CVG Reports Q4 Net Loss, Higher Revenue
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Commercial Vehicle Group reported a narrower net loss in the fourth quarter compared with a year earlier and higher revenue, including record revenue in its electrical systems segment.
For the period ended Dec. 31, the company posted a net loss of $4.1 million, or a loss of 13 cents per share. That was a 45.3% improvement compared with a net loss of $7.5 million, a loss of 24 cents, a year earlier.
Revenue in the quarter rose 14% to $216 million compared with $189.5 million in the 2019 period.
The increase in revenue reflected the substantial increase in the warehouse automation business and the heavy-duty truck market returning to a comparable level to the prior year, according to the New Albany, Ohio-based company. Foreign currency translation also favorably impacted fourth-quarter revenue by $2.1 million, or 1%.
“We are focused on making CVG a secular growth company and are on that path with much to do. COVID-19 hit us hard in 2020 and is truly still with us in certain ways,” said CVG CEO Harold Bevis. “We sharpened our focus on new diversified revenue and are happy to report that 2020 was a good kick-start year. This is a multiyear effort and we are committed to making appropriate investments, led by a talented and unique team, and securing new business with differentiated products and services. We are optimistic about our future.”
The company has two segments: electrical systems and global seating.
Quarterly revenue for the electrical systems segment notched a company record of $138.6 million compared with $113.9 million for the prior year period, an increase of 21.7% primarily as a result of business growth in warehouse automation.
Operating income in the electrical systems unit was $7.8 million compared with $1.1 million in the 2020 quarter. The surge was primarily attributable to increased sales and an improved cost structure.
Revenue for the global seating segment increased to $79.1 million compared with $76.5 million a year earlier, up 3.4%. Foreign currency translation favorably impacted fourth-quarter revenue by $1.5 million, or 2%.
Operating income in the global seating segment was $2 million compared with an operating loss of $600,000 a year earlier, driven by higher sales volume and an improved cost structure.
Bevis said the company is investing in the electric vehicle market, and is a development partner in several new electric vehicle startups. “These programs are largely in development phase during 2021 and expected to turn into revenue in one to two years as we design, prototype, tool up and then produce at volume,” he said.
It had other new business awards in recreational vehicles, material handling equipment, boating and mass transit.
He said net new business awards accumulated through 2020 are estimated to be $100 million per year on an annualized basis, or about 15% of sales, and were predominately in warehouse automation and electric vehicle markets.
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“We are attempting to win the same amount of new business awards in 2021,” he added.
The growth of e-commerce is driving the need for additional warehouse automation, he said.
“Industry expectations are for this growth to continue and we are seeing this in our business. We supply components for these warehouse installations, including complete work centers. In the fourth quarter, our sales to the warehouse automation end-market grew to $34.4 million in revenue as we ramped up new products and new capacity to support this business during 2020.”
For the full year, CVG reported a net loss of $37 million, or $1.20, compared with a net profit of $15.7 million, or 51 cents, in the 2019 period.
Annual revenue dropped to $717.6 million compared with $901.2 million a year earlier.
The company reported at the end of the year it had no outstanding borrowing under its revolving credit facility and had $50.5 million of cash and $88.4 million of availability from the revolving credit facility, resulting in liquidity of $138.9 million.
Bevis sees growth in the commercial vehicles market for Class 5 through Class 8, electrification of trucks and warehouse automation in 2021.
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