What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-26 · 331 added, 326 removed, 1330 unchanged (33% of the section changed)

18 unchanged sentences

Impairment and restructuring charges 13.4 45.5 44.1

Gain on sale of real estate ( 13.8 ) — —

Operating Income 611.1 657.1 606.9

22 unchanged sentences

Change in fair value of derivative financial instruments 2.0 ( 0.8 ) 2.3

Other comprehensive income (loss), net of tax 26.6 ( 166.2 ) ( 65.7 )

Other comprehensive (loss) income, net of tax ( 165.2 ) 26.6 ( 166.2 )

Comprehensive Income, net of tax 210.1 434.6 250.8

68 unchanged sentences

Impairment charges 3.5 33.2 38.3

Loss (gain) on sale of assets 1.3 ( 1.9 ) 1.3

(Gain) loss on sale of assets ( 14.4 ) 1.3 ( 1.9 )

(Gain) loss on acquisitions and divestitures — ( 2.9 ) 3.5

14 unchanged sentences

Capital expenditures ( 170.0 ) ( 187.8 ) ( 178.4 )

Acquisitions, net of cash acquired of $ 30.0 million in 2023 and $ 19.4 million in 2022

Acquisitions, net of cash acquired of $ 8.9 million in 2024;

$ 30.0 million in 2023;

and $ 19.4 million in 2022

( 167.4 ) ( 638.8 ) ( 453.7 )

2 unchanged sentences

$ 5.3 million in 2022

0.3 13.5 33.9

Investments in short-term marketable securities, net 15.2 5.7 14.6

15 unchanged sentences

Other ( 1.2 ) ( 4.4 ) 6.5

Net Cash Provided by (Used in) Financing Activities 347.1 206.8 ( 269.3 )

Net Cash (Used in) Provided by Financing Activities ( 194.8 ) 347.1 206.8

Effect of exchange rate changes on cash ( 22.0 ) ( 7.2 ) ( 14.5 )

Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash 78.6 82.8 ( 63.2 )

(Decrease) Increase In Cash, Cash Equivalents and Restricted Cash ( 45.7 ) 78.6 82.8

Cash, cash equivalents and restricted cash at beginning of year 419.3 340.7 257.9

7 unchanged sentences

Comprehensive

(Loss) Income Treasury

(Loss) Treasury

Year Ended December 31, 2022

12 unchanged sentences

Purchase of treasury shares ( 211.6 ) ( 211.6 )

Shares surrendered for stock option activity — 3.8 ( 3.8 )

Stock option exercise activity 8.5 8.5

13 unchanged sentences

( 94.0 ) ( 94.0 )

Sale of shares of Timken India Limited 229.0 194.5 8.1 26.4

Other ownership changes ( 4.0 ) ( 1.5 ) ( 2.5 )

Stock-based compensation expense 30.6 30.6

Purchase of treasury shares ( 250.9 ) ( 250.9 )

Shares surrendered for stock option activity — 3.8 ( 3.8 )

Stock option exercise activity 21.8 21.8

1 unchanged sentence

compensation ( 17.0 ) ( 17.0 )

Balance at December 31, 2022 $ 2,352.9 $ 40.7 $ 829.6 $ 1,932.1 $ ( 181.9 ) $ ( 352.2 ) $ 84.6

Year Ended December 31, 2023 $ 2,702.4 $ 40.7 $ 1,076.5 $ 2,232.2 $ ( 146.9 ) $ ( 620.1 ) $ 120.0

Year Ended December 31, 2024

Net income 375.3 352.7 22.6

26 unchanged sentences

Revenue is generally recognized as performance obligations under the terms of a contract with a customer of the Company are satisfied.

Of the Company's revenue, approximately 88 % to 92 % is from fixed-price contracts and continues to be recognized as of a point in time when products are shipped from the Company's manufacturing or distribution facilities or at a later point in time when control of the products transfers to the customer.

The Company recognizes approximately 8 % to 12 % of revenue over time for services and certain sales of customer-specific product as it satisfies the performance obligations because of the continuous transfer of control to the customer, supported as follows:

• For certain service contracts, this continuous transfer of control to the customer occurs as the Company's service enhances assets that the customer owns and controls at all times, and the Company is contractually entitled to payment for work performed to date plus a reasonable margin.

Of the Company's revenue, approximately 90 % is from fixed-price contracts and continues to be recognized as of a point in time when products are shipped from the Company's manufacturing or distribution facilities or at a later point in time when control of the products transfers to the customer.

The Company recognizes approximately 10 % of revenue over time primarily for certain sales of customer-specific product as it satisfies the performance obligations because of the continuous transfer of control to the customer, supported as follows:

government contracts, the customer is allowed to unilaterally terminate the contract for convenience, and is required to pay the Company for costs incurred plus a reasonable margin and can take control of any work in process.

1 unchanged sentence

government contracts involving customer-specific products, the customer controls the work in process based on contractual termination clauses or restrictions on the Company's use of the product, and the Company possesses a right to payment for work performed to date plus a reasonable margin.

As a result of control transferring over time for these products and services, revenue is recognized based on progress toward completion of the performance obligation.

As a result of control transferring over time, revenue is recognized based on progress toward completion of the performance obligation.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided.

4 unchanged sentences

government contracts are based on the Company's standard terms and conditions or the result of specific negotiations with each customer.

The Company's standard terms and conditions require payment 45 to 75 days from the invoice date, but the timing of payment for specific negotiated terms may vary.

The Company's standard terms and conditions require payment 30 to 90 days from the invoice date based on geographic region, but the timing of payment for specific negotiated terms may vary.

The Company also has both prime and subcontracts in support of the provision of goods and services to the U.S.

Certain of these contracts are subject to the Federal Acquisition Regulation ("FAR") and are priced based on competitive market prices.

Under the payment terms of certain of those U.S.

Under the payment terms of certain of these U.S.

government fixed-price contracts, the customer pays the Company performance-based payments, which are interim payments of up to 90 % of the costs incurred to date based on quantifiable measures of performance or on the achievement of specified events or milestones.

5 unchanged sentences

Sales, value-added, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

As a practical expedient, the Company may exclude an assessment of whether promised goods or services are performance obligations, if such promised goods and services are immaterial to the customer contract taken as a whole, and combine these with other performance obligations.

The Company has also elected not to adjust the promised amount of consideration for the effects of any significant financing component where the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

As a practical expedient, the Company may exclude an assessment of whether promised goods are performance obligations, if such promised goods are immaterial to the customer contract taken as a whole, and combine these with other performance obligations.

The Company has also elected not to adjust the promised amount of consideration for the effects of any significant financing component where the Company expects, at contract inception, that the period between when the Company transfers a promised good to a customer and when the customer pays for that good will be one year or less.

Finally, the Company's policy is to exclude performance obligations resulting from contracts with a duration of one year or less from its disclosures related to remaining performance obligations.

4 unchanged sentences

The Company adjusts the estimate of revenue at the earlier of when the amount of consideration the Company expects to receive changes or when the consideration becomes fixed.

The Company recognizes the cost of freight and shipping when control of the products or services has transferred to the customer as an expense in "Cost of products sold" on the Consolidated Statement of Income, because those are costs incurred to fulfill the promise recognized, not a separate performance obligation.

The Company recognizes the cost of freight and shipping when control of the products or services has transferred to the customer as an expense in "Cost of products sold" on the Consolidated Statements of Income, because those are costs incurred to fulfill the promise recognized, not a separate performance obligation.

To the extent certain freight and shipping fees are charged to customers, the Company recognizes the amounts charged to customers as revenues and the related costs as an expense in "Cost of products sold" when control of the related products or services has transferred to the customer.

6 unchanged sentences

Restricted Cash:

Cash and cash equivalents of $ 0.4 million and $ 9.1 million were restricted at December 31, 2023 and 2022, respectively.

The decrease in restricted cash was primarily due to the deconsolidation of the Company's Russian joint venture.

Cash and cash equivalents of $ 0.4 million were restricted at December 31, 2024 and 2023.

Accounts Receivable, Less Allowances:

12 unchanged sentences

Note 1 - Significant Accounting Policies (continued)

Inventories are valued at the lower of cost or net realizable value, with approximately 62 % valued by the FIFO method and the remaining 38 % valued by the LIFO method.

Inventories are valued at the lower of cost or net realizable value, with approximately 59 % valued by the first-in, first-out ("FIFO") method and the remaining 41 % valued by the last-in, first-out ("LIFO") method.

The majority of the Company’s domestic inventories are valued by the LIFO method, while substantially all of the Company’s international inventories are valued by the FIFO method.

38 unchanged sentences

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.

The Company has elected to account for Global Intangible Low Tax Income ("GILTI") as a period cost.

The Company has elected to account for Global Intangible Low Tax Income as a period cost.

Foreign Currency:

3 unchanged sentences

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

Net of related derivative activity, the Company recognized a foreign currency exchange loss resulting from transactions of $ 14.8 million for the year ended December 31, 2023 and recognized a gain of $ 15.4 million and a loss of $ 9.4 million for the years ended December 31, 2022 and 2021, respectively.

Net of related derivative activity, the Company recognized a foreign currency exchange loss resulting from transactions of $ 9.3 million for the year ended December 31, 2024 and recognized a loss of $ 14.8 million and a gain of $ 15.4 million for the years ended December 31, 2023 and 2022, respectively.

Pension and Other Postretirement Benefits:

8 unchanged sentences

The Company recognizes forfeitures on stock-based awards as they occur.

In addition, the Company’s share grants provide for the payment of dividends to employees and the Board of Directors upon vesting;

these dividends are charged to retained earnings when paid.

Earnings Per Share:

Certain unvested restricted share grants provide for the payment of non-forfeitable dividends.

The Company considers these awards as participating securities.

Earnings per share are computed using the two-class method.

Basic earnings per share are computed by dividing net income less undistributed earnings allocated to unvested restricted shares by the weighted-average number of common shares outstanding during the year.

Diluted earnings per share are computed by dividing net income less undistributed earnings allocated to unvested restricted shares by the weighted-average number of common shares outstanding, adjusted for the dilutive impact of outstanding stock-based awards.

As of December 31, 2023, there are no participating securities outstanding.

Earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding during the year.

Diluted earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding, adjusted for the dilutive impact of potential common shares for share-based compensation awards.

Note 1 - Significant Accounting Policies (continued)

8 unchanged sentences

Because actual results could differ from these estimates, the Company reviews and updates these estimates and assumptions regularly to reflect recent experience.

Income Statement Presentation:

The Company previously classified intangible asset amortization expense within cost of products sold in the Company's Consolidated Statements of Income.

Intangible asset amortization expense is now classified separately.

The 2022 and 2021 presentation has been revised to conform to the 2023 presentation resulting in a reduction in the cost of products sold for the years ended December 31, 2022 and 2021.

Recent Accounting Pronouncements:

New Accounting Guidance Adopted:

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50)." ASU 2022-04 is intended to establish disclosures that enhance the transparency of a supplier finance program used by an entity in connection with the purchase of goods and services.

Supplier finance programs, which also may be referred to as reverse factoring, payables finance or structured payables arrangements, allow a buyer to offer its suppliers the option for access to payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary.

Under the guidance, a buyer in a supplier finance program would disclose qualitative and quantitative information about its supplier finance programs.

The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

Refer to Note 13 - Supply Chain Financing in the Notes to the Consolidated Financial Statements for additional information.

New Accounting Guidance Issued and Not Yet Adopted:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 40).

ASU 2023-09 is intended to enhance the transparency and decision to improve the usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

The amendments require that all entities disclose on an annual basis the amount of income taxes paid disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold.

For public business entities, the new guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

Note 1 - Significant Accounting Policies (continued)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280).

ASU 2023-07 requires that a public entity disclose:

3 unchanged sentences

The other segment items category is the difference between segment revenue less the segment expenses disclosed and each reported measure of segment profit or loss.

For public business entities, the new guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted the new guidance in the fourth quarter of 2024.

Refer to Note 4 - Segment Information in the Notes to the Consolidated Financial Statements for additional information.

New Accounting Guidance Issued and Not Yet Adopted:

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

ASU 2024-03 requires that a public entity disclose the detailed information about types of expense.

Specifically, a public entity would disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption.

A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(d).

In addition, a public entity should include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

A public entity would also disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

For public business entities, the new guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 40).

ASU 2023-09 is intended to enhance the transparency and decision to improve the usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

For public business entities, the new guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

The Company is preparing to adopt the new guidance in 2025.

Note 2 - Acquisitions and Divestitures

Acquisitions:

During 2023, the Company completed six acquisitions, which enhance its product portfolio.

On September 9, 2024, the Company acquired 100 % of the capital stock of CGI, a Nevada-based manufacturer of precision drive systems serving medical robotics and other automation markets.

CGI employs approximately 130 people and has its headquarters and manufacturing facilities in Carson City, Nevada.

With its concentration on medical robotics, CGI enhances the Company's product portfolio serving this attractive sector.

The total purchase price for this acquisition was $ 167.1 million, net of cash acquired of $ 8.9 million.

Results for CGI are reported in the Industrial Motion segment.

The Company incurred acquisition-related costs of $ 2.0 million to complete this acquisition.

Acquisition costs are recorded in selling, general and administrative expenses on the Consolidated Statements of Income.

During 2023, the Company completed six acquisitions, which enhanced the Company's capabilities and product portfolio.

On December 20, 2023, the Company completed the acquisition of 100 % of the capital stock of Lagersmit, a Netherlands-based manufacturer of highly engineered sealing solutions for marine, dredging, water, tidal energy and other industrial applications, for $ 128.2 million, net of cash acquired of $ 6.5 million.

6 unchanged sentences

Based in Italy, Nadella employs approximately 450 people and operates manufacturing facilities in Europe and China.

Net sales for Nadella were $ 74.6 million in 2023 for the period subsequent to the completion of the acquisition.

Results for Nadella are reported in the Industrial Motion segment.

14 unchanged sentences

The total purchase price for these three acquisitions was $ 95.7 million, net of cash acquired of $ 1.4 million.

The Company incurred transaction costs of $ 6.3 million to complete 2023 acquisitions.

During 2022, the Company completed two acquisitions.

On November 4, 2022, the Company completed the acquisition of GGB, a global leader in premium engineered metal-polymer plain bearings, for $ 300.2 million, net of cash acquired of $ 18.6 million.

GGB's products are used mainly in industrial applications, including pumps and compressors, HVAC, off-highway, energy, material handling and aerospace.

With manufacturing facilities across the United States, Europe and China, GGB employs approximately 900 people and has a global engineering, distribution and sales footprint.

Results for GGB are reported in the Engineered Bearings segment.

On May 31, 2022, the Company completed the acquisition of Spinea, a European technology leader and manufacturer of highly engineered cycloidal reduction gears and actuators.

Spinea’s solutions primarily serve high-precision automation and robotics applications in the factory automation sector.

Spinea is located in Presov, Slovakia.

The purchase price for this acquisition was $ 151.3 million, net of cash acquired of $ 0.2 million.

Results for Spinea are reported in the Industrial Motion segment.

The Company incurred transaction costs of $ 4.7 million to complete 2022 acquisitions.

The Company incurred transaction costs of $ 6.7 million to complete the 2023 acquisitions.

Note 2 - Acquisitions and Divestitures (continued)

23 unchanged sentences

Cash flow reconciling items:

Working capital adjustment related to 2022 acquisitions received in 2023

Working capital adjustment related to 2023 acquisitions paid in 2024

Working capital adjustment related to 2022 acquisition received in 2023 — ( 2.2 )

Cash paid for acquisitions, net of cash acquired $ 167.4 $ 638.8

The 2023 acquisitions presented above include goodwill of $ 58.5 million and intangible assets of $ 77.5 million for Lagersmit, goodwill of $ 78.9 million and intangible assets of $ 45.1 million for Des-Case, and goodwill of $ 128.5 million and intangible assets of $ 158.7 million, including customer relationships of $ 107.2 million, for Nadella.

The 2022 acquisitions presented above include goodwill of $ 64.5 million and intangible assets of $ 151.4 million for GGB, and goodwill of $ 43.4 million and intangible assets of $ 30.6 million for Spinea.

In determining the fair value of amounts above related to Lagersmit, iMECH and Rosa, the Company utilized a benchmarking approach based on the Company's prior acquisitions to determine the preliminary fair values for identified intangibles assets and the step-up of inventory.

Upon completion of the final purchase price allocation, the final fair values of the assets acquired, liabilities assumed and resulting goodwill may differ materially from the preliminary assessment.

Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded to those assets and liabilities and residual amounts will be allocated to goodwill.

In determining the fair value of amounts above related to Des-Case, Nadella and ARB, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued.

The estimation of fair value required judgment related to future net cash flows, discount rates, customer attrition rates, competitive trends, market comparisons and other factors.

The 2023 acquisitions presented above include goodwill of $ 59.1 million and intangible assets of $ 71.9 million for Lagersmit, goodwill of $ 78.7 million and intangible assets of $ 45.1 million for Des-Case, and goodwill of $ 129.0 million and intangible assets of $ 158.9 million for Nadella.

In determining the fair value of the amounts above, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued.

The estimation of fair value required judgment related to future net cash flows, discount rates, competitive trends, market comparisons and other factors.

As a result, the Company utilized third-party valuation specialists to assist in determining the fair value of certain assets.

Inputs were generally determined by taking into account independent appraisals and historical data, supplemented by current and anticipated market conditions.

Inputs were generally determined by considering independent appraisals and historical data, supplemented by current and anticipated market conditions.

Note 2 - Acquisitions and Divestitures (continued)

The amounts in the table above represent the preliminary purchase price allocation for the 2023 acquisitions.

This purchase price allocation, including the residual amount allocated to goodwill, is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations are obtained and management completes its reassessment of the measurement period procedures based on the results of the preliminary valuation.

The purchase price allocations for Lagersmit, iMECH, Rosa and Des-Case are preliminary due to the proximity of the acquisition date to December 31, 2023, and as a result no elements of the purchase price allocation have been finalized.

The purchase price allocation for Nadella is preliminary with respect to most assets acquired and liabilities assumed.

The purchase price allocation for ARB is complete.

During the applicable measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date.

The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments has been completed on the acquisition date.

The 2024 amounts in the table above represent the preliminary purchase price allocation for the CGI acquisition.

The purchase price allocation for CGI is preliminary as a result of the proximity of the acquisition date to December 31, 2024, and as a result, no elements of the purchase price allocation have been finalized.

The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date.

The following table summarizes the preliminary purchase price allocation at fair value for identifiable intangible assets acquired in 2024 and 2023:

Average Life Weighted-

Trade names (indefinite life) $ — Indefinite $ 30.0 Indefinite

Trade names (finite life) 6.1 18 years 25.6 17 years

1 unchanged sentence

Customer relationships 59.0 17 years 201.8 14 years

Capitalized software 0.6 2 years 2.2 2 years

Non-competes — 1.0 3 years

Capitalized software — 0.6 2 years

Total intangible assets $ 100.4 $ 299.5

7 unchanged sentences

The Company recorded proceeds of $ 9.0 million, net of cash divested of $ 0.7 million, on the sale of the business and reported an additional loss of $ 0.6 million in the fourth quarter of 2023.

On February 28, 2023, the Company completed the sale of all of its membership interests in SE Setco, a 50 % owned joint venture.

On February 28, 2023, the Company completed the sale of its 50 % membership interests in SE Setco, a joint venture.

The Company had accounted for SE Setco as an equity method investment prior to the sale.

1 unchanged sentence

The gain was reflected in other (expense) income, net in the Consolidated Statement of Income.

During the third quarter of 2022, the Company made the decision to sell its ADS business, located in Manchester, Connecticut.

The business met the held for sale criteria, and the Company reclassified its assets and liabilities accordingly.

As a result of the carrying value of the business exceeding the estimated sales price less costs to sell, the Company recorded an impairment charge of $ 29.3 million in 2022.

On November 1, 2022, the Company completed the divestiture of ADS.

ADS had net sales of $ 39.7 million and $ 48.8 million in 2022 and 2021, respectively.

The results of operations of ADS were reported in the Industrial Motion segment.

The Company recorded proceeds of $ 33.0 million on the sale of the business.

During 2023, the Company recorded an additional loss of $ 1.2 million due to the payment of a working capital adjustment.

On September 1, 2022, the Company completed the divestiture of Timken Russia, one of its two subsidiaries in Russia.

Timken Russia had net sales of $ 4.8 million in 2022.

The results of operations of Timken Russia were reported in the Engineered Bearings segment.

The Company recorded proceeds of $ 1.0 million, net of cash divested of $ 5.3 million, and recognized a loss of $ 2.7 million on the sale of the business.

The loss was reflected in other (expense) income, net in the Consolidated Statement of Income.

Note 3 - Revenue

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Europe / Middle East / Africa 599.2 520.7 1,119.9

China 503.9 81.7 585.6

Asia-Pacific excluding China 433.5 34.0 467.5

Asia-Pacific 770.4 120.0 890.4

Net sales $ 3,034.3 $ 1,538.7 $ 4,573.0

4 unchanged sentences

Europe / Middle East / Africa 678.6 499.7 1,178.3

China 529.7 78.8 608.5

Asia-Pacific excluding China 392.7 31.6 424.3

Asia-Pacific 937.4 115.7 1,053.1

Net sales $ 3,257.7 $ 1,511.3 $ 4,769.0

4 unchanged sentences

Europe / Middle East / Africa 588.9 406.8 995.7

China 523.3 88.6 611.9

Asia-Pacific excluding China 335.3 28.3 363.6

Asia-Pacific 922.4 110.4 1,032.8

Net sales $ 3,092.6 $ 1,404.1 $ 4,496.7

Net sales by geographic area are reported by the destination of net sales.

When reviewing revenues by sales channel, the Company separates net sales to OEMs from sales to distributors and end users.

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Distribution/end users 45 % 40 % 40 %

In addition to disaggregating revenue by segment and geography and by sales channel as shown above, the Company believes information about the timing of transfer of goods or services, type of customer and distinguishing service revenue from product sales is also relevant.

During the years ended December 31, 2023, 2022 and 2021, approximately 9 % of total net sales were recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized as of a point in time.

Service revenue represented approximately 4 % of total net sales in 2023, 2022 and 2021.

During the year ended December 31, 2024, approximately 10 % of total net sales were recognized on an over-time basis compared to 9 % in 2023 and 2022.

These sales were recognized over-time due to the continuous transfer of control to the customer, with the remainder recognized as of a point in time.

Finally, business with the U.S.

government or its contractors represented approximately 6 % of total net sales in 2023 and 7 % of total net sales for 2022 and 2021.

government or its contractors represented approximately 7 % of total net sales in 2024, 6 % of total net sales in 2023, and 7 % of total net sales for 2022.

Note 3 - Revenue (continued)

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amounts billed to customers ( 384.2 ) ( 383.5 )

unbilled receivables divested — ( 26.3 )

Ending balance $ 140.8 $ 144.5

8 unchanged sentences

Note 4 - Segment Information

Effective January 1, 2023, the Company began operating under new reportable segments.

The Company operates under two reportable segments:

(1) Engineered Bearings and (2) Industrial Motion.

Segment results for 2022 and 2021 have been revised to conform to the 2023 presentation of segments.

Description of types of products and services from which each reportable segment derives its revenues:

The Company ' s reportable segments are business units that target different industry sectors.

While the segments often operate using a shared infrastructure, each reportable segment is managed to address specific customer needs in these diverse market segments.

The Company ' s reportable segments are product business units that serve customers in diverse industrial markets.

Each reportable segment is managed to address specific customer needs in these diverse market segments.

The Engineered Bearings portfolio features bearings with precision tolerances, proprietary internal geometries and quality materials.

2 unchanged sentences

industrial distribution, renewable energy, automotive, rail, aerospace, metals and mining, heavy truck, agriculture and turf, and construction.

Beyond products sold to OEMs, aftermarket sales and services to individual end users, equipment owners, operators and maintenance shops are handled directly or through the Company's extensive network of authorized automotive and heavy truck distributors.

Beyond products sold to OEMs, aftermarket sales to individual end users, equipment owners, operators and maintenance shops are handled directly or through the Company's extensive network of authorized automotive and heavy truck distributors.

The Industrial Motion portfolio features products such as drives, breathers, seals, automatic lubrication systems, linear motion products, chain, belts, couplings, industrial clutches and brakes, and gears and gearboxes.

The portfolio products and services to OEMs and end users in markets that place heavy demands on operating equipment they make or use.

The portfolio products and services are sold to OEMs and end users in markets that place heavy demands on operating equipment they make or use.

This includes:

industrial distribution, automation, agriculture and turf, services, marine, renewable energy, aerospace and construction.

This segment also supports aftermarket sales and service needs through its global network of authorized industrial distributors and through the provision of services directly to end users.

This segment also supports aftermarket sales through its global network of authorized industrial distributors and through the provision of services directly to end users.

In addition, the Company’s industrial drivetrain services offer end users a broad portfolio of maintenance support and capabilities that include repair and service for bearings and gearboxes as well as electric motor rewind, repair and services.

Measurement of segment profit or loss and segment assets:

The Company evaluates performance and allocates resources based on return on capital and profitable growth.

The primary measurement used by management to measure the financial performance of each segment is EBITDA.

The Company's CODM is the President and Chief Executive Officer.

The primary measurement used by the CODM to measure the financial performance of each segment is adjusted EBITDA.

The Company's CODM evaluates financial performance and allocates resources based on return on capital and profitable growth.

The CODM considers actual and budget results provided on a regular basis for both segment's profit measures when making decisions about allocating capital and personnel to the segments.

The Company adopted the new disclosure requirements under ASU 2023-07, which requires that the Company disclose significant segment expenses.

The Company concluded that the significant segment expenses provided to the CODM are:

(1) cost of products sold and (2) selling, general and administrative expenses.

2023 and 2022 have been revised to align with the new presentation guidance.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Factors used by management to identify the enterprise’s reportable segments:

Net sales by geographic area are reported by the destination of net sales, which is reflective of how the Company operates its segments.

Long-lived assets by geographic area are reported by the location of the subsidiary.

Timken’s non-U.S.

operations are subject to normal international business risks not generally applicable to a domestic business.

These risks include currency fluctuation, changes in tariff restrictions, difficulties in establishing and maintaining relationships with local distributors and dealers, import and export licensing requirements, difficulties in staffing and managing geographically diverse operations and restrictive regulations by foreign governments, including price and exchange controls, compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and environmental regulatory requirements, and disadvantages of competing against companies from countries that are not subject to U.S.

laws and regulations, including the FCPA.

Note 4 - Segment Information (continued)

Business Segment Information:

The following tables provide segment financial information and a reconciliation of segment results to consolidated results:

The following tables provide segment financial information and a reconciliation of segment results to consolidated results for the year ended December 31, 2024:

Engineered Bearings Industrial Motion Total

Net sales $ 3,034.3 $ 1,538.7 $ 4,573.0

Cost of products sold (1)

( 2,106.9 ) ( 1,008.5 )

Net sales to external customers:

Engineered Bearings $ 3,257.7 $ 3,092.6 $ 2,815.1

Industrial Motion 1,511.3 1,404.1 1,317.8

Selling, general and administrative expenses (2)

( 419.3 ) ( 269.1 )

Segment EBITDA:

Engineered Bearings $ 661.7 $ 615.8 $ 513.4

Industrial Motion 262.0 222.8 233.0

Total EBITDA, for reportable segments $ 923.7 $ 838.6 $ 746.4

Other segment items (3)

Depreciation and amortization (4)

Adjusted EBITDA for reportable segments $ 608.2 $ 306.5 $ 914.7

Unallocated corporate expense ( 69.9 )

Corporate pension and other postretirement benefit related expense (1)

Impairment, restructuring and reorganization charges ( 17.8 )

Corporate pension and other postretirement benefit income 1.3

Acquisition-related charges ( 13.0 )

Tax indemnification and related items 1.1

Gain on divestitures and sale of certain assets 14.7

CEO succession expenses ( 3.7 )

Property losses and related expenses ( 1.2 )

Depreciation and amortization ( 221.8 )

Interest expense ( 125.1 )

Interest income 14.9

Income before income taxes $ 494.2

Year ended December 31, 2023:

Engineered Bearings Industrial Motion Total

Net sales $ 3,257.7 $ 1,511.3 $ 4,769.0

Cost of products sold (1)

( 2,246.0 ) ( 979.7 )

Acquisition-related gain (2)

Selling, general and administrative expenses (2)

( 425.4 ) ( 253.0 )

Other segment items (3)

Depreciation and amortization (4)

Adjusted EBITDA for reportable segments $ 682.6 $ 319.8 $ 1,002.4

Unallocated corporate expense ( 62.7 )

Impairment, restructuring and reorganization charges ( 59.3 )

Corporate pension and other postretirement benefit expense ( 20.6 )

Acquisition-related charges ( 31.8 )

Gain on divestitures and sale of certain assets 5.2

Depreciation and amortization ( 201.3 )

Interest expense ( 110.7 )

1 unchanged sentence

Income before income taxes $ 530.5

(1) Corporate pension and other postretirement benefit related expense represents curtailments, professional fees associated with pension de-risking and actuarial losses that resulted from the remeasurement of pension and other postretirement plan assets and obligations as a result of changes in assumptions.

(2) The acquisition-related gain represents a bargain purchase price gain on the acquisition of Aurora, acquired on November 30, 2020.

Note 4 - Segment Information (continued)

Year ended December 31, 2022:

Engineered Bearings Industrial Motion Total

Net sales $ 3,092.6 $ 1,404.1 $ 4,496.7

Cost of products sold (1)

( 2,184.7 ) ( 962.8 )

Selling, general and administrative expenses (2)

( 368.1 ) ( 213.6 )

Other segment items (3)

Depreciation and amortization (4)

Adjusted EBITDA for reportable segments $ 638.5 $ 263.7 $ 902.2

Unallocated corporate expense ( 46.3 )

Impairment, restructuring and reorganization charges ( 55.1 )

Corporate pension and other postretirement benefit expense ( 2.9 )

Acquisition-related charges ( 14.8 )

Tax indemnification and related items ( 0.3 )

Gain on divestitures and sale of certain assets 2.9

Depreciation and amortization ( 164.0 )

Interest expense ( 74.6 )

Interest income 3.8

Income before income taxes $ 550.9

(1) Cost of products sold exclude acquisition-related and reorganization charges, and property losses and related expenses.

(2) Selling, general, and administrative expenses exclude acquisition-related charges.

(3) Other segments items is Other (expense) income, net and exclude gain on divestitures and sale of certain assets, and tax indemnification and

related items.

(4) Depreciation and amortization excludes acquisition intangible amortization and depreciation recognized in reorganization charges, if any.

The following tables provide additional segment financial information:

Assets employed at year-end:

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India 174.2 146.2

Romania 100.6 101.8

Rest of world 398.2 440.6

$ 1,306.9 $ 1,311.9

Long-lived assets by geographic area are reported by the location of the subsidiary.

Refer to Note 3 - Revenue for further information pertaining to geographic net sales information.

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The Company made net income tax payments of $ 183.5 million, $ 240.3 million and $ 120.6 million in 2024, 2023 and 2022, respectively.

These income tax payments included $ 45.2 million and $ 55.2 million in 2024 and 2023, respectively, that were recorded in other paid-in capital related to sale of shares of Timken India Limited.

The following table is the reconciliation between the provision for income taxes and the amount computed by applying the U.S.

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Accruals and settlements related to tax audits ( 6.7 ) ( 3.2 ) ( 9.5 )

Valuation allowance changes ( 2.1 ) ( 0.9 ) ( 7.8 )

Stock based compensation ( 2.9 ) ( 1.2 ) ( 8.1 )

Other items, net 2.4 8.7 ( 1.0 )

4 unchanged sentences

foreign tax credit utilization primarily from acquisition integration structuring for the year ended December 31, 2023.

The Company released $ 7.8 million of foreign valuation allowance for the year ended December 31, 2021, which was related to a valuation allowance that was recorded against certain net operating loss carryforwards in China.

Once established, a valuation allowance is released when, based on the weight of all available evidence, management concludes that related deferred tax assets are more likely than not to be realized.

Management concluded in the fourth quarter of 2021 that there was sufficient evidence to release the valuation allowance.

There are no changes to the Company’s assertion about its permanent reinvestment in undistributed foreign earnings.

There has been no change in the Company’s assertion about its permanent reinvestment in undistributed foreign earnings.

The Company recorded $ 1.3 million and $ 15.0 million of income tax expense related to foreign withholding taxes on planned one-time distributions for the years ended December 31, 2024 and 2023, respectively.

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It is not practicable to calculate the additional taxes that might be payable on such unremitted earnings due to the variety of circumstances and tax laws applicable at the time of distribution.

The Organization for Economic Co-operation and Development ("OECD") has a framework to implement a global minimum corporate tax of 15% applied on a country-by-country basis for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025.

