COLUMBUS, Ohio, Aug. 10, 2020 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding", "Core" or
the "Company") today announced results for the second quarter
ended June 30, 2020.
The Company's results for the three months ended June 30, 2020 reflect the impact of COVID-19,
which forced many of the Company's customers to suspend operations
during the quarter. The Company had a net loss of $2.3 million in the second quarter of 2020
compared to net income of $0.2
million in the second quarter of 2019. The results for
the first half of 2020 reflect the operational improvements the
Company made during its turnaround as the Company generated net
income of $5.7 million compared to a
net loss of $3.6 million for the
first half of 2019.
"The Company had operating losses in April and May due to the
global effects of COVID-19, which caused many of our customers to
fully or partially shut down. Although the Company reacted
quickly to reduce costs, the Company could not fully offset the
product sales decrease of more than 70% in April and 40% in May
compared to the average monthly product sales in the first quarter
of 2020," said David Duvall,
President and Chief Executive Officer. "When customers
reopened in June and revenues rebounded, to approximately 85% of
first quarter's average monthly revenues, we recorded our highest
monthly operating profit of the past five years. It is a
clear statement that we have created a stronger company and more
resilient organization," Duvall concluded.
Net sales decreased $43.4 million,
or 53.5%, for the second quarter of 2020 compared to the same
period last year. The sales decline in the second quarter of
2020 was due to a reduction in customer demand from the effects of
COVID-19. Although demand was significantly lower in many of
the industries the Company serves, the Company's efforts to
diversify its customer base have proven beneficial, as customer
demand increased compared to the second quarter 2019 from customers
in industries such as residential renovation and water
treatment. For the six months ended June 30, 2020 net sales decreased $51.7 million, or 33.7%, compared to the same
period last year.
The Company generated strong cash flows from operations for the
three and six months ended June 30,
2020 of $13.1 million and
$18.5 million, respectively, due to
solid operating earnings and a focused effort to reduce working
capital.
"As a team we have been through significant change since we
started the business transformation at the beginning of 2019, and
then through the COVID-19 global shutdown we have shown that
"winners win" no matter what the circumstances. I want to
thank all of our team members for their commitment and dedication
for persevering through the challenges and for the outstanding
improvements we have made," said Duvall. "Our employees'
commitment to our customers and the Company has allowed us to
navigate through the effects of COVID-19 and minimize the negative
financial impact in the face of an extremely challenging
situation. I am proud to be a part of the Core Molding team,"
Duvall continued.
Second Quarter 2020 Compared to Second Quarter 2019:
- Net sales were $37.8 million
compared to $81.2 million.
- Product sales were $35.8 million
compared to $75.4 million.
- Gross margin was 7.7% compared to 10.5%.
- Selling, general and administrative expenses were $4.1 million compared to $7.2 million.
- Operating loss was $1.2 million
compared to operating income of $1.3
million.
- Net loss was $2.3 million, or
($0.29) per diluted share, compared
with net income of $0.2 million, or
$0.03 per diluted share.
- Cash flows from operations were $13.1
million compared to $0.4
million.
First Half 2020 Compared to First Half 2019:
- Net sales were $101.8 million
compared to $153.5 million.
- Product sales were $97.8 million
compared to $146.9 million.
- Gross margin was 13.4% compared to 7.6%.
- Selling, general and administrative expenses were $10.6 million compared to $14.4 million.
- Operating income was $3.1 million
compared to operating loss of $2.8
million.
- Net income was $5.7 million, or
$0.67 per diluted share, compared
with net loss of $3.6 million, or
($0.47) per diluted share.
- Cash flows from operations were $18.5
million compared to $3.3
million.
Second quarter 2020 gross margin declined 2.8 percentage points
compared to second quarter 2019. Although the Company had a
substantial improvement in product mix and manufacturing
efficiency, the effect of lower sales as a result of COVID -19
reduced the Company's fixed cost leverage resulting in a decrease
in gross margin. For the six months ended June 30, 2020 gross margin improved 5.8
percentage points compared to the same period in 2019 due to
product mix and manufacturing efficiency improvements which were a
direct result of the Company's operational systems and processes
implemented throughout 2019. "We continue to drive
operational excellence, through all areas of our business, as a
foundational building block of our strategy," said Eric Palomaki, Executive Vice President of
Operations. "Even with the effect of COVID-19, the Company
was able to continue to drive operational improvements and leverage
the pandemic's forced downtime to complete important upgrades and
improvement projects which will enable us to become even stronger,"
continued Palomaki.
Financial Position at June 30,
2020:
- Total assets of $165.1
million.
