UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended ~~March 31,~~September 30, 2021


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

For the transition period from __________ to __________

Commission file number: 333-43005-01

Park-Ohio Industries, Inc.

(Exact name of registrant as specified in its charter)

Ohio

34-6520107

(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)

(440) 947-2000

(Registrant’s telephone number, including area code)

Not applicable

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

Securities registered pursuant to Section 12(b) of the Act: None

The registrant meets the conditions set forth in general instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form in reduced disclosure format.

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 þ 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). þ 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

Table of Contents

All of the outstanding capital stock of the registrant is held by Park-Ohio Holdings Corp. As of ~~April 30,~~October 29, 2021, 100 shares of the registrant’s common stock, $1 par value, were outstanding.

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Index


		Page
	Part I. Financial Information

Item 1.	Financial Statements	4
	~~Condensed consolidated balance sheets — March 31, 2021 (unaudited) and December 31, 2020~~	4
	~~Condensed consolidated statements of operations (unaudited) — Three months ended March 31, 2021 and 2020~~	5
	~~Condensed consolidated statements of comprehensive income (loss) (unaudited) — Three months ended March 31, 2021 and 2020~~	6
	~~Condensed consolidated statement of shareholder's equity (unaudited) — Three months ended March 31, 2021 and 2020~~	7
	~~Condensed consolidated statements of cash flows (unaudited) — Three months ended March 31, 2021 and 2020~~	8
	Notes to unaudited condensed consolidated financial statements — ~~March 31,~~September 30, 2021	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	2528
Item 4.	Controls and Procedures	2529

	Part II. Other Information
Item 1.	Legal Proceedings	2831
Item 1A.	Risk Factors	2932

Item 6.	Exhibits	2932
Signatures		3033

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Part I. Financial Information

Table of Contents


Item 1.			Financial Statements

Park-Ohio Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


		(Unaudited)					(Unaudited)
		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(In millions)					(In millions)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	48.3	$	44.8	Cash and cash equivalents	$	50.4	$	44.8
Accounts receivable, net	Accounts receivable, net	247.8		248.1		Accounts receivable, net	253.7		248.1
Inventories, net	Inventories, net	333.4		310.9		Inventories, net	386.4		310.9

Receivable from affiliates	Receivable from affiliates	26.0		25.8		Receivable from affiliates	28.7		25.8
Prepaid and other current assets	Prepaid and other current assets	89.0		92.2		Prepaid and other current assets	81.5		92.2
Total current assets	Total current assets	744.5		721.8		Total current assets	800.7		721.8
Property, plant and equipment, net	Property, plant and equipment, net	237.4		239.1		Property, plant and equipment, net	232.0		239.1
Operating lease right-of-use assets	Operating lease right-of-use assets	67.1		68.6		Operating lease right-of-use assets	66.9		68.6
Goodwill	Goodwill	110.0		110.9		Goodwill	112.0		110.9
Intangible assets, net	Intangible assets, net	84.1		86.8		Intangible assets, net	83.0		86.8
Other long-term assets	Other long-term assets	91.7		90.1		Other long-term assets	95.8		90.1
Total assets	Total assets	$	1,334.8	$	1,317.3	Total assets	$	1,390.4	$	1,317.3
LIABILITIES AND SHAREHOLDER’S EQUITY	LIABILITIES AND SHAREHOLDER’S EQUITY					LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	177.7	$	166.7	Trade accounts payable	$	185.6	$	166.7
Payable to affiliates	Payable to affiliates	7.2		7.2		Payable to affiliates	7.2		7.2
Current portion of long-term debt and short-term debt	Current portion of long-term debt and short-term debt	8.6		11.6		Current portion of long-term debt and short-term debt	8.9		11.6
Current portion of operating lease liabilities	Current portion of operating lease liabilities	13.1		12.9		Current portion of operating lease liabilities	13.3		12.9
Accrued expenses and other	Accrued expenses and other	120.8		116.2		Accrued expenses and other	122.3		116.2
Total current liabilities	Total current liabilities	327.4		314.6		Total current liabilities	337.3		314.6
Long-term liabilities, less current portion:	Long-term liabilities, less current portion:					Long-term liabilities, less current portion:
Long-term debt	Long-term debt	523.6		517.8		Long-term debt	592.1		517.8

Long-term operating lease liabilities	Long-term operating lease liabilities	54.8		56.7		Long-term operating lease liabilities	54.2		56.7
Other long-term liabilities	Other long-term liabilities	60.9		61.2		Other long-term liabilities	56.2		61.2
Total long-term liabilities	Total long-term liabilities	639.3		635.7		Total long-term liabilities	702.5		635.7

Total Park-Ohio Industries, Inc. and Subsidiaries shareholder's equity	Total Park-Ohio Industries, Inc. and Subsidiaries shareholder's equity	355.5		353.2		Total Park-Ohio Industries, Inc. and Subsidiaries shareholder's equity	338.4		353.2
Noncontrolling interests	Noncontrolling interests	12.6		13.8		Noncontrolling interests	12.2		13.8
Total equity	Total equity	368.1		367.0		Total equity	350.6		367.0
Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	1,334.8	$	1,317.3	Total liabilities and shareholder's equity	$	1,390.4	$	1,317.3

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

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Park-Ohio Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
			(In millions)						(In millions)
Net sales	Net sales		$	359.6		$	366.3	Net sales	$	358.5	$	340.2	$	1,068.1	$	934.8
Cost of sales	Cost of sales		307.6			312.4		Cost of sales	318.4		290.5		936.1		817.0
Gross profit	Gross profit		52.0			53.9		Gross profit	40.1		49.7		132.0		117.8
Selling, general and administrative expenses	Selling, general and administrative expenses		39.5			40.7		Selling, general and administrative expenses	44.9		38.6		127.6		114.2

Operating income			12.5			13.2
Operating (loss) income								Operating (loss) income	(4.8)		11.1		4.4		3.6

Other components of pension income and other postretirement benefits expense, net	Other components of pension income and other postretirement benefits expense, net		2.4			1.8		Other components of pension income and other postretirement benefits expense, net	2.4		1.9		7.3		5.5
Interest expense, net	Interest expense, net		(7.4)			(7.9)		Interest expense, net	(7.6)		(7.4)		(22.4)		(22.9)

Income before income taxes			7.5			7.1
Income tax expense			(1.9)			(5.5)
(Loss) income before income taxes								(Loss) income before income taxes	(10.0)		5.6		(10.7)		(13.8)
Income tax benefit (expense)								Income tax benefit (expense)	2.8		(0.3)		3.7		3.8

Net income			5.6			1.6
Net loss (income) attributable to noncontrolling interests			0.1			(0.1)
Net income attributable to Park-Ohio Industries, Inc. common shareholder			$	5.7		$	1.5
Net (loss) income								Net (loss) income	(7.2)		5.3		(7.0)		(10.0)
Net loss attributable to noncontrolling interests								Net loss attributable to noncontrolling interests	0.2		0.1		0.5		0.4
Net (loss) income attributable to Park-Ohio Industries, Inc. common shareholder								Net (loss) income attributable to Park-Ohio Industries, Inc. common shareholder	$	(7.0)	$	5.4	$	(6.5)	$	(9.6)

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

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Park-Ohio Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended March 31,
2021 2020
(In millions)
Net income $ 5.6 $ 1.6
Other comprehensive income (loss), net of tax:
Currency translation (4.3) (16.6)
Pension and other postretirement benefits 0.2 0.5
Total other comprehensive income (loss) (4.1) (16.1)
Total comprehensive income (loss), net of tax 1.5 (14.5)
Comprehensive loss (income) attributable to noncontrolling interests 0.1 (0.1)
Comprehensive income (loss) attributable to Park-Ohio Industries, Inc. common shareholder $ 1.6 $ (14.6)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In millions)
Net (loss) income	$	(7.2)	$	5.3	$	(7.0)	$	(10.0)
Other comprehensive (loss) income, net of tax:
Currency translation	(5.5)		12.6		(8.2)		(1.1)
Pension and other postretirement benefits	0.2		0.3		0.6		1.2
Total other comprehensive (loss) income	(5.3)		12.9		(7.6)		0.1
Total comprehensive (loss) income, net of tax	(12.5)		18.2		(14.6)		(9.9)
Comprehensive loss attributable to noncontrolling interests	0.2		0.1		0.5		0.4
Comprehensive (loss) income attributable to Park-Ohio Industries, Inc. common shareholder	$	(12.3)	$	18.3	$	(14.1)	$	(9.5)

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

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Park-Ohio Industries, Inc. and Subsidiaries

Condensed Consolidated Statement of Shareholder's Equity (Unaudited)


		Common Stock	Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total			Common Stock	Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interest		Total
		(In millions)												(In millions)
Balance at January 1, 2021	Balance at January 1, 2021	0	$	133.4	$	237.9	$	(18.1)	$	13.8	$	367.0	Balance at January 1, 2021	—	$	133.4	$	237.9	$	(18.1)	$	13.8	$	367.0
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		5.7		(4.1)		(0.1)		1.5		Other comprehensive income (loss)	—	—		5.7		(4.1)		(0.1)		1.5
Stock-based compensation expense	Stock-based compensation expense	—	1.6		—		—		—		1.6		Stock-based compensation expense	—	1.6		—		—		—		1.6

Dividend paid to parent	Dividend paid to parent	—	—		(2.0)		—		—		(2.0)		Dividend paid to parent	—	—		(2.0)		—		—		(2.0)
Increase in Park-Ohio ownership interest	Increase in Park-Ohio ownership interest	—	1.1		—		—		(1.1)		0		Increase in Park-Ohio ownership interest	—	1.1		—		—		(1.1)		—
Balance at March 31, 2021	Balance at March 31, 2021	0	$	136.1	$	241.6	$	(22.2)	$	12.6	$	368.1	Balance at March 31, 2021	—	136.1		$	241.6	$	(22.2)	$	12.6	$	368.1

Other comprehensive (loss) income													Other comprehensive (loss) income	—	—		(5.2)		1.8		(0.2)		(3.6)
Stock-based compensation expense													Stock-based compensation expense	—	1.4		—		—		—		1.4
Dividend paid to parent													Dividend paid to parent	—	—		(2.0)		—		—		(2.0)
Balance at June 30, 2021													Balance at June 30, 2021	—	137.5		$	234.4	$	(20.4)	$	12.4	$	363.9
Other comprehensive loss													Other comprehensive loss	—	—		(7.0)		(5.3)		(0.2)		(12.5)
Stock-based compensation expense													Stock-based compensation expense	—	1.7		—		—		—		1.7
Dividend paid to parent													Dividend paid to parent	—	—		(2.5)		—		—		(2.5)
Balance at September 30, 2021													Balance at September 30, 2021	—	$	139.2	$	224.9	$	(25.7)	$	12.2	$	350.6


		Common Stock	Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total			Common Stock	Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interest		Total
		(In millions)												(In millions)
Balance at January 1, 2020	Balance at January 1, 2020	0	$	127.3	$	253.4	$	(37.0)	$	14.1	$	357.8	Balance at January 1, 2020	—	$	127.3	$	253.4	$	(37.0)	$	14.1	$	357.8
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		1.5		(16.1)		0.1		(14.5)		Other comprehensive income (loss)	—	—		1.5		(16.1)		0.1		(14.5)
Stock-based compensation expense	Stock-based compensation expense	—	1.4		—		—		—		1.4		Stock-based compensation expense	—	1.4		—		—		—		1.4

Dividend paid to parent	Dividend paid to parent	—	—		(9.5)		—		—		(9.5)		Dividend paid to parent	—	—		(9.5)		—		—		(9.5)
Balance at March 31, 2020	Balance at March 31, 2020	0	$	128.7	$	245.4	$	(53.1)	$	14.2	$	335.2	Balance at March 31, 2020	—	128.7		245.4		(53.1)		14.2		335.2
Other comprehensive (loss) income													Other comprehensive (loss) income	—	—		(16.5)		3.3		(0.4)		(13.6)
Stock-based compensation expense													Stock-based compensation expense	—	1.3		—		—		—		1.3
Balance at June 30, 2020													Balance at June 30, 2020	—	130.0		228.9		(49.8)		13.8		322.9
Other comprehensive income (loss)													Other comprehensive income (loss)	—	—		5.4		12.9		(0.1)		18.2
Stock-based compensation expense													Stock-based compensation expense	—	1.6		—		—		—		1.6

Balance at September 30, 2020													Balance at September 30, 2020	—	$	131.7	$	234.3	$	(36.9)	$	13.7	$	342.8

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

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Park-Ohio Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
		(In millions)					(In millions)
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income		$	5.6	$	1.6
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Net loss						Net loss	$	(7.0)	$	(10.0)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:						Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	9.4		8.9		Depreciation and amortization	28.9		26.9

Stock-based compensation expense	Stock-based compensation expense	1.6		1.4		Stock-based compensation expense	4.7		4.4

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(1.4)		8.1		Accounts receivable	(6.6)		9.6
Inventories	Inventories	(22.9)		(7.3)		Inventories	(74.7)		20.8
Prepaid and other current assets	Prepaid and other current assets	2.1		(5.3)		Prepaid and other current assets	11.5		0.1
Accounts payable and accrued expenses	Accounts payable and accrued expenses	17.1		(8.5)		Accounts payable and accrued expenses	24.5		(17.9)

Other	Other	(1.7)		(3.0)		Other	(9.5)		(1.7)
Net cash used by operating activities		9.8		(4.1)
Net cash (used) provided by operating activities						Net cash (used) provided by operating activities	(28.2)		32.2
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(6.6)		(4.9)		Purchases of property, plant and equipment	(24.9)		(14.9)
Business acquisition, net of cash acquired						Business acquisition, net of cash acquired	(5.4)		—
Proceeds from sale of an asset	Proceeds from sale of an asset	0		1.4		Proceeds from sale of an asset	—		1.4

Net cash used by investing activities	Net cash used by investing activities	(6.6)		(3.5)		Net cash used by investing activities	(30.3)		(13.5)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Proceeds from revolving credit facility, net		5.7		15.5
Proceeds (payments) from revolving credit facility, net						Proceeds (payments) from revolving credit facility, net	78.4		(7.7)
Payments on other debt	Payments on other debt	(2.8)		(2.3)		Payments on other debt	(5.4)		(8.1)
Proceeds from other debt	Proceeds from other debt	1.8		0.2		Proceeds from other debt	2.3		3.8
(Payments on) proceeds from finance lease facilities, net		(1.5)		0.6
Payments on finance lease facilities, net						Payments on finance lease facilities, net	(3.5)		(2.6)

Dividends paid to Parent	Dividends paid to Parent	(2.0)		(9.5)		Dividends paid to Parent	(6.5)		(9.5)

Net cash provided by financing activities		1.2		4.5
Net cash provided (used) by financing activities						Net cash provided (used) by financing activities	65.3		(24.1)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(0.9)		(2.0)		Effect of exchange rate changes on cash	(1.2)		(0.3)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	3.5		(5.1)		Increase (decrease) in cash and cash equivalents	5.6		(5.7)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	44.8		46.7		Cash and cash equivalents at beginning of period	44.8		46.7
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	48.3	$	41.6	Cash and cash equivalents at end of period	$	50.4	$	41.0

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

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Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~March 31,~~September 30, 2021

NOTE 1 — Basis of Presentation

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

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- and nine- month ~~period~~periods ended ~~March 31,~~September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The balance sheet at December 31, 2020 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, 2020.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

NOTE 2 — New Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which was issued in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of the London Interbank Offered Rate. The guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. However, the relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. The Company is currently evaluating the expected impact of this standard.

No other recently issued ASUs are expected to have a material impact on our results of operations, financial condition or liquidity.

NOTE 3 - Revenue

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.

