Core Molding (CMT) 6 Aug 242024 Q2 Earnings call transcript

Good morning, everyone. Welcome to the Core Molding Technologies Second Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

Now I will turn the call over to Sandy Martin, Three Part Advisers. Please go ahead.

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

be and Q&A via call and conference is the the webcast Relations and recorded. EVP on Events today accessed being session link CFO, CEO, through call, on be President Investor coremt.com and This me Today's and audio Dave including Presentations Zimmer. Joining John will page. can the Duvall; an call company's are the

that statements nature, performance replay advised information also no Reform uncertain events reading. Securities or be statements Private that that expressed sensitive Please and made financial any the of not discussion may harbor from today's materially you would are their longer pursuant Litigation and or statements safe results time of expectations future company's of the are implied. those historical By as to or date forward-looking provisions XXXX. are I control. the in or Actual the including statements like remind may future be or the accurate differ to of outside are made any Act transcript of facts, forward-looking

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

to has Form release SEC submitted this been X-K. on a the Finally,

the to company's Now to CEO, like President I Duvall. the and over would call turn Dave

the I results. review Core joining Sandy, by quarter XXXX with some important We first today of Thank achievements recognized our the this all were ppm second Supplier and want XXXX. you and team XXXX XX to for PACCAR half suppliers this thank the in last to award start you, quality. sustain PACCAR that Award. addition Gold to in exceptional award achieve year with This we quarter. the to is discussed XXXX BRP Molding Quality

performance We are exemplary This assembly pleased a shift. million understanding less OEM XX in acquire our and with large every commitment this defects of quality for supplier than achievement what partner. demonstrates our customers of final

excellence customer addition Molding culture. improvement our standards, is a part in In high-quality to strong to strive continuous a as of who journey is continuous It service processes. we Operational and we excellence mindset in partnerships through is organization. embed is customer maintained purposely an that Core and

in continue invest our our is have performance We systems, on improving skills operational is in always our significant and quality to growing people, improvements operational order. cost, complete, in and but focus delivery that safety, It both processes. made never

enable to growth. late XXXX, engaging strategic and implementation to strategy began business create culture, systems plan an execute of transformation In we our robust pillars and inspiring

capabilities, me operate. infrastructure, a we empowered priorities operational a This objectives, creating engaged, of team, organically grow systems Our and to inorganically. transparent business our and to first engagement both as organizational X culture, within includes were financial robust which implementing developing on purposely and winning which and transparency platform skilled systems business and with means discipline

much supplier to plan revenue solely a a transformation multiyear also more program. from aggressive strategically diversification an This us business. truck diverse involved shifted which being in

or drives that to products drive processes more proprietary and for easy Technical make penetration is sales hard into culture Our highly and support the Solutions and flow operational differentiated the conversions, challenges now manufacture markets. create material further end our goal everything make focused to do. continue uniquely a easy market we customer. in teams to embraces designed specifically that things do to by enabling it and

Everything we enable the in support our strategically doing XXXX, created. leverage are and was been In revenue focused on of we've and capability. investing to the growth growth accelerated to company, we've business in both organizational specifically

We lead this moment. generation initiative will in campaign detail and in discuss our more a

to Turning second the summary a results. of quarter's financial

second end looking would quarter the in XXXX XXXX, this sales discuss signaled into that Today, we in net that sales $XX.X to million quarter down we detail. we increased of sales headwinds second sequentially at XXXX, reported XXXX. market Going to X.X% to year, XX.X%. with first of will expectations quarter primarily sales be When second compared the compared below quarter for due the the

in Gross our cost structure was to XX% the basis quarter XX% proactively fourth from first quarter quarter XXXX. margin current we XX,XXXnd Anticipating XX.X% XXX up for demand lower the rebalanced in to and cost of the environment, leverage. compared fixed points the minimize

or EBITDA generated of over of quarter's which over XX% first We of improved in of half million free in flows first also and EBITDA XXXX. the XX.X%. margin million sales, the cash $XX.X $XX generated fiscal We solid adjusted

improvements higher allow consistency. cash the to stability fewer on The introduced us over business flows generate sales greater dollars and execution we last months with XX

financials in Now detail. John turn call cover the over more I to to the

everyone. Dave, morning, you, Thank and good

improved ago sales million, a net compared year sales. growth for total down and Dave our first Normal net XX.X%. quarter the $XX.X mentioned, X.X% quarter were compared seasonality first by sales to sequentially, produced to the As our

and of medium- sales this shifted periods. in remained from sales XX% sports XX% XX% and power quarter XX,XXXnd both year. heavy-duty to in at truck QX

to produce than and In sales ago. addition, other industries, utilities products industrial including a year softer building continued and

