Core Molding Technologies Inc Reports Full Year and Q4 2023 Results
Net Sales: Full year net sales decreased by 5.2% to $357.7 million; Q4 net sales down 14.7% to $73.8 million.
Gross Margin: Improved to 18.0% of net sales for the full year, up from 13.9% in the prior year.
Operating Income: Increased to $26.5 million, or 7.4% of net sales for the full year.
Net Income: Grew to $20.3 million, or $2.31 per diluted share for the full year, compared to $12.2 million, or $1.44 per diluted share, in the prior year.
Adjusted EBITDA: Rose to $42.3 million, or 11.8% of net sales for the full year.
Free Cash Flow: Reached a record $25.7 million for the full year.
Liquidity: Total liquidity stood at $74.1 million at year-end, with a Debt to Trailing Twelve Months Adjusted EBITDA of 0.54 times.
On March 12, 2024, Core Molding Technologies Inc (CMT), a leader in the engineered materials market, announced its financial results for the full year and fourth quarter ended December 31, 2023. The company released its 8-K filing, detailing a year of strategic initiatives that led to improved gross margins and a record in free cash flow, despite a decrease in net sales.
Core Molding Technologies operates as a molder of thermoplastic and thermoset structural products, serving various markets such as medium and heavy-duty trucks, automobiles, power sports, and construction. The company's processes include compression molding, resin transfer molding, and other advanced molding technologies. With facilities across North America, Core Molding Technologies is headquartered in Columbus, Ohio.
The full year 2023 saw a decline in net sales to $357.7 million, a 5.2% decrease from the previous year, mainly due to lower demand in building products and industrial and utility verticals. However, the company's gross margin improved significantly to 18.0% of net sales, up from 13.9% in the prior year. This increase in gross margin reflects the successful execution of the company's strategic initiatives, which focused on profitability improvements and operational performance enhancements.
Despite the challenges of decreased sales, Core Molding Technologies achieved financial milestones that are critical for a company in the chemicals industry. The company's operating income for the full year increased to $26.5 million, or 7.4% of net sales, compared to $18.0 million, or 4.8% of net sales, in the prior year. Net income also saw a substantial rise to $20.3 million, or $2.31 per diluted share, from $12.2 million, or $1.44 per diluted share, in the previous year. Adjusted EBITDA grew to $42.3 million, or 11.8% of net sales, compared to $31.9 million, or 8.5% of net sales, in the prior year.
The company's financial achievements are underscored by its significant free cash flow, which reached a record $25.7 million for the year. This strong cash generation, coupled with disciplined asset utilization, improved the return profile of the business. Core Molding Technologies ended the year with robust liquidity of $74.1 million and a healthy debt to EBITDA ratio of 0.54 times.
"Fiscal 2023 was a significant year where we successfully executed and completed Cores profitability improvements and its Must Win Battle initiative. This was our focus in 2023. I am proud of our teams ability to improve operational performance, thereby increasing capacity and enhancing margins in 2023," said David Duvall, President and CEO of Core Molding Technologies.
"Although net sales were down for the full year, mostly due to market dynamics and tougher 2022 comparisons, we accomplished meaningful profitability goals for the year. For the year, gross margins grew to 18.0%, Adjusted EBITDA expanded to $42.3 million or 11.8% of sales, and we also generated free cash flow of $26 million for the year, a record for Core Molding," commented John Zimmer, EVP and CFO of Core Molding Technologies.
The company's capital expenditures for 2023 totaled $9.1 million, including investments in capacity expansion and automation. Looking ahead, Core Molding Technologies plans for 2024 capital expenditures of approximately $13 million to meet current demand and allow for expansion.
In summary, Core Molding Technologies Inc navigated a challenging year with strategic initiatives that led to improved operational performance and financial health. The company's focus on profitability, coupled with its ability to generate significant free cash flow, positions it well for future growth and stability in the engineered materials market.
Explore the complete 8-K earnings release (here) from Core Molding Technologies Inc for further details.
This article first appeared on GuruFocus.