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Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~March 31,~~September 30, 2021


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
			(In millions)						(In millions)
PRODUCT LINE	PRODUCT LINE							PRODUCT LINE
Supply Technologies	Supply Technologies		$	136.5		$	121.9	Supply Technologies	$	134.5	$	112.1	$	406.2	$	320.1
Engineered specialty fasteners and other products	Engineered specialty fasteners and other products		21.2			18.9		Engineered specialty fasteners and other products	19.5		19.9		60.5		47.1
Supply Technologies Segment	Supply Technologies Segment		157.7			140.8		Supply Technologies Segment	154.0		132.0		466.7		367.2

Fuel, rubber and plastic products	Fuel, rubber and plastic products		82.4			84.7		Fuel, rubber and plastic products	80.8		86.8		238.2		211.3
Aluminum products	Aluminum products		43.6			43.5		Aluminum products	39.4		40.1		117.5		98.7
Assembly Components Segment	Assembly Components Segment		126.0			128.2		Assembly Components Segment	120.2		126.9		355.7		310.0

Industrial equipment	Industrial equipment		55.4			66.1		Industrial equipment	62.0		56.2		179.9		175.7
Forged and machined products	Forged and machined products		20.5			31.2		Forged and machined products	22.3		25.1		65.8		81.9
Engineered Products Segment	Engineered Products Segment		75.9			97.3		Engineered Products Segment	84.3		81.3		245.7		257.6

Total revenues	Total revenues		$	359.6		$	366.3	Total revenues	$	358.5	$	340.2	$	1,068.1	$	934.8


		Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues			Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
		(In millions)									(In millions)
Three Months Ended March 31, 2021
Three Months Ended September 30, 2021										Three Months Ended September 30, 2021
GEOGRAPHIC REGION	GEOGRAPHIC REGION									GEOGRAPHIC REGION
United States	United States	$	97.1	$	87.6	$	38.1	$	222.8	United States	$	92.5	$	77.9	$	46.4	$	216.8
Europe	Europe	28.9		3.8		13.4		46.1		Europe	27.9		3.4		14.8		46.1
Asia	Asia	11.1		6.8		13.2		31.1		Asia	14.7		6.6		12.0		33.3
Mexico	Mexico	16.7		10.7		3.9		31.3		Mexico	15.6		17.8		5.0		38.4
Canada	Canada	2.9		16.6		3.7		23.2		Canada	2.9		14.1		3.5		20.5
Other	Other	1.0		0.5		3.6		5.1		Other	0.4		0.4		2.6		3.4
Total	Total	$	157.7	$	126.0	$	75.9	$	359.6	Total	$	154.0	$	120.2	$	84.3	$	358.5

Three Months Ended March 31, 2020
Three Months Ended September 30, 2020										Three Months Ended September 30, 2020
GEOGRAPHIC REGION	GEOGRAPHIC REGION									GEOGRAPHIC REGION
United States	United States	$	90.0	$	90.7	$	53.2	$	233.9	United States	$	77.0	$	86.1	$	43.0	$	206.1
Europe	Europe	23.7		4.2		15.7		43.6		Europe	21.6		3.8		16.1		41.5
Asia	Asia	9.5		4.3		15.8		29.6		Asia	10.3		9.1		12.6		32.0
Mexico	Mexico	14.5		10.2		2.2		26.9		Mexico	20.5		10.0		2.0		32.5
Canada	Canada	2.9		18.4		6.4		27.7		Canada	2.5		17.4		6.0		25.9
Other	Other	0.2		0.4		4.0		4.6		Other	0.1		0.5		1.6		2.2
Total	Total	$	140.8	$	128.2	$	97.3	$	366.3	Total	$	132.0	$	126.9	$	81.3	$	340.2

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021


	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Nine Months Ended September 30, 2021
GEOGRAPHIC REGION
United States	$	281.4	$	241.8	$	126.7	$	649.9
Europe	84.7		10.7		46.3		141.7
Asia	42.4		19.0		38.5		99.9
Mexico	48.2		38.6		13.4		100.2
Canada	8.6		44.3		12.5		65.4
Other	1.4		1.3		8.3		11.0
Total	$	466.7	$	355.7	$	245.7	$	1,068.1

Nine Months Ended September 30, 2020
GEOGRAPHIC REGION
United States	$	228.3	$	212.9	$	141.7	$	582.9
Europe	59.3		10.2		42.4		111.9
Asia	31.5		19.8		46.1		97.4
Mexico	40.0		23.8		5.5		69.3
Canada	7.0		42.3		15.1		64.4
Other	1.1		1.0		6.8		8.9
Total	$	367.2	$	310.0	$	257.6	$	934.8

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 ~~$37.7~~$38.6 million and $37.4 million at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

~~Table of Contents~~

~~Park-Ohio Industries, Inc. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2021~~

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 ~~$52.9~~$50.0 million and $56.9 million at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, are recorded in Prepaid and other current assets in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

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 deducting corporate costs; 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,
2021 2020
(In millions)
Net sales:
Supply Technologies $ 157.7 $ 140.8
Assembly Components 126.0 128.2
Engineered Products 75.9 97.3
$ 359.6 $ 366.3
Segment operating income (loss):
Supply Technologies $ 12.2 $ 9.2
Assembly Components 6.4 6.3
Engineered Products (1.3) 3.8
Total segment operating income 17.3 19.3
Corporate costs (4.8) (6.1)
Operating income 12.5 13.2
Other components of pension income and other postretirement benefits expense, net 2.4 1.8
Interest expense, net (7.4) (7.9)
Income before income taxes $ 7.5 $ 7.1

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In millions)
Net sales:
Supply Technologies	$	154.0	$	132.0	$	466.7	$	367.2
Assembly Components	120.2		126.9		355.7		310.0
Engineered Products	84.3		81.3		245.7		257.6
	$	358.5	$	340.2	$	1,068.1	$	934.8
Segment operating income (loss):
Supply Technologies	$	10.7	$	10.6	$	33.2	$	20.1
Assembly Components	(8.9)		6.7		(8.6)		(1.6)
Engineered Products	0.6		1.3		(1.3)		4.3
Total segment operating income	2.4		18.6		23.3		22.8

Corporate costs	(7.2)		(7.5)		(18.9)		(19.2)




Operating (loss) income	(4.8)		11.1		4.4		3.6
Other components of pension income and other postretirement benefits expense, net	2.4		1.9		7.3		5.5
Interest expense, net	(7.6)		(7.4)		(22.4)		(22.9)

(Loss) income before income taxes	$	(10.0)	$	5.6	$	(10.7)	$	(13.8)

NOTE 5 — Plant Closure and Consolidation

In the ~~first~~ three and nine months ofended September 30, 2021, the Company recorded expenses totaling ~~$0.6~~$1.8 million and $3.1 million, respectively, in its Assembly Components ~~segment~~segment. These charges were recorded in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, and to complete other ~~cost reduction~~cost-reduction actions in this segment. ~~The~~In the three and nine months ended September 30, 2021, the expenses included facility-related costs of $1.8 million and $2.8 million, respectively, which ~~are~~were included in cost of sales in the Condensed Consolidated Statements of ~~Operations, are comprised of~~Operations. For the nine months ended September 30, 2021, expenses also included severance costs of ~~$0.2~~$0.3 million, which were included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company expects to incur additional moving and other facility-related costs related to these initiatives of ~~$0.4 million.~~approximately $1.9 million in the fourth quarter of 2021.

In the three and nine months ended September 30, 2021, the Company recorded expenses related to plant closure and consolidation in its Engineered Products segment totaling $0.6 million and $1.9 million, respectively, which are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company expects to incur additional costs related to these initiatives of approximately ~~$2.6~~$1.6 million in the ~~remainder~~fourth quarter of 2021.

During the third quarter of 2021, in connection with the plant closure and consolidation activities in its Engineered Products segment, the Company committed to a plan to sell real estate at 2 operating locations. The Company determined that these assets met the criteria to be classified as held for sale during the third quarter and, therefore, the aggregate carrying value of approximately $4.9 million is included in assets held for sale and presented in Prepaid and other current assets in the Condensed Consolidated Balance Sheet at September 30, 2021. The Company believes that the fair value less costs to sell of these assets exceeds their respective carrying values.

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~March 31,~~September 30, 2021

NOTE 6 — Acquisition

On April 1, 2021, the Company acquired NYK Component Solutions Limited (“NYK”) for $5.4 million in cash, net of

cash acquired, plus estimated contingent consideration of up to an additional $1.8 million. NYK, which is included in our

Supply Technologies segment, is headquartered in Southampton, United Kingdom and is a leading distributor of circular

connectors and accessories for use in aerospace, defense, and other industrial applications. NYK provides complementary

products to our existing products in Supply Technologies.

The allocation of the purchase price of NYK is subject to finalization of the Company's determination of the fair values of the assets acquired and the liabilities assumed as of the acquisition date, and could be materially different than the estimates presented below. The Company ~~recorded expenses~~has not yet completed its analysis of the fair value of the intangible assets or the contingent consideration. The final allocation is expected to be completed in the fourth quarter of 2021, but no later than one year after the acquisition date. Below is the estimated purchase price allocation related to ~~plant closure~~the acquisition of NYK; the total purchase price is net of cash acquired and ~~consolidation in its Engineered Products segment totaling $0.7 million, which are included in selling, general and administrative expenses in the Condensed Consolidated Statements~~includes estimated contingent consideration of ~~Operations, in the three months ended March 31, 2021. The Company expects to incur additional costs related to these initiatives of approximately $1.0 million in the remainder of 2021.~~$1.8 million.


