Commercial Vehicle Group, Inc. 10-Q

ITEM 1 – FINANCIAL STATEMENTS COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 (Unaudited) (In thousands, except per share amounts) Revenues $ 257,941 $ 126,896 $ 503,063 $ 314,001 Cost of revenues 223,573 120,421 437,574 287,223 Gross profit 34,368 6,475 65,489 26,778 Selling, general and administrative expenses 18,039 16,840 33,757 34,799 Goodwill and other impairment — 150 — 29,017 Operating income (loss) 16,329 ( 10,515 ) 31,732 ( 37,038 ) Other (income) expense ( 285 ) ( 205 ) ( 941 ) 536 Interest expense 2,818 5,309 7,859 9,933 Loss on extinguishment of debt 7,155 — 7,155 — Income (loss) before provision for income taxes 6,641 ( 15,619 ) 17,659 ( 47,507 ) Provision (benefit) for income taxes 1,546 ( 3,122 ) 4,074 ( 10,416 ) Net income (loss) $ 5,095 $ ( 12,497 ) $ 13,585 $ ( 37,091 ) Earnings (loss) per Common Share: Basic $ 0.16 $ ( 0.40 ) $ 0.43 $ ( 1.20 ) Diluted $ 0.16 $ ( 0.40 ) $ 0.42 $ ( 1.20 ) Weighted average shares outstanding: Basic 31,458 30,890 31,361 30,848 Diluted 32,674 30,890 32,654 30,848 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 (Unaudited) (In thousands) Net income (loss) $ 5,095 $ ( 12,497 ) $ 13,585 $ ( 37,091 ) Other comprehensive income (loss): Foreign currency exchange translation adjustments 1,488 1,920 ( 584 ) ( 2,885 ) Minimum pension liability, net of tax 387 ( 446 ) 673 ( 893 ) Derivative instrument, net of tax ( 77 ) 1,104 ( 503 ) ( 1,674 ) Other comprehensive income (loss) 1,798 2,578 ( 414 ) ( 5,452 ) Comprehensive income (loss) $ 6,893 $ ( 9,919 ) $ 13,171 $ ( 42,543 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2021 December 31, 2020 (Unaudited) (In thousands, except per share amounts) ASSETS Current Assets: Cash $ 40,971 $ 50,503 Accounts receivable, net of allowances of $ 610 and $ 644 , respectively 202,058 151,101 Inventories 128,319 91,247 Other current assets 21,650 17,686 Total current assets 392,998 310,537 Property, plant and equipment, net 61,262 62,776 Intangible assets, net 20,028 21,804 Deferred income taxes 24,678 25,981 Other assets, net 30,989 33,275 Total assets $ 529,955 $ 454,373 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 141,797 $ 112,402 Accrued liabilities and other 46,501 50,056 Current portion of long-term debt 7,500 2,429 Total current liabilities 195,798 164,887 Long-term debt 177,225 144,147 Pension and other post-retirement benefits 13,909 15,296 Other long-term liabilities 31,386 34,673 Total liabilities 418,318 359,003 Stockholders’ equity: Preferred stock, $ 0.01 par value ( 5,000,000 shares authorized; no shares issued and outstanding) $ — $ — Common stock, $ 0.01 par value ( 60,000,000 shares authorized; 31,569,749 and 31,249,811 shares issued and outstanding respectively) 316 313 Treasury stock, at cost: 1,567,654 and 1,560,623 shares, respectively ( 11,966 ) ( 11,893 ) Additional paid-in capital 252,478 249,312 Retained deficit ( 83,771 ) ( 97,356 ) Accumulated other comprehensive loss ( 45,420 ) ( 45,006 ) Total stockholders’ equity 111,637 95,370 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 529,955 $ 454,373 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2021 2020 (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 13,585 $ ( 37,091 ) Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 9,308 9,225 Impairment expense — 29,017 Noncash amortization of debt financing costs 781 804 Payment in kind interest expense 2,254 1,813 Share-based compensation expense 3,165 1,730 Deferred income taxes 1,819 ( 11,568 ) Non-cash loss (income) on derivative contracts ( 424 ) 1,614 Loss on extinguishment of debt 7,155 — Change in other operating items: Accounts receivable ( 50,839 ) 10,997 Inventories ( 37,043 ) 11,200 Prepaid expenses ( 4,931 ) 1,983 Accounts payable 28,874 ( 7,083 ) Other operating activities, net 1,484 7,867 Net cash provided by (used in) operating activities ( 24,812 ) 20,508 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 6,944 ) ( 4,490 ) Proceeds from disposal/sale of property, plant and equipment 35 87 Net cash used in investing activities ( 6,909 ) ( 4,403 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under term loan facility 150,000 — Repayment of 2023 term loan facility principal ( 152,654 ) ( 2,188 ) Borrowings under revolving credit facility 35,500 — Borrowings under ABL revolving credit facility 11,300 15,000 Repayment of ABL revolving credit facility ( 11,300 ) — Debt extinguishment payments and early payment fees on debt ( 3,031 ) — Debt issuance and amendment costs ( 2,333 ) ( 2,579 ) Contingent Consideration payment ( 5,000 ) — Other financing activities ( 241 ) ( 239 ) Net cash provided by financing activities 22,241 9,994 EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH ( 52 ) ( 2,220 ) NET INCREASE (DECREASE) IN CASH ( 9,532 ) 23,879 CASH: Beginning of period 50,503 39,511 End of period $ 40,971 $ 63,390 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Treasury Stock Additional Paid In Capital Retained Deficit Accumulated Other Comp. Loss Total CVG Stockholders’ Equity Shares Amount (Unaudited) (In thousands, except per share amounts) Balance - December 31, 2019 30,801,255 $ 323 $ ( 11,230 ) $ 245,852 $ ( 60,307 ) $ ( 45,950 ) $ 128,688 Share-based compensation expense 46,014 — — 862 — — 862 Total comprehensive income (loss) — — — — ( 24,594 ) ( 8,030 ) ( 32,624 ) Balance - March 31, 2020 30,847,269 $ 323 $ ( 11,230 ) $ 246,714 $ ( 84,901 ) $ ( 53,980 ) $ 96,926 Share-based compensation expense 138,400 ( 14 ) — 868 — — 854 Total comprehensive income (loss) — — — — ( 12,497 ) 2,578 ( 9,919 ) Balance - June 30, 2020 30,985,669 $ 309 $ ( 11,230 ) $ 247,582 $ ( 97,398 ) $ ( 51,402 ) $ 87,861 Balance - December 31, 2020 31,249,811 $ 313 $ ( 11,893 ) $ 249,312 $ ( 97,356 ) $ ( 45,006 ) $ 95,370 Share-based compensation income 132,034 2 — 965 — — 967 Total comprehensive income (loss) — — — — 8,490 ( 2,212 ) 6,278 Balance - March 31, 2021 31,381,845 $ 315 $ ( 11,893 ) $ 250,277 $ ( 88,866 ) $ ( 47,218 ) $ 102,615 Share-based compensation expense 187,904 1 ( 73 ) 2,201 — — 2,129 Total comprehensive income (loss) — — — — 5,095 1,798 6,893 Balance - June 30, 2021 31,569,749 $ 316 $ ( 11,966 ) $ 252,478 $ ( 83,771 ) $ ( 45,420 ) $ 111,637 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Description of Business and Basis of Presentation Commercial Vehicle Group, Inc. and its subsidiaries is a global provider of components and assemblies into two primary end markets – the global vehicle market and the U.S. technology integrator markets. The Company provides components and assemblies to global vehicle companies to build original equipment and provides aftermarket products for fleet owners. The Company also provides mechanical assemblies to warehouse automation integrators and to U.S. military technology integrators. References herein to the "Company", "CVG", "we", "our", or "us" refer to Commercial Vehicle Group, Inc. and its subsidiaries. The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and the rules and regulations of the Securities and Exchange Commission and include the accounts of the Company and its subsidiaries. Except as disclosed within these condensed notes to unaudited quarterly consolidated financial statements, the adjustments made were of a normal, recurring nature. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. The preparation of financial statements in conformity with GAAP in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. These condensed notes to unaudited quarterly consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"), which includes a complete set of footnote disclosures, including the Company's significant accounting policies. 2. Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. Also, in January 2021, the FASB issued ASU No. 2021-01 "Reference Rate Reform (Topic 848): Scope", to clarify that certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. ASU 2020-04 and ASU 2021-01 are effective beginning on March 12, 2020 and the amendments will be applied prospectively through December 31, 2022. We are evaluating the effect these ASUs will have on the Company. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and otherwise clarifies and amends existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. The Company implemented ASU 2019-12 as of January 1, 2021 and the ASU did not have a material impact on the Company's condensed consolidated financial statements and related disclosures. In October 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-10, "Codification Improvements". The ASU updates various codification topics by clarifying and improving disclosure requirements to align with the SEC's regulations. The Company implemented ASU 2020-10 as of January 1, 2021 and the ASU did not have a material impact on the Company's condensed consolidated financial statements and related disclosures. 6 Table of Contents 3. Revenue Recognition We had outstanding customer accounts receivable, net of allowances, of $ 202.1 million as of June 30, 2021 and $ 151.1 million as of December 31, 2020. We generally do not have other assets or liabilities associated with customer arrangements. Revenue Disaggregation - The following is the composition, by product category, of our revenues: Three Months Ended June 30, 2021 Electrical Systems Global Seating Elimination/ Other Total Seats $ 756 $ 83,544 $ ( 1,216 ) $ 83,084 Electrical wire harnesses, panels and assemblies 100,244 1,068 ( 276 ) 101,036 Trim 40,826 — ( 500 ) 40,326 Cab structures and sleeper boxes 21,669 — — 21,669 Mirrors, wipers and controls 11,609 286 ( 69 ) 11,826 Total $ 175,104 $ 84,898 $ ( 2,061 ) $ 257,941 Three Months Ended June 30, 2020 Electrical Systems Global Seating Elimination/ Other Total Seats $ 377 $ 51,422 $ ( 452 ) $ 51,347 Electrical wire harnesses, panels and assemblies 47,822 339 ( 40 ) 48,121 Trim 12,917 1,445 ( 532 ) 13,830 Cab structures and sleeper boxes 5,731 — — 5,731 Mirrors, wipers and controls 7,363 656 ( 152 ) 7,867 Total $ 74,210 $ 53,862 $ ( 1,176 ) $ 126,896 Six Months Ended June 30, 2021 Electrical Systems Global Seating Elimination/ Other Total Seats $ 3,199 $ 170,536 $ ( 8,505 ) $ 165,230 Electrical wire harnesses, panels and assemblies 191,096 4,948 ( 652 ) 195,392 Trim 78,212 72 ( 921 ) 77,363 Cab structures and sleeper boxes 42,326 — — 42,326 Mirrors, wipers and controls 22,513 436 ( 197 ) 22,752 Total $ 337,346 $ 175,992 $ ( 10,275 ) $ 503,063 Six Months Ended June 30, 2020 Electrical Systems Global Seating Elimination/ Other Total Seats $ 744 $ 124,286 $ ( 514 ) $ 124,516 Electrical wire harnesses, panels and assemblies 102,099 747 ( 97 ) 102,749 Trim 43,426 3,363 ( 1,047 ) 45,742 Cab structures and sleeper boxes 20,431 — — 20,431 Mirrors, wipers and controls 19,608 1,446 ( 491 ) 20,563 Total $ 186,308 $ 129,842 $ ( 2,149 ) $ 314,001 7 Table of Contents 4. Debt Debt consisted of the following: June 30, 2021 December 31, 2020 Term loan facility due 2026 $ 150,000 $ — Revolving credit facility due 2026 35,500 — Term loan and security agreement due 2023 — 150,950 Unamortized issuance costs and discount ( 775 ) ( 4,374 ) $ 184,725 $ 146,576 Less: current portion, net of unamortized issuance costs and discount of $ 0.0 million at June 30, 2021 and $ 1.9 million at December 31, 2020, respectively ( 7,500 ) ( 2,429 ) Total long-term debt, net of current portion $ 177,225 $ 144,147 Credit Agreement On April 30, 2021, the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”) between, among others, Bank of America, N.A. as administrative agent (the “Administrative Agent”) and other lenders party thereto (the “Lenders”) pursuant to which the Lenders made available a $ 150 million Term Loan Facility (the “Term Loan Facility”) and a $ 125 million Revolving Credit Facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”). Subject to the terms of the Credit Agreement, the Revolving Credit Facility includes a $ 10 million swing line sublimit and a $ 10 million letter of credit sublimit. The Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the “Incremental Facilities”), in a maximum aggregate amount of (a) up to the date of receipt of financial statements for the fiscal quarter ending June 30, 2022, $ 75 million, and (b) thereafter, (i) $ 75 million less the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50 :1.0. The Credit Facilities mature on April 30, 2026 (the “Maturity Date”). The proceeds of the Credit Facilities were used, together with cash on hand of the Company, to (a) fund the redemption, satisfaction and discharge of all of the Company’s outstanding secured credit facility due 2023 (the “2023 Term Loan Facility”) issued pursuant to a term facility agreement (the “Term Facility Agreement”) between, among others, Bank of America, N.A. as administrative agent and other lender parties thereto, (b) fund the redemption, satisfaction and discharge of all of the Company’s asset-based revolving credit facility (the “ABL Revolving Credit Facility”) issued pursuant to a facility agreement (the “ABL Facility Agreement”) between, among others, Bank of America, N.A. as agent and certain financial institutions as lenders, (c) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Credit Agreement, and (d) for working capital and other lawful corporate purposes of the Company and its subsidiaries. At June 30, 2021 we had $ 35.5 million of borrowings under