PKOH - Earnings call transcript Q4 2017 | Park-Ohio Holdings Corp.

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Operator

Good morning, and welcome to the Park-Ohio Fourth Quarter and Full-Year 2017 Results Conference Call. At this time, all participants are in a listen-only mode. After the presentation, the company will conduct a question-and-answer session. Today's conference is also being recorded.

If you have any objections, you may disconnect at this time.

Litigation I today's remind statements call in Private started, statements that as get XXXX. the on of made may Securities we want everyone to certain defined Before Act Reform be forward-looking These forward-looking and may those actual cause from to to materially uncertainties differ that results projected. are statements subject risks the press XX-K, of as with in well relevant may which A X, as filed SEC. and list March be found company's XXXX release uncertainties risks in was on the earnings the XXXX

company and are the Generally adjusted of and as EBITDA as earnings Additionally, under may adjusted EBITDA discuss defined, performance Accepted Principles. as not earnings Accounting defined as measures

as income CEO. earnings the reconciliation a income Crawford, common conference now attributable I of net earnings EBITDA to Chairman Edward and adjusted Park-Ohio would Mr. turn of please company's the proceed, to defined, For release. like refer recent net over for and to to Mr. Crawford. reconciliation to Please to as shareholders

Edward Crawford

Good gentlemen. Matthew Crawford, ladies you. introduce and of COO Well, and President to Park-Ohio's Matt? Park-Ohio. Welcome conference I'd now the thank morning call. like to

Matt Crawford

you thank and was Overall, much. for Park-Ohio. morning, Good a good XXXX year very

company completed improved Our plan, long-term we our position We several for the actions internal year-over-year. so success. to operating met operating performance

year-over-year include, a XXXX you'll XX%. rate we in and of expect achieved EBITDA revenue, by by we're of As significant growth more, X% little during adjusted excited earnings sales hear billion growth Specific XX%. EBITDA. operating later, bit for a representing achievement and XXXX We income, grew $X.X and

capacity million and unused our credit hand. almost refinanced operating XXst, track terms. delivering our million; flows on of facility and senior over of we $XXX At favorable and continued cash had of December notes availability strong revolving we more borrowing $XX cash We record creating expanded $XX

XX% acquisitions acquisition strategic focused over And of We strategic complement our XXXX making expansion. to earnings which on capital, the share we nearly during completed markets, is announced per customers. $XX invested we year, XX% this businesses earnings yesterday and a with much product Forge. growth of business expanded Canton already XXXX And to offerings, represents adjusted continued in Drop existing that XXXX. guidance We

percent Going back implemented ago. $X.X and of increased the growth, acquisitions was in sales to the with just Gross by increase throughout organic to which by XX.X% acquired was initiatives were to an and businesses. net increase over compared XXXX, a billion, again, XX% a to increased in SG&A full-year operational year. XX.X% due a improvement combination the sales X%. SG&A increase of X%, XXXX from This which our the volumes results, associated year contributed margins sales as in basis driven XXXX, was XX due expenses points to increase year-over-year of

at in relatively SG&A million to XX%. expense tax was However, consistent just the Income U.S. of negatively was as reform. XXXX percent sales, of impacted related tax $X.X by a over expense

amounts per year compared per These impact of Excluding income $X.XX on effective Net $X.XX per million, $XXX EPS to share full-year rate an XX% adjusted XX.X%. on been earnings share or for would've this full-year or adjusted XXXX an share to XXXX share $X.XX was in up diluted On tax an compared X% the diluted per the basis. was EBITDA in $X.XX $XXX basis. XXXX for higher. adjusted was a basis ago.

compared a margin Interest of equal results a X%, contributed expense million, cost as and volumes for to absorption due XXXX SG&A improved of up the was was the XX%, to XX% XXXX, operating increased higher XX% increase XXX due combination specifically, sales XXXX's the which and the were to approximately Gross expense quarter was quarter prior to our in which XX.X% Looking sales XX%. in XXXX. fourth many quarter. acquisitions basis Change percent of was year. in growth, was in facilities. organic primarily at in sales which points, fourth $XXX from to

