-
CVG Reports Second Quarter 2023 Results
المصدر: Nasdaq GlobeNewswire / 01 أغسطس 2023 17:00:01 America/New_York
Strong quarterly revenues of $262 million, up 4.5% year-over-year
EPS of $0.30, adjusted EBITDA of $20.8 million or 7.9% of revenue
Continued strategy execution and operational excellence driving improved resultsNEW ALBANY, Ohio, Aug. 01, 2023 (GLOBE NEWSWIRE) -- CVG (NASDAQ: CVGI), a diversified industrial products and services company, today announced financial results for its second quarter ended June 30, 2023.
Second Quarter 2023 Highlights (Compared with prior year, where comparisons are noted)
- Revenues of $262.2 million, up 4.5% primarily driven by strong price realization.
- Operating income of $15.9 million, up 156.0%; adjusted operating income of $16.7 million, up 106.2%. Improved operating income was driven primarily by improved pricing and cost management.
- Net income of $10.1 million, or $0.30 per diluted share. Adjusted net income of $10.7 million, or $0.32 per diluted share.
- Adjusted EBITDA of $20.8 million, up 67.7% with an adjusted EBITDA margin of 7.9%, tracking further towards the Company's long-term profitability target.
- Net new business wins year-to-date are $124 million. The majority of the new business awards continue to be in the Electrical Systems segment.
- Our cost reduction program continues to deliver cost savings through process improvements, footprint changes and organizational streamlining.
Robert C. Griffin, Chairman of the Board and Interim President and Chief Executive Officer, said, "CVG delivered solid second quarter results and we continued to execute well on our long-term strategy. The team’s efforts to drive the Company’s strategic plan are delivering improved financial results, highlighted by strong improvements in revenue, operating income, adjusted EBITDA and free cash flow during the quarter. Additionally, I am pleased to report that our Electrical Systems plant expansions are on track and the Aldama, Mexico plant is open and ramping up production. We remain on track to deliver record revenues in 2023 and continue to expect our full year Adjusted EBITDA margins to show significant expansion versus last year, based on the current vehicle production outlook for the second half of the year. We also believe we continue to be on track to deliver our 2027 targets of $1.5 billion in revenue and 9% EBITDA margin.”
Mr. Griffin concluded, “I would like to thank our team of employees who helped us improve CVG this quarter and continue to execute our strategy of growing and diversifying our revenue, optimizing our cost structure through process automation and cost reduction, and increasing our margins to become a bigger, more profitable company.”
Andy Cheung, Chief Financial Officer, added, “The continued execution of our strategy is delivering improved financial results for CVG. Our focus on winning new business, improved price realization and cost reduction has allowed us to continue to improve our margins and profit. Additionally, we remain heavily focused on optimizing working capital, increasing cash flows, and paying down our debt.”
Second Quarter Financial Results
(amounts in millions except per share data and percentages)Second Quarter 2023 2022 $ Change % Change Revenues $ 262.2 $ 250.8 $ 11.4 4.5 % Gross profit $ 38.4 $ 21.9 $ 16.5 75.3 % Gross margin 14.6 % 8.7 % Adjusted gross profit1 $ 39.1 $ 23.3 $ 15.8 67.8 % Adjusted gross margin1 14.9 % 9.3 % Operating income $ 15.9 $ 6.2 $ 9.7 156.5 % Operating margin 6.1 % 2.5 % Adjusted operating income1 $ 16.7 $ 8.1 $ 8.6 106.2 % Adjusted operating margin1 6.4 % 3.2 % Net income $ 10.1 $ 2.5 $ 7.6 304.0 % Adjusted net income1 $ 10.7 $ 4.3 $ 6.4 148.8 % Earnings per share, diluted $ 0.30 $ 0.08 $ 0.22 275.0 % Adjusted earnings per share, diluted1 $ 0.32 $ 0.13 $ 0.19 146.2 % Adjusted EBITDA1 $ 20.8 $ 12.4 $ 8.4 67.7 % Adjusted EBITDA margin1 7.9 % 4.9 % 1See Appendix A for GAAP to Non-GAAP reconciliation Consolidated Results
Second Quarter 2023 Results
- Second quarter 2023 revenues were $262.2 million, compared to $250.8 million in the prior year period, an increase of 4.5%. The increase in revenues was primarily driven by increased pricing and volume from new Electrical Systems business, partially offset by lower volumes in the Industrial Automation segment. Foreign currency translation also favorably impacted second quarter 2023 revenues by $0.7 million, or 0.3%.
- Operating income in the second quarter 2023 was $15.9 million compared to $6.2 million in the prior year period. The increase in operating income was attributable to higher margins, partially offset by higher SG&A. The second quarter 2023 adjusted operating income was $16.7 million, excluding special charges.
- Interest associated with debt and other expenses was $2.8 million and $2.1 million for the second quarter 2023 and 2022, respectively.
- Net income was $10.1 million, or $0.30 per diluted share, for the second quarter 2023 compared to net income of $2.5 million, or $0.08 per diluted share, in the prior year period.
At June 30, 2023, the Company had $9.0 million of outstanding borrowings on its U.S. revolving credit facility and $4.1 million outstanding on its China credit facility, $42.4 million of cash and $148.1 million of availability from the credit facilities, resulting in total liquidity of $190.5 million.
Second Quarter 2023 Segment Results
Vehicle Solutions Segment
- Revenues were $152.7 million compared to $142.8 million for the prior year period, an increase of 7.0%, primarily resulting from increased pricing.
- Operating income was $14.1 million, compared to $1.5 million in the prior year period, an increase of 836.7%, primarily attributable to price increases with customers and cost reduction initiatives. Adjusted operating income was $14.5 million.
Electrical Systems Segment
- Revenues were $63.6 million compared to $47.3 million in the prior year period, an increase of 34.4%, primarily resulting from increased sales volume and pricing.
- Operating income was $7.7 million compared to $5.9 million in the prior year period, an increase of 28.9%. The increase in operating income was primarily attributable to increased sales volume and pricing.
Aftermarket & Accessories Segment
- Revenues were $36.8 million compared to $32.2 million in the prior year period, an increase 14.5%, primarily resulting from increased pricing.
- Operating income was $5.5 million compared to $1.1 million in the prior year period, an increase of 388.2%. The increase in operating income was primarily attributable to increased pricing and cost reduction.
Industrial Automation Segment
- Revenues were $9.0 million compared to $28.5 million in the prior year period, a decrease of 68.4%, primarily due to decreased customer demand which is expected to continue in the third quarter.
- Operating loss was $2.1 million compared to operating income of $1.3 million in the prior year period. The decrease in operating income was primarily attributable to volume reduction and an inventory charge of $1.6 million. Adjusted operating loss was $1.7 million.
2023 Demand Outlook
According to ACT Research, 2023 North American Class 8 truck production levels are expected to be at 339,000 units and Class 5-7 production levels are expected to be at 258,000 units. Estimates from FTR for 2023 are 325,000 units, slightly lower than ACT Research for Class 8 truck builds. The 2022 actual Class 8 truck builds according to the ACT Research was 315,128 units.
The global commercial and automotive vehicle wire harness market is growing at approximately 4.5%. The global electric truck market expected to grow approximately 15% CAGR.
According to Interact Analysis, the Global Off-Highway vehicle market is expected to increase approximately 4% to 6.2 million units in 2023 from 5.9 million units in 2022. Beyond 2023, the Off-Highway vehicle market is expected to grow in the 4-5% range. We expect our legacy business growth rates to be in line with this outlook.
Industry forecasts are expecting at least 4% growth in 2023 for North American aftermarket truck parts. Compounded annual growth of at least 4% is forecasted for 2023-2027.
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 Wednesday, August 2, 2023, at 10:00 a.m. ET. Management intends to reference the Q2 2023 Earnings Call Presentation during the conference call. To participate, dial (888) 259-6580 using conference code 34051647. International participants dial (416) 764-8624 using conference code 34051647.
This call is being webcast and can be accessed through the “Investors” section of CVG’s website at ir.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, dial (877) 674-7070 using access code 051647 and international callers can dial (416) 764-8692 using access code 051647.
Company Contact
Andy Cheung
Chief Financial Officer
CVG
IR@cvgrp.comInvestor Relations Contact
Ross Collins or Stephen Poe
Alpha IR Group
CVGI@alpha-ir.comAbout 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, 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 Six Months Ended June 30, 2023 and 2022 (Unaudited) (Amounts in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Revenues $ 262,194 $ 250,849 $ 524,903 $ 495,223 Cost of revenues 223,793 228,970 451,293 447,961 Gross profit 38,401 21,879 73,610 47,262 Selling, general and administrative expenses 22,457 15,652 43,022 32,651 Operating income 15,944 6,227 30,588 14,611 Other (income) expense 307 (167 ) 105 874 Interest expense 2,804 2,118 5,694 4,079 Loss on extinguishment of debt — 921 — 921 Income before provision for income taxes 12,833 3,355 24,789 8,737 Provision for income taxes 2,693 870 5,949 2,270 Net income $ 10,140 $ 2,485 $ 18,840 $ 6,467 Earnings per Common Share: Basic $ 0.31 $ 0.08 $ 0.57 $ 0.20 Diluted $ 0.30 $ 0.08 $ 0.57 $ 0.20 Weighted average shares outstanding: Basic 33,051 32,237 32,960 32,152 Diluted 33,429 33,039 33,312 33,009 COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands, except per share amounts) ASSETS June 30, 2023 December 31,
2022Current assets: Cash $ 42,441 $ 31,825 Accounts receivable, net 173,461 152,626 Inventories 131,695 142,542 Other current assets 22,180 12,582 Total current assets 369,777 339,575 Property, plant and equipment, net 70,371 67,805 Intangible assets, net 12,924 14,620 Deferred income taxes 11,004 12,275 Other assets, net 36,414 35,993 Total assets $ 500,490 $ 470,268 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 106,310 $ 122,091 Accrued liabilities and other 54,680 42,809 Current portion of long-term debt and short-term debt 17,260 10,938 Total current liabilities 178,250 175,838 Long-term debt 143,943 141,499 Pension and other post-retirement benefits 8,780 8,428 Other long-term liabilities 25,757 24,463 Total liabilities $ 356,730 $ 350,228 Stockholders’ equity: Preferred stock $ — $ — Common stock 330 328 Treasury stock (15,302 ) (14,514 ) Additional paid-in capital 262,897 261,371 Retained deficit (76,755 ) (95,595 ) Accumulated other comprehensive loss (27,410 ) (31,550 ) Total stockholders’ equity 143,760 120,040 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 500,490 $ 470,268 COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES BUSINESS SEGMENT FINANCIAL INFORMATION (Unaudited) (Amounts in thousands) Three Months Ended June 30, Vehicle
SolutionsElectrical
SystemsAftermarket and
AccessoriesIndustrial
AutomationCorporate/Other Total 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Revenues $ 152,730 $ 142,785 $ 63,625 $ 47,345 $ 36,829 $ 32,172 $ 9,010 $ 28,547 $ — $ — $ 262,194 $ 250,849 Gross profit 20,904 8,912 10,345 7,245 7,788 2,867 (636 ) 2,855 — — 38,401 21,879 Selling, general & administrative expenses 6,769 7,403 2,686 1,303 2,262 1,735 1,425 1,547 9,315 3,664 22,457 15,652 Operating income (loss) $ 14,135 $ 1,509 $ 7,659 $ 5,942 $ 5,526 $ 1,132 $ (2,061 ) $ 1,308 $ (9,315 ) $ (3,664 ) $ 15,944 $ 6,227 Six Months Ended June 30, Vehicle
SolutionsElectrical
SystemsAftermarket and
AccessoriesIndustrial
AutomationCorporate/Other Total 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Revenues $ 313,315 $ 282,941 $ 118,373 $ 87,222 $ 74,458 $ 62,387 $ 18,757 $ 62,673 $ — $ — $ 524,903 $ 495,223 Gross profit 40,374 21,817 18,643 10,647 15,015 6,952 (422 ) 7,846 — — 73,610 47,262 Selling, general & administrative expenses 12,847 13,990 4,914 2,942 3,913 3,199 2,501 2,871 18,847 9,649 43,022 32,651 Operating income (loss) $ 27,527 $ 7,827 $ 13,729 $ 7,705 $ 11,102 $ 3,753 $ (2,923 ) $ 4,975 $ (18,847 ) $ (9,649 ) $ 30,588 $ 14,611 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 Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Gross profit $ 38,401 $ 21,879 $ 73,610 $ 47,262 Restructuring 683 1,455 1,373 2,349 Adjusted gross profit $ 39,084 $ 23,334 $ 74,983 $ 49,611 % of revenues 14.9 % 9.3 % 14.3 % 10.0 % Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Operating income (loss) $ 15,944 $ 6,227 $ 30,588 $ 14,611 Restructuring 718 1,751 1,431 2,740 Deferred consideration purchase accounting — 119 — 238 Total operating income adjustments 718 1,870 1,431 2,978 Adjusted operating income $ 16,662 $ 8,097 $ 32,019 $ 17,589 % of revenues 6.4 % 3.2 % 6.1 % 3.6 % Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income $ 10,140 $ 2,485 $ 18,840 $ 6,467 Operating income adjustments 718 1,870 1,431 2,978 Loss on extinguishment of debt — 921 — 921 Hryvnia fair value adjustments on forward exchange contracts — (424 ) — 251 Adjusted provision for income taxes1 (180 ) (592 ) (358 ) (1,038 ) Adjusted net income $ 10,678 $ 4,260 $ 19,913 $ 9,579 Diluted EPS $ 0.30 $ 0.08 $ 0.57 $ 0.20 Adjustments to diluted EPS $ 0.02 $ 0.05 $ 0.03 $ 0.09 Adjusted diluted EPS $ 0.32 $ 0.13 $ 0.60 $ 0.29 - Reported Tax Provision adjusted for tax effect of special charges at 25%
Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income $ 10,140 $ 2,485 $ 18,840 $ 6,467 Interest expense 2,804 2,118 5,694 4,079 Provision for income taxes 2,693 870 5,949 2,270 Depreciation expense 3,547 3,719 6,977 7,294 Amortization expense 864 855 1,696 1,712 EBITDA $ 20,048 $ 10,047 $ 39,156 $ 21,822 % of revenues 7.6 % 4.0 % 7.5 % 4.4 % EBITDA adjustments Restructuring $ 718 $ 1,751 $ 1,431 $ 2,740 Deferred consideration purchase accounting — 119 — 238 Loss on extinguishment of debt — 921 — 921 Hryvnia fair value adjustments on forward exchange contracts — (424 ) — 251 Adjusted EBITDA $ 20,766 $ 12,414 $ 40,587 $ 25,972 % of revenues 7.9 % 4.9 % 7.7 % 5.2 % Three Months Ended June 30, 2023 Vehicle
SolutionsElectrical
SystemsAftermarket
and
AccessoriesIndustrial
AutomationCorporate/
OtherTotal Operating income (loss) $ 14,135 $ 7,659 $ 5,526 $ (2,061 ) $ (9,315 ) $ 15,944 Restructuring 340 — — 378 — 718 Adjusted operating income (loss) $ 14,475 $ 7,659 $ 5,526 $ (1,683 ) $ (9,315 ) $ 16,662 % of revenues 9.5 % 12.0 % 15.0 % (18.7 )% 6.4 % Six Months Ended June 30, 2023 Vehicle
SolutionsElectrical
SystemsAftermarket
and
AccessoriesIndustrial
AutomationCorporate/
OtherTotal Operating income (loss) $ 27,527 $ 13,729 $ 11,102 $ (2,923 ) $ (18,847 ) $ 30,588 Restructuring 423 8 — 1,000 — 1,431 Adjusted operating income (loss) $ 27,950 $ 13,737 $ 11,102 $ (1,923 ) $ (18,847 ) $ 32,019 % of revenues 8.9 % 11.6 % 14.9 % (10.3 )% 6.1 % Three Months Ended June 30, 2022 Vehicle
SolutionsElectrical
SystemsAftermarket
and
AccessoriesIndustrial
AutomationCorporate/
OtherTotal Operating income (loss) $ 1,509 $ 5,942 $ 1,132 $ 1,308 $ (3,664 ) $ 6,227 Restructuring — 571 560 314 306 $ 1,751 Deferred consideration purchase accounting — — — 119 — 119 Adjusted operating income (loss) $ 1,509 $ 6,513 $ 1,692 $ 1,741 $ (3,358 ) $ 8,097 % of revenues 1.1 % 13.8 % 5.3 % 6.1 % 3.2 % Six Months Ended June 30, 2022 Vehicle
SolutionsElectrical
SystemsAftermarket
and
AccessoriesIndustrial
AutomationCorporate/
OtherTotal Operating income (loss) $ 7,827 $ 7,705 $ 3,753 $ 4,975 $ (9,649 ) $ 14,611 Restructuring 204 571 995 664 306 2,740 Deferred consideration purchase accounting — — — 238 — 238 Adjusted operating income (loss) $ 8,031 $ 8,276 $ 4,748 $ 5,877 $ (9,343 ) $ 17,589 % of revenues 2.8 % 9.5 % 7.6 % 9.4 % 3.6 % 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.