Commercial Vehicle Group, Inc. · NASDAQ:CVGI
Commercial Vehicle — Investor Day (September 2014)
75 slides from Commercial Vehicle's investor day presentation, Sep 17, 2014
Slide 1: Analyst Day
Analyst Day CVGI LISTED ON THE Westin Hotel | New York, NY | September 17, 2014
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT 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 press release may con
Slide 3: Agenda
AGENDA Wednesday, September 17, 2014 8:00 to 9:00 AM BREAKFAST 9:00 to 9:20 AM STRATEGY 9:20 to 9:40 AM FINANCIAL 9:40 to 9:50 AM Q&A 9:50 to 10:05 AM GLOBAL BUS & TRUCK 10:05 to 10:20 AM GLOBAL CON | AG | MIL 10:20 to 10:30 AM BREAK 10:30 to 10:40 AM ASIA-PACIFIC 10:40 to 10:50 AM EUROPE, MIDDLE EA
Slide 4: Presenters
PRESENTERS ral A i STRATEGY TIM Taeany Rio FINANCIAL _ PAT MILLER Bu 3 GLOBAL TRUCK & BUS cmeuey © 4 GLOBAL CON | AG | MIL camo @ 5 ASIA-PACIFIC == ONT g 6 EUROPE, MIDDLE EAST & AFRICA snvencese By 7 PRODUCT INNOVATION ULE LINDQWISTER fy 8 MARGIN ENHANCEMENT sy AURA MACIAS fr 9 TALENT | CULTURE “pg
Slide 5: Strategy
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Slide 6: Our Background
STRATEGY Our Background • CVG was founded in 2000 as a privately-held company providing trim, wiper, mirror, and seating for medium and heavy duty trucks • IPO in 2004 • Over the past 14 years, CVG pursued growth largely through acquisition of companies providing commercial vehicle components, on an
Slide 7: Our Executive Leadership Team
STRATEGY Our Executive Leadership Team pg | 6
Slide 8: Our Global Footprint
STRATEGY Our Global Footprint pg | 7
Slide 9: 2013 Sales by product, end-market, customer, region
STRATEGY 2013 Sales Product End-Market 10% 16% 7% 1% Truck Seats 55% Bus 42% Trim Construction 21% Wire Harnesses Agriculture 24% Wipers / Mirrors Other Structures 20% 4% Customers Region Volvo 12% 16% PACCAR Daimler 35% 16% NALA 15% Caterpillar Navistar EMEA 72% John Deere APAC 5% 14% Other 7% 8% p
Slide 10: Our Opportunity is Significant
STRATEGY Our Opportunity is Significant CVG has about 5% share of the addressable market – significant opportunity to drive profitable organic growth across our end markets and penetrate our addressable market with current products $10.6B $4.1B $5.4B $6.7B $5.0B $3.2B $2.8B $2.9B • Available Market
Slide 11: Our Focus is to Drive Profitable Organic Growth
STRATEGY Our Focus is to Drive Profitable Organic Growth • We intend to achieve sales and earnings targets commensurate with companies delivering top-quartile total shareholder returns • We will invest in products and capabilities that will strengthen our right-to-win with our core products in our e
Slide 12: CVG 2020 Diversification Sales Breakdown
STRATEGY CVG 2020 | Region | Product |End-Market Diversification Sales Breakdown Region Product End-Market 7% 17% 4% 22% 16% 10% 1% 12% 4% 7% 20% 16% 16% 21% 24% Agriculture 20% Structures Wipers Bus APAC Wire Harnesses Other 72% 47% 55% EMEA Trim Construction 67% 42% NALA Seats Truck 2013 2020 2013
Slide 13: Prioritized Opportunities, Focused on Core Products
STRATEGY Prioritized Opportunities | Focused on Core Products | Driving Disciplined Execution CVG Business Portfolio Action Plan for Core Products Regions, End-Markets and Products • Focus on core, value accretive businesses END- COMPLEMENTARY • Prioritize investment in core products REGIONS MARKETS
Slide 14: Vision and Strategic Imperatives
STRATEGY VISION The preferred provider of innovative, highly differentiated component systems to the commercial vehicle and heavy equipment markets Commercial Vehicle Group, Inc. 020 Product design and introduction excellence * Customer focus *° Differentiated products * Innovation + Low cost produc
Slide 15: What You're Going To See
STRATEGY What You’re Going To See • A compilation of plans that we believe will deliver top- quartile EBITDA performance • A pure organic growth strategy − Revenue and EBITDA growth driven by differentiated, customer focused product designs − Sales capabilities that extend our reach and deepen our p
Slide 16: Financial
) wean A FINANCIAL pg | 15
