Commercial Vehicle Group, Inc. Q4 FY2024 earnings call

• Divestitures and Restructuring: In 2024, sold FinishTEK, Chillicothe facility, Cab Structures, and Industrial Automation; eliminated ~1,300 positions (17% of headcount). Remediated ~85% of operational inefficiencies from portfolio actions in 2024, expecting to address rest in early 2025.
• New Business Wins: Secured ~$97 million of new business in 2024, majority in Electrical Systems (outside construction/agriculture). Opened Morocco facility and ramped Mexico facility.
• Organizational Structure: Introduced new business unit structure with 3 segments: Global Electrical Systems, Global Seating and Trim Systems and Components; aims to enhance clarity, focus, and operational momentum.

Electrical Systems: Achieved revenues of $40.3 million in Q4 2024, a 28% decrease Y/Y, due to global construction and agriculture market softness. Full-year revenues down 17%. Adjusted operating loss for Q4 was $1.7 million, full-year adjusted operating income $4.2 million. Vehicle Solutions: Revenues of $91.4 million in Q4 2024, a 15% decrease Y/Y, due to lower customer demand. Full-year revenues down 14%. Adjusted operating income for Q4 was $2.8 million, full-year $20.3 million. Aftermarket: Revenues of $31.6 million in Q4 2024, a 4% increase Y/Y, driven by slightly improved customer demand. Full-year revenues down 5%. Adjusted operating income for Q4 was $3.1 million, full-year $16 million.

• Revenue expected to be in range of $670 million to $710 million in 2025.
• Adjusted EBITDA expected to be in range of $25 million to $30 million in 2025.
• Expect to return to positive free cash flow in 2025; net leverage to peak in first half of 2025 then decline, aiming to return to near 2x level in second half of 2026.
• Anticipate $15 million to $20 million in cost savings in 2025, driving margin expansion.

• Economic conditions in markets where CVG operates.
• Fluctuations in production volumes of vehicles CVG supplies.
• Financial covenant compliance and liquidity risks.
• Risks associated with conducting business in foreign countries and currencies.

Q: Joe Gomes asked about new business wins, noting few in Q4 and confidence in 2025.

A: James Ray responded that new business wins typically slow in Q4 due to sourcing cycles, but there's a large funnel of opportunities; 2025 expects more meaningful impact from new program launches with ~15% of revenue from new business wins offsetting end market decline.

Q: Gary Prestopino inquired about expense savings capture and facilities.

A: James Ray said expense savings expected in 2025, primarily Q2 and beyond; Andy Cheung added margin expansion expected with cost savings offsetting some headwinds. James Ray also discussed shifting production to new facilities in Mexico and Morocco with optionality for restructuring.

Q: Joe Gomes asked about Aftermarket integration into segments.

A: James Ray explained Aftermarket was primarily seats with wipers and small Electrical Systems; putting it back into segments allows better resource utilization, cleaner transactional processes, and focus on independent Aftermarket growth.

Q: John Franzreb asked about new business quantification and gross margin.

A: James Ray targeted $100 million in new business wins annually; Andy Cheung and James Ray discussed gross margin focus, expecting expansion in 2025 due to operational efficiencies and end market recovery.

Q: Douglas Dethy questioned urgency and gross margin.

A: Andy Cheung and James Ray discussed SG&A reduction, gross margin targets (aiming for 15%+), and focus on gross margin improvement as the biggest lever for EBITDA growth in 2025.

Q: Steven Martin made critical remarks about 2024 performance and future.

A: Andy Cheung and James Ray acknowledged challenges in 2024, emphasized portfolio cleanup, and ongoing evaluation of strategies to improve shareholder value and financial performance.