Strong Demand Results in First Quarter Sales of $90.6 million and Adjusted EBITDA Margin of 10.5%
COLUMBUS, OH, May 10, 2022 – 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 quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Net sales of $90.6 million, up 24% from $72.8 million in the prior year; and product sales of $89.9 million, up 30% from the prior year.
- Raw material cost recoveries were approximately $9.5 million, or 10.5% of net sales, for the three months ended March 31, 2022. Excluding raw materials recoveries, total net sales increased $8.3 million, or 11.4%, compared to the same period in 2021.
- Gross margin of $14.5 million or 16.0% of net sales, compared to $12.7 million or 17.5% of net sales. Excluding the impact of raw material recoveries, gross margin was 17.7% in the 2022 first quarter.
- Selling, general and administrative expenses of $8.5 million or 9.4% of net sales compared to $7.4 million or 10.1% in the prior year same period.
- Operating income of $6.0 million, or 6.6% of net sales, versus $5.3 million, or 7.3% of net sales from the prior year.
- Net income of $3.9 million, or $0.46 per diluted share, up from net income of $3.5 million, or $0.41 a year ago.
- Adjusted EBITDA1 of $9.5 million, or 10.5% of net sales, compared to $8.6 million, or 11.8% 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 are excited about first quarter results as sales momentum from 2021 has carried into 2022. Customer demand remains strong and net new wins for the quarter were $10 million, which continues to incrementally add to our future revenue growth.”
“Given our updated sales forecasts and evaluation of capacity and footprint at our facilities, we have increased our 2022 capital expenditures by approximately $5 million, to $20 million, to maximize our existing square footage with the addition of three new presses in our direct long fiber and structural foam processes, as well as robotic automation of three presses. These investments will increase capacity, as well as efficiencies, increase throughput and leverage our labor to drive immediate revenue. Also, we can remain flexible with our capital spending in case things change later this year,” Duvall concluded.
John Zimmer, the Company’s EVP and Chief Financial Officer commented, “We have made significant progress with raw material cost recoveries and covered the majority of the inflation but expect further improvements. We will continue to work to complete the remaining arrangements during the second quarter 2022.
“It was a good quarter for the Company as we returned to double-digit Adjusted EBITDA margin, on a sequential quarter basis. We were able to exceed operating profit and net income levels compared to the prior year quarter, despite inflationary pressures from non-raw material costs, such as labor, supplies and energy. Looking forward, customer demand continues to be strong, and the Company is on track to launch several new programs during the remainder of 2022. We will monitor ongoing headwinds from inflationary pressures, supply disruptions and changes in monetary policies that could impact customer demand,” concluded Zimmer.
2022 Capital Expenditures
The Company signed $10 million of new business in the first quarter of 2022. As a result of the new business and the program wins in 2021 that will launch during 2022, the Company will increase its planned annual capital expenditures in 2022 from $14 million to $16 million, to approximately $20 million for the year. Expenditures for automation and the addition of three presses in the direct long fiber and structural foam processes will provide added capacity to allow the Company to meet its current demand and to continue to add new business.
Financial Position at March 31, 2022
The Company’s total liquidity at the end of the first fiscal quarter 2022 was $20.8 million with $1.3 million in cash and $19.5 million of undrawn capacity under the Company’s revolving credit facility. The Company’s term debt was $24.2 million at March 31, 2022. The term debt to trailing twelve months Adjusted EBITDA1 was less than one times Adjusted EBITDA1 at the end of the fiscal first quarter. The Company had a return on capital employed1 of 4.5%, or 18% on an annualized basis, for the first quarter 2022, which was consistent with the first quarter of 2021.
1 Adjusted EBITDA and return on capital employed are metrics and non-GAAP financial measures as defined and reconciled below.
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 March 31, 2022. 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 May 17, 2022, by calling (877) 344-7529 and using passcode ID: 4780180#. 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 and Mexico. 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 processes include compression molding of sheet molding compound (“SMC”), resin transfer molding (“RTM”), liquid molding of dicyclopentadiene (“DCPD”), spray-up and hand-lay-up, direct long-fiber thermoplastics (“D-LFT”) and structural foam and structural web injection molding (“SIM”). 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, the future of the Company’s end markets, including the short-term and long-term impact of the COVID-19 pandemic 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.
Core Molding Technologies believes that the following factors, among others, could affect its future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements made in this Quarterly Report on Form 10-Q: business conditions in the plastics, transportation, marine and commercial product industries (including changes in demand for truck production); federal and state regulations (including engine emission regulations); general economic, social, regulatory (including foreign trade policy) and political environments in the countries in which Core Molding Technologies operates; the adverse impact of coronavirus (COVID-19) global pandemic on our business, results of operations, financial position, liquidity or cash flow, as well as impact on customers and supply chains; safety and security conditions in Mexico and Canada; fluctuations in foreign currency exchange rates; dependence upon certain major customers as the primary source of Core Molding Technologies’ sales revenues; efforts of Core Molding Technologies to expand its customer base; the ability to develop new and innovative products and to diversify markets, materials and processes and increase operational enhancements; ability to accurately quote and execute manufacturing processes for new business; the actions of competitors, customers, and suppliers; failure of Core Molding Technologies’ suppliers to perform their obligations; the availability of raw materials; inflationary pressures; new technologies; regulatory matters; labor relations; labor availability; a work stoppage or labor disruption at one of our union locations or one of our customer or supplier locations; the loss or inability of Core Molding Technologies to attract and retain key personnel; the Company’s ability to successfully identify, evaluate and manage potential acquisitions and to benefit from and properly integrate any completed acquisitions; federal, state and local environmental laws and regulations; the availability of sufficient capital; the ability of Core Molding Technologies to provide on-time delivery to customers, which may require additional shipping expenses to ensure on-time delivery or otherwise result in late fees and other customer charges; risk of cancellation or rescheduling of orders; management’s decision to pursue new products or businesses which involve additional costs, risks or capital expenditures; inadequate insurance coverage to protect against potential hazards; equipment and machinery failure; product liability and warranty claims; and other risks identified from time to time in Core Molding Technologies’ other public documents on file with the Securities and Exchange Commission, including those described in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2021.
Core Molding Technologies, Inc.
Executive Vice President & Chief Financial Officer
Investor Relations Contact:
Three Part Advisors, LLC
Sandy Martin or Steven Hooser
-Financial Statements Follow-
|Three Months Ended|
|Total net sales||90,592||72,829|
|Total cost of sales||76,085||60,111|
|Selling, general and administrative expense||8,495||7,372|
|Other income and expense|
|Net periodic post-retirement benefit cost||(31)||(40)|
|Total other income and expense||510||539|
|Income before income taxes||5,502||4,807|
|Income tax expense||1,638||1,351|
|Net income per common share:|
|Cash and cash equivalents||$||1,326||$||6,146|
|Accounts receivable, net||52,292||35,261|
|Prepaid expenses and other current assets||7,213||8,606|
|Total current assets||89,230||75,142|
|Right of use asset||5,081||5,577|
|Property, plant and equipment, net||76,046||75,897|
|Other non-current assets||3,073||3,133|
|Liabilities and Stockholders’ Equity:|
|Current portion of long-term debt||$||3,984||$||3,943|
|Compensation and related benefits||6,972||7,532|
|Accrued other liabilities||7,324||8,202|
|Total current liabilities||63,272||53,052|
|Other non-current liabilities||4,255||4,605|
|Post retirement benefits liability||7,723||7,689|
|Paid in capital||38,514||38,013|
|Accumulated other comprehensive income, net of income taxes||1,011||1,075|
|Total Stockholders’ Equity||104,397||100,095|
|Total Liabilities and Stockholders’ Equity||$||199,886||$||186,692|
|Three Months Ended|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash used in operating activities:|
|Depreciation and amortization||3,125||3,049|
|Losses on foreign currency||240||235|
|Change in operating assets and liabilities:|
|Prepaid and other assets||1,502||903|
|Accrued and other liabilities||(948)||(1,385)|
|Post retirement benefits liability||(47)||(140)|
|Net cash used in operating activities||(1,657)||(512)|
|Cash flows from investing activities:|
|Purchase of property, plant and equipment||(2,482)||(2,436)|
|Net cash used in investing activities||(2,482)||(2,436)|
|Cash flows from financing activities:|
|Gross borrowings on revolving loans||37,855||8,496|
|Gross repayment on revolving loans||(37,444)||(5,915)|
|Payment of deferred loan costs||—||(2)|
|Payments related to the purchase of treasury stock||—||(47)|
|Payment on principal on term loans||(1,092)||(688)|
|Net cash (used in) provided by financing activities||(681)||1,844|
|Net change in cash and cash equivalents||(4,820)||(1,104)|
|Cash and cash equivalents at beginning of year||6,146||4,131|
|Cash and cash equivalents at end of year||$||1,326||$||3,027|
|Cash paid for:|
|Non cash investing activities:|
|Fixed asset purchases in accounts payable||$||513||$||99|
|Provision for income taxes||1,638||1,351|
Total other expenses(1)
|Depreciation and amortization||3,004||2,932|
|Adjusted EBITDA as a percent of net sales||10.5||%||11.8||%|
(1)Includes interest expense and non-cash periodic post-retirement benefit cost
|Total structured investment||$||133,455||$||127,760|
|Return on capital employed||4.5||%||4.2||%|
|Annualized return on capital employed||18.0||%||16.8||%|
|Cash flow used in operations||$||(1,657)||$||(512)|
|Purchase of property, plant and equipment||(2,482)||(2,436)|
|Free cash flow||$||(4,139)||$||(2,948)|