Core Molding Technologies Q2 Earnings Call Highlights

Second-quarter production sales fell 1.2% year over year as a 23% decline in truck-related sales offset strong growth in other markets, including building products (+36%) and powersports (+7%). Management expects truck sales to improve in the second half and reiterated its full-year sales outlook of flat to approximately 5% growth. Gross margin improved to 20.3%, while adjusted EBITDA margin held at 12.2% despite truck-market weakness. Operating income declined to $2.3 million from $5.2 million, and net income was $1.8 million, or $0.21 per diluted share. Growth investments and new awards remain key catalysts: Mexico expansion spending is expected to support added capacity, while nearly $26 million in new business wins during the first half keeps the company on track for its $50 million annual target. Management said awards secured over the past 24 months could generate more than $300 million in production revenue opportunities by 2027. Core Molding Technologies reported fiscal 2026 second-quarter production sales that declined 1.2% year over year as continued weakness in the medium- and heavy-duty truck market offset growth in several other end markets. Management reiterated its full-year outlook, including expectations for sales ranging from flat to up approximately 5%. President and CEO Eric Palomaki said the company’s diversified portfolio and its Invest for Growth strategy supported the quarter’s performance. Excluding truck-related sales, production sales across the company’s other end markets rose 20.8% from the prior-year period, according to CFO Alex Panda. Truck represented 40% of Core Molding’s total product sales during the quarter and declined 23% year over year. Panda said the company is beginning to see truck production volumes improve and expects sales to ramp through the second half of fiscal 2026. Palomaki told analysts that the company sees stronger activity in customer order books and expects the second half to be stronger than the first half across its truck customers. He also cited industry forecasts calling for continued growth in Class 8 and medium-duty truck production over the next two-and-a-half years. Management noted uncertainty around emissions regulations scheduled to take effect Jan. 1, 2027. Palomaki said potential changes in regulations could affect the timing of truck purchases, although he said the company expects the broader annual truck-production trend to remain intact. Panda added that truck original equipment manufacturers have already completed hardware design changes associated with the standards. Outside of trucking, powersports revenue increased 7% year over year, while building-products revenue rose 36%, supported by the launch of previously awarded programs and customer demand. Panda also cited increased demand for an existing automotive program during the quarter. Core Molding reported gross margin of 20.3%, up 220 basis points from the year-earlier quarter. The figure included a capacity charge received from a customer. Excluding that item, gross margin was 19.4%, near the high end of the company’s stated full-year target range of 17% to 19%. SG&A expense totaled $10.4 million, or 16.6% of sales. Excluding $1.8 million in Mexico expansion and succession-related costs, SG&A represented 13.8% of sales, compared with 11.5% in the prior-year period. Operating income was $2.3 million, compared with $5.2 million a year earlier. Net income was $1.8 million, or $0.21 per diluted share. Adjusted EBITDA was $7.6 million, or 12.2% of sales.