EX-99.1 2 l34386aexv99w1.htm EX-99.1 EX-99.1
EXHIBIT 99.1
         
FOR IMMEDIATE RELEASE
  CONTACT:   EDWARD F. CRAWFORD
 
      PARK-OHIO HOLDINGS CORP.
 
      (440) 947-2000
ParkOhio Announces Third Quarter Results
     CLEVELAND, OHIO, November 3, 2008 — Park-Ohio Holdings Corp. (NASDAQ:PKOH) today announced results for its third quarter ended September 30, 2008.
THIRD QUARTER RESULTS
     Net sales were $266.1 million for third quarter 2008, essentially unchanged from net sales of $269.1 million for third quarter 2007. ParkOhio reported a net loss of ($9.1) million or ($.82) per share dilutive for the third quarter of 2008 compared to net income of $6.2 million or $.53 per share dilutive in the third quarter of 2007. Net income, as adjusted (a) for the third quarter of 2008 was $2.7 million or $.24 per share dilutive, compared to net income of $6.2 million or $.53 per share dilutive for third quarter 2007.
NINE MONTHS RESULTS
     Net sales were $819.2 million for the first nine months of 2008, essentially unchanged from net sales of $823.6 million for the same period of 2007. ParkOhio reported net income of $.1 million or $.01 per share dilutive for the nine months ended September 30, 2008, compared to net income of $17.3 million or $1.48 per share dilutive in the same period of 2007. Net income, as adjusted(a) was $11.8 million or $1.02 per share dilutive for the first nine months of 2008, versus $17.3 million or $1.48 per share dilutive in the same period of 2007.
     Edward F. Crawford, Chairman and Chief Executive Officer, stated “We are all concerned about the health and long term viability of the domestic automobile business. Although the current production atmosphere is affecting the overall performance of ParkOhio, we believe we are approaching the nadir in the auto industry.
     We are very pleased to have a balanced portfolio of other companies representing over 80% of our sales, performing very well, and they have positioned ParkOhio to respond to the current and future economic fluctuations.”
                                 
(A) Reconciliation to GAAP (in millions):   Quarter ended   Nine months ended
    September 30,   September 30,
  2008   2007   2008   2007
Net income (loss), as reported
   $ (9.1 )   $ 6.2     $ .1     $ 17.3  
Income taxes (benefit), as reported
   (4.6 )   3.8     .8     9.4  
 
                        
Income (loss) before income taxes, as reported
   (13.7 )   10.0     .9     26.7  
Impairment charges (1)
     18.1       0       18.1       0  
Income taxes, as adjusted
     (1.7 )     (3.8 )     (7.2 )     (9.4 )
 
                        
Net income, as adjusted
   $ 2.7     $ 6.2     $ 11.8     $ 17.3  
 
                        
 
(1)   During the third quarter of 2008, ParkOhio recorded asset impairment charges associated with the recent volume declines and volatility in the automotive markets. The charges were composed of $.6 million of inventory impairment included in Cost of Products Sold and $17.5 million for impairment of property and equipment and other long-term assets.
 
(2)   The Company presents net income as adjusted to exclude impairment charges and their related income tax effect to facilitate comparison between periods.
-more-

 

 

     A conference call reviewing ParkOhio’s third quarter results will be broadcast live over the Internet on Tuesday, November 4, commencing at 10:00 am Eastern Time. Simply log on to http://www.pkoh.com.
     ParkOhio is a leading provider of supply chain logistics services and a manufacturer of highly engineered products. Headquartered in Cleveland, Ohio, the Company operates 24 manufacturing sites and 54 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, including as a result of the current global financial crisis; 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 OPERATIONS (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
Net sales
   $ 266,148     $ 269,104     $ 819,178     $ 823,626  
Cost of products sold (Note B)
     226,759       226,880       697,361       700,413  
 
                        
Gross profit
     39,389       42,224       121,817       123,213  
Selling, general and administrative expenses
     28,799       24,187       82,755       74,537  
Impairment charges (Note B)
     17,480       0       17,480       0  
Gain on sale of assets held for sale
     0       0       0       (2,299 )
 
                        
Operating income (loss)
     (6,890 )     18,037       21,582       50,975  
Interest expense
     6,775       7,993       20,672       24,286  
 
                        
 
                                
Income (loss) before income taxes
     (13,665 )     10,044       910       26,689  
Income taxes (benefit)
     (4,597 )     3,816       779       9,408  
 
                        
Net income (loss)
   $ (9,068 )   $ 6,228     $ 131     $ 17,281  
 
                        
 
                                
Amounts per common share:
                                
Basic
   $ (0.82 )   $ 0.56     $ 0.01     $ 1.56  
Diluted
   $ (0.82 )   $ 0.53     $ 0.01     $ 1.48  
 
                                
Common shares used in the computation:
                                
Basic
     11,006       11,127       11,081       11,079  
Diluted
     11,006       11,707       11,605       11,641  
 
                                
Other financial data:
                                
EBITDA, as defined (Note A)
   $ 17,618     $ 23,821     $ 58,205     $ 66,178  
 
                        
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,  
    2008     2007     2008     2007  
Net income (loss)
   $ (9,068 )   $ 6,228     $ 131     $ 17,281  
Add back:
                                
 
                                
Income taxes (benefit)
     (4,597 )     3,816       779       9,408  
Interest expense
     6,775       7,993       20,672       24,286  
Depreciation and amortization
     5,586       5,254       15,974       15,782  
Impairment charges (Note B)
     18,059       0       18,059       0  
Gain on the sale of assets held for sale
     0       0       0       (2,299 )
Miscellaneous
     863       530       2,590       1,720  
 
                        
EBITDA, as defined
   $ 17,618     $ 23,821     $ 58,205     $ 66,178  
 
                        
Note B—In the third quarter of 2008, the Company recorded $18.1 million of impairment charges associated with the recent volume declines 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 impairment charges.

 

CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
                 
    September 30,     December 31,  
    2008     2007  
    (Unaudited)     (Audited)  
    (In Thousands)  
ASSETS
                
 
                
Current Assets
                
Cash and cash equivalents
   $ 28,992     $ 14,512  
Accounts receivable, net
     185,697       172,357  
Inventories
     236,581       215,409  
Deferred tax assets
     21,897       21,897  
Unbilled contract revenue
     21,014       24,817  
Other current assets
     13,593       15,232  
 
            
 
                
Total Current Assets
     507,774       464,224  
 
                
Property, Plant and Equipment
     250,679       266,222  
Less accumulated depreciation
     156,285       160,665  
 
            
Total Property Plant and Equipment
     94,394       105,557  
 
                
Other Assets
                
Goodwill
     100,683       100,997  
Net assets held for sale
     0       3,330  
Other
     104,272       95,081  
 
            
Total Other Assets
     204,955       199,408  
 
            
Total Assets
   $ 807,123     $ 769,189  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current Liabilities
                
Trade accounts payable
   $ 136,045     $ 121,875  
Accrued expenses
     75,046       67,007  
Current portion of long-term debt
     8,063       2,362  
Current portion of other postretirement benefits
     2,041       2,041  
 
            
Total Current Liabilities
     221,195       193,285  
 
                
Long-Term Liabilities, less current portion
8.375% Senior Subordinated Notes due 2014
     210,000       210,000  
Revolving credit maturing on December 31, 2010
     160,200       145,400  
Other long-term debt
     2,114       2,287  
Deferred tax liability
     22,722       22,722  
Other postretirement benefits and other long-term liabilities
     23,770       24,017  
 
            
Total Long-Term Liabilities
     418,806       404,426  
 
                
Shareholders’ Equity
     167,122       171,478  
 
            
Total Liabilities and Shareholders’ Equity
   $ 807,123     $ 769,189  
 
            

 

BUSINESS SEGMENT INFORMATION (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2008     2007     2008     2007  
NET SALES
                                
 
                                
Supply Technologies
   $ 131,668     $ 134,066     $ 399,452     $ 403,956  
Aluminum Products
     35,784       41,188       120,304       131,838  
Manufactured Products
     98,696       93,850       299,422       287,832  
 
                        
 
   $ 266,148     $ 269,104     $ 819,178     $ 823,626  
 
                        
 
                                
INCOME (LOSS) BEFORE INCOME TAXES (Note A)
                                
 
                                
Supply Technologies
   $ 5,259     $ 8,288     $ 16,551     $ 20,420  
Aluminum Products
     (17,557 )     1,131       (18,674 )     3,285  
Manufactured Products
     10,062       11,619       37,703       35,292  
 
                        
 
     (2,236 )     21,038       35,580       58,997  
Corporate and Other Costs
     (4,654 )     (3,001 )     (13,998 )     (8,022 )
Interest Expense
     (6,775 )     (7,993 )     (20,672 )     (24,286 )
 
                        
 
   $ (13,665 )   $ 10,044     $ 910     $ 26,689  
 
                        
Note A — During the third quarter of 2008, the Company recorded $18,059 of impairment charges associated with the recent volume declines and volatility in the automotive markets. Below is a summary of these charges by segment.
                         
            Cost of        
    Asset     Products        
    Impairment     Sold     Total  
Aluminum Products
   $ 13,189     $ 579     $ 13,768  
Manufactured Products
     4,291       0       4,291  
 
                  
 
   $ 17,480     $ 579     $ 18,059