Commercial Vehicle Group (NASDAQ:CVGI) reported fourth-quarter 2025 results that showed improved profitability and cash generation despite a weaker demand backdrop, particularly in the North American Class 8 truck market. Management emphasized progress on operational efficiency initiatives, margin improvement in key areas, and further debt reduction during the year.
Fourth-quarter results: lower revenue, improved margins
CVG posted consolidated fourth-quarter revenue of $154.8 million, down from $163.3 million in the prior-year period. CFO Andy Cheung attributed the decline primarily to softer customer demand across the company’s Global Seating and Trim Systems and Components segments, especially in North America.
Interest expense rose to $4.2 million from $2.2 million, which management linked to higher interest rates. The company reported a net loss of $6.4 million, or $0.19 per diluted share, compared with a net loss of $35.0 million, or $1.04 per diluted share, in the prior-year quarter. Cheung noted the prior-year loss included a $28.8 million non-cash tax valuation allowance. Adjusted net loss for the quarter was $6.0 million ($0.18 per diluted share), compared with $5.1 million ($0.15 per diluted share) in the year-ago quarter.
Full-year 2025: revenue declined, free cash flow rose
For full-year 2025, CVG reported consolidated revenue of $649.0 million, down from $723.4 million in 2024, again driven by softer demand in the Global Seating and Trim Systems and Components segments. Adjusted EBITDA for the year was $17.8 million, down from $23.2 million, with adjusted EBITDA margin of 2.7% versus 3.2% in 2024. Management said lower sales volume pressured profitability, partly offset by lower SG&A expenses.
Ray and Cheung both focused on cash flow as a key bright spot. The company generated $33.7 million of free cash flow for the full year, up $21.5 million from 2024 and ahead of guidance. Management attributed the increase primarily to improved working capital performance and lower capital expenditures. Cheung said working capital initiatives included delivering on an expected $10 million reduction in inventory and improvements in accounts receivable, while capital expenditures were down $7 million in 2025.
Free cash flow enabled CVG to reduce net debt by $35.8 million during the year, bringing its net leverage ratio to 4.1x trailing twelve-month adjusted EBITDA, down from 4.7x at the end of 2024. Ray said free cash flow generation and debt paydown will remain a focus in 2026.
Segment performance: electrical growth offset by North America weakness
CVG’s segment results reflected a mix of end-market conditions and internal efficiency efforts.
- Global Seating: Fourth-quarter revenue was $70.7 million, down 5.6% year over year on lower sales volume from reduced customer demand. Adjusted operating income improved to $1.8 million, up $1.2 million from the prior-year quarter, which management tied to operating efficiencies and lower SG&A. Cheung said aftermarket seats were a strength, with sales up 7% year over year, which the company attributed to the benefits of last year’s resegmentation. For full-year 2025, segment revenue fell 8.7%, while adjusted operating income rose to $10.5 million, up $4.9 million from 2024.
- Global Electrical Systems: Fourth-quarter revenue increased 12.7% to $49.7 million, benefiting from the ramp of previously awarded business wins in North America and internationally. Adjusted operating income was $0.9 million, an improvement of $3.9 million year over year, driven by higher sales volume and operational efficiencies. For the full year, revenue was “essentially flat,” while adjusted operating income increased to $3.8 million, up $4.6 million from 2024, which management again attributed to efficiency and restructuring benefits.
- Trim Systems and Components: Fourth-quarter revenue declined 22.5% to $34.4 million, which management said reflected lower demand tied to reduced North American Class 8 production volumes. The segment posted an adjusted operating loss of $1.4 million versus adjusted operating income of $0.9 million in the year-ago quarter. For full-year 2025, revenue declined 22.9% and adjusted operating income was $0.2 million, down $13.4 million from 2024, which the company linked to lower demand and a reduction of backlog in the prior period.
Zoox contract and broader diversification efforts
Ray provided additional details on a newly announced contract with Zoox, an autonomous ride-sharing company. CVG said it was selected as a key wire harness supplier and is collaborating on the design and supply of custom low-voltage harnesses for Zoox’s all-electric, purpose-built robotaxis. Ray said CVG has already been supplying harnesses to support test-market vehicle deployment and expects volumes to increase in the second half of 2026.
In the Q&A, Ray said Zoox has told CVG to plan to support 10,000 vehicles per year, with a ramp that management understands as roughly 5,000 annually in the first two years on an annualized basis and a target of 10,000 units in 2028 and 2029. He said CVG’s Aldama, Mexico facility is ramping and the company expects Zoox volume to fully utilize the facility over the life of the program. Ray added that capacity can be scaled as needed and noted CVG’s flexibility with two facilities in Mexico.
Management also discussed efforts to expand “share of wallet” with legacy customers and said it is pursuing opportunities beyond its traditional construction, agriculture, and Class 8 exposure, including areas such as power generation for data centers and the data center architecture itself. Ray clarified that the two previously highlighted new electrical programs and the Zoox program are vehicle-related.
2026 outlook: growth expected, with operating leverage
Management’s 2026 outlook assumes improving conditions in end markets and continued ramp of new business. Ray cited ACT’s forecast for Class 8 heavy truck builds, which implies a 4% year-over-year increase in 2026, followed by a 5% decline in 2027 and a 30% rebound in 2028. He also noted ACT data showing the second half of 2025 declined roughly 28% versus the first half, while the 2026 forecast shows a steady ramp, with the second half up about 18% over the first half.
For construction markets, Ray said the company expects low single-digit percentage growth based on customer commentary and broader market inputs, citing lower interest rates and fiscal stimulus initiatives as drivers.
CVG issued the following 2026 guidance:
- Net sales: $660 million to $700 million, representing nearly 5% growth at the midpoint versus 2025
- Adjusted EBITDA: $24 million to $30 million, representing approximately 50% growth at the midpoint versus 2025
- Free cash flow: expected to be positive, supported by working capital improvements
Ray said the company expects growth to be supported by strength in Global Electrical Systems, with a target for that segment to grow by more than 10% in 2026, aided in part by the expected Zoox ramp. He also said CVG intends to use free cash flow to continue paying down debt, with a longer-term goal of improving net leverage toward a targeted ratio of 2x.
On interest expense, Cheung told analysts that while interest rates remain higher following the company’s refinancing about a year ago, continued debt paydown should drive interest expense “gradually” lower through 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.
