Good morning, ladies and gentlemen, and welcome to CBG's 4th Quarter 2025 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Michelle Harz, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and welcome everyone to our fourth quarter 2025 conference call. Joining me on the call today are James Ray, President and CEO, and Andy Chung, Chief Financial Officer. This morning, we will provide a brief company update as well as commentary regarding our fourth quarter and full year 2025 results, after which we will open the line for questions. As a reminder, this conference call is being webcast, and a fourth-quarter earnings call presentation, which we will refer to during this call, is available on our website. Both may contain forward-looking statements, including, but not limited to, expectations for future periods regarding market trends, cost savings initiatives, and new product initiatives, among others. Actual results may differ from anticipated results because of certain risks and uncertainties. These risks and uncertainties may include, but are not limited to, economic conditions in the markets in which CVG operates, fluctuations in the production volumes of vehicles for which CVG is a supplier, financial covenant compliance and liquidity, risks associated with conducting business in foreign countries and currencies, and other risks as detailed in our SEC filing. I will now turn the call over to James to provide some highlights from our fourth quarter performance.

Thank you, Michelle. Good morning, and thanks to all those who joined the call. Please turn your attention to the supplemental earnings presentation, starting on slide As we have highlighted on this slide, CVG delivered strong year-over-year improvement in profitability despite a challenging demand environment, particularly in North American Class 8 truck market. During the quarter, we delivered an adjusted gross margin of 10.3%, up 190 basis points compared to last year. The continued year-over-year improvement in profitability was again driven by our focus on operational efficiency improvement. Another highlight of the quarter is the continued strong performance within our global electrical systems segment. During the third quarter, we saw segment performance in flex, with revenues up 6% compared to the prior year. The fourth quarter saw further acceleration, with revenues up 13% year-over-year. We continue to benefit from the ramp-up of two key new programs. We highlighted those last quarter. We also announced a new contract with Zoox Autonomous RoboTaxi in our earnings release last night, which I will give more color on later. Additionally, we delivered sequential and year-over-year gross margin expansion in this segment. On this slide is our strong free cash generation. For the full year, we generated $33.7 million in free cash, up $21.5 million from last year and ahead of our guidance, driven primarily by improved working capital performance and lower capital expenditures. That free cash flow enabled us to reduce net debt by more than $35 million for the full year, reducing our net leverage to 4.1 times. Andy will expand on our free cash flow and reduced leverage in a minute. But I just want to thank the entire CVG team for efforts in driving this strong cash flow performance in 2025. Free cash flow generation and debt paydown remain a focus for CVG in 2026. With that, I would like to turn the call over to Andy for a more detailed review of our financial results.

