TKR 10-K & 10-Q changes, risk factors and insider trading

TheIn addition, the Company has previously experienced distributor inventory corrections reflecting de-stocking of the supply chain associated with softer demand in certain markets. The Company's results in a period may be adversely impacted by similar customer inventory adjustments in the future, as well as changes in customer buying preferences.

We require substantial amounts of raw materials, including steel, to operate our business. Our supply of raw materials could be and has in the past been interrupted for a variety of reasons, including availability and pricing.pricing (as a result of tariffs or otherwise). Prices for raw materials necessary for production have fluctuated significantly in the past, have risen substantially at times in the past, and could continue to do so in the future. We generally attempt to manage these fluctuations by passing along increased raw material prices to our customers in the form of price increases or surcharges; however, we may be unable to continue to increase the price of our products, or may experience a lag in doing so, due to pricing pressure, contract terms or other factors, which could adversely impact our revenue and profit margins.

We may not realize the improved operating results that we anticipate from past and future acquisitions, may experience challenges in integrating acquired businesses, may fail to timely or fully capture revenue or cost synergies and may incur unanticipated liabilities and costs associated with such acquired businesses.

We seek to grow, in part, through strategic acquisitions, joint ventures and other alliances,arrangements, which are intended to complement or expand our businesses, and expect to continue to do so in the future. These acquisitionstransactions involve challenges and risks. In the event that we do not successfully integrate these acquisitions into our existing operations or timely or fully capture revenue or cost synergies so as to realize the expected return on our investment, issues identified in our due diligence review are not adequately addressed or the costs associated with such issues are higher than expected, or we uncover material issues (including historical environmental, trade, sanctions, tax or compliance violations) that were not identified during our due diligence review, our results of operations, cash flow or financial condition could be adversely affected.

Some of our debt has variable interest rates, which could increase the cost of servicing such debt, and fixed rate debt may have increased costcosts to refinance at maturity.

We have seen interest rates risefluctuate significantly in recent years, and while rates fell in 2024, they may rise again in the future due to inflation or other causes. As a result, the costs of servicing our variable interest rate debt could increase even if the amount borrowed under such facilities remains the same. Increased servicing costs could in turn negatively impact our profitability and cash flow. In addition, fixed rate debt currently outstanding that matures in the future may be refinanced with higher interest rates leading to additional servicing costs.

For those countries outside the U.S. where we have significant sales, a strengthening in the U.S. dollar as we have seen over the past few years or devaluation in the local currency would reduce revenue, operating profit and shareholders' equity due to the impact of foreign exchange translation on our Consolidated Financial Statements. Fluctuations in foreign currency exchange rates may make our products more expensive for others to purchase or increase our operating costs, affecting our competitiveness and our profitability.

•disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act ("FCPA");

The U.S. government has imposed tariffs on certain foreign goods, including steel and other raw materials as well as certain products made from such materials. ChangesThese tariffs have adversely affected our results of operations and profit margins and could continue to do so. Additionally, changes in U.S. trade policy have resulted in, and could further result in, U.S. trading partners adopting responsive trade policies that make it more difficult or costly for us to export our products to those countries. In addition,Furthermore, the governments of other countries in which we have substantial operations could impose tariffs on, or restrict trade in, the materials and components necessary for the production of our products. These measures could result in an increase in our production costs. If we are unable to increase the price of our products or otherwise mitigate these increased costs, it could adversely impact our revenue and profit margins.

Compliance with environmental, health and safety legislation and regulatory requirements may prove to be more limiting and costly than we anticipate. To date, we have committed significant expenditures in our efforts to manage remediation activities and maintain compliance with these requirements at our facilities, and we expect that we will continue to make significant expenditures related to such compliance in the future. From time to time, we may be subject to legal proceedings brought by private parties or governmental authorities with respect to environmental matters, including matters involving alleged noncompliance with or liability arising from environmental, health and safety laws, property damage or personal injury. Actual or alleged violations of environmental, health and safety laws or environmental permit requirements could result in restrictions or prohibitions on operations and substantial civil or criminal fines, as well as, under some environmental, health, and safety laws, the assessment of strict liability and/or joint and several liability. New laws and regulations, including those that may relate to emissions of greenhouse gases or the use, discharge or disposal of chemicals of concern utilized in our manufacturing processes, stricter or expanded enforcement of existing laws and regulations, new and more stringent customer requirements, the discovery of previously unknown contamination or the imposition of new clean-up requirements or standards could require us to incur costs, change production methods or materials or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations.

