CLEVELAND, March 8 /PRNewswire-FirstCall/ -- Park-Ohio Holdings Corp. (Nasdaq: PKOH) today announced results for its fourth quarter and year ended December 31, 2009.
FOURTH QUARTER RESULTS
Net sales were $187.8 million for fourth quarter 2009, a reduction of 25% from net sales of $249.6 million for fourth quarter 2008. ParkOhio reported net income of $.2 million, or $.02 per share, in the fourth quarter of 2009, compared to a net loss of $119.9 million, or ($10.96) per share dilutive, for fourth quarter 2008. Included in the 2009 results were impairment and restructuring charges totaling $7.0 million ($.36 per share dilutive) and a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $1.2 million ($.06 per share). Included in the 2008 results were impairment and restructuring charges totaling $108.6 million ($8.49 per share dilutive), a deferred tax valuation reserve of $32.7 million ($2.99 per share dilutive) and a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $6.2 million ($.36 per share). Net income, as adjusted (A), for the fourth quarter of 2009 and 2008 was $2.0 million ($.17 per share dilutive) and $1.7 million ($.16 per share dilutive), respectively.
FULL YEAR RESULTS
Net sales were $701.0 million for 2009, a reduction of 34% from net sales of $1.069 billion for the same period of 2008. ParkOhio reported a net loss of $5.2 million, or ($.47) per share, for the year ended December 31, 2009, compared to a net loss of $119.8 million or ($10.88) per share, in 2008. Included in the 2009 results were impairment and restructuring charges totaling $7.0 million ($.41 per share dilutive), a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $6.3 million ($.37 per share) and a charge to reserve for an account receivable from a customer in bankruptcy of $4.2 million ($.25 per share dilutive). Included in the 2008 results were impairment and restructuring charges totaling $126.6 million ($9.46 per share dilutive), a deferred tax valuation reserve of $32.7 million ($2.97 per share dilutive) and a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $6.2 million or ($.36 per share). Net loss as adjusted (A) for 2009 was ($.7) million, ($.06) per share compared to net income as adjusted (A) for 2008 of $13.7 million, or $1.19 per share dilutive.
The Company also announced today that it has amended its existing credit facility. The amendment was effective March 8, 2010 and along with other changes, extends the term of the facility to June 30, 2013.
Edward F. Crawford, Chairman and Chief Executive Officer, stated, "The amendment and restatement of the credit facility will continue to provide the Company the flexibility to execute its strategy and take advantage of growth opportunities in its businesses. We would like to thank our lending institutions for their continued support and specifically, JPMorgan Chase Bank for its ongoing leadership."
(A) Reconciliation to GAAP:
Quarter ended Year ended
December 31, December 31,
2009 2008 2009 2008
-------- -------- -------- --------
Net (loss) income, as reported $.2 ($119.9) ($5.2) ($119.8)
Income taxes, as reported (2.7) 20.2 (.8) 21.0
-------- -------- -------- --------
Income (loss) before income
taxes, as reported ($2.5) ($99.7) ($6.0) ($98.8)
Restructuring and impairment
charges (1) (2) 7.0 108.6 7.0 126.6
Gains (3) (1.2) (6.2) (6.3) (6.2)
Reserve for a customer in
bankruptcy (4) 0 0 4.2 0
Income taxes, as adjusted (1.3) (1.0) .4 (7.9)
-------- -------- -------- --------
Net (loss) income, as adjusted $2.0 $1.7 ($.7) $13.7
-------- -------- -------- --------
(1) During the fourth quarter of 2009, the Company recorded $7.0 million
of asset impairment charges associated with general weakness in the
economy including the railroad industry ($3.0 million in the
Manufactured Products segment and $4.0 million in the Supply
Technologies segment). The charges were composed of $1.8 million of
inventory impairment included in Cost of Products Sold and $5.2
million for impairment of property and equipment. During the fourth
quarter of 2008, ParkOhio recorded a non-cash goodwill impairment
charge of $95.8 million and restructuring and asset impairment charges
of $13.4 associated with the decision to exit its relationship with
its largest customer along with the general economic downturn. The
charges were composed of $5.0 million of inventory impairment included
in Cost of Products Sold and $8.4 million for impairment of property
and equipment and loss on disposal of a foreign subsidiary and
severance costs. Impairment charges of $.6 million recorded in the
Aluminum Products segment in the third quarter of 2008 were reversed
in the fourth quarter of 2008.
(2) During the third quarter of 2008, the Company recorded $18.1 million
of restructuring and asset impairment charges associated with the
weakness and volatility in the automotive markets, ($13.8 million in
the Aluminum Products segment and $4.3 million in the Manufactured
Products segment). Inventory impairment charges of $.6 million were
included in Cost of Products Sold and $17.5 million were included
in Restructuring and impairment charges.
(3) In 2009, Park-Ohio Holdings Corp. recorded a gain of $6.3 million on
the purchase of $15.15 million principal amount of Park-Ohio
Industries, Inc. 8.375% senior subordinated notes due 2014, of which
$1.2 million was recorded in the fourth quarter. In the fourth
quarter of 2008, Park-Ohio Holdings Corp. recorded a gain of $6.2
million on the purchase of $11.0 million of Park-Ohio Industries, Inc.
8.375% senior subordinated notes due 2014. The notes were not
contributed to Park-Ohio Industries, Inc. but were held by Park-Ohio
Holdings Corp. at December 31, 2008 and subsequently sold to a foreign
subsidiary of Park-Ohio Industries, Inc. in the fourth quarter of
2009.
(4) In the first nine months of 2009, the Company recorded a charge of
$4.2 million to fully reserve for an account receivable from a
customer in bankruptcy.
(5) The Company presents adjusted net income excluding impairment charges
and gains to facilitate comparison between periods.
A conference call reviewing ParkOhio's fourth quarter results will be broadcast live over the Internet on Tuesday, March 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 28 manufacturing sites and 40 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 Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $187,795 $249,579 $701,047 $1,068,757
Cost of products sold 159,798 221,936 597,200 919,297
------- ------- ------- -------
Gross profit 27,997 27,643 103,847 149,460
Selling, general and
administrative expenses 21,249 22,790 87,786 105,546
Goodwill impairment charge 0 95,763 0 95,763
Restructuring and impairment
charges 5,206 7,851 5,206 25,331
Gain on purchase of 8.375%
senior subordinated notes (1,189) (6,232) (6,297) (6,232)
Interest expense 5,193 7,198 23,189 27,869
----- ----- ------ ------
Income (loss) before income
taxes (2,462) (99,727) (6,037) (98,817)
Income taxes (2,667) 20,207 (828) 20,986
------ ------ ---- ------
Net (loss) income $205 ($119,934) ($5,209) ($119,803)
==== ========= ======= =========
Amounts per common share:
Basic $0.02 ($10.96) ($0.47) ($10.88)
Diluted $0.02 ($10.96) ($0.47) ($10.88)
Common shares used in the
computation:
Basic 11,080 10,939 10,968 11,008
Diluted 11,583 10,939 10,968 11,008
Other financial data:
EBITDA, as defined $21,325 $15,455 $57,067 $73,659
======= ======= ======= =======
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 Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $205 ($119,934) ($5,209) ($119,803)
Add back:
Income taxes (benefit) (2,667) 20,207 (828) 20,986
Interest expense 5,193 7,198 23,189 27,869
Depreciation and
amortization 4,761 4,808 18,776 20,782
Restructuring and
Impairment charges 7,003 12,816 7,003 30,875
Goodwill impairment
charges 0 95,763 0 95,763
Gain on the purchase of
8.375% senior subordinated
notes 6,232 (6,232) 6,232 (6,232)
Reserve for customer in
bankruptcy 0 0 4,154 0
Miscellaneous 598 829 3,750 3,419
--- --- ----- -----
EBITDA, as defined $21,325 $15,455 $57,067 $73,659
======= ======= ======= =======
Note B--In 2009, the Company recorded a gain of $6.3 million on the
purchase of $15.15 million principal amount of Park-Ohio Industries, Inc.