While the United States has not enacted legislation to adopt Pillar 2, and it is uncertain if it will do so in the future, certain countries in which the Company operates have enacted such legislation, and other countries are in the process of doing so.

The enactment of Pillar 2 was not material to the Company’s results of operations and financial condition.

The effect of temporary differences giving rise to deferred tax assets and liabilities at December 31, 2024 and 2023 was as follows:

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As of December 31, 2023, the Company had $ 34.2 million of total gross unrecognized tax benefits, $ 24.2 million of which would favorably impact the Company’s effective income tax rate in any future period if such benefits were recognized.

As of December 31, 2023, the Company believed it was reasonably possible that the amount of unrecognized tax positions could decrease by approximately $ 5 million during the next 12 months.

The potential decrease would primarily be driven by settlements with tax authorities and the expiration of various applicable statutes of limitation.

As of December 31, 2023, the Company had accrued $ 11.8 million of interest and penalties related to uncertain tax positions.

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Ending balance, December 31 $ 35.8 $ 34.2 $ 26.0

During 2024 , gross unrecognized tax benefits increased primarily for accruals related to prior year tax matters in multiple jurisdictions related to acquisitions and non-deductible expenses.

These increases were partially offset by releases of accruals related to closing agreements and lapses in statute of limitations.

During 2023 , gross unrecognized tax benefits increased primarily for accruals related to prior year tax matters in multiple jurisdictions related to acquisitions and non-U.S.

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These decreases were partially offset by accruals for uncertain tax positions related to prior year tax matters in multiple jurisdictions related to acquisitions.

During 2021, gross unrecognized tax benefits decreased primarily for releases of accruals related to closing agreements and lapses in statute of limitations for the U.S.

and a favorable non-U.S.

transfer pricing settlement.

These decreases were partially offset by accruals for uncertain tax positions related to non-U.S.

non-deductible expenses.

As of December 31, 2024, the Company is subject to examination by the IRS for tax years 2019 to the present.

The Company also is subject to tax examination in various U.S.

state and local tax jurisdictions for tax years 2016 to the present, as well as various foreign tax jurisdictions, including Mexico, China, Poland, France, India, Germany and Slovakia for tax years as early as 2003 to the present .

state and local tax jurisdictions for tax years 2017 to the present, as well as various foreign tax jurisdictions, including Mexico, China, Poland, France, India, Italy, Romania, Germany, Spain and Slovakia for tax years as early as 2003 to the present.

The Company’s unrecognized tax benefits are presented on the Consolidated Balance Sheets as a component of other non-current liabilities, or in certain instances, as a reduction to deferred income taxes.

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If all inventories had been valued at FIFO, inventories would have been $ 257.2 million and $ 232.1 million greater at December 31, 2024 and 2023, respectively.

The Company recognized a decrease in its LIFO reserve of $ 3.3 million during 2023, compared to an increase in its LIFO reserve of $ 36.0 million during 2022.

The Company recognized an increase in its LIFO reserve of $ 25.1 million during 2024, compared to a decrease in its LIFO reserve of $ 3.3 million during 2023.

Note 8 - Property, Plant and Equipment

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At December 31, 2024 and 2023, $ 21.4 million and $ 22.9 million of property, plant and equipment was included in accounts payable, trade and were paid subsequent to year-end.

The Consolidated Statement of Cash Flows was adjusted accordingly.

The Consolidated Statements of Cash Flows were adjusted accordingly.

On September 30, 2024, the Company completed the sale of its former bearing plant in Gaffney, South Carolina.

The Company received $ 16.0 million in cash proceeds for the Gaffney plant and recognized a pretax gain of $ 13.8 million on the sale.

The gain was reflected in gain on sale of real estate in the Consolidated Statements of Income.

Note 9 - Goodwill and Other Intangible Assets

1 unchanged sentence

Furthermore, goodwill and indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In connection with the adoption of new reportable segments, goodwill was reallocated to new reporting units based on relative fair value at the reporting unit level.

The Engineered Bearings segment has one reporting unit and the Industrial Motion segment has six reporting units.

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

The Company utilizes both an income approach and a market approach in testing goodwill for impairment.

The Company utilized updated forecasts for the income approach as part of the goodwill impairment review.

Based on the earnings and cash flow forecasts for the Belts and Chain reporting unit within the Industrial Motion segment, the Company determined that the reporting unit could not support the carrying value of its goodwill.

As a result, the Company recorded a pretax impairment loss of $ 28.3 million during the first quarter of 2023, which was reported in impairment and restructuring charges on the Consolidated Statement of Income.

During the fourth quarter of 2024, the Company recorded an additional goodwill impairment loss of $ 1.5 million for the Belts and Chain reporting unit, bringing their goodwill balance to zero .

This impairment loss is reported in impairment and restructuring charges on the Consolidated Statements of Income.

Changes in the carrying value of goodwill were as follows:

3 unchanged sentences

Acquisitions — 61.4 61.4

Measurement period adjustments related to 2023 acquisitions 6.0 0.4 6.4

Impairment loss — ( 1.5 ) ( 1.5 )

1 unchanged sentence

Ending Balance $ 692.0 $ 691.3 $ 1,383.3

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

The Company utilizes both an income approach and a market approach in testing goodwill for impairment.

The Company utilized updated forecasts for the income approach as part of the goodwill impairment review.

The acquisitions of Lagersmit, iMECH, Rosa, Des-Case, Nadella and ARB added goodwill of $ 58.5 million, $ 12.8 million, $ 6.5 million, $ 78.9 million, $ 128.5 million and $ 0.4 million, respectively, in 2023.

Goodwill arising from these acquisitions is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated by combining the companies.

The goodwill related to iMECH and ARB is deductible for tax purposes and will be amortized over 15 years.

For the other 2023 acquisitions, goodwill will not be deductible for tax purposes.

Note 9 - Goodwill and Other Intangible Assets (continued)

The acquisition of CGI added goodwill of $ 61.4 million in 2024.

Goodwill arising from this acquisition is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated by combining the companies.

The goodwill related to CGI is not deductible for tax purposes.

Year ended December 31, 2023:

2 unchanged sentences

Acquisitions 13.2 272.4 285.6

Impairment loss — ( 28.3 ) ( 28.3 )

Foreign currency translation adjustments and other changes

1 unchanged sentence

Ending Balance $ 692.3 $ 677.3 $ 1,369.6

The acquisition of GGB added $ 63.6 million of goodwill, and the acquisition of Spinea added $ 43.3 million of goodwill in 2022.

In 2023, measurement period adjustments of $ 0.9 million and $ 0.1 million, respectively, were recorded to adjust goodwill for GGB and Spinea.

Approximately 40 % of the goodwill for GGB is being deducted for tax purposes, and all of the goodwill for Spinea is being deducted for tax purposes.

No material goodwill impairment losses were recorded in 2022 or 2021.

Goodwill arising from these acquisitions is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated by combining the companies.

The goodwill related to iMECH and ARB is deductible for tax purposes and will be amortized over 15 years.

For the other 2023 acquisitions, goodwill is not deductible for tax purposes.

No material goodwill impairment losses were recorded in 2022.

Intangible Assets:

19 unchanged sentences

Intangible assets acquired in 2024 totaled $ 100.4 million.

Intangible assets subject to amortization were assigned useful lives of one to 20 years and had a weighted-average amortization period of 15.1 years.

The intangible assets subject to amortization were assigned useful lives of 15 to 18 years and had a weighted-average amortization of 16.8 years.

Amortization expense for intangible assets was $ 85.5 million, $ 72.3 million and $ 50.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

69 unchanged sentences

Short-term debt as of December 31, 2024 and 2023 was as follows:

Variable-rate Term Loan (1) maturing on August 16, 2024, with an interest rate of 5.112 % at December 31, 2023

Variable-rate Term Loan (1) , originally due to mature on August 16, 2024;

redeemed on May 29, 2024.

Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 3.36 % to 3.95 % at December 31, 2024 and 4.35 % to 7.33 % at December 31, 2023

1 unchanged sentence

On August 16, 2023, the Company entered into a € 200 million variable-rate term loan ("2024 Term Loan"), maturing on August 16, 2024.

Proceeds from the 2024 Term Loan were used to repay borrowings on the Senior Credit Facility and Accounts Receivable Facility, as well as for general corporate purposes.

The Company currently intends to repay or replace the 2024 Term Loan prior to its maturity.

The Company repaid the 2024 Term Loan during the second quarter of 2024.

The lines of credit for certain of the Company’s foreign subsidiaries provide for short-term borrowings, with most of these lines of credit being uncommitted.

1 unchanged sentence

The weighted-average interest rate on these lines of credit during the year were 4.19 %, 4.24 % and 1.40 % in 2024 , 2023 and 2022, respectively.

The increase in the weighted-average interest rate was primarily due to higher borrowing rates.

The weighted-average interest rate on lines of credit outstanding at December 31, 2024 and 2023 was 3.58 % and 4.81 %, respectively.

1 unchanged sentence

Variable-rate Senior Credit Facility with an average interest rate on U.S.

Dollar of 6.48 % and Euro of 4.85 % at December 31, 2023 and 5.10 % and 2.21 %, respectively, at December 31, 2022

$ 247.4 $ 8.5

Variable-rate Accounts Receivable Facility, with an interest rate of 6.42 % at December 31, 2023 and of 5.01 % at December 31, 2022

Variable-rate Term Loan (1) , maturing on December 5, 2027, with an interest rate of 6.58 % at December 31, 2023 and of 5.55 % at December 31, 2022

Fixed-rate Senior Unsecured Notes (1) , maturing on September 1, 2024, with an interest rate of 3.875 %

Dollar of 6.48 % and Euro of 4.85 % at December 31, 2023

Variable-rate Accounts Receivable Facility, with an interest rate of 6.42 % at December 31, 2023

Fixed-rate Senior Unsecured Notes (1) , originally due to mature on September 1, 2024;

redeemed on June 24, 2024

Fixed-rate Euro Senior Unsecured Notes (1) , maturing on September 7, 2027, with an interest rate of 2.02 %

Fixed-rate Senior Unsecured Notes (1) , maturing on December 15, 2028, with an interest rate of 4.50 %

Variable-rate Term Loan (1) , maturing on December 5, 2027, with an interest rate of 5.58 % at December 31, 2024 and of 6.58 % at December 31, 2023

Fixed-rate Medium-Term Notes, Series A (1) , maturing at various dates through May 2028, with interest rates ranging from 6.74 % to 7.76 %

Fixed-rate Senior Unsecured Notes (1) , maturing on December 15, 2028, with an interest rate of 4.50 %

Fixed-rate Senior Unsecured Notes (1) , maturing on April 1, 2032, with an interest rate of 4.13 %

Fixed-rate Euro Senior Unsecured Notes (1) , maturing on May 23, 2034, with an interest rate of 4.13 %

Fixed-rate Euro Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15 %

10 unchanged sentences

These limitations reduced the availability of the Accounts Receivable Facility to $ 93.9 million at December 31, 2024.

As of December 31, 2023, there were $ 67.0 million outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under this facility to $ 12.1 million.

As of December 31, 2024, there were no outstanding borrowings under the Accounts Receivable Facility.

