CMT - AMEX

Good morning, everyone. Welcome to the Core Molding Technologies Fourth Quarter and Full Year Fiscal 2024 Financial Results Conference Call. All participants will be in a listen-only mode. Please note that this event is being recorded. Now, I will turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review the fourth quarter and fiscal 2024 results. Joining me on the call today are the company's President and CEO, Dave Duvall, and EVP and CFO, John

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 ten PPM and the BRP Gold, 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 to 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 2025, and I know we will be successful just like the other must-win battles we have executed. We have the organizational capability, assets, and cash to invest in growth. We are actively engaged in evaluating acquisitions and confident we will execute. Our newly implemented voice of customer process has convinced us to invest in top coat paint capabilities at our Matamoros facility, which is now painting for customers and bringing that value-add process inside. 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 must-win battle, which drove decisions and actions to exit our correct non-profit, we have a high-performing business that is operationally positioned and financially capable of significant growth. We won $45 million 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 2024 was another successful year for the company and a testament to our work over the last three years to stabilize margins despite lower revenues. We finished the year with sales of $302 million, 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 million, 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 2024, 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 chains. 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 million 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, $35 million are either new or replacement sales from existing or past customer relationships. We know this demonstrates the importance of continuing to grow as well as the importance of diversifying our end market 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 translate to an 8% sales growth, which is exciting. We will provide more on our fiscal 2025 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 $302.4 million, down 15.5%, driven by lower demand across our end markets. As signaled throughout 2024, the truck market is in a normal cyclical downturn, and we expect to transition to a cyclical upturn in the second half of 2025 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 target range of 17% to 19%. Full-year adjusted EBITDA was $33.8 million or 11.2%. As Dave mentioned, we generated a record $35.2 million in cash flow from operations, translating to a free cash flow of $23.6 million for the year. Additionally, we invested $11.5 million in capital expenditures in 2024. Sales were $62.5 million for the fourth quarter, down 15.3% due to declines primarily in the truck and tire sports market. Demand in end markets, including industrials, utility, and building products, grew against the prior year quarter, and we expect the rebound in 2025 to continue in these markets as we launch new programs. Our fourth-quarter gross margin was $9.9 million or 15.8% of sales compared to 14.8% in the year-ago quarter. The majority of our cost 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 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 and achieve better customer pricing, we mostly offset lost fixed cost leverage in the fourth quarter. SG&A expenses for the fourth quarter were $9 million compared to $8.4 million 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 $2.6 million moving forward. In the fourth quarter, we continued to rightsize the company in response to customer mix demand. Operating income for the quarter was $0.9 million 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 included $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 23.9% for the fiscal year 2024, which consists of the weighted tax costs from the three tax jurisdictions where we operate. We report a slight net loss for the quarter of $39,000 compared to net income of $2.2 million 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 $0.10 and $1.63, respectively, compared to $0.30 or $2.36 in the same period as in 2023. Our fourth-quarter adjusted EBITDA, including adjusted for severance costs, was $5.7 million or 9.2% of sales compared to $7.1 million 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 December 31, 2024, total outstanding liquidity was $91.8 million, which included $41.8 million of cash plus $50 million available under the revolver and capital credit lines. The company's term debt was $21.5 million at the end of the quarter, and our debt to trailing twelve months EBITDA ratio continues to be less than one. Our return on capital employed, a pre-tax return metric, was 9.9% for the full year 2024, and excluding our cash balance, we expect 2025 capital expenditures to be approximately $10 million to $12 million. Our capital allocation strategy remains unchanged and includes strategic investments in strategic investment for invest-for-growth acquisitions and debt repayment. The entire organization is aligned around our three growth pillars: wallet share growth, sales diversification, and growth through acquisition. We will continue to be patient and selective on core M&A, but we have increased our target pipeline over a 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 buybacks plan. We repurchased approximately 172,000 shares for the year at an average price of $17.09 per share. We expect full-year 2025 net sales to be essentially flat compared to the prior year, but on a year-over-year comparison, we anticipate the first half of 2025 revenues to be down 5% to 10% as the Volvo transition continues to impact our revenues. For the full year 2025, we anticipate that the Volvo transition will reduce revenues by approximately $30 million. We expect to be able to offset the 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 17% and 19% 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 US-based. For non-U.S.-based raw materials, we will try to mitigate any tariff impact, but we expect that we will have to pass through costs 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 Ghana and Mexico. We will work with our customers to determine cost-effective ways to produce parts, which may be a different answer for each customer based on component size and cost. And with that, I'd like to turn the call back over to Dave.

Thank you, John. As discussed last quarter, we are investing in our sales and marketing capability and 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 invest-for-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 customers by directly engaging early in the design phase 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 TopCo paint in 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 customer's applications. We have now won a major program in construction where we are providing the compounded sheet molding compound or SMC. The improvements we made in the operations have increased our capacity, and we are actively promoting our many different SMC formulations. Many large OEM customer relationships rely on our expertise and ability to continually support, develop, and provide solutions to make their products more valued. OEM customers can and do trust Core Molding to partner with them and help grow their business. We are deliberately strengthening these relationships to more deeply understand our customers' needs and strategies, and our voice to customer process is being embedded into our organization. We need to be first in our customers' minds when planning a new product or design. The second pillar of investor growth is 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 need to accelerate our efforts to further improve our abilities to support customers with unique high-value solutions by directly engaging with customers to help solve their product problems and demonstrate the value 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 markets and applications have the highest potential for Core's processes and 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 and ultra-large parts that are structural or more difficult to produce, geographic proximity to our plants, or where we identify distinct benefits from our multiprocess offering. We'll provide more color on these differentiators with examples in a moment. Our third pillar of investor growth is strategic M&A efforts. As John mentioned, our pipeline of potential transactions is rapidly growing, and 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 the sales channels, expanding our business diversification strategy and completing an acquisition is a priority. Our strategic criteria for acquisition remain as follows: new sales channel access where we know we have a 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 or 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's invest-for-growth strategy, I'm confident we will again be successful with these initiatives and goals in 2025. This must happen, and we are already seeing the benefits as shown by winning $45 million 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 to understand a customer's needs. An exciting new opportunity we have won and are now starting production in the growing construction industry is an ultra-large turf protection mat to safely drive heavy equipment onto worksites without sinking into the mud or tearing up the ground. These reusable ground protection mats are the perfect solution for many end markets that require large movable equipment for construction, industrial, and some of these turf mats roads go a mile to reach projects like wind turbines. These turf mats weigh over 800 pounds a piece, and there are a 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. An exciting new business for Core, and it is definitely a unique and high-value solution. As I mentioned earlier, we are also developing and providing our sheet molding compound or SMC as a final product. Currently, we have won business in the home construction industry providing our formulated solution. Produced the SMC, and the customer molded to their requirements. There are other large opportunities that we are currently quoting to 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 of their application. An example of a 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 products 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. Our goal is to leverage that into the right markets and applications. We excel at high complex, highly engineered products, but we also produce simple products on some processes, which can be opportunistic and generate shorter cycle revenues. We are excited about the potential of these emerging verticals and look forward to introducing more in 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 industrial applications. We're also looking forward to and planning for a peak season in the truck market by 2026, that begins to ramp up in the back half of 2025. There are new and interesting potential opportunities in the power sports segment, and we see meaningful opportunities with blue-chip companies to expand our offerings in thermoplastics and thermoset. Each proprietary formula and process provides a unique solution that is developed to the customers' needs. Lightweight, high strength, corrosion resistance, and lower total cost. 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 in their markets. Ultimately, we sell unique solutions that solve a customer's problems or improve an existing traditional design. It takes time to gain acceptance, but we have proven that once Core has demonstrated its capabilities, 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. Our momentum continues to grow with a strong pipeline of new opportunities in the truck market, including quotes for major programs like Volvo. Increased customer engagement and our presence at trade shows and with the industry groups create valuable connections across new verticals. Our approach to transformational change is working and has created and developed an inspired 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 call, and 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 adviser for the foreseeable future to assist. 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 in Southern California next week. And we hope to see many of you there. With that, I would like to open the line for questions.

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

Good morning. Thanks for looking forward to seeing you next week. Good. Good. I wanted to ask, I guess, sort of the right. The theme or common topic here is just uncertainty, right, in terms of macro and market. Just, I guess, as you sit here in March, you know, the tone of what you're seeing from customers and visibility, you know, on that full-year view. Know, how have things changed or what are you seeing from customers?

Yeah. I think good question, Chip. I mean, it's been kind of saying over the last three or four months, what we've 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 a 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 you on the large programs, whether we can get it done in Mexico or in the 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, yeah, you see a lot of people that are waiting to see what happens. And, you know, lately with the tariffs where it's on, then it's off, then it's on and off. That it makes people pause.

Yeah. For sure. Right. Are growing is like with those turf mats. Right? I mean, that's really a US-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 US. 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 reps.

Interesting. Yeah. Thanks, Dave. And I guess you know, I guess, the tariffs specifically, you know, obviously, right, we've had some in place and then go away rather quickly, and we'll see what happens when things get finalized. But I guess, you know, in terms of impact on you, it sounds like you know, you've got some ability to shift things around, I guess, competitively. And you know, how are you thinking about direct impacts? And I guess, you know, price pass-through as well.

Yeah. We were pretty clear at the very beginning prior to the first communication that came out from our administration because we are the 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 it with all the large customers that are directly affected to where we are the importer on record. How that process would work, and surcharges would be passed along with line item details to the customer. So I mean, I remember last time, you know, two years ago when we went through the raw material increases, we wanted to make sure our lesson learned from that was to be on it before it happened. And have a process set up where it says surcharge where this is the line item, is how many you shipped. It can be validated. And then we set up the PO process with customers on relative to how that's gonna get charged and how they would get paid.

Perfect. Perfect. Okay. Very helpful. Maybe if I can ask another to our supply base and where we might have challenges or risk there is we 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, the same process we did with the material inflation. So good question, Chip. Yeah. 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 you know, that Volvo headwind that actually is probably helps margins a little bit. But maybe some of the other moving pieces around, you know, the new paint product and mix and SMC, you know, sales. How should we think about margins from some of those initiatives?

Yeah. Know, Chip, I think you kind of remember rightly, you know, our Volvo business was not our highest margin business, so we knew as it was leaving. You know, it hurt the top line, but it actually, you know, helped the margin line overall. You know, 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. Know, it so it allows us to actually kind of have the benefit of diversification. It doesn't matter which end is performing better or worse. We kind of are gonna get that at that range. You know, 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 cost involved in it either. It usually just goes down one SMC line and, you know, kind of gets to the bed and gets shipped out. So we're still pretty comfortable even with the change in mix and even with a little bit of fortunately that we stay in that 17% to 19% this year. Really be set up that, you know, if revenues grow and we re-leverage the fixed cost, it really allows us to have that flow through the gross margin going forward, you know, as revenues grow.

Yes. That's a 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 power sports. 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, you know, we actually would have had an 8% increase in revenue had it not been for, you know, the one big program. And 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, the lower revenue and adjusting the overall cost structure being fixed, SG&A, and 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 Mats, 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, some of that new business. Any way to help frame, you know, how much tooling revenue could be up in terms of mix?

Yeah. I think that, you know, I think we're kind of given some, you know, the Volvo will have a $30 million 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, you know, I think tooling revenue probably would be in the $30 to $40 million range this year. Which again is always good news. Some of it's replacement business, some of it's new business. And so it's that's it's an indicator of future new business, but also to current business and customers still trust us and wanted us to do their business. So but so probably in that in that $40 million range is probably a ballpark of where we see tooling to churn.

Perfect. Perfect. Okay. I'll hop back in queue. Thanks very much.

Great. Thanks, Jeff.

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

Hey, guys. First off, just congratulations to John on being us through the and down cycles and his oversight of the company for such a long time. Congrats. I hope you enjoy your retirement.

I appreciate that, Larry.

Second question on share repurchase. I see you repurchased, I think you said one hundred and 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 not just you guys, but just across the spectrum of companies. Most acquisitions are difficult most of them don't work out, and you're sitting here with your stock trading it you know, four or five times EBITDA, I mean, you could do a Dutch auction. You could just use $20 million of your excess cash to repurchase shares. I guess I'm wondering how you're looking at that.

Yeah. 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 one of them. We wouldn't say that would be the sole purpose. You know, 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, you know, acquisitions always come with some risk, probably more risk than just share buybacks, but it's also the future growth of the company. You know, we're in the industrial businesses. That, you know, long term, we're gonna grow consistent with GDP, those types of things. And so, you know, 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, you know, acquisitions. We do a lot of homework. We understand where our EBITDA is. We understand what type of acquisition we need to do. You know? And so we think we need to do both. You know, and so we don't look at it unilaterally as let's do one or the other. And when I say both, and we need to do organic growth. We need to be ready a customer walks in and says, hey, you guys can put $5 million of capital in. We have a $20 million program for you. And that's critical that we have capital do that also. And so I think we set ourselves up for that. And we're very disciplined on how we do the capital allocation, But, yeah, I think you guys still continue to see share repurchases, but you know, we'll be also looking to use the capital for the other areas also.

Yeah. 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's down a lot as well. So I guess you gotta keep that in mind. 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 $12.50 a share.

Yeah. I mean, discount to tangible book, $40 million in cash, $20 million in debt. I mean, that's We just said that. It's a pretty big joke. Said that. Exactly. Word.

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?

Yeah. So, really, 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 the parts are in the field or the construction's going on.

Great. That's very helpful. And then relative to the second half of the 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.

You know, 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, were in the eighty thousand, ninety thousand units level. And this year, first half, they're taking their kind of in the mid-seventies or a little bit higher. And then they're gonna ramp back up so you'll see a little bit of that. I think it's really a combination of gonna be the truck. It is gonna be something to do for business. I think it's gonna be tooling. Tooling's gonna, you know, really start probably ramping up in Q2, but then if heavier in Q3 and Q4. 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 30th, it usually doesn't start at 100%. It usually starts a 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. Of these sales would probably be even stronger than the product sales right now for that new business.

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

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

Yeah. And usually when you're selling sales or that high, they're very large programs.

So that's what we're looking at. I mean, if you we usually look at the ramp, the programs with the new business, say, you get a third to a half of that in your year that you launch as it ramps up. And then we're also looking at the ACP where 2026 is a peak year for about 350,000 trucks as compared to 2025. It's a 310, 316. And that starts ramping up the end of the year.

Great. Thank you both. And John, they don't have to quite say.

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.