ParkOhio Announces Second Quarter 2021 Results
Park-Ohio Holdings Corp. (NASDAQ: PKOH) reported Q2 2021 consolidated results with net sales of $350.0 million, up from $228.3 million a year earlier. The net loss attributable to shareholders was $5.3 million ($0.44 per diluted share), improved from a loss of $16.6 million ($1.38 per diluted share) in Q2 2020. The semiconductor chip shortage impacted sales by approximately $24 million, affecting EPS by an estimated $0.55. Despite challenges, year-to-date net sales increased to $709.6 million from $594.6 million, and the company expects organic sales growth of 8% to 12% for 2021.
- Net sales increased to $350.0 million, up 53% year-over-year.
- Adjusted net loss narrowed to $0.33 per diluted share in Q2 2021, compared to $1.17 in Q2 2020.
- Year-to-date net sales rose to $709.6 million, up from $594.6 million in the prior year.
- Net loss of $5.3 million due to semiconductor chip shortage impacting sales.
- Expect sales impact of approximately $15 million in Q3 2021 due to ongoing chip shortages.
- Reduced EBITDA margin outlook to a 100-150 basis point improvement over 2020 levels due to higher costs.
Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for the second quarter of 2021.
SECOND QUARTER CONSOLIDATED RESULTS
Net sales were
The net loss in the quarter was a direct result of the global semiconductor chip shortage, which impacted sales and production in several of our plants which provide various highly engineered components to the automotive end market. The net sales impact was approximately
Matthew V. Crawford, Chairman, Chief Executive Officer and President, stated, “The recovery of our business continues to be strong at the revenue line but uneven as it relates to operating profits. Increased costs related to supply chain, labor and materials impacted our business particularly in our automotive segment, Assembly Components. Profit improvement initiatives will continue to take hold during the second half and we expect considerable improvement from the businesses most affected by these challenges and continued momentum from Supply Technologies and Engineered Products.”
SECOND QUARTER SEGMENT RESULTS
In Supply Technologies, net sales were
In Assembly Components, net sales were
In Engineered Products, net sales were
YEAR-TO-DATE CONSOLIDATED RESULTS
Net sales were
During the first six months of 2021, net working capital increased
UPDATED FULL YEAR 2021 OUTLOOK
For the year ending December 31, 2021, we continue to expect organic sales growth to be within our previously announced range of
CONFERENCE CALL
A conference call reviewing ParkOhio’s second quarter 2021 results will be broadcast live over the Internet on Wednesday, August 4, commencing at 10:00 am Eastern Time. Simply log on to http://www.pkoh.com.
ParkOhio is a diversified international company providing world-class customers with a supply chain management outsourcing service, capital equipment used on their production lines, and manufactured components used to assemble their products. Headquartered in Cleveland, Ohio, ParkOhio operates more than 120 manufacturing sites and supply chain logistics facilities worldwide, through three reportable segments: Supply Technologies, Assembly Components and Engineered Products.
This news release contains forward-looking statements, including statements regarding future performance of the Company, that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: the ultimate impact the COVID-19 pandemic has on our business, results of operations, financial position and liquidity, including, without limitation, supply chain issues such as the global semiconductor chip shortage and logistic issues; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities; public health issues, including the outbreak of COVID-19 and its impact on our facilities and operations and our customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems; our ability to continue to pay cash dividends, and the timing and amount of any such dividends; and the other factors we describe under “Item 1A. Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved. The Company assumes no obligation to update the information in this release.
