Core Molding Technologies (CMT) FY Conference Summary Company Overview - **Company**: Core Molding Technologies (NYSEAM:CMT) - **Headquarters**: Columbus, Ohio - **Employees**: Approximately 1,500 - **Industry**: Manufacturing of composite large and ultra-large parts, primarily for the transportation and power sports markets [doc id='13'][doc id='14'] Key Points and Arguments Leadership Transition - **CEO Transition**: Dave Duvall will retire in May 2026, with COO Eric Palomaki set to take over [doc id='2'][doc id='5'] - **Succession Planning**: Emphasis on leadership development and succession planning within the company [doc id='3'][doc id='12'] Business Strategy - **Must-Win Battles**: The company focuses on critical priorities to drive success, with a historical turnaround strategy initiated in 2019 [doc id='3'][doc id='9] - **Operational Focus**: The first three years were dedicated to internal improvements, including safety, quality, and culture [doc id='10'][doc id='11'] - **Customer Contracts**: The company has renegotiated contracts to include raw material adjustment clauses to mitigate cost increases [doc id='11'][doc id='19'] Market Position and Products - **Market Segments**: Core Molding's primary markets include transportation (semi-truck components) and power sports (personal watercraft, UTVs) [doc id='13'][doc id='14'] - **Competitive Moat**: The company has a strong position due to sole-sourced tooling and large press capabilities [doc id='7'][doc id='8'] - **Product Innovations**: Introduction of new products, including a skid plate for UTVs and a new truck roof project, expected to generate significant revenue [doc id='34'][doc id='42'] Financial Performance - **Sales Fluctuations**: Sales have fluctuated due to market conditions, with a decline expected in 2024 and 2025 following a COVID-related boom [doc id='18'][doc id='19'] - **Gross Margins**: Achieved gross margins of 17-19% during a truck peak, with current margins maintained through operational efficiencies [doc id='19'][doc id='20'] - **Cash Position**: The company holds $43 million in cash, with a net cash position of $23 million, allowing for liquidity to pursue growth opportunities [doc id='20'] Growth Opportunities - **CapEx Plans**: Estimated CapEx for 2025 is between $10-$12 million, with an additional $25 million planned for expanding operations in Mexico [doc id='20'][doc id='21'] - **Sales Pipeline**: Current sales pipeline is approximately $250 million, with a historical win rate of 25% [doc id='47'] - **Long-Term Goals**: Targeting over $500 million in sales with operating income greater than 8% in the next three to five years [doc id='23'] Market Dynamics - **Truck Market Cycles**: Currently in a truck trough, with expectations for demand to increase in the second half of 2026 [doc id='18'][doc id='19'] - **Diversification Strategy**: The company is exploring opportunities across various industries, including aerospace and construction, to leverage composite materials [doc id='24'][doc id='29'] Customer Relationships - **Customer Loyalty**: Strong relationships with blue-chip customers, with a focus on delivering quality and value [doc id='16'][doc id='35'] - **Unique Solutions**: Development of innovative products that solve specific customer problems, enhancing loyalty and repeat business [doc id='36'][doc id='41'] Additional Important Content - **M&A Strategy**: The company is currently focusing on organic growth rather than acquisitions due to high seller price expectations [doc id='21'] - **Stock Buyback Program**: Authorized up to $7.5 million, with $5.5 million already spent [doc id='22] - **Operational Readiness**: Preparing for increased demand by practicing hiring and onboarding processes [doc id='53] This summary encapsulates the key insights from the conference, highlighting Core Molding Technologies' strategic direction, market positioning, financial health, and growth opportunities.

Group 1 - The company is experiencing a significant decline in topline performance, with a decrease of 20%, primarily due to weak trucking demand, although there are positive developments in other areas [1] - There is a notable deleverage in operating margins, indicating operational challenges that the company is facing [1] Group 2 - The investment approach focuses on long-term operational aspects rather than market-driven dynamics, emphasizing the importance of understanding the long-term earnings potential of companies [1] - The strategy involves holding companies that are deemed valuable regardless of future price movements, with most recommendations being holds rather than buys [1]

Core Company Overview - Core Molding Technologies, Inc. is a leading engineered materials company specializing in molded structural products across various industries including building products, utilities, transportation, and powersports in North America [3] - The company operates in one segment as a molder of thermoplastic and thermoset structural products, offering a wide range of manufacturing processes such as compression molding, resin transfer molding, and structural foam injection molding [3] Upcoming Investor Conference - Core Molding will participate in the 17th Annual Southwest IDEAS Investor Conference on November 19, 2025, at The Westin Irving Convention Center Las Colinas [1] - The management team, including the CEO, CFO, and COO, will host one-on-one investor meetings and present from 11:15 to 11:50 AM CT [2] - The presentation will be webcast live and available for replay shortly after its conclusion [2]

Financial Performance - Net sales for Q3 2025 were $58.435 million, a decrease of approximately 20% compared to $72.992 million in Q3 2024[111] - Product sales, excluding tooling project sales, for Q3 2025 were $54.178 million, down from $71.258 million in Q3 2024, primarily due to lower demand from medium and heavy-duty trucks[111] - Net income for Q3 2025 was $1.877 million, or $0.22 per share, compared to $3.160 million, or $0.36 per share, in Q3 2024[115] - For the nine months ended September 30, 2025, net sales totaled $199.121 million, a decrease of approximately 17% from $239.880 million in the same period of 2024[117] Gross Margin and Expenses - Gross margin for Q3 2025 was 17.4%, an increase from 16.9% in Q3 2024, driven by higher operational efficiencies[111] - The gross margin for the nine months ended September 30, 2025 was approximately 18.2%, slightly up from 18.1% in the same period of 2024[117] - SG&A expenses for Q3 2025 were $7.572 million, down from $8.740 million in Q3 2024, mainly due to favorable foreign currency translation and lower labor costs[112] - SG&A expenses for the nine months ended September 30, 2025 were $25.616 million, down from $27.550 million in the same period of 2024[118] Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2025 totaled $14.166 million, positively impacted by net income of $8.112 million[124] - Cash used in investing activities for the nine months ended September 30, 2025 was $9,305,000, primarily for property, plant, and equipment purchases[125] - The Company anticipates spending approximately $18,000,000 to $22,000,000 on property, plant, and equipment purchases during 2025, including the Mexico expansion[125] - Following the award of the Volvo Mexico business, the Company plans to invest approximately $25,000,000 over the next 18 months, with $8,000,000 to $10,000,000 expected to be spent by the end of fiscal 2025[125] Financing and Debt - Cash used for financing activities for the nine months ended September 30, 2025 totaled $4,267,000, including $2,249,000 for treasury stock purchases and $1,418,000 for long-term debt repayments[126] - The interest rate for the Huntington Term Loan was 5.93% as of September 30, 2025, with monthly installments beginning at $104,000[143] - The Company entered into an interest rate swap agreement effective July 22, 2022, resulting in an effective interest rate of 4.75% on the Huntington Term Loan as of September 30, 2025[144] - The Company is in compliance with financial covenants associated with the Huntington Credit Agreement as of September 30, 2025[128] Market Outlook - The company expects revenues for 2025 to decrease by approximately 10 to 12 percent compared to 2024, influenced by market uncertainties and program transitions[109] Currency Risk - A hypothetical 10% decrease in the USD to MXN and CAD exchange rate would increase operating costs, adversely affecting operating margins[151] Cash Position - As of September 30, 2025, the Company had $42,397,000 cash on hand and a $25,000,000 revolving loan facility with no outstanding balance[127] - The Company has no significant off-balance sheet arrangements as of September 30, 2025[145]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $58.4 million, down 19.9% year-over-year, primarily due to the known Volvo transition and declines in other truck demand [14][21] - Gross margin was 17.4%, within the targeted range of 17%-19%, with an adjusted EBITDA margin of 11%, up 70 basis points from the previous year [14][22] - Net income for Q3 was $1.9 million, or diluted EPS of $0.22, compared to $3.2 million, or diluted EPS of $0.36 in the same period last year [24][25] - Cash flow from operations for the first nine months of the year was over $14 million, exceeding year-to-date net earnings [14][15] Business Line Data and Key Metrics Changes - Power sports achieved its first year-over-year growth in eight quarters, driven by new product introductions and increased wallet share [6][7] - Sales in power sports, building products, and industrial and utilities markets grew year-over-year, reflecting the success of investment growth initiatives [5][6] - Tooling revenue has shifted to Q4, with expectations for significant increases in tooling sales in the fourth quarter [5][14] Market Data and Key Metrics Changes - The trucking industry remains soft, with several projects on hold pending clarity on policy direction [5][6] - The company anticipates a recovery in the truck market in the second half of 2026, with expectations for over $300 million in total revenue by 2027 [13][32] - The total addressable market for the company's sheet molding compound (SMC) product exceeds $200 million, with ongoing trials with potential customers [10][11] Company Strategy and Development Direction - The company is focused on organic growth and has implemented a value selling program to expand wallet share with key partners [9][12] - A $25 million investment is underway for expansion in Matamoros and Monterrey, Mexico, aimed at increasing capacity for low-pressure injection molding and DCPD processes [11][12] - The company is targeting new markets, including construction and energy sectors, and is committed to continuous performance improvement [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted that while the truck industry forecasts remain soft for Q4, there are signs of stabilization and rebounding demand in key end markets [32][33] - The company is optimistic about future growth opportunities, with a robust sales pipeline of over $250 million [8][28] - Management emphasized the importance of developing a world-class engineering and manufacturing solutions partner for large molded solutions [33] Other Important Information - The company has a strong liquidity position of $92.4 million, with total long-term debt of $20.3 million and a debt-to-EBITDA ratio of less than one [25][26] - The company plans to invest approximately $18-$22 million in capital expenditures for 2025, including investments for the Mexico expansion [24][26] Q&A Session Summary Question: What are the updated thoughts around tariffs specifically? - Management stated that all products are USMCA compliant and currently exempt from tariffs, but there are concerns about potential impacts on customer demand in the future [38][40] Question: What are the biggest risks or upside to the $300 million revenue target for 2027? - Management highlighted that the biggest concern is the speed of recovery in the truck market, which could impact hiring and meeting demand [41][42] Question: Can you provide insights on tooling revenues and their impact on margins? - Tooling sales are expected to be roughly 15% of total sales in 2025, with margins taking a slight hit but still within the 17%-19% target range [43][47] Question: How is the traction with the SMC product? - Management reported positive feedback from four customers currently trialing the SMC product, with expectations for agreements in the next quarter [54][55]

Financial Performance - Core Molding Technologies (CMT) reported quarterly earnings of $0.22 per share, missing the Zacks Consensus Estimate of $0.40 per share, and down from $0.36 per share a year ago, representing an earnings surprise of -45.00% [1] - The company posted revenues of $58.44 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 16.95%, and down from $72.99 million year-over-year [2] - The current consensus EPS estimate for the coming quarter is $0.26 on revenues of $59.94 million, and for the current fiscal year, it is $1.37 on revenues of $270.98 million [7] Market Performance - Core Molding Technologies shares have increased by approximately 10.9% since the beginning of the year, compared to the S&P 500's gain of 16.5% [3] - The company has surpassed consensus EPS estimates only once in the last four quarters [2] Industry Outlook - The Rubber - Plastics industry, to which Core Molding Technologies belongs, is currently ranked in the bottom 13% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact the stock's performance [5]

Financial Performance - Total net sales for Q3 2025 were $58.4 million, a decrease of 19.9% compared to Q3 2024[5] - Gross margin for Q3 2025 was $10.1 million, or 17.4% of net sales, up from 16.9% in the prior year[5] - Operating income for Q3 2025 was $2.6 million, or 4.4% of net sales, compared to $3.6 million, or 4.9% in Q3 2024[5] - Net income for Q3 2025 was $1.9 million, or $0.22 per diluted share, down from $3.2 million, or $0.36 per diluted share in Q3 2024[5] - Adjusted EBITDA for Q3 2025 was $6.4 million, or 11.0% of net sales, compared to $7.5 million, or 10.3% in Q3 2024[5] - Net income for the nine months ended September 30, 2025, was $8,112 thousand, down 39.0% from $13,338 thousand in the same period of 2024[22] - Adjusted EBITDA for the nine months ended September 30, 2025, was $23,115 thousand, representing a decrease of 17.0% compared to $27,848 thousand in 2024[27] - Free cash flow for the nine months ended September 30, 2025, was $4,861 thousand, significantly lower than $23,117 thousand in 2024, indicating a decline of 78.9%[31] - Net income for Q3 2025 was $1,877 million, a decrease from $3,160 million in Q3 2024, representing a decline of 40.5%[33] - Total net income for the nine months ended September 30, 2025, was $8,112 million, down from $13,338 million in the same period of 2024, a decline of 39.1%[33] Future Outlook - The company expects full-year sales for 2025 to decline by 10% to 12% year-over-year[4] - The company has $47 million in new incremental business scheduled to launch over the next two years[3] Capital and Liquidity - Capital expenditures for the first nine months of 2025 were $9.3 million, with an anticipated total of $10 to $12 million for the year[7] - Total liquidity at September 30, 2025, was $92.4 million, including $42.4 million in cash[8] - Cash and cash equivalents at the end of the period were $42,397 thousand, slightly up from $42,348 thousand at the end of the same period in 2024[22] Assets and Liabilities - As of September 30, 2025, total assets increased to $219,692 thousand from $209,550 thousand as of December 31, 2024, reflecting a growth of approximately 5.4%[20] - Total current liabilities increased to $38,391 thousand as of September 30, 2025, compared to $36,711 thousand as of December 31, 2024, marking a rise of 4.6%[20] - The current portion of long-term debt increased to $1,918 thousand from $1,814 thousand, reflecting a rise of 5.7%[20] Performance Ratios - The company achieved a Return on Capital Employed of 6.5% for the trailing twelve months[7] - The debt-to-trailing twelve months adjusted EBITDA ratio was 0.70 as of September 30, 2025, indicating a stable leverage position[28] - Adjusted EBITDA as a percentage of net sales was 11.6% for the nine months ended September 30, 2025, consistent with the same percentage in 2024[27] Shareholder Information - Weighted average common shares outstanding (basic) decreased to 8,561,000 in Q3 2025 from 8,716,000 in Q3 2024, a reduction of 1.8%[33] - Net income per share (basic) for Q3 2025 was $0.22, down from $0.36 in Q3 2024, reflecting a decrease of 38.9%[33] - Adjusted net income per share (basic) for Q3 2025 was $0.24, consistent with Q3 2024, showing stability in adjusted earnings[33] - Net income per share (diluted) for Q3 2025 was $0.22, down from $0.36 in Q3 2024, a decrease of 38.9%[33] - Adjusted net income per share (diluted) for Q3 2025 was $0.24, unchanged from Q3 2024, reflecting consistent performance in adjusted earnings[33] Special Costs - Severance costs (net of tax) for the nine months ended September 30, 2025, were $773 million, with no such costs reported in the same period of 2024[33] - Footprint optimization costs (net of tax) for Q3 2025 were $174 million, with no costs reported in Q3 2024, indicating new strategic investments[33]

