Park-Ohio Holdings Corp.

Good morning and welcome to the Park, Ohio, fourth quarter and full year 2025 results conference call. At this time, all participants are in a listen-only mode. After the presentation, the company will conduct a question-and-answer session. Today's conference is also being recorded. If you have any objections, you may disconnect at this time. 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 release as well as in the company's 2024 10-K, which was filed on March 6, 2025, with the SEC. 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 reconciliation of EPS to adjusted EPS, operating income to adjusted operating income, and net income attributable to Park Ohio common shareholders, the EBITDA, as defined, please refer to the company's recent earnings release. I will now turn the conference over to Mr. Matthew Crawford, Chairman, President, and CEO. Please proceed, Mr. Crawford.

Great. Thank you, Daryl, and welcome, everyone, to our conference. End of 2025 fourth quarter conference call. I am very proud of our Park Ohio team throughout 2025 and especially during the fourth quarter. Strong cost management combined with the benefit of improved productivity in key locations offset demand volatility in many industrial and markets caused by tariffs and general economic uncertainty. This uncertainty also delayed new business launches throughout the year, and some new business awards in a few cases. Also during the fourth quarter, we made cash management a priority and met our debt reduction goal of $40 million. Most importantly, though, we focused on our long-term goals regarding asset allocation, durable growth, and deleveraging. Regarding asset allocation, we continue to invest above our maintenance capital levels as we improve productivity and lower our costs to serve through automation, information technology, and vertical integration. While we continue this journey through 2026 and beyond, we're beginning to see the positive impacts on new business and improved profit flow through. Our growth capital investment, which represented more than a third of our total capital expense, will not only underpin our significant growth in 2026, but is also targeted in products and services where we have above average margins and a sustainable competitive advantage. Lastly, while we are still above our target net debt leverage ratio, Our cash performance in the fourth quarter and the investment we have made toward 2026 growth, including additional working capital, should put us in a good position to take a step forward in this area. So we start 2026 extremely excited to be rewarded with above-average growth and with solid incremental operating leverage in all profitability metrics. Thank you for your support, and thank you to all of our outstanding partners in our business. Now over to Pat to cover the quarter results.

Thank you, Matt, and good morning. Overall, we are pleased with our accomplishments in 2025, many of which will support future sales growth and drive improved operating margin and free cash flow. Our accomplishments during the year included the following. First, we refinanced our $350 million senior notes with new senior secured notes maturing in 2030. In addition, we amended our revolving credit agreement to extend maturity date by five years. The refinancing completed during 2025 provides us with the capital structure to support our sales growth and investment in future years. Second, we invested our over $12 million in information technology during the year and began the implementation of new ERP systems in supply technologies and in our industrial equipment group. We expect significant benefits from these investments, including lower working capital levels, lower operating costs, and improved information flow to and from our supply base and our customers. In supply technologies, we broke ground on a new state-of-the-art North American distribution center, which will be operational this year. This important investment will significantly improve how we service our customers and provide best-in-class warehouse operations with lower costs, lower working capital, automated sorting and kitting, and additional value-added services to support our customers. Also, in our fastener manufacturing business, we invested in automation equipment to improve plant floor productivity and operating margins in several locations. Our capital investments in this business are focused on increasing production capacity to meet the strong demand for our self-piercing and clench products. In assembly components, we won new business during the year, rolling over $40 million of incremental annual sales, which will launch in the second half of this year and continue through 2027. We also implemented product price increases as well as plant floor improvements to increase profitability in 2026. And finally, in our industrial equipment business, we achieved record annual bookings totaling $217 million, including a record $47 million induction heating order placed by a leading steel producer. As a result, our backlogs were $180 million at December 31st an increase of 24% over the prior year levels. Before I discuss our fourth quarter employee results, I want to comment on our 2026 guidance. As outlined in our press release, we expect consolidated revenues to grow to $1.675 to $1.71 billion, an increase of 5% to 7% over 2025 consolidated revenues, driven by sales growth in each business segment. We expect adjusted earnings per share to increase to $2.90 to $3.20 per diluted share, an increase of 7% to 19% year-over-year. EBITDA, as defined, to range from 8% to 9% of net sales, and we expect full-year free cash flow to range from $20 to $30 million. In our supply technology segment, demand in power sports, industrial equipment, and heavy-duty truck end markets are expected to recover, from low production levels in 2025, and we expect continued sales growth from electrical distribution customers supporting the AI data center expansion and continued strong growth from semiconductor aerospace, defense, and agriculture and markets. Also, our faster manufacturing business will continue to expand its products into new applications and will benefit from the continued use of lightweight materials and electrification. In our assembly components business segment, sales of our molded and extruded rubber and fuel-related products are expected to grow year over year, driven by increased production volumes on business launched in 2025 and improved customer pricing. In our engineered product segment, revenues are expected to be at record levels in 2026, driven by strong new equipment backlogs in many end markets, including oil and gas, steel and aerospace, and continued growth in global aftermarket demand. In addition, our forging equipment business recently won a new equipment order with an aerospace customer and strong aftermarket order activity will drive an increase in 2026 revenues. Our engineered product segment is also seeing increased order activity from customers supporting the expansion of AI data centers. For example, we recently were awarded new business for power generation products including transformers and power generators used to control and regulate power to data centers. And we are actively responding to strong demand for our forged products from turbine generator customers who also provide power for data centers. Turning now to our fourth quarter and full year results, our fourth quarter was highlighted by operating cash flow of $49 million and free cash flow of $36 million. We use our free cash flow and excess cash to reduce long-term debt by $40 million during the quarter. Our full-year operating cash flow increased to $42 million from $35 million in 2024 with the increase driven by lower working capital usage compared to 2024. CapEx totaled $40 million in 2025 with investments and information technology totaling over $12 million during the year. Consolidated fourth quarter net sales were $395 million, an increase of 2% year-over-year. The sales growth was driven by higher sales in our supply technologies and assembly component cycles. In engineered products, demand was stable year-over-year, as growth in our industrial equipment group offset lower sales levels in our forge and machine products group. Full-year sales totaled $1.6 billion, a decline of 4% from 2024 levels, with the decline occurring primarily in North American industrial and markets. Our fourth quarter gross margin of 17.3% was 70 basis points higher than a year ago, resulting from higher sales levels and implemented profit improvement initiatives across several of our businesses. Full year gross margins were 17% in 2025, which were comparable to 2024 gross margins despite the lower sales levels. Excluding special items in both periods, fourth quarter adjusted operating income increased 4% to $20 million compared to $19 million in the 2024 period. Special items in the fourth quarter included a non-cash write-off of certain assets in our Forged and Machined Products Group, totaling $8.9 million to align our investments in tooling and production assets with current business levels. Our effective tax rate was 12% in 2025, which is lower than the U.S. statutory tax rate due to research and development tax credits recognized during the year. We expect a more normalized tax rate in 2026, ranging from 18 to 20%. Adjusted earnings per share in the fourth quarter was $0.65 for a diluted share compared to $0.67 in the fourth quarter of 2024, with the decrease due primarily to higher interest expense in the 2025 quarter. Our full-year adjusted earnings per share was $2.70 compared to $3.59 in 2024. And with respect to our segment results, in supply technologies, fourth quarter sales were $187 million compared to $182 million in the 2024 period, and operating income increased 31%, to $21 million compared to $60 million last year. Operating income margin was up 240 basis points and was 11.1% of sales compared to 8.7% last year. The improved year-over-year fourth quarter results in 2025 were driven by higher sales and favorable impact of cost control measures taken during the quarter. Full-year sales in this segment were $748 million compared to $776 million in 2024, driven by lower customer demand in certain end markets, primarily in North America, including power sports, heavy duty truck and bus, and industrial and agricultural equipment, offset by continued strong demand in data center, electrical, and semiconductor end markets. Full year operating income in this segment was $72 million compared to $75 million in 2024, operating margin was 9.7% in both periods due to our efforts to reduce variable operating costs given lower demand. In our assembly component segment, fourth quarter sales were $92 million, up 2% from $90 million a year ago. Adjusted operating income was stable at approximately $4 million in both periods. Full-year sales in this segment were $381 million compared to $399 million last year, lower unit volumes and certain auto platforms and production delays and new business launches impacted revenues during the year. Full year adjusted operating income was $22 million in 2025, compared to $27 million in 2024, with the decrease driven by the lower unit volumes. We expect our operating margins in this segment to improve resulting from expanding our rubber mixing production, plant floor automation, and improved margin flow through from increased sales. In engineered products, fourth quarter sales were approximately $116 million in both 2025 and 2024. We continue to see strong sales in our industrial equipment business, which grew 5%, but was offset by lower sales in our forged and machine products business. Fourth quarter adjusted operating income decreased to $3 million due to lower profitability in the Forged and Machined Products Group. Full-year sales in this segment were $471 million compared to $482 million in 2024. The decrease was driven primarily by the closure of a small manufacturing operation in 2024 and lower demand from the railcar end market, which impacted our Forged and Machined Products Group. We continue to see growth in our industrial equipment business in 2025, driven by 7% growth in our aftermarket business. Adjusted operating income was $17 million compared to $21 million last year, with the decrease driven by lower sales levels and lower profitability in our Forge Group. We expect significant improvement in operating profits in this segment in 2026, based on our strong new equipment backlogs, aftermarket demand, and operational improvements made in several of our plans. I'll turn the call back over to Matt.