What Core Molding Technologies (CMT) Said on Its Q3 Earnings Call

Key Points

• Q3 sales grew sharply: Production sales rose 19.7% year over year, while total revenue including tooling increased more than 54%. Growth was led by medium- and heavy-duty trucks, but lower-margin tooling mix and Mexico expansion costs pressured profitability; adjusted EBITDA margin fell to 7.1% from 11%.
• Fiscal 2026 guidance was maintained: Core expects sales to be flat to up about 5% and gross margin of 16% to 17%, with tooling mix potentially weighing on Q4 margins. It has secured $30 million in new awards year to date and targets $50 million for the full year, subject to Q4 award timing.
• Expansion spending is nearing completion: The Monterrey facility is operational, and two Matamoros presses are expected online by year-end. Core forecasts $28 million to $30 million in 2026 capex, while manufacturing consolidation is expected to generate more than $1 million in annual savings starting in 2027.

Core Molding Technologies NYSEAMERICAN: CMT reported third-quarter fiscal 2026 production-sales growth of 19.7% from a year earlier, while total net revenue, including tooling, increased more than 54%, as new program launches and a major tooling project contributed to results.

President and Chief Executive Officer Eric Palomaki said the company has secured $30 million in new business awards year to date and remains on track toward its full-year objective of $50 million, depending on the timing of fourth-quarter customer awards. He said Core has won more than $90 million in annualized revenue opportunities over the past 18 months across more than 30 programs, with about two-thirds of those wins coming from end markets outside truck and powersports.

Revenue Growth Offset by Tooling Mix and Expansion Costs

Chief Financial Officer Alex Panda said revenue gains were led by a 44.8% year-over-year increase in the medium- and heavy-duty truck vertical. Building-products sales rose 17.7% on new program launches, while industrial and utilities revenue increased 21.5%.

A major tooling project contributed revenue earlier than initially planned following a change in revenue-recognition methodology for a customer, Panda said. However, the elevated proportion of lower-margin tooling sales and commissioning costs tied to the company’s Monterrey, Mexico, expansion affected margins during the period.

Core said gross margin, excluding the tooling-mix impact and one-time commissioning charges, would have been about 18.6%, within its historical guidance range of 17% to 19%.

SG&A expense was $11.8 million, or 13.1% of sales. Excluding $1.8 million in one-time Mexico expansion and footprint-optimization expenses, SG&A would have represented 11.1% of sales, compared with 13% in the prior-year period.

Operating income was $1.6 million, down from $2.6 million a year earlier. Net income totaled $1.5 million, or $0.17 per diluted share. Adjusted EBITDA was $6.4 million, equal to 7.1% of sales, compared with 11% of sales in the prior-year quarter.

Mexico Capacity Expansion and Manufacturing Consolidation

Management said its Monterrey facility is now fully operational and is producing structural foam, structural web and DCPD products with integrated paint capabilities. Two new 4,500-ton presses in Matamoros, Mexico, remain on schedule to become operational by year-end.

The company is also consolidating hood and battery-enclosure systems at its Gaffney, South Carolina, facility as part of a centers-of-excellence strategy. Panda said the footprint initiative is expected to generate more than $1 million in annualized savings beginning in 2027, following about $2 million in one-time costs during the second half of fiscal 2026.

Mexico-related and portfolio-optimization costs totaled $5.2 million through the first nine months of the year. Core expects an additional $1 million of final optimization costs during the balance of 2026.

Palomaki said the company executed the Mexico expansion, manufacturing changes and program launches with minimal disruption to customer service. He also pointed to employee turnover below 7% for the year and said the company plans to invest 18,000 hours in employee, internship and management-development training during 2026.

Cash Flow, Capital Spending and Capital Allocation

Core generated $3.4 million of cash from operating activities during the first nine months of fiscal 2026, while capital expenditures totaled $19.7 million, primarily for Mexico expansion projects. The company expects full-year capital expenditures of $28 million to $30 million, including roughly $20 million related to its Mexico investments.

Panda said the company expects capital spending to return closer to sustaining levels in 2027, which it targets at approximately 3% to 3.5% of sales. He said Core’s annual sustaining-capital level would currently be about $10 million, although the company could exceed that level for projects with sufficiently attractive returns.

At quarter-end, Core had $5.4 million in cash and $4.8 million outstanding on its revolving credit facility. Its capital structure includes a $50 million revolving credit agreement and a $50 million delayed-draw acquisition facility, according to management.

The company repurchased 8,411 shares during the third quarter at an average price of $22.71, followed by 106,659 shares in October at an average price of $23.42. Panda said the company has reached its $2.5 million annual repurchase target and does not expect to repurchase additional shares during the remainder of the year.

Outlook Includes Improving Truck Demand

Core reiterated its fiscal 2026 guidance, calling for total sales ranging from flat to up about 5% year over year. It expects $9 million to $11 million in project revenue during the fourth quarter and full-year gross margin of 16% to 17%, though fourth-quarter margin could fall below that range because of tooling mix.

Management said the majority of $63 million in new program awards secured in 2025 are expected to begin contributing meaningfully in the second half of 2026 and reach full annualized run rates in 2027.

Palomaki said truck original equipment manufacturers are seeking to increase production but are facing supply-chain constraints. He said OEMs expect demand to remain strong through the first half of 2027 and are not forecasting a sharp production decline at the start of the year related to emissions-rule changes.

In industrial and utility markets, Palomaki said Core has secured a grid-infrastructure battery-storage project for molded battery boxes and expects the program to begin launching soon. The company is also pursuing related opportunities in grid, data-center energy and underground utility-vault applications.

Panda said Core is considering issuing fiscal 2027 guidance earlier than its historical March timetable, potentially by late December or January, once its budget has been finalized and reviewed with the board.

About Core Molding Technologies (NYSEAMERICAN:CMT)

Core Molding Technologies, Inc is a manufacturer of composite materials and molded plastic products. The company primarily serves original equipment manufacturers and other industrial customers that require lightweight, durable, and corrosion-resistant components.

Its products and capabilities include sheet molding compound, bulk molding compound, liquid molding compound, and other fiberglass-reinforced composite materials. Core Molding also produces finished components using processes such as compression molding, resin transfer molding, hand lay-up, pultrusion, structural foam molding, and injection molding.

The company's products are used in heavy-duty trucks, automotive vehicles, agriculture and construction equipment, power generation systems, and other industrial applications.

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