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What changed in TIMKEN CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TIMKEN CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+253 added−271 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-26)

Top changes in TIMKEN CO's 2024 10-K

253 paragraphs added · 271 removed · 219 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeTimken also offers Cone Drive® high-torque worm gears, harmonic solutions and precision slew drives. Cone Drive products can be found in a variety of industrial end-market sectors, including solar, oil and gas, aerial platforms, automation and food and beverage. The Company's Spinea® line features highly engineered cycloidal reduction gears and actuators.
Biggest changeTimken has one of the broadest and most differentiated precision drives product portfolios in the global automation industry. These products include Cone Drive® high-torque worm gears, harmonic solutions and precision slew drives. Cone Drive products can be found in a variety of industrial end-market sectors, including solar, oil and gas, aerial platforms, automation and food and beverage.
The Company’s growing portfolio features many strong brands, including Timken®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy® and Lagersmit®. The Company was founded in 1899 by Henry Timken, who received two patents on the design of a tapered roller bearing.
The Company’s growing portfolio features many strong brands, including Timken®, GGB®, Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Diamond®, Drives®, Groeneveld®, BEKA®, Des-Case®, Lovejoy®, Lagersmit® and CGI. The Company was founded in 1899 by Henry Timken, who received two patents on the design of a tapered roller bearing.
Timken markets among the broadest range of housed or mounted bearings in the industry. These products deliver durable, heavy-duty components designed to protect spherical, tapered and ball bearings in debris-filled, contaminated or high-moisture environments. Common housed unit applications include material handling and processing equipment. Plain Bearings.
Timken markets among the broadest range of housed or mounted bearings in the industry. These products include durable, heavy-duty components designed to protect spherical, tapered and ball bearings in debris-filled, contaminated or high-moisture environments. Common housed unit applications include material handling and processing equipment. Plain Bearings.
Various combinations of material pairs and engineered coatings improve friction management for application specific conditions. Industrial Motion Products: Linear Motion Products. The Company designs and manufactures a global portfolio of Rollon® and Nadella® engineered linear motion products, including linear guides, telescopic rails, linear actuators, seventh-axis robotic transfer units and gantry systems.
Various combinations of material pairs and engineered coatings improve friction management for application specific conditions. Industrial Motion Products: Linear Motion Solutions. The Company designs and manufactures a global portfolio of Rollon® and Nadella® engineered linear motion products, including linear guides, telescopic rails, linear actuators, seventh-axis robotic transfer units and gantry systems.
The Company also believes that having open, honest dialogue with its employees is key to maintaining its strong culture and ethical work practices. In line with that approach, the Company conducts comprehensive surveys on a periodic basis and individual stay interviews to measure employee engagement.
The Company believes that having open, honest dialogue with its employees is key to maintaining its strong culture and ethical work practices. In line with that approach, the Company conducts comprehensive surveys on a periodic basis and individual stay interviews to measure employee engagement.
The Company's commitment to the health and safety of its employees is evidenced by its strong safety results in 2023 and 2022 shown in the charts below: *Rates calculated as (number of injuries and illnesses x 200,000) / employee hours worked per 100 full-time workers. 2023 rates represent the Company's best estimate as of the date of this report - - - represents the 2022 top quartile cutoff for U.S. metal manufacturers (North American Industry Classification System ("NAICS") code 332) that employ at least 1,000 employees, based on information provided by the U.S.
The Company's commitment to the health and safety of its employees is evidenced by its strong safety results in 2024 and 2023 shown in the charts below: *Rates calculated as (number of injuries and illnesses x 200,000) / employee hours worked per 100 full-time workers. 2024 rates represent the Company's best estimate as of the date of this report - - - represents the 2023 top quartile cutoff for U.S. metal manufacturers (North American Industry Classification System ("NAICS") code 332) that employ at least 1,000 employees, based on information provided by the U.S.
Patents, Trademarks and Licenses: Timken owns numerous U.S. and foreign patents, trademarks and licenses relating to certain products. While Timken regards these as important, it does not deem its business as a whole, or any industry segment, to be materially dependent upon any one item or group of items.
Patents, Trademarks and Licenses: Timken owns numerous U.S. and foreign patents, trademarks and licenses relating to certain products. While Timken regards these as important, it does not deem its business as a whole, or any industry segment, to be materially dependent upon any one item of intellectual property or group of items.
Item 1. Business General: As used herein, the term “Timken” or the “Company” refers to The Timken Company and its subsidiaries unless the context otherwise requires. Timken designs and manages a portfolio of engineered bearings and industrial motion products, and provides related services.
Item 1. Business General: As used herein, the term “Timken” or the “Company” refers to The Timken Company and its subsidiaries unless the context otherwise dictates. Timken designs and manages a portfolio of engineered bearings and industrial motion products, and provides related services.
Timken remains the world's leading authority in tapered roller bearings and has leveraged that expertise to develop a full portfolio of industry-leading engineered bearings and industrial motion products.
Timken remains the world's leading authority on tapered roller bearings and has leveraged that expertise to develop a full portfolio of industry-leading engineered bearings and industrial motion products.
The portfolio features more than 20,000 parts designed for demanding applications, which are sold to original equipment and aftermarket customers. These belts are engineered for maximum performance and durability, with products available in wrap molded, raw edge, v-ribbed and synchronous belt designs. Common applications include agriculture, construction, industrial machinery, outdoor power equipment and powersports. 2 Table of Contents Chain.
The portfolio features more than 20,000 parts designed for demanding applications, which are sold to original equipment and aftermarket customers. These belts are engineered for maximum performance and durability, with products available in wrap molded, raw edge, v-ribbed and synchronous belt designs. Common applications include agriculture, construction, industrial machinery, outdoor power equipment and powersports. Chain.
The Company provides professional growth and learning opportunities and individualized career development to support these objectives. The Company thinks it is important to recognize and reward its employees with pay and comprehensive benefits that are competitive and equitable based on the local markets in which it operates.
The Company provides professional growth and learning opportunities and individualized career development to support these objectives. The Company also believes it is important to recognize and reward its employees with pay and comprehensive benefits that are competitive and equitable based on the local markets in which it operates.
Major Customers: The Company sells products and services to a diverse customer base globally, including customers in the following market sectors: industrial distribution, renewable energy, automation, automotive original equipment ("OE"), agriculture/turf, rail, aerospace, auto/truck aftermarket, construction, services, metals and mining, heavy truck OE, and marine. No single customer accounts for 5% or more of total net sales.
Major Customers: The Company sells products and services to a diverse customer base globally, including customers in the following market sectors: industrial distribution, renewable energy, automation, automotive original equipment ("OE"), agriculture/turf, rail, aerospace, auto/truck aftermarket, construction, services, metals and mining, heavy truck OE, and marine. No single customer accounts for more than 6% of total net sales.
Exit interviews are conducted with employees who voluntarily terminated their employment, which helps improve management processes. The Company deploys pulse surveys to gain insights from employees’ recent experiences and to better understand how effectively it is engaging, energizing and enabling its workforce. The Company provides several professional development and training opportunities to advance its employees’ skills and expertise.
Exit interviews are also conducted with employees who voluntarily terminate their employment, which helps improve management processes. The Company deploys pulse surveys to gain insights from employees’ recent experiences and to better understand how effectively it is engaging, energizing and enabling its workforce. The Company also provides several professional development and training opportunities to advance our employees’ skills and expertise.
Employment: At December 31, 2023, Timken had more than 19,000 employees worldwide. Approximately 9% of Timken’s U.S. employees are covered under collective bargaining agreements. 6 Table of Contents Human Capital: The Company believes that its employees and their collective knowledge and experience are among its most valuable resources.
Employment: At December 31, 2024, Timken had approximately 19,000 employees worldwide. Approximately 9% of Timken’s U.S. employees are covered under collective bargaining agreements. 6 Table of Contents Human Capital: The Company believes that its employees and their collective knowledge and experience are among its most valuable resources.
To further the Company's diverse and inclusive culture, Timken employee resource groups (“ERGs”) around the world help us understand and address the challenges faced by its diverse workforce and the benefits inclusion offers in advancing its collective knowledge.
To further our Company’s diverse and inclusive culture, Timken employee resource groups (“ERGs”) around the world help us understand and address the challenges and opportunities faced by our diverse workforce and the benefits inclusion offers in advancing our collective knowledge.
Other smaller sites in the United States ("U.S.") include Los Alamitos, California; Downer's Grove, Fulton and Montgomery, Illinois; Norton Shores, Rochester Hills and Traverse City, Michigan; Springfield, Missouri; Keene and Lebanon, New Hampshire; Thorofare, New Jersey; Morganton, North Carolina; and King of Prussia, Pennsylvania.
Other smaller sites in the United States ("U.S.") include Los Alamitos, California; Downer's Grove, Fulton and Montgomery, Illinois; Norton Shores and Traverse City, Michigan; Springfield, Missouri; Keene and Lebanon, New Hampshire; Thorofare, New Jersey; Morganton, North Carolina; Carson City, Nevada; and King of Prussia, Pennsylvania.
The Company and certain of its U.S. subsidiaries previously have been and could in the future be identified as potentially responsible parties for investigation and remediation at off-site disposal or recycling facilities under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), known as the Superfund, or state laws similar to CERCLA.
The Company and certain of its subsidiaries have previously been and could in the future be identified as potentially responsible parties for investigation and remediation at off-site disposal or recycling facilities under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as the Superfund, or state, foreign, or international laws similar to CERCLA.
Some of these opportunities include online-learning platforms, job-specific training, employee development programs, including its operations development program (a training program designed to increase the internal pool of employees who are ready to take on leadership positions), and its educational reimbursement programs.
Some of these opportunities include online-learning platforms, job-specific training, our operations development program (a training program designed to increase the internal pool of employees who are ready to take on leadership positions) and our educational reimbursement programs.
The investment balance at December 31, 2023 was reported in other non-current assets on the Consolidated Balance Sheets.
The investment balance at December 31, 2024 was reported in other non-current assets on the Consolidated Balance Sheets.
The Company competes with many domestic and foreign manufacturers of anti-friction bearings, including SKF Group and Schaeffler Group, and with a diverse group of domestic and foreign manufacturers of industrial motion products. Joint Ventures: Investments in affiliated companies accounted for under the equity method were $1.7 million and $1.8 million, respectively, at December 31, 2023 and 2022.
The Company competes with a variety of domestic and foreign manufacturers of anti-friction bearings, including SKF Group and Schaeffler Group, and with a diverse group of domestic and foreign manufacturers of industrial motion products. Joint Ventures: Investments in affiliated companies accounted for under the equity method were $0.9 million and $1.7 million, respectively, at December 31, 2024 and 2023.
As of the end of 2023, 29 of the Company’s plants had obtained ISO 14001 certification, including the majority of the Company's bearing manufacturing plants. The Company establishes appropriate levels of reserves to cover its environmental expenses and has a well-established environmental compliance audit program for its domestic and international units.
As of the end of 2024, 28 of the Company’s plants, which includes a majority of the Company's bearing manufacturing plants, had obtained ISO 14001 certification. The Company establishes appropriate levels of reserves to cover its environmental expenses and has a well-established environmental compliance audit program for its domestic and international units.
Backlog: The following table provides the backlog of orders for the Company's domestic and overseas operations at December 31, 2023 and 2022: December 31, (Dollars in millions) 2023 2022 Segment: Engineered Bearings $ 1,502.0 $ 1,722.1 Industrial Motion 775.2 768.7 Total Company $ 2,277.2 $ 2,490.8 Approximately 92% of the Company’s backlog at December 31, 2023 is scheduled for delivery in the succeeding 12 months.
Backlog: The following table provides the backlog of orders for the Company's domestic and overseas operations at December 31, 2024 and 2023: (Dollars in millions) 2024 2023 Segment: Engineered Bearings $ 1,341.8 $ 1,502.0 Industrial Motion 679.7 775.2 Total Company $ 2,021.5 $ 2,277.2 Approximately 92% of the Company’s backlog at December 31, 2024 is scheduled for delivery in the succeeding 12 months.
Today, the Company's global footprint consists of 142 manufacturing facilities/service centers, 28 technology and engineering centers, and 73 distribution centers and warehouses, supported by a team comprised of more than 19,000 employees. Timken operates in 45 countries around the globe.
Today, the Company's global footprint consists of 124 manufacturing facilities and service centers, 28 technology and engineering centers, and 77 distribution centers and warehouses, supported by a team comprised of approximately 19,000 employees. Timken operates in 45 countries around the globe.
Bureau of Labor Statistics at https://www.bls.gov/iif/. The Company aims to maintain a recordable rate within the top quartile of U.S. metal manufacturers (NAICS code 332) based on information provided by the U.S. Bureau of Labor Statistics. For 2023, the Company's lost time accident rate of 0.37 and recordable rate of 1.10 remained strong.
Bureau of Labor Statistics at https://www.bls.gov/iif/. The Company aims to maintain a recordable rate within the top quartile of U.S. metal manufacturers (NAICS code 332) based on information provided by the U.S. Bureau of Labor Statistics.
Bearing remanufacturing is available for any bearing type or brand - including competitor products - and is well-suited to heavy industrial applications such as paper, metals, mining, power generation and cement; railroad locomotives, passenger cars and freight cars; and aerospace engines and gearboxes.
Bearing remanufacturing is available for any bearing type or brand - including competitor products - and is well-suited to heavy industrial applications such as paper, metals, mining, power generation and cement; railroad locomotives, passenger cars and freight cars; and aerospace engines and gearboxes. 3 Table of Contents Sales and Distribution: Timken products are sold principally by its internal sales organizations.
The Company is committed to providing a safe work environment and growth opportunities for its employees to learn and advance their career with the Company to promote and safeguard these key resources. Employee Health and Safety Employee health and safety remains a top priority for the Company and its commitment to safety starts at the top of the organization.
The Company is committed to providing a safe work environment and growth opportunities for its employees to learn and advance their career with the Company to promote and safeguard these key resources.
These systems support many industries, including renewable energy, transportation, construction, mining, port, forestry and agriculture. Timken also offers over two dozen different formulations of grease, leveraging its knowledge of tribology and anti-friction bearings to enable smooth equipment operation. Belts. The Company makes and markets a full line of Timken® belts used in industrial, commercial and consumer applications.
Timken also offers over two dozen different formulations of grease, leveraging its knowledge of tribology and anti-friction bearings to enable smooth equipment operation. 2 Table of Contents Belts. The Company makes and markets a full line of Timken® belts used in industrial, commercial and consumer applications.
The Company's employees continue to drive new programming and chapter expansion across its five primary ERGs: Women’s International Network (WIN), Multicultural Association of Professionals (MAP), Young Professionals Network (YPN), Veteran Engagement at Timken (VET), and Timken PRIDE Network (TPN). Additionally, the Company partners with an online platform, Aperian®, to help its employees further their global competency.
Our employees continue to drive new programming and culture acumen development across our six primary ERGs: Women’s International Network (WIN), Multicultural Association of Professionals (MAP), Young Professionals Network (YPN), Veteran Engagement at Timken (VET), Timken PRIDE Network (TPN), and Celebrating Abilities Network (CAN). Additionally, we partner with an online platform, Aperian®, to help our employees further their global competency.
Chief Executive Officer, Richard Kyle, was the first-ever chair of the Company's Environmental Health and Safety Steering Committee, which was created in 2009 and continues to drive accountability and responsibility for safety throughout the organization .
Employee Health and Safety Employee health and safety remains a top priority for the Company and the Company's Environmental Health and Safety Steering Committee, which was created in 2009, continues to drive accountability and responsibility for safety throughout the organization.
Spinea's solutions primarily serve high precision automation and robotics applications in the factory automation sector. Lubrication Systems. The Company's Groeneveld® and BEKA® lubrication systems include a wide variety of automatic lubrication delivery devices, oil management systems and safety support systems designed to reduce operational costs for customers while increasing equipment uptime, productivity and safety.
The Company's Groeneveld® and BEKA® lubrication systems include a wide variety of automatic lubrication delivery devices, oil management systems and safety support systems designed to reduce operational costs for customers while increasing equipment uptime, productivity and safety. These systems support many industries, including renewable energy, transportation, construction, mining, port, forestry and agriculture.
Therefore, Timken goes where its customers need us, with sales engineers primarily working in close proximity to customers rather than at production sites.
A portion of each segment's sales are made through authorized distributors or sales agents. Customer collaboration is central to the Company's sales strategy. Therefore, Timken goes where its customers need us, with sales engineers primarily working in close proximity to customers rather than at production sites.
In 2022, the Company's lost time accident rate of 0.29 outperformed the top quartile of U.S. metal manufacturers while its recordable rate of 1.06 slightly lagged. 7 Table of Contents Attracting, Retaining, and Motivating Highly Qualified Employees Successful execution of the Company's strategy continues to depend on attracting, retaining, and motivating highly qualified talent.
In 2024, the Company improved on 2023 performance with both its lost time accident rate of 0.31 (0.37 in 2023) and its recordable rate of 1.01 (1.10 in 2023). 7 Table of Contents Attracting, Retaining, and Motivating Highly Qualified Employees Successful execution of the Company's strategy depends on attracting, retaining, and motivating highly qualified talent.
Removed
Services accounted for approximately 4% of the Company’s net sales for the year ended December 31, 2023. 3 Table of Contents Sales and Distribution: Timken products are sold principally by its internal sales organizations. A portion of each segment's sales are made through authorized distributors or sales agents. Customer collaboration is central to the Company's sales strategy.
Added
The Company's Spinea® line features highly engineered cycloidal reduction gears and actuators. Spinea's solutions primarily serve high precision automation and robotics applications in the factory automation sector. The portfolio also features CGI precision drive systems, which serve a broad range of automation markets with a concentration in medical robotics. Automatic Lubrication Systems.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur international operations expose us to risks not present in a purely domestic business, including primarily: • changes in international treaties or trade unions, which may make our products or our customers' products more costly to export or import; • changes in tariff regulations, which may make our products more costly to export or import; • threatened or actual state seizure of foreign-owned manufacturing assets; • hostilities between countries in which we operate which could limit our ability to manufacture in, sell into, export out of, or access assets located in such jurisdictions; • the imposition of sanctions on countries in which we operate, from which we receive critical supplies or into which we sell our products; • strained geopolitical relations between countries in which we have significant operations including the U.S. and China; • political protests or unrest which could negatively impact our operations; • difficulties establishing and maintaining relationships with local OEMs, distributors and dealers; • import and export licensing requirements; • compliance with a variety of foreign laws and regulations, including unexpected changes in taxation, environmental, sustainability or other regulatory requirements, which could increase our operating and other expenses and limit our operations; • additional costs, taxes and restrictions related to repatriation of cash in international jurisdictions; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the FCPA; • difficulty in staffing and managing geographically diverse operations; • disruptions to our global supply chain and logistical issues associated with port closures or congestion, delays or increased costs; • tax exposures related to cross-border intercompany transfer pricing and other tax risks unique to international operations; and • compliance with data protection regulations. 12 Table of Contents These and other risks also may increase the relative price of our products compared to those manufactured in other countries, reducing the demand for our products in the markets in which we operate, which could have a material adverse effect on our revenues and earnings.
Biggest changeOur international operations expose us to risks not present in a purely domestic business, including primarily: • changes in international treaties or trade unions, which may make our products or our customers' products more costly to export or import; • changes in tariff regulations, which may make our products more costly to export or import; • threatened or actual state seizure of foreign-owned manufacturing assets; • hostilities between countries in which we operate which could limit our ability to manufacture in, sell into, export out of, or access assets located in such jurisdictions; • the imposition of sanctions on countries in which we operate, from which we receive critical supplies or into which we sell our products; • strained geopolitical relations between countries in which we have significant operations including the U.S., China and Mexico, among others; • political protests or unrest which could negatively impact our operations; • difficulties establishing and maintaining relationships with local OEMs, distributors and dealers; • import and export licensing requirements; • compliance with a variety of foreign laws and regulations, including unexpected changes in taxation, environmental, sustainability or other regulatory requirements, which could increase our operating and other expenses and limit our operations; • additional costs, taxes and restrictions related to repatriation of cash in international jurisdictions; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the FCPA; • difficulty in staffing and managing geographically diverse operations; • disruptions to our global supply chain and logistical issues associated with port closures or strikes, delays or increased costs; • tax exposures related to cross-border intercompany transfer pricing and other tax risks unique to international operations; and • compliance with data protection regulations.
The risks of substantial costs and liabilities related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise or be discovered that create substantial environmental compliance or remediation liabilities and costs or which may require that we change certain production methods or materials used in our manufacturing processes or products.
The risks of substantial costs and liabilities related to compliance with these laws and regulations are an inherent part of our business, and conditions may develop, arise or be discovered that create substantial environmental compliance or remediation liabilities and costs or which may require that we change certain production methods or materials used in our manufacturing processes or products.
The Company relies on information technology systems and those of third parties who provide products or services to us to manage and operate its business and to process, transmit and store data, including its intellectual property, personal data and other proprietary business information and that of its customers and suppliers.
The Company relies on information technology systems and those of third parties who provide products or services to us to manage and operate its business and to process, transmit and store data, including its intellectual property, personal data and other proprietary business information and that of its employees, customers and suppliers.
We operate in a global environment in which the data privacy regulatory and legal framework and corresponding enforcement and litigation landscape are evolving quickly. Moreover, the data privacy laws of the specific jurisdictions in which we operate may vary and potentially conflict.
We operate in a global environment in which the data privacy regulatory and legal framework and corresponding enforcement and litigation landscape are evolving quickly. Moreover, the data privacy laws and regulations of the specific jurisdictions in which we operate may vary and potentially conflict.
Actions required to comply with regulations or stakeholder expectations associated with corporate social responsibility (“CSR”) topics, including those related to climate change, could adversely affect our business and performance. Investors, customers, suppliers, employees, regulators and other stakeholders are increasingly focused on CSR practices and disclosures, and expectations in this area are rapidly evolving and growing.
Actions required to comply with regulations or stakeholder expectations associated with corporate social responsibility (“CSR”) topics, including those related to climate change, could adversely affect our business and performance. Investors, customers, suppliers, employees, regulators and other stakeholders are increasingly focused on CSR practices and disclosures, and expectations in this area are rapidly evolving and growing and sometimes conflicting.
Our most recent evaluation resulted in our conclusion that, as of December 31, 2023, our internal control over financial reporting was effective. We believe that we currently have adequate internal control procedures in place for future periods, including processes related to newly acquired businesses; however, increased risk of internal control breakdowns generally exists in a business environment that is decentralized.
Our most recent evaluation resulted in our conclusion that, as of December 31, 2024, our internal control over financial reporting was effective. We believe that we currently have adequate internal control procedures in place for future periods, including processes related to newly acquired businesses; however, increased risk of internal control breakdowns generally exists in a business environment that is decentralized.
Any significant increase in the prices for such raw materials or logistics expenses could adversely affect our results of operations and profit margins. We may not realize the improved operating results that we anticipate from past and future acquisitions, may experience difficulties in integrating acquired businesses, and may incur unanticipated liabilities and costs associated with such acquired businesses.
Any significant increase in the prices for such raw materials or logistics expenses could adversely affect our results of operations and profit margins. We may not realize the improved operating results that we anticipate from past and future acquisitions, may experience challenges in integrating acquired businesses, and may incur unanticipated liabilities and costs associated with such acquired businesses.
We are or may become subject to extensive federal, state, local and foreign environmental, health and safety laws and regulations concerning matters such as air emissions, wastewater discharges, the use of per- and polyfluoroalkyl substances, such as polytetrafluoroethylene, or other chemicals of concern, waste management (e.g. storage, disposal) and the investigation and remediation of contamination.
We are or may become subject to extensive federal, state, local and foreign environmental, health and safety laws and regulations concerning matters such as air emissions, wastewater discharges, the use of per- and polyfluoroalkyl substances ("PFAS"), such as polytetrafluoroethylene ("PTFE"), or other chemicals of concern, waste management (e.g. storage, disposal) and the investigation and remediation of contamination.
We have taken approximately $127 million in impairment and restructuring charges in the aggregate during the last five years. Changes in business or economic conditions, or our business strategy, may result in additional restructuring actions and may require us to take additional charges in the future, which could have a material adverse effect on our earnings.
We have taken approximately $133 million in impairment and restructuring charges in the aggregate during the last five years. Changes in business or economic conditions, or our business strategy, may result in additional restructuring actions and may require us to take additional charges in the future, which could have a material adverse effect on our earnings.
Over time, stakeholder expectations for, and regulatory requirements (such as the Corporate Sustainability Reporting Directive) related to, our CSR program and initiatives may change, and our investors, customers, suppliers, employees or regulators may advocate that we implement additional, or stricter, goals and initiatives related to CSR topics.
Over time, stakeholder expectations for, and regulatory requirements (such as the European Union, Corporate Sustainability Reporting Directive) related to, our CSR program and initiatives may change, and our investors, customers, suppliers, employees or regulators may advocate that we implement additional, or stricter, goals and initiatives related to CSR topics.
If we are unable to increase the price of our products or otherwise mitigate these increased costs, it could adversely impact our revenue and profit margins. Risks Related to Human Capital Management and Employee Benefits If we are unable to attract, retain and develop key personnel and develop and successfully execute succession plans, our business could be materially adversely affected.
If we are unable to increase the price of our products or otherwise mitigate these increased costs, it could adversely impact our revenue and profit margins. 12 Table of Contents Risks Related to Human Capital Management and Employee Benefits If we are unable to attract, retain and develop key personnel and develop and successfully execute succession plans, our business could be materially adversely affected.
We are subject to the risk of substantial environmental liability and limitations on our operations due to current environmental laws and regulations and future environmental laws and regulations could impose additional risks and limitations.
We are subject to the risk of potentially substantial environmental liability and limitations on our operations due to current environmental laws and regulations and future environmental laws and regulations could impose additional potential risks and limitations.
While we have utilized and continue to utilize various controls and systems to mitigate such risks, we cannot assure that the actions we have implemented and are implementing, or that we have required or will require third-party service providers to implement, will be sufficient to protect our systems or data.
While we have utilized and continue to utilize various controls and systems to mitigate such risks, we cannot assure that the actions we have implemented and are implementing, or that we have required or will require third-party service providers and other business partners to implement, will be sufficient to protect our systems or data.
Any failure, or perceived failure, to comply with our data protection or privacy-related legal obligations may result in reputational damage, loss of business, regulatory investigations and fines, and civil lawsuits, and related monetary damages and injunctive requirements, any of which may adversely affect our results of operations and profitability.
Any failure, or perceived failure, to comply with our data protection or privacy-related legal obligations may result in reputational damage, loss of business, regulatory investigations and fines, and litigation, and related monetary damages and injunctive requirements, any of which may adversely affect our results of operations and profitability.
A successful warranty or product liability claim against us, or a requirement that we participate in a product recall, could have a material adverse effect on our earnings and brand reputation. If our internal controls are found to be ineffective, our financial results or our stock price may be adversely affected.
A successful warranty or product liability claim against us, or a requirement that we participate in a product recall, could have a material adverse effect on our earnings and brand reputation. 17 Table of Contents If our internal controls are found to be ineffective, our financial results or our stock price may be adversely affected.
It is possible that future accounting guidance we are required to adopt, or future changes in accounting principles, could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have an adverse effect on our results of operations, as reported in our consolidated financial statements. 18 Table of Contents Item 1B.
It is possible that future accounting guidance we are required to adopt, or future changes in accounting principles, could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have an adverse effect on our results of operations, as reported in our consolidated financial statements.
Noncompliance with government procurement regulations, information security requirements, or other applicable laws or regulations could result in civil, criminal and administrative liability, termination of government contracts or other public-sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.
Noncompliance with government procurement regulations, information security requirements such as the National Institute of Standards and Technology standards and guidelines, or other applicable laws or regulations could result in civil, criminal and administrative liability, termination of government contracts or other public-sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.
Additionally, third parties may bring claims to challenge the validity of our patents or other intellectual property rights or allege that we infringe their patents or other intellectual property rights. We may incur substantial costs if our competitors or other third parties allege such claims.
Additionally, third parties may bring claims and have brought claims in the past to challenge the validity of our patents or other intellectual property rights or allege that we infringe their patents or other intellectual property rights. We may incur substantial costs if our competitors or other third parties validate such claims.
Prices for raw materials necessary for production have fluctuated significantly in the past, have risen substantially over the past few years, and could continue to do so in the future.
Prices for raw materials necessary for production have fluctuated significantly in the past, have risen substantially at times in the past, and could continue to do so in the future.
Competition for these types of employees is intense, particularly in developed countries such as the U.S., and has increased recently, and we could experience difficulty from time to time in hiring, developing and retaining the personnel necessary to support our business.
Competition for these types of employees is intense, and has increased recently, and we could experience difficulty from time to time in hiring, developing and retaining the personnel necessary to support our business.
New laws and regulations, including those that may relate to emissions of greenhouse gases or the use, discharge or disposal of chemicals of concern utilized in our manufacturing processes, stricter enforcement of existing laws and regulations, new and more stringent customer requirements, the discovery of previously unknown contamination or the imposition of new clean-up requirements or standards could require us to incur costs, change production methods or materials or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations.
New laws and regulations, including those that may relate to emissions of greenhouse gases or the use, discharge or disposal of chemicals of concern utilized in our manufacturing processes, stricter enforcement of existing laws and regulations, new and more stringent customer requirements, the discovery of previously unknown contamination or the imposition of new clean-up requirements or standards could require us to incur costs, change production methods or materials or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations. 14 Table of Contents PTFE and other fluoropolymer materials, which are known to be included in certain of our products, are subject to increasing regulatory scrutiny.
If a customer becomes insolvent or files for bankruptcy, our ability to recover accounts receivable from that customer would be adversely affected and any payment we received during the preference period prior to a bankruptcy filing potentially may be recoverable by the bankruptcy estate.
If a customer becomes insolvent or files for bankruptcy (events which we have occasionally experienced in the past and continue to experience from time to time), our ability to recover accounts receivable from that customer would be adversely affected and any payment we received during the preference period prior to a bankruptcy filing potentially may be recoverable by the bankruptcy estate.
If we are found to be liable for FCPA, export control or sanction violations, we could suffer from criminal or civil penalties or other sanctions, including loss of export privileges or authorization needed to conduct aspects of our international business, which could have a material adverse effect on our business. 15 Table of Contents Also, our sales to public-sector customers are subject to complex regulations.
If we are found to be liable for FCPA, export control or sanction violations, we could suffer from criminal or civil penalties or other sanctions, including loss of export privileges or authorization needed to conduct aspects of our international business, which could have a material adverse effect on our business.
In addition, we face pressure from our customers to reduce prices, and the contractual nature of business with OEM customers, could adversely affect our revenues and profitability. In addition, our customers may choose to purchase products from one of our competitors rather than pay the prices we seek for our products, which could adversely affect our revenues and profitability.
In addition, our customers may choose to purchase products from one of our competitors rather than pay the prices we seek for our products, which could adversely affect our revenues and profitability.
We may experience difficulties or delays in the research, development, production, or marketing of new products and services that may prevent us from recouping or realizing a return on the investments required to bring new products and services to market.
We may experience difficulties or delays in the research, development, production, or marketing of new products and services that may prevent us from recouping or realizing a return on the investments required to bring new products and services to market. The end result could have a negative impact on our operating results.
Interest rates have risen significantly over the past few years and may remain elevated or rise in the future due to inflation or other causes. As a result, the costs of servicing our variable interest rate debt could further increase even if the amount borrowed under such facilities remains the same.
We have seen interest rates rise significantly in recent years, and while rates fell in 2024, they may rise again in the future due to inflation or other causes. As a result, the costs of servicing our variable interest rate debt could increase even if the amount borrowed under such facilities remains the same.
Margins in those industries are highly sensitive to demand cycles, and our customers in those industries historically have tended to delay large capital projects, including expensive maintenance and upgrades during economic downturns.
Margins in those industries are highly sensitive to demand cycles, and our customers in those industries historically have tended to delay large capital projects, including expensive maintenance and upgrades during economic downturns. As a result, our revenues and earnings are impacted by overall levels of industrial production.
For those countries outside the U.S. where we have significant sales, a strengthening in the U.S. dollar as we have seen over the past few years or devaluation in the local currency would reduce the value of our local inventory as presented in our Consolidated Financial Statements.
For those countries outside the U.S. where we have significant sales, a strengthening in the U.S. dollar as we have seen over the past few years or devaluation in the local currency would reduce revenue, operating profit and shareholders' equity due to the impact of foreign exchange translation on our Consolidated Financial Statements.
A cybersecurity incident could expose the Company and its employees, customers and suppliers to risks of misuse of confidential information, manipulation and destruction of data, production downtimes and operational disruptions, which in turn could result in litigation, business disputes and government investigations, and related monetary damages, injunctive requirements and fines, and could adversely affect the Company's reputation, competitive position, business or results of operations.
A cybersecurity incident or failure or disruption relating to our information systems or technology infrastructure or that of our third-party service providers, could expose the Company and its employees, customers and suppliers to risks of misuse of confidential information, manipulation and destruction of data, production downtimes and operational disruptions, which in turn could result in litigation, business disputes and government investigations, and related monetary damages, injunctive requirements and fines, and could adversely affect the Company's reputation, competitive position, business or results of operations. 16 Table of Contents Data privacy and security concerns, as well as evolving regulation and enforcement, could adversely affect our results of operations and profitability.
The end result could have a negative impact on our operating results. 10 Table of Contents Loss of our rights to exclusive use of our intellectual property whether through patent infringement, counterfeiting, theft of trade secrets, or otherwise could have a material adverse effect on the Company.
Loss of our rights to exclusive use of our intellectual property whether through patent infringement, counterfeiting, theft of trade secrets, or otherwise could have a material adverse effect on the Company. Third-party claims alleging our infringement of intellectual property rights could also have a material adverse effect on the Company.
These rights are important to our business, and their loss, whether through patent infringement, counterfeiting, theft of trade secrets, data breach, or otherwise, could have a material adverse effect on the Company.
We rely on a combination of patents, trademarks, trade secret laws, invention assignment agreements, confidentiality agreements, and other arrangements to protect our intellectual property rights. These rights are important to our business, and their loss, whether through patent infringement, counterfeiting, theft of trade secrets, data breach, or otherwise, could have a material adverse effect on the Company.
Furthermore, if any of our suppliers were to become subject to bankruptcy, receivership or similar proceedings, we may be unable to arrange for alternate or replacement relationships on favorable terms, which could harm our sales and operating results.
Furthermore, if any of our suppliers were to become subject to bankruptcy, receivership or similar proceedings, we may be unable to arrange for alternate or replacement relationships on favorable terms, which could harm our sales and operating results. 11 Table of Contents Risks Related to the Global Nature of our Operations Global political instability and other risks of international operations may adversely affect our operating costs, revenues and the price of our products.
Data privacy and security concerns, as well as evolving regulation and enforcement, could adversely affect our results of operations and profitability. We collect, store, access and otherwise process certain confidential or sensitive data, including proprietary business information, personal data or other information that is subject to privacy, data protection and security laws, regulations and/or government or customer-imposed controls.
We and certain authorized third parties of ours, collect, transmit, store, access and otherwise process certain confidential or sensitive data, including proprietary business information, personal data or other information that is subject to privacy, data protection and security laws, regulations and/or government or customer-imposed controls.
Changes in exchange rates between the U.S. dollar and other currencies and volatile economic, political and market conditions in emerging market countries have in the past adversely affected our financial performance and may in the future adversely affect the value of our assets located outside the U.S., our gross profit and our results of operations. 11 Table of Contents Our results of operations may be materially affected by conditions in global financial markets or in any of the geographic regions in which we, our customers or our suppliers operate.
Changes in exchange rates between the U.S. dollar and other currencies and volatile economic, political and market conditions throughout the world have in the past adversely affected our financial performance and may in the future adversely affect the value of our assets located outside the U.S., our gross profit and our results of operations.
Future actions involving our defined benefit and other postretirement plans, such as annuity purchases, lump-sum payouts, and/or plan terminations could cause us to incur significant pension and postretirement settlement and curtailment charges, and require cash contributions. We have purchased annuities and offered lump-sum payouts to defined benefit plan and other postretirement plan participants and retirees in the past.
We may be required legally to make contributions to the pension plans in the future in excess of our current expectations, and those contributions could be material. 13 Table of Contents Future actions involving our defined benefit and other postretirement plans, such as annuity purchases, lump-sum payouts, and/or plan terminations could cause us to incur significant pension and postretirement settlement and curtailment charges, and require cash contributions.
Risks Related to our Capital Structure, the Global Financial Markets, and Currency Exchange Rates An increase in our levels of debt and the corresponding impact to our financial covenants or a failure to maintain our credit ratings could limit our ability to invest in our business.
If the outcomes of any such disputes are unfavorable to us, we could be subject to damages and reputational harm and our business could be otherwise adversely affected. 10 Table of Contents Risks Related to our Capital Structure, the Global Financial Markets, and Currency Exchange Rates An increase in our levels of debt and the corresponding impact to our financial covenants or a failure to maintain our credit ratings could limit our ability to invest in our business.
These cost increases may continue to be impacted by inflationary pressures that could further reduce our sales or profitability. Inflation has led to and could continue to lead to further increases in other operating costs, such as shipping costs, costs of raw materials, and energy and fuel prices.
Inflation has led to and could continue to lead to further increases in other operating costs, such as shipping costs, costs of raw materials, and energy and fuel prices.
In addition, the credit and default risk or bankruptcy of customers or suppliers as a result of work stoppages could also materially and adversely affect our operations and results. 13 Table of Contents Expenses and contributions related to our defined benefit plans are affected by factors outside our control, including the performance of plan assets, interest rates, actuarial data and experience, and changes in laws and regulations, all of which could impact our funded status.
Expenses and contributions related to our defined benefit plans are affected by factors outside our control, including the performance of plan assets, interest rates, actuarial data and experience, and changes in laws and regulations, all of which could impact our funded status.
If we cannot continue to absorb or pass these increases in our costs of production to our customers, our results of operations, profit margins and cash flows could be adversely affected. Increases in compensation, wage pressure, and other expenses for our employees have adversely affected our profitability and could continue to do so.
Rising inflationary pressure has resulted in and could further result in increased employee expenses, shipping costs, raw material costs, energy and fuel costs and other costs of production. If we cannot continue to absorb or pass these increases in our costs of production to our customers, our results of operations, profit margins and cash flows could be adversely affected.
Pursuing these types of actions could require us to make additional contributions to the defined benefit plans to maintain a legally required funded status. 14 Table of Contents Risks Related to Legal, Compliance and Regulatory Matters Current and future environmental health and safety laws, regulations, and customer requirements impose substantial costs and limitations on our operations and compliance may be more costly than we expect.
Risks Related to Legal, Compliance and Regulatory Matters Current and future environmental health and safety laws, regulations, and customer requirements impose substantial costs and limitations on our operations and compliance may be more costly than we expect.
Risk Relating to our Business The bearing and industrial motion industries are highly competitive, and this competition results in significant pricing pressure for our products that could affect our revenues and profitability. The global bearing industry is highly competitive and consolidated. We compete with many domestic and foreign manufacturers of anti-friction bearings.
The global bearing industry is highly competitive and consolidated. We compete with many domestic and foreign manufacturers of anti-friction bearings. In addition, the industries into which we sell our industrial motion products are also highly competitive and consolidating.
The global regulatory landscape is rapidly evolving and new and potentially conflicting requirements, including with respect to climate change, environmental sustainability and other matters, could lead to added operational complexity and compliance risks while adversely impacting our costs and financial results.
Compliance with the laws and regulations described above or with other applicable foreign, federal, state, and local laws and regulations currently in effect or that may be adopted in the future could materially adversely affect our competitive position, operating results, financial condition and liquidity. 15 Table of Contents The global regulatory landscape is rapidly evolving and new and potentially conflicting requirements or preferences, including with respect to climate change, environmental sustainability and other matters, could lead to added operational complexity and compliance risks while adversely impacting our costs and financial results.
We are subject to a wide variety of domestic and foreign laws and regulations that could adversely affect our results of operations, cash flow or financial condition.
Such investigations, remediations, other response actions, and any related proceedings could lead to significant costs or limitations on future production in the absence of viable alternatives. We are subject to a wide variety of domestic and foreign laws and regulations that could adversely affect our results of operations, cash flow or financial condition.
In addition, the industries into which we sell our industrial motion products are also highly competitive and consolidating. Due to competitiveness within these industries, we may not be able to continue to increase prices for our products to cover increases in our costs or to achieve desired profitability.
Due to competitiveness within these industries, we may not be able to continue to increase prices for our products to cover increases in our costs or to achieve desired profitability. In addition, we face pressure from our customers to reduce prices, which coupled with the contractual nature of business with OEM customers, could adversely affect our revenues and profitability.
As such, we incur and expect to continue to incur significant ongoing costs as part of our efforts to comply with applicable law.
These laws and regulations can also impose significant fines and penalties for noncompliance and afford private rights of action to individuals under certain circumstances. As such, we incur and expect to continue to incur significant ongoing costs as part of our efforts to comply with applicable law.
If we do not meet, or are perceived to have not met, announced CSR goals or do not accurately disclose our progress on such goals, our reputation, competitive position, financial condition and operating results could be adversely impacted. 16 Table of Contents Risks Related to Data Privacy and Information Security The Company may be subject to risks relating to its information technology systems, including the risk of cybersecurity incidents.
Greater expectations or legal requirements may cause us to undertake costly initiatives to satisfy such new criteria. If we do not meet, or are perceived to have not met, announced CSR goals or do not accurately disclose our progress on such goals, our reputation, competitive position, financial condition and operating results could be adversely impacted.
If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected. Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.
If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected. Risk Relating to our Business The bearing and industrial motion industries are highly competitive, and this competition results in significant pricing pressure for our products that could affect our revenues and profitability.
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Third-party claims alleging our infringement of intellectual property rights could also have a material adverse effect on the Company. We rely on a combination of patents, trademarks, trade secret laws, invention assignment agreements, confidentiality agreements, and other arrangements to protect our intellectual property rights.
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Our results of operations may be materially affected by conditions in global financial markets or in any of the geographic regions in which we, our customers or our suppliers operate.
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If the outcomes of any such disputes are unfavorable to us, we could be subject to damages and reputational harm and our business could be otherwise adversely affected.
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These and other risks also may increase the relative price of our products compared to those manufactured in other countries, reducing the demand for our products in the markets in which we operate, which could have a material adverse effect on our revenues and earnings.
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In addition, a stronger U.S. dollar or a weaker local currency would result in reduced revenue, operating profit and shareholders' equity due to the impact of foreign exchange translation on our Consolidated Financial Statements.
Added
In addition, the credit and default risk or bankruptcy of customers or suppliers as a result of work stoppages could also materially and adversely affect our operations and results.
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We cannot assure you that any or all of our relationships will not be terminated or that such relationships will continue as presently in effect.
Added
We have purchased annuities and offered lump-sum payouts to defined benefit plan and other postretirement plan participants and retirees in the past.
Removed
Risks Related to the Global Nature of our Operations Global political instability and other risks of international operations may adversely affect our operating costs, revenues and the price of our products.
Added
Pursuing these types of actions could require us to make additional contributions to the defined benefit plans to maintain a legally required funded status.
Removed
We may be required legally to make contributions to the pension plans in the future in excess of our current expectations, and those contributions could be material.
Added
Certain of our products, including but not limited to certain seals and plain bearings, are known to contain PTFE or other fluoropolymer materials, which are included in certain broad definitions of PFAS. These products represent a relatively small portion of our total product portfolio.
Removed
Compliance with the laws and regulations described above or with other applicable foreign, federal, state, and local laws and regulations currently in effect or that may be adopted in the future could materially adversely affect our competitive position, operating results, financial condition and liquidity.
Added
PFAS have been increasingly scrutinized due to their potential environmental and health risks and are now the subject of increasing regulatory attention from the Environmental Protection Agency, state governments, the European Union and other regulators.
Removed
Greater expectations or legal requirements may cause us to undertake costly initiatives to satisfy such new criteria.
Added
These evolving regulations may restrict the use, manufacture, sale and/or distribution of our products or our ability to obtain components of our products, or may require us to report data on our use of certain PFAS. Such regulations could lead to significant costs.
Removed
As a result, our revenues and earnings are impacted by overall levels of industrial production. 17 Table of Contents Rising inflationary pressure has resulted in and could further result in increased employee expenses, shipping costs, raw material costs, energy and fuel costs and other costs of production.
Added
In addition, certain PFAS, including PFAS previously or currently within PTFE or other fluoropolymer materials, have increasingly become subject to new or more stringent investigation and remediation requirements where such PFAS is believed to have caused an impact to the environment.
Added
Certain of the Company’s operations and facilities have already been, or may in the future become, the subject of formal or informal investigations, enforcement actions or proceedings relating to these regulations or of private or public rights of action for the investigation and remediation of PFAS released into the environment.
Added
Also, our sales to public-sector customers are subject to complex regulations.
Added
Risks Related to Data Privacy and Information Security The Company may be subject to risks relating to its information technology systems, including the risk of cybersecurity incidents.
Added
Cybersecurity incidents and similar attacks vary in their form and can include the deployment of harmful malware or ransomware, denial-of-services attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and information.
Added
Increases in compensation, wage pressure, and other expenses for our employees have adversely affected our profitability and could continue to do so. These cost increases may continue to be impacted by inflationary pressures that could further reduce our sales or profitability.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis framework includes steps for assessing the severity of a cybersecurity threat, identifying the source of a cybersecurity threat including whether the cybersecurity threat is associated with a third-party service provider, implementing cybersecurity testing, detection, response, prevention and mitigation strategies and informing management and the Company's Board of Directors of material cybersecurity threats and incidents.
Biggest changeThe Company's processes also include cybersecurity testing, detection, response, prevention and mitigation strategies, conducting contract and vendor due diligence review, and informing management and the Company's Board of Directors of material cybersecurity threats and incidents. The Company's information security team also engages third-party security consultants for penetration testing, training and system enhancements.
Management also provides general program updates and industry trends to the Board and Audit Committee on a more ad hoc basis. In 2023, the Company did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Management also provides general program updates and industry trends to the Board and Audit Committee on a more ad hoc basis. In 2024, the Company did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Management reports to either the Board of Directors or the Audit Committee at least annually on, among other topics, updates to the Company’s cybersecurity program and mitigation strategies, developments in cybersecurity practices generally, and third-party assessments of the Company’s cybersecurity program.
The Vice President of Information Technology and other members of management report to either the Board of Directors or the Audit Committee at least annually on, among other topics, updates to the Company’s cybersecurity program and mitigation strategies, developments in cybersecurity practices generally, and third-party assessments of the Company’s cybersecurity program.
Management is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis, establishing processes for monitoring and mitigating potential cybersecurity risks, exposures, implementing appropriate mitigation measures and maintaining our cybersecurity program.
The Vice President of Information Technology is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis, establishing processes for monitoring and mitigating potential cybersecurity risks, exposures, implementing appropriate mitigation measures and maintaining our cybersecurity program.
Item 1C. Cybersecurity Cybersecurity Risk Management and Governance Information security is an integral part of the Company’s overall enterprise risk management program. The Company's information security program provides a framework for handling cybersecurity threats and incidents, including threats and incidents associated with the use of third-party service providers.
Item 1C. Cybersecurity Cybersecurity Risk Management and Governance Information security is an integral part of the Company’s overall enterprise risk management program.
The Company's cybersecurity program is under the direction of our Vice President, Technology who receives reports from its cybersecurity team and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents. The Company's dedicated personnel are certified and experienced information systems security professionals and information security managers with many years of experience.
The Company's dedicated personnel, who report to the Vice President of Information Technology, are certified and experienced information systems security professionals and information security managers with many years of experience.
The Company's information security team also engages third-party security consultants for penetration testing, training and system enhancements. The Board of Directors has overall oversight responsibility for the Company's risk management function, and primarily relies on the Audit Committee to administer this oversight.
The Company provides training and education for employees on cybersecurity awareness, including confidential information protection and simulated phishing attacks where appropriate for the employee’s role. The Board of Directors has overall oversight responsibility for the Company's risk management function, and primarily relies on the Audit Committee to administer this oversight.
Added
The Company maintains cybersecurity processes designed to detect and assess the severity of cybersecurity threats and incidents and, where applicable and possible, to identify the source of a threat or incident, including, whether it is associated with the use of third-party service providers.
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The Vice President of Information Technology has managed this team for over five years after having progressed through various roles of increasing responsibility in both operations and technology at the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The Company’s corporate headquarters is located in North Canton, Ohio, and, as of December 31, 2023, the Company maintained 94 plants that perform manufacturing, assembly or repair services. The Company also maintains various sales and administrative offices and distribution centers throughout the world.
Biggest changeItem 2. Properties The Company’s corporate headquarters is located in North Canton, Ohio, and, as of December 31, 2024, the Company maintained 93 plants that perform manufacturing, assembly or repair services. The Company also maintains various sales and administrative offices and distribution centers throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or annual results of operations. Item 4. Mine Safety Disclosures Not applicable.
Biggest changeIn the opinion of management, the ultimate disposition of open proceedings as of December 31, 2024 will not have a material adverse effect on the Company’s consolidated financial position or annual results of operations. Item 4. Mine Safety Disclosures Not applicable.
Item 3. Legal Proceedings The Company is involved in various claims and legal actions arising in the ordinary course of business. SEC regulations require us to disclose certain information about environmental proceedings when a governmental authority is a party to the proceedings if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold.
Item 3. Legal Proceedings The Company is involved in various claims and legal actions arising in the ordinary course of business. SEC regulations require us to disclose certain information about legal proceedings when a governmental authority is a party to the proceedings if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold.
Pursuant to such regulations, the Company uses a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required as we believe matters under this threshold are not material to the Company.
Pursuant to such regulations, the Company uses a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required. We believe matters under this threshold are not material to the Company.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 20 Item 4A. Information about our Executive Officers 20 II. PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Unreserved 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A.
Biggest changeItem 4. Mine Safety Disclosures 20 Item 4A. Information about our Executive Officers 20 II. PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Reserved 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A.
Quantitative and Qualitative Disclosures about Market Risk 50 Item 8. Financial Statements and Supplementary Data 51
Quantitative and Qualitative Disclosures about Market Risk 48 Item 8. Financial Statements and Supplementary Data 49

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(3) On February 12, 2021, the Company's Board of Directors approved a share repurchase plan, effective March 1, 2021, pursuant to which the Company may purchase up to ten million of its common shares, in the aggregate. This share purchase plan expires on February 28, 2026.