Certain of our products, including but not limited to certain seals and plain bearings, are known to contain PTFE or other fluoropolymer materials, which are included in certain broad definitions of PFAS. These products represent a relatively small portion of our total product portfolio. PFAS have been increasingly scrutinized due to their potential environmental and health risks and are now the subject of increasing regulatory attention from the Environmental Protection Agency, state governments, the European Union and other regulators. These evolving regulations may restrict the use, manufacture, sale and/or distribution of our products or our ability to obtain components of our products, or may require us to report data on our use of certain PFAS.PFAS or PFAS alternatives. Such regulations could lead to significant costs. In addition, certain PFAS, including PFAS or PFAS alternatives previously or currently within PTFE or other fluoropolymer materials, have increasingly become subject to new or more stringent investigation and remediation requirements where such PFAS is believed to have caused an impact to the environment. Certain of the Company’s operations and facilities have already been, or may in the future become, the subject of formal or informal investigations, enforcement actions or proceedings relating to these regulations or of private or public rights of action for the investigation and remediation of PFAS released into the environment. Such investigations, remediations, other response actions, and any related proceedings could lead to significant costs or limitations on future production in the absence of viable alternatives.

The global regulatory landscape is rapidly evolving and new and potentially conflicting requirements or preferences, including with respect to climate change, environmental sustainability and other matters, could lead to added operational complexity and compliance risks while adversely impacting our costs and financial results. In addition, severe weather associated with a changing climate could negatively impact our operations and those of our customers and suppliers.

The pace at which regulators in many jurisdictions are implementing regulatory change is currently heightened across a wide variety of topics including climate change, environmental sustainability, employment and labor, ethics, data privacy, use of artificial intelligence ("AI"), governance, and others. Rapid changes in the regulatory environment may lead to additional costs of compliance and risks associated with non-compliance. Failure to appropriately adapt to this rapidly evolving landscape may result in liability, sanctions or brand and reputational harm. Furthermore, regulations governing our global operations may at times conflict across jurisdictions leading to additional complexity and operating costs.

In addition, environmental activism, government regulations and reporting standards, and other initiatives aimed at limiting climate change and reducing global greenhouse gas emissions could interfere with our business strategy and operations as well as require material investment in energy efficiency projects, renewable energy sourcing, emission controls, data collection and verification resources. Severe weather associated with a changing climate could also negatively impact the operation of our facilities, as well as those of our customers and suppliers and impact our ability to insure our assets on commercially desirable terms and conditions.

Risks Related to Data PrivacyPrivacy, Cybersecurity, and Information SecurityAI

The Company relies on information technology systems and those of third parties who provide products or services to us to manage and operate its business and to process, transmit and store data, including its intellectual property, personal data and other proprietary business information and that of its employees, customers and suppliers. Despite security measures taken by the Company, the Company’s information technology systems (both on-premises and third-party managed) may be vulnerable to attacks by hackers or subject to unauthorized access due to employee error, technology vulnerabilities or misconfigurations, supplier error, malfeasance or other causes. Cybersecurity incidents and similar attacks vary in their form and can include the deployment of harmful malware or ransomware, denial-of-services attacks, AI-assisted attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and information. While we have utilized and continue to utilize various controls and systems to mitigate such risks, we cannot assure that the actions we have implemented and are implementing, or that we have required or will require third-party service providers and other business partners to implement, will be sufficient to protect our systems or data. We have been and may in the future be subject to attempts to gain unauthorized access to our information technology systems. To date, the impacts of prior incidents have not had a material adverse effect on us. A cybersecurity incident or failure or disruption relating to our information systems or technology infrastructure or that of our third-party service providers, could expose the Company and its employees, customers and suppliers to risks of misuse of confidential information, manipulation and destruction of data, production downtimes and operational disruptions, which in turn could result in litigation, business disputes and government investigations, and related monetary damages, injunctive requirements and fines, and could adversely affect the Company's reputation, competitive position, business or results of operations.

We and certain authorized third parties of ours, collect, transmit, store, access and otherwise process certain confidential or sensitive data, including proprietary business information, personal data or other information that is subject to privacy, data protection and security laws, regulations and/or government or customer-imposed controls. We operate in a global environment in which the data privacy regulatory and legal framework and corresponding enforcement and litigation landscape are evolving quickly. Additionally, remote work and the increased use of AI may increase our vulnerability to data protection and security risks. Moreover, the data privacy laws and regulations of the specific jurisdictions in which we operate may vary and potentially conflict. These laws and regulations can also impose significant fines and penalties for noncompliance and afford private rights of action to individuals under certain circumstances. As such, we incur and expect to continue to incur significant ongoing costs as part of our efforts to comply with applicable law. Any failure, or perceived failure, to comply with our data protection or privacy-related legal obligations may result in reputational damage, loss of business, regulatory investigations and fines, and litigation, and related monetary damages and injunctive requirements, any of which may adversely affect our results of operations and profitability.

