Commercial Vehicle Group, Inc.

Commercial Vehicle Group, Inc. (CVG) operates as a global provider of systems, assemblies and components to the global commercial vehicle market and the electric vehicle markets, with manufacturing operations in the United States, Mexico, China, United Kingdom, Czech Republic, Ukraine, Morocco, Thailand, India and Australia. The company's products are primarily sold in North America, Europe, and the Asia-Pacific region, and it primarily manufactures customized products to meet customer requirements. CVG believes its products are used by a majority of the North American Commercial Truck manufacturers, many construction and agriculture vehicle original equipment manufacturers, and parts and service dealers and distributors. The commercial vehicle supply industry is generally separated into sales to OEMs and aftermarket sales, and the company is seeing a trend toward alternate fuel and electric vehicles, middle-mile and last-mile vehicle models. The North American heavy-duty (Class 8) truck manufacturing market is concentrated in three primary regions: North America, Europe and Asia-Pacific, and new Class 8 truck demand is cyclical and particularly sensitive to economic factors that generate freight tonnage. The medium-duty (Class 5-7) truck market is influenced by overall economic conditions but has historically been less cyclical than the Class 8 market. Demand for aftermarket products is driven by the quality of OEM parts, the number of vehicles in operation, the average age of the vehicle fleet, and other factors, and aftermarket sales tend to be at a higher margin. Demand in the global construction and agriculture equipment market generally follows economic conditions including gross domestic product, infrastructure investment, housing starts, and industrial production, and CVG primarily supplies OEMs in the medium and heavy construction and agriculture equipment market. The military equipment market is particularly sensitive to political and governmental budgetary considerations.

Within each of its principal product categories, CVG competes with a variety of independent suppliers and with vertically integrated in-house operations, primarily on the basis of price, breadth of product offerings, product quality, technical expertise, development capability, product delivery and product service. Some competitors are larger and have greater financial and other resources than CVG does, and in some cases, CVG competes with divisions of its OEM customers. The company's customer base is concentrated, and as of December 31, 2025, receivables from its top five customers represented approximately 46% ¹ of total receivables. CVG believes it has a widely recognized brand portfolio and participates in most retail sales channels including original equipment dealer networks and independent distributors. The company's major brands include CVG, Sprague Devices, Moto Mirror, RoadWatch, KAB Seating, National Seating, Bostrom Seating, Stratos, and AdvancTEK.

CVG generates revenue by designing, engineering, and manufacturing customized products for its customers, with revenue recognized when the performance obligation has been satisfied and control of products has been transferred to a customer, which typically occurs upon shipment. Revenue is measured based on the amount of consideration CVG expects to receive in exchange for the transfer of goods or services. The company's products include electrical wire harnesses, seating systems, plastic components, mirrors, wipers and other accessories, sold into multiple geographic regions and end markets. CVG has long-term contracts with some customers that govern overall terms and conditions accompanied by purchase orders, while many customers conduct business via purchase orders without a long-term contract. The company generally does not have customer contracts with minimum order quantity requirements, and its payment terms vary by customer. CVG's Commercial Arrangements with OEM customers may provide for an annual prospective productivity price reduction, generally calculated as a percentage of the previous year's purchases, which historically have been offset by internal cost reductions and supply base assistance.

During the quarter ended March 31, 2025, CVG completed a strategic reorganization of its operations into three segments: Global Seating, Global Electrical Systems, and Trim Systems and Components. The Global Seating segment designs, manufactures and sells commercial vehicle seats for heavy-duty trucks, medium-duty trucks, last mile delivery trucks and vans, construction and agriculture equipment in North America, Europe and Asia-Pacific, including a portion of the company's activities in the electric vehicle market. This segment also sells seats and components into commercial vehicle aftermarket channels including Original Equipment Service centers and retail distributors across North America, Europe, and Asia-Pacific, as well as office seats primarily sold into commercial and home office furniture distribution channels in Europe and Asia-Pacific. For the year ended December 31, 2025, the Global Seating segment reported revenues of $287,249,000 ² and gross profit of $35,281,000 ³. The Global Electrical Systems segment designs, manufactures and sells cable and harness assemblies for both high and low voltage applications, control boxes, dashboard assemblies and design and engineering for these applications, serving end markets including construction, agricultural, industrial, automotive (both internal combustion and electric vehicles), truck, mining, rail, marine, power generation and the military/defense industries in North America, Europe and Asia-Pacific. For the year ended December 31, 2025, the Global Electrical Systems segment reported revenues of $203,186,000 ⁴ and gross profit of $21,492,000 ⁵. The Trim Systems and Components segment designs, manufactures and sells plastic components primarily for the North America commercial vehicle market, MD/HD truck market and power sports markets, as well as commercial vehicle accessories including wipers, mirrors, and sensors sold both as Original Equipment and as repair products. For the year ended December 31, 2025, the Trim Systems and Components segment reported revenues of $158,567,000 ⁶ and gross profit of $11,612,000 ⁷.

