CVG（CVGI）2026年第3四半期決算説明会：売上高36.5%増、見通しを上方修正

主要なポイント

• 2026年第3四半期の売上高は前年同期比36.5%増の2億810万ドルとなり、前四半期比では6.6%増加しました。全3セグメントで成長を記録しました。
• 調整後売上総利益率は13.8%に達し、前年同期比で170ベーシスポイント上昇、前四半期比で90ベーシスポイント上昇しました。経営陣は数量効果（ボリューム・レバレッジ）、生産性の向上、製品ミックス、価格設定を理由に挙げました。
• 調整後EBITDAは85%増の850万ドルとなり、調整後EBITDA利益率は110ベーシスポイント拡大して4.1%となりました。
• 調整後EPSは2024年第1四半期以来初めて黒字に復帰し、前年同期の0.14ドルの赤字に対し0.03ドルに達しました。
• 純レバレッジ倍率は2026年第2四半期末の3.3倍、2025年末の4.1倍から2.7倍に低下しました。CVGは長期的に約2倍を目標とし続けています。
• CVGは2026年の売上高見通しを7億5,500万〜7億7,500万ドルに引き上げたものの、調整後EBITDAの見通し（ガイダンス）を2,600万〜2,900万ドルに絞り込みました。これにはCEO交代に関連する報酬費用の影響が一部反映されています。

主要財務データ

事業および業績の動向

グローバル・シーティング（Global Seating）セグメントの売上高は、北米およびアジア太平洋地域での需要好調により、23.3%増の8,470万ドルとなりました。調整後営業利益は300万ドルから460万ドルに増加しました。CVGは中国での拠点統合による効果を報告しており、米国および英国での取り組みからもさらなる効果を期待しています。

グローバル・エレクトリカル・システムズ（Global Electrical Systems）セグメントの売上高は、新規プログラムの立ち上げと建設市場の需要回復により、30.2%増の6,440万ドルとなりました。調整後営業利益は140万ドルから370万ドルに増加し、調整後営業利益率は2.8%から5.7%へと2倍以上に拡大しました。

同セグメントは引き続きZooxの生産をサポートし、過去に受注した欧州プログラムの立ち上げを進めています。経営陣によると、Zooxの生産立ち上げは計画より緩やかですが、週当たりの車両生産量は増加しています。CVGは生産能力を増強しており、アラバマ拠点は第1四半期からZoox専用工場となる見込みです。

トリム・システムズ・アンド・コンポーネンツ（Trim Systems and Components）セグメントの売上高は71.9%急増の5,890万ドルとなりました。売上数量の増加と操業効率の向上に支えられ、調整後営業利益は前年同期の30万ドルの赤字から270万ドルに改善しました。経営陣は、ACTのデータに基づき、第3四半期の北米Class 8トラック生産台数が前年同期比で約54%増加したと指摘しました。

経営陣の業績予想（ガイダンス）

CVGは現在、2026年の売上高を7億5,500万〜7億7,500万ドルと見込んでおり、従来の見通しから引き上げました。中間値は全3セグメント、最終市場での需要改善、新規事業の継続的な立ち上げに支えられ、2025年比で約18%の成長を示しています。

同社は調整後EBITDAの見通しを従来の2,600万〜3,100万ドルから2,600万〜2,900万ドルに絞り込みました。修正後の中間値は2025年比で約54%の成長となります。経営陣は、売上高増加に伴う粗利益の増加分は、インセンティブ報酬や新規プログラムおよび生産拡大に伴う費用によって相殺される見込みであると説明しました。

CVGは引き続き2026年のフリーキャッシュフロー黒字化を予想しています。長期的な純レバレッジ倍率の目標値である約2倍に向けて、負債削減が引き続き優先課題となっています。

経営陣が引用したACTの予測によると、Class 8大型トラックの生産台数は2026年に8%、2027年に9%、2028年に12%増加すると推定されています。また、経営陣は顧客からのコメントや見通しに基づき、2026年の建設市場が1桁台後半のペースで成長すると見込んでいます。

リスクと注視点

• 顧客の納期スケジュールに対応するためCVGが生産を拡大する中、割増運賃や残業手当が高水準にとどまっています。
• 商品（原材料）、輸送費、関税コストの顧客への価格転嫁は、実際の費用発生に対して通常約1四半期遅れています。
• シーティング事業の拠点統合に関連する一時的な非効率性は、年内の完了まで続く見込みです。
• 増産および新規立ち上げに伴い売上債権と棚卸資産が拡大したことで運転資本が増加し、短期的なキャッシュ転換が制約されています。
• 販売管理費（SG&A）は前年同期比で640万ドル増加しました。これには株式報酬およびインセンティブ報酬による約400万ドルと、CEO交代に関連する約70万ドルが含まれます。
• 現金決済型の長期パフォーマンス報酬費用はCVGの株価に応じて変動する可能性があり、ガイダンスに対する販売管理費に影響を与える可能性があります。
• 顧客の生産スケジュールは流動的な状態が続いており、OEM（完成車メーカー）は生産量の増加に伴うサプライチェーンの制約や成長の痛みに引き続き直面しています。

アナリスト質疑応答のハイライト

Zooxの生産立ち上げ：経営陣によると、新型車両、工場、従業員の立ち上げに伴い、生産は当初計画よりやや遅れているとのことです。しかし、Zooxは週当たりの車両生産数を増やしており、CVGは2027年以降の潜在的な追加生産量を見据えて人員配置と生産能力の増強を行っています。

輸送費および原材料コスト：CVGは第3四半期においても、割増運賃、サプライヤーの混乱、原材料コストの上昇という逆風に直面し続けました。経営陣は第4四半期に一定の安定化を見込んでいるものの、原材料関連の圧力は続くと考えています。顧客との価格補償協定、代替品の活用、調達先の変更、ニアショアリングが引き続き主要な軽減策となっています。

運転資本および資金調達：経営陣は追加のセール・アンド・リースバック取引を想定していません。同社はATM（アット・ザ・マーケット）プログラムに基づく発行枠を維持していますが、利用は機会に応じたものになると述べています。第4四半期の優先事項には、生産量の安定化に伴う在庫削減と売上債権条件の改善が含まれます。

Class 8需要：経営陣はトリム・システムズ・アンド・コンポーネンツの事業活動が第4四半期において前四半期比でほぼ横ばいになると予想しています。ACTは第3四半期から5%弱の減少を予測していましたが、最近の顧客スケジュールには稼働日の削減と追加の両方が含まれており、上振れ・下振れ双方の可能性があります。

2027年の報酬の正常化：経営陣は、年次インセンティブの前年比較および譲渡制限付株式のベスティング（権利確定）スケジュールが2027年にはより正常化すると予想しています。歴史的に、年齢や勤続年数に伴う大規模な権利確定の影響がない年における株式報酬は、年間約400万ドルとなっています。

決算説明会 文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, ladies and gentlemen, and welcome to CVGI's Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the call over to Michelle Hards, Vice President of Investor Relations. Please go ahead.

Michelle Hards

Thank you, operator, and welcome, everyone, to our third quarter 2026 conference call. Joining me on the call today are James Ray, President and CEO, who will be retiring; David Ruppel, who will be succeeding James as President and CEO; and Angie O'Leary, Chief Financial Officer.

This morning, we will provide a brief company update as well as commentary regarding our third quarter 2026 results, after which we will open the line for questions. As a reminder, this conference call is being webcast and the Q3 2026 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 filings.

I will now turn the call over to James.

James Ray

Thank you, Michelle. Good morning, and thanks to all those who joined the call. Before I turn to the third quarter results, I would just like to quickly reflect on my nearly 3 years as CEO of CVG. We navigated very challenging end market conditions, refinanced the balance sheet, and transformed the operating structure of the company to be more focused on profitable growth. As you saw in the press release last night, David Ruppel is joining us next week as the incoming President and CEO. Given he has not yet started and has not had full access to the business, today's discussion regarding performance and guidance will be handled by the current management team. But I'll ask him to spend a few minutes introducing himself now. Dave?

David Ruppel

Thank you, James, and good morning, everyone. First, I want to say how excited and honored I am to join CVG as President and CEO. Throughout my career, I've had the opportunity to lead global businesses, build high-performing teams and drive operational and commercial excellence. I believe these experiences align well with both the challenges and opportunities ahead for CVG. I see tremendous potential in CVG and look forward to working with our global teams to build on the positive momentum in our business. Together, we will work to bring value to our customers and our shareholders.

Thank you to the Board for its trust and to James for his support through the transition. James, I'll turn the call back to you.

James Ray

Thanks, David.

Please turn your attention to the supplemental earnings presentation, starting on Slide 4. You'll hear us reiterate key themes throughout today's call. First, revenue growth continued and remained broad-based across all 3 segments. Second, stronger volume and operational improvements translated into meaningful margin and earnings expansion, including a return to positive adjusted EPS. And third, improved earnings and continued debt reduction strengthened the balance sheet and reduced net leverage.

Diving into the details, CVG once again delivered year-over-year revenue growth across all 3 segments. The 36.5% increase reflected stronger customer demand, improving end market conditions, and the ramp of previously awarded new business. These efforts to diversify end markets, geographic and customer exposure positioned us to capture that demand and support the increase in production. During the quarter, CVG delivered an adjusted gross margin of 13.8%, up 170 basis points compared to last year and 90 basis points sequentially from the second quarter of 2026.

The year-over-year and sequential margin expansion was driven by continued improvement in operations and productivity, favorable product mix, and disciplined cost management with further operational efficiency initiatives expected to continue to drive improvement. Notably, this is the highest adjusted gross margin delivered since the third quarter of 2023. We have recently highlighted the growth in our Global Electrical Systems segment, and that accelerated again with 30.2% growth in segment revenues in the quarter. CVG continues to benefit from new program ramps across both North American and international markets, especially Zoox in North America and additional wins from the EMEA region, which are increasing utilization across our manufacturing footprint.

The company also benefited from higher demand in construction markets in the quarter and expects continued strength going forward. Another highlight in the last quarter was the continued debt and leverage reduction. Through these deleveraging efforts, including the sale-leaseback transactions and proceeds from the ATM program, CVG reduced debt by $10.3 million since the end of 2025, facilitating a net leverage ratio reduction from 4.1x at the end of 2025 to 2.7x at the end of the third quarter. The goal remains to bring leverage back down to the 2x level over time.

The combination of these 3 drivers: Strong revenue growth, improved gross margins, and lower interest expense on debt drove positive GAAP and adjusted earnings per share for the quarter for the first time since the first quarter of 2024. And the company expects to carry this momentum forward by driving operating leverage on improved volumes to further increase CVG's profitability.

Turning to Slide 5. I want to dive deeper on the year-over-year and sequential adjusted gross margin improvement seen in the third quarter. Our performance in the third quarter marks the sixth consecutive quarter of year-over-year adjusted gross margin expansion and the third consecutive quarter of sequential expansion. The main drivers of gross margin expansion were volume leverage as all 3 segments grew, productivity gains in our plants and better product mix and pricing.

CVG delivered that improvement while still absorbing certain elevated costs. As volumes ramp, the company incurred premium freight and overtime to meet customer schedules. The recovery of higher commodity, freight, and tariff costs from customers continues to lag behind the costs themselves and CVG's seeding footprint consolidations, which the company expects to complete by year-end, are carrying temporary inefficiencies. The company has plans in place to address each of these and sees opportunity to further expand margins heading into 2027.

Turning to Slide 6. I'd like to add more detail around CVG's deleveraging efforts. At the end of the third quarter, the net leverage ratio was 2.7x, down from 3.3x at the end of the second quarter and 4.1x at the end of 2025. Since year-end, the improvement reflects both debt reduction supported by the sale-leaseback transactions and second quarter ATM proceeds as well as higher adjusted EBITDA. CVG repaid more than $30 million of term loan borrowings this year after considering changes in ABL and other borrowings associated with funding growth, total debt decreased $10.3 million and net debt decreased $16.8 million since the end of 2025.

The debt reduction remains a clear priority while the company works toward achieving its stated leverage goal of 2x. Together, improved operating margins and lower interest expense are translating revenue growth into stronger earnings as evidenced by the return to positive adjusted EPS for the quarter.

Overall, the company is encouraged by the momentum it continues to see across all 3 segments. CVG's growth initiatives are delivering results. Margins continue to improve and the balance sheet is stronger, and teams remain focused on disciplined execution. While the company continues to monitor the broader macroeconomic environment, CVG is well positioned to build on the progress achieved so far and looks forward to a strong finish to 2026.

With that, I will now pass the call over to Angie.

Angela O’Leary

Thank you, James, and good morning, everyone.

If you're following along in the presentation, please turn to Slide 7. Consolidated third quarter 2026 revenue was $208.1 million, up 36.5% from $152.5 million in the prior year period. The increase was primarily due to the increased customer demand in global markets and the ramp of previously awarded new business wins across all 3 of our segments. Third quarter 2026 revenue also increased 6.6% sequentially, continuing the acceleration we reported in the first half of 2026. As you'll see from the guidance update James will share in a few minutes, we expect year-over-year growth to continue in the fourth quarter.

Operating income was $7.7 million, which included a $3.1 million gain on the sale of assets compared to an operating loss of $1.1 million in the prior year period. Adjusted operating income was $5.6 million compared to $1.6 million. Adjusted EBITDA increased 85% to $8.5 million for the third quarter compared to $4.6 million in the prior year period. Adjusted EBITDA margin was 4.1%, up 110 basis points from 3% in the third quarter of 2025 as higher gross profit was partially offset by higher SG&A expense.

SG&A expense increased $6.4 million year-over-year. Approximately $4 million of the increase came from share-based and incentive compensation and approximately $700,000 of incremental costs related to the CEO succession process. I'll talk more about the impact of share-based and incentive compensation in a moment. Despite the year-over-year increase, SG&A remained relatively flat as a percentage of sales at 11.3% compared to 11.2% in the third quarter of 2025, and we continue to tightly manage discretionary spending.

Interest expense was $3.4 million compared to $4.1 million in the third quarter of 2025, primarily due to lower debt balances. Net income from continuing operations in the quarter was $5.6 million or $0.14 per diluted share compared to a net loss of $6.8 million or $0.20 per diluted share in the prior year period. GAAP net income for the quarter included a $4.1 million pretax warrant liability revaluation benefit and a $3.1 million gain on the sale of assets.

Adjusted net income for the quarter was $1.2 million or $0.03 per diluted share compared to an adjusted net loss of $4.6 million or $0.14 per diluted share. The improvement reflects higher sales, improved gross margin, and lower interest expense, partially offset by higher SG&A. Furthermore, these quarterly results reflect the first time we are reporting positive GAAP and adjusted EPS since the first quarter of 2024. Free cash flow from continuing operations, including $4.1 million of sale leaseback proceeds was $0.6 million compared to an outflow of $3.4 million in the prior year period.

Operating cash flow was $1.6 million, while capital expenditures increased to $5.1 million, up from $1.8 million a year ago as we invested to support new business launches. As growth accelerates, our financial priorities remain the same: Convert higher earnings into cash, invest appropriately to support profitable growth, and strengthen the balance sheet. Working capital has increased as receivables and inventory have grown with higher volumes and new launches. We see that as an opportunity and are working to align inventory more closely with the volume growth and to manage receivables and customer terms as programs ramp, and we expect those actions to support stronger cash conversion going forward.

Turning to Slide 8. We have provided additional detail on incentive compensation to help explain the relationship between this year's gross profit growth and adjusted EBITDA performance. We included additional detail in our earnings release this quarter, showing the impact of certain items related to long-term incentive compensation. As you can see, the year-to-date impact of those drivers has been $7.1 million, up approximately $4 million year-over-year due to the company's improving business fundamentals and higher stock price in 2026 as well as heavier-than-normal vesting schedule for restricted stock awards.

There's an additional impact from our annual incentive plan, which is accruing again after no bonus was earned in 2025. These factors are currently limiting EBITDA growth this year. As we look ahead, we anticipate 2 of these factors to ease in 2027 as we cycle past the 2025 comparison when no annual incentive was earned and we expect a more normal vesting schedule for restricted stock grants. As a result, we would expect incremental EBITDA margins in 2027 to be more in line with our historical performance. The one component that can still cause variability is the expense associated with our cash settled long-term performance awards, which we remeasure each quarter based on our share price. That expense rises when our share price rises and falls when it declines.

In the second quarter, it added about $1.5 million of expense. And in the third quarter, it produced a benefit of about $400,000. James will talk more about guidance later, but it's important to note that our adjusted EBITDA outlook incorporates our current estimate of the impact of these performance awards. However, changes in our share price could still affect SG&A relative to our guidance. As a reminder, all performance awards are designed to align executive compensation with shareholder returns.

Moving to the segment results, starting on Slide 9. Our Global Seating segment achieved revenues of $84.7 million, an increase of 23.3% compared to the prior year period, driven primarily by increased customer demand in North America and Asia Pacific. Adjusted operating income was $4.6 million, an increase of $1.6 million compared to the third quarter of 2025, reflecting higher volume and improved gross margin performance. We also realized benefits from our recent footprint consolidation efforts in China and expect additional benefits as we advance initiatives in the U.S. and U.K.

Turning to Slide 10. Our Global Electrical Systems segment's third quarter revenues were $64.4 million, an increase of 30.2% compared to the prior year period, primarily due to the ramp of new business wins and increased customer demand in construction markets. Adjusted operating income for the third quarter was $3.7 million, an increase of $2.3 million compared to the prior year period, primarily attributable to volume and favorable product mix.

Adjusted operating margin more than doubled to 5.7% from 2.8%, demonstrating the operating leverage we can generate as new programs increase utilization within our plants. We continue to work closely with Zoox to support their production plans while also launching previously awarded programs with several key customers in Europe. Together, these launches are increasing utilization across our North American and EMEA facilities and supporting growth opportunities into 2027.

Moving to Slide 11. Our Trim Systems and Components revenues in the third quarter increased 71.9% to $58.9 million compared to the prior year period, reflecting higher customer demand and improved product mix and new program activity. As we've mentioned previously, this segment solely serves the North American market and is most directly impacted by Class 8 production volumes, which were up about 54% year-over-year in the third quarter, based on ACT data.

Our revenue growth outpaced the increase in Class 8 production, reflecting our customer and program mix. Adjusted operating income for the third quarter was $2.7 million compared to a loss of $0.3 million in the prior year period. The increase was primarily attributable to higher volumes and improved operational efficiency.

Taken collectively, we delivered strong revenue growth, gross margin expansion, and a return to positive adjusted EPS with adjusted operating margins up year-over-year in all 3 segments. We are ramping new business wins and seeing end market improvement. While we continue to invest in working capital and capacity to support that growth, we see further opportunity in plant efficiency, cost recovery and cash conversion, and we are encouraged by improvements in the underlying trajectory of the business.

That concludes my financial overview commentary. I will now turn the call back over to James to cover our end market outlook and a review of our 2026 guidance.

James Ray

Thank you, Angie.

I will start with our key end market outlook on Slide 12. According to ACT's Class 8 heavy truck build forecast, 2026 estimates imply an 8% increase in year-over-year volumes, followed by another 9% increase in 2027. They currently expect further strong growth of 12% in 2028. Similar to prior quarters, we are showing you a quarterly breakdown of the ACT data and outlook. Production levels for the second half of 2026 are projected to exceed first half production levels by approximately 23%.

Moving to CVG's construction market outlook. Based on recent commentary and outlooks from customers, the construction market is expected to be up in the high single-digit percentage range, primarily driven by stronger industrial production and fiscal stimulus initiatives for 2026.

Turning to Slide 13. I'll share a few thoughts on CVG's updated outlook for 2026. As always, our guidance reflects current macroeconomic trends, forecasted Class 8 truck build rates, demand in construction markets and the expected ramp of new business. Based on strong year-to-date performance, continued new business ramps, and improving end market demand, CVG is raising its 2026 revenue outlook and narrowing its adjusted EBITDA guidance range. The company now expects revenue of $755 million to $775 million, representing 18% growth over 2025 results at the midpoint, supported by strong growth across all 3 business segments.

CVG now expects adjusted EBITDA of $26 million to $29 million compared with our prior range of $26 million to $31 million, reflecting the additional compensation expense related to the CEO succession. The new midpoint of the range represents approximately 54% growth over 2025. The higher revenue outlook is expected to generate additional gross profit. However, that benefit is expected to be substantially offset by higher incentive compensation and the costs associated with supporting new program and volume ramps. As a result, we have narrowed the adjusted EBITDA range by lowering the upper end.

The year-over-year increase in incentive compensation reflects strong performance against the company's incentive targets compared to no annual incentive payout in 2025 as well as the impact of higher stock prices on long-term awards. Furthermore, roughly 1/3 of this expected increase is noncash. While incentive compensation is an ongoing component of the cost structure and will vary with performance, CVG would not expect the current year-over-year increase to be indicative of the underlying rate of SG&A growth.

Finally, the company continues to expect positive free cash flow in 2026. Consistent with recent actions, debt reduction remains a priority for capital allocation as CVG continues to strengthen its balance sheet and reduce net leverage toward a long-term target of approximately 2x.

