Core Molding Technologies(US:CMT)2025-05-08 20:05Part I — Financial Information Item 1. Financial Statements (Unaudited) For Q1 2025, Core Molding Technologies reported a significant decrease in net sales and net income, with net sales falling to $61.4 million from $78.1 million and net income dropping to $2.2 million from $3.8 million, while cash flow from operations improved to $6.1 million Consolidated Statements of Operations In Q1 2025, the company experienced a 21.4% year-over-year decline in net sales, leading to a 40.0% drop in operating income and a 41.9% decrease in net income Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $61,447 | $78,145 | -21.4% | | Gross margin | $11,783 | $13,305 | -11.4% | | Operating income | $2,839 | $4,732 | -40.0% | | Net income | $2,183 | $3,759 | -41.9% | | Basic EPS | $0.25 | $0.43 | -41.9% | | Diluted EPS | $0.25 | $0.43 | -41.9% | Consolidated Statements of Comprehensive Income Comprehensive income for Q1 2025 was $3.1 million, a decrease from $3.5 million in Q1 2024, primarily due to lower net income partially offset by an unrealized gain on foreign currency hedging derivatives Q1 2025 vs Q1 2024 Comprehensive Income (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $2,183 | $3,759 | | Unrealized hedge gain (loss) - Foreign currency | $1,443 | $(487) | | Unrealized hedge gain (loss) - Interest rate swaps | $(192) | $272 | | Comprehensive Income | $3,061 | $3,465 | Consolidated Balance Sheets As of March 31, 2025, total assets increased to $223.6 million from $209.6 million at year-end 2024, driven by higher cash and accounts receivable, while total liabilities also rose to $73.7 million Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,474 | $41,803 | | Total current assets | $115,611 | $102,888 | | Total Assets | $223,591 | $209,550 | | Accounts payable | $28,289 | $17,115 | | Total current liabilities | $46,287 | $36,711 | | Total Liabilities | $73,718 | $62,189 | | Total Stockholders' Equity | $149,873 | $147,361 | Consolidated Statements of Cash Flows For Q1 2025, net cash provided by operating activities increased to $6.1 million from $5.1 million in Q1 2024, mainly due to favorable changes in accounts payable, while cash used in financing activities increased to $1.7 million due to treasury stock repurchases Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,099 | $5,072 | | Net cash used in investing activities | $(1,772) | $(1,893) | | Net cash used in financing activities | $(1,656) | $(665) | | Net change in cash and cash equivalents | $2,671 | $2,514 | | Cash and cash equivalents at end of period | $44,474 | $26,618 | Notes to Consolidated Financial Statements The notes detail the company's accounting policies, revenue streams, and financial instruments, highlighting a significant year-over-year sales decline from all major customers, particularly Volvo, and the initiation of a $7.5 million stock repurchase program - The company operates as a single operating segment, North America, molding thermoplastic and thermoset structural products for markets including trucks, power sports, and building products2295 Sales to Major Customers (in thousands) | Customer | Q1 2025 Sales | Q1 2024 Sales | Change (%) | | :--- | :--- | :--- | :--- | | International | $10,888 | $14,590 | -25.4% | | PACCAR | $9,074 | $10,195 | -11.0% | | BRP | $6,711 | $7,671 | -12.5% | | Yamaha | $6,071 | $8,582 | -29.3% | | Volvo | $4,094 | $12,720 | -67.8% | - On March 11, 2024, the Board approved a stock repurchase program of up to $7.5 million, under which 63,377 shares were repurchased for $0.9 million during Q1 202583151 - The company utilizes a $75 million credit agreement with Huntington Bank, comprising a $25 million term loan, a $25 million CapEx loan, and a $25 million revolving loan, with the revolving and CapEx loans undrawn as of March 31, 20255364 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 21.4% Q1 sales decline to lower demand in power sports and heavy-duty truck markets, notably the transition of business with Volvo, while gross margin improved to 19.2% from 17.0% due to favorable pricing and efficiencies, and liquidity remains strong with $44.5 million in cash Business Outlook The company projects a revenue decrease of 10% to 15% for the first half of 2025 compared to the same period in 2024, attributed to industry projections, customer forecasts, and program ramp-downs, with an expected shift in revenue mix towards more tooling sales - The company expects revenues for the first half of 2025 to decrease by approximately 10% to 15% compared to 2024106 - A change in revenue mix is expected in 2025, with an increase in tooling revenues compared to 2024 as new programs launch106 - Raw material pricing in 2025 is expected to remain flat or experience a slight increase relative to 2024, with tariffs not anticipated to have a material impact under current conditions107 Results of Operations Net sales for Q1 2025 decreased by 21.4% to $61.4 million from $78.1 million in Q1 2024, driven by a $14.8 million drop in product sales, primarily from the medium/heavy-duty truck and power sports markets, while gross margin improved from 17.0% to 19.2% - The decrease in sales is primarily the result of lower demand in power sports and medium and heavy-duty truck markets, including transitioning business with Volvo108 Product Sales by Market (in thousands) | Market | Q1 2025 | Q1 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Medium and heavy-duty truck | $29,560 | $41,509 | $(11,949) | | Power sports | $14,206 | $18,859 | $(4,653) | | Building products | $6,379 | $6,545 | $(166) | | Industrial and utilities | $5,370 | $3,346 | $2,024 | | All other | $5,497 | $5,572 | $(75) | | Net product revenue | $61,012 | $75,831 | $(14,819) | - Gross margin improved to 19.2% in Q1 2025 from 17.0% in Q1 2024, favorably impacted by changes in selling price, raw material costs, product mix, and operational efficiencies, which offset lower fixed cost leverage108 - SG&A expense was $8.9 million, including $0.5 million in severance, with the ex-severance amount of $8.4 million down from $8.6 million in the prior year109 Liquidity and Capital Resources The company's liquidity remains robust, with cash on hand of $44.5 million as of March 31, 2025, net cash from operations of $6.1 million for the quarter, and undrawn $25 million revolving and CapEx loan facilities, sufficient to meet planned capital expenditures of $10 million to $12 million for 2025 - As of March 31, 2025, the Company had $44.5 million cash on hand, a $25 million revolving loan facility, and a $25 million CapEx loan facility, both with no outstanding balance118 - Cash provided by operating activities for Q1 2025 totaled $6.1 million115 - The Company anticipates spending approximately $10 million to $12 million during 2025 on property, plant and equipment purchases116 - The company was in compliance with all financial covenants associated with its Huntington Credit Agreement as of March 31, 2025119 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from commodity price fluctuations, interest rate changes on its variable-rate debt, and foreign currency exchange rate volatility, using derivative instruments to mitigate these risks, with a hypothetical 10% change in interest rates not expected to materially affect earnings - Primary market risks include changes in commodity prices (resins, fiberglass), fluctuations in interest rates on variable-rate debt, and foreign currency fluctuations (Mexican Peso, Canadian Dollar)138139 - The company uses derivative financial instruments to hedge exposure to fluctuations in foreign exchange rates and interest rates138 - A hypothetical 10% change in short-term interest rates would not have a material effect on earnings before tax due to an interest rate hedge140 Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company concluded that its disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal controls over financial reporting during the last fiscal quarter - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025142 - No changes in internal controls over financial reporting occurred in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls142 Part II — Other Information Legal Proceedings The company is not currently involved in any legal proceedings that management believes are likely to have a material adverse effect on its financial position or results of operations - The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company's consolidated financial position or results of operations144 Risk Factors There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the Company's risk factors from those previously disclosed in Core Molding Technologies' Annual Report on Form 10-K for the year ended December 31, 2024145 Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended March 31, 2025, the company repurchased a total of 82,717 shares, with 63,377 shares repurchased under the publicly announced stock repurchase program at an average price of $14.50 per share, and the remaining 19,340 shares withheld to satisfy tax obligations - The company repurchased a total of 82,717 shares of its common stock during the three months ended March 31, 2025146 - Under the publicly announced repurchase program, 63,377 shares were repurchased in March 2025146151 - As of April 30, 2025, the maximum amount that may yet be purchased under the plan was $2.8 million146