What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-08 · 196 added, 239 removed, 286 unchanged (60% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2023 December 31,

4 unchanged sentences

Inventories, net 410.0 406.5

Prepaid and other current assets 80.4 83.2

Other current assets 121.2 114.2

Current assets held-for-sale - discontinued operations 1

Total current assets 945.6 932.4

11 unchanged sentences

Accrued expenses and other 163.8 161.7

Current liabilities held-for-sale - discontinued operations 1

Total current liabilities 445.4 448.6

9 unchanged sentences

Total liabilities and shareholders' equity $ 1,447.4 $ 1,436.6

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of March 31, 2023 and December 31, 2022 and presented in discontinued operations for all periods presented.

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended March 31,

(In millions, except per share data)

1 unchanged sentence

Cost of sales 356.3 308.8

Gross profit 50.4 40.1 153.9 132.0

Selling, general and administrative expenses 45.3 40.2

Restructuring and other special charges 2.5 3.3

Gain on sale of assets ( 0.8 ) —

Operating income (loss) 7.0 ( 5.0 ) 22.6 3.9

Operating income 20.2 5.4

Other components of pension income and other postretirement benefits expense, net 0.7 2.8

2.7 2.4 8.3 7.3

Interest expense, net ( 10.7 ) ( 7.1 )

Income (loss) before income taxes 0.1 ( 10.2 ) 5.2 ( 11.2 )

Income tax benefit 3.0 2.8 5.7 3.7

Net income (loss) 3.1 ( 7.4 ) 10.9 ( 7.5 )

Net (income) loss attributable to noncontrolling interests ( 0.4 ) 0.2 ( 1.1 ) 0.5

Net income (loss) attributable to Park-Ohio Holdings Corp.

Income from continuing operations before income taxes 10.2 1.1

Income tax (expense) benefit ( 2.6 ) 2.8

Income from continuing operations 7.6 3.9

Income attributable to noncontrolling interests ( 0.1 ) ( 0.2 )

Income from continuing operations attributable to Park-Ohio Holdings Corp.

common shareholders 7.5 3.7

Income (loss) per common share attributable to Park-Ohio Holdings Corp.

(Loss) income from discontinued operations, net of tax (Note 5) ( 1.7 ) 2.4

Net income attributable to Park-Ohio Holdings Corp.

common shareholders $ 5.8 $ 6.1

Basic $ 0.22 $ ( 0.60 ) $ 0.81 $ ( 0.58 )

Diluted $ 0.22 $ ( 0.60 ) $ 0.80 $ ( 0.58 )

Weighted-average shares used to compute income (loss) per share:

Basic 12.1 12.1 12.1 12.0

Diluted 12.2 12.1 12.2 12.0

Earnings per common share attributable to Park-Ohio Holdings Corp.

common shareholders:

Continuing operations $ 0.61 $ 0.31

Discontinued operations ( 0.14 ) 0.20

Total $ 0.47 $ 0.51

Continuing operations $ 0.61 $ 0.30

Discontinued operations ( 0.14 ) 0.20

Total $ 0.47 $ 0.50

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended March 31,

(In millions)

Net income (loss) $ 3.1 $ ( 7.4 ) $ 10.9 $ ( 7.5 )

Other comprehensive (loss) income, net of tax:

Net income attributable to Park-Ohio Holdings Corp.

common shareholders before noncontrolling interest $ 5.9 $ 6.3

Other comprehensive income (loss), net of tax:

Currency translation 3.3 ( 3.9 )

1 unchanged sentence

Pension and other postretirement benefits 2.0 0.1

Total other comprehensive loss ( 16.9 ) ( 5.3 ) ( 34.8 ) ( 7.6 )

Total comprehensive loss, net of tax ( 13.8 ) ( 12.7 ) ( 23.9 ) ( 15.1 )

Comprehensive (income) loss attributable to noncontrolling interests ( 0.4 ) 0.2 ( 1.1 ) 0.5

Comprehensive loss attributable to Park-Ohio Holdings Corp.

