Q4 2024 Park-Ohio Holdings Corp Earnings Call

Operator: Greetings and welcome to the Park Ohio Holdings Corp fourth quarter and full year 2024 results conference call and webcast. At this time, all participants are in a listen only mode. If anyone should require operator assistance, please press star zero on your telephone keypad.

Greetings and welcome to the Park, Ohio Holdings Corp, fourth quarter and full year 'twenty 'twenty four results conference call and webcast. At this time all participants are in a listen only mode. If anyone should require operator assistance. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may be placed into question two at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

A question and answer session will follow the formal presentation.

Maybe plays into question shoot at any time by pressing star one on your telephone keypad.

As a reminder, this conference is being recorded.

Operator: It's now my pleasure to turn the call over to your CFO and Vice President, Pat Fogarty. Please go ahead.

Speaker Change: It's now my pleasure to trouble coloratura, yeah, So vice President Pat Fogarty. Please go ahead.

Matthew Crawford: Kevin, actually, it's Matt Crawford is going to start. Thank you for the introduction, and thank all of you for joining us on our fourth quarter and year-end 2024 conference. We're proud of our 2024 results and the momentum we gained in three areas of strategic value. First, improved and record levels of gross margin. Second, while short of our internal goals, solid cash flow performance, and finally, improving leverage metrics and liquidity. We achieve these goals through strong execution by our management team, but also through the ongoing reshaping of our business portfolio. Over the last several years, we've worked to exit businesses which we do not find meet our long-term goals and focus more attention and capital on our best brands, customers, products, and services.

Speaker Change: Kevin actually its a macro or is going to start. Thank you for the introduction.

Speaker Change: And thank all of you for joining us on our fourth quarter and year end 2024 conference call where.

Speaker Change: We're proud of our 2024 our results in.

Speaker Change: And the momentum we gained in three areas of strategic value.

Speaker Change: Improved and record levels of gross margin.

Speaker Change: Second while short of our internal balls solid cash flow performance, and finally, improving leverage metrics and liquidity.

Speaker Change: We achieved we achieved these goals through strong execution by our management team, but also to the ongoing reshaping of our business portfolio.

Speaker Change: Over the last several years, we worked to exit businesses, which we do not find meet our long term goals and focus more attention and capital on our best brands customers products and services.

Matthew Crawford: We have completed this effort while still maintaining record or near record revenue across Our vision here is to build a diverse set of complementary industrial businesses which have important and lasting competitive moats and demonstrate above-average growth characteristics. The businesses we are focused on demonstrate varying strengths, including strong global brand recognition, excellent economies of scale and data management, intellectually protected products, and a good balance of aftermarket exposure. In addition, we have created a less asset intensive model, which should lower our capital expense through the business cycle and free up opportunities to invest in those items, which will lower our cost to serve and increase our overall competitiveness and margin profile.

Speaker Change: We have completed this effort, while still maintaining record or near record record revenue across the company are.

Speaker Change: Our vision here is to build a diverse set of complementary industrial businesses, which have important and lasting competitive moats and demonstrate above average growth characteristics.

Speaker Change: We are focused on demonstrate varying strengths, including strong global brand recognition excellent economies of scale and data management intellectually protected products and a good balance of aftermarket exposure.

Speaker Change: In addition, we have created a less asset intensive model, which should lower our capital expense through the business cycle and free up opportunities to invest in those items, which will lower our cost to serve and increase our overall competitiveness and margin profile.

Matthew Crawford: Additionally, these investments should be the bedrock of a model focused on organic growth complemented by some acquisitions through the business cycle.

Speaker Change: Additionally, these investments should be the bedrock of our model focused on organic growth complemented by some acquisitions through the business cycle.

Matthew Crawford: Thank you to all of our Park Ohio associates globally, our team has never been stronger. Thank you.

Speaker Change: To all of our park, Ohio Associates globally, our team has never been stronger.

Patrick Fogarty: Now I'll turn it over to Pat to cover the Thanks, Matt. Good morning. Overall, we are pleased with our 2024 fourth quarter and full year results, which exceeded our expectations in many financial categories. including gross margins, operating income margins, earnings per share, EBITDAs defined, and net debt leveraged. Also our supply chain management, proprietary fastener manufacturing, industrial equipment businesses achieved all-time highs in terms of sales and profitability.

Pat Fogarty: Thank you now I'll turn it over to Pat to cover.

Pat Fogarty: To cover the numbers.

Pat Fogarty: Thanks, Matt and good morning overall, we are pleased with our 2020 for fourth quarter and full year results, which exceeded our expectations in many financial categories, including gross margins operating income margins earnings per share EBITDA as defined net debt leverage also our supply chain management.

Pat Fogarty: Criteria fastener manufacturing industrial equipment businesses achieved all time highs in terms of sales and profitability.

Patrick Fogarty: Before I comment on our guidance for 2025, I'll review our full year and fourth quarter results in detail. consolidated net sales in 2024 were approximately $1.7 billion, consistent with 2023 record revenue. Two out of our three business segments experienced year over year sales growth, which was driven by several end markets and a broad range of customers. Our supply chain management business achieved record sales during the year despite demand volatility in several end markets. Year-over-year growth occurred primarily in aerospace and defense, heavy-duty truck, consumer electronics, and electrical distribution markets, offset by weaker demand from power sports, industrial and agricultural equipment, and lawn and garden markets.

Pat Fogarty: Before I comment on our guidance for 2025, I will review, our full year and fourth quarter results in detail.

Pat Fogarty: Consolidated net sales in 2024 were approximately $1 7 billion consistent with 2023 record revenues two out of our three business segments experienced year over year sales growth, which was driven by several end markets and a broad range of customers.

Pat Fogarty: Our supply chain management business achieved record sales during the year despite demand volatility in several end markets.

Pat Fogarty: Year over year growth occurred primarily in aerospace and defense heavy duty truck consumer electronics, and electrical distribution markets offset by weaker demand from power sports industrial and agricultural equipment and lawn and garden markets.

Patrick Fogarty: In our proprietary fastener manufacturing business, full-year sales were at record levels as increased demand relating to new applications utilizing our proprietary self-piercing and clinch products contributed to the greater than 10% growth year-over-year in this business. The sales growth in our engineer product segment was in line with our expectations considering the strong new equipment backlogs at the end of 2023 and new equipment bookings throughout the year. The booking trends continue to be robust throughout the year in both North America and Europe and in all major induction heating and melting brands. In our assembly component segment, full year sales declined 7% year over year, which was a result of lower unit volumes on auto platforms currently in production, and end of life programs, and lower pricing on certain fuel products.

Pat Fogarty: Our proprietary fastener manufacturing business full year sales were at record levels as increased demand relating to new applications utilizing our proprietary self Pearce, you're gonna clinch products contributed to the greater than 10% growth year over year in this business.

Pat Fogarty: The sales growth in our engineered products segment was in line with our expectations considering the strong new equipment backlogs at the end of 2023 and new equipment bookings throughout the year.

Pat Fogarty: The booking trends continue to be robust throughout the year in both North America, and Europe and in all major induction heating and melting brands.

Pat Fogarty: In our assembly components segment full year sales declined 7% year over year, which was a result of lower unit volumes on auto platforms. Currently in production and end of life programs and lower pricing uncertainty fueled products.

Patrick Fogarty: Replacement sales on the programs that ended during 2024 launched in the second half of the year, and we're not at full volume production rates. This also affected our 2024 sales in this year. Our gap earnings per share from continuing operations increased 18% to $3.19 per diluted share compared to $2.72 last year. Adjusted earnings per share, which excludes one-time non-recurring items, improved to $3.59 a share compared to $3.07 per share in 2023, an increase of 17% year-over-year. Full year gross margins in 2024 improved 60 basis points to 17% of net sale. The gross margin improvement was most evident in our supply technology segment, resulting from lower product costs, favorable sales mix, and improved absorption in many locations throughout North America and Europe.

Pat Fogarty: Placement sales on the programs that ended during 2024 launched in the second half of the year and we're not at full volume production rates. This also affected our 2020 for sales in this segment.

Pat Fogarty: Our GAAP earnings per share from continuing operations increased 18% to $3 19 per diluted share compared to $2 72.

Pat Fogarty: Last year adjusted earnings per share, which excludes onetime nonrecurring items improved to $3 59, a share compared to $3 seven per share in 2023, an increase of 17% year over year.

Pat Fogarty: Full year gross margins in 2024 improved 60 basis points to 17% of net sales. The gross margin improvement was most evident in our supply technologies segment, resulting from lower product costs favorable sales mix and improved absorption in many locations throughout North America and Europe.

Patrick Fogarty: Gross margin improvement continues to be a key initiative, and we expect continued improvement in the current year. SG&A expenses were higher in 2024 primarily to the impact of the acquisition of EMA induction, higher employee related costs, and general inflationary As a percentage of net sales, SG&A was 11.3% of sales compared to 10.9% of sales in 2020. Our adjusted operating income was $94 million compared to $90 million a year ago, an increase of 4% year over year. Record operating profit margins in our supply technology segment and in our industrial equipment business accounted for the increase year over year.

Pat Fogarty: Margin improvement continues to be a key initiative and we expect continued improvement in the current year.

SG&A expenses were higher in 2024, primarily to the impact of the acquisition of EMA induction higher employee related costs and general inflationary increases.

Pat Fogarty: As a percentage of net sales SG&A was 11, 3% of sales compared to 10, 9% of sales in 2023.

Pat Fogarty: Our adjusted operating income was $94 million compared to $90 million a year ago, an increase of 4% year over year.

Pat Fogarty: Record operating profit margins in our supply technologies segment and in our industrial equipment business accounted for the increase year over year.

Patrick Fogarty: Interest expense was $47 million compared to $45 million in 2023. The increase was primarily due to higher interest rates. Our full-year income tax expense was $4.9 million on pre-tax income of $44.4 million, representing an effective income tax rate of 11 percent. Our effective global tax rate benefited from the recognition of research and development tax credits and the reversal of certain tax valuation allowances during the year.

Pat Fogarty: Interest expense was $47 million compared to $45 million in 2023, the increase was primarily due to higher interest rates.

Pat Fogarty: Our full year income tax expense was $4 $9 million on pretax income of $44 4 million, representing an effective income tax rate of 11%.

Pat Fogarty: Our effective global tax rate benefited from the recognition of research and development tax credits and the reversal of certain tax valuation allowances during the year.

Patrick Fogarty: We expect a more normalized tax rate in 2025, ranging from 21 to 23 percent. Our EBITDA as defined was $152 million in 2024, an increase of 13% compared to $134 million in 2023. Operating cash flow generated during the year was $35 million, and free cash flow was $15 million. Additionally, we sold approximately 1 million shares of common stock for $30 million and used the proceeds to pay down debt. As a result of our improved EBITDA and lower debt levels at year-end, our net debt leverage improved to 3.8 times.

Pat Fogarty: We expect a more normalized tax rate in 2025, ranging from 21% to 23%.

Pat Fogarty: Our EBITDA as defined was $152 million in 2024, an increase of 13% compared to $134 million in 2023 operating cash flow generated during the year was $35 million in free cash flow was $15 million. Additionally, we sold approximately 1 million shares of common stock.

Pat Fogarty: For $30 million and used the proceeds to pay down debt.

As a result of our improved EBITDA and lower debt levels at year end, our net debt leverage improved to three eight times.

Patrick Fogarty: Moving now to our fourth quarter results, net sales from continuing operations of $388 million were consistent with 2023 fourth quarter revenue. Quarterly revenues in our supply technologies and engineering products segments increased 2% year-over-year. Revenues in our assembly components segment declined in the fourth quarter due to customer plant shutdown schedules during the month of December, which affected several of our plants in this segment. Gap earnings per share in the quarter were 41 cents per diluted share, which is affected by the impact of one-time non-recurring items totaling $5 million relating to facility exit costs, litigation expenses relating to a 2016 dispute in our assembly components segment, and gains on sale of assets.

Pat Fogarty: Moving now to our fourth quarter results net sales from continuing operations of $388 million were consistent with 2023 fourth quarter revenues.

Pat Fogarty: Revenues in our supply technologies, and engineered products segments increased 2% year over year.

Pat Fogarty: Revenues in our assembly components segment declined in the fourth quarter due to customer plant shutdown schedules during the month of December which affected several of our plants in this segment.

Pat Fogarty: GAAP earnings per share in the quarter were <unk> 41 per diluted share, which was affected by the impact of onetime nonrecurring items totaling $5 million relating.

Pat Fogarty: Relating to facility exit costs litigation expenses relating to a 2016 dispute in our assembly components segment and gains on sale of assets. Our adjusted earnings per share of <unk> 67 in the quarter compared to 54 in the quarter last year, an increase of 24%.

Patrick Fogarty: are adjusted earnings per share of $0.67 in the quarter compared to $0.54 in the quarter last year, an increase of 24%. In the quarter, adjusted operating income totaled $19.4 million, compared to $17.7 million in the 2023 quarter, and margins improved 45 basis points compared to 2020. We generated significant operating cash flows of $26 million and free cash flow of $29 million and EBITDA has defined an increase of 27% to $37 million in the quarter.

Pat Fogarty: In the quarter adjusted operating income totaled $19 4 million compared to $17 7 million in.

Pat Fogarty: In the 2023 quarter and margins improved 45 basis points compared to 2023.

Pat Fogarty: We generated significant operating cash flows of $26 million and free cash flow of $29 million.

Pat Fogarty: And EBITDA as defined increased 27% to $37 million in the quarter.

Patrick Fogarty: Turning now to our segment results in supply technologies, net sales for the full year were a record $779 million, up 2% compared to $766 million in 2023. The increase was driven by higher customer demand across certain key end markets in our supply chain business, with the biggest increases in aerospace and defense, heavy-duty truck, consumer electronics, and electrical distribution, which was offset by softer year-over-year demand in the power sports, industrial and agricultural equipment, and lawn and garden end markets. During the year, we continued to see strong demand from commercial and military aerospace customers, which was up 21 percent over the prior year.

Pat Fogarty: Turning now to our segment results and supply technologies net sales for the full year were a record $779 million up 2% compared to 770 $766 million in 2023 the increase.

Pat Fogarty: It was driven by higher customer demand across certain key end markets in our supply chain business with the biggest increases in aerospace and defense heavy duty truck consumer electronics, and electrical distribution, which was offset by softer year over year demand in the power sports industrial and agricultural equipment and lawn and garden end Mark.

Pat Fogarty: <unk>.

Pat Fogarty: During the year, we continued to see strong demand from commercial and military aerospace customers, which was up 21% over the prior year.

Patrick Fogarty: Sales in this segment were also favorably impacted by increased demand for our proprietary fastener products, as sales in that part of the segment were up 11% year-on-year. Operating income in this segment achieved an all-time high and totaled $75 million in 2024, up 27% compared to $59 million in the prior year. And operating margins were 200 basis points higher at 9.7%. These increases were driven by the higher sales levels, favorable mix of higher margin products, and the impact of profit improvement initiatives. In the fourth quarter, net sales were up 2% to $182 million, compared to $176 million in the fourth quarter of 2023.

Pat Fogarty: Sales in this segment were also favorably impacted by increased demand for our proprietary fastener products as sales in that part of the segment were up 11% year over year.

Pat Fogarty: Operating income in this segment achieved an all time high and totaled $75 million in 2024 up 27% compared to $59 million in the prior year and operating margins were 200 basis points higher at nine 7%.

Pat Fogarty: These increases were driven by the higher sales levels favorable mix of higher margin products and the impact of profit improvement initiatives.

In the fourth quarter net sales were up 2% to $182 million compared to $176 million in the fourth quarter of 2023, adjusted operating income totaled $16 million compared to $14 million in the prior year quarter, an increase of 14%.

Patrick Fogarty: Adjusted operating income totaled $16 million, compared to $14 million in the prior year quarter, an increase of 14%. The fourth quarter results were a strong end to an outstanding year's performance by this segment of our business.

Pat Fogarty: The fourth quarter results were strong end to an outstanding year as performance by this segment of our business.

Patrick Fogarty: In our assembly components segment, sales were $399 million for the year, down 7% compared to $428 million in 2023, resulting from lower unit sales caused by lower OEM production, lower pricing on certain programs, and end-of-life programs. adjusted operating income was $26.5 million in 2024 compared to $34.9 million in 2023. In the fourth quarter, net sales of $90 million were down 7% compared to $97 million in the fourth quarter of last year, and adjusted operating income totaled $4.5 million compared to $6.5 million in the fourth quarter of 2023.

Pat Fogarty: In our assembly components segment sales were $399 million for the year down 7% compared to $428 million in 2023, resulting from lower unit sales caused by lower OEM production lower pricing on certain programs and end of life programs.

Pat Fogarty: Adjusted operating income was $26 $5 million in 2024 compared to $34 $9 million in 2023.

Pat Fogarty: In the fourth quarter net sales of $90 million were down 7% compared to $97 million in the fourth quarter of last year and adjusted operating income totaled $4 5 million compared to $6 $5 million in the fourth quarter of 2023, our fourth quarter sales levels were affected by OEM plant shutdowns.

Pat Fogarty: <unk>, which exceeded holiday scheduling in the prior year.

Patrick Fogarty: In our engineered product segment, full year net sales were a record $482 million, up 3% compared to $469 million in 2023, driven by strong customer demand in our industrial equipment. New equipment bookings for the full year were $164 million, and new equipment backlog as of December 31st totaled $145 million. Record revenues in this business grew 6%, with significant growth in sales of aftermarket parts and services, which grew 12% year-over-year. In our Forged to the Machine Products business, full year sales decreased 4%, driven by lower rail forging sales, which more than offset strong demand for aerospace forgings in our Canton, Ohio.

Pat Fogarty: In our engineered products segment full year net sales were a record $482 million up 3% compared to $469 million in 2023, driven by strong customer demand in our industrial equipment business.

Pat Fogarty: New equipment bookings for the full year were $164 million and new equipment.

Pat Fogarty: <unk> backlog as of December 31 totaled $145 million.

Pat Fogarty: Record revenues in this business grew 6% with significant growth in sales of aftermarket parts and services, which grew 12% year over year.

Pat Fogarty: In our forged and machine products business full year sales decreased 4% driven by lower rail forging sales, which more than offset strong demand for aerospace forgings in our canton, Ohio facility.

Patrick Fogarty: We continue to quote new projects in support of the defense. including aerospace forging products and new equipment. Excluding special charges, our adjusted operating income for the year was $21.3 million compared to $24 million a year ago in this cycle. The lower operating income levels were driven by a year-over-year decline in the production of rail forging products, which significantly affected margins in the We have implemented operational improvements in our plant in Arkansas and expect the benefits to be realized throughout 2025. in the fourth quarter, net sales of $117 million, increased slightly over sales of $115 million in the 2023 quarter, and adjusted operating income was $5 million in the quarter compared to 3.8.

Pat Fogarty: We continue to quote new projects in support of the defense industry, including aerospace forging products in new equipment builds.

Pat Fogarty: Excluding special charges, our adjusted operating income for the year was $21 3 million compared to $24 million a year ago in this segment.

Pat Fogarty: The lower operating income levels are driven by a year over year decline in the production of rail forging products, which significantly affected margins in this segment.

Pat Fogarty: We have implemented operational improvements in our plant in Arkansas and expect the benefits to be realized throughout 2025.

Pat Fogarty: In the fourth quarter net sales of $117 million increased slightly over sales of $115 million in the 2023 quarter and adjusted operating income was $5 million in the quarter compared to $3 $8 million. Despite.

Patrick Fogarty: Despite the improvement in Adjusted Operating Income, we continue to make operational changes to certain plants to improve future performance, most notably in our foraging.

Pat Fogarty: Despite the improvement in adjusted operating income, we continue to make operational changes to certain plants to improve future performance, most notably in our forging business.

Patrick Fogarty: And finally, corporate expenses were $29 million in 2024, compared to $28 million in 2023, with the increase driven primarily by higher employee-related costs.

Pat Fogarty: And finally corporate expenses were $29 million in 2024 compared to $28 million in 2023 with the increase driven primarily by higher employee related costs now.

Patrick Fogarty: Now I'll make a few comments relating to our guidance for 2025. As indicated in our press release, we expect revenue growth to be in the range of 2-4% year-over-year, driven by stable demand in most end markets compared to 2024 demand levels. We also expect year-over-year improvement in Adjusted Operating Income, Adjusted Net Income, EBITDA as defined, and Free Cash Flow. In addition, fully diluted shares outstanding will approximate 14.7 million shares versus 13.2 million shares in 2024, and we expect an effective tax rate of 21 to 23 percent compared to 11 percent.

Now I'll make a few comments relating to our guidance for 2025.

Pat Fogarty: As indicated in our press release, we expect revenue growth to be in the range of 2% to 4% year over year driven by stable demand in most end markets compared to 2020 for demand levels. We also expect year over year improvement in adjusted operating income adjusted net income EBITDA as defined in free.

Pat Fogarty: Cash flow.

Pat Fogarty: In addition, fully diluted shares outstanding will approximate $14 7 million shares versus $13 2 million shares in 2024, and we expect an effective tax rate of 21% to 23% compared to 11% in 2024 as.

Patrick Fogarty: As a result of recent actions with respect to tariffs on goods manufactured abroad, costs for certain goods which we import into the United States, including certain raw materials and components, are expected to increase by $1.5 billion. We are working with our supply chains and customers to mitigate the impact of such tariff. Conversely, our United States manufacturing plants may realize a benefit from tariffs as a result of higher production and localized sourcing back into the U.S.

Pat Fogarty: As a result of recent actions with respect to tariffs on goods manufactured abroad cost for certain goods, which we imported into the United States, including certain raw materials and components are expected to increase.

Pat Fogarty: We are working with our supply chains and customers to mitigate the impact of such tariffs.

Pat Fogarty: Conversely.

Pat Fogarty: States manufacturing plants may realize the benefit from tariffs as a result of higher production and localized sourcing back into the U S.

Patrick Fogarty: And I'll turn the call back over to... Great. Thank you, Pat.

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

Matt: Great. Thank you Pat I will now open the floor for questions.

Operator: We'll now open the floor for questions. Thank you, and I'll be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you and I'll be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is another question Q1 moment, please pull for questions.

Operator: One moment, please, while we poll for questions.

Dave Storms: Our first question is coming from Dave Storms from Stonegate, your line is now live. Morning, Dave. Just wanted to start with some of the guidance and see kind of what your expectations are for Cadence. Should we expect 2025 to be kind of a normal year, or do you think tariffs or anything else might throw that seasonality off?

Matt: Our first question is coming from James Stallings from Stonegate. Your line is now live.

James: Good morning, Dave.

James Stallings: Just wanted to start with some of the guidance.

James Stallings: Kind of what your expectations are for cadence should we expect 2025 eight kind of.

James Stallings: A normal year or do you think tariffs or anything else might throw that seasonality off.

Matthew Crawford: Let me, Dave, this is Matt, before Pat answers that, let me comment on tariffs because it took to the first question to talk about them, so let's just kind of jump in. I think Pat's last point in his prepared comments is really important. Most of our business, a majority of our business, will not be impacted, meaningfully or at all, by- Also, our balance of business allows us to have exposure, particularly in the forging group and in the equipment group, which could benefit from. In the Forge Group, we are largely sourced domestically for steel in the U.S., so that would be tariff-free.

James Stallings: Let me, yes, David this is Matt.

Speaker Change: Before Pat answers that let me.

Speaker Change: Comment on tariffs because.

Speaker Change: It took time it took to the first question to talk about them. So, let's just kind of jump in.

Speaker Change: I think Pat last point.

Pat Fogarty: In his prepared comments is really important.

Pat Fogarty: Most of our business the majority of our business will not be impacted meaningfully or at all by tariffs.

Pat Fogarty: Also our balance of business allows us to have exposure, particularly.

Pat Fogarty: In the forging group and in the equipment group, which could benefit from these things.

Pat Fogarty: In the fourth group were largely sourced domestically.

Pat Fogarty: For steel in the U S. So that would be tariff free.

Patrick Fogarty: In the equipment business, we would benefit from reinvesting in the steel business and in other related businesses and in American manufacturing generally. As you know, we've seen huge backlogs in that business, as that investment's been happening over a series of years in multiple industries. We got a lot of bites at the apple in our portfolio to be successful here, and the majority of our – well, 65 to 70 percent of our business is in North America. Most of it will not be impacted, but we do have some areas – Pat mentioned it, and perhaps Yeah, Dave, when you think about our business in the supply technology segment where we source product all around the world, we do have tariffs that we expect to impact that business as it stands today.

Pat Fogarty: In the equipment business, we would benefit from reinvesting in the steel business and and other related businesses in an American manufacturing generally.

Pat Fogarty: As you know we've seen huge backlogs in that business is that investment has been happening over a series of years and multiple industry. So we've got a lot of bites at the Apple in our in our portfolio to be successful here.

Speaker Change: And the majority of about 65%, 70% of our business is in North America. Most of it will not be impacted but we do have some areas Pat mentioned, it and perhaps you can comment.

Pat Fogarty: Yes, yes, Dave when you think about our business and the supply technologies segment, where we source product all.

Speaker Change: All around the world.

Speaker Change: We do have tariffs that we expect to impact that business as it stands today.

Patrick Fogarty: We're working with our supply chains to localize some of that supply, but also working with our customers to be able to pass that cost along to them. So it's going to take time to work a lot of that out, but clearly our belief is that through our ability to work with our supply chains and work with our customers, we'll mitigate a large portion of these tariffs as they impact 2025.

Speaker Change: We're working with our supply chains.

Speaker Change: Localize some of that supply.

Speaker Change: But also working with our customers to be able to pass that cost along to them. So.

Speaker Change: It's going to take time to work a lot of that out but.

Speaker Change: Clearly our belief is that through our ability to work with our supply chains and worked with our customers will mitigate a large portion of these tariffs as they impact 2025.

Matthew Crawford: in our auto segment. You know, the same holds true there. As you know, we have significant production plants in Mexico that bring product into the states, but also ship product in the country. And so, depending on how that plays out and how tariffs impact that, we will work with our customers to absorb that cost. And as it stands today, every day is a new day, and we're hearing new news by the hour. But right now, it's an all-out effort to work with our customers and our supply chains to mitigate. Dave, I would add one other thing.

Speaker Change: In our in our auto segment.

Speaker Change: The same holds true there.

Speaker Change: As you know we have significant production plants.

Speaker Change: In Mexico that bring product into the states, but also ship product in the country.

Speaker Change: And so.

Speaker Change: Depending on how that plays out.

Speaker Change: And how tariffs impact that.

Speaker Change: We will work with our customers to absorb that cost.

Speaker Change: Yeah.

Speaker Change: As it stands today.

Speaker Change: Every day is a new day, and we're hearing new news.

Speaker Change: The hour but.

Speaker Change: But right now.

Speaker Change: It's an all out effort to work with our customers and our supply chain to mitigate these.

Speaker Change: Dave I would add one other thing I think as Pat mentioned in the context of our business plan. This is something we will manage.

Matthew Crawford: I think, as Pat mentioned, you know, in the context of our business plan, this is something we will manage, and we have opportunity as well, as I mentioned. Having said that, you know, this chaos does cause us, our customers, the whole supply chain, to be concerned about demand. I mean, this chaos clearly, we haven't seen it yet, but I do get concerned that whether there's inflation or just chaos, it could affect overall demand in 2025 in multiple markets, but we're certainly not seeing that.

Speaker Change: And we have opportunity as well as I mentioned, having said that.

Speaker Change: This chaos does cause us our customers are the whole supply chain to be concerned about demand.

Speaker Change: This chaos clearly, we havent seen it yet but.

Speaker Change: But I do get concerned that.

Speaker Change: Whether there is inflation or just chaos.

Speaker Change: Affect overall demand in 2025 in multiple markets, but we're certainly not seeing that now.

Dave Storms: Understood. That's great caller.

Speaker Change: Understood Thats great color. Thank you.

Dave Storms: Thank you. As we're looking into 2025, you know, aerospace and defense has been a real standout for you guys. Recently, you just mentioned the tailwind from the backlogs. Are there any other end markets to highlight or keep an eye on as potential standouts going into 2025? I think you hit on the one-end market that we continue to see growth in. When we look into our capital equipment business, Dave, we continue to see strong backlogs. We continue to see booking levels and quoting levels at a high level. So that's positive for 2025. Within supply technologies, we continue to see, because of the diversification of that particular business, many end markets are expecting to have increased demand, heavy-duty truck being one of them.

Speaker Change: As we're looking into 2025 aerospace and defense has been a real stand out for you guys. Recently, you just mentioned the tailwind from the backlogs are there any other end markets to highlight or keep an eye on.

Speaker Change: Potential standouts going into 2025.

Speaker Change: I think you hit on.

Speaker Change: On the one end market that we continue to see growth and.

Speaker Change: When we look into our capital equipment business, Dave We continue to see strong backlogs we continue.

Speaker Change: See booking levels and quoting levels at a high level.

Speaker Change: That's positive for 2025 within.

Speaker Change: Within supply technologies, we continue to see because of the diversification of that particular business.

Speaker Change: Many end markets are expecting to have increased demand.

Speaker Change: Heavy duty truck being one of them.

Matthew Crawford: But when our range of 2 to 4 percent isn't largely due to aerospace and defense, there are other end markets that we see. David, I would also add from a margin perspective, and we spend a lot of time talking about increasing margins. The big opportunity for 2025 is in our engineered products group. If you look historically, and I know you have, that business is still substantially underperforming despite the strong back So as we continue, I think, to be effective in turning around those businesses and improving our execution, I think that's the big opportunity at the market.

Speaker Change: But you don't.

Speaker Change: A range of 2% to 4% isn't isn't largely.

Speaker Change: Due to the aerospace and defense there are other end markets that we expect growth in.

Speaker Change: David I would also add from a margin perspective, and we can spend a lot of time talking about increasing margins.

Speaker Change: The big opportunity for 2025.

Speaker Change: As in our engineered products group.

Speaker Change: If you look historically and I know you have.

Speaker Change: That business is still substantially underperforming despite the strong backlogs. So as we as we continue I think to be effective in turning around those businesses and improving our execution I think that's the big opportunity at the margin line.

Speaker Change: Okay.

Matthew Crawford: That actually ties in real nicely to my next question here. Just on consolidated margins, you know, Supply Tech has been pretty much buoying consolidated margins. I know your business is set up, you know, to take advantage of that diversification. Does this, you know, does 2024 look like a baseline for margins for you with, you know, potential sweetener from engineered products, or is there anything else we should maybe keep in mind there? Yeah, I mean, I would say in the aggregate, the opportunity is, or the consolidated result, the opportunity is in the engineered products group. We have been so impressed by the leadership of Supply Technologies.

Speaker Change: That actually ties in very nicely to my next question here just on consolidated margins.

Speaker Change: Mitek has been pretty much booing.

Speaker Change: Holiday margins I know your business is set up to take advantage of that diversification.

Speaker Change: This discipline going forward it looks like a baseline.

Speaker Change: For margins for you with potential sweetener from.

Speaker Change: Engineered products or is there anything else, we should maybe keep in mind there.

Speaker Change: Yes.

Speaker Change: I would say in the aggregate the opportunity is or the consolidated results. The opportunity is in the engineered products group.

Speaker Change: <unk> been so impressed by the leadership of supply technologies, I'm, certainly not suggesting that story is over but those guys have executed at a very high level, both on the supply chain side it side in the specialty fastener manufacturing business. So.

Matthew Crawford: Certainly not suggesting that story's over, but those guys have executed at a very high level, both on the supply chain side and the specialty fastener manufacturing business. So they've done a great job and they will continue to, but our opportunity is to get the engineered products group back to where it's at. And Dave, couldn't agree more. I think as we say here, money is made in buying and supply tech. had some real success in terms of their product costs during the year, which helped our margins. But the opportunity not only is in our engineered products to improve margins, but also in the assembly components area, where we continue to implement new value drivers to improve our margins.

Speaker Change: They've done a great job.

Speaker Change: And they will continue to but our opportunity is to is to get the engineered products group back to where it's been historically.

Speaker Change: That's perfect and then Dave Couldnt Couldnt agree more I think is as we say here money is made in buying in supply tech.

Speaker Change: Had.

Speaker Change: Some real success in terms of their product costs during the year, which helped our margins.

Speaker Change: But the opportunity not only is in our engineered products to improve margins, but also in the assembly components area, where we continue to implement new.

Speaker Change: Value drivers to improve our margins.

Matthew Crawford: And Dave, this will give me a chance to highlight what I said in my opening comments, you know, as we've exited some of the forge business and General Aluminum, which were high capital cost businesses, we will reallocate that into places like supply technologies where we see opportunities not just to work a little harder, but to be a little smarter. So you'll see us investing in technology tools, just to be a little smarter, lower our cost to serve and create a sustainable competitive advantage. So, you know, I think that the story on margin in that group, you know, is going to be strategic as well as good execution on buying.

Speaker Change: And Dave This will give me a chance to highlight what I said in my opening comments.

Speaker Change: You know as we've exited some of the <unk> business and general aluminum, which are high capital cost businesses, we will reallocate that into places like supply technologies, where we see opportunities not just to work a little harder but to be a little smarter. So youll see us investing in technology tools.

Speaker Change: Just to be a little smarter lower our cost to serve and create a sustainable competitive advantage. So.

I think that the story on margin in that group is going to be strategic as well as good execution on buying and so forth.

Speaker Change: That's great color. Thank you one more for me if I could I know.

Dave Storms: I know you guys had a fairly active 2024 from an M&A side with the divestiture, just curious as to what you're seeing in the M&A market with just the general economic outlook. Yeah, the volume of deals that we see, Dave, I would say is good and has always been pretty good, but at a pretty level state. I don't think it's any more or less than what we've seen in the past. We continue to look for strategic type acquisitions that could complement our most profitable business. whether that be in supply technologies or whether that be in our aftermarket parts and services business on the equipment side.

Speaker Change: You guys had a fairly active 24.

Speaker Change: M&A side with the divestiture just curious as to what Youre seeing in the M&A market.

Speaker Change: Just the general economic outlook.

Speaker Change: Yeah, the volume of deals that we see Dave I would say is good in it.

Speaker Change: As always been pretty good but at a pretty level state I don't think it's any more or less than what we've seen in the past.

Speaker Change: We continue to look for strategic type acquisitions that could complement our.

Speaker Change: Our most profitable businesses, whether that be in supply technologies or whether that be in our aftermarket parts and services business on the equipment side.

Matthew Crawford: So, you know, I think, you know, we're very careful with, with where we are going to bolt on to which companies and the activity is pretty good right now.

Speaker Change: So.

Speaker Change: I think.

Speaker Change: We're very careful with with.

Speaker Change: Where we are going to bolt ons.

Speaker Change: Which companies and and the activity is pretty good right now.

Matthew Crawford: That's great.

Speaker Change: That's great. Thank you for taking my questions and good luck.

Matthew Crawford: Thank you for taking my questions and good luck in 2025. Thanks Dave. Thank you.

Pat Fogarty: Okay. Thanks, Dave Thank you.

Brian Sponheimer: Next question is coming from Brian Sponheimer from Gabelli Funger Line is now live. Brian, how are you? Hey, Matt. Hey, Pat.

Speaker Change: Thank you. Your next question is coming from Brian <unk> from Gabelli funds. Your line is that life.

Speaker Change: Brian Hey, Matt Hey, Pat. Thank you very much for getting me on here, we're talking a little bit. This morning about the release and you guys did a great job on the tariff side kind of explaining.

Matthew Crawford: Thank you very much for getting me on here. We were talking a little bit this morning about the release. And you guys did a great job on the tariff side kind of explaining what some opportunities are. We had a question specifically on fasteners and maybe some exposure there, particularly as it relates to China, that you might need to work on potentially down the road here. Any comments there? Yeah, Brian. Supply technologies does import product from China, but it is a small amount. A few years ago, when tariffs were first implemented, we localized supply and moved supply out of China to other countries and back into the U.S., so our exposure there is pretty small.

Speaker Change: Whats the opportunities are we had a question specifically on fasteners and maybe some exposure there.

Speaker Change: Particularly as it relates to China.

Speaker Change: That you might need to work on.

Speaker Change: Potentially down the road here.

Speaker Change: Any comments there.

Speaker Change: Yes, Brian.

Brian: Supply technologies does import product from China, but it is a small amount.

Brian: A few years ago, when tariffs were first implemented we localize supply and move supply out of China to other countries and back into the U S. So our exposure there is pretty small.

Matthew Crawford: The other products that we may source from Asia would come out of primarily Taiwan. And that's where we're obviously working with our customers and our suppliers, including our Taiwanese suppliers, to keep those costs, increases to a minimum.

Brian: The other products that we may source from Asia would come out primarily Taiwan.

Brian: And Thats, where were obviously working with our customers and our suppliers, including our Taiwanese suppliers.

Brian: To keep those cost increases to a minimum.

Matthew Crawford: Okay, terrific, thanks for the clarification and best of luck with the... with this current environment. Thanks. Thank you.

Brian: Yes.

Brian: Okay terrific. Thanks for the clarification and.

Brian: Best of luck and best of luck with the.

Brian: With this current environment.

Brian: Thanks.

Brian: Yes.

Brian: Thank you next question is coming from Jamie Wilen from willing management. Your line is that life.

Jamie Willen: Next question is coming from Jamie Willen from Willen Management. Your line is now live. Hey fellas, a few different areas. One, you mentioned that the shares outstanding you expect for next year to be 14.7 versus 13.2. Where did we end the year of 2024? And why the major increase in shares? Yeah, Jamie, as I mentioned in the script, we sold a million shares through an ATM program. So that took the shares to north of 14.2. It's a weighted average calculation, the fully dilution of the shares. So for next year, we're expecting it to be 14.7.

Speaker Change: A few different areas. One you mentioned that the shares outstanding you expect for next year would be $14 seven versus 13 two.

Speaker Change: Where did we end the year of 2024.

Speaker Change: The major increase in shares.

Speaker Change: Yes.

Jamie: Jamie as I mentioned in the script, we sold 1 million shares.

Speaker Change: Rooney VM program.

Speaker Change: So that took the shares to north of $14 two it's a weighted average calculation the fully dilution.

Speaker Change: The shares so for next year, we're expecting it to be $14 seven.

Jamie Willen: The other increase is a small amount of shares that typically get distributed as part of our restricted stock program within the employee. Okay, so you're not expecting to sell any additional shares within that forecast?

Speaker Change: The other increase is a small amount of shares that typically get distributed as part of our restricted stock program within the employee base.

Speaker Change: So youre not expecting to sell any additional shares.

Speaker Change: And within that forecast.

Matthew Crawford: Not in this work.

Speaker Change: Not in this market.

Matthew Crawford: David, this is Matt. The first time we've issued shares, again, we're just trying to show our commitment to deleveraging and positioning ourselves for refinancing of the bonds and give us a little flexibility. We wouldn't take that off the table permanently, but to be clear, it's an arrow that we want in our quiver. Since you brought it up, I would definitely want to remind everyone that of those million shares, our family not only participated, but led that round with about $5 million of investment at $30, so we're very committed. In supply technology, as you mentioned, proprietary products were up 11%.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: This is Matt.

Speaker Change: Each time, we've issued shares.

Again, just trying to show our commitment to deleveraging and positioning ourselves for a refinancing of the bonds and give us a little flexibility. So we wouldn't take that off the table permanently but to be clear.

Speaker Change: It is.

Speaker Change: Yes.

Speaker Change: It's an area that we want in our quiver and I would kind of.

Speaker Change: Since you brought it up I would I would definitely want to remind everyone that of those million shares.

Speaker Change: Our family not only participated but led that round with about $5 million of investment at 30 Bucks. So yes.

Speaker Change: We're very committed.

Speaker Change: Gotcha.

Speaker Change: Applied technologies, you mentioned that proprietary products were up 11% I assume proprietary products have gross margins well above your corporate average, but what are the types of products, where we are.

Matthew Crawford: I assume proprietary products have gross margins well above your corporate average, but what are the types of products we are supplying in proprietary products and what is the outlook for the future on that? Yeah, I think Jamie is... Those proprietary products are included in our fastener manufacturing part of the business, which when you look at the 10K, you'll see what historic revenues have been. But the opportunity there is we have several products that are used and attached to lightweight or decrease the weight of the vehicle by using lightweight. Our products attach to those products, such as battery cradles and different parts of the frame of the car.

Speaker Change: Supplying and proprietary products and what is the outlook for the future on that.

Jamie: Yes, Jamie.

Jamie: Proprietary products are included in our.

Jamie: Our fastener manufacturing part of the business, which when you look at the 10-K Youll see what historic revenues have been.

Jamie: But.

Jamie: The opportunity there is we have several products that are used in.

Jamie: Tach to lightweight materials, which as you know the automotive front.

Jamie: That is a big initiative to increase or decrease the weight of the vehicle by using lightweight metals our products attach.

Jamie: To those products such as battery cradles in different parts of the the frame of the car so.

Matthew Crawford: Great product has been growing at north of 10% for the last five years, so growing all around the world. We opened up an operation in Germany. We acquired in 2019 a business in Asia. So the product has gained wide acceptance amongst OEMs throughout the world. So we expect that to continue. Okay, so the growth rate in the past could be achieved in the future as well. We fully expect... Yeah, I mean, Jamie, as they convert also in aerospace to different materials, lightweight, other kinds of things you can't weld to, composites, you know, this kind of technology, which is self-piercing and adheres after insertion, is important for these kind of unique designs and hard-to-access areas, not just in auto, although certainly auto has led in the usage of this product.

Jamie: Great product has been growing at north of 10% for the last five years, so growing all around the world, We opened up an operation in Germany.

We acquired in 2019, our business in Asia.

Jamie: So the product has gained wide acceptance amongst.

Jamie: Oems throughout the world So.

Jamie: So we expect that to continue.

Okay.

Jamie: Right in the past could.

Jamie: Could be achieved in the future as well.

Jamie: We fully expect I think Jamie as they convert also in aerospace.

Jamie: To different materials lightweight other kinds of things you can't well to composites.

Jamie: This kind of technology, which is self piercing and adheres. After insertion is as important for these kind of unique designs that are to access areas not just in auto although certainly auto has led in the usage of this product, it's a pretty exciting place to be.

Matthew Crawford: It's a pretty exciting place.

Jamie Willen: On the acquisition front, are you targeting one division more over the other, and what type of EBITDA multiples are you looking to pay?

Speaker Change: On the acquisition front, who are you targeting one division more over the other.

Speaker Change: Type of EBITDA multiples are you looking to pay.

Matthew Crawford: I'll let Pat handle the EBITDA one. Again, I think that our capital allocation model right now is extremely focused on what I call our best products and services. Now, what we have left in the portfolio are our best products and services. So, we would be open to acquiring something strategic, typically smaller, that opens one of our current management teams and businesses perhaps into an adjacent market, an adjacent customer, an adjacent product line, you know, whatever it may be. So, Yilma last year is a great example where we found something that was an induction heating business, solid customers, solid backlog, and an important market, Germany, which everyone was down on.

Speaker Change: I'll, let Scott handle the EBITDA, one again I think that.

Speaker Change: Our capital allocation model right now is extremely focused on what I call, our best products and services now what we have left in the portfolio are our best products and services. So we would be open to acquire.

Speaker Change: Acquiring something strategic typically smaller that opens one of our current management teams and businesses, perhaps into an adjacent market and adjacent customer and adjacent product line whatever it may be so email last year is a great example, where we found something that wasn't induction heating business.

Speaker Change: Solid customer solid backlog and an important market, Germany, which everyone was down on but remember German customers put equipment all around the world.

Matthew Crawford: But remember, German customers put equipment all around the world. So, that's been a very good small acquisition for us. I think, you know, so again, any of our business, I think we'd be open to that kind of one plus one equals three acquisition or bolt-on as we call it. Having said that, Pat mentioned earlier, I mean, certainly supply technology is bringing more in our suite of services and products to our customers. Very important, particularly in these chaotic supply chain times. I would also say, you know, on the induction heating side, the aftermarket piece, which again is above average margins, these are great opportunities for us and probably lead the pack.

Speaker Change: So that's been a very good very good small acquisition for us I think.

Speaker Change: So again any of our business I think we'd be open to that kind of one plus one equals three acquisition.

Pat Fogarty: Or bolt on as we call. It having said that Pat mentioned earlier, I mean, certainly supply technologies, bringing more in our suite of services and products to our customers very important, particularly in these chaotic supply chain times.

Speaker Change: I would also say you know I mean.

Speaker Change: On the induction heating side, the aftermarket piece, which again has above average margins.

Speaker Change: These are great opportunities for us.

Speaker Change: And probably lead the pack, but again in the business. We're remaining we actually did a nice acquisition in our fastener manufacturing business, we talked about a few minutes ago two years ago.

Matthew Crawford: But again, in the business we're remaining, we actually did a nice acquisition in the fastener manufacturing business we talked about a few minutes ago, two years ago. So, you know, where we are in our portfolio, these businesses all have opportunities for those kinds of bolt-ons. But of course, we're going to put the most accretive to the front of the line.

Speaker Change: No.

Speaker Change: Where we are in our portfolio of these businesses all have opportunities for those for those kinds of bolt ons, but of course, we're going to put the most accretive to the front of the line.

Speaker Change: Okay.

Speaker Change: And lastly, a bit of commentary I mean, when you look at your business as you're really tightly controlled in the outlook for sales and margins as kind of a wonderful yet you have no visibility of relatively little on Wall Street, No one knows what a park, Ohio really is.

Jamie Willen: Lastly, a bit of commentary. When you look at your businesses, you're really tightly controlled and the outlook for sales and margins is kind of wonderful, yet you have no visibility or relatively little on Wall Street. No one knows what a Park Ohio really is. You're doing such a good job of managing the businesses, it may be a great time to reintroduce the company to Wall Street so they know what a Park Ohio is. Most people have a name for the company that kind of reflects what their businesses are, not where they're located and where they put their car.

Speaker Change: It may be time, you're doing such a good job of managing the business as it may be a great time to introduce reintroduce the company to Wall Street. So they know what a park, Ohio is where most people have a name for the company that kind of reflects what their businesses are not where they are located and where they put their car and.

Matthew Crawford: I would hope in the future you would think about that so more people in the world can know what you're doing and how well you're doing it.

I would hope in the future you would you would think about that.

Speaker Change: Just so more people in the world can know, what youre doing and how well you're doing it.

Matthew Crawford: Jamie, you're up. Believe me, we do think about what you said. We're very proud of the Park Ohio heritage. It stems back 130, 140 years from Park Drop, Forge, and Ohio Crankshaft, which were incredibly important names historically in the manufacturing business globally, particularly nationally for defense and shipbuilding and rails and so forth. So, you know, we sort of caught up with that history, but we think it says a lot about us, but it's not lost on us that most people don't know that history. I will say again, in terms of really thinking about and any ideas you have offline would be would obviously be helpful.

Jamie: Jamie here.

Speaker Change: Believe me, we do think about what you said, we're very proud of park, Ohio Heritage. It stems back 130, 140 years from park drop fortunate, Ohio crank shaft.

Speaker Change: Incredibly important names historically.

Speaker Change: Manufacturing business globally, particularly nationally for defense in shipbuilding and rails and so far so.

Speaker Change: We sort of caught that history, but we think it says a lot about it but it's not lost on us that most people don't know that history.

Speaker Change: I will say again in terms of really thinking about and any ideas you have offline would be would obviously be helpful. We do think that we have repositioned. This business. Both in terms of how we think about our growth opportunity opportunities and our growth strategy and also the businesses that we're in and why we like them.

Matthew Crawford: We do think that we have repositioned this business, both in terms of how we think about our growth opportunity, opportunities and our growth strategy, and also the businesses that we're in and why we like them. So this business was largely built by acquisition. We will still do our share, but I think our strategy is much tighter. And so, you know, perhaps your your idea is. is welcome and timely. Done a wonderful job of running these businesses and look forward to the future.

Speaker Change: This business was largely built by acquisition, we will still do our share, but I think our strategy is much tighter and so you know perhaps your your idea is as is welcome and timely.

Speaker Change: They've done a wonderful job of running these businesses and look forward to the future.

Matthew Crawford: Thanks.

Jamie: Thanks, Jamie.

Christian Zyla: Thank you.

Jamie: Thank you. Your next question is coming from Steve Barger from Keybanc capital markets. Your line is now live.

Christian Zyla: Next question is coming from Steve Barger from KeyBank Capital Markets. Your line is now live. Good morning.

Speaker Change: Hey, Steve Good morning.

Christian Zyla: This is actually Christian Zyla for Steve Farger. Thank you guys for taking the questions. Morning. Good morning. Thank you. So, just in the press release commentary, you said you expect year-over-year improvement in operating income.

Speaker Change: Actually Christian dialogue for Steve Parker. Thank you guys for taking the questions.

Speaker Change: Good morning, Thank you.

Speaker Change: So just in the press release commentary you said you expect year over year improvement in operating income can you just walk us through the specific steps you are taking to drive that sustainable margin expansion and I heard your previous comments on engineered but the supply tech still have some juice to squeeze along with assembly.

Patrick Fogarty: Can you just walk us through the specific steps you are taking to drive that sustainable margin expansion? And I heard your previous comments on engineered, but does supply tech still have some juice to squeeze along with assembly? Yeah, I think Matt addressed the supply tech side of the business, but if you look at the trends that we've established in our operating income, we continue to implement value drivers in each of the business, whether that's focused on vertically integrating rubber mixing, for example, or automation on the plant floor, or initiatives around resourcing raw materials from different suppliers to reduce our costs.

Speaker Change: Yes.

Speaker Change: And Matt addressed the supply tech side of the business, but if you look at the trends that we've we've established in our operating income we continue to implement value drivers at each of the business whether it whether that's focused on.

Speaker Change: Vertically integrating rubber mixing for example, or automation on the plant floor or initiatives around resourcing raw materials from different suppliers to reduce our costs. So each business has a number of value drivers that they implement each year and based on.

Patrick Fogarty: So, you know, each business has a number of value drivers that they implement each year, and based on those that we've established in our business plans for 2025, we'll continue to drive operating margins, and that's across the board. You know, Matt mentioned the, you know, the real opportunity around engineered products. You know, we've had some challenges in our forging machine products business that we believe have been solved, which will, which will add to the improvement in the operation. I guess we're not trying to suggest that we don't think there's opportunity at SupplyTech. We just want to say they've operated at a very high level, executed at a high level.

Speaker Change: Those that we've established in our business plans for 2025, we will continue to drive operating margins.

Speaker Change: And that's across the board Matt mentioned the.

Speaker Change: Real opportunity around engineered products.

Speaker Change: We've had some challenges in our forged and machine products business that we believe have been solved.

Speaker Change: Which will which will add to the improvement in the operating income margins.

Speaker Change: I don't want to I guess, we're not trying to suggest that we don't think there is opportunity at supply Tech. We just wanted to say they have operated at a very high level execute at a high level now I think we're on a journey of some investment.

Patrick Fogarty: Now I think we're on a journey of some investment to improve the business processes so we can be better, faster, smarter, and that will show up in the margin, but it won't show up quarter over quarter. It'll be a year, if you will, or a year and a half, or two years. We're in the middle of that process, and again, I said some capital freed up when we let go of some of the forging and casting assets, and that's where it's going to go, improving the business process at places like SupplyTech. Great, that's helpful.

Speaker Change: To improve the business processes. So we can be better faster smarter and that will show up in the margin, but it won't show up quarter over quarter would be.

It'll be a year, if you will or year and a half or two years. So I mean, we're in the middle of that process and again I said some capital freed up.

Speaker Change: When we let go of some of the forging and casting assets and that's where it's going to go and proving the business process at places like supply Tech.

Speaker Change: Great. That's helpful. I guess that kind of flows into my next question just as we got into the middle of 2024 kind of tempered your sales outlook a couple of times, how much of that was market driven versus maybe some deliberate plan to walk away from less profitable business and Thats really a 2025 outlook do you think this is it.

Christian Zyla: I guess that kind of flows into my next question. Just as we got into the middle of 2024, you kind of tempered your sales outlook a couple of times. How much of that was market-driven versus maybe some deliberate plan to walk away from less profitable business? And then for your 2025 outlook, do you think this is a conservative approach or realistic, just given the mixed messages in the market right now? You know, that did happen, and, you know, we said on the third quarter call we expected to grow in the fourth quarter, so a little egg on our face there.

Speaker Change: Conservative approach or realistic just given the mixed messages in the market right now.

Speaker Change: That did happen in Canada.

Speaker Change: Perfect.

Fourth quarter so.

Speaker Change: A little I got our face there I don't know I would characterize that as walking away from business I do think for what it's worth at the margin we almost did grow.

Matthew Crawford: I don't know how to characterize that as walking away from business. I do think, for what it's worth, at the margin, we almost did grow. The end of the year was kind of wonky in the industrial sector with the holidays and planned shutdowns. Auto is a lower and lower percent of our overall mix, but really the chaos at Stellanus I think hurt us a bit relative to our forecast, but I wouldn't describe any of that as walking away from business. We like our product portfolio right now. Yeah, I would say, Christian, in the normal course of a year, we're always challenging low margin business.

Speaker Change: The end of the year was kind of wonky in the industrial sector with the holidays and plant shutdowns plant shutdowns.

Speaker Change: <unk> is a lower a lower percent of our overall mix, but really the chaos at Atlantis, I think hurt us a bit relative to our forecast so.

Speaker Change: But I wouldn't describe any of that is walkup walking away from business, we like our product portfolio right now.

Speaker Change: Yes.

Speaker Change: Yeah, I would say.

Speaker Change: Christian in the normal course of a year.

We're always challenging low margin business, so that occurs throughout the year, but nothing significant occurred in 2024.

Patrick Fogarty: So that occurs, you know, throughout the year, but nothing significant occurred in for both our supply tech and our engineering products grew at exactly where we thought they would grow at the beginning of the year, where we saw the decline in sales was primarily in the assembly components. And that was a result of OEM production schedules. lower volumes than we originally. And that clearly, as Matt mentioned, affected the fourth quarter as holiday schedules. The Atlanta shutdown schedules, as they repositioned their own production lines, did affect our Got it, understood.

Speaker Change: Both are our supply tech and our engineered products grew at exactly where we thought they would grow at the beginning of the year, where we saw the decline in sales was primarily in the assembly components segment and that was a result of OEM production schedules and lower volumes than we originally expected and that clearly isn't.

Speaker Change: Matt mentioned affected the fourth quarter as holiday schedules and still land is shutdown schedules as a repositioned.

Speaker Change: Their own production lines did affect our sales.

Speaker Change: Got it understood just last one from me and maybe I might have missed this but what is making the fastener business. So strong can you just remind us is there an end market mix or is it more of a mix between OEM versus aftermarket and then out of those buckets, where do you see enough strength in 25. Thank you so much.

Patrick Fogarty: Just last one from me, and maybe I might have missed this, but what is making the fastener business so strong? Can you just remind us, is there an end market mix, or is it more of a mix between OEM versus aftermarket? And then out of those buckets, where do you see the most strength in 25? Thank you so much. You know, our supply technologies, which represents both the faster manufacturing and the supply chain business. is really diverse. So the mix, I think, under the hood, so to speak, of what's up and what's down, it's a difficult business to really predict at this point.

Speaker Change: Yes.

Speaker Change: Supply technologies, which represents both the faster manufacturing.

Speaker Change: And the supply chain business.

Speaker Change: It is really diverse so the mix I think under the hood, so to speak of what's up and what's down.

Speaker Change: It's a difficult business to really predict at this point from now were really diverse enough. We can get a good sense of where we'll end up it's a little bit hard sometimes to figure out what's going to happen by market Theres a lot of volatility I mean, we were very fortunate I think to position ourselves over the last four or five years strongly in aerospace and defense to some extent that saved are baking a little bit last year Youre definitely.

Patrick Fogarty: Now, we're really diverse enough, we can get a good sense of where we'll end up. It's a little bit hard sometimes to figure out what's going to happen by market. There's a lot of volatility. I mean, we were very fortunate, I think, to position ourselves over the last four or five years strongly in aerospace and defense. To some extent, that saved our bacon a little bit last year. You're definitely seeing some consumer-facing things in ag and some other areas that are extremely weak. So absolutely, I think there's a lot going on, but I would just say that in the aggregate, our business increasingly beats to the drum of what you see across sort of industrial America.

Speaker Change: Seeing some consumer facing things in AG and some other areas that are extremely weak.

Speaker Change: So absolutely I think there is.

Speaker Change: A lot going on but I would just say that in the aggregate our business increasingly beat the drum on what you see across sort of industrial America. So I think because of that are really global industrial when you have is varied.

Matthew Crawford: So I think because of that, a really global industrial, when you have as varied a customer list as furniture to semiconductor tools, to trucks, to snowmobiles, you're bound to track, I think. in general, in aggregate, sort of what's going on in the economy. Great, thank you guys. Thank you. We've reached the end of our question and answer session.

Speaker Change: Customer list is furniture to semiconductor tools that trucks snowmobiles.

Speaker Change: The track I think in general in aggregate and sort of what's going on in the economy generally.

Speaker Change: Alright, Thank you guys.

Speaker Change: Thank you.

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

Matthew Crawford: I'd like to turn the floor back over for any further or closing comments. Great. Well, thank you for your great questions today. We are hard at work here. Again, I want to I want to end with where I ended my initial comments. I want to thank all of the Park Ohio Associates and reiterate our team has never been stronger. Thank you to all of you. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Great well. Thank you for your great questions. Today, we are hard at work here again, I want to I want to end with where I ended up my initial comments.

Speaker Change: I want to thank all of the far class associates and reiterate our team has never been stronger. Thank you to all of you.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.