PKOH - Earnings call transcript Q1 2024 | Park-Ohio Holdings Corp.

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Operator

Good morning, and welcome to the Park-Ohio First Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the presentation, the company will conduct a question-and-answer session. Today's conference is also being recorded.

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

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

company a consolidated the measures defined metrics operating accepted adjusted income and adjusted Additionally, generally not may EPS, continuing accounting discuss EBITDA are principles. of under as basis. on performance or operations These

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

Matthew V. Crawford

Great. on Call. Thank flows. and Thank relates improved our Conference the joining. as pleased We're during quarter, of for performance focus cash especially margins welcome first with quarter our the you continued it to our you managing XXXX company the improved to very of and much,

sale businesses. on As margin the locations, services growing high-cost negative initiatives These last we've noncore restructuring or include that pricing focus most the of activity exiting of spent the products driving low across you commercial our the several and of would quality renewed years assets. know, most of and earnings improve and business, the highest-margin several of regarding

the of of efforts I capital-intensive more organization improvement world's clearer of towards are execution. led quarter, picture and into in and efforts to and data first tools operating Supply we business. and industries in see new an driving a the while continuous many the began Technologies. way Supply leaner, to of has the aggressively supplier initiatives most productivity customers, want predictable Tech as the the a demanding momentum both agile those acknowledge and deeper During volatile often less particularly and proceeding intelligence investing to

innovative and of set to customers, execution. position now fastener the relentless the global continue us particularly value-driven increasing a EV consolidations, in after quote an have which and are but complete, the manufacturing business only consistent focus to and cost bring of allow solutions improved space. more not lower created new several performance, in products substantially important operations world-class Additionally, new ideas years to from on ACG's group of

the many in product a is benefit brands the striving our in to space. installed strong consolidated improve EPG diverse the Our year. and and aftermarket into this equipment and globally and backlogs areas growing where accretion expect seen marches. service the business, precipitated to vehicle. impressive in execution remind portfolio that improvements by and, powertrain head massive a of of and from leader trusted new in We're base cases, will we've agnostic continues to knowledge to the group in we a latter in part business, the all be key should substantial us as I turnover industrial

long-cycle Stable plus solid comparisons year, assumption. balance volumes growth in defense businesses combined year-over-year line the For that and anticipate demand aerospace and our with improved support strong annual of in the with guidance. backlogs we the generally

that, year. spending play quarter over macro and role and EV trends part of results. to semiconductor Pat I'll towards cover a renewed the our infrastructure, With success believe in to it turn the latter larger the we in Additionally, will

Patrick Fogarty

Matt. Thank you,

to start year. Our the first quarter results were a positive

most demand earnings our the performance drove the EBITDA customer markets. operational Sales quarter. strong continued quarter expectations. totaled The million, and strong with operating in demand end with along Our improvements in per during revenues $XXX and market income, were and strong end internal share exceeded the key to projections line be in our

Supply XX.X% XX% was up highest in our compared defined the last million year the EBITDA driven by current year, partially compared an offset last points Interest were share a $XX.X year. driven margin margin million quarter, X.X% adjusted to increase Consolidated quarter up basis components. year-over-year year-over-year. improved costs. over ago, increased of during of improved to year. $XX X $XX.X as points gross quarter year outstanding borrowings quarter. operating in income in the EPS operating interest profit gross costs XX the to million level compared to with consolidated $X.XX margins year, last higher years. in driven personnel the is compared XX% XXX to $XX.X of a increase first net the income and Our lower rates $XX income improved by per to ago, improvement This by Operating sales. million $X.XX in The in strong performance in operating average basis the quarter by from in XX% to was million of income $XX Also, and record performance the assembly expenses of Technologies was first quarter million first SG&A

rate effective tax the Our quarter. in XX% was

the of rates. Foreign tax and helped tax research development offset higher credits and credits impact to foreign

XX% continued and tax adjusted compared $X.XX an quarter a year to compared from expect basis, our per of to GAAP operations We year. an share the per $X.XX per effective $X.XX year full share range XX%. On rate diluted to XX% earnings improved to $X.XX was for increase between share ago, last earnings our XX%.

