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Diversified supplier Commercial Vehicle Group Inc. reported it is making progress on key objectives as it moves beyond earlier earnings “misstatements” it discovered concerning certain quarters and corrected.
In a September statement, Harold Bevis, CEO of CVG, noted, “the company has made progress so far in 2020, but is at the beginning of a bold repositioning and business expansion.”
CVG reported in March (in its fourth-quarter 2019 earnings report) that certain misstatements in various 2018 and 2019 quarters — affecting revenue, net income and diluted earnings per share — should no longer be relied on.
“It’s a little bit in the rearview mirror, for what its worth,” Bevis told Transport Topics on Sept. 28. “It doesn’t affect this year or any operating decisions that we make now. It was an accounting catch.”
At issue was the prepaid production tooling account of its vehicle cab structures manufacturing facility, according to the New Albany, Ohio-based company.
CVG, supported by outside counsel and a forensic accounting firm, discovered the misstatements were “due to a former employee preparing manual journal entries to understate cost of revenues by improperly capitalizing certain manufacturing expenses, primarily in the prepaid production tooling account,” CVG General Counsel Aneezal Mohamed said. “The former employee made intentional misrepresentations during the investigation. During the course of, and as a result of, the investigation, the company terminated the former employee and has taken additional personnel actions.”
As for why it occurred, Mohamed said there was no corporate pressure on that employee to do anything improper, and the employee’s action created no financial benefit to him, either. “So we were surprised about this.”
The company’s stock fell on news of the misstatements but has since rebounded to reach $6 per share, nearly equaling the high for the year of $6.24 set in January.
As for the positive direction of late, CVG reported cashflow enabled it to pay down $20 million of its debt.
It has begun to reinstate compensation to target levels for employees and board members after reducing them earlier this year amid the novel coronavirus pandemic.
It sees a rebound in the commercial vehicle market from the COVID-19-induced downturn, although demand remains below pre-COVID-19 levels overall.
Also in progress are actions to grow in markets where e-commerce and e-tailing-driven warehouse infrastructure subsystems and new electric vehicle platforms are rapidly expanding.
Lastly, CVG reported it is in the early stages of restarting a mergers-and-acquisitions program to expand its product portfolio and dampen its exposure to the cyclicality of the commercial vehicle segment.
Bevis was named CEO in March after serving on CVG’s board for six years. At the time of his appointment, he was chairman and CEO of Boxlight Inc., an education technology company.
Saluting the men and women of the trucking industry who kept America's essential goods flowing during the coronavirus pandemic.
Bevis said he was a good fit for the job.
“I knew the board. I knew the management team. I knew what we needed to do. I was on the board because I liked the company,” he said. “I liked the products, and I could see the future could be extremely better and extremely different if the company could be led that way.”
He added, “If you look at our four business segments — mechanical assemblies, wire harnesses, plastic parts and seats — I worked in three out of four of them [elsewhere].”
Commercial Vehicle Group, through its subsidiaries, is a supplier of seating systems, electromechanical assemblies, engineered material products and warehouse automation subsystems. Its markets include trucking, military, warehouse automation, bus, agriculture, specialty transportation, mining, industrial equipment and off-road recreational.
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