Core Molding Technologies (CMT) Q2 FY26 earnings call: guidance and Q&A

Can you elaborate on the encouraging signs and expectations for the trucking market in the second half of the year and beyond?

Management expects the trucking market to recover in the second half of 2026, with industry forecasts predicting continued increases over the next 2.5 years. They are seeing this recovery in order books and day-to-day actions with truck customers, indicating a stronger second half than the first.

“on the truck side, certainly, the first half would have been on the lower side for us, and we see that recovering second half of this year. And if you go to industry forecasts, that's over the next 2.5 years, we'll continue to see increases.”

asked by Alfred Moore · answered by Eric Palomaki

Please provide more color on the momentum in non-trucking and non-powersports markets, how they are trending, and the opportunity over the next couple of years.

New wins, totaling nearly $26 million in H1, are 65% outside traditional markets. These include utilities for underground data cables and infrastructure networking, where composites offer advantages over concrete. An SMC compound win within trucking and an EV tailgate cover were also secured. 74% of new business will leverage existing U.S. facilities, improving asset utilization.

“On the new wins, we're up to $25 million, $25.8 million, just shy of $26 million for the first half. And those are -- I think I mentioned in the script, 65% of those are outside of what we call the traditional truck and powersports business or new industries.”

asked by Alfred Moore · answered by Eric Palomaki

Can you elaborate on the company's thinking regarding M&A, particularly looking at potentially larger opportunities?

Management is actively evaluating M&A opportunities, averaging about one visit per month, ranging in scale. The focus is on opportunities that are accretive, add diversification, offer a good return on capital employed, and fit Core Molding's culture and processes, rather than just size.

“But really, the focus isn't necessarily on specifically the size, it's how it can be accretive, how it can add diversification to our portfolio, how we can make it a very good return on capital employed opportunity that fits with Core Molding.”

asked by Alfred Moore · answered by Eric Palomaki

What is the typical lag between tooling revenue recognition and the start of production revenue in a normal circumstance?

The normal lag is typically 12 to 24 months. However, for SMC compounds, it can be as short as 6 months, and for simple molded-ship projects, around 6-7 months. Larger, assembled products like hoods or watercraft generally fall into the 12-24 month range.

“Yes. Bill, I would say, on average, it's 12 to 24 months. That's a pretty big range for you. But even a big program like the one Alex just talked about, an international truck program, that's probably close to a year delayed as far as the truck launch.”

asked by William Dezellem · answered by Eric Palomaki

How do the upcoming emissions regulations for January 1, 2027, affect the truck market, and is there an incentive for pre-buy behavior?

The January 1, 2027, emissions regulations will require powertrain differences, potentially causing a short-term volume impact but not changing the overall annual trend. Management believes the regulation applies to trucks where the engine VIN is issued after December 31. Past emissions changes have shown pre-buy behavior, where manufacturers produce more trucks before the deadline, and this is anticipated to happen again.

“I think it is when they issue the VIN number onto the engine, not even just the chassis. So it's finishing of the engine is where I think the emissions reg happens. So that has to -- when that is produced, relative to December 31 or January 1.”

asked by William Dezellem · answered by Eric Palomaki