• Consolidated Net Sales: Approximately $1.7 billion in 2024, consistent with 2023.
• GAAP Earnings Per Share: Increased 18% to $3.19 per diluted share from $2.72 last year.
• Adjusted Earnings Per Share: Improved to $3.59 from $3.07 in 2023, an increase of 17% year-over-year.
• Gross Margins: Improved 60 basis points to 17% of net sales in 2024.
• SG&A Expenses: 11.3% of sales, up from 10.9% in 2023.
• Adjusted Operating Income: $94 million, a 4% increase from $90 million in 2023.
• Interest Expense: $47 million, up from $45 million in 2023.
• Effective Income Tax Rate: 11% in 2024, with expectations of 21% to 23% in 2025.
• EBITDA: $152 million in 2024, a 13% increase from $134 million in 2023.
• Operating Cash Flow: $35 million in 2024.
• Free Cash Flow: $15 million in 2024.
• Net Debt Leverage: Improved to 3.8 times.
• Supply Technologies Segment Sales: Record $779 million, up 2% from $766 million in 2023.
• Assembly Components Segment Sales: $399 million, down 7% from $428 million in 2023.
• Engineered Products Segment Sales: Record $482 million, up 3% from $469 million in 2023.
• Fourth Quarter Net Sales: $388 million, consistent with the fourth quarter of 2023.
• Fourth Quarter Adjusted Earnings Per Share: $0.67, up 24% from $0.54 in the prior year quarter.
• Fourth Quarter EBITDA: $37 million, a 27% increase from the prior year quarter.

• Warning! GuruFocus has detected 6 Warning Signs with PKOH.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Park-Ohio Holdings Corp (NASDAQ:PKOH) achieved record levels of gross margin and improved leverage metrics and liquidity in 2024.
• The company reported all-time highs in sales and profitability for its supply chain management, proprietary fastener manufacturing, and industrial equipment businesses.
• GAAP earnings per share from continuing operations increased by 18% to $3.19 per diluted share, with adjusted earnings per share improving by 17% year-over-year.
• The supply technologies segment achieved record sales of $779 million, driven by strong demand in aerospace and defense, heavy-duty truck, consumer electronics, and electrical distribution markets.
• Park-Ohio Holdings Corp (NASDAQ:PKOH) expects revenue growth of 2% to 4% in 2025, with improvements in adjusted operating income, adjusted net income, EBITDA, and free cash flow.

Negative Points

• Sales in the assembly components segment declined by 7% year-over-year due to lower unit volumes on auto platforms and end-of-life programs.
• SG&A expenses increased in 2024 due to the acquisition of EMA induction, higher employee-related costs, and general inflationary increases.
• Interest expense rose to $47 million from $45 million in 2023, primarily due to higher interest rates.
• The engineered products segment experienced a decline in operating income due to lower production of rail forging products, affecting margins.
• The company anticipates potential cost increases due to tariffs on goods manufactured abroad, which could impact certain raw materials and components.

Q & A Highlights

Q: What are your expectations for 2025 in terms of seasonality and potential impacts from tariffs? A: Matthew Crawford, CEO, explained that most of their business will not be significantly impacted by tariffs. However, they are working with supply chains and customers to mitigate any potential impacts. CFO Patrick Fogarty added that they are localizing supply and working with customers to pass on costs, aiming to mitigate the impact of tariffs throughout 2025.

Q: Are there any standout end markets for 2025, particularly in aerospace and defense? A: CFO Patrick Fogarty noted that aerospace and defense continue to show growth, with strong backlogs and high booking levels. Additionally, the supply technologies segment is expected to see increased demand across various end markets, including heavy-duty trucks.

Q: How do you view the potential for margin improvement in 2025? A: CEO Matthew Crawford highlighted the opportunity for margin improvement in the engineered products group, which has been underperforming. CFO Patrick Fogarty added that supply technologies have been executing well, but the focus will be on improving margins in engineered products and assembly components.

Q: What is the outlook for proprietary products within supply technologies? A: CFO Patrick Fogarty stated that proprietary products, particularly in fastener manufacturing, have been growing at over 10% annually. These products are used in lightweight materials for automotive and aerospace applications, and they expect continued growth.

Q: What is your approach to M&A given the current economic outlook? A: CFO Patrick Fogarty mentioned that they are looking for strategic acquisitions that complement their most profitable businesses. CEO Matthew Crawford added that they are focused on bolt-on acquisitions that can enhance their current offerings, particularly in supply technologies and aftermarket parts and services.

Q: Can you explain the increase in shares outstanding for 2025? A: CFO Patrick Fogarty explained that they sold 1 million shares through an ATM program, increasing the shares to over 14.2 million. The forecast for 2025 includes a small increase from the restricted stock program, with no plans for additional share sales.

Q: How are you addressing potential tariff impacts on fasteners, particularly from China? A: CFO Patrick Fogarty noted that their exposure to Chinese imports is small, as they have localized supply and moved sourcing to other countries. They are working with suppliers in Taiwan to minimize cost increases.

Q: What steps are you taking to drive sustainable margin expansion in 2025? A: CFO Patrick Fogarty outlined several initiatives, including vertical integration, automation, and resourcing raw materials to reduce costs. CEO Matthew Crawford emphasized the focus on improving business processes and investing in technology to enhance margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.