The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income.

The interest rate was 5.67 %, 6.42 % and 5.01 % at December 31, 2024, 2023 and 2022, respectively.

On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of a $ 750.0 million Senior Credit Facility and $ 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 SOFR.

At December 31, 2023, the Senior Credit Facility had outstanding borrowings of $ 247.4 million and $ 1.3 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $ 501.3 million.

On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of a $ 750.0 million Senior Credit Facility and $ 400.0 million 2027 Term Loan, both of which 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 a $ 350.0 million term loan that was set to mature on September 11, 2023.

The interest rates under the Credit Agreement are based on SOFR.

At December 31, 2024, the Senior Credit Facility had no outstanding borrowings.

The Credit Agreement has two financial covenants:

a consolidated net leverage ratio and a consolidated interest coverage ratio.

On May 23, 2024, the Company issued the 2034 Notes in the aggregate principal amount of € 600 million with an interest rate of 4.13 %, maturing on May 23, 2034.

Proceeds from the 2034 Notes were used for the redemption of the Company's outstanding 2024 Notes in the aggregate principal amount of $ 350 million, that were due to mature on September 1, 2024, as well as the repayment of other debt outstanding at the time of issuance.

On March 28, 2022, the Company issued the 2032 Notes in the aggregate principal amount of $ 350.0 million with an interest rate of 4.13 %, maturing on April 1, 2032.

Proceeds from the 2032 Notes were used for general corporate purposes, which included the repayment of borrowings under the Company's previous senior credit facility and Accounts Receivable Facility at the time of issuance.

The Company has the 2024 Notes in the aggregate principal amount of $ 350.0 million with an interest rate of 3.875 %, maturing on September 1, 2024.

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

At December 31, 2024, the Company was in full compliance with all applicable covenants on its outstanding debt.

6 unchanged sentences

Note 13 - Supply Chain Financing

The Company offers a supplier finance program with two different financial institutions where suppliers may receive early payment from the financial institutions on invoices issued to the Company.

The Company has entered into a supplier finance program with two different financial institutions where suppliers may receive early payment from the financial institutions on invoices issued to the Company.

The Company and each financial institution entered into arrangements providing for the Company to pay the financial institution per the terms of any supplier invoice paid early under the program and to pay an annual fee for the supplier finance platform subscription and related support.

4 unchanged sentences

The supplier invoice terms under the program typically require payment in full within 90 days of the invoice date.

The following table is a rollforward of the outstanding obligations for the Company’s supplier finance program for the twelve months ended December 31, 2023:

The following table is a rollforward of the outstanding obligations for the Company’s supplier finance program for the twelve months ended December 31, 2024 and December 31, 2023:

Confirmed obligations outstanding, January 1 $ 21.3 $ 14.4

2 unchanged sentences

Confirmed obligations outstanding, ending balance $ 16.7 $ 21.3

The obligations outstanding at December 31, 2023 were included in accounts payable, trade on the Consolidated Balance Sheet.

The obligations outstanding at December 31, 2024 and December 31, 2023 were included in accounts payable, trade on the Consolidated Balance Sheet.

Note 14 - Contingencies

9 unchanged sentences

All previously pending property damage and personal injury lawsuits against Lovejoy related to the Site were settled or dismissed prior to our acquisition of Lovejoy.

In addition, governmental authorities in the United States and the European Union are increasingly focused on regulating PFAS.

PFAS regulations are applicable to portions of the Company's products, and conditions may develop, arise or be discovered that create environmental compliance or remediation liabilities at certain of its facilities.

The Company had total environmental accruals of $ 4.8 million and $ 4.7 million for various known environmental matters that are probable and reasonably estimable as of December 31, 2024 and 2023, respectively, which includes the Lovejoy matter discussed above.

1 unchanged sentence

The ultimate resolution of these matters could result in actual costs that exceed amounts accrued.

Legal Matter:

On June 11, 2024, the Company's subsidiary in India, TIL, received a government order claiming damages (penalties and interest) totaling approximately $ 12.4 million.

The order relates to the closure of TIL’s retirement trust for employees and subsequent transfer of trust assets to the government-administered Employees’ Provident Fund Organization ("EFPO").

The order alleges that the surrender of trust assets did not follow applicable EFPO timing guidelines.

TIL believes it fully complied with EFPO requirements and guidelines under the circumstances.

TIL is disputing the merits of the order and has filed an appeal with the high court in India having jurisdiction over the matter.

Management believes that relief will be provided to TIL once the matter is fully adjudicated;

accordingly, no liability has been recorded.

While no assurance can be given as to the ultimate outcome of this matter, the Company does not believe that the final resolution will have a material effect on the Company's consolidated financial position or liquidity;

however, the effect of any future outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

Note 14 - Contingencies (continued)

Product Warranties:

In addition to the contingencies above, the Company provides limited warranties on certain of its products.

The product warranty liability included in "Other current liabilities" on the Consolidated Balance Sheets for 2023 and 2022 was $ 15.2 million and $ 23.5 million, respectively.

The balances at the end of each respective period represent the best estimates of costs for existing and future claims for products that are still under warranty.

The liability primarily relates to accruals for products sold into the automotive and renewable energy sectors.

The liability primarily relates to accruals for products sold into the automotive and wind energy sectors.

Accrual estimates are based on actual claims and expected trends that continue to mature.

The Company is currently evaluating claims raised by certain customers with respect to the performance of bearings sold into the automotive and wind energy sectors.

In addition, the Company continues to evaluate claims raised by certain customers with respect to the performance of bearings sold into the wind energy and automotive sectors.

Management believes that the outcome of these claims will not have a material effect on the Company's consolidated financial position;

however, the effect of any such change may be material to the results of operations of any particular period in which such change occurs.

The following is a rollforward of the consolidated product warranty accrual at December 31, 2023 and December 31, 2022, respectively:

2023 December 31,

The following is a rollforward of the consolidated product warranty accrual at December 31, 2024 and 2023:

Beginning balance, January 1 $ 15.2 $ 23.5

2 unchanged sentences

Ending balance $ 18.0 $ 15.2

The product warranty accrual at December 31, 2024 and 2023 is included in other current liabilities on the Consolidated Balance Sheets.

Note 15 - Stock Compensation

10 unchanged sentences

For time-based restricted stock units that are expected to settle in cash, the Company had $ 2.1 million and $ 2.0 million accrued in salaries, wages and benefits as of December 31, 2024 and 2023, respectively, on the Consolidated Balance Sheets.

Note 15 - Stock Compensation (continued)

A summary of stock award activity, including performance-based restricted stock units, time-based restricted stock units and deferred shares that will settle in common shares for the year ended December 31, 2024 is as follows:

4 unchanged sentences

Adjusted for performance results achieved (1)

( 15,175 ) 55.37

Vested ( 366,427 ) 72.84

1 unchanged sentence

Outstanding - end of year 982,010 $ 78.43

(1) Adjustments for the number of shares vested under the 2020 awards at the end of the three-year period ended December 31, 2022 being slightly lower than the target number of shares.

(1) Adjustments for the number of shares vested under the 2021 performance-based restricted stock unit awards at the end of the three-year period ended December 31, 2023 being higher than the target number of shares.

The Company distributed shares totaling 366,427 in 2024, 376,261 in 2023 and 386,594 in 2022 due to the vesting of stock awards.

1 unchanged sentence

The Company recognized compensation expense of $ 25.9 million, $ 30.5 million and $ 29.3 million for the years ended December 31, 2024, 2023 and 2022, respectively, relating to performance-based restricted stock units, time-based restricted stock units, deferred shares and restricted shares.

As of December 31, 2024, the Company had unrecognized compensation expense of $ 31.8 million related to unvested stock awards, which is expected to be recognized over a total weighted-average period of two years .

In addition to performance-based restricted stock units, time-based restricted stock units and deferred shares, the Company has granted stock option awards to officers and key employees.

Stock options typically have a ten-year term and generally vest in 25 % increments beginning annually on the first anniversary date of grant.

Note 15 - Stock Compensation (continued)

During 2023, 2022 and 2021, the Company recognized stock-based compensation expense of $ 0.1 million, $ 1.1 million and $ 2.0 million, respectively, for stock option awards.

During 2024, the Company recognized no stock-based compensation expense for stock options awards.

During 2023 and 2022, the Company recognized stock-based compensation expense of $ 0.1 million and $ 1.1 million, respectively, for stock option awards.

Beginning in 2020, the Company discontinued the use of nonqualified stock options.

4 unchanged sentences

Exercised ( 128,888 ) 43.00

Canceled or expired ( 475 ) 42.60

Outstanding - end of year 257,729 $ 42.53 4 years $ 7.4

3 unchanged sentences

Net cash proceeds from the exercise of stock option awards were $ 5.6 million, $ 21.8 million and $ 8.5 million, respectively.

As of December 31, 2023, the Company had unrecognized compensation expense of $ 37.4 million related to stock options and stock awards, which is expected to be recognized over a total weighted-average period of two years .

There were 5.8 million shares available for future grants for all plans at December 31, 2024.

25 unchanged sentences

The Company transferred its operations to other bearing manufacturing facilities.

The Company expects to incur approximately $ 12 million to $ 14 million of pretax costs in total related to this closure.

During 2024, the Company recorded severance and related benefits of $ 0.2 million and exit costs of $ 1.7 million related to this closure.

During 2023, the Company recorded severance and related benefits of $ 3.6 million and exit costs of $ 0.6 million related to this closure.

During 2022, the Company recorded severance and related benefits of $ 0.9 million related to this closure.

The Company has incurred cumulative pretax costs related to this closure of $ 12.5 million as of December 31, 2023, including rationalization costs recorded in cost of products sold.

The Company incurred cumulative pretax costs related to this closure of $ 16.8 million as of December 31, 2024, including rationalization costs recorded in cost of products sold.

During 2024, the Company recorded impairment charges of $ 2.0 million related to certain engineering-related assets used in the business.

Management concluded no further investment would be made in these assets and as a result, reduced the value to zero.

As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended its operations in Russia in 2022.

1 unchanged sentence

During the year ended December 31, 2022, the Company recorded impairment charges of $ 9.0 million related to certain assets of its Russian JV.

During the fourth quarter of 2023, after evaluating various plans for the Russian JV and the Company's ability to control and influence the joint venture, the Company concluded it should deconsolidate its Russian JV and wrote-down the remaining investment of $ 4.7 million.

Note 16 - Impairment and Restructuring Charges (continued)

During the year ended December 31, 2023 the Company classified TWB as assets held for sale and recorded impairment charges of $ 1.0 million.

The Company subsequently completed the sale of TWB on October 16, 2023.

Note 16 - Impairment and Restructuring Charges (continued)

On July 19, 2021, the Company announced the closure of its bearing manufacturing facility in Villa Carcina, Italy.

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During 2022, the Company recorded severance and related benefits of $ 1.4 million and exit costs of $ 1.6 million related to this closure.

During 2021, the Company recorded impairment charges of $ 1.0 million, severance and related benefit costs of $ 1.8 million and exit costs of $ 1.1 million related to this closure.

