Commercial Vehicle Group Announces Fourth Quarter and Fiscal Year 2015 Results

Mar 10, 2016, 17:39 ET from Commercial Vehicle Group, Inc.

NEW ALBANY, Ohio, March 10, 2016 /PRNewswire/ -- Commercial Vehicle Group, Inc. (the "Company") (Nasdaq: CVGI) today reported financial results for the fourth quarter and fiscal year ended December 31, 2015.

Consolidated Results

Fourth Quarter 2015 Results

  • Fourth quarter 2015 revenues were $184.7 million compared to $211.9 million in the prior-year period, a decrease of 12.8 percent, primarily resulting from a decline in fourth quarter heavy-duty truck production in North America, decreased sales into the global construction and agriculture markets, and foreign currency translation due to the relative strength of the U.S. Dollar.  Foreign currency translation negatively impacted fourth quarter revenues by $3.3 million, or 1.5 percent.
  • Operating income in the fourth quarter was $5.3 million compared to operating income of $9.5 million in the prior-year period.  The decrease in operating income period-over-period was a result of decreased sales. The fourth quarter 2015 results included restructuring costs of $0.8 million and the fourth quarter of 2014 results included $0.7 million of restructuring costs related to the closure of the Tigard facility.
  • Net loss was $2.3 million in the fourth quarter, or $0.08 per diluted share, compared to net income of $4.2 million, or $0.15 per diluted share, in the prior-year period.  Net loss in the fourth quarter reflects an after-tax charge of $0.4 million associated with the redemption of $15 million of the Company's senior secured notes, and an income tax provision of $1.7 million compared to an income tax benefit of $0.1 million in the prior-year period.  The income tax provision in the fourth quarter resulted primarily from pre-tax losses in certain foreign subsidiaries with deferred tax asset valuation allowances; conversely, the income tax benefit in the prior year period resulted primarily from a reduction in deferred tax asset valuation allowances in certain foreign subsidiaries.  Diluted shares outstanding were 29.7 million in the fourth quarter compared to 29.1 million for the prior-year period.

Fiscal Year 2015 Results

  • Fiscal year 2015 revenues were $825.3 million compared to $839.7 million in the prior year, a decrease of 1.7 percent, resulting from decreased sales into the global construction and agriculture markets and the negative impact of foreign currency translation, offset by an increase in medium- and heavy-duty truck ("MD / HD Truck") production in North America. Foreign currency translation negatively impacted fiscal year 2015 revenues by $18.3 million, or 2.2 percent.
  • Operating income for the full year was $38.0 million compared to operating income of $33.7 million in the prior year, an increase of $4.3 million.  The increase in operating income year-over-year resulted from gross profit margin improvement and reduced selling, general & administrative expenses. Results in 2015 included restructuring charges of $2.3 million (inclusive of $1.5 million of Tigard restructuring costs) and 2014 included restructuring charges of $2.1 million related to the closure of the Tigard facility and sale of the Norwalk facility.
  • Net income was $7.1 million for fiscal year 2015, or $0.24 per diluted share, compared to a net income of $7.6 million, or $0.26 per diluted share, in fiscal year 2014.   Net income in fiscal year 2015 reflects an income tax provision of $9.8 million compared to an income tax provision of $5.1 million in the prior year.  The income tax provision in 2015 was adversely affected by pre-tax losses in certain foreign subsidiaries with deferred tax asset valuation allowances; conversely, the income tax provision in the prior year period benefited from a reduction in deferred tax asset valuation allowances in certain foreign subsidiaries.  Diluted shares outstanding were 29.4 million for the fiscal year ending December 31, 2015 compared to 29.1 million for the fiscal year ending December 31, 2014.

In fiscal year 2015, the Company did not have any borrowings under its asset-based revolver and therefore was not subject to any financial maintenance covenants.  At December 31, 2015, the Company had liquidity of $129.7 million; $92.2 million of cash and $37.5 million availability from its asset based revolver.

"Our North American heavy-duty truck business was adversely impacted in November and December as the heavy-duty truck OEMs adjusted their production schedules to reflect a decline in orders and to begin to re-balance truck inventory.   We expect continuing softness in orders and production into the first half of this year and then an improvement in the second half of the year to production more consistent with replacement levels," said Pat Miller, Commercial Vehicle Group President & CEO.  Miller added, "Late last year, in anticipation of this change in demand, we set in motion restructuring and cost reduction actions to more closely align our business with the changing demand.  We believe these actions will result in a structural change in manufacturing cost and enhanced productivity.  Our facility restructuring is proceeding as planned, and we have reduced our selling, general and administrative spend entering 2016 - We expect SG&A to come in at approximately $16 to $17 million in the first quarter."

Tim Trenary, Chief Financial Officer, stated, "We've been very focused on costs given the declining sales environment, and many adjustments have been made.  This effort overall, and more specifically our centrally led procurement, and logistics and operational excellence initiatives, contributed to an improvement in operating income of $4 million on lower sales for the year.  This is reflected in gross profit margin improvement of sixty basis points to 13.4 percent from 12.8 percent.  We are also pleased with our cash build during the year, achieved in part from working capital management.  This allowed us to redeem $15 million of our senior secured notes in the fourth quarter of 2015, thereby deleveraging our balance sheet."

Miller concluded, "With our well-planned strategic restructuring under way, augmented by our focus on reducing our operating expenses, we believe we are positioning the Company to protect margins in the near term and meaningfully enhance profitability in the long term.  Furthermore, we believe we will be better positioned to capture long-term growth in our global markets and expect to further strengthen our ability to deliver improved returns during cycle expansions.  Additionally, we believe our cash position and liquidity provide ample flexibility for us in 2016 and beyond."

Segment Results

Global Truck and Bus Segment

Fourth Quarter 2015 Results

  • Revenues for the GTB Segment for the fourth quarter of 2015 were $127.1 million compared to $140.1 million for the prior-year period, a decrease of 9.3 percent primarily resulting from a decline in fourth quarter heavy-duty truck production in North America compared to the fourth quarter of 2014.
  • Operating income for the fourth quarter was $13.7 million compared to operating income of $16.2 million for the prior-year period. This decrease in operating income period-over-period resulted from the decrease in sales. The fourth quarter 2015 and 2014 results included restructuring charges of $0.3 million and $0.7 million, respectively.

Fiscal Year 2015 Results

  • Revenues for the GTB Segment in fiscal year 2015 were $565.3 million compared to $534.1 million in the prior year, an increase of 5.8 percent primarily resulting from increased MD / HD Truck production in North America.
  • Operating income in fiscal year 2015 was $59.3 million compared to operating income of $51.2 million in the prior year. This increase in operating income year-over-year primarily resulted from the increase in revenue. Results in 2015 included restructuring charges of $1.8 million (inclusive of $1.5 million of Tigard restructuring costs) and 2014 included $2.1 million (consisting of $1.3 million of Tigard restructuring costs and $0.8 million for the loss on the sale of the Norwalk facility), respectively.

Global Construction and Agriculture Segment

Fourth Quarter 2015 Results

  • Revenues for the GCA Segment in the fourth quarter of 2015 were $60.4 million compared to $74.8 million in the prior year, a decrease of 19.3 percent primarily reflecting the challenging marketplace in these end markets and foreign currency translation. Foreign currency translation negatively impacted fourth quarter 2015 revenue by $2.8 million, or 3.7 percent.
  • Operating income in the fourth quarter was $0.7 million compared to operating loss of $1.6 million for the prior year period.  The swing to operating income on lower sales in the current period from an operating loss in the prior year period resulted from the improvement in gross profit margin. Facility restructuring costs in the fourth quarter of 2015 were $0.5 million.

Fiscal Year 2015 Results

  • Revenues for the GCA Segment in fiscal year 2015 were $271.6 million compared to $317.2 million in the prior year, a decrease of 14.4 percent primarily reflecting the challenging marketplace in these end markets and foreign currency translation.  Foreign currency translation negatively impacted fiscal year 2015 revenue by $15.8 million, or 5.0 percent.
  • Operating income in fiscal year 2015 was $8.0 million compared to operating income of $7.5 million in the prior year.  This increase in operating income on lower sales resulted primarily from the improvement in gross profit margin. Fiscal year 2015 results included restructuring costs totaling $0.5 million.

GAAP to Non-GAAP Reconciliation

A reconciliation of GAAP to non-GAAP financial measures is included as Appendix A to this release.

2016 End Market Outlook

The 2015 North American Class 8 truck production was 323,000 units compared to 297,000 units in 2014.  Class 5-7 truck production for 2015 was 235,000 units compared to 226,000 units in 2014.  Management estimates that 2016 North American Class 8 truck production will be in the range of 230,000 – 250,000 units, North American Class 5-7 will be relatively stable, and that there is a bias toward continuing softness in global construction and agriculture markets in 2016.

CONFERENCE CALL

A conference call to discuss the contents of this press release is scheduled for Friday, March 11, 2016, at 10:00 a.m. ET. To participate, dial (866) 300-8704 using conference code 39596128.

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 39596128.

About Commercial Vehicle Group, Inc.

Commercial Vehicle Group, Inc. is a Delaware (USA) corporation. We were formed as a privately-held company in August 2000. We became a publicly held company in 2004. The Company (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 (ATV/UTV) markets.   Information about the Company and its products is available on the internet at www.cvgrp.com.

Forward-Looking Statements

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 enhance the Company, the future of the Company's end markets, Class 8 North America build rates,  performance of the global construction equipment business, expected cost savings, enhanced shareholder value and other economic benefits of the consulting services, 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 in the industry 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; (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 heavy-duty truck, construction, aftermarket, military, bus, agriculture 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 its business; (vii) the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms; (viii) the Company's ability to obtain future financing due to changes in the lending markets or its financial position; (ix) the Company's ability to comply with the financial covenants in its revolving credit facility; (x) the Company's ability to realize the benefits of its cost reduction and strategic initiatives;  (xi) a material weakness in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements; (xii) volatility and cyclicality in the commercial vehicle market adversely affecting us; and (xiii) 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, 2015.  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.

 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Amounts in thousands, except share and per share amounts)




December 31, 2015


December 31, 2014



(Unaudited)


(Unaudited)

ASSETS

CURRENT ASSETS:





Cash


$

92,194



$

70,091


Accounts receivable, net of allowances of $4,539 and $2,808, respectively


130,240



139,912


Inventories


75,658



83,776


Other current assets


10,185



6,351


Total current assets


308,277



300,130


Property, plant and equipment, net of accumulated depreciation of $134,598 and $123,831, respectively


70,961



73,462


GOODWILL


7,834



8,056


INTANGIBLE ASSETS, net of accumulated amortization of $6,858 and $5,613, respectively


16,946



18,589


DEFERRED INCOME TAXES, NET


25,253



33,290


OTHER ASSETS


7,408



9,400


TOTAL ASSETS


$

436,679



$

442,927



LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:





Accounts payable


$

66,657



$

70,826


Accrued liabilities and other


48,196



36,686


Total current liabilities


114,853



107,512


LONG-TERM DEBT


235,000



250,000


PENSION AND OTHER POST-RETIREMENT BENEFITS


17,233



23,356


OTHER LONG-TERM LIABILITIES


3,663



3,223


Total liabilities


370,749



384,091


STOCKHOLDERS' EQUITY:





Common stock, $.01 par value (60,000,000 shares authorized; 29,448,779 and 29,148,504 shares issued and outstanding, respectively)
Preferred stock, $.01 par value (5,000,000 shares authorized; no shares issued and outstanding)


294



296


Treasury stock, at cost: 879,404 and 779,484 shares, respectively


(7,039)



(6,622)


Additional paid-in capital


234,760



231,907


Retained deficit


(122,431)



(129,492)


Accumulated other comprehensive loss


(39,654)



(37,288)


Total CVG stockholders' equity


65,930



58,801


Non-controlling interest




35


Total stockholders' equity


65,930



58,836


TOTAL LIABILITIES AND EQUITY


$

436,679



$

442,927


 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)



Three Months Ended December 31,


Twelve Months Ended December 31,


2015


2014


2015


2014


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)









Revenues

$

184,692



$

211,874



$

825,341



$

839,743


Cost of Revenues

160,341



185,101



714,519



732,055


     Gross Profit

24,351



26,773



110,822



107,688


Selling, General and Administrative Expenses

18,731



16,926



71,469



72,480


Amortization Expense

327



353



1,327



1,515


     Operating Income

5,293



9,494



38,026



33,693


Interest and Other Expense

5,902



5,393



21,207



20,931


Income (Loss) Before Provision (Benefit) for Income Taxes

(609)



4,101



16,819



12,762


Provision (Benefit) for Income Taxes

1,683



(136)



9,758



5,131


Net Income (Loss)

(2,292)



4,237



7,061



7,631


Less:  Non-controlling interest in subsidiary's income



1



1



1


Net Income (Loss) Attributable to CVG Stockholders

$

(2,292)



$

4,236



$

7,060



$

7,630










Earnings (Loss) per Common Share:








Basic

$

(0.08)



$

0.15



$

0.24



$

0.26


Diluted

$

(0.08)



$

0.15



$

0.24



$

0.26










Weighted Average Shares Outstanding:








Basic

29,387



29,089



29,209



28,926


Diluted

29,666



29,145



29,399



29,117


 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENT FINANCIAL INFORMATION (Unaudited)

(Amounts in thousands)



For the three months ended December 31, 2015


Global Truck &
Bus


Global Construction &
Agriculture


Corporate / Other


Total


2015


2014


2015


2014


2015


2014


2015


2014

External Revenues

$

126,969



$

140,093



$

57,723



$

71,780



$



$



$

184,692



$

211,873


Intersegment Revenues

161



50



2,649



2,997



(2,810)



