Core Molding Technologies(CMT) - 2025 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2025, net sales totaled $273,798,000, a decrease from $302,378,000 in 2024, with product sales (excluding tooling) at $232,205,000 compared to $291,092,000 in 2024[141] - Gross margin for 2025 was approximately 17.4%, slightly down from 17.6% in 2024, attributed to unfavorable product mix and production inefficiencies[142] - The company recorded net income of $11,195,000 for 2025, or $1.29 per diluted share, compared to $13,299,000 or $1.51 per diluted share in 2024[145] Market Trends - The North American truck market accounted for 44% of product revenue in 2025, down from 52% in 2023, indicating a significant cyclicality in demand[135] - The company expects revenues for 2026 to increase by approximately 0 to 5 percent compared to 2025, with a consistent mix of product and tooling revenues[139] Operating Expenses - Selling, general and administrative expenses (SG&A) for 2025 totaled $33,364,000, a decrease from $36,565,000 in 2024, primarily due to lower bonuses and labor costs[143] Cash Flow and Investments - Cash provided by operating activities for 2025 was $19,185,000, positively impacted by net income and non-cash deductions[154] - Cash used in investing activities totaled $17,268,000 in 2025, with significant investments in property, plant, and equipment for expansion and automation[155] - The company anticipates spending approximately $25,000,000 to $30,000,000 on capital expenditures in 2026, including $18,000,000 to $20,000,000 for the Mexico expansion project[155] Debt and Liabilities - As of December 31, 2025, the Company had total long-term debt obligations of $19,843,000, with interest payments estimated at $1,487,000[176] - The Company incurred debt origination fees of $402,000 related to the Huntington Credit Agreement, amortized over its life[166] - The Huntington Term Loan requires monthly installments of $104,000 for the first 24 months, increasing to $156,000 for the next 24 months, and $208,000 for the final 12 months[171] - The Company has a revolving loan commitment of $25,000,000, with $13,689,000 advanced as of July 22, 2022, and no outstanding amounts as of December 31, 2025[169] Inventory and Allowances - The Company has recorded an allowance for slow moving and obsolete inventory of $1,137,000 at December 31, 2025, down from $1,392,000 in 2024[181] - The Company had an allowance for credit losses of $58,000 at December 31, 2025, compared to none in 2024[179] Tax Positions - As of December 31, 2025, the Company had a net deferred tax asset of $1,402,000 and deferred tax liabilities of $1,035,000 related to tax positions in the United States[194] - The Company has a valuation allowance of $1,327,000 against the deferred tax asset related to local jurisdiction tax positions due to cumulative losses over the last three years[194] - Management evaluates provisions and deferred tax assets quarterly to determine if adjustments to the valuation allowance are required[194] Risk Exposure - The Company is exposed to fluctuations in interest rates and foreign currency, particularly with the Mexican Peso and Canadian Dollar[197] - Non-hedged loans under the Huntington Credit Agreement bear a variable interest rate, which could be impacted by a hypothetical 10% change in short-term interest rates[198] - A hypothetical 10% decrease in the USD to MXN and CAD exchange rate would increase operating costs, adversely affecting operating margins[200] - A hypothetical 10% increase in commodity prices would lead to higher raw material costs, negatively impacting operating margins[200] - The Company uses derivative financial instruments to hedge exposure to fluctuations in foreign exchange rates and interest rates[197] - The Company does not hold any material market risk sensitive instruments for trading purposes[197] Regulatory Compliance - The Company filed a universal shelf Registration Statement with the SEC for a maximum aggregate offering price of up to $50 million, effective January 8, 2024[173] - The Company has fully implemented ASU No. 2023-09 for income tax disclosures, effective for annual periods beginning after December 15, 2024[196]