Core Molding Technologies(CMT) - 2024 Q1 - Quarterly Report

Part I — Financial Information Presents the unaudited consolidated financial statements and related disclosures for the company Item 1. Financial Statements (Unaudited) Presents Core Molding Technologies' unaudited consolidated financial statements for Q1 2024, including operations, balance sheets, cash flows, and detailed notes Consolidated Statements of Operations Details the company's revenues, costs, and net income for the three months ended March 31 Consolidated Statements of Operations (Three Months Ended March 31): | Metric | 2024 (in thousands) | 2023 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Net Sales | $78,145 | $99,507 | | Cost of Sales | $64,840 | $81,764 | | Gross Margin | $13,305 | $17,743 | | Selling, General and Administrative Expense | $8,573 | $9,668 | | Operating Income | $4,732 | $8,075 | | Income Before Taxes | $4,788 | $7,771 | | Income Tax Expense | $1,029 | $1,919 | | Net Income | $3,759 | $5,852 | | Basic Net Income Per Common Share | $0.43 | $0.69 | | Diluted Net Income Per Common Share | $0.43 | $0.66 | Consolidated Statements of Comprehensive Income Presents net income and other comprehensive income components, such as foreign currency and interest rate hedging, for the period Consolidated Statements of Comprehensive Income (Three Months Ended March 31): | Metric | 2024 (in thousands) | 2023 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Net Income | $3,759 | $5,852 | | Other Comprehensive Income: | | | | Foreign currency hedging derivatives (unrealized gain (loss), net of tax) | $(382) | $383 | | Interest rate swaps (unrealized gain (loss), net of tax) | $215 | $(242) | | Post-retirement benefit plan adjustments (net of tax) | $(127) | $(93) | | Comprehensive Income | $3,465 | $5,900 | Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2024, and December 31, 2023 Consolidated Balance Sheets (as of): | Asset/Liability | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------------------- | :---------------------------- | :----------------------------- | | Assets: | | | | Cash and cash equivalents | $26,618 | $24,104 | | Total current assets | $103,237 | $102,879 | | Property, plant and equipment, net | $80,398 | $81,185 | | Goodwill | $17,376 | $17,376 | | Intangibles, net | $5,617 | $6,017 | | Total Assets | $212,267 | $213,377 | | Liabilities & Equity: | | | | Total current liabilities | $42,223 | $46,186 | | Long-term debt | $21,061 | $21,519 | | Total Liabilities | $69,452 | $74,424 | | Total Stockholders' Equity | $142,815 | $138,953 | | Total Liabilities and Stockholders' Equity | $212,267 | $213,377 | Consolidated Statement of Stockholders' Equity Outlines changes in stockholders' equity, including net income and share-based compensation, for the three months ended March 31, 2024 - Total Stockholders' Equity increased from $138,953 thousand at December 31, 2023, to $142,815 thousand at March 31, 2024, driven by net income of $3,759 thousand and share-based compensation of $739 thousand, partially offset by changes in AOCI and treasury stock purchases[236] Changes in Stockholders' Equity (Three Months Ended March 31, 2024): | Item | Amount (in thousands) | | :---------------------------------- | :-------------------- | | Balance at December 31, 2023 | $138,953 | | Net income | $3,759 | | Change in post-retirement benefits, net of tax | $(127) | | Change in foreign currency hedge, net of tax | $(382) | | Change in interest rate swaps, net of tax | $215 | | Restricted stock vested | $1 | | Purchase of treasury stock | $(343) | | Share-based compensation | $739 | | Balance at March 31, 2024 | $142,815 | Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities for the three months ended March 31 Consolidated Statements of Cash Flows (Three Months Ended March 31): | Activity | 2024 (in thousands) | 2023 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $5,072 | $4,647 | | Net cash used in investing activities | $(1,893) | $(2,127) | | Net cash used in financing activities | $(665) | $(2,211) | | Net change in cash and cash equivalents | $2,514 | $309 | | Cash and cash equivalents at end of period | $26,618 | $4,492 | Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the consolidated financial statements 1. Basis of Presentation The unaudited consolidated financial statements are prepared in accordance with Form 10-Q and GAAP for interim reporting, requiring management estimates and assumptions - Financial statements are unaudited and prepared under GAAP for interim reporting, relying on management's estimates and judgments[238][239] 2. Critical Accounting Policies and Estimates Details critical accounting policies and estimates, including revenue recognition, goodwill, and post-retirement benefits, which involve significant management judgment Revenue Recognition Explains the company's policies for recognizing revenue from product sales and tooling contracts - Product revenue is generally recognized when products are shipped or when the customer takes control at the production facility[11] - Tooling revenue is recognized either at a point in time (upon customer acceptance) or over time (based on cost-to-cost measure of progress) depending on the enforceability of payment rights[214][38] Contract Assets/Liabilities Details the company's contract assets and liabilities, including revenue recognized from contract liabilities Contract Assets/Liabilities (in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Contract Assets | $80 | $77 | | Revenue recognized from contract liabilities (Q1) | $1,841 | N/A | Goodwill Describes the company's goodwill accounting policy and impairment assessment results - Goodwill is reviewed for impairment using qualitative and quantitative assessments; no impairment charges were recorded for the three months ended March 31, 2024, or March 31, 2023[14][178] Accounts Receivable Allowances Outlines allowances for credit losses and estimated chargebacks on accounts receivable Accounts Receivable Allowances (in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Allowance for credit losses | $90 | $0 | | Allowance for estimated chargebacks | $123 | $138 | Long-Lived Assets Explains the evaluation of long-lived asset recoverability and impairment charges - The recoverability of long-lived assets is evaluated based on undiscounted expected future cash flows; no impairment charges were recorded for the three months ended March 31, 2024, or March 31, 2023[40] Self-Insurance Details estimated liabilities for self-insured medical, dental, vision, and worker's compensation claims Estimated Self-Insured Liabilities (in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Self-insured medical, dental, vision, and worker's compensation claims | $997 | $988 | Post-Retirement Benefits Presents the liability for post-retirement healthcare benefits Post-Retirement Healthcare Benefits Liability (in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Liability for post-retirement healthcare benefits | $3,008 | $3,116 | 3. Net Income Per Common Share Provides the computation of basic and diluted net income per common share, reflecting weighted average shares outstanding Net Income Per Common Share (Three Months Ended March 31): | Metric | 2024 | 2023 | | :---------------------------------- | :--- | :--- | | Basic Net Income Per Common Share | $0.43 | $0.69 | | Diluted Net Income Per Common Share | $0.43 | $0.66 | | Weighted average common shares outstanding – basic | 8,666,000 | 8,418,000 | | Weighted average common and potentially issuable common shares outstanding – diluted | 8,832,000 | 8,752,000 | 4. Major Customers Identifies major customers contributing over ten percent of total sales and provides a breakdown of sales revenue - Major customers for the three months ended March 31, 2024, included BRP, Navistar, PACCAR, UFP, Volvo, and Yamaha, with sales to these customers representing a significant portion of total sales[44] Sales Revenue by Major Customer (Three Months Ended March 31, in thousands): | Customer | 2024 | 2023 | | :---------------------------------- | :----- | :----- | | Total BRP sales | $7,671 | $12,725 | | Total Navistar sales | $14,590 | $19,447 | | Total PACCAR sales | $10,195 | $10,267 | | Total UFP sales | $6,276 | $10,774 | | Total Volvo sales | $12,720 | $15,654 | | Total Yamaha sales | $8,582 | $7,888 | | Total product sales | $75,831 | $98,337 | | Total tooling sales | $2,314 | $1,170 | | Total sales | $78,145 | $99,507 | 5. Inventory Details inventory composition, valuation using FIFO, and provisions for excess and obsolete inventory Inventories, net (as of, in thousands): | Component | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Raw materials | $15,089 | $13,068 | | Work in process | $2,817 | $2,649 | | Finished goods | $5,955 | $6,346 | | Total | $23,861 | $22,063 | | Allowance for slow moving and obsolete inventory | $730 | $671 | 6. Leases Describes operating leases for buildings and warehouses, including lease terms, liabilities, and expense components Operating Lease Information (as of, in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $3,302 | $3,802 | | Current operating lease liabilities | $1,785 | $1,981 | | Noncurrent operating lease liabilities | $1,529 | $1,828 | | Total operating lease liabilities | $3,314 | $3,809 | Components of Lease Expense (Three Months Ended March 31, in thousands): | Item | 2024 | 2023 | | :---------------------------------- | :--- | :--- | | Operating lease cost | $538 | $427 | | Short-term lease cost | $458 | $470 | | Total net lease cost | $996 | $897 | 7. Property, Plant & Equipment Outlines property, plant, and equipment, including valuation, depreciation, and capital expenditure commitments Property, Plant and Equipment, net (as of, in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Property, plant and equipment | $211,419 | $209,333 | | Accumulated depreciation | $(131,021) | $(128,148) | | Property, plant and equipment — net | $80,398 | $81,185 | | Depreciation expense (Q1) | $2,873 | $2,978 | | Purchase commitments for capital expenditures in progress | $2,939 | $1,100 | 8. Goodwill and Intangibles Provides details on goodwill and definite-lived intangible assets, including carrying amounts and amortization expenses Goodwill Activity (Three Months Ended March 31, 2024, in thousands): | Item | Amount | | :---------------------------------- | :----- | | Balance at December 31, 2023 | $17,376 | | Additions | $0 | | Impairment | $0 | | Balance at March 31, 2024 | $17,376 | Definite-lived Intangible Assets (as of March 31, 2024, in thousands): | Asset | Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | | :---------------------------------- | :------------------ | :-------------------- | :----------------------- | :------------------ | | Trade name | 25 Years | $250 | $(93) | $157 | | Trademarks | 10 Years | $1,610 | $(1,000) | $610 | | Non-competition agreement | 5 Years | $1,810 | $(1,810) | $0 | | Developed technology | 7 Years | $4,420 | $(3,920) | $500 | | Customer relationships | 10-12 Years | $9,330 | $(4,980) | $4,350 | | Total | | $17,420 | $(11,803) | $5,617 | | Aggregate intangible asset amortization expense (Q1) | | | | $400 | 9. Post-Retirement Benefits Details components of post-retirement benefit expenses for pension and health/life insurance plans, and expected future payments Components of Post-Retirement Benefit Plans Expense (Three Months Ended March 31, in thousands): | Item | 2024 | 2023 | | :---------------------------------- | :--- | :--- | | Multi-employer pension plan | $214 | $238 | | Defined contribution pension plan | $506 | $528 | | Total pension expense | $720 | $766 | | Net periodic health and life insurance benefit credit | $(138) | $(52) | | Total post-retirement benefits expense | $582 | $714 | - The company expects to make approximately $1,803 thousand in pension plan payments and $167 thousand in post-retirement healthcare and life insurance payments for the remainder of 2024[227] 10. Debt Provides an overview of the company's debt, focusing on the Huntington Credit Agreement and other financing arrangements Debt (as of, in thousands): | Item | March 31, 2024 | December 31, 2023 | | :---------------------------------- | :------------- | :---------------- | | Huntington term loans payable | $22,917 | $23,230 | | Leaf Capital term loan payable | $39 | $48 | | Total | $22,956 | $23,278 | | Less deferred loan costs | $(271) | $(291) | | Less current portion | $(1,624) | $(1,468) | | Long-term debt | $21,061 | $21,519 | Huntington Credit Agreement Describes the $75 million secured loan facility with Huntington National Bank, including its structure and covenants - The company has a $75 million secured loan facility with Huntington National Bank, comprising three $25 million commitments: a term loan, a CapEx loan, and a revolving loan[256] - The loans can be ABR Loans or SOFR Loans, with interest rates based on the company's leverage ratio[181][257] - The company's obligations are secured by U.S. and Canadian assets, and 65% of Mexican subsidiary equity interests, and are unconditionally guaranteed by certain subsidiaries[259] - The company was in compliance with all financial covenants as of March 31, 2024[190] Huntington Term Loan Details the $25 million Huntington Term Loan, including its advance date, repayment schedule, and interest rate - A $25 million Huntington Term Loan was advanced on July 22, 2022, with monthly principal repayments and a final due date of July 22, 2027[264] - The interest rate for the Huntington Term Loan was 7.11% as of March 31, 2024, and December 31, 2023[264] Huntington Revolving Loan Outlines the $25 million Huntington Revolving Loan commitment, its outstanding balance, and interest rate - A $25 million Huntington Revolving Loan commitment is available, with no outstanding balance as of March 31, 2024, and December 31, 2023[262] - The interest rate for the Huntington Revolving Loan was 7.11% as of March 31, 2024, and December 31, 2023[191] Huntington Capex Loan Describes the $25 million Huntington CapEx Loan for capital expenditures and its conversion to term loans - A $25 million Huntington Capex Loan is available to finance ongoing capital expenditure needs, with borrowings converting to new term loans annually starting February 2025[182][261] Interest Rate Swap Agreement Explains the interest rate swap agreement hedging the Huntington Term Loan and its fair value - An interest rate swap agreement, effective July 22, 2022, through July 2027, hedges $25 million of the Huntington Term Loan, fixing the interest rate at 2.95% in exchange for daily variable SOFR[265] - The effective interest rate paid on the Huntington Term Loan was 4.75% as of March 31, 2024, and December 31, 2023[265] - The fair value of the interest rate swap was an asset of $797 thousand at March 31, 2024, and $524 thousand at December 31, 2023[265] Leaf Capital Funding Details the finance agreement with Leaf Capital Funding for equipment, including its amount and interest rate - The company has a $175 thousand finance agreement with Leaf Capital Funding for equipment, with a fixed interest rate of 5.50% and a 60-month term[173][154] 11. Income Taxes Provides details on income tax expense, effective tax rates, deferred tax assets/liabilities, and tax examination periods Income Tax Expense and Rate (Three Months Ended March 31): | Metric | 2024 | 2023 | | :---------------------------------- | :--- | :--- | | Income Tax Expense | $1,029,000 | $1,919,000 | | Effective Tax Rate | 21.5% | 24.7% | - At March 31, 2024, the company had a net deferred tax asset of $1,595,000 related to Mexico and deferred tax liabilities of $1,182,000 (US) and $43,000 (Canada)[46] - A valuation allowance of $1,530,000 was recorded against the deferred tax asset related to local tax positions in the U.S. due to cumulative losses and uncertainty of realization[46] 12. Stock Based Compensation Outlines accounting for share-based payments, including the 2021 Equity Incentive Plan and details on restricted stock awards - Compensation cost for share-based payments is recognized over the employee's service period, measured at grant date fair value[64] - The 2021 Plan allows for grants of various stock awards up to 152,501 awards, replacing the 2006 Plan[184] Restricted Stock Details the status of restricted stock awards, including unvested balances and compensation expense Restricted Stock Status (Three Months Ended March 31, 2024): | Item | Number of Shares | Weighted Average Grant Fair Value | | :---------------------------------- | :--------------- | :-------------------------------- | | Unvested balance at December 31, 2023 | 373,583 | $12.81 | | Granted | 94,704 | $19.18 | | Vested | (61,508) | $15.98 | | Forfeited | — | — | | Unvested balance at March 31, 2024 | 406,779 | $14.31 | | Total unrecognized compensation expense (Mar 31, 2024) | | $4,113,000 | | Total compensation cost (Q1 2024) | | $711,000 | Performance Restricted Stock Awards Presents the status of performance restricted stock awards, including unvested balances and compensation expense Performance Restricted Stock Awards Status (Three Months Ended March 31, 2024): | Item | Number of Shares | Weighted Average Grant Fair Value | | :---------------------------------- | :--------------- | :-------------------------------- | | Unvested balance at December 31, 2023 | 11,737 | $15.98 | | Granted | 28,483 | $19.18 | | Vested | — | — | | Forfeited | — | — | | Unvested balance at March 31, 2024 | 40,220 | $18.24 | | Total unrecognized compensation expense (Mar 31, 2024) | | $651,000 | | Total compensation cost (Q1 2024) | | $28,000 | 13. Fair Value of Financial Instruments Details fair value measurement of financial instruments, including cash, debt, and derivatives, categorized by hierarchy levels - The company's financial instruments include cash, accounts receivable, accounts payable, debt, interest rate swaps, and foreign currency derivatives[70] - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar instruments or model-derived valuations with observable inputs), and Level 3 (significant unobservable inputs)[69][86][55] - As of March 31, 2024, the company had Level 2 fair value measurements for its interest rate swaps and foreign currency derivatives[70] Derivative and Hedging Activities Describes the company's use of derivative financial instruments for hedging foreign currency and interest rate risks - The company uses derivative financial instruments (foreign currency forward contracts and interest rate swaps) to hedge exposure to foreign currency exchange risk and interest rate changes[56][57] - All forward contracts and interest rate swaps are formally documented as cash flow hedges and measured at fair value quarterly, with no ineffective portion related to cash flow hedges as of March 31, 2024[56][57][71] Foreign Currency Derivatives Provides details on foreign currency derivative contracts, including notional value and fair value Foreign Currency Derivatives (in thousands): | Metric | March 31, 2024 | March 31, 2023 | | :---------------------------------- | :------------- | :------------- | | Notional contract value | $5,063 | $28,592 | | Fair Value (Asset) | $133 | $620 | | Unrealized gain (loss) in AOCI (Q1) | $(63) | $620 | | Reclassified gain (loss) from AOCI (Q1) | $424 | $119 | Interest Rate Swap Details the interest rate swap, including notional value, fair value, and AOCI impact Interest Rate Swaps (in thousands): | Metric | March 31, 2024 | March 31, 2023 | | :---------------------------------- | :------------- | :------------- | | Notional contract value | $22,917 | $24,167 | | Fair Value (Asset) | $797 | $524 | | Unrealized gain (loss) in AOCI (Q1) | $410 | $(212) | | Reclassified gain (loss) from AOCI (Q1) | $138 | $94 | Financial statement impacts Explains how foreign currency derivative activity reclassified from AOCI impacts cost of goods sold and SG&A - The foreign currency derivative activity reclassified from Accumulated Other Comprehensive Income is allocated to cost of goods sold and selling, general and administrative expense[74] 14. Accumulated Other Comprehensive Income Presents changes in Accumulated Other Comprehensive Income (AOCI), net of tax, for derivative hedging and post-retirement benefits Changes in Accumulated Other Comprehensive Income (in thousands): | Item | Balance at Dec 31, 2023 | Other comprehensive income before reclassifications | Amounts reclassified from AOCI | Income tax benefit (expense) | Balance at Mar 31, 2024 | | :---------------------------------- | :---------------------- | :------------------------------------------ | :----------------------------- | :--------------------------- | :---------------------- | | Derivative Hedging Activities | $901 | $347 | $(562) | $48 | $734 | | Post-Retirement Benefit Items | $4,400 | $(37) | $(124) | $34 | $4,273 | | Total AOCI | $5,301 | $310 | $(686) | $82 | $5,007 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's discussion and analysis of financial condition and results of operations, including outlook, quarterly results, and liquidity Forward-Looking Statements Highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to various known and unknown risks and uncertainties that could cause actual results to differ materially[92] - Key risk factors include business conditions in various industries, economic and political environments, customer dependence, raw material prices, foreign currency fluctuations, labor availability, acquisitions, capital availability, delivery performance, order cancellations, insurance, equipment failure, product liability, new product development, cybersecurity, regulatory matters, key personnel, environmental laws, and safety in Mexico[78][79][93][95][196] Description of the Company Describes Core Molding Technologies' operations, markets served, and geographic presence - Core Molding Technologies operates as one segment in the engineered materials market, molding thermoplastic and thermoset structural products[80][213] - The company serves diverse markets including medium and heavy-duty trucks, power sports, building products, industrial and utilities, and other commercial markets[80][213] - Headquartered in Columbus, Ohio, with six production facilities across the United States, Canada, and Mexico[80][213] Business Outlook Presents the company's expectations for calendar year 2024 revenues, demand, and raw material/labor costs - The company expects calendar year 2024 revenues to decrease by approximately 10% to 15% compared to 2023, with a more significant decrease in the first half[125] - This outlook is attributed to an expected cyclical demand slowdown, decreased customer inventory builds, and a return to pre-pandemic consumer demand levels[125] - Business with Volvo will transition from existing programs to new ones starting in the second half of 2024 and continuing through 2026[99] - Raw material pricing is anticipated to remain flat or slightly higher in 2024, and labor markets have stabilized but with continued wage pressure, particularly in Mexico[127] Results of Operations Analyzes key financial results, including net sales, gross margin, and net income, for the three months ended March 31 Key Financial Results (Three Months Ended March 31, in thousands): | Metric | 2024 | 2023 | Change (YoY) | | :---------------------------------- | :----- | :----- | :----------- | | Net Sales | $78,145 | $99,507 | -21.47% | | Gross Margin | 17.0% | 17.8% | -0.8 ppts | | SG&A Expense | $8,573 | $9,668 | -11.32% | | Net Interest Expense | $82 | $356 | -76.97% | | Income Tax Expense | $1,029 | $1,919 | -46.38% | | Net Income | $3,759 | $5,852 | -35.77% | | Comprehensive Income | $3,465 | $5,900 | -41.27% | - The decrease in net sales was primarily due to lower demand across all industries[128] - Gross margin was impacted by increased net changes in selling price and raw material costs (1.7%), offset by lower fixed cost leverage (1.7%) and operational inefficiencies/product mix (0.8%)[101] Net Product Sales by Market (Three Months Ended March 31, in thousands): | Market | 2024 | 2023 | Change (YoY) | | :---------------------------------- | :----- | :----- | :----------- | | Medium and heavy-duty truck | $41,509 | $49,516 | -16.2% | | Power sports | $18,859 | $22,036 | -14.4% | | Building products | $6,545 | $11,787 | -44.5% | | Industrial and utilities | $3,346 | $6,430 | -47.9% | | All other | $5,572 | $8,568 | -34.9% | | Net product revenue | $75,831 | $98,337 | -22.9% | Liquidity and Capital Resources Discusses the company's cash position, operating and investing activities, debt facilities, and capital expenditure plans - Cash provided by operating activities totaled $5,072 thousand for the three months ended March 31, 2024[132] - Cash on hand was $26,618 thousand at March 31, 2024[108] - The company has a $25 million revolving loan facility and a $25 million CapEx loan facility, both with no outstanding balances as of March 31, 2024[108][115] - Cash used in investing activities was $1,893 thousand, primarily for property, plant, and equipment purchases, with $13 million anticipated for 2024[107] - Cash used for financing activities totaled $665 thousand, including $343 thousand for treasury stock purchases and $322 thousand for long-term debt repayments[133] - Management believes current liquidity, including cash on hand, operating cash flow, and available borrowings, will be sufficient to meet current needs[109] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses market risks from commodity prices, interest rates, and foreign currency, and the use of derivatives to mitigate these exposures - Primary market risks include changes in commodity prices (raw materials), fluctuations in interest rates (variable rate debt), and foreign currency fluctuations (Mexican Peso and Canadian Dollar)[146] - The company uses derivative financial instruments to hedge exposure to foreign exchange rates and interest rates[156] - A hypothetical 10% change in short-term interest rates would not materially affect earnings before tax due to hedging[121] - A hypothetical 10% increase in commodity prices or a 10% decrease in the USD to MXN/CAD exchange rate would adversely affect operating margins[147][157] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective with no material changes - The company's disclosure controls and procedures were effective as of March 31, 2024[158] - There were no material changes in internal controls over financial reporting during the last fiscal quarter[158] Part II — Other Information Contains additional information not covered in the financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings No legal proceedings are expected to have a material adverse effect on the company's financial position or operations - No legal proceedings are likely to have a material adverse effect on the company's financial position or results of operations[159] Item 1A. Risk Factors No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes in risk factors from the Annual Report on Form 10-K for the year ended December 31, 2023[160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Shares of common stock were repurchased to satisfy income tax withholding obligations related to restricted award vesting Shares Repurchased (Three Months Ended March 31, 2024): | Period | Total Number of Shares Purchased | Average Price per Share | | :---------------------------------- | :----------------------------- | :---------------------- | | March 1 to 31, 2024 | 17,773 | $19.31 | | Purpose | To satisfy income tax withholding obligations in connection with the vesting of restricted awards | | Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities[149] Item 4. Mine Safety Disclosures No mine safety disclosures were reported for the period - No mine safety disclosures[149] Item 5. Other Information No other information was reported for the period - No other information to report[149] Item 6. Exhibits Refers to the Index to Exhibits for a complete list of documents filed as part of this report - A detailed list of exhibits is provided in the Index to Exhibits[149] Signatures Contains the official signatures of the company's President, CEO, and CFO, certifying the report - The report is signed by David L. Duvall, President, Chief Executive Officer, and Director, and John P. Zimmer, Executive Vice President, Secretary, Treasurer, and Chief Financial Officer[151][162] Index to Exhibit Lists various exhibits filed with the report, including corporate documents and certifications - The index lists various exhibits, including certificates of incorporation, by-laws, stock award agreements, Section 302 and 1350 certifications, and XBRL documents[152]