Park-Ohio Holdings Corporation
11/05/2026 | Press release | Distributed by Public on 11/05/2026 12:34
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
| 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 provide global OEMs and industrial customers with supply-chain management services, engineered production components, and industrial equipment and related aftermarket support. Our businesses include customized component sourcing and fulfillment, engineered fastening and fluid-routing products, thermal-processing and power-management equipment, and specialty forged and machined products. We report these activities through three segments: Supply Technologies, Assembly Components and Engineered Products.
Supply Technologies provides OEM customers with customized supply-chain management programs, including global sourcing, quality assurance, inventory planning, kitting, and point-of-use delivery of components used in manufacturing. These programs are supported by engineering and design assistance and other value-added services. The segment also designs and manufactures engineered specialty fasteners and other products, including proprietary fastening technologies. Customers span transportation, semiconductor equipment, electrical distribution, aerospace and defense, and other industrial markets.
Assembly Components designs and manufactures engineered fluid-routing products and assemblies, including fuel-delivery systems, hose and tubing products, and molded rubber and plastic components. Its manufacturing capabilities support fluid transfer and thermal-management applications, principally for automotive OEM platforms and related transportation markets. These capabilities may also support additional industrial applications over time.
Engineered Products designs and manufactures industrial thermal-processing and power-management equipment, specialty forged and machined products, and related aftermarket parts and services. Equipment includes induction heating and melting systems, power supplies, transformers, inverters and specialized forming equipment. The segment serves aerospace and defense, electrical steel and power infrastructure, semiconductor and materials processing, oil and gas, power generation and other industrial applications. Its aftermarket activities support customers' installed equipment alongside new equipment demand.
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 included in 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 September 30, 2026 Compared with Three Months Ended September 30, 2025
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (Dollars in millions, except per share data) | |||||||||||||||||||||||
| Net sales | $ | 458.5 | $ | 398.6 | $ | 59.9 | 15 | % | |||||||||||||||
| Cost of sales | 376.3 | 332.0 | 44.3 | 13 | % | ||||||||||||||||||
|
Selling, general and administrative ("SG&A") expenses |
54.2 | 46.5 | 7.7 | 17 | % | ||||||||||||||||||
| SG&A expenses as a percentage of net sales | 11.8 | % | 11.7 | % | |||||||||||||||||||
| Restructuring and other special charges | 1.4 | 2.8 | (1.4) | (50) | % | ||||||||||||||||||
| Operating income | 26.6 | 17.3 | 9.3 | 54 | % | ||||||||||||||||||
| Other components of pension and other postretirement benefits income, net | 2.1 | 1.7 | 0.4 | 24 | % | ||||||||||||||||||
| Interest expense, net | (12.2) | (12.5) | 0.3 | (2) | % | ||||||||||||||||||
| Loss on extinguishment of debt | - | (2.0) | 2.0 | * | |||||||||||||||||||
| Income from continuing operations before income taxes | 16.5 | 4.5 | 12.0 | * | |||||||||||||||||||
| Income tax (expense) benefit | (3.1) | 0.4 | (3.5) | * | |||||||||||||||||||
| Income from continuing operations | 13.4 | 4.9 | 8.5 | * | |||||||||||||||||||
| Loss attributable to noncontrolling interests | 0.4 | 0.6 | (0.2) | (33) | % | ||||||||||||||||||
| Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders | $ | 13.8 | $ | 5.5 | $ | 8.3 | * | ||||||||||||||||
| Income per common share from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders: | |||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Continuing operations | $ | 0.99 | $ | 0.40 | $ | 0.59 | * | ||||||||||||||||
| Diluted: | |||||||||||||||||||||||
| Continuing operations | $ | 0.97 | $ | 0.39 | $ | 0.58 | * | ||||||||||||||||
* Not meaningful
Net Sales
Net sales increased 15.0% to $458.5 million in the third quarter of 2026 compared to $398.6 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 September 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 $376.3 million in the third quarter of 2026 compared to $332.0 million in the same period in 2025. The increase in cost of sales was due to the increase in net sales in the 2026 period compared to the corresponding period in 2025. Gross margin increased to 17.9% in the third quarter of 2026 from 16.7% in the corresponding 2025 period. The improvement reflected profit contribution from higher sales and continued operating initiatives across the business, including productivity improvements, automation and improved manufacturing execution.
SG&A Expenses
SG&A expenses were $54.2 million in the third quarter of 2026 compared to $46.5 million in the comparable period in 2025. As a percentage of net sales, SG&A expenses were 11.8% in the third 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 third quarter of 2026, the Company recorded charges of $1.4 million in connection with restructuring and other special charges, which included $0.4 million in our Supply Technologies segment, $0.1 million in our Assembly Components segment, $0.8 million in our Engineered Products segment and $0.1 million at Corporate.
During the third quarter of 2025, the Company recorded charges of $2.8 million in connection with restructuring and other special charges, which included $1.0 million in our Supply Technologies segment, $1.3 million in our Assembly Components segment, $0.3 million in our Engineered Products segment and $0.2 million at Corporate.
Other Components of Pension and Other Postretirement Benefits ("OPEB") Income, Net
Other components of pension and OPEB income, net was $2.1 million in the quarter ended September 30, 2026 compared to $1.7 million in the corresponding quarter in 2025. This increase was due to a higher return on plan assets in the 2026 period compared to the 2025 period.
Interest Expense, Net
Interest expense, net was $12.2 million in the third quarter of 2026 compared to $12.5 million in the 2025 third quarter. The decrease was due primarily to lower interest rates and lower borrowings on our revolving credit facility in the 2026 third quarter compared to the same quarter a year ago.
Income Tax Expense/Benefit
In the three months ended September 30, 2026, income tax expense was $3.1 million on pre-tax income from continuing operations of $16.5 million, representing an effective income tax rate of 19%. The effective rate for the three-month period is lower than the U.S. statutory rate due primarily to federal research and development tax credit benefit. In the three months ended September 30, 2025, income tax benefit was $0.4 million on pre-tax income of $4.5 million. The tax benefit in the three-month period is primarily due to federal research and development tax credit benefit.
RESULTS OF CONTINUING OPERATIONS
Nine Months Ended September 30, 2026 Compared with Nine Months Ended September 30, 2025
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (Dollars in millions, except per share data) | |||||||||||||||||||||||
| Net sales | $ | 1,319.6 | $ | 1,204.1 | $ | 115.5 | 9.6 | % | |||||||||||||||
| Cost of sales | 1,085.8 | 1,001.2 | 84.6 | 8.4 | % | ||||||||||||||||||
| SG&A expenses | 159.0 | 141.5 | 17.5 | 12.4 | % | ||||||||||||||||||
| SG&A expenses as a percentage of net sales | 12.0 | % | 11.8 | % | |||||||||||||||||||
| Restructuring and other special charges | 4.0 | 5.1 | (1.1) | (21.6) | % | ||||||||||||||||||
| Operating income | 70.8 | 56.3 | 14.5 | 25.8 | % | ||||||||||||||||||
|
Other components of pension and other postretirement benefits income, net
|
6.4 | 5.3 | 1.1 | 20.8 | % | ||||||||||||||||||
| Interest expense, net | (36.8) | (34.7) | (2.1) | 6.1 | % | ||||||||||||||||||
| Loss on extinguishment of debt | - | (2.0) | 2.0 | * | |||||||||||||||||||
| Income from continuing operations before income taxes | 40.4 | 24.9 | 15.5 | 62.2 | % | ||||||||||||||||||
| Income tax expense | (7.1) | (3.3) | (3.8) | * | |||||||||||||||||||
| Income from continuing operations | 33.3 | 21.6 | 11.7 | 54.2 | % | ||||||||||||||||||
| Loss attributable to noncontrolling interests | 0.9 | 1.7 | (0.8) | (47.1) | % | ||||||||||||||||||
| Income from continuing operations attributable to Park-Ohio Holdings Corp. common shareholders | $ | 34.2 | $ | 23.3 | $ | 10.9 | 46.8 | % | |||||||||||||||
| Earnings from continuing operations per common share attributable to Park-Ohio Holdings Corp. common shareholders: | |||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Continuing operations | $ | 2.46 | $ | 1.69 | $ | 0.77 | 45.6 | % | |||||||||||||||
| Diluted: | |||||||||||||||||||||||
| Continuing operations | $ | 2.41 | $ | 1.67 | $ | 0.74 | 44.3 | % | |||||||||||||||
Net Sales
Net sales increased 9.6% to $1,319.6 million in the first nine months of 2026 compared to $1,204.1 million in the same period in 2025. This increase was primarily due to higher customer demand in each of our business segments.