the Revolving Credit Facility, outstanding letters of credit were $ 1.4 million and we had availability of $ 88.1 million. The unamortized deferred financing fees associated with the Revolving Credit Facility were $ 1.4 million as of June 30, 2021, which are being amortized over the remaining life of the Credit Agreement. The unamortized deferred financing fees associated with the ABL Revolving Credit Facility were $ 0.4 million as of December 31, 2020. At December 31, 2020, we had outstanding letters of credit of $ 1.6 million. Interest rates and fees Amounts outstanding under the Credit Facilities and the commitment fee payable in connection with the Credit Facilities accrue interest at a per annum rate equal to (at the Company’s option) the base rate or the Eurodollar rate plus a rate which will vary according to the Consolidated Total Leverage Ratio as set forth in the most recent compliance certificate received by the Administrative Agent, as set out in the following table: Pricing Tier Consolidated Total Leverage Ratio Commitment Fee Letter of Credit Fee Eurodollar Rate Loans Base Rate Loans I > 3.00 to 1.00 0.30 % 3.00 % 3.00 % 2.00 % II < 3.00 to 1.00 but > 2.00 to 1.00 0.25 % 2.75 % 2.75 % 1.75 % III < 2.00 to 1.00 but > 1.50 to 1.00 0.20 % 2.50 % 2.50 % 1.50 % IV < 1.50 to 1.00 0.20 % 2.25 % 2.25 % 1.25 % 8 Table of Contents Guarantee and Security All obligations under the Credit Agreement and related documents are unconditionally guaranteed by each of the Company’s existing and future direct and indirect wholly owned material domestic subsidiaries, subject to certain exceptions (the “Guarantors”). All obligations of the Company under the Credit Agreement and the guarantees of those obligations are secured by a first priority pledge of substantially all of the assets of the Company and of the Guarantors, subject to certain exceptions. The property pledged by the Company and the Guarantors includes a first priority pledge of all of the equity interests owned by the Company and the Guarantors in their respective domestic subsidiaries and a first priority pledge of the equity interests owned by the Company and the Guarantors in certain foreign subsidiaries, in each case, subject to certain exceptions. Covenants and other terms The Credit Agreement contains customary restrictive covenants, including, without limitation, limitations on the ability of the Company and its subsidiaries to incur additional debt and guarantees; grant certain liens on assets; pay dividends or make certain other distributions; make certain investments or acquisitions; dispose of certain assets; make payments on certain indebtedness; merge, combine with any other person or liquidate; amend organizational documents; make material changes in accounting treatment or reporting practices; enter into certain restrictive agreements; enter into certain hedging agreements; engage in transactions with affiliates; enter into certain employee benefit plans; and other matters customarily included in senior secured loan agreements. The Credit Agreement also contains customary reporting and other affirmative covenants, as well as customary events of default, including, without limitation, nonpayment of obligations under the Credit Facilities when due; material inaccuracy of representations and warranties; violation of covenants in the Credit Agreement and certain other documents executed in connection therewith; breach or default of agreements related to material debt; revocation or attempted revocation of guarantees; denial of the validity or enforceability of the loan documents or failure of the loan documents to be in full force and effect; certain material judgments; certain events of bankruptcy or insolvency; certain Employee Retirement Income Securities Act events; and a change in control of the Company. Certain of the defaults are subject to exceptions, materiality qualifiers, grace periods and baskets customary for credit facilities of this type. The Credit Agreement includes (a) a minimum consolidated fixed charge coverage ratio of 1.20 :1.0, and (b) a maximum consolidated total leverage ratio of 3.75 :1.0 (which will be subject to step-downs to 3.50 :1.0 at the end of the fiscal quarter ending September 30, 2021; to 3.25 :1.0 at the end of the fiscal quarter ending March 31, 2022; and to 3.00 :1.0 for each fiscal quarter on and after the fiscal quarter ending September 30, 2022). We were in compliance with the covenants as of June 30, 2021. Repayment and prepayment The Credit Agreement requires the Company to make quarterly amortization payments to the Term Loan Facility at an annualized rate of the loans under the Term Loan Facility for every year as follows: 5.0 %, 7.5 %, 10.0 %, 12.5 % and 15 %. The Credit Agreement also requires all outstanding amounts under the Credit Facilities to be repaid in full on the Maturity Date. The Credit Agreement requires prepayments from the receipt of proceeds of dispositions or debt issuance, subject to certain exceptions and ability to re-invest and use proceeds towards acquisitions permitted by the Credit Agreement. Voluntary prepayments of amounts outstanding under the Credit Facilities are permitted at any time, without premium or penalty. Any prepayment of Eurodollar loans shall be in a principal amount of $ 1 million or a whole multiple of $ 1 million in excess thereof (or, if less, the entire principal amount thereof then outstanding) and any prepayment of base rate loans shall be in a principal amount of $ 0.5 million or a whole multiple of $ 0.1 million in excess thereof (or, if less, the entire principal amount thereof then outstanding). The Credit Agreement contains customary representations and warranties by the Company, The representations and warranties contained in the Credit Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. Term Loan and Security Agreement On April 12, 2017, the Company entered into the $ 175.0 million 2023 Term Loan Facility, maturing on April 12, 2023, pursuant to a term loan and security agreement (the “TLS Agreement”), the terms of which are described in Note 3, Debt in our 2020 Form 10-K. On April 30, 2021, the 2023 Term Loan Facility was fully repaid and terminated as described below. ABL Revolving Credit Facility On September 18, 2019, the Company entered into an amendment of the Third Amended and Restated Loan and Security Agreement (the “Third ARLS Agreement”), dated as of April 12, 2017, the terms of which are described in Note 3, Debt in our 2020 10-K and which governed the Company’s ABL Revolving Credit Facility. 9 Table of Contents On March 1, 2021, the Company and certain of its subsidiaries entered into Amendment No. 3, which amended the terms of the Third ARLS Agreement, among other things, to extend the maturity date of the ABL Revolving Credit Facility to March 1, 2026 and to remove the condition that the first $ 7.0 million of the $ 90.0 million Revolver Commitments are available as a first-in, last-out facility. The Third ARLS Agreement, as amended, also allowed the Company to increase the size of the ABL Revolving Credit Facility by up to $ 50.0 million with the consent of Lenders providing the increase in the ABL Revolving Credit Facility. On April 30, 2021, the ABL Revolving Credit Facility was fully repaid and terminated as described below. Termination of TLS Agreement and Third ARLS Agreement Effective on April 30, 2021, the Company issued a notice of redemption in respect of its 2023 Term Loan Facility and the ABL Revolving Credit Facility and deposited with the Bank of America, N.A. as Administrative Agent under the TLS Agreement and the Third ARLS Agreement proceeds from the Credit Facilities, together with cash on hand in an amount sufficient to discharge the Company’s obligations under the TLS Agreement and the Third ARLS Agreement and respective related agreements. All amounts under the 2023 Term Loan Facility and ABL Revolving Credit Facility were repaid and discharged in full on April 30, 2021 and the TLS Agreement and Third ARLS Agreement were terminated. The discharge resulted in a loss on extinguishment of debt of $ 7.2 million, including $ 3.7 million non-cash write off relating to deferred financing costs and unamortized discount of the 2023 Term Loan Facility, a voluntary repayment premium of $ 3.0 million, and $ 0.5 million of other fees associated with the new debt, recorded in our Condensed Consolidated Statements of Operations for the quarter ended June 30, 2021. Cash Paid for Interest For the six months ended June 30, 2021 and 2020, cash payments for interest were $ 5.4 million and $ 6.2 million, respectively. 5. Goodwill and Intangible Assets Goodwill represents the excess of acquisition purchase price over the fair value of net assets acquired. During the first quarter of 2020, as a result of the Company’s market capitalization value being less than the carrying value of its equity for a duration of time, the Company determined it had an impairment indicator. Accordingly, the Company estimated the fair value of each of the reporting units with goodwill by discounting the estimated cash flows of each reporting unit. The estimated fair values of the reporting units were then compared to their net carrying values as of March 31, 2020 and, as a result, the Company recognized $ 27.1 million impairment of goodwill, which represented the carrying amount of goodwill prior to the impairment charge. The impairment charge is presented in Goodwill and other impairment in the Condensed Consolidated Statements of Operations. The changes in the carrying amounts of goodwill are as follows: Electrical Systems Global Seating Total Balance - December 31, 2019 $ 22,802 $ 5,014 $ 27,816 Finalization of FSE Purchase Accounting ( 537 ) — ( 537 ) Goodwill impairment ( 22,265 ) ( 4,809 ) ( 27,074 ) Currency translation adjustment — ( 205 ) ( 205 ) Balance - December 31, 2020 $ — $ — $ — Our definite-lived intangible assets were comprised of the following: June 30, 2021 December 31, 2020 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trademarks/tradenames 22 years $ 11,607 $ ( 4,862 ) $ 6,745 $ 11,634 $ ( 4,681 ) $ 6,953 Customer relationships 15 years 14,785 ( 7,996 ) 6,789 14,881 ( 7,536 ) 7,345 Technical know-how 5 years 9,790 ( 3,508 ) 6,282 9,790 ( 2,529 ) 7,261 Covenant not to compete 5 years 330 ( 118 ) 212 330 ( 85 ) 245 $ 36,512 $ ( 16,484 ) $ 20,028 $ 36,635 $ ( 14,831 ) $ 21,804 10 The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended June 30, 2021 and 2020, respectively. The aggregate intangible asset amortization expense was $ 1.7 million for the six months ended June 30, 2021 and 2020, respectively. 6. Fair Value Measurement Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 - Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3 - Significant unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. Our financial instruments consisted of cash, accounts receivable, accounts payable, accrued liabilities, pension assets and liabilities and our revolving credit facility. The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of the interest cost associated with such instruments. Recurring Measurements Foreign Currency Forward Exchange Contracts. Our derivative assets and liabilities represent foreign exchange contracts that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and counterparty credit risk. Based on the utilization of these inputs, the derivative assets and liabilities are classified as Level 2. To manage our risk for transactions denominated in Mexican Pesos and in Ukrainian Hryvnia, we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed Consolidated Balance Sheets at fair value. The gains and losses as a result of the changes in fair value of the hedge contract for transactions denominated in Mexican Pesos are deferred in accumulated other comprehensive loss and recognized in cost of revenues in the period the related hedge transactions are settled. As of June 30, 2021, the hedge contract for transactions denominated in Ukrainian Hryvnia was not designated as a hedging instrument; therefore, it is marked-to-market and the fair value of the agreement is recorded in the Condensed Consolidated Balance Sheets with the offsetting gains and losses recognized in other (income) expense and recognized in cost of revenues in the period the related hedge transactions are settled in the Condensed Consolidated Statements of Operations. Interest Rate Swaps. To manage our exposure to variable interest rates, we have entered into interest rate swaps to exchange, at a specified interval, the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount. The interest rate swaps are intended to mitigate the impact of rising interest rates on the Company and covers $ 80 million of outstanding debt under the Term Loan Facility. As of June 30, 2021, the interest rate swaps were not designated as hedging instrument, therefore, are marked-to-market and the fair value of the agreement recorded in the Condensed Consolidated Balance Sheets with the offsetting gain or loss recorded in interest and other expense in the Condensed Consolidated Statements of Operations. Contingent Consideration. As a result of the acquisition of the First Source Electronics, LLC (“FSE”) on September 17, 2019, the Company agreed to pay up to $ 10.8 million in contingent milestone payments (“Contingent Consideration”). The Contingent Consideration is payable based on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") thresholds over the periods from (a) September 18, 2019 through September 17, 2020, (b) September 18, 2019 through March 17, 2021, (c) September 18, 2019 through September 17, 2022 and (d) March 18, 2021 through September 17, 2022. The payment amount will be determined on a sliding scale for reaching between 90 % and 100 % of the respective EBITDA targets. The fair value for the milestone payments is based on a Monte Carlo simulation utilizing forecasted EBITDA through September 17, 2022. As of June 30, 2021 the remaining undiscounted Contingent Consideration payment is estimated at $ 4.8 million and the fair value is $ 4.2 million, which is presented in the Condensed Consolidated Balance Sheets in other long term liabilities. A payment of $ 5.0 million was made during the second quarter of 2021 based on achievement of the second EBITDA threshold. 