PKOH - Earnings call transcript Q3 2024 | Park-Ohio Holdings Corp.

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Operator

Good morning, and welcome to the Park-Ohio Third Quarter 2024 Results Conference Call. [Operator Instructions] Today's conference is being recorded.

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. A list of relevant risks and uncertainties can be found in the earnings press release as well as in the company's 2023 10-K, which was filed on March 6, 2024, with the SEC.

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

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

Matthew V. Crawford

Thank you, appreciate morning us. Kevin, and to everyone. good to you We morning this taking time join

We as are progress with performance more and profitable a the in through we the of quarter, during the make pleased nimble, in business more terms both with enterprise cycle. the results faster-growing continue company and the our overall to third reshaping

Specifically, I X to make want points.

stable that some was numerous specifics, quarter, demand challenges business is line industrial overall year-over-year. offset about addition largely initiatives business to revenue that and Pat new these in were in but will flat markets. while during to discuss some remain our diverse us we're significant in bottom headwinds allowed global of the First, happy the there

unit in growth historic improve will for XXXX double-digit and new during too not us down fourth to explicitly, our While in backlogs and volume the end will equipment optimistic business our XXXX. markets and do discuss prepared with that we were awards amounts business we're are growth that believe in that to quarter up we the along future return in many of set

basis point margin overall margin. our including improvement improve XX gross to a continue we Second, in year-over-year profile,

and to margin investing on and best products focus sustainable. services improvements will more execution bolster continue Our them our on in our make and

continue on and will limited In addition, emerge forging will initiatives, offset benefit us flow-through. improved close near eye especially in we in including In weakness helped These the enhancements and of impact expenses our XXXX. term, and as some we adjustments manage year-end these demand, to closely a automotive any demand of the into negative fluctuations the margin productivity businesses.

we Third, leverage. to use tools us to available continue reduce to all

cash the to all million anticipate and debt thank $X.X initiative. help family opportunistically worth to led $XX a we'll sales reduction this year-end least, partially stock strong Last our at support not use These sold myself $XX million were sales with operating team quarter, Park-Ohio During but flows, stock of our meet members. to our and by share. investment want goals. I we roughly continue common to of a We

a XX results better beyond. build taking the you. I'll of to it customers financial we'll and our stronger now improving over are Pat of be the Our result care for at but a turn business, to X,XXX-plus committing years X XXXX, With day. little for not this simple philosophy, each to our and discuss job of next us only to Thank the quarter. all

Patrick Fogarty

Thank you, Matt.

our industrial our improved assembly just our to in environment, during a supply chain proprietary were our over and of results were significantly and capital million Consolidated continued business margins and and repaid of earnings. Also, higher net $XXX $XXX flat business year-over-year revenues sales fastener in of highlighted in the a compared growth adjusted gross third $XX X of in end businesses. spite In business, increased quarter X many in was Our aftermarket million in offset year quarter. segments our demand sales markets by challenging equipment ago. components liquidity forging our and we a we sales business, saw by lower manufacturing million debt which consistent growth

current to in basis down the basis, businesses our points gross slightly basis to from On increased the ago, expenses the the by a XX driven compared million execution. increase first implement points margin last $XX XX XX.X% was by across year year from in to the improvement related costs to million to a $XX SG&A quarter completed margin XX.X% last second during of $XX SG&A $XX.X up million interest totaled and partially strong $XX to rates year. quarter. by compared quarter, ago. costs. driven acquisition last initiatives million, adjusted consolidated higher human $XX.X consolidated were the was representing XX.X% million, quarter XX.X% induction year-to-date borrowings. million with offset a the XX% efforts continued approximately lower Our net and has expenses sales the improvement the all increase margin in Year-over-year in driven to Interest by higher compared On year, year, in operational employee-related million year of income $XX total with an operating addition was basis, the gross

result the on discrete of recognizing credits. $XX.X certain million a quarter, R&D tax federal to benefits During of income the related was pretax benefit income

We to is tax continue current initiatives reduce effective be rate rate XX%. overall approximately result, And tax tax worldwide. implement to our a our to planning expected effective as

For be between effective the and rate these foreseeable reflecting tax future, we XX% tax will XX%, estimate of that our core strategies. ongoing the annual impact

the $X.XX in adjusted of and Year-to-date, per a $X.XX Our earnings compared generated the X% earnings per of share our $X.XX up is in to was the GAAP We $X.XX with of quarter in third share our year share in quarter, a million per to line EBITDA $X.XX of the increased period compared same XX% quarter, ago. X% year. earnings year which ago. up $XX adjusted was last

approximately X.X%. our sales, and over we As same EBITDA ago, XX% has be year was an a expect million, year margin XX% $XXX EBITDA full defined $XXX as our of year. to a of million period the percentage Year-to-date, last improved increase EBITDA our over

which we of cash receivable quarter, the our affected operating in negatively During collections of flows of million, generated by timing the $X was several businesses.

Also end and to expect fourth our during of under free hand quarter, fourth million arrangements. XX% We unused the the the increased of flow cash our million, of quarter liquidity and various the capacity million. banking quarter of expect meaningful from approximately totaled $XXX in million cash reduction during $XX consisted working and borrowing a $XX quarter which capital second $XXX be approximately on our

quarter, Park-Ohio sale million used debt. bank we common shares of raised the the the During of $XX through majority of to and million down cash of the $XX proceeds pay

lower were Turning to aerospace sales quarter now sports in and most distribution ago. to net which medical truck Supply year-over-year and a end heavy-duty the electronics, markets, in offset higher sales year in our more our $XXX notably Technologies and power electrical generated equipment, $XXX third segment results. in markets. of Sales consumer compared several defense, million year-over-year end million than

to in record be global In addition, an grew points XX.X%, $XX.X margins an our Operating XXX million, year the operating driven and proprietary million sales by our continues an all-time in for $XXX X-month proprietary demand supply last segment X.X% lower business year-to-date year-over-year. to higher-margin this business X% of and was Segment increase sales past an strong $XX X.X%, a records was improved record profitability period. all-time margin basis increase both operating of year-over-year this year. execution, were in for also continued was ago. income our and strong and income operating chain our products robust. in quarter million, Operating all-time basis, segment points a The totaled business. On increase fastener costs in and higher XXX sales as from in of were an was products, XX% manufacturing demand in compared operational basis the

segment this to revenue quarter the year profitability last In new generally compared X.X% pricing year. a which and legacy year-over-year The the growth On compared offset on our increasing in to certain operating were programs and million continues on and was programs in lower line adjusted this in $X.X in product and million income In a revolve launches with lower programs to segment business focus margins and we compared margins, segment, fastener was the due $XXX proprietary $XXX focused ended was that new quarter. and other aerospace segment ago. X.X% and geographies. on volumes down basis, the supply an end-of-life adjusted expanding a in are year-to-date platforms. million operating million ago, year and on into and current million Components sales improvement. continuous a lower to ago to $XXX year quarter strategic certain unit programs, legacy expanding a and applications, lower $XXX sales our in totaled last OEM quarter sales basis, pricing On ago, businesses in around Compared $XX in the on year operating this decrease segment, periods. margin Assembly sales $X.X partially products driven were our industrial from last million income Our to was with operating in sales both customers operational defense by million product X.X%

New business met, will launches, next levels by full year. the revenue which production to during are we middle third once incrementally add expect the $XX which of million began quarter, occur in

strength regions year Engineered industrial $XXX in where to business, will increase year-over-year in compared facilities, our Products The in were and product our were sales XX% which million higher driven our year-over-year. profit XX% was to continue and year-over-year. future also Europe, each identify segment, In of million implement for ago, We by most increased initiatives plant in a X% periods. and which $XXX sales up improvement demand enhance manufacturing equipment occurred up margins revenues notable throughout with operating

services from last revenue year. in North XX% parts up were and addition, from In aftermarket America

million be totaling of equipment year. the New to $XXX backlogs end to million continue strong, $XXX compared last at

operating levels $XX expenses quarter, Also, during decrease year-to-date this our the million million sales lower compared increase a year-over-year business, in quarter. operating In $X.X were to ago. the year. Machine income million period, business. totaled $X.X compared million to lower $X.X last than segment Equipment higher operating sales was offset $X.X Adjusted sales driven products The of and profitability was quarter in ago. more the the was an to $XX and Industrial by million, million a and X% $XXX corporate profitability compared year our in During in improved last Forged this income year compared in margins segment to million

current For $XX in stable corporate between we the growth X% a we with of now year million and current to $XX for X% million guidance, our end year Overall, quarter markets the year expect year-to-date full And ago. revenues will the and respect the our believe to most compared were grow period, in finally, to of fourth year. revenue the year year-over-year. rest be costs

per and year. we adjusted increase EBITDA increase to as addition, than of million, expect to to $XXX earnings be defined more last share an now approximately XX% compared In year-over-year XX%

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

Matthew V. Crawford

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

Operator

Capital KeyBanc from [Operator Instructions] Barger Markets. Our first from today is coming question Steve

Steve Barger

going I'm start Matt, margin. gross the to on

You on you pointed rate years. well. out in about services. investing you it's really just It's running in that? XX products expand And your the best highest Can been mentioned and

Matthew V. Crawford

the I underwent, the but I think to I think several say and back and we've a mean, our for nimble as distribution 'XX, profitable that we've make to different been restructuring, hesitate ways. cycle. we use repositioning portfolio operations more to word been through I really XXXX that manufacturing I doing in core it think, and I and strategy more business the going

U.S. know, or increasing in productivity, you be X the in feet we million invested over plant square As repositioning whether lot a it closures

So high businesses. we low-margin, divested ourselves capital of some

our we we're be to that the And allocation invest trough, business. want portfolio. at true can better And and begin we better though, our for to first board. business and those earnings is your like And in. we seeing what that's which answering say, sustainable. capital we're the landing our businesses happen. do talk to the We across in the We current more about to question, ourselves and So like like reposition business at force I portfolio I believe, more say making

we the and are our seen firm of funnel pipelines it think, inquiries business the absolutely robust but robust automotive seen a also We see day. it, get every across more top from portfolio diverse of new backlogs where business, seeing in pipeline businesses more I we've new industrial action. to in We've more equipment the the

first So that. speak foremost, to and to I want

are on at in in We've metal highlight new would but each invest in Second that equals aftermarket. that look new some not just business where dive the investment like high in adjacent businesses to the business. opportunities I business; innovation I opportunity wonderful X really I and but given margin. the do of hose sustainable to aerospace equipment would extruded candidly, our some continue, space. highlight to and plus our some in In the high all, we the think will understanding a our and and I that bed would IRR, businesses for of Supply and us, think, segment markets I got deep business leans automotive Tech X X highlight isn't pockets

we're want whether again, of the I making suggest don't more that trough we're businesses broadly business sustainable or better. is businesses current investing across inside doing to So our a allocation the be saying cognizant that portfolio. each making term, we're I'm is first sure different new long for business source of in What higher-margin

unit I to past, think business and invest for automotive I've one mixing don't use I and the highlighted in most long-term to their innovations. challenge terms margin, space. each in we sustainable pick again, business terms over integration that growth. to Again, we other. the those in highest say positions sustainable use the highlight I'll I capacity vertical in invested us those

Steve Barger

And restructuring Are corporate which sometimes could margin additive? cash other gross business average investments there of divestitures. or to I or think unable lines the that is where be consistently divestitures the generate of flip consistent flow have are side below

Matthew V. Crawford

Yes.

businesses fastener manufacturing then course, my one most of the which Of our discussion leave did excited we business. out about, I is are in just

to Initiatives, relative we some to rationalize of do would to that's walls But and time. that yes, services. and any and out But to se, of of have close serving cost around a don't on apple although and lot our customers terms X compete about products not bites customers reshaping business. long happen is business I terms Explicitly, say our That's So a continue we're leave full in would number the lowest we service term want our say about them I in I'd from portfolio. single there. of sure are we highest our sort the not undergoing anyone a got per want I our again, ability quality, what total opportunities. where may walking at with away facilities here to that best making of because the that how business. cost out we of answer or basis. investing the one inside say, to in

we're say business. parts tweaking. necessarily not the So broadly I would We're exiting of

Steve Barger

It's a question my facilities. terms the good in to of segue next closing some

serve the without is to What the of big have your right for of to anticipate too that your or You you number roughly impact XXX. capacity customers? rooftops revenue having an ability

Matthew V. Crawford

I'll know it space, start, let providing are Pat their absolutely customers, the not those some second distribution think of locked diverse a but the services. of supply have the in largely, in about hourly, key nature business. I while you hip better than at if with tech we Certainly, daily, anyone centers, our

a viewed those in play. and So necessarily locations are be of consolidation important context the traditional shouldn't manufacturing

that to or North or countries, Asia cetera. of whether whether in Mexico, consolidating be will So be they I facilities consolidate, continue the as we opportunity lower-cost to be it et relates consolidating Southeast rest to that whether the business, American think see again, into

a jump different the lot but that, we opportunity. So have that, mean than back exist. in business say answer a you Tech here, this Those absent manufacturing the have business. acquisitions, the It and year. nature sounds Pat don't the like year fewer will that's I'll of until the rooftops Having doesn't XXX we still high-cost we would peel It means understand Supply model have opportunities I locations. than really is, said next let

Patrick Fogarty

that and many, is for a many this Pat. gone this have we normal I is through years. many, that go would process Steve, add through

that because have well, fluid somewhat in and almost react of and it, to for years. looking to do we it. of experienced leaders our on Each customers to business last move the afraid change we're something that. and locations, it's actively margins. improve million X to X know, and quite do space is X But over we square our or you consolidated we're It's we ways feet As not

we business under-absorbed, market that have on into plants are capacity may losing for looking that losing the for take without plants we're So have or ways without to share example, that customers. to if consolidate always

off extent of is efficient we point, be to to as quickly. to pretty cannot to a the try locations million react capacity more filled, Matt's opportunities certain exit operations. difficult. our number that businesses to that move So all But very a the got we've $XXX will larger, And pin excess grow, going there's to be into and

Matthew V. Crawford

the answer. to not be And with loose trying Steve, we're

We in quarter. have both in during the operations, Europe the and consolidated U.S. third

but as million we an the in in won't ongoing X of So is continue that be it square is just did each and when we business maybe feet, segments It will happen XXXX. as notable absolutely initiative closed this happening. to

Steve Barger

at slow. rate I some has to expansion know point; the of

have in last you XXX expansion those of continue over markets You for and looking points years, basis few improvements. forward the tough driven levers seeing just we're additional to pull to

Matthew V. Crawford

And our think continue up to product explicitly rebuild we the as will the new are I Tech we I to improvement be at consolidated have in needle. I margins. that move as -- to in specifically in opportunities will next the margin the I also, Supply a group. benefit, business has great think, initiatives, going going operations, to mentioned, is on leg with think, I into mean improve job. higher for done those XXXX automotive isolated continuing Forged

for a We have portfolio a reason. diverse

moving well things of look expect we're job to fabulous businesses a But done them to some out at as because needle, they've of in have We XXXX. the in XXXX. terms of great in going other the

Operator

question Storms from Dave comes from Stonegate. today Next

David Storms

operations you in improving Forged, improvement Is and the on just maybe there. operational to more wanted you there? like what give us anything segment outlook looks could Just touch -- the mentioned Forged there

Matthew V. Crawford

last we've -- least Iâ€™ve in last think in the business. including or Product Engineered unique, think Group, X challenges X some and few Forged of all the Group the probably seen of that I this calls, over the discussed at are equipment our I

challenges kinds the knowledge been last existed in our the promised time that COVID of and of to have I say kinds again, I replace COVID left most difficult business. the the business and post-COVID environment, think Some in that the the of I and never employees anyone

So experience. front an talked a openly and in worth decades I Forge. about art It's hammerman decadeâ€™s I've of science, losing think and a of

progress. We are making

be dime. And work just of mean month-over-month. to improvement incremental of better clear, a to those nice on to at some executing. I a when margin just anticipate year. lack reason seeing it's executing. get optimistic. don't of businesses long-term got are great for got defense, it's including sustainable, lack aerospace be I have lot we've good rail, that to we to and are markets And not have lack businesses. running I we better end market be exposure our well, again, at for good to But we But proven most where it's expect a XXXX markets, It's share. not including We really we turning do And we of to have have to opportunity, And get lack for have demand, good highest be there. not they market of great not better assets, for customers,

I But be a X quarter. continued would same as that, to time, So switch going improving, XXXX. anticipate at But getting that you is light we are into simple anyone as improvement want we don't and I to are or suggest to the or better.

David Storms

really that been then defense? a the see you for guys defense do and on? path tailwind and sticking for there. you how runway Is And aerospace Or How you're you view has that? great end markets, Aerospace just with do sustainable and it capitalized a

Matthew V. Crawford

talking and we're the up back same let's make sure So language.

gamut exposure also to and aerospace from defense OEM. aftermarket runs commercial Our the and

So a exposure amount the customer we across base. have tremendous of

longer think time in we that aftermarket backlog see I lead some extend of through XXXX. stuff, the still

visibility shorten in terms and pretty specialty feel evaporate there. lead to steels, good we especially execute, think good a I on steel but or we've we've there. seen We've thing got ability which So good some got of runway is times pretty our comfortable

business, think more have and there. been the chain more supply hardware I I chains think side supply of that on the challenged

I in think think as while next their X chain, and So OEs about think some they're -- if their direction. it's going around I their that I think think on per of se in over moving we like own how we of about the I supply they don't rates build the right based know and know managing chain. years, kind particular, Airbus, I supply keep

feel pretty get were production the visibility. we know machine they obviously visibility. that pleased it's here shortly where we good know back see I in I So have to directionally the that We about to are wonderful I levels wonderful that have is to don't don't settle, strike XXX think meaningful. going. XXXX

little news, less. So good visibility but the is a

Patrick Fogarty

also one in add and locations would point England, Poland. defense I And grow expect operate but called a supply who the the we and covers that France, business, to assemble only business, to Xs that Aerospace, opened Matt's for were fantastic business, brand commercial which and modules OEMs, chain not the those in other Tier to Birmingham, we that Apollo Airbus others. comments different U.S., locations grow with both the up

very some the by goal of haven't further the to because So grow clear business that past. continue penetration that chain in although supply we issues, isn't picture our of had Tier is relative to to of build the Xs rates

Matthew V. Crawford

and one add I'd equipment little bit the on a it more thing, bears business. more

that equipment year, talk clarity about the orders gotten us -- a aerospace bit great last heard X.X little and and A of You've some defense business. lot the we've and during years.

again, sector, lot political, the is the business. just political past Again, investments by so sure of that's Forged the business, that election clarity way, either sort not think in being I getting of equipment it defense uncertainty the around slowed the I'm way. help be in there will And around Not how some will that a election. the which down. continued think I as

David Storms

rhetoric the the leading was around up in some increased U.S. politics, tariffs. of to Sticking election

to increased tariffs parts domestically, feel any potential more to you uniquely little your life? a maybe have advantage that business we or uniquely of are clarity for exposed on positioned that are that should take there the come Now

Matthew V. Crawford

to business markets the now general on manufacturing our is produce the do side. again, in business Well, philosophy where we

the we area side, the of President-elect. by of want ton We import talk rely of we out we about that's vendors import interest out don't of risk. On to a supply way, Asia. chain the to China. but for Generally, important product of not out Asia. specific China, do some out a a risk, fair It's harbor a a the amount do not That's of huge of extent

So significant XX% I'd that, say, generally, liking I the think day, decidedly will generally American business end of of produce a Having American. At is our a expectation not our is because to business that the be locally. the of we're to it impact said North company. North

So investment in is America North us. cycle good for disproportionately a strong

couple for inflation going play precisely. investment we in steel supply see But us. I last what important That's you little good our kind offset the one. that's seen years. in for the think, an energy trade cycle are and we've So grid, my Again, of might out chain. of that's what know manufacturing, policy semiconductors, disproportionately over in markets business another I in it, despite our how the defense, for that's, industry, These to a don't in of good bit opinion, name in if allows in rail,

charge, help in think customers. whoever if our is to goal those American are I manufacturing, is their net-net, So

Operator

floor turn the any closing further to have question-and-answer We of like over reached for back end comments. I'd the or our session.

Matthew V. Crawford

in the especially are morning. about time with performance, again of you this the of We, our your again, some excited for some key markets. headwinds Thank

makes us much. for future. you Bye-bye. Thank very it So optimistic the

Operator

does you. teleconference Thank That conclude and today's webcast.

wonderful this and today. a participation for you We You may your time, at have disconnect your thank line day.

Park-Ohio (PKOH) 7 Nov 242024 Q3 Earnings call transcript