Park-Ohio Holdings Corp. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
(In millions, except per share data) |
||||||||||||||
Net sales |
$ |
350.0 |
|
|
$ |
228.3 |
|
|
$ |
709.6 |
|
|
$ |
594.6 |
|
Cost of sales |
310.1 |
|
|
214.1 |
|
|
617.7 |
|
|
526.5 |
|
||||
Gross profit |
39.9 |
|
|
14.2 |
|
|
91.9 |
|
|
68.1 |
|
||||
Selling, general and administrative expenses |
43.3 |
|
|
35.1 |
|
|
83.0 |
|
|
76.0 |
|
||||
Operating (loss) income |
(3.4 |
) |
|
(20.9 |
) |
|
8.9 |
|
|
(7.9 |
) |
||||
Other components of pension income and other postretirement benefits expense, net |
2.5 |
|
|
1.8 |
|
|
4.9 |
|
|
3.6 |
|
||||
Interest expense, net |
(7.4 |
) |
|
(7.5 |
) |
|
(14.8 |
) |
|
(15.5 |
) |
||||
Loss before income taxes |
(8.3 |
) |
|
(26.6 |
) |
|
(1.0 |
) |
|
(19.8 |
) |
||||
Income tax benefit |
2.8 |
|
|
9.6 |
|
|
0.9 |
|
|
4.1 |
|
||||
Net loss |
(5.5 |
) |
|
(17.0 |
) |
|
(0.1 |
) |
|
(15.7 |
) |
||||
Net loss attributable to noncontrolling interests |
0.2 |
|
|
0.4 |
|
|
0.3 |
|
|
0.3 |
|
||||
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders |
$ |
(5.3 |
) |
|
$ |
(16.6 |
) |
|
$ |
0.2 |
|
|
$ |
(15.4 |
) |
|
|
|
|
|
|
|
|
||||||||
(Loss) income per common share attributable to Park-Ohio Holdings Corp. common shareholders: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.44 |
) |
|
$ |
(1.38 |
) |
|
$ |
0.02 |
|
|
$ |
(1.27 |
) |
Diluted |
$ |
(0.44 |
) |
|
$ |
(1.38 |
) |
|
$ |
0.02 |
|
|
$ |
(1.27 |
) |
Weighted-average shares used to compute (loss) income per share: |
|
|
|
|
|
|
|
||||||||
Basic |
12.0 |
|
|
12.1 |
|
|
12.0 |
|
|
12.2 |
|
||||
Diluted |
12.0 |
|
|
12.1 |
|
|
12.3 |
|
|
12.2 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends per common share |
$ |
0.125 |
|
|
$ |
— |
|
|
$ |
0.250 |
|
|
$ |
0.125 |
|
|
|
|
|
|
|
|
|
||||||||
Other financial data: |
|
|
|
|
|
|
|
||||||||
EBITDA as defined |
$ |
12.3 |
|
|
$ |
(4.2 |
) |
|
$ |
39.6 |
|
|
$ |
21.3 |
|
Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)
Adjusted (loss) income is a non-GAAP financial measure that the Company is providing in this press release. Adjusted (loss) income is net loss calculated in accordance with generally accepted accounting principles ("GAAP"), adjusted for special items. The Company presents this non-GAAP financial measure because management uses adjusted (loss) income to compare its operating performance on a consistent basis over multiple periods because they remove the impact of certain significant non-cash credits or charges and certain infrequent items impacting net income. Adjusted (loss) income is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, net loss calculated in accordance with GAAP. Adjusted (loss) income herein may not be comparable to similarly titled measures of other companies. The following table reconciles net loss to adjusted (loss) income:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||||||||||||||
|
Earnings |
|
Diluted EPS |
|
Earnings |
|
Diluted EPS |
|
Earnings |
|
Diluted EPS |
|
Earnings |
|
Diluted EPS |
||||||||||||||||
|
(In millions, except for earnings per share (EPS)) |
||||||||||||||||||||||||||||||
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders |
$ |
(5.3 |
) |
|
$ |
(0.44 |
) |
|
$ |
(16.6 |
) |
|
$ |
(1.38 |
) |
|
$ |
0.2 |
|
|
$ |
0.02 |
|
|
$ |
(15.4 |
) |
|
$ |
(1.27 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Plant closure and consolidation, severance and related costs |
1.4 |
|
|
0.11 |
|
|
3.3 |
|
|
0.27 |
|
|
2.7 |
|
|
0.21 |
|
|
3.7 |
|
|
0.30 |
|
||||||||
Acquisition related expenses and other |
0.4 |
|
|
0.03 |
|
|
— |
|
|
— |
|
|
0.4 |
|
|
0.03 |
|
|
0.1 |
|
|
0.01 |
|
||||||||
Tax effect of above adjustments |
(0.5 |
) |
|
(0.03 |
) |
|
(0.8 |
) |
|
(0.06 |
) |
|
(0.8 |
) |
|
(0.06 |
) |
|
(0.9 |
) |
|
(0.07 |
) |
||||||||
Adjusted (loss) income |
$ |
(4.0 |
) |
|
$ |
(0.33 |
) |
|
$ |
(14.1 |
) |
|
$ |
(1.17 |
) |
|
$ |
2.5 |
|
|
$ |
0.20 |
|
|
$ |
(12.5 |
) |
|
$ |
(1.03 |
) |
Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)
EBITDA as defined is a non-GAAP financial measure that the Company is providing in this press release. EBITDA as defined reflects net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders before interest expense, income taxes, depreciation and amortization, and also excludes certain charges and corporate-level expenses as defined in the Company's current revolving credit facility. The Company presents this non-GAAP financial measure because management uses EBITDA, as defined to assess the Company's performance and to calculate its debt service coverage ratio under its current revolving credit facility. EBITDA as defined is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, net (loss) income or cash flow information calculated in accordance with GAAP. EBITDA as defined herein may not be comparable to similarly titled measures of other companies. The following table reconciles net (loss) income to EBITDA as defined:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
(In millions) |
||||||||||||||
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders |
$ |
(5.3 |
) |
|
$ |
(16.6 |
) |
|
$ |
0.2 |
|
|
$ |
(15.4 |
) |
Add back: |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
7.4 |
|
|
7.5 |
|
|
14.8 |
|
|
15.5 |
|
||||
Income tax benefit |
(2.8 |
) |
|
(9.6 |
) |
|
(0.9 |
) |
|
(4.1 |
) |
||||
Depreciation and amortization |
9.7 |
|
|
8.9 |
|
|
19.3 |
|
|
17.8 |
|
||||
Stock-based compensation expense |
1.4 |
|
|
1.3 |
|
|
3.0 |
|
|
2.7 |
|
||||
Plant closure and consolidation, severance and related costs |
1.4 |
|
|
3.3 |
|
|
2.7 |
|
|
3.7 |
|
||||
Acquisition related expenses |
0.4 |
|
|
— |
|
|
0.4 |
|
|
— |
|
||||
Other |
0.1 |
|
|
1.0 |
|
|
0.1 |
|
|
1.1 |
|
||||
EBITDA as defined |
$ |
12.3 |
|
|
$ |
(4.2 |
) |
|
$ |
39.6 |
|
|
$ |
21.3 |
|
Park-Ohio Holdings Corp. and Subsidiaries Condensed Consolidated Balance Sheets |
|||||
|
(Unaudited) |
|
|
||
|
June 30,
|
|
December 31,
|
||
|
(In millions) |
||||
ASSETS |
|||||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
55.3 |
|
$ |
55.0 |
Accounts receivable, net |
243.9 |
|
248.1 |
||
Inventories, net |
364.1 |
|
310.9 |
||
Prepaid and other current assets |
89.8 |
|
92.4 |
||
Total current assets |
753.1 |
|
706.4 |
||
Property, plant and equipment, net |
235.6 |
|
236.6 |
||
Operating lease right-of-use assets |
64.4 |
|
68.6 |
||
Goodwill |
113.3 |
|
110.9 |
||
Intangible assets, net |
85.6 |
|
86.8 |
||
Other long-term assets |
95.3 |
|
91.2 |
||
Total assets |
$ |
1,347.3 |
|
$ |
1,300.5 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||
Current liabilities: |
|
|
|
||
Trade accounts payable |
$ |
178.1 |
|
$ |
166.7 |
Current portion of long-term debt and short-term debt |
8.3 |
|
11.6 |
||
Current portion of operating lease liabilities |
13.0 |
|
12.9 |
||
Accrued expenses and other |
116.4 |
|
115.9 |
||
Total current liabilities |
315.8 |
|
307.1 |
||
Long-term liabilities, less current portion: |
|
|
|
||
Long-term debt |
570.2 |
|
517.8 |
||
Long-term operating lease liabilities |
51.9 |
|
56.7 |
||
Other long-term liabilities |
56.2 |
|
61.0 |
||
Total long-term liabilities |
678.3 |
|
635.5 |
||
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity |
340.9 |
|
344.2 |
||
Noncontrolling interests |
12.3 |
|
13.7 |
||
Total equity |
353.2 |
|
357.9 |
||
Total liabilities and shareholders' equity |
$ |
1,347.3 |
|
$ |
1,300.5 |
Park-Ohio Holdings Corp. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||
|
Six Months Ended June 30, |
||||||
|
2021 |
|
2020 |
||||
|
(In millions) |
||||||
OPERATING ACTIVITIES |
|
|
|
||||
Net loss |
$ |
(0.1 |
) |
|
$ |
(15.7 |
) |
Adjustments to reconcile net loss to net cash (used) provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
19.3 |
|
|
17.8 |
|
||
Stock-based compensation expense |
3.0 |
|
|
2.7 |
|
||
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
4.9 |
|
|
62.1 |
|
||
Inventories |
(50.5 |
) |
|
7.9 |
|
||
Prepaid and other current assets |
(3.8 |
) |
|
(6.5 |
) |
||
Accounts payable and accrued expenses |
9.2 |
|
|
(57.2 |
) |
||
Other |
(5.3 |
) |
|
(1.6 |
) |
||
Net cash (used) provided by operating activities |
(23.3 |
) |
|
9.5 |
|
||
INVESTING ACTIVITIES |
|
|
|
||||
Purchases of property, plant and equipment |
(14.4 |
) |
|
(9.4 |
) |
||
Business acquisition, net of cash acquired |
(5.4 |
) |
|
— |
|
||
Proceeds from sale of an asset |
— |
|
|
1.4 |
|
||
Net cash used by investing activities |
(19.8 |
) |
|
(8.0 |
) |
||
FINANCING ACTIVITIES |
|
|
|
||||
Proceeds from revolving credit facility, net |
55.0 |
|
|
8.7 |
|
||
Payments on other debt |
(4.5 |
) |
|
(6.7 |
) |
||
Proceeds from other debt |
1.8 |
|
|
1.9 |
|
||
Payments on finance lease facilities, net |
(3.3 |
) |
|
(0.6 |
) |
||
Dividends |
(3.1 |
) |
|
(1.6 |
) |
||
Purchases of treasury shares |
— |
|
|
(5.3 |
) |
||
Payments of withholding taxes on share awards |
(2.2 |
) |
|
(0.7 |
) |
||
Net cash provided (used) by financing activities |
43.7 |
|
|
(4.3 |
) |
||
Effect of exchange rate changes on cash |
(0.3 |
) |
|
(1.3 |
) |
||
Increase (decrease) in cash and cash equivalents |
0.3 |
|
|
(4.1 |
) |
||
Cash and cash equivalents at beginning of period |
55.0 |
|
|
56.0 |
|
||
Cash and cash equivalents at end of period |
$ |
55.3 |
|
|
$ |
51.9 |
|
Interest paid |
$ |
14.3 |
|
|
$ |
14.8 |
|
Income taxes paid |
$ |
6.4 |
|
|
$ |
1.2 |
|
Park-Ohio Holdings Corp. and Subsidiaries Business Segment Information (Unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
(In millions) |
||||||||||||||
Net sales: |
|
|
|
|
|
|
|
||||||||
Supply Technologies |
$ |
155.0 |
|
|
$ |
94.4 |
|
|
$ |
312.7 |
|
|
$ |
235.2 |
|
Assembly Components |
109.5 |
|
|
54.9 |
|
|
235.5 |
|
|
183.1 |
|
||||
Engineered Products |
85.5 |
|
|
79.0 |
|
|
161.4 |
|
|
176.3 |
|
||||
|
$ |
350.0 |
|
|
$ |
228.3 |
|
|
$ |
709.6 |
|
|
$ |
594.6 |
|
Segment operating income (loss): |
|
|
|
|
|
|
|
||||||||
Supply Technologies |
$ |
10.2 |
|
|
$ |
0.3 |
|
|
$ |
22.5 |
|
|
$ |
9.5 |
|
Assembly Components |
(6.1 |
) |
|
(14.6 |
) |
|
0.3 |
|
|
(8.3 |
) |
||||
Engineered Products |
(0.7 |
) |
|
(0.8 |
) |
|
(1.9 |
) |
|
3.0 |
|
||||
Total segment operating income (loss) |
3.4 |
|
|
(15.1 |
) |
|
20.9 |
|
|
4.2 |
|
||||
Corporate costs |
(6.8 |
) |
|
(5.8 |
) |
|
(12.0 |
) |
|
(12.1 |
) |
||||
Operating (loss) income |
(3.4 |
) |
|
(20.9 |
) |
|
8.9 |
|
|
(7.9 |
) |
||||
Other components of pension income and other postretirement benefits expense, net |
2.5 |
|
|
1.8 |
|
|
4.9 |
|
|
3.6 |
|
||||
Interest expense, net |
(7.4 |
) |
|
(7.5 |
) |
|
(14.8 |
) |
|
(15.5 |
) |
||||
Loss before income taxes |
$ |
(8.3 |
) |
|
$ |
(26.6 |
) |
|
$ |
(1.0 |
) |
|
$ |
(19.8 |
) |
Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)
Free cash flow is a non-GAAP financial measure that the Company is providing in this press release. Free cash flow is calculated as net cash provided by operating activities minus purchases of property, plant and equipment. The Company presents this non-GAAP financial measure because management uses free cash flow to assess the Company's performance and allocate its capital for various purposes. Free cash flow is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, cash flow calculated in accordance with GAAP. Free cash flow herein may not be comparable to similarly titled measures of other companies. The following table reconciles net cash provided by operating activities to free cash flow:
|
Full Year Forecast |
||||||
|
(In millions) |
||||||
|
Low |
|
High |
||||
Net cash provided by operating activities |
$ |
17.0 |
|
|
$ |
28.0 |
|
Purchases of property, plant and equipment |
(32.0 |
) |
|
(28.0 |
) |
||
Free cash flow |
$ |
(15.0 |
) |
|
$ |
— |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210803006063/en/
FAQ
What were Park-Ohio's net sales for Q2 2021?
What was the net loss per share for Park-Ohio in Q2 2021?
How did the semiconductor chip shortage affect Park-Ohio's Q2 results?
What is Park-Ohio's outlook for sales growth in 2021?
What were Park-Ohio's year-to-date net sales for 2021 compared to 2020?
