Core Molding (CMT) 12 Mar 242023 Q4 Earnings call transcript

Hello, and welcome to the Core Molding Technologies Fourth Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call to Sandy Martin, Three Part Advisors. Sandy, please go ahead.

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

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

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

over been has CEO, on Duvall. the now President press like X-K. Finally, And would copy submitted the release I Dave? Form call SEC and to a of to the company's the turn Dave to

accomplishments for successful significant Thank you, both Sandy, must-win and in through we the This pricing. specifically of executing of XXXX. hard XXXX quarter customer some our achieve our and to year company We strategic exciting review journey. results. our you improve line larger and was our annual both as see improvement. stated goals transformation fourth was our for proud profitability XXXX thank in an team's programs battles We're terms progressing with to XXXX performance one our and initiatives margin to and operational and work 'XX, achievements, joining of strategic our what on on through our exceptional driven March for of in product working of long-term key market-based us was all the

We which a summation improvements exciting most XXX year, I basis of We that our high-performing have many our Within is to of growth, believe are attributable The points. key implemented in and this is on executing just Win disciplined profitability commitment goals. result we increased improvements highlights a embed is directly line What targeted a overcome.As model. an some find our approach operational significantly Battle to made infrastructure, defined March margins demonstrate This and continuous do. plants the of result strategic organization to a company-wide initiatives operational our existing now organization important is cost executed organizational our improvement strategy. achieving are better a that business discussed the culture improved done the continuous We significantly challenge the overall improvements. the of more a knowledge successfully in position our is across formalized in originally to to make. these focus to as and and much expert the by exactly next what with review, Must product capacity quick we projects. efficiency leveraging gross XXXX to which of we I have systems, said XXXX, this We that and created in the we for of reflected statement improved company's accomplishment would 'XX.

an future is in programs, a culture ongoing to We capabilities organizational our training foundational internships development, organization, This training continue process, to leadership our technical developing grants. and our which by on government expanding it's creating invest report is environmental and easier company. Core's sustainability in success.We of is XXXX, environment stewardship where citizenship succeed inaugural to and corporate our the focusing our advancements in issued current of cornerstone the and

At full We second publication underscores Innovation of income will for execution and generated balance driving disciplined and Core's cash with nomination results. development to for These XXXX honored top-level flows. company's [ and review in record commitment a culture direct to Core performance, Hull were value.Now resulted the per Sea-Doo Award teams, were were in April. inclusion dedication share, Matamoros net and financial Process and sustainability ] standards, our Molding. which in to Annual year our sheet index for and accomplishments in plants. XXnd the of our record of honored Material their be Russell operational dedicated The at last our of the ethical the The earnings year culture high innovation shareholder the meeting, BRP, and Monterrey our the Mexican our facilities National result the practices turning Industrial of result winning in strengthened

basis for million primarily increased XXXX net annual XXX by to XX%. As dynamics comparisons. changing margins tougher and X% points the we down Gross were previously year $XXX to due market signaled, of sales

adjusted stated. or originally year, in over target improved free $XX for Operational created meaningful the also year. of performance sales. XX% We flows the and our full capacity $XX EBITDA generated in for million million resulting XX.X% additional exceeded of of cash the we metrics

call in utility and to fourth customers sales the third in softer expected quarter about of we quarter industrial cautioned and continuing inventories. comps, year work prior tougher XXXX Given through conference the

Although gross quarter EBITDA challenging margin improved believe due to holidays, market is the authorizing new compared for is to adjusted stock of time us ago. program our to to to we company's full of important current purchase because the more capital the XXXX.Lastly, allocation fourth a component for of critical quarter which still like This it company's that, ability the to buyback year to Again, a customer quarter as cover I'd and $X.X we John announced workdays and to stock, turn we on the had our and the shutdowns a Molding authorized the repurchase yesterday, always year, fewer of is this during has the Core up product program in and organizational at to profitability is the at allows beginning purchase we deliver improved time execute Board in from prices. line result stated detail. that it over margins stock a financials to common strategy.With opportunistically million company now the

good Thank everyone. you, and morning, Dave,

Dave XXXX more full profitability we targets mentioned, accomplished progressed. typical to environment the As during year year our demand as a that seasonality changing normalized

of in sales backdrop a had comparisons XXXX. also versus XXXX We difficult

were industrial softer and product year. X.X% sales total prior sales the net for a verticals. by ago were building Product compared were to utility X.X% down million, $XXX.X compared and XXXX pressured and Our demand the year sales to down products

levels to becoming demand the customer levels certain in In year, half inventory XXXX, During levels. levels returning higher customers customer of half result excess finally first optimal in the they or, of overbuilt. slowed through demand the second as the inventory cases, worked

