commercial vehicle group, inc. 2011 annual meeting · daimler trucks north america (“dtna”) –...
TRANSCRIPT
This presentation contains forward-looking statements that are subject to risks and uncertainties. These statements
often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or similar expressions. In
particular, this presentation contains forward-looking statements about Company estimates for future periods with
respect to cost savings, restructuring charges, revenues or other financial information. These statements are based
on certain assumptions that the Company has made in light of its experience in the industry as well as its perspective
on historical trends, current conditions, expected future developments and other factors it believes are appropriate
under the circumstances. Actual results may differ materially from the anticipated results because of certain risks
and uncertainties, including but not limited to: (i) general economic or business conditions affecting the markets in
which the Company serves; (ii) the Company's ability to develop or successfully introduce new products; (iii) risks
associated with conducting business in foreign countries and currencies; (iv) increased competition in the heavy-duty
truck market and other key end markets; (v) our failure to complete or successfully integrate additional strategic
acquisitions; (vi) the impact of changes in governmental regulations on the Company's customers or on its business;
(vii) the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms;
(viii) the Company’s ability to obtain future financing due to changes in the lending markets or its financial position;
(ix) our ability to comply with the financial covenants in our revolving credit facility; and (x) various other risks as
outlined in CVG’s SEC filings. There can be no assurance that statements made in this presentation relating to future
events will be achieved. CVG undertakes no obligation to update or revise forward-looking statements to reflect
changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All
subsequent written and oral forward-looking statements attributable to CVG or persons acting on behalf of CVG are
expressly qualified in their entirety by such cautionary statements.
For a complete description of risks, please refer to our 2010 Annual Report on Form 10-K and current SEC reports on
file. 2
Forward-Looking Statement
3
Good Afternoon and Welcome to the
Commercial Vehicle Group, Inc.
2011 Annual Meeting of Stockholders
Welcome
The Year in Review / Moving Ahead
Managing for the Future
Financial Review
Closing
Questions
4
Agenda
Over the past year, and in preparation for continued growth and
success, we focused on:
Continuing to diversify our products, end markets and customers
Improving our capital structure
− $25 million equity offering in Q1 2010
− $250 million bond offering in April 2011
Investing in global expansion
− Saltillo, Mexico
− Beijing, China
Realigning our manufacturing footprint through facility consolidations
Achieving new business awards
Capitalizing on our variable cost structure and improving our bottom line
Strategic acquisitions and new market opportunities
− Bostrom Seating
− Exploring India Opportunities
− Exploring Brazil Opportunities
The Year in Review
CVG continued to be a diversified global leader, with a balanced
product, market and customer portfolio:
The Year in Review
2010
CVG has a well positioned capital structure for the future:
First Quarter 2010: public offering of common stock
− 4.37 million shares
− Priced at $6.25 per share
− CVG received approximately $25.4 million of net proceeds from
the offering
$21.4 million cash tax refund during the second quarter of 2010
$250 million bond offering in April 2011 at 7.875% (due in 2019)
Stock Offering + Tax Refund + Revolver Capacity + Bond Offering
= Strong Balance Sheet / Liquidity
Year in Review and Moving Ahead
Daimler Trucks North America
(“DTNA”) – Seats, Flooring, Interior
Components
Beiqi Foton Motor Co
Truck Seats ($30m sales at full
production)
XCMG
Seat Supplier ($4-6m sales)
John Deere
Wire Harnesses for Excavators
Manufactured in China ($4-4.5m
sales)
Hino
Seat Supplier for Medium-duty Trucks
Manufactured in North America ($2-
3m sales)
Skoda Auto
Wire Harnesses ($14-17m sales)
Moving Ahead - New Business Success
Strong Pipeline of New Business Achievements
Managing for the Future - Continuous Improvement and Growth
Moving forward, our focus will remain on:
Capitalizing on Strong End Market Recovery and Growth – Truck/Construction
Geographic Diversification – organic & acquisition
– Mexico Opportunities
– China Opportunities
– India Opportunities
– Brazil Opportunities
– U.S. Opportunities
End Market Diversification - organic & acquisition
Investment in Technology
12
Indicators Support Ongoing Recovery Significant Opportunity For Global Growth
Early stages of penetration into large Asian
commercial vehicle market
Growth opportunities in Asia with strong
production volumes
Continued growth in China
Opportunity in other emerging markets (India,
Russia, South America, etc.)
New business wins with new and existing
customers
Managing for the Future – End Market Growth Opportunity
ROW
12%
NA
12%
Europe
15%
Asia
61%
Managing for the Future - End Market Growth Opportunity
13
2009 2010 2011 2012 2013 2014 2015
North America Europe Asia South America
837 860
937
1,038
1,144
1,247
1,326
Medium / Heavy Duty Equipment Sales
(Represents cranes & movers and earthmoving equipment in thousands of units)
’09-’15
CAGR
12.3%
8.4%
6.6%
6.6%
8.0%
CVG Construction End Market Sales
Heavy truck
40%
Construction
23%
Aftermarket
14%
Military
9%
Other
10%
Agriculture 1%
Bus 3%
Favorable End Market Trends
Improving tone in key U.S. and European construction
markets supported by strong order rates
Exceptional growth in emerging markets, particularly
China, Brazil, Middle East and India
Significant equipment requirements to improve / replace
aging infrastructure globally
Broader equipment usage / recovery across end markets
(e.g., industrial, oil and gas, power and mining) Source: Millmark Associates (January 2011)
Note: Revenue breakdown based on 2010 results.
Managing for the Future - Global and Expanding Footprint
Medium\ Heavy Truck Production 2010 | 2015 – All Regions
Opportunity Focus:
China
India
Brazil
Mexico
U.S.A
Japan
Europe
* Based on Market Research – Untapped Medium / Heavy Truck Markets represent CVG’s largest opportunity for content through 1.3M vehicles in China, 384K vehicles in India and 230K vehicles in Brazil by 2015
Managing for the Future - Global and Expanding Footprint
Medium\ Heavy Construction Production 2010 | 2014 – All Regions
Opportunity Focus:
China
India
Brazil
U.S.A
Japan
Europe
* Based on Market Research – Construction market growth from 2010 to 2014 shows China and India as CVG’s largest opportunity to increase content along with continued focus on North American increased content and Western Europe and Japan
Opportunity Focus:
China
India
Brazil
U.S.A
Japan
Europe
* Based on Market Research – Agriculture market growth from 2010 to 2014 represent CVG’s largest opportunity for content through 762K vehicles in China and 640K vehicles in India, along with continued focus on
increasing North American content and growth in Brazil, Europe and Japan
Managing for the Future - Global and Expanding Footprint
Agriculture Equipment Production 2010 | 2014 - All Regions
Managing for the Future - Becoming A Technology Leader
17
Global Engineering Support
Acoustics and Thermal Systems Development
Material and Process Development
Advanced Testing Services
Dedicated 37,500 sq.ft. facility
Design and Visualization Studio
Three Secure Customer Project Bays
Concept Development and Realization
Physical and Rapid Prototyping
Benchmarking and Reverse
Engineering
Innovative, Industry Leading Products
Arm Rest
Extended Position
Advanced Seating
Innovative Design and R&D Capabilities
Financial Review
20
Global industry recession continued to
challenged the business through 2009 with
signs of recovery in 2010 and in early 2011
Continued improvement in financial results on
a sequential quarter-over-quarter basis – last
eight quarters
Continue to drive culture of entrepreneurship,
innovation and employee engagement to
improve our bottom line
Focus on strategic efforts during downturn:
− Diversification
− Profit improvement goals across organization
Actions during 2009 and 2010 demonstrate
significant progress towards CVG’s long-term
financial goals
Financial Review - Strong Liquidity and Maturity Profile
21
Strong Balance Sheet & Liquidity
Q1 2010 Equity Offering
Q2 2010 Tax Refund
April 2011 $250 million bond offering:
− Reduced overall cost of debt to 7.875%
− Simplified capital structure
− Maintains modest leverage level, positioned to improve with cycle rebound
− 3/31/2011 Pro forma available liquidity of approximately $130 million
• Amended and upsized ABL to $40M with no availability block
− Significantly extends maturity profile
Positioned well to capitalize on growth plans and strategic initiatives
Acquisition of
Bostrom Seating
Saltillo, Mexico
expansion
Beijing, China
expansion
22
Pursue additional new business and “conquest” business wins
− Continue to monitor competitors operating in a distressed state for additional opportunities
− Invest in new processes or capabilities
Pursue strategic, add-on acquisitions to augment strategic initiatives
− Capitalize on track record integration and performance
Sale of Monona Medical Harness
Acquisition of CIEB
Groundbreaking of CVG Corporate Headquarters
Acquisition of National
Seating
Acquisition of Sprague
Device (Prutsman /
Motomirror)
Acquisition of KAB Seating
Acquisition of
R-Squared
Acquisition of Tempress,
Inc.
CVG Initial Public
Offering
Opening of CVG
Shanghai
Acquisition of Short Bark
Industries
Acquisition of Gage
Acquisition of PEKM
Acquisition of ASC, Inc.
Acquisition of Landmark Industries
Formation of Trim Systems
Acquisition of
Mayflower
Acquisition of Monona
Acquisition of Cabarrus
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Financial Review
Track Record of Disciplined, Successful Investment & Growth Strategy
Historical Non-GAAP Measures
Adjusted EBITDA and Adjusted Operating Income
24
Non-GAAP Measures
Reconciliation to Adjusted Operating Income
2005 2006 2007 2008 2009 2010 3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10 9/30/10 12/31/10 3/31/11
Operating Income 89.5$ 97.5$ 18.8$ (191.4)$ (89.7)$ 16.7$ (18.4)$ (22.2)$ (7.8)$ (41.2)$ 3.6$ 2.6$ 5.1$ 5.4$ 8.1$
Long-lived asset impairment - - - - 17.3 - - 3.4 - 13.8 - - - - -
Goodwill and intangible asset impairment - - - 207.5 30.1 - - 7.0 - 23.1 - - - - -
Restructuring Charges - - 1.4 - 3.7 1.7 1.7 0.2 - 1.7 - 1.4 0.2 0.2 0.3
Adjusted Operating Income 89.5$ 97.5$ 20.3$ 16.1$ (38.6)$ 18.4$ (16.7)$ (11.6)$ (7.8)$ (2.6)$ 3.6$ 4.0$ 5.3$ 5.5$ 8.4$
Source: Company filings
Fiscal Year Ending December 31 Fiscal Quarter Ending