CVGI Q2 Revenue Beats by 6%

Key Points

• Revenue (GAAP) exceeded estimates at $172.0 million, topping consensus by 6.5% but declining 11.2% year-over-year (GAAP).

• Adjusted EPS (Non-GAAP) missed forecasts, coming in at $(0.09) compared to the expected $(0.07).

• Free cash flow from continuing operations rose sharply to $17.3 million, up from $0.8 million a year earlier, driven by better working capital management.

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Commercial Vehicle Group (NASDAQ:CVGI), a global supplier of systems and components for the commercial vehicle, construction, agriculture, and military markets, reported its second quarter 2025 results on August 4, 2025. The main news in the release was that revenue (GAAP) was $172.0 million—above analyst expectations of $161.5 million—but profits fell short, with adjusted earnings per share (Non-GAAP) at $(0.09), missing the $(0.07) consensus. Results reflected ongoing weakness in end-market demand, particularly in heavy trucks and agriculture, but the company showed improved free cash flow and reduced debt. Overall, the period was marked by progress in cash generation and operational efficiency, but with persistent demand softness affecting profitability and a cautious outlook for the rest of fiscal 2025.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Commercial Vehicle Group: Core Business and Recent Focus

Commercial Vehicle Group designs and manufactures a broad range of products used in trucks, buses, construction and agricultural vehicles, and military equipment. Its products include seating systems, electrical wire harnesses, plastic components, and interior trim systems. The company serves original equipment manufacturers (OEMs) and aftermarket customers worldwide, leveraging its manufacturing sites in North America, Europe, and Asia-Pacific.

Recently, Commercial Vehicle Group has streamlined its operations to focus on three main segments: Global Seating, Global Electrical Systems, and Trim Systems and Components. It exited non-core businesses, such as cab structures and Industrial Automation, to concentrate resources on its primary business lines. The company emphasizes efficiency, product customization to specific customer needs, and cost control. Success depends on maintaining strong relationships with OEMs, innovating in its product lines, and operating a flexible global supply chain. The aftermarket and accessories segment also supports more stable revenue, offsetting the cyclical nature of direct OEM sales.

Quarter in Review: Performance and Operational Shifts

Revenue (GAAP) surpassed expectations, coming in 6.5% above analyst consensus. Even so, revenue (GAAP) dropped 11.2% year-over-year because of weaker demand in core end-markets, mainly heavy truck and agricultural equipment. This decline reflected broader industry trends, with North America Class 8 truck production, as forecast by ACT Research, expected to fall from 332,372 builds in 2024 to 252,000 in 2025, while construction and agriculture markets are projected to decline approximately 5–15% in 2025. These end-markets make up the majority of the company's sales.

Despite falling sales, the company improved gross margin by 0.7 percentage points to 11.3% (GAAP). This expansion was driven by ongoing operational efficiency efforts, such as optimizing manufacturing footprints and reducing expedited freight costs. Cost reductions in areas like selling, general, and administrative expenses also supported improvements in segment profitability earlier in the year, especially within Global Seating, which grew its operating income even as revenue declined. Management credits these gains to consolidation and right-sizing initiatives started in the prior year, with CEO James Ray stating, "we made progress in implementing operational improvements and right sizing our manufacturing footprint, which drove sequential gross margin improvement for the second consecutive quarter."

The company’s three core segments showed different financial trends. In Global Seating, revenue declined 9.6% year-over-year while operating income increased to $2.7 million, helped by lower SG&A expenses. Global Electrical Systems recorded flat sales (down less than $0.1 million), but swung to a positive operating income, reflecting restructuring efforts and new customer wins outside construction and agriculture. Trim Systems and Components experienced sharper revenue declines, with segment profit impacted by contracting demand.

Free cash flow stood out as a highlight, jumping to $17.3 million from $0.8 million the prior year, driven by better working capital management and reduced capital expenditures. Net debt was reduced by $31.8 million compared to December 2024. The company also completed a refinancing of its credit facilities, shoring up liquidity, which stood at $135.9 million as of June 30, 2025. These actions improved financial flexibility and highlighted progress on strategic priorities, even as profitability faces continued pressure from lower volumes and cost headwinds.

Looking Forward: Guidance and Investor Watch Points

Management updated its financial outlook, lowering revenue guidance to $650–$670 million and adjusted EBITDA to $21–$25 million. These revised figures reflect an industry-wide decline in truck production and sustained weakness in key construction and agriculture markets. However, the company raised its free cash flow target to over $30 million, citing ongoing success in working capital initiatives. No quantitative guidance was provided for segment-level margin or earnings beyond these points.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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