Park-Ohio Holdings Corp ( PKOH) Q3 2010 Earnings Call Transcript November 9, 2010 10:00 am ET Executives Matt Crawford – President and COO Edward Crawford – Chairman and CEO Jeff Rutherford – CFO Analysts Richard Paget – Morgan Joseph David Marsh – Odeon Capital Michael Levine – BB&T Doug Ruth – Lenox Financial Services Matt Vittorioso – Barclays Capital John Baum – Shareholder Park-Ohio Presentation Operator
Previous Statements by PKOH
» Park-Ohio CEO Discusses Q2 2010 Results - Earnings Call Transcript
» Park-Ohio Holdings Corp. Q1 2010 Earnings Call Transcript
» Park-Ohio Holdings Corp. Q4 2008 Earnings Call Transcript
Now the meeting will be turned over to Matthew V. Crawford, President and COO. Gentlemen, you may begin your conference.Matt Crawford Thank you very much and good morning. The third quarter revenue was up 20% versus last year ending the same period to a total of about $203 million. The quarter was capped in September with our strongest monthly sales during 2010. EBITDA as defined almost doubled from last year to a total of $20.5 million and earnings-per-share showed a significant reversal from a loss of 2009 to $0.52 per share. Additionally, total net debt came down by more than $3 million after taking effect of the $18.2 million purchase price of ACS. Now looking at the individual segments. Supply Technologies revenue increased 26% year-over-year and 7% sequentially from the second quarter. Included in these results was revenue associated with the ACS acquisition for the month of September only. Strength has been across the board from last year with particular success in truck, semiconductor and recreational sports. Operating profit margins also improved due to incremental volume to over 6% or approximately $6.4 million. This increase represents an incremental margin of almost 20% on additional sales. While this is atypical for this business, it does demonstrate a trend we hope to capitalize on as the economy recovers and we fully integrate ACS over the next six to nine months. Aluminum Products revenue also grew by 12% during the quarter largely due to the recovery in the production levels in the auto sector. The profitability also reversed nicely from a loss last year of $1.3 million to a positive of $1.9 million or a margin of 5.4%. Manufactured Products grew 17% versus 2009 as volumes continue to recover in parallel with the global manufacturing markets. More importantly, as an indicator of future activity, global bookings – or excuse me – bookings in our global new equipment business are up 50% for this year year-to-date versus last year. Due to this resurgence of activity we’re optimistic that revenue will continue to improve throughout the rest of the year despite some weakness in the locomotive end market.
Operating profit has also recovered nicely reaching $8.3 million versus $3.4 million last year. Although we always get some volatility due to product mix in this segment we’re optimistic that improved volumes will benefit was already our highest margin segment.Looking at the balance sheet, we are especially pleased with our continued strong cash performance. Net debt decreased by more than $3 million after giving effect to the $18.2 million purchase of ACS. This brings our year-to-date total debt reduction to a total just shy of $25 million. Our revolver availability at the end of the quarter stood just in excess of $50 million. CapEx for the quarter was about $1.5 million. We expect CapEx for the year to be about $4 million. In closing, we’re cautiously optimistic about the company’s outlook although we continue to see positive signs in the demand trends; we’re also aware of the uncertain climate – the uncertain business climate globally. Accordingly, we are increasing our sales forecast to just over $800 million at an earnings-per-share target of $1.25. Thank you very much. Edward Crawford Thanks, Matt. Just a couple of comments. We started this year 2010, the plan to have what we called a control the cent of the business particularly in light of the amazing compression in revenues in ’08 and ’09 and more important prepare the company for the future. We always felt that through a crisis like this you can make some changes and do the things necessary that when the revenues return the company can really, really prosper from the earnings-per-share. Read the rest of this transcript for free on seekingalpha.com