Park-Ohio Holdings PKOH Form 10-Q filing Q2 FY2026

Part I. Financial Information

Item 1. Condensed Consolidated Financial Statements

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

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

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

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

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

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

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity (Unaudited)

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

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

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

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

NOTE 1 — Basis of Presentation

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and six-month periods ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The balance sheet at December 31, 2025 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

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

NOTE 2 — New Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This guidance requires tabular footnote disclosure of certain operating expenses disaggregated into categories, such as employee compensation, depreciation, and intangible asset amortization, included within each interim and annual income statement’s expense caption, as applicable. The effective date of this guidance is for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are in the process of evaluating the impact of adopting this guidance on our consolidated financial statement disclosures.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The guidance clarifies the scope, form, and content of interim financial statement disclosures and improves the navigability of Topic 270 without changing existing interim reporting requirements. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. We are in the process of evaluating the impact of adopting this guidance on our consolidated financial statement disclosures.

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

NOTE 3 — Revenue

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

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

For over time arrangements, contract assets primarily relate to revenue recognized in advance of billings to customers under long-term contracts accounted for under percentage of completion. These amounts, which totaled $57.2 million and $49.4 million at June 30, 2026 and December 31, 2025, respectively, are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

For over time arrangements, contract liabilities primarily relate to advances or deposits received from the Company’s customers before revenue is recognized. These amounts, which totaled $56.2 million and $56.9 million at June 30, 2026 and December 31, 2025, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

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

Results by business segment were as follows:

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

NOTE 5 — Inventories

Inventories, net consist of the following:

NOTE 6 — Income Taxes

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

In the three months ended June 30, 2026, income tax expense was $2.4 million on pre-tax income from continuing operations of $14.4 million, representing an effective income tax rate of 17%. In the three months ended June 30, 2025, income tax expense was $1.8 million on pre-tax income of $10.7 million, representing an effective income tax rate of 17%. The rates for the three months ended June 30, 2026 and 2025 are lower than the statutory rate due primarily to increased federal research and development tax credit benefit.

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

In the six months ended June 30, 2026, income tax expense was $4.0 million on pre-tax income from continuing operations of $23.9 million, representing an effective income tax rate of 17%. In the six months ended June 30, 2025, income tax expense was $3.7 million on pre-tax income of $20.4 million, representing an effective income tax rate of 18%. The rates for the six months ended June 30, 2026 and 2025 are lower than the statutory rates due primarily to federal research and development tax credit benefit.

NOTE 7 — Financing Arrangements

Debt consists of the following:

In July 2025, Park-Ohio Industries, Inc. (“Park-Ohio”) completed the issuance of $350.0 million aggregate principal amount of 8.500% Senior Secured Notes due 2030 (the “2030 Notes”), in a private offering. The 2030 Notes were priced at 99.50% of par. The 2030 Notes are senior secured obligations of Park-Ohio and are guaranteed (with certain exceptions) by Park-Ohio's domestic subsidiaries that guarantee the debt under the Credit Agreement on a senior secured basis.

In July 2025, Park-Ohio amended its Seventh Amended and Restated Credit Agreement (the “Credit Agreement”), in order to, among other things, (a) extend the maturity date to the fifth anniversary from the closing of the revolving credit facility amendment, (b) permit the issuance of the 2030 Notes and (c) permit the 2030 Notes to be secured by (i) a first-priority lien on the substantially all of the U.S. equipment (including machinery) of the Park-Ohio and the Park-Ohio’s existing and future domestic subsidiaries (the “Guarantors”) that guarantee debt under the Credit Agreement (the “Notes Priority Collateral”) and (ii) a second-priority lien (junior to the Credit Agreement) on substantially all of the U.S. assets of Park-Ohio and the Guarantors (including the 65% pledge of the foreign equity owned by the Guarantors), other than assets constituting Notes Priority Collateral, securing the revolving credit facility (the “ABL Priority Collateral”). The Credit Agreement provides for a revolving credit facility in the amount of $405.0 million, including a $40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $30.0 million. Pursuant to the Credit Agreement, Park-Ohio has the option to increase the availability under the revolving credit facility. As of June 30, 2026, we had borrowing availability of $101.9 million under the Credit Agreement.

We had outstanding bank guarantees and letters of credit under our credit arrangements of $31.7 million at June 30, 2026 and $32.7 million at December 31, 2025.

The following table represents fair value information of the 2030 Notes, classified as Level 1 using estimated quoted market prices.

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

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

NOTE 8 — Stock-Based Compensation

A summary of restricted share activity for the six months ended June 30, 2026 is as follows:

(a) - Included in this amount are 4,608 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Income. Total stock-based compensation expense was $1.4 million and $1.3 million for the three months ended June 30, 2026 and 2025, respectively. Total stock-based compensation expense was $2.8 million for both the six months ended June 30, 2026 and 2025. As of June 30, 2026, there was $5.5 million of unrecognized compensation cost related to non-vested stock-based compensation, which is expected to be recognized over a weighted-average period of 1.5 years.

NOTE 9 — Commitments and Contingencies

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

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

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

In addition to the routine lawsuits and asserted claims noted above, we are also a co-defendant in 120 cases asserting claims on behalf of 163 plaintiffs alleging personal injury as a result of exposure to asbestos. In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. Historically, we have been dismissed from asbestos cases. We intend to vigorously defend these cases and believe we will continue to be successful in being dismissed from such cases.

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

NOTE 10 — Pension and Postretirement Benefits

The components of pension and other postretirement benefits income, net recognized for the three and six months ended June 30, 2026 and 2025 were as follows:

NOTE 11 — Accumulated Other Comprehensive Loss

The components of and changes in accumulated other comprehensive loss for the three and six months ended June 30, 2026 and 2025 were as follows:

Park-Ohio Holdings Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2026

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

NOTE 12 — Weighted-Average Number of Shares Used in Computing Earnings Per Share

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

Anti-dilutive restricted stock awards, if any, are excluded from the computation of diluted earnings per share. There were no anti-dilutive shares for both the three and six months ended June 30, 2026 and 2025.

NOTE 13 — Subsequent Events

On July 17, 2026, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on August 14, 2026 to shareholders of record as of the close of business on July 31, 2026 and will result in a cash outlay of approximately $1.8 million.

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

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

EXECUTIVE OVERVIEW

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

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

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

Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading systems, generators and transformers, inverters and forged and machined products. Engineered Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Engineered Products are OEMs, sub-assemblers and end users in the following industries: power generation and energy; general steel processing; automotive and heavy vehicles; aerospace and defense; semiconductor; precious metals and industrial materials; oil and gas; general industrial; and rail.

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

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

RESULTS OF CONTINUING OPERATIONS

Three Months Ended June 30, 2026 Compared with Three Months Ended June 30, 2025

Net Sales

Net sales increased 10.0% to $440.1 million in the second quarter of 2026 compared to $400.1 million in the same period in 2025. This increase was primarily due to higher demand in each of our business segments.

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

Cost of Sales and Gross Margin

Cost of sales increased to $361.2 million in the second quarter of 2026 compared to $331.9 million in the same period in 2025. The increase in cost of sales was primarily due to the increase in net sales in the 2026 period compared to the corresponding period in 2025. Gross margin was 17.9% in the 2026 period compared to 17.0% in the corresponding 2025 period, with the increase driven by the profit flow-through from the higher net sales and ongoing profit-enhancement activities throughout the company.

SG&A Expenses

SG&A expenses were $53.1 million in the second quarter of 2026 compared to $46.8 million in the comparable period in 2025. As a percentage of net sales, SG&A expenses were 12.1% in the second quarter of 2026 compared to 11.7% in corresponding 2025 period. The increases were driven by ongoing inflation, higher employee costs and support for the higher sales levels.

Restructuring and Other Special Charges

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

During the second quarter of 2025, the Company recorded charges of $1.3 million in connection with restructuring and other special charges, which included $0.4 million in our Supply Technologies segment, $0.5 million in our Assembly Components segment and $0.4 million in our Engineered Products segment.

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

Other components of pension and OPEB income, net was $2.2 million in the quarter ended June 30, 2026 compared to $1.8 million in the corresponding quarter in 2025. This increase was due to higher return on plan assets in the 2026 period compared to the 2025 period.

Interest Expense, Net

Interest expense, net was $12.3 million in the second quarter of 2026 compared to $11.2 million in the 2025 second quarter. The increase was due primarily to the August 2025 refinancing of all of our outstanding 6.625% Senior Notes due 2027 (the “2027 Notes”), which resulted in a higher interest rate on our 8.500% Senior Secured Notes due 2030 (the “2030 Notes”) compared to the 2027 Notes. This adverse interest impact was partially offset by lower interest rates on our revolving credit facility in the 2026 second quarter compared to the same quarter a year ago.

