Core Molding Technologies Inc (CMT) research, news, and more from GeoInvesting

Company description

Tue, 23 Oct 2012 04:00:00 GMT

Core Molding Technologies, Inc. is a manufacturer of sheet molding compound (SMC) and molder of fiberglass reinforced plastics. Core specializes in large-format moldings and offers a wide range of fiberglass processes, including compression molding of SMC, glass mat thermoplastics (GMT) and bulk molding compounds (BMC); spray-up, lay-up, resin transfer (RTM) and vacuum resin transfer molding (V-RTM). Additionally, the company offers liquid molding of dicyclopentadiene (DCPD). Core serves a wide variety of markets, including the medium and heavy-duty truck, marine, automotive, and other commercial products. Headquartered in Columbus, Ohio, Core maintains plants in Columbus and Batavia, Ohio; Gaffney, South Carolina; Warsaw, Kentucky and Matamoros, Mexico. For further information, visit the company's website at www.coremt.com.

Reasons For Tracking

Wed, 06 Sep 2017 13:28:08 GMT

CMT ($20.55) - After six years since we last covered ex-GeoSpecial CMT, the company is back on our radar. While its current valuation seems more than fair, the Company’s commentary suggests it could be entering a period of consistent growth.

We first added the stock to our GeoSpecial list on March 21, 2011 at $7.55. We removed the stock from our radar on May 9, 2012 when considering the overall uncertainty regarding the recovery of the U.S. economy. During its tenure as a “GeoSpecial” (a term that we eventually retired), the stock hit a high of $10.04. The company operates in a very cyclical industry where the outlook can be cloudy. This is what we said upon removal the GeoSpecial list:

“Although the first quarter 2012 financial performance was positive, margins are beginning to get squeezed. Furthermore, management is not overly open with the investing public. We will revisit the story if margins improve.”

But, the stock went on to hit a high of $28.95 in June of 2015 and is now sitting at $21. It turns out that, for the most part, the company was able to manage its annual financial performance during its period of uncertainty:

Fiscal Year

2017 (6 month)

2016

2015

2014

2013

2012

Rev

EPS

$84.1

$0.50

$174.9

$0.53

$199.1

$1.58

$175.2

$1.28

$144.1

$1.03

$162.4

$1.11

We think it’s great that management has been able to stay the course. And, it now appears that the company may be poised for consistent sales and earnings growth for the next couple years and that it has addressed some of the issues we had in 2012.

Here are our current reasons why the company is back on our radar:

1. In its Q2 2017 press release, the company provided some unusually bullish comments regarding the outlook of its served industry for at least the next two years. CEO, Mr. Barnett stated:

“Looking forward to the second half of 2017, industry sources have raised their forecasts for 2017 and are now predicting North American heavy-duty truck production to be approximately 8% higher for full year 2017 compared to full year 2016. In addition, industry analysts continue to forecast year-over-year increases for Class 8 truck production in 2018 and 2019. We continue to be encouraged about our future growth prospects based on these favorable industry forecasts for the next two to three years.”

2. The company also issued its first everdividend policy that we are taking as a sign of confidence about how the company feels about its future growth prospects.

“Our decision to declare a quarterly dividend is the result of our strong balance sheet and profitability, even throughout the downcycle of our key heavy-duty truck end market,” said Kevin Barnett, President and Chief Executive Officer. “Today’s announcement reflects our confidence in our ability to continue to generate consistent profitability, enabling us to invest in the growth of our business, both organically and through acquisitions, while at the same time, enhancing returns to our shareholders.”

3. Management claims it is trying to expand its customer base and its markets. We did not find much about these goals so we need to interview management to find out more.

Valuation:

If the company has reached an inflection point and we assume Q2 2017 is the new run rate, the Company is on pace to report a rolling 4 quarters EPS of $1.12. To account for slight seasonality that the company mentions in its 10-K, we will discount this figure by 10%. However, looking back at the historical financials, there is no clear evidence of this “seasonality”.

This is an industry that typically does not carry premium valuations, thus at current prices (trading at a forward P/E of 20.5), shares seem fair. However, the commentary suggests that Q2 2017 could be the platform from which the Company builds. We will interview management to determine if our assumptions are accurate.

