Categories: Wire Stories

Core Molding Technologies Reports Fiscal 2023 Second Quarter Results

Strong Earnings per Share of $0.91, up 250%, on Continued Execution of Strategic Priorities

COLUMBUS, Ohio, Aug. 08, 2023 (GLOBE NEWSWIRE) — Core Molding Technologies, Inc. (NYSE American: CMT) (“Core Molding”, “Core” or the “Company”), a leading engineered materials company specializing in molded structural products, principally in building products, industrial and utilities, medium and heavy-duty truck and powersports industries across the United States, Canada and Mexico today reports financial and operating results for the fiscal periods ended June 30, 2023.

Second Quarter 2023 Highlights

  • Net sales of $97.7 million, compared to $98.7 million in the prior year; and product sales of $95.7 million, up 2.6% from the prior year.
  • Gross margin of $20.6 million, or 21.0% of net sales, compared to $13.0 million or 13.2% of net sales. Improvement in 2023 was due to improved customer pricing and operational efficiencies.
  • Selling, general and administrative expenses of $10.5 million, or 10.7% of net sales compared to $8.7 million or 8.8% in the prior year same period. Increase in the current year primarily a result of compensation-related costs from improving performance.
  • Operating income of $10.1 million, or 10.3% of net sales, versus operating income of $4.4 million, or 4.4% of net sales in the prior year.
  • Net income of $7.9 million, or $0.91 per diluted share, compared to net income of $2.2 million, or $0.26 a year ago.
  • Adjusted EBITDA1 of $13.7 million, or 14.1% of net sales, compared to $7.9 million, or 8.0% of net sales in the prior year.

Six Month 2023 Highlights

  • Net sales of $197.2 million, up 4.2% from $189.3 million in the prior year; and product sales of $194.0 million, up 5.9% from the prior year.
  • Gross margin of $38.3 million, or 19.4% of net sales, compared to $27.6 million or 14.6% of net sales.
  • Selling, general and administrative expenses of $20.2 million, or 10.2% of net sales compared to $17.2 million or 9.1% in the prior year same period.
  • Operating income of $18.1 million, or 9.2% of net sales, versus $10.4 million, or 5.5% of net sales in the prior year.
  • Net income of $13.8 million, or $1.59 per diluted share, compared to net income of $6.1 million, or $0.71 a year ago.
  • Adjusted EBITDA1 of $25.9 million, or 13.2% of net sales, compared to $17.5 million, or 9.2% of net sales in the prior year.

1 Adjusted EBITDA is a non-GAAP financial measure as defined and reconciled below.

David Duvall, the Company’s President and Chief Executive Officer, said, “We had a record-breaking second quarter, and I want to thank our dedicated Core Molding team members for making this possible. We have been relentlessly executing our strategic plan to initially turnaround the operations, and then to transform the Core business. It is rewarding to see our disciplined execution showing up in our financial results. As part of our 2023 strategy, we communicated the focus on profitability improvements through our Must Win Battle of key operational improvements. This was an important, but necessary step, to enable us to effectively achieve our growth goals. We have made significant progress on our continuous operational improvement journey, and it is now time to increase our focus on one of our other 2023 strategic initiatives of revenue growth.”

John Zimmer, the Company’s EVP and Chief Financial Officer commented, “Our team remains focused on Core’s four strategic growth initiatives for 2023: Revenue Growth, Technical Solutions Sales, Profitability Improvements, and Free Cash Flow1 Generation. Our record second quarter results are a combination of selling price improvements and operational efficiencies. Progress has been made on our 2023 Must Win Battle to improve profitability at our two lower profitability plants. The operations team has stepped up to drive improvements, but we believe more operational improvements are attainable. The second quarter gross margin of 21.0%, which is the highest quarterly gross margin in over ten years, reflects such operational improvements as well as a favorable product mix driven by normal seasonality of the business.   We believe the second half of the year gross margins will be impacted by our normal seasonality resulting in product mix shifts as well as lower fixed cost leverage from lower net sales, which we believe will produce a full year gross margin in the range of 17% to 19%, compared to prior year full gross margin of 13.9%.

Our balance sheet continues to strengthen with a cash balance of $14.2 million, as a result of Free Cash Flows1 for the first half of 2023 of $14.4 million, largely driven by $18.9 million of Cash Flows from Operations.”

1Free Cash Flow is a non-GAAP financial measure as defined and reconciled below.

2023 Capital Expenditures

The Company’s capital expenditures for second quarter 2023 were $4.5 million, including approximately $1.7 million of capacity expansion and automation investments. The Company plans for total 2023 capital expenditures of approximately $11.0 to $13.0 million to meet current demand and add new business.

Financial Position at June 30, 2023

The Company’s total liquidity at the end of the second fiscal quarter 2023 was $64.2 million, with $14.2 million in cash, $25.0 million of undrawn capacity under the Company’s revolving credit facility and $25.0 million of undrawn capacity under the Company’s capex credit facility. The Company’s term debt was $23.6 million at June 30, 2023. The term debt-to-trailing twelve months Adjusted EBITDA1 was less than one times Adjusted EBITDA1 at the end of the fiscal second quarter. The Company had a return on capital employed1 of 23.6% on an annualized basis based on results for the six months ended June 30, 2023.

1 Adjusted EBITDA and return on capital employed are non-GAAP financial measures as defined and reconciled below.

Conference Call

The Company will conduct a conference call today at 10:00 a.m. Eastern Time to discuss financial and operating results for the quarter ended June 30, 2023. To access the call live by phone, dial (844) 881-0134 and ask for the Core Molding Technologies call at least 10 minutes prior to the start time. A telephonic replay will be available through August 15, 2023, by calling 877-344-7529 and using passcode ID: 5743549#. A webcast of the call will also be available live and for later replay on the Company’s Investor Relations website at www.coremt.com/investor-relations/events-presentations/.

About Core Molding Technologies, Inc.

Core Molding Technologies is a leading engineered materials company specializing in molded structural products, principally in building products, utilities, transportation and powersports industries across North America. The Company operates in one operating segment as a molder of thermoplastic and thermoset structural products. The Company’s operating segment consists of one reporting unit, Core Molding Technologies. The Company offers customers a wide range of manufacturing processes to fit various program volume and investment requirements. These thermoset processes include compression molding of sheet molding compound (“SMC”), resin transfer molding (“RTM”), liquid molding of dicyclopentadiene (“DCPD”), spray-up and hand-lay-up. The thermoplastic processes include direct long-fiber thermoplastics (“D-LFT”) and structural foam and structural web injection molding. Core Molding Technologies serves a wide variety of markets, including the medium and heavy-duty truck, marine, automotive, agriculture, construction, and other commercial products. The demand for Core Molding Technologies’ products is affected by economic conditions in the United States, Mexico, and Canada. Core Molding Technologies’ operations may change proportionately more than revenues from operations.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws that are subject to risks and uncertainties. These statements often include words such as “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release may contain forward-looking statements about the Company’s expectations for future periods with respect to its plans to improve financial results and the future of the Company’s end markets. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: general macroeconomic, social, regulatory and political conditions, including uncertainties surrounding volatility in financial markets; the short-term and long-term impact of the coronavirus (COVID-19) pandemic, or other pandemics in the future, on our business; changes in the plastics, transportation, marine and commercial product industries; efforts of the Company to expand its customer base and develop new products to diversify markets, materials and processes and increase operational enhancements; the Company’s initiatives to quote and execute manufacturing processes for new business, acquire raw materials, address inflationary pressures, regulatory matters and labor relations; and the Company’s financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including those included in the Company’s filings with the SEC. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
Company Contact:
Core Molding Technologies, Inc.
John Zimmer
Executive Vice President & Chief Financial Officer
614-870-5604

Investor Relations Contact:
Three Part Advisors, LLC
Sandy Martin or Steven Hooser
214-616-2207

– Financial Statements Follow –

Core Molding Technologies, Inc.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

  Three months ended June 30,   Six months ended June 30,
    2023       2022       2023       2022  
               
Net sales:              
Products $ 95,703     $ 93,317     $ 194,040     $ 183,218  
Tooling   2,022       5,418       3,192       6,108  
Total net sales   97,725       98,735       197,232       189,326  
               
