What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-30 · 148 added, 105 removed, 438 unchanged (37% of the section changed)

41 unchanged sentences

Three Months Ended

September 30,

2025 2024 $ Change % Change

5 unchanged sentences

Average number of shares – diluted 70,107,191 70,663,741 — (0.8 %)

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change % Change

5 unchanged sentences

Average number of shares – diluted 70,233,259 70,793,086 — (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.

Net sales increased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

The increase was primarily driven by favorable pricing, the favorable impact of foreign currency and the benefit of acquisitions, partially offset by lower end-market demand in the Industrial Motion segment.

Net sales decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.

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

Net income decreased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 primarily due to incremental tariff costs and a gain on the sale of real estate in 2024 that did not repeat in 2025, partially offset by favorable pricing.

Net income decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 primarily due to lower volume, incremental tariff costs, higher manufacturing costs, a gain on the sale of real estate in 2024 that did not repeat in 2025 and higher restructuring costs, partially offset by favorable pricing, lower tax expense, the benefit of acquisitions and lower net interest expense.

Throughout 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.

2 unchanged sentences

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.

As a result, the Company expects 2025 full-year revenues to be down approximately 0.75% compared to 2024, primarily driven by lower demand across both segments, partially offset by favorable pricing, the benefit of acquisitions completed during 2024 and the favorable impact of foreign currency rate changes.

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, incremental tariff costs and a gain on the sale of real estate in 2024 that did not repeat in 2025, 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.

3 unchanged sentences

Three Months Ended

September 30,

2025 2024 $ Change Change

4 unchanged sentences

Impairment and restructuring charges 3.0 2.5 0.5 20.0%

Gain on sale of real estate — (13.8) 13.8 NM

Operating income $ 139.4 $ 146.3 $ (6.9) (4.7%)

Operating income % to net sales 12.0 % 13.0 % (100) bps

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change Change

4 unchanged sentences

Impairment and restructuring charges 16.8 8.1 8.7 107.4%

Gain on sale of real estate — (13.8) 13.8 NM

Operating income $ 431.2 $ 498.1 $ (66.9) (13.4%)

Operating income % to net sales 12.4 % 14.2 % (180) 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.

Net sales increased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

The increase was driven by the favorable impact of foreign currency exchange rate changes of $12 million, the favorable impact of acquisitions of $11 million, and higher organic revenue of $7 million.

Net sales decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.

The decrease was driven by lower organic revenue of $60 million and the unfavorable impact of foreign currency exchange rate changes of $6 million, partially offset by the favorable impact of acquisitions of $38 million.

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.

Operating income decreased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024, due to incremental tariff costs and the gain on the sale of a former bearing manufacturing plant in the three months ended September 30, 2024, partially offset by favorable pricing and lower material and logistics costs.

Operating income decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024, due to the impact of lower volume, incremental tariff costs, and higher manufacturing costs, partially offset by favorable pricing.

• Cost of products sold increased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024, due to incremental tariff costs of $20 million, unfavorable foreign currency exchange rate changes of $12 million and the incremental cost of goods sold from acquisitions of $7 million, partially offset by favorable material and logistics costs of $8 million and the impact of lower production volume of $4 million.

Cost of products sold increased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024, due to incremental tariff costs of $35 million, incremental cost of goods sold from acquisitions of $17 million and higher manufacturing costs of $6 million, partially offset by the impact of lower production volume of $28 million and favorable material and logistics costs of $11 million.

• Selling, general and administrative ("SG&A") expenses decreased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024, primarily due to lower bad debt expense and professional services expenses, partially offset by the unfavorable impact from currency and higher CEO transition expenses.

SG&A expenses decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024, due to decreased discretionary spending, reduced employee compensation and lower bad debt expense, partially offset by the impact of acquisitions and higher CEO transition expenses.

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

• Gain on sale of real estate for the three and nine months ended September 30, 2024 was due to the sale of the Company's former bearing manufacturing 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.

Interest Income and Expense:

Three Months Ended

September 30,

2025 2024 $ Change % Change

2 unchanged sentences

Interest expense, net $ (24.9) $ (26.9) $ 2.0 (7.4 %)

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change % Change

2 unchanged sentences

Interest expense, net $ (75.9) $ (85.8) $ 9.9 (11.5 %)

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.

