Park-Ohio Holdings Corp.

you for the introduction and thank all of you for joining us on our fourth quarter and year-end 2024 conference call. 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 achieved 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. We have completed this effort while still maintaining record or near record revenue across the company. Our vision here is to build a diverse set of complementary industrial businesses that 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. Additionally, these investments should be the bedrock of a model focused on organic growth, complemented by some acquisitions through the business cycle. Thank you to all of our Park Ohio associates globally. Our team has never been stronger. Thank you. Now I'll turn it over to Pat to cover the numbers.

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 leverage. Also, our supply chain management, proprietary fastener manufacturing, industrial equipment businesses achieved all-time highs in terms of sales and profitability. 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 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. 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. 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. Replacement sales on the programs that ended during 2024 launched in the second half of the year and were not at full-volume production rates. This also affected our 2024 sales in this segment. 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 sales. 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. 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 increases. As a percentage of net sales, SG&A was 11.3% of sales compared to 10.9% of sales in 2023. 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. 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%. 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. We expect a more normalized tax rate in 2025, ranging from 21 to 23%. 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. Moving now to our fourth quarter results, net sales from continuing operations of $388 million were consistent with 2023 fourth quarter revenues. Quarterly revenues in our supply technologies and engineered product segments increased 2% year over year. Revenues in our assembly component 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 component segment, and gains on sale of assets. Our adjusted earnings per share of 67 cents in the quarter compared to 54 cents 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 2023. We generated significant operating cash flows of $26 million and free cash flow of $29 million, and EBITDA's defined increased 27% to $37 million in the quarter. 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% over the prior year. 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. 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, 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. In our assembly component 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. Our fourth quarter sales levels were affected by OEM plan shutdown schedules, which exceeded holiday scheduling in the prior year. 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 business. 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 forage and machine products business, full year sales decreased 4%, driven by lower rail foraging sales, which more than offset strong demand, for aerospace forgings in our Canton, Ohio facility. We continue to quote new projects in support of the defense industry, including aerospace forging products and new equipment builds. Excluding special charges, our adjusted operating income for the year was $21.3 million compared to $24 million a year ago in this segment. 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 this segment. 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 million. 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. 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 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% to 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, EBITDAs defined in 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% compared to 11% in 2024. 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. We are working with our supply chains and customers to mitigate the impact of such tariffs. 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. Now I'll turn the call back over to Matt.

Great. Thank you, Pat. We'll now open the floor for questions.