The factors explaining the changes in segment net sales for the nine months ended September 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 $1,085.8 million in the first nine months of 2026 compared to $1,001.2 million in the same period in 2025, driven by the increase in net sales. Gross margin was 17.7% 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 $159.0 million in the first nine months of 2026, compared to $141.5 million in the same period in 2025. As a percentage of net sales, SG&A expenses were 12.0% in the first nine 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 nine months of 2026, the Company recorded $4.0 million in connection with restructuring and other special charges, which included $0.7 million in our Supply Technologies segment, $0.8 million in our Assembly Components segment, $1.9 million in our Engineered Products segment and $0.6 million at Corporate.
During the first nine months of 2025, the Company recorded $5.1 million in connection with restructuring and other special charges, which included $1.4 million in our Supply Technologies segment, $2.0 million in our Assembly Components segment, $1.5 million in our Engineered Products segment and $0.2 million at Corporate.
Other Components of Pension and OPEB Income, Net
Other components of pension and OPEB income, net was $6.4 million in the first nine months of 2026 compared to $5.3 million in the corresponding period in 2025. This increase was due to a higher return on plan assets in 2026 compared to 2025.
Interest Expense, Net
Interest expense, net was $36.8 million in the first nine months of 2026 compared to $34.7 million in the 2025 period. The increase was due primarily to the higher rate on our 8.500% Senior Secured Notes due 2030 (the "2030 Notes") compared to our 6.625% Senior Notes due 2027 (the "2027 Notes") and higher average outstanding debt balances in the 2026 period compared to the same period a year ago, partially offset by lower rates on our revolving credit facility.
Income Tax Expense
In the nine months ended September 30, 2026, income tax expense was $7.1 million on pre-tax income from continuing operations of $40.4 million, representing an effective income tax rate of 18%. In the nine months ended September 30, 2025, income tax expense was $3.3 million on pre-tax income of $24.9 million, representing an effective income tax rate of 13%. The rates for the nine months ended September 30, 2026 and 2025 are lower than the U.S. statutory rate 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Net sales | $ | 225.2 | $ | 185.5 | $ | 629.6 | $ | 560.4 | |||||||||||||||
| Segment operating income | $ | 21.4 | $ | 17.4 | $ | 57.4 | $ | 51.5 | |||||||||||||||
| Segment operating income margin | 9.5 | % | 9.4 | % | 9.1 | % | 9.2 | % | |||||||||||||||
Three months ended September 30:
Net sales increased 21.4% to $225.2 million, primarily reflecting higher demand for the supply-chain management business across semiconductor equipment, AI data-center infrastructure, heavy-duty truck, powersports, and aerospace and defense markets. Sales in the engineered fastener manufacturing business increased 7.9%, including demand for proprietary fastener products across multiple regions.
Segment operating income increased to $21.4 million from $17.4 million, while operating margin was 9.5% compared with 9.4% a year ago. Higher volume supported operating-income growth, alongside ongoing automation and productivity programs.
Nine months ended September 30:
Net sales increased 12.3% in the nine months ended September 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, heavy-duty truck, powersports, aerospace and defense and agricultural and industrial equipment end markets. Sales in our fastener manufacturing business were up 3.9% year-over-year.
Segment operating income was $57.4 million in the 2026 period compared to $51.5 million in the 2025 period. Operating income margin was 9.1% in the nine months ended September 30, 2026 compared to 9.2% in the 2025 period.
Assembly Components Segment
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Net sales | $ | 103.6 | $ | 97.0 | $ | 305.2 | $ | 289.0 | |||||||||||||||
| Segment operating income | $ | 5.6 | $ | 4.7 | $ | 15.8 | $ | 15.6 | |||||||||||||||
| Segment operating income margin | 5.4 | % | 4.8 | % | 5.2 | % | 5.4 | % | |||||||||||||||
Three months ended September 30:
Net sales increased 6.8% to $103.6 million, primarily from higher volumes on automotive programs launched in 2025.
Segment operating income rose to $5.6 million from $4.7 million, with operating margin increasing to 5.4% from 4.8%. The increase reflected higher sales and the comparison with restructuring costs in the prior-year period. The segment continues to focus on program execution and productivity across its fluid-routing and related component businesses.
Nine months ended September 30:
Net sales were $305.2 million, or 5.6% higher, in the nine months ended September 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 increased to $15.8 million in the nine months ended September 30, 2026 compared to $15.6 million in the 2025 period, due to higher sales levels in the 2026 period and restructuring charges in the 2025 period, offset by unfavorable mix in the 2026 period compared to the 2025 period.
Engineered Products Segment
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Net sales | $ | 129.7 | $ | 116.1 | $ | 384.8 | $ | 354.7 | |||||||||||||||
| Segment operating income | $ | 9.1 | $ | 3.4 | $ | 23.8 | $ | 13.2 | |||||||||||||||
| Segment operating income margin | 7.0 | % | 2.9 | % | 6.2 | % | 3.7 | % | |||||||||||||||
Three months ended September 30:
Net sales increased 11.7% to $129.7 million, reflecting demand across defense, electrical steel processing, oil and gas, agriculture, AI data-center infrastructure, semiconductor and other industrial markets. Forged and machined products sales increased 33% year over year.
Segment operating income increased to $9.1 million from $3.4 million, and operating margin improved to 7.0% from 2.9%, reflecting higher sales and improved operating execution in capital equipment and forged products. Demand for aftermarket parts and services also contributed to the segment's activity.
Nine months ended September 30:
Net sales were $384.8 million in the nine months ended September 30, 2026 compared to $354.7 million in comparable 2025 period, up 8.5%. 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 21% compared to the corresponding 2025 period, driven by higher customer demand.
Segment operating income in the 2026 period increased by $10.6 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:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| Net cash (used in) provided by: | (In millions) | ||||||||||||||||
| Operating activities | $ | 16.9 | $ | (6.4) | $ | 23.3 | |||||||||||
| Investing activities | (31.9) | (27.6) | (4.3) | ||||||||||||||
| Financing activities | 29.7 | 30.1 | (0.4) | ||||||||||||||
| Discontinued operations | (0.3) | (0.5) | 0.2 | ||||||||||||||
| Effect of exchange rate changes on cash | (0.3) | 2.1 | (2.4) | ||||||||||||||
| Increase in cash and cash equivalents | $ | 14.1 | $ | (2.3) | $ | 16.4 | |||||||||||
Operating Activities
In the nine months ended September 30, 2026, we generated cash of $16.9 million compared to a use of $6.4 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 totaled $31.9 million in the first nine months of 2026, compared with $27.6 million in the prior-year period, and supported capacity expansion, automation, existing operations and information-system implementations.
Financing Activities
During the nine months ended September 30, 2026, we used net debt borrowings of $38.5 million to fund capital expenditures and working capital needs. In addition, the Company made cash dividend payments to shareholders totaling $5.4 million and payments of withholding taxes on share awards of $3.4 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.
As of September 30, 2026, we had total liquidity of $194.9 million, which included $58.9 million of cash and cash equivalents and $136.0 million of unused borrowing availability under our credit agreements, which includes $10.6 million of suppressed availability.
The Company had cash and cash equivalents held by foreign subsidiaries of $48.0 million at September 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 at 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 substantially all of the U.S. equipment (including machinery) of Park-Ohio and its 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 September 30, 2026, the Company had finance leases totaling $14.5 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 September 30, 2026, our calculated availability under the Credit Agreement was $94.7 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 September 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 $5.4 million during the nine months ended September 30, 2026. On October 30, 2026, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on November 27, 2026 to shareholders of record as of the close of business on November 13, 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.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words "believes", "anticipates", "plans", "expects", "intends", "estimates" and similar expressions are intended to identify forward-looking statements.
These forward-looking statements, including statements regarding future performance of the Company, that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: the outcome of our strategic review of the SSP 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; 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, or geopolitical unrest; 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. Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved.
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