Earnings Presentation
James Ray - President & Chief Executive Officer | Q4 & FY 2023 |
Andy Cheung - Executive Vice President & Chief Financial Officer | March 5, 2024 |
Forward Looking Statements and Non-GAAP Financial Measures
These slides contain forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe", "anticipate", "plan", "expect", "intend", "will", "should", "could", "would", "project", "targets" "forecast" "continue", "likely", and similar expressions. In particular, this document may contain forward-looking statements about the Company's expectations for future periods with respect to its plans to improve financial results, the future of the Company's end markets, changes in the Class 8 and Class 5-7 North America truck build rates, performance of the global construction equipment business, the Company's prospects in the wire harness, industrial automation and electric vehicle markets, the Company's initiatives to address customer needs, organic growth, the Company's strategic plans and plans to focus on certain
segments, competition faced by the Company, volatility in and disruption to the global economic environment, including inflation and labor shortages 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 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 those included in the Company's filings with the SEC. There can be no assurance that statements made in this document 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.
See slide 15 for use of non-GAAP financial measures.
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INTRODUCTION
James Ray
President & CEO
3
Q4 & Full Year 2023 Highlights
Q4 FINANCIAL HIGHLIGHTS
2023 HIGHLIGHTS
REVENUE | ADJUSTED EBITDA |
$223 | $10.3 |
MILLION | MILLION |
ADJUSTED | ADJUSTED EPS |
OPERATING INCOME | $0.09 |
$6.6 | PER DILUTED SHARE |
MILLION |
IMPROVED PROFITABILITY
Adjusted
EBITDA Up 26%
Adjusted EBITDA margin Up 140 bps
FCF AND DEBT PAYDOWN
$19 MILLION
FCF
Net Leverage reduced from 2.2x to 1.5x
NEW BUSINESS WINS
>$150 MILLION
- 2023 program wins, peak annual value when fully ramped, majority in Electrical System segment
2 NEW ELECTRICAL SYSTEMS PLANTS
- Production ramping up at new Aldama, Mexico and Tangier, Morocco facilities
Note: US GAAP net income was $23.3M for Q4 2023. GAAP diluted income per share was | 4 |
$0.70 for Q4 2023. |
Recent Strategic Actions
North American Footprint Optimization
- Actions taken to optimize footprint
- Closing one facility and shifting production to other locations
- Rationalizing higher-cost capacity to expand margins
Cost Reduction Efforts
- Reducing organizational costs and aligning resources in support of growth product lines
- Across multiple business segments
- Ongoing efforts to align costs and improve margins
FinishTEK Sale
- Hydrographic and paint decorator; previously part of Vehicle Solutions business
- Sale completed January 31, 2024
- Optimizes portfolio with more focus on core growth businesses
Improving Profitability and Increased Focus On Growing Electrical Systems
5
Fourth Quarter & Full Year 2023 Results
CONSOLIDATED RESULTS
Highlights
GAAP Measures
($ in millions except for share information)
Revenue
Operating Income
Operating Income Margin
Diluted EPS
NON-GAAP
Measures
($ in millions except for share information)
Adjusted EBITDA
Adjusted EBITDA Margin
Adjusted Diluted EPS
Free Cash Flow
Three Months
Ended Dec 31
2023 2022
$ 223.1 $ 234.9
5.0 (4.0)
2.2% (1.7)%
0.70 (0.98)
Three Months
Ended Dec 31
2023 | 2022 | |
$ 10.3 | $ 13.3 | |
4.6% | 5.7% |
0.09 0.04
3.8 28.0
Twelve Months Ended Dec 31
2023 2022
$ 994.7 $ 981.6
48.1 20.1
4.8% | 2.1% |
1.47 (0.68)
Twelve Months Ended Dec 31
2023 | 2022 | ||
$ 67.6 | $ 53.5 | ||
6.8% | 5.4% |
0.90 0.51
18.6 49.2
- Record revenue in 2023, driven by continued price realization and contribution of new business wins; fourth quarter negatively impacted by lower volumes and strike impacts
- Adjusted EBITDA margins up 140bps for the full year as gross margin expansion more than offsets higher SG&A; fourth quarter negatively affected by volumes and strike impacts
- Adjusted EPS up ~76% driven by higher revenue and margins
- Positive free cash flow in 2023, drives net leverage down to 1.5x
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All values are in millions of dollars, except margin percentages, EPS, and Net Debt / Adj. EBITDA ratios
Q4'23 Adjusted EPS Bridge Including Special Items
$0.70 | ||
Reversal of non-cash tax | ||
valuation allowance | ||
($0.66) | ||
Impact of a strike- | ||
related labor stoppage | ||
at a customer facility | ||
$0.06 | $0.15 | |
$0.05 | $0.09 | |
$0.15 |
GAAP Earnings per Tax Adjustments* | Restructuring | Adj. EPS | Strike Impacts Adj. EPS (ex-special |
Share | items) |
All values are $/share; totals may differ slightly due to rounding | 7 |
*Non-cash items
Electrical Systems
Sales and Adjusted Operating Income
Q4 | Full Year |
Highlights
Revenue ($mm) | • Strong revenue growth and margin expansion in the Q4 and full |
year 2023as pricing and contributions from prior new wins |
+27% | 228.4 | driving improved results | ||||
56.2 | 180.4 | • | Increased pricing helped offset material cost increases and other | |||
+19% | inflationary pressures | |||||
47.1 | • | Q4 adjusted OI margin improvement of 30bps and full year 2023 | ||||
Q4'22 | Q4'23 | 2022 | 2023 | adjusted OI margin improvement of 100bps; driven by volume leverage | ||
and increased pricing Adjusted OI Margin
• Launched two new plants, one each in Mexico and Morocco with
+30bps | +100bps | minimal capital outlay | |
11.6% | 11.9% | ||
11.5% | |||
10.5% | |||
Q4'22 | Q4'23 | 2022 | 2023 |
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Vehicle Solutions
Sales and Adjusted Operating Income | Highlights | ||||
Q4 | Full Year | ||||
Revenue ($mm) | • Q4 revenue negatively impacted by a labor strike at one customer facility | ||||
and softness in demand | |||||
142.8 | -10% | 587.1 | • Full year 2023 revenue up slightly due to increased N.A. Class 8 | ||
579.7 | +1% | ||||
128.4 | production, partially offset by lower Europe and China volumes | ||||
• Q4 adjusted OI margin improvement of 20bps versus 2022; lower | |||||
Q4'22 | Q4'23 | 2022 | 2023 | volumes offset by increased pricing and cost controls | |
Adjusted OI Margin | • Full year 2023 adjusted OI margin improvement of 350bps; benefited | ||||
from increased pricing and cost reduction initiatives |
- Strong cash generation due to improved working capital and capital
+20bps | 7.3% | expenditure management | ||
3.1% | +350bps | |||
2.9% | ||||
3.8% | ||||
Q4'22 | Q4'23 | 2022 | 2023 |
9
Aftermarket & Accessories
Sales and Adjusted Operating Income
Q4 | Full Year |
Highlights
Revenue ($mm)
• Q4 revenue declines driven by lower volumes; 2022 results |
benefited from significant backlog that didn't repeat in 2023 |
34.1 | |
-8% | |
31.4 | |
Q4'22 | Q4'23 |
+5% | 140.2 | |
133.7 | ||
2022 | 2023 |
• Full year 2023 revenue increase of 5% driven by increased |
pricing to offset material cost increases and other inflationary |
pressures |
• Q4 adjusted OI margin improvement of 20bps despite lower |
revenue |
Adjusted OI Margin
• Full year 2023 margin expansion of 330bpsdriven by |
+20bps | |
10.8% | 11.0% |
Q4'22 | Q4'23 |
+330bps | |
13.6% | |
10.3% | |
2022 | 2023 |
increased pricing |
Seating | Mirrors | Wipers |
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CVG - Commercial Vehicle Group Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 12:36:11 UTC.