CVGI - Earnings call transcript Q1 2024 | Commercial Vehicle Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the CVGI Q1 2024 Earnings Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, May 7, 2024. I would now like to turn the conference over to Mr. Officer. Financial Chief Chung, Andy Please go sir. ahead,

Andy Cheung

Thank operator, and welcome, call. conference our to everyone, you,

the is will provide call and on results, commentary me Joining today quarter first call CVG. update well XXXX morning, for regarding company our CEO which James This we the brief will we a after as as open of President Ray, questions.

but risks uncertainties in conditions compliance and regarding of product is because in not Call to initiatives for to, differ limited reminder, webcast initiatives, Both to, as trends, new currencies company forward-looking turn in to financial associated a results and may XXXX the operates, a call filings. not expectations SEC anticipated certain over call Earnings production for risks may and being during future foreign website. conference and results from market refer will periods the and will supplier, among markets the is I uncertainties. provide which volumes Actual presentation, but on call others. include, fluctuations limited countries in in CVG our vehicles risks liquidity, to this held we may of risks update. cost-saving These As is the statements, which a other James which conducting business our including, economic available this QX are CVG and in with now covenant contain

James Ray

earnings Thank starting you, Andy. I'd X. your the to like presentation, to turn on Slide attention supplemental

quarter across additional reported for year prior in and as prior conditions adjusted and we comparison softer $XX.X strong we the metrics. restructuring expect comprehending of the $XXX Solutions period, the initiatives further net segment, Electrical combined at We financial expected, operational be quarter, the our conditions quarter's of efforts business. restructuring most market our efficiency underpin leverage tough remained million. million segment that the and call, quarter strong last in cash for with Despite to softer to a in a were later, as year. largest net These focused of improvements, and Vehicle discussed our in XXXX. I'll use in EBITDA in launched our Systems first ratio we As quarter strengthening executed the made versus X.Xx. on We our a driving well discuss continue net remain growing sales initiatives, year fully We guidance

wins, these Consistent far within and growth on which recording We wins meeting at support new also wins million product strategy, are so ramp-up Systems additional Morocco demand year approximately in Electrical Systems. segment in business to with this our be continue continued the the basis. and plants on focused our ramped X fully driving new Electrical focused new $XX facility, a our

to Turning opportunity margins as reminder like Slide recent continued highlight some improve taken, CVG. I'd and of strategic to this to actions all we've goal serve a take align X. costs to at our which

with last have of a now products expected the in quarter in our the of agreement purchase the close for our growth as reduce restructuring with lines underway. with and First, our product we make that, significant we efficiency in the facility Chillicothe, to Ohio. Chillicothe signed continue our consolidation align QX. in manufactured strides We line actions announced sale organizational remain In to costs improvements facility, resources to transaction

program, ongoing focuses conversion which Second, and productivity, operational excellence materials emphasis cost supports out on our our costs.

the efforts in by are to satisfaction Finally, customer we organization. prioritizing persistent increase engagement our across

our improve the efficiency products, customer will introduce help outlook these segments and XXXX. enterprise-wide profitability, are full relationships efforts for us collaboration Collectively, and new across support business foster price inflationary help to manage Our stronger recoveries. targeted year increase

The product and X, globally, free Slide our line seat win seat and Unity of tilt has seat powered expansion line us recline, to including play are features helping Solutions Unity business new requirements. segment. that above the to highlight market lever product full decreased many Vehicle I'd like moving within Now our performance

results. all compliance of line how our that, a We to look focus, Andy through quarters. with forward more regions strategic a review solutions the Unity achieved in is strong sales turn across strengthening business sharing example to detailed Unity you This to globally core and and the future expansion our Importantly, for segments. and growing customer technology. back we our market our solutions has our safety are of successes With like vehicle call financial I'd

Andy Cheung

Thank you, morning, and James, everyone. good

per to $X.X per of share Slide Adjusted net EBITDA diluted points prior to compared quarter Interest our impacts, was and primarily turn in interest is in offset debt during in $XXX million the Systems XXXX, The quarter year. first expenses. decline first to revenues Adjusted XXXX a expense was more prior related wind for the Industrial lower due first offset certain Automation Vehicle along expense million softening a an following compared in the share prior income million $X.XX in basis was was customer the or The Net diluted to were to to $X.X to in income as Adjusted quarter million compared aftermarket was or share the If $X.X our in lower quarter driven in presentation, for average diluted are first respective of SG&A for in year. quarter million the $X.X net million volumes or partially $XXX the decrease a diluted down $XX.X $X.XX in globally, decrease revenues by EBITDA or in compared balances demand anticipated Solutions million primarily Consolidated EBITDA and inflationary to $XX.X adjusted primarily X.X% Electrical you as $X.XX in to of prior X.X%, segment the of revenues. segments, $X.X million as period. year. of programs compared lower was down X. income and per the the periods. compared increase in please million per XXXX. XXX the $X.X by which $X.XX quarter as than margins share as million margins the year

the Slide Moving results to beginning X. segment

Our resulting Electrical the X.X% $XX.X with revenues Systems from year slight of increased pricing. markets saw the as primarily decline end increase million, our an proactively continue continue. of indicated ago volume OEMs increase agriculture legacy trends will cost in quarter demand, construction a compared as adjust of a structure we these segment from should result achieved customers and Recent to to Sales softening have markets. and weakening comments these end with

business our sales volume year-over-year. January million impacted being $X.X negatively the in to the XXXX. the of effect total ramp-up decrease X. strengthening peso largely quarter new government $X Adjusted mandated the took of Mexico of income wins the by Operating resulting operating income We have that flat facilities also seen first customer was on delays wage and in a was compared of million, at increases

We are continuing to work these with our offset customers headwinds. to

Construction on remains ongoing. is the remain and completed Morocco second track expected by XXXX. be negotiations on facility fourth to our of However, quarter

We new flow improvements will wins driving optimizing additional even margins as and remain through. operational focused on

X. Turning to Slide

supply at to lower decreased Solutions Vehicle the quarter segment's of primarily shortages impacted key revenues customer our XX% a the that Our to impact ago customer year million due compared $XXX.X to negatively including quarter, demand, first schedules.

terms Adjusted million, quarter programs lower in operational prior the in goal and partially decrease vehicle core unfavorable remain wind-down business as the Additionally, compared as as We million our focus income improved on the new to on reducing period of key further offset the of a well remains solutions, $XX.X the team segment was driving operating on margins. strengthening revenues driving in in focused year improvements operational winning SG&A. demand weighed our was quarter. the business anticipated certain of with costs, all lower for segment first this $X.X a and market platforms, improvements by of for

Moving to Slide X.

to $XX.X the in the revenues for compared of the segment the prior operating income sequential in of in bar decreased quarter initiatives million to food. segment, primarily first decrease customer quarter, the prior improvement million Adjusted lower to revenue first $X year primarily Accessory drawdown year our on a as operating and On The backlog adjusted this and of volumes. results sales lower increased and period. was a $X.X income operational aftermarket sales terms from to quarter is decreased ago decrease compared resulting volume period. year million, demand basis, X.X% in attributable Our the

to Turning XX. Slide

year ongoing Our challenging reduced loss Industrial a the market produced Adjusted first period. $X.X to in XX% to and a million of operating segment compared million $X.X of decrease Automation was quarter million, conditions to as legacy the of revenues of due income million loss XXXX $X.X a quarter customers. $X.X from demand first prior of in compared

to We this continue take actions rightsize business. to

actively activities, products. example developing excellence and commercial parallel We strengthening markets improve new exploring are intake. and the end these a concludes product over An this execution on back both are In engineered highly with order outlook. our development trade focused at James I operational is March. to we of discuss was financial new STACK, our named updated located This the the my call which in now show XXXX to will MODEX turn of overview. to new,

James Ray

Andy. you, Thank

on thoughts XXXX. for XX, Turning share to I'll outlook our Slide several

as our for the for agriculture flat previous the reaffirming forecasts in in changes, of level in forward-looking project guidance business of year, XX% American strategy reaffirming of of the estimate XXXX, down end be a to is being will annual full expect outlook our allocation. in North both our $XXX the previously ranges This in revised million XX% to builds range we from resource which these March Industry and a to quantitative the diversification Following continue announced believe offset decline by slightly metrics. favorable revenues. at benefit billion a Class are introduction EBITDA XXXX. we guidance construction and Class we and XXXX XX% guidance from adjusted we be revision to A our year are Notwithstanding X weakening markets, currently revenue decline. We market resilient $X.XXX the positive truck approximately

build million for with actions guidance. customers believe our to the headwinds growth force, serve agriculture being the Electrical be the previously continued Given solidly to together guidance discussions expectation for XXXX. rescale our of with consolidate and to We that to estimates, further in we adjusted expect range $XX segment market $XX and outlooks construction labor provided to taken EBITDA the million the will truck aforementioned underpin manage Systems operations,

We continue efforts an positive find debt or growth generate pursue us should that opportunity. flow, providing free to paydown with optionality expect attractive to either will inorganic cash we we

sourcing will see I business opportunities now make a to is company the expect cash to continue over strategic expected We operational cost profitable efficiency mix to transformation multiple generation. operator and CVG in business line and call making and management decisions more all questions. to drive back the turn profitability to and the through improved the that, our stronger increased working open capital stronger of lead up to this improve years. coming to for and Operator? a Collectively, With

Operator

the from comes question Company. line of first from John Our Sidoti Franzreb &

John Franzreb

Solutions that impacted of of I'd I'm into Vehicle like complete second with the wind-downs the to those And will revenue segment wind the start quarter curious are they and certain program programs. the much or year-over-year? continue down how and line beyond?

Andy Cheung

down the been So wind has the majority completed. of

right favorable talked decided maybe when So it that not quarters about we decided But for that wind the are we ago certain negotiate call the we it, impact. million call I'll at, round, for we that see pricing, them. remember, time level this quarter, us, and exit heard programs last few single-digit to is you there a we anticipated of the are now, a we'll down during

see So can the you now showing QX. up in impact actually

for the a through that time to quite So through now something ago, some can working final work while us QX, the numbers. it you been and production. we've see And takes

John Franzreb

mirror? it is the repricing to and in safe that related that Andy, all rearview is say actions And everything now the to unintended

Andy Cheung

Yes, you're right.

John Franzreb

be anticipated an the actions, you're savings actions and quantify in will much actions? you restructuring for what how maybe can going collectively, these from rate Regarding annualized you to your take that idea restructuring have 'XX calendar

Andy Cheung

Yes.

restructuring, fuel So things. that a the America. were quarter of North announced last here we in mainly couple We doing

facility of call I'll maybe to costs. reductions headcount During about and the of X/X closing. we quarter, to $X QX, related restructuring million X/X in then executed of it it, related it

We it than are, through call our would program. halfway more I restructuring

We be this in still on up most QX. some ramped activity of And will going QX. by should have

our facility, terms as well So of in SG&A. manufacturing both as

where that's right we So now. are

John Franzreb

process? annualized anticipated you done savings And net when this you've

Andy Cheung

Yes.

the saving on mixed depends type program. really X of We the we projects, depends it bag a our projects. So the SG&A it on but and type of multiple within of the have of of kind years manufacturing. restructuring in different projects, the target obviously payback Normally, about actions

John Franzreb

to a troughing low get better far going I high talk And guess, changed? get Industrial level. I there? Automation actually Has half we XX%, the potentially little as took the kind in I step guess as had of at year what's fundamentally lastly, was on and second The anticipation also revenue queue. was I impression last Can compared that business down year. the ahead. I'll you in under, to back maybe the about something that that revenue XX% under were of business the

James Ray

Yes, the of middle transformation we're that in of the business.

from with about production the more longer-term contracts. PO-based more As on shifting engineered we of manufacturing a business call, business talked contract to serialized last we're product,

anticipated. of part So this was

lumpy in. However, as the it comes it's PO and business is very very cyclical,

we have they quarter, pickup. when So year-end toward several government to our see typically end the spend third for the the when And customers that's are of tend a government, of in space.

heavy. was So new invest mentioned, other product, SG&A MODEX like new that's to And products, are to with the year. much more in than technical product, STACK engineers other the for we but as prior also customers and to added that that's the been in show, we the it engineering and stack go in SG&A participate engineered we lighter products have

as and So we're shipping have in QX. in as improvement our and inbound the seen midst contracts recent product of well transformation, this QX order in be we'll where we a

on leading indicators we'll upside. to be of us So turn around this confidence giving going the that continuing level some are the

John Franzreb

a to think say period. revenue this in So there trough we're as is you transition fair that it's James,

James Ray

the testing spike degree, level customer up These products. not on it a we their products, or we ecosystem, a a can of and well certain of rebound beta and there's these or a depending on see prototype sharp products get new you're yes. facilities customer alpha require new recovery and beta as To into on But whether be a also alpha may testing. depend it or back more contracts double near-term new could and when center facilities the prototypes and fulfillment in full of longer

line of foresee our many higher NRE the as And new X- the to manufacturing range. revenue being cases, for price to have full-scale products in range X-month revenue new in than prototype standpoint, which, time the products. on is we from X- So well the SKU contract the X-month that a as a in these then products, production, some existing

Operator

Prestopino question comes from the from next of Barrington Research. Gary Our line

Gary Prestopino

question around restructuring My also doing has you're what revolve the on side.

identified some of systems fluid some markets, fluidness in is think what said Ag. process more of or the your Given really of in the changes you're do of see in be seeing the electrical and to areas to ongoing? in particularly, weakness construction that's of XXXX you a Have this you starting I want restructuring most you've going terms or less to some

James Ray

It's recovery really track. this on going to market depend how

startups. segment the new like customers. long-term business not ag with construction our this in So of legacy is They're primarily market,

to need market. prepared in do the be recovery we So for a

signals on fall segments. those we adjust from low get indications outlooks in for in continue down to year. market had what from both last depending flat a XX% improvement In down, customer from a will we communicated those outlook they led year-over-year the customers the segment since communicated, single-digit year, they've the but that and up to to So our

increase single-digit to in plans down a a scale had now the comprehend in we're to place low for XX%. the we flat pivot in mode And So back to market. things

place a maintain that both to North doing of margin, as come different the capacity do not in we're of items sure flex have they when and what much regions, of is the to the we swing, try make that market short Europe left and back, and to fulfill macro appropriate lose So pretty for but and able America. up capacity not it contracts was sign amount share. also number But influence significant in we're we

positive our somewhat remains they in in it's outlook So that. But do delicate nature. quite balance very markets as these to cyclical a are

Gary Prestopino

it unexpected to terms have then would million? million $XX of or your you for the $XX be segment an $XX that below do million less in to Electrical And be EBITDA, that to for guidance, downturn more would

James Ray

X. It It back items. number in be a could Class could of deterioration a be

So forecast how months the is end of this in last Cloud minus percent been the we're ACT to in recall, trend Vehicle Class to if up back somewhat Solutions down of more over could back segment the inflow you reversal the where or may because of that volatile the XX% has we by X stream range. down, up, down little. And portion and X we larger a our revenue saw the truck, up that a tied positive

segment, have more On we launching. Electrical because are programs the that

those we range rebound coming in that of still the of some is have see and Ag headwinds market very been say something that that launches we'll construction I unless we some happens. And be significant the which would confident will in be a they delayed, that are

Andy Cheung

uncertainties it, supply we And really here chain I up there. and may volatility add and pop the Gary, one thing that see the to is some still if disruption,

remember, we also impacting probably labor have disruption issue at from supply customers. We some places this of there customers all quarter, still And the saw different happening logistics. our some last customers our our know issues and at issues those affecting to our customers. also You or SUs suppliers that are was quarter labor course, canal of places

probably downside throughout the see something things the if risk a happen to are potentially year. those So I continue

seen some that So of happening. the last quarters, of couple we've

Operator

Joe line from our Noble Markets. Instructiions] next question We have Capital [Operator the from Gomes coming of

Joseph Gomes

quick a just So question.

business. the on electrical of side Just the

kind of kind really we something there. like You slower kind recent growth expected bit that this just of look rate? have growth to behind a a there wins the slower than contract given kind of revenue of Was of

Andy Cheung

Yes.

mostly legacy is so so mentioned, and Josh, construction agriculture. the as already James customer So

So up of that's as segments. majority electrical we the that of end explained the markets made the

seeing So slight that we decline. are a

look the growth of So from over continued quarters, of the back at the couple the last you ramping same time, if it the our new comes years. into segment, wins

saw year, slowdown described we those of As a this ramp. we

seeing supply So chain and logistical mostly of because customers challenges.

So they up were their able not to ramp production.

So we them. to revenues don't in supply get obviously, the to turn,

quarter. combination volume up. So is the that's still impacting the this Overall, that

to businesses. So as their some as but of ramp hopefully seeing we level not the that can meaning and still new fast but that customer overcome our new we like continue would revenues we're challenges

James Ray

Yes. And that Josh, I'll just add to point.

not booked. wins business lost are we seeing from We new any

indicator some a leakage gives don't come So We will of that the that leading us market have back any at lost point. business.

So we that wins. electrification feel longer-term well to and And customers tailwind Ag, new in applications we're going confident a all construction as have legacy and startups. addition these new still within infrastructure to it's OEM also from business EV and as

both segments very in But North the and largest are business into. it's serve segments So set a diverse to point, of America ConAg, Europe. Andy's we in the X Electrical

Joseph Gomes

And really those then just is there driver have a you markets, for in as industries noticed? that big the ConAg of that deterioration guys

Andy Cheung

a know, our bad a from that we right spot customers. is few China as things in heard now. OEM One, are There you

most in Asia Pacific over pretty again, is economy the demand activity with then overall, we So in some I the America. think point. North also there. recent low development reduction And here at the see this Europe, the

are earnings some a months low publicly few activities. call compared customers in So market reduced mentioned their and own the seeing they that our ago, to that has also

demand-driven mostly on it's customers. our what we from So based heard

Joseph Gomes

in get in really with $XXX Are quarter? I me, guess, is you? goals the first queue. still just for the we line I'll back the wins with million expecting for your And business the million new for quarter $XX last over, of range one

James Ray

Yes.

pending as that is look also in we're tracking that also opportunities $XXX the our expecting in vehicle When as just solutions pursuing, group million. accessories The and automation. For industrial we've year, awards not quoted million we're electrical, well pool at our and aftermarket within still and you our well. but $XX

just on one then pending bring to home and those each good need pursuit businesses. We We have that opportunities. the a of awards the in funnel are

the in ample winning outlook in our funnel, those opportunities aggressive have be too. on pursuit We capacity to

will achieve in that basis we annualized So we this mentioned that calls. on million at confident that $XXX feel point before an prior have we

Operator

the Our Slater. next from line question comes Steven of Martin from

Steven Martin

of quarter. days by second You plant be said Well, completed Moroccan first end would that ago. the the was XX the

it completed I my question it was and So guess is producing? is,

James Ray

Morocco in was So completed initial we QX. that producing an that have facility currently we're and

this QX by be The complete that of occupancy this year of with facility in QX year the QX started 'XX. second was beneficial will end

Steven Martin

the And how new is doing? the and new plant plant Moroccan Mexican

James Ray

up ramping both They're very well.

improve North for to able are opportunities market. footprint European the actually funnel the with African of We Morocco our

expansion from good we're our European our seeing of footprint. So response customer

have the for As we in the Electrical as you business. may as know, well Republic facilities Ukraine Systems Czech

for well this is expansion Africa the Europe. positioning in So Chihuahua, very on value up facility, outside of which is opportunities North Aldama ramping us Mexico, the is new well. from proposition a And in

was main Our Agrarian. Mexico facility in in

early is schedule the based North that's So new we the with wins to team ramp we the ramp to that past the and Chihuahua and months. over some graphite, in and managing those X have booked year facilities a business those XX America of XX running somewhat year parallel, that in will and we're next throughout continue

Steven Martin

earlier make quarter, first done going of that half to comfort? of in XX% would of XX% to and I And given question you've up midpoint how that down to businesses guidance, level the to the choose businesses midpoint? have be someone's are swing to back your the to follow quarter. midpoint gives All first would imply this that What about What your to X year's were you this make enough guidance. guidance. the up were that If

Andy Cheung

Yes.

already James at side. customer depressed our ACT upside you so So wider on the you Steve, guidance, of that a of clearly bit potentially we the in there's range the if mentioned, demand there's a see look communicated. little the

have in earnings. ability case that now, our to to final manage to it's our going the believe of year our we hard more say I but covered But are we in is well range confidence those So land, where probably right think scenarios. pretty

been we rightsizing about So anticipating demand business, proactive taking actions the changes. customer mentioned the that as we've

for levers to more few a there's us pull. So

So that we we our confident terms are the that produce. pretty of range guidance EBITDA in

James Ray

additional An to the Yes. will benefits start took the of some in efforts point after first. is too, higher second the in we ramp restructuring the half Steve,

that, mentioned ramps as will kick in on higher items our projects volume we and of were to QX, addition calls, in as implemented have in we in and In QX. up program, savings cost-out new to prior some that continue implement those QX

market the So cost-out that, we're line some see And it's have we of we're on that indication to cost than Andy's then worse think top we're but lower don't especially volatile to going help that downside or the up, happens. I that it, to I'm that, side, manage of Class will half. strengthen it's and it's hopeful lost much a point, hoping flat the the to We're that I mitigate helps And X opportunities do right ACT the outlook. continue us banking little any down top end not line really second And now, to the to process going it that through but sure in in on earnings doing. Kanye, the the where better, get not XX%.

to worse we're planning outlook. and try for putting things and on the pressure in mitigate So the EBITDA place

Steven Martin

that. to Follow-up

as as benefits not better. to will everybody all, ACT that of 'XX ACT a first XXXX you the at we bad as on going supposed new be of beginning little year. of When So I 'XX new call, or the as or minus, see was expected a looks the to be said you're plus that maybe expect start cycle. to to cycle? do is see said, you the last

James Ray

Yes.

are I've seen Class engine calendar XX% And the as It's 'XX question, you and the ranges of So as because, that's a emissions. good very vehicles. potentially for all federal interesting new higher emissions know, year X Steve. estimates of costs

much So ACT and outlook is a 'XX pretty prebuy. 'XX factoring in from the

mid see 'XX part ahead. the model. was we as stated new of a the models new 'XX prior start the you'll they or on production. in and 'XX because latter model model would of a see to summer a of of the manufacturers pulled to come And A larger up year year the ramp changed So drop would to expect late have year buy vehicle the lot

given that's compared of still and decline forecast to is we I little more some confidence those when the start they us Even prior it us QX the another to gives the see think, though and earlier, question up. model quarters, showing year. a depends So which in ramp back how their fast a on in indication half customers ACT's next

So side and side. agile somewhat both we ramps, have to high the the to flexible and respond so that can those on low we be

Steven Martin

in a And up question. and bad see you keep the just ACT that replace see assume to to a righted, yang projected benefit? 'XX is would on that that last QX the if not truck lot truck, going new they until better. I or truck road. get we're have the in to One we aftermarket benefit, to it Should ended being the end sense a aftermarket aftermarket doesn't buy some more the stuff existing in it somebody

James Ray

seating. see business our some our portfolio, in benefit. should No. based We the is aftermarket majority of And on

we XX, ones want mentioned to there easy an approach it I how they hit business the that's seeds. had what it's in down within that we to a turnaround that how website customer ability comes our we Alabama, that didn't are our we've what some quick field into with sales took working and an really factory really One have QX XX-XX and is does makes inventory we and does which didn't do that want that in Piedmont, done X I different came X earnings seating. is carry our that because well, to it things. the thing hours And with to our against. And role or is how reps to that when figure solid now. call. after-market our see. been XX last in leverage We've And fit can into on pretty of there win up So second since we're aftermarket Then players the out going out launched

we've We profile some for new different model. in a So put inventory in scheduling. put processes

our touch We more have sales regular reps. with field a point

increase We aftermarket have seen an for recently in inbound seating. orders our

think we for of capturing take us that's fulfillment long inventory of offering So to right as is out focus model. there I our opportunity we better do and having advertising advantage much existing the job as out the share other there competitors a and with

QX other incentive sales field The was for our program reps. started in activity we an

that of driving aftermarket the behavior for I result trailing orders the inbound was think leading teams. is increased

really different being on positive see a So somewhat hopefully, of It continue angles driving focused with reps we're have how retail go our And a momentum looking sales. at a on contemporary at we're and manufacturers. been to more for service now in to business has that. was it. we'll sales in the field But taking approach our more legacy all OE we're contemporary major approach that aftermarket truck type

but we year uplift, second So in us indicators of footing, of some overall good is see early half revenue. also the the should now, which on the the right aggregate pencil that have some we level proofs in a helping better put

aftermarket performance half. we in second So hope see the to more

Operator

Joe from line the Capital Gomes have We a follow-up of from Markets. question coming Noble

Joseph Gomes

me. for follow-up quick a Just

be much of you cost Can exchange cost actions couple what little you the release. offset previous press headwinds. doing to then need a just bit and mentioned how provide completed full a quick you of guys the are more before to And the foreign realize. savings actions to detail questions. in Just of additional the Like, guys just inflation

Andy Cheung

Yes.

answer So areas. me on a you few let

solutions, well offset is a the businesses the as make in Mostly part our cost softer of is we of the so So have sure vehicle businesses, of action rightsize one that we large we electrical. that as can demand to our impact that

So came labor there's really is are all our for border pressure electrical, there's the cost main many from in that X you can up some and labor increase One margin things. the about as in region of percent. see, quarter to XX-ish of increases mandate Mexico of Mexico aware government us

a is costs year locations the of to in really that in our Electrical double-digit strengthening cost creating increase of for one Mexican peso-denominated impacting us. then us is compared a it's Mexican some So also And for of peso other which terms our pressure is the of the ago some cost the business.

to this on labor, would cost our I customer is made the progress of both rightsizing same working that some pressure the working of of working the we're the we structure. At do terms of we're some overhead. through We're ends. in some offsetting already time, a commercially say have we're in resolve some more pressure. labor strengthening also to our cost our for and still us. cost reduction taking peso One with So inflation but continue importantly, offsetting

in believe we we find solutions. efforts to to work with those but able QX, we'll our be some that So should continue customer

James Ray

look we're that brings at activity a this once And obviously, question, down. referencing million then number net both the well similar a $XX cost-out that $XX to approximately the other achieved And well things material, in gross inflation or on print of you other indirect direct chain million part taking same of fresh at roll year, number year, said logistics in gross we a last that But achieve your as and we level. level as to and projects. spend supply as we're track

we are this leaning So I in, to in more specifically addition year say, in direct material. would areas other

our directed by direct from our material of is Some customers.

a suppliers have have drive we than the less select there our We spend that we opportunity where and little own savings.

in this there. is or facility to specific much macro direct manufacturing in on focus place cost by to framework still last framework for now The still was drive put that the driven emphasis that. material place last pursuing year place, items. So a conversion out put some cost pretty year was year have that in the More debt

the to supply and there, that freight we on onshoring chain looking what get at opportunity risk supply reduce logistics caused chain in and which to FX see chains and That as or regions. risk. of supply specific long costs go one chains, well some Canal the has both our is Suez also area supply have and at across us can near-shoring take as disruption our logistics So freight with more a look

that the similar line. So gross on us savings which is further EBITDA level a we're our a level at at range for there number solidify year we to helping margin this are of that looking items achieved of achieve year, last

Operator

to questions at closing over time. final be this turn the Mr. Ray no seems back There call to like I'd now for further to comments.

James Ray

for excited prospects joining reaffirm I'd management execute safe you the business see resource Thank very our drive today's a the you day. and We a call. cost to we strategy much thank have and outlook, I call. we alignment, CVG our like hope for day of you that We all remain growth all at continue for we to to as look engagement. forward joining to for customer forward-looking great continuing and CVG.

Operator

call concludes you thank conference this ask and for please your participating you lines. and that Have for day. a Ladies today. lovely disconnect gentlemen, We your

Commercial Vehicle (CVGI) 7 May 242024 Q1 Earnings call transcript