What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-06 compared with 2023-03-16 · 139 added, 212 removed, 978 unchanged (26% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations — Years Ended December 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive (Loss) Income — Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income (Loss) — Years Ended December 31, 2023, 2022 and 2021

Consolidated Statements of Shareholders’ Equity — Years Ended December 31, 2023, 2022 and 2021

7 unchanged sentences

We have audited the accompanying consolidated balance sheets of Park-Ohio Holdings Corp.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

and Subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

21 unchanged sentences

As discussed in Note 1 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level or more frequently if impairment indicators arise.

Goodwill is tested at the reporting unit level for impairment utilizing the income approach, which uses a discounted cash flow methodology to estimate the fair value of each reporting unit.

Goodwill is tested at the reporting unit level for impairment utilizing a combination of valuation techniques including the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

Auditing management’s quantitative goodwill impairment assessment for certain of its reporting units was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units.

18 unchanged sentences

and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Charter Automotive (Changzhou) Co.

(Charter) or Southern Fasteners & Supply, Inc (Southern Fastener), the results of which are included in the 2022 consolidated financial statements of the Company and collectively constituted approximately 2% of total assets as of December 31, 2022 and 1% of total revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Charter or Southern Fasteners.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 16, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 6, 2024 expressed an unqualified Opinion thereon.

Basis for Opinion

26 unchanged sentences

Inventories, net 411.1 406.5

Unbilled contract revenue 56.7 55.0

Promissory note related to financing arrangement — 25.0

8 unchanged sentences

Other long-term assets 28.1 16.9

Long-term assets held-for-sale - discontinued operations 1

Total assets $ 1,340.7 $ 1,436.6

5 unchanged sentences

Accrued employee compensation 31.8 22.3

Deferred revenue 52.6 51.7

Financing arrangement liability — 45.0

7 unchanged sentences

Other long-term liabilities 10.4 10.7

Long-term liabilities held-for-sale - discontinued operations 1

Total long-term liabilities 687.2 720.1

18 unchanged sentences

Total liabilities and shareholders' equity $ 1,340.7 $ 1,436.6

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

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

Operating income 84.1 33.4 16.3

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

Other components of pension and other postretirement benefits income, net

Interest expense, net ( 45.1 ) ( 33.8 ) ( 27.1 )

Income (loss) from continuing operations before income taxes 41.5 10.7 ( 1.1 )

Income tax benefit 0.7 1.0 1.3

Income tax (expense) benefit ( 8.5 ) 0.7 1.0

Income (loss) from continuing operations 33.0 11.4 ( 0.1 )

(Income) loss attributable to noncontrolling interest ( 1.3 ) 1.2 0.3

Income (loss) from continuing operations attributable to ParkOhio common shareholders 10.1 1.1 ( 0.2 )

Loss (income) attributable to noncontrolling interest 1.0 ( 1.3 ) 1.2

Income from continuing operations attributable to ParkOhio common shareholders 34.0 10.1 1.1

Loss from discontinued operations, net of tax (Note 4) ( 26.2 ) ( 24.3 ) ( 25.9 )

Net loss attributable to ParkOhio common shareholders $ ( 14.2 ) $ ( 24.8 ) $ ( 4.5 )

(Loss) earnings per common share attributable to ParkOhio common shareholders:

Net income (loss) attributable to ParkOhio common shareholders $ 7.8 $ ( 14.2 ) $ ( 24.8 )

Earnings (loss) per common share attributable to ParkOhio common shareholders:

Continuing operations $ 2.76 $ 0.83 $ 0.09

10 unchanged sentences

and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

Year Ended December 31,

1 unchanged sentence

(In millions)

Net loss attributable to ParkOhio common shareholders before noncontrolling interest $ ( 12.9 ) $ ( 26.0 ) $ ( 4.8 )

Other comprehensive (loss) income:

Net income (loss) attributable to ParkOhio common shareholders before noncontrolling interest $ 6.8 $ ( 12.9 ) $ ( 26.0 )

Other comprehensive income (loss):

Currency translation 7.7 ( 19.9 ) ( 10.0 )

Pensions and other postretirement benefits, net of tax 10.4 ( 22.7 ) 8.9

Total other comprehensive (loss) income ( 42.6 ) ( 1.1 ) 18.9

Total comprehensive (loss) income, net of tax ( 55.5 ) ( 27.1 ) 14.1

Comprehensive (income) loss attributable to noncontrolling interest ( 1.3 ) 1.2 0.3

