Commercial Vehicle Group Q4 2025 Earnings Report

Commercial Vehicle Group EPS Results

• Actual EPS: -$0.18
• Consensus EPS: -$0.15
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

Commercial Vehicle Group Revenue Results

• Actual Revenue: $154.76 million
• Expected Revenue: $147.05 million
• Beat/Miss: Beat by +$7.71 million
• YoY Revenue Growth: N/A

Commercial Vehicle Group Announcement Details

• Quarter: Q4 2025
• Date: 3/10/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, March 11, 2026
• Conference Call Time: 8:30AM ET

Commercial Vehicle Group (NASDAQ:CVGI) designs, manufactures and supplies components and assemblies for commercial vehicles and other specialized equipment. Its products are used in heavy- and medium-duty trucks, buses, construction and agricultural equipment, specialty vehicles, and other industrial applications.

The company’s offerings include vehicle seating, cab structures, doors, sleeper systems, instrument panels, trim, wiring harnesses, electronic controls, mirrors and other interior and exterior components. Commercial Vehicle Group also provides systems and products for warehouse automation and material-handling applications, serving original equipment manufacturers and other industrial customers.

Founded in 2000 and headquartered in New Albany, Ohio, Commercial Vehicle Group serves customers through manufacturing and engineering operations in North America, Europe and Asia-Pacific. Its products are sold primarily through relationships with commercial vehicle and equipment manufacturers, as well as through aftermarket and industrial channels.

Commercial Vehicle Group Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: CVG reported meaningful margin improvement in Q4, with a 10.3% adjusted gross margin (up 190 bps YoY) and improved adjusted EBITDA margins driven by operational efficiency and SG&A reductions.
• Positive Sentiment: The Global Electrical Systems segment accelerated, with Q4 revenue up ~13% YoY, two new program ramps and a newly announced Zoox wire-harness contract that management expects to help grow the segment >10% in 2026 and fully utilize the Aldama, Mexico facility over the program life.
• Negative Sentiment: Consolidated revenues declined (Q4 $154.8M vs $163.3M YoY; full year $649M vs $723M), driven by weak demand in Global Seating and a 22.5% decline in Trim Systems and Components tied to lower North American Class 8 truck volumes.
• Positive Sentiment: Cash and balance-sheet trends strengthened—2025 free cash flow of ~$33.7M (ahead of guidance) funded >$35M of net debt reduction, lowering net leverage to 4.1x, and management is targeting continued FCF generation and a move toward a 2x leverage target.
• Neutral Sentiment: 2026 guidance calls for modest top-line growth ($660M–$700M) and higher Adjusted EBITDA ($24M–$30M), but management warns ranges are wide and outcomes hinge on volatile Class 8 build forecasts and the timing of program ramps.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to CVG's fourth quarter 2025 earnings conference call. During today's presentation, all parties will be in a listen only mode. Following the presentation, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Michelle Harvis, Vice President of Investor Relations. Please go ahead.

[Michelle Harvis, VP of Investor Relations at Commercial Vehicle Group]

Thank you, operator, and welcome everyone to our fourth quarter 2025 conference call. Joining me on the call today are James R. Ray, President and CEO, and Andy Cheung, Chief Financial Officer. This morning, we will provide a brief company update as well as commentary regarding our fourth quarter and full year 2025 results, after which we will open the line for questions. As a reminder, this conference call is being webcast and a fourth quarter earnings call presentation, which we will refer to during this call, is available on our website. Both may contain forward-looking statements, including, but not limited to, expectations for future periods regarding market trends, cost savings initiatives, and new product initiatives, among others. Actual results may differ from anticipated results because of certain risks and uncertainties.

[Michelle Harvis, VP of Investor Relations at Commercial Vehicle Group]

These risks and uncertainties may include, but are not limited to, economic conditions in the markets in which CVG operates, fluctuations in the production volumes of vehicles for which CVG is a supplier, financial covenant compliance and liquidity, risks associated with conducting business in foreign countries and currencies, and other risks as detailed in our SEC filing. I will now turn the call over to James to provide some highlights from our fourth quarter performance.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Thank you, Michelle. Good morning, and thanks to all those who joined the call. Please turn your attention to the supplemental earnings presentation starting on slide three. As we have highlighted on this slide, CVG delivered strong year-over-year improvement in profitability despite a challenging demand environment, particularly in North American Class 8 truck market. During the quarter, we delivered an adjusted gross margin of 10.3%, up 190 basis points compared to last year. The continued year-over-year improvement in profitability was again driven by our focus on operational efficiency improvement. Another highlight of the quarter is the continued strong performance within our Global Electrical Systems segment. During the third quarter, we saw segment performance inflect, with revenues up 6% compared to the prior year. The fourth quarter saw further acceleration, with revenues up 13% year over year.

