Commercial Vehicle Group NASDAQ: CVGI reported higher third-quarter revenue, wider margins and a return to positive adjusted earnings per share, while raising its full-year revenue outlook as customer demand improved and previously awarded programs ramped across its three business segments.
Revenue for the third quarter of 2026 rose 36.5% to $208.1 million from $152.5 million a year earlier, and increased 6.6% sequentially. President and CEO James Ray said growth was broad-based, reflecting stronger customer demand, improving end-market conditions and the launch of new business programs.
“Revenue growth continued and remained broad-based across all three segments,” Ray said, adding that volume gains, operating improvements and lower interest expense supported the company’s first positive GAAP and adjusted earnings per share since the first quarter of 2024.
Profitability Improves as Sales Rise
Adjusted gross margin reached 13.8%, up 170 basis points from the prior-year quarter and 90 basis points from the second quarter. Ray said the improvement stemmed from higher production volumes, plant productivity gains, favorable product mix, pricing and disciplined cost management. The result marked CVG’s highest adjusted gross margin since the third quarter of 2023.
Operating income was $7.7 million, including a $3.1 million gain on asset sales, compared with an operating loss of $1.1 million a year earlier. Adjusted operating income rose to $5.6 million from $1.6 million. Adjusted EBITDA increased 85% to $8.5 million, while adjusted EBITDA margin expanded to 4.1% from 3%.
Net income from continuing operations totaled $5.6 million, or $0.14 per diluted share, compared with a loss of $6.8 million, or $0.20 per share, in the prior-year period. Adjusted net income was $1.2 million, or $0.03 per diluted share, versus an adjusted loss of $4.6 million, or $0.14 per share, a year earlier.
Chief Financial Officer Angie O’Leary said higher sales, better gross margins and lower interest expense drove the improvement, partly offset by increased selling, general and administrative costs. SG&A expense rose $6.4 million year over year, including approximately $4 million tied to share-based and incentive compensation and about $700,000 in CEO succession-related costs.
O’Leary said incentive-related expenses have constrained EBITDA growth in 2026, but the company expects two factors—its comparison with a year when no annual incentive was paid and an unusually heavy restricted-stock vesting schedule—to ease in 2027.
All Three Segments Post Growth
- Global Seating: Revenue increased 23.3% to $84.7 million, supported by higher demand in North America and Asia-Pacific. Adjusted operating income rose $1.6 million to $4.6 million.
- Global Electrical Systems: Revenue climbed 30.2% to $64.4 million as new programs ramped and construction-market demand increased. Adjusted operating income increased to $3.7 million from $1.4 million, with adjusted operating margin more than doubling to 5.7%.
- Trim Systems and Components: Revenue jumped 71.9% to $58.9 million, driven by customer demand, product mix and new program activity. The segment posted adjusted operating income of $2.7 million, compared with a $0.3 million loss a year earlier.
Ray said CVG continues to support the production ramp of autonomous vehicle company Zoox, though the ramp has progressed “a little slower than planned.” He said Zoox is increasing weekly vehicle production, has indicated potential for additional volume in 2027 and beyond, and CVG is adding capacity and staffing ahead of anticipated demand. CVG expects its Alabama facility focused on Zoox work to be fully dedicated to that customer beginning in the first quarter.
Debt Reduction and Cash Conversion Remain Priorities
CVG reduced total debt by $10.3 million and net debt by $16.8 million from year-end 2025. The company repaid more than $30 million of term-loan borrowings during the year, although changes in asset-based lending and other borrowings used to fund growth partly offset that reduction.
Net leverage declined to 2.7 times at the end of the third quarter, from 3.3 times at the end of the second quarter and 4.1 times at the end of 2025. Ray said the company’s longer-term objective remains reducing leverage to roughly 2 times.
Free cash flow from continuing operations was $600,000, including $4.1 million in sale-leaseback proceeds, compared with an outflow of $3.4 million a year earlier. Operating cash flow was $1.6 million, while capital expenditures rose to $5.1 million as CVG invested in new business launches.
O’Leary said receivables and inventory increased alongside higher volumes and new program activity. The company expects to reduce inventory as volumes stabilize late in the year and does not anticipate additional sale-leaseback transactions in the fourth quarter.
Company Raises Revenue Outlook
CVG raised its 2026 revenue outlook to $755 million to $775 million, which would represent 18% growth at the midpoint compared with 2025. The company narrowed its adjusted EBITDA outlook to $26 million to $29 million from its prior range of $26 million to $31 million, citing additional CEO succession costs and higher incentive compensation.
The company continues to expect positive free cash flow for 2026. Ray said higher revenue should produce additional gross profit, but that benefit is expected to be substantially offset by compensation expense and costs of supporting new programs and volume ramps.
CVG also announced a leadership transition. Ray, who said he will retire after nearly three years as CEO, introduced David Ruppel as the incoming president and CEO. Ruppel will join the company the following week and said he sees “tremendous potential” in CVG and plans to focus on operational and commercial execution.
About Commercial Vehicle Group (NASDAQ:CVGI)
Commercial Vehicle Group, Inc NASDAQ: CVGI is a supplier of systems, components and assemblies for commercial vehicles and other specialty equipment. The company serves original equipment manufacturers in markets such as heavy-duty trucks, construction equipment, agricultural machinery, military vehicles and other industrial applications.
Its products include vehicle seating systems, cab structures, sleeper cabs, trim and interior components, instrument panels, control systems, wire harnesses and other electrical assemblies.
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