On was basis, million, ratios compared in improved Our leverage in the XX-month resulting as $XXX to quarter. EBITDA year-end. trailing a defined totaled defined our EBITDA million as $XX first

flow. year-over-year generated cash flows and improved cash During free quarter, operating the we

cash working of to implement which will continue We remainder the capital drive improved free initiatives, the year. flow for

banking end various arrangements. the our $XXX $XX liquidity which on million of borrowing million, capacity of approximately was the Our cash consisted hand of first unused quarter $XXX million at under and of

during financial expands leverage. expertise quarter, and operating of throughout Europe EMA capabilities. reduced aftermarket strengthens our and of acquisition the our upgraded previously induction our brands during service portfolio announced our both announced, the Also, S&P the ratings we improved due we and As global heating our EMA equipment performance induction credit to GmbH. Global quarter

the $XX have to of commenced EMA's annual and EMA and revenues the share. results operating operations million our exceed expect Germany, our be into to we in existing margins earnings integration and per We our to accretive

growth the our to demand markets aerospace continued from now ago, during and In in up sales and a net business. led strong increase strong slightly our our industrial supply business defense most year were key million Turning XX% reflecting by segment Supply Technologies, in results. $XXX a quarter, in end and

quarter, heavy-duty partially equipment [indiscernible] lower offset the in was demand and the year-over-year growth. During agricultural this truck markets, which

a a sales business in at operating basis XX% an income segment the up demand a achieved business. also in record lower We profitability Europe. fastener in record proprietary was margins to from strong X.X%, The customer also from X.X% supply and XXX a costs totaled $XX.X up ago. year were manufacturing year in higher higher-margin increase fastener year North our chain business, sales $XX Operating to which record our by growth our due ago points our this in million products, million in a for and proprietary quarter compared Operating products sales were from America driven throughout ago.

unit execution and completed will In first location for also initiatives, higher the by categories of consolidations. were higher-margin across we last in profitability improving driven from benefit Assembly focus current plant to to product ago. The lower and XX% Products industrial segment, to to rubber brands actions, to improvement totaled positively X.X% sales compared costs, $X.X year on and to expanding rail margins. are million lower positively across improvement margins In year and improvement year, $X.X sales operational sales This future automation, in most will focus of margins. which fastener manufacturing our including In our be segment, implementing basis other a decline be and million. demand $XXX expanding profit continued initiatives was and the at million ongoing quarter fuel the proprietary each income X% this increase to profit our product Components capacity operating pricing compared and quarter segment, floor $XXX our from on all ago, level, and product operating million the continued products supply Engineered impacted our plant in plants extruded our and product points. Despite in rubber Our of products the mixing improved XXX strong an increasing impact continue volumes our geographies. with primarily affect profit segment improvement businesses. the to continue the year strong Segment due reducing a increased the

primarily ago. decline year sales $XXX sales were million in sales and lower The to new Europe. of in $XXX a by was the quarter million compared equipment, U.S. in First driven slight

increased XX% During the quarter, year-over-year. aftermarket our revenue

totaled the also $XXX bookings $XXX X% of $XX and million approximately Machine Forged quarter. equipment and in bookings compared be to average year-over-year. this totaled $XX to in last in business million strong to increased Backlogs XXXX. New in continue million Revenues quarterly our products quarter improved million segment compared and

million was our induction a driven $X segment sales by in last operation million forging decline our Arkansas to an new in sales was compared higher costs profitability equipment operating in segment to And income adjusted During $X The this business, operating basis, the was operating year-over-year in million to the income in isolated year lower equipment. lower million quarter complete $X.X ago. year. compared volumes, quarter, new and in this $X.X on

ago, to we mid-single-digit to revenue chain orders. the challenges on our purchasing during to improve XXXX new initiatives the growth full We in throughput to higher aggressive a year finally, range. expenses respect corporate And $X.X in to continue to totaled driven the including are million actions quarter $X.X the and guidance, supply this year equipment million experienced by costs. improve expect production With compared implementing segment, taking year-over-year during profitability improve quarter

year-over-year improvement We also earnings per in to EBITDA expect as continue and share defined. adjusted

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

Matthew V. Crawford

quarter. open appreciate questions. I now the the line Pat. at And look Thanks, the for up we'll first

Operator

Thank you.

moment conducting [Operator your One Instructions] We poll questions. a will now be we session. for while please question-and-answer

first line Storms come with from Stonegate. Dave Our questions the of

Dave Storms

map onto products looks Just was guys. sorry, it How hoping or improvements like will same to assembly results of go right that be the it those to-- and can you process for for to everything Tech really flag there? engineered the components see Supply challenging some easy bear

Matthew V. Crawford

looked of them over a businesses. have cycle. Yes. are we a of their great often great I the a number industrial I-- I Dave. business industrial great full hood, not the years. of each of And business companies say sort industrial particular holding know have uncommon, it's Underneath businesses. you've own number at of

both Tech, volatility different to Supply uncommon really the and the some have on having us. couple for manufacturing not part between and group the And side well is a years having performed So the absolutely of you're distribution better profiles of leadership here. right.

agile because sustainable So different in again, we're a purposefully every used on like there. word there's it seems month, I I comments the a think challenge. my But path

the a a It to I invested business. think, We, that As good efficiencies. ACG restructuring stability I put position We've is in an great I productivity, relative in of standpoint. in really the great there. of their ourselves mentioned, a business. excellence put reflects place itself spot in in operating heavily from think, ourselves operating We

there the we tremendous of have model believe now So operating this in new that is area is focus take to an best we I think that tail class. business,

build we'll I going that see that So play there accretion that we business think or build as business continue will forward. And to out.

few So the my of and difficult the hope own challenge. business point been a to during is again, there bring and word, relies had which couple the businesses, perspective, set is One from it. we of we have where That a challenges lost knowledge, consolidated business of in often related which business the an can has some to years, historically heavily has we some consolidations Engineered is-- leader your now things. that success to mapped to a the after operational its changeover. lot it's be know-how building different about on use we of think I a Products,

well there business business backlogs aerospace the assets, as unique the new heavy equipment market's principles around are aftermarket again, there. particularly are tremendous there. that as defense. space, in products The in brands So and The and electrification electrification, in strong industrial

just it's operational thought. we've I more to we taken the a the begun see has little of X some again, time over first think mapping word, excellence units in that usual than a

Dave Storms

Is does -- Understood. That's that [ new cycle like? When sales there you that bit we're contract any What your that in very there a look now helpful. us little working helpful. you're trending to shorter-- we the on, response give in of insight ]. business you be automotive would a very mentioned in is years more cycle normal were a can and couple than contact obviously, world ago

Matthew V. Crawford

Yes.

types the OE I of X. think just really there's-- new least I the in mean use business of space there's on X, X X I'll side. at automotive types

I think one is replacement business.

well scrap things the we're are extremely the automotive rates to key given replacement productivity, where think positioned I an business drive programs we of that supplier. in performance terms all achieve of and on

So where we I like there. are

years. think new et suited the the in, the over of we're made business think particularly productivity I cetera. participate improvements in I well we've there's there, molding, And that the we again, consolidation space couple given extrusion, last and

think we're-- for we're again, I think I of areas, the think, near term. those of X sort I in success primed are So the

the little that third new cycle. is launching that's products, longer and a think I

first year, certainly material, them later typically more if 'XX a 'XX, could those and I take new being X, as and products this see not to couple into developing So impactful, launching be years.

So to start business and but I this terms us beginning builds X, XXXX anticipate car bottom new we of outperform categories expect-- just growth. didn't particularly in in but line cycle, not X no, in we the would is

Operator

you. Thank

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

Christian Zyla

Zyla This Steve. Christian for actually is

think to the And So through is in sustainable more impressive. since what Can 'XX. due pricing you side? highest looks do walk new portfolio your that to that? Very Was a gross you your level? the this this cost be enabled margin on quarter or material just us XQ

Patrick Fogarty

Christian, this Pat. is

led As in Tech really quarter. mentioned operating Supply during I the the script, income to the performance

increased mentioned the result which significantly. higher carries in level a As of margins. of I year-over-year higher-margin sales a defense Industrial products. aerospace Products higher growth in I and our typically mentioned business,

the overall, big in increase. factor mix So a was

world we to saw our clinch are around margin and really EV which implementing In continue to self-piercing proprietary expect addition, growth use that the in that nice the we relative they our to the and applications other that fastener products, products products. relative

that in QX. on margins A of pleased in mentioned. those we Engineered faced; increase, obviously has getting margins mentioned training And as nice that on a continue an will in that operating Matt segment, some margins a we of to In challenges the we're a And And costs, we heavy throughput went product we're to early impacted to to increase historically occur improvement with a Mix number group drive our expect costs, we our forging margin. which a in segment. Products lot new So a as with costs, in years relates completion carries there there completed, lot our of forging saw higher and We did equipment in business. Canton, those been are X income. that equipment, growth margin business capital in it of operating the a plant with do the our which of nice has continue lot operating opportunities do a And initiatives very see higher pricing around but where has improve. We to place. of inefficiencies start-up that the obviously helps lot costs, have in the automotive our that see reducing plant our starting that those occur part we to over and which of drive were and floor continue improvement margins. to consolidations, was now. are see improvements it, the with around lifting year-over-year been. additional are over customers last consolidations initiatives Matt as the lot

able year. hoping the of to we be through at, So we're we're rest as at with continue that get the XX.X% overall pleased to and where

Matthew V. Crawford

of of businesses, plant ago. gross Christian, inside share years In X the a trying only investing not mean consolidated their is there's X, Tech the particularly I structural [indiscernible] One we're add, highest X businesses. margins, and Supply X, defense places. to shift the and the would businesses layers improvement, in case, that aerospace give right both higher-margin benefiting this we're some particular And X, the of I have that to includes unfair in margins. capital. only from on

businesses it can also set don't that low-margin includes So exiting paid off. provide led It get where value for. to we pay a we

here. there's of amount So work at no question a performed I think significant structural level. There's sort Supply of Tech very strong a

So I in us. is think our continuing that automotive focus, particularly benefit continuous to improvement

different more we're But day, market see of different we're in business Supply at believe a unquestionably. from business again, building the times, businesses inside And sustainable less capital-intensive. now, leadership right going stable, model and the Tech. So end at certainly leader to we the our simpler, was

So that I helps. hope

Christian Zyla

outside with of Yes, last the very much of Tech, and But mix just step few think expansion margin the it the X% balance to of sticking helpful. range the that a have year? down of you the years the or of this driven? know we part Just Supply was I should guys here. for continue just that over is expect made guess to and improvements And I of part model was low mix. the trying how

Patrick Fogarty

Yes, our the on change result going the say as to say, of mix. we've the we north product got XX% quarter, in most was through improvement of the the cost, get forward. a other continue will I rest Christian, But of which mix to hand, reduce help of, initiatives would offset

to we're margin. a X% But we towards closer of drive year-over-year. to operating to that continue continue that generate like XX%. will But going can to with a looks north income I'd us believe margin anything So that takes X.X% comparison nice

Matthew V. Crawford

of parts us that is quickly. a great Yes, our to again, Again, aerospace more think I a the example. quality question grow taken so is earnings optimal the mix. from good of level. we're business gave mix, defense in standpoint, quarter, best a to mean, a we've and our point, higher that, we're-- that, it changes your it comp. There's business But-- tough if maybe we made Having that's is. no again, said have trying

Christian Zyla

in And like components? with drag way at there Great. the Products. a goes as And business, the engineered I look EP the a But as margins? portfolio, entire gears there know Engineered just line to we I you've any business in is Park-Ohio past, is said on did at engineered switching business, recently improve mean, to guys then the structurally as goes. that's you you look assembly

Matthew V. Crawford

apart need we little Number a to the bit made that. to years break business of think long and term. the amount I-- last a try over about tremendous business few we to for improve our one, have the decisions

And well-known Steel is trained businesses into excellence, of the think the the and Again, difficult Processing right consolidation with decisions retirements these higher usual. of Southwest forge most of forge and decisions where usual the I time. business operating These of think knowledge second were at very the are These much decisions example Canton, and made a are example expansion long said they in the than centers lesser-known line. much build I mind. term. of were the decisions at made the Crop turnover was interest long-term consolidation that than these is are were the that, maybe access business of kinds Having labor. health to higher a time loss with

more decisions that business through customers Having of a automotive unique businesses from in worked these said These stable these years, be assets we products. that some very sort challenging are benefiting most those to of the of and over our capabilities. and opportunities. tend are that, So are think I where couple

backlogs against and losing a I the business. infrastructure continues and aftermarket perform The bright where to macro business defense that as I spot. to trends will and recently. around when Forge we benefit as mentioned, outsized an a spot business are bright need as And EMA way. the is about the be in them. we're Separately, aerospace added equipment business, business, well not strong, So The think we

of premier be supplier world So a products we I continue, a electrifying. think, that's to these in

now. as the mentioned same having installation part some or equipment comments, an orders the to whether Again, of months, XX to the it forge, I So of fact on business, the press in combined a both be optimize XX a It that be said my the for up. is execution of ship some catch could reasons be to these that, the difficult order from from all cycle months. heater or your with right new and time XX pricing time an time forging takes standpoint. months, It induction could at takes

macro So on strong the we have trends. conviction

We mentioned a of bones or the and backlogs be, of we've of have or the strong on every new strong has have I've smaller couple the consolidated places of base get convictions we're to made, a decisions day. there's to which a the in continue and equipment, It's we installed areas, that and the on and nature where part business business aftermarket. we going conviction just-- But rapidly from grew been and will forging that's better difficult portfolio. diversified in

Christian Zyla

and Really I'll one last one I've appreciate got back. Great. it answer. pass the

couple Just price the I enable guidance? EMA, your And 'XX about guys in overall think of in know you as the FY performance. does line? but primarily to we quarter, sales pipeline Or a should for year being volume we of then organic-driven points added this upside think about the guide, top should the M&A your with difference

Matthew V. Crawford

latter. Pat let into our I'll build model. former. We to not the I'll tend the take acquisitions take

acquisitions So we've We're to future the front meet that hard upside it. of depending stock. think I not always on in has you some laid to goals

is opportunistic. deals fairly that So do to We've often. tended

that, said not also our I managing not flow, that what's our for levels. debt leave you cash always into going thinking we're success. the beneficial We long-term we're managing thinking there are. would out So our want to be tuned call to Having

something accretive awfully we should would time. at and which be too. excited But the about excited you to about, us or would for be And complete awfully them trying we're to any the you you should so our clear, acquisition means be be to year be of walk shoot see should remainder that that and goals same the

Operator

you. Thank

line come from questions Abebe with Yilma next JPMorgan. Our the of

Yilma Abebe

how I quite the improvements businesses environment. about question in you guess I quite a flat years. my what to the several revenue longer about term. operational guess, the last when we get trying margin place Really, Margins higher last is the revenue in over nicely expanded should I'm across increases, talked revenue at what's operating the a leverage the thinking be over put in bit opportunity set a is environment? business the in you

Patrick Fogarty

we through be this we'd focus Pat. products Yilma But we a to is and XX%. such at on that believe Clearly, And of of our flow operating would to higher income level flow-through of that plants. a relative range like north revenue. have that, wide margins

it have each businesses And XX% as in could sometimes of of Because our-- to so least the costs. general, makeup the in a plants we can a lower. around higher, growing flow-through high expand. the that to especially there's of often world But be manufacturing in without expect our cost revenues sometimes be where our the level We've businesses at capacity in the of grow ourselves fixed manufacturing business. fixed nicely revenues positioned

will increase. flow-through revenues the as So that enhance

Yilma Abebe

we forward move we pure expect are system? Or layers thinking here? talked follow-up That's helpful. lower trying we think it lower relates make capital And as think capital-intensive I costs, in to guess capital see intensive. the I From about CapEx? would of guess about the I more as working are to that. there business less I costs maybe to the to a perspective, other you

Patrick Fogarty

pockets we seeing our Yilma, in where capital CapEx Clearly, side especially be we're expect the on business, of the growth. certain to spent

approximate year For But less. of CapEx, these our opportunities $XX in much our forward, expect the going levels, million. is million in to than spent growth technology. $XX CapEx we current is capital Much lower expect and compared being year, to to would this which be historic I on

our each increase We and year. an our focus down, cash accelerate drive help us customer in working to have capital continue flow to manage will payments, to reducing businesses our free on days continue initiatives accordingly, pull inventory which in this pay of our to investment

All of built historic that those are less the current under levels. things model than we've

working supplier think couple about times, about had and level lead delay, think freight expanding of an last between over we million. issues $XX and that lead issues you when you So and years inventory capital of the import embedded exceeded supplier times,

that of worked the haven't out system. all We

we So continue forward. those ways the level with times efficient will We of inventory suppliers we're benefit back work to those flow our down push most our out suppliers bringing figure inventory lead free to to to levels. going try their carrying, hard of reduce on that to things to all cash

Operator

Thank you.

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

Matthew V. Crawford

also Great. Thank and we you and year and improving for of very much. Thanks a outlook. a company. Again, investment our attention of in results to year your stable time forward look

So we appreciate your time. Thanks.

Operator

participation. so Thank you your We much. This does teleconference. appreciate conclude today's

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

Park-Ohio (PKOH) 30 Apr 242024 Q1 Earnings call transcript