CMT 10-K & 10-Q changes, risk factors and insider trading

Beginning in the second half of 2024 and continuing through 2026, our business with Volvo, a significant customer accounting for approximately 14% of our 2024 total sales, will begin transitioningtransitioned from existing production programs that the Company currently suppliessupplied to new programs that the Company does not support. There is no assurance that we will be able to replace the loss of any revenue that we may experience from the expiration of our existing production programs with Volvo, or from the loss of any other significant customer whether due to unexpected loss or future expiration of production programs.

The North American heavy and medium-duty truck industry, on which the demand of our products is largely dependent, is highly cyclical. In 2024,2025, approximately 56%44% of our product sales was in this industry. The market for this industry fluctuates in response to factors that are beyond our control, such as: general economic conditions; interest rates; federal and state regulations, including engine emissions regulations, import regulations, tariffs (for example, on products imported into or exported from the U.S., including under U.S. or other trade laws or measures, or other key markets); and other taxes, consumer spending, fuel costs, supply chain constraints, our customers' inventory levels and production rates, and the overall strength and variability of the economy. Our manufacturing operations have a significant fixed cost component. Accordingly, during periods of changing demands, including an increase or slowdown in truck demand, the profitability of our operations may change proportionately more than revenues from operations. In particular, the continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action (or inaction) related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs and prices, our customers, our suppliers, and the economy, which in turn could have a material adverse effect on our business, operating results, and financial condition. In addition, our operations are typically seasonal as a result of regular customer maintenance shutdowns, which typically vary from year to year based on production demands and occur in the third and fourth fiscal quarters of each calendar year. This seasonality may result in decreased net sales and profitability during the third and fourth fiscal quarters of each calendar year. Weakness and variability in overall economic conditions or in the markets that we serve, or significant reductions by our customers in their inventory levels or future production rates, could result in decreased demand for our products and could have a material adverse effect on our business, results of operations, or financial condition.

We rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products. Any direct or indirect supply chain disruptions, including from the effects of any imposition of tariffs or retaliatory trade measures, pandemics or epidemics, economic slowdowns, recessions, geopolitical events, natural disasters or similar catastrophes, inflation or rising interest rates, may have an adverse impact on our business, financial condition, results of operations or cash flows. In addition, recent inflationary pressures have resulted in increased raw material, labor and logistics expenses and evolving trade policies could continue to make sourcing products from foreign countries difficult and costly, including the imposition of tariffs and related retaliatory measures, which may force us to face higher costs that could require us to raise prices for our products, which, may adversely affect our results of operations. If our costs are subject to continuing significant inflationary pressures and/or imposition of tariffs, we may not be able to fully offset such higher costs through price increases. Our inability to do soso, or any significant delay in our ability to act, could materially harm our results of operations and financial condition.

In order to obtain new business in a competitive environment, the Company enters into long-term contracts that fix the customer product price and requires the Company to accept all product orders pursuant to such contracts. These fixed price customer contracts allow for certain price increases but may not provide for recovery of all of the Company's cost increases. As a result, if the Company’s operating costs, such as raw material, labor and overhead costs, increase the Company may not be able to increase the price of products sold to customers under such contracts as well as others enough to offset operating costs increases, which could adversely affect our operating results and financial condition.

We are primarily a components supplier to large original equipment manufacturers (“OEMs”) that are able to exert considerable pressure on components suppliers to reduce costs, improve quality, and provide additional design and engineering capabilities. OEMs continue to demand and receive price reductions and measurable increases in quality through their use of competitive selection processes, rating programs, and various other arrangements. We may be unable to generate sufficient production cost savings in the future to offset such price reductions. OEMs may also seek to save costs by purchasing components from suppliers that are geographically closer to their production facilities or relocating production to locations with lower cost structures and purchasing components from suppliers with lower production costs. These decisions by OEMs could require us to shift production between our facilities, move production lines between our facilities, or open new facilities to remain competitive. Shifting production, moving production lines, or opening new locations could result in significant costs required for capital investment, transfer expenses, and operating costs. Additionally, OEMs have generally required component suppliers to provide more design engineering input at earlier stages of the product development process, the costs of which have, in some cases, been absorbed by the suppliers. To the extent that the Company does not meet the quality standards or demands of quality improvement initiatives sought by OEMs, or does not match the quality of suppliers of comparable products, OEMs may choose to purchase from these alternative suppliers, and as a result the Company may lose existing business or not qualify for new business with OEMs. Future price reductions, increased quality standards, and additional engineering capabilities required by OEMs may reduce our profitability and have a material adverse effect on our business, results of operations, or financial condition.

