CORE MOLDING TECHNOLOGIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

Certain statements under this caption of this Annual Report on Form 10-K
constitute 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," "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 Annual Report on Form 10-K: business conditions in the plastics,
transportation, marine and commercial product industries (including slowdown 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; safety and security conditions in Mexico and Canada;
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; 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; 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, including the recent
acquisition of Horizon Plastics; the risk that the integration of Horizon
Plastics may be more difficult, time-consuming or costly than expected; expected
revenue synergies and cost savings from acquisition of Horizon Plastics may not
be fully realized within the expected timeframe; revenues following the
acquisition of Horizon Plastics may be lower than expected; customer and
employee relationships and business operations may be disrupted by the
acquisition of Horizon Plastics; federal, state and local environmental laws and
regulations; the availability of 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; 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 this Annual Report on Form 10-K.

DESCRIPTION OF THE COMPANY

Core Molding Technologies and its subsidiaries operate in the composites market
as one operating segment as a molder of thermoplastic and thermoset structural
products. The Company's operating segment consists of two component reporting
units, Core Traditional and Horizon Plastics. 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"), bulk molding compounds ("BMC"), resin transfer molding
("RTM"), liquid molding of dicyclopentadiene ("DCPD"), spray-up and hand-lay-up,
glass mat thermoplastics ("GMT"), 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, agriculture, construction, and other
commercial products. Product sales to medium and heavy-duty truck markets
accounted for 58% of the Company's sales for the year ended December 31, 2019
and 56% and 68% for the years ended December 31, 2018 and 2017, respectively.
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 facility

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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 ("CPI"),
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.

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, labor availability, and our
customers' production rates and inventory levels. Product sales consist of
demand from customers in many different markets with different levels of
cyclicality and seasonality. The North American truck market, which is highly
cyclical, accounted for 58% and 56% of the Company's product revenue for the
years ended December 31, 2019 and 2018, 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. 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 operations
activity up or down quickly which may impact manufacturing efficiencies more
than in periods of steady demand.

Operating performance is also dependent on the Company's ability to effectively
launch new customer programs, which are typically 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.

Results of 2019 Overview
Core Molding Technologies recorded a net loss in 2019 of $15,223,000, or $(1.94)
per basic and diluted share, compared with a net loss of $4,782,000, or $(0.62)
per basic and diluted share in 2018. Product sales in 2019 increased 5% from
2018, and operating income declined 272%. Higher demand from our truck and
marine customers were the primary drivers of the sales increase, while the
decrease in operating income was largely due to increased manufacturing
inefficiencies at several of the Company's facilities, a higher goodwill
impairment charge, and higher operating and SG&A costs.

In the second half of 2018, the Company started experiencing manufacturing
inefficiencies as a result of the significant production demand in the
heavy-duty truck market. Given the high demand levels, the Company experienced
difficulty hiring, training and retaining labor in a tightening labor market at
several manufacturing facilities. This, coupled with asset capacity and
reliability constraints, resulted in increased manufacturing inefficiencies and
the inability to consistently meet customers' delivery and quality requirements,
including for several of the Company's major customers. During the fourth
quarter of 2018, the Company hired a new CEO who began to implement a turnaround
plan to improve customer delivery and quality performance and reduce
manufacturing inefficiencies. The turnaround plan included additional spending
to improve equipment and labor stability. Management believes that during 2019
the operational benefits of the turnaround plan are being realized as customer
delivery and quality levels have begun to improve. While management believes
these improvements have been successful as an operational matter and were the
primary focus of the turnaround plan, operational efficiency improvements at the
plants have not yet resulted in anticipated levels of financial improvements.

The Company's financial performance had started to reflect the benefits of the
turnaround improvements during the third quarter of 2019, however sales volumes
from products were 19% lower in the fourth quarter, as compared to the third
quarter, which had an adverse effect on operating income in the fourth quarter.

