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 risk and uncertainties may be found in the earnings press release, as well as the company's 2025 10K, 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 and 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 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 power related I want to thank 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 supplied 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 engineer product segment resulted from strong new equipment and aftermarket demand in many end markets and improved results from our forage to machine products business and finally gross margin of 17.9 percent increased 90 basis points from a year ago and operating income increased 22 percent year-over-year based on our record sales in the first half of the year continued strong in market demand and supply technologies strong backlogs and engineered products and ongoing operational improvements across several businesses we are raising our full year 2026 guidance as follows we are increasing that sales guidance to 1.7 billion to 1.73 billion dollars we are increasing adjusted EPS guidance to three dollars and ten cents to three dollars and thirty cents per diluted share we're increasing EBITDA's defined guidance to a range of eight point five percent to nine percent and we are maintaining our previous guidance of free cash flow of 20 to 30 million dollars turning now to the details of our second quarter results total sales in the quarter of 440 million dollars compared to 400 million dollars a year ago an increase of 10 percent sequentially compared to last quarters total sales were up five percent sales in each business segment increased year over year and also increased sequentially resulting from strong demand from most key in 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. Three million dollars at 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 level which expense of 12.3 million dollars was 1.1 million dollars 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 and our revolving credit facility to range between the F earnings prepare for the quarter increased 30% year-over-year to 87 cents per on an adjusted basis earnings per shift to reduce working capital spending total 11 million dollars in the quarter which included investments in information systems automation of liquidity contingent from the hundred eighty nine million dollars at the end of the quarter which consisted of forty eight million dollars of cash on hand and 141 million dollars of unused borrowing capacity under our various things turning now to our segment results in In supply technologies, net sales increased 12% to $209 million during the $287 million. Higher sales were driven by strong customer demand and most key environments. Our supply chain business continues to benefit from increasing demand in the semiconductor, electrical, and AI data center sectors, which in total increased 20%. 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 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 dollars an increase of 13% year-over-year and operating margins were 8.8 percent compared to 8.7 percent 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 total 101 million dollars compared to 95 million dollars 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 plan for automation investments are expected to improve operating our engineered product segment sales were a record 129 million dollars of 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 to machine products group, which are up 25 percent 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. The increased capital equipment sales in the quarter were driven by strong customer demand in several markets including defense, electrical, steel processing, oil and gas, agriculture, AI data center, and semiconductor markets. Both 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 in-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 forging presses for $1 million. The improved operating income resulted from strong sales in the quarter and improved operating performance across many locations. Our continued focus on aligning capital and resources toward higher growth, higher margin opportunities across. We expect the process to be completed toward the end of the 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 The outcome of our strategic review with respect to this business represents potential. I'll turn the call back over to Matt.

Great. Thank you, Pat. Before I open up to questions, I just want to draw some attention to both Pat and I discussing sort of the broadening out of demand. We've been very intentional over the last several years, as all of you know, around aerospace and defense and the things related to data centers and electrical grid investments. But this quarter really demonstrated a depth and broadening of the demand cycle. Not only do we see growth for the year in all of our segments, but we also see it in most of our end markets and almost all of our geographies around the world. So I think it's important to note that this is part of our intentional strategy, but we're also benefiting from, again, a broadening out of industrial demand throughout the world. With that, we'll open it up for some questions.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star 1 at this time. One moment while we pull for the first question. The first question comes from David Storms with Stonegate. Please proceed.

Good morning.

Good morning, David.

Thank you for taking my call. Congrats on the quarter. Congrats on the guidance raise. Admittedly, I did want to start my first question, maybe a little more in the weeds than normally. Starting with assembly components, it was mentioned that you called out specifically fluid transfer on the release last night. I know that's been a big part of your business for a long time. Can you maybe spend a little more time just talking about some of the challenges and problems that you're solving in fluid transfer as it relates to the AI infrastructure build-out?

