Core Molding (CMT) 14 Mar 232022 Q4 Earnings call transcript

Good morning, and welcome to the Core Molding Technologies Fourth Quarter and Fiscal Full-Year 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded today.

I would now like to turn the call over to Sandy Martin with Three Part Advisors. Please go ahead.

Thank you, and good morning, everyone. us fourth Core for quarter joining call Technologies XXXX. you review to and appreciate for Molding the conference We full-year results

and Zimmer. Joining Core the call the EVP CEO, President company's John me and Dave CFO, today & Duvall; on Molding's are

also future I Relations and can that is Q&A or Today's including section or are performance, statements, that audio at reading. Litigation through any the not of future be page statements Presentations session, webcast may Events and to in no forward-looking as accurate replay pursuant date information of recorded. to time-sensitive the Securities advised the Private coremt.com. are would any provisions on transcript Reform and being or remind harbor Please are you will Act of statements call accessed that the be the XXXX. This events also link like the the be including the safe historical be Investor financial discussion call, today's longer facts, made made of expectations or of

our the to nature, measures release their today publicly cash to our employed. revise by release. be with the implied. nearest to the materially and factors or non-GAAP obligation free adjusted disclosures Securities uncertainties described refer and end Molding at update filings the forward-looking including and the or can are and on flow, EBITDA, no Exchange earnings Commission. those uncertain forward-looking results issued in GAAP may capital company's of statements, found Forward-looking assumes differ company's will measures, control. from earnings the statements. to Core These Reconciliations any statements. return Management refer Technologies Please that expressed outside was press Actual are on for other risks

with issued in at press the on earnings today submitted we been an the A the of included website copy coremt.com. release our the release Relations has X-K Investor is section SEC. posted of earlier Finally,

And to to the turn over now, like call Duvall. Dave I Dave? would

quarter Good start our and and Sandy. a you, fourth to gaining momentum. clear call. to to strategy teams people, earnings focus It's our year is company of congratulating processes, on performance. full-year Thank across and our the business see for I'd morning, like and great record-breaking exciting execution, welcome by

As Thank increase is the at always, happen. by Core demonstrated results best We $XX a you $XXX for the had at entire of from the record-breaking year We Molding income record-breaking year, the record-breaking this team. game. prior million. to EBITDA net record-breaking Core a million, in $XX.X XX% revenue making Molding million, had of this of and team

for improve, a You opportunities we us what continually is the difference and by is but and many continually and we team, demonstrated of winning and Core operational is this all we business, feel process exciting important we The that complete, improving This rewarding is still can organizational, for build, are which have and of seeing are improvement our as and Molding. at accelerate, never is see institutionalize systems. improvement, results.

that the to Core for again work making Molding you into So, entire happen. team the thank hard went all this

dive a we review XXXX few to other and into first I outlook want achievements. Before for this our year, deeper important results

to to of drive special goes announce sustainability to end excited on Marshall the a Many thanks will but major continue We the forward. moving efforts by month. Core leader, sustainability spearheaded this this are this and proud project Starr, first progress to our our contributed of Molding's report and endeavor, who launch people

results of from a for We engineering technical and over training outstanding The core an year-long our program training our XX of in program, training online capabilities. continue invest and graduated to implemented seen many, leadership organizational internal and launched program. our to which in We more, knowledge are people leader people many frontline and We leverage our the these management positions their of in account and efforts, XX% knowledge. subject-matter-experts, XXXX. institutionalize promotions, further more

recently as to help cover a Michael throughout our strategic we and hire our Of I operations. excellence decision Operations, President Gayford In to minutes. Vice accelerate operational a in our John made our addition, more this program will team few

