Heavy truck industry supplier Commercial Vehicle Group, Inc. (CVGI) reported second quarter 2017 revenues of US$ 195.1 million compared to US$ 178.3 million in the prior year period, an increase of 9.5%.
“The increase in revenues period-over-period reflects higher heavy-duty truck production in North America and improvement in the global construction markets we serve,” said the company in its report.
Foreign currency translation adversely impacted second quarter 2017 revenues by US$ 2.1 million, or by 1.2% when compared to the same period in the prior year.
Operating income for the second quarter 2017 was US$ 7.6 million compared to operating income of US$ 8.4 million in the prior year period. The decrease in operating income period-over-period was primarily the result of approximately US$ 4.0 million in production challenges in our North American wire harness operations, partially offset by higher revenues and the benefit of cost reduction and restructuring actions.
CVGI highlighted an increase of wire harness production capacity by establishing a new facility in Mexico with better access to labor.
“Admittedly, it is taking longer than previously anticipated to manage down the cost associated with the labor shortage ‒ the burden on second quarter results was on the order of US$ 4 million and there may be another US$ 3 million to US$ 6 million of cost coming in the last half of the year,” the company stated in its report.
Additionally, a rising commodity prices and some production inefficiencies from the spike in North American truck build adversely impacted pull through in the second quarter.
Second quarter 2017 results include US$ 0.9 million of cost associated with our ongoing restructuring initiatives and other related expenditures. Second quarter 2016 results include US$ 0.5 million of cost associated with the restructuring initiatives.
Net income was US$ 0.1 million for the second quarter 2017, or US$ 0.00 per diluted share, compared to net income of US$ 2.7 million in the prior year period, or US$ 0.09 per diluted share. Earnings per share, as adjusted for special items, were US$ 0.08 per diluted share in the second quarter 2017 compared to US$ 0.10 per diluted share in the prior year period.
During the three months ending June 30, 2017, the company did not have any borrowings under its asset-based revolver. At June 30, 2017, the Company had liquidity of US$ 115 million: US$ 52 million of cash and US$ 63 million of availability from our asset-based revolver.
Commercial Vehicle Group owns two manufacturing facilities in Mexico, located in Agua Prieta, Sonora and Saltillo, Coahuila.