While adjust tax income recorded average which U.S. our tax was acquisition by deferred impacted notes to expense our tax to reform. our liability from tax to million $XX.X the borrowings U.S. average borrowing XX% the Income We benefit quarter offset rate the higher transition of new million, net outstanding of the one-time of was $X.X an principally. by XX%. fairly of tax partially related of senior expense refinancing by and caused tax debt million related was a driven $XX expense to consistent a corporate the rate fourth net in increase year-over-year, was GH by tax negatively a

would've Excluding basis or XXXX. adjusted XX% up tax compared an share in in was higher rate fourth XXXX. the been an in for million of basis. compared XX% $X.XX income EBITDA to per On XX% million, on share the earnings the was expense, quarter one-time on the an quarter $XX fourth adjusted to to compared $XX year Net effective or than quarter per the a $X.XX reform impact $X.XX was fourth amounts basis. XXXX XX% share diluted of the These per quarter XX% diluted EPS of of in And ago. adjusted

up XX% truck end including up and in the customer $XX XX%, and at several the vehicle, year-over-year, sports X% acquisitions. key as The Supply the million two markets Now XX% recreational organic from sales heavy-duty new was semiconductor power year-over-year, aerospace or market In higher organic up demand sales X% year-over-year, in numbers, XX% segments. segment's up Technologies of of up million year-over-year. reflecting and were growth driven with $XX the let's growth by as well look sales

and to The Operating our business the of team's pleased $XX our the million in we segment, with related step effort prior as increase $XXX to the from X%. was business $XX income newly an a particularly increased performed sales very year, benefit new We the global fastener segment next products. find lightweighting and aerospace metals well sales the take growth of to group in of the the in big initiatives our towards continues over by years. success globalize this formed in are goal Also million applications for again to year-over-year XX%. in manufacturing couple

In well XXXX volumes the points Assembly Component increased compared sales addition, to operating XX new operating higher were improvements XXXX and as year as in than were relatively related In higher ago. to basis a were year ago. business our income margins for attributes. Both which flat margin have segment, income

demand as for programs end to well fuel businesses. of not related the product in by life products in and of pipe line aluminum and products were and were reductions fuel sales filler increase certain plastic Continued extrusion these although rubber lower rail offset our lost our importantly

In in mentioned fact, products. China And we plants are as calls, significant to are investments we very Mexico and have support previous in growth. located making three planned excited about these on

investments which We thereafter. in rate should million $XXX exceed in two broadly, are forecasting More shortly XXXX in up a in our a these starting sales concepts. significant ramp run embraces strategy

regulation direct include will product applications emissions including focused Euro lightweighting, benefit increasing are others global which to regulation. these China product mandates on our and portfolio. cooling lines in injection our Lead X among These meeting continue First, , X, and X,

internal combustion designs. electric to adoption some while on is global engine, which we towards excited heavily the vehicles focus about products hybrid for future Second, the of the are very foreseeable our weighted

XXXX, business in in cost forging the we was The the backlog over demand business higher of growth XX% years completed above. improvement has increase as of customer area late for acquisition continued a our to compared Product Drop in segment heating $XXX this our Chicago XX.X key serving the to in driven XXst, commodities in core to increased from a entered in sales XXXX which XXXX. $XXX in as actions At to the Engineered oil threading discussed this Xst welcome XXXX, Forge. driven been pipe taken stabilization XX.X from Canton The industrial million lower forge, will segment February in December XXXX income as steel ago. business demand. global we existing customers was up by XXX XXXX by as we eatery XX% to for XXXX in in products. sales our up complementary benefit our recent Operating the well these aerospace Operating growth which particularly and like presence this on in year-over-year were now of backlogs. XXX in markets. compared enhance was in a This ago. induction profitability weakness see The benefit to and segment, Also year well The in demand crap year significant Also basis increased Turning other continue XXXX years is was this will levels. segment a response global points. as increased reduction margin by million and income was million and to in sales suggests as the

product outlook to components the in are equipment Looking end certain and products to aerospace fuel engineered business of we our continue expected growth as ahead organically for most growth, business markets of are revenue from market significant technologies, assembly The recent via industrial be the now rebound. areas acquisitions. and supply revenues both the and forecasting and to XXXX; organic continued the

to share compared to We $X.XX of XX%. be adjusted in to This growth to XXXX diluted range XXXX the earnings XX% of reflects of expect per $X.XX. range EPS

be $XX million to million flows million We to million. capital $XX are also to cash forecasting approximately be $XX operating spending to and $XX

such income sales We is the expense effective of for to the conclusion, new offset XXXX to lower In to as in stated success XX% income billion. rate by XX% of corporate $X rate goals is as interest increased benefit very in reach our deduction you limitations. Park-Ohio other of provisions and much. tax expect we tax Thank the law, of from tax be range U.S. well-positioned believe poised our