The Timken Company designs and manufactures a growing portfolio of engineered bearings and industrial motion products, and provides 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®, PT Tech®, Torsion Control Products®, Philadelphia Gear®, Cone Drive®, CGI®, Rollon®, Nadella®, Rosa Sistemi®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy®, PT Tech®, Torsion Control Products® and Lagersmit®. Timken posted $4.6 billion in sales in 20242025 and employs approximately 19,000 people globally, operating in 4544 countries. The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. The following further describes these business segments:

•Timken’s Engineered Bearings segment features a broad range of product designs serving original equipment manufacturers (OEMs) and end-users worldwide. Timken is a leading authority on tapered roller bearings and leverages its position by applying engineering know-how and technology across its entire bearing portfolio, which includes tapered, spherical and cylindrical roller bearings; plain bearings, metal-polymer bearings and rod end bearings; thrust and specialty ball bearings; and housed or mounted bearings. The Engineered Bearings portfolio features the Timken®, GGB® and Fafnir® brands and serves customers across global industries, including wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail and more.

•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®, CGI®, Spinea®, Rollon®, Nadella®, Rosa Sistemi®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech®, LagersmitTorsion Control Products® and CGI.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.

Profitable Growth. The Company intends to expand into new and existing markets by leveraging its collective knowledge of materials science, friction management and power transmission to create value for Timken customers. Using a customer-centric and highly collaborative technical selling approach, the Company places particular emphasis on creating unique solutions for challenging and/or demanding applications. The Company intends to grow in attractive market sectors around the world, emphasizing those spaces that are highly fragmented, demand high service and value the reliability and efficiency offered by Timken products. The Company also targets applications that offer significant aftermarket demand, thereby providing product and services revenue throughout the equipment’s lifetime.

•In August, Timken issued its annual CSR report, highlighting theadvances Company'sin environmental sustainability, social impact and product innovation. The report details Timken's progress towardstoward its target to reduce aggregate Scope 1 and Scope 2 greenhouse gas (GHG) emissions intensity by 50 percent by 2030,2030. asFrom wellits as2018 providingbaseline anyear updatethrough onthe end of 2024, Timken decreased emissions intensity by about 42 percent, demonstrating the company's actionsdedication to improveclimate the lives of individualsaction and communities,responsible benefit the planet and strengthen its business.operations.

•Timken increased its quarterly dividend by 3% in the second quarter and paid its 410th414th consecutive quarterly dividend in the fourth quarter. The Company achieved eleventwelve straight years of higher annual dividends in 2024.2025. Timken also repurchased half a million779,300 common shares during the year.

•Executed a CEO succession plan andTimken welcomed TarakLucian MehtaBoldea to Timken as its new presidentPresident and Chief Executive Officer ("CEO") in September.

•Throughout 2024,2025, Timken received third-party recognition for the role it plays as a global industrial leader,leader and responsible corporate citizen, innovator and employer of choice.citizen. The Company was named one of the World's Most Ethical Companies® for the 13th14th time by Ethisphere, and one of America's Most Responsible Companies for the 5th6th 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.Statista.

The decreaseincrease in net sales was primarily driven by lowerfavorable demandpricing, inthe Chinabenefit andof Europe,acquisitions and the unfavorablefavorable impact of foreign currency exchange rate changes, partially offset by thelower benefitdemand ofacross acquisitionsboth (net of divestitures) and favorable pricing.segments. The decrease in net income was primarily due to incremental tariff costs, the impact of lower volume, higher manufacturing costs, the unfavorable impact of foreign currency exchange rate changes,mix and anhigher increaseimpairment inand netpension interestremeasurement expense,charges, partially offset by favorable price/mix,pricing, lower impairmentmaterial and pensionlogistics remeasurementcosts, chargesreduced selling, general and aadministrative gain("SG&A") onand thelower saleincome oftax certain real estate.expense.

The Company expects 20252026 full-year revenue to be up in the range fromof down 4%2% to 1%4% in total compared to 2024,2025, primarily driven by higher demand across most market sectors, higher pricing and the unfavorablefavorable 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.rates. The Company's earnings are expected to be downup in 20252026 compared withto 2024,2025, primarily due to higher pricing, the impact of higher volume, favorable mix, the impact of foreign currency exchange rate changes and lower organicmaterial salescosts, volume,partially offset partially by lowerincremental operatingtariff costs and thehigher favorableSG&A impact of acquisitions.expenses.

The Company expects to generate aapproximately higher$515 amountmillion of cash from operating activities in 20252026 compared to 2024,$554.3 million in 2025, driven by improvedhigher working capital performance,to asupport lowerincreased level of capital expenditures,demand and lowerhigher cash taxes.taxes, partially offset by higher net income. The Company expects capital expenditures in 20252026 to be in the range ofapproximately 3.5% of sales.

Net sales decreasedincreased in 20242025 compared to 20232024 primarily due to lowerthe organicfavorable salesimpact of $276acquisitions of $38 million (lower demand, favorable pricing) as well as the unfavorablefavorable impact of foreign currency exchange of $34$17 million, partially offset by thelower organic sales of $46 million (lower demand, favorable impact of acquisitions (net of divestiturespricing) of $114 million..

Operating income decreased in 20242025 compared to 20232024 due to incremental tariff costs and 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 lowerfavorable impairmentpricing and restructuringlower charges.SG&A expenses.

•Cost of products sold decreasedincreased in 20242025 compared to 20232024 due to the impactincremental cost of lower volumetariffs of $173$65 million andmillion, the impact of foreign currency exchange rate changes of $22$16 million, partially offset byand the incremental cost of goods sold from acquisitions (net of divestitures) of $37$15 million, higherpartially manufacturingoffset costsby of $28 million and unfavorable netfavorable material and logistics costs (net)of $19 million and the impact of $5lower volume of $17 million.

•Impairment and restructuring charges decreased significantlyincreased in 20242025 compared to 20232024 primarily due to lowerseverance impairmentexpense charges.related During 2023,to the CompanyCEO recordedtransition, aand pretaxrestructuring goodwillcharges impairmentrelated lossto forthe oneannounced closure of itsthe reportingCompany's unitsbearing manufacturing facility in theHeilbronn, Industrial Motion segment in the amount of $28.3 million.Germany.

Interest expense increaseddecreased in 20242025 compared to 2023,2024, primarily due to higherlower average debt levels during the year and higherlower average interest rates. Interest income increaseddecreased in 20242025 compared to 2023,2024, primarily due to higherlower average cash levels during the year and improved returns on invested cash.year.

The changeincrease in non-service pension and other postretirement expense and income was primarily due to net actuarial ("mark-to-market") gainslosses recorded in 20242025 compared to net actuarial lossesgains in 2023.2024. In 2024,2025, the Company recognized $10.8 million of net mark-to-market losses, compared to $1.3 million of net mark-to-market gains, compared to $20.6 million of net mark-to-market chargesgains in 2023.2024. Refer to Note 17 - Retirement Benefit Plans and Note 18 - Other Postretirement Benefit Plans in the Notes to the Consolidated Financial Statements for more information.

The change in the effective tax rate for 20242025 compared withto 20232024 was ana increasedecrease of 1.0%.0.4%. The increasedecrease was primarily due to the release of valuation allowances on certain non-U.S. deferred tax assets and the release of accruals for uncertain tax positions. This was partially dueoffset toby 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.

Refer to Note 5 - Income Taxes in the Notes to the Consolidated Financial Statements for moreadditional information on the computation of the income tax expense in interim periods.expense.

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.earnings before interest, taxes, depreciation and amortization ("EBITDA"). Refer to Note 43 - Segment Information in the Notes to the Consolidated Financial Statements for the reconciliation of adjusted EBITDA by segment to consolidated income before income taxes.

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, divestituresacquisitions 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.

The following itemsitem highlighthighlights the Company's acquisitions and divestituresacquisition completed in 2024 and 2023:

•The Company acquired CGI, Inc. ("CGI") during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment.

The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $189.0$15.3 million or 5.8%0.5% in 20242025 compared withto 2023,2024, primarily driven by lower demand in Chinathe Americas and Europe, partially offset by higher demand in Latin America and India,China, and higher pricing. AmongThe segment experienced lower demand across most market sectors, the segment experienced a significant decline inwith the renewable energy sectorauto/truck and lowerheavy demandindustries inposting the off-highwaylargest and general & heavy industrial market sectors,declines, partially offset by higher demand in the industrialrenewable distribution,energy rail, and aerospace sectors.sector.

Adjusted EBITDA for the Engineered Bearings segment decreased in 20242025 by $74.4$36.5 million or 10.9%6.0% compared withto 2023,2024, primarily due to incremental tariff costs and the impact of lower sales net of cost of products sold,volume, partially offset by favorable price/mix, lower material and logistics costs and lower SG&A expenses.

•Cost of products sold decreasedincreased in 20242025 compared to 20232024 due to theincremental impacttariff costs 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$55 million, partially offset by unfavorable netfavorable material and logistics costs of $4 million and higher manufacturing costs of $2$24 million.

•SG&A expenses decreased in 20242025 compared to 20232024 driven primarily by lower compensation expense,expense and reduced discretionary spendingspending, andpartially offset by the favorableunfavorable impact of foreign currency.

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $87.2$31.0 million or 5.8%2.0% in 20242025 compared withto 2023,2024, driven primarily by lower end-market demand in Europemost andsegment North America,platforms, partially offset by higher pricing. Excluding acquisitions, salesSales were down across most segment platformsmarkets, with the largest decreasesdeclines in automaticrenewable lubrication systems, linear motion solutions,energy and beltsindustrial and chain.services.

Adjusted EBITDA decreased $13.3$9.1 million or 4.2%3.0% in 20242025 compared withto 20232024 primarily due to the impact of lower salesvolume netand ofthe incremental cost of productstariffs, soldpartially offset by favorable pricing and higherthe SG&Abenefit expenses.of acquisitions.

•Cost of products sold increased in 20242025 compared to 20232024 due to the impact of the incremental cost of goods sold from acquisitions of $63$25 millionmillion, the unfavorable impact of foreign currency of $14 million, and higherthe manufacturingincremental costscost of $26tariffs of $10 million, partially offset by the impact of lower volume of $58$13 million.

•Depreciation and amortization increased in 20242025 compared to 20232024 primarily due to the addition of property, plant and equipment assets from acquisitionsthe acquisition completed during 2024 and 2023.the addition of assets from capital projects in the Americas. Refer to Note 2 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.

Unallocated corporate expense increased in 20242025 compared withto 20232024 primarily due to the unfavorable impact of foreign currency losses of $11.5 million in 2025 compared to $8.2 million in 2024 comparedand tohigher $3.7charitable milliondonations, inpartially 2023.offset by reduced corporate compensation expenses.

The decreaseincrease in net cash provided by operating activities in 20242025 compared withto 20232024 was primarily due to the unfavorablefavorable impact of working capital items of $43.7$95.1 million,million a decrease in net income of $32.7 million, a decrease in impairment charges of $29.7 million, partially offset byand the favorable impact of income taxes on cash of $56.5$17.2 millionmillion, duepartially tooffset lowerby taxa payments.decrease in net income of $58.0 million. Refer to the table below for additional detail of the impact of each line on net cash provided by operating activities.

The decrease in net cash used in investing activities in 20242025 compared withto 20232024 was primarily due to a decrease in cash used for acquisitions of $471.4$167.4 million,million and a decrease in capital expenditures of $17.8$21.8 millionmillion, andpartially anoffset increaseby a decrease in cash from the net liquidation of short-term marketable securities of $9.5$19.7 million and a decrease in proceeds from disposals of property, plant and equipment of $13.1 million.

The change in net cash used in/provided by financing activities in 20242025 compared withto 20232024 was primarily due to aproceeds decrease in net borrowings of $686.2 million and lower proceedsreceived from the 2024 sale of shares of Timken India Limited ("TIL") asin compared2024 toof the$232.3 2023million salethat did not repeat in the2025, amountan of $52.5 million, partially offset by a decreaseincrease in the purchase of treasury shares of $210.4$16.9 million and an increase in noncontrolling dividends paid of $13.9 million, partially offset by an increase in net borrowings of $21.6 million.

On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750.0$750 million unsecured revolving credit facility ("Senior Credit Facility") and a $400.0$400 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, 2024,2025, the Senior Credit Facility had no$21.2 million of 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, 2024,2025, 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, 2024,2025, the Company's consolidated interest coverage ratio was 7.697.76 to 1.0.

The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 6,5, 2023.2025. The $100.0$100 million Accounts Receivable Facility matures on November 30, 2026.2028. 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 theThe Accounts Receivable Facility tohad $93.9no millionborrowing base limitations at December 31, 2024.2025. As of December 31, 2024,2025, there were no outstanding borrowings under the Accounts Receivable Facility.

On May 23, 2024, the Company issued fixed-rate unsecuredEuro senior unsecured notes ("2034 Notes") in the aggregate principal amount of €600 million with an interest rate of 4.125%,4.13%, 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.

The Company expects to generate aapproximately higher$515 amountmillion of cash from operating activities in 20252026 compared to 2024,$554.3 million in 2025, driven by improvedhigher working capital performance,to asupport lowerincreased level of capital expenditures,demand and lowerhigher cash taxes.taxes, partially offset by higher net income. The Company expects capital expenditures in 20252026 to be in the range ofapproximately 3.5% of sales.

Accounting guidance permits an entity to first assess qualitative factors to determine whether additional indefinite-lived intangible asset impairment testing, including goodwill, is required. The Company chose to utilize this qualitative assessment in the annual goodwill impairment testing for all reporting units, except its Belts and Chain reporting unit,units in the fourth quarter of 2024.2025. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of these reporting units exceeded their respective carrying values. TheIn 2024, the Company chose to performperformed a quantitative impairment analysis in the fourth quarter of 2024 for its Belts and Chain reporting unit. The result of this impairment analysis was to recognize an impairment loss of $1.5 million, reducing goodwill for this reporting unit to zero.

In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate income tax determination is uncertain. The Company is regularly under audit by tax authorities. Accruals for uncertain tax positions are provided for in accordance with the requirements of ASC Topic 740. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense. In 2024,2025, the Company recorded $2.4$13.2 million of net tax benefit for uncertain tax positions, which consisted primarily of $8.8 million related to increases to current and prior year uncertain tax positions and interest. This expense was partially offset by $11.2$21.0 million of the net reversal of accruals for prior year uncertain tax positions and settlements with tax authorities. This benefit was partially offset by $7.8 million related to increases to current and prior year uncertain tax positions and interest. During 2024,2025, the Company recorded a $2.0$2.6 million decreaseincrease of uncertain tax positions related to foreign currency translation adjustments and deferred tax liabilities. The Company also recordedreleased $5.9$0.3 million of uncertain tax positions related to prior years for acquisitions made during 2024.

Defined Benefit Pension Plans:

The Company sponsors a number of defined benefit pension plans that cover eligible employees. The Company also sponsors several funded and unfunded postretirement plans that provide health care and life insurance benefits for eligible retirees and their dependents. These plans are accounted for in accordance with ASC Topic 715-30, "Defined Benefit Plans – Pension,Pension." and ASC Topic 715-60, "Defined Benefit Plans – Other Postretirement."

•Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, precision 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 services, which return equipment and components to like-new condition. The Industrial Motion portfolio features many strong brands, including Philadelphia Gear®, Cone Drive®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Bijur Delimon®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech®, Lagersmit® and CGI®. Industrial Motion products are used across a broad range of industries, including automation, solar energy, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more.

The following items highlight some of the Company's more significant strategic accomplishments during the three and six months ended MarchJune 31,30, 2026:

•On March 18, 2026, the Company acquired the assets and related businesses of Bijur Delimon, a leading global designer and manufacturer of automated lubrication systems. Founded in 1872, Bijur Delimon operates manufacturing locations in the United States,U.S., Europe and Asia Pacific. The acquisition of Bijur Delimon expands the Company's position in automated lubrication systems.systems and operating results for the business are included in the Industrial Motion segment.

•The Company increased its quarterly dividend by 3% and paid its 415th416th consecutive quarterly dividend inon theMay first29, quarter.2026. The Company also repurchased 0.3 million437,000 common shares during the threesix months ended MarchJune 31,30, 2026.

Net incomesales increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 20252025. The increase was primarily duedriven to favorable price/mix,by higher volume andin both segments, the benefit of acquisitions, the favorable impact of foreign currency exchangeand rates,favorable partiallypricing. offsetNet sales increased for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increase was primarily driven by the incrementalfavorable tariffimpact costs,of higher manufacturingend-market costs,demand across both segments, foreign currency, favorable pricing and higherthe taxbenefit expense.of acquisitions.

The Company expects 2026 full-year revenues to be up approximately 5% to 6% compared to 2025, primarily driven by higher demand across both segments, favorable pricing, the benefit of acquisitions, and the favorable impact of foreign currency rate changes. The Company's earnings are expected to be updown slightly in 2026 compared with 2025, primarily2025 due to higher impairment charges, mostly offset by the impact of higher organic sales volume,volume and favorable price/mix, and favorable material, partially offset by incremental tariff costs and higher manufacturing costs.mix.

The Company expects to generate approximatelya $530comparable millionamount of cash from operating activitiesactivities, with $550 million in 2026 compared to $554.3 million in 2025, driven by higher working capital to support increased demand and higher cash taxes, partially offset by higher net income.2025. The Company expects capital expenditures in 2026 to be approximately 3.4%3.3% of sales.