(3,047)






Total Revenues

$

127,130



$

140,143



$

60,372



$

74,777



$

(2,810)



$

(3,047)



$

184,692



$

211,873


Gross Profit

$

17,691



$

23,683



$

6,398



$

3,968



$

262



$

(878)



$

24,351



$

26,773


Selling, General &

  Administrative Expenses

$

3,735



$

7,194



$

5,618



$

5,568



$

9,378



$

4,164



$

18,731



$

16,926


Operating Income

$

13,663



$

16,173



$

746



$

(1,637)



$

(9,116)



$

(5,042)



$

5,293



$

9,494



















For the twelve months ended December 31, 2015


Global Truck &
Bus


Global Construction &
Agriculture


Corporate / Other


Total


2015


2014


2015


2014


2015


2014


2015


2014

External Revenues

$

564,651



$

533,752



$

260,690



$

305,991



$



$



$

825,341



$

839,743


Intersegment Revenues

618



366



10,937



11,210



(11,555)



(11,576)






Total Revenues

$

565,269



$

534,118



$

271,627



$

317,201



$

(11,555)



$

(11,576)



$

825,341



$

839,743


Gross Profit

$

85,702



$

81,430



$

28,627



$

29,583



$

(3,507)



$

(3,325)



$

110,822



$

107,688


Selling, General &

  Administrative Expenses

$

25,263



$

28,890



$

20,442



$

21,903



$

25,764



$

21,687



$

71,469



$

72,480


Operating Income

$

59,252



$

51,171



$

8,044



$

7,533



$

(29,270)



$

(25,011)



$

38,026



$

33,693



 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

Appendix A: Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

(Amounts in thousands, except per share data)



Three Months Ended December 31, 2015

Three Months Ended December 31, 2014


Operating Income

Net
Income 3

Basic
EPS

Diluted
EPS

Operating Income

Net
Income 3

Basic
EPS

Diluted
EPS

As Reported (GAAP)

$

5,293


$

(2,292)


$

(0.08)


$

(0.08)


$

9,494


$

4,237


$

0.15


$

0.15


Special Items:









Bond Redemption 1


422


0.01


0.01






Plant Closures2

846


465


0.02


0.02


716


394


0.01


0.01


Total Special Items

846


887


0.03


0.03


716


394


0.01


0.01


Adjusted (Non-GAAP)

$

6,139


$

(1,405)


$

(0.05)


$

(0.05)


$

10,210


$

4,631


$

0.16


$

0.16











1 Costs associated with the redemption of $15 million of the Company's Senior Secured Notes, including an early payment premium and write off of associated deferred financing costs.

2  Costs associated with plant closures, including employee severance and retention costs, lease cancellation costs, building repairs and costs to transfer equipment.

3 Adjusted Net Income is calculated by applying an assumed 45 percent tax rate to the special items.










 

 


Twelve Months Ended December 31, 2015

Twelve Months Ended December 31, 2014


Operating Income

Net
Income 4

Basic
EPS

Diluted
EPS

Operating Income

Net
Income 4

Basic
EPS

Diluted
EPS

As Reported (GAAP)

$

38,026


$

7,061


$

0.24


$

0.24


$

33,693


$

7,631


$

0.26


$

0.26


Special Items:









Bond Redemption 1


422


0.01


0.01






Plant Closures 2

2,332


1,283


0.04


0.04


1,321


727


0.03


0.03


Loss on Sale of Building 3





769


423


0.01


0.01


Total Special Items

2,332


1,705


0.05


0.05


2,090


1,150


0.04


0.04


Adjusted (Non-GAAP)

$

40,358


$

8,766


$

0.29


$

0.29


$

35,783


$

8,780


$

0.30


$

0.30











1 Costs associated with the redemption of $15 million of the Company's Senior Secured Notes, including an early payment premium and write off of associated deferred financing costs.

2  Costs associated with plant closures, including employee severance and retention costs, lease cancellation costs, building repairs and costs to transfer equipment.

3  Loss on sale of Norwalk, Ohio manufacturing facility.

4 Adjusted Net Income is calculated by applying an assumed 45 percent tax rate to the special items.

 

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). In general, the non-GAAP measures exclude items and charges that (i) management believes reflect the Company's multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company's performance, engage in financial and operational planning and to determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on the Company's financial and operating results and in comparing the Company's performance to that of its competitors and comparable reporting periods. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

 

SOURCE Commercial Vehicle Group, Inc.



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