Commercial Vehicle Group, Inc. (the “Company”) (Nasdaq: CVGI) today reported financial results for the second quarter ended June 30, 2016.
Patrick Miller, President and CEO, stated, “I am proud of the diligent efforts being made by our various CVG teams to effectively reduce costs during a challenging sales environment. The Global Construction group is making progress year over year which is reflected by improved profits on slightly lower sales, the Global Truck team is achieving our decremental margin expectations, and our support groups are contributing through supply chain management, lean initiatives, and spending control. Additionally, a portion of the restructuring initiatives are already positively contributing to the results. We are facing some difficult market headwinds and are working hard to manage the areas in our control which is showing up in the quarterly results.”
Tim Trenary, Chief Financial Officer, stated, “Our margins continue to benefit from our operational excellence, centrally led procurement and logistics, cost reduction and facility restructuring initiatives. Gross profit margin is flat year over year on eighteen percent less sales, and selling general and administrative expense for the quarter is down $2 million from a year ago, or by 11percent. Our focus on working capital employed in the business is paying dividends too; cash build for the first six months of the year was $32 million. All things considered, we are pleased with our performance.”
Consolidated Results
- Second quarter 2016 revenues were $178.3 million, compared to $217.6 million in the prior-year period, a decrease of 18.1 percent. The decrease in revenues period-over-period is driven primarily by the retreat of North American heavy-duty truck production volumes from near historically high levels in 2015 and the continued softness in the global construction and agriculture markets we serve. Foreign currency translation adversely impacted second quarter 2016 revenues by $1.5 million, or by 0.7 percent when compared to the same period in the prior year.
- Operating income in the second quarter 2016 was $8.4 million, compared to operating income of $11.6 million in the prior-year period. The decrease in operating income period-over-period was primarily the result of decreased revenues, offset by operational improvements and the benefits from cost reduction and restructuring actions. Second quarter 2016 results include $0.5 million of costs associated with our ongoing restructuring initiatives. Second quarter 2015 results include $0.5 million of costs associated with the closure of our Tigard, Oregon facility.
- Net income was $2.7 million in the second quarter 2016, or $0.09 per diluted share, compared to net income of $3.2 million, or $0.11per diluted share, in the prior-year period. Earnings per share, as adjusted for special items, were $0.10 per diluted share in second quarter 2016, compared to $0.12 per diluted share in the prior-year period. Net income in the second quarter 2016 benefited from a lower effective tax rate period-over-period.
For the period ending June 30, 2016, the Company did not have any borrowings under its asset-based revolver and therefore was not subject to any financial maintenance covenants. At June 30, 2016, the Company had liquidity of $162 million, $124 million of cash and$38 million of availability from our asset based revolver.
Segment Results
Global Truck and Bus Segment
- Revenues for the Global Truck and Bus Segment for the second quarter 2016 were $112.1 million compared to $149.3 million for the prior-year period, a decrease of 24.9 percent primarily resulting from lower North American heavy-duty truck production when compared to the same period in the prior year.
- Operating income for the second quarter 2016 was $8.5 million compared to operating income of $15.1 million for the prior-year period. The decrease in operating income period-over-period is primarily the result of the decrease in revenues offset by operational improvements and the benefit of the cost reduction and restructuring actions. Second quarter 2016 results include $0.3 million of costs associated with our ongoing restructuring initiatives. Second quarter 2015 results include $0.5 million 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 second quarter 2016 were $68.5 million compared to $70.7 million in the prior-year period, a decrease of 3.1 percent. The global construction and agriculture end markets for which we manufacture products continue to be soft. Foreign currency translation adversely impacted second quarter 2016 revenues by $1.5 million, or by 2.1 percent when compared to the same period in the prior year.
- Operating income for the second quarter 2016 was $5.5 million compared to operating income of $2.8 million for the prior-year period. Improvement in operating income period-over-period resulted primarily from operational improvements and the benefit of the cost reduction and restructuring actions. Second quarter 2016 results include $0.2 million of costs associated with our ongoing restructuring initiatives.
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.
2016 End Market Outlook
Management estimates that the 2016 North American Class 8 truck production will be in the range of 215,000 – 235,000 units, down from a near historically high level of 323,000 units in 2015, while North American Class 5-7 production is expected to be stable year-over-year. Management believes there is a continuing bias toward softness in the global construction and agriculture equipment markets.
CONFERENCE CALL
A conference call to discuss this press release is scheduled for Thursday, August 4, 2016, at 3:00 p.m. ET. To participate, dial (866) 300-8704 using conference code 46540432.
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 46540432.
