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PARK OHIO HOLDINGS CORP (PKOH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $405.4M (-2.9% YoY) and adjusted EPS was $0.66; both missed S&P Global consensus, with revenue -4.7% vs $425.5M and EPS below $0.835; EBITDA also trailed consensus, reflecting lower volumes in Supply Technologies and Assembly Components. Bold miss: revenue and EPS were below expectations. *
  • Engineered Products turned the corner: segment sales +6.3% YoY to $120.7M and adjusted operating income +21% to $4.6M; management highlighted stronger new equipment and aftermarket demand and improving profitability trajectory into 2025.
  • FY 2025 guidance was refined to net sales of $1.6B–$1.7B and adjusted EPS of $3.00–$3.50; the full-year tax rate outlook was lowered to 20–23% (from 21–23% prior) amid tariff uncertainty but expected mitigation through in-country supply chains.
  • Working capital built as demand improved late in the quarter: operating cash flow was a use of $10.0M and free cash flow a use of $19.5M; liquidity remained solid at $209.5M (cash $54.5M + $155.0M undrawn).
  • Near-term stock narrative hinges on: rebound in Engineered Products margins/backlog, tariff mitigation vs consumer-facing demand softness in Supply Technologies/Assembly Components, and cadence recovery after a slow January; March consolidated sales exceeded prior-year levels.

What Went Well and What Went Wrong

What Went Well

  • Engineered Products “turned the corner,” with year-over-year improvement and strong quarter-end execution; management expects improving profitability to continue through 2025 and beyond. “We are now beginning to see improved profitability.”
  • Industrial equipment within Engineered Products saw sales +13% and operating margins +110 bps, supported by strong new equipment and aftermarket demand across regions.
  • March sales strength: consolidated March sales exceeded prior-year levels; Supply Technologies average daily sales improved through the quarter, signaling demand recovery after a slow January.

What Went Wrong

  • Demand softness in North America impacted Supply Technologies and Assembly Components; segment revenues fell to $187.8M (-4.6% YoY) and $96.9M (-9.6% YoY) respectively, compressing segment operating margins.
  • Dilution impact from 2024 equity issuance: increased diluted shares reduced Q1 EPS by ~$0.05; GAAP diluted EPS fell to $0.61 vs $0.83 last year.
  • Working capital usage: operating cash flow from continuing operations was -$10.0M (AR build with higher late-quarter sales), and free cash flow was -$19.5M; CapEx increased to $9.5M (IT and new business support).

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$418 $388 $405.4
GAAP Diluted EPS – Continuing Ops ($)$1.02 $0.41 $0.61
Adjusted EPS ($)$1.07 $0.67 $0.66
Gross Margin (%)17.3% N/A16.8%

Segment breakdown – net sales and profitability:

SegmentQ1 2024 Net Sales ($M)Q1 2025 Net Sales ($M)Q1 2024 Op Inc ($M)Q1 2025 Op Inc ($M)Q1 2024 Op Margin (%)Q1 2025 Op Margin (%)
Supply Technologies$196.9 $187.8 $19.5 $17.8 9.9% 9.5%
Assembly Components$107.2 $96.9 $8.6 $5.3 8.0% 5.5%
Engineered Products$113.5 $120.7 $3.5 $3.8 N/AN/A
Engineered Products (Adjusted)——$3.8 $4.6 ——

KPIs and cash metrics:

KPIQ1 2024Q1 2025
New Equipment Bookings ($M)$43 $39
New Equipment Backlog ($M)$145 (12/31/2024) $136 (3/31/2025)
Aftermarket Revenue YoYN/A+5%
Operating Cash Flow ($M)$2.3 $(10.0)
Free Cash Flow ($M)$(3.5) $(19.5)
CapEx ($M)$5.8 $9.5
Liquidity ($M)N/A$209.5 (Cash $54.5; Unused lines $155.0)

Q1 2025 actual vs consensus (S&P Global):

MetricConsensusActual
Revenue ($USD)$425.5M*$405.4M
EPS ($)$0.835*$0.66 (Adjusted)
EBITDA ($USD)$36.75M*$33.9M (EBITDA, as defined)

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025Revenue growth +2% to +4% YoY $1.6B–$1.7B Lowered (range implies flat to down vs ~$1.7B FY2024)
Adjusted EPSFY 2025N/A$3.00–$3.50 Introduced
Effective Tax RateFY 202521%–23% 20%–23% Lowered bottom of range
Free Cash FlowFY 2025Improve YoY Improve YoY Maintained
CapExFY 2025N/A$30M–$35M Introduced
DividendCurrent$0.125 per share quarterly $0.125 per share (as declared 4/17/2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroAnticipated tariff exposure modest due to local production; net positive if US manufacturing investment rises Majority of business not meaningfully impacted; mitigation with supply chains/customers Widened FY EPS range; focus on in-country supply chains and USMCA; risk skewed to demand softness; tax rate 20%–23% Elevated uncertainty; mitigation ongoing
Supply ChainPortfolio reshaping; cost/process improvements; facility consolidation in U.S./EU ongoing Continued location consolidation; operating margin initiatives across segments March sales > prior-year; avg daily sales improved; optimization to offset tariffs Improving cadence after January
Engineered ProductsBacklogs robust; margin improvement needed (forging ops) Margin opportunity centered in Engineered Products in 2025 Sales +6%; adjusted op income +21% to $4.6M; aftermarket +5%; bookings/backlog healthy Improving profitability
Aerospace/DefenseStrength across aerospace/defense; aftermarket visibility into 2025 Continued tailwind in Supply Tech; equipment business awaiting clarity Commercial aerospace growth offset North America softness; defense/infrastructure seen as future catalysts Sustained demand tailwind
M&A/PortfolioDebt reduction via equity; strategic bolt-ons (e.g., EMA induction) M&A pipeline steady; bolt-ons focused on Supply Tech and aftermarket M&A activity slowed; buyers/sellers in wait-and-see mode as banks tighten Slower near term
Share Count/DilutionEquity sales to delever; family led $30/share purchase Fully diluted shares expected ~14.7M; ATM issuance detail EPS impacted by ~$0.05 due to higher diluted shares Dilution headwind persists

Management Commentary

  • “Our Engineered Products group turned the corner… we are now beginning to see improved profitability. We anticipate this will continue through 2025 and beyond.” — Matthew V. Crawford, CEO
  • “Industrial equipment business… sales grew 13% and operating margins increased 110 basis points… strong new equipment and aftermarket demand in all regions.” — Patrick Fogarty, CFO
  • “We generally do in-country manufacturing… while I won’t suggest China tariffs will have no impact, we are not a significant exporter back to the U.S.” — Matthew V. Crawford, CEO

Q&A Highlights

  • Guidance drivers: Risk concentrated in Supply Technologies and Assembly Components (consumer-facing end markets), while Engineered Products has backlog visibility and margin leadership; high end of EPS range consistent with YTD trajectory; low end contemplates demand volatility.
  • Tariff exposure and mitigation: ~70% of business in North America; Asia ~15% (~8% in China of that); strategy emphasizes optimizing supply chains and customer support for highly engineered, sole-sourced components; risk more from demand destruction than tariff costs.
  • Cadence recovery: Slow January resulted in ~$15M lost sales flowing through to ~$3M EBIT impact; momentum improved in March; management expects to make up some ground through the year.
  • M&A: Activity slowed due to macro/bank tightening; potential re-acceleration if rates fall; bolt-ons remain targeted but timing cautious.

Estimates Context

  • Q1 2025 missed consensus on all three headline metrics: revenue $405.4M vs $425.5M*, adjusted EPS $0.66 vs $0.835*, and EBITDA $33.9M (company “EBITDA, as defined”) vs $36.75M*. Values retrieved from S&P Global. *
  • Estimate revisions likely: softness in consumer-facing end markets, share count dilution (-$0.05 EPS impact), and working capital usage may drive modest downward adjustments; counterbalances include Engineered Products margin improvement and March sales strength.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term miss driven by January softness and demand weakness in North America, especially in consumer-facing end markets; cadence improved by March, reducing risk to FY trajectory’s high end.
  • Engineered Products profitability inflecting with healthy bookings/backlog and aftermarket growth; this segment is the key margin lever for 2025.
  • Tariff strategy emphasizes in-country manufacturing and USMCA benefits; risk skewed more to demand than direct tariff costs; tax rate guided to 20–23%.
  • Liquidity remains robust ($209.5M) despite Q1 free cash outflow, supporting CapEx ($30–$35M FY) on IT and new business initiatives and a maintained $0.125 quarterly dividend.
  • Guidance shift: explicit FY net sales range of $1.6B–$1.7B and adjusted EPS $3.00–$3.50 provide clarity; revenue range appears more conservative vs prior +2–4% growth commentary.
  • Watch for sequential improvement in Supply Technologies average daily sales and Assembly Components new launch ramp; these are key to regaining consolidated margin lost on lower volumes.
  • Trading implications: sentiment likely hinges on evidence of 2Q bookings acceleration in Engineered Products, tariff pass-through traction, and confirmation of March momentum sustaining into Q2; any backlog conversion/tax-rate tailwind could support the upper end of EPS range.