Timken Company (The)

Good morning, ladies and gentlemen, and welcome to Timken's third quarter earnings release conference call. All participants will be in a listen-only mode, and should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Neil Frohnapple. Welcome, sir. You may begin.

Thank you, operator. and welcome everyone to our third quarter 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 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. 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. 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 Thank you for joining us today. 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. 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.

Thanks, Neil, and good morning, everyone. We appreciate you joining us today to discuss our quarterly results and outlook. I'd like to begin by thanking our Timken team for their dedication to our customers and for the significant progress they have made in advancing our company's transformation. As I reflect on my first year at Timken, I'm proud of what we've accomplished together. We have developed and deployed our Elevate to Outperform strategy to build upon our strong foundation and transform Timken into a leader in advanced motion technology. We've aligned our teams around our discipline execution framework that anchors the strategy. and made substantial progress towards achieving our 2028 targets, most notably in industrial motion, where we delivered high single-digit organic sales growth and significant margin expansion so far this year. The steps we have taken and early results reinforce my confidence in our direction and the significant opportunities ahead. Let me now turn to our third quarter performance, including the advancements we are making in executing our strategic priorities. In the quarter, total sales were up 4.7% versus last year, and organic revenue grew by nearly 3%, driven by positive pricing and higher volumes in the industrial motion segment. We saw improving demand trends across most of our industrial markets, and if we exclude the significant decline in China wind energy sales from a very strong third quarter in 2025, organic sales were up mid-single digits from last year. We expanded EBITDA margins to 18.5%, We also generated over $228 million in free cash flow. Regarding capital allocation, we repurchased more than 500,000 shares during the third quarter, substantially increasing our buyback activity from the first half of the year. Our net leverage ratio also declined to 1.7 times EBITDA. Our strong balance sheet gives us flexibility to fuel our capital allocation priorities. In the quarter, we delivered meaningful progress across all three pillars of our strategy as we put 80-20 and our disciplined execution framework to work across the entire enterprise. Starting with pillar one, optimizing the portfolio, we completed the divestiture of the belts business near the end of the quarter. This is an important milestone in achieving our 2028 financial targets, and we expect this action to increase industrial motion EBITDA margin by more than 200 basis points in 2027. We also continue to build great momentum with 8020. With employee training largely complete and work streams established and underway, 8020 teams are taking actions across our businesses and regions. A few recent examples include the implementation of minimum order values for customers to reduce our cost to serve and improve profitability without negatively impacting total revenue. We also established our differentiated commercial service model to drive incremental growth with our 80s customers. Key account playbooks have been developed and deployed and a number of large accounts to grow our share of wallet by engaging as a one-time solution provider. Overall, I'm very encouraged by what we're seeing. These initiatives are well underway and generating positive early results by reducing complexity and expanding margins while increasing our focus on the fastest growing customers and verticals. That brings us to pillar two, where we are stepping up our resources, investments, and customer facing efforts to drive outgrowth within our strategic verticals. Building a vertically aligned M&A pipeline is also a priority. This organizational focus contributed to double-digit growth in automation and robotics during the quarter. We also completed a minority investment in an early-stage manufacture of electro-adhesive technology, highlighting how we're expanding our technology model to align with next-generation motion technology. This investment is intended to support our growth in automation and robotics. For Pillar 3, our one-Timken operating model is fully in place to speed up decision making and execution and to bring together commercial and operating organizations. A recently announced Chief Commercial Officer structure is connecting strategic marketing, sales excellence, and execution across our multinational footprint to generate greater differentiation, enhance customer value, and most importantly, accelerate growth. This supports our One Timken commercial strategy, which is already driving greater integration across many of our platforms, including Precision Drive. For example, in precision drives, Kohn Drive and Spinea brought together complementary technologies and expertise to develop an integrated actuator solution for the commercial space industry. It is an exciting example of our evolution towards a system-based solution. We're also accelerating the integration of our lubrication systems platform. Over the past decade, we have added capabilities in this space through strategic acquisitions. Today, we are reducing portfolio complexity, aligning commercial resources with our strategic verticals, and aggressively scaling across Timken's multinational footprint beyond the business's largely European base. Our Chief Operating Officer structure, led by Steve Ribaudo, who joined Timken in September, is now responsible for our P&Ls. With this structure, business leaders have greater accountability for the strategic choices that shape business performance, investment, and long-term competitiveness. Additionally, by bringing the entire supply chain footprint under a single organization and aligning individual factories with P&Ls, we will continue to benefit from right-sizing and maintaining a nimble and globally flexible footprint that is competitive on cost and lead times to support our customers' growth. Taken together, these actions show how the Timken team is moving with speed to execute our Elevate or Perform strategy. We are focused on finishing the year strong and delivering our 2026 outlook, and we are confident in our ability to achieve even stronger performance next year. While it is still early, we currently expect our organic sales to increase by mid single digits during 2027, driven by incremental growth from our strategic initiatives and further positive momentum across our industrial markets. As one example of the momentum we are seeing, The company's backlog at the end of the third quarter grew sequentially and was up mid-single digits from last year. With that, let me turn the call over to Mike for a more detailed review of the results and outlook.