PKOH - Earnings call transcript Q2 2019 | Park-Ohio Holdings Corp.

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Operator

Good morning. Welcome to the Park-Ohio Second Quarter 2019 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. instructions] [Operator

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

company defined. discuss may and EPS the EBITDA as Additionally, adjusted

principles. and defined Adjusted EBITDA of are as performance measures accepted EPS not accounting under generally

net as as EBITDA earnings company's for reconciliation income release. to net of a the earnings reconciliation please to adjusted Park-Ohio shareholders For attributable recent refer to a of common and defined, of income

Matthew would now and to conference proceed, turn CEO. the I to like Crawford. Crawford, Please Chairman Mr. Mr. over

Matthew Crawford

Thank welcome just levels nearly earnings forging to We're call million times record good Park-Ohio. These I business. call, new in are press Park-Ohio's morning, our I it. guess, at and you, or performance Arkansas. XXXX very call launching second-quarter are exciting automated and commissioning of We very much $XX should fully

auto a while and our in end-market with some strategic inflation, an some significant are the this US We and line demand. the demand The in around adversity. in the which volatility markets; second in achieved improving best performance record China; is at shortages acquisition and results. facing Labor some in outstanding results and facilities space in we We otherwise; completed are three world. part continue European slowdown tariff new quarter, did near we expectations,

no products surprise this call. be on markets. to in of and is terms a company, diverse anyone both There Park-Ohio should

get I very the year and are as growth continue how on We question we XX% company. robust to expenses, last always, agile year. and our often a focus vigilantly, last about was

time, up. people, the at of remind is of part the any business And part I given business is down. And

as We the response we make facilities. plant and as agile, closures endured of adjustments in to half to some in both So of the terms during that continue first year. being always,

in also adjusting we terms will to appropriately, meet of that continue our And to workforce our do performance.

to to to have reaffirmed since business year, of the our the half cost have for relative call, ourselves of ability and risks guidance second footprint. macroeconomic happy agile the certainly, and We bet our diversity last be increased, but the on our and we're

to With turn that, over I'll it Pat Fogarty.

Pat Fogarty

Thank highlights the Key were you, quarter results segment. products continue the our and the in completion of quarter and Systems, Erie acquisition of will which the geographic for Press strength Matt. to tremendous add the demonstrate Overall, second of the to products included second diversified engineered operations, value positive locations. our

results We be Erie's of in our the XXXX expect second accretive to earnings. to half

will revenues related both annually, in of Assembly today's we Also ramp Asia The continue which most second our will of which Components and to $XXX over in incremental positively and has start-up second add over segment, results. programs begun in business. most auto quarter, XX new in facilities, the North our million half up of impact of is our America the production

and the our induction products parts see our used demand XXXX engineered our equipment, closures rail beyond. And remainder throughout two by for completed plant and we in forging results segment, reflect the benefit actions from addition, services of and aftermarket our these and our this continued products In and we'll customers. segment aerospace strong finally,

both in $XXX for year-over-year $XXX demand sales in Asia was The a of to results sales decline quarter, the supply our million, consolidated result to in strong. the were more engineered markets the weaker year. climate components compared million end segment, products than and continued performance to top-line now and where certain in business These be technologies assembly Europe Turning offset key segments. last strong declines our

in XX.X% quarter was segment. to a plant were margins The our compared $X.X assembly margin costs of decrease second ago. the gross year to million closing in XX.X%, due Consolidated onetime components primarily

Excluding those margin would quarter charges, in have gross the been XX.X%.

levels, was mix product new costs. lesser business the to start-up and margin a gross by Our affected, increased unfavorable product also degree, and lower sales

SG&A on and ago. programs a million. expenses increases million compensation We SG&A with expect $XX the included to associated XXXX onetime gross compared year as expense second consolidated business ends. costs improve, launching to a half margin were the $X.X these in production new million, $XX of

Excluding year. units. This this across XX.X% and professional last related to down primarily SG&A XX.X% result as costs expenses were percentage decrease to business of a and versus fees taken employee sales our expense, several due the lower actions of was of

this operating XX $XX.X Adjusted year. of Operating X.X% $XX.X was was a basis year on points income to million quarter. an last basis million adjusted second income up income sequential million in $XX.X On basis, up sales and percentage was a versus operating year-over-year XX the points as basis.

rate Our effect second includes quarter the XX%, was of which certain quarter. during nondeductible incurred the in effective the expenses tax

XX%. We full-year income expect to effective to be tax rate our XX%

a On EPS $X.XX Our year ago. share was $X.XX to GAAP were $X.XX, per earnings compared adjusted to a year an ago. our $X.XX, basis, compared

adjusted first compared X%, improved of the quarter this year. to Our earnings

Through flow last of million six $X.X versus months, use $X.X was year. cash our operating a million

$XX million $XX debt cash second of generate year-end. million expect our the to us operating which by of the in flows half We $XX to $XX year, million long-term enable million to reduce will strong by to

including a projects. million under quarter strong cash availability million in June on $XX $XXX cash arrangements. million and of credit equivalents in of was XX, support of various CapEx and hand million at $XXX position growth liquidity of our $XX in are the We

in are as new Matt fuel-related line which engineered call, As aluminum, we the the in support our to Also in on be year. fourth our segment, the rubber and these we Arkansas, business of quarter businesses. we first-quarter newly mentioned, our extruded mentioned forging in investments awarded expect earnings this operational products molded and completing

CapEx $XX we million of $XX approximately in to million, year, expect For the XXXX. to million compared $XX full

partially XX% which markets, in aerospace in which Moving market, individual and to XX% a and consumer $XXX segment and sales the respectively. the which the markets, year XX% XX% primarily and growth to results down our semiconductor sales electronics were the The by year-over-year decreases quarter, impacted $XXX sales heavy-duty These the decline defense truck-related demand, lower and and technology, truck up in year-over-year, second compared ago. million, Asia in million were were offset year-over-year. was was quarter up were in Europe. our year-over-year This sales supply in by to driven

the on to Operating income product costs resulting from quarter tariffs from million, ago. was and compared sales and were $XX.X China. million affected lower unfavorable Operating the by inflation end-market mix increase product margins general a during imported levels, year and in $XX.X an products

and offset half initiatives to the product have to the margin the second the a We of of of of year half these impact first supply throughout and the portion customer large cost various expect pricing cost with throughout year. increases chain increases continue recover

in segment, driven our by production China. auto components assembly facilities in year-over-year, platforms sales programs impact XX% our down end-of-life of of of the business our levels and were in in certain lower aluminum fuel to products business our Moving

our accelerated New the lines. the majority second product and operating of quarter, affecting locations in business launches

aimed expect in revenues are and in incremental applications year. auto of our are years. trends $XXX which with earlier, the benefit global global-emission over we industry, to mentioned content vehicles componentry, continue comply per half As increase I We injection trends from regulations. next in will annual we more second a million the auto these that to we the at this stringent focus vehicle of The the cooling of be to believe global begin direct well-positioned recent market, and lighter to the will several technologies use expect producing

X.X% operating sales to costs. plant X.X% declined year and mentioned, year-over-year business to new levels lower due from in QX Segment primarily costs XXXX, million of the of previously margins $X.X launch closing last

is closing in second Excluding costs, year. an the the margin in the this quarter X% from first X.X% improvement been plant have of quarter, would which operating

We completed the up as in the fully improvement effect. take second margins expect of levels in of initiatives and the continued improvement ramp half operating margin impact year, production

the engineered continue X% up new equipment, second aftermarket melting sold our of were to products current to by driven over products into the quarter forge with and be aerospace our the increased our ago, XX% sales segment year second quarter, this heating customer which and a and in rail strong, and Bookings services, up markets. compared year-over-year, In segment, year. our induction backlogs second last XX% end bookings quarter and in parts equipment for demand up of

of half Year-to-date, in XX% over new X% of half equipment XXXX the up orders first up last over new 'XX. the and equipment are bookings

our rest in of for sales the well to segment of expect We the US the conditions business part aerospace to business specialty in in improved as be in steel, as strong metal the markets, and rail strength markets. due this year, the

our the $XX.X These mix, Operating of Operating-income and of XXXX, of million was $X.X parts points year-over-year sales and sales and percentage increase from aftermarket a increases basis up by income XXX profit million. quarter, in in XX% X.X% higher in second were quarter segment in year-over-year. was including this to businesses. from higher services margin the margin driven an favorable capital-equipment

reduction of quarter, the $X.X during XX%. compared lower quarter. decrease primarily was to were a $X.X to million the expenses The reduced Corporate fees year, in professional last million employee-related expenses and due

the are or XX%. our XXXX, six months million $X.X of For down first costs corporate

updating XXXX we expenses as with second result of to Finally, our are incurred respect $X.XX, GAAP to to quarter. guidance, guidance the during our the a $X.XX onetime

to we maintaining range are $X.XX share. adjusted guidance EPS per $X.XX our diluted However, of

results, launched taken We of each with second segments. expectations business the and cost-reduction the from are finish in the of production and our given stronger we actions the the new business year being will half margin the margin that optimistic effect

the Matt. turn I'll call to back over Now

Matthew Crawford

very Great, Pat. much, thank you

of given our will Before of year economy, some the what's strategy cash cost going quality want questions, made, I to turning secondly, Pat's is to the some that global risk be on business, around the on obviously There this headline new team comments investments on throughout we've when structure. necessary echo in and, his new pricing strong and earnings, and rest utilization the continuing focus of flows presentation. for incremental final of the over but focus the

where impact that's of and regardless, our have enhancement. But on and is our to is of the strong the what we're grow overall rest So diversity year. We certainly our the focus flows for hope cash focus results. doing margin

that, turn I'll it to With questions. over

Operator

question Crawford. Park-Ohio Please is and proceed, from Our the the and Ambassador Ambassador. former US Ireland, current Ambassador instructions] Chairman [Operator to CEO first Edward of Mr.

Edward Crawford

development comment quarter, you on effect diversified Great Park-Ohio's long-term Would further gentlemen. on its morning. good company? Well, and international the plans

Matthew Crawford

Sure.

it's Ambassador, though. call. this to Mr. of in. we Thank certainly for hear you from And good appreciate you First you it thank all, for coming morning. the

Well, for I'll our market begin by end existed diversity XX years. our and footprint XX to reminding global product everyone and that by has

is the not So of in made new strategy made is this the the in Europe transfer environment China particular, well auto the electrification to said to Park-Ohio. we're in emissions strategy investments the as we've the backbone of that, Having that some in related and of regulatory and in the current of technology we've around leveraging investments some innovation, particularly UK. over fuel the as acquisitions

we products. is place if but know the portfolio aerospace anything our not innovative to do in the also I add? we've Regarding have terms think of our based so most you it's diversification that on got of only don't part product, and group,

Pat Fogarty

at Tier Yes, around the business customers, different by world. OEMs, add only X different I plants, covers different that we're the look launching, many the when not large that many the products, customers but also you saying would many

the So particular seeing is large we in increase a as very business. grow that segment diversification

Edward Crawford

up Thank very Well, you. thank and you good much the keep work.

Matthew Crawford

Great, luck there. thank too. you Good over

Operator

B. is question from FBR. with Our Horn next Riley Chris Van

Chris Van Horn

thank morning taking Good my you call. for guys,

Pat Fogarty

Good morning, Chris.

Matthew Crawford

Chris. morning, Good

Chris Van Horn

things And I here. takes a guess, little the some the at as dependent you the that of and look operationally you are I guide? it end-market is factors? that range? I'm some what bit have there's within gets for puts a on Or just range guidance, of curious

Matthew Crawford

dollar that the with EBITDA the nominal starting is on can't without or maybe while relatively EBIT basis question that answer a range, small considerable an amount. I EPS Chris, fact on

bit dollar point, So like, it share at we gap bigger the in of fairly itself EPS projecting limited little side. with feel a count on set narrow this a the a manifests earnings of we're

reasonably finishing a focused bit the mentioned, some predicated that as the beginning a year-strong need steady Pat I've said So I certainly I bag of relative that, and and business impact are want team trick of and our to to our always band. it's this and plan his industrial the – market, on to we no, on some was of investments to to a but able be that, narrow to our said strategies. a having such more EPS applaud on year Having margin see convert

marketplace. significant That's But or the how as make need the I in somewhat in suggests get some we're well-balanced execution that and So to a industrial revenue the inflation that is pricing a do strategies to to new to as investment it to think reliant we're relates to past, we've a diversity recession numbers. and what Certainly, our continue there, our approach. some marketplace. of in we we'll I make the absent of we launches, going seen mentioned headway the response sell-off in on the need

balanced from hits a side. is globally, made we've the plan we've executing taken stay on to this business economy on steady months. we mean, the some I And XX do that investments to now the is need over built our help XX approach. but our So last

Chris Van Horn

markets? commentary kind than here got growth that are despite a peaking might others on more some And see the But peaking? able automotive. cycles I curious, it When your view cycle sounds of a new those those opining secular been people to at you resilient That's and there Okay, look end have winning maybe market that is you're in be be these Park-Ohio might because little you fair. the some your theme. areas, obviously, business truck exposure, around just have like Many kind how bit of it.

Matthew Crawford

comment. that's No, a fair Yeah.

I revenue in think a market year. year this that participant there from standpoint truck our growth, both is certainly continues – strong the to a last been has revenue contributor and a be

the It's That's a is mean, cycle, a Well, I watching real cyclical. people a cycle. auto you've trucks. Class cyclical market. is weaken that been or in expected. if So that touch, very said X

with familiar our profitable, tend overall to it, does it. So From segment, a to it we're and earnings dilutive perspective, manage be as an margins. we'll but

and let could alone still you've heard some the some about extent mix good So business. To some markets bad at margin. we us minority lose We'll see. turns, line revenue, mix. revenue supply truck a some and a The higher-margin recovery that for the and of lower overall revenue see that talk be lot is in punch the is margin technologies the

margin could Park-Ohio, a profile think But headwind. of it it to be to the and its So relative relative size I all it's manageable.

Pat Fogarty

Well, comment Yeah. the different run diversification. Class but a than add to market, talked Class the servicing is market, – X I Chris, the would also is market. only which that, we no X truck X market only different service cycle Class we're the X a not bit the different, we about little to tends do

Chris Van Horn

one for got And Okay, it. last then me.

Press curious, see kind You've of these finding how always how still another and to for bit future job was Erie the a are they really market versus exposed done at any and integrating end just up? came I you specific pipeline acquisitions. acquisitions. of a good some And

Matthew Crawford

first Pat, who business corporate press development, part, does the that mechanical Chambersburg, particular, we business our at as equipment at business, Financial being comment well Officer, you long of take time. hammer and on Park-Ohio, through the environment. can long, and Ajax for forging as I'll current been with many in then Erie a our Press is Chief familiar and our have a know,

been that a our portfolio long adding desirous We have long, for to of time.

leverage kinds et of but the to of the allows portfolio it think do only of our mechanical capabilities, well machining it I as and ability also some make presses, as some us the now aftermarket builds other cetera. of presses business, not to Now hydraulic out

of it, at time So the that family of is the tracking a long into unit many a the exactly years. a this business. relationship is business wonderful been level with that many, classic still Park-Ohio fold – has This team of They're we formed active deal. people. in desirous example owned kind our a for the And deal we've getting a been bringing that for

it excited we're it, fits So about very perfectly. and

Pat Fogarty

Chris, would expand for end their strategic despite our business Yeah, presence forging add that aerospace. deal, market and And is the tremendous primarily to similarities I doing that that reasons our adds a and in that opportunity press Erie, market the different customer market. to

deals So was for all for of regularly. those it reasons, great us. the the a to continue deal Relative see to really in we marketplace, acquisitions

companies. Our are and focus strategic that growth is on those looking at

So be bit. the range really on opportunities. to come banks look see the start to take where deal a up tighten in their downward see good. And continues into to valuations we'll I flow lending, multiples as we tracking little

Chris Van Horn

it. Thank you got morning. for time so your this Okay, much

Matthew Crawford

Thank you.

Operator

Our with Markets. KeyBanc Barger next question is from Capital Steve

Steve Barger

morning Hi, guys. good

Matthew Crawford

Good morning.

Pat Fogarty

Good morning.

Steve Barger

Can much this revenue? to about in incremental more trying that get you those the talk leverage? just of about or absorption, function of is your better profitability you the here. a What understand $XXX is million programs confidence it or specifically utilization pricing so bring Did

Matthew Crawford

would about profile comment choose what history across unprecedented essentially Park-Ohio's to it not But can in rare, XX is, month I I be over to once. on particular XX is at in period fact, think in talk I an Yes, different locations four margin a launching I platforms. think

those will some and starting seen to think be businesses. there said that fair contribute to have our performance. the simply we it Having and will meaningfully as our I – assume expenses the them earnings dilution to making is we of that, So to absorb launch profitable overhead

margins. business those need to don't we So peak to get

Having have anything margin, said been different business we'll in in unprecedented the I our think, that these going of that, we that, our facilities to parts – forward. traditionally overall so expect wouldn't begin investing as I accretive four we to operating are there. enhancement, margin I on just based see think that our see leverage investment

Steve Barger

hear. operating on modest I back the XX think revenue or points. to good the of I half, if which margin I ask basis I versus And in about we're 'XX is at mix That's of incremental-contribution at the and what half it's 'XX, first margin plus increases, half end-market minus, had as looking versus think look And challenges. takes up is, reason launches, low Park-Ohio's first the the historically, puts

Matthew Crawford

been spending in the And we businesses. money investing have these and other

off lower We seen revenue margin incremental improvement dollars. have

the the I because in has negative Supply I model, think in it's who that did profile. that a know, are a with combined financial future, a and little for businesses unfair Technology have business say well, as investing a to lower of sense, to you think, have these truly very yet margin tends XXXX weigh-down you a particularly wonderful

you're what but being sure also understand launches, hear saying, margin those completely probably I accomplished. with I So that and it's to business accurate, that what's accretion, make want undersells actually people mix,

Steve Barger

great That's detail.

cash Supply working flow specifically, For your is production back anticipating Technology, cap seeing customers guidance broadly? are destocking operating benefit you in the second a scale from on half? And big

Pat Fogarty

is Steve, Yes, this Pat.

business normal. I the improvement in that a think of normal generate is year. of cash cyclicality that capital generally working you of of second customers only of some lot not saw than the the metrics, June, will annually show we Clearly, the their half our end every our At our payment in longer but one stretching in businesses. out Supply of Technologies, in we

from we expect $XX flow do reduced requirements. And capital going operating million to the to benefit million –we're of $XX so to working cash

Steve Barger

question of lot the just obviously just go plans the plans, broadly to we Are translating is well Tech going you and customer production see into back production to a customers. Supply decelerate, cautious into that for seeing tied it, – speaking, half? into back specifically, as more macro Got is

Pat Fogarty

Yes.

the more in last than have think I a volatility our we we're end-markets little year. over seeing

it's But customers. swings a so that. think our from in is And material. more of not seeing of I don't we requirements – are volatility with production some it's there our

Steve Barger

Okay.

and businesses, versus rail-oriented railcar can infrastructure track components your seeing you're what talk about For you locomotive terms in of products? versus

Matthew Crawford

that prepared I it really and break inside our in to Pat and of I our of don't engineered know good But the is, all then a group. forging products that's resides Steve, be that question. apart. business in wouldn't segment

forged not at have it's driving part rail or right We moment. on our I business. now maintenance. I'm just be wouldn't to track prepared activity sure seen this our of robust in If rail comment that? what's builds

Steve Barger

industry nameplates And that Okay. on the accelerated slowed and consolidation it? for Any just or both update one talk Has domestic auto for international China market last there. producers me. softness down

Matthew Crawford

was think cars believe, I noncompliant Well, clearly, deadline was it I X, to the for be June sold.

of players this So it brand-new how think, XX% slashing, to would selling up I and I disastrous inventories, cars. to were which XX% and off year part be to was for XX% had hard articulate mean noncompliant who the parts they first

experience, particular, So from of of back about it. lack that was said down X as only really the a really probably Chinese slowed that better elements set the disaster. included in think Having for they talk well launch the about perspective are Steve, our the as facilities, need No in the that, regulatory a it can I expectations. of that it our getting are this question point. a of timing message invest – from OEMs I products think SAIC a we national And absolutely most to I multinationals year, at well word, our that a meet – as

certainly we some early find to way certainly, or get to smaller are the late whether next will see into continue the real as great quoting that standards. a these helpful be have in environment. That compliance precipitates question us meet national going is to to year, we year because, not, to companies and consolidation So a energy this Chinese

think this you but privy that know I point. would at some don't consolidation, So that would to that we're precipitate

Steve Barger

mileage requirements emissions not to the So OEMs these in the pressing targets? are hit only, they're name and really

Matthew Crawford

that the – they about XX% or part like off rates blow for to we're trying because first I their year, think rates, inventory production for you this noncompliant. GM, if just everyone sales were Shanghai you, through people look Yes, of products I can were tell for talks XX%

Steve Barger

Got the time. it, for thanks

Matthew Crawford

Thank you.

Operator

Rodriguez Marco question with Capital Stonegate Markets. next is Our from

Marco Rodriguez

taking for thank and my morning questions. you Good

Matthew Crawford

Marco. morning, Good

Pat Fogarty

Good morning.

Marco Rodriguez

more more side? Technologies, some component is a Are specific the the can on you're provide out guys that I then Supply called was that little a market detail especially semiconductor bit you're there And you and on side, you're talk side. Asia. Can like a weakness? you seeing you weakness the Obviously, in just electronics, specific Or CE little the areas seeing seeing? consumer if within about in in maybe maybe broad there areas the semi semiconductor weakness are handset industry that there weakness manufacturers? there semiconductor that wondering that

Matthew Crawford

sure, Having – performance. Yeah, would large and I our that our to manufacturers yeah, don't prepared said tool are their have the who relatively Marco, with be semi a mean, contract Supply of not would And sort performance. driving that, to – smaller what's side I understand impactful large be underlying get been suppliers, important customers, in me electronics I'm Technologies. or wrong, consumer on albeit are I they segments,

Marco Rodriguez

Engineered the terms in maybe about going And you good you're reinvestment going you, you're What that global there, strength might of there in had that be Can just and you seeing that? Got market. metals inside then more on a forward? some based lot cycle? sort switching over movement a little bit of where Products, expectations cycle forward kind mentioned to maybe of you seeing of guys talk a

Matthew Crawford

that, for relevant as Having to business be particularly, ability seeing, have steel to you future, their business if a upgrade in in a at of the well. that alloys, trends the are make It's over think, of let's to to commodity long-term of interesting I in is our to to will. to investment, moment, Yes. said commodity look is you wave as very high-strength businesses. I whether I think relative assets of their And will think or the think, investment the focus to because their prices the sector which a steel terms see assets on sort for I prices industry I driver massive types it continue steels, investments mid- different those improve – you're what we and tendency, to

is that think a I metals. or specialty So –

I that's going think that's sort of cycle on. a

they focused on Secondarily, are margin. very

to lower I pricing the think at going make have they they're realize term. to long over money

I fingertips, more year right as for year So than their upgrade have the for CapEx, have might market. facilities steel they but my the productive I and make well. productivity, before in don't investing I last spent and places think, numbers as is important invest at them think, the in example, these sort double in of US

the a despite pricing historical think okay. market, on steel which in still the I So is basis,

think I and to on we part be need that whether they equipment I or the facilities, that, modernize of the on side. basis their be new can it aftermarket think

a I bit side. and little on think oil true is same gas the the

I think that or where rig chain, where supply in heavy that a depending on still you in are there's cycle that count. – pretty

count our out are a while still significant and business, prices, oil there. a off we've of gas considerably, particular, of natural rig So and in parts seen little bit that there's to impact

can in macroeconomic be steady the reasonably that still supporting So sense.

Marco Rodriguez

just acquisition And back coming helpful. you current of guys last landscape debt very the That's levels. for sort on and question,

year. Some of here little bit the kind crept a of have last up metrics over the

uncomfortable where debt? kind of can you you you max think adding just if you terms So in on terms additional of levels feel on where comfort out, your will, in debt, update you maybe us of

Matthew Crawford

is mean this comment Matt, I'll just So in then Pat let better But and me answer. I generally. let – is position a to

times. in be stated in three want forward. we leverage achieve We of We is ratio this place to our under right think the to trying get to of that have going cycle the flexibility part goal a the

you debt wrong. But XXXX. are of reflect two And on XXXX, really a strategy, named toward significant shift We is We've is essentially of that will, out seen a on we'll it. you've if the where deals. focus – money, screening one in a structure think includes terms certainly means of that our on That just hits point sort a that get is that want amount rubber a lot also leverage. a Don't to – doesn't about we the do due focus not road I coupon strategy, subtle that of thirds But think create mean in to more skip I sort deleveraging. So great me we It for of something obviously, XXXX. until non-amortizing six-and-change and or else. We of fixed, coverage. paid acquisitions. a

So we million. $XXX in excess of well have liquidity that's

coverage, of the of $XX interest. order $XX have against of million worth million, million worth We on $XXX something EBITDA

So how covering think I ability. that am metric commenting four you over just we're the times. to about in we

that can't be flexibility. agnostic we be leverage can't you focus rates. a gives maximum we've set – mean, You up agnostic on to structure and I believe us

interested but is are and coverage it it's to focus of and our a process consider. decreasing rates a much to structure that we in thought relative more leverage, relative we intricate So process,

So we deals We'll we down continue that, to some well. good as are interested do said all look deals. yes, paying at But debt will continue to strategic having deals. in and

Pat Fogarty

is get strategic around echo and right also we on below comments, We've this we not I Marco. deal stated one for do up strategic view We've goal a But going what leverage forward. to a our three. indicated down metric key year. getting pass plan Matt's net leverage our to very to our deal. We're debt as going us

Marco Rodriguez

guys. commentary, Thanks great appreciate I it, time your Got for it.

Pat Fogarty

you. Thank

Operator

is next John Private Our Investor. question from Baum,

John Baum

quarter and of guys. morning good maybe environment. on in face the Congratulations softening nice a Good a industrial guidance

Matthew Crawford

John. Thanks,

Pat Fogarty

Thanks, appreciate it.

John Baum

one in, nice shareholder was get number we as there over CEO I our from to caller can first former – It hear and hope the so

Matthew Crawford

of was it a was bit but surprise, a We agree, little it great.

John Baum

was of he's respect too, still there get especially, little a plug tariffs. so – let's possible with business admirable with in. it get see Is there. shall say, I can listening what Irish your guidance to to hope a I we out Chinese we Hopefully,

China to in to you've think that – China. to in Asia sell to said Asia before or I you're sell

So necessarily to you're really possible to sell the is hard China because Is a Good and or US, material back China? quantify impact is we there the that perhaps not it tariff it about to on Brexit on exchange? in ahead. not talk foreign but export thoughts if too to into any basically

Matthew Crawford

gets lucky, to job. I'm I'll the to I he clean start. get has harder and up, Pat start

it because our is they and this do too, cases, Technologies, in sell want the lot in lot of particular indirectly Let – to either me here Asia there, saying consolidating, to group, Supply of undersell or in tend Supply business by China. matters directly mean, your we're in I region buy a just I some the Technologies attention start in we to and particularly a because, in point, but gets don't do exposed and in. they automotive

said it supply strategy April, think, tracked a we side, impacted – parts want something So mentioned They around. you can on inflation a I a then on think, be sometimes the got them, or calls, to is impact. a when them. us of the honest supply ago, we and you, chain can because assure we large over necessary on beginning XX just that understanding our a – X,XXX number timing year a for This side supplier are to lot to has focused not or prior that it work our issue, team to about no a and negatively. is is margins may understand dollar we've it paid it's that the are have But – March, distribute lack negotiate price as with doubt is nothing a ago, of – been has this I since to it, relatively be attention, all bit can increase that I interesting. while that, is the been, the we be on issue, began an not we – customers. it. multimillion new Having over and this and pricing more It It there's to tariff is a a year considerable this which

Pat Fogarty

tariffs And my import alright. basis, resource from pricing little the customers our fighting directly comments that's for occurring. our we not importing are a some our China, is Technologies, But product and China, Matt's to and those to get are China. we're what States are And Relative on we Supply they and amount is in that goods China. in similar in very in from from there that, are we're John, business proper daily the China on about. to really talking back to strategy hard imported

business. a the So should our have recently seen there not effect we material drop on that currency have

business now, are But China that's mostly that right dollars. is business. Our currency components within our start-up in positive. In US would done not in business overall Technology our Supply plants those in assembly plants in translation material not our effect a are local to have

from So significant hits I wouldn't expect that. any

John Baum

some Patrick, Let's granular for finish I'll to questions see, Matt, and overall question back up.

that EBITDA So looking coming forward Pat. $X future? to complicated XX% XX% just guys. the jurisdictions, you go-forward at we I And and I'll and on that basis, Matt looking but still I'll I know with with, you are at finish the reaffirming in don't various in are sales XX% billion a cash a margin let taxes it's know, Thanks up up to one on

Pat Fogarty

paid which paid would Cash taxes with six John. from range much where through I we $XX year, to to were million is year $XX months, for million pretty we ago. that million. a the expect $X.X Thanks consistent

John Baum

you. Thank

Matthew Crawford

John. Thanks

Operator

over Matthew of We reached will Crawford, I end have question-and-answer session. turn call Mr. to the the remarks. now the closing for

Matthew Crawford

the recognize We're good perspective these they're through and and get because books on smart not team, our are and the increasingly some risks to Corporate a just products I should the and of going we help our us and particular doing and we've leadership I on of the the through and the they from also on got VP that work Controller complex of think them have former to to this Finance, I most some Pierce, in get business look think the we Mike both straight of to and heavy Corporate say, an but team, the and have and of calls we financial got get want it compliment we've ignorant positively. lifting. today, to a get want otherwise, do closed, volatility them Volchko, Rob we geopolitically

who So room thank me, appreciate and in much. time of with today. very you we Thank are the to Bye-bye. your both you you,

Operator

conference. today's concludes This

may thank participation. you your time. for at You your this disconnect And lines

Matthew Crawford	Chairman and Chief Financial Officer
Pat Fogarty	Chief Financial Officer
Bob Vilsack	Chief Legal Counsel
Edward Crawford	US Ambassador to Ireland
Chris Van Horn	B. Riley FBR
Steve Barger	KeyBanc Capital Markets
Marco Rodriguez	Stonegate Capital Markets
John Baum	Private Investors

Park-Ohio (PKOH) 11 Aug 192019 Q2 Earnings call transcript