Biggest changePeriod Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs (1) 10/1/2024 - 10/31/2024 — $ — — 2,258,990 11/1/2024 - 11/30/2024 120,000 75.45 120,000 2,138,990 12/1/2024 - 12/31/2024 — — — 2,138,990 Total 120,000 $ 75.45 120,000 — (1) On February 12, 2021, the Company's Board of Directors approved a share repurchase plan, effective March 1, 2021, pursuant to which the Company may purchase up to ten million of its common shares, in the aggregate.
Issuer Purchases of Common Shares: The following table provides information about purchases of its common shares by the Company during the quarter ended December 31, 2023.
Issuer Purchases of Common Shares: The following table provides information about purchases of its common shares by the Company during the quarter ended December 31, 2024.
The graph assumes, in each case, an initial investment of $100 on January 1, 2019, in Timken common shares, S&P 500 Index and S&P 400 Industrials Index, based on market prices at the end of each fiscal year through and including December 31, 2023 , and reinvestment of dividends. 22 Table of Contents
The graph assumes, in each case, an initial investment of $100 on January 1, 2020, in Timken common shares, S&P 500 Index and S&P 400 Industrials Index, based on market prices at the end of each fiscal year through and including December 31, 2024 , and reinvestment of dividends.
Under this plan, the Company may purchase shares from time to time in open market purchases or privately negotiated transactio n, and it may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans. 21 Table of Contents Item 5.
This share purchase plan expires on February 28, 2026. Under this plan, the Company may purchase shares from time to time in open market purchases or privately negotiated transaction, and it may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans. 21 Table of Contents Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common shares are traded on the New York Stock Exchange under the symbol “TKR". The estimated number of record holders of the Company’s common shares at December 31, 2023 was 2,882.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common shares are traded on the New York Stock Exchange under the symbol “TKR". The number of record holders of the Company’s common shares at December 31, 2024 was 2,729. The estimated number of beneficial shareholders at December 31, 2024 exceeds 90,000.
The estimated number of beneficial shareholders at December 31, 2023 exceeds 100,000. During the quarter ended December 31, 2023, no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Regulation 408(a) of Regulation S-K).
During the quarter ended December 31, 2024, no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Regulation 408(a) of Regulation S-K).
Fiscal years ending December 31. 2019 2020 2021 2022 2023 Timken $ 155 $ 217 $ 198 $ 205 $ 237 S&P 500 131 156 200 164 207 S&P 400 Industrials 134 156 200 177 232 The line graph compares the cumulative total shareholder returns over five years for The Timken Company, the S&P 500 Stock Index and the S&P 400 Industrials Index.
Fiscal years ending December 31. 2020 2021 2022 2023 2024 Timken $ 140 $ 128 $ 133 $ 153 $ 139 S&P 500 118 152 125 158 197 S&P 400 Industrials 116 150 132 174 198 The line graph compares the cumulative total shareholder returns over five years for The Timken Company, the S&P 500 Stock Index and the S&P 400 Industrials Index.
Removed
Period Total number of shares purchased (1) Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs (3) 10/1/2023 - 10/31/2023 310,627 $ 71.68 310,000 2,778,990 11/1/2023 - 11/30/2023 130,454 71.30 130,000 2,648,990 12/1/2023 - 12/31/2023 15,391 75.34 10,000 2,638,990 Total 456,472 $ 71.70 450,000 — (1) Of the shares purchased in October, November and December, 627, 454 and 5,391 respectively, represent common shares of the Company that were owned and tendered by employees to exercise stock options, and to satisfy withholding obligations in connection with the exercise of stock options and vesting of restricted shares.
Removed
(2) For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company’s common shares as quoted on the New York Stock Exchange at the time of vesting.
Removed
For shares tendered in connection with the exercise of stock options, the price paid is the real-time trading share price at the time the options are exercised.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTwelve Months Ended December 31, 2023 2022 2021 2020 2019 Diluted earnings per share (EPS) $ 5.47 $ 5.48 $ 4.79 $ 3.72 $ 4.71 Adjusted EPS $ 7.05 $ 6.46 $ 5.18 $ 4.56 $ 5.05 Diluted Shares 72,081,884 74,323,839 77,006,589 76,401,366 76,896,565 43 Table of Contents Reconciliation of segment EBITDA to segment adjusted EBITDA and segment adjusted EBITDA margin: Twelve Months Ended December 31, 2023 Engineered Bearings Industrial Motion Unallocated Corporate Total Net Sales $ 3,257.7 $ 1,511.3 $ — $ 4,769.0 EBITDA 661.7 262.0 (90.5) 833.2 Impairment, restructuring and reorganization charges (1) 14.3 36.5 — 50.8 Corporate pension and other postretirement benefit related expense (2) — — 20.6 20.6 Acquisition-related charges (3) 3.6 21.0 7.2 31.8 Russia-related charges (5) 8.5 — — 8.5 (Gain) loss on divestitures and sale of certain assets (6) (5.5) 0.3 — (5.2) Adjusted EBITDA $ 682.6 $ 319.8 $ (62.7) $ 939.7 Adjusted EBITDA Margin (% of net sales) 21.0 % 21.2 % NM 19.7 % Twelve Months Ended December 31, 2022 Engineered Bearings Industrial Motion Unallocated Corporate Total Net Sales $ 3,092.6 $ 1,404.1 $ — $ 4,496.7 EBITDA 615.8 222.8 (52.9) 785.7 Impairment, restructuring and reorganization charges (1) 4.4 35.1 — 39.5 Corporate pension and other postretirement benefit related expense (2) — — 2.9 2.9 Acquisition-related charges (3) 6.2 4.9 3.7 14.8 Russia-related charges (5) 15.6 — — 15.6 (Gain) loss on divestitures and sale of certain assets (6) (3.5) 0.6 — (2.9) Tax indemnification and related items — 0.3 — 0.3 Adjusted EBITDA $ 638.5 $ 263.7 $ (46.3) $ 855.9 Adjusted EBITDA Margin (% of net sales) 20.7 % 18.8 % NM 19.0 % (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.
Biggest changeTwelve Months Ended December 31, 2024 2023 2022 2021 2020 Diluted earnings per share (EPS) $ 4.99 $ 5.47 $ 5.48 $ 4.79 $ 3.72 Adjusted EPS $ 5.79 $ 7.05 $ 6.46 $ 5.18 $ 4.56 Diluted shares 70,750,482 72,081,884 74,323,839 77,006,589 76,401,366 (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.
On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750.0 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.
On December 5, 2022 the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $750.0 million unsecured revolving credit facility ("Senior Credit Facility") and a $400.0 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027.
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.
However, management believes these actions are not representative of the Company’s core operations. (2) Corporate pension and other postretirement benefit related (income) expense represents actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience.
The Company recognizes actuarial 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.
The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to Note 17 - Retirement Benefit Plans and Note 18 - Other Postretirement Benefit Plans for additional discussion.
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 and industrial clutches and brakes that keep systems running efficiently.
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®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech® and Lagersmit®.
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®, Spinea®, Rollon®, Nadella®, Groeneveld®, BEKA®, Des-Case®, Diamond®, Drives®, Timken® Belts, Lovejoy®, PT Tech®, Lagersmit® and CGI.
Timken focuses its international efforts and footprint in regions of the world where strong macroeconomic factors such as urbanization, infrastructure development and sustainability create demand for its products and services. The Company's strategy has three primary elements: Profitable Growth.
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.
These non-GAAP financial measures include adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margins, segment adjusted EBITDA and segment 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.
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.
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. 36 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States.
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. 34 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States.
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 $2.1 million in 2023 and $0.9 million in 2022 of tax benefits related to the reversal of valuation allowances.
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 $0.9 million in 2024 and $2.1 million in 2023 of tax benefits related to the reversal of valuation allowances.
(2) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any. 47 Table of Contents 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.
(2) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any. 44 Table of Contents 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.
(2) Corporate pension and other postretirement benefit related expense represents actuarial losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.
(2) Corporate pension and other postretirement benefit related (income) expense represents actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.
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, driving organizational advancement and agility, and building greater brand equity to fuel growth.
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.
Refer to Note 1 - Significant Accounting Policies in the Notes to the Consolidated Financial Statements for further discussion around the Company's revenue policy. 38 Table of Contents Benefit Plans: The Company sponsors a number of defined benefit pension plans that cover eligible employees.
Refer to Note 1 - Significant Accounting Policies in the Notes to the Consolidated Financial Statements for further discussion around the Company's revenue policy. 36 Table of Contents Benefit Plans: The Company sponsors a number of defined benefit pension plans that cover eligible employees.
A one percentage point increase in the assumed health care cost trend rate would have increased the 2023 total service and interest cost components by $0.1 million and would have increased the postretirement benefit obligation by $0.7 million.
A one percentage point increase in the assumed health care cost trend rate would have increased the 2024 total service and interest cost components by $0.1 million and would have increased the postretirement benefit obligation by $0.7 million.
For a discussion of changes in consolidated results from 2022 to 2021, 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, 2022. 28 Table of Contents BUSINESS SEGMENTS The Company's reportable segments are product-based business groups that serve customers in diverse industrial markets.
For a discussion of changes in consolidated results from 2023 to 2022, 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, 2023. 27 Table of Contents BUSINESS SEGMENTS The Company's reportable segments are product-based business groups that serve customers in diverse industrial markets.
This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world. 24 Table of Contents Capital Deployment to Drive Shareholder Value.
This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world. 23 Table of Contents Capital Deployment to Drive Shareholder Value.
The following table presents the sensitivity of the Company's accumulated other postretirement benefit obligation ("APBO") to the indicated increase/decrease in key assumptions: + / - Change at December 31, 2023 Change APBO Assumption: Discount rate .25% $ 0.6 I n the table above, a 25 basis point decrease in the discount rate will increase the APBO by $0.6 million and decrease income before income taxes through the recognition of actuarial losses of $0.6 million.
The following table presents the sensitivity of the Company's accumulated other postretirement benefit obligation ("APBO") to the indicated increase/decrease in key assumptions: + / - Change at December 31, 2024 Change APBO Assumption: Discount rate .25% $ 0.6 In the table above, a 25 basis point decrease in the discount rate will increase the APBO by $0.6 million and decrease income before income taxes through the recognition of actuarial losses of $0.6 million.
Net of related derivative activity, the Company recognized a foreign currency exchange loss resulting from transactions of $14.8 million for the year ended December 31, 2023, and recognized a gain of $15.4 million and a loss of $9.4 million for the years ended December 31, 2022 and 2021, respectively.
Net of related derivative activity, the Company recognized a foreign currency exchange loss resulting from transactions of $9.3 million for the year ended December 31, 2024, a loss of $14.8 million and a gain of $15.4 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2023, the Company carried investment-grade credit ratings with Moody's (Baa2) and S&P Global (BBB-). 34 Table of Contents The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 6, 2023. The $100.0 million Accounts Receivable Facility matures on November 30, 2026.
As of December 31, 2024, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-). 32 Table of Contents The Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility") on December 6, 2023. The $100.0 million Accounts Receivable Facility matures on November 30, 2026.
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.
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. 47 Table of Contents
A one percentage point decrease would provide corresponding reductions of $0.1 million and $0.6 million, respectively. 41 Table of Contents 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.
A one percentage point decrease would provide corresponding reductions of $0.1 million and $0.7 million, respectively. 39 Table of Contents 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.
This includes: the ability of the Company to respond to rapid changes in customer demand, disruptions to the Company's supply chain, logistical issues associated with port closures or congestion, delays or increased costs , the effects of customer or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles, the ability of the Company to effectively adjust the prices for its products in response to changing dynamics, the effects of distributor inventory corrections reflecting de-stocking of the supply chain and whether conditions of fair trade continue in the Company's markets; (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 that may impact the way the Company’s products are produced, sold or distributed; (e) changes in operating costs.
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 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 that may impact the way the Company’s products are produced, sold or distributed; (e) changes in operating costs.
Net periodic benefit credit for 2024 does not include actuarial gains that will be recognized immediately through earnings in the fourth quarter of 2024, or on an interim basis if specific events trigger a remeasurement. Excluding the mark-to-market gains of $1.0 million recognized in 2023, the net periodic benefit credit was $6.3 million in 2023.
Net periodic benefit credit for 2025 does not include actuarial gains or losses that will be recognized immediately through earnings in the fourth quarter of 2025, or on an interim basis if specific events trigger a remeasurement. Excluding the mark-to-market gains of $0.5 million recognized in 2024, the net periodic benefit credit was $6.3 million in 2024.
This will be the 407 th consecutive quarterly dividend paid on the common shares of the Company. 48 Table of Contents Forward-Looking Statements Certain statements set forth in this Annual Report on Form 10-K and in the Company’s 2023 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.
