COLUMBUS, Ohio, Nov. 5, 2020 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding", "Core" or
the "Company") today announced results for the third quarter
ended September 30, 2020.
The Company reported net income for the third quarter of 2020 of
$3.3 million, a $9.4 million improvement compared to the
$6.1 million loss reported for the
same period in 2019. The net income increase was largely
driven by operational improvements as well as lower interest and
tax expense. The results for the first nine months of
2020 reflect the operational improvements the Company made during
its turnaround as the Company generated net income of $9.0 million compared to a net loss of
$9.8 million for the first nine
months of 2019.
Although net sales decreased $14.8
million to $59.9 million, or
approximately 20%, for the third quarter of 2020 compared to the
same period last year, net sales increased by 58% from the second
quarter of 2020, which was heavily impacted due to COVID-19
shutdowns in North America. The sales decrease in the third
quarter 2020 compared to the same period last year was primarily a
result of the cyclical downturn in North American heavy-duty truck
production. The heavy-duty truck sales decrease was partially
offset by higher sales in other markets served by the Company,
including construction and all-terrain vehicles. For the nine
months ended September 30, 2020, net
sales decreased $66.5 million, or
29%, compared to the same period last year, primarily due to the
North American heavy-duty cyclical downturn and the impact of
COVID-19.
The Company generated cash flows from operations for the three
months ended September 30, 2020 of
$12.6 million due to increased
operating earnings and a focused effort to reduce working capital.
For the full year the Company has generated cash flows from
operations of $31.1 million compared
to $4.0 million in 2019. The
nearly 700% improvement in year-over-year cash flows from
operations is a result of the Company being able to convert its
improvement in operational performance into
cash.
"Our strong financial performance in the third quarter 2020 is a
direct result of our ability to quickly and efficiently increase
output. It was a challenging quarter, but we have
demonstrated that the Company operates very differently today than
before the start of the transformation, in January of 2019, when
significant demand increases drove financial losses," said
David Duvall, President and Chief
Executive Officer. "I am excited about the future and
very proud of the entire Core team on how we have progressed in the
transformation. Core now has a solid foundation of
operational execution and the leadership to continually drive a
culture of operational excellence," concluded Duvall.
On October 27, 2020, the Company
closed a new credit facility with Wells Fargo Bank and FGI
Equipment Finance, LLC. The new credit facility is a
combination of $31.7 million of new
term loan capacity and $25.0 million
of revolving loan capacity. Upon closing the new credit
facility, the Company borrowed $30.0
million of term loans and $8.7
million of revolving credit loans to repay its existing
credit facility and pay transaction fees. As a result of the
refinancing, the Company is no longer in default on any of its
outstanding debt and has alleviated the doubt about the Company's
ability to continue as a going concern.
Third quarter 2020 Compared to Third quarter 2019:
- Net sales were $59.9 million
compared to $74.7 million.
- Product sales were $54.2 million
compared to $67.5 million.
- Gross margin was 18.1% compared to 8.7%.
- Selling, general and administrative expenses were $6.5 million compared to $7.0 million.
- Goodwill impairment charge was $4.1
million for the three months ended September 30, 2019.
- Operating income was $4.3 million
compared to operating loss of $4.7
million.
- Net income was $3.3 million, or
$0.39 per diluted share, compared
with net loss of $6.1 million, or
($0.78) per diluted share.
- Cash flows from operations were $12.6
million compared to $0.7
million.
First Nine Months 2020 Compared to First Nine Months
2019:
- Net sales were $161.7 million
compared to $228.2 million.
- Product sales were $152.0 million
compared to $214.4 million.
- Gross margin was 15.2% compared to 7.9%.
- Selling, general and administrative expenses were $17.1 million compared to $21.4 million.
- Goodwill impairment charge was $4.1
million for the nine months ended September 30, 2019.
- Operating income was $7.4 million
compared to operating loss of $7.4
million.
- Net income was $9.0 million, or
$1.07 per diluted share, compared
with net loss of $9.8 million, or
($1.25) per diluted share.
