PKOH - Earnings call transcript Q2 2021 | Park-Ohio Holdings Corp.

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Operator

Good morning, and welcome to the Park-Ohio Second Quarter 2021 Results Conference Call. [Operator Instructions]. Today's conference is also being recorded.

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

Before we get started, I want to remind everyone that certain statements made on today's call may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. subject to and projected. differ are cause that statements results actual materially forward-looking to uncertainties risks may These from those list the as and the risks was filed company's of be X, which A in XXXX, March found with XXXX uncertainties XX-K, earnings as well may release on in SEC. the press relevant

measures defined. accounting EBITDA as and Additionally, may adjusted discuss EPS accepted the generally EPS are Adjusted of not company principles. under and EBITDA as performance defined

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

Matthew Crawford

morning, for thank CFO, line me. us. And Pat open have some you for with I the Fogarty, comments, we'll our after questions. and Good joining

more the inefficiencies semiconductor caused and notably demand complex revenue our challenges. auto with managed business perhaps reduction in in a volatility not chain weekly continued backdrop rebound the pleased frustrating we was most challenges, markets, we're quarter Supply end While as broad-based business to related in significant of our across revenue our for chips manufacturing that quarter, but caused created a in the only and significant daunting facilities. second

seeing locations, were were across North our which and demand customers. challenges difficulty labor daily addition, availability of of costs labor, In American footprint from exacerbated increased their

to challenges utilizing some quarter the in investment has this activities, discussed which that Pat pricing, see taken manufacturing to in raw difficult profits. first our had call more this robust our of challenging want these note, than and seen to footprint second booking more anticipated. of our continues progresses. urgency. that put they on period pressure than as our positive costs will activity the inflation outline in outpace meaningful it was although the most dividends. through worked the during Most the continue with be our Lastly, quarter, the to and and of the issues normalized have our speed through size to in business reducing progress increases we and anticipate said the challenges segment will around some we we related margins materials especially confidence Recovery On to segment, continuous address with quarter. historically improvement significant to And which continued longer the segment Park-Ohio may entire and I has team. has with and pay a return team continue across automotive, profitability the but we freight continues results, awards the year. of Having Products that, Engineered led to we strategies these have we the current hoped, the new specifics, remainder during thank make environment but budget company. flexible will Notably, year business during more

turn way results filled quarter we during worked unexpected what of proud these supporting With While with tirelessly worked are difficulties. customers other a helping the Pat. we not that, I'm each for, over and have our I'll to have it

Patrick Fogarty

Thanks, Matt.

of Products strength and in material segment Components Our segment. in our our and segment, our the raw continued chip costs in Supply market bookings of labor end second increasing Technologies results impact Engineered shortage, quarter new semiconductor reflect strong the orders Assembly

the the second F-XXX, including product Ford quarter from Chevy segment of and net $X.XX a increased costs and net our key consistent XX% overall with Engineered by segment. the the Products quarter. have quarter adjusted driven ago demand closure for substantially GAAP $XXX first in in basis, recovered low of to the Technologies excludes the sales impacted $X.XX. quarter Equinox, which in of Supply EPS, OEM the which sales a chip levels sales in and semiconductor the the net a in was to compared compared the and XX% were was several consolidated sequential levels, loss as Jeep Explorer Assembly impact sales consolidation quarter million first second demand EPS pandemic. platforms, levels plant On quarter by in up of decline Components a caused ago were Cherokee, from year was and primarily shortage on Our the loss our The year a XXXX in sales

shortage, loss fluctuated in volumes platforms widely the result was direct in from estimate the The volatility significant $XX share. a per an We Our which in the million, facilities, the resulting quarter certain impact result shortages in impact operating approximately in week. on labor of to labor on volatility demand by our caused week levels. EPS was the cost sales levels key chip inefficiencies EPS quarter caused where of net the impact $X.XX the certain the and low and absorption fixed a low facilities production of was

our raw In $X.XX molded share. most in by notably increases, compounds rubber and used extruded used an aluminum our rubber estimated casting facilities, and our aluminum material addition, in results alloys per impacted businesses significant

business our equipment and chain Supply Technologies businesses. results the supply improved supply business. less costs a of results will most recovery results once occur at freight begins half of the truck assembly our These throughout the plant, impacting chain pricing strike our performance to raw a overshadowed and impacts affecting year key included these unfavorable Other stabilize. heavy-duty to increases capital the events labor and expect the constraints increased significant of in We continued material second quarterly in

to normal SG&A expenses a $XX million million to $XX compared year year ago, were Our a versus a ago. returning level

the sales, XX% quarter $X.X ago, due income recognition the the decrease rate to year lower expenses million effective the decreased tax Interest year to of $X.X $X.X in compared SG&A rate by earnings. the to borrowings million quarter than As certain quarter. driven an and a represented discrete benefit XX%, million to the second of tax of composition ago. benefits current expense the is the primarily The percentage during tax a average which net XX% of a of quarter totaled compared of during higher U.S. statutory in XX%,

the full year XXXX, tax For we effective of approximately estimate XX%. an rate

hand liquidity consisted strong ago as cash various up $XXX totaled XX, our and million to a to of of Our of continues be June year capacity unused $XXX of XX% borrowing on million million and compared and under arrangements. banking $XX

levels. higher year, operating by net During used the was primarily working $XX the capital half activities million, cash first to of fund

second support chain increased and of levels, challenges. demand increased extended in levels supplier lead During significantly customer quarter, times inventory the global supply

various In raw inventory plant addition, inbound builds support inventory consolidation to and activities our costs increased also and material our levels. higher freight

normalized We and the of of more return to inventory, for to launches our the during half were Components incremental business Capital support which products businesses. second and in the decrease rubber in the aluminum new in Assembly expect approximated primarily equipment quarter $X year new levels expenditures million $XX year-to-date levels. segment molded will million, our

of million. be year our XXXX to estimate range the in will that million $XX $XX We full to CapEx continue

semiconductor, during million first were quarter due $XXX to to similar heavy-duty levels and the strike caused million most major a markets, results. quarter truck our second month year $XXX which to quarter despite to we continued aerospace power a in the end $XX of ago. net electrical at by assembly million end during most the the were the market affected markets. Technologies, in notably segment Overall, civil turning and end quarter levels the a the in saw daily first full distribution plant, sales. Supply labor Now sales lower strength sports, In sales compared Average

$XX.X aerospace which last by was quarter our to up the income in operating Operating sales constraints impacted labor and million income income civilian recent X.X%. in the Operating the and acquisition, We market, import of and to XX% expedited and impact were including margin both are supply freight improvement and global by segment encouraged inbound domestic chain strike. margin this NYK. from freight higher caused sales costs, sequential the compared by was totaled

in by approximately Excluding in quarter. chip sales to million and and resulted impacted plant negatively OEM second exceeded income material and had In $XX would Components fluctuations shortage, first our demand and Weekly the quarter. impact schedules which quarter of shutdowns plant current a Assembly operating lower Sales during factors, segment. million production were million semiconductor the certain in in the these delays compared have segment, levels. this $XXX on were sales quarter quarter $XXX the sales first sales

challenge We most second will year. expect likely our of businesses for the remain the the shortage a half throughout auto-related

$XX the the current million to difficult time, sales Although based this third million will in be $XX quarter approximately full that impact customer project it we year the impact is to schedules. on at estimate

we by impact sales $X.X in segment, continue the in of the mentioned in positively $X.X to factors. calls, quarter, loss new in second this operating half an which have million several we operating of We As incurred compared the of segment business launch on income million to to we year. previous expect this first driven

First, impact significantly operating in operation production causing plant fluctuations demand higher to the and extreme many automotive chip costs. shortage continues and our of

material raw impacted in unfavorably increased especially aluminum, profitability. have prices, of where prices rising excess our Second, in XX%, business, our rubber

impact local And customer other higher response in increased half to certain and the In labor costs as temporary the help segment. and We year these our to caused to labor the our of the plants, workforce to to by shortages expect increased throughout labor benefits shortages finally, affecting we to continue labor. market. second costs material the wages recover begin use of this direct operations adjusts pricing labor retain increased

the $X these the we activities. and impacted charges production challenges, certain to closure scrap costs. restructuring shifted and by processes facilities capacity of lower to inefficiencies In the plant training costs, result, levels. quarter levels capacity response labor realigned open nearly higher and incurred consolidation second and Also a million to wages, quarter, was with As and we have during recruiting operational increased related

the $XX highest ago. quarter year. of in In the segment's Products We actions million Sequentially, positively second the year million equipment a to were compared expect sales segment, in of demand quarter by our XXXX. first at Engineered impact $XX these half million in the the and their XX%, our first this capital customer will increased since performance sales level driven increased In sales business, were $XX business.

