Q1 2026 Core Molding Technologies Inc Earnings Call

May 7, 2026

Operator: Good morning, everyone. Welcome to the Core Molding Technologies Fiscal 2026 Q1 Financial Results Conference Call. All participants will be in listen only mode. Should you need assistance, please do a conference specialist for pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you press star then one on your telephone keypad. To withdraw your question, please press star then two. As a reminder, this event is being recorded. I now turn the conference over to Sandy Martin of Three Part Advisors. Please go ahead.

Speaker #1: Should you need assistance, please know the conference specialists are pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #1: To ask a question, you may press star, then one on your telephone keypad. To throw your question, please press star, then two. As a reminder, this event is being recorded.

Operator: To ask a question, you press star then one on your telephone keypad. To withdraw your question, please press star then two. As a reminder, this event is being recorded. I now turn the conference over to Sandy Martin of Three Part Advisors. Please go ahead.

Speaker #1: I now turn the conference over to Sandy Martin, three-part advisors. Please go ahead.

Speaker #2: Thank you and good morning, everyone. We appreciate you joining us for the CORE MOLDING TECHNOLOGIES conference call to review our fiscal 2026 first quarter results.

Sandy Martin: Thank you. Good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review our fiscal 2026 Q1 results. Joining me on the call are the company's COO and incoming President and CEO, Eric Palomaki, and CFO, Alex Panda. David Duvall, current CEO, will also be on the call for the Q&A session. This call is being recorded. This call will also be webcast and can be accessed through coremt.com via an audio link on the Investor Relations Events and Presentations page. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading.

Speaker #2: Joining me on the call are the companies COO and incoming president and CEO, Eric Palomaki, and CFO, Alex Panda. Dave Duvall, current CEO, will also be on the call for the Q&A session in this call is being recorded.

Speaker #2: This call will also be webcast and can be accessed through CORE MT dot com via an audio link on the investor relations events and presentations page.

Sandy Martin: This call will also be webcast and can be accessed through coremt.com via an audio link on the Investor Relations Events and Presentations page. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading.

Speaker #2: Please be advised that any time sensitive information may no longer be accurate as of the date of any replay or transcript reading. 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.

Sandy Martin: 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. Forward-looking statements are uncertain and outside the company's control. Actual results may differ materially from those expressed or implied, and today's earnings release includes our forward-looking disclosures. Risks, risk factors, and other uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Core Molding Technologies assumes no obligation to update or revise any forward-looking statements publicly. Management will refer to non-GAAP measures, including Adjusted EPS, Adjusted EBITDA, the debt to trailing twelve months EBITDA ratio, Free Cash Flow, and Return on Capital Employed.

Speaker #2: Forward-looking statements are uncertain and outside the company's control. Actual results may differ materially from those expressed or implied in today's earnings release, includes our forward-looking disclosures.

Speaker #2: Risks factors and other uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. CORE MOLDING TECHNOLOGIES assumes no obligation to update or revise any forward-looking statements publicly.

Speaker #2: Management will refer to non-gap measures, including adjusted EPS, adjusted EBITDA, the debt to trailing 12 months EBITDA ratio, free cash flow, and return on capital employed.

Speaker #2: Reconciliations to the nearest gap measures are available at the end of our earnings release, which has been submitted to the SEC on Form 8K.

Sandy Martin: Reconciliations to the nearest GAAP measures are available at the end of our earnings release, which has been submitted to the SEC on Form 8-K. I would like to turn the call over to Eric Palomaki. Eric.

Speaker #2: Now I would like to turn the call over to Eric Palomaki. Eric?

Speaker #3: Thank you, Sandy, and good morning, everyone. Our first quarter of 2026 was a busy one. While product revenue was lighter, our team was hard at work executing our growth strategy.

Eric Palomaki: Thank you, Sandy. Good morning, everyone. Our Q1 of 2026 was a busy one. While product revenue was lighter, our team was hard at work executing our growth strategy, delivering $17 million in additional new wins, relocating 5 of 9 presses into our new facility in Monterrey, and posting our best gross margin quarter in over a decade. The must-win battle focus on our Mexico expansion is on track. We continue to execute our flawless launch playbook across 50 already won projects. As this is David's last earnings call as CEO, I want to take a moment to recognize and thank him for his tremendous impact on Core Molding Technologies. Working alongside David has been a privilege. He has been instrumental in shaping our company culture and in my growth as a leader.

Speaker #3: Delivering $17 million in additional new wins, relocating five of nine presses into our new facility in the Monterey, and posting our best gross margin quarter in over a decade.

Speaker #3: The must-win battle focused on our Mexico expansion is on track, and we continue to execute our flawless launch playbook across 50 already won projects.

Speaker #3: As this is Dave's last earnings call as CEO, I want to take a moment to recognize and thank him for his tremendous impact on CORE MOLDING TECHNOLOGIES.

Speaker #3: Working alongside Dave has been a privilege. He has been instrumental in shaping our company culture and in my growth as a leader. His leadership, integrity, and steady hand help set the direction of this company and his mentorship through challenges, milestones, and countless everyday conversations has left a lasting impression.

Eric Palomaki: His leadership, integrity, and steady hand helped set the direction of this company, and his mentorship through challenges, milestones, and countless everyday conversations has left a lasting impression. Dave, thank you for your trust, your support, and for setting an example of excellence. As I fully transition into the CEO role this month, we have taken deliberate steps to reinforce operational leadership and continuity, backfilling my COO responsibilities. We have split the COO role into two positions, underscoring our commitment to promoting from within and ensuring organizational readiness. Arnold Alanis now leads our Mexico operations, and Michael Gayford oversees the US and Canada operations. Both leaders exemplify Core's four values: being a learning organization, having the courage to challenge, showing mutual respect, and operating with transparency. Speaking about operations, I want to once again recognize our teams for their disciplined execution and exceptional service to customers.

Speaker #3: Dave, thank you for your trust, your support, and for setting an example of excellence. As I fully transitioned into the CEO role this month, we have taken deliberate steps to reinforce operational leadership and continuity.

Speaker #3: Backfilling my COO responsibilities. We have split the COO role into two positions underscoring our commitment to promoting from within and ensuring organizational readiness. Arnold Alanis, now leads our Mexico operations, and Mike Gafford oversees the US and Canada operations.

Speaker #3: Both leaders exemplify CORE's four values: being a learning organization, having the courage to challenge, showing mutual respect, and operating with transparency. Speaking about operations, I want to once again recognize our teams for their disciplined execution and exceptional service to customers.

Speaker #3: In the quarter, we achieved 99.1% on-time delivery, and a quality performance of 52 parts per million. In our business of making large, complex, composite assemblies, our ability to be a trusted be trusted with major product launches is a key value proposition in a major reason why CORE wins repeat business or why CORE is able to grow our wallet share.