and the the industrial in rebalanced and coming customers primarily industrial down, through medium sales see We demand were utility continue throughout and strong for to sales inventory the markets building work trucks year. XXXX.As their heavy-duty products levels utility and product into

and decreased negative on sales full sales and in Our a compared compared in $XX.X full truck to lesser return labor years the over year. exchange severance million, have levels. income XX% year gross impact has to of to Operating In for to the with unfavorable was had for our improve shifted $XX.X it a would year mix XXXX. past to prior the past, but year the truck onetime several business for as and a the $XXX,XXX the to margins, their professional year $XX.X of impact foreign higher expense truck sales increase have costs, by primarily driven worked by and the of fees sales XXXX health XXXX up million a currency incentive the the decrease fluctuations.SG&A were truck XX% significant we profitability customers expenses in as XX% period, extent, million that from

a income XXXX. increased Our as of in to percentage full compared to X.X% X.X% year sales operating

interest lower range. to down expense This financial is refinancing operating The One in are in goals from benefit credit million towards of cost. balances the that half its facility $X step XXXX goal.Net the company's the in of year and a in in long-term second being XX% XX% was debt positive sales interest reflected year lower the our was overall earlier. XXXX XXXX, the of X% income of

against of comparison XXXX favorable extinguishment the due loss $X.X was million. XXXX Another the debt to of

the effective XXXX XX%, the comprising we Our was X tax tax rate weighted jurisdictions operate. where tax cost of

$XX.X diluted or million $X.XX totaled in EPS million income over comparable diluted year share, XX% EPS of per $X.XX period. or $XX.X compared net the to Our of up

the fourth sales. the prior fourth this XXX of year on normal from sales, $XX.X and costs inventory to company's last about compared quickly, an comparison strong were seeing an was SG&A compared end to of reductions with lost were X.X% as third $X.X costs expenses on XXXX.Now labor income profitability XX.X% anticipated we million similar of adjusted cash to year's customer XX% a fourth provided to in million the XXXX decrease due this as sales leverage X.X% points demand down million for a material, the XXXX gross of to XX.X% and margin indicated quarter a the income profit lower demand as QX fixed gross levels. In that In ago. difficult XX% or is and sales Gross were percentage of to reduce sales, margins quarter EBITDA, flat was reduce approximately to sales in lower company sales $XX.X costs, quickly the which a variable we X.X%. maintain in and was is $X.X decreased. able its product $XX.X to benefit our million The due million in critical XX.X% sales, which the improvement to $XX.X year. results. or for Product a even sales. quarter SG&A a Net were $X.X not quarter. percent compared ability delivered than the prior costs reduced of to company sales.Fourth overhead XXXX, also record to QX, the at higher react Operating did year. flows. operating in turning to against We million sales, had of million to return seasonality of or QX, increase basis quarter to We We XX.X%

last per adjust As us Net and on decreased its on necessary, last to we focused operational reserves.For proceed $X.XX to million reversing year. that fixed improvements and and was income from company will earn NOLs ago QX, tax diluted the diluted reported income that year. infrastructure from share due long-term to company income net XX% levels. to cumulative costs allowed the will to flows costs, reserves company. $X.X SG&A last The focus $X.XX. cash million the the is if paydowns XXXX, free borrowings year $X.X retain interest the debt valuation quarter by benefit we on versus on related growth compared interest monitor year's EPS of expense in and or Recall required sales cash This year's grow eliminate generated based

and share. year's EPS we the tax our been initiatives, up pleased X.X% year for margin strategic quarter or X%. million Based points and with the from on was gross prior our per XXX Excluding the have improvements $X.X actions EBITDA EBITDA. XXXX last margin would year-over-year adjusted basis benefit, of in EBITDA sales, are $X.XX diluted Adjusted of

non-GAAP were in to release.Turning our position, the improvements and press tables resulted Our to cash flow. with a compared $XX.X the focus now of $XX flows expenditures XXXX, flow the favorably for of XXXX's cash company's cash compared for The financial which to XXXX and reconciliation XXXX. significant on was $XX.X activities to in starting million $X.X discussion are profitability higher operating million free were GAAP end XXXX. year in by generation. at provided Capital million company's million for cash operational million $X.X

at outstanding approximately XXXX of includes be liquidity with million. in capital than was months our and cash credit was $XX of of to $XX EBITDA the $XX to total balance and cash We the Xx. debt term company's million ratio debt XXXX million under available expect We the XX million capital $XX and and ended end $XX The expenditures year lines. trailing million, which revolver equivalents less

managed working to pretax on netted end the of our capital well exceeds be employed, which and trailing continues was expected Our our targeted range return changes to to share basis, These for XX-month to industry XX.X% of a forecast launches customer capital million metric, return the program in. as $XX a on year.Finally, at and want XX% and program new we estimates outlook our well XX%.Today, combined price as XXXX sales. material projection, a

by to decrease XX% expect XXXX. annual to compared sales We net XX% XXXX to

model Also that existing current stabilizing outside of that a this half and continuing consistent is levels. the on as transitioning future are Volvo transition, are environment is to is customer Volvo business believe from not programs. through programs sales of. in truck cyclical we XXXX. Core the XXXX as the Our demand includes outlook well more positioned model truck, actively slowdown in new secure new pre-pandemic to consumer inventories beginning with Notwithstanding Volvo and second of we well a part demand being

projects We new on Volvo good relationship programs focused customers. remain and and from from have new Volvo a highly other with

margins profitability We gross discuss Dave. outside XX%, levels further to allow continuous the with that, all range this will of year on lines, will for XX% with I'd to improvements continue forecast some focus range to working to targeted events.I'll this we turn year. on which maintain Dave? seasonality onetime let of additional our and plans full to product due gross us and Dave outlook across it initiatives a margin like back quarterly With in

Thank you, John.

up for end certain cyclical calls XXXX. of in a XXXX end-of-life projections focused expectations compared truck offsetting truck in in correction truck with we're America cyclicality demand which to make Class half on XXXX, headwinds, North our programs. market, revenue and XXXX For market Industry X and still XXXX, to rebound for XXXX for

We sports slowdown seeing sensitive are rate power levels. in some a and pre-pandemic return utilities, have for which and to interest seen industrial demand

quote we wins at come business that We is success. of Same have end aggressively to our the and to We've wins XXXX up drive ramped through life. new grow with commitments, in to slowing for this cash another already new won processes our opportunity business. XXXX lead to $XX million and are as generation that end that will to addition demand offset to replaces of will These XXXX. launch business existing programs businesses our of

have actively sales pipeline opportunity intact million, with our through being unique to challenges. remains solution sales also business technical customer we're solutions with base which of a our driver over to strategy continue primary new pursuing.Our that customers their We provide to $XXX diversify the

as market provide capabilities us offering conditions process durable, current overall position serve. Our such and from reshoring industries and benefit growth solutions the recyclable spending, lightweight, we infrastructure in that to low-cost, strategically manufacturing

our projections match cost improvements sustaining line to XXXX sales while changes structure XXXX position a lower us customer made levels in maintain in and with The profitability adjusting operational gross demand. put even product improvements. operational XXXX cost structure continue better and current we in We margin to solid in

additional in the now can continue our efficient, $XXX that and to date $XXX to improvements which allow operational between the make in resulting place capacity. revenue, million utilization will product to more company. asset capacity have of we believe million in future us growing annual Our We generate

customer new future to to we opportunities company choppy acquisition in adding plan M&A and our the capacity see revenue where areas of We strategy. North or lever for price have opportunity, which allocation expanding process The matters. America and for and overpay an good We environment. growth. an a our in we capital part our footprint includes size not and opportunities, acquisition diversification especially as manage prioritized This offerings of strategy, demand evaluating over continue to includes do

capital the the XXXX was gain which and plan to deploy successes sustainable prepare for from Win will growth, plan Battle and improvements us prudently.Our We helped margin beginning. Must us carefully

We have growth an well. execute we've systems look capital operational to our now resource can as organization, capacity and across support technical we the scaled organization that created plans. prepared for to is our invest excellence foundation and growth The long-term

the with to navigate continue will We impacting manage business as and discipline factors we purpose and external our internal business.

resilient and our positioned XXXX shareholder well reflect top for employees, built organization we the that a the will believe shareholders continued we support Although some from growth and choppiness creation. long-term value We customers, Board appreciate is members. at line,

questions. to I'd open for Operator? that, with like line the So

you very Thank much.

question-and-answer We from EF will question Tim Moore Today's session. the begin comes [Operator Instructions] Hutton. first now with

and year. sales the CapEx. the guidance, nice XXXX that I flow cash free work won't will That decrease currently the gross the Volvo you participate was that But annual Dave, how like John your is off? in one margin on model for new considering strong rolling expansion. that that decline even maybe you in much do the impressive the regarding be sales

Yes.

So was programs total part to and and $X maybe 'XX. then over It's product million actually remaining out. that about about will 'XX $XX for are It several out 'XX Volvo only sales just million. $XX phase this The will would a in the different year phase of over million be be families. Volvo for different

No, that's good.

years, talk the it much kind year, So the $X 'XX following 'XX, combined of be do and this will to million you million when how think X X? if about you $XX following

then $XX million and be year this in the probably 'XX in million about the that of then XX% to and It will 'XX. $X remainder

makes That Okay. sense.

with them that's model changing that business some not out. on the programs at still some are do major have we'll Tim, We the still end.

million we will around business. still And $XX somewhere retain so of probably

Right.

the they strike, That an impact of And truck the that. in was bit a had Mac quarter. figured right? yes, I little because fourth

Yes.

Yes.

in the first also And strike quarter little... Bronco is fact the in

helpful. that's No,

Just bit touch But year are I you more. kind what I mean are notable? the I explained other was that I wanted Volvo mostly phaseouts the a little expecting just year impacting that you there of impact. for versus this to end-of-life difference this maybe are just think before any

No, really. not

and year think of I bigger Customers, the X watercraft, levels were seeing, year levels. see with really quarters. to high those last this building thing that especially still personal first this the they think back quarters to come normal utilities, inventory, were year, ATV, I we're we're going is

of last industries some half of figured is the people comp a build the what it most so a more the then reasonable normal bit their because that And year, guidance up burning some they seemed year or out year half our like little of of doing for for And more about levels to second by through sometime those probably June inventory inventories is bit XX over little the quarter. time. third the coming standpoint they us, first about more had probably in back on a were that with and

So then real And year, of really, the think I tough as of out the comps. to half of is the year be going goes most on. that first it evens kind

personal the the built 'XX, of they're filling and all especially on truck, delivered at at really watercraft beginning Yes, costs, industrial. and pipeline was as it

the down trucking on commercial makes maybe when structure. the and normalization. and area you sense cost I But for cover know to restocking XX% XX% engineering, I they're [ vehicle. to just be commercial guiding vehicle That to mentioned ] I like

cost second Would the facing it margin thinking seems in should half that gave like be in the But off you're first guidance. won't being second half, when your half XX% to the much be So the forecast comparables base than margin in as as starts so off. structure better variable, Maybe Volvo by gross first half we model XX% with sales the year. you second the or rolling easier half? of the down gross depending I

of is model somewhere between react company's this the cost. get that always hit costs it's our rid how and job, you with it's right variable and been fast the XX%, on think head, job I that is XX%, the we

second And bit a be than little half of the do the so first will yes, say think, I year I the half. would better

think quickly be a just maybe that. reacted I lot probably very because quarter even already second better would to we've first even quarter than of

costs was Some you types XX/X, of of our mentioned to the structures QX plants us running that things. we in changing at saw those back now that XX/X, severance plants, shift were

would and fourth, softest, being But a being we've seasonality moving so than But goes been year quick. little with fourth probably else. second the quarter that everything of I then normal and middle kind of way the is other yes, first think then and bit the the better first up and the third the And shutdowns of year. that quarter be than might

you looking qualifying view color. there customer said makes you? That good not, I year? if a any OEMs million $XXX new there sense. really to That's And big mentioned, Dave pipeline. this any think ones are with Are line big

Yes.

area have We year. new this truck customer the we We've several new in got just a customers. that won

we're We data looking big programs the either that for for really also the X that get transmission on right quoting vaults now lids for on in the have, or transmission. ground industrial the or the buried energy and the think, at pipeline I

hog in there's then else top in the last million That you're question, regarding But the limelight not pretty here. presses great. it... sales Or rank looking priority? acquisitions, anything is still that's funnel you at my probably just of mentioned to $XXX believe big. when be are No, place. to you $XXX I could And there capacity million

at then that with done construction sales far sales Yes, the projects, channels really so getting that our be strengthen what capacity for sales that all with that installed the have, at grow of of can we're M&A the have least 'XX, I need processes. that we think capacity in to our build we the that to treatment and for Really, parts. share we're where with able other out the growing strategy, processes capacity other channel work channels industries I we we to for most the as with those those we think getting we've with wallet be looking to plus current into water more our industrials, as

the of running Tim, Yes. America America Buy up is that the we against things one Build keep challenge.

infrastructure built in the that we We is there's stuff do of a one United not in United do bill, the requirement do States. the States. currently processes With America, have that our

So we States. some we about how the buy are it acquire get try them presses United actively to it or looking that get do process and be better Would in to to So definitely America up most looking advantage of we other and Build running? we're at States how for processes do we All in the United part. America. do our the take the Buy into

are So company we're of a then also good large And there. parts. little at footprint. still think we'll make bit our We that I look a

So located is very where you're important.

so in build additional some maybe you to processes and see how get have little more up and be different to maybe all a strategy more bit continue across with we locations, bit And the might our Southwest. the of a can States Southwest United little

fourth so decent a the second you the of and conservative could luck wish at the be you Great. on the That's really lapping that normalization helpful Appreciate some cover, you're the things Yes, sales other could have I top it. I maybe maybe and done year. least. half guidance granularity being like company hopefully, color. you to year line and with get quarter destocking think on actually I

Instructions] from Capital. next [Operator Dezellem The question Bill Tieton with comes

Building last the so revenue year? QX, million decline discuss please or $X year to from this Products million down you $X Would X

to a we're change are us. abrupt programs and We when everything an have quite customers build. was their think of did launch, I had And were And inventories, that we for ready lot they It or to getting lot that's saying, in whether sites. basically of product. a Yes. warehouses already supplying at areas can you job we'll that, that actually several take the we store

decline, this already their large a the some of And drains, a think the and that, seeing store come at are now, put consuming inventory to of like water end customer that They when when really started as looked with lot QX. outside. volume year-end inventories Right them vaults, things demand on expect back. they lids, year. near sometime of talked inventories near and into and slowdown So far outside. I reevaluated of every see really us you'll the they We've the as telling they they're that their storm the beginning

And in that kind Bill, think building maybe of concept. mentioned I you products

that So is one customer our building we... primarily products

I industrial and talking utilities. was

Yes.

think said building which And deal with on Dave On products, customer did good we does so products, kind I you building box guys that a of, that explanation retail. one. big one

And and a produce again, sales big-box the their their the they subject lattice. at with retailers they things. programs to have little lattice, it we're And really the so bit we big-box their retailers. is of we how and their many And so throughput have all stores structure, have those types

that good or sell have and I'm to to things. box there's we're with bit person those But totally of little types them. think but of and that the with sure area. big and a we what relationship real Not situations going different I on Universal point, products a has in selling customer clear, been slowdown to lattice Forest building the so they're selling this at so a And with the still

we so them for drive count parts And They really big the sales. drive on to the We them. box. into the produce the sales

Okay.

really of Depot as and Lowe's interpret clear, then seeing slowdown basically result slowdown Home that the that Just that that as saw Universal their kind pieces their your correctly? business the reviewed abrupt low. had one is utility inventory products decline to Did a the I was sales the Forest then those be they of

correct. That's Yes.

Yes.

which the would the from be in under the big decline be Is to and Okay. all first answer, that not utilities Excellent. industrial correct? a clear, And that saw just pretty other QX. category, category,

industrial Yes. utilities. inventory and adjustment The specific was

for us, all to Would walk then abrupt was then category the also $X pretty Okay. please? QX at going so million, And through to jump that back from you decline. helpful. $XX.X revenues declined QX million. also Excellent. million and or That's That like other am a just $X to I where went more phenomenon

is back you standpoint, down model were And Yes. that usually they a that the where I they'll in seasonality of have the be, will look situations, all those back as lot sales of that because of types all mean other those ]. From slowdown. we're for QX slowly normal period to from overflow really, types from what usually time a [ will other over be in at in standpoint, see QX those pull certain us. on quarter, business when overflow we we are time see coming we A the we'll customers doing programs QX, slow in things.

so start start and we'll Q standpoint up. up the of up their to they that from time back period, back some And up in pick as ramp pick to business QX

really helpful, And that that products are the seasonality? what see John. That's

So some themselves, And a time also period molding. industrial mold And of for is when us outsource what the a I they'll some them packaging auto ORBIS, is again, they the packaging disclose in very big ] we their industry. QX will anyways. market, be those usually or customer to And for during returnable time where of they packaging, some things. Those say types during slow craters do returnable customers used packaging, with like that [ period. and but

then of and us and then and a any them, at time, so back tool some quarter tools X additional send they'll up and give tools us we'll and going us a kind take or between for forth have And over tools. back given and ramp

start doing those things. nature then that moving We those And tools those said, QX industries kind QX types that, by just see just so us don't goes are left. point a back lot they in like I kind are year QX, tools slow. the of of and at back what's bringing to And of as along like We forth. stuff where of

Thank you. like would remarks. our This to session. question-and-answer Mr. any for call concludes closing to I Duvall over now turn back the

for ROTH our company. you Thank participating continued in March. be Conference your in in interest upcoming the We'll

results providing your please representative. when an look interested May. report you're first We in update on quarter ROTH we If meeting, to a contact our progress in our forward

you. So have day. a great Thank

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

lines. disconnect You your may now