Park Ohio Holdings Corp: Form 10-Q for the period ended Sep 30, 2025
Filed with the SEC on Nov 6, 2025 and accepted by EDGAR at Nov 6, 2025, 19:01 ET.
Management's discussion and analysis
As filed, 37,588 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Our condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, “we,” “our,” or the “Company”). All significant intercompany transactions have been eliminated in consolidation.
EXECUTIVE OVERVIEW
We are 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. We operate through three reportable segments: Supply Technologies, Assembly Components and Engineered Products.
Supply Technologies provides our customers with Total Supply Management™, a proactive solutions approach that manages the efficiencies of every aspect of supplying production parts and materials to our customers’ manufacturing floor, from strategic planning to program implementation. Total Supply Management™ includes such services as engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking, just-in-time and point-of-use delivery, electronic billing services and ongoing technical support. Our Supply Technologies business services customers in the following principal industries: heavy-duty truck; power sports and recreational equipment; aerospace and defense; semiconductor equipment; electrical distribution and controls; consumer electronics; bus and coaches; automotive; agricultural and industrial equipment; HVAC; lawn and garden; plumbing; and medical devices.
Assembly Components manufactures products oriented towards fuel efficiency and reduced emission standards. Assembly Components designs, develops and manufactures aluminum products and highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Our products are primarily used in the following industries: including automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and bus.
Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading systems and forged and machined products. Engineered Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Engineered Products are OEMs, sub-assemblers and end users in the following industries: ferrous and non-ferrous metals; coatings; forging; foundry; heavy-duty truck; construction equipment; automotive; oil and gas; rail; aerospace and defense; and power generation.
Our business is global in scope, and government trade actions may materially and adversely impact our business, financial condition and results of operations. The U.S. government has recently taken, and may continue to take, trade actions that impact or could impact our operations, including, but not limited to, imposing tariffs on certain goods and raw materials imported into the United States. For example, during April 2025, the U.S. government announced baseline tariffs on products from all countries and additional individualized reciprocal tariffs on the countries with which the United States has the largest trade deficits, including China. In addition, several governments, including the European Union, China and India, have imposed tariffs, including reciprocal tariffs, on certain goods imported from the United States. Given the current macroeconomic environment and uncertainty around tariffs, we continue to assess the impact of added costs for certain imported raw materials and other components and demand softness in certain of our key end markets. We are working with our customers and suppliers and expect to mitigate the impact of added costs caused by tariffs. Conversely, we believe many of our businesses are well positioned to benefit in the long term from the current environment due to higher production activity and localized sourcing back into the United States.
Sales and operating income for these three segments are provided in Note 4 to the condensed consolidated financial statements, included elsewhere herein.
RESULTS OF CONTINUING OPERATIONS
Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024
(Dollars in millions, except per share data)
| Three Months Ended September 30, 2025 | 2024 | $ Change | % Change | |
|---|---|---|---|---|
| Net sales | $398.6 | $417.6 | $(19.0) | (4.5)% |
| Cost of sales | 332.0 | 345.3 | (13.3) | (3.9)% |
| Selling, general and administrative (“SG&A”) expenses | 46.5 | 47.8 | (1.3) | (2.7)% |
| SG&A expenses as a percentage of net sales | 11.7% | 11.4% | ||
| Restructuring and other special charges | 2.8 | 0.9 | 1.9 | * |
| Operating income | 17.3 | 23.6 | (6.3) | (26.7)% |
| Other components of pension and other postretirement benefits income, net | 1.7 | 1.1 | 0.6 | 54.5% |
| Interest expense, net | (12.5) | (12.1) | (0.4) | 3.3% |
| Loss on extinguishment of debt | (2.0) | — | (2.0) | * |
| Income from continuing operations before income taxes | 4.5 | 12.6 | (8.1) | (64.3)% |
| Income tax benefit | 0.4 | 0.6 | (0.2) | (33.3)% |
| Income from continuing operations | 4.9 | 13.2 | (8.3) | (62.9)% |
| Loss attributable to noncontrolling interests | 0.6 | 0.5 | 0.1 | 20.0% |
| Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders | $5.5 | $13.7 | $(8.2) | (59.9)% |
| Income per common share from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders: | ||||
| Basic: | ||||
| Continuing operations | $0.40 | $1.05 | $(0.65) | (61.9)% |
| Diluted: | ||||
| Continuing operations | $0.39 | $1.02 | $(0.63) | (61.8)% |
*Calculation not meaningful
Net Sales
Net sales decreased 4.5% to $398.6 million in the third quarter of 2025 compared to $417.6 million in the same period in 2024. This decrease was primarily due to lower demand in each of our business segments.