Eric Palomaki: In the quarter, we achieved 99.1% on-time delivery and a quality performance of 52 parts per million. In our business of making large, complex composite assemblies, our ability to be trusted with major product launches is a key value proposition and a major reason why Core wins repeat business or why Core is able to grow our wallet share. These results demonstrate our focus on standard work, consistency, and operational excellence. With Arnold and Mike leading our operations, I'm able to spend more time with our commercial and financial leaders, or as we like to say, our two Alexes. Alex Bantz, Core's Chief Commercial Officer, and Alex Panda, our Chief Financial Officer. If you're looking for me, chances are I'm with one of the Alexes focusing on growing the company.

Speaker #3: These results demonstrate our focus on standard work, consistency, and operational excellence. With Arnold and Mike leading our operations, I'm able to spend more time with our commercial and financial leaders, or as we like to say, our two Alexes.

Speaker #3: Alex Vance, CORE's chief commercial officer, and Alex Panda, our chief financial officer. If you're looking for me, chances are I'm with one of the Alexes focusing on growing the company.

Speaker #3: Turning to a first quarter performance, we are very pleased with the continued momentum of our investor growth initiatives, which generated $17 million in new business wins.

Eric Palomaki: Turning to the first quarter performance, we are very pleased with the continued momentum of our Invest for Growth initiatives, which generated $17 million in new business wins. We are also pleased to report gross margins exceeding 20%. While this performance reflects strong execution, Alex Bantz will provide more color on our full-year margin outlook in a few moments. The $17 million in new business awards included a significant multi-year battery energy storage system project. These battery energy storage systems are becoming more widely used for reducing power loads, coupling with renewable power generation, and adjusting for grid load changes or disruptions. Within transportation, we continue to support specialty electric truck platforms, serving route-based fleets such as postal vehicles, trash trucks, and electric buses, many of which are owned by municipalities.

Speaker #3: We are also pleased to report gross margins exceeding 20%. While this performance reflects strong execution, Alex will provide more color on our full-year margin outlook in a few moments.

Speaker #3: The $17 million in new business awards included a significant multi-year battery energy storage system project. These battery energy storage systems are becoming more widely used for reducing power loads, coupling with renewable power generation, and adjusting for grid load changes or disruptions.

Speaker #3: Within transportation, we continue to support specialty electric truck platforms serving route-based fleets such as postal vehicles, trash trucks, and electric buses, many of which are owned by municipalities.

Speaker #3: Some of the newest battery enclosure opportunities we are currently working on are tied to grid reliability applications, including grid hardening and load shedding. While battery adoption has moderated in consumer EVs, demand is expanding rapidly in grid infrastructure, and we're engaged with customers and industry partners to capture that growth.

Eric Palomaki: Some of the newest battery enclosure opportunities we are currently working on are tied to grid reliability applications, including grid hardening and load shedding. While battery adoption has moderated in consumer EVs, demand is expanding rapidly in grid infrastructure, and we're engaged with customers and industry partners to capture that growth. To support our sales pipeline, we've added one business development manager during Q1 and are planning two additional hires this quarter. As part of powersports market, we continue to expand our proprietary skid plate technology, which we developed approximately 2 years ago and launched in Q3 of 2025. New wins this quarter include a prominent OEM traditionally known for agricultural and farm equipment, further broadening the application of this technology.

Speaker #3: To support our sales pipeline, we've added one business development manager during the first quarter and are planning two additional hires. This quarter. As part of Power Sports Market, we continue to expand our proprietary skid plate technology which we developed approximately two years ago and launched in the third quarter of 2025.

Speaker #3: New wins this quarter include a prominent OEM traditionally known for agricultural and farm equipment, further broadening the application of this technology. As previously discussed, we are seeing meaningful signs of industry recovery with major OEMs launching new products features that include additional CORE molding components across watercraft, skid plates, and cargo boxes.

Eric Palomaki: As previously discussed, we are seeing meaningful signs of industry recovery, with major OEMs launching new product features that include additional core molding components across watercraft, skid plates, and cargo boxes. The Q1 marked the 3rd consecutive quarter of year-over-year revenue growth in our powersports market, with a year-over-year growth of 46%. We remain focused on scaling the adoption of Core's SMC offerings and topcoat capabilities, which enable us to serve as a preferred supplier of structural molding compound, as well as deliver finished installation-ready systems. These value-added capabilities allow us to participate more broadly across the supply chain, supporting applications in construction equipment, agricultural machinery, aerial lifts, and other industrial markets. Our topcoat paint capability differentiates Core by enabling installation-ready systems that reduce total cost and improve manufacturing efficiency for our OEM customers.

Speaker #3: The first quarter marked the third consecutive quarter of year-over-year revenue growth in our Power Sports Market with a year-over-year growth of 46%. We remain focused on scaling the adoption of CORE's SMC offerings and Topcoat capabilities, which enable us to serve as a preferred supplier of structural molding compound as well as deliver finished installation-ready systems.

Speaker #3: These value-added capabilities allow us to participate more broadly across the supply chain, supporting applications in construction equipment, agricultural machinery, aerial lifts, and other industrial markets.

Speaker #3: Our Topcoat paint capability differentiates CORE by enabling installation-ready systems that reduce total cost and improve manufacturing efficiency for our OEM customers. Together, these investments expand our technical capabilities, deepen customer integration, and support durable, higher-value revenue streams that align our long-term growth and margin objectives.

Eric Palomaki: Together, these investments expand our technical capabilities, deepen customer integration, and support durable, higher-value revenue streams that align our long-term growth and margin objectives. All of Core's proprietary compounds and SMC materials remain on track and are expected to be in production during the H2 of 2026. As we previously discussed, we invested $6.5 million in 2025 to expand our operations in Mexico, including a greenfield facility, and we plan to invest an additional $19 million this year. These projects are ahead of schedule, with all work in Monterrey is expected to be completed by the end of the Q2. We view Monterrey region as a long-term secular growth market, strategically positioned closer to key customers. Our expansion in Matamoros includes the installation of ultra-large 4,500 ton compression molding presses in Matamoros, continuing through the H2 of 2026.

Speaker #3: All of CORE's proprietary compounds and SMC materials remain on track and are expected to be in production during the second half of 2026. As we previously discussed, we invested $6.5 million in 2025 to expand our operations in Mexico, including a greenfield facility.

Speaker #3: And we plan to invest an additional $19 million this year. These projects are ahead of schedule, with all work in Monterey expected to be completed by the end of the second quarter.

Speaker #3: We view Monterey region as a long-term secular growth market, strategically positioned closer to key customers. Our expansion in Matamoros includes the installation of ultra-large 4,500-ton compression molding presses in Matamoros continuing through the second half of 2026.

Speaker #3: That is 9 million pounds of pressing force per press for 18 million pounds that will be operational by year-end. We hope you're able to join us in September for our investor day where we'll be able to get up close and see how these massive composite molding systems create 100-plus pound parts for sleeper roof assemblies.

Eric Palomaki: That is 9 million pounds of pressing force per press, or 18 million pounds that will be operational by year-end. We hope you're able to join us in September for our Investor Day, where we'll be able to get up close and see how these massive composite molding systems create 100+ pound parts for sleeper roof assemblies. Looking ahead, we expect truck market volumes to begin recovering in H2 2026, and when combined with the $63 million in new wins secured in 2025, which will launch throughout 2026 and early 2027, we maintain visibility into total product revenue that could exceed $300 million in 2027. As a sole supplier on long-term OEM programs, we benefit from long-term customer relationships that provide strong forecasting visibility while recognizing that macro conditions can influence timing.

Speaker #3: Looking ahead, we expect truck market volumes to begin recovering in the second half of 2026. And when combined with a $63 million in new wins secured in 2025, which will launch throughout '26 and early '27, we maintain visibility into total product revenue that could exceed $300 million in 2027.

Speaker #3: As a sole supplier of long-term OEM programs, we benefit from long-term customer relationships that provide strong forecasting visibility. While recognizing that macro conditions can influence timing, with that, I'll now turn the call over to Alex to review financials in more detail.

Eric Palomaki: With that, I'll now turn the call over to Alex to review financials in more detail.

Speaker #4: Thank you, Eric, and good morning, everyone. As expected, first quarter revenues declined by 4.7% year over year. Driven primarily by previously discussed truck cycle dynamics.

Alex Panda: Thank you, Eric, and good morning, everyone. As expected, Q1 revenues declined by 4.7% year-over-year, driven primarily by previously discussed truck cycle dynamics. In Q1, medium and heavy-duty truck sales represented 34% of Core's total product sales, which is down from 44% in fiscal 2025. As Eric noted, we delivered strong gross margins of 20.4%, an increase of 120 basis points year-over-year and 520 basis points sequentially. This performance was driven by a favorable revenue mix, including a shift away from tooling and toward higher margin product revenue. While pleased with our Q1 margins, we remain comfortable reaffirming our full-year gross margin target range of 17% to 19%, particularly given the elevated tooling revenue expected in the Q4.

Speaker #4: In Q1, medium and heavy-duty truck sales represented 34% of CORE's total product sales, which is down from 44% in fiscal 2025. As Eric noted, we delivered strong gross margins of 20.4%, an increase of 120 basis points year over year, and 520 basis points sequentially.

Speaker #4: This performance was driven by a favorable revenue mix, including a shift away from tooling and toward higher margin product revenue. While pleased with our first quarter margins, we remain comfortable reaffirming our full-year gross margin target range of 17 to 19 percent, particularly given the elevated tooling revenue expected in the fourth quarter.

Speaker #4: Our Power Sports end markets continued to expand during the quarter, delivering 45.7% year-over-year revenue growth. This acceleration likely pulled some volume forward from the second quarter as OEMs prepared for spring demand.

Alex Panda: Our powersports end markets continued to expand during the quarter, delivering 45.7% year-over-year revenue growth. This acceleration likely pulled some volume forward from the Q2 as OEMs prepared for spring demand. SG&A expense in the Q1 was $11.2 million or 19.1% of sales, compared with 14.6% in the prior year period. SG&A this quarter included $2.1 million of Mexico expansion-related expenses and $924,000 of succession related costs. Excluding these items, normalized SG&A would have been approximately $8.2 million or 14% of sales. Operating income for the quarter was $764,000 compared to $2.8 million in the prior year period, reflecting the SG&A items discussed. Net income was $605,000 or $0.07 per diluted share.

Speaker #4: As GNA expands in the first quarter was 11.2 million, or 19.1% of sales, compared with 14.6% in the prior year period. As GNA this quarter included 2.1 million of Mexico, expansion-related expenses, and $924,000 of secession-related costs.

Speaker #4: Excluding these items, normalized SG&A would have been approximately $8.2 million or 14% of sales. Operating income for the quarter was $764,000 compared to $2.8 million in the prior year period, reflecting the SG&A items discussed.

Speaker #4: Net income was $605,000 or 7 cents per diluted share, adjusted EBITDA was 7.3 million or 12.5% of sales, compared to 7.2 million or 11.7% in the prior year period.

Alex Panda: Adjusted EBITDA was $7.3 million or 12.5% of sales, compared to $7.2 million or 11.7% in the prior year period. Operating cash flow for the quarter was a use of $9.2 million, driven by planned investments in our Mexico growth initiatives, including tooling payments, press relocations, and inventory bank bills. Capital expenditures totaled $3.8 million, resulting in an expected negative Free Cash Flow of $13 million, consistent with our budget and investment plan. For the full year, we continue to expect capital expenditures of approximately $25 to 30 million, with $18 to 20 million allocated to Mexico organic growth initiatives. These planned investments reflect our confidence in the returns we will earn from our organic growth initiatives and the strong execution delivered by our operating teams.

Speaker #4: Operating cash flow for the quarter was a use of $9.2 million driven by planned investments in our Mexico growth initiatives, including tooling payments, press relocations, and an inventory bank build.

Speaker #4: Capital expenditures totaled $3.8 million resulting in an expected negative free cash flow of $13 million. Consistent with our budget and investment plan. For the full year, we continue to expect capital expenditures of approximately $25 to $30 million with $18 to $20 million allocated to Mexico organic growth initiatives.

Speaker #4: These planned investments reflect our confidence in the returns we will earn from our organic growth initiatives and the strong execution delivered by our operating teams.

Speaker #4: As of March 31st, our balance sheet remained strong with total liquidity of $73.5 million including $23.5 million in cash and $50 million of availability under our revolver and capital credit lines.

Alex Panda: As of 31 March, our balance sheet remains strong with total liquidity of $73.5 million, including $23.5 million in cash and $50 million of availability under our revolver and capital credit lines. Term debt totaled $19.3 million, and our debt to EBITDA ratio remains below 1x on a trailing twelve-month basis. Return on Capital Employed was 6.8% or 7.9% excluding cash based on trailing twelve-month pre-tax operating income. As new programs launch and asset utilization improves, we expect ROC to strengthen. Additional details, including GAAP to non-GAAP reconciliations, are available in our earnings release. Our capital deployment strategies prioritizes organic growth with continued disciplined debt and working capital management.

Speaker #4: Term debt totaled $19.3 million and our debt-to-EBITDA ratio remains below one times on a trailing 12-month basis. Return on capital employed was 6.8% or 7.9% excluding cash.

Speaker #4: Based on trailing 12-month pre-tax operating income, as new programs launch, an asset utilization improves, we expect ROCE to strengthen. Additional details including gap to non-gap reconciliations are available in our earnings release.

Speaker #4: Our capital deployment strategies prioritize organic growth with continued disciplined debt and working capital management. During the quarter, we repurchased 24,000, 545 shares at an average price of $18.62 per share.

Alex Panda: During the quarter, we repurchased 24,545 shares at an average price of $18.62 per share for a total of $457,000. In March, we increased our share repurchase authorization by $6.5 million and intend to continue opportunistically offsetting dilution from equity compensation. For fiscal 2026, we continue to expect the following. 1, total sales to be flat to up approximately 5% with tooling revenue weighted toward the Q4. 2, the majority of the $63 million new program wins secured in 2025, we expect to contribute to the H2 of 2026 and hit full annualized volumes in 2027. 3, we continue to remain cautiously optimistic as we start seeing order builds for truck cycle recovery in the H2 of this year.

Speaker #4: For a total of $457,000. In March, we increased our share repurchase authorization by 6.5 million and intend to continue opportunistically offsetting dilution from equity compensation.

Speaker #4: For fiscal 2026, we continue to expect the following: One, total sales to be flat to up approximately 5%, with tooling revenue weighted toward the fourth quarter.

Speaker #4: Two, the majority of the $63 million new program wins secured in 2025, we expect to contribute to the second half of 2026 and hit full annualized volumes in 2027.

Speaker #4: Three, we continue to remain cautiously optimistic as we start seeing order builds for truck cycle recovery in the second half of this year. Four, full-year gross margins in the range of 17 to 19 percent.

Alex Panda: Four, full-year gross margins in the range of 17% to 19%. Five, the company incurred $2.1 million of Mexico expansion-related expense during Q1 and expects to incur approximately $900,000 in Q2. Six, during Q1, the company incurred $924,000 of succession planning-related costs and expects to incur approximately $900,000 more over the balance of 2026, primarily in Q2. Switching to a discussion on tariffs and recent oil prices, our customers currently benefit from preferential tariff treatment under the USMCA, which is scheduled for a joint governmental review beginning in July 2026.

Speaker #4: Five, the company incurred $2.1 million of Mexico expansion-related expense during the first quarter and expects to incur approximately $900,000 in the second quarter. Six, during the first quarter, the company incurred $924,000 of secession planning-related costs and expects to incur approximately $900,000 more over the balance of 2026, primarily in the second quarter.

Speaker #4: Switching to a discussion on tariffs and recent oil prices, our customers currently benefit from preferential tariff treatment under the USMCA. Which is scheduled for a joint governmental review beginning in July 2026.

Speaker #4: Any changes could affect demand patterns, and we continue to monitor potential impacts on our customers and end markets. With respect to recent increases in oil prices, we have contractual mechanisms in place that will allow us to pass through a majority of these costs.

Alex Panda: Any changes could affect demand patterns, and we continue to monitor potential impacts on our customers and end markets. With respect to recent increases in oil prices, we have contractual mechanisms in place that will allow us to pass through a majority of these costs. With that, I would like to turn it back to Eric.

Speaker #4: And with that, I would like to turn it back to Eric.

Speaker #5: Thank you, Alex. We are pleased with the progress of our Muslim battle this year, particularly the execution of our Mexico expansion, which remains on schedule and aligned with our budgeted projections.

Eric Palomaki: Thank you, Alex. We are pleased with the progress of our must-win battle this year, particularly the execution of our Mexico expansion, which remains on schedule and aligned with our budgeted projections. We believe these organic investments further differentiate Core as a leader in highly specialized large and ultra-large molded solutions. As we grow, we remain anchored in the fundamentals, operating with the highest standards and discipline around safety, people, quality, delivery, and cost, while staying closely aligned with the voice of our customer. Our business development pipeline continues to exceed $220 million in high-quality opportunities. With $17 million in new awards secured in Q1, we are confident in our target of $50 million in new program awards during 2026. Importantly, these wins continue to include customers in new and emerging markets for Core and align well with our strategic diversification priorities.

Speaker #5: We believe these organic investments further differentiate CORE as a leader in highly specialized, large, and ultra-large molded solutions. As we grow, we remain anchored in the fundamentals, operating with the highest standards and discipline around safety, people, quality, delivery, and cost, while staying closely aligned with the voice of our customer.

Speaker #5: Our business development pipeline continues to exceed $220 million in high-quality opportunities, with $17 million in new awards secured in the first quarter. We are confident in our target of $50 million in new program awards during 2026.

Speaker #5: Importantly, these wins continue to include customers in new and emerging markets for CORE and align well with our strategic diversification priorities. Target segments include specialized transportation applications for electric vehicles, inner box panels for electric pickup truck platforms, satellite tracking systems, building products, construction and agriculture, increased demand for SMC compounds, and our expanding top-coat paint capabilities.

Eric Palomaki: Target segments include specialized transportation applications for electric vehicles, inner box panels for electric pickup truck platforms, satellite tracking systems, building products, construction, and agriculture, increased demand for SMC compounds, and our expanding topcoat paint capabilities. We remain highly focused on scaling our execution excellence, leveraging our fixed cost base, optimizing our manufacturing footprint, and strengthening operational discipline across the enterprise. Our commercial organization is energized and fully supported by the broader company. As a result, we continue to make progress towards our long-term objective of $500 million in annual revenue while staying intensely focused on profitability, cash flow generation, and returns on capital employed. While strong demand in our powersports market benefited from some revenue being pulled into Q1, we believe the recovery has momentum. Combined with continued wallet share expansion and organic sales growth, we are building commercial momentum.

Speaker #5: We remain highly focused on scaling our execution excellence, leveraging our fixed cost base, optimizing our manufacturing footprint, and strengthening operational discipline across the enterprise.

Speaker #5: Our commercial organization is energized and fully supported by the broader company. As a result, we continue to make progress towards our long-term objective of $500 million in annual revenue while staying intensely focused on profitability, cash flow generation, and returns on capital employed.

Speaker #5: While strong demand in our power sports market benefited from some revenue being pulled into the first quarter, we believe the recovery has momentum. Combined with continued wallet share expansion and organic sales growth, we are building commercial momentum.

Speaker #5: We are purposefully targeting large, growing, diverse end markets, including construction, energy, industrial, aerospace, and medical. We are increasingly engaging customers earlier in the design cycle.

Eric Palomaki: We are purposefully targeting large, growing, diverse end markets, including construction, energy, industrial, aerospace, and medical. We are increasingly engaging customers earlier in the design cycle. These customers are seeking strategic partners like Core that can deliver design, fabrication, and finished installation-ready systems under one roof, backed by a proven track record of flawless launch execution and reliability. I want to thank our dedicated employees. Your commitment, skill, and hard work make all of this possible. We are equally grateful to our customers, shareholders, and board for their continued confidence and support as we execute our strategy. As we mentioned last quarter, we will host an Investor Day in Brownsville, Texas on 29 September and 30 September. As we prepare for our upcoming Investor Day, this event will also serve as a meaningful moment to celebrate a major milestone for our company, Core's 30-year anniversary.

Speaker #5: These customers are seeking strategic partners like CORE that can deliver design, fabrication, and finished installation-ready systems under one roof. Backed by a proven track record of flawless launch execution and reliability.

Speaker #5: I want to thank our dedicated employees. Your commitment, skill, and hard work make all of this possible. We are equally grateful to our customers, shareholders, and board for their continued confidence and support as we execute our strategy.

Speaker #5: As we mentioned last quarter, we will host an investor day in Brownsville, Texas, on September 29th and 30th. As we prepare for our upcoming investor day, this event will also serve as a meaningful moment to celebrate a major milestone for our company: CORE's 30-year anniversary.

Speaker #5: Our program will include presentations on the afternoon of day one, and a tour of our Matamoros facility, including a manufacturing, shop floor tour, of our manufacturing execution engine on the morning of day two.

Eric Palomaki: Our program will include presentations on the afternoon of day one and a tour of our Matamoros facility, including a manufacturing shop floor tour of our manufacturing execution engine on the morning of day two. The facility tour will highlight Core's ultra-large composite manufacturing capabilities, which include two new 4,500 ton presses I spoke about earlier, which we believe are among the strongest in North America. We plan to distribute a save the date in the next couple weeks. If you're interested in attending and do not receive the invitation, please reach out to us. In addition, we will participate in the East Coast IDEAS Conference in New York City on 10 June, where we will host a presentation and one-on-one meetings. Please contact us if you'd like to schedule time with management. With that, we'll open the line up for questions. Operator?

Speaker #5: The facility tour will highlight CORE's ultra-large composite manufacturing capabilities, which include two new 4,500-ton presses I spoke about earlier. Which we believe are among the strongest in North America.

Speaker #5: We plan to distribute a Save the Date in the next couple of weeks. If you're interested in attending, do not receive the invitation. Please reach out to us.

Speaker #5: In addition, we will participate in the East Coast Ideas Conference in New York City on June 10th, where we will host a presentation and one-on-one meetings.

Speaker #5: Please contact us if you'd like to schedule time with management. With that, we'll open the line up for questions. Operator?

Speaker #6: Yes. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your hands up before pressing the keys.

Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If any of your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Chip Moore with Roth.

Speaker #6: If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster.

Speaker #6: And the first question comes from Chip Moore with Roth.

Chip Moore: Hey, good morning. Hey, guys. Thanks for taking the question.

Speaker #7: Hey, good morning. Hey, guys. Thanks for taking the question.

Speaker #8: Hey, good morning, Chip.

Eric Palomaki: Hey, good morning, Chip.

Chip Moore: Hey, how you doing? I wanted to ask, you know, powersports, very strong. You know, maybe talk a bit more about, I think it sounds like there was a little bit of pull forward. You know, help us size that, you know, and some of the seasonal dynamics. Any, any thoughts on that market, you know, with just fuel prices in general and, you know, with that pull forward, just help us think about Q2 impacts given that, you know, trucking is more of a H2 story for pickup.

Speaker #7: hey, how you doing? I, I wanted to ask, you know, power sports very strong. you know, maybe talk a bit more about, I think, it sounds like there was a little bit of pull forward, you know, help us size that.

Speaker #7: you know, and some of the seasonal dynamics. Any, any thoughts on that market, you know, with just fuel prices, in general, and, you know, with that pull forward, just help us think about, Q2 impacts given that, you know, trucking is more of a back half story, for pickup.

Speaker #8: Yeah. A-and the overall for power sports, Chip, I'd say we definitely see the recovery of power sports, you know, the, the, the bust associated with COVID, is back.

Eric Palomaki: Overall for powersports, Chip Moore, I'd say we definitely see the recovery of powersports. You know, the bust associated with COVID is back. Dealer inventories are back to what they would call moderate and normal levels. If you look at a lot of our customers, they're very happy with that situation. With our watercraft portion of powersports, well, we got a pretty good Q1 there. You can see that in the numbers. We wouldn't necessarily expect that to maintain through the, you know, the next few quarters. The skid plate that we launched last year is now at full run rate. That will continue throughout the year. In general, you should see powersports up, Q1 being maybe up a little bit more than what we would expect the rest of the year.

Speaker #8: Dealer inventories are back to what they would call moderate and normal levels. If you look at a lot of our customers, they're very happy with that situation.

Speaker #8: with our watercraft portion of power sports, we got a pretty good first quarter there. You can see that in the numbers. we wouldn't we wouldn't necessarily expect that to maintain through the all, you know, the next few quarters.

Speaker #8: but the skid plate that we launched last year, it's now at full run rate. That will continue throughout the year. so general, you should see power sports up.

Speaker #8: Q1 being maybe up a little bit more than what we would expect the rest of the year. But I, not that's not to say a, a massive decrease in Q2 or, or, or any, anything to expect there.

Eric Palomaki: That's not to say a massive decrease in Q2 or anything to expect there, just a really good Q1.

Speaker #8: Just, a really good first quarter.

Speaker #7: Got it. That's, that's helpful. Thank you. and maybe just, you know, i on new business, y-you know, y-you outlined some of the investments there and, and targets.

Chip Moore: That's helpful. Thank you. Maybe just, you know, on new business, you know, you outlined some of the investments there and targets, just what you're excited about and maybe, you know, the battery opportunity in general. It sounds like you got a nice win there. You know, how large-

Speaker #7: Just what you're excited about and maybe, you know, the, the battery, opportunity in general. it sounds like you got a nice win there. Just, you know, how large.

Eric Palomaki: Yeah

Speaker #7: Do you think that, that, that market can be for you?

Chip Moore: Do you think that market can be for you?

Eric Palomaki: Yeah. I'll start on just specifically the awards for Q1. One of those was that battery energy system customer, and that's a $9 million a year, and they've committed to 3 years of that volume at a minimum also with us. Very nice. Sometimes we're very excited about the big OEM business that has 5 to 10-year lengths on it, but having a customer like this commit to 3 years of volume additionally is a very nice thing to have when we're in these diversified markets. We're working with a couple other customers in the same category of battery energy system, but the first one is a pretty sizable one. Of that $17 million, $9 million of it is made up of that customer.

Speaker #8: yeah. So I'll start on just specifically the, the awards for the first quarter. one of those was the, that battery energy system, customer. And that's, a $9 million a year.

Speaker #8: And they committed to three years of that volume at a minimum also with us. So, very nice. Sometimes we're, we're very excited about the big OEM business that has 5 to 10-year lengths on it, but having a customer like this commit to three years of volume, additionally, is a is a very nice thing to have when we're in these diversified markets.

Speaker #8: So, we're working with a couple other customers in the same category of, of battery energy system, but, the first one is a is a pretty sizable one of that $17 million, $9 million of it is made up of that customer.

Eric Palomaki: We won another product that leverages the skid plate technology that we developed 2 years ago. That's worth $2 million in the powersports world. We won another aero truck roof deflector that's worth another $5 million. The nice thing about that one is it's with a truck OEM that we don't do a lot of typical business with, so we're expanding a little bit with some other customers in the truck and transportation space. Really big panels on a roof or an air deflector are perfect for us. So that's another very nice project worth about a little under $5 million a year when it launches in 2028.

Speaker #8: we won another product that leverages the, the skid plate technology that we developed two years ago. that's worth a couple million in the power sports world.

Speaker #8: and we won another, aero truck roof, deflector that's worth another, another $5 million that the nice thing about that one is it's with a truck OEM that we don't do a lot of typical business with.

Speaker #8: So we're expanding, a little bit, with some other customers in the in the truck and transportation space. but, but really big panels on a roof, or an air deflector are, are perfect for us.

Speaker #8: so that's, that's another very nice project worth about a little a little under $5 million a year when it, when it launches in 2028.

Chip Moore: That's a great color. That battery win, that $9 million per year, is this, you know, transport or is this on the grid side that you were referencing?

Speaker #7: That's, that's a that's a great caller. And that, that battery win, that $9 million per year, is this, you know, transport, or is this m on the grid side that you were referencing?

Chip Moore: That's a great color. That battery win, that $9 million per year, is this, you know, transport or is this on the grid side that you were referencing?

Speaker #8: Grid. Yeah. Grid side. So stationary batteries, where you build a very large bank and building of batteries to, to loadshed or to cover for, different types of energy situations.

Eric Palomaki: Yeah, grid side. Stationary batteries where you build a very large bank and building of batteries to load shed or to cover for different types of energy situations.

Speaker #7: Yeah. Interesting. Yeah. A, a great market opportunity.

Chip Moore: Yeah, interesting. Yeah, a great market opportunity for you guys.

Speaker #8: And so. Similar technology to, like, an AV battery, but you don't have the same requirements of crash ratings and things like that. So, SMC is a perfect composite solution to build a very large battery pack, and the and then they're just basically stacked in racks.

Eric Palomaki: Yeah. It's similar technology to like an EV battery, but you don't have the same requirements of crash ratings and things like that. SMC is a perfect composite solution to build a very large battery pack. They're just basically stacked in racks, you know, not in a data center, but sometimes are supporting data centers in terms of instead of generation, like there are a lot of natural gas generators that are added to data centers everywhere. This is an alternative to that. If you thought you needed to cover for an hour of power shortage or three hours of power shortage, you could do it with batteries instead of natural gas generators.

Speaker #8: You know, it's not, not in a data center, but sometimes our supporting data centers in terms of, instead of generation, like, there are a lot of natural gas generators that are added to data centers everywhere.

Speaker #8: This is an alternative to that. If you thought you needed to cover for an hour of power shortage, or three hours of power shortage, you could do it with batteries instead of natural gas generators.

Speaker #7: Yeah. Yeah. Excellent. and to your point, S-SMC, are you, you know, effectively getting sold out there, or what are you thinking on, future capacity?

Chip Moore: Yeah. No, excellent. To your point, SMC, are you effectively getting sold out there, or what are you thinking on future capacity?

Eric Palomaki: We're focused on launching the four that we talked about at the end of last year that we won.

Speaker #8: w-we're focused, on launching the, the four that we talked about at the end of last year that we won. We've got three more of those still to launch here over the next, 90 to 90 to 120 days.

Eric Palomaki: We're focused on launching the four that we talked about at the end of last year that we won.

Chip Moore: Yeah.

Eric Palomaki: We got 3 more of those still to launch here over the next, 90 to 120 days. That's really the team's focus. We continue to find new customers for SMC compounds. Not sold out yet, but, you know, continue to be very bullish in terms of our SMC compound offering.

Speaker #8: so that's really the team's focus. but we continue to find, new customers for, for SMC Compound. So not sold out yet, but, you know, continue continue to be very bullish in terms of our SMC Compound offering.

Speaker #7: Excellent. Okay. and, and Mexico, it sounds like, you're running ahead of schedule. Any, anything to call out there? to pay attention to, or, or, you know, all systems go, it sounds like, for, for completing here, in the near term?

Chip Moore: Excellent. Okay. And Mexico sounds like you're running ahead of schedule. Any, anything to call out there to pay attention to or, you know, all systems go, it sounds like for completing here in the near term.

Eric Palomaki: Yeah, all systems go. Our whole executive team and myself spent the week down there 2 weeks ago, and just super proud of our team and the work that they have done. It's pretty awesome to stand up a building, you know, fill it full of equipment in a just a few short months. They're on schedule, we should have the Monterrey facility basically all moved and consolidated under one roof by the end of Q2, and we'll start to, you know, get everything consolidated in Q3 and see those the benefits associated with all of that move in Q4.

Speaker #8: yeah. All, all systems go. we were our whole executive team and myself spent the week down there, two weeks ago. and just super proud of our team and the work that they have done.

Speaker #8: it's pretty awesome to stand up a building, you know, fill it full of equipment in, in a just a few, few short months. So, they're on schedule.

Speaker #8: And, we should have the Monterey facility basically all moved and consolidated under one roof by the end of the second quarter. And we'll start to, you know, get everything consolidated in the third quarter and see those, the benefits associated with all of that move in the fourth quarter.

Eric Palomaki: The Matamoros team has cleared out the space for the Volvo launch that happens in 2027, and all that equipment is being built and will be installed during Q3 and Q4. Still a lot of work to do there in our Matamoros facility with a lot of that capital investment. That we'll start to see the return from that in H2 of 2027 or H1 of 2027 as it launches.

Speaker #8: And the Matamoros team has cleared out the space for the Volvo launch that happens in 2027, and all that equipment is being built and will be installed during the third and fourth quarter.

Speaker #8: So still a lot of work to do there in the in our Matamoros facility with a lot of that capital investment. and that we'll, we'll start to see the returns from that in the second half of, of '27 or the first half of '27 as it launches.

Speaker #7: Yeah. Yeah. Okay. Great. Well, we'll look forward to, late September, and,

Chip Moore: Yeah. Yeah. Okay, great. Well, we'll look forward to late September.

Speaker #8: Yeah.

Eric Palomaki: Yeah

Speaker #7: Say thanks again to Dave. Dave, if he's out there, thanks very much.

Chip Moore: say thanks again to Dave. Dave, if he's out there, thanks very much.

Speaker #8: Thanks, Chip. No, I'm here.

David Duvall: Thanks, Chip. No, I'm here.

Speaker #7: Hey, Dave. Yeah. Congrats. And, Look forward to.

Chip Moore: Hey, Dave. Yeah. Congrats.

Speaker #8: Yeah. Appreciate it. I think we're in a great place.

David Duvall: Appreciate it.

David Duvall: look forward to-

David Duvall: I think we're in a great place.

Speaker #7: Yeah. Agreed. You've, you've done a good job. So look forward to catching up down the road.

Chip Moore: Yeah, agreed. You've done a good job. Look forward to catching up down the road.

Speaker #8: All right. Absolutely.

David Duvall: All right. Absolutely.

Speaker #1: Okay. Thank you. The next press conference bill is that one with, Titan Capital.

Operator: Okay. Thank you. The next question, Bill Dezellem with Tieton Capital Management.

Bill Dezellem: Thank you. A couple of questions. First of all, relative to the powersport strength, is that tied primarily to the new program wins, or is it primarily a rebound in purchasing because inventories are now at a more reasonable level?

Speaker #9: thank you, a couple of questions. First of all, relative to the, power sports strength, is that tied, primarily to the new program wins? Or is it primarily a rebound in purchasing because inventories are now, at a more reasonable level?

Eric Palomaki: It's both, Bill, and I'll make sure I add color to that. There's definitely a push for watercraft on an annual cycle, so they wanna get those units out there to dealers in the spring 'cause most of North America has sort of a summer boating season. We get a pretty good push there on the watercraft side. Also the overall recovery of powersports has underlined that we see it in all the mix. It doesn't matter whether it's a off-road vehicle or a watercraft, we see that base increase. I would add one to you as a third portion, a third leg of it. You'll remember the launch of the skid plate technology in Q3 of 2025. We still are on a year-over-year.

Speaker #8: it's, it's both, Bill. And I'll, I'll make sure I add color to that. There's definitely, push for watercraft on an annual cycle. So they wanna get those units, out there to dealers in the spring 'cause most of North America, has sort of a summer boating season.

Eric Palomaki: It's both, Bill, and I'll make sure I add color to that. There's definitely a push for watercraft on an annual cycle, so they want to get those units out there to dealers in the spring because most of North America has sort of a summer boating season. We get a pretty good push there on the watercraft side. Also, the overall recovery of powersports has underlined that we see it in all the mix. It doesn't matter whether it's an off-road vehicle or a watercraft, we see that base increase. I would add one to you as a third portion, a third leg of it. You'll remember the launch of the skid plate technology in Q3 of 2025. We still are on a year-over-year.

Speaker #8: And so, you get, we got a pretty good push there on the watercraft side. But then also, the overall recovery of power sports has underlined that—we see it in all the mix.

Speaker #8: So it doesn't matter whether it's a off-road vehicle or a watercraft. We see that base, increase. And then I would I would add one to you as a as a third portion a third leg of it.

Speaker #8: You'll remember the launch of the, the skid plate technology in Q3 of '25. We still are on a year-over-year. So until we get to Q3, year-over-year, we'll have be incrementally adding that skid plate technology.

Eric Palomaki: Until we get to Q3, year-over-year, we'll be incrementally adding that skid plate technology and now having won another one with another OEM that's gonna use that same technology on another side-by-side that will launch in 2027. Very excited to continue to use our ability to make that large and ultra large part in a single shot.

Eric Palomaki: Until we get to Q3, year-over-year, we'll be incrementally adding that skid plate technology and now having won another one with another OEM that's going to use that same technology on another side-by-side that will launch in 2027. Very excited to continue to use our ability to make that large and ultra large part in a single shot.

Speaker #8: And, and now having won another one with another OEM that's gonna use that same technology, on another side-by-side that will launch in '27. very excited to continue to use that our ability to make that large and ultra-large part, in a single shot.

Speaker #9: And so if we're hearing you correctly, the power sports market is feeling like it is back to normal after the boom-bust, COVID, post-COVID.

Bill Dezellem: If we're hearing you correctly, the powersports market is feeling like it is back to normal after the boom bust, COVID, post-COVID. Now we're into what we just call normal cycle tied to powersports. Is that a fair interpolation of your comments?

Speaker #9: And, and now we're into what we just call normal, normal cycle tied to power sports. Is that a fair interpolation of your comments?

Eric Palomaki: Yes. That's for Core's version of powersports. Being a consumer myself, I can tell you there are some parts of powersports that probably are still weak. The fact that, like, our off-road segment is very much on the utility vehicle side. Utility vehicles are still selling very well. The stuff that contractors are using, municipalities, school districts, the people that are doing work with them, versus a pure recreation product, those continue to be very good sellers, and we have a lot of content on those products. We have a good mix in the powersports world.

Speaker #8: yes. And, and that's for CORE's version of power sports. being a consumer myself, I can tell you there are some parts of power sports that probably are still, still weak.

Speaker #8: but the fact that, like, our off-road segment is very much on the utility vehicle side. Utility vehicles are, are still selling very well. The, the stuff that contractors are using, municipalities, school districts, that people are doing work with them, versus a pure recreation product.

Speaker #8: those continue to be very good sellers. And we have a lot of content on those, those products. So we have a good mix in the power sports world.

Speaker #9: Great. Thank you. And then I don't want Alex to feel, left out here. So I'm gonna ask a couple of balance sheet, questions, please.

Bill Dezellem: Great. Thank you. I don't want Alex to feel left out here, so I'm gonna ask a couple of balance sheet questions please. Accounts receivable were up significantly from the Q4. Interestingly, the contract liabilities were up a lot also. Wondering if there's some sort of a deferred revenue phenomenon taking place? Alex, would you help us out with those two items, please?

Bill Dezellem: Great. Thank you. I don't want Alex to feel left out here, so I'm going to ask a couple of balance sheet questions please. Accounts receivable was up significantly from the Q4. Interestingly, the contract liabilities were up a lot also. Wondering if there's some sort of a deferred revenue phenomenon taking place? Alex, would you help us out with those two items, please?

Speaker #9: So, accounts receivable, we're up, significantly from the, fourth quarter. And then interestingly, the contract liabilities were up, a lot, also. So wondering if there's some sort of a deferred revenue, phenomenon taking place.

Speaker #9: But Alex, would you help us out with those two items, please?

Speaker #8: Yes. good question. So that's a direct, relation to our billing of a progress payment to Volvo. So the large tolling job that will close in Q4 of 2026, we had a progress billing that went out at the very end of Q1.

Alex Panda: Yes. Good question. That's a direct relation to our billing of a progress payment to Volvo. The large tolling job that will close in Q4 of 2026, we had a progress billing that went out at the very end of Q1, will be paid in Q2, ideally. That offset is down in contract liabilities.

Speaker #8: And so we'll be paid in Q2, ideally. And then that offset is down in contract, liabilities.

Bill Dezellem: Okay, they're one and the same, essentially.

Speaker #9: okay. So they are th-they're one and the same, essentially.

Speaker #8: Correct. Correct.

Alex Panda: Correct. Correct.

Speaker #9: Great. Thank you both.

Bill Dezellem: Great. Thank you both.

Speaker #8: Thank you.

Alex Panda: Thank you.

Eric Palomaki: Yep. Thanks, Bill.

Speaker #7: Thanks, Bill.

Speaker #1: Thank you. And once again, please press star, then one, if you would like to ask a question. And the next presser comes from Lawrence Baumgartner, a private investor.

Operator: Thank you. Once again, please press star then one if you would like to ask a question. The next question comes from Lawrence Baumgartner, a private investor.

Operator: Thank you. Once again, please press star then one if you would like to ask a question. The next question comes from [Lawrence Baumgartner], a private investor.

Speaker #10: Hey, guys. first of all, I got to say congratulations to David. If you've been around this stock a long time, the last two truck cycles, the stock went down to low single digits.

Lawrence Baumgartner: Hey, guys. First of all, I got to say congratulations to David. If you've been around this stock a long time, the last two truck cycles, the stock went down to low single digits, and we seem to have maneuvered through this one pretty successfully, through your watch. Congratulations on that.

Speaker #10: And we seem to have maneuvered through this one pretty successfully. through your watch. So congratulations on that.

Speaker #8: Thank you, Lars. We have a good team.

David Duvall: Thank you, Lawrence. We have a good team.

David Duvall: Thank you, [Lawrence]. We have a good team.

Lawrence Baumgartner: Yeah. You've really done a great job through this part of the cycle. Question on the Mexico expansion. I just noticed in the financials you threw in, as an addition to the financial statement that looks like you expensed the expansion down there for, I don't know, $3 million bucks. Would that normally be capitalized? Why would that be an adjustment to earnings?

Speaker #10: Yeah, you're—you're really, you've really done a great job through this part of the cycle. Question on the Mexico expansion. I just noticed in the financials you threw in, as in—and, in addition to the financial statement, that it looks like you expensed the expansion down there for, I don't know, $3 million bucks.

Speaker #10: Would that normally be capitalized? I mean, why would that be, an adjustment to, to earnings?

Speaker #8: Yeah. So there is a, as part of the expansion, we are moving, our press-presses in two locations. So in our current Monterey facility, we are moving six structural foam machines, to the new DCPD business that's in Matamoros that is also moving, to the new Monterey facility.

Alex Panda: As part of the expansion, we are moving our presses in 2 locations. In our current Monterrey facility, we are moving 6 structural foam machines to the new facility in Monterrey, and then our DCPD business that's in Matamoros, that is also moving to the new Monterrey facility. As part of just accounting rules, we have to expense those expenses, mainly because it doesn't add any new value to the piece of equipment. We do review all of those expenses, and if we are doing improvements or upgrades to those machines as part of the move, we will capitalize those. The straight rigging costs on installation and reinstallation, because there's no true value add, we cannot capitalize those expenses.

Speaker #8: And so as part of just accounting roles, we have to expense those, those expenses, mainly because it doesn't add any new value to the, the piece of equipment.

Speaker #8: We do review all doing improvements or upgrades, to those machines as part of the move, we will capitalize those. But the straight rigging costs, uninstallation, and reinstallation because there's no true value add, there we cannot capitalize those expenses.

Speaker #8: And so they're one-time expenses that we add back for, that won't be reoccurring.

Alex Panda: They're one-time expenses that we add back for that won't be recurring.

Speaker #10: Okay. Okay. I guess the my second question or last question will be for Eric. You know, when sometimes when you get new CEO in a company, he wants to make a big splash and go out and make a big silly acquisition or and often don't turn out to be very successful.

Lawrence Baumgartner: Okay. Okay. I guess my second question or last question will be for Eric. You know, when sometimes when you get a new CEO in a company who wants to make a big splash and go out and make a big silly acquisition and often don't turn out to be very successful. I guess I'd like to know what your thoughts are and strategy is. I know we've talked about acquisitions with David in the past, and he's really kept, stayed out of that game. I guess I'd like to know what Eric's thoughts are on that going forward.

Speaker #10: I guess I'd like to know what your thoughts are and strategy is. I know we've talked about acquisitions with David in the past. And he's really kept, stayed out of that game.

Speaker #10: And I guess I'd like to know what Eric's, thoughts are on that going forward.

Speaker #8: Sure, Lars. Thanks for the question. I think an, an interesting part to make sure you're aware of is that, David and I started, roughly the same time, seven and a half years ago.

Eric Palomaki: Sure, Lawrence. Thanks for the question. I think an interesting part to make sure you're aware of is that Dave and I started roughly the same time, seven and a half years ago. Of course, been around the business for all of that time, been part of the executive team on Dave's team, and been part of building the strategy. I don't come in as an outsider, as the new CEO, as you know, you certainly have seen happen in plenty of Fortune 500s right now recently. No big splash, no major change as far as the strategy, as far as our execution engine, and really as far as our customers and our team is concerned.

Speaker #8: So, of course, been around the business for all of that time, been part of the executive team, on Dave's team. and been part of building the strategy.

Speaker #8: And so, I don't come in as an outsider, as the new CEO, as you, you know, you certainly have seen happen in plenty of Fortune 500s right now, recently.

Speaker #8: so no big splash, no major changes as far as the strategy, as far as our execution engine, and, and really as far as our customers and our team is concerned.

Speaker #8: I am, I'm quite proud of our team as, as well as the board, as well as Dave and the succession work that we've done, we haven't surprised anybody, whether it's internal stakeholders, external stakeholders, or our customers.

Eric Palomaki: I am, I'm quite proud of our team as well as the board, as well as David Duvall and the succession work that we've done. We haven't surprised anybody, whether it's internal stakeholders, external stakeholders, or our customers. We've done a pretty good job staying consistent. I would leave you with no major changes, just a shift and a continuation of the strategy, and continue to grow the business and leverage the execution engine that we've worked so hard to protect. Being able to go through a truck cycle the way we have, as you suggested, is a huge, you know, change to the business over the years, and it's putting us in a spot where we can make different decisions and different investments, so.

Speaker #8: we've done a pretty good job staying consistent. So, I would I would leave you with no, no major changes, just a, just a, a shift and a, a continuation of the strategy.

Speaker #8: and continue to, to grow the business and leverage the execution engine, that, that we've worked so hard to protect. being able to go through a truck cycle, the way we have, as you suggested, is a huge, you know, change to the business over the years.

Speaker #8: And it's putting us in a spot where we can make different decisions and different investments, so. and I think you may know this I think you may know this, Lawrence, but Dave's an advisor for the next 18 months for us as well.

Lawrence Baumgartner: Okay. Good. Good.

Eric Palomaki: Uh-

Lawrence Baumgartner: Thanks very much.

Eric Palomaki: I think you may know this, Lawrence, Dave's an advisor for the next 18 months for us as well. He'll continue to be around to be able to advise me, answer questions, support us in an advisory role through all of 2027.

Speaker #8: So, he'll continue to be around, be able to advise me, answer questions, support us, in an advisory role through all of 27.

Speaker #10: Yeah. You know, I, I think one, as we've talked about in the past, sometimes just buying back your stocks, the when it's trading at a, a really inexpensive valuation, is the best thing to do with your with your really nice balance sheet that you've that you've accumulated.

Lawrence Baumgartner: Yeah, you know, I think as we've talked about in the past, sometimes just buying back your stock, when it's trading at a really inexpensive valuation is the best thing to do with your really nice balance sheet that you've accumulated.

Speaker #8: Yeah, yeah. We've learned our lesson from not having a strong balance sheet from the beginning.

Eric Palomaki: Yeah.

Speaker #10: Thank you.

Lawrence Baumgartner: Thank you.

Eric Palomaki: We've learned our lesson from not having a strong balance sheet from the beginning.

Speaker #10: Yeah. If you remember the last cycle, I hope so.

Lawrence Baumgartner: Yeah. If you remember the last cycle, I hope so.

Eric Palomaki: Yeah. That changes your decision process.

Speaker #8: Yeah. That changes your decision process.

Speaker #10: Yeah. Great. Thanks, guys.

Lawrence Baumgartner: Yeah. Great. Thanks, guys.

Speaker #8: Thank you.

Eric Palomaki: Thank you.

Speaker #1: Thank you. And this concludes the question and answer session. I now would like to turn the conference over to Eric Palomaki for any closing comments.

Operator: Thank you. This concludes the question and answer session. I now would like to turn the conference over to Eric Palomaki for any closing comments.

Operator: Thank you. This concludes the question-and-answer session. I now would like to turn the conference over to Eric Palomaki for any closing comments.

Speaker #8: Thank you for your interest in our company. We look forward to providing an update on our progress when we report our second quarter results in a few months.

Eric Palomaki: Thank you for your interest in our company. We look forward to providing an update on our progress when we report our Q2 results in a few months. Have a great day.

Speaker #8: Have a great day.

Operator: Thank you. This concludes today's call conference. Thank you for attending today's presentation. You may now disconnect your lines.