PKOH - Earnings call 3 2023 | Park-Ohio Holdings Corp.

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Operator

Good morning, and welcome to the Park-Ohio Third Quarter 2023 Results Conference Call. [Operator Instructions] Today's conference is also recorded [Operator Instructions]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. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. The list of relevant risks and uncertainties may be found in the earnings press release as well as in the company's 2022 10-K, which was filed on March 16, 2023, with the SEC.Additionally, the company may discuss adjusted EPS, adjusted operating income and EBITDA as defined on a continuing operations or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles.

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

Matthew V. Crawford

Thank much, morning good and you to very everybody.

I've of how XXXX not we results Let we and unchanged. discuss a report.On remain note, how and volatility, and a in record-setting year revenue little as why as that to forecast, and challenges, labor this revenue choose me on compared do bit inflation XXXX. XXXX in have start is record despite pleased expect, an business last proposition by ourselves results have going all-time off often of stated based achieved prior change setting supply our challenged in model to periods.As view to years, value year-to-date have our we're compare demand XXXX over This script our record before, couple here to the and our for we financial the our to

achieved quarter set the important metrics, in same note that record to results. third not profitability in we've EBITDA While the the nearing to was it's also XXXX.Turning

gross showed and other growth third as of our revenue leverage strong in margins The solid profit quarter X% as operating well results.

in flow in which sheet to during pleased balance continue strength. the quarter, liquidity strengthen anticipate will cash diversity we're end be extend significant strong end the to free and quarter, continues through of and Additionally, our position.Again year to see markets will we the this our

half, in business a of XX% all contributed our quarter. during the moderated blistering overall to from the growth performance revenue improved X While third segments rate first

become across profile. to stable of increasing and that noting aerospace business, continues defense demand growth the While worth an it's has part the be our

during this priority been conclude restructuring grapple more of which our to inflation, pricing to our allocating several commercial to products, year last centers and especially adjustments, with we're years, model, by increase which operating relates capital We as pursuing we our productivity a of to services and from benefit aims as continue excellence. operations it as our the also now best have we addition, labor.In focused

spending UAW stronger, the quarter auto fourth results, our some focused strike take industrial the we will a around the at that positioned company end more While headwind and Pat. certain macro that, we of I'll well am turn customers over our a it truck and much trends will policy, began and year I year provide infrastructure than to disciplined of reshoring.With important and to advantage to

Patrick Fogarty

and Thank you, good morning. Matt,

year-over-year were over costs earnings was XXX was price our gross basis was were growth margin business, year. customer offset continued year benefit was to and X and billion, business expenses we is quarter each up our in totaled half demand Sales pricing. inflation. volume our year unit last to year-over-year diverse in of year.Our years, from business $XX and increases from points and each sales months higher raw year-over-year very last second the growth year-over-year. quarter this in our quarter, was we per the million share and increased and Our as continue sales Sales approximately EBITDA global quarter, margins business strong of in and the growth a business addition the achieved results growth customer since at third significant our and due which our and levels increase of quarter over also our profit reflect sales XX.X%, highest growth to sales in of were quarter up X quarter, quarter operational and driven of X the last and segments. product costs.In quarter all segments increased and first third and implemented operating of increase of their In which at for X $X.X segments within improvement in The sales million delivered the representing remainder levels, million an gross the base.Our X% third third strong the income, approximately value-added million, across consolidated sequential margin a were our both material, to each continued margin. a higher driven across percentage prior gross labor to And the $X compared XX.X% We $XXX net year, last personnel to was current continuing gross operations XXXX.SG&A by our by that the record $XXX of sales rate. quarter favorably level, near-record XX% level improvement strong were higher in compared quarter estimate the compared material highest general driven second than

reflects year As continuing in SG&A a last XX% year-over-year. was of basis, remainder third $XX higher XX% quarter.Our compared year-over-year operating second to increase, compared quarter and operating a improvement businesses.Interest customer the compared improvement of the to million margins higher consolidation with to ago. $XX.X compared resulting quarter million and due average in was an year positive this actions ago. compared of operational operations XX.X% a the income quarter year to the implemented third $X the the to plant adjusted from impact the sales, was On was price $XX.X up percentage sequentially in our prior $X.X borrowings million from across to operating quarter XX.X% by year.Consolidated interest rates, million increases completed quarter the Of million from in initiatives driven third million expense $X.X periods, the second was in income the from

X% of $X.XX to full of compared to year.GAAP last expectations basis, earnings quarter per the $X.XX XX%, was operating our increase per compared our diluted compared an $XX.X Our per per tax earnings from earnings million an the adjusted for XX%. This line earnings share $X.XX an highest share, effective share for XX% has basis $XX a On of cash operations million increase income share in third last year. XXXX. XX%.Our On $X.XX was approximately sequential since the the continuing over flow. in year quarter, million flows of last in EBITDA and up the continuing compared of XX% was quarter level third year.During a generated with quarter operations equal $XX $XX share diluted cash share is is EBITDA was was from On and $X.XX a the the free quarter second third basis, quarter operations which in continuing per to ago, quarter's GAAP adjusted per million of improved last to our year, our EBITDA increased from sequentially. of year-to-date we to

the working During made businesses. capital across and X months significant days have most first the the of year, are reducing benefits our our of we net seeing progress in

have year-over-year. basis, to strategy.Turning $XX to million. segment totaled the million sales $XX hand quarter $XXX record key $XX Average during extend facility the existing As future a our year flow higher end flow we to a arrangements. were cash cash revolving daily now continued sales flow customer In and year foundation million to strong consisted maturity The third various result, in On banking driven to up at estimate between fourth was we be million Supply range liquidity of million by a amended chain facility continue In realized our liquidity our this grown to to which in increases. price free results. expect the million $XXX our compared $XX segment year-to-date on million $XXX increase capacity $XXX in date. ago. demand enhances with X% year, quarter, of of a the end free markets X% sales and our Technologies, million.Our $XXX this quarter net of and most supply growth business our cash expected credit unused and strong of up The were cash September, $XX customer sales to combined million, scheduled and under XX% support borrowing amended free to during full million our strong the

continued our adjusted compared million driven costs. XX% business X% flow-through position consolidation industrial our supply business customer which pricing.With to our a launched semiconductor driven compared include future has self-pierce the and were continues profit during to segment.The and A few equipment. the million consumer-related an focused market integration of XXX Southern end strong were sales will our Operating operating and quarter process increased to higher the as business, During ago, respect were pricing up a products, growth.In On in both were end well and operating the quarter, including customer has operating manufacturing self-piercing margins products civilian our million costs the each the our as current our to year-over-year. Components demand in plastic products. million sales X.X% grow agricultural a in gone $XX.X end million Charter well by increases our increases quarter, higher-margin to year been quarter, aluminum year-over-year markets, certain again which million significant this in $XXX $XX ongoing. in a defined We by increased supply customer our to reduced largest this proprietary exceeded $XX last year prior our from industrial and remain operating initiatives from our segment achieved for in lower and global increase basis, totaled military aerospace, products year the and ago, on has margins to as exceeded points basis operating compared truck which of and quarter year bus, activities, of this segment, in resulting clinch business markets million and Fasteners ago, and products from levels, expectations the XX%. and sales from rubber new the heavy-duty The increase Automotive categories, our proprietary of $XXX resulting product in has year-to-date year-over-year quarter.Segment acquisitions for in sales income our the increase been grew SPAC quarter. improved the significantly end $XX.X profit our and Operating and segment, have industrial other Assembly an sports income fuel-related Sales and plant increase realized margins year price by in income and and year-over-year, isolated, included $X historically driven power in efforts addition, market.In increased clinch for perform our the fastener business in enhancement well is year-over-year. to

We impact continue customer operational increases, implement and will price which improvements to positively results. future

loss million. During the approximately this quarter, in the third $X incurred operating was business

million aerospace capital OEMs a by of equipment the third were continue in $XX around products business equipment Products both demand XX% our business and We a and of strong business.In sales our initiative electrification in over driven million, for ago, segment, resulting both were products automotive year our equipment year-over-year, this to certain parts and key business, machine will lightweighting, in the term.In the and customer aftermarket sales services our benefit and new capital onshoring higher forged auto to long up platforms of machine compared increasing every Engineered year.In increased the million, quarter remained $XXX believe was in end our as several in again September the demand totaled last $XX markets, business in quarter a of ago. are strong compared sales Revenues as and up sales X% forged our the into products in region increase XX% defense. strong sales. backlog key of converted rail $XXX increase of in driven Bookings and compared this including by an this backlogs quarter and were end our to XX quarter to XX%, being business, million, customer the and year

$X higher was period increased to sales segment facility than equipment income costs the our a were $X in compared our equipment in and impacted the approximately quarter offset from start-up adjusted in our higher line downtime XX% early year were Ohio million, of in sales increase operating forging as this by million, a business, ago, and the adjusted basis, newly part results. our an in income this forging operating income million and On operating the quarter, $XX in X%. incurred $X year-to-date margins on in prior the installed was operating of strong quarter million in segment to $XXX XX% were margins million the basis, flow-through and our year-over-year on Canton, year. the third an lower forging business.Our profit operating was each income During capital And

to We production segment $XX this continue steel respect XXXX we end we in increased related certain continue directly year sales used to year, believe received to trends electrical used our in battery XX% part defense to over XX% with This the business win of orders new technologies support in business these of munitions equipment our of guidance, have and will range finally, -- million sales and of in growth of to are benefit.And full this new reached maintaining our markets. market year-over-year.

production impact on plants per UAW, the there full difficult Workers to the impacted to affected negatively revenues the be United $XX fourth be of appears the our as back OEM and and from it's strike, $XX approximately current between normal Components the by the quarter strikes Our OEM quarter Assembly Auto revenues by estimate our agreements million levels.Our impacted to million customer will tentative Supply month the up levels which across plans.Although ramps segments. fourth strikes Technologies to several total revenue OEMs

the adjusted We call cash free EBITDA for over improvement defined operating as full year-over-year Matt. flow and to per earnings the expect continue to turn adjusted back year.Now in I'll income, share

Matthew V. Crawford

Pat. open for the Great. Thank much, now very questions. We'll you line

Operator

Capital Storms questions [Operator first Instructions] from line Our with come of the Dave Stonegate Markets.

David Joseph Storms

kind to of wanted start. Just

forward? are the half Is half strong How the room be see in kind a do to volumes you of think going your Or to mentioned you 'XX? of was volume through still the You that going and pricing? and product that there call into do revenues of push remainder pricing. driver 'XX

Matthew V. Crawford

first has the now over us priority, inflation subdues, very an love in great It answer. question. issues been yet, the issues not and a opportunity no would couple know No, a the of for incredible focus amount labor as opportunity issues it's to in is market question migrating industrial challenging in provided has of last the what's of raw or pricing. so years.Clearly, made the that to push been during There's areas, couple has labor chain last inflationary to supply Yes, from strategic I mentioned, been -- to the much pricing one space a particularly that those a I chain material years, I supply X as lesser. over to joke.

complete not I our significant comment pricing so close say and with dealing -- lot with into So planning challenging business yet, entered less they're -- robust efforts been of not we very really our it's difficult and will have we would as a our out conversations.So process difficult really to and next around period become But ability year. has a yet, still inflation and and labor. we're what that

can anticipate different opportunities inflation. a want that get And then issue. don't to that if we we the forward. to I And we have will think can't, I and So that's suggest the manage just smaller smaller moving over. additional it's

David Joseph Storms

and And hit close QX. flows a switching looks in of like a Understood. It cash for you just to what pull goal do of year have Very cash bump those expect then Obviously, end your to flows to $XX the you for nice million out the to had $XX million levers the second. of goals? Kind you XXXX. in stated helpful.

Patrick Fogarty

David, this Pat. is

first reduction throughout in working The mentioned, I fourth manage aggressive and to we've in expect been has is As continue X quarters, quarter. -- capital the the business. days very targets we made said to working being the the capital of progress of that terms

quarter. very sales when to continue And really that the we our growth little really reduced you in carry fourth units, supply investments capital, seen off restrictions to current at working in tremendous chain reduce. made that we're XXXX us that that we've working which in achievement capital.The inventory, more we the invested by it's to see required starting of is the So driven we've a in look and business year, expect as

Matthew V. Crawford

anticipate unrelated I less we would business around But to we as this just continuing operations through model, capital-intensive business, do and comment, think is business. as our our a question. your particularly

my as we is about stronger, the story, a the I being flows about -- in more to ability flow part of and cycle. comments cash through think that focused business So talk generate business, about our cash

Operator

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

Christian Zyla

actually is Christian for This Zyla Barger. Steve on

that XQ XX% in question, First pretty a nice with your comp. held about rate year-over-year X% growth a guidance implies on

where end and you slowdowns customers? -- you see time any And are from are to destocking which that and uncertainty, a suppliers talk do hearing macro During strength broad continue markets customers your continuing? about

Matthew V. Crawford

Pat answer beat a doubt full to try I growth question. diversity drum of give from perspective. terms on that that time. I'll the unit year-over-year volume in minute has a to no softened There's

numbers to some of pricing our Our earlier. work incorporate and alluded forecasts the that I

and, I Again, that So on. of no, the time our word, increasing. couple mentioned.But one not areas. And our mentioned better think and different guess, of would a again, that leadership, some slowing One diversity a important seen strong. rotation defense. a I part We've of to is I I think is of down. we highlight for of slowdown aerospace the It's an you is business. agree. But we lack unit I lot spend Not

on backlogs other a we particular, by is So thing equipment in that Technologies, I also a at cases, XXXX. affected, some weekly, an daily, have basis, diversity continues, rates Supply think, that and beyond have demand I customers and extend, is think, will forging business I that while consumption monthly support.The to mention in our business

So this that is Pat, our does play. diversity you... give at

Patrick Fogarty

year-over-year increases aerospace we it X fourth in stretches defense, that our diversity now in in And Supply that Products show will that quite have sluggish have tremendous in topics Engineered the the been and Technologies whether be to segment highlighted particular on strong see our but where each -- we the beyond years those touched right truck, market. of and bus one and Matt segment be we agricultural, part of the end expect quarter, continue revenue aerospace, markets. in mean backlogs strength us. I Matt that last Yes. The for of to year-over-year

going the the but well. to only on not increases aerospace the are on So side, seen defense as side commercial be

Christian Zyla

comments, the just UAW your comment. to I to Moving sure make understand want

from that? the in revenues a we we by those to about You on shifting Or revenues like in the How guess, is should I how think quantified from about products about haircutting XX% impacted automakers that. haircut of $XX million Detroit some X the think should you haircut monthly are Just fair? strikes. trying term? those near production

Matthew V. Crawford

to I'm general the have impacted going organized impacted UAW a So -- have only big gather that -- understand Please thoughts let his not Pat strikes, second. here or not labor for in only strikes X. the strikes

the the several thing the over significant of one an workplace, have is in table to the is what last strike.So point is in impact, marketplace. I is just there at point still think relative Mack other environment, have years. might the dealing in are this happening is want While industrial direct people currently labor the labor gotten, that a I with side the particularly ongoing that I nonunion the out this sort in last chunk out, workers these been of many who of unions disruptions Truck, to

for is particularly see starters, do this we will we much Supply more But Technologies, guess. as auto. my probably about the think who big this doesn't So just of as X isn't

So to and then it briefly that I turn back would over Pat. just risk on comment

Patrick Fogarty

and voted demand that very, on not based the sites to on as Xs, $XX to at a each agreements fluid. start volumes difficult. to get the Xs strikes million significantly. it's knew to but ability as pretty the production mentioned, begin to Tier to that probably is that's normal right the come But Matt time and OEMs, will of impact the included to throughout from as volume only comment of forecast the to production work month to we and back back $XX of monthly barometer. -- would end quickly that's I that Ramping a November.My we'll month impact get start how back Tier the based what Obviously, our on. the levels, happen. coming It's now of see of are have up be drop script very this unknown good tentative October, There's million Yes. the plants going

Christian Zyla

And guess Got then I helpful. it. switching M&A. That's to over

you Southern are seems Are So there? most really been it. a like? there interested to pipeline out good And other you acquiring? when Fasteners have And guys what look in good your bought does deal deals what value value

Patrick Fogarty

a always a our was capital has the result, We're pipeline business multiples Fasteners The acquisition, a of opportunities valuation throughout allocation.Southern seeing credit number in been supplies we're to And careful allowed get What are of The us the marketplace, a with consistent. at tightening. the strategic look our diversity business. industrial us of the allows are tremendous course drop. expand markets to to as starting year.

And could that our way. be there opportunities so come more

that acquisitions our income our those strategic for gross look at but faster to than margins, current grow able to continue the not we're businesses pace margins, our organic only and that are accretive levels. operating growth a We margins, to

Christian Zyla

you are guess improving what Southern's ST or one that the for margins Southern just relative Fasteners. think And in I that about term? the you how Fasteners Great. last opportunities segment? follow-up on Can And us guys just the are for overall remind a long me, then to

Patrick Fogarty

Sure.

plants the in in the but higher used for business traditional critical the won't margins. industrial that supply are equipment you within an spares Supply us, business Fasteners, production Southern supply is an indicate space. which margins The acquired they're segment are built in Typically, particular the in products that individual production I than than up margins our manager. that we higher business higher fasteners segment Technologies, chain generate and would that those we used margins MRO see. on needed often primarily fix to other that had supplies margins comment or products are Before OEM

Matthew V. Crawford

margins. is how to we that, our add there to also Tech, as that, going value provide customers. to accretive value more But do to think to would to continue and our I strategy internally consolidated that and our in opportunities our about bringing identify that both opportunities are to improved We focus externally customers. be which think is be Supply to will provide

yes, to to that nice. a but that think portfolio is be will -- there up, you think systems opportunities very already extend And continue are I So if product it, in way. about set which the accretive

Operator

of would have over our the We like reached now question-and-answer session. Crawford end back I Matthew to turn closing the any comments. to floor for

Matthew V. Crawford

here, company have you interest for your again, while we disciplined Thank anxious Thank our Great. know a industrial in in and model are and advantage times your future more interesting what globally all and as focused, take you in many much. very business space, we're a ownership Bye-bye. in then ways, and particularly both very we see of U.S. and the that to still challenging bright

Operator

teleconference. This today's conclude you. does Thank

day. your at for lines Thank time. enjoy the of participation, you your your and disconnect may rest this You

Park-Ohio (PKOH) 2 Nov 232023 Q3 Earnings call transcript