PARK OHIO HOLDINGS CORP [PKOH] Filings

10-Q 1 pkoh-20240930.htm 10-Q pkoh-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 000-03134

Park-Ohio Holdings Corp.

(Exact name of registrant as specified in its charter)

Ohio

34-1867219

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6065 Parkland Boulevard,

Cleveland,

Ohio

44124

(Address of principal executive offices)

(Zip Code)

(440) 947-2000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.00 Per Share	PKOH	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountings standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Number of shares outstanding of registrant’s Common Stock, par value $1.00 per share, as of October 31, 2024: 14,041,891 shares.

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Index


		Page
	Part I. Financial Information

Item 1.	Condensed Consolidated Financial Statements	4





	Notes to unaudited condensed consolidated financial statements — September 30, 2024	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	31
Item 4.	Controls and Procedures	31

	Part II. Other Information

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

Table of Contents

Part I. Financial Information

Table of Contents


Item 1.			Condensed Consolidated Financial Statements

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Balance Sheets


	(Unaudited)
	September 30, 2024		December 31, 2023
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	59.5	$	54.8

Accounts receivable, net	276.5		263.3
Inventories, net	430.8		411.1


Other current assets	119.2		95.2

Total current assets	886.0		824.4
Property, plant and equipment, net	187.9		184.9
Operating lease right-of-use assets	43.4		44.7
Goodwill	115.7		110.2
Intangible assets, net	74.4		73.3

Other long-term assets	99.2		103.2
Total assets	$	1,406.6	$	1,340.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	202.1	$	204.0
Current portion of long-term debt and short-term debt	10.2		9.4
Current portion of operating lease liabilities	11.6		10.6
Accrued expenses and other	137.4		139.6

Total current liabilities	361.3		363.6
Long-term liabilities, less current portion:
Long-term debt	651.1		633.4
Long-term operating lease liabilities	32.1		34.4

Other long-term liabilities	19.1		19.4
Total long-term liabilities	702.3		687.2








Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity	335.9		280.4
Noncontrolling interests	7.1		9.5
Total equity	343.0		289.9
Total liabilities and shareholders' equity	$	1,406.6	$	1,340.7

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions, except per share data)
Net sales	$	417.6	$	418.8	$	1,267.8	$	1,270.4
Cost of sales	345.3		348.8		1,050.9		1,063.1

Selling, general and administrative expenses	47.8		43.0		142.3		135.1
Restructuring, acquisition-related and other special charges	0.9		—		2.4		6.6
Gains on sales of assets	—		—		—		(0.8)

Operating income	23.6		27.0		72.2		66.4
Other components of pension and other postretirement benefits income, net	1.1		0.6		3.8		1.9
Interest expense, net	(12.1)		(11.6)		(36.0)		(33.4)

Income from continuing operations before income taxes	12.6		16.0		40.0		34.9
Income tax benefit (expense)	0.6		(3.8)		(5.3)		(8.5)
Income from continuing operations	13.2		12.2		34.7		26.4
Loss attributable to noncontrolling interests	0.5		0.3		1.9		0.7
Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders	13.7		12.5		36.6		27.1
Loss from discontinued operations, net of tax (Note 5)	(3.9)		(1.4)		(5.3)		(4.8)
Net income attributable to Park-Ohio Holdings Corp. common shareholders	$	9.8	$	11.1	$	31.3	$	22.3

Earnings (loss) per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic:
Continuing operations	$	1.05	$	1.01	$	2.88	$	2.22
Discontinued operations	$	(0.30)	$	(0.11)	(0.42)		(0.39)
Total	$	0.75	$	0.90	$	2.46	$	1.83
Diluted:
Continuing operations	$	1.02	$	0.99	$	2.81	$	2.19
Discontinued operations	$	(0.29)	$	(0.11)	(0.41)		(0.39)
Total	$	0.73	$	0.88	$	2.40	$	1.80

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)
Net income attributable to Park-Ohio Holdings Corp. common shareholders before noncontrolling interest	$	9.3	$	10.8	$	29.4	$	21.6
Other comprehensive income (loss), net of tax:
Currency translation	7.4		(9.3)		2.5		(3.8)

Foreign currency forward contracts	(0.2)		(0.1)		(1.3)		(0.5)
Pension and other postretirement benefits	0.6		1.0		1.5		3.9
Total other comprehensive income (loss)	7.8		(8.4)		2.7		(0.4)
Total comprehensive income, net of tax	17.1		2.4		32.1		21.2
Comprehensive loss attributable to noncontrolling interests	0.5		0.3		1.9		0.7
Comprehensive income attributable to Park-Ohio Holdings Corp. common shareholders	$	17.6	$	2.7	$	34.0	$	21.9

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity (Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	(In whole shares)	(In millions)
Balance at January 1, 2024	17,029,938	$	17.0	$	155.9	$	240.1	$	(88.9)	$	(43.7)	$	9.5	$	289.9
Other comprehensive income (loss)	—	—		—		9.6		—		(1.3)		(0.5)		7.8
Stock-based compensation expense	—	—		1.5		—		—		—		—		1.5
Stock-based compensation activity	3,065	—		—		—		—		—		—		—
Dividends	—	—		—		(1.6)				—		—		(1.6)

Payments of withholding taxes on share awards	—	—		—		—		(0.1)		—		—		(0.1)

Balance at March 31, 2024	17,033,003	17.0		157.4		248.1		(89.0)		(45.0)		9.0		297.5
Other comprehensive income (loss)	—	—		—		11.9		—		(3.8)		(0.9)		7.2
Stock-based compensation expense	—	—		1.2		—		—		—		—		1.2
Stock-based compensation activity	132,012	0.2		(0.2)		—		—		—		—		—


Dividends	—	—		—		(1.7)		—		—		—		(1.7)
Payments of withholding taxes on share awards	—	—		—		—		(2.3)		—		—		(2.3)
Balance at June 30, 2024	17,165,015	17.2		158.4		258.3		(91.3)		(48.8)		8.1		301.9
Other comprehensive income (loss)	—	—		—		9.8		—		7.8		(0.5)		17.1
Stock-based compensation expense		—		1.4		—		—		—		—		1.4
Stock-based compensation activity	75,480	—		—		—		—		—		—		—
Issuances of common stock	856,933	0.9		23.8		—		—		—		—		24.7
Dividends	—	—		—		(1.6)		—		—		(0.5)		(2.1)

Balance at September 30, 2024	18,097,428	$	18.1	$	183.6	$	266.5	$	(91.3)	$	(41.0)	$	7.1	$	343.0

Table of Contents


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	(In whole shares)	(In millions)
Balance at January 1, 2023	16,653,928	$	16.6	$	149.8	$	238.8	$	(86.9)	$	(61.8)	$	11.4	$	267.9
Other comprehensive income	—	—		—		5.8		—		5.1		0.1		11.0
Stock-based compensation expense	—	—		1.6		—		—		—		—		1.6
Stock-based compensation activity	9,535	0.1		(0.1)		—		—		—		—		—
Dividends	—	—		—		(1.6)		—		—		—		(1.6)



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)	—	—		—		5.4		—		2.9		(0.5)		7.8
Stock-based compensation expense	—	—		1.7		—		—		—		—		1.7
Stock-based compensation activity	309,237	0.3		(0.3)		—		—		—		—		—


Dividends	—	—		—		(1.6)		—		—		—		(1.6)
Payments of withholding taxes on share awards	—	—		—		—		(1.2)		—		—		(1.2)
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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Dividends per common share	$	0.125	$	0.125	$	0.375	$	0.375

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
	2024		2023
	(In millions)
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Income from continuing operations	$	34.7	$	26.4
Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations:
Depreciation and amortization	25.2		23.4

Stock-based compensation expense	4.1		4.9



Gain on sale of assets	—		(0.8)


Changes in operating assets and liabilities:
Accounts receivable	(7.9)		(20.2)
Inventories	(13.9)		2.5
Prepaid and other current assets	(19.1)		(30.8)
Accounts payable and accrued expenses	(9.6)		14.2


Other	(4.9)		4.7
Net cash provided by operating activities from continuing operations	8.6		24.3
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Purchases of property, plant and equipment	(22.3)		(20.8)

Proceeds from sales of assets	—		2.0
Business acquisitions, net of cash acquired	(11.0)		(1.2)
Net cash used in investing activities from continuing operations	(33.3)		(20.0)
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from revolving credit facility, net	18.7		1.4

Payments on other debt	(4.4)		(1.4)
Proceeds from other debt	5.8		5.1
(Payments on) proceeds from finance lease facilities, net	(1.7)		0.3




Net proceeds from common stock issuances	24.7		—
Payments related to prior acquisitions	(2.2)		(2.1)
Dividends	(5.4)		(4.9)

Payments of withholding taxes on share awards	(2.4)		(1.9)


Net cash provided by (used in) financing activities from continuing operations	33.1		(3.5)
DISCONTINUED OPERATIONS:
Total used by operating activities	(4.1)		(3.4)
Total used by investing activities	—		(2.0)
Total used by financing activities	—		(1.9)
Decrease in cash and cash equivalents from discontinued operations	(4.1)		(7.3)
Effect of exchange rate changes on cash	0.4		(0.5)
Increase (decrease) in cash and cash equivalents	4.7		(7.0)
Cash and cash equivalents at beginning of period	54.8		58.2
Cash and cash equivalents at end of period	$	59.5	$	51.2
Interest paid	$	29.9	$	29.6
Income taxes paid	$	8.5	$	7.1

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024

NOTE 1 — Basis of Presentation

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. 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, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The balance sheet at December 31, 2023 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, 2023.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 — New Accounting Pronouncements

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. The Company is still evaluating the impact that adoption will have on the consolidated financial statements.

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. The Company is still evaluating the impact that adoption will have on the consolidated financial statements.

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

NOTE 3 — Revenue

We disaggregate our revenue by product line and geographic region of our customers as we believe these metrics best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. See details in the tables below.

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)
PRODUCT LINE
Supply technologies	$	165.5	$	166.3	$	506.9	$	508.2
Engineered specialty fasteners and other products	29.0		26.5		87.1		77.7
Supply Technologies Segment	194.5		192.8		594.0		585.9

Fuel, rubber and plastic products	98.7		108.4		309.0		330.8

Assembly Components Segment	98.7		108.4		309.0		330.8

Industrial equipment	96.5		81.4		269.7		253.9
Forged and machined products	27.9		36.2		95.1		99.8
Engineered Products Segment	124.4		117.6		364.8		353.7

Total revenues	$	417.6	$	418.8	$	1,267.8	$	1,270.4


	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Three Months Ended September 30, 2024
GEOGRAPHIC REGION
United States	$	111.1	$	64.6	$	64.9	$	240.6
Europe	36.2		4.2		20.7		61.1
Asia	23.5		7.7		25.7		56.9
Mexico	18.7		13.3		5.0		37.0
Canada	3.6		7.7		7.2		18.5
Other	1.4		1.2		0.9		3.5
Total	$	194.5	$	98.7	$	124.4	$	417.6

Three Months Ended September 30, 2023
GEOGRAPHIC REGION
United States	$	117.7	$	73.0	$	64.2	$	254.9
Europe	37.5		4.2		21.4		63.1
Asia	16.1		8.2		15.3		39.6
Mexico	17.4		13.4		3.0		33.8
Canada	2.9		8.2		10.3		21.4
Other	1.2		1.4		3.4		6.0
Total	$	192.8	$	108.4	$	117.6	$	418.8

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024


	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Nine Months Ended September 30, 2024
GEOGRAPHIC REGION
United States	$	344.1	$	204.7	$	198.8	$	747.6
Europe	115.0		12.9		60.8		188.7
Asia	63.8		24.2		60.9		148.9
Mexico	57.6		40.2		14.5		112.3
Canada	11.4		23.6		20.4		55.4
Other	2.1		3.4		9.4		14.9
Total	$	594.0	$	309.0	$	364.8	$	1,267.8

Nine Months Ended September 30, 2023
GEOGRAPHIC REGION
United States	$	358.1	$	236.8	$	201.0	$	795.9
Europe	115.1		13.3		51.9		180.3
Asia	46.5		20.1		51.2		117.8
Mexico	54.1		33.3		11.6		99.0
Canada	10.0		23.7		25.6		59.3
Other	2.1		3.6		12.4		18.1
Total	$	585.9	$	330.8	$	353.7	$	1,270.4

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 $55.1 million and $59.9 million at September 30, 2024 and December 31, 2023, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

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 $46.5 million and $53.9 million at September 30, 2024 and December 31, 2023, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

Our operating segments are defined as components of the enterprise for which separate financial information is available and evaluated on a regular basis by our chief operating decision maker to allocate resources and assess performance.

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

Results by business segment were as follows:

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)
NET SALES OF CONTINUING OPERATIONS:
Supply Technologies	$	194.5	$	192.8	$	594.0	$	585.9
Assembly Components	98.7		108.4		309.0		330.8
Engineered Products	124.4		117.6		364.8		353.7
	$	417.6	$	418.8	$	1,267.8	$	1,270.4
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES:
Supply Technologies	$	20.5	$	15.6	$	59.0	$	45.0
Assembly Components	6.1		11.2		21.6		26.9
Engineered Products	4.8		7.1		14.6		15.3
Total segment operating income	31.4		33.9		95.2		87.2

Corporate costs	(7.8)		(6.9)		(23.0)		(21.6)

Gains on sales of assets	—		—		—		0.8


Operating income	23.6		27.0		72.2		66.4
Other components of pension and other postretirement benefits income, net	1.1		0.6		3.8		1.9
Interest expense, net	(12.1)		(11.6)		(36.0)		(33.4)

Income from continuing operations before income taxes	$	12.6	$	16.0	$	40.0	$	34.9

NOTE 5 — Discontinued Operations

On December 29, 2023, the Company completed the sale of its Aluminum Products business to Angstrom Automotive Group 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 up to $15.0 million payable to the Company on approximately the one-year anniversary of the sale, of which up to $10.0 million is contingent on the Aluminum Products business attaining certain purchase commitments during 2024. The fair value of this contingent consideration, valued using recurring level 3 inputs, was approximately $5.0 million as of September 30, 2024.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)				(In millions)
Net sales	$	—	$	45.4	$	—	$	137.7
Cost of sales	—		41.6		—		129.6

Selling, general and administrative	—		4.9		—		12.5


Operating loss	—		(1.1)		—		(4.4)
Interest expense	—		(1.1)		—		(2.6)



Loss from operation of discontinued operations	—		(2.2)		—		(7.0)
Loss from sale of discontinued operations	(5.0)		—		(6.8)		—
Income tax benefit	1.1		0.8		1.5		2.2
Loss from discontinued operations, net of tax	$	(3.9)	$	(1.4)	$	(5.3)	$	(4.8)

NOTE 6 — Acquisitions

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024

In February 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, which is included in our Engineered Products segment, is a leading manufacturer of induction heating equipment and converters and operates through its two locations in Meckesheim, Germany and Beijing, China. The purchase price, net of cash acquired for the acquisition, was $11.0 million.

The allocation of the purchase price of EMA 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, including primarily the valuation of acquired intangibles, is in process and will be completed no later than one year after the acquisition date. Below is the estimated purchase price allocation related to the acquisition of EMA:


	(In millions)
Accounts receivable	$	6.0
Inventories	4.7
Other current assets	0.5
Property, plant and equipment	1.3
Goodwill	4.4
Intangibles	5.1
Other assets	0.1
Accounts payable and accrued expenses	(10.0)
Deferred income tax liability	(1.1)
Total purchase price, net of cash acquired	$	11.0

During the first nine months of 2024, the Company paid $2.2 million related to the deferred purchase price for the 2022 acquisitions of Charter Automotive (Changzhou) Co. Ltd. (“Charter”) and Southern Fasteners & Supply, Inc.

During the fourth quarter of 2024, the Company is scheduled to pay $0.7 million related to the remaining deferred purchase price for the 2022 acquisition of Charter.

NOTE 7 — Inventories

Inventories, net consist of the following:


	September 30, 2024		December 31, 2023
	(In millions)
Raw materials and supplies	$	113.5	$	107.6
Work-in-process	57.6		50.1
Finished goods	259.7		253.4

Inventories, net	$	430.8	$	411.1

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2024

NOTE 8 — Accrued Warranty Costs

The Company estimates warranty claims that may be incurred based on current and historical data of products sold. 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, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)
Beginning balance	$	5.8	$	5.8	$	5.5	$	5.2
Claims paid	(0.8)		(0.4)		(1.6)		(1.7)
Warranty expense	1.2		0.1		2.0		2.4
Acquisition	—		—		0.6		—
Foreign currency translation	0.2		(0.3)		(0.1)		(0.7)
Ending balance	$	6.4	$	5.2	$	6.4	$	5.2

NOTE 9 — Income Taxes

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

In the nine months ended September 30, 2024, income tax expense was $5.3 million on pre-tax income from continuing operations of $40.0 million, representing an effective income tax rate of 13%. In the nine months period, we recognized a benefit of $2.4 million primarily due to changes in estimates related to prior year federal research and development credits. In the nine months ended September 30, 2023, income tax expense was $8.5 million on pre-tax income of $34.9 million, representing an effective income tax rate of 24%.

NOTE 10 — Financing Arrangements

Debt consists of the following:

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024


				Carrying Value at
	Maturity Date	Interest Rate at September 30, 2024		September 30, 2024		December 31, 2023
				(In millions)
Senior Notes	April 15, 2027	6.625	%	$	350.0	$	350.0

Revolving credit facility	January 14, 2027	6.9	%	282.2		263.5


Finance Leases	Various	Various		14.6		16.3
Other	Various	Various		16.7		15.9
Total debt				663.5		645.7
Less: Current portion of long-term debt and short-term debt				(10.2)		(9.4)

Less: Unamortized debt issuance costs				(2.2)		(2.9)
Total long-term debt				$	651.1	$	633.4

In September 2023, Park-Ohio Industries, Inc. (“Park-Ohio”) amended its Seventh 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 September 30, 2024, we had borrowing availability of $108.7 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately $42.1 million at September 30, 2024 and $32.8 million at December 31, 2023.

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.

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


	September 30, 2024		December 31, 2023
	(In millions)
Carrying amount	$	350.0	$	350.0
Fair value	$	342.8	$	330.2

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, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024

NOTE 11 — Stock-Based Compensation

A summary of restricted share activity for the nine months ended September 30, 2024 is as follows:


	2024
	Time-Based
	Number of Shares	Weighted Average Grant Date Fair Value
	(In whole shares)
Outstanding - beginning of year	755,064	$	18.70
Granted(a)	249,430	25.44
Vested	(285,324)	19.31

Canceled or expired	(36,698)	18.26
Outstanding - end of period	682,472	$	20.93

(a) - Included in this amount are 2,175 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Income. Total stock-based compensation expense was $1.4 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively. Total stock-based compensation expense was $4.1 million and $4.9 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, there was $9.3 million of unrecognized compensation cost related to non-vested stock-based compensation, which is expected to be recognized over a weighted-average period of 2.1 years.

NOTE 12 — Commitments and Contingencies

The Company is subject to a variety of claims, suits, investigations and administrative proceedings with respect to commercial, premises liability, product liability, employment, personal injury and environmental matters arising from the ordinary course of business. The Company records a liability for loss contingencies in the consolidated financial statements when a loss is known or considered probable and the amount can be reasonably estimated. Our provisions are based on historical experience, current information and legal advice, and they may be adjusted in the future based on new developments. Estimating probable losses requires the analysis of multiple forecasted factors that often depend on judgments and potential actions by third parties. Although it is not possible to predict with certainty the ultimate outcome or cost of these matters, the Company believes they will not have a material adverse effect on our consolidated financial statements.

Our subsidiaries are involved in a number of contractual and warranty-related disputes. We believe that appropriate liabilities for these contingencies have been recorded; however, actual results may differ materially from our estimates.

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in 106 cases asserting claims on behalf of 151 plaintiffs alleging personal injury as a result of exposure to asbestos. In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. Historically, we have been dismissed from asbestos cases. We intend to vigorously defend these cases and believe we will continue to be successful in being dismissed from such cases.

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.

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024

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, 2024 and 2023 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,
	2024		2023		2024		2023		2024		2023		2024		2023
	(In millions)
Service costs	$	1.0	$	0.9	$	3.3	$	3.4	$	—	$	—	$	—	$	—
Interest costs	0.9		0.9		2.6		2.6		0.1		—		0.2		0.2
Expected return on plan assets	(2.7)		(2.5)		(8.0)		(7.5)		(0.1)		—		(0.2)		(0.1)
Recognized net actuarial loss	0.6		0.9		1.4		2.7		0.1		0.1		0.2		0.2
Net periodic benefit (income) expense	$	(0.2)	$	0.2	$	(0.7)	$	1.2	$	0.1	$	0.1	$	0.2	$	0.3

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, 2024 and 2023 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, 2024								Three Months Ended September 30, 2023
Beginning balance	$	(35.4)	$	(1.1)	$	(12.3)	$	(48.8)	$	(33.2)	$	0.1	$	(20.7)	$	(53.8)
Currency translation(a)	7.4		—		—		7.4		(9.3)		—		—		(9.3)

Foreign currency forward contracts, net of tax	—		(0.2)		—		(0.2)		—		(0.1)		—		(0.1)
Pension and OPEB activity, net of tax	—		—		0.6		0.6		—		—		1.0		1.0


Ending balance	$	(28.0)	$	(1.3)	$	(11.7)	$	(41.0)	$	(42.5)	$	—	$	(19.7)	$	(62.2)

	Nine Months Ended September 30, 2024								Nine Months Ended September 30, 2023
Beginning balance	$	(30.5)	$	—	$	(13.2)	$	(43.7)	$	(38.7)	$	0.5	$	(23.6)	$	(61.8)
Currency translation (a)	2.5		—		—		2.5		(3.8)		—		—		(3.8)
Foreign currency forward contracts	—		(1.3)		—		(1.3)		—		(0.5)		—		(0.5)
Pension and OPEB activity, net of tax	—		—		1.5		1.5		—		—		3.9		3.9


Ending balance	$	(28.0)	$	(1.3)	$	(11.7)	$	(41.0)	$	(42.5)	$	—	$	(19.7)	$	(62.2)

(a)No income taxes were provided on currency translation as foreign earnings are considered permanently reinvested.

NOTE 15 — Weighted-Average Number of Shares Used in Computing Earnings Per Share

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

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2024


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
	(In millions)
Weighted-average basic shares outstanding	13.1	12.4	12.7