Core Molding Technologies Inc

Welcome to the Core Molding Technologies second quarter fiscal 2023 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. Now I will turn the call over to Sandy Martin, three-part advisors. Please go ahead.

Thank you and good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review second quarter results for 2023. Joining me on the call today are Core Molding's president and CEO, Dave Duvall, and the company's EVP and CFO, John Zimmer. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section at coremt.com. Today's 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 fact 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. Forward-looking statements by their nature are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to the earnings press release that was issued today 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-GAP measures, including adjusted EBITDA, free cash flow, and return on capital employed. Reconciliations to the nearest gap measures can be found at the end of our earnings release. Finally, the earnings press release we issued earlier today is posted on the investor relations section of our website at coremt.com. A copy of the release has also been included in an 8K submitted to the SEC. And now I would like to call, turn the call over to Dave Duvall. Dave?

Thank you Sandy. Good morning and welcome to our second quarter earnings call. We're excited to share several important accomplishments this quarter. First, I want to share that the end of June, CORE joined the Russell 3000 Index. This major milestone, as well as our record second quarter, are a direct result of our winning culture driven by a dedicated team and their relentless focus on customer support and continuous improvements. I want to thank our hardworking team of talented people for executing Core's shared vision of growth and driving improvements in our business every day. Before we talk about our results, I want to briefly provide a few other comments. As we discussed last quarter, one of Core's four strategic growth initiatives for 2023 is our commitment to profitability improvement through our must-win battle of achieving higher operational performance across all Core locations. We are focused on operational excellence and continually improving production efficiencies. We understood that a disciplined execution of our operational excellence initiatives in 2023 would result in increased gross margins. Again, this quarter, I'm excited to share that our gross margin for the quarter increased to 21%. This is the highest quarterly gross margin in over a decade. If you remember during the last few quarters, quarterly calls, John Zimmer said he wanted to see it start with a 2. So great forecasting, John. Sequentially, this is a 320 basis point improvement from the first quarter and an increase of 780 basis points from Q2 of last year. I believe these results are direct evidence that the business transformation is progressing well and more importantly, gaining momentum by consolidating the improvements or compounding. We know that our successful gross margin expansion this year is a result of a relentless focus on our operational execution, material cost recoveries, and our technical solution sales, especially as we expand into new or adjacent markets. I'm excited to see that our must-win battle for 2023 is fully embedded in our operational excellence processes and supporting our continuous improvement culture. We will remain strategically focused on optimizing plant capacity through improvements in operational performance, and we are continually driving near-term opportunities within our sheep molding compound business. For the first half of the year, we increased our productivity by 15% in our focused plants. Recall that we reported an 8% productivity improvement in Q1. So we are proud to report the continued improvement in our overall plant productivity, which reduces costs, increases our machine capacity, and reduces the demand on our technical resources, which is a significant opportunity cost as we look forward. I appreciate how focused our operational teams are in driving and supporting our 2023 must-win battle. The cross-functional teams are providing on-site support and facilitating system improvements, Kaizen events, and organizational development processes. A must-win battle means it's a priority for all of us. Now turning more specifically to the quarter, second quarter product sales demonstrated the benefits of diversification and we continue to see strength in our transportation and power sports industries with Q2 softening mostly in building products. Compared to first quarter sales of medium and heavy duty trucks shifted back below 50% of our mix, And power, sports, and industrial utilities grew in the second quarter. As we mentioned last quarter, we continue to win programs in the industrial and utilities categories, specifically related to stormwater solutions, flush cover, and in-ground vault products. Our technical solutions team signed new contracts in the first half of the year that will contribute new and replacement annualized revenue of approximately $12 million that we are expecting to launch in 2023 and in early 2024. These programs relate primarily to new business in the industrial and power sports industries. We are excited to launch these programs as they further differentiate our business in the growing end markets where we provide high-value engineered solutions. We will continue to focus on margin enhancements by offering a differentiated solution with new and existing customers that seek improved product performance, lower cost of ownership, and reduce manufacturing complexities. Finally, regarding our sustainability efforts, we are currently in the certification process for CORE's EcoVadis rating, and we expect this to be completed by mid-August. This certification further supports the value proposition of several industrial and utilities customers. We continue to work with customers to increase their usage of recycled material or developing a completely recyclable solution by converting from traditional materials. All of these efforts closely align with our strategy of providing a technical and proprietary solution by utilizing our wide portfolio of processes and over 80 presses. This is especially important for our long-term relationships with blue chip companies where we provide single source manufacturing arrangements. We firmly believe that driving sustainable solutions for our customers will create long-term value for our customers, shareholders, and, of course, core molding. With that, I'd like to now turn it over to John to cover the financials in more detail.