CMT - Earnings call transcript Q2 2022 | Core Molding Technologies, Inc.

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Operator

Good morning, everyone. Welcome to the Core Molding Technologies Second Quarter Fiscal 2022 Financial Results Conference Call.

As a reminder, this conference call is being recorded. [Operator Instructions] Now I will turn the call over to Sandy Martin, Three Part Advisors, to provide introductions and read the safe harbor statements. Please go ahead.

Sandy Martin

morning, good and you, everyone. Thank joining We Technologies the Molding for call appreciate to XXXX. you conference for review Core results us second quarter

or that and accessed no Zimmer. This historical longer the Core also is also replay like of the on facts, today and call of financial EVP future CEO, can webcast discussion the the statements date would President and statements be safe the expectations statements any Please or forward-looking to company's you John remind me and of today's Act future at that the coremt.com. of harbor be section the on Events any the Relations recorded. accurate Dave as may audio to made CFO, Joining provisions and are information made be Reform and being XXXX. call, Duvall; or are through Litigation events time-sensitive I Investor not Q&A including transcript link be will performance, are advised call reading. Presentations pursuant page Molding's Private of in Securities are the or session, Today's the including that

the cash adjusted return margin. forward-looking of statements. and our to also to to Molding on assumes adjusted risks nature, disclosures Actual at the on by refer forward-looking statements. can obligation any from our end are be uncertainties outside statements, company's factors company's capital update earnings described and and Exchange press flow, other nearest filings non-GAAP control. are EBITDA, in publicly the to the employed their Forward-looking expressed or refer and Core found revise or GAAP the issued may with the free Technologies was release. results for today of materially Commission. earnings differ in Please may uncertain measures, those including Reconciliations implied. release detail gross Securities measures and that Management These no

we of Duvall. issued website posted submitted on turn Dave would release over copy Investor of included press earnings Relations release And the to earlier in I X-K is now the been the the to call Finally, the A our Dave? like to section has coremt.com. SEC. today at an

David Duvall

and Sandy, morning, you, everyone. Thank good

the Impact I'd was like to year. of award Before Human this into Executive congratulating Renee as Renee I Vice quarterly honoree our get a by progress, Resources, HR XXXX start Anderson. selected President

have excellence HR overall customers process. rewarding Having described John the impacted with and you And business we than is and investor spoke strategy. she Volvo. and leadership service we're a strategy. fortunate that of this where an our are and I environment If you work award our extend success remember, presented doing news. recovery Last in Volvo year We're absolutely at they very supply each communities start our a uninterrupted at prioritized like to for this this our IR implemented earlier quarter, proactive to material company well This week, terms through she asset Last And a integrity current important their relationship modify some of to agreement business communities the HR and raw how five component resource serve. exemplify the and engaging year to Renee to critical and costs. live work. agreement has Molding. part also came excellence, provide our valuable team with field to company Core of provides that team, human an the in is strategy years. our the HR is able outreach professionals of as would XXXX. our with Renee organization. as I agreement foundational we to positively a continue open, recent we With an is excited were that to partner good leadership extension, and about Renee and any work leadership that with and we with embodies that more we to

pleased the journey buy awareness on with story. side Molding from the our are reaction and We side the of increase sell Core to

company. our We of create underfollowed, continue and stock continually to transparency believe and that we awareness are is working to our

Then Now some discussing by open and highlights turning more on to in up in quarter our the continued our over touch review second QX to call detail. major John progress. results. initiatives I I'll our turn XXXX to will

company's acquired discuss was Lastly, Columbus Historically, I synonymous In and the provide a the we Plastics, industry. efforts of truck will XXXX, our some come back around up market heavy was the International. and which Navistar with programs continued division call outlook. Molding sustainability to wrap OEM Core

was our citing of natural is it for stakeholders to more company, XX% as of revenue So us from truck than legacy think that the heavy-duty industry. a transportation originated

through compositions. into company, and multiple metal. that single introduced did challenges important began the innovative concrete transformational presses business R&D XX% business material our molded added truck with engineering many product represents This create business materials products like to turnaround a the lighter weight, new acquisitions developing by teams materials. XXXX. piece less much coupled customers includes specialized we revenues, materials is solving partnering project. we engineered major from launch plans, over thermoplastic in engineered R&D two businesses of a strategic a products. and XXXX, material stronger, technical underwent business operational in customers We below corrosive-resistant XXXX, diversification us Then our sequence during customer. However, reduce to that with sales that our technical recently, to solution deliberate medium labor our program, past we company-wide that are and XX% and them solution deliberately or transforming XXXX, in referring the just Instead ourselves that we and teams, turnaround and revenues. new building we solution other creating sales for assembly In as the support began several take or from formulated Most composite industries specially traditional either around the of we redesigned and years a and an by not few years, truck requires and into conversion improved back. the well our a strategically of cases, of heavy-duty truck and materials grew today, our And brings Instead, unique team components

market work, simulation, now last example rising and million need creates solutions continue demand, This markets XXXX, We that launch last public wins. new longer. and like including supply be are net costs important better further incremental simpler are sector the we the XXXX of the product when margins new great revenues diversifies improvements, especially which XXXX current our and new utilities, incremental diversification of with sports. products business and A successfully business products, partner perform will between customer in of the at up vehicles growth power achieved and $XX long-term seeing upfront to customers well cornerstone are share. providing of into to basic the added the strategy. infinite year. our better transportation, their experiencing million outcome businesses opens have model are of is and and what are as create These $XX wins skilled the differentiation number which to us to on development The net in design growing enables and company's are all-terrain agricultural we Profitable first unique watercrafts momentum of construction, delivery a and design, the by will strength increasing half our we by are as with for This wins new the our and last-mile continued in partners business. of chains. is wallet and them expanding other our markets And model engaging thereby Personal this. an

wallet significant in partnering believe market to companies personal And are those the additional light watercraft utility vehicles share This industry, sport of of our demand also off have the other tailwinds is business encouraged vehicles. larger The related XXXX carts, this vehicles we new quarters, environment allows utility we these at about are engineered business we with power XXXX. just that more significant of by Coming for but possibilities. golf We material look one applications. some provide revenue and expansion or sports category to record demand all-terrain category. selective us share accept. be our back-to-back sell teams example of and We to

high-value ways diversify to for produce and generating revenues to better will margins. products, We continue look

serving and up reliable our are automotive of production programs of major roof life demand We programs, with delivering requires full handling team commitments, dedicated Ford along Launches in new a of processes, capable category. launch systems have that major plants. capacity existing certain of are all with while in to Bronco improvements. of proven QX ramping stable, these customer customers products in the Bringing and requirements in adequate production each the requires operational changes

are daily this. We on working all of

business New continue our primary growth be driver. wins to

to pipeline opportunity current be over at continues robust Our million. $XXX

eliminated this remember on rationalized deliver. require constraints but first sooner than what opportunities lower we quarter can higher, is projects significantly you based as If and time, from that opportunities capacity was pipeline lower capacity reported than last the the value-add and we in

facilities. installation adding new point capacity are that automation presses our before plants three to to revenue our another continue existing to six we and increasing within We capacity location. first in maximize want our are a in We order now the expansion, with of existing

raw last now in customer the top saw million quarterly ways cost fulfillment to improve due chain are for disruption other offsetting customer inefficiencies quarter, sales Molding we and In Core QX, continued on financial driven our some we in to the by efficiencies always revenue. a In focus order quarter, few material quarter to reported plants. looking with high highest our of manufacturing for for inflation topped over we Turning $XX our demand of the second number challenges. to and in second supply On highlights. and

improve efficiencies. to are manage actively with our We working our production demand and customers

supply are a stabilized material Our pressures labor times. but have at still and challenge

carefully. we are So this monitoring

the will important to the turn that, details call to further The overall takeaway results. financial I environment give continues demand be With on over strong. John that to is our

John Zimmer

good you, Thank morning, Dave, everyone. and

driven prior sales we that profit the year sales Gross sales as compared Revenue of raw higher a well high primarily as mix increases to across in were net the shift and up improve. plant increased raw nearly quarter due with as million, Second well largely XX% $XX $XX.X product versus second sales launches the program and quarter as quarter margin working XX.X% totaled $XX.X of by all to demand coupled the for material period. ago, million XXXX recoveries or was XX% new decline or demand in material prior industries, The customer versus million year second recoveries. pressures in to production, year inefficiencies to are the quarter. related XX.X% quarter, percentage of product was impact inflation

material second XX.X%. raw been the margin would have quarter XXXX gross Excluding recoveries,

We the this previously company with arrangement year. have recovered a agreement majority come Volvo have allows increased material cost material a long-term incurred from to inflation. an the raw increases begin mentioned, us And raw on new beginning we as in that of to Dave of recovering costs July

Dave As has chain returned. supply mentioned, stability

certain resins, continue to chemical However, component hardware and prices increase.

we continue will raw changing through pass material can We going where costs forward. to

were of which customer in Selling, $X.X period. carefully administration second we general half or are compared and expenses $X.X we Finally, to early watching prior quarter increase. recessionary XXXX million if could million pressures the changes, demand the for year for in see the XXXX

$X.X a income prior net million QX the the labor, Although X.X%, year quarter. ago. Adjusted company points XXXX per SG&A of in $X.X share. which is notwithstanding per the $X.X In million or percent for million and basis in operating professional comparison to X%, insurance to due $X.XX SG&A quarter XX quarter the to primarily an versus the quarter, quarter a the second income of quarter, share million $X.X strong improvement or fees second sales, second net as a increased was was compared $X.X EBITDA the million. $X.XX for year aggregated dollars of reported of or income quarter

to the EBITDA adjusted You reconciliation GAAP non-GAAP end can of this measures press find financial at of release. the

plan sports, XX% XX% we and other. building in continues As utilities diversification discussed last strategic consisting power and industrials second progress quarter to for with product of our revenue call, make products, XX% truck, revenue X% XX% the our

sales totaled as across months driven to XX% Net demand turning period. prior program were first new Now $XXX.X for six product half recoveries. ago, year largely results. customer sales well XX% material sales industries, all the and increased first versus from up million, the as Sales by the a increases year raw

the sales profit first material million due the operational or the $XX.X of raw half. of compared margin in shift, and prior First primarily first half $XX.X mix percentage quarter, a was to Consistent other XX.X% gross with pressures and margin half or efficiencies. XX.X% the million was in cost year production recoveries sales decline zero second inflationary to

Excluding X months compared gross $X.X first been Fiscal half aggregated compared the million per the year the months the share $X.X income of period. to six margin raw for $XX.X or in million material would recoveries, to first prior $X.XX expenses Operating $X.XX XXXX the for XX%. or net prior was million in million. first first SG&A year. net share $XX.X income half million income were the $XX.X have

the for adjusted prior First compared million was $XX.X year. million X.X% half $XX.X EBITDA or to

press EBITDA financial at the today's GAAP find adjusted of can measures You to end of reconciliations release. non-GAAP the

to cash provided $X.X XX, flows to operations. six from capacity The months million. of the programs. for flow Approximately operating totaled capital XXXX, company's working increases the of the and were $X.X million cash to the financial growth balance year-to-date the in company's expenditures activity same for due now Turning period launch ended The position, expenditures our or capital business by $X.X sheet. reduced new and first the capital related June the has of cash million increase

long call, Mexico in complete about thermoplastic in approximately XXXX the our our million, to plant. D-LFT last we capital the On or capacity expansion capital of inclusive expansion talked of $XX direct to the spending revising fiber

press in the for equipment capacity press and the be the of full is in operational new place, we now new to anticipate at All QX.

As less of debt XX-month our strong. higher remains $XX The and June, the outstanding June ended revolving end. reliance trailing and At efficiencies capital ended had current company's and we $XX.X had our company last reducing the And to of Xx the or quarter EBITDA working available which adding maximize quarter $XX.X more XX, automation million million adjusted at with the at labor. us and of than term -- footprint add was our XX needed credit drive million term ratio end we throughput revenue-generating helps quarter, facility. discussed at days debt accounts presses quarter under sales will June capacity, allow our immediately DSO and is liquidity to on while XXXX, at The EBITDA receivable and primarily company days.

an employed, which metric, a capital return basis. first is the on year for the return of Our pretax half was annualized XX.X% on

coupled split refinanced paying million higher entered term term the continue of credit strong to entered new We repay the evenly on into the the sheet, efficient X.XX%. the and aggregate the grow. from liquidity, loan loan, XXXX term of with term company We debt. used our new debt to this revolving loan. through to and believe end rate to the million swap its loan, provides the company agreement, agreement with facility July proceeds balance Subsequent on to company quarter, that loan between $XX $XX the flexibility a XX, a credit with fixed our rate a agreement, existing Concurrent into CapEx closing of rate continue interest

successfully completed transformation our work a years we from back, Although is done. never few business the

existing incremental to our extend improve facilities production more revenue. continuing our and presses to the all throughput in the and addition floor are across operational of plants, on We us efficiencies drive allows

to for -- better clear with like We look Dave are it this profitability would and committed to Dave? investors through performance growth, to and core strategic prospects With to goals turn shareholder and I'd I like more some to consistent back year driving comments. final and messaging forward growth that, value analysts. sales for and

David Duvall

and record with packaging. We're demand see to and sports you, to in strong growing for and demand sales happy Thank John. report quarterly truck continue power utilities industrials,

We added efficiencies better of are our the on focused and and most improvement, margin presses making automation.

in productivity operational and and increasing sales, throughput. waste control cannot core at eliminating we solid can environment work, on each focus to team we quarter-to-quarter, improvements, we X drive and right control and processes have relentlessly the demand productivity our must product and our plants. This all we of With efficiencies hard record-setting Although mix execute. is a from

is to Molding, reduce materials goal convert to Related environmental our Core positively long-term impact in waste are sustainability alternative that the working recycled products with the smarter this, prime to alternative purposefully into usable Regarding deploying impact. world on we materials as and materials. to

efficient focuses our that use for the energy As responsibility quarter, I seriously we raw of on and waste mentioned well sustainability materials last took as as minimization. environmental

alternative that team development materials materials Our continuously environmental reduce impact. researching is

engineered businesses convert solutions sustainability that with of provide our benefit customers' also design and and the for Our extend our customers our into processes that materials materials existing efforts communities.

have of is type to applications are protein-rich And our in plans. of the category, animal limitless. positioned automated is in Core The packaging remain And our grow facility a the short- generate one truly as containers world. solution crickets. millions manufacturing countries and are sustainability in on a or food. of for as example, For well customer design food is base We flows. intensely profits long-term focused in now innovative for how and that harvest This and unique fully grow underserved we partnered cash are executing serve to example for we and and our this to difference making a

automation investing We are our winning and in in assets. people, engineering new capabilities, industries,

improvements relentlessly business We every are in our driving day.

and discovering heat and our process, expanding and in conversion higher industrial wallet especially performance are product our hotspot lighter customers. sectors. result Our share, we in cost products applications lower and in map new for innovation weight, investments utility Utilizing the

work that infrastructure more to people and demand. live, want which desire to where businesses for we challenges driving they solving call are is We what

evolving accelerated that new and stability our to lines further as believe We leading continues company. infrastructure businesses strategy execution profitability underground such pay data of We off and are high-speed throughout a today. with that our are challenges partnering the pandemic and relentless that solving by will for

see very shareholders I call We expand Operator? bright to future a value to all And analysts the I'm deliver With for business our or like questions for from to open the continue and Core excited continue to would to stakeholders. that, Technologies. Molding and for investors.

Operator

The Moore EF first Hutton. comes with Chip Instructions] question [Operator from

Chip Moore

about, ask and to efficiencies. just production guess, want first I on I

those that called it's on supply You some It of and out. like customer-driven sounds more issues. chain

expand you to there So maybe those some could you're just if can what mitigate of help that pressures? seeing you do what and on and

David Duvall

Yes.

really the operational it obviously on So product basis really by impacted mix and about XXX and We truck mix product a schedule. in gross inefficiencies, our ramp-up points. the margin see

more I So significantly on from a guess, and product are some of the the and of products, mold roof products, the mix. it changes other drives complicated, roofs lot overall

we've side. increase and really as plants specific So lot compensate had systems, change quick and Kanban molds of mix really Obviously the dyes systems handle into a to in [indiscernible] labor demand. certain add to the for product also implemented to of the

So increase in see we truck. big a do

Chip Moore

Got it.

And in in some just layering think would That's there and think just should curious we helpful. we some QX half? I about way of think starting but for read-through those Volvo we margins is if the obviously a if about the ramping any sequentially, think that. about improving assume how programs, back you to new that, that very take if of Okay. price extension with efforts, about on that pass-through

John Zimmer

margins. with starting negotiate with been haven't them X of one deal forward Obviously, actively Yes. recover those We've kind working those able Volvo to us in us July areas been appreciate that. We and a on to them. we with help guys. with the new will -- past them really contract on with of working working or the And going

At work in as plants. the of volumes the put place, I of some place improvement same operational margins So we're the in new a labor work at through time, challenges come certain result in we time, get the have expect some to molds the put as as at and to think, in the processes the in would change mentioned, then going to Kanban the Dave same that. through

the and labor, and in through bring work we'll to training people. the retention of have We the

And think back that, and up year. half would make back so of we the operational the improvements hope with I the we the would drive margins that going Volvo, into

Chip Moore

Got it.

up And conversely, you a helpful. about in about one right? me. growth versus after luxury of That's selective think future? You're -- just focused any is bumping risk business go what few call, about are think -- of recession of for of about the it think growth maximizing more sort when Okay. of some investing bigger new maybe important, picture, more think of the sort the against potential side? talked practical in sort future do obviously times you more balancing you having that's do stepping guess capacity. you you capacity, I on you you in to sort and would be the Or have on more out the on How sort

David Duvall

Yes.

really have add that opportunities areas do I against of most have right capacity in plants we think plants. on the why we which our pipeline of being probably also now, out pipeline the the place those value. And rationalizing that able to put it's areas that, where bumping in to really limit, doing we the are place really and in some is the those some capacity facilities took up locations in we the in optimize about and

selective -- lot So it's a a right now. lot being more more

new We have require or in a expanding couple some of similar in addition continue was an plants our acquisition left facility a either locations would of that to that of industry. And a further.

Chip Moore

Got it. Yes.

Okay.

David Duvall

market. exposure the time some of go have place. to plants talking when putting to importantly, the your or start Really faster you're reduces cycle -- it labor. for about a out provides is It reduced your does and is part. automation for automation, also it still We we're current reduces the the people machine our in your load in opportunities machines we because it a what it in unload to waiting labor more But not

the with the load unload. faster machines So automated you can run and

Chip Moore

Yes. Perfect.

Okay.

some demand additional and tackle grows and contemplate grows the and that mix up. of of the share fruit wallet it expansion low-hanging if kind when So

Okay.

Operator

question with The next from McGuire] [Matt [DemCo]. comes

Unidentified Analyst

least a about So book repriced kind But of here. to of to be, needs as what aggregate expectations to the come? portion your question majority you kind cover follow-up as your second And move guess, Or business, Have this inflation? renegotiated are of cost we into what of more those at that business through of got there contracts? I half we think of year? is or the

John Zimmer

you're gotten the all right, actually Yes, we at process. the contracts, X-step all contracts a point. this through significant have There was of kind

was The is by adjusted pass in quarter able first step and contracts. to these quarter. raw after introduce then every costs on through of clause some material a And going basically those that quarter being

for And other this been at we mechanisms have in renegotiated that recoveries do yet, in we contracts that aren't but able contracts point. new of them. raw -- due a ongoing get We place that so put to put from material of most couple those we've we've

recoveries this the specifically don't of for but providing customers us at raw contracts the material them, are so point. And with both provide

Unidentified Analyst

new we thinking But next last the XX for of the in verticals perspective? terms in Great. then $XX bit are down in business little business then a from maybe And maybe beginning maybe types additional wins? remind the that at pace talked us how I the the but a what new a year, is pipeline million new of of bit the wins. Okay. that's new call, from about about of And it wins months little I year-to-date, think guess, you what's

David Duvall

Yes.

about some the through trucks is wins delivery half would of we we programs And launching kind Amazon-type Marketing, just We're ability wins the we we're got call adding of this We had year. would capacity it and trucks, when and in four is go facility. FedEx-type then net last-mile far we I D-LFT ConAg launch, so split into at that another the half what our start is our But targets. but we're not set between then total, really, in of heavy smaller remainder And looking adding of the press of X,XXX-ton EVP one, DLT then About $XX And sports. new which as in and another your wins So we and on current other what moving And million Matamoros, as I'll as presses two million press. year. forward, power truck, $XX to Sales utilities. in call last presses, know some John in Winona wins. the and trucks. press see new the Cobourg in more talked a is

So those and next place and months. will automation lot of getting the and up the presses about launch over in take six time resources a

it. launch don't adding a $XX what would able on again I expect to being add this to lot the only it we're adding being more capacity, current I on would also So selective automation. working not we're and see the that but year. and know produce contracts not the million to we have capacity to

Unidentified Analyst

costs what on wins then ahead? $XX start-up we how looking -- million think of you're should as about And new Okay. launching

John Zimmer

up tuned of -- into up, you stage, obviously where the bring getting someone tools, They that in there's in types throughput, the to Yes. on ramp-up those you're things. speed first quarter you're

getting bit to of the we speed then news up margins we a impact new have going see a to program of but up -- this, quarter. the we to on bring bit we're quarter, that little But getting ramp-up we have it up and good we've for obviously, up program new and products. long to additional cost, But a any costs bringing point how really related the most does of gotten do part, levels we do know where so to each an term, that little to the do a kind And of each it as on. probably it bidded

Operator

from comes Investment question next The Value Corporation. with Jeff Geygan Global

Jeffrey Geygan

manageable prepared more your Appreciate you Dave, you think the comment your respect what important color comments a consider think narrowing criteria market that about targeting earlier. to around detail when infinite universe, and the opportunity, as most are with in to business? -- new

David Duvall

Yes.

utilities. a I I they than we by mean something well And and offer product significantly in performance appealing us, that a in or we deal with, can And especially and it's an to be is of with sections industrial what -- or troughs able area to be the it's for troughs offers what that offer They the a [indiscernible] come making the it's like talk more concrete demand in put or can it. maybe they come water that things or build as drains we better see place you're to product to drains that think as using is about what order. currently we entire might trough that's most concrete when different storm when able to configurable where being satisfy is, different to find that make because we and for able have. surface and say, where easier to

if and almost and they take installed. into that where an location, project, turn make it a all configure we for gets outline then -- able we're ship and to and to it Lego like can So that the just it entire it the products a piece and to

our we advantage process and what material they're currently our can with really, So using. to a where competitive offer

Jeffrey Geygan

you have financially contemplating What different type of these when overlay do opportunities?

David Duvall

What type of?

Jeffrey Geygan

for maybe John. a yes, For it's question example,

good you this a from customer? type universe, financial criteria as Just would engineering of large solution to or about what that better think you the are an apply

John Zimmer

Yes.

our of of business situations. kind on employed Jeff, we capital margin, all look at at we the at return both look of things and So one we for from the that the is look

capital, to And program, for we special we're hurdle if use for we would we is looking if targets we're what rate want of business, we have a we're the really adding it's items look kind any then kind adding. product, different at. looking value, have of that -- buy And rate. a in any set we I And at say take for the the margins so asset capital at do every and normal new normal also to day that we when going there's might that type when a hurdle that of have we we value

rate. hurdle different a have We

income that Just that knowing asset really you that maybe your all are target from specific specific opportunity. getting from that

trying we're out earnings And of at the employed target at cash that pretax. that the though, always do, to we again, to then we that's will to which earn both a need long-term. continue to get that grow capital flows we've to we so drive again, business. then try XX% that, kind return employed, to And the set on capital And on look free and return put least the there

Jeffrey Geygan

Appreciate Dave, to Great. your back color. capacity rationalize And seventh among to of circumstance the additional have, six with to add as Yes. opt would under strategically you facilities? what a opposed the six you that to further improve that amount you facilities finite profitability in

David Duvall

at looking have I Yes. business right our in say as well some would I time. take what the rationalizing locations. mean, absolutely we optimizing that coming we're new That in as the now, current will

I just two whether the or we the under work. it's doesn't that here our have to as successful, sure to We make I business our said. talking current and before months because that will would what have belt would add we to one nine have some we and are And facilities then know more those just six that automation facility But have decide get put John and probably facility. would have longer a has look that build to we secured add. to to in we left we if at, think do really term, launches we it, that months, optimization new look, add already about be a that. locations we horses But would they in place think really come we What able we're and

John Zimmer

think in I a time bit Jeff, right now, And an we're little the realize uncertain in that of economy. we

we more been the business. so year, new put in rationalizing year, we've million last through And this of year, went wins. we $XX This as

going, of we little the one go a now, right now bit pick then see would things does a driven probably the on over would next let's ventures it's is to maybe of good and uncertain. going at, different facilities we the probably we're and you've If see going And got goes. be path way other. kind happening I more of it could growth bit buildings exactly of and we months. at also this and probably economy And other XX again. look just where we think bit side new look little thing the we're on you is where But does over or I other think a what's hey, cautious this that economy economy this long-term it the will get months then side ahead we Right as always at what the come just economy growing in you. little look like where goes by out time on as a think new does, it start investing XX the next the where the

Jeffrey Geygan

question the really understand certainly just issue. We here. housekeeping John, a It's uncertainty. last

basis year-over-year explain expense income the Your higher. for that? can or tax Did -- is you explain notably you

John Zimmer

Yes.

tax, we depending we these now, as the country of We in right and the contracts are our in kind or through as we trying -- last recovery recoveries, get income our United where in States. losses the the year, on we've were United generating put we're all -- over raw material generating to we do and footnote in in the getting -- with going States. raw we XX material the renegotiations XX were but been So losses so it what

we corporate can is a States what our is actively on being to offices SG&A situation have We program and here. there is other the entities, of the United Canadian The do. allocate where in are a lot you Mexico do the costs limit a but

now. income getting accounting because The the aren't on on and the P&L P&L. States happened to in in put the that is Mexico And right is of so recognized losses United taxed be and what's my Canada rules allowed

valuation a to have We put allowance. full

kind the from tax really the of profitable benefit unprofitable. have on the two and you the So not

by of little that the and of we really in we're maybe doing some little that. value and an term, States the books, business a just maybe of restructure a out at of bit United the at NOL that and United do kind that recognized lot kind is our $X the looking the around situations not long royalty where we a look on of of get what or right and and from have million. driven maybe but being addressing NOL Mexico structure way we're Canada States do we at not now bit into We more income have So cost looking allocations

So me, problem get could if figure that's and this we out there use go cash it. to that we out can

And to we're tax blended so standard, it kind does have a or rate of But short-term, probably to profitable, you'll hopefully, more United hoping where XX% a short-term back P&L. is get States impact so. on get of and long-term, the

Jeffrey Geygan

congratulating of by you. just conclude I'll Yes. both

performance notable quarter. another your has delivering think been constructive and I Good luck.

