Commercial Vehicle Group, Inc. 10-Q

ITEM 1 – FINANCIAL STATEMENTS COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2022 2021 (Unaudited) (In thousands, except per share amounts) Revenues $ 244,374 $ 245,122 Cost of revenues 218,991 214,001 Gross profit 25,383 31,121 Selling, general and administrative expenses 16,999 15,718 Operating income 8,384 15,403 Other (income) expense 1,041 ( 656 ) Interest expense 1,961 5,041 Income before provision for income taxes 5,382 11,018 Provision for income taxes 1,400 2,528 Net income $ 3,982 $ 8,490 Earnings per Common Share: Basic $ 0.12 $ 0.27 Diluted $ 0.12 $ 0.26 Weighted average shares outstanding: Basic 32,065 31,264 Diluted 32,685 32,307 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 March 31, 2022 2021 (Unaudited) (In thousands) Net income $ 3,982 $ 8,490 Other comprehensive income (loss): Foreign currency exchange translation adjustments 327 ( 2,072 ) Minimum pension liability, net of tax ( 29 ) 286 Derivative instrument, net of tax 2,814 ( 426 ) Other comprehensive income (loss) 3,112 ( 2,212 ) Comprehensive income $ 7,094 $ 6,278 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 March 31, 2022 December 31, 2021 (Unaudited) (In thousands, except per share amounts) ASSETS Current Assets: Cash $ 38,208 $ 34,958 Accounts receivable, net of allowances of $ 340 and $ 243 , respectively 210,378 174,472 Inventories 158,355 141,045 Other current assets 22,951 20,201 Total current assets 429,892 370,676 Property, plant and equipment, net 64,751 63,126 Intangible assets, net 17,407 18,283 Deferred income taxes 23,538 24,108 Other assets, net 30,200 31,500 Total assets $ 565,788 $ 507,693 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 128,942 $ 101,915 Accrued liabilities and other 46,412 50,840 Current portion of long-term debt 10,313 9,375 Total current liabilities 185,667 162,130 Long-term debt 213,608 185,581 Pension and other post-retirement benefits 9,423 9,905 Other long-term liabilities 22,689 23,424 Total liabilities 431,387 381,040 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; 32,157,210 and 32,034,592 shares issued and outstanding respectively) 322 321 Treasury stock, at cost: 1,764,351 and 1,708,981 shares, respectively ( 13,636 ) ( 13,172 ) Additional paid-in capital 256,683 255,566 Retained deficit ( 69,642 ) ( 73,624 ) Accumulated other comprehensive loss ( 39,326 ) ( 42,438 ) Total stockholders’ equity 134,401 126,653 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 565,788 $ 507,693 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 Three Months Ended March 31, 2022 2021 (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,982 $ 8,490 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 4,432 4,642 Noncash amortization of debt financing costs 113 538 Payment in kind interest expense — 1,705 Shared-based compensation expense 1,117 965 Deferred income taxes 532 1,603 Non-cash loss (income) on derivative contracts 599 ( 212 ) Change in other operating items: Accounts receivable ( 36,212 ) ( 35,564 ) Inventories ( 17,502 ) ( 18,255 ) Prepaid expenses ( 2,599 ) ( 3,426 ) Accounts payable 27,998 22,930 Other operating activities, net ( 3,858 ) 1,213 Net cash used in operating activities ( 21,398 ) ( 15,371 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 3,590 ) ( 1,736 ) Proceeds from disposal/sale of property, plant and equipment — 27 Net cash used in investing activities ( 3,590 ) ( 1,709 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of term loan facility ( 1,875 ) — Repayment of 2023 term loan facility principal — ( 1,094 ) Borrowing under revolving credit facility 55,200 — Repayment of revolving credit facility ( 24,400 ) — Borrowings under ABL revolving credit facility — 6,800 Surrender of common stock by employees ( 464 ) — Other financing activities ( 55 ) ( 232 ) Net cash provided by financing activities 28,406 5,474 EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH ( 168 ) ( 761 ) NET INCREASE (DECREASE) IN CASH 3,250 ( 12,367 ) CASH: Beginning of period 34,958 50,503 End of period $ 38,208 $ 38,136 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, 2020 31,249,811 $ 313 $ ( 11,893 ) $ 249,312 $ ( 97,356 ) $ ( 45,006 ) $ 95,370 Share-based compensation expense 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 Balance - December 31, 2021 32,034,592 $ 321 $ ( 13,172 ) $ 255,566 $ ( 73,624 ) $ ( 42,438 ) $ 126,653 Share-based compensation expense 122,618 1 ( 464 ) 1,117 — — 654 Total comprehensive income (loss) — — — — 3,982 3,112 7,094 Balance - March 31, 2022 32,157,210 $ 322 $ ( 13,636 ) $ 256,683 $ ( 69,642 ) $ ( 39,326 ) $ 134,401 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) (Amounts in thousands, except for share and per share amounts and where specifically disclosed) 1. Description of Business and Basis of Presentation At Commercial Vehicle Group, Inc. and its subsidiaries, we deliver real solutions to complex design, engineering and manufacturing problems across a range of global industries by innovating, constantly adding value, and treating our customer's bottom line as if it were our own. References herein to the "Company", "CVG", "we", "our", or "us" refer to Commercial Vehicle Group, Inc. and its subsidiaries. We have manufacturing operations in the United States, Mexico, China, United Kingdom, Belgium, Czech Republic, Ukraine, Thailand, India and Australia. Our products are primarily sold in North America, Europe, and the Asia-Pacific region. We primarily manufacture customized products to meet the requirements of our customer. We believe our products are used by a majority of the North American Commercial Truck markets, many construction vehicle OEMs and top e-commerce retailers. 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, 2021 (the "2021 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. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company will apply the guidance to impacted transactions during the transition period. The Company does not expect the adoption of this standard to have a material impact on the Company’s Consolidated Financial Statements. 3. Revenue Recognition We had outstanding customer accounts receivable, net of allowances, of $ 210.4 million as of March 31, 2022 and $ 174.5 million as of December 31, 2021. We generally do not have other assets or liabilities associated with customer arrangements. 6 Table of Contents Revenue Disaggregation - The following is the composition, by product category, of our revenues: Three Months Ended March 31, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 69,808 $ — $ — $ 15,788 $ 85,596 Electrical wire harnesses, panels and assemblies — 1,795 39,876 3,321 44,992 Trim 44,758 — — 1,296 46,054 Warehouse Automation — 32,331 — — 32,331 Cab structures 25,591 — — — 25,591 Mirrors, wipers and controls — — — 9,810 9,810 Total $ 140,157 $ 34,126 $ 39,876 $ 30,215 $ 244,374 Three Months Ended March 31, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 67,502 $ — $ — $ 14,077 $ 81,579 Electrical wire harnesses, panels and assemblies 695 3,252 46,127 3,472 53,546 Trim 36,757 — — 560 37,317 Warehouse Automation — 41,120 — — 41,120 Cab structures 17,913 — — 2,747 20,660 Mirrors, wipers and controls 1,475 — 335 9,090 10,900 Total $ 124,342 $ 44,372 $ 46,462 $ 29,946 $ 245,122 4. Debt Debt consisted of the following: March 31, 2022 December 31, 2021 Term loan facility due 2026 $ 144,375 $ 146,250 Revolving credit facility due 2026 80,200 49,400 Unamortized discount and issuance costs ( 654 ) ( 694 ) $ 223,921 $ 194,956 Less: current portion, net of unamortized discount and issuance costs of $ 0.00 and $ 0.7 million, respectively ( 10,313 ) ( 9,375 ) Total long-term debt, net of current portion $ 213,608 $ 185,581 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”) 7 Table of Contents 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 March 31, 2022, we had $ 80.2 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 43.6 million. The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 1.2 million and $ 1.3 million as of March 31, 2022 and December 31, 2021, respectively, are being amortized over the remaining life of the Credit Agreement. At December 31, 2021, we had $ 49.4 million of borrowings under the Revolving Credit Facility and we had outstanding letters of credit of $ 1.4 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 % 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 Security 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 (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). 8 Table of Contents On October 25, 2021, the Company entered into the Amendment to the Credit Agreement. The Amendment permits the Company to engage in supply chain financing arrangements with financial institutions to cover up to $ 20.0 million in accounts receivable from customers per month. Additionally, the Amendment increased the Company’s capital expenditure investment threshold from $ 25.0 million to $ 32.0 million. We were in compliance with the covenants as of March 31, 2022. 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 beginning in the third quarter of 2021 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”). 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, which governed the Company’s ABL Revolving Credit Facility. 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 Consolidated Statements of Operations for the twelve months ended December 31, 2021. Cash Paid for Interest For the three months ended March 31, 2022 and 2021, cash payments for interest were $ 1.6 million and $ 3.0 million, respectively. 