FORM 10-K: CORE MOLDING TECHNOLOGIES, INC. AND SUBSIDIARIES
Core Molding Technologies, Inc. filed its annual report for the fiscal year ended December 31, 2024. The company reported net sales of $444.8 million, a 10.3% increase from the prior year. Gross profit increased 12.1% to $114.1 million, and operating income rose 14.5% to $34.5 million. Net income was $24.1 million, a 15.1% increase from the prior year. The company’s diluted earnings per share (EPS) was $0.27, a 15.4% increase from the prior year. As of December 31, 2024, the company had cash and cash equivalents of $64.1 million and total debt of $143.8 million. The company’s aggregate market value of voting and non-voting common equity held by non-affiliates was approximately $97 million as of June 30, 2024.
Financial Performance Overview
Core Molding Technologies, a leading manufacturer of sheet molding compound and thermoset and thermoplastic products, has reported its financial results for the past three years. The company has faced some challenges in recent years, with decreases in sales and net income, but has also shown signs of improvement.
2024 Compared to 2023
In 2024, the company’s net sales totaled $302.4 million, down from $357.7 million in 2023. This decrease was primarily due to lower demand from customers across all of the company’s major markets, including medium and heavy-duty trucks, power sports, building products, and industrial and utilities.
Gross margin was 17.6% of sales in 2024, down slightly from 18.0% in 2023. This decrease was due to lower fixed cost leverage and unfavorable product mix and production inefficiencies, partially offset by changes in selling price and raw material costs.
Selling, general and administrative (SG&A) expenses decreased to $35.3 million in 2024, down from $38.0 million in 2023, primarily due to lower bonus, labor and benefits, and stock compensation expenses.
Net income for 2024 was $13.3 million, or $1.51 per diluted share, compared to $20.3 million, or $2.31 per diluted share, in 2023. The decrease in net income was primarily due to the lower sales and gross margin.
Comprehensive income, which includes net income as well as other comprehensive items like foreign currency hedges and post-retirement benefit plan adjustments, was $10.3 million in 2024, down from $22.6 million in 2023.
2023 Compared to 2022
In 2023, the company’s net sales were $357.7 million, down from $377.4 million in 2022. This decrease was primarily due to lower demand from customers in the building products and industrial and utilities industries, partially offset by higher demand in the heavy-duty truck industry and the full-year impact of price increases related to raw material inflation.
Gross margin improved to 18.0% of sales in 2023, up from 13.9% in 2022. This increase was due to the net impact of higher selling prices and raw material costs, as well as favorable product mix and production efficiencies.
SG&A expenses increased to $38.0 million in 2023, up from $34.4 million in 2022, primarily due to higher labor, benefit, and bonus costs, as well as higher professional fees.
Net income for 2023 was $20.3 million, or $2.31 per diluted share, compared to $12.2 million, or $1.44 per diluted share, in 2022. The increase in net income was primarily due to the higher gross margin.
Comprehensive income was $22.6 million in 2023, up from $14.2 million in 2022, mainly due to the increase in net income.
Strengths and Weaknesses
The company’s key strengths include its diversified customer base across several industries, its focus on operational efficiency and cost control, and its strong liquidity position with significant cash on hand and available credit facilities.
However, the company’s reliance on certain key markets, such as medium and heavy-duty trucks, and its exposure to fluctuations in raw material and labor costs are potential weaknesses. The company’s profitability is also sensitive to changes in sales volumes and product mix.
Outlook and Future Trends
Looking ahead, the company anticipates that raw material costs will increase in 2025 compared to 2024, and that labor markets will remain challenging, with continued wage pressure, especially in Mexico.
The company plans to continue investing in capital expenditures to support additional capacity, automation, and new program launches. It expects to spend between $10 million and $12 million on capital expenditures in 2025.
Overall, the company’s management believes that its cash on hand, cash flow from operations, and available borrowings will be sufficient to meet its current liquidity needs. However, the company acknowledges that a material adverse change in its financial position or significant differences between actual and forecasted sales and expenses could negatively impact its liquidity and ability to obtain further financing.
Conclusion
Core Molding Technologies has faced some headwinds in recent years, with decreases in sales and net income. However, the company has also shown signs of improvement, with a stronger gross margin in 2023 and a focus on operational efficiency and cost control.
Going forward, the company will need to navigate challenges related to raw material and labor costs, as well as fluctuations in demand across its key markets. Its strong liquidity position and continued investment in capital expenditures may help the company weather these challenges and position it for future growth.