This will be the 411 th consecutive quarterly dividend paid on the common shares of the Company. 45 Table of Contents Forward-Looking Statements Certain statements set forth in this Annual Report on Form 10-K and in the Company’s 2024 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.
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 8, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per common share.
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 14, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.34 per common share.
For the year ended December 31, 2023, the Company recorded a positive non-cash foreign currency translation adjustment of $35.3 million that increased shareholders’ equity, compared with a negative non-cash foreign currency translation adjustment of $155.4 million that decreased shareholders’ equity for the year ended December 31, 2022.
For the year ended December 31, 2024, the Company recorded a negative non-cash foreign currency translation adjustment of $156.4 million that decreased shareholders’ equity, compared with a positive non-cash foreign currency translation adjustment of $35.3 million that increased shareholders’ equity for the year ended December 31, 2023.
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 and energy; disruptions to the Company's supply chain and logistical issues associated with port closures or congestion, delays or increased costs; changes in the expected costs associated with product warranty claims especially in industry segments with potential high claim values; changes in the global regulatory landscape; changes resulting from inventory management and cost reduction initiatives; the effects of unplanned plant shutdowns; the effects of government-imposed restrictions, commercial requirements and Company goals associated with climate change and emissions or other sustainability initiatives; and changes in the cost of labor and benefits; (f) the impact of inflation on employee expenses, shipping costs, raw material costs, energy and fuel costs and other production costs; (g) 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; (h) 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; (i) the continued attraction, retention and development of management, other key employees, and other skilled personnel at all levels of the organization, the successful development and execution of succession plans and management of other human capital matters; 49 Table of Contents (j) unanticipated litigation, claims, investigations or assessments.
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 costs associated with the effects of 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; 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; 46 Table of Contents (i) unanticipated litigation, claims, investigations, remediation or assessments.
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, 2023 Change PBO Assumption: Discount rate .25% $ 15.2 In the table above, a 25 basis point decrease in the discount rate will increase the PBO by $15.2 million and decrease income before income taxes through the recognition of actuarial losses of $15.2 million.
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, 2024 Change PBO Assumption: Discount rate .25% $ 13.0 In the table above, a 25 basis point decrease in the discount rate will increase the PBO by $13.0 million and decrease income before income taxes through the recognition of actuarial losses of $13.0 million.
Timken posted $4.8 billion in sales in 2023 and employs more than 19,000 people globally, operating in 45 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 original equipment manufacturers (OEMs) and end-users worldwide.
Timken posted $4.6 billion in sales in 2024 and employs approximately 19,000 people globally, operating in 45 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 original equipment manufacturers (OEMs) and end-users worldwide.
Risk Factors on pages 8 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.
Risk Factors on pages 9 through 18 . 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.
For expense purposes in 2023, the Company applied an expected weighted-average rate of return of 4.47% for the Company’s U.S. pension plan assets. For expense purposes in 2024, the Company will apply an expected weighted-average rate of return on plan assets of 3.94%.
For expense purposes in 2024, the Company applied an expected weighted-average rate of return of 3.94% for the Company’s U.S. pension plan assets. For expense purposes in 2025, the Company will apply an expected weighted-average rate of return on plan assets of 4.30%.
For expense purposes in 2023, the Company applied a weighted-average discount rate of 5.64% to its U.S. defined benefit pension plans. For expense purposes in 2024, the Company will apply a weighted-average discount rate of 5.40% to its U.S. defined benefit pension plans.
For expense purposes in 2024, the Company applied a weighted-average discount rate of 5.40% to its U.S. defined benefit pension plans. For expense purposes in 2025, the Company will apply a weighted-average discount rate of 5.83% to its U.S. defined benefit pension plans.
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 2023, the Company made cash contributions and payments of $27.1 million to its global defined benefit pension plans and $2.7 million to its other postretirement benefit plans.
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 2024, the Company made cash contributions and payments of $24.6 million to its global defined benefit pension plans and $1.6 million to its other postretirement benefit plans.
The Company expects to generate a higher amount of cash from operating activities in 2024 compared to 2023, driven by improved working capital performance and lower cash taxes.
The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance, a lower level of capital expenditures, and lower cash taxes.
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, 2023, outstanding letters of credit totaled $59.6 million, primarily having expiration dates within 12 months.
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, 2024, outstanding letters of credit totaled $55.7 million, primarily having expiration dates within 12 months.
In addition, a 25 basis point decrease in returns on pension assets will decrease income before income taxes by $1.0 million, and a 25 basis point increase in return on pension assets will increase income before income taxes by $1.0 million. 40 Table of Contents Other Postretirement Benefit Plans: The Company recognized net periodic benefit credit of $7.3 million during 2023 for other postretirement benefit plans, compared to net periodic benefit credit of $21.6 million during 2022.
In addition, a 25 basis point decrease in returns on pension assets will decrease income before income taxes by $0.9 million, and a 25 basis point increase in return on pension assets will increase income before income taxes by $0.9 million. 38 Table of Contents Other Postretirement Benefit Plans: The Company recognized net periodic benefit credit of $6.9 million during 2024 for other postretirement benefit plans, compared to net periodic benefit credit of $7.3 million during 2023.
This includes: claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, environmental or health and safety issues, data privacy and taxes; (k) changes in worldwide financial and capital markets, impacting the availability of financing on satisfactory terms as a result of financial stress affecting the banking system or otherwise, and the high interest rate environment, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products; (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.
This includes: claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, PTFE, PFAS, other environmental or health and safety issues, data privacy and taxes; (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.
A 25 basis point increase in the discount rate will decrease the PBO by $15.2 million and increase income before income taxes through the recognition of actuarial gains of $15.2 million.
A 25 basis point increase in the discount rate will decrease the PBO by $13.0 million and increase income before income taxes through the recognition of actuarial gains of $13.0 million.
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, strained geopolitical relations between countries in which we have significant operations, and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions; (b) negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, negative impacts to customer demand or operations, and availability and health of employees, and governmental restrictions on travel and manufacturing 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: 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 the 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.
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. 39 Table of Contents Defined Benefit Pension Plans: The Company recognized net periodic benefit cost of $33.8 million during 2023 for defined benefit pension plans, compared to net periodic benefit cost of $21.0 million during 2022.
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. 37 Table of Contents Defined Benefit Pension Plans: The Company recognized net periodic benefit cost of $12.2 million during 2024 for defined benefit pension plans, compared to net periodic benefit cost of $33.8 million during 2023.
For expense purposes in 2023, the Company applied a discount rate of 5.75% to its other postretirement benefit plans. For expense purposes in 2024, the Company will apply a discount rate of 5.55% to its other postretirement benefit plans.
For expense purposes in 2024, the Company applied a discount rate of 5.55% to its other postretirement benefit plans. For expense purposes in 2025, the Company will apply a discount rate of 5.83% to its other postretirement benefit plans.
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, 2023 2022 2021 2020 2019 Adjusted EBITDA (1) $ 939.7 $ 855.9 $ 718.0 $ 658.9 $ 726.3 Acquisition intangible amortization 65.7 43.9 46.8 47.3 46.7 Less: depreciation and amortization expense (2) 200.5 164.0 167.0 164.0 159.9 Adjusted EBIT 804.9 735.8 597.8 542.2 613.1 Adjusted tax rate 25.5 % 25.5 % 24.0 % 25.5 % 26.5 % Calculated income taxes 205.2 187.6 143.5 138.3 162.5 ANOPAT $ 599.7 $ 548.2 $ 454.3 $ 403.9 $ 450.6 Adjusted Invested Capital: Twelve Months Ended December 31, 2023 2022 2021 2020 2019 2018 Total debt $ 2,395.9 $ 1,963.2 $ 1,464.9 $ 1,564.6 $ 1,730.1 $ 1,681.6 Less: cash and cash equivalents 418.9 331.6 257.1 320.3 209.5 132.5 Net debt 1,977.0 1,631.6 1,207.8 1,244.3 1,520.6 1,549.1 Total equity 2,702.4 2,352.9 2,377.7 2,225.2 1,954.8 1,642.7 Invested capital (total debt + total equity) 4,679.4 3,984.5 3,585.5 3,469.5 3,475.4 3,191.8 Invested capital (two-point average) $ 4,332.0 $ 3,785.0 $ 3,527.5 $ 3,472.5 $ 3,333.6 Return on Invested Capital: Twelve Months Ended December 31, 2023 2022 2021 2020 2019 ANOPAT $ 599.7 $ 548.2 $ 454.3 $ 403.9 $ 450.6 Invested capital (two-point average) 4,332.0 3,785.0 3,527.5 3,472.5 3,333.6 Return on invested capital 13.8 % 14.5 % 12.9 % 11.6 % 13.5 % (1) Refer to page 46 for reconciliations to the most directly comparable GAAP financial measures.
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, 2024 2023 2022 2021 2020 Adjusted EBITDA (1) $ 844.8 $ 939.7 $ 855.9 $ 718.0 $ 658.9 Acquisition intangible amortization 78.0 65.7 43.9 46.8 47.3 Less: depreciation and amortization expense (2) 220.5 200.5 164.0 167.0 164.0 Adjusted EBIT 702.3 804.9 735.8 597.8 542.2 Adjusted tax rate 27.0 % 25.5 % 25.5 % 24.0 % 25.5 % Calculated income taxes 189.6 205.2 187.6 143.5 138.3 ANOPAT $ 512.7 $ 599.7 $ 548.2 $ 454.3 $ 403.9 Adjusted Invested Capital: Twelve Months Ended December 31, 2024 2023 2022 2021 2020 2019 Total debt $ 2,062.7 $ 2,395.9 $ 1,963.2 $ 1,464.9 $ 1,564.6 $ 1,730.1 Less: cash and cash equivalents 373.2 418.9 331.6 257.1 320.3 209.5 Net debt 1,689.5 1,977.0 1,631.6 1,207.8 1,244.3 1,520.6 Total equity 2,984.1 2,702.4 2,352.9 2,377.7 2,225.2 1,954.8 Invested capital (total debt + total equity) 4,673.6 4,679.4 3,984.5 3,585.5 3,469.5 3,475.4 Invested capital (two-point average) $ 4,676.5 $ 4,332.0 $ 3,785.0 $ 3,527.5 $ 3,472.5 Return on Invested Capital: Twelve Months Ended December 31, 2024 2023 2022 2021 2020 ANOPAT $ 512.7 $ 599.7 $ 548.2 $ 454.3 $ 403.9 Invested capital (two-point average) 4,676.5 4,332.0 3,785.0 3,527.5 3,472.5 Return on invested capital 11.0 % 13.8 % 14.5 % 12.9 % 11.6 % (1) Refer to page 43 for reconciliations to the most directly comparable GAAP financial measures.
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 2023.
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, except its Belts and Chain reporting unit, in the fourth quarter of 2024.
(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.
Kyle and other one-time costs associated with the transition. (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.
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. 42 Table of Contents Reconciliation of net income attributable to The Timken Company to adjusted net income, adjusted EBITDA and adjusted EBITDA Margin: Twelve Months Ended December 31, 2023 2022 2021 2020 2019 Net Sales $ 4,769.0 $ 4,496.7 $ 4,132.9 $ 3,513.2 $ 3,789.9 Net Income Attributable to The Timken Company 394.1 407.4 369.1 284.5 362.1 Net Income Attributable to The Timken Company as a Percentage of Sales 8.3% 9.1% 8.9% 8.1% 9.6% Adjustments: Acquisition intangible amortization 65.7 43.9 46.8 47.3 46.7 Impairment, restructuring and reorganization charges (1) 51.6 39.5 15.1 29.0 9.8 Corporate pension and other postretirement benefit related expense (income) (2) 20.6 2.9 0.3 18.5 (4.1) Acquisition-related charges (3) 31.8 14.8 3.2 3.7 15.5 Acquisition-related gain (4) — — (0.9) (11.1) — Russia-related charges (5) 8.5 15.6 — — — Gain on divestitures and sale of certain assets (6) (5.2) (2.9) — (0.4) (4.5) Property losses (recoveries) and related expenses (7) — — — (5.5) 7.6 Brazil legal matter — — — — 1.8 Tax indemnification and related items — 0.3 0.2 0.5 0.7 Noncontrolling interest of above adjustments (2.1) (5.3) — (0.1) (0.5) Provision for income taxes (8) (56.9) (35.9) (35.0) (18.2) (47.2) Adjusted Net Income $ 508.1 $ 480.3 $ 398.8 $ 348.2 $ 387.9 Net income attributable to noncontrolling interest 13.9 9.6 12.4 7.9 12.6 Provision for income taxes (as reported) 122.5 133.9 95.1 103.9 97.7 Interest expense 110.7 74.6 58.8 67.6 72.1 Interest income (9.3) (3.8) (2.3) (3.7) (4.9) Depreciation and amortization expense (9) 200.5 164.0 167.0 164.0 159.9 Less: Acquisition intangible amortization 65.7 43.9 46.8 47.3 46.7 Less: Noncontrolling interest (2.1) (5.3) — (0.1) (0.5) Less: Provision for income taxes (8) (56.9) (35.9) (35.0) (18.2) (47.2) Adjusted EBITDA $ 939.7 $ 855.9 $ 718.0 $ 658.9 $ 726.3 Adjusted EBITDA Margin (% of net sales) 19.7 % 19.0 % 17.4 % 18.8 % 19.2 % 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.