Total cost of sales   77,163       85,690       158,927       161,774  
               
Gross margin   20,562       13,045       38,305       27,552  
               
Selling, general and administrative expense   10,492       8,660       20,161       17,155  
               
Operating income   10,070       4,385       18,144       10,397  
               
Other income and expense              
Interest expense   293       459       649       1,000  
Net periodic post-retirement benefit   (52 )     (31 )     (105 )     (62 )
Total other income and expense   241       428       544       938  
               
Income before income taxes   9,829       3,957       17,600       9,459  
               
Income tax expense   1,893       1,769       3,812       3,407  
               
Net income $ 7,936     $ 2,188     $ 13,788     $ 6,052  
               
Net income per common share:              
Basic $ 0.93     $ 0.26     $ 1.62     $ 0.71  
Diluted $ 0.91     $ 0.26     $ 1.59     $ 0.71  


Core Molding Technologies, Inc.
Product Sales by Market
(unaudited, in thousands)

  Three months ended June 30,   Six months ended June 30,
    2023     2022     2023     2022
Medium and heavy-duty truck $ 45,193   $ 36,694   $ 94,709   $ 71,913
Power sports   23,878     21,263     45,914     42,170
Building products   10,691     14,501     22,478     29,440
Industrial and Utilities   6,622     8,743     13,052     13,727
All Other   9,319     12,116     17,887     25,968
Net Product Revenue $ 95,703   $ 93,317   $ 194,040   $ 183,218


Core Molding Technologies, Inc.
Consolidated Balance Sheets
(in thousands)

  As of    
  6/30/2023   As of
  (unaudited)   12/31/2022
Assets:      
Current assets:      
Cash and cash equivalents $ 14,162     $ 4,183  
Accounts receivable, net   50,368       44,261  
Inventories, net   24,394       23,871  
Prepaid expenses and other current assets   9,642       8,350  
Total current assets   98,566       80,665  
       
Right of use asset   4,731       5,114  
Property, plant and equipment, net   82,179       83,267  
Goodwill   17,376       17,376  
Intangibles, net   6,810       7,619  
Other non-current assets   4,441       4,574  
Total Assets $ 214,103     $ 198,615  
       
Liabilities and Stockholders’ Equity:      
Liabilities:      
Current liabilities:      
Current portion of long-term debt $ 1,205     $ 1,208  
Revolving debt         1,864  
Accounts payable   29,811       29,586  
Contract liabilities   2,279       1,395  
Compensation and related benefits   9,790       9,101  
Accrued other liabilities   10,069       7,643  
Total current liabilities   53,154       50,797  
       
Other non-current liabilities   3,304       3,516  
Long-term debt   22,384       22,986  
Post retirement benefits liability   4,963       5,191  
Total Liabilities   83,805       82,490  
       
Stockholders’ Equity:      
Common stock   86       84  
Paid in capital   41,829       40,342  
Accumulated other comprehensive income, net of income taxes   3,856       3,053  
Treasury stock   (31,006 )     (29,099 )
Retained earnings   115,533       101,745  
Total Stockholders’ Equity   130,298       116,125  
Total Liabilities and Stockholders’ Equity $ 214,103     $ 198,615  


Core Molding Technologies, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)

  Six months ended June 30,
    2023       2022  
Cash flows from operating activities:      
Net income $ 13,788     $ 6,052  
Adjustments to reconcile net income to net cash used in operating activities:      
Depreciation and amortization   6,346       6,219  
Loss on disposal of property, plant and equipment   80        
Share-based compensation   1,487       1,082  
Losses on foreign currency   296       175  
Change in operating assets and liabilities:      
Accounts receivable   (6,107 )     (18,831 )
Inventories   (523 )     (3,828 )
Prepaid and other assets   (190 )     265  
Accounts payable   700       10,318  
Accrued and other liabilities   3,492       1,622  
Post retirement benefits liability   (465 )     (128 )
Net cash provided by operating activities   18,904       2,946  
Cash flows from investing activities:      
Purchase of property, plant and equipment   (4,511 )     (8,623 )
Net cash used in investing activities   (4,511 )     (8,623 )
Cash flows from financing activities:      
Gross borrowings on revolving loans   (38,962 )     (73,559 )
Gross repayment on revolving loans   37,098       75,879  
Payments related to the purchase of treasury stock   (1,907 )     (482 )
Payment on principal on term loans   (643 )     (2,193 )
Net cash used in financing activities   (4,414 )     (355 )
Net change in cash and cash equivalents   9,979       (6,032 )
Cash and cash equivalents at beginning of year   4,183       6,146  
Cash and cash equivalents at end of year $ 14,162     $ 114  
Cash paid for:      
Interest $ 653     $ 886  
Income taxes $ 3,347     $ 3,761  
Non cash investing activities:      
       
Fixed asset purchases in accounts payable and other non-current liabilities $ 848     $ 731  


Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Core Molding management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying tables.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation and amortization of long-lived assets, (iv) share based compensation expense, (v) plant closure costs, and (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company’s core operations. Free Cash Flow represents net cash (used in) provided by operating activities less purchase of property, plant and equipment. Return on capital employed represents earnings before (i) interest expense, net and (ii) provision (benefit) for income taxes divided by (i) stockholders’ equity and (ii) current and long-term debt.

We present Adjusted EBITDA, Adjusted EBITDA as a percent of net sales, debt-to-trailing twelve months adjusted EBITDA, Free Cash Flow and Return on Capital Employed because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to performance measure derived in accordance with GAAP as an indicator of our operating performance. Our calculation of these measures may not be comparable to similarly named measures reported by other companies. The following tables present reconciliations of net income to Adjusted EBITDA, and Cash Flow from Operating Activities to Free Cash Flow, the most directly comparable GAAP measures, and Return on Capital Employed, for the periods presented:


Core Molding Technologies, Inc.
Net Income to Adjusted EBITDA Reconciliation
(unaudited, in thousands)

  Three months ended June 30,   Six months ended June 30,
    2023       2022       2023       2022  
Net income $ 7,936     $ 2,188     $ 13,788     $ 6,052  
Provision for income taxes   1,893       1,769       3,812       3,407  
Total other expenses(1)   241       428       544       938  
Depreciation and amortization   2,918       2,972       6,308       5,976  
Share-based compensation   756       581       1,487       1,082  
Adjusted EBITDA $ 13,744     $ 7,938     $ 25,939     $ 17,455  
               
Adjusted EBITDA as a percent of net sales   14.1 %     8.0 %     13.2 %     9.2 %
               
(1)Includes interest expense and non-cash periodic post-retirement benefit cost


Core Molding Technologies, Inc.
Computation of Debt to Trailing Twelve Months Adjusted EBITDA
(unaudited, in thousands)

  Q3 2022   Q4 2022   Q1 2023   Q2 2023   Trailing Twelve Month Adjusted EBITDA
Net income $ 1,319   $ 4,832     $ 5,852   $ 7,936   $ 19,939
Provision for income taxes   1,251     (2,276 )     1,919     1,893     2,787
Total other expenses(1)   2,062     418       304     241     3,025
Depreciation and amortization   3,170     2,457       3,390     2,918     11,935
Share-based compensation   623     624       731     756     2,734
Adjusted EBITDA $ 8,425   $ 6,055     $ 12,196   $ 13,744   $ 40,420
                   
Total Outstanding Term Debt as of June 30, 2023   $ 23,589
                   
Debt to Trailing Twelve Months Adjusted EBITDA     0.58
                   
(1)Includes interest expense and non-cash periodic post-retirement benefit cost


Core Molding Technologies, Inc.
Computation of Return on Capital Employed
Six Months Ended June 30, 2023 and 2022
(unaudited, in thousands)

    2023       2022  
Equity $ 130,298     $ 106,622  
Structure debt   23,589       29,988  
Total structured investment $ 153,887     $ 136,610  
       
Operating income $ 18,144     $ 10,397  
Return on capital employed   11.8 %     7.6 %
Annualized return on capital employed   23.6 %     15.2 %


Core Molding Technologies, Inc.
Free Cash Flow
Six Months Ended June 30, 2023 and 2022
(unaudited, in thousands)

    2023       2022  
Cash flow provided by operations $ 18,904     $ 2,946  
Purchase of property, plant and equipment   (4,511 )     (8,623 )
Free cash flow (deficit) surplus $ 14,393     $ (5,677 )

 

Alex

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