SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Ohio

34-1867219

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6065 Parkland Boulevard,

Cleveland,

Ohio

44124

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.00 Per Share	PKOH	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountings standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Number of shares outstanding of registrant’s Common Stock, par value $1.00 per share, as of ~~April 30,~~July 31, 2023: ~~12,813,717~~13,069,297 shares.

Part I. Financial Information


Item 1.			Financial Statements

Current assets held-for-sale - discontinued operations1

Current liabilities held-for-sale - discontinued operations1

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of ~~March 31,~~June 30, 2023 and December 31, 2022 and presented in discontinued operations for all periods presented.

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

Common Stock
Shares Amount Additional
Paid-In
Capital Retained
Earnings Treasury Stock Accumulated
Other
Comprehensive Loss Noncontrolling Interests Total
(In whole shares) (In millions)
Balance at January 1, 2023 16,653,928 $ 16.6 $ 149.8 $ 238.8 $ (86.9) $ (61.8) $ 11.4 $ 267.9
Other comprehensive
income — — — 5.8 — 5.1 0.1 11.0
Stock-based compensation expense — — 1.6 — — — — 1.6
Stock-based compensation activity 9,535 0.1 (0.1) — — — — —
Dividends — — — (1.6) — — — (1.6)
Balance at March 31, 2023 16,663,463 $ 16.7 $ 151.3 $ 243.0 $ (86.9) $ (56.7) $ 11.5 $ 278.9
Common Stock
Shares Amount Additional
Paid-In
Capital Retained
Earnings Treasury Stock Accumulated
Other
Comprehensive Loss Noncontrolling Interests Total
(In whole shares) (In millions)
Balance at January 1, 2022 16,339,722 $ 16.3 $ 142.9 $ 259.4 $ (85.3) $ (19.2) $ 10.7 $ 324.8
Other comprehensive
income (loss) — — — 6.1 — (3.1) 0.2 3.2
Stock-based compensation expense — — 1.6 — — — — 1.6
Stock-based compensation activity (5,502) — — — — — — —
Dividends — — — (1.6) — — — (1.6)
Payments of withholding taxes on share awards
— — — — (0.1) — — (0.1)
Balance at March 31, 2022 16,334,220 $ 16.3 $ 144.5 $ 263.9 $ (85.4) $ (22.3) $ 10.9 $ 327.9


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	(In whole shares)	(In millions)
Balance at January 1, 2023	16,653,928	$	16.6	$	149.8	$	238.8	$	(86.9)	$	(61.8)	$	11.4	$	267.9
Other comprehensive income	—	—		—		5.8		—		5.1		0.1		11.0
Stock-based compensation expense	—	—		1.6		—		—		—		—		1.6
Stock-based compensation activity	9,535	0.1		(0.1)		—		—		—		—		—
Dividends	—	—		—		(1.6)		—		—		—		(1.6)



Balance at March 31, 2023	16,663,463	16.7		151.3		243.0		(86.9)		(56.7)		11.5		278.9
Other comprehensive income (loss)	—	—		—		5.4		—		2.9		(0.5)		7.8
Stock-based compensation expense	—	—		1.7		—		—		—		—		1.7
Stock-based compensation activity	309,237	0.3		(0.3)		—		—		—		—		—


Dividends	—	—		—		(1.6)		—		—		—		(1.6)
Payments of withholding taxes on share awards	—	—		—		—		(1.2)		—		—		(1.2)
Balance at June 30, 2023	16,972,700	$	17.0	$	152.7	$	246.8	$	(88.1)	$	(53.8)	$	11.0	$	285.6


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	(In whole shares)	(In millions)
Balance at January 1, 2022	16,339,722	$	16.3	$	142.9	$	259.4	$	(85.3)	$	(19.2)	$	10.7	$	324.8
Other comprehensive income (loss)	—	—		—		6.1		—		(3.1)		0.2		3.2
Stock-based compensation expense	—	—		1.6		—		—		—		—		1.6
Stock-based compensation activity	(5,502)	—		—		—		—		—		—		—
Dividends	—	—		—		(1.6)		—		—		—		(1.6)

Payments of withholding taxes on share awards	—	—		—		—		(0.1)		—		—		(0.1)

Balance at March 31, 2022	16,334,220	16.3		144.5		263.9		(85.4)		(22.3)		10.9		327.9
Other comprehensive income (loss)	—	—		—		1.0		—		(14.8)		0.5		(13.3)
Stock-based compensation expense	—	—		1.8		—		—		—		—		1.8
Stock-based compensation activity	308,621	0.3		(0.3)		—		—		—		—		—


Dividends	—	—		—		(1.6)		—		—		—		(1.6)
Payments of withholding taxes on share awards	—	—		—		—		(1.0)		—		—		(1.0)
Balance at June 30, 2022	16,642,841	$	16.6	$	146.0	$	263.3	$	(86.4)	$	(37.1)	$	11.4	$	313.8

Three Months Ended March 31,
2023 2022
Dividends per common share $ 0.125 $ 0.125

~~Refer to the accompanying notes to these unaudited condensed consolidated financial statements.~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

Three Months Ended March 31,
2023 2022
(In millions)
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Income from continuing operations $ 7.6 $ 3.9
Adjustments to reconcile income from continuing operations to net cash provided (used) by operating activities from continuing operations:
Depreciation and amortization 7.7 7.8
Stock-based compensation expense 1.6 1.6
Gain on sale of assets (0.8) —
Changes in operating assets and liabilities:
Accounts receivable (9.0) (28.6)
Inventories (1.8) (11.7)
Prepaid and other current assets (6.5) (4.9)
Accounts payable and accrued expenses 1.1 31.5
Other 0.3 (1.7)
Net cash provided (used) by operating activities from continuing operations 0.2 (2.1)
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Purchases of property, plant and equipment (6.0) (5.5)
Proceeds from sale of assets 1.4 —
Business acquisitions, net of cash acquired (0.5) —
Net cash used in investing activities from continuing operations (5.1) (5.5)
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from revolving credit facility, net 3.0 29.2
Payments on other debt (0.5) (0.7)
Proceeds from other debt 3.2 —
Proceeds from (payments on) finance lease facilities, net 1.7 (0.7)
Contingent consideration payment related to prior acquisition (1.3) —
Dividends (1.6) (1.6)
Payments of withholding taxes on share awards — (0.1)
Net cash provided by financing activities from continuing operations 4.5 26.1
DISCONTINUED OPERATIONS1:
Total used by operating activities (6.4) (8.0)
Total used by investing activities (1.5) (1.6)
Total used by financing activities (0.7) (0.9)
Decrease in cash and cash equivalents from discontinued operations (8.6) (10.5)
Effect of exchange rate changes on cash 0.4 (0.5)
(Decrease) increase in cash and cash equivalents (8.6) 7.5
Cash and cash equivalents at beginning of period 58.2 54.1
Cash and cash equivalents at end of period $ 49.6 $ 61.6
Interest paid $ 5.2 $ 1.7
Income taxes paid $ 3.2 $ 1.4

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of March 31, 2023 and December 31, 2022 and presented in discontinued operations for all periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dividends per common share	$	0.125	$	0.125	$	0.250	$	0.250

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.


	Six Months Ended June 30,
	2023		2022
	(In millions)
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Income from continuing operations	$	14.2	$	10.8
Adjustments to reconcile income from continuing operations to net cash provided (used) by operating activities from continuing operations:
Depreciation and amortization	15.5		15.1

Stock-based compensation expense	3.3		3.4


Gains on sales of assets	(0.8)		(2.9)


Changes in operating assets and liabilities:
Accounts receivable	(8.8)		(30.9)
Inventories	3.0		(32.8)
Prepaid and other current assets	(14.1)		(3.6)
Accounts payable and accrued expenses	(15.1)		8.0


Other	3.7		(2.1)
Net cash provided (used) by operating activities from continuing operations	0.9		(35.0)
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Purchases of property, plant and equipment	(13.4)		(12.7)

Proceeds from sale of assets	1.4		4.0
Business acquisitions, net of cash acquired	(1.0)		—
Net cash used in investing activities from continuing operations	(13.0)		(8.7)
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from revolving credit facility, net	14.2		67.9

Payments on other debt	(0.8)		(1.3)
Proceeds from other debt	4.2		1.3
Proceeds from (payments on) finance lease facilities, net	0.9		(1.3)




Payments related to prior acquisitions	(2.0)		—
Dividends	(3.2)		(3.2)

Payments of withholding taxes on share awards	(1.2)		(1.1)


Net cash provided by financing activities from continuing operations	12.1		62.3
DISCONTINUED OPERATIONS1:
Total used by operating activities	(2.2)		(3.3)
Total used by investing activities	(1.7)		(2.7)
Total used by financing activities	(1.2)		(1.7)
Decrease in cash and cash equivalents from discontinued operations	(5.1)		(7.7)
Effect of exchange rate changes on cash	0.3		(3.9)
(Decrease) increase in cash and cash equivalents	(4.8)		7.0
Cash and cash equivalents at beginning of period	58.2		54.1
Cash and cash equivalents at end of period	$	53.4	$	61.1
Interest paid	$	22.6	$	15.4
Income taxes paid	$	4.4	$	2.7

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of June 30, 2023 and December 31, 2022 and presented in discontinued operations for all periods presented.

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

The condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, “we,” “our” or the “Company”). All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

~~As of December 31, 2022 and March 31, 2023, we~~We determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting ~~criteria.~~criteria as of December 31, 2022 and June 30, 2023. Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Form 10-Q. Unless otherwise indicated, amounts and activity in this Form 10-Q are presented on a continuing operations basis. See Note 5, “Discontinued Operations,” in the Notes to Consolidated Financial Statements (Unaudited) for further information.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

No recently-issued accounting standards updates are expected to have a material impact on our results of operations, financial condition or liquidity.

We disaggregate our revenue by product line and geographic region of our customer as we believe these metrics best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. See details in the tables below.

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~March 31, 2023~~

Three Months Ended March 31,
2023 2022
(In millions)
PRODUCT LINE
Supply Technologies $ 170.4 $ 146.2
Engineered specialty fasteners and other products 25.4 22.6
Supply Technologies Segment 195.8 168.8
Fuel, rubber and plastic products 110.4 97.9
Assembly Components Segment 110.4 97.9
Industrial equipment 84.4 64.3
Forged and machined products 32.9 26.7
Engineered Products Segment 117.3 91.0
Total revenues $ 423.5 $ 357.7

Supply Technologies Segment Assembly Components Segment Engineered Products Segment Total Revenues
(In millions)
Three Months Ended March 31, 2023
GEOGRAPHIC REGION
United States $ 119.1 $ 81.0 $ 68.4 $ 268.5
Europe 39.0 4.5 15.6 59.1
Asia 15.1 5.7 16.5 37.3
Mexico 18.6 10.5 4.7 33.8
Canada 3.2 7.5 7.8 18.5
Other 0.8 1.2 4.3 6.3
Total $ 195.8 $ 110.4 $ 117.3 $ 423.5
Three Months Ended March 31, 2022
GEOGRAPHIC REGION
United States $ 101.6 $ 70.5 $ 52.2 $ 224.3
Europe 31.9 4.1 16.1 52.1
Asia 14.9 5.2 12.7 32.8
Mexico 16.2 9.3 4.1 29.6
Canada 3.0 8.3 4.6 15.9
Other 1.2 0.5 1.3 3.0
Total $ 168.8 $ 97.9 $ 91.0 $ 357.7

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~March 31,~~June 30, 2023


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
PRODUCT LINE
Supply Technologies	$	171.5	$	154.2	$	341.9	$	300.4
Engineered specialty fasteners and other products	25.8		21.6		51.2		44.2
Supply Technologies Segment	197.3		175.8		393.1		344.6

Fuel, rubber and plastic products	112.0		95.4		222.4		193.3

Assembly Components Segment	112.0		95.4		222.4		193.3

Industrial equipment	88.1		69.5		172.5		133.8
Forged and machined products	30.7		29.1		63.6		55.8
Engineered Products Segment	118.8		98.6		236.1		189.6

Total revenues	$	428.1	$	369.8	$	851.6	$	727.5


	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Three Months Ended June 30, 2023
GEOGRAPHIC REGION
United States	$	121.3	$	82.8	$	68.4	$	272.5
Europe	38.6		4.6		14.9		58.1
Asia	15.3		6.2		19.4		40.9
Mexico	18.1		9.4		3.9		31.4
Canada	3.9		8.0		7.5		19.4
Other	0.1		1.0		4.7		5.8
Total	$	197.3	$	112.0	$	118.8	$	428.1

Three Months Ended June 30, 2022
GEOGRAPHIC REGION
United States	$	108.0	$	71.3	$	58.6	$	237.9
Europe	30.7		4.4		14.4		49.5
Asia	16.9		4.2		12.3		33.4
Mexico	16.5		9.1		3.9		29.5
Canada	3.1		5.7		5.5		14.3
Other	0.6		0.7		3.9		5.2
Total	$	175.8	$	95.4	$	98.6	$	369.8

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023


	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Six Months Ended June 30, 2023
GEOGRAPHIC REGION
United States	$	240.4	$	163.8	$	136.8	$	541.0
Europe	77.6		9.1		30.5		117.2
Asia	30.4		11.9		35.9		78.2
Mexico	36.7		19.9		8.6		65.2
Canada	7.1		15.5		15.3		37.9
Other	0.9		2.2		9.0		12.1
Total	$	393.1	$	222.4	$	236.1	$	851.6

Six Months Ended June 30, 2022
GEOGRAPHIC REGION
United States	$	209.6	$	141.8	$	110.8	$	462.2
Europe	62.6		8.5		30.5		101.6
Asia	31.8		9.4		25.0		66.2
Mexico	32.7		18.4		8.0		59.1
Canada	6.1		14.0		10.1		30.2
Other	1.8		1.2		5.2		8.2
Total	$	344.6	$	193.3	$	189.6	$	727.5

For over time arrangements, contract liabilities primarily relate to advances or deposits received from the Company’s customers before revenue is recognized. These amounts, which totaled ~~$51.4~~$53.3 million and $52.6 million at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

For over time arrangements, contract assets primarily relate to revenue recognized in advance of billings to customers under long-term contracts accounted for under percentage of completion. These amounts, which totaled ~~$60.3~~$66.8 million and $56.7 million at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

Our operating segments are defined as components of the enterprise for which separate financial information is available and evaluated on a regular basis by our chief operating decision maker to allocate resources and assess performance.

For purposes of measuring business segment performance, the Company 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 and share-based compensation and corporate office costs. Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costs; ~~gain~~gains on ~~sale~~sales of assets; other components of pension income and other postretirement benefits expense, net; and interest expense, net.

Results by business segment were as follows:

Three Months Ended March 31,
2023 2022
(In millions)
NET SALES OF CONTINUING OPERATIONS:
Supply Technologies $ 195.8 $ 168.8
Assembly Components1
110.4 97.9
Engineered Products 117.3 91.0
$ 423.5 $ 357.7
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES:
Supply Technologies $ 14.0 $ 12.0
Assembly Components1
7.3 (0.4)
Engineered Products 5.0 1.8
Total segment operating income 26.3 13.4
Corporate costs (6.9) (8.0)
Gain on sale of assets 0.8 —
Operating income 20.2 5.4
Other components of pension income and other postretirement benefits expense, net
0.7 2.8
Interest expense, net (10.7) (7.1)
Income from continuing operations before income taxes1
$ 10.2 $ 1.1

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~March~~June 30, 2023


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
NET SALES OF CONTINUING OPERATIONS:
Supply Technologies	$	197.3	$	175.8	$	393.1	$	344.6
Assembly Components1	112.0		95.4		222.4		193.3
Engineered Products	118.8		98.6		236.1		189.6
	$	428.1	$	369.8	$	851.6	$	727.5
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES:
Supply Technologies	$	15.4	$	12.7	$	29.4	$	24.7
Assembly Components1	8.4		(1.4)		15.7		(1.9)
Engineered Products	3.2		7.1		8.2		8.9
Total segment operating income	27.0		18.4		53.3		31.7

Corporate costs	(7.8)		(7.5)		(14.7)		(15.4)

Gains on sales of assets	—		2.9		0.8		2.9


Operating income	19.2		13.8		39.4		19.2
Other components of pension income and other postretirement benefits expense, net	0.6		2.8		1.3		5.6
Interest expense, net	(11.1)		(7.6)		(21.8)		(14.7)

Income from continuing operations before income taxes1	$	8.7	$	9.0	$	18.9	$	10.1

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of June 30, 2023 and December 31, ~~2023~~

A business is classified as held-for-sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value, and certain other criteria of ASC 360 are met. A business classified as held-for-sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less costs to sell, a loss is recognized and updated each reporting period as appropriate. A business held-for-sale is classified as discontinued operations if the disposal group is a component of an entity; the component of an entity meets the held-for-sale criteria of ASC 360; and disposal of the component of an entity represents a strategic shift that will have a major effect on the entity's operations and financial results.

During the fourth quarter of 2022, the Company determined that the Aluminum Products business met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the held-for-sale assets and liabilities and the operating results of Aluminum Products in discontinued operations for all periods presented in this Quarterly Report on Form 10-Q. The Aluminum Products business was previously reported in the Company’s Assembly Components segment until meeting the discontinued operations criteria. See Note 10 for further discussion ~~of the entry into a memorandum of understanding (the “MOU”)~~ related to the potential sale of this business.

Three Months Ended March 31,
2023 2022
Net sales $ 46.9 $ 60.6
Cost of sales 45.5 53.8
Selling, general and administrative 3.1 3.7
Restructuring and other special charges — 0.5
Operating (loss) income (1.7) 2.6
Interest expense1
(0.7) (0.7)
(Loss) income from operation of discontinued operations (2.4) 1.9
Income tax benefit 0.7 0.5
(Loss) income from discontinued operations, net of tax $ (1.7) $ 2.4

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business, totaling $0.6 million in both three months ended March 31, 2023 and 2022.