- Total debt of $35.5 million.
- Stockholders' equity of $89.5
million.
The Company's debt to equity ratio is 40%. During the
second quarter 2020 the Company generated cash flows from
operations in excess of $13.1 million
which were used to reduce outstanding debt by $8.7 million and increase cash on hand by
$3.2 million. "Through
operational performance and lower working capital needs the Company
reduced its outstanding debt by more than 40% from peak debt levels
reached in November 2019. The Company's efforts to refinance
its existing debt facility were delayed due to COVID-19 as
potential lenders wanted to see operations reopen prior to
submitting final term sheets. Since operations reopened in
June, the Company has been able to demonstrate to potential lenders
strong operational performance and has received several new term
sheets," said John Zimmer, Executive
Vice President and Chief Financial Officer. "The Company has
executed term sheets with new lenders and is targeting closing the
new financing prior to September 30,
2020," Zimmer continued.
Outlook
Although Company operations have reopened,
substantial uncertainty remains about the potential future effect
of COVID-19 on the North American economy and the Company's
customers' operations. In the Company's largest industry that
it serves, the North American truck industry, industry analysts and
customer forecasts project sales to rebound from second quarter
2020 levels but to be lower for the remainder of 2020 compared to
2019. Customers in the marine industry are also projecting
reductions in 2020 sales compared to 2019 resulting from the
COVID-19 pandemic.
"Phase one of our transformation focused on creating robust and
efficient operations as a foundation, which is a required platform
from which to grow. We are now focused on strengthening our
resources in technology and innovation, organizational development
and profitable growth. This will enable the Company to take a much
more targeted, proactive and value focused approach to the markets
we serve. We have won several new programs and more than
doubled our sales pipeline already and have only recently started
implementation of our Go-To-Market transformation. It all
starts with a foundation of operational excellence and a team with
an integrity-based winning culture," Duvall concluded.
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
June 30,
|
|
Six
Months Ended
June 30,
|
|
2020
|
2019
|
|
2020
|
2019
|
Net sales:
|
|
|
|
|
|
Products
|
$
35,847
|
$
75,442
|
|
$
97,777
|
$
146,892
|
Tooling
|
1,959
|
5,805
|
|
4,053
|
6,621
|
Total net
sales
|
37,806
|
81,247
|
|
101,830
|
153,513
|
|
|
|
|
|
|
Cost of
sales
|
34,903
|
72,756
|
|
88,161
|
141,872
|
Gross margin
|
2,903
|
8,491
|
|
13,669
|
11,641
|
|
Selling, general and administrative expense
|
4,109
|
7,224
|
|
10,614
|
14,390
|
Operating income (loss)
|
(1,206)
|
1,267
|
|
3,055
|
(2,749)
|
Other income and expense
|
|
|
|
|
|
Interest expense
|
1,197
|
869
|
|
2,371
|
1,765
|
Net periodic post-retirement benefit
|
(20)
|
(24)
|
|
(40)
|
(48)
|
Total other income and expense
|
1,177
|
845
|
|
2,331
|
1,717
|
|
Income (loss) before taxes
|
(2,383)
|
422
|
|
724
|
(4,466)
|
Income tax expense
(benefit)
|
(111)
|
213
|
|
(4,965)
|
(830)
|
Net income (loss)
|
$
(2,272)
|
$
209
|
|
$
5,689
|
$
(3,636)
|
Net income (loss) per common share:
|
|
|
|
|
|
Basic
|
$
(0.29)
|
$
0.03
|
|
$
0.67
|
$
(0.47)
|
Diluted
|
$
(0.29)
|
$
0.03
|
|
$
0.67
|
$
(0.47)
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
thousands)
|
|
|
|
As of
6/30/2020
(Unaudited)
|
|
As of
12/31/2019
|
Assets:
|
|
|
|
|
Cash
|
|
$
|
4,604
|
|
|
|
$
|
1,856
|
|
Accounts Receivable,
net
|
|
21,582
|
|
|
|
32,424
|
|
Inventories,
net
|
|
16,225
|
|
|
|
21,682
|
|
Other Current
Assets
|
|
9,118
|
|
|
|
5,263
|
|
Property, Plant and
Equipment, net
|
|
76,528
|
|
|
|
79,206
|
|
Goodwill
|
|
17,376
|
|
|
|
17,376
|
|
Intangibles,
net
|
|
12,490
|
|
|
|
13,464
|
|
Right of Use
Asset
|
|
3,832
|
|
|
|
4,484
|
|
Other Non-Current
Assets
|
|
3,363
|
|
|
|
3,551
|
|
Total
Assets
|
|
$
|
165,118
|
|
|
|
$
|
179,306
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current Portion of
Long-Term Debt
|
|
$
|
35,360
|
|
|
|
$
|
49,451
|
|
Accounts
Payable
|
|
11,955
|
|
|
|
19,910
|
|
Contract
Liabilities
|
|
3,078
|
|
|
|
3,698
|
|
Compensation and
Related Benefits
|
|
6,508
|
|
|
|
5,515
|
|
Accrued Other
Liabilities
|
|
6,973
|
|
|
|
5,260
|
|
Other Non-Current
Liabilities
|
|
3,838
|
|
|
|
3,119
|
|
Post Retirement
Benefits Liability
|
|
7,954
|
|
|
|
7,927
|
|
Stockholders'
Equity
|
|
89,452
|
|
|
|
84,426
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
165,118
|
|
|
|
$
|
179,306
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
thousands)
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
5,689
|
|
|
$
|
(3,636)
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
5,588
|
|
|
5,180
|
|
Deferred income
tax
|
517
|
|
|
—
|
|
Share-based
compensation
|
704
|
|
|
866
|
|
Loss (gain) on
foreign currency
|
(45)
|
|
|
17
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
10,842
|
|
|
(2,745)
|
|
Inventories
|
5,457
|
|
|
1,798
|
|
Prepaid and other
assets
|
(3,667)
|
|
|
2,367
|
|
Accounts
payable
|
(7,910)
|
|
|
(1,412)
|
|
Accrued and other
liabilities
|
1,438
|
|
|
1,060
|
|
Post retirement
benefits liability
|
(130)
|
|
|
(198)
|
|
Net cash provided
by operating activities
|
18,483
|
|
|
3,297
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(1,644)
|
|
|
(5,201)
|
|
Net cash used in
investing activities
|
(1,644)
|
|
|
(5,201)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
(59,357)
|
|
|
(98,473)
|
|
Gross borrowings on
revolving line of credit
|
47,349
|
|
|
101,201
|
|
Payment from term
loan
|
175
|
|
|
—
|
|
Payment of principal
on term loans
|
(2,258)
|
|
|
(1,688)
|
|
Payment of deferred
loan costs
|
—
|
|
|
(434)
|
|
Payments related to
the purchase of treasury stock
|
—
|
|
|
(60)
|
|
Net cash provided
by (used in) financing activities
|
(14,091)
|
|
|
546
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
2,748
|
|
|
(1,358)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
1,856
|
|
|
1,891
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
4,604
|
|
|
$
|
533
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
2,377
|
|
|
$
|
1,660
|
|
Income
taxes
|
$
|
302
|
|
|
$
|
1,016
|
|
Non cash:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
146
|
|
|
$
|
368
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
(2,272)
|
|
|
$
|
209
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
2,765
|
|
|
2,618
|
|
Deferred income
tax
|
—
|
|
|
—
|
|
Share-based
compensation
|
388
|
|
|
516
|
|
Loss (gain) on
foreign currency
|
29
|
|
|
36
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
6,453
|
|
|
3,099
|
|
Inventories
|
3,407
|
|
|
2,148
|
|
Prepaid and other
assets
|
1,215
|
|
|
971
|
|
Accounts
payable
|
(466)
|
|
|
(8,853)
|
|
Accrued and other
liabilities
|
1,622
|
|
|
(240)
|
|
Post retirement
benefits liability
|
(37)
|
|
|
(92)
|
|
Net cash provided
by operating activities
|
13,104
|
|
|
412
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(1,188)
|
|
|
(1,797)
|
|
Net cash used in
investing activities
|
(1,188)
|
|
|
(1,797)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
(20,543)
|
|
|
(47,196)
|
|
Gross borrowings on
revolving line of credit
|
12,767
|
|
|
49,240
|
|
Payment from term
loan
|
175
|
|
|
—
|
|
Payment of principal
on term loans
|
(1,133)
|
|
|
(844)
|
|
Payment of deferred
loan costs
|
—
|
|
|
(12)
|
|
Payments related to
the purchase of treasury stock
|
—
|
|
|
(60)
|
|
Net cash provided
by (used in) financing activities
|
(8,734)
|
|
|
1,128
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
3,182
|
|
|
(257)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
1,422
|
|
|
790
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
4,604
|
|
|
$
|
533
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
1,289
|
|
|
$
|
802
|
|
Income
taxes
|
$
|
117
|
|
|
$
|
208
|
|
Non cash:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
146
|
|
|
$
|
368
|
|
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SOURCE Core Molding Technologies