Core Molding (CMT) 5 Nov 242024 Q3 Earnings call transcript

Good morning everyone. Welcome to the Core Molding Technologies Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

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

President sensitive coremt.com and on CEO, being Zimmer. Investor webcast me page. session the be today advised audio replay is the Joining and Presentations accessed link can date through Today's may the time will that call recorded. Events This including the Q&A call Dave conference an and EVP be company's Relations Duvall; the or and longer be CFO, be Please any via of accurate information no John call, are and on transcript as reading. any of

today's of expectations are statements and discussion facts, including also forward-looking future performance of or historical and that that nature, Securities would I materially to in safe Private Litigation remind not or or like or the the made from pursuant statements you of are those the Act outside future statements harbor events forward-looking are results company's financial made control. expressed Reform the may statements to Actual their differ provisions are By implied. XXXX. uncertain

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

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

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

quarter XXXX Thank joining for to our review you, Sandy, results. and thank third you all

results, quarter some summarize our John Growth updates our on for Before I third Invest exciting share want I and to strategies.

executing the Bantz Officer. We is Alex understand First, important to Core's Chief expertise charge marketing brings transformation driving we XX strategy. joined relationships, announced as of of marketing and the aligning revenue on a revenue role He fundamental track growth. new ideal step Alex to our newly market sales impressive in the of successful tenured execution is commercial this that appointing its and Alex has created capable years XX And and record company an programs building our approach. sales on that leadership at strong over the is successful industrial to an strategies any October accelerating sales person Commercial with roles long programs. and lead based customer-centric

our customer and think show in progress pursuing end shows, I first want our to team. demonstration of an quickly lunch trade Mexican our exhibited last our sales at in update quarter Mexico, on is as from Monterrey, new opportunities continue markets. Poliplast Mexican and we trade learn engagement events a composite participation provide which in of I to strength make we

largest the medical, automotive, technologies North attended commercial also in markets emerging and industrial is aerospace, We in and battery showcases and the battery which Detroit applications. event comprehensive This America's event. show most

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

profitability. serve, in we but We we continue of industries headwinds to to face macroeconomic the our continue some maintain

million. quarter million in of third $XX XX.X% EBITDA generated over year-to-date $XX flow free we or to which contributed million, $X.X and cash of were adjusted Our sales sales, a

$X.XX $X.X million was diluted per share. income or net Our

profitability chapter We our continue to for drive entire organization of [indiscernible]. is next and preparing the

generated strengthened higher infrastructure. technical business High-return our and possible execution the which XX inorganic manufacturing flows more and as as fewer balance capabilities investing growth last disciplined stability. cash over and sheet based on months, are We organic sales are dollars cash consistency and with investments in well on our

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

morning, Thank you, good Dave, and everyone.

product compared to total year Our sales XX.X% a ago. and for quarter and third net down XX.X% the respectively, sales were

were have expected in and second of cyclical demand currently of transition the cyclical XXXX, in of in upcoming all to the and lower a expected prior is to XXXX. sales is Truck on half The transition Volvo due environmental discussed a market regulation but changes XXXX start downturn, as declines to truck upturn normal calls. we the to

year, sales the half XXXX. impact started has and Volvo of the will impacting The transition of which next is As discussed, in second negatively XXXX. previously will transition occur majority the

are quoting with XXXX. with several are as launching on currently new currently Volvo, soon opportunities we We bidding early one program as

products to we In comers resets, continue negatively and building overflow as impacted products power post-COVID other by being sports molders. producing XXXX pressures macroeconomic X utilities were by while are in-sourcing be in-sourcing certain industrial and impacted and of in customer markets,

non-truck to year, and begin that markets will We next some leveling markets. the these some rebound see in believe we are seeing in off

third XX.X% our on quarter. quarter which margins year a is full year XX% long-term gross target was to Our $XX.X or Gross sales in basis to year-to-date compared million the ago XX%. within XX.X% range margin XX.X%, of of were

margins is gross are and efficient maintain based is As to previously our the we in our our variable we in lower reducing range discussed, sales are our cost majority of -- have within revenues. times of long-term the how costs variable reducing on of ability

in front done operational and variable the revenue team the past reducing a has in the X out of quarters. slowdown costs been has job great Our

of better the third partially we material the pricing, cost As a achieve XXX able offset basis and in leverage our lost their quarter. result efforts to reduce points fixed of pricing, have been to ability customer raw and

$X.X million currency the SG&A $XXX,XXX bonuses, cost, of of in unfavorable lower cost $X.X $XXX,XXX primarily year, and compared severance foreign to were to by million offset expenses due prior translation. benefit labor and

moving and the our expected generate cost disclosed earnings fixed when forward cost million fixed were of plants cost we the is quarter forward. revenues annual at As better force to rebound. reduction but begin driven This and course, third our headquarters in to in in savings we going release, a completed approximately and decrease $X.X SG&A business, by Volvo structure partially position of also to rebaseline our during

was This year tax the was cash the period. $X.X prior year was from tax interest balances. for sales in interest of $XXX,XXX costs comprising tax net the we weighted from XX.X%, expense jurisdictions income was which the the million Net of on ago of compared an Quarter's quarter $XXX,XXX of in X.X% third improvement X.X% or income included quarter. interest rate sales operate. effective to income Operating quarter, $XXX,XXX the X in where

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

$X.X adjusted Our year's to non-GAAP reconciliation tables. million XX.X% XX.X% EBITDA in million the sales prior compared or of or third Please quarter to of for quarter. see our sales was earnings GAAP $X.X release

with XXXX to company's company's ended $X.X million. of the million quarter $XX.X expenditures convert third the for through were of and this increased million XXXX, year-to-date in quarter cash. equivalents. to quarter resulted of $XX.X operating our $X months earnings million position. the Turning to cash strong flows free flows financial cash and to cash first by the We year. This provided cash by million The the cash activities $XX.X Strong from capital of ability resulted X

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

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

capital working on which our optimized efficiencies, $XX.X million September XX. have We netted

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

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

capital and and and with strategy consistent Our growth debt organic buybacks, in prior infrastructure, investments allocation repayment. acquisitions share remains includes guidance

not continue an our acquisition be into disciplined strategic a while that is We -- hurdles. strategic doesn't fit fit not to or financial rush

organic flow share purchased provide $XX.XX expansion enterprise share. We we quarter previously buyback for will XXX,XXX long-term Molding Under strong at our announced price growth and Core the that both approximately third in average of also generation. plan, cash an growth, inorganic shares value and per understand

to slightly of demand customer a full lower schedules year our upcoming projections net approximately XX%. year the to be sales is primarily season. compared decrease previous approximately changing full predictable XX% We than XXXX, less to of sales The due down is which XXXX during expect adjustment holiday

continue the to range. we gross For to year, full XX% the in XX% forecast margins

truck with most quarter existing As discussed significant sales through on began this continue XXXX. to XXXX, impact and this earlier model Volvo's expected calls have in transition we pressure year, previously will

with programs other continue [indiscernible] are to work hard by Volvo Core's We to at and customers. and encouraged earn future programs

to to With the turn over like call Dave. back that, I'd

John. Thank you,

develop expand large wallet our designs. grow A mind a customer our yet industries, working new share and resources process the problems meaningful product our relationships is with industrialize continue solve to offerings. and first customers' high-value our their Molding strategy to to way new developing to through of to We solution. part is be with growth want Core continually and are We surest to to customers in the key

continually that step with We also strengthening of thermoset want cost our to in of customer-focused our as final a cases, unique thermoplastic higher and large cost-saving business -- our is are portfolio systems allows improving as lower and We This to resources sales cornerstone our of a overall and and support sales solutions with us initiatives. another and solution opportunities. Cross-selling applications processes of marketing and alternative. customers next and our many offer the take customers value engineering full transformation. marketing advantage higher know such and

interest some to business. increases, areas As ago. execution all have our X COVID but with X since beginning development integration we've fact. the it over the unprecedented is processes front-end the excuse, years a improvements years faster, go chain did our stated, transformation shortages, significant name our This internal inflation, business an times is what a to rapid and win just of [indiscernible] business of rate have thought made I battle we discussed supply rate our we not must last of we've the leverage few, would

the like in around few achieved the more would to put minutes to XXXX hope outline take will with it some implementing and have we we're strategy color business we've company. what I today. going beginning from where the So to been a I

improved EBIT million a EBIT this I lost on we revenue. Core when QX revenue. communicated focus always systems to $XX $XX.X We on execution internally current competition. $XXX for million million execute the strong our operational turnaround this at In our portfolio can than battles transformation, that million consistently in a million we've by basic been When XXXX, million rationalization $XX look must-win that this should on business $XXX prerequisite performance model say driving generated XXXX, our We team serve and has business and strong less discussed, $XX.X externally we be after of up line the and today, growth. first team we in better year-to-date I as focused revenue. on operating through year in strong creating started a then because in this customers that. product did with

now our the our customer needs Our a strategy. have next growth composite always blue-chip investor a produces and supply partner growing is that is that is large the complex has to profitable better companies ultra-large engine used than been we and created, serve parts. leverage business competition specific highly step Core trusted to execution and can

solutions for these is markets strategy order wide business portfolio force and our programs, product that This single-source unique a characterized of validation complex X-year is and to directly solutions large our do large processes. to model level success our and development. programs revenue Invest the are our require a are able of manufactured that a working single launch. creates long-term the that steps by customers tied of offer customers source in are supported optimizing We Number linked stream and their business that model. of X large with sales varying to directly with to expertise Most customers one, large priority Growth prior by

