Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in millions, except per share data)
OVERVIEW
Introduction:
The Timken Company designs and manufactures a growing portfolio of engineered bearings and industrial motion products, and provides related services. With more than a century of knowledge and innovation, the Company continuously improves the reliability and efficiency of global machinery and equipment to move the world forward. The Company’s growing portfolio features many strong brands, such as Timken®, GGB®, PT Tech®, Torsion Control Products®, Philadelphia Gear®, Cone Drive®, CGI®, Rollon®, Nadella®, Rosa Sistemi®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy®, PT Tech®, Torsion Control Products® and Lagersmit®. Timken posted $4.6 billion in sales in 2025 and employs approximately 19,000 people globally, operating in 44 countries. The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. The following further describes these business segments:
• 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; plain bearings, metal-polymer bearings and rod end bearings; thrust and specialty ball bearings; and housed or mounted bearings. 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. The Industrial Motion portfolio features many strong brands, including Philadelphia Gear®, Cone Drive®, CGI®, Spinea®, Rollon®, Nadella®, Rosa Sistemi®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech®, Torsion Control Products® and Lagersmit®. Industrial Motion products are used across a broad range of industries, including solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more.
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. The Company’s business strengths include its product technology, end-market diversity, geographic reach and aftermarket mix. Timken collaborates with OEMs to improve equipment efficiency with its engineered products and captures subsequent equipment replacement cycles by selling largely through independent channels in the aftermarket. Timken focuses its international efforts and footprint in regions of the world where strong macroeconomic factors such as urbanization, infrastructure development, industrialization and sustainability create demand for its products and services.
The Company's strategy has three primary elements:
Profitable Growth. 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 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. The Company also targets applications that offer significant aftermarket demand, thereby providing product and services revenue throughout the equipment’s lifetime.
Operational Excellence. Timken operates with a relentless drive for exceptional results and a passion for superior execution. The Company embraces a continuous improvement culture that is charged with increasing efficiency, lowering costs, eliminating waste, increasing cash flow, driving organizational advancement and agility, and building greater brand equity to fuel growth. This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world.
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Capital Deployment to Drive Shareholder Value. The Company is focused on providing the highest returns for shareholders through its capital allocation framework, which includes: (1) investing in the core business through capital expenditures, research and development and initiatives to drive profitable organic growth; (2) pursuing strategic acquisitions to broaden its portfolio and capabilities across diverse markets, with a focus on engineered bearings, industrial motion products and related services; (3) returning capital to shareholders through dividends and share repurchases; and (4) maintaining a strong balance sheet and sufficient liquidity. As part of this framework, the Company may also restructure, reposition or divest underperforming product lines or assets.
The following items highlight some of the Company's accomplishments in 2025:
• In August, Timken issued its annual CSR report, highlighting advances in environmental sustainability, social impact and product innovation. The report details Timken's progress toward its target to reduce aggregate Scope 1 and Scope 2 greenhouse gas (GHG) emissions intensity by 50 percent by 2030. From its 2018 baseline year through the end of 2024, Timken decreased emissions intensity by about 42 percent, demonstrating the company's dedication to climate action and responsible operations.
• Timken increased its quarterly dividend by 3% in the second quarter and paid its 414th consecutive quarterly dividend in the fourth quarter. The Company achieved twelve straight years of higher annual dividends in 2025. Timken also repurchased 779,300 common shares during the year.
• The Company strengthened its balance sheet by reducing total debt by $141 million and net debt by $132 million during the year.
• Timken welcomed Lucian Boldea to Timken as its new President and Chief Executive Officer ("CEO") in September.
• Throughout 2025, Timken received third-party recognition for the role it plays as a global industrial leader and responsible corporate citizen. The Company was named one of the World's Most Ethical Companies® for the 14th time by Ethisphere, and one of America's Most Responsible Companies for the 6th year in a row by Newsweek and Statista.
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RESULTS OF OPERATIONS
Overview:
$ Change
% Change
Net sales
Net income
Net income attributable to noncontrolling interest
Net income attributable to The Timken Company
Diluted earnings per share
Average number of diluted shares
The increase in net sales was primarily driven by favorable pricing, the benefit of acquisitions and the favorable impact of foreign currency exchange rate changes, partially offset by lower demand across both segments. The decrease in net income was primarily due to incremental tariff costs, the impact of lower volume, unfavorable mix and higher impairment and pension remeasurement charges, partially offset by favorable pricing, lower material and logistics costs, reduced selling, general and administrative ("SG&A") and lower income tax expense.
Outlook:
The Company expects 2026 full-year revenue to be up in the range of 2% to 4% in total compared to 2025, primarily driven by higher demand across most market sectors, higher pricing and the favorable impact of foreign currency exchange rates. The Company's earnings are expected to be up in 2026 compared to 2025, primarily due to higher pricing, the impact of higher volume, favorable mix, the impact of foreign currency exchange rate changes and lower material costs, partially offset by incremental tariff costs and higher SG&A expenses.
