NEW ALBANY, Ohio, Aug. 6, 2018 /PRNewswire/ -- Commercial Vehicle Group, Inc. (the "Company") (NASDAQ: CVGI) today reported financial results for the second quarter ended June 30, 2018.
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."
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.
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.
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 .
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.
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SOURCE Commercial Vehicle Group, Inc.