Our success largely depends on the efforts and abilities of our key personnel and our continuing ability to attract and retain highly qualified personnel. Their skills, experience, and industry contacts significantly benefit us. A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels and government regulations or policies.policies and enforcement. The increasing competition for highly skilled and talented employees has resulted, and could in the future result, in higher compensation costs resulting in difficulties in maintaining a capable workforce. If we are unable to hire and retain skilled employees capable of performing at a high level, or if mitigation measures we may take to respond to a decrease in the availability of skilled laborers, such as overtime and third-party outsourcing, have unintended negative effects, then our business could be adversely affected. A sustained labor shortage, lack of skilled labor, increased turnover or labor cost inflation, as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, which could negatively affect our ability to efficiently operate our manufacturing facilities and overall business and have other adverse effects on our results of operations and financial condition.

As of December 31, 2024,2025, unions at our Columbus, Ohio, Matamoros and Escobedo,Monterrey, Mexico, and Cobourg, Canada facilities represented approximately 67.4%65.8% of our entire workforce. As a result, we are subject to the risk of work stoppages and other labor-relations matters. The current Columbus, Ohio, Matamoros, Mexico, Cobourg, Canada, and Escobedo,Monterrey, Mexico union contracts extend through August 9,12, 2025,2028, December 31, 2025,2026, November 1, 2025 and February 14, 2026, respectively. Any prolonged work stoppage or strike at our unionized facilities could have a material adverse effect on our business, results of operations, or financial condition. Any failure by us to reach a new agreement upon expiration of such union contracts may have a material adverse effect on our business, results of operations, or financial condition.

We operate manufacturing facilities in Matamoros and Escobedo,Monterrey, Mexico and Cobourg, Canada. As a result, a significant portion of our business and operations is subject to the risk of changes in economic conditions, tax systems, consumer preferences, social conditions, safety and security conditions, and political conditions inherent in Mexico and Canada, including changes in the laws and policies that govern foreign investment, as well as changes in United States laws, policies and regulations relating to foreign trade, investment and relations.relations with these two countries. Changes in laws, policies and regulations related to foreign trade, investment and relations may have an adverse effect on our results of operations, financial condition, or cash flows. Similarly, the potential imposition of tariffs, especially in Mexico, may lead to further challenges that may negatively affect our business if there is a resulting reduction in demand for our products, result in the loss of customers and harm our competitive position in key markets.

Changes in U.S. trade policy, including the imposition of new or increased tariffs and the resulting consequences, as well as U.S. foreign relations, could have an adverse effect on our business, operating results, and financial condition.

Evolving U.S. trade policies and foreign relations could make sourcing and selling products between foreign countries difficult and costly, as the Company and its customers sell foreign produced products into the United StatesU.S. and the Company sources a portion of its raw materials used in production from outside of the U.S. For example, in early 2025, the current U.S. administration announced significant new tariffs on foreign imports into the U.S., specifically from Mexico and Canada, all of which were subsequently postponed for 30 days prior to becoming effective. We cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, taxes or other similar restrictions upon the import or export of our products in the future, nor can we predict the outcome of negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. The continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs and prices, our customers, our suppliers, and the economy, which in turn could have a material adverse effect on our business, operating results, and financial condition.

We convert raw materials into molded products through a manufacturing process at each production facility. A catastrophic loss of the use of all or a portion of our facilities due to accident, fire, explosion, or natural disaster, interruption or stoppage due to regulatory or governmental action, or other reasons, whether short or long-term, could have a material adverse effect on our business, results of operations, or financial condition.

The success of our business relies on our ability to produce products which meet the quality, performance, and price expectations of our customers. Our ability to recognize profit is largely dependent upon accurately identifying the costs associated with the manufacturing of our products and executing the manufacturing process in a cost-effective manner. All costs may not be accurately identified during the Company's quoting process and the expected level of manufacturing efficiency may not be achieved. As a result, we may not realize the anticipated operating results related to new business awards. We will continue to pursue, and may be awarded, new business from existing or new customers. The Company may make capital investments, which may be material to the Company, in order to meet the expected production requirements of existing or new customers related to these business awards, and to support the potential production demands which may result from continued sales growth. The anticipated impact on the Company's sales and operating results related to these business awards may not materialize, as our growth could be adversely affected by many factors, including macroeconomic events such as inflation, recession, and interest rate increases, competition, and labor market shortages or regulations. Any delays or production difficulties encountered in connection with these business awards, and any change in customer demand, could adversely impact our business, results of operations, and liquidity, and the benefits we anticipate may never materialize.

Any acquisitions may present significant challenges for our management due to the increased time and resources required to properly integrate management, employees, information systems, accounting controls, personnel, operations, and administrative functions of the acquired business with those of ours and to manage the combined company on a going forward basis. The diversion of management's attention and any delays or difficulties encountered in connection with the integration of these businesses could adversely impact our business, results of operations, and liquidity, and the benefits we anticipate may never materialize.

As we grow our business, we may have to incur significant capital expenditures. We may make capital investments to, among other things, build new or upgrade our facilities, purchase equipment, and enhance our production processes. We may not have, or be able to obtain, adequate funds to make all necessary capital expenditures when required, and the amount of future capital expenditures may be materially in excess of our anticipated or current expenditures. If we are unable to make necessary capital expenditures we may not have the capability to support our customer demands, which in turn could reduce our sales and profitability and impair our ability to satisfy our customers' expectations. The need for additional capital may necessitate that the Company incur further indebtedness or issue additional stock in the equity markets in order to raise neededthe capital.capital needed. In addition, even if we are able to invest sufficient resources, these investments may not generate net sales that exceed our expenses, generate any net sales at all, or result in any commercially acceptable products.

Our stock price can fluctuate widely in response to a variety of factors. Factors include actual or anticipated variations in our quarterly operating results, our relatively small public float, changes in securities analysts' estimates of our future earnings, the loss of major customers, or significant business developments relating to us or our competitors, and other factors, including those described in this “Risk Factors” section. Our common stock also has a low average daily trading volume, which limits a person's ability to quickly accumulate or quickly divest themselves of large blocks of our stock. In addition, a low average trading volume can lead to significant price swings even when a relatively few number of shares are being traded. On March 11, 2024, the Company announced that its Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $7,500,000 of its outstanding shares of common stock. Repurchases of shares of common stock under the stock repurchase program are made in the open market. The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion. Company stock repurchases under the program may result in common stock price and volume fluctuations. During the year ended December 31, 2024,2025, the Company repurchased 172,043201,999 common shares under the stock repurchase program and had a remaining repurchase authorization of $4,561,000$1,387,000 as of December 31, 2024.2025.

We require effective internal control over financial reporting in order to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud. Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we cannot provide reasonable assurance with respect to our financial statements and effectively prevent fraud, our financial statements could become materially misleading, which could adversely affect the trading price of our common stock. If we are not able to maintain the adequacy of our internal control over financial reporting, including any failure to implement required new or improved controls or if we experience difficulties in their implementation, our business, financial condition, and operating results could be harmed. Any material weakness could affect investor confidence in the accuracy and completeness of our financial statements. As a result, our ability to obtain any additional financing, or additional financing on favorable terms, could be materially and adversely affected. This, in turn, could materially and adversely affect our business, financial condition, and the market value of our stock and require us to incur additional costs to improve our internal control systems and procedures. In addition, perceptions of the Company among customers, suppliers, lenders, regulators, investors, securities analysts, and others could also be adversely affected. Material weaknesses may arise in the future due to our failure to implement and maintain adequate internal control over financial reporting.

We are subject to income taxes in the United States, Mexico, and Canada. Our provision for income taxes and cash flow related to taxes may be negatively impacted by: (1) changes in the mix of earnings taxable in jurisdictions with different statutory rates, (2) changes in tax laws and accounting principles, (3) changes in the valuation of our deferred tax assets and liabilities, (4) discovery of new information during the course of tax return preparation, (5) increases in nondeductible expenses, or (6) being subject to include foreign income in the United States as part of the Global Intangible Low-Taxed Income or the GILTI tax provision. Tax audits may also negatively impact our business, financial condition, and results of operations. We are subject to continued examination of our income tax returns, and tax authorities may disagree with our tax positions and assess additional tax. We regularly evaluate the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. Outcomes from examinations may have a negative impact on our future financial condition and operating results.

Cybersecurity incidents across industries, including ours, are increasing in sophistication and frequency and may range from uncoordinated individual attempts to measures targeted specifically at us. These attacks include but are not limited to, malicious software or viruses, attempts to gain unauthorized access to, or otherwise disrupt, our information systems, attempts to gain unauthorized access to business, proprietary or other confidential information, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. Cybersecurity failures may be caused by employee error, malfeasance, system errors or vulnerabilities, including vulnerabilities of our customers, vendors, suppliers, and their products. We have been subject to cybersecurity incidents in the past. Based on information known to date, past incidents have not had a material impact on our financial condition or results of operations. Additionally, if our controls are not effective in timely identifying the occurrence of material cybersecurity incidents involving our information systems or data, then we may not comply with the SEC’s cybersecurity disclosure regulations, which could lead to regulatory action, fines, penalties, inquiries or reprimands that adversely impact our business, as well as lead to a decline in customer engagement or confidence, negative publicity, and possibly an increase in our operating costs to improve monitoring and compliance features relating to cybersecurity. The rapid evolution and increased adoption of artificial intelligence technologies may intensify these risks. We, or third parties who provide material services to us, may experience such incidents in the future, potentially with more frequency or sophistication. In the conduct of our business, we collect, use, transmit and store data on information systems, which are vulnerable to disruption and an increasing threat of continually evolving cybersecurity risks. Failures of our IT systems as a result of cybersecurity incidents or other disruptions could result in a breach of critical operational or financial controls and lead to a disruption of our operations, commercial activities or financial processes. Cybersecurity incidents or other disruptions impacting significant customers and/or suppliers could also lead to a disruption of our operations or commercial activities. Despite our attempts to implement safeguards on our systems and mitigate potential risks, our actions may not be sufficient to prevent cyberattacks or security breaches that manipulate or improperly use our systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations. The occurrence of such events could have a material adverse effect on our business, financial condition or results of operations.

Disruptions or unpredictable variability in the financial markets could have a material adverse effect on our liquidity and financial condition if our ability to borrow money were to be impaired. Disruptions or unpredictable variability in the financial markets may also have a material adverse impact on the availability and cost of credit in the future. Our ability to pay our debt or refinance our obligations will depend on our future performance, which could be affected by, among other things, prevailing economic conditions. Disruptions in the financial markets may also have an adverse effect on the U.S. and world economies, which would have a negative impact on demand for our products. In addition, tightening of credit markets may have an adverse impact on our customers' ability to finance the sale of their products or our suppliers' ability to provide us with raw materials, either of which could adversely affect our business and results of operations.

Looking forward, based on industry analyst projections, customer forecasts, cyclical demand, and customer programs ramping down throughout 2025, offset by anticipated program launches and price changes, the Company expects revenues for first half of the calendar year 20252026 to decreaseincrease by approximately 50 to 105 percent as compared to 2024,2025 but remain flat forand the fullsecond yearhalf 2025of as compared2026 to 2024.be greater than the first half of 2026. The Company also expects a change inconsistent mix in 20252026 as compared to 20242025 between product revenues and tooling revenues as new programs launch during 2025.2026. In 2026, the Company expects to incur incremental one-time costs of approximately $2,500,000 in connection with the Mexico Expansion Project, primarily related to press relocations and the temporary overlap of two facility leases in Monterrey, as well as approximately $1,000,000 associated with the Company’s succession plan. Both expenses will primarily be incurred during the first half of 2026 and will be recorded in Selling, General, and Administrative expenses.

Cash provided by operating activities totaled $35,151,000$19,185,000 for the year ended December 31, 2024.2025. Net income of $13,299,000$11,195,000 positively impacted operating cash flows. Cash flows were positively impactimpacted by non-cash deductions in net income from depreciation and amortization,amortization and share based compensation and deferred income taxes of $13,399,000, $2,495,000$12,348,000 and $473,000,$1,788,000, respectively. AAn decreaseincrease in working capital of $4,064,000$5,332,000 resulted in ana increasedecrease in cash. The increasedecrease in cash from working capital was primarily related to net changes in accounts receivable,payable, inventory and other prepaid assets, offset by net changes in accounts payable and other accrued liabilities.assets.

Cash used in investing activities totaled $11,525,000$17,268,000 for the year ended December 31, 2024,2025, relatedof which $10,809,000 relates to purchases of property, plant and equipment for additional capacity, automation, new programs and equipment improvements at the Company’s production facilities.facilities and $6,459,000 relates to the Mexico expansion project. At December 31, 2025, purchase commitments for capital expenditures in progress were approximately $13,766,000. The Company anticipates spending approximately $10,000,000$25,000,000 to $12,000,000$30,000,000 during 2026 on property, plant and equipment purchases for all of the Company's operationsoperations. Included in the Company's anticipated spending in 2026 is approximately $18,000,000 to $20,000,000 for the yearMexico endedexpansion December 31, 2025. The Company plans on using cash on hand and cash from operations to finance capital expenditures. At December 31, 2024, purchase commitments for capital expenditures in progress were approximately $2,802,000.project.

Cash used in financing activities totaled $5,927,000$5,662,000 for the year ended December 31, 2024.2025. Cash activity primarily consisted of the purchase of treasury stock related to the Company's stock buy back plan of $2,939,000,$3,174,000, repayments of long-term debt of $1,887,000 and purchase of treasury stock of $1,440,000$601,000 in exchange for payment of taxes related to net share settlements of equity awards and repayments of long-term debt of $1,548,000.awards.

In connection with the credit agreement, the Company incurred debt origination fees of $402,000 related to the Huntington Credit Agreement, which is being amortized over the life of the Credit Agreement. The aggregate unamortized deferred financing fees as of December 31, 2025 and 2024 totaledwas $210,000.$129,000 and $210,000, respectively.

Management maintains allowances for doubtful accounts for estimatedcredit 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 determined that no$58,000 allowance for doubtfulcredit accountslosses was needed at December 31, 20242025 orand no allowances for credit losses was needed at December 31, 2023, respectively.2024. Management also records estimates for customer returns and deductions, discounts offered to customers, and for price adjustments. Should customer returns and deductions, discounts, and price adjustments fluctuate from the estimated amounts, additional allowances may be required. The Company had an allowance for estimated chargebacks of $212,000 at December 31, 2025 and $227,000 at December 31, 2024 and $138,000 at December 31, 2023.2024.

The Company is self-insured with respect to Columbus, Ohio; Gaffney, South Carolina; Winona, Minnesota; and Brownsville, Texas for medical, dental and vision claims and Columbus, 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 December 31, 20242025 and December 31, 20232024 of $1,087,000$845,000 and $988,000,$1,087,000, respectively,respectively. The accrual was included within the Other Current Liabilities on the Company's Consolidated Balance Sheets.

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 to realize deferred tax benefits through the generation of future taxable income. Management reviewsmakes allassumptions, available evidence, both positivejudgments, and negative,estimates to assessdetermine our current and deferred tax provision and also the long-term earnings potential of the Company using a number of alternatives to evaluate financial results in economic cycles at various industry volume conditions. The projected availability of taxable income to realize thedeferred tax benefitsassets fromand the reversal of temporary differences before expiration of these benefits are also considered.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.

As of December 31, 20242025 the Company had a net deferred tax asset of $1,454,000$1,402,000 and $183,000$221,000 related to tax positions in Mexico and Canada and deferred tax liabilities of $1,219,000$1,035,000 related to tax positions in the United States. Deferred tax assets are included in "Other non-current assets" on the Consolidated Balance Sheets and deferred tax liabilities are included in "Other non-current liabilities" on the Consolidated Balance Sheets. As of December 31, 2024,2025, the Company had a valuation allowance of $1,265,000$1,327,000 against the deferred tax asset related to local (city) jurisdiction tax positions in the United States,positions, due to cumulative losses over the last three years in the local jurisdiction and uncertainty related to the Company’s ability to realize the deferred assets. The Company believes that the net deferred tax assets associated with the Mexican and CanadianCanada tax jurisdictions are more-likely-than-not to be realizable based on estimates of future taxable income.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional informationdisclosures onregarding income taxes paid. The Company has fully implemented the requirements of ASU 2023-09 for the current reporting period and has included the corresponding disaggregated reconciliation tables and income tax paid disclosures within the related footnote. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. As(See thisNote accounting13, standardIncome only impacts disclosure, it will not have a material impact on the Company's Consolidated Financial Statements.Taxes.)

There have been no material changes in theCore Company'sMolding Technologies' risk factors from those previously disclosed in Core Molding Technologies' Annual Report on Form 10-K for the year ended December 31, 2025.

Product salesrevenue 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.

Looking forward, based on industry analyst projections, customer forecasts, cyclical demand, anticipated program launches and price changes, the Company expects revenues for the calendar year 2026 to increase by approximately 0 to 5 percent as compared to 2025 and the second half of 2026 to be greater than the first half of 2026. The Company also expects a consistent mix in 2026 as compared to 2025 between product revenues and tooling project revenues as new programs launch during 2026. InDuring the second half of 2026, the Company expects to incur incremental one-time costs of approximately $3,000,000$500,000 in connection with the Mexico Expansion Project, primarily related to press relocations and the temporary overlap of two facility leases in Monterrey, as well as approximately $2,000,000 associated with the Company’s succession plan.Monterrey. The increase in succession plan costs is primarily due to the increase in the Company's stock price over the last 60 days. Both expensesexpense will primarily be incurred during the firstthird halfquarter of 2026 and will be recorded in Selling, General,General and Administrative expenses.

Three Months Ended MarchJune 31,30, 2026, as Compared to Three Months Ended MarchJune 31,30, 2025

Net salesrevenue for the three months ended MarchJune 31,30, 2026 and 2025 totaled $58,583,000$62,729,000 and $61,447,000,$79,239,000, respectively. Included in net salesrevenue were tooling project salesrevenue of $1,123,000$1,839,000 and $435,000$17,606,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Tooling salesproject revenue are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Product sales,revenue, excluding tooling project sales,revenue, for the three months ended MarchJune 31,30, 2026 were $57,460,000$60,890,000 compared to $61,012,000$61,633,000 for the same period in 2025. The decreasechange in salesproduct revenue is primarily the result of lower demand infrom the medium and heavy-duty truck markets,truck, including transitioning the Company's business with Volvo from existing programs that the Company currently supplies to new programs that the Company does not support, offset by demand increase in Powersportsthe duebuilding toproducts demand increasesmarket and launching new programs.program launches. The Company's product salesrevenue for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 by market are as follows (in thousands):

Gross margin was 20.4%approximately and 19.2%20.3% of salesrevenue for the three months ended MarchJune 31,30, 2026 and 2025,included respectively.a favorable one-time capacity charge impacting gross margin by 90 basis points. Excluding the one-time gain gross margin was 19.4% of revenue for the same period compared to 18.1% of revenue for the three months ended June 30, 2025. Gross margin compared to last year was favorably impacted by product mix and operationaloperating efficiencies of 1.1%4.0%, offset by fixed cost leverage of 2.2% and net changes in selling price and raw material costs of 0.5%, offset by fixed cost leverage of 0.4%.0.5%.

Selling general and administrative expense ("SG&A") was $11,214,000$10,433,000 for the three months ended MarchJune 31,30, 2026, which included successionseverance plan costsexpense of $924,000$487,000 and Mexico expansion related expense of $2,102,000.$1,302,000. Excluding succession plan costsseverance and Mexico expansion related expense, SG&A cost for the three months ended MarchJune 31,30, 2026 totaled $8,188,000$8,644,000 compared to $8,444,000, excluding $500,000 of severance expense,$9,100,000 for the three months ended MarchJune 31,30, 2025. Decreased SG&A expenses resulted primarily from lower foreign currency of $268,000.

Net interest expense totaled $86,000$60,000 for the three months ended MarchJune 31,30, 2026, compared to $16,000net interest income of $32,000 for the three months ended MarchJune 31,30, 2025. HigherLower interest expenseincome was primarily due to lower interest income of $106,000 from cash accumulationaccumulation. For the three months ended June 30, 2026, the Company recognized an loss of $190,000.$87,000 related to the repayment of the Huntington Term Loan and a gain of $170,000 for the termination of Interest Rate Swap.

Income tax expense for the three months ended MarchJune 31,30, 2026 is estimated to be $190,000,$569,000, approximately 23.9%24.2% of income before income taxes. Income tax expense for the three months ended MarchJune 31,30, 2025 was estimated to be $750,000,$1,311,000, approximately 25.6%24.4% of income before income taxes. The Company’s effective tax rates reflect the effects of taxable income being generated in higher tax rate jurisdictions whileand taxablethe lossesaffect areof beingone generatedtime innontaxable lower tax rate jurisdictions.expenses.

The Company recorded net income for the three months ended MarchJune 31,30, 2026 of $605,000$1,783,000 or $0.07$0.21 per basic and diluted share compared with net income of $2,183,000,$4,052,000, or $0.25$0.47 per basic and diluted share, for the three months ended MarchJune 31,30, 2025.

Comprehensive income totaled $623,000$2,355,000 for the three months ended MarchJune 31,30, 2026, compared to comprehensive income of $3,061,000$4,762,000 for the same period ended MarchJune 31,30, 2025. The decrease was primarily related to the decreaselower in net income of $1,578,000 and hedging activity of $857,000.$2,269,000.

Historically, 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. As of MarchJune 31,30, 2026, the Company had outstanding foreign exchange contracts with notional amounts totaling $57,665,000.$53,700,000. As of MarchJune 31,30, 2026, the Company had outstanding interest rate swaps with notional amounts totaling $19,375,000.$0.

Cash usedprovided inby operating activities for the threesix months ended MarchJune 31,30, 2026 totaled $9,229,000.$7,070,000. Net income of $605,000$2,388,000 positively impacted operating cash flows. Non-cash deductions of depreciation and amortization, and share-based compensation included in net income amounted to $3,057,000$6,231,000 and $495,000,$996,000, respectively. Increased working capital decreased cash provided by operating activities by $13,572,000.$2,056,000. Higher working capital was primarily driven by paymentsrelated to tooling vendors, increased inventory associated with the Mexico expansion, and changes in product mix impacting accounts receivable, partiallyinventories, and prepaid assets offset by accounts payable and accrued liabilities.

Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $3,784,000,$12,082,000, which related to purchases of property, plant and equipment. The Company anticipates spending approximately $25,000,000 to $30,000,000 during 2026 on property, plant and equipment purchases for all of the Company's operations. Included in the Company's anticipated spending in 2026 is approximately $18,000,000 to $20,000,000 for the Mexico expansion project. At MarchJune 31,30, 2026, purchase commitments for capital expenditures in progress were $8,042,000.$8,319,000. The Company anticipates using cash from operations, its available revolving line of credit or its capex line to fund capital investments.

Cash used infor financing activities for the threesix months ended MarchJune 31,30, 2026 totaled $1,538,000,$20,912,000, which consisted of repayments of long-term debt of $19,843,000, the purchase of treasury stock of $612,000 in exchange for payment of taxes related to net shares settlements of equity awards,awards repaymentsand purchase of long-term debt of $469,000 and treasury stock related to the Company's stock buy back plan of $457,000.

At MarchJune 31,30, 2026, the Company had $23,507,000$12,134,000 cash on hand, a $25,000,000 revolving loan facility of which none is outstanding, and a $25,000,000 Capex loan facility with no outstanding balance.

The Company is required to meet certain financial covenants included in the Huntington Credit Agreement (defined below), which covenants include a net debt leverage and a fixed charge coverage ratio. As of MarchJune 31,30, 2026, the Company was in compliance with its financial covenants associated with the loans made under the Huntington Credit Agreement as described below.

The Huntington Credit Agreement contains certain customary representations and warranties, conditions, affirmative and negative covenants and events of default. The Company is in compliance with such covenants as of MarchJune 31,30, 2026.

Pursuant to the terms of the Huntington Credit Agreement, Huntington made available to the Company secured Capex loan (the “Huntington Capex Loan”) in the maximum aggregate principal amount of $25,000,000.$25,000,000 which none was outstanding as of June 30, 2026 and December 31, 2025. Proceeds of the Huntington Capex Loan will be used to finance the ongoing capital expenditure needs of the Company.

Pursuant to the terms of the Huntington Credit Agreement, Huntington made available to the Company a revolving loan commitment (the “Huntington Revolving Loan”) of $25,000,000. The Company has $25,000,000 of available revolving loans of which none was outstanding as of MarchJune 31,30, 2026 and December 31, 2025, respectively.2025.

The interest rate for the Huntington Revolving Loan was 5.43%5.42% and 6.33%5.46% as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Pursuant to the terms of the Huntington Credit Agreement, Huntington made available to the Company a Term Loan commitment (the “Huntington Term Loan”) of $25,000,000 ($25,000,000all of which was advanced to the Company on July 22, 2022). The Huntington Term Loan is to be repaid in monthly installments beginning August 2022 of $104,000 per month for the first 24 months, $156,000 per month for the next 24 months, $208,000 for the next 12 months and the remaining balance to be paid on July 22, 2027. The interest rate for the Huntington Term Loan was 5.43%5.42% and 5.46% as of MarchJune 31,30, 2026 and December 31, 2025, respectively. As of June 30, 2026, the Company repaid in full the outstanding balance of the Huntington Term Loan.

The Company entered into an interest rate swap agreement that became effective July 22, 2022 and continues through July 2027, which was designed as a cash flow hedge for $25,000,000 of the Huntington Term Loan. Under this agreement, the Company will pay a fixed rate of 3.65%2.95% to the swap counterparty in exchange for the Term Loans daily variable SOFR. As a result the interest rate paid on the Huntington Term Loan was 4.75% as of MarchJune 31,30, 2026 and December 31, 2025. The fair value of the interest rate swap was an asset of $78,000$0 and $23,000 at MarchJune 31,30, 2026 and December 31, 2025, respectively. Concurrent with the repayment of the Huntington Term Loan, the Company terminated the Interest Rate Swap and recognized a gain of $170,000.

The Company did not have any significant off-balance sheet arrangements as of MarchJune 31,30, 2026 or December 31, 2025.

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 MarchJune 31,30, 2026 and December 31, 2025.