Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for
the first quarter of 2018.
Net sales were a record $405.7 million in the first quarter of 2018, an
increase of 18% from net sales of $343.8 million in the first quarter of
2017, driven by organic growth of 9%. Net income attributable to
ParkOhio common shareholders was $9.8 million in both first quarter
periods. On an adjusted basis, net income attributable to ParkOhio
common shareholders was $0.93 per diluted share in the first quarter of
2018 compared to $0.68 per diluted share in the 2017 period. The
adjustments in the 2018 period included $0.10 per share related to U.S.
Tax Reform and $0.05 per share for acquisition-related expenses. Please
refer to the table that follows for a reconciliation of net income to
adjusted earnings.
EBITDA, as defined was $35.4 million in the first quarter of 2018, an
increase of 11% from $31.9 million in the first quarter of 2017. Please
refer to the table that follows for a reconciliation of net income to
EBITDA, as defined. During the quarter, the Company generated operating
cash flows of $8.4 million, and at March 31, 2018, had $89.2 million of
cash and cash equivalents on hand.
The effective income tax rate for the first quarter of 2018 was 36% and
includes an adjustment of $1.2 million to income tax expense recorded in
2017 related to U.S. Tax Reform. Excluding this $1.2 million expense,
the effective income tax rate in the first quarter of 2018 would have
been 29%.
Edward F. Crawford, Chairman and Chief Executive Officer, stated, "The
first quarter was a great start to 2018. Each of our three individual
business silos achieved increased revenues and earnings. We are
maintaining our adjusted EPS guidance at $3.55 - $3.75 per share."
CONFERENCE CALL
A conference call reviewing ParkOhio's first quarter 2018 results will
be broadcast live over the Internet on Wednesday, May 9, 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, 2017. 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, |
| | 2018 |
| 2017 (2) |
| | (In millions, except per share data) |
|
Net sales
| |
$
|
405.7
| | |
$
|
343.8
| |
|
Cost of sales (1) | |
340.6
|
| |
288.8
|
|
|
Gross profit
| |
65.1
| | |
55.0
| |
|
Selling, general and administrative expenses (1) | |
43.0
| | |
37.8
| |
|
Litigation settlement gain
| |
-
|
| |
(3.3
|
)
|
|
Operating income
| |
22.1
| | |
20.5
| |
|
Other components of net pension income (1) | |
2.3
| | |
1.7
| |
|
Interest expense
| |
(8.4
|
)
| |
(7.4
|
)
|
|
Income before income taxes
| |
16.0
| | |
14.8
| |
|
Income tax expense
| |
(5.8
|
)
| |
(4.7
|
)
|
|
Net income
| |
10.2
| | |
10.1
| |
|
Net income attributable to noncontrolling interests
| |
(0.4
|
)
| |
(0.3
|
)
|
|
Net income attributable to Park-Ohio Holdings Corp. common
shareholders
| |
$
|
9.8
|
| |
$
|
9.8
|
|
| | | |
|
|
Earnings per common share attributable to Park-Ohio Holdings Corp.
common shareholders:
| | | | |
|
Basic
| |
$
|
0.80
|
| |
$
|
0.80
|
|
|
Diluted
| |
$
|
0.78
|
| |
$
|
0.79
|
|
|
Weighted-average shares used to compute earnings per share:
| | | | |
|
Basic
| |
12.3
|
| |
12.2
|
|
|
Diluted
| |
12.5
|
| |
12.5
|
|
| | | |
|
|
Dividends per common share
| |
$
|
0.125
|
| |
$
|
0.125
|
|
| | | |
|
|
Other financial data:
| | | | |
|
EBITDA, as defined
| |
$
|
35.4
|
| |
$
|
31.9
|
|
(1) - The Company adopted ASU 2017-07 in the first quarter of
2018, resulting in a change to the presentation of components of
net
pension income. The following amounts are reflected in the
condensed consolidated statements of income:
|
|
| |
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
|
Amounts recorded in Cost of sales
| |
$
|
(0.7
|
)
| |
$
|
(0.5
|
)
|
|
Amounts recorded in SG&A expenses
| |
(0.3
|
)
| |
(0.1
|
)
|
|
Amounts recorded in Other components of net pension income
| |
2.3
|
| |
1.7
|
|
|
Total pension income
| |
$
|
1.3
|
| |
$
|
1.1
|
|
| | | | | | | |
|
(2) - 2017 pension amounts have been reclassified to conform to
the 2018 presentation.
| |
| | | | | | | |
|
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 March 31, |
| | 2018 |
| 2017 |
| | Earnings |
| Diluted EPS | | Earnings |
| Diluted EPS |
| | (In millions, except for earnings per share (EPS)) |
|
Net income
| |
$
|
10.2
| | |
$
|
0.81
| | |
$
|
10.1
| | |
$
|
0.81
| |
|
Net income attributable to noncontrolling interests
| |
(0.4
|
)
| |
(0.03
|
)
| |
(0.3
|
)
| |
(0.02
|
)
|
Net income attributable to Park-Ohio Holdings Corp. common
shareholders
| |
9.8
| | |
0.78
| | |
9.8
| | |
0.79
| |
|
Adjustments:
| | | | | | | | |
|
Acquisition-related expenses
| |
0.8
| | |
0.07
| | |
0.3
| | |
0.02
| |
|
Litigation settlement gain
| |
-
| | |
-
| | |
(3.3
|
)
| |
(0.26
|
)
|
|
Plant relocation and related costs
| |
-
| | |
-
| | |
0.7
| | |
0.05
| |
|
Tax effect of above adjustments
| |
(0.2
|
)
| |
(0.02
|
)
| |
1.0
| | |
0.08
| |
|
U.S. Tax Act adjustment
| |
1.2
|
| |
0.10
|
| |
-
|
| |
-
|
|
|
Adjusted earnings
| |
$
|
11.6
|
| |
$
|
0.93
|
| |
$
|
8.5
|
| |
$
|
0.68
|
|
| | | | | | | | | | | | | | | |
|
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 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 March 31, |
| | 2018 |
| 2017 |
| | (In millions) |
|
Net income attributable to Park-Ohio Holdings Corp. common
shareholders
| |
$
|
9.8
| |
$
|
9.8
|
|
Add back:
| | | | |
|
Interest expense
| |
8.4
| |
7.4
|
|
Income tax expense
| |
5.8
| |
4.7
|
|
Depreciation and amortization
| |
8.9
| |
7.8
|
|
Share-based compensation expense
| |
2.2
| |
2.2
|
|
Acquisition-related expenses and other
| |
0.3
| |
-
|
|
EBITDA, as defined
| |
$
|
35.4
| |
$
|
31.9
|
| | | | | |
|
|
| |
| |
| Park-Ohio Holdings Corp. and Subsidiaries |
| Condensed Consolidated Balance Sheets |
| | | |
|
| | (Unaudited) | | |
| | March 31, 2018 | | December 31, 2017 |
| | (In millions) |
| ASSETS | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| |
$
|
89.2
| |
$
|
82.8
|
|
Accounts receivable, net
| |
272.5
| |
242.6
|
|
Inventories, net
| |
299.7
| |
282.8
|
|
Other current assets
| |
79.2
| |
61.4
|
|
Total current assets
| |
740.6
| |
669.6
|
|
Property, plant and equipment, net
| |
196.4
| |
177.0
|
|
Goodwill
| |
106.5
| |
100.2
|
|
Intangible assets, net
| |
106.0
| |
99.5
|
|
Other long-term assets
| |
84.2
| |
86.2
|
|
Total assets
| |
$
|
1,233.7
| |
$
|
1,132.5
|
| | | |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | | |
|
Current liabilities:
| | | | |
|
Trade accounts payable
| |
$
|
187.8
| |
$
|
173.7
|
|
Current portion of long-term debt and short-term debt
| |
14.5
| |
17.7
|
|
Accrued expenses and other
| |
97.3
| |
84.7
|
|
Total current liabilities
| |
299.6
| |
276.1
|
|
Long-term liabilities, less current portion:
| | | | |
|
Debt
| |
568.7
| |
515.5
|
|
Deferred income taxes
| |
27.6
| |
22.3
|
|
Other long-term liabilities
| |
33.0
| |
30.6
|
|
Total long-term liabilities
| |
629.3
| |
568.4
|
|
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity
| |
292.4
| |
276.0
|
|
Noncontrolling interests
| |
12.4
| |
12.0
|
|
Total equity
| |
304.8
| |
288.0
|
|
Total liabilities and shareholders' equity
| |
$
|
1,233.7
| |
$
|
1,132.5
|
| | | | | |
|
|
| |
| Park-Ohio Holdings Corp. and Subsidiaries |
| Condensed Consolidated Statements of Cash Flows (Unaudited) |
| |
|
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
| | (In millions) |
| OPERATING ACTIVITIES | | | | |
|
Net income
| |
$
|
10.2
| | |
$
|
10.1
| |
|
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
| | | | |
|
Depreciation and amortization
| |
8.9
| | |
7.8
| |
|
Litigation settlement gain
| |
-
| | |
(3.3
|
)
|
|
Share-based compensation expense
| |
2.2
| | |
2.2
| |
|
Net impact of U.S. Tax Act
| |
1.2
| | |
-
| |
|
Changes in operating assets and liabilities:
| | | | |
|
Accounts receivable
| |
(16.5
|
)
| |
(30.0
|
)
|
|
Inventories
| |
(9.2
|
)
| |
(6.5
|
)
|
|
Other current assets
| |
(2.2
|
)
| |
(2.3
|
)
|
|
Accounts payable and accrued expenses
| |
15.0
| | |
27.1
| |
|
Litigation settlement payment
| |
-
| | |
(4.0
|
)
|
|
Other
| |
(1.2
|
)
| |
(1.3
|
)
|
|
Net cash provided (used) by operating activities
| |
8.4
| | |
(0.2
|
)
|
| INVESTING ACTIVITIES | | | | |
|
Purchases of property, plant and equipment
| |
(8.9
|
)
| |
(6.1
|
)
|
|
Business acquisition, net of cash acquired
| |
(36.7
|
)
| |
-
|
|
|
Net cash used by investing activities
| |
(45.6
|
)
| |
(6.1
|
)
|
| FINANCING ACTIVITIES | | | | |
|
Proceeds from revolving credit facility, net
| |
47.3
| | |
13.0
| |
|
Payments on term loans and other debt
| |
(3.6
|
)
| |
(3.0
|
)
|
|
Proceeds from term loans and other debt
| |
3.7
| | |
-
| |
(Payments on) proceeds from capital lease facilities, net
| |
(1.2
|
)
| |
1.1
| |
|
Dividends
| |
(1.6
|
)
| |
(1.6
|
)
|
|
Purchase of treasury shares
| |
(0.6
|
)
| |
-
| |
|
Payments of withholding taxes on share awards
| |
(1.1
|
)
| |
(0.7
|
)
|
|
Net cash provided by financing activities
| |
42.9
| | |
8.8
| |
|
Effect of exchange rate changes on cash
| |
0.7
|
| |
0.7
|
|
|
Increase in cash and cash equivalents
| |
6.4
| | |
3.2
| |
|
Cash and cash equivalents at beginning of period
| |
82.8
|
| |
64.3
|
|
|
Cash and cash equivalents at end of period
| |
$
|
89.2
|
| |
$
|
67.5
|
|
|
Income taxes paid
| |
$
|
2.0
| | |
$
|
1.9
| |
|
Interest paid
| |
$
|
2.2
| | |
$
|
1.9
| |
| | | | | | | |
|
|
| |
| Park-Ohio Holdings Corp. and Subsidiaries |
| Business Segment Information (Unaudited) |
| |
|
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
| | (In millions) |
| Net sales: | | | | |
|
Supply Technologies
| |
$
|
160.9
| | |
$
|
133.2
| |
|
Assembly Components
| |
145.4
| | |
139.3
| |
|
Engineered Products
| |
99.4
|
| |
71.3
|
|
| |
$
|
405.7
|
| |
$
|
343.8
|
|
| | | |
|
| Segment operating income: | | | | |
|
Supply Technologies
| |
$
|
12.5
| | |
$
|
10.6
| |
|
Assembly Components
| |
12.6
| | |
11.8
| |
|
Engineered Products
| |
5.7
|
| |
1.3
|
|
|
Total segment operating income
| |
30.8
| | |
23.7
| |
|
Corporate costs
| |
(8.7
|
)
| |
(6.5
|
)
|
|
Litigation settlement gain
| |
-
|
| |
3.3
|
|
|
Operating income
| |
22.1
| | |
20.5
| |
|
Other components of net pension income
| |
2.3
| | |
1.7
| |
|
Interest expense
| |
(8.4
|
)
| |
(7.4
|
)
|
|
Income before income taxes
| |
$
|
16.0
|
| |
$
|
14.8
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180508006481/en/
Edward F. Crawford
Park-Ohio Holdings Corp.
440-947-2000