Slide 17: Sales and Operating Income Margin
FINANCIAL Sales and Operating Income Margin Sales OI (millions) Margin 5% 4.4% 4.2% 4% 3.3% 3% 2.3% 2.8% 2.1% 2% 1.1% 1% (0.2)% 0% (1)% Sales (1.8)% (2)% OIM Q2 Q3 (3)% Adjusted OIM Q1 Q4 Q1 Q2 2013 2014 See appendix for reconciliation of GAAP to non-GAAP financial measures – adjusted OIM pg | 16
Slide 18: CVG 2020 – The Process
FINANCIAL CVG 2020 – The Process An operational and financial roadmap – by regions | end-markets | products - to guide resource allocation and other decision making to achieve our 2020 goals • A six month, bottom up process • Interviews of Directors, senior management and certain mid- level manageme
Slide 19: CVG 2020 – The Process
FINANCIAL CVG 2020 – The Process An operational and financial roadmap – by regions | end-markets | products - to guide resource allocation and other decision making to achieve our 2020 goals • PLM Imperatives – e.g., improve the core, grow share, new / adjacent markets, new geographies • Collection
Slide 20: Top Quartile Total Shareholder Return
FINANCIAL Top Quartile Total Shareholder Return We intend to achieve sales and earnings targets commensurate with companies delivering top-quartile total shareholder returns Stock Appreciation & Dividends EBITDA Growth Multiple Correlation to ~13% EBITDA CAGR1 1Sample of 360 Fortune 500 companies fo
Slide 21: CVG 2020 Financial Objectives
FINANCIAL CVG 2020 Financial Objectives Compound Annual Growth Rate1 Sales 6% – 8% EBITDA2 13% – 17% • We serve cyclical industries • Many of our customers (the OEMs) have 2-3 year program lead times for our products • 2015 & 2016 will be building | investment years for us 1 2014 to 2020 2 EBITDA as
Slide 22: OPACC is our Measure
FINANCIAL OPACC is our Measure Operating Profit After Capital Charge • Positive OPACC = Value Creation Operating Profit (EBIT) • Negative OPACC = Value Erosion Less: Capital Charge • Higher profit without corresponding asset growth • Reduce assets without Operating Asset Base x Cost of Capital corre
Slide 23: Managing Through the Cycle
FINANCIAL Managing Through the Cycle • Playbook for down and up cycles Objective • Enhanced focus on shareholder value • Consistent execution lends to credibility What Does • Act strategically and opportunistically That Mean pg | 22
Slide 24: Capital Structure / Leverage
FINANCIAL Capital Structure / Leverage ($ in millions) Senior Secured Notes LTM Principal Balance $ 250 2013 Q2 2014 Interest 7.875% Due Apr 2019 Cash $ 73 $ 70 Debt 250 250 Asset Based Credit Facility Commitment $ 40 Net Debt $ 177 $ 180 Availability $ 37 Letters of Credit $ 3 EBITDA $ 27 $ 40 Acco
Slide 25: Global Truck & Bus
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Slide 26: Addressable Market
GLOBAL TRUCK & BUS Addressable Market Region Product $ 5.6B $ 1.2B $0.8B $2.4B $0.3B $ 3.3B • GTB addressable 37% NALA 28% 37% 29% 35% market is NALA 27% approximately 19% $6.8B EMEA 30% 19% 20% 33% EMEA 21% • Structures is generally OEM 54% 45% captive 42% 44% 38% APAC APAC 42% • Focus is on seatin
Slide 27: Product Strategy
GLOBAL TRUCK & BUS Product Strategy Growth and development resources will focus on core products in targeted regions • Leverage strength in NA to grow w/ multi national OEMs • Best beach-head product to grow in emerging regions • Replicate knowledge and infrastructure in underserved segments to Seat
Slide 28: Global Market Strategy
GLOBAL TRUCK & BUS Global Market Strategy • Improve our market • Euro seat line • High growth focus leading seat and trim expansion • Design to market positions • Initial focus – mid expectations • Grow Mexico base size Truck OEMs • Leverage global • Enhance margins – • Develop bus and OEM relations
Slide 29: Operational Transformation
GLOBAL TRUCK & BUS Operational Transformation • Investments | Margin enhancement – Next Gen seat and trim programs quoted / won - SOP 2017 / 2018 – Proprietary headliner processing for current and next gen platforms - target launch 2015 – India infrastructure – Upgrade facilities, assembly cells, an
Slide 30: In Summary
