8-K
Core Molding Technologies Inc (CMT)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11,
2021
Core Molding Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-12505
31-1481870
(State or other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
800 Manor Park Drive
Columbus
,
Ohio
43228-0183
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number,
including area code: (
614
)
870-5000
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d
-2(b) under the Exchange Act (17 CFR 240.14d-
2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, par value $0.01
CMT
NYSE American
LLC
Preferred Stock purchase rights, par value $0.01
N/A
NYSE American
LLC
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the
Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b
-2 of the Securities Exchange Act of 1934 (§ 240.12b-
2 of this chapter). Emerging growth company
☐
If an emerging growth company,
indicate by check mark if the registrant has elected not to
use the extended
transition period for complying with any new or revised financial accounting
standards provided pursuant to Section
13(a) of the Exchange Act
Item 2.02
Results of Operation and Financial Condition.
On March 11, 2020, the Company announced financial results for the fourth quarter and
year ended December 31, 2020. A copy of the press release announcing this event is included in
this Form 8-K as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number
Description
Press release announcing earnings for the Company for the fourth quarter and
SIGNATURE
Pursuant to the
requirements of the
Securities Exchange Act
of 1934, the
registrant has duly
caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
CORE MOLDING TECHNOLOGIES, INC.
By:
/s/ John P.
Zimmer
Name: John P.
Zimmer
Title: Executive Vice
President, Treasurer,
Secretary and Chief Financial Officer
Date:
March 15, 2021
ex991
FOR IMMEDIATE RELEASE
CORE MOLDING TECHNOLOGIES REPORTS STRONG FULL YEAR 2020 RESULTS
COLUMBUS, Ohio - March 11, 2021 - Core Molding Technologies, Inc. (NYSE American: CMT) (“Core
Molding”, “Core” or the “Company”) today announced results
for the full year and fourth quarter
ended December 31, 2020.
The Company recorded net
income of $8.2
million for the full
year 2020 compared to
a net loss
of $15.2
million for the same period
in 2019.
Operational improvements in 2020 drove the
increase in net income
as the Company benefited from the
completion of its turnaround started in
the fourth quarter of 2018.
For
the fourth quarter 2020,
the Company recorded a
net loss $0.9 million
compared to a
net loss of $5.5
million
for the fourth quarter
of 2019.
The 2020 fourth quarter
net loss includes a
one-time charge, net
of tax, of
$1.3 million from the
successful refinancing of the
Company’s debt in
October 2020.
Excluding the one-
time charge, the Company would have recorded net income of $0.4 million in the fourth quarter 2020.
The Company’s net sales decreased $61.9
million or 22% for the
full year 2020 to $222.4
million compared
to $284.3 million in
2019.
Lower demand from our
customers as a result
of a cyclical downturn
in the truck
market and the full year negative effect
of COVID-19 on most customer demand
were the primary drivers
of the sales decrease.
For the fourth quarter 2020,
net sales increased $4.5 million
or 8% to $60.7 million
compared to the same
period in 2019
due to increased demand
in the construction
and all-terrain vehicles
markets combined
with stable
demand in
the other
markets the
Company serves.
Customer demand
continued to
improve in
the fourth
quarter 2020
from COVID
-19 effected
demand levels
in the
second
quarter of 2020.
“The two
foundational components
of our
transformation strategy
are the
Core Molding
Values
and
Execution Excellence.
We first needed to create an inspired team and then create a culture of excellence in
executing the
business,” said
David Duvall,
President and
Chief Executive
Officer.
“I am
proud of
the
progress we have made in
these areas and it directly
shows in our 2020 financial
performance.
Even with
a $62 million decrease in
net sales we were able
to increase our net income
by over $23 million.
These
two foundational components
must always remain
a part of
who Core Molding
is and how
we operate,”
concluded Duvall.
The Company generated
cash flows from
operations for the
full year 2020
of $28.2 million
compared to
$16.7 million for the same period of 2019.
Year
over year improvement in cash flows from operations is a
result of the Company’s operational improvements and focus on managing working capital.
Fourth Quarter 2020 Compared to Fourth Quarter 2019:
•
Net sales were $60.7 million compared to $56.1 million.
•
Product sales were $58.6 million compared to $54.6 million.
•
Gross margin was 16.4% compared to 6.0%.
•
Selling, general and administrative expenses were $7.0 million compared to $7.5 million.
•
Goodwill impairment charge was $4.1 million for the three months ended December 31, 2019.
