Park-Ohio Holdings Corp.

Good morning and welcome to the Park Ohio second quarter 2026 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 risk 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 the company's 2025 10-K, which was filed on March 5, 2026, with the SEC. Additionally, the companies may discuss adjusted EPS, adjusted operating income, and EBITDA as defined. These metrics are not measures of performance under generally accepted accounting principles. For a reconciliation of EPS to adjusted EPS, operating income to adjusted operating income, and net income attributable to Park, Ohio common shareholders to EBITDA as defined, please refer to the company's recent earning release. I will now turn the conference over to Mr. Matthew Crawford, Chairman, Chief President, Officer. Please proceed, Mr. Crawford.

Thank you very much and good morning to everyone. We're pleased to report a solid second quarter performance which included a number of record or near record financial performance metrics. More important is the continued success of our transformation efforts to become a business driven by organic growth and our most durable products and services. This transformation has and will continue to provide increased operating leverage as well as improved margin and cash flow performance. Additionally, we are positioned to increase our expectations for 2026 performance as we gain deeper visibility into what is not only a stable and growing industrial economy, but one that also appears to continue to broaden out from some of the drivers of growth over the past several quarters, most notably electrical infrastructure, data center, as well as aerospace and defense. As it relates to our transformation, We continue to invest in productivity tools across the business and believe we are in the early innings of seeing these benefits both in operating expense reduction and reduced investment per dollar of revenue growth. Examples include more robust data management tools, facility optimization and automation investments, and importantly, infrastructure enhancements, particularly in the engineer product segment, where we continue to see consistently increased order and backlog activity across end markets but particularly in defense and electric power related. I want to thank all of our global associates for their commitment to operating excellence and their participation in the transformational work we are undergoing. Now I'll turn it over to Pat to review the second quarter results.

Thanks, Matt. Overall, our strong second quarter results exceeded our expectations and were highlighted by record consolidated revenues of $440 million, record revenues in both our supply technologies and engineered product segments, and continued sales growth in our assembly component segment. Also, we continue to see strong demand across most of our key end markets, including semiconductor, aerospace and defense, AI data center, electrical, steel, Heavy Duty Truck, Oil and Gas, and Power Sports. The strong performance in our engineered product segment resulted from strong new equipment and aftermarket demand in many end markets and improved results from our forged and machined products business. And finally, gross margin of 17.9% increased 90 basis points from a year ago and operating income increased 22% year over year. Based on our record sales in the first half of the year, continued strong in-market demand in supply technologies, strong backlogs in engineered products, and ongoing operational improvements across several businesses, we are raising our full year 2026 guidance as follows. We are increasing net sales guidance to $1.7 billion to $1.73 billion. We are increasing adjusted EPS guidance to $3.10. to $3.30 per diluted share. We're increasing EBITDA's defined guidance to a range of 8.5% to 9%, and we are maintaining our previous guidance of free cash flow of $20 to $30 million. Turning now to the details of our second quarter results, total sales in the quarter were $440 million compared to $400 million a year ago, an increase of 10%. Sequentially, compared to last quarter, total sales were up 5%. Sales in each business segment increased year-over-year and also increased sequentially, resulting from strong demand from most key end markets. Our year-over-year consolidated gross margin improvement in 90 basis points and the increased operating income increase of 22% were driven by margin flow-through from the record sales levels and profit enhancement initiatives implemented across several of our businesses. SG&E expenses in the quarter were approximately $53 million of 12.1% of sales compared to 11.7% of sales a year ago. The increase was driven primarily by general inflation, increases in personnel costs, and support for the higher sales levels. Second quarter interest expense of $12.3 million was $1.1 million higher than last year due primarily to the higher interest rate on our senior secured notes that we refinanced in the third quarter of last year. This increase was partially offset by lower interest rates on our revolving credit facility during the quarter. Our effective income tax rate was approximately 17% in the quarter. The favorable effective tax rate year-to-date was due by federal research and development tax credit benefits estimated for the year. We expect our full-year effective income tax rate to range between 17% and 20%. Gap earnings per share for the quarter increased 30% year-over-year to 87 cents per diluted share. On an adjusted basis, earnings per share increased 24% to 93 cents per share compared to 75 cents in the second quarter of last year. During the quarter, cash flow from operations was $9 million, an improvement of $23 million compared to a year ago. The cash flow improvement was due to higher income levels, and our ongoing efforts to reduce working capital in each business. Capital spending totaled $11 million in the quarter, which included investments in information systems, automation equipment, which will drive improved plant floor efficiencies, and growth capital. We expect our full-year CapEx to be approximately $35 to $40 million. Our liquidity continues to be strong and totaled approximately $189 million at the end of the quarter, which consisted of $48 million of cash on hand and $141 million of unused borrowing capacity under our various banking arrangements. Turning now to our segment results, in supply technologies net sales increased 12% and totaled a record $209 million during the quarter compared to $187 million in the second quarter of last year. Higher sales were driven by strong customer demand in most canned markets including semiconductor, AI data center, power sports, aerospace and defense, heavy duty truck, and agricultural and industrial equipment and markets. Our supply chain business continues to benefit from increasing demand in the semiconductor, electrical, and AI data center sectors, which in total increased 29% year over year. In response to the growing demand trends in these interrelated end markets, We are expanding our global service center footprint in support of key customers and the expected demand for our supply chain services over the next several years. In addition, aerospace and defense demand continues to be strong and increased 10% during the quarter. Segment operating income in the second quarter was $19 million, an increase of 13% year over year, and operating margins were 8.8% compared to 8.7% a year ago. We continue to be on track to open our new state-of-the-art North American Distribution Center in the third quarter of this year. We are confident that this facility will be a best-in-class service center operation with automated sorting and kitting and additional value-added services for our customers. We expect to see the margin benefits of this strategic investment beginning in 2027. Our faster manufacturing business performed well in the quarter as net sales grew 6% year-over-year. Global customer demand for our proprietary products continues to grow, resulting from the expanded use of lightweight materials and increased global production of EV and hybrid vehicles. In our assembly component segment, sales for the quarter totaled $101 million compared to $95 million a year ago, an increase of 7%, driven by new product sales launched last year in each product line and higher customer demand from various automotive platforms. Segment operating income totaled $5.3 million compared to $5.6 million last year and increased from $4.9 million last quarter. We continue to focus on improving operating margins in this segment through improved margin flow through from revenue growth from new programs as well as through profit enhancement initiatives. Several operating initiatives such as increasing our rubber mixing production to support sales growth in our molded and extruded products and Planfor Automation Investments are expected to improve operating margins. In our engineered product segment, sales were a record $129 million, up 10% compared to last year and up 3% compared to last quarter. The increase in sales was driven primarily by sales of aftermarket parts and services and strong new equipment backlogs in our industrial equipment group, as well as higher sales in our forage and machine products group which were up 25% year over year. New equipment backlogs, I'm sorry, new equipment bookings totaled $66 million. Year to date, new equipment bookings totaled $153 million compared to $129 million for the same period last year, an increase of 19%. Our equipment backlog at the end of the second quarter increased 23% to $252 million compared to $205 million at the end of last year. The increased capital equipment sales in the quarter were driven by strong customer demand in several end markets including defense, electrical steel processing, oil and gas, agriculture, AI data center, and semiconductor markets. Both our industrial equipment and forging businesses continue to experience strong demand from both defense and AI data center related sectors. We provide several products in support of these growing end markets including transformer systems for IT equipment, induction furnaces for electrical steel processing, forgings for industrial turbines and various military applications, generators for emergency power, and various induction equipment used by data center cooling systems and for military applications, and forging presses used to produce munitions for military use. During the quarter, segment operating income improved 50% to $9 million, compared to $6 million both a year ago and sequentially last quarter. The improved operating income resulted from strong sales in the quarter and improved operating performance across many locations, including our forged product locations. And finally, as we announced last quarter, as part of our ongoing portfolio optimization strategy, we engaged an investment banking firm to assist us with a formal review of strategic alternatives for our Southwest Steel processing business, including a potential sale or other transaction. SSP is part of our engineered product segment. This review reflects our continued focus on aligning capital and resources toward higher growth, higher margin opportunities across our portfolio. We expect the process to be completed toward the end of this year. Our revised outlook includes the impact of Southwest Steel, which is expected to generate approximately $15 million in revenue and a net loss of approximately 50 cents per diluted share. The outcome of our strategic review with respect to this business represents potential upside to our current guidance. Now I'll turn the call back over to Matt.