The exit costs recognized in 2022 and 2021 primarily related to environmental remediation.

The exit costs recognized in 2022 primarily related to environmental remediation.

The Company incurred cumulative pretax costs related to this closure of $ 9.9 million as of December 31, 2022, including rationalization costs recorded in cost of products sold.

On November 1, 2022, the Company completed the sale of this facility and recognized a pretax gain of $ 3.6 million.

During the year ended December 31, 2021, the Company recorded impairment charges of $ 3.4 million related to certain engineering-related assets used in the business.

Management concluded no further investment would be made in these assets and as a result, reduced the value to zero.

Industrial Motion:

During the third quarter of 2022, the Company announced certain organizational changes, which included the appointment of executive leaders for its Engineered Bearings and Industrial Motion product groups.

On December 6, 2024, the Company announced a reduction in force for its belts manufacturing facility in Springfield, Missouri.

The reorganization of this facility is expected to affect approximately 100 employees and be completed during the first half of 2026.

On November 30, 2023, the Company announced the closure of its belts manufacturing facility in Fort Scott, Kansas.

The Company expects to transfer its operations to other belts manufacturing facilities.

The closure of this facility is expected to occur by the end of the second quarter of 2025 and is expected to affect approximately 155 employees.

The Company expects to incur approximately $ 12 million to $ 14 million of pretax costs in total related to the closure of the Fort Scott facility and the reorganization of the Springfield facility.

During the twelve months ended December 31, 2024, the Company recorded severance and related benefits of $ 2.5 million, related to the closure and reorganization.

The Company has incurred cumulative pretax costs related to this closure of $ 6.8 million as of December 31, 2024, including rationalization costs recorded in cost of products sold.

During 2022, the Company announced certain organizational changes, which included the appointment of executive leaders for its Engineered Bearings and Industrial Motion product groups.

After evaluating the impact from the organizational changes and related segmentation implications through the balance of 2022, the Company concluded that it would begin operating under two new reportable segments, Engineered Bearings and Industrial Motion, effective January 1, 2023.

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In addition, the Company was required to review goodwill for impairment under these new reporting units.

As a result of this goodwill impairment review, the Company recognized a pretax goodwill impairment loss of $ 28.3 million during the three months ended March 31, 2023.

In 2022, the Company classified the ADS business as assets held for sale and recorded impairment charges of $ 29.3 million.

As a result of this goodwill impairment review, the Company recognized a pretax goodwill impairment loss of $ 28.3 million during the three months ended March 31, 2023 for its Belts and Chain reporting unit.

In 2024, the Company recognized a pretax goodwill impairment loss of $ 1.5 million for its Belts and Chain reporting unit.

In 2022, the Company classified the Timken Aerospace Drives Systems, LLC ("ADS") business as assets held for sale and recorded impairment charges of $ 29.3 million.

The Company subsequently completed the sale of the ADS business on November 1, 2022.

On February 4, 2020, the Company announced the closure of its chain plant in Indianapolis, Indiana.

This plant was part of the Diamond Chain acquisition completed on April 1, 2019.

The Company transferred the majority of its Diamond Chain product line to its chain facility in Fulton, Illinois.

The chain plant ceased operations on April 30, 2023 and affected approximately 240 employees.

The Company hired approximately 130 full-time positions in Fulton, Illinois.

During 2021, the Company recorded severance and related benefits costs of $ 1.2 million related to this closure.

The Company incurred cumulative pretax costs related to this closure of $ 14.5 million as of December 31, 2023, including rationalization costs recorded in cost of products sold.

During the year ended December 31, 2023, the Company recorded severance and related benefits of $ 2.2 million related to one of its automatic lubrication systems facilities in Europe and $ 1.5 million related to its gear drive manufacturing facility in Europe to align current employment levels with current demand.

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The cash contributions and payments for the Company’s defined benefit pension plans were $ 24.6 million, $ 27.1 million and $ 11.2 million in 2024 , 2023 and 2022, respectively.

The 2021 contributions and payments included a $ 10.0 million payout of deferred compensation to a former executive officer of the Company.

The following tables summarize the net periodic benefit cost information and the related assumptions used to measure the net periodic benefit cost for the years ended December 31:

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Recognition of net actuarial

losses (gains) 9.2 22.6 13.9 12.4 ( 6.6 ) ( 9.5 )

(gains) losses ( 1.3 ) 9.2 22.6 0.6 12.4 ( 6.6 )

Curtailment gain — — — ( 0.1 ) — —

Net periodic benefit cost (credit) $ 9.0 $ 19.6 $ 29.5 $ 3.2 $ 14.2 $ ( 8.5 )

3 unchanged sentences

3.03 % to 4.95 %

Future compensation assumption 2.50 % to 3.50 %

Future compensation assumption 3.25 %

2.50 % to 3.50 %

Expected long-term return on plan assets 2.09 % to 4.67 %

22 unchanged sentences

Note 17 - Retirement Benefit Plans (continued)

The Company recognized actuarial gains of $ 0.7 million during 2024 primarily due to the impact of a net increase in the discount rate used to measure its defined benefit pension obligations of $ 28.7 million, partially offset by lower than expected returns on plan assets of $ 26.8 million and experience losses of $ 1.2 million.

The impact of the net increase in the discount rate used to measure the Company's defined benefit pension obligations was primarily driven by a 95 basis point increase in the discount rate used to measure its U.K.

plan obligations, which increased from 4.48 % in 2023 to 5.43 % in 2024, and a 43 basis point increase in the weighted-average discount rate used to measure its U.S.

plan obligations, which increased from 5.40 % in 2023 to 5.83 % in 2024.

The Company recognized actuarial losses of $ 21.6 million during 2023 primarily due to the impact of a net reduction in the discount rate used to measure its defined benefit pension obligations of $ 17.6 million and the impact of experience losses of $ 10.3 million, partially offset by changes in mortality of $ 6.0 million primarily related to the U.K.

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plan obligations, which increased from 1.80 % in 2021 to 4.81 % in 2022.

The Company recognized actuarial losses of $ 4.4 million during 2021 primarily due to the impact of lower than expected returns on plan assets of $ 28.4 million, the impact of experience losses of $ 9.3 million, the impact of inflation of $ 8.5 million and other changes in actuarial assumptions of $ 3.2 million, partially offset by the favorable impact of a net increase in the discount rate used to measure its defined benefit pension obligations of $ 45.0 million.

The impact of the net increase in the discount rate used to measure the Company's defined benefit pension obligations was primarily driven by a 55 basis point increase in the discount rate used to measure its U.K.

plan obligations, which increased from 1.25 % in 2020 to 1.80 % in 2021, and a 23 basis point increase in the weighted-average discount rate used to measure its U.S.

plan obligations, which increased from 2.84 % in 2020 to 3.07 % in 2021.

For expense purposes in 2024, the Company applied a weighted-average discount rate of 5.40 % to its U.S.

6 unchanged sentences

Note 17 - Retirement Benefit Plans (continued)

The following tables set forth the change in benefit obligation, change in plan assets, funded status and amounts recognized on the Consolidated Balance Sheets for the defined benefit pension plans as of December 31, 2023 and 2022:

The following tables set forth the change in the benefit obligation and plan assets, funded status and amounts recognized on the Consolidated Balance Sheets for defined benefit pension plans as of December 31, 2024 and 2023:

Plans International Plans

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Interest cost 17.1 17.9 10.2 10.4

Actuarial losses (gains) 10.8 ( 116.4 ) 10.8 ( 88.2 )

Plan amendments — — 0.3 —

Actuarial (gains) losses ( 12.6 ) 10.8 ( 14.9 ) 10.8

International plan exchange rate change — — ( 6.9 ) 10.4

Curtailments — — ( 0.1 ) —

Benefits paid ( 21.0 ) ( 31.6 ) ( 15.0 ) ( 14.7 )

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Amounts recognized on the Consolidated Balance Sheets:

Non-current assets $ — $ — $ — $ 0.3

Current liabilities $ ( 4.9 ) $ ( 4.8 ) $ ( 2.1 ) $ ( 2.4 )

1 unchanged sentence

$ ( 122.4 ) $ ( 134.0 ) $ ( 42.3 ) $ ( 45.5 )

Amounts recognized in accumulated other comprehensive

loss (income):

Amounts recognized in accumulated other comprehensive loss:

Net prior service cost $ — $ 0.1 $ 3.6 $ 3.6

Accumulated other comprehensive loss (income) $ 0.1 $ 0.3 $ 3.6 $ 3.6

Changes in prior service cost recognized in accumulated other comprehensive loss (income):

Accumulated other comprehensive loss (income) at beginning

of year $ 0.3 $ 1.5 $ 3.6 $ 4.2

Accumulated other comprehensive loss $ — $ 0.1 $ 3.6 $ 3.6

Changes in prior service cost recognized in accumulated other

comprehensive loss:

Accumulated other comprehensive loss at beginning of year $ 0.1 $ 0.3 $ 3.6 $ 3.6

Prior service cost — — 0.3 —

Recognized prior service cost ( 0.1 ) ( 0.2 ) ( 0.2 ) ( 0.2 )

1 unchanged sentence

Total recognized in accumulated other comprehensive

loss (income) at December 31 $ 0.1 $ 0.3 $ 3.6 $ 3.6

loss at December 31 $ — $ 0.1 $ 3.6 $ 3.6

The presentation in the above tables for amounts recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets is before the effect of income taxes.

Note 17 - Retirement Benefit Plans (continued)

Certain of the Company’s defined benefit pension plans were overfunded as of December 31, 2022.

As a result, $ 0.3 million at December 31, 2022 was included in other non-current assets on the Consolidated Balance Sheets.

No defined benefit pension plans were overfunded as of December 31, 2023.

No defined benefit pension plans were overfunded as of December 31, 2024 and 2023.

The current portion of accrued pension benefits, which was included in salaries, wages and benefits on the Consolidated Balance Sheets, was $ 7.0 million and $ 7.2 million at December 31, 2024 and 2023, respectively.

In 2024, the current portion of accrued pension benefits relates to unfunded plans and represents the actuarial present value of expected payments related to the plans to be made over the next 12 months.

The four largest defined benefit pension plans, covering certain employees in the United States and U.K., represent 83 % and 84 % of the Company's projected benefit obligation at December 31, 2023 and 2022, respectively.

The four largest defined benefit pension plans, covering certain employees in the United States and U.K., represent 83 % of the Company's projected benefit obligation at December 31, 2024 and 2023.

These defined benefit pension plans are closed to new entrants and benefits have been frozen for three of these plans.

The accumulated benefit obligation at December 31, 2023 exceeded the market value of plan assets for several of the Company’s pension plans.

The projected benefit obligation at December 31, 2024 exceeded the market value of plan assets for most of the Company's pension plans.

For these plans, the projected benefit obligation was $ 534.9 million, the accumulated benefit obligation was $ 527.6 million and the fair value of plan assets was $ 370.3 million at December 31, 2024.

The accumulated benefit obligation at December 31, 2024 exceeded the market value of plan assets for most of the Company’s pension plans.

For these plans, the projected benefit obligation was $ 526.3 million, the accumulated benefit obligation was $ 521.4 million and the fair value of plan assets was $ 361.9 million at December 31, 2024.

The total accumulated benefit obligation for all plans was $ 528.0 million and $ 567.0 million at December 31, 2024 and 2023, respectively.

Investment performance increased the value of the Company’s pension assets by 6.3 % in 2023 largely due to decreases in bond rates.

Investment performance decreased the value of the Company’s pension assets by 1.4 % in 2024 largely due to increases in bond rates.

As of December 31, 2024 , 2023 and 2022, the Company’s defined benefit pension plans did not directly hold any of the Company’s common shares.

24 unchanged sentences

Government and agency securities 8.0 — — 8.0 9.0 — — 9.0

Corporate bonds - investment grade — — — — — 31.5 — 31.5

Equity securities - U.S.

2 unchanged sentences

Mutual funds - fixed income 28.8 — — 28.8 30.5 — — 30.5

Mutual funds - international equity — — — — 21.5 — — 21.5

$ 50.9 $ — $ — $ 50.9 $ 98.6 $ — $ — $ 98.6

Investments measured at net asset value:

Equity securities - international companies $ — $ 0.4

Common collective funds - domestic equities — 19.9

Common collective funds - international equities 47.3 45.8

Common collective funds - fixed income 132.2 166.1

Common collective funds - diversified growth — 12.1

Limited partnerships 4.2 5.4

22 unchanged sentences

The underlying assets in this investment are valued daily.

Common collective funds - diversified growth investments are pooled funds that invest in a multiple underlying asset classes, such as equities, fixed income, commodities, alternative investments, and cash in an effort to achieve returns on investment through capital appreciation and income.

The underlying assets in this investment are valued daily.

Employer Contributions to Defined Benefit Plans

3 unchanged sentences

2030-2034 211.3

In January 2025, the Company entered into an insurance buy-in contract for its pension obligation for its U.K.

defined benefit pension plan which was funded from existing pension plan assets without any adjustment to the benefit obligation.

In addition, the Company contributed £ 6 million towards this insurance buy-in contract.

The insurance buy-in contract will be classified as “Annuity Contracts” since the insurance buy-in contract is similar to an annuity contract.

The insurance buy-in contract matches cash flows with future benefit payments for participants as of the contract date with the obligation remaining with the plan.

Employee Savings Plans:

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Discount rate 5.83 % 5.55 %

The Company recognized actuarial gains of $ 0.5 million during 2024 primarily due to lower than expected benefit payments of $ 2.0 million, the impact of experience gains of $ 1.2 million and $ 0.6 million due to the impact of a 28 basis point increase in the discount rate used to measure the Company's defined benefit postretirement obligations.

The discount rate increased from 5.55 % in 2023 to 5.83 % in 2024.

These actuarial gains were partially offset by actuarial losses of $ 3.1 million due to the impact of an increase in the rate of Medicare Advantage plans and $ 0.2 million due to changes in other actuarial assumptions.

The Company recognized actuarial gains of $ 1.0 million during 2023 primarily due to lower than expected benefit payments of $ 1.4 million and $ 0.1 million due to changes in other actuarial assumptions.

These actuarial gains were partially offset a $ 0.5 million loss due to the impact of a 20 basis point decrease in the discount rate used to measure the Company's defined benefit postretirement obligations, which decreased from 5.75 % in 2022 to 5.55 % in 2023.

The Company recognized actuarial gains of $ 13.1 million during 2022 primarily due to the impact of a 276 basis point increase in the discount rate used to measure the Company's defined benefit postretirement obligations, which increased from 2.99 % in 2021 to 5.75 % in 2022.

The increase in the discount rate resulted in a $ 8.4 million gain.

In addition to the gain from the discount rate increases, the Company recognized actuarial gains of $ 3.0 million due to the impact of a reduction in the rate for Medicare Advantage plans and $ 1.9 million due to lower than expected benefit payments.

These actuarial gains were offset $ 0.2 million of changes to other assumptions.

These actuarial gains were partially offset by a $ 0.5 million loss due to the impact of a 20 basis point decrease in the discount rate used to measure the Company's defined benefit postretirement obligations, which decreased from 5.75 % in 2022 to 5.55 % in 2023.

The increase in the discount rate resulted in a $ 8.4 million gain.

In addition to the gain from the discount rate increases, the Company recognized actuarial gains of $ 1.1 million due to lower than expected benefit payments, $ 1.0 million due to the impact of a reduction in the rate for Medicare Advantage plans and $ 0.4 million due to changes in other actuarial assumptions .

In addition to the gain from the discount rate increases, the Company recognized actuarial gains of $ 3.0 million due to the impact of a reduction in the rate of Medicare Advantage plans and $ 1.9 million due to lower than expected benefit payments.

These actuarial gains were offset by $ 0.2 million of changes in other actuarial assumptions .

Note 18 - Other Postretirement Benefit Plans (continued)

The discount rate assumption is based on current rates of high-quality long-term corporate bonds over the same period that benefit payments will be required to be made.

The expected rate of return on plan assets assumption is based on the weighted-average expected return on the various asset classes in the plans’ portfolio.

The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.

For expense purposes in 2024, the Company applied a discount rate of 5.55 % to its other postretirement benefit plans.

For expense purposes in 2025, the Company will apply a discount rate of 5.83 % to its other postretirement benefit plans.

The following tables set forth the change in benefit obligation, change in plan assets, funded status and amounts recognized on the Consolidated Balance Sheets for the other postretirement benefit plans as of December 31, 2023 and 2022:

The following tables set forth the change in the benefit obligation and amounts recognized on the Consolidated Balance Sheets for other postretirement benefit plans as of December 31, 2024 and 2023:

Change in benefit obligation:

2 unchanged sentences

Interest cost 1.7 1.9

Plan amendments — ( 0.6 )

Actuarial gains ( 0.5 ) ( 1.0 )

13 unchanged sentences

Accumulated other comprehensive loss at beginning of year $ ( 63.6 ) $ ( 71.9 )

Prior service credit — ( 0.6 )

Recognized prior service credit 8.2 8.3

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For measurement purposes, the Company assumed a weighted-average annual rate of increase in the per capita cost (health care cost trend rate) of 7.00 % for 2025, declining gradually to 5.0 % in 2033 and thereafter for medical and prescription drug benefits.

For Medicare Advantage benefits, actual contract rates have been set for 2024 through 2026, and are assumed to increase by $ 5 per year for 2027 to 2028 and then 6.0 % for 2028, declining gradually to 5.0 % in 2032 and thereafter.

For Medicare Advantage benefits, actual contract rates have been set for 2025 through 2026, and are assumed to increase by $ 10 per year for 2027 through 2029 and then 6.0 % for 2029, declining gradually to 5.0 % in 2033 and thereafter.

Estimated future benefit payments to be funded by the Company are expected to be as follows:

2 unchanged sentences

Note 19 - Sale of Shares of Timken India Limited

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.

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 $ 229.0 million after income taxes of $ 55.2 million and transaction costs.

The sale reduced the Company’s ownership in TIL from 67.80 percent to 57.70 percent.

On May 28, 2024, the Company completed the sale of 5.0 million shares of TIL, generating net proceeds of $ 186.8 million after income taxes of $ 45.2 million and transaction costs.

The sale reduced the Company’s ownership in TIL from 57.70 percent to 51.05 percent.

The India market remains strategically important to Timken, and the Company is not contemplating any further sale transactions at the present time.

Note 20 - Accumulated Other Comprehensive (Loss) Income

10 unchanged sentences

(loss) income, before income tax — ( 7.9 ) ( 2.5 ) ( 10.4 )

Income tax benefit — 2.0 0.3 2.3

Income tax (expense) benefit ( 7.7 ) 2.0 ( 1.0 ) ( 6.7 )

Net current period other comprehensive income (loss),

10 unchanged sentences

Balance at December 31, 2022 $ ( 235.7 ) $ 50.8 $ 3.0 $ ( 181.9 )

Other comprehensive (loss) income before reclassifications

Ownership changes 6.6 — — 6.6

Other comprehensive income (loss) before reclassifications

and income taxes 33.5 ( 0.2 ) ( 2.0 ) 31.3

1 unchanged sentence

(loss) income, before income tax — ( 7.9 ) 0.9 ( 7.0 )

Income tax benefit (expense) — 1.9 ( 0.6 ) 1.3

Net current period other comprehensive (loss) income,

net of income taxes ( 162.7 ) ( 5.8 ) 2.3 ( 166.2 )

Income tax benefit — 2.0 0.3 2.3

Net current period other comprehensive income (loss),

net of income taxes and ownership changes 40.1 ( 6.1 ) ( 0.8 ) 33.2

Noncontrolling interest 1.8 — — 1.8

Net current period comprehensive (loss) income, net

of income taxes and noncontrolling interest ( 155.4 ) ( 5.8 ) 2.3 ( 158.9 )

of income taxes, noncontrolling interest and ownership

changes 41.9 ( 6.1 ) ( 0.8 ) 35.0

Balance at December 31, 2023 $ ( 193.8 ) $ 44.7 $ 2.2 $ ( 146.9 )

Foreign currency translation adjustments at December 31, 2024 and 2023 included cumulative gains of $ 27.1 million and $ 3.3 million, respectively, net of deferred taxes, related to net investment hedges.

Refer to Note 22 - Derivative Instruments for additional information on the net investment hedges.

Other comprehensive (loss) income before reclassifications and income taxes includes the effect of foreign currency.

17 unchanged sentences

Short-term investments 31.6 — 31.6 —

Interest rate swap 3.1 — 3.1 —

Foreign currency forward contracts 3.3 — 3.3 —

2 unchanged sentences

Total Liabilities $ 11.4 $ — $ 11.4 $ —

Cash and cash equivalents are highly liquid investments with maturities of 90 days or less when purchased and are valued at redemption value.

Cash and cash equivalents are highly liquid investments with maturities of 90 days or less when purchased that are valued at redemption value.

Short-term investments are investments with maturities between 91 days and one year, and generally are valued at amortized cost, which approximates fair value.

3 unchanged sentences

In addition, the Company remeasures certain assets to fair value, using Level 3 measurements, as a result of the occurrence of triggering events such as purchase accounting for acquisitions or goodwill impairment.

During the third quarter of 2023, TWB was reclassified to assets held for sale.

In conjunction with this reclassification, the legal entity, with a carrying value of $ 10.3 million, was written down to $ 9.3 million, which represented its estimated fair value less the cost to sell, resulting in an impairment charge of $ 1.0 million.

The fair value for these net assets was determined based on an estimate of the value expected to be received upon the sale of this business.

See Note 2 - Acquisitions and Divestitures for further discussion.

During the third quarter of 2023, property, plant and equipment and leased assets at the Company's joint venture in Russia, with a carrying value of $ 3.9 million, were written down to their estimated fair value, resulting in an impairment charge of $ 3.9 million.

The fair value for these assets was determined based on the best estimate of the price that would be realized in a current transaction to sell the business and related assets to a third party.

No material assets were measured at fair value on a nonrecurring basis during the years ended December 31, 2024 and 2023.

Note 21 - Fair Value (continued)

During the third quarter of 2022, the Company's ADS business, located in Manchester, Connecticut, was reclassified to assets held for sale.

In conjunction with this reclassification, the ADS business, with a carrying value of $ 62.1 million, was written down to its estimated fair value less cost to sell of $ 32.8 million, resulting in an impairment charge of $ 29.3 million.

The Company subsequently sold ADS on November 1, 2022.

The fair value for these net assets was determined based on an estimate of the value expected to be received upon the sale of this business.

See Note 2 - Acquisitions and Divestitures for further discussion.

In 2022, property, plant and equipment at the Russian JV, with a carrying value of $ 16.1 million, were written down to their fair value of $ 7.1 million, resulting in an impairment charge of $ 9.0 million.

The fair value for these assets was determined based on an estimate of the best price that would be received in a current transaction to sell the assets to a third party.

No other material assets were measured at fair value on a nonrecurring basis during the years ended December 31, 2023 and 2022.

Financial Instruments:

12 unchanged sentences

The Company designates certain foreign currency forward contracts as cash flow hedges of forecasted revenues and certain interest rate hedges as cash flow hedges of fixed-rate borrowings.

On September 8, 2020, the Company entered into a $ 100 million floating-to-fixed rate swap on the 2023 Term Loan,

which hedges the change in the 1-month LIBOR rate October 30, 2020 through September 11, 2023 to a fixed rate.

The Company repaid the LIBOR based 2023 Term Loan on December 5, 2022 and replaced it with the SOFR based 2027 Term Loan.

The Company amended the interest rate for the swap from LIBOR to SOFR commencing January 2023.

The Company’s risk management objective is to hedge the risk of changes in the monthly interest expense attributable to changes in the benchmark interest rate.

The swap matured on September 11, 2023.

On September 15, 2020, the Company designated € 54.5 million of its € 150.0 million fixed-rate senior unsecured notes, maturing on September 7, 2027 (the "2027 Notes") as a hedge against its net investment in one of its European affiliates.

On May 23, 2024, the Company designated its 2034 Notes, in the aggregate principal amount of € 600.0 million, as a hedge against its net investment in one of its European subsidiaries.

The objective of the hedge transaction is to protect the net investment in the foreign operations against changes in the exchange rate between the U.S.

dollar and the Euro.

The net impact for the twelve months ended December 31, 2023 was to record a loss of $ 1.8 million to accumulated comprehensive loss (income) with a corresponding offset to other (expense) income, which partially offsets the impact of the foreign currency adjustment on the 2027 Notes.

The Company entered into $ 350 million of floating-to-fixed 10-year Treasury rate locks during the first quarter of 2022, prior to issuing the 2032 Notes.

This fixed the 10-year Treasury yield and settled at pricing of the 2032 Notes, resulting in $ 6.5 million of cash proceeds received by the Company.

This amount was recorded to accumulated comprehensive income and will be amortized as a reduction in interest expense over the 10-year tenor of the 2032 Notes.

The net impact for the year ended December 31, 2024 was a gain of $ 27.7 million recorded to accumulated comprehensive (loss) income.

The objective of the hedge transaction is to protect the net investment in the foreign operations against changes in the exchange rate between the U.S.

dollar and the Euro.

The net impact for the year ended December 31, 2024 was to record a gain of $ 3.7 million to accumulated comprehensive loss (income).

The Company does not purchase or hold any derivative financial instruments for trading purposes.

1 unchanged sentence

Refer to Note 21 - Fair Value for the fair value disclosure of derivative financial instruments.

Foreign currency forward contracts classified as assets are included in other current assets, and foreign currency forward contracts classified as liabilities are included in other current liabilities on the Consolidated Balance Sheets.

Cash Flow Hedging Strategy:

For certain derivative instruments that are designated and qualify as cash flow hedges ( i.e ., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any ( i.e ., the ineffective portion), or hedge components excluded from the assessment of effectiveness, are recognized in the Consolidated Statement of Income during the current period.

For certain derivative instruments that are designated and qualify as cash flow hedges ( i.e ., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

To protect against a reduction in the value of forecasted foreign currency cash flows resulting from export sales, the Company has instituted a foreign currency cash flow hedging program.

29 unchanged sentences

From time to time, the Company receives government assistance in the form of grants and other incentives from various governments to support capital projects and other business development.

The amount received is typically based on the amount of qualifying capital expenditures or business development costs in the countries providing the government assistance.

The amounts received are typically based on the amount of qualifying capital expenditures or business development costs in the countries providing the government assistance.

The Company typically has to meet certain requirements, such as adding or maintaining a specified number of qualifying positions, to retain the government assistance or the funds can be clawed back by the government.

1 unchanged sentence

For amounts that are expected to be paid back, the Company recognizes applicable interest expense.

As of December 31, 2023, the Company has $ 1.6 million and $ 36.0 million of government assistance in other current liabilities and other non-current liabilities , respectively.

In addition, the Company cumulatively recorded $ 7.5 million and $ 0.2 million of government assistance as a reduction to cost of products sold and SG&A , respectively.

The Company also cumulatively recognized interest expense of $ 1.6 million related to the expected shortfall of incentive obligations.

As of December 31, 2024 and December 31, 2023, the Company has recorded $ 1.5 million and $ 1.6 million, respectively, of government assistance in other current liabilities and $ 42.2 million and $ 36.0 million, respectively, in other non-current liabilities .

In addition, as of December 31, 2024, the Company has cumulatively recorded $ 7.9 million of government assistance as a reduction to cost of products sold and $ 0.2 million as a reduction to SG&A .

The Company has also cumulatively recognized interest expense of $ 2.1 million related to the expected shortfall of incentive obligations.

The following paragraphs discuss the Company's most significant government assistance programs.

In 2022, the Company acquired Spinea.

In December 2023, the Company reached a definitized technology investment agreement with the United States Government for the purposes of enhancing and expanding the industrial base for high performance, precision ball bearings.

Title to assets purchased under this agreement vest with the Government throughout the agreement.

The Government may elect to transfer all, or some, of the assets purchased to the Company at the end of the agreement, provided the Company's performance is satisfactory and in compliance with the terms of the agreement.

As of December 31, 2024, the company is accounting for $ 7.2 million of awards received as other non-current liabilities .

The awards will be amortized over the useful life of the assets purchased as a reduction to cost of products sold .

As of December 31, 2024, amortization is less than $ 0.1 million.

In 2022, the Company acquired Spinea, s.r.o.

Prior to the acquisition, Spinea received incentives totaling $ 18.0 million from the Slovakian government to invest in a new production facility and related machinery and equipment.

As a result, Spinea is required to create 450 new jobs.

As a result, Spinea was required to create 450 new jobs.

If Spinea is unable to meet these commitments, all or a portion of the incentive could be recaptured with interest by October 2027.

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The remaining amount is being amortized over the period the costs are being incurred.

The Company recorded amortization expense of $ 2.1 million as a reduction to cost of products sold .

Cumulatively as of December 31, 2024, the Company recorded amortization expense of $ 3.3 million as a reduction to cost of products sold .

In addition, the Company recorded total interest expense of $ 1.2 million due to the possibility of having to pay a portion of the incentive back.

In 2017 and 2018, the Company received grants from the Romanian Government for the reimbursement of capital investments for its new production facility, totaling $ 16.5 million.

While the original grants were based on capital investments, the Company needs to pay various taxes, including corporate income tax, payroll taxes and building tax, totaling $ 16.5 million between 2019 through 2024.

If the total tax obligation is not met, any shortfall could result in a recapture of the grant with interest as early as December 2024.

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In addition, the Company recorded total interest expense of $ 0.9 million due to the expectation of having to pay a portion of the grant back.

The Company may have receive other government assistance that is not described above;

The Company may have received other government assistance that is not described above;

however, the total amount of the government assistance is immaterial to the Company’s Consolidated Financial Statements.

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therefore, the sum of the quarterly earnings per share may not equal the total computed for the year.

(1) Net income for the third quarter of 2024 included the gain on the sale of a former bearing manufacturing plant of $ 13.8 million.

Net income for the fourth quarter of 2024 included net actuarial gains of $ 1.3 million.

(2) Net income for the first quarter of 2023 included goodwill impairment charges of $ 28.3 million.

Net income for the fourth quarter of 2023 included net actuarial losses of $ 22.3 million.

(2) Net income for the second quarter of 2022 included net actuarial losses of $ 11.6 million.

Net income for the third quarter of 2022 included impairment charges of $ 29.3 million.

Net income for the fourth quarter of 2022 included net actuarial gains of $ 12.3 million.

Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

United States and United Kingdom Pension Benefit Obligations

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For example, we tested controls over management’s review of the discount rates used in the measurement of these benefit obligations.

To test the pension benefit obligation, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions discussed above, and the underlying data used by the Company.

To test the pension benefit obligation, our audit procedures included, among others, evaluating the methodology used and the significant actuarial assumptions discussed above.

We compared the actuarial assumptions used by management to historical trends and, we involved actuarial specialists to assist with our procedures.

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In certain instances, as part of this assessment, we compared the projected cash flows to prior year and compared the current year benefits paid to the prior year projected cash flows.

We also tested the completeness and accuracy of the underlying data, including the participant data used in the determination of the projected benefit obligations.

Valuation of Customer Relationships Intangible Asset in the Acquisition of Leonardo Top S.a.r.l.

Description of the Matter As described in Note 2 to the consolidated financial statements, during April 2023, the Company completed the acquisition of Leonardo Top S.a.r.l.

(“Nadella”) for $293.5 million, net of cash acquired.

The acquisition was accounted for under the purchase method of accounting and the assets acquired and liabilities assumed have been recorded based on preliminary estimates of fair value and is subject to change based on the finalization of the fair values of the assets acquired and liabilities assumed.

Auditing the Company’s accounting for the preliminary allocation of the purchase price for its acquisition of Nadella was complex due to the significant estimation uncertainty involved in estimating the fair value of the customer relationships intangible asset, which was recorded on a preliminary basis.

The total preliminary fair value ascribed to the customer relationships intangible asset amounted to $107.2 million.

The Company used a discounted cash flow model to value the customer relationships intangible asset.

The significant assumptions used to estimate the preliminary fair value of customer relationships intangible asset included the projected EBITDA margins and customer attrition rate.

These significant assumptions are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its accounting for the acquisition of Nadella.

For example, we tested controls that address the risks of material misstatement relating to the valuation of the customer relationships intangible asset, including management’s review of the methods and significant assumptions used to develop such estimate.

To test the estimated fair value of the customer relationships intangible asset, we performed audit procedures that included, among others, evaluating the Company’s selection of the valuation methodology, evaluating the model and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

For example, when evaluating the assumptions related to the projected EBITDA margins, we compared the assumptions to the past performance of Nadella and forecasted performance of the guideline public companies.

We also performed sensitivity analyses to evaluate the changes in the fair value of the customer relationships intangible asset that would result from changes in the significant assumptions.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology and significant assumptions used by the Company to determine the preliminary fair value estimate of the customer relationships intangible asset, including the projected EBITDA margins and customer attrition rate.

/s/ Ernst & Young LLP

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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-K

Item 8. Financial Statements and Supplementary Data