Core Molding at Midwest Ideas: Strategic Turnaround and Growth

On Tuesday, 26 August 2025, Core Molding Technologies (NYSE:CMT) presented at the 16th Annual Midwest Ideas Conference, showcasing its strategic turnaround and growth ambitions. The company, once struggling with a bank default, now focuses on diversification and expansion into new markets. While sales dipped recently, improved margins and a strong balance sheet provide a foundation for future growth.

Key Takeaways

• Core Molding has reduced its reliance on the truck market from 92% to 54%.
• The company is investing $25 million in a new plant in Monterey, Mexico, for a $150 million Volvo contract.
• It aims to achieve $500 million in revenue and a 14-16% return on capital employed within 3-5 years.
• The company is exploring M&A opportunities and expanding into aerospace, construction, and consumer products.
• Management remains optimistic about growth despite recent sales declines.

Financial Results

• Sales have decreased over the past two years, but margins have improved, with adjusted EBITDA as a percentage of sales increasing.
• Operating cash flows were approximately $90 million over the last three years, with sustaining CapEx at $23 million and growth CapEx at $14 million.
• The company authorized a $7.5 million stock buyback, with $5 million already used and $2.5 million remaining.

Operational Updates

• Core Molding’s diversification strategy has reduced truck market reliance significantly.
• It holds market leadership in personal watercraft and truck segments.
• The company is expanding its manufacturing capabilities, including a new plant in Monterey and additional facilities in Matamoros.

Future Outlook

• Core Molding is focused on organic growth, M&A, and returning capital to shareholders.
• It targets tuck-in acquisitions in the $10 million to $40 million range with a disciplined approach.
• The company is leveraging its expertise in SMC and top coat paint to capture new market share.

Q&A Highlights

• Tariffs: Mexican production benefits from USMCA compliance, avoiding tariffs.
• Raw Material Costs: Increases are passed through to customers.
• ATV Skid Plate Business: Estimated at $8 million to $10 million annually from one customer, with discussions ongoing with others.
• Composite Adoption: Aerospace is at the beginning stages, with Core Molding poised to capitalize on this trend.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 16th Annual Midwest Ideas Conference:

Steve, Host/Presenter: Good afternoon. The next, presentation for you have is Core Molding Technologies based out of Columbus, Ohio, not too far from here. They’re a client of ours as well, ticker CMT. And with us from the company, we’ve got presenting Dave Duvall and then our CFO, Alex Panda will join us in a few moments.

So with that, I’ll turn it over to Dave.

David Duvall, President and CEO, Core Molding Technologies: Thank you, Steve. Good afternoon, everyone. My name is David Duvall. I’m the President and CEO of Core Molding Technologies. I have Eric Palamaki here with us.

He’s our COO. I was given the name for Steven to pronounce it. I think I got it right. And then we have Alex Pandell on his way back with some show and tell samples for you. So I’m going to start on Slide three because I think what’s important about where we are with core molding is the journey and where we are today.

And I think this really tells the story. My goals today is to be able to convince you and show you that where we are today has been purposely developed. We really focused on the internal execution of Core Molding for the first four years. And where we are today is what we call our strategy is invest for growth. Everything we’ve done was to really turn Core around.

When we started Core was in bank default in 2019, we came out of bank default to an ABL and then to a cash based loan. Everything that we did was about developing the organization, getting the right people in place, getting the processes in place, rebuilding the company and making it a great place to work. You’ll see that in some of our turnover, we’re less than 6% employee turnover. And I think that means a lot relative to cost when you start looking at the cost of a company that really requires technical resources to develop its product. What you’ll see is that we first focused on the internal execution.

And to me, execution is the key part of any strategy. No strategy works without being able to execute. Once you can execute, then you execute your strategy. You can’t go the other way. If you’re losing money and you gain more sales, you’ll lose more money.

So I think what you’ll see here really through the 2019 to 2020 was really the heavy lifting, the turnaround. I probably spent seven days, twenty four hours a day on top of presses and fixing hydraulics. And Eric and I were out on the floor fixing things, right? But they needed to see that. They needed to see that leadership was involved, right?

That’s how you start gaining the momentum and buying the culture of the company. So going through the turnaround, we were shutting down customers at the beginning. We had quality defects. We get chargebacks. And that’s what drives the cost of your company.

