Q1 2026 Timken Co Earnings Call

May 6, 2026

Operator 2: Good morning. My name is Kara, and I will be your conference operator today. At this time, I would like to welcome everyone to Timken's First Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then number one on your telephone keypad again. Thank you. Mr. Frohnapple, you may begin your conference.

Speaker #3: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad.

Speaker #3: If you would like to withdraw your question, press star, then number 1 on your telephone keypad again. Thank you. Mr. Frohnapple, you may begin your conference.

Speaker #2: Thank you, operator, and welcome everyone to our first quarter 2026 earnings conference call. This is Neil Frohnapple, Vice President of Investor Relations for The Timken Company.

Neil Frohnapple: Thank you, operator. Welcome everyone to our Q1 2026 Earnings Conference Call. This is Neil Frohnapple, Vice President of Investor Relations for The Timken Company. We appreciate you joining us today. Before we begin our remarks this morning, I wanna point out that we have posted presentation materials on the company's website that we will reference as part of today's review of the quarterly results. You can also access this material through the download feature on the earnings call webcast link. With me today are The Timken Company's President and CEO, Lucian Boldea, and Michael Discenza, our Chief Financial Officer. We will have opening comments this morning from both Lucian and Mike before we open up the call for your questions.

Speaker #2: We appreciate you joining us today. Before we begin our remarks this morning, I want to point out that we have posted presentation materials on the company's website that we will reference as part of today's review of the quarterly results.

Speaker #2: You can also access this material through the download feature on the earnings call webcast link. With me today are The Timken Company's President and CEO, Lucian Boldea, and Mike Discenza, our Chief Financial Officer.

Speaker #2: We will have opening comments this morning from both Lucian and Mike before we open up the call for your questions. During the Q&A, I would ask that you please limit your questions to one question and one follow-up at a time to allow everyone a chance to participate.

Neil Frohnapple: During the Q&A, I would ask that you please limit your questions to one question and one follow-up at a time to allow everyone a chance to participate. During today's call, you may hear forward-looking statements related to our future financial results, plans, and business operations. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in today's press release and in our reports filed with the SEC, which are available on the timken.com website. We have included reconciliations between non-GAAP financial information and its GAAP equivalent in the press release and presentation materials. Today's call is copyrighted by The Timken Company, and without express written consent, we prohibit any use, recording, or transmission of any portion of the call.

Speaker #2: During today's call, you may hear forward-looking statements related to our future financial results, plans, and business operations. Our actual results may differ materially from those projected or implied, due to a variety of factors which we describe in greater detail in today's press release and in our reports filed with the SEC, which are available on the TIMKEN.com website.

Speaker #2: We have included reconciliations between non-GAAP financial information and its GAAP equivalent in the press release and presentation materials. Today's call is copyrighted by The Timken Company, and without express written consent, we prohibit any use, recording, or transmission of any portion of the call.

Speaker #2: Finally, just a reminder that we are hosting an Investor Day on Wednesday, May 20th, in New York City, so we hope that you will join us either virtually or in person.

Neil Frohnapple: Finally, just a reminder that we are hosting an Investor Day on Wednesday, 20 May in New York City. We hope that you will join us either virtually or in person. With that, I would like to thank you for your interest in The Timken Company, and I will now turn the call over to Lucian.

Speaker #2: With that, I would like to thank you for your interest in the TIMKEN Company and I will now turn the call over to Lucian.

Speaker #3: Thanks, Neil, and good morning, everyone. We appreciate your interest in TIMKEN and for joining us today. I would like to start by thanking our TIMKEN team for their hard work to deliver an excellent start to 2026.

Lucian Boldea: Thanks, Neil, good morning, everyone. We appreciate your interest in Timken and for joining us today. I would like to start by thanking our Timken team for their hard work to deliver an excellent start to 2026. We're gaining momentum and making great progress executing our strategic priorities, including two recent actions to advance our eighty/twenty portfolio work. Our financial performance is strong, we are pleased to have achieved double-digit earnings growth and margin expansion in Q1. Turning to our results for the quarter, total sales were up 8% from last year, and organic revenue grew more than 4%, driven by higher pricing and volume growth in the Industrial Motion segment. We expanded EBITDA margins to 18.8% in the quarter and adjusted EPS increased nearly 20% year over year to $1.67.

Speaker #3: We're gaining momentum and making great progress executing our strategic priorities, including two recent actions to advance our 80/20 portfolio work. Our financial performance is strong, and we are pleased to have achieved double-digit earnings growth and margin expansion in the first quarter.

Speaker #3: Turning to our results for the quarter, total sales were up 8% from last year, and organic revenue grew more than 4%, driven by higher pricing and volume growth in the Industrial Motion segment.

Speaker #3: We expanded EBITDA margins to 18.8% in the quarter and adjusted earnings per share increase nearly 20% year over year to allocation, we repurchased approximately $280,000 shares and acquired Bijour Delamont, which I'll talk about more in a moment.

Lucian Boldea: With respect to capital allocation, we repurchased approximately 280,000 shares and acquired Bijur Delimon, which I'll talk about more in a moment. We ended the quarter with a strong balance sheet and net leverage of only 2.1x, giving us continued flexibility to pursue our balanced approach to capital allocation. While Mike will take you through the details of our 2026 outlook, we are raising our guidance for organic revenue, margins, and earnings. Our outlook now implies 13% adjusted EPS growth at the midpoint of our range compared to the 8% we previously guided and includes a more positive price-cost impact related to tariffs. We saw improved customer demand across most end markets, which was reflected in our recent order activity.

Speaker #3: We ended the quarter with a strong balance sheet and net leverage of only 2.1 times, giving us continued flexibility to pursue our balanced approach to capital allocation.

Lucian Boldea: Our backlog at the end of the quarter was up both sequentially and year on year, continuing the positive momentum we experienced in the back half of last year. These trends support the increase in our organic sales outlook for the year to 3% growth. Despite continued volatility around trade and geopolitics, our team is operating with urgency to execute our strategic priorities and deliver stronger performance in 2026. As I mentioned earlier, we are deeply engaged in advancing our eighty/twenty strategic initiatives, including optimizing our portfolio as we are prioritizing actions that will have the greatest impact to company margins and growth. Last quarter, we announced that we are extending the eighty/twenty discipline across our entire enterprise to reduce complexity and streamline operations. While still early in the process, we are moving quickly.

Lucian Boldea: We have established a transformation office with dedicated eighty/twenty teams responsible for leading the execution of major work streams. We have completed comprehensive training across many areas of the business, and as of today, nearly 300 Timken leaders are fully trained and putting eighty/twenty principles into action. Our focus on these initiatives have driven two recent actions. On 1 May, we announced the sale of our Belts business to Gates. This divestiture is expected to simplify our portfolio, free up resources to redeploy to our growth initiatives, and structurally improve margins for the Industrial Motion segment. We expect to complete that transaction in Q3. Secondly, we acquired Bijur Delimon, which strengthens Timken's Industrial Motion portfolio in key markets and is expected to be accretive to Industrial Motion segment margins after synergies.

Lucian Boldea: Timken is the natural owner of this business. It scales our automated lubrication systems platform to nearly $400 million in total revenue. These two portfolio moves are aligned with eighty/twenty. The net result is a higher margin, faster-growing Industrial Motion segment. Our teams around the world are energized by the benefits of eighty/twenty. We are confident it will be a major driver of value creation over time. I remain confident about the opportunity to raise Timken's organic growth trajectory by focusing on the fastest-growing verticals and regions. This includes driving synergies through the global expansion of our acquired businesses. We are gaining traction. For example, we saw double-digit organic growth during Q1 in our Linear Motion platform in the Americas, driven by new business wins within factory automation.

Lucian Boldea: We're excited about the many opportunities like this ahead to leverage Timken's strength and create new ways to drive higher performance. Before I turn over the call to Mike, I want to touch on the leadership transition we initiated for our Engineered Bearings segment and thank Andreas Trogmann for his many years of service to Timken. An external search is underway for a permanent successor. During this time, Tim Graham, our President of Industrial Motion, will serve as Interim President of Engineered Bearings. Tim spent decades leading teams within Engineered Bearings, including most recently as Vice President of Operations. His deep knowledge of our operations and customers across Engineered Bearings will ensure a seamless transition. Our bearings business set the foundation for Timken more than 125 years ago and remains critical to our future. Together with Industrial Motion, we have a very compelling customer value proposition.

Lucian Boldea: I am focused on building the right leadership structure to best position our teams around the world for even greater success. With that, let me turn the call over to Mike for a more detailed review of the results and outlook. Mike?

Michael Discenza: Thanks, Lucian, good morning, everyone. For the financial review, I'm going to start on slide 8 of the materials with a summary of our strong Q1 results. Overall, total revenue for the quarter was $1.23 billion, which was up 8% from last year. Adjusted EBITDA margins increased to 18.8%, adjusted earnings per share for the quarter was $1.67, up significantly versus last year. Turning to slide 9, let's take a closer look at our Q1 sales. Organically, sales were up 4.3% from last year. The increase was driven by higher pricing across both segments and higher demand in the Industrial Motion segment while volumes were relatively flat in Engineered Bearings. Looking at the rest of the revenue walk, foreign currency translation contributed 3.4% growth to the top line.

Michael Discenza: The acquisition of Bijur Delimon, which closed in mid-March, added a small amount of sales to the quarter. On the right, you can see Q1 performance in terms of organic growth by region. In the Americas, our largest region, we were up 6%, driven by growth across both segments in North America, while Latin America was relatively flat. In EMEA, we were up 5% from last year, driven by solid growth across both segments. Finally, we were down 1% in Asia-Pacific, as growth in India was slightly more than offset by lower demand in China. Turning to slide 10, adjusted EBITDA was $231 million or 18.8% of sales in Q1, compared to 18.2% of sales last year.

Michael Discenza: Organically, incremental margins were approximately 35%. Solid operating performance from the team during the quarter. Let me comment a little further on a few of the different drivers on the EBITDA bridge you can see on this slide. Starting with the impact from mix, it was a notable year-on-year benefit driven by relatively stronger performance by several of our most profitable platforms within Industrial Motion. With respect to pricing in the quarter, it was +$32 million and added nearly 3% to the top line as we continued to put through pricing actions to recover the margin impact from tariffs. As you can see on the slide, tariffs were a $20 million headwind versus last year. Looking at material and logistics, costs were lower versus last year, driven mostly by savings tactics in the Engineered Bearings segment and material cost deflation in Asia Pacific.

Michael Discenza: With respect to the manufacturing cost line. The increase from last year reflects labor and other cost inflation, as well as a timing impact related to inventory accounting. Moving to the SG&A and other line, expenses were up from last year, driven by higher incentive comp and spending on strategic initiatives. Now let's move to our business segment results, starting with Engineered Bearings on slide 11. Engineered Bearings sales were $806 million in the quarter, up 6% from last year. Organic sales were up 3%, driven by higher pricing, while currency translation added another 3%. Among market sectors, aerospace and heavy industries achieved the strongest gains versus last year. We also posted growth in general industrial, off-highway, and renewable energy. Revenue was relatively flat across the distribution and on highway sectors, while rail shipments were down from last year.

Michael Discenza: Engineered Bearings adjusted EBITDA was $159 million or 19.7% of sales in Q1, compared to 20.9% of sales last year. Margins in the quarter were negatively impacted by higher operating costs compared to last year. Let's turn to Industrial Motion on slide 12. Industrial Motion sales were $425 million in the quarter, an all-time quarterly record for the segment and up 12% from last year. Organically, sales increased 7%, driven by higher demand across most sectors and higher pricing. Currency translation was a benefit of 4.2%, while the Bijur Delimon acquisition added 0.8%. The segment saw growth in the quarter across all product platforms and was led by double-digit gains in the Americas.

Michael Discenza: Among market sectors, automation, distribution, and heavy industries achieved the strongest gains versus the prior year. We also generated growth in the off-highway and aerospace sectors while solar sales were down. Industrial Motion's adjusted EBITDA margins came in at 21.5% of sales in Q1, up significantly from last year. The increase in segment margins reflects strong operational execution by the team, as well as the impact of higher volumes and favorable price mix. Moving to slide 13. You can see that we generated operating cash flow of $39 million in Q1, and after CapEx, free cash flow was slightly positive. Keep in mind that Q1 is typically our seasonally low quarter for free cash flow, and we expect cash flow to step up significantly as we move through the rest of the year.

Michael Discenza: From a capital allocation standpoint, we returned $53 million of cash to shareholders through share buybacks and dividends in Q1. Note that the board recently approved a new 5-year share repurchase authorization for 10 million shares. Looking at the balance sheet, we ended Q1 with net debt to adjusted EBITDA at 2.1x, which is near the middle of our targeted range. Let's turn to the current outlook for full year 2026, with a summary on slide 15. We are increasing our outlook across the board. Starting with net sales, we're raising our full year outlook to an increase of 4% to 6% in total, up from the prior range of 2% to 4%. Organically, we now expect revenue to be up 3% at the midpoint, a 1-point increase from the initial guide.

Michael Discenza: The current outlook also adds 1% for M&A to include the expected revenue for the Bijur Delimon acquisition. We're still planning for currency to contribute around 1% to our revenue for the year, unchanged from our prior outlook. On the bottom line, we expect adjusted earnings per share in the range of $5.75 to $6.25, up $0.25 at the midpoint versus the prior outlook. Note that the outlook assumes year-over-year earnings growth every quarter this year. The current earnings outlook implies that our 2026 consolidated adjusted EBITDA margin will be approximately 18% at the midpoint, up from 17.4% in 2025 and slightly higher than the prior guidance. Note that the midpoint of the ranges implies an incremental margin of approximately 30% for the full year.

Michael Discenza: For Q2, we expect organic revenue, adjusted EBITDA margins, and adjusted EPS to all be higher than last year. However, we expect adjusted EPS to be modestly lower sequentially compared to Q1 to reflect incremental inflation and some customer activity we saw pulled forward from Q2 related to the uncertainty around the situation in the Middle East. Moving to free cash flow, we expect to generate $350 to 375 million for the full year or approximately 105% conversion on GAAP net income at the midpoint. On slide 16, we provide an updated view on our 2026 organic sales outlook by market sector, which includes the impact of both volumes and pricing.

Michael Discenza: Note that we are raising our outlook for the heavy industries and off-highway sectors based on stronger than expected year-to-date performance and the positive trends we see in the order book. Moving to slide 17. Here we provide a bridge of the $0.25 per share increase in our 2026 adjusted EPS outlook at the midpoint. First, you can see a $0.20 positive impact from the organic sales change. Next, we're estimating an incremental $0.15 per share tailwind from tariffs versus our prior guide. This primarily reflects the lower tariff rate on India and a modest net positive impact from the changes to Section 232 on 6 April. Finally, we're factoring a $0.10 headwind into guidance to account for potential incremental cost inflation over the rest of the year.

Next, we're estimating, an incremental, 15% per share, Tailwind from tariffs versus our prior guide.

This primarily reflects the lower tariff rate on India and a modest net positive impact from the changes to section 232 on April 6th.

Michael Discenza: In summary, the company delivered better than expected Q1 results. The team is committed to delivering the increased outlook for 2026. Let me turn it back over to Lucian for some final remarks before we open the line for questions. Lucian.

And finally we're factoring a 10-cent headwind into guidance to account for potential incremental cost, inflation over the rest of the year.

In summary, the company delivered better-than-expected first quarter results, and the team is committed to delivering the increased outlook for 2026.

Lucian Boldea: Thanks, Mike. We enter 2026 with momentum, and this quarter reinforces our confidence in the path ahead. Our portfolio is becoming sharper. Our eighty/twenty initiatives are accelerating, and we're executing with urgency to position Timken for stronger growth and higher margins in 2026. I look forward to sharing more details with you soon at our Investor Day on 20 May in New York City.

Let me turn it back over to Lucian for some final remarks. Before we open the line for questions Lucian.

Thanks Mike. We enter 2026 with momentum and this quarter reinforces our confidence in the path ahead.

Our portfolio is becoming sharper, our 8020 initiative are accelerating and we're executing with urgency to position Timken for stronger, growth and higher margins in 2026.

I look forward to sharing more details with you soon and our investor Day on May 2020 in New York City.

Michael Discenza: Thanks, Lucian. This concludes our formal remarks, and we'll now open up the line for questions. Operator?

Operator 2: Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please back up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Stephen Volkmann with Jefferies. Your line is open. Please go ahead.

Thank you, Lucian. This concludes our formal remarks. We will now open up the line for questions. Operator?

Thank you. We will now begin the question and answer session.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad to withdraw your question, press star 1. Again, please back up your handset. When asking a question if you are muted locally, please remember to unmute your device please. Stand by while we compile the Q&A roster,

Stephen Volkmann: Great. Good morning, everybody. Thank you for taking the question. I'm gonna dive in on the changed guidance, Mike, your slide 17, I guess. I'm curious about the tariffs, the $0.15 benefit. I assume that's mostly IEPA and India. Is there any scenario where you get, you know, rebates on what you've paid, and how are you thinking about that? Then is there also some potential for additional tariffs as we go through these 301 kind of studies through the summer? Thanks.

Your first question comes from the line of Steve Volkman with Jeffrey's your line is open. Please go ahead.

Operator: Good morning. My name is Kara, and I will be your conference operator today. At this time, I would like to welcome everyone to Timken's First Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then number one on your telephone keypad again. Thank you. Mr. Frohnapple, you may begin your conference.

Hey, uh, good morning everybody. Thank you for taking the question. Um, I'm going to dive in, uh, on the, the, uh, the changed guidance. Mike, your slide 17, I guess. Um, and I'm curious about the tariffs, the $0.15 benefit. I, I assume that's mostly AIP and India. Um, is there any scenario where you get, um, you know, rebates on what you've paid and how are you thinking about that? Um, and then, uh, is there also some potential for additional tariffs as we go through these 301, uh, kind of studies through the summer? Thanks.

Michael Discenza: Great. Well, good morning, Steve. Thank you for the questions. You, you sized it up right on the India part. We previously had talked about that, the change in IEPA, and because India represents a large part of our imports into the US, that was one of the bigger impacts, then the small net impact from the Section 232 change. Those are the big drivers on tariffs. As it relates to IEPA, you know, the process is unfolding. We're following the process, if and when we have something to communicate on that, we'll relay that later, but nothing is assumed in our guidance for anything related to IEPA refunds. As far as additional tariffs, yeah, it's a fluid situation.

On tariffs.

Um,

Neil Frohnapple: Thank you, operator. Welcome everyone to our Q1 2026 Earnings Conference Call. This is Neil Frohnapple, Vice President of Investor Relations for The Timken Company. We appreciate you joining us today. Before we begin our remarks this morning, I wanna point out that we have posted presentation materials on the company's website that we will reference as part of today's review of the quarterly results. You can also access this material through the download feature on the earnings call webcast link. With me today are The Timken Company's President and CEO, Lucian Boldea, and Mike Discenza, our Chief Financial Officer. We will have opening comments this morning from both Lucian and Mike before we open up the call for your questions.

As as it relates to aipa, you know, the process is unfolding um we're following the process and and if and when we have something to communicate on that, we'll we'll relay that later. But nothing is assumed in our guidance, for um, for anything related to, uh, AA refunds,

Michael Discenza: Related to 232, we think we've sized it up as best as possible, so I don't anticipate anything further. Of course, as the administration announces further changes, that could impact us and again, we'd communicate that if and when that was appropriate.

Stephen Volkmann: Okay. Fair enough. You also talk about the $0.10 sort of cost inflation, and I don't wanna put words in your mouth, but that sounded more like a placeholder rather than you see more costs. Is that like cushion or do you actually see that kind of cost inflation?

Uh, as far as additional tariffs. Yeah. It's uh, it's a fluid situation. Uh, related to 232. We think we've sized it up, uh, as best as possible. So I don't anticipate anything further, but of course, uh as um, the administration announces further changes that could impact us. And again, we'd communicate that if and when that was appropriate,

Lucian Boldea: Yeah. Good morning, Steve. This is Lucian. Let me take that. It is somewhat of a placeholder, but I'll tell you the degrees of what we're seeing today. It's an it depends by region. If you're sitting, for example, in India, you're already experiencing an inflationary environment as we sit today. In China, not really, almost somewhat in the opposite direction. If you look, in Europe, you're starting to see signs of it, and in the US not as much. Where we're already seeing the increases, we're already underway with price increases, in some cases, first round, in some cases, second round. This is now for us, not a new muscle. It's a well-exercised muscle. It's one that's in place. The customers understand.

okay, fair enough. And then you also talk about the 10 cents sort of cost inflation, and I don't want to put words in your mouth but that sounded more like a placeholder rather than you see. More costs is that is that like cushion? Or are you do you actually see that kind of cost inflation?

Yeah, good morning, Steve. This is Lucian. Let me take that. So it is somewhat of a play store, but I'll tell you the degrees of what we're seeing today. So, uh, it it's an independent by region. So, if you're sitting, for example, in India, you're already experiencing an inflationary environment as we sit today, uh, in China, not not really almost somewhat in the opposite direction. If you look, uh, in Europe, you're starting to see signs of it and in the US not as much and so,

Lucian Boldea: There's something about when you drive home, even as a customer to the gas pump and the price of gasoline is higher, you understand that everything else is going up. There is a level of understanding and appreciation that we are in this environment. We'll continue to work with customers closely. Yeah, I mean, it's our best guess of what it can be at this point. We are seeing parts of it already, and we're taking action. We're prepared, and we're obviously in communications with our customers to be sure that we overcome this headwind.

Lucian Boldea: Thanks, Neil, good morning, everyone. We appreciate your interest in Timken and for joining us today. I would like to start by thanking our Timken team for their hard work to deliver an excellent start to 2026. We're gaining momentum and making great progress executing our strategic priorities, including two recent actions to advance our 80/20 portfolio work. Our financial performance is strong, we are pleased to have achieved double-digit earnings growth and margin expansion in Q1. Turning to our results for the quarter, total sales were up 8% from last year, and organic revenue grew more than 4%, driven by higher pricing and volume growth in the Industrial Motion segment. We expanded EBITDA margins to 18.8% in the quarter and adjusted EPS increased nearly 20% year-over-year to $1.67.

Stephen Volkmann: Great. That's helpful. Thanks. I'll pass it on.

Where we're already seeing. Uh, the increases were already underway with price increases in some cases, uh, first round in some cases second round, but this is now for us, not a new muscle, it's a Well, exercise muscle, it's 1, that's in place the customers. Understand, there's something about when you drive home even as a customer to the Gas Pump and the price of gasoline is higher, you understand that, everything else is going up. So there is a level of of understanding and appreciation that we are in this environment. So we'll continue to work with customers closely. But, uh, yeah. I mean, it's our best guess of what it can be at this point. Uh, we are seeing parts of it already and we're taking action, but we're, we're prepared and we're obviously in Communications with our customers to be sure that, uh, that we overcome this, uh, this headwind

Great. That's helpful. Thanks, I'll pass it on.

Michael Discenza: Thanks, Steve.

Operator 2: Your next question comes from the line of David Raso with Evercore. Your line is open. Please go ahead.

Thanks Steve.

David Raso: Hi. Thank you for the time. I was just curious, with the rest of the year guide implying somewhat notably slower organic, right? About 2.5% after the 4.3% in Q1. Given a lot of the positives commentary around the end market, can you maybe help us a little bit, how much business do you think got pulled from Q2 to Q1? Should we look at the organic guide, maybe some level of conservatism? I just wanted to also ask, just given the meeting coming up in two weeks, anything you wanted to put out there as what we should expect at the meeting? Especially given I thought it was interesting, the Eighty/Twenty rollout now being a little broader in the recent M&A in the last week or so.

Your next question comes from the line of David Rosso with evercore, your line is open. Please go ahead.

Hi, thank you for the time. I was just curious with the rest of the year guide implying. Um, someone notably slower organic write about 2 and a half percent. After the 4.3 in the first quarter. Um, given a lot of the positive commentary around the End Market.

David Raso: Just curious if things have, you know, changed a little bit how you're thinking about timing of actions and so forth since, when you first joined, The Timken Company. Thank you.

Can you maybe help us a little bit? How much business do you think got pulled from 2q to 1 Q or should we look at the organic guide? Maybe some level of conservatism. And then I just wanted to ask just given the meeting coming up in 2 weeks. Anything you wanted to to put out there is what we should expect, uh, at the meeting. Especially given I thought it was interesting, the 8020 roll out. Now, being a little broader in the recent m&a in the last week or so just curious if things have, you know, changed a little bit how you think about timing of actions and so forth. Since uh when you first joined uh timkin thank you.

Michael Discenza: Yeah. Let me take the first part of that at least on these slower organics. A couple things. You know, hard to say exactly how much was pulled from Q2 to Q1, but, you know, we think that from an EPS standpoint, you know, or from a top line standpoint, maybe 1% top line. You think normally, seasonally, we would, you know, step up from Q1 to Q2 2%. We're now seeing that more flat, so we think that was about 1% pulled forward. As it relates to the rest of the year, you know, there's still a lot of uncertainty. Certainly, the Iran conflict creates further uncertainty.

Uh, yeah. So let me take the, uh, the first part of that, at least, um,

Uh, on these slow Organics. So um, a couple things

Lucian Boldea: Our backlog at the end of the quarter was up both sequentially and year on year, continuing the positive momentum we experienced in the back half of last year. These trends support the increase in our organic sales outlook for the year to 3% growth. Despite continued volatility around trade and geopolitics, our team is operating with urgency to execute our strategic priorities and deliver stronger performance in 2026. As I mentioned earlier, we are deeply engaged in advancing our 80/20 strategic initiatives, including optimizing our portfolio as we are prioritizing actions that will have the greatest impact to company margins and growth. Last quarter, we announced that we are extending the 80/20 discipline across our entire enterprise to reduce complexity and streamline operations. While still early in the process, we are moving quickly.

Michael Discenza: We don't have a lot of sales in the Middle East, so it's not necessarily a direct impact. The impact around the world on the macro economies could certainly be, could pull down that organic growth. You know, we are still expecting growth year over year for the rest of the year. You know, just being maybe a little bit, you know, trying to take into account a little bit that Iran conflict impact. Lucian, anything to add?

Um, you know, hard to hard to say exactly how much was was pulled from second quarter to first quarter. But, um, you know, we think that from from a, uh, EPS standpoint, you know, or or from a top line standpoint, maybe, maybe a percent top line. So you, you think normally seasonally we would, uh, you know, step up from the first quarter of the second quarter, a couple percent, we're now seeing that more flat. So we think that was about a percent pulled forward. So, um, as it relates to the rest of the year, you know, uh, it's, there's still a lot of uncertainty, certainly the, uh, Iran, uh, conflict creates further uncertainty. Uh, we don't have a lot of sales in the Middle East, so it's not necessarily a direct impact.

Lucian Boldea: Yeah, no. If you look at normal seasonality as you head from Q1 to Q2, you know, you would normally expect a couple of % step up. I think in this case, as Mike said, we've pulled maybe 1% out of Q2 into Q1. Then something more flattish is probably more consistent with historic seasonality by the time you account for that for that pull forward. That's the extent to which we can see. As Mike said, the good news is we don't yet see demand destruction from the conflict. We see inflationary pressure, but we don't see demand destruction. Pipeline still remains robust. Order book still remains very robust. The order book was up year over year, also grew sequentially, which is very encouraging.

Lucian Boldea: We have established a transformation office with dedicated 80/20 teams responsible for leading the execution of major work streams. We have completed comprehensive training across many areas of the business, and as of today, nearly 300 Timken leaders are fully trained and putting 80/20 principles into action. Our focus on these initiatives have driven two recent actions. On 1 May, we announced the sale of our Belts business to Gates. This divestiture is expected to simplify our portfolio, free up resources to redeploy to our growth initiatives, and structurally improve margins for the Industrial Motion segment. We expect to complete that transaction in Q3. Secondly, we acquired Bijur Delimon, which strengthens Timken's Industrial Motion portfolio in key markets and is expected to be accretive to Industrial Motion segment margins after synergies.

Lucian Boldea: I think all in all, we're still remain cautiously optimistic, I would say. You know, to the extent that the conflict gets resolved, then obviously it provides some upside. Where we sit, it does not yet seem to affect demand. To your second question on Investor Day, you know, obviously, you know, we'll have a lot more detail on these topics, but basically the main objective is really to detail our strategy and the long-term vision. Really from that, give you the double click on how are we doing on our transformation, what does that look like, and also, more importantly, give you a bit of a flavor on what is the execution discipline behind it.

Lucian Boldea: Timken is the natural owner of this business. It scales our automated lubrication systems platform to nearly $400 million in total revenue. These two portfolio moves are aligned with 80/20. The net result is a higher margin, faster-growing Industrial Motion segment. Our teams around the world are energized by the benefits of 80/20. We are confident it will be a major driver of value creation over time. I remain confident about the opportunity to raise Timken's organic growth trajectory by focusing on the fastest-growing verticals and regions. This includes driving synergies through the global expansion of our acquired businesses. We are gaining traction. For example, we saw double-digit organic growth during Q1 in our Linear Motion platform in the Americas, driven by new business wins within factory automation.

1% of Q2 into q1. So then uh, uh, then something more flattish is probably more consistent with the with historic, seasonality by the time you account for that uh, for that pull forward. But that's, that's the extent to which we can see. As Mike said, the good news is we don't yet see demand destruction from the conflict. We see inflationary pressure but we don't see demand destruction. So a pipeline Still Remains robust order. Books Still Remains very robust order. Book was uh up here over a year. Also grew sequentially which is very encouraging and so I think all in all we're still remain cautiously optimistic. I would say but uh but you know, to the extent that the conflict gets resolved and then obviously provide some upside but uh but where we sit, it does not yet seem to affect demand and then to your second question on investor day you know obviously you know we'll have a lot more detail on these topics but basically the main objective is really to detail our strategy and the long term.

Lucian Boldea: As you alluded to it, we'll talk about eighty/twenty, so we'll provide way more detail on the actions we've already taken, try to quantify those on the portfolio for you, and then also provide a bit of a roadmap on where we're headed. Obviously the financial targets on what all this sums up. We'll give you a multi-year projection as well. Certainly very excited to share all that with you. I think the story is coming together very nicely, and the team is very excited to be in front of you on 20 May.

Vision and then really from that give you the double, click on how we doing on our transformation. What does that look like? And also more importantly, give you a bit of a flavor on what is the execution discipline behind it? Uh, as you alluded to it, we'll talk about 80/20 so we'll provide way more detail on the actions. We've already taken rather quantify those on the portfolio for you. And then uh and then also provide a bit of a road map on where we're headed and then obviously the uh Financial time.

Michael Discenza: I appreciate that. Thank you.

Targets on, uh, what all this sums up. So we'll give you a multi-year projection as well. But uh, certainly very excited to uh, to share all that with you. I think the story is coming together, very nicely and the team is uh, is very excited to be in front of you on uh, on May 20th.

I appreciate that. Thank you.

Lucian Boldea: Thank you.

Operator 2: Your next question comes from the line of Rob Wertheimer with Melius Research. Your line is open. Please go ahead.

Rob Wertheimer: Yes. Hi, and good morning. You had a few things go right to help raise the full year outlook, and I wonder if you could attribute that to end market strength or some of the eighty/twenty and other initiatives already paying off, as the first question.

Thank you. Your next question comes from the line of Rob Wimer with Nellie's research. Your line is open, please go ahead.

Yes. Hi, good morning. Um, you had a few things, go right to help uh raise the full year outlook, and I wonder if you could attribute uh that to and Market strength or some of the 80/20 and other initiatives that are already paying off as the first question,

Lucian Boldea: Yeah. We outlined a few things, and no doubt market demand helped. No doubt we communicated in Q3 and Q4 that we're still starting to see positive momentum on the book to build side, on building pipeline, building the order book. I think that's definitely has helped. But we have done quite a bit of self-help as well. One of the growth vectors that I was most bullish about from the first day I got in this job, and with every day that goes by I'm more excited about it, is regional growth. We have an entire portfolio in the Industrial Motion acquired businesses that are businesses that are more regional in nature, single region businesses. Taking those businesses into new regions, is an important vector.

Yeah, and look, we we outlined a few things and no doubt market demand helped, no doubt. We communicating in Q3 and Q4 that were still starting to see positive, momentum, on the book to build side on building pipeline building the order book. So I think that's

Mike Discenza: Thanks, Lucian, good morning, everyone. For the financial review, I'm going to start on slide 8 of the materials with a summary of our strong Q1 results. Overall, total revenue for the quarter was $1.23 billion, which was up 8% from last year. Adjusted EBITDA margins increased to 18.8%, adjusted earnings per share for the quarter was $1.67, up significantly versus last year. Turning to slide 9, let's take a closer look at our Q1 sales. Organically, sales were up 4.3% from last year. The increase was driven by higher pricing across both segments and higher demand in the Industrial Motion segment while volumes were relatively flat in Engineered Bearings. Looking at the rest of the revenue walk, foreign currency translation contributed 3.4% growth to the top line.

Lucian Boldea: We, we talked last year about prioritizing that and, for example, the Linear Motion business. That business is primarily European business, and it's not even a European business, it's a German and Italian business. Taking that to the rest of Europe and taking that into the Americas just provides a pretty significant growth factor, and that's true for other businesses in that portfolio. That Linear Motion business alone is growing double-digit in the Americas, and it's in a significant number. It's not a teens kind of number. It's a significant growth number. It's off of a lower base to start with, but we're winning in warehouse automation and other applications that are rapidly growing. It's a, it's an exciting growth factor for us. It's a combination of self-help and also the market. It's also eighty/twenty, you alluded to it.

Definitely has helped uh but we have done quite a bit of self-help as well. So 1 of the growth vectors that I was most bullish about from the first day, I got in this job and with every day that goes via more excited about it. Is regional growth, uh, we have an entire portfolio in the industrial motion acquired businesses, that are businesses that are more Regional in nature single region businesses. So, taking those businesses into new regions, uh, is is an important Vector. So we, we talked

Mike Discenza: The acquisition of Bijur Delimon, which closed in mid-March, added a small amount of sales to the quarter. On the right, you can see Q1 performance in terms of organic growth by region. In the Americas, our largest region, we were up 6%, driven by growth across both segments in North America, while Latin America was relatively flat. In EMEA, we were up 5% from last year, driven by solid growth across both segments. Finally, we were down 1% in Asia-Pacific, as growth in India was slightly more than offset by lower demand in China. Turning to slide 10, Adjusted EBITDA was $231 million or 18.8% of sales in Q1, compared to 18.2% of sales last year.

Lucian Boldea: The impact of eighty/twenty, I would say right now is less so on a quantitative kind of simplification, but it is on a mindset. We have very early on in the process adopted the mindset of let's double down in the markets and industries where we're winning and invest less where we're not. That's already paying off. We have reorganized our commercial teams. We've verticalized them to where we're more in a one team can face to the industry. We've built regional teams that each region has the autonomy to operate and make decisions locally under a global framework. Those things are already showing. If you look at our regional results, you know, we're in some regions defying gravity a little bit compared to our competitors.

Last year about prioritizing that. And for example, the linear motion business, uh, that business is primarily European business and it's not even a European business. It's a German and Italian business. So taking that to the rest of Europe, and taking that, uh, into the Americas, just provides pretty significant growth factor. And that's true for other businesses in that portfolio, but then linear motion business alone, uh, is growing double digit in the Americas and it's a significant number. It's not a teens kind of number. It's a significant growth number. It's off of a lower base to start with, but uh, we're winning in Warehouse Automation and other applications that are rapidly growing. So it's a, it's an exciting growth factor for us. So it's a combination of self-help and also the market. It's also 8020. You alluded to it. Uh the impact of 8020 I would say right now is less so on uh quantitative kind of simplification but it is on a mindset. Uh we have

Lucian Boldea: We had a nice run here in Europe, for example, continuing our good run in places like India and the US. Some of that is self-help and us being a little more focused.Fantastic. Thank you.

Very early on in the process adopted the mindset of, let's double down in the markets and industries where we're winning and invest less where we're not, uh, that's already paying off. Uh, we have reorganized our commercial teams with verticalized them to where we're more in a 1 team can phase to the industry. We've built Regional teams that each region has the autonomy to operate and make decisions locally under a global framework. And so so those things are already showing and if you look at our regional results, you know, where in some regions, define gravity a little bit.

Mike Discenza: Organically, incremental margins were approximately 35%. Solid operating performance from the team during the quarter. Let me comment a little further on a few of the different drivers on the EBITDA bridge you can see on this slide. Starting with the impact from mix, it was a notable year-on-year benefit driven by relatively stronger performance by several of our most profitable platforms within Industrial Motion. With respect to pricing in the quarter, it was +$32 million and added nearly 3% to the top line as we continued to put through pricing actions to recover the margin impact from tariffs. As you can see on the slide, tariffs were a $20 million headwind versus last year. Looking at material and logistics, costs were lower versus last year, driven mostly by savings tactics in the Engineered Bearings segment and material cost deflation in Asia Pacific.

Compared to our competitors. So we had a, a nice run here in Europe, for example, uh, continuing our good run in in places like India and the us but that some of that is self-help and us being a little more focused.

Fantastic, thank you.

Lucian Boldea: Sure. Thanks, Rob.

Operator 2: Your next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open. Please go ahead.

Thanks Rob.

Angel Castillo: Hi, good morning, and thanks for taking my question. Lucian, I was just hoping we could unpack a little bit more of the backlog. You said it's up sequentially in year-over-year. I guess just any way to kind of quantify that for us and just any particular pockets around markets where, you know, you're seeing, I guess, more of a boost in kind of the backlog right now. Just would love, I guess if you could share also any color on kind of order activity in April versus March. I think you mentioned that you're seeing activity still or I guess in your guidance activity more kind of flattish in Q2 versus Q1 due to some of that pull forward.

With Morgan Stanley, your line is open. Please go ahead.

Angel Castillo: I guess curious if you're seeing that also reflected in your orders or, you know, how that kind of compares, as we think about maybe that degree of conservatism on, you know, how much was maybe pull forward versus just underlying demand.

Mike Discenza: With respect to the manufacturing cost line. The increase from last year reflects labor and other cost inflation, as well as a timing impact related to inventory accounting. Moving to the SG&A and other line, expenses were up from last year, driven by higher incentive comp and spending on strategic initiatives. Now let's move to our business segment results, starting with Engineered Bearings on slide 11. Engineered Bearings sales were $806 million in the quarter, up 6% from last year. Organic sales were up 3%, driven by higher pricing, while currency translation added another 3%. Among market sectors, aerospace and heavy industries achieved the strongest gains versus last year. We also posted growth in general industrial, off-highway, and renewable energy. Revenue was relatively flat across the distribution and on highway sectors, while rail shipments were down from last year.

Lucian Boldea: I think, if you look at the order book both year over year, it was up significantly year over year, and really the leaders are off highway, aerospace, rail, and wind. Those are the four verticals that are mostly contributing to that. I think the significant momentum in the Americas, Europe doing pretty well. I'm sorry, India doing quite well. China's still a little bit soft. We're very encouraged by the fact that the order book was still up sequentially versus Q4. You know, the challenge to translate order book math into precise quarterly revenue math, obviously in the long run it works out, but you have shorter cycle businesses, longer cycles, that's where it doesn't quite translate one to one.

Hi. Good morning and thanks for taking my question. Um Lucian. I was just hoping we could on back a little bit more of the backlog. You said it's subsequently a year-over-year I guess just any way to kind of quantify um that for us and just any particular Pockets around markets where you know you're seeing I guess more of a of a boost and and kind of the backlog right now and just would love I guess if you could share also any color on kind of order activity and April versus March. I think you mentioned that you're seeing a activity, still or or I guess in in your guidance, activity more kind of flattish and 2 versus 1 Q due to some of that pull forward, but I guess curious, if you're seeing that also reflected in your orders or, you know, how that kind of Compares. Um, as we think about maybe that degree of conservatism on, you know, how much was maybe put forward versus, uh, just underlying demand.

Yeah, I think if you look at the order book both year over year and it was up significantly year-over-year and really, the leaders are off-highway Aerospace Rail and wind. Those are the, the 4 vertical that are mostly contributing uh, to that. I think the significant momentum in the Americas. Uh Europe doing pretty well as I headed to China, I'm sorry, India doing quite well, China, still a little bit soft. We're very encouraged by the fact that the order book was still up sequentially versus Q4, you know, that the challenge to translate order, book math into precise quarterly Revenue math obviously in the long run.

Lucian Boldea: Over time, when the order book is up significantly, at some point that flows through the revenue. That's why we're encouraged. I think if you look at markets in general, you know, and you look at Q1 kind of as a guide, we saw strong activity across both segments. Americas was a big region for that. Power gen pulled pretty strong on the demand. Metals was pretty strong. So you saw activity related to kind of general economic activity picking up that was quite helpful. General industrial was another one. I think it's pretty broad across the sectors.

Mike Discenza: Engineered Bearings Adjusted EBITDA was $159 million or 19.7% of sales in Q1, compared to 20.9% of sales last year. Margins in the quarter were negatively impacted by higher operating costs compared to last year. Let's turn to Industrial Motion on slide 12. Industrial Motion sales were $425 million in the quarter, an all-time quarterly record for the segment and up 12% from last year. Organically, sales increased 7%, driven by higher demand across most sectors and higher pricing. Currency translation was a benefit of 4.2%, while the Bijur Delimon acquisition added 0.8%. The segment saw growth in the quarter across all product platforms and was led by double-digit gains in the Americas.

It works out but you have shorter cycle, businesses longer Cycles, so uh, so that's where it doesn't quite translate 1 to 1. But over time, when the order book is up significantly, at some point that flows through the revenue. So that's why we're, uh, we're encouraged, I think, if you look at

Lucian Boldea: You know, we've been cautious to really not hang our hat on this too early because I think part of it is the market is still somewhat, you know, not taking into account the Middle East disruption maybe sufficiently, because the order books are certainly not reflecting that and the demand is not reflecting it. We see the inflationary pressure, as I mentioned earlier, but we don't see it having any impact on the demand. That history would say that there might be some impact at some point, but at this point we're not seeing that. That also gives us a little bit of reason for caution. As for April, you know, April is off to a good start, I would say.

Mike Discenza: Among market sectors, automation, distribution, and heavy industries achieved the strongest gains versus the prior year. We also generated growth in the off-highway and aerospace sectors while solar sales were down. Industrial Motion's Adjusted EBITDA margins came in at 21.5% of sales in Q1, up significantly from last year. The increase in segment margins reflects strong operational execution by the team, as well as the impact of higher volumes and favorable price mix. Moving to slide 13. You can see that we generated operating cash flow of $39 million in Q1, and after CapEx, free cash flow was slightly positive. Keep in mind that Q1 is typically our seasonally low quarter for free cash flow, and we expect cash flow to step up significantly as we move through the rest of the year.

Markets in general, you know, and you look at q1, kind of as a guide, we saw strong activity, across both segments, uh, America's was a big region for that, uh, Power gen for pretty strong on the demand medals was pretty strong. And so, uh, so you saw activity related to kind of General economic activity picking up, that was uh White for was quite helpful. General industrial was another 1. So so I think it's pretty broad across across the sectors. You know, we've been cautious to really not hang our hats on this too early because I think part of it is the market is still somewhat, uh, you know, not taking into account the Middle East, uh, disruption, maybe sufficiently. Uh, because the order books, are certainly not reflecting that and the demand is not reflecting it. We see the inflationary pressure as I mentioned earlier, but we don't see it having any impact on uh, on the demand. So that

Lucian Boldea: If you compare to where we thought we would be, we're about where we thought we would be. You know, the part to keep in mind is whatever dynamic drove March being a little stronger because April got pulled into March because customers realized they're in an inflationary environment, they're in an environment of supply chain uncertainty, so more product sooner in hand is better. That same dynamic persists in April. I don't think this would have been the typical that if you had accelerated orders from April to March, that you would see a slow first week in April because conflict is still there, the uncertainty is still there. There's still a bit of pulling on the on that on that demand. Again, it was modest. It was about 1%, so it's not a, not a big number.

History would say that there might be some impact at some point, but, uh, but at this point we're not, uh, we're not seeing that. But that also gives us a little bit of reason for caution. Uh, as for, uh, as for April, you know, April is off to a good start. I would say, um, if you compare to where we thought we would be, we're about where we thought we would be. Um, you know, the part to keep in mind is whatever dynamic drove.

March being a little stronger because April got pulled into March because customers realized, they're in an inflationary environment, they're in an environment of supply chain uncertainty. So more products sooner in hand is better that same Dynamic persists in April. So I don't think this

would have been the typical that if you

Mike Discenza: From a capital allocation standpoint, we returned $53 million of cash to shareholders through share buybacks and dividends in Q1. Note that the board recently approved a new 5-year share repurchase authorization for 10 million shares. Looking at the balance sheet, we ended Q1 with net debt to Adjusted EBITDA at 2.1x, which is near the middle of our targeted range. Let's turn to the current outlook for full year 2026, with a summary on slide 15. We are increasing our outlook across the board. Starting with net sales, we're raising our full year outlook to an increase of 4% to 6% in total, up from the prior range of 2% to 4%. Organically, we now expect revenue to be up 3% at the midpoint, a 1-point increase from the initial guide.

Lucian Boldea: That's April is consistent with what we expected April to be so far, both in terms of revenue and just in terms of continued strength on building order book.

Angel Castillo: That's very helpful. Thank you. I just wanted to, if we were to take all this together and think about kind of the segments and the cadence you ultimately expect for kind of sales and margins, Q2 through Q4, I was hoping you could kind of help at the segment level unpack that. Just to clarify on the price cost, you indicated that the $0.10 is, you know, part kind of baking in some of the potential risk for inflation. Curious if the price increases you said you're starting to action, if you've also assumed that in the guidance or if you're waiting to see how those kind of go through before you're kind of embedding that.

had accelerator or orders from April to March that you would see a slow first week in April, because conflict is still there. The uncertainty is still there. So, so there's still a bit of pulling on the, uh, on that, uh, on that demand again, it was modest, it was about 1%, so it's not a, not a big number, uh, but uh, but that's April is consistent with what we expected, April to be so far, uh, both in terms of Revenue and just in terms of continuous strength on building or the book.

Mike Discenza: The current outlook also adds 1% for M&A to include the expected revenue for the Bijur Delimon acquisition. We're still planning for currency to contribute around 1% to our revenue for the year, unchanged from our prior outlook. On the bottom line, we expect adjusted earnings per share in the range of $5.75 to $6.25, up $0.25 at the midpoint versus the prior outlook. Note that the outlook assumes year-over-year earnings growth every quarter this year. The current earnings outlook implies that our 2026 consolidated Adjusted EBITDA margin will be approximately 18% at the midpoint, up from 17.4% in 2025 and slightly higher than the prior guidance. Note that the midpoint of the ranges implies an incremental margin of approximately 30% for the full year.

That that's very helpful. Thank you. And then I just wanted to, I guess, if we could, if we were to take all this together and think about kind of this segments and the Cadence you, um, ultimately expect for kind of sales and and margins, um, took you through 4 q. Uh, I was hoping you could kind of help at the segment level um kind of unpack that and then just to clarify on the price cost. You you indicated that the 10 cents is uh you know part kind of baking in some of the potential risk for for inflation. But curious if the price increases you said you're starting to action. If you're also assume that in the guidance or or if you're waiting to see how those kind of go through to before you kind of embedding that

Lucian Boldea: Yeah. I mean, we've only embedded prices that we already see in the guide. I think, to the extent that we have something in front of us. Part of that $0.10 is probably embedded with the corresponding price, but not all of it yet. You know, there's a timing there of when do you get the inflationary increase and when do the prices actually flow through the P&L. That's why we thought it's a little more prudent to, at this point, not have all that perfectly matched yet.

Lucian Boldea: I think if you look at the two segments, what I would say for the rest of the year is we do expect the trend to continue where you see a little more growth in Industrial Motion than you see in Engineered Bearings. That will continue throughout 2026. I think if you look at, you know, H1 of 2026 being up that 3% to 4% and H2 being up 2% to 3%, that's kind of what we expect right now when we look at what the drivers are and how those are reflected in the two segments.

Mike Discenza: For Q2, we expect organic revenue, Adjusted EBITDA margins, and Adjusted EPS to all be higher than last year. However, we expect Adjusted EPS to be modestly lower sequentially compared to Q1 to reflect incremental inflation and some customer activity we saw pulled forward from Q2 related to the uncertainty around the situation in the Middle East. Moving to free cash flow, we expect to generate $350 to 375 million for the full year or approximately 105% conversion on GAAP net income at the midpoint. On slide 16, we provide an updated view on our 2026 organic sales outlook by market sector, which includes the impact of both volumes and pricing.

Price. But, uh, but not, uh, uh, not all of it yet. You know, there's a timing there of, when do you get the inflationary increase and when do the prices actually flow through the pnl? So, so that's why we thought it's a little more prudent to at this point. Not uh uh, not have all that, uh, perfectly matched yet. Uh, I think if you look at the 28 and so that's uh that will continue throughout uh uh 2026.

Angel Castillo: Thank you.

I think if you look at, you know, first half of uh uh of 26 being update, 3 to 4% and second half being up 2 to 3%. That's kind of what we uh, what we expect right now. When we look at uh, when we look at what the drivers are and how those uh those are reflected in the in the 2 segments.

Thank you.

Neil Frohnapple: Thanks, Ian.

Operator 2: Your next question comes from the line of Kyle Menges with Citigroup. Your line is open. Please go ahead.

Your next question comes from the line of Kyle menes with Citigroup. Your line is open. Please go ahead.

Kyle Menges: Thank you. I was hoping if we could talk a little bit more about the portfolio transformation and maybe the M&A pipeline. I know we'll hear more about this at the Investor Day, Lucian, I am curious, do we already have a pretty good idea of the focus areas for M&A? I'm just curious how that pipeline is building now that I'm assuming you already have a pretty good idea of where you want to expand inorganically.

Mike Discenza: Note that we are raising our outlook for the heavy industries and off-highway sectors based on stronger than expected year-to-date performance and the positive trends we see in the order book. Moving to slide 17. Here we provide a bridge of the $0.25 per share increase in our 2026 Adjusted EPS outlook at the midpoint. First, you can see a $0.20 positive impact from the organic sales change. Next, we're estimating an incremental $0.15 per share tailwind from tariffs versus our prior guide. This primarily reflects the lower tariff rate on India and a modest net positive impact from the changes to Section 232 on 6 April. Finally, we're factoring a $0.10 headwind into guidance to account for potential incremental cost inflation over the rest of the year.

Thank you. I was, I was hoping if if we could talk a little bit more about the portfolio transformation and maybe the the m&a pipeline, I I know we'll hear more about this at the investor day but Lucian, I am curious.

Um do we already have a pretty good idea of of the focus areas for m&a? And I'm just curious how that pipeline is is is building. Now that I'm assuming you already have a pretty good idea of where you want to expand and organically.

Lucian Boldea: Thank you for the question. Gates, I would say it's still work in progress. I think there's different phases to portfolio transformation. The first thing we said is, okay, let's look with an eighty/twenty lens and say, what is the portion of the portfolio where you have some no-regret moves where those portfolios don't naturally belong to us, we're not the natural owner, let's take those actions. We committed about a quarter ago that we would take action on up to a single-digit percent of the portfolio. This is not a big portion of the company, but a single-digit percentage.

Yeah, thank you for the question. And it gets, I would say, it's still a work in progress. Uh, I think there's different phases to portfolio transformation. In the first thing we said is, okay, let's

Look with an 80/20 lens and say, what is the portion of the portfolio where you have some—

Mike Discenza: In summary, the company delivered better than expected Q1 results. The team is committed to delivering the increased outlook for 2026. Let me turn it back over to Lucian for some final remarks before we open the line for questions. Lucian.

Lucian Boldea: I think if you look at the actions we have already communicated, whether that's around auto OEM or whether that's around the divestiture of the Belts business, that's now the majority of that single-digit %. From a divestiture standpoint, I think we're, we've tackled the majority of what needs to be tackled. From an acquisition standpoint, what we've also said is in the short term, until we have our strategy fully defined and laid out, we'll be a little more middle of the fairway, a little more opportunistic in terms of what's what's available. I think Bijur Delimon was a great example that sometime mid to late Q4, it became it became actionable. I can tell you, I couldn't be more grateful to the team.

Lucian Boldea: Thanks, Mike. We enter 2026 with momentum, and this quarter reinforces our confidence in the path ahead. Our portfolio is becoming sharper. Our 80/20 initiatives are accelerating, and we're executing with urgency to position Timken for stronger growth and higher margins in 2026. I look forward to sharing more details with you soon at our Investor Day on 20 May in New York City.

Mike Discenza: Thanks, Lucian. This concludes our formal remarks, and we'll now open up the line for questions. Operator?

no moves where those portfolios don't naturally. Belong to us. We're not the natural or let's take those actions and we, uh, committed about a quarter ago that we would take action on up to a single digit percent of the portfolio. So this is not the not a big portion of the of the company but a single digit percentage and I think if you look at the actions, we have already communicated whether that's around the auto OEM or whether that's around the the vesture of the belt business. That's now the majority of that single digit percent. So from a the vest that your standpoint I think we're we've we've tackled the majority of what needs to be tackled. Uh, and then from an acquisition standpoint, what we've also said is in the short term until we have our strategy fully defined and laid out, we will be a little more uh middle of the Fairway, a little more opportunistic uh in terms of what uh uh what's available at.

Operator: Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please back up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steve Volkmann with Jefferies. Your line is open. Please go ahead.

Lucian Boldea: I think from the time we started talking about it to the time we were done, was somewhere around the 90-day time range. I think a level of speed was demonstrated that that's to be commended, and we ended up with a really good acquisition that fits naturally in our portfolio very nicely. I can tell you it's only been a couple of months, and it's hard to find who are the Bijur people and who are the Timken people. It's because they're in the same industry, they have complementary market coverage, they have complementary product lines, complementary regional coverage. It's a win-win. They're helping each other be successful. We want more of those.

Steve Volkmann: Great. Good morning, everybody. Thank you for taking the question. I'm gonna dive in on the changed guidance, Mike, your slide 17, I guess. I'm curious about the tariffs, the $0.15 benefit. I assume that's mostly IEPA and India. Is there any scenario where you get, you know, rebates on what you've paid, and how are you thinking about that? Then is there also some potential for additional tariffs as we go through these 301 kind of studies through the summer? Thanks.

Lucian Boldea: To the extent that those that we have on our list, and as they become available, we're prepared to act quickly. Opportunistic ones, I think you're gonna see us act very quickly. More transformational in nature, obviously, those will be a little post communicating our strategy and really outlining what the growth verticals are and what positions we're trying to build. We'll also highlight at Investor Day a bit of a time horizon approach of what do we try to do in terms of transformation by time horizon. That will provide a little more clarity to the question. But in terms of opportunistic M&A, I think you can look at Bijur as a nice example of what we would like to do more of that builds out these platforms.

Be sure. The lemon was a great example that uh, uh, sometime mid to late Q4 it became uh, it became actionable. And I can tell you, I couldn't be more grateful to the team. I think, from the time, we started talking about it, the time we were done, uh, was somewhere around 90-day time range. So, uh, I think a level of speed was demonstrated that, uh, that's to be commended. And we ended up with a really good, uh, acquisition that fits naturally in our portfolio, very nicely. Uh, I can tell you, it's only been a couple of months and it's hard to find who are the visual people and who are the team can people? It's because they're in the same industry. They have complimentary Market coverage. They have complimentary product lines complimentary regional coverage. So they're, it's a win-win. They're, they're helping each other be successful. So, that's a, we want more of those. So, to the extent that those, that we have on our, and we have our list, and as they become available, we're prepared to act quickly. So open

Mike Discenza: Great. Well, good morning, Steve. Thank you for the questions. You, you sized it up right on the India part. We previously had talked about that, the change in IEPA, and because India represents a large part of our imports into the US, that was one of the bigger impacts, then the small net impact from the Section 232 change. Those are the big drivers on tariffs. As it relates to IEPA, you know, the process is unfolding. We're following the process, if and when we have something to communicate on that, we'll relay that later, but nothing is assumed in our guidance for anything related to IEPA refunds. As far as additional tariffs, yeah, it's a fluid situation.

Opportunistic ones. I think you're going to see what US act very quickly. Uh, more transformational in nature. Obviously, those will be a little post uh, communicating our strategy, really outlining what the growth verticals are and what positions? We're trying to build will also highlight an investor day. A bit of a Time Horizon approach of what do we try to do in terms of transformation by time Horizon and so that will provide you a little more clarity to the question but uh, but in terms of opportunistic m&a, I think you can look at

Lucian Boldea: You know, our lubrication platforms, we've not talked a lot about it, but it's now $400 plus million, and it's got a nice runway to get to $500 million. Our Linear Motion platform is comparable in size. You can start thinking about building these half billion dollar platforms across the enterprise that start to be very interesting and start to be market leading positions. That's, that's the kind of M&A playbook that we're looking at least in the short to medium term.

In the short to medium term.

Mike Discenza: Related to 232, we think we've sized it up as best as possible, so I don't anticipate anything further. Of course, as the administration announces further changes, that could impact us and again, we'd communicate that if and when that was appropriate.

Kyle Menges: That's helpful. Would be great to get a little bit more color on the Belts divestiture, maybe just how it came together. Anything you are willing to share on the financial profile of that business as well. After this gets sold, does that also reduce the tariff impact for Timken?

Steve Volkmann: Okay. Fair enough. You also talk about the $0.10 sort of cost inflation, and I don't wanna put words in your mouth, but that sounded more like a placeholder rather than you see more costs. Is that like cushion or do you actually see that kind of cost inflation?

That's helpful. And then, what would be great to get a little bit more color on the belts? Divest assure, maybe just how it came together or anything you're willing to share on the financial profile that business as well. And then, um, after this gets sold, does that also reduce the Tariff impact for tenken?

Lucian Boldea: Yeah. Belts was really one of those it's very consistent with our near-term strategic priorities, very consistent with eighty/twenty, and even more importantly, it's the best example I can come up with of a business ending up with a natural owner. I'm actually happy for our Timken team members that are in the Belts business being a part of Gates. I think they'll be able to continue to be successful in the business, and Gates will do a nice job with the business. It's really a win-win from that standpoint. For us, we'll quantify it more exactly at Investor Day, but what I will tell you is it will structurally increase the profitability two ways.

Lucian Boldea: One is it does mix us up, it also allows us to redeploy resources to faster-growing areas in the portfolio. That simplification further increases it. It will structurally increase the adjusted EBITDA margins of Industrial Motion's business. Again, we'll quantify that for you exactly at Investor Day, there is a structural step-up in IM.

Yeah. So, um, it belt was really 1 of those. It's very consistent with our near-term, strategic priorities. Very consistent with 8020, and even more importantly, it's the best example. I can come up with of a business ending up with the natural owner. So I'm actually happy for our uh Timken team members that are in the belt business. Being a part of gates. I think they'll be uh, they'll be able to continue to to be successful in the business. And Gates will do a, a nice job with the business. So that it it's really a a win-win from that standpoint for us, we'll quantify it more exactly at investor day. But what I would tell you is it will structurally increase the profitability to weighs 1. Is it does Mix us up but then it also allows us to redeploy resources to faster growing areas in the portfolio. So that's simplification further, uh, increases it, uh, it will structure increase the adjusted e with the margins of industrial motions business again, we'll, we'll quantify that.

For you exactly at investor day. But, uh, but there is a structural Step Up in IM

Kyle Menges: Very helpful. Thank you.

Lucian Boldea: Sure.

very helpful. Thank you.

Neil Frohnapple: Thanks, Kyle.

Operator 2: Your next question comes from the line of Steve Barger with KeyBanc Capital Markets. Your line is open. Please go ahead.

Sure. Thanks.

Steve Barger: Thanks. First one for Mike, just going back to the cadence for the quarters and the sequential decline in Q2 EPS, will Q2 still be the high point for the next three quarters, or will Q2 and Q3 be relatively even before the normal kind of seasonal step down in Q4?

Your next question comes from the line of Steve Barger with keybanc capital markets. Your line is open. Please go ahead.

Steve Volkmann: Great. That's helpful. Thanks. I'll pass it on.

Mike Discenza: Thanks, Steve.

Thanks uh first 1 for Mike, just going back to the Cadence for the quarters and the sequential decline in 2 Cube EPS will 2 Q. Still be the high point for the next 3 quarters or will 2 q and 3 Q. Be relatively, even before the normal kind of seasonal step down and 4 Cube,

Operator: Your next question comes from the line of David Raso with Evercore. Your line is open. Please go ahead.

Michael Discenza: Morning, Steve. Thanks for the question. Yeah, we would expect a normal seasonal step down from Q2 to Q3 and then Q3 to Q4. We do have some seasonality built in, typical seasonality. I guess this would be the high point relative to your question. You asked if that was the high point since EPS is coming down, then Q1 would be the high point, Q2 would be a little bit lower, and then normal seasonal step down.

David Raso: Hi. Thank you for the time. I was just curious, with the rest of the year guide implying somewhat notably slower organic, right? About 2.5% after the 4.3% in Q1. Given a lot of the positives commentary around the end market, can you maybe help us a little bit, how much business do you think got pulled from Q2 to Q1? Should we look at the organic guide, maybe some level of conservatism? I just wanted to also ask, just given the meeting coming up in two weeks, anything you wanted to put out there as what we should expect at the meeting? Especially given I thought it was interesting, the80/20 rollout now being a little broader in the recent M&A in the last week or so.

Uh, good morning, Steve. Thanks for the question. Uh, yeah. We would expect, um,

A normal seasonal step down from, uh, 2q to 3Q and then 3 Q to 4 q. So we do have, um, some seasonality built in, um,

Steve Barger: Got it. Thanks. Then for Lucian, it's kind of a two-speed industrial world with aerospace and defense, data center, grid infrastructure, all showing great demand, and there's just a more restrained general industrial. Are there any real standout opportunities you see where Timken currently doesn't participate? Can you specifically talk about humanoids just giving increasing news flow and investor interest there?

Uh, typical seasonality. So, um, so I, I guess, uh, this would be the high point relative to your question. You after that was the high point since uh, EPS is coming down. Then first quarter would be the high point. Second quarter would be a little bit lower and then normal seasonal step down

David Raso: Just curious if things have, you know, changed a little bit how you're thinking about timing of actions and so forth since, when you first joined, The Timken Company. Thank you.

Got it, thanks. And then, uh, for Lucian, it's kind of a two-speed industrial world, with aerospace and defense, data center, and grid infrastructure all showing great demand. And there's just a more restrained general industrial. Are there any real standout opportunities you see where Timken currently doesn't participate? And can you specifically talk about humanoids, just given the increasing news flow and investor interest there?

Lucian Boldea: Yeah. Look, I think we do participate in some of the verticals that you mentioned, but we have upside in participating in those. I've been bullish about power generation utilities from the day I got here, and I continue to be bullish about that. We have a better footprint, frankly, in it than we've talked about. That's one that's quite exciting. Obviously, what all the verticals that you mentioned have in common is they do drive the need for infrastructure. As you drive the need for infrastructure, then heavy equipment, off-highway, all that gets pulled through. The new one that of course, gets a lot of press these days is humanoids.

Mike Discenza: Yeah. Let me take the first part of that at least on these slower organics. A couple things. Hard to say exactly how much was pulled from Q2 to Q1, but, you know, we think that from an EPS standpoint, you know, or from a top line standpoint, maybe 1% top line. You think normally, seasonally, we would, you know, step up from Q1 to Q2 2%. We're now seeing that more flat, so we think that was about 1% pulled forward. As it relates to the rest of the year, you know, there's still a lot of uncertainty. Certainly, the Iran conflict creates further uncertainty.

Mike Discenza: We don't have a lot of sales in the Middle East, so it's not necessarily a direct impact. The impact around the world on the macro economies could certainly be, could pull down that organic growth. You know, we are still expecting growth year-over-year for the rest of the year. You know, just being maybe a little bit, you know, trying to take into account a little bit that Iran conflict impact. Lucian, anything to add?

Lucian Boldea: What I wanna start with is, okay, what problem are humanoids solving? The problem they're solving is the skill gap that we have today, both in quantity and quality, in terms of labor because of demographics, because of how people wanna live and work. Automation in general fills that need, and humanoids is a subset. I think if you look at just industrial automation alone, the portfolio that we've built through the acquisitions is remarkable. If you look at our CAGR internally, you know, we've grown double digit in that market since 2018, this is not one that we decided last quarter to start focusing on. We did decide to double down on it, that's accelerating that growth rate.

Yes. So okay. I think we do participate in some of the verticals that you mentioned, but we have upside in participating in those. I've been, I've been bullish about the power generation utilities from the day, I got here and I continue to be to be bullish about that. We have a better footprint frankly in it than we've talked about. And so, uh, so that's 1 that's quite exciting. And then obviously, uh, what all the verticals that you mentioned have in common is they do Drive, the need for infrastructure. And so as you drive the need for infrastructure, then, uh, heavy equipment off Highway. All that gets gets pulled through the, the new, the new 1 that, uh, that of course gets a lot of press these days is humanoids but uh, but what I want to start with is okay, what are what problem are humanoid solving and the problem they're solving is the skill Gap that we have today both in quantity and quality

In terms of labor, because of demographics, because of how people want to live and work, and so automation.

Lucian Boldea: Yeah, no. If you look at normal seasonality as you head from Q1 to Q2, you know, you would normally expect a couple of % step up. I think in this case, as Mike said, we've pulled maybe 1% out of Q2 into Q1. Then something more flattish is probably more consistent with historic seasonality by the time you account for that for that pull forward. That's the extent to which we can see. As Mike said, the good news is we don't yet see demand destruction from the conflict. We see inflationary pressure, but we don't see demand destruction. Pipeline still remains robust. Order book still remains very robust. The order book was up year-over-year, also grew sequentially, which is very encouraging.

Lucian Boldea: How we participate, you know, think about our Cone Drive and our Spinea business that offer harmonic solutions. They offer cycloidal drives. Our Rollon acquisition offering linear actuators that really create that seventh axis for industrial robots. Medical robots servicing through our CGI precision gearing, our Timken bearings or our Cone Drive harmonic solutions. Autonomous guided vehicles, also Cone Drive and Rollon, and then humanoids and exoskeletons. This is one where Cone Drive Timken bearings are also already present. That's just from what we have today. And then obviously, humanoids offers an additional vector. Again, I know, wait for Investor Day seems to be a very common answer.

That really create that seventh axis for industrial robots, medical robots, servicing through our CGI Precision gearing, our team can bearings or cone Drive harmonic Solutions, autonomous guided vehicles, uh, also cone drive and roll on and then humanoids and exoskeletons, this is 1 where Khan Drive thinking bearings are also already present. So so that's just

Lucian Boldea: I'll give you a little teaser that we'll have our newly appointed chief technology officer talk to you about that in a little more detail and how we see the opportunity and how we plan to go after it. This is certainly a vector that we are nicely positioned as a company to be able to benefit from.

Lucian Boldea: As you alluded to it, we'll talk about 80/20, so we'll provide way more detail on the actions we've already taken, try to quantify those on the portfolio for you, and then also provide a bit of a roadmap on where we're headed. Obviously the financial targets on what all this sums up. We'll give you a multi-year projection as well. Certainly very excited to share all that with you. I think the story is coming together very nicely, and the team is very excited to be in front of you on 20 May.

Steve Barger: That's really good color. Thanks. Just one quick follow-up. Are you seeing the secondary infrastructure play come through in off-highway specifically, or is that more just cyclical recovery there?

From what we have today. And then obviously humanoids offers an additional Vector again. I, I know, uh, wait for investor, they seem to be a very common, uh, common answer. But, uh, uh, I'll give you. I'll give you a little teaser that, uh, will have our newly appointed Chief technology officer talk to you about the about that, and a little more detail and how we see the opportunity and how we plan to how we plan to go after it. But this is, this is certainly a vector that we are nicely positioned as a company uh, to be able to benefit from

That's a really good caller. Thanks, just 1, quick, follow-up. Are you seeing the secondary infrastructure play come through and off Highway specifically? Or is that more just cyclical recovery there?

Lucian Boldea: Yeah, I don't, I don't know that I'm smart enough to fully separate that. I think if you look at it regionally, there's certainly an uptick, and I think the net, the net growth is certainly driven by those, by those macro trends. You know, if you look at the amount of construction that's required for data centers, the amount of infrastructure that's required to do that, the amount of infrastructure for utilities, that all requires a lot of heavy equipment. If you look at the performance of some of our customers, they certainly highlight that being as a big, as a big driver. What I, what I would tell you is from our chair where we sit, we see order book beefing up. We see the pipeline getting stronger from those customers.

David Raso: I appreciate that. Thank you.

Lucian Boldea: Thank you.

Operator: Your next question comes from the line of Rob Wertheimer with Melius Research. Your line is open. Please go ahead.

Rob Wertheimer: Yes. Hi, and good morning. You had a few things go right to help raise the full year outlook, and I wonder if you could attribute that to end market strength or some of the 80/20 and other initiatives already paying off, as the first question.

Lucian Boldea: Obviously, it's a combination of recovery and some of those macro trends.

Michael Discenza: Maybe if I could just add some color, 'cause in addition to the infrastructure that Lucian highlighted, we are seeing some green shoots in ag. Part of that off-highway, the ag business, which we've talked about as being down, we're starting to see some green shoots there. That's also in that. Not just the infrastructure piece, but ag as well.

Yeah, I don't, I don't know that I'm, uh, smart enough to fully separate that. Um, I think if you look at it regionally, there's certainly certainly an uptick. And I think the, the net growth is certainly driven by those, uh, uh, by those macro Trends. You know, if you look at the amount of construction that's required for data centers, the amount of infrastructure that's required to do that the amount of infrastructure for utilities, that all requires a lot of heavy equipment. And if you look at the performance of some of our customers, they certainly highlight that being as a big, as a big driver. But what I, what I would tell you is from our chair where we sit, we see order books beefing up. We see the pipeline getting stronger from those customers and obviously uh, it's a combination of recovery and some of those macro Trends and maybe if I could just add some color because in addition to the infrastructure that Lucian highlighted, we are seeing some green shoots and eggs. So part of that off Highway, uh, the egg business, which we've talked about is being down. Uh, we're starting to see some green shoots there, so uh, so that's all.

Steve Barger: Really great. Thanks.

In that. So, um, not just the infrastructure piece. Uh, but but egg as well.

Really great. Thanks.

Operator 2: Your next question comes from the line of Tomohiko Sano with J.P. Morgan. Your line is open. Please go ahead.

Tomohiko Sano: Hi. Good morning, everyone.

Your next question comes from the line of Tom osano with JP Morgan. Your line is open, please go ahead.

Michael Discenza: Morning, Tomo.

Hi, good morning, everyone.

Lucian Boldea: Morning.

Tomohiko Sano: Thank you for taking my question. Slide 16 shows improved outlooks across nearly all end markets. Your full year organic growth guidance was raised to 3%. In Q1, most of the organic growth appear to be price driven rather than volumes. Given the broader base end market improvement and then PMI about 50, should we expect a greater contribution from volume in the coming quarters, or will organic growth remain primary price led? Thank you.

Thank you for taking my question. So slide 16 shows. Uh improved outlooks across nearly all and markets uh but your full year organic growth. Guided guidance was um uh raised to a 3%. So in q1, most of the organic growth appear to be price driven rather than volumes. So given the broader based and Market Improvement and the PMI about 50. Should we expect a greater contribution from volume and the coming quarters or will organic growth. Remain primary uh price left. Thank you.

Lucian Boldea: Yeah. Look, you've got two factors going on. One is, of course, the year-over-year pricing comparison. You know, we picked up price during the year last year, so that year-over-year comparison is going to dampen. You're going to get less contributions for that. You're also going to get less contribution from effects. The proportion of the of the growth in the revenue overall that comes from volume is going to be, is going to be a little bit higher for the reasons that you just mentioned. That's true for organic growth as well.

Lucian Boldea: The impact of 80/20, I would say right now is less so on a quantitative kind of simplification, but it is on a mindset. We have very early on in the process adopted the mindset of let's double down in the markets and industries where we're winning and invest less where we're not. That's already paying off. We have reorganized our commercial teams. We've verticalized them to where we're more in a one team can face to the industry. We've built regional teams that each region has the autonomy to operate and make decisions locally under a global framework. Those things are already showing. If you look at our regional results, you know, we're in some regions defying gravity a little bit compared to our competitors.

Yeah. Look You've Got 2 factors going on. So 1 is of course the year-over-year pricing comparison uh you know we picked up right during the year last year so that year-over-year comparison is going to dampen so you're going to get less contributions for that. You're also going to get less contribution from FX. And so the proportion of the uh of the growth in the revenue overall uh that comes from volume is going to be is going to be a little bit higher for the reasons that you just mentioned and that's true for organic growth as well.

Tomohiko Sano: Thank you, Lucian. Just follow up on, like, ongoing eighty/twenty initiatives and portfolio rationalization. Is there any intentional short terms restraint on the volume growth as you focus on higher margin products and customers? Could you talk about that for eighty/twenty for the volume growth, please?

Lucian Boldea: Yeah. Thank you for the question 'cause it's a great question. It's one we get internally as well. I can tell you the intent of eighty/twenty is to grow. The intent is not to prune and shrink to perfection. The good news, we will share the more specific data with you during Investor Day, is if you look at our mix, very little pruning of revenue is required to dramatically affect complexity. What that means is really, the price of simplicity is a lot lower than you would expect in our portfolio from where we sit. That's very exciting.

Thank you Lucian and just follow up on like ongoing 8020 initiatives and portfolio. Rationalization is there any intentional short-terms restrain on the volume growth as you focus on a higher margin products and customers? Um, could you talk about that? Um, uh, for 8020 for the volume growth please.

Lucian Boldea: We had a nice run here in Europe, for example, continuing our good run in places like India and the US. Some of that is self-help and us being a little more focused.

Rob Wertheimer: Fantastic. Thank you.

Lucian Boldea: Sure. Thanks, Rob.

Operator: Your next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open. Please go ahead.

Yeah uh and and thank you for the question because it's a it's a great question, it's 1. We get internally as well and I can tell you the the intent of 8020 is to grow. The intent is not to prune and Shrink to Perfection the good news and we will share the more specific data with you during investor day. Is if you look at our mix

uh, very little pruning of

Lucian Boldea: I can tell you that already with the 300 people that we have trained and with the focus that we have, there is way more energy, passion, and focus on the Eighties than there is on the Twenties. What I mean by that is we'll take care of the simplification, we'll take care of dealing with the tail products or what we need to do with certain customers. In the end, what it comes down to is what happens when you double down, when you focus, a very high percentage of our revenue is concentrated with a very small number of customers. How do you serve those customers differently?

With the focus that we have.

Lucian Boldea: Sometimes timing in life is everything, and we're doing eighty/twenty at the perfect time because when order books are up, when customers are motivated to find product, even frankly, when we have a little bit of geopolitical uncertainty and supply chain uncertainty, customers are receptive to really being treated differentially by their suppliers and committing more of their volume to us as we commit a better service to them. This is the perfect time to have those discussions with our large customers. No, I do not expect to see volume declines that are related to eighty/twenty, but I do expect to see dramatic simplification and possibly volume increases.

Lucian Boldea: I think, if you look at the order book both year-over-year, it was up significantly year-over-year, and really the leaders are off highway, aerospace, rail, and wind. Those are the four verticals that are mostly contributing to that. I think the significant momentum in the Americas, Europe doing pretty well. I'm sorry, India doing quite well. China's still a little bit soft. We're very encouraged by the fact that the order book was still up sequentially versus Q4. You know, the challenge to translate order book math into precise quarterly revenue math, obviously in the long run it works out, but you have shorter cycle businesses, longer cycles, that's where it doesn't quite translate one to one.

There's way more energy passion and focus on the 80s than there is on the 20s. And what I mean by that is, we'll take care of the simplification. We'll take care of dealing with the tail products, or, uh, or what we need to do with, uh, in, with certain customers. But, uh, in the end, the, what it comes down to is what happens when you double down, when you focus a very high percentage, of our revenue is concentrated with a very small number of customers. So how do you serve those customers differently and, uh, sometimes timing in life is everything and we're doing 8020 at the perfect time because when order books are up, when customers are motivated to find product, even frankly, when we have a little bit of geopolitical uncertainty and supply chain uncertainty,

Customers are receptive to really being treated differentially by their suppliers and committing more of their volume to us as we commit a better service to them. So so this is the perfect time to have those discussions with our large customers. So no, I do not expect to see volume declines uh that are related to 80/20 but I do expect to see.

Lucian Boldea: The reason volume increases is when you simplify your product slate in a factory, we spend so much time on changeovers in our factories, making a short run of product for a customer that maybe doesn't order as often, and we could run so much more efficiently for some of these larger customers that have a more consistent demand. You know, there's a fine line obviously not going all the way to high volume, low complexity. That's what we're trying to get away from. But, even with our existing mix of customers, just getting a little more of that share of wallet is gonna make a big difference. The whole motivation of eighty/twenty is growth, it's not shrinking.

Lucian Boldea: We've been cautious to really not hang our hat on this too early because I think part of it is the market is still somewhat, you know, not taking into account the Middle East disruption maybe sufficiently, because the order books are certainly not reflecting that and the demand is not reflecting it. We see the inflationary pressure, as I mentioned earlier, but we don't see it having any impact on the demand. That history would say that there might be some impact at some point, but at this point we're not seeing that. That also gives us a little bit of reason for caution. As for April, you know, April is off to a good start, I would say.

Tomohiko Sano: This is very helpful. Thank you, Lucian.

Dramatic simplification and possibly volume increases. And the reason volume increases is when you simplify your products. Late in a factory, we spend so much time on changeovers in our factories, uh, making a short run of product for a customer that maybe doesn't order as often and we could run so much more efficiently for some of these larger customers that have a more consistent demand. And so, you know, there's a fine line, obviously not going all the way to, uh, high volume low complexity. That's what we were trying to get away from. Uh, but uh, even with our existing mix of customers, just getting a little more of that, uh, share of wallet is going to make, uh, is going to make a big difference. So the whole motivation of 8020 is gross. It's not, uh, shrinking.

Lucian Boldea: Thank you, Thomas.

This is very helpful. Thank you, listen.

Thank you, Thomas.

Operator 2: Your next question comes from the line of Tim Thein with Raymond James. Your line is open. Please go ahead.

Tim Thein: Thank you. Good morning. I just wanted we've touched on price a couple of times, but I just wanted to make sure I got the right kinda takeaway here. The question just relates to price versus variable costs as we go through the year. Just how you're thinking about that. I ask in that there's, you know, historically there have been times when markets inflect that, you know, tends to be in more inflationary environments, which is good. There's some contractual constraints that have limited that, kind of the timing and your ability to push price. I don't know if that's an analogous period of where we are now, but just kind of curious how you expect those two to behave.

Your next question comes from the line of Tim Fame with Raymond James. Your line is open. Please go ahead.

Thank you. Good morning. I, I just wanted we touched on on price a couple times, but I just wanted to make sure I I, uh,

Lucian Boldea: If you compare to where we thought we would be, we're about where we thought we would be. The part to keep in mind is whatever dynamic drove March being a little stronger because April got pulled into March because customers realized they're in an inflationary environment, they're in an environment of supply chain uncertainty, so more product sooner in hand is better. That same dynamic persists in April. I don't think this would have been the typical that if you had accelerated orders from April to March, that you would see a slow first week in April because conflict is still there, the uncertainty is still there. There's still a bit of pulling on the on that on that demand. Again, it was modest. It was about 1%, so it's not a, not a big number.

I I got the the the right uh kind of takeaway here and and the the question just relates to price versus variable costs as we as we go through the year. Um, just now you're thinking about that um and I I asked in that there's you know, and historically there have been times when when markets inflect that you know tends to be in more inflation

Tim Thein: Price versus variable cost, for the balance of the year.

Lucian Boldea: Yes, Tim, I appreciate the question. Look, it is, as I said earlier, this is a well-exercised muscle in terms of getting prices up. At the same time, the situation we're in today is slightly different from where we've been before. When we started from no tariff to tariffs, basically there was only one move on price, and that was up for everybody everywhere. Whereas now, you have multiple dimensions that smooth out the curve a little bit. You've got in some cases, tariffs going away, where you might still have some prices that are a little more sticky. You have other cases where inflation is coming in, where you have to price up.

Ary environment, which is good. Um but but there's some contractual constraints that have limited that um kind of the timing in your ability to to push price. So I I don't know if that's an analogous period where we are now, but just kind of curious how that how you expect those 2 to behave again price versus variable cost, um for the balance of the year?

Lucian Boldea: That's April is consistent with what we expected April to be so far, both in terms of revenue and just in terms of continued strength on building order book.

Lucian Boldea: You have both areas under the curve on the way up or on the way down that are offsetting each other. A little bit of margin expansion in some cases, and some you might have a little short-term margin compression as you get the prices up. That's why and plus it's a pretty modest number when you look in comparison to what we've dealt with before. You know, we put $10 million as a placeholder, but we're not at least as of today, looking at that full amount. A little smaller amount, more dynamics in both directions, which will allow us to do a little better job than we were able to do when it was just a one-time big hit of tens of millions of dollars.

Yes. Dims I appreciate the question and and look what it it is. As I said earlier, this is the well exercise, muscle and terms of uh, getting prices up. At the same time, the situation we're in today is slightly different from, uh, where we've been before. So, when we started from no tariff to tariffs, uh, basically there was only 1 move on price and that was up for everybody everywhere. Uh, whereas now you have multiple Dimensions that move out the curve a little bit. So you've got in some cases tariffs going away, where you might still have some prices that are a little more sticky. Uh, and then you have other cases where inflation is coming in where you have to price up. So so you have both, uh, areas under the curve, on the way up, or on the way down that, uh, that are offsetting, uh, uh, their offsetting each other. So, a little bit of margin expansion in some cases and some you might have a little short-term margin compression as you get the prices up. So that's why. And plus it's a pretty much

Tim Thein: Okay. All right. Understood. Thank you. Then maybe just close just on Industrial Motion and the growth outlook there. That's, you know, historically, I think of that as being a lot, you know, a lot more European exposed, which is where one could potentially be maybe a little bit more concerned or cautious just given the current conflict and how the, you know, that second derivative of higher oil prices, et cetera, impacts the outlook. Maybe if you spend just a second there. I know it's not all Europe, but, I don't know, just maybe what kind of helps to underpin that outlook for Industrial Motion. Thank you.

Modest number, when you look in comparison to what we've dealt with before, uh, you know, we we put 10 million dollars as a placeholder but we're not at least as of today, looking at that uh at that full amount. And so so a little smaller amount more than mics in both directions which which will allow us to do a little better job than than we were able to do when it was just a 1 time, big hit of tens of millions of dollars.

Lucian Boldea: Yeah. No, I appreciate it. Industrial Motion, I think if you look at the segments of Industrial Motion, the Linear Motion and the automated lubrication systems are certainly majority European businesses, and together they are, you know, call it half of Industrial Motion. You've got Cone Drive, you've got Philadelphia Gear, you've got CGI Inc. that are primarily US businesses. By the time you average it all out, it's not as heavy European as you might think. Obviously, the Philadelphia Gear business is heavily exposed to defense, to marine, and that business is growing strongly as well. More importantly, I think, you know, Linear Motion, if you look even in Q1, we were up substantially, and the growth was driven by the Americas.

Higher oil prices and etc. impact the outlook. So maybe if you could spend just a second there—I know it's not all Europe—but, um, I don't know, just maybe, what kind of helps to underpin that outlook for industrial motion? Thank you.

Angel Castillo: Thank you.

Lucian Boldea: Thanks, Ian.

Operator: Your next question comes from the line of Kyle Menges with Citigroup. Your line is open. Please go ahead.

Lucian Boldea: Although the business is a majority European business, automation projects in the US is what drove it. For our lubrication business, which also historically was a European business, one of the big value propositions of Bijur Delimon was their heavy Asia, a lot of India footprint in rail, in places where we didn't have as strong a footprint with our automated lubrication system. That provides a growth vector as well. Being up in off highway, being up in general industrial helps lubrication. I think ag picking up helps Industrial Motion, whether that's chain, whether that's other places. Coupling, clutches, seals for off highway and industrial distribution also helps on the Industrial Motion side.

Yeah no I I appreciate it. So industrial motion. I think if you look at the segments of industrial motion. So the linear business and the lubrication business are certainly majority European businesses and together. They're you know, call it half of industrial motion, but then you've got cone, you've got Philadelphia gear, you've got CGI that are primarily us businesses. And so, so by the time you average it all out, it's not uh not as heavy European as uh, as you might think. And then obviously the, uh, Philadelphia gear businesses heavily exposed to defense to uh, marine and that businesses uh, is growing strongly as well. More importantly, I think, you know, linear motion. If you look even in q1, we were up substantially and the growth was driven by the America. So although the business is a majority European business automation projects in the US is is what drove it and then for our lubrication business,

Lucian Boldea: Thank you for the question. Gates, I would say it's still work in progress. I think there's different phases to portfolio transformation. The first thing we said is, okay, let's look with an 80/20 lens and say, what is the portion of the portfolio where you have some no-regret moves where those portfolios don't naturally belong to us, we're not the natural owner, let's take those actions. We committed about a quarter ago that we would take action on up to a single-digit percent of the portfolio. This is not a big portion of the company, but a single-digit %.

Lucian Boldea: Those businesses, again, the coupling, clutches, and seals, that's also more of a US business with the PT Tech and other elements of the business. We feel good about the position that Industrial Motion is in, and more importantly, we feel good about how Industrial Motion and ED are coming together. That's one of the things we'll spend a lot of time on at Investor Day to explain how the, that combined sales motion really creates a unique value proposition for customers.

Which also historically was a European business. 1 of The Big Value propositions of visual deliman, was their heavy Asia. A lot of India footprint, footprint in rail in places where we didn't have a strong footprint with our automated lubrication system. So, so that provides, uh, a growth Vector, as well. And then being up in off-highway being up in general. Industrial helps, uh, helps lubrication. I think, uh, a picking up helps, uh, industrial motion, whether that's changed, whether that's other, uh, other places coupling clutches seals for off-highway and Industrial distribution. Also helps on, uh, on the industrial motion side and those businesses. Again, the coupling clutches and seals that also more of a US business with the PT Tech and other, uh, other elements of the business. So we feel good about the position that industrial motion is in. And more importantly, we feel good about how industrial motion and EB are coming together and that's 1 of the things.

We'll spend a lot of time on an investor day to explain how that combined sales motion really creates a unique value proposition for customers.

Tim Thein: All right. Sounds good. Thank you, Lucian.

Lucian Boldea: Sure.

All right. Sounds good. Thank you, Lucian.

Operator 2: Your next question comes from the line of Michael Shlisky with D.A. Davidson. Your line is open. Please go ahead.

Michael Shlisky: Hello. Thanks for taking my questions. Wanted to ask about your comments on ag and some of the green shoots you are seeing there. I guess I want to listen just a couple more details there. I guess is it replacement demand and parts versus OEM? Also, are you getting any commentary from the OEMs? Is some of your upside here looking to increase production in Q4 of this year in advance of their making 2027 models or their better outlook for 2027?

Your next question comes from the line of Mike Schlitzie with D.A. Davidson. Your line is open. Please go ahead.

Uh, hello. Thanks for taking my questions.

Um wanted to ask about your comments on a and some of the green shoots you're seeing there. I guess I want to list just a couple more um couple more details there. I guess is it replacement demand and parts versus OEM and also are you getting any commentary from the oems to

Is some of your upside here looking to increase production in the fourth quarter of this year, in advance of—they're making 2027 models—or their better outlook for, uh, 2027?

Michael Discenza: Hey, Mike. Mike here. Thanks for the question. Answering the last part first, we can't really comment on that, you know, in terms of how Q4 is shaping up. We don't give that specific guidance. Certainly, as it gets closer to 2027, we'll be able to give you some outlook on what that is. As it relates specifically to ag, you know, we're seeing increasing order books. It's hard to know if it's restocking, I think is what you're getting to. Is it OEM driven? You know, again, I would say it's just general green shoots in that space that we're seeing. I would assume it's a little bit of both.

Yeah, uh, hey, Mike, Mike here. Uh, thanks for the question. Answering the last part first—yeah, we don't, uh, can't really comment on that. Um,

Uh, you know, in terms of how fourth quarter is shaping up, we don't give that specific guidance and certainly, um,

Michael Discenza: It's just, it's just now turning from what has been a pretty long down cycle there. You know, we'll see what that, what that turns into. Right now, just beginnings of green shoots for us there.

Uh, as it gets closer to 27, we'll be able to give you some some, uh, outlook on what that, uh, what that is, as it relates specifically, to egg. Um, you know, we're we're seeing, uh, increasing order books. It's it's hard to know if it's, uh, if it's restocking, I think is what you're getting to if it's um, is it OEM driven? Um, you know, again I I would say it's just general green shoots in that space that we're seeing. Uh, so I would assume it's, it's a little bit of both. Um,

Lucian Boldea: Our lubrication platforms, we've not talked a lot about it, but it's now $400+ million, and it's got a nice runway to get to $500 million. Our Linear Motion platform is comparable in size. You can start thinking about building these half billion dollar platforms across the enterprise that start to be very interesting and start to be market leading positions. That's, that's the kind of M&A playbook that we're looking at least in the short to medium term.

Lucian Boldea: Yeah. Look, the year-over-year math looks compelling, if you take a long enough time horizon, you realize that it's part of it is the comp. It's just off of a very low base. That's why it's hard to draw too many long-term conclusions based on that. It's certainly no longer a year-over-year headwind. It's now a more of a tailwind.

Michael Shlisky: Sure. I can appreciate that. Just secondly, just a quick housekeeping question, really. What you sold to Gates, the belts business hasn't technically closed yet. Is that still part of the guidance? I guess it's currently a headwind to EBITDA margins, once that is officially closed, might you increase your margin outlook again?

But it's just, it's just now turning from what has been a pretty long down cycle there. So um you know so we'll we'll see what that uh, what that turns into. But right now just just beginning of green shoots for us there. Yeah. And the year-over-year math looks compelling, but then if you take a long enough time Horizon, you realize that it's, it's part of it is the comp it's just off of a very low base. Uh, and so that's why it's, it's hard to hard to draw too many long-term, uh, conclusions based on that. But it's certainly certainly no longer a year-over-year headwind. That's now a more of a Tailwind

Sure, I can appreciate that. And just secondly, just a quick housekeeping question, really. Uh, when you sold the Gates, the belts business,

Headwind to even down margins. But once that is officially closed by you increase your marginality again.

Michael Discenza: Yeah. That's correct. It is. Until the transaction closes, it will be part of our guidance, so it is included in our guidance today. As we said, we expect that to be a structural improvement to Industrial Motion margin. Post-closing then, yes, we'd expect that to be an improvement to Industrial Motion margins. Again, back to Investor Day, you know, we'll lay this out more clearly for you at Investor Day, you can see that exact margin impact.

Lucian Boldea: Yeah. Belts was really one of those it's very consistent with our near-term strategic priorities, very consistent with 80/20, and even more importantly, it's the best example I can come up with of a business ending up with a natural owner. I'm actually happy for our Timken team members that are in the Belts business being a part of Gates. I think they'll be able to continue to be successful in the business, and Gates will do a nice job with the business. It's really a win-win from that standpoint. For us, we'll quantify it more exactly at Investor Day, but what I will tell you is it will structurally increase the profitability two ways.

Lucian Boldea: Keep in mind just the practicality of it. We said it's, as you look at 2026, so we said we're gonna expect close sometime in Q3. Obviously, there is an element of stranded cost that has to be dealt with to get the full benefit that we're gonna outline for you. Obviously, we'll work on that expeditiously, but don't think of it as a 1-day event where all that happens at the same time. There will be a mixing up, no doubt, the 1st day, but then to get the full lift, we also have a little bit of self-help to do. That obviously we'll be prepared to do quickly.

Lucian Boldea: One is it does mix us up, it also allows us to redeploy resources to faster-growing areas in the portfolio. That simplification further increases it. It will structurally increase the Adjusted EBITDA margins of Industrial Motion's business. Again, we'll quantify that for you exactly at Investor Day, there is a structural step-up in IM.

Yeah, so, uh, that's correct. It is, um, until it's until the transaction closes, it will be part of our guidance. So it is included in our guidance today. Uh, and as we said, we expect that to be, uh, a structural Improvement to Industrial motion. Margins so post, uh, uh post-closing. Then yes, we would give, uh, uh, we'd expect that to be, uh, an improvement to Industrial motion margins again back to investor day. You know, we'll we'll lay this out more clearly for you at investor day. Um, and so you can see that exact margin impact. Yep, but the, but keep in mind just the practicality of it. So we said, it's, as you look at 2026. So we said, we're going to expect close sometime in in Q3. Uh, and then obviously there's an element of stranded cost that has to be dealt with, to get the full benefit that we're going to outline for you. Obviously will work on that expeditiously but don't think of it as a 1 day uh event where all that happens. Uh, at the same time, there will be a mixing up no doubt the first day. Uh but then to get the full full lift, we are

Michael Shlisky: Thank you.

Also have a little bit of, uh, self-help to do that. Obviously, we will be prepared to do that quickly.

Thank you.

Lucian Boldea: Thank you.

Thank you.

Kyle Menges: Very helpful. Thank you.

Operator 2: There are no remaining questions at this time. Sir, do you have any final comments or remarks?

Lucian Boldea: Sure.

Mike Discenza: Thanks, Kyle.

Operator: Your next question comes from the line of Steve Barger with KeyBanc Capital Markets. Your line is open. Please go ahead.

Neil Frohnapple: Yeah. Thank you, operator. Thank you everyone for joining us today. If you have any further questions after today's call, please contact me. Thank you. This concludes our call.

There are no remaining questions at this time, sir. Do you have any final comments or remarks?

Operator 2: Thank you for participating in The Timken Company's Q1 earnings release conference call. Access The Timken Company IR website for more information.

Yeah, thank you, operator. And thank you, everyone, for joining us today. If you have any further questions after today's call, please contact me. Thank you. And this concludes our call.

Thank you for participating. In Tim kintz, first quarter earnings release conference call. You may now disconnect

Mike Discenza: Morning, Steve. Thanks for the question. Yeah, we would expect a normal seasonal step down from Q2 to Q3 and then Q3 to Q4. We do have some seasonality built in, typical seasonality. I guess this would be the high point relative to your question. You asked if that was the high point since EPS is coming down, then Q1 would be the high point, Q2 would be a little bit lower, and then normal seasonal step down.

Lucian Boldea: How we participate, think about our Cone Drive and our Spinea business that offer harmonic solutions. They offer cycloidal drives. Our Rollon acquisition offering linear actuators that really create that seventh axis for industrial robots. Medical robots servicing through our CGI precision gearing, our Timken bearings or our Cone Drive harmonic solutions. Autonomous guided vehicles, also Cone Drive and Rollon, and then humanoids and exoskeletons. This is one where Cone Drive Timken bearings are also already present. That's just from what we have today. And then obviously, humanoids offers an additional vector. Again, I know, wait for Investor Day seems to be a very common answer.

Lucian Boldea: Obviously, it's a combination of recovery and some of those macro trends.

Mike Discenza: Maybe if I could just add some color, 'cause in addition to the infrastructure that Lucian highlighted, we are seeing some green shoots in ag. Part of that off-highway, the ag business, which we've talked about as being down, we're starting to see some green shoots there. That's also in that. Not just the infrastructure piece, but ag as well.

Steve Barger: Really great. Thanks.

Operator: Your next question comes from the line of Tomo Sano with JPMorgan. Your line is open. Please go ahead.

Tomo Sano: Hi. Good morning, everyone.

Mike Discenza: Morning, Tomo.

Lucian Boldea: Morning.

Tomo Sano: Thank you for taking my question. Slide 16 shows improved outlooks across nearly all end markets. Your full year organic growth guidance was raised to 3%. In Q1, most of the organic growth appear to be price driven rather than volumes. Given the broader base end market improvement and then PMI about 50, should we expect a greater contribution from volume in the coming quarters, or will organic growth remain primary price led? Thank you.

Tomo Sano: Thank you, Lucian. Just follow up on, like, ongoing 80/20 initiatives and portfolio rationalization. Is there any intentional short terms restraint on the volume growth as you focus on higher margin products and customers? Could you talk about that for 80/20 for the volume growth, please?

Lucian Boldea: Yeah. Thank you for the question 'cause it's a great question. It's one we get internally as well. I can tell you the intent of 80/20 is to grow. The intent is not to prune and shrink to perfection. The good news, we will share the more specific data with you during Investor Day, is if you look at our mix, very little pruning of revenue is required to dramatically affect complexity. What that means is really, the price of simplicity is a lot lower than you would expect in our portfolio from where we sit. That's very exciting.

Lucian Boldea: Sometimes timing in life is everything, and we're doing 80/20 at the perfect time because when order books are up, when customers are motivated to find product, even frankly, when we have a little bit of geopolitical uncertainty and supply chain uncertainty, customers are receptive to really being treated differentially by their suppliers and committing more of their volume to us as we commit a better service to them. This is the perfect time to have those discussions with our large customers. No, I do not expect to see volume declines that are related to 80/20, but I do expect to see dramatic simplification and possibly volume increases.

Tomo Sano: This is very helpful. Thank you, Lucian.

Lucian Boldea: Thank you, Tomo.

Operator: Your next question comes from the line of Tim Thein with Raymond James. Your line is open. Please go ahead.

Tim Thein: Price versus variable cost, for the balance of the year.

Tim Thein: All right. Sounds good. Thank you, Lucian.

Lucian Boldea: Sure.

Operator: Your next question comes from the line of Mike Shlisky with D.A. Davidson. Your line is open. Please go ahead.

Mike Shlisky: Hello. Thanks for taking my questions. Wanted to ask about your comments on ag and some of the green shoots you are seeing there. I guess I want to listen just a couple more details there. I guess is it replacement demand and parts versus OEM? Also, are you getting any commentary from the OEMs? Is some of your upside here looking to increase production in Q4 of this year in advance of their making 2027 models or their better outlook for 2027?

Mike Discenza: Hey, Mike. Mike here. Thanks for the question. Answering the last part first, we can't really comment on that, you know, in terms of how Q4 is shaping up. We don't give that specific guidance. Certainly, as it gets closer to 2027, we'll be able to give you some outlook on what that is. As it relates specifically to ag, you know, we're seeing increasing order books. It's hard to know if it's restocking, I think is what you're getting to. Is it OEM driven? You know, again, I would say it's just general green shoots in that space that we're seeing. I would assume it's a little bit of both.

Mike Discenza: It's just, it's just now turning from what has been a pretty long down cycle there. You know, we'll see what that, what that turns into. Right now, just beginnings of green shoots for us there.

Mike Shlisky: Sure. I can appreciate that. Just secondly, just a quick housekeeping question, really. What you sold to Gates, the belts business hasn't technically closed yet. Is that still part of the guidance? I guess it's currently a headwind to EBITDA margins, once that is officially closed, might you increase your margin outlook again?

Mike Discenza: Yeah. That's correct. It is. Until the transaction closes, it will be part of our guidance, so it is included in our guidance today. As we said, we expect that to be a structural improvement to Industrial Motion margin. Post-closing then, yes, we'd expect that to be an improvement to Industrial Motion margins. Again, back to Investor Day, you know, we'll lay this out more clearly for you at Investor Day, you can see that exact margin impact.

Mike Shlisky: Thank you.

Lucian Boldea: Thank you.

Operator: There are no remaining questions at this time. Sir, do you have any final comments or remarks?

Neil Frohnapple: Yeah. Thank you, operator. Thank you everyone for joining us today. If you have any further questions after today's call, please contact me. Thank you. This concludes our call.

Neil Frohnapple: Thank you for participating in The Timken Company's Q1 earnings release conference call. Access The Timken Company IR website for more information.