• Revenue: $73 million for the third quarter.
• Adjusted EBITDA: $7.5 million, representing 10.3% of sales.
• Net Income: $3.2 million or $0.36 per diluted share.
• Gross Margin: $12.3 million or 16.9% of sales.
• SG&A Expenses: $8.7 million, down from $9.4 million in the prior year.
• Operating Income: $3.6 million or 4.9% of sales.
• Cash and Cash Equivalents: $42.3 million at the end of the quarter.
• Free Cash Flow: $23.1 million year-to-date through the third quarter.
• Capital Expenditures: $7 million year-to-date, with full-year expectations of $11 million to $13 million.
• Debt to EBITDA Ratio: Less than 1x.
• Return on Capital Employed: 10.8% on a trailing 12-month basis; 14.4% excluding accumulated cash.
• Share Buyback: Approximately 112,000 shares repurchased at an average price of $17.62 per share.
• Sales Forecast: Full-year 2024 sales expected to be down approximately 17% compared to 2023.

• Warning! GuruFocus has detected 6 Warning Signs with PAX.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Core Molding Technologies Inc (CMT) appointed Alex Bantz as the new Chief Commercial Officer to accelerate revenue growth.
• The company generated $7.5 million in adjusted EBITDA, maintaining a profitability margin of 10.3% of sales.
• CMT reported a year-to-date free cash flow of over $23 million, demonstrating strong cash conversion.
• The company has secured over $45 million in new business and has a thriving pipeline with over $270 million in active opportunities.
• CMT's technical advancements and infrastructure investments have already cut annual costs by over $1 million.

Negative Points

• Product sales and total net sales were down 11.9% and 15.8% respectively, compared to the previous year.
• The truck market is experiencing a cyclical downturn, impacting sales negatively, with a significant impact expected in 2025.
• Gross margin decreased to 16.9% of sales from 17.6% in the year-ago quarter.
• The company expects full-year 2024 sales to be down approximately 17% compared to 2023.
• CMT is facing macroeconomic pressures in power sports and building products markets, affecting performance.

Q & A Highlights

Q: Can you expand on the $100 million-plus in your pipeline and the expected win rate? A: David Duvall, President and CEO, explained that the pipeline is progressing through different phases, with many programs in the construction, truck, and power sports industries. However, customers are delaying program launches due to large tooling costs and other factors. The pipeline is bottlenecked at the final phase, but they expect progress as conditions stabilize.

Q: Any thoughts on volumes for next year considering the Volvo program transition and new programs? A: John Zimmer, CFO, noted that the Volvo transition will negatively impact sales next year. While the truck market is expected to be softer, a strong rebound is anticipated in 2026. Other markets remain uncertain, with customers being cautious about the political and economic environment.

Q: Can you provide more details on the hospital bed win in healthcare? A: David Duvall shared that the company developed a support structure for hospital beds, replacing a sheet metal part with a composite solution. This project took about a year from concept to production, offering a higher value and lower cost option with design features not possible with steel.

Q: When will the cost-saving actions fully impact financials, and are there any remaining one-time costs? A: John Zimmer stated that most benefits from cost-saving actions will be realized in the fourth quarter, with some costs spilling over from the third quarter. The actions primarily involved labor cost reductions, and the full impact will be seen moving forward.

Q: How is the Volvo business transition progressing compared to their original plan? A: David Duvall mentioned that the transition is ongoing, with Volvo and Mack programs being commonized. The phase-out is lengthy due to numerous part numbers transitioning to common ones. The process is generally slower than initially planned.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.