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What changed in PARK OHIO HOLDINGS CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PARK OHIO HOLDINGS CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+165 added−204 removedSource: 10-K (2024-03-06) vs 10-K (2023-03-16)

Top changes in PARK OHIO HOLDINGS CORP's 2023 10-K

165 paragraphs added · 204 removed · 141 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

25 edited+2 added−4 removed49 unchanged
Biggest changeAs of December 31, 2022, we employed approximately 7,100 people, including employees in our Aluminum Products business. 3 Table of Contents The following table summarizes the key attributes of each of our business segments: Supply Technologies Assembly Components Engineered Products NET SALES FOR 2022 $711.5 million $388.8 million $392.6 million SELECTED PRODUCTS Sourcing, planning and procurement of over 280,000 production components, including: • Fasteners • Pins • Valves • Hoses • Wire harnesses • Clamps and fittings • Rubber and plastic components • Other Class C and MRO products • Extruded and molded rubber and thermoplastic products • Fuel filler assemblies • Gasoline direct injection systems • Induction heating and melting systems • Pipe threading systems • Industrial oven systems • Forging presses • Forged steel and machined products SELECTED INDUSTRIES SERVED • Heavy-duty truck • Power 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 • Medical devices • Automotive and light vehicle • Agricultural equipment • Construction equipment • Heavy-duty truck • Marine equipment • Bus • Ferrous and non-ferrous metals • Coatings • Forging • Foundry • Heavy-duty truck • Construction equipment • Automotive • Oil and gas • Rail • Aerospace and defense • Power generation The Company consists of the following segments: Supply Technologies Our Supply Technologies business 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.
Biggest changeThe total purchase price consisted of a cash down payment of $20.0 million paid to the Company in December 2022; cash of $15.5 million paid to the Company at closing; and promissory notes totaling $15.0 million payable to the Company on December 31, 2024, of which $10.0 million is contingent on the Aluminum Products business attaining certain purchase commitments during 2024. 3 Table of Contents The following table summarizes the key attributes of each of our business segments: Supply Technologies Assembly Components Engineered Products NET SALES FOR 2023 $763.4 million $427.8 million $468.5 million SELECTED PRODUCTS Sourcing, planning and procurement of over 280,000 production components, including: • Fasteners • Pins • Valves • Hoses • Wire harnesses • Clamps and fittings • Rubber and plastic components • Other Class C and MRO products • Fuel rails • Fuel filler assemblies • Extruded rubber and plastics • Molded rubber and plastics • Induction heating and melting systems • Pipe threading systems • Industrial oven systems • Forging presses • Forged steel and machined products SELECTED INDUSTRIES SERVED • Heavy-duty truck • Power 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 • Medical devices • Automotive and light vehicle • Agricultural equipment • Construction equipment • Heavy-duty truck • Bus • Ferrous and non-ferrous metals • Coatings • Forging • Foundry • Heavy-duty truck • Construction equipment • Automotive • Oil and gas • Rail • Aerospace and defense • Power generation The Company consists of the following segments: Supply Technologies Our Supply Technologies business 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.
This engine downsizing increases efficiency, while dramatically decreasing pollution levels. Assembly Components operates 12 manufacturing facilities and four technical offices in the United States, Mexico, China, the United Kingdom and the Czech Republic. In addition, we also provide value-added services such as design engineering, machining and parts assembly. Markets and Customers.
This engine downsizing increases efficiency, while dramatically decreasing pollution levels. Assembly Components operates 12 manufacturing facilities and three technical offices in the United States, Mexico, China, the United Kingdom and the Czech Republic. In addition, we also provide value-added services such as design engineering, machining and parts assembly. Markets and Customers.
Some production components are characterized by low per unit supplier prices relative to the indirect costs of supplier management, quality assurance, inventory management and delivery to the production line. In addition, Supply Technologies delivers an increasingly broad range of higher-value production components including valves, fuel hose assemblies, electro-mechanical hardware, labels, fittings, steering components and many others.
Some 4 Table of Contents production components are characterized by low per unit supplier prices relative to the indirect costs of supplier management, quality assurance, inventory management and delivery to the production line. In addition, Supply Technologies delivers an increasingly broad range of higher-value production components including valves, fuel hose assemblies, electro-mechanical hardware, labels, fittings, steering components and many others.
Approximately 46% of our induction heating and melting systems’ revenues are derived from the sale of replacement parts and provision of field service, primarily for the installed base of our own products. Our pipe threading business serves the oil and gas industry.
Approximately 45% of our induction heating and melting systems’ revenues are derived from the sale of replacement parts and provision of field service, primarily for the installed base of our own products. Our pipe threading business serves the oil and gas industry.
Sales and Marketing Supply Technologies markets its products and services in the United States, Mexico, Canada, Europe and Asia primarily through its direct sales force, which is assisted by applications engineers who provide the technical expertise necessary to assist the engineering staff of OEM customers in designing new products and improving existing products.
Sales and Marketing 6 Table of Contents Supply Technologies markets its products and services in the United States, Mexico, Canada, Europe and Asia primarily through its direct sales force, which is assisted by applications engineers who provide the technical expertise necessary to assist the engineering staff of OEM customers in designing new products and improving existing products.
Our suppliers of raw materials and component parts may significantly and quickly increase their prices in response to increases in costs of the raw materials, such as steel, that they use to manufacture our raw materials and component parts.
Our suppliers of raw materials and component parts may significantly and quickly increase their prices in response to increases in the cost of the raw materials, such as steel, that they use to manufacture our raw materials and component parts.
We compete with small-to medium-sized domestic and international equipment manufacturers on the basis of service capability, ability to meet customer specifications, delivery performance and engineering expertise. We 6 Table of Contents compete domestically and internationally with small-to medium-sized forging and machining businesses on the basis of product quality and precision.
We compete with small-to medium-sized domestic and international equipment manufacturers on the basis of service capability, ability to meet customer specifications, delivery performance and engineering expertise. We compete domestically and internationally with small-to medium-sized forging and machining businesses on the basis of product quality and precision.
These advanced products, coupled with Turbo Enabled engines, make up large and growing engine architecture for all worldwide car manufacturers. Assembly Components also designs and manufactures Turbo Charging hoses along with Turbo Coolant hoses that will be required as engines get downsized to 3 or 4 cylinders from 6 or 8 cylinders.
These advanced products, coupled with Turbo Enabled engines, make up large and growing engine architecture for all 5 Table of Contents worldwide car manufacturers. Assembly Components also designs and manufactures Turbo Charging hoses along with Turbo Coolant hoses that will be required as engines get downsized to 3 or 4 cylinders from 6 or 8 cylinders.
We forge aerospace and defense structural components such as landing gears and struts, as well as rail products such as railcar center plates and draft lugs. Markets and Customers. For the year ended December 31, 2022, approximately 56% of Engineered Products’ net sales were to domestic customers.
We forge aerospace and defense structural components such as landing gears and struts, as well as rail products such as railcar center plates and draft lugs. Markets and Customers. For the year ended December 31, 2023, approximately 57% of Engineered Products’ net sales were to domestic customers.
Supply Technologies produces both standard items and specialty products to customer specifications, which are used in large volumes by customers in the automotive, heavy-duty truck and rail industries. Markets and Customers. For the year ended December 31, 2022, approximately 61% of Supply Technologies’ net sales were to domestic customers.
Supply Technologies produces both standard items and specialty products to customer specifications, which are used in large volumes by customers in the automotive, heavy-duty truck and aerospace industries. Markets and Customers. For the year ended December 31, 2023, approximately 60% of Supply Technologies’ net sales were to domestic customers.
We manufacture these products in 15 domestic facilities throughout the United States and 18 international facilities in Canada, Mexico, the United Kingdom, Belgium, Germany, China, Italy, India, Japan, Spain, France and Brazil.
We manufacture these products in 14 domestic facilities throughout the United States and 19 international facilities in Canada, Mexico, the United Kingdom, Belgium, Germany, China, Italy, India, Japan, Spain, France and Brazil.
For the year ended December 31, 2022, approximately 73% of Assembly Components’ net sales were to domestic customers. The five largest customers of Assembly Components accounted for approximately 55% and 54% of segment sales for 2022 and 2021, respectively. These sales, across multiple operating divisions, are through sole-source contracts.
For the year ended December 31, 2023, approximately 70% of Assembly Components’ net sales were to domestic customers. The five largest customers of Assembly Components accounted for approximately 57% and 55% of segment sales for 2023 and 2022, respectively. These sales, across multiple operating divisions, are through sole-source contracts.
Supply Technologies markets and sells its approach to over 7,500 customers domestically and internationally. The five largest customers, to which Supply Technologies sells through sole-source contracts to multiple operating divisions or locations, accounted for approximately 35% and 33% of the sales of Supply Technologies in 2022 and 2021, respectively.
Supply Technologies markets and sells to over 7,500 customers domestically and internationally. The five largest customers, to which Supply Technologies sells through sole-source contracts to multiple operating divisions or locations, accounted for approximately 36% and 35% of the sales of Supply Technologies in 2023 and 2022, respectively.
We operate more than 80 logistics service centers in the United States, Mexico, Canada, Czech Republic, Puerto Rico, Scotland, Hungary, China, 4 Table of Contents Taiwan, Singapore, India, England, France, Spain, Poland, Malaysia, Northern Ireland and Ireland, including production sourcing and support centers in the United States and Asia.
We operate approximately 80 logistics service centers in the United States, Mexico, Canada, Czech Republic, Puerto Rico, Scotland, Hungary, China, Taiwan, Singapore, India, England, France, Spain, Poland, Malaysia, Northern Ireland and Ireland, including production sourcing and support centers in the United States and Asia.
Examples of benefits offered in the U.S. include a 401(k) plan, defined benefit - cash balance plan, comprehensive health benefits, employee assistance programs, business travel, life/disability insurance and supplemental voluntary insurance. 8 Table of Contents Training & Talent Development : The Company is committed to continued development of our workforce.