Total other comprehensive income (loss) 5.1 ( 3.1 )

Total comprehensive income, net of tax 11.0 3.2

Comprehensive income attributable to noncontrolling interests ( 0.1 ) ( 0.2 )

Comprehensive income attributable to Park-Ohio Holdings Corp.

common shareholders $ 10.9 $ 3.0

10 unchanged sentences

Other comprehensive

income (loss) — — — 6.1 — ( 3.1 ) 0.2 3.2

income — — — 5.8 — 5.1 0.1 11.0

Stock-based compensation expense — — 1.6 — — — — 1.6

1 unchanged sentence

Dividends — — — ( 1.6 ) — — — ( 1.6 )

Payments of withholding taxes on share awards

— — — — ( 0.1 ) — — ( 0.1 )

Balance at March 31, 2023 16,663,463 $ 16.7 $ 151.3 $ 243.0 $ ( 86.9 ) $ ( 56.7 ) $ 11.5 $ 278.9

Other comprehensive income (loss) — — — 1.0 — ( 14.8 ) 0.5 ( 13.3 )

Stock-based compensation expense — — 1.8 — — — — 1.8

Stock-based compensation activity 308,621 0.3 ( 0.3 ) — — — — —

Dividends — — — ( 1.6 ) — — — ( 1.6 )

Payments of withholding taxes on share awards

— — — — ( 1.0 ) — — ( 1.0 )

Balance at June 30, 2022 16,642,841 $ 16.6 $ 146.0 $ 263.3 $ ( 86.4 ) $ ( 37.1 ) $ 11.4 $ 313.8

Other comprehensive (loss) income — — — 2.7 — ( 16.9 ) 0.4 ( 13.8 )

Stock-based compensation expense — — 2.0 — — — — 2.0

Stock-based compensation activity 7,497 — — — — — — —

Dividends — — — ( 1.6 ) — — ( 0.6 ) ( 2.2 )

Payments of withholding taxes on share awards

— — — — ( 0.2 ) — — ( 0.2 )

Balance at September 30, 2022 16,650,338 $ 16.6 $ 148.0 $ 264.4 $ ( 86.6 ) $ ( 54.0 ) $ 11.2 $ 299.6

Shares Amount Additional

9 unchanged sentences

Dividends — — — ( 1.6 ) — — — ( 1.6 )

Increase in Park-Ohio ownership interest — — 1.1 — — — ( 1.1 ) —

Payments of withholding taxes on share awards

1 unchanged sentence

Balance at March 31, 2022 16,334,220 $ 16.3 $ 144.5 $ 263.9 $ ( 85.4 ) $ ( 22.3 ) $ 10.9 $ 327.9

Other comprehensive (loss) income — — — ( 5.3 ) — 1.8 ( 0.2 ) ( 3.7 )

Stock-based compensation expense — — 1.4 — — — — 1.4

Stock-based compensation activity 174,746 0.2 ( 0.2 ) — — — — —

Dividends — — — ( 1.5 ) — — — ( 1.5 )

Payments of withholding taxes on share awards

— — — — ( 2.1 ) — — ( 2.1 )

Balance at June 30, 2021 16,316,870 $ 16.3 $ 139.4 $ 287.6 $ ( 82.0 ) $ ( 20.4 ) $ 12.3 $ 353.2

Other comprehensive (loss) income — — — ( 7.2 ) — ( 5.3 ) ( 0.2 ) ( 12.7 )

Stock-based compensation expense — — 1.7 — — — — 1.7

Stock-based compensation activity 2,500 — — — — — — —

Dividends — — — ( 1.6 ) — — — ( 1.6 )

Purchases of treasury stock ( 99,661 shares)

— — — — ( 2.5 ) — — ( 2.5 )

Payments of withholding taxes on share awards

— — — — ( 0.4 ) — — ( 0.4 )

Balance at September 30, 2021 16,319,370 $ 16.3 $ 141.1 $ 278.8 $ ( 84.9 ) $ ( 25.7 ) $ 12.1 $ 337.7

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Dividends per common share $ 0.125 $ 0.125

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

OPERATING ACTIVITIES

Net income (loss) $ 10.9 $ ( 7.5 )

Adjustments to reconcile net income to net cash (used) provided by operating activities:

OPERATING ACTIVITIES FROM CONTINUING OPERATIONS

Income from continuing operations $ 7.6 $ 3.9

Adjustments to reconcile income from continuing operations to net cash provided (used) by operating activities from continuing operations:

Depreciation and amortization 7.7 7.8

7 unchanged sentences

Other 0.3 ( 1.7 )