~~The following represents the details of assets and liabilities held-for-sale in each period:~~

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~March 31,~~June 30, 2023

March 31, 2023 December 31, 2022
(In millions, except share data)
ASSETS
Current assets:
Accounts receivable, net $ 32.9 $ 24.9
Inventories, net 21.4 30.2
Other current assets 1.3 1.2
Current assets held-for-sale1
55.6 56.3
Property, plant and equipment, net 47.6 46.1
Operating lease right-of-use assets 4.8 4.8
Long-term assets held-for-sale1
52.4 50.9
Total assets held-for-sale $ 108.0 $ 107.2
LIABILITIES
Current liabilities:
Trade accounts payable $ 19.4 $ 22.8
Current portion of finance lease liabilities 2.2 2.4
Current portion of operating lease liabilities 2.1 2.3
Other accrued expenses 8.8 10.7
Current liabilities held-for-sale1
$ 32.5 $ 38.2
Long-term liabilities, less current portion:
Long-term finance lease liabilities 2.7 3.1
Long-term operating lease liabilities 2.1 2.5
Long-term liabilities held-for-sale1
4.8 5.6
Total liabilities held-for-sale $ 37.3 $ 43.8


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Net sales	$	45.4	$	58.9	$	92.3	$	119.6
Cost of sales	42.5		58.7		88.0		112.7

Selling, general and administrative	4.5		3.7		7.6		7.3
Restructuring and other special charges	—		2.7		—		3.2

Operating loss	(1.6)		(6.2)		(3.3)		(3.6)
Interest expense1	(0.8)		(0.7)		(1.5)		(1.4)



Loss from operation of discontinued operations	(2.4)		(6.9)		(4.8)		(5.0)

Income tax benefit	0.7		1.5		1.4		2.0
Loss from discontinued operations, net of tax	$	(1.7)	$	(5.4)	$	(3.4)	$	(3.0)

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business. The allocations were $0.7 million and $0.6 million in the three months ended June 30, 2023 and 2022, respectively, and $1.3 million and $1.2 million in the six months ended June 30, 2023 and 2022, respectively.

The following represents the details of assets and liabilities held-for-sale in each period:


	June 30, 2023		December 31, 2022
	(In millions, except share data)
ASSETS
Current assets:
Accounts receivable, net	$	31.0	$	24.9
Inventories, net	24.4		30.2

Other current assets	1.9		1.2
Current assets held-for-sale1	57.3		56.3

Property, plant and equipment, net	47.8		46.1
Operating lease right-of-use assets	3.7		4.8
Long-term assets held-for-sale1	51.5		50.9

Total assets held-for-sale	$	108.8	$	107.2
LIABILITIES
Current liabilities:
Trade accounts payable	$	25.3	$	22.8
Current portion of finance lease liabilities	2.0		2.4
Current portion of operating lease liabilities	1.8		2.3
Other accrued expenses	9.0		10.7
Current liabilities held-for-sale1	$	38.1	$	38.2

Long-term liabilities, less current portion:
Long-term finance lease liabilities	2.3		3.1
Long-term operating lease liabilities	1.9		2.5
Long-term liabilities held-for-sale1	4.2		5.6

Total liabilities held-for-sale	$	42.3	$	43.8

(1) - We reasonably expect to finalize the sale of the Aluminum Products business in ~~2023,~~the next twelve months, and therefore we have presented all assets and liabilities held-for-sale as current in the Condensed Consolidated Balance Sheet.

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

During the three and six months ended ~~March 31,~~June 30, 2023 and 2022, the Company incurred the following expenses related to plant closure and consolidation in connection with its profit-improvement actions across its segments. These charges are included in Restructuring and other special charges in the Condensed Consolidated Statements of Income.


	Facility-Related Costs		Severance and Other		Total

Three months ended June 30, 2023:
Assembly Components	$	0.2	$	—	$	0.2
Engineered Products	0.7		1.9		2.6
Total	$	0.9	$	1.9	$	2.8

Three months ended June 30, 2022:
Assembly Components	$	1.5	$	—	$	1.5
Engineered Products	0.8		—		0.8
Total	$	2.3	$	—	$	2.3

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~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~March 31, 2023~~

The actions in the Assembly Components segment were primarily in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, to relocate certain production to lower-cost facilities with open capacity, and to complete other cost-reduction actions.

The actions in the Engineered Product segment were primarily in connection with plant closure and consolidation of multiple locations, and to complete other cost-reduction actions.

The Company expects to incur expenses of ~~approximately~~less than $1.0 million in the remainder of 2023 in connection with its plant closure and consolidation activities.

~~Inventories, net consist of the following:~~

March 31, 2023 December 31, 2022
(In millions)
Raw materials and supplies $ 103.3 $ 105.0
Work-in-process 45.0 42.9
Finished goods 261.7 258.6
Inventories, net $ 410.0 $ 406.5

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~March 31,~~June 30, 2023

Inventories, net consist of the following:


	June 30, 2023		December 31, 2022
	(In millions)
Raw materials and supplies	$	101.8	$	105.0
Work-in-process	50.5		42.9
Finished goods	253.6		258.6

Inventories, net	$	405.9	$	406.5

The Company estimates warranty claims that may be incurred based on current and historical data of products sold. Actual warranty expense could differ from the estimates made by the Company based on product performance. The following table presents changes in the Company’s product warranty liability for the three and six months ended ~~March 31,~~June 30, 2023 and 2022:

NOTE 9 — Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of its annual effective rate, adjusted for discrete items ~~if any,~~ in each ~~period.~~period, if any.

In the three months ended ~~March 31,~~June 30, 2023, income tax expense was ~~$2.6~~$2.1 million on pre-tax income from continuing operations of ~~$10.2~~$8.7 million, representing an effective income tax rate of ~~25%~~24%. In the three months ended ~~March 31,~~June 30, 2022, income tax expense was $2.1 million on pre-tax income of $9.0 million, an effective income tax rate of 23%.

In the six months ended June 30, 2023, income tax expense was $4.7 million on pre-tax income from continuing operations of $18.9 million, representing an effective income tax rate of 24%. In the six months ended June 30, 2022, income tax benefit was ~~$2.8~~$0.7 million on ~~pretax~~pre-tax income of ~~$1.1~~$10.1 million. The benefit in 2022 included a discrete tax benefit of $3.2 million related to federal research and development tax credits.

Debt consists of the following:

Carrying Value at
Maturity Date Interest Rate at
March 31, 2023 March 31, 2023 December 31, 2022
(In millions)
Senior Notes April 15, 2027 6.625 % $ 350.0 $ 350.0
Revolving credit facility November 26, 2024 5.94 % 288.5 285.3
Finance Leases Various Various 20.2 18.5
Other Various Various 18.1 15.3
Total debt 676.8 669.1
Less: Current portion of long-term debt and short-term debt (12.8) (10.9)
Less: Unamortized debt issuance costs (2.9) (3.1)
Total long-term debt $ 661.1 $ 655.1

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023


				Carrying Value at
	Maturity Date	Interest Rate at June 30, 2023		June 30, 2023		December 31, 2022
				(In millions)
Senior Notes	April 15, 2027	6.625	%	$	350.0	$	350.0

Revolving credit facility	November 26, 2024	6.43	%	300.0		285.3


Finance Leases	Various	Various		19.4		18.5
Other	Various	Various		18.9		15.3
Total debt				688.3		669.1
Less: Current portion of long-term debt and short-term debt				(12.5)		(10.9)

Less: Unamortized debt issuance costs				(2.7)		(3.1)
Total long-term debt				$	673.1	$	655.1

In addition to debt listed above, on December 30, 2022, the Company entered into ~~the MOU~~a memorandum of understanding (the “MOU”) with a third party pursuant to which the third party would purchase our Aluminum Products business. The sale of the Aluminum Products business is subject to the successful completion of a definitive purchase agreement and other customary conditions. In connection with the MOU, the Company also entered into a financing arrangement with the third party pursuant to which the Company received a portion

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~March 31, 2023~~

of the estimated purchase price of the Aluminum Products business, including $20.0 million of cash and a promissory note in the principal amount of $25.0 million, and recorded a financing arrangement liability of $45.0 million. The Company used the $20.0 million from this financing arrangement to repay indebtedness under its revolving credit facility. If a definitive purchase agreement between the parties is not entered into or the sale is not successfully consummated, the promissory note will be cancelled and the Company will repay the third party $20.0 ~~million, less a $0.8 million break-up fee.~~million.

~~Park-Ohio's~~The Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) of the Company's subsidiary, Park-Ohio Industries, Inc. (“Park-Ohio”) 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 by an aggregate incremental amount up to $70.0 million. The Credit Agreement matures on November 26, 2024. As of ~~March 31,~~June 30, 2023, we had borrowing availability of ~~$98.4~~$86.8 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately ~~$46.0~~$46.5 million at ~~March 31,~~June 30, 2023 and $41.0 million at December 31, 2022.

In 2017, Park-Ohio completed the issuance, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”). The Notes are unsecured senior obligations of Park-Ohio and are guaranteed on an unsecured senior basis by the 100% owned material domestic subsidiaries of Park-Ohio.

In 2015, the Company entered into a finance lease agreement (the “Lease Agreement”). The Lease Agreement provides the Company up to $50.0 million for finance leases. Finance lease obligations of ~~$4.5~~$4.0 million were borrowed under the Lease Agreement to acquire machinery and equipment as of ~~March 31,~~June 30, 2023. As of ~~March 31,~~June 30, 2023, the Company had additional finance leases totaling ~~$15.7~~$15.4 million.

In 2015, the Company, through its Southwest Steel Processing LLC subsidiary, entered into a financing agreement with the Arkansas Development Finance Authority, which matures in September 2025. The financing agreement provides the Company the ability to borrow up to $11.0 million for expansion of its manufacturing facility in Arkansas. The Company had ~~$4.0~~$3.7 million of borrowings outstanding under this agreement as of ~~March 31,~~June 30, 2023, which is included in Other above.

The following table represents fair value information of the Notes, classified as Level 1 using estimated quoted market prices.

March 31, 2023 December 31, 2022
(In millions)
Carrying amount $ 350.0 $ 350.0
Fair value $ 273.9 $ 227.5

Table of Contents

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~March 31,~~June 30, 2023


	June 30, 2023		December 31, 2022
	(In millions)
Carrying amount	$	350.0	$	350.0
Fair value	$	311.5	$	227.5

The fair value of the revolving credit facility is equal to its carrying value as the Company has the ability to repay the outstanding principal at par value at any time. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.

A summary of restricted share activity for the ~~three~~six months ended ~~March 31,~~June 30, 2023 is as follows:

(a) - Included in this amount is 9,000 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Income. Total stock-based compensation expense was ~~$1.6~~$1.7 million and $1.8 million for ~~both~~ the three months ended ~~March 31,~~June 30, 2023 and ~~2022.~~2022, respectively. Total stock-based compensation expense was $3.3 million and $3.4 million for the six months ended June 30, 2023 and 2022, respectively. As of ~~March 31,~~June 30, 2023, there was ~~$6.6~~$9.9 million of unrecognized compensation cost related to non-vested stock-based compensation, which cost is expected to be recognized over a weighted-average period of ~~1.6~~2.1 years.

The Company is subject to a variety of claims, suits, investigations and administrative proceedings with respect to commercial, premises liability, product liability, employment, personal injury and environmental matters arising from the ordinary course of business. The Company records a liability for loss contingencies in the consolidated financial statements when a loss is known or considered probable and the amount can be reasonably estimated. Our provisions are based on historical experience, current information and legal advice, and they may be adjusted in the future based on new developments. Estimating probable losses requires the analysis of multiple forecasted factors that often depend on judgments and potential actions by third parties. Although it is not possible to predict with certainty the ultimate outcome or cost of these matters, the Company believes they will not have a material adverse effect on our consolidated financial statements.

Our subsidiaries are involved in a number of contractual and warranty-related disputes. We believe that appropriate liabilities for these contingencies have been recorded; however, actual results may differ materially from our estimates.

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in 112 cases asserting claims on behalf of 162 plaintiffs alleging personal injury as a result of exposure to asbestos. In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. Historically, we have been dismissed from asbestos cases. We intend to vigorously defend these cases and believe we will continue to be successful in being dismissed from such cases.

While it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations.

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~March 31, 2023~~

The components of net periodic benefit (income) expense costs recognized for the three and six months ended ~~March 31,~~June 30, 2023 and 2022 were as follows:

The components of and changes in accumulated other comprehensive loss for the three and six months ended ~~March 31,~~June 30, 2023 and 2022 were as follows:

Cumulative Translation Adjustment Cash Flow Hedges Pension and Postretirement Benefits Total Cumulative Translation Adjustment Cash Flow Hedges Pension and Postretirement Benefits Total
(In millions)
Three Months Ended March 31, 2023 Three Months Ended March 31, 2022
Beginning balance $ (38.7) $ 0.5 $ (23.6) $ (61.8) $ (18.3) $ — $ (0.9) $ (19.2)
Currency translation(a)
3.3 — — 3.3 (3.9) — — (3.9)
Foreign currency forward contracts, net of tax — (0.2) — (0.2) — 0.7 — 0.7
Pension and OPEB activity, net of tax — — 2.0 2.0 — — 0.1 0.1
Ending balance $ (35.4) $ 0.3 $ (21.6) $ (56.7) $ (22.2) $ 0.7 $ (0.8) $ (22.3)

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023


	Cumulative Translation Adjustment		Cash Flow Hedges		Pension and Postretirement Benefits		Total		Cumulative Translation Adjustment		Cash Flow Hedges		Pension and Postretirement Benefits		Total
	(In millions)
	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022
Beginning balance	$	(35.4)	$	0.3	$	(21.6)	$	(56.7)	$	(22.2)	$	0.7	$	(0.8)	$	(22.3)
Currency translation(a)	2.2		—		—		2.2		(14.6)		—		—		(14.6)

Foreign currency forward contracts, net of tax	—		(0.2)		—		(0.2)		—		(0.2)		—		(0.2)
Pension and OPEB activity, net of tax	—		—		0.9		0.9		—		—		—		—


Ending balance	$	(33.2)	$	0.1	$	(20.7)	$	(53.8)	$	(36.8)	$	0.5	$	(0.8)	$	(37.1)

	Six Months Ended June 30, 2023								Six Months Ended June 30, 2022
Beginning balance	$	(38.7)	$	0.5	$	(23.6)	$	(61.8)	$	(18.3)	$	—	$	(0.9)	$	(19.2)
Currency translation (a)	5.5		—		—		5.5		(18.5)		—		—		(18.5)
Foreign currency forward contracts	—		(0.4)		—		(0.4)		—		0.5		—		0.5
Pension and OPEB activity, net of tax	—		—		2.9		2.9		—		—		0.1		0.1


Ending balance	$	(33.2)	$	0.1	$	(20.7)	$	(53.8)	$	(36.8)	$	0.5	$	(0.8)	$	(37.1)

(a)No income taxes were provided on currency translation as foreign earnings are considered permanently reinvested.

The following table sets forth the weighted-average number of shares used in the computation of earnings per share:

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~March 31, 2023~~

Certain restricted stock awards are anti-dilutive and therefore excluded from the computation of diluted earnings per share. Anti-dilutive shares were ~~0.1~~0.2 million and ~~0.2~~0.3 million for the three months ended ~~March 31,~~June 30, 2023 and 2022, respectively, and 0.2 million and 0.3 million for the six months ended June 30, 2023 and 2022, respectively.

On ~~April~~July 21, 2023, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on ~~May 19,~~August 18, 2023 to shareholders of record as of the close of business on ~~May 5,~~August 4, 2023 and will result in a cash outlay of approximately $1.6 million.


Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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.

As of ~~March 31,~~June 30, 2023 and December 31, 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Quarterly Report on Form 10-Q. Unless otherwise indicated, amounts and activity in this Quarterly Report on Form 10-Q are presented on a continuing operations basis. See Note 5 to the condensed consolidated financial statements, included elsewhere herein. On December 30, 2022, we entered into a memorandum of understanding (the “MOU”) with a third party pursuant to which the third party would purchase our Aluminum Products business. The sale of the Aluminum Products business is subject to the entry into a definitive purchase agreement and other customary conditions. See Note 10 to the condensed consolidated financial statements, included elsewhere ~~herein.~~herein, for further discussion of the MOU.

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; sports and recreational equipment; aerospace and defense; semiconductor equipment; electrical distribution and controls; consumer electronics; bus and coaches; ~~automotive,~~automotive; agricultural and ~~construction~~industrial equipment; HVAC; lawn and garden; plumbing; and medical.

Assembly Components (which excludes the discontinued Aluminum Products business) 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: automotive, including automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and marine original equipment manufacturers (“OEMs”), on a sole-source basis.

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; silicon; coatings; forging; foundry; heavy-duty truck; construction equipment; automotive; oil and gas; locomotive and rail manufacturing; and aerospace and defense.

Sales and operating income for these three segments are provided in Note 4 to the condensed consolidated financial statements, included elsewhere herein.

*Calculation not meaningful

Net sales increased ~~18.4%~~15.8% to ~~$423.5~~$428.1 million in the ~~first three months~~second quarter of 2023 compared to ~~$357.7~~$369.8 million in the same period in 2022. This increase was primarily due to higher customer demand in all three of our business ~~segments.~~segments and increased product pricing.

The factors explaining the changes in segment net sales for the three months ended ~~March 31,~~June 30, 2023 compared to the corresponding 2022 period are contained within the “Segment Results” section below.

