Core Molding Technologies (CMT) FY Conference Summary Company Overview - **Company Name**: Core Molding Technologies - **Ticker**: CMT - **Headquarters**: Columbus, Ohio - **Employees**: Approximately 1,600 - **Sales**: Approximately $200 million in the last year - **Industry**: Manufacturing, specifically in composites for automotive, powersports, and industrial applications Key Points and Arguments Company Turnaround and Strategy - Core Molding was in bank default in 2019 and has since focused on internal execution and turnaround strategies, leading to a current strategy of "invest for growth" [3][4][11] - The company has achieved a low employee turnover rate of less than 6%, indicating a strong organizational culture [4] - Significant improvements in gross margins were noted between 2022 and 2023, attributed to operational fixes and strategic pricing adjustments [7][11] Pricing and Market Position - Core Molding implemented significant price increases across all customer segments, which initially led to losing some business, including Volvo, but has since regained it [9][10][32] - The company has diversified its customer base, reducing its reliance on the truck market from 92% to 54% [13] - Core Molding holds a market leadership position with 30% of the truck market and 87% of the personal watercraft market [15][16] Financial Health and Growth Prospects - The company has $40 million in cash and a $50 million line of credit, indicating a strong financial position [12][60] - Projected revenue growth includes $50 million to $60 million in incremental sales over the next 18 months [61] - The company is targeting a return on investment of 14% to 16% for its projects, with a current investment of $25 million for a Volvo contract in Mexico [58][61] Product Innovation and Market Expansion - Core Molding is expanding into new markets, including aerospace, consumer products, and medical applications, leveraging its composite materials [24][38][41] - The company is also focusing on new revenue streams, such as selling SMC (Sheet Molding Compound) to external customers, with an addressable market estimated at $200 million [37][38] - The introduction of top coat paint is expected to open up new opportunities in the construction and agricultural markets [39] Competitive Advantages - Core Molding's proprietary SMC formulations and manufacturing processes provide a competitive edge, allowing for faster production and customization [70][73] - The company has established long-term relationships with blue-chip customers, ensuring reliable revenue streams [17] - The lightweight and high-strength characteristics of their composite products offer significant advantages over traditional materials like metal and concrete [44][90] Challenges and Market Dynamics - The transition from traditional materials to composites is slow due to established supply chains and customer reluctance to change [86][88] - The company faces competition from other SMC producers but believes its operational efficiencies and product consistency will provide a competitive advantage [71][72] Additional Important Insights - Core Molding's operational improvements have stabilized margins and increased adjusted EBITDA as a percentage of sales over the past two years [61] - The company is focused on maintaining a strong balance sheet while pursuing organic growth and potential acquisitions [56][60] - The implementation of a cold room for curing SMC enhances product quality and reduces lead times compared to competitors [70][72] This summary encapsulates the key insights from the conference, highlighting Core Molding Technologies' strategic direction, financial health, market position, and product innovation efforts.

Financial Data and Key Metrics Changes - Revenue for Q1 was $61 million, down 21.4% year-over-year, primarily due to lower demand in the medium and heavy-duty truck vertical and powersports [13][21] - Gross margin expanded to 19.2%, up 220 basis points year-over-year and 340 basis points sequentially [12][14] - Adjusted EBITDA margin was 11.7%, an improvement from 11.2% in the previous year [18] - Net income for Q1 was $2.2 million, or diluted EPS of $0.25, compared to $3.8 million or diluted EPS of $0.43 in the same period last year [17] - Cash flow from operations exceeded $6 million, up from $5.1 million a year ago [18] Business Line Data and Key Metrics Changes - The building products sector secured $10 million in new business, while the electric vehicle battery sector contributed $5 million [10] - The company achieved 99.3% on-time delivery and maintained a quality level under 100 ppm, both industry-leading metrics [9] Market Data and Key Metrics Changes - The company expects revenues to decline between 10-15% for the first half of 2025, revised from a previous guidance of down 5-10% [21] - The decline is attributed to tooling sales shifting to the second half of the year and lower than expected product sales in the heavy and medium-duty truck market [21][22] Company Strategy and Development Direction - The company's focus for 2025 is on investing for growth, with plans to utilize restructuring savings to enhance sales resources and market analysis [15][20] - The strategy includes prioritizing high-value parts in sectors where technical differentiation provides a competitive advantage, such as construction, energy, industrial, and medical markets [26] - The company remains active in M&A discussions, with a robust pipeline aligned with strategic priorities [24] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining gross margins in the 17% to 19% range for the full year despite macroeconomic uncertainties [25] - The company is closely monitoring global trade dynamics and potential regulatory changes that may impact demand [25][22] - Management highlighted the importance of adapting quickly to customer needs and production levels in response to market conditions [23] Other Important Information - The company repurchased approximately 63,000 shares at an average price of $14.5 during the first quarter [20] - As of March 31, 2025, the company had a strong liquidity position of $94.5 million, including $44.5 million in cash [18] Q&A Session Summary Question: Insights on growth and SMC capacity - Management expressed excitement about SMC and its potential for revenue growth, highlighting shorter quote-to-cash cycles and existing capacity for production [29][30] Question: Advantages of US and Mexico footprint - Management confirmed that having production capacity in both the US and Mexico positions the company well to capitalize on opportunities as businesses consider reshoring [36][37] Question: Updates on newer markets like medical and turf protection - Management reported ongoing production in turf protection and opportunities in the medical sector, emphasizing the company's technical capabilities [38][39] Question: Details on large press upgrades - Management discussed evaluating upgrades to older presses to enhance operational speed and efficiency [41][42] Question: Thoughts on acquisition valuations - Management noted that acquisition multiples are between six and seven for companies being considered, with competitive pricing strategies in place [50]