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As part of the turnaround plan, management has implemented customer price
increases where margin on product is not meeting the Company's profitability
model, and are evaluating relationships with major customers to assess ongoing
profitability of those relationships. The Company previously announced that on
November 15, 2019 it had provided notice to the Volvo Group ("Volvo") of the
Company's intention to terminate its agreement with Volvo, with such termination
to become effective twelve months from the date of notice, absent the parties
reaching mutually agreeable terms upon which to continue their relationship. In
March 2020, the Company and Volvo mutually agreed to new terms to continue to
supply Volvo and the Company revoked its termination notice. Sales to Volvo
amounted to approximately 17%, 17%, and 22% of total sales for 2019, 2018, and
2017, respectively.

Looking forward, the Company anticipates that 2020 product sales levels will
decrease as compared to 2019, due to lower demand from heavy duty truck
customers. Heavy duty truck customers as well as industry analysts are
forecasting a decrease in Class 8 truck sales of approximately 34% in 2020
compared to 2019. Management continues to aggressively implement the Company's
turnaround plan to improve operational inefficiencies and financial performance
while still managing and reacting to the softening truck production forecasts.

2019 Compared to 2018
Net sales for 2019 totaled $284,290,000, which was an increase from the
$269,485,000 reported for 2018. Included in total sales were tooling project
sales of $15,303,000 for 2019 and $13,268,000 for 2018. Tooling project sales
result primarily from customer approval and acceptance of molds and assembly
equipment specific to their products as well as other non-production services.
These sales are sporadic in nature and fluctuate in regard to scope and related
revenue on a period-to-period basis. Total product sales for 2019, excluding
tooling project sales, totaled $268,987,000, representing a 5% increase from the
$256,217,000 reported for 2018. The increase in product sales is primarily the
result of increased sales to our truck and marine customers of $11,707,000 and
$3,144,000, respectively.

Gross margin was approximately 7.6% of sales in 2019 and 10.1% in 2018. The
gross margin decrease, as a percent of sales, was due to unfavorable product mix
and production inefficiencies of 4.2%. These reductions were offset by net
changes in selling price and material costs of 1.3% and favorable changes in
customer chargebacks of 0.4%.

Selling, general and administrative expense ("SG&A") totaled $28,934,000 in
2019, compared to $27,838,000 in 2018. The increase in SG&A expense primarily
resulted from higher labor and benefit costs of $1,144,000 and higher insurance
costs of $327,000 offset by lower professional and outside services of
$1,017,000. For the year ended December 31, 2018, the Company incurred one-time
acquisition fees of $1,289,000.

Goodwill impairment totaled $4,100,000 and $2,403,000 in 2019 and 2018, respectively, based on the Company's annual and interim goodwill impairment assessment for its reporting units. See Note 2 - Summary of Significant Accounting Policies, for further details.

Net interest expense totaled $4,144,000 for the year ended December 31, 2019,
compared to net interest expense of $2,394,000 for the year ended December 31,
2018. The increase in interest expense was primarily due to a higher average
outstanding debt balance as well has higher interest rates in 2019.

Income tax benefit was approximately 2% of total loss before income taxes in
2019 and 12% in 2018. The effective income tax rate in both years is a result of
the net effect of taxable losses in a lower statutory rate tax jurisdictions
being offset by taxable income in higher statutory rate tax jurisdictions.
Additionally, the effective rate in 2019 includes the impact of recording a full
valuation allowance against net deferred tax assets in the United States of
approximately $3,267,000.

Net loss for 2019 was $15,223,000 or $(1.94) per basic and diluted share, compared with net loss of $4,782,000 or $(0.62) per basic and diluted share for 2018.

Comprehensive loss totaled $15,970,000 in 2019, compared to a comprehensive loss
of $4,735,000 in 2018. The decrease was primarily related to higher net loss of
$10,441,000 and a change in net actuarial adjustments of $1,630,000 for other
post-retirement benefit obligations offset by a change in hedging derivatives of
$836,000. The net actuarial changes in 2018 and 2019 were primarily due to
changes in discount rate.
2018 Compared to 2017
Net sales for 2018 totaled $269,485,000, which was an increase from
the $161,673,000 reported for 2017. Included in total sales were tooling project
sales of $13,268,000 for 2018 and $13,050,000 for 2017. Tooling project sales
result primarily from customer approval and acceptance of molds and assembly
equipment specific to their products as well as other non-production services.
These sales are sporadic in nature and fluctuate in regard to scope and related
revenue on a period-to-period basis. Total product sales for 2018, excluding
tooling project sales, totaled $256,217,000, representing a 72% increase from
the $148,623,000 reported

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for 2017. The increase in product sales is primarily the result of new sales
from the acquisition of Horizon Plastics totaling $62,603,000 and higher demand
from truck customers of $44,991,000.

