Core Molding Technologies (NYSEAMERICAN:CMT) 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 Weakness Offset by Growth Elsewhere
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.
Margins and Earnings
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, compared with 12% of sales in the prior-year quarter.
- Net cash provided by operating activities was $7.1 million in the first half of fiscal 2026.
Panda said the stable adjusted EBITDA margin despite truck-market softness reflected the company’s portfolio diversification and manufacturing discipline.
Mexico Investments and New Business Awards
The company is investing in manufacturing capacity in Mexico, including a new facility in Monterrey and an expansion in Matamoros. Palomaki said construction of the Monterrey greenfield facility was completed in less than nine months, on time and on budget. The site is now producing structural foam, structural web and DCPD products and includes paint application systems.
The Matamoros expansion is expected to add two 4,500-ton molding machines during the second half of 2026. The company said its Mexico investments total $25 million and are intended to increase capacity and position production closer to customers. Panda said capital expenditures are expected to total approximately $25 million to $30 million for the full year, including $18 million to $20 million for Mexico initiatives.
Mexico expansion costs totaled $3.4 million through the first half, and management does not expect a material increase during the remainder of the year. The company also incurred $1.4 million in succession-related expenses in the first half and does not anticipate significant additional costs in 2026.
Core Molding secured nearly $26 million of net new business wins in the first half and remains on track for its $50 million full-year target. Palomaki said 100% of the awards represent new opportunities rather than replacement programs, with approximately 65% coming from outside the company’s traditional truck and powersports markets. About 74% of the newly awarded business is expected to use existing U.S. manufacturing capacity.
Over the past 24 months, the company has secured approximately $112 million in incremental business awards. Management said those awards could provide production revenue opportunities exceeding $300 million in 2027 as programs enter production.
Balance Sheet, Capital Allocation and Outlook
Core Molding ended the quarter with $12.1 million in cash and no outstanding debt. In early July, the company amended and extended its credit facility, increasing total debt capacity to $100 million through a $50 million revolving credit facility and a $50 million delayed-draw term loan, both maturing in 2031.
During the first half, the company repurchased 24,545 shares for approximately $457,000, at an average price of $18.62 per share. No shares were repurchased in the second quarter.
Management reiterated that it expects the majority of the $63 million in new program awards secured during 2025 to begin contributing meaningfully in the second half of 2026 and reach full annualized production rates in 2027. The company also expects project-based tooling revenue to be weighted toward the fourth quarter.
Palomaki said the company is evaluating acquisition opportunities of varying sizes but remains focused on transactions that are accretive, strategically aligned and supportive of returns on capital. Core Molding will host an Investor Day and plant tour in Brownsville, Texas, on Sept. 29 and 30.
About Core Molding Technologies (NYSEAMERICAN:CMT)
Core Molding Technologies is a publicly traded manufacturer specializing in engineered composite and polymer solutions for a wide array of industrial applications. The company’s core business includes the design, tooling and high-volume production of fiberglass-reinforced plastics, advanced polyurethane systems, structural composites and specialty coatings. Its products find use in commercial vehicles, off-highway equipment, defense, power sports, recreation and industrial markets.
Core Molding offers end-to-end services ranging from digital design and prototyping to mold fabrication, process development and full-scale manufacturing.
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