Comprehensive (loss) income attributable to ParkOhio common shareholders $ ( 56.8 ) $ ( 25.9 ) $ 14.4

Total other comprehensive income (loss) 18.1 ( 42.6 ) ( 1.1 )

Total comprehensive income (loss), net of tax 24.9 ( 55.5 ) ( 27.1 )

Comprehensive loss (income) attributable to noncontrolling interest 1.0 ( 1.3 ) 1.2

Comprehensive income (loss) attributable to ParkOhio common shareholders $ 25.9 $ ( 56.8 ) $ ( 25.9 )

The accompanying notes are an integral part of these consolidated financial statements.

9 unchanged sentences

Balance at January 1, 2021 16,148,791 16.1 135.5 290.5 ( 79.8 ) ( 18.1 ) 13.7 357.9

Comprehensive (loss) income — — — ( 4.5 ) — 18.9 ( 0.3 ) 14.1

Comprehensive loss — — — ( 24.8 ) — ( 1.1 ) ( 1.2 ) ( 27.1 )

Stock-based compensation — — 6.5 — — — — 6.5

2 unchanged sentences

Dividends — — — ( 6.3 ) — — ( 0.7 ) ( 7.0 )

Purchase of treasury stock ( 519,387 shares)

Purchase of treasury stock ( 191,983 )

— — — — ( 5.5 ) — — ( 5.5 )

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

Balance at December 31, 2021 16,339,722 16.3 142.9 259.4 ( 85.3 ) ( 19.2 ) 10.7 324.8

Comprehensive loss — — — ( 24.8 ) — ( 1.1 ) ( 1.2 ) ( 27.1 )

Comprehensive (loss) income — — — ( 14.2 ) — ( 42.6 ) 1.3 ( 55.5 )

Stock-based compensation — — 7.2 — — — — 7.2

4 unchanged sentences

— — — — ( 1.6 ) — — ( 1.6 )

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

Balance at December 31, 2022 16,653,928 16.6 149.8 238.8 ( 86.9 ) ( 61.8 ) 11.4 267.9

Comprehensive (loss) income — — — ( 14.2 ) — ( 42.6 ) 1.3 ( 55.5 )

Comprehensive income (loss) — — — 7.8 — 18.1 ( 1.0 ) 24.9

Stock-based compensation — — 6.5 — — — — 6.5

16 unchanged sentences

Income (loss) from continuing operations $ 33.0 $ 11.4 $ ( 0.1 )

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

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

Depreciation and amortization 31.7 30.2 30.8

Stock-based compensation 6.5 7.2 6.5

Gains on sales of assets, net ( 2.4 ) ( 14.7 ) —

Gain on sales of assets, net ( 0.8 ) ( 2.4 ) ( 14.7 )

Deferred income taxes ( 7.2 ) ( 8.3 ) ( 5.8 )

5 unchanged sentences

Other 3.5 ( 7.5 ) ( 8.2 )

Net cash (used) provided by operating activities from continuing operations ( 26.6 ) ( 12.2 ) 58.6

Net cash provided (used) by operating activities from continuing operations 53.4 ( 26.6 ) ( 12.2 )

INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

1 unchanged sentence

Proceeds from sales of assets 2.0 9.5 20.3

Proceeds from sale of discontinued operations 15.5 — —

Business acquisitions, net of cash acquired ( 1.2 ) ( 23.3 ) ( 5.4 )

1 unchanged sentence

FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

Proceeds from (payments on) revolving credit facility, net 64.8 77.6 ( 29.3 )

(Payments on) proceeds from revolving credit facility, net ( 22.3 ) 64.8 77.6

Payments on term loans and other debt ( 7.2 ) ( 3.6 ) ( 6.3 )

1 unchanged sentence

Proceeds from (payments on) finance lease facilities, net 0.9 8.5 ( 0.3 )

Proceeds from third-party financing arrangement 20.0 — —

Proceeds from down payment for sale of discontinued operations — 20.0 —

Payments related to prior acquisitions ( 2.9 ) — —

Dividends ( 7.4 ) ( 7.0 ) ( 7.0 )

1 unchanged sentence

Payments of withholding taxes on stock awards ( 2.0 ) ( 1.6 ) ( 3.0 )

Net cash provided (used) by financing activities from continuing operations 84.6 60.8 ( 44.8 )

Net cash (used) provided by financing activities from continuing operations ( 36.6 ) 84.6 60.8

DISCONTINUED OPERATIONS 1 :

Total (used) provided by operating activities ( 1.0 ) ( 31.1 ) 10.7

Total used by operating activities ( 2.9 ) ( 1.0 ) ( 31.1 )

Total used by investing activities ( 3.9 ) ( 4.8 ) ( 8.8 )

Total used by financing activities ( 2.4 ) ( 3.4 ) ( 0.9 )

(Decrease) increase in cash and cash equivalents from discontinued operations ( 9.2 ) ( 40.8 ) 2.2

Decrease in cash and cash equivalents from discontinued operations ( 9.2 ) ( 9.2 ) ( 40.8 )

Effect of exchange rate changes on cash 0.9 ( 4.0 ) ( 1.3 )

Increase (decrease) in cash and cash equivalents 4.1 ( 0.9 ) ( 1.0 )

(Decrease) increase in cash and cash equivalents ( 3.4 ) 4.1 ( 0.9 )

Cash and cash equivalents at beginning of year 58.2 54.1 55.0

2 unchanged sentences

Interest paid $ 47.6 $ 34.5 $ 28.8

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which was sold December 29, 2023 and presented in discontinued operations for all periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The Company does not have off-balance sheet arrangements or financings with unconsolidated entities or other persons, other than the letters of credits disclosed in Note 9.

The Company does not have off-balance sheet arrangements or financing with unconsolidated entities or other persons, other than the letters of credit disclosed in Note 9.

The Company leases certain real properties owned by related parties as described in Note 13.

3 unchanged sentences

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 Annual Report on Form 10-K.

On December 29, 2023, the Company sold this business to Angstrom Automotive Group (“Angstrom”) for approximately $ 50 million in cash and promissory notes, plus the assumption of approximately $ 3 million of financial lease obligations.

Unless otherwise indicated, amounts and activity in this Annual Report are presented on a continuing operations basis.

See Note 4, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for further information.

See Note 4, “Discontinued Operations,” for further information.

Accounting Estimates:

26 unchanged sentences

Additions and improvements that extend the lives of assets are capitalized, and expenditures for repairs and maintenance are charged to operations as incurred.

Depreciation of fixed assets, including amounts capitalized under finance leases, is computed by the straight-line method based on the estimated useful lives of the assets ranging from five to 40 years for buildings, and one to 20 years for machinery and equipment (with the majority in the range of three to ten years ).

The following table summarizes property, plant and equipment:

14 unchanged sentences

Our reporting units have been identified one level below the operating segment level.

The Company completed its annual goodwill and indefinite-lived intangibles impairment testing as of October 1 of each year, noting no impairment related to continuing operations.

To determine fair value for goodwill testing purposes, the Company uses an income approach, utilizing a discounted cash flow model based on forecasted cash flows and weighted average cost of capital.

The Company completed its annual goodwill and indefinite-lived intangibles impairment testing as of October 1 of each year, noting no impairment.

To determine fair value for goodwill testing purposes, the Company uses an income approach, utilizing a discounted cash flow model based on forecasted cash flows and weighted average cost of capital, and a market multiple approach.

To determine fair value for indefinite-lived intangibles testing, the Company uses a relief-of-royalty method.

22 unchanged sentences

The Company has not changed its valuation techniques for measuring fair value during 2023, and there were no transfers between levels during the periods presented.

We account for our pensions in accordance with ASC Topic 715, "Compensation — Retirement Benefits." Net actuarial gains and losses are amortized to expense when they exceed the 10% accounting corridor, based on the greater of the plan assets or benefit obligations, over an average employee future service period.

Refer to Note 14 for more information.

18 unchanged sentences

The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, current conditions and reasonable forecasts.

As of December 31, 2022, the Company had uncollateralized receivables with five customers in the automotive industry, each with several locations, aggregating $ 28.1

As of December 31, 2023 and 2022, the Company had uncollateralized receivables with five customers in the automotive industry, each with several locations, aggregating $ 26.3 million and $ 28.1 million, respectively, which represented approximately 10 % and 11 %, respectively, of the

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

million, which represented approximately 11 % of the Company’s trade accounts receivable.

During 2022, sales to these customers amounted to approximately $ 218.5 million, which represented approximately 15 % of the Company’s net sales.

Company’s trade accounts receivable.

During 2023 and 2022, sales to these customers amounted to approximately $ 259.5 million and $ 218.5 million, respectively, which represented approximately 16 % and 15 %, respectively, of the Company’s net sales.

Environmental:

19 unchanged sentences

Balance at December 31 $ 5.5 $ 5.2 $ 7.2

Weighted-Average Number of Shares Used in Computing (Loss) Earnings Per Share:

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

Weighted-Average Number of Shares Used in Computing Earnings (Loss) Per Share:

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

Year Ended December 31,

5 unchanged sentences

Outstanding stock awards with exercise prices greater than the average price of the common shares are anti-dilutive and are not included in the computation of diluted earnings per share.

Because the Company was in a continuing operations loss position for the year ended December 31, 2020, all common shares outstanding are anti-dilutive.

For the years ended December 31, 2023, 2022 and 2021, the anti-dilutive shares were 0.1 million, 0.2 million and 0.6 million, respectively.

Accounting Standards 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 (“LIBOR”).

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.

As of December 31, 2022, the Company utilizes ongoing reference rates, including the Euro

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This guidance requires additional annual and interim disclosures for reportable segments.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interbank Offered Rate;

the change from LIBOR had no impact on the financial statements of the Company.

All loan agreements that previously utilized LIBOR have been updated to utilize an ongoing reference rate.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This guidance requires additional annual disclosures for income taxes.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2024.

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

26 unchanged sentences

Incurred costs represent work performed and therefore best depict the transfer of control to the customer.

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

These amounts, which totaled $ 52.6 million and $ 51.7 million at December 31, 2022 and December 31, 2021, respectively, are recorded as Deferred revenue in the Consolidated Balance Sheets.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

These amounts, which totaled $ 53.9 million and $ 52.6 million at December 31, 2023 and December 31, 2022, respectively, are recorded as Other accrued expenses in the Consolidated Balance Sheets.

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

These amounts, which totaled $ 56.7 million and $ 55.0 million at December 31, 2022 and December 31, 2021, respectively, are recorded as Unbilled contract revenue in the Consolidated Balance Sheets.

These amounts, which totaled $ 59.9 million and $ 56.7 million at December 31, 2023 and December 31, 2022, respectively, are recorded as Other current assets in the Consolidated Balance Sheets.

The Company has elected to account for shipping and handling as activities to fulfill the promise to transfer its products.

10 unchanged sentences

Assembly Components Segment 427.8 388.8 321.5

388.8 321.5 298.4

Industrial equipment 335.1 277.3 247.0

2 unchanged sentences

Total revenues $ 1,659.7 $ 1,492.9 $ 1,277.0

The Aluminum Products business unit was previously included in our Assembly Components segment.

PARK-OHIO HOLDINGS CORP.

32 unchanged sentences

Supply Technologies, Assembly Components and Engineered Products.

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

The Aluminum Products business was previously reported in the Company’s Assembly Components segment and now is shown as discontinued operations for all periods presented.

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating (loss) income, which is defined as revenues less expenses identifiable to the product lines within each segment.

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating income (loss), 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;

1 unchanged sentence

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

Segment operating (loss) income reconciles to consolidated

Segment operating (loss) income reconciles to consolidated income (loss) before income taxes by deducting corporate costs, certain non-cash and/or non-operating items;

Other components of pension and other postretirement benefits (“OPEB”) income, net;

and interest expense, net.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(loss) income before income taxes by deducting corporate costs, certain non-cash and/or non-operating items;

Other components of pension income and other postretirement benefits (“OPEB”) expense, net;

and interest expense, net.

Results by business segment were as follows:

5 unchanged sentences

$ 1,659.7 $ 1,492.9 $ 1,277.0

Segment operating (loss) income:

Segment operating income (loss):

Supply Technologies $ 59.0 $ 45.7 $ 42.8

5 unchanged sentences

Operating income 84.1 33.4 16.3

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

Other components of pension and other postretirement benefits income, net

Interest expense, net ( 45.1 ) ( 33.8 ) ( 27.1 )

Income (loss) from continuing operations before income taxes $ 41.5 $ 10.7 $ ( 1.1 )

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31,

19 unchanged sentences

$ 1,340.7 $ 1,436.6 $ 1,360.0

At December 31, 2022, 2021 and 2020, approximately 71 %, 71 % and 70 %, respectively, of the Company’s assets (including assets held-for-sale) were located in the United States.

NOTE 4 — 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 Annual Report.

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

See Note 9 for discussion of the entry into a memorandum of understanding (the “MOU”) related to the potential sale of this business.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2023, 2022 and 2021, approximately 67 %, 71 % and 71 %, respectively, of the Company’s assets were located in the United States.

NOTE 4 — Discontinued Operations

On December 29, 2023, the Company completed the sale of its Aluminum Products business to Angstrom for approximately $ 50 million in cash and promissory notes, plus the assumption of approximately $ 3 million of finance lease obligations.

The total purchase price consisted of a cash down payment of $ 20.0 million paid to the Company in December 2022;

cash of $ 15.5 million paid to the Company at closing;

and promissory notes totaling $ 15.0 million payable to the Company on December 31, 2024, of which $ 10.0 million is contingent on the Aluminum Products business attaining certain purchase commitments during 2024.

In connection with the sale agreement, the promissory note of $ 25.0 million previously issued to the Company was deemed to be satisfied in full.

Year Ended December 31,

9 unchanged sentences

Loss from operation of discontinued operations ( 3.4 ) ( 30.5 ) ( 31.4 )

Loss on sale of discontinued operations ( 28.3 ) — —

Loss on classification as held-for-sale — ( 1.8 ) —

2 unchanged sentences

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business, totaling $ 3.0 million, $ 2.5 million and $ 2.6 million in 2023, 2022 and 2021, respectively.

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

December 31, 2022 December 31, 2021

(In millions, except share data)

Current assets:

Accounts receivable, net $ 24.9 $ 31.7

Inventories, net 30.2 30.5

Other current assets 1.2 3.0

Current assets held-for-sale 1

Property, plant and equipment, net 46.1 49.9

Operating lease right-of-use assets 4.8 7.0

Long-term assets held-for-sale 1

Total assets held-for-sale $ 107.2 $ 122.1

Current liabilities:

Trade accounts payable $ 22.8 $ 15.7

Current portion of finance lease liabilities 2.4 4.4

Current portion of operating lease liabilities 2.3 2.2

Other accrued expenses 10.7 10.6

Current liabilities held-for-sale 1

$ 38.2 $ 32.9

Long-term liabilities, less current portion:

Long-term finance lease liabilities 3.1 4.6

Long-term operating lease liabilities 2.5 4.8

Long-term liabilities held-for-sale 1

Total liabilities held-for-sale $ 43.8 $ 42.3

NOTE 5 — Plant Closure and Consolidation

During 2023, 2022 and 2021, the Company incurred the following expenses related to plant closure and consolidation in connection with its profit-improvement actions across its businesses.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) - We reasonably expect to finalize the sale of the Aluminum Products business within one year from the December 31, 2022 balance sheet date, and therefore we have presented all assets and liabilities held-for-sale as current as of that date.

NOTE 5 — Plant Closure and Consolidation

During 2022, 2021 and 2020, the Company incurred the following expenses related to plant closure and consolidation in connection with its profit-improvement actions across the businesses.

Facility Related Costs Severance and Other Total

10 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 in this segment.

The Company expects to incur expenses of approximately $ 2.0 million to $ 3.0 million in 2023 in connection with its plant closure and consolidation activities.

In connection with the above actions, the Company sold certain real estate for cash proceeds and gains on sales as follows.

7 unchanged sentences

(“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

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 was finalized in 2022 and is summarized as follows:

(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 ( 1.5 )

Total purchase price $ 9.3

The Company paid $ 6.0 million for Charter in 2022 and is scheduled to pay the remaining balance throughout 2023 and 2024.

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 Company has paid $ 7.6 million for Charter as of December 31, 2023 and is scheduled to pay the remaining balance throughout 2024.

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 .

The purchase price included cash of $ 16.7 million paid at closing plus $ 0.5 million paid in 2023 (included in Business acquisitions, net of cash acquired in the Consolidated Statements of Cash Flows) and a $ 1.5 million Note that will be paid to the seller in 2024.

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 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

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 was finalized in 2022 and is summarized as follows (including the $ 2.0 million of notes payable to the seller):

(In millions)

Accounts receivable $ 3.3

Inventories 5.0

Property, plant and equipment 0.4

Other current assets 0.3

Intangible assets 6.0

Accounts payable and accrued expenses ( 2.5 )

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

In 2021, the Company acquired NYK Component Solutions Limited (“NYK”).

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NYK provides complementary products to our existing products in Supply Technologies.

At closing, the Company paid $ 5.4 million in cash, net of cash acquired.

In addition, the purchase agreement stipulates potential contingent consideration of up to an additional $ 1.8 million based on earnings before interest, taxes, depreciation and amortization during the two years following the acquisition date.

The Company paid $ 0.6 million during 2022, which is included in Business Acquisitions in the Consolidated Statements of Cash Flows.

As of December 31, 2022, the Company expects to pay an additional $ 1.2 million of the contingent consideration to the seller in 2023.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company paid $ 7.2 million for NYK, including $ 5.4 million in cash at closing and an additional $ 0.6 million in 2022 and $ 1.3 million in 2023 related to contingent considerations based on profitability over the two years after the acquisition.

NOTE 7 — Goodwill

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Balance at December 31, 2022 21.1 51.3 36.5 108.9

Acquisitions 6.2 — — 6.2

Foreign currency translation 0.7 0.1 0.5 1.3

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Amortization expense $ 6.7 $ 6.6 $ 6.9

We estimate amortization expense for the five years subsequent to 2022 as follows:

PARK-OHIO HOLDINGS CORP.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We estimate amortization expense for the five years subsequent to 2023 as follows:

NOTE 9 — Financing Arrangements

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

Revolving credit facility November 26, 2024 5.40 % 285.3 221.1

Revolving credit facility January 14, 2027 6.94 % - 7.19 %

Finance leases Various Various 16.3 18.5

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$ 633.4 $ 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 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 (as amended, 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, the Company 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 16, 2024.

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

(“Park-Ohio”), the operating subsidiary of the Company, entered into the 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 January 14, 2027.

As of December 31, 2023, we had borrowing availability of $ 103.3 million under the Credit Agreement.

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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.

On August 13, 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 $ 5.1 million were borrowed under the Lease Agreement as of December 31, 2022 to acquire machinery and equipment.

See Note 13 for additional disclosures about finance leases.

As of December 31, 2022, the Company had additional finance leases totaling $ 13.4 million.

On October 21, 2015, the Company, through its subsidiary, Southwest Steel Processing LLC, entered into a financing agreement with the Arkansas Development Finance Authority.

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

The loan matures in September 2025.

The Company has borrowed $ 4.3 million under this agreement as of December 31, 2022.

The following table represents fair value information of the Notes, classified as Level 1, at December 31, 2023 and 2022.

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NOTE 10 — Income Taxes

(Loss) income from continuing operations before income taxes consists of the following:

Income (loss) from continuing operations before income taxes consists of the following:

Year Ended December 31,

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2023 2022 2021

Current (benefit) expense:

Current expense (benefit):

Federal $ 1.7 $ ( 1.6 ) $ ( 4.9 )

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Foreign 13.9 9.4 9.4

7.6 4.8 ( 8.2 )

Deferred expense (benefit):

Deferred (benefit) expense:

Federal ( 7.1 ) ( 8.0 ) ( 5.9 )

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( 7.2 ) ( 8.3 ) ( 5.8 )

Income tax benefit $ ( 0.7 ) $ ( 1.0 ) $ ( 1.3 )

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted on March 27, 2020.

The CARES Act was a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the

Income tax expense (benefit) $ 8.5 $ ( 0.7 ) $ ( 1.0 )

PARK-OHIO HOLDINGS CORP.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

COVID-19 pandemic.

In 2023, the effective tax rate of 20.5 % approximated the U.S.

statutory rate of 21%, as the tax benefits of the foreign tax credit and research and development tax credit were offset by the tax expense of foreign earnings, GILTI and non-deductible expenses.

In 2022, the Company completed a research and development tax credit study for the current year as well as U.S.

tax years open under statute.

The completed study resulted in additional research and development tax credit benefits being recorded in 2022.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted on March 27, 2020 to address the impact of the COVID-19 pandemic.

Significant impacts of the CARES Act include the ability to carry back a net operating loss five years and an increase of the Internal Revenue Code Section 163(j) interest expense disallowance limitations from 30% to 50% of adjusted taxable income.

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This additional tax benefit of 14% increased the 2021 tax benefit.

In 2022, the Company completed a research and development tax credit study for the current year as well as US tax years open under statute.

The completed study resulted in additional research and development tax credit benefits being recorded in the current year.

A reconciliation of income tax expense (benefit) computed by applying the statutory federal income tax rate to income tax benefit as recorded is as follows:

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Other, net ( 0.2 ) ( 0.6 ) —

Income tax benefit as recorded $ ( 0.7 ) $ ( 1.0 ) $ ( 1.3 )

Income tax expense (benefit) as recorded $ 8.5 $ ( 0.7 ) $ ( 1.0 )

PARK-OHIO HOLDINGS CORP.

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Total deferred income tax liabilities 64.8 66.0

Net deferred income tax assets (liabilities) prior to valuation allowances 3.5 ( 20.9 )

Net deferred income tax assets prior to valuation allowances 11.1 3.5

Valuation allowances ( 7.3 ) ( 8.6 )

Net deferred income tax liability $ ( 5.1 ) $ ( 27.0 )

Net deferred income tax asset (liability) $ 3.8 $ ( 5.1 )

At December 31, 2023, the Company has U.S., state and foreign net operating loss carryforwards as well as U.S.

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The foreign tax credit carryforward is $ 1.9 million and expires between 2031 and 2033.

The foreign tax credit carryforward has a full valuation allowance as the Company is not expected to generate sufficient foreign source income to utilize the credit before expiration.

research and development tax credit carryforward is $ 3.6 million and expires between 2042 and 2043.

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The Company has determined that it was more likely than not that its U.S.

deferred tax assets will be realized, except for the foreign tax credit as noted above.

deferred tax assets will be realized.

The Company reviews all valuation allowances related to deferred tax assets and will reverse these valuation allowances, partially or totally, when appropriate under ASC 740.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Gross Increases to Tax Positions Related to Prior Years — 0.3 —

Gross Decreases to Tax Positions Related to Prior Years — — ( 0.5 )

Gross Decreases related to settlements with taxing authorities — — ( 0.1 )

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Unrecognized Tax Benefit — December 31 $ 0.5 $ 0.8 $ 1.0

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $ 0.1 million at both December 31, 2023 and December 31, 2022.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

During the years ended December 31, 2022 and 2021, the Company recognized a tax benefit of approximately $ 0.1 million, in both years, in net interest and penalties due to the expiration of various uncertain tax positions.

During 2023 and 2022, the Company recognized a tax benefit of approximately $ 0.1 million in net interest and penalties due to the expiration of various uncertain tax positions.

The Company had approximately $ 0.1 million for the payment of interest and penalties accrued at both December 31, 2023 and 2022.

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(a) Included in the granted amount are 9,000 restricted share units.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognized compensation expense of $ 6.5 million, $ 7.2 million and $ 6.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, relating to time-based awards and performance-based awards.

The 50,000 share performance-based award in 2019 relates to a five-year cumulative profit target through 2023.

Through December 31, 2022, no compensation expense was recognized as achievement of the performance target is deemed not probable.

As of December 31, 2023, these shares have expired and no compensation expense was recognized as achievement of the performance target was not met.

The total fair value of restricted shares and share units that vested during the years ended December 31, 2023, 2022 and 2021 was $ 6.9 million, $ 6.5 million and $ 6.7 million, respectively.

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The unrecognized compensation expense is expected to be recognized over a total weighted average period of 1.9 years.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 12 — Commitments and Contingencies

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Additionally, we do not believe that the amounts claimed in any of the asbestos cases are meaningful indicators of our potential exposure because the amounts claimed typically bear no relation to the extent of the plaintiff's injury, if any.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 13 - Lease Arrangements

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The incremental borrowing rate is calculated based on lease term, currency and collateral adjustments.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During 2023, the Company obtained right-of-use assets in exchange for new operating lease liabilities of $ 2.0 million.

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Operating lease expense is recognized on a straight-line basis over the lease term, with variable payments recognized in the period those payments are incurred.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

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Cash Flow Information for 2023, 2022 and 2021

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

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Interest cost 3.5 1.8 0.3 0.1

Actuarial gains ( 15.8 ) ( 2.5 ) ( 0.8 ) ( 0.5 )

Actuarial loss (gain) 3.2 ( 15.8 ) 0.2 ( 0.8 )

Benefits and expenses paid ( 6.2 ) ( 6.4 ) ( 0.7 ) ( 1.0 )

Curtailment loss - discontinued operations 0.4 — — —

Benefit obligation at end of year $ 72.8 $ 67.6 $ 5.0 $ 5.2

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Fair value of plan assets at beginning of year $ 131.5 $ 169.9 $ 3.6 $ 4.5

Actual return on plan assets ( 32.0 ) 19.6 0.1 —

Company contributions — — — 5.1

Cash transfer to fund postretirement benefit payments — ( 5.1 ) — —

Actual return (loss) on plan assets 22.6 ( 32.0 ) 0.5 0.1

Benefits and expenses paid ( 6.2 ) ( 6.4 ) ( 0.7 ) ( 1.0 )

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Discount rate for interest costs 5.35 % 2.21 % 1.66 % 5.29 % 1.96 % 1.33 %

Expected return on plan assets 7.75 % 7.75 % 7.75 % 7.75 % 7.75 % N/A

Expected return on plan assets 7.75 % 7.75 % 7.75 % 7.75 % 7.75 % 7.75 %

Rate of compensation increase 3.00 % 3.00 % 3.00 % N/A N/A N/A

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Expected return on plan assets ( 9.9 ) ( 12.9 ) ( 12.3 ) ( 0.3 ) ( 0.3 ) —

Amortization of prior service cost (credit) — — — — — —

Recognized net actuarial loss 3.6 — 0.8 0.3 0.2 0.3

Benefit (income) costs $ ( 6.8 ) $ ( 5.9 ) $ ( 3.6 ) $ — $ 0.4 $ 0.4

Benefit costs (income) - continuing operations 1.5 ( 6.8 ) ( 5.9 ) 0.3 — 0.4

Curtailment loss - discontinued operations 0.4 — — — — —

Total benefit (income) costs $ 1.9 $ ( 6.8 ) $ ( 5.9 ) $ 0.3 $ — $ 0.4

Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss (“AOCI”)

AOCI at beginning of year $ 40.0 $ 10.9 $ 21.5 $ 2.4 $ 2.2 $ 3.0

Net (loss) gain arising during the year — ( 0.8 ) ( 1.8 ) ( 0.2 ) ( 0.3 ) ( 0.2 )

Recognition of prior service credit — — — — — —

Recognition of actuarial (loss) gain 29.1 ( 9.8 ) ( 5.0 ) 0.4 ( 0.5 ) 0.6

Net income arising during the year ( 3.7 ) — ( 0.8 ) ( 0.3 ) ( 0.2 ) ( 0.3 )

Recognition of actuarial (gain) loss ( 9.4 ) 29.1 ( 9.8 ) ( 0.1 ) 0.4 ( 0.5 )

Total recognized in accumulated other comprehensive loss at end of year $ 26.9 $ 40.0 $ 10.9 $ 2.0 $ 2.4 $ 2.2

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2029 to 2033 31.7 2.2 2.0 0.2

The Company expects to make no contributions to its defined benefit plans in 2023 and beyond, as pension benefits are expected to be paid out of plan assets and postretirement benefits are paid directly by the Company.

The Company expects to make no contributions to its defined benefit plans in 2024 and beyond, as pension and postretirement benefits are expected to be paid out of plan assets.

In January 2008, a Supplemental Executive Retirement Plan (“SERP”) for the Former CEO was approved by the Compensation Committee of the Board of Directors of the Company.

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No income taxes are provided on currency translation as foreign earnings are considered permanently re-invested.

NOTE 16 — Subsequent Event

NOTE 16 — Subsequent Events

On January 26, 2024, the Company's Board of Directors declared a quarterly dividend of $ 0.125 per common share.

The dividend was paid on February 23, 2024, to shareholders of record as of the close of business on February 9, 2024 and resulted in cash payments of $ 1.6 million.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective February 29, 2024, the Company acquired all of the outstanding shares of EMA Indutec GmbH (“EMA”), headquartered in Meckesheim, Germany, from the Aichelin Group, headquartered in Modling, Austria.

EMA, a leading manufacturer of induction heating equipment and converters, operates through its two locations in Meckesheim, Germany and Beijing, China.

The acquisition strengthens our global induction heating expertise throughout Europe and expands our portfolio of induction equipment brands and our aftermarket service capabilities.

The cash purchase price for the acquisition was approximately $ 14 million.

Supplementary Financial Data

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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-K

Item 8. Financial Statements and Supplementary Data