When You Have To Fire Your Biggest Customer

The bank called it a covenant violation. The board called it a crisis. The new CEO called it a starting point. Within five years, the same manufacturer that had defaulted on its loans twice in thirteen months was generating record free cash flow.

Here's what you'll learn:

Core Molding Technologies was not just dependent on Navistar — it was built from Navistar's own factory floor. The company was formed in 1996 to acquire the plastics division of International's truck manufacturing operation in Columbus, Ohio. By 2013, Navistar alone accounted for 33% of total revenue.

Heavy-duty truck production follows a well-documented multi-year cycle driven by freight demand, interest rates, and fleet replacement timing. In down years, Tier 2 suppliers absorb the volume loss with no mechanism to compensate. Core tried to diversify: PACCAR in the late 1990s, Volvo in 2013 via a $26-30 million annual program, BRP and other powersports OEMs by the mid-2010s. Progress was slow — heavy-duty truck represented 91% of revenue as recently as 2011.

In early 2018, the company made a $63 million acquisition of Horizon Plastics International, a structural foam and structural web injection molder with plants in Ontario and Mexico. Horizon had approximately $60 million in annual sales and a non-truck customer base that, on paper, pushed non-truck revenue to roughly half of a combined $270 million business.

The integration nearly broke the company. Horizon brought a manufacturing culture that didn't fit, equipment reliability problems, and integration costs that collapsed margins. Full-year 2018 gross margin fell to 10.1%, down from above 15%, on a net loss of $4.8 million. In 2019 the damage compounded: gross margin dropped to 7.6%, the net loss widened to $15.2 million, and a covenant violation pushed the company into forbearance with its banks. Duvall had arrived in late 2018 to lead the turnaround — by the time the full damage was visible, Core had defaulted on its loan covenants twice in thirteen months.

The strategy to acquire Horizon had been right. The execution had been wrong. Duvall's job was to fix one without abandoning the other.

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Duvall's first year was unglamorous. He raised wages to cut turnover, increased spending on equipment repair and preventive maintenance, and drove down the downtime that had been hemorrhaging customer relationships. By Q2 2019, the company had returned to profitability for the first time in a year, with on-time delivery up 30% over the prior two quarters. With operations stabilized, the next problem was clear: Core had never priced to match the value it was delivering.

Core held leading market share in North American heavy-duty truck composites. A composite hood or roof panel is not a commodity, since SMC components offer up to 30% less weight than steel and switching to an alternative supplier is expensive and slow. Core had the presses, the process range, and the materials science, but had been leaving money on the table for years.

The company declared pricing recovery its "Must Win Battle" for 2022 and went to every major customer with increases, losing no significant relationships in the process. Duvall later put it plainly: "We put all of our product pricing at the level that it needed to be. We didn't lose any customers other than Volvo who we got back." Gross margin climbed from 13.9% in 2022 to 18.0% in 2023, a 410 basis point gain on slightly lower revenue.

Diversification ran in parallel. In 2021, the company won $75 million in net new business outside trucks, in industrial enclosures, utility infrastructure, packaging, and construction, growing the opportunity pipeline to over $160 million. Each additional non-truck dollar reduced the amplitude of the inevitable next downturn. By 2023, the company declared a new Must Win Battle: embed continuous improvement across all operations to increase capacity by 20% at underperforming plants.

The three moves weren't sequential, and each reinforced the others. Stable operations gave customers the confidence to absorb price increases, higher margins funded the pipeline, and a broader customer base reduced the pressure to protect any one relationship at the expense of profitability.

The turnaround produced a financial arc that was anything but smooth. Core posted a $15.2 million net loss in 2019, then watched April 2020 revenue fall more than 70% as the pandemic shut down customers across trucks and powersports simultaneously. The snapback was equally sharp: $377 million in revenue and $31.9 million in adjusted EBITDA by 2022, then earnings per share of $2.37 in 2023, up 66% year-over-year on net income of $20.3 million, covering five consecutive years of earnings growth across two separate industry disruptions.

The cycle turned again in 2024 and 2025. Revenue fell to $302 million in 2024 as the truck market absorbed excess inventory, then to $273.8 million in 2025 as Volvo transitioned programs that had represented roughly 14% of the prior year's revenue. Gross margins held at 17.4% through the decline, and the company generated $19 million in operating cash flow. A business that runs at 10% gross margin in a downturn looks very different from one running at 17%.

What comes next is already in motion. Core won the Volvo Mexico program launching in Q1 2027, backed by a $25 million capacity expansion and an estimated $150 million in revenue over seven to ten years. A standalone SMC direct-sales channel targets a $200 million addressable market with six-month quote-to-cash cycles. The business development pipeline stood at $220 million as of early 2026.

David Duvall, who retired in May 2026, left behind a company the board described as having gone from "financial instability to sustained growth." He fixed the operations, repriced the book, and turned a fixed-cost-heavy manufacturer's biggest liability into its primary profit lever.

Key takeaways you can apply…

1. A Good Acquisition Can Still Produce a Terrible Year.
Buying the right asset doesn't guarantee a smooth integration. The execution risk is real, and it shows up in margins before it shows up anywhere else. When an acquisition breaks, the job is to fix the operations without abandoning the strategic logic that justified the deal.

2. Know What Your Pricing Actually Reflects.
Market share and pricing power are not the same thing. A company can hold a dominant position in a specialized, high-switching-cost market and still be leaving significant money on the table if it has never pressure-tested what customers will actually pay. The willingness of customers to absorb increases is itself data about the strength of your position.

3. Operational Credibility Is a Prerequisite for Pricing Power.
You cannot reprice a book of business you aren't reliably delivering. Core had to stabilize on-time delivery and reduce customer chargebacks before it had the standing to go back to those same customers and ask for more money. The sequence matters: fix the execution first, then capture the value.

17.4% - Full-year 2025 gross margin

$220 million - Active business development pipeline in early 2026

$35 million - Record operating cash flow in fiscal 2024, holding through a 15.5% revenue decline

~$10 million - First-year revenue from the new SMC direct-sales channel launched in 2025

16.4% - Return on Capital Employed in fiscal 2023, a record for the company

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