Commercial Vehicle Group Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose 13.5% to $195.2 million, with growth across all three segments. Adjusted gross margin expanded to 12.9%, although higher SG&A and interest expense contributed to a wider adjusted net loss of $4.6 million.
• CVG reduced its net leverage ratio to 3.3 times and paid down $26.2 million of its term loan year to date, but free cash flow was negative $1.4 million as the company invested in working capital and new program launches.
• The company raised its 2026 outlook to $725 million–$755 million in revenue and $26 million–$31 million in adjusted EBITDA, citing new business ramps, improving end-market demand and expected growth in Class 8 truck production.

Commercial Vehicle Group NASDAQ: CVGI reported higher second-quarter revenue across each of its three operating segments, while adjusted gross margin expanded as new business programs ramped and end-market demand improved.

Revenue for the second quarter of 2026 rose to $195.2 million from $172.0 million a year earlier. Adjusted EBITDA increased to $5.4 million from $5.2 million, though adjusted EBITDA margin declined 20 basis points to 2.8% as higher SG&A expenses and foreign-exchange headwinds more than offset gross-margin improvement.

“CVG is hitting its stride as our new business wins are ramping coincidentally with a recovery in our key end markets,” President and CEO James Ray said on the company’s earnings call.

Gross Margin Improves as Volumes Rise

Adjusted gross margin reached 12.9% during the quarter, improving 90 basis points from the prior-year period and 70 basis points sequentially from the first quarter. Ray said the improvement reflected operational-efficiency efforts and operating leverage from higher volumes.

The company said it continues to pursue additional margin expansion through higher facility utilization, price and mix management, and recovery of costs associated with tariffs, freight, fuel surcharges and materials. Ray also cited product mix, particularly in the Trim Systems and Components business, and the effect of new business launches.

Despite the revenue growth and gross-margin gains, CVG recorded a net loss from continuing operations of $8.7 million, or $0.25 per diluted share, compared with a loss of $4.1 million, or $0.12 per share, in the prior-year quarter. The GAAP loss included a $3.4 million pre-tax warrant-liability revaluation expense.

Adjusted net loss was $4.6 million, or $0.13 per diluted share, versus an adjusted net loss of $2.9 million, or $0.09 per diluted share, a year earlier. Interim CFO Angie O’Leary said higher sales and improved gross margin were offset by higher SG&A and interest expense.

SG&A rose primarily because of higher incentive compensation, including long-term awards tied to stock-price performance and annual incentive plans tied to improved financial performance. O’Leary said the company continues to manage discretionary spending tightly.

All Three Segments Post Revenue Growth

• Global Seating: Revenue increased 7.5% to $80.0 million, driven primarily by higher customer demand in international markets. Adjusted operating income rose $0.9 million to $4.0 million, helped by higher volumes and benefits from footprint consolidation in the Asia-Pacific region.
• Global Electrical Systems: Revenue rose 15.8% to $62.0 million, reflecting the ramp of previously awarded business in North America and international markets. Adjusted operating income increased $0.5 million to $1.7 million, primarily due to volume and product mix.
• Trim Systems and Components: Revenue climbed 21.1% to $53.2 million as customer demand increased in North America. Adjusted operating profit rose to $2.2 million from $0.3 million, primarily due to improved volume leverage and product mix.

Ray highlighted the company’s Electrical Systems growth, including the ramp of the Zoox robotaxi program in North America and programs in the Europe, Middle East and Africa region. CVG began adding staff at its Aldama, Mexico, facility during the second quarter and expects to continue adding staffing in the third quarter to support Zoox production. The company also plans incremental capital investment for the ramp.

Ray said increased activity at Aldama and Tangier, Morocco, is raising capacity utilization and contributing to margin expansion in the Electrical Systems segment. Zoox announced in June that it had locked its vehicle design and was preparing for large-scale manufacturing at its Hayward, California, facility. Ray said Zoox’s planned production volumes remained consistent with prior expectations.

Debt Reduction and Cash Flow Investment

Free cash flow from continuing operations was an outflow of $1.4 million in the second quarter, compared with an inflow of $17.3 million a year earlier. O’Leary attributed the change primarily to higher working-capital investment needed to support revenue growth, including direct and indirect labor and capital spending for new launches.

The company reduced its net leverage ratio to 3.3 times at the end of the quarter from 4.1 times at the end of 2025. The improvement was supported by a sale-leaseback transaction and the company’s at-the-market equity program, which generated $11.6 million in net proceeds during the quarter.

CVG said the transactions enabled $14.6 million of total debt paydown since year-end 2025. O’Leary said the company had paid down $26.2 million of its term loan year to date, reducing future interest expense. Subsequent to quarter-end, CVG completed a sale-leaseback transaction involving its Dublin, Virginia, facility, generating $3.8 million in net proceeds that were applied to the term loan.

Management reiterated its longer-term objective of bringing net leverage toward approximately two times.

Company Raises 2026 Outlook

CVG increased its 2026 revenue guidance to a range of $725 million to $755 million, representing approximately 14% growth over 2025 at the midpoint. It raised adjusted EBITDA guidance to $26 million to $31 million, representing approximately 60% growth at the midpoint.

The company continues to expect positive free cash flow for 2026. Ray said the outlook is supported by growth across all three segments, new business ramps and improving demand in key markets.

According to ACT’s forecast cited by CVG, Class 8 truck production is expected to increase 9% in 2026, followed by another 9% increase in 2027 and 13% growth in 2028. Ray said CVG expects Class 8 production to increase further in the third and fourth quarters, while construction markets are expected to grow in the mid-single-digit percentage range during 2026.

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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