- Net sales of $418 million compared to $424 million in Q1
2023
- GAAP EPS from continuing operations improved 36% to $0.83 per
diluted share, up from $0.61 in Q1 2023; Adjusted EPS from
continuing operations of $0.85 per diluted share, up 18% vs. $0.72
in Q1 2023
- Gross margin of 17.1% improved 120 basis points
year-over-year
- EBITDA, as defined was $38 million, an increase of 19% compared
to Q1 2023
- Full year 2024 outlook unchanged
Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its
results for the first quarter of 2024.
“We are pleased with our first quarter results, particularly as
it relates to our improved quality of earnings. Our results are in
line with our prior expectations, and we continue to see solid
backlogs in most businesses, especially in our equipment and
forging end markets. We will continue our focus on operating
excellence and improved cash flow metrics throughout the remainder
of the year. Additionally, we continue to benefit broadly from
macro-economic trends, which include increased investments in
critical end markets including aerospace, defense, EV, industrial
electrification and infrastructure," said Matthew V. Crawford,
Chairman and Chief Executive Officer.
FIRST QUARTER CONSOLIDATED RESULTS FROM
CONTINUING OPERATIONS
In the first quarter of 2024, net sales from continuing
operations were $417.6 million compared to $423.5 million in the
2023 period. Gross margin was 17.1%, an increase of 120 basis
points compared to 15.9% in the 2023 first quarter. Income from
continuing operations attributable to ParkOhio common shareholders
in the first quarter of 2024 was $10.6 million, or $0.83 per
diluted share, compared to $7.5 million, or $0.61 per diluted share
in the first quarter of 2023. Excluding special items, adjusted EPS
from continuing operations was $0.85 per diluted share in the first
quarter of 2024 compared to $0.72 per diluted share in the 2023
period. The year-over-year profit improvement was driven by record
operating profit in our Supply Technologies segment and benefits
from ongoing profit-improvement actions, including product pricing.
Please refer to the table that follows for a reconciliation of
income from continuing operations to adjusted income from
continuing operations.
FIRST QUARTER SEGMENT RESULTS FROM CONTINUING
OPERATIONS
In our Supply Technologies segment, net sales in the first
quarter of 2024 were $196.9 million compared to $195.8 million in
the first quarter a year ago, due to continued strong customer
demand in most of our key end markets, driven by a 28% increase in
the aerospace and defense market and year-over-year growth in our
industrial supply business, partially offset by decreases in the
heavy-duty truck, lawn and garden and agricultural equipment
markets. Sales in our fastener manufacturing business were up 15%
year-over-year, driven by higher customer demand for our
proprietary products throughout North America and Europe. Segment
operating income improved $5.5 million to $19.5 million in the
first quarter of 2024 compared to $14.0 million in the first
quarter 2023. Operating income margin was a record 9.9% in the 2024
quarter, up 270 basis points from 7.2% in the 2023 first quarter,
due primarily to an increase in higher-margin sales and lower
supply chain costs, and strong demand in our fastener manufacturing
business.
In Assembly Components, net sales were $107.2 million compared
to $110.4 million in the 2023 first quarter. Sales were slightly
lower year-over-year due to lower unit volumes, primarily in our
fuel rail and extruded rubber products businesses. Segment
operating income was $8.6 million in the first quarter of 2024
compared to $7.3 million in the corresponding 2023 quarter.
Operating income margin was 8.0% in the 2024 period, up 140 basis
points from 6.6% in the 2023 first quarter. The 18% improvement in
segment operating income in the 2024 period compared to the same
period a year ago was driven by the benefit of ongoing profit
improvement initiatives, improved product pricing and the benefit
from completed plant closure and consolidation actions.
In Engineered Products, net sales were $113.5 million in the
2024 first quarter compared to $117.3 million in last year's first
quarter, driven by lower new equipment sales in our capital
equipment business. Sales in our aftermarket parts and service
business continued to be robust and grew 16% year-over-year. New
equipment backlog totaled $151 million at March 31, 2024 compared
to $162 million at December 31, 2023. In our forged and machined
products business, first quarter 2024 sales were up 4% compared to
the same quarter a year ago, driven by strong forging equipment
sales. Segment operating income in the 2024 first quarter was $3.5
million compared to $5.0 million in the 2023 first quarter. On an
adjusted basis, which excludes plant closure and consolidation and
acquisition-related expenses, segment operating income was $3.8
million in the first quarter of 2024 compared to $7.0 million in
the 2023 period, resulting from lower sales and margins in our
capital equipment business and higher operating costs in our forged
and machined products business. As previously announced, on
February 29, 2024, we completed the acquisition of EMA Indutec GmbH
(“EMA”) to expand our leading global induction business throughout
Europe, our portfolio of induction equipment brands and our
aftermarket service capabilities.
Please refer to the tables that follow for a reconciliation of
segment operating income to adjusted segment operating income.
LIQUIDITY AND CASH FLOW
EBITDA, as defined totaled $37.8 million in the 2024 first
quarter, up 19% year-over-year. During the first quarter of 2024,
operating cash flow from continuing operations was $2.3 million, an
improvement from $0.2 million in the 2023 period, and free cash
flow improved by $2.3 million in the 2024 period compared to the
first quarter of 2023.
At March 31, 2024, our total liquidity was $167.5 million, which
included cash on hand of $61.6 million and $105.9 million of unused
borrowing availability under our credit arrangements.
CREDIT AGENCY UPGRADE
The Company previously announced on April 10, 2024 that S&P
Global (“S&P”) has upgraded the ratings of Park-Ohio
Industries, Inc., including the issuer credit rating to B from B-,
and the issue-level rating on the Company’s $350 million senior
unsecured notes to B-. S&P noted that the upgrades and stable
outlook reflect improved operating performance in 2023, and its
view that ParkOhio will continue to improve profitability, generate
positive free operating cash flow and continue deleveraging over
the next 12 months.
2024 OUTLOOK - CONTINUING OPERATIONS
For 2024, we continue to expect revenue growth in the mid-single
digit range year-over-year, driven by continued strong demand in
most end markets in Supply Technologies and Assembly Components,
and the strength of our backlog in Engineered Products. In
addition, we continue to expect year-over-year improvement in EPS
and EBITDA, as defined.
CONFERENCE CALL
A conference call reviewing ParkOhio’s first quarter 2024
results will be broadcast live over the Internet on Tuesday, April
30, commencing at 10:00 am Eastern Time. Simply log on to
http://www.pkoh.com. An investor presentation is available on
the Company's website.
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 approximately
130 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 ability to realize any contingent
consideration from the sale of the Aluminum Products business; the
impact supply chain and logistic issues have on our business,
results of operations, financial position and liquidity; 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; the impact of labor disturbances affecting
our customers; 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, including the EMA
acquisition; the amounts and timing, if any, of purchases of our
common stock; changes in general 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, such as tariffs and
surcharges; adverse impacts to us, our suppliers and customers from
acts of terrorism or hostilities, including the conflicts between
Russia and Ukraine and in the Middle East, or political unrest,
including the rising tension between China and the United States;
public health issues, including the outbreak of infectious diseases
and any impact on our facilities and operations and our customers
and suppliers; 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; 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 timing and amount of any such 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, 2023. 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,
2024
2023
(In millions, except per share
data)
Net sales
$
417.6
$
423.5
Cost of sales
346.2
356.3
Selling, general and administrative
expenses
47.1
45.3
Restructuring, acquisition-related and
other special charges
0.3
2.5
Gain on sale of assets
—
(0.8
)
Operating income
24.0
20.2
Other components of pension and other
postretirement benefits income, net
1.3
0.7
Interest expense, net
(11.9
)
(10.7
)
Income from continuing operations before
income taxes
13.4
10.2
Income tax expense
(3.3
)
(2.6
)
Income from continuing operations
10.1
7.6
Loss (income) attributable to
noncontrolling interests
0.5
(0.1
)
Income from continuing operations
attributable to Park-Ohio Holdings Corp. common shareholders
10.6
7.5
Loss from discontinued operations, net of
tax
(1.0
)
(1.7
)
Net income attributable to Park-Ohio
Holdings Corp. common shareholders
$
9.6
$
5.8
Income (loss) per common share
attributable to Park-Ohio Holdings Corp. common shareholders:
Basic:
Continuing operations
$
0.85
$
0.61
Discontinued operations
(0.08
)
(0.14
)
Total
$
0.77
$
0.47
Diluted:
Continuing operations
$
0.83
$
0.61
Discontinued operations
(0.08
)
(0.14
)
Total
$
0.75
$
0.47
Weighted-average shares used to compute
income (loss) per share:
Basic
12.4
12.2
Diluted
12.8
12.3
Dividends per common share
$
0.125
$
0.125
Other financial data:
EBITDA, as defined
$
37.8
$
31.7
Park-Ohio Holdings Corp. and
Subsidiaries Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted earnings from continuing operations is a non-GAAP
financial measure that the Company is providing in this press
release. Adjusted earnings from continuing operations is income
from continuing operations 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 from continuing operations to
compare its operating performance on a consistent basis over
multiple periods because they remove the impact of certain
significant noncash 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, income from continuing operations
calculated in accordance with GAAP. Adjusted income from continuing
operations herein may not be comparable to similarly titled
measures of other companies. The following table reconciles income
from continuing operations to adjusted earnings from continuing
operations:
Three Months Ended March
31,
2024
2023
Earnings
Diluted EPS
Earnings
Diluted EPS
(In millions, except for
earnings per share (EPS))
Income from continuing operations
attributable to Park-Ohio Holdings Corp. common shareholders
$
10.6
$
0.83
$
7.5
$
0.61
Adjustments:
Restructuring and other special
charges
—
—
2.4
0.20
Acquisition-related expenses
0.3
0.03
0.1
0.01
Gain on sale of assets
—
—
(0.8
)
(0.07
)
Tax effect of above adjustments
(0.1
)
(0.01
)
(0.4
)
(0.03
)
Adjusted earnings
$
10.8
$
0.85
$
8.8
$
0.72
The following table shows the impact of these adjustments on our
segment results (continuing operations):
Cost of Sales
SG&A
Total
Cost of Sales
SG&A
Total
(In millions)
Three Months Ended March 31,
2024
Three Months Ended March 31,
2023
Supply Technologies
$
—
$
—
$
—
$
—
$
0.2
$
0.2
Assembly Components
—
—
—
0.3
—
0.3
Engineered Products
—
0.3
0.3
—
2.0
2.0
Corporate
—
—
—
—
—
—
Total continuing operations
$
—
$
0.3
$
0.3
$
0.3
$
2.2
$
2.5
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 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 to calculate its debt service
coverage ratio under its current revolving credit 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,
2024
2023
(In millions)
Income from continuing operations
attributable to Park-Ohio Holdings Corp. common shareholders
$
10.6
$
7.5
Add back:
Interest expense, net
11.9
10.7
Income tax expense
3.3
2.6
Depreciation and amortization
8.4
7.7
Stock-based compensation expense
1.5
1.6
Restructuring, business optimization and
other costs
—
2.4
Acquisition-related expenses
0.3
0.1
EBITDA loss attributable to Designated
Subsidiary
1.8
—
Other
—
(0.9
)
EBITDA, as defined
$
37.8
$
31.7
Park-Ohio Holdings Corp. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited)
March 31, 2024
December 31,
2023
(In millions)
ASSETS
Current assets:
Cash and cash equivalents
$
61.6
$
54.8
Accounts receivable, net
283.8
263.3
Inventories, net
428.5
411.1
Other current assets
109.8
95.2
Total current assets
883.7
824.4
Property, plant and equipment, net
184.0
184.9
Operating lease right-of-use assets
44.9
44.7
Goodwill
114.2
110.2
Intangible assets, net
76.3
73.3
Other long-term assets
99.4
103.2
Total assets
$
1,402.5
$
1,340.7
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Trade accounts payable
$
199.3
$
204.0
Current portion of long-term debt and
short-term debt
12.3
9.4
Current portion of operating lease
liabilities
11.6
10.6
Accrued expenses and other
170.3
139.6
Total current liabilities
393.5
363.6
Long-term liabilities, less current
portion:
Long-term debt
657.3
633.4
Long-term operating lease liabilities
33.6
34.4
Other long-term liabilities
20.6
19.4
Total long-term liabilities
711.5
687.2
Park-Ohio Holdings Corp. and Subsidiaries
shareholders' equity
288.5
280.4
Noncontrolling interests
9.0
9.5
Total equity
297.5
289.9
Total liabilities and shareholders'
equity
$
1,402.5
$
1,340.7
Park-Ohio Holdings Corp. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended March
31,
2024
2023
(In millions)
OPERATING ACTIVITIES FROM CONTINUING
OPERATIONS
Income from continuing operations
$
10.1
$
7.6
Adjustments to reconcile income from
continuing operations to net cash provided by operating activities
from continuing operations:
Depreciation and amortization
8.4
7.7
Stock-based compensation expense
1.5
1.6
Gain on sale of assets
—
(0.8
)
Changes in operating assets and
liabilities:
Accounts receivable
(16.1
)
(9.0
)
Inventories
(13.9
)
(1.8
)
Prepaid and other current assets
(5.8
)
(6.5
)
Accounts payable and accrued expenses
20.9
1.1
Other
(2.8
)
0.3
Net cash provided by operating activities
from continuing operations
2.3
0.2
INVESTING ACTIVITIES FROM CONTINUING
OPERATIONS
Purchases of property, plant and
equipment
(5.8
)
(6.0
)
Proceeds from sales of assets
—
1.4
Business acquisitions, net of cash
acquired
(11.0
)
(0.5
)
Net cash used in investing activities from
continuing operations
(16.8
)
(5.1
)
FINANCING ACTIVITIES FROM CONTINUING
OPERATIONS
Proceeds from revolving credit facility,
net
24.0
3.0
Payments on other debt
(2.8
)
(0.5
)
Proceeds from other debt
7.1
3.2
(Payments on) proceeds from finance lease
facilities, net
(0.8
)
1.7
Payments related to prior acquisitions
—
(1.3
)
Dividends
(1.6
)
(1.6
)
Payments of withholding taxes on share
awards
(0.1
)
—
Net cash provided by financing activities
from continuing operations
25.8
4.5
DISCONTINUED OPERATIONS:
Total used by operating activities
(3.6
)
(6.4
)
Total used by investing activities
—
(1.5
)
Total used by financing activities
—
(0.7
)
Decrease in cash and cash equivalents from
discontinued operations
(3.6
)
(8.6
)
Effect of exchange rate changes on
cash
(0.9
)
0.4
Increase (decrease) in cash and cash
equivalents
6.8
(8.6
)
Cash and cash equivalents at beginning of
period
54.8
58.2
Cash and cash equivalents at end of
period
$
61.6
$
49.6
Interest paid
$
5.5
$
5.2
Income taxes paid
$
2.0
$
3.2
Park-Ohio Holdings Corp. and
Subsidiaries
Business Segment Information
(Unaudited)
Three Months Ended March
31,
2024
2023
(In millions)
NET SALES OF CONTINUING OPERATIONS:
Supply Technologies
$
196.9
$
195.8
Assembly Components
107.2
110.4
Engineered Products
113.5
117.3
$
417.6
$
423.5
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES:
Supply Technologies
$
19.5
$
14.0
Assembly Components
8.6
7.3
Engineered Products
3.5
5.0
Total segment operating income
31.6
26.3
Corporate costs
(7.6
)
(6.9
)
Gain on sale of assets
—
0.8
Operating income
24.0
20.2
Other components of pension and other
postretirement benefits income, net
1.3
0.7
Interest expense, net
(11.9
)
(10.7
)
Income from continuing operations before
income taxes
$
13.4
$
10.2
Park-Ohio Holdings Corp. and
Subsidiaries Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted segment operating income (loss) is a non-GAAP financial
measure that the Company is providing in this press release.
Adjusted segment operating income (loss) is calculated as segment
operating income (loss) plus adjustments for plant closure and
consolidation, severance and other. The Company presents this
non-GAAP financial measure because the business segments have
incurred significant restructuring and related expenses during the
year-to-date periods. Adjusted segment operating income (loss) is
not a measure of performance under GAAP and should not be
considered in isolation from, or as a substitute for, earnings in
accordance with GAAP. Adjusted segment operating income (loss)
herein may not be comparable to similarly titled measures of other
companies. The following table reconciles adjusted segment
operating income (loss) to segment operating income (loss):
Three Months Ended March
31,
2024
2023
(In millions)
As reported
Adjustments
As adjusted
As reported
Adjustments
As adjusted
Supply Technologies
$
19.5
$
—
$
19.5
$
14.0
$
0.2
$
14.2
Assembly Components
8.6
—
8.6
7.3
0.3
7.6
Engineered Products
3.5
0.3
3.8
5.0
2.0
7.0
Corporate
(7.6
)
—
(7.6
)
(6.9
)
—
(6.9
)
Gain on sale of assets
—
—
—
0.8
(0.8
)
—
Operating income - continuing
operations
$
24.0
$
0.3
$
24.3
$
20.2
$
1.7
$
21.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429917833/en/
MATTHEW V. CRAWFORD PARK-OHIO HOLDINGS CORP. (440) 947-2000
Park Ohio (NASDAQ:PKOH)
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Park Ohio (NASDAQ:PKOH)
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