The factors explaining the changes in segment net sales for the three months ended September 30, 2025 compared to the corresponding 2024 period are contained within the “Segment Results” section below.
Cost of Sales and Gross Margin
Cost of sales decreased to $332.0 million in the third quarter of 2025 compared to $345.3 million in the same period in 2024. The decrease in cost of sales was primarily due to the decrease in net sales in the 2025 period compared to the corresponding period in 2024 and the impact of ongoing profit improvement initiatives. Gross margin was 16.7% in the 2025 period compared to 17.3% in the corresponding 2024 period, with the decrease driven by the decrease in net sales described above.
SG&A Expenses
SG&A expenses were $46.5 million in the third quarter of 2025 compared to $47.8 million in the comparable period in 2024, a decrease of 2.7%. As a percentage of net sales, SG&A expenses were 11.7% in the third quarter of 2025 compared to 11.4% in corresponding 2024 period. The increase as a percentage of net sales was driven by ongoing inflation, higher employee costs and fixed SG&A costs over lower sales levels.
Restructuring and Other Special Charges
During the third quarter of 2025, the Company recorded charges of $2.8 million in connection with restructuring and other special charges, which included $1.0 million in our Supply Technologies segment, $1.3 million in our Assembly Components segment, $0.3 million in our Engineered Products segment and $0.2 million at Corporate.
During the third quarter of 2024, the Company recorded charges of $0.9 million in connection with restructuring and other special charges, which included $0.5 million in our Assembly Components segment and $0.4 million in our Engineered Products segment.
Other Components of Pension and Other Postretirement Benefits (“OPEB”) Income, Net
Other components of pension and OPEB income, net was $1.7 million in the quarter ended September 30, 2025 compared to $1.1 million in the corresponding quarter in 2024. This increase was due to lower net actuarial losses impacting 2025 compared to 2024.
Interest Expense, Net
Interest expense, net was $12.5 million in the third quarter of 2025 compared to $12.1 million in the 2024 third quarter. The increase was due primarily to the higher interest rate on our newly issued 8.500% Senior Secured Notes due 2030 (the “2030 Notes”) compared to the 6.625% Senior Notes due 2027 (the “2027 Notes”), partially offset by lower interest rates on our revolving credit facility in the 2025 third quarter compared to the same quarter a year ago.
Loss on Extinguishment of Debt
During the third quarter of 2025, Park-Ohio Industries, Inc. (“Park-Ohio”) issued the 2030 notes and used the net proceeds, along with cash on hand, to redeem all of our outstanding 2027 Notes. In connection with this transaction, the Company recorded a $2.0 million loss on extinguishment of debt.
Income Tax Benefit
In the three months ended September 30, 2025, income tax benefit was $0.4 million on pre-tax income from continuing operations of $4.5 million. The tax benefit in the three-month period is primarily due to federal research and development tax credits benefit (“R&D benefit”).
In the three months ended September 30, 2024, income tax benefit was $0.6 million on pre-tax income from continuing operations of $12.6 million. The tax benefit in the three-month period included a benefit of $2.4 million primarily due to changes in estimates related to the prior year quarter's federal R&D benefit.
RESULTS OF CONTINUING OPERATIONS
Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024
(Dollars in millions, except per share data)
| Nine Months Ended September 30, 2025 | 2024 | $ Change | % Change | |
|---|---|---|---|---|
| Net sales | $1,204.1 | $1,267.8 | $(63.7) | (5.0)% |
| Cost of sales | 1,001.2 | 1,050.9 | (49.7) | (4.7)% |
| SG&A expenses | 141.5 | 142.3 | (0.8) | (0.6)% |
| SG&A expenses as a percentage of net sales | 11.8% | 11.2% | ||
| Restructuring and other special charges | 5.1 | 2.4 | 2.7 | * |
| Operating income | 56.3 | 72.2 | (15.9) | (22.0)% |
| Other components of pension and other postretirement benefits income, net | 5.3 | 3.8 | 1.5 | 39.5% |
| Interest expense, net | (34.7) | (36.0) | 1.3 | (3.6)% |
| Loss on extinguishment of debt | (2.0) | — | (2.0) | * |
| Income from continuing operations before income taxes | 24.9 | 40.0 | (15.1) | (37.8)% |
| Income tax expense | (3.3) | (5.3) | 2.0 | (37.7)% |
| Income from continuing operations | 21.6 | 34.7 | (13.1) | (37.8)% |
| Loss attributable to noncontrolling interests | 1.7 | 1.9 | (0.2) | (10.5)% |
| Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders | $23.3 | $36.6 | $(13.3) | (36.3)% |
| Earnings from continuing operations per common share attributable to Park-Ohio Holdings Corp. common shareholders: | ||||
| Basic: | ||||
| Continuing operations | $1.69 | $2.88 | $(1.19) | (41.3)% |
| Diluted: | ||||
| Continuing operations | $1.67 | $2.81 | $(1.14) | (40.6)% |
*Calculation not meaningful
Net Sales
Net sales decreased 5.0% to $1,204.1 million in the first nine months of 2025 compared to $1,267.8 million in the same period in 2024. This decrease was primarily due to lower demand in each of our business segments.
The factors explaining the changes in segment net sales for the nine months ended September 30, 2025 compared to the corresponding 2024 period are contained in the “Segment Results” section below.
Cost of Sales and Gross Margin
Cost of sales decreased to $1,001.2 million in the first nine months of 2025 compared to $1,050.9 million in the same period in 2024, driven by the decrease in net sales described above and the impact of ongoing profit improvement initiatives. Gross margin was 16.9% in the 2025 period compared to 17.1% in the corresponding 2024 period. The year-over-year gross margin decrease was driven by the decrease in net sales described above.
SG&A Expenses
SG&A expenses were $141.5 million in the first nine months of 2025, compared to $142.3 million in the same period in 2024, a decrease of 0.6%. As a percentage of net sales, SG&A expenses were 11.8% in the first nine months of 2025 compared to 11.2% in the comparable period in 2024. This increase as a percentage of net sales was driven by ongoing inflation, higher employee costs and fixed SG&A costs over lower sales levels.
Restructuring and Other Special Charges
During the first nine months of 2025, the Company recorded $5.1 million in connection restructuring and other special charges which included $1.4 million in our Supply Technologies segment, $2.0 million in our Assembly Components segment, $1.5 million in our Engineered Products segment and $0.2 million at Corporate.
During the first nine months of 2024, the Company recorded $2.1 million in connection restructuring and other special charges, primarily in our Assembly Components and Engineered Products segments, as well as acquisition-related charges of $0.3 million in connection with the acquisition of EMA Indutec GmbH (“EMA”).
Other Components of Pension and OPEB Income, Net
Other components of pension and OPEB income, net was $5.3 million in the first nine months of 2025 compared to $3.8 million in the corresponding period in 2024. This increase was due to lower net actuarial losses impacting 2025 compared to 2024.
Interest Expense, Net
Interest expense, net was $34.7 million in the first nine months of 2025 compared to $36.0 million in the 2024 period. The decrease was due primarily to lower interest rates on our revolver and lower average outstanding debt balances in the 2025 period compared to the same period a year ago, both partially offset by higher interest on our 2030 Notes at 8.500% compared to the 2027 Notes at 6.625%.
Loss on Extinguishment of Debt
During the first nine months of 2025, Park-Ohio issued the 2030 notes and used the net proceeds, along with cash on hand, to redeem all of our outstanding 2027 Notes. In connection with this transaction, the Company recorded a $2.0 million loss on extinguishment of debt.
Income Tax Expense
In the nine months ended September 30, 2025, income tax expense was $3.3 million on pre-tax income of $24.9 million, representing an effective income tax rate of 13%. The effective income tax rate of 13% differed from the U.S. statutory rate primarily due to the R&D benefit.
In the nine months ended September 30, 2024, income tax expense was $5.3 million on pre-tax income of $40.0 million, representing an effective income tax rate of 13%. The effective income tax rate of 13% differed from the U.S. statutory rate primarily due to the R&D benefit.
SEGMENT RESULTS
For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating; unusual in nature; or corporate costs, which include but are not limited to executive compensation and corporate office costs. Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costs; other components of pension and other postretirement benefits income, net; and interest expense, net.
Supply Technologies Segment
(Dollars in millions)
| Three Months Ended September 30, 2025 | 2024 | Nine Months Ended September 30, 2025 | 2024 | |
|---|---|---|---|---|
| Net sales | $185.5 | $194.5 | $560.4 | $594.0 |
| Segment operating income | $17.4 | $20.5 | $51.5 | $59.0 |
| Segment operating income margin | 9.4% | 10.5% | 9.2% | 9.9% |
Three months ended September 30:
Net sales decreased 4.6% in the three months ended September 30, 2025 compared to the 2024 period due primarily to lower customer demand in certain key North American end markets, including industrial equipment, bus and coach and consumer electronics, partially offset by increases in the electrical, heavy-duty truck, semiconductor and agricultural end markets. Sales in our fastener manufacturing business were down 8.3% year-over-year, driven by overall market softness.
Segment operating income was $17.4 million in the 2025 period compared to $20.5 million in the 2024 period. Operating income margin was 9.4% in the 2025 quarter compared to 10.5% in the 2024 quarter. In the 2025 period, profit-enhancement actions, including alignment of variable costs to lower demand levels, partially offset the impact of lower sales levels on profitability. In the 2025 period, charges related to restructuring and other special charges were $1.0 million.
Nine months ended September 30:
Net sales decreased 5.7% in the nine months ended September 30, 2025 compared to the 2024 period due primarily to lower customer demand in certain end markets in our supply chain business, including power sports, heavy-duty truck and bus, industrial and agricultural equipment and aerospace and defense, partially offset by increases in the electrical and semiconductor end markets. Sales in our fastener manufacturing business were down 9.2% year-over-year, driven by overall market softness.
Segment operating income was $51.5 million in the 2025 period compared to $59.0 million in the 2024 period. Operating income margin was 9.2% in the nine months ended September 30, 2025 compared to 9.9% in the 2024 period. In the 2025 period, profit-enhancement actions, including alignment of variable costs to lower demand levels, partially offset the impact of lower sales levels on profitability. In the 2025 and 2024 periods, charges related to restructuring and other special charges were $1.4 million and $0.2 million, respectively.
Assembly Components Segment
(Dollars in millions)
| Three Months Ended September 30, 2025 | 2024 | Nine Months Ended September 30, 2025 | 2024 | |
|---|---|---|---|---|
| Net sales | $97.0 | $98.7 | $289.0 | $309.0 |
| Segment operating income | $4.7 | $6.1 | $15.6 | $21.6 |
| Segment operating income margin | 4.8% | 6.2% | 5.4% | 7.0% |
Three months ended September 30:
Net sales decreased 1.7% in the three months ended September 30, 2025 compared to the 2024 period. Sales were lower quarter-over-quarter due primarily to lower unit volumes in our fuel rail and extruded rubber products, customer production delays on new business launches, and favorable pricing that ended in 2024 on certain legacy programs.
Segment operating income in the 2025 period decreased by $1.4 million, and segment operating income margin decreased by 140 basis points, compared to the corresponding period of 2024. The decreases in operating income and margin in the second quarter of 2025 compared to the 2024 period were due to the lower unit volumes. In the 2025 and 2024 periods, charges related to restructuring and other special charges were $1.3 million and $0.5 million, respectively.
Nine months ended September 30:
Net sales were $289.0 million, or 6.5% lower, in the nine months ended September 30, 2025 compared to the 2024 period. The decrease was due primarily to lower unit volumes in our fuel rail and extruded rubber products, customer production delays on new business launches, and favorable pricing that ended in 2024 on certain legacy programs.
Segment operating income decreased to $15.6 million in the nine months ended September 30, 2025 compared to $21.6 million in the 2024 period. The decrease was due to the lower unit volumes. In the 2025 and 2024 periods, charges related to restructuring and other special charges were $2.0 million and $0.5 million, respectively.
Engineered Products Segment
(Dollars in millions)
| Three Months Ended September 30, 2025 | 2024 | Nine Months Ended September 30, 2025 | 2024 | |
|---|---|---|---|---|
| Net sales | $116.1 | $124.4 | $354.7 | $364.8 |
| Segment operating income | $3.4 | $4.8 | $13.2 | $14.6 |
| Segment operating income margin | 2.9% | 3.9% | 3.7% | 4.0% |
Three months ended September 30:
Net sales were $116.1 million in the 2025 third quarter, a decrease of 6.7%, compared to $124.4 million in last year's third quarter. The year-over-year decrease was driven by lower sales in our capital equipment business in North America and Asia, partially offset by sales growth in Europe. In our forged and machined products business, third quarter 2025 sales were down 5.0% compared to the same quarter a year ago, driven by the closure of a small manufacturing operation in 2024 and demand softness in the rail car end market.
Segment operating income in the 2025 period decreased by $1.4 million compared to the corresponding 2024 period. The decrease in the 2025 period was driven by the lower sales, partially offset by operational efficiencies, alignment of variable costs to lower demand levels and other profit-enhancement initiatives. The 2025 and 2024 periods also included $0.3 million and $0.4 million, respectively, of charges related to restructuring and other special charges.
Nine months ended September 30:
Net sales were $354.7 million in the nine months ended September 30, 2025 compared to $364.8 million in comparable 2024 period. The year-over-year decrease was driven by lower sales in our forged and machined products business, driven by lower orders, order delays and closure of a small manufacturing operation in 2024, offset by a $2.0 million increase in sales at our industrial equipment business.
Segment operating income in the 2025 period decreased by $1.4 million compared to the corresponding 2024 period, driven by the lower sales levels. The 2025 and 2024 periods also included $1.5 million and $1.7 million, respectively, of charges related to restructuring and other special charges.
Liquidity and Capital Resources
The following table summarizes the major components of cash flow:
(In millions)
| Net cash (used in) provided by: | Nine Months Ended September 30, 2025 | 2024 | $ Change |
|---|---|---|---|
| Operating activities | $(6.4) | $8.6 | $(15.0) |
| Investing activities | (27.6) | (33.3) | 5.7 |
| Financing activities | 30.1 | 33.1 | (3.0) |
| Discontinued operations | (0.5) | (4.1) | 3.6 |
| Effect of exchange rate changes on cash | 2.1 | 0.4 | 1.7 |
| (Decrease) increase in cash and cash equivalents | $(2.3) | $4.7 | $(7.0) |
Operating Activities
In the nine months ended September 30, 2025, we utilized cash of $6.4 million compared to $8.6 million of cash generated in the same period of 2024. Cash flow from operating activities was lower in 2025 due to lower profitability and higher working capital needs.
Investing Activities
Capital expenditures of $27.6 million in the nine months ended September 30, 2025 were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, to maintain existing operations and for information system implementations.
Capital expenditures of $22.3 million in the nine months ended September 30, 2024 were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, to maintain existing operations and for information system implementations. Additionally, during the nine months ended September 30, 2024, the Company paid $11.0 million, net of cash acquired, for the EMA acquisition.
Financing Activities
During the nine months ended September 30, 2025, we had net debt borrowings of $46.0 million to fund capital expenditures and working capital needs. In addition, Park-Ohio issued the 2030 notes and used the net proceeds, along with cash on hand, to redeem all of our outstanding 2027 Notes, which resulted in a cash outlay of $6.5 million for debt refinancing fees and expenses. We also made cash dividend payments totaling $6.0 million.
During the nine months ended September 30, 2024, we had net debt borrowings of $18.4 million to fund capital expenditures and the EMA acquisition. In addition, in the nine months ended September 30, 2024, the Company generated proceeds from common stock issuances totaling $24.7 million, made scheduled payments related to prior acquisitions totaling $2.2 million and made cash dividend payments totaling $5.4 million.
We do not have off-balance sheet arrangements, financing or other relationships with unconsolidated entities or other persons, other than the letters of credits disclosed in Note 8 to the condensed consolidated financial statements, included elsewhere herein.
Liquidity
Our liquidity needs are primarily for working capital, capital expenditures, dividends and acquisitions. Our primary sources of liquidity have been funds provided by operations, funds available from existing bank credit arrangements and the sale of our debt securities. Our existing financial resources (working capital, available bank borrowing arrangements and our at-the-market program) and anticipated cash flow from operations are expected to be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future thereafter, including but not limited to our ability to maintain current operations and fund capital expenditure requirements, service our debt, pursue acquisitions, pay dividends and repurchase common shares. For more information about our at the market program and other sales of common stock, see Note 13, “Weighted-Average Number of Shares Used in Computing Earnings Per Share,” to the condensed consolidated financial statements, included elsewhere herein.
As of September 30, 2025, we had total liquidity of $187.4 million, which included $50.8 million of cash and cash equivalents and $136.6 million of unused borrowing availability under our credit agreements, which includes $10.6 million of suppressed availability.
The Company had cash and cash equivalents held by foreign subsidiaries of $38.1 million at September 30, 2025 and $43.4 million at December 31, 2024. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.
The Company has two components to its assertion regarding reinvestment of foreign earnings outside of the United States. First, for all foreign subsidiaries except RB&W Corporation of Canada (“RB&W”), all earnings are permanently reinvested outside of the United States. Second, for RB&W, dividend distributions may be made, but only to the extent of current earnings in excess of cash required to fund its business operations; all accumulated earnings are permanently reinvested.
Senior Notes
On July 31, 2025, Park-Ohio completed the sale, in a private offering, of $350.0 million aggregate principal amount of the 2030 Notes. The net proceeds from the offering of the 2030 Notes, along with cash on hand, were used to repay in full our 2027 Notes and pay related fees and expenses.
Credit Agreement
On July 17, 2025, Park-Ohio amended its Seventh Amended and Restated Credit Agreement (the “Credit Agreement”), in order to, among other things, (a) extend the maturity date to the fifth anniversary from the closing of the revolving credit facility amendment, (b) permit the issuance of the 2030 Notes and (c) permit the 2030 Notes to be secured by (i) a first-priority lien on the substantially all of the U.S. equipment (including machinery) of the Park-Ohio and the Park-Ohio’s existing and future domestic subsidiaries (the “Guarantors”) that guarantee debt under the Credit Agreement (the “Notes Priority Collateral”) and (ii) a second-priority lien (junior to the Credit Agreement) on substantially all of the U.S. assets of Park-Ohio and the Guarantors (including the 65% pledge of the foreign equity owned by the Guarantors), other than assets constituting Notes Priority Collateral, securing the revolving credit facility (the “ABL Priority Collateral”). The Credit Agreement provides for a revolving credit facility in the amount of $405.0 million, including a $40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $30.0 million. Pursuant to the Credit Agreement, Park-Ohio has the option to increase the availability under the revolving credit facility.
Finance Leases
As of September 30, 2025, the Company had finance leases totaling $15.3 million.
Covenants
The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on (1) our calculated availability under the Credit Agreement and (2) if such calculated availability decreases below $50.625 million, our ability to meet a debt service ratio covenant. If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At September 30, 2025, our calculated availability under the Credit Agreement was $93.2 million; therefore, the debt service ratio covenant did not apply.
Failure to maintain calculated availability of at least $50.625 million and meet the debt service ratio covenant could materially impact the availability and interest rate of future borrowings. Our debt service coverage ratio could be materially impacted by negative economic trends. To make certain permitted payments as defined under the Credit Agreement, including but not limited to acquisitions and dividends, we must meet defined availability thresholds ranging from $37.5 million to $50.625 million, and a defined debt service coverage ratio of 1.15.
As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of September 30, 2025. While we expect to remain in compliance throughout 2025, declines in sales volumes in the future, including due to the current macroeconomic conditions, could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.
Dividends
The Company declared and paid dividends to shareholders of $5.4 million during the nine months ended September 30, 2025. On October 31, 2025, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on November 28, 2025 to shareholders of record as of the close of business on November 14, 2025 and will result in a cash outlay of approximately $1.8 million. Although we currently intend to pay a quarterly dividend on an ongoing basis, all future dividend declarations will be at the discretion of our Board of Directors and dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors may deem relevant.