11 The fair values of our derivative assets and liabilities and Contingent Consideration measured on a recurring basis are categorized as follows: June 30, 2021 December 31, 2020 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Foreign exchange contract $ 1,455 $ — $ 1,455 $ — $ 1,882 $ — $ 1,882 $ — Interest rate swaps $ 586 $ — $ 586 $ — $ 936 $ — $ 936 $ — Liabilities: Interest rate swaps $ 1,305 $ — $ 1,305 $ — $ 2,080 $ — $ 2,080 $ — Contingent Consideration $ 4,168 $ — $ — $ 4,168 $ 8,800 $ — $ — $ 8,800 Details of the changes in value for the Contingent Consideration that is measured using significant unobservable inputs (Level 3) are as follows: Amount Contingent Consideration liability balance at December 31, 2020 $ 8,800 Change in fair value 368 Payments ( 5,000 ) Contingent Consideration liability balance at June 30, 2021 $ 4,168 The following table summarizes the notional amount of our open foreign exchange contracts: June 30, 2021 December 31, 2020 U.S. $ Equivalent U.S. $ Equivalent Fair Value U.S. $ Equivalent U.S. $ Equivalent Fair Value Commitments to buy or sell currencies $ 12,763 $ 13,377 $ 14,675 $ 16,558 The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets: Derivative Asset Balance Sheet Location Fair Value June 30, 2021 December 31, 2020 Foreign exchange contracts Other current assets $ 1,455 $ 1,882 Interest rate swaps Accrued liabilities and other $ 586 $ 936 Derivative Liability Balance Sheet Location Fair Value June 30, 2021 December 31, 2020 Interest rate swaps Accrued liabilities and other $ 1,305 $ 2,080 Derivative Equity Balance Sheet Location Fair Value June 30, 2021 December 31, 2020 Foreign exchange contracts Accumulated other comprehensive loss $ 938 $ 1,441 12 The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Location of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Foreign exchange contracts Cost of revenues $ ( 540 ) $ ( 885 ) $ ( 847 ) $ ( 885 ) Interest rate swaps Interest and other expense $ 4 $ ( 28 ) $ 6 $ ( 1,024 ) Foreign exchange contracts Other (income) expense $ ( 41 ) $ — $ ( 223 ) $ — We consider the impact of our credit risk on the fair value of the contracts, as well as our ability to honor obligations under the contract. Other Fair Value Measurements The fair value of long-term debt obligations is based on a fair value model utilizing observable inputs. Based on these inputs, our long-term debt fair value as disclosed is classified as Level 2. The carrying amounts and fair values of our long-term debt obligations are as follows: June 30, 2021 December 31, 2020 Carrying Amount Fair Value Carrying Amount Fair Value Term Loan Facility 1 $ 149,225 $ 143,413 $ — $ — Term loan and security agreement 2 $ — $ — $ 146,576 $ 144,878 Revolving Credit Facility 1 $ 35,500 $ 35,500 $ — $ — 1. Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 7.5 million and long-term debt of $ 177.2 million as of June 30, 2021 2. Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 2.4 million and long-term debt of $ 144.1 million as of December 31, 2020. 7. Leases The components of lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Operating lease cost $ 2,474 $ 2,562 $ 4,974 $ 5,028 Finance lease cost 93 112 193 213 Short-term lease cost 1,602 1,037 2,972 2,066 Total lease expense $ 4,169 $ 3,711 $ 8,139 $ 7,307 13 Table of Contents Supplemental balance sheet information related to leases is as follows: Balance Sheet Location June 30, 2021 December 31, 2020 Operating Leases Right-of-use assets, net Other assets, net $ 27,339 $ 30,047 Current liabilities Accrued liabilities and other 8,595 9,236 Non-current liabilities Other long-term liabilities 20,478 23,932 Total operating lease liabilities $ 29,073 $ 33,168 Finance Leases Right-of-use assets, net Other assets, net $ 586 $ 767 Current liabilities Accrued liabilities and other 254 293 Non-current liabilities Other long-term liabilities 313 434 Total finance lease liabilities $ 567 $ 727 For the six months ended June 30, 2021 and 2020, cash payments on operating leases were $ 5.8 million and $ 5.0 million, respectively. Right-of-use Asset Impairment. The impairment of an operating lease right-of-use asset of $ 0.4 million was recorded for the first quarter ended March 31, 2020. The impairment charge is presented in Goodwill and other impairment in the Condensed Consolidated Statements of Operations. Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows: Operating Financing Total Remainder of 2021 $ 5,220 $ 145 $ 5,365 2022 10,126 199 10,325 2023 6,033 130 6,163 2024 4,642 80 4,722 2025 3,996 42 4,038 Thereafter 3,891 — 3,891 Total lease payments $ 33,908 $ 596 $ 34,504 Less: Imputed interest ( 4,835 ) ( 29 ) ( 4,864 ) Present value of lease liabilities $ 29,073 $ 567 $ 29,640 8. Income Taxes For the three and six months ended June 30, 2021 we recorded a $ 1.5 million and $ 4.1 million tax provision, respectively, or 23 % effective tax rate for each period, compared to a $ 3.1 million and $ 10.4 million tax benefit for the three and six months ended June 30, 2020, respectively. The effective tax rate in the current three and six month period is higher than the U.S. federal income tax rate primarily as a result of U.S. state and non-U.S. income taxes. The Company’s prior year tax benefit was primarily a result of pre-tax net loss for the three and six months ended June 30, 2020, respectively. For the six months ended June 30, 2021 and 2020, cash paid for taxes, net of refunds received were $ 1.7 million and $ 0.1 million, respectively. 