[James R. Ray, President and CEO at Commercial Vehicle Group]

We continue to benefit from the ramp up of two key new programs. We highlighted those last quarter. We also announced a new contract with Zoox autonomous robotaxi in our earnings release last night, which I will give more color on later. Additionally, we delivered sequential and year-over-year gross margin expansion in this segment. Also highlighted on this slide is our strong free cash generation. For the full year, we generated $33.7 million in free cash, up $21.5 million from last year, and ahead of our guidance, driven primarily by improved working capital performance and lower capital expenditures. That free cash flow enabled us to reduce net debt by more than $35 million for the full year, reducing our net leverage to 4.1 times. Andy will expand on our free cash flow and reduced leverage in a minute.

[James R. Ray, President and CEO at Commercial Vehicle Group]

I just want to thank the entire CVG team for efforts in driving this strong cash flow performance in 2025. Free cash flow generation and debt paydown remain a focus for CVG in 2026. With that, I would like to turn the call over to Andy for a more detailed review of our financial results.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Thank you, James, and good morning, everyone. If you are following along in the presentation, please turn to slide four. Consolidated fourth quarter 2025 revenue was $154.8 million as compared to $163.3 million in the prior year period. The decrease in revenues was due primarily to a softening in customer demand across our Global Seating and Trim Systems and Components segments, particularly in North America. Adjusted EBITDA was $2.3 million for the fourth quarter compared to $0.9 million in the prior year. Adjusted EBITDA margins were 1.5%, up 90 basis points as compared to Adjusted EBITDA margins of 0.6% in the fourth quarter of 2024, driven primarily by operational efficiency improvements and reductions in SG&A expenses.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Interest expense was $4.2 million as compared to $2.2 million in the fourth quarter of 2024, driven by higher interest rates. Net Loss for the quarter was $6.4 million or a loss of $0.19 per diluted share as compared to a Net Loss of $35 million or a loss of $1.04 per diluted share in the prior year. Net Loss in the prior year included a non-cash tax valuation allowance of $28.8 million. Adjusted Net Loss for the quarter was $6 million or a loss of $0.18 per diluted share as compared to Adjusted Net Loss of $5.1 million or a loss of $0.15 per diluted share in the prior year.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Net Loss and Adjusted Net Loss were impacted by softening customer demand in North America, as well as high interest offset somewhat by operational efficiency improvements. Free cash flow from continuing operations for the quarter was $8.7 million compared to $0.8 million in the prior year due to better working capital management and reduced capital expenditures. Now moving to our full year consolidated results. Consolidated revenue for the full year was $649 million as compared to $723.4 million in the prior year. The decrease in revenues was primarily driven by a softening in customer demand in Global Seating and Trim Systems and Components segments. Adjusted EBITDA was $17.8 million for the full year compared to $23.2 million in the prior year.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Adjusted EBITDA margins were 2.7%, down 50 basis points as compared to Adjusted EBITDA margins of 3.2% in 2024, driven primarily by lower sales volume offset somewhat by lower SG&A expenses. At the end of the year, our net leverage ratio calculated as our net debt divided by our trailing twelve-month Adjusted EBITDA from continuing operations was 4.1 times, down from 4.7 times at the end of 2024. Turning to slide five, I want to provide additional color as it relates to free cash flow in 2025. As James mentioned, we exceeded our guidance on this metric, which we had raised from our initial expectations provided in the first quarter of 2025. Operational efficiencies and lower SG&A expenses in 2025 helped limit margin erosion despite absorbing a $74 million revenue decline.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Working capital was a major focus for us, and we delivered on our expectation of a $10 million reduction in inventory. We also saw improvements across other areas of working capital, including accounts receivable. Another area of focus was controlling capital expenditures, which were down $7 million in 2025. These factors drove $33.4 million in free cash flow, which allowed us to reduce our net debt by $35.8 million, bringing our net leverage ratio down to 4.1 times compared to 4.7 times at the end of 2024. Moving to the segment results starting on slide six.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Our Global Seating segment achieved revenues of $70.7 million, a decrease of 5.6% as compared to year-ago quarter, with the decrease primarily driven by lower sales volume as a result of reduced customer demand. Adjusted operating income was $1.8 million, an increase of $1.2 million compared to the fourth quarter of 2024. Despite the revenue decline in this segment, we saw our efforts of driving operating efficiencies and lower SG&A expenses improve profitability. We continued to see strength in our aftermarket seats, with sales up 7% year-over-year as we benefited from the resegmentation completed last year. For the full year, revenues were down 8.7%, again due to softening customer demand and wind down of certain programs.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Adjusted operating income for the full year was $10.5 million, an increase of $4.9 million compared to 2024 due primarily to lower SG&A expenses. We are already seeing operational efficiencies flow through in this segment, and we expect further improvements in operational performance in 2026 as we anticipate recovery in end market demand. Turning to slide seven, our Global Electrical Systems segment's fourth quarter revenues were $49.7 million, an increase of 12.7% as compared to the year-ago quarter, benefiting from the ramp of previously awarded business wins in North America and internationally. Adjusted operating income for the fourth quarter was $0.9 million, an increase of $3.9 million compared to the prior year. Primarily attributable to increased sales volumes and operational efficiencies.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

