Commercial Vehicle Group, Inc. (the “Company”) (Nasdaq: CVGI) today reported financial results for the second quarter ended June 30, 2014.
Second quarter 2014 revenues were $216.0 million compared to $198.9 million for the prior-year period, an increase of 8.6 percent, driven by a continuation of increased production volumes in North American heavy-duty truck OEMs and global construction markets. Operating income for the second quarter was $9.0 million compared to operating income of $2.1 million for the prior-year period. Net income was $2.7 million for the second quarter, or $0.09 per diluted share, compared to a net loss of $1.7 million, or $(0.06) per diluted share in the prior-year period. Diluted shares outstanding were 29.2 million for the second quarter compared to 28.5 million for the prior-year period.
Improvement in operating income in the second quarter of 2014 compared to the prior-year period primarily resulted from increased production volumes across our primary businesses. Also, in the second quarter of 2013, the company incurred a cost of $2.5 million associated with executive changeover, and we did not incur similar charges in the second quarter of 2014. In addition, in the second quarter of 2014, we benefitted from a more efficient cost structure driven by actions taken in the third quarter of 2013, partially offset by repurposing of spend to more value accretive functions within the organization.
An income tax provision of $1.1 million was recorded for the three months ended June 30, 2014 compared to an income tax benefit of $1.4 millionfor the prior-year period. The Company’s effective tax rate continued to be adversely affected in second quarter 2014 as certain favorable tax laws, including the research and development tax credit, were not extended by Congress. Additionally, the effective tax rate continues to be impacted by valuation allowances in certain foreign subsidiaries.
The Company did not have any outstanding borrowings under its asset-based revolver during the quarter ended June 30, 2014 and therefore was not subject to any financial maintenance covenants. At June 30, 2014, the Company had total liquidity of $107.4 million with cash of $70.3 millionand availability from the asset-based revolver of $37.1 million.
Richard Lavin, President and CEO of Commercial Vehicle Group, stated, “We are pleased to see improved sales, along with corresponding improvements in gross profit and operating income, compared to the second quarter of 2013. The increase in revenues largely resulted from higher production volumes in North American heavy-duty truck OEMs and improved sales to construction equipment OEMs in the global markets we serve. Conversion of incremental sales into operating income exceeded our historical conversion rate, before giving effect to the $2.5 million in costs associated with the executive changeover in the prior-year period, in part as a consequence of operating leverage from cost structure discipline. We continue to believe that increased production levels in North American heavy-duty truck OEMs are sustainable for the full year. The North American construction industry continues to benefit from moderate economic growth. China, which is a key market for us, is expected to have continued GDP growth for the remainder of the year and it appears that they are introducing targeted economic stimulus measures that are expected to favorably impact infrastructure and construction in the second half of the year. Generally, we see positive economic factors in our key global markets and industries.”
Tim Trenary, Chief Financial Officer of Commercial Vehicle Group, stated, “Our SG&A spending during the second quarter of 2014 was $18.7 million and reflects spending consistent with the first two quarters of 2013, before giving effect to the $2.5 million in costs related to the executive changeover incurred in the second quarter of 2013. We continue to evaluate our SG&A spend for cost efficiency opportunities.”
Management estimates that 2014 North American Class 8 truck production will be in the range of 280,000 – 300,000 units. The Company also expects that global production of mid- to heavy-construction equipment will be up modestly compared to 2013 levels.
A conference call to discuss the contents of this press release is scheduled for Friday, August 8, 2014, at 10:00 a.m. ET. To participate, dial (888) 680-0865 using access code 14059781. To pre-register for the conference call and receive a pin number visit:
https://www.theconferencingservice.com/prereg/key.process?key=PEARACXLA
This call is being webcast by Thomson/CCBN 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 (888) 286-8010 using access code 19085835.
