What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-04-30 compared with 2023-11-01 · 105 added, 287 removed, 336 unchanged (54% 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®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Lovejoy®, Diamond®, Drives®, Groeneveld® and BEKA®.

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

Timken employs more than 19,000 people globally in 45 countries.

10 unchanged sentences

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®, 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®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech® and Lagersmit®.

Industrial Motion products are used across a broad range of industries, including solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more.

18 unchanged sentences

(3) returning capital to shareholders through dividends and share repurchases;

and (4) maintaining a strong balance sheet and sufficient liquidity.

and (4) maintaining a strong balance sheet and sufficient liquidity to run the business.

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

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.

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.

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

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,

2024 2023 $ Change % Change

5 unchanged sentences

Average number of shares – diluted 70,880,015 73,360,854 — (3.4) %

Nine Months Ended

September 30,

2022 2021 $ Change % Change

Net sales $ 3,677.8 $ 3,414.7 $ 263.1 7.7 %

Net income 346.1 317.9 28.2 8.9 %

Net income attributable to noncontrolling interest 10.7 7.7 3.0 39.0 %

Net income attributable to The Timken Company $ 335.4 $ 310.2 $ 25.2 8.1 %

Diluted earnings per share $ 4.63 $ 4.16 $ 0.47 11.3 %

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

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%).

The decrease in net sales for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 was driven by lower organic sales (lower volume offset by favorable pricing) and the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions (net of divestitures).

The decrease in net income for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 was primarily due to the impact of lower volume, higher interest expense and higher intangible amortization expense, partially offset by lower impairment charges, favorable price/mix, lower operating costs, favorable material costs, and the benefit of acquisitions (net of divestitures).

The Company expects 2024 full-year revenue to be down 2% to 4% compared to 2023, driven by lower demand, partially offset by the favorable impact from acquisitions (net of divestitures) and slightly higher pricing.

The Company's net earnings are expected to be down in 2024 compared with 2023, primarily due to the impact of lower sales volume and higher income tax rate, partially offset by lower impairment charges, favorable price/mix, lower operating costs and the benefit of acquisitions (net of divestitures), including reduced acquisition related charges.

The Company expects to generate a higher amount of cash from operating activities in 2024 compared to 2023, driven mainly by improved working capital performance and lower cash taxes.

The Company expects capital expenditures to remain flat in 2024 compared to 2023, and relatively in line with 2023 spending as a percentage of sales (4.0%).

THE STATEMENT OF INCOME

1 unchanged sentence

Three Months Ended

September 30,

2024 2023 $ Change Change

6 unchanged sentences

Operating income % to net sales 15.5 % 14.9 % 60 bps

Nine Months Ended

September 30,

2023 2022 $ Change Change

Net sales $ 3,677.8 $ 3,414.7 $ 263.1 7.7%

Cost of products sold 2,500.0 2,390.5 109.5 4.6%

Selling, general and administrative expenses 551.3 469.8 81.5 17.3%

Amortization of intangible assets 48.3 32.2 16.1 50.0%

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 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.

Net sales decreased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023.

The decrease was driven by lower organic sales of $115 million (lower volume partially offset by favorable pricing), including a significant decline in renewable energy market sector, and the unfavorable impact of foreign currency exchange rate changes of $7 million, partially offset by the favorable impact of acquisitions (net of divestitures) of $50 million.

Operating income decreased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, due to the unfavorable impact of lower sales net of cost of products sold, increased amortization expense, and higher selling, general and administrative ("SG&A") expenses, partially offset by lower impairment and restructuring charges.

• Cost of products sold decreased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, due to the impact of lower volume of $70 million, favorable material and logistics costs of $6 million and the impact of foreign currency exchange rate changes of $5 million, partially offset by the incremental cost of goods sold from acquisitions (net of divestitures) of $26 million.

• SG&A expenses increased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, primarily due to the impact of acquisitions, partially offset by lower compensation expense and reduced discretionary spending to align with the lower demand levels.

• Amortization of intangible assets increased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, primarily due to the addition of intangible assets from the six 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.

As a result of this analysis the Company determined that one of the new reporting units within the Industrial Motion segment could not support the carrying value of its goodwill, and subsequently recorded a pretax impairment loss of $28.3 million in the first quarter of 2023.

• Impairment and restructuring charges were lower for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, primarily due to the impairment charges of $28.3 million related to the goodwill impairment recorded in the Industrial Motion segment during the first three months of 2023.

Interest Income and Expense:

Three Months Ended

September 30,

2024 2023 $ Change % Change

1 unchanged sentence

Interest income 2.8 1.5 $ 1.3 86.7 %

Nine Months Ended

September 30,

2023 2022 $ Change % Change

Interest expense $ (79.9) $ (51.9) $ (28.0) 53.9 %

Interest income 6.0 2.7 $ 3.3 122.2 %

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.

The increase in net interest expense for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 was due to increased debt levels and higher average interest rates.

Other Income (Expense):

Three Months Ended

September 30,

2024 2023 $ Change % Change

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) %

Non-service pension and other postretirement

(expense) income $ (1.0) $ 0.1 $ (1.1) NM

Other (expense) income (0.9) 3.1 (4.0) (129.0) %

Total other (expense) income $ (1.9) $ 3.2 $ (5.1) (159.4) %

Nine Months Ended

September 30,

2023 2022 $ Change % Change

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 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.

The change in non-service pension and other postretirement expense (income) for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 was due to a pension remeasurement gain of $0.9 million recognized during the first three months of 2023.

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

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.

The change in other (expense) income for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 was due to a gain of $4.8 million on the divestiture of SE Setco, a 50% owned joint venture, during the three months ended March 31, 2023.

Income Tax Expense:

Three Months Ended

September 30,

2024 2023 $ Change Change

1 unchanged sentence

Effective tax rate 27.9 % 25.3 % 260 bps

Nine Months Ended

September 30,

2023 2022 $ Change Change

Provision for income taxes $ 122.9 $ 108.9 $ 14.0 12.9 %

Effective tax rate 26.2 % 25.5 % 70 bps

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.

Refer to Note 6 - Income Taxes for more information on the computation of the income tax expense in interim periods.

Income tax expense increased $0.2 million for the three months ended March 31, 2024 compared with the three months ended March 31, 2023.

The slight increase in expense reflects an increase in the mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates and the net favorable impact of discrete items in the year ago period, which were mostly offset by lower pre-tax earnings.

Refer to Note 6 - Income Taxes in the Notes to the Consolidated Financial Statements for more information on the computation of the income tax expense in interim periods.

BUSINESS SEGMENTS

5 unchanged sentences

The effects of acquisitions, divestitures and foreign currency exchange rate changes on net sales are removed to allow investors and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period.

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

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

• The Company acquired Lagersmit during the fourth quarter of 2023.

Results for Lagersmit are reported in the Industrial Motion segment.

• The Company acquired iMECH during the fourth quarter of 2023.

Results for iMECH are reported in the Engineered Bearings segment.

• The Company completed the sale of Jiangsu TWB Bearings Co., Ltd.

("TWB") during the fourth quarter of 2023.

Results for TWB were reported in the Engineered Bearings segment.

• The Company acquired Rosa and Des-Case during the third quarter of 2023.

4 unchanged sentences

Results for ARB are reported in the Engineered Bearings segment.

• The Company acquired GGB during the fourth quarter of 2022.

Results for GGB are reported in the Engineered Bearings segment.

• The Company completed the sale of ADS during the fourth quarter of 2022.

Results for ADS were reported in the Industrial Motion segment.

• 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.

• The Company acquired Spinea during the second quarter of 2022.

Results for Spinea are reported in the Industrial Motion segment.

Engineered Bearings Segment:

Three Months Ended

September 30,

2024 2023 $ Change Change

3 unchanged sentences

Three Months Ended

September 30,

2024 2023 $ Change % Change

1 unchanged sentence

Acquisitions 8.5 — 8.5 NM

Currency 1.1 1.1 NM

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

Nine Months Ended

September 30,

2023 2022 $ Change Change

Net sales $ 2,533.5 $ 2,350.4 $ 183.1 7.8%

EBITDA $ 538.7 $ 486.2 $ 52.5 10.8%

EBITDA margin 21.3 % 20.7 % 60 bps

Nine Months Ended

September 30,

2023 2022 $ Change % Change

Net sales $ 2,533.5 $ 2,350.4 $ 183.1 7.8 %

Acquisitions 168.6 168.6 NM

Divestitures (7.6) — (7.6) NM

2 unchanged sentences

divestitures and currency $ 808.2 $ 900.7 $ (92.5) (10.3 %)

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 $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.

The Engineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, decreased $92.5 million or 10.3% in the three months ended March 31, 2024 compared with the three months ended March 31, 2023.

The decrease reflects lower volume across most market sectors, driven primarily by a significant decline in the renewable energy sector and lower shipments in the off-highway sector, partially offset by higher pricing and higher sales volume in the rail sector.

EBITDA decreased by $26.3 million or 12.8% for the three months ended March 31, 2024 compared with the three months ended March 31, 2023, primarily due to the impact of lower volume and the unfavorable impact of foreign currency exchange rate changes, partially offset by lower material costs, favorable price/mix, and the benefit of acquisitions (net of divestitures).

Industrial Motion Segment:

Three Months Ended

September 30,

2024 2023 $ Change Change

3 unchanged sentences

Three Months Ended

September 30,

2024 2023 $ Change % Change

1 unchanged sentence

Acquisitions 49.1 — 49.1 NM

Divestitures (12.9) (12.9) NM

Currency 0.1 — 0.1 NM

Net sales, excluding the impact of acquisitions

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

Nine Months Ended

September 30,

2023 2022 $ Change Change

Net sales $ 1,144.3 $ 1,064.3 $ 80.0 7.5%

EBITDA $ 199.4 $ 162.4 $ 37.0 22.8%

EBITDA margin 17.4 % 15.3 % 210 bps

Nine Months Ended

September 30,

2023 2022 $ Change % Change

Net sales $ 1,144.3 $ 1,064.3 $ 80.0 7.5 %

Acquisitions 62.7 62.7 NM

Divestitures (36.0) (36.0) NM

Currency (3.5) (3.5) NM

Net sales, excluding the impact of acquisitions,

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, 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.

and currency $ 338.6 $ 362.1 $ (23.5) (6.5) %

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $23.5 million or 6.5% in the three months ended March 31, 2024 compared with the three months ended March 31, 2023.

The decrease reflects lower volume across most platforms, with belts and chain experiencing the largest decline, partially offset by higher services revenue and higher pricing.

EBITDA increased $29.1 million or 60.4% for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 primarily due to lower impairment charges, the benefit of acquisitions and favorable pricing, partially offset by the impact of lower volume.

The lower impairment charges were primarily due to the impairment charges related to the impairment of goodwill recorded in the quarter ended March 31, 2023.

Unallocated Corporate

Three Months Ended

September 30,

2024 2023 $ Change Change

1 unchanged sentence

Unallocated corporate expense % to net sales (1.5) % (1.4) % (10) bps

Nine Months Ended

September 30,

2023 2022 $ Change Change

Unallocated corporate expense $ (47.9) $ (35.4) $ (12.5) 35.3 %

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

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

September 30,

Unallocated corporate expense increased for the three months ended March 31, 2024 compared with the three months ended March 31, 2023 primarily due to the unfavorable impact of foreign currency exchange rate changes.

Three Months Ended

2024 2023 $ Change

1 unchanged sentence

Net cash used in investing activities (24.5) (64.5) 40.0

Net cash provided by financing activities 235.6 88.5 147.1

Net cash used in financing activities (15.0) (17.5) 2.5

Effect of exchange rate changes on cash (6.8) 1.8 (8.6)

Increase in cash and cash equivalents and restricted cash $ 34.4 $ 43.7 $ (9.3)

Increase (decrease) in cash and cash equivalents

and restricted cash $ 3.0 $ (1.6) $ 4.6

Op erating Activities:

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.

The decrease in net cash provided by operating activities for the first three months of 2024 compared with the first three months of 2023 was primarily due to a decrease in net income of $15.1 million, lower non-cash impairment charges of $28.3 million, the unfavorable impact of working capital items of $8.7 million and higher pension and postretirement payments of $7.8 million, partially offset by the favorable impact of income taxes on cash of $32.7 million due to lower 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 nine months of 2023 and 2022, respectively:

Nine Months Ended

September 30,

The following table displays the impact of working capital items on cash during the three months of 2024 and 2023, respectively:

Three Months Ended

2024 2023 $ Change

6 unchanged sentences

Cash used in working capital items $ (118.2) $ (109.5) $ (8.7)

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,

The following table displays the impact of income taxes on cash during the first three months of 2024 and 2023, respectively:

Three Months Ended

2024 2023 $ Change

4 unchanged sentences

Investing Activities:

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.

