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PARK OHIO HOLDINGS CORP (PKOH)·Q4 2024 Earnings Summary

Executive Summary

  • PKOH delivered steady Q4 results: net sales of $388.4M (flat YoY), GAAP diluted EPS from continuing ops of $0.41 (down YoY on non-recurring items), and adjusted EPS of $0.67 (+24% YoY). EBITDA, as defined, rose 27% YoY to $37.0M (9.5% margin) .
  • Mix and execution drove outperformance at Supply Technologies, while Engineered Products improved on an adjusted basis; Assembly Components was pressured by OEM plant shutdowns and legacy program pricing. A $5.0M litigation charge and restructuring were called out as non-recurring items in Q4 .
  • 2025 outlook: revenue growth of 2%–4% with YoY improvement in adjusted operating income, adjusted net income, EBITDA, and free cash flow; management guided to a 21%–23% tax rate and ~14.7M fully diluted shares on higher share count post-ATM issuance .
  • Liquidity improved to $198.2M; net debt leverage fell to 3.8x (from 4.4x). New equipment backlog stood at $145M (vs $162M) and bookings were $164M (vs $175M) at year-end. Dividend maintained at $0.125 per share (paid Feb 21, 2025) .

What Went Well and What Went Wrong

  • What Went Well

    • Supply Technologies set the pace: segment sales +2% YoY to $181.8M; operating income $15.9M with 80 bps margin expansion, driven by higher-margin mix (fasteners) and strong execution; aerospace/defense sales +21% YoY in Q4 .
    • Adjusted earnings quality: adjusted EPS rose 24% YoY to $0.67; EBITDA up 27% to $37.0M (9.5% margin), reflecting margin initiatives and tax benefits (R&D credits and valuation allowance reversals) .
    • Cash and leverage improved: Q4 operating cash flow $26M; FCF $29M; year-end liquidity $198.2M; net debt leverage improved to 3.8x (vs 4.4x) aided by ~$30M equity proceeds used for debt reduction .
    • Quote: “We concluded 2024 by continuing to demonstrate improved metrics around margin, cash flow and leverage… enter 2025 with a faster growing, more profitable, less capital intensive and more predictable business model” — CEO Matthew Crawford .

  • What Went Wrong

    • Assembly Components under pressure: Q4 sales fell to $89.7M (from $97.0M); operating income declined to $3.9M (adjusted $4.5M), impacted by OEM December shutdowns, lower pricing on legacy programs, and lower volumes on end-of-life programs .
    • Engineered Products mixed: Q4 sales +2% to $116.9M, but operating income down to $3.1M; adjusted operating income improved to $5.0M, offset by higher costs and weaker forged/machined products; backlog eased to $145M (from $162M) .
    • Non-recurring items weighed on GAAP EPS: $5.0M litigation charge in Other Expense and $2.5M restructuring/special charges; without these, adjusted EPS improved, highlighting the gap between GAAP and non-GAAP .
    • Analyst concerns: tariff exposure and share dilution (ATM program to delever) featured in Q&A; management expects to mitigate tariff cost impacts and emphasized the strategic rationale for share issuance and family participation .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$389.3 $417.6 $388.4
Diluted EPS - Continuing Ops ($)$0.54 $1.02 $0.41
Adjusted EPS - Continuing Ops ($)$0.54 $1.07 $0.67
EBITDA, as defined ($M)$29.1 $38.5 $37.0
Operating Income ($M)$17.7 $23.6 $14.4

Segment breakdown (Sales and Operating Income):

SegmentQ4 2023 Sales ($M)Q4 2024 Sales ($M)Q4 2023 Op Inc ($M)Q4 2024 Op Inc ($M)
Supply Technologies$177.5 $181.8 $14.0 $15.9
Assembly Components$97.0 $89.7 $6.5 $3.9
Engineered Products$114.8 $116.9 $3.8 $3.1

KPIs and balance sheet/cash:

KPIValue
Liquidity at 12/31/24 ($M)$198.2 (Cash $53.1; Unused availability $145.1)
Net debt leverage (EBITDA basis)3.8x vs 4.4x YoY
Q4 Operating Cash Flow ($M)$26
Q4 Free Cash Flow ($M)$29
New equipment backlog ($M)$145 at 12/31/24 vs $162 at 12/31/23
New equipment bookings ($M)$164 in 2024 vs $175 in 2023
Dividend$0.125/share declared Jan 24, 2025; paid Feb 21, 2025

Drivers/Why:

  • Q4 YoY adjusted EPS growth and EBITDA expansion were driven by Supply Technologies’ higher-margin mix and fastener demand, strong capital equipment performance, and tax benefits; GAAP EPS reflects litigation and restructuring charges .
  • Sequentially, revenue declined from Q3 on seasonality (OEM shutdowns) and softer Assembly Components; EBITDA margin improved vs Q3 (9.5% vs 9.2%) per Company disclosures .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (YoY)FY 2025—2%–4% New
Adjusted Operating IncomeFY 2025—Improve YoY New
Adjusted Net IncomeFY 2025—Improve YoY New
EBITDA, as definedFY 2025—Improve YoY New
Free Cash FlowFY 2025—Improve YoY New
Effective Tax RateFY 2025—21%–23% New
Fully Diluted SharesFY 2025—~14.7M New
Tariff ImpactFY 2025—Expect cost increases; mitigate with suppliers/customers; potential U.S. manufacturing benefit New
DividendQ1 2025$0.125 (prior quarterly level) $0.125 (declared Jan 24, 2025) Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Tariffs & Supply ChainLimited exposure to China; produce locally; some Asian sourcing; pricing/process tools to manage; offset via cost-to-serve reductions Noted tariff rhetoric; overall impact seen as manageable given North America mix; strong U.S. investment cycle is positive Expect certain import costs to rise; mitigation via suppliers/customers; U.S. plants may benefit from reshoring; majority business not meaningfully impacted Mixed (manageable risk; potential U.S. benefit)
Engineered Products TurnaroundImprovement in capital equipment; forging margins lag; actions at Arkansas plant; bookings/backlog strong Still underperforming historically; execution (not demand) the issue; 2025 improvement expected but not a “light switch” Adjusted operating income improved; backlog $145M; focus on execution to lift margins in 2025 Improving (execution-led)
Supply Technologies StrengthRecord sales/margins; aerospace & defense +56% YoY; fasteners +12% Record margins; fasteners +9%; diversified end markets support stability Q4 sales +2% YoY; A&D +21% YoY; strong higher-margin mix; fasteners demand strong Strong/Consistent
Aerospace & DefenseKey growth engine across segments; long lead aftermarket; defense equipment orders Multi-year runway; visibility mixed but direction positive; Apollo Aerospace expansion in EU/US Continued growth expected; A&D demand a standout into 2025 Positive
Leverage & LiquidityTarget deleveraging; improved EBITDA and FCF; model less capex-intensive post divestiture Raised equity to repay debt; liquidity improved; management family led ~$5M of ATM at $30 Net leverage to 3.8x; liquidity $198.2M; ~14.7M FD shares expected 2025 Improving (lower leverage)
Tax Rate GuidanceCore ETR 21%–23% discussed Effective rate ~15% near-term; core 20%–23% 2025 ETR 21%–23% Stable

Management Commentary

  • Strategic posture: “We… enter 2025 with a faster growing, more profitable, less capital intensive and more predictable business model through the business cycle” — CEO Matthew Crawford .
  • Margin roadmap: “The big opportunity for 2025 is in our Engineered Products group… get the Engineered Products group back to where it's been historically” — CEO Matthew Crawford .
  • Tariffs: “Majority of our business will not be impacted meaningfully… working with supply chains and customers to mitigate… U.S. plants may realize benefit” — Management .
  • Share count/leverage: “We sold ~1M shares through an ATM… to deleverage… family led with ~$5M at $30” — Management .
  • Tax rate: “We expect a more normalized tax rate in 2025 ranging from 21% to 23%” — CFO Patrick Fogarty .

Q&A Highlights

  • Tariffs and end-market cadence: Management expects manageable tariff impact via localization and pass-throughs; cautioned that macro “chaos” could affect demand, though not yet visible .
  • Growth vectors: A&D and capital equipment backlog remain solid; heavy-duty truck among end markets expected to grow in 2025; the primary margin opportunity is Engineered Products execution .
  • Pricing/margins: Supply Technologies “money is made in buying”; continued product cost wins and process investments to support margins; Assembly Components pursuing value drivers to lift margins .
  • M&A pipeline: Focus on bolt-ons expanding services in Supply Technologies and aftermarket in Equipment; EMA integration progressing in Europe .
  • Capital structure: Fully diluted shares ~14.7M in 2025; ATM not part of the base forecast beyond issued shares; emphasis on deleveraging and refinancing readiness .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and Revenue was unavailable at the time of analysis due to data access limits; therefore, we cannot provide a numerical beat/miss comparison for the quarter. Investors should monitor S&P Global for updated consensus to recalibrate expectations.

Key Takeaways for Investors

  • Supply Technologies remains the earnings engine: diversified end markets, higher-margin mix (proprietary fasteners), and operational discipline continue to underpin consolidated profitability .
  • Engineered Products is the swing factor for 2025: backlog/bookings support sales, but execution—particularly in forging—must improve to unlock margin expansion contemplated in guidance .
  • Assembly Components likely stabilizes on new launches and value drivers, but legacy pricing and OEM schedule volatility remain watch items near term .
  • Balance sheet progress is tangible: liquidity at $198.2M and net leverage at 3.8x provide flexibility; share issuance was used to delever and is reflected in 2025 FD share guidance (~14.7M) .
  • Tariffs are a managed risk with potential U.S. manufacturing upside; management expects to mitigate cost pressures through supplier/customer actions and sees reshoring as a tailwind for certain operations .
  • Tax rate normalization to 21%–23% in 2025 is a headwind vs 2024’s 11% effective rate, but guided margin/EBITDA improvements aim to offset this .
  • Dividend maintained at $0.125/share signals continuity; continued cash generation and lower capital intensity support ongoing returns and deleveraging .

Citations:

  • Q4 2024 8-K/Press Release financials and segments:
  • Q4 2024 earnings call transcript (prepared remarks and Q&A):
  • Prior quarters for trend context: Q3 2024 PR/Call ; Q2 2024 PR/Call
  • Dividend PR (Jan 24, 2025):