CVG (NASDAQ: CVGI), a diversified industrial products and services
company, today announced financial results for its first quarter
ended March 31, 2021.
First Quarter 2021 Highlights
(Compared with prior-year period, where comparisons are noted)
- Revenue of $245.1
million, up 31.0% driven by new business wins, demand growth in
warehouse automation, and demand growth in global vehicle
markets.
- Operating Income of
$15.4 million, up $41.9 million primarily due to higher sales
volume in Q1 2021 and an impairment taken of $28.9 million in Q1
2020 that did not reoccur.
- Adjusted operating
income of $15.8 million, up $8.7 million or 122.5% due to higher
volume and an improved cost structure driven by 2020 restructuring
actions.
- Net income of $8.5
million, or $0.26 per diluted share, an increase of $1.06 per
share.
- Adjusted EBITDA of
$21.1 million, up $10.1 million due to higher volumes, lower
costs and improved sales mix.
- Warehouse
automation revenues grew to $41.9 million, representing 17.1% of
Company sales in Q1 2021.
- Estimated $100
million of net new annualized business awarded to the company in Q1
2021, driven by electric vehicle platform wins that are longer
cycle awards.
- Subsequent to
quarter end, the Company refinanced its debt with a new bank group
and a new flexible design that enables us to have up to $200
million of acquisition capital. The refinancing will reduce future
interest expense by $3.1 million per quarter. This is a major
milestone in our business transformation program.
Harold Bevis, President and Chief Executive
Officer of CVG, said, “We reported record sales in Q1 2021 due to
strong demand in the company's legacy markets, growth in the
company's target markets and new business awards. Our success can
be seen in our warehouse automation business which grew revenues
22% quarter over quarter to $41.9 million and remains on track to
meet or exceed our full year 2021 goal of $150 million.
Additionally, our expertise designing, developing and building
value-added products offers significant value to companies in the
e-commerce transportation network and automated warehousing. With
the majority of our $100 million of net new annual business
wins in the quarter outside of internal combustion engine truck, we
continue to make progress towards our goal of reducing the
cyclicality in our business and turning CVG into a secular growth
business. Looking forward, we see some customers moderating their
production outlooks as a result of semiconductor chip and material
shortages as well as cost inflation due to dislocations in the
supply chain. While demand and orders are robust, we see headwinds
with regards to increasing production rates, raw material
inflation, labor inflation and freight inflation."
Chris Bohnert, Chief Financial Officer,
commented, "While we delivered record sales in the first quarter,
we also maintained our expense discipline which resulted in 260
basis points of adjusted operating margin expansion as compared to
the year ago first quarter. Our first quarter adjusted operating
margin of 6.4% also included $1.1 million of new business startup
costs which suppressed our margin by 40 basis points. Additionally,
I am very pleased we were able to close on our $275 million senior
secured credit facility on April 30, 2021. This refinance will
significantly reduce our interest expense and provide greater
financial flexibility for our future growth."
First Quarter Financial
Results(amounts in millions except per share data and
percentages)
|
First Quarter |
|
|
|
2021 |
|
2020 |
|
Change |
Revenues |
$ |
245.1 |
|
|
$ |
187.1 |
|
|
31.0 |
% |
Gross profit |
$ |
31.1 |
|
|
$ |
20.3 |
|
|
53.2 |
% |
Gross margin |
12.7 |
% |
|
10.8 |
% |
|
|
Operating income (loss) |
$ |
15.4 |
|
|
$ |
(26.5 |
) |
|
NM 2 |
|
Operating margin |
6.3 |
% |
|
(14.2 |
)% |
|
|
Adjusted operating income
1 |
$ |
15.8 |
|
|
$ |
7.1 |
|
|
122.5 |
% |
Adjusted operating margin 1 |
6.4 |
% |
|
3.8 |
% |
|
|
Net income (loss) |
$ |
8.5 |
|
|
$ |
(24.6 |
) |
|
NM 2 |
|
Adjusted net income 1 |
$ |
8.8 |
|
|
$ |
0.7 |
|
|
1157.1 |
% |
Earnings per share,
diluted |
$ |
0.26 |
|
|
$ |
(0.80 |
) |
|
NM 2 |
|
Adjusted earnings per share, diluted 1 |
$ |
0.27 |
|
|
$ |
0.02 |
|
|
1250.0 |
% |
Adjusted EBITDA 1 |
$ |
21.1 |
|
|
$ |
11.0 |
|
|
91.8 |
% |
Adjusted EBITDA margin 1 |
8.6 |
% |
|
5.9 |
% |
|
|
1 See Appendix A
for GAAP to Non-GAAP reconciliation |
2 Not
meaningful |
|
Consolidated ResultsFirst Quarter 2021
Results
- First quarter 2021
revenues were $245.1 million compared to $187.1 million in the
prior year period, an increase of 31.0%. The increase in revenues
reflected the significant increase in the warehouse automation
business and the improving global vehicle end markets. Foreign
currency translation also favorably impacted first quarter of 2021
revenues by $4.3 million, or by 2.3%.
- Operating income
for the first quarter 2021 was $15.4 million compared to an
operating loss of $26.5 million in the prior year period. The
increase in operating income is primarily attributable to higher
sales volume, an improved cost structure and an impairment of $28.9
million taken in the prior year period that did not reoccur. The
first quarter of 2021 adjusted operating income was $15.8 million,
excluding special charges.
- Interest associated
with debt and other expenses was $5.0 million and $4.6 million for
the first quarter ended March 31, 2021 and 2020,
respectively.
- Net income was $8.5
million, or $0.26 per diluted share, for the first quarter 2021
compared to net loss $24.6 million, or $(0.80) per diluted share,
in the prior year period.
At March 31, 2021, the Company had $6.8
million outstanding borrowings on its revolving credit facility and
had $38.1 million of cash and $81.9 million of
availability from the revolving credit facility, resulting in
liquidity of $120.0 million.
Subsequent to quarter end, on April 30, 2021,
the Company closed on $275 million in senior secured credit
facilities, consisting of a $150 million Term Loan A and a $125
million Revolving Credit Facility. The Company used a portion of
the proceeds to pay off its existing Term Loan B and Asset Backed
Loan Facility which had outstanding principle of $151.6 million and
$11.3 million, respectively, at April 30, 2021. On a proforma basis
at March 31, 2021, the Company's liquidity would have been $154.7
million under its new credit facility.
Segment Results
Electrical Systems Segment
First Quarter 2021 Results
- Revenues for the
Electrical Systems segment in the first quarter 2021 were $162.2
million compared to $112.1 million for the prior year period, an
increase of 44.7% primarily as a result of business growth in
warehouse automation and improved demand in the global wire harness
business, especially construction equipment. Foreign currency
translation favorably impacted first quarter 2021 revenues by $1.3
million, or by 1.2%.
- Operating income
for the first quarter 2021 was $14.9 million compared to operating
loss of $17.1 million in the prior year period. The increase in
operating income was primarily attributable to increased sales and
an impairment taken in the prior year that did not reoccur.
Global Seating Segment
First Quarter 2021 Results
- Revenues for the
Global Seating segment in the first quarter of 2021 were $91.1
million compared to $76.0 million in the prior year period, an
increase of 19.9% due to the improving global commercial vehicle
end markets, particularly in Asia Pacific and Europe. Foreign
currency translation favorably impacted first quarter 2021 revenues
by $3.0 million, or by 3.9%.
- Operating income
for the first quarter of 2021 was $5.5 million compared to
operating loss of $0.4 million in the prior year period. The
increase in operating income is primarily attributable to higher
sales volume and an impairment taken in the prior year that did not
reoccur.
2021 Demand Outlook
The demand outlook for the Company's legacy
vehicle markets is favorable. According to a April 2021 report by
ACT Research, a publisher of industry market research, 2020 North
American Class 8 truck build production was 214,250 units and Class
5-7 production was 223,721 units. 2021 North American Class 8 truck
production levels are expected to be at 303,000 units and Class 5-7
production are expected to be at 250,000 units. This outlook
supports demand for the Company’s vehicle products.
The demand outlook for the Company’s entrance
into the electric vehicle market is favorable. Many global electric
vehicle platforms are underway across the spectrum of vehicle
types. Adoption rates are forecast to increase and supports
continuance of the Company's efforts aimed at partnering with
Electric Vehicle makers to help them develop and produce these
vehicles and make use of the Company’s full product basket of the
following: entire electrical systems for the chassis and
powertrain, seating solutions, headliners, interior trim, mirrors,
wipers, floormats, and road sensors.
The demand outlook for the Company’s warehouse
automation products is favorable. According to LogisticsIQ, demand
for warehouse automation products is expected to grow approximately
14% annually through 2026. This outlook supports demand for the
Company's warehouse automation 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 Wednesday, May 5, 2021, at 10:00 a.m. ET.
Management intends to reference the Q1 2021 Earnings Call
Presentation during the conference call. To participate, dial (833)
235-5650 using conference code 9982822. International participants
dial (647) 689-4139 using conference code 9982822.
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, dial (800) 585-8367 using access code 9982822
and international callers can dial (416) 621-4642 using access code
9982822.
Company Contact
Christopher H. BohnertCFO CVG(614) 289-0414
About CVG
CVG is a global provider of components and
assemblies into two primary end markets – the global vehicle market
and the U.S. technology integrator markets. The company provides
components and assemblies to global vehicle companies to build
original equipment and provides aftermarket products for fleet
owners. The company also provides mechanical assemblies to
warehouse automation integrators and to U.S. military technology
integrators.
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
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSThree Months Ended March 31, 2021
and 2020(Unaudited)(Amounts in
thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
2021 |
|
2020 |
Revenues |
$ |
245,122 |
|
|
$ |
187,105 |
|
Cost of revenues |
214,001 |
|
|
166,802 |
|
Gross profit |
31,121 |
|
|
20,303 |
|
Selling, general and
administrative expenses |
15,718 |
|
|
17,959 |
|
Goodwill and other
impairment |
— |
|
|
28,867 |
|
Operating income (loss) |
15,403 |
|
|
(26,523 |
) |
Other (income) expense |
(656 |
) |
|
741 |
|
Interest expense |
5,041 |
|
|
4,624 |
|
Income (loss) before provision for income taxes |
11,018 |
|
|
(31,888 |
) |
Provision (benefit) for income
taxes |
2,528 |
|
|
(7,294 |
) |
Net income (loss) |
$ |
8,490 |
|
|
$ |
(24,594 |
) |
Earnings (loss) per Common
Share: |
|
|
|
Basic |
$ |
0.27 |
|
|
$ |
(0.80 |
) |
Diluted |
$ |
0.26 |
|
|
$ |
(0.80 |
) |
Weighted average shares
outstanding: |
|
|
|
Basic |
31,264 |
|
|
30,806 |
|
Diluted |
32,307 |
|
|
30,806 |
|
|
|
|
|
|
|
|
COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(Amounts in
thousands, except per share amounts) |
|
|
|
|
ASSETS |
March 31, 2021 |
|
December 31, 2020 |
Current assets: |
|
|
|
Cash |
$ |
38,136 |
|
|
$ |
50,503 |
|
Accounts receivable, net of allowances of $670 and $644,
respectively |
186,036 |
|
|
151,101 |
|
Inventories |
109,008 |
|
|
91,247 |
|
Other current assets |
22,043 |
|
|
17,686 |
|
Total current assets |
355,223 |
|
|
310,537 |
|
Property, plant and equipment,
net |
59,882 |
|
|
62,776 |
|
Intangible assets, net |
20,926 |
|
|
21,804 |
|
Deferred income taxes, net |
24,603 |
|
|
25,981 |
|
Other assets, net |
31,252 |
|
|
33,275 |
|
Total assets |
$ |
491,886 |
|
|
$ |
454,373 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
135,453 |
|
|
$ |
112,402 |
|
Accrued liabilities and other |
51,681 |
|
|
50,056 |
|
Current portion of long-term debt |
2,430 |
|
|
2,429 |
|
Total current liabilities |
189,564 |
|
|
164,887 |
|
Long-term debt |
152,035 |
|
|
144,147 |
|
Pension and other post-retirement
benefits |
14,668 |
|
|
15,296 |
|
Other long-term liabilities |
33,004 |
|
|
34,673 |
|
Total liabilities |
389,271 |
|
|
359,003 |
|
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;
31,381,845 and 31,249,811 shares issued and outstanding
respectively) |
315 |
|
|
313 |
|
Treasury stock, at cost: 1,567,654 and 1,560,623 shares,
respectively |
(11,893 |
) |
|
(11,893 |
) |
Additional paid-in capital |
250,277 |
|
|
249,312 |
|
Retained deficit |
(88,866 |
) |
|
(97,356 |
) |
Accumulated other comprehensive loss |
(47,218 |
) |
|
(45,006 |
) |
Total stockholders’ equity |
102,615 |
|
|
95,370 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
491,886 |
|
|
$ |
454,373 |
|
|
|
|
|
|
|
|
|
|
COMMERCIAL VEHICLE GROUP, INC. AND
SUBSIDIARIESBUSINESS SEGMENT FINANCIAL
INFORMATION(Unaudited)(Amounts in
thousands) |
|
|
|
Three Months Ended March 31 |
|
Electrical Systems |
|
Global Seating |
|
Corporate / Other |
|
Total |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenues |
$ |
159,687 |
|
|
$ |
111,167 |
|
|
$ |
85,435 |
|
|
$ |
75,938 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
245,122 |
|
|
$ |
187,105 |
|
Intersegment revenues |
2,553 |
|
|
931 |
|
|
5,659 |
|
|
43 |
|
|
(8,212 |
) |
|
(974 |
) |
|
— |
|
|
— |
|
Total revenues |
$ |
162,240 |
|
|
$ |
112,098 |
|
|
$ |
91,094 |
|
|
$ |
75,981 |
|
|
$ |
(8,212 |
) |
|
$ |
(974 |
) |
|
$ |
245,122 |
|
|
$ |
187,105 |
|
Gross profit |
20,270 |
|
|
10,946 |
|
|
10,888 |
|
|
9,371 |
|
|
(37 |
) |
|
(14 |
) |
|
31,121 |
|
|
20,303 |
|
Selling, general &
administrative expenses |
5,403 |
|
|
4,679 |
|
|
5,344 |
|
|
4,923 |
|
|
4,971 |
|
|
8,357 |
|
|
15,718 |
|
|
17,959 |
|
Goodwill and other
impairment |
— |
|
|
23,415 |
|
|
— |
|
|
4,809 |
|
|
— |
|
|
643 |
|
|
— |
|
|
28,867 |
|
Operating income (loss) |
$ |
14,867 |
|
|
$ |
(17,148 |
) |
|
$ |
5,544 |
|
|
$ |
(361 |
) |
|
$ |
(5,008 |
) |
|
$ |
(9,014 |
) |
|
$ |
15,403 |
|
|
$ |
(26,523 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMERCIAL VEHICLE GROUP, INC. AND
SUBSIDIARIESAppendix A: Reconciliation of GAAP to
Non-GAAP Financial
Measures(Unaudited)(Amounts in
thousands, except per share amounts and percentages)
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Operating income (loss) |
$ |
15,403 |
|
|
$ |
(26,523 |
) |
Restructuring |
— |
|
|
171 |
|
Deferred consideration purchase accounting |
248 |
|
|
— |
|
Investigation |
194 |
|
|
2,376 |
|
CEO transition |
— |
|
|
2,256 |
|
Impairment of goodwill and long-lived assets |
— |
|
|
28,867 |
|
Total operating income (loss) adjustments |
442 |
|
|
33,670 |
|
Adjusted operating income
(loss) |
$ |
15,845 |
|
|
$ |
7,147 |
|
% of revenues |
6.5 |
% |
|
3.8 |
% |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Net income (loss) |
8,490 |
|
|
(24,594 |
) |
Operating income (loss) adjustments |
442 |
|
|
33,670 |
|
Adjusted (benefit) provision for income taxes1 |
(111 |
) |
|
(8,417 |
) |
Adjusted net income (loss) |
$ |
8,821 |
|
|
$ |
659 |
|
|
|
|
|
Diluted EPS |
$ |
0.26 |
|
|
$ |
(0.80 |
) |
Adjustments to diluted EPS |
$ |
0.01 |
|
|
$ |
0.82 |
|
Adjusted diluted EPS |
$ |
0.27 |
|
|
$ |
0.02 |
|
1. Reported Tax (Benefit) Provision adjusted for tax
effect of special charges at 25%
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Net income (loss) |
$ |
8,490 |
|
|
$ |
(24,594 |
) |
Interest expense |
5,041 |
|
|
4,624 |
|
Provision (benefit) for income taxes |
2,528 |
|
|
(7,294 |
) |
Depreciation expense |
3,781 |
|
|
3,780 |
|
Amortization expense |
861 |
|
|
860 |
|
Impairment of goodwill and long-lived assets |
— |
|
|
28,867 |
|
EBITDA |
$ |
20,701 |
|
|
$ |
6,243 |
|
% of revenues |
8.4 |
% |
|
3.3 |
% |
|
|
|
|
EBITDA adjustments |
|
|
|
Restructuring |
$ |
— |
|
|
$ |
171 |
|
Deferred consideration purchase accounting |
248 |
|
|
— |
|
Investigation |
194 |
|
|
2,376 |
|
CEO transition |
— |
|
|
2,256 |
|
Adjusted EBITDA |
$ |
21,143 |
|
|
$ |
11,046 |
|
% of revenues |
8.6 |
% |
|
5.9 |
% |
|
|
|
|
|
|
COMMERCIAL VEHICLE GROUP, INC. AND
SUBSIDIARIESAppendix B: Segment Reconciliation of
GAAP to Non-GAAP Financial
Measures(Unaudited)(Amounts in
thousands, except percentages)
|
Three Months Ended March 31, 2021 |
|
ElectricalSystems |
|
GlobalSeating |
|
Corporate / Other |
|
Total |
Operating income (loss) |
$ |
14,867 |
|
|
$ |
5,544 |
|
|
$ |
(5,008 |
) |
|
$ |
15,403 |
|
Deferred consideration purchase accounting |
248 |
|
|
— |
|
|
— |
|
|
248 |
|
Investigation |
— |
|
|
— |
|
|
194 |
|
|
194 |
|
Adjusted operating income
(loss) |
$ |
15,115 |
|
|
$ |
5,544 |
|
|
$ |
(4,814 |
) |
|
$ |
15,845 |
|
% of revenues |
9.3 |
% |
|
6.1 |
% |
|
|
|
6.5 |
% |
|
Three Months Ended March 31, 2020 |
|
ElectricalSystems |
|
GlobalSeating |
|
Corporate / Other |
|
Total |
Operating loss |
$ |
(17,148 |
) |
|
$ |
(361 |
) |
|
$ |
(9,014 |
) |
|
$ |
(26,523 |
) |
Restructuring |
— |
|
|
131 |
|
|
40 |
|
|
171 |
|
Investigation |
— |
|
|
— |
|
|
2,376 |
|
|
2,376 |
|
CEO transition |
— |
|
|
— |
|
|
2,256 |
|
|
2,256 |
|
Impairment of goodwill and long-lived assets |
23,415 |
|
|
4,809 |
|
|
643 |
|
|
28,867 |
|
Adjusted operating income
(loss) |
$ |
6,267 |
|
|
$ |
4,579 |
|
|
$ |
(3,699 |
) |
|
$ |
7,147 |
|
% of revenues |
5.6 |
% |
|
6.0 |
% |
|
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
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.
Commercial Vehicle (NASDAQ:CVGI)
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