Edward Crawford

Well, thank Matthew. you

I would management today. company great that this to couple behind moment the get answering been exists for last in around to Park-Ohio do share of like have what that for work the means like I setting think the opportunity release table position we in four means. quote is next to it would ever Before years. future. a I current I have future, ready out XX hard of the doing a that has advantage has the the a questions we What of the the take got particularly get in to relative been press thoughts point which I into take thoughts it. issue some the to exactly years and our used what questions, not for globe

As I said, is opportunity. the table is wonderful set. There

We finance. have our bank

sheet in the the We right position. got have balance

the the The plan. have added call We key team, some have do next players and what years. we fork hand to I four

nice that. is that pie a sales highlights comments, we It's go our years, that's eight as obviously on will the rate back do I'll give and I'll not a next a are Matthew's XX% number. XX%. sales. years revenues mind. believe Matthew we Reaching moment. again, by we expect billion $X something were XXXX EBITDA. growth to in And be X is to up you This in to run four averaged some more sky. how XXXX or in that's solid you in the indicated If average rate going a last billion the some goal time up In reality share accompanying going a And that you X.X% with a Run XX% the and

from to You $XX cash which times. What's sales company interesting to all to we flow. can will And yourself. good be this It's do have is me operating times, in about a company, bad years taken the able this billion without will is particularly goal we This stock. accomplish. that we $X last the do million this of math XX issuing for

thinking flow about Well, last to XX% averaged given the doing somewhere by and we EBITDA. the fact great described are of the So year. I the very, What the they million that's opportunity eight opportunities of grow of debt? around a quickly. operating Incidentally, years availability am position. well, if going $XX are in per have cash that's And that around we in given very world, it's

growth, XX%, can this. we a numbers, XX% you the about take you you and that's EBITDA, talk If talk the about accomplish

We are all around us.

have continue points. the We get good is up for to a staying and been four go not us. well Eleven and But in number company debt, at do swamped XX we to below XX. can

company Let's in this why possible, in big, to world. this big, operating is go big four in big, now back is places -- trying the

North in America. growing We are

We are growing sales Euro outside crossing America, over We the XX% North the zone. are in of okay?

We growing are Mexico. in

Asia. are We growing in

years in products have have ever made have in China now. years, of about plants China. And my We seven some XX in to knowledge XX–XX $X out China been that we [indiscernible] shipped

there cheap the world, running over Chinese we for in When labor running Chinese the was relationships. everyone were there are over We business and with the customers. building

is the Maybe us. a in but not we this for platforms it's opportunity cheap we a labor. there there. a is be fact business doesn't build their us an numerous to So, this It much, we that were that they looking good like And have place good like you in the were when carry over feeling. that sound like using China,

three-year us. recreational like back any down Now two-year, we're are I we all want a customer they're never some still coming they're here, there, they of organic. the I in there, $XXX that off-road business size period, they had believe three a of the Caterpillar, they're have the that's but million That which they've old couple trucking, some steel rough the vehicles; to the aerospace, call opportunities that a $XXX great the What not number there rebound. now. million gas, at industries by mean industry, but all right break have of growth I and old business, we in And way years, organic. on is categories one, oil, lost like had in is over on serve I

$X our organic. the get roll right of when call, $XXX coming got old that billion is piece adding I and million," relationship is "Well, to to million, up numbers we'll a So Well, it good where from? you start from say, coming historical that $XXX I

every a something for This right to and and new at China in business very in and exaggeration, auto we red-hot forward issuing I'm acquisitions. XX-XX four China going owned been $XX business for When the -- million this a aerospace worldwide World us one bigger. we've organic. logistics our XXX been is company, world, of difficulty] our the here, to platform years mentioned been years, joined Now there's amusement Supply little been years. expansion to aerospace has interested business been it's spreading an get time, park. system Drop it this units an gas have have. for I you The Technologies in now, we worked, a forces me, the it's company and which the to of and oil, done it's a and hit relationship is able in is a the area great flow. years, conference We've has now at company a timely, better looking exceptional to old-fashioned homerun we've current do team. by followed we In gives this do been in in. is that this they've the been and for future truck buying that's it's in a by is trying dead we've I it's cash Forge way integrated have we're in We've head-to-head last a acquisitions, aspect have $XX and without million it able [technical diversification, there, where with competitors Well, that's this the up we XX time, years. at Series and for XXX able the without it that's around excuse management next acquisition. great to stock; opportunity the love we've closing, do

it I'll over glad questions. be to turn Now to

Operator

Thank you. [Operator Instructions] Thank you.

today line comes FBR. B. Christopher the Horn your question Please first Riley proceed question. with Our of with Van from

Dan Drawbaugh

Chris. on Thanks, I and acquisition. Drop the the on Canton appreciate questions, our Dan line taking Forge Drawbaugh good morning, this you for congratulations is

Edward Crawford

Thanks, Dan.

Dan Drawbaugh

segment, GH know fairly to acquisition, Canton. and got -- recently, now made you've curious you've are coming two you Products Engineered quickly. looking I'm there ahead, on off and acquisitions start to pretty also sales what that Just ramping

profile I'm thinking for term. know what margin medium you're to So curious about their the

about that we forward? profile I in at be this a should like used think margin XXXX, margin thinking year-to-year to mid-teens of going points ramped what business, in basis terms be something XXX

Matt Crawford

for question. is Matt, thanks this Dan, your

that accretive to So the of margin are profile segment. both I think current acquisitions that

one Forge remind In there's struggles areas. that participates. group where some in the businesses Canton still accretive few Forge two Canton to to general, business, profile. segment; with you be will that weak in demand the is different Just a now business

see freight for We return, to in have begun a car the example, space.

but little much We of have seen space. in pick-up, a not bit locomotive the build

I Canton, So of customers. diverse think, has set a nice

utilization commercial they are While they're general, we're to numbers margin. recent But under own nice history, in well including history, to. or diverse below capacity accustomed businesses bring in company portfolio peak revenue still under those or an at their their even from the operating own aerospace at a what accretive

of induction a global have largely soft by well mentioned is hot where heating you other bit lately, a as topic of markets, the business demand steel oil which The business The GH. been the we gas, some part recently. as numbers added has affected and seen

our to hardening have I the robust. business. the will, So GH side you that us environments was and has heat augment great been because exposed of things part continue And it heat other for like aerospace, and a been the automotive treat the side of of production think been treat, investment more had business, if to to initiative

of they bit brought been hardening historical is at has those global the will on and commodities. in and a candidly of a the exposure struggling to a of book also little accretive they've management that level the diverse once part core execute which company that, have with business GH side, nice So And team margins. demand a again, brought participate the soft in in some a

of the but those all buffeted Engineered flow leverage businesses through see I is $XX the still a sort with so. Products the in for to -- some specific potential million $XX my is us. million in incremental point answer Park-Ohio, does question of highest demand of And operating to business additions, there is or of our like good good think lot the we'd we've So additional your

Dan Drawbaugh

Okay, missed thanks. for this, but I you And goals mentioned I'm just remarks I million that can appreciate if not then compares aerospace. right for the color. your in That's now? $XXX you what to very sales prepared helpful. clarify us sure

Matt Crawford

little felt started the don't back market Supply at there. growth year well. and and those we some has its an weren't part and up, aerospace characteristics be liked We couple. acquisitions to also small was feel what just or cut do Technologies initiative initiative margin would liked on the things call the of end recall toughest opportunity as ago. knew a the time, Supply the And that a identified industrial the we traditionally enter. but Technologies of profile teeth snowmobiles, tools we for and on of that Yes, right, done is we over as we this That for we organic, which some should like that. some market, semiconductor We've we going we trucks, a to

suggest So which long, far goal not meeting we're least about really to disclose year-and-a-half $XXX million pleased I on way well today did I'm we halfway. We but that how we that at are saying our in comfortable ago. a announced we're to think

Dan Drawbaugh

questions. That's I'll Okay, ahead enough, in I appreciate the step fair back go thanks. and queue. thank you.

Edward Crawford

Thanks, Dan.

Operator

you. Thank

Edward Our Marshall and line with Please next question proceed Company. comes of from questions. with your the Sidoti

Edward Marshall

Eddie. how in Patrick, morning, room. are Good if Matthew, the you? you're

Edward Crawford

Great.

Pat Fogarty

here. am I

Edward Crawford

He's here.

Edward Marshall

Good.

seeing to Maybe kind we growth would've were volume we of the operating what curious thoughts. SG&A, as quarter you're move maybe as think initiative But streamlining guidance know of an where for and organization, relative kind streamline mean of the business the as your in Chrysler. organization I the with issues better that. model. kind line to I with we there and about added I would've about over seen saw out I about thought just what I or and a I the -- talk talk through was that to about the So we XXXX, Dodge look the the I'm maybe wanted XXXX following top changed into the that on leverage to

Matt Crawford

not comment a that at Yes, again clean to let that. where I'll on granular we services some it on to businesses but particularly do suffering margin continuing up aftermarket are facilities, Pat across in and builds relates are underutilization high businesses fact have then level. support can These that more optimally. facilities, return. it cost profile as Products the to networks jump But the equipment of and operating forging we group high briefly just in that waiting me fixed And are really and business, that are Engineered not were just

are and committed this being future. investors So prior and importance management keeping the business teams the to here. build building we've key calls of we And long-term discussed retaining to on into

talked and number not lot So an business. I a one. continue a Mexico also themselves. don't profitability associated optimal dollar to in before expense I two, in They projects. with plan about China. some of expensive build we're significant have have executing across Number on CapEx they environment, mean Those think are that plants we're growth them, our one the new we've These plants revenue. and get you

plug-n-play, you great you're off is it's to do and it's Building an easy. acquisition, know get not cheap, plant running. not and pro forma and the results, to You

and we So in significant a our going some executing Assembly group, growth that's money. Components are cost to strategy against

the high all single-digit almost backdrop, with profit So, that isn't level I rate against on double you the I and line tell growth that that. operating that think associated would the

against defend So of I'm willing backdrop particularly that those Pat? items. to two the

Pat Fogarty

add expecting certain Yes, employee-based result our a acquisition assets are XXXX. which than not at acquisition amortization but I with higher we also in SG&A the primarily the we're comments, also that compensation in only levels. increases associated operate share and amortization the Matt that expect And we the in of is the to historic the that sales value, increase that that amortization percentage in to intangible there's of levels only thing would the that a slightly SG&A

Edward Crawford

bit. add little to that me a Let

that and reducing prepared the way prepare got going here we're in future. share we operate more handle year. It's different some to our that's us to to at to cost, the next get these to correct. going cost products. brakes reductions the and is us engineers anticipated so future. in And of looking be restructuring and the we in But the cost You're forth, four at did now. company. looking now this some We've some and off six months the taken run this we're to ago. money right for money We've new new for It's We've cost

So off fact fully billion the you the from you're aware at for correct. been your months. a brakes We're we be are that of six have $X look if Yes, it viewpoint building the to team company.

Edward Marshall

it. Got

So we're of what margin hearing kind time, is, not think EBITDA the I'm if you get $X to it is investment on investments XX% growth billion what ultimately that and the you're today saying? seeing the -- period sum I up because that in that you're early is volume on over

Edward Crawford

Yes.

Matt Crawford

bad other to saying as twice I accomplishing that's reiterate -- we to we're not as leverage I need I recognize what the are We that, of think said. want growth but things that's Operating the rate is well.

Edward Marshall

guidance both curious growth outlook. I'm it. that embedded you've the missed 'XX? And if In outlook, Got interest XXXX the mentioned sales about the I for organic in

Matt Crawford

I'll comment thought equally. it guidance, take the sort that, has Matt, growth. relatively this Pat interesting, we've been split I of to interest long-term, was the let will our growth I -- on but suggested is

fourth of quarter that fact comment was my even notable 'XX. talked in was I the in think that almost exactly it about it the and 'XX, prepared in even we

that going don't is 'XX. anything in average I there's to that change long-term would that think suggest So

Edward Marshall

remains and 'XX? rest growth that and coming organic X% to 'XX the early the late X% in -- So, either from acquisitions

Matt Crawford

Yes, right.

Edward Marshall

Okay.

Pat Fogarty

with is Yes, mind a Ed, at large fixed Pat in this keep address again. I our a also that. bond portion that And rate. your of agree is interest debt to question, interest

in through decrease will interest overall, that rate increase acquisitions. debt But expect lower in expense are most than at to is effective the we the debt, pass borrowing level $X we're our But $X.X our it we approximate that bond borrowing we effective some fed of increases is that And increases do rate see to likely assumes this million, of the see interest seeing result million our year. because cost to a rate expense the So going see year-over-year. and our lower.

Edward Marshall

me, then negative to kind final the I you one Got it. thoughts close it from came before to about with of it your see the talk initial for limited And I as details Park-Ohio. relates guess But think And tariffs, actions, steel just today, Components, is I or on it -- to wanted with comments. you flow any that? Engineered of have then we kind positive how and it through

Edward Crawford

metal as because aluminum aspect Well, as most on York in Again, our not steel the plats the I of about it which impacts forth. aluminum always us. as far concerned am and indexed we in it pass-through, and of that's and New the is markets contracts so daily have

and that from But fasteners, or fire taking and resolved. in going a is go doing categories. TV But anything where doing in ways here, just a -- be cases all customers, it's ones, to from mean the we're we our both to So, is there's either lot to steel, that affect a us. in of going any yet. this it'll price. is other to we're to way of make big get in lot plan have adjustment I -- passes, the the But a a up this an there what you're ability burden. the Supply of bigger -- in if is when Washington lot Technologies there we viewpoint. it have We'll scare Obviously yet is time not long spend and to is my keep it's watching real being recently, hear game, was in sense the you I answer there's in This no to

Edward Marshall

Okay. Thanks guys. it. Appreciate

Edward Crawford

Thank you.

Operator

is with of line the from Please Capital proceed Markets. with your Our next Barger questions. KeyBanc Steve question

Ken Newman

for my guys. Thanks Hey, Ken This taking questions. morning actually Steve. on good for is Newman

Edward Crawford

Hi, are doing? Ken. you How

Ken Newman

inclined want seeing the as I curious M&A Thanks. you where you Good, interest? more on look that little are you're what perspective, build are to in And market looking seeing you're where seeing And a if to better to deal coming at did multiples? or deals you out these Tech are about a bit to talk the are, Supply are you Eddie. the your desk, Engineered? from out

Edward Crawford

there's I think been were a no there's general but it's out with right willing four enthusiasm. in Well, in a not I quite equities nine-and-a-half Private strategics run flipped cash flipping you years that so settling flow, was now the there places. there's It's multiples one, year they're other. around to or and be flip. the the the the scared number nines to Maybe three in mean, -- Well, of equity pay. ago to strategics. private one are

coming of we're niche, particular, but $XX We've a a know million But million, bolt-on. in ever but they're think two equity I $XXX robust. I than down. fair expected. flow especially to transaction. we're a took done altar terrific. out the are we it's it would've to better relief. lot like paid in where are price, there They're $XX a acquisitions with core last last things not a We in going lot of the the area. and they $XX million, some it's much, getting spot, private in But broken doesn't is sound right XX our twice good moving is once months deal there So or into if deals that deal the And our But million, happening them

And ability to and we're being they known close. popping have come for and the quick, back and smart, So we at us, fair.

got money. set million year, point-and-a-half not is in there we with be solid. to we're in there's there's and that is Zero. The to prefer And It's a do? bolt-ons at the never about $XXX it'll where going $XXX here the just or I'm -- went is we million. great. acquisitions do So every XX-XX. set It's ago did where so a for and just what sitting that it or stone; this But we set up, prefer my was out here opportunity do We flow when something, all be Park-Ohio were we the year-and-a-half excited one. below to company, grow. way stone least that at what thought It's go to no we out organic growth best single is, we transactions, expect point going best we're -- point never it. But the

Because, you your company. in shareholders answers that So large have fortunately, as the why? I question. know, Hopefully

Ken Newman

great that's color. No,

Canton into where -- Drop guess into the I is no revenue Forge about we as help that, mean us a think as are I deals engineered? revenue that So guess other for I we that's you been guidance, to our it about for that look there's at where historical assume as your think the built follow-up correct built And can acquisition to additional guide? models has

Pat Fogarty

is is Ken, deals the guidance. built additional There this into Pat. no

previously Our Canton made, the including the acquisitions deal. guidance reflects we've that Drop Forge

Ken Newman

Got it.

how lows here? the these Okay, year kind and you two, or a about then talked out as about of runs coming of it especially for the floor but in off if little we growth plan. up-cycle are of that thinking they're it But you businesses, your kind rate a way cyclical can has the of expect

Matt Crawford

This is Matt.

a of mentioned being back And long-term under dad average just goes moments few that my to XXXX. ago about XX%. I think the

this I We're than can about right maybe long-term the a think projecting that. little we average this in better something do year. environment

But we'll think environment And -- better. environment indicative a long-term as worse. we'll the think I a that's in how is don't operates. company of I do that the weak a average midpoint think robust a do pretty in I little

Edward Crawford

billion, little number. $X.X -- a of XX% $XXX big it thought of way it this of I a doing of think than company yesterday.XX% different doing a million is a And a company

of $XXX here. million goal, high numbers and and that [ph], it's million, NX get talking real You're numbers you're to that talking $XXX to

XX% not a easy. it's of is quite So bigger number bigger a as number.

