PKOH 10-K & 10-Q changes, risk factors and insider trading

Inflation may continue to have a significant effect on labor and raw material costs, which could continue to result in material adverse effects on our business and operating results.

Given the high rates of inflation in the recent inflationary trendspast and forecaststhe forpossibility of rising inflation rates in the future, we expectmay furtherface raw material price increases and higher labor costs, which may continue tocould adversely affect our business and operating results, particularly in the Assembly Components segment.

The new U.S. presidentialcontinues administrationto has announcedimpose tariffs on goods manufactured abroad, including goods manufactured in China, Mexico and Canada, as well as on steel and aluminum. These tariffs will increase costs for certain goods imported into the United States, including certain of our raw materials and components, which will increaseincreases our costs. Our inability to pass along our increased costs to our customers, in whole or in part, could have a material adverse effect on our business and results of operations.

We generally supply products and services to our Supply Technologies customers generally under purchase orders as opposed to long-term contracts. When we do enter into long-term contracts with our Supply Technologies customers, many of themthe contracts only establish pricing terms and do not obligaterequire our customers to buy required minimum amounts from us or to buy from us exclusively. Accordingly, many of our Supply Technologies customers may abruptly decrease the number of products and services that they purchase from us or even stop purchasing from us altogether, either of which could have a material adverse effect on our net sales and profitability.

Our Supply Technologies business purchases substantially all of its component parts from third-party suppliers and manufacturers. As such, it is subject to the risk of price fluctuations and periodic delays in the delivery of component parts. The price for our component parts could increase as a result of the tariffs imposed by the new U.S. presidential administrationgovernment as well as retaliatory tariffs implemented by other governments. Additionally, failure by suppliers to continue to supply us with these component parts on commercially reasonable terms, or at all, could have a material adverse effect on us. We depend upon the ability of these suppliers, among other things, to meet stringent performance and quality specifications and to conform to delivery schedules. Failure by third-party suppliers to comply with these and other requirements could have a material adverse effect on our financial condition, liquidity and results of operations.

Our manufacturing process and the transportation of raw materials, components and finished goods are energy intensive. Our manufacturing processes are dependent on adequate supplies of electricity and natural gas. A substantial increase in the cost of transportation fuel, natural gas or electricity could have a material adverse effect on our margins. We may experience higher than anticipated gas costs in the future, which could adversely affect our results of operations. In addition, a disruption or curtailment in supply could have a material adverse effect on our production and sales levels. Geopolitical and macroeconomic developments such as global or regional conflicts, instability and disruptions may adversely affect energy costs and supply.

We may experience cybersecurity threats and cyber securitycyber-security incidents, breaches of, or disruptions to, our information technology systems or those of our third-party providers, or other compromises of our data, including the improper disclosure of personal or confidential data, which may adversely affect our operations and reputation.

We utilize information technology systems in connection with our business operations, including processing orders, managing inventory and accounts receivable collections, purchasing products, maintaining cost-effective operations, routing and re-routing orders. We also depend on our information technology systems to maintain confidential, proprietary and personal information relating to our current, former and prospective employees, customers and other third parties in these systems and in systems of third-party providers who we engage in connection with the processing and storage of certain information. Our information technology systems and those of our third-party providers are subject to breaches, disruptions or damage, which may be caused by a wide array of causes, including telecommunications failures, computer failures, power outages, ransomware attacks, the deployment of harmful malware, denial-of-services attacks, computer viruses, cybersecurity incidents and other intrusions, which could result in the disruption of our operations, or information misappropriation, such as theft of intellectual property or inappropriate disclosure of personal and confidential information. Cybersecurity threat actors also may attempt to exploit vulnerabilities through software including software commonly used by companies in cloud-based services and bundled software. In addition, we could also experience data or cybersecurity incidents stemming from the intentional or negligent acts of our employees or other third parties.parties, including fraud, phishing or other social engineering attempts or other methods to cause confidential information, payments account access or access credentials, or other data to be transmitted to an unintended recipient. To the extent our information technology systems or those of our third-party providers are disabled, compromised, or disrupted, key business processes could be interrupted. Any such operational disruptions and/or misappropriation of information, whether in systems we maintain or are maintained by others, could have a material adverse effect on our business. In addition, any such damage, any cybersecurity incident, compromise or breach to our systems or those of our vendors, could result in a violation of privacy and other laws, and expose us to significant legal and financial liability, including costs related to individual claims or consumer class actions, commercial litigation, administrative, and civil or criminal investigations or actions, regulatory intervention and sanctions or fines, investigation and remediation costs, loss of intellectual property, release of confidential information, and costs related to alteration or corruption of data or systems.

As of December 31, 2024,2025, we were a party to eightthree collective bargaining agreements with various labor unions that covered approximately 2,1001,200 full-time employees. Our inability to negotiate acceptable contracts with these unions could result in, among other things, strikes, work stoppages or other slowdowns by the affected workers and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized, we could experience a significant disruption of our operations and higher ongoing labor costs, which could have a material adverse effect on our business, financial condition and results of operations.

Growing concernsConcerns about climate change may result in the imposition of additional regulations or restrictions to which we may become subject. A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to climate change, including regulating greenhouse gas emissions. The outcome of new legislation or regulation in the U.S. and other jurisdictions in which we operate may result in new or additional requirements, additional charges to fund energy efficiency activities, and fees or restrictions on certain activities. Compliance with these climate change initiatives may also result in additional costs to us, including, among other things, increased production costs, additional taxes, reduced emission allowances or additional restrictions on production or operations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Even without such regulation, increased public awareness and adverse publicity about potential impacts on climate change emanating from us or our industry could harm us. We may not be able to recover the cost of compliance with new or more stringent laws and regulations, which could adversely affect our results of operations, financial position or cash flows. We may also face conflicting regulatory requirements from changes to the rules and rescission of prior rules, which may subject us to conflicting compliance obligations and increased compliance costs.

On December 29, 2023, the Company completed the sale to Angstrom Automotive Group (“Angstrom”) of its Aluminum Products business, which has been classified as a discontinued operation for all periods presented.

Net sales were $1,599.1 million in 2025 compared to $1,656.2 million in 2024 compared to $1,659.7 million in 2023,2024, a decrease of 0.2%.3.4%. The decrease was primarily due to lower salescustomer demand in theeach Assembly Components segment, partially offset by higher sales inof our Supply Technologies segment and in the capital equipment business in our Engineered Products segment.segments.

SG&A expenses increased to $189.6 million, or 11.9% of net sales, in 2025 from $187.4 million, or 11.3% of net sales, in 2024 from $181.5 million, or 10.9% of net sales, in 2023.2024. The increases were driven by ongoing inflation, higher employee costs and fixed SG&A expensecosts increaseover waslower drivensales by SG&A expenses in our acquired EMA Indutec GmbH (“EMA”) business, ongoing inflation and higher employee costs.levels.

During 2024,2025, the Company recorded restructuring and other special charges of $4.9$6.4 million compared to $6.6$4.9 million in 2023.2024. The charges in both years relate primarily to plant closure and consolidation activities and other initiatives in theeach Company’sof Assemblyour Components and Engineered Productsbusiness segments.

During 2024, the Company sold real estate and other assets within its Engineered Products segment for cash proceeds of $9.3 million, resulting in a net gain of $0.8 million. The Company also sold real estate within its Assembly Components segment for cash proceeds of $2.2 million, resulting in a net gain of $1.7 million. The total net gain of $2.5 million is recorded on a separate line in the Consolidated Statements of OperationsIncome and is excluded from segment income.

Income tax expense in 20242025 was $4.9$2.8 million on pre-tax income of $44.4$23.8 million, for an effective tax rate of 11.0%,11.8%, which was less than the U.S. statutory rate of 21%,21% primarily as a result of the tax benefit of the research and development tax credit and the release of certain valuation allowances.credit.

Income tax expense in 20232024 was $8.5$4.9 million on pre-tax income of $41.5$44.4 million, for an effective tax rate of 20.5%,11.0%, which approximatedwas less than the U.S. statutory rate of 21%,21% primarily as a result of the tax benefitsbenefit of the foreign tax credit and research and development tax credit were offset byand the tax expenserelease of foreigncertain earnings,valuation GILTI and non-deductible expenses.allowances.

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating; unusual in nature; or corporate costs,expenses, which include but are not limited to executive compensation and corporate office costs.expenses. Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costsexpenses; loss on extinguishment of debt; gains on sales of assets; other unallocated expenses; other components of pension and other postretirement benefits income, net; and interest expense, net.

Segment operating income was $19.1 million in 2025 compared to $25.4 million in 2024 compared to $33.4 million in 20232024, and segment operating income margin decreased 140 basis points in 20242025 compared to a year ago. The decreases were due to the lower productunit pricingsales volumes. During 2025 and unit volumes, which were partially offset by profit enhancement initiatives in 2024. During 2024 and 2023,2024, we incurred $1.1$2.8 million and $1.5$1.1 million, respectively, of charges related to restructuring activities.

Segment operating income was $6.6 million in 2024 decreased $1.4 million2025 compared to 2023,$17.7 million 2024, and segment operating margin decreased 40230 basis points in 20242025 compared to 2023,2024, as a result of higher operating costs in our forged and machined products business, partially offsetdriven by thelower higher sales and improved margins in our capital equipment business.sales. In addition, restructuring and other special charges were $1.9 million in 2025 and $3.6 million in 20242024. andDuring $4.92025, an $8.9 million non-cash asset impairment charge was recorded to write-down the carrying value of certain assets, primarily at its forging operations in 2023.Arkansas.

In 2024,2025, we generated positive operating cash flow of $35.0$42.3 million compared to $53.4$35.0 million in 2023.2024. Cash flow from operating activities was lowerhigher in 20242025 due to higherlower working capital needs, which more than offset higherlower profitability in 2024.2025.

Capital expenditures were $40.3 million in 2025 and $31.4 million in 2024 and $28.2 million in 2023.2024. These capital expenditures were primarily for growth initiatives, including information technology investments,investments across all three of our segments, and to maintain existing operations.

In 2024 and 2023,2024, we sold assets and received aggregate proceeds of $11.5 million and $2.0 million, respectively.million. See Note 5 to the consolidated financial statements included elsewhere herein for additional information. WeIn 2024, we spent $11.0 million for the acquisition of EMA.EMA Additionally,Indutec in 2023, we received $15.5 million in connection with the sale of our Aluminum Products business.GmbH.

Cash usedprovided by financing activities in 20232024 included debt repayments of $24.3$16.0 million, payments related to prior acquisitions of $2.9$3.0 million, dividends to shareholders and noncontrolling interest partners totaling $7.4$7.2 million, and payments of withholding taxes on share awards of $2.0$2.6 million. On June 3, 2024, the Company entered into an agreement providing for an at-the-market (“ATM”) program, authorizing the sale of up to $50.0 million of the Company's common stock.

Overall, we were able to pay down debt and fund capital expenditures in 2024 using cash flows from operations, cash proceeds from asset sales and proceeds from common stock issuances. See Note 910 to the consolidated financial statements included elsewhere herein for further discussion of our financing arrangements.

InOn AprilJuly 2017,31, 2025, Park-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., completed the sale, in a private placement,offering, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”).2030 Notes. The net proceeds from the issuanceoffering of the Notes2030 Notes, along with cash on hand, were used to repayredeem in full ourthe previously outstanding 8.125% Senior2027 Notes dueand 2021pay related fees and our outstanding term loan, and to repay a portion of the borrowings then outstanding under our revolving credit facility.expenses.

Interest payable associated with our 6.625% Senior2030 Notes due 2027 is $23.2$29.8 million due in the twelve months following December 31, 20242025 and $29.9$106.6 million due thereafter.

The results of testing as of October 1, 2024,2025, 20232024 and 20222023 for all reportingindefinite-lived unitsintangible assets confirmed that the estimated fair value exceeded carrying values, and no impairment existed as of those dates.