Thank you, James, and good morning, everyone. If you are following along in the presentation, please turn to slide four. Consolidated fourth quarter 2025 revenue was $154.8 million as compared to $163.3 million in the prior year period. The decrease in revenues was due primarily to a softening in customer demand across our global seeding and trim systems and component segments, particularly in North America. Adjusted EBITDA was $2.3 million for the fourth quarter, compared to $0.9 million in the prior year. Adjusted EBITDA margins were 1.5%, up 90 basis points, as compared to adjusted EBITDA margins of 0.6% in the fourth quarter of 2024. Driven primarily by operational efficiency improvements, and reductions in SG&A expenses. Interest expense was $4.2 million as compared to $2.2 million in the fourth quarter of 2024, driven by higher interest rates. Net loss for the quarter was $6.4 million, or a loss of $0.19 per diluted share, as compared to a net loss of $35 million or a loss of $1.04 per diluted share in the prior year. Net loss in the prior year included a non-cash tax valuation allowance of $28.8 million. Adjusted net loss for the quarter was $6 million or a loss of $0.18 per diluted share as compared to adjusted net loss of $5.1 million or a loss of $0.15 per dilute share in the prior year. Net loss and adjusted net loss were impacted by softening customer demand in North America as well as higher interest offset somewhat by operational efficiency improvements. Free cash flow from continuing operations for the quarter was $8.7 million compared to $0.8 million in the prior year due to better working capital management and reduced capital expenditures. Now moving to our full-year consolidated results. Consolidated revenue for the full year was $649 million as compared to $723.4 million in the prior year. The decrease in revenues was primarily driven by a softening in customer demand in global seats and trim systems and component segments. Adjusted EBITDA was 17.8 million dollars for the full year compared to 23.2 million in the prior year. Adjusted EBITDA margins were 2.7 percent down 50 basis points as compared to adjusted EBITDA margins of 3.2% in 2024, driven primarily by lower sales volume offset somewhat by lower SG&A expenses. At the end of the year, our net leverage ratio calculated as our net debt divided by our turning 12-month adjusted EBITDA from continuing operations was 4.1 times, down from 4.7 times at the end of 2024. Turning to slide 5, I want to provide additional color as it relates to free cash flow in 2025. As James mentioned, we exceeded our guidance on this metric, which we had raised from our initial expectations provided in the first quarter of 2025. Operational efficiencies and lower SG&A expenses in 2025 helped limit margin erosion despite absorbing a $74 million revenue decline. Working capital was a major focus for us and we delivered on our expectation of a $10 million reduction in inventory. We also saw improvements across other areas of working capital, including accounts receivable. Another area of focus was controlling capital expenditures, which were down $7 million in 2025. These factors drove $33.7 million in free cash flow, which allowed us to reduce our net debt by $35.8 million, dollars, bringing our net leverage ratio down to 4.1 times, compared to 4.7 times at the end of 2024. Moving to the segment results, starting on slide 6. Our global seeding segment achieved revenues of 70.7 million dollars, a decrease of 5.6 percent as compared to year ago quarter, with the decrease primarily driven by lower sales volume as a result of reduced customer demand. Adjusted operating income was $1.8 million, an increase of $1.2 million compared to the fourth quarter of 2024. Despite the revenue decline in this segment, we saw our efforts of driving operating efficiencies and lower SG&A expenses improve profitability. We continued to see strength in our aftermarket seats, with sales up 7% year-over-year, as we benefited from the resegmentation completed last year. For the full year, revenues were down 8.7%, again due to softening customer demand and wind-down of certain programs. Adjusted operating income for the full year was $10.5 million, an increase of $4.9 million compared to 2024 due primarily to lower SG&A expenses. We are already seeing operational efficiencies flow through in this segment and we expect further improvement in operational performance in 2026 as we anticipate recovery in end market demand. Turning to slide 7, our global electrical system segment's fourth quarter revenues were $49.7 million, an increase of 12.7% as compared to the year-ago quarter, benefiting from the ramp of previously awarded business wins in North America and internationally. Adjusted operating income for the fourth quarter was $0.9 million, dollars, an increase of $3.9 million compared to the prior year, primarily attributable to increased sales volumes and operational efficiencies. We are continuing to see the benefits of the restructuring actions we have taken in this segment, and we remain well-positioned to take advantage of higher volumes in 2026, particularly as we ramp the newly announced Zoot's business in the second half of the year. For the full year, revenues were essentially flat. Adjusted operating income for the full year was $3.8 million, an increase of $4.6 million compared to 2024, primarily due to operational efficiencies achieved. We are starting to see the benefits of the margin improvement initiatives we have implemented in this segment, right as growth is accelerating on the back of new business wins ramping. Moving to slide 8, our trim systems and components revenues in the fourth quarter decreased 22.5% to $34.4 million compared to the year-ago quarter due to lower sales volume as a result of decreased customer demand. As a reminder, this segment solely serves the North American market and is most directly impacted by the reduction in Class 8 production volumes. Adjusted operating loss for the fourth quarter was $1.4 million compared to profits of $0.9 million in the prior year. The decrease is primarily attributable to lower demand levels. In addition to a successful new Viper program launch, we expect our focus on cost discipline to return to the segment to profitability as Class H production improves throughout 2026. For the full year, revenues were down 22.9% due to the decreased customer demand in North America. Adjusted operating income for the full year was $0.2 million, a decrease of $13.4 million compared to 2024, primarily driven by decreased customer demand and the reduction of backlog in the prior period. That concludes my financial overview commentary. I will now turn the call over to James to cover our end market outlook, key strategic actions, and our 2026 guidance.