	(In millions)
Accounts receivable	$	1.0
Inventories	2.2
Accounts payable and accrued expenses	(1.0)
Property, plant and equipment	0.1
Other, net	0.1
Intangible assets	2.8
Goodwill	2.5
Deferred income tax liability	(0.5)
Total purchase price (including the estimated contingent consideration of $1.8 million)	$	7.2

NOTE 67 — Inventories

Inventories, net consist of the following:


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(In millions)					(In millions)
Raw materials and supplies	Raw materials and supplies	$	106.1	$	93.8	Raw materials and supplies	$	120.0	$	93.8
Work in process		40.7		42.3
Work-in-process						Work-in-process	50.1		44.0
Finished goods	Finished goods	186.6		174.8		Finished goods	216.3		173.1

Inventories, net	Inventories, net	$	333.4	$	310.9	Inventories, net	$	386.4	$	310.9

NOTE 78 — Accrued Warranty Costs

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 nine months ended ~~March 31,~~September 30, 2021 and 2020:

Three Months Ended March 31,
2021 2020
(In millions)
Beginning balance $ 6.4 $ 6.4
Claims paid (0.3) (0.2)
Warranty expense 0.4 0.6
Ending balance $ 6.5 $ 6.8

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In millions)
Beginning balance	$	7.6	$	6.5	$	6.4	$	6.4
Claims paid	(0.4)		(0.5)		(1.6)		(1.1)
Warranty expense	0.1		0.3		2.5		1.0
Ending balance	$	7.3	$	6.3	$	7.3	$	6.3

NOTE 89 — 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.

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. Significant impacts of the CARES Act include the ability to carry back a net operating loss for five years and an increase of the Internal Revenue Code Section 163(j) interest expense disallowance limitations from 30% to 50% of adjusted taxable income, which will allow the Company to deduct additional interest expense for the 2019 and 2020 tax years. The Company is assessing the potential impact of global relief packages and the CARES Act.

Income tax ~~expense~~benefit for the three months ended ~~March 31,~~September 30, 2021 was ~~$1.9~~$2.8 million, representing an effective rate of ~~25%~~28% compared to ~~$5.5~~income tax expense of $0.3 million, or ~~77%~~5%, for the three months ended ~~March 31,~~September 30, 2020. The rate in the 2021 period is higher than the U.S. statutory rate of 21% due primarily to ~~income subject~~the additional tax benefit recorded as result of stock compensation that vested and state and local taxes during the quarter. The rate in the 2020 period is lower than the U.S. statutory rate of 21% due primarily to ~~foreign~~a U.S. net operating loss carryback to a prior year under the CARES Act, a tax atbenefit from the favorable impact of final Global Intangible Low-Taxed Income (“GILTI”) regulations and a decrease in our Transition Tax liability.

Income tax ~~rates~~benefit for the nine months ended September 30, 2021 was $3.7 million, representing an effective rate of 35%,

compared to $3.8 million, or 28%, for the nine months ended September 30, 2020. The rate in the 2021 period is higher than the U.S. statutory rate of 21% due primarily to the additional benefit recorded as result of the net operating loss carryback claim under the CARES Act and ~~state taxes.~~the composition of earnings. The rate in the 2020 period is higher than the U.S. statutory rate ~~of 21%~~ due to anthe impact of earnings ~~mix that yields an increase~~ in foreign jurisdictions with statutory income tax rates higher than the ~~Global Intangible Low Taxed Income (“GILTI”) inclusion, and also reduces the benefit of foreign tax credits and the Foreign Derived Intangible Income (“FDII”) deduction.~~U.S. rate.

NOTE 10 — Financing Arrangements

1214

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~March 31,~~September 30, 2021

~~NOTE 9 — Financing Arrangements~~

Debt consists of the following:


					Carrying Value at								Carrying Value at
		Maturity Date	Interest Rate at March 31, 2021		March 31, 2021		December 31, 2020			Maturity Date	Interest Rate at September 30, 2021		September 30, 2021		December 31, 2020
					(In millions)								(In millions)
Senior Notes	Senior Notes	April 15, 2027	6.625	%	$	350.0	$	350.0	Senior Notes	April 15, 2027	6.625	%	$	350.0	$	350.0

Revolving credit facility	Revolving credit facility	November 26, 2024	1.32	%	149.4		143.7		Revolving credit facility	November 26, 2024	1.30	%	221.8		143.7

Finance Leases	Finance Leases	Various	Various		17.1		18.7		Finance Leases	Various	Various		15.2		18.7
Other	Other	Various	Various		20.6		22.3		Other	Various	Various		18.2		22.3
Total debt	Total debt				537.1		534.7		Total debt				605.2		534.7
Less current portion of long-term debt and short-term debt	Less current portion of long-term debt and short-term debt				(8.6)		(11.6)		Less current portion of long-term debt and short-term debt				(8.9)		(11.6)

Less unamortized debt issuance costs	Less unamortized debt issuance costs				(4.9)		(5.3)		Less unamortized debt issuance costs				(4.2)		(5.3)
Total long-term debt, net	Total long-term debt, net				$	523.6	$	517.8	Total long-term debt, net				$	592.1	$	517.8

In 2018, the Company entered into Amendment No. 1 to Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) with a group of banks to increase the availability under the revolving credit facility from $350.0 million to $375.0 million, the Canadian revolving subcommitment from $35.0 million to $40.0 million and the European revolving subcommitment from $25.0 million to $30.0 million. Furthermore, the Company has the option, pursuant to the Credit Agreement, to increase the availability under the revolving credit facility by an aggregate incremental amount up to $100.0 million. In 2019, ~~Park-Ohio~~the Company entered into Amendment No. 4 to the Credit Agreement, extending the maturity of the Credit Agreement to November 26, 2024.

We had outstanding bank guarantees and letters of credit under the Credit Agreement of approximately ~~$36.0~~$35.3 million at ~~March 31,~~September 30, 2021 and $34.9 million at December 31, 2020.

In 2017, the Company 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 the Company and are guaranteed on an unsecured senior basis by the 100% owned material domestic subsidiaries of the Company.

In 2016, the Company, through its subsidiary, IEGE Industrial Equipment Holding Company Limited, entered into a financing agreement with Banco Bilbao Vizcaya Argentaria, S.A. The financing agreement provides the Company a loan up to ~~$29.3~~$28.9 million as of ~~March 31,~~September 30, 2021, as well as a revolving credit facility for up to ~~$11.7~~$11.6 million to fund working capital and general corporate needs. ~~NaN~~No amounts were outstanding under the loan agreement or the revolving credit facility as of ~~March 31,~~September 30, 2021.

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 ~~$17.1~~$15.2 million were borrowed under the Lease Agreement to acquire machinery and equipment as of ~~March 31,~~September 30, 2021.

In 2015, the Company, through its Southwest Steel Processing LLC subsidiary, entered into a financing agreement with the Arkansas Development Finance ~~Authority.~~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 ~~financing agreement matures in September 2025. The~~ Company had ~~$6.8~~$6.1 million of borrowings outstanding under this agreement as of ~~March 31,~~September 30, 2021, which is included in Other above.

~~Table of Contents~~

~~Park-Ohio Industries, Inc. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2021~~

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

March 31, 2021 December 31, 2020
(In millions)
Carrying amount $ 350.0 $ 350.0
Fair value $ 355.6 $ 361.8

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021


	September 30, 2021		December 31, 2020
	(In millions)
Carrying amount	$	350.0	$	350.0
Fair value	$	351.3	$	361.8

NOTE 1011 — Stock-Based Compensation

A summary of Holdings' restricted share activity for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 is as follows:


		2021							2021
		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	741,006	$	22.02	50,000	$	32.55	Outstanding - beginning of year	741,006	$	22.02	50,000	$	32.55
Granted(a)	Granted(a)	0	0		0	0		Granted(a)	183,401	33.64		—	—
Vested	Vested	(12,167)	35.06		0	0		Vested	(234,081)	22.47		—	—

Canceled or expired	Canceled or expired	(6,667)	22.74		0	0		Canceled or expired	(7,917)	21.71		—	—
Outstanding - end of period	Outstanding - end of period	722,172	$	21.79	50,000	$	32.55	Outstanding - end of period	682,409	$	24.99	50,000	$	32.55

(a) - Included in this amount are 4,905 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. Total stock-based compensation expense for the three months ended ~~March 31,~~September 30, 2021 and 2020 was $1.7 million and $1.6 million, respectively. Total stock-based compensation expense for the nine months ended September 30, 2021 and ~~$1.4~~2020 was $4.7 million and $4.4 million, respectively. As of ~~March 31,~~September 30, 2021, there was ~~$8.4~~$11.4 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 2.0 years.

NOTE 1112 — Commitments and Contingencies

The Company is subject to various pending and threatened legal proceedings arising in 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.

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in approximately ~~121~~124 cases asserting claims on behalf of approximately ~~222~~228 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.

~~Table of Contents~~

~~Park-Ohio Industries, Inc. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2021~~

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.

Table of Contents

Park-Ohio Industries, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021

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.

NOTE 1213 — Pension and Postretirement Benefits

The components of net periodic benefit (income) expense costs recognized for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 were as follows:


			Pension Benefits				Postretirement Benefits				Pension Benefits						Postretirement Benefits
		Three Months Ended March 31,			Three Months Ended March 31,						Three Months Ended September 30,		Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020		2021		2020				2021		2020		2021		2020		2021		2020		2021		2020
			(In millions)								(In millions)
Service costs	Service costs		$	1.1	$	1.1	$	0	$	0		Service costs	$	1.0	$	1.0	$	3.2	$	3.2	$	—	$	—	$	—	$	—
Interest costs	Interest costs		0.3		0.5		0		0			Interest costs	0.3		0.5		1.0		1.6		—		—		0.1		0.1
Expected return on plan assets	Expected return on plan assets		(3.1)		(2.9)		0		0			Expected return on plan assets	(3.0)		(2.9)		(9.2)		(8.8)		—		—		—		—
Recognized net actuarial loss	Recognized net actuarial loss		0.2		0.5		0.1		0.1			Recognized net actuarial loss	0.2		0.4		0.6		1.4		0.1		0.1		0.3		0.2
Net periodic benefit (income) expense	Net periodic benefit (income) expense		$	(1.5)	$	(0.8)	$	0.1	$	0.1		Net periodic benefit (income) expense	$	(1.5)	$	(1.0)	$	(4.4)	$	(2.6)	$	0.1	$	0.1	$	0.4	$	0.3

NOTE 1314 — Accumulated Other Comprehensive (Loss) Income

The components of and changes in accumulated other comprehensive loss for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 were as follows:


		Cumulative Translation Adjustment		Pension and Postretirement Benefits		Total		Cumulative Translation Adjustment		Pension and Postretirement Benefits		Total
		(In millions)

															Cumulative Translation Adjustment		Pension and Postretirement Benefits		Total		Cumulative Translation Adjustment		Pension and Postretirement Benefits		Total
															(In millions)
		Three Months Ended March 31, 2021						Three Months Ended March 31, 2020							Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
Beginning balance	Beginning balance	$	(8.3)	$	(9.8)	$	(18.1)	$	(22.4)	$	(14.6)	$	(37.0)	Beginning balance	$	(11.0)	$	(9.4)	$	(20.4)	$	(36.1)	$	(13.7)	$	(49.8)
Currency translation(a)	Currency translation(a)	(4.3)		—		(4.3)		(16.6)		—		(16.6)		Currency translation(a)	(5.5)		—		(5.5)		12.6		—		12.6
Pension and OPEB activity, net of tax	Pension and OPEB activity, net of tax	—		0.2		0.2		—		0.5		0.5		Pension and OPEB activity, net of tax	—		0.2		0.2		—		0.3		0.3

Ending balance	Ending balance	$	(12.6)	$	(9.6)	$	(22.2)	$	(39.0)	$	(14.1)	$	(53.1)	Ending balance	$	(16.5)	$	(9.2)	$	(25.7)	$	(23.5)	$	(13.4)	$	(36.9)

															Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
Beginning balance														Beginning balance	$	(8.3)	$	(9.8)	$	(18.1)	$	(22.4)	$	(14.6)	$	(37.0)
Currency translation(a)														Currency translation(a)	(8.2)		—		(8.2)		(1.1)		—		(1.1)
Pension and OPEB activity, net of tax														Pension and OPEB activity, net of tax	—		0.6		0.6		—		1.2		1.2

Ending balance														Ending balance	$	(16.5)	$	(9.2)	$	(25.7)	$	(23.5)	$	(13.4)	$	(36.9)

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

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~~Park-Ohio Industries, Inc. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2021~~

~~NOTE 14 — Subsequent Event~~

On April 1, 2021, the Company acquired NYK Component Solutions Limited (“NYK”) for $5.7 million in cash, net of cash acquired, plus potential contingent consideration of up to an additional $2.0 million. NYK, which will be included in our Supply Technologies segment, is headquartered in Southampton, United Kingdom and is a leading distributor of circular connectors and accessories for use in aerospace, defense, and other industrial applications. NYK provides complementary products to our existing products in Supply Technologies.

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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 Industries, Inc. and its subsidiaries (collectively, “we,” “our,” or the “Company”). All significant intercompany transactions have been eliminated in consolidation. Park-Ohio Industries, Inc. is a wholly-owned subsidiary of Park-Ohio Holdings Corp. (“Holdings”).

EXECUTIVE OVERVIEW

We are a diversified international company providing world-class customers with a supply chain management outsourcing service, capital equipment used on their production lines, and manufactured components used to assemble their products. We operate through three reportable segments: Supply Technologies, Assembly Components and Engineered Products.

Supply Technologies provides our customers with Total Supply Management™, a proactive solutions approach that manages the efficiencies of every aspect of supplying production parts and materials to our customers’ manufacturing floor, from strategic planning to program implementation. Total Supply Management™ includes such services as engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking, just-in-time and point-of-use delivery, electronic billing services and ongoing technical support. Our Supply Technologies business services customers in the following principal industries: heavy-duty truck; sports and recreational equipment; aerospace and defense; semiconductor equipment; electrical distribution and controls; consumer electronics; bus and coaches; automotive, agricultural and construction equipment; HVAC; lawn and garden; plumbing; and medical.

Assembly Components manufactures products oriented towards fuel efficiency and reduced emission standards. Assembly Components designs, develops and manufactures aluminum products and highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Additional products include cast and machined aluminum engine, transmission, brake, suspension and other components, such as pump housings, clutch retainers/pistons, control arms, knuckles, master cylinders, pinion housings, brake calipers, oil pans and flywheel spacers. 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.

COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus (“COVID-19”) as a pandemic, and it ~~continues to~~ spread throughout the United States and other countries around the world. The pandemic has negatively impacted several of the markets we ~~serve.~~serve, as well as contributed to a global semiconductor micro-chip shortage, raw material price inflation, higher labor costs and various supply chain constraints, including supplier delays that caused extended lead times and increasing freight costs. In response to the ongoing COVID-19 pandemic, we continue to ~~take actions to reduce~~manage our operating costs, including through actions to reduce costs, including plant ~~consolidation; severance;~~consolidation, severance, and discretionary spending ~~cuts.~~cuts, and we are taking aggressive actions to improve results in response to these macroeconomic conditions. We also continue to ~~aggressively~~ manage both working capital and capital spending. Although there continues to be uncertainty related to the anticipated impact and duration of the

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COVID-19 pandemic ~~outbreak~~ on our future results, we believe our diversified portfolio of global businesses, our liquidity position of ~~$264.4~~$208.8 million as of ~~March 31,~~September 30, 2021, and the ~~recent~~ steps we have taken in both 2020 and 2021 to reduce costs leave us well-positioned to manage our business through this crisis as it continues to unfold.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020


	Three Months Ended September 30,
	2021			2020			$ Change		% Change
	(Dollars in millions)
Net sales	$	358.5		$	340.2		$	18.3	5.4	%
Cost of sales	318.4			290.5			27.9		9.6	%
Gross profit	40.1			49.7			(9.6)		(19.3)	%
Gross margin	11.2		%	14.6		%
Selling, general and administrative (“SG&A”) expenses	44.9			38.6			6.3		16.3	%
SG&A expenses as a percentage of net sales	12.5		%	11.3		%


Operating (loss) income	(4.8)			11.1			(15.9)		*
Other components of pension income and other postretirement benefits expense, net	2.4			1.9			0.5		26.3	%
Interest expense, net	(7.6)			(7.4)			(0.2)		2.7	%

(Loss) income before income taxes	(10.0)			5.6			(15.6)		*
Income tax benefit (expense)	2.8			(0.3)			3.1		*


Net (loss) income	(7.2)			5.3			(12.5)		*
Net loss attributable to noncontrolling interest	0.2			0.1			0.1		100.0	%
Net (loss) income attributable to Park-Ohio Industries, Inc. common shareholder	$	(7.0)		$	5.4		$	(12.4)	*

* Calculation not meaningful

Net Sales

Net sales increased 5.4% to $358.5 million in the third quarter of 2021 compared to $340.2 million in the same period in 2020. This increase was primarily due to higher customer demand across our Supply Technologies and Engineered Products segments, partially offset by lower sales levels in our Assembly Components segment due to the ongoing global semiconductor micro-chip shortage.

The factors explaining the changes in segment net sales for the three months ended September 30, 2021 compared to the

corresponding 2020 period are contained within the “Segment Results” section below.

Cost of Sales & Gross Profit

Cost of sales increased 9.6% to $318.4 million in the third quarter of 2021 compared to $290.5 million in the same period in 2020. The increase incost of sales was primarily due to the increase in net sales for the 2021 period compared to the corresponding period in 2020, as well as the factors listed below that impacted gross margin.

Gross margin was 11.2% in the third quarter of 2021 compared to 14.6% in the same period in 2020. The lower margin in the 2021 period compared to a year ago was due to the negative impact of the global semiconductor micro-chip shortage, raw material price inflation, higher labor costs and various supply chain constraints, including supplier delays that caused extended lead times and increasing freight costs, and manufacturing under-absorption of fixed costs at certain plants. The third quarter of 2021 included expenses of $1.8 million related to plant closure and consolidation actions. The third quarter of 2020 included charges of $1.3 million related to plant closure and consolidation, severance and other actions to reduce costs.

SG&A Expenses

SG&A expenses increased to $44.9 million in the third quarter of 2021 compared to $38.6 million, in the comparable period in 2020, an increase of 16.3%. In response to significantly lower demand levels caused by the COVID-19 pandemic in the 2020 third quarter, the Company took immediate actions in many of its operations to reduce costs, including workforce furloughs, permanent headcount reductions, salary and incentive compensation reductions, and cuts in discretionary spending.

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~~Subsequent Event~~As demand levels increased in 2021, a portion of the SG&A expense reduction from 2020 was restored to meet the increasing demand. SG&A expenses in the 2021 period also included $2.5 million of charges related to plant closure and consolidation and other costs. The third quarter of 2020 included charges of $0.5 million related to plant closure and consolidation, severance and other actions to reduce costs.

~~On April 1, 2021, the Company acquired NYK Component Solutions Limited~~Other Components of Pension Income and Other Postretirement Benefits Expense (“~~NYK”~~OPEB”) ~~for $5.7~~, Net

Other components of pension income and OPEBexpense, net was $2.4 million in ~~cash,~~the three months ended September 30, 2021 compared to $1.9 million in the corresponding period in 2020. This increase in the 2021 period relates to higher returns on plan assets in the 2021 period compared to the same period a year ago.

Interest Expense, Net

Interest expense, net was $7.6 million in the third quarter of ~~cash acquired, plus potential contingent consideration~~2021 compared to $7.4 million in the 2020 period. The increase was due to higher average outstanding borrowings during the 2021 period.

Income Tax Benefit

Income tax benefit for the three months ended September 30, 2021 was $2.8 million, representing an effective rate of up28% compared to anincome tax expense of $0.3 million, or 5%, for the three months ended September 30, 2020. The rate in the 2021 period is higher than the U.S. statutory rate of 21% due primarily to the additional ~~$2.0 million. NYK, which will be included~~tax benefit recorded as result of stock compensation that vested and state and local taxes during the quarter. The rate in the 2020 period is lower than the U.S. statutory rate of 21% due primarily to a U.S. net operating loss carryback to a prior year under the CARES Act, a tax benefit from the favorable impact of final Global Intangible Low-Taxed Income (“GILTI”) regulations and a decrease in our Supply Technologies segment, is headquartered in Southampton, United Kingdom and is a leading distributor of circular connectors and accessories for use in aerospace, defense, and other industrial applications. NYK provides complementary products to our existing products in Supply Technologies.Transition Tax liability.

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RESULTS OF OPERATIONS

~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 Compared with ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020


		Three Months Ended March 31,											Nine Months Ended September 30,
		2021			2020			$ Change		% Change			2021			2020			$ Change		% Change
		(Dollars in millions)											(Dollars in millions)
Net sales	Net sales	$	359.6		$	366.3		$	(6.7)	(1.8)	%	Net sales	$	1,068.1		$	934.8		$	133.3	14.3	%
Cost of sales	Cost of sales	307.6			312.4			(4.8)		(1.5)	%	Cost of sales	936.1			817.0			119.1		14.6	%
Gross profit	Gross profit	52.0			53.9			(1.9)		(3.5)	%	Gross profit	132.0			117.8			14.2		12.1	%
Gross margin	Gross margin	14.5		%	14.7		%					Gross margin	12.4		%	12.6		%
Selling general and administrative (“SG&A”) expenses		39.5			40.7			(1.2)		(2.9)	%
SG&A expenses												SG&A expenses	127.6			114.2			13.4		11.7	%
SG&A expenses as a percentage of net sales	SG&A expenses as a percentage of net sales	11.0		%	11.1		%					SG&A expenses as a percentage of net sales	11.9		%	12.2		%

Operating income	Operating income	12.5			13.2			(0.7)		(5.3)	%	Operating income	4.4			3.6			0.8		22.2	%

Other components of pension income and other postretirement benefits expense, net	Other components of pension income and other postretirement benefits expense, net	2.4			1.8			0.6		33.3	%	Other components of pension income and other postretirement benefits expense, net	7.3			5.5			1.8		32.7	%
Interest expense, net	Interest expense, net	(7.4)			(7.9)			0.5		(6.3)	%	Interest expense, net	(22.4)			(22.9)			0.5		(2.2)	%

Income before income taxes		7.5��			7.1			0.4		5.6	%
Income tax expense		(1.9)			(5.5)			3.6		(65.5)	%
Loss before income taxes												Loss before income taxes	(10.7)			(13.8)			3.1		(22.5)	%
Income tax benefit												Income tax benefit	3.7			3.8			(0.1)		(2.6)	%

Net income		5.6			1.6			4.0		250.0	%
Net loss (income) attributable to noncontrolling interests		0.1			(0.1)			0.2		*
Net income attributable to Park-Ohio Industries, Inc. common shareholder		$	5.7		$	1.5		$	4.2	280.0	%
Net loss												Net loss	(7.0)			(10.0)			3.0		(30.0)	%
Net loss attributable to noncontrolling interests												Net loss attributable to noncontrolling interests	0.5			0.4			0.1		25.0	%
Net loss attributable to Park-Ohio Industries, Inc. common shareholder												Net loss attributable to Park-Ohio Industries, Inc. common shareholder	$	(6.5)		$	(9.6)		$	3.1	(32.3)	%

*Calculation not meaningful

Net Sales

Net sales ~~decreased 1.8%~~increased 14.3% to ~~$359.6~~$1,068.1 million in the first ~~three~~nine months of 2021 compared to ~~$366.3~~$934.8 million in the same period in 2020. This ~~decrease~~increase was primarily due to ~~lower customer demand for our products in our Engineered Products segment, which more than offset~~ higher customer demand in our Supply Technologies and Assembly Components ~~segments.~~business segments, partially offset by lower demand in our Engineered Products segment.

The factors explaining the changes in segment net sales for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to the

corresponding 2020 period are contained in the “Segment Results” section below.

Cost of Sales & Gross Profit

Cost of sales ~~decreased 1.5%~~increased 14.6% to ~~$307.6~~$936.1 million ~~in the first three months of 2021 compared to $312.4 million in the same period in 2020. The decrease in cost of sales was primarily due to the decrease in net sales described above.~~

~~Gross margin was 14.5%~~ in the first nine months of 2021 compared to ~~14.7%~~$817.0 million in the same period in 2020. The increase incost of sales was primarily due to the increase in net sales described above.

Gross margin was 12.4% in the first nine months of 2021 compared to 12.6% in the corresponding period in 2020. The ~~decrease was due primarily to the lower profit flow-through from lower sales in the~~ 2021 period ~~and $0.6~~included expenses of $2.9 million ~~of expenses~~ related to plant closure and consolidation, severance and other actions to reduce costs. The 2020 period included charges of $4.1 million related to plant closure and consolidation, severance ~~recorded in cost of goods sold in the first quarter of 2021.~~and other actions to reduce costs.

SG&A Expenses

SG&A expenses were ~~$39.5~~$127.6 million ~~or 11.0% of net sales,~~ in the first ~~three~~nine months of 2021, compared to ~~$40.7~~$114.2 million ~~or 11.1% of net sales,~~ in the same period in ~~2020. SG&A expenses were down 2.9% compared~~2020, an increase of 11.7%. In response to significantly lower demand levels caused by the ~~same period a year ago,~~pandemic in 2020, the Company

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~~driven by the benefit from cost reduction~~took immediate actions ~~implemented across the Company. The amount~~in many of its operations to reduce costs, including workforce furloughs, permanent headcount reductions, salary and incentive compensation reductions, and cuts in discretionary spending. As demand levels increased in 2021, a portion of the SG&A expense reduction from 2020 was restored to meet the increasing demand. SG&A expenses in the 2021 period included ~~$0.7~~$4.1 million of ~~expenses~~charges related to plant closure and ~~consolidation.~~consolidation, severance and other costs and $0.4 million of acquisition related expenses. SG&A expenses in the 2020 period included severance and other charges of $1.5 million. As a percentage of net sales, SG&A expenses improved to 11.9% in the 2021 period compared to 12.2% in the 2020 period, as a fixed portion of SG&A expenses were spread over a higher revenue base.

Other Components of Pension Income and OPEB, Net

Other components of pension income and OPEBexpense, net was ~~$2.4~~$7.3 million in the first ~~three~~nine months of 2021 compared to ~~$1.8~~$5.5 million in the corresponding period in 2020. This increase was driven by higher returns on plan assets and lower interest costs in the 2021 period compared to the same period a year ago.

Interest Expense, ~~net~~Net

Interest expense, net was ~~$7.4~~$22.4 million in the first ~~three~~nine months of 2021 compared to ~~$7.9~~$22.9 million in the 2020 period. The decrease was due primarily to lower ~~average outstanding borrowings and lower average~~ interest rates ~~during~~in the 2021 period compared to the same period a year ago. ~~The lower outstanding borrowings reflect our efforts to pay-down indebtedness with our free cash flow.~~

Income Tax ~~Expense~~Benefit

Income tax ~~expense~~benefit for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~$1.9~~$3.7 million, representing an effective rate of ~~25%~~35%,

compared to ~~income tax expense of $5.5~~$3.8 million, or ~~77%~~28%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. The rate in the 2021 period is higher than the U.S. statutory rate of 21% due primarily to ~~income subjected to foreign tax at tax rates higher than~~ the ~~U.S. statutory rate~~additional benefit recorded as result of the net operating loss carryback claim under the CARES Act and ~~state taxes.~~the composition of earnings. The rate in the 2020 period is higher than the U.S. statutory rate ~~of 21%~~ due to anthe impact of earnings ~~mix that yields an increase~~ in foreign jurisdictions with statutory income tax rates higher than the ~~Global Intangible Low Taxed Income (“GILTI”) inclusion, and also reduces the benefit of foreign tax credits and the Foreign Derived Intangible Income (“FDII”) deduction.~~

U.S. rate.

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SEGMENT RESULTS

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.

Supply Technologies Segment


		Three Months Ended March 31,				Three Months Ended September 30,								Nine Months Ended September 30,
			2021				2020				2021			2020			2021			2020
			(Dollars in millions)								(Dollars in millions)
Net sales	Net sales		$	157.7			$	140.8		Net sales	$	154.0		$	132.0		$	466.7		$	367.2
Segment operating income	Segment operating income		$	12.2			$	9.2		Segment operating income	$	10.7		$	10.6		$	33.2		$	20.1
Segment operating income margin	Segment operating income margin		7.7		%		6.5		%	Segment operating income margin	6.9		%	8.0		%	7.1		%	5.5		%

Three months ended September 30:

Net sales increased ~~12.0%~~16.7% in the three months ended ~~March 31,~~September 30, 2021 compared to the 2020 period due primarily to higher customer demand in ~~certain~~substantially all of the Company's end markets, ~~including~~with the ~~Company’s~~largest increases in heavy-duty truck, semiconductor, and ~~truck-related market, which was up 26% year-over-year;~~agricultural and industrial equipment. As a result of the ~~Company’s power sports market, which was up 37% year-over-year; and the Company’s medical market, which was up 48% year-over-year. These increases were partially offset by lower~~COVID-19 pandemic, customer demand in ~~the Company’s commercial aerospace market.~~2020 was down significantly in most of our key end markets.

Segment operating income increased by ~~$3.0~~$0.1 million and segment operating income margin decreased 110 basis points in the 2021 period compared to the same period a year ago. The decrease in margin was driven by higher freight costs in the 2021 period as a result of global supply chain constraints and a labor strike at a major truck assembly plant, partially offset by the benefit of cost-reduction actions.

Nine months ended September 30:

Net sales increased 27.1% in the nine months ended September 30, 2021 compared to the 2020 period due primarily to higher customer demand in most of the Company's end markets, with the biggest increases in heavy-duty truck, powersports, agricultural and industrial equipment, and semiconductor. As a result of the COVID-19 pandemic, customer demand in 2020 was down significantly in most of our key end markets.

Segment operating income increased by $13.1 million and segment operating income margin was up ~~120~~160 basis points in the 2021 period compared to the same period a year ago. These net increases were driven by increased sales, the ~~higher sales levels and the benefit~~impact of cost reduction ~~actions.~~actions, the impact of pricing initiatives and favorable product mix. These positive factors were partially offset by higher freight costs in the 2021 period as a result of global supply chain constraints and a labor strike at a major truck assembly plant.

Assembly Components Segment

Three Months Ended March 31,
2021 2020
(Dollars in millions)
Net sales $ 126.0 $ 128.2
Segment operating income $ 6.4 $ 6.3
Segment operating income margin 5.1 % 4.9 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(Dollars in millions)
Net sales	$	120.2		$	126.9		$	355.7		$	310.0
Segment operating (loss) income	$	(8.9)		$	6.7		$	(8.6)		$	(1.6)
Segment operating (loss) income margin	(7.4)		%	5.3		%	(2.4)		%	(0.5)		%

Three months ended September 30:

Net sales decreased ~~1.7%~~5.2% in the three months ended ~~March 31,~~September 30, 2021 compared to the 2020 period ~~as the segment has essentially returned to pre-pandemic demand levels.~~

Segment operating income in the 2021 period increased by $0.1 million, and segment operating income margin increased by 20 basis points compared to the corresponding period of 2020. These increases were due primarily to the ~~benefit~~impact of ~~cost reduction actions. In~~ the global semiconductor micro-chip shortage that continued in the third quarter 2021, which negatively impacted net sales in the quarterly period this segment incurred expenses of $0.6 million related to plant closing and consolidation and other actions to reduce costs. In the 2020 period, this segment incurred expenses of $0.1 million related to plant closing and consolidation.

~~Engineered Products Segment~~

Three Months Ended March 31,
2021 2020
(Dollars in millions)
Net sales $ 75.9 $ 97.3
Segment operating (loss) income $ (1.3) $ 3.8
Segment operating income margin (1.7) % 3.9 %

by approximately $13.1 million.

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Segment operating loss was $8.9 million in the 2021 period compared to segment operating income of $6.7 million in the 2020 period. The loss in the 2021 period was driven by the negative impacts of the global semiconductor micro-chip shortage; raw material price inflation; higher labor costs and various supply chain constraints, including supplier delays that caused extended lead times and increasing freight costs; and charges of $3.4 million related to plant closure and consolidation activities and other costs. Income in the 2020 period included charges related to plant closure and consolidation were $1.4 million.

Nine months ended September 30:

Net sales increased 14.7% in the nine months ended September 30, 2021 compared to the 2020 period due primarily to

the shut-down of North American automotive production in the second quarter of 2020 as a result of the COVID-19 pandemic, partially offset the impact of the global semiconductor micro-chip shortage, which negatively impacted net sales in the 2021 year-to-date period.

Segment operating income in the 2021 period decreased by $7.0 million, and segment operating income margin decreased 190 basis points compared to the 2020 period. The loss in the 2021 period was driven by the factors listed above under the three-month discussion. In the 2021 period, charges related to plant closure and consolidation and other costs were $4.8 million. The loss in the 2020 period was driven by lower sales as a result of the COVID-19 pandemic and charges related to plant closure and consolidation were $3.7 million.

Engineered Products Segment


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(Dollars in millions)
Net sales	$	84.3		$	81.3		$	245.7		$	257.6
Segment operating income (loss)	$	0.6		$	1.3		$	(1.3)		$	4.3
Segment operating income (loss) margin	0.7		%	1.6		%	(0.5)		%	1.7		%

Three months ended September 30:

Net sales were ~~22.0%~~3.7% higher in the 2021 period compared to the 2020 period. The increase was due to stronger demand in the 2021 period for our capital equipment products, partially offset by lower customer demand in certain end markets in our forged and machined products business, including oil and gas, aerospace, rail and agriculture, which continue to be slow to recover from the pandemic.

Segment operating income in the 2021 period decreased $0.7 million and segment operating income decreased by 90 basis points compared to the corresponding 2020 period. These decreases were the result of manufacturing under-absorption of fixed costs at certain plants and charges of $0.6 million in 2021 related to plant closure and consolidation. Charges related to plant closure and consolidation in the 2020 period were $0.4 million.