8.375% senior subordinated notes due 2014 of which $1.2 million was
recorded in the fourth quarter.
Note C--In the fourth quarter of 2009, the Company recorded $7.0 million
of asset impairment charges associated with general weakness in the economy, including the railroad industry ($3.0 million in the
Manufactured Products segment and $4.0 million in the Supply Technologies
segment). Inventory impairment charges of $1.8 million were included in
Cost of Products Sold and $5.2 million were included in Restructuring and
impairment charges.
Note D--In the first nine months of 2009, the Company recorded a charge of
$4.2 million to fully reserve for an account receivable from a customer in
bankruptcy.
Note E--In the third quarter of 2008, the Company recorded $18.1 million
of restructuring and asset impairment charges associated with the weakness
and volatility in the automotive markets ($13.8 million in the Aluminum
Products segment and $4.3 million in the Manufactured Products segment).
Inventory impairment charges of $.6 million were included in Cost of
Products Sold and $17.5 million were included in Restructuring and
impairment charges.
Note F--In the fourth quarter of 2008, the Company recorded $13.4 million
of restructuring and asset impairment charges at its Supply Technologies
segment associated with the decision to exit its relationship with its
largest customer along with the general economic downturn resulting in
either the closure, downsizing or consolidation of its distribution
network. The charges were composed of $5.0 million of inventory impairment
included in Cost of Products Sold and $8.4 million for asset impairment,
loss on disposal of a foreign subsidiary and severance costs. Impairment
charges of $.6 million recorded in the Aluminum Products segment were
reversed in the fourth quarter.
Note G--In the fourth quarter of 2008, the Company recorded non-cash
goodwill impairment charges of $95.8 million.
Note H--In the fourth quarter of 2008, Park-Ohio Holdings Corp. recorded a
gain of $6.2 million on the purchase of $11.0 million of Park-Ohio
Industries, Inc. 8.375% senior subordinated notes due 2014. The notes were
not contributed to Park-Ohio Industries, Inc. but were held by Park-Ohio
Holdings Corp. at December 31,2008 and sold to a subsidiary of Park-Ohio
Industries, Inc. in the fourth quarter of 2009.
Note I--In the fourth quarter of 2008, the Company recorded a valuation
allowance of $32.7 million for its net deferred tax asset.
CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
December 31, December 31,
2009 2008
(Unaudited) (Audited)
----------- -----------
(In Thousands)
ASSETS
Current Assets
Cash and cash equivalents $23,098 $17,825
Accounts receivable, net 104,643 165,779
Inventories 182,116 228,817
Deferred tax assets 8,104 9,446
Unbilled contract revenue 19,411 25,602
Other current assets 12,700 12,818
------ ------
Total Current Assets 350,072 460,287
Property, Plant and Equipment 245,240 248,474
Less accumulated depreciation 168,609 157,832
------- -------
Total Property Plant and Equipment 76,631 90,642
Other Assets
Goodwill 4,155 4,109
Other 71,410 64,182
------ ------
Total Other Assets 75,565 68,291
------ ------
Total Assets $502,268 $619,220
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $75,083 $121,995
Accrued expenses 39,150 74,351
Current portion of long-term debt 4,294 8,778
Current portion of other postretirement
benefits 2,197 2,290
----- -----
Total Current Liabilities 120,724 207,414
Long-Term Liabilities, less current portion
8.375% Senior Subordinated Notes due 2014 183,835 198,985
Revolving credit maturing on December 31, 2010 141,200 164,600
Other long-term debt 4,668 2,283
Deferred tax liability 7,200 9,090
Other postretirement benefits and other long-
term liabilities 21,831 24,093
