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Commercial vehicle supplier CVG reported higher second-quarter net income and record quarterly revenue as it continued to diversify its customer base and emphasize secular growth.
For the period ended June 30, net income reached $5.1 million, or 16 cents per diluted share, compared with a net loss of $12.5 million, or a 40-cent loss, a year earlier.
Net income included a $7.2 million charge, on a pre-tax basis, for debt refinancing occurring in the quarter, according to the New Albany, Ohio-based company.
Revenue was $257.9 million compared with $126.9 million in the 2020 period — spurred by new business wins in its warehouse automation segment, electric vehicles and increased demand by North American truck makers, which accounted for 36% of revenue.
“We are diversifying our customer base and expanding our end market coverage to mitigate cyclicality as we strive to transform CVG into a secular growth business,” Harold Bevis, CEO of CVG, said in a release. “This transformation is being driven by the warehouse automation segment, which delivered 25% sequential growth and now represents 20% of total company sales in the second quarter.”
“We are also having strong success winning new business in the electric vehicle sector with multiple new wins and new products in the quarter across our business portfolio in this important end market,” he added. “Currently, we are working with 25 electric vehicle original equipment manufacturers on 52 opportunities and believe we are well positioned for the transition to electric vehicles away from internal combustion engine vehicles.”
Year-to-date, Bevis said CVG achieved “$129 million of new annualized business awards, and a majority were in the EV sector and, we believe, provides visibility for future revenue growth.”
The company has two segments: electrical systems and global seating.
Revenue for the electrical systems segment in the second quarter 2021 was $175.1 million compared with $74.2 million a year earlier, an increase of 136% primarily as a result of a very weak COVID-impacted Q2 2020, business growth in warehouse automation and improved demand in the global wire harness business, especially construction equipment.
Operating income for Q2 2021 was $18.6 million compared with an operating loss of $6.2 million in the prior year period.
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Revenue for the global seating segment in Q2 hit $84.9 million compared with $53.9 million in the 2020 period, an increase of 57.6%. Operating income was $5 million compared with $1.5 million a year earlier.
Meanwhile, CVG Chief Financial Officer Chris Bohnert noted, “During the quarter, we refinanced our debt which saved us $2.5 million compared to the prior year period and will provide $3.1 million of interest savings, on a full quarter basis. This refinancing also provides flexibility to invest in our strong sales growth and new business opportunities. Our margins will remain a focus in the second half of the year as we continue to implement actions such as material substitutions, increased supplier communications and production schedule adjustments to overcome material and labor shortages and commodity cost pressures we are experiencing.”
CVG provides components and assemblies to global vehicle companies to build original equipment and provides aftermarket products for fleet owners. The company also provides mechanical assemblies to warehouse automation integrators and to U.S. military technology integrators.
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