Commercial Vehicle Group NASDAQ: CVGI reported first-quarter 2026 revenue growth and improved gross margins, led by strength in its Global Electrical Systems and Global Seating segments, while management emphasized continued operational efficiency initiatives and progress on deleveraging following a sale-leaseback transaction.
First-quarter results and profitability trends
Consolidated first-quarter 2026 revenue totaled $171.5 million, up from $169.8 million a year earlier, driven by higher sales in Global Electrical Systems and Global Seating, partially offset by lower sales in Trim Systems and Components, according to Interim CFO Angie O’Leary.
James Ray, president and CEO, said the company delivered “year-over-year revenue growth driven by strong results within our Global Electrical Systems and Global Seating segments,” which he described as evidence of efforts to reduce concentration in cyclical North American Class 8 end markets.
Ray also highlighted margin gains: adjusted gross margin was 12.2%, up 140 basis points year over year and 250 basis points sequentially from the fourth quarter of 2025. O’Leary attributed gross margin improvements to actions taken in 2024 and continued operational focus, including footprint consolidation, supply chain optimization amid tariff changes and input cost increases, productivity improvements, product mix initiatives, and pricing actions intended to recover cost increases.
Adjusted EBITDA was $4.8 million, down from $5.8 million in the prior-year quarter, with adjusted EBITDA margin of 2.8% versus 3.4% a year earlier. O’Leary said the margin decline was “driven primarily by higher SG&A expenses, partially offset by higher gross margins.”
Interest expense increased to $4.1 million from $2.5 million, which O’Leary said was due to higher interest rates following the company’s refinancing completed in the second quarter of 2025.
CVG posted GAAP net income of $0.9 million, or $0.03 per diluted share, compared with a net loss of $3.1 million, or a loss of $0.09 per diluted share, in the prior-year period. O’Leary noted GAAP results included several notable items on a pre-tax basis: a $14 million gain on sale of assets, a $5 million warrant liability revaluation expense, and a $2 million loss on partial extinguishment of debt, with the gain and loss tied to the Vonore, Tennessee sale-leaseback transaction.
On an adjusted basis, the company reported an adjusted net loss of $3.4 million, or a loss of $0.10 per diluted share, compared to an adjusted net loss of $2.6 million, or a loss of $0.08 per diluted share, a year earlier.
Cash flow and leverage: Vonore sale-leaseback supports debt reduction
Free cash flow from continuing operations was $11.7 million, up from $11.2 million in the prior-year quarter, which O’Leary said was aided by the sale-leaseback transaction.
Ray and O’Leary detailed the company’s deleveraging progress. Net leverage (net debt divided by trailing 12-month adjusted EBITDA from continuing operations) declined to 3.8x at the end of the quarter from 4.1x at the end of 2025. Ray said CVG used proceeds from the Vonore transaction to pay down debt by $12.8 million since the end of 2025 and reiterated a longer-term goal “to bring leverage back down to the 2x level over time.”
O’Leary said the sale-leaseback generated $16 million in gross proceeds, and net proceeds of $14.6 million were used to prepay a portion of the company’s term loan. Under the agreement, CVG will lease back the Vonore property for 20 years with initial annual base rent of about $1.4 million in the first year.
Segment performance: Electrical Systems growth offsets softness in Trim
- Global Seating: Revenue increased 1.5% to $74.5 million, driven by higher international volumes offset by decreased customer demand in North America. Adjusted operating income rose to $3.6 million, up $0.9 million year over year, as operational efficiencies expanded margins, O’Leary said.
- Global Electrical Systems: Revenue increased 13.9% to $57.4 million, primarily due to “the ramp of previously awarded new business wins in North America and internationally,” O’Leary said. Adjusted operating income improved to $0.5 million from $0.2 million, aided by higher volumes and operational efficiencies.
- Trim Systems and Components: Revenue fell 13.9% to $39.5 million due to lower sales volume and softening customer demand. O’Leary noted the segment serves only North America and is most exposed to Class 8 production declines; based on ACT data, Class 8 production was down 27% year over year in the first quarter. Adjusted operating profit declined to $0.1 million from $1.6 million.
Despite the year-over-year decline in Trim Systems and Components, O’Leary said the segment showed sequential improvement from the fourth quarter of 2025, with a 620-basis-point improvement in gross margin and a 430-basis-point improvement in adjusted operating margin, reflecting prior headcount reduction actions that management believes should improve operating leverage when Class 8 production recovers.
Zoox ramp, EV exposure, and capacity outlook
Ray said CVG expects Global Electrical Systems sales to increase more than 10% in 2026, driven by ramping new business wins and utilization of capacity additions in Aldama, Mexico, and Tangier, Morocco. Ray said utilization should increase further as production ramps under the company’s Zoox contract and other new wins, which is expected to provide a “growth tailwind starting in the second half of this year.”
In the Q&A, Ray said electrical content can rise substantially depending on vehicle architecture, pointing to autonomous vehicles as an example. “Due to the redundant nature, for a safety perspective, the electrical content in an autonomous vehicle is almost double because of the redundancy,” he said, adding that increasing content is also occurring in legacy end markets including construction, agriculture, and Class 8.
Asked about electric vehicle market exposure, Ray said about “10%-12% of our business goes into the EV market” to date, with the majority in EMEA. He added that Zoox is expected to become the company’s largest EV end market “as it ramps,” and said CVG also has EMEA business wins that have not yet launched.
On capacity, Ray indicated CVG has sufficient capacity in Global Electrical Systems in the near term. In response to questions about new facilities, he said the company does not expect to add additional floor space “for at least another year or so,” and later added it “should be good until the end of 2027 before we start adding another rooftop for electrical,” depending on ramp rates.
Ray also said CVG’s agreements with Zoox “take us through the end of the decade,” adding that statements of work extend over the next few years and that the company is collaborating with Zoox on the current model now in production and potential next-generation models under evaluation.
2026 outlook reaffirmed; SG&A expected to remain elevated
Ray cited ACT’s Class 8 heavy truck build forecast calling for a 9% year-over-year increase in 2026, followed by a 2% decline in 2027 and a 25% rebound in 2028. He noted first-quarter production of 54,000 units and expectations for a “meaningful uptick” in the second quarter and further growth in the second half of the year. For construction, Ray said the company expects the market to be up in the low single-digit percentage range in 2026, driven by lower interest rates and fiscal stimulus initiatives.
Management reaffirmed full-year 2026 guidance ranges:
- Net sales: $660 million to $700 million
- Adjusted EBITDA: $24 million to $30 million
Ray said the net sales range represents nearly 5% growth over 2025 at the midpoint, supported by growth in Global Electrical Systems, while the adjusted EBITDA range implies about 50% growth over 2025 at the midpoint, reflecting expected operating leverage as end markets recover and capacity utilization improves. He added that if ACT Class 8 forecasts materialize, CVG would expect results “toward the high end” of the ranges, with an update anticipated on the second-quarter call.
The company also reiterated expectations for positive free cash flow in 2026, which Ray said will be prioritized for debt reduction as CVG works toward its targeted 2x net leverage goal.
On SG&A, O’Leary said the year-over-year increase was “really driven by our incentive compensation coming back over the prior year,” including long-term performance awards tied to the stock price that are valued quarterly. “I would expect that we’ll continue to see SG&A at this level for the balance of the year,” she said. Ray added that while CVG has reduced SG&A over the past six quarters, the company may need to add support headcount as plants add shifts with volume recovery, though management intends to do so “very surgically.”
About Commercial Vehicle Group NASDAQ: CVGI
Commercial Vehicle Group, Inc NASDAQ: CVGI is a global designer, engineer and manufacturer of seating systems and interior components for commercial vehicles. The company serves original equipment manufacturers (OEMs) in the on‐highway, off‐highway and specialty vehicle markets, supplying complete seating assemblies, suspension mechanisms and interior trim products. CVGI's offerings are aimed at enhancing driver comfort, safety and overall vehicle usability across a diverse range of applications, from heavy‐duty trucks and transit buses to agricultural and construction equipment.
The company's product portfolio is organized around three core segments: Seating, Controls and Interiors.
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