We consult with our actuaries at least annually when reviewing and selecting the discount rates to be used. The discount rates used by the Company are based on yields of various corporate and governmental bond indices with actual maturity dates that approximate the estimated benefit payment streams of the related pension plans. The discount rates are also reviewed in comparison with current benchmark indices, economic market conditions and the movement in the benchmark yield since the previous fiscal year. The liability weighted-average discount rate for the defined benefit pension plan is 5.55%5.24% for 2024,2025, compared with 5.14%5.55% in 2023.2024. For the other postretirement benefit plan, the rate is 4.87% for 2025 and 5.43% for 2024 and 5.06% for 2023.2024. This rate represents the interest rates generally available in the United States, which is the Company’s only country with other postretirement benefit liabilities. Another assumption that affects the Company’s pension expense is the expected long-term rate of return on assets. The Company’s pension plans are funded. The weighted-average expected long-term rate of return on assets assumption is 7.50% and 7.75% for 2024both 2025 and 2023,2024, respectively. In determining the expected return on plan assets, we consider both historical performance and an estimate of future long-term rates of return on assets similar to those in our plan. We consult with and consider opinions of financial and actuarial experts in developing appropriate return assumptions.

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

Assembly Components manufactures products oriented towards fuel efficiency and reduced emission standards. Assembly Components designs, develops and manufactures aluminum products and highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Our products are primarily used in the following industries: including automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and bus.

Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading systems, generators and transformers, inverters 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: ferrouspower generation and non-ferrous metalsenergy; coatings;general forging;steel foundry; heavy-duty truck; construction equipmentprocessing; automotive and heavy vehicles; aerospace and defense; semiconductor; precious metals and industrial materials; oil and gas; rail;general aerospace and defenseindustrial; and power generation.rail.

As part of its ongoing portfolio optimization strategy, the Company is engaging inconducting a formal review of strategic alternatives for its Southwest Steel Processing (“SSP”) business, including a potential sale or other transaction. SSP is part of our Forged and Machined Products group within the Engineered Products segment. This review reflects our continued focus on aligning capital and resources toward higher-growth, higher-margin opportunities across our portfolio. The Company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this review process will result in any transaction or particular outcome.

Three Months Ended MarchJune 31,30, 2026 Compared with Three Months Ended MarchJune 31,30, 2025

Net sales increased 3.8%10.0% to $421.0$440.1 million in the firstsecond three monthsquarter of 2026 compared to $405.4$400.1 million in the same period in 2025. This increase was primarily due to higher customer demand in each of our business segments.

The factors explaining the changes in segment net sales for the three months ended MarchJune 31,30, 2026 compared to the corresponding 2025 period are contained inwithin the “Segment Results” section below.

Cost of sales increased to $348.3$361.2 million in the firstsecond three monthsquarter of 2026 compared to $337.3$331.9 million in the same period in 2025,2025. drivenThe byincrease in cost of sales was primarily due to the increase in net sales described above. Gross margin was 17.3% in the 2026 period compared to 16.8%the corresponding period in 2025. Gross margin was 17.9% in the 2026 period compared to 17.0% in the corresponding 2025 period.period, Thewith year-over-year gross marginthe increase was driven by the increaseprofit inflow-through from the higher net sales described above and ongoing profit-enhancement activities throughout the company.

SG&A expenses were $51.7$53.1 million in the firstsecond three monthsquarter of 2026,2026 compared to $48.2$46.8 million in the samecomparable period in 2025. As a percentage of net sales, SG&A expenses were 12.3%12.1% in the firstsecond three monthsquarter of 2026 compared to 11.9%11.7% in thecorresponding comparable2025 period in 2025.period. The increases were driven by ongoing inflation andinflation, higher employee costs.costs and support for the higher sales levels.

During the firstsecond three monthsquarter of 2026, the Company recorded charges of $1.3 million in connection with restructuring and other special charges, which included $0.4$0.3 million in our Supply Technologies segment, $0.3 million in our Assembly Components segment, $0.5$0.6 million in our Engineered Products segment and $0.4$0.1 million at Corporate.

During the firstsecond three monthsquarter of 2025, the Company recorded $1.0charges of $1.3 million in connection with restructuring and other special charges, primarilywhich included $0.4 million in our Supply Technologies segment, $0.5 million in our Assembly Components segment and $0.4 million in our Engineered Products segment.

Other components of pension and OPEB income, net was $2.1$4.3 million in the first threesix months of 2026 compared to $1.8$3.6 million in the corresponding period in 2025. This increase was due to higher return on plan assets in 2026 compared to 2025.

Interest expense, net was $12.3$24.6 million in the first threesix months of 2026 compared to $11.0$22.2 million in the 2025 period. The increase was due primarily to the higher rate of 8.500% on our 2030 Notes compared to the 6.625% Senior Notes due 2027 (the “2027 Notes”) and higher average outstanding debt balances in the 2026 period compared to the same period a year ago, partially offset by lower rates on our revolving credit facility.

In the threesix months ended MarchJune 31,30, 2026, income tax expense was $1.6$4.0 million on pre-tax income from continuing operations of $9.5$23.9 million, representing an effective income tax rate of 17%. In the threesix months ended MarchJune 31,30, 2025, income tax expense was $1.9$3.7 million on pre-tax income of $9.7$20.4 million, representing an effective income tax rate of 20%.18%. The raterates for the threesix months ended MarchJune 31,30, 2026 isand 2025 are lower than the statutory rate and the corresponding 2025 raterates due primarily to increased federal research and development tax credit benefit.

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating; unusual in nature; or corporate costs, which include but are not limited to executive compensation and corporate office costs.costs; items that are non-operating; or certain items that are unusual in nature. Segment operating income reconciles to consolidated income before income taxes by adjusting for corporate costs; other components of pension and other postretirement benefits income, net; and interest expense, net.

Net sales increased 3.9%11.9% in the three months ended MarchJune 31,30, 2026 compared to the 2025 period drivendue byprimarily to higher customer demand in certain end markets, including the powersemiconductor, sports,AI semiconductor,data center, powersports, aerospace and defense, electricalheavy-duty truck and agricultureagricultural and industrial equipment end markets,markets. asSales wellin asour fastener manufacturing business were up 5.8% year-over-year, driven by higher tariffscustomer demand for our proprietary products, particularly in the 2026 first quarter compared to last year’s quarter.Asia.

Segment operating income was steady year-over-year, finishing at $17.5$36.0 million in the three2026 period compared to $34.1 million in the 2025 period. Operating income margin was 8.9% in the six months ended March,June 3130, 2026 compared to $17.8 million9.1% in the 2025 period. Segment operating income margin was 5020 basis points lower in the 2026 period compared to the same period a year ago due primarily to higher tariffs in the 2026 period, which impacted gross margins.

Net sales increased 3.4%6.6% in the three months ended MarchJune 31,30, 2026 compared to the 2025 period, due primarily to increased unit volumes on new business launched throughoutin 2025.

Segment operating income in the 2026 period increased by $1.9$3.0 million compared to the corresponding 2025 period, and operating margins in the 2026 first quarter were up 140190 basis points compared to the corresponding 2025 quarter,period. The increases in the 2026 period were driven by the higher sales and improved operational improvementefficiencies in both our capital equipment and forged and machined products groups.group.

In the threesix months ended MarchJune 31,30, 2026, we utilizedgenerated cash of $7.8$1.4 million compared to $10.0a use of $23.7 million in the same period of 2025. Cash flow from operating activities improved in 2026 due to higher income and lower working capital needs.

Capital expenditures of $12.5$23.5 million and $9.5$16.9 million in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, were primarily to provide increased capacity and automation for future growth, to maintain existing operations and for information system implementations.

During the threesix months ended MarchJune 31,30, 2026, we had net debt borrowings of $24.3$31.6 million to fund capital expenditures and working capital needs. In addition, the Company made cash dividend payments to shareholders totaling $1.8$3.6 million and payments of withholding taxes on share awards of $2.0 million.

As of MarchJune 31,30, 2026, we had total liquidity of $199.0$189.1 million, which included $46.7$48.3 million of cash and cash equivalents and $152.3$140.8 million of unused borrowing availability under our credit agreements, which includes $8.8$7.1 million of suppressed availability.

The Company had cash and cash equivalents held by foreign subsidiaries of $36.6$36.9 million at MarchJune 31,30, 2026 and $34.1 million at December 31, 2025. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.

As of MarchJune 31,30, 2026, the Company had finance leases totaling $16.0$15.3 million.