•
Operating income was $3.0 million compared to operating loss of $4.1 million.
•
Net loss was $0.9 million, or ($0.10) per share, compared to net loss of $5.5 million, or ($0.69) per
share.
Year
ended 2020 Compared
to Year
ended 2019:
•
Net sales were $222.4 million compared to $284.3 million.
•
Product sales were $210.6 million compared to $269.0 million.
•
Gross margin was 15.5% compared to 7.6%.
•
Selling, general and administrative expenses were $24.1 million compared to $28.9 million.
•
Goodwill impairment charge was $4.1 million for the year ended December 31, 2019.
•
Operating income was $10.4 million compared to operating loss of $11.5 million.
•
Net income was $8.2 million, or $0.98 per share, compared to net loss of $15.2 million, or ($1.94)
per share.
Full year and fourth
quarter 2020 gross margin increased
over the same periods in
2019 primarily as a
result
of product
mix and
operational improvements.
“Operational improvements
implemented as
part of
the
Company’s turnaround
have stabilized
the Company’s
performance and
improved the
Company’s
profitability,” said John Zimmer,
Executive Vice President and Chief Financial Officer.
Full year and
fourth quarter 2020
selling, general and
administrative expenses decreased
compared to the
same period in 2020 due primarily to
lower professional services, due to the stabilization of
the Company’s
operations in
2020, and
due to
lower travel
costs due
to travel
restrictions resulting
from the
effects of
COVID-19.
In addition, the Company received
$1.4 million of COVID-19 related government
subsidies in
the second and third quarter of
2020 which reduced full year 2020 selling,
general and administrative costs.
Full year operating income improved to $10.4 million from an operating loss
of $11.5 million in 2019.
“I
am incredibly
proud of
the entire
team who
proved we
have the
ability to
adapt to
any challenge
while
executing with
excellence in
2020.
In the
second quarter
we cut
cost, improved
inventory turns,
and
protected against the
early pandemic customer
shutdowns.
In the second
half of 2020
we used the
same
flexibility and
operational execution
techniques to
deliver on
rapidly increasing
demands,” said
Eric
Palomaki, Executive Vice
President of Operations.
“The 2020 results are a testament
to the creativity and
the ability to
handle both extremes
with a desire
to win with
integrity and demonstrates
our preparedness
for 2021 and the right to grow and pursue the future transformation of business,” concluded Palomaki.
Financial Position at December 31, 2020:
•
Total assets of $165.5 million.
•
Revolving line of credit debt of $0.4 million.
•
Term loan debt of $27.7 million.
•
Stockholders’ equity of $93.9 million.
The Company’s
debt to equity
ratio as of
December 31, 2020
is 30%.
“As a result
of refinancing of
the
Company’s credit facility in the fourth quarter of 2020 and due to strong cash flows from operations for all
of 2020, the Company has been able to reduce its debt to equity ratio nearly in half from the 2019 year end
level of 59%,” said Zimmer.
“With the improvement in
the Company’s debt to
equity ratio, the Company
is in good position financially to turn its attention to growing the business,” concluded Zimmer.
Outlook
Looking forward,
based on
industry analysts’
projections and
customer forecasts,
the Company
expects
sales levels
for 2021
to increase
compared to
2020.
In the
Company’s largest
market, North
American
heavy-duty truck, ACT Research is
forecasting production to increase approximately
41%.
In several other
industries the Company
serves, customers are
forecasting higher demand
in 2021 including
in the marine
and all-terrain vehicle markets.
The Company
anticipates higher
raw material
costs in
2021 as
global economies
continue to
strengthen
from the COVID-19 effected 2020 economic levels. Global demand for
certain raw materials the Company
uses has increased
in the second
half of 2020
and in the
first quarter of
2021.
As a result,
suppliers have
been increasing the price of these
materials.
The Company has the ability to
pass through a portion, but not
all, of the cost increases to its customers.
In February 2021,
an unprecedented winter
storm in Texas
and Mexico caused
operational disruptions to
many companies in the area including
the Company’s Matamoros and Monterey Mexico operations as well
as to
our customers
and suppliers.
Much of
North American
resins and
glass supply
originate from
the
region and these
supplier operations were
significantly affected
causing suppliers to
claim force majeure
and set supply allocations.
While the Company has
been able to coordinated
its raw material supply with
customer demand, other
supplier disruptions throughout our
customers’ supply chain
have resulted in
our
customers delaying orders.
In addition, suppliers
of certain materials,
such as polypropylene,
have increased
prices due to a shortage of supply.
Suppliers have indicated they anticipate supply levels to recover during
the second quarter of 2021
.
“We are now able to effectively leverage our ability to execute well
by better serving our current customers
and continuing
our diversification
of the
business.
With our
expertise and
industry leading
breadth of
composite and plastic processes we
can offer complete solutions
that are uniquely developed to
maximize
value for
our customers’
applications,” said
Duvall. “We
are increasing
our investment
in materials
development, technology and applications
engineering to better understand the
market needs and translate
those to high
value solutions
for our customers.
With more
focus on environmental
stewardship we are
seeing increased interest
in composite and
plastic solutions that
provide lighter weights,
consolidation of
components, and higher performance,” concluded Duvall.
About Core Molding Techno
logies, Inc.
Core Molding
Technologies and
its subsidiaries
operate in
one operating segment
as a
molder of
thermoplastic and thermoset structural
products. The Company's operating segment
consists of two
component reporting units,
Core Traditional and
Horizon Plastics. The
Company offers customers
a wide
range of
manufacturing processes
to fit
various program
volume and
investment requirements.
These
processes include compression
molding of sheet
molding compound ("SMC"),
bulk molding compounds
("BMC"), resin transfer
molding ("RTM"),
liquid molding of
dicyclopentadiene ("DCPD"), spray-up
and
hand-lay-up, direct long
-fiber thermoplastics ("D-LFT")
and structural foam
and structural web
injection
molding ("SIM"). Core Molding Technologies serves a wide variety of markets, including the medium and
heavy-duty truck,
marine, automotive,
agriculture, construction,
and other
commercial products.
The
demand for Core Molding Technologies’ products
is affected by economic conditions in the United States,
Mexico, and Canada. Core
Molding Technologies’
manufacturing operations have a
significant fixed cost
component. Accordingly,
during periods
of changing
demand, the
profitability of
Core Molding
Technologies’ operations may change proportionately more than revenues from operations.
This press
release contains
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 Annual Report on Form 10-K: 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; the adverse
impact of coronavirus
(COVID-19) global pandemic
on our
business, results
of operations, financial
position, liquidity or
cash flow,
as well as
impact on customers
and supply chains; safety and
security conditions in Mexico and
Canada; fluctuations in foreign
currency
exchange rates; 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;
ability to
accurately quote
and execute
manufacturing processes
for new
business; 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; a work stoppage
or labor disruption
at one of
our union locations
or one of
our customer or
supplier locations; 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; federal,
state and
local environmental
laws and
regulations; the
availability of
sufficient
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
this Annual Report on Form 10-K.
Company Contact:
John Zimmer
Exec Vice President & Chief Financial Officer
614-870-5604
jzimmer@coremt.com
(See Accompanying Tables)
CORE MOLDING TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income (Loss) (Unaudited)
(in thousands, expect per share data)
Three Months Ended
Year
Ended
December 31,
December 31,
2020
2019
2020
2019
Net sales:
Products
$
58,563
$
54,585
$
210,580
$
268,987
Tooling
2,091
1,537
11,776
15,303
Total
net sales
60,654
56,122
222,356
284,290
Total
cost of sales
50,687
52,740
187,882
262,784
Gross margin
9,967
3,382
34,474
21,506
Selling, general and administrative expense
6,953
7,503
24,084
28,934
Goodwill impairment
—
—
—
4,100
Total
expenses
6,953
7,503
24,084
33,034
Operating income (loss)
3,014
(4,121)
10,390
(11,528)
Other income and expense
Interest expense
2,586
1,266
5,923
4,144
Net periodic post-retirement benefit cost
(20)
(22)
(80)
(94)
Total
other income and expense
2,566
1,244
5,843
4,050
Income (loss) before taxes
448
(5,365)
4,547
(15,578)