Thank you, Andy. I will start with our key in-market outlooks on slide nine. According to ACT's Class 8 heavy truck build forecast, 2026 estimates imply a 4% increase in year-over-year volumes. ACT is then forecasting a decline of 5 percent in 2027 before rebounding 30 percent in 2028. We also think it is helpful to provide a more granular drill down into the quarterly ACT data and outlook today. You can see that the second half of 2025 saw a rapid decline of approximately 28% compared to the first half of the year. On the other hand, the current forecast for 2026 shows a steady ramp throughout the year, with the second half up about 18% over the first half. Moving to our construction market outlook, based on recent commentary and outlooks from our customers and key market players, we expect construction market to be up in the low single digit percentage range, primarily driven by lower interest rates and fiscal stimulus initiatives. Turning to slide 10, I would like to give more details on the recently announced relationship with Zoox. CVG has been selected as a key wire harness supplier for Zoox, an autonomous ride sharing company. This win highlights the global nature of our supply chain and ability to support client needs with high-quality products and available capacity. Starting with Zootz on the design and supply of custom low-voltage harnesses for their all-electric purpose-built robo-taxis, supporting our continued diversification into electric and autonomous vehicle markets. We intend to continue supporting ZOOTS through their period of scale, further increasing the utilization of our new facility in Aldama, Mexico. Over the life of the program, we expect to reach full utilization of this facility. CVG is focusing on opportunities to expand this relationship. CVG has been supplying harnesses to support their test market vehicle deployment, and we expect volumes to increase in the second half of 2026. The anticipated ramp is expected to contribute to our target of growing our global electrical system segment in more than 10% in 2026, and is accretive to segment operating margins. Turning to slide 11, I will share several thoughts on our outlook for 2026. Our guidance ranges are based on current macroeconomic trends, forecasted Class 8 truck build rates, demand levels in construction markets, and the ramp of new business. We expect a year of top-line growth with our net sales guidance range of $660 million to $700 million. which represents growth of nearly 5% over 2025 results at the midpoint, supported by strong growth in our global electrical system segment. Similarly, we are announcing an adjusted EBITDA guidance range of $24 to $30 million, which represents growth of approximately 50% over 2025 results at the midpoint of the range, Reflecting the operational leverage we expect to see as in-markets recover and driving increased capacity utilization. We expect to generate positive free cash flow in 2026, supported by further improvements in working capital. We expect to use our free cash flow to continue paying down debt, improving net leverage toward our targeted leverage ratio of two times. With that, I will now turn the call back to the operator and open up the line for questions. Operator?

Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the one on a touchstone phone. If you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any case. Once again, that is star one, should you wish to ask a question. Your first question is from Joe Gomez from Noble Capital. Your line is now open.

Good morning, James and Andy. Thanks for taking my call. Morning, Joe. So I wanted to start out, you know, we talked about those two new key programs that started ramping in the third quarter. It looks like the more positive in the fourth quarter. We're just wondering if you'd give us a little more color on how those programs are unfolding right now.

Yeah, thank you for the question, Joe. They're both going to plan. The one program that was in EMEA is ramping up. We have the capacity. The customer volumes are coming in as planned, in some cases a little higher. for the Zoox program that we did announce and disclose that customer here in North America. That's going to plan two. The new facility in Adama, Mexico, is ramping up, and we see that facility being fully utilized by the Zoox volume, and their forecast is staying pretty true to where it was at Business Award. We're currently in the last pre-production series supporting them. They're on track to start their volume production toward the latter part of the second quarter, and we're positioned to support them, and we don't foresee any hiccups at this point.

Okay, great. Thanks for that. I know you guys don't typically talk about the level of new business wins, but James, maybe give us a little color for 25 outside of these two key programs. You know, what you saw kind of on the new business winds, and are there any, you know, significant programs in 26 that it will be ending?

So for 25, we target approximately $100 million a year to book new business, and that's at the peak annual sales in the programs that are awarded by customers. But as we've discussed previously, the volatility of those quantified numbers that the customers give us in forecasts is pretty erratic. It can be delayed program launches. There can be lower volumes. It's all over the map. So that's why we stopped communicating that and really focused on the annual guidance where we have a closer in view of when programs are starting. The nice thing about the Zoox opportunity, we actually were able to start producing harnesses for them within 12 months of being awarded the business. So that's a more near term. And some of our seeding programs and trim programs, it's a two- to three-year delay from the time you're awarded the business to the time you actually start production. The other programs in EMEA, we are utilizing our Morocco facility for that. And that's for supporting the electrical systems business. So the growth coming through in electrical systems is really, really positive right now. And as we said, we expect that business to grow more than 10% in 2026. As far as other business that we're pursuing, we book quite a bit of business each year. But again, it does depend on the timing and the ramp schedule of the customers and other macroeconomic and geopolitical factors, as we know, can happen like what's going on in the EMEA region now. But there are a number of programs across all businesses. So we have not stopped pursuing new business wins in seeding or trim systems and components. We actually have booked a few wins in each one of those businesses during this first quarter. We won't really disclose the magnitude of it, but we continue to focus on building a funnel of approximately $100 million a year in new business.

Okay. Thank you for that. And the aftermarket business seems to be pretty strong here in the quarter. You talked about it, highlighted. Maybe give us a little bit more color on the aftermarket. and where you see that going in 26.

So if you recall, last year we resegmented our product lines in the company, and an aftermarket business was integrated into our seeding business for the seed products, and the wipers were integrated into our trim systems and components business. One of the benefits is the alignment with our production facilities. We have a separate seeding aftermarket plan and a separate OEM seeding plan. Now we look at those sites together, and when we talk about improving operational efficiencies, they're under a single operating unit, and we have much better coordination from a lead time perspective, scheduling perspective, and what really drives aftermarket, especially in seeds, is your turnaround time or time to delivery from the time we get an order. And that has reduced substantially from where it was in prior years just based on how we operate the plants together and more seamlessly and much more customer-focused. The other thing that we started doing with the seed business in a more, I guess, intentional way is driving promotions. And several of our aftermarket seed competitors are more promotional-based. And now that we have the reduced lead time, order to delivery, we're fulfilling a lot more promotional actions. So we continue to see that business grow. Both of the plants, the OEM and the aftermarket plant, are running about half capacity. So we have additional capacity to really grow the aftermarket business. We have further engagement with our over 60 field sales reps that represent our product in the aftermarket field. So a lot more intentional initiatives to really grow that top line, and that margin is accretive to the overall seeding business. So we're really excited about it. We're going to continue to focus on that. We've even had opportunities from a cash generation standpoint by using some of our excess inventory to have certain promotions in our aftermarket seed business. So it's really been a multifaceted efficiency improvement across all elements of our financials. So we're really excited about it. We're looking at new products to introduce into the aftermarket channel in addition to seeds, seed covers, and other new products. So we're really excited about it. That's going to be a focus area for growth for the global seating business. In addition to pursuing OEM platforms, the other benefit from aftermarket is near term. So we can get an order and turn around a seat in days or a few weeks compared to booking a new seat OEM program, which takes years to bring to market. So we're really excited about it.

Thanks for that. And I'll get back in queue. You're welcome.

Thank you. Your next question is from John Frenzreb from Sidoti & Company. Your line is now open.

Good morning, everyone, and thanks for taking the questions. I have to admit I'm not particularly familiar with the Zoox product line, but my understanding is that the target level there is 10,000 units of production per year. Is that what you're hearing, and when is the timeline for them to start to hit that kind of a number?

Yeah, so I can't speak for Zoots, but what they have told us is to plan to support 10,000 vehicles per year. They are in a ramp mode. For the first two years, we understand their volume to be about 5,000 on an annualized basis. So for us this year, it's about half that, and then for 27, the full five, and then when you get to 28 and 29, they're targeting 10,000 units. Now, their schedule may accelerate depending on the municipality and geofence within those municipality deployments. The larger their geofence, the more vehicles they can deploy. I had an opportunity to ride in their vehicle at the Consumer Electronics Show. It's a very unique product. It's bidirectional, so it goes both forward and backward. No steering wheel, no brakes. Well, it does have brakes. no steering wheel in the vehicle, and the seats are facing. But it's a very highly contented vehicle because of the cameras and the high-speed communication. So the content in that vehicle is more than twice would be in a vehicle that size that wasn't autonomous. So we're benefiting from that, too, and that's what's allowing us to better utilize and fill our utilization in our Aldama plant in Mexico.

Ray, I was honestly going to ask you if you wrote it, you know, in a follow-up offline, but I'm glad you answered that.

I've got pictures to prove it, John.

I believe you. I really do. I guess I'm actually curious. I think you just answered the question. There's not going to be a capacity problem or capacity addition when you get to that 28 timeframe to fill 10,000 units? You're fine?

We will scale capacity as needed, but up to that point, we have the capacity in place, as you're aware. We've had headwinds with some of our structural costs in electrical as we've built capacity ahead of businesses launching. So the past couple of years, we've been struggling with getting our structural costs aligned with demand. Now we're seeing that come into play, and we're getting much better absorption, and we expect really good operating leverage as that capacity utilization increases over the next couple of years.

Got it. As a reminder,

remember that we have two facilities in Mexico. We have flexibility to move programs from one to the other. So as we continue to see the volume and utilization in our DAMA, we'll make those decisions and obviously when necessary we will invest in additional equipment and other capacity. So we have no problem with shopping if the customer really want to that level. It would be just good news for us.

And actually, Andy, this next question might be more for you. You talked about an improvement in free cash flow. In 2025, it was largely coming from working capital and the receivables line, best I can tell. And I'm curious what remaining levers, because it looks like, you know, You're going to pull down CapEx. What are the other levers you still have on operating cash flow that can drive improvement in free cash flow this year?

Yeah, so, John, we still see opportunities for us to continue to improve our efficiencies in managing our working capital. So we did a lot of work in receivable. We have seen a significant improvement in days and past years, so we solved a lot of process issues. And then next, as James mentioned, we are seeing the sign of improving inventory efficiencies as well. We're working with customers to make sure that our demand variation is keeping to minimum, allow our plans to be more efficient. And we work on minimum order quantities, lead time with our supply base. So we actually continue to see we are not done in working capital improvements. So as you know, we're looking for growth now in the next couple of years. So it will require more working capital to fund that growth. But at the same time, our efficiency will allow us to offset that. So we're pretty confident that we'll still have opportunities ahead.

Got it. And maybe one last question, and I'll get back into Q. The last three months, we've seen some stunning truck order numbers. I'm curious, A, about your thoughts about that, and maybe, B, How long do those orders translate into revenue for you on a normalized basis?

I'll take that, John. If you guys track ACT, you'll see it's changed substantially since the early part of Q4 last year from the low 200s. And when we got at this, we were basing the truck build on 260,000 units, which came out in February. Just this week, ACT has come out with a revised forecast for 2026, targeting 275,000 vehicles. So the cautionary comment I'll make here is that the volatility in the ACT forecast, based on a number of factors, I mean, they have a very robust model on forecasting, But there's so much uncertainty that drives where the OEMs target production levels, and that's really driven by fleet sales and freight rates and economic indicators that, you know, relate to GDP growth, et cetera. So we vowed in a very judicious way how we add capacity and inventory or how we reduce capacity and inventory and headcount to stay flexible. And some of that up and down does create inefficiency. It also, we see variation in customer schedules. Just in the first quarter, several of our customers had down weeks of production. And if you look at the ACT numbers, the first quarter of 26 actually came in lower than their prior forecast. So it's a constant adjustment, but we're optimistic that the trend of increased quarterly production is in play. And our customers, we see about a 12- to 13-week EDI schedule from our customers, and then they give us out-quarter estimates on where they're going to be. And they're somewhat in line with ACT. Now, we don't supply every OEM that ACT uses in their forecast, so there's a mixed element between our customer orders, their production, and what the overall ACT production numbers are, which we use as a proxy along with what our customers are telling us.

Got it.

Thank you both. I'll get back into Q.

Thanks, Joe.

Thank you. Once again, that is star one, should you wish to ask a question. And your next question is from Gary Prestopino from Barrington Research. Your line is now open.

Good morning, Annie and James. Good morning, Gary. A couple of questions here. Looking at your reduction in debt levels and all that, is the interest expense line in Q4 a good proxy for what it should be on a

quarterly basis going forward? Yeah. So thank you, Gary. Well, as I mentioned in my prepared remark, we continue to focus on using our free cash flow to bring down our debt. So as you see that north of $30 million of debt paid down already happened this year. And we are right now at the lowest net debt level for many, many quarters at around $73 million at the end of 2025. So you also remember about a year ago we did refinance and the interest rate is higher than what we had in the past so right now you see a combination effect of higher interest rate but we continue to pay down debt. So from what I'm seeing in 2026 you'll continue to see a similar interest rate level but you'll continue to see a gradual pay down of our debt. We guided that this year we'll have also positive free cash flow, and we'll use that to pay down more debt as well. It's a little too early for us to talk about the magnitude of the amount of free cash flow and the debt level for 2026 for now, but we'll have more line of sight and maybe guide a little bit more in the first quarter call. But overall, you should see that the interest expense will gradually coming down throughout 2026.

Okay, that's helpful. And then, James, you mentioned in the global electric, you've had two contracts or two programs that were signed up that's starting to drive some growth. I got confused. Were there two programs in addition to Zeus, or was there two programs without Zeus?

There were two programs in addition to Zeus.

Okay. Okay. And so those two programs came on last year, and they're starting to positively impact the numbers in the back of last year.

That's correct. And the other thing I'd say, Gary, is that with several of our legacy customers, we have a portion of share of wallet. So to the extent we can provide products to expand our share within those customers, we consider that opportunities for near-term revenue growth, too. And now that we have additional capacity online, a lot of the discussions are centered around share of wallet expansion with some of our legacy customers, in addition to pursuing new customers and new end markets. But our legacy construction and agriculture customers, and some of those are in PowerGen in markets now and also for data centers. So a lot of discussions now are centered around how we can support those customers' growth in PowerGen for data centers and also the data center architecture itself. So we are looking outside to diversify in other end markets, in addition to construction, agriculture, and Class 8, and we're starting to see some good traction and tailwind in winning business and content in those adjacent end markets.

Okay, but the programs that you, the 2 plus Zeus that you announced in Global Electric, those are related to vehicles. It's not related to data centers. That's correct. That's correct. And then just looking at your guidance, pretty big range of adjusted EBITDA there. You know, when you're looking at the low end, what kind of factors are going into that, you know, particularly your Class A truck build rate, because the last couple of years, you know, These numbers have started off pretty high, and then gradually, as the year goes on, ACT has reduced them. We've been in a freight recession for years now, and you've got to have some replacement units coming on because these are capital equipment and it wears out. So could you kind of help us with what your assumptions are for the high-end, low-end?

Yeah, so let me give you some color there. So as you see, last year, as you mentioned, the last few quarters, as you keep lowering the guidance, and you see that that's highly correlated to the Class 8 end market production. As we're going through into our planning for 2026, and the last couple of months of ACT forecast has been positively revised every time. So I would say that even including yesterday's ACT report is another 5% of positive revision upwards. So we are actually seeing this time around that the range, yes, is wide, but as you can see, the volatility is high. But the last couple trends of the ACT report give us more positive confidence that the range is probably giving us the momentum into the top side. So 2024 has been the start of the decline in end market, but now we see that the bottom as forecasted by ACT is in horizon. on. I will also say that as you look to our cost structure, you can expect that have significant drop-through of the incremental top line that will come through as we have already largely completed our restructuring programs in the last year. The fixed cost has been significantly reduced. So now when we see the additional volume come through, I'm hopeful that the drop-through will be

attractive. Well, let me ask it this way, then. Is ACT, as we started the year, what's been the, for the first two months of this year, year over year, what's been the year over year increase in

orders? The ACT Q1 run rate is still around the 50-ish thousand units. So, it's a run rate of about 220 or so annualized. If you look at the latest ACT, it's up to 275,000. So that's implying about 65 to 70,000 units on a quarterly basis. So you will see that the continued improvement in the quarterly volume going into 2026.

Okay, thank you.

Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Thank you all for joining today's call. I'm encouraged by the progress we have made in driving operational efficiencies and lowering our cost structure. And we are starting to see signs of in-market improvement, which we believe will yield improved financial performance in 2026 and beyond. We look forward to updating CVG's progress next quarter.

Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may now disconnect your lines.