Commercial Vehicle Group, Inc.

Ladies and gentlemen, and welcome to CVT's second quarter 2025 earning conference call. During today's presentation, all parties will be in a listen only mode. Following the presentation, the conference will be open for questions with introductions to follow at that time. As a reminder, this conference is being recorded. I will now like to turn the call over to Mr. Andy Chung, Chief Financial Officer. Please go ahead.

Thank you, operator, and welcome everyone to our conference call. Joining me on the call today is James Wei, President and CEO of CVG. This morning, we will provide a brief company update as well as commentary regarding our second quarter 2025 results, after which we will open the call for questions. As a reminder, this conference call is being webcast and a Q2 2025 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, call saving initiatives, and new product initiatives, among others. Actual results may differ from anticipated results because of the certain risks and uncertainties. This risk and uncertainties may include, but are not limited to, economic conditions in the market in which CVG operates, fluctuations in the production volumes of vehicle for which CVG is a supplier, financial governance compliance and liquidity, risks associated with conducting business in foreign countries and currencies, and other risks as detailed in our SEC filings. I will now turn the call over to James to provide a company update.

Thank you, Andy. Before I speak to the earnings presentation, I wanna take a moment to thank Ruth Gratzke, the CVG board member since July, 2021, for her contributions as she leaves our board for personal reasons, effective August 7th. Additionally, I also want to thank Scott Reed, our current COO for his contributions to the company. Scott will be leaving the company to pursue consulting opportunities, effective August 29th. We have a solid team in place and expect to fully execute on our plans going forward. Now, I'd like to turn your attention to the supplemental earnings presentation starting on slide three. As we have highlighted on this slide, CVG delivered solid second quarter results and continued improvement in our profitability and free cash generation in a very challenging market environment. During the quarter, we delivered an adjusted gross margin of 12%, which is up 120 basis points on a sequential basis and up 70 basis points compared to last year. The continued improvement in profitability was again driven by the operational efficiency initiatives we have spoken to in prior calls. I will cover this in more detail in a minute. Also highlighted on this slide is our continued improvement in free cash generation. During the quarter, we delivered $17.3 million in free cash flow, which is an improvement of $16.5 million compared to last year. I will also provide more detail regarding our free cash flow performance in a moment. Another highlight of the quarter is our improved performance within the global electrical system segment. For the quarter, we saw segment performance stabilize with revenues flat compared to prior year. Despite flat revenue, we delivered an adjusted operating income improvement of $0.4 million driven by lower salary expense as we continue to ramp production in our new low cost facilities. Before I move on, I'd also like to comment on our recently announced debt refinancing, which we completed and announced during the second quarter. These transactions provide us with significantly more financial flexibility as we look to advance our operational initiatives, including further cost reductions, margin improvement, and overall operational efficiency. Turning to slide four, I want to provide additional color as it relates to the continued sequential improvement we are seeing at the gross margin line. As we highlighted last quarter, the operational efficiency improvements made related to freight, labor, and plant level overhead continue to benefit our profitability. As a reminder, we have reduced our reliance on expedited freight, optimized our terms with suppliers, and improved our lead times and order qualities. We also continue to flex our direct labor to better align with customer volume changes and have continued to balance our production more toward lower cost facilities. And finally, our new segment alignment has provided a more optimal overhead structure, and we are continuously evaluating selling, general and administrative expenses, SG&A, for efficiency improvements. We are pleased to see our focus on operational efficiency payoff, which has supported our financial performance in a lower demand environment. While we acknowledge the broader market and macroeconomic uncertainty, we have, and will continue to take the necessary proactive actions. Looking ahead, we believe we are well positioned to drive accretive growth, accelerate margin expansion, increase our capital efficiency, and ultimately enhance shareholder value as our end markets recover. Moving to slide five, I'd like to again highlight a graphic we have shared in our last two earnings calls. Again, while the strategic portfolio actions we took last year led to cash flow headwinds in 2024, we are seeing these actions reverse meaningfully year to date in 2025. Through June of this year, our discontinued operations were net cash generative, and we had minimal restructuring spend at less than $2 million. We've also driven a $12 million improvement in inventory versus the end of 2024. Improvement in each of these areas helped drive free cash generation of $17.3 million in the quarter, which brings our year to date free cash generation up to $28.5 million. As Andy will cover in a moment, we have raised our free cash flow outlook for the year to be at least $30 million, as we expect to build on our year to date progress in the back half of the year. With that, I'd like to turn the call back to Andy for a more detailed review of our financial results.