What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 88 added, 81 removed, 474 unchanged (26% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2023 December 31,

31 unchanged sentences

Total liabilities and shareholders' equity $ 1,456.5 $ 1,436.6

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of June 30, 2023 and December 31, 2022 and presented in discontinued operations for all periods presented.

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of September 30, 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.

2 unchanged sentences

Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

14 unchanged sentences

common shareholders 12.5 7.1 27.1 17.2

(Loss) income from discontinued operations, net of tax (Note 5) ( 1.7 ) ( 5.4 ) ( 3.4 ) ( 3.0 )

Loss from discontinued operations, net of tax (Note 5) ( 1.4 ) ( 4.4 ) ( 4.8 ) ( 7.4 )

Net income attributable to Park-Ohio Holdings Corp.

12 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

6 unchanged sentences

Pension and other postretirement benefits 1.0 0.1 3.9 0.2

Total other comprehensive income (loss) 2.9 ( 14.8 ) 8.0 ( 17.9 )

Total other comprehensive loss ( 8.4 ) ( 16.9 ) ( 0.4 ) ( 34.8 )

Total comprehensive income (loss), net of tax 2.4 ( 13.8 ) 21.2 ( 23.9 )

25 unchanged sentences

Balance at June 30, 2023 16,972,700 17.0 152.7 246.8 ( 88.1 ) ( 53.8 ) 11.0 285.6

Other comprehensive income (loss) — — — 11.1 — ( 8.4 ) ( 0.3 ) 2.4

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

Stock-based compensation activity 36,949 — — — — — — —

Dividends — — — ( 1.6 ) — — — ( 1.6 )

Payments of withholding taxes on share awards

— — — — ( 0.7 ) — — ( 0.7 )

Balance at September 30, 2023 17,009,649 $ 17.0 $ 154.3 $ 256.3 $ ( 88.8 ) $ ( 62.2 ) $ 10.7 $ 287.3

Shares Amount Additional

19 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

Other comprehensive income (loss) — — — 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

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

2023 2022 2023 2022

Dividends per common share $ 0.125 $ 0.125 $ 0.375 $ 0.375

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

14 unchanged sentences

Purchases of property, plant and equipment ( 20.8 ) ( 20.0 )

Proceeds from sale of assets 1.4 4.0

Proceeds from sales of assets 2.0 4.0

Business acquisitions, net of cash acquired ( 1.2 ) ( 21.9 )

8 unchanged sentences

Payments of withholding taxes on share awards ( 1.9 ) ( 1.3 )

Net cash provided by financing activities from continuing operations 12.1 62.3

Net cash (used) provided by financing activities from continuing operations ( 3.5 ) 81.0

DISCONTINUED OPERATIONS 1 :

4 unchanged sentences

Effect of exchange rate changes on cash ( 0.5 ) ( 5.9 )

(Decrease) increase in cash and cash equivalents ( 4.8 ) 7.0

Decrease in cash and cash equivalents ( 7.0 ) ( 0.4 )

Cash and cash equivalents at beginning of period 58.2 54.1

2 unchanged sentences

Income taxes paid $ 7.1 $ 1.8

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

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 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 six-month periods ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three- and nine-month periods ended September 30, 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.

We determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria as of December 31, 2022 and June 30, 2023.

We determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria as of December 31, 2022 and September 30, 2023.

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.

12 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

Three Months Ended June 30, Six Months Ended June 30,

September 30, 2023

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

2023 2022 2023 2022

11 unchanged sentences

(In millions)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

GEOGRAPHIC REGION

6 unchanged sentences

Total $ 192.8 $ 108.4 $ 117.6 $ 418.8

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

GEOGRAPHIC REGION

9 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

Supply Technologies Segment Assembly Components Segment Engineered Products Segment Total Revenues

(In millions)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

GEOGRAPHIC REGION

6 unchanged sentences

Total $ 585.9 $ 330.8 $ 353.7 $ 1,270.4

Six Months Ended June 30, 2022

Nine Months Ended September 2022

GEOGRAPHIC REGION

7 unchanged sentences

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 $ 53.3 million and $ 52.6 million at June 30, 2023 and December 31, 2022, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

These amounts, which totaled $ 67.9 million and $ 52.6 million at September 30, 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 $ 66.8 million and $ 56.7 million at June 30, 2023 and December 31, 2022, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

These amounts, which totaled $ 79.3 million and $ 56.7 million at September 30, 2023 and December 31, 2022, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

8 unchanged sentences

and interest expense, net.

Results by business segment were as follows:

Park-Ohio Holdings Corp.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

Three Months Ended June 30, Six Months Ended June 30,

September 30, 2023

Results by business segment were as follows:

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

2023 2022 2023 2022

20 unchanged sentences

$ 16.0 $ 5.3 $ 34.9 $ 15.4

Aluminum Products was previously included in our Assembly Components segment.

13 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

Three Months Ended June 30, Six Months Ended June 30,

September 30, 2023

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

2023 2022 2023 2022

10 unchanged sentences

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business.

The allocations were $ 0.7 million and $ 0.6 million in the three months ended June 30, 2023 and 2022, respectively, and $ 1.3 million and $ 1.2 million in the six months ended June 30, 2023 and 2022, respectively.

The allocations were $ 1.0 million and $ 0.5 million in the three months ended September 30, 2023 and 2022, respectively, and $ 2.3 million and $ 1.7 million in the nine months ended September 30, 2023 and 2022, respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In millions, except share data)

24 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

NOTE 6 — Plant Closure and Consolidation

During the three and six months ended June 30, 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.

During the three and nine months ended September 30, 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.

Facility-Related Costs Severance and Other Total

Three months ended June 30, 2023:

Three months ended September 30, 2023:

Assembly Components $ — $ — $ —

1 unchanged sentence

Total $ — $ — $ —

Three months ended June 30, 2022:

Three months ended September 30, 2022:

Assembly Components $ 1.2 $ — $ 1.2

2 unchanged sentences

Facility-Related Costs Severance and Other Total

Six months ended June 30, 2023:

Nine months ended September 30, 2023:

Assembly Components $ 0.5 $ — $ 0.5

1 unchanged sentence

Total $ 3.2 $ 1.9 $ 5.1

Six months ended June 30, 2022:

Nine months ended September 30, 2022:

Assembly Components $ 4.2 $ — $ 4.2

3 unchanged sentences

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 less than $ 1.0 million in the remainder of 2023 in connection with its plant closure and consolidation activities.

As of September 30, 2023, the Company was substantially complete with these actions.

Park-Ohio Holdings Corp.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

September 30, 2023

NOTE 7 — Inventories

Inventories, net consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In millions)

6 unchanged sentences

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 six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

The following table presents changes in the Company’s product warranty liability for the three and nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

7 unchanged sentences

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

In the three months ended June 30, 2023, income tax expense was $ 2.1 million on pre-tax income from continuing operations of $ 8.7 million, representing an effective income tax rate of 24 %.

In the three months ended June 30, 2022, income tax expense was $ 2.1 million on pre-tax income of $ 9.0 million, an effective income tax rate of 23 %.

In the six months ended June 30, 2023, income tax expense was $ 4.7 million on pre-tax income from continuing operations of $ 18.9 million, representing an effective income tax rate of 24 %.

In the six months ended June 30, 2022, income tax benefit was $ 0.7 million on pre-tax income of $ 10.1 million.

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

In the three months ended September 30, 2023, income tax expense was $ 3.8 million on pre-tax income from continuing operations of $ 16.0 million, representing an effective income tax rate of 24 %.

In the three months ended September 30, 2022, income tax benefit was $ 2.2 million on pre-tax income of $ 5.3 million.

The benefit in 2022 included a discrete tax benefit of $ 2.7 million related to various tax credits and a reduction to the Global Intangible Low-Taxed Income (“GILTI”) inclusion.

In the nine months ended September 30, 2023, income tax expense was $ 8.5 million on pre-tax income from continuing operations of $ 34.9 million, representing an effective income tax rate of 24 %.

In the nine months ended September 30, 2022, income tax benefit was $ 2.9 million on pre-tax income of $ 15.4 million.

The benefit in 2022 included a discrete tax benefit of $ 5.9 million related to various tax credits and a reduction to the GILTI inclusion.

NOTE 10 — Financing Arrangements

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

Carrying Value at

Maturity Date Interest Rate at

June 30, 2023 June 30, 2023 December 31, 2022

September 30, 2023 September 30, 2023 December 31, 2022

(In millions)

Senior Notes April 15, 2027 6.625 % $ 350.0 $ 350.0

Revolving credit facility November 26, 2024 6.43 % 300.0 285.3

Revolving credit facility January 14, 2027 7.17 % 286.8 285.3

Finance Leases Various Various 18.8 18.5

9 unchanged sentences

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.

The Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) of the Company's subsidiary, Park-Ohio Industries, Inc.

(“Park-Ohio”) 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.

On September 13, 2023, Park-Ohio Industries, Inc.

(“Park-Ohio”) amended its Eighth Amended and Restated Credit Agreement (the “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.

Pursuant to the Credit Agreement, Park-Ohio has the option to increase the availability under the revolving credit facility by an aggregate incremental amount up to $ 70.0 million.

The Credit Agreement matures on November 26, 2024.

As of June 30, 2023, we had borrowing availability of $ 86.8 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately $ 46.5 million at June 30, 2023 and $ 41.0 million at December 31, 2022.

The Credit Agreement matures on January 14, 2027.

As of September 30, 2023, we had borrowing availability of $ 99.2 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately $ 42.5 million at September 30, 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”).

The Notes are unsecured senior obligations of Park-Ohio and are guaranteed on an unsecured senior basis by the 100 % owned material domestic subsidiaries of Park-Ohio.

In 2015, the Company entered into a finance lease agreement (the “Lease Agreement”).

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

Finance lease obligations of $ 4.0 million were borrowed under the Lease Agreement to acquire machinery and equipment as of June 30, 2023.

As of June 30, 2023, the Company had additional finance leases totaling $ 15.4 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 Company the ability to borrow up to $ 11.0 million for expansion of its manufacturing facility in Arkansas.

The Company had $ 3.7 million of borrowings outstanding under this agreement as of June 30, 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.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

June 30, 2023 December 31, 2022

September 30, 2023

September 30, 2023 December 31, 2022

(In millions)

2 unchanged sentences

The fair value of the revolving credit facility is equal to its carrying value as the Company has the ability to repay the outstanding principal at par value at any time.

The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

NOTE 11 — Stock-Based Compensation

A summary of restricted share activity for the six months ended June 30, 2023 is as follows:

A summary of restricted share activity for the nine months ended September 30, 2023 is as follows:

Time-Based Performance-Based

9 unchanged sentences

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

Total stock-based compensation expense was $ 1.7 million and $ 1.8 million for the three months ended June 30, 2023 and 2022, respectively.

Total stock-based compensation expense was $ 3.3 million and $ 3.4 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, there was $ 9.9 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 2.1 years.

Total stock-based compensation expense was $ 1.6 million and $ 2.0 million for the three months ended September 30, 2023 and 2022, respectively.

Total stock-based compensation expense was $ 4.9 million and $ 5.4 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was $ 9.0 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 2.0 years.

NOTE 12 — Commitments and Contingencies

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in 128 cases asserting claims on behalf of 178 plaintiffs alleging personal injury as a result of exposure to asbestos.

4 unchanged sentences

NOTE 13 — Pension and Postretirement Benefits

The components of net periodic benefit (income) expense costs recognized for the three and six months ended June 30, 2023 and 2022 were as follows:

The components of net periodic benefit (income) expense costs recognized for the three and nine months ended September 30, 2023 and 2022 were as follows:

Pension Benefits Postretirement Benefits

Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022 2023 2022 2023 2022

6 unchanged sentences

NOTE 14 — Accumulated Other Comprehensive Loss

The components of and changes in accumulated other comprehensive loss for the three and six months ended June 30, 2023 and 2022 were as follows:

The components of and changes in accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022 were as follows:

Park-Ohio Holdings Corp.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

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 June 30, 2023 Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

Beginning balance $ ( 33.2 ) $ 0.1 $ ( 20.7 ) $ ( 53.8 ) $ ( 36.8 ) $ 0.5 $ ( 0.8 ) $ ( 37.1 )

4 unchanged sentences

Ending balance $ ( 42.5 ) $ — $ ( 19.7 ) $ ( 62.2 ) $ ( 53.8 ) $ 0.5 $ ( 0.7 ) $ ( 54.0 )

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

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

7 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

4 unchanged sentences

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

Anti-dilutive shares were 0.2 million and 0.3 million for the three months ended June 30, 2023 and 2022, respectively, and 0.2 million and 0.3 million for the six months ended June 30, 2023 and 2022, respectively.

NOTE 16 — Subsequent Event

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

The dividend will be paid on August 18, 2023 to shareholders of record as of the close of business on August 4, 2023 and will result in a cash outlay of approximately $ 1.6 million.

Anti-dilutive shares were 0.1 million for the three months ended September 30, 2023 and 2022, respectively, and 0.1 million and 0.2 million for the nine months ended September 30, 2023 and 2022, respectively.

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