Income Tax Expense

In the three months ended June 30, 2026, income tax expense was $2.4 million on pre-tax income from continuing operations of $14.4 million, representing an effective income tax rate of 17%. In the three months ended June 30, 2025, income tax expense was $1.8 million on pre-tax income of $10.7 million, representing an effective income tax rate of 17%. The rates for the three months ended June 30, 2026 and 2025 are lower than the statutory rate due primarily to increased federal research and development tax credit benefit.

RESULTS OF CONTINUING OPERATIONS

Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025

Net Sales

Net sales increased 6.9% to $861.1 million in the first six months of 2026 compared to $805.5 million in the same period in 2025. This increase was primarily due to higher customer demand in each of our business segments.

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

Cost of Sales and Gross Margin

Cost of sales increased to $709.5 million in the first six months of 2026 compared to $669.2 million in the same period in 2025, driven by the increase in net sales. Gross margin was 17.6% in the 2026 period compared to 16.9% in the corresponding 2025 period, with the year-over-year gross margin increase driven by the profit flow-through from the higher sales and ongoing profit-enhancement activities throughout the company.

SG&A Expenses

SG&A expenses were $104.8 million in the first six months of 2026, compared to $95.0 million in the same period in 2025. As a percentage of net sales, SG&A expenses were 12.2% in the first six months of 2026 compared to 11.8% in the comparable period in 2025. The increases were driven by ongoing inflation, higher employee costs and support for the higher sales levels.

Restructuring and Other Special Charges

During the first six months of 2026, the Company recorded $2.6 million in connection with restructuring and other special charges, which included $0.3 million in our Supply Technologies segment, $0.7 million in our Assembly Components segment, $1.1 million in our Engineered Products segment and $0.5 million at Corporate.

During the first six months of 2025, the Company recorded $2.3 million in connection with restructuring and other special charges, which included $0.4 million in our Supply Technologies segment, $0.7 million in our Assembly Components segment and $1.2 million in our Engineered Products segment.

Other Components of Pension and OPEB Income, Net

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

Interest Expense, Net

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

Income Tax Expense

In the six months ended June 30, 2026, income tax expense was $4.0 million on pre-tax income from continuing operations of $23.9 million, representing an effective income tax rate of 17%. In the six months ended June 30, 2025, income tax expense was $3.7 million on pre-tax income of $20.4 million, representing an effective income tax rate of 18%. The rates for the six months ended June 30, 2026 and 2025 are lower than the statutory rates due primarily to federal research and development tax credit benefit.

SEGMENT RESULTS

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

Supply Technologies Segment

Three months ended June 30:

Net sales increased 11.9% in the three months ended June 30, 2026 compared to the 2025 period due primarily to higher customer demand in certain end markets, including the semiconductor, AI data center, powersports, aerospace and defense, heavy-duty truck and agricultural and industrial equipment end markets. Sales in our fastener manufacturing business were up 5.8% year-over-year, driven by higher customer demand for our proprietary products, particularly in Asia.

Segment operating income was $18.5 million in the 2026 period compared to $16.3 million in the 2025 period. Operating income margin was 8.8% in the 2026 quarter compared to 8.7% in the 2025 quarter. The increases reflect profit flow-through from the higher sales, continued sales growth of our proprietary products in our fastener manufacturing business, various profit-enhancement initiatives and our ongoing investments in automation initiatives designed to improve productivity and reduce operating costs across the business.

Six months ended June 30:

Net sales increased 7.9% in the six months ended June 30, 2026 compared to the 2025 period due primarily to higher customer demand in certain end markets in our supply chain business, including the semiconductor, AI data center, powersports, aerospace and defense, heavy-duty truck and agricultural and industrial equipment end markets. Sales in our fastener manufacturing business were up 1.9% year-over-year.

Segment operating income was $36.0 million in the 2026 period compared to $34.1 million in the 2025 period. Operating income margin was 8.9% in the six months ended June 30, 2026 compared to 9.1% in the 2025 period. Segment operating income margin was 20 basis points lower in the 2026 period compared to the same period a year ago due primarily to higher tariffs in the 2026 period, which impacted gross margins.

Assembly Components Segment

Three months ended June 30:

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

Segment operating income in the 2026 period decreased by $0.3 million, and segment operating income margin decreased by 70 basis points, compared to the corresponding period of 2025. The decreases in operating income and margin in the second quarter of 2026 compared to the 2025 period were due to unfavorable mix.

Six months ended June 30:

Net sales were $201.6 million, or 5.0% higher, in the six months ended June 30, 2026 compared to the 2025 period. The increase was due primarily to increased unit volumes on new business launched throughout 2025.

Segment operating income decreased to $10.2 million in the six months ended June 30, 2026 compared to $10.9 million in the 2025 period, a decrease of 6.4%, and margins decreased by 60 basis points. The decreases were due to unfavorable mix.

Engineered Products Segment

Three months ended June 30:

Net sales were $129.4 million in the 2026 second quarter, an increase of 9.8%, compared to $117.9 million in last year's second quarter. The increase was driven by higher demand across defense, electrical steel processing, oil and gas, agriculture, AI data center, semiconductor and other general industrial end markets. In our forged and machined products group, second quarter 2026 sales were up 25% compared to the same quarter a year ago, driven by higher customer demand.

Segment operating income in the 2026 period increased by $3.0 million compared to the corresponding 2025 period, and operating margins were up 190 basis points compared to the corresponding 2025 period. The increases in the 2026 period were driven by the higher sales and improved operational efficiencies in both our capital equipment and forged and machined products group.

Six months ended June 30:

Net sales were $255.1 million in the six months ended June 30, 2026 compared to $238.6 million in comparable 2025 period, up 6.9%. The year-over-year increase was driven by higher customer demand across defense, electrical steel processing, oil and gas, agriculture, AI data center, semiconductor and other general industrial end markets. In our forged and machined products group, 2026 sales were up 15% compared to the same quarter a year ago, driven by higher customer demand.

Segment operating income in the 2026 period increased by $4.9 million compared to the corresponding 2025 period, driven by higher sales and improved operational efficiencies in both our capital equipment and forged and machined products group.

Liquidity and Capital Resources

The following table summarizes the major components of cash flow:

Operating Activities

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

Investing Activities

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

Financing Activities

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

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

Liquidity

Our liquidity needs are primarily for working capital, capital expenditures, dividends and acquisitions. Our primary sources of liquidity have been funds provided by operations, funds available from existing bank credit arrangements and the sale of our debt securities. Our existing financial resources (working capital, available bank borrowing arrangements and our at-the-market program) and anticipated cash flow from operations are expected to be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future thereafter, including but not limited to our ability to maintain current operations and fund capital expenditure requirements, service our debt, pursue acquisitions, pay dividends and repurchase common shares. For more information about our at the market program and other sales of common stock, see Note 12, “Weighted-Average Number of Shares Used in Computing Earnings Per Share,” to the condensed consolidated financial statements, included elsewhere herein.

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

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

The Company has two components to its assertion regarding reinvestment of foreign earnings outside of the United States. First, for all foreign subsidiaries except RB&W Corporation of Canada (“RB&W”), all earnings are permanently reinvested outside of the United States. Second, for RB&W, dividend distributions may be made, but only to the extent of current earnings in excess of cash required to fund its business operations; all accumulated earnings are permanently reinvested.

Senior Notes

In July 2025, Park-Ohio completed the sale, in a private offering, of $350.0 million aggregate principal amount of the 2030 Notes bearing interest 8.500%. The net proceeds from the offering of the 2030 Notes, along with cash on hand, were used to redeem in full the 2027 Notes and pay related fees and expenses. Interest on the Notes is payable semi-annually in arrears on January 31 and July 31 of each year.

Credit Agreement

In July 2025, Park-Ohio amended its Seventh Amended and Restated Credit Agreement (the “Credit Agreement”), in order to, among other things, (a) extend the maturity date to the fifth anniversary from the closing of the revolving credit facility amendment, (b) permit the issuance of the 2030 Notes and (c) permit the 2030 Notes to be secured by (i) a first-priority lien on the substantially all of the U.S. equipment (including machinery) of the Park-Ohio and the Park-Ohio’s existing and future domestic subsidiaries (the “Guarantors”) that guarantee debt under the Credit Agreement (the “Notes Priority Collateral”) and (ii) a second-priority lien (junior to the Credit Agreement) on substantially all of the U.S. assets of Park-Ohio and the Guarantors (including the 65% pledge of the foreign equity owned by the Guarantors), other than assets constituting Notes Priority Collateral, securing the revolving credit facility (the “ABL Priority Collateral”). The Credit Agreement provides for a revolving credit facility in the amount of $405.0 million, including a $40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $30.0 million. Pursuant to the Credit Agreement, Park-Ohio has the option to increase the availability under the revolving credit facility.

Finance Leases

As of June 30, 2026, the Company had finance leases totaling $15.3 million.

Covenants

The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on (1) our calculated availability under the Credit Agreement and (2) if such calculated availability decreases below $50.625 million, our ability to meet a debt service ratio covenant. If our calculated availability is less than $50.625 million, our debt service coverage ratio must be greater than 1.0. At June 30, 2026, our calculated availability under the Credit Agreement was $101.9 million; therefore, the debt service ratio covenant did not apply.

Failure to maintain calculated availability of at least $50.625 million and meet the debt service ratio covenant could materially impact the availability and interest rate of future borrowings. Our debt service coverage ratio could be materially impacted by negative economic trends. To make certain permitted payments as defined under the Credit Agreement, including but not limited to acquisitions and dividends, we must meet defined availability thresholds ranging from $37.5 million to $50.625 million, and a defined debt service coverage ratio of 1.15.

As our calculated availability under the Credit Agreement was above $50.625 million, we were also in compliance with the other covenants contained in the revolving credit facility as of June 30, 2026. While we expect to remain in compliance throughout 2026, declines in sales volumes in the future, including due to the current macroeconomic conditions, could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may be unable to pay their accounts payable to us on a timely basis or at all, which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.

Dividends

The Company declared and paid dividends to shareholders of $3.6 million during the six months ended June 30, 2026. On July 17, 2026, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on August 14, 2026 to shareholders of record as of the close of business on July 31, 2026 and will result in a cash outlay of approximately $1.8 million. Although we currently intend to pay a quarterly dividend on an ongoing basis, all future dividend declarations will be at the discretion of our Board of Directors and dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors may deem relevant.

Seasonality; Variability of Operating Results

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

Critical Accounting Policies

Our critical accounting policies are described in "Item. 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations," and in the notes to our consolidated financial statements for the year ended December 31, 2025, both contained in our Annual Report on Form 10-K for the year ended December 31, 2025. There were no new critical accounting policies or updates to existing critical accounting policies as a result of new accounting pronouncements in this Quarterly Report on Form 10-Q.

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

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk, including changes in interest rates. As of June 30, 2026, we are subject to interest rate risk on borrowings under the floating rate revolving credit facility provided by our Credit Agreement. A 100-basis-point increase in the interest rate would have resulted in an increase in interest expense on these borrowings of approximately $1.4 million during the six-month period ended June 30, 2026.

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

Our largest exposures to commodity prices relate to metal and rubber compounds, which have fluctuated widely in recent years. In 2026 and 2025, we entered into agreements to hedge foreign currency. These agreements did not have a material impact on the results of the Company. We have no other commodity swap agreements or forward purchase contracts.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

Under the supervision of and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting.

During the quarter ended June 30, 2026, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

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

In addition to the routine lawsuits and asserted claims noted above, we were a party to the lawsuits and legal proceedings described below as of June 30, 2026:

We were a co-defendant in 120 cases asserting claims on behalf of 163 plaintiffs alleging personal injury as a result of exposure to asbestos. These asbestos cases generally relate to production and sale of asbestos-containing products and allege various theories of liability, including negligence, gross negligence and strict liability, and seek compensatory and, in some cases, punitive damages.

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

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

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

Item 1A. Risk Factors

There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Investors should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

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

The table below summarizes the information regarding our repurchases of the Company's common stock during the quarter ended June 30, 2026.

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

(2) Consists of an aggregate total of 58,471 shares of common stock we acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient withholding tax liabilities.

Item 5. Other Information

On June 29, 2026, Robert D. Vilsack, the Company's Chief Legal and Administrative Officer, Corporate Secretary, entered into a written plan for the sale of up to 40,000 shares of the Company’s common stock. The plan is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and is scheduled to terminate no later than August 16, 2027. Other than Mr. Vilsack, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K) during the quarter ended June 30, 2026.

Item 6. Exhibits

The following exhibits are included herein: