Commercial Vehicle Group, Inc. (NASDAQ:CVGI) Hits A Wall, What Next For Shareholders??


Commercial Vehicle Group, Inc. (NASDAQ: CVGI) is seeing normalizing demand from exceptionally robust sales last year. Can the company continue creating value despite the shift in market dynamics? When you ask the management of CVGI what the future looks like, the answer you get is that it looks brilliant.

But where does the optimism come from? If you look closely, you can see that Commercial Vehicle Group, Inc. (NASDAQ: CVGI) stands on solid financial grounds and that could be one reason the management believes that normalization in the market won’t destroy value for shareholders.

At the end of 1Q2016, CVGI’s liquidity was $135.3 million with $97.8 million being cash balance and $37.5 million being available under a credit revolver. In the year-ago quarter, CVGI only had cash balance of $81.2 million. The solid financial position makes the management confident that they can take advantage of opportunities as they come without having to struggle with fundraisers to meet new budget plans.

Cost-reduction campaign

The other thing that is inspiring optimism at Commercial Vehicle Group, Inc. (NASDAQ: CVGI) is that the company’s cost-reduction efforts are bearing fruit. The company is particularly targeting to trim its fixed costs. The idea of shrinking fixed costs is predicted on the desire to improve profit margins.

As part of the fixed costs reduction measures, CVGI is in the process of consolidating its North American seat manufacturing capacity. But the management insists that consolidating seat production in North America will not hurt CVGI’s capacity to meet demand.

Outside fixed costs, Commercial Vehicle Group, Inc. (NASDAQ: CVGI) is looking to lower expenses in other areas of operation. That saw SG&A expenses in 1Q2016 decline by $1.5 million compared to a similar quarter last year, thus indicating 8% drop in SG&A costs.

What transpired in the Commercial Vehicle Group, Inc. (NASDAQ: CVGI) First Quarter?

Commercial Vehicle Group, Inc. (NASDAQ:CVGI) generated revenue of $180.3 million, a decrease of 18.2% YoY due to normalization of demand for the company’s products in North America. Adverse forex impact also caused some revenue loss during the latest quarter.

CVGI posted adjusted EPS of $0.10, down from $0.13 a year ago.


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