Examples of benefits offered in the U.S. include a 401(k) plan, defined benefit - cash balance plan, comprehensive health benefits, employee assistance programs, business travel, life/disability insurance and supplemental voluntary insurance. Training & Talent Development : The Company is committed to continued development of our workforce. Training is provided in several formats to accommodate workforce diversity and business focus.
For instance, we have 7 Table of Contents been identified as a potentially responsible party at third-party sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or comparable state laws, which provide for strict and, under certain circumstances, joint and several liability.
For instance, we have been identified as a potentially responsible party at third-party sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or comparable state laws, which provide for strict and, under certain circumstances, joint and several liability. We are participating in the cost of certain clean-up efforts at several of these sites.
Human Capital Resources As of December 31, 2022, we employed approximately 7,100 employees, including our Aluminum Products business, in our operations around the world. Approximately 3,400 of these employees are in the United States, while the remaining 3,700 are employed in other countries. Approximately 28% of our employees are covered by a collective bargaining agreement.
Human Capital Resources As of December 31, 2023, we employed approximately 6,300 employees in our operations around the world. Approximately 2,600 of these employees are in the United States, while the remaining 3,700 are employed in other countries. Approximately 37% of our employees are covered by a collective bargaining agreement.
Numerous U.S. and foreign companies compete with Supply Technologies in manufacturing cold-formed and cold-extruded products. 5 Table of Contents Assembly Components Assembly Components (which excludes the discontinued Aluminum Products business) manufactures products oriented towards fuel efficiency, reduced emission standards and vehicle electrification.
Numerous U.S. and foreign companies compete with Supply Technologies in manufacturing cold-formed and cold-extruded products. Assembly Components Assembly Components manufactures products oriented towards fuel efficiency, reduced emissions and vehicle electrification.
Fogarty has been Vice President and Chief Financial Officer since 2015. Prior to that, Mr. Fogarty was Director of Corporate Development since 1997 and served as Director of Finance from 1995 to 1997. Mr. Vilsack has been Secretary and Chief Legal Officer since joining us in 2002 and has served as Chief Administration Officer since 2020.
Crawford became one of our directors in August 1997 and has served as President of Crawford Group, Inc. since 1995. Mr. Fogarty has been Vice President and Chief Financial Officer since 2015. Prior to that, Mr. Fogarty was Director of Corporate Development since 1997 and served as Director of Finance from 1995 to 1997. Mr.
In addition, as soon as reasonably practicable after such materials are filed with or furnished to the SEC, we make such materials available on our website free of charge at http://www.pkoh.com. The information on our website is not a part of this Annual Report on Form 10-K.
The public can obtain copies of these materials by accessing the SEC’s website at http://www.sec.gov. In addition, as soon as reasonably practicable after such materials are filed with or furnished to the SEC, we make such materials available on our website free of charge at http://www.pkoh.com.
We are participating in the cost of certain clean-up efforts at several of these sites. The availability of third-party payments or insurance for environmental remediation activities is subject to risks associated with the willingness and ability of the third party to make payments.
The availability of third-party payments or insurance for environmental remediation activities is subject to risks associated with the 7 Table of Contents willingness and ability of the third party to make payments.
Crawford was elected President in 2019 and Chairman of the Board and Chief Executive Officer in 2018. Prior to that, he served as President and Chief Operating Officer from 2003 to 2018. Mr. Crawford became one of our directors in August 1997 and has served as President of Crawford Group, Inc. since 1995. Mr.
Fogarty 62 Vice President and Chief Financial Officer Robert D. Vilsack 63 Chief Legal and Administrative Officer, Corporate Secretary Mr. Crawford was elected President in 2019 and Chairman of the Board and Chief Executive Officer in 2018. Prior to that, he served as President and Chief Operating Officer from 2003 to 2018. Mr.
Information About our Executive Officers Information with respect to our executive officers as of March 16, 2023, is as follows: Name Age Position Matthew V. Crawford 53 Chairman of the Board, Chief Executive Officer and President Patrick W. Fogarty 61 Vice President and Chief Financial Officer Robert D. Vilsack 62 Chief Legal and Administrative Officer, Corporate Secretary Mr.
The information on our website is not a part of this Annual Report on Form 10-K. Information About our Executive Officers Information with respect to our executive officers as of March 6, 2024, is as follows: Name Age Position Matthew V. Crawford 54 Chairman of the Board, Chief Executive Officer and President Patrick W.
Available Information We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and other information with the Securities and Exchange Commission (“SEC”). The public can obtain copies of these materials by accessing the SEC’s website at http://www.sec.gov.
In addition, various internship programs and informal mentoring demonstrate the Company’s ongoing commitment and initiatives toward accelerating our future leaders. Available Information 8 Table of Contents We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and other information with the Securities and Exchange Commission (“SEC”).
References herein to “we” or “the Company” include, where applicable, Holdings and Park-Ohio Industries, Inc. and Holdings’ other direct and indirect subsidiaries. During the fourth quarter of 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.
References herein to “we” or “the Company” include, where applicable, Holdings and Park-Ohio Industries, Inc. and Holdings’ other direct and indirect subsidiaries. The Company operates through three reportable segments: Supply Technologies, Assembly Components and Engineered Products. As of December 31, 2023, we employed approximately 6,300 people.
Removed
Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Annual Report on Form 10-K. Unless otherwise indicated, amounts and activity in this Annual Report are presented on a continuing operations basis.
Added
On December 29, 2023, the Company completed the sale of its Aluminum Products business to Angstrom Automotive Group (“Angstrom”) for up to $50.5 million in cash and promissory notes, plus the assumption of approximately $3 million of finance lease obligations.
Removed
See Note 4, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for further information. On December 30, 2022, we entered into a memorandum of understanding (the “MOU”) with a third party pursuant to which the third party would purchase our Aluminum Products business.
Added
Vilsack has been Secretary and Chief Legal Officer since joining us in 2002 and has served as Chief Administration Officer since 2020.
Removed
The sale of the Aluminum Products business is subject to the entry into a definitive purchase agreement and other customary conditions. The Company operates through three reportable segments: Supply Technologies, Assembly Components (which previously included the Aluminum Products business) and Engineered Products.
Removed
Training is provided in several formats to accommodate workforce diversity and business focus. In addition, various internship programs and informal mentoring demonstrate the Company’s ongoing commitment and initiatives toward accelerating our future leaders.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+8 added−12 removed62 unchanged
Biggest changeWe derived 32% and 6% of our net sales during the year ended December 31, 2022 from the automotive and heavy-duty truck industries, respectively. The loss of a portion of business to any of our major automotive or heavy-duty truck customers could continue to have a material adverse effect on our financial condition, cash flow and results of operations.
Biggest changeThe loss of a portion of business to any of our major automotive or heavy-duty truck customers could have a material adverse effect on our financial condition, cash flow and results of operations. We cannot assure you that we will maintain or improve our relationships in these industries or that we will continue to supply these customers at current levels.
Any of these factors may disrupt our operations and adversely affect our financial condition and results of operations. The insurance that we maintain may not fully cover all potential expenses.
Any of these factors may disrupt our operations and adversely affect our financial condition and the results of operations. The insurance that we maintain may not fully cover all potential expenses.
As of December 31, 2022, we were in compliance with our debt service coverage ratio covenant and other covenants contained in our revolving credit facility. While we expect to remain in compliance throughout 2023, declines in demand in the automotive industry and in sales volumes could adversely impact our ability to remain in compliance with certain of these financial covenants.
As of December 31, 2023, we were in compliance with our debt service coverage ratio covenant and other covenants contained in our revolving credit facility. While we expect to remain in compliance throughout 2024, declines in demand in the automotive industry and in sales volumes could adversely impact our ability to remain in compliance with certain of these financial covenants.
As of December 31, 2022, Matthew Crawford, our Chairman of the Board, Chief Executive Officer and President, and Edward Crawford, our former President, collectively beneficially owned approximately 29% of Holdings’ outstanding common stock. Mr. M. Crawford is Mr. E. Crawford’s son. Their interests could conflict with your interests.
As of December 31, 2023, Matthew Crawford, our Chairman of the Board, Chief Executive Officer and President, and Edward Crawford, our former President, collectively beneficially owned approximately 29% of Holdings’ outstanding common stock. Mr. M. Crawford is Mr. E. Crawford’s son. Their interests could conflict with your interests.
Accordingly, many of our Supply Technologies customers may 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. We are dependent on key customers. We rely on several key customers.
Accordingly, many of our Supply Technologies customers may 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. 10 Table of Contents We are dependent on key customers. We rely on several key customers.
Our information technology systems and those of our third-party providers are subject to disruptions or damage, which may be caused by a wide array of causes, including telecommunications failures, computer failures, power outages, computer viruses, cybersecurity breaches 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.
Our information technology systems and those of our third-party providers are subject to disruptions or damage, which may be caused by a wide array of causes, including telecommunications failures, computer failures, power outages, ransomware 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.
The occurrence of material operating problems at our facilities may have a material adverse effect on our operations as a whole, both during and after the period of operational difficulties. We have a significant amount of goodwill, and any future goodwill impairment charges could adversely impact our results of operations.
The occurrence of material operating problems at our facilities may have a material adverse effect on our operations as a whole, both during and after the period of operational difficulties. 12 Table of Contents We have a significant amount of goodwill, and any future goodwill impairment charges could adversely impact our results of operations.
Our operations are subject to the risks of doing business abroad, including the following: • fluctuations in currency exchange rates; • limitations on ownership and on repatriation of earnings; • transportation delays and interruptions; • political, social and economic instability and disruptions, including the conflict between Russia and Ukraine and the rising tension between China and the United States; • potential disruption that could be caused by the partial or complete reconfiguration of the European Union; • government embargoes or foreign trade restrictions; • the imposition of duties and tariffs and other trade barriers; • import and export controls; • labor unrest and current and changing regulatory environments; • the potential for nationalization of enterprises; 14 Table of Contents • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the U.S.
Our operations are subject to the risks of doing business abroad, including the following: • fluctuations in currency exchange rates; • limitations on ownership and on repatriation of earnings; • transportation delays and interruptions; • political, social and economic instability and disruptions, including the conflicts between Russia and Ukraine and in the middle east, or political unrest, including the rising tension between China and the United States; • potential disruption that could be caused by the partial or complete reconfiguration of the European Union; • government embargoes or foreign trade restrictions; • the imposition of duties and tariffs and other trade barriers; • import and export controls; • labor unrest and current and changing regulatory environments; • the potential for nationalization of enterprises; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the U.S.
We believe that the principal competitive factors for our 11 Table of Contents Supply Technologies segment are an approach reflecting long-term business partnership and reliability, sourced product quality and conformity to customer specifications, timeliness of delivery, price and design and engineering capabilities.
We believe that the principal competitive factors for our Supply Technologies segment are an approach reflecting long-term business partnership and reliability, sourced product quality and conformity to customer specifications, timeliness of delivery, price and design and engineering capabilities.
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 12 Table of Contents systems of third-party providers who we engage in connection with the processing and storage of certain information.
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.
Longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business.
Longer-term disruptions in the 9 Table of Contents capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business.
For the year ended December 31, 2022, our ten largest customers accounted for approximately 27% of our net sales. Many of our customers place orders for products on an as-needed basis and operate in cyclical industries and, as a result, their order levels have varied from period to period in the past and may vary significantly in the future.
For the year ended December 31, 2023, our ten largest customers accounted for approximately 26% of our net sales. Many of our customers place orders for products on an as-needed basis and operate in cyclical industries and, as a result, their order levels have varied from period to period in the past and may vary significantly in the future.
In addition, labor disturbances affecting our customers could continue to impact our sales to certain key customers, particularly in the automotive and heavy-duty truck industries, which could continue to have an adverse effect on our business, results of operations and financial condition. The loss of key executives could adversely impact us.
In addition, labor disturbances affecting our customers could continue to impact our sales to certain key customers, particularly in the automotive and heavy-duty truck industries, which could continue to have an adverse effect on our business, results of operations and financial condition.
We cannot assure you that we will continue to operate in compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations to which we may be subject.
We cannot assure you that we will continue to operate in compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations to which we may be subject. We also cannot assure you that these laws will not be modified.
In addition, we could also experience data or cybersecurity breaches stemming from the intentional or negligent acts of our employees or other third parties. To the extent our information technology systems are disabled for a long period of time, key business processes could be interrupted.
In addition, we could also experience data or cybersecurity incidents stemming from the intentional or negligent acts of our employees or other third parties. To the extent our information technology systems or those of our third-party providers are disabled, compromised, or disrupted for a long period of time, key business processes could be interrupted.
Risks Relating to Human Capital 13 Table of Contents Some of our employees belong to labor unions, and strikes or work stoppages could adversely affect our operations. As of December 31, 2022, we were a party to seven collective bargaining agreements with various labor unions that covered approximately 2,000 full-time employees.
Risks Relating to Human Capital Some of our employees belong to labor unions, and strikes or work stoppages could adversely affect our operations. As of December 31, 2023, we were a party to eight collective bargaining agreements with various labor unions that covered approximately 2,400 full-time employees.
Our businesses are subject to many foreign, federal, state and local environmental, health and safety laws and regulations, particularly with respect to the use, handling, treatment, storage, discharge and disposal of substances and hazardous wastes used or generated in our manufacturing processes. Compliance with these laws and regulations is a significant factor in our business.
We are subject to significant environmental, health and safety laws and regulations and related compliance expenditures and liabilities. Our businesses are subject to many foreign, federal, state and local environmental, health and safety laws and regulations, particularly with respect to the use, handling, treatment, storage, discharge and disposal of substances and hazardous wastes used or generated in our manufacturing processes.
The FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws.
In addition, we could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws. The FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws.
We 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 them only establish pricing terms and do not obligate our customers to buy required minimum amounts from us or to buy from us exclusively.
When we do enter into long-term contracts with our Supply Technologies customers, many of them only establish pricing terms and do not obligate our customers to buy required minimum amounts from us or to buy from us exclusively.
Our businesses expose us to potential product liability risks that are inherent in the design, manufacture and sale of our products and products of third-party vendors that we use or resell.
Risks Relating to Legal, Compliance and Regulatory Matters Potential product liability risks exist from the products that we sell. Our businesses expose us to potential product liability risks that are inherent in the design, manufacture and sale of our products and products of third-party vendors that we use or resell.
Additionally, to the extent our customers are adversely affected by a decline in the economy in general, they may not be able to pay their accounts payable to us on a timely basis or at all, which would make the accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow. 16 Table of Contents Risks Relating to the Execution of our Strategy We may encounter difficulty in expanding our business through targeted acquisitions.
Additionally, to the extent our customers are adversely affected by a decline in the economy in general, they may not be able to pay their accounts payable to us on a timely basis or at all, which would make the accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow.
Adverse credit market conditions may significantly affect our access to capital, cost of capital and ability to meet liquidity needs. Disruptions, uncertainty or volatility in the credit markets, including as a result of a recession, may adversely impact our ability to access credit already arranged and the availability and cost of credit to us in the future.
Disruptions, uncertainty or volatility in the credit markets, including as a result of a recession, may adversely impact our ability to access credit already arranged and the availability and cost of credit to us in the future.
We have pursued, and may continue to pursue, targeted acquisition opportunities that we believe would complement our business. We cannot assure you that we will be successful in consummating any acquisitions. Any targeted acquisitions will be accompanied by the risks commonly encountered in acquisitions of businesses.
Risks Relating to the Execution of our Strategy We may encounter difficulty in expanding our business through targeted acquisitions. We have pursued, and may continue to pursue, targeted acquisition opportunities that we believe would complement our business. We cannot assure you that we will be successful in consummating any acquisitions.
Any of the foregoing effects could have a material adverse effect on our business, results of operations and financial condition. 10 Table of Contents 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.
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.
Our success as a global business will depend, in part, upon our ability to succeed in differing legal, regulatory, economic, social and political conditions by developing, implementing and maintaining policies and strategies that are effective in each location where we do business. In addition, we could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws.
Our success as a global business will depend, in part, upon our ability to succeed 14 Table of Contents in differing legal, regulatory, economic, social and political conditions by developing, implementing and maintaining policies and strategies that are effective in each location where we do business.
Changes in tax policy, trade regulations or trade agreements, such as the disallowance of tax deductions on imported merchandise or the imposition of new tariffs on imported products, could have a material adverse effect on our business and results of operations.
We are also exposed to risks relating to U.S. policy with respect to companies doing business in foreign jurisdictions. Changes in tax policy, trade regulations or trade agreements, such as the disallowance of tax deductions on imported merchandise or the imposition of new tariffs on imported products, could have a material adverse effect on our business and results of operations.
Consequently, our results of operations and financial condition may be materially adversely affected. The energy costs involved in our production processes and transportation are subject to fluctuations that are beyond our control and could significantly increase our costs of production. Our manufacturing process and the transportation of raw materials, components and finished goods are energy intensive.
We may not be able to increase our prices commensurate with our increased costs. Consequently, our results of operations and financial condition may be materially adversely affected. The energy costs involved in our production processes and transportation are subject to fluctuations that are beyond our control and could significantly increase our costs of production.
We have incurred and expect to continue to incur significant expenditures to comply with applicable environmental laws and regulations.
Compliance with these laws and regulations is a significant factor in our business. We have incurred and expect to continue to incur significant expenditures to comply with applicable environmental laws and regulations.
As a consequence, our operating results for a particular period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods.
As a consequence, our operating results for a particular period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing effects could have a material adverse effect on our business, results of operations and financial condition.
Crawford and Edward Crawford, our former President, or certain of their related parties own in the aggregate less than 15% of Holdings’ outstanding common stock and, if at such time, neither Mr. M. Crawford nor Mr. E. Crawford holds the office of chairman, chief executive officer or president. The loss of the services of Mr. M.
Additionally, an event of default occurs under our revolving credit facility if Messrs. M. Crawford and Edward Crawford, our former President, or certain of their related parties own in the aggregate less than 15% of Holdings’ outstanding common stock and, if at such time, neither Mr. M. Crawford nor Mr. E.
We may be exposed to certain regulatory and financial risks related to climate change. Growing concerns 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.
We may be exposed to certain regulatory and financial risks related to climate change. Growing concerns about climate change may result in the imposition of additional regulations or restrictions to which we may become subject.
A downturn in any of the industries we serve could have a material adverse effect on our financial condition, liquidity and results of operations.
A downturn in any of the industries we serve could have a material adverse effect on our financial condition, liquidity and results of operations. Adverse credit market conditions may significantly affect our access to capital, cost of capital and ability to meet liquidity needs.
While we generally attempt to pass along increased raw materials prices to our customers in the form of price increases, there may be a time delay between the increased raw materials prices and our ability to increase the price of our products, or we may be unable to increase the prices of our products due various factors.
While we generally attempt to pass along increased raw materials prices to our customers in the form of price increases, there may be a time delay between the increased raw materials prices and our ability to increase the price of our products, or we may be unable to increase the prices of our products due various factors. 11 Table of Contents Our suppliers of component parts, particularly in our Supply Technologies business, may continue to significantly and quickly increase their prices in response to increases in costs of the raw materials, such as steel, that they use to manufacture our component parts.
In addition, a disruption or curtailment in supply could have a material adverse effect on our production and sales levels. We may experience breaches of, or disruptions to, our information technology systems, or other compromises of our data, including the improper disclosure of personal or confidential data, which may adversely affect our operations and reputation .
We may experience 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 .
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.
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.
As of December 31, 2022, we had goodwill of $108.9 million.
As of December 31, 2023, we had goodwill of $110.2 million.
Our success depends upon the efforts, abilities and expertise of our executive officers and other senior managers, including Matthew Crawford, our Chairman, Chief Executive Officer and President, as well as the president of each of our operating units. Additionally, an event of default occurs under our revolving credit facility if Messrs. M.
The loss of key executives could adversely impact us. 13 Table of Contents Our success depends upon the efforts, abilities and expertise of our executive officers and other senior managers, including Matthew Crawford, our Chairman, Chief Executive Officer and President, as well as the president of each of our operating units.