GLOBAL TRUCK & BUS In Summary • We are only 5% of the global addressable market • Focused growth efforts on Seating, Trim, and Aftermarket • Leveraging strength in North America with Global OEMs in emerging markets • Enhancing margins with new products and processes pg | 29
Slide 31: Global Con | Ag | Mil
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Slide 32: Addressable Market
GLOBAL CON | AG | MIL Addressable Market Region Product $2.6B $3.5B $2.1B $1.0B $1.4B $0.1B $1.5B NALA NALA • Addressable market is approximately $6.1B • Agricultural market of $3.5B EMEA EMEA • Two global product lines • Three regional APAC APAC product lines CON AG Wire Seats Trim Wipers Structure
Slide 33: Product Strategy
GLOBAL CON | AG | MIL Product Strategy • Seize opportunity in earth-moving equipment – leverage medium / heavy excavation construction equipment position Seats • Launch new product for compact construction equipment • Launch new agriculture seat line, featuring semi-active Invictus for premium and 4
Slide 34: Global Market Strategy
GLOBAL CON | AG | MIL Global Market Strategy • Strengthen our wire • Enhance construction • Grow our construction harness construction equipment seat equipment seat market equipment market share offering and grow share market share • Grow our construction • Develop seats for equipment seat market •
Slide 35: Operational Transformation
GLOBAL CON | AG | MIL Operational Transformation • Investments / Margin enhancement • Standardized, smart production lines for built-in-quality • Capabilities / Systems – System upgrades – CVG Operating System, ERP improvements – Momentum in building out PLM organization • Footprint actions underway
Slide 36: In Summary
GLOBAL CON | AG | MIL In Summary • An approximately $6.1B addressable market in which we can credibly show right-to-win • A $3.6B agricultural playing field – With “familiar” right-to-win prospects for CVG – As we fill out our seats product line, we address this broader market • Logical opportunitie
Slide 37: Asia-Pacific
corres 5 ASIA-PACIFIC pg | 36
Slide 38: Addressable Market
ASIA-PACIFIC Addressable Market APAC $ 1.2B $ 1.3B $ 2.4B $ 0.7B Wipers 2% 1% 3% 3% • Approximately a $5.6B Trim 22% 20% addressable market opportunity 43% 36% 77% • As with any good strategy, it is 40% Structures important we identify both desired and undesirable 15% 47% 17% segments to participate
Slide 39: Product Strategy
ASIA-PACIFIC Product Strategy • Develop truck seat market share • Penetrate the driver and passenger seat bus market – leverage India know-how • Leverage established OEM relationships in heavy excavator Seats seating across OEM product lines • Design seats for the Chinese agriculture market • Develo
Slide 40: CVG Sales Playbook
CVG Sales Playbook Coverage Participation Closure Retention Recommendation Build brand and Address customer Increase the closure Develop Customer Leverage existing product awareness key challenges rate Loyalty customer base Brand Promotion Product Launch Customer Care Program Referral Program (onlin
Slide 41: In Summary
ASIA-PACIFIC In Summary • We have a vast addressable market opportunity to take advantage of • Designing product that is in tune to the varying requirements on durability, valued features and price • Execution of a process driven CVG Sales Playbook will expand our ability to both grow and capture ad
Slide 42: Europe, Middle East & Africa
lanaging Director @ 6 EUROPE, MIDDLE EAST & AFRICA pg | 41
Slide 43: Addressable Market
EUROPE, MIDDLE EAST & AFRICA Addressable Market EMEA Region $0.7B $1.2B $1.3B $0.2B Wipers 3% 1% 5% 10% • Total addressable “white space” of 15% $3.4B, over $1.3B of that in seating and Trim 31% 35% wire harnesses 16% • Grow seat business from strong position 16% 71% in construction to truck / bus a
Slide 44: Product Strategy
EUROPE, MIDDLE EAST & AFRICA Product Strategy • Truck / bus seat market size is attractive – must meet European standards and take on entrenched competitors • Expand range of truck / bus seat products to OEMs • Large Agriculture market – now developing a full range of Seats agricultural seats to mee