The decrease in net cash used in investing activities for the first three months of 2024 compared with the first three months of 2023 was primarily due to a decrease in cash used for acquisitions of $29.0 million and an increase in cash from the net liquidation of short-term marketable securities of $18.9 million, partially offset by lower proceeds from divestitures of $5.7 million.

Financing Activities:

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.

The decrease in net cash used in financing activities for the first three months of 2024 compared with the first three months of 2023 was primarily due to a decrease in net borrowings of $44.8 million and a decrease in proceeds from the exercise of stock options of $10.7 million, partially offset by a decrease in the purchase of treasury shares of $54.0 million.

LIQUIDITY AND CAPITAL RESOURCES

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

September 30,

2024 December 31,

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Ratio of Net Debt to Capital:

September 30,

2024 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 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.

At March 31, 2024, the Company had strong liquidity with $421.9 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $523.8 million available under committed credit lines.

Of the $421.9 million of cash and cash equivalents, $395.4 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 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 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 interest rates under Credit Agreement are based on SOFR.

At March 31, 2024, the Company had $251.1 million of outstanding borrowings and $0.1 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $498.8 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 September 30, 2023, the Company's consolidated leverage ratio was 1.93 to 1.0.

As of March 31, 2024, the Company's consolidated leverage ratio was 2.20 to 1.0.

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

As of September 30, 2023, the Company's consolidated interest coverage ratio was 9.74 to 1.0.

As of March 31, 2024, the Company's consolidated interest coverage ratio was 8.24 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 6.42% and the average rate on outstanding Euro borrowings was 4.51% as of September 30, 2023.

dollar borrowings was 6.43% and the average rate on outstanding Euro borrowings was 4.86% as of March 31, 2024.

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

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

As of March 31, 2024, 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, 2026.

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 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 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.

As of March 31, 2024, the Company had $75 million of outstanding borrowings under the Accounts Receivable Facility and no borrowing base limitations.

There was $25 million of availability under the Accounts Receivable Facility as of March 31, 2024.

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 $227.4 million.

At March 31, 2024, the Company had borrowings outstanding of $26.8 million and bank guarantees of $1.7 million, which reduced the aggregate availability under these facilities to $198.9 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 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 also has 2024 Notes in the aggregate principal amount of $350.0 million with an interest rate of 3.875%, maturing on September 1, 2024.

The Company currently intends to refinance the 2024 Term Loan and the 2024 Notes prior to their maturity.

At March 31, 2024, 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 2024 compared to 2023, driven mainly by improved working capital performance and lower cash taxes.

The Company expects higher capital expenditures in 2024 compared to 2023, but relatively in line with 2023 spending as a percentage of sales (4.0%).

Financing Obligations and Other Commitments:

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.

During the first three months of 2024, the Company made cash contributions and payments of $11.9 million to its global defined benefit pension plans and $0.3 million to its other postretirement benefit plans.

The Company expects to make contributions to its global defined benefit plans of approximately $25 million in 2024.

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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 nine months ended September 30, 2023.

OTHER MATTERS

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

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.

For the three months ended March 31, 2024, the Company recorded negative foreign currency translation adjustments of $50.3 million that decreased shareholders' equity, compared with positive foreign currency translation adjustments of $27.4 million that increased shareholders' equity for the three months ended March 31, 2023.

The foreign currency translation adjustments for the three months ended March 31, 2024 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:

The Company had two subsidiaries in Russia prior to Russia's invasion of Ukraine in February 2022, including Timken Russia, which was 100% owned by Timken and a 51%-owned joint venture to serve the Russian rail market ("Rail JV").

As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended operations and recorded property, plant and equipment impairment charges of $9.0 million and inventory write-downs of $4.1 million during the year ended December 31, 2022.

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

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.

