PKOH - Earnings call transcript Q4 2021 | Park-Ohio Holdings Corp.

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Operator

Good morning and welcome to the Park-Ohio Forth Quarter and Full Year 2021 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.

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

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

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

Matthew Crawford

and challenges growth. was by and business, call. continued restructuring joining demand thank to ongoing begin of our highlighting Good fourth for from our revenue but the volatility our want significant the work quarter up for XXXX, revenue our and the our of X% in the for momentum quarter year. within fourth you I morning many Despite the are customers XX% There quarter

in though, importantly our of each three activity backlogs our segments. business More revenue new outlook growing will from and benefit

lead material COVID. profitability Extraordinary freight, related costs to particularly of our record expense schedules a as tremendous relatively which million. revenue $XX an In fact, of unpredictable to steep overshadows loss in These the overall raw near resulted XX came labor been to loss done a we lower unreimbursed and adjusted levels. or expenses This over XXXX inefficiencies, fourth and record has during work, reemergence expense quarter expect and strong provide revenues as and production months the well amount increase at of customer premium last to inflation structure.

Reduced production While these managing for businesses, especially in premium at erratic or customer vast our Products costs difficult efficiently operations these assembly resulted made majority and Group the affected Assembly to schedules related all of costs, increased freight. accounted challenges. extremely the of plants

aluminum and in of and raw spike the were we material labor that issues and into some footprint improvement casting as the incremental production midyear. segment related our customer the some unique Midwest occur material casting business results business these in pricing raw We anticipate and challenges move our more dramatically. the Additionally, as and XXXX our amplified benefits normalized ongoing U.S. levels to

production segment. the We the sizeable also normalized occurred anticipate more operating leverage schedules in has that this to will create restructuring due

awards. reminder, As reduced years our X business this to in a see approximately continue we positive last footprint new and over XX% by have manufacturing segment, the

parts, product light-weighting, the strong XXXX. portfolio towards Given agnostic the powertrain electrification see related end of this and providing we segment as to contribution meaningful

also We growing backlogs engineered of and products. anticipate the benefit

space. energy uncertainty the new earnings, While challenges of activity, level pleased supply with some and timing will revenues these order in especially of to we robust chain the provide are the

to facilities. of industrial our the months, the the guidance restructuring in XX operating revenue aerospace, revenue incremental forging give We during basis multiple significant been the from undergoing during and solid are the closure challenges a course, benefit recovery Railcar provide will We markets, expansion these end the during as of cost and we facilities this oil outlook, some will the traditional in and earnings investments to which improvements on market. in leverage sustained one been bells, global and also expect has improvements weak engineered of have that Despite our anticipate we last high products include each. solid due ongoing of reluctant gas significant of improvements

restocking issues important the an and supply be production chain will market there minute some down even schedules last vulnerable, underlying cycle at to is anticipate end up are due and we strong, the particularly demand While chain. value

While add the challenges is additional it direct only we pressure the globally war more on will some these to exposure Ukraine, and put some clear have Russia but and limited may expense.

difficult the it’s substantially reduce we to impact a full of consumer particularly solid Additionally, inflation which manufacturing to adjusted almost pricing will it Pat In review demand. short, to be that, year expect a I XXXX where initiatives to return all will under end-market scenarios. we improved turn over profitability. Regardless, we quarter. overheads, understand earnings benefit and provide to to expected minimum With the from to

Pat Fogarty

Matt. Thanks,

to to consolidated quarter XXXX our sales XX%. continued our the Before about met demand comments few I customer details make fourth up for our were of as and recover expectations results. from our the revenues levels Overall, want speak a year results, full XXXX I to year full

strong to end XXXX. demand We market expect continue throughout

operating Our year $XX income increase at perform XX% of and supply year-over-year Supply to saw continue XX% million Technologies difficult chain of environment. segment, which or a well sales full growth

continued expect business. and equipment in demand, markets in year and in our shortages end year. our In volatility this increased backlogs be and capital Components notably end at Our most and demand labor the Engineered segment, we aluminum aerospace casting Assembly increasing segment commodity Products oil to and forging and our gas, challenging, inflation rail

impacted $X.XX our During approximately our by negatively business share. adjusted diluted full aluminum per EPS year year, in the losses our

Assembly improved and footprint, consolidations included Our our plant ongoing cost reduce Engineered segments, fixed have in several XXXX. drive Components restructuring help to efforts which will profitability Products in our

charge was to a customer one-time in to more related driven to semiconductor quarter year expenses $XX Technologies related and fourth the million the continued return million, the of in was up our business. GAAP normalized Now aluminum fourth chip impairment ago. our an occurring sale of $X SG&A estate, Components Assembly of loss business our one-time the million. $XXX loss items, X% our quarter production other operating quarter lower $XXX in adjusted The million XXXX the and automotive to operating million non-recurring increase our compared $X.X million ago, aluminum Engineered year items our $X.XX as excluding Products of real increase $XX our expenses the a borrowings year a year-over-year million XX%, the of the gain of review by primarily a were has year-over-year. for related in our impact in quarter XX% the a which were year-over-year result segment compared $XX as quarter higher sales adjusted I will with of $X.X Supply and represented and $X.X by shortage, result a to results. was effective restructuring, of expense $XX rate sales $X.XX. excludes throughout fourth was Consolidated million EPS higher On charges, which of goodwill quarter On caused to lower tax on tax higher was taxable earnings EPS, statutory the ago, quarter loss segments. Sales a $X.X a GAAP of in rate of a Interest The income one-time basis, compared rate volatility were driven levels. jurisdictions. which a is to fourth which million, an million in million the one-time totaled adjusted base. U.S. benefit basis, with loss average the higher than

with unused $XXX the suppressed of included $XX capacity ending to at continued banking of various on strong, arrangements, which million which under of $XXX million cash consisted year $XX million, million and liquidity Our hand a our borrowing availability. be

million. of a During $XX and on million the we sold recorded location Drop gain the Forge quarter, our sale for $XX

which We drive complete the will in Drop expect to the this higher Canton during of margins future location this business. year, into consolidation our Forge location

Supply year forged Each our increased and For the compared customer machine up XXXX, XX%. except the compared a segment, Technologies was largest which in were increase ago consolidated increase $X.X XX% billion, with products full group of XXXX to demand businesses, to sales the levels. year of an saw our

machine equipment which year our loss the businesses, full offset was of due Technologies to and forged in of products performance in than GAAP capital business. XXXX and Our loss in a in our was EPS $X.XX losses primarily our adjusted operating our and more EPS and The Supply castings loss aluminum was $X.XX. strong a

the during sales ago. million daily X% quarter results. million year Average were now markets we end Technologies, $XXX key and Turning fourth civilian up up compared a to compared many in was the up saw $XXX of Supply the to year. during net our quarter, duty quarter truck, In The the sales segment XX% in quarter, the biggest the X% market heavy were semiconductor, last In year-over-year. to industrial and with markets. civilian aerospace strength increases aerospace equipment agricultural and

in new XXX, the mid-market customers initiatives and our We have around end including business XXX new quarter over continue customers In success centered various with accounts. in to over markets. totaled XXXX, products industrial fourth supply and new

customer and were which sales Operating margins and well were as inbound customers domestic to as initiative million prior supplies higher Our initiatives. growth and middle-market to this in one-time by X.X% approximately totaled margin income in each industrial freight favorable impacted Operating items, period. costs, ocean excluding income $XX levels segment at costs quarter. is on adjusted and pricing contributing product higher the consistent through and sales in current operating And in were segment. increasing focus this offset our

semiconductor relating certain higher demand and schedules every affected segment, driven up current fourth year and full production key and negatively million increase activities. by our this our points quarter. an plant to of XXXX again Weekly in were were one-time ago. market. driven million of increases XX% the of the $X business which Components fluctuations operating The $XX $XXX delays this quarter higher $XX aluminum million, in by drove chip million million shortage. were year in respectively. sales compared XXX segment operating million million operating compared sales an sales customer and plant shutdowns of pricing closure the initiatives basis levels loss impacted charges, were OEM ongoing consolidation our and In for Sales again primarily $XX.X XXXX, Assembly For in virtually was the to The ongoing end to a net plant demand margin, $XXX income loss and by and quarter quarter $XXX

shutdowns, X% full a ago an increase as the levels $XXX from customer incurred For year the pandemic-induced in in the XXXX, year XXXX. net compared segment sales of to were rebounded which sales million,

resulting in income losses in operating launched on to had XX the an were million compared growth $XX which losses XXXX previously loss for in million in demand basis in isolated business, $XX of $XX in million The sales Again, segment compared our segment on aluminum to XXXX, this operating $X in basis. XXXX continued our was year expect products. loss XXXX. was million from and adjusted segment adjusted We income operating million higher operating of

segment by increases non-profitable across low and production the cost in are and to high in We losses negotiating implementing finalizing aggressively lines, moving production the planned addressing facilities, labor all exiting product price automating consolidations, products. areas

XXXX. of their Bookings ago, actions than quarter our the to increase In X%. segment, Bookings last sales a million to capital an first totaled compared a a level fourth the XX% of the are operating in our We up were In segment’s $XX substantially compared ago. an ago to of quarter, in at year expect these losses year. were highest we backlogs business, of and fourth since and compared reduce Engineered more quarter pandemic up in the to capital to million business X% $XX significantly are in million compared $XX increase began Products year new this sales equipment year XXXX. equipment

backlog XX, more December $XXX than XXXX a compared increase an million, ago. of year at was capital to Our equipment XX%

commercial aerospace. our business, capital partially forged business from Our our including was to and results market demand and strengthening markets, continued key and by oil military products be rail where equipment gas, and in by impacted offset machine end in performance several sales the weak and

$XX of real initiatives. the the $XX for to earlier, a were segment’s proceeds one-time and operating expenses as million. we quarter, for due million various gain million $XX on cash of losses estate plant sale of sold charges totaling the recorded Also, During restructuring mentioned I

sales XXXX. to $XXX to ago. $XX $X The million lower and was decrease were machine the charges due compared excluding for restructuring Adjusted year demand the a year full million of products. in forged million For XXXX was in operating customer million $X our $XXX to million XXXX, income, compared

business, which business During offset the our and operating in equipment by two losses our was capital the in forged more products concentrated quarter, operations. profitability in than machine strong were manufacturing

significant We in and price changes have leadership headcount operations, changes, two these implemented reductions. increases including customer

the finally, in to As a ago. the corporate million full XXXX. XXXX. result, both XXXX costs the quarter a and improve totaled year approximately On in totaled during basis, And our $X in expect $XX year forging million to a compared we corporate million results business expenses significantly $X.X

markets XXXX, XXXX which approximately products by Looking our machine new of Supply in be at customer are in ahead over be sales strength growth increased growth previously revenue we levels, would in segment. from will driven and each products forecasting demand and in assembly to capital XX% XXXX strong strong The businesses. record levels. components launched from Technologies, in and forged most end expected is backlogs several our equipment volumes of the revenue

expect challenges, chain we for guidance the to not inflationary during resulting we which due the XXXX will and in we positive improvement income significant time Although provide in to expect the profitability year, year. at supply further pressures continue net labor in headwinds, this

to back call the turn will I over Now, Matt.

Matthew Crawford

Pat. Thanks,

team. to markets, times the I have challenges moment global Technologies, or be the in and it Park-Ohio performance whether reemergence take of open the we Products. it a have performance seen want very been the Engineered I some questions, of intense thank at industrial the the of steady up in Components These Assembly Before for Supply in

our operating growth I to got our want that the for And are model. that’s now very Increasingly, work times. business portion and and affirms are in are and acknowledge to have are reaffirm efforts. the through the in incredibly These challenging very, we professional substantially everyone thank that All products the people the of right as right working business we sacrifice we the seeing of other And personal big business throughout that their happening we a restructuring, have succeed. customers hard.

team. invest most the think ability for right to long-term. importantly, and got have We future the got And we the

happy of to done everybody. the be lot work in am thank good in it proud history to that, that was I said all put So, Having books. you of. we XXXX A should

it open to questions. will I up that, with So

Operator

proceed first Thank with KeyBanc [Operator Capital you. questions. Our Please Instructions] Steve come Barger from the Markets. is question line and your with

Steve Barger

morning. Good Thanks.

Matthew Crawford

morning, Good Steve.

Steve Barger

Matt dealing/going And assembly most more you looking resilient? how’s with What tough at products a and do now And those to specifically very we the in make had Yes, year customers? general. likely. ‘XX to conversation general know tough a aluminum can businesses start

Matthew Crawford

specifically saying, assembly Yes, great in approaching in deterioration the sight, a portfolio question. aluminum. components group, lose segment I not by in over want revenue, of quarter. did to our general automotive of I product quarter and substantial flat. start of The strength our let’s our the think customers saw And our and saw we most of peers kind

we industry. aluminum, the broadly is So you components, revenue of the by gains, the lot automotive more new again, businesses of electrification, sort in overhaul, a will, assembly lightweighting. if impacting that of saw driven

with those to of challenge. intensified end businesses of customers collect years line want So in. some P&L re-unreimbursed every last positioned the costs, challenges, in to a in has continue today. confident the challenges reiterate, conversations spite at in be that, been to we Having I of we’re that and And the the said continue those for through

that benefit customers, volumes, And in we point benefit our think fourth model the going will of pain believe I those important quoting extent. we value part we’ll think think we’re that a supplier we We forward. strategic of our prove some believe pricing activity see our quarter. we sort are that significant that. Again, was from the and I chain, So the that of to our to

think we’re conversations customers, automatic customers, that’s will, it I of Some But bottomed strategically of not will again, I we’ve the will out to important reflect our related that, difficult of all to if to Having either. some that. you think said subject and and think the pass-throughs, be negotiations. sort aluminum, about related them to the I particularly do

has a in more that don’t ago, think are where upon XX have, XX we which I are in performers business continue the are not than reducing significantly not way environment efficient, changed very areas we changed automotive, The months strong has benefits XX to where has efficient, us, incumbent we areas our it’s to we business, for enough ago, certain cost, focus strong business. on with models, were less have overwhelmed us months to are performers. very mix and more not changed we

we needs our some the mentioned, think, focus current restructuring fourth So quarter, challenge of serve I there. has business need labor And model, taking our in respond tried of we aggressively. And needs, rise us in those to Pat, better long-term. particularly out cost our And to the able the to need the we to gotten customers be footprint meet Midwest. that on of to to to also on focus to our as really

So need some we’ll our I out think in all the to about additional. the their this make ask I we’ll the And for that some we’re help. for get meantime, of do I model their to long-term. we contractually, want serves needs something customers got cut don’t to think us operating but that And migrate we work

Steve Barger

quoting activity environment? have Yes, can the is of now three structure for the understood. you capture for did material all in And adequately quicker guess, current segments. this quotes you say cost marketplace And high, I that you the adjustments? the a inflationary And is contracts out question

Matthew Crawford

stay the their those would And question, not freight. which had we protect that a to invest XXXX. I think they have job, think I customers. the recaptured that that’s, inventories is extent to model, throughout will isn’t to LTA of then and side, but a the talk steady acknowledge sink applaud them. our Yes, think me fantastic need big And in supply the that compliment these I So trying it? of really into to have want that’s we big heavily increased their done large your large the not on of entirely, able amounts to less and picture. question extremely we’ve some answers But Group, incremental significant you let tougher Products not our a those curve I on guys in can say meet focused, Certainly in I business cash assure premium focused. team entirely expedited I I are is, Engineered technologies to performance days, the were ones. those really teeth costs to extent,

that then So margins, I on example, an obvious business think at We obviously next we have ship opportunity the the get and to and equipment’s we project. quote start had right? new again product

time able business I sure quote to, over make re limited a of of amount sort we’re fairly you up, think, we’re will. So that and if keeping

challenges chain there supply refreshing of that continues performance Our been and less sort have pricing about delivery and that impact I we pricing about and that business. making sure think, to meet about can in more schedules, more

the productivity, an automotive. are don’t that things The you’re of everything whole signing focused agreements, spent, challenges automotive with squarely leaning Some world globalizing well, career, all on do erratic sight, automating environment. and that production in my business out long-term all discussing in

got So, will unfortunately, But for prone lot allow particularly adjustments. to we we we have that some quarter. contracts materials aluminum is fourth adjustments. we Again, I been support, see the aluminum raw where of the raw a use. material damaged. not are with And is as in the quarterly think those some killed And only not

enough again, we we’re our working, to expect it. think, So, address strategic I we’re important to that that. partners with get And

stay the automotive, of not it, of businesses our ahead across the suggest challenge gotten significant business, we’ve in XX%, hadn’t the it is been opportunity of have that business. to been stayed more think either or I hard most the It other the of it working refresh regularly. it. to for on day The in really have no, people to challenges call So ahead

Steve Barger

EPS, GAAP free talk $XX operating adjusted for cap. you how flow said about just CapEx Pat, that last Yes. was of working already this year, that you you positive was and a flow expect requirements. cash use about year? standpoint, do talk What you million – adjusted think from looks half I then of And a expect maybe cash working Can through,

missed Sorry, that. I if

Pat Fogarty

That we chain will our of will to constraints in year, no sign, capital expect Yes, a problem. levels is positive year. the very supply cash ease working assuming be relatively would certain flat. drive flow. next that half positive That to which operating start No, second remain the

range We $XX CapEx XXXX, and between expect to our million. million $XX for

some free to flow that complete number to the expect have Which current projects positive mid-XXs. push We major year. in XXXX. But the during cash would

Matthew Crawford

add building to that, want non-budgeted cash of in a benefit from we I Steve, benefited a Chicago.

those continue forecast as clear to During to like the expect unbudgeted see restructure like – to don’t we benefits benefits things. business, that that. be we And we

big a that’s think one. particularly I

side, capital. So being to think opportunities of about some in restructuring cash I benefit some find wouldn’t of the material. continue that overly we the flow on terms will of it But from offset to the and

Steve Barger

you. Thank Understood.

Operator

you. Thank

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

Quentin Harrah

guys. Quentin Marco. Hey, for this is Thanks for taking dialing in questions, my

Matthew Crawford

Sure.

Quentin Harrah

– It’s have Just past. in two. the a

You’ve automation talked manufacturing color apart? much improve about all how the efficiencies. activities and on some doing provide you is Can to playing

Matthew Crawford

is of are invested heavily belief always Having to Well, great that let we automation some by in And I the that’s core production the the I stakes, challenges, of start that sort think question. I across business, think automotive, our in drive particularly said challenging of think, answer. the right erratic the efficiencies the have some automation schedules and a where in table that, saying, that’s business. me

for what particularly we that how next X,XXX you great the not automotive everyday is think we’re it’s needs or I X,XXX that for in out. What seen The parts line a XX automate make years. that’s a the have challenges a if day, playing either XXX. are production That’s line some production to automation. seeing, where needs space, candidate expects

and capital a been important now, incredibly has cost to automation become relies of on sheet, right growth consistent volumes But period over developing a requires fundamentally standard extract are quote that long part stable significant of and say time. has that a opportunity to because job investment, nimble to that costs. to an efficient our more be team our would I So, our

one true. fits it would you emphasize is of is emphasize markets end not the also more to the is size some group, these didn’t production some where And for difficult automation lines. the that exposing even of volatility products what saw would challenges labor of a that that’s in I solution. our say inefficiencies the And that in work all I more. So, related some we assembly automating, making

I So, think very isn’t and it’s way still a to critical – of is this important that a just is a suits in that volatility, customers labor part process. labor And access demand the always the still the part, automate continuing to solution.

Quentin Harrah

Okay. opportunities you year how and into of you talk discuss And your about about secondly, could are guys industries pipelines is, XXXX? feel looking? aerospace fiscal maybe heading how pipeline auto And the

Matthew Crawford

That’s question, the a way. big by

resourcing, have indirect the global and just we numbers, say in year-over-year some Are second on direct would general, for is in the production. and gases industrial didn’t maybe think while on But Europe little relates Russia, the palladium, unpredictable. reducing Ukraine insulated but we the it’s bit, have neon about in what restocking be Based on that quarter, sales I quarter. back you means chain the again, I pretty have global huge nobody some lot obviously, a it have challenges So, bills But quarter recognized understands in first to clear, additional etcetera just do I fourth production between that talk world. third that and we production, out the new at some frontlines back to some will we it’s and to and I of think it, that we wire the positive and data the for out think Ukraine, supply as have still a I quarter the certainly heard, exposure, causing harness where growth mentioned hopefully, metals like war that I production bills cycle, risk, that the was side the visibility a to in I Russia But and perhaps and to problem. U.S., production playing think us fully car be expense. increasing and

number So, But expect well. my mentioned is, the I I incremental seeing Aerospace, think predictable we benefit. that to set I goes builds broader think a can auto. year as I take more that in know. we in comments, are that on don’t of rail what as

we are I XX%, think those surges of in think we And see are XX% of of we cautiously going for multiple sort optimistic, But have we that not very no, So, demand. type to that see to XX%, sort nice waiting growth. markets re-emerge. I been will GDP

Pat Fogarty

would in customers in add script fourth within my business, new I XXXX, XXX mentioned Yes. I supply in our that technology the XXX, that quarter.

rely customers Our on starting chain see to are that. our supply expertise. we And

chain world, tech, you that are supply the supply are With know customers constraints to seeing around the we because come the they seeing we can get job done.

into the the supply tech we and growth throughout and current current expect And so have year is the pipeline continued within solid, we that year.

rail, part markets demand been year. that’s our increases stagnant market oil of think gas. aerospace, end and years, the products over end engineered the backlogs that have and an I group. really I this in So, last That’s buoyed mentioned X our by growth in important in

seeing pipeline that business nice are in in – of a We new those markets.

Quentin Harrah

guys my questions. makes taking Appreciate I It Okay. That’s sense. all had. you

Matthew Crawford

Sure. Thank you.

Operator

Thank you.

questions come the Our from of next line proceed Please with questions. Sherbetchyan B. your with Sarkis Riley.

Sarkis Sherbetchyan

my thank Good and you question morning here. for taking

Matthew Crawford

Good morning.

Sarkis Sherbetchyan

real just focus the I on quick. sheet balance to wanted

some quarter sold essentially real ops. estate which here You financed fourth

own have XX-K. on filed plenty as I previously estate real look your of back You

maybe some sales arrangements? do will sales point liquidity just asset operations cover you you Where think your leaseback than more more the or expect blank, do needs So, business? your even to operate

Pat Fogarty

in reverse take will I Well, order.

profitable this be to expect year. we mentioned, I As

implies that positive that think I So, more EBITDA.

finance to XXXX, will able be think forward we we So, that moving for own our growth.

to will to need extent, think so injure to we So, think the speak. balance I sheet, I that don’t

to your – ourselves at sort the related only we in but So, where to expenses going. unreimbursed some prospectively that heavily inventories of our would be to fourth the of customers. price We paid protect that’s building see quarter, not also

unwinding normalized. more of some that as things anticipate get will We

our and we said provide flow And I I cash think stability few see math minutes be growth important the suggest the right, So, the we will think our I spent you balance the money restructuring. opportunities would as sheet. in financial a that that ago, from no, Yes, that sale. that will free to continue on will the are to we got

there if to be that don’t in are asset that expect the continue we of I our think the particular from scale forecast. few, certainly margin to will opportunity. at any we that But account sales benefit for that

Sarkis Sherbetchyan

over and consolidated changes EBITDA the fiscal recur That’s expect through to components helpful. of I any? if ‘XX, was And looking these amounts release, of definition of the revised. you in do which in detail? maybe the suppose, just you go And kind Can

Pat Fogarty

Sarkis, I will that. address

restructuring labor specific in that add-back non-recurring add-backs down it Also, we on. we to particular agreement, of of of that were spent. in in used item, issue year was if disclosing X periods, are COVID that which our allowed any have money look of changes issues made definition in because what a is release, net the we to spent related our money our defined income, to or you the And we historically, allow which the related as always So, items releases. the when most press would you wind I that related for amended November, changed at press and the optimization. outlined expect add-backs credit current know, the And business for either to EBITDA that to were future that for EBITDA. Page expenses, On that

we we in for of whole other number add-backs, say historically that were that look agreement. would of that, most add-backs the definition non-cash a allowed credit it I by our allowed for very an at when So, service availability that. from million. very, unless doesn’t blow through is about are come doesn’t which into it calculation, coverage far debt – play, really away $XX And ratio we covenant, any

So hopefully, for that’s you. helpful

Matthew Crawford

Sarkis, address the an want which I can to be what our elephant is leverage. in room,

was As business Pat we not not our mentioned, liquidity. have goal, our related that the long our specifically And for Xx. to leverage ago, target stated that’s again, really

general the we distant aluminum, business, rebuild, where think around the that real got target focus is But point we inherent our of Now, to the very think a at I the that that inherent if is particularly I EBITDA area revenue and little what have are again. number numbers may the showing moment. sort about and profitability think seem have revenue much a profitability of again, the you to in

of invest, have $XXX well our EBITDA boot the or then million flexibility historic to got, beyond gives and level. I think worth continue and which at to liquidity, at – or to us So belong over build we to

to not I recent the an challenges in think with of had So, it’s the outlook we obviously, little am I But less the the some months, of six a it’s suggesting meaningful important metric. business. not most

Sarkis Sherbetchyan

and the pricing have the of No, right. environment and guess the a to operations debt obviously accordingly, the I is is appreciate this good discussion, I the and kind the color. forum market equity judging because clearly securities

driven is much outlook moving talk of to for through line you be to talk specific your drivers example, that can guidance want the and the of much growth maybe just So, of kind how growth pricing on this. able to by top And by and to how volumes? of if in XX%,

Matthew Crawford

demand, that we as we result you typically let’s in should the know, products double-digit as Those forging, priced in those due backlogs extremely number equipment, and script are negotiating improvement Alright, business. go the oil gas. my equipment factors. in see in end is that are strong our and One and mentioned in We and I rail, growth pricing order. are Sarkis, of over aerospace, that. That’s a market as our a segment the start segment-by-segment. capital are in to of capital

the So, and impact the our group, assembly is of I so been the supply of In volatile chain some in nature pricing numbers. element that constraints. relative last to have business. think the that’s components X of pandemic years But growth there those

normalizing We demand. of expect normal some that

In addition, Motors. a $XX XXXX. we the on have in a fuel give launched a million you for number of block of products Gen X one assembly General business engine for about is example, which will I

volumes XXXX. So, in XXXX in large to to quoted that business of we blocks launched were being in get expect

in seeing the on addition, supply we the I technologies, global In are based economy. is think demand

domestic. XX% XX%, Our XX% business is to

are And end we every strong demand across in seeing to key XXXX. market We continue expect end market. that

Pat Fogarty

– And haven’t those material certainly but is markets, let’s incremental customer. markets, say a incremental major pre-COVID, seeing ones. Sarkis, of as key I Every XXXX, our lost can’t vast majority unit just one end end the markets all I in color this every growth well. all, we our add majority vast of say the is the of might Since unit growth.

So, all we while on is unit it of we seeing material are lost question and the growth I business. here is of haven’t challenging diversity complexity directly point basis, customer. think the macro corners the given in the our to your business a And important answer

us expect again, we have surprise or near revenue. – record the above that to is So, we it be to no got

for with gas, So parts and business aerospace. growth, for that’s still example, oil growth, unit hitting and the of pre-pandemic unit key example, not

can feel just about that no, think this not confident growth. is we unit So, about This inflation. is that I

Sarkis Sherbetchyan

again, for speak if piece are puzzle very step back Good. drivers positive kind certainly guess I to And solid And a very as we for year, profits whole the a income this net outlined the And important to you of second, helpful. right. XXXX here. and for

the you the So, my means bit get there is and of half, we look to for the solid to you does more have to a losses business? cadence come income back people? half second net in to here spread think What things different that? different mean, in what then like little of And because positive to or the a front question do it’s guys expecting bit profitability little are Do through ‘XX? evenly is, expect what it the getting

Matthew Crawford

right this to not we any solid. guidance word are So, will the that Sarkis, am to inclined it’s you, be And give I the now. frustrating one because picked

So, I at it to think we got that. leave

we are the are to just because penny. think solid, I one not say is, trying make I we to point going suggested

just We finish you to kind the point. are or not revenue But are so nose breakeven the over not granularity our push we – forecasting, of are over trying more can the nose the here. trying impossible we of are to profitable to we almost that. in it be just give not than get We we context believe just to line try

to trying from goals, achieve to We rebuild substantial saw. are restructuring we margin can the the if see benefit those improvement. expect we would we and And begin to that

benefit things we cadence, will will year year. the a was of the there we there part is still are in challenge was the a think a than was lot, we early Supply terms have worst chain, the continuing of a But discussed – of the that in that In Omicron year part to early number business it it is of be a is, big factor cases factor, some be in big to a a our January, business February. was in whether a ago. challenge. clear,

in of eat So, goes benefit I March I we improvements, assumptions issues, some year the from Pricing as think will And we cadence measured is the But we line the it’s punch the think on. based discussed. discussed. have of some into I the as that things will some particular. on be

things start us benefit will won’t. quarter, Some in regardless, will first and the some

stick, the as decidedly year incremental the hockey but as year the on. would a not be cadence goes incremental So, goes on,

the is we best forward Looking do. can

Sarkis Sherbetchyan

very No, much. helpful. no, you it’s Thank

Operator

Thank you.

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

Steve Barger

thanks. guys, Hey,

appreciate think be segments. product growth top launch EP Pat, comments new on activity up said in gets follow-ups. Does couple double-digit I a And you the the double-digits. line assembly? the will you to to Just

Pat Fogarty

Yes.

Steve Barger

obviously, single-digit, drive enough there there activity to And out is comp? tough Should very we that be supply XX% or tech, more towards thinking double-digits? that’s domestically

Pat Fogarty

reasonable, it that’s that single-digit assume another growth. think think can type But unrealistic. you XX% to will be that assume Steve, is more I I

Steve Barger

Understood?

Matthew Crawford

Steve, mean It’s any the guys and classic unprecedented. surface. the despite shutdown customers a and that are notifications little performance for it like what line, There, year bit Friday over the is stable at of going and last amount on calm to team’s profitability pretty the needed very appreciate surface, very looks these effort. much next on it’s duck. the their the get week I not on still the calm revenue

expedited is through. they it fundamental So, that These issues working are freight. are all

job So, year continue the tough, it’s doing going in pointed guys pretty strong expect and Those of job. great to great be we the particularly done comps. as them have against you to a out to part early

Steve Barger

you lot a the to you that in supply still But XQ around to improving sequence get EPS everything of and at cadence we that through year, do want tech negative activity positive And in don’t just reasonable given EP, the last least, be know get about is probably specific have or it with can to that that even in think consolidated think one, before more components, is the in you you start XQ? you I guidance talked assembly given.

Matthew Crawford

conversations as customers can’t can’t go It are but are emphasize just just and we we we, can’t I the Steve, important we it. apologize, with there. question, answer that having asking I important key right. how enough

those I are think the we again, true. these results conversations have And that tough But particularly of those tough matter. And customers. And these are important. are are very confidence I times.

EPS particularly that on it be to answer question. impossible, an So, basis would

Steve Barger

much time. so Thanks for Understand. the

Matthew Crawford

Steve. Thanks

Operator

back over There you. I to this like questions would at Thank the further now any comments. no call turn to Matthew are time. Crawford closing for

Matthew Crawford

Great.

this to history books, earlier, the put As glad couldn’t. one in but I mentioned

have forward and a here bright you much. upward great, Thank of proud to lot re-emphasize team want and more are to a and future we our onward. look and We again, very that to

Operator

teleconference. conclude today’s We your does participation. This you. Thank appreciate

time. at the You may rest Enjoy your disconnect day. your of lines this

Park-Ohio (PKOH) 16 Mar 222021 Q4 Earnings call transcript