CVG's products are sold under multiple brands, with the Global Seating segment's seats sold under KAB Seating, National Seating, Bostrom Seating, and Stratos brands. The Global Electrical Systems segment's wire harness assemblies are customized to fit specific end-user requirements and can be complex, with production capabilities including low and high volume serial production, RIM (reaction injection molding) and specialized testing. The Trim Systems and Components segment's plastic assemblies and components include thermoformed products, injection molded products, and reaction injection molded products, with principal products including molded products, instrument panels, cab interiors, and accessories such as mirrors, wipers and wiper systems sold under the AdvancTEK, Moto Mirror, Sprague Devices, and RoadWatch brand names. The company's seats are primarily sold fully-assembled and ready for installation, offering a wide range that includes mechanical and air suspension seats, static seats, bus seats and military seats, designed to achieve a high level of operator comfort with manual and power features such as lumbar support, cushion and back bolsters, and leg and thigh support.

On June 27, 2025, CVG closed on $210 million ⁸ in senior secured credit facilities, consisting of a $95 million ⁹ senior secured Term Loan with TCW Group, as agent, and a $115 million ¹⁰ senior secured asset-based revolving credit facility with Bank of America, N.A., as agent, with obligations maturing on June 27, 2030 ¹¹. In connection with the financing, TCW Group affiliates received five-year warrants for the purchase of up to 3,934,776 ¹² shares of the company's common stock, issued in two equal tranches with exercise prices of $1.52 ¹³ and $2.07 ¹⁴ per share, respectively. The company announced a new organizational structure effective January 1, 2025, reorganizing its vertical business units into three operating divisions and reporting segments: Global Electrical Systems, Global Seating, and Trim Systems and Components. During the year ended December 31, 2024, CVG sold its cab structures business with operations in Kings Mountain, North Carolina and its Industrial Automation segment including First Source Electronics business with operations in Elkridge, Maryland, which qualified as discontinued operations. The company incurred $5.5 million ¹⁵ in restructuring expenses during the year ended December 31, 2025 related to programs designed to align the company's cost structure to support margin expansion, including workforce reductions and footprint optimization across segments. Research and development costs for the years ended December 31, 2025, 2024 and 2023 totaled $8.0 million ¹⁶, $8.3 million ¹⁷ and $6.2 million ¹⁸, respectively.

For the fiscal year ended December 31, 2025, CVG reported total revenues of $649,002,000 ¹⁹, a decrease of 10.3% compared to $723,355,000 ²⁰ in the prior year. Gross profit was $68,385,000 ²¹ compared to $73,119,000 ²² in 2024, with gross profit margin improving to 10.5% ²³ from 10.1% ²⁴. The company reported an operating loss of $656,000 ²⁵ compared to an operating loss of $758,000 ²⁶ in 2024. Net loss from continuing operations was $20,477,000 ²⁷ compared to a net loss from continuing operations of $35,734,000 ²⁸ in the prior year. Net loss including discontinued operations was $22,781,000 ²⁹ compared to a net loss of $27,867,000 ³⁰ in 2024. Diluted loss per share from continuing operations was $0.61 ³¹ compared to $1.07 ³² in the prior year. Net cash provided by operating activities was $44,643,000 ³³ compared to net cash used in operating activities of $33,452,000 ³⁴ in 2024.

CVG's long-term strategy is to increase sales, profits and shareholder value by growing its Global Electrical Systems segment to be its largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening its product portfolio, increasing margins and evaluating opportunities to add to its businesses through a focused M&A program. The company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening current positions, entering new markets, developing relationships with new customers, and enhancing service to customers. A developing trend that may have a favorable impact on the Global Electrical Systems segment is the expectation that autonomous, self-driving cars are expected to become more common with continued advancements in technology, including applications such as last mile delivery, which will contribute to higher electrical and electronic content per vehicle and increased complexity in vehicle wiring architectures. According to a February 2026 report by ACT Research, North American Class 8 production levels are expected to increase to approximately 260,000 units ³⁵ in 2026, and North American Class 5-7 truck production is expected to increase to approximately 197,000 units ³⁶ in 2026. The company is seeing a trend toward alternate fuel and electric vehicles, middle-mile and last-mile vehicle models, and commercial truck makers are developing electric models of all classes of trucks and buses, creating an increased number of platform opportunities relative to historical trends.

CVG's long-term strategy includes globally optimizing its cost structure through manufacturing process enhancements, low cost footprint and global sourcing. The company's restructuring programs are designed to align the company's cost structure to support margin expansion, and it incurred $5.5 million ³⁷ in restructuring expenses during the year ended December 31, 2025. The company expects its cost of goods sold will continue to be impacted by tariffs which increase the price of materials purchased and products sold to customers, and in the past, CVG has negotiated with customers in an attempt to pass on a portion of the increased costs resulting from tariffs, although there is significant uncertainty as to its ability to pass these costs along. The company's Board and management periodically review and evaluate short-term and long-term strategies, as well as potential strategic alternatives to enhance shareholder value, which may include acquisitions, dispositions, recapitalizations, restructurings or other transactions.

CVG employs approximately 6,500 ³⁸ employees as of December 31, 2025, of which 6,100 ³⁹ are permanent employees and 400 ⁴⁰ are temporary employees. Approximately 5,300 ⁴¹ (86%) of permanent employees are located outside of the United States and 800 ⁴² (14%) are located in the United States. The company utilizes flexible manufacturing cells at its production facilities and employs just-in-time manufacturing and sourcing to meet customer requirements for faster deliveries and minimize inventory levels. CVG has systems in place that allow it to provide complete customized interior kits in returnable containers and disposable dunnage delivered in sequence, with several manufacturing facilities strategically located near customers' assembly facilities. The company is in the process of implementing a new enterprise resource planning (ERP) system as part of a plan to integrate and upgrade its systems and processes.

CVG expects capital expenditures in 2026 to be in the range of $12 million ⁴³ to $18 million ⁴⁴. The company did not repurchase any of its common stock on the open market during 2025, and employees surrendered 157,974 ⁴⁵ shares of common stock to satisfy tax withholding obligations on the vesting of restricted stock awards. CVG has not declared or paid any dividends to holders of its common stock in the past and does not anticipate paying dividends in the foreseeable future. The company's primary sources of liquidity during the year ended December 31, 2025 were operating income, cash and availability under its credit facility, and it intends to allocate resources consistent with the following priorities: invest in growth, invest in operational improvements, manage working capital, reduce debt, and other actions deemed appropriate by management to improve operational performance.

CVG faces several structural headwinds and constraints explicitly flagged by management. The global trade environment remains highly dynamic, with increased tariffs and any retaliatory actions potentially significantly increasing the cost of products and resulting in lower demand, delivery delays, and terminations of orders by customers. The company expects its cost of goods sold will continue to be impacted by tariffs which increase the price of materials purchased and products sold to customers, and there is significant uncertainty as to its ability to pass these costs along. Geopolitical uncertainties, including the military conflict in Israel and Gaza, the Russia-Ukraine conflict, and increased political tensions in Europe, the Middle East and Asia, continue to create a challenging operating environment. The company's business and operating results are substantially dependent on international trade, and changes in trade policies among the United States and other countries, in particular the imposition of new or higher tariffs, could place pressure on average selling prices as customers seek to offset the impact of increased tariffs on their own products. Additionally, the company faces risks related to heightened inflation, recession, financial and credit market disruptions and other economic conditions, and economic weakness and geopolitical uncertainty have in the past resulted, and may result in the future, in reduced demand for products resulting in decreased sales, margins and earnings.

CVG's results of operations are directly impacted by declines in new truck orders by fleets, freight tonnage hauled, and infrastructure development projects, with North American heavy-duty truck production at 251,247 units ⁴⁶ in 2025. The company faces significant risk from changes in trade policies, as the United States has recently imposed new or higher tariffs on a large number of products, and the tariff environment has been dynamic in 2025 with changes occurring on an ongoing basis. CVG's customer base is concentrated, with receivables from its top five customers representing approximately 46% ⁴⁷ of total receivables as of December 31, 2025, and the loss of a major customer could materially reduce revenues. The company's foreign operations in Mexico, China, United Kingdom, Czech Republic, Ukraine, Morocco, Australia, India and Thailand collectively accounted for approximately 38% ⁴⁸ of total revenues for the year ended December 31, 2025, exposing CVG to risks including foreign currency exchange rate fluctuations, tariffs, and geopolitical instability. CVG's indebtedness includes a Term Loan due 2030 with a maximum total leverage ratio covenant that steps down from 7.25 to 1.00 ⁴⁹ for the quarter ending September 30, 2025 to 4.00 to 1.00 ⁵⁰ for the quarter ending September 30, 2027 and thereafter, and failure to comply with these covenants could result in acceleration of all amounts outstanding.

Management's message to shareholders emphasizes the company's long-term strategy to increase sales, profits and shareholder value by growing the Global Electrical Systems segment to be its largest business while financially optimizing core legacy businesses, organically growing in targeted areas, strengthening the product portfolio, increasing margins, and evaluating opportunities to add to businesses through a focused M&A program. The company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening current positions, entering new markets, developing relationships with new customers, and enhancing service to customers. Management notes that the company is navigating through several challenging external factors which create uncertainty and volatility in its end markets, including geopolitical dynamics, new and changing tariff actions and responses, tax regulation and fluctuating foreign exchange rates. The company expects its cost of goods sold will continue to be impacted by tariffs which increase the price of materials purchased and products sold to customers, and in the past, CVG has negotiated with customers in an attempt to pass on a portion of the increased costs resulting from tariffs, although there is significant uncertainty as to its ability to pass these costs along. Management states that the company's Board and management periodically review and evaluate short-term and long-term strategies, as well as potential strategic alternatives to enhance shareholder value, which may include acquisitions, dispositions, recapitalizations, restructurings or other transactions, but there can be no assurance that any such transaction will be pursued or completed.