Core Molding: Composites, Cables, and a Truck Prebuy

The Ohio-based compounder is turning AI data-center demand and a looming emissions change into growth — while the market watches.

CMT · Earnings Call · 2026-08-04

A Diversified Quarter

Core Molding Technologies posted a second quarter that could easily be read as ho-hum on the headline: production sales fell 1.2% year-over-year. But that masks a powerful shift underneath. Excluding the soft medium- and heavy-duty truck segment, sales across the rest of the portfolio jumped 20.8%. The star was Building Products, up 36%, as previously won programs rolled into production. As CEO Eric Palomaki put it, “we delivered solid performance that reflects the continued resilience of our diversified portfolio and the ongoing execution of our Invest for Growth strategy.” — Eric Palomaki, President and CEO · 2026-08-04 The company has now secured nearly $26 million of new business awards in the first half of 2026, with 65% originating outside its traditional truck and powersports markets. Over the past two years, the haul is more than $112 million. CFO Alex Panda noted on the call that “we are beginning to see production volumes improve and expect sales to continue ramping through the second half of 2026.” — Alex Panda, Chief Financial Officer (CFO) · 2026-08-04

The AI Gambit

The more interesting story is where the new business is coming from. Long known as a supplier of large complex molded parts to truck and powersports OEMs, Core Molding is now chasing the grid. The transcript is laced with talk of AI data center demand, utilities market modernization, and underground data cables. During the quarter, the company "secured a significant award for battery energy storage systems" — a direct play on the power-hungry data center buildout. Palomaki explained the logic:

These markets require durable, lightweight and highly engineered composite products, areas where Core has set the standard in differentiated capabilities with long-standing customer relationships.
Eric Palomaki, President and CEO · 2026-08-04

This is not entirely new — in the prior quarter, management had already flagged a $9 million-per-year battery energy system win with a three-year commitment, noting “we're working with a couple of other customers in the same category of battery energy system” — Eric Palomaki, Chief Operating Officer and incoming President and Chief Executive Officer · 2026-05-08. But the current quarter adds a second, significant, award, and the strategic language has sharpened. The company is increasingly positioning its proprietary SMC compound as a direct substitute for concrete in infrastructure applications — lighter, corrosion-resistant, and easier to install. That push is coming with deliberate capacity planning; on the March call, Palomaki noted “we still have some capacity left for the coming year, although we're getting to the point where in the next 12 to 18 months, we may need to add capacity for compound.” — Eric Palomaki, COO and incoming CEO · 2026-03-10

The Truck Prebuy Puzzle

The truck market, still 40% of sales, is the other half of the story. Management is confident the second half will be stronger, and they cite both industry forecasts and a classic prebuy dynamic tied to the January 1, 2027 emissions regulations. Palomaki walked through the mechanics: “I think it is when they issue the VIN number onto the engine... So you can still deliver that truck that was built December 15... It still qualifies as a 2026 emissions regulation versus if it was built... into '27.” — Eric Palomaki, President and CEO · 2026-08-04 The company expects OEMs to pull production forward into late 2026 to beat the regulatory change — a well-documented behavior from past emissions transitions. That timing dovetails with new program launches and could give Core Molding a meaningful volume bump into 2027.

Balance Sheet Firepower

All of this is being funded from a position of strength. The company ended the quarter with $12.1 million in cash and no debt, and just amended its credit facility to a $100 million capacity (a $50M revolver plus a $50M delayed-draw term loan, both maturing 2031). Management is also broadening its M&A lens. Palomaki noted: “Alex and I have had the chance to visit a number of opportunities already. We're averaging about 1 a month... the focus isn't necessarily on specifically the size, it's how it can be accretive, how it can add diversification to our portfolio.” — Eric Palomaki, President and CEO · 2026-08-04 This is a notable shift from the conservative posture of prior years, when the company was more narrowly focused on organic growth. The bigger balance sheet gives it room to move. The financials tell a mixed but improving story. Gross margin came in at 20.3% (19.4% ex a one-time capacity charge), at the high end of the guided 17-19% range, while adjusted EBITDA margin held at 12.2%. The real gap is return on capital employed — just 5.7% today versus a 14% long-term goal. That gap is the bull case: if the new awards and truck recovery fill capacity, the incremental margins should be disproportionately high. ## The Takeaway Core Molding is no longer just a cyclical compounds maker. It's positioning itself as a play on AI-driven power demand, infrastructure resilience, and a coming truck upcycle — all while cleaning up its balance sheet and eyeing larger deals. The tape is already starting to reward it: the stock is up nearly 10% over the past 90 days and sits within 8% of its 52-week high. The September Investor Day, complete with a plant tour in Matamoros, will be the next test of whether the story sticks.