Park-Ohio (NASDAQ:PKOH) reported record second-quarter revenue of $440 million and raised its full-year 2026 outlook, citing broad demand across industrial markets and continued operational improvement.
Chairman, President and CEO Matthew Crawford said the company’s performance reflected progress in its effort to focus on organic growth in durable products and services. He said Park-Ohio is investing in productivity tools, data management, facility optimization, automation and infrastructure improvements, particularly within its Engineered Products segment.
Revenue, Earnings and Cash Flow
Total second-quarter sales rose 10% year over year to a record $440 million, compared with $400 million in the prior-year period. Revenue also increased 5% sequentially. Vice President and CFO Pat Fogarty said sales increased both year over year and sequentially in each of the company’s three segments.
Gross margin increased 90 basis points from the prior-year quarter to 17.9%, while operating income increased 22% year over year. Fogarty attributed the improvement to margin flow-through from higher sales and profit-enhancement initiatives across multiple businesses.
GAAP diluted earnings per share rose 30% to $0.87. Adjusted diluted EPS increased 24% to $0.93, from $0.75 a year earlier.
Second-quarter cash flow from operations was $9 million, an improvement of $23 million from the year-ago period. The company said the improvement reflected higher income and efforts to reduce working capital. Capital expenditures totaled $11 million and included information-system investments, plant-floor automation and growth capital.
Park-Ohio ended the quarter with approximately $189 million of liquidity, including $48 million of cash and $141 million of unused borrowing capacity. The company expects full-year capital spending of approximately $35 million to $40 million.
Outlook Raised
Based on record first-half sales, demand in Supply Technologies, Engineered Products backlogs and operational improvements, Park-Ohio raised several elements of its 2026 guidance:
- Net sales of $1.70 billion to $1.73 billion.
- Adjusted diluted EPS of $3.10 to $3.30.
- EBITDA as defined of 8.5% to 9%.
- Free cash flow guidance maintained at $20 million to $30 million.
Fogarty said the company expects its full-year effective income tax rate to range from 17% to 20%. Its second-quarter effective tax rate was about 17%, with the favorable year-to-date rate driven by estimated federal research-and-development tax credit benefits.
Segment Performance
Supply Technologies reported record quarterly sales of $209 million, up 12% from $187 million a year earlier. Segment operating income rose 13% to $19 million, while operating margin increased to 8.8% from 8.7%.
The segment benefited from demand in semiconductor, artificial intelligence data center, powersports, aerospace and defense, heavy-duty truck, and agricultural and industrial equipment markets. Sales tied to semiconductor, electrical and AI data center end markets collectively rose 29% year over year, while aerospace and defense demand increased 10%.
Park-Ohio is expanding its global service-center footprint and expects to open a new North American distribution center during the third quarter. Fogarty said margin benefits from that facility are expected to begin in 2027. The company’s fastener manufacturing business posted 6% sales growth, supported by demand for proprietary products and the expanded use of lightweight materials in electric and hybrid vehicles.
Assembly Components sales increased 7% to $101 million, driven by programs launched last year and increased demand across automotive platforms. Operating income was $5.3 million, down from $5.6 million a year earlier but above $4.9 million in the first quarter.
The company said it is pursuing higher margins in the segment through revenue growth from new programs, expanded rubber-mixing production for molded and extruded products, and plant-floor automation investments.
Engineered Products generated record sales of $129 million, up 10% year over year and 3% sequentially. Operating income increased 50% to $9 million from $6 million in both the prior-year quarter and first quarter.
New equipment bookings in the segment totaled $66 million during the quarter. Year-to-date bookings rose 19% to $153 million, and equipment backlog increased 23% from year-end to $252 million. Demand was supported by defense, electrical steel processing, oil and gas, agriculture, AI data center and semiconductor markets.
Fogarty said the segment’s higher profitability reflected sales growth, improved absorption across plants and better operating performance, including at forged-product locations. He said EBIT margins above 10% have not been uncommon for the business over the long term and that the company expects continued improvement.
Southwest Steel Review
Park-Ohio continues to conduct a formal review of strategic alternatives for its Southwest Steel Processing business, part of Engineered Products. The alternatives may include a sale or another transaction, and the company expects the process to be completed near the end of 2026.
Fogarty said Southwest Steel is expected to generate about $15 million in revenue and a net loss of roughly $0.50 per diluted share this year. The company’s revised guidance includes the business, and Fogarty said the outcome of the review could represent upside to current guidance.
Crawford said Southwest Steel had been an important contributor for two decades but that changes in its end markets made it less aligned with Park-Ohio’s objectives for growth and operating leverage. He said the company did not identify other businesses with a similarly negative impact on its financial results.
About Park-Ohio (NASDAQ:PKOH)
Park-Ohio Holdings Corp is a diversified industrial company that supplies engineered products and distribution services to a broad array of end markets. Through its two primary operating segments—Engineered Solutions and Supply Chain Solutions—the company delivers metal components, assemblies and value-added distribution tailored to energy, transportation, industrial and commercial applications.
The Engineered Solutions segment provides design, machining, fabrication and assembly of custom metal parts, including heat exchangers, welded assemblies, tubing products and precision-machined components.
