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Core Molding Technologies Inc. Message Board

  • monty_a100 monty_a100 Aug 9, 2007 9:51 AM Flag

    results

    The results appear in line with expectations. It is not a good day to get a balanced view of the market's perception. The sales have been bolstered by a substantial tooling sales amount. The bottom line though seems to be:

    1�.The tooling sales are accounted for when tooling is delivered to the client for use. Therefore one would expect that new client lines are starting to move through the sales pipeline as stocks are manufactured.

    2�.The calculation of the 12c per basic share is made at 30th June on 10,618,000 shares. Since then the share numbers have contracted by 3,600,000. So if the earnings are recalculated using the current share balance, the earnings are closer to 18c. Of course this is an optimistic view because it does not include any interest calculation which will come into play on the borrowings necessary to complete the purchase.

    3�..The margin remains down as the fixed cost component remains high. As the new product lines move through and sales pick up the margin improvement will be noticeable.

    4�..Inventories remain at last years level despite the lower sales.

    5�..The balance sheet will look different next quarter because of reduced shares, less cash and a little more debt. However, the fact that the company is continuing to make money in this downturn should remain reassuring to the market.

    Overall I am content with the result and look forward to the rapid expansion in margin which will translate more rapidly to higher growth in the eps when the truck market returns.

    Good luck.

    Monty

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    • Monty,
      #1Is there anymore to be said about tooling?


      #2 Re share repurchase 19m cash 7.1m borrowed. Looks like interest costs aren't of much significance on this one.

      I noticed that accrued liabilities have been cut in half (condensed balance sheet) year over year. Any notion what kind of obligations this represents?

      Thanks for your,as usual, informative report.

      jeefco

      • 2 Replies to jeefco2004
      • Hi jeefco2004

        1....Have a look at my earlier posts on Tooling. More information will be available when the 10Q is forthcoming. I won't repeat all that I have said before, suffice to say that I think that it has a gross profit margin of about 12%. It is then a matter of looking at the balance outstanding in the 10Q and getting a feel for the level of tooling still to be invoiced in the future. The lower contribution for tooling obviously pulls down the overall margin in addtion to the fixed cost component. It is sporadic and the big lumps we have seen over the last year are in relation to the new product lines being developed by the company for their clients.

        2....True. However, they will also have increased working capital requirements when business begins to pick up and given that they will have dissipated much of their cash balance on the buyback, one would expect that there will be additional borrowings to fund those increased sales going forward.

        3....Accrued liabilities. If you refer to the 10K they were made up of employee related items and taxes. Income taxes have droppped by $2m and presumably in the slowdown given the drop in SG&A there would be a significant reduction in employment related costs as well as incentive bonuses and share option grants.

        ggsipaper - I trust my comments on tooling above are useful.

        Good luck.

        Monty

      • Yes, I am also a little foggy on the treatment of tooling. Is it billed before the product for which it is being used is made or is it billed at the end of the product life cycle? It seems that there is much control by the company as when they decide to realize the revenue. Any clarifications would be greatly appreciated.

        ggsi

 
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