COLUMBUS, Ohio, May 7, 2021 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding", "Core" or
the "Company") today announced results for the first quarter
ended March 31, 2021.
The Company recorded net income of $3.5
million, or $0.41 per share,
for the first quarter 2021 on net sales of $72.8 million. The Company improved operating
income as a percent of net sales to 7.3% for the first quarter of
2021 compared to 6.7% for the same period of 2020.
The Company's net sales increased $8.8
million, or 13.8%, for the first quarter 2021 to
$72.8 million compared to
$64.0 million in the same period last
year. The increase in sales is primarily the result of higher
demand from the heavy-duty truck, building product and consumer
product markets and due to new business in our power sports
market.
Net income for the first quarter of 2021 was $3.5 million compared to $8.0 million for the first quarter 2020. In
2020, the Company recorded a $5.6
million tax benefit from the utilization of net operating
loss carrybacks. Excluding the benefit of the net operating
loss carrybacks, 2020 first quarter net income was $2.4 million.
"We are excited that our first quarter 2021 results demonstrate
that we are driving increased operating margin performance with
increased sales. We had year over year first quarter profitability
improvement on increased sales as well as sequential quarterly
profitability improvement, as first quarter of 2021 operating
income increased nearly 80% on sales increase of 20% as compared to
the fourth quarter of 2020. The Company implemented a robust
operating system as part of its recent transformation and our
results reflect the stability this new operating system provides
that allowed the Company to deliver higher profit margins even as
demand rapidly increased," said David
Duvall, President and Chief Executive
Officer.
The Company used cash flows for operations in the first quarter
of $0.5 million compared to
generating $5.4 million for the same
period of 2020. In the first quarter of 2021, higher net
sales resulting in higher accounts receivable and the strategic
decision to hold additional inventory due to possible raw material
supply disruptions increased the Company's working capital
requirements.
First Quarter 2021 Compared to First Quarter 2020:
- Net sales were $72.8 million
compared to $64.0 million.
- Product sales were $69.1 million
compared to $61.9 million.
- Gross margin was 17.5% compared to 16.8%.
- Selling, general and administrative expenses were $7.4 million compared to $6.5 million.
- Operating income was $5.3 million
compared to operating income of $4.3
million.
- Net income was $3.5 million, or
$0.41 per share, compared to net
income of $8.0 million, or
$0.97 per share.
Gross margin was 17.5% of sales for the three months ended
March 31, 2021, compared with 16.8%
for the three months ended March 31,
2020. The gross margin percentage increase was due to
favorable product mix and production efficiencies of 4.4%, offset
by unfavorable net changes in selling prices and raw material costs
of 3.7%.
"Although raw material costs increased due to supply constraints
and unprecedented winter weather conditions in Texas and Mexico during the first quarter, we were able
to offset the cost increases with a favorable product mix and
strong operational performance," said Eric
Palomaki, Executive Vice President of Operations and
Research and Development. "There is no doubt that these
supply chain shortages could be used as an excuse for
underperformance, but I am proud of the team at Core who rose to
the challenge to mitigate the effects of the supply constraints and
who are relentlessly looking to the future to strengthen our supply
chain and avoid supply challenges that most manufacturing
organizations are facing this year," concluded Palomaki.
First quarter 2021 selling, general and administrative expenses
increased 13% or $0.9 million
compared to the same period in 2020 due primarily to higher labor
costs and professional fees.
First quarter operating income improved to $5.3 million, or 7.3% of net sales, from an
operating income of $4.3 million, or
6.7% of net sales, in the first quarter of 2020. "The Company
improved profitability while at the same time investing in
additional resources to grow the Company going forward," said
John Zimmer, Executive Vice
President and Chief Financial Officer. "The Company plans to
continue to invest in its human capital to position itself for
long-term profitable growth," concluded Zimmer.
Financial Position at March 31,
2021:
- Total assets of $179.8
million.
- Revolving line of credit debt of $3.0
million.
- Term loan debt of $27.2
million.
- Stockholders' equity of $97.6
million.
The Company's debt to equity ratio as of March 31, 2021 was 30.9%. "The Company's
financial position continues to be very strong with total debt
outstanding of $30.2 million and a
leverage ratio of 1.27 times EBITDA," said Zimmer. "As a
result of restructuring our debt in 2020, the Company was able to
reduce its interest expense to $0.6
million in the first quarter of 2021 compared to
$1.2 million in the first quarter of
2020," concluded Zimmer.
Outlook
Looking forward, based on industry analysts'
projections and customer forecasts, the Company expects sales
levels for 2021 to increase compared to 2020. In the
Company's largest market, North American heavy-duty truck, ACT
Research is forecasting production to increase approximately
41%. In several other industries the Company serves,
customers are forecasting higher demand in 2021 including in the
building products, power sports, and consumer goods markets.
The Company and our customers have experienced supply disruptions
and material cost increases due to storms, port delays, supplier
force majeure as well as overall heavy global demand for certain
materials. Although some of the supply disruptions have
started to subside, we anticipate the disruptions to continue to
impact revenues through the remainder of 2021.
The Company incurred increased raw material costs in the first
quarter of 2021 and anticipates higher raw material costs to
continue through the remainder of 2021. For a majority of our
business, the Company has the ability to pass through a portion,
but not all, of the cost increases to its
customers.
"Core Molding and the markets we serve are seeing increases in
demand and challenges with the supply of many raw materials.
This dynamic makes it much more important to have a strong
operating system to effectively compensate for the erratic
variation in supply and demand," said Duvall. "It has been both
challenging and highly rewarding, for the team, to see the dramatic
improvements in our ability to execute well, given the challenges
in the market. An inspired team and a culture of excellence
in executing have always been the foundation for our transformation
and the cornerstone of our business model going forward," concluded
Duvall.
"With the foundation of our business transformation solidified
we are now able to effectively leverage our ability to execute and
focus on transforming the Company's 'Go-To-Market' strategy.
A key strategic direction for Core is to integrate systems and
resources, enabling 'Technical Solution Sales' to leverage our
large portfolio of processes into high value customer
solutions. We are increasing our investments in materials
development, rapid prototyping technologies and applications
engineering to create the infrastructure that will enable Core to
better serve our customer partners with composite solutions that
combine our portfolio of processes into solutions and conversions
that are lighter weight, higher performance and reduce the number
of components," said Duvall.
About Core Molding Technologies, Inc.
Core Molding Technologies and its subsidiaries operate in one
operating segment as a molder of thermoplastic and thermoset
structural products. The Company's operating segment consists of
one reporting unit, Core Molding Technologies. 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"), resin
transfer molding ("RTM"), liquid molding of dicyclopentadiene
("DCPD"), spray-up and hand-lay-up, 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 Quarterly Report
on Form 10-Q: 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; fluctuations in foreign currency
exchange rates; 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; ability to accurately quote and execute manufacturing
processes for new business; 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; a work stoppage or labor disruption
at one of our union locations or one of our customer or supplier
locations; 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 sufficient 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, 2020.
Company Contact:
John Zimmer
Exec Vice President & Chief Financial Officer
614-870-5604
jzimmer@coremt.com
(See Accompanying Tables)
CORE MOLDING
TECHNOLOGIES, INC.
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(in thousands,
expect per share data)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
|
Net
sales:
|
|
|
|
Products
|
$
|
69,133
|
|
$
|
61,930
|
Tooling
|
3,696
|
|
2,093
|
Total net
sales
|
72,829
|
|
64,023
|
|
|
|
|
Total cost of
sales
|
60,111
|
|
53,257
|
|
|
|
|
Gross
margin
|
12,718
|
|
10,766
|
|
|
|
|
Selling, general and
administrative expense
|
7,372
|
|
6,505
|
|
|
|
Operating
income
|
5,346
|
|
4,261
|
|
|
|
|
Other income and
expense
|
|
|
Interest
expense
|
579
|
|
1,174
|
Net periodic
post-retirement benefit cost
|
(40)
|
|
(20)
|
Total other income
and expense
|
539
|
|
1,154
|
|
|
|
|
Income before
taxes
|
4,807
|
|
3,107
|
|
|
|
|
Income tax expense
(benefit)
|
1,351
|
|
(4,854)
|
|
|
|
|
Net
income
|
|
3,456
|
|
$
|
7,961
|
|
|
|
|
Net income per
common share:
|
|
|
|
Basic
|
$
|
0.41
|
|
$
|
0.97
|
Diluted
|
$
|
0.41
|
|
$
|
0.97
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
7,985,000
|
|
7,882,000
|
Diluted
|
7,992,000
|
|
7,882,000
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
As of
03/31/2021
(Unaudited)
|
|
As of
12/31/2020
|
Assets:
|
|
|
|
Cash
|
$
|
3,027
|
|
|
|
$
|
4,131
|
|
Accounts Receivable,
net
|
40,202
|
|
|
|
27,584
|
|
Inventories,
net
|
20,373
|
|
|
|
18,360
|
|
Other Current
Assets
|
6,221
|
|
|
|
6,403
|
|
Right of Use
Asset
|
4,346
|
|
|
|
2,754
|
|
Property, Plant and
Equipment, net
|
74,000
|
|
|
|
74,052
|
|
Goodwill
|
17,376
|
|
|
|
17,376
|
|
Intangibles,
net
|
11,029
|
|
|
|
11,516
|
|
Other Long-Term
Assets
|
3,211
|
|
|
|
3,332
|
|
Total
Assets
|
$
|
179,785
|
|
|
|
$
|
165,508
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current Portion of
Long-Term Debt
|
$
|
2,938
|
|
|
|
$
|
2,535
|
|
Revolving
Debt
|
3,001
|
|
|
|
420
|
|
Accounts
Payable
|
25,465
|
|
|
|
16,994
|
|
Compensation and
Related Benefits
|
7,300
|
|
|
|
8,305
|
|
Accrued Other
Liabilities
|
5,906
|
|
|
|
6,322
|
|
Lease
Liability
|
4,306
|
|
|
|
2,693
|
|
Long-Term
Debt
|
24,226
|
|
|
|
25,198
|
|
Post Retirement
Benefits Liability
|
9,048
|
|
|
|
9,109
|
|
Stockholders'
Equity
|
97,595
|
|
|
|
93,932
|
|
Total Liabilities
and Stockholders' Equity
|
$
|
179,785
|
|
|
|
$
|
165,508
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2021
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
3,456
|
|
|
$
|
7,961
|
|
|
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
3,049
|
|
|
2,823
|
|
Deferred income
tax
|
—
|
|
|
517
|
|
Share-based
compensation
|
318
|
|
|
316
|
|
Losses (gains) on
foreign currency
|
235
|
|
|
(74)
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(12,618)
|
|
|
4,389
|
|
Inventories
|
(2,013)
|
|
|
2,050
|
|
Prepaid and other
assets
|
303
|
|
|
(4,882)
|
|
Accounts
payable
|
8,283
|
|
|
(7,444)
|
|
Accrued and other
liabilities
|
(1,385)
|
|
|
(184)
|
|
Post retirement
benefits liability
|
(140)
|
|
|
(93)
|
|
Net cash provided
by (used in) operating activities
|
(512)
|
|
|
5,379
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(2,436)
|
|
|
(456)
|
|
Net cash used in
investing activities
|
(2,436)
|
|
|
(456)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Gross repayments on
revolving line of credit
|
(5,915)
|
|
|
(38,814)
|
|
Gross borrowings on
revolving line of credit
|
8,496
|
|
|
34,582
|
|
Payment of deferred
loan costs
|
(2)
|
|
|
—
|
|
Payments related to
the purchase of treasury stock
|
(47)
|
|
|
—
|
|
Payment of principal
on term loan
|
(688)
|
|
|
(1,125)
|
|
Net cash provided
by (used in) financing activities
|
1,844
|
|
|
(5,357)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
(1,104)
|
|
|
(434)
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
4,131
|
|
|
1,856
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
3,027
|
|
|
$
|
1,422
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
Interest
|
$
|
467
|
|
|
$
|
1,088
|
|
Income
taxes
|
$
|
2,560
|
|
|
$
|
185
|
|
Non cash investing
activities:
|
|
|
|
Fixed asset purchases
in accounts payable
|
$
|
99
|
|
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Core Molding Technologies, Inc.