Commercial Vehicle Group, Inc. 10-Q

ITEM 1 – FINANCIAL STATEMENTS COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (Unaudited) (In thousands, except per share amounts) Revenues $ 251,412 $ 239,610 $ 746,635 $ 742,673 Cost of revenues 224,570 209,466 672,531 647,040 Gross profit 26,842 30,144 74,104 95,633 Selling, general and administrative expenses 17,304 18,772 49,955 52,529 Operating income 9,538 11,372 24,149 43,104 Other (income) expense 1,924 ( 186 ) 2,798 ( 1,127 ) Interest expense 2,813 1,630 6,892 9,489 Loss on extinguishment of debt — — 921 7,155 Income before provision for income taxes 4,801 9,928 13,538 27,587 Provision for income taxes 1,250 2,417 3,520 6,491 Net income $ 3,551 $ 7,511 $ 10,018 $ 21,096 Earnings per Common Share: Basic $ 0.11 $ 0.24 $ 0.30 $ 0.67 Diluted $ 0.11 $ 0.23 $ 0.30 $ 0.64 Weighted average shares outstanding: Basic 32,460 31,570 32,950 31,432 Diluted 32,922 32,706 33,645 32,738 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 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (Unaudited) (In thousands) Net income $ 3,551 $ 7,511 $ 10,018 $ 21,096 Other comprehensive loss: Foreign currency exchange translation adjustments ( 4,493 ) ( 1,225 ) ( 9,689 ) ( 1,809 ) Minimum pension liability, net of tax ( 362 ) 1,421 1,085 2,094 Derivative instrument, net of tax 1,838 ( 549 ) 4,011 ( 1,052 ) Other comprehensive loss ( 3,017 ) ( 353 ) ( 4,593 ) ( 767 ) Comprehensive income $ 534 $ 7,158 $ 5,425 $ 20,329 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 September 30, 2022 December 31, 2021 (Unaudited) (In thousands, except per share amounts) ASSETS Current Assets: Cash $ 38,713 $ 34,958 Accounts receivable, net of allowances of $ 343 and $ 243 , respectively 178,340 174,472 Inventories 150,347 141,045 Other current assets 15,788 20,201 Total current assets 383,188 370,676 Property, plant and equipment, net 64,755 63,126 Intangible assets, net 15,468 18,283 Deferred income taxes 24,381 24,108 Other assets, net 33,658 31,500 Total assets $ 521,450 $ 507,693 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 121,350 $ 101,915 Accrued liabilities and other 48,446 50,840 Current portion of long-term debt 9,844 9,375 Total current liabilities 179,640 162,130 Long-term debt 174,490 185,581 Pension and other post-retirement benefits 7,704 9,905 Other long-term liabilities 23,855 23,424 Total liabilities 385,689 381,040 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; 32,551,341 and 32,034,592 shares issued and outstanding respectively) 326 321 Treasury stock, at cost: 1,842,407 and 1,708,981 shares, respectively ( 14,138 ) ( 13,172 ) Additional paid-in capital 260,210 255,566 Retained deficit ( 63,606 ) ( 73,624 ) Accumulated other comprehensive loss ( 47,031 ) ( 42,438 ) Total stockholders’ equity 135,761 126,653 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 521,450 $ 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 Nine Months Ended September 30, 2022 2021 (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 10,018 $ 21,096 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 13,606 13,879 Noncash amortization of debt financing costs 274 895 Payment in kind interest expense — 2,254 Share-based compensation expense 4,644 5,029 Deferred income taxes ( 1,118 ) 2,771 Non-cash loss (income) on derivative contracts 30 ( 642 ) Loss on extinguishment of debt 921 7,155 Settlement of derivative contract 3,900 — Change in other operating items: Accounts receivable ( 9,193 ) ( 41,452 ) Inventories ( 14,414 ) ( 55,913 ) Prepaid expenses ( 1,587 ) ( 2,452 ) Accounts payable 23,544 25,225 Other operating activities, net 3,169 1,266 Net cash provided by (used in) operating activities 33,794 ( 20,889 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 12,541 ) ( 11,441 ) Proceeds from disposal/sale of property, plant and equipment 16 42 Net cash used in investing activities ( 12,525 ) ( 11,399 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under term loan facility 30,625 150,000 Repayment of term loan facility ( 4,063 ) ( 1,875 ) Repayment of 2023 term loan facility principal — ( 152,654 ) Borrowings under revolving credit facility 65,200 51,800 Repayment of revolving credit facility ( 103,013 ) ( 20,500 ) Borrowings under ABL revolving credit facility — 11,300 Repayment of ABL revolving credit facility — ( 11,300 ) Surrender of shares to pay withholding taxes ( 966 ) ( 73 ) 