COLUMBUS, Ohio, Aug. 8, 2018 /PRNewswire/ -- Core Molding
Technologies, Inc. (NYSE American: CMT) ("Core Molding" or the
"Company") today announced results for the second quarter
ended June 30, 2018.
The Company recorded significant sales growth in the second
quarter and the first half of 2018 driven by the first quarter 2018
acquisition of Horizon Plastics International, Inc. ("Horizon
Plastics") and increased demand from North American heavy-duty
truck customers. Net sales increased $21.2 million or 45% and $47.5 million or 57% for the second quarter and
first half 2018 compared to the same periods last year, primarily
due to increased product sales offset by lower tooling sales.
Net product sales increased 77% and 71% for the second quarter and
year-to-date 2018 versus the same periods of 2017. Excluding
Horizon Plastics, net product sales increased 28% and 26% for the
second quarter and year-to-date 2018 versus the same period of
2017.
Although sales increased, the Company's net income declined to
$0.4 million and $1.0 million for the second quarter and
year-to-date 2018 compared to net income of $2.2 million and $3.8
million for the second quarter and first half 2017.
"We are disappointed in our inability to convert our increase
in sales into higher profits," said Kevin
Barnett, President and Chief Executive Officer. "The
rapid increase in customer demand, tight labor markets and numerous
new product launches have challenged the Company's operations
resulting in higher costs and lower operational efficiency,"
Barnett added.
Second Quarter 2018 Compared to Second Quarter 2017:
- Net sales were $68.6 million
compared to $47.4 million.
- Product sales were $65.2 million
compared to $36.8 million.
- Gross margin was 11.5% compared to 15.5%.
- Selling, general and administrative expenses were $6.5 million compared to $4.2 million.
- Operating income was $1.4 million
compared to $3.2 million.
- Net income was $0.4 million, or
$0.06 per diluted share, compared
with net income of $2.1 million, or
$0.28 per diluted share.
First Half 2018 Compared to First Half 2017:
- Net sales were $131.6 million
compared to $84.1 million.
- Product sales were $124.9 million
compared to $73.1 million.
- Gross margin was 12.0% compared to 16.4%.
- Selling, general and administrative expenses were $13.2 million compared to $8.1 million.
- Operating income was $2.5 million
compared to $5.7 million.
- Net income was $1.0 million, or
$0.12 per diluted share, compared
with net income of $3.8 million, or
$0.50 per diluted share.
Second quarter and first half 2018 gross margin was negatively
affected by operational inefficiencies and higher costs including
increased hiring, training, wages, overtime, non-local third party
contract labor, including travel and local lodging, scrap, rework,
expedited premium shipping, customer charges, returns, repairs and
maintenance, and raw material costs.
Selling, general and administrative expenses increased in the
second quarter and first half of 2018, compared to the same periods
of 2017, primarily due to the Horizon Plastics acquisition and
higher labor and professional fees. As a result of the
Horizon Plastics acquisition, the Company incurred ongoing
operating costs of the new entity along with amortization costs for
acquired intangible assets. The Company also incurred one-time
acquisition transaction costs in January
2018 of $1.3 million.
The one-time acquisition transaction costs negatively impacted
net income by $0.9 million
($1.3 million pre-tax), or
$0.12 per share for the first half of
2018. Excluding the one-time costs, the Company's net income for
the first half of 2018 would have been $1.9
million, or $0.24 per diluted
share. The Horizon Plastics acquisition, excluding one-time
transaction costs, contributed earnings of $.13 and $.20 per
dilutive share for the quarter and first half of 2018,
respectively.
Financial Position at June 30,
2018:
- Total assets of $190.5
million.
- Total debt of $43.4 million.
- Stockholders' equity of $103.6
million.
The Company's debt to equity ratio is 42%. The Company's
debt obligations contain covenant provisions related to leverage
and fixed charge coverage. As of June
30, 2018, the Company was in compliance with its debt
covenants. As a result of lower earnings in the second
quarter and first half 2018, the margin by which the Company
exceeds its covenant limits has declined. Continued lower
earnings will put debt covenant compliance at risk in the
future. In order to meet future covenant obligations, the
Company is aggressively working to improve operational performance
and profitability and has started discussions with the Company's
banks related to debt covenant and restructuring options, if
necessary. Until financial performance improves, the Board
has suspended quarterly dividend payments.
Outlook
Barnett stated, "Looking ahead to the
remainder of 2018, we expect continued sales growth due to the
acquisition of Horizon Plastics and further increases in the
Company's largest market, North American heavy-duty truck.
Industry analysts are projecting 2018 heavy-duty truck productions
levels to be approximately 316,000 units, which is at the high end
of historical annual production volumes."
Barnett continued, "We expect the high level of industry demand
to continue to create challenges for our operations. We are
aggressively focused on performance improvement plans including
programs for further hiring, training and retention of our
workforce, adding further technical resources and outside
consulting support, negotiating customer price increases, possible
temporary or permanent move of business to other manufacturers and
investments to increase and improve equipment capacity and
reliability. We are diligently implementing changes necessary to
improve and restructure our operations for long-term
profitability."
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 2017 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 (Unaudited)
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net
sales:
|
|
|
|
|
|
|
|
Products
|
$
|
65,225
|
|
|
$
|
36,794
|
|
|
$
|
124,937
|
|
|
$
|
73,130
|
|
Tooling
|
3,376
|
|
|
10,574
|
|
|
6,710
|
|
|
10,984
|
|
Total net
sales
|
68,601
|
|
|
47,368
|
|
|
131,647
|
|
|
84,114
|
|
|
|
|
|
|
|
|
|
Total cost of
sales
|
60,704
|
|
|
40,027
|
|
|
115,864
|
|
|
70,296
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
7,897
|
|
|
7,341
|
|
|
15,783
|
|
|
13,818
|
|
|
|
|
|
|
|
|
|
Total selling,
general and administrative expense
|
6,479
|
|
|
4,168
|
|
|
13,239
|
|
|
8,093
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
1,418
|
|
|
3,173
|
|
|
2,544
|
|
|
5,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and
expense
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
624
|
|
|
65
|
|
|
1,073
|
|
|
129
|
|
Net
periodic post-retirement benefit cost
|
(12)
|
|
|
(12)
|
|
|
(24)
|
|
|
(24)
|
|
Total other income
and expense
|
612
|
|
|
53
|
|
|
1,049
|
|
|
105
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
806
|
|
|
3,120
|
|
|
1,495
|
|
|
5,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
361
|
|
|
958
|
|
|
532
|
|
|
1,772
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
445
|
|
|
$
|
2,162
|
|
|
$
|
963
|
|
|
$
|
3,848
|
|
|
|
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
|
$
|
0.50
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
|
$
|
0.50
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
7,743
|
|
|
7,687
|
|
|
7,727
|
|
|
7,669
|
|
Diluted
|
7,800
|
|
|
7,752
|
|
|
7,800
|
|
|
7,730
|
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
As
of
6/30/2018
(Unaudited)
|
|
As of
12/31/2017
|
Assets:
|
|
|
|
|
Cash
|
|
$
|
—
|
|
|
|
$
|
26,780
|
|
Accounts Receivable,
net
|
|
38,601
|
|
|
|
19,846
|
|
Inventories,
net
|
|
19,683
|
|
|
|
13,459
|
|
Other Current
Assets
|
|
8,382
|
|
|
|
4,870
|
|
Property, Plant and
Equipment, net
|
|
81,609
|
|
|
|
68,631
|
|
Goodwill
|
|
22,957
|
|
|
|
2,403
|
|
Intangibles,
net
|
|
17,148
|
|
|
|
513
|
|
Other Long-term
Assets
|
|
2,125
|
|
|
|
2,076
|
|
Total
Assets
|
|
$
|
190,505
|
|
|
|
$
|
138,578
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Revolving Line of
Credit
|
|
$
|
784
|
|
|
|
$
|
—
|
|
Current Portion of
Long-term Debt
|
|
|
3,230
|
|
|
|
|
3,000
|
|
Accounts
Payable
|
|
24,883
|
|
|
|
13,850
|
|
Compensation and
Related Benefits
|
|
5,075
|
|
|
|
3,524
|
|
Accrued Liabilities
and Other
|
|
5,210
|
|
|
|
4,212
|
|
Long-Term
Debt
|
|
39,401
|
|
|
|
3,750
|
|
Deferred Tax
Liability
|
|
395
|
|
|
|
395
|
|
Post Retirement
Benefits Liability
|
|
7,912
|
|
|
|
7,954
|
|
Stockholders'
Equity
|
|
103,615
|
|
|
|
101,893
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
190,505
|
|
|
|
$
|
138,578
|
|
View original
content:http://www.prnewswire.com/news-releases/core-molding-technologies-reports-second-quarter-2018-results-300693738.html
SOURCE Core Molding Technologies, Inc.