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

Other Income (Expense):

Three Months Ended

September 30,

2025 2024 $ Change % Change

Non-service pension and other postretirement expense $ (1.3) $ (0.9) $ (0.4) 44.4 %

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

Other expense, net (5.7) (6.3) 0.6 (9.5 %)

Total other expense, net $ (7.0) $ (7.2) $ 0.2 (2.8 %)

Nine Months Ended

September 30,

2025 2024 $ Change % Change

Non-service pension and other postretirement expense $ (3.7) $ (2.9) $ (0.8) 27.6 %

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

Other expense, net (9.4) (6.0) (3.4) 56.7 %

Total other expense, net $ (13.1) $ (8.9) $ (4.2) 47.2 %

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:

Three Months Ended

September 30,

2025 2024 $ Change Change

1 unchanged sentence

Effective tax rate 30.9 % 21.9 % 900 bps

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change Change

1 unchanged sentence

Effective tax rate 26.5 % 25.6 % 90 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.

Income tax expense increased $8.6 million for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 primarily due to the discrete impact of withholding taxes on dividend distributions in 2025.

This was partially offset by lower pre-tax earnings.

Income tax expense decreased $12.4 million for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 primarily due to lower pre-tax earnings and a decrease in the mix of earnings in Non-U.S.

jurisdictions with relatively higher tax rates.

This was partially offset by the net unfavorable impact of discrete items in comparison to the year ago period.

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

1 unchanged sentence

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.

The Company has included the impact on its Consolidated Financial Statements and the impact was not material to the Company's results of operations and financial condition.

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.

12 unchanged sentences

Three Months Ended

September 30,

2025 2024 $ Change Change

7 unchanged sentences

Three Months Ended

September 30,

2025 2024 $ Change % Change

2 unchanged sentences

Net sales, excluding the impact of currency $ 760.9 $ 740.7 $ 20.2 2.7 %

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change Change

6 unchanged sentences

Adjusted EBITDA margin 19.8 % 20.9 % (110) bps

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change % Change

2 unchanged sentences

Net sales, excluding the impact of currency $ 2,318.2 $ 2,326.6 $ (8.4) (0.4 %)

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.

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, increased $20.2 million or 2.7% in the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

The increase was primarily driven by higher pricing and higher renewable energy demand.

Adjusted EBITDA for the Engineered Bearings segment increased for the three months ended September 30, 2025 by $5.8 million or 4.2% compared with the three months ended September 30, 2024, due to favorable pricing and lower material and logistics costs, partially offset by the unfavorable impact of tariffs.

• Cost of products sold increased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 due to incremental tariff costs of $17 million, unfavorable foreign currency exchange rate changes and the impact of higher production volume, partially offset by lower material and logistics costs of $11 million.

The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $8.4 million or 0.4% in the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.

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

Adjusted EBITDA for the Engineered Bearings segment decreased for the nine months ended September 30, 2025 by $29.2 million or 6.0% compared with the nine months ended September 30, 2024, due to the unfavorable impact of tariffs, lower volume, unfavorable foreign currency exchange rate changes, and higher manufacturing costs, partially offset by lower material and logistics costs and favorable pricing.

• Cost of products sold increased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 due to incremental tariff costs of $29 million, partially offset by lower material and logistics costs of $15 million and the impact of favorable foreign currency exchange rate changes of $6 million.

• SG&A expenses decreased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 driven primarily by reduced discretionary spending.

Industrial Motion Segment:

Three Months Ended

September 30,

2025 2024 $ Change Change

7 unchanged sentences

Three Months Ended

September 30,

2025 2024 $ Change % Change

4 unchanged sentences

and currency $ 372.7 $ 386.1 $ (13.4) (3.5 %)

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change Change

2 unchanged sentences

Selling, general and administrative expenses (204.6) (204.0) (0.6) 0.3 %

Other segment items (0.2) (0.3) 0.1 (33.3 %)

Depreciation and amortization 37.3 32.7 4.6 14.1 %

1 unchanged sentence

Adjusted EBITDA margin 18.4 % 20.1 % (170) bps

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change % Change

4 unchanged sentences

and currency $ 1,121.3 $ 1,172.8 $ (51.5) (4.4 %)

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.

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $13.4 million or 3.5% in the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

The decrease reflects lower demand, driven primarily by lower renewable energy and industrial services demand, partially offset by higher pricing.

Adjusted EBITDA increased $0.3 million or 0.4% for the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

Favorable price/mix, lower SG&A expenses, and the benefit of acquisitions were partially offset by lower volume and incremental tariff costs.

• Cost of products sold increased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 due to the incremental cost of goods sold from acquisitions of $8 million, unfavorable foreign currency exchange rate changes of $5 million, higher material and logistics costs and incremental tariff costs, partially offset by the impact of lower production volume of $9 million.

