Commercial Vehicle Group, Inc. (“CVG”, the “Company”), a diversified industrial company, reported progress against its objectives in the areas of leadership, growth, cost and cash actions taken during 2020.
- Debt Paydown – The Company has generated and sustained sufficient cashflow to immediately pay down $20 million of its debt. After the $20 million repayment, the Company will have $156 million of Term Loan B debt, $0 of revolver debt, and $55 million of global cash. This will result in a net debt balance of $101 million, and the Company will continue to have over $100 million of liquidity. We expect to be able to continue to invest in targeted areas for growth expansion, new products, capability enhancement, cost optimization, quality improvement, and digital business processes.
- Compensation Restoration – The Company implemented a set of temporary cost actions in 2020 which included compensation reductions by its employees and members of its Board of Directors. The Company is announcing that it has begun to reinstate compensation to target levels.
- Core Market Recovery – The global commercial vehicle markets show signs of recovery from the covid induced downturn, although demand remains below pre-covid levels overall. However, ACT Research, a publisher of industry market research, has increased its North American production outlooks for 2020, 2021 and 2022. The Company is re-staffing in certain areas and continues to invest in operations in its core markets.
- Organic Growth Progress – As previously reported, the Company is implementing actions to enable growth in its markets that are expanding and growing rapidly, specifically e-commerce and e-tailing driven warehouse infrastructure subsystems, and new electric vehicle platforms. E-commerce and e-tailing continue to grow at a rapid pace and the supply industry infrastructure needed for sorting and shipping products is expanding globally. Additionally, the Company previously announced a new business relationship with a new customer that is a last-mile electric vehicle maker. The Company has begun its investment and ramp-up activities for this foundational new business area.
- Business Development Restart – The Company has implemented actions to integrate business operations and achieve the desired business expansion and portfolio diversification enabled by the acquisition of First Source Electronics in 2019. The Company is in the early stages of restarting a focused M&A program with goals of portfolio expansion, dampening commercial vehicle cyclicality on the Company’s results, and enhancing the Company’s value propositions.
“The Company has made progress so far in 2020, but is at the beginning of a bold repositioning and business expansion. We have multiple strategic actions underway to achieve this outcome – new people, new customers, new products, new footprint, new business processes, and re-focused M&A agenda. We are also at the beginning of a sustained initiative to become an innovator and best-in-class solutions provider in our markets. We are making fundamental changes and adding new people to complement and strengthen our team. We added a key new leader in Q3 and have searches underway for multiple other new leaders. We also have promoted and reassigned some of our strongest leaders to directly lead the Company in new areas. We intend to profitably grow the Company and pivot our center of mass to include other diversified industrial end markets.”
“The Company is implementing a set of business process infrastructure actions in 2020 to advance its financial management regimens, growth program tracking, cost management actions and cash / debt optimization. This has been a tremendous workload for our headquarters team and global operations teams. Additionally, we have supplemented our team with a few specialized consultants to assist with these important actions. These efforts are improving our ability to forecast and target growth, and be more proactive with cost and cash management. This work is not completed and we expect it will continue for a few more quarters.”
“The combination of the covid-related slowdown in the heavy duty vehicle markets and the rapid growth of e-commerce driven warehouse infrastructure investment this year presented a very unique entrepreneurial opportunity that we took advantage of with swift actions. We pivoted quickly and used the temporary but large slow down to initiate reconfiguration of four plants to better serve warehouse equipment growth and initiated cost optimization at six other plants, including three facility closures. The work to complete these actions is still underway”
“E-commerce, e-tailing, last mile delivery, electric vehicles, and sophisticated warehousing and distribution centers are global macro-trends that we intend to firmly participate in. It is already a big part of the new CVG and we are taking actions with the goal of making them significantly larger,” said Harold Bevis, President and CEO.
SOURCE: CVG
