CORE MOLDING TECHNOLOGIES INC
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
CMT$21.67+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001026655-24-000097
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001026655-24-000132
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 88 current paragraphs.
61 unchanged; 26 reworded; 1 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
As a result of overall demand level declines by our customers, the Company restructured its fixed cost and selling, general and administrative costs by reducing labor levels during the third quarter. As a result, the Company incurred restructuring charges, primarily severance costs, of $228,000 for the three months ended September 30, 2024 and anticipates additional restructuring charges of approximately $81,000 in the three months ended December 31, 2024. The labor reduction is expected to provide annual savings of approximately $2,627,000.
Reworded paragraphs (26)
Previous wording
Looking forward, based on industry analyst projections, customer forecasts, anticipated price changes, as well as anticipated new program launches, offset by current programs that we expect to begin to ramp down in the second half of 2024 as further described below, the Company expects revenues for calendar year 2024 to decrease by approximately 10 to 15 percent as compared to 2023. Additional factors contributing to our anticipated 2024 revenue outlook include an expected cyclical demand slowdown, decreased customer inventory builds due to stabilizing inventory levels as well as a consumer demand environment that is more consistent with pre-pandemic levels. Due to seasonality shifts and product mix changes the Company anticipates the first half and second half of 2024 percentage revenue decreases to be at similar levels.
Current wording
Looking forward, based on industry analyst projections, customer forecasts, anticipated price changes, as well as anticipated new program launches, offset by current programs that we expect to continue to ramp down in the fourth quarter of 2024 as further described below, the Company expects revenues for the fourth quarter of 2024 to decrease by approximately 17 to 20 percent as compared to the same period in 2023. Additional factors contributing to our anticipated 2024 revenue outlook include an expected seasonal demand slowdown, decreased customer inventory builds due to optimizing inventory levels as well as a consumer demand environment that is more consistent with pre-pandemic levels.
Previous wording
Beginning in the second half of 2024 and continuing through 2026, the Company’s business with Volvo will begin transitioning from existing programs that the Company currently supplies to new programs that the Company does not support. Notwithstanding this transition and the completion of existing programs with Volvo, the Company continues to actively bid for new Volvo business, which we believe we will continue to secure outside of the current programs. Going forward we remain focused on continuing to replace phased out business from existing programs with new programs from Volvo or other customers.
Current wording
Beginning in the second half of 2024 and continuing through 2026, the Company’s business with Volvo has and will begin transitioning from existing programs that the Company currently supplies to new programs that the Company does not support. Notwithstanding this transition and the completion of existing programs with Volvo, the Company continues to actively bid for new Volvo business, which we believe we will continue to secure outside of the current programs. Going forward we remain focused on continuing to replace phased out business from existing programs with new programs from Volvo or other customers.
Previous wording
The Company’s raw material supply chains remain stable, and the Company anticipates raw material pricing in 2024 to remain flat or slightly lower as compared to 2023. Labor markets have also stabilized, although at higher cost levels over the past several years. The Company does not anticipate challenges in hiring hourly labor, although management believes wage pressure will continue primarily in Mexico.
Current wording
The Company’s raw material supply chains remain stable, and the Company anticipates raw material pricing in the fourth quarter of 2024 to remain flat or slightly lower as compared to 2023. Labor markets have also stabilized, although at higher cost levels over the past several years. The Company does not anticipate challenges in hiring hourly labor, although management believes wage pressure will continue primarily in Mexico.
Previous wording
Net sales for the three months ended June 30, 2024 and 2023 totaled $88,743,000 and $97,725,000, respectively. Included in net sales were tooling project sales of $4,787,000 and $2,022,000 for the three months ended June 30, 2024 and 2023, respectively. Tooling sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the three months ended June 30, 2024 were $83,956,000 compared to $95,703,000 for the same period in 2023. The decrease in sales is primarily the result of lower demand across most industries. The Company's product sales for the three months ended June 30, 2024 compared to the same period in 2023 by market are as follows (in thousands):
Current wording
Net sales for the three months ended September 30, 2024 and 2023 totaled $72,992,000 and $86,728,000, respectively. Included in net sales were tooling project sales of $1,734,000 and $5,832,000 for the three months ended September 30, 2024 and 2023, respectively. Tooling sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the three months ended September 30, 2024 were $71,258,000 compared to $80,896,000 for the same period in 2023. The decrease in sales is primarily the result of lower demand across most industries. The Company's product sales for the three months ended September 30, 2024 compared to the same period in 2023 by market are as follows (in thousands):
Previous wording
Gross margin was 20.0% and 21.0% of sales for the three months ended June 30, 2024 and 2023, respectively. Gross margin compared to last year was unfavorably impacted by lower fixed cost leverage of 1.2% and operational inefficiencies and product mix of 0.5%, offset by net changes in selling price and raw material costs of 0.7%.
Current wording
Gross margin was 16.9% and 17.6% of sales for the three months ended September 30, 2024 and 2023, respectively. Gross margin compared to last year was unfavorably impacted by lower fixed cost leverage of 1.5% and operational inefficiencies and product mix of 2.4%, offset by net changes in selling price and raw material costs of 3.2%.
Previous wording
Selling general and administrative expense ("SG&A") was $10,236,000 for the three months ended June 30, 2024, compared to $10,492,000 for the three months ended June 30, 2023. Decreased SG&A expenses resulted primarily from lower bonus and labor and benefits of $650,000, offset by unfavorable foreign currency translation of $478,000.
Current wording
Selling general and administrative expense ("SG&A") was $8,740,000 for the three months ended September 30, 2024, compared to $9,403,000 for the three months ended September 30, 2023. Decreased SG&A expenses resulted primarily from lower bonus and labor and benefits of $961,000 offset by higher severance payment cost of $228,000 and unfavorable foreign currency translation of $612,000. In the three months ended September 30, 2023 the Company also incurred a $540,000 one-time press relocation cost.
Previous wording
Net interest income totaled $38,000 for the three months ended June 30, 2024, compared to net interest expense of $293,000 for the three months ended June 30, 2023. Lower net interest expense was primarily due to higher interest income of $340,000 from cash accumulation.
Current wording
Net interest income totaled $144,000 for the three months ended September 30, 2024, compared to net interest expense of $187,000 for the three months ended September 30, 2023. Lower net interest expense was primarily due to higher interest income of $440,000 from investment of the Company's accumulated cash balances.
Previous wording
Income tax expense for the three months ended June 30, 2024 is estimated to be $1,246,000, approximately 16.3% of income before income taxes. Income tax expense for the three months ended June 30, 2023 was estimated to be $1,893,000, approximately 19.3% of income before income taxes. The company's effective tax rate reflects the effects of taxable income being generated in lower tax rate jurisdictions and Foreign-Derived Intangible Income rate utilization throughout the quarter.
Current wording
Income tax expense for the three months ended September 30, 2024 is estimated to be $727,000, approximately 18.7% of income before income taxes. Income tax expense for the three months ended September 30, 2023 was estimated to be $1,386,000, approximately 24.1% of income before income taxes. The company's effective tax rate reflects the effects of taxable income being generated in lower tax rate jurisdictions and the benefit of lower tax rates of foreign derived intangible income.
Previous wording
The Company recorded net income for the three months ended June 30, 2024 of $6,419,000 or $0.74 perbasic and $0.73 diluted share compared with net income of $7,936,000, or $0.93 per basic and $0.91 diluted share, for the three months ended June 30, 2023.
Current wording
The Company recorded net income for the three months ended September 30, 2024 of $3,160,000 or $0.36 perbasic and diluted share compared with net income of $4,354,000, or $0.50 per basic and $0.49 per diluted share, for the three months ended September 30, 2023.
Previous wording
Comprehensive income totaled $5,388,000 for the three months ended June 30, 2024, compared to comprehensive income of $8,691,000 for the same period ended June 30, 2023. The decrease was primarily related to the decrease in net income of $1,517,000 and decrease in valuation of foreign currency hedging of $1,386,000.
