Sign in

You're signed outSign in or to get full access.

PO

PARK OHIO HOLDINGS CORP (PKOH)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was operationally stable with resilient margins and improved free cash flow, but headline results missed Wall Street consensus on both revenue and EPS; net sales were $398.6M vs $417.3M consensus and EPS (S&P Primary) was $0.65 vs $0.83 consensus * * *.
  • EBITDA was $34.2M (8.6% margin), roughly flat sequentially, and operating cash flow improved to $17.3M; backlog reached $185M (+28% vs year-end 2024), providing multi-quarter visibility into 2026 .
  • FY25 guidance was lowered: net sales to $1.600–$1.620B (from $1.620–$1.650B), adjusted EPS to $2.70–$2.90 (from $2.90–$3.20), and full-year FCF to $10–$20M (previously $20–$30M, still with Q4 FCF of $45–$55M) .
  • Strategic catalysts: record bookings in Engineered Products (including a $47M electrical steel-related order), strong electrification/defense demand, and management targeting meaningful Q4 debt reduction ($35–$45M) via free cash flow .

What Went Well and What Went Wrong

What Went Well

  • “Revenue and EBITDA were consistent sequentially, margin remained resilient, and cash flow continues to improve meaningfully in the back half of the year.” — CEO Matthew Crawford .
  • Engineered Products bookings and backlog hit record levels; segment backlog totaled $185M (+28% YTD), underpinned by electrification and defense demand (including a $47M induction slab heating equipment order) .
  • Working capital initiatives drove operating cash flow of $17.3M and free cash flow of $6.6M in Q3, a $28M sequential improvement; management expects Q4 FCF of $45–$55M .

What Went Wrong

  • Topline softness and higher interest expense weighed on EPS; GAAP diluted EPS was $0.38 and S&P Primary EPS/adjusted EPS was $0.65 vs $0.83 consensus; revenue was $398.6M vs $417.3M consensus * *.
  • Engineered Products profitability declined YoY on lower forged and machined products sales and front-loaded investments to prepare for large programs; adjusted operating income was $3.7M vs $5.2M a year ago .
  • FY25 guidance was reduced for net sales, adjusted EPS, and FCF due to mixed industrial demand and incremental interest expense from refinancing (reducing adjusted EPS by ~$0.07 in Q3 and ~$0.20 for H2) .

Financial Results

Consolidated Performance vs prior periods and estimates

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$405.4 $400.1 $398.6
GAAP Diluted EPS (Total) ($)$0.60 $0.66 $0.38
EPS (S&P Primary/Adjusted) ($)$0.66 *$0.75 *$0.65 *
Gross Profit ($USD Millions)$68.1 $68.2 $66.6
Gross Margin (%)16.8% (68.1/405.4) 17.0% (68.2/400.1) 16.7% (66.6/398.6)
EBITDA, as defined ($USD Millions)$33.9 $35.2 $34.2
EBITDA Margin (%)8.4% (33.9/405.4) 8.8% (35.2/400.1) 8.6% (34.2/398.6)

Actuals vs Wall Street consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue – Consensus ($USD Millions)$425.5*$405.4*$417.3*
Revenue – Actual ($USD Millions)$405.4 $400.1 $398.6
EPS (S&P Primary) – Consensus ($)$0.835*$0.715*$0.83*
EPS (S&P Primary) – Actual ($)$0.66*$0.75*$0.65*

Values retrieved from S&P Global.*

Segment net sales and operating income

SegmentQ1 2025 Net Sales ($M)Q2 2025 Net Sales ($M)Q3 2025 Net Sales ($M)Q1 2025 Op Inc ($M)Q2 2025 Op Inc ($M)Q3 2025 Op Inc ($M)
Supply Technologies$187.8 $187.1 $185.5 $17.8 $16.3 $17.4
Assembly Components$96.9 $95.1 $97.0 $5.3 $5.6 $4.7
Engineered Products$120.7 $117.9 $116.1 $3.8 $6.0 $3.4

Adjusted segment operating income

SegmentQ1 2025 Adj Op Inc ($M)Q2 2025 Adj Op Inc ($M)Q3 2025 Adj Op Inc ($M)
Supply Technologies$17.8 $16.7 $18.4
Assembly Components$5.5 $6.1 $6.0
Engineered Products$4.6 $6.4 $3.7

KPIs

KPIQ1 2025Q2 2025Q3 2025
Backlog ($USD Millions)$136 (new equipment) $172 $185
Operating Cash Flow ($USD Millions)$(10.0) (Six months) $(23.7) $17.3
Free Cash Flow ($USD Millions)$(19.5) (Six months) $(40.6) $6.6
Liquidity ($USD Millions)$209.5 —$187

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)FY 2025$1.620–$1.650B $1.600–$1.620B Lowered
Adjusted EPS ($)FY 2025$2.90–$3.20 $2.70–$2.90 Lowered
Free Cash Flow ($USD Millions)FY 2025$20–$30M; H2 ≈ $65M $10–$20M; Q4 = $45–$55M Lowered (full year), Q4 reaffirmed
Effective Tax Rate (%)FY 2025—13%–16% New disclosure
Quarterly Dividend ($/share)Q4 2025—$0.125 (payable Nov 28; record Nov 14) Maintained/Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q1 2025)Current Period (Q3 2025)Trend
Electrification & Electrical SteelRecord bookings $85M; backlog $172M; $47M order highlighted Engineered Products +6% YoY; strong new equipment/aftermarket demand Backlog $185M; multi-year delivery timeline; percentage-of-completion accounting; strong aftermarket margins Strengthening; visibility into 2026–2027
Defense demandStrong bookings/backlog support Early signs of benefit from reshoring/localized sourcing Ongoing strength in munitions/armor; contributes to backlog Improving
Tariffs/MacroRefinancing increased H2 interest; tariff backdrop noted Tariffs impact expected but mitigated via supply chain/commercial solutions Tariffs seen as a net positive; improved supply chain nimbleness; government shutdown not materially impacting Stabilizing/Positive operationally
Working Capital & FCFH2 FCF ≈ $65M target Q1 OCF/FCF negative; working capital build Q3 OCF $17.3M and FCF $6.6M; Q4 FCF $45–$55M expected; debt reduction $35–$45M Improving sharply
AI/Data Initiatives——Using AI/data tools to clean/manage data, enabling future efficiency gains, especially in Supply Technologies Emerging implementation
Segment Margin TrajectorySupply Tech adjusted margin improved sequentially to 9.9% Supply Tech margin solid vs record prior year EP margins pressured by upfront investments; expected to improve through repricing and execution in 2026 ST holding/inching up; EP recovery expected in 2026

Management Commentary

  • CEO: “Revenue and EBITDA were consistent sequentially, margin remained resilient, and cash flow continues to improve meaningfully in the back half of the year… record bookings in Engineered Products provide good visibility into 2026.”
  • CFO: “We refinanced both our senior notes and our revolving credit facility… bond-related expenses of $2M… reduced our GAAP earnings by $0.11 per share… record high bookings and backlogs at most locations.”
  • CEO on electrification: “Industrial electrification… is beginning. We will see it begin to impact… really into 2026 and beyond.”
  • CFO on margins and aftermarket: “Historically [industrial equipment] was our highest margin business… repricing of new jobs and value drivers… will clearly have a benefit on future margins.”
  • CFO on FCF cadence: “We are currently estimating fourth quarter free cash flow… $45–$55 million… driven by reduced working capital levels in each business.”

Q&A Highlights

  • Engineered Products backlog recognition and timing: Percentage-of-completion accounting; $47M order spans 2026–2027 (three units in 2026, two in 2027), implying double-digit EP growth potential with execution .
  • EP margin path: Near-term pressure from hiring and facility modernization to prepare for backlog; margins expected to improve as repriced jobs roll through and aftermarket supports; meaningful progress expected in 2026 .
  • Free cash flow drivers: Q4 FCF guided to $45–$55M on AR harvesting, inventory days reduction, shorter lead times post tariff-related pre-buys; quarter-over-quarter debt reduction of $35–$40M targeted .
  • Macro/government shutdown: No material explicit impact; defense strength continues though administrative processes may slow .
  • AI adoption: Early-stage deployment for data cleaning/management to enable operational efficiencies; more use cases expected in 2026, especially in Supply Technologies .

Estimates Context

  • Q3 2025: Revenue $398.6M vs $417.3M consensus; EPS (S&P Primary) $0.65 vs $0.83 consensus — both misses * *.
  • Q2 2025: Revenue $400.1M vs $405.4M consensus (slight miss); EPS (S&P Primary) $0.75 vs $0.715 consensus (beat) *.
  • Q1 2025: Revenue $405.4M vs $425.5M consensus (miss); EPS (S&P Primary) $0.66 vs $0.835 consensus (miss) *.
  • Forward Q4 2025 consensus: Revenue ~$402.9M, EPS (S&P Primary) ~$0.735, EBITDA ~$34.45M; only two estimates reflected (low coverage) [GetEstimates]*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Mixed demand and higher interest expense create headline EPS pressure; expect Q4 to showcase strong free cash generation and debt paydown ($35–$45M), a potential positive catalyst for credit profile and equity narrative .
  • Medium-term: Electrification, electrical steel processing, and defense backlogs provide multi-year visibility; EP margins should improve as repriced, higher-quality contracts and aftermarket mix roll through in 2026 .
  • Supply Technologies: Sequential margin improvement to 9.9% with pricing discipline and operational upgrades; additional leverage expected from targeted growth in electrical/data center, semiconductor, heavy truck, aerospace/defense .
  • Balance sheet/liquidity: Refinancing extended maturities; despite higher coupon, liquidity is solid ($187M) and tax rate favorable (13–16%) supporting cash generation .
  • Guidance reset: FY25 net sales, adjusted EPS, and FCF ranges lowered; execution on Q4 FCF and working capital normalization is key to restoring confidence and supporting 2026 margin trajectory .
  • Segment focus: Monitor EP backlog conversion and margin cadence; ST margin durability and AC new program launches (~$50M through 2026) should underpin earnings quality .
  • Risk checks: Volatility across industrial end markets, tariff dynamics, and execution on large EP projects remain watch items; limited sell-side coverage (two estimates) can amplify surprises [GetEstimates]*.