Good morning, everyone. Welcome to the Core Molding Technologies Third Quarter Fiscal 2024 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review third quarter results for 2024. Joining me on the call today are the company's President and CEO, Dave Duvall; and EVP and CFO, John Zimmer. This call is being webcast and can be accessed through coremt.com via an audio link on the Investor Relations’ Events and Presentations page. Today's conference call, including the Q&A session will be recorded. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements or expectations or future events or future financial performance are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Core Molding Technologies assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures, including adjusted EPS, adjusted EBITDA, debt-to-trailing 12 months EBITDA ratio, free cash flow and return on capital employed. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, this release has been submitted to the SEC on Form 8-K. Now I would like to turn the call over to the company's President and CEO, Dave Duvall.

Thank you, Sandy, and thank you all for joining to review our 2024 third quarter results. Before John and I summarize our third quarter results, I want to share some exciting updates on our Invest for Growth strategies. First, we announced on October 28 that Alex Bantz has joined the company as our new Chief Commercial Officer. We understand that strong capable leadership is fundamental to the successful execution of any strategy. And appointing Alex to this newly created role is an important step in our sales and marketing transformation of accelerating Core's revenue growth. Alex brings an impressive track record of over 25 years executing successful industrial sales and marketing programs. He is the ideal person to lead the charge based on its commercial sales expertise and long tenured roles at building relationships, driving revenue programs and aligning market strategies with a customer-centric approach. I want to quickly provide an update from last quarter on our participation in trade shows, customer lunch and learn events and sales engagement opportunities as we continue to make progress pursuing new end markets. We exhibited in our first Mexican composite trade show at Poliplast in Monterrey, Mexico, which I think is a demonstration of our strength of our Mexican team. We also attended the battery show in Detroit which is North America's largest and most comprehensive battery event. This event showcases emerging markets and technologies in the automotive, medical, aerospace, commercial and industrial applications. Turning to a summary of the third quarter's financial results. We continue to face macroeconomic headwinds in some of the industries we serve, but we continue to maintain our profitability. Our third quarter sales were $73 million, and we generated $7.5 million in adjusted EBITDA or 10.3% of sales, which contributed to a year-to-date free cash flow of over $23 million. Our net income was $3.2 million or $0.36 per diluted share. We continue to drive profitability and our entire organization is preparing for the next chapter of growth. We are investing cash in organic and inorganic growth as well as technical capabilities and manufacturing infrastructure. High return investments are possible based on our disciplined business execution over the last 24 months, which strengthened our balance sheet and generated higher cash flows on fewer sales dollars with more consistency and stability. Now I want to turn the call over to John to cover the financials in more detail.

Thank you, Dave, and good morning, everyone. Our product sales and total net sales were down 11.9% and 15.8% respectively, for the third quarter compared to a year ago. Truck sales declines were as expected to lower demand and the start of the Volvo transition we have discussed on prior calls. The truck market is currently in a normal cyclical downturn, but is expected to transition to a cyclical upturn in the second half of 2025 and all of 2026, due to upcoming environmental regulation changes in 2027. As previously discussed, the Volvo transition has started and is impacting the second half of 2024. The majority of the transition will occur next year, which will negatively impact sales in 2025. We are currently quoting several new opportunities with Volvo, with one program we are currently bidding on launching as soon as early 2026. In other markets, power sports and building products continue to be impacted by macroeconomic pressures and post-COVID resets, while industrial and utilities are being negatively impacted by two customer in-sourcing – customers in-sourcing of certain products we were producing in 2023 as overflow molders. We are seeing some leveling off in the non-truck markets and believe that next year we will begin to see some rebound in these markets. Our third quarter gross margin was $12.3 million or 16.9% of sales compared to 17.6% in the year ago quarter. Gross margins on a year-to-date basis were 18.1%, which is within our long-term full year target range of 17% to 19%. As we have previously discussed, the majority of our cost of sales is variable and our ability to maintain our gross margins within our long-term range is based on how efficient we are reducing – are in reducing the variable costs in times of lower revenues. Our…

Thank you, John. We are developing new relationships and new industries, yet our surest way to meaningful growth is through working with our large customers to expand our product and process offerings. A key part of our strategy is to grow wallet share and continually develop the resources to solve customer problems with a high-value Core Molding solution. We want to continue to be first in the customers’ mind to industrialize their designs. We also want to take full advantage of our large portfolio processes and support customers with cost-saving opportunities. Cross-selling of thermoplastic and thermosets allows us to offer customers a unique and in many cases, lower cost overall solution with higher – as a higher value alternative. This is another cornerstone of our sales and marketing initiatives. We know that strengthening our sales and marketing resources and continually improving our customer-focused systems such as solutions and applications engineering are the next and final step of our business transformation. As we’ve stated, our must win battle is the development and integration of our front-end business processes to leverage the execution improvements we have made throughout all internal areas of our business. This is what we’ve discussed since the beginning of our business transformation four years ago. I thought it would go faster, but we did have some unprecedented times over the last four years with COVID, significant rate interest rate increases, supply chain shortages, rapid inflation, to name a few, not an excuse, just a fact. So I would like to take a few minutes to outline the business strategy we’ve been implementing from the beginning in 2019 to today. I hope this will put some more color around what we have achieved and where we’re going with the company. In 2019, when we started this transformation, Core lost…

[Operator Instructions] Our first question will come from Chip Moore with Roth MKM. You may now go ahead.

Hey, Dave and John, good morning. Thanks for taking the question. I wanted to ask about that – I think you said $100 million plus in your pipeline that’s moving further along. Maybe just expand on that sort of where that business lies in terms of mix and I assume your expected win rate there would be higher, but any thoughts.

Yes, for sure. And really, when we look at it, and we go through it relative to the team here, and the pipeline is somewhat inverted. So you’re seeing it move through to different phases, and we’re seeing it at the last phase. And a lot of what we hear from customers is they’re waiting on when they’re going to launch a program, when they’re going to spend a program. So it’s a little bit of bottleneck in that phase. They are large programs. A lot of the work that we see in there is in different industries. So we have a lot of programs that are in what we call the construction or Con/Agg area as well as truck and power sports. But we are seeing customers may be slow down a little bit on launching these programs. And usually for a customer, it’s pretty large tooling programs that they have to spend and approve when they launch the program and source us with the program. So that’s usually what we see right now. Whereas a year and half ago, it was rush as fast as you could do it and get it out there.

Got you. Yes. And I imagine having some more certainty on the political environment doesn’t hurt as well.

Yes. I hear that, it’s got something to do with it as well.

Yes. We’ll stay tune. I guess any thoughts on volumes next year just given that Volvo program transition and some of the newer programs you have set to ramp any way to help frame that or too early?

No. Again, I think we kind of talk through the Volvo piece, the Volvo will transition out next year. And so that will negatively impact our sales as we’ve been saying. Right now, we’re kind of early in the process of looking at next year, we kind of – our customer gives us forecast, but we track what they’re saying to the outside world probably more than we do inside what they’re telling us. And most of our customers, BRP, Polaris, Generac, UFP, all those guys are have been pretty silent on next year at this point. So I think there’s a lot of our customers trying to figure out, again, not just the political environment, but how fast interest rates are coming down, those types of things. And so probably a little bit early for next year at this point. Volvo is the one piece we know that’s happening. The truck market, ACT does say is a little bit softer next year is where they’re at and then a real strong rebound in 2026. And so I think truck market will see some softness. Everything else, we’re kind of in a wait-and-see mode at this point.

That’s helpful. That’s helpful. And Dave, I think you called out a win in, I guess, it was in bedding structures in health care. Any – it seems like a new market, maybe not, but it’s sounds like…

Yeah, that’s pretty exciting one. We’ve been trying for that one. I think we went back through it. It’s been eight years talking with that customer. Right now, we are – it’s on a hospital bed. So the support structure for the hospital bed, which – that’s our first program to win. Right now, the customer is delighted with the timing and everything that we met. So I think that can be another growing diversification channel for us.

Great. Great. And maybe a last one for me just on the cost side. You talked about some actions you’ve taken. When do we see that benefit fully roll through, John? And are we done with sort of the one-time cost is that all this quarter? Thanks.

Yes. So most of the benefits – I mean, we did it at the end of the quarter, maybe actually a little bit into the fourth quarter to tell you truth, there was a little bit of timing on when it happened. And so there will be a little bit more cost that comes through in the fourth quarter. But most of the benefits you should – we should be starting to see the benefits as early as this quarter. It was primarily labor cost. And so we’ll see the benefit coming through this quarter and moving forward and pretty much a full impact in this quarter – in the fourth quarter.

Got it. Okay. Awesome. Appreciate it. Thanks.

Thanks, Chip.

[Operator Instructions] Our next question will come from Bill Dezellem of Tieton Capital. You may now go ahead.

Thank you. I’d like to start with the hospital bed. Would you please kind of walk us through exactly what it is? Can you help us visualize what it is you’re actually doing on the bed? And then secondarily, how that process worked over the last eight years to win that business and what the hurdles were for your customer and for you to ultimately decide this was the right way for them to make the bed?

Yes. We had originally had contact with this customer. It was probably an initial contact about 8 years ago through our sales agent group. We started working with them on an opportunity they had here, I would say, about 1.5 years ago. What we're producing and what we designed with them is they're changing from a sheet metal part and the part that is underneath the bed that holds the structure of the person is what we're making is that platform underneath the entire bed holding the structure to people. So the bed would sit on top of that. And really, it's going through the validation, the development, changing the material. We were able to use a – I think, a higher value, lower cost option for the customer and design features in that molded in features that you couldn't do with steel. So I would say the actual development from initial concept today, where we're actually tooling going into production is probably about a year.

And not to oversimplify this, but the underneath the person sounds very similar to the underneath of a – of a golf cart or of a water track..?

I agree. I completely agree that the concept and the structure that we did on the bed was very similar to the concept and structure that we had looked at on the golf cart application, that we were originally quoting. We still have other golf cart opportunities. And you also see that on ATV, UTV as well. We won the skid plates on all the ATV, UTV, so the new regulation coming next year to where you can't – when you're riding, you can't have something for true through the bottom of the vehicle and impale the driver or passenger that's a new regulation. So that's a big part of the wins as well. Same process, same structure as well.

Great. Thank you. And then shifting to Volvo for a moment, would you please update us on their process of moving that business versus their original plan of moving that business where they're at on a…

Yes. It would depend on what original plan. So this was originally two years ago that they were looking at transitioning. So right now, they are in the middle of the transition to the new program, it ramps down. There's different models. So what they're doing is commonizing their Volvo and Mack programs. So right now, they are separate. So as they phase in, phase out, it depends on whether it's a Volvo or Mack volumes. So what they're doing, you'll start phasing out at the end of this year and through next year and into the beginning of the following year. It's quite a long phase out time frame because there are so many part numbers going to a common part number.

And is it your sense that, that process is moving slower or faster in line with what they were thinking, let's say, earlier this year?

I would say everything always moves slower than people plan.

Great, thank you.

Thanks.

It appears there are no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you for your continued interest in our company. We look forward to providing an update on our progress when we report the fourth quarter results in March. Have a great day. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.