Stonegate Capital Partners Updates Coverage on Park-Ohio Holdings Corp. (PKOH) 2Q26

Dallas, Texas--(Newsfile Corp. - August 10, 2026) - Park-Ohio Holdings Corp. (NASDAQ: PKOH): Stonegate Capital Partners Updates Coverage on Park-Ohio Holdings Corp. (NASDAQ: PKOH). PKOH's 2Q26 marked a clearer inflection in the portfolio, as wider demand and better Engineered Products execution shifted the growth mix toward higher margin, more durable businesses. Importantly, management raised FY26 guidance while retaining SSP's expected ~$0.50/share loss, suggesting the core portfolio is improving faster than consolidated results imply. Gross margin reached its highest level since 2013, operating income increased 22% y/y, and operating cash flow improved $23M. In our view, PKOH is entering a multi-step margin and portfolio-quality improvement cycle, with Engineered Products absorption, company-specific productivity initiatives, 2H cash conversion, and the SSP review the primary variables through year-end.

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Key Takeaways:

• Revenue increased 10% y/y to $440.1M and adj. EBITDA reached $38.8M, both above our and consensus estimates, while gross margin expanded 90 bps to 17.9%, its highest level since 2013. The quarter supports the view that broader demand, higher-volume flow-through, and company-specific productivity initiatives are beginning to translate into better operating leverage across the portfolio.
• Engineered Products showed the clearest improvement, with revenue up 10% y/y to $129.4M and operating margin expanding 190 bps to 7.0%, while backlog increased 29% y/y to $252M. We believe the combination of stronger aftermarket activity, improved forged and machined performance, and a growing backlog is shifting PKOH's growth mix toward higher-margin, more durable businesses and supports management's long-term EBIT margin target above 10% for the segment.
• Management raised FY26 sales, adjusted EPS, and EBITDA margin guidance while retaining the expected ~$0.50/share loss from Southwest Steel Processing, suggesting the core portfolio is improving faster than consolidated results imply. With the SSP strategic review expected to conclude around year-end and unchanged FCF guidance implying stronger 2H cash conversion, portfolio simplification and cash generation remain important potential drivers of further earnings-quality improvement.

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About Stonegate

Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking, equity research and capital raising for public and private companies.

Source: Stonegate, Inc.

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