Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Commercial Vehicle Group, Inc. | investorpresonov20178k.htm |
Patrick Miller
President and CEO
Tim Trenary
Chief Financial Officer
Terry Hammett
Treasurer and VP Investor Relations
Commercial Vehicle Group, Inc.
November 2017
Forward Looking Statements
pg | 1
This presentation 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 presentation may contain forward-looking statements about Company expectations for future periods with
respect to its plans to improve financial results and enhance the Company, the future of the Company’s end markets, Class 8 North America build rates, performance of the global
construction equipment business, expected cost savings, the Company’s initiatives to address customer needs, organic growth, the Company’s economic growth plans to focus
on certain segments and markets and the Company’s financial position or other financial information. 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)
general economic or business conditions affecting the markets in which the Company serves; (ii) the Company's ability to develop or successfully introduce new products; (iii)
risks associated with conducting business in foreign countries and currencies; (iv) increased competition in the heavy-duty truck, construction, aftermarket, military, bus,
agriculture and other markets; (v) the Company’s failure to complete or successfully integrate strategic acquisitions; (vi) the impact of changes in governmental regulations on the
Company's customers or on its business; (vii) the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms; (viii) security breaches
and other disruptions to our information systems and our business; (ix) the Company’s ability to obtain future financing due to changes in the lending markets or its financial
position; (x) the Company’s ability to comply with the financial covenants in its revolving credit facility and term loan facility; (xi) fluctuation in interest rates relating to the
Company's term loan facility and revolving credit facility; (xii) the Company’s ability to realize the benefits of its cost reduction and strategic initiatives; (xiii) a material weakness in
our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements; (xiv) volatility and cyclicality in the
commercial vehicle market adversely affecting us; (xv) the geographic profile of our taxable income and changes in valuation of our deferred tax assets and liabilities impacting
our effective tax rate; (xvi) changes to domestic manufacturing initiatives impacting our effective tax rate related to products manufactured either in the United States or in
international jurisdictions; (xvii) implementation of tax changes, by the United States or another international jurisdiction, related to products manufactured in one or more
jurisdictions where we do business; and (xviii) various other risks as outlined under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for fiscal year
ending December 31, 2016 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017. There can be no assurance that statements made in this
presentation relating to future events will be achieved. The Company 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 the Company or
persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
23 Facilities
9 Countries
2016 sales $662M
NASDAQ CVGI
pg | 2
Global Presence
North America 12 facilities
Europe 5 facilities
Asia Pacific 6 facilities
Mexico
Australia
Ohio
United
Kingdom
Belgium
Czech Republic
Ukraine
India
China
pg | 3
Products
Seats & Seating
Systems
Cabs and Sleeper BoxesWiper Systems,
Mirrors & Controls
Wire Harnesses &
Controls
Interior Trim
2016 Sales - $662 Million
pg | 4
78%
11%
11%
N. America
EMEA
APAC
42%
19%
5%2%
18%
14% OEM Truck
OEM Construction
OEM Bus
OEM Agriculture
Aftermarket
Other
42%
23%
20%
9%
6%
Seats
Wire Harnesses
Trim
Structures
Wipers / Mirrors
17%
15%
10%
7%6%
6%
39%
Volvo
Daimler
Paccar
Caterpillar
John Deere
Navistar
All Other
Region End Market
Product Customer
2016 Business Segment Sales¹
pg | 5
1. Before intercompany sales eliminations
62%
19%
8%
2% 9% MD/HD Truck
OEMs
Aftermarket and
OE Service
Bus OEMs
Construction
OEMs
Other
Global Truck and Bus
$416 Million (62%)
47%
16%
14%
8%
5%
3%
7% Construction
Aftermarket and
OE Service
Automotive
Truck
Military
Agriculture
Other
Global Construction and Agriculture
$254 Million (38%)
pg | 6
North American Truck Build Rates 2016 CVG Sales by End Market
(‘000s of units)
228 256 322 295 244 263 280
2016A 2017E 2018E 2019E 2020E 2021E 2022E
Heavy-Duty Truck (Class 8)
233 250 251
258 271 265 275
2016A 2017E 2018E 2019E 2020E 2021E 2022E
42%
19%
5%
2%
18%
14%
OEM Truck
OEM Bus
OEM
Agriculture
Aftermarket*
Other
OEM ConstructionMedium-Duty Trucks (Class 5-7)
Source: Company website and filings, ACT Research.
* Each segment has aftermarket exposure.
• Forecasting services recently increased Class 8 builds for 2017 and 2018
• October 2017 order level highest since December 2014 (34 months)
• Freight tonnage and pricing is moving in positive direction
Industry Outlook – North America Truck
??? ??? ??? ??? ??? ???
???
??? ??? ??? ??? ?????
?? ?? ?? ?? ?????
??? ??? ??? ??? ??????
??? ??? ??? ??? ???
????? ????? ????? ????? ????? ?????
???????????? ?????? ????????????? ???????????? ??????? ?????????????
(‘000s of units)
pg | 7
Industry Outlook – Global Construction
Global Sales of Construction Equipment 2016 CVG Sales by End Market
42%
19%
5%
2%
18%
14%
OEM Truck
OEM Bus
OEM
Agriculture
Aftermarket*
Other
Market Observations
OEM Construction
Source: Millmark Associates (Oct 2016), VDMA (2016), Customer S&OP data, and Wall Street Research.
Reflects select platforms in Crane, Earthmoving equipment, and Paving.
* Each segment has aftermarket exposure.
1,267 1,325
1,330 1,303
square4 Positive economic fundamentals. Consumer spending, fueled by wage and
job growth, may continue to translate into housing demand. Expected
tailwinds from infrastructure spending. Low machinery inventories and high
rental utilization has triggered demand increase.
square4 Elevated construction growth in Asia, Europe, and North America
square4 North America – Up 30% in Q3 2017 versus Q3 2016
square4 Europe – HD-MD machinery demand up 17% Q3 2017 versus Q3 2016
square4 Construction output continues to be supported by consumer spending,
housing recovery, and global trade.
square4 Commodity pricing, housing growth in top tier cities, combined with
stimulus plans have contributed to significant machinery growth in 2017.
Continued growth expected through short term outlook.
1,090
1,290
Strategies to Improve the Core
pg | 8
???????????????
???????????????
??????????
?????
head2right CVG Digital – Digitalize processes, design, production, and products
square4 Updating manufacturing and support processes – connectivity
square4 Benefits – Increased efficiency, quality, and reduction of working capital
head2right Process investments
square4 Proprietary automated processes for interior trim in North America
square4 Updated high volume seat assembly cells in US and UK
square4 Expanding wire harness capacity – Europe, North America and Asia
square4 Lean Six Sigma program (Operational Excellence) – Training and program
expansion continues globally
head2right Restructuring plan announced November 2015
square4 SG&A actions fully implemented in 2016
square4 Remaining operational changes – expect completion by end of 2017
Examples of CVG Digital Actions
pg | 9
???????????????
???????????????
??????????
?????
Virtual Wiring Boards for high
proliferation
Built-in Quality –
Digital error
proofing and smart
processes
Real time
process
monitoring
and data
tracking Digital design and validation
speeds product development
Improving the Foundation
pg | 10
???????????????
???????????????
??????????
?????
Institutionalizing
Lean Culture
Reducing
Working Capital
Cost Focus to lower
Break-Even
Investing in
Innovation
Next Gen Product
Growth Initiatives
Customer Support
CVG Digital
Actions
Optimizing
Manufacturing
Footprint
Stronger
Performance
throughout
the cycle
Targets for Growth
pg | 11
Global Truck and Bus
Next Gen NA truck seat unveiled September 2017 at NACV truck
show. Next Gen seat products for India and China markets.
Wire harnesses – Europe, North America and Asia
Expanding capacity in Wire Harness – Growing in construction,
agriculture, truck, and power generation. Exploring extension into
digital components.
New off-road seating product lines
Construction and Ag seats available now (“SCIOX”); currently in
development programs with major OEMs. Modular product allows
customization.
Open to M&A options that could facilitate
our targets for growth
Launching trim for new Volvo, Daimler and Mack Trucks
in 2017.
Finance Update
pg | 13
Outlook for medium
and heavy duty truck
production 000’s)*
Class 8 Class 5-7
* Source: ACT Research
See appendix for reconciliation of GAAP to non-GAAP financial measures
Financial Results
(Dollars in millions) Q3 2016 Q3 2017
Sales $ 153.6 $ 198.3 Up 29%
Gross Profit $ 18.9 $ 25.2 MX labor shortage ? $2 million Q3 '17 impact
Margin 12.3 % 12.7 %
SG&A $ 14.1 $ 14.1 Cost discipline in rising sales environment
Operating Income $ 4.5 $ 10.7
Margin 2.9 % 5.4 %
Adjusted Operating Income $ 6.0 $ 11.1 Almost double
Margin 3.9 % 5.6 %
N.A. Class 8 Production (000's) 54 73
N.A. Class 5 - 7 Production (000's) 52 62
pg | 14
Business Segments1
1 Before intercompany sales eliminations
See appendix for reconciliation of GAAP to non-GAAP financial measures
(Dollars in millions)
Global
Truck & Bus
Global
Construction &
Agriculture
Sales $ 122.0 $ 79.6
Gross Profit $ 17.2 $ 8.3 MX labor shortage ? $2 million Q3 '17 impact
Margin 14.1 % 10.5 %
SG&A $ 5.5 $ 4.2
Operating Income $ 11.4 $ 4.1
Margin 9.3 % 5.2 %
Adjusted Operating Income $ 11.7 $ 4.1
Margin 9.6 % 5.2 %
Three Months Ended September 30, 2017
See appendix for reconciliation of GAAP to non-GAAP financial measures
pg | 15
Capital Structure
Capital Allocation: 1.) liquidity 2.) growth 3.) de-leverage 4.) return capital to shareholders
1
Refinanced $235 million in Senior Secured Notes with an Institutional Term Loan in April 2017
LTM Q1 LTM Q3 1
(Dollars in millions) 2017 2017
Principal Balance $ 174
Debt $ 235 $ 174 Interest Rate LIBOR + 600
Less: Cash 119 50 Maturity April 2023
Net Debt $ 116 $ 124
Interest Rate Swap $ 80
Adjusted EBITDA $ 44 $ 49 Interest Rate 8.07%
Maturity April 2022
Adjusted Gross Leverage 5.3 X 3.6 X
Adjusted Net Leverage 2.6 X 2.5 X
Commitment $ 65
Availability $ 63
Liquidity: Letters of Credit $ 2
Cash $ 50 Accordion $ 40
ABL Borrowing Base 65
Less: LOC (2)
Liquidity $ 113 Moody's B2 / Stable
S&P B / Stable
Term Loan1
New Asset Based Credit Facility
Agency Ratings
Appendix
GAAP to Non-GAAP Reconciliation
pg | 17
GAAP to Non-GAAP Reconciliation
Adjusted Operating Income Reconciliation
Q3 Q3
(Dollars in millions) 2016 2017
Operating Income $ 4.5 $ 10.7
Margin 2.9 % 5.4 %
Special Items:
Restructuring & Related 1.5 0.4
Adjusted Operating Income $ 6.0 $ 11.1
Margin 3.9 % 5.6 %
EBITDA & Adjusted EBITDA Reconciliation
pg | 18
GAAP to Non-GAAP Reconciliation
LTM LTM
(Dollars in millions) Q1 2017 Q3 2017
Net Income $ 4.8 $ 5.9
Interest Expense 19.3 20.6
Tax Provision (1.7) 2.1
Depreciation 14.7 14.0
Amortization 1.3 1.3
EBITDA $ 38.4 $ 43.9
Restructuring & Related 4.3 3.6
Insurance Recovery (0.7) (0.7)
Litigation Settlement 2.3 2.3
Adjusted EBITDA $ 44.3 $ 49.1
pg | 19
GAAP to Non-GAAP Reconciliation
Business Segment Adjusted Operating Income Reconciliation
Global
Global Truck Construction
(Dollars in millions) & Bus & Agriculture
Operating Income $ 11.3 $ 4.1
Margin 9.3 % 5.2 %
Special Items:
Restructuring & Related 0.4
Adjusted Operating Income $ 11.7 $ 4.1
Margin 9.6 % 5.2 %
Three Months Ended September 30, 2017