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Commercial Vehicle Group (CVGI) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 4, 2026

Source: earnings call transcript

Executive summary

Commercial Vehicle Group Q2 FY26 — Strong Revenue Growth and Deleveraging Progress

Commercial Vehicle Group delivered robust top-line growth across all segments in Q2 FY26, driven by new business wins and recovering end markets. The company made significant progress on deleveraging through strategic asset sales and an equity program. While profitability was impacted by elevated SG&A and working capital investments for growth, management remains focused on operational efficiency and achieving its long-term leverage target.

Highlights

5

  • Consolidated revenue increased to $195.2 million, up from $172 million in the prior year period.

  • Adjusted gross margin expanded to 12.9%, up 90 basis points year-over-year and 70 basis points sequentially.

  • Net leverage ratio reduced to 3.3x from 4.1x at the end of 2025.

  • Global Electrical Systems segment revenue grew 15.8% year-over-year.

  • Trim Systems and Components segment revenue increased 21.1% year-over-year despite Class 8 truck production decline.

Concerns

3

  • Adjusted EBITDA margin decreased 20 basis points year-over-year to 2.8% due to higher SG&A and FX headwinds.

  • Net loss from continuing operations was $8.7 million, compared to $4.1 million in the prior year.

  • Free cash flow from continuing operations was an outflow of $1.4 million, compared to an inflow of $17.3 million in the prior year, reflecting higher working capital investment.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Revenue
$725M to $755M
high materiality
High
Full-year 2026 Adjusted EBITDA
$26M to $31M
high materiality
High
Full-year 2026 Free Cash Flow
positive
medium materiality
High
Net Leverage Ratio
2x
high materiality
High
Zoox Production Volume
2,500 vehicles
medium materiality
High
Zoox Production Volume
5,000 vehicles
medium materiality
High
Zoox Production Volume
10,000 vehicles
medium materiality
High
Class 8 Heavy Truck Build Forecast
9% increase
medium materiality
High
Class 8 Heavy Truck Build Forecast
9% increase
medium materiality
High
Class 8 Heavy Truck Build Forecast
13% increase
medium materiality
High
Construction Market Growth
mid-single-digit percentage range
medium materiality
High
SG&A as % of sales
just north of 11%, maybe into 11.5%
low materiality
Medium
Gross Margin
mid-teens level
medium materiality
Medium
Interest Expense
$2M to $2.5M
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Global Seating
Revenue increase primarily driven by increased customer demand in international markets, reflecting geographical diversification benefits. Adjusted operating income increased by $0.9 million, with expanded margins on higher sales volumes and benefits from Asia Pacific footprint consolidation.
$80M7.5%—$4M
Global Electrical Systems
Revenue increase primarily due to the ramp of previously awarded new business wins in North America and internationally (e.g., Zoox, EMEA wins). Adjusted operating income increased by $0.5 million, primarily attributable to volume and product mix. Positioned to accelerate revenue growth in H2 FY26.
$62M15.8%—$1.7M
Trim Systems and Components
Revenue increase due to higher sales volumes from increasing customer demand in North America, despite Class 8 production volumes being down 6% year-over-year. Strong top-line growth driven by an improved product mix. Adjusted operating profit increased from $0.3 million, primarily attributable to improved volume leverage.
$53.2M21.1%—$2.2M

Product announcements

ProductTypeDetails
Zoox Robotaxi Serviceslaunch

Deals & partnerships

Zoox Supply agreement for robotaxi components, ramping to commercial scale production.

Zoox has locked in design and is moving to commercial scale production, preparing for large-scale manufacturing at their Hayward, California facility. CVG is adding staffing and investing capital to support this ramp.

Undisclosed Sale-leaseback transaction on Vonore facility

Transaction completed, providing cash used to reduce total debt.

Undisclosed Sale-leaseback transaction on Dublin, Virginia facility $3.8M

Executed subsequent to quarter end, with proceeds used for debt reduction.

Capital programs

Zoox Production Ramp Capital Investment underway
Period spend: incremental capital
Start: Q2 FY26

Benefit:support production ramp

Investing in planned incremental capital to support the Zoox production ramp at Aldama, Mexico facility.

Risks & headwinds

Macroeconomic Uncertainties ongoing

unquantified

Mitigation:Monitoring, disciplined execution, diversification efforts.

SG&A Expense Pressures FY26

Elevated incentive compensation (stock price performance, annual plans); full-year SG&A expected to be 11-11.5% of sales.

Mitigation:Tightly managing discretionary SG&A spending; mining opportunities on gross margin line to offset.

Input Cost Volatility ongoing

Impacts from constrained sea containers (expedite costs), tariffs, fuel surcharges, material costs.

Mitigation:Leveraging price and mix management to recover costs; acknowledging a lag effect (normally by quarter) in recovery from customers.

Working Capital Investment for Growth near-term

$1.4M free cash flow outflow in Q2 FY26 (vs $17.3M inflow YoY).

Mitigation:Managing payment terms for receivables, inventory; focusing on efficiency to maximize positive free cash flow.

Foreign Exchange Headwinds Q2 FY26

Contributed to 20 bps YoY decline in Adjusted EBITDA margin.

Mitigation:Not explicitly stated, but generally managed through diversification and pricing.

What to watch in Q3 FY26

Net Leverage Ratio

next quarter and beyond
Current 3.3x
Target closer to 2x

Why it matters

Achieving the 2x leverage target is a key financial priority, impacting interest expense and balance sheet flexibility.

Our goal remains to bring leverage back down to the 2x level over time.

Find out whether CVGI delivers this. Inve re-checks your case every morning.

Q&A highlights

Which segments contributed most to the upward revision in revenue guidance?

All three segments contributed materially to the year-over-year increase and the forward outlook. Trim Systems and Components had the largest percentage increase, Global Seating saw appreciable international demand, and Electrical Systems grew 16% year-over-year.

“Well, if you look at our percent versus prior year, Trim Systems and Components had the largest percent increase. Our Global Seating business with the international demand that we saw new programs and other end markets internationally had an appreciable increase year-over-year, too. And then Electrical, 16% up year-over-year, which is really big for that business.”

asked by John Franzreb · answered by James Ray

2 min read 6 chapters

Detailed narrative

Overall Performance and Diversification Strategy

CVG achieved year-over-year revenue growth across all three segments, reflecting successful efforts to reduce end-market concentration in cyclical North American Class 8 truck exposure through geographic and end-market diversification. New business wins are ramping up coincidentally with a recovery in key end markets, positioning the company for continued growth. Management emphasized disciplined execution and operational efficiency to drive shareholder value.

Zoox Program Ramp-Up and Facility Utilization

The Zoox program is moving to commercial scale production, with NHTSA approval for robotaxi services in Las Vegas. CVG has begun adding staffing in Q2 and Q3 at its Aldama, Mexico facility and plans incremental capital investment to support the production ramp. This, along with other programs, is increasing capacity utilization at Aldama and Tangier, Morocco facilities, contributing to gross margin expansion.

Deleveraging Efforts and Balance Sheet Flexibility

The company significantly reduced its net leverage ratio from 4.1x at the end of 2025 to 3.3x at the end of Q2 FY26. This improvement was driven by $11.6 million in net proceeds from an at-the-market (ATM) equity program and sale-leaseback transactions, enabling $14.6 million of total debt paydown since year-end 2025. A subsequent sale-leaseback on the Dublin, Virginia facility generated an additional $3.8 million for debt reduction in Q3, further reducing interest expense.

Gross Margin Expansion and Drivers

Adjusted gross margin expanded to 12.9% in Q2, up 90 basis points year-over-year and 70 basis points sequentially. This improvement is attributed to operational efficiency, operating leverage from improved volumes, and favorable product mix. The company continues to focus on price and mix management, as well as recovering costs associated with tariffs, freight, fuel surcharges, and material costs to drive further gross margin expansion towards a mid-teens target.

New Business Wins and Diversification

CVG targets approximately $100 million in new business wins annually and is on track for the first half of the year. The new business is increasingly global, with significant opportunities in EMEA for the Seating business and diversification beyond Class 8 in North America for Trim Systems, including powersports. This diversification, both regionally and by end market, is expected to provide more pricing flexibility and contribute to long-term gross margin targets.

End Market Outlook

ACT's Class 8 heavy truck build forecast implies a 9% increase in year-over-year volumes for 2026, with further increases of 9% in 2027 (up from a prior 2% decline expectation) and 13% in 2028. The construction market is expected to grow in the mid-single-digit percentage range in 2026, driven by stronger industrial production and fiscal stimulus. CVG is seeing increased volumes in the Class 8 truck market and is supporting its customers' growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.