Core Molding Technologies, Inc. Price & Performance (CMT)

Thank you, and good morning, everyone. We appreciate you joining us for the Core Moulding Technologies' conference call to review the fourth quarter and fiscal twenty twenty four results. Joining me on the call today are the company's President and CEO, Dave Duvall and EVP and CFO, John Zimmer. This call is being webcast and can be accessed through coremt.com via an audio link on the Investor Relations Events and Presentations page. Today's conference Core, including the Q and 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 statements made in today's discussion that are not historical [indiscernible] including statements or expectations or future events, our 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. By their nature, forward looking statements are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward looking statements. These factors and others' risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.

Core Moulding Technologies assumes no obligation to publicly update or revise any forward looking statements. Management will refer to non GAAP measures, including adjusted EPS, adjusted EBITDA, debt to trailing twelve months EBITDA ratio, free cash flow and return on capital employed. Reconciliations to the nearest GAAP measure can be found at the end of our earnings release. Our earnings release has been submitted to the SEC on Form eight ks. Now, I would like to turn the call over to the company President and CEO, Dave Duvall.

Thank you, Sandy, and thank you all for joining us.

Before we review our 2024 financial results, I want to sincerely thank all of our employees for their hard work and dedication throughout the year. Our organizational, operational and product line profitability improvements which were previous must win battles, that we've successfully implemented over the past three years are evident in our ability to maintain our gross margin levels between our targeted range of 17% to 19% even with the reduced demand. All plants continue to be profitable as promised. Our book of business is solid and we see our customers benefiting from a stable partner that can invest in improving the quality of services and products we provide. As demonstrated by our recent supplier awards such as the PACCAR 10P PPM and the BRP Gold awards. We believe we are operating better than many in the industry in both launching new complex programs as well as ongoing delivery and support.

We have created a strong team and a robust business model which has provided record cash flows and has put Core in a position to drive growth. Our job is now Our job is to now leverage all the work the teams have done to drive profitable growth. Driving growth both organic and inorganic, is what we have to do and are relentlessly driving now. Investor growth is our must win battle for twenty twenty twenty five and I know we will be successful just like the other must win battles we have executed. Assets and cash to invest in growth We are actively engaged in evaluating acquisition and confident we will execute an acquisition this year. Our newly implemented voice of the customer process has convinced us to invest in top Core paint capability and our Matamoros facility which is now painting for customers and bringing that value add process in soft The ability to paint aligns well with some markets that we are driving to grow such as construction equipment, aerial lifts and agricultural equipment. These solutions further engage us with customers and provide a broader value proposition. And I will share more in a few moments. Now turning to high level comments on the year.

As promised, all of our plants continue to be profitable in 2024. Our book of business is growing and we have maintained solid product line profitability. Based on the successful completion of our last Muslin battle, which drove decisions and actions to exit our correct non profit business.

We have a high performing business that is operationally positioned and financially capable of significant growth. We won $45,000,000 of new business in 2024 and driving profitable sales growth remains our most important focus. Now to hit on a few of the financial highlights. Fiscal twenty twenty four was another successful year for the company and a testament to our work over the last three years to stabilize margin despite lower revenues. We finished the year with sales of $3.00 $2,000,000 gross margins of 17.6% and adjusted EBITDA margins just over 11%. I'm pleased to report that we generated record cash flow from operations of $35,000,000 which is driven by prudent working capital management, stable margins and solid returns that John will discuss in a moment. Although market demand and product sales were down overall in Core, we do not accept or tolerate the decline in sales. And we firmly believe that our invest for growth strategy is the key to driving our growth engine. We have the same must win battle drive for excellence and sense of urgency as we've shown over the last three years with our organizational, operational and product line profitability must win battles. We acknowledge that a portion of sales growth in the past was a direct result of positive COVID impacts higher customer demand, and product stockpiling due to unpredictable supply chain.

We have proven our ability to ramp up and capitalize on opportunities quickly and I'm confident we can do it again. Nearly all of our $45,000,000 in new wins are launching in 2025 generating higher tooling revenue with a ramp up to full production levels in 2026. Also of the new wins, dollars 35,000,000 are either new or replacement sales from existing or past customer relationships. We know this demonstrates the importance of continuing to grow wallet share with existing customers as well as the importance of diversifying our end markets so that we can demonstrate our value and partnership with new customers and new industries. The replacement business we secured in 2024 indicates that customers trust our performance and ability to deliver. Finally, our pure new business wins last year on top of our 2024 product sales translates to an 8% sales growth which is exciting. We will provide more on our fiscal twenty twenty five outlook in a few minutes. Now I want to turn the call over to John to cover the financials in more detail. Thank you, Dave, and good morning, everyone. For the full year, net sales were $302,400,000 down 15.5% driven by lower demand across our end markets.

As signaled throughout 2024, the truck market is is in a normal cyclical downturn we expect to transition to a cyclical upturn in the second half of twenty twenty five and all of 2026 due to upcoming environmental regulation changes in 2027. We also see some leveling off or stabilization in non truck markets. Gross profit for the year was 17.6%, which is within our long term full year target range of 17% to 19%. Full year adjusted EBITDA was $33,800,000 or 11.2%. As Dave mentioned, we generated a record $3,035,200,000.0 dollars in cash flow from operations translating to a free cash flow of $23,600,000 for the year. Additionally, we invested $11,500,000 in capital expenditure for 2024. Sales were $62,500,000 for the fourth quarter down 15.3% due to declines primarily in the truck and power source market. Demand in end markets including industrials, utilities and building products grew against the prior year quarter and we expect the rebound in 2025 to continue in these markets and as we launch new programs. Our fourth quarter gross margin was $9,900,000 or 15.8% of sales compared to 14.8% in the year ago quarter. Majority of our Core of sales are variable and our ability to maintain gross margins within our long term range is based on how efficiently we can reduce variable expenses as demand forecasts change.

Our operational team is has a good line of sight on demand and quickly reduced variable costs in 2024. As a result of their efforts and our ability to reduce raw material pricing, to achieve better customer pricing, we mostly offset lost fixed cost leverage in the fourth quarter. SG and A expenses for the fourth quarter were $9,000,000 compared to $8,400,000 in the prior year primarily due to lower labor and benefits offset by an increase in both severance costs of $500,000 and foreign currency translation costs of $600,000 Last quarter, we discussed the company's restructuring which would generate annual savings of approximately $2,600,000 moving forward. In the fourth quarter, we continue to rightsize the company in response to customer mix demand. Operating income for the quarter was $900,000 or 1.4% of sales, compared to 3.4% of sales in the year ago period. Net interest income was $94,000 in the fourth quarter, which include $411,000 of interest income on cash balances. This improvement from $175,000 in net interest expense in the prior year quarter. The quarter's effective tax rate was impacted by a full year catch up to a 23.9% for the fiscal year Core, which consists of the weighted tax costs from the three tax jurisdictions where we operate.

We Core a slight net loss for the quarter of $39,000 compared to net income of $2,200,000 or diluted EPS of $0.25 in the comparable year period. Excluding the impact of severance, our fourth quarter and full year 2024 diluted EPS would have been $0.1 and $1.63 respectively. Compared to $0.3 and $2.36 in the same period as in 2023. Our fourth quarter adjusted EBITDA, including adjusted for severance costs, was $5,700,000 or 9.2% of sales compared to $7.1 or 9.6% of sales in the prior year's quarter. Please see our earnings release for the GAAP to non GAAP reconciliation tables. As of 12/31/2024, total outstanding liquidity was $9,000,000 included $41,800,000 of cash plus $50,000,000 available under the revolver and capital credit lines. The company's term debt was $21,500,000 at the end of the quarter, and our debt to trailing Our return on capital employed, a pre tax return metric, was 9.9% on for the full year 2024 and excluding our cash balances was 13.1%. Expect 2025 capital expenditures to be approximately Our capital allocation strategy remains unchanged and includes strategic investments in strategic investment Core invest for growth acquisitions and debt repayment. Entire organization is aligned around our three growth pillars: wallet share growth, sales diversification and growth through acquisition. [indiscernible] will continue to be patient and selective on course M and A, but we have increased our target pipeline over at year ago.

We also understand that both organic and inorganic growth core merrily will provide long term growth enterprise value expansion and strong cash flow generation. We also plan to continue with share repurchases. Under our previously announced share buyback, plan, we repurchased approximately 172,000 shares for the year at an average price of $17.09 per share. We expect full year 2025 prior year. On a year over year comparison, we anticipate the first half twenty twenty five revenues to be down 5% to 10% as the bolo transition continues to impact our revenues. Core the full year 2025, we anticipate that the bolo transition will reduce revenues by approximately $30,000,000 We expect to be able to offset Volvo impact through higher tooling sales as we launch new programs while in the prior year Product revenues from these programs as we launch them and the programs ramp up and product sales increases from forecasted rebounds in the truck market in the second half of the year. Gross margin should remain between 1719% for the full year even with the change in revenue mix to higher tooling sales in 2025 our improvement efforts over the past several years continue to provide ongoing benefits.

Regarding tariffs, most of our raw materials are U. S. Based.

For non U. S.-based raw materials, we will try to mitigate any tariff impact that but we expect that we will have to pass through Core to our customers. We will monitor and adjust our cost structure for any customer demand impact as many of the OEMs we serve have operations in Canada and Mexico. We will work with our customers to determine cost effective ways to produce parts, which may be different a different answer for each customer based on component size and cost.

And with that, I'd like to turn call back over to Dave.

Thank you, John. As discussed last quarter, we are investing in our sales and marketing capabilities Core resources. Alex Vance has joined the organization in our new executive role as Chief Commercial Officer and has been working with our team over the last four months to restructure and transform our sales and marketing team as part of our investor growth initiatives. As with all core successful transformations or must win battles, in the last several years, we first optimized the execution process to meet our future vision we did in 2024, and now we are investing to leverage this to support growth. Our 2025 investor growth initiatives are built around three fundamental pillars and the first two represent the primary focus of Core's sales and marketing team. First, is growing wallet share with our existing large Core and working with customers across our entire portfolio processes between thermoplastics and thermostats. This is a key area where we are employing our voice of the customer process This is what drove our decision to invest in TopCoat Paint and our Matamoros facility. Our camp managers are highly focused on expanding business opportunities through core's existing large customers by engaging and educating on the value of all core processes within the customers' applications.

We have now won a major program or SMC The improvements we made in the operations has increased our capacity and we are actively promoting our many different SMC formulations.

Many large OEM customer relationships rely on our extra expertise and ability to continually support, develop and provide solutions that make their products more valued. OEM customers can and do trust Core Moulding to partner with them and help grow their business. We are deliberately strengthening these relationships to more deeply understand our customer and strategies and our voice to customer process is being embedded into our organization. We need to be first in our customers' minds planning a new product or design.

Second pillar of investor growth is a disciplined execution. For business diversification strategy. We are excited about the new opportunities we have won in new and emerging industries, including construction, industrial, energy and medical.

We We need to accelerate our efforts further our technical solution sales approach can provide. Identifying the highest potential products and customers, and educating the customer on how Core can provide better solutions for their applications is essential to efficiently execute our solution sales process. Our efforts are centered around first understanding what market and applications have the highest potential for coarse processes than increasing the number of leads through trade shows, industry groups and sales agents. We are focusing additional resources where we have advantages which include large, ultra large parts, that are structural or more difficult to produce. Geographic proximity to our plants, or where we identify distinct benefits from our multi process offering. We'll provide more color on these differentiators with examples in a moment.

Our third pillar of investor growth is strategic M and A efforts. As John mentioned, our pipeline of potential transactions is rapidly growing We are actively pursuing one or more of these opportunities. Acquisition is a major part of our diversification strategy. As we understand new markets and use acquisition, to accelerate our growth into these sales channels, expanding our business diversification strategy and completing an acquisition is a priority. Our strategic criteria for acquisition remains as follows. New sales channel access where we know we have process fit and our ability to expand our solutions We are driving to expand product offerings, industries and customer relationships. Number two, geographic locations. Where we do not have locations today opening opportunities for customers where logistics costs for our large parts may have a high burden. Finally, we want processes that will complement our current processes and enable us to grow wallet share.

We fully expect to carry out an acquisition this year The attorneys much prefer that I say expect versus will, So I try to stick with we expect to execute one acquisition this year.

Based on our three pillars supporting Core invest for growth strategy, I'm confident we will again be successful with these initiatives and goals in twenty twenty five. This must happen and we are already seeing the benefits as shown by winning $45,000,000 in new business last year. We continue to develop new relationships in new industries and we know that the most direct way to achieve growth is through working with our current large customers to expand our product offerings. We understand the importance of being first in the customers' mind to industrialize their designs. As I mentioned initially, our sales teams are approaching markets differently and we are always driving the understand the customers' needs. An exciting new opportunity we have won and are now starting production. In the growing construction industry is an ultra large turf protection match. To safely drive heavy equipment onto work sites without sinking into the mud or tearing the ground. These reusable ground protection mats are the perfect solution for many end markets that require large movable equipment for construction, industrial and agricultural projects. Some of these turf mats turf mat roads go a mile to reach projects like wind turbines. These turf mats lay over 800 pounds apiece and there are few competitors that can mold such large structural parts.

We're currently working with that customer to make them even larger and in a single shot on one of our largest presses. It's an exciting new business for Core and it is definitely a unique and high value As I mentioned earlier, we are also developing and providing our sheet molding compound Core SMC as a final product. Currently, we have one business in the home construction industry providing our formulated We produced the SMC and the customer molded to their requirements. There are other large opportunities that we are currently quoting provide our SMC formulations that we believe we have a high chance of winning. They seek a consistent high quality SMC product that has a large processing window and meets the severe environment An example of new and growing profit center for us, which we are actively pursuing. As I mentioned last quarter, we're entering areas like EV, bus, battery trays, hospital bed frames in the medical industry and saw retail product to Big Box Realty. Retailers like fake rocks for residential backyard use.

We know we have the processes organizational capabilities, and assets to drive revenue growth and our goal is to leverage that into the right markets and applications. We excel at high complex highly engineered products, but we also produce simpler products on some processes which can be opportunistic and generate short shorter cycle revenues. We are excited about the potential of these emerging verticals and look forward to introducing more the coming months. These solutions also become a new beachhead to open up new markets and relationships which could be meaningful in large and growing industries, including construction and We're also looking forward to and planning for a peak season in the truck market that begins to ramp up in the back half of twenty twenty five. There are new and interesting potential opportunities in the Power Core segment and we see meaningful opportunities with blue chip companies to expand our offerings in thermoplastics and thermoset. Each proprietary formula and process provides unique solution that is developed to the customers' needs. Lightweight, high strength, corrosion resistance and lower total Core. Both of these are large programs working with large single source customers and require a varying level of validation before production launch.

This creates a business model with a revenue stream characterized by long term programs and large complex single source solutions directly tied to the success of our customers and their markets.

Ultimately, we sell unique solutions that solve a customer's problems or improves an existing traditional design. It takes time to gain acceptance, but we have proven that once Core has demonstrated [indiscernible] we have grown our value with those customers. This is the key to the investor growth strategy.

As part of our investor growth strategy, we're actively rebalancing assets and optimizing costs for long term success. Momentum continues to grow with a strong pipeline of new opportunities in the truck market including quotes for major programs like Volvo. [indiscernible] Increased customer engagement and our presence at trade shows and with the industry groups create valuable connections across new verticals.

Our approach to transforming transformational change is working, and has created and developed an inspired workforce workforce and culture at Core. I continue to be very grateful for the hardworking collaborative team at Core This is John's last earnings conference Core, I want to recognize his hard work and valuable contributions to our transformation journey and more importantly as a friend and business partner. I want to personally thank John for all that he has done for Core to get where we are today. John will continue to be an advisor for the foreseeable future to assist with the M and A work that is accelerating Finally, I want to thank our customers shareholders and the Board for their continued support. Before we get to questions, I would like to share that John, Alex and I plan to participate in the upcoming ROTH Capital Markets Conference Southern California next week. And we hope to see many of you there. With that, I would like to open the line for questions. Operator?

Thank you. We will now begin the question and And your first question today will come from Chip Moore with Ross. Please go ahead.

Core morning. Thanks for look forward to seeing you next week. Good, good.

I wanted to ask, I guess, sort of the right the theme or common topic here just uncertainty, right, in terms of macro and market. Just I guess as you sit here in March, the tone of of what you're seeing from customers and visibility on that full year view. How have things changed Core what are you seeing from customers? Yes, I think good question, Chip. I mean, it's have been kind of saying over the last three or four months what we have seen is that in our pipeline, you see usually in your pipeline, you'll see a lot more at the top end of your pipeline as it's coming in, but we see a lot of our programs where they're right at the quote stage, where they're waiting and waiting for decision, looking at what's happening prior to the new administration now with the talks of the tariffs. So you see a lot of waiting right now. That's where we see on the large programs, whether we get it done in Mexico or in The U. S. US, good for us is that we have facilities in both locations.

So we're usually able to talk with the customer relative to opportunities on those programs. But yes, you see a lot of people that are waiting to see what happens. And lately with the tariffs where it's on, then it's off, then it's on and off, that it makes people pause. [indiscernible] For sure, right. That are growing is like with those turf mats, right. I mean that's really a U. S.-based type consumption to where they're doing windmills or construction out to large open areas and they don't want the tractors to fall in. And some of those I call them turf roads are they could be a mile long. So you're using a lot of those in place and it's a market that may have been covered from external in China, where now it's being moved to The U. S. Not only because it's large and heavy, but the assets that are needed to actually make those parts are pretty specific and is right up our asset base. It fits us very well to where we could actually work with the customer and make larger ones with our largest prefs.

Interesting. Yes. Thanks, Dave. And I guess I guess, the tariffs specifically obviously, right, we've had some in place and then go away rather quickly and we'll see what what happens when things get finalized. I guess in terms of impact on you, it sounds like you've got some ability to shift things around, I guess competitively and how are you thinking about direct impacts? And I guess price pass through as well? Yes. We were pretty clear at the very beginning prior to the first communication that came out from our administration because we are an importer of record coming out of our Matamoros facility into Brownsville. So we would automatically be charged. So what we did is we estimated what that cost would be. It automatically gets put on core.

We set up a process and communicated with all the large customers. That are directly affected to where we are importer on record. How that process would work and surcharges would be passed along with line item So we I mean, I remember last time, two years ago when we went through the raw material increases, we wanted to make sure our lesson learned from that was be on it before it happened. And have a process set up where it's a surcharge to where this is a line item this is how many you ship, it can be validated. And then we set up the PO process with customers on relative to how that's going to get charged and how that we get paid.

Perfect. Okay, very helpful. [indiscernible] And where we might have challenges or risks there and have already reached out to those suppliers and looked at what the extent was or what that how that would pass through. I think the key is as we talked about one of our must win battles on our product line profitability, a lot of the contracts have been changed or we didn't have a contract So these large raw materials would be passed through just like we did same process we did with the material inflation. So good question, Chip. Yes, we've been all over that one. Awesome. Good to hear. And margins in general, it sounds like you're comfortable with the range. And remind me, I thought that that Volvo headwind that actually is probably helps margins a little bit, but maybe some of the other moving pieces around the new paint product in Mexico and SMC sales, how should we think about margins from some of those initiatives [indiscernible] Yes. Chip, I think you kind of remember rightly, our Volvo business was not our highest margin business. So we knew as it was leaving it hurt the top line, but it actually helped the margin line overall I think what we've done over the last two or three years, really we look at the book of business and it's solidly profitable.

So it allows us to actually kind of have the benefit of diversification. It doesn't matter which industry is performing better or worse. We kind of are going to get to that at that range. For the new business, the FMC and those types of things, It's a little bit of a different type of sale. We are selling at a you know good margin because it is our formula that we basically create. So it has unique value to the customer.

Doesn't have a lot of fixed costs involved in it either and you just goes down one SMC line and kind of get to the event and get shipped out. So we're still pretty comfortable even with the change in mix and even with a little bit of more tooling that we stay in that 17 to 19 this year. Really be set up that revenues grow and we re leverage the fixed cost it really allows us to have that flow through the the gross margin going forward. As revenues grow.

Yes. I think that's the key point, Chip. I mean, when we look at where we are as far as we've seen the decrease relative to Volvo and we see some of the market decrease especially in truck and powersports. We know that will come back. We're looking at ACT. We see that starting to come back at the end of this year. And then with all the programs that we're launching, we actually would have had an 8% increase in revenue had it not been for the one big program exiting. We're still quoting on that. We're still looking at how we can support Volvo. But overall, where we've gotten the business now relative to the performance, still being still above 17% gross margin, with the lower revenue and adjusting the overall cost putting fixed SG and A in our plants. Relative to lower sales. When we see sales pick up and we start seeing these programs that we already have won that we're already starting to launch like the turf match we see that as a big benefit for Core.

Perfect, perfect, very helpful. Maybe just one last one guys.

Or John, around the tooling ramp up this year for some of that new business, any way to help frame how much tooling revenue could be up in terms of mix Yes, I think that [indiscernible] [indiscernible] the Volvo will have a $30,000,000 product revenue kind of headwind against us and we'll make up most of that through tooling. We have some huge programs coming out. And so think tooling revenue probably would be in the $30,000,000 to $40,000,000 range this year.

Which again is always good news. Some of it's replacement business, some of it's new business. And so as it's an indicator of future new business, but also indicator of where we got we won. Current business and customers still trust us and wanted us to do their business. So probably in that $40,000,000 range is probably a ballpark of where we would see to lead this year. [indiscernible] Hop back in queue. Thanks very much. Great. Thanks, Jeff.

And your next question today will come from Larry Baumgartner, Private Investor. Please go ahead.

Hey, guys.

First off, just congratulations to John on seeing us through the up and down side Congrats on that you enjoy your retirement. I appreciate that, Larry.

Second question on share repurchase. I see Core repurchased I think you said 172,000 shares at $17 I guess I'm just looking at this from a bigger picture. What acquisition could be possibly leverage your income statement more than just repurchasing your own shares with a lot less risk? Of some kind of acquisitions I mean, over the years, we see acquisitions and not just you guys, but just across the spectrum of companies that most acquisitions are difficult most of them don't work out, And you're sitting here with your stock trading at four or five times EBITDA, I mean, you could do a Dutch auction, you could just use $20,000,000 of your excess cash.

To repurchase shares. I guess I'm wondering how you're looking at that Yes. Larry, the way we look at it is we kind of look at the short term, we look at the long term of the company. We think that we need to take our capital and allocate it amongst several different areas. Share repurchases is a lot of them. We wouldn't say that would be the sole purpose We're still a company that's heavily capital intensive. When we look at acquisitions or organic growth, it can take a lot of capital pretty quick. I agree with you that acquisitions always come with some some risk, probably more risk than just share buybacks, but it's also the future growth of the company We're in the industrial businesses. Long term, we're going to grow consistent with GDP, those types of things. And so we see that the company's growth is really critical at the same time as doing a share repurchase. So doing both is really critical to us. That's the reason I will tell you, we probably are a little bit cautious on acquisitions We do a lot of homework. We understand where our EBITDA range is. We understand what type of acquisition we need to do.

And so we think we need to do both.

And so we don't look at it laterally as let's do one or the other. When I say both and need to do organic growth. We need to be ready when a customer walks in and says, hey, you guys can put $5,000,000 of capital in, we have a $20,000,000 program for you. And that's critical that we have capital to do that also. And so I think we set ourselves up for Core. And we're very disciplined on how we do the capital allocation. But yes, I think you guys still continue to see share repurchases, but we'll be also looking to use the capital for the other areas also. Yes. I mean, you guys have been terrific at not buying in a couple of years ago when you first started talking about acquisitions. And now as profitability has come down across the industry, you're in a much better position to do it. But your stock is down a lot as well. So I guess you got to keep that in mind.

Yes, this balance.

That's also really relative to what you said, Larry, when we were doing the stock repurchase, the shares were $17 a share. Now obviously the finance has changed a little bit when you're $12.5 a share. Yes. I mean, discount to tangible book, $40,000,000 in cash, dollars 20,000,000 in debt. I mean, that's We just said that. [indiscernible] Okay. We'll keep generating the cash and everything will be fine. Thanks guys.

Great. Thanks Larry. Your next question today will come from Bill Dezellem with Tieton Capital. Please go ahead. Thank you. Relative to the new MAT contract, Who is your end customer or who is your customer in this equation? Is it one of the existing MAP players that are just using you in lieu of their own capital expansion. Or are you actually selling the match to the end to the end user of the mats? [indiscernible] the end customer for us is companies like Sunbelt that are renting those out when they rent out the equipment and also these large construction companies usually get them from Sunbelt. And then they do long term rentals while they're parts are in the field or the construction is going on.

And then relative to the second capital year, how much of that uptick in revenue are you anticipating to be from the truck business rebounding versus from the new business starting to kick in. That's non truck related.

I'd say that most of the decrease in the first half of the year is actually the truck related Truck sales last year, ATT truck sales last year, Core in the 80,000, 90,000 units level. And in this year, first half, they're thinking they're kind of in the mid-70s or a little bit higher. And then they're going to ramp back up. And so you'll see a little bit of that. Think it's really a combination of it's going to be the truck, it is going to be something to do for business, I think it's going to be tooling. Tooling is going to really start probably ramping up in Q2, but then is heavier in Q3 and Q4. And then the last part would be that the new revenue from new launches from products. And the reason for that is just really from a timing standpoint. Even if you get it up and running by June 30, it usually doesn't start at 100%. It usually starts to slow ramp. And you ramp up throughout the year. And so I would say that that is the kind of the tail, the last piece of it, it'd be the ramp up of product sales from new business.

Lead sales would probably be even stronger than the product sales right now from that new business.

John, picking up on that, that the tooling sales are larger, they are going to be that large in the second half, is is should we read that as a really strong indication for 2026, if we're talking about pushing $40,000,000 in tooling in the second half of the year.

Yes. I mean, we obviously haven't given a for 'twenty six, but between the truck market and the launch of these new programs, I think going into 2026 that would be really I think right now the way we see the world today '26 should be a really good year. And so that's I think you've already seen a transition year this year. And it's nice to have that much drilling sales to tell you the truth because it really is an indicator of some future sales coming our way.

And usually when you're selling sales Core that high or very large programs. So that's what we're looking at. I mean, if you we usually look at the ramp of the programs with the new business, say get a third to a half of that in Core year that you launch as it ramps up. And then we're also looking at the ACP where 2026 is a peak year.

Of about 350,000 trucks as compared to 25, a 03/10, 03/16. And that starts ramping up the end of the year.

Great. Thank you both. And John, Thanks, Bill.

This concludes our question and answer session. I would like to turn the conference back over to Dave Duvall for any closing remarks.

Thank you for your continued interest in our company and we look forward to providing an update on our progress when we report the first quarter results in May. Have a great day. Thank you.

The conference has now concluded. You for attending today's presentation. You may now disconnect.