Earnings call transcript Q1 2023

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Operator

Good morning, everyone. Welcome to the Core Molding Technologies' First Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded.

Now I will turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

Sandra Martin

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

and accessed Zimmer. coremt.com. Presentations This advised the Today's Core be page any is call, transcript Events also the the on and any today and call section audio EVP of CEO, the may will can link be Investor replay webcast Q&A President accurate the information the be recorded. sensitive company's John me and at the Please Dave CFO, Joining be as and being Duvall; through call Molding's are that Relations time session or longer date including no reading. of on of

you that the pursuant today's remind not statements and Private Securities made I made future Litigation fact, events including statements -- like that are made provisions expectations historical performance, and would Act discussion to XXXX. or future of of financial are Reform the safe pursuant or harbor or to in not forward-looking statements are also are

nature, uncertain by their company's are statements, and the outside control. Forward-looking of

assumes our release Actual was Please refer Securities Exchange described any forward-looking in press or company's obligation with results issued the from publicly filings implied. no and Technologies differ statements. the to Commission. statements. the earnings and today and may expressed to These forward-looking uncertainties are materially those disclosures update Core for or factors risks on that other detail revise Molding in

can to non-GAAP earnings end on and the to release. the GAAP adjusted flow measures of return found at will free employed. measures, EBITDA, including be our refer Reconciliations cash nearest capital Management

also section at earlier press Investor been release SEC. included posted X-K our to an has of the we coremt.com. website the of is submitted the the today release copy earnings in Finally, issued on A Relations

to turn over would the to I Dave? Duvall. And call now like Dave

David Duvall

in want first I result a to team Molding of to results. earnings for Good hard-working the thank Thank financial people skilled It quarter our driving feel our progressing, you direction direct increasing. welcome when is of first Core can of see change you, morning, passion especially shared the business the and to outstanding a every call. team momentum our our transformation with Sandy. the is day. exciting business improve to It a

As we gross I'm XXXX the That's The over margin. five highest a our for direct strategic reflected is years. of is stated March, that the in communicate this one of margin in XX.X%. to profitability was improvement. goals our measurement This our in is quarter for sequential key gross improvement was of prior XXX challenged the material basis focus points on from by QX the our This into fourth sales technical recoveries and we as increase cost quarter in solution an basis markets. XXX expand driven plants, continued of points operational newer execution from and our of year. excited

in our our stated our we fully performing lower XXXX with processes battle must-win operations for to a on March, locations. all of operational our As focus excellence in is embed

and compound always all This business. short-term of to but specifically on operations opportunities capture optimize will performance molding that and at our capacity. our sheet current the strategically improving focused are some that and have productivity within never improve We know to profitability we more is operational both our we improving capacity our margins ending, open

for must-win progress, plants productivity in by and teams appreciate more In focused driving is our QX, X%. I increased on supporting have we battle and good than how our our This each overall XXXX. plant are other operational

know end We more year. there much still capture also opportunity for of the us the is to before

free on our goals of sales, technical extremely cash and quarter. revenue focused team The improvements for the worked hard and profitability growth, the Now turning more specifically strategic solution flow year X generation. to has

on progress sales goals our improvements quarter margin these on compared growth. year strong first solid operating results gross to with reflect income last and The

truck, and increased continue demand largest medium our during with an market, the in see to strength We heavy-duty first quarter.

first shifted, heavy-duty new first which to customer, also to medium- second quarter of XXXX. launched quarter, new in of In with the truck the business includes truck this business revenue half sales from leading was The with demand a our coming the increase mix growth. XX% contributing trucks and truck

demand market saw powersports products in while since the also We been year. an increase beginning has pressured building QX, the in of the in

in the from company's of XXXX growth demonstrates The to solid markets. compared strategic X.X% the the XXXX new strategy end first benefits sales diversification quarter into

delivering gross reflects XX.X%, significant our progress achievements made improvement -- higher We which from margins ongoing of margin by process. also transformation

launch and utilities this solutions, of in with industrial bulk stormwater industrial year. in-ground and projects, projects win utility flush expect and production full covers related specifically to continue number to we to along the that categories, and We be products, programs a in other

