PARK OHIO HOLDINGS CORP

Previous wording

Our condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, “we,” “our,” or the “Company”). All significant intercompany transactions have been eliminated in consolidation.

Current wording

Our condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, “we,” “our,” or the “Company”). All intercompany accounts and transactions have been eliminated in consolidation.

Previous wording

Assembly Components manufactures products oriented towards fuel efficiency and reduced emission standards. Assembly Components designs, develops and manufactures aluminum products and highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Our products are primarily used in the following industries: including automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and bus.

Current wording

Assembly Components manufactures products oriented towards fuel efficiency and reduced emission standards. Assembly Components designs, develops and manufactures highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Our products are primarily used in the following industries: including automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and bus.

Previous wording

Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading systems, inverters and forged and machined products. Engineered Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Engineered Products are OEMs, sub-assemblers and end users in the following industries: ferrous and non-ferrous metals; coatings; forging; foundry; heavy-duty truck; construction equipment; automotive; oil and gas; rail; aerospace and defense; and power generation.

Current wording

Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading systems, generators and transformers, inverters and forged and machined products. Engineered Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Engineered Products are OEMs, sub-assemblers and end users in the following industries: power generation and energy; general steel processing; automotive and heavy vehicles; aerospace and defense; semiconductor; precious metals and industrial materials; oil and gas; general industrial; and rail.

Previous wording

As part of its ongoing portfolio optimization strategy, the Company is engaging in a formal review of strategic alternatives for its Southwest Steel Processing (“SSP”) business, including a potential sale or other transaction. SSP is part of our Forged and Machined Products group within the Engineered Products segment. This review reflects our continued focus on aligning capital and resources toward higher-growth, higher-margin opportunities across our portfolio. The Company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this review process will result in any transaction or particular outcome.

Current wording

As part of its ongoing portfolio optimization strategy, the Company is conducting a formal review of strategic alternatives for its Southwest Steel Processing (“SSP”) business, including a potential sale or other transaction. SSP is part of our Engineered Products segment. This review reflects our continued focus on aligning capital and resources toward higher-growth, higher-margin opportunities across our portfolio. The Company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this review process will result in any transaction or particular outcome.

Previous wording

The factors explaining the changes in segment net sales for the three months ended March 31, 2026 compared to the corresponding 2025 period are contained in the “Segment Results” section below.

Current wording

The factors explaining the changes in segment net sales for the three months ended June 30, 2026 compared to the corresponding 2025 period are contained within the “Segment Results” section below.

Previous wording

During the first three months of 2026, the Company recorded $1.3 million in connection with restructuring and other special charges, which included $0.4 million in our Assembly Components segment, $0.5 million in our Engineered Products segment and $0.4 million at Corporate.

Current wording

During the second quarter of 2025, the Company recorded charges of $1.3 million in connection with restructuring and other special charges, which included $0.4 million in our Supply Technologies segment, $0.5 million in our Assembly Components segment and $0.4 million in our Engineered Products segment.

Previous wording

In the three months ended March 31, 2026, income tax expense was $1.6 million on pre-tax income from continuing operations of $9.5 million, representing an effective income tax rate of 17%. In the three months ended March 31, 2025, income tax expense was $1.9 million on pre-tax income of $9.7 million, representing an effective income tax rate of 20%. The rate for the three months ended March 31, 2026 is lower than the statutory rate and the corresponding 2025 rate due primarily to increased federal research and development tax credit benefit.

Current wording

In the three months ended June 30, 2026, income tax expense was $2.4 million on pre-tax income from continuing operations of $14.4 million, representing an effective income tax rate of 17%. In the three months ended June 30, 2025, income tax expense was $1.8 million on pre-tax income of $10.7 million, representing an effective income tax rate of 17%. The rates for the three months ended June 30, 2026 and 2025 are lower than the statutory rate due primarily to increased federal research and development tax credit benefit.

Previous wording

Net sales increased 3.8% to $421.0 million in the first three months of 2026 compared to $405.4 million in the same period in 2025. This increase was primarily due to higher customer demand in each of our business segments.

Current wording

Net sales increased 6.9% to $861.1 million in the first six months of 2026 compared to $805.5 million in the same period in 2025. This increase was primarily due to higher customer demand in each of our business segments.

Previous wording

Cost of sales increased to $348.3 million in the first three months of 2026 compared to $337.3 million in the same period in 2025, driven by the increase in net sales described above. Gross margin was 17.3% in the 2026 period compared to 16.8% in the corresponding 2025 period. The year-over-year gross margin increase was driven by the increase in net sales described above and ongoing profit-enhancement activities throughout the company.

Current wording

Cost of sales increased to $709.5 million in the first six months of 2026 compared to $669.2 million in the same period in 2025, driven by the increase in net sales. Gross margin was 17.6% in the 2026 period compared to 16.9% in the corresponding 2025 period, with the year-over-year gross margin increase driven by the profit flow-through from the higher sales and ongoing profit-enhancement activities throughout the company.

Previous wording

SG&A expenses were $51.7 million in the first three months of 2026, compared to $48.2 million in the same period in 2025. As a percentage of net sales, SG&A expenses were 12.3% in the first three months of 2026 compared to 11.9% in the comparable period in 2025. The increases were driven by ongoing inflation and higher employee costs.

Current wording

SG&A expenses were $104.8 million in the first six months of 2026, compared to $95.0 million in the same period in 2025. As a percentage of net sales, SG&A expenses were 12.2% in the first six months of 2026 compared to 11.8% in the comparable period in 2025. The increases were driven by ongoing inflation, higher employee costs and support for the higher sales levels.

Previous wording

Other components of pension and OPEB income, net was $2.1 million in the first three months of 2026 compared to $1.8 million in the corresponding period in 2025. This increase was due to higher return on plan assets in 2026 compared to 2025.

Current wording

Other components of pension and OPEB income, net was $4.3 million in the first six months of 2026 compared to $3.6 million in the corresponding period in 2025. This increase was due to higher return on plan assets in 2026 compared to 2025.

Previous wording

Interest expense, net was $12.3 million in the first three months of 2026 compared to $11.0 million in the 2025 period. The increase was due primarily to the higher rate of 8.500% on our 2030 Notes compared to the 6.625% Senior Notes due 2027 (the “2027 Notes”) and higher average outstanding debt balances in the 2026 period compared to the same period a year ago, partially offset by lower rates on our revolving credit facility.

Current wording

Interest expense, net was $24.6 million in the first six months of 2026 compared to $22.2 million in the 2025 period. The increase was due primarily to the higher rate of 8.500% on our 2030 Notes compared to the 2027 Notes and higher average outstanding debt balances in the 2026 period compared to the same period a year ago, partially offset by lower rates on our revolving credit facility.

Previous 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.

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 corporate costs, which include but are not limited to executive compensation and corporate office costs; items that are non-operating; or certain items that are unusual in nature. 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

Segment operating income was steady year-over-year, finishing at $17.5 million in the three months ended March, 31 2026 compared to $17.8 million in the 2025 period. Segment operating income margin was 50 basis points lower in the 2026 period compared to the same period a year ago due primarily to higher tariffs in the 2026 period, which impacted gross margins.

Current wording

Segment operating income was $36.0 million in the 2026 period compared to $34.1 million in the 2025 period. Operating income margin was 8.9% in the six months ended June 30, 2026 compared to 9.1% in the 2025 period. Segment operating income margin was 20 basis points lower in the 2026 period compared to the same period a year ago due primarily to higher tariffs in the 2026 period, which impacted gross margins.

Previous wording

Net sales increased 3.4% in the three months ended March 31, 2026 compared to the 2025 period, due primarily to increased unit volumes on new business launched throughout 2025.

Current wording

Net sales increased 6.6% in the three months ended June 30, 2026 compared to the 2025 period, due primarily to increased unit volumes on new business launched in 2025.

Previous wording

Segment operating income in the 2026 period increased by $1.9 million compared to the corresponding 2025 period, and operating margins in the 2026 first quarter were up 140 basis points compared to the corresponding 2025 quarter, driven by the higher sales and operational improvement in both our capital equipment and forged and machined products groups.

Current wording

Segment operating income in the 2026 period increased by $3.0 million compared to the corresponding 2025 period, and operating margins were up 190 basis points compared to the corresponding 2025 period. The increases in the 2026 period were driven by the higher sales and improved operational efficiencies in both our capital equipment and forged and machined products group.

Previous wording

In the three months ended March 31, 2026, we utilized cash of $7.8 million compared to $10.0 million in the same period of 2025. Cash flow from operating activities improved in 2026 due to lower working capital needs.

Current wording

In the six months ended June 30, 2026, we generated cash of $1.4 million compared to a use of $23.7 million in the same period of 2025. Cash flow from operating activities improved in 2026 due to higher income and lower working capital needs.

Previous wording

Capital expenditures of $12.5 million and $9.5 million in the three months ended March 31, 2026 and 2025, respectively, were primarily to provide increased capacity and automation for future growth, to maintain existing operations and for information system implementations.

Current wording

Capital expenditures of $23.5 million and $16.9 million in the six months ended June 30, 2026 and 2025, respectively, were primarily to provide increased capacity and automation for future growth, to maintain existing operations and for information system implementations.

Previous wording

During the three months ended March 31, 2026, we had net debt borrowings of $24.3 million to fund capital expenditures and working capital needs. In addition, the Company made cash dividend payments to shareholders totaling $1.8 million.

Current wording

During the six months ended June 30, 2026, we had net debt borrowings of $31.6 million to fund capital expenditures and working capital needs. In addition, the Company made cash dividend payments to shareholders totaling $3.6 million and payments of withholding taxes on share awards of $2.0 million.

Previous wording

As of March 31, 2026, we had total liquidity of $199.0 million, which included $46.7 million of cash and cash equivalents and $152.3 million of unused borrowing availability under our credit agreements, which includes $8.8 million of suppressed availability.

Current wording

As of June 30, 2026, we had total liquidity of $189.1 million, which included $48.3 million of cash and cash equivalents and $140.8 million of unused borrowing availability under our credit agreements, which includes $7.1 million of suppressed availability.

Previous wording

The Company had cash and cash equivalents held by foreign subsidiaries of $36.6 million at March 31, 2026 and $34.1 million at December 31, 2025. 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 $36.9 million at June 30, 2026 and $34.1 million at December 31, 2025. 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 March 31, 2026, the Company had finance leases totaling $16.0 million.

Current wording

As of June 30, 2026, the Company had finance leases totaling $15.3 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 March 31, 2026, our calculated availability under the Credit Agreement was $108.4 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 June 30, 2026, our calculated availability under the Credit Agreement was $101.9 million; therefore, the debt service ratio covenant did not apply.

Previous wording

The Company declared and paid dividends to shareholders of $1.8 million during the three months ended March 31, 2026. On April 17, 2026, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on May 14, 2026 to shareholders of record as of the close of business on May 1, 2026 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.

Current wording

The Company declared and paid dividends to shareholders of $3.6 million during the six months ended June 30, 2026. On July 17, 2026, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on August 14, 2026 to shareholders of record as of the close of business on July 31, 2026 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.