Core Molding Technologies(US:CMT)2025-05-08 15:02Financial 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]