rates.
Current wording
The decrease in interest expense for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 was primarily due to lower average debt levels.
Previous wording
Income tax expense decreased $8.7 million and $19.7 million for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023, respectively, due to lower pre-tax earnings and the net favorable impact of discrete items in comparison to the year ago period.
Current wording
Income tax expense decreased $15.8 million for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to lower pre-tax earnings and the net favorable impact of discrete items in comparison to the year ago period. The favorable discrete items in the current period primarily related to the reversal of accruals for uncertain tax positions to account for the expiration of statutes of limitation in jurisdictions outside the United States.
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 Information in 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 Information in the Notes to the Consolidated Financial Statements for the reconciliation of adjusted EBITDA by segment to consolidated income before income taxes.
Previous wording
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 2024 and 2023 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.
Current wording
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 the acquisitions completed in 2024 and foreign currency exchange rate changes. The effects of acquisitions 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 wording
The following item represents the Company's acquisitions and divestitures completed in 2024 and 2023:
Current wording
The following item highlights the Company's acquisition completed in 2024:
Previous wording
•The Company acquired CGI during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment.
Current wording
•The Company acquired CGI, Inc. ("CGI") during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment.
Previous wording
The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $5.0 million or 1.4% in the three months ended September 30, 2024 compared with the three months ended September 30, 2023. The decrease reflects lower demand across most platforms, with lubrication systems experiencing the largest decline, partially offset by growth in the drive systems platform, and favorable pricing. EBITDA increased $0.6 million or 0.9% for the three months ended September 30, 2024 compared with the three months ended September 30, 2023 primarily due to the benefit of acquisitions, partially offset by the impact of lower volume and higher operating costs.
Current wording
The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $14.8 million or 3.8% in the three months ended March 31, 2025 compared with the three months ended March 31, 2024. The decrease reflects lower demand across most platforms, with industrial services and lubrication systems experiencing the largest declines, partially offset by growth in the drive systems platform.
Previous wording
Unallocated corporate expense increased for the three and nine months ended September 30, 2024 compared with the three and nine months ended September 30, 2023 primarily due to unfavorable foreign currency losses in the current year periods of $5.4 million and $11.0 million, respectively.
Current wording
Unallocated corporate expense increased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to an increase in compensation expense.
Previous wording
The decrease in net cash provided by operating activities for the first nine months of 2024 compared with the first nine months of 2023 was due to the unfavorable impact of working capital items of $80.0 million, a decrease in net income of $45.9 million, lower non-cash impairment charges of $31.2 million, and higher gains from sales of assets of $14.6 million, partially offset by the favorable impact of income taxes on cash of $34.2 million and higher depreciation and amortization of $16.6 million. Refer to the tables below for additional detail of the impact of each line item on net cash provided by operating activities.
Current wording
The increase in net cash provided by operating activities for the first three months of 2025 compared with the first three months of 2024 was due to the favorable impact of working capital items of $48.7 million, partially offset by a decrease in net income of $19.2 million and lower accrued income taxes of $16 million. Refer to the tables below for additional detail of the impact of each line item on net cash provided by operating activities.
Previous wording
The following table displays the impact of working capital items on cash during the first nine months of 2024 and 2023, respectively:
Current wording
The following table displays the impact of working capital items on cash during the first three months of 2025 and 2024:
Previous wording
The following table displays the impact of income taxes on cash during the first nine months of 2024 and 2023, respectively:
Current wording
The following table displays the impact of income taxes on cash during the first three months of 2025 and 2024:
Previous wording
The decrease in net cash used in investing activities for the first nine months of 2024 compared with the first nine months of 2023 was due to a decrease in cash used for acquisitions of $297.0 million, an increase in cash from the net liquidation of short-term marketable securities of $22.1 million, lower capital expenditures of $18.5 million, and higher proceeds from disposals of fixed assets of $15.8 million, offset partially by lower proceeds from divestitures of $4.2 million.
Current wording
The increase in net cash used in investing activities for the first three months of 2025 compared with the first three months of 2024 was due to a decrease in cash from the net liquidation of short-term marketable securities of $18.9 million, partially offset by lower capital expenditures of $8.9 million.
Previous wording
The change in net cash used in/provided by financing activities for the first nine months of 2024 compared with the first nine months of 2023 was due to a decrease in net borrowings of $406.8 million and lower proceeds from the sale of shares of TIL during the 2024 period compared to the 2023 period in the amount of $52.5 million, and the impact of other items (net), partially offset by a decrease in the purchase of treasury shares of $187.0 million.
Current wording
The change in net cash used in financing activities for the first three months of 2025 compared with the first three months of 2024 was due to an increase in the purchase of treasury shares of $23.1 million, partially offset by a decrease in net borrowings of $10.4 million.
Previous wording
At September 30, 2024, the Company had strong liquidity with $412.7 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $778.0 million available under committed credit lines. Of the $412.7 million of cash and cash equivalents, $381.2 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 March 31, 2025, the Company had strong liquidity with $376.1 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $820.0 million available under committed credit lines. Of the $376.1 million of cash and cash equivalents, $355.1 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 Credit Agreement, which is comprised of a $750.0 million Senior Credit Facility and a $400.0 million 2027 Term Loan that each mature on December 5, 2027. The interest rates under the Credit Agreement are based on SOFR. At September 30, 2024, the Company had no outstanding borrowings under the Senior Credit Facility. 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 September 30, 2024, the Company's consolidated net leverage ratio was 2.14 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of September 30, 2024, the Company's consolidated interest coverage ratio was 7.48 to 1.0.
Current wording
On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of a $750.0 million Senior Credit Facility and a $400.0 million 2027 Term Loan that each mature on December 5, 2027. The interest rates under the Credit Agreement are based on SOFR. At March 31, 2025, the Company had no outstanding borrowings under the Senior Credit Facility. The Credit Agreement has two defined 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 March 31, 2025, the Company's consolidated net leverage ratio was 2.17 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of March 31, 2025, the Company's consolidated interest coverage ratio was 7.70 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 6.24% and the average rate on outstanding Euro borrowings was 4.63% as of September 30, 2024. 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 September 30, 2024, the Company carried investment-grade credit ratings with both 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. The average rate on outstanding Euro borrowings was 3.76% over the quarter ending March 31, 2025. There were no U.S. dollar borrowings during the quarter. 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 March 31, 2025, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).
Previous wording
The Company has a $100 million Accounts Receivable Facility, which 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. The Accounts Receivable Facility had no borrowing base limitations at September 30, 2024. As of September 30, 2024, the Company had $72 million of outstanding borrowings under the Accounts Receivable Facility, which reduced the availability to $28 million.
Current wording
The Company has a $100 million Accounts Receivable Facility, which 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. The Accounts Receivable Facility had no borrowing base limitations at March 31, 2025. As of March 31, 2025, the Company had $30 million of outstanding borrowings under the Accounts Receivable Facility, which reduced the availability to $70 million.
Previous wording
Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently provide for borrowings of up to $231.5 million. At September 30, 2024, the Company had borrowings outstanding of $25.9 million and bank guarantees of $2.4 million, which reduced the aggregate availability under these facilities to $203.2 million.
Current wording
Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently provide for borrowings of up to $233.8 million. At March 31, 2025, the Company had borrowings outstanding of $7.4 million and bank guarantees of $0.3 million, which reduced the aggregate availability under these facilities to $226.1 million.
Previous wording
On May 23, 2024, the Company issued 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 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.
Current wording
On May 23, 2024, the Company issued the 2034 Notes in the aggregate principal amount of €600 million with an interest rate of 4.13%, maturing on May 23, 2034. Proceeds from the 2034 Notes were used for the redemption of the 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 lower amount of cash from operating activities in 2024 compared to 2023 primarily due to lower expected net income. The Company expects capital expenditures to remain relatively flat in 2024 compared to 2023 and in line with 2023 spending as a percentage of sales (4.0%).
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
During the first nine months of 2024, the Company made cash contributions and payments of $21.7 million to its global defined benefit pension plans and $1.2 million to its other postretirement benefit plans. The Company expects to make contributions to its global defined benefit plans of approximately $25 million in 2024. The Company expects to make payments of approximately $4 million to its other postretirement benefit plans in 2024. Excluding mark-to-market charges, the Company expects higher pension and other postretirement benefits expense in 2024 compared to 2023 primarily due to lower expected returns on pension plan assets and higher interest expense.
Current wording
During the first three months of 2025, the Company made cash contributions and payments of $23.2 million to its global defined benefit pension plans and $0.6 million to its other postretirement benefit plans. In 2025, the Company expects to make contributions to its global defined benefit pension plans of approximately $36 million and to make payments of approximately $3 million to its other postretirement benefit plans. Excluding actuarial gains and losses, the Company expects higher pension and other postretirement benefits expense in 2025 compared to 2024 primarily due to lower expected returns on pension plan assets and higher interest expense.
Previous wording
The Company's financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company reviews its critical accounting policies throughout the year. The Company has concluded that there have been no significant changes to its critical accounting policies or estimates, as described in its Annual Report on Form 10-K for the year ended December 31, 2023, during the nine months ended September 30, 2024.