capital new importantly, equipment levels improve. to continue More order

the order XXXX. half half During our to the year, levels of first equipment compared increased new XX% second of this

throughout which melting second customers quarter in foundry over during including lines, $XX and induction markets. and the came totaled for and applications systems orders, New the steel from every region end hardening globally million product various

strength during in this of profitability our half new and increase believe the of see capital continue the year We sales bookings the to segment equipment strong month second backlog. orders of based July will and this of on in

aftermarket In sales both each business our addition, and of since United in year. Europe has increased last States quarter the and services June

and capital cost our capital XXXX was sales and forging sales a On to of We gas, within and to to Arkansas impacted million the basis, our products that was to to we our $XX million current respect the in expenditures in quarter. defined, machined aerospace, including business, levels impacted over financial totaled and from we of the corporate to primarily trend the in during loss $XX our orders, demand during lower as at activities. to operating organic be to our expect oil costs to improve million the range free of basis quarter and expenses cash our low the to X.X%. as sales points businesses, closure finally, In defined will negatively regarding million XXXX. we in for year and equipment With the half continue in by well first losses be the certain business to as several related segment, the communicated flow agriculture. forged XXXX machined pandemic. as range $X.X expect costs and downtime to primarily With and were to $XX and key costs which continue. which finally, operating year-to-date this by XXXX. military plant lower higher second up continue $XXX,XXX working expect due end forging forged markets, outlook, the And of in XXX outlook XX% totaled And Profitability by margins to in in by now corporate compared EBITDA legacy the delayed and XXX expect million margin year-over-year $XXX,XXX in to The additional commercial driven be of the respect rail products to use $XX required production consolidation of growth totaled and $XX sales million. complete plant half the previously X% EBITDA,

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

Matthew Crawford

you, Thank Pat.

reiterate believe X the open after to questions, they expect of not and frustration on to line team, worked call. our we strongly, reflect I a the we people these things discussed Before do tirelessly be business on want a as progress to the each around for we've remind on I management complete results. restructuring. we executing We fundamentally want reshaped what

First is the restructuring.

We continue be involved. to

You see from restructuring some the we add-backs. have results,

Our the priority focused times. more is business next be to can nimble a as more these in a emerge more in months XX that leaner, business, challenging

Pat And restructuring, that and things started as laser-focused now when So on one his we the much, in this availability we're is of comments. we labor. on the that focus mentioned of didn't

restructure more we're to make a more operating to on focused also in now the and find position and can labor. continue we lean as nimble business ourselves leverage, we where and more garner So

our So has our the but some not the restructuring goal. appetite continue changed that's changed of business, around thoughts towards this to it

initiatives Secondly, best our investing services. products return around and and in highest our

the happening the and across segments. We across business have innovation

long-term not We and we are on new drive product to we're focused secure we cases, great business. to agreements, the on more have business, to chain. growing ideas continue and we're in need had on walking We've new continue needs. across business many, cash also, supply and while And sales ideas margins. innovation company. high to Those number fulfilling that the our many deleveraging we the of those. thought we're In focus at than in to great, customer's our away launches focus from a utilize And

our supply would mentioned, new by cash pricing to I So It has growing our while stage. about Also expected goal center change at schedule. this than chain we more as we've ahead protect doesn't using business, had taken of deleveraging point. have

pricing margin strategy well made as on growth is a So the in our quarter. now our progress of a second ton We key strategy. on in prong that enhancement

be Some like in of third aluminum we it until group. or whether the increases during some contractually, it that delayed, cases, is negotiated in in kick our don't quarter

X the by months. We that pricing. pricing have trails quarter-over-quarter indexed market It's

the We'll aluminum, So the seen The good market. see environment, those increases a in news contractual. news the raw increases. rising is the it's material in bad we've particularly is spike trail

We're to be X all observing that's and to and continue So new focused those on things to -- we so again, are environment, the them that we're be on. committed focused continuing staying X.

over So with questions. that, to I will turn it

Operator

[Operator Instructions].

Markets question with is Capital first Our from Barger KeyBanc Steve Inc.

Robert Barger

you the guide. Matt, maintained sales

sounds isn't So demand problem. It's it this like a more timing.

