COLUMBUS, Ohio, May 11, 2020 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding", "Core" or
the "Company") today announced results for the first quarter
ended March 31, 2020.
The Company had net income of $8.0
million in the first quarter of 2020 compared to a net loss
of $3.8 million for the first quarter
of 2019.
"The turn-around phase of Core Molding is complete and we are
now focusing our efforts on continuous improvement and profitable
growth," said David Duvall,
President and Chief Executive Officer. "Our immediate focus
is on providing a safe work environment for our employees and
supporting our local communities in getting through the COVID-19
pandemic by producing personal protective equipment. How we
treat people and customers during this difficult time will be how
we are remembered. We expect to come out of the pandemic
stronger than when it started. I especially want to thank all
of our employees for their contributions and dedication throughout
this challenging time," Duvall continued.
Sales declined in the first quarter of 2020, due to the industry
demand decline in North American heavy-duty trucks. Based on
industry analysts' estimates, the North American heavy-duty truck
industry production decreased approximately 28% in the first
quarter of 2020 compared to the same period in the prior year.
Net sales decreased $8.2
million or 11.4% for the first quarter of 2020 compared to
the same period last year. Product sales, excluding tooling sales,
decreased $9.5 million or 13.3% for
the first quarter of 2020 compared to the first quarter of
2019.
First Quarter 2020 Compared to First Quarter 2019:
- Net sales were $64.0 million
compared to $72.3 million.
- Product sales were $61.9 million
compared to $71.5 million.
- Gross margin was 16.8% compared to 4.4%.
- Selling, general and administrative expenses were $6.5 million compared to $7.2 million.
- Operating income was $4.3 million
compared to operating loss of $4.0
million.
- Net income was $8.0 million, or
$0.97 per diluted share, compared
with net loss of $3.8 million, or
$0.49 per diluted share.
- Cash flow from operations was $5.4
million compared to $2.9
million.
First quarter 2020 gross margin improved by 3.8 times or 282%
compared to first quarter of the prior year. Significantly improved
operational performance, reduced selling, general and
administrative expenses and a $5.6
million favorable impact from the utilization of a fully
reserved tax net operating loss allowed the company to achieve a
net income of $8.0 million for the
quarter. Excluding the net operating loss benefit, net income
would have been $2.3 million or
$.0.28 per share for the first
quarter. "We are now seeing the results in the overall
operating performance, as our integrated operational systems begin
working together to create flow and eliminate daily disruptions,"
said Eric Palomaki, Executive Vice
President of Operations. "The improvement in financial
performance was driven by sustained productivity improvements,
across the organization, that we have been relentlessly focused on
improving throughout the turnaround. It is a clear picture
showing that we are now running a profitable business. It has
taken a lot of work by all of us to make this happen and I want to
thank the entire team for bringing Core back to profitability,"
said John Zimmer, Chief Financial
Officer. "It is both rewarding and exciting to see the
winning culture that has been created at Core. We are
building a strong employer brand that will help us retain and hire
highly qualified team members," said Renee
Anderson, Executive Vice President of Human Resources.
Financial Position at March 31,
2020:
- Total assets of $174.7
million.
- Total debt of $44.2 million.
- Stockholders' equity of $90.7
million.
The Company's debt to equity ratio is 49%. During the
first quarter 2020 the Company reduced its outstanding debt by
$5.3 million. The Company
is currently in default of its credit facility as a result of not
achieving certain financial covenant requirements. The
Company is operating under a forbearance agreement that extends
through May 29, 2020. The
Company continues to seek refinancing alternatives, although the
impact of COVID-19 and the resulting economic uncertainty due to
the pandemic have delayed the Company's ability to complete a
refinancing. The Company and its current lenders intend to extend
the forbearance period to allow the Company to complete its
refinancing once the immediate impacts of COVID-19
subside.
COVID 19 Impact
Several of the Company's major
customers suspended operations during April due to reduced demand
and the impact of government regulations and mandates. As a
result, Company product revenues declined approximately 72% in
April as compared to the prior three months' average. The Company
has begun to increase production starting May 4, 2020 and expects to increase production
throughout the month of May as customers come back online and
supply chains stabilize.
In order to protect our financial stability, the Company
implemented cost reduction measures to reduce operating costs,
including temporary layoffs of hourly employees, layoffs and
furloughs of salaried employees, temporary reduction in salaries,
and discretionary spending reductions. We are also benefitting
from the government programs in the
United States and Canada. The Company is closely
monitoring its existing available liquidity. As of
May 8, 2020 the Company had
$.8 million drawn on its available
$20 million line of credit. The
Company is working closely with its lending group to manage
available liquidity in order to transition through the effects of
the pandemic.
The extent to which COVID-19 will impact the business, results
of operations, financial condition or liquidity is uncertain and
will depend on future developments, including the spread and
duration of the virus, potential actions taken by governmental
authorities, and how quickly economic conditions stabilize and
recover.
Outlook
Based on industry analysts' projections and
customer forecasts, the Company expects heavy and medium duty truck
sales levels to decline in 2020, due to both lower cyclical demand
and the COVID-19 pandemic. Customers in the marine industry are
also projecting a reduction in 2020 sales resulting from the
COVID-19 pandemic. "Although demand in certain industries has
been negatively impacted by the pandemic, we are seeing solid
demand in our construction, building products and energy business
which demonstrates the benefit from diversification that we have
achieved over the past four years," said Mr. Zimmer.
"It has been a lot work and dedication by the entire team to
deliver on our performance metrics and beat our first quarter
metric based targets. Through demonstrated results, our
operational system is driving the elimination of waste to improve
our profitability. We continue to track countless
opportunities for improvement which we are continuing to execute,
despite the temporary disruption due to the virus," said Mr.
Palomaki. "I am even more excited as I work with our teams in
helping to drive our operations and engineering to world class
levels, especially when I see how far we have progressed in the
last year," concluded Mr. Palomaki.
"We have implemented a solid operational foundation, with a
continuous improvement mindset, for our business. Our focus will
now be on executing a fact based and data driven Go-To-Market
strategy to grow our business and provide value to our customers by
leveraging our industry-leading portfolio of composite and plastic
solutions. We have successfully created a solid foundation
and we are now focused on building the platform to provide value to
the market while aggressively growing our business," said Mr.
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 may contain 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
|
|
March
31,
|
|
2020
|
|
2019
|
Net
sales:
|
|
|
|
Products
|
$
|
61,930
|
|
|
|
$
|
71,451
|
|
|
Tooling
|
2,093
|
|
|
|
815
|
|
|
Total net
sales
|
64,023
|
|
|
|
72,266
|
|
|
|
|
|
|
Cost of
sales
|
53,257
|
|
|
|
69,117
|
|
|
|
|
|
|
Gross
margin
|
10,766
|
|
|
|
3,149
|
|
|
|
|
|
|
Selling, general,
and administrative expense
|
6,505
|
|
|
|
7,166
|
|
|
|
|
|
|
Operating income
(loss)
|
4,261
|
|
|
|
( 4,017)
|
|
|
|
|
|
|
Other income and
expense
|
|
|
|
|
|
Interest
expense
|
1,174
|
|
|
|
896
|
|
|
Net periodic
post-retirement benefit
|
(20)
|
|
|
|
(24)
|
|
|
Total other income
and expense
|
1,154
|
|
|
|
872
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
3,107
|
|
|
|
(4,889)
|
|
|
|
|
|
|
Income tax
benefit
|
(4,854)
|
|
|
|
(1,044)
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
7,961
|
|
|
|
$
|
(3,845)
|
|
|
|
|
|
|
Net income (loss)
per common share:
|
|
|
|
Basic
|
$
|
0.97
|
|
|
|
$
|
(0.49)
|
|
|
Diluted
|
$
|
0.97
|
|
|
|
$
|
(0.49)
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
thousands)
|
|
|
|
As of
3/31/2020
(Unaudited)
|
|
As of
12/31/2019
|
Assets:
|
|
|
|
|
Cash
|
|
$
|
1,422
|
|
|
|
$
|
1,856
|
|
Accounts Receivable,
net
|
|
28,035
|
|
|
|
32,424
|
|
Inventories,
net
|
|
19,632
|
|
|
|
21,682
|
|
Other Current
Assets
|
|
10,016
|
|
|
|
5,263
|
|
Property, Plant and
Equipment, net
|
|
77,419
|
|
|
|
79,206
|
|
Goodwill
|
|
17,376
|
|
|
|
17,376
|
|
Intangibles,
net
|
|
12,977
|
|
|
|
13,464
|
|
Right of Use
Asset
|
|
4,159
|
|
|
|
4,484
|
|
Other Non-Current
Assets
|
|
3,680
|
|
|
|
3,551
|
|
Total
Assets
|
|
$
|
174,716
|
|
|
|
$
|
179,306
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current Portion of
Long-Term Debt
|
|
$
|
44,162
|
|
|
|
$
|
49,451
|
|
Accounts
Payable
|
|
12,418
|
|
|
|
19,910
|
|
Contract
Liabilities
|
|
2,654
|
|
|
|
3,698
|
|
Compensation and
Related Benefits
|
|
5,790
|
|
|
|
5,515
|
|
Accrued Other
Liabilities
|
|
7,431
|
|
|
|
5,260
|
|
Other Non-Current
Liabilities
|
|
3,626
|
|
|
|
3,119
|
|
Post Retirement
Benefits Liability
|
|
7,913
|
|
|
|
7,927
|
|
Stockholders'
Equity
|
|
90,722
|
|
|
|
84,426
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
174,716
|
|
|
|
$
|
179,306
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
thousands)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
7,961
|
|
|
$
|
(3,845)
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
2,823
|
|
|
2,562
|
|
Deferred income
tax
|
517
|
|
|
—
|
|
Share-based
compensation
|
316
|
|
|
350
|
|
Gain on foreign
currency translation
|
(74)
|
|
|
(19)
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
4,389
|
|
|
(5,844)
|
|
Inventories
|
2,050
|
|
|
(350)
|
|
Prepaid and other
assets
|
(4,882)
|
|
|
1,396
|
|
Accounts
payable
|
(7,444)
|
|
|
7,441
|
|
Accrued and other
liabilities
|
(184)
|
|
|
1,300
|
|
Post retirement
benefits liability
|
(93)
|
|
|
(106)
|
|
Net cash provided
by operating activities
|
5,379
|
|
|
2,885
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(456)
|
|
|
(3,404)
|
|
Net cash used in
investing activities
|
(456)
|
|
|
(3,404)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
(38,814)
|
|
|
(51,277)
|
|
Gross borrowings on
revolving line of credit
|
34,582
|
|
|
51,961
|
|
Payment of principal
on term loans
|
(1,125)
|
|
|
(844)
|
|
Payment of deferred
loan costs
|
—
|
|
|
(422)
|
|
Net cash used in
financing activities
|
(5,357)
|
|
|
(582)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
(434)
|
|
|
(1,101)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
1,856
|
|
|
1,891
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
1,422
|
|
|
$
|
790
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
1,088
|
|
|
$
|
858
|
|
Income
taxes
|
$
|
185
|
|
|
$
|
808
|
|
Non cash:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
184
|
|
|
$
|
1,028
|
|
View original
content:http://www.prnewswire.com/news-releases/core-molding-technologies-reports-11-8m-improvement-in-net-income-on-11-4-lower-sales-for-the-first-quarter-2020--301056108.html
SOURCE Core Molding Technologies, Inc.