The balance sheet seems strong:

Current ratio of 2.8
Debt/Equity of 8.1
Return on equity is running at 8%, lower than are normal threshold of 15%

Caveats:

One of our favorite activists, Mario Gabelli of GAMCO Investors, has been selling his shares since May 2015.
4 customers account for at least 80% of the Company’s revenue
Most of CMT’s revenues serve cyclical vehicle industry segments, comprised of the manufacturing of hoods, roofs, sun visors, air deflectors, cab extenders, fender extensions, splash panels, back panels, air deflectors, air fairings, fenders, and personal watercraft.

Comments & Business Outlook

Wed, 09 May 2012 04:00:00 GMT

First Quarter 2012 Results

Total net sales for the first quarter were $44,529,000, compared with $28,989,000 in the same quarter of 2011. Product sales totaled $44,331,000, increasing 53% from $28,974,000 for the first quarter of 2011.
Net income for the first quarter ended March 31, 2012 was $2,635,000, or $0.37 per basic and $0.36 per diluted share, compared with $2,269,000, or $0.33 per basic and $0.31 per diluted share in the first quarter of 2011.

"We experienced mixed results for the first quarter. Overall sales and earnings surpassed those of the first quarter 2011 reflecting continued strong demand from our customers. Operationally we experienced some production inefficiencies and startup costs which negatively impacted net income for the quarter," said Kevin L. Barnett, President and Chief Executive Officer. "While we did not convert as much of our overall sales growth to income as desired, our overall level of profitability remains very respectable," Barnett continued. "Going forward we will continue to focus our efforts on growing our business and improving our operations," Barnett added.

GeoSpecial Notes

Wed, 09 May 2012 04:00:00 GMT

On 3/21/2011 we added CMT to the GeoSpecial list @ $7.55

Catalyst: Strong fourth quarter 2010 results and bullish commentary

We are now removing CMT from the GeoSpeicial List @ $8.00

Current road block: Although the first quarter 2012 financial performance was positive, margins are beginning to get squeezed. Furthermore, management is not overly open with the investing public. We will revisit the story if margins improve.

Peak performance: Reached a high of $10.04 on 03/13/2012 for a maiximum potential return of 30%
Current Price: $8.00

Comments & Business Outlook

Wed, 14 Mar 2012 04:00:00 GMT

Fourth Quarter 2011 Results

Total net sales for the fourth quarter were $41,302,000, compared with $31,045,000 in the same quarter of 2010.
Net income for the quarter ended December 31, 2011 was $2,559,000, or $0.36 per basic and $0.35 per diluted share, compared with $1,821,000, or $0.27 per basic and $0.25 per diluted share in the fourth quarter of 2010.

"We are especially pleased with our sales growth and our financial results for 2011," said Kevin L. Barnett, President and Chief Executive Officer. Our markets recovered very strongly as we achieved the largest year over year sales growth in the 15-year history of our company. We are also proud to report that we set new net income and earnings per share records for the year," continued Barnett. "In 2011 we also launched several new business programs, including our new start-up subsidiary, Core Specialty Composites in Warsaw, Kentucky and we began a significant capacity expansion of our Matamoros, Mexico facility," Barnett added.

"Looking forward to 2012, we expect to see continued growth in sales both from further industry expansion and new product launches. Truck industry analysts forecast continued growth throughout 2012, over 2011 levels. We also intend to keep our focus on strengthening our organization, improving our products, serving the needs of our customers and growing our businesses," said Barnett.

Comments & Business Outlook

Wed, 09 Nov 2011 05:00:00 GMT

Third Quarter 2011 Results

Total net sales for the third quarter were $37,836,000, compared with $25,295,000 in the same quarter of 2010.
Net income for the third quarter of 2011 of $2,856,000, or $0.41 per basic and $0.39 per diluted share, compared with net income of $307,000, or $0.04 per basic and diluted share in the third quarter of 2010.

"We continue to be very pleased with our financial results this year as we have surpassed our previous full year earnings per share record," said Kevin L. Barnett, President and Chief Executive Officer. "Demand for our products continues to be strong and industry analysts continue to forecast higher levels of demand for 2012 and 2013," Barnett said.

"We also made steady progress with two of our significant growth initiatives. Our previously announced expansion of our Matamoros, Mexico facility is progressing as planned. In addition, our new start up subsidiary, Core Specialty Composites in Warsaw, Ky., is on track to begin production in the first quarter of 2012," Barnett continued.

Comments & Business Outlook

Mon, 22 Aug 2011 04:00:00 GMT

COLUMBUS, Ohio, Aug. 22, 2011 /PRNewswire/ -- Core Molding Technologies, Inc. (NYSE Amex: CMT), a leading North American molder of fiberglass reinforced plastics and compounder of custom sheet molding compound (SMC), today announced it has established a new operating subsidiary and manufacturing location to support a significant new business venture outside its traditional heavy truck customer base.

Core has formed the subsidiary, Core Specialty Composites, LLC, to manage the new business. Core Specialty Composites will operate out of a manufacturing site, located in Warsaw, Kentucky. The facility includes 62,000 sq.ft. of leased manufacturing space. Core's existing plant in Batavia, Ohio, will provide additional management support to the Warsaw location, and the operation will be under the direction of Robert (Bob) Brennan, Plant Manager – Batavia.

Operations initially will include production of large-format parts using a customized fiberglass hand lamination process. Development and staffing activities are underway. Our people will be on-site in September and active production is planned to begin early in 2012. The Warsaw operation is expected to employ approximately 40 people. Revenue for the new business is projected to be $5$8 million annually.

"We are excited about this expansion outside our traditional markets," said Kevin Barnett, President and Chief Executive Officer of Core Molding Technologies. "For some time, we have been focused on growing our business with industries beyond our traditional heavy truck accounts, and this is the latest of several successes in that regard."

Core's director of market development, Mark Murfitt, led the effort to launch the new business. "Our work has included a great deal of product development. Additionally, we'll be utilizing some new process technology for Core," Murfitt said. "We're now actively building tooling and acquiring the necessary manufacturing permits and equipment." Core will lease the building in Warsaw, but will make a capital investment of approximately $1.7 million for equipment and technology to support the operation.

Core's Batavia, Ohio plant manager, Bob Brennan emphasized the positive impact on employment for the Warsaw area. "We liked the quality of the labor market in Gallatin and surrounding counties," Mr. Brennan noted. "We worked closely with state and local representatives in our targeted regions, and the combination of benefits offered by the people and officials of Kentucky and Gallatin County convinced us that Warsaw was the best location for our new operation".

Comments & Business Outlook

Wed, 10 Aug 2011 04:00:00 GMT

Second Quarter 2011 Results

The Company recorded net income for the second quarter of 2011 of $2,842,000 or $0.41 per basic and $0.39 per diluted share, compared with net income of $441,000, or $0.06 per basic and diluted share, in the second quarter of 2010. Total net sales for the second quarter were $35,294,000, compared with $23,476,000 in the same quarter of 2010. Product sales for the three months ended June 30, 2011 increased 56% to $33,547,000, from $21,473,000 for the same period one year ago. The increase in sales is primarily due to higher demand for North American medium and heavy-duty trucks.

For the first six months of 2011, net income was $5,111,000 or $0.74 per basic and $0.70 per diluted share, compared with net income of $304,000, or $0.04 per basic and diluted share, for the same period of 2010. Total net sales for the first six months of 2011 were $64,283,000, compared with $43,918,000 for the same period of 2010. Product sales increased 52%, to $62,521,000 through six months of 2011 compared to $41,169,000 for the same period in 2010.

"We are very pleased with our results so far this year as we set another new quarterly earnings per share record for our Company," said Kevin L. Barnett, President and Chief Executive Officer. "Our markets continue to show strong growth and are forecasted for higher levels of demand in 2012 and 2013. We also continue to focus on new growth opportunities which have resulted in the award of several major new business programs that will start later in 2011 and into 2012," Barnett continued.

"We began work on our previously disclosed $14 million Matamoros, Mexico plant expansion project to support capacity needs associated with new business and anticipated demand for existing products in 2012 and beyond. Additional molding capacity is scheduled to come on-line by the end of this year with the project slated for completion in the third quarter 2012," Barnett said

Comments & Business Outlook

Thu, 05 May 2011 04:00:00 GMT

First Quarter Results:

Core Molding Technologies recorded net income for the first quarter of 2011 of $2,269,000, or $0.33 per basic and $0.31 per diluted share, compared with a net loss of $137,000, or $.02 per basic and diluted share in the first quarter of 2010.
Total net sales for the first quarter of 2011 were $28,989,000, compared with $20,442,000 in the same quarter of 2010.

"We are very pleased with the results of our first quarter which set a new earnings per share record for our Company," said Kevin L. Barnett, President and Chief Executive Officer. "The markets we serve have continued to strengthen over the fourth quarter of 2010 and look promising going forward," Barnett continued.