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Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 214 added, 123 removed, 515 unchanged (40% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In thousands, except per share amounts)

6 unchanged sentences

Interest expense 2,118 2,818 4,079 7,859

Loss on extinguishment of debt 921 7,155 921 7,155

Income before provision for income taxes 3,355 6,641 8,737 17,659

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In thousands)

5 unchanged sentences

Other comprehensive income (loss) ( 4,688 ) 1,798 ( 1,576 ) ( 414 )

Comprehensive income $ 7,094 $ 6,278

Comprehensive income (loss) $ ( 2,203 ) $ 6,893 $ 4,891 $ 13,171

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(In thousands, except per share amounts)

38 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

5 unchanged sentences

Payment in kind interest expense — 2,254

Shared-based compensation expense 1,117 965

Share-based compensation expense 2,818 3,165

Deferred income taxes ( 1,454 ) 1,819

Non-cash loss (income) on derivative contracts 34 ( 424 )

Loss on extinguishment of debt 921 7,155

Settlement of derivative contract 3,900 —

Change in other operating items:

10 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under term loan facility 30,625 150,000

Repayment of term loan facility ( 1,875 ) —

Repayment of 2023 term loan facility principal — ( 152,654 )

Borrowing under revolving credit facility 55,200 —

Borrowings under revolving credit facility 65,200 35,500

Repayment of revolving credit facility ( 83,600 ) —

Borrowings under ABL revolving credit facility — 11,300

Repayment of ABL revolving credit facility — ( 11,300 )

Surrender of common stock by employees ( 912 ) —

Debt extinguishment payments and early payment fees on debt — ( 3,031 )

Debt issuance and amendment costs ( 648 ) ( 2,333 )

Contingent Consideration payment — ( 5,000 )

Other financing activities ( 131 ) ( 241 )

17 unchanged sentences

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 — — — — 5,095 1,798 6,893

Balance - June 30, 2021 31,569,749 $ 316 $ ( 11,966 ) $ 252,478 $ ( 83,771 ) $ ( 45,420 ) $ 111,637

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

Total comprehensive income — — — — 3,982 3,112 7,094

Balance - March 31, 2022 32,157,210 $ 322 $ ( 13,636 ) $ 256,683 $ ( 69,642 ) $ ( 39,326 ) $ 134,401

Share-based compensation expense 290,558 3 ( 448 ) 1,701 — — 1,256

Total comprehensive income (loss) — — — — 2,485 ( 4,688 ) ( 2,203 )

Balance - June 30, 2022 32,447,768 $ 325 $ ( 14,084 ) $ 258,384 $ ( 67,157 ) $ ( 44,014 ) $ 133,454

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

34 unchanged sentences

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 had outstanding customer accounts receivable, net of allowances, of $ 219.3 million as of June 30, 2022 and $ 174.5 million as of December 31, 2021.

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 March 31, 2022

Three Months Ended June 30, 2022

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total

6 unchanged sentences

Total $ 142,785 $ 28,547 $ 47,345 $ 32,172 $ 250,849

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total

6 unchanged sentences

Total $ 130,230 $ 54,324 $ 44,195 $ 29,192 $ 257,941

Six Months Ended June 30, 2022

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total

Seats $ 135,112 $ — $ — $ 36,671 $ 171,783

Electrical wire harnesses, panels and assemblies — 7,193 87,222 5,135 99,550

Trim 92,227 — — 1,296 93,523

Warehouse Automation — 55,480 — — 55,480

Cab structures 54,377 — — — 54,377

Mirrors, wipers and controls 1,225 — — 19,285 20,510

Total $ 282,941 $ 62,673 $ 87,222 $ 62,387 $ 495,223

Six Months Ended June 30, 2021

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total

Seats $ 136,459 $ — $ — $ 27,594 $ 164,053

Electrical wire harnesses, panels and assemblies 1,309 6,035 89,970 6,409 103,723

Trim 76,223 — — 1,309 77,532

Warehouse Automation — 92,661 — — 92,661

Cab structures 37,367 — — 4,981 42,348

Mirrors, wipers and controls 3,214 — 687 18,845 22,746

Total $ 254,572 $ 98,696 $ 90,657 $ 59,138 $ 503,063

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 )

June 30, 2022 December 31, 2021

Term loan facility $ 175,000 $ 146,250

Revolving credit facility 31,000 49,400

Unamortized issuance costs and discount ( 93 ) ( 694 )

$ 205,907 $ 194,956

current portion, net of unamortized discount and issuance costs of $ 0.00 and $ 0.7 million, respectively

current portion

( 8,750 ) ( 9,375 )

5 unchanged sentences

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”).

issued pursuant to a term facility agreement (the “Term Facility Agreement”) between, among others, Bank of America, N.A.

