Core Molding Technologies(US:CMT)2025-11-04 16:00Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $58.4 million, down 19.9% year-over-year, primarily due to the known Volvo transition and declines in other truck demand [14][21] - Gross margin was 17.4%, within the targeted range of 17%-19%, with an adjusted EBITDA margin of 11%, up 70 basis points from the previous year [14][22] - Net income for Q3 was $1.9 million, or diluted EPS of $0.22, compared to $3.2 million, or diluted EPS of $0.36 in the same period last year [24][25] - Cash flow from operations for the first nine months of the year was over $14 million, exceeding year-to-date net earnings [14][15] Business Line Data and Key Metrics Changes - Power sports achieved its first year-over-year growth in eight quarters, driven by new product introductions and increased wallet share [6][7] - Sales in power sports, building products, and industrial and utilities markets grew year-over-year, reflecting the success of investment growth initiatives [5][6] - Tooling revenue has shifted to Q4, with expectations for significant increases in tooling sales in the fourth quarter [5][14] Market Data and Key Metrics Changes - The trucking industry remains soft, with several projects on hold pending clarity on policy direction [5][6] - The company anticipates a recovery in the truck market in the second half of 2026, with expectations for over $300 million in total revenue by 2027 [13][32] - The total addressable market for the company's sheet molding compound (SMC) product exceeds $200 million, with ongoing trials with potential customers [10][11] Company Strategy and Development Direction - The company is focused on organic growth and has implemented a value selling program to expand wallet share with key partners [9][12] - A $25 million investment is underway for expansion in Matamoros and Monterrey, Mexico, aimed at increasing capacity for low-pressure injection molding and DCPD processes [11][12] - The company is targeting new markets, including construction and energy sectors, and is committed to continuous performance improvement [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted that while the truck industry forecasts remain soft for Q4, there are signs of stabilization and rebounding demand in key end markets [32][33] - The company is optimistic about future growth opportunities, with a robust sales pipeline of over $250 million [8][28] - Management emphasized the importance of developing a world-class engineering and manufacturing solutions partner for large molded solutions [33] Other Important Information - The company has a strong liquidity position of $92.4 million, with total long-term debt of $20.3 million and a debt-to-EBITDA ratio of less than one [25][26] - The company plans to invest approximately $18-$22 million in capital expenditures for 2025, including investments for the Mexico expansion [24][26] Q&A Session Summary Question: What are the updated thoughts around tariffs specifically? - Management stated that all products are USMCA compliant and currently exempt from tariffs, but there are concerns about potential impacts on customer demand in the future [38][40] Question: What are the biggest risks or upside to the $300 million revenue target for 2027? - Management highlighted that the biggest concern is the speed of recovery in the truck market, which could impact hiring and meeting demand [41][42] Question: Can you provide insights on tooling revenues and their impact on margins? - Tooling sales are expected to be roughly 15% of total sales in 2025, with margins taking a slight hit but still within the 17%-19% target range [43][47] Question: How is the traction with the SMC product? - Management reported positive feedback from four customers currently trialing the SMC product, with expectations for agreements in the next quarter [54][55]