Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for
the third quarter of 2016.
THIRD QUARTER RESULTS
In the third quarter of 2016, net sales were $312.7 million and net
income attributable to ParkOhio common shareholders was $13.5 million,
or $1.10 per diluted share. These results compared to net sales of
$364.4 million and net income attributable to ParkOhio common
shareholders of $13.2 million, or $1.06 per diluted share, in the third
quarter of 2015. On an adjusted basis, net income attributable to
ParkOhio common shareholders was $1.13 per diluted share in the third
quarter of 2016, compared to $1.10 per diluted share in the 2015 period.
Net income in the 2016 period was positively impacted by the reversal of
various income tax accruals totaling approximately $4 million relating
to previous tax positions for which the statutes of limitations expired.
Please refer to the table that follows for a reconciliation of net
income to adjusted earnings.
Gross margin, as a percentage of net sales, was 17.4% in the third
quarter of 2016, an increase of almost 200 basis points compared to
gross margin in the first half of 2016. Operating cash flows were $13.3
million for the third quarter, and the Company had cash and cash
equivalents of $57.7 million on hand at September 30, 2016. EBITDA, as
defined was $30.7 million in the third quarter of 2016 compared to $36.9
million in the third 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,
"Improving profitability continued in the third quarter of 2016. We are
expecting revenues in some of our key end markets to begin expansion in
early 2017."
YEAR-TO-DATE RESULTS
In the nine months ended September 30, 2016, net sales were $970.1
million and net income attributable to ParkOhio common shareholders was
$25.2 million, or $2.06 per diluted share. These results compared to net
sales of $1,116.4 million and net income attributable to ParkOhio common
shareholders of $36.4 million, or $2.94 per diluted share, in the
comparable period in 2015. Adjusted earnings in the 2016 period were
$2.35 per diluted share compared to $3.00 per diluted share in the 2015
period. Please refer to the table that follows for a reconciliation of
net income to adjusted earnings.
For the nine months ended September 30, 2016, the Company delivered
operating cash flows of $40.8 million compared to $11.7 million in the
comparable 2015 period. EBITDA, as defined was $87.6 million in the
first nine months of 2016 compared to $104.4 million in the 2015 period.
Please refer to the table that follows for a reconciliation of net
income to EBITDA, as defined.
We are reaffirming our full year 2016 Adjusted EPS guidance of $3.10 to
$3.30 per diluted share. Our GAAP EPS is expected to be $2.75 to $2.95,
considering our full year forecasted EPS adjustments of $0.35 per
diluted share. Please refer to the table that follows for a
reconciliation of GAAP EPS to Adjusted EPS.
A conference call reviewing ParkOhio's third quarter results will be
broadcast live over the Internet on Tuesday, November 8, commencing at
10:00 am Eastern Time. Simply log on to http://www.pkoh.com.
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 "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 | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 | | 2015 | | 2016 |
| 2015 |
| | (In millions, except per share data) |
Net sales
| |
$
|
312.7
| | |
$
|
364.4
| | |
$
|
970.1
| | |
$
|
1,116.4
| |
Cost of sales
| |
258.4
|
| |
302.1
|
| |
813.7
|
| |
935.3
|
|
Gross profit
| |
54.3
| | |
62.3
| | |
156.4
| | |
181.1
| |
Selling, general and administrative expenses
| |
33.4
| | |
34.9
| | |
99.9
| | |
103.8
| |
Asset impairment charge
| |
-
|
| |
-
|
| |
4.0
|
| |
-
|
|
Operating income
| |
20.9
| | |
27.4
| | |
52.5
| | |
77.3
| |
Interest expense
| |
7.2
|
| |
7.0
|
| |
21.3
|
| |
20.7
|
|
Income before income taxes
| |
13.7
| | |
20.4
| | |
31.2
| | |
56.6
| |
Income tax (benefit) expense
| |
(0.1
|
)
| |
7.2
|
| |
5.7
|
| |
19.7
|
|
Net income
| |
13.8
| | |
13.2
| | |
25.5
| | |
36.9
| |
Net income attributable to noncontrolling interest
| |
(0.3
|
)
| |
-
|
| |
(0.3
|
)
| |
(0.5
|
)
|
Net income attributable to ParkOhio common shareholders
| |
$
|
13.5
|
| |
$
|
13.2
|
| |
$
|
25.2
|
| |
$
|
36.4
|
|
| | | | | | | | |
|
Earnings per common share attributable to ParkOhio common
shareholders:
| | | | | | | | | |
Basic
| |
$
|
1.12
|
| |
$
|
1.07
|
| |
$
|
2.08
|
| |
$
|
2.98
|
|
Diluted
| |
$
|
1.10
|
| |
$
|
1.06
|
| |
$
|
2.06
|
| |
$
|
2.94
|
|
Weighted-average shares used to compute earnings per share:
| | | | | | | | | |
Basic
| |
12.1
|
| |
12.3
|
| |
12.1
|
| |
12.2
|
|
Diluted
| |
12.3
|
| |
12.4
|
| |
12.3
|
| |
12.4
|
|
| | | | | | | | |
|
Dividends per common share
| |
$
|
0.125
|
| |
$
|
0.125
|
| |
$
|
0.375
|
| |
$
|
0.375
|
|
| | | | | | | | |
|
Other financial data:
| | | | | | | | | |
EBITDA, as defined
| |
$
|
30.7
|
| |
$
|
36.9
|
| |
$
|
87.6
|
| |
$
|
104.4
|
|
| | | | | | | | | | | | | | | |
|
Park-Ohio Holdings Corp. and Subsidiaries
Supplemental
Non-GAAP Financial Measures (Unaudited)
Adjusted earnings is a non-GAAP financial measure that the Company is
providing in this press release. Adjusted earnings is net income
calculated in accordance with generally accepted accounting principles
("GAAP"), adjusted for special items. The Company presents this non-GAAP
financial measure because management uses adjusted earnings to compare
its operating performance on a consistent basis over multiple periods
because they remove the impact of certain significant non-cash credits
or charges and certain infrequent items impacting net income. Adjusted
earnings is not a measure of performance under GAAP and should not be
considered in isolation from, or as a substitute for, net income
calculated in accordance with GAAP. Adjusted earnings herein may not be
comparable to similarly titled measures of other companies. The
following table reconciles net income to adjusted earnings:
|
| |
| |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
| | |
| Diluted | | |
| Diluted | | |
| Diluted | | |
| Diluted |
| | Earnings | | EPS | | Earnings | | EPS | | Earnings | | EPS | | Earnings | | EPS |
| | (In millions, except for earnings per share (EPS)) |
Net income
| |
$
|
13.8
| | |
$
|
1.12
| | |
$
|
13.2
| | |
$
|
1.06
| | |
$
|
25.5
| | |
$
|
2.08
| | |
$
|
36.9
| | |
$
|
2.98
| |
Net income attributable to noncontrolling interest
| |
(0.3
|
)
| |
(0.02
|
)
| |
-
|
| |
-
|
| |
(0.3
|
)
| |
(0.02
|
)
| |
(0.5
|
)
| |
(0.04
|
)
|
Net income attributable to ParkOhio common shareholders
| |
13.5
| | |
1.10
| | |
13.2
| | |
1.06
| | |
25.2
| | |
2.06
| | |
36.4
| | |
2.94
| |
Adjustments:
| | | | | | | | | | | | | | | | |
Asset impairment charge
| |
-
| | |
-
| | |
-
| | |
-
| | |
4.0
| | |
0.33
| | |
-
| | |
-
| |
Severance
| |
0.2
| | |
0.02
| | |
0.5
| | |
0.04
| | |
0.6
| | |
0.05
| | |
0.5
| | |
0.04
| |
Plant relocation and related costs
| |
0.2
| | |
0.01
| | |
-
| | |
-
| | |
0.5
| | |
0.03
| | |
-
| | |
-
| |
Acquisition-related costs
| |
-
| | |
-
| | |
0.2
| | |
0.02
| | |
0.2
| | |
0.02
| | |
0.5
| | |
0.04
| |
Other
| |
0.1
| | |
0.01
| | |
-
| | |
-
| | |
0.1
| | |
0.01
| | |
-
| | |
-
| |
Tax effect of adjustments
| |
(0.1
|
)
| |
(0.01
|
)
| |
(0.2
|
)
| |
(0.02
|
)
| |
(1.9
|
)
| |
(0.15
|
)
| |
(0.2
|
)
| |
(0.02
|
)
|
Adjusted earnings
| |
$
|
13.9
|
| |
$
|
1.13
|
| |
$
|
13.7
|
| |
$
|
1.10
|
| |
$
|
28.7
|
| |
$
|
2.35
|
| |
$
|
37.2
|
| |
$
|
3.00
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| |
| |
Reconciliation of GAAP EPS guidance to Adjusted EPS guidance for
the full year 2016:
|
| | | |
|
| | Low | | High |
GAAP EPS guidance for the full year 2016
| |
$
|
2.75
| |
$
|
2.95
|
Adjustments through September 30, 2016
| | |
0.29
| | |
0.29
|
Adjustments forecasted in Q4 2016*
| |
|
0.06
| |
|
0.06
|
Adjusted EPS guidance for the full year 2016
| |
$
|
3.10
| |
$
|
3.30
|
| | | |
|
* Q4 2016 adjustments are expected to be similar in nature to
those in the first nine months of 2016.