Gross margin was approximately 10.1% of sales in 2018 and 15.2% in 2017. The
gross margin decrease, as a percent of sales, was due to unfavorable product mix
and production inefficiencies of 8.1%, net changes in selling price and material
costs of 1.1% and unfavorable sales returns of 0.6%, offset by higher leverage
of fixed costs of 2.5% and favorable impact of 2.0% from the Horizon Plastic
acquisition.

Selling, general and administrative expense ("SG&A") totaled $27,838,000 in 2018, compared to $16,690,000 in 2017. The increase in SG&A expense primarily resulted from additional ongoing SG&A costs of $3,681,000 related to Horizon Plastics, higher professional and outside services of $2,292,000, higher intangible amortization of $1,819,000, higher labor and benefit costs of $994,000, one-time severance costs of $858,000 and one-time acquisition fees of $693,000.

Goodwill impairment totaled $2,403,000 in 2018, based on the Company's annual
goodwill impairment assessment for the Core Traditional reporting unit. See Note
2 - Summary of Significant Accounting Policies, for further details.

Net interest expense totaled $2,394,000 for the year ended December 31, 2018,
compared to net interest expense of $245,000 for the year ended December 31,
2017. The increase in interest expense was primarily due to a higher average
outstanding debt balance in 2018.

Income tax expense was approximately 12% of total income before income taxes
in 2018 and 30% in 2017. The change in effective income tax rate primary relates
to the net effect of taxable losses in a lower statutory rate tax jurisdictions
being offset by taxable income in higher statutory rate tax jurisdictions.

Net loss for 2018 was $4,782,000 or $(0.62) per basic and diluted share, compared with net income of $5,459,000 or $0.71 per basic and $0.70 per diluted share for 2017.

Comprehensive loss totaled $4,735,000 in 2018, compared to comprehensive income
of $4,953,000 in 2017. The decrease was primarily related to lower net income of
$10,241,000 and a change in hedging derivatives of $418,000 offset by a change
in net actuarial adjustments of $971,000 for other post-retirement benefit
obligations. In 2018, the Company recorded a net actuarial gain of $910,000
compared to an actuarial loss of $417,000 in 2017. The 2018 gain and the 2017
loss were primarily due to a change in discount rate.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow
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 December 31, 2019, the Company had outstanding foreign
exchange contracts with notional amounts totaling $15,358,000, compared to
$27,588,000 outstanding as of December 31, 2018. As of December 31, 2019, the
Company also had outstanding interest rate swaps with notional amounts totaling
$29,750,000, compared to $32,375,000 outstanding as of December 31, 2018.

Cash provided by operating activities totaled $16,701,000 for the year ended
December 31, 2019. Net loss of $15,223,000 negatively impacted operating cash
flows. Non-cash deductions of depreciation and amortization, and goodwill
impairment charge included in net loss amounted to $10,376,000 and $4,100,000,
respectively. Decreases in working capital resulted in cash provided by
operating activities of $18,285,000. Changes in working capital primarily
related to decreases in accounts receivable and inventory, due to a decreases in
sales volume and reduction in certain customer payment terms.

Cash used in investing activities totaled $7,460,000 for the year ended
December 31, 2019, primarily related to purchases of property, plant and
equipment for new programs and equipment improvements at the Company's
production facilities. The Company anticipates spending approximately $9,000,000
during 2020 on property, plant and equipment purchases for all of the Company's
operations. The Company anticipates using cash from operations and its revolving
line of credit to finance this capital investment. At December 31, 2019,
purchase commitments for capital expenditures in progress were approximately
$336,000.

Cash used in financing activities totaled $9,276,000 for the year ended December 31, 2019. Cash activity primarily consisted of net repayments of revolving loans of $5,368,000, net scheduled repayments of principal on outstanding term loans of $3,375,000, and payment of deferred loan costs of $435,000.

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At December 31, 2019, the Company had $1,856,000 of cash on hand and an
available revolving line of credit of $15,992,000. 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.

Debt and Credit Facilities
On January 16, 2018, the Company entered into an Amended and Restated Credit
Agreement (the "A/R Credit Agreement") with KeyBank National Association as
administrative agent (the "Administrative Agent") and various financial
institutions party thereto as lenders (the "Lenders"). Pursuant to the terms of
the A/R Credit Agreement (i) the Company may borrow revolving loans in the
aggregate principal amount of up to $40,000,000 (the "U.S. Revolving Loans")
from the Lenders and term loans in the aggregate principal amount of up to
$32,000,000 from the Lenders, (ii) the Company's wholly-owned subsidiary,
Horizon Plastics International, Inc., (the "Subsidiary") may borrow revolving
loans in an aggregate principal amount of up to $10,000,000 from the Lenders
(which revolving loans shall reduce the availability of the U.S. Revolving Loans
to the Company on a dollar-for-dollar basis) and term loans in an aggregate
principal amount of up to $13,000,000 from the Lenders, (iii) the Company
obtained a Letter of Credit Commitment of $250,000, of which $160,000 has been
issued and (iv) the Company repaid the outstanding term loan balance
of $6,750,000. The A/R Credit Agreement is secured by a guarantee of each U.S.
and Canadian subsidiary of the Company, and by a lien on substantially all of
the present and future assets of the Company and its U.S. and Canadian
subsidiaries, except that only 65% of the stock issued by Corecomposites de
Mexico, S. de R.L. de C.V. has been pledged.
Concurrent with the closing of the A/R Credit Agreement the Company borrowed the
$32,000,000 term loan and $2,000,000 from the U.S. Revolving loan and the
Subsidiary borrowed the $13,000,000 term loan and $2,500,000 from revolving
loans to provide $49,500,000 of funding for the acquisition of Horizon Plastics.
On March 14, 2019, the Company entered into the first amendment ("First
Amendment") to the A/R Credit Agreement with the Lenders. Pursuant to the terms
of the First Amendment, the Company and Lenders agreed to modify certain terms
of the A/R Credit Agreement. These modifications included (1) implementation of
an availability block on the U.S. Revolving Loans reducing availability from
$40,000,000 to $32,500,000, (2) modification to the definition of EBITDA to add
back certain one-time expenses, (3) waiver of non-compliance with the leverage
covenant as of December 31, 2018 and modification of the leverage ratio
definition and covenant to eliminate testing of the leverage ratio until
December 31, 2019, (4) waiver of non-compliance with the fixed charge covenant
as of December 31, 2018 and modification of the fixed charge coverage ratio
definition and covenant requirement, (5) implementation of a capital expenditure
spend limit of $7,500,000 during the first six months of 2019 and $12,500,000
for the full year 2019, (6) an increase of the applicable interest margin spread
for existing term and revolving loans, and (7) an increase in the commitment
fees on any unused U.S. Revolving Loans.
On November 22, 2019, the Company entered into a forbearance agreement (the
"Forbearance Agreement") with the Lenders. Pursuant to the Forbearance
Agreement, the Borrowers and the Lenders acknowledged and confirmed that an
event of default occurred under the A/R Credit Agreement resulting from the
Borrowers failure to maintain the required Fixed Charge Coverage Ratio (as
defined in the A/R Credit Agreement") for the fiscal quarter ended September 30,
2019. The Forbearance Agreement provides that the Administrative Agent and
Lenders shall forbear from the exercise of rights and remedies pursuant to the
Loan Documents described in the A/R Credit Agreement through March 13, 2020, as
long as the Company satisfies the conditions set forth in the Forbearance
Agreement, including, (i) the Borrowers shall remain current on all loan
payments during the forbearance period, (ii) on or before December 6, 2019, the
Administrative Agent and Lenders shall each receive a copy of a report of Huron
Consulting Group containing findings and observations in respect of the
businesses and operations of the Company and the Borrowers shall deliver a
strategic alternative assessment in respect of the Borrowers' operations and
financing, (iii) on or before December 15, 2019, the Administrative Agent and
Lenders shall each receive a copy of appraisals of machinery and equipment and
inventory appraisals, and the Borrowers shall have determined and proposed a new
capital structure to the Administrative Agent and Lenders, (iv) on or before
February 14, 2020, the Borrowers shall have obtained a definitive, written
commitment from involved parties and/or lenders providing the basis for
implementation of a new capital structure, and (v) on or before March 13, 2020,
the Borrowers shall have closed on a new capital structure, acceptable to the
Administrative Agents and Lenders. The Forbearance Agreement also implemented a
new availability block with respect to the U.S. Revolving Loans portion of the
A/R Credit Agreement, reducing availability from $32,500,000 to $28,000,000 and
increasing the applicable margin for existing term and revolving loans, as well
as increasing the commitment fees on any unused U.S. Revolving Loans.

On March 13, 2020, the Company entered into an Amendment to the Forbearance
Agreement (the "Amended Forbearance Agreement") with the Lenders. Pursuant to
the terms of the Amended Forbearance Agreement, the Company and Lenders agreed
to modify certain terms of the A/R Credit Agreement and Forbearance Agreement
and extend the Forbearance Agreement through May 29, 2020. The modifications
include (1) a reduction in the U.S. Revolving Loan to $25,000,000 with an
availability block of $5,000,000 which can be borrowed with the unanimous
approval of the lenders, (2) a change of interest rate to LIBOR plus 650 basis
points for all outstanding loans, (3) forbear compliance with the leverage
covenant and fixed charge covenant through May

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29, 2020, and (4) implementation of a capital expenditure spend limit of $3,500,0000 from the effective date of the Amended Forbearance Agreement through May 29, 2020.

The Amended Forbearance Agreement provides that the Administrative Agent and
Lenders shall forbear from the exercise of rights and remedies pursuant to the
Loan Documents described in the Credit Agreement through May 29, 2020, as long
as the Company satisfies the conditions set forth in the Amended Forbearance
Agreement, including, (i) on or before March 31, 2020, the borrowers shall have
obtained an executed term sheet from involved parties and/or lenders providing
the basis for implementation of a new capital structure and defined due
diligence parameters, (ii) on or before May 15, 2020 the Borrowers shall have
obtained an executed definitive, written commitment from the New Lenders to
enter into a definitive agreement to effect the refinancing, and (iii) on or
before May 29, 2020, the borrowers shall have closed on a new capital structure.
As a result of the Amended Forbearance Agreement not extending beyond a year,
the Company's remaining long-term debt under the A/R Credit Agreement,
consisting of $49,451,000 in borrowings under the revolving credit commitment
and the loan commitments, was classified as a current liability in the Company's
consolidated balance sheet as of December 31, 2019. As a result, the Company's
current liabilities exceeded its current assets by $22,609,000 as of December
31, 2019. If the Lenders were to call the loans or demand repayment of all
existing borrowings, this could result in the Company being unable to meet its
working capital obligations.

Bank Covenants
The Company is required to meet certain financial covenants included in the A/R
Credit Agreement with respect to leverage ratios, fixed charge ratios and
capital expenditures. As of September 30, 2019, the Company was in default with
its fixed charge coverage ratios associated with the loans made under the A/R
Credit Agreement as described above. As a result of this default the Company and
the Administrative Agent on behalf of the Lenders entered into a Forbearance
Agreement to address the non-compliance and establish milestones for the Company
related to restructuring of its existing debt. Effective March 13, 2020, the
Company entered into an Amended Forbearance Agreement to modify existing and
establish new milestones.

The Company is required to meet certain financial covenants included in the A/R
Credit Agreement with respect to leverage ratios and fixed charge ratios and
capital expenditures, as well as other customary affirmative and negative
covenants. As of September 30, 2019, the Company was not in compliance with its
financial covenants. The following table presents the financial covenants
specified in our A/R Credit Agreement, as modified by the First Amendment, and
the actual covenant calculations as of December 31, 2019:

                                                                Actual 

Covenants as

                                        Financial Covenants    of December 31, 2019
Fixed Charge Coverage Ratio (A)            Minimum 1.00                       0.59
Leverage Ratio                             3.25 or Lower                      9.18



(A) The terms of the A/R Credit Agreement that the fixed charge coverage ratio
will be maintained at a minimum of 1.00 and 1.10 on each of December 31, 2019
and March 31, 2020, and from June 30, 2020 and thereafter set at a minimum of
1.15.

The Amended A/R Credit Agreement also provides a capital expenditure limit
covenant, whereby capital expenditures as defined in the Amended A/R Credit
Agreement are limited to an aggregate of $12,500,000 for the twelve months ended
December 31, 2019. As of December 31, 2019 capital expenditures for 2019 have
amounted to $7,460,000.

Based on current financial projections, the Company does not believe that it
will be compliant with the financial covenants beyond the negotiated forbearance
period and therefore is pursuing the restructuring or refinancing of its
existing obligations under the A/R Credit Agreement.

The Company has engaged Huron Transactional Advisor's to facilitate a full
marketing process for refinancing the A/R Credit Agreement. Management and Huron
are evaluating term sheets submitted by potential lending sources. The Company
is considering financing options including an asset backed lending facility
using the Company's accounts receivable and inventories as security, term loans
secured with the Company's real estate and machinery and equipment, sale and
leaseback of Company owned real estate and potential equity financing. Any new
financing remains subject to asset appraisals, field exams, financial projection
due diligence, real estate environmental reviews, and other customary legal
documentation.


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Shelf Registration
On November 14, 2017 the Company filed a universal shelf Registration Statement
on Form S-3 (the "Registration Statement") with the SEC in accordance with the
Securities Act of 1933, as amended, which became effective on November 20, 2017.
 The Registration Statement registered common stock, preferred stock, debt
securities, warrants, depositary shares, rights, units, and any combination of
the foregoing, for a maximum aggregate offering price of up to $50 million,
which may be sold from time to time.  The terms of any securities offered under
the Registration Statement and intended use of proceeds will be established at
the times of the offerings and will be described in prospectus supplements filed
with the SEC at the times of the offerings.  The Registration Statement has a
three year term.

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET TRANSACTIONS

The Company has the following minimum commitments under contractual obligations,
including purchase obligations, as defined by the SEC. A "purchase obligation"
is defined as an agreement to purchase goods or services that is enforceable and
legally binding on the Company and that specifies all significant terms,
including: fixed or minimum quantities to be purchased; fixed, minimum, or
variable price provisions; and the approximate timing of the transaction. Other
long-term liabilities are defined as long-term liabilities that are reflected on
the Company's balance sheet under accounting principles generally accepted in
the United States. Based on this definition, the table below includes only those
contracts which include fixed or minimum obligations. It does not include normal
purchases, which are made in the ordinary course of business.

The following table provides aggregated information about the maturities of contractual obligations and other long-term liabilities as of December 31, 2019:

                        2020            2021            2022            2023          2024 and after         Total
Long-term debt(C)  $ 49,451,000     $         -     $         -     $         -     $              -     $ 49,451,000
Interest(A)(C)        2,740,000               -               -               -                    -        2,740,000
Operating lease       1,433,000       1,174,000       1,102,000       1,000,000              530,000        5,239,000
obligations
Contractual
commitments for         336,000               -               -               -                    -          336,000
capital
expenditures(B)
Post retirement       1,233,000         470,000         497,000         519,000            6,441,000        9,160,000
benefits
Total              $ 55,193,000     $ 1,644,000     $ 1,599,000     $ 1,519,000     $      6,971,000     $ 66,926,000

(A) Variable interest rates were as of December 31, 2019. (B) Includes $158,000 recorded on the balance sheet in accounts payable at December 31, 2019. (C) The Company has classified all of its long-term debt as current due non-compliance with its debt covenants under the A/R Credit Agreement and subsequent entry into a Forbearance Agreement with the Lenders. The Company anticipates restructuring its current outstanding debt by May 29, 2020.