XX% was offset the lower loss about gross change the shifts leverage compared due in pricing XX% quarter. cost of The second fixed was in and changes XXX to the or quarter, raw operating product material to points sales mix million partially Second year-ago by of basis and margin $XX.X costs. of quarter

operational improved of our Today, margins. margin have efficiencies volatility from gross operational last improvements, in better and shift all mix create we year's stability fluctuations Before across profitability plants. line volume and more product

income unfavorable compared was $XX.X SG&A currency foreign the were sales in bonuses, due $X.X of the expenses in offset period. of million year ago and prior $XX.X translation. primarily XX.X% million year, X.X% sales or the million quarter for by to benefits, compared to Operating lower labor to

the included accumulated quarter, quarter. was interest from of in net an $XX,XXX improvement interest interest year of Net net cash $XX,XXX second in prior quarter The $XXX,XXX income from interest income income expense this the balances. our $XXX,XXX

comprising quarterly jurisdictions tax tax XX.X% the from costs we tax the rate operate. interim where The weighted X effective was

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

$XX.X compared sales million in the $XX.X EBITDA XX.X% quarter was million quarter. or second prior year's or Our of XX% adjusted to sales of

of the at You can our GAAP refer non-GAAP our reconciliation release. press to to tables end

for Turning first activities provided of ended the million company's in was position. $XX.X $XX.X half. to by the equivalents. XXXX, first compared financial quarter million X million company's with cash and months operating to which the of prior We cash year's The the cash $XX.X favorably

For expenditures from were million X and the months, year. $XX.X improvement $XX.X the first free $X.X prior capital were in cash million, million flows an

to million year. approximately expenditures capital XXXX $XX full expect the for We be

months lines. million was trailing As less and and which debt of available the quarter, credit was The liquidity cash million ratio million, and company's than June outstanding EBITDA capital the our $XX.X XXXX, debt under XX term end Xx. $XX.X $XX to at was XX, the revolver total of includes

to working netted managed Our on and continues capital XX, June be XXXX. million well $XX.X

on Our pretax metric, return XX-month XX.X% return a on basis. capital employed, was a trailing

targets our was Excluding long-term which capital on accumulated of XX% future employed investment, for aligns XX.X%, cash available with our to XX%. return

share share. of of full growth, previously allocation net the year XX% XXXX approximately gross in be that Capital we remains debt year, acquisitions announced strategy Earlier XX% Under to net plan, prior to guidance with XXXX consistent organic down this repayments. buybacks, XX% buyback we price average includes repurchased quarter announced and XX%. and share shares we in at and $XX.XX investments margins compared XX,XXX per sales to to an expected our

be Due be and in to of year a from expect down second year be clear, XXXX likely seasonality, first full bottom end lower sales and margins than margins year we lower fiscal of our net to closer the margin demand range. full sales full those softness and year normal half end to to the To in ranges. will ongoing resulting approximately come at margins the customer XX% half margins

inventories The as sales customer outlook demand stable continue demand to as pattern. includes a in in slowdown well truck a cyclical seasonal consumer normal more

consumer. improve for watching more Fed changes carefully to are the to markets We tied rates, begin could closely which interest end to

truck Volvo's the reminder, existing half from new through one transitioned a of continue business us begin XXXX in to to model impact will its and As second XXXX. a

to operating rebound. vendor. with essentials to serve in programs with Volvo new blue-chip are customers' on our plans is truck well of business the our positioned once bidding period, are sole-source Despite long-term demand begins our economy customers reduced a We growth all manufacturing to customers trusted and

moment, will turn Dave. million discuss Dave Must back have Invest of battle. Win With a $XX this As to a business year Growth I it markets of that, new like in due for end diverse XXXX in set signed our would to we to

Thank you, John.

a members' helped transparency and materials Molding Core to as vision are and tie manufacturing core. This at We reliable, action create red strategies to we our plans striving establishing by at enabling to most to solutions. thread, clarity linking a as culture the innovative winning bring vision and vision culture competitive partner and in that our responsive to our Our critical life to to to what our team and to engineered is be refer our goals. advantage the

the support growth. organization an have that have We ready created to for and assets growth, we is

solutions, new this to X half the $XX As XXXX been we and the the cycle the XX business to million therefore, most first months technical excited is starting requirements XXXX. and and our of of of wins validation John be realized is remaining through benefits and have mentioned, Over of business year. of we months, of will quote-to-cash replacement. our with in are that required awarded XX is report Because the these

transforming the ability focused improvements Simply to to stated, the now business transformation. We leverage the execute, then execution increase first of phase in are and improve volume. and our marketing the sales organization the strengthening first, on made

quote-to-cash worked speed We to streamline process support to customer our enabling needs. better have Core improve our quality and to event,

this driving We and process the faster make validation easier customer. for to are

win $XXX more Our business. this current purposely to of identified driving are and is pipeline over sales opportunity we million,

pleased far, and aggressive with Although multiple are thus initiative revenue this streams. we new work business our year's know we that requires goals progress

to has components growth investor discuss several in all improving execution and quoting, Our want processes, on the today. customer-facing initiative I focused first We strategic flow costing creating process.

enabling vertical. managers adding for in growth are We verticals by industry industry X ownership ownership driving with key account and for their

will application support market the a and and leadership executive process are analysis to deeper implementing We we transformation. be adding

to Officer molding. this successfully Commercial are search conducting Chief other areas We major and to of sales initiative currently external drive our transformation. We transformation the to core marketing similar in expect lead fully a for and all be executed

The transformational driving we sales marketing operational because we as stated, significant business. is had area before to the growth in ability and improve execution final the

year. the the We of by expect end to appointment announce the

the industry and growth Growing changes by right will essential. industry market accelerate marketing is establish sales to and industry These resources ownership with market ownership skills enable vertical. or

heat and analysis enable us utilizing products process and opportunities for potential map Our highest our to on will processes. efforts hotspot focus our the market

We our lead customers. engaging sales wallet grow we displays And learn in their to and our mind front-end is associations. robust customer share will be with the through strategy our by campaign first customers' large in trade streamlining industry account to our existing drive agents, processes, generation show designs. with initiatives leaders, and and lead to trade industrialize to continue of want part strengthening events, lunch aggressive generation Key

large customers and with unique thermosets product portfolio higher working take with to our likely cost are offer supporting us expand cost-saving offerings advantage opportunities. of our and allows thermoplastics or lower to We customers value of alternative. Cross-selling customers large to processes and a

clear shown me for We see challenges. for transformation, can growth processes, and all sales confidence to and investments a early supporting to are supporting by execute with wins near-term challenged transfers exciting on aggressive an and/or manufacturing the initial people revenue, in year-to-date. $XX long marketing suppliers traditional is that mold seeing and improvements processes cycle, in the we of in happy the in from direction technical opportunities and results our customers. drive we with sales team It as plan make pursue customers continue the Notwithstanding growth to million

fit acquisitions or that in an potential growth acquisition rush for strategic strategic We continue a our and channel vetting criteria financial our will expansion. growth process sales does our that not is footprint being and and John into thresholds. prudent I meet not disciplined and for not believe fit

for way organic that growth growth, Molding know position long-term also of the value cash enterprise company We a and is for flow inorganic expansion generation. the to best Core combination and

and confident of growth. about our am Battle I investor Must Win excited

successful implementing organization for to with to for transformational exciting a strong now process core Our see change the organization the opportunities and robust have has that processes. execution been available is we

the into trusted created processes to needs the now well, the are this team ability have We developing partners. and of leverage supply to aggressively that we market execute

hard the and team appreciate them the and to I work of our significant implemented. changes enabling dedication thank have for we want

In addition shareholders I and for want continued Board to team, customers, their thanking to our our the support. thank

open Advisers. in Conference to we that, upcoming Relations September, in are line For participate we Investor questions. roadshow Three would month. non-deal Part our I And Chicago Midwest Ideas the the like a Operator? efforts, this plan planning for to With in later with