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 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.

On May 12, 2022, the Company and certain of its subsidiaries entered into a second amendment (the “Amendment”) to its Credit Agreement pursuant to which the Lenders upsized the existing term loan facility to $ 175 million in aggregate principal amount and increased the revolving credit facility commitments by $ 25 million to an aggregate of $ 150 million in revolving credit facility commitments.

The Revolving Credit Facility includes a $ 10 million swing line sublimit and a $ 10 million letter of credit sublimit.

The Amended 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.

Further, separate from the Company’s annual $ 35 million capital spending cap, a one-time $ 45 million capital project basket was

included in the amendment.

All other key provisions, including the $ 75 million accordion, acquisition holiday, and other baskets remain unchanged.

The Credit Facilities mature on May 12, 2027 (the “Maturity Date”).

The Amendment resulted in a loss on extinguishment of debt of $ 0.9 million, including $ 0.6 million non-cash write off relating to deferred financing costs and unamortized discount of the Term Loan Facility and $ 0.3 million of other fees associated with the amended debt, recorded in our Consolidated Statements of Operations for the six months ended June 30, 2022.

The proceeds of the Credit Facilities will be used, together with cash on hand of the Company, to (a) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Amended Credit Agreement and (b) for working capital and other lawful corporate purposes of the Company and its subsidiaries.

At June 30, 2022, we had $ 31.0 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 117.8 million.

The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 1.4 million and $ 1.3 million as of June 30, 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:

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 Term Secured Overnight Financing Rate ("SOFR"), including a credit spread adjustment, 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

8 unchanged sentences

0.25 % 2.25 % 2.25 % 1.25 %

IV < 1.50 to 1.00

IV < 2.00 to 1.00 but

> 1.50 to 1.00

0.20 % 2.00 % 2.00 % 1.00 %

V < 1.50 to 1.00

0.15 % 1.75 % 1.75 % 0.75 %

Guarantee and Security

16 unchanged sentences

enter into certain employee benefit plans;

make acquisitions;

and other matters customarily included in senior secured loan agreements.

7 unchanged sentences

certain events of bankruptcy or insolvency;

certain Employee Retirement Income Security Act events;

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 (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;

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 March 31, 2023;

to 3.25 :1.0 at the end of the fiscal quarter ending June 30, 2023;

and to 3.00 :1.0 for each fiscal quarter on and after the fiscal quarter ending September 30, 2023).

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.

We were in compliance with the covenants as of June 30, 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:

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.

The Credit Agreement requires mandatory 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

11 unchanged sentences

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.

For the six months ended June 30, 2022 and 2021, cash payments for interest were $ 3.5 million and $ 5.4 million, respectively.

Intangible Assets

Our definite-lived intangible assets were comprised of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amount Accumulated

2 unchanged sentences

Amortization Net

Definite-lived intangible assets:

Trademarks/tradenames 22 years $ 11,509 $ ( 5,202 ) $ 6,307 $ 11,573 $ ( 5,043 ) $ 6,530

3 unchanged sentences

$ 36,059 $ ( 19,643 ) $ 16,416 $ 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.

The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended June 30, 2022 and 2021.

The aggregate intangible asset amortization expense was $ 1.7 million for the six months ended June 30, 2022 and 2021.

Fair Value Measurement

5 unchanged sentences

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.

Our financial instruments consist 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.

5 unchanged sentences

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.

As of June 30, 2022, the hedge contracts for transactions denominated in Ukrainian Hryvnia and Czech Crown were not designated as hedging instruments;

Settlements of hedge transactions are recognized in cost of revenues in the Condensed Consolidated Statements of Operations in the period they are settled.

Interest Rate Swaps.

1 unchanged sentence

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

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.

Any changes in fair value are included in earnings or deferred through Accumulated other comprehensive loss, depending on the nature and effectiveness of the offset.

Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the Condensed Consolidated Statements of Operations.

During the second quarter ended June 30, 2022, the Company entered into transactions to cash settle existing interest rate swaps and received proceeds of $ 3.9 million.

The gain on the swap settlement has been recorded in Other comprehensive income (loss) and will be recognized over the life of the settled swaps.

Following the settlement of the existing interest rate swaps, we entered into a new interest rate swap agreement to align with the SOFR rate and maturity date of the Credit Agreement.

Contingent Consideration.

3 unchanged sentences

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.

As of June 30, 2022, the remaining undiscounted Contingent Consideration payment is estimated at $ 4.8 million and the fair value is $ 4.6 million, which is presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other.

