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Commercial Vehicle Group Announces Third Quarter 2018 Results
STRONG SALES AND FINANCIAL PERFORMANCE

NEW ALBANY, Ohio, Nov. 5, 2018 /PRNewswire/ -- Commercial Vehicle Group, Inc. (the "Company") (NASDAQ: CVGI) today reported financial results for the third quarter ended September 30, 2018.


Third Quarter

($ in millions except EPS)

2018


2017

Revenues

$225.0


$198.3

Operating Income

$16.5


$10.7

Net Income

$12.6


$4.8

Basic EPS

$0.42


$0.16

Diluted EPS

$0.41


$0.16

Patrick Miller, President and CEO, stated, "We've successfully increased production to meet considerably higher market demand which has driven revenues and earnings up significantly.  Compared to the same period last year, revenues are up 13 percent and our Global Truck and Bus Segment is up 20 percent.  North American heavy-duty truck orders are at a record breaking pace contributing to a historically high order backlog.  This backlog is a good indicator that truck production in 2019 should be even higher than 2018, barring unexpected market shocks.  We believe this backlog, combined with our growing wire harness business, will result in higher 2019 revenues."

Tim Trenary, Chief Financial Officer, stated, "Operating income of $16.5 million for the third quarter is over fifty percent higher than the same period last year, operating income margin of 7.3 percent is almost 200 bps higher and net income of $12.6 million is more than twice as much as last year.  This improvement in net income is a reflection of our improved operating results and an unusually low tax provision, which includes $2.9 million of tax benefit to adjust the provisional tax expense arising from the Tax Cuts and Jobs Act of 2017.  Free cash flow has improved and investment in working capital is moderating - the Company's cash position at quarter end increased to $58 million.  Net leverage is now 1.4 times trailing twelve months EBITDA, half as much as it was a year ago.  It was a good quarter notwithstanding supply chain, material and labor cost headwinds."

Consolidated Results

Third Quarter 2018 Results

  • Third quarter 2018 revenues were $225.0 million compared to $198.3 million in the prior year period, an increase of 13.5 percent. The increase in revenues period-over-period reflects higher heavy-duty truck production in North America and continued strength in the global construction markets we serve. Foreign currency translation adversely impacted third quarter 2018 revenues by $1.0 million, or by 0.5 percent when compared to the same period in the prior year.

  • Operating income for the third quarter 2018 was $16.5 million compared to operating income of $10.7 million in the prior year period. The increase in operating income period-over-period is primarily attributable to the increase in sales volume. Commodity and other material inflationary pressures, as well as difficult labor markets, adversely affected operating income. However, cost control and cost recovery initiatives, including pricing adjustments, reduced the impact of these cost pressures on operating income. Third quarter of 2017 results include costs of approximately $2.0 million arising from a labor shortage in our North American wire harness business and $0.4 million in charges relating to facility restructuring and other related costs.

  • Net income was $12.6 million for the third quarter 2018, or $0.41 per diluted share, compared to net income of $4.8 million in the prior year period, or $0.16 per diluted share. A tax benefit of $2.9 million was recorded in the third quarter of 2018 to adjust the $4.0 million provisional tax expense on the deemed repatriation of accumulated untaxed foreign subsidiary earnings (pursuant to the Tax Cuts and Jobs Act of 2017) recorded in the fourth quarter of 2017.

At September 30, 2018, the Company had liquidity of $121 million: $58 million of cash and $63 million of availability from our asset based revolver.  There were no borrowings under our asset based revolver at September 30, 2018.

Segment Results

Global Truck and Bus Segment

Third Quarter 2018 Results

  • Revenues for the Global Truck and Bus Segment in the third quarter 2018 were $146.4 million compared to $122.0 million for the prior year period, an increase of 20.0 percent primarily resulting from higher North American heavy-duty truck production. Foreign currency translation adversely impacted third quarter 2018 revenue by $0.3 million, or by 0.3 percent when compared to the same period in the prior year.

  • Operating income for the third quarter 2018 was $14.9 million compared to operating income of $11.4 million in the prior year period. The increase in operating income period-over-period is primarily attributable to the increase in sales volume and cost control and cost recovery initiatives, including pricing adjustments, to reduce the impact of commodity and other material inflationary pressures, and difficult labor markets. The completion of facility restructuring in late 2017 also benefited operating income. Third quarter 2017 results include $0.4 million of cost associated with restructuring initiatives.

Global Construction and Agriculture Segment

Third Quarter 2018 Results

  • Revenues for the Global Construction and Agriculture Segment in the third quarter 2018 were $82.8 million compared to $79.6 million in the prior year period, an increase of 4.0 percent. Foreign currency translation adversely impacted third quarter 2018 revenues by $0.7 million, or by 0.9 percent when compared to the same period in the prior year.

  • Operating income for the third quarter 2018 was $7.6 million compared to operating income of $4.1 million in the prior year period. Operating income benefitted from cost control and cost recovery initiatives, including pricing adjustments, to reduce the impact of commodity and other material inflationary pressures, and difficult labor markets. Third quarter of 2017 results include costs of approximately $2.0 million arising from a labor shortage in our North American wire harness business.

2018 End Market Outlook

Management estimates that 2018 North American Class 8 truck production will be in the range of 315,000 to 325,000 units, as compared to 256,000 units in 2017; North American Class 5-7 production is expected to be up slightly year-over-year.  We believe that construction equipment production in the markets we serve in Europe, Asia, and North America remains strong.

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 Tuesday, November 6, 2018, at 10:00 a.m. ET. To participate, dial (844) 743-2497 using conference code 4793599.

This call is being webcast by NASDAQ and can be accessed at Commercial Vehicle Group's Web site 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, dial (855) 859-2056 using access code 4793599.

About Commercial Vehicle Group, Inc.

Commercial Vehicle Group, Inc. (through its subsidiaries) is a leading supplier of a full range of cab related products and systems for the global commercial vehicle market, including the medium- and heavy-duty truck market, the medium- and heavy-construction vehicle markets, the military, bus, agriculture, specialty transportation, mining, industrial equipment and off-road recreational markets.  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", "expect", "anticipate", "intend", "plan", "estimate", "will", "should", "could", "would", "project", "continue", "likely", or similar expressions. In particular, this press release may contain forward-looking statements about Company expectations for future periods with respect to its plans to improve financial results and to enhance shareholder value or the Company, the future of the Company's end markets, Class 8 and Class 5-7 North America build rates, performance of the global construction and agriculture equipment business, expected cost savings, the Company's initiatives to address customer needs, organic growth, the Company's economic growth plans to focus on certain segments and markets 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 but not limited to: (i) general economic or business conditions affecting the markets in which the Company serves or intends to serve; (ii) the Company's ability to develop or successfully introduce new products; (iii) risks associated with conducting business in foreign countries and currencies; (iv) increased competition in the medium- and heavy-duty truck, construction, agriculture, aftermarket, military, bus and other markets; (v) the Company's failure to complete or successfully integrate strategic acquisitions; (vi) the impact of changes in governmental regulations on the Company's customers or on the Company's business; (vii) the loss of business from a major customer, a collection of smaller customers or the discontinuation of particular commercial vehicle platforms; (viii) security breaches and other disruptions to our information systems and/or our business; (ix) the Company's ability to obtain future financing due to changes in the capital markets or Company's financial position; (x) the Company's ability to comply with the financial covenants in its debt facilities; (xi) fluctuation in interest rates relating to the Company's debt facilities; (xii) the Company's ability to realize the benefits of its cost reduction and strategic initiatives; (xiii) a material weakness in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements; (xiv) volatility and cyclicality in the commercial vehicle market adversely affecting us; (xv) the geographic profile of our taxable income and changes in valuation of our deferred tax assets and liabilities impacting our effective tax rate; (xvi) changes to domestic manufacturing initiatives; (xvii) implementation of tax or other changes, by the United States or other international jurisdictions, related to products manufactured in one or more jurisdictions where we do business; and (xviii) various other risks as outlined under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for fiscal year ending December 31, 2017. 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 INCOME

(Unaudited)

(Amounts in thousands, except per share amounts)






Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017

Revenues

$

225,010



$

198,349



$

674,135



$

566,893


Cost of Revenues

192,535



173,199



574,655



497,539


Gross Profit

32,475



25,150



99,480



69,354


Selling, General and Administrative Expenses

15,694



14,136



45,429



45,557


Amortization Expense

321



332



980



990


Operating Income

16,460



10,682



53,071



22,807


Interest and Other Expense

3,659



3,482



9,047



14,786


Income Before Provision for Income Taxes

12,801



7,200



44,024



8,021


Provision for Income Taxes

218



2,437



8,393



2,498


Net Income

$

12,583



$

4,763



$

35,631



$

5,523










Earnings per Common Share:








Basic

$

0.42



$

0.16



$

1.18



$

0.18


Diluted

$

0.41



$

0.16



$

1.17



$

0.18


Weighted Average Shares Outstanding:








Basic

30,219



29,875



30,219



29,874


Diluted

30,638



30,487



30,575



30,379


 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands)








September 30, 2018


December 31, 2017

ASSETS

Current Assets:





Cash


$

57,525



$

52,244


Accounts receivable, net of allowances of $6,039 and $5,242, respectively


151,196



108,595


Inventories


93,195



99,015


Other current assets


14,137



14,792


Total current assets


316,053



274,646


Property, plant and equipment, net of accumulated depreciation of $142,376
and $147,553, respectively


63,000



64,630


Goodwill


7,374



8,045


Intangible assets, net of accumulated amortization of $9,138 and $8,533,
respectively


12,987



14,548


Deferred income taxes, net


11,742



20,273


Other assets


3,814



2,246


Total assets


$

414,970



$

384,388







LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:





Accounts payable


$

91,582



$

86,608


Accrued liabilities and other


34,400



33,944


Current portion of long-term debt


3,217



3,191


Total current liabilities


129,199



123,743


Long-term debt


161,340



163,758


Pension and other post-retirement benefits


14,534



15,450


Other long-term liabilities


4,582



6,695


Total liabilities


309,655



309,646


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; 30,219,278
shares issued and outstanding, as of September 2018 and December 2017,
respectively)


304



304


Treasury stock, at cost: 1,175,795 shares, as of September 2018 and
December 2017


(9,114)



(9,114)


Additional paid-in capital


242,167



239,870


Retained deficit


(79,452)



(115,083)


Accumulated other comprehensive loss


(48,590)



(41,235)


Total stockholders' equity


105,315



74,742


Total liabilities and stockholders' equity


$

414,970



$

384,388


 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENT FINANCIAL INFORMATION

(Unaudited)

(Amounts in thousands)




Three Months Ended September 30,




Global Truck & Bus


Global Construction &
Agriculture


Corporate / Other


Total


2018


2017


2018


2017


2018


2017


2018


2017

Revenues
















External Revenues

$

145,540



$

121,497



$

79,470



$

76,852



$



$



$

225,010



$

198,349


Intersegment Revenues

821



552



3,311



2,705



(4,132)



(3,257)






Total Revenues

$

146,361



$

122,049



$

82,781



$

79,557



$

(4,132)



$

(3,257)



$

225,010



$

198,349


Gross Profit

$

20,486



$

17,180



$

12,159



$

8,316



$

(170)



$

(346)



$

32,475



$

25,150


Selling, General &
Administrative Expenses

$

5,300



$

5,534



$

4,554



$

4,160



$

5,840



$

4,442



$

15,694



$

14,136


Operating Income

$

14,899



$

11,350



$

7,571



$

4,121



$

(6,010)



$

(4,789)



$

16,460



$

10,682



































































































Nine Months Ended September 30,




Global Truck & Bus


Global Construction &
Agriculture


Corporate / Other


Total


2018


2017


2018


2017


2018


2017


2018


2017

Revenues
















External Revenues

$

421,014



$

342,964



$

253,121



$

223,929



$



$



$

674,135



$

566,893


Intersegment Revenues

2,394



1,084



9,524



7,315



(11,918)



(8,399)






Total Revenues

$

423,408



$

344,048



$

262,645



$

231,244



$

(11,918)



$

(8,399)



$

674,135



$

566,893


Gross Profit

$

62,675



$

48,288



$

37,736



$

22,099



$

(931)



$

(1,033)



$

99,480



$

69,354


Selling, General &
Administrative Expenses

$

16,522



$

16,688



$

12,752



$

12,619



$

16,155



$

16,250



$

45,429



$

45,557


Operating Income

$

45,278



$

30,716



$

24,879



$

9,374



$

(17,086)



$

(17,283)



$

53,071



$

22,807


 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

Appendix A: Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

(Amounts in thousands, except per share amounts)








Trailing Twelve Months Ended
September 30,




2018


2017

Net Income



$

28,404



$

5,877


Interest



12,565



20,644


Provision for Income Taxes



21,246



2,086


Depreciation



14,389



13,996


Amortization



1,311



1,316


EBITDA



$

77,915



$

43,919








Debt per Balance Sheet



$

164,557



$

167,749


Plus: Original Issue Discount



2,583



3,203


Plus: Prepaid Financing



2,391



2,955


Gross Debt



$

169,531



$

173,907


Less: Cash



57,525



50,232


Net Debt



$

112,006



$

123,675


Divide by Trailing 12 Months EBITDA



$

77,915



$

43,919


Net Leverage



1.4x



2.8x








 

 

Use of Non-GAAP Measures

This earnings release contains financial measures that are not in accordance with U.S. generally accepted accounting principles ("GAAP").  Management uses these non-GAAP financial measures to evaluate the Company's performance, and to engage in financial and operational planning.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the Company's financial and operating results and in comparing the Company's performance to that of its competitors.  However, 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.

Cision View original content:http://www.prnewswire.com/news-releases/commercial-vehicle-group-announces-third-quarter-2018-results-300744102.html

SOURCE Commercial Vehicle Group, Inc.

Terry Hammett, Investor Relations, Commercial Vehicle Group, Inc., (614) 289-5384

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