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Dec 31, 2019
Core Molding Q4 2019 Earnings Report
Core Molding Technologies reported a net loss due to decreased revenues from heavy-duty truck customers, offset by cost reductions and increased demand from marine customers.
Key Takeaways
Core Molding Technologies reported a decrease in net sales for Q4 2019 compared to the same period in 2018, primarily due to lower demand from North American heavy-duty truck customers. The company recorded a net loss for the quarter, impacted by decreased revenues, but cost reductions and a renegotiated supply agreement with Volvo are expected to improve results in the first quarter of 2020.
Net sales decreased by $17.0 million, or 23%, compared to Q4 2018.
Net loss was $5.5 million, or $0.69 per share, compared to a net loss of $3.9 million, or $0.51 per share in Q4 2018.
Gross margin was 6.0% compared to 8.9% in Q4 2018.
The company renegotiated its supply agreement with Volvo and rescinded its termination notification.
Core Molding
Core Molding
Forward Guidance
The company expects sales levels for 2020 to decrease compared to 2019 due to decreased demand from truck customers. ACT Research is forecasting 2020 North American production of heavy-duty trucks to decrease approximately 34% compared to 2019.
Positive Outlook
- Operational improvements made throughout 2019 are expected to continue benefiting the company.
- The company will focus on key performance metrics, including improved quality performance, labor productivity, scrap, and overhead spend reductions.
- Substantially improved service to all customers is expected to continue.
- The first quarter of 2020 is anticipated to be the company’s first profitable quarter since the second quarter of 2019.
- The company's operational foundation has stabilized and is moving into a continuous improvement phase.
Challenges Ahead
- Sales levels for 2020 are expected to decrease compared to 2019 due to decreased demand from truck customers.
- ACT Research is forecasting a significant decrease in North American production of heavy-duty trucks.
- The fourth quarter heavy-duty truck plant shutdowns and reduction in demand reduced profitability.
- The company has engaged Huron Transactional Advisors to assist in refinancing its current debt facility.
- The company is evaluating term sheets and expects to have executed term sheets by March 31, 2020, to refinance the existing debt structure.