- Cash flows from operations were $31.1
million compared to $4.0
million.
Third quarter 2020 gross margin increased 9.4 percentage points
compared to third quarter 2019. The gross margin percentage
increase was due to a favorable net change in product mix and
productivity efficiency which were a direct result of the Company's
operational systems and processes implemented throughout 2019.
"Third quarter 2020 gross margin percent was the highest
since the first quarter of 2016," said Eric
Palomaki, Executive Vice President of Operations. "The
entire Core operations team has embraced a new data driven focus
and disciplined method to eliminate waste from all processes.
Our ability to turn these already implemented improvements into a
foundational process that builds upon itself with continuous
improvements across all areas of the operation is demonstrated by
our gross margin improvement," continued Palomaki.
Financial Position at September 30,
2020:
- Total assets of $174.0
million.
- Total debt of $34.3 million.
- Stockholders' equity of $93.5
million.
The Company's debt to equity ratio as of September 30, 2020 is 37%. During the third
quarter 2020 the Company generated cash flows from operations of
$12.6 million which were used to
reduce outstanding debt by $1.1
million and increase cash on hand by $10.2 million. "Another quarter of
strong operational performance allowed the Company to further
improve its financial position prior to the completion of our
refinancing in October 2020," said
John Zimmer, Executive Vice
President and Chief Financial Officer. "As of the closing of
the new debt facility the Company had available liquidity of
approximately $25 million and reduced
its weighted average effective interest rate on its term debt to
5.75% compared to 8.0% under its existing credit
facility. Having the new credit facility in place
lowers the Company's overall borrowing costs and provides liquidity
to allow the Company to focus on growing the business," Zimmer
concluded.
Outlook
For the full year 2020 the Company expects
sales to be lower than prior year primarily due to the effect of
the cyclical downturn in North American heavy-duty truck market and
the effect of COVID-19. Based on ACT Research projected
production for heavy-duty truck for the fourth quarter 2020 and
customer forecasts in several of the markets the Company serves, we
expect fourth quarter 2020 revenues to be only slightly lower than
the fourth quarter 2019. The Company continues to monitor
closely any potential effects of COVID-19 on the operations of our
customers and is prepared to make operational adjustments
accordingly.
"As previously announced, our turnaround is complete. The
turnaround was a necessary first step in the transformation journey
to becoming a leader in the industries we serve. We are
purposefully creating a foundational culture of organizational
strength and disciplined execution that will be a competitive
advantage," said Renee Anderson,
Executive Vice President of Human Resources. "We have
implemented an organizational development system focused on
organizational health. We are seeing results from this
initiative, impacting the culture internally and solidifying the
Core employer brand externally," concluded Anderson.
"We are excited to see the holistic improvements across our
business and how this is already being realized in new business
opportunities. We have increased our sales opportunities by
over 350% since the first quarter of 2020 and won new and
replacement business worth over $45
million," said Duvall.
As the Company continues to strengthen its resources in
technology and innovation it also must make sure that it optimizes
current resources. This has led the Company to the decision
to close our Cincinnati facility
located in Batavia, Ohio in 2021
and work with our customers to relocate the business into other
Core locations or to third parties. The team in
Cincinnati has made tremendous
improvements in the operations over the past 18 months.
However, the operations still do not, and will not in the future,
provide the required returns to support ongoing investment in the
location. The Cincinnati facility
revenue accounts for less than 5% of the Company's total revenues
and the Company anticipates approximately half of those revenues
will transition to other Core locations. The Company
anticipates shutdown costs and any asset impairment charges to be
immaterial.
"We will continue to strengthen our resources in technology and
innovation, organizational development and complete our
Go-To-Market transformation to further refine our ability to
provide differentiated value to our customers and the market,"
concluded Duvall.
About Core Molding Technologies, Inc.