A payment of $ 5.0 million was made during the second quarter of 2021 based on achievement of the second EBITDA threshold.

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

June 30, 2022 December 31, 2021

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

7 unchanged sentences

Change in fair value 238

Contingent consideration liability balance at March 31, 2022

Contingent consideration liability balance at June 30, 2022

The following table summarizes the notional amount of our open foreign exchange contracts:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Equivalent U.S.

6 unchanged sentences

Location Fair Value

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Foreign exchange contracts Other current assets $ 1,650 $ 1,375

Interest rate swap agreement Other current assets $ 2,700 $ 241

Interest rate swap agreement Accrued liabilities and other $ — $ 241

Derivative Liability

1 unchanged sentence

Location Fair Value

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Foreign exchange contracts Accrued liabilities and other $ 1 $ —

Interest rate swap agreement Other long-term liabilities $ 1,133 $ —

Interest rate swap agreement Accrued liabilities and other $ 283 $ 498

2 unchanged sentences

Location Fair Value

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Derivative instruments Accumulated other comprehensive (loss) income $ 2,930 $ 757

The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Location of Gain (Loss) on Derivatives

Recognized in Income Amount of Gain (Loss) on Derivatives

Recognized in Income

Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives

Recognized in Income (Loss)

Foreign exchange contracts Cost of revenues $ 844 $ ( 540 ) $ 1,300 $ ( 847 )

Interest rate swap agreement Interest and other expense $ ( 193 ) $ 2

Interest rate swap agreements Interest and other expense $ ( 84 ) $ 4 $ ( 277 ) $ 6

Foreign exchange contracts Other (income) expense $ 637 $ ( 41 ) $ ( 34 ) $ ( 223 )

4 unchanged sentences

The carrying amounts and fair values of our long-term debt obligations are as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amount Fair Value Carrying

3 unchanged sentences

Revolving credit facility 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.

$ 31,000 $ 31,000 $ 49,400 $ 49,400

Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 8.8 million and long-term debt of $ 197.2 million as of June 30, 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.

The components of lease expense are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Operating lease cost

1 unchanged sentence

Finance lease cost 71 93 147 193

Amortization of right-of-use assets 71 92

Interest on lease liabilities 5 8

Total finance lease cost 76 100

Short-term lease cost

913 1,602 2,438 2,972

Total lease expense $ 3,534 $ 4,169 $ 7,713 $ 8,139

Supplemental balance sheet information related to leases is as follows:

Balance Sheet Location March 31, 2022 December 31, 2021

Balance Sheet Location June 30, 2022 December 31, 2021

Operating Leases

4 unchanged sentences

Finance Leases

Right-of-use assets, net Other assets $ 398 $ 468

Right-of-use assets, net Other assets, net $ 321 $ 468

Current liabilities Accrued liabilities and other 136 194

1 unchanged sentence

Total finance lease liabilities $ 335 $ 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.

For the six months ended June 30, 2022 and 2021, cash payments on operating leases were $ 5.0 million and $ 5.8 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:

9 unchanged sentences

Present value of lease liabilities $ 28,889 $ 335 $ 29,224

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.

For the three and six months ended June 30, 2022, we recorded a $ 0.9 million and $ 2.3 million tax provision, respectively, or 26 % effective tax rate for each period, compared to a $ 1.5 million and $ 4.1 million tax provision for the three and six months ended June 30, 2021, respectively, or 23 % effective tax rate for each period.

Income tax expense 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.

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 and six months ended June 30, 2022.

For the six months ended June 30, 2022 and 2021, cash paid for taxes, net of refunds received, were $ 3.1 million and $ 1.7 million, respectively.

Pension and Other Post-Retirement Benefit Plans

1 unchanged sentence

Pension and Other Post-Retirement Benefit Plans Non-U.S.

Three Months Ended March 31, Three Months Ended March 31,

Three Months Ended June 30, Three Months Ended June 30,

2022 2021 2022 2021

4 unchanged sentences

Net (benefit) cost $ 68 $ ( 279 ) $ 108 $ 165

Pension and Other Post-Retirement Benefit Plans Non-U.S.

Six months ended June 30, Six months ended June 30,

2022 2021 2022 2021

Interest cost $ 388 $ 414 $ 415 $ 323

Expected return on plan assets ( 415 ) ( 1,106 ) ( 533 ) ( 504 )

Amortization of prior service cost 4 4 26 28

Recognized actuarial loss 165 140 317 482

Net (benefit) cost $ 142 $ ( 548 ) $ 225 $ 329

Net periodic (benefit) cost components, not inclusive of service costs, are recognized in other expense (income) within the Condensed Consolidated Statements of Operations.

8 unchanged sentences

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.

The total amount payable as of the award's vesting date is determined based upon the number of shares allocated to a 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, ROIC performance, and the share price of the Company's stock.

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.

ROIC is defined as adjusted net income plus interest expense (net of tax), divided by total assets less current liabilities plus current debt.

A five -point average is used to calculate the asset denominator.

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.

3 unchanged sentences

Adjusted Award Value at December 31, 2021 $ 1,234

New grants 2,101

Forfeitures ( 86 )

1 unchanged sentence

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.

Adjusted Award Value at June 30, 2022 $ 1,354

Unrecognized compensation expense was $ 2.4 million and $ 2.8 million as of June 30, 2022 and 2021, respectively.

Share-Based Compensation

6 unchanged sentences

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.

Performance targets are based on relative total shareholder return in terms of ranking as compared to the peer group over the performance period and ROIC performance.

As of June 30, 2022, there was approximately $ 6.4 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:

A summary of the status of our restricted stock awards as of June 30, 2022 and changes during the six months ended June 30, 2022, are presented below:

(in thousands) Weighted-

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Forfeited ( 6 ) 7.61

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.

Nonvested - June 30, 2022 820 $ 7.18

As of June 30, 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.

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.

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.

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, 32,447,768 and 32,034,592 shares were issued and outstanding as of June 30, 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.

No preferred shares were outstanding as of June 30, 2022 and December 31, 2021.

Earnings Per Share - Basic earnings per share is determined by dividing net income by the weighted average number of common shares outstanding during the year.

Diluted earnings 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,

Diluted earnings per share for the three and six months ended June 30, 2022 and 2021 includes the effect of potential common shares issuable when dilutive, and is as follows:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net income $ 2,485 $ 5,095 $ 6,467 $ 13,585

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Dilutive shares outstanding 33,039 32,674 33,009 32,654

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.

Basic earnings per share $ 0.08 $ 0.16 $ 0.20 $ 0.43

Diluted earnings per share $ 0.08 $ 0.16 $ 0.20 $ 0.42

There were 19 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2022 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2021.

There were 21 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2022 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2021.

Other Comprehensive Income (Loss)

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comprehensive

income (loss)

Balance - December 31, 2021 $ ( 20,445 ) $ ( 22,750 ) $ 757 $ ( 42,438 )

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Derivative instruments — — 2,173 2,173

Balance - March 31, 2022 $ ( 20,118 ) $ ( 22,779 ) $ 3,571 $ ( 39,326 )

Amortization of actuarial gain — 1,447 — 1,447

Balance - June 30, 2022 $ ( 25,641 ) $ ( 21,303 ) $ 2,930 $ ( 44,014 )

currency translation adjustment Pension and

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comprehensive

income (loss)

Balance - December 31, 2020 $ ( 19,024 ) $ ( 27,423 ) $ 1,441 $ ( 45,006 )

1 unchanged sentence

Derivative instruments — — ( 503 ) ( 503 )

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

Amortization of actuarial gain — 673 — 673

Balance - June 30, 2021 $ ( 19,608 ) $ ( 26,750 ) $ 938 $ ( 45,420 )

The related tax effects allocated to each component of other comprehensive loss are as follows:

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Amount Tax Expense After Tax Amount Before Tax

Amount Tax Expense After Tax Amount

Amortization of actuarial gains $ 1 $ ( 30 ) $ ( 29 )

Cumulative translation adjustment ( 5,523 ) — ( 5,523 ) ( 5,196 ) — ( 5,196 )

Amortization of actuarial gain $ 1,384 $ 92 $ 1,476 $ 1,385 $ 62 $ 1,447

Derivative instruments ( 786 ) 145 ( 641 ) 2,966 ( 793 ) 2,173

Total other comprehensive income (loss) $ ( 4,925 ) $ 237 $ ( 4,688 ) $ ( 845 ) $ ( 731 ) $ ( 1,576 )

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Amount Tax Expense After Tax

Amortization of actuarial losses $ 399 $ ( 113 ) $ 286

Amount Before Tax

Amount Tax Expense After Tax

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 )

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The changes in accrued restructuring balances are as follows:

Balance - December 31, 2020 $ 679

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

December 31, 2021 $ 230 $ 417 $ — $ — $ ( 161 ) $ 486

New charges 204 350 — 435 — 989

Payments and other adjustments ( 309 ) ( 770 ) — ( 435 ) 422 ( 1,092 )

Balance - March 31, 2021 $ 417

Balance - December 31, 2021 $ 486

March 31, 2022 $ 125 $ ( 3 ) $ — $ — $ 261 $ 383

New charges — 314 571 560 306 1,751

Payments and other adjustments ( 91 ) ( 311 ) ( 571 ) ( 560 ) ( 444 ) ( 1,977 )

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.

