Commercial Vehicle Group Reports Third Quarter 2006 Results
NEW ALBANY, Ohio, Oct. 25, 2006 -- Commercial Vehicle Group, Inc. , today reported revenues of $235.8 million for the third quarter ended September 30, 2006, up 14.6 percent compared to $205.9 million in the prior-year quarter. Operating income for the third quarter was $27.4 million, an 11.5 percent increase, compared to $24.6 million last year. Net income for the quarter was $18.0 million, or $0.84 per diluted share, compared to $11.9 million, or $0.57 per diluted share, in the prior-year quarter. Fully diluted shares outstanding for the quarter were 21.5 million compared to 20.9 million in the prior-year quarter.
Revenues were approximately $6.3 million higher for the quarter compared to the Company's estimates, due primarily to the increase in the North American Class 8 production levels achieved during the quarter. Operating income was in line with the Company's estimates while fully diluted earnings per share was approximately $0.15 higher than the Company's estimates for the quarter. Included in the Company's results for the quarter were certain unexpected operational costs, a favorable pre-tax gain of approximately $1.6 million resulting from the marking to market of its foreign currency contracts as well as a favorable tax provision adjustment resulting from the completion of certain tax credit analysis' and prior year adjustments made during the quarter.
The Company generated approximately $6.9 million of positive cash flow during the quarter and as a result, its net debt position at the end of the quarter improved to approximately $141.5 million.
"This past quarter marks the highest revenue and operating income levels ever achieved in the history of our Company," said Mervin Dunn, president and chief executive officer of Commercial Vehicle Group. "This achievement is a result of our end-market demands as well as our on-going focus on continuous improvement and our long-term growth strategy. We are extremely proud of our third quarter and year-to-date performance and look forward to setting new milestones in the future."
The Company reported revenues of $700.0 million for the nine months ended September 30, 2006, up 26.3 percent compared to $554.4 million in the prior- year period. Operating income for the nine-month period was $79.7 million compared to $67.1 million last year. Net income for the nine-month period was $46.9 million, or $2.18 per diluted share, compared to $37.0 million, or $1.93 per diluted share, in the prior nine-month period. Fully diluted shares outstanding for the nine-month period ended September 30, 2006 were 21.5 million compared to 19.2 million in the prior-year period.
The Company has not adjusted its previously disclosed revenue or operating estimates for the fourth quarter 2006. As a result, revenues remain in the range of $225.0 to $229.0 million for the fourth quarter 2006 and $925.0 to $929.0 million for the full year 2006 and fully diluted earnings per share to be in the range of $0.70 to $0.72 for the fourth quarter 2006 based upon 21.7 million fully diluted shares and $2.88 to $2.90 for the full year 2006 based upon 21.6 million fully diluted shares.
A conference call to review third quarter results and preview the fourth quarter and full year 2006 is scheduled for Wednesday, October 25, 2006 at 11:00 a.m. ET. Interested participants may listen to the live conference call by dialing (706) 758-9607 and asking for the CVG third quarter 2006 earnings conference call. A recording of this call will be available until midnight, November 1, 2006 by dialing (706) 645-9291 and entering code 7513905.
To listen to a live Webcast of the conference call, go to Commercial Vehicle Group's Website, http://www.cvgrp.com/, click on "Investor Relations" and then the Webcast icon. The Webcast replay will be available from 1:00 p.m. ET, Wednesday, October 25, 2006 until midnight, Wednesday, November 1, 2006. Listening to the Webcast requires speakers and Windows Media Player. If you do not have Media Player, download the free software at http://www.windowsmedia.com/.
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/.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or similar expressions. In particular, this press release contains forward-looking statements about Company estimates for the remainder of the year with respect to revenues and earnings per share. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to: (i) CVG's ability to develop or successfully introduce new products; (ii) risks associated with conducting business in foreign countries and currencies; (iii) general economic or business conditions affecting the markets in which CVG serves; (iv) increased competition in the heavy-duty truck market; (v) CVG's failure to complete or successfully integrate additional strategic acquisitions; and (vi) various other risks as outlined in CVG's SEC filings. There can be no assurance that statements made in this press release relating to future events will be achieved. CVG undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to CVG or persons acting on behalf of CVG are expressly qualified in their entirety by such cautionary statements.
COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
(unaudited)(unaudited)(unaudited)(unaudited)
REVENUES $235,841 $205,859 $699,973 $554,365
COST OF REVENUES 195,044 169,364 580,245 455,476
Gross Profit 40,797 36,495 119,728 98,889
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,294 11,876 39,693 31,597
AMORTIZATION EXPENSE 104 53 312 217
Operating Income 27,399 24,566 79,723 67,075
OTHER (INCOME) (1,642) (325) (2,720) (3,598)
INTEREST EXPENSE 3,582 3,977 11,321 9,460
LOSS ON EARLY EXTINGUISHMENT OF
DEBT - 1,525 318 1,525
Income Before Income Taxes 25,459 19,389 70,804 59,688
PROVISION FOR INCOME TAXES 7,453 7,491 23,896 22,719
Net Income $18,006 $11,898 $46,908 $36,969
BASIC EARNINGS PER SHARE $0.85 $0.58 $2.22 $1.96
WEIGHTED AVERAGE BASIC SHARES
OUTSTANDING 21,156 20,679 21,099 18,885
DILUTED EARNINGS PER SHARE $0.84 $0.57 $2.18 $1.93
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING 21,548 20,918 21,507 19,159
Reconciliation to Net Income:
Net Income $18,006 $11,898 $46,908 $36,969
Depreciation & Amortization 3,854 3,026 11,166 8,926
Interest Expense 3,582 3,977 11,321 9,460
Provision for Income Taxes 7,453 7,491 23,896 22,719
Loss on early extinguishment
of debt - 1,525 318 1,525
Miscellaneous (Income) (3) (68) (13) (103)
Adjusted EBITDA (1) $32,892 $27,849 $93,596 $79,496
Supplemental Information:
Noncash (gain) on forward
exchange contracts $(1,639) $(257) $(2,707) $(3,495)
COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
September 30, December 31,
2006 2005
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $21,896 $40,641
Accounts receivable, net 146,752 114,116
Inventories, net 87,233 69,053
Prepaid expenses and other current
assets 11,507 4,724
Deferred income taxes 13,345 12,571
Total current assets 280,733 241,105
PROPERTY, PLANT AND EQUIPMENT, net 84,695 80,415
GOODWILL 127,664 125,607
INTANGIBLE AND OTHER ASSETS, net 98,577 96,756
TOTAL ASSETS $591,669 $543,883
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt $1,981 $5,309
Accounts payable 100,993 73,709
Accrued liabilities 43,562 42,983
Total current liabilities 146,536 122,001
LONG-TERM DEBT, net of current
maturities 161,406 185,700
OTHER LONG-TERM LIABILITIES 29,159 34,105
Total liabilities 337,101 341,806
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' INVESTMENT:
Common stock, $0.01 par value per
share; 30,000,000 shares
authorized; 21,327,175 and
21,145,954 shares issued and
outstanding 213 211
Additional paid-in capital 172,284 169,252
Retained earnings 80,865 33,957
Accumulated other comprehensive
income (loss) 1,206 (1,343)
Total stockholders' investment 254,568 202,077
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $591,669 $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 the early extinguishment of debt, miscellaneous income/expenses and cumulative effect of changes in accounting principle. In calculating Adjusted EBITDA, the Company excludes the effects of gains/losses on the early extinguishment of debt, miscellaneous income/expenses and cumulative effect of changes in accounting principles 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, in addition to the supplemental information, 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, in addition to the supplemental information, 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 operating 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.
The Company's management believes that Adjusted EBITDA, in addition to the supplemental information, is useful to investors as it provides them with disclosures of the Company's operating results on the same basis as that used by the Company's management. Additionally, the Company's management believes that Adjusted EBITDA, in addition to the supplemental information, provides useful information to investors about the performance of the Company's overall business because the measure eliminates the effects of certain recurring and other unusual or infrequent charges that are not directly attributable to the Company's underlying operating performance. Additionally, the Company's management believes that because it has historically provided a non-GAAP financial measure in previous filings, that continuing to include a non-GAAP measure in its filings provides consistency in its financial reporting and continuity to investors for comparability purposes. Accordingly, the Company believes that the presentation of Adjusted EBITDA, when used in conjunction with the supplemental information and GAAP financial measures, is a useful financial analysis tool, used by the Company's management as described above, that can assist investors in assessing the Company's financial condition, operating performance and underlying strength. Adjusted EBITDA should not be considered in isolation or as a substitute for net income prepared in conformity with GAAP. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA, as well as the other information in this filing, should be read in conjunction with the Company's financial statements and footnotes contained in the documents that the Company files with the U.S. Securities and Exchange Commission.