CVG Reports Modest Results in Third Quarter
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Diversified commercial vehicle supplier Commercial Vehicle Group reported a decline in net income in the third quarter as revenue rose slightly.
Net income for the period ended Sept. 30 fell 52% to $3.6 million, or 11 cents per diluted share, compared with $7.5 million, 23 cents, a year earlier.
Revenue climbed 4.9% to $251.4 million compared with $239.6 million in 2021.
The New Albany, Ohio-based company noted the revenue gain primarily was driven by higher pricing to offset material cost increases and volume, offset by a volume decrease in its warehouse automation unit. Foreign currency translation also unfavorably impacted revenue by $6.5 million, or 2.7%.
“In the third quarter, sales and profit increased in our vehicle businesses, somewhat offsetting the pause in warehouse automation that we highlighted last quarter,” CEO Harold Bevis said in a release. “Our operating performance is on track to deliver the higher end of our free cash flow generation target, which in turn puts us on track to pay down debt at the higher end of the previously announced range, fully pay off our revolving credit facility and end the year with cash on hand.”
“CVG’s transformation plan is on track; however, 2022 results have been masked by persisting inflationary pressures. Our plan includes improving or exiting underperforming legacy business, winning new business, particularly within our electrical systems segment, and improving our balance sheet,” he said. “Our new wins, particularly within the electric vehicle market, remain on pace for a record year, supporting our goal of increasing the accretive mix of electrical systems sales for CVG.
“Our customers truly appreciate our value-add in this business, and we are now a Tier 1 designer of electrical systems for electric vehicle manufacturers.”
At the end of the quarter, the company reported $38.7 million cash and $137.2 million available from the revolving credit facility for total liquidity of $175.9 million. It had $11.6 million of outstanding borrowings on its revolving credit facility.
Segment results included:
• Vehicle solutions revenue increased 30.6% to $154 million compared with $117.9 million in the prior-year period, primarily resulting from material cost pass-through and favorable volume. Operating income in third-quarter 2022 rose 227.3% to $9.6 million compared with $2.9 million in the prior-year period — from increased pricing and lower health care expense.
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• Electrical systems revenue increased 15.1% to $46.1 million compared with $40.1 million in 2021 — from material cost pass-through and contributions from new business wins. Operating income was $5.2 million compared with $4.9 million a year ago — primarily attributable to a decrease in selling, general and administrative expenses offset by increased labor costs, raw material inflation and freight cost increases.
• Aftermarket and accessories revenue increased 24.1% to $37.1 million compared with $29.9 million in the prior-year period — from increased volume and pricing to offset material cost pass-through. Operating income was $5 million compared with $2.3 million a year earlier — attributable to the increase in pricing to offset material cost pass-through.
• Warehouse automation revenue was $14.1 million compared with $51.7 million in the 2021 period, a decrease of 72.7% primarily due to lower demand levels. Operating loss was $1 million compared with operating income of $8 million in the 2021 period — attributable to lower volumes.
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