Release Date: March 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details about the new business wins, especially since there was little activity in the fourth quarter? What gives you confidence in seeing growth in 2025? A: James Ray, President and CEO, explained that most new business wins were booked by Q3, as Q4 typically sees slower sourcing cycles. Despite this, CVG has a large funnel of opportunities and is engaged in quoting activities. For 2025, they expect a more meaningful impact on the top line from new program launches, with about 15% of revenue associated with new business wins, offsetting market declines.
Q: How is CVG performing in the Class 8 and construction markets relative to aggregate outlooks? A: James Ray noted that CVG is performing in line with market expectations, with some softness observed towards the end of the quarter. However, customers are optimistic about Q2 onwards, especially with new Class 8 models. The company expects a pre-buy in 2026 due to new emissions regulations, which should provide a tailwind.
Q: Will CVG capture most of the $15 million to $20 million in expense savings in 2025? A: James Ray confirmed that they expect to capture these savings primarily from Q2 onwards. Andy Cheung, CFO, added that despite revenue declines, CVG anticipates margin expansion due to productivity and cost savings efforts.
Q: Can you explain the strategy behind running new facilities in tandem with existing ones? A: James Ray explained that the new facilities were planned to accommodate new business and expected market growth. They are shifting some production to these lower-cost facilities while maintaining existing ones to handle future market recovery. This strategy provides flexibility and optionality, despite increased costs.
Q: What is the urgency and plan to improve financial performance, given the high SG&A and low gross margins? A: Andy Cheung acknowledged the challenging environment and highlighted ongoing cost structure adjustments. The company has reduced headquarters costs and is focused on generating free cash flow. James Ray emphasized a focus on improving gross margins, expecting significant EBITDA improvement from operational efficiencies and market recovery.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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