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 ( 166 ) ( 261 ) Net cash provided by (used in) financing activities ( 13,031 ) 16,073 EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH ( 4,483 ) ( 685 ) NET INCREASE (DECREASE) IN CASH 3,755 ( 16,900 ) CASH: Beginning of period 34,958 50,503 End of period $ 38,713 $ 33,603 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 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 Share-based compensation expense — — — 1,863 — — 1,863 Total comprehensive income (loss) — — — — 7,511 ( 353 ) 7,158 Balance - September 30, 2021 31,569,749 $ 316 $ ( 11,966 ) $ 254,341 $ ( 76,260 ) $ ( 45,773 ) $ 120,658 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 — — — — 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 Share-based compensation expense 103,573 1 ( 54 ) 1,826 — — 1,773 Total comprehensive income — — — — 3,551 ( 3,017 ) 534 Balance - September 30, 2022 32,551,341 $ 326 $ ( 14,138 ) $ 260,210 $ ( 63,606 ) $ ( 47,031 ) $ 135,761 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 applies 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. 6 Table of Contents 3. Revenue Recognition We had outstanding customer accounts receivable, net of allowances, of $ 178.3 million as of September 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 September 30, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 77,843 $ — $ — $ 20,080 $ 97,923 Electrical wire harnesses, panels and assemblies 45 3,416 45,608 2,744 51,813 Trim 45,980 — — 2,623 48,603 Warehouse Automation — 10,700 521 — 11,221 Cab structures 28,739 — — 497 29,236 Mirrors, wipers and controls 1,417 — — 11,199 12,616 Total $ 154,024 $ 14,116 $ 46,129 $ 37,143 $ 251,412 Three Months Ended September 30, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 60,813 $ — $ — $ 15,533 $ 76,346 Electrical wire harnesses, panels and assemblies 597 14,334 39,938 1,476 56,345 Trim 39,164 — — 730 39,894 Warehouse Automation — 37,347 — — 37,347 Cab structures 15,863 — — 2,780 18,643 Mirrors, wipers and controls 1,477 — 147 9,411 11,035 Total $ 117,914 $ 51,681 $ 40,085 $ 29,930 $ 239,610 Nine Months Ended September 30, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 212,956 $ — $ — $ 56,751 $ 269,707 Electrical wire harnesses, panels and assemblies 45 10,609 132,830 7,879 151,363 Trim 138,207 — — 3,919 142,126 Warehouse Automation — 66,180 520 — 66,700 Cab structures 83,116 — — 497 83,613 Mirrors, wipers and controls 2,642 — — 30,484 33,126 Total $ 436,966 $ 76,789 $ 133,350 $ 99,530 $ 746,635 7 Table of Contents Nine Months Ended September 30, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total Seats $ 197,272 $ — $ — $ 43,127 $ 240,399 Electrical wire harnesses, panels and assemblies 1,906 20,370 129,907 7,884 160,067 Trim 115,388 — — 2,039 117,427 Warehouse Automation — 130,008 — — 130,008 Cab structures 53,230 — — 7,761 60,991 Mirrors, wipers and controls 4,691 — 835 28,255 33,781 Total $ 372,487 $ 150,378 $ 130,742 $ 89,066 $ 742,673 4. Debt Debt consisted of the following: September 30, 2022 December 31, 2021 Term loan facility $ 172,813 $ 146,250 Revolving credit facility 11,588 49,400 Unamortized issuance costs and discount ( 67 ) ( 694 ) $ 184,334 $ 194,956 Less: current portion ( 9,844 ) ( 9,375 ) Total long-term debt, net of current portion $ 174,490 $ 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 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. 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 8 Table of Contents 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 Amendment, recorded in our Consolidated Statements of Operations for the nine months ended September 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 September 30, 2022, we had $ 11.6 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 137.2 million. The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 1.3 million and $ 1.3 million as of September 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 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 Leverage Ratio Commitment Fee Letter of Credit Fee Term SOFR Loans Base Rate Loans I > 3.50 to 1.00 0.35 % 2.75 % 2.75 % 1.75 % II < 3.50 to 1.00 but > 2.75 to 1.00 0.30 % 2.50 % 2.50 % 1.50 % III < 2.75 to 1.00 but > 2.00 to 1.00 0.25 % 2.25 % 2.25 % 1.25 % 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 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; make acquisitions; and other matters customarily included in senior secured loan agreements. The Credit Agreement also contains customary reporting and other affirmative covenants, as well as customary events of default, including, without limitation, nonpayment of obligations under the Credit Facilities when due; material inaccuracy of representations and warranties; violation of covenants in the Credit Agreement and certain other documents executed in connection therewith; breach or default of agreements related to material debt; revocation or attempted revocation of guarantees; denial of the validity or enforceability of the loan documents or failure of the loan documents to be in full force and effect; certain material judgments; certain events of bankruptcy or insolvency; certain Employee Retirement Income Securities Act events; and a change in control of the Company. Certain of the defaults are subject to exceptions, materiality qualifiers, grace periods and baskets customary for credit facilities of this type. 9 Table of Contents 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). We were in compliance with these covenants as of September 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 as follows: 5.0 %, 7.5 %, 10.0 %, 12.5 % and 15.0 %. 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 mandatory prepayments from the receipt of proceeds of dispositions or debt issuance, subject to certain exceptions and the Company's 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. 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 associated fees, recorded in our Consolidated Statements of Operations for the nine months ended September 30, 2021. Cash Paid for Interest For the nine months ended September 30, 2022 and 2021, cash payments for interest were $ 6.2 million and $ 7.0 million, respectively. 10 5. Intangible Assets Our definite-lived intangible assets were comprised of the following: September 30, 2022 December 31, 2021 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trademarks/tradenames 22 years $ 11,447 $ ( 5,268 ) $ 6,179 $ 11,573 $ ( 5,043 ) $ 6,530 Customer relationships 15 years 14,243 ( 8,918 ) 5,325 14,770 ( 8,499 ) 6,271 Technical know-how 5 years 9,790 ( 5,955 ) 3,835 9,790 ( 4,487 ) 5,303 Covenant not to compete 5 years 330 ( 201 ) 129 330 ( 151 ) 179 $ 35,810 $ ( 20,342 ) $ 15,468 $ 36,463 $ ( 18,180 ) $ 18,283 The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended September 30, 2022 and 2021. The aggregate intangible asset amortization expense was $ 2.6 million for the nine months ended September 30, 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 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. 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 September 30, 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. 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. 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 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. 11 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. 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 September 30, 2022, the remaining undiscounted Contingent Consideration payment is estimated at $ 4.8 million and the fair value is $ 4.8 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: September 30, 2022 December 31, 2021 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Foreign exchange contract $ 981 $ — $ 981 $ — $ 1,375 $ — $ 1,375 $ — Interest rate swap agreement $ 1,944 $ — $ 1,944 $ — $ 241 $ — $ 241 $ — Liabilities: Foreign exchange contract $ 134 $ — $ 134 $ — $ — $ — $ — $ — Interest rate swap agreement $ — $ — $ — $ — $ 498 $ — $ 498 $ — Contingent Consideration $ 4,750 $ — $ — $ 4,750 $ 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 341 Contingent Consideration liability balance at September 30, 2022 $ 4,750 The following table summarizes the notional amount of our open foreign exchange contracts: September 30, 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 $ 12,640 $ 12,863 $ 49,601 $ 48,712 12 The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets: Derivative Asset Balance Sheet Location Fair Value September 30, 2022 December 31, 2021 Foreign exchange contracts Other current assets $ 981 $ 1,375 Interest rate swap agreement Other current assets $ 389 $ — Interest rate swap agreement Other assets, net $ 1,555 $ — Interest rate swap agreement Accrued liabilities and other $ — $ 241 Derivative