What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-01 compared with 2023-08-03 · 177 added, 152 removed, 446 unchanged (42% of the section changed)

4 unchanged sentences

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®, Philadelphia Gear®, GGB®, Drives®, Cone Drive®, Rollon®, Lovejoy®, Diamond®, BEKA®, Groeneveld® and Nadella®.

The Company’s growing product and services portfolio features many strong industrial brands, such as Timken®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Lovejoy®, Diamond®, Drives®, Groeneveld® and BEKA®.

Timken employs more than 19,000 people globally in 46 countries.

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and housed or mounted bearings.

The Engineered Bearings portfolio features Timken® and GGB® 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 and industrial clutches and brakes that keep systems running efficiently.

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 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:

Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Groeneveld®, BEKA®, Diamond®, Drives®, Timken® Belts, Lovejoy® and PT Tech®.

The Industrial Motion portfolio features many strong brands, including Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Groeneveld®, BEKA®, Diamond®, Drives®, Timken® Belts, Lovejoy® and PT Tech®.

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.

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Profitable Growth.

The Company intends to expand into new and existing markets by leveraging its collective knowledge of metallurgy, friction management and industrial motion to create value for Timken customers.

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 highly collaborative technical selling approach, the Company places particular emphasis on creating unique solutions for challenging and/or demanding applications.

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(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 bearings, adjacent industrial motion products and related services;

(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;

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As part of this framework, the Company may also restructure, reposition or divest underperforming product lines or assets.

The following items highlight some of the Company's more significant strategic accomplishments during the six months ended June 30, 2023:

The following items highlight some of the Company's more significant strategic accomplishments during the nine months ended September 30, 2023:

• On September 29, 2023, the Company acquired Rosa, a European designer and manufacturer of roller guideways, linear bearings, customized linear systems and actuators, commercialized ball guideways and precision ball screws.

Rosa will further Timken's strategy to expand and scale its leading industrial motion product portfolio.

• On September 5, 2023, the Company acquired Des-Case, a Tennessee-based manufacturer of specialty filtration products for industrial lubricants.

Des-Case products complement Timken's existing automatic lubrication systems product portfolio and provide strong synergy opportunities.

• On April 4, 2023, the Company acquired Nadella, a leading European manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions.

With revenue of €100 million in 2022, Nadella will further Timken's strategy to expand and scale its leading industrial motion product portfolio.

• On June 20, 2023, the Company completed the sale of 7.6 million shares of TIL, a subsidiary of the Company, generating net proceeds of $229 million after estimated income taxes of $55 million and transaction costs.

Nadella will further Timken's strategy to expand and scale its leading industrial motion product portfolio.

• On June 20, 2023, the Company completed the sale of 7.6 million shares of TIL, a publicly-traded subsidiary of the Company, generating net proceeds of $229 million after estimated income taxes of $55 million and transaction costs.

The transaction reduced the Company's ownership in TIL from 67.8 percent to 57.7 percent.

• The Company paid its 403 rd and 404 th consecutive quarterly dividends, including a dividend of $0.33 per share during the second quarter, an increase of 6% from the prior quarter.

The Company also repurchased 1.9 million common shares, or nearly 3% of outstanding common shares.

• On January 31, 2023, the Company acquired the assets of ARB, a North Carolina-based manufacturer of industrial bearings.

ARB, which boasts a large U.S.

installed base and strong aftermarket business, reported revenue of approximately $35 million in 2022.

ARB's product offerings join Timken's industry-leading portfolio of engineered bearings solutions.

ARB boasts a large U.S.

installed base and strong aftermarket business, and its product offerings enhance the Company's industry-leading portfolio of engineered bearings solutions.

• The Company paid its 405 th consecutive quarterly dividend in the third quarter.

During the second quarter, Timken increased its quarterly dividend by 6%.

The Company also repurchased 2.7 million common shares, or nearly 4% of outstanding common shares over the first nine months of the year.

Three Months Ended

September 30,

2023 2022 $ Change % Change

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Average number of shares – diluted 71,535,609 73,866,743 — (3.2) %

Six Months Ended

Nine Months Ended

September 30,

2022 2021 $ Change % Change

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Average number of shares – diluted 72,456,849 74,548,711 — (2.8) %

The increase in net sales for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 was driven by the favorable impact of acquisitions (net of divestitures) and organic growth in both the Industrial Motion and Engineered Bearings segments, partially offset by the unfavorable impact of foreign currency exchange rate changes.

The increase in net income for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 was primarily due to the favorable price/mix, lower material and logistics costs and lower impairment and restructuring charges, partially offset by higher manufacturing and selling, general and administrative ("SG&A") costs, as well as higher interest expense.

The increase in net sales for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 was driven by organic growth in both the Engineered Bearings and Industrial Motion segments and the favorable impact of acquisitions (net of divestitures), partially offset by the unfavorable impact of foreign currency exchange rate changes.

The increase in net income for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 was primarily due to the favorable price/mix, the impact of higher volume and lower material and logistics costs, partially offset by higher manufacturing and SG&A costs, as well as higher impairment and restructuring charges and interest expense.

The Company expects 2023 full-year revenue to be up approximately 8% compared to 2022, driven by continued organic growth and the benefit of acquisitions (net of divestitures).

The Company's earnings are expected to be up in 2023 compared with 2022, due to the favorable impact of price/mix and lower material and logistics costs, partially offset by higher manufacturing and SG&A costs, higher impairment and restructuring charges, the unfavorable impact of foreign currency exchange rate changes and higher interest expense.

The Company expects to generate a higher amount of cash from operating activities in 2023 compared to 2022, primarily driven by higher earnings and improved working capital performance.

The increase in net sales for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 was driven by the favorable impact of acquisitions (net of divestitures) and higher pricing across both segments, partially offset by lower volume.

The increase in net income for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 was primarily due to favorable price/mix, lower operating costs, lower impairment and restructuring charges and the net benefit of acquisitions, partially offset by the impact of lower volume, the unfavorable impact of foreign currency exchange rate changes and higher interest and income tax expense.

The increase in net sales for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 was driven by the favorable impact of acquisitions (net of divestitures) and higher pricing in both segments, partially offset by the unfavorable impact of foreign currency exchange rate changes and slightly lower volume.

The increase in net income for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 was primarily due to favorable price/mix and the net benefit of acquisitions, partially offset by higher operating costs, the unfavorable impact of foreign currency exchange rate changes and higher interest and income tax expense.

The Company expects 2023 full-year revenue to be up 5 to 5.5% compared to 2022, driven almost entirely by the benefit of acquisitions (net of divestitures).

The Company's net earnings are expected to be relatively flat in 2023 compared with 2022, as the favorable impact of price/mix and the benefit of acquisitions are expected to be offset by the impact of lower volume, higher operating costs, the unfavorable impact of foreign currency exchange rate changes and higher interest expense.

The Company expects to generate a higher amount of cash from operating activities in 2023 compared to 2022, driven mainly by improved working capital performance.

The Company expects higher capital expenditures in 2023 compared to 2022, but relatively in line with 2022 spending as a percentage of sales (4.0%).

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Three Months Ended

September 30,

2023 2022 $ Change Change

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Operating income % to net sales 13.1 % 11.6 % 150 bps

Six Months Ended

Nine Months Ended

September 30,

2023 2022 $ Change Change

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Amortization of intangible assets 48.3 32.2 16.1 50.0%

Impairment and restructuring charges 31.4 11.0 20.4 NM

Impairment and restructuring charges 40.3 42.3 (2.0) (4.7%)

Operating income $ 537.9 $ 479.9 58.0 12.1%

Operating income % to net sales 14.6 % 14.1 % 50 bps

Net sales increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022.

The increase was driven by the benefit of acquisitions (net of divestitures) of $77 million and organic growth (including pricing) of $52 million, partially offset by the unfavorable impact of foreign currency exchange rate changes of $11 million.

Net sales increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022.

The increase was driven by organic growth (including pricing) of $176 million and the benefit of acquisitions (net of divestitures) of $122 million, partially offset by the unfavorable impact of foreign currency exchange rate changes of $41 million.

Operating income increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, due to favorable impact of higher sales net of cost of products sold, and lower impairment and restructuring charges, partially offset by higher SG&A expenses and increased amortization expense.

Operating income increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022, due to favorable impact of higher sales net of cost of products sold, partially offset by higher SG&A expenses, higher impairment and restructuring charges and increased amortization expense.

• Cost of products sold increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, due to the incremental cost of goods sold from acquisitions (net of divestitures) of $55 million and higher manufacturing costs of $39 million, partially offset by lower material and logistics costs of $22 million and the impact of foreign currency exchange rate changes of $6 million.

Cost of products sold increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022, due to higher manufacturing costs, net of favorable mix impact, of $94 million and the incremental cost of goods sold from acquisitions (net of divestitures) of $89 million, partially offset by lower material and logistics costs of $36 million and the impact of foreign currency exchange rate changes of $22 million.

The higher manufacturing costs for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022 reflect continued labor and input cost inflation, as well as the impact of reduced inventory build in the 2023 periods compared to the same periods a year ago.

• SG&A expenses increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, primarily due to the impact of acquisitions and increased spending to support the higher sales and business activity levels.

SG&A expenses increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022, primarily due to the impact of acquisitions, higher compensation costs and increased spending to support the higher sales and business activity levels.

• Amortization of intangible assets increased for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022, primarily due to the addition of intangible assets from the GGB acquisition, which was completed in the fourth quarter of 2022, and the Nadella acquisition, which was completed in the second quarter of 2023.

• Impairment and restructuring charges were lower for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, primarily due to impairment charges recorded in the second quarter of 2022 related to the Company's operations in Russia.

As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended its operations in Russia.

Refer to Russia Operations below for additional information.

Impairment and restructuring charges were higher for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to the impairment of goodwill, partially offset by the Russia-related charges in 2022 discussed above.

Net sales increased for the three months ended September 30, 2023 compared with the three months ended September 30, 2022.

The increase was driven by the favorable impact of acquisitions (net of divestitures) of $69 million and the favorable impact of foreign currency exchange rate changes of $6 million, partially offset by lower organic sales of $69 million (lower volume, favorable pricing).

Net sales increased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022.

The increase was driven by the favorable impact of acquisitions (net of divestitures) of $191 million and higher organic sales of $107 million (favorable pricing, lower volume), partially offset by the unfavorable impact of foreign currency exchange rate changes of $35 million.

Operating income increased for the three and nine months ended September 30, 2023 compared with the three and nine months ended September 30, 2022, due to favorable impact of higher sales net of cost of products sold, and lower impairment and restructuring charges, partially offset by higher selling, general and administrative ("SG&A") expenses and increased amortization expense.

• Cost of products sold decreased for the three months ended September 30, 2023 compared with the three months ended September 30, 2022, due to the impact of lower sales volume of $51 million and lower material and logistics costs of $35 million, partially offset by the incremental cost of goods sold from acquisitions (net of divestitures) of $48 million, the impact of foreign currency exchange rate changes of $11 million and higher manufacturing costs of $9 million.

Cost of products sold increased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022, due to the incremental cost of goods sold from acquisitions (net of divestitures) of $137 million and higher manufacturing costs, net of favorable mix impact, of $54 million, partially offset by lower material and logistics costs of $72 million and the impact of foreign currency exchange rate changes of $11 million.

The higher manufacturing costs for the three and nine months ended September 30, 2023 compared with the three and nine months ended September 30, 2022 reflect continued labor and input cost inflation.

• SG&A expenses increased for the three months ended September 30, 2023 compared with the three months ended September 30, 2022, primarily due to the impact of acquisitions.

SG&A expenses increased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022, primarily due to the impact of acquisitions, higher compensation costs and increased spending to support the higher sales and business activity levels.

• Amortization of intangible assets increased for the three and nine months ended September 30, 2023 compared with the three and nine months ended September 30, 2022, primarily due to the addition of intangible assets from the GGB acquisition, which was completed in the fourth quarter of 2022, and the four acquisitions that were completed during 2023.

Refer to Note 3 - Acquisitions and Divestitures in the Notes to the Consolidated Financial Statements for additional information.

• Impairment and restructuring charges were lower for the three months ended September 30, 2023 compared with the three months ended September 30, 2022, primarily due to impairment charges of $29.3 million in the third quarter of 2022 related to the sale of the ADS business, which was completed in the fourth quarter of 2022.

Impairment and restructuring charges were lower for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 primarily due to the impairment charges related to the sale of the ADS business in 2022 discussed above, partially offset by the impairment of goodwill.

During the first quarter of 2023, the Company reviewed goodwill for impairment for its reporting units due to the change in reporting segments that went into effect on January 1, 2023.

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Three Months Ended

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Interest income 2.6 1.1 $ 1.5 136.4 %

Six Months Ended

Nine Months Ended

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1 unchanged sentence

Interest income 6.0 2.7 $ 3.3 122.2 %

The increase in interest expense for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022 was due to increased debt levels and higher average interest rates.

The increase in net interest expense for the three and nine months ended September 30, 2023 compared with the three and nine months ended September 30, 2022 was due to increased debt levels and higher average interest rates.

Other Income (Expense):

Three Months Ended

September 30,

2023 2022 $ Change % Change

Non-service pension and other postretirement income (expense) $ — $ (7.9) $ 7.9 (100.0) %

Other income (expense) 2.3 (1.1) 3.4 NM

Total other income (expense) $ 2.3 $ (9.0) $ 11.3 (125.6) %

Six Months Ended

Non-service pension and other postretirement (expense) income $ (0.9) $ 1.3 $ (2.2) (169.2) %

Other income, net 0.4 2.3 (1.9) (82.6) %

Total other (expense) income $ (0.5) $ 3.6 $ (4.1) (113.9) %

Nine Months Ended

September 30,

2023 2022 $ Change % Change

Non-service pension and other postretirement income (expense) $ 0.1 $ (6.6) $ 6.7 (101.5) %

Other income (expense) 5.4 (0.9) 6.3 NM

Non-service pension and other postretirement expense $ (0.8) $ (5.3) $ 4.5 (84.9) %

Other income, net 5.8 1.4 4.4 NM

Total other income (expense) $ 5.0 $ (3.9) $ 8.9 (228.2) %

Non-service pension and other postretirement income (expense) increased for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022.

Non-service pension and other postretirement expense increased for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 due to the impact of a lower expected return on plan assets and higher interest expense on pension plan obligations, partially offset by lower pension remeasurement losses.

Non-service pension and other postretirement expense decreased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022.

The Company recognized pension remeasurement gains in 2023 compared to pension remeasurement losses in 2022.

This favorable impact was partially offset by the impact of a lower expected return on pension plan assets and higher interest expense on pension plan obligations.

R efer to Note 16 - Retirement Benefit Plans and Note 17 - Other Postretirement Benefit Plans in the Notes to the Consolidated Financial Statements for additional information.

Other income (expense) increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 due to gains on divestitures of $4.8 million primarily related to the sale of SE Setco , a 50% owned joint venture.

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.

Other income, net increased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 due to gains on divestitures of $4.8 million primarily related to the sale of SE Setco, a 50% owned joint venture.

Income Tax Expense:

Three Months Ended

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1 unchanged sentence

Effective tax rate 26.8 % 22.8 % 400 bps

Six Months Ended

Nine Months Ended

September 30,

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1 unchanged sentence

Effective tax rate 26.2 % 25.5 % 70 bps

Income tax expense increased $3.1 million for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 due to higher pre-tax earnings and an increase in the mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates, partially offset by the net favorable impact of discrete tax items in comparison to the year ago period.

Income tax expense increased $7.4 million for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 due to higher pre-tax earnings and an increase in the mix of earnings in non-U.S.

Income tax expense increased $6.6 million for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 due to higher pre-tax earnings, an increase in the mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates and the net unfavorable impact of discrete tax items in comparison to the year ago period.

Income tax expense increased $14.0 million for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 due to to higher pre-tax earnings and an increase in the mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates, partially offset by the net favorable impact of discrete tax items in comparison to the year ago period.

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The following item represents the Company's acquisitions and divestitures completed in 2023 and 2022:

• 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.

• The Company acquired Nadella during the second quarter of 2023.

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Results for ADS were reported in the Industrial Motion segment.

• The Company completed the sale of Timken-Rus Service Company ooo ("Timken Russia") during the third quarter of 2022.

• The Company completed the sale of Timken Russia during the third quarter of 2022.

Results for Timken Russia were reported in the Engineered Bearings segment.

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Three Months Ended

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Three Months Ended

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Acquisitions 55.4 55.4 NM

Divestitures (1.3) (1.3) NM

Currency 1.1 1.1 NM

Net sales, excluding the impact of acquisitions,

divestitures and currency $ 811.2 $ 798.3 $ 12.9 1.6 %

Six Months Ended

Net sales, excluding the impact of acquisitions and currency $ 719.1 $ 779.7 $ (60.6) (7.8 %)

Nine Months Ended

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EBITDA margin 21.3 % 20.7 % 60 bps

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divestitures and currency $ 2,400.9 $ 2,350.4 $ 50.5 2.1 %

The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $12.9 million or 1.6% in the three months ended June 30, 2023 compared with the three months ended June 30, 2022.

The increase reflects higher pricing across the segment and higher sales volume in the renewable energy, rail and heavy industries sectors, partially offset by lower sales volume in the distribution, auto/truck and general industrial sectors.

EBITDA increased by $18.0 million or 10.7% for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, primarily due to favorable price/mix, lower material and logistics costs, the benefit of acquisitions and lower Russia related charges, partially offset by higher manufacturing costs, the impact of lower volume, and the unfavorable impact of foreign currency exchange rate changes.

The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $111.2 million or 7.1% in the six months ended June 30, 2023 compared with the six months ended June 30, 2022.

The Engineered Bearings segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $60.6 million or 7.8% in the three months ended September 30, 2023 compared with the three months ended September 30, 2022.

The decrease reflects lower sales volume across most sectors, partially offset by higher pricing.

EBITDA decreased by $2.2 million or 1.5% for the three months ended September 30, 2023 compared with the three months ended September 30, 2022, primarily due to the impact of lower volume, higher manufacturing costs, the unfavorable impact of foreign currency exchange rate changes and higher impairment and restructuring charges, mostly offset by lower material and logistics costs, favorable price/mix and the benefit of acquisitions (net of divestitures).

The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $50.5 million or 2.1% in the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022.

The increase reflects higher pricing across the segment and higher sales volume in the renewable energy, rail, and heavy industries sectors, partially offset by lower sales volume in the distribution and auto/truck sectors.

EBITDA increased by $54.7 million or 16.3% for the six months ended June 30, 2023 compared with the six months ended June 30, 2022, primarily due to favorable price/mix, lower material and logistics costs and the benefit of acquisitions, partially offset by higher manufacturing and SG&A costs, and the unfavorable impact of foreign currency exchange rate changes.

EBITDA increased by $52.5 million or 10.8% for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022, primarily due to favorable price/mix, lower material and logistics costs and the benefit of acquisitions (net of divestitures), partially offset by higher manufacturing and SG&A costs, the unfavorable impact of foreign currency exchange rate changes and lower volume.

Industrial Motion Segment:

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divestitures and currency $ 348.8 $ 356.7 $ (7.9) (2.2) %

Six Months Ended

Nine Months Ended

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EBITDA margin 17.4 % 15.3 % 210 bps

Six Months Ended

Nine Months Ended

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divestitures and currency $ 1,121.1 $ 1,064.3 $ 56.8 5.3 %

The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $39.8 million or 11.2% in the three months ended June 30, 2023 compared with the three months ended June 30, 2022 .

The increase reflects higher pricing across the segment and higher sales volume in the drive systems, services and automatic lubrication systems platforms, partially offset by lower sales volume in the belts and chain platform.

EBITDA increased $15.8 million or 24.3% for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 primarily due to favorable price/mix and the impact of higher sales volume, partially offset by higher SG&A costs.

The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $64.6 million or 9.1% in the six months ended June 30, 2023 compared with the six months ended June 30, 2022.

The increase reflects higher pricing across the segment and higher sales volume in the drive systems, services, automatic lubri cation systems and linear motion platforms, partially offset by lower sales volume in the belts and chain platform.

EBITDA increased $1.6 million or 1.3% for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to favorable price/mix, the impact of higher sales volume and lower material and logistics costs, mostly offset by higher impairment and restructuring charges, and higher manufacturing and SG&A costs.

The higher impairment and restructuring charges were primarily related to the impairment of goodwill for one of the segment's reporting units.

The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $7.9 million or 2.2% in the three months ended September 30, 2023 compared with the three months ended September 30, 2022.

The decrease reflects lower sales volume in the belts and chain and linear motion platforms, partially offset by higher pricing and higher sales volume in the drive systems and services and automatic lubrication systems platforms.

EBITDA increased $35.4 million or 101.4% for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 primarily due to lower impairment and restructuring charges, favorable price/mix and lower material and logistics costs, partially offset by the impact of lower sales volume.

The lower impairment and restructuring charges were primarily due to the impairment charges related to the sale of the ADS business that were recorded in the third quarter of 2022.

The Industrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $56.8 million or 5.3% in the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022.

The increase reflects higher pricing and higher sales volume in the drive systems and services and automatic lubrication systems platforms, partially offset by lower sales volume in the belts and chain platforms.

EBITDA increased $37.0 million or 22.8% for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 primarily due to favorable price/mix, lower material and logistics costs and the impact of higher sales volume, partially offset by higher manufacturing and SG&A costs and the unfavorable impact of foreign currency exchange rate changes.

Unallocated Corporate

Three Months Ended

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1 unchanged sentence

Unallocated corporate expense % to net sales (1.5) % (0.8) % (70) bps

Six Months Ended

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Unallocated corporate expense % to net sales (1.3) % (1.0) % (30) bps

Unallocated corporate expense increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to increased spending for professional services and other corporate expenses.

Six Months Ended

Unallocated corporate expense increased for the three months ended September 30, 2023 compared with the three months ended September 30, 2022 primarily due to the unfavorable impact of foreign currency exchange rate changes.

Unallocated corporate expense increased for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022 primarily due to the unfavorable impact of foreign currency transaction gains and losses and the increased spending for professional and other services.

Nine Months Ended

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5 unchanged sentences

Op erating Activities:

The increase in net cash provided by operating activities for the first six months of 2023 compared with the first six months of 2022 was primarily due to a decrease in cash used for working capital items of $134.0 million and an increase in net income of $27.7 million, partially offset by a reduction in the benefit of income taxes on cash of $43.3 million.

The increase in net cash provided by operating activities for the first nine months of 2023 compared with the first nine months of 2022 was primarily due to the favorable impact of working capital items of $231.2 million and an increase in net income of $28.2 million, partially offset by the unfavorable impact of income taxes on cash of $70.5 million due to higher tax payments.

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 six months of 2023 and 2022, respectively:

Six Months Ended

The following table displays the impact of working capital items on cash during the nine months of 2023 and 2022, respectively:

Nine Months Ended

September 30,

2023 2022 $ Change

6 unchanged sentences

Cash used in working capital items $ (44.9) $ (276.1) $ 231.2

The following table displays the impact of income taxes on cash during the first six months of 2023 and 2022, respectively:

Six Months Ended

The following table displays the impact of income taxes on cash during the first nine months of 2023 and 2022, respectively:

Nine Months Ended

September 30,

2023 2022 $ Change

4 unchanged sentences

Investing Activities:

The increase in net cash used in investing activities for the first six months of 2023 compared with the first six months of 2022 was primarily due to an increase in cash used for acquisitions of $172.3 million, an increase in net investments in short-term marketable securities of $24.2 million and an increase in capital expenditures of $16.1 million

The increase in net cash used in investing activities for the first nine months of 2023 compared with the first nine months of 2022 was primarily due to an increase in cash used for acquisitions of $312.3 million, an increase in cash used for net investments in short-term marketable securities of $33.4 million, and an increase in capital expenditures of $12.4 million.

Financing Activities:

The increase in net cash provided by financing activities for the first six months of 2023 compared with the first six months of 2022 was primarily due to cash proceeds of $284.8 million on the sale of shares of TIL, a subsidiary of the Company, in the second quarter of 2023, partially offset by a decrease in net borrowings of $247.6 million.

The increase in net cash provided by financing activities for the first nine months of 2023 compared with the first nine months of 2022 was primarily due to cash proceeds of $284.8 million on the sale of shares of TIL, a subsidiary of the Company, in the second quarter of 2023, partially offset by a decrease in net borrowings of $117.6 million and an increase in the purchase of treasury shares of $25.1 million.

LIQUIDITY AND CAPITAL RESOURCES

Reconciliation of total debt to net debt and the ratio of net debt to capital:

September 30,

2023 December 31,

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Ratio of Net Debt to Capital:

September 30,

2023 December 31,

4 unchanged sentences

The Company presents net debt because it believes net debt is more representative of the Company's financial position than total debt due to the amount of cash and cash equivalents held by the Company and the ability to utilize such cash and cash equivalents to reduce debt if needed.

At June 30, 2023, the Company had strong liquidity with $344.3 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $630.0 million available under committed credit lines.

At September 30, 2023, the Company had strong liquidity with $367.9 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $720.9 million available under committed credit lines.

Of the $367.9 million of cash and cash equivalents, $346.5 million resided in jurisdictions outside the United States.

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On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of the $750.0 million Senior Credit Facility and the $400.0 million 2027 Term Loan that each mature on December 5, 2027.

The Credit Agreement amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350.0 million 2023 Term Loan.

The Credit Agreement amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350.0 million 2023 Term Loan that was set to mature on September 11, 2023.

The Credit Agreement also replaced interest rates based on LIBOR with interest rates based on SOFR.

At June 30, 2023, the Company had $133.2 million of outstanding borrowings and $1.8 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $615.0 million.

At September 30, 2023, the Company had $49.1 million of outstanding borrowings and $2.0 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $698.9 million.

The Credit Agreement has two financial covenants:

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The maximum consolidated leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0.

As of June 30, 2023, the Company's consolidated leverage ratio was 1.85 to 1.0.

As of September 30, 2023, the Company's consolidated leverage ratio was 1.93 to 1.0.

The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0.

As of June 30, 2023, the Company's consolidated interest coverage ratio was 10.47 to 1.0.

As of September 30, 2023, the Company's consolidated interest coverage ratio was 9.74 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 6.27% and the average rate on outstanding Euro borrowings was 4.07% as of June 30, 2023.

dollar borrowings was 6.42% and the average rate on outstanding Euro borrowings was 4.51% as of September 30, 2023.

In addition, the Company pays a facility fee based on the applicable rate, which is variable with a spread based on the Company's debt rating, multiplied by the aggregate commitments of all of the lenders under the Senior Credit Facility.

As of June 30, 2023, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

As of September 30, 2023, 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, 2024.

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 June 30, 2023, the Company had $85 million of outstanding borrowings under the Accounts Receivable Facility and no borrowing base limitations.

There was $15 million of availability under the Accounts Receivable Facility as of June 30, 2023.

As of September 30, 2023, the Company had $78 million of outstanding borrowings under the Accounts Receivable Facility and no borrowing base limitations.

There was $22 million of availability under the Accounts Receivable Facility as of September 30, 2023.

Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which provide for borrowings of up to $226.9 million.

At June 30, 2023, the Company had borrowings outstanding of $49.8 million and bank guarantees of $2.7 million, which reduced the aggregate availability under these facilities to $193.6 million.

At September 30, 2023, the Company had borrowings outstanding of $30.1 million and bank guarantees of $2.3 million, which reduced the aggregate availability under these facilities to $194.5 million.

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.

On March 28, 2022, the Company issued the 2032 Notes in the aggregate principal amount of $350 million with an interest rate of 4.125%, maturing on April 1, 2032.

Proceeds from the 2032 Notes were used for general corporate purposes, which included repayment of borrowings under the Senior Credit Facility and the Accounts Receivable Facility outstanding at the time of issuance.

At June 30, 2023, the Company was in full compliance with all applicable covenants on its outstanding debt.

The Company expects to generate a higher amount of cash from operating activities in 2023 compared to 2022, primarily driven by higher earnings and improved working capital performance.

At September 30, 2023, the Company was in full compliance with all applicable covenants on its outstanding debt.

The Company expects to generate a higher amount of cash from operating activities in 2023 compared to 2022, driven mainly by improved working capital performance.

The Company expects higher capital expenditures in 2023 compared to 2022, but relatively in line with 2022 spending as a percentage of sales (4.0%).

Financing Obligations and Other Commitments:

During the first six months of 2023, the Company made cash contributions and payments of $6.3 million to its global defined benefit pension plans and $0.9 million to its other postretirement benefit plans.

During the first nine months of 2023, the Company made cash contributions and payments of $22.9 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 2023.

6 unchanged sentences

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, 2022, during the six months ended June 30, 2023.

OTHER MATTERS

4 unchanged sentences

Foreign currency gains and losses resulting from transactions, and the related hedging activity, are included in the Consolidated Statements of Income.

For the six months ended June 30, 2023, the Company recorded negative foreign currency translation adjustments of $0.2 million that decreased shareholders' equity, compared with negative foreign currency translation adjustments of $134.2 million that decreased shareholders' equity for the six months ended June 30, 2022.

The foreign currency translation adjustments for the six months ended June 30, 2023 were positively impacted by the weakening of the U.S.

dollar relative to other foreign currencies, including the Euro.

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 June 30, 2023 totaled $1.7 million of net gains, compared with $2.3 million of net gains during the three months ended June 30, 2022.

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, 2023 totaled $1.3 million of net losses, compared with $4.6 million of net gains during the six months ended June 30, 2022.

For the nine months ended September 30, 2023, the Company recorded negative foreign currency translation adjustments of $63.5 million that decreased shareholders' equity, compared with negative foreign currency translation adjustments of $267.7 million that decreased shareholders' equity for the nine months ended September 30, 2022.

The foreign currency translation adjustments for the nine months ended September 30, 2023 were negatively impacted by the strengthening of the U.S.

dollar relative to other foreign currencies, including the Chinese Renminbi Yuan and Euro.

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, 2023 totaled $5.2 million of net losses, compared with $9.1 million of net gains during the three months ended September 30, 2022.

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, 2023 totaled $6.5 million of net losses, compared with $13.7 million of net gains during the nine months ended September 30, 2022.

Russia Operations:

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During the third quarter of 2022, the Company sold its Timken Russia business resulting in a loss of $2.7 million on the sale.

After giving effect to these impairments and write-downs, as well as the sale of Timken Russia, as of June 30, 2023, the Company has net assets (net of noncontrolling interest of $4.4 million), totaling $7.1 million on its Consolidated Balance Sheet related to its Rail JV.

In the third quarter of 2023, the Company recorded impairment charges of $3.9 million related to property, plant and equipment and operating leased assets at the Rail JV.

After giving effect to these impairments and write-downs, as well as the sale of Timken Russia, as of September 30, 2023, the Company has net assets (net of noncontrolling interest of $2.1 million), totaling $5.1 million on its Consolidated Balance Sheet related to its Rail JV.

Net assets include $6.5 million of cash and cash equivalents that the Company has classified as restricted as the Company is presently unable to repatriate these funds to one of its subsidiaries outside of Russia.

The Company will continue to monitor the events in Russia and Ukraine and may record additional asset impairments or other losses in the future.

Quarterly Dividend:

On August 2, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.33 per common share.

The quarterly dividend will be paid on August 28, 2023 to shareholders of record as of August 15, 2023.

This will be the 405 th consecutive quarterly dividend paid on the common shares of the Company.

NON-GAAP MEASURES

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

6 unchanged sentences

8.0 32.0 44.1 35.7

Corporate pension and other postretirement benefit

related (income) expense (2)

Corporate pension and other postretirement benefit related expense (income) (2)

0.2 1.0 (1.7) 15.2

3 unchanged sentences

4.3 3.0 12.8 5.7

Loss (gain) on divestitures and sale of certain

(Gain) loss on divestitures and sale of certain assets (5)

(1.5) 0.1 (5.9) —

17 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Reconciliation of segment EBITDA to segment adjusted EBITDA and segment adjusted EBITDA margin:

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Engineered Bearings Industrial Motion Unallocated Corporate Total

3 unchanged sentences

5.4 2.5 — 7.9

Corporate pension and other postretirement benefit

related income (2)

— — (1.0) (1.0)

Corporate pension and other postretirement benefit related expense (2)

Russia-related charges (3)

(0.1) — — (0.1)

Acquisition-related charges (4)

0.9 2.5 0.9 4.3

Loss on divestitures and sale of certain assets (5)

Gain on divestitures and sale of certain assets (5)

(1.4) (0.1) — (1.5)

Adjusted EBITDA $ 156.7 $ 75.2 $ (16.1) $ 215.8

Adjusted EBITDA Margin (% of net sales) 20.2 % 20.5 % NM 18.9 %

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Engineered Bearings Industrial Motion Unallocated Corporate Total

3 unchanged sentences

1.1 31.0 (0.1) 32.0

Corporate pension and other postretirement

benefit related expense (2)

— — 11.6 11.6

Corporate pension and other postretirement benefit related expense (2)

Russia-related charges (3)

1 unchanged sentence

— 2.1 0.9 3.0

Loss (gain) on divestitures and sale of certain

0.1 (0.2) — (0.1)

Loss divestitures and sale of certain assets (5)

Adjusted EBITDA $ 153.8 $ 68.0 $ (8.2) $ 213.6

Adjusted EBITDA Margin (% of net sales) 19.7 % 19.1 % NM 18.8 %

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Engineered Bearings Industrial Motion Unallocated Corporate Total

3 unchanged sentences

10.6 32.7 0.1 43.4

Corporate pension and other postretirement benefit

related income (2)

Corporate pension and other postretirement benefit related income (2)

— — (1.7) (1.7)

2 unchanged sentences

3.2 5.8 3.8 12.8

(Gain) loss on divestitures and sale of certain

(Gain) loss on divestitures and sale of certain assets (5)

(6.2) 0.3 — (5.9)

1 unchanged sentence

Adjusted EBITDA Margin (% of net sales) 21.7 % 20.8 % NM 20.2 %

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Engineered Bearings Industrial Motion Unallocated Corporate Total

3 unchanged sentences

2.7 33.1 (0.1) 35.7

Corporate pension and other postretirement

benefit related expense (2)

Corporate pension and other postretirement benefit related expense (2)

— — 15.2 15.2

3 unchanged sentences

— 3.5 2.2 5.7

Gain on divestitures and sale of certain assets (5)

Loss (gain) divestitures and sale of certain assets (5)

0.1 (0.2) 0.1 —

7 unchanged sentences

Impairment, restructuring and reorganization charges for 2023 included $28.3 million related to the impairment of goodwill.

Impairment, restructuring and reorganization charges for 2022 included $29.3 million related to the sale of ADS.

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.

(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.

(2) Corporate pension and other postretirement benefit related expense (income) represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience.

The Company recognizes actuarial losses and (gains) 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 Plans for additional discussion.

(3) Russia-related charges include impairments and allowances recorded against certain property, plant and equipment, inventory and trade receivables to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations.

In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the fourth quarter of 2022.

(3) Russia-related charges include impairments or allowances recorded against certain property, plant and equipment, inventory and trade receivables to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations.

In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the third quarter of 2022.

Refer to Russia Operations on page 45 above for additional information.

(4) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.

(5) Represents the net loss (gain) resulting from divestitures and the sale of certain assets.

(5) Represents the net (gain) loss resulting from divestitures and sale of certain assets .

(6) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.

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Free Cash Flow:

Free cash flow represents net cash provided by (used in) operating activities less capital expenditures.

Free cash flow represents net cash provided by operating activities less capital expenditures.

Management believes free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

4 unchanged sentences

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.

T he 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 June 30, 2023 and December 31, 2022 was $444.7 million and $417.0 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 1.9 at June 30, 2023 and December 31, 2022.

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 September 30, 2023 and December 31, 2022 was $445.2 million and $417.0 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 2.0 and 1.9 at September 30, 2023 and December 31, 2022, respectively.

Reconciliation of Net income to Adjusted EBITDA for the trailing twelve months:

Twelve Months Ended

September 30,

2023 December 31,

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and (iv) impairment of assets.

Impairment, restructuring and reorganization charges for the twelve months ended December 31, 2022 and June 30, 2023 included $29.3 million related to the sale of ADS.

In addition, impairment, restructuring and reorganization charges for the twelve months ended June 30, 2023 included $28.3 million related to the impairment of goodwill.

Impairment, restructuring and reorganization charges for the twelve months ended December 31, 2022 and September 30, 2023 included $29.3 million related to the sale of ADS.

In addition, impairment, restructuring and reorganization charges for the twelve months ended September 30, 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.

3 unchanged sentences

(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.

(4) Represents the net gain resulting from divestitures and the sale of certain assets.

(5) Russia-related charges include allowances and impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations.

In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the fourth quarter of 2022.

Refer to Russia Operations on page 42 in Management Discussion and Analysis for additional information.

(4) Represents the net gain resulting from divestitures and sale of certain assets.

(5) Russia-related charges include impairments or allowances recorded against certain property, plant and equipment, inventory and trade receivables to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations.

In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the third quarter of 2022.

Refer to Russia Operations on page 45 above for additional information.

FORWARD-LOOKING STATEMENTS

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"Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 or this Form 10-Q.

Additional risks relating to the Company's business, the industries in which the Company operates, or the Company's common shares may be described from time to time in the Company's filings with the Securities and Exchange Commission.

Securities and Exchange Commission ("SEC").

All of these risk factors are difficult to predict, are subject to material uncertainties that may affect actual results and may be beyond the Company's control.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis