Strategic Initiatives Continue to Drive Higher Returns and Generate Strong Cash Flow

COLUMBUS, Ohio, Nov. 07, 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 September 30, 2023.

Third Quarter 2023 Highlights

• Net sales of $86.7 million, compared to $101.6 million in the prior year; and product sales of $80.9 million, down 12.4% from the prior year. Product sales increased by 19.6% on a cumulative basis over two years from 2021 levels when combining the 36.5% product sales increase from the 2022 third quarter with the 12.4% decrease in the 2023 third quarter.
• Gross margin of $15.3 million, or 17.6% of net sales, compared to $13.3 million or 13.1% of net sales in the prior year.
• Selling, general and administrative expenses of $9.4 million, or 10.8% of net sales compared to $8.7 million or 8.5% of net sales in the prior year same period. The current year quarter included one-time equipment relocation costs of $0.5 million.
• Operating income of $5.9 million, or 6.8% of net sales, versus operating income of $4.6 million, or 4.6% of net sales in the prior year.
• Net income of $4.4 million, or $0.49 per diluted share, compared to net income of $1.3 million, or $0.16, in the prior year. Adjusted net income was $0.53 per diluted share¹ this year, up 51%, versus $0.35 per diluted share¹ in the prior year, which excludes $0.5 million in equipment relocation costs this quarter and $1.6 million of loss from early extinguishment of debt from refinancing last year.
• Adjusted EBITDA¹ of $9.8 million, or 11.3% of net sales, compared to $8.4 million, or 8.3% of net sales in the prior year.

Nine Month 2023 Highlights

• Net sales of $284.0 million, down 2.4% from $290.9 million in the prior year; and product sales of $274.9 million, down 0.2% from the prior year.
• Gross margin of $53.6 million, or 18.9% of net sales, compared to $40.9 million or 14.1% of net sales from the prior year.
• Selling, general and administrative expenses of $29.6 million, or 10.4% of net sales compared to $25.9 million or 8.9% in the prior year same period.
• Operating income of $24.0 million, or 8.5% of net sales, versus $15.0 million, or 5.2% of net sales in the prior year.
• Net income of $18.1 million, or $2.08 per diluted share, compared to net income of $7.4 million, or $0.87 a year ago. Adjusted net income was $2.12 per diluted share¹ this year, up 100%, versus $1.06 per diluted share¹ last year.
• Adjusted EBITDA¹ of $35.8 million, or 12.6% of net sales, compared to $25.9 million, or 8.9% of net sales in the prior year.

¹ Adjusted EBITDA and Adjusted Net Income Per Share are non-GAAP financial measures as defined and reconciled below.

David Duvall, the Company’s President and Chief Executive Officer, said, “Our performance for the third quarter was in line with our expectations, and our operational improvements are progressing according to plan. Gross margins remained solid and within our targeted ranges this quarter, based on a combination of additional operational improvements and continued pricing discipline. We were awarded $50 million of new or replacement business through the first nine months of this year, which launches primarily in 2024 and later, demonstrating the continued strong demand for our services. Our product sales results this quarter were not surprising given the strong comparisons from last year, and on a two-year basis, we increased almost 20% versus 2021 levels. We will remain focused on further revenue expansion, diversification through technical solution sales, continued improvements in profitability, and the generation of cash flow.”

John Zimmer, the Company’s EVP and Chief Financial Officer commented, “Third quarter was a return to more historical seasonality than last year when customers were rebuilding inventories against higher demand. Regarding product sales this quarter, medium and heavy-duty trucks were up, while other end markets were down as customers worked inventories lower throughout the period. For the third quarter, excluding the equipment moving cost this year and the refinancing costs last year, Adjusted diluted net income per share¹ increased by 51% from the year-ago quarter, and we expanded Adjusted EBITDA¹ margin by 300 basis points. Our trailing twelve months of Adjusted EBITDA¹ increased to a Company record of $41.8 million, giving us confidence that our strategic growth initiatives are progressing as expected. Free cash flow¹ for the first nine months was $19.3 million, and with a strong balance sheet, we ended the quarter with $68 million of available liquidity.

“Similar to the third quarter, our outlook for the fourth quarter anticipates a return to historical seasonality and customer de-stocking, which along with the impact of UAW strikes at customer locations in the fourth quarter, is expected to result in sales declines of 15% to 20% from the fourth quarter of 2022.  We continue to target gross margins in the 17.5% to 18.5% range for fiscal year 2023, and full-year revenues may be down 5% to 10% compared to fiscal year 2022.”

¹Adjusted EBITDA, Adjusted Net Income per Diluted Shares and Free Cash Flow are non-GAAP financial measures as defined and reconciled below.

2023 Capital Expenditures

For the first nine months, capital expenditures were $6.8 million, including approximately $1.8 million of capacity expansion and automation investments. The Company’s total 2023 capital expenditures are expected to be in the range of approximately $9.0 to $11.0 million.

Financial Position at September 30, 2023

The Company's cash and cash equivalents at September 30, 2023, were $18 million, and its cash provided by operating activities for the nine months totaled $26.1 million. The Company’s total liquidity at the end of the third fiscal quarter of 2023 was $68.0 million, with $18.0 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 $23.3 million on September 30, 2023. The term debt-to-trailing twelve months Adjusted EBITDA¹ was less than one times Adjusted EBITDA¹ at the end of the fiscal third quarter. The Company had a return on capital employed¹ of 17.2% on a trailing twelve month basis as of September 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 September 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 November 14, 2023, by calling 877-344-7529 and using passcode ID: 8134739#. 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 (“DLFT”) 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
[email protected]

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

- Financial Statements Follow –

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. Adjusted net income per share represents net income before (i) equipment relocation costs net of related provision (benefit) for income taxes and (ii) loss due to extinguishment of debt net of related provision (benefit) for income taxes divided by either (i) weighted average common shares outstanding - basic or (ii) weighted average common and potentially issuable common share outstanding - diluted.

We present Adjusted EBITDA, Adjusted EBITDA as a percent of net sales, adjusted net income per share, 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, Cash Flow from Operating Activities to Free Cash Flow, and Adjusted Net Income Per Share to Net Income Per Share, the most directly comparable GAAP measures, and Return on Capital Employed, for the periods presented: