ParkOhio(US:PKOH)2025-11-06 19:01Financial Performance - Net sales decreased by 4.5% to $398.6 million in Q3 2025 compared to $417.6 million in Q3 2024, primarily due to lower demand across all business segments[86]. - Operating income fell by 26.7% to $17.3 million in Q3 2025 from $23.6 million in Q3 2024, reflecting the decline in net sales[85]. - For the first nine months of 2025, net sales decreased by 5.0% to $1,204.1 million compared to $1,267.8 million in the same period in 2024[98]. - Income from continuing operations attributable to common shareholders was $5.5 million in Q3 2025, a decrease of 59.9% from $13.7 million in Q3 2024[85]. - Segment operating income for the Supply Technologies Segment fell to $51.5 million in 2025 from $59.0 million in 2024, with an operating income margin of 9.2% compared to 9.9%[115]. - Assembly Components Segment net sales decreased by 6.5% to $289.0 million in the nine months ended September 30, 2025, from $309.0 million in 2024[119]. - Engineered Products Segment net sales were $354.7 million in the nine months ended September 30, 2025, down from $364.8 million in 2024[124]. Expenses and Margins - SG&A expenses were $46.5 million in Q3 2025, a decrease of 2.7% from $47.8 million in Q3 2024, with SG&A as a percentage of net sales increasing to 11.7%[88]. - The gross margin for Q3 2025 was 16.7%, down from 17.3% in Q3 2024, driven by the decrease in net sales[87]. - The cost of sales for the first nine months of 2025 was $1,001.2 million, down from $1,050.9 million in 2024, contributing to a gross margin of 16.9%[99]. - Restructuring and other special charges amounted to $5.1 million in the first nine months of 2025, compared to $2.4 million in the same period in 2024[102]. Interest and Debt - Interest expense increased to $12.5 million in Q3 2025 from $12.1 million in Q3 2024, primarily due to higher interest rates on newly issued notes[92]. - The company recorded a loss of $2.0 million on extinguishment of debt during Q3 2025[93]. - The Company recorded a $2.0 million loss on extinguishment of debt after issuing 2030 notes and redeeming all outstanding 2027 Notes[106]. - Net interest expense decreased to $34.7 million in the first nine months of 2025 from $36.0 million in 2024, primarily due to lower interest rates and average outstanding debt balances[105]. Taxation - Income tax expense for the nine months ended September 30, 2025, was $3.3 million on pre-tax income of $24.9 million, resulting in an effective tax rate of 13%[107]. Liquidity and Financial Position - Total liquidity as of September 30, 2025, was $187.4 million, including $50.8 million in cash and cash equivalents and $136.6 million in unused borrowing availability[135]. - The company had calculated availability under the Credit Agreement of $93.2 million as of September 30, 2025, exceeding the $50.625 million threshold[141]. - The company declared and paid dividends of $5.4 million during the nine months ended September 30, 2025, with a quarterly dividend of $0.125 per common share declared on October 31, 2025[144]. - A 100-basis-point increase in interest rates would result in an increase in interest expense of approximately $2.2 million for the nine-month period ended September 30, 2025[151]. - The company has a revolving credit facility amounting to $405.0 million, including a $40.0 million Canadian subcommitment and a $30.0 million European subcommitment[139]. - The company must maintain a debt service coverage ratio greater than 1.0 if calculated availability falls below $50.625 million[142]. Market Risks - The company faces translation risks related to foreign currency exchange rates, which may affect net sales and expenses from foreign operations[152]. - The company is exposed to market risks, including fluctuations in commodity prices, particularly for metal and rubber compounds[153]. - The company expects to remain in compliance with financial covenants throughout 2025, although future sales volume declines could impact this[143]. - The company has the option to increase availability under the revolving credit facility as per the Credit Agreement[139].