The Timken Company ($TKR)

Good morning, everyone. Welcome to the Timken Company's 2026 Investor Day. My name is Neil Frohnapple, Vice President of Investor Relations for Timken. We're excited to have many with us here in the room today in New York City, and we welcome those who are joining us virtually via webcast. We appreciate everyone taking the time to learn more about how Timken intends to elevate its performance. Let's start by taking a look at the agenda. This morning, you'll hear from our President and CEO, Lucian Boldea, who will give you an overview of Timken's strategic plan to accelerate profitable growth and structurally increase margins. Then our Chief Technology Officer, John Szarka will spend time discussing how Timken's innovation and technology will support our growth in the next generation of motion systems. After John speaks, we'll take a short break, and then our President of Industrial Motion, Tim Graham will take you through how we're winning with customers and creating value as one Timken. Our final presentation today will be from Mike Discenza, Executive Vice President and CFO, as he shares more details on the company's growth algorithm, margin outlook, and will give more detail on our new 2028 financial targets. After Lucian provides a few closing comments. We'll have John, Tim and Mike back to the stage for a Q&A session. For the Q&A session, we'll have mics going around for those here in the room and those attending virtually can e-mail me with your question at any time during the event at [email protected]. After the Q&A session, we hope those here in person will join us for a networking reception and lunch. Before we get started, let me direct your attention to the safe harbor statement on Slide 5 of the presentation materials. We will be making forward-looking statements throughout the course of the presentations today, and we will also reference certain non-GAAP financial information. They have been reconciled and will appear disclosed in the appendix of the presentation. Please take a moment to read through the statement. Before I pass it over to Lucian, let's start with a brief video to set the stage for the day. [Presentation]

All right. Thank you, Neil. And to all of you on behalf of our leadership team, our Board and our Board Chairman, John Timken, present with us today. A very warm welcome to our 2026 Investor Day. It's a privilege to be here with you today and to represent 19,000 employees of the Timken Company and share with you our strategy and our vision for the future. What you just saw in the video here reflects who we are as a company, a company built on technology leadership, engineering excellence and strong customer relationships. Today, I will build on that and talk about where we are, how we're evolving and where we are going. We see a clear path to improve our performance over time, strengthen our leadership position, accelerate growth and deliver stronger and more consistent financial outcomes. But as David Cody used to say, the proof is in the doing, so we will share with you the what and the how, and give you insight into both our strategy as well as our execution discipline that we are building upon. We're starting from a tremendous foundation. This was started 125 years ago by Henry Timken and it was built upon over many decades. We have a clear vision of the future, and we're fortunate to be well positioned to capitalize on a number of key mega trends that we'll talk to you about today. More importantly, we're taking actions that will drive our transformation to faster growth in the short term. Those actions focus on 3 areas: portfolio simplification, focusing on the right strategic verticals and taking advantage of regional opportunities. The end result that we'll share with you today is a compelling set of financial targets that include significantly higher margins. We're committed to achieving this higher performance through a very disciplined execution framework. We have a very strong foundation, and I'll spend the next few minutes walking through an overview of the company that we are today. We're a leader in advanced motion technology, and we design and manufacture highly engineered systems and components, 2/3 of our revenue comes from our engineered bearings product line, while 1/3 comes from our industrial motion solution portfolio. Our team and operations span over 45 countries, and in 2025, we generated $4.6 billion of revenue with trough EBITDA margins of 17.4%. Our cash generation and balance sheet remains strong with net leverage in the middle of our long-term range even using trough EBITDA. This has enabled continued disciplined capital allocation, extending our 104-year continuous streak of quarterly dividend payments. This combination of scale, global reach, financial strength, coupled with strong execution discipline provides a solid base for the next phase of our journey. We have the privilege of working with amazing customers. Together, we bring solutions that truly impact the world. Our teams deliver drives that power aircraft carriers with precision gears, bearings and automated lubrication systems. Our bearings expertise advances deep space exploration, including the James Webb telescope. Our participation in infrastructure is broad from mining to metals processing and cement to reliable and heavy construction equipment. Our history in transportation started in automotive, but today is largely anchored in rail and aerospace. Our precision drives technologies enable precision surgeries, and we have also broad offerings that support power generation that is essential in the AI economy. We're in the environment and applications for performance and reliability are nonnegotiable. And our products play a direct role in enabling systems performance, safety and uptime for our customers. As a result, we wake up each and every day feeling privileged to be able to be a trusted partner to our customers and continue to earn that right through our service and solutions each and every day. This is a key strength of our business and an important foundation of how we create value as we move forward. We're humbled by the trust placing us by our customers. The slide you see here behind me, we've not talked about today, so you're the first ones to see it, but last month, 3 of our technical staff the privilege to be on board of the U.S. Navy recovery vessel that was out to pick up some very precious cargo. It's a testament of the reputation of our Philadelphia gear business that we've earned with what is the definition of a highly critical application, keeping our sailors moving during a time of war or in this case, a time of peace. This slide provides the evolution of our portfolio transformation into motion leader, and it's been driven by the acquisitions that we've done over the last 10 years. Please keep in mind that the chart that you see does not even represent a full set of acquisitions, the full list. What you see is just a strong statement, though, of the degree of the transformation. We're building a higher-performing motion leader. We're focusing and accelerating a journey that started over a decade ago through targeted acquisitions we'll be expanding beyond engineered bearings into a broader set of motion technologies that include lubrication systems, precision drives as well as linear motion. This has allowed us to increase our participation in high-value applications and strengthen our position in key verticals enabling our Industrial Motion business to gain critical mass and lead the next frontier of growth for the Timken Company. So the rest of the discussion today will really focus on 2 elements. First of all, how this transformation creates a different company, but second, how do we execute in the short term to enable performance while we transform. So let's get started and talk about who we are today. So our multinational footprint is what allows us to operate at scale. Please note that I said multinational, I didn't say global, and that was deliberate. We're not the single location exporter. We're truly a multinational player who can think globally and act locally while maintaining a single global high-quality performance standard. We have over 100 manufacturing sites and 30 innovation centers with a presence across all major industrial regions. Why is that important? It's because this footprint enables us to be close to our customers. It enables us to work with them from idea to full-scale manufacturing. It also allows us to scale technologies and solutions across regions. But most importantly, as you will see today as part of our growth algorithm, it creates an infrastructure that we can leverage to take solutions from one market or one region into another. This combination that you see here of global scale, global quality standards and a local presence is an important competitive advantage for us, and it's one that we will be able to leverage in the current very dynamic geopolitical environment that we all face every day. We've updated our end market sales mix also, and this better reflects our market focus as a company, but more importantly, it demonstrates the growth potential that's in front of us. As you step back and you look at the end mix of markets that are in front of you, a very compelling picture emerges. Almost half of our revenue is exposed to markets that grow well above GDP, and the better news there is that, that growth is expected to persist in the coming years. Why is that? Because it's driven by compelling megatrends and we see outgrowth as we focus on those strategic verticals and we focus on regional growth opportunities, and we'll cover both of those with you today. But a strong and robust growth strategy begins with focusing on attractive end markets, but then you have to have a customer offering that is well aligned with megatrends that sustain that growth. So let's talk a bit about the megatrends that drive Timken's end market growth, and what you will see is that they're clearly persistent and compelling. Start with automation and robotics. We're just scratching the surface there as we tackle the skill gap that we're facing as a global community. Our workforce is aging. I'm not the first one to tell you that. But frankly, expecting different work conditions and work life balance than in the past. Robotics and automation are key to solving that problem, and we are uniquely positioned to play a very key role. I'm not going to steal our CTO's thunder on how we do this, but the good news for you is you only have to wait 20 more minutes to find out. Aerospace and defense is another vector that's driving our growth. We enjoy a strong position in both air and marine defense as well as civil aviation and we'll continue to evolve our offerings to meet this growing need. In the field of power and electrification, we're well positioned with both engineered bearings products as well as industrial motion solutions and both the businesses can participate and are already participating in that growth. And last but not least, as infrastructure continues to be built out around the world, our legacy positions give us a front row seat to innovate with our customers as emerging market mobility demand increases and infrastructure is modernized through automation and autonomous operations that require a new level of reliability and service. So I'll walk you through the end markets and the megatrends, and now let's click down and discuss the strategic verticals inside these end markets that are expected to grow high single digits through 2028. So I'll give some of you a peek behind the curtain and tell you how we arrived at these verticals. I think with many of you as we went through the Q&A and I did my roadshows over the last few months, you saw this thought process evolve and you probably recognize some of this. It all started last fall, and it started last fall with a very simple question, which is where are we winning and why, and where are we winning, it's actually right behind you here. It's in the strategic verticals. The premise going forward now is twofold, and it's not a big leap. It's that it's easier to win where you're already winning and you have positive market momentum. And second, if you focus on that with an 80-20 mindset, you can accelerate that growth by allocating R&D resources and growth resources disproportionately to those verticals. We've also modified our org structure, both regionally as well as globally to drive this focus inside the regions as well as inside our P&L. So I know normally, at least to this group, if the pitch is, the future is different from the past, that's a very difficult sale to make. But in this case, it's not because the future is actually just a better version of the past. You see the outperformance in the last few years that was in a down economic cycle. The cycle is going to be more favorable, but what you also see is the impact of doubling down and focusing on 80/20. The future here is really anchored in that 80-20 discipline and in that mindset to accelerate growth, it's not a completely different set of strategies than where we've been. End markets are important, and we do need to discuss those. But at the same time, at the end of the day, it's customers that make that buying decision. So we have to understand their evolving expectations, so let's talk about those for a moment. OEMs are no different from the rest of us. They face the same skill gap, and as a result, they increasingly outsource some of the engineering complexity to their suppliers. Additionally, as suppliers, we're increasingly expected to think of life cycle economics and go from a product offering to more of an end-to-end solution that incorporates rebuild and replacement. Good news for us is that through our acquisitions over the past decade, we're now well positioned really capitalize on this trend in several markets. Last but not least, we see the third trend that you see there, which is increasing competitive pressure in high-volume applications. There, we're faced with the choice we either have to make substantial investments in capital into automation to really get to a new cost structure or exit those businesses. The automotive OE business that Tim will talk to you about later today, and those exit actions are really a result and a good example of this trend. Of course, those decisions will always be made on a case-by-case basis, but I can tell you that the first 2 expectations from customers that you see here, whether it's life cycle expectations or whether it's increasing complexity that outsources engineering, those offer a way more compelling growth vector for us than the third one, so they'll always be prioritized. So as you pull all this together and step back, what does all this say? It says that we must continue to evolve. So let's talk a little bit about what that means. It means going from a component supplier to a design partner, it means going from competing on unit economics to value across the life cycle and finally, it means going from a product-led offering to fully integrated applications engineer. So as you look at this, this might seem like a lot of transformation but it actually turns out to be a lot shorter of a path for our team than most would realize. So let's spend the next few minutes and talk about why that is the case. So I always like to think about a business in terms of sales motion because in the end, that's how you understand how you make value, how you create value, how you interact with the market, how you interact with your customers. So in orange here is the sales motion of the engineered bearings business. It's a business that's underpinned by technology that then creates highly engineered components, sell those to OEMs and then further creates value through rebuild and aftermarket. Compare that to industrial motion, there we actually sell engineered systems today, whether it's an automated lubrication system, whether it's a complex gear drive or whether it's a linear motion assembly, whether it's mechanically or electrically actuated, it's based on a foundation of engineering knowledge that then allows us to outsource components. So in very simple terms, industrial motion, the sales motion, the business model begins where engineered bearings leads off. So what that says is when you combine the 2 models that you see here on the right-hand side, you get a very compelling combination. And that combination then allows you to lead with a systems-first approach, which is a very important feature of our future success. For example, in a vertical, this enables us to offer a one Timken engineer system. So as an example, you can think a gearbox, you can think a humanoid assembly, you can think an industrial robot moving platform. And that component or that assembly can be based on first party as well as third-party components. This leads to greater life cycle economics, the lease to service, the lease to rebuild, and it leads to other revenue models. And Tim will walk you into specific examples where we're already doing that. Given the growth in our Industrial Motion business over the last 10 years, we are now at that point where we've reached critical mass, and another way to think about this is Industrial Motion now becomes the storefront for the Timken business rather than the historical approach, which was using the engineered bearings channels, or product channels to pull through a solution. It's a pretty meaningful change in our posture and it's 1 that is underpinned by significant execution infrastructure that we will discuss going forward. I'm excited to share with you our Elevate to Outperform strategy. It's not an aspiration. It's actually a statement of intent. It's a commitment, and it's 1 that we underpin with solid execution and sustainable execution. It's based on disciplined processes that are repeatable and scalable. What we do is we aim to elevate our game in very tangible ways to achieve top quartile financial performance over the coming years. So let me give you a flavor now of the execution discipline that we are already practicing. Our Elevate to Outperform strategy is focused on the 3 pillars you see in front of you. They are our North Star, they drive the choices we make, the structure we're building and more importantly, our operating model and our 80/20 mindset. It starts with Pillar 1. If you recall, that's the first thing we talked about last fall, and that is optimizing the portfolio. This is an ongoing activity. It's not a 1 and done, and it has to be done to make sure that we're participating in the areas that create the most value, and we draw from those where we're not the natural owner. The second pillar requires us to focus our resources on strategic verticals where we have a more compelling value proposition and withdraw from those where we don't. And in Pillar 3, leveraging our multinational footprint allows us for significant growth opportunities, and this is especially true for our company because what is unique about us is 1/3 of our revenue is Industrial Motion businesses which are almost all single region businesses or were at least at the time of acquisition. So the 3 pillars get executed across 3 time horizons, and we'll talk about how that's different. But these pillars are meant to age well, they're meant to stay here and they're meant to evolve with our strategy and with our transformation. So here are the 3 time horizons, and they really represent the progression of our strategy. Over the next 3 years. Obviously, they continue beyond that. We're well underway with Horizon 1 with the objective to transform the core make the quick and no regrets decisions that are in front of us. They involve portfolio actions, like the ones we've already announced, and we'll discuss in more detail today. They involve focusing our customer-facing efforts to the most attractive segments and markets and then driving the most lucrative regional translations available. As we move towards Horizon 2, which we expect to accelerate next year, we evolve the model. We refine both our portfolio actions as well as the strategic vertical offerings while continuing that regional penetration. In 2028, we'll scale that advantage, and that is reflected here in Horizon 3. That's the exciting part. That's the destination. That's when the flywheel becomes scalable and it creates a competitive advantage that is difficult to duplicate. It results in a growth engine that is both organic and inorganic in nature with reliable and predictable outcomes across the economic cycle. So let's now double-click on each of the time horizons and see how each pillar evolves a little more in depth. So in Horizon 1 over the short term, we're optimizing the portfolio by exiting nonstrategic product lines, reducing complexity and streamlining our 100-plus manufacturing site network and supply chain. We expect this to deliver structural margin improvement. Next, the strategic vertical focus involves doubling down the resources where we're winning and accelerating technology-led growth and focusing R&D and also increasing R&D dollars in these verticals. It also involves very targeted M&A, and the recently announced [indiscernible] is a great example. And I say targeted because we're looking for M&A that affords quick and relatively straightforward synergy delivery for this first horizon. As we leverage our multinational footprint operating as One Timken, that affords us the ability to create the ecosystem, structure and operating model to enable rapid translation of our single region businesses into new regions, and Tim will cover examples for you later today. As we head to Horizon 2, we evolve the model. The portfolio work becomes more deliberate and more bold. 80-20 enable simplification, and you see the benefits of that in our financial results as we begin next year. We'll consider complementary acquisitions to enhance those positions in our key verticals. Most importantly, our strategic vertical focus now takes shape at the customer level in a more deliberate way. 80/20, just like the name says, identifies your 80 customers. And it's those 80 customers that then we build clear and compelling offerings for they are distinct and differentiated, but we do so 1 single customer at a time. The regional playbook is relatively unchanged, but it does become more standardized in Horizon 2 because then it needs to be repeatable and it needs to require less intervention. Scaling this advantage is really Horizon 3, and that's where we want to land. In 2028 and beyond is when this model is fully institutionalized, it becomes who we are, what we're known for and how we operate in everything that we do. Our portfolio work is now an integral part of our quarterly strategy process. With a scalable integration model, we now can pursue more aspirational acquisitions into higher growth verticals where significant synergies will be required to produce a compelling business case. The strategic verticals become more fully aligned with our innovation portfolio and process and then our key accounts, technology road maps, new products and service offerings, all flow via a single process. Last but not least, our regions will be operating at that point with enough autonomy to be nimble and drive integration and growth while operating within a well-prescribed global operating model. As a result, we expect the execution of our Elevate to Outperform strategy to translate into top quartile financial performance versus our peer group. Our strategy is anchored by a very disciplined execution framework, so this is where we get to the proof is in the doing. The Timken Company has strong fundamentals today. Our foundation of global businesses and processes, coupled with technical knowledge and a lean mindset are key to this, but they're really just a required starting point. Our key capabilities, build on that and include the brand equity that we've created, our global footprint, both in engineering capability and assets. But last but not least, the customer-facing capability adds further to that execution framework. Now those elements all are key, and we're driving from those strong fundamentals to another level of execution. Foundationally, what we're doing is we're taking our manufacturing-focused operating system to a Timken operating system that extends broadly across the enterprise. This means we incorporate lean in all we do. We've implemented already a disciplined operating model. There's nothing novel about it. It's a tried-and-true model that has been successful at many high-performing companies in our space. Our capabilities are being enhanced with the creation of all new organizations for us, such as the Chief Technology Officer organization, Chief Marketing Officer, both of them are present here today, as well as regional and P&L structures that are well aligned with the 3 pillars. Last but not least, delivering a One Timken system to key customers in key verticals requires a different level of processes, systems, tools and capabilities, and all those are either already in place or well underway. Mike, our CFO, will walk you through all the details in our financials, but this is a summary of our 2028 financial targets, and these are driven by our Elevate to Outperform strategy. These represent new record levels of performance for our company and position us for substantial transformation in the long term. It's important to note that none of these targets include putting our cash to work, whether it's an M&A or share buyback. You'll note that our EBITDA margin target of 21% to 23% represents a 500 basis point increase from where we are today, and more importantly, most of this is driven by actions not only within our control, but you'll follow the math later, quite a bit of it are actions that we have already taken. Our EPS is projected to be about $8.50 a share in 2028, and our cash flow will increase by $200 million over the next 3 years. This is not an aspiration. This is already underway, and we're excited to make this happen. Also, it's important to note that this is an interim goal. As we drive to our vision, this is the beginning of the journey, and this is the first set of financial milestones that we commit to. Our vision is compelling, and our vision continues the journey that was started 125 years ago. That vision is to be a trusted partner to our valued customers, those who entrusted us for decades and would win with us going forward. We're a leader in advanced motion technology, and we're innovating for the next industrial revolution. Our differentiated technology will carry us into the future and will position us to win in new markets like humanoids that require precise motion, and also applications that feed the AI-driven power demand. This is more than a vision. It's a goal. And it's 1 that has a plan, and that plan is already underway and has already proof point of success that we'll share with you today. But let me now step away and let you enjoy the best part of today. You're about to hear from our Chief Technology Officer, John Szarka, the guy who I think has the best job in the company. And you will see why I'm so excited, not only to have John on my team but also why I'm so confident that we will deliver on our future. John. .

Thanks, Lucian. Again, John Szarka, Chief Technology Officer for Timken. I've been in this role for a little less than 5 months, but I've been with Timken for over 20 years, and over the last 5 years, I was leading our engineered bearings product team. And I'm really excited today to share with you guys insights about how Timken is leveraging technology to create value for our customers in their most critical motion control applications today. Customers have been turning to Timken for over 125 years to really help increase their power density, improved system efficiency and increasing precision motion across their applications, or frankly, any time they need help with solving a problem. Technology has really been at the core of what we do since the beginning, but what's new that I'm going to talk to you guys about today is really about how we're going to be able to scale this in ways that were not possible before and it's all through creating better connections across our enterprise technology groups and really standardizing on the best practices that we're using to accelerate our innovation cycles. And this is all about creating more customer value, whether it's in the applications that we service, the products that we make, the regions that we do business, it's all going to help us elevate to outperform across all the horizons that Lucian had talked about. I want to start off by really walking you guys through the history of where we've come from, because I really think it's going to help you see where we're headed. You're going to notice 2 things when you look at this slide. The first thing is we continue to increase our serviceable addressable market, but the other piece is we continue to climb up the customer value chain with the products and technologies that we have. It all started with the tapered roller bearing. And with that, we really built a strong knowledge around tribology, precision manufacturing and metallurgy. And we use this every day in the foundation of how we make high-performance products that customers trust. As we move in the 1990s, we started to begin to broaden our range of bearing products with more precision bearings, mounted bearings and industrial bearings. And again, this is more advanced products, but really the secret sauce of what we did over this time is expand our application knowledge and the tools that we use to work with customers and solve their problems every day in their toughest applications. As you move into 2010, we really started to expand our products into power transmission components and really built out with couplings, chains, power systems and automatic lubrication. And again, this is about getting into more complex products and solutions for our customers. But then our most recent chapters have been all about getting into integrated system solutions with products like our linear motion and our precision gearing lines. And this journey has really put us in a strong position with a diverse range of products and expanding what we're able to do and system solutions that our customers value. Now I want to talk a little bit about the foundation of how we operate with our technology across our organization. And it all starts off really with engineering where it matters. And we focus on mission-critical applications with our customers. And when I say mission-critical, I'm talking about spaces where failure is not acceptable. A great example of that would be the reduction gear in the Navy ship that Lucian pointed out earlier, where a failure would lead to a propeller that doesn't work, which is not acceptable and could be extremely dangerous. Over 60% of our applications today live in these mission-critical applications. The second piece is about how we innovate with customers, and we work with them very early in their design cycles. And with our largest, most strategic customers, we're with them every day at the beginning of their design cycles. And what this does for us is it allows them to help optimize their entire system versus the individual component that we've been supplying. And that allows them to downsize the whole system. A great example of that would be like in a gear drive as an example, where we can model their entire system and help them with how big they need to make their shaft, how big their housing needs to be, all that leads to reducing the total package that their system is and saves them weight, which saves them cost. And then the third element is really about how we execute with multinational scale. We've got over 2,000 engineers around the world that are face-to-face with our customers every single day, understanding their problems, speaking their local languages and helping them solve them. And these are really the fundamentals at the core of how we support customers across Timken today. That said, the model has been very good for us, but just like we innovate with our customers, we have to continue to innovate our model if we want to deliver the next generation of growth. So what we're going to do that's different? The first thing is, is putting more focus on integrated system solutions in our strategic verticals that Lucian had talked about. And if you really think about our history of what we've been doing back to that slide, we really are positioned well to do this. The first thing we've done is we've expanded our range of motion control products with couplings, chains and brakes as an example. But the second piece is we've really built out our engineering expertise in systems with lubrication systems, linear systems and our precision drives business. You combine that back with the strong engineering foundation that we have and the fact that customers trust us with the products that we make are going to perform well in their applications, it and opens up a whole new set of doors for us of what we can do with our customers. The second piece that we're going to pivot on is more about understanding where our technology resources are, understanding where they're needed . We've got the 2,000 engineers all over the world. And we're really putting in a new model that's going to help us with understanding the biggest opportunities that we have across those areas and really aligning the resources to focus on the biggest opportunities versus anyone that comes in front of them. And then finally, what we're doing is we're putting in a more repeatable innovation playbook of how we operate that's going to really take our enterprise-wide idealization to implementation process, that's going to help scale the smaller regional businesses that we have today by taking their technology across a broader range of customers, regions and platforms of where we go. So I'm really confident that this is going to help us go from local product innovation to more scaled system solutions across our priority verticals and really create sustainable growth. So over my 20 years at Timken, I already knew that we had a lot of good products and engineering capabilities. But after being in this role for almost 5 months now and really increasing my engagement across all of our different businesses as One Timken, I've got a whole new appreciation for the products and engineering capabilities that we have in this company. And knowing the applications that we have in space, I can honestly tell you that not even the sky is the limit of where we're able to solve customer problems and create value for them. We've got a strong foundation of knowledge and engineering across a broad range of motion technologies. And this really allows us to design these increased complex and integrated system solutions for our customers. And this is very unique to Timken's capabilities and would be very hard for anybody else to replicate. So now what I want to do is share with you guys a little bit of -- or some examples of where technology is really apply today across the mega trends and market sectors that Lucian had talked about earlier, and my hope is that you're going to get a glimpse into the deep value that we're already creating for customers, but also get a glimpse into the future of how much more is possible. So the first ecosystem I want to talk about is automation and robotics, and this falls into our market sector of automation and industrial solutions. And this is a very exciting space for Timken with lots of opportunities, and you can see on this slide, just some of the examples of the positions that we're already in today. Whether a factory is new or old or whether it's full of people or highly automated, factories all over the world count on our products for their core infrastructure, things like bearings and couplings that keep those factories running. With that said, the labor shortage that's in front of us and need to drive for cost reductions, automation is going to increase the amount of opportunities that we have. Thinking about our strain wave and our cycloidal drives that are used in robotic arms as an example, or the linear systems used in customized designed automation systems. And then when it comes to automation, if customers need micro precision or the ability to lift things the size of a car, we really have the right products and know-how to engineer the right custom solutions for them that deliver reliability and efficiency. The labor shortage doesn't only impact people working on the manufacturing line. It also impacts maintenance teams, and this really increases the value of our highly reliable products that we make for them as they have less people to do MRO for them. In addition, it increases the value of our automatic lubrication systems because people don't have to go to all the different lubrication points throughout their factory as often as they would have before. Industrial robotics are very valuable for customers, but the fact that they're stationary has its limitations. The number of assets a given robot can reach or being able to move parts from 1 asset to another really limits the value that they can create, so there's something called a robot transfer unit that helps solve that problem by putting the robot on tracks that moves it around the plant from 1 asset to another. These need to be custom designed for every factory because no factories are the same with the way they've laid out all their assets. And these typically have a 10- to 16-week lead time to build something like this -- design it and build it. And what we've done is we've developed a modular design of how we do this, that allows us to go from design to ship in as little as 4 weeks, which creates extra value for customers. But the other great value for this for the customer is the fact that as they change their plant layouts, they can reconfigure this system good part for Timken is that it provides us another touch point with them and help them redesign that system and service it over time, and it's not a single transaction. And this is a great example of how we're doing system solutions today that uses many different components and is custom engineered to fit what the customer needs. And you'll remember back to our earnings call, Lucian mentioned double-digit growth in our linear systems business in North America. This is an example of exactly where that's coming from. Now when you want to talk about robots or robotics in an unstructured environment, you think about humanoid. And this is an exciting but very highly dynamic and rapidly evolving market. But there's clearly very big opportunities for Timken in this space. We have the core motion technologies that our customers are looking for in this space for their actuators in the bearings, encoders, precision drives and linear systems that we make today. And it's estimated that these actuators are going to be 25% to 30% of the bill of materials within a giving humanoid. So given the size of the opportunity, we put together a cross-functional team that's working on how we enter this space successfully. We have a pipeline of over $100 million today, we've quoted tens of millions of dollars in the space, and we've delivered multiple prototypes to several customers in the humanoid space. When you think about this, if you add in our engineering expertise, our U.S. manufacturing footprint and our ability to scale, this creates a huge opportunity for Timken as this market develops. Next, I want to talk a little bit about the AI race, and the AI race is really driving 2 major things. The first thing is the need for data centers, and the second thing is the need for power. And this is fueling 2 of our market sectors today of power and electrification, and infrastructure. And this whole space starts with the raw materials or mining that's necessary. And whether this is for a data center or any power infrastructure project, mining is still necessary. And customers have been counting on Timken bearings, couplings, brakes and breathers to maximize uptime within their mine sites for many years. And then as you move into the power generation itself, whether it's renewable energy or fossil fuels, customers are counting on Timken products every day with the slew drives that we make for solar or the gear drives and power plants that we make, or the bearings that go into wind turbines. And then if you get into semiconductor manufacturing itself, there's much more precision equipment that's used in this space, and they count on our linear systems, couplings and precision bearings to manufacture the semiconductors themselves. And then finally, when you get to the data center, the data centers are full of chips using lots of power, that creates a lot of heat. And that heat is the enemy of the data center. So there's the massive cooling systems, which have our bearings in them and couplings that help remove that heat. And if they go down, the entire data center will go down, so it's still a critical application for the plant -- or for the data center itself. So Timken has got a portfolio that really creates significant value across these verticals today. As I mentioned, power is a big challenge for data centers, and it can often even be the bottleneck for getting a plant up and running. And they're turning to on-site power as the solution, but even the gas turbine industry is constrained with long lead times today. So we have a customer that's turned to Timken because they located unused 50-hertz turbines overseas, and because of our long history in our Philadelphia gear business of designing and building power generation load gears, they knew we could help them with this problem. So we've designed them custom load gears that will convert the power of the turbines to match the 60-hertz generation that's used in the U.S. So this is another great example of how we're doing integrated system solutions today for our customers. This will cut the lead time for them and get their project off the ground much faster by eliminating the bottleneck of power generation for the data center. Now I want to turn to aerospace as an example. New designs in aerospace and defense market are always pushing the limits of what's possible. They're looking for lighter weight, higher speeds, all still -- while maintaining extremely high reliability. Timken's got a lot of applications across both commercial and military space here, and whether it's air, land or sea and even space, this puts us in a great position in this vertical. And why is it so great for Timken? Well, it's because everything is mission critical. Whether you want to talk about the bearings that go into gear drives of a helicopter, where failure is catastrophic, to the cycloidal drives and precision bearings that we supply to satellites that operate in extreme conditions, vacuums and very extreme temperatures, where no maintenance and repair is possible and failures costly, to the main reduction gears in the Navy ships that we supply, where failure leaves them stranded at sea. But in addition to being mission critical, they're also always looking for weight reduction to improve their profitability because it reduces fuel consumption and allows them to carry more cargo. And there's a balancing here of really making sure you maintain the reliability while you're reducing weight. A great example of where we do this today is actually with the commercial airline seat manufacturers. So we work with these customers to shave ounces off of all the linear systems that go in every 1 of those seats in the airplane that still needs to operate for thousands of cycles throughout that aircraft's life. That said, reliability is still extremely important because nobody wants to be stuck on an airplane for 14 hours when the seat doesn't recline, so even reliability is important in that application as well. But another example about weight savings is with the new bearing technology that we've developed. We're working with customers on their next generation of higher efficiency aircraft engines and gear drives. And we've developed and tested a new ceramic roller that reduces the weight while maintaining the same stiffness and life of the bearing. The rolling element itself is 58% lighter than the traditional steel rollers and the fact that this is inside of the drivetrain further increases the value that it creates for the customer with weight reduction. As we talk to customers about this technology, their eyes absolutely light up thinking about what's possible, and we're working with several of them on prototypes for their future generation platforms. But what's really amazing here is that they're so enthusiastic about the technology, they're actually looking at retrofitting some of their older designs and taking advantage of this technology earlier than having to wait for a complete redesign. And for those that understand the aerospace industry know that they're not looking to do redesigns unless it's absolutely necessary or the benefit is massive for them, so you can see how valuable they find this new technology that we've developed. And then the last ecosystem I want to talk about is urbanization and rail systems. And this touches our market sectors of infrastructure and industrial transportation and mobility. So urbanization is driving a need for increased passenger rail and metro that they constantly want to run smoother, faster and more reliable. But you also have developing countries like India, as an example, investing heavily in their freight rail infrastructure to support their expanding economy across the country. And we have a lot of touch points across these industries, whether you look at the bearings and lubrication systems used on freight, to -- as you move into the passenger car, you add the need for linear systems on the doors or if you get into the bearings, couplings and lubrication systems in the construction equipment that's needed for the infrastructure build-out. If you've ever been in a tunnel and wondered how in the world did they build this, up on this slide, you can see an example of a tunnel boring machine, and that's the piece of equipment that they use today to build these tunnels. They're massive in size. They're 30 to 60 feet tall, hundreds of feet long, and on the front of them, there's a bunch of cutter heads that break up all the rock and are very extreme and demanding application. Customers count on Timken bearings inside of those applications because they know that they're going to be the most reliable option that they have. And this keeps their projects running on schedule and on budget, and really create significant value for them completing their projects on time. And then the last example I want to talk about is really about where technology and customer intimacy come together to create sustained value. So we have a customer in Brazil that we do on-site reconditioning of their rail bearings with today, and they were running into an issue with the electrification of the drivetrain, causing electric arcs through the bearings in their MSUs or motor suspension units. And as we thought about this and thinking about the electrification trend and the fact that we have the technology that can solve this problem, we put our engineers to work and really developed a solution to solve this by optimizing the geometry of the bearing on the outside, but then also adding a dielectric coating to prevent the arcing from happening. As a customer installed these, they've gotten 2x the life out of the bearings, reducing their total cost of ownership from this. And the fact that electrification is happening in so many spots, and we have the ability now to extend this to other customers with the same application, but other applications experiencing the same problem and creates a real growth opportunity for Timken. So I really hope that these examples showcase how Timken's technology is an enabler to drive the 3 pillars that Lucian talked about for Elevate to Outperform. First thing I want to point out is Timken is a technology leader that customers value and trust with a strong product reputation, and that's not easy. As we go forward, we're going to use 80/20 to really better focus those resources under the highest value opportunities that we have. Second, we've got many touch points across those strategic verticals that we have today with all of our products, and this really creates the access with customers that is needed to create the more complex system solutions that we're talking about today and create more value for our customers. And then finally, we're going to deploy a new technology process across One Timken that really ensures our ability to scale and improve efficiency in everything that we do, so I'm really excited about where we are today, and I'm confident in the technology we're developing is really going to have a bright future for Timken and our customers. And with that, I'll turn it over to Neil.

Okay. Thanks, John. Thanks, Lucian. I appreciate what you guys have shared thus far, very exciting presentations. Well, I'm getting a little nervous and I might be replaced by humanoid at the next Investor Day. We're now going to take a break. There are refreshments that are available here in the room and we'll start back up around 10:05. [Break]

All right. Everybody, if you could please find your seats, we're going to go ahead and get started again. Just a friendly reminder to our virtual audience, please e-mail your questions ahead of time, if possible for the Q&A session Okay. Now please join me in welcoming Tim Graham, President of Industrial Motion to the podium.

Thanks, Neil. As Neil said, I'm Tim Graham, President of the Industrial Motion business. I've been in this role for about a year. I had the privilege of leading the business the last year, which has been fantastic. Prior to that, I spent really 2 decades building this engineered bearing multinational footprint that we talk about, and you're going to hear more about today. So really familiar with the company, understand how we operate and understand what makes us tick and how to leverage that and utilize it going forward. So there's no question, John does have the coldest job in the company. But quite frankly, mine is not bad either. I get to work with 19,000 really talented individuals that really work together to take all the fun stuff that John develops and his team developed to the market to solve our customers' challenges. I'm going to spend my time talking about how we do that across the temping company, leveraging the strengths of the industrial motion and the engineered bearing businesses. Then I'll turn it over to Mike, and he'll talk about what that means to company financials. As Lucian mentioned, we operate 2 complementary businesses that bring unique strengths that we're able to utilize to grow the Timken Company revenue globally. Industrial Motion is currently about 1/3 of our sales revenue and leads our expansion into motion control and power transmission solutions. The business unit is made up of regional industry-leading technology-driven companies that not only expands our content in key applications, but also expands our customer reach, increasing our share of wallet in high-growth markets. We're able to leverage the strong customer positions through regional sales and engineering expertise that the engineered bearing business has built over many decades to engage and solve customers' challenging problems. Our portfolio spans linear motion systems, lubrication systems, precision drives and power transmission solutions. Across many of these categories, we hold strong market positions. What differentiates the Industrial Motion business, though, is our ability to combine these technologies with our engineered bearing portfolio to customize solutions that participate in specific and complex customer applications. We have clearly evolved from selling individual components to predominantly designing, selling and servicing systems that expand our reach into the broader motion system, helping customers improve reliability, efficiency and performance. As part of Timken's broader Elevate to Outperform strategy, Industrial Motion is focused on 3 pillars to accelerate growth. First, we're focused on optimizing the portfolio ensuring that we have businesses in the portfolio that we are the rightful owners of. Our portfolio shaping activities have been very active with our recent divestiture of the belts business that is expected to increase our segment EBITDA margins by 200-plus basis points. Secondly, we're focusing our resources, both talent and capital on high-growth strategic verticals where we are positioned to win in the marketplace. A great example is the continued investment in our high-growth [indiscernible] Seals business, which has been growing at 10-plus percent CAGR for 7 years. This year, we found ourselves in need of additional floor space for equipment to continue to feed the growth through their capital budget. In 2026 alone, their capital budget is double that of the overall Temping company average capital as a percent of sales invested. And third, we leveraged the Timken Company multinational footprint to operate as One Timken company, both commercially and operationally, utilizing regional resources and footprint to accelerate growth into new regions. Two great proof points of Timken taking action within the last 2 months of portfolio shaping is our recent acquisition of Bijur Delimon and divestiture of the belts business. The belts business divestiture is consistent with our 80/20 mindset to improve margins and focus our resources on strategic verticals. Again, we fully expect to realize a greater than 200 basis point improvement in segment EBITDA margins. The acquisition of Bijur Delimon is a great fit. It expands our lubrication system offering in high-growth verticals as well as continuing to grow our lubrication business. This acquisition was a strong strategic fit that will be accretive to Industrial Motion segment margins post synergy and will allow us to scale the lubrication systems platform to greater than $500 million in annual revenue. The integration is off to a great start, and it's led by our office of transformation team. As Lucian recently mentioned in our Q1 earnings call, Pillar 3 of our growth strategy is scaling several of the motion platforms globally. Many of the industrial motion platform started as strong regional businesses with deep technical expertise. Our opportunity now is to scale these platforms globally, utilizing Timken's existing international footprint, and commercial infrastructure for engineered bearings. We continue to expand Linear Motion and Lubrication Systems businesses outside of their home regions of Europe into key growth regions. For example, Linear Motion is on pace to grow revenue nearly 50% in North America in 2026, that's a 5-0, so significant growth in North America out of linear. While we're focusing the precision drives and power transmission solutions outside of the U.S. to grow in new expanding regions. By leveraging our existing manufacturing, distribution and customer relationships globally, we can accelerate the expansion of these specialized motion technologies. This approach allows us to scale efficiently while preserving the engineering expertise that differentiates these businesses. In Engineered Bearings, we offer the customer access and global infrastructure that we are increasingly leveraging to accelerate growth, including Industrial Motion as we've shown, the motion businesses offer huge potential through global expansion. In Engineered Bearings, we live our specification driven advantage. We serve safety-critical, high-performance applications across industrial markets, in aerospace, rail and wind energy. These are markets also characterized by long life cycles, high switching costs and recurring aftermarket demand. While Industrial Motion expands access and adjacency, Engineered Bearing provides the installed base, the margin durability and cash flow that underpin our portfolio. Together, this is what drives us to operate as One Timken going forward, leveraging the breadth of the global ecosystem and regional, commercially focused teams to generate additional value creation in the depths of customer specifications. Within engineered bearings, we hold leading positions across several high-specification bearing categories. We compete at the top tier globally with a broad range of industrial mounted and plane bearings and then with specialty bearings for aerospace precision, rail and wind applications. We are laser-focused on technically demanding OE applications requiring engineering depth, advanced manufacturing capability and global support for high-performance bearings. Our breadth across these categories has and will continue to enable us to grow our share of wallet across multiple verticals and most importantly, across the full product life cycle for higher-margin service parts. The strength of our technology, our product portfolio and our global reach forms the foundation for both growth and strong profitability. While Engineered Bearing already holds strong positions, we see meaningful opportunity to further improve performance. We are executing 3 focused initiatives to elevate the business, which in the following slides I'll talk about in more detail. Relative to the first pillar, portfolio optimization, we are selectively exiting low-return parts of the bearing business and reallocating capital and resources towards high-margin industrial markets. Secondly, we are reducing structural complexity through disciplined 80/20 execution in all regions. And third, we are taking our established Timken operating system to the next level to drive enterprise-wide productivity and margin improvements. Together, these actions are expected to structurally improve profitability and further strengthen cash generation over time. Again, the first step in elevating performance is portfolio optimization. Those of you who have tracked the Timken Company over a longer period know that we have significantly reduced our exposure in auto OE applications in prior years. Concretely, we have discontinued close to $1 billion worth of bearing business in automotive OE over the past 2 decades and replaced it with higher margin industrial sales. Since the outbreak of COVID in 2020 and higher inflation in the following years, we have experienced a declining profitability in our automotive OE business again with structural margin pressures in this segment and low return on invested capital. With our strategy, we are taking the deliberate decision to exit the remaining lower return exposure and invest more resources in higher-margin industrial verticals. I'd like to mention that we are executing this shift in a phased manner, preserving key customer relationships while responsibly managing stranded cost. As a result of this initiative, it's expected to contribute approximately 150 basis points of segment margin improvement over time. The second initiative entails our recently started disciplined 80/20 initiative. As the term suggests, on 1 side, we are engaging in concerted actions globally to reduce the structural complexity of our business. As you can imagine, our legacy of solving customers' technical challenges for 125 years and the outcome of adding products and customers naturally has built complexity over time. On the other side, and more importantly, for the long run, we are systematically refocusing the organization on market segments, customers and products where we have the strongest right to win. For priority customers, we are aligning operations and business processes to deliver best-in-class service and responsiveness through the cycle. For lower priority segments, we are simplifying the model. For example, self-service, shifting business towards distribution and rigorously automating the business to reduce cost to serve. To give you an idea of what the analysis tells us, in the Engineered Bearing business today, 50% of our active SKUs and 50% of our customers are generating only about 1% of our revenue. It's difficult to see and you can't unsee it, but half of our SKUs and half of our customers generate about 1% of revenue. So far, we've identified about 25% of our bearing SKUs for harmonization. We've trained more than 300 leaders in the 80/20 methodology, and we have appointed more than 20 work stream leaders that are passionate about driving the initiative and growing our best customers into raving fans of Timken. As you heard me talk about in the beginning, I spent 2 decades running the Engineered Bearing business on the operations side, generally, globally. I've lived globally. I've worked globally. I can tell you the impact of this and getting this right, we can't overestimate what the impact is to the operating side of the business, not just from a cost standpoint, but what I'm most excited about in my new role, it allows us to utilize that capacity, both equipment as well as people and capital to find ways to grow in the marketplace, and so very excited. We've won the hearts and minds of our 19,000 associates, they understand this, and now they're aggressively walking down the path with us. Now that you have a better understanding of how the 2 businesses operate and where the focused initiatives are, let's spend some time talking about what it means to really operate as One Timken and what that will mean for our customers and our business. As we expand our ecosystem, it is equally important that we simplify how customers engage across Timken. Historically, the business has operated through largely separate commercial organizations. We have now aligned our commercial teams around customers and vertical markets rather than products with strong regional teams focused on translating customer needs and demand in their regions to accelerate growth. This includes a new regional-led sales structure, clear channel strategies and a focus on high-value customers through our 80/20 approach. We are investing in the digital customer experience and data integration to make it easier for customers to get the engineering support needed to design the systems required. Together, these changes allow us to present a single Timken interface to customers and expand our share of wallet. The engineered bearing business has been focused on providing high-end customized solutions to the food and beverage industry for many years. But as we operate as One Timken, we are bringing a solution set to the food and beverage industry that now includes many industrial motion products also such as couplings, chain, linear and lubrication systems as well as third-party content in the solutions. This makes us much more than a component supplier and creates a much stickier relationship, where we are now able to be part of the total system design from the beginning, ensuring that we participate in the long aftermarket tail. When we integrate technologies together as a system and content, the value we deliver increases significantly. Let me use a marine propulsion example. Historically, Lagersmit was focused on providing sealing solutions. Because of our integrated solution development, we are now able to sell a fully integrated marine propulsion solution, including not just seals, but also stern tubes, several bearing types and several lubrication systems including an oil circulation system from our recent Bijur Delimon acquisition. As a proven system provider and at the core of our customers' applications, we continue to see opportunities to provide more value not just in the form of physical components, but also aftermarket service and support. The new system approach in this example will drive the lifetime revenue value of 3x that of simply supplying the seal as a component. Another rapidly growing application area for our Motion Technologies is robotics and advanced automation. In surgical robots, our systems support several critical motion functions within these systems with our linear guides, cross roller bearings, ball screws and high-precision drive systems, enabling extremely precise movements that are required. The complex design requirements and regulated nature of these platforms limit supplier turnover and improved replacement and service revenues and margins. Our recent CGI acquisition was a leading supplier of precision gears to the medical robotics industry. Now as part of One Timken, we have expanded into a system solution that includes several different drive systems, bearings and linear guides to bring a full package to this rapidly growing market and customer base globally. This system approach gives us access to 50x the lifetime revenue of opportunity. Again, this includes several third-party content as well as we continue to drive being a total system provider. What brings this all together is the Timken operating system that has continued to be deployed across the entire Timken company driving our execution framework, which started back in 2016 with a focus on lean principles and root cause problem solving on the shop floor and having trained over 3,000 leaders across 35 sites and delivered significant manufacturing output improvements, evolved in 2023 into the Timken manufacturing operating system that expanded to focus on material flow, machine effectiveness and methods optimization, driving greater than 30% productivity improvement. And it is now our Timken operating system, driving strategy execution and consistency across the company focused on delivering greater than 500 basis points of margin improvement across the business through initiatives that you've heard about today around portfolio transformation, 80/20 program and driving the execution rigor into industrial motion as well as the indirect organizations. Thank you. I'll now turn it over to Mike for the financial review.

Thank you, Tim. Good morning, everyone, and thank you for joining us both here and in the room and online. I'm Mike Discenza, our Chief Financial Officer. And many of you know, I began in this role as the CFO in August of last year. But I have been with Timken for over 25 years now. And while it's obvious, this is my first time at Investor Day in this role, it's actually the third Investor Day I've participated in as part of the team. And there's excitement surrounding each of those previous Investor Days, but this one is different. The energy is higher this time, and I am more excited about what the team is doing and what the future holds than I have been at any time during my extensive career with the company. Timken is well positioned for the future, and we're moving with urgency to deliver on the Elevate to Outperform plan. Today, I'll walk through the 2028 financial targets that Lucian outlined. I'll explain the revenue growth algorithm and the margin outlook, and I'll show how the actions you heard about earlier translate into significant earnings growth. I'll also cover the impact of our portfolio 80/20 actions, including the automotive OE exit and the belt's divestiture, and explain why those moves matter. Finally, I'll lay out our capital allocation framework and the optionality we have because of a strong balance sheet and significant free cash flow expected. My goal is simple, show the transparent math behind our targets and why our plan is realistic, actionable and value creating. We're not just betting on a market recovery. We are reshaping the company to earn higher growth and better margins regardless of the cycle. So we launched our transformation program in January of this year to take our performance to new levels. This is a full company effort designed to sharpen our strategic focus and drive measurable results with a dedicated transformation office reporting directly to me, we have clear accountability across the business, governing execution across revenue, cost and investment initiatives. We have strong early traction with 17 structured work streams putting 80/20 into action. Our priorities are how we grow, how we manage costs and how we deploy capital end to end. Before I get into the math and targets, though, I want to spend a few minutes on how we'll actually execute and measure our progress. At the heart of this transformation is the 80/20 mindset. It's something we've already mobilized across the company, and I couldn't be more excited about the financial benefits. Why am I so confident? After 25 years working in and around the bearing business, from the plant floor to strategic planning, I've seen firsthand what complexity costs us. The 80/20 approach to our transformation is about ruthlessly focusing on the things that create disproportionate value. The products, customers and processes that truly move the needle. It is in a short-term cost-cutting program. It's a strategic simplification that frees up people, cash and capabilities so we can invest where Timken can win. I believe in this 80-20 approach and frankly, why I get so excited because it removes complexity that slows us down and consumes margin. It frees resources to accelerate growth in our strategic verticals, it makes the business more predictable and easier to scale globally, and it creates space to invest in R&D and go-to-market muscle where we get the best returns. Put simply, 80/20 gives us leverage. It lets us redeploy talent and capital into higher-return initiatives and accelerates the margin and growth story we're presenting today. To ensure we convert initiatives into outcomes, we've set clear KPIs and a tight governance cadence with weekly work stream checkpoints, biweekly integration updates and monthly executive reviews. Key indicators that we're using include things like SKU reduction percentage, application engineering hours redeployed to strategic verticals and customers, margin accretion from portfolio actions, R&D spend on prioritized platforms, and working capital days improvement. And as Tim mentioned, we've already started SKU rationalization actions, and that simplification will allow better line balancing that improves both throughput and reduces urgent expedite costs. And finally, we'll be transparent about our progress. And of course, we will course-correct quickly where needed. Overall, these actions that are underway to transform the core, along with the team's 80/20 mindset form the pillars of the Elevate to Outperform program. The bottom line is this: the execution of the strategy that you heard today is expected to directly translate into compelling financial outcomes, including accelerating growth and margin uplift through 2028. This is not theoretical. It's operational, simplify, redeploy, invest and leverage the power of One Timken. Starting in 2027, we expect to show tangible margin improvement from portfolio moves and early 80/20 actions that will be visible in segment margins and improved working capital conversion. Collectively, the combination of redeployed resources, higher R&D effectiveness and platform expansion should materially contribute to our revenue and margin targets. Importantly, this success is repeatable, with a simpler portfolio and concentrated go-to-market, Timken will become faster, more predictable and more capital efficient. The 80/20 discipline is not new, but it is the right lever for Timken right now. It's about creating the runway for our best talent and best products to scale globally. That's how you turn capability into superior returns and how you build a company that thrives across cycles. 80/20 is the practical engine behind our transformation and the numbers I'll walk through today. So let's talk about the revenue growth algorithm. Our target is mid-single-digit organic growth annually through 2028, outpacing the market by more than 100 basis points per year. Starting from roughly $4.6 billion of reported sales in 2025, portfolio actions like the auto exit, belts divestiture and the recent Bijur Delimon acquisition, create a cleaner pro forma 2025 base of about $4.4 billion. From that base, growth comes from 3 places. First, the underlying market growth, including pricing, which contributes about 350 to 400 basis points of the CAGR. Second, outgrowth from our strategic verticals for an incremental 50 to 100 basis points annually. And thirdly, global platform expansion adds another 30 to 50 basis points annually including the aggressive industrial motion regional expansion, which Tim highlighted earlier. Collectively, these actions drive more than 100 basis points of annual outgrowth versus the underlying market and bring us to a 2028 revenue range of $5 billion to $5.2 billion. We expect adjusted EBITDA margins of 21% to 23% in 2028. And roughly a 500 basis point improvement versus 2025 at the midpoint. This would be a new record for Timken. The drivers breakdown like this. First, we expect a positive 100 to 150 basis point contribution from the operating leverage on market growth. Keep in mind, this is net of incremental investment we're planning to help accelerate growth as part of the transformation plan. Again, the reduction in complexity as part of 80/20 will free up resources that we intend to redeploy to help support our growth initiatives. And we're also planning to increase R&D expense over the time horizon, which would be embedded in that line, for example. Next, we're forecasting a 150 to 200 basis point margin gain from portfolio optimization related to the automotive exit and belts divestiture. I'll cover these respective actions in more detail in a few moments, but you'll notice that this is the biggest driver on the margin bridge and is in our control with actions already underway. With respect to the strategic verticals, the outgrowth we are targeting is expected to contribute 100 to 150 basis points to the 2028 margin target. And then our global platform expansion as part of Pillar 3 is driven primarily by outgrowth within the margin-accretive industrial motion platforms such as linear motion and automated lubrication systems. What I want to emphasize is that most of the margin increase is within our control through execution and portfolio actions and not dependent solely on volume recovery. So here's the first of the portfolio actions I want to highlight. We're reducing automotive OE exposure in a phased way, as Tim highlighted earlier. Action is already underway set us up to exit about $150 million of revenue through 2028. That exit is expected to add about 150 basis points to engineered bearings segment margins when complete, and it frees resources to redeploy into higher return areas. We're applying that same portfolio, 80/20 discipline in Industrial Motion. Our recent announcement to divest the belt business allows us to materially improve the structural profitability of the segment and simplifies our portfolio, generating more than 200 basis points of margin improvement on a run rate basis and roughly $100 million of revenue removed from the segment. On a pro forma basis, Industrial Motion EBITDA margins rise above 21% just from this action. And this action will be accretive to EPS in 2027, and it lets us, of course, redeploy resources into our strategic growth verticals. This next slide provides details on the 2028 outlook for sales and margins by segment, inclusive of the portfolio optimization in both segments I just highlighted. Both segments are expected to contribute to total company sales growth, but you can see that the CAGR is meaningfully higher for Industrial Motion. Industrial Motion is indexed to relatively higher growth markets like robotics and automation and has more regional expansion opportunities as part of Pillar 3. In addition, the Engineered Bearings segment has a higher revenue impact expected from portfolio optimization. I want to reiterate what I said a few slides back, that our mid-single-digit organic growth rate is higher than the total sales CAGR we show here since this includes the impact of the portfolio optimization. Both segments are expected to reach record margins in 2028, led by Industrial Motion expanding by around 700 basis points at the midpoint versus 2025. Just to reiterate, most of this margin expansion is driven by disciplined execution of Elevate to Outperform, and about 1/3 of it is from the portfolio actions already underway. And that margin expansion is a critical driver to our higher earnings and free cash flow trajectory. Timken has also proven its ability to consistently generate strong free cash flow which will fuel our strategic initiatives and enable us to continue returning capital to shareholders. Overall, we generated approximately $1.1 billion of free cash flow over the last 3 years. More importantly, we're expecting to generate around $1.3 billion in free cash flow over the next 3 years in total. This represents a $200 million increase versus the prior period based on around 95% conversion of GAAP net income, with the higher margin outlook being an important driver, along with our 80/20 simplification actions, which will help unlock working capital. And here is our disciplined capital allocation framework. We're effectively compounding this strong free cash flow and utilizing our investment-grade balance sheet to fuel our growth initiatives while consistently returning cash to shareholders. Investing in our core business remains our #1 priority as it generally produces the highest risk-adjusted returns on capital. We're targeting CapEx in the range of 3.5% of sales, which compares to the company's previous range of 3.5% to 4%. Our capital intensity is expected to continue to move lower over time as Industrial Motion becomes a larger percentage of the overall company, and we more efficiently leverage our existing asset base through our 80/20 mindset. Second, we expect to continue to pay an attractive dividend that grows over time. The expected payout ratio this year is below 25% of adjusted earnings, and we think the payout ratio will remain below 25% over the foreseeable future given the significant earnings growth we expect. I'll cover M&A and share buybacks further in a few minutes, but both remain very attractive options for deploying capital to enhance our earnings power and maximize returns. And finally, we're still targeting net debt in the range of 1.5 to 2.5x adjusted EBITDA, which is the foundation of our capital deployment framework and is in line with the low to mid-BBB investment-grade credit rating. Another point I'd like to make here is that return on invested capital comprises 30% of the long-term incentive plan for our leadership team, so disciplined capital deployment is especially important. And the free cash flow generation and strong earnings growth expected provides significant capital deployment optionality over the next 3 years. Based on the cash flow and EBITDA outlook, we expect to have $2.4 billion in total capital to deploy over the next 3 years, while still maintaining a net leverage ratio at 2x. Note that this includes $1.6 billion in cash available to deploy towards M&A and share buybacks, and keep in mind that our 2028 targets do not include incremental M&A and share buybacks, which represents upside. Let me focus a bit more on the potential capital deployment optionality, specific to acquisitions and how we think about M&A. On the right side, you can see listed the core principles for future acquisitions. With respect to fit, Timken needs to be a natural owner of a target, and it should have alignment with the strategic verticals we've detailed. Additionally, an acquisition needs to be financially attractive with the intent of maintaining the company's investment-grade rated balance sheet. And note that when we consider M&A, we do that relative to buybacks as an alternative. Timken has demonstrated a strong history of returning capital to shareholders with nearly $2 billion returned through dividends and buybacks over the last 10 years, and returning significant amounts of capital to shareholders is expected to remain an important element of capital deployment over the coming years. You can see we've delivered 12 consecutive years of higher annual dividends and 2026 will mark 13 years based on the recent quarterly dividend increase approved by the board a few weeks ago. Since 2013, we have reduced our share count by approximately 25% on a net basis. We currently have authorization to repurchase up to 10 million shares through 2031 and have been actively buying back stock thus far in 2026. Given where our stock is trading and the confidence we have in the future earnings power of the company, we would expect share repurchase to remain an attractive use of capital. Let me now turn to our balance sheet, which remains a key strength of the company. Today, we are reaffirming our net leverage target range of 1.5 to 2.5x. Note that we maintained leverage right around 2x the last few years as we've paid down debt levels to offset the declining EBITDA from an extended period of lower end market demand. Overall, our balance sheet puts us in a great position to drive shareholder value creation through capital deployment. So let me close on the summary of our 2028 financial targets that Lucian highlighted earlier. The bottom line is this, we expect significant sales growth, margin expansion and higher earnings over the next 3 years, driven by Timken's Elevate to Outperform plan. These would all represent new records for the company and really demonstrate that we're building a more simplified, higher growth and higher-margin Timken Company. Thank you all for your time today. I hope you can sense the excitement we have for the future earnings power of the company and the value creation potential. With that, I'll turn it back over to Lucian to provide a few closing remarks before we move to the Q&A session. Lucian?

All right. Thank you, Mike. I think you've heard my close with a word, excitement, and I hope you can sense that from all the presenters. What I want to do in my closing remarks is bring you kind of back to where we started from and maybe help understand where that excitement comes from. That excitement comes from confidence in the strategy and in its execution, and it comes from having implemented most of the financial elements that are required to execute and also from having already taken several of the actions that are well aligned with the 3 pillars. We've gone through our 80/20 portfolio, and its identified our accretive portfolio moves that are well underway. Our strategic vertical focus that we've talked to you about is already driving out growth. And our multinational footprint is creating new growth vectors that are already starting to bear fruit. These 3 pillars that you saw today, they're the foundation of how we do it. They're the foundation of how we're organizing and they're the foundation of our operating model. They will evolve over time, and we've outlined that with you, but they would most importantly become part of who we are and what sets us apart. So let me try to wrap up with the punchline of why Timken. Obviously, I'm biased, but with facts like the ones behind me, I think it's a bias that's anchored in a very compelling reality. We've got a tremendous foundation to build upon. We have the customer credibility in the right market spaces. We've got the balance sheet to invest in growth. We're in the right verticals. The wind is at our back and megatrends are in our favor. We have a clear and compelling execution framework. And this is the most important part, which is it's not revolutionary. It's tried and true. It is simple discipline and clarity in execution, its simplicity, and we're moving with urgency. This recipe coupled with speed and agility, it results in a strategy that always works. Whether it works or not is in our control, and we stand here confident and accountable to you to make it work. Last but not least, we're committed to our financial targets. These are not aspirations, they are commitments that we make to ourselves to deliver. And so thank you for your time, and we very much look forward to answering your questions. So I want to turn it over back to Neil. Neil?

Thanks, Lucian. Okay. We're now going to move to the Q&A session. We're going to have chairs brought up here in front. So please raise your hand. And you ask a question, just announce what firm you're with, your name. And then we'll have a couple of mics in the room, and then I'm going to try to navigate between some virtual audience questions as well. First, we're going to go to Brian and then we'll hit David over here. So Bryan go ahead.

Bryan Blair from Oppenheimer. Really good color throughout. To start Q&A at a high level. Maybe elaborate a bit more on the revamped Timken operating model. That can mean a lot of different things to different companies, and frankly, it can be more or less impactful or needle moving. How should we think of operating model revisions, the changes underway in the context of Timken's evolution?

Yes. Thank you for the question, Bryan. So something I'm very passionate about because I've seen it work. And it's kind of simple and basic, it's a little bit almost you want to get healthy, what do you want to do? You want to go to the gym, eat better, sleep more, drink more water, everybody knows it. But the proofs in the doing. This is no different. It's based on basic fundamental principles, which is you have management routines that are well defined, very prescriptive, based on 1 version of the truth. You have a cadence. So we have something that is called business decision week, so it's 1 week of the month. When we sit down and there's a day for functions and there's a day for regions and there is a day for the P&L. You make all the decisions that weak, then you have time for the rest of the month to engage with the market, engage with the customer. It doesn't even take the whole week. We don't do -- it's not a surprise agenda. It's not an agenda of the month. It's a bit -- think of Danaher operating system. All work goes through a standard process. Everything is not a crisis, everything is not special. If your standard processes work well, you can leverage those to really make decisions and drive forward. But the biggest core principle behind it is 1 version of the truth and simplification. So that's around the business day to day. Then there's a quarterly cadence, which goes around the strategy. So what that means is strategy is not an annual process that results in a fancy book that goes on a shelf, the strategy has an execution plan, and then we monitor the strategy execution on a quarterly basis. M&A integration is another part of that. So M&A integration, every single acquisition or divestiture as a leader, whether it's called a separation manager or an integration manager. There's a business case, no need to create a new 1 because when we did the divestiture or the acquisition, we reviewed 1 with the Board, we already have it. We just use that one, and we'll use that 1 every 2 weeks, and it's people you see in front of you today that review that. Everything doesn't work like you planned, but your review and adjust and you don't put away the original commitment. That is the commitment, that's the only 1 that that is there, that's what we look at. And then we adjust to the market reality in terms of what we need to do different, but what we need to do different is not reset the goal. And yes, everything won't work perfect. And at some point that's why we do portfolio management, there will be 1 of those acquisitions, 1 out of 10, 115 that maybe wasn't meant to be and then you take action, but use that discipline. So it's really tried-and-true operating model, taking kind of the best of what we've been able to learn from others and using it again, it's not -- there's nothing novel about it. No secret mousetrap here. It's just literally the tried-and-true model that we're applying with rigor and with discipline and using 80/20 on top of that because really, when you try to apply that model to the existing complexity, just imagine you're trying to drag half your customers and half your SKUs through this model over 1% of the revenue. I mean, it doesn't make sense. So that's where simplification will enable the model. But the model is in place already. We have the routine, we have the cadence. And little things like these monthly meetings have the same agenda every month, the same slides every month, finance creates them, and there's just new updated numbers, but it's not a new version of the scoreboard on the stadium. It's the same scoreboard we saw last month, how did it change and what's different and what are we doing about it?

Yes. Appreciate the detail. As a follow-up, you have pretty healthy Industrial Motion financial targets that you put out or commitments. How should we think about market growth and your team's out growth similar to the bridge that you provided on Slide 65, but segment versus consolidated?.

Yes. Look, I think given where we sit today, we had to put down what we see in front of us. And I think you can look at this and say, is everything you're going to get out of 80/20 in here? Or is there more regional translation than you have? And we've tried to give you our best look that we see today, and that's -- Industrial Motion growth is no different. So the margin, again, as Tim talked about, we have a significant step-up just from the belts exit alone. That one's already -- yes, we still need to close, but it's something that's well underway. We understand the margin accretion on some of these businesses as they grow. As you can imagine, when you sell into medical surgical equipment that's really good margin business. Tim talked about Lagersmit now with a long track record of 10% growth, over 10% growth. So those are all accretive to the portfolio. So just outgrowing those businesses already gives you margin lift. Some businesses like linear like lubrication do have also nice leverage on the fixed cost on the volumes, so that helps as well in terms of leverage. But I think overall, this is what we see in front of us. We also recognize translating these businesses -- and that's, I think, the aha moment. It's not as simple as they don't have a product catalog that you just hand to the bearing sales force and say, please sell this. It's an engineered solution business, which means you've got to build the ecosystem, which means if you want to take a roll-on out of Italy to France, you've got to replicate your Italian-speaking, many engineers with many relationships on the other side of the Alps. It's just reality. When you try to do it in the U.S., it's the same. So we've done that in the U.S. actually, for roll-on we're seeing it bear fruit. But there will be a sequence on how we invest and how we do it. But I'm excited that this -- these 3 pillars -- I've been asked before, so how long do you think you can sort of live off of these? Is this a short term? Is this not I think 80-20, there's a benefit from simplification that's quick, but the benefit from focus on the 80, that's longer lasting. So I think that will carry us. Focusing on the verticals, you heard talking about humanoid, talking about automation, that growth will fuel for quite sometimes the growth of Industrial Motion. And the regional translations will take a while before we run out of ground there. And then obviously, there's further capital deployment for M&A.

Great. Go to David here in the front.

David Raso, Evercore ISI. First, Capital Markets Day as CEO. Just curious, when you were rolling this this plan out, just so we learned sort of where do you feel -- and I'm speaking about metrics, not just qualitative. What are some of the metrics you would say you held back, you feel those are maybe a little more conservative? And where were the areas that you felt you were willing to put your neck out a little bit. And then the follow-up be kind of more specific. Can you update us on where the auto OE divestitures are backing away from low-margin revenues are in your negotiations and the revenue that you're embedding in the guide for humanoid in particular.

Okay. So I'll hand out to Tim because otherwise, I would be telling you what Tim is doing every day. So you'll hear it straight from him. But on the metrics on the metrics themselves, I would tell you it was surprising because I would have expected I'm going to have to sell these to the left of me, and that was actually not the case. I think we had enough time for Investor Day that we were able to go through the logic through the math through everything and arrive at numbers that everybody is aligned behind, so it wasn't like a big internal negotiation. When I -- what was, at least for me, a design principle going in is that there's not going to be big numbers and yes, but -- so we could have put out revenue of 5.5% up there and then come back and say, "Yes, yes, but remember, now we exited automotive, so you get to deduct $200 million from that " So you got $500 million, but it's -- you get 5.5%, but it's 5.2%. So we budgeted all that. We budgeted reinvestment into our margin because we didn't want to come back in 2 years and say, "Well, we hit our margin, but we had -- we want to spend on R&D for the future, so it's less, that's in." So we try to give metrics that are all in. So we don't revise because as a new management team, the most important thing that we have to earn is credibility. And we recognize that and putting numbers behind us is 1 thing, delivering them day in, day out, and that obviously means Q2 and Q3 and Q4 and the rest of them after that, but that's what it was. So I wouldn't say there was 1 that was just a big debate over. Do you want to talk about...

Sure. Yes, I'd love to. So on the automotive I'll say, exit plan. That's been going on for quite a few years. As we said, we've been sort of ramping that down. We took another look at it. We really have line of sight. If you look over the next 2 or 3 years, we've already got, I would say, 85%, 90% of our contracts and our discussions done with customers to know what that plan is going to look like really through the end of 2028. We may bleed into 2029. But for the most part, we have time frames locked down. We understand what we're going to do from a capacity standpoint. And so I would think about it in that time frame.

The humanoid revenues?

Yes. So on the humanoid revenues, John mentioned a few of them. We're still into the world of leading indicators versus revenue in hand. So I think what we know is what pipeline we have and we already mentioned it's over $100 million. We've quoted on tens of millions of dollars of business that at least if you listen to customers, it's not that far out in time or that will begin to materialize with supplied prototypes. So that is that is in motion or pun intended, but the pace at which it will happen, depends these OEMs, especially the typical ones you would think in the humanoid space tend to be very ambitious. And sometimes, they turn out to be right. So if you take their estimates, then it's faster, if you take what is more reasonable historically, then maybe not as quick. But I can't really give you an exact time other than to say how big the pipeline is at this point. But I would say humanoid is a bit binary or if this is going to be a big platform, then obviously, it will require some capital investment, it will require there's a -- it can only go so fast to get big because we have to invest for it. And that takes 18, 24 months to do. So that's kind of at least at the minimum, that's a limitation.

Angel Castillo with Morgan Stanley back here. Just wanted to maybe follow along those lines a little bit more. Lucian, you talked about just giving us, I guess, ultimately what you see today. There was a lot of what you described that ultimately alluded to, potentially the ability to take market share to grow your aftermarket business, given the opportunities that some of these other products maybe are kind of unlocking and your systems approach to maybe drive growth even beyond where some of those faster growth end markets are. I just want to clarify, should we assume that, that's all kind of incremental upside? How would you kind of characterize those opportunities? Or are those kind of embedded already in what you've laid out in that backdrop for growth? And then a separate question, just -- in terms of the $1.6 billion, that's not included in capital deployment, Mike, in terms of EPS or M&A, how should we think about that on an annual basis? Is this something that you're going to -- we should think about kind of steadily deployed each year that you'll do buybacks if you don't do M&A that year? And then as it relates to that, just if you could talk about the M&A pipeline, just again, help us understand the cadence.

Yes. So I appreciate the question. And 1 thing I would maybe clarify a little bit, so market share is usually a dangerous game to play because it results usually in the same share at less price. And so I'm a firm believer and share of wallet versus market share, so how can you get that share of wallet from the customer, what else can you add to your offering to get more share of wallet. Now if you can get market share by a completely different offering, so you -- and that's the beauty of 80/20. If you really focus on which ones are 80s customers and which ones are your 20s. What Tim didn't tell you is, yes, 50% of the customers cover 1% of the revenue, but a very small percentage of customers cover half the revenue. So you have half the revenue with really a very small number of customers, so how do you go to those customers and engage them differently and get more share of wallet, whether that share of wallet is first-party content, third-party content, it's back to that systems engineer. And again, I was talking and break with several of you, the systems engineer doesn't have to be 100% of what we do. There will still be a product sale that we do to a customer that just wants to buy a product, whether we do it directly, whether we do it through a channel partner, but to those key verticals and the key verticals don't buy anything key customers in the key verticals, in there is where we want to go for that share of wallet and how do you get more of that from customers. So that's what drives the growth. So if you think about the 2 vectors, it's the verticals, driving share of wallet and then it's the regional penetration. And the regional penetration that does have an element of share shift the beauty there is we're in the very elegant position of being the minority share. So then it's very difficult for somebody to fight back because it cost them a lot than it would cost us.

And the capital allocation question. So maybe first, I'd highlight that something I mentioned, which is we finished the last several years with our net leverage right around 2x, and we reaffirmed our target leverage range. So you can put that construct on it first, that we're going to continue to be disciplined in our capital allocation. I think that's important. As far as timing goes, hard to lay out the timing on that. I'd say we'll be opportunistic with our M&A pipeline as we've been. We've given you the criteria for what M&A looks like. So it has to be a natural owner strategic vertical fit, et cetera, so we'll continue to look for opportunities like that. But we aren't going to let our balance sheet go underutilized. So we will continue to balance those 2 and make sure that we're staying disciplined, but staying active.

Rob Werheimer, Melius Research. So you've laid out a lot of changes, which is fantastic, and I wanted to ask about organic outgrowth and what is the driver of that over the next couple of years? So maybe system sales takes a little while to get moving, maybe it doesn't, maybe cross-border selling. So how do you think about that outgrowth and what the sources are. And then second, I'll just ask them both at once, on M&A, do you see integration of M&A is different now? Maybe it's more strategic as you're trying to build systems and solutions, maybe you're doing more integration as opposed to adding pools of assets. I'm curious what your thoughts are.

Yes. So let me start with the second one, maybe it's a little more straightforward. So M&A, if you're the natural owner, it's inherently much easier. And integration, the purpose of integration is not to get everybody to use an orange pen because we're not Timken. The purpose of doing an integration is to create value for the shareholder. And if you look at Bijur Delimon for example, it's been -- Tim can tell you this, it's hard to tell after 2 months, who's Bijur and who's Timken because who they're working with are people who speak the same language, who have the same interest to have the same underlying technology, but they have a different customer base in different regions with complementary solutions. All of a sudden, they're stronger together, so they're excited. So that's happening. Now what we need to make sure as a management team is that we put in the investment that we said we were going to do. So for example, Lagersmit today is spending 2x the rate of CapEx that the rest of Timken is spending, which is wonderful. They're also growing at more than 2x the average of the company. So that's what we want to do. But we need to be here to say if that was a synergy case, if that's what we decided we're going to put our money where our mouth is. So that's on the acquisition integration. And again, the reason we highlighted the 3 time horizons because there was a lot of debate for putting 3 pillars and 3 time horizons for trying to explain a 3x3, which is not trivial to do. But the reason we did that is to really share with you that this strategy evolves over time, and M&A is part of this, where you start with no regrets, you go a little more bold. And at some point, when you really have confidence in the machine is when you can do more transformational things. But if you look at the history of companies before us that have done transformations like we'd like to do when Parker or others did their -- they didn't do -- it wasn't the first deal that they signed up for that was only accretive after massive synergy achievement, which they did achieve, so we want to have high confidence in the machine before we go big. Until then, we're going to go with things like Bijur where it's a little more straightforward. In terms of the outgrowth, you can think back to the same 2 dimensions, which is what can I get from these geographic translations that are really not dependent on market growth that's just taking a technology from an ecosystem from 1 region to another. And then it's the share of wallet with customers, and when half of your customers are 1% of the revenue and half your revenue is with, call it, 10% or 5% of your customers or even less, can you go to that top list of customers and get more share of wallet and more than pay for the 1% at the same time get the leverage. But the other very important element that we're bringing back through the P&L is verticals are important. We didn't talk about the back of the store a lot, sweating the assets. If you look at our trajectory over the last few years, even in Engineered Bearings and you deduct price from the revenue, you actually have lower volumes, and so if your volumes decline, you can go look for leverage on the extra revenue all day long, it's not going to be there. Volumes have to at some point go up. So paying attention both the volume as well as the revenue, I think, is going to be important, which is what the P&L will do. So the P&L will be fully aligned with assets, really sweating those assets, really making sure that if we keep that asset, then we keep an eye on the utilization and the piece count. If the asset is not a long-term keeper then, okay, fine, then let's take that strategy. We will do both. But I think it's the discipline on the volume, it's the outgrowth in the regions, and then it's the share of wallet in the segments.

Tomo, JPMorgan. I'd like to ask about the pricing power with One Timken business model. And how much do you bake in the pricing out of the revenue growth and the financial target? And especially if you could talk about how should we think about the incremental pricing power that could come from the business model shift itself? And if you could talk about also some potential competitive changes from possible NSK NTN integrations when it comes to the pricing, please?

Yes. Look, if you step back and look at the business, we separated to EB and IM and talk a little bit separately. If you look at EB margins and you compare it to our peers, we're doing pretty well. So it's not an issue that we don't have a good pricing machine. We have actually a pretty good pricing machine. But in the end, what the question is, is twofold. One is what I said below. Are you balancing that price and volume correctly? Are you simplifying enough to where you're running your assets most efficiently because when you run the complexity that we run, your most frequent operation is called changeover, and changeover is charity, that's money losing. That's not productive. And so you want to do your productive campaigns as long as possible, and you want to have as few changeovers as possible. So that helps on the price versus cost. And then we have businesses that are so accretive to the portfolio. Just like you saw, we had -- it's easy for you to conclude that we at least had 2 that were highly dilutive to the portfolio because we're getting margin lift from exiting those. Likewise, we have accretive ones. So how do I double down and invest into those more accretive into the accretive businesses. So I think it's going to be much more of a mixed focus. But the last thing I would leave you with, which I think is the most important 1 is I always started a business with a material margin because if I don't have material margin, then there's nothing for me to worry about, then I have to go out and get some more from customers. The material margin of this company is very healthy. So now how do I keep more of that to the bottom line? And I keep it by simplifying, I keep it by getting the right mix. I keep it by running my factory as well versus let me go and skim some more on the price. Mike can talk to you about what's baked in, we have some price baked in, but I would say this is not a let's go price higher plan. This is a let's run the business better. Do you want to talk about price, Mike?

Yes. Just a simple answer. Assumed in that revenue growth, that market growth bucket, there's about 100 basis points of pricing assumed in there, so -- which is consistent with what we've been doing recently. And when you consider the 80/20 actions, et cetera, that I think is well within our delivery as our ability to deliver, as Lucian said, our pricing mechanism works really well. So we'll continue to price where appropriate, but assumed in the models of around 100 basis points of growth.

The question just around the discussion around 80/20. Just more kind of at the plant level, are there complexities that, that brings up in that you have plants that don't just make products for auto they may sell into distribution and other applications. So how do you manage that if that is an issue that you have to kind of get around just in terms of how you think about allocating those resources? And then I guess, Part B, it doesn't sound like cash flows are going to be an issue, but just thinking about looking at Timken India trading at almost 45x EBITDA. Is there opportunity to -- or potential to further sell down and potentially monetize that stake? Or are there -- I know there are some control issues that may arise. So maybe just the potential opportunity to leverage that highly valuable stake.

Yes. Sure. Do you want to I'll take the last part first and then you want to -- we can come back maybe Tim can cover that. So over the last several years, we have taken our stake in Timken India down from 68% to about 51% ownership right now. So as it stands, there's no plans to further take advantage of that. It doesn't mean we're not always looking at it. But as you point out, control issues, if we go below 51%, so it's a very valuable part of our operation. And so I would say there's no current further plans to do anything with that, but we'll continue to look at it.

In reference to the first question, clearly, when you look across our number of plants globally, there is some complexity and there's some overlap in there when you look at 80/20. What I would say is not as much as you would inherently think. And I would say, historically, when we try to go take a look at this, we sort of got scared away because of those interconnectedness of the assets. And so I think the 80/20 methodology, what it's brought us to is -- there are areas that are very clean that we can go action right now. And then there are other areas that are a little bit messier where it's going to take a little bit of time to unwind and look about how -- look to how we reevaluate those asset structures globally. And so -- what I would say is we're not letting it hold us back now for 1 thing, which historically, we are at risk of that. So we are moving forward in areas where it makes sense. It's clean, go do it. There are some other areas and probably less than we all thought that really are -- have some of that interconnectivity we have to deal with, but it's not really a major part of it.

Maybe just to add to that, specific to the auto, you mentioned, Tim, the auto part of that. So as Tim mentioned in his in his section, responsibly managing the stranded cost is an important part of what we have to do. And so -- and I think we've demonstrated that over time that we address that with restructuring reorganizations. And so we'll always manage that responsibly, and -- but what's assumed in those targets is already accounting for any stranded costs that we're not able to address. .

Yes. And 80/20, culturally, if you roll out 80/20 into an organization within the first 5 minutes, you're going to hear 2 things from the sales force. One is all little customers are called baby whales and then all big customers buy baby products. And so if you buy into those 2 things, then you pack up and go home. What you saw behind us is we said 50% of our SKUs and customers are covering 1% of the revenue, and we said we're immediately targeting 25%. So we're not allowing the dialogue to slow us down. We're saying, yes, you are correct. There is such a thing as a big customer buying a small product, then there is such a thing as a baby will but half of what we have is not that. So let's not let great be the enemy of good. Let's start today and action what we can do. And if right away, I can only rationalize 25% of my SKUs, that's still huge progress, and then we'll go through the other 25% and see whether we can rationalize 20% of that 25% or 24%. But we will go through that. So that's the approach. The approach is solve for yes, what can you do today and let's not let the debate of the last percent hold up everything else. It's -- we've established that philosophy very early on. We've seen that before, and we've learned from the past, and I think that's why you see us move with a lot more speed and confidence than before.

Joe Ritchie from Goldman Sachs. I appreciate all the details today. I guess just focused on this whole SKU rationalization. I'm trying to connect the dots on the financial targets of 150 to 200 basis points of portfolio optimization. And then the fact that you're getting rid of the auto business, you're exiting the belts business and that seems to basically get you most of the way there, if not all the way there. So just help me connect the dots between the financial targets? It just seems like there might be some more opportunity on the portfolio rationalization size? .

So a couple of things. So one, what we gave for the margin lift on belts and on auto, our segment margins in each of the businesses. So if you take that, then you got to take 1/3 of the 200 for belts, right? And that translates into only 60 for the company. And then the 150 auto, 2/3 of that is 100. So you get out of the 350 you only get about half. So that's that piece and we have 500 total. The other part is the 500 total is net of investments. So there is another more than 100 that investment. So it's really more like 600 in total. So there is a good 350, 400 on top of that. Is there upside on that? Is it possible? Yes. I think if you talk to people who have done 80/20 before, 80/20 consultants, generally, people will quote you a number that's maybe a little more than what we have here. What we have is what we think is reasonable that we can execute in this time horizon. Again, this is a 3-year view because the same people that would tell you that there is typically 400, 500 bps of lift, they will tell you it's 3 to 4 years to get it, and this is -- we'd have to get it in to have it actually fully hit in year 3. So that's part of it is you're not really reaching steady state on 80/20. We're going to try to do better. Of course, we're going to try to do better. But this is not a -- we've got the 700 in the bag, let's sign up for 500. That was not the approach here.

Okay. That's super helpful. And then maybe just 1 other question, so there are other companies that have taken this approach and it's been super successful in terms of expanding margins over the past decade. I think of somebody like an ITW is a good example of that. When they tried to pivot to growth, it was a little bit more of a struggle. I'm just wondering, as you're thinking about your own KPIs and how you're going to manage that almost like transfer process from rationalizing your SKUs to getting more out of your organization to grow. Just help us understand that a little bit further.

Yes. The beauty is we commissioned the 80s teams and the 20s teams at the same time. So this is not a -- let's go save a bunch of money and then we'll figure out what to do with it. We literally did that all at the same time. the training that's being done, and we're using a consulting firm. We've talked about it publicly strategic. They're the leader in this. people that be using spend time in IT coincidentally. So they've seen they've seen a movie before. And so obviously, we're benefiting from some of those lessons and also some of their colleagues are from other companies that have done this, and they've implemented 80/20 and many other companies. So we're Again, we're trying to invent nothing new. We're trying to learn from others that have done it. But we've really focused on making sure even the training itself, if you come to our 80/20 training, it's -- it's 2 days. And you learn about the 20 in the first 3 hours and then the next 1.5 days is about the 80s, it's about how you grow. And that's really the emphasis that the balance. We're over investing on that side because, frankly, if you look at our DNA, go cut this, go exit this, we'll do that. That will get done. I'm not worried about that. It's the second part that muscle that needs to have the confidence. We've changed our organizational structure. So for example, we only had regional leaders for 2 of our regions for really the far away regions. There was no European leader. There was no Americas leader. Well, that's the majority of the revenue of the company. Now 100% of the revenue is box balance between regions and P&L. There's no region without a regional leader. There's no factory without a P&L that owns it. So that box balancing also allows then the regions to prioritize market-facing resources and you hold them accountable for pipeline, for order book for growth and then you can hold the factories accountable for fact your absorption for managing the cost for all the things you would use to manage the back of the store well. So it allows us to do both of those, and that's the brand's question, that's where the operating model is or the magic comes in, you got to bring that together because you're operating the back of the store in the front of the store and then they have to come together.

The other thing I would add to that, add to Lucian is when you look at this, we've got both businesses that are in this 80/20. And so when you look at how each of those businesses are positioned for this the industrial motion position, as you've heard, we're taking that as the storefront. They know how to grow. They are the fastest growing. So when we talk about growth, we're really leaning on that industrial motion portfolio to continue to grow at higher levels outgrowth and then pull in the bearing side of this from a system. The bearing side is the 1 that has the 125 years of history, when we talk about more of the 20s, right? And so we're in a great position with a little bit of wind at our back on managing both these, and we can get benefits out of both. So I think that's part of the behind the scenes also.

Thanks so much for all the great info. I had a couple of questions on the capital deployment slide. First is, I noticed that the CapEx is $500 million in both periods prior and going forward. I might have thought with the focus on some of the growth verticals that the CapEx number would be greater going forward. So if you talk about that a little bit. And then the other question related to that slide is the portion M&A and share repurchase, just to understand how you're thinking a little bit more. Is the share repurchase more of a residual. So if you can't spend all the money on good acquisitions you like, then you got a share repurchase? Or is it at a given point in time, you look at the relative returns of each of those and decide accordingly.

Yes. Sure. So let me start with the second one. And Mike, obviously, I'm sure, is going to want to add. But key at least in the short to medium term back to walk before we run is balanced. So we're not going to go in 1 extreme direction or another better farm acquisitions, things like that, that's -- we have to we have to develop a lot of confidence into where we're all the muscle that's required to integrate and to create value out of something that's more binary like that. So that will, by definition, almost have a balanced approach will we go all the way to share buybacks. No, because again, our focus on verticals is going to require continued portfolio refresh. We have pretty good healthy list of acquisition targets that we know we want. They don't all become available when we choose. But when they become available, we can move quickly. I think we've demonstrated on Bijur Delimon from the time that I could spell the name to the time that we had an announcement was very, very short. And we moved with speed and thank goodness, we moved toward speed because that market has picked up pretty significantly since we closed on the acquisition, and we were able to close on that at a pretty good value. Mike, if you want to add?

Yes, I can take the CapEx question. A couple of things on that. One, with our shift to growth, especially around the industrial motion portfolio, they are a little bit less capital intense. So I can get more bang for the buck to use a term by keeping those dollars the same. And then we're putting an 80-20 lens on everything we're doing. And I would say it's the same for how we spend our capital. aligned to our strategic verticals now. So making sure that our capital is leveraged against where we're going to get the best opportunity for growth. And so while I may be spending the same dollars, I'm hopefully spending them a little more effectively and aligned. So between the capital intensity going down and the more focused investment, the dollars stay the same.

Thank you. A very interesting presentation this morning. Two questions. I'll just ask them 1 at a time. just to make sure the margin uplift from the businesses you're exiting belts and parts of your auto portfolio, I mean that implies that the EBITDA margins for those respective businesses are running in the order of 2,500 basis points below the segment average, if I did my math correctly. And I just want to verify that, that's correct that there's not some other element to the margin improvement associated with those divestitures? .

Yes. I don't know if it's exactly true 2,500 in each segment, but your order of magnitude isn't wrong and your conclusion is not wrong.

Okay. That's what I figured. I just wanted -- second, so Engineered Bearings, if I look at the 2028 target, 21% to 23% EBITDA margin, that's sort of similar to prior segment peak, I think, in 2023 adjusted for the uplift from the auto exit. So I guess what's holding you back? Or what are the headwinds working against getting above a prior segment margin peak for engineered bearings on a like-for-like basis as you look out to 2028 or beyond. .

Yes. Look, I think there's several segments in there where we were at a different point in the growth trajectory than we are today at the last cycle. So for example, wind would be an example of that where you see it in our revenue, and a lot of that change is more price than revenue. So wind has now become a heavily China business, which has a little different competitive dynamics than it had when it was on the upswing. So that's an example in that mix. But I think in general, it's just the margins in that business are a little more challenged. -- than in the rest. But the other piece is what I referred to earlier, which is the volume leverage. We've not kept the sufficient eye on the volume and of the utilization. That's what the asset which is what I think has -- so that's 1 area, frankly, that will get a lot more attention going forward. What's baked in there now is what we said -- what we see in front of us, but that's 1 we will pay a close attention to.

Yes. And maybe just to clarify, Justin, so in 2023, we had just over 20% adjusted EBITDA margins for engineered bearings and the midpoint of the target is 22% for engineered bearings, so just...

Steve Barger from KeyBanc. One for Tim. You're leading on industrial motion for growth and bringing bearings along -- in the slides, you showed how the One Timken approach can increase lifetime value by 3x, 4x, in one case, 50 times. How do you start that conversation about displacing the incumbents to get that share? And how long do you think that process takes?

Sure. Great question. Listen, we've already got many of our industrial motion businesses and products are already pulling bearings through. And so if you look at Philadelphia Gear, right, they're using Timken bearings when they do their gearbox either new business or repair. And so it's already done. It's really about how do you continue to leverage that more as you go to the market, knowing that we can now take not just bearings, right, but we're able to leverage other industrial motion acquisitions that may be and historically didn't have the opportunity to pull other products through, whether it be bearings or other Timken components, right? So if your question specifically on bearings, I think from a displacement standpoint, we already continually look at that to make sure that we've got the right components going through the products. I think we -- with now as part of One Timken, we'll go back and take another look, and it's really John, as part of his prior role looked at, do we have all the bearing pull-through that we could in our industrial motion applications, I think, from my standpoint, as that portfolio has grown to the size it is now, we're going to see a bigger uplift coming through quite frankly, the time to shift to sourcing decisions to Timken bearings are fairly short, to be honest, right? It's not really a long tent in the pole in most of our applications.

Yes. And I think the other opportunity that's even more compelling is synergies inside IM. So we've combined a number of the businesses into a precision drives portfolio. So or that's already 1 business unit, they're presenting themselves to the market as one, they're talking to customers as one. So whether it's account driver whether it's assist drive, whether it's a precision driver that you get out of CGI either way. that gets presented as 1 solution. And they're already as we speak, engaging with customers like that as 1 face to the market. New markets like humanoid, obviously, that depends on how fast that technology scales up. . Also related to the CapEx on humanoid if that is to turn out to be something very significant, which all likelihood is that it will, then obviously that has CapEx implications, but it also has implications for John and his team on how we make these parts because how you scale this in a way that's cost competitive because when this goes big, they're not going to want 5 of them. This is going to be a mass production of something that needs to be reimagined versus how it's done today.

Thanks, Steve. We do have a question online. In engineered bearings, should we think about the phasing of the 150 basis points of margin benefit from exiting auto OE is falling in line with the sales impact, i.e., minimal in 2026, 50 bps in 2027 and 100 bps in 2028 or is it more front-end loaded?

Yes, I can take that one. So I think fair to assume that the impact this year is minimal and already incorporated in our guidance from May 6. Not ready to provide '27 outlook yet, but it will be -- we'll -- as volume goes down, obviously, stranded cost becomes an issue. We'll manage that to the best we can. But I would say that between the pricing actions we're taking and our cost management that it will come in, call it phased over time. I don't know if it quite be -- as even as that, but it would come in phased over time. But then Really, the big uplift is not until you get to the end, if you will, and we're able to address all of the stranded costs.

Just wanted to ask 2 questions. One of them is, does the reorganization of the company towards 80/20 has it -- or does it impact on your distribution partners? And have they provided any input? And yes, maybe I'll start with there and ask a follow-up.

We're not the only ones who do 80/20. So I think when you think about 80/20, okay, I'm going to have fewer customers, people talk to use words like fire customers, things like that. This is I don't think it's any longer an adversarial action. I think it's accepted in the industry that people do this. It's part of being a good steward of a business. And so that's the tone of the conversations, whether that's with our customers that buy small volumes or whether that's with our important channel partners who will remain very strategic and very important to us. They can be beneficiaries of this because on that 50% of the customers, there is a significant portion of those that we will let them manage. Now they will have to work with us because if those same small customers buy the one-off parts, then we haven't fixed anything, but they will have to work with us to where if they take the small customers, then how do we rationalize the SKUs, how do we transition them to more standard product. But it's a partnership that in the end will be good for them. And it really allows them to do what they're good at and ask what is -- so we've had -- I met personally with some of our larger distributors. And I can tell you it's a very productive conversation. It's understood that their are other suppliers do it. And we're getting points because we're approaching them early, which is always good in life. We're sharing very openly what we're trying to accomplish, and then we're letting them be part of the how, which is what gets the buy in.

And just a last question on headcount. Do you think at the end of the process, does the net headcount at Timken grow, shrink or stay the same?

Yes. Look, the intent is not to achieve value via headcount, the intent here. But will there be certain activities that will require less headcount absolutely, there will be no doubt there will be. But we will also have to also redeploy that headcount because some of these initiatives will require more investment, absolutely. And so if you think about creating these ecosystems for industrial motion businesses in new countries, this is a pretty significant upfront investment. You do have to do a little bit of the build it and they will come. We're not going to build the factory first, the factory, I'll tolerate the logistics and tariffs and whatever inefficiency they'll prove that somebody is buying something, and -- but the engineering, the customer-facing ecosystem, the prototyping that all needs to be there. So there will be investment and reduction at the same time. I couldn't tell you exactly where it's going to net out. But what I can tell you is we're not doing 80/20 with a headcount target in mind. We're doing it with a simplification and with a growth in mind.

Great. Any more questions in the room? We've got time for another question. We do have 1 more on the virtual audience. Can you just talk about the impact from exiting auto OE business, so the automotive aftermarket outlook, does that impact that business at all? .

Yes. I think from our standpoint, no, we're really focused on the automotive OE side of this. The automotive aftermarket business operates very differently and operate separately. We certainly understand if there are implications around that. There was a question earlier about mixing of sort of markets, high volume, low volume. Clearly, there is some of that in there. but again, not as much as we would think. And so we're going into the auto OE fix with an eye towards the automotive aftermarket and making sure that we continue to manage that business the way it needs to be managed.

All right. Well, thanks, everyone, for joining us today. If you have any further questions after today's event, please contact me. Thank you, and this concludes Timken's 2026 Investor Day.