Net cash used in operating activities ( 31.4 ) ( 25.9 )

INVESTING ACTIVITIES

Net cash provided (used) by operating activities from continuing operations 0.2 ( 2.1 )

INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

Purchases of property, plant and equipment ( 6.0 ) ( 5.5 )

1 unchanged sentence

Business acquisitions, net of cash acquired ( 0.5 ) —

Net cash used in investing activities ( 41.6 ) ( 30.3 )

FINANCING ACTIVITIES

Net cash used in investing activities from continuing operations ( 5.1 ) ( 5.5 )

FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

Proceeds from revolving credit facility, net 3.0 29.2

1 unchanged sentence

Proceeds from other debt 3.2 —

Payments on finance lease facilities, net ( 4.5 ) ( 3.5 )

Proceeds from (payments on) finance lease facilities, net 1.7 ( 0.7 )

Contingent consideration payment related to prior acquisition ( 1.3 ) —

Dividends ( 1.6 ) ( 1.6 )

Purchases of treasury shares — ( 2.5 )

Payments of withholding taxes on share awards — ( 0.1 )

Net cash provided by financing activities 78.5 62.0

Net cash provided by financing activities from continuing operations 4.5 26.1

DISCONTINUED OPERATIONS 1 :

Total used by operating activities ( 6.4 ) ( 8.0 )

Total used by investing activities ( 1.5 ) ( 1.6 )

Total used by financing activities ( 0.7 ) ( 0.9 )

Decrease in cash and cash equivalents from discontinued operations ( 8.6 ) ( 10.5 )

Effect of exchange rate changes on cash 0.4 ( 0.5 )

3 unchanged sentences

Interest paid $ 5.2 $ 1.7

Income taxes paid (received) $ 1.8 $ ( 4.6 )

Income taxes paid $ 3.2 $ 1.4

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

March 31, 2023

NOTE 1 — Basis of Presentation

6 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three- and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

As of December 31, 2022 and March 31, 2023, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.

Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Form 10-Q.

Unless otherwise indicated, amounts and activity in this Form 10-Q are presented on a continuing operations basis.

See Note 5, “Discontinued Operations,” in the Notes to Consolidated Financial Statements (Unaudited) for further information.

The preparation of financial statements in conformity with U.S.

2 unchanged sentences

NOTE 2 — New Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which was issued in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of the London Interbank Offered Rate.

The guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020.

However, the relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date.

This standard is not expected to have a material impact once adopted.

No other recently-issued ASUs are expected to have a material impact on our results of operations, financial condition or liquidity.

No recently-issued accounting standards updates are expected to have a material impact on our results of operations, financial condition or liquidity.

NOTE 3 - Revenue

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

March 31, 2023

Three Months Ended March 31,

(In millions)

3 unchanged sentences

Fuel, rubber and plastic products 110.4 97.9

Aluminum products 51.9 39.4 171.5 117.5

Assembly Components Segment 110.4 97.9

5 unchanged sentences

(In millions)

Three Months Ended September 30, 2022

Three Months Ended March 31, 2023

GEOGRAPHIC REGION

6 unchanged sentences

Total $ 195.8 $ 110.4 $ 117.3 $ 423.5

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

GEOGRAPHIC REGION

9 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

Supply Technologies Segment Assembly Components Segment Engineered Products Segment Total Revenues

(In millions)

Nine Months Ended September 30, 2022

GEOGRAPHIC REGION

United States $ 324.7 $ 333.0 $ 165.6 $ 823.3

Europe 91.8 12.9 50.2 154.9

Asia 50.2 15.8 39.1 105.1

Mexico 51.9 43.9 11.4 107.2

Canada 9.3 58.3 14.6 82.2

Other 2.6 1.9 5.6 10.1

Total $ 530.5 $ 465.8 $ 286.5 $ 1,282.8

Nine Months Ended September 30, 2021

GEOGRAPHIC REGION

United States $ 281.4 $ 241.8 $ 126.7 $ 649.9

Europe 84.7 10.7 46.3 141.7

Asia 42.4 19.0 38.5 99.9

Mexico 48.2 38.6 13.4 100.2

Canada 8.6 44.3 12.5 65.4

Other 1.4 1.3 8.3 11.0

Total $ 466.7 $ 355.7 $ 245.7 $ 1,068.1

March 31, 2023

For over time arrangements, contract liabilities primarily relate to advances or deposits received from the Company’s customers before revenue is recognized.

