Commercial Vehicle Group’s first quarter results drew a significant positive market reaction, despite a double-digit sales decline year on year. Management attributed the quarter’s performance to operational efficiency initiatives—most notably, a streamlined segment structure and targeted cost reductions in freight, labor, and overhead. CEO James Ray cited the early benefits of these structural changes, stating, “We have seen early benefits from this resegmentation, and we continue to believe this structure will accelerate the operational momentum we have created year-to-date.” The company’s focus on working capital management and divestiture of non-core businesses also contributed to improved free cash flow and gross margin versus the prior quarter.
Is now the time to buy CVGI? Find out in our full research report (it’s free).
Commercial Vehicle Group (CVGI) Q1 CY2025 Highlights:
- Revenue: $169.8 million vs analyst estimates of $163.5 million (12.8% year-on-year decline, 3.8% beat)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.15 (44.8% beat)
- Adjusted EBITDA: $5.8 million vs analyst estimates of $2.19 million (3.4% margin, significant beat)
- The company dropped its revenue guidance for the full year to $675 million at the midpoint from $690 million, a 2.2% decrease
- EBITDA guidance for the full year is $24.5 million at the midpoint, below analyst estimates of $25.2 million
- Operating Margin: 1.1%, down from 2.2% in the same quarter last year
- Market Capitalization: $45.66 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Commercial Vehicle Group’s Q1 Earnings Call
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Joe Gomes (NOBLE Capital): Asked about normalized gross margin potential and the timeline for reaching higher margins. CFO Andy Cheung explained that achieving a 15% gross margin would require both market recovery and continued self-help, stating the company still has “a long way there” but remains focused on operational improvements.
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Joe Gomes (NOBLE Capital): Probed the company’s strategy for navigating prolonged downturns in construction and agriculture. CEO James Ray emphasized flexibility in cost structure and ongoing operational initiatives, noting the company hasn’t previously experienced such extended declines but believes cost actions position it for margin expansion even amid headwinds.
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Gary Prestopino (Barrington Research): Inquired about the sharp decline in Class 8 truck build forecasts and how the company is adjusting. Ray described CVG’s efforts to align production and inventory with customer schedules, emphasizing real-time adjustments and supply chain optimization to manage volatility.
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Gary Prestopino (Barrington Research): Sought details on tariff exposure and mitigation plans. Cheung detailed that most exposure is tied to Mexico and Canada, with some relief under USMCA and ongoing negotiations for customer recovery, estimating less than 10% of costs are from China.
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John Franzreb (Sidoti & Company): Asked about the impact of scheduled customer downtime and the company’s visibility into future production. Ray noted that planning cycles generally provide 2–3 months of visibility, allowing the company to adjust operations and inventory accordingly while maintaining focus on delivery and efficiency.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) the pace and sustainability of gross margin improvements as operational changes mature, (2) the company’s ability to further reduce inventory and strengthen free cash flow, and (3) any shifts in end-market demand for Class 8 trucks, construction, and agriculture. Updates on tariff exposure and customer price recovery will also be key signposts for progress.
Commercial Vehicle Group currently trades at $1.34, up from $0.88 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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