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 net sales 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 22.1%, and its operating margin was 8.5%. The company’s cash and cash equivalents increased to $143.8 million, and its debt decreased to $243.8 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 from 14.5% in 2023 to 10.1% in 2024. 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 from 9.7% to 10.2%.
The company reported a net loss from continuing operations of $35.7 million in 2024, compared to net income of $43.6 million in the prior year. 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 from 12.6% to 9.7%. This was primarily due to lower sales volume, restructuring activities, and increased freight costs.
The Electrical Systems segment, which made up 26.2% of revenues, experienced a 17.0% revenue decline to $189.6 million. Gross profit plummeted 69.8% to $10.7 million, with the gross margin contracting from 15.5% to 5.6%. 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 revenues, saw a 5.5% revenue decrease to $129.6 million. Gross profit declined 11.9% to $23.3 million, with the gross margin decreasing from 19.3% to 18.0%, primarily due to the lower sales volume and restructuring-related expenses.
Strategic Initiatives and Outlook
CVG’s long-term strategy is to increase sales, profits, and shareholder value by growing its 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.
To support this strategy, CVG has undertaken several key initiatives:
Divestitures: In 2024, the company sold its cab structures business for $40 million and announced the sale of its First Source Electronics (FSE) business for $1.5 million. These divestitures represent a strategic shift in CVG’s business and are expected to allow the company to focus on its core competencies.
Debt Refinancing: The company amended its credit agreement in 2024, reducing the term loan facility to $85 million and the revolving credit facility to $125 million. This refinancing also revised the covenant calculations, including increasing the maximum consolidated total leverage ratio.
Organizational Restructuring: Effective January 1, 2025, CVG will reorganize its business units into three new operating divisions and reporting segments: Global Electrical Systems, Global Seating, Trim Systems and Components. This realignment is designed to enhance alignment with the company’s customers and end markets.
Looking ahead, the company faces several challenges and opportunities. In the commercial vehicle market, North American Class 8 truck production is expected to decrease from 332,382 units in 2024 to 316,000 units in 2025, according to industry forecasts. However, the global trend towards electric vehicles in the commercial truck segment presents new platform opportunities for CVG.
The company’s ability to navigate these market dynamics and execute on its strategic initiatives will be critical to its future performance. Maintaining compliance with the financial covenants in its credit agreement may also be a key focus area, as the company’s ability to do so could be affected by economic or business conditions beyond its control.
Financial Position and Liquidity
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.
The company’s primary sources of liquidity during 2024 were proceeds from divestitures, cash, and availability under its credit facility. Management believes these sources will provide adequate funds for the company’s working capital needs, capital expenditures, and debt service over the next twelve months.
However, CVG’s ability to comply with the financial covenants in its credit agreement, including the maximum consolidated total leverage ratio, may be affected by factors beyond its control. The company’s current forecast indicates it will be able to maintain compliance, but no assurances can be given.
Conclusion
CVG faced a challenging year in 2024, with declining revenues, profitability, and a net loss from continuing operations. The company’s performance was impacted by softening customer demand, unfavorable product mix, and increased restructuring costs across its business segments.
To address these challenges, CVG has undertaken strategic initiatives, including divestitures, debt refinancing, and an organizational restructuring. These actions are aimed at optimizing the company’s core businesses, growing its Electrical Systems segment, and diversifying its revenue and profit streams to become less cyclical.
While the near-term outlook for the commercial vehicle market remains uncertain, CVG’s long-term strategy and focus on operational improvements may position the company for a stronger performance in the future. However, the company’s ability to maintain compliance with its financial covenants and effectively navigate the evolving market landscape will be critical to its success.
