ParkOhio(PKOH) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements Park-Ohio's financial statements for Q2 and H1 2025 show decreased net sales and net income, increased assets and debt, and negative operating cash flow Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $873.8 | $836.0 | | Total assets | $1,421.7 | $1,365.1 | | Total current liabilities | $336.2 | $361.1 | | Long-term debt | $656.7 | $618.3 | | Total liabilities | $1,045.4 | $1,028.0 | | Total equity | $376.3 | $337.1 | Condensed Consolidated Statements of Income Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $400.1 | $432.6 | $805.5 | $850.2 | | Operating income | $20.1 | $24.6 | $39.0 | $48.6 | | Net income attributable to Park-Ohio | $9.2 | $11.9 | $17.5 | $21.5 | | Diluted EPS (Total) | $0.66 | $0.92 | $1.26 | $1.68 | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23.7) | $(0.4) | | Net cash used in investing activities | $(16.9) | $(24.2) | | Net cash provided by financing activities | $31.5 | $35.3 | | (Decrease) increase in cash | $(7.5) | $5.1 | Notes to Condensed Consolidated Financial Statements (Unaudited) Notes detail accounting policies, segment revenue, debt, and subsequent events including new senior secured notes and credit agreement amendment Revenue by Product Line (in millions) | Product Line Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Supply Technologies | $187.1 | $202.6 | $374.9 | $399.5 | | Assembly Components | $95.1 | $103.1 | $192.0 | $210.3 | | Engineered Products | $117.9 | $126.9 | $238.6 | $240.4 | | Total revenues | $400.1 | $432.6 | $805.5 | $850.2 | Debt Composition (as of June 30, 2025, in millions) | Debt Instrument | Carrying Value | | :--- | :--- | | Senior Notes | $350.0 | | Revolving credit facility | $287.5 | | Finance Leases | $15.1 | | Other | $14.4 | | Total debt | $667.0 | - On July 31, 2025, the company issued $350.0 million in new 8.50% senior secured notes due 2030 to redeem existing 6.625% Senior Notes due 2027[76][58] - In July 2025, the Credit Agreement was amended to extend its maturity date to the fifth anniversary from the amendment's closing[77][88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025 net sales decline to lower demand, with operating income decreasing, and liquidity at $189.4 million Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $400.1 | $432.6 | $(32.5) | (7.5)% | | Operating income | $20.1 | $24.6 | $(4.5) | (18.3)% | | Income from continuing operations | $8.9 | $11.4 | $(2.5) | (21.9)% | H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 | H1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $805.5 | $850.2 | $(44.7) | (5.3)% | | Operating income | $39.0 | $48.6 | $(9.6) | (19.8)% | | Income from continuing operations | $16.7 | $21.5 | $(4.8) | (22.3)% | - Net sales decreased in Q2 and H1 2025 primarily due to lower customer demand across all business segments, notably in power sports, heavy-duty truck, and bus markets[90][99][109] - As of June 30, 2025, total liquidity was $189.4 million, comprising $45.6 million in cash and $143.8 million in unused borrowing availability[130] Segment Results All three operating segments experienced year-over-year sales declines in Q2 and H1 2025 due to reduced demand and customer launch delays Supply Technologies Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $187.1 | $202.6 | $374.9 | $399.5 | | Segment operating income | $16.3 | $19.0 | $34.1 | $38.5 | | Operating income margin | 8.7% | 9.4% | 9.1% | 9.6% | Assembly Components Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $95.1 | $103.1 | $192.0 | $210.3 | | Segment operating income | $5.6 | $6.9 | $10.9 | $15.5 | | Operating income margin | 5.9% | 6.7% | 5.7% | 7.4% | Engineered Products Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $117.9 | $126.9 | $238.6 | $240.4 | | Segment operating income | $6.0 | $6.3 | $9.8 | $9.8 | | Operating income margin | 5.1% | 5.0% | 4.1% | 4.1% | Item 3. Quantitative and Qualitative Disclosure About Market Risk Market risks include interest rates, foreign currency, and commodity prices; a 100-basis-point rate increase would raise H1 2025 interest expense by $1.4 million - The company faces interest rate risk on its floating-rate revolving credit facility; a 100-basis-point increase would raise H1 2025 interest expense by approximately $1.4 million[146] - Foreign currency translation risks arise from foreign subsidiaries operating in local currencies, with fluctuations recorded in Accumulated Other Comprehensive Loss[147] - Major commodity price exposures are metal and rubber compounds; the company utilized foreign currency hedges in 2025 and 2024 but holds no other commodity swap agreements[148] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of the reporting period end[149] - No material changes to internal control over financial reporting occurred during Q2 2025[150] Part II. Other Information Item 1. Legal Proceedings The company is involved in routine legal matters, including 110 asbestos cases, but management anticipates no material adverse effect on financial condition or operations - As of June 30, 2025, the company is a co-defendant in 110 cases involving 152 plaintiffs alleging asbestos exposure personal injury[153][66] - Management does not anticipate these legal proceedings, including asbestos cases, will materially adversely affect the company's financial condition or operations[152][155] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company acquired 84,392 common shares from employees to settle withholding tax liabilities, not under a public repurchase program Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | — | N/A | | May 2025 | 32,415 | $18.32 | | June 2025 | 51,977 | $17.62 | | Total | 84,392 | $17.89 | - The 84,392 shares acquired were from restricted stock award recipients to settle withholding tax liabilities, not part of the publicly announced repurchase plan[160] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025[162] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and Inline XBRL data files - Exhibits include CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906[164] - The filing incorporates various Inline XBRL documents for interactive data[164]