• SG&A expenses decreased for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 primarily due to reduced bad debt expense.

The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $51.5 million or 4.4% in the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.

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

Adjusted EBITDA decreased $21.8 million or 9.2% for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 due to the impact of lower volume, higher manufacturing costs, and the incremental costs of tariffs, partially offset by favorable pricing and the benefit of acquisitions.

• Cost of products sold increased for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 due to the incremental cost of goods sold from acquisitions of $25 million, unfavorable foreign currency exchange rate changes of $6 million, incremental tariff costs of $6 million, higher manufacturing costs of $5 million and higher material and logistics cost (net), partially offset by the impact of lower production volume of $26 million.

Unallocated Corporate

Three Months Ended

September 30,

2025 2024 $ Change Change

1 unchanged sentence

Unallocated corporate expense % to net sales (1.5 %) (2.0 %) 50 bps

Six Months Ended

Nine Months Ended

September 30,

2025 2024 $ Change Change

1 unchanged sentence

Unallocated corporate expense % to net sales (1.5 %) (1.6 %) 10 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

Unallocated corporate expense decreased for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024 primarily due to lower foreign currency exchange losses and reduced corporate compensation expenses, partially offset by higher charitable donations.

Nine Months Ended

September 30,

2025 2024 $ Change

3 unchanged sentences

Effect of exchange rate changes on cash 20.8 1.2 19.6

Increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

and restricted cash $ 77.9 $ (5.9) $ 83.8

Op erating Activities:

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.

The increase in net cash provided by operating activities for the first nine months of 2025 compared with the first nine months of 2024 was primarily due to the favorable impact of working capital items of $99.1 million and the favorable impact of income taxes on cash of $10.9 million, partially offset by a decrease in net income of $48.8 million.

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

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

Six Months Ended

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

Nine Months Ended

September 30,

2025 2024 $ Change

6 unchanged sentences

Cash used in working capital items $ (25.8) $ (124.9) $ 99.1

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

Six Months Ended

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

Nine Months Ended

September 30,

2025 2024 $ Change

4 unchanged sentences

Investing Activities:

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.

The decrease in net cash used in investing activities for the first nine months of 2025 compared with the first nine months of 2024 was due to a decrease in cash used for acquisitions of $167.7 million, partially offset by an increase in cash used for the net increase in short-term marketable securities of $20.7 million.

Financing Activities:

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.

The change in net cash used in financing activities for the first nine months of 2025 compared with the first nine months of 2024 was due to proceeds received from the sale of shares of TIL in 2024 of $232.3 million that did not repeat in 2025, as well as an increase in the purchase of treasury shares of $14.3 million and an increase in dividends paid to non-controlling shareholders of $13.9 million, partially offset by the favorable change in net debt borrowings/payments of $107.2 million.

LIQUIDITY AND CAPITAL RESOURCES

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

September 30,

2025 December 31,

5 unchanged sentences

Ratio of Net Debt to Capital:

September 30,

2025 December 31,

4 unchanged sentences

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

At June 30, 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.

At September 30, 2025, the Company had strong liquidity with $449.1 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $850.0 million available under committed credit lines.

Of the $449.1 million of cash and cash equivalents, $419.6 million resided in jurisdictions outside the United States.

7 unchanged sentences

dollar borrowings.

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

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

As of September 30, 2025, the Company's consolidated net leverage ratio was 2.13 to 1.0.

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

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

As of September 30, 2025, the Company's consolidated interest coverage ratio was 7.76 to 1.0.

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

The average rate on outstanding U.S.

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

There were no Euro borrowings during the quarter.

There were no USD or 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 June 30, 2025, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

As of September 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 June 30, 2025.

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

The Accounts Receivable Facility had no borrowing base limitations at September 30, 2025, and the Company had no outstanding borrowings.

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 $246.2 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.

At September 30, 2025, the Company had borrowings outstanding of $12.0 million and bank guarantees of $5.1 million, which reduced the aggregate availability under these facilities to $229.1 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 June 30, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt.

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

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Financing Obligations and Other Commitments:

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.

During the first nine months of 2025, the Company made cash contributions and payments of $33.7 million to its global defined benefit pension plans and $1.4 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 $2 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 six months ended June 30, 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 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.

For the nine months ended September 30, 2025, the Company recorded positive foreign currency translation adjustments of $199.7 million that increased shareholders' equity, compared with negative foreign currency translation adjustments of $0.2 million that decreased shareholders' equity for the nine months ended September 30, 2024.

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

dollar relative to other foreign currencies, including the Euro, the Chinese Renminbi, the Mexican Peso 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 September 30, 2025 totaled $4.9 million of net losses, compared with $6.3 million of net losses during the three months ended September 30, 2024.

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the nine months ended September 30, 2025 totaled $8.1 million of net losses, compared with $9.9 million of net losses during the nine months ended September 30, 2024.

CEO Transition:

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The Company also announced that the Board had appointed Mr.

Kyle as the interim President and CEO of the Company, effective immediately.

Kyle as the interim President and CEO of the Company.

On September 1, 2025, the Company's Board appointed Lucian Boldea President and CEO and appointed Mr.

Kyle Advisor to the CEO.

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

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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.

In addition, the Company recorded incremental stock compensation expense related to stock compensation awards issued to Mr.

Kyle during the nine months ended September 30, 2025, as well as other one-time costs associated with the transition in 2025.

NON-GAAP MEASURES

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Adjusted Net Income and Adjusted EBITDA:

Adjusted net income and adjusted earnings per share represent net income attributable to The Timken Company and diluted earnings per share, respectively, adjusted for the amortization of intangible assets related to acquisitions, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, the income tax impact of these adjustments, as well as other income tax discrete items, and other items from time to time that are not part of the Company's core operations.

Adjusted net income and adjusted earnings per share represent net income attributable to The Timken Company and diluted earnings per share, respectively, adjusted for the amortization of intangible assets related to acquisitions, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, the income tax impact of these adjustments, as well as other discrete income tax items, and other items from time to time that are not part of the Company's core operations.

Management believes adjusted net income and adjusted earnings per share are useful to investors as they are representative of the Company's core operations and are used in the management of the business.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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6.7 1.5 18.5 2.7

Property losses and related expenses (5)

Noncontrolling interest of above adjustments — (0.1) 4.8 (0.2)

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(3) Represents the net gain resulting from the sale of certain assets.

Gain on sale of certain assets for the third quarter 2024 included a $13.8 million gain related to the sale of the Gaffney, South Carolina plant .

(4) On August 22, 2025, the Company announced the appointment of Lucian Boldea as President and CEO, effective September 1, 2025, and that Richard G.

Kyle would retire from the role of interim President and CEO.

On March 31, 2025, the Company announced that Tarak B.

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

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

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.

CEO transition expenses 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, the acceleration of certain stock compensation awards issued to Mr.

Kyle, and other one-time costs associated with the transition in 2025.

During 2024, the Company announced that Mr.

Kyle, President and CEO of the Company would be retiring from his position as CEO as of February 15, 2025, and that Mr.

Mehta would be appointed CEO on September 5, 2024.

Mehta would be appointed President and CEO on September 5, 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.

(5) Represents property loss and related expenses incurred during the periods presented resulting from property loss that occurred during the second quarter of 2024 at one of the Company's plants in Slovakia.

(6) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any.

(6) Represents the noncontrolling interest impact of the adjustments listed above, as well as the reversal of uncertain tax positions related to Timken India Limited.

(7) Represents the noncontrolling interest impact of the adjustments listed above, as well as the reversal of uncertain tax positions related to TIL.

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

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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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 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.

Net income for the trailing twelve months ended September 30, 2025 and December 31, 2024 was $326.5 million and $375.3 million, respectively.

Net debt to adjusted EBITDA for the trailing twelve months was 2.1 and 2.0 at September 30, 2025 and December 31, 2024, respectively.

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

Twelve Months Ended

September 30,

2025 December 31,

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Gain on sale of certain assets (4)

(15.1) (14.7)

Property losses and related expenses (5)

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

Gain on sale of certain assets for the third quarter of 2024 included $13.8 million gain related to the sale of the Gaffney, South Carolina plant.

Gain on sale of certain assets for the third quarter of 2024 included a $13.8 million gain related to the sale of the Gaffney, South Carolina plant.

(6) On August 22, 2025, the Company announced the appointment of Lucian Boldea as President and CEO, effective September 1, 2025, and that Richard G.

Kyle would retire from the role of interim President and CEO.

On March 31, 2025, the Company announced that Tarak B.

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

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

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.

CEO transition expenses for the twelve months ended September 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, the acceleration of certain stock compensation awards issued to Mr.

Kyle, and other one-time costs associated with the transition in 2025.

During 2024, the Company announced that Mr.

Kyle, President and CEO of the Company would be retiring from his position as CEO as of February 15, 2025, and that Mr.

Mehta would be appointed CEO on September 5, 2024.

Mehta would be appointed President and CEO on September 5, 2024.

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

47 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis