UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


X☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ____________ Toto

Commission File Number 001-12505

CORE MOLDING TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

31-1481870

(State or other jurisdiction

incorporation or organization)

(I.R.S. Employer Identification No.)

800 Manor Park Drive, Columbus, Ohio

43228-0183

(Address of principal executive office)

(Zip Code)

Registrant’s telephone number, including area code (614) 870-5000

N/A

Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer,” and “smaller reporting company,” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated Filer ¨

Smaller reporting company

☒

(Do not check if a smaller reporting company)

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Trading Symbol

Common Stock, par value $0.01

NYSE American LLC

CMT

As of ~~November 5, 2021,~~May 9, 2022, the latest practicable date, ~~8,715,785~~8,697,482 shares of the registrant’s common stock were issued, which includes ~~632,506~~427,320 shares of unvested restricted common stock.

Table of Contents


Part I — Financial Information

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Operations			3

Consolidated Statements of Comprehensive Income ~~(Loss)~~			4

Consolidated Balance Sheets			5

Consolidated Statement of Stockholders’ Equity			6

Consolidated Statements of Cash Flows			87

Notes to Consolidated Financial Statements			98

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2321

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3027

Item 4. Controls and Procedures			3128

Part II — Other Information

Item 1. Legal Proceedings			3229

Item 1A. Risk Factors			3229

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3229

Item 3. Defaults Upon Senior Securities			3229

Item 4. Mine Safety Disclosures			3229

Item 5. Other Information			3229

Item 6. Exhibits			3229

Signatures			3330

Index to Exhibits			3 1

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

Core Molding Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except for per share data)

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,			Three months ended March 31,
		2021		2020			2021			2020			2022		2021
Net sales	Net sales	$	81,025	$	59,873		$	234,315		$	161,705	Net sales	$	90,592	$	72,829

Cost of sales	Cost of sales	74,610		49,035			201,446			137,192		Cost of sales	76,085		60,111

Gross margin	Gross margin	6,415		10,838			32,869			24,513		Gross margin	14,507		12,718

Selling, general and administrative expense	Selling, general and administrative expense	8,808		6,517			23,744			17,136		Selling, general and administrative expense	8,495		7,372

Operating income (loss)		(2,393)		4,321			9,125			7,377
Operating income												Operating income	6,012		5,346

Other income and expense	Other income and expense											Other income and expense
Interest expense	Interest expense	563		966			1,725			3,338		Interest expense	541		579
Net periodic post-retirement benefit	Net periodic post-retirement benefit	(40)		(20)			(120)			(60)		Net periodic post-retirement benefit	(31)		(40)
Total other expense	Total other expense	523		946			1,605			3,278		Total other expense	510		539

Income (loss) before taxes		(2,916)		3,375			7,520			4,099
Income before taxes												Income before taxes	5,502		4,807

Income tax expense (benefit)		396		32			3,290			(4,933)
Income tax expense												Income tax expense	1,638		1,351

Net income (loss)		$	(3,312)	$	3,343		$	4,230		$	9,032
Net income												Net income	$	3,864	$	3,456

Net income (loss) per common share:
Net income per common share:												Net income per common share:
Basic	Basic	$	(0.41)	$	0.39		$	0.50		$	1.08	Basic	$	0.46	$	0.41
Diluted	Diluted	$	(0.41)	$	0.39		$	0.50		$	1.08	Diluted	$	0.46	$	0.41

See notes to unaudited consolidated financial statements.

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Core Molding Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income ~~(Loss)~~

(In thousands)

(Unaudited)

Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
Net income (loss) $ (3,312) $ 3,343 $ 4,230 $ 9,032
Other comprehensive income (loss):
Foreign currency hedging derivatives:
Unrealized hedge gain (loss) — 415 — (456)
Income tax benefit (expense) — (88) — 98
Interest rate swaps:
Unrealized hedge gain (loss) — 172 — (550)
Income tax benefit (expense) — (39) — 125
Post-retirement benefit plan adjustments:
Amortization of net actuarial loss 43 46 130 136
Amortization of prior service credits (124) (124) (372) (372)
Income tax benefit 18 17 51 50
Comprehensive income (loss) $ (3,375) $ 3,742 $ 4,039 $ 8,063


	Three months ended March 31,
	2022		2021
Net income	$	3,864	$	3,456

Other comprehensive income:









Post-retirement benefit plan adjustments:
Amortization of net actuarial loss	43		43
Amortization of prior service credits	(124)		(124)
Income tax benefit	17		17

Comprehensive income	$	3,800	$	3,392

See notes to unaudited consolidated financial statements.

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Core Molding Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except for share data)

(Unaudited)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets:	Assets:					Assets:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	615	$	4,131	Cash and cash equivalents	$	1,326	$	6,146
Accounts receivable, net	Accounts receivable, net	39,427		27,584		Accounts receivable, net	52,292		35,261
Inventories, net	Inventories, net	22,410		18,360		Inventories, net	28,399		25,129
Income tax receivable		2,601		2,026
Foreign tax receivable		4,317		1,916

Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,613		2,461		Prepaid expenses and other current assets	7,213		8,606
Total current assets	Total current assets	70,983		56,478		Total current assets	89,230		75,142

Right of use asset	Right of use asset	3,631		2,754		Right of use asset	5,081		5,577
Property, plant and equipment, net	Property, plant and equipment, net	74,377		74,052		Property, plant and equipment, net	76,046		75,897

Goodwill	Goodwill	17,376		17,376		Goodwill	17,376		17,376
Intangibles, net	Intangibles, net	10,054		11,516		Intangibles, net	9,080		9,567
Other non-current assets	Other non-current assets	3,033		3,332		Other non-current assets	3,073		3,133
Total Assets	Total Assets	$	179,454	$	165,508	Total Assets	$	199,886	$	186,692

Liabilities and Stockholders’ Equity:	Liabilities and Stockholders’ Equity:					Liabilities and Stockholders’ Equity:
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	3,774	$	2,535	Current portion of long-term debt	$	3,984	$	3,943
Revolving debt	Revolving debt	2,320		420		Revolving debt	4,835		4,424
Accounts payable	Accounts payable	24,149		16,994		Accounts payable	33,420		22,695
Taxes payable		2,557		2,613

Contract liability	Contract liability	3,062		1,319		Contract liability	6,737		6,256

Compensation and related benefits	Compensation and related benefits	7,269		8,305		Compensation and related benefits	6,972		7,532
Accrued other liabilities	Accrued other liabilities	4,292		3,809		Accrued other liabilities	7,324		8,202
Total current liabilities	Total current liabilities	47,423		35,995		Total current liabilities	63,272		53,052

Other non-current liabilities	Other non-current liabilities	2,742		2,560		Other non-current liabilities	4,255		4,605
Long-term debt	Long-term debt	22,252		25,198		Long-term debt	20,239		21,251
Post-retirement benefits liability	Post-retirement benefits liability	7,745		7,823		Post-retirement benefits liability	7,723		7,689
Total Liabilities	Total Liabilities	80,162		71,576		Total Liabilities	95,489		86,597
Commitments and Contingencies	Commitments and Contingencies	—		—		Commitments and Contingencies	—		—
Stockholders’ Equity:	Stockholders’ Equity:					Stockholders’ Equity:
Preferred stock — $0.01 par value, authorized shares — 10,000,000; no shares outstanding at September 30, 2021 and December 31, 2020		—		—
Common stock — $0.01 par value, authorized shares – 20,000,000; outstanding shares 8,083,279 at September 30, 2021 and 7,980,516 at December 31, 2020		81		80
Preferred stock — $0.01 par value, authorized shares — 10,000,000; no shares outstanding at March 31, 2022 and December 31, 2021						Preferred stock — $0.01 par value, authorized shares — 10,000,000; no shares outstanding at March 31, 2022 and December 31, 2021	—		—
Common stock — $0.01 par value, authorized shares – 20,000,000; outstanding shares: 8,270,162 at March 31, 2022 and 8,235,740 at December 31, 2021						Common stock — $0.01 par value, authorized shares – 20,000,000; outstanding shares: 8,270,162 at March 31, 2022 and 8,235,740 at December 31, 2021	83		82
Paid-in capital	Paid-in capital	37,543		36,127		Paid-in capital	38,514		38,013
Accumulated other comprehensive income, net of income taxes	Accumulated other comprehensive income, net of income taxes	1,184		1,375		Accumulated other comprehensive income, net of income taxes	1,011		1,075
Treasury stock - at cost, 3,818,166 shares at September 30, 2021 and 3,810,929 shares at December 31, 2020		(28,617)		(28,521)
Treasury stock - at cost, 3,818,166 shares at March 31, 2022 and December 31, 2021						Treasury stock - at cost, 3,818,166 shares at March 31, 2022 and December 31, 2021	(28,617)		(28,617)
Retained earnings	Retained earnings	89,101		84,871		Retained earnings	93,406		89,542
Total Stockholders’ Equity	Total Stockholders’ Equity	99,292		93,932		Total Stockholders’ Equity	104,397		100,095
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	179,454	$	165,508	Total Liabilities and Stockholders’ Equity	$	199,886	$	186,692

See notes to unaudited consolidated financial statements.

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Core Molding Technologies, Inc. and Subsidiaries

Consolidated Statement of Stockholders’ Equity

(In thousands, except for share data)

(Unaudited)

For the three months ended ~~September 30, 2020:~~March 31, 2021:

Common Stock
Outstanding Paid-In
Capital Accumulated
Other
Comprehensive
Income Treasury
Stock Retained
Earnings Total
Stockholders'
Equity
Shares Amount
Balance at June 30, 2020 7,965,289 $ 80 $ 35,476 $ 2 $ (28,501) $ 82,395 $ 89,452
Net income 3,343 3,343
Change in post-retirement benefits, net of tax $17 (61) (61)
Change in unrealized foreign currency hedge, net of tax $88 327 327
Change in interest rate swaps, net of tax $39 133 133
Purchase of treasury stock (4,574) (20) (20)
Restricted stock vested 11,158 — —
Share-based compensation 355 355
Balance as of September 31, 2020 7,971,873 $ 80 $ 35,831 $ 401 $ (28,521) $ 85,738 $ 93,529
For the nine months ended September 30, 2020:
Common Stock
Outstanding Paid-In
Capital Accumulated
Other
Comprehensive
Income Treasury
Stock Retained
Earnings Total
Stockholders'
Equity
Shares Amount
Balance at December 31, 2019 7,877,945 $ 79 $ 34,772 $ 1,370 $ (28,501) $ 76,706 $ 84,426
Net income 9,032 9,032
Change in post-retirement benefits, net of tax $50 (186) (186)
Change in unrealized foreign currency hedge, net of tax $98 (358) (358)
Change in interest rate swaps, net of tax $125 (425) (425)
Purchase of treasury stock (4,574) (20) (20)
Restricted stock vested 98,502 1 1
Share-based compensation 1,059 1,059
Balance as of September 30, 2020 7,971,873 $ 80 $ 35,831 $ 401 $ (28,521) $ 85,738 $ 93,529

~~Table of Contents~~


	Common Stock Outstanding			Paid-In Capital		Accumulated Other Comprehensive Income		Treasury Stock		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2020	7,980,516	$	80	$	36,127	$	1,375	$	(28,521)	$	84,871	$	93,932
Net income										3,456		3,456
Change in post-retirement benefits, net of tax $17						(64)						(64)
Purchase of treasury stock	(3,874)							(47)				(47)
Restricted stock vested	11,158	—										—
Share-based compensation				318								318
Balance at March 31, 2021	7,987,800	$	80	$	36,445	$	1,311	$	(28,568)	$	88,327	$	97,595

For the three months ended September 30, 2021
Common Stock
Outstanding Paid-In
Capital Accumulated
Other
Comprehensive
Income Treasury
Stock Retained
Earnings Total
Stockholders'
Equity
Shares Amount
Balance at June 30, 2021 8,040,748 $ 80 $ 36,931 $ 1,247 $ (28,568) $ 92,413 $ 102,103
Net loss (3,312) (3,312)
Change in post-retirement benefits, net of tax $18 (63) (63)
Purchase of treasury stock (3,363) (49) (49)
Restricted stock vested 45,894 1 1
Share-based compensation 612 612
Balance at September 30, 2021 8,083,279 $ 81 $ 37,543 $ 1,184 $ (28,617) $ 89,101 $ 99,292

For the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

Common Stock
Outstanding Paid-In
Capital Accumulated
Other
Comprehensive
Income Treasury
Stock Retained
Earnings Total
Stockholders'
Equity
Shares Amount
Balance at December 31, 2020 7,980,516 $ 80 $ 36,127 $ 1,375 $ (28,521) $ 84,871 $ 93,932
Net income 4,230 4,230
Change in post-retirement benefits, net of tax $51 (191) (191)
Purchase of treasury stock (7,237) (96) (96)
Restricted stock vested 110,000 1 1
Share-based compensation 1,416 1,416
Balance at September 30, 2021 8,083,279 $ 81 $ 37,543 $ 1,184 $ (28,617) $ 89,101 $ 99,292


	Common Stock Outstanding			Paid-In Capital		Accumulated Other Comprehensive Income		Treasury Stock		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2021	8,235,740	$	82	$	38,013	$	1,075	$	(28,617)	$	89,542	$	100,095
Net income										3,864		3,864
Change in post-retirement benefits, net of tax $17						(64)						(64)



Restricted stock vested	34,422	1										1
Share-based compensation				501								501
Balance at March 31, 2022	8,270,162	$	83	$	38,514	$	1,011	$	(28,617)	$	93,406	$	104,397

See notes to unaudited consolidated financial statements.

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Core Molding Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Nine months ended September 30,					Three months ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	4,230	$	9,032	Net income	$	3,864	$	3,456
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:						Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	9,273		8,425		Depreciation and amortization	3,125		3,049
Loss on disposal of property, plant and equipment		625		—
Deferred income tax		(595)		517

Share-based compensation	Share-based compensation	1,416		1,059		Share-based compensation	501		318
Losses on foreign currency translation		214		203
Losses on foreign currency remeasurement						Losses on foreign currency remeasurement	240		235
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable	Accounts receivable	(11,843)		6,118		Accounts receivable	(17,031)		(13,218)
Inventories	Inventories	(4,050)		6,449		Inventories	(3,270)		(2,013)
Prepaid and other assets	Prepaid and other assets	(1,829)		(747)		Prepaid and other assets	1,502		903
Accounts payable	Accounts payable	6,841		(2,053)		Accounts payable	10,407		8,283
Accrued and other liabilities	Accrued and other liabilities	1,085		2,238		Accrued and other liabilities	(948)		(1,385)
Post-retirement benefits liability	Post-retirement benefits liability	(319)		(189)		Post-retirement benefits liability	(47)		(140)
Net cash provided by operating activities		5,048		31,052
Net cash used in operating activities						Net cash used in operating activities	(1,657)		(512)

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(8,301)		(2,716)		Purchase of property, plant and equipment	(2,482)		(2,436)
Net cash used in investing activities	Net cash used in investing activities	(8,301)		(2,716)		Net cash used in investing activities	(2,482)		(2,436)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Gross repayments on revolving line of credit	Gross repayments on revolving line of credit	(9,707)		(59,356)		Gross repayments on revolving line of credit	(37,444)		(5,915)
Gross borrowings on revolving line of credit	Gross borrowings on revolving line of credit	11,607		47,349		Gross borrowings on revolving line of credit	37,855		8,496
Payments related to the purchase of treasury stock	Payments related to the purchase of treasury stock	(96)		(20)		Payments related to the purchase of treasury stock	—		(47)
Payment of deferred loan costs	Payment of deferred loan costs	(2)		(140)		Payment of deferred loan costs	—		(2)
Proceeds from term loan		—		175

Payment of principal on term loans	Payment of principal on term loans	(2,065)		(3,391)		Payment of principal on term loans	(1,092)		(688)
Net cash used in financing activities		(263)		(15,383)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(681)		1,844

Net change in cash and cash equivalents	Net change in cash and cash equivalents	(3,516)		12,953		Net change in cash and cash equivalents	(4,820)		(1,104)

Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	4,131		1,856		Cash and cash equivalents at beginning of period	6,146		4,131

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	615	$	14,809	Cash and cash equivalents at end of period	$	1,326	$	3,027

Cash paid for:	Cash paid for:					Cash paid for:
Interest	Interest	$	1,376	$	3,523	Interest	$	420	$	467
Income taxes	Income taxes	$	4,313	$	467	Income taxes	$	2,198	$	2,560
Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Fixed asset purchases in accounts payable	Fixed asset purchases in accounts payable	$	123	$	146	Fixed asset purchases in accounts payable	$	513	$	99

See notes to unaudited consolidated financial statements.

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Core Molding Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States of America for interim reporting, which are less than those required for annual reporting. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (all of which are normal and recurring in nature) necessary to present fairly the financial position of Core Molding Technologies, Inc. and its subsidiaries (“Core Molding Technologies” or the “Company”) at ~~September 30, 2021,~~March 31, 2022, and the results of operations and cash flows for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The Company has reclassified certain prior-year amounts to conform to the current year's presentation. The “Notes to Consolidated Financial Statements” contained in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, should be read in conjunction with these consolidated financial statements.

Core Molding Technologies and its subsidiaries operate in the ~~composites~~engineered materials market as 1one operating segment as a molder of thermoplastic and thermoset structural products. ~~The Company's operating segment consists of 1 reporting unit.~~ The Company produces and sells molded products for varied markets, including medium and heavy-duty trucks, ~~automobiles, marine, construction~~power sports, building products, industrial and ~~agriculture, building products~~utilities and other commercial markets. The Company offers customers a wide range of manufacturing processes to fit various program volume and investment requirements. These processes include compression molding of sheet molding compound ("SMC"), resin transfer molding ("RTM"), liquid molding of dicyclopentadiene ("DCPD"), spray-up and hand-lay-up, direct long-fiber thermoplastics ("D-LFT") and structural foam and structural web injection molding ("SIM"). Core Molding Technologies has its headquarters in Columbus, Ohio, and operates ~~seven~~six production facilities in ~~Columbus~~three countries, the United States, Canada and Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota; Matamoros and Escobedo, Mexico; and Cobourg, Ontario, Canada. All production facilities produce structural composite products. On November 5, 2020, the Company announced it will close the manufacturing facility located in Batavia, Ohio and is expected to complete the closure in the fourth quarter of 2021.Mexico.

2. CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Principles of Consolidation: Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates ~~due to the uncertainty around the magnitude~~under different assumptions and ~~duration of the COVID-19 pandemic, as well as other factors.~~conditions.

Revenue Recognition:The Company ~~recognizes~~historically has recognized revenue from two streams, product revenue and tooling revenue. Product revenue is earned from the manufacture and sale of ~~thermoplastic~~sheet molding compounds and thermoset ~~structural~~and thermoplastic products. Revenue from product sales is generally recognized as products are shipped, as the Company transfers ~~title and risk of ownership~~control to the customer and is entitled to ~~payment.~~payment upon shipment. In ~~limited~~certain circumstances, the Company recognizes revenue from product sales when products are produced and the customer takes ~~title and risk of ownership~~control at ~~the Company's~~our production facility.

Tooling revenue is earned from manufacturing multiple tools, molds and assembly equipment as part of a tooling program for a customer. Given that the Company is providing a significant service of producing highly interdependent component parts of the tooling program, each tooling program consists of a single performance obligation to provide the customer the capability to produce a single product. Based on the arrangement with the customer, the Company recognizes revenue either at a point in time or over ~~time.~~a given period. When the Company does not have an enforceable right to payment, the Company recognizes tooling revenue at a point in time. In such cases, the Company recognizes revenue upon customer acceptance, which is when the customer has legal title to the tools.

Certain tooling programs include an enforceable right to payment. In those cases, the Company recognizes revenue over time based on the extent of progress towards completion of its performance obligation. The Company uses a cost-to-cost measure of

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progress for such contracts because it best depicts the transfer of value to the customer and also correlates with the amount of consideration to which the entity expects to be ~~entitled~~titled in exchange for transferring the promised goods or services to the customer. Under the cost-to-cost measure of progress, progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred.

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Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash is held primarily in three banks in three separate jurisdictions. The Company had $1,326,000 cash on hand at March 31, 2022 and had $6,146,000 cash on hand at December 31, 2021.

Accounts Receivable Allowances: Management maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company ~~recorded an~~has determined that a $32,000 allowance for doubtful accounts ~~of $107,000~~is needed at March 31, 2022 and ~~$41,000~~$90,000 at ~~September 30, 2021 and~~ December 31, ~~2020, respectively.~~

2021. Management also records ~~an allowance~~estimates for ~~estimated~~ customer ~~chargebacks~~returns and deductions, discounts offered to customers, and for price adjustments. Should customer returns ~~price~~and deductions, discounts, and price adjustments premium freight and expediting costs and customer production line disruption costs resulting from late deliveries. At times, customers have asserted a right to significant production line disruption charges to recover damages as a result of late delivery. The Company typically works with its customers to minimize disruption charges, validate damages and negotiate resolution. The Company records accruals for customer chargebacks when a valid charge is probable and the amount of the charge can be reasonably estimated. Should customer chargebacks fluctuate from the estimated amounts, additional allowances may be ~~necessary.~~required. The Company ~~reduced accounts receivable~~had an allowance for estimated chargebacks ~~by $611,000~~of $255,000 at ~~September 30, 2021~~March 31, 2022 and ~~$179,000~~$222,000 at December 31, ~~2020.~~2021. There have been no material changes in the methodology of these calculations.

Inventories: Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or net realizable value. The inventories are accounted for using the first-in, first-out (FIFO) method of determining inventory costs. Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based on historical and anticipated usage. The Company has recorded an allowance for slow moving and obsolete inventory of ~~$268,000~~$451,000 at ~~September 30, 2021~~March 31, 2022 and ~~$546,000~~$362,000 at December 31, ~~2020.~~2021.

Contract Assets/Liabilities: Contract assets and liabilities represent the net cumulative customer billings, vendor payments and revenue recognized for tooling programs. For tooling programs where net revenue recognized and vendor payments exceed customer billings, the Company recognizes a contract asset. For tooling programs where net customer billings exceed revenue recognized and vendor payments, the Company recognizes a contract liability. Customer payment terms vary by contract and can range from progress payments based on work performed or one single payment once the contract is completed. The Company has recorded contract assets of ~~$104,000~~$443,000 at ~~September 30, 2021,~~March 31, 2022, and ~~$554,000~~$17,000 at December 31, ~~2020.~~2021. Contract assets are generally classified as current within prepaid expenses and other current assets inon the Consolidated Balance Sheets. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company recognized no impairments on contract assets. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company recognized ~~$4,867,000~~$432,000 amount of revenue from contract liabilities related to open jobs outstanding as of December 31, ~~2020.~~2021.

Income Taxes: The Company evaluates the balance of deferred tax assets that will be realized based on the premise that the Company is ~~more likely than not~~more-likely-than-not to realize deferred tax benefits through the generation of future taxable income.

Long-Lived Assets: Long-lived assets consist primarily of property, plant and equipment and definite-lived intangibles. The recoverability of long-lived assets is evaluated by an analysis of operating results and consideration of other significant events or changes in the business environment. The Company evaluates whether impairment exists for property, plant and equipment on the basis of undiscounted expected future cash flows from operations before interest. There ~~was~~were no impairment charges of the Company’s long-lived assets for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020.~~respectively.

Goodwill: The purchase consideration of acquired businesses ~~have~~has been allocated to the assets and liabilities acquired based on the estimated fair values on the respective acquisition dates. Based on these values, the excess purchase consideration over the fair value of the net assets acquired was allocated to goodwill. The Company accounts for goodwill in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other. FASB ASC Topic 350 prohibits the amortization of goodwill and requires these assets be reviewed for impairment.

The annual impairment tests of goodwill may be completed through qualitative assessments; however, the Company may elect to bypass the qualitative assessment and proceed directly to a quantitative impairment test for any period. The Company may resume the qualitative assessment in any subsequent period.

Under a qualitative and quantitative approach, the impairment test for goodwill consists of an assessment of whether it is more-likely-than-not that the fair value is less than its carrying amount. As part of the qualitative assessment, the Company considers

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relevant events and circumstances that affect the fair value or carrying amount of the Company. Such events and circumstances could include changes in economic conditions, industry and market conditions, cost factors, overall financial performance, and capital markets pricing. The Company places more weight on the events and circumstances that most affect the Company's fair value or carrying amount. These factors are all considered by management in reaching its conclusion about whether to perform step one of the impairment test. If the Company elects to bypass the qualitative assessment, or if a qualitative assessment indicates it is more-likely-than-not that the estimated carrying value exceeds its fair value, the Company proceeds to a quantitative approach.

There were no ~~indicators~~impairment charges of ~~impairment~~the Company's goodwill for the ~~nine~~three months ended ~~September 30, 2021. The company also performed a qualitative analysis for the year end December~~March 31, ~~2020~~2022 and ~~determined that no impairment was needed for the year 2020.~~March 31, 2021, respectively.

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Self-Insurance: The Company is self-insured with respect to its facilities in Columbus, ~~and Batavia,~~ Ohio; Gaffney, South Carolina; Winona, Minnesota; and Brownsville, Texas for medical, dental and vision claims and Columbus, ~~and Batavia,~~ Ohio for workers’ compensation claims, all of which are subject to stop-loss insurance thresholds. The Company is also self-insured for dental and vision with respect to its Cobourg, Canada location. The Company has recorded an estimated liability for self-insured medical, dental and vision claims incurred but not reported and worker’s compensation claims incurred but not reported at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 of ~~$1,143,000~~$890,000 and ~~$933,000,~~$916,000, respectively.

~~Derivative Instruments:~~ Derivative instruments are utilized to manage exposure to fluctuations in foreign currency exchange rates and interest rates on long term debt obligations. All derivative instruments are formally documented as cash flow hedges and are recorded at fair value at each reporting period. Gains and losses related to currency forward contracts and interest rate swaps are deferred and recorded as a component of Accumulated Other Comprehensive Income in the Consolidated Statement of Stockholders' Equity and then subsequently recognized in the Consolidated Statement of Operations when the hedged item affects net income. The ineffective portion of the change in fair value of a hedge, if any, is recognized in income. For additional information on derivative instruments, see Note 14, "FairFair Value of Financial ~~Instruments".~~Instruments:The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and debt. Cash and cash equivalents, accounts receivable and accounts payable carrying values as of March 31, 2022 and December 31, 2021 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of the Company's debt with Wells Fargo Bank, National Association approximate fair value as of March 31, 2022 and December 31, 2021 due to the short term nature of the underlying variable rate LIBOR agreements. The Company's debt with FGI Equipment Finance, LLC approximates fair value as of March 31, 2022 and December 31, 2021 due to immaterial movement in interest rates since the Company entered into the Promissory Note on October 20, 2020.

~~Post-retirement~~Post-Retirement Benefits: Management records an accrual for post-retirement costs associated with the health care plan sponsored by Core Molding Technologies. Should actual results differ from the assumptions used to determine the reserves, additional provisions may be required. In particular, increases in future healthcare costs above the assumptions could have an adverse effect on Core Molding Technologies’ operations. The effect of a change in healthcare costs is described in Note 12, ~~"Post-Retirement~~"Post Retirement Benefits", of the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Core Molding Technologies had a liability for post-retirement healthcare benefits based on actuarial computed estimates of ~~$9,031,000~~$9,114,000 at ~~September 30, 2021~~March 31, 2022 and ~~$9,109,000~~$9,080,000 at December 31, ~~2020.~~2021.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Current ~~expected credit loss~~Expected Credit Loss (CECL)

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses,” which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. Subsequent to issuing ASU 2016-13, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” for the purpose of clarifying certain aspects of ASU 2016-13. ASU 2018-19 has the same effective date and transition requirements as ASU 2016-13. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” which is effective with the adoption of ASU 2016-13. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments - Credit Losses (Topic 326),” which is also effective with the adoption of ASU 2016-13. In November 2019, the FASB voted to delay the implementation date for certain companies, including those that qualify as a smaller reporting company under ~~SEC~~the U.S. Securities and Exchange Commission rules, until fiscal years beginning after December 15, 2022. We will adopt this ASU on its effective date of January 1, 2023. ~~This~~We do not expect the adoption of this ASU ~~will~~to have noa material impact on our consolidated financial ~~statements.~~position, results of operations, cash flows, or presentation thereof.

~~Facilitation~~0Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued ASU No. ~~2020-04,~~2020-4, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). The ASU provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU is effective as of March 12,

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2020 through December 31, 2022. We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis.

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4. NET INCOME ~~(LOSS)~~ PER COMMON SHARE

Net income ~~(loss)~~ per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income ~~(loss)~~ per common share is computed similarly but includes the effect of the assumed exercise of dilutive stock appreciation rights and restricted stock under the treasury stock method.

On May 13, 2021, the Company's shareholders approved the 2021 Long Term Equity Incentive Plan (the “2021 Plan”) that replaced the 2006 Long Term Equity Incentive Plan (the “2006 Plan”) approved in May 2006 and amended in May 2015. The 2021 Plan provides restricted stock award recipients voting rights equivalent to the Company's common stock and accrual of dividends but not receipt of dividends until all conditions or restrictions related to such award have been satisfied. Accordingly, the restricted shares are not considered participating shares. The 2006 Plan provides restricted ~~shares~~stock award recipients voting rights equivalent to the Company’s common stock and accrual and receipt of dividends irrespective of any conditions or restrictions related to such award being satisfied. Accordingly, the restricted shares granted from the 2006 Plan are considered a participating security and the Company is required to apply the two-class method to consider the impact of the restricted shares on the calculation of basic and diluted earnings per share.

The computation of basic and diluted net income ~~(loss)~~ per common share (in thousands, except for per share data) is as follows:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Net income (loss)		$	(3,312)	$	3,343	$	4,230	$	9,032
Net income										Net income	$	3,864	$	3,456
Less: net income allocated to participating securities	Less: net income allocated to participating securities	—		207		234		438		Less: net income allocated to participating securities	97		204
Net income (loss) available to common shareholders		$	(3,312)	$	3,136	$	3,996	$	8,594
Net income available to common shareholders										Net income available to common shareholders	$	3,767	$	3,252

Weighted average common shares outstanding — basic	Weighted average common shares outstanding — basic	8,053,000		7,969,000		8,015,000		7,922,000		Weighted average common shares outstanding — basic	8,268,000		7,985,000
Effect of weighted average dilutive securities	Effect of weighted average dilutive securities	—		—		32,000		—		Effect of weighted average dilutive securities	—		7,000
Weighted average common and potentially issuable common shares outstanding — diluted	Weighted average common and potentially issuable common shares outstanding — diluted	8,053,000		7,969,000		8,047,000		7,922,000		Weighted average common and potentially issuable common shares outstanding — diluted	8,268,000		7,992,000

Basic net income (loss) per common share		$	(0.41)	$	0.39	$	0.50	$	1.08
Diluted net income (loss) per common share		$	(0.41)	$	0.39	$	0.50	$	1.08
Basic net income per common share										Basic net income per common share	$	0.46	$	0.41
Diluted net income per common share										Diluted net income per common share	$	0.46	$	0.41

The computation of basic and diluted net income per participating share is as follows (in thousands, except for per share data) ~~is as follows:~~:

Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
Net income allocated to participating securities $ — $ 207 $ 234 $ 438
Weighted average participating shares outstanding — basic — 526,000 470,000 404,000
Effect of dilutive securities on participating shares — — — —
Weighted average common and potentially issuable participating shares outstanding — diluted — 526,000 470,000 404,000
Basic net income per participating share $ 0.00 $ 0.39 $ 0.50 $ 1.08
Diluted net income per participating share $ 0.00 $ 0.39 $ 0.50 $ 1.08


	Three months ended March 31,
	2021		2020
Net income allocated to participating securities	$	97	$	204

Weighted average participating shares outstanding — basic	213,000		500,000
Effect of dilutive securities	—		—
Weighted average common and potentially issuable common shares outstanding — diluted	213,000		500,000

Basic net income per participating share	$	0.46	$	0.41
Diluted net income per participating share	$	0.46	$	0.41

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5. MAJOR CUSTOMERS

The Company had 5 major customers during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, BRP, Inc. ~~(“BRP”~~("BRP"), Navistar, Inc. ~~(“Navistar”~~("Navistar"), PACCAR, Inc. ~~(“PACCAR”~~("PACCAR"), Universal Forest Products, Inc. ~~(“UFP”~~("UFP"), and Volvo Group North America, LLC ~~(“Volvo”~~("Volvo"). Major customers are defined as customers whose sales individually consist of more than ten percent of the Company's total sales during any annual or interim reporting period in the current year. The loss of a significant portion of sales to these customers could have a material adverse effect on the business of the Company.

The following table presents sales revenue for the above-mentioned customers for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):

Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
BRP product sales $ 6,907 $ 4,240 $ 25,896 $ 13,693
BRP tooling sales 124 175 362 508
Total BRP sales 7,031 4,415 26,258 14,201
Navistar product sales 10,027 8,065 30,933 25,231
Navistar tooling sales 6,656 5,198 6,962 6,384
Total Navistar sales 16,683 13,263 37,895 31,615
PACCAR product sales 6,872 8,268 27,056 19,383
PACCAR tooling sales 715 179 1,547 386
Total PACCAR sales 7,587 8,447 28,603 19,769
UFP product sales 7,551 12,188 33,323 30,659
UFP tooling sales — — — —
Total UFP sales 7,551 12,188 33,323 30,659
Volvo product sales 7,804 4,907 25,359 14,647
Volvo tooling sales 70 38 117 2,186
Total Volvo sales 7,874 4,945 25,476 16,833
Other product sales 28,482 16,572 73,327 48,406
Other tooling sales 5,817 43 9,433 222
Total other sales 34,299 16,615 82,760 48,628
Total product sales 67,643 54,240 215,894 152,019
Total tooling sales 13,382 5,633 18,421 9,686
Total sales $ 81,025 $ 59,873 $ 234,315 $ 161,705


	Three months ended March 31,
	2022		2021
BRP product sales	$	12,207	$	8,568
BRP tooling sales	150		115
Total BRP sales	12,357		8,683

Navistar product sales	14,022		9,937
Navistar tooling sales	11		306
Total Navistar sales	14,033		10,243

PACCAR product sales	8,747		9,354
PACCAR tooling sales	111		329
Total PACCAR sales	8,858		9,683

UFP product sales	12,687		10,657
UFP tooling sales	—		—
Total UFP sales	12,687		10,657

Volvo product sales	10,915		10,125
Volvo tooling sales	87		20
Total Volvo sales	11,002		10,145

Other product sales	31,323		20,492
Other tooling sales	332		2,926
Total other sales	31,655		23,418

Total product sales	89,901		69,133
Total tooling sales	691		3,696
Total sales	$	90,592	$	72,829

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6. INVENTORY

Inventories, net consisted of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	14,662	$	11,640	Raw materials	$	18,984	$	17,160
Work in process	Work in process	1,501		1,679		Work in process	2,061		1,976
Finished goods	Finished goods	6,247		5,041		Finished goods	7,354		5,993
Total	Total	$	22,410	$	18,360	Total	$	28,399	$	25,129

Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based on historical and anticipated usage.

7. LEASES

The Company has operating leases with fixed payment terms for certain buildings and warehouses. The Company's leases have remaining lease terms of less than one year to four years, some of which include options to extend the lease for five years. Operating leases are included in operating lease right-of-use ("ROU") assets, accrued other liabilities and other non-current liabilities in the Consolidated Balance Sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company used the applicable incremental borrowing rate at implementation date to measure lease liabilities and ROU assets. The incremental borrowing rate used by the Company was based on baseline rates and adjusted by the credit spreads commensurate with the Company’s secured borrowing rate. At each reporting period when there is a new lease initiated, the Company will utilize its incremental borrowing rate to perform lease classification tests on lease components and to measure ROU assets and lease liabilities.

The components of lease expense were as follows (in thousands):

Three Months Ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
Operating lease cost $ 390 $ 357 $ 1,145 $ 1,072


	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	475	$	368

Other supplemental balance sheet information related to leases was as follows (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Operating lease right of use assets	Operating lease right of use assets	$	3,631	$	2,754	Operating lease right of use assets	$	5,081	$	5,577

Current operating lease liabilities(A)	Current operating lease liabilities(A)	$	1,137	$	1,023	Current operating lease liabilities(A)	$	1,497	$	1,489
Noncurrent operating lease liabilities(B)	Noncurrent operating lease liabilities(B)	2,453		1,670		Noncurrent operating lease liabilities(B)	3,688		4,024
Total operating lease liabilities	Total operating lease liabilities	$	3,590	$	2,693	Total operating lease liabilities	$	5,185	$	5,513

(A)Current operating lease liabilities are included in accrued other liabilities onin the Consolidated Balance Sheets.

(B)Noncurrent operating lease liabilities are included in other non-current liabilities in the Consolidated Balance Sheets.

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The following table presents certain information related to lease terms and discount rates for ~~leases as~~leases:


Operating leases	March 31, 2022		December 31, 2021
Weighted average remaining lease term (in years):	3.9		4.2

Weighted average discount rate:	4.0	%	4.1	%

Table of ~~September 30, 2021 and December 31, 2020:~~Contents

Operating leases September 30, 2021 December 31, 2020
Weighted average remaining lease term (in years): 3.8 3.5
Weighted average discount rate: 5.5 % 5.9 %

Other information related to leases were as follows (in thousands):


		Nine months ended September 30,					Three months ended March 31,
		2021		2020			2022		2021
Cash paid for amounts included in the measurement of lease liabilities	Cash paid for amounts included in the measurement of lease liabilities					Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases(C)	Operating cash flows from operating leases(C)	$	1,145	$	1,072	Operating cash flows from operating leases(C)	$	475	$	368

(C)Cash flow from operating leases are included in prepaid and other assets in the Consolidated Statements of Cash Flows.

Maturities of operating lease liabilities were as follows (in thousands):

September 30, 2021 December 31, 2020
2021 (remainder of year) $ 373 $ 1,215
2022 1,143 811
2023 1,044 706
2024 1,050 705
2025 and beyond 629 —
Total lease payments 4,239 3,437
Less: imputed interest (649) (744)
Total lease obligations 3,590 2,693
Less: current obligations (1,137) (1,023)
Long-term lease obligations $ 2,453 $ 1,670


	March 31, 2022		December 31, 2021
2022 (remainder of year)	$	1,203	$	1,567
2023	1,511		1,468
2024	1,517		1,473
2025	803		783
2026	698		698
Total lease payments	5,732		5,989
Less: imputed interest	(547)		(476)
Total lease obligations	5,185		5,513
Less: current obligations	(1,497)		(1,489)
Long-term lease obligations	$	3,688	$	4,024

8. PROPERTY, PLANT & EQUIPMENT

Property, plant and equipment, net consisted of the following for the periods specified (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Property, plant and equipment	Property, plant and equipment	$	181,556	$	174,553	Property, plant and equipment	$	186,166	$	183,500
Accumulated depreciation	Accumulated depreciation	(107,179)		(100,501)		Accumulated depreciation	(110,120)		(107,603)
Property, plant and equipment — net	Property, plant and equipment — net	$	74,377	$	74,052	Property, plant and equipment — net	$	76,046	$	75,897

Property, plant, and equipment are recorded at cost, unless obtained through acquisition, then assets are recorded at estimated fair value at the date of acquisition. Depreciation is provided on a straight-line method over the estimated useful lives of the assets. The carrying amount of long-lived assets is evaluated annually to determine if an adjustment to the depreciation period or to the unamortized balance is warranted. Depreciation expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 was $2,517,000 and ~~2020 was $2,471,000 and $2,273,000, respectively. Depreciation expense for the nine months ended September 30, 2021 and 2020 was $7,414,000 and $6,764,000,~~$2,482,000, respectively. Amounts invested in capital additions in progress were ~~$5,227,000~~$7,232,000 and ~~$1,422,000~~$6,605,000 at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, purchase commitments for capital expenditures in progress were ~~$3,561,000~~$3,822,000 and ~~$677,000,~~$5,315,000, respectively.

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9. GOODWILL AND INTANGIBLES

Goodwill activity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 consisted of the following (in thousands):


Balance at December 31, ~~2020~~2021	$	17,376
Additions	—
Impairment	—
Balance at ~~September 30, 2021~~March 31, 2022	$	17,376

Intangibles, net at ~~September 30,~~March 31, 2022 were comprised of the following (in thousands):


Definite-lived Intangible Assets	Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	25 Years	$	250	$	(70)	$	180
Trademarks	10 Years	1,610		(678)		932
Non-competition agreement	5 Years	1,810		(1,523)		287
Developed technology	7 Years	4,420		(2,657)		1,763
Customer relationships	10-12 Years	9,330		(3,412)		5,918
Total		$	17,420	$	(8,340)	$	9,080

Intangibles, net at December 31, 2021 were comprised of the following (in thousands):

Definite-lived Intangible Assets Amortization Period Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount
Trade name 25 Years $ 250 $ (65) $ 185
Trademarks 10 Years 1,610 (597) 1,013
Non-competition agreement 5 Years 1,810 (1,343) 467
Developed technology 7 Years 4,420 (2,342) 2,078
Customer relationships 10-12 Years 9,330 (3,019) 6,311
Total $ 17,420 $ (7,366) $ 10,054

~~Intangibles, net at December 31, 2020 were comprised of the following (in thousands):~~


Definite-lived Intangible Assets	Definite-lived Intangible Assets	Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Definite-lived Intangible Assets	Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	Trade name	25 Years	$	250	$	(58)	$	192	Trade name	25 Years	$	250	$	(68)	$	182
Trademarks	Trademarks	10 Years	1,610		(476)		1,134		Trademarks	10 Years	1,610		(637)		973
Non-competition agreement	Non-competition agreement	5 Years	1,810		(1,071)		739		Non-competition agreement	5 Years	1,810		(1,433)		377
Developed technology	Developed technology	7 Years	4,420		(1,869)		2,551		Developed technology	7 Years	4,420		(2,499)		1,921
Customer relationships	Customer relationships	10-12 Years	9,330		(2,430)		6,900		Customer relationships	10-12 Years	9,330		(3,216)		6,114
Total	Total		$	17,420	$	(5,904)	$	11,516	Total		$	17,420	$	(7,853)	$	9,567

The aggregate intangible asset amortization expense was ~~$488,000 and~~ $487,000 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. The aggregate intangible asset amortization expense was $1,462,000 and $1,461,000 for the nine months ended September 30, 2021 and 2020,~~ respectively.

10. POST-RETIREMENT BENEFITS

The components of expense for the Company’s post-retirement benefit plans are as follows (in thousands):


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Pension expense:	Pension expense:									Pension expense:
Multi-employer plan	Multi-employer plan	$	179	$	157	$	600	$	549	Multi-employer plan	$	207	$	189
Defined contribution plan	Defined contribution plan	263		258		881		766		Defined contribution plan	365		302
Total pension expense	Total pension expense	442		415		1,481		1,315		Total pension expense	572		491
Health and life insurance:	Health and life insurance:									Health and life insurance:
Interest cost	Interest cost	41		58		122		177		Interest cost	50		41
Amortization of prior service credits	Amortization of prior service credits	(124)		(124)		(372)		(372)		Amortization of prior service credits	(124)		(124)
Amortization of net loss	Amortization of net loss	43		46		130		135		Amortization of net loss	43		43
Net periodic benefit credit	Net periodic benefit credit	(40)		(20)		(120)		(60)		Net periodic benefit credit	(31)		(40)
Total post-retirement benefits expense	Total post-retirement benefits expense	$	402	$	395	$	1,361	$	1,255	Total post-retirement benefits expense	$	541	$	451

1615

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The Company made payments of ~~$1,602,000~~$526,000 to pension plans and ~~$198,000~~$31,000 for post-retirement healthcare and life insurance during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. For the remainder of ~~2021,~~2022, the Company expects to make approximately ~~$300,000~~$2,179,000 of pension plan payments, of which ~~$136,000~~$1,126,000 was accrued at ~~September 30, 2021.~~March 31, 2022. The Company also expects to make approximately ~~$1,088,000~~$1,360,000 of post-retirement healthcare and life insurance payments for the remainder of ~~2021,~~2022, all of which were accrued at ~~September 30, 2021.~~March 31, 2022.

11. DEBT

Debt consists of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021

Wells Fargo term loans payable	Wells Fargo term loans payable	$	14,591	$	16,390	Wells Fargo term loans payable	$	13,392	$	13,992
FGI term loans payable	FGI term loans payable	12,906		13,148		FGI term loans payable	12,077		12,561
Leaf Capital term loan payable	Leaf Capital term loan payable	127		152		Leaf Capital term loan payable	111		119
Total	Total	27,624		29,690		Total	25,580		26,672
Less deferred loan costs	Less deferred loan costs	(1,598)		(1,957)		Less deferred loan costs	(1,357)		(1,478)
Less current portion	Less current portion	(3,774)		(2,535)		Less current portion	(3,984)		(3,943)
Long-term debt	Long-term debt	$	22,252	$	25,198	Long-term debt	$	20,239	$	21,251

Term Loans

Wells Fargo Term Loans

On October 27, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, lead arranger and book runner, and the lenders party thereto (the “Lenders”). Pursuant to the terms of the Credit Agreement, the Lenders made available to the Company secured term loans (the “WF Term Loans”) in the maximum aggregate principal amount of $18,500,000 ($16,790,000 of which was advanced to the Company on October 28, 2020). The proceeds from the WF Term Loans were used to pay off the Company’s existing outstanding indebtedness with KeyBank National Association, and to pay certain fees and expenses associated with the financing.

At the option of the Company, the WF Term Loans bears interest at a per annum rate equal to LIBOR plus a margin of 300 basis points or base rate plus a margin of 200 basis points. LIBOR rate means the greater of (a) 0.75% per annum and (b) the per annum published LIBOR rate for interest periods of one, three or six months as chosen by the Company. Base rate is the greater of (a) 1.0% per annum, (b) the Federal Funds Rate plus 0.5%, (c) LIBOR Rate plus 100 basis or (d) prime rate. The weighted average interest rate was 3.78% and 3.77% as of ~~September 30, 2021.~~March 31, 2022 and December 31, 2021, respectively.

The WF Term Loans are to be repaid in monthly installments of $200,000 plus interest, with the remaining outstanding balance due on November 30, 2024, subject to certain optional and mandatory repayment terms. The Company’s obligations under the WF Term Loans are unconditionally guaranteed by each of the Company’s U.S. and Canadian subsidiaries, with such obligations of the Company and such subsidiaries being secured by a lien on substantially all of their U.S. and Canadian assets.

The WF Term Loans contains reporting, indebtedness, and financial covenants. The Company is in compliance with ~~its~~such covenants as of ~~September 30, 2021.~~March 31, 2022.

Voluntary prepayments of amounts outstanding under the WF Term Loans are permitted at any time without premium or penalty. To the extent applicable, LIBOR breakage fees may be charged in connection with any prepayment.

FGI Equipment Finance LLC Term Loan

On October 20, 2020, the Company entered into a Master Security Agreement, ~~and a Promissory Note,~~ among FGI Equipment Finance LLC, (“FGI”) the Company as debtor, and each of Core Composites Corporation, a subsidiary of the Company organized in Delaware, and CC HPM, S. de R.L. de C.V., a subsidiary of the Company organized in Mexico, as guarantors, for a term loan in the principal amount of $13,200,000 (the “FGI Term Loan”)., which loan is evidenced by a Promissory Note, dated October 20, 2020, executed by the Company in favor of FGI. On October 27, 2020, FGI advanced to the Company $12,000,000 which proceeds were used to pay off the Company’s existing outstanding indebtedness with KeyBank National Association, and to pay certain fees and expenses associated with the transactions, and $1,200,000 which proceeds were used to fund a security deposit to be

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held by FGI. Interest on the FGI Term Loan is a fixed rate of 8.25% and is payable monthly. The security deposit of $1,200,000 is included in other assets in the Consolidated Balance Sheets.

~~Table of Contents~~

~~Following the advance of funds by FGI, the~~The FGI Term Loan is to be repaid in monthly principal and interest installments of $117,000 for the first 12 months, $246,000 for the subsequent 59 months and $1,446,000 due on October 31, 2026, subject to certain optional and mandatory repayment terms. The Company’s obligations under the Master Security Agreement are secured by certain machinery and equipment of the guarantors located in Mexico, and real property of Core Composites de Mexico, S. de R.L. de C.V.,a subsidiary of the Company organized in Mexico, located in Matamoros, Mexico.

The Company may prepay in full or in part (but not less than the amount equal to 20% of the original principal amount of the loan) outstanding amounts before they are due on any scheduled Payment Date upon at least thirty (30) days’ prior written notice. The Company will pay a “Prepayment Fee” in an amount equal to an additional sum equal to the following percentage of the principal amount to be prepaid for prepayments occurring in the indicated period: four percent (4.0%) for prepayments occurring prior to the first anniversary of the FGI Term Loan; three percent (3.0%) for prepayments occurring on the first anniversary of the FGI Term Loan until the second anniversary of the FGI Term Loan; two percent (2.0%) for prepayments occurring on and after the second anniversary of the FGI Term Loan and prior to the third anniversary of the Loan; and one percent (1.0%) for prepayments occurring any time thereafter.

Leaf Capital Funding

On April 24, 2020 the Company entered into a finance agreement with Leaf Capital Funding of $175,000 for equipment. The parties agreed to a fixed interest rate of 5.5% and a term of 60 months.

Revolving Loans

Wells Fargo Revolving Loan

On October 27, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, lead arranger and book runner, and the lenders party thereto (the “Lenders”). Pursuant to the terms of the Credit Agreement, the Lenders made available to the Company a revolving loan commitment (the “WF Revolving Loan”) of $25,000,000 ($8,745,000 of which was advanced to the Company on October 28, 2020). The proceeds from the WF Revolving Loan were used to pay off the Company’s existing outstanding indebtedness with KeyBank National Association, and to pay certain fees and expenses associated with the financing.

The Credit Agreement also makes available to the Company an incremental revolving commitment in the maximum amount of $10,000,000 at the Company’s option at any time during the three-year period following the closing.

The borrowing availability under the WF Revolving Loan is the lesser of (a) the loan commitment of $25,000,000 or (b) the sum of 90% of eligible investment grade accounts receivable, 85% of non-investment grade eligible accounts receivable and 65% of eligible inventory.

At the option of the Company, the WF Revolving Loan bears interest at a per annum rate equal to LIBOR plus a margin of 200 to 250 basis points or base rate plus a margin of 100 to 150 basis points, with the margin rate being based on the excess availability amount under the line of credit. LIBOR rate means the greater of (a) 0.75% per annum and (b) the per annum published LIBOR rate for interest periods of one, three or six months as chosen by the Company. Base rate is the greater of (a) 1.0% per annum, (b) the Federal Funds Rate plus 0.5%, (c) LIBOR Rate plus 100 basis and (d) prime rate. The weighted average interest rate was 4.50% and 4.25% as of ~~September 30, 2021.~~March 31, 2022 and December 31, 2021, respectively.

The WF Revolving Loan commitment terminates, and all outstanding borrowings thereunder must be repaid, by November 30, 2024. The Company has ~~$24,321,000~~$24,316,000 of available rate revolving loans of which ~~$2,320,000~~$4,835,000 is outstanding as of ~~September 30, 2021.~~March 31, 2022. As of December 31, 2021, the Company had $24,337,000 of available rate revolving loans of which $4,424,000 was outstanding.

The WF Revolving Loan contains the same covenants as the WF Term Loans.

Wells Fargo Bank will issue up to $2,000,000 of Letters of Credit in accordance with the terms of the Credit Agreement upon the Company’s request. As of ~~September 30, 2021,~~March 31, 2022, the Company had one Letter of Credit outstanding for $160,000.

~~KeyBank Loan~~

On September 30, 2020, the Company had a term loan of $35,035,000 and no revolving loan balance with KeyBank National Association. The Company’s term loan and revolving loan had variable interest rate of 8.00% at September 30, 2020.

Bank Covenants

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~~Bank Covenants~~

The Company is required to meet certain financial covenants included in the Credit Agreement with respect to fixed coverage charge ratio. As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement as described above.

12. INCOME TAXES

The Company evaluates the balance of deferred tax assets that will be realized based on the premise that the Company is ~~more likely than not~~more-likely-than-not to realize deferred tax benefits through the generation of future taxable income. Management makes assumptions, judgments, and estimates to determine the deferred tax assets and liabilities. The Company evaluates provisions and deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available evidence.

The Company’s Consolidated Balance Sheets include net deferred tax assets of ~~$460,000~~$252,000 for the Canadian and ~~$469,000~~$841,000 for the Mexican tax jurisdictions and a net deferred tax liability of ~~$288,000~~$572,000 for the U.S. tax jurisdiction at ~~September 30, 2021.~~March 31, 2022. The deferred tax asset is classified in other non-current assets and deferred tax liabilities are in other non-current liabilities. ~~During~~At March 31, 2022, the ~~nine months ended September 30, 2021, the Company increased its~~Company's net deferred tax liability included a valuation allowance from $1,193,000 at December 31, 2020 to $2,259,000 at September 30, 2021. The valuation allowance is against the interest limitation carryforward, U.S. state and local net loss carryforward and a portion of ~~the U.S. federal net loss carryforward,~~$3,310,000, due to cumulative losses ~~in the United States~~ over the last three years and uncertainty related to the Company's ability to realize the deferred assets. The Company believes that the deferred tax assets associated with the Canadian and Mexican tax jurisdictions are more-likely-than-not to be realizable based on estimates of future taxable income.

Income tax expense for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is estimated to be ~~$3,290,000,~~$1,638,000, approximately ~~43.8%~~29.8% of income before income taxes, and includes tax expense in Canadian and Mexican tax ~~jurisdictions~~jurisdictions. U.S. operations incurred a net loss for the three months ended March 31, 2022 and ~~a valuation allowance of $1,066,000 against U.S. tax jurisdiction deferred tax assets, offset by a~~the net loss tax benefit ~~in U.S. tax jurisdictions.~~ was offset with a full valuation reserve.Income tax benefit for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was estimated to be ~~$4,933,000,~~$1,351,000, approximately ~~120.3%~~28.1% of income before income taxes.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses. Tax provisions of the CARES Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions, including allowing net operating losses to be carried back five years versus an indefinite carryforward. An income tax benefit of $5,638,000 was realized in the first quarter of 2020. The income tax benefit consists of the reversal of the full valuation allowance against net deferred tax assets in the United States for approximately $3,267,000. The income tax benefit also consists of a rate benefit of $2,371,000 based on the losses being carried back to years where the Company paid tax at 34% compared to the valuation of the losses being recorded at the 21% current U.S. statutory tax rate.

The Company files income tax returns in the ~~U.S.,~~United States, Mexico, Canada and various state and local jurisdictions. The Company is subject to federal income tax examinations for tax years 2014 through 2017 but the scope of examination is limited to adjustments resulting from the Net Operating Loss carry back claims from the 2018, 2019, and 2020 tax years. The Company is subject to federal income tax examinations for years 2018 through 2021 with unlimited scope. The Company is not subject to ~~U.S. federal and~~ state ~~income tax~~ examinations ~~by tax authorities~~ for years ~~prior to 2017,~~before 2017. The Company is not subject to Mexican income tax examinations by Mexican authorities for the years ~~prior to 2015~~before 2017 and is not subject to Canadian income tax examinations by Canadian authorities for the years ~~prior to~~before 2018.

13. STOCK BASED COMPENSATION

On May 13, 2021, The Company's shareholders approved the 2021 Long Term Equity Incentive Plan (the “2021 Plan”) that replaced the 2006 Long Term Equity Incentive Plan (the “2006 Plan”) approved in May 2006 and amended in May 2015. The 2021 Plan allows for grants to employees, officers, non-employee directors, consultants, independent contractors and advisors of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards (“stock awards”) up to an aggregate of ~~924,823~~712,364 awards. Awards can be granted under the 2021 Plan through the earlier of May 13, 2031, or the date the maximum number of available awards under the 2021 Plan have been granted. No new awards may be granted from the 2006 Plan.

Awards under the 2021 Plan vest over one to three years and shares previously awarded and currently unvested under the 2006 Plan vest over three years. Shares granted under both the 2006 and 2021 Plans vest upon the date of a participant’s death, disability or change in control.

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Restricted Stock

The Company grants shares of its common stock to certain directors, officers, key managers and employees in the form of unvested stock and units (“Restricted Stock”). These awards are ~~recorded~~measured at the ~~market~~fair value of the Company's common stock on the date of issuance and ~~amortized~~recognized ratably as compensation expense over the applicable vesting period, which is typically three years. The Company adjusts compensation expense for actual forfeitures, as they occur.

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The following summarizes the status of Restricted Stock and changes during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2020		507,835	$	6.25
Unvested balance at December 31, 2021					Unvested balance at December 31, 2021	459,420	$	9.79
Granted	Granted	250,635	13.75		Granted	2,322	8.62
Vested	Vested	(110,000)	7.08		Vested	(34,422)	6.96
Forfeited	Forfeited	(15,964)	5.30		Forfeited	—	—
Unvested balance at September 30, 2021		632,506	$	9.06
Unvested balance at March 31, 2022					Unvested balance at March 31, 2022	427,320	$	10.01

At ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there was ~~$3,664,000~~$2,579,000 and ~~$1,928,000,~~$1,325,000, respectively, of total unrecognized compensation expense, related to Restricted Stock grants. The unrecognized compensation expense at ~~September 30, 2021~~March 31, 2022 is expected to be recognized over the weighted-average period of ~~2.3~~1.9 years. Total compensation cost related to Restricted Stock grants for the three months ended ~~September 30,~~March 31, 2022 and 2021 was $468,000 and ~~2020 was $578,000 and $319,000,~~$289,000, respectively. Total compensation cost related to Restricted Stock grants for the nine months ended September 30, 2021 and 2020 was $1,322,000 and $968,000, respectively, all of which was recorded to selling, general and administrative expense.

During the ~~nine~~three months ended ~~September 30, 2021 and 2020,~~March 31, 2022 employees surrendered ~~6,740 and 4,574~~no shares ~~respectively~~ of the Company's common stock to satisfy income tax withholding obligations in connection with the vesting of restricted awards. Employees surrendered 3,874 shares for the three months ended March 31, 2021.

Stock Appreciation Rights

As part of the Company's ~~2020~~2019 annual grant, Stock Appreciation Rights ("SARs") were granted with a grant price of $10. These awards have a contractual term of five years and vest ratably over a period of three years or immediately vest if the recipient is over 65 of age. These awards are valued using the Black-Scholes option pricing ~~model.~~model, and are recognized ratably as compensation expense over three years.

A summary of the Company's stock appreciation rights activity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is as follows:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2020		180,925	$	2.57
Outstanding as of December 31, 2021					Outstanding as of December 31, 2021	177,016	$	2.57
Granted	Granted	—	—		Granted	—	—
Exercised	Exercised	—	—		Exercised	—	—
Forfeited	Forfeited	(3,909)	2.57		Forfeited	—	—
Outstanding at end of the period ended September 30, 2021		177,016	$	2.57
Exercisable at end of the period ended September 30, 2021		124,801	$	2.57
Outstanding at end of the period ended March 31, 2022					Outstanding at end of the period ended March 31, 2022	177,016	$	2.57
Exercisable at end of the period ended March 31, 2022					Exercisable at end of the period ended March 31, 2022	124,801	$	2.57

The average remaining contractual term for those SARs outstanding at ~~September 30, 2021~~March 31, 2022 is ~~2.5~~2.1 years, with aggregate intrinsic value of ~~$267,000.~~$135,000. At ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there was ~~$81,000~~$11,000 and ~~$225,000,~~$149,000, respectively, of total unrecognized compensation expense, related to SARs. The total unrecognized compensation expenses as of ~~September 30, 2021~~March 31, 2022 is expected to be recognized over the weighted average period of ~~0.5~~0.1 years. Total compensation cost related to SARs for the three months ended ~~September 30,~~March 31, 2022 and 2021 was $33,000 and ~~2020 was $34,000 and $36,000,~~$30,000, respectively. Total compensation cost related to SARs for the nine months ended September 30, 2021 and 2020 was $94,000 and $91,000, respectively, all of which was recorded to selling, general and administrative expense.

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14. ~~FAIR VALUE OF FINANCIAL INSTRUMENTS~~

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants as of the measurement date. Fair value is measured using the fair value hierarchy and related valuation methodologies as defined in the authoritative literature. This guidance provides a fair value framework that requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.

~~The three levels are defined as follows:~~

~~Level 1 -Quoted prices in active markets for identical assets and liabilities.~~

~~Level 2 -~~Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.

~~Level 3 -Significant unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability.~~

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt, interest rate swaps and foreign currency derivatives. Cash and cash equivalents, accounts receivable and accounts payable carrying values as of September 30, 2021 and December 31, 2020 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of WF Term Loan and WF Revolving Loan approximate fair value as of September 30, 2021 and December 31, 2020 due to the short term nature of the underlying variable rate LIBOR agreements. The FGI Term Loan approximate fair value as of September 30, 2021 and December 31, 2020 due to immaterial movement in interest rates since the Company entered into the Promissory Note on October 20, 2020.The following tables summarize the amount of unrealized and realized gain (loss) recognized in Accumulated Other Comprehensive Income ("AOCI") for the three months ended September 30, 2021 and 2020 (in thousands):

Derivatives in
subtopic 815-20
Cash Flow Hedging
Relationship Amount of Unrealized
Gain (Loss) Recognized
in Accumulated Other
Comprehensive Income on
Derivative
Location of Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive Income(A)
Amount of Realized Gain
(Loss) Reclassified from
Accumulated Other
Comprehensive Income
2021 2020 2021 2020
Foreign exchange
contracts $ — $ 668 Cost of goods sold $ — $ (219)
Selling, general and administrative expense $ — $ (33)
Interest rate swaps $ — $ 321 Interest expense $ — $ (149)

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The following tables summarize the amount of unrealized and realized gain (loss) recognized in Accumulated Other Comprehensive Income ("AOCI") for the nine months ended September 30, 2021 and 2020 (in thousands):

Derivatives in
subtopic 815-20
Cash Flow Hedging
Relationship Amount of Unrealized
Loss Recognized
in Accumulated Other
Comprehensive Income on
Derivative
Location of Loss
Reclassified from
Accumulated Other
Comprehensive Income (A)
Amount of Realized Loss
Reclassified from
Accumulated Other
Comprehensive Income
2021 2020 2021 2020
Foreign exchange
contracts $ — $ 135,000 Cost of goods sold $ — $ (525,000)
Selling, general and
administrative expense $ — $ (67,000)
Interest rate swaps $ — $ (206,000) Interest expense $ — $ (343,000)

~~(A)~~The foreign currency derivative activity reclassified from Accumulated Other Comprehensive Income is allocated to cost of goods sold and selling, general and administrative expense based on the percentage of foreign currency spend.

~~15.~~ ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents changes in Accumulated Other Comprehensive Income, net of tax, for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):

2020: Derivative
Hedging
Activities
Post Retirement
Benefit Plan
Items(A)
Accumulated
Other
Comprehensive
Income
Balance at December 31, 2019 $ (191) $ 1,561 $ 1,370
Other comprehensive loss before reclassifications (71) — (71)
Amounts reclassified from accumulated other comprehensive income (935) (236) (1,171)
Income tax benefit 223 50 273
Balance at September 30, 2020 $ (974) $ 1,375 $ 401
2021:
Balance at December 31, 2020 $ — $ 1,375 $ 1,375
Other comprehensive income before reclassifications — — —
Amounts reclassified from accumulated other comprehensive income — (242) (242)
Income tax benefit — 51 51
Balance at September 30, 2021 $ — $ 1,184 $ 1,184


2021:	Post Retirement Benefit Plan Items(A)
Balance at December 31, 2020	$	1,375
Other comprehensive loss before reclassifications	—
Amounts reclassified from accumulated other comprehensive income	(81)
Income tax benefit	17
Balance at March 31, 2021	$	1,311

2022:
Balance at December 31, 2021	$	1,075
Other comprehensive income before reclassifications	—
Amounts reclassified from accumulated other comprehensive income	(81)
Income tax benefit	17
Balance at March 31, 2022	$	1,011

(A)The effect of post-retirement benefit items reclassified from Accumulated Other Comprehensive Income is included in other income and expense on the Consolidated Statements of Operations. These Accumulated Other Comprehensive Income components are included in the computation of net periodic benefit cost (see Note 10, "Post-Retirement Benefits" for additional details). The tax effect of post-retirement benefit items reclassified from Accumulated Other Comprehensive Income is included in income tax expense on the Consolidated Statements of Operations.

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~~Part I — Financial Information~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance as opposed to historical items and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Such forward-looking statements involve known and unknown risks and are subject to uncertainties and factors relating to Core Molding Technologies' operations and business environment, all of which are difficult to predict and many of which are beyond Core Molding Technologies' control. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plans,” “projects,” “believes,” “estimates,” ~~“encouraged,”~~ “confident” and similar expressions are used to identify these forward-looking statements. These uncertainties and factors could cause Core Molding Technologies' actual results to differ materially from those matters expressed in or implied by such forward-looking statements.

Core Molding Technologies believes that the following factors, among others, could affect its future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements made in this Quarterly Report on Form 10-Q: business conditions in the plastics, transportation, ~~marine~~power sports, utilities and commercial product industries (including changes in demand for truck production); federal and state regulations (including engine emission regulations); general economic, social, regulatory (including foreign trade policy) and political environments in the countries in which Core Molding Technologies operates; the adverse impact of the coronavirus (COVID-19) global pandemic on our business, results of operations, financial position, liquidity or cash flow, as well as impact on customers and supply chains; safety and security conditions in Mexico and Canada; fluctuations in foreign currency exchange rates; dependence upon certain major customers as the primary source of Core Molding Technologies’ sales revenues; efforts of Core Molding Technologies to expand its customer base; the ability to develop new and innovative products and to diversify markets, materials and processes and increase operational enhancements; ability to accurately quote and execute manufacturing processes for new business; the actions of competitors, customers, and suppliers; failure of Core Molding Technologies’ suppliers to perform their obligations; the availability of raw materials; inflationary pressures; new technologies; regulatory matters; labor relations; labor availability; a work stoppage or labor disruption at one of our union locations or one of our customer or supplier locations; the loss or inability of Core Molding Technologies to attract and retain key personnel; the Company's ability to successfully identify, evaluate and manage potential acquisitions and to benefit from and properly integrate any completed acquisitions; federal, state and local environmental laws and regulations; the availability of sufficient capital; the ability of Core Molding Technologies to provide on-time delivery to customers, which may require additional shipping expenses to ensure on-time delivery or otherwise result in late fees and other customer charges; risk of cancellation or rescheduling of orders; management’s decision to pursue new products or businesses which involve additional costs, risks or capital expenditures; inadequate insurance coverage to protect against potential hazards; equipment and machinery failure; product liability and warranty claims; and other risks identified from time to time in Core Molding Technologies’ other public documents on file with the Securities and Exchange Commission, including those described in Item 1A of ~~the~~Core Molding Technologies' Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

~~Description of the Company~~

Core Molding Technologies and its subsidiaries operate in one operating segment as a molder of thermoplastic and thermoset structural products. The Company's operating segment consists of one reporting unit. The Company offers customers a wide range of manufacturing processes to fit various program volume and investment requirements. These processes include compression molding of sheet molding compound ("SMC"), resin transfer molding ("RTM"), liquid molding of dicyclopentadiene ("DCPD"), spray-up and hand-lay-up, direct long-fiber thermoplastics ("D-LFT") and structural foam and structural web injection molding ("SIM"). Core Molding Technologies serves a wide variety of markets, including the medium and heavy-duty truck, marine, automotive, construction and agriculture, building products and other commercial products. The demand for Core Molding Technologies’ products is affected by economic conditions in the United States, Mexico, and Canada. Core Molding Technologies’ manufacturing operations have a significant fixed cost component. Accordingly, during periods of changing demand, the profitability of Core Molding Technologies’ operations may change proportionately more than revenues from operations.

In 1996, Core Molding Technologies acquired substantially all of the assets and assumed certain liabilities of Columbus Plastics, a wholly owned operating unit of Navistar’s truck manufacturing division since its formation in late 1980. Columbus Plastics, located in Columbus, Ohio, was a compounder and compression molder of SMC. In 1998, Core Molding Technologies began operations at its second facility in Gaffney, South Carolina, and in 2001, Core Molding Technologies added a production

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facility in Matamoros, Mexico by acquiring certain assets of Airshield Corporation. As a result of this acquisition, Core Molding Technologies expanded its fiberglass molding capabilities to include the spray up, hand-lay-up open mold processes and RTM closed molding. In 2005, Core Molding Technologies acquired certain assets of the Cincinnati Fiberglass Division of Diversified Glass, Inc., a Batavia, Ohio-based, privately held manufacturer and distributor of fiberglass reinforced plastic components supplied primarily to the heavy-duty truck market. In 2009, the Company completed construction of a new production facility in Matamoros, Mexico that replaced its leased facility. In March 2015, the Company acquired substantially all of the assets of CPI Binani, Inc., a wholly owned subsidiary of Binani Industries Limited, located in Winona, Minnesota, which expanded the Company's process capabilities to include D-LFT and diversified the customer base. In January 2018, the Company acquired substantially all the assets of Horizon Plastics, which has manufacturing operations in Cobourg, Ontario and Escobedo, Mexico. This acquisition expanded the Company's customer base, geographic footprint, and process capabilities to include structural foam and structural web molding. On November 5, 2020, the Company announced it will close the manufacturing facility located in Batavia, Ohio and is expected to complete the closure in the fourth quarter of 2021.

Business Overview

General

The Company’s business and operating results are directly affected by changes in overall customer demand, operational costs and performance and leverage of our fixed cost and selling, general and administrative ("SG&A") infrastructure.

Product sales fluctuate in response to several factors, including many that are beyond the Company’s control, such as general economic conditions, interest rates, government regulations, consumer spending, raw material cost inflation, labor availability, and our customers’ production rates and inventory levels. The Company's customers operate in many different markets with different cyclicality and seasonality. ~~The North American truck market, which is highly cyclical, accounted for 41% and 42% of the Company’s product revenue for the nine months ended September 30, 2021 and 2020 respectively.~~

Operating performance is dependent on the Company’s ability to manage changes in input costs for items such as raw materials, labor, and overhead operating costs. The Company has certain contractual commitments that restrict its ability to pass through changes in input costs to certain customers. As a result, during periods of significant increases or decreases in input costs operating results may be impacted.

Performance is also affected by manufacturing efficiencies, including items such as on time delivery, quality, scrap, and productivity. Market factors of supply and demand can impact operating costs. In periods of rapid increases or decreases in customer demand, the Company is required to ramp operational activity up or down quickly, which may impact manufacturing efficiencies more than in periods of steady demand.

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Operating performance is also dependent on the Company’s ability to effectively launch new customer programs, which are extremely complex in nature. The start of production of a new program is the result of a process of developing new molds and assembly equipment, validation testing, manufacturing process design, development and testing, along with training and often hiring employees. Meeting the targeted levels of manufacturing efficiency for new programs usually occurs over time as the Company gains experience with new tools and processes. Therefore, during a new program launch period, start-up costs and inefficiencies can affect operating results.

For the nine months ended September 30, 2021, the Company experienced larger than normal increases in raw material costs and customer demand disruptions due to customer supply chain challenges. For the nine months ended September 30, 2021, the Company incurred raw material cost inflation of approximately $19,103,000 of which the Company was able to recoup approximately $12,253,000 from customers, which is included within product sales. Due to contractual limitations, the Company is not able to pass through all of its raw material price increases to its customers; however, the Company is pursuing recovery of raw material inflation costs, including from customers with contractual constraints and customers whose contractual commitments expire.

The Company incurred operating losses, including closure costs, for the three months and nine months ended September 30, 2021 of $2,258,000 and $2,276,000, respectively, for the closure of its Batavia, Ohio facility. The Company initially planned to complete the closure of the facility in the first half of 2021 but was delayed to ensure an orderly transition of customer products to other Company facilities as well as other third-party suppliers. During the third quarter of 2021, the Company completed the product transition plan with its customers, which will allow for closure of the facility by December 31, 2021. As a result of finalizing the transition plan the Company has facility shutdown costs for losses on disposal of fixed assets of $625,000, building repairs of $431,000 and severance costs of $392,000. The Company does not anticipate any additional material expenses related to the Batavia manufacturing closure in the fourth quarter of 2021.

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Forward Looking

Looking forward, based on ~~industry analysts’ projections~~customers' forecasts and ~~customer forecasts,~~anticipated new program launches, the Company expects sales for ~~the fourth quarter of 2021~~2022 to increase as compared to 2021. Customers in the ~~fourth quarter~~medium and heavy-duty truck, power sports, utilities and industrial markets are forecasting higher demand in 2022. New programs launched in the power sports and utilities markets in 2021 and anticipated launches of ~~2020, primarily due~~previously awarded new programs in 2022 is expected to increase sales. We are monitoring ongoing customer supply chain disruptions and higher interest rates and would anticipate some unfavorable impact on customer demand, but cannot estimate the timing of the impact.

The Company’s supply chains have become more stable but the Company continues to experience higher raw material ~~cost inflation recoupment. Excluding~~costs and anticipates most raw material costs to remain elevated in 2022, including thermoset resins and fiberglass. The Company was able to recover much of the raw material cost ~~inflation recoupment,~~increases in the first quarter of 2022 and is pursuing additional cost recoveries where the Company expects sales for the fourth quarter of 2021 to be flat to prior year fourth quarter. In the Company’s largest market, North American heavy-duty truck, ACT Research is forecasting production of heavy-duty truck to be flat in the fourth quarter of 2021 compared to the same period in the prior year. The Company anticipates that supply chain disruptions our customers have experienced will continue in the fourth quarter and will result in sporadic changes to demand.cannot offset increases.

The Company has experienced raw material cost inflation due to ongoing raw material shortages and supply chain disruptions. The Company anticipates increased raw material costs to continue through the remainder of 2021. The Company will continue to pursue recoupment of higher raw material costs where not contractually constrained and where practical.

Labor ~~markets~~market constraints in all Company locations ~~have tightened over~~started to improve in the ~~past several months~~first quarter of 2022.We anticipate the labor constraints to continue to improve, subject to any pandemic challenges, although we anticipate ongoing wage inflation.

Description of the Company

Core Molding Technologies and its subsidiaries operate in the ~~Company anticipates the markets to remain tight.~~engineered materials market as one operating segment as a molder of thermoplastic and thermoset structural products. The Company produces and sells molded products for varied markets, including medium and heavy-duty trucks, power sports, building products, industrial and utilities and other commercial markets. Core Molding Technologies has ~~had to raise wages~~its headquarters in Columbus, Ohio, and ~~create other solutions~~operates six production facilities in ~~order to hire~~three countries, the United States, Canada and ~~retain workers. The Company will pursue customer price increases to recoup wage increases where contractually possible and where such increases will not significantly negatively impact demand.~~Mexico.

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Results of Operations

Three Months Ended ~~September 30, 2021,~~March 31, 2022, as Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

Net sales for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ totaled ~~$81,025,000~~$90,592,000 and ~~$59,873,000,~~$72,829,000, respectively. Included in net sales were tooling project sales of ~~$13,382,000~~$691,000 and ~~$5,663,000~~$3,696,000 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. These sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$67,643,000~~$89,901,000 compared to ~~$54,240,000~~$69,133,000 for the same period in ~~2020.~~ 2021. The increase in sales is primarily the result of higher demand from the medium and heavy-duty truck, power sports, and ~~consumer~~building product markets and ~~the recoupment of~~price increases related to raw material ~~inflation costs.~~

and labor cost inflation. The Company experienced increased raw material costs in the three months ended September 30, 2021 due to supply disruptions and overall increase in global demand of certain materials. The Company has the ability to pass through a portion, but not all, of the raw material cost inflation incurred to its customers. For the three months ended September 30, 2021, the Company had raw material cost inflation of approximately $9,941,000. The Company was able to recoup approximately $6,544,000 of the raw material cost inflation during the three months ended September 30, 2021. Raw material cost inflation was immaterialCompany's product sales for the three months ended ~~September 30, 2020.~~March 31, 2022 compared to the same period in 2021 by market are as follows (in thousands):


	Three months ended March 31,
	2022		2021
Medium and heavy-duty truck	$	35,219	$	30,692
Power sports	20,907		14,066
Building products	14,939		12,126
Industrial and utilities	6,025		3,939
All other	12,811		8,310
Net product revenue	$	89,901	$	69,133

Gross margin was approximately ~~7.9%~~ 16.0% of sales for the three months ended ~~September 30, 2021,~~March 31, 2022, compared with ~~18.1%~~17.5% for the three months ended ~~September 30, 2020.~~ March 31, 2021. The gross margin percentage decrease was ~~due to~~negatively impacted by net changes in selling price and raw material ~~cost~~costs of ~~7.0%~~1.7% and ~~unfavorable~~ product mix and production ~~inefficiencies~~inflation of ~~4.9%~~1.2%, offset by higher fixed cost leverage of ~~0.8%~~1.4%.

~~Included in selling, general and administrative expense~~ (“SG&A”) was $8,495,000 for the three months ended ~~September 30, 2021~~ ~~are closure costs of $1,768,000 related~~March 31, 2022, compared to ~~the manufacturing facility in Batavia, Ohio.~~ ~~The remaining SG&A~~ ~~costs~~$7,372,000 for the three months ended ~~September 30, 2021~~ ~~totaled $7,040,000 for the three months ended~~ ~~September 30, 2021, compared to $6,517,000 for the three months ended~~ ~~September 30, 2020~~.March 31, 2021. Increased SG&A expenses resulted primarily from higher labor and benefits costs of ~~$309,000 and increased travel~~$659,000, increase in insurance costs of ~~$110,000.~~$122,000 and professional fees of $366,000.

Interest expense totaled ~~$563,000~~$541,000 for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to interest expense of ~~$966,000~~$579,000 for the three months ended ~~September 30, 2020. As~~March 31, 2021. The decrease in interest expense was due to a ~~result of restructuring the Company's debt in 2020, the Company had~~ lower average outstanding debt balance ~~and lower interest rates~~ during the three months ended ~~September 30, 2021,~~March 31, 2022, when compared to the same period in ~~2020, which decreased interest expense in~~ 2021. ~~Interest expense for the three months ended September 30, 2020 includes $225,000 of forbearance fees resulting from an amendment of the Company’s credit agreement.~~

Income tax expense for the three months ended ~~September 30, 2021 was $396,000~~March 31, 2022 is estimated to be $1,638,000, approximately 29.8% of income before income taxes, and includes ~~statutory foreign~~ tax expense ~~from foreign taxable income,~~in Canadian and Mexican tax jurisdictions. U.S. operations incurred a net loss for the three months ended March 31, 2022 and the net loss tax benefit was offset ~~by tax benefits net of~~with a full valuation ~~allowance for tax losses in the United States.~~ reserve.Income tax expense for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$32,000 and includes statutory foreign tax expense from foreign taxable~~estimated to be $1,351,000, approximately 28.1% of income ~~and an adjustment in the Company’s United States net operating losses as the Company will receive a benefit from carrying back 2020 losses to previous tax years with higher tax rates.~~

~~Table of Contents~~before income taxes.

The Company recorded a net ~~loss~~income for the three months ended ~~September 30, 2021~~March 31, 2022 of ~~$3,312,000~~$3,864,000 or ~~$(0.41)~~$0.46 per basic and diluted share, compared with a net income of ~~$3,343,000,~~$3,456,000, or ~~$0.39~~$0.41 per basic and diluted share, for the three months ended September 30, 2020. During the three months ended September 30, 2021 the Company incurred net of tax losses of $1,784,000 or ($0.22) per basic and diluted share for the Batavia manufacturing facility closure.

~~Comprehensive loss totaled $3,375,000 for the three months ended~~ ~~September 30, 2021, compared to comprehensive income of $3,742,000 for the same period ended~~ ~~September 30, 2020. The decrease was primarily related to the decrease in net income of $6,655,000 and foreign currency derivatives, net of tax of $327,000.~~

~~Nine months Ended September 30, 2021, as Compared to Nine Months Ended September 30, 2020~~

Net sales for the nine months ended September 30, 2021 and 2020 totaled $234,315,000 and $161,705,000, respectively. Included in net sales were tooling project sales of $18,421,000 and $9,686,000 for the nine months ended September 30, 2021 and 2020, respectively. These sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales, excluding tooling project sales, for the nine months ended September 30, 2021 were $215,894,000 compared to $152,019,000 for the same period in 2020. This increase in sales is primarily the result of higher demand from the heavy-duty truck, building product, power sports, and consumer product markets and the recoupment of raw material cost inflation.

The Company experienced increased raw material costs in the nine months ended September 30, 2021 due to supply disruptions and overall increase in global demand of certain materials. The Company has the ability to pass through a portion, but not all, of the raw material cost inflation incurred to its customers. For the nine months ended September 30, 2021, the Company had raw material cost inflation of approximately $19,103,000. The Company was able to recoup approximately $12,253,000 of the raw material cost inflation during the nine months ended September 30,March 31, 2021.~~Raw material cost inflation was immaterial for the nine months ended September 30, 2020.~~

~~Gross margin was approximately~~ ~~14.0%~~ ~~of sales for the nine months ended September 30, 2021, compared with 15.2% for the nine months ended September 30, 2020.~~ The gross margin percentage decrease was due to net changes in selling price and raw material costs of 4.6%, offset by net favorable product mix and production efficiencies of 1.3% and higher fixed cost leverage of 2.4%.

~~Included in selling, general and administrative expense~~ ~~(“SG&A”) for the nine months ended~~ ~~September 30, 2021~~ ~~are closure costs of $2,027,000 related the manufacturing facility in Batavia, Ohio.~~ ~~Excluding closing costs, remaining SG&A~~ ~~costs for the nine months ended~~ ~~September 30, 2021~~ totaled $21,717,000 compared to $17,136,000 for the nine months ended September 30, 2020. Increased SG&A expenses resulted primarily from higher labor and benefits costs of $1,539,000, increased business technology costs of $552,000 and increased travel costs of $256,000. SG&A expenses for the nine months ended ~~September 30, 2020~~ ~~was favorably impacted from cost savings efforts implemented due to COVID-19 and includes the favorable impact of COVID-19 related government subsidies of $1,391,000.~~

~~Interest expense totaled $1,725,000 for the nine months ended September 30, 2021, compared to interest expense of $3,338,000 for the nine months ended September 30, 2020.~~As a result of restructuring the Company's debt in 2020, the Company had lower average outstanding debt balance and lower interest rates during the nine months ended September 30, 2021, when compared to the same period in 2020, which decreased interest expense in 2021. ~~Interest expense for the nine months ended~~ ~~September 30, 2020~~ ~~includes $675,000 of forbearance fees resulting from amendments to the Company’s credit agreement.~~

Income tax expense for the nine months ended September 30, 2021 was $3,290,000 and includes statutory foreign tax expense from foreign taxable income offset by tax benefits, net of valuation allowances, for tax losses in the United States. Income tax benefit for the nine months ended September 30, 2020 was $4,933,000 and includes $5,638,000 of a tax valuation allowance reversal and a tax rate benefit due to tax law changes that allow the Company to carryback net operating losses to offset taxable income in 2013 through 2015, where the Company paid tax at 34% compared to the valuation of the losses being recorded at the 21% current United States statutory rate.

~~The Company recorded net income for the nine months ended September 30, 2021 of~~ ~~$4,230,000 or $0.50 per basic and diluted s~~hare, compared with $9,032,000, or $1.08 per basic and diluted share, for the nine months ended September 30, 2020. During the nine months ended September 30, 2021 the Company incurred net of tax losses of $1,798,000 or ($0.22) per basic and diluted share for the Batavia manufacturing facility closure.

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In 2020, net income was favorably impacted by $5,638,000, or $0.69 per share, as a result of a tax valuation allowance reversal and a tax rate benefit due to tax law changes that allowed the Company to carryback net operating losses to offset taxable income in 2013 through 2015, where the Company paid tax at 34% compared to the valuation of the losses being recorded at the 21% current United States statutory rate.

Comprehensive income totaled ~~$4,039,000~~$3,800,000 for the ~~nine~~ three months ended ~~September 30, 2021~~,March 31, 2022, compared to ~~$8,063,000~~comprehensive income of $3,392,000 for the same period ended ~~September 30, 2020~~.March 31, 2021. The ~~decrease~~increase was ~~primarily~~ related to the ~~decrease~~increase in net income of ~~$4,802,000, offset by increases related to the foreign currency derivatives, net of tax of $358,000 and interest rate swaps derivatives, net of tax of $425,000.~~$408,000.

Liquidity and Capital Resources

The Company’s primary sources of funds have been cash generated from operating activities and borrowings from third parties. Primary cash requirements are for operating expenses, capital expenditures, repayments of debt, and acquisitions. The Company from time to time will enter into foreign exchange contracts and interest rate swaps to mitigate risk of foreign exchange and interest rate volatility. The Company had no outstanding foreign exchange contracts nor interest rate swaps as of ~~September 30, 2021.~~March 31, 2022.

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Cash ~~provided by~~used in operating activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 totaled ~~$5,048,000.~~$1,657,000. Net income of ~~$4,230,000~~$3,864,000 positively impacted operating cash flows. Non-cash deductions of depreciation and amortization included in net income amounted to ~~$9,273,000~~. ~~Changes in~~$3,125,000. Increased working capital decreased cash provided by operating activities by ~~$10,116,000.~~$9,387,000. The ~~decrease~~increase in working capital was primarily related to changes in accounts receivable and inventory, offset by change in accounts ~~payable and accrued liabilities.~~payable.

Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$8,301,000,~~$2,482,000, which related to purchases of property, plant and equipment. The Company anticipates spending up to ~~$15,000,000~~$20,000,000 during ~~2021~~2022 on property, plant and equipment purchases for all of the Company's ~~operations, including approximately $3,400,000 to expand~~operations. The Company anticipates increasing production capacity through the ~~Company’s~~completion of its DLFT capacity expansion in Matamoros, ~~Mexico.~~Mexico started in 2021, and the addition of one press in each of its Winona, Minnesota and Cobourg, Ontario Canada facilities. At ~~September 30, 2021,~~March 31, 2022, purchase commitments for capital expenditures in progress were ~~$3,561,000.~~$3,822,000. The Company anticipates using cash from operations, its available revolving line of credit or equipment financing to fund capital investments.

Cash used for financing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 totaled ~~$263,000,~~$681,000, which primarily consisted of net revolving loan borrowings of ~~$1,900,000~~$411,000 and scheduled repayments of principal on outstanding term loans of ~~$2,065,000.~~$1,092,000.

At ~~September 30, 2021,~~March 31, 2022, the Company had ~~$615,000~~$1,326,000 cash on hand, and a net available balance on the revolving line of credit of ~~$22,001,000.~~$24,316,000.

The Company is required to meet certain financial covenants included in the Credit Agreement with respect to fixed charge coverage ~~charge~~ ratio. As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement as described above.

Management regularly evaluates the Company’s ability to effectively meet its debt covenants. Based on the Company’s forecasts, which are based on industry analysts’ estimates of heavy and medium-duty truck production volumes, customers' forecasts, as well as other assumptions, management believes that the Company will be able to maintain compliance with its financial covenants for the next 12 months. Management believes ~~that existing~~ cash on hand, cash flow from operating activities, ~~and~~ available borrowings under the ~~Credit Agreement~~Company's credit agreement and equipment financing for capacity expansion will be sufficient to meet the ~~Company’s~~Company's current liquidity needs for the next 12 months. If a material adverse change in the financial position of the Company should occur, or if actual sales or expenses are substantially different than what has been forecasted, the Company’s liquidity and ability to obtain further financing to fund future operating and capital requirements could be negatively impacted.needs.

Term Loans

Wells Fargo Term Loans

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The WF Term Loans contains reporting, indebtedness, and financial covenants. The Company is in compliance with ~~its~~such covenants as of ~~September 30, 2021.~~March 31, 2022.

FGI Equipment Finance LLC Term Loan

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were used to pay off the Company’s existing outstanding indebtedness with KeyBank National Association, and to pay certain fees and expenses associated with the transactions, and $1,200,000 which proceeds were used to fund a security deposit to be held by FGI. Interest on the FGI Term Loan is a fixed rate of 8.25% and is payable monthly. The security deposit of $1,200,000 is included in other assets in the Consolidated Balance Sheets.

Leaf Capital Funding

On April 24, 2020 the Company entered into a finance agreement with Leaf Capital Funding of $175,000 for equipment. The parties agreed to a fixed interest rate of 5.5% and a term of 60 months.

Revolving Loans

Wells Fargo Revolving Loan

On October 27, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, lead arranger and book runner, and the lenders party thereto (the “Lenders”). Pursuant to the terms of the Credit Agreement, the Lenders made available to the Company a revolving loan commitment (the “WF Revolving Loan”) of $25,000,000 ($8,745,000 of which was advanced to the Company on October 28, 2020). The proceeds from the WF Revolving Loan were used to pay off the Company’s existing outstanding indebtedness with KeyBank National Association, and to pay certain fees and expenses associated with the financing.

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The WF Revolving Loan contains the same covenants as the WF Term Loans.

~~KeyBank Loan~~Bank Covenants

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~~On September 30, 2020,~~The Company is required to meet certain financial covenants included in the Credit Agreement with respect to fixed coverage charge ratio. As of March 31, 2022, the Company ~~had a term loan of $35,035,000 and no revolving loan balance~~was in compliance with ~~KeyBank National Association. The Company’s term loan and revolving loan had variable interest rate of 8.00% at September 30, 2020.~~its financial covenants associated with the loans made under the Credit Agreement as described above.

Off-Balance Sheet Arrangements

The Company did not have any significant off-balance sheet arrangements as of ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

The Company did not have or experience any material changes outside the ordinary course of business as to contractual obligations, including long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long term liabilities reflected in the Company’s Consolidated Balance Sheet under GAAP, as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Critical Accounting Policies and Estimates

For information on critical accounting policies and estimates, see Note 2, "Critical Accounting Policies and Estimates," to the consolidated financial statements included herein.

Recent Accounting Pronouncements

For information on the impact of recently issued accounting pronouncements, see Note 3, "Recent Accounting Pronouncements," to the consolidated financial statements included herein.

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~~Part I — Financial Information~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Core Molding Technologies’ primary market risk results from changes in the price of commodities used in its manufacturing operations. Core Molding Technologies is also exposed to fluctuations in interest rates and foreign currency fluctuations associated with the Mexican ~~peso~~Peso and Canadian Dollar. Core Molding Technologies does not hold any material market risk sensitive instruments for trading purposes. The Company may use derivative financial instruments to hedge exposure to fluctuations in foreign exchange rates and interest rates.

Core Molding Technologies has the following three items that are sensitive to market risks: (1) Revolving Loans and Term Loans under the Credit Agreement, some of which bear a variable interest rate; (2) foreign currency purchases in which the Company purchases Mexican ~~pesos~~Pesos and Canadian ~~dollars~~Dollars with United States ~~dollars~~Dollars to meet certain obligations; and (3) raw material purchases in which Core Molding Technologies purchases various resins, fiberglass, and metal components for use in production. The prices and availability of these materials are affected by the prices of crude oil, natural gas and other feedstocks, tariffs, as well as processing capacity versus demand.

Assuming a hypothetical 10% change in short-term interest rates, interest paid on the Term Loan would ~~have been~~be impacted, as the interest rate on these loans is based upon LIBOR. It would not, however, have a material effect on earnings before tax.

Assuming a hypothetical 10% decrease in the United States dollar to Mexican ~~peso~~Peso and Canadian ~~dollar~~Dollar exchange rate, the Company would be impacted by an increase in operating costs, which would have an adverse effect on operating margins.

Assuming a hypothetical 10% increase in commodity prices, Core Molding Technologies would be impacted by an increase in raw material costs, which would have an adverse effect on operating margins.

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~~Part I — Financial Information~~

Item 4. Controls and Procedures

As of the end of the period covered by this report, the Company has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon this evaluation, the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were (i) effective to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and (ii) effective to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes in internal controls over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Part II — Other Information

Item 1. Legal Proceedings

From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company's consolidated financial position or results of operations.

Item 1A. Risk Factors

There have been no material changes in Core Molding Technologies' risk factors from those previously disclosed in Core Molding Technologies' Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number that May Yet be Purchased Under the Plans or Programs
July 1 to 31, 2021 3,363 14.46 — —
August 1 to 31, 2021 — — — —
September 1 to 30, 2021 — — — —

The Company did not make any unregistered sales of equity securities during the three months ended March 31, 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

See Index to Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CORE MOLDING TECHNOLOGIES, INC.

Date:

~~November 8, 2021~~May 10, 2022

By:

/s/ David L. Duvall

David L. Duvall

President, Chief Executive Officer, and Director

Date:

~~November 8, 2021~~May 10, 2022

By:

/s/ John P. Zimmer

John P. Zimmer

Executive Vice President, Secretary, Treasurer and Chief Financial Officer

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INDEX TO EXHIBIT

Exhibit No.

Description

Location

~~2(a)(1)~~

~~Asset Purchase Agreement dated as of September 12, 1996, as amended October 31, 1996, between Navistar and RYMAC Mortgage Investment Corporation~~1

~~Incorporated by reference to Exhibit 2-A to Registration Statement on Form S-4 (Registration No. 333-15809)~~

~~2(a)(2)~~

~~Second Amendment to Asset Purchase Agreement dated December 16, 1996~~1

~~Incorporated by reference to Exhibit 2(a)(2) to Annual Report on Form 10-K for the year-ended December 31, 2001~~

~~2(b)(1)~~

~~Agreement and Plan of Merger dated as of November 1, 1996, between Core Molding Technologies, Inc. and RYMAC Mortgage Investment Corporation~~

~~Incorporated by reference to Exhibit 2-B to Registration Statement on Form S-4 (Registration No. 333-15809)~~

~~2(b)(2)~~

~~First Amendment to Agreement and Plan of Merger dated as of December 27, 1996 between Core Molding Technologies, Inc. and RYMAC Mortgage Investment Corporation~~

~~Incorporated by reference to Exhibit 2(b)(2) to Annual Report on Form 10-K for the year ended December 31, 2002~~

~~2(c)~~

~~Asset Purchase Agreement dated as of October 10, 2001, between Core Molding Technologies, Inc. and Airshield Corporation~~

~~Incorporated by reference to Exhibit 1 to Current Report on Form 8-K filed October 31, 2001~~

~~2(d)~~

~~Asset Purchase Agreement dated as of March 20, 2015, between Core Molding Technologies, Inc and CPI Binani, Inc.~~

~~Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed March 23, 2015~~

~~2(e)~~

Asset Purchase Agreement dated as of January 16, 2018 between 1137952 B.C. Ltd., Horizon Plastics International, Inc., 1541689 Ontario Inc., 2551024 Ontario Inc., Horizon Plastics de Mexico, S.A. de C.V., and Brian Read

~~Incorporate by reference to Exhibit 2.1 to Current Report on Form 8-K filed January 19, 2018~~

3(a)(1)

Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on October 8, 1996

Incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-8 (Registration No. 333-29203)

3(a)(2)

Certificate of Amendment of Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on November 6, 1996

Incorporated by reference to Exhibit 4(b) to Registration Statement on Form S-8 (Registration No. 333-29203)

3(a)(3)

Certificate of Amendment of Certificate of Incorporation as filed with the Secretary of State of Delaware on August 28, 2002

Incorporated by reference to Exhibit 3(a)(4) to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002

3(a)(4)

Certificate of Designation, Preferences and Rights of Series AB Junior Participating Preferred Stock as filed with the Secretary of State of Delaware on ~~July 18, 2007~~April 21, 2020

Incorporated by reference to Exhibit 3.1 to ~~Current Report on~~ Form 8-K filed ~~July 19, 2007~~April 22, 2020

3(a)(5)

Certificate of Elimination of the Series A Junior ~~Participating~~Participant Preferred Stock as filed with the ~~Secretary~~Delaware Sec. of State ~~of the State of Delaware~~ on April ~~2, 2015.~~1, 2021

Incorporated by reference to Exhibit 3(a)(5) to ~~Current Report on~~ Form 8-K filed April ~~2, 2015~~6, 2021

3(b)(1)

Amended and Restated By-Laws of Core Molding Technologies, Inc.

Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed January 4, 2008

3(b)~~(1)~~(2)

Amendment No. 1 to the Amended and Restated By-Laws of Core Molding Technologies, Inc.

Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed December 17, 2013

~~Table of Contents~~

~~Exhibit No.~~

~~Description~~

~~Location~~

~~4(a)(1)~~

~~Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on October 8, 1996~~

~~Incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-8 (Registration No. 333-29203)~~

~~4(a)(2)~~

~~Certificate of Amendment of Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on November 6, 1996~~

~~Incorporated by reference to Exhibit 4(b) to Registration Statement on Form S-8 (Registration No. 333-29203)~~

~~4(a)(3)~~

~~Certificate of Amendment of Certificate of Incorporation as filed with the Secretary of State of Delaware on August 28, 2002~~

~~Incorporated by reference to Exhibit 3(a)(4) to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002~~

~~4(a)(4)~~

~~Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock as filed with the Secretary of State of Delaware on July 18, 2007~~

~~Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed July 19, 2007~~

~~4(a)(5)~~

~~Certificate of Elimination of Series A Junior Participating Preferred Stock, as filed with the Secretary of State of the State of Delaware on April 2, 2015~~

~~Incorporated by reference to Exhibit 3(a)(5) to Current Report on Form 8-K filed April 2, 2015~~

~~10 (m)~~

~~Form of Restricted Stock Agreement between Core Molding Technologies, Inc. and certain executive officers, dated August 6, 2021~~

~~Incorporated by reference to Exhibit 10(m) to Current Report on Form 10-Q filed on August 6th, 2021~~

~~10 (n)~~

~~Form of Executive Employment Agreement between David L. Duvall and Core Molding Technologies, Inc, dated August 6, 2021~~

~~Incorporated by~~ r ~~eference to Exhibit~~ ~~10(n) to Current Report on Form 10-Q filed on August 6th, 2021~~

~~10 (q)~~

~~Form of Executive Employment Agreement between Core Molding Technologies, Inc. and certain executive officers, dated August 6, 2021~~

~~Incorporated by referenc~~e to ~~Exhibit~~ ~~10(q) to Current Report on Form 10-Q~~ ~~filed on August 6th, 2021~~

~~Computation of Net Income per Share~~

~~Exhibit 11 omitted because the required information is Included in Notes to Financial Statement~~

31(a)

Section 302 Certification by David L. Duvall, President, Chief Executive Officer, and Director

Filed Herein

31(b)

Section 302 Certification by John P. Zimmer, Executive Vice President, Secretary, Treasurer, and Chief Financial Officer

Filed Herein

32(a)

Certification of David L. Duvall, Chief Executive Officer of Core Molding Technologies, Inc., dated ~~November 5, 2021,~~March 10, 2022, pursuant to 18 U.S.C. Section 1350

Filed Herein

32(b)

Certification of John P. Zimmer, Executive Vice President, Secretary, Treasurer and Chief Financial Officer of Core Molding Technologies, Inc., dated ~~November 5, 2021,~~March 10, 2022, pursuant to 18 U.S.C. Section 1350

Filed Herein

101.INS

XBRL Instance Document

Filed Herein

101.SCH

XBRL Taxonomy Extension Schema Document

Filed Herein

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

Filed Herein

101.LAB

XBRL Taxonomy Extension Label Linkbase

Filed Herein

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

Filed Herein

~~Table of Contents~~

~~Exhibit No.~~

~~Description~~

~~Location~~

101.DEF

XBRL Taxonomy Extension Definition Linkbase

Filed Herein

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Filed Herein

The Asset Purchase Agreement, as filed with the Securities and Exchange Commission as Exhibit 2-A to Registration Statement on Form S-4 (Registration No. 333-15809), omits the exhibits (including the Buyer Note, Special Warranty Deed, Supply Agreement, Registration Rights Agreement and Transition Services Agreement identified in the Asset Purchase Agreement) and schedules (including those identified in Sections 1, 3, 4, 5, 6, 8 and 30 of the Asset Purchase Agreement). Core Molding Technologies, Inc. will provide any omitted exhibit or schedule to the Securities and Exchange Commission upon request.

3631


	September 30, 2021		December 31, 2020
2021 (remainder of year)	$	373	$	1,215
2022	1,143		811
2023	1,044		706
2024	1,050		705
2025 and beyond	629		—
Total lease payments	4,239		3,437
Less: imputed interest	(649)		(744)
Total lease obligations	3,590		2,693
Less: current obligations	(1,137)		(1,023)
Long-term lease obligations	$	2,453	$	1,670


Derivatives in subtopic 815-20 Cash Flow Hedging Relationship	Amount of Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income on Derivative				Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income(A)	Amount of Realized Gain (Loss) Reclassified from Accumulated Other Comprehensive Income
	2021		2020			2021		2020
Foreign exchange contracts	$	—	$	668	Cost of goods sold	$	—	$	(219)
					Selling, general and administrative expense	$	—	$	(33)
Interest rate swaps	$	—	$	321	Interest expense	$	—	$	(149)


Derivatives in subtopic 815-20 Cash Flow Hedging Relationship	Amount of Unrealized Loss Recognized in Accumulated Other Comprehensive Income on Derivative				Location of Loss Reclassified from Accumulated Other Comprehensive Income (A)	Amount of Realized Loss Reclassified from Accumulated Other Comprehensive Income
	2021		2020			2021		2020
Foreign exchange contracts	$	—	$	135,000	Cost of goods sold	$	—	$	(525,000)
					Selling, general and administrative expense	$	—	$	(67,000)
Interest rate swaps	$	—	$	(206,000)	Interest expense	$	—	$	(343,000)


2020:	Derivative Hedging Activities		Post Retirement Benefit Plan Items(A)		Accumulated Other Comprehensive Income
Balance at December 31, 2019	$	(191)	$	1,561	$	1,370
Other comprehensive loss before reclassifications	(71)		—		(71)
Amounts reclassified from accumulated other comprehensive income	(935)		(236)		(1,171)
Income tax benefit	223		50		273
Balance at September 30, 2020	$	(974)	$	1,375	$	401

2021:
Balance at December 31, 2020	$	—	$	1,375	$	1,375
Other comprehensive income before reclassifications	—		—		—
Amounts reclassified from accumulated other comprehensive income	—		(242)		(242)
Income tax benefit	—		51		51
Balance at September 30, 2021	$	—	$	1,184	$	1,184


Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number that May Yet be Purchased Under the Plans or Programs
July 1 to 31, 2021	3,363	14.46	—	—
August 1 to 31, 2021	—	—	—	—
September 1 to 30, 2021	—	—	—	—