Before I conclude, I'd like to reinforce the priorities for the balance of 2026 and beyond. CVG is encouraged by the third quarter performance and continued advancement of its strategic objectives. The company's stronger earnings profile, broad-based revenue growth, and improving balance sheet reflect the progress our teams are making across the globe.

The focus remains on sustaining that momentum through profitable growth, continued operational improvement, positive free cash flow, and further deleveraging. Finally, I would like to thank all CVG employees for their continued efforts to drive shareholder value every day.

With that, I will now turn the call back to the operator and open up the line for questions. Operator?

Operator

[Operator Instructions] Your first question comes from the line of Joe Gomes with NOBLE Capital.

質疑応答

Joseph Gomes

James, it's been a great time working with you. Wish you success in your new endeavors. David, welcome aboard. Looking forward to seeing how things unfold from here.

David Ruppel

Thank you, Joe.

Joseph Gomes

So starting with the questions on Zoox, how is that production ramp looking? Has it changed any, hopefully, for the positive? Maybe just a little more color on that opportunity.

James Ray

Sure, Joe. Yes, the Zoox ramp is going, I would say, a little slower than planned. As you can imagine, new vehicle, new plant, new workforce. We are staying in close alignment with them daily on our support for their ramp schedule. They are increasing the number of vehicles per week every week, and we are aligned with supporting that. They have also indicated that there could be additional potential volume in '27 and beyond. So we're very encouraged with this. They continue to roll out their vehicles across multiple cities. We are continuing to add capacity in anticipation of further growth next year. So we're ready and not behind. We're getting in front of it. We have staffing in place. Again, we have to staff a little ahead of time to make sure our workforce is trained and start really driving labor efficiency.

And wire harness manufacturing, especially in autonomous vehicles where you have redundant systems, the complexity of the harnesses are higher than typical for nonautonomous vehicles. So we're really encouraged with it. We're very happy to see that they're having success in the market and all indications are in front of us that they're going to achieve their volumes in the years coming. So we're excited about it. We have a facility in Alabama that's really focused on Zoox, and it will be completely dedicated to them starting in Q1.

Joseph Gomes

And then last quarter, you talked about some, I'll call it, headwinds, maybe just some uncertainties, you talked about the other freight cost, sea container availability, fuel surcharges, a couple of other little items there. And I was wondering maybe you could provide some more color on how those have been played out in the third quarter and what you see for them going for the rest of the year?

James Ray

Yes. Well, we continue to see headwinds in Q3. Fortunately, we were able to offset some of those headwinds. And as a result, you can see in our results. We do have some lagging recovery from customers. Usually, it's a quarter behind, not just on freight and material economics, but also where we have disruptions with suppliers, and we have to have premium freight and those things. We incurred that in Q3. We see some stabilization in Q4 as the conflict eases a bit. The material economics piece is going to continue, we believe, and we stay closely aligned with customers for recovery where we have agreements in place or looking at substitutions or resourcing or nearshoring. So all of those levers are in play.

And as we plan the balance of the year and look into next year, we're continuing to optimize our supply chain and also make sure that we have good alignment and agreement with our customers on how we're going to manage the supply chain, both complexities and economics.

Operator

Your next question comes from the line of John Franzreb with Sidoti & Co.

John Franzreb

I want to start with the increase in inventory and, I guess, also receivables. I'm kind of curious about the timing of cash conversion there. Will we see a lot of that in the fourth quarter? Or will you still need to use maybe alternative financing, more sale leasebacks or ATM uses? Anything like that in the fourth quarter? Or you have the cash outlook that kind of negates that?

Angela O’Leary

John -- sorry, John, this is Andy. I'll take that question. We do not -- I guess, the second part of your question there, we do not anticipate any more sale leaseback transactions. And the ATM program, as you know, we still have some availability there, but we'll continue to be opportunistic there in terms of when we would execute that based on stock prices. Our focus in Q4 is really to work on that working capital efficiency. And so we do see [indiscernible] down the inventory levels there in Q4 just as we align with more stable volume as we go into year-end. And we continue to work receivable terms as well. So from an efficiency perspective, I think we're doing pretty -- a pretty good job controlling the growth and keeping the cash conversion cycle as tight as we can.

James Ray

John, were you able to catch all of that? It seems there's an echo on the line.

John Franzreb

I'm not hearing it on my end, if that helps. But yes, I got it. And in the second quarter, you kind of suggested that the Class 8 truck outlook was such that you had expected the ramp to be up sequentially in the second half of the year. I'm kind of curious if that's still the case, given the normal seasonality of the business? And would you expect Trim to be up sequentially in Q4 versus Q3? Or is there a change in that kind of an outlook?

James Ray

No, we expect it to be relatively flat. ACT showing a little less than 5% decline Q3 to Q4. But again, ACT is one of the leading indicators we look at. We pay much more attention to our customer schedules. And just within the last couple of weeks, we've seen changes in vehicle build schedules with several of our major Class 8 customers. In some cases, they're taking a couple of days out. But in other cases, they're actually adding days. Several of our customers have indicated they work over the holiday up until New Year for -- which typically is downtime.

So I think there are some risks and opportunities. But right now, it looks like we have some potential tailwind that might bump up that decline that ACT is forecasting. But we'll stay close, and we have 12-week insight, but it changes within 4-week windows. So we're staying really closely aligned. And the most important thing is making sure that we have the aligned capacity, whether it's up or down, so we can be more efficient and flex with their schedules. But it is a little dynamic. There are other supply chain constraints that our OEMs are dealing with, with component manufacturers and suppliers of other parts.

So as this volume ramps, they're seeing some growing pains across the supply chain. We're keeping up with them. We have opportunities to continue to reduce some of our backlog and past due going into Q4, and we expect to be caught up really by the end of November where we are past due in some cases.

Operator

Your next question comes from the line of Gary Prestopino with Barrington Research.

Gary Prestopino

Angie, could you just help me out here? I went through the cue and was trying to find some of these impacts to EBITDA. I saw a $700,000 recruiting cost, which is for the new CEO, and welcome to him. There was another $700,000 for advisory services. What was that involved with?

James Ray

I could comment on a couple, Gary, and I'll let Angie fill in others. But as we continue to drive operational efficiency improvement, we do engage some consultants across several of our sites to help accelerate the operational efficiency improvements. So a portion of that is related to, I would say, ops improvement, ops excellence, quality consultants. So we expect those to stabilize from an operations standpoint by the end of this year. So as we go into '27, our platform will be much more stable. We will have incorporated the volume increases for the second half. And there's still an expectation that volume will pretty much remain where it is going into Q1. So we see some stability coming and would expect a reduction in some of those expenses.

Angela O’Leary

Yes. And just to add on there, we did -- we do from time to time use consultants to kind of fill where we have open roles, like my -- like the Chief Accounting Officer role. So as we go out throughout the rest of the year here, we'll expect to see some of those costs reduce.

Gary Prestopino

So if I'm trying to get to a real adjusted EBITDA number, and I realize you don't back in stock comp, but it's safe to say the recruiting costs were there. That's not going to occur again. But the advisory costs will still continue into fiscal '27, but not at that rate of whatever it was this quarter?

Angela O’Leary

Yes. I think we will still continue to have some advisory costs going forward. There are always projects that we have in the pipeline. And going forward, obviously, we'll talk about that when the time comes, but we'll be focused on continuing to work on projects that improve efficiency and just how we do things, how we work differently going forward. So I think that would be something that you would continue to see. And like I think we talked about last quarter, we do anticipate that for 2026, our SG&A as a percent of revenue will continue to be at about the same rate it was this quarter, in that 11.5% range.

Gary Prestopino

And then just lastly, continuing on this whole thing with stock comp. It looks like for the 6-month period, you had about $2.4 million, $2.5 million of stock comp, which works out to about $1.25 million per quarter. It jumped up to $3 million this quarter. When you're talking about normalization going into '27, are we looking at somewhere back in that $1.2 million to $1.3 million per quarter?

Angela O’Leary

Yes. Yes. I think historically, when we haven't had years where we have significant age and service date testing, we're around that $4 million mark. So I think we would expect we would get more in line with that range.

Operator

[Operator Instructions] There are no further questions at this time. This concludes the Q&A session. I will now turn the call back to Mr. Ray for closing remarks.

James Ray

Thank you all for joining today's call. We continue to execute and deliver clear progress across CVG in the third quarter. Revenue growth accelerated across all 3 segments. We delivered another quarter of adjusted margin expansion. We returned to positive adjusted EPS, and we further reduced net leverage. The focus now is to build on that progress through disciplined new business execution, continued operational improvement, stronger cash conversion, and further deleveraging.

The management team looks forward to updating you on CVG's progress next quarter. Thank you all.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.