What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-30 · 185 added, 81 removed, 358 unchanged (43% of the section changed)

9 unchanged sentences

The following further describes these business segments:

• Timken’s Engineered Bearings segment features a broad range of product designs serving original equipment manufacturers (OEMs) and end-users worldwide.

• Timken’s Engineered Bearings segment features a broad range of product designs serving OEMs and end-users worldwide.

Timken is a leading authority on tapered roller bearings and leverages its position by applying engineering know-how and technology across its entire bearing portfolio, which includes tapered, spherical and cylindrical roller bearings;

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The Engineered Bearings portfolio features the Timken®, GGB® and Fafnir® brands and serves customers across global industries, including wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail and more.

• Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, couplings, filtration systems, seals, and industrial clutches and brakes that keep systems running efficiently.

Industrial Motion also includes industrial drivetrain services, which return equipment to like-new condition.

• Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, precision drives, automatic lubrication systems, linear motion products and systems, chains, belts, couplings, filtration systems, seals, and industrial clutches and brakes that keep systems running efficiently.

Industrial Motion also includes industrial services, which return equipment and components to like-new condition.

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

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

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

Timken creates value by understanding customer needs and applying its know-how to serve a broad range of customers in attractive markets and industries across the globe.

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The Company intends to expand into new and existing markets by leveraging its collective knowledge of materials science, friction management and power transmission to create value for Timken customers.

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

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

The Company intends to grow in attractive market sectors around the world, emphasizing those spaces that are highly fragmented, demand high service and value the reliability and efficiency offered by Timken products.

19 unchanged sentences

Average number of shares – diluted 70,075,084 70,849,254 — (1.1 %)

Net sales decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024.

The decrease was primarily driven by lower end-market demand in both segments, as well as the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions.

Net income decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to the impact of lower volume, higher manufacturing costs, higher impairment and restructuring charges, unfavorable price/mix and the unfavorable impact of foreign currency exchange rate changes, partially offset by lower tax expense and the benefit of acquisitions.

In early 2025, the United States government announced the imposition of import tariffs on all countries.

Six Months Ended

2025 2024 $ Change % Change

Net sales $ 2,313.7 $ 2,372.6 $ (58.9) (2.5) %

Net income 177.1 212.6 (35.5) (16.7) %

Net income attributable to noncontrolling interest 20.3 12.9 7.4 57.4 %

Net income attributable to The Timken Company $ 156.8 $ 199.7 $ (42.9) (21.5) %

Diluted earnings per share $ 2.23 $ 2.82 $ (0.59) (20.9) %

Average number of shares – diluted 70,283,847 70,850,792 — (0.8) %

Net sales decreased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024.

The decrease was primarily driven by lower end-market demand in both segments, partially offset by favorable pricing, the benefit of acquisitions and the favorable impact of foreign currency exchange rate changes.

Net sales decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024.

The decrease was primarily driven by lower end-market demand in both segments as well as the unfavorable impact of foreign currency exchange rate changes, partially offset by favorable pricing and the benefit of acquisitions.

Net income decreased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 primarily due to lower volume and incremental tariff costs, partially offset by favorable pricing.

Net income decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 primarily due to lower volume, higher manufacturing costs, incremental tariff costs and higher restructuring costs, partially offset by lower income tax expense, favorable pricing and the benefit of acquisitions.

During the first half of 2025, the United States government announced the imposition of import tariffs on all countries.

The baseline reciprocal tariff is 10%, with higher tariffs imposed on certain countries like China, Mexico and Canada, and sectors like steel, aluminum and automotive.

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Timken is also monitoring the impact that tariffs could have on global economic demand.

The Company currently expects that tariffs and the related macroeconomic effects will adversely impact operating income in 2025.

As a result, the Company expects 2025 full-year revenues to be down in total compared to 2024, primarily driven by lower demand related to international trade volatility and the impact of unfavorable foreign currency exchange rates, partially offset by favorable pricing and the benefit of acquisitions completed during 2024.

The Company's earnings are expected to be down in 2025 compared with 2024, primarily due to the impact of lower organic sales volume, higher tariffs and unfavorable foreign currency exchange rate changes, offset partially by lower operating costs and the favorable impact of acquisitions.

The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance, a lower level of capital expenditures, and lower cash taxes.

The Company currently anticipates that tariffs and the related macroeconomic effects will adversely impact operating income in 2025.

As a result, the Company expects 2025 full-year revenues to be down 2.0% to 0.5% compared to 2024, primarily driven by lower demand across both segments, partially offset by favorable pricing and the benefit of acquisitions completed during 2024.

The Company's earnings are expected to be down in 2025 compared with 2024, primarily due to the impact of lower organic sales volume, unfavorable mix, and incremental tariff costs, offset partially by favorable pricing, lower operating costs and the favorable impact of acquisitions.

The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance and lower cash taxes, partially offset by higher pension and other postretirement benefit contributions and payments.

The Company expects capital expenditures in 2025 to be in the range of 3.5% of sales.

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Operating income % to net sales 12.6 % 14.1 % (150) bps

Net sales decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024.

Six Months Ended

2025 2024 $ Change Change

Net sales $ 2,313.7 $ 2,372.6 $ (58.9) (2.5%)

Cost of products sold 1,594.7 1,601.4 (6.7) (0.4%)

Selling, general and administrative expenses 374.5 374.8 (0.3) (0.1%)

Amortization of intangible assets 38.9 39.0 (0.1) (0.3%)

Impairment and restructuring charges 13.8 5.6 8.2 146.4%

Operating income $ 291.8 $ 351.8 (60.0) (17.1%)

Operating income % to net sales 12.6 % 14.8 % (220) bps

Net sales decreased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024.

The decrease was driven by lower organic revenue of $30 million, partially offset by the favorable impact of acquisitions of $14 million and the favorable impact of foreign currency exchange rate changes of $7 million.

Net sales decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024.

The decrease was driven by lower organic revenue of $67 million and the unfavorable impact of foreign currency exchange rate changes of $19 million, partially offset by the favorable impact of acquisitions of $26 million.

Operating income decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to the impact of lower volume, higher manufacturing costs, higher impairment and restructuring charges, unfavorable price/mix and the unfavorable impact of foreign currency exchange rate changes, partially offset by the benefit of acquisitions.

• Cost of products sold decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, due to the impact of foreign currency exchange rate changes of $18 million and the impact of lower volume of $12 million, partially offset by higher manufacturing costs of $12 million and the incremental cost of goods sold from acquisitions of $4 million.

• Selling, general and administrative ("SG&A") expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to the favorable impact of foreign currency exchange rates and reduced discretionary spending to align with the lower demand levels.

• Impairment and restructuring charges were higher for the three months ended March 31, 2025 compared with the three months ended March 31, 2024, primarily due to severance related to the CEO transition during the three months ended March 31, 2025.

Operating income decreased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024, due to incremental cost of tariffs, the impact of lower volume and unfavorable mix, partially offset by favorable pricing, lower material and logistics costs and the benefit of acquisitions.

Operating income decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024, due to the impact of lower volume, unfavorable mix, higher manufacturing costs, incremental tariff costs, higher impairment and restructuring charges and the unfavorable impact of foreign currency exchange rate changes, partially offset by favorable pricing and the benefit of acquisitions.

• Cost of products sold increased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024, due to incremental tariff costs of $14 million, unfavorable foreign currency exchange rate changes of $7 million and the incremental cost of goods sold from acquisitions of $6 million, partially offset by the impact of lower production volume of $16 million and favorable material and logistics costs of $6 million.

Cost of products sold decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024, due to the impact of lower production volume of $24 million, favorable foreign currency exchange rate changes of $11 million and favorable material and logistics costs (net) of $4 million, partially offset by higher manufacturing costs of $7 million, incremental tariff costs of $15 million and incremental cost of goods sold from acquisitions of $10 million.

• Selling, general and administrative ("SG&A") expenses increased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024, primarily due to increased accruals for potential uncollectible accounts, the unfavorable impact from currency and the impact of acquisitions, partially offset by reduced discretionary spending to align with the lower demand levels.

SG&A expenses were flat for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 as the impact of acquisitions and increased accruals for potential uncollectible accounts were offset by reduced discretionary spending to align with lower demand levels.

• Impairment and restructuring charges were higher for the six months ended June 30, 2025 compared with the six months ended June 30, 2024, primarily due to severance related to the CEO transition during the six months ended June 30, 2025.

Interest Income and Expense:

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Interest expense, net $ (26.8) $ (29.5) $ 2.7 (9.2 %)

The decrease in interest expense for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 was primarily due to lower average debt levels.

Six Months Ended

2025 2024 $ Change % Change

Interest expense $ (56.3) $ (66.8) $ 10.5 (15.7 %)

Interest income 5.3 7.9 $ (2.6) (32.9) %

Interest expense, net $ (51.0) $ (58.9) $ 7.9 (13.4) %

The decrease in interest expense for the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 was primarily due to lower average debt levels and lower interest rates.

Other Income (Expense):

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Non-service pension and other postretirement expense $ (1.2) $ (1.0) $ (0.2) 20.0 %

Other expense, net (0.3) (0.9) 0.6 (66.7 %)

Other (expense) income (3.4) 1.2 (4.6) (383.3) %

Total other (expense) income $ (4.6) $ 0.2 $ (4.8) NM

Six Months Ended

2025 2024 $ Change % Change

Non-service pension and other postretirement expense $ (2.4) $ (2.0) $ (0.4) 20.0 %

Other (expense) income (3.7) 0.3 (4.0) NM

Total other expense, net $ (6.1) $ (1.7) $ (4.4) 258.8 %

The change in other (expense) income, net, for the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 was primarily driven by the unfavorable impact of foreign currency exchange losses.

Income Tax Expense:

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Effective tax rate 26.4 % 26.0 % 40 bps

Income tax expense decreased $15.8 million for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to lower pre-tax earnings and the net favorable impact of discrete items in comparison to the year ago period.

The favorable discrete items in the current period primarily related to the reversal of accruals for uncertain tax positions to account for the expiration of statutes of limitation in jurisdictions outside the United States.

Six Months Ended

2025 2024 $ Change Change

Provision for income taxes $ 57.6 $ 78.6 $ (21.0) (26.7) %

Effective tax rate 24.5 % 27.0 % (250) bps

Income tax expense decreased $5.2 million for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 primarily due to lower pre-tax earnings.

Income tax expense decreased $21.0 million for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 primarily due to lower pre-tax earnings and the net favorable impact of discrete items in comparison to the year ago period.

The favorable discrete items in the six months ended June 30, 2025 primarily related to the reversal of accruals for uncertain tax positions to account for the expiration of statutes of limitation in jurisdictions outside the United States.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through future years.

The Company is currently assessing the impact of OBBBA on its Consolidated Financial Statements.

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

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Net sales, excluding the impact of currency $ 777.2 $ 783.4 $ (6.2) (0.8 %)

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $22.4 million or 2.8% in the three months ended March 31, 2025 compared with the three months ended March 31, 2024.

The decrease was primarily driven by lower demand across most market sectors, with auto/truck and heavy industries sectors posting the largest declines, partially offset by higher renewable energy demand.

Adjusted EBITDA for the Engineered Bearings segment decreased for the three months ended March 31, 2025 by $22.2 million or 12.2% compared with the three months ended March 31, 2024, primarily due to the impact of lower volume, unfavorable price/mix and unfavorable foreign currency exchange rate changes.

• Cost of products sold decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to the impact of foreign currency exchange rate changes of $14 million and the impact of lower volume of $7 million.

• SG&A expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 driven primarily by the favorable impact of foreign currency exchange rate changes and reduced discretionary spending.

Six Months Ended

2025 2024 $ Change Change

Net sales $ 1,538.1 $ 1,585.9 $ (47.8) (3.0 %)

Cost of products sold (1,069.3) (1,078.8) 9.5 (0.9 %)

Selling, general and administrative expenses (205.7) (211.4) 5.7 (2.7 %)

Other segment items 1.5 4.3 (2.8) (65.1 %)

Depreciation and amortization 48.0 47.6 0.4 0.8 %

Adjusted EBITDA $ 312.6 $ 347.6 $ (35.0) (10.1 %)

Adjusted EBITDA margin 20.3 % 21.9 % (160) bps

Six Months Ended

2025 2024 $ Change % Change

Net sales $ 1,538.1 $ 1,585.9 $ (47.8) (3.0 %)

Currency (19.2) — (19.2) NM

Net sales, excluding the impact of currency $ 1,557.3 $ 1,585.9 $ (28.6) (1.8 %)

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $6.2 million or 0.8% in the three months ended June 30, 2025 compared with the three months ended June 30, 2024.

The decrease was primarily driven by lower demand across most market sectors, partially offset by higher renewable energy demand and higher pricing.

Adjusted EBITDA for the Engineered Bearings segment decreased for the three months ended June 30, 2025 by $12.8 million or 7.7% compared with the three months ended June 30, 2024, due to the unfavorable impact of tariffs, lower volume, unfavorable mix, higher manufacturing costs, and unfavorable foreign currency exchange rate changes, partially offset by favorable pricing and lower material and logistics costs.

• Cost of products sold increased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 due to incremental tariff costs of $11 million, unfavorable foreign currency exchange rate changes and higher manufacturing costs, partially offset by lower material and logistics costs of $5 million and the impact of lower production volume.

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $28.6 million or 1.8% in the six months ended June 30, 2025 compared with the six months ended June 30, 2024.

The decrease was primarily driven by lower demand across most market sectors, with the auto/truck, heavy industries and off-highway sectors posting the largest declines, partially offset by higher renewable energy demand.

Adjusted EBITDA for the Engineered Bearings segment decreased for the six months ended June 30, 2025 by $35.0 million or 10.1% compared with the six months ended June 30, 2024, due to the impact of lower volume, the unfavorable impact of tariffs and unfavorable foreign currency exchange rate changes, partially offset by lower SG&A expenses and lower material and logistics costs (net).

• Cost of products sold decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 due to favorable foreign currency exchange rate changes of $12 million, the impact of lower production volume of $7 million and lower material and logistics costs (net) of $4 million, partially offset by incremental tariff costs of $12 million.

• SG&A expenses decreased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 driven primarily by lower compensation expense.

Industrial Motion Segment:

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and currency $ 375.6 $ 398.9 $ (23.3) (5.8 %)

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $14.8 million or 3.8% in the three months ended March 31, 2025 compared with the three months ended March 31, 2024.

The decrease reflects lower demand across most platforms, with industrial services and lubrication systems experiencing the largest declines, partially offset by growth in the drive systems platform.

Adjusted EBITDA decreased $15.0 million or 18.3% for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to the impact of lower volume and higher manufacturing costs, partially offset by the benefit of acquisitions and lower SG&A expenses.

• Cost of products sold increased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to the impact of higher manufacturing costs of $10 million and the incremental cost of goods sold from acquisitions of $8 million, partially offset by the impact of lower volume of $5 million.

• SG&A expenses decreased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 due to reduced discretionary spending, partially offset by the incremental SG&A expense from acquisitions.

Six Months Ended

2025 2024 $ Change Change

Net sales $ 775.6 $ 786.7 $ (11.1) (1.4 %)

Cost of products sold (521.7) (511.5) (10.2) 2.0 %

Selling, general and administrative expenses (138.8) (135.0) (3.8) 2.8 %

Depreciation and amortization 24.6 21.6 3.0 13.9 %

Adjusted EBITDA $ 139.7 $ 161.8 $ (22.1) (13.7 %)

Adjusted EBITDA margin 18.0 % 20.6 % (260) bps

Six Months Ended

2025 2024 $ Change % Change

Net sales $ 775.6 $ 786.7 $ (11.1) (1.4 %)

Acquisitions 26.3 — 26.3 NM

Currency 0.7 — 0.7 NM

Net sales, excluding the impact of acquisitions

and currency $ 748.6 $ 786.7 $ (38.1) (4.8) %

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $23.3 million or 5.8% in the three months ended June 30, 2025 compared with the three months ended June 30, 2024.

The decrease reflects lower demand across most platforms, with belts and chain and lubrication systems experiencing the largest declines.

Adjusted EBITDA decreased $7.1 million or 8.9% for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 primarily due to the impact of lower volume, partially offset by favorable pricing and the benefit of acquisitions.

• Cost of products sold decreased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 due to the impact of lower production volume of $14 million, offset by incremental cost of goods sold from acquisitions of $9 million, unfavorable foreign currency exchange rate changes of $5 million and incremental tariff costs.

• SG&A expenses increased for the three months ended June 30, 2025 compared with the three months ended June 30, 2024 primarily due to increased accruals for potential uncollectible accounts, as well as incremental SG&A expense from acquisitions.

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $38.1 million or 4.8% in the six months ended June 30, 2025 compared with the six months ended June 30, 2024.

The decrease reflects lower demand across most platforms, with belts and chain, industrial services and lubrication systems experiencing the largest declines, partially offset by growth in the drive systems platform.

Adjusted EBITDA decreased $22.1 million or 13.7% for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 due to the impact of lower volume, unfavorable mix and higher manufacturing costs, partially offset by higher pricing and the benefit of acquisitions.

• Cost of products sold increased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 due to the incremental cost of goods sold from acquisitions of $17 million, higher manufacturing costs of $5 million and incremental tariff costs, partially offset by the impact of lower production volume of $17 million.

• SG&A expenses increased for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 primarily due to increased accruals for potential uncollectible accounts, as well as the incremental SG&A expense from acquisitions, partly offset by reduced discretionary spending.

Unallocated Corporate

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Unallocated corporate expense % to net sales (1.5 %) (1.3 %) (20) bps

Unallocated corporate expense increased for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 primarily due to an increase in compensation expense.

Three Months Ended

Six Months Ended

2025 2024 $ Change Change

Unallocated corporate expense $ (36.0) $ (32.8) $ (3.2) 9.8 %

Unallocated corporate expense % to net sales (1.6) % (1.4) % (20) bps

Unallocated corporate expense increased for the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 primarily due to unfavorable foreign currency exchange rate changes.

Six Months Ended

2025 2024 $ Change

6 unchanged sentences

Op erating Activities:

The increase in net cash provided by operating activities for the first three months of 2025 compared with the first three months of 2024 was due to the favorable impact of working capital items of $48.7 million, partially offset by a decrease in net income of $19.2 million and lower accrued income taxes of $16 million.

The decrease in net cash provided by operating activities for the first six months of 2025 compared with the first six months of 2024 was due to the unfavorable impact of income taxes on cash of $48.5 million, a decrease in net income of $35.5 million and higher pension and postretirement payments of $12.3 million, largely offset by the favorable impact of working capital items of $74.3 million and other items.

Refer to the tables below for additional detail of the impact of each line item on net cash provided by operating activities.

The following table displays the impact of working capital items on cash during the first three months of 2025 and 2024:

Three Months Ended

The following table displays the impact of working capital items on cash during the first six months of 2025 and 2024:

Six Months Ended

2025 2024 $ Change

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Cash used in working capital items $ (88.0) $ (162.3) $ 74.3

The following table displays the impact of income taxes on cash during the first three months of 2025 and 2024:

Three Months Ended

The following table displays the impact of income taxes on cash during the first six months of 2025 and 2024:

Six Months Ended

2025 2024 $ Change

4 unchanged sentences

Investing Activities:

The increase in net cash used in investing activities for the first three months of 2025 compared with the first three months of 2024 was due to a decrease in cash from the net liquidation of short-term marketable securities of $18.9 million, partially offset by lower capital expenditures of $8.9 million.

The increase in net cash used in investing activities for the first six months of 2025 compared with the first six months of 2024 was due to a decrease in cash from the net liquidation of short-term marketable securities of $16.1 million, partially offset by lower capital expenditures of $13.1 million.

Financing Activities:

The change in net cash used in financing activities for the first three months of 2025 compared with the first three months of 2024 was due to an increase in the purchase of treasury shares of $23.1 million, partially offset by a decrease in net borrowings of $10.4 million.

The change in net cash used in financing activities for the first six months of 2025 compared with the first six months of 2024 was due to the proceeds from the sale of shares of TIL of $232.3 million in 2024, as well as an increase in the purchase of treasury shares of $16.0 million, partially offset by a favorable change in debt borrowings/payments of $214.5 million.

LIQUIDITY AND CAPITAL RESOURCES

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

At March 31, 2025, the Company had strong liquidity with $376.1 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $820.0 million available under committed credit lines.

At June 30, 2025, the Company had strong liquidity with $419.3 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $850.0 million available under committed credit lines.

Of the $419.3 million of cash and cash equivalents, $395.5 million resided in jurisdictions outside the United States.

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

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

At March 31, 2025, the Company had no outstanding borrowings under the Senior Credit Facility.

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

dollar borrowings.

At June 30, 2025, the Company had no outstanding borrowings under the Senior Credit Facility.

The Credit Agreement has two defined financial covenants:

1 unchanged sentence

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

As of March 31, 2025, the Company's consolidated net leverage ratio was 2.17 to 1.0.

As of June 30, 2025, the Company's consolidated net leverage ratio was 2.27 to 1.0.