June 30, 2022 $ 34 $ — $ — $ — $ 123 $ 157

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

December 31, 2020 $ 349 $ — $ — $ 40 $ 290 $ 679

Payments and other adjustments ( 186 ) — — ( 40 ) ( 36 ) ( 262 )

March 31, 2021 $ 163 $ — $ — $ — $ 254 $ 417

Payments and other adjustments ( 67 ) — — — ( 171 ) ( 238 )

June 30, 2021 $ 96 $ — $ — $ — $ 83 $ 179

Of the $ 1.8 million costs incurred in the three months ended June 30, 2022, $ 0.6 million primarily related to headcount reductions and $ 1.2 million related to facility exit and other costs.

Of the $ 1.8 million costs incurred, $ 1.5 million was recorded in cost of revenues and $ 0.3 million was recorded in selling, general and administrative expenses.

Of the $ 2.7 million costs incurred in the six months ended June 30, 2022, $ 0.7 million primarily related to headcount reductions and $ 2.0 million related to facility exit and other costs.

Of the $ 2.7 million costs incurred, $ 2.3 million was recorded in cost of revenues and $ 0.4 million was recorded in selling, general and administrative expenses.

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.

As of June 30, 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.

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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.

As of June 30, 2022 and 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.

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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:

These amounts, as they relate to the periods ended June 30, 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 six months ended June 30, 2022:

Balance - December 31, 2021 $ 1,490

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Deduction for payments made and other adjustments ( 473 )

Balance - March 31, 2022 $ 1,255

Balance - June 30, 2022 $ 1,175

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 2022 $ 4,375 $ — $ 4,375

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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.

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 has allowed 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.

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The following tables present financial information for the Company's reportable segments for the periods indicated:

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

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Selling, general & administrative expenses 7,403 1,547 1,303 1,735 3,664 15,652

Operating income $ 6,319 $ 3,667 $ 1,761 $ 2,621 $ ( 5,984 ) $ 8,384

Three Months Ended March 31, 2021

Operating income (loss) $ 1,509 $ 1,308 $ 5,942 $ 1,132 $ ( 3,664 ) $ 6,227

Three Months Ended June 30, 2021

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

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Selling, general & administrative expenses

Operating income $ 7,483 $ 3,909 $ 4,856 $ 4,163 $ ( 5,008 ) $ 15,403

6,721 1,206 1,459 1,449 7,204 18,039

Operating income (loss) $ 8,242 $ 8,480 $ 3,129 $ 3,686 $ ( 7,208 ) $ 16,329

Six Months Ended June 30, 2022

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

Revenues $ 282,941 $ 62,673 $ 87,222 $ 62,387 $ — $ 495,223

Gross profit 21,817 7,846 10,647 6,952 — 47,262

Selling, general & administrative expenses 13,990 2,871 2,942 3,199 9,649 32,651

Operating income (loss) $ 7,827 $ 4,975 $ 7,705 $ 3,753 $ ( 9,649 ) $ 14,611

Six Months Ended June 30, 2021

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total

Revenues $ 254,572 $ 98,696 $ 90,657 $ 59,138 $ — $ 503,063

Gross profit 28,771 15,126 10,912 10,720 ( 40 ) 65,489

Selling, general & administrative expenses

13,046 2,738 2,927 2,871 12,175 33,757

Operating income (loss) $ 15,725 $ 12,388 $ 7,985 $ 7,849 $ ( 12,215 ) $ 31,732

Other Financial Information

Items reported in inventories consisted of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Raw materials $ 116,572 $ 107,505

1 unchanged sentence

Finished goods 13,963 11,869

$ 158,355 $ 141,045

Inventories $ 150,025 $ 141,045

Items reported in property, plant, and equipment, net consisted of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Land and buildings $ 32,215 $ 32,012

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Items reported in accrued expenses and other liabilities consisted of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Compensation and benefits $ 17,040 $ 16,677

Accrued freight 5,434 5,628

Taxes payable 9,053 6,391

Operating lease liabilities 7,480 9,048

Accrued freight 5,677 5,628

Contingent Consideration 4,647 4,409

Deferred tooling revenue 4,071 851

Other 10,369 7,836

$ 46,412 $ 50,840

Accrued liabilities and other $ 58,337 $ 50,840

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements