ParkOhio Announces Third Quarter Results
CLEVELAND, Nov. 8, 2010 /PRNewswire-FirstCall/ -- Park-Ohio Holdings Corp. (Nasdaq: PKOH) today announced results for its third quarter ended September 30, 2010.
THIRD QUARTER RESULTS
Net sales were $203.0 million for third quarter 2010, an increase of 20% from net sales of $168.6 million for third quarter 2009. Net income for the third quarter of 2010 was $6.2 million, or $.52 per share dilutive compared to a net loss of $3.2 million, or $(.29) per share dilutive, for third quarter 2009. Included in the 2010 results were gains of $2.2 million representing the excess of the aggregate fair value of purchased net assets over the purchase price for the Assembly Component System ("ACS") business unit acquisition that was completed during the quarter and a $3.5 million asset impairment charge related to the write down of an investment. Included in the 2009 results were a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014 of $2.0 million and a charge to reserve for an account receivable from a customer in bankruptcy of $2.1 million.
NINE MONTHS RESULTS
Net sales were $593.0 million for the first nine months of 2010, an increase of 16% from net sales of $513.3 million for the same period of 2009. Net income was $11.7 million, or $.99 per share dilutive, versus net loss of $5.4 million, or $(.50) per share dilutive, in the same period of 2009. Included in the 2010 results were gains of $2.2 million representing the excess of the aggregate fair value of purchased net assets over the purchase price for the ACS business unit acquisition and a $3.5 million asset impairment charge related to the write down of an investment. Included in the 2009 results were a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014 of $5.1 million and a charge to reserve for an account receivable from a customer in bankruptcy of $4.2 million.
Edward F. Crawford, Chairman and Chief Executive Officer, stated, "The last 90 days at ParkOhio have been very active in new order bookings. The Supply Technologies acquisition of ACS will add in excess of $50 million in additional synergistic revenue in 2011.
The new order activity in our Manufactured Products segment for global new equipment has increased by approximately 50% year-to-date and aftermarket activity continues to rebound.
Lastly, General Aluminum has been awarded two major blocks of business. One with ZF Lenksysteme to produce and machine aluminum racks for their electronic steering systems and the other with Chrysler for a new platform of knuckles and control arms. This business will commence in 2012 and total revenues are expected to exceed $40 million per year."
A conference call reviewing ParkOhio's third quarter results will be broadcast live over the Internet on Tuesday, November 9, 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 29 manufacturing sites and 52 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 vehicular 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; 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.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) |
|||||||||
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES |
|||||||||
(In Thousands, Except per Share Data) |
|||||||||
Three Months Ended |
Nine Months Ended |
||||||||
September 30, |
September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Net sales |
$202,986 |
$168,597 |
$592,990 |
$513,252 |
|||||
Cost of products sold |
168,006 |
145,938 |
495,374 |
437,402 |
|||||
Gross profit |
34,980 |
22,659 |
97,616 |
75,850 |
|||||
Selling, general and administrative expenses |
22,150 |
21,701 |
65,455 |
66,537 |
|||||
Operating income |
12,830 |
958 |
32,161 |
9,313 |
|||||
Asset impairment charge |
3,539 |
0 |
3,539 |
0 |
|||||
Gain on purchase of 8.375% senior subordinated notes |
0 |
(2,011) |
0 |
(5,107) |
|||||
Gain on acquisition of business |
(2,210) |
0 |
(2,210) |
0 |
|||||
Interest expense |
6,469 |
5,897 |
18,072 |
17,996 |
|||||
Income (loss) before income taxes |
5,032 |
(2,928) |
12,760 |
(3,576) |
|||||
Income taxes |
(1,152) |
296 |
1,095 |
1,838 |
|||||
Net income (loss) |
$6,184 |
($3,224) |
$11,665 |
($5,414) |
|||||
Amounts per common share: |
|||||||||
Basic |
$0.54 |
($0.29) |
$1.03 |
($0.50) |
|||||
Diluted |
$0.52 |
($0.29) |
$0.99 |
($0.50) |
|||||
Common shares used in the computation: |
|||||||||
Basic |
11,386 |
11,011 |
11,282 |
10,931 |
|||||
Diluted |
11,824 |
11,011 |
11,773 |
10,931 |
|||||
Other financial data: |
|||||||||
EBITDA, as defined |
$20,482 |
$10,459 |
$49,309 |
$35,742 |
|||||
Note A--EBITDA, as defined, reflects earnings before interest, income taxes, and excludes depreciation, amortization, certain non-cash charges and corporate-level expenses as defined in the Company's Revolving Credit Agreement. EBITDA 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 because management 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 and because 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 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 |
Nine Months Ended |
|||||||||||
September 30, |
September 30, |
|||||||||||
2010 |
2009 |
2010 |
2009 |
|||||||||
Net income (loss) |
$6,184 |
($3,224) |
$11,665 |
($5,414) |
||||||||
Add back: |
||||||||||||
Income taxes |
(1,152) |
296 |
1,095 |
1,838 |
||||||||
Deferred Tax impact netted in acquisition gain |
1,354 |
0 |
1,354 |
0 |
||||||||
Interest expense |
6,469 |
5,897 |
18,072 |
17,996 |
||||||||
Depreciation and amortization |
3,666 |
4,426 |
12,099 |
14,015 |
||||||||
Asset impairment charge |
3,539 |
0 |
3,539 |
0 |
||||||||
Reserve for customer in bankruptcy |
0 |
2,139 |
0 |
4,154 |
||||||||
Miscellaneous |
422 |
925 |
1,485 |
3,153 |
||||||||
EBITDA, as defined |
$20,482 |
$10,459 |
$49,309 |
$35,742 |
||||||||
Note B--In the first nine months of 2009, the Company recorded a gain of $5.1 million on the purchase of $6.125 million principal amount of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014, of which $2.0 million was recorded in the third quarter. |
|||||||||
Note C--In the first nine months of 2009 the Company recorded a charge of $4.2 million to reserve for an account receivable from a customer in bankruptcy. |
|||||||||
Note D--In the third quarter of 2010 the Company recorded a bargain purchase gain of $2.2 million from the acquisition of certain assets and assumption of specific liabilities of Assembly Component Systems Inc. representing the excess of the aggregate fair value of purchased net assets over the purchase price and a $3.5 million asset impairment charge relating to the write down of an investment. |
|||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES |
||||||
September 30, |
December 31, |
|||||
2010 |
2009 |
|||||
(Unaudited) |
(Audited) |
|||||
(In Thousands) |
||||||
ASSETS |
||||||
Current Assets |
||||||
Cash and cash equivalents |
$35,749 |
$23,098 |
||||
Accounts receivable, net |
137,024 |
104,643 |
||||
Inventories |
193,021 |
182,116 |
||||
Deferred tax assets |
8,104 |
8,104 |
||||
Unbilled contract revenue |
10,209 |
19,411 |
||||
Other current assets |
8,332 |
12,700 |
||||
Total Current Assets |
392,439 |
350,072 |
||||
Property, Plant and Equipment |
255,866 |
245,240 |
||||
Less accumulated depreciation |
184,013 |
168,609 |
||||
Total Property Plant and Equipment |
71,853 |
76,631 |
||||
Other Assets |
||||||
Goodwill |
8,586 |
4,155 |
||||
Other |
75,071 |
71,410 |
||||
Total Other Assets |
83,657 |
75,565 |
||||
Total Assets |
$547,949 |
$502,268 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
Current Liabilities |
||||||
Trade accounts payable |
$97,476 |
$75,083 |
||||
Accrued expenses |
61,865 |
39,150 |
||||
Current portion of long-term debt |
12,115 |
10,894 |
||||
Current portion of other postretirement benefits |
2,197 |
2,197 |
||||
Total Current Liabilities |
173,653 |
127,324 |
||||
Long-Term Liabilities, less current portion |
||||||
8.375% Senior Subordinated Notes due 2014 |
183,835 |
183,835 |
||||
Revolving credit and term debt maturing on April 30,2014 |
121,000 |
134,600 |
||||
Other long-term debt |
5,407 |
4,668 |
||||
Deferred tax liability |
7,200 |
7,200 |
||||
Other postretirement benefits and other long-term liabilities |
21,993 |
21,831 |
||||
Total Long-Term Liabilities |
339,435 |
352,134 |
||||
Shareholders' Equity |
34,861 |
22,810 |
||||
Total Liabilities and Shareholders' Equity |
$547,949 |
$502,268 |
||||
BUSINESS SEGMENT INFORMATION (UNAUDITED) |
||||||||||
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES |
||||||||||
(In Thousands) |
||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
NET SALES |
||||||||||
Supply Technologies |
$103,885 |
$82,464 |
$295,308 |
$242,879 |
||||||
Aluminum Products |
35,554 |
31,663 |
109,714 |
75,656 |
||||||
Manufactured Products |
63,547 |
54,470 |
187,968 |
194,717 |
||||||
$202,986 |
$168,597 |
$592,990 |
$513,252 |
|||||||
INCOME (LOSS) BEFORE INCOME TAXES |
||||||||||
Supply Technologies |
$6,428 |
$2,078 |
$16,223 |
$5,509 |
||||||
Aluminum Products |
1,913 |
(1,337) |
6,148 |
(6,793) |
||||||
Manufactured Products |
8,258 |
3,413 |
20,787 |
20,498 |
||||||
16,599 |
4,154 |
43,158 |
19,214 |
|||||||
Corporate expenses |
(3,769) |
(3,196) |
(10,997) |
(9,901) |
||||||
Gain on purchase of 8.375% senior |
||||||||||
subordinated notes |
0 |
2,011 |
0 |
5,107 |
||||||
Gain on acquisition of business |
2,210 |
0 |
2,210 |
0 |
||||||
Asset impairment charge |
(3,539) |
0 |
(3,539) |
0 |
||||||
Interest Expense |
(6,469) |
(5,897) |
(18,072) |
(17,996) |
||||||
$5,032 |
($2,928) |
$12,760 |
($3,576) |
|||||||
SOURCE Park-Ohio Holdings Corp.
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