14 Table of Contents 9. Pension and Other Post-Retirement Benefit Plans The components of net periodic (benefit) cost related to pension and other post-retirement benefit plans is as follows: U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan Three Months Ended June 30, Three Months Ended June 30, 2021 2020 2021 2020 Interest cost $ 206 $ 281 $ 162 $ 204 Expected return on plan assets ( 553 ) ( 518 ) ( 254 ) ( 266 ) Amortization of prior service cost 2 1 14 143 Recognized actuarial loss 66 75 243 13 Net (benefit) cost $ ( 279 ) $ ( 161 ) $ 165 $ 94 U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan Six months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Interest cost $ 414 $ 562 $ 323 $ 408 Expected return on plan assets ( 1,106 ) ( 1,037 ) ( 504 ) ( 529 ) Amortization of prior service cost 4 3 28 286 Recognized actuarial loss 140 149 482 24 Net (benefit) cost $ ( 548 ) $ ( 323 ) $ 329 $ 189 Net periodic (benefit) cost components, not inclusive of service costs, are recognized in other expense (income) within the Condensed Consolidated Statements of Operations. 10. Performance Awards In 2020, the Company made awards, defined as cash, shares or other awards, to employees under the Commercial Vehicle Group, Inc. 2014 Equity Incentive Plan (the “2014 EIP”) and the Commercial Vehicle Group, Inc. 2020 Equity Incentive Plan (the “2020 EIP”). Effective June 15, 2020, as part of the Company’s stockholders’ approval of the 2020 EIP, the Company agreed that no more awards will be made under the 2014 Plan. Restricted Cash Awards – Restricted cash is a grant that is earned and payable in cash based upon the Company’s relative total shareholder return in terms of ranking as compared to the peer group generally ranging from a one to three-year period. Performance Stock Awards Settled in Cash – Performance-based stock award is a grant that is earned and payable in cash. The total amount payable as of the award's vesting date is determined based upon number of shares allocated to each participant, which can fluctuate depending on the Company’s relative total shareholder return in terms of ranking as compared to the peer group over the performance period, and the share price of the Company's stock. Total shareholder return is determined by the percentage change in value (positive or negative) over the applicable measurement period as measured by dividing (A) the sum of the cumulative value of dividends and other distributions paid on the Common Stock for the applicable measurement period and the difference (positive or negative) between each such company’s starting stock price and ending stock price, by (B) the starting stock price. Performance targets are based on relative total shareholder return in terms of ranking as compared to the peer group over the performance period. These awards are payable at the end of the performance period in cash if the employee is employed through the end of the performance period. If the employee is not employed during the entire performance period, the award is forfeited. These grants are accounted for as cash settlement awards for which the fair value of the award fluctuates based on the change in total shareholder return in relation to the peer group. 15 Table of Contents The following table summarizes performance awards granted in the form of cash awards under the equity incentive plans: Amount Adjusted Award Value at December 31, 2020 $ 976 Adjustments 448 Payments ( 300 ) Adjusted Award Value at June 30, 2021 $ 1,124 Unrecognized compensation expense was $ 2.8 million as of June 30, 2021. 11. Share-Based Compensation The Company's outstanding share-based compensation is comprised of restricted and performance-stock awards. Restricted Stock Awards – Restricted stock is a grant of shares of common stock that may not be sold, encumbered or disposed of and that may be forfeited in the event of certain terminations of employment or in the case of the board of directors, a separation for cause, prior to the end of a restricted period set by the compensation committee of the board of directors. Forfeitures are recorded as they occur. A participant granted restricted stock generally has all of the rights of a stockholder, unless the compensation committee determines otherwise. Time-based restricted stock awards generally vest over the three-year period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period. Performance Stock Awards – Performance-based stock awards have similar restrictions as restricted stock. They vest over the specified period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period at the Company’s discretion if the Company meets the performance targets set at the time the award was granted. Performance targets are based on relative total shareholder return in terms of ranking as compared to the peer group over the performance period. As of June 30, 2021, there was approximately $ 7.1 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans. This expense is subject to future adjustments and forfeitures and will be recognized on a straight-line basis over the remaining restricted period for each grant. A summary of the status of our share-based compensation awards as of June 30, 2021 and changes during the six months ended June 30, 2021, are presented below: 2021 Shares (in thousands) Weighted- Average Grant-Date Fair Value Nonvested - December 31, 2020 1,263 $ 3.48 Granted 408 9.89 Vested ( 327 ) 5.50 Forfeited ( 22 ) 7.20 Nonvested - June 30, 2021 1,322 $ 4.89 As of June 30, 2021, a total of 2.9 million shares were available for future grants from the shares authorized for award under our 2020 EIP, including cumulative forfeitures. 12. Stockholders’ Equity Common Stock — Our authorized capital stock consists of 60,000,000 shares of common stock with a par value of $ 0.01 per share; of which, 31,569,749 and 31,249,811 shares were issued and outstanding as of June 30, 2021 and December 31, 2020, respectively. Preferred Stock — Our authorized capital stock also consists of 5,000,000 shares of preferred stock with a par value of $ 0.01 per share, with no preferred shares were outstanding as of June 30, 2021 and December 31, 2020. 16 Table of Contents Diluted earnings per share for the three and six months ended June 30, 2021 and 2020 includes the effect of potential common shares issuable when dilutive, and is as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income (loss) $ 5,095 $ ( 12,497 ) $ 13,585 $ ( 37,091 ) Weighted average number of common shares outstanding (in '000s) 31,458 30,890 31,361 30,848 Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 1,216 — 1,293 — Dilutive shares outstanding 32,674 30,890 32,654 30,848 Basic earnings (loss) per share $ 0.16 $ ( 0.40 ) $ 0.43 $ ( 1.20 ) Diluted earnings (loss) per share $ 0.16 $ ( 0.40 ) $ 0.42 $ ( 1.20 ) There were no outstanding share-based compensation awards that were excluded from the calculation of diluted earnings per shares for the three months ended June 30, 2021 and 396 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2020. There were no outstanding share-based compensation awards that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2021 and 286 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2020. Shareholder Rights Plan On June 23, 2020, the Company’s Board of Directors adopted a limited duration rights plan and declared a dividend distribution of one right (each, a “Right” and together with all other such rights distributed or issued pursuant thereto, the “Rights”) for each outstanding share of common stock, par value $ 0.01 , of the Company, as of July 5, 2020, the record date for such dividend. Each holder of common stock as of the record date received a dividend of one Right per share of common stock. On April 15, 2021, the Company and Computershare Trust Company, N.A., as rights agent (“Rights Agent”), entered into an amendment (the “Amendment”) to the Rights Agreement, dated as of June 25, 2020, by and between the Company and Rights Agent (the “Rights Agreement”). Pursuant to the Amendment, the Final Expiration Date of the Rights (each as defined in the Rights Agreement) was advanced from June 24, 2021 to April 15, 2021. As a result of the Amendment, the Rights are no longer outstanding. 13. Other Comprehensive (Income) Loss The after-tax changes in accumulated other comprehensive loss are as follows: Foreign currency translation adjustment Pension and post-retirement benefits plans Derivative instruments Accumulated other comprehensive loss Balance - December 31, 2020 $ ( 19,024 ) $ ( 27,423 ) $ 1,441 $ ( 45,006 ) Net current period change ( 584 ) — — ( 584 ) Amortization of actuarial gain (loss) — 673 — 673 Derivative instruments — — ( 503 ) ( 503 ) Balance - June 30, 2021 $ ( 19,608 ) $ ( 26,750 ) $ 938 $ ( 45,420 ) Foreign currency translation adjustment Pension and post-retirement benefit plans Derivative instruments Accumulated other comprehensive loss Balance - December 31, 2019 $ ( 24,032 ) $ ( 22,382 ) $ 464 $ ( 45,950 ) Net current period change ( 2,885 ) — — ( 2,885 ) Amortization of actuarial gain (loss) — ( 893 ) — ( 893 ) Derivative instruments — — ( 1,674 ) ( 1,674 ) Balance - June 30, 2020 $ ( 26,917 ) $ ( 23,275 ) $ ( 1,210 ) $ ( 51,402 ) 17 Table of Contents The related tax effects allocated to each component of other comprehensive loss are as follows: Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Cumulative translation adjustment $ 1,488 $ — $ 1,488 $ ( 584 ) $ — $ ( 584 ) Amortization of actuarial gain (loss) 654 ( 267 ) 387 1,053 ( 380 ) 673 Derivative instruments ( 100 ) 23 ( 77 ) ( 656 ) 153 ( 503 ) Total other comprehensive loss $ 2,042 $ ( 244 ) $ 1,798 $ ( 187 ) $ ( 227 ) $ ( 414 ) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Cumulative translation adjustment $ 1,920 $ — $ 1,920 $ ( 2,885 ) $ — $ ( 2,885 ) Amortization of actuarial gain (loss) ( 551 ) 105 ( 446 ) ( 1,105 ) 212 ( 893 ) Derivative instruments 1,443 ( 339 ) 1,104 ( 2,045 ) 371 ( 1,674 ) Total other comprehensive loss $ 2,812 $ ( 234 ) $ 2,578 $ ( 6,035 ) $ 583 $ ( 5,452 ) 14. Cost Reduction and Manufacturing Capacity Rationalization During 2019, the Company began implementing cost reduction and manufacturing capacity rationalization initiatives (the "Restructuring Initiatives") in response to declines in end market volumes. Furthermore, in 2020 the Company began implementing additional cost reduction initiatives and further manufacturing capacity rationalization initiatives in response to the COVID-19 pandemic ("2020 Initiatives"). The Restructuring Initiatives and 2020 Initiatives consist primarily of headcount reductions in each segment and at corporate, as well as other costs associated with transfer of production and subsequent closure of facilities, and expansion of production footprint to manufacture warehouse automation subsystems. The changes in accrued restructuring balances are as follows: Electrical Systems Global Seating Corporate/ Other Total December 31, 2020 $ 463 $ 40 $ 176 $ 679 Payments and other adjustments ( 367 ) ( 40 ) ( 93 ) ( 500 ) June 30, 2021 $ 96 $ — $ 83 $ 179 Electrical Systems Global Seating Corporate/ Other Total December 31, 2019 $ 1,276 $ 102 $ 947 $ 2,325 New charges 1,986 677 452 3,115 Payments and other adjustments ( 2,431 ) ( 625 ) ( 627 ) ( 3,683 ) June 30, 2020 $ 831 $ 154 $ 772 $ 1,757 Of the $ 3.1 million costs incurred in the six months ended June 30, 2020, $ 2.8 million primarily related to headcount reductions and $ 0.3 million related to facility exit and other costs. Of the $ 3.1 million costs incurred, $ 2.1 million was recorded in cost of revenues and $ 1.0 million was recorded in selling, general and administrative expenses. 15. Commitments and Contingencies Leases - As disclosed in Note 7, Leases, we lease office, warehouse and manufacturing space and equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees. As of June 30, 2021, our equipment leases did not provide for any material guarantee of a specified portion of residual values. 18 Table of Contents Guarantees - Costs associated with guarantees are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of available facts; where no amount within a range of estimates is more likely, the minimum is accrued. As of June 30, 2021, we had no such guarantees. Litigation - We are subject to various legal proceedings and claims arising in the ordinary course of business, including but not limited to product liability claims, customer and supplier disputes, service provider disputes, examinations by taxing authorities, employment disputes, workers' compensation claims, unfair labor practice charges, OSHA investigations, intellectual property disputes and environmental claims arising out of the conduct of our businesses. Management believes that the Company maintains adequate insurance and that we have established reserves for issues that are probable and estimable in amounts that are adequate to cover reasonable adverse judgments not covered by insurance. Based upon the information available to management and discussions with legal counsel, it is the opinion of management that the ultimate outcome of the various legal actions and claims that are incidental to our business are not expected to have a material adverse impact on the consolidated financial position, results of operations, equity or cash flows; however, such matters are subject to many uncertainties and the outcomes of individual matters are not predictable with any degree of assurance. Warranty - We are subject to warranty claims for products that fail to perform as expected due to design or manufacturing deficiencies. Depending on the terms under which we supply products to our customers, a customer may hold us responsible for some or all of the repair or replacement costs of defective products when the product supplied did not perform as represented. Our policy is to record provisions for estimated future customer warranty costs based on historical trends and for specific claims. These amounts, as of June 30, 2021, are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets. The following presents a summary of the warranty provision for the six months ended June 30, 2021: Balance - December 31, 2020 $ 2,041 Provision for warranty claims 644 Deduction for payments made and other adjustments ( 750 ) Balance - June 30, 2021 $ 1,935 Debt Payments - As disclosed in Note 4, Debt, the Credit Agreement requires the Company to repay a fixed amount of principal on a quarterly basis and make voluntary prepayments that coincide with certain events. The following table provides future minimum principal payments due on long-term debt for the next five years: Term loan facility Revolving credit facility Total Remainder of 2021 $ 3,750 $ — $ 3,750 2022 $ 9,375 $ — $ 9,375 2023 $ 13,125 $ — $ 13,125 2024 $ 16,875 $ — $ 16,875 2025 $ 20,625 $ — $ 20,625 Thereafter $ 86,250 $ 35,500 $ 121,750 16. Segment Reporting Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker (“CODM”), which is our President and Chief Executive Officer. Each of these segments consists of a number of manufacturing facilities. Certain of our facilities manufacture and sell products through both of our segments. Each manufacturing facility that sells products through both segments is reflected in the financial results of the segment that has the greatest amount of revenues from that manufacturing facility. Our segments are more specifically described below. The Electrical Systems segment designs, manufactures and sells the following products: • Electrical systems, electrical wire harnesses, electro-mechanical assemblies for warehouses, electro-mechanical cable assemblies for the construction, agricultural, industrial, automotive, truck, mining, rail and military industries in North America, Europe and Asia-Pacific. This segment includes a portion of the company’s activities in the emerging electric vehicle market; • Plastic components ("Trim") primarily for the North America commercial vehicle market and recreational vehicle markets; 19 Table of Contents • Warehouse automation subsystems primarily for the North American e-commerce markets and include electro-mechanical assemblies and panels; • Commercial vehicle accessories including wipers, mirrors, floormats and sensors; and • Cab structures for the North American MD/HD truck market. The Global Seating segment designs, manufactures and sells the following products: • Commercial vehicle seats for the global commercial vehicle markets including heavy duty trucks, medium duty trucks, last mile trucks, construction equipment, material handling equipment and agriculture equipment in North America, Europe and Asia-Pacific. This segment includes a portion of the company’s activities in the emerging electric vehicle market; • Office seats primarily in Europe and Asia-Pacific; and • Aftermarket seats and components in North America, Europe and Asia-Pacific. Corporate expenses consist of certain overhead and shared costs that are not directly attributable to the operations of a segment. For purposes of business segment performance measurement, some of these costs that are for the benefit of the operations are allocated based on a combination of methodologies. The costs that are not allocated to a segment are considered stewardship costs and remain at corporate in our segment reporting. The following table presents segment results for the three and six months ended June 30, 2021 and 2020. Three Months Ended June 30, 2021 Electrical Systems Global Seating Corporate/ Other Total Revenues External revenues $ 174,104 $ 83,837 $ — $ 257,941 Intersegment revenues 1,000 1,061 ( 2,061 ) — Total revenues $ 175,104 $ 84,898 $ ( 2,061 ) $ 257,941 Gross profit $ 23,776 $ 10,594 $ ( 2 ) $ 34,368 Selling, general & administrative expenses 5,224 5,611 7,204 18,039 Operating income (loss) $ 18,552 $ 4,983 $ ( 7,206 ) $ 16,329 Three Months Ended June 30, 2020 Electrical Systems Global Seating Corporate/ Other Total Revenues External revenues $ 73,498 $ 53,398 $ — $ 126,896 Intersegment revenues 712 464 ( 1,176 ) — Total revenues $ 74,210 $ 53,862 $ ( 1,176 ) $ 126,896 Gross profit $ 1,144 $ 5,345 $ ( 14 ) $ 6,475 Selling, general & administrative expenses 7,309 3,810 5,721 16,840 Goodwill and other impairment — — 150 150 Operating income (loss) $ ( 6,165 ) $ 1,535 $ ( 5,885 ) $ ( 10,515 ) Six Months Ended June 30, 2021 Electrical System Global Seating Corporate/ Other Total Revenues External revenues $ 333,792 $ 169,271 $ — $ 503,063 Intersegment revenues 3,554 6,721 ( 10,275 ) — Total revenues $ 337,346 $ 175,992 $ ( 10,275 ) $ 503,063 Gross profit $ 44,048 $ 21,482 $ ( 41 ) $ 65,489 Selling, general & administrative expenses 10,627 10,955 12,175 33,757 Operating income (loss) $ 33,421 $ 10,527 $ ( 12,216 ) $ 31,732 20 Table of Contents Six Months Ended June 30, 2020 Electrical Global Seating Corporate/ Other Total Revenues External revenues $ 184,665 $ 129,336 $ — $ 314,001 Intersegment revenues 1,643 506 ( 2,149 ) — Total revenues $ 186,308 $ 129,842 $ ( 2,149 ) $ 314,001 Gross profit $ 12,090 $ 14,714 $ ( 26 ) $ 26,778 Selling, general & administrative expenses 11,989 8,733 14,077 34,799 Goodwill and other impairment 23,415 4,809 793 29,017 Operating income (loss) $ ( 23,314 ) $ 1,172 $ ( 14,896 ) $ ( 37,038 ) 17. Other Financial Information Items reported in inventories consisted of the following: June 30, 2021 December 31, 2020 Raw materials $ 96,381 $ 65,334 Work in process 17,706 13,373 Finished goods 14,232 12,540 Inventories $ 128,319 $ 91,247 Items reported in property, plant, and equipment, net consisted of the following: June 30, 2021 December 31, 2020 Land and buildings $ 32,265 $ 30,305 Machinery and equipment 190,685 189,939 Construction in progress 4,704 1,558 Property, plant, and equipment, gross 227,654 221,802 Less accumulated depreciation ( 166,392 ) ( 159,026 ) Property, plant and equipment, net $ 61,262 $ 62,776 Items reported in accrued expenses and other liabilities consisted of the following: June 30, 2021 December 31, 2020 Compensation and benefits $ 16,795 $ 15,877 Operating lease liabilities 8,595 9,236 Accrued freight 4,356 2,556 Taxes payable 3,767 4,057 Contingent Consideration — 4,870 Other 12,988 13,460 Accrued liabilities and other $ 46,501 $ 50,056