Core Molding
Technologies and its subsidiaries operate in the composites market
as one operating segment as a molder of thermoplastic and
thermoset structural products. The Company's operating segment
consists of two component reporting units, Core Traditional and
Horizon Plastics. The Company offers customers a wide range of
manufacturing processes to fit various program volume and
investment requirements. These processes include compression
molding of sheet molding compound ("SMC"), bulk molding compounds
("BMC"), resin transfer molding ("RTM"), liquid molding of
dicyclopentadiene ("DCPD"), spray-up and hand-lay-up, glass mat
thermoplastics ("GMT"), direct long-fiber thermoplastics ("D-LFT")
and structural foam and structural web injection molding ("SIM").
Core Molding Technologies serves a wide variety of markets,
including the medium and heavy-duty truck, marine, automotive,
agriculture, construction, and other commercial products. The
demand for Core Molding Technologies' products is affected by
economic conditions in the United
States, Mexico, and
Canada. Core Molding Technologies'
manufacturing operations have a significant fixed cost component.
Accordingly, during periods of changing demand, the profitability
of Core Molding Technologies' operations may change proportionately
more than revenues from operations.
This press release contains forward-looking statements within
the meaning of the federal securities laws. As a general matter,
forward-looking statements are those focused upon future plans,
objectives or performance as opposed to historical items and
include statements of anticipated events or trends and expectations
and beliefs relating to matters not historical in nature. Such
forward-looking statements involve known and unknown risks and are
subject to uncertainties and factors relating to Core Molding
Technologies' operations and business environment, all of which are
difficult to predict and many of which are beyond Core Molding
Technologies' control. Words such as "may," "will," "could,"
"would," "should," "anticipate," "predict," "potential,"
"continue," "expect," "intend," "plans," "projects," "believes,"
"estimates," "encouraged," "confident" and similar expressions are
used to identify these forward-looking statements. These
uncertainties and factors could cause Core Molding Technologies'
actual results to differ materially from those matters expressed in
or implied by such forward-looking statements.
Core Molding Technologies believes that the following
factors, among others, could affect its future performance and
cause actual results to differ materially from those expressed or
implied by forward-looking statements made in this report: business
conditions in the plastics, transportation, marine and commercial
product industries (including changes in demand for truck
production); federal and state regulations (including engine
emission regulations); general economic, social, regulatory
(including foreign trade policy) and political environments in the
countries in which Core Molding Technologies operates; the adverse
impact of coronavirus (COVID-19) global pandemic on our business,
results of operations, financial position, liquidity or cash flow,
as well as impact on customers and supply chains; safety and
security conditions in Mexico and
Canada; dependence upon certain
major customers as the primary source of Core Molding Technologies'
sales revenues; efforts of Core Molding Technologies to expand its
customer base; the ability to develop new and innovative products
and to diversify markets, materials and processes and increase
operational enhancements; the actions of competitors, customers,
and suppliers; failure of Core Molding Technologies' suppliers to
perform their obligations; the availability of raw materials;
inflationary pressures; new technologies; regulatory matters; labor
relations; labor availability; the loss or inability of Core
Molding Technologies to attract and retain key personnel; the
Company's ability to successfully identify, evaluate and manage
potential acquisitions and to benefit from and properly integrate
any completed acquisitions; federal, state and local environmental
laws and regulations; the availability of capital; the ability of
Core Molding Technologies to provide on-time delivery to customers,
which may require additional shipping expenses to ensure on-time
delivery or otherwise result in late fees and other customer
charges; risk of cancellation or rescheduling of orders;
management's decision to pursue new products or businesses which
involve additional costs, risks or capital expenditures; inadequate
insurance coverage to protect against potential hazards; equipment
and machinery failure; product liability and warranty claims; and
other risks identified from time to time in Core Molding
Technologies' other public documents on file with the Securities
and Exchange Commission, including those described in Item 1A of
the Annual Report on Form 10-K for the year ended December 31, 2019.
Company
Contact:
John
Zimmer
Executive Vice
President & Chief Financial Officer
614-870-5604
jzimmer@coremt.com
|
|
(See Accompanying Tables)
|
|
CORE MOLDING
TECHNOLOGIES, INC.
