Core Molding Technologies(CMT) - 2025 Q2 - Quarterly Results

Executive Summary & Business Update Management Commentary Management maintained gross margins despite sales declines in key markets, anticipating improved sales comparisons in H2 2025 - Sales declined in the Truck and Powersports markets, which constitute 75% of total revenue, primarily due to a previously announced truck program phase-out and persistent consumer demand weakness[3][4] - Despite market challenges, the company maintained gross margins within the projected range of 17% to 19% in Q2 2025[4] - Management expects year-over-year sales comparisons to improve in the H2 2025, projecting a manageable 4% to 6% decline[5] Strategic Growth Initiatives The company pursues 'Invest For Growth', securing new business wins and expanding capacity, especially in Mexico - Core Molding Technologies secured $47 million in new incremental business wins in the H1 2025, with programs launching over the next two years across diverse end-markets including building products, EV - transportation, aerospace, and powersports[3] - The company won new Volvo Mexico programs, anticipated to launch in Q1 2027, which are expected to generate $150 million in revenues over the next 7 to 10 years[4] - An organic investment of $25 million is planned over the next 18 months, including an expansion of the Matamoros plant and a new plant and equipment in Monterrey, Mexico, adding DCPD molding and paint capabilities[4] Key Financial & Operational Highlights The company demonstrated solid profitability, strong cash flow, a robust balance sheet, and continued capital return - Generated $9.6 million of cash from operations and $5.2 million of free cash flow in Q2 2025[6] - The balance sheet remains strong, with ample liquidity to support the 'Invest for Growth' strategy and plant expansion[6] - The company continues to return capital to shareholders through its ongoing share repurchase program[6] Detailed Financial Results Second Quarter 2025 Performance Q2 2025 net sales and profitability declined, yet gross margin percentage remained within expectations Metric | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Total net sales | $79.2M | $88.7M | -10.7% | | Gross margin | $14.3M | $17.7M | -19.3% | | Gross margin (% of net sales) | 18.1% | 20.0% | -1.9 pp | | Operating income | $5.2M | $7.5M | -30.7% | | Operating income (% of net sales) | 6.6% | 8.4% | -1.8 pp | | Net income | $4.1M | $6.4M | -35.9% | | Diluted EPS | $0.47 | $0.73 | -35.6% | | Adjusted EBITDA | $9.5M | $11.6M | -18.0% | | Adjusted EBITDA (% of net sales) | 12.0% | 13.0% | -1.0 pp | - The decrease in gross margin was primarily due to unfavorable fixed cost leverage (2.2%) and lower operational efficiencies/product mix (0.9%), partially offset by higher net changes in selling price and raw material costs (1.2%)[10] - 88,207 shares were repurchased under the share repurchase authorization at an average price of $15.07[10] Six Month 2025 Performance H1 2025 saw declines in net sales, operating income, and net income, with gross margin percentage remaining stable Metric | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Total net sales | $140.7M | $166.9M | -15.7% | | Gross margin | $26.1M | $31.0M | -15.9% | | Gross margin (% of net sales) | 18.5% | 18.6% | -0.1 pp | | Operating income | $8.1M | $12.2M | -33.7% | | Operating income (% of net sales) | 5.7% | 7.3% | -1.6 pp | | Net income | $6.2M | $10.2M | -39.1% | | Diluted EPS | $0.72 | $1.15 | -37.4% | | Adjusted EBITDA | $16.7M | $20.3M | -17.7% | | Adjusted EBITDA (% of net sales) | 11.9% | 12.2% | -0.3 pp | - 151,584 shares were repurchased under the share repurchase authorization at an average price of $14.82[10] Sales by Market Segment Product sales declined in truck and powersports segments for Q2 and H1 2025, while industrial and utilities grew Product Sales by Market (in thousands) | Market Segment | Q2 2025 | Q2 2024 | Q2 Change (%) | H1 2025 | H1 2024 | H1 Change (%) | | :----------------------- | :------ | :------ | :------------ | :------ | :------ | :------------ | | Medium and heavy-duty truck | $31,246 | $46,841 | -33.3% | $60,806 | $88,350 | -31.1% | | Power sports | $14,208 | $20,902 | -32.0% | $28,414 | $39,761 | -28.5% | | Building products | $4,671 | $5,429 | -13.9% | $11,050 | $11,974 | -7.7% | | Industrial and utilities | $5,874 | $4,175 | +40.7% | $11,244 | $7,521 | +49.5% | | All other | $5,634 | $6,609 | -14.7% | $11,131 | $12,181 | -8.6% | | Net product revenue | $61,633 | $83,956 | -26.6% | $122,645 | $159,787 | -23.3% | Financial Position As of June 30, 2025, the company maintained strong liquidity, a healthy debt profile, and continued growth investments Financial Position Highlights (as of June 30, 2025) | Metric | Amount | | :-------------------------------- | :------ | | Total liquidity | $93.2M | | Cash | $43.2M | | Undrawn revolving credit facility | $25.0M | | Undrawn capex credit facility | $25.0M | | Term debt | $20.6M | | Term debt-to-trailing twelve months Adjusted EBITDA | <1x | | Capital expenditures (first six months 2025) | $4.4M | | Anticipated 2025 Capital Expenditures | $10M - $12M | | Anticipated Volvo Mexico program investment (by end of 2025) | $8M - $10M | | Return on Capital Employed (TTM) | 7.2% | | Return on Capital Employed (TTM, excluding cash) | 9.6% | Consolidated Financial Statements Consolidated Statements of Operations Statements of operations show decreased net sales and profitability for Q2 and H1 2025, driven by lower product sales Consolidated Statements of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Products net sales | $61,633 | $83,956 | $122,645 | $159,787 | | Tooling net sales | $17,606 | $4,787 | $18,041 | $7,101 | | Total net sales | $79,239 | $88,743 | $140,686 | $166,888 | | Total cost of sales | $64,925 | $71,018 | $114,589 | $135,858 | | Gross margin | $14,314 | $17,725 | $26,097 | $31,030 | | Selling, general and administrative expense | $9,100 | $10,236 | $18,044 | $18,810 | | Operating income | $5,214 | $7,489 | $8,053 | $12,220 | | Income before income taxes | $5,363 | $7,665 | $8,296 | $12,451 | | Income tax expense | $1,311 | $1,246 | $2,061 | $2,273 | | Net income | $4,052 | $6,419 | $6,235 | $10,178 | | Diluted Net income per common share | $0.47 | $0.73 | $0.72 | $1.15 | Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows increased total assets and equity, with higher cash and accounts receivable Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $43,212 | $41,803 | | Accounts receivable, net | $37,792 | $30,118 | | Inventories, net | $19,356 | $18,346 | | Total current assets | $113,193 | $102,888 | | Property, plant and equipment, net | $79,203 | $80,807 | | Total Assets | $219,924 | $209,550 | | Current portion of long-term debt | $1,814 | $1,814 | | Accounts payable | $22,630 | $17,115 | | Total current liabilities | $39,685 | $36,711 | | Long-term debt | $18,797 | $19,706 | | Total Liabilities | $66,463 | $62,189 | | Total Stockholders' Equity | $153,461 | $147,361 | | Total Liabilities and Stockholders' Equity | $219,924 | $209,550 | Consolidated Statements of Cash Flows H1 2025 saw significantly decreased operating cash flow, stable investing cash flow, and increased financing cash use Consolidated Statements of Cash Flows (in thousands) | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | | Net cash provided by operating activities | $9,594 | $20,943 | | Net cash used in investing activities | $(4,387) | $(4,805) | | Net cash used in financing activities | $(3,798) | $(2,455) | | Net change in cash and cash equivalents | $1,409 | $13,683 | | Cash and cash equivalents at end of period | $43,212 | $37,787 | Non-GAAP Financial Measures Non-GAAP Definitions The company uses non-GAAP financial measures for performance insights, reconciled to comparable GAAP results - Adjusted EBITDA represents net income before interest expense, income taxes, depreciation and amortization, share-based compensation, restructuring and severance costs, and nonrecurring legal settlement costs[24] - Free Cash Flow is defined as net cash provided by operating activities less purchase of property, plant and equipment[24] - TTM Return on Capital Employed is calculated as TTM earnings before interest and taxes divided by stockholders' equity and total debt[24] Adjusted EBITDA Adjusted EBITDA decreased for Q2 and H1 2025, reflecting the overall decline in net income Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Adjusted EBITDA | $9,544 | $11,563 | $16,708 | $20,306 | | Adjusted EBITDA as a percent of net sales | 12.0% | 13.0% | 11.9% | 12.2% | Debt and Capital Employed Metrics The company maintained a healthy debt-to-Adjusted EBITDA ratio and reported TTM Return on Capital Employed Debt and Capital Employed Metrics (in thousands) | Metric | Value | | :-------------------------------- | :---- | | Total Outstanding Term Debt as of June 30, 2025 | $20,611 | | Trailing Twelve Months Adjusted EBITDA | $30,205 | | Debt to Trailing Twelve Months Adjusted EBITDA | 0.68 | | Trailing Twelve Months Return on Capital Employed | 7.2% | | Trailing Twelve Months Return on Capital Employed, Excluding Cash | 9.6% | Free Cash Flow H1 2025 free cash flow significantly decreased, primarily due to lower cash flow from operations Free Cash Flow (in thousands) | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | | Cash flow provided by operations | $9,594 | $20,943 | | Purchase of property, plant and equipment | $(4,387) | $(4,805) | | Free cash flow | $5,207 | $16,138 | Adjusted Net Income per Share Adjusted net income and diluted EPS for Q2 and H1 2025 were lower, impacted by severance and optimization costs Adjusted Net Income per Share (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net Income | $4,052 | $6,419 | $6,235 | $10,178 | | Severance costs (net of tax) | $378 | $— | $773 | $— | | Footprint optimization costs (net of tax) | $158 | $— | $158 | $— | | Adjusted net income | $4,588 | $6,419 | $7,166 | $10,178 | | Diluted Net income per share | $0.47 | $0.73 | $0.72 | $1.15 | | Diluted Adjusted net income per share | $0.53 | $0.73 | $0.83 | $1.15 | Corporate Information About Core Molding Technologies, Inc. Core Molding Technologies is a leading engineered materials company specializing in molded structural products across North America - The company specializes in molded structural products for building products, utilities, transportation, and powersports industries[12] - Core Molding Technologies offers various manufacturing processes, including compression molding (SMC), resin transfer molding (RTM), liquid molding (DCPD), spray-up, hand-lay-up, direct long-fiber thermoplastics (DLFT), and structural foam/web injection molding[12] - Key markets served include medium and heavy-duty truck, marine, automotive, agriculture, construction, and other commercial products[12] Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks, and actual results may differ from expectations - Forward-looking statements are identified by words such as 'believe', 'anticipate', 'plan', 'expect', 'intend', 'will', and similar expressions[13] - Factors that could cause actual results to differ include dependence on major customers, macroeconomic conditions, market volatility, inflationary pressures, industry changes, and regulatory matters[13] - The company undertakes no obligation to update or revise forward-looking statements[13] Company and Investor Relations Contact Contact information for the CFO and Investor Relations representatives is provided for inquiries - Company Contact: Alex Panda, Executive Vice President & Chief Financial Officer, apanda@coremt.com[14] - Investor Relations Contact: Three Part Advisors, LLC, Sandy Martin or Steven Hooser, smartin@threepa.com, shooser@threepa.com, 214-616-2207[14]