Core Molding Technologies reported a sharp increase in third-quarter revenue, led by growth in production sales, while profitability was weighed down by costs tied to its Mexico expansion, plant-footprint changes and higher input prices. The engineered-products maker said new manufacturing capacity is coming online and maintained its full-year outlook.
The quarter also brought continued growth in tooling-project revenue and new business wins, including an award in battery energy storage systems. Management said the company is pursuing opportunities in markets such as power infrastructure as it seeks to diversify beyond its traditional end markets.
Key details
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Revenue rose 54.4% year over year to about $90.2 million. The total comprised $64.8 million in production revenue and $25.4 million in tooling-project revenue. Production revenue increased 19.7%, supported by recovering heavy-duty truck demand, new program launches and strength in building products and industrial and utilities markets.
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Gross margin was 14.8%. Management said it would have been about 18.6% excluding the effects of tooling-project revenue mix and Monterrey commissioning charges. Tooling projects made up a larger share of sales in the quarter, which management said weighs on reported margins in the short term but can generate recurring demand and revenue.
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Expansion and operating changes added costs. The quarter included one-time startup and commissioning costs for the Mexico expansion, costs associated with optimizing the company’s manufacturing footprint, and higher external input costs.
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The Mexico expansion is advancing. Monterrey is now operational. Two 4,500-ton presses in Matamoros are expected to come online by year-end, adding capacity.
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Full-year guidance was unchanged. Core Molding continues to expect net sales to be flat to up approximately 5% for fiscal 2026, with gross margins in the 16% to 17% range.
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New business awards and sales prospects are growing. The company said it has secured about $30 million in awards so far this year and sees a potential path to approximately $50 million through six major projects in the final stage of its sales process. That potential is not presented as booked revenue.
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The company cited a significant battery energy storage award and pointed to demand associated with electrification, grid upgrades and rising power needs as opportunities to diversify its end-market exposure.
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Core Molding invested about $0.8 million during the quarter to establish a center of excellence for hood and battery systems at its Gaffney, South Carolina, facility. It also continued share repurchases during the quarter and into October.
Plain-English implications
The quarter combined strong production-revenue growth with weaker reported gross margin, reflecting startup and transition costs as well as a larger contribution from tooling projects. The new Mexico capacity and the planned Matamoros presses expand the company’s production footprint, while its maintained guidance indicates management still expects full-year sales and margins within the previously stated ranges.