Core Molding (CMT) 5 Nov 24 2024 Q3 Earnings call transcript

Core Molding Technologies held its third quarter fiscal 2024 financial results conference call, providing an in-depth analysis of the company's performance and outlook. The call, led by CEO Dave Duvall and EVP and CFO John Zimmer, highlighted the company's strategic initiatives and its ability to maintain profitability amidst macroeconomic challenges.

Financial Highlights and Challenges

The third quarter sales for Core Molding Technologies reached $73 million, generating $7.5 million in adjusted EBITDA, representing 10.3% of sales. Despite facing macroeconomic headwinds in certain industries, the company reported a net income of $3.2 million or $0.36 per diluted share.

John Zimmer detailed the impact of macroeconomic pressures, including lower demand in the truck market due to the start of a cyclical downturn and the Volvo transition. This transition, expected to occur in the second half of 2025 and all of 2026, will negatively impact sales in 2025.

Growth Strategies and Investments

Dave Duvall emphasized the company's growth strategies, including the recent appointment of Alex Bantz as Chief Commercial Officer to lead the sales and marketing transformation. Bantz's extensive experience in industrial sales and marketing is expected to accelerate Core's revenue growth.

The company also announced the completion of a fixed cost and SG&A reduction program, which is expected to generate annual savings of approximately $2.6 million moving forward. This move is part of a broader effort to optimize costs for long-term success.

Investor Growth Strategy and New Markets

Core Molding Technologies is actively diversifying its offerings and expanding its presence in new markets. The company has secured over $45 million in new business and has a thriving pipeline of over $270 million in active opportunities. The focus on investor growth is evident in the company's efforts to optimize its business model and leverage its execution engine.

One notable development is the company's entry into the hospital bed frames market, which represents a significant opportunity for growth in the medical industry. The company's expertise in manufacturing complex composite parts positions it well to capture a fair market value for its solutions.

Future Outlook and Challenges

Looking ahead, Core Molding Technologies expects full-year sales to be down approximately 17% compared to 2023, primarily due to customer demand schedules changing during the holiday season. The company forecasts gross margins in the 17% to 19% range for the full year.

The Volvo truck model transition is expected to continue to pressure sales through 2025, with the most significant impact expected in 2025. However, the company remains optimistic about its prospects, with a strong pipeline of opportunities and a focus on expanding its product and process offerings.

Conclusion

Core Molding Technologies' third quarter fiscal 2024 results underscore the company's resilience in the face of macroeconomic challenges and its commitment to strategic growth initiatives. The company's focus on operational efficiency, cost optimization, and new market expansion positions it well for future success. As Core Molding Technologies moves into the fourth quarter, it remains committed to executing its must-win battles and driving long-term value for its shareholders.