Commercial Vehicle Group, Inc. (the “Company”) (Nasdaq: CVGI) today reported financial results for the third quarter ended September 30, 2014.
Third quarter 2014 revenues were $213.8 million compared to $187.9 million for the prior year period, an increase of 13.8 percent. Operating income for the third quarter was $9.7 million compared to operating loss of $3.4 million for the prior-year period. Net income was $1.2 million for the third quarter, or $0.04 per diluted share, compared to a net loss of $7.3 million, or $(0.25) per diluted share in the prior-year period. Diluted shares outstanding were 29.3 million for the third quarter compared to 28.6 million for the prior year period.
Operating income in the third quarter of 2014 increased by $13.1 million compared to the prior year period. This improvement resulted in part from the 13.8 percent increase in sales over the prior year period. Also, in the third quarter of 2013, the Company incurred $1.8 million in costs associated with employee separation, $2.7 million of asset impairments, and $2.8 million of costs for third-party consulting services. In the third quarter of 2014, the Company did not incur any material charges relating to employee separation, asset impairment or third-party consulting services.
An income tax provision of $3.3 million was recorded for the three months ended September 30, 2014 compared to an income tax benefit of $1.5 million for the prior year period. The effective tax rate continues to be negatively impacted by the need for valuation allowances in certain subsidiaries.
The Company did not have any outstanding borrowings under its asset-based revolver during the quarter ended September 30, 2014and therefore was not subject to any financial maintenance covenants. At September 30, 2014, the Company had total liquidity of $113.2 million with cash of $76.1 million and availability from the asset-based revolver of $37.1 million.
Rich Lavin, President and CEO of Commercial Vehicle Group, stated, “We are pleased with the almost 14 percent improvement in sales compared to the third quarter of 2013. This improvement reflects the favorable production volumes in North America by the heavy-duty truck OEMs and our market position as a supplier of a full range of cab related products and systems in this region. Our global construction and agriculture end markets also performed well in the third quarter of 2014, delivering better than 10 percent more sales than in the prior year period. With respect to our pull through, we continue to be pleased with our ability to convert incremental sales into operating income. Before giving effect in the prior year period to the costs associated with employee separation, asset impairments and third party consulting services, pull through was well within the range we expect period over period.
Tim Trenary, Chief Financial Officer of Commercial Vehicle Group, stated, “Our SG&A spending during the third quarter of 2014 was$18.3 million, $2.8 million less than the prior year period. In the third quarter of 2013, the company incurred employee separation costs of $1.8 million associated with a reduction in force, $1.6 million of which was charged to SG&A expense; and $2.8 million of third party consulting services. Our SG&A spending in the third quarter of 2014 reflects spending consistent with the first two quarters of the year. We continue to evaluate our SG&A spending to ensure alignment with our recently announced long-term strategy, CVG 2020.
We continue to believe that increased production levels in North American heavy-duty truck OEMs are sustainable through the remainder of the year. We estimate that 2014 North American Class 8 truck production will be in the range of 290,000 – 300,000 units.
