EXHIBIT 99.1
FOR IMMEDIATE RELEASE | CONTACT: | EDWARD F. CRAWFORD | ||
PARK-OHIO HOLDINGS CORP. | ||||
(440) 947-2000 |
Park-Ohio Announces 2008 Results
CLEVELAND, OHIO, March 10, 2009 — Park-Ohio Holdings Corp. (NASDAQ:PKOH) today announced results for its fourth quarter and year ended December 31, 2008.
FOURTH QUARTER RESULTS
Net sales were $249.6 million for fourth quarter 2008, essentially unchanged from net sales of $247.8 million for fourth quarter 2007. ParkOhio reported a net loss of $119.9 million, or $10.96 per share, in the fourth quarter of 2008, compared to net income of $3.9 million, or $.34 per share dilutive, for fourth quarter 2007. Included in the 2008 results were restructuring and impairment charges totaling $108.6 million ($8.49 per share dilutive), a deferred tax asset valuation reserve of $32.7 million ($2.99 per share dilutive) and a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $6.2 million ($.36 per share). Net income, as adjusted (a) for the fourth quarter of 2008 was $1.7 million, or $.16 per share dilutive.
FULL YEAR RESULTS
Net sales were $1.069 billion for 2008, essentially unchanged from net sales of $1.071 billion for the same period of 2007. ParkOhio reported a net loss of $119.8 million, or $10.88 per share, for the year ended December 31, 2008, compared to net income of $21.2 million or $1.82 per share dilutive, in 2007. Included in the 2008 results were restructuring and impairment charges totaling $126.6 million ($9.46 per share dilutive), a deferred tax asset valuation reserve of $32.7 million ($2.97 per share dilutive) and a gain on the purchase of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due in 2014 of $6.2 million ($.36 per share). Net income, as adjusted (a) for 2008 was $13.7 million, or $1.19 per share dilutive compared to net income, as adjusted (a) of $19.4 million, or $1.67 per share dilutive in 2007.
Edward F. Crawford, Chairman and Chief Executive Officer, stated “As our stakeholders would expect, we are proactively addressing the challenges of the current economic downturn. We are confident that the decisions we are making now, combined with the diversity and strength of our products, will make us stronger when the global economy stabilizes”.
(a) | Reconciliation to GAAP: |
Quarter ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net (loss) income, as reported | $ | (119.9 | ) | $ | 3.9 | $ | (119.8 | ) | $ | 21.2 | ||||||
Income taxes, as reported | 20.2 | .6 | 21.0 | 10.0 | ||||||||||||
(Loss) income before income taxes, as reported | $ | (99.7 | ) | $ | 4.5 | $ | (98.8 | ) | $ | 31.2 | ||||||
Restructuring and impairment charges (1) (2) | 108.6 | 0 | 126.6 | 0 | ||||||||||||
Gains (3) | (6.2 | ) | 0 | (6.2 | ) | (2.3 | ) | |||||||||
Income taxes, as adjusted | (1.0 | ) | (.6 | ) | (7.9 | ) | (9.5 | ) | ||||||||
Net income, as adjusted | $ | 1.7 | $ | 3.9 | $ | 13.7 | $ | 19.4 | ||||||||
- more -
(1) | During the fourth quarter of 2008, ParkOhio recorded a non-cash goodwill impairment charge of $95.8 million and restructuring and asset impairment charges of $13.4 million associated with the decision to exit its relationship with its largest customer along with the general economic downturn. The charges were composed of $5.0 million of inventory impairment included in Cost of Products Sold and $8.4 million for impairment of property and equipment, loss on disposal of a foreign subsidiary and severance costs. Impairment charges were offset by a gain of $.6 million recorded in the Aluminum Products segment relating to the sale of certain facilities that were previously written off. | |
(2) | In the third quarter of 2008, the Company recorded $18.1 million of restructuring and asset impairment charges associated with the weakness and volatility in the automotive markets ($13.8 million in the Aluminum Products segment and $4.3 million in the Manufactured Products segment). Inventory impairment charges of $.6 million were included in Cost of Products Sold and $17.5 million were included in Restructuring and impairment charges. | |
(3) | In the fourth quarter of 2008, Park-Ohio Holdings Corp. recorded a gain of $6.2 million on the purchase of $11.0 million of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014. The notes were not contributed to Park-Ohio Industries, Inc. In the first quarter of 2007, the Company recorded a gain of $2.3 million on the sale of an asset held for sale. | |
(4) | The Company presents adjusted net income excluding impairment charges and gains to facilitate comparison between periods. |
A conference call reviewing ParkOhio’s fourth quarter results will be broadcast live over the Internet on Wednesday, March 11, commencing at 10:00 am Eastern Time. Simply log on tohttp://www.pkoh.com.