Nine months ended September 30:

Net sales were 4.6% lower in the 2021 period compared to the 2020 period. The decrease was due ~~primarily~~ to lower ~~customer~~ demand in certain ~~key~~ end markets in our forged and machined products business ~~including our oil and gas, aerospace, rail and agriculture markets; as well as lower~~which continue to be slow to recover from the pandemic, partially offset by stronger demand in the 2021 period for our capital equipment products ~~as many customers delayed buying decisions in response to the COVID-19 pandemic.~~

Segment operating ~~(loss) income~~loss was $1.3 million in the 2021 period ~~decreased by $5.1 million~~ compared to segment operating income of $4.3 million in the ~~corresponding~~ 2020 period. This decrease in profitability of $5.6 million was ~~driven by~~due to the lower sales levels, manufacturing under-absorption of fixed costs at certain plants, and ~~expenses~~charges of $1.9 million related to plant closure and ~~consolidation. In~~consolidation activities in the 2021 ~~period, this segment incurred expenses of $0.7 million~~period. Charges related to plant ~~closing~~closure and consolidation ~~and other actions to reduce costs. In~~in the 2020 period ~~this segment incurred expenses of $0.1 million related to severance. The decreases~~ were ~~partially offset by the benefits of cost reduction actions that the Company has implemented in response to current market conditions.~~

$0.7 million.

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Information about our Guarantors and the Issuer of our Guaranteed Securities

The accompanying summarized financial information has been prepared and presented pursuant to Rule 3-10 of Regulation S-X, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 of Regulation S-X, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant’s Securities.” Each of the material domestic direct and indirect wholly-owned subsidiaries (the “Guarantor subsidiaries”) of the Company have fully and unconditionally, and jointly and severally, guaranteed the obligations under the $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 issued by the Company (the “Notes”).

The following presents the summarized financial information on a combined basis for Park-Ohio Industries, Inc. (parent company and issuer of the guaranteed obligations) and the Guarantor subsidiaries, which are collectively referred to as the “obligated group.” Transactions between the obligated group have been eliminated. Information for the non-Guarantor subsidiaries has been excluded from the combined summarized financial information of the obligated group.

Each Guarantor subsidiary is consolidated by Park-Ohio Industries, Inc. as of ~~March 31,~~September 30, 2021. Refer to Exhibit 22.1 to this Quarterly Report on Form 10-Q for the detailed list of entities included within the obligated group as of ~~March 31,~~September 30, 2021 and December 31, 2020.

The guarantee of a Guarantor subsidiary with respect to the Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the indenture pursuant to which the Notes were issued (the “Indenture”), will be automatically and unconditionally released and discharged, upon the occurrence of any of the following:

(a) any sale or other disposition of all or substantially all of the assets or all of the capital stock of such Guarantor subsidiary, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of such Guarantor subsidiary, in each case to a person that is not (either before or after giving effect to such transaction) the Company or a subsidiary of the Company; provided that the net proceeds of such sale or other disposition are applied in accordance with the terms of the Indenture;

(b) the designation of any Guarantor subsidiary as an Unrestricted Subsidiary” (as defined in the Indenture);

(d) the release of such Guarantor subsidiary’s guarantee under all credit facilities of the Company (other than a release as a result of payment under or a discharge of such guarantee).

Each entity in the summarized combined financial information follows the same accounting policies as described in the consolidated financial statements. The accompanying summarized combined financial information does not reflect investments of the obligated group in non-Guarantor subsidiaries. The financial information of the obligated group is presented on a combined basis; intercompany balances and transactions within the obligated group have been eliminated. The obligated group’s amounts due from, amounts due to, and transactions with, non-Guarantor subsidiaries and related parties have been presented in separate line items.

Summarized Combined Financial Information of the Issuer and Guarantor Subsidiaries:

The following table contains summarized combined financial information from the Statements of Unaudited Condensed Consolidated Financial Position of the obligated group:

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		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(In millions)					(In millions)
Total current assets	Total current assets	$	463.4	$	441.4	Total current assets	$	496.7	$	441.4
Total noncurrent assets	Total noncurrent assets	393.4		394.1		Total noncurrent assets	393.3		394.1
Amounts due from subsidiaries that are non-Guarantors, net	Amounts due from subsidiaries that are non-Guarantors, net	26.0		25.8		Amounts due from subsidiaries that are non-Guarantors, net	28.7		25.8

Total current liabilities	Total current liabilities	226.5		209.1		Total current liabilities	225.6		209.1
Total noncurrent liabilities	Total noncurrent liabilities	596.4		590.8		Total noncurrent liabilities	659.3		590.8

The following table contains summarized combined financial information from the Statements of Unaudited Condensed Consolidated Operations of the obligated group:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
		(In millions)					(In millions)
Net sales	Net sales	$	252.9	$	266.4	Net sales	$	248.5	$	236.0	$	738.6	$	655.0
Gross profit	Gross profit	36.2		38.9		Gross profit	23.1		33.1		83.3		80.2
SG&A expenses	SG&A expenses	31.1		32.0		SG&A expenses	37.4		29.3		100.0		88.4
Income before income taxes		1.1		1.5
Net income (loss)		0.8		(2.7)
(Loss) income before income taxes						(Loss) income before income taxes	(15.3)		0.3		(24.2)		(21.8)
Net (loss) income						Net (loss) income	(10.2)		3.4		(15.7)		(13.5)

Seasonality; Variability of Operating Results

The timing of orders placed by our customers has varied with, among other factors, orders for customers’ finished goods, customer production schedules, competitive conditions and general economic conditions. The variability of the level and timing of orders has, from time to time, resulted in significant periodic and quarterly fluctuations in the operations of our businesses. Such variability is particularly evident in our capital equipment business, included in the Engineered Products segment, which typically ships large systems at a relatively lower pace than our other businesses.

Critical Accounting Policies

Our critical accounting policies are described in "Item. 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations," and in the notes to our consolidated financial statements for the year ended December 31, 2020, both contained in our Annual Report on Form 10-K for the year ended December 31, 2020. There were no new critical accounting policies or updates to existing critical accounting policies as a result of new accounting pronouncements in this Quarterly Report on Form 10-Q.

The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “estimates” and similar expressions are intended to identify forward-looking statements.

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These forward-looking statements, including statements regarding future performance of the Company that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are

not limited to, the following: the ultimate impact the COVID-19 pandemic has on our business, results of operations, financial position and ~~liquidity;~~liquidity, including, without limitation, supply chain issues such as the global semiconductor micro-chip shortage and logistic issues; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities; public health issues, including the outbreak of COVID-19 and its impact on our facilities and operations and our customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems; our ability to continue to pay cash dividends, and the timing and amount of any such dividends; and the other factors we describe under “Item 1A. Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved.


Item 3.			Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk, including changes in interest rates. As of ~~March 31,~~September 30, 2021, 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 ~~$0.4~~$1.7 million during the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2021.

Our foreign subsidiaries generally conduct business in local currencies. We face translation risks related to the changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated in U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded as a component of Accumulated other comprehensive loss in the Shareholders' equity section of the accompanying Condensed Consolidated Balance Sheets. Sales and expenses at our foreign operations are translated into U.S. dollars at the applicable monthly average exchange rates. Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars.

Our largest exposures to commodity prices relate to metal and natural gas prices, which have fluctuated widely in recent years. We do not have any commodity swap agreements, forward purchase or hedge contracts.

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Item 4.			Controls and Procedures

~~Table of Contents~~

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,~~September 30, 2021, 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

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Item 1.			Legal Proceedings

We are subject to various pending and threatened lawsuits in which claims for monetary damages are asserted in the ordinary course of business. While any litigation involves 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,~~September 30, 2021:

We were a co-defendant in approximately ~~121~~124 cases asserting claims on behalf of approximately ~~222~~228 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, 2020. Investors should not interpret the disclosure of any risk factor to imply that

the risk has not already materialized.


Item 6.			Exhibits

The following exhibits are included herein:









22.1			Schedule of the obligated group, including the issuer and the subsidiary guarantors that have guaranteed our obligations under the 6.625% Senior Notes due 2027 issued by Park-Ohio Industries, Inc. (filed as Exhibit 22.1 to Form 10-Q of Park-Ohio Industries, Inc. filed November 10, 2020, SEC File No. 333-43005 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)

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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 INDUSTRIES, INC.
(Registrant)

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

Date: ~~May 13,~~November 12, 2021

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