Demand for certain of our products is affected by, among other things, the relative strength or weakness of the automotive and heavy-duty truck industries. The global semiconductor micro-chip shortage, in particular, could continue to adversely affect a significant portion of our sales to our automotive and heavy-duty truck customers.
Demand for certain of our products is affected by, among other things, the relative strength or weakness of the automotive and heavy-duty truck industries. The domestic automotive and heavy-duty truck industries are also highly cyclical and may be adversely affected by international competition.
In addition, any such damage, 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. Operating problems in our business may materially adversely affect our financial condition and results of operations.
In addition, any such damage, 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. We recognize the ever-present global risk of cyberattacks from diverse threat actors, including nation-states, cybercriminals, hacktivists, insiders and organized crime.
Crawford, senior and executive officers, and/or other key individuals could have a material adverse effect on our financial condition, liquidity and results of operations. Risks Relating to Legal, Compliance and Regulatory Matters Potential product liability risks exist from the products that we sell.
Crawford holds the office of chairman, chief executive officer or president. The loss of the services of Mr. M. Crawford, senior and executive officers, and/or other key individuals could have a material adverse effect on our financial condition, liquidity and results of operations.
We cannot assure you that we will maintain or improve our relationships in these industries or that we will continue to supply these customers at current levels. Our Supply Technologies customers are generally not contractually obligated to purchase products and services from us.
Our Supply Technologies customers are generally not contractually obligated to purchase products and services from us. We supply products and services to our Supply Technologies customers generally under purchase orders as opposed to long-term contracts.
The domestic automotive and heavy-duty truck industries are also highly cyclical and may be adversely affected by international competition. In addition, the automotive and heavy-duty truck industries are significantly unionized and subject to work slowdowns and stoppages resulting from labor disputes.
In addition, the automotive and heavy-duty truck industries are significantly unionized and subject to work slowdowns and stoppages resulting from labor disputes, such as the United Auto Workers strike in 2023. We derived 33% and 8% of our net sales during the year ended December 31, 2023 from the automotive and heavy-duty truck industries, respectively.
Removed
Our business, results of operations and cash flows have been and may continue to be adversely affected by COVID-19. 9 Table of Contents To date, the COVID-19 pandemic has had an adverse impact on our business, including how it has impacted our customers, employees, supply chain and distribution network.
Added
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.
Removed
The impact of the COVID-19 pandemic and uncertainty with respect to the economic effects of the pandemic introduced significant volatility in the financial markets and has had a widespread adverse effect on the industries in which we operate.
Added
In spite of our efforts, we (or third parties we rely on) may not be able to fully, continuously and effectively implement security controls as intended.
Removed
The COVID-19 pandemic could continue to negatively impact our business, results of operations, financial position or cash flows in a number of ways, including but not limited to: • disruptions in our supply chain due to the global semiconductor micro-chip shortage, logistics issues, labor disruptions and our ability to obtain raw materials, among other factors; • increases in raw material and freight costs; • labor shortages; • disruptions to our facilities, including shutdowns or slowdowns as a result of facility closures, reductions in operating hours and labor shortages; • the inability of a significant portion of our workforce to work as a result of illness or government restrictions; • exposure to cybersecurity threats and other risks associated with a large number of our employees working remotely; and • the need to reduce our workforce as a result of declines in our business caused by the COVID-19 pandemic, which has caused us, and may continue to cause us, to incur significant expenses.
Added
We utilize a risk-based approach and judgment to determine the security controls to implement, but it is possible we may not implement appropriate controls if we do not recognize or we underestimate a particular risk. In addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate risks.
Removed
The extent to which our business, results of operations, financial position or cash flows may ultimately be adversely impacted by the COVID-19 pandemic are highly uncertain and cannot be accurately predicted. The impact of the COVID-19 pandemic may also exacerbate other risks discussed herein, any of which could have a material effect on us.
Added
Further, even events that are detected by security tools or third parties may not always be immediately understood or acted upon.
Removed
Our suppliers of component parts, particularly in our Supply Technologies business, may continue to significantly and quickly increase their prices in response to increases in costs of the raw materials, such as steel, that they use to manufacture our component parts. We may not be able to increase our prices commensurate with our increased costs.
Added
While no organization is immune to attack attempts and we cannot eliminate all risks from cybersecurity threats or provide assurance that we have not experienced an undetected cybersecurity incident, in 2023 we did not identify any material cybersecurity events that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.
Removed
On January 31, 2020, the United Kingdom (“UK”) exited (“Brexit”) the European Union (“EU”). The transition period post-Brexit expired on December 31, 2020, and the UK and the EU entered into a free trade agreement that now governs the UK’s relationship with the EU.
Added
Operating problems in our business may materially adversely affect our financial condition and results of operations.
Removed
While the UK and the EU can generally continue to trade with each other without the imposition of tariffs for imports and exports, there are new customs requirements that require additional documentation and data, and there are also new controls on the movement and reporting of goods.
Added
A number of governments or governmental bodies have introduced or are contemplating regulatory 15 Table of Contents changes in response to climate change, including regulating greenhouse gas emissions.
Removed
Although we have not experienced any material disruption in our business as a result of Brexit, we do not know the extent to which Brexit and the free trade agreement will ultimately impact the business and regulatory environment in the UK, the rest of the EU or other countries, although it is possible there will be tighter controls and administrative requirements for imports and exports between the UK and the EU or other countries, as well as increased regulatory complexities.
Added
Any targeted acquisitions will be accompanied by the risks commonly encountered in acquisitions of businesses.
Removed
Any of these factors could adversely impact customer demand, our relationships with customers and suppliers and our results of operations. We are also exposed to risks relating to U.S. policy with respect to companies doing business in foreign jurisdictions.
Removed
We also cannot assure you that these laws will not be modified. 15 Table of Contents We are subject to significant environmental, health and safety laws and regulations and related compliance expenditures and liabilities.
Removed
We may be unable to sell our Aluminum Products business. We are pursuing a sale of our Aluminum Products business. On December 30, 2022, the Company entered into the MOU with a third party pursuant to which the third party would purchase our Aluminum Products business.
Removed
The sale of the Aluminum Products business is subject to the successful completion of a definitive purchase agreement and other customary conditions. Accordingly, there can be no assurance that the sale of the Aluminum Products business will be completed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides information relative to our principal facilities as of December 31, 2022. 17 Table of Contents Segment (1) Location Owned or Leased Use SUPPLY Brampton, Ontario, Canada Leased Manufacturing TECHNOLOGIES Minneapolis, MN Leased Logistics Changzhou, China Leased Manufacturing Cleveland, OH Leased Supply Technologies Corporate Office Dayton, OH Leased Logistics Memphis, TN Leased Logistics Suwanee, GA Leased Logistics Streetsboro, OH Leased Manufacturing Allentown, PA Leased Logistics Carol Stream, IL Leased Logistics Solon, OH Leased Logistics Dublin, VA Leased Logistics Tulsa, OK Leased Logistics Winston-Salem, NC Leased Logistics and Office ASSEMBLY Ocala, FL Owned Manufacturing COMPONENTS Acuna, Mexico Leased Manufacturing Lexington, TN Owned Manufacturing Angola, IN Owned Manufacturing ENGINEERED Cuyahoga Heights, OH Owned Manufacturing PRODUCTS Canton, OH (2) Owned/Leased Manufacturing Newport, AR Owned Manufacturing Warren, OH Owned Manufacturing Erie, PA Owned Manufacturing La Roeulx, Belgium Owned Manufacturing Brookfield, WI Leased Manufacturing Madison Heights, MI Leased Manufacturing Leini, Italy Owned Manufacturing Pune, India Owned Manufacturing Chennai, India Owned Manufacturing Cortland, OH Owned Office and Manufacturing Valencia, Spain Owned Manufacturing (1) Each segment has other facilities, none of which is deemed to be a principal facility.
Biggest changeThe following table provides information relative to our principal facilities as of December 31, 2023. 18 Table of Contents Segment (1) Location Owned or Leased Use SUPPLY Brampton, Ontario, Canada Leased Manufacturing TECHNOLOGIES Minneapolis, MN Leased Logistics Changzhou, China Leased Manufacturing Cleveland, OH Leased Supply Technologies Corporate Office Dayton, OH Leased Logistics Memphis, TN Leased Logistics Suwanee, GA Leased Logistics Streetsboro, OH Leased Manufacturing Allentown, PA Leased Logistics Carol Stream, IL Leased Logistics Solon, OH Leased Logistics Dublin, VA Leased Logistics Tulsa, OK Leased Logistics Winston-Salem, NC Leased Logistics and Office ASSEMBLY Ocala, FL Owned Manufacturing COMPONENTS Acuna, Mexico Leased Manufacturing Lexington, TN Owned Manufacturing Angola, IN Owned Manufacturing Birmingham, England Owned Manufacturing ENGINEERED Cuyahoga Heights, OH Owned Manufacturing PRODUCTS Canton, OH Owned Manufacturing Canton, OH Leased Manufacturing Newport, AR Owned Manufacturing Warren, OH Owned Manufacturing Erie, PA Owned Manufacturing La Roeulx, Belgium Owned Manufacturing Brookfield, WI Leased Manufacturing Madison Heights, MI Leased Manufacturing Leini, Italy Owned Manufacturing Pune, India Owned Manufacturing Chennai, India Owned Manufacturing Cortland, OH Owned Office and Manufacturing Valencia, Spain Owned Manufacturing (1) Each segment has other facilities, none of which is deemed to be a principal facility.
Item 2. Properties As of December 31, 2022, our operations included numerous manufacturing and supply chain logistics services facilities located in 28 states in the United States and in Puerto Rico, as well as in Asia, Canada, Europe, Mexico and Brazil.
Item 2. Properties As of December 31, 2023, our operations included numerous manufacturing and supply chain logistics services facilities located in 28 states in the United States and in Puerto Rico, as well as in Asia, Canada, Europe, Mexico and Brazil.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−2 removed11 unchanged
Biggest changeWhile any such claims, suits, investigations and proceedings involve an element of uncertainty, in the opinion of management, liabilities, if any, arising from currently pending or threatened claims, suits, investigations and proceedings are not expected to have a material adverse effect on our financial condition, liquidity or results of operations.
Biggest changeWhile any such claims, suits, investigations and proceedings involve an element of uncertainty, in the opinion of management, liabilities, if any, arising from currently pending or threatened claims, suits, investigations and proceedings are not expected to have a material adverse effect on our financial condition, liquidity or results of operations. 19 Table of Contents In addition to the routine claims, suits, investigations and proceedings noted above, we were a party to the lawsuits and legal proceedings described below as of December 31, 2023: We were a co-defendant in approximately 132 cases asserting claims on behalf of approximately 184 plaintiffs alleging personal injury as a result of exposure to asbestos.
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.
To the extent that any specific amount of damages is sought, the amount applies to claims against all named defendants. There are three asbestos cases, involving 19 plaintiffs, that plead specified damages against named defendants. In each of the three cases, the plaintiff is seeking compensatory and punitive damages based on a variety of potentially alternative causes of action.
Removed
In addition to the routine claims, suits, investigations and proceedings noted above, we were a party to the lawsuits and legal proceedings described below as of December 31, 2022: 18 Table of Contents We were a co-defendant in approximately 99 cases asserting claims on behalf of approximately 162 plaintiffs alleging personal injury as a result of exposure to asbestos.
Removed
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (2) October 1 — October 31, 2022 300 $ 11.31 — 444,424 November 1 — November 30, 2022 1,234 12.78 — 444,424 December 1 — December 31, 2022 17,516 13.31 — 444,424 Total 19,050 $ 13.25 — 444,424 (1) Consists of an aggregate total of 19,050 shares of common stock we acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient minimum withholding tax liabilities.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (2) October 1 — October 31, 2023 1,989 $ 18.25 — 444,424 November 1 — November 30, 2023 2,489 22.13 — 444,424 December 1 — December 31, 2023 1,140 23.13 1,217 443,207 Total 5,618 $ 20.96 1,217 443,207 (1) Consists of an aggregate total of 5,618 shares of common stock we acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient minimum withholding tax liabilities.
Issuer Purchases of Equity Securities Set forth below is information regarding repurchases of our common stock during the fourth quarter of the year ended December 31, 2022.
Issuer Purchases of Equity Securities Set forth below is information regarding repurchases of our common stock during the fourth quarter of the year ended December 31, 2023.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $1.00 per share, trades on the Nasdaq Global Select Market under the symbol “PKOH”. The number of shareholders of record of our common stock as of February 28, 2023 was 382.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $1.00 per share, trades on the Nasdaq Global Select Market under the symbol “PKOH”. The number of shareholders of record of our common stock as of February 29, 2024 was 382.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+14 added−45 removed42 unchanged
Biggest changeSee Note 4, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for further information. 2022 Compared with 2021 and 2021 Compared with 2020 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 $ Change % Change $ Change % Change (Dollars in millions, except per share data) Net sales $ 1,492.9 $ 1,277.0 $ 1,152.1 $ 215.9 17 % $ 124.9 11 % Cost of sales 1,282.4 1,099.1 986.8 183.3 17 % 112.3 11 % Selling, general and administrative ("SG&A") expenses 162.2 155.9 140.2 6.3 4 % 15.7 11 % SG&A expenses as a percentage of net sales 10.9 % 12.2 % 12.2 % Restructuring and other special charges 17.3 20.4 6.6 (3.1) * 13.8 * Gains on sales of assets, net (2.4) (14.7) — 12.3 * (14.7) * Operating income 33.4 16.3 18.5 17.1 105 % (2.2) (12) % Other components of pension income and other postretirement benefits expense, net 11.1 9.7 7.3 1.4 14 % 2.4 33 % Interest expense, net (33.8) (27.1) (27.6) (6.7) 25 % 0.5 (2) % Income (loss) from continuing operations before income taxes 10.7 (1.1) (1.8) 11.8 * 0.7 39 % Income tax benefit 0.7 1.0 1.3 (0.3) * (0.3) * Income (loss) from continuing operations 11.4 (0.1) (0.5) 11.5 * 0.4 80 % (Income) loss attributable to noncontrolling interest (1.3) 1.2 0.3 (2.5) * 0.9 300 % Income (loss) from continuing operations attributable to ParkOhio common shareholders $ 10.1 $ 1.1 $ (0.2) $ 9.0 * $ 1.3 650 % Earnings (loss) from continuing operations per common share attributable to ParkOhio common shareholders: Basic: Continuing operations $ 0.83 $ 0.09 $ (0.02) $ 0.74 * $ 0.11 550 % Diluted: Continuing operations $ 0.83 $ 0.09 $ (0.02) $ 0.74 * $ 0.11 550 % * Calculation not meaningful 2022 Compared with 2021 Net Sales 22 Table of Contents Net sales increased 17% to $1,492.9 million in 2022 compared to $1,277.0 million in 2021.
Biggest changeThe amounts below exclude discontinued operations. 2023 Compared with 2022 and 2022 Compared with 2021 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 $ Change % Change $ Change % Change (Dollars in millions, except per share data) Net sales $ 1,659.7 $ 1,492.9 $ 1,277.0 $ 166.8 11 % $ 215.9 17 % Cost of sales 1,388.3 1,282.4 1,099.1 105.9 8 % 183.3 17 % Gross margin 16.4 % 14.1 % 13.9 % Selling, general and administrative ("SG&A") expenses 181.5 162.2 155.9 19.3 12 % 6.3 4 % SG&A expenses as a percentage of net sales 10.9 % 10.9 % 12.2 % Restructuring and other special charges 6.6 17.3 20.4 (10.7) (62) % (3.1) (15) % Gains on sales of assets, net (0.8) (2.4) (14.7) 1.6 * 12.3 * Operating income 84.1 33.4 16.3 50.7 152 % 17.1 105 % Other components of pension and other postretirement benefits income, net 2.5 11.1 9.7 (8.6) (77) % 1.4 14 % Interest expense, net (45.1) (33.8) (27.1) (11.3) 33 % (6.7) 25 % Income (loss) from continuing operations before income taxes 41.5 10.7 (1.1) 30.8 288 % 11.8 * Income tax (expense) benefit (8.5) 0.7 1.0 (9.2) * (0.3) 30 % Income (loss) from continuing operations 33.0 11.4 (0.1) 21.6 189 % 11.5 * Loss (income) attributable to noncontrolling interest 1.0 (1.3) 1.2 2.3 (177) % (2.5) 208 % Income from continuing operations attributable to ParkOhio common shareholders $ 34.0 $ 10.1 $ 1.1 $ 23.9 237 % $ 9.0 * Earnings (loss) from continuing operations per common share attributable to ParkOhio common shareholders: Basic: Continuing operations $ 2.76 $ 0.83 $ 0.09 $ 1.93 233 % $ 0.74 * Diluted: Continuing operations $ 2.72 $ 0.83 $ 0.09 $ 1.89 228 % $ 0.74 * * Calculation not meaningful 2023 Compared with 2022 Net Sales 23 Table of Contents Net sales increased 11% to $1,659.7 million in 2023 compared to $1,492.9 million in 2022.
The Company’s pension plans are funded. The weighted-average expected long-term rate of return on assets assumption is 7.75% for 2022. 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.
The Company’s pension plans are funded. The weighted-average expected long-term rate of return on assets assumption is 7.75% for 2023 and 2022. 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.
In applying the quantitative approach, we use an income approach to estimate the fair value of the reporting unit. The income approach uses a number of factors, including future business plans, actual and forecasted operating results, and market data.
In applying the quantitative approach, we use an income approach and market multiple approach to estimate the fair value of the reporting unit. The income approach uses a number of factors, including future business plans, actual and forecasted operating results, and market data.
Such variability is particularly evident in the industrial equipment business unit included in the Engineered Products segment, which typically ships a few large systems per year. 33 Table of Contents Forward-Looking Statements This Annual Report on Form 10-K 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.
Such variability is particularly evident in the industrial equipment business unit included in the Engineered Products segment, which typically ships a few large systems per year. 32 Table of Contents Forward-Looking Statements This Annual Report on Form 10-K 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.
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. The Company assumes no obligation to update the information in this Annual Report on Form 10-K, except to the extent required by law. 34 Table of Contents
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. The Company assumes no obligation to update the information in this Annual Report on Form 10-K, except to the extent required by law. 33 Table of Contents
For 2022, 2021 and 2020, we performed quantitative testing for each reporting unit with a goodwill balance. Our annual goodwill impairment analysis utilizes a quantitative approach comparing the carrying amount of the reporting unit to its estimated fair value. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded.
For 2023, 2022 and 2021, we performed quantitative testing for each reporting unit with a goodwill balance. Our annual goodwill impairment analysis utilizes a quantitative approach comparing the carrying amount of the reporting unit to its estimated fair value. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded.
Additionally, we test all indefinite-lived intangible assets for impairment at least annually, as of October 1 of each year, or more frequently if impairment indicators arise. In 2022, 2021 and 2020, we utilized a quantitative approach using the royalty relief method.
Additionally, we test all indefinite-lived intangible assets for impairment at least annually, as of October 1 of each year, or more frequently if impairment indicators arise. In 2023, 2022 and 2021, we utilized a quantitative approach using the royalty relief method.
Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which 29 Table of Contents could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.
Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.
Based on these factors, when we have determined that the realizability of certain domestic and foreign deferred tax assets is more likely than not to not be realized, a valuation allowance has been established. Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year.
Based on these factors, when we have determined that the realizability of certain domestic and foreign deferred tax assets is more likely than not to not be realized, a valuation allowance has been established. 30 Table of Contents Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year.
Off-Balance Sheet Arrangements We do not have off-balance sheet arrangements, financing or other relationships with unconsolidated entities or other persons, other than the letters of credits disclosed in Note 9 to the consolidated financial statements, included elsewhere herein.
Off-Balance Sheet Arrangements We do not have off-balance sheet arrangements, financing or other relationships with unconsolidated entities or other persons, other than the letters of credit disclosed in Note 9 to the consolidated financial statements, included elsewhere herein.
As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of December 31, 2022.
As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of December 31, 2023.
A reporting unit is an operating segment pursuant to ASC 280, “Segment Reporting”, or one level below the operating segment (component level) as determined by the availability of discrete financial information that is regularly reviewed by operating segment management. Our reporting units have been identified at the component level.
A reporting unit is an operating segment pursuant to ASC 280, “Segment Reporting”, or one level below the operating segment (component level) as determined by the availability of discrete financial information that is regularly reviewed by operating segment management. 29 Table of Contents Our reporting units have been identified at the component level.
While we expect to remain in compliance throughout 2023, declines in sales volumes in the future, could adversely impact our ability to remain in compliance with certain of these financial covenants.
While we expect to remain in compliance throughout 2024, declines in sales volumes in the future could adversely impact our ability to remain in compliance with certain of these financial covenants.
The Company had cash and cash equivalents held by foreign subsidiaries of $47.8 million at December 31, 2022 and $44.2 million at December 31, 2021. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.
The Company had cash and cash equivalents held by foreign subsidiaries of $44.6 million at December 31, 2023 and $47.8 million at December 31, 2022. We do not expect restrictions on repatriation of cash held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.
Senior Notes 28 Table of Contents In April 2017, Park-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., completed the sale, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”).
Senior Notes In April 2017, Park-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., completed the sale, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”).
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.
Seasonality; Variability of Operating Results 31 Table of Contents 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.
Gains on Sales of Assets, net During 2022, in connection with its plant closure and consolidation initiatives, the Company sold assets within its Supply Technologies segment for cash proceeds of $1.5 million, resulting in a loss of $3.4 million; within its Assembly Components segment for cash proceeds of $4.4 million, resulting in a gain of $3.3 million; and within its Engineered Products segment for cash proceeds of $3.6 million, resulting in a gain of $2.5 million.
During 2022, in connection with its plant closure and consolidation initiatives, the Company sold assets within its Supply Technologies segment for cash proceeds of $1.5 million, resulting in a loss of $3.4 million; within its Assembly Components segment for cash proceeds of $4.4 million, resulting in a gain of $3.3 million; and within its Engineered Products segment for cash proceeds of $3.6 million, resulting in a gain of $2.5 million.
If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At December 31, 2022, our calculated availability under the Credit Agreement was $102.3 million; therefore, the debt service ratio covenant did not apply.
If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At December 31, 2023, our calculated availability under the Credit Agreement was $103.3 million; therefore, the debt service ratio covenant did not apply.
For the other postretirement benefit plan, the rate is 5.41% for 2022 and 2.49% for 2021. 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.
For the other postretirement benefit plan, the rate is 5.06% for 2023 and 5.41% for 2022. 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.
Business Combinations: Business combinations are accounted for using the purchase method of accounting under ASC 805, "Business Combinations." This method requires the Company to record assets and liabilities of the business acquired at their estimated fair values as of the acquisition date.
Business Combinations: Business combinations are accounted for using the purchase method of accounting under Accounting Standards Codification (“ASC”) 805, "Business Combinations." This method requires the Company to record assets and liabilities of the business acquired at their estimated fair values as of the acquisition date.
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 5.48% for 2022, compared with 2.80% in 2021.
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 5.14% for 2023, compared with 5.48% in 2022.
These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: our ability to consummate the sale of our Aluminum Products business for any reason, including the inability to enter into a definitive purchase agreement; the ultimate impact the COVID-19 pandemic has on our business, results of operations, financial position and liquidity, including, without limitation, supply chain issues such as the global semiconductor micro-chip shortage and logistic issues; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities, including the conflict between Russia and Ukraine, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of COVID-19 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.
These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: our ability to realize any contingent consideration from the sale of the Aluminum Products business; the impact supply chain and logistic issues have on our business, results of operations, financial position and liquidity; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations, including the EMA acquisition; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities, including the conflicts between Russia and Ukraine and in the Middle East, or political unrest, including the rising tension between China and the United States; public health issues, including the outbreak of infectious diseases and any impact on our facilities and operations and our customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems; our ability to continue to pay cash dividends, and the timing and amount of any such dividends; and the other factors we describe under “Item 1A.
This increase was primarily due to higher customer demand and increased net price realization in all three of our business segments. The factors explaining the changes in segment net sales for the year ended December 31, 2022 compared to the year ended December 31, 2021 are contained in the “Segment Results” section below.
This increase was primarily due to higher customer demand in all three of our business segments and increased product pricing. The factors explaining the changes in segment net sales for the year ended December 31, 2023 compared to the year ended December 31, 2022 are contained in the “Segment Results” section below.
Financing Activities Cash provided by financing activities in 2022 included debt borrowings of $73.2 million, proceeds from a third-party financing arrangement of $20.0 million in connection with the entry into the MOU, dividends of $7.0 million, and payments of withholding taxes on share awards of $1.6 million.
Cash provided by financing activities in 2022 included debt borrowings of $73.2 million, proceeds from a third-party financing arrangement of $20.0 million in connection with the entry into the memorandum of understanding in connection with the sale of our Aluminum Products business, dividends of $7.0 million, and payments of withholding taxes on share awards of $1.6 million.
Dividends The Company paid dividends to shareholders of $6.4 million during 2022. On January 27, 2023, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend was paid on February 24, 2023, to shareholders of record as of the close of business on February 10, 2023 and resulted in cash payments of $1.6 million.
Dividends The Company paid dividends to shareholders of $6.4 million during 2023. On January 26, 2024, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend was paid on February 23, 2024, to shareholders of record as of the close of business on February 9, 2024 and resulted in cash payments of $1.6 million.
Engineered Products Segment Year Ended December 31, 2022 2021 2020 (Dollars in millions) Net sales $ 392.6 $ 336.0 $ 343.6 Segment operating (loss) income $ 14.8 $ (12.2) $ 3.5 Segment operating (loss) income margin 3.8 % (3.6) % 1.0 % 2022 Compared to 2021 Net sales were 17% higher in 2022 compared to 2021.
Engineered Products Segment Year Ended December 31, 2023 2022 2021 (Dollars in millions) Net sales $ 468.5 $ 392.6 $ 336.0 Segment operating income (loss) $ 19.1 $ 14.8 $ (12.2) Segment operating income (loss) margin 4.1 % 3.8 % (3.6) % 2023 Compared to 2022 Net sales were 19.3% higher in 2023 compared to 2022.
The following table summarizes our indicators of liquidity: 2022 2021 (Dollars in millions) Cash and cash equivalents $ 58.2 $ 54.1 Gross debt (excluding unamortized debt issuance costs) $ 669.1 $ 597.1 Financing arrangement with third party, net $ 20.0 $ — Working capital (excluding cash) $ 425.6 $ 372.4 Net debt as a % of capitalization 66 % 59 % Our liquidity needs are primarily for working capital and capital expenditures.
The following table summarizes our indicators of liquidity: 2023 2022 (Dollars in millions) Cash and cash equivalents $ 54.8 $ 58.2 Gross debt (excluding unamortized debt issuance costs) $ 645.7 $ 669.1 Financing arrangement with third party, net $ — $ 20.0 Working capital (excluding cash) $ 406.0 $ 425.6 Net debt as a % of capitalization 64 % 66 % Our liquidity needs are primarily for working capital and capital expenditures.
We have been named as one of many defendants in a number of asbestos-related personal injury lawsuits. Our cost of defending such lawsuits has not been material to date and, based upon available information, management does not expect our future costs for asbestos-related lawsuits to have a material adverse effect on our results of operations, liquidity or financial condition.
Our cost of defending such lawsuits has not been material to date and, based upon available information, management does not expect our future costs for asbestos-related lawsuits to have a material adverse effect on our results of operations, liquidity or financial condition.
Environmental 32 Table of Contents We have been identified as a potentially responsible party at third-party sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or comparable state laws, which provide for strict and, under certain circumstances, joint and several liability.
Environmental We have been identified as a potentially responsible party at third-party sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or comparable state laws, which provide for strict and, under certain circumstances, joint and several liability. We are participating in the cost of certain clean-up efforts at several of these sites.
Revenue from certain long-term contracts is 30 Table of Contents accounted for over time, when products are manufactured or services are performed, as control transfers under these arrangements. We follow the input method since reasonably reliable estimates of revenue and costs of a contract can be made.
Revenue from certain long-term contracts is accounted for over time, when products are manufactured or services are performed, as control transfers under these arrangements. We follow the input method since reasonably reliable estimates of revenue and costs of a contract can be made. See Note 2 of the consolidated financial statements included elsewhere herein for additional disclosures on revenue.
Gains on Sales of Assets, net During 2021, in connection with the plant closure and consolidation initiatives, the Company sold real estate within the Engineered Products segment for cash proceeds of $19.6 million, resulting in a gain of $14.2 million.
Gains on Sales of Assets, net During 2023, in connection with the plant closure and consolidation initiatives, the Company sold real estate within its Engineered Products segment for cash proceeds of $1.4 million, resulting in a gain of $0.8 million. The Company also sold other real estate for cash proceeds of $0.6 million.
See Note 2 of the consolidated financial statements included elsewhere herein for additional disclosures on revenue. Allowance for Obsolete and Slow-Moving Inventory: Inventories are valued using first-in, first-out or the weighted-average inventory method; stated at the lower of cost or net realizable value; and have been reduced by an allowance for obsolete and slow-moving inventories.
Allowance for Obsolete and Slow-Moving Inventory: Inventories are valued using first-in, first-out or the weighted-average inventory method; stated at the lower of cost or net realizable value; and have been reduced by an allowance for obsolete and slow-moving inventories.
Cost of Sales Cost of sales increased 17% to $1,282.4 million in 2022 compared to $1,099.1 million in 2021. The increase in cost of sales and decrease in gross margin were due to the increase in net sales described above.
Cost of Sales and Gross Margin Cost of sales increased 8% to $1,388.3 million in 2023 compared to $1,282.4 million in 2022. The increase in cost of sales was due to the increase in net sales described above.
Credit Agreement Park-Ohio’s Seventh Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) provides for a revolving credit facility in the amount of $405.0 million, including a $40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $30.0 million.
Credit Agreement 27 Table of Contents On September 13, 2023, Park-Ohio amended its Eighth Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility in the amount of $405.0 million, including a $40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $30.0 million.
We are participating in the cost of certain clean-up efforts at several of these sites. However, our share of such costs has not been material and based on available information, management does not expect our exposure at any of these locations to have a material adverse effect on our results of operations, liquidity or financial condition.
However, our share of such costs has not been material and based on available information, management does not expect our exposure at any of these locations to have a material adverse effect on our results of operations, liquidity or financial condition. We have been named as one of many defendants in a number of asbestos-related personal injury lawsuits.
Contractual and Other Obligations and Commitments Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations.
Contractual and Other Obligations and Commitments Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations. See Note 9 to the consolidated financial statements included elsewhere herein for additional information regarding scheduled maturities of our long-term debt.
Cash used by financing activities in 2020 included debt repayments of $32.9 million, treasury share repurchases of $7.5 million, dividends of $3.2 million and payments of withholding taxes on share awards of $1.2 million.
Financing Activities Cash used by financing activities in 2023 included debt repayments of $24.3 million, payments related to prior acquisitions of $2.9 million, dividends of $7.4 million, and payments of withholding taxes on share awards of $2.0 million.
Supply Technologies Segment Year Ended December 31, 2022 2021 2020 (Dollars in millions) Net sales $ 711.5 $ 619.5 $ 510.1 Segment operating income $ 45.7 $ 42.8 $ 30.2 Segment operating income margin 6.4 % 6.9 % 5.9 % 2022 Compared to 2021 Net sales increased 15% in 2022 compared to 2021 due primarily to higher customer demand in most of the Company's end markets, with the biggest increases in heavy-duty truck, power sports, industrial and agricultural equipment, semiconductor, and civilian aerospace markets, as well as the sales from our acquisitions in 2022.
Supply Technologies Segment Year Ended December 31, 2023 2022 2021 (Dollars in millions) Net sales $ 763.4 $ 711.5 $ 619.5 Segment operating income $ 59.0 $ 45.7 $ 42.8 Segment operating income margin 7.7 % 6.4 % 6.9 % 2023 Compared to 2022 Net sales increased 7.3% in 2023 compared to the 2022 period due primarily to higher customer demand in many of the Company's key end markets, with the largest increases in the power sports, heavy-duty truck, and commercial aerospace, and increased demand for our proprietary fastener products.
Pursuant to the Credit Agreement, the Company has the option to increase the availability under the revolving credit facility by an aggregate incremental amount up to $70.0 million. The Credit Agreement matures on November 16, 2024.
Pursuant to the Credit Agreement, Park-Ohio has the option to increase the availability under the revolving credit facility by an aggregate incremental amount up to $70.0 million. The Credit Agreement matures on January 14, 2027. Finance Leases As of December 31, 2023, the Company had finance leases totaling $16.3 million.
In addition, the Company sold real estate within the Assembly Components segment for cash proceeds of $0.7 million, resulting in a gain of $0.5 million. The total net gain of $14.7 million was recorded on a separate line in the Consolidated Statements of Operations and was excluded from segment income.
The total net gain of $0.8 million was recorded on a separate line in the Consolidated Statements of Operations and excluded from segment income.
Liquidity and Capital Resources The following table summarizes the major components of cash flows: 2022 2021 2020 Cash (used) provided by: (In millions) Operating activities $ (26.6) $ (12.2) $ 58.6 Investing activities (40.7) (7.4) (18.9) Financing activities 84.6 60.8 (44.8) Discontinued operations (9.2) (40.8) 2.2 Effect of exchange rate on cash (4.0) (1.3) 1.9 Increase (decrease) in cash and cash equivalents $ 4.1 $ (0.9) $ (1.0) Operating Activities The use of cash in 2022 was driven by increased working capital of $57.2 million, driven by higher inventory levels resulting from supply chain constraints and an increase in accounts receivable of $23.2 million resulting from higher sales.
Liquidity and Capital Resources The following table summarizes the major components of cash flows: 2023 2022 2021 Cash provided (used) by: (In millions) Operating activities $ 53.4 $ (26.6) $ (12.2) Investing activities (11.9) (40.7) (7.4) Financing activities (36.6) 84.6 60.8 Discontinued operations (9.2) (9.2) (40.8) Effect of exchange rate on cash 0.9 (4.0) (1.3) (Decrease) increase in cash and cash equivalents $ (3.4) $ 4.1 $ (0.9) Operating Activities In 2023, we generated positive operating cash flow of $53.4 million compared to a cash outflow of $26.6 million in 2022.
The results of testing as of October 1, 2022, 2021 and 2020 for all reporting units confirmed that the estimated fair values exceeded carrying values, and no impairment related to continuing operations existed as of those dates. The Company's reporting units with goodwill balances had fair values in excess of their carrying amounts by at least 14%.
The results of testing as of October 1, 2023, 2022 and 2021 for all reporting units confirmed that the estimated fair values exceeded carrying values, and no impairment existed as of those dates.
Segment operating income reconciles to consolidated income before income taxes by deducting corporate costs; certain non-cash and/or non-operating items; Other components of pension income and OPEB expense, net; and interest expense, net. During the fourth quarter of 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.
Segment operating income reconciles to consolidated income before income taxes by deducting corporate costs; certain non-cash and/or non-operating items; other components of pension and OPEB income, net; and interest expense, net.
Interest Expense, Net Interest expense, net increased to $33.8 million in 2022 compared to $27.1 million in 2021. The increase was due to higher average interest rates and higher average outstanding borrowings in 2022 compared to 2021. The higher borrowings were used to fund higher working capital levels.
The decrease in 2023 was due to lower returns on plan assets impacting 2023 compared to 2022. Interest Expense, Net Interest expense, net increased to $45.1 million in 2023 compared to $33.8 million in 2022. The increase was due to higher average interest rates and higher average outstanding borrowings in 2023 compared to 2022.
As of December 31, 2022, our undiscounted purchase obligations were $282.2 million due in the next twelve months and $1.6 million due thereafter under purchase orders and "take or pay" arrangements.
Interest payable associated with our 6.625% Senior Notes due 2027 is $23.2 million due in the twelve months following December 31, 2023 and $53.1 million due thereafter. 28 Table of Contents As of December 31, 2023, our undiscounted purchase obligations were $229.0 million due in the next twelve months and $4.2 million due thereafter under purchase orders and "take or pay" arrangements.
As of December 31, 2022, we had $285.3 million outstanding under the revolving credit facility, and total liquidity of $167.9 million, which included cash and cash equivalents of $58.2 million and $109.7 million of unused borrowing availability and excluded $12.4 million of suppressed availability.
As of December 31, 2023, we had $263.5 million outstanding under the revolving credit facility, and total liquidity of $166.0 million, which included cash and cash equivalents of $54.8 million and $111.2 million of unused borrowing availability.
These effective rates are higher in both periods due to U.S tax loss planning and related net operating loss carrybacks to prior years under the CARES Act. SEGMENT RESULTS 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.
SEGMENT RESULTS 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.
Our average effective borrowing rate was 4.8% in 2021 compared to 5.0% in 2020. 24 Table of Contents Income Tax Benefit Income tax benefit in 2021 was $1.0 million on pre-tax loss of $1.1 million (effective rate of 91%). Income tax benefit in 2020 was $1.3 million on pre-tax loss of $1.8 million (effective rate of 72%).
Our average effective borrowing rate was 6.6% in 2023 compared to 5.1% in 2022. Income Tax Expense/Benefit 24 Table of Contents Income tax expense in 2023 was $8.5 million on pre-tax income of $41.5 million, for an effective tax rate of 20.5%, which approximated the U.S. statutory rate.
We believe we incorporate ample sensitivity ranges into our analysis of intangible impairment testing, such that actual experience would need to be materially out of the range of expected assumptions in order for an impairment to remain undetected. 31 Table of Contents The results of testing as of October 1, 2022, 2021 and 2020 for all reporting units confirmed that the estimated fair value exceeded carrying values, and no impairment existed as of those dates.
Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. We believe we incorporate ample sensitivity ranges into our analysis of intangible impairment testing, such that actual experience would need to be materially out of the range of expected assumptions in order for an impairment to remain undetected.
These positive factors were partially offset by higher freight costs in 2021 as a result of global supply chain constraints and a labor strike at a major truck assembly plant. 25 Table of Contents Assembly Components Segment Year Ended December 31, 2022 2021 2020 (Dollars in millions) Net sales $ 388.8 $ 321.5 $ 298.4 Segment operating (loss) income $ 1.1 $ (2.6) $ 10.9 Segment operating (loss) income margin 0.3 % (0.8) % 3.7 % 2022 Compared to 2021 Net sales increased 21% in 2022 compared to 2021.
Assembly Components Segment Year Ended December 31, 2023 2022 2021 (Dollars in millions) Net sales $ 427.8 $ 388.8 $ 321.5 Segment operating income (loss) $ 33.4 $ 1.1 $ (2.6) Segment operating income (loss) margin 7.8 % 0.3 % (0.8) % 2023 Compared to 2022 Net sales increased 10.0% in 2023 compared to 2022.
Our average effective borrowing rate was 5.1% in 2022 compared to 4.8% in 2021. Income Tax Benefit 23 Table of Contents Income tax benefit in 2022 was $0.7 million on pre-tax income of $10.7 million, driven by changes in estimates related to prior year federal research and development credits.
The tax benefits of the foreign tax credit and research and development tax credit were offset by the tax expense of foreign earnings, global intangible low-taxed income and non-deductible expenses. Income tax benefit in 2022 was $0.7 million on pre-tax income of $10.7 million, driven by changes in estimates related to prior year federal research and development credits.
See Notes 7 and 8 of the consolidated financial statements included elsewhere herein for additional disclosure on goodwill and indefinite-lived intangibles.
The results of testing as of October 1, 2023, 2022 and 2021 for all reporting units confirmed that the estimated fair value exceeded carrying values, and no impairment existed as of those dates. See Notes 7 and 8 of the consolidated financial statements included elsewhere herein for additional disclosure on goodwill and indefinite-lived intangibles.
Liquidity Overall, we utilized our revolving credit facility in 2022 to fund our higher working capital levels, our capital expenditures, our acquisitions and our other financing activities described above. See Note 9 to the consolidated financial statements included elsewhere herein for further discussion of our financing arrangements.
See Note 9 to the consolidated financial statements included elsewhere herein for further discussion of our financing arrangements.
In addition, the Company sold real estate within the Assembly Components segment for cash proceeds of $0.7 million, resulting in a gain of $0.5 million. The total net gain of $14.7 million was recorded on a separate line in the Consolidated Statements of Operations and was excluded from segment income.
The total net gain of $2.4 million was recorded on a separate line in the Consolidated Statements of Operations and excluded from segment income. Other Components of Pension and Other Postretirement Benefits (“OPEB”) income, Net Other components of pension and OPEB income, net was $2.5 million in 2023 compared to $11.1 million in 2022.
The charges in both 2022 and 2021 related primarily to plant closure and consolidation in the Company's Assembly Components and Engineered Products segments; other cost reduction initiatives in all three business segments; and costs related to acquisitions.
Restructuring and other special charges During 2023, the Company recorded restructuring and other special charges of $6.6 million compared to $17.3 million in 2022. The charges in both periods relate primarily to plant closure and consolidation activities, including severance, and other initiatives in the Company’s Assembly Components and Engineered Products segments.
Subsequent Event On January 27, 2023, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share.
Subsequent Events On January 26, 2024, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend was paid on February 23, 2024, to shareholders of record as of the close of business on February 9, 2024 and resulted in cash payments of $1.6 million.
Segment operating income increased by $2.9 million and segment operating income margin was down 50 basis points in 2022 compared to the prior year.
The sales increase was driven by increased product pricing and new programs implemented during the year. Segment operating income was $33.4 million in 2023 compared to $1.1 million in 2022.
The improvement in segment operating results in 2022 compared to the prior year was driven by profit flow-through from the higher sales levels, higher product pricing and the benefit of profit improvement initiatives, all of which more than offset the impacts of inflation and higher operating costs in 2022.
The improvement in segment operating results in 2023 compared to 2022 was driven by the benefit of profit-improvement initiatives implemented over the 25 Table of Contents past two years, including increased product pricing, and the higher sales levels. Restructuring and other special charges were $1.5 million in 2023 compared to $5.6 million in 2022.
Positive operating cash flow in 2020 was driven by lower working capital levels. Investing Activities Capital expenditures were $26.9 million in 2022, $22.3 million in 2021 and $20.3 million in 2020. These capital expenditures were primarily for growth initiatives, with the majority in our Assembly Components and Engineered Products segments.
The positive cash flow in 2023 was driven by higher income from continuing operations in 2023 and improvement in working capital in 2023. Investing Activities Capital expenditures were $28.2 million in 2023 and $26.9 million in 2022.
In 2021, we paid $5.4 million for the NYK acquisition. See Note 6 to the consolidated financial statements included elsewhere herein for additional information.
See Note 13 to the consolidated financial statements included elsewhere herein for additional information on leases. See Note 14 to the consolidated financial statements included elsewhere herein for additional information of future pension and postretirement benefit obligations.
The increase was driven by strong demand in both our capital equipment business and our forged and machined products business as key end markets continue to recover from COVID-19 pandemic lows. 26 Table of Contents Segment operating income was $14.8 million in 2022 compared to segment operating loss of $12.2 million in 2021.
The increase was driven by strong backlogs at the start of the year and higher customer demand in both our capital equipment business and our forged and machined products business. Segment operating income in 2023 increased $4.3 million, as profit flow-through from higher sales levels and implemented operational improvement initiatives contributed to higher profit and margins in this business.
SG&A Expenses SG&A expenses increased to $162.2 million, or 10.9% of net sales, in 2022 from $155.9 million, or 12.2% of net sales, in 2021. The increase in SG&A expenses was primarily attributable to foreign exchange impacts of a weaker Euro and British Pound and higher personnel costs in 2022 compared to 2021.
Gross margin was 16.4% in 2023 compared to 14.1% in 2022, driven by profit flow-through from the higher sales levels and the impact of our profit-enhancement initiatives, including increased product pricing. SG&A Expenses SG&A expenses increased to $181.5 million, or 10.9% of net sales, in 2023 from $162.2 million, or 10.9% of net sales, in 2022.
Segment operating income in 2022 increased by $3.7 million, and segment operating income margin increased 110 basis points compared to 2021.
Segment operating income increased $13.3 million to $59.0 million in 2023 compared to 2022, and segment operating income margin increased 130 basis points in 2023 compared to a year ago. These increases were driven by the higher sales levels and the impact of profit-enhancement actions, including increased product pricing.
Removed
During the fourth quarter of 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Annual Report on Form 10-K.
Added
Sale of Aluminum Products On December 29, 2023, the Company completed the sale of its Aluminum Products business to Angstrom Automotive Group (“Angstrom”) for up to $50.5 million in cash and promissory notes, plus the assumption of approximately $3 million of finance lease obligations.
Removed
Unless otherwise indicated, amounts and activity in this Annual Report are presented on a continuing operations basis. See Note 4, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for further information.
Added
The total purchase price consisted of a cash down payment of $20.0 million paid to the Company in December 2022; cash of $15.5 million paid to the Company at closing; and promissory notes totaling $15.0 million payable to the Company on December 31, 2024, of which $10.0 million is contingent on the Aluminum Products business attaining certain purchase commitments during 2024.
Removed
On December 30, 2022, we entered into a memorandum of understanding (the “MOU”) with a third party pursuant to which the third party would purchase our Aluminum Products business. The sale of the Aluminum Products business is subject to the entry into a definitive purchase agreement and other customary conditions.
Added
Effective February 29, 2024, the Company acquired all of the outstanding shares of EMA Indutec GmbH (“EMA”), headquartered in Meckesheim, Germany, from the Aichelin Group, headquartered in Modling, Austria. EMA, a leading manufacturer of induction heating equipment and converters, operates through its two locations in Meckesheim, Germany and Beijing, China.
Removed
The dividend was paid on February 24, 2023, to shareholders of record as of the close of business on February 10, 2023 and resulted in cash payments of $1.6 million. 21 Table of Contents RESULTS FROM CONTINUING OPERATIONS During the fourth quarter of 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.
Added
The acquisition strengthens our global induction heating expertise throughout Europe and expands our portfolio of induction equipment brands and our aftermarket service capabilities.
Removed
Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Annual Report on Form 10-K. Unless otherwise indicated, amounts and activity in this Annual Report are presented on a continuing operations basis.
Added
The cash purchase price for the acquisition was approximately $14 million. 22 Table of Contents RESULTS FROM CONTINUING OPERATIONS This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Removed
The improvement in SG&A expenses as a percentage of net sales was driven by the impact of fixed SG&A expenses over the higher revenue base in 2022 compared to 2021. Restructuring and other special charges During 2022, the Company recorded restructuring and other special charges of $17.3 million compared to $20.4 million in 2021.
Added
Discussions of 2021 items and year-over-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
Removed
The total net gain of $2.4 million was recorded on a separate line in the Consolidated Statements of Operations and was excluded from segment income. During 2021, in connection with its plant closure and consolidation initiatives, the Company sold real estate within its Engineered Products segment for cash proceeds of $19.6 million, resulting in a gain of $14.2 million.
Added
The SG&A expense increase was driven by higher selling expenses as a result of higher sales levels; higher costs due to ongoing inflation; and higher employee costs. As a percentage of net sales, SG&A expenses were comparable year-over-year.
Removed
Other Components of Pension Income and Other Postretirement Benefits (“OPEB”) Expense, Net Other components of pension income and OPEB expense, net was $11.1 million in 2022 compared to $9.7 million in 2021. The increase in 2022 was driven by higher returns on plan assets impacting 2022 compared to 2021.
Added
These factors partially offset by lower margins in our forged and machined products business. In addition, restructuring and other special charges were $4.9 million in 2023 and $8.4 million in 2022.
Removed
Income tax benefit in 2021 was $1.0 million on pre-tax loss of $1.1 million, driven by the additional benefit recorded as a result of the net operating loss claimed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. 2021 Compared with 2020 Net Sales Net sales increased 11% to $1,277.0 million in 2021 compared to $1,152.1 million in 2020.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe agreement did not have a material impact on the results of the Company. Our largest exposures to commodity prices relate to metal and natural gas prices, which have fluctuated widely in recent years. We have no commodity swap agreements or forward purchase contracts. 35 Table of Contents
Biggest changeOur largest exposures to commodity prices relate to metal, rubber compound and natural gas prices, which have fluctuated widely in recent years. We have no commodity swap agreements or forward purchase contracts. 34 Table of Contents
A 100-basis point increase in the interest rate would have resulted in an increase in interest expense on these borrowings of approximately $2.9 million for the year ended December 31, 2022. We are exposed to changes in foreign currency exchange rates. Our foreign subsidiaries generally conduct business in local currencies.
A 100-basis point increase in the interest rate would have resulted in an increase in interest expense on these borrowings of approximately $2.6 million for the year ended December 31, 2023. We are exposed to changes in foreign currency exchange rates. Our foreign subsidiaries generally conduct business in local currencies.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk, including changes in interest rates. As of December 31, 2022, we are subject to interest rate risk on borrowings under the floating rate revolving credit facility provided by our Credit Agreement, which consisted of borrowings of $285.3 million at December 31, 2022.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk, including changes in interest rates. As of December 31, 2023, we are subject to interest rate risk on borrowings under the floating rate revolving credit facility provided by our Credit Agreement, which consisted of borrowings of $263.5 million at December 31, 2023.
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. During 2022, we entered into an agreement to hedge foreign currency exchange rates.
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.

Other PKOH 10-K year-over-year comparisons