So back when ship the the any normalized labor a with of running absorption? more and needed? holding and the going just inventory are that now basis on to help you comments, And to just inventory can plants

Matthew Crawford

we're performed be little in more that. really to progress with a lot is well automotive have has the than well, a start built response progress made there. continues I in I'll making segment environment. And focused on question, Yes. that expected. Technologies right with, inventory Products Supply Engineered Again, We're slower have we -- very to of now. the albeit happy your we -- would

We it don't are the an to to it -- hard trying be we've is. ever would environment think normalize, I quite but way seen

next for recently released, plants as before about they their released and talked taking as week. down X truck -- Just they yesterday, GM just

they So must to it's chip they talk guess related have was. about their chips. inventory chips. I'm My sure what is known

suppose as there's -- chain well. other I chain some So supply supply challenges

and things. always know how issues limits. will and the where -- that other think environment on has We its chips to their OEs build in will SAAR how supply those desire I chain allocate inventory our this don't be

So thought of of they We labor, year. at well-established now what build the programs we and an now year, believe the appetite believe XX% -- X/X are the to do they appetite profitably. relieve will competitively programs that beginning have have we will so they or inventory. inventory the buy when an we they to ultimately, do the have that do for and there can OEMs But at

the be So be models. permanent into could inventory careful for got more that to things losses building we certain

Robert Barger

And think script. some Pat Yes. in of this I mentioned his

think about or labor specific rooftops kind does of have it that as with to more you plants? are longer So Just your less term? issues, in product line you sense addressing diversity make how that

Matthew Crawford

touched it question. great a It's Pat on I and did.

competitiveness. we little and a past. We answer restructuring have the long-term less availability have positioning about that was for this before of A was about around taken of -- now lot cost is in concentrating expectations labor best the our I where this think that around about it's bit consistency. was And exclusively quarter having rooftops the

think will, investing terms a is But how in it. we little you rooftops world-class less our and restructuring our yes, the continues if different I formula, include of about So locations. in to think

and that true this on with is that again, do will the nimble. need a well. This in but on also to focus as unquestionably, -- So an being only cost be our group nimble. we automotive restructuring not has to example We being lot need

were now is through they rebates. than to suppliers need way next require we push to build. was to we're It model. the And going a past. they thought environment it They just react XX% decade variance could would that to be on in in around that's for to What in they they'd an they do be what the a set be have able to particular big build see a year would it. nimble volatility would line product build more used So rates a fluctuations up because to seeing

frustrating an automotive area group is think and lot we faster. we And that, So we progress not where again, on that. we anyhow. -- that going it a from good that's making because direction doesn't and of were enough. going our show Park-Ohio we're the numbers, is this at that's understand this for And -- in We're

Robert Barger

how And back you availability out think of material you areas other in think just half? the given seeing do plays I changing, this how it fast things you why gets better? do problems? are And are guess,

Matthew Crawford

know I'll could get answer little I'll explicitly. I joking just -- me it how that ask Pat let don't say, worse. more I'm But a bit.

Patrick Fogarty

saw things a that large second in of material happen quarter. are Yes, expect prices, we a increase half think XX%, of to of Clearly, Steve, to a quarter. couple up is obviously year. prices the we those some given huge the recover the I expected which on mentioned I raw were material in raw in second increases

are full the to prices expect we Rubber somewhat some operations be we volatile, free hope customer will amount of price to year, a aluminum For the continue quarter, plants up cover to up XX%. increases. In the increases, moved significant of compounds, we labor. although to our different

the We quarters. to happen expect in that of the third benefit and fourth

group, automotive In addition, launched in some certain levels pretty rail products programs we're significantly launching and the fuel engine, the for including which expect we in some Gen large X absorption to have plants. impact

expanding Our expect we With business Mexico, recovered increase that to continues very the in nice launching, and perform volumes new a we're business on in the has been revenues. Acuna, in that of well. profitability flow-through

things some So the happening Components. those of are Assembly in

at that segment, of a of feel we a half production equipment backlogs quarter level profitability maybe new the a with the year. our Having seen time. we're exciting year. the The bookings those second where seeing timing in we capital will haven't is of take projects story within hold new now that of more our are a in of $XX Engineered the that long in enhance million think half second I Products should a level our

aftermarket second as some our positive of to year. of the in still services optimistic and said, there. We expected our in real volumes story trend products. low segment All above volumes some But the a to see direction. continues we Supply beginning to where oil forging gas. perform parts continues and operating still being that the overall, So expect right hold Tech that's of we in low plans. the year in from see a take we're and very The that business half

civilian market We continue. aerospace the to expect pick see was end quarter. nice second It the market in up strength to

We expect throughout that second half. to the continue

real a So happening. lot of good things

the the faced to we And on challenges improve some and of the quarter. third expect in in fourth second quarter,

Matthew Crawford

take on out. is add quarter, resources business, to would to have which to more. increases I will in cost But the Steve, permanent human strategy for I we'll be said. Pat want it the fair second doing a There what in our availability explicit that settle while results It in. get X to with operate issues come to of It included poor where kinds your contractual with means costs. in enough means means requirements. which rates. results to days, reflected higher scrap all trying having even meet It can't of people which problems labor, a facility you our work

that we stabilize, have on will cost the side think it, to the recoup is doing will of to continue I to then So focus additional business. begin of pricing to and

of while, saw of work through begin little sort this the the both some of we So won't see least stabilization. for sides a in both to We at but worst second quarter. we'll

now has are make sure nimble days right -- to and programs in working get be has X week we're we're a that the that profitably working Our enough running. goal to to

Robert Barger

I'm have the some expectations there, going unfolding? I to saw or but as ask. let have up quarter were and Really full going out that guidance come heads to results didn't below in people I pre back give to detail. get announce in appreciate all line. just know just Why know to ask you you I'll one well that not more,

Patrick Fogarty

I'll Yes, and our revenues guidance guidance EBITDA give Steve, is really -- margins. that. minimal address We we that around

context with come numbers color it quarterly And We why the was give guidance release the do details the kind fluctuate an to able that guidance. advanced be be release. of advanced doing is of without this there some that important Our would call the why, felt we EPS often an to have we reasons that reasons if and the of not significantly. communicate the in which and in not

Operator

Riley from Sarkis comes next Our with Securities. Sherbetchyan B. question

Sarkis Sherbetchyan

Yes.

the at revised guidance away here. pick to want just So

if half, the half end top low line at it's, for first for I back take the million I number second of and I of example, even think we're then think of out what the right, look the sales for that, back kind say, half. line, in top let's round just in if $XXX we performance, expecting the

appropriate. You the reasons why that gave feel or on comfortable you that's

area is of having $XX It's I margin improvement on say, trouble little the a of, year-over-year million I'm least with kind half the basis bit second that think quarter. point a improvement imply EBITDA. XXX would EBITDA let's at of

Just reconcile in kind of that given me help $XX here million of EBITDA XQ. posted

Patrick Fogarty

Sarkis, the Right. Based Engineered is that out Well, the volume coming the significant. highest Group historically I That a business in the bit the The in segment. think, business our of we improvement Assembly in activities business. margin been has expect our on we've of based our of year flow-through Components being increase information new Products second on quite half indicated, launched.

hit So freight, the hard we in for we that Technologies, some expect expedited were much another higher by increase as quarter margins example of coming business in freight good as freight. both out second In of where ocean the well Supply segment.

We of ease the that expect much enhance year, our of will in half second which the to margins.

of outlook those very that that we positive. this built revised the So have are some believe are margin things into been

Sarkis Sherbetchyan

it customers reconcile you you. a out you're guess tech get lasts? seeing ground XXXX. we're 'XX? your the on Got through versus what some how obviously, this from just of of there, for how chip you into can perhaps And some actually shortages and long And what I players are sense the of to the lasting players real-time impacts kind want I tech saying? hearing

Matthew Crawford

a tell Yes, this visibility No one we one that interesting we full challenge continue a I'll will have the which question and least rest I believe believe of at Sarkis, take you does. to. the this -- we What that. year. is don't be will at for really to is

the think year. be you, profits the and revenue we on of the the some the that I to and on this of pleased from for guidance surprised -- honest will quite OEs was to see in fact, -- rest I with

I be an So guess bit, would will will little be the terms operations. that the our to and on, more bit -- the can is more it likely curve may with gone transparent early be in we a I will a more in to 'XX chain. process operations efficient, that think behind at we more while probably little But automotive planned any it hopefully learning our say I we've profitable a goes responsive can anticipate think My efficient -- be year and to think business ongoing so be the us, being be alleviate through of that's how the I type the normalcy of I worst for resume into in level. issue year the supply more this of before how rest as

ability of can to behind encouraged comments positive the last surprised is forward. couple days. coming And the going properly I the worst more maybe, more what maybe over and we So of OEs but us, with but again, hope with transparency we schedule that -- And I'm there's agree you're suggesting. the out can only

Sarkis Sherbetchyan

I things $X.XX press compound the was if out the $XX Got and X One the back impact call million in think then of to a in it. share. do the taking, That's relative $X.XX in, pricing you you we the by kind comes guess into you release. rubber go of in aluminum $X.XX kind remarks, the is mentioned just think step were alloys guess, helpful. back P&L? can sales quickly the price And the year of and a I back the called share kind how the prepared at kind out. back out on And it and stuck you're I impact I just share impacting per half I look of the of quarter if $X.XX the to this think

Patrick Fogarty

half per the the If increase slight XXX% a that -- price And year, stabilize, year as impact. second prices the happened Yes. in July, a that's is see a stabilize as Most did prices see of although through products price entire victory. the increase, a of in business. the impact. month recover Sarkis, long guess, only the pound that of that aluminum we slight increases customer we'll price given in it's in aluminum of recover I we'll if increase in but what's We

Operator

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

Marco Rodriguez

I was of wondering if impact. the the as color and maybe automotive bit the a relates headwinds you some could revenues put more around to it little

about you've about that kind positively $XX some having you're expected business half you new million $XX the from But at are talked walk a You kind that revenue QX thinking million hit. launches time, how standpoint? sales. to nice second to same through of Can impact really another us got of

Patrick Fogarty

Marco. The believe, shortage impact be new production that. half the business that being solely in of based offset programs Yes. Yes, will relating to the the year. that being chip the of was of by expected the and launched second much launched, on We new

Marco Rodriguez

Got it.

Or comes find are of of when Or can your rates? maybe then difficult little And bit it's that individuals seeing, checks of impacting there shortages that? it to and of labor regular put that just the other stimulus labor? sort in seeing? unemployment color more experience Okay. that of sort because surrounding are there either Is or because employees to factors just you what the terms kind most you're you just of a are what

Matthew Crawford

regional Well, is a issue. say, first I is all, this Marco, No. are locations differently. Matt. this of Different would impacted

answer areas know -- would willing I you business, most that don't each tremendous to to is comments for fits question. affected your one pressure to competitiveness size rate be There all answer In our I the yes. people of work. and the So in your think those there's a

they So up and people to show another job. find work, then

that and come that don't and our So to in bring with suggesting standards on then are they number of to think I people money to people their up. ability come. it's does a time they'll -- relaxed for show they of lot then and reply onboarding in, for currently. And to There -- apply more desire significant under on spent something have do the the unemployment don't

exactly, for finger to affected on So put most it's above it's but hard the my locations. the all

long more see affected term. part of so pools than to our strategy as Hence, of And some be much are more where of we our cognizant labor good others. restructuring

Marco Rodriguez

Then in on that of to back Engineered of pre-pandemic the fiscal of here Based you things to the right right $XXX this kind $XXX sounds to shifting run Or definitely you segment. Products do event? your what see million are like moving now, by direction. kind is Understood. to expect in revenue get the of year? of more type levels that end 'XX million a rate kind revenue It

Patrick Fogarty

levels. a I in quarterly to $XX year, right million in not gradual that that get in our exceed improvement get million to we're $XX in to Having current million start heading see segment. But expect $XXX historic to revenue the million think would going back to we're but backlogs to direction. I it $XXX us a to that good the revenues is

Marco Rodriguez

of seeing your comments what in information oil bit little little oil in there? surprised just there in Understood. group. currently. Can bit a regard that, are back? you holding the a maybe by underperformance to of are given And gas the where terms provide that guys EP kind of more then What's and prices kind kind of segment, little you of A

Matthew Crawford

numbers rig Matt. Yes. I strategic the of ways. business that is upstream count of that or And more you less. touch and to by been a in and are some This would But business the clear return money that upstream. few that be large, it's our more is different think tell in the it'd drill comments drivers activities shareholders I and big the goal from their whether to We

generally business. a and products that means the we also that drilling for. But So source are players cases, spending. desire that defer selling These by where, good many or what large is good innovation we I think, both a us see, reduced I something think have it we're best high-margin to the that still in

that mid-XXXX is guess we're to could be a this put any historically. the we think little business And talking to I maybe when got back come going to that's a it a play until kind before I it Or does next your way, come let's back, to know return happen? drag. will is be a Because contributor. it's of will out not it expect normalization. my bit to So we in contributor be be that question meaningful to see And never but where been was, measure this up it to

Marco Rodriguez

just of valuations the us Tech, quick of And last update M&A like an it. what can What through if but looks you you guys acquisition of just Got pipeline. on Supply me. Maybe, for closed kind walk question today? Matt, your kind like? know us I pipeline looking are

Matthew Crawford

I we there's -- mean Yes. a activity. ton of

in I As expectations think seller's have We've we a that a relaxed terms got a conversations of don't always, we're fit. multiples. active pursuing those couple to aggressively ongoing. see of

think been can be as year but careful us very that to I you the last in so. or So we've active, expect

Operator

Jim from Jefferies. is question with Dowling next Our

James Dowling

I timing. the could be on off

and given what restructuring as my revenue maybe If me give X changes numbers a you those So ever get of would margin the years all didn't EBITDA doubt. EBITDA in memory achievable that you thought reasonably hold. the normalcy XX% benefit you've that But aftermarkets margin. of from I returns? And said plus seen foresee a to you gave level accurate a ago, ago, long says, the can presume the billion years ago, reasonable years that's we would also are what memory, today to you X-plus a my once say little term your $X -- is and X I'm

Matthew Crawford

me Yes. Well, goal. meet some businesses first, the believe own that -- growth that business acquisitions modest opportunities to customers, we the growth -- we saying, and with the let inherent by have we relationships today start internal the

where markets. billion feel environment Obviously, on of pressure $X.X $X.X back still we particularly on is in about So side. our -- the at revenue what a we're billion, an key significant few

new no pre-pandemic took and of going the our over was, haven't back we timing on is again, perspective There in from levels, we it's sustained. couple markets quite the we goals and step next accretive. major the think a question, while of to business to a couple pressure a still years our that is returned be COVID So during

something put we business meet that The cycle. over that still business more is the I about on a pricing did believe profitability restructuring is So the we of X/X good mentioned. COVID. can on this have Inflation of inherently I that and way -- side in goal work but do still than intact. to I that side we just goal the would tell you, we our -- little the And is out. considered let's type before our plan say, well, the reprices half through when we of news not

probably at about, XX% you said up. catch will the margin. be it, cycle. that's talking business about And Pat's or where Having think If pricing, of been X/X some reprices through X reprices there I our think index

So side the way got some in market, will in cases, margin. goals. our we in out established some the it is I pricing originally cut But a in retrieve have didn't an us bad news when we we've inflationary work think those we for

competitive the from So is customers, we -- an is are our everything news inflationary our environment. which good with in do more position valuable

more Our our relationships, valuable, know-how, is our inventory relationship, sourcing tooling. our manufacturing footprint, our our customer

to for are we foreseen. more work were customers, got not that goals So than those our meet us important margin but we've ever cut out to

make us of laggard the us can we're see the just Group. sort cut in to achievable X revenue So world as that, normalcy we our Engineered we number. our for work the that our work traction some the is pricing on That's restructuring we margin But the I or of And years. momentum we as thought significant and more continue to got We I in But we got goal when years, side. out live side. X Products $X to return here. the now. that over particularly some for on improves, think been next billion than that set we going that so see that's cut goal towards that mean I believe X out

Operator

is from question next Our John Baum.

Unidentified Analyst

Comment call prior might guess, question. quarters, First to in I of you a clinker. it or is all, want comment, then a

kind event was it that now. Park-Ohio. whole been which scenario, the of endogenous the an it's more and on this exogenous chip whole OEMs specific you're of But suppliers, is to -- an shortage something in hitting You've right shock the

have you same the I you're you've that And a and oils -- exact working have I company, got suppliers know you've know with through a addressing So of that. guess lot that Missouri it. situation to lot you OEMs are got of here. don't But and a guys to I probably work

So that's The what… comment. I the is guess question

Matthew Crawford

trucks John, are something let just some that the opportunity not to me whole just comment, we cycle empty If lots empty. earnings gets by that quarter. are and because be we the relatively doing everything well. our whatever sold we're But empty, of principally can -- which they or there out whether selling, the cars, surprised to -- they're snowmobiles in had watch through. when OEs they which are they haven't was, it's second to point they're of John, see And customers, customers might -- have drive I our come

that. But successful will the interesting got how to navigate watch customers in And root hurt they have be We point not to quarter, see as understand it been. to suppliers pleased got going it I'm So replenish OES. the that for success. forward was them your our the their second to

key we to and sit ago, a chain margin make volumes. what expectations? is, have So a our And we The to execute? to we're we see Jim's good see minute where So can our is -- about execute we'll supply going can point very going forward. the we the the can volumes. question question going They're in to you expect at

Unidentified Analyst

being you up, have go to -- you when that point, have hire month increase know that come got don't albeit you and to have ghost to you because materially out other it made And then to might Sure. a bit I When raw about call mean a for permanent. lag, wish of starting But and in not terms I talks and the quarter this so-called whether they be And press here days makes might that try to you to really And maybe you conference specifically, of going transitory an of we're inflation increases, a are address lot what wages. thing. then is I are on think now want you careful or would they comment, And long I show employees a and say, on ability everybody -- a -- do makes I had talk with And not difference because sense. regarding price you I the to inflation. these for you be prior I a which catch which increase in it twofold up the you with wages? how you've because a good term? that inflation see that what question question again, in that? how wage existing calls implement adequately on at that scales. health starting X little you be, do had To in to in respond, makes looking did the this we material conference mean, And

Matthew Crawford

the And you Well, market it by labor way. is inflationary transitory. be. the but that not is opinion and the great the almost share I question, impossible, -- not It's

about how hands. our to I do want and need on We address us. to business where that's So around of up address And throw and about we it, business long want you can't next we said, to we or right? availability for that think need part mean the footprint to So think cost just everything our strategically term. years. that do we are we how XX and XX

first answer transitory. knowing second is So answer. My my it's that's not

The bigger issue is cost. availability and than a again, -- is answer second

our that John. value-add in So the an I is to is think exact or as number, that well I say we general, services would manufacturing, around second which don't cognizant general, I in have mean issue our need our that, be

cost direct under labor XX%. of Our is

area will, industrial the right, will continue we an is supplier, this So and continue. that as world, a to will reprice

to seen hammer in to find hit work. to related and people So we've the sort heavy that inability second the quarter to people get of ability sledge

manage. most just direct out, levels and that we labor, bit, itself I The than about think wood that less their As can have system labor cost knock manufacturing reprice it's little product. XX% really industrial and will a companies of on of costs

it. is go wages on and as it's to people into work. up, obviously, need to come getting But hope as to will that come And manage manage. be prices, challenge, us ourselves. can people we we hourly we manage part, that And a So going to to work

them. other some as that's of We have one drivers but well,

Unidentified Analyst

is labor. be it eventually, in cetera. be et good to education, that's But the think I will it's point, workforce XX% going direct Yes, pricing, and a

said, cost to nimble, So transitory only be not manageable. but you increases. and permanent be pass-through agile to -- permanent to you that how you're seems price Like have going

Matthew Crawford

people most business they in if more sector, sure had snap up trained, all leaders the that think could I to make their fingers industrial XX% would everybody showed to day every and been pay take Well, that work long day.

Patrick Fogarty

John And yes. --

got and We've John, increase production automation areas, in plant the the labor different in transitory. our put -- through our the innovative do to operators, these to believe As can't only cost we low-cost costs things on but also be automation, is like improve not able floor. reducing ways on

Unidentified Analyst

got does, The Absolutely. this Well, X be with events -- silos moment. right could of silos arrest could cut like will a the multiple year. X cardiac in balance you you're for and you in now, industries solved. out automotive. this your But be blip. the X you've what closing, now work right a that's your were used Tier at and it and management when what be That's that's the be to It

with So good guys. that, luck you I'm with and

Matthew Crawford

John. that, appreciate I Thanks. Yes.

again, what bring have. this where more -- urgency, before, urgency plan I commented the does all just already me Let is to we've

through restructuring. investments We our have the issues and tremendous investment automation, first foremost as operations through say. of horse That's to trough, on supporting to resolving liquidity. I going the in execute we're And the it, like of first these in some in

your appreciate So I comments.

Operator

we the for back reached remarks. Mr. gentlemen, to over Crawford have of like turn question-and-answer closing the call to I the would session, end and Ladies and

Matthew Crawford

this thank I you company highly guys invested your invested many frustration urgency. Great. sense Remember, management more people questions for you morning. think, than our are of our team this well. the and we you so, that's in, are hope a I Well, in as

to brings going we resolve a and new level urgency. we're side-by-side, So this, of just and are to us this

appreciate So and next today your we'll and questions, quarter. see your you I time

Operator

today's conference. concludes This

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

Park-Ohio (PKOH) 7 Aug 212021 Q2 Earnings call transcript