The Company expects to generate approximately $515 million of cash from operating activities in 2026 compared to $554.3 million in 2025, driven by higher working capital to support increased demand and higher cash taxes, partially offset by higher net income. The Company expects capital expenditures in 2026 to be approximately 3.5% of sales.
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THE STATEMENTS OF INCOME
Operating Income:
Twelve Months Ended
December 31,
$ Change
Change
Net sales
Cost of products sold
Selling, general and administrative expenses
Amortization of intangible assets
Impairment and restructuring charges
Gain on sale of real estate
Operating income
Operating income % to net sales
bps
Net sales increased in 2025 compared to 2024 primarily due to the favorable impact of acquisitions of $38 million as well as the favorable impact of foreign currency exchange of $17 million, partially offset by lower organic sales of $46 million (lower demand, favorable pricing).
Operating income decreased in 2025 compared to 2024 due to incremental tariff costs and the impact of lower sales net of cost of products sold, partially offset by favorable pricing and lower SG&A expenses.
• Cost of products sold increased in 2025 compared to 2024 due to the incremental cost of tariffs of $65 million, the impact of foreign currency exchange rate changes of $16 million, and the incremental cost of goods sold from acquisitions of $15 million, partially offset by favorable material and logistics costs of $19 million and the impact of lower volume of $17 million.
• SG&A expenses decreased in 2025 compared to 2024 primarily due to reduced discretionary spending to align with lower demand, decreased accruals for potential uncollectible accounts, and reduced employee compensation, partially offset by the incremental expense associated with acquisitions and the unfavorable impact of foreign currency.
• Impairment and restructuring charges increased in 2025 compared to 2024 primarily due to severance expense related to the CEO transition, and restructuring charges related to the announced closure of the Company's bearing manufacturing facility in Heilbronn, Germany.
• Gain on sale of real estate for 2024 was due to a gain of $13.8 million on the sale of a former bearing manufacturing plant in Gaffney, South Carolina during the quarter ended September 30, 2024. Refer to Note 8 - Property, Plant and Equipment in the Notes to the Consolidated Financial Statements for additional information.
Interest Expense and Income:
$ Change
% Change
Interest expense
Interest income
Interest expense, net
Interest expense decreased in 2025 compared to 2024, primarily due to lower average debt levels during the year and lower average interest rates. Interest income decreased in 2025 compared to 2024, primarily due to lower average cash levels during the year.
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Other Income (Expense):
$ Change
% Change
Non-service pension and other postretirement
expense
Other expense, net
Total other expense, net
The increase in non-service pension and other postretirement expense was primarily due to net actuarial ("mark-to-market") losses recorded in 2025 compared to net actuarial gains in 2024. In 2025, the Company recognized $10.8 million of net mark-to-market losses, compared to $1.3 million of net mark-to-market gains in 2024. Refer to Note 17 - Retirement Benefit Plans and Note 18 - Other Postretirement Benefit Plans in the Notes to the Consolidated Financial Statements for more information .
The increase in other expense, net was primarily due to higher foreign currency exchange losses, net of derivative activity, recognized in 2025 compared to 2024.
Income Tax Expense:
$ Change
Change
Income tax expense
Effective tax rate
bps
The effective tax rate for 2025 was 23.7%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21% and U.S. state and local income taxes. This was partially offset by the release of valuation allowances on certain non-U.S. deferred tax assets and release of accruals for uncertain tax positions.
The effective tax rate for 2024 was 24.1%, which was unfavorable compared to the U.S. federal statutory rate of 21%, primarily due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21% and U.S. state and local income taxes. This was partially offset by the release of accruals for uncertain tax positions.
The change in the effective tax rate for 2025 compared to 2024 was a decrease of 0.4%. The decrease was primarily due to the release of valuation allowances on certain non-U.S. deferred tax assets and the release of accruals for uncertain tax positions. This was partially offset by the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21%.
Refer to Note 5 - Income Taxes in the Notes to the Consolidated Financial Statements for additional information on the computation of the income tax expense.
For a discussion of changes in consolidated results from 2024 to 2023, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
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BUSINESS SEGMENTS
The Company's reportable segments are product-based business groups that serve customers in diverse industrial markets. The primary measurement used by management to measure the financial performance of each segment is adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"). Refer to Note 3 - Segment Information in the Notes to the Consolidated Financial Statements for the reconciliation of adjusted EBITDA by segment to consolidated income before income taxes.
The presentation of segment results below includes a reconciliation of the changes in net sales for each segment reported in accordance with U.S. GAAP to net sales adjusted to remove the effects of acquisitions completed in 2024 and foreign currency exchange rate changes. The effects of acquisitions and foreign currency exchange rate changes on net sales are removed to allow investors and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period.
The following item highlights the Company ' s acquisition completed in 2024:
• The Company acquired CGI, Inc. ("CGI") during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment.
Engineered Bearings Segment:
$ Change
Change
Net sales
Cost of products sold
Selling, general and administrative expenses
Other segment items
Depreciation and amortization
Adjusted EBITDA
Adjusted EBITDA margin
bps
$ Change
% Change
Net sales
Less: Currency
Net sales, excluding the impact of currency
The Engineered Bearings segment's net sales, excluding the effects of foreign currency exchange rate changes, decreased $15.3 million or 0.5% in 2025 compared to 2024, primarily driven by lower demand in the Americas and Europe, partially offset by higher demand in China, and higher pricing. The segment experienced lower demand across most market sectors, with the auto/truck and heavy industries posting the largest declines, partially offset by higher demand in the renewable energy sector.
Adjusted EBITDA for the Engineered Bearings segment decreased in 2025 by $36.5 million or 6.0% compared to 2024, primarily due to incremental tariff costs and the impact of lower volume, partially offset by favorable price/mix, lower material and logistics costs and lower SG&A expenses.
• Cost of products sold increased in 2025 compared to 2024 due to incremental tariff costs of $55 million, partially offset by favorable material and logistics costs of $24 million.
• SG&A expenses decreased in 2025 compared to 2024 driven primarily by lower compensation expense and reduced discretionary spending, partially offset by the unfavorable impact of foreign currency.
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Industrial Motion Segment:
$ Change
Change
Net sales
Cost of products sold
Selling, general and administrative expenses
Other segment items
Depreciation and amortization
Adjusted EBITDA
Adjusted EBITDA margin
bps
$ Change
% Change
Net sales
Less: Acquisitions
Currency
Net sales, excluding the impact of acquisitions and currency
The Industrial Motion segment's net sales, excluding the effects of acquisitions and foreign currency exchange rate changes, decreased $31.0 million or 2.0% in 2025 compared to 2024, driven primarily by lower demand in most segment platforms, partially offset by higher pricing. Sales were down across most markets, with the largest declines in renewable energy and industrial services.
Adjusted EBITDA decreased $9.1 million or 3.0% in 2025 compared to 2024 primarily due to the impact of lower volume and the incremental cost of tariffs, partially offset by favorable pricing and the benefit of acquisitions.
• Cost of products sold increased in 2025 compared to 2024 due to the impact of the incremental cost of goods sold from acquisitions of $25 million, the unfavorable impact of foreign currency of $14 million, and the incremental cost of tariffs of $10 million , partially offset by the impact of lower volume of $13 million.
• Depreciation and amortization increased in 2025 compared to 2024 primarily due to the addition of property, plant and equipment assets from the acquisition completed during 2024 and the addition of assets from capital projects in the Americas. Refer to Note 2 - Acquisitions in the Notes to the Consolidated Financial Statements for additional information.
Unallocated Corporate:
$ Change
Change
Unallocated corporate expense
Unallocated corporate expense % to net sales
bps
Unallocated corporate expense increased in 2025 compared to 2024 primarily due to the unfavorable impact of foreign currency losses of $11.5 million in 2025 compared to $8.2 million in 2024 and higher charitable donations, partially offset by reduced corporate compensation expenses.
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CASH FLOWS
$ Change
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash
Decrease in cash, cash equivalents and restricted cash
Operating Activities:
The increase in net cash provided by operating activities in 2025 compared to 2024 was primarily due to the favorable impact of working capital items of $95.1 million and the favorable impact of income taxes on cash of $17.2 million, partially offset by a decrease in net income of $58.0 million. Refer to the table below for additional detail of the impact of each line on net cash provided by operating activities.
The following chart displays the impact of working capital items on cash during 2025 and 2024:
$ Change
Cash provided by (used in):
Accounts receivable
Unbilled receivables
Inventories
Trade accounts payable
Other accrued expenses
Cash provided by (used in) working capital items
The following table displays the impact of income taxes on cash during 2025 and 2024:
$ Change
Accrued income tax expense
Income tax payments
Other miscellaneous
Change in income taxes
Investing Activities:
The decrease in net cash used in investing activities in 2025 compared to 2024 was primarily due to a decrease in cash used for acquisitions of $167.4 million and a decrease in capital expenditures of $21.8 million, partially offset by a decrease in cash from the net liquidation of short-term marketable securities of $19.7 million and a decrease in proceeds from disposals of property, plant and equipment of $13.1 million.
Financing Activities:
The change in net cash used in financing activities in 2025 compared to 2024 was primarily due to proceeds received from the sale of shares of Timken India Limited ("TIL") in 2024 of $232.3 million that did not repeat in 2025, an increase in the purchase of treasury shares of $16.9 million and an increase in noncontrolling dividends paid of $13.9 million, partially offset by an increase in net borrowings of $21.6 million.
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LIQUIDITY AND CAPITAL RESOURCES
Reconciliation of total debt to net debt and the ratio of net debt to capital:
Net Debt:
December 31,
Short-term debt, including current portion of long-term debt
Long-term debt
Total debt
Less: Cash and cash equivalents
Net debt
Ratio of Net Debt to Capital:
December 31,
Net debt
Total equity
Net debt plus total equity (capital)
Ratio of net debt to capital
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 December 31, 2025, the Company had strong liquidity with $364.4 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $828.8 million available under committed credit lines. Of the $364.4 million of cash and cash equivalents, $333.9 million resided in jurisdictions outside the United States. Repatriation of non-U.S. cash could be subject to taxes and some portion may be subject to governmental restrictions. Part of the Company's strategy is to grow in attractive market sectors, many of which are outside the United States. This strategy includes making investments in facilities, equipment and potential new acquisitions. The Company plans to fund these investments, as well as meet working capital requirements, with cash and cash equivalents and unused lines of credit within the geographic location of these investments where feasible.
On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750 million unsecured revolving credit facility ("Senior Credit Facility") and a $400 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027. Interest rates under the Credit Agreement are based on the Secured Overnight Financing Rate ("SOFR"). At December 31, 2025, the Senior Credit Facility had $21.2 million of outstanding borrowings. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio. The maximum consolidated net leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of December 31, 2025, the Company's consolidated net leverage ratio was 2.01 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of December 31, 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. 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 December 31, 2025, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).
The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 5, 2025. The $100 million Accounts Receivable Facility matures on November 30, 2028. 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 December 31, 2025. As of December 31, 2025, there were no outstanding borrowings under the Accounts Receivable Facility.
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Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently allows for borrowings of up to $247.2 million. At December 31, 2025, the Company had borrowings outstanding of $24.5 million and bank guarantees of $6.2 million, which reduced the aggregate availability under these facilities to $216.5 million.
On May 23, 2024, the Company issued fixed-rate Euro senior unsecured notes ("2034 Notes") in the aggregate principal amount of €600 million with an interest rate of 4.13%, maturing on May 23, 2034. Proceeds from the 2034 Notes were used for the redemption of the Company's outstanding fixed-rate unsecured senior notes ("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 December 31, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt.
The Company expects to generate approximately $515 million of cash from operating activities in 2026 compared to $554.3 million in 2025, driven by higher working capital to support increased demand and higher cash taxes, partially offset by higher net income. The Company expects capital expenditures in 2026 to be approximately 3.5% of sales.
FUTURE CONTRACTUAL AND OTHER PAYMENTS
The Company’s material cash requirements for contractual debt obligations and other contractual commitments outstanding as of December 31, 2025 were as follows:
Payments due by period:
Future Contractual and Other Payments
Total
Less than
1 Year
1-5 Years
More than
5 Years
Interest payments
Long-term debt, including current portion of long-term debt
Short-term debt
Purchase commitments
Operating leases
Retirement benefit plans
Total
The interest payments beyond five years primarily relate to long-term fixed-rate notes. Refer to Note 12 - Financing Arrangements in the Notes to the Consolidated Financial Statements for additional information.
In order to maintain minimum funding requirements, the Company is required to make contributions to the trusts established for its defined benefit pension plans and other postretirement benefit plans. The table above shows the expected future minimum cash contributions to the trusts for the funded plans as well as estimated future benefit payments to participants for the unfunded plans. Those minimum funding requirements and estimated benefit payments can vary significantly. The amounts in the table above are based on actuarial estimates using current assumptions for, among other things, discount rates, expected return on assets and health care cost trend rates. During 2025, the Company made cash contributions and payments of $36.8 million to its global defined benefit pension plans and $1.9 million to its other postretirement benefit plans. Refer to Note 17 - Retirement Benefit Plans and Note 18 - Other Postretirement Benefit Plans in the Notes to the Consolidated Financial Statements for additional information.
Refer to Note 5 - Income Taxes and Note 14 - Contingencies in the Notes to the Consolidated Financial Statements for additional information regarding the Company's exposure for certain tax and legal matters.
In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to insurance contracts. At December 31, 2025, outstanding letters of credit totaled $86.3 million, primarily having expiration dates within 12 months.
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NEW ACCOUNTING GUIDANCE ISSUED AND NOT YET ADOPTED
Information required for this Item is incorporated by reference to Note 1 - Significant Accounting Policies in the Notes to the Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The following paragraphs include a discussion of some critical areas that require a higher degree of judgment, estimates and complexity.
Goodwill and Indefinite-lived Intangible Assets:
The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually, performing its annual impairment test as of October 1st. Furthermore, goodwill and indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Each interim period, the Company assesses whether or not an indicator of impairment is present that would necessitate a goodwill and indefinite-lived intangible assets impairment analysis be performed in an interim period other than during the fourth quarter.
As of December 31, 2025, the Company had $1,486.4 million of goodwill on its Consolidated Balance Sheet, of which $703.9 million was attributable to the Engineered Bearings segment and $782.5 million was attributable to the Industrial Motion segment. See Note 9 - Goodwill and Other Intangible Assets in the Notes to the Consolidated Financial Statements for movements in the carrying amount of goodwill by segment.
The Company reviews goodwill for impairment at the reporting unit level. The Engineered Bearings segment has one reporting unit and the Industrial Motion segment has six reporting units.
Accounting guidance permits an entity to first assess qualitative factors to determine whether additional indefinite-lived intangible asset impairment testing, including goodwill, is required. The Company chose to utilize this qualitative assessment in the annual goodwill impairment testing for all reporting units in the fourth quarter of 2025. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of these reporting units exceeded their respective carrying values. In 2024, the Company performed a quantitative impairment analysis in the fourth quarter of 2024 for its Belts and Chain reporting unit. The result of this impairment analysis was to recognize an impairment loss of $1.5 million, reducing goodwill for this reporting unit to zero.
As of December 31, 2025, the Company had $100.6 million of indefinite-lived intangible assets on its Consolidated Balance Sheet. The Company’s indefinite-lived intangible assets primarily consist of acquired trade names. As mentioned above, accounting guidance permits an entity to first assess qualitative factors to determine whether additional indefinite-lived intangible asset impairment testing is required. The Company chose to utilize this qualitative assessment in the annual impairment testing for all of its indefinite-lived intangible assets in the fourth quarter of 2025. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of these indefinite-lived intangible assets would exceed their respective carrying values.
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Income Taxes:
Management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities, valuation allowances against deferred tax assets, and accruals for uncertain tax positions.
The Company, which is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions, accounts for income taxes in accordance with Accounting Standards Codification ("ASC") Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. Deferred tax assets relate primarily to tax loss carryforwards in foreign jurisdictions, as well as pension and postretirement benefit obligations in the U.S., which the Company believes are more likely than not to result in future tax benefits. In determining the need for a valuation allowance, the historical and projected financial performance of the entity recording the net deferred tax asset is considered along with any other pertinent information. The Company recorded $6.8 million in 2025 and $0.9 million in 2024 of tax benefits related to the reversal of valuation allowances. Refer to Note 5 - Income Taxes in the Notes to the Consolidated Financial Statements for further discussion on the valuation allowance reversals.
In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate income tax determination is uncertain. The Company is regularly under audit by tax authorities. Accruals for uncertain tax positions are provided for in accordance with the requirements of ASC Topic 740. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense. In 2025, the Company recorded $13.2 million of net tax benefit for uncertain tax positions, which consisted primarily of $21.0 million of the net reversal of accruals for prior year uncertain tax positions and settlements with tax authorities. This benefit was partially offset by $7.8 million related to increases to current and prior year uncertain tax positions and interest. During 2025, the Company recorded a $2.6 million increase of uncertain tax positions related to foreign currency translation adjustments and deferred tax liabilities. The Company also released $0.3 million of uncertain tax positions related to prior years for acquisitions made during 2024.
Purchase Accounting and Business Combinations:
Assets acquired and liabilities assumed as part of a business combination are recognized at their acquisition date fair values. In determining these fair values, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. For certain acquisitions, the Company used a benchmarking model to measure the trade names, customer relationship, and technology and know-how-related intangible assets. The estimation of fair value required judgment related to future net cash flows based on assumptions related to revenue and EBITDA growth rates, customer attrition rates and discount rates. Inputs were generally determined by taking into account competitive trends, market comparisons, independent appraisals, and historical data, among other factors, and were supplemented by current and anticipated market conditions.
Refer to Note 1 - Significant Accounting Policies for further discussion regarding the fair value process.
Revenue Recognition:
A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Revenue is generally recognized as performance obligations under the terms of a contract with a customer of the Company are satisfied. Refer to Note 1 - Significant Accounting Policies in the Notes to the Consolidated Financial Statements for further discussion around the Company's revenue policy.
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Defined Benefit Pension Plans:
The Company sponsors a number of defined benefit pension plans that cover eligible employees. These plans are accounted for in accordance with ASC Topic 715-30, "Defined Benefit Plans – Pension."
The measurement of liabilities related to these plans is based on management's assumptions related to future events, including discount rates. Management regularly evaluates these assumptions and adjusts them as required and appropriate. Other plan assumptions also are reviewed on a regular basis to reflect recent experience and the Company's future expectations. Actual experience that differs from these assumptions may affect future liquidity, expense and the overall financial position of the Company. While the Company believes that current assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may affect materially the Company's pension obligations and its future expense and cash flow.
The discount rate is used to calculate the present value of expected future pension cash flows as of the measurement date. The Company establishes the discount rate by constructing a notional portfolio of high-quality corporate bonds and matching the coupon payments and bond maturities to projected benefit payments under the Company's pension plans. A lower discount rate will result in a higher benefit obligation; conversely, a higher discount rate will result in a lower benefit obligation. The discount rate also is used to calculate the annual interest cost, which is a component of net periodic benefit cost.
During 2025, the Company entered into an insurance buy-in contract for its pension obligation related to its defined benefit pension plan in the United Kingdom ("U.K."). Refer to Note 17 - Retirement Benefit Plans in the Notes to the Consolidated Financial Statements for additional information regarding the insurance buy-in contract. The insurance buy-in contract matches cash flows with future benefit payments for participants as of the contract date with the obligation remaining with the plan. The discount rate for this plan has been set at the discount rate inherent in the insurance buy-in contract.
The expected rate of return on plan assets is determined by analyzing the historical long-term performance of the Company's pension plan assets, as well as the mix of plan assets between equities, fixed-income securities and other investments, the expected long-term rate of return expected for those asset classes and long-term inflation rates. Short-term asset performance can differ significantly from the expected rate of return, especially in volatile markets. A lower-than-expected rate of return on pension plan assets will increase pension expense and future contributions.
The Company recognizes actuarial gains and losses immediately through net periodic benefit cost upon the annual remeasurement in the fourth quarter, or on an interim basis if specific events trigger a remeasurement.
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The Company recognized net periodic benefit cost of $25.2 million during 2025 for defined benefit pension plans, compared to net periodic benefit cost of $12.2 million during 2024. The Company recognized net mark-to-market losses of $11.2 million during 2025 compared to net mark-to-market gains of $0.7 million during 2024. Mark-to-market losses during 2025 were primarily due to the impact of a net reduction in the discount rate used to measure the Company's defined benefit pension obligations of $10.6 million and the impact of experience losses of $2.9 million, partially offset by higher than expected returns on plans assets of $1.3 million and other actuarial gains of $1.0 million. The impact of the net reduction in the discount rate used to measure the Company's defined benefit pension obligations was primarily driven by a 36 basis point decrease in the discount rate used to measure its plan obligations in the U.K., which decreased from 5.43% in 2024 to 5.07% in 2025, and a 24 basis point decrease in the weighted-average discount rate used to measure its U.S. plan obligations, which decreased from 5.83% in 2024 to 5.59% in 2025. Excluding mark-to-market and recognized in 2025 and 2024, including a , net period cost was $14.0 million and $13.0 million, respectively. The increase in 2025 was due to higher interest costs.
In 2026, the Company expects net periodic benefit cost to be approximately $12 million for defined benefit pension plans, compared to net periodic benefit cost of $25.2 million in 2025. Net periodic benefit cost for 2026 does not include mark-to-market charges that will be recognized immediately through earnings in the fourth quarter of 2026, or on an interim basis if specific events trigger a remeasurement. Excluding the mark-to-market losses of $11.2 million recognized in 2025, net periodic benefit cost was $14.0 million in 2025. The expected decrease in net periodic benefit cost for 2026, excluding mark-to-market charges, primarily reflects a higher expected return on plan assets.
The Company expects to contribute to its defined benefit pension plans or pay directly to participants of defined benefit plans approximately $32 million in 2026 compared to $36.8 million of contributions and payments in 2025. The decrease is primarily due to lower expected contributions on to the U.S. pension plans in 2026.
For expense purposes in 2025, the Company applied a weighted-average discount rate of 5.83% to its U.S. defined benefit pension plans. For expense purposes in 2026, the Company will apply a weighted-average discount rate of 5.59% to its U.S. defined benefit pension plans.
For expense purposes in 2025, the Company applied an expected weighted-average rate of return of 4.30% for the Company’s U.S. pension plan assets. For expense purposes in 2026, the Company will apply an expected weighted-average rate of return on plan assets of 4.74%.
The following table presents the sensitivity of the Company's global projected pension benefit obligation ("PBO") to the indicated increase/decrease in key assumptions:
+ / - Change at December 31, 2025
Change
PBO
Assumption:
Discount rate
In the table above, a 25 basis point decrease in the discount rate will increase the PBO by $8.3 million and decrease income before income taxes through the recognition of actuarial losses of $8.3 million. A 25 basis point increase in the discount rate will decrease the PBO by $8.3 million and increase income before income taxes through the recognition of actuarial gains of $8.3 million. In addition, a 25 basis point decrease in returns on pension assets will decrease income before income taxes by $0.6 million, and a 25 basis point increase in return on pension assets will increase income before income taxes by $0.6 million.
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NON-GAAP MEASURES
Supplemental Non-GAAP Measures:
In addition to results reported in accordance with U.S. GAAP, the Company provides information on non-GAAP financial measures. These non-GAAP financial measures include adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margins, ratio of net debt to adjusted EBITDA (for the trailing 12 months), net debt, ratio of net debt to capital, free cash flow and return on invested capital. This information is intended to supplement U.S. GAAP financial measures and is not intended to replace U.S. GAAP financial measures. Net debt and the ratio of net debt to capital is disclosed in the "Liquidity and Capital Resources" section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
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, CEO transition expenses, 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.
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for items that are not part of the Company's core operations. These items include 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, and other items from time to time that are not part of the Company's core operations. Management believes adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.
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Reconciliation of net income attributable to The Timken Company to adjusted net income, adjusted EBITDA and adjusted EBITDA Margin:
Twelve Months Ended December 31,
Net sales
Net Income Attributable to The Timken Company
Net Income Attributable to The Timken Company as a Percentage of Sales
Adjustments:
Acquisition intangible amortization
Impairment, restructuring and reorganization
charges (1)
Corporate pension and other postretirement
benefit related (income) expense (2)
Acquisition-related charges (3)
Gain on divestitures and sale of certain assets (4)
Property losses and related expenses (5)
Tax indemnification and related items
CEO transition expenses (6)
Noncontrolling interest of above adjustments
Provision for income taxes (7)
Adjusted Net Income
Net income attributable to noncontrolling
interest
Provision for income taxes (as reported)
Interest expense
Interest income
Depreciation and amortization expense (8)
Less: Acquisition intangible amortization
Less: Noncontrolling interest
Less: Provision for income taxes (7)
Adjusted EBITDA
Adjusted EBITDA Margin (% of net sales)
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; (iv) impairment of assets; and (v) related depreciation and amortization. Impairment, restructuring and reorganization charges for 2023 included $28.3 million related to the impairment of goodwill. Impairment, restructuring and reorganization charges for 2022 included $29.3 million related to the sale of Timken Aerospace Drives Systems, LLC. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
(2) Corporate pension and other postretirement benefit related expense (income) represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and (gains) in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to Note 17 - Retirement Benefit Plans and Note 18 - Other Postretirement Benefit Plans for additional discussion.
(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and certain unsuccessful transactions, as well as any resulting inventory step-up impact, and a bargain purchase gain in 2021 on the acquisition of the assets of Aurora Bearing Company, that closed on November 30, 2020.
(4) Represents the net gain resulting from divestitures and sale of certain assets.
(5) Represents property loss and related expenses incurred during the periods presented resulting from a fire that occurred during the second quarter of 2024 at one of the Company's plants in Slovakia.
(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 Mr. Kyle would be serving as interim President and CEO. 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 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.
(7) 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.
(8) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any.
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Diluted earnings and adjusted earnings per share in the table below are based on net income attributable to The Timken Company and adjusted net income, respectively, in the table above.
Twelve Months Ended December 31,
Diluted earnings per share (EPS)
Adjusted EPS
Diluted shares
Free Cash Flow:
Free cash flow represents net cash provided by operating activities less capital expenditures. Management believes free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy.
Reconciliation of net cash provided by operating activities to free cash flow:
Twelve Months Ended December 31,
Net cash provided by operating activities
Capital expenditures
Free cash flow
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Ratio of Net Debt to Adjusted EBITDA:
The ratio of net debt to adjusted EBITDA for the trailing twelve months represents total debt less cash and cash equivalents divided by adjusted EBITDA for the trailing twelve months. T he Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the Company's ability to cover its net debt obligations with results from its core operations. Net income for the trailing twelve months ended December 31, 2025 and December 31, 2024 was $317.3 million and $375.3 million, respectively. Net debt to adjusted EBITDA for the trailing twelve months was 2.0 at both December 31, 2025 and December 31, 2024 .
Reconciliation of Net income to Adjusted EBITDA for the twelve months:
Twelve Months Ended December 31,
Net income
Provision for income taxes
Interest expense
Interest income
Depreciation and amortization
Consolidated EBITDA
Adjustments:
Impairment, restructuring and reorganization charges (1)
Corporate pension and other postretirement related expense (income) (2)
Acquisition-related charges (3)
Property losses and related expenses (4)
Gain on divestitures and sale of certain assets (5)
CEO transition expenses (6)
Tax indemnification and related items
Total Adjustments
Adjusted EBITDA
Net Debt
Ratio of Net Debt to Adjusted EBITDA
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
(2) Corporate pension and other postretirement benefit related expense (income) represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and (gains) in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.
(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.
(4) Represents property loss and related expenses incurred during the periods presented resulting from a fire that occurred during the second quarter of 2024 at one of the Company's plants in Slovakia.
(5) Represents the net gain resulting from divestitures and sale of certain assets.
(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 Mr. Kyle would be serving as interim President and CEO. 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 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.
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Return on Invested Capital:
Return on Invested Capital is defined as adjusted net operating profit after taxes divided by average invested capital. The Company uses Average Invested Capital as a type of non-GAAP ratio that indicates return on invested capital, which management believes is useful to investors as a measure of return on their investment.
Reconciliation of adjusted net operating profit after taxes, adjusted invested capital and return on adjusted inv ested capital:
Adjusted Net Operating Profit after Taxes (ANOPAT):
Twelve Months Ended December 31,
Adjusted EBITDA (1)
Acquisition intangible amortization
Less: depreciation and amortization expense (2)
Adjusted EBIT
Adjusted tax rate
Calculated income taxes
ANOPAT
Adjusted Invested Capital:
Twelve Months Ended December 31,
Total debt
Less: cash and cash equivalents
Net debt
Total equity
Invested capital (net debt + total
equity)
Invested capital (two-point average)
Return on Invested Capital:
Twelve Months Ended December 31,
ANOPAT
Invested capital (two-point average)
Return on invested capital
(1) Refer to page 39 for reconciliations to the most directly comparable U.S. GAAP financial measures.
(2) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any.
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OTHER DISCLOSURES:
Foreign Currency:
Assets and liabilities of subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the reporting period. Related translation adjustments are reflected as a separate component of accumulated other comprehensive loss. Foreign currency gains and losses resulting from transactions are included in the Consolidated Statements of Income.
Net of related derivative activity, the Company recognized foreign currency exchange losses resulting from transactions of $14.0 million, $9.3 million and $14.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. For the year ended December 31, 2025, the Company recorded a positive non-cash foreign currency translation adjustment of $215.6 million that increased shareholders’ equity, compared to a negative non-cash foreign currency translation adjustment of $156.4 million that decreased shareholders’ equity for the year ended December 31, 2024. The foreign currency translation adjustments for the year ended December 31, 2025 were positively impacted by the weakening of the U.S. dollar relative to other currencies as of December 31, 2025 compared to December 31, 2024.
CEO Transition:
On September 5, 2024, the Company's Board of Directors appointed Tarak B. Mehta President and CEO and appointed Richard G. Kyle Advisor to the CEO. Mr. Mehta succeeded Mr. Kyle, who had served as Timken’s President and CEO since 2014. On March 31, 2025, Timken announced that the Company and Mr. Mehta had mutually agreed that Mr. Mehta would depart from the Company, including resigning as a member of the Company’s Board of Directors, effective immediately. The Company also announced that the Board had appointed Mr. 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. Mehta's settlement arrangement and release of claims for his termination without cause. Approximately two-thirds of this amount was paid in 2025, with the remaining amounts to be paid in 2026 and 2027. In addition, the Company recorded incremental stock compensation expense related to stock compensation awards issued to Mr. Kyle during the twelve months ended December 31, 2025, as well as other one-time costs associated with the transition in 2025. 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.
Trade Law Enforcement:
The U.S. government has an antidumping duty order in effect covering tapered roller bearings from China. The Company is a producer of these bearings, as well as ball bearings and other bearing types, in the U.S.
Quarterly Dividend:
On February 13, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.35 per common share. The quarterly dividend will be paid on March 6, 2026 to shareholders of record as of February 24, 2026. This will be the 415 th consecutive quarterly dividend paid on the common shares of the Company.
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Forward-Looking Statements
Certain statements set forth in this Annual Report on Form 10-K and in the Company’s 2025 Annual Report to Shareholders that are not historical in nature (including the Company’s forecasts, beliefs and expectations) are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, Management’s Discussion and Analysis contains numerous forward-looking statements. 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. 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:
(a) deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company or its customers or suppliers conduct business, including adverse effects from a global economic slowdown or recession, pandemics, epidemics or other public health concerns, terrorism, or hostilities. This includes: political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers or suppliers conduct business, changes in currency valuations, additional costs, taxes and restrictions related to repatriation of cash in international jurisdictions, strained geopolitical relations between countries in which we have significant operations, and recent world events that have increased macroeconomic risks posed by international trade disputes, tariffs and sanctions;
(b) negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, and negative impacts to operations;
(c) the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the Company operates. This includes: the ability of the Company to respond to rapid changes in customer demand, disruptions to the Company's supply chain, 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, changes in customer preferences due to emergent technologies, evolving regulatory landscapes or other factors and whether conditions of fair trade continue in the Company's markets;
(d) 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 AI, that may impact the way the Company’s products are produced, sold or distributed;
(e) changes in operating costs. This includes: the effect of changes in the Company’s manufacturing processes; changes in costs associated with varying levels of operations and manufacturing capacity; availability and cost of raw materials, energy and fuel; 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; changes in the expected costs associated with product warranty claims especially in industry segments with potential high claim values; changes in the global regulatory landscape (including with respect to climate change or other environmental regulations); changes resulting from inventory management and cost reduction initiatives; the effects of unplanned plant shutdowns; costs associated with inclement weather events; the effects of government-imposed restrictions, commercial requirements and Company goals associated with climate change and emissions or other sustainability initiatives; and changes in the cost of labor and benefits;
(f) the success of the Company’s operating plans, announced programs, initiatives and capital investments; the ability to integrate acquired companies and to address material issues both identified and not uncovered during the Company's due diligence review; and the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings, realization of synergies and expected cash flow generation;
(g) the Company’s ability to maintain appropriate relations with unions or works councils that represent Company employees in certain locations in order to avoid disruptions of business;
(h) the continued attraction, retention and development of management, other key employees, and other skilled personnel, the successful development and execution of succession plans and management of other human capital matters;
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(i) unanticipated litigation, claims, investigations, remediation or assessments. This includes: claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, PTFE, PFAS, other environmental or health and safety issues, data privacy, cybersecurity and taxes;
(j) the rapidly evolving global regulatory landscape and the corresponding heightened operational complexity and compliance risks;
(k) changes in worldwide financial and capital markets, including fluctuations in interest rates, impacting the availability of financing on satisfactory terms as a result of financial stress affecting the banking system or otherwise, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;
(l) the Company's ability to satisfy its obligations and comply with covenants under its debt agreements, maintain favorable credit ratings and its ability to renew or refinance borrowings on favorable terms;
(m) the impact on the Company's pension obligations and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk; and
(n) those items identified under Item 1A. Risk Factors on pages 9 through 19 .
Additional risks relating to the Company’s business, the industries in which the Company operates or the Company’s common shares may be described from time to time in the Company’s filings with the SEC. All of these risk factors are difficult to predict, are subject to material uncertainties that may affect actual results and may be beyond the Company’s control.
Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered to be a complete list. Except as required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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