Core Insights - Core Molding Technologies, Inc. anticipates a 10% to 12% decline in full-year sales for 2025 compared to the previous year, while positioning itself for accelerated program launches in 2026 [1][3] - The company has secured $47 million in new incremental business expected to launch over the next two years, focusing on market share gains and new business opportunities [2] - Strategic investments of $25 million in organic growth are underway, including expansions at the Matamoros plant and a new facility in Monterrey, Mexico [2] Financial Performance - Total net sales for Q3 2025 were $58.4 million, a decrease of 19.9% year-over-year, with a gross margin of 17.4% [6][15] - For the nine-month period ending September 30, 2025, total net sales were $199.1 million, down 17.0% from the prior year [6][15] - The company maintained gross margins within the range of 17% to 19%, despite sales declines, by focusing on operational excellence and cost control [3] Operational Efficiency - The company achieved a record low scrap rate of 2%, zero inventory variance, and on-time delivery rates above 98% [3] - Adjusted EBITDA for Q3 2025 was $6.4 million, or 11.0% of net sales, compared to $7.5 million, or 10.3% for the prior year [6][30] Capital Expenditures and Financial Position - Capital expenditures for the first nine months of 2025 were $9.3 million, with an anticipated total of $10 to $12 million for the year [8] - As of September 30, 2025, the company had total liquidity of $92.4 million, including $42.4 million in cash [9][20] Market Segmentation - In Q3 2025, the medium and heavy-duty truck segment generated $19.5 million in sales, down from $41.3 million in the prior year [18] - The power sports segment saw sales of $17.5 million, compared to $16.5 million in the previous year [18]

Core Molding Technologies Overview - Core Molding Technologies, Inc. is a leading engineered materials company specializing in molded structural products across various industries including building products, utilities, transportation, and powersports in North America [4] Upcoming Financial Results - The company will release its third quarter fiscal 2025 results on November 4, 2025, before the market opens [1] - A conference call will be held on the same day at 10:00 am Eastern, which will be broadcast live over the internet [1] Conference Call Details - Participants can join the call by dialing 1-888-506-0062 or 1-973-528-0011 (international) and using the access code 260801 [2] - A replay of the call will be available until November 18 by dialing 1-877-481-4010 and using the replay code 52957 [2] Webcast Information - The webcast can be accessed via the Events and Presentations page on Core Molding's Investor Relations website, with a recommendation to log in at least 10 minutes in advance [3] Company Operations - Core Molding operates in one segment as a molder of thermoplastic and thermoset structural products, offering various manufacturing processes to meet different program volume and investment needs [4] - The company serves multiple markets including medium and heavy-duty trucks, marine, automotive, agriculture, and construction, with demand influenced by economic conditions in the U.S., Mexico, and Canada [4]

Core Insights - Core Molding Technologies, Inc. (CMT) shares increased by 8.2% to $20.98 in the last trading session, with a notable trading volume, and a total gain of 13.1% over the past four weeks [1][2] Company Performance - The recent stock rally is attributed to optimism regarding increased customer demand for molded thermoplastic and thermoset products in industrial and utilities markets, alongside new program wins in construction, aerospace, energy, and medical sectors [2] - Core Molding is projected to report quarterly earnings of $0.40 per share, reflecting an 11.1% year-over-year increase, while revenues are expected to be $70.36 million, a decrease of 3.6% from the previous year [3] - The consensus EPS estimate for Core Molding has remained stable over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - Core Molding Technologies operates within the Zacks Rubber - Plastics industry, where another company, Myers (MYE), experienced a 0.5% decline in its stock price, with a return of -2.2% over the past month [4] - Myers' consensus EPS estimate has also remained unchanged at $0.24, representing a 4% decrease compared to the previous year [5]