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Core Molding Technologies(CMT) - 2024 Q4 - Earnings Call Transcript
CMTCore Molding Technologies(CMT)2025-03-11 17:11
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Financial Data and Key Metrics Changes - For fiscal 2024, net sales were 302million,down15.5302 million, down 15.5% due to lower demand across end markets [21][22] - Gross profit margin was 17.6%, within the long-term target range of 17% to 19% [22] - Adjusted EBITDA for the year was 33.8 million, or 11.2% of sales [22] - Record cash flow from operations reached 35million,translatingtofreecashflowof35 million, translating to free cash flow of 23.6 million [23][29] - The company reported a slight net loss of 39,000forthefourthquartercomparedtonetincomeof39,000 for the fourth quarter compared to net income of 2.2 million in the prior year [28] Business Line Data and Key Metrics Changes - The company won 45millioninnewbusinessin2024,withnearlyalllaunchingin2025[19]−Thefourth−quartersaleswere45 million in new business in 2024, with nearly all launching in 2025 [19] - The fourth-quarter sales were 62.5 million, down 15.3% primarily due to declines in the truck and tire sports market [23] - Demand in end markets such as industrials, utility, and building products grew compared to the prior year quarter [24] Market Data and Key Metrics Changes - The truck market is experiencing a cyclical downturn, with expectations for a cyclical upturn in the second half of 2025 [21] - The company anticipates a revenue decline of approximately 30millionduetotheVolvotransitionin2025[32]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedondrivingorganicandinorganicgrowth,withanemphasisonacquisitions[12][30]−InvestmentintopcoatpaintcapabilitiesattheMatamorosfacilityalignswithgrowthinconstructionequipmentandagriculturalmarkets[13]−Thethreegrowthpillarsincludewalletsharegrowth,salesdiversification,andgrowththroughacquisition[30][42]ManagementCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgestheuncertaintyinthemacroenvironmentandcustomerdecision−makingduetotariffs[64][65]−ThecompanyexpectstooffsettheVolvoimpactthroughhighertoolingsalesandnewprogramlaunches[32][33]−Managementremainsconfidentinmaintaininggrossmarginsbetween1730 million due to the Volvo transition in 2025 [32] Company Strategy and Development Direction - The company is focused on driving organic and inorganic growth, with an emphasis on acquisitions [12][30] - Investment in top coat paint capabilities at the Matamoros facility aligns with growth in construction equipment and agricultural markets [13] - The three growth pillars include wallet share growth, sales diversification, and growth through acquisition [30][42] Management Comments on Operating Environment and Future Outlook - Management acknowledges the uncertainty in the macro environment and customer decision-making due to tariffs [64][65] - The company expects to offset the Volvo impact through higher tooling sales and new program launches [32][33] - Management remains confident in maintaining gross margins between 17% and 19% despite changes in revenue mix [33][79] Other Important Information - The company repurchased approximately 172,000 shares at an average price of 17.09 per share [32] - Total outstanding liquidity was 91.8million,including91.8 million, including 41.8 million in cash [29] Q&A Session Summary Question: What is the current visibility from customers regarding the full-year outlook? - Management noted that there is a lot of waiting from customers due to uncertainty around tariffs and decision-making processes [64][65] Question: How are tariffs impacting the company? - The company has set up processes to pass through costs to customers and has communicated these changes effectively [70][71] Question: What is the expected impact of the Volvo transition on margins? - The Volvo business was not the highest margin business, so its exit may help overall margins despite hurting top-line revenue [76][78] Question: How much tooling revenue is expected this year? - Tooling revenue is anticipated to be in the 30to30 to 40 million range, indicating strong future business [84] Question: How does the company view share repurchases versus acquisitions? - Management believes in balancing capital allocation between share repurchases and acquisitions for long-term growth [93][95]