UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 5, 2012
Park-Ohio Holdings Corp.
(Exact name of registrant as specified in its charter)
Ohio | 000-03134 | 34-1867219 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File No.) |
(I.R.S. Employer Identification Number) |
6065 Parkland Blvd.
Cleveland, OH 44124
(Address of principal executive offices)
(440) 947-2000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On March 5, 2012, the Company issued a press release announcing its 2011 year-end results. The press release is attached hereto as Exhibit 99.1.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit |
Description | |
99.1 | Park-Ohio Holdings Corp. Press Release, dated March 5, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Park-Ohio Holdings Corp. (Registrant) | ||||||
Date: March 5, 2012 | By: | /s/ Jeffrey L. Rutherford | ||||
Jeffrey L. Rutherford | ||||||
Vice President and Chief Financial Officer |
Exhibit Index
Exhibit |
Description | |
99.1 | Park-Ohio Holdings Corp. Press Release, dated March 5, 2012 |
EXHIBIT 99.1
FOR IMMEDIATE RELEASE | CONTACT: | EDWARD F. CRAWFORD | ||
PARK-OHIO HOLDINGS CORP. | ||||
(440) 947-2000 |
ParkOhio Announces Strong 2011 Results
| Sales up 19% |
| Net Income up 93% |
| EPS up 90% |
CLEVELAND, OHIO, March 5, 2012 Park-Ohio Holdings Corp. (NASDAQ:PKOH) today announced results for its fourth quarter and year ended December 31, 2011.
FOURTH QUARTER RESULTS
Net sales were $234.6 million for fourth quarter 2011, an increase of 6% from net sales of $220.5 million for fourth quarter 2010. ParkOhio reported net income on a GAAP basis of $18.9 million or $1.58 per share dilutive for 2011 compared to $3.5 million or $.30 per share dilutive in 2010. Net income in 2011 increased by $11.3 million due to the reversal of the Companys valuation allowance against its U.S. net deferred tax assets compared to a full valuation allowance in 2010. Net income, before the reversal of the Companys valuation allowance against its U.S. net deferred tax assets was $7.7 million or $.64 per share dilutive compared to $.30 per share dilutive in 2010.
FULL YEAR RESULTS
Net sales were $966.6 million for 2011, an increase of 19% from net sales of $813.5 million for 2010. Net income on a GAAP basis for 2011 was $29.4 million or $2.45 dilutive compared to $15.2 million or $1.29 per share dilutive for 2010. Net income in 2011 increased by $11.3 million related to the reversal of the Companys valuation allowance against its U.S. net deferred tax assets compared to a full valuation allowance in 2010. Also included were a restructuring and asset impairment charge of $5.4 million, refinancing charges of $7.3 million and a tax provision associated with the refinancing of $2.0 million. 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.
Net income, before 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 share dilutive. Net income, before the asset impairment charges and gain on acquisition in 2010, was $15.2 million or $1.28 per share dilutive.
Edward F. Crawford, Chairman and Chief Executive Officer, stated, We would like to thank all the stakeholders for their continuing support and we look forward to the future.
A conference call reviewing ParkOhios fourth quarter results will be broadcast live over the Internet on Tuesday, March 6, 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 31 manufacturing sites and 44 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.
- more
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 Companys customers and suppliers, including the impact of any bankruptcies; the Companys 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 Companys 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 INCOME (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 234,593 | $ | 220,532 | $ | 966,573 | $ | 813,522 | ||||||||
Cost of products sold |
196,227 | 184,051 | 799,248 | 679,425 | ||||||||||||
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Gross profit |
38,366 | 36,481 | 167,325 | 134,097 | ||||||||||||
Selling, general and administrative expenses |
24,849 | 26,300 | 105,582 | 91,755 | ||||||||||||
Restructuring and asset impairment charge |
0 | 0 | 5,359 | 3,539 | ||||||||||||
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Operating income |
13,517 | 10,181 | 56,384 | 38,803 | ||||||||||||
Gain on acquisition of business |
0 | 0 | 0 | (2,210 | ) | |||||||||||
Interest expense |
5,845 | 5,720 | 24,817 | 23,792 | ||||||||||||
Debt extinguishment costs |
0 | 0 | 7,335 | 0 | ||||||||||||
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Income before income taxes |
7,672 | 4,461 | 24,232 | 17,221 | ||||||||||||
Income taxes |
(11,271 | ) | 939 | (5,203 | ) | 2,034 | ||||||||||
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Net income |
$ | 18,943 | $ | 3,522 | $ | 29,435 | $ | 15,187 | ||||||||
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Amounts per common share: |
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Basic |
$ | 1.62 | $ | 0.31 | $ | 2.54 | $ | 1.34 | ||||||||
Diluted |
$ | 1.58 | $ | 0.30 | $ | 2.45 | $ | 1.29 | ||||||||
Common shares used in the computation: |
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Basic |
11,711 | 11,408 | 11,580 | 11,314 | ||||||||||||
Diluted |
11,998 | 11,917 | 11,999 | 11,807 | ||||||||||||
Other financial data: |
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EBITDA, as defined |
$ | 18,327 | $ | 15,668 | $ | 80,133 | $ | 63,987 | ||||||||
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Note AEBITDA, as defined, reflects earnings before interest, income taxes, and excludes depreciation, amortization, certain non-cash charges and corporate-level expenses as defined in the Companys 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 Companys satisfaction of its Debt Service Ratio covenant in its Revolving Credit Agreement and because EBITDA is a measure used under the Companys 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, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 18,943 | $ | 3,522 | $ | 29,435 | $ | 15,187 | ||||||||
Add back: |
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Income taxes |
(11,271 | ) | 939 | (5,203 | ) | 2,034 | ||||||||||
Deferred tax impact netted in acquisition gain |
0 | 0 | 0 | 1,354 | ||||||||||||
Customer relationship asset upon acquisition |
0 | 0 | 0 | (990 | ) | |||||||||||
Interest expense |
5,845 | 5,720 | 24,817 | 23,792 | ||||||||||||
Depreciation and amortization |
4,195 | 5,023 | 16,028 | 17,122 | ||||||||||||
Restructuring and asset impairment charge |
0 | 0 | 5,359 | 3,539 | ||||||||||||
Debt extinguishment costs |
0 | 0 | 7,335 | 0 | ||||||||||||
Miscellaneous |
615 | 464 | 2,362 | 1,949 | ||||||||||||
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EBITDA, as defined |
$ | 18,327 | $ | 15,668 | $ | 80,133 | $ | 63,987 | ||||||||
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Note BOn April 7, 2011, the Company completed the sale of $250.0 million in aggregate principal amount of 8.125% Senior Notes due 2021 (the Notes). The Notes bear an interest rate of 8.125% per annum and will be payable semi-annually in arrears on April 1 and October 1 of each year commencing on October 1, 2011. The notes mature on April 1,2021. The Company also entered into a fourth amended and restated credit agreement (the Amended Credit Agreement). The Amended Credit Agreement, among other things, provides an increased borrowing facility up to $200.0 million, extends the maturity date of the borrowings under the revolving credit facility to April 7,2016 and amends fee and pricing terms. Furthermore the Company has the option to increase the availability under the revolving credit facility by $50.0 million. The Company also purchased all of its outstanding 8.375% senior subordinated notes due 2014 in the aggregate principal amount of $183.8 million that were not held by its affiliates, repaid all of the term loan A and term loan B outstanding under its then existing credit facility and retired the 8.375% senior subordinated notes due 2014 in the aggregate principal amount of $26.2 million that were held by an affiliate. The Company incurred debt extinguishment costs related primarily to premiums and other transaction costs associated with the tender and early redemption and wrote off deferred financing costs associated with the 8.375% Senior Subordinated Notes totaling $7.3 million ($.62 per share on a diluted basis) and recorded a provision for foreign income taxes of $2.1 million ($.18 per share on a diluted basis) resulting from the retirement of $26.2 million that were held by an affiliate.
Note CThe following table reconciles net income to net income, adjusted to exclude refinancing charges and an associated income tax provision, restructuring and asset impairment charges and gain on acquisition of business and an associated income tax provision. The Company presents net income adjusted for these items, to provide an indication of the Companys core operating performance and facilitate a comparison between the 2010 and 2011 periods:
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income, as reported |
$ | 18,943 | $ | 3,522 | $ | 29,435 | $ | 15,187 | ||||||||
Full reversal of the deferred tax asset valuation allowance |
(11,271 | ) | 0 | (11,271 | ) | 0 | ||||||||||
Refinancing charges |
0 | 0 | 7,335 | 0 | ||||||||||||
Provision for income tax associated with the refinancing |
0 | 0 | 2,100 | 0 | ||||||||||||
Gain on acquisition of business |
0 | 0 | 0 | (2,210 | ) | |||||||||||
Provision for income tax associated with the gain on acquisition of business |
0 | 0 | 0 | (1,354 | ) | |||||||||||
Restructuring and asset impairment charges |
0 | 0 | 5,359 | 3,539 | ||||||||||||
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Net income, as adjusted |
$ | 7,672 | $ | 3,522 | $ | 32,958 | $ | 15,162 | ||||||||
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Note DIn the third quarter of 2011, the Company recorded a $5.4 million restructuring and asset impairment charge relating to the write down of underperforming assets in its rubber products unit. 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 the purchased net assets over the purchase price and a $3.5 million asset impairment charge relating to the write down of an investment.
Note EIn the fourth quarter of 2011, the Company reversed its U.S. deferred tax asset valuation allowance of approximately $11.3 million.
CONDENSED CONSOLIDATED BALANCE SHEETS
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | (Audited) | |||||||
(In Thousands) | ||||||||
ASSETS |
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Current Assets |
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Cash and cash equivalents |
$ | 78,001 | $ | 35,311 | ||||
Accounts receivable, net |
139,941 | 126,409 | ||||||
Inventories |
202,039 | 192,542 | ||||||
Deferred tax assets |
20,561 | 10,496 | ||||||
Unbilled contract revenue |
18,778 | 12,751 | ||||||
Other current assets |
8,790 | 12,800 | ||||||
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Total Current Assets |
468,110 | 390,309 | ||||||
Property, Plant and Equipment |
259,975 | 253,077 | ||||||
Less accumulated depreciation |
198,165 | 184,294 | ||||||
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Total Property Plant and Equipment |
61,810 | 68,783 | ||||||
Goodwill |
9,463 | 9,100 | ||||||
Other |
74,557 | 84,340 | ||||||
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Total Other Assets |
84,020 | 93,440 | ||||||
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Total Assets |
$ | 613,940 | $ | 552,532 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current Liabilities |
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Trade accounts payable |
$ | 99,588 | $ | 95,695 | ||||
Accrued expenses |
73,651 | 59,487 | ||||||
Current portion of long-term debt |
1,415 | 13,756 | ||||||
Current portion of other postretirement benefits |
2,002 | 2,178 | ||||||
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Total Current Liabilities |
176,656 | 171,116 | ||||||
Long-Term Liabilities, less current portion |
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Senior Notes |
250,000 | 183,835 | ||||||
Credit facility |
93,000 | 113,300 | ||||||
Other long-term debt |
3,165 | 5,322 | ||||||
Deferred tax liability |
1,392 | 9,721 | ||||||
Other postretirement benefits and other long-term liabilities |
24,285 | 22,863 | ||||||
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Total Long-Term Liabilities |
371,842 | 335,041 | ||||||
Shareholders Equity |
65,442 | 46,375 | ||||||
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Total Liabilities and Shareholders Equity |
$ | 613,940 | $ | 552,532 | ||||
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BUSINESS SEGMENT INFORMATION (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
NET SALES |
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Supply Technologies |
$ | 119,391 | $ | 106,861 | $ | 492,974 | $ | 402,169 | ||||||||
Aluminum Products |
24,292 | 33,958 | 127,044 | 143,672 | ||||||||||||
Manufactured Products |
90,910 | 79,713 | 346,555 | 267,681 | ||||||||||||
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$ | 234,593 | $ | 220,532 | $ | 966,573 | $ | 813,522 | |||||||||
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INCOME BEFORE INCOME TAXES |
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Supply Technologies |
$ | 6,968 | $ | 5,993 | $ | 32,565 | $ | 22,216 | ||||||||
Aluminum Products |
(2,895 | ) | 434 | 1,781 | 6,582 | |||||||||||
Manufactured Products |
11,954 | 7,952 | 43,671 | 28,739 | ||||||||||||
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16,027 | 14,379 | 78,017 | 57,537 | |||||||||||||
Corporate expenses |
(2,510 | ) | (4,198 | ) | (16,274 | ) | (15,195 | ) | ||||||||
Gain on acquisition of business |
0 | 0 | 0 | 2,210 | ||||||||||||
Asset impairment charge |
0 | 0 | (5,359 | ) | (3,539 | ) | ||||||||||
Interest Expense |
(5,845 | ) | (5,720 | ) | (24,817 | ) | (23,792 | ) | ||||||||
Debt extinguishment costs |
0 | 0 | (7,335 | ) | 0 | |||||||||||
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$ | 7,672 | $ | 4,461 | $ | 24,232 | $ | 17,221 | |||||||||
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