Commercial Vehicle Group Reports Second Quarter 2006 Results and Revised 2006 Estimates
NEW ALBANY, Ohio, July 26 -- Commercial Vehicle Group, Inc. , today reported revenues of $234.8 million for the second quarter ended June 30, 2006, up 19.7 percent compared to $196.1 million in the prior-year quarter. Operating income for the second quarter was $26.8 million, a 3.9 percent increase, compared to $25.8 million last year. Net income for the quarter was $15.5 million, or $0.72 per diluted share, compared to $14.2 million, or $0.78 per diluted share, in the prior-year quarter. Fully diluted shares outstanding for the quarter were 21.5 million compared to 18.3 million in the prior-year quarter. This increase in shares outstanding is primarily the result of the Company's stock offering during 2005.
"We are pleased with our quarterly and year-to-date results and continue to focus on our long-term growth strategy to be the preferred global supplier of complete cab systems," said Mervin Dunn, president and chief executive officer of Commercial Vehicle Group. "We remain equally focused on our quality and delivery objectives during these periods of significant industry volumes and global material supply and pricing pressures."
Revenues were approximately $5.9 million higher for the quarter compared to the Company's estimates, due primarily to the increase in both organic growth and market share growth achieved by the Company. The Company increased adjusted earnings before interest, taxes, depreciation and amortization, gains/losses on foreign currency transactions, gains/losses on the early extinguishment of debt and miscellaneous income/expenses (Adjusted EBITDA) to $30.7 million in the second quarter of 2006, or approximately $0.8 million higher than its estimate for the quarter. Included in the Company's Operating Income and Adjusted EBITDA results for the quarter was a one time pre-tax net gain of approximately $1.8 million as a result of changes made to certain retiree medical programs during the quarter, which was more than offset by certain unexpected material pricing and supply related cost increases as well as other operational and administrative cost increases during the quarter. In addition, included in the Company's Net Income and fully diluted earnings per share for the quarter was a favorable pre-tax gain of approximately $1.3 million resulting from the marking to market of its foreign currency contracts.
Adjusted EBITDA is a non-GAAP financial measure that is defined in the footnotes to this release and is reconciled to net income, the most directly comparable GAAP measure, in the accompanying financial tables.
"The Company generated approximately $15.4 million of positive cash flow during the quarter and as a result, its net debt position at the end of the quarter was approximately $148.3 million.
"Despite the cost impacts associated with continued material pricing pressures and unprecedented industry volumes, our quarterly results remain solid," said Chad Utrup, chief financial officer of Commercial Vehicle Group. "Our variable cost structure will allow us to position the company for a successful 2007, despite the anticipated downturn in heavy truck volumes."
The Company reported revenues of $464.1 million for the six months ended June 30, 2006, up 33.2 percent compared to $348.5 million in the prior-year period. Operating income for the six-month period was $52.3 million compared to $42.5 million last year. Net income for the six-month period was $28.9 million, or $1.35 per diluted share, compared to $25.1 million, or $1.37 per diluted share, in the prior six-month period. Fully diluted shares outstanding for the six-month period ended June 30, 2006 were 21.5 million compared to 18.3 million in the prior-year period. This increase in shares outstanding is primarily the result of the Company's stock offering during 2005.
The Company has revised its estimates for the remainder of the year to include revenues in the range of $227.5 to $231.5 million for the third quarter 2006 and $917.0 to $925.0 million for the full year 2006 and fully diluted earnings per share to be in the range of $0.68 to $0.70 for the third quarter 2006 and $2.73 to $2.77 for the full year 2006 based upon 21.5 million fully diluted shares. The Company revised its estimated revenues from previous estimates as a result of its second quarter 2006 actual results and an estimated 90,000 North American Class 8 truck build rate in the third quarter 2006 and approximately 362,000 Class 8 build rate for the full year 2006. This is a 3,000 unit increase from its previous estimates of 87,000 units in the third quarter and 359,000 units for the full year. In addition, the Company has revised its revenue and fully diluted earnings per share estimates for the remainder of 2006 to include estimates for increases in revenue content and market share; currency translation impacts for the remainder of 2006; material cost impacts related primarily to the copper industry and; the effects of the sale of its medical business during the second quarter 2006.
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. CVG is headquartered in New Albany, OH with operations throughout North America, Europe and Asia. Information about CVG and its products is available on the internet at http://www.cvgrp.com/.
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,
2006 2005 2006 2005
(unaudited)(unaudited) (unaudited)(unaudited)
REVENUES $234,787 $196,091 $464,132 $348,506
COST OF REVENUES 194,590 159,949 385,201 286,112
Gross Profit 40,197 36,142 78,931 62,394
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,247 10,172 26,399 19,721
AMORTIZATION EXPENSE 103 140 208 164
Operating Income 26,847 25,830 52,324 42,509
OTHER (INCOME) (1,308) (391) (1,078) (3,272)
INTEREST EXPENSE 3,849 3,314 7,739 5,482
LOSS ON EARLY EXTINGUISHMENT
OF DEBT 318 - 318 -
Income Before
Income Taxes 23,988 22,907 45,345 40,299
PROVISION FOR INCOME TAXES 8,494 8,722 16,443 15,228
Net Income $15,494 $14,185 $28,902 $25,071
BASIC EARNINGS PER SHARE $0.73 $0.79 $1.37 $1.39
DILUTED EARNINGS PER SHARE $0.72 $0.78 $1.35 $1.37
Reconciliation to Net Income:
Net Income $15,494 $14,185 $28,902 $25,071
Depreciation & Amortization 3,811 3,138 7,312 5,900
Interest Expense 3,849 3,314 7,739 5,482
Provision for Income Taxes 8,494 8,722 16,443 15,228
Noncash (gain) on forward
exchange contracts (1,306) (366) (1,068) (3,238)
Loss on early extinguishment
of debt 318 - 318 -
Miscellaneous (Income) (2) (25) (10) (34)
Adjusted EBITDA (1) $30,658 $28,968 $59,636 $48,409
COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
June 30, December 31,
2006 2005
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,303 $40,641
Accounts receivable, net 144,360 114,116
Inventories, net 74,798 69,053
Prepaid expenses and other current
assets 7,863 4,724
Deferred income taxes 11,840 12,571
Total current assets 254,164 241,105
PROPERTY, PLANT AND EQUIPMENT, net 81,928 80,415
GOODWILL 127,445 125,607
INTANGIBLE AND OTHER ASSETS, net 97,105 96,756
TOTAL ASSETS $560,642 $543,883
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt $1,878 $5,309
Accounts payable 85,201 73,709
Accrued liabilities 45,430 42,983
Total current liabilities 132,509 122,001
LONG-TERM DEBT, net of current
maturities 161,771 185,700
OTHER LONG-TERM LIABILITIES 30,689 34,105
Total liabilities 324,969 341,806
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' INVESTMENT:
Common stock, $0.01 par value per share;
30,000,000 shares authorized;
21,152,461 and 21,145,954 shares issued
and outstanding 211 211
Additional paid-in capital 171,728 169,252
Retained earnings 62,859 33,957
Accumulated other comprehensive
income (loss) 875 (1,343)
Total stockholders' investment 235,673 202,077
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $560,642 $543,883
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 foreign currency transactions, gains/losses on the
early extinguishment of debt and miscellaneous income/expenses. In
calculating Adjusted EBITDA, the Company excludes the effects of
gains/losses on foreign currency transactions, gains/losses on the
early extinguishment of debt and miscellaneous income/expenses 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 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 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 operation 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.