Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for
the first quarter of 2016.
FIRST QUARTER RESULTS
Net sales were $328.0 million for the first quarter of 2016, a decrease
of $46.7 million, or 12.5%, from net sales of $374.7 million for the
first quarter of 2015. ParkOhio reported net income attributable to
ParkOhio common shareholders of $2.7 million, or $0.22 per diluted share
for the first quarter of 2016. This compared to net income attributable
to ParkOhio common shareholders of $10.8 million, or $0.87 per diluted
share, for the first quarter of 2015. As adjusted earnings decreased in
the first quarter of 2016 to $0.46 per diluted share compared to $0.93
per diluted share in the first quarter of 2015. Please refer to the
table that follows for a reconciliation of net income to as adjusted
earnings.
In addition, EBITDA, as defined was $25.6 million during the first
quarter of 2016 compared to EBITDA, as defined of $33.5 million during
the first quarter of 2015. Please refer to the table that follows for a
reconciliation of net income to EBITDA, as defined.
Edward F. Crawford, Chairman and Chief Executive Officer stated, "We are
very disappointed in our first quarter results. The unexpected reduction
in volume in our aluminum casting unit caused by a customer's decision
to end production on two car platforms and the impact of the low build
rates in heavy-duty truck and rail in January and February impacted
results. We have implemented aggressive cost reductions in our
businesses and expect improved results throughout the rest of the year.
We are revising our 2016 as adjusted earnings guidance to $3.10 to $3.30
as a result of these events."
A conference call reviewing ParkOhio's first quarter results will be
broadcast live over the Internet on Monday, May 2, commencing at 10:00
am Eastern Time. Simply log on to http://www.pkoh.com.
On April 28, 2016, the Company's Board of Directors declared a quarterly
cash dividend of $0.125 per share on the common stock outstanding, to be
paid on May 27, 2016, to shareholders of record as of the close of
business on May 13, 2016.
ParkOhio is a diversified international company providing world class
customers with a supply chain management outsourcing service, capital
equipment used on their production lines, and manufactured components
used to assemble their products. Headquartered in Cleveland, Ohio,
ParkOhio operates 45 manufacturing sites and 54 supply chain logistics
facilities, through three reportable segments: Supply Technologies,
Assembly Components and Engineered Products.
This news release contains forward-looking statements, including
statements regarding future performance of the Company that, are subject
to 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
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;
our ability to successfully integrate recent and future acquisitions
into existing operations; 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, including the uncertainties related to
the current global financial crises; 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; 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, 2015. 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 March 31, |
| | | 2016 |
| 2015 |
| | | (In millions, except earnings per share data) |
Net sales
| | |
$
|
328.0
| | |
$
|
374.7
| |
Cost of sales
| | |
280.2
|
| |
316.3
|
|
Gross profit
| | |
47.8
| | |
58.4
| |
Selling, general and administrative expenses
| | |
32.5
| | |
34.1
| |
Asset impairment
| | |
4.0
|
| |
-
|
|
Operating income
| | |
11.3
| | |
24.3
| |
Interest expense
| | |
7.1
|
| |
6.8
|
|
Income before income taxes
| | |
4.2
| | |
17.5
| |
Income tax expense
| | |
1.5
|
| |
6.4
|
|
Net income
| | |
2.7
| | |
11.1
| |
Net income attributable to noncontrolling interest
| | |
-
|
| |
(0.3
|
)
|
Net income attributable to ParkOhio common shareholders
| | |
$
|
2.7
|
| |
$
|
10.8
|
|
| | | | |
|
Earnings per common share attributable to ParkOhio common
shareholders:
| | | | | |
Basic
| | |
$
|
0.22
|
| |
$
|
0.89
|
|
Diluted
| | |
$
|
0.22
|
| |
$
|
0.87
|
|
Weighted-average shares used to compute earnings per share:
| | | | | |
Basic
| | |
12.1
|
| |
12.2
|
|
Diluted
| | |
12.2
|
| |
12.4
|
|
| | | | |
|
Dividend per common share
| | |
$
|
0.125
|
| |
$
|
0.125
|
|
| | | | |
|
Other financial data:
| | | | | |
EBITDA, as defined
| | |
$
|
25.6
|
| |
$
|
33.5
|
|
| | | | | | | | |
|
|
Park-Ohio Holdings Corp. and Subsidiaries |
Supplemental Non-GAAP Financial Measures (Unaudited) |
|
As adjusted earnings is a measure of earnings that excludes
significant non-cash credits and charges and significant and
infrequent contingency expenses. As adjusted earnings reflects 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 selling, general and
administrative ("SG&A") expenses; currency exchange losses (gains)
related to non-permanent intercompany loans; and restructuring and
impairment charges. 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 contingent
consideration expenses 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 from continuing
operations, 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 March 31, |
| | 2016 |
| 2015 |
| | |
| Diluted | | |
| Diluted |
| | Earnings | | EPS | | Earnings | | EPS |
| | (In millions, except for earnings per share (EPS)) |
Net income
| |
$
|
2.7
| | |
$
|
0.22
| | |
$
|
11.1
| | |
$
|
0.89
| |
Net income attributable to noncontrolling interest
| |
-
|
| |
-
|
| |
(0.3
|
)
| |
(0.02
|
)
|
Net income attributable to ParkOhio common shareholders
| |
2.7
| | |
0.22
| | |
10.8
| | |
0.87
| |
Add back:
| | | | | | | | |
Asset impairment, net of tax benefit
| |
2.5
| | |
0.20
| | |
-
| | |
-
| |
Acquisition-related costs in cost of sales
| |
-
| | |
-
| | |
0.2
| | |
0.02
| |
Acquisition-related costs in SG&A expenses, net of tax benefit
| |
0.2
| | |
0.02
| | |
0.1
| | |
0.01
| |
Currency exchange losses (gains) related to non-permanent
intercompany loans in SG&A expenses, net of tax benefit
| |
-
| | |
-
| | |
0.4
| | |
0.03
| |
Severance, net of tax benefit
| |
0.3
|
| |
0.02
|
| |
-
|
| |
-
|
|
As adjusted earnings
| |
$
|
5.7
|
| |
$
|
0.46
|
| |
$
|
11.5
|
| |
$
|
0.93
|
|
| | | | | | | | | | | | | | | |
|
|
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, income taxes, and
excludes depreciation, amortization, certain non-cash charges and
corporate-level expenses as defined in the Company's Revolving
Credit Agreement. EBITDA 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 because management uses EBITDA to assess
the Company's performance and believes that EBITDA 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 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 March 31, |
| | | 2016 |
|
| 2015 |
| | | (In millions) |
Net income attributable to ParkOhio common shareholders
| | |
$
|
2.7
| | | |
$
|
10.8
|
Add back:
| | | | | | |
Interest expense
| | |
7.1
| | | |
6.8
|
Income tax expense
| | |
1.5
| | | |
6.4
|
Depreciation and amortization
| | |
7.4
| | | |
7.0
|
Share-based compensation
| | |
2.5
| | | |
1.6
|
Asset impairment
| | |
4.0
| | | |
-
|
Acquisition related costs in cost of sales
| | |
-
| | | |
0.2
|
Acquisition related costs in selling, general and administrative
expenses
| | |
0.2
| | | |
0.2
|
Currency exchange losses related to non-permanent intercompany loans
| | |
-
| | | |
0.4
|
Miscellaneous
| | |
0.2
|
| | |
0.1
|
EBITDA, as defined
| | |
$
|
25.6
|
| | |
$
|
33.5
|
| | | | | | | | |
|
|
|
| |
| | |
Park-Ohio Holdings Corp. and Subsidiaries |
Condensed Consolidated Balance Sheets |
| | | | | |
|
| | | (Unaudited) | | | |
| | | March 31, 2016 | | | December 31, 2015 |
| | | (In millions) |
ASSETS |
Current assets:
| | | | | | |
Cash and cash equivalents
| | |
$
|
60.4
| | | |
$
|
62.0
|
Accounts receivable, net
| | |
212.1
| | | |
199.3
|
Inventories, net
| | |
253.4
| | | |
249.0
|
Unbilled contract revenue
| | |
26.7
| | | |
26.5
|
Other current assets
| | |
15.8
|
| | |
12.8
|
Total current assets
| | |
568.4
| | | |
549.6
|
Property, plant and equipment, net
| | |
149.8
| | | |
151.3
|
Goodwill
| | |
82.5
| | | |
82.0
|
Intangible assets, net
| | |
91.6
| | | |
92.8
|
Other long-term assets
| | |
68.0
|
| | |
66.4
|
Total assets
| | |
$
|
960.3
|
| | |
$
|
942.1
|
| | | | | |
|
LIABILITIES AND SHAREHOLDERS' EQUITY | |
Current liabilities:
| | | | | | |
Trade accounts payable
| | |
$
|
135.4
| | | |
$
|
129.7
|
Accrued expenses and other
| | |
109.2
|
| | |
95.5
|
Total current liabilities
| | |
244.6
| | | |
225.2
|
Long-term liabilities, less current portion:
| | | | | | |
Debt
| | |
439.6
| | | |
445.8
|
Deferred tax liabilities
| | |
20.6
| | | |
20.4
|
Other postretirement benefits and other long-term liabilities
| | |
37.2
|
| | |
38.5
|
Total long-term liabilities
| | |
497.4
| | | |
504.7
|
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity
| | |
211.4
| | | |
205.3
|
Noncontrolling interest
| | |
6.9
|
| | |
6.9
|
Total equity
| | |
218.3
|
| | |
212.2
|
Total liabilities and shareholders' equity
| | |
$
|
960.3
|
| | |
$
|
942.1
|
| | | | | | | | |
|
|
|
| |
Park-Ohio Holdings Corp. and Subsidiaries |
Condensed Consolidated Statements of Cash Flows (Unaudited) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2016 |
| 2015 |
| | | (In millions) |
OPERATING ACTIVITIES | | | | | |
Net income
| | |
$
|
2.7
| | |
$
|
11.1
| |
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | |
Depreciation and amortization
| | |
7.4
| | |
7.0
| |
Asset impairment
| | |
4.0
| | |
-
| |
Share-based compensation
| | |
2.5
| | |
1.6
| |
Changes in operating assets and liabilities:
| | | | | |
Accounts receivable
| | |
(11.6
|
)
| |
(12.8
|
)
|
Inventories and other current assets
| | |
(6.1
|
)
| |
(15.8
|
)
|
Accounts payable and accrued expenses
| | |
16.9
| | |
11.1
| |
Other
| | |
(5.7
|
)
| |
(1.2
|
)
|
Net cash provided by operating activities
| | |
10.1
| | |
1.0
| |
INVESTING ACTIVITIES | | | | | |
Purchases of property, plant and equipment
| | |
(8.9
|
)
| |
(11.5
|
)
|
Net cash used by investing activities
| | |
(8.9
|
)
| |
(11.5
|
)
|
FINANCING ACTIVITIES | | | | | |
Proceeds from term loans and other debt
| | |
4.7
| | |
2.4
| |
Payments on term loans and other debt
| | |
(1.1
|
)
| |
(0.1
|
)
|
(Payments on) proceeds from revolving credit facility, net
| | |
(4.5
|
)
| |
1.7
| |
Payments on capital lease facilities, net
| | |
(0.7
|
)
| |
-
| |
Dividends
| | |
(1.5
|
)
| |
(1.6
|
)
|
Purchase of treasury stock
| | |
(0.4
|
)
| |
(1.1
|
)
|
Other
| | |
(0.1
|
)
| |
-
|
|
Net cash (used) provided by financing activities
| | |
(3.6
|
)
| |
1.3
| |
Effect of exchange rate changes on cash
| | |
0.8
|
| |
(2.1
|
)
|
(Decrease) in cash and cash equivalents
| | |
(1.6
|
)
| |
(11.3
|
)
|
Cash and cash equivalents at beginning of period
| | |
62.0
|
| |
58.0
|
|
Cash and cash equivalents at end of period
| | |
$
|
60.4
|
| |
$
|
46.7
|
|
Income taxes paid
| | |
$
|
0.8
| | |
$
|
1.3
| |
Interest paid
| | |
$
|
1.5
| | |
$
|
1.3
| |
| | | | | | | | |
|
|
|
| |
Park-Ohio Holdings Corp. and Subsidiaries |
Business Segment Information (Unaudited) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2016 |
| 2015 |
| | | (In millions) |
Net sales: | | | | | |
Supply Technologies
| | |
$
|
129.9
| | |
$
|
151.4
| |
Assembly Components
| | |
131.7
| | |
140.5
| |
Engineered Products
| | |
66.4
|
| |
82.8
|
|
| | |
$
|
328.0
|
| |
$
|
374.7
|
|
| | | | |
|
Income before income taxes: | | | | | |
Supply Technologies
| | |
$
|
10.2
| | |
$
|
14.2
| |
Assembly Components
| | |
10.2
| | |
10.6
| |
Engineered Products
| | |
1.4
|
| |
6.2
|
|
Total segment operating income
| | |
21.8
| | |
31.0
| |
Corporate costs
| | |
(6.5
|
)
| |
(6.7
|
)
|
Asset impairment
| | |
(4.0
|
)
| |
-
| |
Interest expense
| | |
(7.1
|
)
| |
(6.8
|
)
|
Income before income taxes
| | |
$
|
4.2
|
| |
$
|
17.5
|
|
| | | | | | | | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428007006/en/
Park-Ohio Holdings Corp.
Edward F. Crawford, 440-947-2000