Commercial Vehicle Group, Inc. (the “Company” or “CVG”) (Nasdaq: CVGI) today reported financial results for the third quarter ended September 30, 2015.
Consolidated Results
- Third quarter revenues were $202.7 million compared to $213.8 million in the prior year period, a decrease of 5.2 percent. Foreign currency exchange translation, due in large part to the relative strength of the U.S. Dollar, negatively impacted third quarter sales compared to the prior year period by $4.5 million. As adjusted for foreign currency exchange translation, third quarter revenues decreased by 3.1 percent.
- Operating income in the third quarter was $9.9 million compared to operating income of $9.7 million in the prior year period, an increase of 2.1 percent on lower revenue. Third quarter 2015 and 2014 results included $0.3 million and $0.1 million, respectively, of costs associated with the closure of our Tigard, Oregon facility.
- Net income was $2.6 million in the third quarter, or $0.09 per diluted share, compared to net income of $1.2 million, or $0.04 per diluted share in the prior year period. Earnings per share, as adjusted for special items, were $0.10 per diluted share in the third quarter, compared to $0.04 per diluted share in the prior year period.
Rich Lavin, President and CEO of Commercial Vehicle Group, stated, “As adjusted for foreign currency exchange translation of $4.5 million, our sales in the third quarter declined by $6.6 million, or by 3.1 percent. Sales in the Global Construction and Agriculture Segment declined by $11.6 million, net of unfavorable foreign currency exchange translation of $3.9 million, and reflects the challenging conditions in these end markets. Global Construction and Agriculture are two of our core industries, and we intend to continue to invest in those businesses to take advantage of the long term growth we are confident will develop in the coming years. Conversely, sales in our Global Truck and Bus segment increased by 2.8 percent, reflecting the continued favorable production volumes in the North American medium- and heavy-duty truck markets. As regards operating income, we were pleased with our overall cost management and pull through on lower sales for the quarter.”
Tim Trenary, Chief Financial Officer of Commercial Vehicle Group, stated, “As previously announced, on October 15, 2015, we elected to call for the redemption of $15 million of the $250 million outstanding 7.875% Senior Secured Notes due 2019. This action was made possible in large part as a consequence of $40 million of cash build for the nine months ended September 30, 2015. This redemption and therefore de-leveraging of our balance sheet is consistent with our capital allocation strategy and will reduce annual cash interest payments by $1.2 million. Adjusted for the anticipated redemption and the semi-annual interest payment we made on October 15, 2015, at September 30, 2015, the Company had liquidity of $122 million.”
Segment Results
Global Truck and Bus Segment
- Revenues for the Global Truck and Bus Segment for the third quarter were $142.9 million compared to $139.0 million for the prior year period, an increase of 2.8 percent primarily resulting from continued favorable production volumes in the North American medium- and heavy-duty truck markets. Foreign currency exchange translation negatively impacted third quarter 2015 sales by $0.6 million.
- Operating income for the third quarter was $16.4 million compared to operating income of $15.1 million for the prior year period, primarily as a result of increased sales period over period. Third quarter 2015 and 2014 results included $0.3 million and $0.1 million, respectively, of costs associated with the closure of our Tigard, Oregon facility.
Global Construction and Agriculture Segment
- Revenues for the Global Construction and Agriculture Segment for the third quarter were $62.5 million compared to $78.0 million in the prior year period, a decrease of 19.9 percent, reflecting the challenging marketplace in these end markets. Foreign currency exchange translation negatively impacted third quarter 2015 sales by $3.9 million, or 5.0 percent.
- Operating income in the third quarter was $0.8 million compared to $0.9 million in the prior year period on lower revenue.
GAAP to Non-GAAP Reconciliation
A reconciliation of GAAP to non-GAAP financial measures is included as Appendix A to this release.
End Market Outlook
Management estimates that 2015 North American Class 8 truck production levels will be in the range of 320,000 – 330,000 units, up from the 297,000 units produced in 2014. 2016 North American Class 8 truck production is expected to remain above the generally accepted annual replacement level. Additionally, we expect equipment production to remain soft for the remainder of 2015 and into 2016 in the global construction and agriculture end markets we serve.
Conference Call
A conference call to discuss this press release is scheduled for Thursday, November 5, 2015, at 10:00 a.m. ET. To participate, dial (866) 300-8704 using conference code 56623530.
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 56623530.
Click here to view the full release including financial tables.