XXXX, Design fully recruiting, of we driving the is team, motivated impacts we Also, in and demand partnership and knowledgeable closely advantage, and most macroeconomic with six and success. developing of retaining, a remains forecasted competitive In total a Entering program custom colleges continued strong, expanded changes. we a for our events monitoring quite Excellence, monetary our future are and have to and understand for Center that and important internship technical factor universities. and highly policy simply, Manufacturing the summary, business

need on As pass programs on winning means excess better programs. we to and available disciplined XXXX, in new tightened focused our that selective with more on lower we business, capacity were our potentially margin remain This and goals. return that align

bullish maintaining goals. capital on industries potential and enhanced advancing our in the improved in consistent evaluating business through sales transformation our our acquisition future with new opportunities combination we through we remain are We margins, addition serve, a of disciplined in a long-term the for efficiencies, plan return long-term of growth, growth the employed, on are and capacity. We

and to sports we We power drive our ability our XXXX, with in utilities growth industrial percent saw demand drove strategy as material and in to from meaningful in XX% recover costs, to truck industry our in continue revenue combined truck XX% product a market, industries. our XXXX diversification sales. Increased of

winning a solid solution, with composite existing platform development supporting customers us provides mix and technical solutions and with new design to launch. from business industry needing customers current a continue to Our with

of long-term We are industrial, our utilities, we by expansion packaging verticals, encouraged especially see trends. and where growth

solutions our solutions industries, and and resources diligent will the selective benefit with our XXXX, utilizing that be from our material engineered sales, capacity and For growing technical highest conversions. be are about to continuing teams and value opportunities

fourth progress during versus QX. few launches quarter, increases the a reported to Product to a fourth substantial new in represent ‘XX. product XXXX product that quarter sales and in production. see in of XXXX QX sales XX% strong comments Turning about of wins in now We continued are we

launch to vault number categories, along flush in be the production QX projects to industrials in-ground projects of water year. by continue specifically this covers, related and expect programs and other solutions, industrial a to We with storm products, we in utilities that utilities full of

engineering well Molding, improved reduced We as of margin cost, customers. confidence for customer unique they represent launches enhancements provide customers. about are where drive these ed important complexity growing a they lower these created excited solution because that and to have we performance, and Each our markets are solutions projects as our in Core because

With to turn that, it over in financials I detail. would to John now more the like to cover

good and Dave, Thank everyone. you, morning,

Completion determined the integration challenges due of chain this our supply through group, to we solutions and integrated fourth all transformation. go company's analysis full-year the operating the to quarter for quarter I charge to XXXX, In several results, engineering this impacts plant. Before appropriate of integration wanted structure discuss took I that of systems, each of changes business to our long-term corporate and from operational the our completed and the plants. years of each The completing from turnaround, related analysis the integrated priority. resulting company's sales, COVID, of value us directly of tax an our receives took and plant timing

analysis, tax by is value the reflective As each a result structure company's plant. of more the of the received

release a net As QX losses. in reserves to million operating the from XXXX, was years company of result, of able tax-related $X.X allowance previous

next three over utilize the to losses net years. operating the expect We

With XX% the new structure, mix effective we company's to tax of depending upper range, on the expect be our will business. rate mid the the in

price profit the year of prior increases, Now in truck XX.X% product our turning prior sales fourth new versus And year $XX.X year increased of $XX.X fourth mentioned, Revenue customer were to XX.X% quarter to driven sales and or compared XX.X% as a and sports by power in Dave $X.X launches. XX% versus XXXX million, program demand quarter million period. quarter. or results, increases sales Gross for the ago. totaled higher largely our million was sales net up the industries,

have quarter, supply chains we are even worked decreasing, to prices to the most that material margins, further out, some and material are stable. we and leveled During pleased prices stabilize report with

expenses risk the costs related information million quarter was and and in were certain including costs, benefit prior incentive year-over-year the $X.X management. financial increase million applications technology and higher to period. to cybersecurity higher $X.X improve performance, compared strong year providers for we as capabilities to short-term our professional administrative and The the general, primarily transition labor third-party Selling, our due to information to fees

