• CVG Reports Third Quarter 2022 Results

    ソース: Nasdaq GlobeNewswire / 02 11 2022 16:05:03   America/New_York

    Sales increase of 5%, previously announced pricing and profit recovery showing results
    New business wins expected to surpass expectations and debt paydown toward higher end of $25-40 million range

    NEW ALBANY, Ohio, Nov. 02, 2022 (GLOBE NEWSWIRE) -- CVG (NASDAQ: CVGI), a diversified industrial products and services company, today announced financial results for its third quarter ended September 30, 2022.

    Third Quarter 2022 Highlights (Compared with prior year, where comparisons are noted)

    • Revenues of $251.4 million, up $11.8 million or 4.9%. Operating Income of $9.5 million. Adjusted operating income of $10.6 million, down $1.6 million or 13.1% versus Q3 2021.
    • Net income of $3.6 million, or $0.11 per diluted share. Adjusted net income of $5.1 million, or $0.15 per diluted share, a decrease of $0.10 per diluted share versus Q3 2021.
    • Adjusted EBITDA of $14.3 million, down $2.6 million or 15.4% versus Q3 2021. Adjusted EBITDA margin of 5.7% versus 7.1% in Q3 2021.
    • Expect full year debt paydown at the high end of $25 million to $40 million range, and on track to fully pay off revolver in Q4 2022.
    • Innovation program continued to deliver new products, new customers, and new business wins and remains on track for approximately $200 million in annualized wins in 2022.
    • Efforts to transform cost structure remain ahead of schedule, improving our competitive position with next-generation manufacturing processes as well as new low-cost plants in low-cost countries.

    Harold Bevis, President and Chief Executive Officer of CVG, said, "CVG continued to deliver against its business transformation plan with sequential improvements in revenue, adjusted EBITDA, operating income margin, free cash flow, and new business wins during the quarter. In the third quarter, sales and profit increased in our vehicle businesses, somewhat offsetting the pause in warehouse automation that we highlighted last quarter. Our operating performance is on track to deliver the higher end of our free cash flow generation target, which in turn puts us on track to pay down debt at the higher end of the previously announced range, fully pay off our revolving credit facility and end the year with cash on hand.”

    “CVG’s transformation plan is on track; however, 2022 results have been masked by persisting inflationary pressures. Our plan includes improving or exiting underperforming legacy business, winning new business, particularly within our Electrical Systems segment, and improving our balance sheet. Our new wins, particularly within the electric vehicle market, remain on pace for a record year, supporting our goal of increasing the accretive mix of Electrical Systems sales for CVG. Our customers truly appreciate our value-add in this business, and we are now a Tier 1 designer of electrical systems for electric vehicle manufacturers.”

    “We are proud of the progress we’ve made company-wide, thanks to our great team of leaders and employees, and are encouraged by strong underlying vehicle demand and new business wins. While we continue to operate in a challenging macro environment, we believe we are beginning to see some relief, particularly as it relates to steel pricing and freight costs.”

    Third Quarter Financial Results
    (amounts in millions except per share data and percentages)

     Third Quarter    
      2022   2021  $ Change % Change
    Revenues$251.4  $239.6  $11.8  4.9%
    Gross profit$26.8  $30.1  $(3.3) (11.0)%
    Gross margin 10.7%  12.6%    
    Adjusted gross profit 1$27.4  $30.1  $(2.7) (9.0)%
    Adjusted gross margin 1 10.9%  12.6%    
    Operating income (loss)$9.5  $11.4  $(1.9) (16.7)%
    Operating margin 3.8%  4.8%    
    Adjusted operating income (loss) 1$10.6  $12.2  $(1.6) (13.1)%
    Adjusted operating margin 1 4.2%  5.1%    
    Net income (loss)$3.6  $7.5  $(3.9) (52.0)%
    Adjusted net income (loss)1$5.1  $8.1  $(3.0) (37.0)%
    Earnings (loss) per share, diluted$0.11  $0.23  $(0.12) (52.2)%
    Adjusted earnings per share, diluted 1$0.15  $0.25  $(0.10) (40.0)%
    Adjusted EBITDA 1$14.3  $16.9  $(2.6) (15.4)%
    Adjusted EBITDA margin 1 5.7%  7.1%    
    1 See Appendix A for GAAP to Non-GAAP reconciliation    

    Consolidated Results of Operations

    Third Quarter 2022 Results

    • Third quarter 2022 revenues increased 4.9% to $251.4 million, compared to $239.6 million in the prior year period. The increase in revenues was primarily driven by increased pricing to offset material cost increases and volume, offset by a volume decrease in Warehouse Automation. Foreign currency translation also unfavorably impacted third quarter 2022 revenues by $6.5 million, or 2.7%.
    • Operating income in the third quarter 2022 was $9.5 million compared to $11.4 million in the prior year period. The decrease in operating income was primarily attributable to a lag in price-cost offsets, $2.9 million of new business startup costs and $0.6 million of restructuring expenses. The third quarter 2022 adjusted operating income was $10.6 million, excluding special charges.
    • Interest associated with debt was $2.8 million and $1.6 million for the third quarter 2022 and 2021, respectively.
    • Net income was $3.6 million, or $0.11 per diluted share, in the third quarter 2022 compared to $7.5 million, or $0.23 per diluted share, in the prior year period.

    At September 30, 2022, the Company had $11.6 million of outstanding borrowings on its revolving credit facility, $38.7 million of cash and $137.2 million of availability from the revolving credit facility, resulting in total liquidity of $175.9 million.

    Third Quarter 2022 Segment Results

    Vehicle Solutions Segment

    • Revenues in the third quarter 2022 increased 30.6% to $154.0 million, compared to $117.9 million in the prior year period, primarily resulting from material cost pass-through and favorable volume.
    • Operating income in the third quarter 2022 increased 227.3% to $9.6 million, compared to $2.9 million in the prior year period, primarily driven by volume leverage, increased pricing and lower health care expense.

       Electrical Systems Segment

    • Revenues in the third quarter 2022 increased 15.1% to $46.1 million, compared to $40.1 million in the prior year period, primarily resulting from material cost pass-through and contributions from new business wins.
    • Operating income was $5.2 million compared to $4.9 million in the prior year period. The increase in operating income was primarily attributable to a decrease in SG&A expenses offset by increased labor costs, raw material inflation and freight cost increases.

    Aftermarket and Accessories Segment

    • Revenues in the third quarter 2022 increased 24.1% to $37.1 million, compared to $29.9 million in the prior year period, primarily resulting from increased volume and pricing to offset material cost pass-through.
    • Operating income was $5.0 million compared to $2.3 million in the prior year period. The increase in operating income was primarily attributable to the increase in pricing to offset material cost pass-through. Adjusted operating income was $5.4 million, an increase of 129.8%.

    Warehouse Automation Segment

    • Revenues in the third quarter 2022 were $14.1 million compared to $51.7 million in the prior year period, a decrease of 72.7% primarily due to lower demand levels.
    • Operating loss in the third quarter 2022 was $1.0 million compared to operating income of $8.0 million in the prior year period. The decrease was primarily attributable to lower volumes. Adjusted operating loss was $0.7 million, compared to income of $8.1 million in the prior period.

    Demand Outlook

    According to ACT Research, 2022 North American Class 8 truck production levels are expected to be at 310,000 units and Class 5-7 production are expected to be at 234,000 units. This outlook supports the Company’s 2022 projections for production of vehicle products.

    GAAP to Non-GAAP Reconciliation

    A reconciliation of GAAP to non-GAAP financial measures referenced in this release is included as Appendix A to this release.

    Conference Call

    A conference call to discuss this press release is scheduled for Thursday, November 3, 2022, at 10:00 a.m. ET. During the conference call, management intends to reference the Q3 2022 Earnings Call Presentation posted on the "Investors" section of CVG's website. To participate, dial (888) 396-8049 using conference code 38941344. International participants dial (416) 764-8646 using conference code 38941344.

    This call is being webcast and can be accessed through the “Investors” section of CVG’s website at www.cvgrp.com, where it will be archived for one year.

    A telephonic replay of the conference call will be available for a period of two weeks following the call. To access the replay, toll-free callers can dial (877) 674-7070 using access code 941344.

    Company Contact
    Andy Cheung
    Chief Financial Officer
    CVG
    IR@cvgrp.com 

    Investor Relations Contact
    Ross Collins or Stephen Poe
    Alpha IR Group
    CVGI@alpha-ir.com 

    About CVG

    At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries and communities we serve. Information about the Company and its products is available on the internet at www.cvgrp.com.

    Forward-Looking Statements

    This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release may contain forward-looking statements about the Company’s expectations for future periods with respect to its plans to improve financial results, the future of the Company’s end markets, including the short-term and long-term impact of the COVID-19 pandemic on our business, changes in the Class 8 and Class 5-7 North America truck build rates, performance of the global construction equipment business, the Company’s prospects in the wire harness, warehouse automation and electric vehicle markets, the Company’s initiatives to address customer needs, organic growth, the Company’s strategic plans and plans to focus on certain segments, competition faced by the Company, volatility in and disruption to the global economic environment and the Company’s financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including those included in the Company’s filings with the SEC. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.


    COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    Three Months and Nine Months Ended September 30, 2022 and 2021
    (Unaudited)
    (Amounts in thousands, except per share amounts)

     Three Months Ended Nine Months Ended
     September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
    Revenues$251,412 $239,610  $746,635 $742,673 
    Cost of revenues 224,570  209,466   672,531  647,040 
    Gross profit 26,842  30,144   74,104  95,633 
    Selling, general and administrative expenses 17,304  18,772   49,955  52,529 
    Operating income 9,538  11,372   24,149  43,104 
    Other (income) expense 1,924  (186)  2,798  (1,127)
    Interest expense 2,813  1,630   6,892  9,489 
    Loss on extinguishment of debt      921  7,155 
    Income before provision for income taxes 4,801  9,928   13,538  27,587 
    Provision for income taxes 1,250  2,417   3,520  6,491 
    Net income$3,551 $7,511  $10,018 $21,096 
    Earnings per Common Share:       
    Basic$0.11 $0.24  $0.30 $0.67 
    Diluted$0.11 $0.23  $0.30 $0.64 
    Weighted average shares outstanding:       
    Basic 32,460  31,570   32,950  31,432 
    Diluted 32,922  32,706   33,645  32,738 


    COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (Amounts in thousands, except per share amounts)

    ASSETSSeptember 30, 2022 December 31, 2021
    Current assets:   
    Cash$38,713  $34,958 
    Accounts receivable, net of allowances of $343 and $243, respectively 178,340   174,472 
    Inventories 150,347   141,045 
    Other current assets 15,788   20,201 
    Total current assets 383,188   370,676 
    Property, plant and equipment, net 64,755   63,126 
    Intangible assets, net 15,468   18,283 
    Deferred income taxes 24,381   24,108 
    Other assets, net 33,658   31,500 
    Total assets$521,450  $507,693 
    LIABILITIES AND STOCKHOLDERS' EQUITY   
    Current liabilities:   
    Accounts payable$121,350  $101,915 
    Accrued liabilities and other 48,446   50,840 
    Current portion of long-term debt 9,844   9,375 
    Total current liabilities 179,640   162,130 
    Long-term debt 174,490   185,581 
    Pension and other post-retirement benefits 7,704   9,905 
    Other long-term liabilities 23,855   23,424 
    Total liabilities$385,689  $381,040 
    Stockholders’ equity:   
    Preferred stock, $0.01 par value ($5,000,000 shares authorized; no shares issued and outstanding)$  $ 
    Common stock, $0.01 par value ($60,000,000 shares authorized; 32,551,341 and 32,034,592 shares issued and outstanding respectively) 326   321 
    Treasury stock, at cost: 1,842,407 and 1,708,981 shares, respectively (14,138)  (13,172)
    Additional paid-in capital 260,210   255,566 
    Retained deficit (63,606)  (73,624)
    Accumulated other comprehensive loss (47,031)  (42,438)
    Total stockholders’ equity 135,761   126,653 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$521,450  $507,693 


    COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
    BUSINESS SEGMENT FINANCIAL INFORMATION
    (Unaudited)
    (Amounts in thousands)

     Three Months Ended September 30,
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
      2022  2021  2022   2021  2022  2021  2022  2021  2022   2021   2022  2021
    Revenues$154,024 $117,914 $14,116  $51,681 $46,129 $40,085 $37,143 $29,930 $  $  $251,412 $239,610
    Gross profit 13,839  10,143  404   9,486  6,210  6,633  6,389  3,885     (3)  26,842  30,144
    Selling, general & administrative expenses 4,279  7,222  1,371   1,461  1,055  1,718  1,436  1,536  9,163   6,835   17,304  18,772
    Operating income (loss)$9,560 $2,921 $(967) $8,025 $5,155 $4,915 $4,953 $2,349 $(9,163) $(6,838) $9,538 $11,372


     Nine Months Ended September 30,
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
      2022  2021  2022  2021  2022  2021  2022  2021  2022   2021   2022  2021
    Revenues$436,966 $372,487 $76,789 $150,378 $133,350 $130,742 $99,530 $89,066 $  $  $746,635 $742,673
    Gross profit 35,657  38,914  8,249  24,612  16,857  17,545  13,341  14,605     (43)  74,104  95,633
    Selling, general & administrative expenses 18,269  20,269  4,242  4,199  3,998  4,646  4,636  4,407  18,810   19,008   49,955  52,529
    Operating income (loss)$17,388 $18,645 $4,007 $20,413 $12,859 $12,899 $8,705 $10,198 $(18,810) $(19,051) $24,149 $43,104

    COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
    Appendix A: Reconciliation of GAAP to Non-GAAP Financial Measures
    (Unaudited)
    (Amounts in thousands, except per share amounts and percentages)

     Three Months Ended Nine Months Ended
     September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
    Gross profit$26,842  $30,144  $74,104  $95,633 
    Restructuring 607      2,958    
    Adjusted gross profit$27,449  $30,144  $77,062  $95,633 
    % of revenues 10.9%  12.6%  10.3%  12.9%


     Three Months Ended Nine Months Ended
     September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
    Operating income (loss)$9,538  $11,372  $24,149  $43,104 
    Restructuring 647      3,387    
    Deferred consideration purchase accounting 103   120   341   488 
    Investigation          394 
    Executive transition 329   683   329   683 
    Total operating income (loss) adjustments 1,079   803   4,057   1,565 
    Adjusted operating income (loss)$10,617  $12,175  $28,206  $44,669 
    % of revenues 4.2%  5.1%  3.8%  6.0%


     Three Months Ended Nine Months Ended
     September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
    Net income (loss)$3,551  $7,511  $10,018  $21,096 
    Operating income (loss) adjustments 1,079   803   4,057   1,565 
    Pension settlement 1,116      1,116    
    Loss on extinguishment of debt       921   7,155 
    Hryvnia fair value adjustments on forward exchange contracts (153)     98    
    Adjusted (benefit) provision for income taxes1 (511)  (201)  (1,548)  (2,180)
    Adjusted net income (loss)$5,082  $8,113  $14,662  $27,636 
            
    Diluted EPS$0.11  $0.23  $0.30  $0.64 
    Adjustments to diluted EPS$0.04  $0.02  $0.14  $0.20 
    Adjusted diluted EPS$0.15  $0.25  $0.44  $0.84 
    1. Reported Tax (Benefit) Provision adjusted for tax effect of special charges at 25%
     Three Months Ended Nine Months Ended
     September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
    Net income (loss)$3,551  $7,511  $10,018  $21,096 
    Interest expense 2,813   1,630   6,892   9,489 
    Provision (benefit) for income taxes 1,250   2,417   3,520   6,491 
    Depreciation expense 3,749   3,712   11,043   11,300 
    Amortization expense 851   859   2,563   2,579 
    EBITDA$12,214  $16,129  $34,036  $50,955 
    % of revenues 4.9%  6.7%  4.6%  6.9%
            
    EBITDA adjustments       
    Restructuring$647  $  $3,387  $ 
    Deferred consideration purchase accounting 103   120   341   488 
    Loss on extinguishment of debt       921   7,155 
    Hryvnia fair value adjustments on forward exchange contracts (153)     98    
    Executive transition 329   683   329   683 
    Pension settlement 1,116      1,116    
    Investigation          394 
    Adjusted EBITDA$14,256  $16,932  $40,228  $59,675 
    % of revenues 5.7%  7.1%  5.4%  8.0%


     Three Months Ended September 30, 2022
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
    Operating income (loss)$9,560  $(967) $5,155  $4,953  $(9,163) $9,538 
    Restructuring 66   136      445      647 
    Deferred consideration purchase accounting    103            103 
    Executive transition            329   329 
    Adjusted operating income (loss)$9,626  $(728) $5,155  $5,398  $(8,834) $10,617 
    % of revenues 6.2% (5.2)        %  11.2%  14.5%    4.2%


     Nine Months Ended September 30, 2022
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
    Operating income (loss)$17,388  $4,007  $12,859  $8,705  $(18,810) $24,149 
    Restructuring 270   800   571   1,440   306   3,387 
    Deferred consideration purchase accounting    341            341 
    Executive transition             329   329 
    Adjusted operating income (loss)$17,658  $5,148  $13,430  $10,145  $(18,175) $28,206 
    % of revenues 4.0%  6.7%  10.1%  10.2%    3.8%


     Three Months Ended September 30, 2021
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
    Operating income (loss)$2,921  $8,025  $4,915  $2,349  $(6,838) $11,372 
    Deferred consideration purchase accounting    120            120 
    Investigation                 
    Executive transition             683   683 
    Adjusted operating income (loss)$2,921  $8,145  $4,915  $2,349  $(6,155) $12,175 
    % of revenues 2.5%  15.8%  12.3%  7.8%    5.1%


     Nine Months Ended September 30, 2021
     Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
    Operating income (loss)$18,645  $20,413  $12,899  $10,198  $(19,051) $43,104 
    Deferred consideration purchase accounting    488            488 
    Investigation             394   394 
    Executive transition             683   683 
    Adjusted operating income (loss)$18,645  $20,901  $12,899  $10,198  $(17,974) $44,669 
    % of revenues 5.0%  13.9%  9.9%  11.4%    6.0%

    Use of Non-GAAP Measures

    This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). In general, the non-GAAP measures exclude items that (i) management believes reflect the Company’s multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, engage in financial and operational planning and to determine incentive compensation.

    Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on the Company’s financial and operating results and in comparing the Company’s performance to that of its competitors and to comparable reporting periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

    The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. The financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

     


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