Cost of Sales and Gross Margin

Cost of sales increased 13.3% to $358.0 million in the second quarter of 2023 compared to $316.1 million in the same period in 2022. The increase in cost of sales was primarily due to the increase in net sales for the 2023 period compared to the

corresponding period in 2022. Gross margin was 16.4% in the 2023 period compared to 14.5% in the corresponding 2022 period, driven by profit flow-through from the higher sales levels and the impact of our profit-enhancement initiatives.

SG&A expenses were $46.8 million in the second quarter of 2023 compared to $40.5 million in the comparable period in 2022, an increase of 15.6%. As a percentage of net sales, SG&A expenses decreased to 10.9% in the second quarter of 2023 compared to 11.0% in corresponding 2022 period. The improvement in SG&A expenses as a percentage of net sales was driven by the impact of fixed SG&A expenses over the higher revenue base in the 2023 period compared to the same period a year ago, which more than offset higher selling expenses as a result of higher sales levels; higher costs due to ongoing inflation; SG&A expenses of our 2022 acquisitions; and higher employee costs.

Restructuring and Other Special Charges

During the three months ended June 30, 2023, the Company recorded restructuring and other special charges of $4.1 million compared to $2.3 million in 2022. The charges in both periods relate primarily to plant closure and consolidation activities, including severance, and other initiatives in the Company’s Assembly Components and Engineered Products segments.

Gains on Sales of Assets

During the second quarter of 2022, in connection with the plant closure and consolidation initiatives, the Company sold real estate within its Engineered Products segment for cash proceeds of $3.6 million, resulting in a gain of $2.5 million, and within the Assembly Components segment for cash proceeds of $0.4 million, resulting in a gain of $0.4 million.

Other Components of Pension Income and Other Postretirement Benefits Expense (“OPEB”), Net

Other components of pension income and OPEBexpense, net was $0.6 million in the three months ended June 30, 2023 compared to $2.8 million in the corresponding period in 2022. This decrease was due to lower returns on plan assets impacting 2023 compared to 2022.

Interest Expense, Net

Interest expense, net was $11.1 million in the second quarter of 2023 compared to $7.6 million in the 2022 period. The increase was due to higher average outstanding borrowings and higher interest rates during the 2023 period.

In the three months ended June 30, 2023, income tax expense was $2.1 million on pre-tax income from continuing operations of $8.7 million, representing an effective income tax rate of 24%. In the three months ended June 30, 2022, income tax expense was $2.1 million on pre-tax income of $9.0 million, an effective income tax rate of 23%.


	Six Months Ended June 30,
	2023			2022			$ Change		% Change
	(Dollars in millions, except per share data)
Net sales	$	851.6		$	727.5		$	124.1	17.1	%
Cost of sales	714.3			624.9			89.4		14.3	%


SG&A expenses	92.1			80.7			11.4		14.1	%
SG&A expenses as a percentage of net sales	10.8		%	11.1		%
Restructuring and other special charges	6.6			5.6			1.0		17.9	%
Gains on sales of assets	(0.8)			(2.9)			2.1		*


Operating income	39.4			19.2			20.2		105.2	%
Other components of pension income and other postretirement benefits expense, net	1.3			5.6			(4.3)		(76.8)	%
Interest expense, net	(21.8)			(14.7)			(7.1)		48.3	%

Income from continuing operations before income taxes	18.9			10.1			8.8		87.1	%
Income tax (expense) benefit	(4.7)			0.7			(5.4)		*


Income from continuing operations	14.2			10.8			3.4		31.5	%
Loss (income) attributable to noncontrolling interests	0.4			(0.7)			1.1		*
Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders	$	14.6		$	10.1		$	4.5	44.6	%

Earnings from continuing operations per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic:
Continuing operations	$	1.20		$	0.83		$	0.37	44.6	%



Diluted:
Continuing operations	$	1.18		$	0.83		$	0.35	42.2	%

*Calculation not meaningful

Net sales increased 17.1% to $851.6 million in the first six months of 2023 compared to $727.5 million in the same period in 2022. This increase was primarily due to higher customer demand in all three of our business segments and increased product pricing.

The factors explaining the changes in segment net sales for the six months ended June 30, 2023 compared to the corresponding 2022 period are contained in the “Segment Results” section below.

Cost of Sales and Gross Margin

Cost of sales increased ~~15.4%~~14.3% to ~~$356.3~~$714.3 million in the first ~~three~~six months of 2023 compared to ~~$308.8~~$624.9 million in the same period in 2022. The increase incost of sales was primarily due to the increase in net sales described above. Gross margin was 16.1% in the 2023 period compared to 14.1% in the corresponding 2022 period, driven by profit flow-through from the higher sales levels and the impact of our profit-enhancement initiatives.

SG&A expenses were ~~$45.3~~$92.1 million in the first ~~three~~six months of 2023, compared to ~~$40.2~~$80.7 million in the same period in 2022, an increase of ~~12.7%~~14.1%. As a percentage of net sales, SG&A expenses ~~were 10.7%~~decreased to 10.8% in the first ~~three~~six months of 2023 compared to ~~11.2%~~11.1% in the comparable period in 2022. The improvement in SG&A expenses as a percentage of net sales was driven by the impact of fixed SG&A expenses over the higher revenue base in the 2023 period compared to the same period a year ago, which more than offset higher selling expenses as a result of higher sales ~~levels,~~levels; higher costs due to ongoing ~~inflation~~inflation; SG&A expenses of our 2022 acquisitions; and higher employee costs.

Restructuring and Other Special Charges

During the first ~~three~~six months of 2023, the Company recorded restructuring and other special charges of ~~$2.5~~$6.6 million compared to ~~$3.3~~$5.6 million in 2022. The charges in both ~~2023 and 2022 related~~periods relate primarily to plant closure and consolidation activities, including severance, and other initiatives in the ~~Company's~~Company’s Assembly Components and Engineered Products ~~segments; other cost reduction~~segments.

Gains on Sales of Assets

During the six months ended June, 30, 2023, in connection with the plant closure and consolidation initiatives, the Company sold real estate within its Engineered Products segment for cash proceeds of $1.4 million, resulting in ~~all three business segments;~~a gain of $0.8 million.

During the six months ended June, 30, 2022, in connection with the plant closure and ~~costs related to acquisitions.~~consolidation initiatives, the Company sold real estate within its Engineered Products segment for cash proceeds of $3.6 million, resulting in a gain of $2.5 million, and within the Assembly Components segment for cash proceeds of $0.4 million, resulting in a gain of $0.4 million.

Other Components of Pension Income and Other Postretirement Benefits Expense, Net

Other components of pension income and other postretirement benefits expense, net was ~~$0.7~~$1.3 million in the first ~~three~~six months of 2023 compared to ~~$2.8~~$5.6 million in the corresponding period in 2022. This decrease was due to lower returns on plan assets impacting 2023 compared to 2022.

Interest Expense, Net

Interest expense, net was ~~$10.7~~$21.8 million in the first ~~three~~six months of 2023 compared to ~~$7.1~~$14.7 million in the 2022 period. The increase was due primarily to higher interest rates and higher average outstanding debt balances in the 2023 period compared to the same period a year ago.

Income Tax Expense/Benefit

In the ~~three~~six months ended ~~March 31,~~June 30, 2023, income tax expense was ~~$2.6~~$4.7 million on pre-tax income from continuing operations of ~~$10.2~~$18.9 million, representing an effective income tax rate of ~~25%~~24%. In the ~~three~~six months ended ~~March 31,~~June 30, 2022, income tax benefit was ~~$2.8~~$0.7 million on ~~pretax~~pre-tax income of ~~$1.1~~$10.1 million. The benefit in 2022 included a discrete tax benefit of $3.2 million related to federal research and development tax credits.

For purposes of business segment performance measurement, the Company 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 or unusual in nature or are corporate costs, which include but are not limited to executive and share-based compensation and corporate office costs.

Three months ended June 30:

Net sales increased ~~16%~~12.2% in the three months ended ~~March 31,~~June 30, 2023 compared to the 2022 period due primarily to higher customer demand in ~~nearly all~~many of the Company's key end markets, with the largest increases in the power sports, heavy-duty truck, industrial and agricultural equipment, and civilian aerospace ~~markets.~~markets, as well as the sales from our 2022 acquisitions.

Segment operating income increased ~~by $2.0~~$2.7 million to $15.4 million for the three months ended June 30, 2023 compared to the same period in 2022, and segment operating income margin ~~was 10~~increased 60 basis points ~~higher~~ in the 2023 period compared to the same period a year ago. These increases were driven by the higher sales levels and the impact of profit-enhancement actions, partially offset by certain inflationary supply chain costs.

Six months ended June 30:

Net sales increased 14.1% in the six months ended June 30, 2023 compared to the 2022 period due primarily to higher customer demand in many of the Company's key end markets, with the largest increases in the power sports, heavy-duty truck, industrial and agricultural equipment, and civilian aerospace markets, as well as the sales from our 2022 acquisitions.

Segment operating income increased $4.7 million to $29.4 million for the six months ended June 30, 2023 compared to the same period in 2022, and segment operating income margin increased 30 basis points in the 2023 period compared to the same period a year ago. These increases were driven by the higher sales levels and the impact of profit-enhancement actions, partially offset by certain inflationary supply chain costs.

Three months ended June 30:

Net sales increased ~~13%~~17.4% in the three months ended ~~March 31,~~June 30, 2023 compared to the 2022 period. The sales increase was driven by higher customer ~~demand.~~demand and increased product pricing.

Segment operating income was $8.4 million in the three months ended June 30, 2023 ~~period increased by $7.7 million, and segment operating income margin increased by 700 basis points~~ compared to a loss of $1.4 million in the ~~corresponding period of 2022.~~2022 period. The improvement in segment operating results in the 2023 period compared to the same period in the prior year was driven by profit flow-through from the higher sales levels and the benefit of plant consolidation and other profit-improvement initiatives, including increased product pricing, all of which more than offset the impacts of inflation and higher

operating costs in 2023. Restructuring and other special charges were $1.2 million in the 2023 first quarter compared to $1.5 million in the 2022 second quarter.

Six months ended June 30:

Net sales increased 15.1% in the six months ended June 30, 2023 compared to the 2022 period. The sales increase was driven by higher customer demand and increased product pricing.

Segment operating income was $15.7 million in the 2023 period compared to a loss of $1.9 million in the 2022 period. The improvement in segment operating results in the 2023 period compared to the same period in the prior year was driven by profit flow-through from the higher sales levels and the benefit of plant consolidation and other profit-improvement initiatives, including increased product pricing, all of which more than offset the impacts of inflation and higher operating costs in 2023. ~~Charges related to plant consolidation~~Restructuring and other special charges were ~~$0.3~~$1.5 million in ~~the~~ 2023 ~~first quarter~~ compared to ~~$1.5~~$3.0 million in the 2022 ~~first quarter.~~period.

Three months ended June 30:

Net sales ~~increased 29%~~were 20.4% higher in the 2023 period compared to the 2022 period. The increase was driven by strong customer demand in both our capital equipment business and our forged and machined products business.

~~Table~~Segment operating income in the 2023 period decreased $3.9 million compared to the 2022 period. In our capital equipment business, operating income increased year-over-year, as profit flow-through from higher sales levels and implemented operational improvement initiatives contributed to higher profit and margins in this business. These increases were more than offset by operating losses in our forged and machined products business, which was impacted by equipment down-time and labor challenges, which impacted our two forging plants during the second quarter of ~~Contents~~2023. In addition, during the 2023 quarter, we incurred restructuring and other special charges of $2.9 million, compared to $0.8 million in the three months ended June 30, 2022. These charges are primarily related to plant closure and consolidation activities, including severance.

Six months ended June 30:

Net sales were 24.5% higher in the 2023 period compared to the 2022 period. The increase was driven by strong customer demand in both our capital equipment business and our forged and machined products business.

Segment operating income in the 2023 period ~~increased~~decreased $0.7 million, driven primarily by ~~$3.2~~restructuring and other special charges of $4.9 million in the 2023 period compared to $1.4 million in the ~~corresponding 2022~~same period ~~and segment operating margin increased 230 basis points compared~~a year ago. These charges related to the corresponding period in 2022. The profitability improvement in 2023 was driven by the higher sales levels, implemented operational improvements, and benefits of profit-improvement initiatives, includingprimarily to plant closure and ~~consolidation.~~consolidation activities, including severance. Excluding these charges, operating income during the 2023 period increased due to strong results in our capital equipment business as discussed in the “Three months ended June 30” section above.

Liquidity and Capital Resources

The following table summarizes the major components of cash flow:

Three Months Ended March 31,
2023 2022 $ Change
Net cash provided (used) by: (In millions)
Operating activities $ 0.2 $ (2.1) $ 2.3
Investing activities (5.1) (5.5) 0.4
Financing activities 4.5 26.1 (21.6)
Discontinued operations (8.6) (10.5) 1.9
Effect of exchange rate changes on cash 0.4 (0.5) 0.9
(Decrease) increase in cash and cash equivalents $ (8.6) $ 7.5 $ (16.1)

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	Six Months Ended June 30,
	2023		2022		$ Change
Net cash provided (used) by:	(In millions)
Operating activities	$	0.9	$	(35.0)	$	35.9
Investing activities	(13.0)		(8.7)		(4.3)
Financing activities	12.1		62.3		(50.2)
Discontinued operations	(5.1)		(7.7)		2.6
Effect of exchange rate changes on cash	0.3		(3.9)		4.2
(Decrease) increase in cash and cash equivalents	$	(4.8)	$	7.0	$	(11.8)

Operating Activities

In the ~~first three~~six months ofended June 30, 2023, we generated positive operating cash flow of ~~$0.2~~$0.9 million compared to a use of ~~$2.1~~$35.0 million in the same period of 2022. The positive cash flow in the 2023 period was driven by higher income from continuing operations ~~partially offset by~~in the 2023 period and higher working capital ~~levels~~usage in the ~~first quarter of 2023.~~2022 period.

Investing Activities

Capital expenditures were ~~$6.0~~$13.4 million in the ~~three~~six months ended ~~March 31,~~June 30, 2023 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, for facility consolidation in our Engineered Products segment and to maintain existing operations.

Capital expenditures were $12.7 million in the six months ended June 30, 2022 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, for facility consolidation in our Engineered Products segment and to maintain existing operations. Additionally, in the ~~first quarter 2023,~~2022 period, the Company sold real estate for cash proceeds of ~~$1.4 million and made cash payments related prior year acquisitions of $0.5~~$4.0 million. ~~The Company is schedule to pay the remaining balance of the Charter Automotive (Changzhou) Co. Ltd. acquisition throughout 2023 and 2024.~~

Capital expenditures were $5.5 million in the three months ended March 31, 2022 and were primarily to provide increased capacity for future growth in our Engineered Products and Assembly Components segments, for facility consolidation in our Engineered Products segment and to maintain existing operations.

Financing Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, we had net debt borrowings of ~~$7.4~~$18.5 million to fund a portion of our operating activities and capital expenditures. In addition, in the six months ended June 30, 2023, the Company made scheduled payments related to prior acquisitions totaling $2.0 million and cash dividend payments to shareholders totaling $3.2 million.

The Company is scheduled to pay the remaining $2.1 million balance in connection with the Charter Automotive (Changzhou) Co. Ltd. acquisition on scheduled dates in 2023 and 2024.

During the six months ended June 30, 2022, we had net debt borrowings of $66.6 million to fund our higher working capital levels. In addition, ~~in the three months ended March 31, 2023, the Company made a contingent consideration payment related to a prior acquisition totaling $1.3 million and~~we made cash dividend payments to shareholders totaling ~~$1.6~~$3.2 million.

During the three months ended March 31, 2022, we had net debt borrowings of $27.8 million and paid dividends to shareholders of $1.6 million. The borrowings were used to fund our higher working capital levels.

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 10 to the condensed consolidated financial statements, included elsewhere herein.

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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 and available bank borrowing arrangements) 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.

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As of ~~March 31,~~June 30, 2023, we had total liquidity of ~~$171.1~~$168.6 million, which included ~~$49.6~~$53.4 million of cash and cash equivalents and ~~$121.5~~$115.2 million of unused borrowing availability under our credit agreements, which included ~~$18.3~~$24.3 million of suppressed availability.

The Company had cash and cash equivalents held by foreign subsidiaries of ~~$38.1~~$41.9 million at ~~March 31,~~June 30, 2023 and $47.8 million at December 31, 2022. 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

In April 2017, Park-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., completed the sale, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”). The net proceeds from the issuance of the Notes were used to repay in full our previously outstanding 8.125% Senior Notes due 2021 and our outstanding term loan, and to repay a portion of the borrowings then outstanding under our revolving credit facility.

Credit Agreement

Park-Ohio’s Seventh Amended and Restated Credit Agreement (as amended, 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 by an aggregate incremental amount up to $70.0 million. The Credit Agreement matures on November 26, 2024.

Financing Arrangement with Third Party

On December 30, 2022, the Company entered into ~~the MOU~~a memorandum of understanding (the “MOU”) with a third party pursuant to which the third party would purchase our Aluminum Products business. The sale of the Aluminum Products business is subject to the successful completion of a definitive purchase agreement and other customary conditions. In connection with the entry into the MOU, the Company also entered into a financing arrangement with the third party pursuant to which the Company received a portion of the estimated purchase price of the Aluminum Products business, including $20.0 million of cash and a promissory note in the principal amount of $25.0 million, and recorded a financing arrangement liability of $45.0 million. The Company used the $20.0 million from this financing arrangement to repay indebtedness under its revolving credit facility. If a definitive purchase agreement between the parties is not entered into or the sale is not successfully consummated, the promissory note will be cancelled and the Company will repay the third party $20.0 ~~million, less a $0.8 million break-up fee.~~million.

Finance Leases

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In August 2015, the Company entered into a Capital Lease Agreement (the “Lease Agreement”). The Lease Agreement provides the Company up to $50.0 million for finance leases. Finance lease obligations of ~~$4.5~~$4.0 million were borrowed under the Lease Agreement to acquire machinery and equipment as of ~~March 31,~~June 30, 2023. As of ~~March 31,~~June 30, 2023, the Company had additional finance leases totaling ~~$15.7~~$15.4 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

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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 ~~March 31,~~June 30, 2023, our calculated availability under the Credit Agreement was ~~$98.4~~$86.8 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, including the negative trends caused by the COVID-19 pandemic.~~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 ~~March 31,~~June 30, 2023. While we expect to remain in compliance throughout 2023, declines in sales volumes in the future ~~including any declines caused by the COVID-19 pandemic,~~ 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, ~~including the decline caused by the COVID-19 pandemic,~~ 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 paid dividends to shareholders of ~~$1.6~~$3.2 million during the ~~three~~six months ended ~~March 31,~~June 30, 2023. On ~~April~~July 21, 2023, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on ~~May 19,~~August 18, 2023 to shareholders of record as of the close of business on ~~May 5,~~August 4, 2023 and will result in a cash outlay of approximately $1.6 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.

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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, 2022, both contained in our Annual Report on Form 10-K for the year ended December 31, 2022. 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

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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: our ability to consummate the sale of our Aluminum Products business for any reason, including the inability to enter into a definitive purchase agreement; 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 micro-chip shortage and logistic ~~issues;~~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 conflict between Russia and Ukraine, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of ~~COVID-19~~infectious diseases and ~~its~~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, 2022. 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.

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Item 3.			Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk, including changes in interest rates. As of ~~March 31,~~June 30, 2023, 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 ~~$0.7~~$1.5 million during the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2023.

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.

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Our largest exposures to commodity prices relate to metal and rubber compound, which have fluctuated widely in recent years. In 2023 and 2022, we entered into agreements to hedge foreign currency. These agreements will not have a material impact on the results of the Company. We have no other commodity swap agreements or forward purchase contracts.


Item 4.			Controls and Procedures

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 ~~March 31,~~June 30, 2023, 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.

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Part II. Other Information


Item 1.			Legal Proceedings

We are involved in a variety of claims, suits, investigations and administrative proceedings with respect to commercial, premises liability, product liability, employment, personal injury and environmental matters arising from the ordinary course of business. While any such claims, suits, investigations and proceedings involve an element of uncertainty, in the opinion of management, liabilities, if any, arising from currently pending or threatened litigation are not expected to have a material adverse effect on our financial condition, liquidity or results of operations.

In addition to the routine lawsuits and asserted claims noted above, we were a party to the lawsuits and legal proceedings described below as of ~~March 31,~~June 30, 2023:

We were a co-defendant in 112 cases asserting claims on behalf of 162 plaintiffs alleging personal injury as a result of exposure to asbestos. These asbestos cases generally relate to production and sale of asbestos-containing products and allege various theories of liability, including negligence, gross negligence and strict liability, and seek compensatory and, in some cases, punitive damages.

In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. In substantially all of the asbestos cases, the plaintiffs either claim damages in excess of a specified amount, typically a minimum amount sufficient to establish jurisdiction of the court in which the case was filed (jurisdictional minimums generally range from $25,000 to $75,000), or do not specify the monetary damages sought. To the extent that any specific amount of damages is sought, the amount applies to claims against all named defendants.

There are four asbestos cases, involving 20 plaintiffs, that plead specified damages against named defendants. In each of the four cases, the plaintiff is seeking compensatory and punitive damages based on a variety of potentially alternative causes of action. In two cases, the plaintiff has alleged three counts at $3.0 million compensatory and punitive damages each; one count at $3.0 million compensatory and $1.0 million punitive damages; one count at $1.0 million. In the third case, the plaintiff has alleged compensatory and punitive damages, each in the amount of $20.0 million, for three separate causes of action, and $5.0 million compensatory damages for the fifth cause of action. In the fourth case, the plaintiff has alleged compensatory and punitive damages, each in the amount of $10.0 million, for ten separate causes of action.

Historically, we have been dismissed from asbestos cases on the basis that the plaintiff incorrectly sued one of our subsidiaries or because the plaintiff failed to identify any asbestos-containing product manufactured or sold by us or our subsidiaries. We intend to vigorously defend these asbestos cases, and believe we will continue to be successful in being dismissed from such cases. However, it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation. Despite this uncertainty, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations. Among the factors management considered in reaching this conclusion were: (a) our historical success in being dismissed from these types of lawsuits on the bases mentioned above; (b) many cases have been improperly filed against one of our subsidiaries; (c) in many cases the plaintiffs have been unable to establish any causal relationship to us or our products or premises; (d) in many cases, the plaintiffs have been unable to demonstrate that they have suffered any identifiable injury or compensable loss at all or that any injuries that they have incurred did in fact result from alleged exposure to asbestos; and (e) the complaints assert claims against multiple defendants and, in most cases, the damages alleged are not attributed to individual defendants. Additionally, we do not believe that the amounts claimed in any of the asbestos cases are meaningful indicators of our potential exposure because the amounts claimed typically bear no relation to the extent of the plaintiff's injury, if any.

Our cost of defending these lawsuits has not been material to date and, based upon available information, our management does not expect its future costs for asbestos-related lawsuits to have a material adverse effect on our results of operations, liquidity or financial position.

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Item 1A.			Risk Factors

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, 2022. Investors should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

The table below summarizes the information regarding our repurchases of the Company's common stock during the quarter ended ~~March 31,~~June 30, 2023.

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (1) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1)
January 1 — January 31, 2023 729 (2) $ 14.15 — 444,424
February 1 — February 28, 2023 1,885 (2) 13.78 — 444,424
March 1 — March 31, 2023 — (2) — — 444,424
Total 2,614 $ 13.88 — 444,424


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (1)	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1)
April 1 — April 30, 2023	1,604	(2)	$	12.40	—	444,424
May 1 — May 31, 2023	406	(2)	16.11		—	444,424
June 1 — June 30, 2023	65,733	(2)	17.31		—	444,424
Total	67,743		$	17.19	—	444,424

(1)On March 11, 2020, we announced a share repurchase program whereby we may repurchase up to 1.0 million shares of our outstanding common stock.

(2)Consists of an aggregate total of ~~2,614~~67,743 shares of common stock we acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient withholding tax liabilities.

3135

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Item 5.			Other Information

During the quarter ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).

Table of Contents


Item 6.			Exhibits

The following exhibits are included herein:








10.1			Park-Ohio Holdings Corp. 2021 Equity and Incentive Compensation Plan (Amended and Restated Effective May 17, 2023) (incorporated by reference to exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on May 23, 2023, Registration No. 333-225915) and incorporated by reference and made a part hereof)

31.1			Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32			Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

3238

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


PARK-OHIO HOLDINGS CORP.
(Registrant)

By:			/s/ Patrick W. Fogarty
Name:			Patrick W. Fogarty
Title:			Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Date: ~~May 4,~~August 3, 2023

3339


		(Unaudited)					(Unaudited)
		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
		(In millions)					(In millions)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	49.6	$	58.2	Cash and cash equivalents	$	53.4	$	58.2

Accounts receivable, net	Accounts receivable, net	256.8		246.3		Accounts receivable, net	256.9		246.3
Inventories, net	Inventories, net	410.0		406.5		Inventories, net	405.9		406.5

Other current assets	Other current assets	121.2		114.2		Other current assets	127.0		114.2
Current assets held-for-sale - discontinued operations1	Current assets held-for-sale - discontinued operations1	108.0		107.2		Current assets held-for-sale - discontinued operations1	108.8		107.2
Total current assets	Total current assets	945.6		932.4		Total current assets	952.0		932.4
Property, plant and equipment, net	Property, plant and equipment, net	181.0		181.1		Property, plant and equipment, net	183.2		181.1
Operating lease right-of-use assets	Operating lease right-of-use assets	52.0		54.7		Operating lease right-of-use assets	49.4		54.7
Goodwill	Goodwill	109.7		108.9		Goodwill	109.8		108.9
Intangible assets, net	Intangible assets, net	77.7		78.7		Intangible assets, net	76.3		78.7

Other long-term assets	Other long-term assets	81.4		80.8		Other long-term assets	81.1		80.8
Total assets	Total assets	$	1,447.4	$	1,436.6	Total assets	$	1,451.8	$	1,436.6
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	220.5	$	221.0	Trade accounts payable	$	207.3	$	221.0
Current portion of long-term debt and short-term debt	Current portion of long-term debt and short-term debt	12.8		10.9		Current portion of long-term debt and short-term debt	12.5		10.9
Current portion of operating lease liabilities	Current portion of operating lease liabilities	11.0		11.2		Current portion of operating lease liabilities	10.8		11.2
Accrued expenses and other	Accrued expenses and other	163.8		161.7		Accrued expenses and other	159.8		161.7
Current liabilities held-for-sale - discontinued operations1	Current liabilities held-for-sale - discontinued operations1	37.3		43.8		Current liabilities held-for-sale - discontinued operations1	42.3		43.8
Total current liabilities	Total current liabilities	445.4		448.6		Total current liabilities	432.7		448.6
Long-term liabilities, less current portion:	Long-term liabilities, less current portion:					Long-term liabilities, less current portion:
Long-term debt	Long-term debt	661.1		655.1		Long-term debt	673.1		655.1
Long-term operating lease liabilities	Long-term operating lease liabilities	41.2		43.7		Long-term operating lease liabilities	38.7		43.7

Other long-term liabilities	Other long-term liabilities	20.8		21.3		Other long-term liabilities	21.7		21.3
Total long-term liabilities	Total long-term liabilities	723.1		720.1		Total long-term liabilities	733.5		720.1

Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity	Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity	267.4		256.5		Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity	274.6		256.5
Noncontrolling interests	Noncontrolling interests	11.5		11.4		Noncontrolling interests	11.0		11.4
Total equity	Total equity	278.9		267.9		Total equity	285.6		267.9
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	1,447.4	$	1,436.6	Total liabilities and shareholders' equity	$	1,451.8	$	1,436.6


		2023							2023
		Time-Based			Performance-Based				Time-Based			Performance-Based
		Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
		(In whole shares)			(In whole shares)				(In whole shares)			(In whole shares)
Outstanding - beginning of year	Outstanding - beginning of year	716,242	$	20.53	50,000	$	32.55	Outstanding - beginning of year	716,242	$	20.53	50,000	$	32.55
Granted(a)	Granted(a)	9,535	13.89		—	—		Granted(a)	332,039	15.97		—	—
Vested	Vested	(9,000)	33.12		—	—		Vested	(266,946)	20.38		—	—

Canceled or expired								Canceled or expired	(4,267)	20.12		—	—
Outstanding - end of period	Outstanding - end of period	716,777	$	20.28	50,000	$	32.55	Outstanding - end of period	777,068	$	18.64	50,000	$	32.55


		Page
	Part I. Financial Information

Item 1.	Financial Statements	4





	Notes to unaudited condensed consolidated financial statements — ~~March 31,~~June 30, 2023	1011
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	2932
Item 4.	Controls and Procedures	2933

	Part II. Other Information

Item 1.	Legal Proceedings	3034
Item 1A.	Risk Factors	3135
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3135
Item 5.	Other Information	37
Item 6.	Exhibits	3238
Signatures		3339


		Three Months Ended March 31,				Three Months Ended June 30,						Six Months Ended June 30,
				2023			2022			2023		2022		2023		2022
			(In millions, except per share data)							(In millions, except per share data)
Net sales	Net sales			$	423.5		$	357.7	Net sales	$	428.1	$	369.8	$	851.6	$	727.5
Cost of sales	Cost of sales			356.3			308.8		Cost of sales	358.0		316.1		714.3		624.9

Selling, general and administrative expenses	Selling, general and administrative expenses			45.3			40.2		Selling, general and administrative expenses	46.8		40.5		92.1		80.7
Restructuring and other special charges	Restructuring and other special charges			2.5			3.3		Restructuring and other special charges	4.1		2.3		6.6		5.6
Gain on sale of assets				(0.8)			—
Gains on sales of assets									Gains on sales of assets	—		(2.9)		(0.8)		(2.9)

Operating income	Operating income			20.2			5.4		Operating income	19.2		13.8		39.4		19.2
Other components of pension income and other postretirement benefits expense, net	Other components of pension income and other postretirement benefits expense, net			0.7			2.8		Other components of pension income and other postretirement benefits expense, net	0.6		2.8		1.3		5.6
Interest expense, net	Interest expense, net			(10.7)			(7.1)		Interest expense, net	(11.1)		(7.6)		(21.8)		(14.7)

Income from continuing operations before income taxes	Income from continuing operations before income taxes			10.2			1.1		Income from continuing operations before income taxes	8.7		9.0		18.9		10.1
Income tax (expense) benefit	Income tax (expense) benefit			(2.6)			2.8		Income tax (expense) benefit	(2.1)		(2.1)		(4.7)		0.7
Income from continuing operations	Income from continuing operations			7.6			3.9		Income from continuing operations	6.6		6.9		14.2		10.8
Income attributable to noncontrolling interests				(0.1)			(0.2)
Loss (income) attributable to noncontrolling interests									Loss (income) attributable to noncontrolling interests	0.5		(0.5)		0.4		(0.7)
Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders	Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders			7.5			3.7		Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders	7.1		6.4		14.6		10.1
(Loss) income from discontinued operations, net of tax (Note 5)	(Loss) income from discontinued operations, net of tax (Note 5)			(1.7)			2.4		(Loss) income from discontinued operations, net of tax (Note 5)	(1.7)		(5.4)		(3.4)		(3.0)
Net income attributable to Park-Ohio Holdings Corp. common shareholders	Net income attributable to Park-Ohio Holdings Corp. common shareholders			$	5.8		$	6.1	Net income attributable to Park-Ohio Holdings Corp. common shareholders	$	5.4	$	1.0	$	11.2	$	7.1

Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:	Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:								Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic:	Basic:								Basic:
Continuing operations	Continuing operations			$	0.61		$	0.31	Continuing operations	$	0.58	$	0.53	$	1.20	$	0.83
Discontinued operations	Discontinued operations			(0.14)			0.20		Discontinued operations	$	(0.14)	$	(0.45)	(0.28)		(0.25)
Total	Total			$	0.47		$	0.51	Total	$	0.44	$	0.08	$	0.92	$	0.58
Diluted:	Diluted:								Diluted:
Continuing operations	Continuing operations			$	0.61		$	0.30	Continuing operations	$	0.57	$	0.52	$	1.18	$	0.83
Discontinued operations	Discontinued operations			(0.14)			0.20		Discontinued operations	$	(0.14)	$	(0.44)	(0.28)		(0.25)
Total	Total			$	0.47		$	0.50	Total	$	0.43	$	0.08	$	0.90	$	0.58


	March 31, 2023		December 31, 2022
	(In millions, except share data)
ASSETS
Current assets:
Accounts receivable, net	$	32.9	$	24.9
Inventories, net	21.4		30.2

Other current assets	1.3		1.2
Current assets held-for-sale1	55.6		56.3

Property, plant and equipment, net	47.6		46.1
Operating lease right-of-use assets	4.8		4.8
Long-term assets held-for-sale1	52.4		50.9

Total assets held-for-sale	$	108.0	$	107.2
LIABILITIES
Current liabilities:
Trade accounts payable	$	19.4	$	22.8
Current portion of finance lease liabilities	2.2		2.4
Current portion of operating lease liabilities	2.1		2.3
Other accrued expenses	8.8		10.7
Current liabilities held-for-sale1	$	32.5	$	38.2

Long-term liabilities, less current portion:
Long-term finance lease liabilities	2.7		3.1
Long-term operating lease liabilities	2.1		2.5
Long-term liabilities held-for-sale1	4.8		5.6

Total liabilities held-for-sale	$	37.3	$	43.8


				Carrying Value at
	Maturity Date	Interest Rate at March 31, 2023		March 31, 2023		December 31, 2022
				(In millions)
Senior Notes	April 15, 2027	6.625	%	$	350.0	$	350.0

Revolving credit facility	November 26, 2024	5.94	%	288.5		285.3


Finance Leases	Various	Various		20.2		18.5
Other	Various	Various		18.1		15.3
Total debt				676.8		669.1
Less: Current portion of long-term debt and short-term debt				(12.8)		(10.9)

Less: Unamortized debt issuance costs				(2.9)		(3.1)
Total long-term debt				$	661.1	$	655.1


			Pension Benefits							Postretirement Benefits					Pension Benefits								Postretirement Benefits
		Three Months Ended March 31,						Three Months Ended March 31,	Three Months Ended June 30,						Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
				2023		2022				2023		2022			2023		2022		2023		2022		2023		2022		2023		2022
			(In millions)						(In millions)
Service costs	Service costs			$	1.2	$	1.1			$	—	$	—	Service costs	$	1.3	$	1.1	$	2.5	$	2.2	$	—	$	—	$	—	$	—
Interest costs	Interest costs			0.8		0.4				0.1		—		Interest costs	0.9		0.5		1.7		0.9		0.1		0.1		0.2		0.1
Expected return on plan assets	Expected return on plan assets			(2.5)		(3.2)				(0.1)		(0.1)		Expected return on plan assets	(2.5)		(3.3)		(5.0)		(6.5)		—		(0.1)		(0.1)		(0.2)
Recognized net actuarial loss	Recognized net actuarial loss			0.9		—				0.1		0.1		Recognized net actuarial loss	0.9		—		1.8		—		—		—		0.1		0.1
Net periodic benefit expense (income)	Net periodic benefit expense (income)			$	0.4	$	(1.7)			$	0.1	$	—	Net periodic benefit expense (income)	$	0.6	$	(1.7)	$	1.0	$	(3.4)	$	0.1	$	—	$	0.2	$	—