Core Molding Technologies (NYSEAMERICAN:CMT) reported fourth-quarter and full-year 2025 results while outlining a leadership transition, progress on strategic diversification initiatives, and an investment program centered on expanding manufacturing capabilities in Mexico.
Leadership transition and strategic focus
President and CEO David Duvall said the company has spent several years building what he described as a stronger operating foundation, including “more robust operating systems,” margin expansion efforts, balance sheet improvements, and a performance-driven culture. Duvall reiterated that he plans to retire at the end of May, with COO Eric Palomaki set to succeed him as CEO. Duvall said he will remain in an executive advisory role through the end of 2027 to support continuity.
Fourth-quarter results: higher revenue and profitability
For the fourth quarter, the company reported revenue of $74.7 million, which Palomaki said was up 27.8% sequentially and 19.5% year-over-year. He attributed the increase to higher tooling revenue from recent wins and strength in product revenue tied to powersports, building products, and other categories, which more than offset lower truck volumes.
CFO Alex Panda said fourth-quarter tooling revenue exceeded $19 million. Gross margin in the quarter was $11.3 million, or 15.2% of sales, which he noted is consistent with Core’s historically lightest sales quarter. Panda said hourly severance costs and tooling margins created an approximately 230-basis-point unfavorable impact on fourth-quarter gross margins.
SG&A expense in the quarter was $7.7 million (10.4% of sales), compared with 14.4% in the prior-year period. Excluding severance and executive transition costs, SG&A was $7.3 million (9.7% of sales), compared with 12.7% a year earlier. Operating income rose to $3.6 million (4.8% of sales), up from $0.9 million (1.4% of sales) in the prior-year quarter.
Net income for the fourth quarter was $3.1 million, or $0.36 per diluted share, compared with a loss of $39,000 in the prior year. Adjusted EBITDA was $7.6 million, representing an 10.2% margin, up 100 basis points year-over-year.
Full-year 2025: revenue down amid truck weakness, margins held in target range
Panda said fiscal 2025 revenue declined 9.5%, driven primarily by continued weakness in the truck sector, which represented 44% of Core’s product sales for the year. Despite the volume pressure, the company posted gross margins of 17.4%, staying within the company’s targeted 17%–19% range.
The company generated $19.2 million in GAAP cash flow from operations in 2025, following $35 million in fiscal 2024. After capital expenditures of $17.3 million, free cash flow was $1.9 million.
Palomaki also highlighted operational metrics for the year, including 99% on-time delivery and 62 parts per million quality performance, which he described as industry-leading.
In addition, Palomaki said the company completed a footprint optimization initiative launched at the end of the second quarter, consolidating resin transfer molding operations by relocating selected programs to other facilities in an effort to streamline operations and improve margins.
SMC growth, Mexico expansion, and tooling revenue visibility
Palomaki called out progress in the company’s sheet molding compound (SMC) business. He said Core established SMC compound as a new sales channel in early 2025 to serve the building products market, which he said represents an addressable opportunity of more than $200 million. According to Palomaki, the sales and marketing team generated $12 million in annual SMC revenue during the fourth quarter and $21 million for the full year.
Management said about one-third of these SMC compound wins have launched, with the remainder scheduled to be in production by the end of the third quarter of 2026. In the Q&A session, Palomaki added that some programs require customer validation testing—such as ultraviolet exposure testing—that can take time to complete.
The company is also investing in Mexico capacity. Palomaki said Core invested $6.5 million in 2025 for Mexico expansions and a greenfield plant, with plans to invest an additional $19 million in Mexico in 2026. He said press pits have been completed in Matamoros and that fabrication is progressing on two 4,500-ton SMC molding presses. Once ramped, the added capacity is expected to support up to approximately $20 million in annual SMC molded and assembled sleeper roof product revenue.
Core is also managing a customer tooling project expected to produce approximately $35 million in tooling revenue, with anticipated completion in Q4 2026. When asked about 2026 tooling, management said the tooling revenue split is expected to be similar to 2025 and again weighted toward the fourth quarter, citing the Volvo program announced in Q2 and expecting that tooling revenue to close in Q4 2026.
Balance sheet, capital allocation, and 2026 outlook
As of December 31, Panda said Core had total liquidity of $88.1 million, consisting of $38.1 million in cash and $50 million of revolver and capital credit line availability. Term debt totaled $19.7 million, and the company’s debt-to-EBITDA ratio remained less than one times on a trailing twelve-month basis. Return on capital employed was 8% (or 10.2% excluding cash), calculated using trailing twelve-month operating income on a pre-tax basis.
On capital allocation, Panda said the company repurchased 201,999 shares in 2025 at an average price of $15.70, leaving $1.4 million under the authorization.
For 2026, management provided the following expectations:
- Total sales flat to up approximately 5%, with tooling revenue weighted more heavily to the fourth quarter.
- Most of the $63 million of new wins expected to impact results in the second half of 2026 and in 2027, reflecting a 12- to 18-month quote-to-cash cycle.
- A conservative stance on truck recovery, aligning with ACT forecasts pointing to improvement starting in the second half of 2026.
- Gross margin expected to be within the 17%–19% range for full-year 2026.
Panda said sustaining capital expenditures are expected to be approximately $7 million–$10 million in 2026. Including planned Mexico expansion investments of approximately $18 million–$20 million, total 2026 capital spending is expected to be $25 million–$30 million. The company also expects approximately $2.5 million of operating expenses tied to the expansion projects in the first half of 2026, plus an estimated $1 million of one-time SG&A costs related to succession planning.
Management also addressed tariffs, noting that products manufactured in Canada and Mexico remain under USMCA compliance and are currently exempt, while the company continues monitoring trade developments.
Looking further out, Palomaki said the company’s business development pipeline totals $220 million in opportunities and that Core is “well on our way” to securing an additional $50 million in new program awards during 2026. He also said the company is planning an investor day in the fall, targeting September 29 for management meetings and September 30 for a facility tour including a visit to the Matamoros facility.
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.