-- maintain if maintain to keep XX% as to want you cash flow, you not -- just EBITDA. a and And easy to a want and if your you want it's we Okay, that

Ken Newman

That's out growth about we in good your are solid business, as to almost backlog talk that talked is you of just to order you in fill hear. last through Engineered. first year? about one in the from this me, enquiry backlog One some the how quarter and starting that Can

Matt Crawford

my looking notes. This I'm Matt. through is back

think the backlog segment a year of XXXX, ago. as I to XX, million December $XXX I -- compared was gave million in $XXX

terms last it's latter part mention the that year. precise I of strength in of of is But began what worth, part in the to to that consistent has the get. think as want been would year I we for So early this see I

Ken Newman

Thanks. color. Great

Operator

of your is question next proceed line Gabelli from with & with Please Our Paige the Matthew Company. questions.

Matthew Paige

nice Good morning, quarter. a on congrats and

that look aerospace. some Park-Ohio? found the And also belongs market? have you new the Are that like to you had invest markets, you inverse, in don't and portfolio mentioned You taken there feel anything new any through future of the products to a into in maybe get

Matt Crawford

we've question. the good in to particularly investment, aerospace some exposure investment, a group. That's The traditionally Components the Engineered aerospace had

we've business a like So is forging a which business, to exposure that. Canton, had

I sister in in my Kropp As have Forge. comments, a company of that Chicago, mentioned to named sort we

say a process. that So significant manufacturing there's different not I would

brings that, in are having there side question. to that yes, products management. supply on is our it's our think tech introducing an our to would excellent forging new I supply portfolio, it which And portfolio. we aerospace are more say competency applications said I the chain core

about So less we managing and supply that business chain. we customers improving developing in products efficiencies about and the our are designing are and of innovative their than

we So chain products. I in forging slightly already the just to and business, we're supply in would and look our are products supply new management as tweaking to And we a adding customers generally know. in solid new in deep think chain different we then business say pretty I you, expertise

Matthew Paige

some Does think do interest can perspective. how or pay second And color. down you it. some this helpful until you your a mentioned about deductibility acquisitions question really me Thank on debt, limit you, the to limits that's ability do that? for you from Got is, future tax

Pat Fogarty

No, way all. Matt, that view I don't at it

with finance And growth. panelizes look U.S. this to our have in require we world debt debt. will we been we to the that. I what that we've and those and companies over that growth we us think all at tax U.S. past, to and world debt. not in the look areas work finance U.S. do And the towards to use where the can at grown as growth really with jurisdictions business is reform financed particular in path that continue down that Really

bought GH, it financed we debt. when with we recall, may European you As

and are will We have allow do to the to markets that. us to continue that going do to

term wrinkle what into throws back working it our to this are a would that high XX% hard bring So, just we but into would to in effective I type rate, line a expect say be range. short with we the where

Matthew Paige

look All you in to with future. right. the I'll forward speaking

Edward Crawford

you. Thank

Operator

Capital. with proceed line question. Our Stonegate the Marco of next your Please from question is Rodriguez,

Marco Rodriguez

you my Thank questions. for Good morning, guys. taking

Edward Crawford

morning. Good

Marco Rodriguez

few help follow-ups, help a got regard so you you the in was you 'XX? year, this there drag in can what in capacity Just maybe a is drag or quantify to understand better on way to see sort of last under experienced, the that us any

Matt Crawford

is I that in this think largely Yes, our Marco, Matt. mean experienced products have we I engineered segment.

welcome seven some our certainly to from segment. are go see peek back years the volatility last at you look numbers the segment of reporting So, or the eight that over and in

you that of same are sense could acquisitions. look But We actually the bit we Perhaps, for the gap operating give fundamentally with business some like. might the were. the what little of addition as

the of to to some of way be next or assembly to that term relates not meaning would under some sort capacity, XX readily a so. expenses are ones or whether said they but Having would technology identify identify be So it. be supply that, we expect the short numbers months that related of of expansion as may it are components, those as the relatively significant the some one it them to

Edward Crawford

type Matthew's down figure because of clear volume. but to EBITDA service. whole going XX% this is or during we -- it's was exactly what just do to is -- I down the -- period mean of out this that products you And engineered a EBIT and am came Backing of in it X% by this have made parts historically try comment type company XX% company. It drag,

was drag cake And equipment. parts are it of around you the when it. the going it's and capital great So, not and on one world your service selling the a you on are aspect sugar having

with is that capital the being the that Euro we particularly see units activity coming our lifted increased So drag all by equipment zone. in in

Marco Rodriguez

That's helpful.

there had capacity ended the that through particular that client we all the assembly So, products, exiting fill is side components think that the did are how enter 'XX XX-XX? and on when you as we life then, of that should two

Edward Crawford

industry really all touch over gas conclusion. that No, it the to and not we oil the that's correct of and period of equipment to try ramp this da, I'll other had capital capacity even da, three-year way going that and and da, steel down the world answer to that. haven't we areas the started the around and

do have let's still. XX% re-engaged we that say have it's availability we So, capacity the of

Marco Rodriguez

can you guidance if longer term hit XX% slightly we X% the guess? your top as guidance rank regard the not three of about you when to in also to your Then the the to easiest easy talk in can think see if opportunities X or of terms XX% Maybe goal more I current billion, to on here, 'XX? maybe you kind

Edward Crawford

It's think about lot talked this things question. and Well, it days. the that of -- but the happen happen let's could be XX a Asia zone. I won't answer to different And change in in to obviously we world, Mexico Euro We spry, way. put next expect that hard categories good different different and parts, quite North to the America as in parts

We'll on As we sit it's some upturn. disappointments today here everything have looks an obviously. like

You that you We've are I it at XX% to us. EBITDA. what for as growth we disappointments look like shift But will in doing rate an private quarter-to-quarter have in and reality, and equity shouldn't just difficult years been a a and XX% for month-to-month. And we can operating company as company, be share years. that the four saying that to would

one I think want pick is to to don't I up going the that So others. outperform area

holistic. I think it's

Matt Crawford

year in we think don't than maybe a all expecting I growth I the bit support are our thing, key of if that past units. mind; Ed, you this business in may one different little and

what lagged favorable we the which I sort years is environment, that, and from that automotive decidedly while benefited more couple largest have touch. over of others end-market, have last the of is think we our single seen

think I nice particular globally the slight in that agree business, to wouldn't resurgence the any want I into the that about while I are business, highlight comfortable think we that feel across a mitigated seeing broad-based in while maybe sales follow-up we auto made region, and NAFTA that I think a market. I for a by we've automotive touch we investments think very

key in and address discussed in the the I world. So, environment hybrid regulatory and market also that technologies areas the of multiple

So, broad-based point, this at this nice. is we is are pretty comfortable which

Marco Rodriguez

question time guys, quick of of might, I thinking can helpful, two you'll are just that sure overall for risks be you mitigated where those spend mean, And if I you Very focusing kind risk the into make where to your most last top at when might major 'XX? you thanks. looking about if rank

Pat Fogarty

little and much for at prepared manufacturers. get Risks of to the getting some that to little -- say the ramp anything, while in leverage. would any I issue mentioned but harder the inflation I market. as products cost highest associated margins; that which good - again. demand have to I to just we it President, engineered now we work at is that inflation; take jump reductions a see group, in favorable like bit good in and to execution, we say we starting a but mentioned, difficult, it. the expected away than do are just the from bit significant seat does Matt It's a operating as earnings of take up a need relative 'XX. more geopolitical business, much to doing 'XX would are We we also well, benefited -- front of particular our in more the We got got in in to to we've

you in certainly and great raw gist we want don't pricing but indexes, environment, it relative up deflationary competitor, you, know, and be wake are I to You would a everyday worried are our touch Even with in under significant next to the to a got because disruption challenge. be material able though would have a disruptive. think in we about marketplace customers, we be somebody

Marco Rodriguez

guys. time. a lot, it. Thanks your appreciate Got I

Edward Crawford

you. Thank

Operator

remarks. this turn floor for back time, closing At the to you. management Thank will I

Edward Crawford

itself it's that for all seeing Well, company, the about employees, I an including and our whatever. interest -- company, times hourly and of of chat want generally important particularly I'll speaking, excited everyone and with all [indiscernible] the doing, maybe printout just hear employees the our to But real employees to show as look at the our not outlined. or that. note, will maybe meeting Matthew Again, downside us at work the of upside few downside -- very $X is the EBITDA, final approximately potential of the XX% have be this is a company what we look XX% in urge of I company. that surprised and funding to we you the And this the quickly. in the some optimistic thank I'm leave billion, plan cash in the are EBITDA, flow as I'm overly very

it the it's officers one company employees, but knock I It's but or way our and out looking better, going support the and plan. could everyone's worse, be it could forward a not and it. are be of us to other. the particularly we it's concrete, and not appreciate So

to Thank go can this forward is we going It plan. much. very it. accomplish I'm we are to meeting. We the next the after looking but plan, you believe

Operator

conference. Park-Ohio today's concludes This

this your for you disconnect now Thank may your time. lines You at participation.

Park-Ohio (PKOH) 6 Mar 182017 Q4 Earnings call transcript