- Q3 2017 Revenues Increased to $352
million, up 13% Year-Over-Year
- YTD 2017 Revenues up 8%
Year-Over-Year
- 2017 Full-Year Guidance Maintained
at $3.15 to $3.35 per Diluted Share, As Adjusted
Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its
results for the third quarter of 2017.
THIRD QUARTER RESULTS
Net sales were $352.2 million in the third quarter of 2017, an
increase of 13% from net sales of $312.7 million in the third
quarter of 2016. The Company reported net income attributable to
ParkOhio common shareholders of $10.0 million, or $0.80 per diluted
share, in the third quarter of 2017, compared to $13.5 million, or
$1.10 per diluted share, in the third quarter of 2016. On an
adjusted basis, net income attributable to ParkOhio common
shareholders was $0.82 per diluted share in the third quarter of
2017, compared to $1.13 per diluted share in the 2016 period. The
results in both periods include the favorable reversal of various
income tax accruals, totaling $1.4 million in 2017 and $4.0 million
in 2016, relating to previous tax positions for which the statutes
of limitations expired.
In the 2017 quarter, operating cash flows were $18.2 million,
and the Company ended September with $80.7 million of cash on-hand.
EBITDA, as defined was $31.0 million in the third quarter of 2017
compared to $30.7 million in the third quarter of 2016. 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, “ParkOhio expects to meet its 2017 earnings guidance, with
revenues and EBITDA up over 10%, and foresees a strong 2018.”
YEAR-TO-DATE RESULTS
In the nine months ended September 30, 2017, net sales were
$1,046.9 million, an increase of 8% compared to net sales of $970.1
million in the 2016 period. The Company reported net income
attributable to ParkOhio common shareholders of $22.8 million, or
$1.83 per diluted share, in the nine months ended September 30,
2017, compared to $25.2 million, or $2.06 per diluted share, in the
2016 period. On an adjusted basis, net income attributable to
ParkOhio common shareholders was $2.37 per diluted share in 2017,
compared to $2.35 per diluted share in the 2016 period. EBITDA, as
defined was $96.9 million in the first nine months of 2017 compared
to $87.6 million in the 2016 period. Please refer to the tables
that follow for reconciliations of net income to adjusted earnings
and net income to EBITDA, as defined.
CONFERENCE CALL
A conference call reviewing ParkOhio’s third quarter 2017
results will be broadcast live over the Internet on Tuesday,
November 7, 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 more than 125
manufacturing sites and supply chain logistics facilities
worldwide, 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 those related to the current global
uncertainties and 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 or import and export controls and
other trade barriers; 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 “Item 1A. Risk Factors”
included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2016. 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, 2017 2016 2017
2016 (In millions, except per share data) Net sales $
352.2 $ 312.7 $ 1,046.9 $ 970.1 Cost of sales 295.0 258.4
873.9 813.7 Gross profit 57.2 54.3 173.0 156.4
Selling, general and administrative expenses 36.5 33.4 109.3 99.9
Litigation settlement gain — — (3.3 ) — Asset impairment charge —
— — 4.0 Operating income 20.7 20.9 67.0
52.5 Interest expense 7.8 7.2 23.1 21.3 Loss on extinguishment of
debt — — 11.0 — Income before income
taxes 12.9 13.7 32.9 31.2 Income tax expense (benefit) 2.7
(0.1 ) 9.4 5.7 Net income 10.2 13.8 23.5 25.5 Net
income attributable to noncontrolling interests (0.2 ) (0.3 ) (0.7
) (0.3 ) Net income attributable to Park-Ohio Holdings Corp. common
shareholders $ 10.0 $ 13.5 $ 22.8 $ 25.2
Earnings per common share attributable to Park-Ohio
Holdings Corp. common shareholders: Basic $ 0.82 $ 1.12
$ 1.87 $ 2.08 Diluted $ 0.80 $ 1.10
$ 1.83 $ 2.06 Weighted-average shares used to
compute earnings per share: Basic 12.2 12.1 12.2
12.1 Diluted 12.4 12.3 12.4 12.3
Dividends per common share $ 0.125 $ 0.125
$ 0.375 $ 0.375 Other financial data:
EBITDA, as defined $ 31.0 $ 30.7 $ 96.9 $ 87.6
Park-Ohio Holdings Corp. and
SubsidiariesSupplemental 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, 2017 2016
2017 2016 Diluted
Diluted Diluted Diluted
Earnings EPS Earnings EPS
Earnings EPS Earnings EPS (In
millions, except for earnings per share (EPS)) Net income $
10.2 $ 0.82 $ 13.8 $ 1.12 $ 23.5 $ 1.89 $ 25.5 $ 2.08 Net income
attributable to noncontrolling interests (0.2 ) (0.02 ) (0.3 )
(0.02 ) (0.7 ) (0.06 ) (0.3 ) (0.02 ) Net income attributable to
Park-Ohio Holdings Corp. common shareholders 10.0 0.80 13.5 1.10
22.8 1.83 25.2 2.06 Adjustments: Loss on extinguishment of debt — —
— — 11.0 0.89 — — Litigation settlement gain — — — (3.3 ) (0.27 ) —
— Asset impairment charge — — — — — — 4.0 0.33 Amortization of
inventory step-up 0.1 0.01 — — 0.1 0.01 — — Plant relocation and
related costs — — 0.2 0.01 0.7 0.05 0.5 0.03 Acquisition-related
costs 0.2 0.02 — — 0.6 0.04 0.2 0.02 Severance — — 0.2 0.02 — — 0.6
0.05 Other — — 0.1 0.01 — — 0.1 0.01 Tax effect of adjustments (0.1
) (0.01 ) (0.1 ) (0.01 ) (2.4 ) (0.18 ) (1.9 ) (0.15 ) Adjusted
earnings $ 10.2 $ 0.82 $ 13.9 $ 1.13 $
29.5 $ 2.37 $ 28.7 $ 2.35
Park-Ohio Holdings Corp. and
SubsidiariesSupplemental 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 Park-Ohio
Holdings Corp. 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 current revolving credit facility. 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 current
revolving credit facility. Additionally, EBITDA, as defined is a
measure used under the Company's current 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 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. EBITDA, as defined 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, 2017 2016
2017 2016 (In millions) Net income
attributable to Park-Ohio Holdings Corp. common shareholders $ 10.0
$ 13.5 $ 22.8 $ 25.2 Add back: Interest expense 7.8 7.2 23.1 21.3
Loss on extinguishment of debt — — 11.0 — Income tax expense 2.7
(0.1 ) 9.4 5.7 Depreciation and amortization 7.7 7.4 23.6 22.2
Share-based compensation expense 2.3 2.6 6.3 8.1 Amortization of
inventory step-up 0.1 — 0.1 — Asset impairment charge — — — 4.0
Acquisition-related costs — — — 0.2 Miscellaneous 0.4 0.1
0.6 0.9 EBITDA, as defined $ 31.0 $ 30.7
$ 96.9 $ 87.6
Park-Ohio Holdings
Corp. and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited) September 30, 2017
December 31, 2016 (In millions) ASSETS Current
assets: Cash and cash equivalents $ 80.7 $ 64.3 Accounts
receivable, net 231.4 194.4 Inventories, net 268.3 240.6 Other
current assets 71.2 53.4 Total current assets 651.6 552.7
Property, plant and equipment, net 171.2 167.1 Goodwill 92.0 86.6
Intangible assets, net 97.5 96.6 Other long-term assets 79.3
71.3
Total assets
$ 1,091.6 $ 974.3
LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Trade accounts payable $ 169.4 $
133.6 Current portion of long-term debt and short-term debt 18.1
30.8 Accrued expenses and other 88.1 77.5 Total current
liabilities 275.6 241.9 Long-term liabilities, less current
portion: Debt 492.3 439.0 Deferred income taxes 27.7 27.7 Other
long-term liabilities 21.3 29.7 Total long-term liabilities
541.3 496.4 Park-Ohio Holdings Corp. and Subsidiaries shareholders'
equity 264.3 226.0 Noncontrolling interests 10.4 10.0 Total
equity 274.7 236.0 Total liabilities and shareholders'
equity $ 1,091.6 $ 974.3
Park-Ohio Holdings
Corp. and Subsidiaries Condensed Consolidated Statements of
Cash Flows (Unaudited) Nine Months Ended September
30, 2017 2016 (In millions)
OPERATING ACTIVITIES Net income $ 23.5 $ 25.5 Adjustments to
reconcile net income to net cash provided (used) by operating
activities: Depreciation and amortization 23.6 22.2 Loss on
extinguishment of debt 11.0 — Litigation settlement gain (3.3 ) —
Asset impairment charge — 4.0 Share-based compensation expense 6.3
8.1 Changes in operating assets and liabilities: Accounts
receivable (29.9 ) (1.6 ) Inventories (15.7 ) (3.5 ) Other current
assets (14.9 ) (5.4 ) Accounts payable and accrued expenses 34.4
1.4 Litigation settlement payment (4.0 ) — Other (3.8 ) (9.9 ) Net
cash provided by operating activities 27.2 40.8
INVESTING
ACTIVITIES Purchases of property, plant and equipment (18.9 )
(20.3 ) Business acquisition (10.5 ) — Net cash used by
investing activities (29.4 ) (20.3 )
FINANCING ACTIVITIES
Payments on revolving credit facility, net (32.5 ) (17.4 ) Payments
on term loans and other debt (27.7 ) (3.4 ) Proceeds from term
loans and other debt — 7.3 Proceeds from (payments on) capital
lease facilities, net 0.1 (2.5 ) Issuance of 6.625% Senior Notes
due 2027 350.0 — Debt financing costs (7.5 ) — Repurchase of 8.125%
Senior Notes due 2021 (250.0 ) — Premium on early extinguishment of
debt (8.0 ) — Dividends (5.0 ) (4.7 ) Purchase of treasury shares
(3.6 ) — Payments of withholding taxes on share awards (2.3 ) (1.7
) Payment of acquisition earn-out — (2.0 ) Net cash provided
(used) by financing activities 13.5 (24.4 ) Effect of exchange rate
changes on cash 5.1 (0.4 ) Increase (decrease) in cash and
cash equivalents 16.4 (4.3 ) Cash and cash equivalents at beginning
of period 64.3 62.0 Cash and cash equivalents at end
of period $ 80.7 $ 57.7 Income taxes paid $ 1.6 $ 7.0
Interest paid $ 16.5 $ 14.7
Park-Ohio
Holdings Corp. and Subsidiaries Business Segment Information
(Unaudited) Three Months Ended September 30,
Nine Months Ended September 30, 2017
2016 2017 2016 (In millions)
Net sales: Supply Technologies $ 140.2 $ 122.0 $ 415.8 $
384.8 Assembly Components 127.9 133.4 393.2 399.4 Engineered
Products 84.1 57.3 237.9 185.9 $ 352.2
$ 312.7 $ 1,046.9 $ 970.1
Segment operating income: Supply Technologies $ 10.9 $ 9.7 $
34.6 $ 30.8 Assembly Components 11.4 13.9 37.0 38.3 Engineered
Products 6.0 4.0 13.5 8.6 Total segment
operating income 28.3 27.6 85.1 77.7 Corporate costs (7.6 ) (6.7 )
(21.4 ) (21.2 ) Litigation settlement gain — — 3.3 — Asset
impairment charge — — — (4.0 ) Operating
income 20.7 20.9 67.0 52.5 Interest expense (7.8 ) (7.2 ) (23.1 )
(21.3 ) Loss on extinguishment of debt — — (11.0 )
— Income before income taxes $ 12.9 $ 13.7
$ 32.9 $ 31.2
Park-Ohio Holdings Corp. and
SubsidiariesSupplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted earnings per share is a non-GAAP
financial measure that the Company is providing in this press
release. Adjusted earnings per share is earnings per share
calculated in accordance with GAAP, adjusted for special items. The
Company presents this non-GAAP financial measure because management
uses adjusted earnings per share 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 earnings per share.
Adjusted earnings per share is not a measure of performance under
GAAP and should not be considered in isolation from, or as a
substitute for, earnings per share calculated in accordance with
GAAP. Adjusted earnings per share herein may not be comparable to
similarly titled measures of other companies. The following table
reconciles earnings per share to adjusted earnings per share:
FY 2017 Forecast
2016 Low High
Actual Diluted EPS-GAAP basis $ 2.61 $
2.81 $ 2.58 Loss on extinguishment of
debt 0.89 0.89 — Litigation settlement gain (0.27 ) (0.27 ) — Plant
relocation costs 0.05 0.05 0.09 Acquisition-related costs 0.05 0.05
0.10 Asset impairment — — 0.33 Severance and other — — 0.08 Tax
effect of adjustments (0.18 ) (0.18 ) (0.17 ) Impact of adjustments
0.54 0.54 0.43 Diluted EPS-Adjusted basis $
3.15 3.35 $ 3.01
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version on businesswire.com: http://www.businesswire.com/news/home/20171106006496/en/
Edward F. CrawfordPark-Ohio Holdings Corp.440-947-2000
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