Park-Ohio Holdings Corp. (PKOH) | The Buildout — AI Infrastructure
The Verdict
Park-Ohio is a diversified industrial that makes and distributes the physical parts and equipment behind electrical infrastructure, power generation, and factory production. It supplies switchgear makers, transformer and generator builders, and cooling-equipment manufacturers that serve data centers, plus fasteners and supply-chain services for electronics and semiconductor customers. The company runs three segments: supply-chain outsourcing and Class C components, automotive fuel and fluid-handling parts, and engineered capital equipment like induction heating, forging presses, and power-management gear. Because comparable parts are widely available and alternative suppliers could be qualified within weeks to months, its role in the AI buildout is supporting rather than critical.
| Market Cap | — |
| Revenue (TTM) | $1.7B |
| Revenue Growth | +2.7% |
| EBITDA Margin (TTM) | 7.2% |
| Net Debt | $656M |
| Earnings Beats | 2 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Roughly $150M of electrical/data-center revenue across Supply Technologies and Engineered Products, growing more than 10% a year, from 'very little' three years ago.
- Engineered Products backlog of $195.9M at March 31, 2026 — up 9% sequentially and 44% year over year — with Q1 new-equipment bookings of $62M against a 2025 quarterly average of $54M.
- Q1 2026 gross margin of 17.3%, up 50 basis points year over year, and Engineered Products adjusted operating income up 35% year over year to $6.2M.
- About $40M of incremental annual Assembly Components sales won during 2025, launching in 2H 2026 and continuing through 2027.
- A formal strategic review of Southwest Steel Processing; excluding it, Q1 2026 adjusted EPS would have been $0.77 instead of $0.65, and management says the outcome represents potential upside to guidance.
What We’re Watching
- The Southwest Steel review has no disclosed timeline or plan B; the unit carries a ~$0.53/share 2026 drag on ~$17M of revenue.
- Assembly Components margin inflection in 2H 2026: Q1 adjusted operating income fell to $5.3M from $5.5M despite 3% revenue growth.
- Free cash flow: Q1 2026 operating cash flow was a use of $8M, and the full-year guide of $20M–$30M is back-half weighted.
- Interest expense rose $1.3M year over year on the 8.500% 2030 Notes; total debt was $704.0M at June 30, 2026.
The thesis is intact and leaning stronger, but it is not yet proven. The 2026-08-05 press release said the company posted record second-quarter revenues and raised its FY2026 outlook, and the electrical/data-center base keeps compounding. The catch is that the 2026 earnings recovery is back-half weighted: Q1 2026 adjusted EPS of $0.65 was slightly below the prior-year $0.66, and the full-year guide depends on Engineered Products converting its backlog, Assembly Components finding second-half leverage, and the Southwest Steel drag being resolved. The open question is whether those three land together while interest costs and customer concentration stay contained.
Earnings
Q2 FY2026 revenue was $440.1M, up 10% year over year from $400.1M. Gross margin was 17.9%, up about 90 basis points, and EBITDA was $32.9M, a 7.5% margin. The 2026-08-05 release described record second-quarter revenues and a raised FY2026 outlook; the revised guidance figures were not in the source set.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $440M | $421M | $400M | +10.0% |
| Gross margin | 17.9% | 17.3% | 17.0% | +90bps |
| EBITDA | $33M | $29M | $30M | +11.1% |
| EPS | $0.85 | $0.58 | $0.67 | +27.4% |
Going back 3 years, we saw very little activity on the electrical side in both Supply Technologies and in our Engineered Products segment. Today, that revenue base starts at about $150 million and continues to grow north of 10% per year.— Patrick Fogarty, Chief Financial Officer, 2026-05-07
Management tone: On the Q1 2026 call (2026-05-07), management's tone was constructive and confident, stressing that years of investment are beginning to show in the results. Versus the prior call, they disclosed the Southwest Steel strategic review with a quantified EPS drag and said backlog execution speed is better than it has been in four, five, or six years. The 2026-08-05 press release extended that tone, saying Park-Ohio is becoming a 'faster growing, less cyclical business.'
Management Guidance
For FY2026, management guided revenue of $1.675B–$1.710B (+5% to +7%), adjusted EPS of $2.90–$3.20 (+7% to +19%), an EBITDA margin of 8%–9% of net sales, and free cash flow of $20M–$30M, with capex of about $35M and a full-year effective tax rate of 17%–20%. The guide includes Southwest Steel at roughly $17M of revenue and a ~$0.53/share loss, which management said the review outcome could offset as potential upside. Management reaffirmed those figures on 2026-05-07 and said on 2026-08-05 that it raised the outlook; the revised figures were not in the source set.
Trajectory
Revenue slid through 2025 — $400M in Q2, $399M in Q3, $395M in Q4 — then turned back up: $421M in Q1 2026 and $440.1M in Q2 2026. Gross margin has held in the mid-to-high teens, reaching 17.9% in Q2. The turn comes from Engineered Products backlog conversion and data-center/electrical demand in Supply Technologies, while Assembly Components waits on its second-half launch wave and Supply Technologies defers its IT-driven benefit to 2027.
The Model
The model projects FY+1 revenue of $1,730M and EBITDA of $138M, an 8.0% margin, and FY+2 revenue of $1,860M and EBITDA of $160M, an 8.6% margin. The near-term anchor is the FY2026 guide and the Engineered Products backlog converting over 9–12 months. FY+2 assumes the Assembly Components launch wave and the electrical/data-center base keep growing while the IT and automation investment cycle starts to pay off.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $1.6B | $1.7B | $1.9B |
| YoY Growth | — | +8.2% | +7.5% |
| EBITDA | $115M | $138M | $160M |
| EBITDA Margin | 7.2% | 8.0% | 8.6% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.5% above analyst consensus.
For FY2026, management guided revenue of $1.675B–$1.710B (+5% to +7%), adjusted EPS of $2.90–$3.20 (+7% to +19%), an EBITDA margin of 8%–9% of net sales, and free cash flow of $20M–$30M, with capex of about $35M and a full-year effective tax rate of 17%–20%. The guide includes Southwest Steel at roughly $17M of revenue and a ~$0.53/share loss, which management said the review outcome could offset as potential upside. Management reaffirmed those figures on 2026-05-07 and said on 2026-08-05 that it raised the outlook; the revised figures were not in the source set.
What Could Go Right — and Wrong
- Electrical/data-center revenue keeps growing more than 10% a year, lifting its share of the mix above the estimated ~9% of total revenue.
- Engineered Products converts its $195.9M backlog on schedule and holds the 35% year-over-year adjusted operating-income pace.
- Assembly Components turns $40M of new annual sales into second-half 2026 operating leverage.
- A Southwest Steel transaction removes the unit's 2026 earnings drag and moves deleveraging toward the 3x net debt to EBITDA target.
- ERP and automation investments begin lowering working capital and costs, with management pointing to 2027.
- The Southwest Steel review stalls or fails to transact, leaving the unit's 2026 loss drag in place.
- Assembly Components margins stay flat; Q1 2026 adjusted operating income was $5.3M versus $5.5M a year earlier.
- Interest expense stays elevated — Q1 was up $1.3M year over year, with total debt of $704.0M at June 30, 2026.
- Large capital-equipment projects slip; the battery steel project alone takes roughly two years to convert.
- A sole-source contract loss lands hard, given Supply Technologies' top five customers are 36% of segment sales and Assembly Components' top five are 53%.
Looking Ahead
Over the next 12 months the story is execution. The new North American distribution center is expected operational in Q3 2026, adding automated sorting, kitting, and packaging. Assembly Components' $40M launch wave ramps across the second half of 2026 and into 2027, and Engineered Products converts its $195.9M backlog over 9–12 months. The Southwest Steel review has no disclosed timeline. Management reaffirmed FY2026 guidance in May and said in August it raised the outlook.
- Q3 2026Distribution center opens — New automated site adds sorting, kitting, and value-added services.
- 2H 2026Assembly Components launches — $40M of incremental annual sales begin ramping.
- 9–12 monthsBacklog conversion — Engineered Products converts $195.9M of backlog.
- 2027IT/automation payoff — Management expects Supply Technologies benefits here.
- Not disclosedSouthwest Steel review — A sale would remove the ~$0.53/share drag.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $1.7B | $1.6B | $1.7B | -3.4% |
| Gross Margin | 17.0% | 16.9% | 17.3% | 3bps |
| EBITDA | $120M | $115M | $119M | -4.7% |
| EBITDA Margin | 7.3% | 7.2% | 7.2% | 9bps |
| Net Income | $32M | $25M | $27M | -22.0% |
| Free Cash Flow | −$2M | $1M | $20M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)17.3%
- EBITDA Margin (TTM)7.2%
- Net Margin (TTM)1.6%
- ROIC6.5%
- FCF Conversion16.6%
- SBC / Revenue0.1%
The Company
Park-Ohio Holdings is a diversified international company that provides supply-chain management outsourcing, capital equipment, and manufactured components. It runs three segments. Supply Technologies manages the flow of production parts and materials for customers — fasteners, pins, valves, hoses, wire harnesses, and other Class C and MRO goods — largely under sole-source arrangements. Assembly Components makes fuel-system and fluid-handling parts like fuel rails and fuel filler assemblies for vehicles. Engineered Products builds niche capital equipment: induction heating and melting systems, forging presses, pipe threading systems, generators, transformers, and inverters.
The company employed about 6,300 people as of December 31, 2025, and operates manufacturing and logistics sites across the United States, Canada, Mexico, Europe, and Asia. Its 10-K footprint includes owned manufacturing plants in Ohio, Arkansas, Pennsylvania, and Florida, leased logistics sites and a leased factory in China, and owned manufacturing plants in India. Supply Technologies purchases substantially all of its component parts from third-party suppliers, and the other two segments buy most raw materials from third parties as commodity products.
Business Segments
Competitive Landscape
Park-Ohio's disclosed advantage is contract structure rather than any single product. The 10-K says Total Supply Management is 'typically provided to customers pursuant to sole-source arrangements,' and Assembly Components sales run through sole-source contracts, embedding the company inside customers' production lines. The provided source set does not name any direct competitor.
Supply Chain
Park-Ohio sits between third-party parts and materials suppliers and industrial and electrical customers, turning fasteners, forgings, and power equipment into the physical infrastructure of factories and data centers.