9 5. Intangible Assets Our definite-lived intangible assets were comprised of the following: March 31, 2022 December 31, 2021 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets: Trademarks/tradenames 22 years $ 11,597 $ ( 5,145 ) $ 6,452 $ 11,573 $ ( 5,043 ) $ 6,530 Customer relationships 15 years 14,673 ( 8,694 ) 5,979 14,770 ( 8,499 ) 6,271 Technical know-how 5 years 9,790 ( 4,976 ) 4,814 9,790 ( 4,487 ) 5,303 Covenant not to compete 5 years 330 ( 168 ) 162 330 ( 151 ) 179 $ 36,390 $ ( 18,983 ) $ 17,407 $ 36,463 $ ( 18,180 ) $ 18,283 The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended March 31, 2022 and 2021. 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. 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, Czech Crown and Ukrainian Hryvnia, we have entered into forward exchange contracts which are recorded in the Condensed Consolidated Balance Sheets at fair value. The hedge contracts for transactions denominated in Mexican Pesos are designated as cash flow hedge instruments and gains and losses as a result of the changes in fair value of the hedge contract are deferred in accumulated other comprehensive loss and recognized in cost of revenues in the period the related hedge transactions are settled. As of March 31, 2022, the hedge contracts for transactions denominated in Ukrainian Hryvnia and Czech Crown were not designated as hedging instruments; therefore, they are marked-to-market and the fair value of the agreements 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 50 % of outstanding debt under the Term Loan Facility. Any changes in fair value are included in earnings or 10 deferred through OCI, depending on the nature and effectiveness of the offset. Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the consolidated statements of operations. Contingent Consideration. As a result of the acquisition of 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 March 31, 2022, the remaining undiscounted Contingent Consideration payment is estimated at $ 4.8 million and the fair value is $ 4.5 million, which is presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other. The fair values of our derivative assets and liabilities and Contingent Consideration measured on a recurring basis are categorized as follows: March 31, 2022 December 31, 2021 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Foreign exchange contract $ 2,371 $ — $ 2,371 $ — $ 1,375 $ — $ 1,375 $ — Interest rate swap agreement $ 2,700 $ — $ 2,700 $ — $ 241 $ — $ 241 $ — Liabilities: Foreign exchange contract $ 799 $ — $ 799 $ — $ — $ — $ — $ — Interest rate swap agreement $ — $ — $ — $ — $ 498 $ — $ 498 $ — Contingent consideration $ 4,528 $ — $ — $ 4,528 $ 4,409 $ — $ — $ 4,409 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, 2021 $ 4,409 Change in fair value 119 Contingent consideration liability balance at March 31, 2022 $ 4,528 The following table summarizes the notional amount of our open foreign exchange contracts: March 31, 2022 December 31, 2021 U.S. $ Equivalent U.S. Equivalent Fair Value U.S. $ Equivalent U.S. Equivalent Fair Value Commitments to buy or sell currencies $ 36,477 $ 36,474 $ 49,601 $ 48,712 The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets: Derivative Asset Balance Sheet Location Fair Value March 31, 2022 December 31, 2021 Foreign exchange contracts Other current assets $ 2,371 $ 1,375 Interest rate swap agreement Other current assets $ 2,700 $ 241 Derivative Liability Balance Sheet Location Fair Value March 31, 2022 December 31, 2021 Foreign exchange contracts Accrued liabilities and other $ 799 $ — Interest rate swap agreement Accrued liabilities and other $ — $ 498 11 Derivative Equity Balance Sheet Location Fair Value March 31, 2022 December 31, 2021 Derivative instruments Accumulated other comprehensive (loss) income $ 3,571 $ 757 The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations: Three Months Ended March 31, 2022 2021 Location of Gain (Loss) on Derivatives Recognized in Income Amount of Gain (Loss) on Derivatives Recognized in Income Foreign exchange contracts Cost of revenues $ 456 $ ( 307 ) Interest rate swap agreement Interest and other expense $ ( 193 ) $ 2 Foreign exchange contracts Other (income) expense $ ( 671 ) $ ( 182 ) 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: March 31, 2022 December 31, 2021 Carrying Amount Fair Value Carrying Amount Fair Value Term loan and security agreement 1 $ 143,721 $ 140,291 $ 145,556 $ 142,265 Revolving credit facility $ 80,200 $ 80,200 $ 49,400 $ 49,400 1. Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 10.3 million and long-term debt of $ 213.6 million as of March 31, 2022, and current portion of long-term debt of $ 9.4 million and long-term debt of $ 185.6 million as of December 31, 2021. 7. Leases The components of lease expense are as follows: Three Months Ended March 31, 2022 2021 Operating lease cost $ 2,578 $ 2,500 Finance lease cost Amortization of right-of-use assets 71 92 Interest on lease liabilities 5 8 Total finance lease cost 76 100 Short-term lease cost 1,525 1,370 Total lease expense $ 4,179 $ 3,970 12 Table of Contents Supplemental balance sheet information related to leases is as follows: Balance Sheet Location March 31, 2022 December 31, 2021 Operating Leases Right-of-use assets, net Other assets, net $ 24,629 $ 26,116 Current liabilities Accrued liabilities and other 8,738 9,048 Non-current liabilities Other long-term liabilities 17,127 18,519 Total operating lease liabilities $ 25,865 $ 27,567 Finance Leases Right-of-use assets, net Other assets $ 398 $ 468 Current liabilities Accrued liabilities and other 168 194 Non-current liabilities Other long-term liabilities 236 272 Total finance lease liabilities $ 404 $ 466 For the three months ended March 31, 2022 and 2021, cash payments on operating leases were $ 2.0 million and $ 2.2 million, respectively. 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 2022 $ 7,898 $ 141 $ 8,039 2023 6,766 140 6,906 2024 5,042 91 5,133 2025 4,382 50 4,432 2026 3,392 2 3,394 Thereafter 1,428 — 1,428 Total lease payments $ 28,908 $ 424 $ 29,332 Less: Imputed interest ( 3,043 ) ( 20 ) ( 3,063 ) Present value of lease liabilities $ 25,865 $ 404 $ 26,269 8. Income Taxes For the three months ended March 31, 2022, we recorded a $ 1.4 million tax provision, or 26 % effective tax rate for the period, compared to a $ 2.5 million tax provision for the three months ended March 31, 2021. Income tax expense for the three months ended March 31, 2022 and 2021 is based on an estimated annual effective tax rate, which requires management to make its best estimate of annual pretax income or loss. During the year, management regularly updates forecasted annual pretax results for the various countries in which the Company operates based on changes in factors such as prices, shipments, product mix, material inflation and manufacturing operations. To the extent that actual 2022 pretax results for U.S. and foreign income or loss vary from estimates, the actual income tax expense recognized in 2022 could be different from the forecasted amount used to estimate the income tax expense for the three months ended March 31, 2022. For the three months ended March 31, 2022 and 2021, cash paid for taxes, net of refunds received were $ 1.4 million and $ 1.0 million, respectively. 13 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 March 31, Three Months Ended March 31, 2022 2021 2022 2021 Interest cost 195 208 215 161 Expected return on plan assets ( 207 ) ( 553 ) ( 275 ) ( 250 ) Amortization of prior service cost 2 2 13 14 Recognized actuarial loss 84 74 164 239 Net (benefit) cost $ 74 $ ( 269 ) $ 117 $ 164 Net periodic (benefit) cost components, not inclusive of service costs, are recognized in other expense (income) within the Condensed Consolidated Statements of Operations. During the year ended December 31, 2021, the Audit Committee of the Board of Directors approved amendments to the U.S. Pension Plan to terminate the plan. The plan participants were notified of the Company's intention to terminate the plan effective December 31, 2021 and settle plan liabilities through either lump sum distributions to plan participants or annuity contracts that cover vested benefits. The Company currently expects to complete the settlement of plan liabilities between the fourth quarter of 2022 and the first quarter of 2023. 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 EIP. 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, the Company’s relative total shareholder return in terms of ranking which can fluctuate 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. 14 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, 2021 $ 1,234 New grants — Forfeitures — Adjustments 287 Payments ( 300 ) Adjusted Award Value at March 31, 2022 $ 1,221 Unrecognized compensation expense was $ 1.3 million and $ 3.0 million as of March 31, 2022 and 2021, respectively. 11. Share-Based Compensation The company's outstanding share-based compensation is comprised solely of restricted stock awards and performance stock awards to be settled in stock. 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 Settled in Stock – 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 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 March 31, 2022, there was approximately $ 3.9 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 period listed above for each grant. A summary of the status of our restricted stock awards as of March 31, and changes during the three months ended March 31, are presented below: 2022 Shares (in thousands) Weighted- Average Grant-Date Fair Value Nonvested - December 31, 2021 783 $ 5.68 Granted 124 2.43 Vested ( 178 ) 3.16 Forfeited ( 4 ) 7.62 Nonvested - March 31, 2022 725 $ 5.74 As of March 31, 2022, 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, 32,157,210 and 32,034,592 shares were issued and outstanding as of March 31, 2022 and December 31, 2021, 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 outstanding as of March 31, 2022 and December 31, 2021. 15 Table of Contents Earnings (Loss) Per Share - Basic earnings (loss) per share is determined by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share presented is determined by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period as determined by the treasury stock method. Potential common shares are included in the diluted earnings per share calculation when dilutive. Diluted earnings per share for the three months ended March 31, 2022 and 2021 includes the effect of potential common shares issuable when dilutive, and is as follows: Three Months Ended March 31, 2022 2021 Net income $ 3,982 $ 8,490 Weighted average number of common shares outstanding (in '000s) 32,065 31,264 Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 620 1,043 Dilutive shares outstanding 32,685 32,307 Basic earnings (loss) per share $ 0.12 $ 0.27 Diluted earnings (loss) per share $ 0.12 $ 0.26 There were no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2022 and 2021. 13. Other Comprehensive Income (Loss) The after-tax changes in accumulated other comprehensive income (loss) are as follows: Foreign currency translation adjustment Pension and post-retirement benefits plans Derivative instruments Accumulated other comprehensive loss Balance - December 31, 2021 $ ( 20,445 ) $ ( 22,750 ) 757 $ ( 42,438 ) Net current period change 327 ( 29 ) 298 Derivative instruments — 2,814 2,814 Balance - March 31, 2022 $ ( 20,118 ) $ ( 22,779 ) $ 3,571 $ ( 39,326 ) Foreign currency translation adjustment Pension and post-retirement benefit plans Derivative instruments Accumulated other comprehensive loss Balance - December 31, 2020 $ ( 19,024 ) $ ( 27,423 ) $ 1,441 $ ( 45,006 ) Net current period change ( 2,072 ) — — ( 2,072 ) Derivative instruments — — ( 426 ) ( 426 ) Amortization of actuarial losses — 286 — 286 Balance - March 31, 2021 $ ( 21,096 ) $ ( 27,137 ) $ 1,015 $ ( 47,218 ) The related tax effects allocated to each component of other comprehensive income (loss) are as follows: Three Months Ended March 31, 2022 Before Tax Amount Tax Expense After Tax Amount Amortization of actuarial gains $ 1 $ ( 30 ) $ ( 29 ) Cumulative translation adjustment 327 — 327 Derivative instruments 3,752 ( 938 ) 2,814 Total other comprehensive income (loss) $ 4,080 $ ( 968 ) $ 3,112 16 Table of Contents Three Months Ended March 31, 2021 Before Tax Amount Tax Expense After Tax Amount Amortization of actuarial losses $ 399 $ ( 113 ) $ 286 Cumulative translation adjustment ( 2,072 ) — ( 2,072 ) Derivative instruments ( 556 ) 130 ( 426 ) Total other comprehensive income (loss) $ ( 2,229 ) $ 17 $ ( 2,212 ) 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 ("the 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. On November 1, 2021, the Company's Board of Directors approved a restructuring program to align the Company's cost structure to support margin expansion. The program includes workforce reductions and footprint optimization across segments. We expect the restructuring cost to be between $ 4.0 million to $ 6.0 million for the entire program. The changes in accrued restructuring balances are as follows: Total Balance - December 31, 2020 $ 679 New charges — Payments and other adjustments ( 262 ) Balance - March 31, 2021 $ 417 Balance - December 31, 2021 $ 486 New charges 989 Payments and other adjustments ( 1,092 ) Balance - March 31, 2022 $ 383 Of the $ 1.0 million costs incurred in the three months ended March 31, 2022 for restructuring, $ 0.9 million related to facility exit and other costs and $ 0.1 million related to headcount reductions. Of the $ 1.0 million costs incurred, $ 0.2 million related to Vehicle Solutions segment, $ 0.4 million related to Electrical Systems segment and $ 0.4 million related to Aftermarket segment. Of the $ 1.0 million costs incurred, $ 0.9 million was recorded in cost of revenues and $ 0.1 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 March 31, 2022, our equipment leases did not provide for any material guarantee of a specified portion of residual values. 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 March 31, 2022 and 2021, we had no such guarantees. 17 Table of Contents 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 they relate to the periods ended March 31, 2022 and 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 three months ended March 31, 2022: Balance - December 31, 2021 $ 1,490 Provision for warranty claims 7 Deduction for payments made and other adjustments ( 242 ) Balance - March 31, 2022 $ 1,255 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: Total Remainder of 2022 $ 7,500 2023 $ 13,125 2024 $ 16,875 2025 $ 20,625 2026 $ 86,250 Thereafter $ 80,200 16. Segment Reporting In the quarter ended December 31, 2021, we completed a strategic reorganization of our operations into four segments, Vehicle Solutions, Warehouse Automation, Electrical Systems and Aftermarket & Accessories. The reorganization will allow the Company to better focus on growth opportunities, capital allocation and enhancing shareholder value. As a result of the strategic reorganization, the prior period amounts have been reclassified to conform to the new organization structure. 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 multiple segments. Our segments are more specifically described below. The Vehicle Solutions 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 delivery trucks and vans, construction and agriculture equipment in North America, Europe and Asia-Pacific. This segment includes a portion of the company’s activities in the electric vehicle market; • Plastic components ("Trim") primarily for the North America commercial vehicle market and recreational vehicle markets; and Cab structures for the North American medium-duty/heavy-duty ("MD/HD") truck market. The Warehouse Automation segment designs, manufactures and sells the following products: 18 Table of Contents • Warehouse automation subsystems including control panels, electro-mechanical assemblies, cable assemblies, and power and communication solutions. • The end markets for these products primarily include e-commerce, warehouse integration, transportation, and the military/defense industry. The Electrical Systems segment designs, manufactures and sells the following products: • Cable and harness assemblies for both high and low voltage applications, control boxes, dashboard assemblies and design and engineering for these applications. • The end markets for these products are construction, agricultural, industrial, automotive (both internal combustion and electric vehicles), truck, mining, rail and the military/ defense industries in North America, Europe and Asia-Pacific. The Aftermarket & Accessories segment designs, manufactures and sells the following products: • Seats and components sold into the commercial vehicle markets in North America, Europe and Asia-Pacific; • Commercial vehicle accessories including wipers, mirrors, and sensors; and • Office seats primarily in 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 tables present financial information for the Company's reportable segments for the periods indicated: Three Months Ended March 31, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 140,157 $ 34,126 $ 39,876 $ 30,215 $ — $ 244,374 Gross profit 12,907 4,991 3,401 4,086 $ ( 2 ) 25,383 Selling, general & administrative expenses 6,588 1,324 1,640 1,465 $ 5,982 16,999 Operating income $ 6,319 $ 3,667 $ 1,761 $ 2,621 $ ( 5,984 ) $ 8,384 Three Months Ended March 31, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 124,342 $ 44,372 $ 46,462 $ 29,946 $ — $ 245,122 Gross profit 13,808 5,440 6,324 5,585 ( 36 ) 31,121 Selling, general & administrative expenses 6,325 1,531 1,468 1,422 4,972 15,718 Operating income $ 7,483 $ 3,909 $ 4,856 $ 4,163 $ ( 5,008 ) $ 15,403 19 Table of Contents 17. Other Financial Information Items reported in inventories consisted of the following: March 31, 2022 December 31, 2021 Raw materials $ 124,549 $ 107,505 Work in process 20,690 21,671 Finished goods 13,116 11,869 $ 158,355 $ 141,045 Items reported in property, plant, and equipment, net consisted of the following: March 31, 2022 December 31, 2021 Land and buildings $ 32,235 $ 32,012 Machinery and equipment 195,738 194,828 Construction in progress 12,653 8,822 Property, plant, and equipment, gross 240,626 235,662 Less accumulated depreciation ( 175,875 ) ( 172,536 ) Property, plant and equipment, net $ 64,751 $ 63,126 Items reported in accrued expenses and other liabilities consisted of the following: March 31, 2022 December 31, 2021 Compensation and benefits $ 15,093 $ 16,677 Accrued freight 5,434 5,628 Taxes payable 5,980 6,391 Operating lease liabilities 8,738 9,048 Contingent Consideration 4,528 4,409 Other 6,639 8,687 $ 46,412 $ 50,840