Let me sort of kick that off, and I'll let Pat discuss more specifically where we may have said that. But let me point out, we have a very strong brand and very strong market presence in multi-layer extruded hose where we're vertically integrated, mostly in the automotive space. Not entirely, but mostly in the automotive space. So there are numerous areas in our business where we touch on data centers and electrical infrastructure, but that would not be one of them per se. other than we are seeing more and more applications on the automotive side for fluid transfer for things like battery coolant technology and etc so cooling systems and so forth washer systems more advanced vehicles on the hybrid and EV side so we on that transition we are involved but I think more broadly the themes that you're thinking about less so that one additional comment when you

think of our our end markets as Matt mentioned automotive heavy truck industrial applications transfer fuel to transfer cooling fluids to transfer hydraulic fluids we also produce extruded plastic hose for for air and other types of fluids they're clearly expand our makeup of customers outside of auto heavy-duty truck to other industrial applications which might include data center activities or other other parts of the industrial economy I

appreciate that clarification I think I was putting the horse before the card a little bit there um that's perfect thank you um as I'm looking then at the the data center build out writ large. Obviously, there's a lot of excitement. You're able to take advantage of that. Are you seeing any pushback? I'm starting to see a lot of headlines of local pushback to data centers. Are you seeing that come through, or is that more a headline that maybe doesn't have as much real-world impact?

Yeah, I think that, no, I think the headlines are real. How it affects our business is i think a little bit differently than you may expect we touch really upstream and downstream on on this area for example when you think about you know people like caterpillar who are providing mining equipment for rare minerals when you think about a division of caterpillar supplying stationary power i mean there's there's a lot of upstream investments that I think, candidly, have multi-year backlogs. So I'm not sure that they're real focused right now on what the latest sort of political headline is. Those are really durable opportunities. I also think in some of the build-out for some of these data centers are already commissioned. I'm going to call these sort of the midstream investments, if you will, to steal a term from the energy sector. You know, switch gears, transformers, fasteners that really build out these things, I would tell you those are ongoing. That might be affected over time by some of those headlines, but again, there is a multi-year catch-up period going on right now for what just has not been built. I think you probably have watched this play out with Intel down near Columbus. I mean, that's multi-years behind schedule. So I think those could play out over the next, you know, 3, 5, 10 years, but it will be interesting to see how that happens. I don't see it anticipating our backlogs. I think our customers are trying to catch up. And then, of course, you've got the semiconductor sector that I think is really strengthening as sort of the final piece of the puzzle, right? You've got all the upstream. Now you've got the facilities built. Now you need semiconductor tools, and you need things like that. And that's why I think that for so long, people like Applied Materials were pretty flat. And everyone's like, how is that possible, right? And now they're booming as more of these things are stood up and the actual guts or the intelligence of the operations being invested. So, you know, we really touch on all parts of that value stream. And so at this point, I feel like it's more catch-up than it is real political risk from those headlines. But, you know, long-term, you know, there's a lot of discussion. Is this a five-year, 10-year, 20-year trend? And I would tell you that over 10 or 20 years, the issue you mentioned will certainly play out.

That's great commentary. If I could maybe ask one more around defense, just trying to think about what the qualification bidding, you know, negotiating process is like there in the defense market. Are you seeing, you know, maybe manufacturing competence and time to market being on equal or close to equal footing as things like price that might maybe take the lead in other negotiations? Or maybe, I guess, how would you qualify the defense new customer acquisition? Are you just referring to sort of more broadly? Correct, broadly. And could be engineer products, could be supply tech.

Again, I think that there are parts of the business that are expanding fairly quickly. and we've touched on some of them, you know, data centers, we've touched on aerospace and defense, you know, the capacity building, stationary power, mining, you know, the capacity building is so important. I think these are all important issues, by the way, quality product, price, delivery. I mean, these are all triangulated every day in our business. But I would certainly say in some of the segments we're discussing, delivery is the most important thing. So I think that delivery, oh, quality, sorry, quality is mostly deliveries, too. Price is always an important part of the puzzle to, you know, deliver value, overall value to the customer. So I would suggest to you that, you know, by and large, those are the kinds of discussions that happen. Again, not to suggest that price is still not very important, you know, particularly in some of the more traditional sectors, whether it be auto or rail or truck. So, you know, delivering value to that supply chain, particularly after years of price increases as inflation came through, is a little higher on their priorities than perhaps the people who are trying to build more missile cells or something like that, right? But it's an intersection of all three, unquestionable, especially after years of inflation, for sure, and cost increases on our side and theirs.

I appreciate you taking my questions, and good luck on that short. Thank you so much.

Thank you. The next question comes from Christian Zyla with KeyBank Capital. Please proceed.

Good morning, Matt and Pat. This is Christian Zyla on for Steve Barger. Thanks for taking the questions. No problem, Christian.

How are you?

Good. First question from us. You guys divested aluminum products a few years ago and now have Southwest Steel in a strategic review. What other business units have negative or flat earnings, and should we expect further portfolio actions as your other core businesses really start to accelerate with the industrial cycle?

Well, let me first comment on Southwest Steel. Again, Southwest Steel has been an important contributor to Park Ohio over the last 20 years, and until recently has been consistently profitable and accretive to our overall margin profile. So, you know, there's some fundamental things that have happened in their end markets that make it less desirable for us as part of our core business and our goals to grow a significant operating leverage. So, you know, we're patiently trying to find the right fit for that. Moving to your second question, I don't know as we sit here today that I would identify another part of our business which certainly has the negative impact that Southwest does on our overall financial statements. But, you know, to be honest with you, we're always, I mean, we are always, particularly in this period of reinvestment, looking to optimize, looking to be more efficient. So while I would not call it any particular business, I would say that we always have what we call value drivers here across the business, you know, to optimize and improve the way that we come to market. So, you know, but not to that level or nor would I call it any particular business other than SSP.

I guess sticking with engineer products, I know you guys have that silicon steel order that you're working through. So was some of the margin, the year-over-year margin expansion, driven by you fulfilling parts of that contract? Or was the margin improvement in E.P. partially driven by metric mix in the quarter? You guys have said in the past that E.P. drives Park, Ohio. So ultimately what I'm trying to figure out is, is this a level of sustainable margin as a floor in your E.P. segment? And judging by the comments you made in the disclosure about Southwest Steel, it sounds like the answer is yes, but I'm just trying to frame out long-term trajectory and how you're thinking about E.P.

No, no, it's a great question. So first of all, more specifically, I think what Pat will tell you in a moment is we are benefiting from that order. But I think what's more important to focus on is that order entry this year is up over last year. So even with that big order, order entry continues to be very strong. And oh, by the way, there are certain dynamics about large orders versus small orders. So, no, the bat business continues to be strong. There's no question that we're benefiting from that large order last year, but I don't want you to suggest this is a lump going through the snake, so to speak. It may be operationally at times, I'm sure, but that's not the way I would think about it. So we are really, and then separately I would say, I just want to comment generally, we are seeing through, I think, great leadership out of that group and some really discrete investments that I discussed in terms of increasing the reliability of their equipment as well as their infrastructure to perform, I think we're beginning to see a return to the profitability metrics we saw consistently for 20 years until COVID. So I would not look at this as a one-off. I would look at this as an opportunity to return some of the profitability metrics to where they should be. And I also think an opportunity to invest in the business. And yes, also benefit maybe a little disproportionately around some of the sort of electrical infrastructure stuff we've talked about, transformers and so forth, AI, et cetera, as well as aerospace and defense, which is where a big chunk of that exposure is for us. So no, I don't view that particular order, while beneficial to this year's earnings as being unusual or the sort of lump in the snake.

Yeah, Christian, I would also comment that, you know, this is a global business with global aftermarket presence as well as new equipment bills. We continue to see increased absorption in each of our plants based on the increase in bookings. So it makes perfect sense that as a result we're going to see higher margins our margins have continued to improve year-over-year but still not where we're where we need to be and in our team is working hard on that so we expect continued improvement even margins north of 10% are not uncommon in this business over the long term and we plan to get there that's great and i guess back the envelope math if i exclude southwest steel um to engineer

products it looks like you guys are closer to like a high single digit nine plus percent ebit so sounds like you guys are kind of already there which is great to hear if i could do one last question thank you for the time again um for supply tech what was the impact of the automation improvements and the new distribution center on the margin just typically when you have double digit sales in supply tech you have some nice operating leverage and margin expansion there They're just trying to get a sense of what a clean operating margin level was excluding the investments that you guys made.

Thank you again Yeah, I'll address that Christian as I mentioned in the script Effect of the North American distribution center will start to appear in our margins in 2027 There was no impact relative to that. We continue to make investments in people to support that activity but I wouldn't say in the in the current quarter that had a meaningful impact on our margin we'll start to see more of that over the next couple of quarters and then in terms of the the information systems investments that we're making you know again it's people driven we implement our new information systems will have an impact on our margins going forward but we've seen continued improvement in the margins in this segment we expect at

this time I would like to turn the call back over to mr. Crawford for closing comments great thank you much thank you very much for your questions this morning and your time and we look forward to a very exciting second half have a great day thank you this does conclude today's teleconference you may disconnect your lines at this time.

Thank you for your participation and have a great day.