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. 40 Table of Contents Reconciliation of net income attributable to The Timken Company to adjusted net income, adjusted EBITDA and adjusted EBITDA Margin: Twelve Months Ended December 31, 2024 2023 2022 2021 2020 Net sales $ 4,573.0 $ 4,769.0 $ 4,496.7 $ 4,132.9 $ 3,513.2 Net Income Attributable to The Timken Company 352.7 394.1 407.4 369.1 284.5 Net Income Attributable to The Timken Company as a Percentage of Sales 7.7% 8.3% 9.1% 8.9% 8.1% Adjustments: Acquisition intangible amortization 78.0 65.7 43.9 46.8 47.3 Impairment, restructuring and reorganization charges (1) 19.1 60.1 55.1 15.1 29.0 Corporate pension and other postretirement benefit related (income) expense (2) (1.3) 20.6 2.9 0.3 18.5 Acquisition-related charges (3) 13.0 31.8 14.8 3.2 3.7 Acquisition-related gain (4) — — — (0.9) (11.1) Gain on divestitures and sale of certain assets (5) (14.7) (5.2) (2.9) — (0.4) Property losses (recoveries) and related expenses (6) 1.2 — — — (5.5) Tax indemnification and related items (1.1) — 0.3 0.2 0.5 CEO succession expenses (7) 3.7 — — — — Noncontrolling interest of above adjustments (0.2) (2.1) (5.3) — (0.1) Provision for income taxes (8) (41.0) (56.9) (35.9) (35.0) (18.2) Adjusted Net Income $ 409.4 $ 508.1 $ 480.3 $ 398.8 $ 348.2 Net income attributable to noncontrolling interest 22.6 13.9 9.6 12.4 7.9 Provision for income taxes (as reported) 118.9 122.5 133.9 95.1 103.9 Interest expense 125.1 110.7 74.6 58.8 67.6 Interest income (14.9) (9.3) (3.8) (2.3) (3.7) Depreciation and amortization expense (9) 220.5 200.5 164.0 167.0 164.0 Less: Acquisition intangible amortization 78.0 65.7 43.9 46.8 47.3 Less: Noncontrolling interest (0.2) (2.1) (5.3) — (0.1) Less: Provision for income taxes (8) (41.0) (56.9) (35.9) (35.0) (18.2) Adjusted EBITDA $ 844.8 $ 939.7 $ 855.9 $ 718.0 $ 658.9 Adjusted EBITDA Margin (% of net sales) 18.5 % 19.7 % 19.0 % 17.4 % 18.8 % 41 Table of Contents 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.
During 2023, the Company recorded a $0.6 million increase of uncertain tax positions related to foreign currency translation adjustments and deferred tax liabilities. The Company also recorded $5.9 million of uncertain tax positions related to prior years for acquisitions made during 2023.
During 2024, the Company recorded a $2.0 million decrease of uncertain tax positions related to foreign currency translation adjustments and deferred tax liabilities. The Company also recorded $5.9 million of uncertain tax positions related to prior years for acquisitions made during 2024.
Reconciliation of net cash provided by operating activities to free cash flow: Twelve Months Ended December 31, 2023 2022 2021 2020 2019 Net cash provided by operating activities $ 545.2 $ 463.8 $ 387.3 $ 577.6 $ 550.1 Capital expenditures (187.8) (178.4) (148.3) (121.6) (140.6) Free cash flow $ 357.4 $ 285.4 $ 239.0 $ 456.0 $ 409.5 45 Table of Contents 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.
Reconciliation of net cash provided by operating activities to free cash flow: Twelve Months Ended December 31, 2024 2023 2022 2021 2020 Net cash provided by operating activities $ 475.6 $ 545.2 $ 463.8 $ 387.3 $ 577.6 Capital expenditures (170.0) (187.8) (178.4) (148.3) (121.6) Free cash flow $ 305.6 $ 357.4 $ 285.4 $ 239.0 $ 456.0 42 Table of Contents 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.
For Medicare Advantage benefits, actual contract rates have been set for 2024 through 2026, and are assumed to increase by $5 for 2027 to 2028 and then 6.0% for 2028 , declining gradually to 5.0% in 2032 and thereafter . The assumed health care cost trend rate may have a significant effect on the amounts reported.
For Medicare Advantage benefits, actual contract rates have been set for 2025 through 2026, and are assumed to increase by $10 per year for 2027 through 2029 and then 6.0% for 2029, declining gradually to 5.0% in 2033 and thereafter. The assumed health care cost trend rate may have a significant effect on the amounts reported.
Net income for the trailing twelve months ended December 31, 2023 and December 31, 2022 was $408.0 million and $417.0 million, respectively. Net debt to adjusted EBITDA for the trailing twelve months was 2.1 at December 31, 2023 , compared with 1.9 at December 31, 2022 .
Net income for the trailing twelve months ended December 31, 2024 and December 31, 2023 was $375.3 million and $408.0 million, respectively. Net debt to adjusted EBITDA for the trailing twelve months was 2.0 at December 31, 2024 , compared with 2.1 at December 31, 2023 .
The foreign currency translation adjustments for the year ended December 31, 2023 were positively impacted by the weakening of the U.S. dollar relative to other currencies as of December 31, 2023 compared to December 31, 2022.
The foreign currency translation adjustments for the year ended December 31, 2024 were negatively impacted by the strengthening of the U.S. dollar relative to other currencies as of December 31, 2024 compared to December 31, 2023.
For measurement purposes, the Company assumed a weighted-average annual rate of increase in the per capita cost (health care cost trend rate) for medical benefits of 6.25% for 2024, declining gradually to 5.0% in 2029 and thereafter for medical and prescription drug benefits.
For measurement purposes, the Company assumed a weighted-average annual rate of increase in the per capita cost (health care cost trend rate) for medical benefits of 7.00% for 2025, declining gradually to 5.0% in 2033 and thereafter for medical and prescription drug benefits.
In 2024, the Company expects net periodic benefit credit of approximately $6 million for other postretirement benefit plans, compared to net periodic benefit credit of $7.3 million in 2023.
In 2025, the Company expects net periodic benefit credit of approximately $6 million for other postretirement benefit plans, compared to net periodic benefit credit of $6.9 million in 2024.
In 2023, the Company recorded $4.7 million of net tax expense for uncertain tax positions, which consisted primarily of $15.4 million related to increases to current and prior year uncertain tax positions and interest. This expense was partially offset by $10.7 million of the net reversal of accruals for prior year uncertain tax positions and settlements with tax authorities.
In 2024, the Company recorded $2.4 million of net tax benefit for uncertain tax positions, which consisted primarily of $8.8 million related to increases to current and prior year uncertain tax positions and interest. This expense was partially offset by $11.2 million of the net reversal of accruals for prior year uncertain tax positions and settlements with tax authorities.
The Company currently intends to refinance the 2024 Notes prior to their maturity. At December 31, 2023, the Company was in full compliance with all applicable covenants on its outstanding debt. The Company expects to generate a higher amount of cash from operating activities in 2024 compared to 2023, driven by improved working capital performance and lower cash taxes.
At December 31, 2024, the Company was in full compliance with all applicable covenants on its outstanding debt. The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance, a lower level of capital expenditures, and lower cash taxes.
The decrease in net income was primarily due to the impact of lower volume, higher operating costs, the unfavorable impact of foreign currency exchange rate changes, higher pension remeasurement charges, and an increase in net interest expense, partially offset by favorable price/mix.
The decrease in net income was primarily due to the impact of lower volume, higher manufacturing costs, the unfavorable impact of foreign currency exchange rate changes, and an increase in net interest expense, partially offset by favorable price/mix, lower impairment and pension remeasurement charges and a gain on the sale of certain real estate.
The following items highlight the Company ' s acquisitions and divestitures completed in 2023 and 2022: • The Company a cquired Lagersmit during the fourth quarter of 2023. Results for Lagersmit are reported in the Industrial Motion segment. • The Company acquired iMECH during the fourth quarter of 2023.
The following items highlight the Company ' s acquisitions and divestitures completed in 2024 and 2023: • The Company acquired CGI during the third quarter of 2024. Results for CGI are reported in the Industrial Motion segment. • The Company a cquired Lagersmit Holding B.V. ("Lagersmit") during the fourth quarter of 2023.
Net periodic benefit cost for 2024 does not include mark-to-market charges that will be recognized immediately through earnings in the fourth quarter of 2024, or on an interim basis if specific events trigger a remeasurement. Excluding the mark-to-market charges of $21.6 million recognized in 2023, net periodic benefit cost was $12.2 million in 2023.
Net periodic benefit cost for 2025 does not include mark-to-market charges that will be recognized immediately through earnings in the fourth quarter of 2025, or on an interim basis if specific events trigger a remeasurement.
As of December 31, 2023, the Company had $1,369.6 million of goodwill on its Consolidated Balance Sheet, of which $692.3 million was attributable to the Engineered Bearings segment and $677.3 million was attributable to the Industrial Motion segment.
As of December 31, 2024, the Company had $1,383.3 million of goodwill on its Consolidated Balance Sheet, of which $692.0 million was attributable to the Engineered Bearings segment and $691.3 million was attributable to the Industrial Motion segment.
The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of December 31, 2023, the Company's consolidated interest coverage ratio was 9.11 to 1.0. The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating.
As of December 31, 2024, the Company's consolidated interest coverage ratio was 7.69 to 1.0. The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating.
In 2023, $20.6 million of mark-to-market charges were recognized, compared to $2.9 million of mark-to-market charges in 2022. 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 .
In 2024, the Company recognized $1.3 million of net mark-to-market gains, compared to $20.6 million of net mark-to-market charges in 2023. 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 .
At December 31, 2023, the Company had strong liquidity with $418.9 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $513.4 million available under committed credit lines. Of the $418.9 million of cash and cash equivalents, $406.3 million resided in jurisdictions outside the United States.
At December 31, 2024, the Company had strong liquidity with $373.2 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $843.9 million available under committed credit lines. Of the $373.2 million of cash and cash equivalents, $338.6 million resided in jurisdictions outside the United States.
(7) Represents property loss and related expenses during the periods presented (net of insurance recoveries received in 2020) resulting from property loss that occurred during the first quarter of 2019 at one of the Company's warehouses in Knoxville, Tennessee and during the third quarter of 2019 at one of the Company's warehouses in Yantai, China.
(6) 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, as well as insurance recoveries received in 2020 resulting from property loss that occurred during the first quarter of 2019 at one of the Company's warehouses in Knoxville, Tennessee and during the third quarter of 2019 at one of the Company's warehouses in Yantai, China.
The Company recognized mark-to-market" charges of $21.6 million during 2023 compared to $16.0 million during 2022.
The Company recognized net mark-to-market gains of $0.7 million during 2024 compared to net mark-to-market charges of $21.6 million during 2023.
In 2024, the Company expects net periodic benefit cost to be approximately $13 million for defined benefit pension plans, compared with net periodic benefit cost of $33.8 million in 2023.
In 2025, the Company expects net periodic benefit cost to be approximately $14 million for defined benefit pension plans, compared with net periodic benefit cost of $12.2 million in 2024.
Financing Activities: The change in net cash provided by financing activities in 2023 compared with 2022 was primarily due to cash proceeds of $284.8 million from the sale of shares of TIL, a subsidiary of the Company, in the second quarter of 2023, partially offset by a decrease in net borrowings of $105.0 million and an increase in the purchase of treasury shares of $39.3 million. 33 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Reconciliation of total debt to net debt and the ratio of net debt to capital: Net Debt: December 31, 2023 2022 Short-term debt, including current portion of long-term debt $ 605.6 $ 49.0 Long-term debt 1,790.3 1,914.2 Total debt $ 2,395.9 $ 1,963.2 Less: Cash and cash equivalents 418.9 331.6 Net debt $ 1,977.0 $ 1,631.6 Ratio of Net Debt to Capital: December 31, 2023 2022 Net debt $ 1,977.0 $ 1,631.6 Total equity 2,702.4 2,352.9 Net debt plus total equity (capital) $ 4,679.4 $ 3,984.5 Ratio of net debt to capital 42.2 % 40.9 % 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.
