EX-99.1 2 c17018exv99w1.htm SECOND QUARTER 2007 EARNINGS PRESS RELEASE exv99w1
 

Exhibit 99.1
     
CONTACT:
  Chad M. Utrup, CFO
 
  Commercial Vehicle Group, Inc.
 
  (614) 289-5360
FOR IMMEDIATE RELEASE
COMMERCIAL VEHICLE GROUP REPORTS
SECOND QUARTER 2007 RESULTS
NEW ALBANY, OHIO, July 24, 2007 — Commercial Vehicle Group, Inc. (Nasdaq: CVGI) today reported revenues of $158.6 million for the second quarter ended June 30, 2007, compared to revenues of $234.8 million for the second quarter of 2006 and a net loss of $0.2 million, or ($0.01) per diluted share, compared to net income of $15.5 million, or $0.72 per diluted share, in the prior-year quarter.
The Company reported that the primary drivers of the change in its results when compared to the prior year were a decrease in production levels and the fluctuations in the product mix of the North American Class 8 heavy truck market.
Net debt (calculated as total debt less cash and cash equivalents) improved by approximately $18.6 million to $125.9 million at June 30, 2007 when compared to $144.4 million at March 31, 2007. Included as Other Income in the Company’s results for the second quarter of 2007 is a gain of approximately $1.7 million from the marking to market of its foreign currency exchange contracts and a gain of approximately $0.5 million related to the reversal of estimated withholding tax penalties and interest on prior period debt activity. Fully diluted shares outstanding for the quarter were 21.4 million compared to 21.5 million in the prior-year quarter.
“Our 2007 results have been impacted by the slow down in the North American Class 8 heavy truck market, and specifically the product variation, or mix, of the units being produced,” said Mervin Dunn, president and chief executive officer of Commercial Vehicle Group. “During this slow period, our employees are working diligently to accommodate the fluctuations in customer production schedules while minimizing the overall impact to our targeted operating improvements for this year. In addition, we continue to focus on our material cost savings objectives which have been hindered by inventory levels and the lower volumes and product mix of 2007. We continue to face the challenges of the cyclicality of the industry but remain committed to our long-term strategy for success by making tough decisions such as the closure and consolidation of our Seattle operation. These decisions along with our focus on continuous improvement, organic growth and the development of both our products and our employees will continue to position CVG for the future,” added Dunn.
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The Company reported revenues of $357.4 million for the six-month period ended June 30, 2007, down approximately 23 percent compared to $464.1 million in the six-month period ended June 30, 2006. Net income for the six-month period was $2.7 million, or $0.13 per diluted share, compared to $28.9 million, or $1.35 per diluted share, for the six-month period ended June 30, 2006. Fully diluted shares outstanding for the six-month period ended June 30, 2007 were 21.7 million compared to 21.5 million in the prior-year period.
Management believes that the mix, or content, of the Class 8 units being produced during 2007 will require less of the Company’s products than its previous outlook for the year. As a result, the Company is adjusting its 2007 full year fully diluted earnings per share estimates downward from a range of $0.85 to $1.35 per diluted share to a range of $0.18 to $0.46 per diluted share, based on 21.6 million diluted shares. The revised estimates include the effects of the Company’s Seattle facility closure and are based upon total North American Class 8 truck production levels, excluding Mexico and export units, in the range of 145 thousand to 170 thousand units. The Company has also adjusted its 2007 capital expenditure outlook from $23.0 million to $18.0 million.
“We are revising our estimates for 2007 based on where we have seen our product content track through the first six months of this year and where we expect it to be for the remainder of the year,” said Chad M. Utrup, chief financial officer of Commercial Vehicle Group. “We are also revising our estimates to include the impact of production scheduling variations, changes in our material sourcing programs and the effects of the Seattle facility closure and consolidation. Our efforts are obviously focused on minimizing the impact of the decline in the Class 8 market, while remaining equally focused on what lies ahead for us in 2008 and beyond,” added Utrup.
A conference call to review the Company’s second quarter results is scheduled for Wednesday, July 25, 2007, at 10:00 a.m. ET. Interested participants may listen to the live conference call by dialing (706) 758-9607 and asking for the CVG second quarter 2007 earnings conference call. A recording of this call will be available until midnight, August 8, 2007, by dialing (706) 645-9291 and entering code 10268583.
To listen to a live Web cast of the conference call, go to Commercial Vehicle Group’s Website, www.cvgrp.com, click on “Investor Relations” and then the Web cast icon. The Web cast replay will be available from 12:00 p.m. ET, Wednesday, July 25, 2007, until midnight, Wednesday, August 8, 2007. Listening to the Web cast requires speakers and Windows Media Player. If you do not have Media Player, download the free software at www.windowsmedia.com.
About Commercial Vehicle Group, Inc.
Commercial Vehicle Group is a leading supplier of fully integrated system solutions for the global commercial vehicle market, including the heavy-duty truck market, the construction and agriculture market and the specialty and military transportation markets. The Company’s products include suspension seat systems, interior trim systems, such as instrument and door panels, headliners, cabinetry, molded products and floor systems, cab structures and components, mirrors, wiper systems, electronic wiring harness assemblies and controls and switches specifically designed for applications in commercial vehicle cabs. The Company is headquartered in New Albany, OH with operations throughout North America, Europe and Asia. Information about the Company and its products is available on the internet at www.cvgrp.com.
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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 estimates for future periods with respect to revenues and earnings per share 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) the Company’s ability to develop or successfully introduce new products; (ii) risks associated with conducting business in foreign countries and currencies; (iii) general economic or business conditions affecting the markets in which the Company serves; (iv) increased competition in the heavy-duty truck market; (v) the Company’s failure to complete or successfully integrate additional strategic acquisitions; (vi) the impact of changes in governmental regulations on our customers or on our business; (vii) the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms; and (viii) various other risks as outlined in the Company’s SEC filings. 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.
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COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007     2006     2007     2006  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
 
                                
REVENUES
   $ 158,566     $ 234,787     $ 357,367     $ 464,132  
 
                                
COST OF REVENUES
     141,947       194,590       314,479       385,201  
 
                        
 
                                
Gross Profit
     16,619       40,197       42,888       78,931  
 
                                
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     14,610       13,247       30,164       26,399  
 
                                
AMORTIZATION EXPENSE
     259       103       362       208  
 
                                
RESTRUCTURING CHARGES
     998       —       998       —  
 
                        
 
                                
Operating Income
     752       26,847       11,364       52,324  
 
                                
OTHER (INCOME) EXPENSE
     (2,103 )     (1,308 )     217       (1,078 )
 
                                
INTEREST EXPENSE
     3,536       3,849       7,173       7,739  
 
                                
LOSS ON EARLY EXTINGUISHMENT OF DEBT
     149       318       149       318  
 
                        
 
                                
(Loss) Income Before Provision for Income Taxes
     (830 )     23,988       3,825       45,345  
 
                                
(BENEFIT) PROVISION FOR INCOME TAXES
     (599 )     8,494       1,097       16,443  
 
                        
 
                                
Net (Loss) Income
   $ (231 )   $ 15,494     $ 2,728     $ 28,902  
 
                        
 
                                
(LOSS) EARNINGS PER COMMON SHARE:
                                
Basic
   $ (0.01 )   $ 0.73     $ 0.13     $ 1.37  
 
                        
Diluted
   $ (0.01 )   $ 0.72     $ 0.13     $ 1.35  
 
                        
 
                                
WEIGHTED AVERAGE SHARES OUTSTANDING:
                                
Basic
     21,413       21,119       21,401       21,070  
 
                        
Diluted
     21,413       21,501       21,680       21,486  
 
                        
 
                                
Reconciliation to Net (Loss) Income:
                                
Net (Loss) Income
   $ (231 )   $ 15,494     $ 2,728     $ 28,902  
Depreciation & Amortization
     3,998       3,811       7,727       7,312  
Interest Expense
     3,536       3,849       7,173       7,739  
(Benefit) Provision for Income Taxes
     (599 )     8,494       1,097       16,443  
Loss on Early Extinguishment of Debt
     149       318       149       318  
Restructuring Charges
     998       —       998       —  
Miscellaneous Expense (Income)
     35       (2 )     108       (10 )
 
                        
Adjusted EBITDA(1)
   $ 7,886     $ 31,964     $ 19,980     $ 60,704  
 
                        
 
                                
Supplemental Information:
                                
Noncash (gain) loss on forward exchange contracts
   $ (1,661 )   $ (1,306 )   $ 586     $ (1,068 )
Nonrecurring (benefit) for prior period debt service
   $ (477 )   $ —     $ (477 )   $ —  

 

 

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COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
                 
    June 30,     December 31,  
    2007     2006  
    (unaudited)     (unaudited)  
ASSETS
                
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 24,425     $ 19,821  
Accounts receivable, net
     97,907       123,471  
Inventories, net
     85,212       88,723  
Prepaid expenses
     17,512       24,272  
Deferred income taxes
     8,862       8,819  
 
            
Total current assets
     233,918       265,106  
 
            
PROPERTY, PLANT AND EQUIPMENT, net
     89,499       90,388  
GOODWILL
     131,905       134,766  
INTANGIBLE AND OTHER ASSETS, net
     104,219       100,562  
 
            
TOTAL ASSETS
   $ 559,541     $ 590,822  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
                
 
                
CURRENT LIABILITIES:
                
Current maturities of long-term debt
   $ 115     $ 2,158  
Accounts payable
     66,696       86,610  
Accrued liabilities
     37,077       40,970  
 
            
Total current liabilities
     103,888       129,738  
 
            
LONG-TERM DEBT, net of current maturities
     150,167       159,956  
OTHER LONG-TERM LIABILITIES
     36,011       36,223  
 
            
Total liabilities
     290,066       325,917  
 
            
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ INVESTMENT:
                
Common stock, $0.01 par value per share; 30,000,000 shares authorized; 21,437,609 and 21,368,831 shares issued and outstanding
     214       214  
Treasury stock purchased from employees; 5,836 shares
     (115 )     (115 )
Additional paid-in capital
     176,242       174,044  
Retained earnings
     94,797       92,007  
Accumulated other comprehensive (loss)
     (1,663 )     (1,245 )
 
            
Total stockholders’ investment
     269,475       264,905  
 
            
TOTAL LIABILITIES AND STOCKHOLDERS’ INVESTMENT
   $ 559,541     $ 590,822  
 
            
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Footnotes to Press Release
(1) Adjusted EBITDA is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the accompanying financial tables. Adjusted EBITDA is defined as net earnings before interest, taxes, depreciation, amortization, gains/losses on the early extinguishment of debt, miscellaneous income/expenses, restructuring charges and cumulative effect of changes in accounting principle. In calculating Adjusted EBITDA, the Company excludes the effects of gains/losses on the early extinguishment of debt, miscellaneous income/expenses, restructuring charges and cumulative effect of changes in accounting principles because the Company’s management believes that some of these items may not occur in certain periods, the amounts recognized can vary significantly from period to period and these items do not facilitate an understanding of the Company’s operating performance. The Company’s management utilizes Adjusted EBITDA, in addition to the supplemental information, as an operating performance measure in conjunction with GAAP measures, such as net income and gross margin calculated in conformity with GAAP.
The Company’s management uses Adjusted EBITDA, in addition to the supplemental information, as an integral part of its report and planning processes and as one of the primary measures to, among other things:
  (i)   monitor and evaluate the performance of the Company’s business operations;
 
  (ii)   facilitate management’s internal comparisons of the Company’s historical operating performance of its business operations;
 
  (iii)   facilitate management’s external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels;
 
  (iv)   review and assess the operating performance of the Company’s management team and as a measure in evaluating employee compensation and bonuses;
 
  (v)   analyze and evaluate financial and strategic planning decisions regarding future operating investments; and
 
  (vi)   plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
The Company’s management believes that Adjusted EBITDA, in addition to the supplemental information, is useful to investors as it provides them with disclosures of the Company’s operating results on the same basis as that used by the Company’s management. Additionally, the Company’s management believes that Adjusted EBITDA, in addition to the supplemental information, provides useful information to investors about the performance of the Company’s overall business because the measure eliminates the effects of certain recurring and other unusual or infrequent charges that are not directly attributable to the Company’s underlying operating performance. Additionally, the Company’s management believes that because it has historically provided a non-GAAP financial measure in previous filings, that continuing to include a non-GAAP measure in its filings provides consistency in its financial reporting and continuity to investors for comparability purposes. Accordingly, the Company believes that the presentation of Adjusted EBITDA, when used in conjunction with the supplemental information and GAAP financial measures, is a useful financial analysis tool, used by the Company’s management as described above, that can assist investors in assessing the Company’s financial condition, operating performance and underlying strength. Adjusted EBITDA should not be considered in isolation or as a substitute for net income prepared in conformity with GAAP. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA, as well as the other information in this filing, should be read in conjunction with the Company’s financial statements and footnotes contained in the documents that the Company files with the U.S. Securities and Exchange Commission.
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