These amounts, which totaled $ 48.9 million and $ 51.7 million at September 30, 2022 and December 31, 2021, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

These amounts, which totaled $ 51.4 million and $ 52.6 million at March 31, 2023 and December 31, 2022, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

For over time arrangements, contract assets primarily relate to revenue recognized in advance of billings to customers under long-term contracts accounted for under percentage of completion.

These amounts, which totaled $ 46.1 million and $ 55.0 million at September 30, 2022 and December 31, 2021, respectively, are recorded in Prepaid and other current assets in the Condensed Consolidated Balance Sheets.

These amounts, which totaled $ 60.3 million and $ 56.7 million at March 31, 2023 and December 31, 2022, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

4 unchanged sentences

or corporate costs, which include but are not limited to executive and share-based compensation and corporate office costs.

Segment operating income reconciles to consolidated income before income taxes by deducting corporate costs;

Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costs;

gain on sale of assets;

other components of pension income and other postretirement benefits expense, net;

and interest expense, net.

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

Results by business segment were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

NET SALES OF CONTINUING OPERATIONS:

Supply Technologies $ 195.8 $ 168.8

2 unchanged sentences

$ 423.5 $ 357.7

Segment operating income (loss):

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES:

Supply Technologies $ 14.0 $ 12.0

4 unchanged sentences

Gain on sale of assets 0.8 —

Operating income (loss) 7.0 ( 5.0 ) 22.6 3.9

Operating income 20.2 5.4

Other components of pension income and other postretirement benefits expense, net

2.7 2.4 8.3 7.3

Interest expense, net ( 10.7 ) ( 7.1 )

Income (loss) before income taxes $ 0.1 $ ( 10.2 ) $ 5.2 $ ( 11.2 )

NOTE 5 — Plant Closure and Consolidation

In the three and nine months ended September 30, 2022 , the Company recorded expenses totaling $ 1.7 million and $ 7.9 million, respectively, in its Assembly Components segment in connection with its plant closure and consolidation and other activities.

For the three months ended September 30, 2022, e xpenses of $ 1.7 million were included in Cost of sales.

For the nine months ended September 30, 2022, restructuring e xpenses of $ 7.6 million were included in Cost of sales and $ 0.3 million were included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The Company expects to incur additional restructuring costs of approximately $ 0.5 million in this segment in the remainder of 2022.

In the three and nine months ended September 30, 2022 , the Company recorded expenses totaling $ 1.4 million and $ 2.8 million, respectively, in its Engineered Products segment in connection with plant closure and consolidation activities.

The expenses are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations, and consisted of severance of $ 0.0 million and $ 0.2 million, respectively, and other restructuring activities of $ 1.4 million and $ 2.6 million, respectively.

The Company expects to incur additional costs of approximately $ 4.0 million related to the initiatives in this segment in the remainder of 2022.

In connection with its plant closure and consolidation initiatives, during the nine months ended September 30, 2022, the Company sold real estate within its Engineered Products segment for cash proceeds of $ 3.6 million, resulting in a gain of $ 2.5 million, and within the Assembly Components segment for cash proceeds of $ 0.4 million, resulting in a gain of $ 0.4 million.

In the three and nine months ended September 30, 2021 , the Company recorded expenses totaling $ 1.8 million and $ 3.1 million, respectively, in its Assembly Components segment in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, and to complete other cost-reduction actions in this

Income from continuing operations before income taxes 1

Park-Ohio Holdings Corp.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

The expenses included in Cost of sales in the Condensed Consolidated Statements of Operations were comprised of facility-related costs related to these initiatives of $ 1.8 million and $ 2.8 million, respectively.

For the nine months ended September 30, 2021, expenses also included $ 0.3 million, which were included in Selling, general and administrative expenses in the Condensed Consolidated Statement of operations.

In the three and nine months ended September 30, 2021 , the Company recorded expenses totaling $ 0.6 million and $ 1.9 million, respectively, in its Engineered Products segment in connection with plant closure and consolidation activities.

The expenses are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

NOTE 6 — Acquisitions

In July 2022, the Company acquired Charter Automotive (Changzhou) Co.

(“Charter”) for $ 9.3 million, net of cash acquired.

