Core Molding Q2: Truck Sales Drop 23%, Building Products Jump 36%

Core Molding Technologies posted fiscal 2026 second-quarter production sales that declined 1.2% from a year earlier, as a 23% slide in truck-related revenue offset double-digit growth in building products and powersports. Management kept its full-year outlook for sales to be flat to up about 5%, saying truck volumes are starting to improve.

Truck represented 40% of total product sales in the quarter and fell sharply. CFO Alex Panda said the company is seeing production volumes pick up and expects truck sales to ramp through the second half. CEO Eric Palomaki told analysts that customer order books show stronger activity and that the second half should beat the first half across truck customers. He cited industry forecasts calling for continued growth in Class 8 and medium-duty truck production over the next two and a half years.

Outside trucking, the picture was brighter. Building-products revenue rose 36%, supported by the launch of previously awarded programs and customer demand. Powersports revenue increased 7%. Excluding truck sales, production sales across the rest of the business rose 20.8%, Panda said.

Gross margin improved to 20.3%, up 220 basis points from a year earlier. The figure included a capacity charge 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% a year earlier.

Operating income was $2.3 million, down from $5.2 million. Net income was $1.8 million, or $0.21 per diluted share. Adjusted EBITDA was $7.6 million, or 12.2% of sales, steady from 12% in the prior-year quarter. Panda said the stable margin despite truck weakness reflected portfolio diversification and manufacturing discipline.

The company is investing in manufacturing capacity in Mexico. A new greenfield facility in Monterrey was completed in less than nine months, on time and on budget, Palomaki said. The site is now producing structural foam and structural web products. An expansion in Matamoros is expected to add two 4,500-ton molding machines in the second half of 2026. Mexico investments total $25 million. Capital expenditures for the full year are expected to be about $25 million to $30 million, including $18 million to $20 million for Mexico initiatives, Panda said. Mexico expansion costs were $3.4 million through the first half, and management does not expect a material increase for the rest 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, not replacement programs, with about 65% coming from outside 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 about $112 million in incremental business awards. Management said those awards could provide production revenue opportunities exceeding $300 million in 2027 as programs enter production.

The company ended the quarter with $12.1 million in cash and no outstanding debt. In early July, it 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 about $457,000, at an average price of $18.62 per share. No shares were repurchased in the second quarter.

Management reiterated that the majority of the $63 million in new program awards secured during 2025 should begin contributing meaningfully in the second half of 2026 and reach full annualized production rates in 2027. Project-based tooling revenue is expected to be weighted toward the fourth quarter.

Palomaki said the company is evaluating acquisition opportunities of varying sizes but remains focused on deals 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.