TIMKEN COTKR
TIMKEN CO Debt Disclosure
Note 12 - Financing Arrangements
Short-term debt as of December 31, 2025 and 2024 was as follows:
| 2025 | 2024 | |||||||
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 2.59% to 2.68% at December 31, 2025 and 3.36% to 3.95% at December 31, 2024 | $ | 24.5 | $ | 8.7 | ||||
| Short-term debt | $ | 24.5 | $ | 8.7 | ||||
The lines of credit for certain of the Company’s foreign subsidiaries provide for short-term borrowings, with most of these lines of credit being uncommitted. At December 31, 2025, the Company’s foreign subsidiaries had borrowings outstanding of $24.5 million and bank guarantees of $6.2 million. The weighted-average interest rate on these lines of credit during the year were 2.77%, 4.19% and 4.24% in 2025, 2024 and 2023, respectively. The weighted-average interest rate on lines of credit outstanding at December 31, 2025 and 2024 was 2.63% and 3.58%, respectively.
Long-term debt as of December 31, 2025 and 2024 was as follows:
| 2025 | 2024 | |||||||
Variable-rate Senior Credit Facility with an average interest rate for Euro of 2.91% at December 31, 2025 | $ | 21.2 | $ | — | ||||
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02% | 176.2 | 155.3 | ||||||
Variable-rate Term Loan(1), maturing on December 5, 2027, with an interest rate of 4.94% at December 31, 2025 and of 5.58% at December 31, 2024 | 84.8 | 369.6 | ||||||
Fixed-rate Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76% | 154.9 | 154.8 | ||||||
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50% | 398.5 | 398.1 | ||||||
Fixed-rate Senior Unsecured Notes(1), maturing on April 1, 2032, with an interest rate of 4.13% | 346.4 | 345.1 | ||||||
Fixed-rate Euro Senior Unsecured Notes(1), maturing on May 23, 2034, with an interest rate of 4.13% | 695.5 | 609.7 | ||||||
Fixed-rate Euro Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15% | 10.6 | 10.6 | ||||||
| Other | 9.4 | 10.8 | ||||||
| Total debt | $ | 1,897.5 | $ | 2,054.0 | ||||
| Less current maturities | 14.4 | 4.3 | ||||||
| Long-term debt | $ | 1,883.1 | $ | 2,049.7 | ||||
(1) Net of discount and fees
The Company renewed the Accounts Receivable Facility on December 5, 2025. The $100 million Accounts Receivable Facility matures on November 30, 2028. Under the terms of the Accounts Receivable Facility, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly owned consolidated subsidiary that, in turn, uses the trade receivables to secure borrowings that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility may be limited to certain borrowing base limitations; however, availability under the Accounts Receivable Facility was not reduced by any such borrowing base limitations at December 31, 2025. As of December 31, 2025, there were no outstanding borrowings under the Accounts Receivable Facility. The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income. The interest rate was 4.93%, 5.67% and 6.42% at December 31, 2025, 2024 and 2023, respectively.
Note 12 - Financing Arrangements (continued)
On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of the $750 million Senior Credit Facility and the $400 million 2027 Term Loan, both of which mature on December 5, 2027. The interest rates under the Credit Agreement are based on SOFR. At December 31, 2025, the Senior Credit Facility had $21.2 million of outstanding borrowings, which reduced the availability under this facility to $728.8 million. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio. Payments in 2025 and 2024 have reduced the 2027 Term Loan to $85.0 million at December 31, 2025.
On May 23, 2024, the Company issued the 2034 Notes in the aggregate principal amount of €600 million with an interest rate of 4.13%, maturing on May 23, 2034. Proceeds from the 2034 Notes were used for the redemption of the Company's outstanding 2024 Notes in the aggregate principal amount of $350 million, that were due to mature on September 1, 2024, as well as the repayment of other debt outstanding at the time of issuance.
At December 31, 2025, the Company was in full compliance with all applicable covenants on its outstanding debt.
In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to insurance contracts. At December 31, 2025, outstanding letters of credit totaled $86.3 million, primarily having expiration dates within 12 months.
The maturities of long-term debt (including finance leases) for the years subsequent to December 31, 2025 are as follows:
| Year | |||||
| 2026 | $ | 14.6 | |||
| 2027 | 311.1 | ||||
| 2028 | 522.9 | ||||
| 2029 | 2.5 | ||||
| 2030 | 2.1 | ||||
| Thereafter | 1,059.5 | ||||
The table above excludes $14.6 million of unamortized discounts and fees that are netted against long-term debt and $0.6 million of imputed interest netted against finance leases at December 31, 2025.
Interest paid was $104.8 million in 2025, $113.2 million in 2024 and $108.8 million in 2023. This differs from interest expense due to the timing of payments, the amortization of deferred financing fees and interest capitalized of $1.4 million in 2025, $1.0 million in 2024 and $0.2 million in 2023.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.