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

As of March 31, 2025, the Company's consolidated interest coverage ratio was 7.70 to 1.0.

As of June 30, 2025, the Company's consolidated interest coverage ratio was 7.66 to 1.0.

The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating.

The average rate on outstanding Euro borrowings was 3.76% over the quarter ending March 31, 2025.

There were no U.S.

dollar borrowings during the quarter.

The average rate on outstanding U.S.

dollar borrowings was 5.76% over the quarter ending June 30, 2025.

There were no Euro borrowings during the quarter.

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

As of March 31, 2025, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

As of June 30, 2025, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

The Company has a $100 million Accounts Receivable Facility, which matures on November 30, 2026.

The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company.

The Accounts Receivable Facility had no borrowing base limitations at March 31, 2025.

As of March 31, 2025, the Company had $30 million of outstanding borrowings under the Accounts Receivable Facility, which reduced the availability to $70 million.

The Accounts Receivable Facility had no borrowing base limitations at June 30, 2025.

As of June 30, 2025, the Company had no outstanding borrowings under the Accounts Receivable Facility.

Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently provide for borrowings of up to $249.0 million.

At March 31, 2025, the Company had borrowings outstanding of $7.4 million and bank guarantees of $0.3 million, which reduced the aggregate availability under these facilities to $226.1 million.

At June 30, 2025, the Company had borrowings outstanding of $39.3 million and bank guarantees of $0.2 million, which reduced the aggregate availability under these facilities to $209.5 million.

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

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

At March 31, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt.

At June 30, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt.

The Company expects capital expenditures in 2025 to be in the range of 3.5% of sales.

Financing Obligations and Other Commitments:

During the first three months of 2025, the Company made cash contributions and payments of $23.2 million to its global defined benefit pension plans and $0.6 million to its other postretirement benefit plans.

During the first six months of 2025, the Company made cash contributions and payments of $27.3 million to its global defined benefit pension plans and $1.1 million to its other postretirement benefit plans.

In 2025, the Company expects to make contributions to its global defined benefit pension plans of approximately $36 million and to make payments of approximately $3 million to its other postretirement benefit plans.

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The Company reviews its critical accounting policies throughout the year.

The Company has concluded that there have been no significant changes to its critical accounting policies or estimates, as described in its Annual Report on Form 10-K for the year ended December 31, 2024, during the three months ended March 31, 2025.

OTHER MATTERS

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

For the three months ended March 31, 2025, the Company recorded positive foreign currency translation adjustments of $66.5 million that increased shareholders' equity, compared with negative foreign currency translation adjustments of $50.3 million that decreased shareholders' equity for the three months ended March 31, 2024.

The foreign currency translation adjustments for the three months ended March 31, 2025 were impacted by the weakening of the U.S.

dollar relative to other foreign currencies, including the Euro, the Romanian Leu, and the Brazilian Real.

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the three months ended March 31, 2025 totaled $1.1 million of net gains, compared with $3.2 million of net losses during the three months ended March 31, 2024.

CEO Succession:

For the six months ended June 30, 2025, the Company recorded positive foreign currency translation adjustments of $210.5 million that increased shareholders' equity, compared with negative foreign currency translation adjustments of $79.5 million that decreased shareholders' equity for the six months ended June 30, 2024.

The foreign currency translation adjustments for the six months ended June 30, 2025 were impacted by the weakening of the U.S.

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

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the three months ended June 30, 2025 totaled $4.4 million of net losses, compared with $0.4 million of net losses during the three months ended June 30, 2024.

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the six months ended June 30, 2025 totaled $3.3 million of net losses, compared with $3.6 million of net losses during the six months ended June 30, 2024.

CEO Transition:

On September 5, 2024, the Company's Board appointed Tarak B.

Mehta President and CEO of the Company and appointed Richard G.

Mehta President and CEO and appointed Richard G.

Kyle Advisor to the CEO.

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During the three months ended March 31, 2025, the Company recorded severance of $9.3 million, plus related taxes, for Mr.

Mehta's settlement arrangement and release of claims.

Mehta's settlement arrangement and release of claims for his termination without cause.

Approximately two-thirds of this amount is expected to be paid in 2025, with the remaining amounts paid in 2026 and 2027.

In addition, the Company recorded stock compensation expense related to a deferred share award issued to Mr.

NON-GAAP MEASURES

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net Sales $ 1,173.4 $ 1,182.3 $ 2,313.7 $ 2,372.6

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Impairment, restructuring and reorganization charges (1)

5.0 4.9 8.2 9.6

Acquisition-related charges (2)

Gain on sale of certain assets (3)

CEO succession expenses (4)

(0.1) (0.2) (1.3) (0.9)

CEO transition expenses (4)

3.2 1.1 11.8 1.2

Noncontrolling interest of above adjustments 1.0 — 4.8 (0.1)

Provision for income taxes (7)

(8.2) (8.8) (21.3) (15.3)

Adjusted Net Income $ 99.3 $ 115.2 $ 197.9 $ 240.9

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Depreciation and amortization expense (5)

56.9 54.0 111.9 108.9

Acquisition intangible amortization 19.9 19.0 38.9 39.0

Noncontrolling interest (6)

1.0 — 4.8 (0.1)

Provision for income taxes (7)

(8.2) (8.8) (21.3) (15.3)

Adjusted EBITDA $ 208.2 $ 230.2 $ 416.3 $ 476.6

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Mehta, President and CEO of the Company would be departing from the Company, effective immediately, and Richard G.

Kyle will be serving as interim President and CEO.

CEO succession expenses primarily relate to the cost of the settlement agreement with Mr.

Mehta in connection with his departure, net of stock compensation expense for stock awards forfeited.

Kyle would be serving as interim President and CEO.

CEO transition expenses for 2025 primarily relate to the cost of the settlement agreement with Mr.

Mehta in connection with his departure, net of the impact for stock awards forfeited, and incremental stock compensation expense related to a deferred share award issued to Mr.

During 2024, the Company announced that Mr.

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Mehta would be appointed CEO on September 5, 2024.

CEO succession expenses also include the acceleration of certain stock compensation awards for Mr.

CEO transition expenses for 2024 relate to the acceleration of certain stock compensation awards for Mr.

Kyle and other one-time costs associated with the transition in 2024.

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Diluted earnings per share (EPS) $ 1.12 $ 1.36 $ 2.23 $ 2.82

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net cash provided by operating activities $ 111.3 $ 124.6 $ 169.9 $ 173.9

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The Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the Company's ability to cover its net debt obligations with results from its core operations.

Net income for the trailing twelve months ended March 31, 2025 and December 31, 2024 was $356.1 million and $375.3 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 2.2 and 2.0 at March 31, 2025 and December 31, 2024.

Net income for the trailing twelve months ended June 30, 2025 and December 31, 2024 was $339.8 million and $375.3 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 2.3 and 2.0 at June 30, 2025 and December 31, 2024, respectively.

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

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Property losses and related expenses (5)

CEO succession expenses (6)

CEO transition expenses (6)

Tax indemnification and related items (1.1) (1.1)

Total adjustments 19.9 18.6

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Mehta, President and CEO of the Company would be departing from the Company, effective immediately, and Richard G.

Kyle will be serving as interim President and CEO.

Kyle would be serving as interim President and CEO.

CEO transition expenses for the twelve months ended June 30, 2025, primarily relate to the cost of the settlement agreement with Mr.

Mehta in connection with his departure, net of the impact for stock awards forfeited, and incremental stock compensation expense related to a deferred share award issued to Mr.

During 2024, the Company announced that Mr.

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Mehta would be appointed CEO on September 5, 2024.

CEO succession expenses for the twelve months ended March 31, 2025 relate to the cost of the settlement agreement with Mr.

Mehta in connection with his departure, net of stock compensation expense for stock awards forfeited, plus the acceleration of certain stock compensation awards for Mr.

Kyle in connection with his retirement, and other one-time costs associated with the transition in 2024.

CEO transition expenses for 2024 relate to the acceleration of certain stock compensation awards for Mr.

Kyle and other one-time costs associated with the transition in 2024.

FORWARD-LOOKING STATEMENTS

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Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q.

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

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

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

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

• changes in operating costs.

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availability and cost of raw materials, energy and fuel;

changes in costs associated with the effects of tariffs;

changes in tariff rates and other costs associated with tariffs;

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

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This includes:

claims, investigations or problems related to intellectual property, product liability or warranty, foreign export,

sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, PTFE, PFAS, other environmental or health and safety issues, data privacy and taxes;

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

• the rapidly evolving global regulatory landscape and the corresponding heightened operational complexity and compliance risks;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis