CVGI - Earnings call transcript Q3 2020 | Commercial Vehicle Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CVG's Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] Please note that the speakers' will be referring to the presentation that is available on the company's Web site. hand Chief over Accounting Financial to today, your Officer. like Bohnert, Chris Officer now the to conference speaker I'd and Chief Please sir. go ahead,

Chris Bohnert

and you, welcome our call. Thank to conference

President the is call Joining of me Harold on Bevis, CVG. and today CEO

webcast covenant and may which both as regarding is presentation of contain statements, available for the conditions economic risks in a the initiatives our of These limited on third company may production foreign regarding and call detailed to over a questions. from financial site, after countries This update is because CVG fluctuations XXXX open will being as which commentary Harold conference expectations as and We financial others. in conducting other will will we risks periods compliance not and are include, operates, Web CVG not anticipated in but future business and company among in to, and up uncertainties. differ market forward-looking well earnings limited provide to results initiatives, our results associated brief volumes liquidity, including, filings. cost-saving turn certain a a may the Actual results our currencies I for risks supplier, but to, markets provide now call which supplemental and new for in product update. quarter the trends, uncertainties SEC is call with vehicles risks

Harold Bevis

everyone Thank the call you, joining today. for to Chris, thank you and

duty experience CVG and range including our exposure Officer leadership to years you, Chief excellence brings and medium Chris. as introduce across weeks over global welcome financial to great to Thank Chris duty than market Bohnert, XX in Financial to Chris industrials Accounting We're First, a ago. markets. the our just and less few who capital engine he to wide leverage to activities truck has company's combustion plastics. expand industries, I joined acquisitions, excited Chris spoke, and help will of heavy which want him and Officer of financing, a team. we accelerate portfolio our mergers, Chief

I Now CEOs family please the if quarter their strong getting and will not, other we've investor QX, likely year, heard strong of QX point good join bounce verbally I our have a X presentation, their their if slammed you Page going Most this and you, XXXX turn suppliers stronger. I'll be you've was no in from thank that want families exception. before for and and together, thank together COVID. companies gone to for by and the same XXXX for employees, me to make back through which was here. us conquered this through CVG a all other for

diverse and companies some to can people, work, in while months. hiring, approximately of off few inclusive committed hired a to fact, were We're be laying And have XXXX a people where team. part we the and still hiring. In were we're place fun have employees and great being global we last

Now let's a the results our minute. in for talk specific quarter about

bit year, versus $XX.X continues us. sequentially increased the bright income automation a warehouse a little by and spot our it, but recovered minute, You It were to million. can below but income prior versus XX% Adjusted but market market the markets quite bit as be prior which was well. And cover to sales see and are basically operating margins due our was down operating The sequentially year, us we're that $XXX they increased levels. sequentially. million, improved in our which XXXX vehicle for commercial to down going a up with a

And sales. less grew year to increased free in adjusted actually our about far this prior again, a in paid XX additional million $XX million cash funded flow absolute we million pace liquidity an so an was million Our do X to and X year. XX down to and manner million the generation quarter million million $X for we versus And we debt. we're of EBITDA on and our CapEx XX.X

So all, in quarter for us. it a good all was

please. Turning to Page X,

Our sales our mix seen analyses corner, mix. is a couple turning the that show

long similar And mix fact, sales period true. that's being Our very over time. in a of

and tied subsystems, If to tied a this areas especially that for commercial We're about at and vehicles, Class X XX-year XX% assets That's XX% markets team changed us our sales you current about sales and mix period for we have and year. now truck the for electric lessening. our as look automation at approximately of through sales plastic make focus the team alternate markets. delivery harnesses. to wire it's And ecommerce, trucks, vans, parts to warehouse are a X then were

graphic but a corner the is was future. a it put that be here So our little performance our turning good sales year-to-date we continue just truck quarter a for mix going this to of and of to and part pretend

X, Turning please. to Page

the one, it's QX, steeper trending you over the recovery market X can good again, really X to quite market or still upper see and below be Class the left up drop drop, the but years in V with as and right, through year, Class continue well It's outlooks a a corner dropped to outlook. the then the recovered the went almost not is couple Class quarterly and that entirely went XXX% by you which much as X next gain, the expected gain recovery. can similar and to through through X next You truck through not is grow to see a to XX%, quite a QX V see markets going a market in a QX in can classic

during Please and favorable driving Eventually, which periods. moment about a market, XX% Page we of a X. core there thing, time sector, of market. improvement ACT, truck use kind of the is FSC. our the spoken new I'm a ecommerce this been in all from own turn one well. that about on these vehicle to when we healthy So to and companies big you going thing part And We've came data to that big our the GDP research. other And any And substantial during growth in occur legacy follow it's business they've with is builds. warehouse ACT sessions some It's as business growing. speak is group same to acquired outlooks in going of you this our electric and if and automation was recording one the we substitution all is are

our in exploiting it team as footprint. and leveraging of can and it process CVG the the making are integrating of by expanded We We've it capacity our and four especially be it arcs and of at plants. big global the our as

evaluating additional We capacity. next steps for are now

added to evaluating for as catalog. people. sub-assemblies the during approximately up side, product quarter further On product our amount QX as dedicated now. line during of And the we and procurement. We personnel staffed we resources our And leadership additions we're to people added complicated XXX portfolio added well an additional some

be We over year. $XXX next business expect million to this

ecommerce market automation to an rates accreditive above growth the And secular are XX%. the it's isn't trends warehouse business. it's us, turn in and which to tethered For tied

And is of of FSC. to one with were who there. we us. the X. so Kevin it. Please reasons this attracted his why to So still is business turn us is nice a it's team the bright and still is that spot Kevin, And for Page founder leading

really is on that we're electric focusing big us. a for and industry This is Another important vehicles. for the market market

this extending these new that one We second have a for quarter. in bundled funded. are greater startups. other two startups of And $XXX meaningful positions, vehicle companies. is business contingent three in over in marquee There's future start product the business also XX And We've smaller than quarter one little electric have a million opportunities offering which at several secured they with properly awards we electric quarter, globally secured vehicle potential dates. and

fine working for is us. this So

offering And buy make of as vans one a a truck start customer it for life growing and concentrations trucks, like our part from have diversify spectrum what Class bundle delivery delivery are to being the is vans as tethered go vehicles like these products to helped way a all forward product Terminal up natural this attacking We garbage size us from through of we vehicle sort companies market vehicles, whole and basis. companies really new and to value-added place simpler Marine of purpose well X on that special and thing.

good a for the was quarter future. So for us it

to Page that need you think a we're Electric quarter, vehicles systems company help now shipping to the automation and current win, primarily about next a and are this impact shipping If the electric is warehouse more tool We're it's will set here with quarters going vehicles, the in of X. and coming you quarter. is that production customer warehouse business they XXXX in at up where and beyond. are long-term our us. automation

in the and the new we're quarter, brand fashion. it's V both So markets on, recovered we've as automation markets strong we're a perform focused in well old Warehouse in our that markets absolutely strong truck traditional markets core the QX and been the for well, markets the takeaways have in now. was as the that

were reductions just through aggressive the The caused in worked. stayed put that anything, would to that strong I pandemic has cost So this. If say place strengthen. and it we

income operating went up to If lot take-outs you implemented. the why look adjusted it a due margins cost was we that our at of big

phase some want now, in as I mentioned, as hiring our QX. starting to businesses markets. And to our those we're new recovered We we to restore the in staff up are as costs and of QX well

of are On was are backwards underway. several still which restructuring and the looking other facility reducing projects have we some we that footprint, permanently redundant, hand, still our

unforeseen electric growth I and up products I've the one well have the we've we desirous the And are that names business lastly as are quarter. our that as they're On happened. been added our to have It's supply Good vaccine the capacity COVID customers a it And growth marquee outlook. be as new to and these right you one by now be a a contingent filling at dealing customers. impact we'll future, And hopeful some moment, at in vaccine. but new very concern bound all it. are focused another pretty that customers. rapidly, on about know on news on business because If quite a that less few a COVID capitalized. demand news that's in and near speak startup the for an for of is confidentiality But them, good we is saw steady. end really, spoken customer. the morning to as We've with a vehicle of with our done but still with customers the have company. cyclicality. the well COVID people the of company. we pipeline, could concern to rising the concern It's about down gained this pull would We're for not us to chain we COVID. it us. the and is We're people mentioned, our markets awards impact, due Cases side, concern a in it products -- happy us

Okay. financial it I'd take summary. turn to back some the Chris? to of well, With going you through Chris, he's that, like to

Chris Bohnert

Thank you, Harold.

to presentation, along Page following you're If in XX. turn please the

revenues third XX.X cost XXXX a of the the revenue global was sales in and of Third to in sequential operating reflects in second COVID-XX quarter foreign increased our quarter XXXX, XX.X% million of in the markets period, revenues a SG&A of lower by to production over volume. FSC million. XX% to X.X XXX.X focus favorably the and income compared XXX.X decreased of million XXXX decline America attributable by sharp year for about basis market military XXX.X were truck impacted optimization. decrease third decrease an partially in roughly we sequentially quarter the year serve. and prior decline This currency pandemic XX.X to the $X million This million quarter reported declines XXXX quarter year-over-year sales offset of continued prior compared a in XX.X%. the company primarily and attributable primarily consolidated the third heavy to more period, of is revenues XXXX and construction on million specifically due our by The XX% industrial revenue business. On in duty North increase driven the

decrease million up EBITDA versus slight second prior XXXX. sequential income Third was basis, quarter and Harold mentioned XXXX Adjusted quarter recovered million, in of XXXX. XX.X sequentially slightly the suggesting year of EBITDA the prior slightly operating quarter from second ahead adjusted in on adjusted was a XX.X million of a XX as compared million X.X in loss operating the from of year to X.X

XXX EBITDA increased sequentially. of a points quarter percentage XXXX basis third of the sales points compared As adjusted XXX increase basis an to

charge of cost fixed $X.X refinancing which net million third Harold prior period by to per occurred to share quarter for reduction the $X.XX the was quarter is and million for in the X.XX the expense X.X As XXXX. other initiatives. offset successful also the mentioned, compared or per XXXX the second interests sales share. in of million, or in $X.XX related million of in income loan Net X.X to Interest impact a third compared diluted quarter the of totaled included income XXXX client partially XXXX; of X.X quarter diluted

the segment I'll Slide to on talk results. If a electrical you little bit about turn please XX,

construction were third a quarter X.X%. decrease COVID XXX.X serve, and quarter. prior sales the primarily year the in quarter. to duty sequential contributed million XX.X% from lower to is military million decrease million more in XXXX. the in XXX.X warehouse we by FSC due revenues The heavy declines business. which Of a of primarily markets to truck partially basis systems and industrial third resulted and in note, specifically compared segment from the in the production attributable declines pandemic America For subsystems period increased XX electrical second the year-over-year of and revenues North offset market automation incremental over the an On revenues, global

third is revenues to quarter, to by reported in prior year segment system quarter, sales segment income compared in $XXX,XXX. million lower volume. the Foreign XX.X primarily electrical million decrease about of favorably electrical impacted translations The the currency attributable operating third period. the The XX.X

details lower from operating XX.X XX.X prior sales second the to year declines quarter XXXX. quarter increased revenues XX.X Slide global declined resulted segment the system to special Third the on seating other million primarily and duty of over production adjusted of the in in Revenues truck our America. million heavy a for million when XX period. basis, P&L income the excluding markets compared third due sharp was declines quarter segment. the charges. XXXX in It's XX.X% North On specifically COVID-XX in sequential the and electrical

feeding of decrease from segment in by initiatives. compared in million was during partially to The favorably offset reported year currencies $XXX,XXX sales the the Foreign impacted prior an approximately operating income operating in quarter million the cost quarter. the to ongoing The primarily income X.X savings global lower third restructuring I'm period. X.X attributable sales volume, by

revenue. of adjusted XXXX special increase of over is an year-on-year despite million a $XX.X income quarter operating decline percent quarter. charges, income Third second flat Adjusted the XXX% a was X.X revenue million as essentially operating in when excluding

were mentioned, facility. flow September on ABL, down X the XX, outstanding This cash no million Turning million revolving term was And additional on million the the paid XXXX, Thank XXXX. to to you. of facility million. Slide operator quarter as quarter. which of during Q&A. on we for was remarks. Free I for now loan prepared concludes XX.X XX XXX.X XX, September liquidity the XX, our the our will There the revolving our an over it as million on had please, credit turn credit cash availability X company under of up Harold and of of million, XX.X made borrowings

Operator

first comes from Please Colliers Your question ahead. Instructions] [Operator go you. Security. Thank Mike Shlisky from

line Your is open.

Mike Shlisky

other here a there? contract for other with or that contracts? parts System additional quarter? on just color there the EB wire you a similar last signed a announced more the that the new newer harnesses get just like Are or products big Are we Can involved on they contracts little you Seating

Harold Bevis

Yes.

So things supplier That there. America. about in say. all I a customer two is That's trucks and North of Europe can

And They reasons what function, they selling, bundled the the package, we seating the they choose love And pay customer. harnesses that product and similar. one value seat main it. the yes, for that of have modular we're our fit plastic customers. a system the of to seating The pay form terms is of pedestal gen don't kind system. aesthetic the offering we're unity leading-edge product if approach monitor spectrum they can of a by seating And solution. and want In point now Mike. to with have get It's our by it's the And parts they state-of-the-art offered, needed and anything extra, is customizable of for it's next integrated want also and on name technology. suspension very it's it's the selling easily it's we

Mike Shlisky

of contribute on any how you hydrogen current can powered any that sense Got both Have give how it. truck you make help to you're the diesel all they work, about and a aggregate sure per discussion be the maybe with you and there talks can in battery summarize can some had also do an on customers Can future. you trucks? And basis, big to truck opportunity I'm to with them us much having the trucks compared basis might of the diesel? you a their a want models?

Harold Bevis

Yes.

them upgrade existing their already business line not. product offering who legacy some truck using new are makers of them are the the their electric So to the some generally cabs, in are have vehicle product in platforms, of

just that engine train, So the or change upgrade, of low from going case when transition system. power get to to generally the refresh we In environment. they're compete combustion a there's a to cab the a emission an a or where

cab. don't of a they much change Some

it So varies.

different, So to going quote, they're new opportunity business the refresh if not our, is cab.

the as what or they're traditional all with opportunity is players, we Mike. not are electric doing. additional business so to at an but vehicles specific And involved whether

Mike Shlisky

you've that be the changes in got they're the number the aggregate diesel be CVG table happened them trucks see in of of able the all most you ever Your have that or all to roughly electric, to materials same, overall impact? whether Would say future? the in will and that they're

Harold Bevis

Well, always the we a we're share we've getting same and luck, have market XX% had. about

makers hard a those We talk crack that specifically globally. domestically, to lot There's you in have access the XXX% all market, into. to major are companies about and buy global China of accounts if

with share, by So to and product But and our of looks terms same winner electric or gain we pursuit basically I initiative market vehicle our are here a in share. is the share to maintain share say being mirror -- then are would growing our offering? trying electric vehicle

Mike Shlisky

don't in along be you Clearly plan disrupted to process. this

So efforts that's hear. good during the been I kind ones the you you more of of your so that which your hiring, et markets far, just this you're successful, on some a a pursuing, to good ones some -- can that's prepared certainly the cetera. markets, bit traditional remarks, little touched put to a saw color new beyond have expand some of which haven't, on

Harold Bevis

Yes.

a FSC, Rich subsystems a an expanded So being lead executive product globally. expansion we they had there ones, Tajer assigned of internally subsystems. wire offered, several the to electric they business. biggest line warehouse that that when foothold three And the who business we main have leading we We automation good bought we our got harness is big

risk, doing we in just oversee from this well at as moment to We in investments, plant it's leverage big our having place basically absorption doing. the from And ramp that I new emphasis one any current have our and as footprint. that leveraging say so get will greenfield our primary so is current our we that overhead teams experienced this that's And foresee to footprint. up that teams inside the existing them. can the of current people put causing manufacturing departments our time what's we're us don't

Rich the automation. our a our unit, getting which wiring business than and Growth can year the that's kind warehouse non-trucks. of success So that vehicle, harnesses positions large on of two, sales that's other little are is also in for leading wiring leader any kind this equipment harnesses. any a great there We biggest and smaller make

plastic them portfolio of we've parts them third set so good term. of and short-term, have injection some machines. some a thermal big molding win, And of longer a had our And we forming areas of in

have for parts We only made traditionally trucks.

consumer We have products parts hire competitors, the we industrial had those for and industries, knew leaders knew for other lead turned to our customers sales knew to medical, us. the attention who markets, products, making way to

we the have but footprint, we the have capacity, will. spear, of really We the have know-how, commercial the the have we didn't if tip you

that's the So hiring our main nature been of is leadership. commercial

Operator

comes ahead. from Please Chris Barrington question Your Research. from next Howe go

is open. Your line

Chris Howe

mix First potentially? automation changing. slide incremental less the comment as hundred on off, see continues of start think mix out about this could -- business consider the showed million electric as the in market context How slide your we that that be If should in years this business the that to how and we the business? incremental we XXX margin margin on nature? of to positively And million? to cyclical I realigned the impacting where wanted of is we further off you of warehouse change of to surrounding How look

Harold Bevis

question. good Yes,

big So, warehouses the XXXX And change and average or turning it's is up XX% comes has up chunks it's some the accretive around at year-to-date new versus say lumpiness, warehouse CAGR. is at because with definitely even back in lumps, automation. and new trended and I it looking it cyclicality, But it should warehouse automation. but XX-year XXXX main

also, their we so and six trying you do had for been then, this that's the years. to $XXX way that bought Basically accretive. million think we to about as expand industry you we're business it's know, CAGR And XX% have what that, And market. business at serving in growing

of business ecommerce known place top that top player So is in -- basically were known they the supplier and putting warehouse distribution some to the retailers biggest systems. XXX the -- of a were

what we're them. them. free a we customers known making as now those But say get our not to we're name do see expanding when we And we're So we supplier to a names, for PO, them.

to automated half time move control a form center, into warehouses. So elevate at control panel, of like around. least these making think And some a of has conveyors boxes, material the puzzle elevators, To it piece connected we're or motor in the it. subsystems mainly cases, that and

business have the trying two than harnesses regards -- that's and pieces go more it. to mix to the as is GDP, better but that's of right going trying plastic we to to GDP --we're parts I trying we're growing to on for we're add wiring business now, Chris. So With be think it would other and

Chris Howe

Great, great.

things, As space. I have aggregate kind the think two vehicle of in an about wins electric on you key basis,

going We been key outlook growing the and have warehouse your takeaways, business new and new future? at that automation future changed deals And the space. approach opportunities, as given development How assess into or are look product these gain mix available how should in products a on opportunities working in long-term? short what we sort has win or or are current to you've of able currently the we your strategic customers, you of on as

Harold Bevis

Yes.

We expect smaller three electric big we're And we ones, we're get pursuing two the don't greedy XX have -- be. globally. we've vehicle basically but as as being five to had victories, can we top ones. So all, them

in as You profit should business. rates to be similar have expect the they been that

the got this thing of command business, of leading transition have for Bowen. us. He's gentleman We it's both sides Doug that and same

to a And we're tethering company, to part the having of committed ourselves So we're industry. and as there. an impact growth the sustainability high

quickie, quite complex a we're huge is place put it's entire for in truck to truck and And move complicated. for that not more because a big an deal doing the it's repositioning, assembly, company longer the which so of is term

stuff into but tying to compared stories. Our easy we're those that, growth

our chance think capabilities. It we these a on our using yes, quality but design. fit it a goes about it the -- robotic a of all higher to so And is seat this putting, multi-year And that modular that and level, system, platform function, at Web going as manufacturing modular make paint level a to sort modular you platform. a covers So presentation it it's you higher Unity robotic thing. of painting, have business put slices welding, as the to we're don't when a on we and are processes should win advance we're web are a along. site change form, the as wrinkles layering But state-of-the-art, and more the clear as to design as

aesthetics and smart also So very better a inside plant. process our

industry, doing -- America that in doing precedents one it's We're on smart we're there one for smart China. And putting automotive manufacturing are are in in process. North a and lines. the this So the we

so, we're to Japan, set from all China, up countries And supplying we're Mexico. going Asian to America, be the North that And Thailand, point. from supply

these the benchmarked are CapEx, to little lines it on. We've That's best. are we to so And to going going take new our of going And a adapt process. manufacturing Chris. into unity bit

Chris Howe

which discussed, or may cadence whole, a as the quarter-to-quarter, back you the great. million, timing just that very circling the the quickly comments just $XXX all to confident but that And of which opportunity That's XXXX in of Okay, your helpful. we've about change $XXX million based from feel million. $XXX what on

Harold Bevis

primarily what in do. FSC was the we did it's do We appeal release, We business, And Chris. quarter.

to to overriding delivered and retailers ecommerce VOC the choosing that terms conditions. business is agreements processes bracket do doors, to and parcels depends to people their distributors. The tied an investment to our or capacity. them speed on expand have You the But up handle that their

next see at of terms project projects. and for firm in we so three can go planned And forecasts year. we out are out forms to to comes it the projects months the six end So -- of and us in

build of the us. trucks a if of going have have you forward warehouse, ways it have right of to get industry come you suppliers lot you And the to land, design in to then, building, a a are look quite out now in to a give case new And out. you because So have system it. then, to and get to warehouse inside like

than okay. a visibility And better now a the is high and down is it's number. a right trucking. quite growth Trucking little is up I at So say secular would bit. this one

Operator

Bevis, Harold the queue. questions We Officer to for like I remarks. turn to closing further Instructions] have President over no and [Operator call Chief Executive in would back

Harold Bevis

back joining. for again tough to lot furloughs for then through this spoke went obviously few to Chris because subsequent a year, speak cuts, for I a then everyone joining. we today layoffs going here more. want And Chris meetings is you, the and been going and benefit employees new and In only Chris thank people. a hiring want a I days. lot of Thank to have salary of hire cuts the has year and the I to and thank we're

happy through good So it's like it. with that, for gone our results and outlook. in has a you. in very the and in. call. I'm here that Thank many quarter speaking end company forward next We With look that good Thanks you we've we'll industries, to calling our have delivered

Operator

and call. gentlemen, for concludes conference Thank this participation. you Ladies your today's

may disconnect. You now

Commercial Vehicle (CVGI) 9 Nov 202020 Q3 Earnings call transcript