Net sales increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025. The increase was driven by the favorable impact of higher organic revenue of $49$52 million, the benefit of acquisitions of $21 million and foreign currency exchange rate changes of $39$15 million. Net sales increased for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increase was driven by the favorable impact of higher organic revenue of $101 million, foreign currency exchange rate changes of $54 million, and the benefit of acquisitions of $24 million.

•Selling, general and administrative ("SG&A") expenses increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025, primarily due to higher employee compensation, the impact of acquisitions, higher discretionary spending and the unfavorable impact from foreign currency exchange rates. SG&A expenses increased for the six months ended June 30, 2026 compared with the six months ended June 30, 2025, primarily due to the unfavorable impact from foreign currency exchange rates, higher employee compensation, the impact of acquisitions and higher discretionary spending.

•Impairment and restructuring charges were lowerhigher for the three and six months ended MarchJune 31,30, 2026 compared with the three and six months ended MarchJune 31,30, 2025, primarily due to severanceimpairment andcharges otherfor costscertain assets related to the CEOplanned transitionbelts divestiture recorded during the three months ended MarchJune 31,30, 2025.2026.

The decrease in interest expense for the three and six months ended MarchJune 31,30, 2026 compared with the three and six months ended MarchJune 31,30, 2025 was primarily due to lower interest rates and lower average debt levels.

Income tax expense increaseddecreased $10.1$10.0 million for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025 primarily due to higherlower pre-tax earnings as a result of the agreement to sell certain assets of the belts business and lower net favorablethe impact of discretebeneficial itemsprovisions effective in comparison2026 tofrom the yearOBBBA. agoThis period.increase Thewas partially offset by favorable discrete items recognized in the prior 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. This was partially offset byof the mix of earnings in non-U.S. jurisdictions with relatively higher tax rates and the impact of beneficial provisions effective in 2026 from the OBBBA.U.S.

The following item highlights the Company's sole acquisition completed in 2026:

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, increased $22.6$19.8 million or 3.0%2.5% in the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025. The increase was primarily driven by higher volume across most sectors and higher pricing. Adjusted EBITDA for the Engineered Bearings segment decreased slightlyincreased for the three months ended MarchJune 31,30, 2026 by $0.2$7.9 million or 0.1%5.1% compared with the three months ended MarchJune 31,30, 2025, due to thefavorable unfavorable impact of tariffsprice/mix and higher operatingvolume, costs,partially offset by favorablehigher price/mix.SG&A expense and higher manufacturing costs.

•Cost of products sold increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025 due to higher volume of $7 million, unfavorable foreign currency exchange rate changes of $17$5 million, incremental tariff costs of $16 million,million and higher operating costs of $12 million, partially offset by lower material and logistics costs of $5 million.

•SG&A expenses increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025 primarily due to higher compensation expense and thehigher unfavorablediscretionary impact of foreign currency exchange rates.spending.

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, increased $26.7$32.0 million or 7.0%8.1% in the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025. The increase reflects higher demand across most end market sectors and higher pricing. Adjusted EBITDA increased $24.2$33.0 million or 36.1%45.5% for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025.2025, Favorabledriven primarily by favorable price/mix and higher volume were partially offset by incremental tariff costs.volume.

•Cost of products sold increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025 due to the impact of acquisitions of $13 million, higher volume of $4 million and unfavorable foreign currency exchange rate changes of $12$4 million and incremental tariff costs.million.

•SG&A expenses increased for the three months ended MarchJune 31,30, 2026 compared with the three months ended MarchJune 31,30, 2025 primarily due to the incremental SG&A expense from acquisitions and the unfavorable impact of foreign currency exchange rates.

Unallocated corporate expense increased for the three and six months ended MarchJune 31,30, 2026 compared with the three and six months ended MarchJune 31,30, 2025 primarily due to higher discretionarycompensation spending.expense.

The decrease in net cash provided by operating activities for the first threesix months of 2026 compared with the first threesix months of 2025 was primarily due to the unfavorable impact of working capital items of $61.4$92.1 million and a decrease in net income of $34.0 million, partially offset by anhigher increaseimpairment in net incomecharges of $14.5$79.0 million, lower pension contributions of $13.0 million and the favorable impact of income taxes on cash of $12.5$13.0 million and lower pension contributions of $10.3 million. Refer to the tables below for additional detail of the impact of each line item on net cash provided by operating activities.

The following table displays the impact of working capital items on cash during the first threesix months of 2026 and 2025:

The following table displays the impact of income taxes on cash during the first threesix months of 2026 and 2025:

The increase in net cash used in investing activities for the first threesix months of 2026 compared with the first threesix months of 2025 was due to an increase in cash used for acquisitions of $124.3$124.4 million.

The change in net cash provided by (used in) financing activities for the first threesix months of 2026 compared with the first threesix months of 2025 was due to the favorable change in net debt borrowings/payments of $134.9 million, partially offset by an increase in the purchase of treasury shares of $4.9$158.5 million.

At MarchJune 31,30, 2026, the Company had strong liquidity with $344.7$399.1 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $670.3$651.6 million available under committed credit lines. Of the $344.7$399.1 million of cash and cash equivalents, $320.2$372.5 million resided in jurisdictions outside the United States.U.S. 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.U.S. 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.

On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of a $750 million Senior Credit Facility and a $400 million 2027 Term Loan that each mature on December 5, 2027. The interest rates under the Credit Agreement are based on SOFR for U.S. dollar borrowings. At MarchJune 31,30, 2026, the Company had $79.7$118.4 million of outstanding borrowings under the Senior Credit Facility.Facility, which reduced the availability to $631.6 million. 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 MarchJune 31,30, 2026, the Company's consolidated net leverage ratio was 2.152.02 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of MarchJune 31,30, 2026, the Company's consolidated interest coverage ratio was 8.188.78 to 1.0.

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 4.78%4.79% and the average rate on outstanding Euro borrowings was 2.94%3.03% as of MarchJune 31,30, 2026. 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 MarchJune 31,30, 2026, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

The Company has a $100 million Accounts Receivable Facility, which matures on November 30, 2028. The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. As of MarchJune 31,30, 2026, the Company had $100$80 million of outstanding borrowings under the Accounts Receivable Facility, which reduced the availability to zero.$20 million.

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 $250.5$249.4 million. At MarchJune 31,30, 2026, the Company had borrowings outstanding of $28.8$26.3 million and bank guarantees of $5.8$7.2 million, which reduced the aggregate availability under these facilities to $215.9 million.

At MarchJune 31,30, 2026, the Company was in full compliance with all applicable covenants on its outstanding debt.

The Company expects to generate approximatelya $530comparable millionamount of cash from operating activitiesactivities, with $550 million in 2026 compared to $554.3 million in 2025, driven by higher working capital to support increased demand and higher cash taxes, partially offset by higher net income.2025. The Company expects capital expenditures in 2026 to be approximately 3.4%3.3% of sales.

During the first threesix months of 2026, the Company made cash contributions and payments of $10.4$17.2 million to its global defined benefit pension plans and $0.4$0.9 million to its other postretirement benefit plans. In 2026, the Company expects to make contributions to its global defined benefit pension plans of approximately $32 million and to make payments of approximately $3 million to its other postretirement benefit plans. Excluding actuarial gains and losses, the Company expects lower pension and other postretirement benefits expense in 2026 compared to 2025 primarily due to higher expected returns on pension plan assets and lower interest expense.

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, 2025, during the threesix months ended MarchJune 31,30, 2026.

For the threesix months ended MarchJune 31,30, 2026, the Company recorded negative foreign currency translation adjustments of $21.9$26.2 million that decreased shareholders' equity, compared with positive foreign currency translation adjustments of $66.5$210.5 million that increased shareholders' equity for the threesix months ended MarchJune 31,30, 2025. The foreign currency translation adjustments for the threesix months ended MarchJune 31,30, 2026 were impacted by the weakeningstrengthening of the U.S. dollar relative to other foreign currencies, including the Euro and the Indian Rupee, partially offset by strengthening against the Chinese Yuan.Rupee.

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 MarchJune 31,30, 2026 and June 30, 2025 totaled $4.4 million of net losses in each period. Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the six months ended June 30, 2026 totaled $3.3$7.7 million of net losses, compared with $1.1$3.3 million of net gainslosses during the threesix months ended MarchJune 31,30, 2025.

(45) 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 would be serving as interim President and CEO. CEO transition expenses primarily relatedrelate to the cost of the settlement agreement with Mr. Mehta in connection with his departure, net of stockthe compensation expenseimpact for stock awards forfeited.forfeited, and incremental stock compensation expense related to a deferred share award issued to Mr. Kyle.

The ratio of net debt to adjusted EBITDA for the trailing twelve months represents total debt less cash and cash equivalents divided by adjusted EBITDA for the trailing twelve months. The Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the Company's ability to cover its net debt obligations with results from its core operations. Net income for the trailing twelve months ended MarchJune 31,30, 2026 and December 31, 2025 was $331.8$283.3 million and $317.3 million, respectively. Net debt to adjusted EBITDA for the trailing twelve months was 2.1 and 2.0 at MarchJune 31,30, 2026 and December 31, 2025, respectively.2025.