Commercial Vehicle’s Earnings Call: Mixed Signals Amid Challenges

Commercial Vehicle ((CVGI)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call from Commercial Vehicle (CVG) painted a mixed picture of the company’s financial health. While there were notable improvements in operational efficiency and strategic growth in specific segments like Global Electrical Systems, these positive developments were overshadowed by significant revenue declines and increased net losses. The overall sentiment from the call was one of cautious optimism, tempered by the challenges that lie ahead.

Improvement in Gross Margin

The company reported an adjusted gross margin of 12.1% for Q3 2025, marking a sequential increase of 10 basis points and a year-over-year rise of 50 basis points. This improvement was attributed to enhanced operational efficiencies, signaling a positive trend in the company’s cost management strategies.

Global Electrical Systems Revenue Increase

A bright spot in the earnings call was the 6% revenue increase in the Global Electrical Systems segment. This growth was driven by new programs with an autonomous vehicle manufacturer in North America and a major automotive manufacturer in Europe, highlighting CVG’s strategic expansion in high-potential markets.

Year-to-Date Free Cash Flow Improvement

CVG reported a significant improvement in free cash flow, generating $25 million in the first nine months of 2025. This represents a $14 million increase from the previous year, primarily due to better working capital performance and reduced capital expenditures.

Adjusted Operating Income in Global Seating Segment

Despite a 10% revenue decrease in the Global Seating segment, adjusted operating income rose by $3.7 million compared to the third quarter of 2024. This was achieved through operational efficiency improvements and lower SG&A expenses, demonstrating the company’s ability to maintain profitability amid declining sales.

Significant Revenue Decline

CVG’s consolidated revenue for Q3 2025 was $152.5 million, a decrease from $171.8 million in the prior year period. This decline was primarily due to softening customer demand in North America, which remains a critical challenge for the company.

Increased Net Loss

The net loss for Q3 2025 was $6.8 million, a significant increase from the $0.9 million loss in the prior year. This was impacted by softened demand, higher interest rates, and increased taxes, underscoring the financial pressures facing CVG.

Free Cash Flow from Operations Decline

Free cash flow from continuing operations was negative $3.4 million in Q3 2025, compared to a positive $17.1 million in the previous year. This decline was attributed to softer demand and a facility move in China, highlighting operational challenges.

Trim Systems and Components Revenue Drop

Revenues in the Trim Systems and Components segment fell by 29% to $34.3 million compared to the prior year, driven by lower sales volume from decreased customer demand, reflecting broader market challenges.

Increased Interest Expense

Interest expense for Q3 2025 rose to $4.1 million from $2.4 million in the prior year, driven by higher interest rates following debt refinancing. This increase adds to the financial burden on CVG.

Forward-Looking Guidance

CVG’s guidance for 2025 reflects a cautious outlook, with expectations of generating at least $30 million in free cash flow to pay down debt. The company revised its full-year revenue guidance to $640 million to $650 million, down from $650 million to $670 million. Adjusted EBITDA guidance was also lowered, reflecting ongoing challenges such as a forecasted decline in North American Class 8 production volumes. Despite these hurdles, CVG remains committed to operational efficiency and cost-saving initiatives, with the Global Electrical Systems segment expected to achieve growth in 2026.

In summary, the earnings call from Commercial Vehicle highlighted a company navigating through a challenging financial landscape. While there are positive signs of growth and efficiency improvements, significant revenue declines and increased net losses present ongoing challenges. The company’s forward-looking guidance suggests a cautious approach, with a focus on operational efficiencies and strategic growth in key segments.