Park-Ohio (NASDAQ:PKOH) raised its full-year sales and adjusted earnings outlook after reporting record third-quarter revenue, citing strong industrial demand, higher equipment backlogs and operational improvements.
The company reported sales of $459 million, up 15% from $399 million a year earlier. Diluted earnings per share rose to $0.97 from $0.39, while adjusted earnings per share increased 60% to $1.04. Gross margin improved by 120 basis points, and operating income rose 54%.
Chairman, President and CEO Matthew Crawford said growing backlogs and improved visibility have made the company confident in a better-than-expected fourth quarter and continued growth into 2027. Demand was strong across markets including semiconductors, aerospace and defense, power management and data centers, management said.
Higher outlook, with cash flow guidance unchanged
Park-Ohio increased its full-year sales forecast to $1.75 billion to $1.77 billion and its adjusted earnings forecast to $3.35 to $3.50 per diluted share. The company maintained its expected EBITDA margin of 8.5% to 9% and free cash flow outlook of $20 million to $30 million.
Chief Financial Officer Pat Fogarty said revenue growth has required additional working capital, helping explain why the cash flow forecast has not risen alongside sales guidance. He expects free cash flow of $35 million to $45 million in the fourth quarter, driven by lower working capital at year-end.
Third-quarter cash flow from operations was $16 million, and free cash flow was $7 million. Capital spending totaled $8 million for the quarter, with full-year spending projected at $35 million to $40 million. Liquidity at quarter-end was approximately $195 million, including $59 million in cash and $136 million in unused borrowing capacity.
Fogarty said the company expects to reduce net debt by $30 million to $40 million in the fourth quarter, bringing net debt leverage to about 3.8 times. Park-Ohio’s longer-term goal is below three times. Crawford said deleveraging is a capital-allocation priority, alongside investments in the business.
Growth across all three segments
Supply Technologies posted record revenue of $225 million, up 21% from a year earlier. Its semiconductor, electrical and AI data center markets collectively grew 44%, while aerospace and defense sales rose 26%. Segment operating income increased 23% to $21 million, and operating margin edged up to 9.5% from 9.4%.
The segment began operations at a new North American distribution center. Fogarty said margin improvements from the approximately 350,000-square-foot facility should begin to appear in the second half of 2027 as business from several locations is consolidated there. He declined to quantify the expected margin benefit.
Assembly Components revenue increased 7% to $104 million, supported by new products and higher demand from automotive platforms. Operating income rose to $5.6 million from $4.7 million. Fogarty said facility rationalization, expanded rubber-mixing capacity and automation investments are expected to benefit margins in 2027.
Engineered Products revenue reached a record $130 million, up 12%, while operating income increased to $9 million from $3 million. Sales in the forged and machined products group rose 33%, driven by aerospace and defense demand. The segment’s equipment backlog was $242 million at quarter-end, up 18% from $205 million at the end of 2025.
Southwest Steel review and 2027 demand
Park-Ohio expects to complete its review of strategic alternatives for Southwest Steel Processing toward the end of the year. The review includes a potential sale or other transaction. The company’s revised guidance assumes the business will generate approximately $50 million in full-year revenue and a loss of about $0.46 per diluted share.
Fogarty said Southwest Steel’s volumes are improving and that the railcar build market is expected to be much better in 2027. He also cited aftermarket activity that helped in the third quarter and is expected to continue in the fourth.
Management did not provide a numerical growth forecast for 2027, but Fogarty said Park-Ohio expects growth in each segment. He said the forging business and forging-press manufacturing capacity are sold out for 2027, and the company expects its backlogs at the end of 2026 to be about 10% higher than a year earlier.
About Park-Ohio (NASDAQ:PKOH)
Park-Ohio Holdings Corp. (NASDAQ: PKOH) is a diversified manufacturing and supply-chain management company serving original equipment manufacturers and other industrial customers. Through its operating businesses, the company provides engineered products, component manufacturing, and integrated supply-chain services.
Park-Ohio’s manufacturing activities include the production of forged, machined, stamped, molded, and assembled components, as well as specialized products made from metal, rubber, and other materials.
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