Financing Arrangements

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Financing Arrangements

Note 12 - Financing Arrangements

Short-term debt as of December 31, 2023 and 2022 was as follows:

	2023		2022
Variable-rate Term Loan(1) maturing on August 16, 2024, with an interest rate of 5.112% at December 31, 2023	$	220.8	$	—
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 4.35% to 7.33% at December 31, 2023 and 2.38% to 5.50% at December 31, 2022	25.4		46.3
Short-term debt	$	246.2	$	46.3

On August 16, 2023, the Company entered into a €200 million variable-rate term loan ("2024 Term Loan"), maturing on August 16, 2024. Proceeds from the 2024 Term Loan were used to repay borrowings on the Senior Credit Facility and Accounts Receivable Facility, as well as for general corporate purposes. The Company currently intends to repay or replace the 2024 Term Loan prior to its maturity.

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, 2023, the Company’s foreign subsidiaries had borrowings outstanding of $25.4 million and bank guarantees of $2.1 million. The weighted-average interest rate on these lines of credit during the year were 4.24%, 1.4% and 0.8% in 2023, 2022 and 2021, respectively. The increase in the weighted-average interest rate was primarily due to higher borrowing rates. The weighted-average interest rate on lines of credit outstanding at December 31, 2023 and 2022 was 4.81% and 2.62%, respectively.

Long-term debt as of December 31, 2023 and 2022 was as follows:

	2023		2022
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 6.48% and Euro of 4.85% at December 31, 2023 and 5.10% and 2.21%, respectively, at December 31, 2022	$	247.4	$	8.5
Variable-rate Accounts Receivable Facility, with an interest rate of 6.42% at December 31, 2023 and of 5.01% at December 31, 2022	67.0		85.0
Variable-rate Term Loan(1), maturing on December 5, 2027, with an interest rate of 6.58% at December 31, 2023 and of 5.55% at December 31, 2022	399.3		399.1
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%	350.0		349.8
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%	165.5		160.4
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%	397.7		397.2
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%	154.8		154.8
Fixed-rate Senior Unsecured Notes(1), maturing on April 1, 2032, with an interest rate of 4.125%	343.7		342.1
Fixed-rate Euro Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%	12.7		13.6
Other	11.6		6.4
Total debt	$	2,149.7	$	1,916.9
Less current maturities	359.4		2.7
Long-term debt	$	1,790.3	$	1,914.2

(1) Net of discount and fees

Note 12 - Financing Arrangements (continued)

The Company renewed the Accounts Receivable Facility on December 6, 2023. The $100.0 million Accounts Receivable Facility matures on November 30, 2026. 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. These limitations reduced the availability of the Accounts Receivable Facility to $79.1 million at December 31, 2023. As of December 31, 2023, there were $67.0 million outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under this facility to $12.1 million. 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 6.4%, 5.0% and 0.9% at December 31, 2023, 2022 and 2021, respectively.

On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of a $750.0 million Senior Credit Facility and $400.0 million 2027 Term Loan that each mature on December 5, 2027. The Credit Agreement amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350.0 million 2023 Term Loan that was set to mature on September 11, 2023. The Credit Agreement also replaced interest rates based on LIBOR with interest rates based SOFR. At December 31, 2023, the Senior Credit Facility had outstanding borrowings of $247.4 million and $1.3 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $501.3 million. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio.

On March 28, 2022, the Company issued the 2032 Notes in the aggregate principal amount of $350.0 million with an interest rate of 4.125%, maturing on April 1, 2032. Proceeds from the 2032 Notes were used for general corporate purposes, which included the repayment of borrowings under the Company's previous senior credit facility and Accounts Receivable Facility at the time of issuance.

The Company has the 2024 Notes in the aggregate principal amount of $350.0 million with an interest rate of 3.875%, maturing on September 1, 2024. The Company currently intends to refinance the 2024 Notes prior to their maturity.

At December 31, 2023, the Company was in full compliance with all applicable covenants on its outstanding debt.

In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to insurance contracts. At December 31, 2023, outstanding letters of credit totaled $59.6 million, primarily having expiration dates within 12 months.

The maturities of long-term debt (including $8.5 million of finance leases) for the years subsequent to December 31, 2023 are as follows:

Year
2024	$	359.4
2025	29.1
2026	53.1
2027	837.6
2028	521.2
Thereafter	358.8

Interest paid was $108.8 million in 2023, $72.5 million in 2022 and $56.5 million in 2021. This differs from interest expense due to the timing of payments, the amortization of deferred financing fees and interest capitalized of $0.2 million in 2023, $1.0 million in 2022 and $2.6 million in 2021.