Commercial Vehicle Group Inc (CVGI, Financial) released its third-quarter earnings report on November 1, 2023, revealing a significant increase in earnings per share (EPS) and adjusted EBITDA. Despite a slight decline in revenues, the company's strategic focus on Electrical Systems continues to yield positive results.
Key Financial Highlights
CVGI reported a 100% year-over-year increase in EPS to $0.22 for Q3 2023. The company's adjusted EBITDA also rose by 16.1% to $16.6 million, despite a 1.9% decline in revenues to $246.7 million. The decrease in revenues was primarily due to higher revenue in the prior year as a result of a COVID backlog in Asia-Pacific.
Operating income for the quarter was $12.4 million, up 30.5% from the same period last year. This improvement was driven primarily by improved pricing and cost management, partially offset by volume decreases. Net income and adjusted net income were both $7.3 million, up from $3.6 million in Q3 2022.
Commentary on Results
Robert Griffin, Chairman of the Board and Interim President and Chief Executive Officer, commented on the results, stating,
CVG continues to execute on its strategic long-term plan, which again delivered year-over-year bottom line improvements in the quarter. Electrical Systems remains a key growth area for the Company, as evidenced by the strong revenue growth compared to last year and the successful start-up at our new Electrical Systems facilities in Aldama, Mexico, and Tangier, Morocco, which has gone very well."
Andy Cheung, Chief Financial Officer, added,
“CVG continued executing on our strategy, delivering strong year-over-year improvements in profitability during the quarter. Despite the strong performance, revenues declined slightly year-over-year against a tough comparable base year in 2022, when our Asia-Pacific business benefited from a post-COVID increase in backlogged sales orders. We also had improved earnings and generated strong free cash flow of $12.5 million during the quarter, further strengthening our financial foundation, and reduced our leverage to 1.5x from 2.7x in the third quarter last year.”
Segment Performance
The Vehicle Solutions Segment saw a decrease in revenues by 5.6% to $145.4 million, while the Electrical Systems Segment reported an increase of 16.8% to $53.9 million. The Aftermarket & Accessories Segment experienced a decrease of 7.4% to $34.4 million, and the Industrial Automation Segment reported a decrease of 7.8% to $13.0 million.
Outlook
According to ACT Research, the 2023 North American Class 8 truck production levels are expected to be at 336,000 units, compared to approximately 315,000 units in 2022. The global commercial and automotive vehicle wire harness market is growing at approximately 5% per year, according to Transparency Market Research Inc.
Explore the complete 8-K earnings release (here) from Commercial Vehicle Group Inc for further details.