Charter, which is included in our Supply Technologies segment, is headquartered in Changzhou, China and is strategic to our existing fastener manufacturing business, will accelerate the global growth of the Company's proprietary products to Electric Vehicle and other auto-related platforms.

The allocation of the purchase price of Charter is subject to finalization of the Company's determination of the fair values of the assets acquired and the liabilities assumed as of the acquisition date, and could be materially different than the estimates presented below.

The final allocation will be completed no later than one year after the acquisition date.

Below is the estimated purchase price allocation related to the acquisition of Charter;

the total purchase price is net of cash acquired.

(In millions)

Accounts receivable $ 2.6

Inventories 3.0

Property, plant and equipment 4.3

Other current assets 0.9

Accounts payable and accrued expenses ( 0.4 )

Deferred income tax liability ( 1.1 )

Total purchase price $ 9.3

In August 2022, the Company acquired Southern Fasteners & Supply, Inc.

(“Southern Fasteners”) for $ 18.7 million, net of cash acquired.

The purchase price included cash of $ 16.7 million paid at closing plus a $ 2.0 million note that will be paid to the seller over the next two years.

Southern Fasteners, which is included in our Supply Technologies segment, is headquartered in Winston-Salem, North Carolina.

Southern Fasteners provides commercial fasteners and industrial supplies to a diverse base of Maintenance, Repair and Operations (“MRO”) and Original Equipment Manufacturing (“OEM”) customers throughout the United States and specializes in the design of customized inventory programs for its customers.

Southern Fasteners complements Supply Technologies’ continued efforts to grow the initiatives centered around industrial supply and MRO products to our global OEM customer base.

The allocation of the purchase price of Southern Fasteners is subject to finalization of the Company's determination of the fair values of the assets acquired and the liabilities assumed as of the acquisition date, and could be materially different than the estimates presented below.

The final allocation will be completed no later than one year after the acquisition date.

Below is the estimated purchase price allocation related to the acquisition of Southern Fasteners.

The total purchase price is net of cash acquired and includes the $ 2.0 million of notes payable to the seller.

March 31, 2023

NOTE 5 — Discontinued Operations

A business is classified as held-for-sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value, and certain other criteria of ASC 360 are met.

A business classified as held-for-sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell.

When the carrying amount of the business exceeds its estimated fair value less costs to sell, a loss is recognized and updated each reporting period as appropriate.

A business held-for-sale is classified as discontinued operations if the disposal group is a component of an entity;

the component of an entity meets the held-for-sale criteria of ASC 360;

and disposal of the component of an entity represents a strategic shift that will have a major effect on the entity's operations and financial results.

During the fourth quarter of 2022, the Company determined that the Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.

Accordingly, the Company has reported the held-for-sale assets and liabilities and the operating results of Aluminum Products in discontinued operations for all periods presented in this Quarterly Report on Form 10-Q.

The Aluminum Products business was previously reported in the Company’s Assembly Components segment until meeting the discontinued operations criteria.

See Note 10 for discussion of the entry into a memorandum of understanding (the “MOU”) related to the potential sale of this business.

Three Months Ended March 31,

Net sales $ 46.9 $ 60.6

Cost of sales 45.5 53.8

Selling, general and administrative 3.1 3.7

Restructuring and other special charges — 0.5

Operating (loss) income ( 1.7 ) 2.6

Interest expense 1

( 0.7 ) ( 0.7 )

(Loss) income from operation of discontinued operations ( 2.4 ) 1.9

Income tax benefit 0.7 0.5

(Loss) income from discontinued operations, net of tax $ ( 1.7 ) $ 2.4

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business, totaling $ 0.6 million in both three months ended March 31, 2023 and 2022.

