Park Ohio Holdings Corp (PKOH) 2024 Q2 法說會逐字稿

Good morning, and welcome to the Park-Ohio second-quarter 2024 results conference call. (Operator Instructions)

早安，歡迎參加 Park-Ohio 2024 年第二季業績電話會議。（操作員說明）

Before we get started, I want to remind everyone that certain statements made on today's call may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A list of relevant risks and uncertainties may be found in the earnings press release as well as in the company's 2023 10-K, which was filed on March 6, 2024, with the SEC.

在我們開始之前，我想提醒大家，今天電話會議中的某些陳述可能是 1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。這些前瞻性陳述存在風險和不確定性，可能導致實際結果與預測有重大差異。相關風險和不確定性清單可在收益新聞稿以及該公司於 2024 年 3 月 6 日向 SEC 提交的 2023 年 10-K 報告中找到。

Additionally, the company may discuss adjusted EPS, adjusted operating income and EBITDA as defined on a continuing operations or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles. For a reconciliation of EPS to adjusted EPS, operated income to adjusted operated income and net income attributable to Park-Ohio common shareholders to EBITDA as defined, please refer to the company's recent earnings release.

此外，公司可能會討論在持續經營或合併基礎上定義的調整後每股收益、調整後營業收入和 EBITDA。這些指標不是公認會計原則下的績效衡量標準。有關每股收益與調整後每股收益、營業收入與調整後營業收入以及 Park-Ohio 普通股股東應佔淨利潤與 EBITDA 的定義的調節表，請參閱公司最近的收益報告。

I will now turn the conference over to Mr. Matthew Crawford, Chairman, President and CEO. Please proceed, Mr. Crawford.

我現在將會議交給董事長、總裁兼執行長 Matthew Crawford 先生主持。請繼續，克勞福德先生。

Good morning, everyone, and thank you for joining this morning's call.

大家早安，感謝您參加今天早上的電話會議。

We're excited to announce record revenue for the second quarter, as well as continued improvement in our margins and overall quality of earnings. We accomplished these strong results against a backdrop of stable, but mixed demand especially in our short-cycle businesses and excellent operating execution across most of the product portfolio.

我們很高興地宣布第二季度收入創紀錄，並且我們的利潤率和整體收益品質持續改善。我們在穩定但混合的需求（特別是在我們的短週期業務中）以及大多數產品組合中出色的營運執行的背景下取得了這些強勁的業績。

Our diversification once again proved to be our strength, and in particular our investments in aerospace and defense were important positive contributors. Supply technologies and assembly components group, both relatively short-cycle businesses, offset some softening demand in a handful of discrete end markets, with new business and strong execution. While our engineered products group a relatively long-cycle business, continued to see elevated backlogs and benefited from some improved delivery performance.

我們的多元化再次證明了我們的優勢，特別是我們在航空航太和國防領域的投資做出了重要的積極貢獻。供應技術和組裝零件集團都是週期相對較短的業務，憑藉新業務和強大的執行力，抵消了少數離散終端市場需求疲軟的影響。雖然我們的工程產品屬於週期相對較長的業務，但積壓訂單繼續增加，並受益於交付性能的改善。

While we expect some variability in our second-half demand picture, in the aggregate we see our business as very stable and expect to deliver year-over-year growth. We also expect to make continual progress on our debt reduction goals, and see the second half as meaningful from a free cash flow perspective, which is both seasonal and strategic given our change in business mix and lower capital requirements, after the sale last year of some automotive assets.

雖然我們預計下半年的需求狀況會出現一些變化，但總的來說，我們認為我們的業務非常穩定，並預計將實現同比成長。我們也期望在債務削減目標上不斷取得進展，並認為從自由現金流的角度來看，下半年是有意義的，考慮到我們在去年出售公司後業務結構的變化和較低的資本要求，這既是季節性的，也是策略性的。

With that, I'll turn it over to Pat.

有了這個，我會把它交給帕特。

Thank you, Matt.

謝謝你，馬特。

We are pleased with our second-quarter operating results, which exceeded our expectations in most of our businesses and were highlighted by record consolidated sales of $433 million, adjusted EPS of $1.02 per share and EBITDA as defined of $39.4 million. Our strong results were driven by record sales and increased margins in our supply technologies segment, better-than-expected results in our assembly components segment and record sales and improved margins in our engineered products segment.

我們對第二季的經營業績感到滿意，大部分業務都超出了我們的預期，其中最突出的是創紀錄的合併銷售額 4.33 億美元，調整後每股收益 1.02 美元，EBITDA 為 3,940 萬美元。我們的強勁業績是由供應技術部門創紀錄的銷售和利潤成長、組裝零件部門好於預期的業績以及工程產品部門創紀錄的銷售和提高的利潤所推動的。

Net sales of $433 million compared to $428 million, a year ago and increased 4% from $418 million last quarter. Our second-quarter revenues resulted from increasing demand in certain key end markets, with notable strength in the aerospace and defense market, continued growth in our proprietary fastener manufacturing business and improved sales in our capital equipment business where strong backlogs are being converted to sales.

淨銷售額為 4.33 億美元，較上年同期的 4.28 億美元成長，較上季的 4.18 億美元成長 4%。我們第二季度的收入源於某些關鍵終端市場需求的增加，其中航空航天和國防市場的實力顯著，我們專有的緊固件製造業務的持續增長以及我們資本設備業務的銷售改善，其中大量的積壓訂單正在轉化為銷售。

Our consolidated gross margin was 16.9% in the quarter, up 120 basis points from the second quarter of last year. On a year-to-date basis, our gross margin increased 90 basis points to 17% compared to 16.1%, a year ago. The year-over-year improved gross margins are a direct result of ongoing efforts to improve customer pricing, reduce operating costs and increase operational efficiencies throughout each of our businesses. We continue to focus on gross margin improvement, through the implementation of value-driven initiatives in each business.

本季我們的綜合毛利率為 16.9%，比去年第二季成長 120 個基點。年初至今，我們的毛利率比一年前的 16.1% 增加了 90 個基點，達到 17%。毛利率的年增率是我們各業務部門不斷努力改善客戶定價、降低營運成本和提高營運效率的直接結果。我們透過在每項業務中實施價值驅動計劃，繼續關注毛利率的提高。

Our GAAP EPS of $0.95 was up 67% in the quarter, and our adjusted EPS of $1.02 increased 23% compared to $0.83, a year ago. Year to date, adjusted EPS of $1.87 was up 21% compared to the same period last year.

本季我們的 GAAP 每股收益為 0.95 美元，成長了 67%，調整後每股收益為 1.02 美元，與一年前的 0.83 美元相比成長了 23%。年初至今，調整後每股收益為 1.87 美元，比去年同期成長 21%。

As I mentioned, we generated EBITDA of $39.4 million in the quarter, an improvement of 10% compared to a year ago. As a percentage of our sales, EBITDA margin was 9.1% in the quarter, which is our highest EBITDA margin since 2018. On a trailing 12-month basis, our EBITDA as defined totaled $145 million. The significant increase in EBITDA and free cash flow over the last 12 months have resulted in an improvement in our net debt leverage of over 30% since June 30, of last year.

正如我所提到的，我們本季的 EBITDA 為 3,940 萬美元，比去年同期成長了 10%。本季 EBITDA 利潤率占我們銷售額的百分比為 9.1%，這是我們自 2018 年以來的最高 EBITDA 利潤率。以過去 12 個月計算，我們的 EBITDA 總額為 1.45 億美元。自去年 6 月 30 日以來，過去 12 個月 EBITDA 和自由現金流的大幅成長導致我們的淨債務槓桿率改善了 30% 以上。

Consolidated operating income improved 28% to $24.6 million in the second quarter. And on an adjusted basis, operating income increased 11% to $26 million. In addition, operating income margins improved 120 basis points year over year, driven by continued strong profit performance in supply technologies and higher sales and improved margins in our engineered products segment.

第二季綜合營業收入成長 28% 至 2,460 萬美元。調整後的營業收入成長了 11%，達到 2,600 萬美元。此外，由於供應技術持續強勁的利潤表現以及工程產品領域銷售額的增加和利潤率的提高，營業利潤率比去年同期提高了 120 個基點。

SG&A expenses were approximately $47 million and 11% of net sales in both periods. Interest costs totaled $12 million during the quarter compared to $11.1 million last year, driven by higher interest rates in the current year.

兩個期間的 SG&A 費用約為 4,700 萬美元，佔淨銷售額的 11%。由於本年度利率上升，本季利息成本總計 1,200 萬美元，而去年為 1,110 萬美元。

Our effective tax rate was 19% in the quarter, which reflects the ongoing benefits from research and development tax credits and other tax planning initiatives to reduce our overall effective tax rate worldwide. As a result, we have lowered our expected full-year effective tax rate to between 21% and 23% to reflect the impact of these tax strategies.

本季我們的有效稅率為 19%，這反映了研發稅收抵免和其他稅務規劃措施持續帶來的好處，以降低我們在全球範圍內的整體有效稅率。因此，我們將全年預期有效稅率下調至 21% 至 23%，以反映這些稅務策略的影響。

During the quarter, we used operating cash of $3 million, primarily driven by increased working capital to support sales growth in certain businesses, and due to the timing of completion of capital equipment projects. Similar to prior years, we expect strong operating and free cash flow in the second half of the year, driven by continued strong EBITDA and lower working capital levels.

本季度，我們使用了 300 萬美元的營運現金，主要是由於增加營運資金以支持某些業務的銷售成長以及資本設備項目的完成時間所致。與往年類似，我們預計，在持續強勁的 EBITDA 和較低的營運資本水準的推動下，下半年營運和自由現金流將強勁。

Our liquidity continues to be strong and totaled $161 million at June 30, which consisted of approximately $60 million of cash on hand and $101 million of unused borrowing capacity under our various banking arrangements.

我們的流動性仍然強勁，截至 6 月 30 日總計 1.61 億美元，其中包括約 6,000 萬美元的手頭現金和我們各種銀行安排下未使用的借款能力 1.01 億美元。

Turning now to our segment results, supply technologies generated record net sales of $203 million in the second quarter, representing a 3% increase year over year. We continue to see strong customer demand in several key end markets led by a 56% increase in sales in the aerospace and defense market. Average daily sales also improved in the heavy-duty truck, off-road construction, electrical distribution and consumer electronics end markets.

現在轉向我們的部門業績，供應技術第二季淨銷售額創紀錄地達到 2.03 億美元，年增 3%。我們繼續看到幾個關鍵終端市場的強勁客戶需求，其中航空航太和國防市場的銷售額成長了 56%。重型卡車、越野建築、配電和消費性電子終端市場的每日平均銷售也有所改善。

In addition, sales in our fastener manufacturing business grew 12% year over year as global demand for our proprietary products continues to be robust. Although revenues in many end markets continue to trend positively, slowing demand is expected in the semiconductor, agricultural equipment, and certain consumer end markets throughout the rest of the year.

此外，由於全球對我們專有產品的需求持續強勁，我們緊固件製造業務的銷售額較去年同期成長 12%。儘管許多終端市場的收入繼續呈積極趨勢，但預計今年剩餘時間半導體、農業設備和某些消費終端市場的需求將放緩。

Operating income in the segment totaled $19 million, an increase of 23% year over year. Operating margins were 9.4% and an improvement of 160 basis points from 7.8% a year ago. The higher profitability in the quarter was driven by an increase in sales of higher-margin products, lower operating costs in our supply chain business and continued strong demand in our proprietary fastener business. On a year-to-date basis, sales in this segment were a record $400 million and operating income was a record $38.5 million.

該部門營業收入總計1,900萬美元，較去年同期成長23%。營業利益率為 9.4%，比一年前的 7.8% 提高了 160 個基點。本季獲利能力的提高是由於高利潤產品銷售的增加、供應鏈業務營運成本的降低以及我們專有緊固件業務的持續強勁需求所推動的。今年迄今，該部門的銷售額達到創紀錄的 4 億美元，營業收入達到創紀錄的 3,850 萬美元。

Operating margin was 9.6%, an increase of 210 basis points compared to the 2023 period. The strong liquidity -- I'm sorry, the strong quarterly and year-to-date results in this segment reflect our continued focus on expanding product margins, increasing sales in our higher-margin industrial supply business and growing revenues in our proprietary fastener manufacturing business.

營業利益率為 9.6%，較 2023 年同期成長 210 個基點。強勁的流動性—抱歉，該領域強勁的季度和年初至今業績反映出我們持續專注於擴大產品利潤、增加利潤率較高的工業供應業務的銷售額以及我們專有的緊固件製造收入的增長商業。

In our assembly components segment, sales were $103 million in the quarter compared to $112 million a year ago. The year-over-year decrease in sales was driven by lower unit volumes and end-of-life programs and lower product pricing on certain legacy programs, which partially offset the sales growth on other OEM platforms.

在我們的組裝零件部門，本季銷售額為 1.03 億美元，而去年同期為 1.12 億美元。銷售額較去年同期下降的原因是單位銷售和報廢計劃的減少以及某些遺留計劃的產品定價較低，這部分抵消了其他 OEM 平台的銷售增長。

Segment operating income decreased to $6.9 million from $8.4 million a year ago. Profitability in the second quarter was impacted by the lower unit volumes and product pricing, which more than offset margin expansion on several products resulting from implemented margin improvement initiatives.

部門營業收入從一年前的 840 萬美元減少至 690 萬美元。第二季度的獲利能力受到單位銷售和產品定價下降的影響，這遠遠抵消了實施利潤率改善計劃帶來的多種產品利潤率的增長。

On a year-to-date basis, sales were $210 million compared to $222 million a year ago, and adjusted operating income margin was 7.4% compared to 7.7% a year ago. In this segment, we continue to implement profit improvement initiatives, which will enhance operating margins in future quarters.

年初至今，銷售額為 2.1 億美元，而去年同期為 2.22 億美元，調整後營業利潤率為 7.4%，去年同期為 7.7%。在這一領域，我們繼續實施利潤改善舉措，這將提高未來幾季的營業利潤率。

Key initiatives include increasing customer pricing on low-margin products, improving operational efficiencies, such as scrap reduction programs, increasing cycle times, reducing operating costs through the automation of certain processes and increasing our rubber mixing capacity.

主要措施包括提高客戶對低利潤產品的定價、提高營運效率（例如減少廢品計劃）、增加週期時間、透過某些流程的自動化降低營運成本以及提高我們的橡膠混合能力。

In our engineered products segment, sales were a record $127 million and increased 7% compared to $119 million a year ago, driven by higher demand in both our industrial equipment business and our forged machine products group. Higher sales in the Industrial equipment group resulted from strong sales of new capital equipment primarily in North America and Europe.

在我們的工程產品領域，由於我們的工業設備業務和鍛造機械產品集團的需求增加，銷售額達到創紀錄的 1.27 億美元，與一年前的 1.19 億美元相比增長了 7%。工業設備集團銷售額的成長主要歸因於主要在北美和歐洲的新資本設備的強勁銷售。

During the quarter, new equipment sales in North America grew 19% year over year. Also, sales of aftermarket parts and services in North America grew 12% year over year, while aftermarket sales in Europe and Asia were stable compared to a strong prior year quarter. During the second quarter, new equipment bookings were approximately $50 million, and equipment backlog continues to be strong totaling $173 million, an increase of 7% compared to backlogs on December 31.

本季度，北美新設備銷量較去年同期成長 19%。此外，北美售後市場零件和服務的銷售額年增 12%，而歐洲和亞洲售後市場銷售與去年同期的強勁表現相比保持穩定。第二季度，新設備預訂量約為 5,000 萬美元，設備積壓持續強勁，總計 1.73 億美元，與 12 月 31 日的積壓相比增加了 7%。

Revenues in our forged machine products business increased 8% year over year driven by increased unit volumes on products sold into the aerospace and defense industry, which more than offset weaker demand for rail forgings, which impacted our results. During the quarter, operating income in this segment was $6.3 million compared to $3.2 million a year ago. And on an adjusted basis, operating income increased 20% year over year to $7.3 million in the quarter.

由於銷往航空航太和國防工業的產品單位數量增加，我們的鍛造機械產品業務營收年增 8%，足以抵銷軌道鍛件需求疲軟對我們業績的影響。本季度，該部門的營業收入為 630 萬美元，而去年同期為 320 萬美元。經調整後，本季營業收入年增 20% 至 730 萬美元。

The increase in profitability year over year was driven by higher sales and improved margins, primarily in our industrial equipment group. Compared to the first-quarter operating income almost doubled, reflecting significant operational improvements in the current quarter.

獲利能力的年增率是由於銷售額的增加和利潤率的提高（主要是在我們的工業設備集團）。與第一季相比，營業收入幾乎翻了一番，反映出本季營運的顯著改善。

In our forged and machine products business profit flow-through from the 8% year-over-year sales increase was offset by lower margins isolated in our forging operation in Arkansas. We have taken several actions to improve the results in this plan including personnel changes and operational improvements to reduce equipment downtime and increase production efficiencies.

在我們的鍛造和機械產品業務中，銷售額年增 8% 帶來的利潤被我們阿肯色州鍛造業務的利潤率下降所抵消。我們採取了多項行動來改善該計劃的結果，包括人員變動和營運改進，以減少設備停機時間並提高生產效率。

In the year-to-date period, sales in this segment were $240 million, an increase of 2% compared to the 2023 period. Adjusted operating income was $11.1 million compared to $13.1 million a year ago with the decline due to lower margins in our forged machine products business.

今年迄今，該細分市場的銷售額為 2.4 億美元，較 2023 年成長 2%。調整後營業收入為 1,110 萬美元，而去年同期為 1,310 萬美元，下降的原因是我們的鍛造機械產品業務利潤率較低。

And finally, corporate expenses totaled $7.6 million during the quarter compared to $7.8 million a year ago. And year to date, were approximately 2% of net sales in both periods.

最後，本季公司支出總計 760 萬美元，而去年同期為 780 萬美元。今年迄今為止，這兩個時期的淨銷售額約為 2%。

Overall, our results in the second quarter were strong and our results year to date have exceeded our expectations. With respect to our full-year guidance, we now expect year-over-year revenue growth to range from 2% to 4% due to slowing but stable demand in certain end markets. We continue to expect year-over-year improvement in adjusted EPS and EBITDA as defined.

總體而言，我們第二季的業績強勁，今年迄今的業績超出了我們的預期。就我們的全年指引而言，由於某些終端市場的需求放緩但穩定，我們目前預計營收年增將在 2% 至 4% 之間。我們繼續預期調整後每股盈餘和 EBITDA 的定義將較去年同期改善。

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

現在，我將把電話轉回給馬特。

Great. Thank you very much, Pat. We'll now open the line for questions.

偉大的。非常感謝你，帕特。我們現在將開通提問熱線。

(Operator Instructions) Dave Storms, Stonegate.

（操作員指示）Dave Storms，Stonegate。

Good morning. Just hoping we could start with maybe some of the puts and takes on guidance. I know previously you were guiding to mid-single-digits. It looks like that might be coming in at the lower end of that previous guidance between 2% and 4% on the top line. Are there any end markets that you're seeing as have an outsized importance for this guidance, anything that could put you on the higher or lower end? Really any color here would be great.

早安.只是希望我們可以從一些看跌期權和看跌期權的指導開始。我知道之前你的指導價是中個位數。看起來這可能會低於先前指導的下限，即營收的 2% 到 4% 之間。您認為是否有任何終端市場對於本指南具有極其重要的意義，任何可能使您處於高端或低端市場的市場？真的，這裡任何顏色都會很棒。

Yes, it's a great question. I think that broadly described the sort of business-to-business capital industry manufacturing side of the business continues to be strong. Where we are seeing a very different view is in our book of customers that are more consumer-facing. So I think that it's a little hard to predict right now quite candidly.

是的，這是一個很好的問題。我認為，廣義上描述的那種企業對企業資本產業的製造業務仍然強勁。我們在更面向消費者的客戶名錄中看到了截然不同的觀點。所以我認為現在坦白預測有點困難。

There's a lot at play, but it doesn't disconnect too much from what you read in the Wall Street Journal. What is unusual at an extremely high level is the difference between where you see pockets of strength in any market connected to aerospace and defense as we described steel for that matter electrical. Again, parts of the automotive business where they're reshaping it regardless of powertrain, all continue to be fairly positive but things that are a touch more consumer-facing are problematic.

其中有很多因素在起作用，但它與你在《華爾街日報》上讀到的內容並沒有太大的脫節。在極高水平上的不同尋常之處在於，在與航空航天和國防相關的任何市場中，您所看到的實力之間存在差異，正如我們在電氣方面所描述的鋼鐵一樣。同樣，無論動力系統如何，他們正在重塑的汽車業務部分仍然相當積極，但更面向消費者的事情卻存在問題。

And those -- the difference between those are double-digit growth versus double-digit shrinkage. So I don't know that I would describe our forecast as meaningfully different. I think we have to appreciate the risks that weren't here to the downside if you will in the prior or three months ago, when we had this call, particularly on the consumer side. Everything just feels a little more delicate but having said that, in no way do I want to suggest in the aggregate we don't feel that the positives outweigh the negatives, and feel strenuously that we'll have a stronger second half than we did last year.

這些之間的差異是兩位數的成長與兩位數的萎縮。所以我不知道我是否會將我們的預測描述為有意義的差異。我認為我們必須認識到下行風險，如果你願意的話，在我們接到這個電話之前或三個月前，特別是在消費者方面。一切都感覺有點微妙，但話雖如此，我絕不是想表明，總的來說，我們不認為積極的一面超過消極的一面，並且強烈地感覺到我們的下半場會比以前更強大。

Understood. That's very helpful. Thank you. And then just looking at engineered products, it had a really strong quarter kind of top to bottom. I know you've mentioned in the past that EP is really an important driver for the company. How would you categorize the sustainability of this quarter's performance in engineered products?

明白了。這非常有幫助。謝謝。然後只要看看工程產品，它的季度表現就非常強勁。我知道您過去曾提到，EP 確實是公司的重要驅動力。您如何評估本季工程產品業績的可持續性？

Let me -- I'll give Pat a bit to think about that while I answer the easy part. For those of us that have been around this company for a while, we recognize that engineered products should has been and will be again the driver for quality of earnings in this business. In that segment, we have some of the most unique assets, some of the best brands and also a nice diversification of aftermarket versus OE.

讓我——在回答簡單的部分時，我會讓帕特思考。對於我們這些在這家公司工作了一段時間的人來說，我們認識到工程產品應該並且將會再次成為該業務盈利品質的驅動力。在該細分市場中，我們擁有一些最獨特的資產、一些最好的品牌，以及售後市場與原廠設備相比的良好多元化。

It's really a nice business and has been a leader traditionally in terms of our business both on the sales side periodically and also it's a long-cycle sales business is a bit lumpy, but particularly on the quality of earnings and margin side. We have sacrificed some of that due to execution as we've discussed in prior calls because retirements lack of knowledge, supply chain challenges that while they become a little easier or still challenging changes in geopolitics and how you source products.

這確實是一項不錯的業務，並且在我們的定期銷售業務方面一直處於傳統領先地位，而且它是一項長週期銷售業務，有點不穩定，但特別是在盈利質量和利潤方面。正如我們在先前的電話會議中所討論的那樣，由於退休人員缺乏知識，供應鏈面臨著挑戰​​，而這些挑戰雖然變得更容易，但仍然挑戰著地緣政治和採購產品方式的變化，但我們已經犧牲了一些執行力。

These are things that we continue to work through. And every day we get a little better but they're not a late switch. So that journey is underway. It hasn't been a demand issue. It's been an execution issue. We have made meaningful changes there in terms of personnel. We've spent meaningful dollars in terms of training. We've made changes in leadership. We continue to attack this from all levels.

這些都是我們繼續努力解決的問題。我們每天都在進步一點，但他們的轉變並不是遲到的。所以這個旅程正在進行中。這不是需求問題。這是一個執行問題。我們在人員方面做出了有意義的改變。我們在培訓方面花費了有意義的資金。我們對領導階層進行了調整。我們繼續從各個層面對此進行攻擊。

So what I would tell you is from a historical perspective that business is still underperforming meaningfully underperforming. So I don't mean to suggest that it's a low bar but we would expect to see maybe again it could be a bit lumpy but we continue to expect meaningful improvement in that business over the medium-term.

因此，我要告訴你的是，從歷史角度來看，企業的表現仍然表現不佳。因此，我並不是說這是一個低標準，但我們預計可能會再次看到它可能有點不穩定，但我們仍然預計該業務在中期內會出現有意義的改善。

Yes, Dave, this is Pat. I agree with Matt's comments. I think when you look at that segment of our business we have seen meaningful improvement in our industrial equipment group. The backlogs have been strong. The bookings have been pretty consistent quarter by quarter.

是的，戴夫，這是帕特。我同意馬特的評論。我認為，當您審視我們的這部分業務時，我們發現我們的工業設備集團取得了有意義的進步。積壓情況一直很嚴重。每季的預訂量都相當穩定。

And the operational performance has improved to the point where we're approaching those double-digit operating income margins in that business. The acquisition of EMA is in the transition into our business is underway. We get a lot of good things to happen throughout Europe as a result. They are performing as planned right now and their backlogs continue to be strong.

營運績效已經改善到我們正在接近該業務兩位數的營運利潤率。對 EMA 的收購正在向我們的業務過渡正在進行中。結果，我們在整個歐洲發生了很多好事。他們目前正在按計劃進行，積壓訂單仍然較多。

The challenges that we've been faced with have been isolated in our forging group. As Matt mentioned, we've made meaningful changes across the board in leadership not only on the plant floor but across all aspects and all disciplines of the business and expect our customer base to continue to support that business going forward.

我們所面臨的挑戰是在我們的鍛造團隊中被孤立的。正如馬特所提到的，我們不僅在工廠車間，而且在業務的各個方面和所有學科的領導力方面進行了有意義的變革，並期望我們的客戶群繼續支持該業務的發展。

So we expect improvement there and to get back to those historic levels that Matt mentioned. So that gives you a little bit more color, but we feel we're heading in the right direction there and we expect continued improvement.

因此，我們期望那裡有所改善，並回到馬特提到的歷史水平。所以這給了你更多的色彩，但我們覺得我們正在朝著正確的方向前進，我們期望繼續改進。

Understood. That's great color. Thank you. I'll get back in queue.

明白了。那顏色真棒。謝謝。我會回到隊列中。

Steve Barger, KeyBanc Capital Markets.

Steve Barger，KeyBanc 資本市場。

Thanks. Good morning. I think Pat mentioned in his prepared remarks increased pricing on some low-margin product lines. What percentage of the portfolio do you think is not priced for the value that you provide. And can you accelerate price actions in those areas?

謝謝。早安.我認為帕特在他準備好的演講中提到提高了一些低利潤產品線的定價。您認為投資組合中有多少比例的定價不符合您提供的價值。您能否加快這些領域的價格行動？

Steve, this is Pat. Yes, the answer is yes. And we've proven over the last few years that we've been able to get pricing across to our customer base. And as we've talked about the labor inflation that we've experienced has been permanent and we're still working to recover much of that.

史蒂夫，這是帕特。是的，答案是肯定的。過去幾年我們已經證明，我們能夠將定價傳達給我們的客戶群。正如我們所討論的，我們所經歷的勞動力通膨是永久性的，我們仍在努力恢復其中的大部分。

The raw material side of price increases has been mature for customers to understand. But we continue to look for ways to increase product pricing, especially within the automotive segment, as volumes are lower than what was expected (technical difficulty) not going to be a material improvement, but coupled with operational efficiencies value-driven (technical difficulty) floor, all of which will be a driver towards improved margins in that business.

原材料方面的漲價已成熟為顧客所理解。但我們繼續尋找提高產品定價的方法，特別是在汽車領域，因為銷量低於預期（技術難度），這不會帶來實質改進，但會帶來價值驅動的營運效率（技術難度）地板，所有這些都將推動該業務的利潤率提高。

Steve, I would say that if there's such a thing as a silver lining to COVID. I think the leadership in the business across the board and supply technologies was an early mover and thoughtful on it across a very complex portfolio of products was pricing was addressed aggressively. And we had some pains as you know particularly in the automotive segment on that front and that caused some losses. And we've got ourselves in a much more stable circumstance.

史蒂夫，如果新冠疫情還有一線希望的話，我會這麼說。我認為，全面業務和供應技術的領導地位是先行者，並且在非常複雜的產品組合中深思熟慮，並積極解決了定價問題。如你所知，我們遇到了一些困難，特別是在汽車領域，這造成了一些損失。我們已經處於一個更穩定的環境。

The good news is, as Pat described, while there's always opportunity the opportunities are more limited. But nonetheless, I think that the inflation that exists in the market the ongoing demand in certain pieces allow us to keep focused on it to keep pushing the lessons that we've learned from the past keeping an eye on additional areas of volatility like freight. So I think the dynamics have changed in a positive way. Having said that, I don't -- I agree with Pat the opportunity for it is not as meaningful as it would have been in the prior couple of years.

好消息是，正如帕特所描述的，雖然機會總是存在，但機會卻更有限。但儘管如此，我認為市場上存在的通貨膨脹和某些產品的持續需求使我們能夠繼續關注它，繼續推動我們從過去吸取的教訓，同時關注貨運等其他波動領域。所以我認為動態已經發生了積極的變化。話雖如此，我不同意帕特的觀點，因為這個機會並不像前幾年那麼有意義。

Yes. As you think about the new business that you're quoting, do you have more flexibility in there vis-à-vis escalators and that sort of thing than you did historically?

是的。當您考慮您所引用的新業務時，您在自動扶梯等方面是否比以前擁有更大的靈活性？

Yes, that's -- contractually, that is an interesting question. There's no doubt that there have been challenges in the marketplace to some of the customary design of products and relationships. I can tell you deemphasizing through asset sales, the automotive business, that's where the pressure is always worse and is at its worst.

是的，從合約角度來看，這是一個有趣的問題。毫無疑問，市場上的一些產品和關係的慣用設計面臨著挑戰​​。我可以告訴你，透過資產出售不再強調汽車業務，這就是壓力總是更嚴重、最嚴重的地方。

And I think that, that again, I talked a lot about having changed or evolved business model to make us more sustainable from a quality of earnings in a sustainable earnings and a free cash flow earnings through the business cycle, this is part of it. So no, there's no doubt that the evolution has been in the supply basis favor. Our business mix has been in our favor.

我認為，我再次談到如何改變或發展商業模式，以使我們在整個商業週期中從可持續收益和自由現金流收益的收益品質中變得更加可持續，這是其中的一部分。所以，毫無疑問，這種演變有利於供應基礎。我們的業務組合一直對我們有利。

Having said that, we deal with the biggest, most sophisticated companies in the world, their hands are always out. They always want the best deal. So I think that what we need to preserve and make sure is that we can meet them in the middle.

話雖如此，我們與世界上最大、最複雜的公司打交道，他們的手總是伸出來的。他們總是想要最好的交易。所以我認為我們需要保留並確保我們能夠在中間與他們相遇。

And we have spent a lot of time over the last few years reducing our cost to serve, and we continue to do it, whether they be in implementing pure restructuring and reducing footprint as we've discussed, whether it be implementing new software tools and technology. Our positioning of our business today is meaningfully better in terms to get awarded new business at attractive pricing that's accretive to our business model. And that's what it's all about. That's what it's all about.

在過去的幾年裡，我們花了很多時間來降低服務成本，並且我們將繼續這樣做，無論是像我們所討論的那樣實施純粹的重組和減少佔地面積，還是實施新的軟體工具和技術。我們今天的業務定位明顯更好，能夠以有吸引力的價格獲得新業務，這有利於我們的業務模式。這就是全部內容。這就是全部內容。

So I think that as we focus and begin to see the needle move a little bit in the second half and into 2025 on these new blocks of business, we're going to see better margins. Part of it because, as you described, the marketplace is a little bit different, but part of it is because we reduced our cost to serve.

因此，我認為，當我們關注並開始看到下半年和 2025 年這些新業務領域的進展時，我們將看到更好的利潤率。部分原因是，正如您所描述的，市場有點不同，但部分原因是我們降低了服務成本。

Yes. No, that's good color. And I guess as you think about your sales force, do they have an understanding of the hurdle rate required to bid new business? Do they have the tools they need to make sure that you do walk away from business that is less favorable, when it doesn't make sense to take it?

是的。不，這個顏色很好。我想當您考慮您的銷售人員時，他們是否了解競標新業務所需的最低門檻？他們是否擁有所需的工具來確保您在沒有意義的情況下放棄不太有利的業務？

Yes. No, there's no question. I think the most certainly, the ACG and engineered components, the size, the sheer size of some of the orders and opportunities and nature of the long-term agreements get a lot of attention from the whole executive team. Supply technology certainly is the most complex business where a lot of people touch pricing in the process, and some of our best opportunities are some of our smaller accounts.

是的。不，毫無疑問。我認為最肯定的是，ACG 和工程組件、規模、一些訂單的規模以及長期協議的機會和性質得到了整個執行團隊的大量關注。供應技術無疑是最複雜的業務，許多人在過程中都會涉及定價，而我們的一些最佳機會就是我們的一些較小的客戶。

So no, there's no question that's where we have -- continue to try and invest in business processes that identify not only low margin or underperforming accounts, warehouses, whatever end markets you name it. But we continue to invest heavily there in technology tools to make sure that we don't make mistakes.

所以，不，毫無疑問，這就是我們所擁有的——繼續嘗試和投資於業務流程，這些流程不僅能識別低利潤或表現不佳的帳戶、倉庫，無論你稱之為什麼終端市場。但我們繼續在技術工具上進行大量投資，以確保我們不會犯錯。

So no, you're absolutely, I think, hitting an important point. And I would tell you, to the extent -- most of our portfolio are big orders that get attention with big companies and long-term contracts. We are -- I won't say best-in-class, but we work every day to be best in class to make sure that our team makes the right decisions, even on the small orders at a place like supply technologies.

所以不，我認為你絕對說到了一個重要的點。我想告訴你，在某種程度上，我們的大部分投資組合都是大訂單，受到大公司和長期合約的關注。我不會說我們是一流的，但我們每天都在努力成為一流的，以確保我們的團隊做出正確的決策，即使在供應技術等地方的小訂單上也是如此。

And I'm confident that today, we're meaningfully better than we were a year ago and two years ago. And I think we're going to be twice as good a year or two from now, given some of the investments we're making. So no, I do feel pretty comfortable and again, I don't want to say a silver lining to COVID, but we have to address pricing across the board. As a matter of life and death, you get a little better at this stuff.

我相信今天我們比一年前和兩年前有了明顯的進步。我認為，考慮到我們正在進行的一些投資，一兩年後我們的業績將會翻倍。所以不，我確實感覺很舒服，而且我不想對新冠疫情說一線希望，但我們必須全面解決定價問題。事關生死，你在這件事上會做得更好。

Right. And Pat, you said -- oh, sorry. Go ahead.

正確的。帕特，你說——哦，抱歉。前進。

I was just going to add that when we look at hurdle rates, whether it's with sales folks or the executive teams that run the business, we go very deep into that process and look at IRRs, return on capital, if there's capital needed. So -- and those hurdle rates are well described within each of the business.

我只是想補充一點，當我們考慮最低門檻利率時，無論是銷售人員還是營運業務的執行團隊，我們都會非常深入地研究該流程，並考慮 IRR、資本回報率（如果需要資本）。因此，這些最低門檻率在每個業務中都有很好的描述。

So I would say that that's been an evolving process with each of the -- whether it's the financial teams within each business or the sales teams within each business. So I feel very good about kind of where we're at as we look at opportunities across the board.

所以我想說，這對每個企業來說都是一個不斷發展的過程，無論是每個企業內的財務團隊還是每個企業內的銷售團隊。因此，當我們全面審視機會時，我對我們所處的位置感到非常滿意。

Steve, I want to say one last thing. As we think about where we have underperformed, it hasn't been because of poor quoting, or not understanding our hurdle rates. It has been by poor execution. And we've seen that a bit in engineered products. And again, I'm not -- I mean we see it everywhere, but I'm saying some of the challenges of the retirements, of the loss of knowledge, those kinds of things affected our ability to convert some of the orders at what we expected. I'm not so sure that's a pricing issue or a visibility issue. I think it's more an execution issue and one, we're again trying to get better at every day.

史蒂夫，我想說最後一件事。當我們思考我們在哪些方面表現不佳時，這並不是因為報價不佳或不了解我們的最低門檻利率。這是由於執行不力造成的。我們已經在工程產品中看到了這一點。再說一次，我不是——我的意思是我們到處都能看到這種情況，但我說的是退休的一些挑戰，知識的流失，這些事情影響了我們轉換一些訂單的能力。我不太確定這是定價問題還是可見性問題。我認為這更多的是一個執行問題，我們再次努力每天都變得更好。

Understood. And Pat you said bookings were good in some parts of engineered products. Can you talk more about that? And what were orders for the company this quarter?

明白了。派特你說工程產品的某些部分的預訂情況很好。能多談談嗎？該公司本季的訂單是多少？

Yes. So the bookings in the quarter see were $50 million. And really across several of our brands in both Europe and in North America is where we're seeing the most strength. Backlogs continue to be good and the operational improvements we saw at least sequentially, we believe are sustainable and having better throughput through the plants with a strong backlog is good and it takes out a lot of the inefficiencies that we see in the plants.

是的。因此，本季的預訂量為 5,000 萬美元。事實上，我們在歐洲和北美的幾個品牌中，我們看到了最有實力的地方。積壓訂單繼續保持良好狀態，我們至少連續看到了運營方面的改進，我們相信這是可持續的，並且通過積壓訂單較多的工廠獲得更好的吞吐量是件好事，並且它消除了我們在工廠中看到的許多低效率問題。

Yes. And I guess that's a good segue to my last question. I heard you say free cash flow will be better in the back half, typically is. But did you say what you expect for full-year free cash flow realization?

是的。我想這是我最後一個問題的一個很好的延續。我聽說你說後半段的自由現金流會更好，通常是這樣。但您是否說過您對全年自由現金流實現的預期？

No, I did not comment on that but we expect second-half free cash flow to be $25 million to $30 million. And year to date, we're at $13 million. So those are hurdles that we expect to exceed, but I'm comfortable laying that out for you right now.

不，我沒有對此發表評論，但我們預計下半年自由現金流為 2500 萬至 3000 萬美元。今年迄今為止，我們的收入為 1300 萬美元。因此，這些是我們期望克服的障礙，但我現在很樂意為您解答。

Okay. Appreciate that. Thanks.

好的。很欣賞這一點。謝謝。

Steve, I'm not going to miss the opportunity to say, achieving record results after having sold a business that represented about 12% on average of our sales, but 20% to 25% of our CapEx through the business cycle has changed our mix from a cash flow perspective permanently. So I'm not saying we have enough good ideas we may spend a little more here, but we are fundamentally a different business model from a cash flow perspective post sale.

史蒂夫，我不會錯過這樣的機會，在出售了占我們平均銷售額約12% 的業務後取得了創紀錄的業績，但整個商業週期中20% 至25% 的資本支出改變了我們的組合從現金流的角度來看，永久。所以我並不是說我們有足夠多的好主意，我們可以在這裡多花一點錢，但從售後現金流的角度來看，我們從根本上來說是一種不同的商業模式。

I mean yes that's kind of my point on some of the pricing questions. You -- by exiting low-margin business where there are structural challenges to pricing the whole portfolio becomes better. And I have to think there's other opportunities to do that. You guys provide a lot of value to your customers. If you're not getting adequately compensated the question has to become why are you doing it?

我的意思是，是的，這就是我在一些定價問題上的觀點。透過退出存在結構性挑戰的低利潤業務，整個投資組合的定價會變得更好。我必須認為還有其他機會可以做到這一點。你們為客戶提供了很多價值。如果你沒有得到足夠的補償，那麼問題就變成你為什麼要這樣做？

You're preaching to the acquirer. And as I said, we're better today than we were last year and we're going to be better tomorrow than we are today. So we are making the investments necessary to do that. And I would again highlight the use of technology as a key driver, particularly at supply technologies and making those decisions.

你正在向收購方說教。正如我所說，我們今天比去年更好，明天也會比今天更好。因此，我們正在為此進行必要的投資。我想再次強調使用科技作為關鍵驅動因素，特別是在供應技術和做出這些決策方面。

The devil is in the details, but your point is absolutely well made, but we've made some real strides in this area and we expect to continue to improve. But again, we've done it a couple of different ways. So one structurally, we just got out of a business that was too damn hard in this area. And we've moved to businesses where your point is we've got a little more leverage, a little more ability, a little more opportunity to get paid fairly. And that was very difficult.

細節決定成敗，但你的觀點絕對是正確的，但我們在這一領域已經取得了一些真正的進步，我們希望繼續改進。但同樣，我們透過幾種不同的方式做到了這一點。因此，從結構上來說，我們剛剛退出了這一領域太難的業務。我們已經轉向了這樣的企業，你的觀點是我們有更多的影響力，更多的能力，更多的機會來獲得公平的報酬。那是非常困難的。

Exactly. Yes. I'm sure you sleep better with that gone. Thanks.

確切地。是的。我確信你會睡得更好。謝謝。

Our customers are big and tough and we got to do the right thing by them. So this isn't a straight line.

我們的客戶規模龐大且實力強勁，我們必須為他們做正確的事。所以這不是一條直線。

Appreciate it.

欣賞它。

Jamie Wilen, Wilen Management.

傑米·威倫，威倫管理公司。

Hi. You talked about the pickup of business in the aerospace and defense side, could you give us a little clarity on that? Are these new customers, existing customers with new projects, the longevity of these projects? And how would you characterize the margins on the business you're picking up versus your existing business?

你好。您談到了航空航太和國防的業務回升，您能否向我們介紹一下這一點？這些新客戶、擁有新專案的現有客戶、這些專案的壽命長嗎？您如何評價您正在進行的業務與現有業務的利潤率？

Yes, I'll kick off. I'm sure Pat has a thing to say. One of the nice things about seeing some additional activity in aerospace and defense, it does touch a large percentage of our product portfolio. And that's good news. So we have seen significant discrete opportunities in our engineered products groups related to defense, particularly in capital equipment for building things like ammunitions and so forth. So very discrete there.

是的，我要開始了。我確信帕特有話要說。看到航空航太和國防領域的一些額外活動的好處之一是，它確實觸及了我們產品組合的很大一部分。這是個好消息。因此，我們在與國防相關的工程產品組中看到了重大的離散機會，特別是在用於製造彈藥等物品的資本設備方面。那裡非常離散。

Also on the aerospace side and defense side as well, but aerospace in particular, you may know that five or six years ago this became an area that we felt was a great adjacency for supply technologies and that those customers would appreciate our service model and our brand. And so that business has grown nicely.

同樣在航空航天和國防方面，特別是航空航天，您可能知道，五、六年前，這成為我們認為與供應技術非常接近的一個領域，並且這些客戶會欣賞我們的服務模式和我們的服務。 。所以這項業務發展得很好。

We had to sort of fostered a bit and supported a little bit during the more difficult times. But now that they're trying to reorient their and improve their supply chains, I think we're in a great place. So we've seen the benefit of there in supply technology. So we've seen a fairly diverse and impressive and I think sustainable improvement in those areas.

在最困難的時期，我們必須給予一點鼓勵和支持。但現在他們正在努力重新定位並改善供應鏈，我認為我們處於一個很好的位置。所以我們已經看到了供應技術的好處。因此，我們看到了相當多樣化和令人印象深刻的，我認為這些領域的可持續改進。

Jamie, this is Pat. Matt mentioned the supply technology business and we think about the OEMs on the commercial side of the business, Airbus and their Tier 1 suppliers, we're supplying product to. And the growth opportunity is to supply more product different types of Class C componentry into those various programs.

傑米，這是帕特。馬特提到了供應技術業務，我們想到了商業方面的原始設備製造商、空中巴士及其一級供應商，我們正在向其供應產品。成長機會是向這些不同的項目提供更多不同類型的 C 類組件產品。

The margins typically are higher than other end market margins. So that business continues to grow and we're seeing tremendous opportunities not only throughout Europe but also here in the States for those products.

利潤率通常高於其他終端市場的利潤率。因此，業務不斷增長，我們不僅在整個歐洲而且在美國看到這些產品的巨大機會。

When talking about how it impacts our broader portfolio, I should have talked about our forged group. We should highlight there that for a while, we were significantly -- or past due and unable to deliver because of the struggle to get aerospace grade alloys to the forge, which the whole industry was seeing and gets talked about a lot at the highest levels at Airbus and Boeing. Those supply chains have improved a little bit. So we're able now to convert some of those orders.

當談論它如何影響我們更廣泛的投資組合時，我應該談論我們的鍛造團隊。我們應該強調，有一段時間，我們嚴重或逾期並且無法交付，因為很難將航空級合金投入鍛造，整個行業都看到了這一點，並在最高層進行了很多討論在空中客車公司和波音公司。這些供應鏈有所改善。因此，我們現在可以轉換其中一些訂單。

So again, I don't see this as a flash in the pan. I see this as an industry that is reinvesting in on the defense side and I see it as a commercial side that is just only beginning to sort out their supply chain issues and we want to be there to support it.

再說一次，我不認為這只是曇花一現。我認為這是一個在國防方面進行再投資的行業，我認為這是一個剛開始解決供應鏈問題的商業方面，我們希望在那裡提供支援。

Excellent. Thank you.

出色的。謝謝。

Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for closing remarks.

謝謝。目前沒有其他問題。我想將發言權交還給管理階層作結束語。

Thank you again for your time today, and I want to thank all of the Park-Ohio family of people that come to work every day and make this happen. That's what it's really all about. And we're again very pleased with the results. But at the same time, there's plenty of room for opportunity for improvement.

再次感謝您今天抽出寶貴的時間，我要感謝所有每天來上班並促成這一切的俄亥俄州帕克大家庭的人們。這就是它的真正意義。我們對結果再次感到非常滿意。但同時，還有很大的進步空間。

Steve, you gave me a nice opportunity to talk about how our business model is evolving and we expect continued deleveraging, continued improvement in quality of earnings, which to us means higher aggregate margins and better sustainable business on the free cash flow side. So that's where we're going, and I think this is a nice step in the right direction.

史蒂夫，你給了我一個很好的機會來談論我們的商業模式是如何發展的，我們期望繼續去槓桿化，持續改善盈利質量，這對我們來說意味著更高的總利潤率和自由現金流方面更好的可持續業務。這就是我們的目標，我認為這是朝著正確方向邁出的一步。

Thanks, and have a great day.

謝謝，祝你有美好的一天。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。