Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for
the third quarter of 2015.
THIRD QUARTER RESULTS
Net sales were $364.4 million for the third quarter of 2015, an increase
of $19.8 million, or 5.7%, from net sales of $344.6 million for the
third quarter of 2014. ParkOhio reported net income attributable to
ParkOhio common shareholders of $13.2 million, or $1.06 per diluted
share, for the third quarter of 2015. This compared to net income
attributable to ParkOhio common shareholders of $12.4 million, or $1.00
per diluted share, for the third quarter of 2014. As adjusted earnings
were $1.07 per diluted share in the third quarter of 2015 compared to
$1.15 per diluted share in the third quarter of 2014. Please refer to
the table that follows for a reconciliation of net income to as adjusted
earnings. EBITDA, as defined was $36.9 million during the third quarter
of 2015 compared to EBITDA, as defined of $35.8 million during the third
quarter of 2014.
YEAR-TO-DATE RESULTS
Net sales were $1,116.4 million for the first nine months of 2015, an
increase of $110.7 million, or 11.0%, from net sales of $1,005.7 million
in the first nine months of 2014. ParkOhio reported net income
attributable to ParkOhio common shareholders of $36.4 million, or $2.94
per diluted share, for the first nine months of 2015. This compares to
net income attributable to ParkOhio common shareholders of $34.9
million, or $2.82 per diluted share, for the first nine months of 2014.
As adjusted earnings were $3.04 per diluted share in the first nine
months of 2015 compared to $2.94 per diluted share in the first nine
months of 2014. Please refer to the table that follows for a
reconciliation of net income to as adjusted earnings. In addition,
EBITDA, as defined was $104.4 million during the first nine months of
2015 and compares to EBITDA, as defined of $96.6 million during the
first nine months of 2014.
Edward F. Crawford, Chairman and Chief Executive Officer stated, "Once
again the diversification of the industrial markets we serve through
world class manufacturing companies has resulted in record sales and
profits."
The Company is updating its annual guidance to a range from $4.01 to
$4.12, on an as adjusted basis.
A conference call reviewing ParkOhio's third quarter results will be
broadcast live over the Internet on Tuesday, November 3, commencing at
10:00 am Eastern Time. Simply log on to http://www.pkoh.com.
ParkOhio is a leading provider of supply chain management services and a
manufacturer of highly-engineered products. Headquartered in Cleveland,
Ohio, the Company operates 45 manufacturing sites and 55 supply chain
logistics facilities.
This news release contains forward-looking statements, including
statements regarding future performance of the Company that are subject
to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance and achievements, or industry results, to be materially
different from any future results, performance or achievements expressed
or implied by such forward-looking statements. These factors that could
cause actual results to differ materially from expectations include, but
are not limited to the following: our ability to successfully integrate
acquired companies and achieve the expected results of such
acquisitions; our substantial indebtedness; the uncertainty of the
global economic environment; general business conditions and competitive
factors, including pricing pressures and product innovation; demand for
our products and services; raw material availability and pricing;
fluctuations in energy costs; component part availability and pricing;
changes in our relationships with customers and suppliers; the financial
condition of our customers, including the impact of any bankruptcies;
the amounts and timing, if any, of purchases of our common stock;
changes in general domestic economic conditions such as inflation rates,
interest rates, tax rates, unemployment rates, higher labor and
healthcare costs, recessions and changing government policies, laws and
regulations, adverse impacts to us, our suppliers and customers from
acts of terrorism or hostilities; our ability to meet various covenants,
including financial covenants, contained in the agreements governing our
indebtedness; disruptions, uncertainties or volatility in the credit
markets that may limit our access to capital; potential disruption due
to a partial or complete reconfiguration of the European Union;
increasingly stringent domestic and foreign governmental regulations,
including those affecting the environment; inherent uncertainties
involved in assessing our potential liability for environmental
remediation-related activities; the outcome of pending and future
litigation and other claims and disputes with customers; the outcome of
the review conducted by the special committee of our Board of Directors;
our dependence on the automotive and heavy-duty truck industries, which
are highly cyclical; the dependence of the automotive industry on
consumer spending, our ability to negotiate contracts with labor unions;
our dependence on key management; our dependence on information systems;
our ability to continue to pay cash dividends; and the other factors we
describe under the "Item 1A. Risk Factors" included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2014. Any
forward-looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law. In light of these
and other uncertainties, the inclusion of a forward-looking statement
herein should not be regarded as a representation by us that our plans
and objectives will be achieved. The Company assumes no obligation to
update the information in this release.
Park-Ohio Holdings Corp. and Subsidiaries Condensed
Consolidated Statements of Income (Unaudited) |
|
| |
| |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2015 |
| 2014 | | 2015 |
| 2014 |
| | (In millions, except earnings per share data) |
Net sales
| |
$
|
364.4
| |
$
|
344.6
| | |
$
|
1,116.4
| | |
$
|
1,005.7
| |
Cost of sales
| |
302.1
| |
284.0
|
| |
935.3
|
| |
828.1
|
|
Gross profit
| |
62.3
| |
60.6
| | |
181.1
| | |
177.6
| |
Selling, general and administrative expenses
| |
34.9
| |
34.2
|
| |
103.8
|
| |
102.9
|
|
Operating income
| |
27.4
| |
26.4
| | |
77.3
| | |
74.7
| |
Interest expense
| |
7.0
| |
6.5
|
| |
20.7
|
| |
19.4
|
|
Income before income taxes
| |
20.4
| |
19.9
| | |
56.6
| | |
55.3
| |
Income tax expense
| |
7.2
| |
7.4
|
| |
19.7
|
| |
19.6
|
|
Net income
| |
13.2
| |
12.5
| | |
36.9
| | |
35.7
| |
Net income attributable to noncontrolling interest
| |
-
| |
(0.1
|
)
| |
(0.5
|
)
| |
(0.8
|
)
|
Net income attributable to ParkOhio common shareholders
| |
$
|
13.2
| |
$
|
12.4
|
| |
$
|
36.4
|
| |
$
|
34.9
|
|
| | | | | | | |
|
Earnings per common share attributable to ParkOhio common
shareholders:
| | | | | | | | |
Basic
| |
$
|
1.07
| |
$
|
1.02
|
| |
$
|
2.98
|
| |
$
|
2.88
|
|
Diluted
| |
$
|
1.06
| |
$
|
1.00
|
| |
$
|
2.94
|
| |
$
|
2.82
|
|
Weighted-average shares used to compute earnings per share:
| | | | | | | | |
Basic
| |
12.3
| |
12.1
|
| |
12.2
|
| |
12.1
|
|
Diluted
| |
12.4
| |
12.4
|
| |
12.4
|
| |
12.4
|
|
| | | | | | | |
|
Dividend per common share
| |
$
|
0.125
| |
$
|
0.125
|
| |
$
|
0.375
|
| |
$
|
0.250
|
|
| | | | | | | |
|
Other financial data:
| | | | | | | | |
EBITDA, as defined
| |
$
|
36.9
| |
$
|
35.8
|
| |
$
|
104.4
|
| |
$
|
96.6
|
|
| | | | | | | | | | | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries |
Supplemental Non-GAAP Financial Measures (Unaudited) |
|
As adjusted earnings are a measure of earnings that excludes
significant non-cash credits and charges; and significant and
infrequent contingency expenses. As adjusted earnings reflect net
income after: the exclusion of net income attributable to
noncontrolling interest and before the inclusion of
acquisition-related costs in cost of sales and in selling, general
and administrative ("SG&A") expenses, and executive severance. The
acquisition-related costs in cost of sales relate to the fair value
measurements to inventory acquired from the acquisitions that were
expensed during the periods presented. Acquisition-related costs in
SG&A expenses relate to adjustments to fair-value of contingent
consideration related to certain acquisitions. As adjusted earnings
are not a measure of performance under generally accepted accounting
principles ("GAAP") and should not be considered in isolation or as
a substitute for net income, cash flows from operating, investing
and financing activities and other income or cash flow statement
data prepared in accordance with GAAP or as a measure of
profitability or liquidity. The Company presents as adjusted
earnings because management uses as adjusted earnings to measure
performance. As adjusted earnings herein may not be comparable to
other similarly titled measures of other companies. The following
table reconciles net income to as adjusted earnings:
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| | 2015 |
| 2014 | | 2015 |
| 2014 |
| | Earnings |
| Diluted EPS | | Earnings |
| Diluted EPS | | Earnings |
| Diluted EPS | | Earnings |
| Diluted EPS |
| | (In millions, except for earnings per share (EPS)) |
Net income
| |
$
|
13.2
| |
$
|
1.06
| |
$
|
12.5
| | |
$
|
1.01
| | |
$
|
36.9
| | |
$
|
2.98
| | |
$
|
35.7
| | |
$
|
2.88
| |
Net income attributable to noncontrolling interest
| |
-
| |
-
| |
(0.1
|
)
| |
(0.01
|
)
| |
(0.5
|
)
| |
(0.04
|
)
| |
(0.8
|
)
| |
(0.06
|
)
|
Net income attributable to ParkOhio common shareholders
| |
13.2
| |
1.06
| |
12.4
| | |
1.00
| | |
36.4
| | |
2.94
| | |
34.9
| | |
2.82
| |
Add back:
| | | | | | | | | | | | | | | | |
Acquisition-related costs in cost of sales
| |
-
| |
-
| |
0.1
| | |
0.01
| | |
0.2
| | |
0.02
| | |
0.1
| | |
0.01
| |
Acquisition-related costs in SG&A expenses, net of tax benefit
| |
0.1
| |
0.01
| |
0.2
| | |
0.02
| | |
0.4
| | |
0.03
| | |
0.7
| | |
0.06
| |
Executive severance, net of tax benefit
| |
-
| |
-
| |
-
| | |
-
| | |
0.3
| | |
0.02
| | |
-
| | |
-
| |
Currency exchange losses related to non-permanent intercompany loans
in SG&A expenses, net of tax benefit
| |
-
| |
-
| |
1.5
|
| |
0.12
|
| |
0.4
|
| |
0.03
|
| |
0.6
|
| |
0.05
|
|
As adjusted earnings
| |
$
|
13.3
| |
$
|
1.07
| |
$
|
14.2
|
| |
$
|
1.15
|
| |
$
|
37.7
|
| |
$
|
3.04
|
| |
$
|
36.3
|
| |
$
|
2.94
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries |
Supplemental Non-GAAP Financial Measures (Unaudited) |
|
EBITDA, as defined reflects net income attributable to ParkOhio
common shareholders before interest expense and income taxes, and
excludes depreciation, amortization, certain non-cash charges and
corporate-level expenses as defined in the Company's revolving
credit agreement. The acquisition-related costs in cost of sales
relate to the fair value measurements to inventory acquired from the
acquisitions that were expensed during the periods presented.
Acquisition-related costs in SG&A expenses relate to adjustments to
fair-value of contingent consideration related to certain
acquisitions. EBITDA, as defined is not a measure of performance
under GAAP and should not be considered in isolation or as a
substitute for net income, cash flows from operating, investing and
financing activities and other income or cash flow statement data
prepared in accordance with GAAP or as a measure of profitability or
liquidity. The Company presents EBITDA, as defined because
management uses EBITDA, as defined to assess the Company's
performance and believes that EBITDA, as defined is useful to
investors as an indication of the Company's satisfaction of its debt
service ratio covenant in its revolving credit agreement.
Additionally, EBITDA, as defined is a measure used under the
Company's revolving credit facility to determine whether the Company
may incur additional debt under such facility. EBITDA, as defined
herein may not be comparable to other similarly titled measures of
other companies. The following table reconciles net income
attributable to ParkOhio common shareholders to EBITDA, as defined:
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| | 2015 |
| 2014 | | 2015 |
| 2014 |
| | (In millions) |
Net income attributable to ParkOhio common shareholders
| |
$
|
13.2
| | |
$
|
12.4
| |
$
|
36.4
| |
$
|
34.9
|
Add back:
| | | | | | | | |
Interest expense
| |
7.0
| | |
6.5
| |
20.7
| |
19.4
|
Income tax expense
| |
7.2
| | |
7.4
| |
19.7
| |
19.6
|
Depreciation and amortization
| |
7.1
| | |
5.7
| |
21.2
| |
16.3
|
Share-based compensation
| |
2.4
| | |
1.7
| |
5.3
| |
4.2
|
Acquisition related costs in cost of sales
| |
-
| | |
0.2
| |
0.2
| |
0.2
|
Acquisition-related costs in SG&A expenses
| |
0.2
| | |
0.2
| |
0.5
| |
0.9
|
Currency exchange losses related to non-permanent intercompany loans
in SG&A expenses
| |
-
| | |
1.7
| |
0.4
| |
0.7
|
Miscellaneous
| |
(0.2
|
)
| |
-
| |
-
| |
0.4
|
EBITDA, as defined
| |
$
|
36.9
|
| |
$
|
35.8
| |
$
|
104.4
| |
$
|
96.6
|
| | | | | | | | | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries Condensed
Consolidated Balance Sheets |
|
| |
| |
| | (Unaudited) | | |
| | September 30, 2015 | | December 31, 2014 |
| | (In millions) |
ASSETS |
Current assets:
| | | | |
Cash and cash equivalents
| |
$
|
62.7
| |
$
|
58.0
|
Accounts receivable, net
| |
218.7
| |
208.0
|
Inventories, net
| |
247.8
| |
238.4
|
Deferred tax assets
| |
29.0
| |
28.9
|
Unbilled contract revenue
| |
32.7
| |
26.8
|
Other current assets
| |
24.1
| |
22.1
|
Total current assets
| |
615.0
| |
582.2
|
Property, plant and equipment, net
| |
153.0
| |
141.1
|
Goodwill
| |
72.4
| |
89.5
|
Intangible assets, net
| |
94.9
| |
88.1
|
Other long-term assets
| |
79.8
| |
73.3
|
Total assets
| |
$
|
1,015.1
| |
$
|
974.2
|
| | | |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
Current liabilities:
| | | | |
Trade accounts payable
| |
$
|
136.1
| |
$
|
160.3
|
Accrued expenses and other
| |
106.1
| |
103.6
|
Total current liabilities
| |
242.2
| |
263.9
|
Long-term liabilities:
| | | | |
Debt, less current portion
| |
463.9
| |
434.4
|
Deferred tax liabilities
| |
45.4
| |
43.9
|
Other postretirement benefits and other long-term liabilities
| |
41.5
| |
40.1
|
Total long-term liabilities
| |
550.8
| |
518.4
|
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity
| |
215.3
| |
185.6
|
Noncontrolling interest
| |
6.8
| |
6.3
|
Total equity
| |
222.1
| |
191.9
|
Total liabilities and shareholders' equity
| |
$
|
1,015.1
| |
$
|
974.2
|
| | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (Unaudited) |
|
| |
| | Nine Months Ended September 30, |
| | 2015 |
| 2014 |
| | (In millions) |
OPERATING ACTIVITIES | | | | |
Net income
| |
$
|
36.9
| | |
$
|
35.7
| |
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | |
Depreciation and amortization
| |
21.2
| | |
16.3
| |
Share-based compensation
| |
5.3
| | |
4.2
| |
Other
| |
-
| | |
(0.7
|
)
|
Changes in operating assets and liabilities, excluding business
acquisitions:
| | | | |
Accounts receivable
| |
(14.5
|
)
| |
(33.9
|
)
|
Inventories and other current assets
| |
(21.8
|
)
| |
(4.5
|
)
|
Accounts payable and accrued expenses
| |
(21.4
|
)
| |
24.9
| |
Other
| |
6.0
|
| |
(7.8
|
)
|
Net cash provided by operating activities
| |
11.7
| | |
34.2
| |
INVESTING ACTIVITIES | | | | |
Purchases of property, plant and equipment
| |
(31.1
|
)
| |
(13.9
|
)
|
Proceeds from sale of assets
| |
-
| | |
2.0
| |
Business acquisitions, net of cash acquired
| |
-
|
| |
(5.4
|
)
|
Net cash used by investing activities
| |
(31.1
|
)
| |
(17.3
|
)
|
FINANCING ACTIVITIES | | | | |
Proceeds from term loans and other debt
| |
2.3
| | |
-
| |
Payments on term loans and other debt
| |
(3.5
|
)
| |
(4.1
|
)
|
Proceeds from revolving credit facility, net
| |
27.6
| | |
(0.5
|
)
|
Proceeds from capital lease credit facility
| |
10.3
| | |
-
| |
Dividends
| |
(4.7
|
)
| |
(3.1
|
)
|
Purchase of treasury stock
| |
(5.0
|
)
| |
(3.7
|
)
|
Other
| |
-
|
| |
(1.3
|
)
|
Net cash provided (used) by financing activities
| |
27.0
| | |
(12.7
|
)
|
Effect of exchange rate changes on cash
| |
(2.9
|
)
| |
3.1
|
|
Increase in cash and cash equivalents
| |
4.7
| | |
7.3
| |
Cash and cash equivalents at beginning of period
| |
58.0
|
| |
55.2
|
|
Cash and cash equivalents at end of period
| |
$
|
62.7
|
| |
$
|
62.5
|
|
Income taxes paid
| |
$
|
13.3
| | |
$
|
19.5
| |
Interest paid
| |
$
|
14.6
| | |
$
|
13.1
| |
| | | | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries Business
Segment Information (Unaudited) |
|
| |
| |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2015 |
| 2014 | | 2015 |
| 2014 |
| | (In millions) |
Net sales: | | | | | | | | |
Supply Technologies
| |
$
|
143.1
| | |
$
|
143.4
| | |
$
|
444.7
| | |
$
|
420.2
| |
Assembly Components
| |
149.3
| | |
121.6
| | |
429.6
| | |
351.7
| |
Engineered Products
| |
72.0
|
| |
79.6
|
| |
242.1
|
| |
233.8
|
|
| |
$
|
364.4
|
| |
$
|
344.6
|
| |
$
|
1,116.4
|
| |
$
|
1,005.7
|
|
| | | | | | | |
|
Income before income taxes: | | | | | | | | |
Supply Technologies
| |
$
|
13.0
| | |
$
|
12.2
| | |
$
|
40.2
| | |
$
|
32.7
| |
Assembly Components
| |
17.7
| | |
11.0
| | |
41.9
| | |
31.3
| |
Engineered Products
| |
4.3
|
| |
11.5
|
| |
15.7
|
| |
32.8
|
|
Total segment operating income
| |
35.0
| | |
34.7
| | |
97.8
| | |
96.8
| |
Corporate costs
| |
(7.6
|
)
| |
(8.3
|
)
| |
(20.5
|
)
| |
(22.1
|
)
|
Interest expense
| |
(7.0
|
)
| |
(6.5
|
)
| |
(20.7
|
)
| |
(19.4
|
)
|
Income before income taxes
| |
$
|
20.4
|
| |
$
|
19.9
|
| |
$
|
56.6
|
| |
$
|
55.3
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151102006733/en/
Park-Ohio Holdings Corp.
Edward F. Crawford, 440-947-2000