PARK OHIO HOLDINGS CORP

Previous wording

Net sales decreased 0.2% to $1,267.8 million in the first nine months of 2024 compared to $1,270.4 million in the same period in 2023. This decrease was primarily due to lower sales in the Assembly Components segment, partially offset by increased sales in our Supply Technologies segment and the capital equipment business in our Engineered Products segment.

Current wording

Net sales decreased 2.9% to $405.4 million in the first three months of 2025 compared to $417.6 million in the same period in 2024. This decrease was primarily due to lower demand in our Supply Technologies and Assembly Components segments.

Previous wording

The factors explaining the changes in segment net sales for the three months ended September 30, 2024 compared to the corresponding 2023 period are contained within the “Segment Results” section below.

Current wording

The factors explaining the changes in segment net sales for the three months ended March 31, 2025 compared to the corresponding 2024 period are contained in the “Segment Results” section below.

Previous wording

Cost of sales decreased to $1,050.9 million in the first nine months of 2024 compared to $1,063.1 million in the same period in 2023, driven by ongoing profit improvement initiatives and the decrease in net sales described above. Gross margin was 17.1% in the 2024 period compared to 16.3% in the corresponding 2023 period. The year-over-year gross margin improvement was driven by improved operating profit in our Supply Technologies segment; higher sales and improved margins in our capital equipment business; and ongoing profit improvement initiatives.

Current wording

Cost of sales decreased to $337.3 million in the first three months of 2025 compared to $346.2 million in the same period in 2024, driven by the decrease in net sales described above. Gross margin was 16.8% in the 2025 period compared to 17.1% in the corresponding 2024 period. The year-over-year gross margin decrease was driven by the decrease in net sales described above.

Previous wording

SG&A expenses were $142.3 million in the first nine months of 2024, compared to $135.1 million in the same period in 2023, an increase of 5.3%. As a percentage of net sales, SG&A expenses were 11.2% in the first nine months of 2024 compared to 10.6% in the comparable period in 2023. These increases were driven by ongoing inflation and higher employee costs.

Current wording

SG&A expenses were $48.2 million in the first three months of 2025, compared to $47.1 million in the same period in 2024, an increase of 2.3%. As a percentage of net sales, SG&A expenses were 11.9% in the first three months of 2025 compared to 11.3% in the comparable period in 2024. These increases were driven by ongoing inflation, higher employee costs and fixed SG&A costs over lower sales levels.

Previous wording

During the first nine months of 2024, the Company recorded $2.1 million in connection restructuring and other special charges, primarily in our Engineered Products segment, as well as acquisition-related charges of $0.3 million in connection with the acquisition of EMA Indutec GmbH (“EMA”).

Current wording

During the first three months of 2024, the Company recorded acquisition-related charges of $0.3 in connection with the acquisition of EMA Indutec GmbH (“EMA”).

Previous wording

Other components of pension and OPEB income, net was $3.8 million in the first nine months of 2024 compared to $1.9 million in the corresponding period in 2023. This increase was due to lower net actuarial losses impacting 2024 compared to 2023.

Current wording

Other components of pension and OPEB income, net was $1.8 million in the first three months of 2025 compared to $1.3 million in the corresponding period in 2024. This increase was due to lower net actuarial losses impacting 2025 compared to 2024.

Previous wording

Interest expense, net was $36.0 million in the first nine months of 2024 compared to $33.4 million in the 2023 period. The increase was due primarily to higher interest rates, offset slightly by lower average outstanding debt balances in the 2024 period compared to the same period a year ago.

Current wording

Interest expense, net was $11.0 million in the first three months of 2025 compared to $11.9 million in the 2024 period. The decrease was due primarily to lower average outstanding debt balances and lower interest rates in the 2025 period compared to the same period a year ago.

Previous wording

In the three months ended September 30, 2024, income tax benefit was $0.6 million on pre-tax income from continuing operations of $12.6 million. In the three month period, we recognized a benefit of $2.4 million primarily due to changes in estimates related to prior year federal research and development credits. In the three months ended September 30, 2023, income tax expense was $3.8 million on pre-tax income of $16.0 million, representing an effective income tax rate of 24%.

Current wording

In the three months ended March 31, 2025, income tax expense was $1.9 million on pre-tax income from continuing operations of $9.7 million, representing an effective income tax rate of 20%. In the three months ended March 31, 2024, income tax expense was $3.3 million on pre-tax income of $13.4 million, representing an effective income tax rate of 25%. The three month ended March 31, 2025 tax rate is lower than the statutory rate primarily due to the federal research and development tax credit benefit partially offset by foreign earnings taxed at higher than U.S. rates. The three month ended March 31, 2024 tax rate is higher than the statutory rate primarily due foreign earnings taxed at higher than U.S. rates.

Previous wording

For purposes of business segment performance measurement, the Company utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating or unusual in nature or are corporate costs, which include but are not limited to executive and share-based compensation and corporate office costs.

Current wording

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating; unusual in nature; or corporate costs, which include but are not limited to executive compensation and corporate office costs. Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costs; other components of pension and other postretirement benefits income, net; and interest expense, net.

Previous wording

Net sales were $9.7 million, or 9%, lower in the three months ended September 30, 2024 compared to the 2023 period. The decrease was due primarily to lower product pricing on certain legacy programs and lower unit volumes primarily on end-of-life programs, partially offset by higher product pricing on certain other programs.

Current wording

Net sales decreased 9.6% in the three months ended March 31, 2025 compared to the 2024 period. The sales decrease was driven by lower product pricing on certain legacy programs and lower unit volumes particularly on end-of-life programs.

Previous wording

Net sales increased 5.8% in the 2024 period compared to the 2023 period. The increase was driven by higher sales in both our new capital equipment and aftermarket parts and services businesses in North America and Europe.

Current wording

Net sales increased 6.3% in the 2025 period compared to the 2024 period. The increase was driven by strong customer demand in our industrial equipment business offset by lower volumes in our forged and machined products group. The higher sales in our industrial equipment business were for both new equipment and aftermarket products and services in North America, Europe and Asia.

Previous wording

Segment operating income in the 2024 period decreased $2.3 million compared to the 2023 period. Segment operating income margin decreased 210 basis points in the 2024 period compared to the 2023 period. The lower profitability in the 2024 third quarter was driven by lower sales levels and operating margins in our forged and machined products business, which more than offset higher sales and profitability in our capital equipment business.

Current wording

Segment operating income in the 2025 period increased by $0.3 million compared to the corresponding 2024 period. The increase in the 2025 period was driven by the higher sales, partially offset by lower sales and margins in our forged and machined products group.

Previous wording

In the nine months ended September 30, 2024, we generated cash of $8.6 million compared to $24.3 million in the same period of 2023. Cash flow from operating activities was lower in 2024 due to higher working capital needs.

Current wording

In the three months ended March 31, 2025, we utilized cash of $10.0 million compared to generating cash of $2.3 million in the same period of 2024. Cash flow from operating activities was lower in 2025 due to higher working capital needs, primarily higher accounts receivable from higher sales in the first quarter of 2025 compared to the fourth quarter of 2024.

Previous wording

Capital expenditures were $20.8 million in the nine months ended September 30, 2023 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, for facility consolidation in our Engineered Products segment and to maintain existing operations.

Current wording

Capital expenditures were $9.5 million in the three months ended March 31, 2025 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, to maintain existing operations and for information system implementations.

Previous wording

Capital expenditures were $22.3 million in the nine months ended September 30, 2024 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, to maintain existing operations and for information system implementation. Additionally, during the nine months ended September 30, 2024, the Company paid $11.0 million, net of cash acquired for the EMA acquisition.

Current wording

Capital expenditures were $5.8 million in the three months ended March 31, 2024 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, to maintain existing operations and for information system implementations. Additionally, during the three months ended March 31, 2024, the Company paid $11.0 million, net of cash acquired for the EMA acquisition.

Previous wording

During the nine months ended September 30, 2023, we had net debt borrowings of $5.4 million to fund a portion of our capital expenditures. In addition, the Company made scheduled payments related to prior acquisitions totaling $2.1 million and made cash dividend payments to shareholders totaling $4.9 million.

Current wording

During the three months ended March 31, 2025, we had net debt borrowings of $22.1 million to fund capital expenditures and working capital needs. In addition, the Company made cash dividend payments to shareholders totaling $1.8 million.

Previous wording

As of September 30, 2024, we had total liquidity of $194.4 million, which included $59.5 million of cash and cash equivalents and $134.9 million of unused borrowing availability under our credit agreements, which includes $18.1 million of suppressed availability.

Current wording

As of March 31, 2025, we had total liquidity of $209.5 million, which included $54.5 million of cash and cash equivalents and $155.0 million of unused borrowing availability under our credit agreements, which includes $9.4 million of suppressed availability.

Previous wording

The Company had cash and cash equivalents held by foreign subsidiaries of $48.6 million at September 30, 2024 and $44.6 million at December 31, 2023. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.

Current wording

The Company had cash and cash equivalents held by foreign subsidiaries of $44.2 million at March 31, 2025 and $43.4 million at December 31, 2024. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.

Previous wording

As of September 30, 2024, the Company had finance leases totaling $14.6 million.

Current wording

As of March 31, 2025, the Company had finance leases totaling $15.7 million.

Previous wording

The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on (1) our calculated availability under the Credit Agreement and (2) if such calculated availability decreases below $50.625 million, our ability to meet a debt service ratio covenant. If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At September 30, 2024, our calculated availability under the Credit Agreement was $108.7 million; therefore, the debt service ratio covenant did not apply.

Current wording

The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on (1) our calculated availability under the Credit Agreement and (2) if such calculated availability decreases below $50.625 million, our ability to meet a debt service ratio covenant. If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At March 31, 2025, our calculated availability under the Credit Agreement was $118.0 million; therefore, the debt service ratio covenant did not apply.

Previous wording

As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of September 30, 2024. While we expect to remain in compliance throughout 2024, declines in sales volumes in the future could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.

Current wording

As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of March 31, 2025. While we expect to remain in compliance throughout 2025, declines in sales volumes in the future, including due to the current macroeconomic conditions, could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.

Previous wording

The Company declared and paid dividends to shareholders of $4.9 million during the nine months ended September 30, 2024. On November 1, 2024, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on November 29, 2024 to shareholders of record as of the close of business on November 15, 2024 and will result in a cash outlay of approximately $1.6 million. Although we currently intend to pay a quarterly dividend on an ongoing basis, all future dividend declarations will be at the discretion of our Board of Directors and dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors may deem relevant.

Current wording

The Company declared and paid dividends to shareholders of $1.8 million during the three months ended March 31, 2025. On April 17, 2025, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on May 16, 2025 to shareholders of record as of the close of business on May 2, 2025 and will result in a cash outlay of approximately $1.8 million. Although we currently intend to pay a quarterly dividend on an ongoing basis, all future dividend declarations will be at the discretion of our Board of Directors and dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors may deem relevant.

Previous wording

These forward-looking statements, including statements regarding future performance of the Company, that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: our ability to realize any contingent consideration from the sale of the Aluminum Products business; the impact supply chain and logistic issues have on our business, results of operations, financial position and liquidity; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations, including the EMA acquisition; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities, including the conflicts between Russia and Ukraine and in the Middle East, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of infectious diseases and any impact on our facilities and operations and our customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the depend…

Excerpt shortened here; the source contains the full paragraph.

Current wording

These forward-looking statements, including statements regarding future performance of the Company, that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: the impact supply chain and logistic issues have on our business, results of operations, financial position and liquidity; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities, including the conflicts between Russia and Ukraine and in the Middle East, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of infectious diseases and any impact on our facilities and operations and our customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our ability to negotiate contracts with labor unions; our dependence on key ma…

Excerpt shortened here; the source contains the full paragraph.