COLUMBUS, Ohio, May 7, 2019 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding", "Core" or
the "Company") today announced results for the first quarter
ended March 31, 2019.
Strong sales growth continued in the first quarter of 2019, led
by increased demand from North American heavy-duty truck customers.
Net sales increased $9.2 million or
14.6% for the first quarter of 2019 compared to the same period
last year. Product sales, excluding tooling sales, increased 19.7%
for the first quarter of 2019 compared to the first quarter of
2018.
The Company had a net loss of $3.8
million in the first quarter of 2019 compared to net income
of $0.5 million for the first quarter
of 2018. "Spending to stabilize operations, while the Company is
undertaking its turnaround, continued to be elevated in the first
quarter of 2019," said David Duvall,
President and Chief Executive Officer. "The business is more
stable than it was six months ago, as our output levels have
increased, allowing us to meet increasing customer demand while
significantly improving on time delivery and reducing past due
orders by 80%. During the first quarter we began to decrease
spending on third party technical services that we added in the
fourth quarter of 2018 to stabilize the business. We expect to
continue to decrease these costs moving forward and begin seeing
gross margin improvement," Duvall continued.
First Quarter 2019 Compared to First Quarter 2018:
- Net sales were $72.3 million
compared to $63.0 million.
- Product sales were $71.5 million
compared to $59.7 million.
- Gross margin was 4.4% compared to 12.5%.
- Selling, general and administrative expenses were $7.2 million compared to $6.8 million.
- Operating loss was $4.0 million
compared to operating income of $1.1
million.
- Net loss was $3.8 million, or
$0.49 per diluted share, compared
with net income of $0.5 million, or
$0.07 per diluted share.
First quarter 2019 gross margin was negatively affected by
operational inefficiencies and higher costs, including a
higher-than-normal union employee bonus payment made in 2019 as a
result of a regulatory adjustment doubling the minimum wage rates
in Matamoros, Mexico. "The Company
has seen higher costs, especially labor costs, as it has
implemented wage rate increases at several of its facilities in
order to stay competitive with local wages. These wage increases
coupled with the Matamoros
facility union employee bonus payment, which was approximately
$1.4 million more than in 2018,
negatively affected gross margin in the first quarter of 2019,"
said John Zimmer, Chief Financial
Officer. "The Matamoras union employee bonus payment is paid once a
year in the first quarter, and therefore will not be a reoccurring
cost for the remainder of 2019. In addition, the increased wage
rates have assisted with lower employee turnover levels, which we
believe will be beneficial to further stabilization of operations,"
Zimmer concluded.
Selling, general and administrative expenses increased in the
first quarter compared to the same period of 2018, due to higher
spending on third party technical services and internal resources
primarily focused on stabilizing operations. Included in first
quarter 2018 costs were one-time acquisition transaction costs of
$1.3 million.
Financial Position at March 31,
2019:
- Total assets of $211.3
million.
- Total debt of $57.8 million.
- Stockholders' equity of $95.6
million.
The Company's debt to equity ratio is 61%. The Company's debt
obligations contain a covenant provision related to fixed charge
coverage. As of March 31, 2019, the
Company was in compliance with its debt covenant, however, due to
uncertainty of timing of improvements with the ongoing turnaround
the Company is undertaking, management continues to monitor the
Company's ability to meet this covenant in the future and the
possible need for additional capital.
Outlook
Based on industry analysts' projections and
customer forecasts, the Company expects sales levels to remain
strong in 2019. Industry analysts are projecting 2019 heavy-duty
truck production levels to be approximately 337,000 units compared
to 324,000 units in 2018.
"Our operational turnaround is accelerating and we have
increased our overall capacity, which allows our team more time for
continuous improvement activities and major equipment
improvements," said Eric Palomaki,
Executive Vice President of Operations. "We have been able to
develop a continuous improvement team performing Kaizen events
across multiple plants focused on our largest cost opportunities,"
concluded Mr. Palomaki.
"Now that we have increased throughput to meet the increasing
customer demands, our focus is on driving processes and systems to
improve our daily execution, which will translate to improved
operational efficiencies," said Mr. Duvall.
About Core Molding Technologies, Inc.
Core Molding
Technologies, Inc. is a manufacturer of sheet molding compound
(SMC) and molder of thermoset and thermoplastic products. The
Company produces high quality molded products, assemblies and SMC
materials for varied markets, including medium and heavy-duty
trucks, automotive, marine, home improvement, water management,
agriculture, construction and other commercial markets. The Company
offers customers a wide range of manufacturing processes to fit
various program volume and investment requirements. These processes
include compression molding of 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
web injection molding. Core Molding Technologies has its
headquarters in Columbus, Ohio,
and operates production facilities in Columbus and Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota; Matamoros and Escobedo, Mexico; and Cobourg, Ontario, Canada. For further
information, visit the company's website at www.coremt.com.
This press release may contain certain 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; 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, including the recent acquisition of
Horizon Plastics; the risk that the integration of Horizon Plastics
may be more difficult, time-consuming or costly than expected;
expected revenue synergies and cost savings from acquisition of
Horizon Plastics may not be fully realized within the expected
timeframe; revenues following the acquisition of Horizon Plastics
may be lower than expected; customer and employee relationships and
business operations may be disrupted by the acquisition of Horizon
Plastics; 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 2018 Annual Report on Form 10-K.
Company Contact:
John
Zimmer
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
|
|
March
31,
|
|
2019
|
|
2018
|
Net
sales:
|
|
|
|
Products
|
$
|
71,451
|
|
|
|
$
|
59,712
|
|
|
Tooling
|
815
|
|
|
|
3,334
|
|
|
Total net
sales
|
72,266
|
|
|
|
63,046
|
|
|
|
|
|
|
Total cost of
sales
|
69,117
|
|
|
|
55,161
|
|
|
|
|
|
|
Gross
margin
|
3,149
|
|
|
|
7,885
|
|
|
|
|
|
|
Total selling,
general, and administrative expense
|
7,166
|
|
|
|
6,760
|
|
|
|
|
|
|
Operating income
(loss)
|
(4,017)
|
|
|
|
1,125
|
|
|
|
|
|
|
Other income and
expense
|
|
|
|
|
|
Interest
expense
|
896
|
|
|
|
449
|
|
|
Net periodic
post-retirement benefit
|
(24)
|
|
|
|
(12)
|
|
|
Total other income
and expense
|
872
|
|
|
|
437
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
(4,889)
|
|
|
|
688
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
(1,044)
|
|
|
|
170
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(3,845)
|
|
|
|
$
|
518
|
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
Basic
|
$
|
(0.49)
|
|
|
|
$
|
0.07
|
|
|
Diluted
|
$
|
(0.49)
|
|
|
|
$
|
0.07
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
7,779
|
|
|
|
7,711
|
|
|
Diluted
|
7,779
|
|
|
|
7,800
|
|
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
|
|
|
As of
3/31/2019
(Unaudited)
|
|
As of
12/31/2018
|
Assets:
|
|
|
|
|
Cash
|
|
$
|
790
|
|
|
|
$
|
1,891
|
|
Accounts Receivable,
net
|
|
51,312
|
|
|
|
45,468
|
|
Inventories,
net
|
|
26,115
|
|
|
|
25,765
|
|
Other Current
Assets
|
|
6,285
|
|
|
|
7,178
|
|
Property, Plant and
Equipment, net
|
|
82,182
|
|
|
|
80,657
|
|
Goodwill
|
|
21,476
|
|
|
|
21,476
|
|
Intangibles,
net
|
|
14,926
|
|
|
|
15,413
|
|
Right of Use
Asset
|
|
5,330
|
|
|
|
—
|
|
Other Long-Term
Assets
|
|
2,917
|
|
|
|
3,350
|
|
Total
Assets
|
|
$
|
211,333
|
|
|
|
$
|
201,198
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current Portion of
Long-term Debt
|
|
$
|
3,110
|
|
|
|
$
|
3,230
|
|
Accounts
Payable
|
|
33,029
|
|
|
|
25,450
|
|
Contract
Liabilities
|
|
2,404
|
|
|
|
1,686
|
|
Compensation and
Related Benefits
|
|
6,232
|
|
|
|
5,154
|
|
Accrued Other
Liabilities
|
|
5,474
|
|
|
|
4,671
|
|
Lease
Liability
|
|
3,888
|
|
|
|
—
|
|
Long-Term
Debt
|
|
36,677
|
|
|
|
37,784
|
|
Revolving
Debt
|
|
18,059
|
|
|
|
17,375
|
|
Post Retirement
Benefits Liability
|
|
6,907
|
|
|
|
6,919
|
|
Stockholders'
Equity
|
|
95,553
|
|
|
|
98,929
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
211,333
|
|
|
|
$
|
201,198
|
|
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SOURCE Core Molding Technologies, Inc.