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 ZimmerExecutive Vice President & Chief
Financial Officer614-870-5604
Investor Relations
Contact:Three Part Advisors, LLCSandy Martin or Steven
Hooser214-616-2207
- 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
EmployedSix 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 FlowSix 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 |
) |
Core Molding Technologies (AMEX:CMT)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Core Molding Technologies (AMEX:CMT)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024