As of December 31, 2019, the Company had no significant off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of
Operations discuss the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these consolidated financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. On an
on-going basis, management evaluates its estimates and judgments, including
those related to accounts receivable, inventories, goodwill and other long-lived
assets, self-insurance, post retirement benefits, and income taxes. 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 under different assumptions or conditions.

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.

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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 has determined that a $50,000 allowance for doubtful
accounts is needed at December 31, 2019 and $25,000 allowance was needed at
December 31, 2018. 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 $$476,000 at December 31, 2019 and
$$2,344,000 at December 31, 2018. 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 $898,000 at December 31, 2019 and $957,000 at
December 31, 2018.

Long-Lived Assets
Long-lived assets consist primarily of property, plant and equipment and
finite-lived intangibles. The Company acquired substantially all of the assets
of Horizon Plastics on January 16, 2018, which resulted in approximately
$16,770,000 of finite-lived intangibles and $12,994,000 of property, plant and
equipment, all of which were recorded at fair value. 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 long-lived
assets on the basis of undiscounted expected future cash flows from operations
before interest. There was no impairment of the Company's long-lived assets for
the years ended December 31, 2019, 2018 and 2017.

Goodwill

The purchase consideration of acquired businesses have 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 at
each reporting unit. As a result of the Horizon Plastics acquisition on January
16, 2018 and the status of its integration, the Company established two
reporting units, Core Traditional and Horizon Plastics.

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 reporting unit in
any period. The Company may resume the qualitative assessment for any reporting
unit 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 a reporting
unit's fair value is less than its carrying amount. As part of the qualitative
assessment, the Company considers relevant events and circumstances that affect
the fair value or carrying amount of the Company. Such events and circumstances
could include macroeconomic conditions, industry and market conditions, cost
factors, overall financial performance, reporting unit specific events 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 for any reporting unit, or if a qualitative
assessment indicates it is more-likely-than-not that the estimated carrying
value of a reporting unit exceeds its fair value, the Company proceeds to a
quantitative approach.
Due to the Company's financial performance and continued depressed stock price,
the Company performed a quantitative analysis for both of its reporting units at
September 30, 2019. During 2019, the Company incurred a loss of margin in its
Horizon Plastics reporting unit caused by selling price decreases that the
Company has not been able to fully offset with material cost reductions. As a
result of the quantitative analysis, the Company concluded that the carrying
value of Horizon Plastics was greater than the fair value, which resulted in a
goodwill impairment charge of $4,100,000 at September 30, 2019
representing 19% of the goodwill related to the Horizon Plastics reporting unit.
The company performed a qualitative assessment at December 31, 2019, indicating
no additional goodwill impairment related to the Horizon Plastics reporting
unit.
The Company's annual impairment assessment at December 31, 2018 consisted of a
quantitative analysis for both reporting units. It concluded that the carrying
value of Core Traditional was greater than the fair value, which resulted in a
goodwill impairment charge of $2,403,000, representing all the goodwill related
to the Core Traditional reporting unit. The analysis of the Company's other
reporting unit, Horizon Plastics, indicated no goodwill impairment charge, based
on historical performance and financial

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projections at that time, as the excess of the estimated fair value over the
carrying value of its invested capital was approximately 23% of the book value
of its net assets.
There was impairment of the Company's goodwill in 2019 and 2018 of $4,100,000
and $2,403,000, respectively. There was no impairment of the Company's goodwill
for the year ended December 2017.

Self-Insurance

The Company is self-insured with respect to 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 December 31, 2019 and December 31, 2018 of
$1,203,000 and $960,000, respectively.

Post Retirement Benefits
Management records an accrual for post retirement costs associated with the
health care plan sponsored by the Company for certain employees. 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 the Company's operations.
The effect of a change in healthcare costs is described in Note 13 - Post
Retirement Benefits, Core Molding Technologies had a liability for post
retirement healthcare benefits based on actuarially computed estimates of
$9,160,000 at December 31, 2019 and $8,076,000 at December 31, 2018.

Revenue Recognition
The Company historically has recognized revenue from two streams, product
revenue and tooling revenue. Product revenue is earned from the manufacture and
sale of sheet molding compound and thermoset and thermoplastic products. Revenue
from product sales is generally recognized as products are shipped, as the
Company transfers control to the customer and is entitled to payment upon
shipment. In certain circumstances, the Company recognizes revenue from product
sales when products are produced and the customer takes control at 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. 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. The Company
historically recognized all tooling revenue at a point in time, upon customer
acceptance, before the adoption of ASU 2014-09.

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 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 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.

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 to realize
deferred tax benefits through the generation of future taxable income.
Management reviews all available evidence, both positive and negative, to assess
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. Other factors considered are the Company's relationships with its
major customers, and any recent customer diversification efforts. The projected
availability of taxable income to realize the tax benefits from the reversal of
temporary differences before expiration of these benefits are also considered.
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, 2019 the Company had a deferred tax asset of $5,293,000 of
which $3,267,000 is related to tax positions in the United States, $1,555,000
related to tax positions in Canada and $471,000 related to tax positions in
Mexico. During 2019, the Company recorded a valuation allowance against all
deferred tax assets in the United States, due to cumulative losses over the last
three years and uncertainty related to the Company's ability to realize net loss
carryforwards and other net deferred tax

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assets in the future. 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 and the Company's ability to carryback losses.

Management recognizes the financial statement effects of a tax position when it is more likely than not the position will be sustained upon examination.

Recent Accounting Pronouncements
Leases
In February 2016, the Financial Accounting Standards Board issued Accounting
Standards Update ("ASU") No. 2016-02, Leases (Topic 842). This update requires
organizations to recognize lease assets and lease liabilities on the balance
sheet and also disclose key information about leasing arrangements. This ASU is
effective for annual reporting periods beginning on or after December 15, 2018,
and interim periods within those annual periods. Earlier application is
permitted for all entities as of the beginning of an interim or annual period.

In accordance with ASU 2016-02, the Company elected not to recognize lease
assets and lease liabilities for leases with a term of twelve months or less.
The ASU requires a modified retrospective transition method, or a transition
method option further described within ASU 2018-11, with the option to elect a
package of practical expedients that permits the Company to: (1) not reassess
whether expired or existing contracts contain leases, (2) not reassess lease
classification for existing or expired leases and (3) not consider whether
previously capitalized initial direct costs would be appropriate under the new
standard. The Company elected to apply the package of practical expedients.

The Company adopted ASU No. 2016-02 as of January 1, 2019, using the modified
retrospective approach. The modified retrospective approach provides a method
for recording existing leases at adoption without restating previously reported
periods. In addition, the Company elected the practical expedients permitted
under the transition guidance within the new standard, which among other things,
allowed the Company to carry forward the historical lease classification.

In addition, the Company elected the practical expedient to determine the lease
term for existing leases.  In the application of practical expedient, the
Company evaluated the buildings leased and the current financial performance of
the plant associated, which resulted in the determination that most renewal
options would be reasonably certain in determining the expected lease term.

Adoption of the new standard resulted in the recording of additional net right
of use assets and lease liabilities of $4,490,000 and $4,428,000, respectively,
as of January 1, 2019. The present value of lease liabilities has been measured
using the Company's revolving loan borrowing rates as of December 31, 2018 (one
day prior to initial application). Additionally, ROU assets for these operating
leases have been measured as the initial measurement of applicable lease
liabilities adjusted for any unamortized initial prepaid/accrued rent and any
ASC Topic 420 liabilities. The standard did not materially impact the Company's
consolidated statement of income (loss) or statement of cash flows.

Current 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 October
2019, the FASB voted to delay the implementation date for certain companies,
including those that qualify as a smaller reporting company under SEC rules,
until January 1, 2023, with revised ASU's expected to be issued in November
2019. We will adopt this ASU on its effective date of January 1, 2023. We do not
expect the adoption of this ASU to have a material impact on our consolidated
financial position, results of operations, cash flows, or presentation thereof.


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