Current wording
Comprehensive income totaled $1,767,000 for the three months ended September 30, 2024, compared to comprehensive income of $3,720,000 for the same period ended September 30, 2023. The decrease was primarily related to the decrease in net income of $1,194,000 and decrease in valuation of interest rate swaps of $607,000.
Previous wording
Six Months Ended June 30, 2024, as Compared to Six Months Ended June 30, 2023
Current wording
Nine Months Ended September 30, 2024, as Compared to Nine Months Ended September 30, 2023
Previous wording
Net sales for the six months ended June 30, 2024 and 2023 totaled $166,888,000 and$197,232,000, respectively. Included in net sales were tooling project sales of $7,101,000 and $3,192,000 for the six months ended June 30, 2024 and 2023, respectively. Tooling sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the six months ended June 30, 2024 were$159,787,000 compared to$194,040,000 for the same period in 2023. The decrease in sales is primarily the result of lower demand across most industries. The Company's product sales for the six months ended June 30, 2024 compared to the same period in 2023 by market are as follows (in thousands):
Current wording
Net sales for the nine months ended September 30, 2024 and 2023 totaled $239,880,000 and$283,961,000, respectively. Included in net sales were tooling project sales of $8,835,000 and $9,028,000 for the nine months ended September 30, 2024 and 2023, respectively. Tooling sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the nine months ended September 30, 2024 were$231,045,000 compared to$274,933,000 for the same period in 2023. The decrease in sales is primarily the result of lower demand across most industries. The Company's product sales for the nine months ended September 30, 2024 compared to the same period in 2023 by market are as follows (in thousands):
Previous wording
Gross margin was approximately 18.6% of sales for the six months ended June 30, 2024, compared with 19.4% for the same period in 2023. The gross margin percentage decrease was due to lower fixed cost leverage of 1.4%, operational inefficiencies and product mix of 0.7%, offset by net changes in selling price and raw material costs of 1.3% .
Current wording
Gross margin was approximately 18.1% of sales for the nine months ended September 30, 2024, compared with 18.9% for the same period in 2023. The gross margin percentage decrease was due to lower fixed cost leverage of 1.4% and operational inefficiencies and product mix of 1.3%, offset by net changes in selling price and raw material costs of 1.9% .
Previous wording
SG&A was$18,810,000 for the six months ended June 30, 2024, compared to SG&A costs of$20,161,000 for the same period in 2023. Decreased SG&A expenses resulted primarily from lower bonus and labor and benefits of $1,323,000.
Current wording
SG&A was$27,550,000 for the nine months ended September 30, 2024, compared to SG&A costs of$29,562,000 for the same period in 2023. Decreased SG&A expenses resulted primarily from lower bonus and labor and benefits of $2,262,000 and offset by severance payment cost of $228,000. The Company also incurred a one-time press relocation cost of $540,000 in 2023.
Previous wording
Net interest expense totaled$45,000 for the six months ended June 30, 2024, compared to net interest expense of$649,000 for the same period in 2023. Lower interest expense was primarily due to higher interest income of $592,000 from cash accumulation.
Current wording
Net interest income totaled $99,000 for the nine months ended September 30, 2024, compared to net interest expense of$836,000 for the same period in 2023. Lower interest expense was primarily due to higher interest income of $1,032,000 from investment of the Company's accumulated cash balances.
Previous wording
Income tax expense for the six months ended June 30, 2024 is estimated to be$2,273,000, approximately 18.3% of income before income taxes, and includes tax expense in United States, Canadian and Mexican tax jurisdictions. The Company recognized a tax benefit of $274,000 related to the difference in grant price and vest price for stock awards that vested during the six months ended June 30, 2024. Income tax expense for the same period in 2023 was estimated to be$3,812,000, approximately 21.7% of income before income taxes, and includes tax expense in United States, Canadian and Mexican tax jurisdictions. The Company recognized a tax benefit of $535,000 related to the difference in grant price and vest price for stock awards that vested during the six months June 30, 2023. The company's effective tax rate reflects the effects of taxable income being generated in lower tax rate jurisdictions and Foreign-Derived Intangible Income rate utilization throughout the year.
Current wording
Income tax expense for the nine months ended September 30, 2024 is estimated to be$3,000,000, approximately 18.4% of income before income taxes, and includes tax expense in United States, Canadian and Mexican tax jurisdictions. The Company recognized a tax benefit of $282,000 related to the difference in grant price and vest price for stock awards that vested during the nine months ended September 30, 2024. Income tax expense for the same period in 2023 was estimated to be$5,198,000, approximately 22.3% of income before income taxes, and includes tax expense in United States, Canadian and Mexican tax jurisdictions. The Company recognized a tax benefit of $535,000 related to the difference in grant price and vest price for stock awards that vested during the nine months ended September 30, 2023. The Company's effective tax rate reflects the effects of taxable income being generated in lower tax rate jurisdictions and Foreign-Derived Intangible Income rate utilization throughout the year.
Previous wording
The Company recorded net income for the six months ended June 30, 2024 of $10,178,000 or$1.17 perbasic share and $1.15 per diluted share, compared with net income of$13,788,000, or $1.62 per basic and $1.59 diluted share, for the same period in 2023.
Current wording
The Company recorded net income for the nine months ended September 30, 2024 of $13,338,000 or$1.53 perbasic share and $1.51 per diluted share, compared with net income of$18,142,000, or $2.13 per basic and $2.08 per diluted share, for the same period in 2023.
Previous wording
Comprehensive income totaled $8,853,000 for the sixmonths ended June 30, 2024, compared to comprehensive income of$14,591,000 for the same period in 2023. The decrease was related to the decrease in net income of $3,610,000 and a decrease in valuation of foreign currency hedging of $2,151,000.
Current wording
Comprehensive income totaled $10,620,000 for thenine months ended September 30, 2024, compared to comprehensive income of$18,311,000 for the same period in 2023. The decrease was related to the decrease in net income of $4,804,000 and a decrease in valuation of foreign currency hedging of $2,267,000.
Previous wording
Historically, the Company’s primary sources of funds have been cash generated from operating activities and borrowings from third parties. Primary cash requirements are for operating expenses, capital expenditures, repayments of debt, and acquisitions. The Company from time to time will enter into foreign exchange contracts and interest rate swaps to mitigate risk of foreign exchange and interest rate volatility. As of June 30, 2024, the Company had outstanding foreign exchange contracts with notional amounts totaling $36,759,000. As of June 30, 2024, the Company had outstanding interest rate swaps with notional amounts totaling $22,604,000.
Current wording
Historically, the Company’s primary sources of funds have been cash generated from operating activities and borrowings from third parties. Primary cash requirements are for operating expenses, capital expenditures, repayments of debt, and acquisitions. The Company from time to time will enter into foreign exchange contracts and interest rate swaps to mitigate risk of foreign exchange and interest rate volatility. As of September 30, 2024, the Company had outstanding foreign exchange contracts with notional amounts totaling $33,813,000. As of September 30, 2024, the Company had outstanding interest rate swaps with notional amounts totaling $22,187,000.
Previous wording
Cash provided by operating activities for the six months ended June 30, 2024 totaled $20,943,000. Net income of $10,178,000 positively impacted operating cash flows. Non-cash deductions of depreciation and amortization, and share-based compensation included in net income amounted to $6,728,000 and $1,505,000, respectively. Decreased working capital increased cash provided by operating activities by $1,897,000.
Current wording
Cash provided by operating activities for the nine months ended September 30, 2024 totaled $30,162,000. Net income of $13,338,000 positively impacted operating cash flows. Non-cash deductions of depreciation and amortization, and share-based compensation included in net income amounted to $10,018,000 and $2,067,000, respectively. Decreased working capital increased cash provided by operating activities by $3,192,000.
Previous wording
Cash used in investing activities for the six months ended June 30, 2024 was $4,805,000, which related to purchases of property, plant and equi pment. The Company anticipates spending approximately$13,000,000 during 2024 on property, plant and equipment purchases for all of the Company's operations. At June 30, 2024, purchase commitments for capital expenditures in progress were $3,550,000. The Company anticipates using cash from operations, its available revolving line of credit or its capex line to fund capital investments.
Current wording
Cash used in investing activities for the nine months ended September 30, 2024 was $7,045,000, which related to purchases of property, plant and equi pment. The Company anticipates spending approximately $11,000,000 to$13,000,000 during 2024 on property, plant and equipment purchases for all of the Company's operations. At September 30, 2024, purchase commitments for capital expenditures in progress were $3,184,000. The Company anticipates using cash from operations, its available revolving line of credit or its capex line to fund capital investments.
Previous wording
Cash used for financing activities for the six months ended June 30, 2024 totaled $2,455,000, which consisted of the purchase of treasury stock of $1,417,000 in exchange for payment of taxes related to net shares settlements of equity awards, repayments of long-term debt of $645,000 and purchase of treasury stock of $393,000.
Current wording
Cash used in financing activities for the nine months ended September 30, 2024 totaled $4,873,000, which consisted of the purchase of treasury stock of $1,439,000 in exchange for payment of taxes related to net shares settlements of equity awards, repayments of long-term debt of $1,071,000 and purchase of treasury stock of$2,363,000.
Previous wording
At June 30, 2024, the Company had $37,787,000 cash on hand, a $25,000,000 revolving loan facility of which none is outstanding, and a $25,000,000 Capex loan facility with no outstanding balance.
Current wording
At September 30, 2024, the Company had $42,348,000 cash on hand, a $25,000,000 revolving loan facility of which none is outstanding, and a $25,000,000 Capex loan facility with no outstanding balance.
Previous wording
The interest rate for the Huntington Revolving Loan was 7.14% and 7.11% as of June 30, 2024 and December 31, 2023, respectively.
Current wording
The interest rate for the Huntington Revolving Loan was 6.85% and 7.11% as of September 30, 2024 and December 31, 2023, respectively.
Previous wording
Pursuant to the terms of the Huntington Credit Agreement, Huntington made available to the Company a Term Loan commitment (the “Huntington Term Loan”) of $25,000,000 ($25,000,000 of which was advanced to the Company on July 22, 2022). The Huntington Term Loan is to be repaid in monthly installments beginning August 2022 of $104,000 per month for the first 24 months, $156,000 per month for the next 24 months, $208,000 for the next 12 months and the remaining balance to be paid on July 22, 2027. The interest rate for the Huntington Term Loan was 7.14% and 7.11% as of June 30, 2024 and December 31, 2023, respectively.
Current wording
Pursuant to the terms of the Huntington Credit Agreement, Huntington made available to the Company a Term Loan commitment (the “Huntington Term Loan”) of $25,000,000 ($25,000,000 of which was advanced to the Company on July 22, 2022). The Huntington Term Loan is to be repaid in monthly installments beginning August 2022 of $104,000 per month for the first 24 months, $156,000 per month for the next 24 months, $208,000 for the next 12 months and the remaining balance to be paid on July 22, 2027. The interest rate for the Huntington Term Loan was 6.85% and 7.11% as of September 30, 2024 and December 31, 2023, respectively.
Previous wording
The Company entered into an interest rate swap agreement that became effective July 22, 2022 and continues through July 2027, which was designed as a cash flow hedge for $25,000,000 of the Huntington Term Loan. Under this agreement, the Company will pay a fixed rate of 2.95% to the swap counterparty in exchange for the Term Loans daily variable SOFR. As a result the interest rate paid on the Huntington Term Loan was 4.75% as of March 31, 2024 and December 31, 2023. The fair value of the interest rate swap was an asset of $797,000 and $524,000 at June 30, 2024 and December 31, 2023, respectively.
Current wording
The Company entered into an interest rate swap agreement that became effective July 22, 2022 and continues through July 2027, which was designed as a cash flow hedge for $25,000,000 of the Huntington Term Loan. Under this agreement, the Company will pay a fixed rate of 2.95% to the swap counterparty in exchange for the Term Loans daily variable SOFR. As a result the interest rate paid on the Huntington Term Loan was 4.75% as of March 31, 2024 and December 31, 2023. The fair value of the interest rate swap was an asset of $237,000 and $524,000 at September 30, 2024 and December 31, 2023, respectively.