Current wording
The Company's financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company reviews its critical accounting policies throughout the year. The Company has concluded that there have been no significant changes to its critical accounting policies or estimates, as described in its Annual Report on Form 10-K for the year ended December 31, 2024, during the three months ended March 31, 2025.
Previous wording
For the nine months ended September 30, 2024, the Company recorded negative foreign currency translation adjustments of $0.2 million that decreased shareholders' equity, compared with negative foreign currency translation adjustments of $63.5 million that decreased shareholders' equity for the nine months ended September 30, 2023. The foreign currency translation adjustments for the nine months ended September 30, 2024 was negatively impacted by the strengthening of the U.S. dollar relative to other foreign currencies, including the Mexican Peso.
Current wording
For the three months ended March 31, 2025, the Company recorded positive foreign currency translation adjustments of $66.5 million that increased shareholders' equity, compared with negative foreign currency translation adjustments of $50.3 million that decreased shareholders' equity for the three months ended March 31, 2024. The foreign currency translation adjustments for the three months ended March 31, 2025 were impacted by the weakening of the U.S. dollar relative to other foreign currencies, including the Euro, the Romanian Leu, and the Brazilian Real.
Previous wording
Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the three months ended September 30, 2024 totaled $6.3 million of net losses, compared with $5.2 million of net losses during the three months ended September 30, 2023. Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the nine months ended September 30, 2024 totaled $9.9 million of net losses, compared with $6.5 million of net losses during the nine months ended September 30, 2023.
Current wording
Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the three months ended March 31, 2025 totaled $1.1 million of net gains, compared with $3.2 million of net losses during the three months ended March 31, 2024.
Previous wording
In addition to results reported in accordance with U.S. GAAP, the Company provides information on non-GAAP financial measures. These non-GAAP financial measures include adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margins, segment adjusted EBITDA and segment adjusted EBITDA margins, ratio of net debt to adjusted EBITDA (for the trailing 12 months), net debt, ratio of net debt to capital and free cash flow. This information is intended to supplement GAAP financial measures and is not intended to replace GAAP financial measures. Net debt and the ratio of net debt to capital is disclosed in the "Liquidity and Capital Resources" section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
Current wording
In addition to results reported in accordance with U.S. GAAP, the Company provides information on non-GAAP financial measures. These non-GAAP financial measures include adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margins, ratio of net debt to adjusted EBITDA (for the trailing 12 months), net debt, ratio of net debt to capital, free cash flow and return on invested capital. This information is intended to supplement GAAP financial measures and is not intended to replace GAAP financial measures. Net debt and the ratio of net debt to capital is disclosed in the "Liquidity and Capital Resources" section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
Previous wording
Adjusted net income and adjusted earnings per share represent net income attributable to The Timken Company and diluted earnings per share, respectively, adjusted for intangible amortization, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, the income tax impact of these adjustments, as well as other discrete income tax items, and other items from time to time that are not part of the Company's core operations. Management believes adjusted net income and adjusted earnings per share are useful to investors as they are representative of the Company's core operations and are used in the management of the business.
Current wording
Adjusted net income and adjusted earnings per share represent net income attributable to The Timken Company and diluted earnings per share, respectively, adjusted for the amortization of intangible assets related to acquisitions, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, the income tax impact of these adjustments, as well as other income tax discrete items, and other items from time to time that are not part of the Company's core operations. Management believes adjusted net income and adjusted earnings per share are useful to investors as they are representative of the Company's core operations and are used in the management of the business.
Previous wording
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for items that are not part of the Company's core operations. These items include intangible amortization, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, and other items from time to time that are not part of the Company's core operations. Management believes adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.
Current wording
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for items that are not part of the Company's core operations. These items include impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, and other items from time to time that are not part of the Company's core operations. Management believes adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.
Previous wording
(1)Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. Impairment, restructuring and reorganization charges for 2023 included $28.3 million related to the impairment of goodwill. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
Current wording
(1)Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
Previous wording
(3)Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.
Current wording
(2)Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.
Previous wording
(4) Represents the net gain resulting from divestitures and sale of certain assets. (Gain) loss on divestitures and sale of certain assets for the third quarter of 2024 included $13.8 million gain related to the sale of the Gaffney, South Carolina plant.
Current wording
(3) Represents the net gain resulting from the sale of certain assets.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
(2) Corporate pension and other postretirement benefit related (income) expense represents actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial gains and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to Note 16 - Retirement Benefit Plans and Note 17 - Other Postretirement Benefit Plansfor additional discussion.
Previous report — wording carried elsewhere
(5) 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.
Previous report — wording carried elsewhere
(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.