Good morning, and welcome to the Park-Ohio First Quarter 2014 Results Conference Call. [Operator Instructions] Today's conference is also being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Edward Crawford, Chairman and CEO. Please proceed, Mr. Crawford. Edward F. Crawford: Well, thank you. Good morning, ladies and gentlemen. I would like to turn the mic over to our CFO, Scott Emerick, to cover the Safe Harbor statement. Scott?

Thank you, Ed. Good morning, everyone, and thank you for joining us today. If you have not received a copy of our earnings press release, you can find it on the Investor Relations section of our corporate website at www.pkoh.com. I want to remind everybody that certain statements we make on today’s call, both during opening remarks and during the question-and-answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A list of relevant risks and uncertainties may be found in the earnings press release as well as on the company’s 2013 10-K filed with the SEC on March 14, 2014. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Additionally, the company may discuss EBITDA. EBITDA is not a measure of performance under Generally Accepted Accounting Principles. For a reconciliation of net income attributable to Park-Ohio common shareholders to EBITDA, please refer to the company’s recent earnings release. Any references we make to earnings per share are on a fully diluted basis. Back to you, Ed. Edward F. Crawford: Thanks very much, Scott. I'd like to introduce Matthew Crawford, who's President and CEO of the company's -- excuse me, not yet, COO of the company. And he will address the operations of the company in the first quarter of 2014. Matthew V. Crawford: Thank you very much, and good morning, everyone. Our first quarter was highlighted by strong revenue improvement in much of the business, resulting in greater than a 12% year-over-year growth rate. Also, we saw improvement in year-over-year earnings performance in 5 out of our 6 business units. Net income attributable to Park-Ohio common shareholders was $10.1 million or $0.82 per share for the first quarter of 2014 compared to $10.3 million or $0.85 per share for the first quarter of 2013. Earnings from continuing operations per common share attributable to Park-Ohio shareholders was $0.82 per share for the first quarter of 2014 and compares to $0.88 per share in the first quarter of 2013. Despite this generally strong business performance and a positive outlook, our earnings results were slightly below our internal expectations. Notably, while most of our businesses were not adversely affected by the extreme weather conditions of the first quarter, our highest margin business unit, our forging business within the Engineered Products segment, clearly was impacted by the long harsh winter. If not for this significant headwind, we would have been close to achieving our internal forecast for the first quarter and would have approximated prior year earnings levels as well. We now cover a more detail review of underlying performance and our consolidated results in core business segments. Net sales increased 12%, as I mentioned, in the first quarter to $318 million compared to $283 million in the prior year. The revenue increase is attributable to volume increases in the Supply Technologies segment and the Assembly Components group, slightly offset by volume declines in our Engineered Products segment. On a sequential basis, revenues increased 3% compared to the fourth quarter on very good momentum in the Supply Technologies segments. Gross profit increased $4.4 million to $56 million. The gross profit margin percentage was 17.6% in the first quarter, which is a 60-basis-point reduction compared to the 18.2% gross profit margin in the first quarter of last year. The decline in gross margin percentage is largely due to a change in the sales mix between the comparable periods, as the higher-margin Engineered Products segment revenues declined year-over-year and were a smaller percentage of consolidated sales in the current year. Consolidated SG&A expense of $33 million increased $4.7 million or 17% compared to last year. And SG&A expense as a percentage of net sales increased 40 basis points to 10.4% in 2014 compared to 10% last year. The increase in SG&A expenses is primarily attributable to the incremental SG&A costs associated with the Bates, Henry Halstead and QEF acquisitions, increased professional fees and payroll-related cost increases. Interest expense is $7 million, increased approximately $0.5 million in 2014 primarily as a result of the recognition of expense on the earn out from 1 of the fourth quarter acquisitions. Looking at taxes. Our effective tax rate for the first quarter of 2014 was 35.2% compared to the first quarter of last year at 35.9%. We're still forecasting our full year effective tax rate to be approximately 34.2%. Now, looking at the individual segments. First, let's look at Supply Technologies performance. Supply Technologies revenues represented 42% of consolidated revenues during the first quarter of 2014. Revenues increased 20% over the prior year and totaled approximately $134 million. Almost half of the revenue increase over 2013 is directly attributable to the fourth quarter acquisitions of Henry Halstead and QEF. The majority of our growth in the first quarter however, was organic growth. This growth was driven by heavy-duty truck, which is up 59%; semiconductor, which is 62%; and power sports and recreational equipment which increased 11%. In addition, our fastener manufacturing division generated sales increases of 23%. Not only were these key markets up year-over-year, but these markets were up sequentially compared to the fourth quarter as power sports and recreational equipment increased 14%; heavy-duty truck, 14%; semiconductor, 28% and our fastener manufacturing division, 17%. Recent economic data related to our key markets are encouraging and we're optimistic regarding the balance of the year. With the increase in net sales, segment operating income increased $1.4 million or 15% to $10.8 million, which was a record performance for this segment. Segment operating income margin was a very solid 8%, this margin compared to the prior year's first quarter segment operating income of 8.4%. The reduction in margin percentage is primarily attributable to increased professional fees, overall customer and product mix swings in the first quarter of 2014 slightly offset by increased operational leverage as a result of the acquisitions. Next, I'll discuss the Assembly Components side. Assembly Components revenues represented 34% of consolidated revenues. Net sales increased 17% to $108 million in the first quarter of 2014 compared to 2013. Just over 70% of the revenue increase is attributable to the Bates acquisition that was completed in the second quarter of 2013. The remainder of the revenue increase is primarily attributable to the organic growth in the aluminum business based in the strength of new program launches secured the aluminum business and in particular, the Jeep Cherokee and Chrylser 200 models. These revenue increases were slightly offset by the expected reduced volumes in the fuel filler business of Fluid Routing Solutions as programs came to the end of their life cycles in the second half of 2013. Based on the current automotive outlook and new business bookings, we expect continued revenue strength in this segment. Segment operating income grew to $1.3 million to $10.8 million, which was a 19% improvement over the prior year. Segment operating income margin was 7.5%, which increased from 7.4% in the prior year. We're expecting margins to continue to improve in this segment as new programs for the 2014 vehicles continue to move past our initial launch phase and we see larger incremental improvements and productivity in operating leverage. Now let's look at Engineered Products segment. Engineered Products revenues represent 24% of consolidated revenues. Net sales decreased 5% to approximately $75 million in the first quarter of 2014 compared to last year. Both of our primary business units in this segment underperformed compared to the prior year top line results. Most notably, our forging business was unfavorably impacted by the extreme weather conditions that we discussed earlier and reduced demand for some of its aircraft forging products. Additionally, large equipment shipments with our Industrial Equipment group continue to show volatility. But most importantly, backlog of both equipment and aftermarket support continued to expand in the equipment group and are 25% higher at the end of the first quarter as compared to 2013. Segment operating income decreased 14% to $10.6 million. In addition, segment operating income margin declined 150 basis points to 14.1% in the first quarter of 2014, compared to 15.6% in the first quarter of 2013. As we mentioned at the start of the call, forged and machined products results, which were impacted in part by the extreme weather conditions, contributed to all of the decline in operating income of the segment. We're optimistic that some of this loss can be recouped throughout the balance of the year and in conjunction with the increasing revenues at Industrial Equipment group should provide an excellent backdrop for the rest of 2014. Next, I'd like to take a moment to highlight cash flows for the first quarter. As March was a very strong sales month for the company, we built working capital on accounts receivable at quarter end. Accordingly, operating cash flows were only $4 million for the first quarter. The quality of our receivables remains very strong as DSO improved to -- improved 4.2 days in the first quarter of 2014 compared to the prior year, and improved 2.6 days sequentially compared to fourth quarter of 2013. We are still forecasting cash flows from operations to be approximately $70 million for 2014. Net capital expenditures were $3.1 million in the first quarter. We are still forecasting full year CapEx to total $25 million. Reflecting on the balance of 2014, we see positive trends for North American Manufacturing, continued growth prospects in Supply Technologies, automotive industry momentum and significant backlogs in the capital equipment business. Given these conditions, we remain confident that we can achieve earnings results in our range of March earnings guidance despite a slower earning start than anticipated. I also would like to remind the listeners that earnings per share guidance is very difficult to estimate especially by quarter and particularly early in the year given the small share count of our company. As an example, a very modest shift in annual operating income of only $1.2 million after taxes can produce a swing of $0.10 per share up or down. I'd like to close by discussing the dividend that was announced yesterday. We announced that our Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on June 9, 2014 to all shareholders of record as of the close of business on May 23, 2014. We're very pleased to announce this first dividend since the early 1990s as part of our strategy to deliver another form of return to our shareholders while continuing to focus on our well-balanced capital allocation and growth commitment. In fact, in the 3 years ended December 31, 2013, Park-Ohio has closed over $140 million in strategic acquisitions; invested nearly $60 million in capital expenditures; increased the cash position, $20 million to $55 million; reduced total debt-to-equity from 6.8x to 2.3x; and substantially reduced the leverage, while increasing sales and growing earnings at a compounded annual growth rate of 14% and 26% since 2010. Based on this improved financial position and our earnings and cash flow trajectory, we're excited to reward our shareholders with this additional return and welcome new shareholders to Park-Ohio that may have been prohibited from participating in our stock due to dividend requirements of their holdings. Thank you, and I'll turn it back over to Ed. Edward F. Crawford: Well, thank you very much, Matt. I will open the lines to questions.