Instructions] from ROTH. question comes Chip first [Operator Moore with The

the David, And see, some already, investments. execution. and like follow maybe I guess, sounds on have early sales I start return to returns lag a to potential in on Good those John, up how there. maybe I -- wanted OpEx then you're implications with think on expand investments about, guess, it but to I seeing

definitely we where decrease markets seeing operational that there need we drive, to a we've we put can market, where and that sales challenge the bit. then execute, thought we now and as with that we're have grow. have think to and at really overall our sales we where far thing need capacity is the seeing from If that seen we about bring we've ability we've one we it's the I Yes, the as the we sales to seen I improvements. it's -- a point increasing can the in. mean, all a easily into that gained are

all what now And and business wand that and the gain is on doing really to right we the done do side. magic side can we've leverage operational the

get transfer do we lag of, and XX business say, can look sales, the than maybe or grow XX customers now to we to to investments to that, mobile earlier over we're troubled at supplier with with growing So next -- business months, working a XX but have a need months. we and the the competitor a trying to our the working it's that XX

add or share think follow-up share? Yes. piece, I you've sort whether opportunity on No, it's on these as wallet versus to greenfield resources, some inside then that's a how power adjacent I of And wallet And you the helpful. sports talked think products. guess the past about growing maybe opportunities, truck the in about those

Just an share? growing update wallet there on action that and

No.

growing are our We new are programs. on existing a wallet I share. the of wins customers mean with seeing lot

that inside that things like there's X that can So a the need plywood we and at we that see that. fit better. cabinets, into on think I some of about converting I do more that bumps Class a always when the thermoplastic, look truck, I would things think -- of could work do something lot we

that. with customers about are We talking

seeing existing and of share. we wallet with customers lot are a opportunities growing So

other think those we as there's I opportunities lot a out with customers. expand of the there portfolio

would are we're I'd those So customers. those those in I more sales I because already easier, say, know we the say don't the, and those but already attainable are relationships, have deeper if

wallet the interaction the is of their down opportunities in those being about know have solution we And And really what's growing coming share to mind big a able that. part a knowing and with that having first earlier. that for being So is line.

transition right, financial that And side, and Any the think back Dave. well maybe seen think out about half at I end -- and the helpful, volumes there. seasonality color between everybody progression lower understandable, coming with guess Volvo on margins? in in the more on the I That's as on as

Yes.

think several moving pieces. got I you've

by next seasonality still think demand book overall our we most has is would to think and year the impact I we that really $XX customers lower probably of where Volvo's it but result majority customers we're do what the say seen year. I come back said have Fed done. that that the Fed being hits revenue of million I impact The of of of are that we have -- this and piece, impacted seasonality, comfortable and our the also is business around a

I if about up starts I that the all business sole-sourced lot, bullish to we're this talked rates, our very grow Long about term, a part think interest Fed think our loosen nice again. again, is customers on to And are tools. their they're going that the we

so And with them. grow they we grow,

seen still I of we we've the year, And bit expected it's year. back little the -- this of really than had but so additional our a -- what in guidance early think half softer --

retained we But growth return and with of again, still all types they look customers, those going all to customers, their as we them to next into year and grow things.

of markets in slowness some our so the And is just at point, too. seasonality, but this most some of end

Got great of it. maybe cash Southwest, what tuck-in debt the right? and you side, any sort seeing? past I there. no the color and I what just right, the accretion helpful. on now about generation you've the but one, opportunity? seeing in is on you're obviously, talked the are some mean And last That's And net geographic other M&A think, generating

buy we be side. market the players bought. outside there's hire We We've not us last not back. The challenge to that have that's holding focuses banker But did quarter, in that Yes. many said identified an really today on as is we want targets.

this point. evaluated and with pipeline talk using and that them active and have to at go the bankers outreach programs provided wanted really We to we through, go who the to in we they're

of are of today. the up sale of these things One those with that guys for none types acquisitions, --

M&A them joining to with now us of just together. benefit those probably about working that their acquisition getting looking people for us. won't sense But and makes right to stop little businesses. having sell we're a that side really But the core are the on it a and understand trying it's of is actively doing kind us bit where potential mean in to find we market right that slow doesn't So targets

We we're that. or always we want We're to how want exactly looking, to evaluating. we add what know get

over [Operator I like session. Instructions] closing for any back the remarks. would question-and-answer conference This concludes turn to to Dave Duvall our

when Have update an to you. Thank We you interest quarter in Thank results day. great a look continued November. third for progress company. in our your report providing our on the forward we

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

You may disconnect. now