We these provide growing about are excited engineered where high-value solutions. launches represent they end we because differentiated markets

our margin lower with as drive our we product and for and a costs complexities create projects customers manufacturing value these reduced of All enhancements performance, differentiator customers. improve

was We traditional to website report, to solution, inaugural customer a our posted a developing usually them on by support are their either materials which excited on see about March requests by our also recyclable more XX. using or recyclable on sustainability material sustainability product. publishing recycled converting path We do

to technical which or are to thermoplastics, products is Again, solutions, utilizes which of strategy that thermoset portfolio converted solution wide have aligned our not this providing of recyclable we processes. our Specifically, recyclable. are a

how our business of integrate forward almost outlined we've year, XXxXX targets strategy goals believe this we our customer am into strategy, in this sustainability proposition. employee journey, taken It and sustainability our in far how a enhance will our progressed Implementing proud am and area. our firmly and I looking a value I will I is has to and

value our us utility certification and holistic employees, to expect makes industrial proposition to responsibility also It in the further disciplined the is environment. July, more of We that receive aware several visibly of communities supports our and organization our customers. a EcoVadis and which

John in more financials the With that, to detail. over I cover turn would it like to to now

John Zimmer

and Thank morning, you, everyone. good Dave,

Dave flows last cash As when drove and by pricing a first and to quarter. improvements, margin strategic volume primarily sales higher combination compared mentioned, free growth driven actions, of year's

net XXXX quarter X.X% ago, costs higher were up $XX.X increased year by demand well launches. the versus with sales higher as Revenue versus largely million, prior First driven coupled year and to as inflationary customer increases product sales period. X.X% program a new offset pricing totaled

$XX.X for profit year of quarter the to Gross or the million quarter. XX% in of compared $XX.X prior first XX.X% or was sales sales million

combination strategic pricing supply and stable we and quarter, the saw especially labor the that given environment higher During more of the margins, our overall volumes enhanced chains.

impact dollar, first the a of weakening margins negative basis a of in have points. U.S. on We gross which also had seen the quarter XXXX XXX of approximately

dollar, Canadian we're hedge the still the of actively a by dollar. Mexican impacted portion We change exposure peso and to in the our but the

due in general $X.X period. primarily Selling, administrative and conditions for increases, prior to Increases improve year-over-year compared operations. million strategic primarily expenses were million to the quarter certain inflation due to year wage the were to $X.X and

per $X.XX, basis period company In over income prior $X.X $X.XX a of year. EPS year reported first of or an the was versus $X.X XX.X% quarter, same operating the up million, million the $X.X on million the prior same of diluted Net XX%. share diluted increase period income

$X.X quarter or of or was $XX.X XXXX adjusted the of million to Adjusted EBITDA XX.X% sales. quarter compared sales first XX.X% of million EBITDA for the in

the quarter still adjusted on XXXX, recognize we more returning with EBITDA margins first to XX.X% pleased improvements. are of our of We opportunities but have progress for for we

reconciliation You the first the non-GAAP the press results. can of find our to end GAAP quarter tables at for release

fourth X balance sheet. flow the and the expenditures to cash totaled quarter financial million, results cash cash ended months in flows activities grows to a XXXX, operating year. for by seasonality, million. The first working of for prior XX, quarter quarter the $X.X position, first in the sales flow company's and line a year historically as now free reduction positive million $X.X were March compared free growth in with capital Turning Due provided cash of company's in resulting capital $X.X to

from in in on experienced also free are the we year, growth, improvements and based we making working an capital we resulting generate business. ongoing cash sales flows This increase

free With XXXX. for plan flows from of for million capital capital $XX operations to year working utilize from to we not year, seasonality this expect the are the flows cash spending in We requirement changes approximately generated forecasted significant. be cash generate remainder as to

At cash and and EBITDA company the of a XXXX, had of company than equivalents cash XX-month also the of million, the debt-to-trailing remains which our less XX, of available at combination revolvers adjusted availability March, March includes liquidity first and had debt the EBITDA on $XX.X of lines. end and $XX.X The end Xx million at quarter. ratio term credit capital

year the accounts to with of the Xx few moments payable ago, March. with managed as $XX.X a Inventories working of controlled March of well receivable mentioned remain days. netted and We were I of a capital were XX. than ended end less As investments $XX million well accounts DSO XX at million and our

Our employed, driven XX% pretax return annualized use to a improved on basis, return on by capital an capital. metric, of a disciplined

a good X cash We our and and believe combination our a -- initiatives, profitability are free improvements on in generation. strategic growth capital solution plan X which liquidity to provides growth deployment sheet sales, prudent growth, manner manage to our balance flow strategically of that strong flexibility revenue technical focus and

reduce technical at transformation to As efforts we efficiencies operational Dave business and progressed margins plants and product strategic solution discussed, in the shifts impact to mix of our higher-margin and improve continue sales on our work our all business.

must-win quality productivity spending. reduction as productivity scrap improvements and well of integrating XXXX as and for Our the battle labor major includes overhead reduction,

take a operational year operational improvements usually to focused also all on our We to out new launches, from up efficiencies. product which launch with the work

margin on as goals performance operational and target efficiency capital. well and gross increased as capacity, throughput enhancements further return Our

strategic Core's long-term creation. with are We to to profitability drive value dedicated and goals growth programs

back that, to final would it Dave? turn for like to With Dave comments. I some

David Duvall

you, Thank John.

from earlier, our XXXX and molding for operational battle stated largest the to our our with must-win As into operations both our coming excellence or sheet John embed I compound, opportunities processes fully plants. SMC, is

the speed our strategic strategic energy investments. capacity our prepare for will which high SMC expand must-win we success reduce We a as foundation growth create costs stronger we will of our focus into productivity, directly priority organization, level and plants execution is a believe and future of driving asset increase quality about for by that and placed large mission. throughout XX%, communicated our have event has a Improving which battle goals into

battle, which of proper Ps creates XXXX planning objectives. execution flawless availability As capacity completion we facility site. plan greenfield add either acquisition, we best are to expansion grow prerequisite the capacity and executing on continue Basically, expansion capacity, a major technical our poor currently is the both machine investigating prevent of to our The five enable growth of how to expertise successful business, through to adding or just must-win the and and it's performance.

measuring in are we in in this We and productivity never complete, we X% improvement achieved XXXX. improve QX to over significant what is And want are alone. although have journey progress making

costs adding increase support additional production are and further automation also We efficiencies, to capacity. reduce

Our XXXX to serves and reduce monitoring concentration forecasts outlook includes markets. adjusting by end diversification of utilization carefully and assets accordingly. which labor all value We our in revenue plan industry, for our risks and customer

to cash We are flow. margins driving incremental further generate to gross increase

are year outlook Our be product slightly up for we be forecasting to flat sales this to our on the continues year. to optimistic and

infrastructure new sales projects. technical from advantage take that in requires government-funded resulting sustainability well solution including strategy to opportunities solutions, various of positions Our us industries opportunities and

remains our seen customers from macroeconomic slow to our demand industry and have unchanged. on an from industries but building inflation, impact efforts other products demand We

will and the to macroeconomic industry-specific diversification other from investors downturn call on continue headwinds, attention continued our impacts watch for again We demand increases their industry business. of to we time and your or believe carefully -- progress lessen our We analysts in but follow-up want this and call. impact want any on and today's rate welcome interest will a and to on questions call, thank for

I would line up open Operator? to like questions. that, With for the

Operator

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

Chip Moore

on team whole Wanted great quarter with start the to a to margins. Congrats of execution.

quarter. the optimistic margin great a fairly Obviously, on sound front. You

take programs and Just us of remind sort ramp factors and to of of into near seasonality for any term? you account new of on margins maybe sort mix can

John Zimmer

first so margins Chip, Obviously, with happy we're Yes. those. quarter, XX.X%. pretty

QX, the We when mix. a best of are going lot seasonality, to of have battles But are first you can the that the think, versus being kind QX Historically, indicates we're from some seeing seeing just always last product improvements. which quarter, the of look because the of margins operational our mix, of must-win we even normal I at benefits product year, you XX%, about. that up see talk benefits from

weaker but bit have half year show of would every little of usually than going sustainable But improvements the we just to rest and a a quarter kind would are to with seasonality that back the expect of operational where product normal that seen So mix. operational there first of expect improvements because of lot forward, the the up half for we improvements margins year. those the -- the are operational ongoing just in we've be that,

Chip Moore

And Got we're hear. those curious another capacity that. it. and That's ask then that's obviously, those all seeing to around you're what watching efforts? you sort how of future referenced, could that impact macro some there But bidding notwithstanding, which efforts, expansion, if great how I of may around pipeline, out and progressed maybe potential

David Duvall

Yes. Chip, this is Dave.

want business proceed capacity it's looking developing slower able the We've at at as that machines can individuals far is looking want the we rate banks strategy, how what than to being expand working, investment we the for that you to different right us. now companies, that, as with a possible and we're So but add or pipeline. interest our outlined with organically in or is probably the to purchase definitely on

So of that spots the our we we've have. -- we've mostly all all within the or and spots filled all locations, -- really

want And So the our next acquisition what and either brick-and-mortar looking probably more to to the is ability do is of I we're implement. we because towards speed step think just side, acquisition.

Chip Moore

lattice rate sheet And hearing you if some obviously, that. me. on a the is seeing other with sort right, balance good referenced of like guess markets, things you're On guess powersports I end Yes. interest environment? position. higher I particularly a curious impacts last anything, Understood. for one in maybe market-wise, and the

David Duvall

but Yes, we to we Right like the have going at of had we beginning orders now, especially thought, just we decline, not. see year still a that you, were the significant see strong.

that volumes. half would end We that, strong this anticipating right of that now, in see the the having year, effect. But are near we start second

John Zimmer

have our the nothing really any major we customers talking had point. they're been personal watercraft, stay seen ATV, them adjustments in still. If bullish we close haven't but we to to so adjustments you tell really at small all and In and We've to pretty some the truth, time, this far major.

as So get data fast customer close the we're to we to their staying as can.

Chip Moore

year? going to on like say on Perfect. Yes, sales sounds and have it visibility then was that follow product good for and up I your you outlook, the based pretty

John Zimmer

out time. Yes, forecast Again, customers most of I our think we us do. of give extended period

I think watching same in distribution the as the that. they're boat economy, like they're us, things see they though, can channels, but all their in their inventory levels,

But all they bit now, So still visibility. I But like think they're also. little have seems probably jobs, people have they're going rational spend more when to a right money. again, it

customers spending are right so think now, still at And I least. money

Chip Moore

hear. to Great

one maybe one, sorry, last if could. I And

to sort the seeing Sort that start And grow? are of opportunity? a infrastructure are potential opportunities in that utilities, you acquisition source in side, the or seeing would -- technical you that world, of those solution be early of

David Duvall

sales utilities, want we as whether at looking looking for infrastructure start we're industrial, to for channels, significant we definitely grow at. what growth We area us. When see absolutely. that's No, a processes or

Operator

[Operator back question-and-answer Duvall our to would like Instructions] concludes closing to turn over remarks. conference session. Dave I for any This the

David Duvall

already Thank if continued and conference scheduled calls we in we of quarter forward and to week you we when your week. few interest this a company, for in providing our next look months results progress have an and report our second update later

much. very you thank So

Operator

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

You may disconnect. now

Core Molding (CMT) 9 May 232023 Q1 Earnings call transcript