Income tax expense (benefit)
1,315
97
(3,618)
(335)
Net income (loss)
(867)
$
(5,462)
$
8,165
$
(15,223
)
Net income (loss) per common share:
Basic
$
(0.10)
$
(0.69)
$
0.98
$
(1.94
)
Diluted
$
(0.10)
$
(0.69)
$
0.98
$
(1.94
)
Weighted average shares outstanding:
Basic
7,975
7,868
7,936
7,830
Diluted
7,975
7,868
7,936
7,830
Condensed Consolidated Balance Sheets
(in thousands)
As of 12/31/2020
(Unaudited)
As of
12/31/2019
Assets:
Cash
$
4,131
$
1,856
1,856
Accounts Receivable, net
27,584
32,424
Inventories, net
18,360
21,682
Other Current Assets
6,403
5,263
Right of Use Asset
2,754
4,484
Property, Plant and Equipment, net
74,052
79,206
Goodwill
17,376
17,376
Intangibles, net
11,516
13,464
Other Long-Term Assets
3,332
3,551
Total
Assets
$
165,508
$
179,306
Liabilities and Stockholders' Equity
Current Portion of Long-Term Debt
$
2,535
$
37,443
Current Portion of Revolving Debt
420
12,008
Accounts Payable
16,994
19,910
Compensation and Related Benefits
8,305
5,515
Accrued Other Liabilities
6,322
7,725
Lease Liability
2,693
3,119
Long-Term Debt
25,198
—
Post Retirement Benefits Liability
9,109
9,160
Stockholders' Equity
93,932
84,426
Total
Liabilities and Stockholders' Equity
$
165,508
$
179,306
Year
Ended
December 31,
2020
2019
Cash flows from operating activities:
Net income (loss)
$
8,165
$
(15,223
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
11,662
10,376
Deferred income tax
1,097
(873)
Mark-to-market of interest rate swap
—
67
Goodwill impairment
—
4,100
Share-based compensation
1,355
1,564
Losses (gains) on foreign currency
237
(33)
Change in operating assets and liabilities:
Accounts receivable
4,840
13,044
Inventories
3,322
4,083
Prepaid and other assets
(2.017)
2,587
Accounts payable
(3,142
)
(4,849)
Accrued and other liabilities
2,909
3,420
Post retirement benefits liability
(264
)
(1,628
)
Net cash provided by operating activities
28,164
16,701
Cash flows from investing activities:
Purchase of property, plant and equipment
(3,683
)
(7,460
)
Net cash used in investing activities
(3,683
)
(7,460
)
Cash flows from financing activities:
Gross repayments on revolving line of credit
(68,381
)
(199,782
)
Gross borrowings on revolving line of credit
56,793
194,414
Proceeds from term loan
30,165
—
Payment of principal on term loan
(38,725)
(3,375)
Payment of deferred loan costs
(2,038
)
(435
)
Payments related to the purchase of treasury stock
(20)
(98)
Net cash provided by (used in) financing activities
(22,206
)
(9,276)
Net change in cash and cash equivalents
2,275
(35
)
Cash and cash equivalents at beginning of period
1,856
1,891
Cash and cash equivalents at end of period
$
4,131
$
1,856
Cash paid for:
Interest
$
3,854
$
3,869
Income taxes
$
570
$
1,284
Non cash investing activities:
Fixed asset purchases in accounts payable
$
147
$
158
Three Months Ended
December 31,
2020
2019
Cash flows from operating activities:
Net income (loss)
$
(867)
$
(5,462
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
3,237
2,676
Deferred income tax
580
(241)
Mark-to-market of interest rate swap
—
67
Goodwill impairment
—
—
Share-based compensation
296
300
Losses (gains) on foreign currency
34
55
Change in operating assets and liabilities:
Accounts receivable
(1,278)
13,422
Inventories
(3,127)
1,731
Prepaid and other assets
(1,270)
687
Accounts payable
(1,089)
(2,344)
Accrued and other liabilities
671
3,167
Post retirement benefits liability
(75)
(1,330
)
Net cash (used in) provided by operating activities
(2,888)
12,728
Cash flows from investing activities:
Purchase of property, plant and equipment
(967
)
(1,180
)
Net cash used in investing activities
(967
)
(1,180
)
Cash flows from financing activities:
Gross repayments on revolving line of credit
(9,025)
(51,103
)
Gross borrowings on revolving line of credit
9,445
42,293
Proceeds from term loan
29,990
—
Payment of principal on term loan
(35,334)
(843)
Payment of deferred loan costs
(1,898
)
(1)
Payments related to the purchase of treasury stock
—
(38)
Net cash provided by (used in) financing activities
(6,823
)
(9,692)
Net change in cash and cash equivalents
(10,678)
1,856
Cash and cash equivalents at beginning of period
14,809
1,856
Cash and cash equivalents at end of period
$
4,131
$
—
Cash paid for:
Interest
$
331
$
1,163
Income taxes
$
103
$
124
Non cash investing activities:
Fixed asset purchases in accounts payable
$
147
$
158