[Operator Instructions] Our first question for today comes from the line of Ajay Kejriwal with FBR Capital Markets.

This is Ajay Kejriwal. So Ed, I know you talked about Supply Tech and obviously, business is ramping up here, good to see the growth rate. Maybe talk a little bit about what's driving that, is it a new account wins? Or you are you seeing a rebound with your truck customers, obviously that market's being down last 18 months or so. So just give us a sense of what's driving that and then what are your thoughts for the rest of the year? Edward F. Crawford: Matt, why don't you cover the growth there in supply chain management -- Supply Tech. Matthew V. Crawford: Ajay, new business activity continues to be a priority and activity continues to be strong, but I would refer principally back to my comments as it relates to the first quarter and the significant year-over-year implements in the areas I mentioned, heavy-duty trucks, semiconductors, power sports, our smaller manufacturing divisions. I would refer you to see those comments as being the principal drivers.

And do you expect this momentum to continue through the course of the year? I thought I heard a comment with regard -- in your prepared remarks. Matthew V. Crawford: Yes, I would repeat my last comment during that section which was recent economic data related to our key markets are encouraging and we're optimistic regarding the balance of the year, so yes. Edward F. Crawford: Ajay, a little color on that. Number one, the trucking business, which has been a very important part of the Supply Tech's story for a number of years and has been on a furlough for the last 18 months, it's really starting to pick up and perk up. So we are pleased to have our -- one of our largest segments of the revenue of that particular silo beginning to perform as it does has historically. So I think a combination of that -- one particular issue is very, very important to the company. And that's going to really drive the results and the performance of that as it ticks up.

Good. That's helpful. And then Engineered Products, a little bit light. I know mentioned extreme weather in the forging business. And then backlogs, high. But maybe a little color on what drives the confidence that things pick up for the balance of the year. Are you hearing comments from your customers? Or is it just a look back onto your orders and backlog that gives you confidence? Edward F. Crawford: Well, as we've discussed Ajay, the company has numerous platforms, numerous customers around the world. And I've said I hope 1 quarter at least, in my career, that they would all be doing well in 1 quarter. So we've had a little off-speed with the Supply Tech that starts to mount momentum and the capital equipment business or that factor that -- and is incidentally, which is our largest and most profitable business historically. We have not lost momentum. The orders there, the backlog is higher. It's up 25% year-over-year. Year-over-year, 25% but this is again an end loaded third and fourth quarter business. We've been over this year after year, it's capital equipment, the orders come in later than they should and they want to get out before the end of the year. It's the same thing as last year. But what happened last year and what is happening right now is that not in any way indicating that, that unit isn't still the robust unit that it's been in the past and the highest EBITDA margins. And when that comes on string, and it will come on string very strongly to the balance of the year, that's going to change things dramatically. And maybe we'll have in the third quarter, the first time, all 3 silos driven by the increase in trucking business, by the forging business picking up, particularly the military side, and the capital equipment business starts shipping that. So we haven't lost any momentum, that's why we reconfirmed our guidance. But nothing has happened in this company to change our view of meeting the I -- N5 goal and keeping the company on track. So it's a short-term glitch, if you want to call it, but we have not lost anything in the capital equipment business. We don't see any downturn. We see a continued rosy picture in our largest contributing margin business, backed up by any move in Supply Technologies, which you have seen I think that's what gives us the confidence to move forward in '14, '15 and '16.

Good, that's very helpful. Obviously, good prospects there in terms of capital spending outlook and all that. Maybe if you can quantify the expenses related to deal activity, I thought I heard in the prepared remarks, x one-time type expenses kind of hitting the quarter. Would it be possible to give us a sense of how much that was? Edward F. Crawford: Well, we never breakdown those expenses. But any -- when you're -- as to acquisition concept, that when you're in the marketplace and have been in the marketplace and trying to do transactions and so forth, there are costs along -- associated with traveling around the world, trying to make acquisitions, there's legal expenses. There's lots of expenses around accelerated activity or commitment to get out in the world, particularly in the Eurozone as we've talked about and look for transactions. So we won't break it down into pieces but that's just one aspect of it.

Good, and last question then I'll pass it on. So any color on the M&A pipelines? Sounds like you traveled a lot in 1Q. And I'm sure you have stuff in the hopper. Matthew V. Crawford: Well, we do, that's in the hopper. We are still maintaining our absolute discipline to meeting the goals of the acquisition relative to the return, being accretive. We're not going out on the limb. We're being very patient, we always have. It takes -- you got to wait, wait, wait. It takes sometimes now with all bankers and everyone else involved the transaction used to take 3 months, now it takes 6 months. It's very painful. But we are minding the marketplace. We're going to continue our efforts to add bolt-on activities to our current silos. We have a number of opportunities we hope to be able to address those with closings later. But we're not just going to pay retail for our earnings. So we'll get there. We always have, but it's -- there's a lot of loose money out there from the private equity firms. We're competing with them. It's more difficult but we will find the acquisitions. They're there for the type of companies we want to bolt-up to our existing silos.

Our next question comes from the line of Steve Barger with KeyBanc Capital Markets.

Matt, in your prepared remarks, you -- I think you said that if weather hadn't slowed down the forging business, you would have hit your internal forecast and results would have been around last year. So just so I understand, does that mean that your internal forecast for 1Q was around $0.90, plus or minus? Matthew V. Crawford: I wouldn't want to comment explicitly on our internal quarterly forecast since we don't forecast by quarter. But as we indicated in issuing our original guidance, we did expect a slower start to the year and earnings would build throughout the year. So that kind of number would be consistent with that message. But I wouldn't want to expressly comment on our internal forecast. Edward F. Crawford: Steve back to this share count, again, it's doesn't make much movement in the revenue of the whole company, okay, to affect the earnings per share, particularly in a given quarter. So the forging business being down, hurts for that particular quarter. But that doesn't mean we've lost any accounts, okay, it just means that the revenues were not there subsequently, the EBIT wasn't there. And again, it doesn't take much to move this needle back and forth by $0.05, $0.06, $0.07, $0.08. Okay?

Yes, I understand. And so the follow-up is, if you take 1Q into account, then to hit the midpoint of the range, your guidance range, it's about $3.70 over the next 3 quarters. And the simple math to that is that you have to put up better than $1.20 per quarter to get to the midpoint of the range. I'm just trying to get a sense of cadence, you -- and you've talked about this some, but you expect the back half run rate will really be a step function up from how your internal plan sees 2Q? Is that the right way to think about it? Edward F. Crawford: Well, when you talk about the internal plan, our guidance is sort of an internal plan. We're issuing guidance that we expect as the company, we develop it here. We have our numbers, we have our facts. And we've issued our guidance and we're back confirming that guidance. And again, I'd like to point out that if we met the mid of that guidance, that would be $4.52 and that would be a 37% increase in earnings per share year-over-year. This company's been averaging 26% over -- through '10 to '13, $1.65, $2.64, $2.82, $3.31, go to $4.52, that's 37% up in the middle. So it's not as though we're decelerating here.

And as I recall, there are no further acquisitions baked into that existing guidance range, right? So presumably anything would be upside?

It's correct, yes.

Thought process around the dividend, you were -- Eddie, I think you were opposed to it for a long time. And so anything change your thinking beyond just opening yourself up to that new spectrum of investors? And any other changes in you broad capital allocation thought process? Edward F. Crawford: Well, you're absolutely right, I have been opposed to the dividend for many, many years. But when I was thinking that way and making those statements, we weren't the company we are today. We are a completely different company. We've become a different company in the last 2 or 3 years. We have our N5 goal. We have a vision of this company going forward. And a number of our investors, who have joined in investing in this company share the same vision. So part of being confident in the future is to say "Okay, fine." We would like to have a greater diversity of shareholders. Everywhere I go they say "Well, why don't you let the other shareholders in, how about the family offices." They're all these individuals -- and so we're a bigger better, more professional company than we ever have been. And we're going into this $2 billion level and probably higher. So we just felt that we had start acting and responding like a company that we're going to be. But -- and that's having a dividend, and it's like being with the big boys. So the dividend's there, we can well afford to it. I mean it's only $6 million out of millions you know. So it is not -- and I don't mean it is just a splash in the pan here. We like the idea of dividends, okay. And the first time we're prepared to do it and it's not going to impact our stated goals. And stated goal is the N5 and growing this company at the compounded rate we've discussed. So there's nothing here today, there's nothing in this discussion at this point, changes the momentum of where we're going.

Got it. A question on the supply side. And I'm sorry if I missed this. Did you mention what the acquisition added to the revenue in the quarter? And I'm curious, excluding one-time charges, what was the margin profile from the addition? Or was it better or worse than the base business? Matthew V. Crawford: Let me take those piece-by-piece. Yes, in my comments, I mentioned that the majority of the revenue improving year-over-year was organic. Having said that, the acquisitions were significant to the growth year-over-year. I don't think I broke it apart exactly, but that gives you a sense of significance. But it was important, I think, in this quarter that the organic was the majority player in the incremental impact. We did not discuss nor do I think I would want to be specific about margin impact of those 2 deals. I mean, candidly, it's a little bit of a mixed bag as we execute our integration strategy.

All right. And then just one more, and I'll get back in line. For assembly, if you back out the acquisition benefit and whatever happened at FRS, what was the revenue change in the aluminum business? And the second part is on just consolidated margin was basically flat. I'm trying to get a sense for leverage in the segment, and specifically in the aluminum business. Matthew V. Crawford: We tried to stay away from breaking down financial information between business units and segments. The vast majority of the revenue increase in Assembly Components business was related to growth in aluminum. Edward F. Crawford: Steve, I also wanted to point out that we got bogged down in a strike, which has been resolved and our men are back to work in our plant. It's a big FRS plant in Michigan. But that hurt us a little bit in the first quarter. But that's been resolved. And it's one of the very few union facilities we have in our whole organization. And that would be -- in fact, we got that obviously through the acquisition. But that's just another color on particular segment.

And since you brought it up, were you able to sign a multiyear contract? Is that something that we're not going to have to worry about a while again? Edward F. Crawford: You're not going to have to worry about it. Back to business. No problem.

Our next question comes from the line of Thomas Van Buskirk with Sidoti & Company.

I wanted to go back to just a couple of items and ask them in a different way. I guess, one thing was SG&A. How should we -- I know you don't want to break apart all the pieces of it. But how should we think about that going forward as a run rate? Matthew V. Crawford: Tom, this is Matt. I would only comment that SG&A probably was a touch higher than we would have typically expected. So we would hope that we're at a high-water mark as it relates to SG&A, particularly percentage.

And Tom, maybe some other guidance that I could offer. When you think of total SG&A as a percent of revenue on a full year run rate, somewhere between 9.5% and 10% is probably reasonable.

Okay. And then the other thing is -- and I know some of this has already been discussed. But as far as capital equipment in the Engineered Products segment and some of the issues with getting that revenue booked, can you characterize maybe this past quarter versus the prior quarter, anything that was different or similar and kind of how you expect that revenue to come in over the balance of the year? Matthew V. Crawford: Tom, this is Matt. I would tell you that bookings tend to play out from a revenue perspective over 6 to 9 months typically. So having an incremental backlog of 25%, actually over 30% for equipment on its own, should roughly guide you towards revenue expectations over the next 6 to 9 months. I want to make a correction, too. I was corrected of Steve's point. The growth in Assembly Components was probably a little bit more balanced than I indicated between the acquisition dates and the growth in aluminum. I said it was overwhelmingly aluminum, and that's not fair. Based -- I think it was a more balanced than I expected -- than I thought.

Our next question comes from the line of Jay Harris with Goldsmith & Harris.

You guys have made tremendous progress over the last 5 years. I'd like to talk a little about your European beachhead, if I could. How cyclically sensitive do you think the businesses, the 2 acquisitions there are? And how do you think your European business will evolve over the next couple of years? Edward F. Crawford: Well, let's just take, I call it, the eurozone. The initiative has been up to date to add bolt-on units to Supply Tech in the acquisitions in England and in Ireland. We're pleased that what we thought we acquired, we have. Again that was new customers. And it's very serious foothold relative to the number of people and the gravity. So we see and there are a number of targets in the eurozone that would fit as a bolt-on to Supply Tech that bring us new customers and higher revenues. And as indicated, because of the prices, particularly in the middle markets in Europe, companies that historically would have sold at 7x, 7.5x the euro, those numbers are now down in the 5s, a maximum of 6x. And these are all very well-run companies, privately held. And we see not an endless supply but a considerable supply of those, and you'll be hearing more about that in the future. As far as over in the capital equipment business, particularly induction heating and all the specialities that go with the capital equipment business, there are a number of opportunities there in places, believe it or not, in Germany, in Stuttgart and in Italy. And this is -- financing anything in Europe is very touchy, but we're getting great support from our bank group. So we're in a position that we have the capital available to us. We have cash there, as you know. So we're being very methodical. But we're going to grow up. Right now, we're able to do acquisitions there in the Supply Tech side and get a greater return than if we invested the same money here in one of the other businesses. So I think it's a great place for us to be. I think we're going to get gravity. And when we put together $200 million or $300 million in business over there, in Supply Tech particularly, over the years, it's going to be a very, very good business because we are viewing Supply Technologies in the way we buy things, the way we operate. We bring a lot to the table over there just other than money. Matthew V. Crawford: Jay, this is Matt. Let me maybe make a point of clarification for you as well. As you may recall, the pieces around some of the acquisitions we did at the end of last year as they relate to Supply Technologies in the U.K. were related to companies which have customer and industry experience, which brings us global opportunities. We are not investing, I believe as you know, in the businesses where their domain expertise is geographic. They service customers around Birmingham. There are customers like that, I'm sure, but the pieces around this acquisition and how we're building Supply Tech is to add personnel and businesses with customer and industry experience that provide opportunities all over the world. So to tie those acquisitions or discuss eurozone cyclicality, while not -- while interesting, isn't necessarily the thesis or what we expect out of the growth of these companies. Edward F. Crawford: Jay, one more point. Our current customers, North American customers, some of our biggest and best relationships we have, could not be more excited about the fact that we are actually opening up and getting size and gravity in the eurozone, okay? They see this as a commitment from the company to bring Supply Tech there. And there are a lot of very, very big companies. I mean, we do a lot of business with Volvo in North America and 0 in Europe. And you have Daimler, which is the largest manufacturer in trucking in that zone. So I think we're being -- we're begun to be recognized by our current domestic North American customers, as made a commitment to that area and we plan to staff it up, get the people, get the quality and, I think, a lot of revenue. Ultimately, the next phase of revenue will come from our own customers in North America, giving us the opportunity to participate in the eurozone.

The reason I asked the question about cyclicality is that the timing on your purchases of those businesses in Ireland and in the U.K. seem to be sort of perfect with the pickup of economic activity that's occurring in those, we'll call the countries. As you referred to Daimler and Volvo, and Polaris is, I guess, committed to putting up a facility in Poland, what do you have to do to be in a position to service those customers? And how much time do you have to put it in place? Edward F. Crawford: Well, I'll let Matthew answer the Polaris issue. And he just came back with a trip to India. Why don't you just cover that opportunity, Matthew, in India? Matthew V. Crawford: One of the benefits, Jay, of the strategy of following key customers around the globe is that we already have customer and product knowledge, so -- and supply chain knowledge. So it is certainly challenging to get feet on the ground. And it is often challenging to manage the expectations of local sourcing. But we are significantly ahead of the curve in following these customers when we are often supplying these parts in other parts of the world. We've got supplier relationships, maybe help to engineer the product or provide cost savings. So those, which often can be the most time-consuming and challenging pieces, are already completed. And we're sort of left to the execution piece, which I in no way want to make it sound easy but perhaps is from a timing perspective and expense perspective easier. Edward F. Crawford: Jay, my last thought on it is when you look past N5 and you look into the future after '17, I believe the next 5 years following '17 are going to be, our activity in growth internationally is going to be very sizable. I mean, there's great opportunities for us across the board, but particularly in Supply Technologies when you think about where the company is going to be in 10 years.

Can you establish a service base on the Continent just by buying property or warehouse and staffing it? What's required beyond those functions? Edward F. Crawford: Well, it's better -- and we've proven over a long period of years, we can buy companies and consolidate them into our base of operations. And not as a startup, so we don't need to do a startup there. We can just do it. Keep in mind, there's also -- I want to break -- the interesting part about this, the tax rate, our average tax rate here is 34% now, Matthew? 34%. England is 20%, Ireland is 12.5%. Think of that number. If you make an acquisition over there, that's a different tax rate. So again go down the road, a lot more than a few years here, taxes do start playing into earnings per share.

Is there much in the way of a training phase that you'll have to go through? Edward F. Crawford: We've been trained.

Well, I mean, in terms of people on the ground outside the U.S? Edward F. Crawford: No. We have -- let's put it this way. We don't have a Triple-A team, we've got a very -- it's not a professional. The group we acquired, the team that put together with what we have there, let's say, we have 100 people in that whole area now. That's a pretty nice 100 people. They're all proven, successful people in their own businesses. So we've got all the makings of all the potential to build from there. We'll probably consolidate most of this in Birmingham. That will be servicing that part of the world. Now we're well on our way to building a team. When we make an acquisition, you've heard me say one thing is making the acquisition. Number two is who is going to run it and is it going to be successful in the future. So I think we're well on our way to get ourselves an organization based out of probably England because of, let's say, the tax rate among other quality employees. So we put a lot of time and effort. Look, we're spending money every single year, getting ready to grow more and more in England. We're investing in Europe. We think it's a place we'd like to be in size.

Can you service Continental Europe customers from Birmingham? Matthew V. Crawford: Look, Jay, let me back up. Once again, you're focusing on geography, not customer support. We're a customer-driven model. Do I think that will lead us to providing some on-the-ground support on the Continent? Probably. But right now, it's a customer-driven model, number one. Number two, we have been providing global support to many key customers out of Glasgow, Scotland for years. So while these acquisitions represented a strategic shift towards expanding that presence, we were not newbies to what I'll call sort of the U.K. region. And we've got great relationship there.

One final question. What -- do you have other subsidiaries other than your forging operations in which there is a minority interest? Edward F. Crawford: Okay. No, there's only one.

Our next question comes from the line of John Baum, a private investor.

I want to compliment you on the clarity and honesty in all of these conference calls. I mean, they are real jewels of information dissemination right there. And we appreciate it. Congratulations on the dividend. And just a quick question in terms of, Eddie, what do you see in auto going forward the next 3 or 5 years? Are we still in a sweet spot right now? Are we accelerating, decelerating just from a long-term forecast right there? Edward F. Crawford: Well, after they get finished with all these recalls. I don't know what's happening with that. But generally speaking, there seems to be a lot of confidence in at least the large domestics and the transplants here. There seems to be an optimistic view that America is back to style again. And cars that look pretty and get better gas mileage are just going to get bought. I mean, I've never seen more models being launched. Look at all the ones we're launching. Look, it's a piece of the business. As I've indicated, we know the size we want to be in this business. There's plenty of business for us to be a company of size but not commit more and more assets. We made big commitments in the aluminum business. It's going to work out fine. But there's a level of which I am less interested in the auto business as I am in some other businesses. So there's plenty for us to have a $300 million, $400 million platform there and not get so deep in that an earthquake in the volume would hurt us. We're diversifying our customers in the aluminum business. We're doing a lot of things. We're moving into the ag business, we're trying to get away from being an auto supplier business. And we're mindful of that every single day. So we think, too, that there are other businesses within our company that we can invest that have a brighter, long-term view. Matthew V. Crawford: John, I would add real quick, too, and I know you know this, but I'm just going to say it. We continue to have even greater belief that we're well positioned relative to the demands of increased fuel efficiency. And I don't just mean aluminum with regard to lightening the car to meet the CAFE requirements, which is now, as you know, not just a U.S. issue, it's a global issue. But also in our Assembly Components group, our plastic and rubber division, and their strategic vision around supplying turbocharger assemblies and parts. So we think we're well positioned throughout the business in a key growth part of the auto business because obviously predicting the production rates in auto is a good way to get yourself in trouble. So I think it's more important that we're in the right places, too. Edward F. Crawford: And John, I just want to point out again because it gets slipped off the pages why we're building the business in a number of locations and making commitment. We did agree and were selected by General Motors to put a manufacturing unit in Shanghai for fuel filler systems. We took 2 platforms. We took the 2 platforms to get approval to prove to General Motors we could do this and we do it comfortably. But for the first time again, we've made an investment, we've been accepted. It's a small thing and we're not talking about it. But you'll turn around one day when we prove that we can run the plant there, be efficient, make a profit, new business of General Motors, then we'll probably expand it. So the number of opportunities for this company across the board to grow the revenue side of it and hopefully drag along a very important thing called earnings per share and cash flow is there. And we don't talk about every little one of these. But the revenue and the ability to grow this company, we've got so many touches. But that's one that just happens. And it's a very nice business over there. But the potential is enormous. I mean, General Motors comes right back and says, "Would you take on more facilities?" We hear next thing from Ford, "You guys are qualified in Shanghai and you make product there for General Motors?" Yes. And next thing right behind them comes the Chinese auto companies. We're not sleeping. But I'm not worried about growing the revenue of this company. And -- I'm worried about growing the revenue of this company and getting the earnings and the cash flow and increasing the share price by increasing the earnings.

Very fair. Well, Buffett says, "Never sacrifice 5 minutes if you don't want to own it for 5 years." I've owned it well more than that. And obviously, we're seeing EPS rise. We're seeing share price rise. Now you guys got the dividends. You're playing on the big stage. Look forward to seeing you all at the annual meeting, and I'll hang up and listen.

Our next question is a follow-up question from the line of Thomas Van Buskirk with Sidoti & Company.

Just to follow up on the aluminum business. And forgive me if you already mentioned this. But I know on prior calls, there was a little bit of talk about additional platforms that you were going to get involved in. And I guess, in part because Dart had been kind of disappointing relative to the Cherokee and the other one, is there anything you can elaborate on there to talk about growth in the aluminum business? Edward F. Crawford: Well, the interesting thing about the Dart, it was terribly disappointing. I can imagine how disappointing it was to Chrysler. I mean, I think the thing is 1/2 the volume if you're lucky. But one of the other platforms that we want to point out today is in one of the other platforms is relocated and are utilizing a lot of equipment that was used in the Dart program in that program. So they're running way ahead of volume. It's crazy to think that they spent millions and millions on the Dart and it seems to have failed. And I mean, imagine, I'm sure Chrysler. And another one of the vehicles is just hopping. And as far as more business, there's no shortage of RFQs in the auto business for aluminum components. The question is can you get the margin, okay? And we are mindful of the constant pressure by the Big Three to continue to reduce our margins. So we're not going to process aluminum for free. But we did take -- got the -- I think I mentioned we've got a very big footprint in the new 10-speed transmission, which is a Ford, General Motors initiative. So I can't wait because now other people that have 8-speeds are talking about 10-speeds. I guess, if you're going into a showroom and somebody's selling you a car when you got 8-speed and some of your friends got a 10-speed, you've got to have a 10-speed. But we'll stay in the aluminum business. We don't have a lot of capacity. When we don't have a lot of capacity, that means that you have to buy new equipment. If you have to buy new equipment, you have to depreciate it. So the question is the aluminum components are not going to be the same price they were the last time around because clearly, that was with CapEx and that was equipment we had bought at discounts. Now if you want to -- we have to come up and ramp up our new knuckle, we have to buy all-new, low-pressure equipment. That causes us to have to raise the prices and that's having a sobering effect on some of the buyers. But we're happy where we were. We can sit here and run this business as we have and be very, very pleased and invest our money someplace else. But we still like it and we're going to chase it. But there's no shortage of opportunities. The question is sometimes the shortage of opportunities that you could make a fair return.

Okay. Mr. Crawford, would like to make a closing comment, sir? Edward F. Crawford: Yes. I want to thank everyone, all the stakeholders in the company and our shareholders, the new shareholders, and hopefully, the shareholders that will be attracted to the company by the dividend. Here at Park-Ohio, we're very, very pleased to be able to do this. We think it's the right time. And I hope you understand it's an expression of our confidence and our ability to continue to grow this company, meet the goals we've set forth. And the goal that's on the table is our guidance. And it's getting our full attention. So thank you again for your support, and we look forward to the next quarterly conference call. Have a nice day.

Thank you, Mr. Crawford. This will conclude our entire conference for today. Please disconnect your lines at this time. Thank you for your participation. Have a great day.