Park-Ohio is a leading provider of supply chain logistics services and a manufacturer of highly engineered products. Headquartered in Cleveland, Ohio, the Company operates 28 manufacturing sites and 49 supply chain logistics facilities.
This news release contains forward-looking statements, including statements regarding future performance of the Company that are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.
Among the key factors that could cause actual results to differ materially from expectations are: the cyclical nature of the vehicular industry; timing of cost reductions; labor availability and stability; changes in economic and industry conditions, including as a result of the current global financial crisis; adverse impacts to the Company, its suppliers and customers from acts of terrorism or hostilities; the financial condition of the Company’s customers and suppliers, including the impact of any bankruptcies; the Company’s ability to successfully integrate the operations of acquired companies; the uncertainties of environmental, litigation or corporate contingencies; and changes in regulatory requirements. These and other risks and assumptions are described in the Company’s reports that are available from the United States Securities and Exchange Commission. The Company assumes no obligation to update the information in this release.
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net sales | $ | 249,579 | $ | 247,815 | $ | 1,068,757 | $ | 1,071,441 | ||||||||
Cost of products sold (Notes B and C) | 221,936 | 211,924 | 919,297 | 912,337 | ||||||||||||
Gross profit | 27,643 | 35,891 | 149,460 | 159,104 | ||||||||||||
Selling, general and administrative expenses | 22,790 | 24,142 | 105,546 | 98,679 | ||||||||||||
Goodwill impairment charge (Note D) | 95,763 | 0 | 95,763 | 0 | ||||||||||||
Restructuring and impairment charges (Notes B and C) | 7,851 | 0 | 25,331 | 0 | ||||||||||||
Gain on purchase of 8.375% senior subordinated notes | (6,232 | ) | 0 | (6,232 | ) | 0 | ||||||||||
Gain on sale of assets held for sale | 0 | 0 | 0 | (2,299 | ) | |||||||||||
Operating (loss) income | (92,529 | ) | 11,749 | (70,948 | ) | 62,724 | ||||||||||
Interest expense | 7,198 | 7,265 | 27,869 | 31,551 | ||||||||||||
(Loss) Income before income taxes | (99,727 | ) | 4,484 | (98,817 | ) | 31,173 | ||||||||||
Income taxes | 20,207 | 568 | 20,986 | 9,976 | ||||||||||||
Net (loss) income | $ | (119,934 | ) | $ | 3,916 | $ | (119,803 | ) | $ | 21,197 | ||||||
Amounts per common share: | ||||||||||||||||
Basic | ($10.96 | ) | $ | 0.35 | ($10.88 | ) | $ | 1.91 | ||||||||
Diluted | ($10.96 | ) | $ | 0.34 | ($10.88 | ) | $ | 1.82 | ||||||||
Common shares used in the computation: | ||||||||||||||||
Basic | 10,939 | 11,184 | 11,008 | 11,106 | ||||||||||||
Diluted | 10,939 | 11,679 | 11,008 | 11,651 | ||||||||||||
Other financial data: | ||||||||||||||||
EBITDA, as defined (Note A) | $ | 15,455 | $ | 16,871 | $ | 73,659 | $ | 83,049 | ||||||||
Note | A—EBITDA, as defined, reflects earnings before interest, income taxes, and excludes depreciation, amortization, certain non-cash charges and corporate-level expenses as defined in the Company’s Revolving Credit Agreement. EBITDA is not a measure of performance under generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for net income, cash flows from operating, investing and financing activities and other income or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. The Company presents EBITDA because management believes that EBITDA is useful to investors as an indication of the Company’s satisfaction of its Debt Service Ratio covenant in its revolving credit agreement and because EBITDA is a measure used under the Company’s revolving credit facility to determine whether the Company may incur additional debt under such facility. EBITDA as defined herein may not be comparable to other similarly titled measures of other companies. The following table reconciles net income to EBITDA, as defined: |
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net (Loss) income | $ | (119,934 | ) | $ | 3,916 | $ | (119,803 | ) | $ | 21,197 | ||||||
Add back: | ||||||||||||||||
Income taxes | 20,207 | 568 | 20,986 | 9,976 | ||||||||||||
Interest expense | 7,198 | 7,265 | 27,869 | 31,551 | ||||||||||||
Depreciation and amortization | 4,808 | 4,687 | 20,782 | 20,469 | ||||||||||||
Restructuring and impairment charges (Notes B and C) | 12,816 | 0 | 30,875 | 0 | ||||||||||||
Goodwill impairment charges (Note D) | 95,763 | 0 | 95,763 | 0 | ||||||||||||
Gain on the purchase of 8.375% senior subordinated notes | (6,232 | ) | 0 | (6,232 | ) | 0 | ||||||||||
Gain on the sale of assets held for sale | 0 | 0 | 0 | (2,299 | ) | |||||||||||
Miscellaneous | 829 | 435 | 3,419 | 2,155 | ||||||||||||
EBITDA, as defined | $ | 15,455 | $ | 16,871 | $ | 73,659 | $ | 83,049 | ||||||||
Note | B—In the third quarter of 2008, the Company recorded $18.1 million of restructuring and asset impairment charges associated with the weakness and volatility in the automotive markets ($13.8 million in the Aluminum Products segment and $4.3 million in the Manufactured Products segment). Inventory impairment charges of $.6 million were included in Cost of Products Sold and $17.5 million were included in Restructuring and impairment charges. | |
Note | C—In the fourth quarter of 2008, the Company recorded $13.4 million of restructuring and asset impairment charges at its Supply Technologies segment associated with the decision to exit its relationship with its largest customer along with the general economic downturn resulting in either the closure, downsizing or consolidation of its distribution network. The charges were composed of $5.0 million of inventory impairment included in Cost of Products Sold and $8.4 million for asset impairment, loss on disposal of a foreign subsidiary and severance costs. Impairment charges were offset by a gain of $.6 million recorded in the Aluminum Products segment relating to the sale of certain facilities that were previously written off. | |
Note | D—In the fourth quarter of 2008, the Company recorded non-cash goodwill impairment charges of $95.8 million. | |
Note | E—In the fourth quarter of 2008, Park-Ohio Holdings Corp. recorded a gain of $6.2 million on the purchase of $11.0 million of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014. The notes were not contributed to Park-Ohio Industries, Inc. but are held by Park-Ohio Holdings Corp. and therefore excluded from EBITDA, as defined. | |
Note | F—In the fourth quarter of 2008, the Company recorded a valuation allowance of $32.7 million for its net deferred tax asset. | |
Note | G—In the first quarter of 2007, the Company recorded a gain of $2.3 million on the sale of an asset held for sale. |
CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
(Unaudited) | (Audited) | |||||||
(In Thousands) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 17,825 | $ | 14,512 | ||||
Accounts receivable, net | 165,779 | 172,357 | ||||||
Inventories | 228,817 | 215,409 | ||||||
Deferred tax assets | 9,446 | 21,897 | ||||||
Other current assets | 38,420 | 40,049 | ||||||
Total Current Assets | 460,287 | 464,224 | ||||||
Property, Plant and Equipment | 248,474 | 266,222 | ||||||
Less accumulated depreciation | 157,832 | 160,665 | ||||||
Total Property Plant and Equipment | 90,642 | 105,557 | ||||||
Other Assets | ||||||||
Goodwill | 4,109 | 100,997 | ||||||
Net assets held for sale | 0 | 3,330 | ||||||
Other | 64,182 | 95,081 | ||||||
Total Other Assets | 68,291 | 199,408 | ||||||
Total Assets | $ | 619,220 | $ | 769,189 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Trade accounts payable | $ | 121,995 | $ | 121,875 | ||||
Accrued expenses | 74,351 | 67,007 | ||||||
Current portion of long-term debt | 8,778 | 2,362 | ||||||
Current portion of other postretirement benefits | 2,290 | 2,041 | ||||||
Total Current Liabilities | 207,414 | 193,285 | ||||||
Long-Term Liabilities, less current portion | ||||||||
8.375% Senior Subordinated Notes due 2014 | 198,985 | 210,000 | ||||||
Revolving credit maturing on December 31, 2010 | 164,600 | 145,400 | ||||||
Other long-term debt | 2,283 | 2,287 | ||||||
Deferred tax liability | 9,090 | 22,722 | ||||||
Other postretirement benefits and other long-term liabilities | 24,093 | 24,017 | ||||||
Total Long-Term Liabilities | 399,051 | 404,426 | ||||||
Shareholders’ Equity | 12,755 | 171,478 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 619,220 | $ | 769,189 | ||||
BUSINESS SEGMENT INFORMATION (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
NET SALES | ||||||||||||||||
Supply Technologies | $ | 121,818 | $ | 127,461 | $ | 521,270 | $ | 531,417 | ||||||||
Aluminum Products | 35,965 | 37,280 | 156,269 | 169,118 | ||||||||||||
Manufactured Products | 91,796 | 83,074 | 391,218 | 370,906 | ||||||||||||
$ | 249,579 | $ | 247,815 | $ | 1,068,757 | $ | 1,071,441 | |||||||||
(LOSS) INCOME BEFORE INCOME TAXES (Note A) | ||||||||||||||||
Supply Technologies | $ | (91,435 | ) | $ | 6,755 | $ | (74,884 | ) | $ | 27,175 | ||||||
Aluminum Products | (17,368 | ) | (265 | ) | (36,042 | ) | 3,020 | |||||||||
Manufactured Products | 12,831 | 10,506 | 50,534 | 45,798 | ||||||||||||
(95,972 | ) | 16,996 | (60,392 | ) | 75,993 | |||||||||||
Corporate and Other Costs | 3,442 | (5,247 | ) | (10,556 | ) | (13,269 | ) | |||||||||
Interest Expense | (7,197 | ) | (7,265 | ) | (27,869 | ) | (31,551 | ) | ||||||||
$ | (99,727 | ) | $ | 4,484 | $ | (98,817 | ) | $ | 31,173 | |||||||
INCOME BEFORE INCOME TAXES, EXCLUDING CHARGES AND GAINS | ||||||||||||||||
Supply Technologies | $ | 1,242 | $ | 6,755 | $ | 17,793 | $ | 27,175 | ||||||||
Aluminum Products | (1,467 | ) | (265 | ) | (6,373 | ) | 3,020 | |||||||||
Manufactured Products | 12,831 | 10,506 | 54,825 | 45,798 | ||||||||||||
12,606 | 16,996 | 66,245 | 75,993 | |||||||||||||
Corporate and Other Costs | (2,790 | ) | (5,247 | ) | (16,788 | ) | (15,568 | ) | ||||||||
Interest Expense | (7,197 | ) | (7,265 | ) | (27,869 | ) | (31,551 | ) | ||||||||
$ | 2,619 | $ | 4,484 | $ | 21,588 | $ | 28,874 | |||||||||
Note | A—During the fourth quarter of 2008, the Company recorded non-cash goodwill impairment charges of $95,763. Below is a summary of these charges by segment. |
Supply Technologies | $ | 79,248 | ||
Aluminum Products | 16,515 | |||
$ | 95,763 | |||
Note | B—In the fourth quarter of 2008, the Company recorded, in the Supply Technologies segment, $13,430 of restructuring and asset impairment charges associated with the decision to exit its relationship with its largest customer along with the general economic downturn resulting in either the closure, downsizing or consolidation of eight facilities in its distribution network. Impairment charges were offset by a gain of $614 recorded in the Aluminum Products segment relating to the sale of certain facilities previously written off. | |
Note | C—In the fourth quarter of 2008, the Company recorded a gain of $6,232 on the purchase of $11,015 of Park-Ohio Industries, Inc. 8.375% senior subordinated notes due 2014. The gain is reflected in Corporate and other costs. | |
Note | D—In the third quarter of 2008, the Company recorded $18,059 of restructuring and asset impairment charges associated with the weakness and volatility in the automotive markets ($13,768 in the Aluminum Products segment and $4,291 in the Manufactured Products segment). Inventory impairment charges of $579 were included in Cost of Products Sold and $17,480 were included in Restructuring and impairment charges. |