|
| | | |
|
Park-Ohio Holdings Corp. and Subsidiaries
Supplemental
Non-GAAP Financial Measures (Unaudited)
EBITDA, as defined is a non-GAAP financial measure that the Company is
providing in this press release. EBITDA, as defined reflects net income
attributable to ParkOhio common shareholders before interest expense,
income taxes, depreciation and amortization, and also excludes certain
non-cash charges and corporate-level expenses as defined in the
Company's Revolving Credit Agreement. The Company presents this non-GAAP
financial measure because management uses EBITDA, as defined 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 is not a measure of performance under
generally accepted accounting principles ("GAAP") and should not be
considered in isolation from, or as a substitute for, net income or cash
flow information calculated in accordance with GAAP. Adjusted earnings
herein may not be comparable to similarly titled measures of other
companies. The following table reconciles net income to EBITDA, as
defined:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
| | (In millions) |
Net income attributable to ParkOhio common shareholders
| |
$
|
13.5
| | |
$
|
13.2
| | |
$
|
25.2
| |
$
|
36.4
|
Add back:
| | | | | | | | |
Interest expense
| |
7.2
| | |
7.0
| | |
21.3
| |
20.7
|
Income tax (benefit) expense
| |
(0.1
|
)
| |
7.2
| | |
5.7
| |
19.7
|
Depreciation and amortization
| |
7.4
| | |
7.1
| | |
22.2
| |
21.2
|
Share-based compensation expense
| |
2.6
| | |
2.4
| | |
8.1
| |
5.3
|
Asset impairment charge
| |
-
| | |
-
| | |
4.0
| |
-
|
Acquisition-related costs
| |
-
| | |
0.2
| | |
0.2
| |
0.7
|
Miscellaneous
| |
0.1
|
| |
(0.2
|
)
| |
0.9
| |
0.4
|
EBITDA, as defined
| |
$
|
30.7
|
| |
$
|
36.9
|
| |
$
|
87.6
| |
$
|
104.4
|
| | | | | | | | | | | | | |
|
|
| |
| |
Park-Ohio Holdings Corp. and Subsidiaries |
Condensed Consolidated Balance Sheets |
| | | |
|
| | (Unaudited) | | |
| | September 30, 2016 | | December 31, 2015 |
| | (In millions) |
ASSETS |
Current assets:
| | | | |
Cash and cash equivalents
| |
$
|
57.7
| |
$
|
62.0
|
Accounts receivable, net
| |
200.6
| |
199.3
|
Inventories, net
| |
251.4
| |
249.0
|
Other current assets
| |
45.1
| |
39.3
|
Total current assets
| |
554.8
| |
549.6
|
Property, plant and equipment, net
| |
148.8
| |
151.3
|
Goodwill
| |
81.7
| |
82.0
|
Intangible assets, net
| |
87.4
| |
92.8
|
Other long-term assets
| |
69.2
| |
66.4
|
Total assets
| |
$
|
941.9
| |
$
|
942.1
|
| | | |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
Current liabilities:
| | | | |
Trade accounts payable
| |
$
|
126.3
| |
$
|
129.7
|
Accrued expenses and other
| |
81.3
| |
77.7
|
Current portion of long-term debt
| |
20.5
| |
17.8
|
Total current liabilities
| |
228.1
| |
225.2
|
Long-term liabilities, less current portion:
| | | | |
Debt
| |
428.1
| |
445.8
|
Deferred tax liabilities
| |
20.5
| |
20.4
|
Other long-term liabilities
| |
30.2
| |
38.5
|
Total long-term liabilities
| |
478.8
| |
504.7
|
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity
| |
227.9
| |
205.3
|
Noncontrolling interest
| |
7.1
| |
6.9
|
Total equity
| |
235.0
| |
212.2
|
Total liabilities and shareholders' equity
| |
$
|
941.9
| |
$
|
942.1
|
| | | | | |
|
|
| |
Park-Ohio Holdings Corp. and Subsidiaries |
Condensed Consolidated Statements of Cash Flows (Unaudited) |
| |
|
| | Nine Months Ended September 30, |
| | 2016 |
| 2015 |
| | (In millions) |
OPERATING ACTIVITIES | | | | |
Net income
| |
$
|
25.5
| | |
$
|
36.9
| |
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
| | | | |
Depreciation and amortization
| |
22.2
| | |
21.2
| |
Asset impairment charge
| |
4.0
| | |
-
| |
Share-based compensation expense
| |
8.1
| | |
5.3
| |
Changes in operating assets and liabilities:
| | | | |
Accounts receivable
| |
(1.6
|
)
| |
(14.5
|
)
|
Inventories
| |
(3.5
|
)
| |
(15.7
|
)
|
Prepaid and other current assets
| |
(5.4
|
)
| |
(6.1
|
)
|
Accounts payable and accrued expenses
| |
1.4
| | |
(21.4
|
)
|
Other noncurrent liabilities
| |
(8.4
|
)
| |
(3.6
|
)
|
Other
| |
(1.5
|
)
| |
9.6
|
|
Net cash provided by operating activities
| |
40.8
| | |
11.7
| |
INVESTING ACTIVITIES | | | | |
Purchases of property, plant and equipment
| |
(20.3
|
)
| |
(31.1
|
)
|
Net cash used by investing activities
| |
(20.3
|
)
| |
(31.1
|
)
|
FINANCING ACTIVITIES | | | | |
(Payments) proceeds from revolving credit facility, net
| |
(17.4
|
)
| |
27.6
| |
Payments on term loan
| |
(3.4
|
)
| |
(3.5
|
)
|
Proceeds from other long-term debt
| |
7.3
| | |
2.3
| |
(Payments) proceeds from capital lease facilities, net
| |
(2.5
|
)
| |
10.3
| |
Dividends
| |
(4.7
|
)
| |
(4.7
|
)
|
Purchases of treasury stock
| |
(1.7
|
)
| |
(5.0
|
)
|
Payment of acquisition earn-out
| |
(2.0
|
)
| |
-
|
|
Net cash (used) provided by financing activities
| |
(24.4
|
)
| |
27.0
| |
Effect of exchange rate changes on cash
| |
(0.4
|
)
| |
(2.9
|
)
|
Decrease in cash and cash equivalents
| |
(4.3
|
)
| |
4.7
| |
Cash and cash equivalents at beginning of period
| |
62.0
|
| |
58.0
|
|
Cash and cash equivalents at end of period
| |
$
|
57.7
|
| |
$
|
62.7
|
|
Income taxes paid
| |
$
|
7.0
| | |
$
|
13.3
| |
Interest paid
| |
$
|
14.7
| | |
$
|
14.6
| |
| | | | | | | |
|
|
| |
| |
Park-Ohio Holdings Corp. and Subsidiaries |
Business Segment Information (Unaudited) |
| | | |
|
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
| | (In millions) |
Net sales: | | | | | | | | |
Supply Technologies
| |
$
|
122.0
| | |
$
|
143.1
| | |
$
|
384.8
| | |
$
|
444.7
| |
Assembly Components
| |
133.4
| | |
149.3
| | |
399.4
| | |
429.6
| |
Engineered Products
| |
57.3
|
| |
72.0
|
| |
185.9
|
| |
242.1
|
|
| |
$
|
312.7
|
| |
$
|
364.4
|
| |
$
|
970.1
|
| |
$
|
1,116.4
|
|
| | | | | | | |
|
Segment operating income: | | | | | | | | |
Supply Technologies
| |
$
|
9.7
| | |
$
|
13.0
| | |
$
|
30.8
| | |
$
|
40.2
| |
Assembly Components
| |
13.9
| | |
17.7
| | |
38.3
| | |
41.9
| |
Engineered Products
| |
4.0
|
| |
4.3
|
| |
8.6
|
| |
15.7
|
|
Total segment operating income
| |
27.6
| | |
35.0
| | |
77.7
| | |
97.8
| |
Corporate costs
| |
(6.7
|
)
| |
(7.6
|
)
| |
(21.2
|
)
| |
(20.5
|
)
|
Asset impairment charge
| |
-
| | |
-
| | |
(4.0
|
)
| |
-
| |
Interest expense
| |
(7.2
|
)
| |
(7.0
|
)
| |
(21.3
|
)
|
|
(20.7
|
)
|
Income before income taxes
| |
$
|
13.7
|
| |
$
|
20.4
|
| |
$
|
31.2
|
| |
$
|
56.6
|
|
| | | | | | | | | | | | | | | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161107006533/en/
Park-Ohio Holdings Corp.
Edward F. Crawford, 440-947-2000