ParkOhio Announces 2010 Results

Mar 07, 2011, 16:52 ET from Park-Ohio Holdings Corp.

CLEVELAND, March 7, 2011 /PRNewswire/ -- Park-Ohio Holdings Corp. (Nasdaq: PKOH) today announced results for its fourth quarter and year ended December 31, 2010.

FOURTH QUARTER RESULTS

Net sales were $220.5 million for fourth quarter 2010, an increase of 17% from net sales of $187.8 million for fourth quarter 2009.  Net income for the fourth quarter of 2010 was $3.5 million, or $.30 per share dilutive compared to net income of $.2 million, or $.02 per share dilutive, for fourth quarter 2009. Included in the 2009 results were a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014 of $1.2 million and impairment and restructuring charges of $7.0 million.

FULL YEAR RESULTS

Net sales were $813.5 million for 2010, an increase of 16% from net sales of $701.0 million for the same period of 2009.  Net income was $15.2 million, or $1.29 per share dilutive, versus net loss of $5.2 million, or $(.47) 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 $6.3 million and a charge to reserve for an account receivable from a customer in bankruptcy of $4.2 million and impairment and restructuring charges of $7.0 million.  

Edward F. Crawford, Chairman and Chief Executive Officer, stated, “Our success in 2010 indicates we have the company well prepared for the future.  All three of our operating segments have increased their competitive edge, and we look forward to a bright future.”

A conference call reviewing ParkOhio's fourth quarter results will be broadcast live over the Internet on Tuesday, March 8, 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 31 manufacturing sites and 49 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,

2010

2009

2010

2009

Net sales

$220,532

$187,795

$813,522

$701,047

Cost of products sold

184,051

159,798

679,425

597,200

  Gross profit

36,481

27,997

134,097

103,847

Selling, general and administrative expenses

26,300

21,249

91,755

87,786

Asset impairment charge

0

5,206

3,539

5,206

  Operating income

10,181

1,542

38,803

10,855

Gain on purchase of 8.375% senior subordinated notes

0

(1,189)

0

(6,297)

Gain on acquisition of business

0

0

(2,210)

0

Interest expense

5,720

5,193

23,792

23,189

  Income (loss) before income taxes

4,461

(2,462)

17,221

(6,037)

Income taxes

939

(2,667)

2,034

(828)

  Net income (loss)

$3,522

$205

$15,187

($5,209)

Amounts per common share:

  Basic

$0.31

$0.02

$1.34

($0.47)

  Diluted

$0.30

$0.02

$1.29

($0.47)

Common shares used in the computation:

  Basic

11,408

11,080

11,314

10,968

  Diluted

11,917

11,583

11,807

10,968

Other financial data:

  EBITDA, as defined

$15,668

$21,325

$63,987

$57,067

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,

2010

2009

2010

2009

Net income (loss)

$3,522

$205

$15,187

($5,209)

Add back:

  Income taxes

939

(2,667)

2,034

(828)

  Deferred tax impact netted in acquisition gain

0

0

1,354

0

  Customer relationship asset upon acquisition

0

0

(990)

0

  Interest expense

5,720

5,193

23,792

23,189

  Depreciation and amortization

5,023

4,761

17,122

18,776

  Gain on the purchase of 8.375% senior subordinated notes

0

6,232

0

6,232

  Asset  impairment charge

0

7,003

3,539

7,003

  Reserve for customer in bankruptcy

0

0

0

4,154

  Miscellaneous

464

598

1,949

3,750

EBITDA, as defined

$15,668

$21,325

$63,987

$57,067

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 asset impairment charges associated with weakness in the railroad industry

($3.0 million in the Manufactured Products segment) along with a decision to attempt to sell two business units ($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 reserve for an account receivable from a customer in  

bankruptcy.

Note E--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

December 31,

December 31,

2010

2009

(Unaudited)

(Audited)

(In Thousands)

ASSETS

Current Assets

  Cash and cash equivalents

$35,311

$23,098

  Accounts receivable, net

126,409

104,643

  Inventories

192,542

182,116

  Deferred tax assets

10,496

8,104

  Unbilled contract revenue

12,751

19,411

  Other current assets

12,800

12,700

Total Current Assets

390,309

350,072

Property, Plant and Equipment

253,077

245,240

Less accumulated depreciation

184,294

168,609

Total Property Plant and Equipment

68,783

76,631

Other Assets

  Goodwill

9,100

4,155

  Other

84,340

71,410

Total Other Assets

93,440

75,565

Total Assets

$552,532

$502,268

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

  Trade accounts payable

$95,695

$75,083

  Accrued expenses

59,487

39,150

  Current portion of long-term debt

13,756

10,894

  Current portion of other postretirement benefits

2,178

2,197

Total Current Liabilities

171,116

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

113,300

134,600

  Other long-term debt

5,322

4,668

  Deferred tax liability

9,721

7,200

  Other postretirement benefits and other long-term liabilities

22,863

21,831

Total Long-Term Liabilities

335,041

352,134

Shareholders' Equity

46,375

22,810

Total Liabilities and Shareholders' Equity

$552,532

$502,268

BUSINESS SEGMENT INFORMATION (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands)

Three Months Ended December 31,

Year  Ended December 31,

2010

2009

2010

2009

NET SALES

Supply Technologies

$106,861

$85,926

$402,169

$328,805

Aluminum Products

33,958

35,732

143,672

111,388

Manufactured Products

79,713

66,137

267,681

260,854

$220,532

$187,795

$813,522

$701,047

INCOME (LOSS) BEFORE INCOME TAXES

Supply Technologies

$5,993

$816

$22,216

$8,531

Aluminum Products

434

1,638

6,582

(5,155)

Manufactured Products

7,952

2,974

28,739

26,472

14,379

5,428

57,537

29,848

Corporate expenses

(4,199)

(3,887)

(15,195)

(13,787)

Gain on purchase of 8.375% senior

   subordinated notes

0

1,190

0

6,297

Gain on acquisition of business

0

0

2,210

0

Asset impairment charge

0

0

(3,539)

(5,206)

Interest Expense

(5,719)

(5,193)

(23,792)

(23,189)

$4,461

($2,462)

$17,221

($6,037)

SOURCE Park-Ohio Holdings Corp.



RELATED LINKS

http://www.pkoh.com