The following represents the details of assets and liabilities held-for-sale in each period:

Park-Ohio Holdings Corp.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

(In millions)

Accounts receivable $ 3.3

Inventories 6.0

Property, plant and equipment 0.4

Deferred income tax asset 0.3

March 31, 2023

March 31, 2023 December 31, 2022

(In millions, except share data)

Current assets:

Accounts receivable, net $ 32.9 $ 24.9

Inventories, net 21.4 30.2

Other current assets 1.3 1.2

Intangible assets 4.4

Accounts payable and accrued expenses ( 2.5 )

Total purchase price (including notes payable to seller of $ 2.0 million)

Current assets held-for-sale 1

Property, plant and equipment, net 47.6 46.1

Operating lease right-of-use assets 4.8 4.8

Long-term assets held-for-sale 1

Total assets held-for-sale $ 108.0 $ 107.2

Current liabilities:

Trade accounts payable $ 19.4 $ 22.8

Current portion of finance lease liabilities 2.2 2.4

Current portion of operating lease liabilities 2.1 2.3

Other accrued expenses 8.8 10.7

Current liabilities held-for-sale 1

$ 32.5 $ 38.2

Long-term liabilities, less current portion:

Long-term finance lease liabilities 2.7 3.1

Long-term operating lease liabilities 2.1 2.5

Long-term liabilities held-for-sale 1

Total liabilities held-for-sale $ 37.3 $ 43.8

(1) - We reasonably expect to finalize the sale of the Aluminum Products business in 2023, and therefore we have presented all assets and liabilities held-for-sale as current in the Condensed Consolidated Balance Sheet.

NOTE 6 — Plant Closure and Consolidation

During the three months ended March 31, 2023 and 2022, the Company incurred the following expenses related to plant closure and consolidation in connection with its profit-improvement actions across its segments.

These charges are included in Restructuring and other special charges in the Condensed Consolidated Statements of Income.

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

Facility-Related Costs Severance and Other Total

Assembly Components $ 0.3 $ — $ 0.3

Engineered Products 2.0 — 2.0

Total $ 2.3 $ — $ 2.3

Assembly Components $ 1.5 $ — $ 1.5

Engineered Products 0.5 0.1 0.6

Total $ 2.0 $ 0.1 $ 2.1

The actions in the Assembly Components segment were primarily in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, to relocate certain production to lower-cost facilities with open capacity, and to complete other cost-reduction actions.

The actions in the Engineered Product segment were primarily in connection with plant closure and consolidation of multiple locations, and to complete other cost-reduction actions.

The Company expects to incur expenses of approximately $ 1.0 million in the remainder of 2023 in connection with its plant closure and consolidation activities.

NOTE 7 — Inventories

Inventories, net consist of the following:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In millions)

3 unchanged sentences

Inventories, net $ 410.0 $ 406.5

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 8 — Accrued Warranty Costs

1 unchanged sentence

Actual warranty expense could differ from the estimates made by the Company based on product performance.

The following table presents changes in the Company’s product warranty liability for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following table presents changes in the Company’s product warranty liability for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(In millions)

6 unchanged sentences

The Company’s tax provision for interim periods is determined using an estimate of its annual effective rate, adjusted for discrete items, if any, in each period.

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

In the three months ended September 30, 2022, income tax benefit was $ 3.0 million on pre-tax income of $ 0.1 million.

The overall benefit included a discrete benefit of $ 2.4 million due primarily to changes in estimates related to prior year federal research and development credits, Global Intangible Low-Taxed Income (“GILTI”), Foreign-Derived Intangible Income (“FDII”) and foreign tax credits.

In the three months ended September 30, 2021, income tax benefit was $ 2.8 million, representing an effective income tax rate of 27 %.

This rate is higher than the U.S.

statutory rate of 21% due primarily to the additional tax benefit recorded as result of stock compensation that vested and state and local taxes during the quarter.

In the nine months ended September 30, 2022, income tax benefit was $ 5.7 million on pre-tax income of $ 5.2 million.

The overall benefit included discrete tax benefits totaling $ 6.5 million related primarily to changes in estimates related to prior year federal research and development credits, GILTI, FDII and foreign tax credits.

In the nine months ended September 30, 2021, income tax benefit was $ 3.7 million, representing an effective income tax rate of 33 %.

This rate is higher than the U.S.

statutory rate of 21% primarily due to the additional benefit recorded as result of the net operating loss carryback claim under the Coronavirus Aid, Relief, and Economic Security Act and the composition of earnings.

In the three months ended March 31, 2023, income tax expense was $ 2.6 million on pre-tax income from continuing operations of $ 10.2 million, representing an effective income tax rate of 25 %.

In the three months ended March 31, 2022, income tax benefit was $ 2.8 million, on pretax income of $ 1.1 million.

The benefit in 2022 included a discrete tax benefit of $ 3.2 million related to federal research and development tax credits.

NOTE 10 — Financing Arrangements

2 unchanged sentences

Maturity Date Interest Rate at

September 30, 2022 September 30, 2022 December 31, 2021

March 31, 2023 March 31, 2023 December 31, 2022

(In millions)

6 unchanged sentences

Unamortized debt issuance costs ( 2.9 ) ( 3.1 )

Total long-term debt, net $ 674.4 $ 591.5

Total long-term debt $ 661.1 $ 655.1

In addition to debt listed above, on December 30, 2022, the Company entered into the MOU with a third party pursuant to which the third party would purchase our Aluminum Products business.

The sale of the Aluminum Products business is subject to the successful completion of a definitive purchase agreement and other customary conditions.

In connection with the MOU, the Company also entered into a financing arrangement with the third party pursuant to which the Company received a portion

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

of the estimated purchase price of the Aluminum Products business, including $ 20.0 million of cash and a promissory note in the principal amount of $ 25.0 million, and recorded a financing arrangement liability of $ 45.0 million.

The Company used the $ 20.0 million from this financing arrangement to repay indebtedness under its revolving credit facility.

If a definitive purchase agreement between the parties is not entered into or the sale is not successfully consummated, the promissory note will be cancelled and the Company will repay the third party $ 20.0 million, less a $ 0.8 million break-up fee.

Park-Ohio's Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) provides for a revolving credit facility in the amount of $ 405.0 million, including a $ 40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $ 30.0 million.

1 unchanged sentence

The Credit Agreement matures on November 26, 2024.

As of September 30, 2022, we had borrowing availability of $ 78.8 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under the Credit Agreement of approximately $ 44.4 million at September 30, 2022 and $ 39.7 million at December 31, 2021.

As of March 31, 2023, we had borrowing availability of $ 98.4 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately $ 46.0 million at March 31, 2023 and $ 41.0 million at December 31, 2022.

In 2017, Park-Ohio completed the issuance, in a private placement, of $ 350.0 million aggregate principal amount of 6.625 % Senior Notes due 2027 (the “Notes”).

2 unchanged sentences

The Lease Agreement provides the Company up to $ 50.0 million for finance leases.

Finance lease obligations of $ 13.0 million were borrowed under the Lease Agreement to acquire machinery and equipment as of September 30, 2022.

Finance lease obligations of $ 4.5 million were borrowed under the Lease Agreement to acquire machinery and equipment as of March 31, 2023.

As of March 31, 2023, the Company had additional finance leases totaling $ 15.7 million.

In 2015, the Company, through its Southwest Steel Processing LLC subsidiary, entered into a financing agreement with the Arkansas Development Finance Authority, which matures in September 2025.

The financing agreement provides the

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

Company the ability to borrow up to $ 11.0 million for expansion of its manufacturing facility in Arkansas.

The Company had $ 4.7 million of borrowings outstanding under this agreement as of September 30, 2022, which is included in Other above.

The financing agreement provides the Company the ability to borrow up to $ 11.0 million for expansion of its manufacturing facility in Arkansas.

The Company had $ 4.0 million of borrowings outstanding under this agreement as of March 31, 2023, which is included in Other above.

The following table represents fair value information of the Notes, classified as Level 1 using estimated quoted market prices.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In millions)

1 unchanged sentence

Fair value $ 273.9 $ 227.5

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

NOTE 11 — Stock-Based Compensation

A summary of restricted share activity for the nine months ended September 30, 2022 is as follows:

A summary of restricted share activity for the three months ended March 31, 2023 is as follows:

Time-Based Performance-Based

3 unchanged sentences

Outstanding - beginning of year 716,242 $ 20.53 50,000 $ 32.55

338,265 15.98 — —

Granted 9,535 13.89 — —

Vested ( 9,000 ) 33.12 — —

Canceled or expired ( 14,581 ) 23.16 — —

Outstanding - end of period 716,777 $ 20.28 50,000 $ 32.55

(a) - Included in this amount are 12,500 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Total stock-based compensation expense was $ 2.0 million and $ 1.7 million for the three months ended September 30, 2022 and 2021, respectively.

Total stock-based compensation expense was $ 5.4 million and $ 4.7 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, there was $ 9.8 million of unrecognized compensation cost related to non-vested stock-based compensation, which cost is expected to be recognized over a weighted-average period of 1.9 years.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

Total stock-based compensation expense was $ 1.6 million for both the three months ended March 31, 2023 and 2022.

As of March 31, 2023, there was $ 6.6 million of unrecognized compensation cost related to non-vested stock-based compensation, which cost is expected to be recognized over a weighted-average period of 1.6 years.

NOTE 12 — Commitments and Contingencies

7 unchanged sentences

however, actual results may differ materially from our estimates.

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in 112 cases asserting claims on behalf of 162 plaintiffs alleging personal injury as a result of exposure to asbestos.

3 unchanged sentences

While it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations.

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

NOTE 13 — Pension and Postretirement Benefits

The components of net periodic benefit (income) expense costs recognized for the three and nine months ended September 30, 2022 and 2021 were as follows:

The components of net periodic benefit (income) expense costs recognized for the three months ended March 31, 2023 and 2022 were as follows:

Pension Benefits Postretirement Benefits

Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31, Three Months Ended March 31,

2023 2022 2023 2022

4 unchanged sentences

Recognized net actuarial loss 0.9 — 0.1 0.1

Net periodic benefit (income) expense $ ( 1.7 ) $ ( 1.5 ) $ ( 5.1 ) $ ( 4.4 ) $ 0.1 $ 0.1 $ 0.1 $ 0.4

Net periodic benefit expense (income) $ 0.4 $ ( 1.7 ) $ 0.1 $ —

NOTE 14 — Accumulated Other Comprehensive Loss

The components of and changes in accumulated other comprehensive loss for the three and nine months ended September 30, 2022 and 2021 were as follows:

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2022

The components of and changes in accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022 were as follows:

Cumulative Translation Adjustment Cash Flow Hedges Pension and Postretirement Benefits Total Cumulative Translation Adjustment Cash Flow Hedges Pension and Postretirement Benefits Total

(In millions)

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Beginning balance $ ( 36.8 ) $ 0.5 $ ( 0.8 ) $ ( 37.1 ) $ ( 11.0 ) $ — $ ( 9.4 ) $ ( 20.4 )

Currency translation (a)

( 17.0 ) — — ( 17.0 ) ( 5.5 ) — — ( 5.5 )

Pension and OPEB activity, net of tax — — 0.1 0.1 — — 0.2 0.2

Ending balance $ ( 53.8 ) $ 0.5 $ ( 0.7 ) $ ( 54.0 ) $ ( 16.5 ) $ — $ ( 9.2 ) $ ( 25.7 )

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Beginning balance $ ( 38.7 ) $ 0.5 $ ( 23.6 ) $ ( 61.8 ) $ ( 18.3 ) $ — $ ( 0.9 ) $ ( 19.2 )

1 unchanged sentence

3.3 — — 3.3 ( 3.9 ) — — ( 3.9 )

Foreign currency forward contracts — 0.5 — 0.5 — — — —

Foreign currency forward contracts, net of tax — ( 0.2 ) — ( 0.2 ) — 0.7 — 0.7

Pension and OPEB activity, net of tax — — 2.0 2.0 — — 0.1 0.1

3 unchanged sentences

The following table sets forth the weighted-average number of shares used in the computation of earnings per share:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

2 unchanged sentences

Weighted-average diluted shares outstanding 12.3 12.2

Park-Ohio Holdings Corp.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

Certain restricted stock awards are anti-dilutive and therefore excluded from the computation of diluted earnings per share.

Anti-dilutive shares were 0.1 million and 0.2 million for the three months ended September 30, 2022 and 2021, respectively, and 0.2 million and 0.1 million for the nine months ended September 30, 2022 and 2021, respectively.

Anti-dilutive shares were 0.1 million and 0.2 million for the three months ended March 31, 2023 and 2022, respectively.

NOTE 16 — Subsequent Event

On November 4, 2022, the Company's Board of Directors declared a quarterly dividend of $ 0.125 per common share.

The dividend will be paid on December 2, 2022 to shareholders of record as of the close of business on November 18, 2022 and will result in a cash outlay of approximately $ 1.6 million.

On April 21, 2023, the Company's Board of Directors declared a quarterly dividend of $ 0.125 per common share.

The dividend will be paid on May 19, 2023 to shareholders of record as of the close of business on May 5, 2023 and will result in a cash outlay of approximately $ 1.6 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements