The sleepy business of molding reinforced plastics for truck hoods and other components at Core Molding Technologies (CMT) of Columbus, Ohio, is suddenly attracting a lot of interest on Wall Street. Its price this morning on the American Stock Exchange was $27 per share, about double what it was just two months ago.
CMT reported record results for its quarter ended March 31 and has mostly shown steady gains in performance since it was formed in 1996 when an Ohio-based REIT with significant losses in mortgage securities bought Columbus Plastics, a Navistar processing subsidiary.
RYMAC Mortgage Investment Corp. became a plastics company and leveraged its financial acumen and knowledge of financial markets to grow the company and launch new lightweighting technologies. The stock has been pretty quiet until recently and hedge fund interest has been muted.
The company’s fundamentals are interesting.
Demand is very strong for SMC (sheet molding compound) made by CMT. SMC sheet capacity for 2014 was 100 percent, up from 84 percent in 2013. A new SMC line went into service late last year, doubling capacity.
Molding capacity is also growing. Four large compression molding presses have been added recently: two in Columbus and two in Gaffney, South Carolina. The company now has 24 compression presses with clamp forces of at least 2,000 tons. Capacity utilization of the compression presses rose from 55 percent in 2013 to 79 percent last year largely as a result of new Volvo truck business.
Capital expenditures were $10.7 million, $9.3 million and $8.3 million in 2014, 2013 and 2012 respectively. Net sales for 2014 were $175,204,000, up 22 percent from 2013.
Two new investments show how the company sees potential for future growth.
On May 12, CMT announced that it will invest an additional $2 million in molding presses and metering equipment at its Mexican maquiladora plant to support new business in the reaction injection molding (RIM) of dicyclopentadiene (DCPD), a specialty engineered material system.
In March, CMT acquired, CPI Binani of Winona, Minnesota, a producer of direct long-fiber thermoplastics (D-LFT) products, serving the marine, automotive, packaging and other industries. The move puts CMT in the thermoplastics composites business, which would seem to have more growth potential than thermoset composites, which are heavier and more difficult to recycle.
Diversification is very important to CMT. Business with just four truck builders represented 84 percent of total sales last year. Loss of just one of those customers or a downturn in the heavy trucking industry could send the stock crashing.
Two directors of CMT recently sold chunks of CMT stock, apparently deciding to cash in just in case the very fickle investment community decides that the reinforced thermoset plastics is not that interesting after all.