Quarterly Sales of
Estimated $168 million of Net New Annualized Business Secured Year to Date
Third Quarter 2021 Highlights (Compared with prior-year period, where comparisons are noted)
- Revenue of
$239.6 million , up 27.7%. The increase year over year is primarily driven by new business wins in Warehouse Automation and material cost pass through. - Operating Income of
$11.4 million , up$2.5 million or 28.1% primarily due to higher sales volume in Q3 2021. Adjusted operating income of$12.2 million was in-line with prior year even with profit compression from cost inflation and increased expenses relating to new business wins. - Net income was
$7.5 million , or$0.23 per diluted share. Excluding certain special costs, adjusted net income was$8.1 million , or$0.25 per diluted share, an increase of$0.04 per share. - Adjusted EBITDA of
$16.9 million , up$0 .5 million primarily due to higher sales volumes. - Estimated
$168 .0 million of net new annualized business secured year to date with multi-year platform value expectations. The Company's organic growth program to improve its customer roster, its profitability rates and lessen its cyclicality is delivering results.
Third Quarter Financial Results
(amounts in millions except per share data and percentages)
Third Quarter | ||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||
Revenues | $ | 239.6 | $ | 187.7 | $ | 51.9 | 27.7 | % | ||||||
Gross profit | $ | 30.1 | $ | 24.2 | $ | 5.9 | 24.4 | % | ||||||
Gross margin | 12.6 | % | 12.9 | % | ||||||||||
Adjusted gross profit 1 | $ | 30.1 | $ | 25.2 | $ | 4.9 | 19.4 | % | ||||||
Adjusted gross margin 1 | 12.6 | % | 13.4 | % | ||||||||||
Operating income | $ | 11.4 | $ | 8.9 | $ | 2.5 | 28.1 | % | ||||||
Operating margin | 4.8 | % | 4.7 | % | ||||||||||
Adjusted operating income 1 | $ | 12.2 | $ | 12.0 | $ | 0.2 | 1.7 | % | ||||||
Adjusted operating margin 1 | 5.1 | % | 6.4 | % | ||||||||||
Net income | $ | 7.5 | $ | 4.2 | $ | 3.3 | 78.6 | % | ||||||
Adjusted net income 1 | $ | 8.1 | $ | 6.5 | $ | 1.6 | 24.6 | % | ||||||
Earnings per share, diluted | $ | 0.23 | $ | 0.13 | $ | 0.10 | 76.9 | % | ||||||
Adjusted earnings per share, diluted 1 | $ | 0.25 | $ | 0.21 | $ | 0.04 | 19.0 | % | ||||||
Adjusted EBITDA 1 | $ | 16.9 | $ | 16.4 | $ | 0.5 | 3.0 | % | ||||||
Adjusted EBITDA margin 1 | 7.1 | % | 8.8 | % | ||||||||||
1 See Appendix A for GAAP to Non-GAAP reconciliation |
Consolidated Results of Operations
Third Quarter 2021 Results
- Third quarter 2021 revenues were
$239.6 million compared to$187.7 million in the prior year period, an increase of 27.7%. The increase in revenues is primarily driven by new business wins in Warehouse Automation, an increased truck build rate inNorth America , and increased pricing to offset material cost increases. Foreign currency translation also favorably impacted third quarter of 2021 revenues by$2.4 million , or by 1.3%. - Operating income for the third quarter of 2021 was
$11.4 million compared to$8.9 million in the prior year period. The increase in operating income is primarily attributable to prior year restructuring charges that did not recur. The third quarter of 2021 adjusted operating income was$12.2 million , excluding special charges. The third quarter included$1.3 million of new business startup expenses. The Company's new business win rate continues to exceed expectations and is driving higher than expected startup expenses. The Company believes incurring these expenses is beneficial to the Company's long term growth plans. - Interest associated with debt and other expenses was
$1.6 million and$5.5 million for the third quarter endedSeptember 30, 2021 and 2020, respectively. The decrease in interest was due to the refinancing of the company's debt onApril 30, 2021 . - Net income was
$7.5 million , or$0.23 per diluted share, for the third quarter of 2021 compared to$4.2 million , or$0.13 per diluted share, in the prior year period.
At
Segment Results
Electrical Systems Segment
Third Quarter 2021 Results
- Revenues for the Electrical Systems segment in the third quarter 2021 were
$164.1 million compared to$121.1 million in the prior year period, an increase of 35.6% primarily as a result of business growth in warehouse automation with revenues of$37.1 million as compared to$11.7 million in the prior year and an increased truck build rate inNorth America . Foreign currency translation favorably impacted third quarter 2021 revenues by$0.7 million , or by 0.6%. - Operating income for the third quarter of 2021 was
$17.8 million compared to$12.2 million in the prior year period. The increase in operating income was primarily attributable to increased sales.
Global Seating Segment
Third Quarter 2021 Results
- Revenues for the Global Seating segment in the third quarter of 2021 were
$76.5 million compared to$68.9 million in the prior year period, an increase of 11.0% primarily due to increased pricing to mitigate material inflation and strong demand in the European construction market. Foreign currency translation favorably impacted third quarter 2021 revenues by$1.7 million , or by 2.4%. - Operating income for the third quarter of 2021 was
$0.4 million compared to$4.8 million in the prior year period. The decrease in operating income was primarily attributable to the challenges in passing along material and freight cost increases to our customers. Additionally, volatile customer schedules, supply chain constraints and freight cost inflation have caused inefficiencies in our operations.
2021 Demand Outlook
The demand outlook for the Company's key markets are favorable; however production capacity is limited in a number of our end markets due to continued pandemic-driven supply-chain constraints.
- According to a
August 2021 report byACT Research , a publisher of industry market research, 2020 North American Class 8 truck build production was 214,250 units and Class 5-7 production was 223,721 units. 2021 North American Class 8 truck production levels are expected to be at 263,000 units and Class 5-7 production are expected to be at 232,000 units. This outlook supports demand for the Company’s vehicle products. - We believe the demand outlook for the Company’s entrance into the electric and fuel cell vehicle market to be favorable. Many global electric and fuel cell vehicle platforms are underway across the spectrum of vehicle types. Adoption rates are forecast to increase per the Bloomberg NEF Electric Vehicle Outlook and supports continuance of the Company's efforts aimed at partnering with electric vehicle and fuel cell makers to help them develop and produce these vehicles and make use of the Company’s full product basket of offerings such as: entire electrical systems for the chassis and powertrain, seating solutions, headliners, interior trim, mirrors, wipers, floor mats, and road sensors.
- The demand outlook for the Company’s warehouse automation products is favorable. According to LogisticsIQ, demand for warehouse automation products is expected to grow approximately 14% annually through 2026.
GAAP to Non-GAAP Reconciliation
A reconciliation of GAAP to non-GAAP financial measures referenced in this release is included as Appendix A & B to this release.
Conference Call
A conference call to discuss this press release is scheduled for
This call is being webcast and can be accessed through the “Investors” section of CVG’s website 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 (800) 585-8367 using access code 7554569 and international callers can dial (416) 621-4642 using access code 7554569.
Company Contact
Chief Financial Officer
CVG
IR@cvgrp.com
About CVG
CVG is a global provider of components, assemblies and systems to the traditional commercial vehicle market, the electric vehicle market, and the warehouse automation market. 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”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release 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, including the short-term and long-term impact of the COVID-19 pandemic on our business, changes in the Class 8 and Class 5-7
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months and Nine Months Ended
(Unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||
Revenues | $ | 239,610 | $ | 187,697 | $ | 742,673 | $ | 501,698 | |||||||
Cost of revenues | 209,466 | 163,538 | 647,040 | 450,761 | |||||||||||
Gross profit | 30,144 | 24,159 | 95,633 | 50,937 | |||||||||||
Selling, general and administrative expenses | 18,772 | 15,266 | 52,529 | 50,066 | |||||||||||
— | — | — | 29,017 | ||||||||||||
Operating income (loss) | 11,372 | 8,893 | 43,104 | (28,146 | ) | ||||||||||
Other (income) expense | (186 | ) | 213 | (1,127 | ) | 749 | |||||||||
Interest expense | 1,630 | 5,461 | 9,489 | 15,393 | |||||||||||
Loss on extinguishment of debt | — | — | 7,155 | — | |||||||||||
Income (loss) before provision for income taxes | 9,928 | 3,219 | 27,587 | (44,288 | ) | ||||||||||
Provision (benefit) for income taxes | 2,417 | (959 | ) | 6,491 | (11,375 | ) | |||||||||
Net income (loss) | $ | 7,511 | $ | 4,178 | $ | 21,096 | $ | (32,913 | ) | ||||||
Earnings (loss) per Common Share: | |||||||||||||||
Basic | $ | 0.24 | $ | 0.13 | $ | 0.67 | $ | (1.07 | ) | ||||||
Diluted | $ | 0.23 | $ | 0.13 | $ | 0.64 | $ | (1.07 | ) | ||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 31,570 | 30,986 | 31,432 | 30,894 | |||||||||||
Diluted | 32,706 | 31,617 | 32,738 | 30,894 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except per share amounts)
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 33,603 | $ | 50,503 | |||
Accounts receivable, net of allowances of | 192,111 | 151,101 | |||||
Inventories | 146,469 | 91,247 | |||||
Other current assets | 19,918 | 17,686 | |||||
Total current assets | 392,101 | 310,537 | |||||
Property, plant and equipment, net | 62,142 | 62,776 | |||||
Intangible assets, net | 19,142 | 21,804 | |||||
Deferred income taxes | 24,018 | 25,981 | |||||
Other assets, net | 31,789 | 33,275 | |||||
Total assets | $ | 529,192 | $ | 454,373 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 139,076 | $ | 112,402 | |||
Accrued liabilities and other | 52,070 | 50,056 | |||||
Current portion of long-term debt | 8,438 | 2,429 | |||||
Total current liabilities | 199,584 | 164,887 | |||||
Long-term debt | 170,253 | 144,147 | |||||
Pension and other post-retirement benefits | 11,646 | 15,296 | |||||
Other long-term liabilities | 27,051 | 34,673 | |||||
Total liabilities | $ | 408,534 | $ | 359,003 | |||
Stockholders’ equity: | |||||||
Preferred stock, | $ | — | $ | — | |||
Common stock, | 316 | 313 | |||||
(11,966 | ) | (11,893 | ) | ||||
Additional paid-in capital | 254,341 | 249,312 | |||||
Retained deficit | (76,260 | ) | (97,356 | ) | |||
Accumulated other comprehensive loss | (45,773 | ) | (45,006 | ) | |||
Total stockholders’ equity | 120,658 | 95,370 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 529,192 | $ | 454,373 |
BUSINESS SEGMENT FINANCIAL INFORMATION
(Unaudited)
(Amounts in thousands)
Three Months Ended | |||||||||||||||||||||||||||||||
Electrical Systems | Global Seating | Corporate / Other | Total | ||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||
External revenues | $ | 163,134 | $ | 120,723 | $ | 76,476 | $ | 66,974 | $ | — | $ | — | $ | 239,610 | $ | 187,697 | |||||||||||||||
Intersegment revenues | 978 | 344 | 14 | 1,928 | (992 | ) | (2,272 | ) | — | — | |||||||||||||||||||||
Total revenues | $ | 164,112 | $ | 121,067 | $ | 76,490 | $ | 68,902 | $ | (992 | ) | $ | (2,272 | ) | $ | 239,610 | $ | 187,697 | |||||||||||||
Gross profit | 23,662 | 16,118 | 6,484 | 8,418 | (2 | ) | (377 | ) | 30,144 | 24,159 | |||||||||||||||||||||
Selling, general & administrative expenses | 5,878 | 3,895 | 6,061 | 3,646 | 6,833 | 7,725 | 18,772 | 15,266 | |||||||||||||||||||||||
Operating income (loss) | $ | 17,784 | $ | 12,223 | $ | 423 | $ | 4,772 | $ | (6,835 | ) | $ | (8,102 | ) | $ | 11,372 | $ | 8,893 |
Nine Months Ended | |||||||||||||||||||||||||||||||
Electrical Systems | Global Seating | Corporate / Other | Total | ||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||
External revenues | $ | 496,926 | $ | 305,389 | $ | 245,747 | $ | 196,309 | $ | — | $ | — | $ | 742,673 | $ | 501,698 | |||||||||||||||
Intersegment revenues | 4,532 | 1,987 | 6,735 | 2,435 | (11,267 | ) | (4,422 | ) | — | — | |||||||||||||||||||||
Total revenues | $ | 501,458 | $ | 307,376 | $ | 252,482 | $ | 198,744 | $ | (11,267 | ) | $ | (4,422 | ) | $ | 742,673 | $ | 501,698 | |||||||||||||
Gross profit | 67,710 | 28,208 | 27,966 | 23,133 | (43 | ) | (404 | ) | 95,633 | 50,937 | |||||||||||||||||||||
Selling, general & administrative expenses | 16,505 | 15,884 | 17,016 | 12,379 | 19,008 | 21,803 | 52,529 | 50,066 | |||||||||||||||||||||||
— | 23,415 | — | 4,809 | — | 793 | — | 29,017 | ||||||||||||||||||||||||
Operating income (loss) | $ | 51,205 | $ | (11,091 | ) | $ | 10,950 | $ | 5,945 | $ | (19,051 | ) | $ | (23,000 | ) | $ | 43,104 | $ | (28,146 | ) |
Appendix A: Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts and percentages)
Three Months Ended | Nine Months Ended | ||||||||||||||
Gross profit | $ | 30,144 | $ | 24,159 | $ | 95,633 | $ | 50,937 | |||||||
Restructuring | — | 1,037 | — | 3,189 | |||||||||||
Adjusted gross profit | $ | 30,144 | $ | 25,196 | $ | 95,633 | $ | 54,126 | |||||||
% of revenues | 12.6 | % | 13.4 | % | 12.9 | % | 10.8 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
Operating income (loss) | $ | 11,372 | $ | 8,893 | $ | 43,104 | $ | (28,146 | ) | ||||||
Restructuring | — | 2,168 | — | 5,312 | |||||||||||
Deferred consideration purchase accounting | 120 | 500 | 488 | 3,961 | |||||||||||
Investigation | — | 483 | 394 | 3,267 | |||||||||||
Executive transition | 683 | — | 683 | 2,256 | |||||||||||
Impairment of goodwill and long-lived assets | — | — | — | 29,017 | |||||||||||
Total operating income (loss) adjustments | 803 | 3,151 | 1,565 | 43,813 | |||||||||||
Adjusted operating income (loss) | $ | 12,175 | $ | 12,044 | $ | 44,669 | $ | 15,667 | |||||||
% of revenues | 5.1 | % | 6.4 | % | 6.0 | % | 3.1 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
Net income (loss) | $ | 7,511 | $ | 4,178 | $ | 21,096 | $ | (32,913 | ) | ||||||
Operating income (loss) adjustments | 803 | 3,151 | 1,565 | 43,813 | |||||||||||
Loss on extinguishment of debt | — | — | 7,155 | — | |||||||||||
Adjusted (benefit) provision for income taxes1 | (201 | ) | (788 | ) | (2,180 | ) | (10,953 | ) | |||||||
Adjusted net income (loss) | $ | 8,113 | $ | 6,541 | $ | 27,636 | $ | (53 | ) | ||||||
Diluted EPS | $ | 0.23 | $ | 0.13 | $ | 0.64 | $ | (1.07 | ) | ||||||
Adjustments to diluted EPS | $ | 0.02 | $ | 0.08 | $ | 0.20 | $ | 1.07 | |||||||
Adjusted diluted EPS | $ | 0.25 | $ | 0.21 | $ | 0.84 | $ | — | |||||||
1. Reported Tax (Benefit) Provision adjusted for tax effect of special charges at 25% |
Three Months Ended | Nine Months Ended | ||||||||||||||
Net income (loss) | $ | 7,511 | $ | 4,178 | $ | 21,096 | $ | (32,913 | ) | ||||||
Interest expense | 1,630 | 5,460 | 9,489 | 15,393 | |||||||||||
Provision (benefit) for income taxes | 2,417 | (959 | ) | 6,491 | (11,375 | ) | |||||||||
Depreciation expense | 3,712 | 3,751 | 11,300 | 11,260 | |||||||||||
Amortization expense | 859 | 858 | 2,579 | 2,575 | |||||||||||
Impairment of goodwill and long-lived assets | — | — | — | 29,017 | |||||||||||
EBITDA | $ | 16,129 | $ | 13,288 | $ | 50,955 | $ | 13,957 | |||||||
% of revenues | 6.7 | % | 7.1 | % | 6.9 | % | 2.8 | % | |||||||
EBITDA adjustments | |||||||||||||||
Restructuring | $ | — | $ | 2,168 | $ | — | $ | 5,312 | |||||||
Deferred consideration purchase accounting | 120 | 500 | 488 | 3,961 | |||||||||||
Investigation | — | 483 | 394 | 3,267 | |||||||||||
Executive transition | 683 | — | 683 | 2,256 | |||||||||||
Loss on extinguishment of debt | — | — | 7,155 | — | |||||||||||
Adjusted EBITDA | $ | 16,932 | $ | 16,439 | $ | 59,675 | $ | 28,753 | |||||||
% of revenues | 7.1 | % | 8.8 | % | 8.0 | % | 5.7 | % |
Appendix B: Segment Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except percentages)
Three Months Ended | |||||||||||||||
Electrical Systems | Global Seating | Corporate | Total | ||||||||||||
Operating income (loss) | $ | 17,784 | $ | 423 | $ | (6,835 | ) | $ | 11,372 | ||||||
Deferred consideration purchase accounting | 120 | — | — | 120 | |||||||||||
Executive transition | — | — | 683 | 683 | |||||||||||
Adjusted operating income (loss) | $ | 17,904 | $ | 423 | $ | (6,152 | ) | $ | 12,175 | ||||||
% of revenues | 10.9 | % | 0.6 | % | 5.1 | % |
Nine Months Ended | |||||||||||||||
Electrical Systems | Global Seating | Corporate / Other | Total | ||||||||||||
Operating income (loss) | $ | 51,205 | $ | 10,950 | $ | (19,051 | ) | $ | 43,104 | ||||||
Deferred consideration purchase accounting | 488 | — | — | 488 | |||||||||||
Investigation | — | — | 394 | 394 | |||||||||||
Executive transition | — | — | 683 | 683 | |||||||||||
Adjusted operating income (loss) | $ | 51,693 | $ | 10,950 | $ | (17,974 | ) | $ | 44,669 | ||||||
% of revenues | 10.3 | % | 4.3 | % | 6.0 | % |
Three Months Ended | |||||||||||||||
Electrical Systems | Global Seating | Corporate / Other | Total | ||||||||||||
Operating income (loss) | $ | 12,223 | $ | 4,772 | $ | (8,102 | ) | $ | 8,893 | ||||||
Restructuring | 704 | 335 | 1,129 | 2,168 | |||||||||||
Deferred consideration purchase accounting | 500 | — | — | 500 | |||||||||||
Investigation | — | — | 483 | 483 | |||||||||||
Adjusted operating income (loss) | $ | 13,427 | $ | 5,107 | $ | (6,490 | ) | $ | 12,044 | ||||||
% of revenues | 11.1 | % | 7.4 | % | 6.4 | % |
Nine Months Ended | |||||||||||||||
Electrical Systems | Global Seating | Corporate / Other | Total | ||||||||||||
Operating income (loss) | $ | (11,091 | ) | $ | 5,945 | $ | (23,000 | ) | $ | (28,146 | ) | ||||
Restructuring | 2,690 | 1,012 | 1,610 | 5,312 | |||||||||||
Deferred consideration purchase accounting | 3,961 | — | — | 3,961 | |||||||||||
Investigation | — | — | 3,267 | 3,267 | |||||||||||
Executive transition | — | — | 2,256 | 2,256 | |||||||||||
Impairment of goodwill and long-lived assets | 23,415 | 4,809 | 793 | 29,017 | |||||||||||
Adjusted operating income (loss) | $ | 18,975 | $ | 11,766 | $ | (15,074 | ) | $ | 15,667 | ||||||
% of revenues | 6.2 | % | 5.9 | % | 3.1 | % |
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with
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 to comparable reporting periods. 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. The financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
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