Document
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 6, 2018
 
Commercial Vehicle Group, Inc.
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
001-34365
 
41-1990662
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
 
 
 
 
7800 Walton Parkway, New Albany, Ohio
 
43054
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 614-289-5360
Not Applicable
Former name or former address, if changed since last report
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨

 




Item 2.02. Results of Operations and Financial Condition.

On August 6, 2018, Commercial Vehicle Group, Inc. (the “Company”) issued the press release attached hereto as Exhibit 99.1 announcing earnings for the second quarter ended June 30, 2018.

The information, including exhibit 99.1 hereto, the registrant furnished in this report is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the Securities and Exchange Commission shall not incorporate this information by reference, except as otherwise expressly stated in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits
 
 
 
 
Exhibit No.
  
Description
 
 
  
Second quarter ended June 30, 2018 earnings press release dated August 6, 2018.










 




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
COMMERCIAL VEHICLE GROUP, INC.
 
 
 
 
August 6, 2018
 
 
 
By:
 
/s/ C. Timothy Trenary
 
 
 
 
Name:
 
C. Timothy Trenary
 
 
 
 
Title:
 
Chief Financial Officer



EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
  
Second quarter ended June 30, 2018 earnings press release dated August 6, 2018.




Exhibit
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12391673&doc=3
Exhibit 99.1

CONTACT: Terry Hammett, Investor Relations
Commercial Vehicle Group, Inc.
(614) 289-5384
FOR IMMEDIATE RELEASE

COMMERCIAL VEHICLE GROUP ANNOUNCES
SECOND QUARTER 2018 RESULTS

IMPROVED MARGINS FROM HIGHER REVENUES AND COST CONTROL

NEW ALBANY, OHIO, August 6, 2018 /PRNewswire/ – Commercial Vehicle Group, Inc. (the “Company”) (NASDAQ: CVGI) today reported financial results for the second quarter ended June 30, 2018.
 
 
Second Quarter
($ in millions except EPS)
2018
 
2017
Revenues
$233.4
 
$195.1
Operating Income
$21.1
 
$7.6
Net Income
$13.2
 
$0.1
Basic EPS
$0.44
 
$0.00
Diluted EPS
$0.43
 
$0.00

Patrick Miller, President and CEO, stated, “We had a strong second quarter. The truck production level combined with a healthy global construction market and pricing adjustments drove our consolidated revenues for the quarter to the highest level seen since 2012, up about 20 percent compared to the same period last year. Positive economic conditions in North America fueled increased North American truck production and record heavy-duty truck order activity in the second quarter. Heavy-duty truck production was up 19.7 percent compared to second quarter of 2017, and heavy-duty truck orders more than doubled in June, as compared to the same month last year.”

Tim Trenary, Chief Financial Officer, stated, “Operating Income for the second quarter of 2018 rose to $21.1 million on $233.4 million of revenues, an operating income margin of 9.1 percent. This margin is almost 300 bps higher than on comparable sales in the first and second quarters three years ago. This improvement in financial performance reflects successful completion of our facility restructuring and cost reduction actions. Moreover, the actions the Company has in flight to reduce the impact on our business of the difficult labor markets and the impact of commodity and other raw material inflationary pressures are bearing fruit. Conversion of incremental sales into operating income, or pull through, in the second quarter of 2018 compared to the same period last year was 35 percent. This pull through benefits from the resolution of the labor issues last year in our North American wire harness business. Setting this aside, pull through for the quarter was 27 percent on a constant currency basis. In short, we are pleased with the Company's financial performance this quarter.”
 





Consolidated Results

Second Quarter 2018 Results

Second quarter 2018 revenues were $233.4 million compared to $195.1 million in the prior year period, an increase of 19.6 percent. The increase in revenues period-over-period reflects higher heavy-duty truck production in North America and improvement in the global construction markets we serve. Foreign currency translation favorably impacted second quarter 2018 revenues by $4.3 million, or by 2.2 percent when compared to the same period in the prior year.

Operating income for the second quarter 2018 was $21.1 million compared to operating income of $7.6 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 raw material inflationary pressures, as well as difficult labor markets, adversely affected operating income. Cost control and cost recovery initiatives, including pricing adjustments, reduced the impact of these cost pressures on operating income. Also benefitting operating income is the completion of facility restructuring in late 2017. The second quarter of 2017 results include costs of approximately $4.0 million arising from a labor shortage in our North American wire harness business. Second quarter 2017 results also include $0.9 million in charges relating to facility restructuring and other related costs.

Net income was $13.2 million for the second quarter 2018, or $0.43 per diluted share, compared to net income of $0.1 million in the prior year period, or $0.00 per diluted share.

At June 30, 2018, the Company had liquidity of $108 million: $45 million of cash and $63 million of availability from our asset based revolver. There were no borrowings under our asset based revolver at June 30, 2018.
    
Segment Results

Global Truck and Bus Segment

Second Quarter 2018 Results

Revenues for the Global Truck and Bus Segment in the second quarter 2018 were $148.7 million compared to $119.9 million for the prior year period, an increase of 24.0 percent primarily resulting from higher North American heavy-duty truck production. Foreign currency translation favorably impacted second quarter 2018 revenue by $0.3 million, or by 0.2 percent when compared to the same period in the prior year.

Operating income for the second quarter 2018 was $17.2 million compared to operating income of $11.1 million in the prior year period. The increase in operating income period-over-period is primarily attributable to the increase in sales volume, cost control and cost recovery initiatives, including pricing adjustments, and the completion of facility restructuring in late 2017.


Global Construction and Agriculture Segment

Second Quarter 2018 Results

Revenues for the Global Construction and Agriculture Segment in the second quarter 2018 were $88.7 million compared to $78.2 million in the prior year period, an increase of 13.4 percent primarily as a result of improvement in the global construction markets we serve. Foreign currency translation favorably impacted second quarter 2018 revenues by $4.3 million, or by 5.5 percent when compared to the same period in the prior year.




Operating income for the second quarter 2018 was $9.1 million compared to operating income of $1.9 million in the prior year period. The increase in operating income period-over-period is primarily attributable to the increase in sales volume, cost control and cost recovery initiatives, including pricing adjustments, and actions taken to address the labor shortage which adversely affected our North American wire harness business in 2017. Second quarter 2017 results include $0.9 million of cost associated with our ongoing restructuring initiatives.


2018 End Market Outlook

Management estimates that the 2018 North American Class 8 truck production will be in the range of 300,000 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 is strong.


CONFERENCE CALL

A conference call to discuss this press release is scheduled for Tuesday, August 7, 2018, at 10:00 a.m. ET. To participate, dial (844) 743-2497 using conference code 3662707.
 
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 3662707.


About Commercial Vehicle Group, Inc.

Commercial Vehicle Group, Inc. (and 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", 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 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 June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues
$
233,391

 
$
195,127

 
$
449,126

 
$
368,543

Cost of Revenues
197,507

 
172,426

 
382,121

 
324,339

Gross Profit
35,884

 
22,701

 
67,005

 
44,204

Selling, General and Administrative Expenses
14,433

 
14,802

 
29,736

 
31,421

Amortization Expense
327

 
331

 
659

 
658

Operating Income
21,124

 
7,568

 
36,610

 
12,125

Interest and Other Expense
3,428

 
6,740

 
5,388

 
11,304

Income Before Provision for Income Taxes
17,696

 
828

 
31,222

 
821

Provision for Income Taxes
4,501

 
697

 
8,174

 
61

Net Income
$
13,195

 
$
131

 
$
23,048

 
$
760

 
 
 
 
 
 
 
 
Earnings per Common Share:
 
 
 
 
 
 
 
Basic
$
0.44

 
$
0.00

 
$
0.76

 
$
0.03

Diluted
$
0.43

 
$
0.00

 
$
0.75

 
$
0.03

Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
Basic
30,219

 
29,874

 
30,219

 
29,873

Diluted
30,513

 
30,455

 
30,543

 
30,325




COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
 
 
June 30, 2018
 
December 31, 2017
ASSETS
Current Assets:
 
 
 
 
Cash
 
$
44,674

 
$
52,244

Accounts receivable, net of allowances of $5,486 and $5,242, respectively
 
150,606

 
108,595

Inventories
 
91,109

 
99,015

Other current assets
 
13,981

 
14,792

Total current assets
 
300,370

 
274,646

Property, plant and equipment, net of accumulated depreciation of $143,496 and $147,553, respectively
 
62,217

 
64,630

Goodwill
 
7,658

 
8,045

Intangible assets, net of accumulated amortization of $8,978 and $8,533, respectively
 
13,542

 
14,548

Deferred income taxes, net
 
13,939

 
20,273

Other assets
 
3,562

 
2,246

Total assets
 
$
401,288

 
$
384,388

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
 
 
 
 
Accounts payable
 
$
88,473

 
$
86,608

Accrued liabilities and other
 
31,870

 
33,944

Current portion of long-term debt
 
3,208

 
3,191

Total current liabilities
 
123,551

 
123,743

Long-term debt
 
162,145

 
163,758

Pension and other post-retirement benefits
 
14,429

 
15,450

Other long-term liabilities
 
6,622

 
6,695

Total liabilities
 
306,747

 
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 June 2018 and December 2017, respectively)
 
304

 
304

Treasury stock, at cost: 1,175,795 shares, as of June 2018 and December 2017
 
(9,114
)
 
(9,114
)
Additional paid-in capital
 
241,387

 
239,870

Retained deficit
 
(92,035
)
 
(115,083
)
Accumulated other comprehensive loss
 
(46,001
)
 
(41,235
)
Total stockholders’ equity
 
94,541

 
74,742

Total liabilities and stockholders’ equity
 
$
401,288

 
$
384,388











COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENT FINANCIAL INFORMATION
(Unaudited)
(Amounts in thousands)
 
Three Months Ended June 30,
 
Global Truck & Bus
 
Global Construction & Agriculture
 
Corporate / Other
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External Revenues
$
147,983

 
$
119,603

 
$
85,408

 
$
75,524

 
$

 
$

 
$
233,391

 
$
195,127

Intersegment Revenues
761

 
307

 
3,290

 
2,657

 
(4,051
)
 
(2,964
)
 

 

Total Revenues
$
148,744

 
$
119,910

 
$
88,698

 
$
78,181

 
$
(4,051
)
 
$
(2,964
)
 
$
233,391

 
$
195,127

Gross Profit
$
23,219

 
$
17,070

 
$
13,042

 
$
5,960

 
$
(377
)
 
$
(329
)
 
$
35,884

 
$
22,701

Selling, General & Administrative Expenses
$
5,710

 
$
5,701

 
$
3,932

 
$
3,975

 
$
4,791

 
$
5,126

 
$
14,433

 
$
14,802

Operating Income
$
17,217

 
$
11,073

 
$
9,075

 
$
1,949

 
$
(5,168
)
 
$
(5,454
)
 
$
21,124

 
$
7,568


 
Six Months Ended June 30,
 
Global Truck & Bus
 
Global Construction & Agriculture
 
Corporate / Other
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External Revenues
$
275,474

 
$
221,466

 
$
173,652

 
$
147,077

 
$

 
$

 
$
449,126

 
$
368,543

Intersegment Revenues
1,573

 
532

 
6,213

 
4,609

 
(7,786
)
 
(5,141
)
 

 

Total Revenues
$
277,047

 
$
221,998

 
$
179,865

 
$
151,686

 
$
(7,786
)
 
$
(5,141
)
 
$
449,126

 
$
368,543

Gross Profit
$
42,189

 
$
31,107

 
$
25,578

 
$
13,782

 
$
(762
)
 
$
(685
)
 
$
67,005

 
$
44,204

Selling, General & Administrative Expenses
$
11,222

 
$
11,154

 
$
8,198

 
$
8,459

 
$
10,316

 
$
11,808

 
$
29,736

 
$
31,421

Operating Income
$
30,379

 
$
19,366

 
$
17,309

 
$
5,253

 
$
(11,078
)
 
$
(12,494
)
 
$
36,610

 
$
12,125












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