Operator

question from next comes The Group. Talanta Putnam with Investment Justyn

Justyn Putnam

were I just In have press one gross mix efficiencies said due production margin percentage to question. it pressures quick inflation. release, the clarification primarily that shift, and your

and XXX asked across I impact, that, that Is three about it basis caller think point items. earlier correct? those mentioned was you and

John Zimmer

Yes.

I and here. the think out just we there look think a components, that have. exact actually three kind a When kind on we the will get I'm pulling come I at bit of items for three that more it XX-Q you numbers gives the Dave today all that was of throwing across -- clarity of up little you'll

is sorry. selling leverage. up -- to cost Before basis points fixed about basis I'm we then from raw recoveries, net And material leverage And the XXX cost pick price benefit for XXX selling with and or change selling adjusting selling raw unfavorable of raw from on cost in the did about, then some of yes, inefficiencies, materials. you're points XXX end basis points costs, up going material

XXX yes, three is across that So all categories.

Justyn Putnam

And that...

John Zimmer

Go sorry. ahead. I'm

Justyn Putnam

quarter-over-quarter, comparing 'XX. right? that's quarter Second And

John Zimmer

year last to second year to -- yes, quarter. Compared last

Justyn Putnam

or there impact like number, feel impact. quantify implying how that's you Do negative that that way a think that this you it's Is quarter? a unusual of correct is for of So interpretation a to negative is much is -- somewhat kind too? that a

John Zimmer

when a now Yes. ramp at also. product just labor type it's for think quarter ramp-up truck, ramping the the of up. you a being mean, looking we're takes with going when I on the more impact would up really that we're that that's heavily I right negative lot

some sequential we're that like I seeing we're ongoing lot and producing year-over-year, hey, we I things. where and think happening of a we're the say, interruptions mean, Friday at still of the a chain. week. of we're the types those event You same of and or the inefficiencies of looking to get the fiberglass to It's product. along bit little we're going customer of going that call going going you're I it I produce of us through rearrange and run next customers, see little things looking anything from one we're you're with rearrange kind -- would more we supply It's customers enough. if scrambling even those out at send we're actually you're so can't types a And take the overemphasize and of schedules, can it to produce the of where to can't kind say, people training bit your on speed a the products tell produce having and the to coming costs, in,

a really we're So where customers lot time same last get year that the in again trying bit what to our to second we're still lot just of period. that's stable and a the ran with more saw disruption, we it than And quarter a we seeing or of quarter. first work in at the little maybe

David Duvall

product XX You the a well. next the change for start months. is truck they're with bit seeing a as ramp-up quite mix Truck saying booked

Justyn Putnam

the impacting that particularly Right. had past one the dynamic quarters, Right. of at you XXXX, broken out Yes, few end particular you. was

the I and these a pretty as unrecouped impact significant items not think increases. where is you material that's it's, used you mentioned? has through, it, its what raw that other That's worked much just term price -- way

John Zimmer

battling price getting on customers. increases. a were far at on had that we Yes. pretty behind were of In the quarter, never A customers lot the the heard We really the increase. lot them of of fourth price time what

from got We July, recoveries customers. that done contract Starting have all where the really our final gotten kind to in we've of Volvo. point with got we

gross not getting much normalize really raw and And less material we've issue. on it we we're probably what go profit we something a whenever doing we bigger raise that's percent, have forward, cost we're those, have as now, of margin The because cost And the on bit margin that or become dollars that through. cost of we so pass not to raw raw actually the of we what and becomes -- so price it's at is having recoveries, material raise should been a issue gross because that selling to breaking dilution materials we're out an of that a materials. is our really because it's little

Operator

turn This management conference back concludes closing the I our over question-and-answer any to remarks. like would to session. for

David Duvall

in our when you We we progress for Thank No. third very an update forward months. results company. much. few look quarter a the Thank report in your interest continued our you to providing of

Operator

The now for attending concluded. presentation. you today's conference Thank has

may disconnect. now You

Core Molding (CMT) 13 Aug 222022 Q2 Earnings call transcript