Commercial Vehicle Group, Inc. (the “Company” or “CVG”) (NASDAQ: CVGI), a leading supplier of fully-integrated system solutions for the global commercial vehicle market, announced additional actions to adjust and synchronize the Company’s priorities, overall cost structure including salaried and hourly staffing, and working capital investments in order to optimize outcomes during the global COVID-19 pandemic.
“During these challenging conditions, we have taken decisive actions to align both our priorities and cost structure to the current lower demand environment,” said Harold Bevis, President and Chief Executive Officer of CVG. “Since the initial impact on our business was felt as COVID-19 spread in China, we have been watching the situation closely. Our operations in China have returned to near pre-disruption levels; however, we have yet to reach the apex of the pandemic in North America and Europe. To date, we have moved quickly and broadly, and are working closely with our customers to prioritize key projects and short-term production decisions. We have retained staffing with lean structures for essential operations, and are managing our working capital investments aggressively. We believe these actions will better enable CVG to navigate the current economic turmoil, while also ensuring we remain focused on the needs of our many stakeholders – employees, customers, and investors.”
Aligning Cost Structure to Business Priorities and Preserving Liquidity
CVG has aggressively implemented a series of temporary cost reduction measures to further align its cost structure and business practices to the current business environment, preserve liquidity, and protect its workforce. These temporary actions include:
- 50% reduction of the compensation for Chief Executive Officer, Harold Bevis
- 40% reduction of the compensation for the remaining executive leadership team
- 20% reduction of base wages for all global salaried personnel through a combination of furloughs and reductions, in accordance with local laws, regulations, and labor agreements
- 20% reduction of annual cash retainer compensation for CVG’s Board of Directors
- Select reduction in workforce and furloughing of production employees
- Elimination of discretionary expenses and non-essential capital expenditures
- Elimination of 2020 401K matching program
- Curtailment of operations at select facilities to align with current demand levels and adhere to state and local government mandates
- Reductions in working capital including specific plans to reduce purchases of raw material
- Implementation of more aggressive industrial hygiene protocols to protect its workforce; and
- Continuation of key R&D projects with top customers.
Compensation reductions will remain in place until conditions improve, while the closure of facilities will vary and continue to align with regulatory mandates.
“Our primary focus today is on the well-being of our employees. We do not make furlough and wage reduction decisions lightly and have considered a broad range of options with the goal of avoiding permanent reductions where possible. We believe these prioritization and cost reduction actions will support the financial stability of CVG; will drive significant improvement; and allow us to perform in both the near-term and long-term. We will continue to monitor the situation and we will move swiftly, as appropriate, to add back personnel, increase production, increase R&D, or right-size costs further,” continued Mr. Bevis. “Based on our current financial position, we believe we have sufficient liquidity to fund our operations, maintain strategic R&D and capex programs in key areas, and make other prudent investments in the business. In addition, we are acutely focused on ensuring we are meeting our customers’ needs and are having ongoing dialogues to understand supply chain outlooks. We are continuing to deliver essential parts to customers. This is a fluid situation and we will react quickly to any changes.”
