CVG Reports Higher Q4 Net Income, Revenue
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CVG, a supplier to the commercial vehicle industry and others, reported increased net income and revenue in the fourth quarter on the strength of its vehicle solutions business, its largest segment.
For the quarter ended Dec. 31, the company posted net income of $2.6 million, or 8 cents per diluted share, compared with a net loss of $4.1 million, or a loss of 13 cents, a year earlier.
Revenue was $228.9 million compared with $216 million in the 2020 period.
Bevis
Fourth-quarter results were hurt “by several legacy Class 8 supply contracts” that did not accommodate COVID and rapid cost inflation, together with the shortfall in truck production due to supply chain disruptions, Harold Bevis, CEO of CVG, said during the earnings call.
Bevis said approximately 20% of the company’s existing revenue is at break-even operating income. CVG is renegotiating these agreements.
“We are actively discontinuing the practice of entering into agreements that have mandatory price-downs or do not have mechanisms to address inflation and profit stability,” he said.
New Albany, Ohio-based CVG also is moving to vertical integration with certain materials to be less reliant on global supply chains.
The vehicle solutions segment had quarterly revenue of $126.4 million, an increase of 13.9% compared with a year earlier primarily resulting from material cost pass-through, the company noted.
The warehouse automation segment had revenue of $37.5 million, an increase of 0.4%, due to slightly higher sales volumes.
The electrical systems segment saw revenue decline to $38.2 million, a decrease of 7.4%, due to lower shipment volume caused by supply chain constraints and semiconductor chip shortages at customers’ plants.
The aftermarket and accessories segment reported revenue was nearly flat at $26.7 million compared with a year earlier due to supply chain constraints and labor shortages.
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CVG is expanding its aftermarket presence, especially with seating and wipers, and adding an e-commerce platform allowing it to ship from inventory for the first time.
For the full year, net income was $23.7 million, 72 cents, compared with a loss of $37 million, or a loss of $1.20, in the 2020 period.
Revenue hit a record $971.5 million compared with $717.6 million a year earlier.
CVG reported about $200 million in new business in 2021, adding to about $200 million won in 2020, and has added about $75 million more in the first two months of this year with more than 100 new products.
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In 2021, about 79% of the new wins were in the electric vehicle industry, Bevis said, and that segment is expected to become its largest and fastest-growing business. CVG views itself as an emerging leader in the electric vehicle industry for low- and high-voltage systems amid the coming conversion to EVs and fuel cell vehicles.
“Currently, our largest end market remains North American Class 8 truck market,” he said.
CVG’s commercial vehicle products include wiper systems, mirrors, seating, sleeper and cab structures, trim and electrical systems.
“We are estimating the industry will be able to make approximately 270,000 trucks, or roughly flat to 2021, the company noted in the earnings release. “2022 Class 5-7 production is expected to be at 261,000 units.”
