Good morning, and welcome to the Park-Ohio Second Quarter 2020 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. 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 2019 10-K, which was filed on March 12, 2020, with the SEC. Additionally, the company may discuss adjusted EPS and EBITDA as defined. Adjusted EPS and EBITDA as defined are not measures of performance under generally accepted accounting principles. For a reconciliation of EPS to adjusted EPS and for a reconciliation of the income attributable to Park-Ohio common shareholders to EBITDA as defined, please refer to the company's recent earnings release. I will now turn the conference over to Mr. Matthew Crawford, Chairman, CEO and President. Please proceed, Mr. Crawford.

Good morning, and welcome to our 2020 second quarter conference call. I have Pat Fogarty, our CFO, with me, and we'll hear from him in a few minutes. But before I comment on the quarter, I want to thank all of our colleagues here at Park-Ohio for the sacrifice, dedication and professionalism during these last few months. Because of your efforts, we're able to not only meet or exceed the expectations of our customers and other stakeholders, but we continue to identify and invest in opportunities for growth and business improvements. We've learned a great deal over the last several months about how to operate our business while keeping people safe. I'm optimistic that while business may not be normal for some time to come, we know how to protect each other and build a brighter future. While our consolidated results were severely impacted by COVID and related customer shutdowns, there are several important themes that were significant below the surface. Our business model embraces diversity. Because of this, we saw notable strength in a handful of markets, such as medical and technology end markets and supply technologies, our Chinese customers and assembly components, and alternative energy and engineered components. Our diversity also ensured over $13 million of operating cash flow during the second quarter while continuing to make our important restructuring decisions and investing prudently in our future. Regarding the future, we saw a number of encouraging signs during the quarter. While many of our new business launches were delayed during April and May, the quarter concluded with renewed excitement around these launches across all three segments. While our $100 million-plus of new business revenue we'd hoped to see fully develop by the end of 2020 now seems to be delayed into 2021, we believe all of those opportunities still to be vibrant, and our investments around capacity during 2018 and 2019 to still be well positioned. Perhaps even more encouraging, we are viewed broadly across the industries we serve as a strong and well-positioned participant, and we have seen an acceleration in new business opportunities and interest in us from customers who are seeking long-term partnerships during these difficult times. I also want to emphasize the ongoing effort regarding our initiatives to improve long-term competitiveness. We have and will continue to challenge the costs related to our customer service model. This crisis has provided us the opportunity to take significant and permanent actions across our business. More importantly, we have made thoughtful and targeted investments, which have above-average returns in each of the businesses. Whether they be related to our footprint, process improvements, best done during a shutdown or acquiring new equipment at deep discounts with substantial near-term saving opportunities, we are focused on lowering our cost to serve. While a great deal has been accomplished year-to-date on this front, we recognize the ongoing challenges in the global business environment and will continue to meaningfully adjust through at least the rest of the year. Lastly, none of this gets done without leadership. Our decentralized organizational model emphasizes the entrepreneurial spirit and the authority to make quick decisions where it matters, close to the customers and on the plant floor. The second quarter was a case study in the importance of these organizational beliefs and will benefit us for some time to come. While we cannot force our customers to buy more planes, semiconductor tools, snowmobiles, or cars, we can continue to position ourselves for accelerating growth and enhance margins when the business environment improves. Additionally, our strong liquidity position gives us all the tools our team needs to meet this strategic commitment. While we continue to suspend financial guidance, we are optimistic that we'll deliver profitable results for the remainder of 2020. With that, I'll turn it over to Pat Fogarty.

Thanks, Matt. Our second quarter results reflect the significant impact caused by the COVID-19 pandemic, which negatively affected most of our locations around the world. The impact was seen most dramatically in our Assembly Components segment, which supplies a diverse set of products to automotive OEMs and Tier 1 and Tier 2 production plants throughout North America and Asia, which were substantially idled during the quarter. In our Supply Technologies and Engineered Products segments, second quarter demand was significantly lower across most end markets around the world as the pandemic caused many plants to significantly reduce production levels or temporarily shut down. Also during the quarter, we experienced customer delays in new equipment and aftermarket order decisions as customers managed their capital spending. As a result, we took aggressive actions during the first quarter and throughout the second quarter to reduce operating expenses, which included a permanent headcount reduction and employee furloughs impacting approximately 50% of our global workforce, salary and Board compensation reductions, and discretionary spending cuts. In addition, we are proceeding with the consolidation and downsizing of certain operating locations. All of these actions taken to reduce operating costs will positively impact future margins as volumes recover. Despite the challenges presented by the pandemic and the impact on certain end markets, consolidated sales levels began to improve significantly in June. The improved demand levels which began in late May and throughout the month of June were across most end markets. As customer locations reopened around the world, June sales on a consolidated basis improved 78% over April sales and 58% over May sales. We are cautiously optimistic that continued positive trends in both sales and earnings will occur throughout the second half of this year as customer production levels improve and the benefits of the implemented operational restructuring are realized. During the second quarter, we reduced working capital by almost $20 million, minimized capital spending to $4.5 million, and suspended our quarterly dividend in order to preserve liquidity. As a result of our actions, we ended the quarter with relatively strong liquidity of $197 million at June 30, including $52 million of cash and cash equivalents on hand and $145 million of availability under our credit arrangements. We fully expect our overall liquidity to increase during the second half of this year as the global economy recovers and demand for our products increases across all business segments. Turning now to the detailed results for the quarter, consolidated sales were $228 million compared to $415 million last year. The sales decline year-over-year was a direct result of the COVID-19 pandemic, resulting in customer planned shutdowns affecting each of our business segments, as I previously mentioned. Consolidated gross margins in the second quarter were 6.2% compared to 15.9% a year ago. The margin decrease was due primarily to the lower sales levels in the 2020 period, which significantly reduced fixed cost absorption levels in most facilities. We expect second half gross margins to improve as demand levels increase and the benefits of the cost reduction actions are realized. Many of the operational improvements, which began in the second half of 2019 continued in the first half of this year despite the pandemic setback. Our efforts to improve plant efficiencies and profitability through process changes, various plant consolidation initiatives, and customer and supplier price negotiations will drive improved gross margins as sales levels improve. SG&A expenses in the quarter were $35 million compared to $47 million a year ago. SG&A in 2019 included a one-time expense of $4.3 million. Excluding this expense, SG&A expenses decreased 18% in the second quarter. During the second quarter, we incurred an operating loss of $21 million. On an adjusted basis, the operating loss was $18 million. The adjustments to GAAP earnings include one-time costs relating to the consolidation of facilities and personnel severance costs incurred during the quarter. Our effective tax rate in the second quarter was a benefit of 36%, which includes the favorable effect of a net operating loss carryback under the recently enacted CARES Act. We expect our full year effective income tax rate to range from 20% to 25%. Our GAAP earnings per share was a loss of $1.38, and on an adjusted basis was a loss of $1.17 in the second quarter. During the second quarter, we generated positive operating cash flows and free cash flow of $13.4 million and $8.9 million, respectively. The free cash flow during the quarter reflects our efforts to maximize cash flows and preserve our liquidity as we navigated through the current economic environment. CapEx in the quarter was reduced to $4.5 million as we aggressively controlled the level of spending during the quarter. CapEx in the second half of 2020 will approximate $10 million to $15 million, most of which is necessary to support new business previously awarded in our Assembly Components segment. Moving to our individual segment results in the second quarter. In Supply Technologies, sales in the quarter were $94 million compared to $162 million a year ago. The decline in sales was driven by lower customer demand across most key end markets as a direct result of the COVID pandemic. In addition, our faster manufacturing business was significantly impacted by the reduced levels of North American automotive production in the quarter. These decreases were partially offset by year-over-year sales growth in the semiconductor and medical end markets as well as by new business generated during the quarter. Despite the weak demand in April and the early part of May, average daily sales in our supply chain management business began to improve and continued a positive trend throughout the end of June. June average daily sales improved 31% compared to April and May averages. Improved trends were seen in most end markets, with significant improvement in the recreational vehicle, heavy-duty truck, agriculture equipment, bus and coach, and consumer products end markets. We anticipate that our daily average sales will continue trending in a positive direction during the second half of 2020 and as the global economy recovers from the effects of the pandemic. Segment operating income was $0.3 million compared to $11.3 million a year ago, reflecting the lower sales. In this business, we took action to reduce operating costs through headcount reductions and facility consolidations and also reduced discretionary spending and working capital. Our supply chain team continues to focus on reducing inventory levels to align with current customer demand and through innovative approaches to supplier lead times and stocking programs. We expect these efforts will have a positive effect on segment operating cash flows in the second half of the year due to the further reduction in working capital. Also, we continue to focus on new business initiatives centered around aerospace and industrial supplies and adding new customer logos to our diverse list of customers and end markets. Despite the economic downturn, we continue to win new business as a result of these initiatives. Moving to our Assembly Components segment, sales were down 60% year-over-year, driven solely by the impact of the COVID pandemic. Most of our plant locations were significantly downsized or temporarily idled in mid-March as North American auto production came to a sudden halt. In late May, OEM and parts suppliers began a slow restart of production, and at that time, our facilities reopened. Production levels in most of our plants are accelerating. Assuming no further shutdowns will occur, we currently expect third and fourth quarter customer demand to be significantly higher than second quarter levels. Segment operating income margins declined year-over-year as a result of the significantly lower sales levels. We took aggressive cost reduction actions in this segment, which included a temporary layoff of the majority of our workforce resulting from the production shutdown in mid-March. Production levels at each of our facilities in North America and China significantly improved in June, and as of June 30, we have brought back 75% of our workforce who were on temporary furloughs. The increase in build rates and customer demand for our products will be supplemented by the increasing momentum on new product launches, which were delayed during the second quarter. We continue to believe we are well positioned to benefit from trends in the global auto industry, which are aimed at producing vehicles to comply with more stringent global emission regulations. The use of lighter componentry, cooling applications, and direct injection technologies will continue to be a focus in the global auto market. And we expect that these trends will increase our sales content per vehicle over the next several years. In our Engineered Products segment, sales in the second quarter were $79 million compared to $117 million last year, driven by lower demand from certain key end markets, including aerospace and defense, oil and gas, and rail, which affected both our industrial equipment and forged and machine products businesses. Bookings of new equipment totaled $52 million in the first half of the year compared to $100 million in the first half of 2019. Global order activity slowed during the second quarter as a direct result of the pandemic as customers cut back their capital spending and deferred projects into future periods. We expect bookings in new equipment and aftermarket parts and services in this segment will gradually improve in the second half of this year as customers increase their plant production during the recovery and resume their capital spending plans. Operating income in this segment was down from the second quarter of 2019 from $11.5 million to a loss of $0.8 million. The decreases in year-over-year profit and margin were driven by the lower sales levels, which resulted in several under-absorbed operations. Corporate expenses were $5.8 million in the quarter compared to $7.5 million last year. Excluding one-time severance expenses incurred during the quarter, corporate expenses were down approximately 30% year-over-year. The decrease was due primarily to actions taken to reduce personnel costs and control all spending levels in light of the current operating environment. Before I turn the call back over to Matt, I want to emphasize a few points mentioned in my earlier comments. The pandemic and its effect on the global economy have challenged each of our businesses and required us to change how we operate. We have implemented all of the necessary protocols and are providing a safe work environment for all of our colleagues that have returned to work. We are seeing positive signs that the economic recovery is underway, as each of our businesses reported much improved sales and earnings in June compared to April and May. As a result, we have brought back a large percentage of furloughed employees in order to support current customer demand. Also, we have implemented several operational improvements, announced the consolidation of several facilities, and realigned certain business processes to emerge from this down period more profitable than pre-COVID levels when sales fully return. Our liquidity continues to be strong, and we have adequate cash flow and borrowing availability, if necessary, to continue supporting future strategic investments, R&D activities, and working capital needed to support future growth. And finally, based on the uncertain operating environment caused by the pandemic, we will not provide full year earnings guidance as we have previously stated. Now I'll turn the call back over to Matt.

Great. Thank you very much, Pat. With that, we'll open the conference call for questions.

[Operator Instructions]. Thank you. Our first question comes from the line of Sarkis Sherbetchyan with B. Riley FBR. Please proceed with your question.

Good, thank you. Just, first question here how should we think about the $35 million SG&A for the quarter? Is that kind of the run rate on a go-forward basis? Kind of help me understand what the opportunities are here in the cost structure?

Yes Sarkis, this is Pat. Included in the SG&A reductions that you saw in the second quarter, was a significant amount of employee salary reductions, which would be viewed as temporary as volumes recover. And so I would expect to see an increase in SG&A as our revenues grow. In addition, when you think about global travel in our sales group, in the second quarter, sales travel, entertainment expenses, things of that nature were completely cut off, especially in April and May. We have resumed our travel arrangements and visiting customer sites where we can. And so, I would expect those levels to increase. Overall, we are going to see permanent SG&A reductions as a result of employee cuts that have been made. And so, that will carry and linger throughout the course of the year.

Got it? And can you frame that in relation to the comments you made on the June sales trends?

Right, in June I think we're still going to see the benefit of the cost reductions on SG&A. I think as we move into the third and fourth quarter, I think we're going to see roughly a 10% increase, maybe less in SG&A, depending on where sales levels end up. But that's how I would look at that.

Sarkis, this is Matt. I would agree with everything Pat said, particularly even if you use the first quarter as a baseline, we would expect on a sustained basis to be improved from that. And to a large extent, some of the investments that we are discussing and the increases in SG&A Pat is referring to depend on continuing to see increases in business activity. So again, we're pretty nimble in that area, but I think that the second quarter would demonstrate a low watermark.

I appreciate those comments. And in the commentary, you mentioned some of the capacity rationalization. Maybe if you can talk about how you're thinking about the capacity kind of going forward. Do you foresee some more permanent rationalization? And then also which segments, in particular are being kind of affected the most?

Yes, good question. Sarkis this, I think being your first call. I'll say something I often say. As an investor in distressed businesses over the years and we've bought some businesses with some hair on it, we're always restructuring something. It is not - it's in our DNA to make sure that we're doing that. We call it out this quarter and, in this period, because it's more meaningful. So again, we're never in a position where we're happy. This opportunity that's been given us, and I guess, we'll use the word opportunity to review our overheads as it relates to current business activity and future activity, has allowed us to be a little more aggressive. So numerous locations around - over all three business segments are being reviewed, and all the business are being touched in some way. Some are adjustments relative to size of square footage in particular leases. Some are complete closures. Some extend to North America some extend to Asia and Europe. So it is very comprehensive. And I would say, during this time, much more strategic. Whereas our routine looks at this and unabsorbed variances and things like that is more tactical. We're pushing the envelope in terms of what we think we can do continue our success with our customers. So a lot of things are being touched. I wouldn't want to disclose what we think will be touched by the end of the year, but it's meaningful relative to our overall facility comp. I don't know, Pat if you want to be more specific. That's kind of what I have.

Yes, the only additional color I would give, Sarkis, is within our, for example, our Supply Technologies segment, our customers are growing and moving and we're there to support their needs, which often requires us to challenge. As Matt mentioned, square footage of warehouse facilities and being able to move into locations where we can more efficiently serve our accounts. And so, some of it - and those types of changes occur every year and so this year, we'll see additional movement because of lower capacity and lower needs that our customers are having. But all in the view of being more efficient in how we service them. And that's, at the end of the day, will lower our costs.

Our next question comes from Steve Barger with KeyBanc Capital Markets. Please proceed with your question.

Happy to hear your confidence on remaining profitable in the back half and just for modeling as you think about the revenue step-up you're seeing and the cost actions, the mix? Can you exceed the $0.13 in 1Q or how should we think about results against that benchmark?

Steve, I'll let Pat handle it. That's a bit of a hot potato. I'll be honest with you. We debated internally a little bit of how to address that. So - and the reality of it is - it's not just because of the volatility around COVID and infection rates and customers, that is certainly the single biggest issue. For us, it's also mix. And Steve, you know that better than anybody. We have some businesses that are performing exceedingly well versus first quarter. And I think in the third quarter will be standouts. We have others with higher breakeven points even after the cost actions that we just are not going to be able to address till we see some of the new business launches or a return. So it's hard to get more specific than that, Steve, because we don't - it's not just COVID and supply chains, it's mix as well.

Right.

And particularly in our high-margin businesses, the right mix in some of the Engineered Products group changes the picture meaningfully. It could be - that could be $0.10 by itself. So that's going to - we're going to have to wait and see. But we are comfortable to say that the trajectory and what we see already in the third quarter suggests that, that is where we're going.

Great, no that's encouraging to hear. And Matt, you said your customers see you as strong and well positioned, getting you a look at new business. Can you just expand on where you see some of the opportunities that are coming your way?

Absolutely, I don't want to name individual customers, but I can comment explicitly on three relationships that come to mind in businesses where we - there is significant and critical customers in our end markets where we've not been their primary source and we recognize that. And we have had, in this environment, the unique opportunity to bid on that business. And it remains to be seen how successful we are. But we feel very good in terms of our opportunity to be viewed as a strong partner. And some of our key competitors are wounded. Again I hate to beat the drum, but our liquidity and our management style, I think allows for people - even though we do have a little bit of leverage, allows people to see us as a long-term stable business. So I am - I don't want to be customer specific on the call today. But I would say, especially - well, in all three business segments, notably in Assembly Components and the Supply Technologies, we've seen invigorated interest from great customers and lots of new business activity.

Yes, that's really great. And one of the elements of the growth strategy that you've talked about over the past few quarters is auto electrification. And we know that most auto plants shutdown in 2Q and they're coming back up. But can you talk about what, if anything, this whole situation means to the electrification push? And any differences you're seeing in the three regions?

Well, I think that there is a - in my mind, there's no question a lot has been pushed out vis-à-vis electrification and product launches across the board, not just electrification. Some of Ford's issues around the Explorer are well known and are impacting us today. So it's not just electrification. Product launches have been pushed back. Some would argue that, that would include electrification to some greater extent. I'm not overly thoughtful about that today. As you know, all of our products - almost all our products today and our new business is positioned around trying to be agnostic relative to powertrain. We're not entirely there, as you know, but we are thrilled to think that we're well positioned on key platforms. Some of those key platforms and customers, and I include Tesla as a good customer of ours, will eventually succeed and will be there as our partners. So our ongoing strategy is to make sure we're positioned as most the OEs, in my opinion, still pursue in the near term, 3 to 5 years, a broad set of strategies so they can monopolize on whatever consumer tastes go to. I'm apt to say sometimes that GM is trying to be a leader in the electrification space. But they're sure as hell trying to sell a lot of Tahoes. So in the near term, we're going to try and chew gum and walk at the same time.

All right. So if I step back from electrification, just talk about any powertrain, can you talk about where you stand from a utilization standpoint in China versus Europe versus the U.S. right now and just maybe frame up how the auto world restart has progressed?

Well, China certainly has been, I don't know, I mean, a leader in the sense that they entered the COVID issue first so they've come out first. And that certainly, as I mentioned in my comments, was a strength, one of very few bright spots, candidly, in the quarter for the automotive business. So we did consolidate a facility in China, so we are preparing for a more of a long haul relative to building the businesses that we - the capacity that we built there. Having said that, our products there continue to be well positioned. So we are not - unfortunately, our new facility up in Qingdao, we're - got some great business, got some good new customers. We're nowhere near capacity but we're very well positioned. I think our Changshu facility, which is focused more on the direct injection technology, again, we've got some additional capacity there. The rollout of those technologies has been slower than we thought but continues to be very well positioned. So the rebound in China has benefited us, but from a capacity utilization standpoint, we're still 18 months away from, I think, seeing meaningful contribution.

Our next question comes from the line of Marco Rodriguez with Stonegate Capital Markets. Please proceed with your questions.

I was wondering if maybe you could elaborate a little bit more about the process improvements and the potential permanent savings that you guys have been obviously working on all of last year and then devoting extra time, given the closures of a lot of the facilities here this last quarter. Maybe if you can kind of help us understand, once you get into a normalized environment, whenever that might be, and if we maybe use fiscal '19 as kind of a base year, how does the model sort of change versus that with these improvements that you've made thus far?

Marco, this is Pat. The changes that were made in the second quarter were very significant, whether it's downsizing a facility, consolidating a facility, changing the way we manufacture with automation, narrowing aisles in a warehouse, taking the time now that the volumes are down to invigorate a lot of those changes. And so I would say, when I look at the things that we're doing, these are permanent reductions in our cost structure. And I would say in each of the segments, there is an estimated $2 million to $3 million of permanent manufacturing cost reductions in each segment. And as volumes come back, we would expect those to affect our gross margin. And so that's the kind of things that our presidents and our managers are reviewing and looking at and implementing every day. And so it is going to be meaningful, and only time will tell when volumes come back.

And the permanent reductions that you may have taken from a headcount perspective because if I remember hearing you correctly that you brought back the vast majority of your furloughed workers and SG&A expenses should be up about 10% sequentially or so. Have they all been brought back or have some of those furloughed employees been permanently cut? Just trying to think through how maybe that progresses in the next few quarters.

I'll jump in and just mention, Marco, that the hourly worker was disproportionately hurt during this downturn. So generally, when we talk about people who we've returned to work from furlough or layoff, it has been hourly workers. Those are tied directly to production levels. The actions, now that doesn't mean that significant salary adjustments and permanent layoffs didn't happen in the SG&A, right? They did. And I think that's what you're trying to get your arms around and what Pat just mentioned, in terms of generalizations around what we're chasing on an annual basis from each business. But to be clear, when we say we brought back 75% of half our workforce, that's disproportionately hourly workers.

And then Matt, just coming back to your comments in answering a prior question about new business opportunities through relationships you saw. I think that the last quarter on our call, we talked about a lot of opportunities for you to basically take share and take wallet from particular clients, and it sounds like that's sort of starting to happen here for you guys. Just kind of wondering, just based on the fact that maybe some of your competitors are wounded, kind of using the wording that you made, are you seeing those competitors perhaps become a little bit irrational with the pricing to try and stay relevant? And how, if at all, has that affected your bidding?

Yes. That's a really good question because there's a dark side, right, to competitors being wounded. At this point, it may be too early to tell. Anecdotally, one of the nice things about our - you know we talk a lot about how important our diversity is. Many of the opportunities I'm talking about, some are - have realized, many are anecdotal opportunities we're seeing. In general, while the numbers may not be material today, the trend I talked about is real. Whether or not it will be material depends a lot on the position of some of our competitors to defend their market position at a time where they don't have as strong a balance sheet and no liquidity. So on a couple of bigger opportunities, I can't comment yet, to be honest with you. We have not - we feel the opportunities are real. We've seen the realization of some. Candidly, we've had the opportunity to buy capacity at pennies and a dollar from failed competitors. So, I think it's - I think some of them are going to have a difficult time competing on price. Banks in particular, while they maybe not being too rigorous in terms of covenants and waivers, they're unlikely to fund growth again unless they're confident it can be profitable. I think it's different right now, I do. But I will tell you - ask me that question on the next call and I'll tell you for sure because it certainly makes sense to me that some of these competitors, wounded as they may be, are going to do everything they can to leverage their incumbent position. So I'm not cocky enough to say that, that trend is material to our numbers. But the - yes sales funnel has to start somewhere.

Right, understood. And so, I'm assuming that also presents a potential opportunity for you guys, at least from an M&A standpoint. I understand that last quarter banks were really trying to help make sure everybody was staying afloat. Just kind of wondering if the pipeline has sort of opened up a little bit more in terms of deal flow for you guys?

I want Pat to comment on that because he's closer to it. But let me just say generally, and I don't want to make anyone nervous because those that don't know our company well might not understand this comment. We're very disciplined buyers and we believe downturns are where we build the next leg up of this business, either through the things we've talked about internally or equally or more importantly, externally. So, I'd be disappointed, deeply disappointed if we didn't come out of this cycle having found some opportunities. But Pat, you're closer to it in terms of flow.

Yes, I think it's too early, Marco. I think we are going to see opportunities over the course of the next six months based on some of the things that Matt talked about. I think deal flow has been quiet in the second quarter for obvious reasons. Whether it's the federal funding that has taken place for a lot of privately owned companies. I think that's all going to end soon. And the issues that Matt talked about are really going to come out in Q3 and Q4. And then I think we are going to see a lot of opportunities on that front. And I also think companies, especially privately-owned companies are going to say, I don't want this to happen again to me. And I want to take the opportunity to put my company out on the market. And we're going to take advantage of that. So we're excited about those kinds of opportunities because as Matt mentioned, we know that's where the next leg up is going to be.

We do have an additional question coming from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your question.

Yes. I just wanted to ask you about a couple of business units and end markets. Toward the end of last year, you were talking about being in the right place with forging and seeing some new customers and products that were higher margin. And I'm sure volumes were affected like everything else. But has anything changed about how you're thinking about the forging business in terms of ability to win new customers and new business?

Yes. Steve, you're familiar with the investment we made in Arkansas with the new press line. I would tell you that the value that's been created in particular there has. We expected to initially be the flexibility we would have to take down press line number 1, which has been a workhorse for this company for a dozen years, making us tens of millions of dollars and transfer some of that workload. So phase 1 was to allow that to happen. Given what's happened in the oil and gas and train market, we got more of an opportunity than we thought. So - but that doesn't mean that we haven't benefited in our ability, not on the earnings line, but benefited in giving the opportunity to get press line 2 up and running and press line 1 refurbished. So that has been successful, albeit not on the earnings line. I'll tell you that I think that some of the new opportunities that we hope to fill press line 2 with have slowed. They're still active. Some of the diversification we talk to in the construction and so forth exist. I think meaningful strategic discussions are going on. But Steve, it's hard to weave a great story in the current period, given the weakness in our core markets and - some of the delays on some of the diversification. Having said that I, would tell you that it's given us a wonderful opportunity to debug press line 2 and to refurbish press line 1. So I'm - the forging game, as you know, is a long - it's a long - it's a game of years, not months.

Right.

So, we're not where we want to be, but our strategy is intact. And I think that some of our potential partners are looking at us more squarely and saying, before we liked you. Now we love you, help us move forward. I would say that we had some - on the other side of the forging business, again, we've been - some of our strategy there as well as in Supply Tech was built around this resurgence in aerospace. We had some new opportunities and some new dies in the military space, in particular and hopefully in commercial as well. And those have hit the pause button as well. So, that's a business that we like long-term. We want to invest in long-term. That may be an area we see an acquisition in for the right opportunity. But some of the things that we discussed late last year, I would say, are strategically valid, but moving very slowly.

Got it? And then Supply Tech, we've always talked about this being a long selling cycle. But right now, every company I cover is pulling every lever to get cost out. So - and you already alluded to this, but can you talk about how that's playing into your ability to go out and tell that story and maybe quote on business even if it's a small product line, just to get your foot in the door?

Yes, no great question. So, we've talked I think, Steve about the - how we thought differently about the go-to-market strategy over the last couple of years. And the leadership in Supply Technologies, I think, has really done the right thing in recognizing that while we love our large multinational, multi-facility, lots of SKU customers, the business is built from the ground up. The business is built with the $100,000 customer that becomes the $1 million customer, becomes the $10 million customer. So our initiatives around new logos, as I know they call it, and other things related to the diversification of our business model, yes, are going really well. We are continuing to see new business gather, and that's not just in the traditional business, which we are seeing business - seeing new opportunities. That is also, I think, in some of the new investments. Aerospace is a challenge right now. I mean now there's no other way to slice it. I like the opportunities there. Maybe there's some opportunities on the acquisition side down the road, challenging space, but we're in it the right way, low overheads, good market position. But I will tell you, our MRO investment, which we've talked a lot about, has benefited exactly to the point you said. And I think that whether it's as simple as seeing some good fortune around PPE, which is a product category for us with our current customers or otherwise. I think that we've been successful in terms of new opportunities, new signings. And I think that's one of the great stories that's buried below the sort of top numbers in Supply Technologies. And I think that those incremental dollars are higher margin. And I think in the third and fourth quarter, we're going to be celebrating them. That's going to be the front end of our train, so to speak, going forward here for the next few quarters, in my opinion.

Thank you. We have reached the end of our question-and-answer session. So, I'd like to turn the floor back over to management for any additional closing comments.

Great, well thank you for the great questions, first of all, and thank you for giving us the time to explain why it's important to be patient and why while the second quarter was difficult financially, that we think we've improved our strategic picture. And thank you, most of all, for your support and your time. Take care.

Ladies and gentlemen, this does conclude today's teleconference and webcast. Once again, we thank you for your participation, and you may disconnect your lines at this time.