Condensed
Consolidated Statements of Income (Loss) (Unaudited) (in
thousands, expect per share data)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
2019
|
|
2020
|
2019
|
Net sales:
|
|
|
|
|
|
Products
|
$
54,240
|
$
67,511
|
|
$
152,019
|
$
214,403
|
Tooling
|
5,633
|
7,144
|
|
9.686
|
13,765
|
Total net
sales
|
59,873
|
74,655
|
|
161,705
|
228,168
|
|
|
|
|
|
|
Cost of
sales
|
49,035
|
68,171
|
|
137,192
|
210,043
|
Gross margin
|
10,838
|
6,484
|
|
24,513
|
18,125
|
Selling, general and administrative expense
|
6,517
|
7,041
|
|
17,136
|
21,431
|
Goodwill
impairment
|
—
|
4,100
|
|
—
|
4,100
|
Operating income (loss)
|
4,321
|
(4,657)
|
|
7,377
|
(7,406)
|
Other income and expense
|
|
|
|
|
|
Interest expense
|
966
|
1,113
|
|
3,338
|
2,878
|
Net periodic post-retirement benefit
|
(20)
|
(23)
|
|
(60)
|
(71)
|
Total other income and expense
|
946
|
1,090
|
|
3,278
|
2,807
|
|
Income (loss) before taxes
|
3,375
|
(5,747)
|
|
4,099
|
(10,213)
|
Income tax expense
(benefit)
|
32
|
378
|
|
(4,933)
|
(452)
|
Net income (loss)
|
$
3,343
|
$
(6,125)
|
|
$
9,032
|
$
(9,761)
|
Net income (loss) per common share:
|
|
|
|
|
|
Basic
|
$
0.39
|
$
(0.78)
|
|
$
1.07
|
$
(1.25)
|
Diluted
|
$
0.39
|
$
(0.78)
|
|
$
1.07
|
$
(1.25)
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(in
thousands)
|
|
|
|
As of
9/30/2020
(Unaudited)
|
|
As of
12/31/2019
|
Assets:
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
14,809
|
|
|
|
$
|
1,856
|
|
Accounts Receivable,
net
|
|
26,306
|
|
|
|
32,424
|
|
Inventories,
net
|
|
15,233
|
|
|
|
21,682
|
|
Other Current
Assets
|
|
6,345
|
|
|
|
5,263
|
|
Property, Plant and
Equipment, net
|
|
75,207
|
|
|
|
79,206
|
|
Goodwill
|
|
17,376
|
|
|
|
17,376
|
|
Intangibles,
net
|
|
12,003
|
|
|
|
13,464
|
|
Right of Use
Asset
|
|
3,506
|
|
|
|
4,484
|
|
Other Non-Current
Assets
|
|
3,215
|
|
|
|
3,551
|
|
Total
Assets
|
|
$
|
174,000
|
|
|
|
$
|
179,306
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current Portion of
Long-Term Debt
|
|
$
|
2,753
|
|
|
|
$
|
49,451
|
|
Accounts
Payable
|
|
17,949
|
|
|
|
19,910
|
|
Contract
Liabilities
|
|
2,745
|
|
|
|
3,698
|
|
Compensation and
Related Benefits
|
|
6,450
|
|
|
|
5,515
|
|
Accrued Other
Liabilities
|
|
7,101
|
|
|
|
5,260
|
|
Other Non-Current
Liabilities
|
|
3,962
|
|
|
|
3,119
|
|
Long-Term
Debt
|
|
31,537
|
|
|
|
—
|
|
Post Retirement
Benefits Liability
|
|
7,974
|
|
|
|
7,927
|
|
Stockholders'
Equity
|
|
93,529
|
|
|
|
84,426
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
174,000
|
|
|
|
$
|
179,306
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited) (in
thousands)
|
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
9,032
|
|
|
$
|
(9,761)
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
8,425
|
|
|
7,700
|
|
Deferred income
tax
|
517
|
|
|
632
|
|
Goodwill
impairment
|
—
|
|
|
4,100
|
|
Share-based
compensation
|
1,059
|
|
|
1,264
|
|
Losses (gains) on
foreign currency
|
203
|
|
|
(22)
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
6,118
|
|
|
(378)
|
|
Inventories
|
6,449
|
|
|
2,352
|
|
Prepaid and other
assets
|
(747)
|
|
|
1,900
|
|
Accounts
payable
|
(2,053)
|
|
|
(2,505)
|
|
Accrued and other
liabilities
|
2,238
|
|
|
253
|
|
Post retirement
benefits liability
|
(189)
|
|
|
(298)
|
|
Net cash provided
by operating activities
|
31,052
|
|
|
3,973
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(2,716)
|
|
|
(6,280)
|
|
Net cash used in
investing activities
|
(2,716)
|
|
|
(6,280)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
(59,356)
|
|
|
(148,679)
|
|
Gross borrowings on
revolving line of credit
|
47,349
|
|
|
152,121
|
|
Payment from term
loan
|
175
|
|
|
—
|
|
Payment of principal
on term loans
|
(3,391)
|
|
|
(2,532)
|
|
Payment of deferred
loan costs
|
(140)
|
|
|
(434)
|
|
Payments related to
the purchase of treasury stock
|
(20)
|
|
|
(60)
|
|
Net cash provided
by (used in) financing activities
|
(15,383)
|
|
|
416
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
12,953
|
|
|
(1,891)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
1,856
|
|
|
1,891
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
14,809
|
|
|
$
|
—
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
3,523
|
|
|
$
|
2,706
|
|
Income
taxes
|
$
|
467
|
|
|
$
|
1,160
|
|
Non cash investing
activities:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
146
|
|
|
$
|
429
|
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
3,343
|
|
|
$
|
(6,125)
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,837
|
|
|
2,520
|
|
Deferred income
tax
|
—
|
|
|
(632)
|
|
Goodwill
impairment
|
—
|
|
|
4,100
|
|
Share-based
compensation
|
355
|
|
|
398
|
|
Losses (gains) on
foreign currency
|
248
|
|
|
(39)
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(4,724)
|
|
|
2,367
|
|
Inventories
|
992
|
|
|
554
|
|
Prepaid and other
assets
|
2,920
|
|
|
(467)
|
|
Accounts
payable
|
5,857
|
|
|
(1,093)
|
|
Accrued and other
liabilities
|
800
|
|
|
(807)
|
|
Post retirement
benefits liability
|
(59)
|
|
|
(100)
|
|
Net cash provided
by operating activities
|
12,569
|
|
|
676
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(1,072)
|
|
|
(1,079)
|
|
Net cash used in
investing activities
|
(1,072)
|
|
|
(1,079)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
—
|
|
|
(50,206)
|
|
Gross borrowings on
revolving line of credit
|
—
|
|
|
50,920
|
|
Payment from term
loan
|
—
|
|
|
—
|
|
Payment of principal
on term loans
|
(1,132)
|
|
|
(844)
|
|
Payment of deferred
loan costs
|
(140)
|
|
|
—
|
|
Payments related to
the purchase of treasury stock
|
(20)
|
|
|
—
|
|
Net cash provided
by (used in) financing activities
|
(1,292)
|
|
|
(130)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
10,205
|
|
|
(533)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
4,604
|
|
|
533
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
14,809
|
|
|
$
|
—
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
1,146
|
|
|
$
|
1,046
|
|
Income
taxes
|
$
|
165
|
|
|
$
|
144
|
|
Non cash investing
activities:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
—
|
|
|
$
|
61
|
|
View original
content:http://www.prnewswire.com/news-releases/core-molding-technologies-reports-significant-increase-in-third-quarter-2020-earnings-and-a-new-credit-facility-301166968.html
SOURCE Core Molding Technologies, Inc.