Financing Activities: The change in net cash used in/provided by financing activities in 2024 compared with 2023 was primarily due to a decrease in net borrowings of $686.2 million and lower proceeds from the 2024 sale of shares of Timken India Limited ("TIL") as compared to the 2023 sale in the amount of $52.5 million, partially offset by a decrease in the purchase of treasury shares of $210.4 million. 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Reconciliation of total debt to net debt and the ratio of net debt to capital: Net Debt: December 31, 2024 2023 Short-term debt, including current portion of long-term debt $ 13.0 $ 605.6 Long-term debt 2,049.7 1,790.3 Total debt $ 2,062.7 $ 2,395.9 Less: Cash and cash equivalents 373.2 418.9 Net debt $ 1,689.5 $ 1,977.0 Ratio of Net Debt to Capital: December 31, 2024 2023 Net debt $ 1,689.5 $ 1,977.0 Total equity 2,984.1 2,702.4 Net debt plus total equity (capital) $ 4,673.6 $ 4,679.4 Ratio of net debt to capital 36.1 % 42.2 % 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.
Reconciliation of Net income to Adjusted EBITDA for the twelve months: Twelve Months Ended December 31, 2023 2022 Net income $ 408.0 $ 417.0 Provision for income taxes 122.5 133.9 Interest expense 110.7 74.6 Interest income (9.3) (3.8) Depreciation and amortization 201.3 164.0 Consolidated EBITDA 833.2 785.7 Adjustments: Impairment, restructuring and reorganization charges (1) $ 50.8 $ 39.5 Corporate pension and other postretirement related expense (2) 20.6 2.9 Acquisition-related charges (3) 31.8 14.8 Russia-related charges (4) 8.5 15.6 Gain on divestitures and sale of certain assets (5) (5.2) (2.9) Tax indemnification and related items — 0.3 Total Adjustments 106.5 70.2 Adjusted EBITDA $ 939.7 $ 855.9 Net Debt $ 1,977.0 $ 1,631.6 Ratio of Net Debt to Adjusted EBITDA 2.1 1.9 (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.
Reconciliation of Net income to Adjusted EBITDA for the twelve months: Twelve Months Ended December 31, 2024 2023 Net income $ 375.3 $ 408.0 Provision for income taxes 118.9 122.5 Interest expense 125.1 110.7 Interest income (14.9) (9.3) Depreciation and amortization 221.8 201.3 Consolidated EBITDA 826.2 833.2 Adjustments: Impairment, restructuring and reorganization charges (1) $ 17.8 $ 59.3 Corporate pension and other postretirement related (income) expense (2) (1.3) 20.6 Acquisition-related charges (3) 13.0 31.8 Property losses and related expenses (4) 1.2 — Gain on divestitures and sale of certain assets (5) (14.7) (2.9) CEO succession expenses (6) 3.7 — Tax indemnification and related items (1.1) — Total Adjustments 18.6 108.8 Adjusted EBITDA $ 844.8 $ 942.0 Net Debt $ 1,689.5 $ 1,977.0 Ratio of Net Debt to Adjusted EBITDA 2.0 2.1 (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.
Income Tax Expense: 2023 2022 $ Change Change Income tax expense $ 122.5 $ 133.9 $ (11.4) (8.5 %) Effective tax rate 23.1 % 24.3 % — (120) bps The effective tax rate for 2023 was 23.1%, 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 withholding taxes accrued on planned dividend distributions expected in 2024.
The effective tax rate for 2023 was 23.1%, 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 withholding taxes accrued on planned dividend distributions in 2024.
The following chart displays the impact of working capital items on cash during 2023 and 2022, respectively: 2023 2022 $ Change Cash (used in) provided by: Accounts receivable $ 71.6 $ (73.5) $ 145.1 Unbilled receivables (40.4) (26.0) (14.4) Inventories 72.0 (145.6) 217.6 Trade accounts payable (57.4) (10.2) (47.2) Other accrued expenses (47.6) 91.9 (139.5) Cash used in working capital items $ (1.8) $ (163.4) $ 161.6 The following table displays the impact of income taxes on cash during 2023 and 2022, respectively: 2023 2022 $ Change Accrued income tax expense $ 122.5 $ 133.9 $ (11.4) Income tax payments (240.3) (120.6) (119.7) Other miscellaneous (2.2) (0.6) (1.6) Change in income taxes $ (120.0) $ 12.7 $ (132.7) Investing Activities: The increase in net cash used in investing activities in 2023 compared with 2022 was primarily due to an increase in cash used for acquisitions of $185.1 million, a decrease in the proceeds from divestitures of $20.4 million, an increase in cash used for net investments in short-term marketable securities of $8.9 million, and an increase in capital expenditures of $9.4 million.
The following chart displays the impact of working capital items on cash during 2024 and 2023: 2024 2023 $ Change Cash (used in) provided by: Accounts receivable $ (14.2) $ 71.6 $ (85.8) Unbilled receivables 3.3 (40.4) 43.7 Inventories 9.6 72.0 (62.4) Trade accounts payable (37.1) (57.4) 20.3 Other accrued expenses (7.1) (47.6) 40.5 Cash used in working capital items $ (45.5) $ (1.8) $ (43.7) The following table displays the impact of income taxes on cash during 2024 and 2023: 2024 2023 $ Change Accrued income tax expense $ 118.9 $ 122.5 $ (3.6) Income tax payments (183.5) (240.3) 56.8 Other miscellaneous 1.1 (2.2) 3.3 Change in income taxes $ (63.5) $ (120.0) $ 56.5 Investing Activities: The decrease in net cash used in investing activities in 2024 compared with 2023 was primarily due to a decrease in cash used for acquisitions of $471.4 million, a decrease in capital expenditures of $17.8 million and an increase in cash from the net liquidation of short-term marketable securities of $9.5 million.
The primary measurement used by management to measure the financial performance of each segment is EBITDA. Refer to Note 4 - Segment Information in the Notes to the Consolidated Financial Statements for the reconciliation of EBITDA by segment to consolidated income before income taxes. Effective January 1, 2023, the Company began operating under new reportable segments.
The primary measurement used by management to measure the financial performance of each segment is adjusted EBITDA. Refer to Note 4 - 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 quarterly dividend will be paid on March 6, 2024 to shareholders of record as of February 20, 2024.
The quarterly dividend will be paid on March 7, 2025 to shareholders of record as of February 25, 2025.
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 24 basis point reduction in the weighted-average discount rate used to measure its U.S. plan obligations, which decreased from 5.64% in 2022 to 5.40% in 2023, and a 33 basis point decrease in the discount rate used to measure its U.K. plan obligations, which decreased from 4.81% in 2022 to 4.48% in 2023.
The impact of the net increase in the discount rate used to measure the Company's defined benefit pension obligations was primarily driven by a 95 basis point increase in the discount rate used to measure its plan obligations in the United Kingdom ("U.K."), which increased from 4.48% in 2023 to 5.43% in 2024, and a 43 basis point increase in the weighted-average discount rate used to measure its U.S. plan obligations, which increased from 5.40% in 2023 to 5.83% in 2024.
Results for Rosa and Des-Case are reported in the Industrial Motion segment. • The Company acquired Nadella during the second quarter of 2023. Results for Nadella are reported in the Industrial Motion segment. • The Company acquired ARB during the first quarter of 2023.
Results for Nadella are reported in the Industrial Motion segment. • The Company acquired American Roller Bearing Company ("ARB") during the first quarter of 2023.
This was partially offset by the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring. The effective tax rate for 2022 was 24.3%, 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%.
This was partially offset by the favorable impact of U.S. foreign tax credit utilization from acquisition integration structuring. The change in the effective rate for 2024 compared with 2023 was an increase of 1.0%. The increase was partially due to the unfavorable impact of earnings in foreign jurisdictions where the effective tax rate was higher than 21%.
Results for iMECH are reported in the Engineered Bearings segment. • The Company completed the sale of Jiangsu TWB Bearings Co., Ltd. ("TWB") during the fourth quarter of 2023. Results for TWB were reported in the Engineered Bearings segment. • The Company acquired Rosa and Des-Case during the third quarter of 2023.
Results for Lagersmit are reported in the Industrial Motion segment. • The Company acquired Engineered Solutions Group ("iMECH") during the fourth quarter of 2023. Results for iMECH are reported in the Engineered Bearings segment. • The Company completed the sale of Jiangsu TWB Bearings Co., Ltd. ("TWB") during the fourth quarter of 2023.
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.
Impairment, restructuring and reorganization charges for the twelve months ended December 31, 2023 included $28.3 million related to the impairment of goodwill. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. These limitations reduced the availability of the Accounts Receivable Facility to $79.1 million at December 31, 2023.
The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. These limitations reduced the availability of the Accounts Receivable Facility to $93.9 million at December 31, 2024. As of December 31, 2024, there were no outstanding borrowings under the Accounts Receivable Facility.
On March 28, 2022, the Company issued the fixed-rate unsecured senior notes (the "2032 Notes") in the aggregate principal amount of $350 million with an interest rate of 4.125%, maturing on April 1, 2032.
On May 23, 2024, the Company issued fixed-rate unsecured senior notes ("2034 Notes") in the aggregate principal amount of €600 million with an interest rate of 4.125%, maturing on May 23, 2034.
The Credit Agreement h as two financial covenants: a consolidated net leverage ratio and a consolidated interest coverag e ratio. The maximum consolidated net leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of December 31, 2023, the Company's consolidated net leverage ratio was 2.09 to 1.0.
The maximum consolidated net leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of December 31, 2024, 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.
The Company expects capital expenditures for 2024 to be similar in amount to 2023 and in the range of 4% of sales. 35 Table of Contents FUTURE CONTRACTUAL AND OTHER PAYMENTS The Company’s material cash requirements for contractual debt obligations and other contractual commitments outstanding as of December 31, 2023 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 $ 508.6 $ 104.9 $ 332.1 $ 71.6 Long-term debt, including current portion of long-term debt 2,159.2 359.4 1,441.0 358.8 Short-term debt 246.2 246.2 — — Purchase commitments 77.4 59.7 17.7 — Operating leases 117.0 29.8 68.4 18.8 Retirement benefit plans 227.7 20.7 99.2 107.8 Total $ 3,336.1 $ 820.7 $ 1,958.4 $ 557.0 The interest payments beyond five years primarily relate to long-term fixed-rate notes.
The Company expects capital expenditures in 2025 to be in the range of 3.5% of sales. 33 Table of Contents FUTURE CONTRACTUAL AND OTHER PAYMENTS The Company’s material cash requirements for contractual debt obligations and other contractual commitments outstanding as of December 31, 2024 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 $ 600.1 $ 93.0 $ 315.5 $ 191.6 Long-term debt, including current portion of long-term debt 2,072.9 4.3 1,091.4 977.2 Short-term debt 8.7 8.7 — — Purchase commitments 114.7 81.1 33.6 — Operating leases 129.5 36.2 81.2 12.1 Retirement benefit plans 274.3 27.4 117.4 129.5 Total $ 3,200.2 $ 250.7 $ 1,639.1 $ 1,310.4 The interest payments beyond five years primarily relate to long-term fixed-rate notes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIf the market rates for short-term borrowings increased by one-percentage-point around the globe, the impact from our variable rate debt would be an increase in interest expense of $9.6 million annually, with a corresponding decrease in income from continuing operations before income taxes of the same amount.
Biggest changeIf the market rates for short-term borrowings increased by one-percentage-point around the globe, the impact from the Company's variable rate debt would be an increase in interest expense of $3.8 million annually, with a corresponding decrease in income from continuing operations before income taxes of the same amount.
Commodity Price Risk: In the ordinary course of business, the Company is exposed to market risk with respect to commodity price fluctuations, primarily related to our purchases of raw materials and energy, principally steel and natural gas.
Commodity Price Risk: In the ordinary course of business, the Company is exposed to market and other risk with respect to commodity price fluctuations, primarily related to our purchases of raw materials and energy, principally steel and natural gas.
Whenever possible, the Company manages its exposure to commodity risks primarily through the use of supplier pricing agreements that enable the Company to establish the purchase prices for certain inputs that are used in our manufacturing and distribution business. 50 Table of Contents
Whenever possible, the Company manages its exposure to commodity risks primarily through the use of supplier pricing agreements that enable the Company to establish the purchase prices for certain inputs that are used in our manufacturing and distribution business. 48 Table of Contents
As of December 31, 2023, there were $591.8 million of hedges in place. A uniform 10% weakening of the U.S. dollar against all currencies would have resulted in a benefit of $19.4 million related to these hedges, which would have partially offset the impact of the underlying currency fluctuation.
As of December 31, 2024, there were $471.6 million of hedges in place. A uniform 10% weakening of the U.S. dollar against all currencies would have resulted in a benefit of $11.9 million related to these hedges, which would have partially offset the impact of the underlying currency fluctuation.

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