------ ------
Total Long-Term Liabilities 358,734 399,051
Shareholders' Equity 22,810 12,755
------ ------
Total Liabilities and Shareholders' Equity $502,268 $619,220
======== ========
BUSINESS SEGMENT INFORMATION (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
---- ---- ---- ----
NET SALES
Supply Technologies $85,926 $121,818 $328,805 $521,270
Aluminum Products 35,732 35,965 111,388 156,269
Manufactured Products 66,137 91,796 260,854 391,218
------ ------ ------- -------
$187,795 $249,579 $701,047 $1,068,757
======== ======== ======== ==========
INCOME BEFORE INCOME TAXES
Supply Technologies $816 ($91,435) $6,325 ($74,884)
Aluminum Products 1,638 (17,368) (5,155) (36,042)
Manufactured Products 2,974 12,831 23,472 50,534
----- ------ ------ ------
5,428 (95,972) 24,642 (60,392)
Corporate and Other Costs (2,697) 3,442 (7,490) (10,556)
Interest Expense (5,193) (7,197) (23,189) (27,869)
------ ------ ------- -------
($2,462) ($99,727) ($6,037) ($98,817)
======= ======== ======= ========
INCOME BEFORE INCOME TAXES, EXCLUDING CHARGES AND GAINS
Supply Technologies $4,819 $1,242 $10,328 $17,793
Aluminum Products 1,638 (1,467) (1,001) (6,373)
Manufactured Products 5,974 12,831 26,472 54,825
----- ------ ------ ------
12,431 12,606 35,799 66,245
Corporate and Other
Costs (3,887) (2,790) (13,787) (16,788)
Interest Expense (5,193) (7,197) (23,189) (27,869)
------ ------ ------- -------
$3,351 $2,619 ($1,177) $21,588
====== ====== ======= =======
Note A--In 2009, the Company recorded a gain of $6.3 million on the
purchase of $15.15 million principal amount of Park-Ohio Industries, Inc.
8.375% senior subordinated notes due 2014 of which $1.2 million was
recorded in the fourth quarter.
Note B--In the fourth quarter of 2009, the Company recorded $7.0 million
of asset impairment charges associated with general weakness in the
economy including the railroad industry ($3.0 million in the Manufactured
Products segment and $4.0 million in the Supply Technologies segment).
Inventory impairment charges of $1.8 million were included in Cost of
Products Sold and $5.2 million were included in Restructuring and
impairment charges.
Note C--In the first nine months of 2009, the Company recorded a charge of
$4.2 million to fully reserve for an account receivable from a customer in
bankruptcy.
Note D--During the fourth quarter of 2008, the Company recorded non-cash
goodwill impairment charges of $95,763. Below is a summary of these
charges by segment.
Supply Technologies $79,248
Aluminum Products 16,515
-------
$95,763
=======
Note E--In the fourth quarter of 2008, the Company recorded in the Supply
Technologies segment $13,430 of restructuring and asset impairment
charges associated with the decision to exit its relationship with its
largest customer along with the general economic downturn resulting in
either the closure, downsizing or consolidation of eight facilities in its
distribution network. Impairment charges of $614 recorded in the Aluminum
Products segment in the third quarter were reversed in the fourth quarter.
Note F--In the fourth quarter of 2008, the Company recorded a gain of
$6,232 on the purchase of $11,015 of Park-Ohio Industries, Inc. 8.375%
senior subordinated notes due 2014. The gain is reflected in Corporate
and other costs.
Note G--In the third quarter of 2008, the Company recorded $18,059 of
restructuring and asset impairment charges associated with the weakness
and volatility in the automotive markets ($13,768 in the Aluminum Products
segment and $4,291 in the Manufactured Products segment). Inventory
impairment charges of $579 were included in Cost of Products Sold and
$17,480 were included in Restructuring and impairment charges.
SOURCE Park-Ohio Holdings Corp.
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