our knowledge to and of our are function closer the customers in markets. investing improve to We sales our be

with and customers portfolio large We on share wallet wide are processes. our growing focused our

are diversifications, We resources our further our to channels, enhancing technology advancing sales and solve really and customer footprint expertise complementary expansion. technology three, and acquisitions problems. expanding functions And

do sports, led demand, by key travel XXXX, more demonstration in quickly of occasion normal partly and surge we believe during I'm COVID in It power incredibly seizing demand where capability. that products business serve cyclicality others our up this truck, rose a a the how level. period, stabilizing our remarkable in of we invest across and and limited ramping and team couldn't XXXX the So bump, fueled was consumers are industrial. to our to We a capacity the manage. that markets, overflow experienced production proud more to markets

we've in year, million $XXX in thriving over is our $XX active So and million far over with opportunities. this secured new business pipeline

This Currently, that the $XXX is the in confident we're more are negotiation. launches. the they we customers cautious to begin customers optimism investments. significant reflects million as among market there reflects of bottom program the for -- signs of than promising pipeline believe stage this nearing We're dip as and final accelerate prepare

some Our visible pipeline. expanding large more competitive with is competitors further facing than our edge challenges, opportunity now ever

bed existing for in not We're plates We're care initial efforts new more about introducing breaking wins, Our growth the to coming customers bus construction, areas in trays, these forward frames also EV name the hospital industry thrilled yielding markets. only and to into protection and already medical products like with the but exciting are look even in and investments possibilities months. a emerging few. large just in turf verticals battery

The a sports also in with substantial We and our industrial early current robust, anticipate segment to the as as both in we mid-XXXX. XXXX solutions. power and expand opportunities and customers market thermoplastic signs see thermoset with offerings by truck emerging soon remains peak

for strategy, optimizing As long-term part actively assets costs growth we're and investor of our rebalancing success.

improvements. advancements technical more produce already savings of leading SMC in longer the a to and core investments sheet cut us higher-quality an million. to consistent, life, over testament costs has to annual by initiative in $X compound infrastructure a product allowed Our organization. have $XXX,XXX with additional a the our It's effectiveness infrastructure shelf molding This across

doors we're times, executes, speaks that challenging customers, to and record and through track for enables opening revenue and external material in Importantly, team this streams advance that new a us proven SMC enhance for our I believe to sales. formulations itself. especially follows our we've

significantly stated, retention Simply and work grow in invested employee career, we place to Core business. the your stabilizing and making first a better our improving

and employee Our investments turnaround quality to then provide. BRP market solutions Award the to by expectations. with our then We annualized. company-wide We drive demand is awarded Success being line XX better meet in turnover the entire our to customer a X% demonstrated operational value fair portfolio capture Gold now is people than less a completed we PACCAR rationalize PPM capital product and the ability award. and major for

is investor battle allow growth the investor must-win it our I'm where Core capabilities be we've done equally where successful exceptional will is Molding. at we that the growth step, next all. strategy. why The us true is initiatives as our built This confident This excitement and to fully leverage begins.

truck presence industries. Our programs a valuable major like engagement momentum opportunities Increased is market, of Volvo. are including shows pipeline with trade in our the the and for new strong at growing new across customer quotes connections creating

impact where core witness we our the of Our approach everyone to to getting pivotal for and it's aspiring transformational at us change to in are molding has been today. efforts.

journey phase investor the team successful for fully continued change shareholders the I embracing this am our their the as thank growth, and our Board initiatives and in year. throughout want entire and I execution significant want transformation battle the team of and support. working, Our hard thank this Core grateful customers, for successful as to committed collaborative each must-win our to next the we're making at also for the step last. to is

in the Southwest upcoming this Dallas Finally, month. we plan participate to in Conference IDEAS later

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

[Operator question come will from MKM. with Instructions] Our Moore ROTH Chip first

of that be thoughts. and where rate in win you lies -- said that about I sort million that's your along. assume that ask further any expand plus business mix your but of Maybe expected in I pipeline there to on higher, $XXX moving would wanted terms think just I

team Yes, for pipeline and when go sure. we and And inverted. at through really, we the it it, look to is the relative somewhat here,

a we going seeing you're launch lot it of going they're seeing on to program, they're phase. And to program. through to when what customers spend the phases, when move a different it So is a they're we're from last and hear waiting at

They in in industries. large phase. in bottleneck a programs. work we is lot are A of little different that the see it's there bit that So of

in little and with the bit source customers the a approve power on launching well these the call we launch So slow truck programs. for of lot down to a we But as program ag are customer, construction have are what maybe that And area program. or programs a we as and tooling programs they sports. large usually they have on that it's and pretty when us spend seeing

as see could now. rush ago, you So as was out that's what get right Whereas do and X.X fast there. we years it usually it it

And environment well. some having more doesn't Yes. hurt imagine political you. the I certainty Got on as

it something got That's with do as Yes. to well.

stay on We'll Volvo ramp year you frame the just to Yes. volumes program transition that early? that any way given next and to too programs of thoughts any I tuned. or some guess help set newer have

No. out talk the kind the next through Volvo piece, Volvo will transition think year. of Again, I we

been probably that so world we're our of they're [indiscernible], the UFP, And customer as telling inside impact customers, our gives And but of in looking at -- BRP, next kind we've we guys year the at they're what sales us. will than of point. Polaris, negatively saying Right early track pretty to next year, our those all us saying. most this silent we we now, of process more been are outside have forecast, on what kind do

just to down, interest political of how of coming a things. types there's figure not So trying environment, I but fast our those are customers lot rates think out, the again,

Volvo know say point. is bit they're piece is this so then truck And market, the and at little next we probably a early year. rebound next a happening. The real where for strong bit does softer in 'XX. that's is little year ACT at a one

And point. mode I see else, this the Everything kind will wait-and-see we're think of truck so a softness. market some at in

helpful. think health maybe Dave, I guess you it we've not, seems Any but I was betting for in new out like -- it that trying That's That's And pretty market, called care. in helpful. one. structures win in a -- been a it

it. with went Right a years we been that bed. -- on X it's I hospital customer. we are talking back think to now, It's

the for structure timing our customer program we that support first Right -- everything that's hospital delighted the bed, So the which and win. to now, met. with the is

So another channel diversification I growing that think for us. be can

And me. last maybe for Great. one a Great.

the side. cost on Just

about talked taken. When benefit John? you've with of onetime cost we And actions at this You roll quarter? through, sort some do done all that see are fully the we of

Yes.

it to most did end truth, the tell when quarter, on was quarter of benefits -- bit there of little mean, little the timing of the actually into a a we fourth at So it I the bit maybe happened. you

fourth the so there bit through more early benefits cost most of comes was It And to be a in But -- quarter. labor benefits the quarter. primarily we be cost. should this as will you that should the starting little as see

benefit impact pretty full and And so in this much moving . quarter. this a the the and through forward we'll see coming quarter quarter fourth in

Instructions] [Operator will Capital. Higton of Dezellem Bill Next from come question

what you're kind us bed. I'd the actually on right like this -- years was the customer help how And them you to hurdles your bed? is to through for us what exactly to hospital for over make start were ultimately Would of win the decide way bed? it with walk process and it secondarily, business then to the for and what visualize last doing the X that the that worked you is please

that working ago. an metal had making initial say, probably originally people. It underneath about designed ago entire what We here, of sheet this what We structure is with we're them was on they're with we sales our X them platform about changing bed and through is they the had the years group. the part that we're is to that the agent opportunity and part from would X.X person producing underneath customer. the Yes. what a contact the structure I bed years had started with holding an is holds contact

value, on design sit to the So the a We through going for think, couldn't top validation, bed use that. in the And really, cost molded changing it's customer I the the option features and you higher development, of able features do in lower a were material. that that with would -- steel.

tooling year. say is into actually production actual from a would the development we're concept probably So where initial today, I going about

oversimplify not -- And to person a very similar to track of of sounds a but this, [indiscernible] cart golf a the water there? the underneath of or the underneath

concept you quoting. the We on application, was a and coming concept or I the plates very have you're the see that the when bed new also and through the ADT golf did the agree. bottom ATV, you of all originally that that year golf the we that on driver structure something opportunities. And as UTV, similar passenger still -- on and looked so that's the the impale structure were next have well. I completely agree new we cart the we regulation to can't had true that on at regulation. won can't the where other cart skid for to you riding, vehicle We

the same So wins of a big that's well. as structure as well. Same part process,

you process versus on their business of original [indiscernible]? for on Great. plan moment. they're update that And a where their Volvo then business shifting moving please a moving that Would us to at of

would on depend plan. what Yes. It original

this So that originally they were transitioning. looking ago X was at years

it now, models. transition ramps program. There's down. they middle the the right So to are new in the of different

So their MAC what programs. Volvo is they're commonizing doing and

they So right separate. are now,

out, as it Volvo whether phase So volumes. they on depends Mac phase it's or a in,

following year. the going part common you'll into to time there doing, because through beginning phase so are year of long quite phasing start out they're part It's many a frame and what of at end and out next this number. the a the year So numbers

this with year? sense moving or faster in your process what is that, that line they let's were it say, is And earlier slower thinking,

than I always would everything say plan. people slower moves

I would conference like any the further for no remarks. session. over question-and-answer It to This back to concludes our appears are closing turn management there questions.

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

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

may disconnect. now You