Commercial Vehicle Group (CVGI) Sidoti September Small-Cap Virtual Conference summary

Business overview and strategic direction

• Reported 2023 revenue of $995 million and Adjusted EBITDA of $67.6 million, with 8,200 employees across 30 plants in 10 countries.

• Strategic transformation launched in 2021 to diversify products and customers, focusing on Electrical Systems and optimizing Vehicle Solutions.

• Recent divestitures include Cab Structures and FinishTek businesses, with a review underway for Industrial Automation to reduce cyclicality and improve capital efficiency.

• Expansion of low-cost production capacity in Morocco and Mexico to support new business wins and optimize global footprint.

• Ongoing focus on operational efficiency, supply chain improvements, and cost structure right-sizing to enhance profitability.

Market outlook and growth opportunities

• Class 8 truck market, the largest end market, is expected to be weak in 2024–2025, with growth projected in 2026 due to new EPA regulations.

• Agriculture and construction equipment markets, representing 25% of revenue, are expected to decline in 2024 but have strong long-term growth prospects.

• Electrification and autonomous driving trends are increasing demand for wiring and cabling, benefiting Electrical Systems.

• E-commerce growth continues to drive demand for commercial vehicles in first and last mile deliveries.

• Capital allocation prioritizes internal growth, maintaining leverage, and potential future M&A or shareholder returns.

Financial performance and outlook

• Electrical Systems and Vehicle Solutions are the primary focus for investment and growth.

• 2024 revenue outlook is $900–$960 million, with EBITDA of $42–$52 million; pro forma after divestitures, revenue is $730–$780 million and EBITDA $28–$36 million (4–5% margin).

• Divestiture proceeds will primarily be used for debt reduction to strengthen the balance sheet.

• Long-term EBITDA margin target is 9%, with 400–500 basis points of improvement expected from market recovery and self-help initiatives.

• Margin improvement will rely on both market recovery and ongoing restructuring, cost migration, and operational enhancements.