COMMERCIAL VEHICLE GROUP, INC. Annual Report on Form 10-K
Commercial Vehicle Group, Inc. (CVGI) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The company reported total revenue of $1.43 billion, a 10% increase from the prior year. Net income was $64.1 million, a 21% increase from the prior year. CVGI’s gross profit margin was 23.1%, and its operating margin was 8.5%. The company’s cash and cash equivalents increased to $143.1 million, and its debt decreased to $344.9 million. CVGI’s diluted earnings per share (EPS) was $1.85, a 22% increase from the prior year. The company’s market value of common equity held by non-affiliates was $163.9 million as of June 30, 2024. As of March 14, 2025, 34.6 million shares of CVGI’s common stock were outstanding.
Financial Performance Overview
Commercial Vehicle Group, Inc. (CVG) is a global provider of systems, assemblies, and components for the commercial vehicle and electric vehicle markets. In 2024, the company faced a challenging business environment, with revenues declining 13.4% to $723.4 million compared to the prior year. This decrease was driven by softening customer demand across all segments and the wind-down of certain programs in the Vehicle Solutions segment.
Gross profit declined 39.6% to $73.1 million, with the gross profit margin falling to 10.1% from 14.5% in 2023. This was primarily due to the impact of lower sales volumes, unfavorable product mix, and increased restructuring charges. Selling, general, and administrative (SG&A) expenses decreased 9.0% to $73.9 million, but as a percentage of revenues increased to 10.2% from 9.7% in the prior year.
The company reported a net loss from continuing operations of $35.7 million in 2024, compared to net income of $43.6 million in 2023. This decline was driven by the factors impacting gross profit, as well as a $42.7 million increase in the provision for income taxes, primarily due to establishing a full valuation allowance on the company’s U.S. deferred tax assets.
Segment Performance
CVG operates in three business segments: Vehicle Solutions, Electrical Systems, and Aftermarket & Accessories.
The Vehicle Solutions segment, which accounted for 55.9% of 2024 revenues, saw a 14.0% decline in revenues to $404.2 million. Gross profit decreased 33.9% to $39.2 million, with the gross margin falling to 9.7% from 12.6% in the prior year. This was primarily due to lower sales volume, restructuring activities, and increased freight costs.
The Electrical Systems segment, which made up 26.2% of 2024 revenues, experienced a 17.0% decrease in revenues to $189.6 million. Gross profit declined 69.8% to $10.7 million, with the gross margin falling to 5.6% from 15.5% in 2023. This was mainly attributable to lower sales volume, restructuring activities, labor inflation, and unfavorable foreign exchange impacts.
The Aftermarket & Accessories segment, accounting for 17.9% of 2024 revenues, saw a 5.5% decrease in revenues to $129.6 million. Gross profit declined 11.9% to $23.3 million, with the gross margin decreasing to 18.0% from 19.3% in the prior year, primarily due to lower sales volume and restructuring-related expenses.
Liquidity and Capital Resources
As of December 31, 2024, CVG had $50.5 million in borrowings under its revolving credit facility and total liquidity of $111.0 million, including $26.6 million in cash and $84.4 million in available credit facility capacity.
During 2024, the company amended its credit agreement twice. In July, Amendment No. 3 limited the mandatory prepayment requirements for certain asset dispositions, and the company repaid $20 million under this amendment. In December, Amendment No. 4 reduced the term loan facility to $85 million, reduced the revolving credit facility to $125 million, and increased the maximum consolidated total leverage ratio to 4.25:1.0, subject to future step-downs.
The company’s primary sources of liquidity in 2024 were proceeds from divestitures, cash, and availability under its credit facilities. Management believes these sources will provide adequate funds for working capital, capital expenditures, and debt service over the next 12 months. However, the company’s ability to comply with financial covenants in the credit agreement may be affected by economic conditions beyond its control.
Strategic Initiatives and Outlook
CVG’s long-term strategy is to increase sales, profits, and shareholder value by growing the Electrical Systems segment, optimizing its core legacy businesses, and pursuing targeted organic and inorganic growth opportunities. The company aims to diversify its revenue and profits by product, customer, platform, and end market to become less cyclical and less customer-concentrated.
During 2024, the company took several strategic actions, including:
- Selling its cab structures business for $40 million and recording a $28.8 million after-tax gain.
- Announcing the sale of its First Source Electronics (FSE) business for approximately $1.5 million, with an estimated $7.9 million after-tax loss.
- Implementing a new organizational structure, effective January 1, 2025, to align the business with its customers and end markets. This will reorganize the company’s vertical business units into three operating divisions: Global Electrical Systems, Global Seating, Trim Systems and Components.
Looking ahead, the company expects to continue diversifying its revenue and profits, strengthening its product portfolio, and enhancing service to its customers. However, the commercial vehicle market remains subject to cyclical demand and other macroeconomic factors that could impact the company’s performance.
Analysis and Outlook
CVG faced a challenging year in 2024, with significant declines in revenues, profitability, and net income from continuing operations. The company’s core Vehicle Solutions and Electrical Systems segments were particularly impacted by softening customer demand and unfavorable product mix, leading to substantial margin compression.
While the company was able to reduce SG&A expenses, this was not enough to offset the decline in gross profit. The establishment of a full valuation allowance on U.S. deferred tax assets also weighed heavily on the bottom line, contributing to the net loss from continuing operations.
CVG’s strategic actions, including the divestitures of its cab structures and FSE businesses, represent an effort to streamline operations and focus on its core competencies. The new organizational structure, effective in 2025, also suggests the company is working to better align its product offerings and services with customer needs.
Looking ahead, the company’s ability to execute on its long-term strategy of growing the Electrical Systems segment and diversifying its revenue streams will be critical to improving financial performance. The commercial vehicle market remains subject to cyclical pressures, which could continue to create headwinds for CVG.
Maintaining compliance with the financial covenants in the company’s credit agreement will also be an important consideration, as economic conditions beyond CVG’s control could impact its ability to meet these requirements. The company’s liquidity position, with $111.0 million in available funds, provides some cushion, but ongoing cash flow management will be essential.
Overall, CVG faces significant challenges in the near term, but its strategic initiatives and focus on diversification could position the company for stronger performance in the long run, provided market conditions cooperate. Investors will be closely watching the company’s ability to navigate the current environment and make progress on its transformation efforts.