We are continuing to see the benefits of the restructuring actions we have taken in this segment, and we remained well-positioned to take advantage of higher volumes in 2026, particularly as we ramp the newly announced Zoox business in the second half of the year. For the full year, revenues were essentially flat. Adjusted operating income for the full year was $3.8 million, an increase of $4.6 million compared to 2024, primarily due to operational efficiencies achieved. We are starting to see the benefits of the margin improvement initiatives we have implemented in this segment, right as growth is accelerating on the back of new business wins ramping. Moving to slide 8.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Our Trim Systems and Components revenues in the fourth quarter decreased 22.5% to $34.4 million compared to the year-ago quarter, due to lower sales volume as a result of decreased customer demand. As a reminder, this segment solely serves the North American market and is most directly impacted by the reduction in Class 8 production volumes. Adjusted Operating Loss for the fourth quarter was $1.4 million compared to profits of $0.9 million in the prior year. The decrease is primarily attributable to lower demand levels. In addition to a successful new wiper program launch, we expect our focus on cost discipline to return this segment to profitability as Class 8 production improves throughout 2026. For the full year, revenues were down 22.9% due to the decreased customer demand in North America.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Adjusted operating income for the full year was $0.2 million, a decrease of $13.4 million compared to 2024, primarily driven by decreased customer demand and the reduction of backlog in the prior period. That concludes my financial overview commentary. I will now turn the call over to James to cover our end market outlook, key strategic actions, and our 2026 guidance.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Thank you, Andy. I will start with our key end market outlooks on slide nine. According to ACT's Class 8 heavy truck build forecast, 2026 estimates imply a 4% increase in year-over-year volumes. ACT is then forecasting a decline of 5% in 2027 before rebounding 30% in 2028. We also think it is helpful to provide a more granular drill down into the quarterly ACT data and outlook today. You can see that the second half of 2025 saw a rapid decline of approximately 28% compared to the first half of the year. On the other hand, the current forecast for 2026 shows a steady ramp throughout the year, with the second half up about 18% over the first half. Moving to our construction market outlook.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Based on recent commentary and outlooks from our customers and key market players, we expect construction market to be up in the low single-digit % range, primarily driven by lower interest rates and fiscal stimulus initiatives. Turning to slide 10. I would like to give more details on the recently announced relationship with Zoox. CVG has been selected as a key wire harness supplier for Zoox, an autonomous ride-sharing company. This win highlights the global nature of our supply chain and ability to support client needs with high-quality products and available capacity. We are collaborating with Zoox on the design and supply of custom low-voltage harnesses for their all-electric purpose-built robotaxis, supporting our continued diversification into electric and autonomous vehicle markets. We intend to continue supporting Zoox through their period of scale, further increasing the utilization of our new facility in Aldama, Mexico.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Over the life of the program, we expect to reach full utilization of this facility. CVG is focusing on opportunities to expand this relationship. CVG has been supplying harnesses to support their test market vehicle deployment, and we expect volumes to increase in the second half of 2026. The anticipated ramp is expected to contribute to our target of growing our Global Electrical Systems segment in more than 10% in 2026 and is accretive to segment operating margins. Turning to slide 11, I will share several thoughts on our outlook for 2026.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Our guidance ranges are based on current macroeconomic trends, forecasted Class 8 truck build rates, demand levels in construction markets, and the ramp of new business. We expect a year of top-line growth with our net sales guidance range of $660 million-$700 million, which represents growth of nearly 5% over 2025 results at the midpoint, supported by strong growth in our Global Electrical Systems segment. Similarly, we are now seeing an Adjusted EBITDA guidance range of $24 million-$30 million, which represents growth of approximately 50% over 2025 results at the midpoint of the range, reflecting the operational leverage we expect to see as end markets recover and driving increased capacity utilization. Finally, we expect to generate positive free cash flow in 2026, supported by further improvements in working capital.

[James R. Ray, President and CEO at Commercial Vehicle Group]

We expect to use our free cash flow to continue paying down debt, improving net leverage toward our targeted leverage ratio of 2 times. With that, I will now turn the call back to the operator and open up the line for questions. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press the star followed by the one on a touch-tone phone. If you wish to cancel your request, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Joe Gomes from Noble Capital Markets. Your line is now open.

[Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets]

Good morning, James and Andy. Thanks for taking my call. Questions.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Morning, Joe.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Good morning, Joe.

[Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets]

I wanted to start out, you know, we talked about those two new key programs that started ramping in the third quarter. Looks like the more positive fourth quarter. Just wondering if you could give us a little more color on how those programs are unfolding right now.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Yeah, thank you for the question, Joe. They're both going to plan. The one program that was in EMEA is ramping up. We have the capacity. The customer volumes are coming in as planned, in some cases a little higher. For the Zoox program that we did announce and disclose that customer here in North America, that's going to plan too. The new facility in Aldama, Mexico, is ramping up, and we see that facility being fully utilized by the Zoox volume. Their forecast is staying pretty true to where it was at business award. We're currently in the last pre-production series supporting them. They're on track to start their volume production toward the latter part of the second quarter.

[James R. Ray, President and CEO at Commercial Vehicle Group]

We're positioned to support them, and we don't foresee any hiccups at this point.

[Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets]

Okay, great. Thanks for that. I know you guys don't, you know, typically talk about the level of new business wins, but, you know, James, maybe give us a little color, you know, for 2025 outside of these two key programs, you know, what you saw kind of on the new business wins. Are there any, you know, significant programs in 2026 that will be ending?

[James R. Ray, President and CEO at Commercial Vehicle Group]

For 2025, we target approximately $100 million a year to book new business, and that's at the peak annual sales in the programs that are awarded by customers. But as we've discussed previously, the volatility of those quantified numbers that the customers give us in forecasts is pretty erratic. It can be delayed program launches. There could be lower volumes. It's all over the map. That's why we stopped communicating that and really focused on the annual guidance where we have a closer end view of when programs are starting. The nice thing about the Zoox opportunity, we actually were able to start producing harnesses for them within 12 months of being awarded the business. That's a more near term.

[James R. Ray, President and CEO at Commercial Vehicle Group]

In some of our Seating programs and Trim programs, it's a 2-3-year delay from the time you're awarded the business to the time you actually start production. The other programs in EMEA, we are utilizing our Morocco facility for that, and that's for supporting the Electrical Systems business. The growth coming through in Electrical Systems is really positive right now, and as we said, we expect that business to grow more than 10% in 2026. As far as other business that we're pursuing, we book quite a bit of business each year, but again, it does depend on the timing and the ramp schedule of the customers and other macroeconomic and geopolitical factors as we know can happen, like what's going on in the EMEA region now.

[James R. Ray, President and CEO at Commercial Vehicle Group]

There are a number of programs across all businesses, so we have not stopped pursuing new business wins in seating or Trim Systems and Components. We actually have booked a few wins in each one of those businesses during this first quarter. We won't really disclose the magnitude of it, but we continue to focus on building a funnel of approximately $100 million a year in new business.

[Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets]

Okay. Thank you for that. The aftermarket business seemed to be, you know, pretty strong here in the quarter. You talked about it, highlighted. Maybe give us a little bit more color on the aftermarket, and where you see that going in 2026.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Yeah. So if you recall, last year we resegmented our product lines in the company and aftermarket business was integrated into our seating business for the seat products and the wipers were integrated into our Trim Systems and Components business. One of the benefits is the alignment with our production facilities. We have a separate seating aftermarket plan and a separate OEM seating plan. Now we look at those sites together, and when we talk about improving operational efficiencies, they're under a single operating unit, and we have much better coordination from a lead time perspective, scheduling perspective. What really drives aftermarket, especially in seats, is your turnaround time or time to delivery from the time we get an order.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That has reduced substantially from where it was in prior years, just based on how we operate the plants together and more seamlessly and much more customer-focused. The other thing that we started doing with the seat business in a more intentional way is driving promotions. Several of our aftermarket seats competitors are more promotional-based. Now that we have the reduced lead time, order to delivery, we're fulfilling a lot more promotional actions. We continue to see that business grow. Both of the plants, the OEM and the aftermarket plant, are running about half capacity, so we have additional capacity to really grow the aftermarket business. We have further engagement with our over 60 field sales reps that represent our product in the aftermarket field.

[James R. Ray, President and CEO at Commercial Vehicle Group]

A lot more intentional initiatives to really grow that top line, and that margin is accretive to the overall seating business. We're really excited about it. We're gonna continue to focus on that. We've even had opportunities from a cash generation standpoint by using some of our excess inventory to have certain promotions in our aftermarket seat business. It's really been a multifaceted efficiency improvement across all elements of our financials. We're really excited about it. We're looking at new products to introduce into the aftermarket channel in addition to seats, seat covers and other new products. We're really excited about it. That's gonna be a focus area for growth for the Global Seating business. In addition to pursuing OEM platforms, the other benefit from aftermarket is near term.

[James R. Ray, President and CEO at Commercial Vehicle Group]

We can get an order and turn around a seat in days or a few weeks compared to booking a new seat OEM program, which takes years to bring to market. We're really excited about it.

[Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets]

Great. Thanks for that, and I'll get back in queue. Thank you.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Yep. You're welcome.

[Operator]

Thank you. Your next question is from John Franzreb from Sidoti & Company. Your line is now open.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Good morning, everyone, and thanks for taking the questions. I have to admit, I'm not particularly familiar with the Zoox product line, but my understanding is that the target level there is 10,000 units of production per year. Is that what you're hearing, and when's the timeline for them to start to hit that kind of a number?

[James R. Ray, President and CEO at Commercial Vehicle Group]

Yeah. I can't speak for Zoox, but what they have told us is to plan to support 10,000 vehicles per year. They are in a ramp mode. For the first two years, we understand their volume to be about 5,000 on an annualized basis. For us this year, it's about half that, and then for 2027, the full 5,000, and then when you get to 2028 and 2029, they're targeting 10,000 units. Now, their schedule may accelerate depending on the municipality and geofence within those municipality deployments. The larger their geofence, the more vehicles they can deploy. I had an opportunity to ride in their vehicle at the Consumer Electronics Show. It's a very unique product. It's bidirectional, so those go forward and backward, no steering wheel, no brakes. Or no, it does have brakes.

[James R. Ray, President and CEO at Commercial Vehicle Group]

I'm sorry. No steering wheel in the vehicle, and the seats are facing. It's a very highly content vehicle because of the cameras and the high-speed communication. The content in that vehicle is more than twice what would be in a vehicle that size that wasn't autonomous. We're benefiting from that too, and that's what's allowing us to better utilize and fill our utilization in our Aldama plant in Mexico.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Ray, I was honestly gonna ask you if you rode it, you know, and a follow-up offline, but I'm glad you answered that.

[James R. Ray, President and CEO at Commercial Vehicle Group]

I've got pictures to prove it, John.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

I know. I believe you. I really do. I guess, I'm actually curious. I think you just answered the question, though. There's not gonna be a capacity problem or capacity addition when you get to that 2028 timeframe to fill 10,000 units? You're fine?

[James R. Ray, President and CEO at Commercial Vehicle Group]

We will scale capacity as needed, but up to that point, we have the capacity in place.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Okay.

[James R. Ray, President and CEO at Commercial Vehicle Group]

As you're aware, we've had headwinds with some of our structural costs and electrical as we built capacity ahead of businesses launching. The past couple of years, we've been struggling with getting our structural costs aligned with demand. Now we're seeing that come into play, and we're getting much better absorption, and we expect really good operating leverages as that capacity utilization increases over the next couple of years.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

John, as a

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Go ahead.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

As a reminder, you remember that we have two facilities in Mexico, right? We have flexibility to move programs from one to the other.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Mm-hmm.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

As we continue to see the volume and utilization in Aldama, we'll make those decisions, and obviously, when necessary, we'll invest in additional equipment and other capacity. We have no problem-

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Absorbing if the customer really want to that level. It will be just good news for us.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it. Actually, Andy, this next question might be more for you. You talked about improvement in free cash flow. In 2025, it was largely coming from working capital and the receivables line, best I can tell. I'm curious what remaining levers, 'cause it looks like, you know, you're gonna pull down CapEx. What are the other levers you still have on operating cash flow that can drive improvement in free cash flow this year?

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Yeah. John, we still see opportunities for us to continue to improve our efficiencies in managing our working capital. We did a lot of work in receivables. We have seen a significant improvement in days and past due, so we solve a lot of process issues. As James mentioned, we are seeing the signs of improving inventory efficiencies as well. We're working with customers to make sure that our demand variation is keeping to minimum, allowing our plants to be more efficient, and we work on minimum order quantities, lead times with our supply base. We actually continue to see we are not done in working capital improvements.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

As you know, we're looking for growth now in the next couple of years, so it will require more working capital to fund that growth, but at the same time, our efficiency will allow us to offset that. We're pretty confident that we'll still have opportunities ahead.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it. Maybe one last question, and I'll get back into queue. The last three months we've seen some stunning order numbers. I'm curious of A, about your thoughts about that and maybe B, you know, how long do those orders translate into revenue for you on a normalized basis?

[James R. Ray, President and CEO at Commercial Vehicle Group]

Okay. I'll take that one, John. If you guys track ACT, you'll see it's changed substantially since the early part of Q4 last year from the low 200s. When we guided this, we were basing the truck build on 260,000 units, which came out in February. Just this week, ACT has come out with a revised forecast for 2026, targeting 275,000 vehicles. The cautionary comment I'll make here is that the volatility in the ACT forecast based on a number of factors, I mean, they have a very, you know, robust model on forecasting. But there's so much uncertainty that drives where the OEMs target production levels.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That's really driven by fleet sales and freight rates and economic indicators that, you know, relate to GDP growth, et cetera. We view in a very judicious way how we add capacity and inventory or how we reduce capacity and inventory and head count to stay flexible. Some of that up and down does create inefficiency. We see variation in customer schedules. Just in the first quarter, several of our customers had down weeks of production. If you look at the ACT numbers, the first quarter of 2026 actually came in lower than their prior forecast. It's a constant adjustment, but we're optimistic that the trend of increased quarterly production is in play.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Our customers, we see about a 12-13 week EDI schedule from our customers, and then they give us out quarter estimates on where they're gonna be, and they're somewhat in line with ACT. Now, we don't supply every OEM that ACT uses in their forecast, so there's a

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Right

[James R. Ray, President and CEO at Commercial Vehicle Group]

mixed element between our customer orders, their production, and what the overall ACT production numbers are, which we use as a proxy along with what our customers are telling us.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it. Thank you both. I'll get back into queue.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Thanks, John.

[Operator]

Thank you once again. That is star one should you wish to ask a question. Your next question is from Gary Prestopino from Barrington Research. Your line is now open.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Hi. Good morning, Andy and James.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Good morning, Gary.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

A couple of quick questions here. Looking at your reduction in debt levels and all that, is the interest expense line in Q4 a good proxy for what it should be on a quarterly basis going forward?

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Yeah. Thank you, Gary. As I mentioned in my prepared remark, we continue to focus on using our free cash flow to bring down our debt, right? As you see that north of $30 million of debt pay down already happened this year, and we are right now at the lowest net debt level for many, many quarters, at around $73 million at the end of 2025. You also remember about a year ago, we did refinance, and the interest rate is higher than what we had in the past. Right now you see a combination effect of higher interest rates, but we continue to pay down debt.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

From what I'm seeing in 2026, you'll continue to see a similar interest rate level, but you'll continue to see a gradual pay down of our debt. We guided that this year we'll have also positive free cash flow, and we'll use that to pay down more debt as well. It's a little too early for us to talk about the magnitude of the amount of free cash flow and the debt level for 2026 for now. We'll have more line of sight and maybe guide a little bit more in the first quarter call. Overall, you should see that the interest expense will gradually coming down throughout 2026.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay, that's helpful. James, you mentioned in the Global Electrical, you had two contracts or two programs that were signed up, that's starting to drive some growth. I got confused. Were there two programs in addition to Zoox, or was there two programs without Zoox?

[James R. Ray, President and CEO at Commercial Vehicle Group]

There were two programs in addition to Zoox.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay. Those two programs came on last year, and they're starting to positively impact the numbers.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That's correct.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

In the back half of last year.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That's correct.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay.

[James R. Ray, President and CEO at Commercial Vehicle Group]

The other thing I'd say, Gary, is that with several of our legacy customers, we have a portion of share of wallet. To the extent we can provide products to expand our share within those customers, we consider that, you know, opportunities for near-term revenue growth, too. Now that we have additional capacity online, a lot of the discussions are centered around share of wallet expansion with some of our legacy customers, in addition to pursuing new customers and new end markets. Our legacy construction and agriculture customers and some of those are in power gen end markets now and also the data centers.

[James R. Ray, President and CEO at Commercial Vehicle Group]

A lot of discussions now are centered around how we can support those customers' growth in power gen for data centers and also the data center architecture itself. We are looking outside to diversify in other end markets in addition to the construction, agriculture and Class 8. We're starting to see some good traction and tailwind in winning business and content in those adjacent end markets.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

The programs the two plus Zoox that you announced in Global Electrical, those are related to vehicles. It's not related to data centers.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That's correct.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay.

[James R. Ray, President and CEO at Commercial Vehicle Group]

That's correct. That's correct.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay. Just looking at your guidance, pretty big range of Adjusted EBITDA there. You know what? When you're looking at the low end, what kind of factors are going into that? You know, particularly your Class 8 truck build rate, because the last couple of years, you know, these numbers have started off pretty high, and then gradually, as the year goes on, ACT has reduced them. You know, knowing that, you know, we've been in a freight recession for years now, and you gotta have some replacement units coming on, 'cause these are capital equipment, and it wears out. Could you kinda help us with what your assumptions are for the high end, low end?

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

Yeah. Let me give you some color there, Gary. As you see the last year, as you mentioned, our last few quarters, as we keep lowering the guidance, and you see that that's highly correlated to the Class 8 end market production. As we go through into our planning for 2026, and the last couple of months of ACT forecast has been positively revised every time. I would say that even including yesterday's ACT report is another 5% of positive revision upwards. We are actually seeing this time around that the range, yes, is wide, but as you can see, the volatility is high. The last couple trend of the ACT report gives us more positive confidence that the range is probably giving us the momentum into the top side.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

2024 has been the start of the decline in end market, but now we see that the bottom, as forecasted by ACT, is in the horizon. I will also say that as you look to our cost structure, you can expect that have significant drop-through of the incremental top line that will come through, as we have already largely completed our restructuring programs in the last year. The fixed cost has been significantly reduced. Now when we see the additional volume come through, I'm hopeful that the drop-through will be very attractive.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay. That's helpful. Well, let me ask it this way then. As ACT, as we started the year, what's been the, for the first two months of this year-over-year, what's been the year-over-year increase in orders?

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

The ACT Q1 11 rate is still around the 50-ish thousand units, so it's a run rate of about 220 or so annualized. If you look at the latest ACT, it's up to 275,000.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay.

[Andy Cheung, EVP and CFO at Commercial Vehicle Group]

that's implying about 65,000-70,000 units on a quarter-to-quarter basis. You will see that, the continual improvement in the quarterly volume, going into 2026.

[Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research]

Okay. Thank you.

[Operator]

Thank you. There are no further questions at this time. Please proceed with the closing remarks.

[James R. Ray, President and CEO at Commercial Vehicle Group]

Thank you all for joining today's call. I'm encouraged by the progress we have made in driving operational efficiencies and lowering our cost structure. We are starting to see signs of end market improvement, which we believe will yield improved financial performance in 2026 and beyond. We look forward to updating CVG's progress next quarter.

[Operator]

Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may now disconnect your line.

Participants

Executives

• Andy Cheung, EVP and CFO
• James R. Ray, President and CEO
• Michelle Harvis, VP of Investor Relations

Analysts

• Gary Prestopino, Managing Director and Senior Equity Research Analyst at Barrington Research
• Joe Gomes, Managing Director and Senior Generalist Equity Analyst at Noble Capital Markets
• John Franzreb, Senior Equity Analyst at Sidoti & Company