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Component supplier Commercial Vehicle Group Inc. reported slumping revenue and a net loss in the first quarter as production of vehicles declined in key markets.
For the period ended March 31, the company reported a net loss of $24.6 million, or a loss of 80 cents per share, on revenue that fell 23.1% to $187.1 million. That compared with a net profit of $10 million, or 33 cents per share, on revenue of $243.2 a year earlier.
The decrease in revenue primarily reflected lower heavy-duty truck production in North America and in the global construction markets it serves, according to the New Albany, Ohio-based company.
In the quarter, 50% of revenue was generated from sales to North American medium-duty and heavy-duty truck manufacturers and 20% from sales to vehicle manufacturers in the global construction equipment market. Its remaining revenue primarily was derived from sales to the aftermarket, original equipment service organizations, the military market and specialty markets, CVG reported.
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As of March 31, the company had borrowed $15 million on its revolving credit facility, and liquidity of $114.2 million — including $58.1 million in cash and $56.1 million available from its revolving credit facility.
“In the face of an already substantially lower production environment, which was exacerbated by the COVID-19 pandemic in late-March, we took swift actions to align our business to our new operational realities,” CEO Harold Bevis said in a release.
“Further, we are continuing to make adjustments to right-size the business and maintain liquidity based on current demand trends. We have been purposeful in our approach to cost optimization to preserve our capabilities, ensure we are ready to restart production efficiently and preserve core growth initiatives,” he said.
First Source Electronics, a company CVG acquired in September, continues to be a bright spot in what Bevis called a difficult business environment.
FSE provides electrical systems integration and manufacturing services, with expertise in electromechanical assemblies, cable and wire harness assemblies, chassis integration, and cabinet, panel and rack assemblies for markets that include telecommunications, industrial, military, alternative energy and transportation.
CVG noted it had expanded production at FSE from one facility to three, using two additional CVG facilities. At the time of the purchase, FSE had 12-month sales of $46 million as of June 30, 2019.
CVG reported revenue for its electrical systems segment fell 21.9% to $112.1 million compared with $143.6 million a year earlier, primarily resulting from lower heavy-duty truck production in North America and in the global construction markets. That partially was offset by an increase in industrial and military revenues attributable to the First Source Electronics acquisition.
Revenue for its global seating segment dropped $27 million to $76 million compared with $104.1 million in the prior-year period.
The earnings release said ACT Research in April forecast second-quarter 2020 North American heavy-duty and medium-duty truck build is expected to decline 65% to 75% as compared with the first quarter of 2020 amid COVID-19 and overall market conditions.
“Although the company’s other end markets are not expected to decline as dramatically, we expect revenues for the three months ending June 30 to be significantly lower than the three months ending March 31,” CVG noted.
The company’s products include electrical wire harnesses, control panels and assemblies, trim systems and components, cab structures and sleeper boxes. Also, mirrors, wipers and controls, and seats and seating systems — for the aftermarket, commercial vehicle, bus and construction markets in North America, Europe and Asia.
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