Core Molding Technologies Reports Fiscal 2022 First Quarter Results

Rhea-AI Summary

Core Molding Technologies (CMT) reports Q1 2022 net sales of $90.6 million, a 24% increase year-over-year, driven by strong product demand. Adjusted EBITDA was 10.5% of net sales with net income rising to $3.9 million or $0.46 per diluted share. The company recovered $9.5 million from raw material costs, although gross margin slightly declined to 16.0%. Capital expenditures increased to $20 million to boost production capacity. Despite inflationary pressures, CMT remains optimistic about future revenue growth and ongoing demand.

Positive

• Net sales increased 24% year-over-year to $90.6 million.
• Net new business wins amounted to $10 million in Q1 2022, bolstering future revenue.
• Adjusted EBITDA margin at 10.5%, returning to double-digit margin levels.
• Increased annual capital expenditures from $14 million to $20 million, enhancing production capacity.

Negative

• Gross margin decreased to 16.0% from 17.5% year-over-year.
• Inflationary pressures from non-raw material costs affecting profitability.

Strong Demand Results in First Quarter Sales of $90.6 million and Adjusted EBITDA Margin of 10.5%

COLUMBUS, Ohio, May 10, 2022 /PRNewswire/ -- 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 11.3%, 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 in 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 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.

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 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.

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 share and per share data)
		Three Months Ended
		March 31,
		2022		2021
Net sales:
Products		$     89,901		$  69,133
Tooling		691		3,696
Total net sales		90,592		72,829
Total cost of sales		76,085		60,111
Gross margin		14,507		12,718
Selling, general and administrative expense		8,495		7,372
Operating income		6,012		5,346
Other income and expense
Interest expense		541		579
Net periodic post-retirement benefit cost		(31)		(40)
Total other expense		510		539
Income before taxes		5,502		4,807
Income tax expense		1,638		1,351
Net income		$        3,864		$    3,456
Net income per common share:
Basic		$          0.46		$      0.41
Diluted		$          0.46		$      0.41

 

Core Molding Technologies, Inc.
Consolidated Balance Sheets
(in thousands)
		As of
		3/31/2022 (unaudited)		As of 12/31/2021
Assets:
Current assets:
Cash		$            1,326		$          6,146
Accounts receivable, net		52,292		35,261
Inventories, net		28,399		25,129
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
Goodwill		17,376		17,376
Intangibles, net		9,080		9,567
Other non-current assets		3,073		3,133
Total Assets		$        199,886		$     186,692
Liabilities and Stockholders' Equity:
Current liabilities:
Current portion of long-term debt		$            3,984		$          3,943
Revolving debt		4,835		4,424
Accounts payable		33,420		22,695
Contract liability		6,737		6,256
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
Long-term debt		20,239		21,251
Post retirement benefits liability		7,723		7,689
Total Liabilities		95,489		86,597
Stockholders' Equity:
Common stock		83		82
Paid in capital		38,514		38,013
Accumulated other comprehensive income, net of income taxes		1,011		1,075
Treasury stock		(28,617)		(28,617)
Retained earnings		93,406		89,542
Total Stockholders' Equity		104,397		100,095
Total Liabilities and Stockholders' Euqity		$        199,886		$     186,692

 

Core Molding Technologies, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
		Three Months Ended
		March 31,
		2022		2021
Cash flows from operating activities:
Net income		$          3,864		$        3,456
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		3,125		3,049
Share-based compensation		501		318
Losses on foreign currency		240		235
Change in operating assets and liabilities:
Accounts receivable		(17,031)		(13,218)
Inventories		(3,270)		(2,013)
Prepaid and other assets		1,502		903
Accounts payables		10,407		8,283
Accrued and other liablities		(948)		(1,385)
Postretirement benefit		(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 repayments on revolving line of credit		(37,444)		(5,915)
Gross borrowings on revolving line of credit		37,855		8,496
Payment of deferred loan costs		-		(2)
Payments related to 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 beginnng of period		6,146		4,131
Cash and cash equivalents at end of period		$          1,326		$        3,027
Cash paid for:
Interest		$             420		$           467
Income taxes		$          2,198		$        2,560
Non cash investing activities:
Fixed asset purchases in accounts payable		$             513		$              99

 

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) restricting costs, (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 and net working capital. These metrics are supplemental measures of our operating performance that are neither required by nor presented in accordance with, GAAP. 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. We present Adjusted EBITDA 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. Our calculation of these measures may not be comparable to similarly named measures reported by other companies. The following tables present a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA for the periods presented:

Core Molding Technologies, Inc.
Net Income to Adjusted EBITDA Reconciliation
Fiscal Quarters Ended March 31, 2022 and 2021
(unaudited, in thousands)
		2022	2021
Net income		$              3,864	$              3,456
Provision for income taxes		1,638	1,351
Total other expense(1)		510	539
Depreciation and amortization		3,004	2,932
Share-based compensation		501	318
Adjusted EBITDA		$              9,517	$              8,596
Adjusted EBITDA as percent of net sales		10.5%	11.8%
(1)Includes interest expense and non-cash periodic post-retirement benefit cost
Core Molding Technologies, Inc.
Computation of Return on Capital Employed
Fiscal Quarters Ended March 31, 2022 and 2021
(unaudited, in thousands)
		2022	2021
Equity		104,397	97,595
Structured debt		29,058	30,165
Total structured investment		133,455	127,760
Operating income		6,012	5,346
Return on capital employed		4.5%	4.2%
Annualized return on capital employed		18.0%	16.8%
Core Molding Technologies, Inc.
Free Cash Flow
Fiscal Quarters Ended March 31, 2022 and 2021
(unaudited, in thousands)
		2022	2021
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)

 

 

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SOURCE Core Molding Technologies

FAQ

What were Core Molding Technologies' Q1 2022 net sales?

Core Molding Technologies reported net sales of $90.6 million for Q1 2022.

How much did adjusted EBITDA amount to for Core Molding in Q1 2022?

The adjusted EBITDA for Q1 2022 was 10.5% of net sales.

What is the impact of inflation on Core Molding Technologies' financials?

Inflationary pressures from non-raw material costs are affecting profitability, though the company is managing raw material cost recoveries.

What is the expected capital expenditure for Core Molding in 2022?

Core Molding increased its planned capital expenditures for 2022 to approximately $20 million.

What was the net income for Core Molding in Q1 2022?

The net income for Core Molding in Q1 2022 was $3.9 million.