Slide 45: Manufacturing Footprint
Manufacturing Footprint • Global demand patterns and We will assess our footprint our product and customer mix in the context of our are shifting and will continue to do so strategy, including: • Ensuring we have the right • How and where we produce, global manufacturing and by product line and regi
Slide 46: In Summary
EUROPE, MIDDLE EAST & AFRICA In Summary • EMEA holds a large amount of “white space” for CVG, creating an opportunity for a renewed phase of growth in the region • We will focus our resources on the most attractive growth opportunities: – Seats for trucks / buses, agriculture and construction equipm
Slide 47: Product Innovation
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Slide 48: Strategy
PRODUCT INNOVATION Strategy Expand the addressable market Available Market into available market Addressable Market Penetrate the addressable market Existing Customers Penetrate existing customers pg | 47
Slide 49: Product Innovation at Work: The Sentinel Seat
PRODUCT INNOVATION Product Innovation at Work | The Sentinel Seat Penetrate Existing Customers Target: Light Construction & Agriculture Markets Value proposition • Customer branding for the cab • Upgraded seat / less weight and cost • New features – Operator position sensor – Split trim levels to co
Slide 50: Sentinel Seat: Expand the Addressable Market
PRODUCT INNOVATION Product Innovation at Work | The Sentinel Seat Expand the Addressable Market Traditional Suspension Seats – Low Coverage Currently in Market Light Construction & Agriculture Available Markets Sentinel Seat Tier 1 | 2 Available 2014 Sentinel Seat Tier 3 | 4 Available Late 2015 pg |
Slide 51: Margin Enhancement
‘SLE LNoauiste So MARGIN ENHANCEMENT
Slide 52: Global Engineering
MARGIN ENHANCEMENT Global Engineering Enhanced Processes and Discipline Through Centrally Led Engineering pg | 51
Slide 53: Global Purchasing & Logistics
MARGIN ENHANCEMENT Global Purchasing & Logistics Transition from Tactical / Transactional to Strategic pg | 52
Slide 54: Operational Excellence
MARGIN ENHANCEMENT Operational Excellence Accelerate Operational Excellence Program • Commercial Vehicle Group Operating System (CVGOS) – Team based activities focused on the elimination of waste – Increase plant-wide productivity in operations – Reduce work-in-process (WIP) inventory • Process – Ex
Slide 55: Margin Enhancement Programs
MARGIN ENHANCEMENT In Summary Margin Enhancement Programs • Design to value • Modularity & parts rationalization • Supplier consolidation & cost targets • Global logistics strategy & third party logistics consolidation • CVGOS expansion & Lean 6 Sigma pg | 54
Slide 56: Talent | Culture
| O TALENT | CULTURE LAURA MACIAS ¢iit Chief Human Resource Officer pg | 55
Slide 57: CVG 2020 Core Values
TALENT | CULTURE CVG 2020 Core Values Integrity | Continuous Improvement | Innovation | Teamwork | Sense of Urgency • Leadership behavior defines the characteristics and actions that support our Core Values – Help guide our decisions and interactions – Make the core values more meaningful and action
Slide 58: Effective Talent Management is Critical to CVG 2020
TALENT | CULTURE Effective Talent Management is Critical to the Success of CVG 2020 • Early focus on roles critical to the success of CVG 2020 – Product line management, engineering, manufacturing management • Build a sustainable talent pipeline • Provide training & development for current & future
Slide 59: Wrap-Up
WRAP-UP pg | 58
Slide 60: Revenue Roadmap by Region, Product, End-Market
2014 Sales (F) Truck Bus Construction Market Seats Agriculture Truck Bus Trim Construction Agriculture Truck APAC Bus Construction Agriculture Wire Harnesses EMEA Truck Bus NALA Construction Wipers Agriculture Truck Bus Construction Structures Agriculture Revenue Roadmap by Region | Product | End- O
Slide 61: What You Can Expect
WRAP-UP What You Can Expect • Top-quartile total shareholder return • Trusted strategic supply partner with major OEMs in all key industries and best in class competitor • World class product design and introduction capabilities • Manufacturing and assembly facilities that set the industry standard
Slide 62: Questions and Discussion
QUESTIONS AND DISCUSSION pg | 61
Slide 63: Appendix
APPENDIX pg | 62
Slide 64: Executive Biography
EXECUTIVE BIOGRAPHY Richard P. “Rich” Lavin was appointed President and Chief Executive Officer of Commercial Vehicle Group (CVG) effective May 28, 2013. He also serves as a member of CVG’s board of directors. Rich comes to CVG with 28 years of global experience with Caterpillar Inc., where he most
Slide 65: Executive Biography
EXECUTIVE BIOGRAPHY C. Timothy “Tim” Trenary joined CVG in October 2013 as Executive Vice President and Chief Financial Officer with responsibility for Finance, Accounting, Planning & Analysis, Internal Audit and Shared Services. Tim brings 35 years of finance, accounting and operations experience t
Slide 66: Executive Biography
EXECUTIVE BIOGRAPHY Patrick Miller joined CVG in October, 2005 and currently serves as the President of Global Truck & Bus. Prior to that, he served as the Vice President and General Manager of Structures, Vice President of Operations, Senior Vice President of Sales, and Vice President and General M
Slide 67: Executive Biography
EXECUTIVE BIOGRAPHY Kevin R.L. Frailey joined CVG in February, 2007 and currently serves as the President of Global Construction, Agriculture & Military. Prior to that, he served as President and General Manager of Global Electrical Systems. His earlier leadership assignments with CVG included respo
Slide 68: Executive Biography
EXECUTIVE BIOGRAPHY Ulf Lindqwister joined CVG in August, 2014 in the capacity of Chief Administrative Officer. His portfolio of responsibilities includes Global IT, Global Engineering, Global Supply Chain Management, Operational Excellence, Mergers & Acquisitions, Corporate Business Development, St
Slide 69: Executive Biography
EXECUTIVE BIOGRAPHY Laura L. Macias joined CVG in August, 2008 as the Vice President of Corporate Human Resources. Her current responsibilities as Chief Human Resources Officer include global human resources, corporate communications and public affairs. Before joining CVG, Laura was with Dominion Ho
Slide 70: Executive Biography
EXECUTIVE BIOGRAPHY Kevin joined CVG in April, 2014 in the capacity of Managing Director, European, Middle East and African markets . He is based in Zurich, with responsibility for our manufacturing facilities in the UK, Czech Republic, Belgium, and the Ukraine and our sales organization across the
Slide 71: Executive Biography
EXECUTIVE BIOGRAPHY Geoff Perich joined CVG in August, 2013 in the capacity of Managing Director for the Asia-Pacific markets. He is based in Shanghai with responsibility for our manufacturing facilities and sales organization in China, India, and Australia. Before joining CVG, Geoff held a number o
Slide 72: Executive Biography
EXECUTIVE BIOGRAPHY Terry joined CVG in October, 2004 and currently serves in the capacity of Vice President of Tax and Treasury, which includes responsibility for Investor Relations. Prior to that, Mr. Hammett served as the Corporate Director of Finance. Terry has 15 years of prior finance leadersh
Slide 73: Executive Biography
EXECUTIVE BIOGRAPHY John Wehrenberg joined CVG in January, 2014 and currently serves as the Vice President of Seat Product Line Management for the Construction, Agriculture, and Military business unit. Before joining CVG, John was a Vice President at Nelson Global Products with responsibility for op
Slide 74: Reconciliation of GAAP to Non-GAAP Financial Measures
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Adjusted Operating Income Reconciliation Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 $ (000's) Net Sales 177,822 198,909 187,942 183,045 198,071 215,996 Cost of Sales 159,737 176,035 169,852 162,364 173,767 187,811 Gross Profit 18,085 22,874
Slide 75: Reconciliation of GAAP to Non-GAAP Financial Measures
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES EBITDA Reconciliation pg | 74
Commercial Vehicle Group — Investor Day (September 2014) on 6ix