discussed earlier. the fourth release XXXX million was recognized $X.X or the net reserves fourth $X.X quarter $X.XX fourth X.X% million of million. of net EBITDA per In share in to a the aggregated the valuation or income or $X income sales. of reported NOL per to share. XXXX for EBITDA $XXX,XXX million tax quarter to compared tax X% sales, operating adjusted compared income or the structure from related of quarter, of $X.XX of million company the We benefit of $X.X $X.X QX quarter, Adjusted

year-to-date both the You fourth GAAP and the numbers at quarter end discussed of can press release our today. find non-GAAP the for to reconciliation tables

goals and Sales our in Net sales especially margins versus million of months new few demand, operational sales, turning by XX.X% Now, increases versus made related in the moments. XX customer $XXX.X or improvements increased production XXXX. launches. facilities to year XXXX product and cost favorable to operational Gross will power from truck $XX.X driven net raw $XX.X recoveries, inefficiencies, imperatives sales has The manufacturing largely has strong material in program XX.X% sales ago, solid set company through compared improving additional product by results. offset prices Gross to somewhat increases, profit totaled go mix or period. price was and year and full-year progress our efficiencies. XXXX. the and XX.X% were inflation sports, impacted million unfavorable by XX.X% in up of a fiscal Dave of for million, were prior selling for excess a heavy-duty

million prior is the the plant for million period. the quarter. year SG&A million The fourth in compared costs growth the in $XX.X excluding SG&A $XX.X costs were full-year the with for closure growth year $XX.X to in or consistent

XXXX $X.X loss financial income and the in from $XX on short-term of contributor refinancing year, correlated Full-year based SG&A operating looking income line, increased large work was which million is million, million, recorded costs growth operating our a we of below performance. is extinguishment to early summer completed and directly incentive XXXX. $X.X to debt For the a the

or expense benefit income to $X.XX $XX.X was per full income million tax of million, million $X.X $X.X the year. included structure compared share, in our the due XXXX $X.XX change tax in or to million which net income is prior share our year, the a earlier. For tax of discussed net $X.X per

EBITDA $XX.X full-year or $XX.X of of Finally, million compared X.X% sales in sales the year. adjusted was to X.X% or million prior

or on financial million. Turning December At sheet. activities now December XX million company's XX included of working total XX, operating December, flow, cash investments. year-end. of is less XXXX to XXXX the will months the had company's debt and ratio CapEx We company XXXX, balance and on also months capital and that for be by end debt $XX in and and combination a spending were managed to well The The availability expansion had liquidity provided company's for CapEx one which trailing expenditures term million. of of position, XX, million, $X.X included capital XXXX, equivalents, than the $XX.X automation available ended at the at investment December company XXXX. EBITDA capacity totaled cash year $XX million EBITDA as lines. XX% and capital credit The at our capital $XX cash spend The of adjusted estimate approximately our $XX.X times cash, the $XX.X revolver million the million of XX, was

level. having we the and year million, our of XXXX at Inventories receivable of are payable DSO days. accounts levels, XX well with a least accounts goal one our inventory down achieved ended compared our and We and times be $XX.X year-end controlled of to

capital metric, the manner, strategically fund disciplined of a improved with that a which prudent on basis, return liquidity provides manage Our pre-tax return signals to an flexibility annualized and employed, to a balance on We plans. are plan sheet, our XX.X% capital. decisions company believe our growth and allocation capital strong use to in

improvements. XXXX, our and we on continues, in business and profitability XXXX transformation focused operational During continuous are increasing strategic through

on Improving operational capacity enhanced margins Our capital target on gross efficiencies. returns also performance improvement to employed. assets, our which will efficiencies the as better improve goals production higher throughput floor we of drives increase through

goals, profitability and core are programs to creation strategic and We value XXXX dedicated with in to growth drive long-term beyond.

call final for would to over Dave? the Dave that, some like With comments. I turn back to

Molding were annual recognize Thank us reach an of record. another This first future and each our to pleased during you, John. is Core milestone in to helps over XXXX, growth accomplishment, We in this million our sales gauge $XXX plan plants. awesome

on As John this operational productivity the and all operations focused strategically to improving are we of performance, mentioned, specifically forward. momentum profitability and carry our at improving

Mike mentioned, our Gayford operational teams to and in United the we hired As support I lead States.

our must-win price like Just must-win increase battle by some that of enables underperforming processes solution sales to capacity will estimate approach. XXXX fully battle plants, was our recovery and our We our in in operational XXXX, is this a for embed for our better our operations. excellence it XX%

capacity level processes. high continue driving known and are For and of effective, spending, metric our but we sales we We've to discuss scrap, delivery productivity, all require made additional When capabilities performance that we a be from throughput, also productivity of efficiencies. and embedded know our labor improvements, have this operational improvements. in significant opportunities solution to we overhead

put our company. place our one number is our to It have in improvements a goal processes battle are We this must-win successes, these and for year. key calculate

As reduce profitability on in while robotics past, the changing and asset continually focus to and monitoring we've we're utilization, efficiencies. increase improve automating and throughput, discussed forecasts. applying order We costs,

will and diversify risks reduce by both For continue industries. we Core, end and customers to in concentration markets revenue

business. and of and especially growing affect here we the dedication further significantly as work expand our Our margins, gross will stabilizing business

to the being compensation of improvements, the March further portion our the continue to tied made XX% will operational awards to focus operational board grant in financial become executive years. our board from long-term meeting, with becoming decision to awards starting performance-based solely incentive leadership on XXXX, the our that shareholders, team senior restricted three time-vested strategic we a plan performance. future the board next At our As over Xth for transition approved align to directly

leadership's shares performance hit transition to performance, based the incentive years. immediate decided performance the long-term years the an cliff-vest compensation plan the board by on over annual in having senior would've on our three XX% the total three As been three there next Therefore, XXXX XX%, next and the board awards performance-based March XXth, shares and the over the targets includes be first XX%, share then share performance annual which shares. company's over The awards, years. granted set the three-year to

Core the are at regards will corporate to in our for advancing. of As and done sustainability in this highlight I publishing proud this areas later the disclosures, mentioned for month, benchmarking, social all Work getting which inaugural journey. team to has beginning, are scorecard, report ES&G we our our and of been our us point responsibility that I'm we

goals. improve a always and defined our much committed a professionals, but achieve have to We to will of have team do, solid a foundation, we clearly continually business path and our

support to health later and will local of in our work in sustainability inaugural this gas waste continue seek Core also committed environmental We strengthen projects advancing and to area, that communities, this is our reduce you emissions, oceans. new I greenhouse our believe stewardship, our out month. and see that report the

XXXX we power outlook is from on see demand which robust the Our program, discussions major of currently our part based UTV a customers. sports is our We optimistic a recently with industry. won and

half. first personal watercraft through customer and demand strong the UTV remains Our

well or continue weeks, serve. could are companies. we big as for in and somewhat we Building industries industrial pressure addition, retailers be to for watch companies, In demand through we work carefully automotive continuing all residential some has and supply but seasonal, will to truck under consumers large temporary that that been infrastructure develop recent box as and

answer with future we pleased about markets. XXXX the This return remain growth allocation for strategy. We of and our on a as cautious welcome results, monitor our macro continue We to your analysts plan are potential questions thank to to the want and today long-term profile, that remain and prospective end especially capital our their investors want optimistic and our for call with creation, your our We will on cash, time to investors value to means and call and disciplined earnings all impact We follow-up businesses. questions. or attention. either changes

line like the open to questions. up Operator? that, With for I'd

[Operator go Hutton. with Chip Moore first Instructions] from EF Please Our is question ahead.

able I John, I Yes, the Hey, you congratulations to there. capacity million there their you get how about that? think about, being in current do job. Do ask $XXX could to or Good potential investment think there, morning. some increase can the Dave. great on wanted path year. Just footprint? do you you any by on with expand plants little that Dave, about great you you a maybe the goal. XX%. to contemplate M&A Maybe your or longer-term think bit get talked

Right $XXX it Yes. footprint. the get with of work, in. must-win to older wouldn't part have known our be to some some have that Right would battle, where we now, we we we do work talk get to we the on of probably presses We'd and able current we're about now, know we when that bringing and million opportunities. close, the need type depend work

estimate XX you overall XX% two which in it's four plants in would presses. improvement essentially would throughput about get machines that get in we you So, about - those those, a

highest preparation as the and brick system year do, getting next what into getting forward looking that really be whether really place, So, or before the start is operational level on mortar the doing an acquisition, would we in would operating plants we possible at acquisition. in

about that that sort terms how think optimize assets, timeline? you XX that's those to process XX-month do think helpful. And of Got timeline, it. of to a That's or you in

better that. We be than faster

a have nine, say XX six to months along. nine in months. mean, curve, finishing me, you're - it draw at be to to this all goal I year. We'll if with getting improvements I looking linear Our is it

that Yes. about launching won ago. that year Chip, business the probably kind is, of - today we one thing XX programs a maybe our our were months knowing - we're ago,

so, for year making what ready needs looking And is we as we're to sold we're sure what up some that or to do today open capacity, at time. to sell next be that launched

critical, that reason today. to Dave capacity said, So, open the get it's that's really as

So, we sell go that can it. we comfortable feel ahead and very

this guess right, point. even perfect. out, further I And launching to at into I that think, yes, some point, That's, ‘XX you've got visibility programs

guess, you about aligning, And so, in opportunity talk then is well. can I maybe the pipeline like how general. And that pretty sounds expansion? with It

probably mean, and said, probably being I that's Yes, right coming just taken of phase, more now, we're the business we we've $XX like ago, putting - lot of a - the million that have, years in. two with into we're selective we because what, some on launch

when So, got we’ve selective programs in capacity be ending and more a we don't. and on the look we to definitely that. where at want do for have little to But when we be we new programs bring will

wins I seeing half We than QX utility are - section. were more in think of the in our

Okay, if last can one just I that do maybe one on great. And CapEx.

was going, it that year. particularly versus capacity in new things is of terms Thank Where $XX that? like this think I million and you. programs

those a we Again, Yes, our be get sustaining, goes to things. going that change as that change faster, you and you types the but improve additional what get equipment, made more about comment capacity. of will end you'll in those that sustaining up a of when that a controls as of is way up on will controls also happening throughput, press is we types stable, Dave things, majority down but

expansion. pretty years, the done couple last of capacity so, some And good we've

last over this three four the obviously I presses years. two presses last year, added think during over past we the -

of or we things. of got And a make very year sure on stays we've those the I CapEx focus that this sure think do make sustainable sustaining business how spent, the more being stable, so, is types

capacity and When Yes. what do a the gaining Maybe about you're can expanding put we at place, elaborate really able the you question. getting and do that as lot of that to one the of in point, start come operational as a we looking more out them preparing little in quickly and Chip, and operational know getting that we systems is operational high your when on prior to when so in systems level you a possible. to integrate an really acquisition, talk

Yes, makes sense.

else. Yes. Fix before you somebody yourself fixing try

That's very right. right. All it. I appreciate Thanks much.

Showing remarks. over like Dave I [Operator would questions, conference to instructions]. our any turn back further session. no closing concludes Duvall the for this to question-and-answer

for Thank update Good. you company, first we do look results of everyone. report Thank and an continued your in when progress our forward quarter a you, our months. in of providing couple we interest to

attending you now The presentation. for conference today's has Thank concluded.

may You disconnect. now