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the three months ended March 31, 2024 totaled $3.2 million of net losses, compared with $3.0 million of net losses during the three months ended March 31, 2023.

NON-GAAP MEASURES

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net Sales $ 1,190.3 $ 1,262.8

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Acquisition intangible amortization 20.0 13.5

Impairment, restructuring and reorganization

8.0 32.0 44.1 35.7

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

0.2 1.0 (1.7) 15.2

Impairment, restructuring and reorganization charges (1)

Corporate pension and other postretirement benefit related income (2)

Russia-related charges (3)

3.6 2.3 3.8 15.3

Acquisition-related charges (4)

4.3 3.0 12.8 5.7

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

(1.5) 0.1 (5.9) —

Gain on divestitures and sale of certain assets (5)

Noncontrolling interest of above adjustments (0.1) (0.2)

Provision for income taxes (6)

(7.0) (15.7) (24.0) (26.5)

Adjusted Net Income $ 125.7 $ 153.5

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Depreciation and amortization expense (7)

52.1 39.9 148.3 122.0

Acquisition intangible amortization 20.0 13.5

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Provision for income taxes (6)

(7.0) (15.7) (24.0) (26.5)

Adjusted EBITDA $ 246.4 $ 265.5

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Diluted earnings per share (EPS) $ 1.46 $ 1.67

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

Three Months Ended September 30, 2023

Engineered Bearings Industrial Motion Unallocated Corporate Total

Net Sales $ 775.6 $ 367.1 $ — $ 1,142.7

EBITDA 148.2 70.3 (17.2) 201.3

Impairment, restructuring and reorganization

5.4 2.5 — 7.9

Corporate pension and other postretirement benefit related expense (2)

Russia-related charges (3)

Acquisition-related charges (4)

0.9 2.5 0.9 4.3

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 September 30, 2022

Engineered Bearings Industrial Motion Unallocated Corporate Total

Net Sales $ 779.7 $ 356.7 $ — $ 1,136.4

EBITDA 150.4 34.9 (10.1) 175.2

Impairment, restructuring and reorganization

1.1 31.0 (0.1) 32.0

Corporate pension and other postretirement benefit related expense (2)

Russia-related charges (3)

Acquisition-related charges (4)

— 2.1 0.9 3.0

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 %

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Engineered Bearings Industrial Motion Unallocated Corporate Total

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2.5 1.8 0.1 4.4

Corporate pension and other postretirement benefit related income (2)

— — (1.7) (1.7)

Russia-related charges (3)

Acquisition-related charges (4)

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Adjusted EBITDA Margin (% of net sales) 22.6 % 21.2 % NM 20.7 %

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Engineered Bearings Industrial Motion Unallocated Corporate Total

3 unchanged sentences

1.1 28.7 — 29.8

Corporate pension and other postretirement benefit related expense (2)

Corporate pension and other postretirement benefit related income (2)

— — (0.9) (0.9)

Russia-related charges (3)

15.3 — — 15.3

Acquisition-related charges (4)

2.2 — 2.5 4.7

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

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

(4.8) — — (4.8)

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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 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.

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

The Company recognizes actuarial gains and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.

Refer to Note 16 - Retirement Benefit Plans and Note 17 - Other Postretirement Benefit Plans for additional discussion.

(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.

Refer to Russia Operations in Management Discussion and Analysis within the Company's annual report on Form 10-K 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 (gain) loss resulting from divestitures and sale of certain assets .

(5) Represents the net gain 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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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net cash provided by operating activities $ 49.3 $ 78.6

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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.

Net income for the trailing twelve months ended March 31, 2024 and December 31, 2023 was $392.9 million and $408.0 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 2.1 at March 31, 2024 and December 31, 2023.

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

Twelve Months Ended

September 30,

2024 December 31,

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$ 25.4 $ 50.8

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

Corporate pension and other postretirement benefit related expense (2)

Acquisition-related charges (3)

1 unchanged sentence

Russia-related charges (5)

Tax indemnification and related items 0.3 0.3

Total adjustments 85.8 106.5

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and (iv) impairment of assets.

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.

Impairment, restructuring and reorganization charges for the twelve months ended December 31, 2023 included $29.3 million related to the sale of ADS and $28.3 million related to the impairment of goodwill.

The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges.

However, management believes these actions are not representative of the Company’s core operations.

(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 represents actuarial losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience.

The Company recognizes actuarial losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.

(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 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.

(5) Russia-related charges include impairments or allowances recorded against certain property, plant and equipment, inventory and trade receivables and write-down of a 51%-owned joint venture ("Russian JV") to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations.

Refer to Russia Operations in Management Discussion and Analysis within the Company's annual report on Form 10-K for additional information.

FORWARD-LOOKING STATEMENTS

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The Company cautions readers that actual results may differ materially from those expressed or implied in forward-looking statements made by or on behalf of the Company due to a variety of factors, such as:

• deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company or its customers or suppliers conduct business, including adverse effects from a global economic slowdown or recession, terrorism, or hostilities.

This includes:

political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers or suppliers conduct business, changes in currency valuations and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions;

• negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, negative impacts to customer demand or operations, and availability and health of employees, as a result of COVID-19 or other pandemics and associated governmental measures such as restrictions on travel and manufacturing operations;

political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers or suppliers conduct business, changes in currency valuations, strained geopolitical relations between countries in which we have significant operations, and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions;

• negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, negative impacts to customer demand or operations, availability and health of employees, and governmental restrictions on travel and manufacturing operations;

• the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the Company operates.

This includes:

the ability of the Company to respond to rapid changes in customer demand, disruptions to the Company's supply chain, logistical issues associated with port closures or congestion, delays or increased costs, the effects of customer or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles, the effects of distributor inventory corrections reflecting de-stocking of the supply chain and whether conditions of fair trade continue in the Company's markets;

the ability of the Company to respond to rapid changes in customer demand, disruptions to the Company's supply chain, logistical issues associated with port closures or congestion, delays or increased costs, the effects of customer or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles, the ability of the Company to effectively adjust the prices for its products in response to changing dynamics, the effects of distributor inventory corrections reflecting de-stocking of the supply chain and whether conditions of fair trade continue in the Company's markets;

• competitive factors, including changes in market penetration, increasing price competition by existing or new foreign and domestic competitors, the introduction of new products or services by existing and new competitors, competition for skilled labor and new technology that may impact the way the Company’s products are produced, sold or distributed;

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disruptions to the Company's supply chain and logistical issues associated with port closures or congestion, delays or increased costs;

changes in the expected costs associated with product warranty claims;

changes in the expected costs associated with product warranty claims especially in industry segments with potential high claim values;

changes in the global regulatory landscape (including with respect to climate change or other environmental regulations);

changes resulting from inventory management and cost reduction initiatives;

the effects of unplanned plant shutdowns;

the effects of government-imposed restrictions, commercial requirements and Company goals associated with climate change and emissions or other waste reduction initiatives;

the effects of government-imposed restrictions, commercial requirements and Company goals associated with climate change and emissions or other sustainability initiatives;

and changes in the cost of labor and benefits;

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and the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings, realization of synergies and expected cash flow generation;

• the Company’s ability to maintain appropriate relations with unions or works councils that represent Company associates in certain locations in order to avoid disruptions of business;

the continued attraction, retention and development of management and other key employees, the successful development and execution of succession plans and management of other human capital matters;

• unanticipated litigation, claims, investigations or assessments.

• the Company’s ability to maintain appropriate relations with unions or works councils that represent Company employees in certain locations in order to avoid disruptions of business;

• the continued attraction, retention and development of management, other key employees, and other skilled personnel at all levels of the organization, the successful development and execution of succession plans and management of other human capital matters;

• unanticipated litigation, claims, investigations, remediation or assessments.

This includes:

claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, environmental or health and safety issues, data privacy and taxes;

• changes in worldwide financial and capital markets impacting the availability of financing on satisfactory terms, as a result of financial stress affecting the banking system or otherwise, and the rising interest rate environment, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;

claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, PFAS, other environmental or health and safety issues, data privacy and taxes;

• changes in worldwide financial and capital markets impacting the availability of financing on satisfactory terms, as a result of financial stress affecting the banking system or otherwise, and the high interest rate environment, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;

• the Company's ability to satisfy its obligations and comply with covenants under its debt agreements, maintain favorable credit ratings and its ability to renew or refinance borrowings on favorable terms;

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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