Release Date: March 11, 2025

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

Positive Points

• Core Molding Technologies Inc (CMT) maintained gross margins within their targeted range of 17-19% despite reduced demand.
• The company generated record cash flow from operations of $35 million, driven by prudent working capital management.
• CMT won $45 million in new business in 2024, indicating strong future growth potential.
• The company is actively evaluating acquisitions and expects to execute one this year, which could drive further growth.
• CMT's new business wins are expected to generate an 8% sales growth, demonstrating successful customer engagement and market diversification.

Negative Points

• Net sales for the full year were down 15.5%, driven by lower demand across end markets, particularly in the truck and power sports sectors.
• The company reported a slight net loss for the fourth quarter of $39,000 compared to net income in the previous year.
• Sales in the fourth quarter were down 15.3%, primarily due to declines in the truck and power sports markets.
• The Volvo transition is expected to reduce revenues by approximately $30 million in 2025.
• Market demand and product sales were down overall in 2024, and the company does not tolerate the decline in sales.

Q & A Highlights

Q: How are you managing the uncertainty in the macro environment and market visibility for the full year? A: Dave Duvall, President and CEO, explained that there is a lot of waiting in the pipeline due to uncertainties like tariffs. However, Core Molding Technologies is well-positioned with facilities in both Mexico and the US, allowing flexibility in operations. The company is seeing growth in areas like turf mats, which are US-based and less affected by international uncertainties.

Q: How are tariffs impacting your operations, and what measures are you taking to mitigate these effects? A: Dave Duvall stated that they have set up a process to pass any tariff-related costs to customers. They have communicated with affected customers and established a surcharge process to ensure transparency and validation of costs.

Q: Can you provide insights into the expected margins, especially with the Volvo transition and new initiatives like the paint product in Mexico? A: John Zimmer, EVP and CFO, noted that while the Volvo business was not the highest margin, its exit helps margins overall. The company is confident in maintaining a 17-19% gross margin range, even with changes in revenue mix and new business initiatives.

Q: What is the outlook for tooling revenue this year, and how does it relate to future business growth? A: John Zimmer indicated that tooling revenue is expected to be in the $30 to $40 million range this year. This is a positive indicator of future business, as it reflects both replacement and new business, showing customer trust and ongoing business relationships.

Q: Why not focus more on share repurchases given the current stock valuation? A: John Zimmer explained that while share repurchases are part of their capital allocation strategy, they also focus on long-term growth through acquisitions and organic growth. The company aims to balance capital allocation to support strategic investments and growth opportunities.

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