Seasonality; Variability of Operating Results
The timing of orders placed by our customers has varied with, among other factors, orders for customers’ finished goods, customer production schedules, competitive conditions and general economic conditions. The variability of the level and timing of orders has, from time to time, resulted in significant periodic and quarterly fluctuations in the operations of our businesses. Such variability is particularly evident in our capital equipment business, included in the Engineered Products segment, which typically ships large systems at a relatively lower pace than our other businesses.
Critical Accounting Policies
Our critical accounting policies are described in "Item. 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations," and in the notes to our consolidated financial statements for the year ended December 31, 2024, both contained in our Annual Report on Form 10-K for the year ended December 31, 2024. There were no new critical accounting policies or updates to existing critical accounting policies as a result of new accounting pronouncements in this Quarterly Report on Form 10-Q.
The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “estimates” and similar expressions are intended to identify forward-looking statements.
These 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 impact supply chain and logistic issues have on our business, results of operations, financial position and liquidity; 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, including the conflicts between Russia and Ukraine and in the Middle East, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of infectious diseases and any 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, 2024. 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.
Market risk
As filed, 1,570 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
We are exposed to market risk, including changes in interest rates. As of September 30, 2025, we are subject to interest rate risk on borrowings under the floating rate revolving credit facility provided by our Credit Agreement. A 100-basis-point increase in the interest rate would have resulted in an increase in interest expense on these borrowings of approximately $2.2 million during the nine-month period ended September 30, 2025.
Our foreign subsidiaries generally conduct business in local currencies. We face translation risks related to the changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated in U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded as a component of Accumulated other comprehensive loss in the Shareholders' Equity section of the accompanying Condensed Consolidated Balance Sheets. Sales and expenses at our foreign operations are translated into U.S. dollars at the applicable monthly average exchange rates. Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars.
Our largest exposures to commodity prices relate to metal and rubber compounds, which have fluctuated widely in recent years. In 2025 and 2024, we entered into agreements to hedge foreign currency. These agreements did not have a material impact on the results of the Company. We have no other commodity swap agreements or forward purchase contracts.
Controls and procedures
As filed, 943 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of disclosure controls and procedures.
Under the supervision of and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.
Changes in internal control over financial reporting.
During the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 276 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Investors should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-07-01 to 2025-09-30 | $398.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months2025-01-01 to 2025-09-30 | $1.20bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2025-07-01 to 2025-09-30 | $332.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months2025-01-01 to 2025-09-30 | $1.00bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months2025-07-01 to 2025-09-30 | $66.6m | us-gaap:GrossProfit |
| Gross profit | 9 months2025-01-01 to 2025-09-30 | $202.9m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months2025-07-01 to 2025-09-30 | $46.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months2025-01-01 to 2025-09-30 | $141.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months2025-07-01 to 2025-09-30 | $17.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months2025-01-01 to 2025-09-30 | $56.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2025-07-01 to 2025-09-30 | $12.5m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months2025-01-01 to 2025-09-30 | $34.7m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months2025-07-01 to 2025-09-30 | −$400.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2025-01-01 to 2025-09-30 | $3.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-07-01 to 2025-09-30 | $5.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months2025-01-01 to 2025-09-30 | $22.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-07-01 to 2025-09-30 | $0.38 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months2025-01-01 to 2025-09-30 | $1.63 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-07-01 to 2025-09-30 | $0.39 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months2025-01-01 to 2025-09-30 | $1.65 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-07-01 to 2025-09-30 | 14,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months2025-01-01 to 2025-09-30 | 14,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months2025-01-01 to 2025-09-30 | −$6.4m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 9 months2025-01-01 to 2025-09-30 | $27.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months2025-01-01 to 2025-09-30 | $6.0m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | At period end2025-09-30 | $50.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2025-09-30 | $887.0m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-09-30 | $1.44bn | us-gaap:Assets |
| Current liabilities | At period end2025-09-30 | $346.8m | us-gaap:LiabilitiesCurrent |
| Current portion of debt | At period end2025-09-30 | $8.3m | us-gaap:DebtCurrent |
| Shareholders' equity | At period end2025-09-30 | $374.8m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000076282-25-000116. Last ingested by Listed: Oct 24, 2026, 14:53 ET. Listed shows no prices and gives no investment advice.