Our product names the brand of our customer. You can’t have hoods and roofs leaking and cracking on the field. So I think a big part of that was being able to turn that company around, being able to make it a better place to work for everyone and to really change the culture to where winners win, right? I mean, wants to win. So turning the culture around and then what we did in 2022 and 2023 and what you can really see is the change in the gross margin and the step margin step function change in 2022 to 2023.

The problem with the manufacturing company, if you’re manufacturing it and you’re not doing it well, everyone knows you’re not doing it well. And when you quote a program that might launch in two years from now, you always assume that you’re going to be able to fix it in two years, but you don’t. So you end up having a program that’s losing money because your cost didn’t change, but your price is still the same. So what we did is we went through our entire portfolio and did what’s called a fix or get out, right? Everybody thought we’re crazy, but if you’re losing money, then it doesn’t make sense to do it.

So we did significant price increases on every truck customer, on every customer we had, and we put our prices back up to what we called market pricing. Now everybody thought we were the devil at the time. But now we lost the Volvo business at this time because we were quoting the Volvo business at the same time that we did a price increase. But we now have the Volvo business back two years later. So I think a big part of that is you can’t ask for pricing unless you fix the value that you have.

So we were delivering on time, we had good quality, we could be trusted, we’re providing a good product, but you have to get there. You have to fix the operations before you fix the pricing. Nobody wants to pay you more for something that isn’t working to begin with. So if I look at where we are with core, that takes us to where we are today. And our strategy today is really invest for growth.

So we have cash in the bank with $40,000,000 We have a $50,000,000 line of credit. And we have the organization and the execution mentality to really leverage the strategy for investor growth. That’s the key. Everything was done to get to the point where we are today, investor growth. Nobody wants to do all the hard work and get oil all over you and fix everything you have to fix without taking advantage of that.

That’s why we are where we are. So investor growth, we’ve invested in our sales team. We’ve grown our sales team with account management to take care of ongoing customers and business development with our current new customers, diversifying into industries. Seven years ago, we were 92% truck. Now we’re 54% truck.

So the key is diversifying the business. So we’re growing wallet share. We have the largest portfolio of processes, being able to offer that to our customers and then combine those processes to create unique solutions. So investor growth is where we are today. Little bit about core, so we are on the New York Stock Exchange, CMT is a ticker, about forty five years old.

It was a carve out from Navistar at the time. Headquartered in Columbus, Ohio with about 1,600 employees, about $3.00 $2,000,000 in sales last year. So if you look at why invest in core, we have market leadership. We have about 87 of the tower personal watercraft market, both halls and decks for all of Yamaha and all of BRP. The only one we don’t work with is Kawasaki and that’s because they do a hand layup spray up process.

It’s a very manual process. You look at market leadership and truck, we have about 30% of the entire truck market. A few competitors high barriers to entry, a press itself could be about $5,000,000 and take another $3,000,000 to install. We have 82 presses installed. So it’s a significant barrier to entry.

Large diverse addressable market, composites are taking over. I mean you look at metals, steels, it’s changing the composite. If it’s lightweight, look corrosion resistance, easy to handle, it’s significant advantage. Long term relationships with blue chip customers, we don’t worry about not getting paid. We have international, Volvo, BRP, Yamaha, proprietary highly engineered product.

I’ll have some SMC samples that we’ll pass around here. Feel the difference in weight. You have one that’s a standard product and then you have one that’s lightweight and then you have one in between because nobody wants to pay for the lightweight right away. Same weight, same strength, half the weight. Eventually the world will go to the lightweight one.

No, it’s a matter of when they want to pay for it and what value advantage they get for it. Personal watercraft, they’ll pay for it today. Truck won’t pay for it today. 10 from now, they’ll pay for it. So proprietary, we formulate the SMC for those products.

We know it, it’s like the Coca Cola formula. You don’t patent it because then everybody knows your formula. Single source technical solutions, everything that we make is designed specifically for the application. Whereas one set of tooling, if I look at the recent program that we won with Volvo, that program in Mexico, it’s about $25,000,000 in tooling. They’re not going to spend that with multiple suppliers.

You’ll end up with about 20 different stainless or 20 different steel molds, about $800,000 a piece and all the downstream equipment that you have to implement. Product innovation expertise, we’ll look at some of those. And then we are USMCA compliant, which has helped. Think really looking at addressable market, I would say truck and powersports were in the defend mode. 87% market share in personal watercraft.

We still continue to grow on ATV, UTV. New federal regulation requiring skid plates on ATVs. We now make skid plates for BRP on all their side by sides. Golf carts, I think is another big example of where you see many more golf carts out there that have a very special appeal to them. They’re not just something you’d ride around and beat up on a golf course now.

They got them with mag wheels, low noise tires and stereo systems. So we’re seeing a lot more opportunities there. Industrial and utilities, composites really has an advantage there to where you’re not having to use heavy equipment to install it. It can be done by hand. So it’s 10 times faster.

Aerospace, what you’re seeing there is we’re making the base now for satellite receiver systems and are making 60 of these a week. I did not know they made 60 satellite receiver stations a week. Construction and ag, we’ll look at what we’re doing there. We’ve implemented top coat paint in two of our plants. Con ag is lower volume than truck in general, so they don’t have paint in their facilities.

We never painted and we really didn’t get into that market. Now we’re implementing Topco paint to really capture that market. We have all the molding processes that we need for that. Consumer Products, this was a really neat one. Eric had developed a way to what fake rocks in about two days and now working with one of our suppliers, our customers UFP to be able to sell faux rocks.

I never knew there was over $10,000,000 in faux rocks. It’s perfect for composites. Then building products, all the lattice that you see, that’s probably our lattice that we make and all the fence posts. A little bit about core. So we have six facilities and a warehouse.

You can see the facilities there spread out really across the Midwest and East. We are looking at expansion into the West. What you see there in that picture is a SMC machine sheet molding compound. So that is a highly automated machine to where you’re actually making the composites from formulated materials itself. So everything that goes into the composite we completely made.

We baked it, added the ingredients and baked it. Big customers, new truck, we do business with all the big truck customers. Navistar, Volvo, PACCAR, we do some with Daimler, power sports obviously, building products, decorators, GELD WEN. When we start looking at JELD WEN, all the doors that you see and usually most of the windows, they’re SMC. There’ll be an SMC inner and outer with a corrugated interior being able to sell our proprietary SMC to JELD WEN to make those doors.

Industrial and Utilities, Old Castle, AFL, we do a lot with Xylem for water treatment. I think if you really look at where we diversify, truck is where we started. We’ve grown powersports. Powersports actually started with an acquisition that we did CPI in Winona. We started with about $5,000,000 in business and we’re now over $50,000,000 with that customer.

So that’s a big advantage for us. Building products, we’re doing a lot with they call it a deck in a box. So being able to do the decks and all the building products. You talk to UFP and they want to own the backyard. And all of that could be composite.

Industrial and utilities, the first one there, it’s called TroTrof. That’s about 10 times faster to install than a concrete because you’re having to with a concrete you’re having to shut down the rail line and install all the data transmission and energy transmission down that rail line. With that, you can pick it up by hand and install it by hand. A big problem that industrial companies have is the skilled labor to do the installations. If I need somebody that runs a crane, it’s going take me significantly longer and harder to do that.

You can do it without a crane. So one thing that we are you’ll see in our last earnings release that we will be investing $25,000,000 We’ve won the Volvo roof contract and that was the business that we did lose about three years ago when we did the price increase. So it feels good to get it back. The supplier that they had wasn’t meeting their demands and wasn’t meeting the capacity that they needed. So they came to us and we’ve won that contract.

So what that’ll mean is about $150,000,000 over about nine years program. And what that will allow us to do is we’re putting a new plant in Monterey. We have a plant in Monterey at 47,000 square feet. We’ll combine that along with a warehouse into our plant in Monterey. We will also put our DCPD, which is a reaction injection molding process, which is really for severe duty applications, vocational trucks, things like that, ConAg.

You see a lot of that there. And we’re putting in TopCoat paint. And that puts us right near one of our major customers that uses DCPD and TopCoat paint. So it’s not only what Wawa allows us to do because of the size of the program is make the investment, but we’re making the investment to grow the entire business. And that’s the key what we’ve done all along.

So what you’re seeing, 25,000,000, we’re also expanding our Matamoros plant to put the Volvo program in our Matamoros moving out DCPD to Monterey. So we’ll end up with two larger facilities with capabilities to service two new markets. Looking at new products. Up on the top left, you see a new EV truck manufacturer, small truck, low cost. What we’re doing is making the side frames in the bed and the bunk in the bed.

That’s perfect for a composite. It’s our DLFT composite. You throw whatever you want in the back and not damage it. That’s a big one for us. We’ve on the next, you’ll see SMC and top coat paint.

Those are new revenue streams for us. We’ve always made SMC. We’ve always used our own SMC. And we sell SMC to Yamaha that we’ve developed specifically for the personal watercraft market. But we’ve never really sold SMC as a new revenue stream.

And the reason is, is we never had enough capacity and we didn’t have enough, I guess, I would say confidence in our SMC to be able to sell it out into the general market. So through all the work that we’ve done, through the really focusing on the execution and operations, we’ve increased the capacity significantly in our SMC. We’ve improved the consistency of our SMC and we are at the point where we have capacity to be able to sell. So we actually did an AI search of the internet on anything that anyone could buy for SMC. And we’re seeing now at about £400,000,000 a year, not dollars, pounds.

SMC goes for anywhere between $1 to $4 a pound depending on the type of SMC whether it’s a heavy or the light. So what you’re seeing there, we believe we have a addressable market of about $200,000,000 About half of that is what we see as addressable. The other half I would say is captive for people that make their own SMC for their purposes. Companies like Kohler making baths and sinks out of SMC. So we see that as a brand new revenue stream for us.

We’re already selling SMC outside of that. We have eight other customers that we’re meeting with. So we see that as a huge opportunity for us and the top coat paint. Implementing top coat paint now opens up the entire con ag market for us. So down below that, aerospace.

You can see each of these installations is taking nine satellite receiver dishes and they’re putting in 60 a week. Then EV enclosures, when we look at where we’re doing where we’re working with EV, it’s not really automotive. What you’re seeing is a lot it’s a lot better application in municipalities. So buses that or vehicles that have designated routes, designated lengths and they come back to a designated spot. This battery is on top of the vehicle, just comes over top of a pick and place crane, picks the battery up, puts a new battery in and then it goes back out on the road.

You don’t have to worry about do I have enough range. It’s already set. And then medical is a big area that we’ve been focusing. When we look at our composites on like medical beds and other medical machinery, it’s a perfect match for that. And one interesting of ones is the carbon fiber molding.

So using our what we call RTM or our hand layup process, we’re able to actually make parts with carbon fiber. They’re not as strong as carbon fiber, but they look just like carbon fiber. And what you see is a lot of times carbon fiber is not used for the reason for carbon fiber. It’s used to make things look cool. And that makes the BRP look cool, carbon fiber.

What frustrates us is that carbon fiber sits right on top of our structural component that is actually part of the structure of that personal watercraft. So that could be molded. We can mold that. Or if you did injection molding, high pressure injection molding on large parts, you would be able to injection mold something like that. And that’s another area that we’re looking as well.

So unique differentiators. I think when we look at it lightweight reducing total cost. When we talked about that rail data transmission data signal system, the prior solution is what you see there on top. It’s a concrete that requires it’s 500 pounds requires a crane to install it. You have to shut down the train track.

Whereas our solution, you can see a person picking it up. It weighs 30 pounds. You can install it, maintain it. It’s 10 times faster and about 15% lower cost. The cost per foot is more, but the total cost is significantly less and 10 times faster.

High strength to weight, you know, it’s funny is this gentleman here has been with Yamaha for about fifty years. And whenever we do a new trial and test, we have to go and work with him. And he’s 72 years old and he uses a sledgehammer to smack every part of that haul all the way around and it doesn’t break. At least you pass his test. But really you look at what we have, we got presses up to 5,500 tons.

So when you look at that one under the innovative material, that is one shot with our press. We can mold an entire boat haul with one shot. And we mold in all the features, all the engine mounts, fasteners, everything gets molded in. So that when it gets to the customer, our goal is that it gets to the customer, all they do is bolt it in. There’s no extra assembly.

And then to give you a really I think this is unique when we work with BRP. And I think we have a really good relationship where we’re early in the design phase of BRP. So BRP has what’s called a switch. It’s a mix between a personal watercraft and a pontoon boat. So it has a steering wheel of a personal watercraft with the platform of a pontoon boat.

And what you see in red there, that is fiber reinforced composite. It’s a DLFT with a fiberglass reinforced because that’s where the engine gets mounted. It takes all the stress. What you see in gray is called structural foam, which low pressure injection molding. We also make that.

So what we’re able to do is combine a solution with both of those processes to where it’s unique to us, unique to BRP and nobody else can do it. It’s a much lower cost. You could have made the whole thing out of what’s in red, but that would have been more expensive because you’re using all fiber reinforced. You only use fiber reinforced where you need it and only we can do that. So I think that’s a really with our portfolio processes, that is a unique opportunity for us as far as when we talk about solution sales, being able to offer something that no one else can offer.

So kind of some of the case studies when you look at some of the vaults that are going in. So fiber optic vaults, usually when they’re running fiber optics they’re going to run more fiber optics and they’re going put it in a vault. And in case one line breaks down going down, they’ll pull another line out of that vault and rerun it because you can’t repair fiber optics. So you have a lot of these vaults. Even a polymerized concrete weighs almost 100 pounds whereas ours is 25 pounds.

One person can pick it up and install it and you don’t need a crane to do that. Significantly faster. Another one when you look down at storm water treatment, you know, it would take a crane to install these pipes as you have. What you can do with ours, you can pick this up in the field. You can actually cut the hole out in the field and install that in the field itself.

So again, significantly faster than what the competition is. When we start talking about what we can do in a mold and having our large molds and having the expertise in molding and control of the raw material. When you look at we had done a it’s a step side for a truck. So it was originally 49 piece 43 pieces between all the fasteners, brackets and you needed the metal plate in there for strength. We were able to make that out of a fiber reinforced polypropylene with all the brackets and everything molded into the part itself.

So with one part that snapped right into the vehicle. And that’s significant when you start looking at how many vehicles are making and how much labor is involved. And that’s really our focus is how do we partner, how do we give a technical solution and then how do we provide value with our processes and our expertise. Down below, that same haul you saw earlier for the BRP with the guy standing next to it, You can see all the fasteners get molded in. Everything is automated in the mold, it gets molded in as well as all the engine mounts.

So everything is there to just install and assemble when it gets to the customer. Next, we’ll go into some financials, and I’m going fast.

Alex Pandell, CFO, Core Molding Technologies: Okay, so like Dave said, everything we’ve done has led us to this point for investor growth. So our capital allocation priorities are organic growth, M and A, return capital to shareholders, and maintaining a strong balance sheet. Gotta go back here.

David Duvall, President and CEO, Core Molding Technologies: I have a stand right there. So

Alex Pandell, CFO, Core Molding Technologies: organic growth, like Dave said, we have a $25,000,000 investment project, for Volvo Mexico. Our target return on on these type of investments are 14 to 16 pretax return, and we believe that this investment will be north of that. M and a. So right now, we’re building our pipeline. We almost we got real close to closing, an acquisition in March 2025.

It fell through, but right now, we’re focused on building the pipeline, looking at tuck in acquisitions, staying around the 10 to $40,000,000, size. We won’t ever go above two or two and a half times leverage, but the main point here is staying disciplined, making sure that our acquisitions are getting our return of 14 to 16%, and not over leveraging the company. Return capital to shareholders, right now we have $7,500,000 of stock buyback authorized. We’ve used roughly about $5,000,000 of that, so we have $2,500,000 left that will expire I think over the next year and a half. We anticipate that we’ll buy enough shares to eliminate that amount and we’ll probably go back and renew we will renew and ask for more shares from the board.

Lastly, maintaining a strong balance sheet. Right now we have $40,000,000 of cash on the books, $20,000,000 of debt. Our accounts receivable is all current and our AP covers our inventory. Our balance sheet is really strong and we’re poised to make bigger investments moving forward. So moving on to some selected financial data.

Coming off the COVID peak, for our sales where power sports just went bananas basically in ’22 and ’23, and truck was extremely high during that. We have seen a dip in our sales over the last two years. But the most important thing here is we fixed our margins, we stabilized our margins and we’ve actually increased our adjusted EBITDA as a percent of sales over the last two years. Our return on capital for the last two years achieved our targets of 14% to 16%. It has dipped for our trailing twelve months in June 2025, but as sales come back, we believe that our return on capital employed will increase back into our targets.

We also have in between 50,000,000 and $60,000,000 of incremental sales left to launch over the next eighteen months. So cash flows and our reinvestment over the last three years. So we’ve our operating cash flows have been roughly about $90,000,000 over the last three years with sustaining CapEx being about 25% of that at 23,000,000 and growth CapEx at 14,000,000. That gives us free cash flows right around 52,000,000 over the last three years, and we have capacity in place to do roughly somewhere between $425,000,000 to $475,000,000 in sales. So long term financial goals, we believe these are achievable in the next three to five years.

Our $500,000,000 of revenue, operating income in between eight to 10%, and return on capital employed, like I said, of 14 to 16%. And with that, any questions for Dave and I?

David Duvall, President and CEO, Core Molding Technologies: Yeah. Sorry. You want to Yeah. Want say one thing in summary. I think we are excited.

And I think that really the thing to take away is that all the work that we’ve done on the execution, we’ve gotten done. The two problems with core when we started was cost was too high, price was too low. You got to do the cost before you do the price. So we fixed the business, the execution, we got the operations in place, we’ve got the teams in place and then we went after the pricing. We put all of our product pricing at the level that it needed to be.

We didn’t lose any customers other than Volvo who we got back. So obviously the pricing was too low. So I think when we look at where we are today, we fixed the baseline of the business. We are investing for growth and it’s an exciting part to be. This is why we did all the work you did here.

Steve, Host/Presenter: Is your Mexican production subject to tariffs?

David Duvall, President and CEO, Core Molding Technologies: No. We are under USMCA. So anything that we produce in Mexico that comes into The U. S. Is under USMCA.

Anything that’s in Mexico, get it shipped to Mexico is never part of the tariff.

Alex Pandell, CFO, Core Molding Technologies: And then any raw material cost increases that we do have, we do have pass through in our contracts, so we would just pass it through to our customers.

Steve, Host/Presenter: And have you been experiencing significant amount of those?

David Duvall, President and CEO, Core Molding Technologies: No. You. Tyler was first. No, good question. I mean, we’ve really looked at the SMC market.

In the past, we used SMC internally. We supplied ourselves in all of our locations. And we really didn’t drive the capacity and the consistency as much as we should have. So now that we really have the time and the money, we’re investing and we put in what’s called a maturation room and a cold room. So SMC is a living substance.

It’s curing as soon as you make it. So you want to warm it, you cure it for about twenty four hours till you get it right where you want it, then we put it in a cold room. So we actually have a building within our plant that’s a cold room to cure it. So we can ship out of the cold room. So that’s our competitive advantage as well as our ability to make different formulations for SMC.

I mean you could have SMC that’s for lightweight, high strength, being able to formulate that. The competitors that we’re looking at are only producing SMC. It’s IDI and in molding plastics, MP. What we’re seeing now, we’ve talked with about 10 customers in this area. The lead times are very long.

The consistency of the product is not there. They’re talking eight weeks lead time, we got days, right, because we have it in a cold room. So we can build it, put it in a cold room and then we’re able to ship it out of the cold room and have their capacity in days. So I think one thing that, that does give us advantage on when we’re selling SMC, we also know what everyone else is molding. It helps out with the acquisition pipeline and knowing what everyone else is doing there as well.

Alex Pandell, CFO, Core Molding Technologies: I think the other thing that I would add is because we make SMC and we mold SMC, we can go in and help the potential customers mold their product, Right? We’re we’re specialists when it comes to molding, and it’s not easy. It’s hard. So we can help them, you know, engineer different ways to do charge patterns and stuff like that to to better their process.

David Duvall, President and CEO, Core Molding Technologies: Sorry, Bill.

Bill, Unidentified speaker: It’s alright. So the ATV skid plate business, how large is that?

Alex Pandell, CFO, Core Molding Technologies: It’s about 8,000,000 to $10,000,000

David Duvall, President and CEO, Core Molding Technologies: annually.

Bill, Unidentified speaker: And that’s one customer?

David Duvall, President and CEO, Core Molding Technologies: One customer.

Bill, Unidentified speaker: How many prospective customers are there for

David Duvall, President and CEO, Core Molding Technologies: the business? Right now we have BRP. We would we’re also talking with Yamaha and Polaris. Now they may have gone metal because it’s quick and easy. But when you start hearing gravel pinging against metal on the bottom of your vehicle, that’s going to change.

Yes, we’ve already passed there were certain requirements on energy absorption that we had to meet as far impact test and piercing test. So we validated all that to the requirements, the federal requirements. So we’re already validated in. Yes. It’s a good example of if I look at the difference in companies, BRP is very progressive.

They’re going to look at all right, what’s the end goal? What’s the best solution? They’ll usually go for that. Sometimes other companies are what will work now and just get us by for this regulation to then figure it out later.

Bill, Unidentified speaker: So you showed the train track and the communication box along the line, my perception would be that the European market would be much larger than The US market. Yeah. Is that number one, is that

David Duvall, President and CEO, Core Molding Technologies: Yes. Good question. Product actually came out of The UK. It was used in The UK first for trans. We find much more traction in actually installing the systems in Canada.

The U. S. Seems to say they’re going to do it and then slows down and one thing or another, but most of our installations have been in Canada. We do have some big installations that are talking in The U. S.

There was a San Antonio, Las Vegas and then Las Vegas, LA that they’re still working on. But yes, Montreal installed, Toronto. Car companies make a lot of money. I would say it’s funny. You get into these and it’s they’re all in a rush.

They wanted the quotes. They want to have all the answers and then you wait in one thing or another. But Canada actually moves pretty fast with installing systems. I assume in The US, once you install one, it’ll go faster.

Bill, Unidentified speaker: All right. I’ll ask one more then.

Alex Pandell, CFO, Core Molding Technologies: All

Bill, Unidentified speaker: right. So you gave a few examples of prospective conversion from concrete to composite and some examples of 90 pounds, 25 pounds, etcetera. Why hasn’t that happened already? And it seems the case that you provide seems pretty compelling to us sitting here who don’t work hard actually in the field doing this. What’s the issue?

David Duvall, President and CEO, Core Molding Technologies: Yes, I think it’s just change, right? I mean, you’re talking with a customer that may have done it this way for fifty years. And what they have, they know works. They’ve already got a supply chain set up for it. So you’re really it’s the conversion of it and them making the decision to convert.

And I think it gains momentum once they get used to it and they see it, then you start getting more and more. And you see it in aerospace right now. I mean, those bases were concrete, then they went to some manual process and now they’re looking at SMC. So different industries go faster. I would say industrial and utilities is maybe a little slower just because what they have works, right?

And then they start seeing the advantage. Xylem is a great example. I mean, we do a lot of work with Xylem and they’re all about composites. It’s part of their business.

Alex Pandell, CFO, Core Molding Technologies: Convincing a customer to change is difficult and it takes a long time. It’s difficult and it takes a

Steve, Host/Presenter: long time, but Volvo flipped and flopped in two years.

David Duvall, President and CEO, Core Molding Technologies: No. They were always composite. So the trucks have been composite for about twenty five years. Right, right. It was just switching suppliers there.

Sorry. No. I’d say you have many more problems with that with concrete. Concrete in the end leaks. It will crack, especially in the ground with thermal expansion and contraction or just installing it.

Ours does not. Composites do not. You don’t have a problem with that. And a composite is already a compilation of different components, whereas the concrete they’re using has maybe rebar in it or it’s just straight concrete. You have many more problems.

That’s why in some of them, like the vaults, they polymerize them. So they take a polymer, infuse it into the concrete so that when it does crack, it doesn’t leak. Absolutely. I mean we what we see today is that’s our first project and it’s with a big company down in Brownsville. I think they’re trying us to see if that works, and we can do it at high volumes.

Right now, they weren’t able to meet the volumes and get those installed. And that’s a lot of times why they’ll use traditional materials, right, because they can get it. So for us, we designed the molds. We’re now making it out of SMC. And they’re looking at installing 60 of those a week.

I had no idea that they would install 60 satellite stations with nine satellites in each a week. The satellite station? My guess, probably 10,000 or one of those little stations. And that’s another good thing is, I think we were talking earlier, When you supply a roof on truck, a roof is $2,500 right? $3,000 a roof.

Maybe it’s $1,500 a hood. You’re a big cost. You’re $5,000 of their cost. That’s a big cost. They scrutinize it.

When you’re $200 of a $10,000 product, it’s a lot easier to get margin. But yes, aerospace, I’d say we’re just at the beginning. All right. Thank you, everyone.

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