ParkOhio(PKOH) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales decreased 0.3% to $417.6 million in Q3 2024 compared to$418.8 million in Q3 2023, driven by strong demand in Supply Technologies and Engineered Products, offset by lower pricing in Assembly Components [78]. - Cost of sales decreased to $345.3 million in Q3 2024 from$348.8 million in Q3 2023, contributing to a gross margin improvement to 17.3% from 16.7% [80]. - Operating income for Q3 2024 was $23.6 million, down 12.6$27.0 million in Q3 2023 [76]. - Income from continuing operations attributable to common shareholders increased by 9.6% to $13.7 million in Q3 2024 compared to$12.5 million in Q3 2023 [76]. - For the first nine months of 2024, net sales decreased 0.2% to $1,267.8 million from$1,270.4 million in the same period in 2023, primarily due to lower sales in Assembly Components [90]. - Cost of sales for the first nine months of 2024 decreased to $1,050.9 million from$1,063.1 million in the same period in 2023, with a gross margin improvement to 17.1% from 16.3% [92]. - SG&A expenses increased by 11.2% to $47.8 million in Q3 2024, representing 11.4$142.3 million, an increase of 5.3% from $135.1 million in the same period in 2023, representing 11.2$8.1 million, or 1%, to $594.0 million in the nine months ended September 30, 2024, compared to$585.9 million in 2023 [102][105]. - Segment operating income for the Supply Technologies Segment rose by $14.0 million, or 31$59.0 million in the nine months ended September 30, 2024, with an operating income margin increase of 220 basis points [106]. - Net sales for the Assembly Components Segment decreased by $21.8 million, or 7$309.0 million in the nine months ended September 30, 2024, compared to $330.8 million in 2023 [107][110]. - Segment operating income for the Assembly Components Segment fell to$21.6 million in the nine months ended September 30, 2024, down from $26.9 million in 2023, with a margin decrease of 110 basis points [111]. - Net sales for the Engineered Products Segment increased by 3.1$8.6 million from operating activities in the nine months ended September 30, 2024, a decrease from $24.3 million in the same period of 2023 due to higher working capital needs [119]. - Capital expenditures were$22.3 million in the nine months ended September 30, 2024, primarily for increased capacity in the Engineered Products and Assembly Components segments [120]. - As of September 30, 2024, the Company had total liquidity of $194.4 million, including$59.5 million in cash and cash equivalents [127]. - The Company incurred interest expense of $36.0 million in the first nine months of 2024, compared to$33.4 million in the same period of 2023, primarily due to higher interest rates [99]. Debt and Financing - Park-Ohio completed the sale of $350.0 million aggregate principal amount of 6.625$14.6 million [132]. - The Credit Agreement provides a revolving credit facility of $405.0 million, with calculated availability at$108.7 million as of September 30, 2024, exceeding the $50.625 million threshold [131][133]. - The company must maintain a defined debt service coverage ratio of 1.15 to make certain permitted payments, including acquisitions and dividends [134]. Special Charges and Restructuring - The Company recorded$2.1 million in restructuring and other special charges during the first nine months of 2024, a decrease from $6.6 million in the same period of 2023 [95][96]. Interest Expense and Risks - Interest expense increased to$12.1 million in Q3 2024 from $11.6 million in Q3 2023, primarily due to higher interest rates [85]. - A 100-basis-point increase in interest rates would increase interest expense by approximately$2.1 million during the nine-month period ended September 30, 2024 [144]. - The company faces translation risks related to foreign currency exchange rates, which may affect net sales and expenses from foreign operations [145]. - The company has substantial indebtedness and is subject to risks from economic conditions, including supply chain issues and pricing pressures [142]. - The company entered into agreements to hedge foreign currency, which did not have a material impact on results [146]. - Variability in customer orders has resulted in significant fluctuations in operations, particularly in the capital equipment business [138]. Dividends - The company declared and paid dividends totaling $4.9 million during the nine months ended September 30, 2024, with a quarterly dividend of$0.125 per common share declared on November 1, 2024 [137].