ParkOhio Announces Record Revenues and Net Income for 2012

CLEVELAND, March 4, 2013 /PRNewswire/ -- Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced results for its fourth quarter and year ended December 31, 2012. 

FOURTH QUARTER RESULTS

Net sales were $275.7 million for the fourth quarter of 2012, an increase of $41.1 million, or 18%, from net sales of $234.6 million for the fourth quarter of 2011.  ParkOhio reported net income of $7.7 million, or $.63 per diluted share, for the fourth quarter of 2012.  This compared to a net income of $18.9 million, or $1.58 per diluted share, for the fourth quarter of 2011. Net income in 2011 included $11.3 million due to the reversal of the Company's valuation allowance against its U.S. net deferred tax assets.  Net income, as adjusted for the reversal of the Company's valuation allowance of $0.94 per diluted share was $7.7 million, or $0.64 per diluted share in 2011.  Net income in 2012 of $0.63 per diluted share was comparable to net income, as adjusted in 2011 of $0.64 per diluted share. 

FULL YEAR RESULTS

Net sales for 2012 were a Company record and totaled $1,134.0 million, an increase of $167.4 million, or 17%, from net sales of $966.6 million for 2011.  Net income was a record $31.8 million, or $2.62 per diluted share, for 2012, which included the impact of a $13.0 million pre-tax litigation settlement charge, or $.68 per diluted share. This compared to net income of $29.4 million, or $2.45 per diluted share, for 2011.  Net income for 2011 was favorably impacted by $11.3 million associated with the reversal of the Company's valuation allowance against U.S. net deferred tax assets, and net income for 2011 was unfavorably impacted by restructuring and asset impairment charges of $5.4 million, refinancing charges of $7.3 million and a tax provision associated with the refinancing of $2.1 million.  Net income, as adjusted, which excludes the reversal of the deferred tax valuation allowance, the restructuring and asset impairment charges and the refinancing charges, in 2011 was $33.0 million, or $2.75 per diluted share.

2013 REVENUE AND EARNINGS GUIDANCE UPDATE

We currently forecast our consolidated 2013 revenues to be approximately 8% greater than 2012 revenues.  We forecast our earnings to be in the range of $3.65 to $3.95 per diluted share.  In addition, we are forecasting EBITDA, as defined to be in the range of $119 million to $124 million for 2013.  EBITDA, as defined, reflects earnings 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. 

Edward F. Crawford, Chairman and Chief Executive Officer, stated, "2012 was a record year at ParkOhio for revenues, net income and EBITDA.  Our business plan will continue to focus on organic growth and high-value bolt-on acquisitions.  ParkOhio is now in a position to reach $2 billion in annual revenues by 2017."

SHARE REPURCHASE PROGRAM

The Company also announced today that its Board of Directors has authorized a share repurchase program whereby the Company may repurchase up to 1.0 million shares of its outstanding common stock.  This replaces a share repurchase plan previously authorized by the Board of Directors in 2006.

The repurchases may be made in the open market or in privately negotiated transactions.  The Company may also implement all or part of the repurchases under a Rule 10b5-1 trading plan.  The timing and extent to which the Company repurchases its shares will depend upon market conditions and other corporate considerations, and will be at the Company's sole discretion.  Purchases under the program may commence or be suspended at any time without prior notice.

A conference call reviewing ParkOhio's fourth quarter results will be broadcast live over the Internet on Tuesday, March 5, commencing at 10:00 am Eastern Time.  Simply log on to http://www.pkoh.com.         

ParkOhio is a leading provider of supply management services and a manufacturer of highly-engineered products.  Headquartered in Cleveland, Ohio, the Company operates 37 manufacturing sites and 45 supply chain logistics facilities. 

This news release contains forward-looking statements, including statements regarding future performance of the Company that are subject to certain risks, uncertainties and assumptions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. 

Among the key factors that could cause actual results to differ materially from expectations are: the cyclical nature of the vehicle industry; timing of cost reductions; labor availability and stability; changes in economic and industry conditions; adverse impacts to the Company, its suppliers and customers from acts of terrorism or hostilities; the financial condition of the Company's customers and suppliers, including the impact of any bankruptcies; the Company's ability to successfully integrate the operations of acquired companies; the uncertainties of environmental, litigation or corporate contingencies; the amounts and timing, if any, of purchases of the Company's common stock; and changes in regulatory requirements.  These and other risks and assumptions are described in the Company's reports that are available from the United States Securities and Exchange Commission.  The Company assumes no obligation to update the information in this release.

 

CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands, Except per Share Data)










Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011









Net sales

$  275,707


$  234,593


$ 1,134,042


$  966,573

Cost of products sold

227,450


196,227


927,026


799,248

   Gross profit

48,257


38,366


207,016


167,325

Selling, general and administrative expenses

27,608


24,849


117,209


105,582

Settlement of litigation

-


-


13,000


-

Restructuring and asset impairment charges

-


-


-


5,359

   Operating income

20,649


13,517


76,807


56,384

Interest expense

6,555


5,845


26,045


24,817

Debt extinguishment costs

-


-


305


7,335

   Income before income taxes 

14,094


7,672


50,457


24,232

Income tax expense (benefit)

6,435


(11,271)


18,671


(5,203)

   Net income

$       7,659


$    18,943


$      31,786


$    29,435









Amounts per common share:








   Basic

$         0.64


$        1.62


$          2.67


$        2.54

   Diluted

$         0.63


$        1.58


$          2.62


$        2.45









Common shares used in the computation








   Basic

11,962


11,711


11,921


11,580

   Diluted

12,151


11,998


12,116


11,999









Other financial data:








     EBITDA, as defined

$     27,252


$    18,530


$      99,656


$    80,281









 

SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands, Except per Share Data)

















Earnings, as adjusted is a measure of earnings that excludes significant non-cash credits and charges and unusual financing costs.  Earnings, as adjusted, reflects net income before the reversal of the Company's valuation allowance against U.S. net deferred tax assets, refinancing charges and any associated tax provision, and restructuring and asset impairment charges.  Earnings, as adjusted is 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, earnings per share, 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 earnings, as adjusted because management uses earnings, as adjusted to measure performance.  Earnings, as adjusted herein may not be comparable to other similarly titled measures of other companies. The following table reconciles earnings, as reported to earnings, as adjusted:


















Three Months Ended December 31,


Year Ended December 31, 


2012


2011


2012


2011


Net


Diluted


Net


Diluted


Net


Diluted


Net


Diluted


Income


EPS


Income


EPS


Income


EPS


Income


EPS

















Earnings, as reported

$ 7,659


$ 0.63


$ 18,943


$ 1.58


$ 31,786


$ 2.62


$ 29,435


$ 2.45

Add back:
















    Reversal of the deferred tax asset valuation allowance
















-


-


(11,271)


(0.94)


-


-


(11,271)


(0.94)

    Refinancing charges

-


-


-


-


-


-


7,335


0.61

    Provision for income tax associated with refinancing
















-


-


-


-


-


-


2,100


0.18

    Restructuring and asset impairment charges

-


-


-


-


-


-


5,359


0.45

















Earnings, as adjusted

$ 7,659


$ 0.63


$   7,672


$ 0.64


$ 31,786


$ 2.62


$ 32,958


$ 2.75

















SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands)









EBITDA, as defined, reflects earnings 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, as defined is 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, 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, as defined because management uses EBITDA, as defined to measure performance and as an indication of the Company's satisfaction of its Debt Service Ratio covenant in its Revolving Credit Agreement and because EBITDA, as adjusted 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 to EBITDA, as defined:










Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011









Net income

$  7,659


$ 18,943


$ 31,786


$ 29,435

Add back:








     Interest expense

6,555


5,845


26,045


24,817

     Income taxes 

6,435


(11,271)


18,671


(5,203)

     Debt extinguishment costs

-


-


305


7,335

     Restructuring and asset impairment charge

-


-


-


5,359

     Depreciation and amortization

4,824


4,195


17,991


16,177

     Share-based compensation

680


561


2,725


2,086

     Miscellaneous

1,099


257


2,133


275









EBITDA, as defined

$ 27,252


$ 18,530


$ 99,656


$ 80,281









 

CONDENSED CONSOLIDATED BALANCE SHEETS

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES






(Unaudited)




December 31,


December 31,


2012


2011





(in Thousands)

ASSETS








Current assets




    Cash and cash equivalents

$        44,437


$        78,001

    Accounts receivable, net

161,273


139,941

    Inventories, net

215,579


202,039

    Deferred tax assets

19,850


20,561

    Unbilled contract revenue

1,385


18,778

    Other current assets

21,473


9,622


Total current assets

463,997


468,942






Property, plant and equipment, net

100,431


61,810






Goodwill and other intangible assets

99,295


20,187

Other assets

62,897


63,833


Total assets

$      726,620


$      614,772











LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities




   Trade accounts payable

$      102,097


$        99,588

   Accrued expenses

83,328


74,483

   Current portion of long-term debt

4,411


1,415

   Current portion of other postretirement benefits

1,906


2,002


Total current liabilities

191,742


177,488






Long-term liabilities, less current portion




  Senior Notes 

250,000


250,000

  Credit facility

120,629


93,000

  Other long-term debt

3,638


3,165

  Deferred tax liability

31,507


1,392

  Other postretirement benefits and other long-term liabilities

27,353


24,285


Total long-term liabilities

433,127


371,842






Shareholders' equity

101,751


65,442


Total liabilities and shareholders' equity

$      726,620


$      614,772









CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES










Years Ended December 31,


2012


2011


(in Thousands)





OPERATING ACTIVITIES








Net Income

$  31,786


$  29,435

Adjustments to reconcile net income to net cash provided by operating activities:




    Depreciation and amortization 

17,991


16,177

    Restructuring and asset impairment charges

-


5,359

    Share-based compensation expense 

2,725


2,086

    Gain on sale of property 

(250)


-

    Deferred income taxes

7,539


(12,817)

    Debt extinguishment costs 

305


7,335

Changes in operating assets and liabilities, excluding acquisitions of businesses:




    Accounts receivable 

9,754


(13,533)

    Inventories and other current assets 

7,133


(8,763)

    Accounts payable and accrued expenses 

(21,397)


18,057

    Other 

295


(7,475)

        Net Cash Provided by Operating Activities 

55,881


35,861





INVESTING ACTIVITIES








Purchases of property, plant and equipment

(29,625)


(12,673)

Proceeds from sale and leaseback transactions

5,904


-

Proceeds from sale of property

400


1,575

Acquisition, net of cash acquired 

(96,963)


-

    Net Cash Used by Investing Activities 

(120,284)


(11,098)





FINANCING ACTIVITIES








Proceeds from (payments on) term loans and other debt 

22,220


(37,598)

Proceeds from revolving credit facility 

8,879


2,800

Issuance of 8.125% senior notes, net of deferred financing costs 

-


244,970

Redemption of 8.375% senior subordinated notes due 2014 

-


(189,555)

Bank debt issue costs 

(876)


(1,079)

Exercise of stock options 

1,083


494

Income tax effect of suspended benefits from share-based compensation

2,819


-

Income tax effect of share-based compensation exercise and vesting

416


-

Purchase of treasury stock 

(3,968)


(2,105)

    Net Cash Provided by Financing Activities 

30,573


17,927

Effect of exchange rate changes on cash

266


-

(Decrease) Increase in Cash and Cash Equivalents 

(33,564)


42,690

Cash and Cash Equivalents at Beginning of Period 

78,001


35,311

Cash and Cash Equivalents at End of Period 

$  44,437


$  78,001





Taxes paid 

$    5,548


$    4,648

Interest paid (includes $5,720 of senior subordinated debt redemption costs in 2011) 

23,832


26,993









 

BUSINESS SEGMENT INFORMATION (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands)





Three Months Ended December 31,


Years Ended December 31,


2012


2011


2012


2011

NET SALES

















Supply Technologies

$    108,110


$    118,062


$    489,651


$    486,571


Assembly Components

83,529


31,622


304,003


157,764


Engineered Products

84,068


84,909


340,388


322,238


$    275,707


$     234,593


$ 1,134,042


$    966,573









INCOME BEFORE INCOME TAXES

















Supply Technologies

$         6,544


$         6,810


$      33,748


$      31,303


Assembly Components

5,551


(1,592)


19,944


1,425


Engineered Products

12,373


10,809


55,040


45,289


    Total Segment Operating Income

24,468


16,027


108,732


78,017


Corporate and other costs

(3,819)


(2,510)


(18,925)


(16,274)


Settlement of litigation

-


-


(13,000)


-


Restructuring and asset impairment charge

-


-


-


(5,359)


Interest expense

(6,555)


(5,845)


(26,045)


(24,817)


Debt extinguishment costs

-


-


(305)


(7,335)


$      14,094


$         7,672


$      50,457


$      24,232









Note A - On March 23, 2012, the Company completed the acquisition of Fluid Routing Solutions Holding Corp. ("FRS"), a leading manufacturer of automotive and industrial rubber and thermoplastic hose products and fuel filler and hydraulic fluid assemblies for the automotive and industrial industries.  FRS will expand the Company's sales of assembled components and is included in the Assembly Components segment from the date of acquisition through December 31, 2012. 

SOURCE Park-Ohio Holdings Corp.



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