Liability Balance Sheet Location Fair Value September 30, 2022 December 31, 2021 Foreign exchange contracts Accrued liabilities and other $ 134 $ — Interest rate swap agreement Accrued liabilities and other $ — $ 498 Derivative Equity Balance Sheet Location Fair Value September 30, 2022 December 31, 2021 Derivative instruments Accumulated other comprehensive (loss) income $ 4,768 $ 757 The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Location of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Foreign exchange contracts Cost of revenues $ 776 $ 807 $ 2,076 $ 1,654 Interest rate swap agreements Interest and other expense $ ( 67 ) $ ( 1 ) $ ( 344 ) $ ( 7 ) Foreign exchange contracts Other (income) expense $ ( 185 ) $ 63 $ ( 219 ) $ 286 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: September 30, 2022 December 31, 2021 Carrying Amount Fair Value Carrying Amount Fair Value Term loan and security agreement 1 $ 172,746 $ 161,081 $ 145,556 $ 142,265 Revolving credit facility 1 $ 11,588 $ 11,588 $ 49,400 $ 49,400 1. Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 9.8 million and long-term debt of $ 174.5 million as of September 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. 13 Table of Contents 7. Leases The components of lease expense are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease cost $ 2,484 $ 2,519 $ 7,612 $ 7,493 Finance lease cost 29 87 176 280 Short-term lease cost 1,470 1,799 3,908 4,771 Total lease expense $ 3,983 $ 4,405 $ 11,696 $ 12,544 Supplemental balance sheet information related to leases is as follows: Balance Sheet Location September 30, 2022 December 31, 2021 Operating Leases Right-of-use assets, net Other assets, net $ 26,807 $ 26,116 Current liabilities Accrued liabilities and other 7,172 9,048 Non-current liabilities Other long-term liabilities 20,198 18,519 Total operating lease liabilities $ 27,370 $ 27,567 Finance Leases Right-of-use assets, net Other assets, net $ 290 $ 468 Current liabilities Accrued liabilities and other 129 194 Non-current liabilities Other long-term liabilities 166 272 Total finance lease liabilities $ 295 $ 466 For the nine months ended September 30, 2022 and 2021, cash payments on operating leases were $ 7.5 million and $ 8.5 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 $ 2,412 $ 40 $ 2,452 2023 8,554 146 8,700 2024 4,835 104 4,939 2025 5,044 65 5,109 2026 4,465 2 4,467 Thereafter 10,861 — 10,861 Total lease payments $ 36,171 $ 357 $ 36,528 Less: Imputed interest ( 8,801 ) ( 62 ) ( 8,863 ) Present value of lease liabilities $ 27,370 $ 295 $ 27,665 8. Income Taxes For the three and nine months ended September 30, 2022, we recorded a $ 1.3 million, and $ 3.5 million tax provision, respectively, or 26 % effective tax rate for each period, compared to a $ 2.4 million and $ 6.5 million tax provision for the three and nine months ended September 30, 2021, respectively, or approximately 24 % 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, 14 Table of Contents 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 nine months ended September 30, 2022. We have recorded valuation allowances in prior years related to certain foreign subsidiaries due to multiple year cumulative losses. Given the current earnings and anticipated future earnings of some of the Company's foreign locations, the Company believes there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow it to reach a conclusion that the valuation allowance on the deferred tax assets of certain foreign entities will no longer be needed. Releasing the valuation allowance would result in the recognition of previously unrecognized deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve. For the nine months ended September 30, 2022 and 2021, cash paid for taxes, net of refunds received, were $ 4.2 million and $ 3.1 million, respectively. 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 September 30, Three Months Ended September 30, 2022 2021 2022 2021 Interest cost $ 193 $ 207 $ 187 $ 160 Expected return on plan assets ( 208 ) ( 553 ) ( 244 ) ( 251 ) Amortization of prior service cost 1 1,118 2 11 12 Recognized actuarial loss 82 70 142 239 Net (benefit) cost $ 1,185 $ ( 274 ) $ 96 $ 160 U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan Nine months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Interest cost $ 581 $ 621 $ 602 $ 483 Expected return on plan assets ( 623 ) ( 1,659 ) ( 777 ) ( 755 ) Amortization of prior service cost 1 1,122 6 37 40 Recognized actuarial loss 247 210 459 721 Net (benefit) cost $ 1,327 $ ( 822 ) $ 321 $ 489 1. Includes $ 1.1 million non-cash settlement charge. 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. During the nine months ended September 30, 2022, the Company partially settled the U.S. Pension Plan liabilities. Payouts totaling $ 4.4 million were made out of plan assets and, as reflected in amortization of prior service cost in the table above, resulted in a non-cash settlement charge of $ 1.1 million, which was recorded in other expense in the Condensed Consolidated Statements of Income. On October 3, 2022, the Company settled the remaining U.S. Pension Plan liabilities through purchase of an annuity contract. The contract totaling $ 25.2 million was paid out of plan assets and is expected to result in an $ 8.1 million non-cash settlement charge, which will be recognized in the three months ending December 31, 2022. 15 Table of Contents 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 and Return on Invested Capital ("ROIC") component established by the Compensation Committee of the Board of Directors. 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 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. 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. 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. 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. 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 2,108 Forfeitures ( 513 ) Adjustments ( 1,287 ) Payments ( 300 ) Adjusted Award Value at September 30, 2022 $ 1,242 Unrecognized compensation expense was $ 2.0 million and $ 2.3 million as of September 30, 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 and ROIC performance. 16 Table of Contents As of September 30, 2022, there was approximately $ 4.2 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 September 30, 2022 and changes during the nine months ended September 30, 2022, are presented below: 2022 Shares (in thousands) Weighted- Average Grant-Date Fair Value Nonvested - December 31, 2021 783 $ 5.68 Granted 600 7.58 Vested ( 650 ) 3.46 Forfeited ( 50 ) 8.45 Nonvested - September 30, 2022 683 $ 6.81 As of September 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. 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, 32,551,341 and 32,034,592 shares were issued and outstanding as of September 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 September 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 and nine months ended September 30, 2022 and 2021 includes the effect of potential common shares issuable when dilutive, and is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income $ 3,551 $ 7,511 $ 10,018 $ 21,096 Weighted average number of common shares outstanding (in '000s) 32,460 31,570 32,950 31,432 Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 462 1,136 695 1,306 Dilutive shares outstanding 32,922 32,706 33,645 32,738 Basic earnings per share $ 0.11 $ 0.24 $ 0.30 $ 0.67 Diluted earnings per share $ 0.11 $ 0.23 $ 0.30 $ 0.64 There were 8 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2022 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2021. There were 10 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2022 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2021. 17 Table of Contents 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 income (loss) Balance - December 31, 2021 $ ( 20,445 ) $ ( 22,750 ) $ 757 $ ( 42,438 ) Net current period change ( 9,689 ) — — ( 9,689 ) Derivative instruments — — 4,011 4,011 Amortization of actuarial gain — 1,085 — 1,085 Balance - September 30, 2022 $ ( 30,134 ) $ ( 21,665 ) $ 4,768 $ ( 47,031 ) Foreign currency translation adjustment Pension and post-retirement benefit plans Derivative instruments Accumulated other comprehensive income (loss) Balance - December 31, 2020 $ ( 19,024 ) $ ( 27,423 ) $ 1,441 $ ( 45,006 ) Net current period change ( 1,809 ) — — ( 1,809 ) Derivative instruments — — ( 1,052 ) ( 1,052 ) Amortization of actuarial gain — 2,094 — 2,094 Balance - September 30, 2021 $ ( 20,833 ) $ ( 25,329 ) $ 389 $ ( 45,773 ) The related tax effects allocated to each component of other comprehensive loss are as follows: Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Cumulative translation adjustment $ ( 4,493 ) $ — $ ( 4,493 ) $ ( 9,689 ) $ — $ ( 9,689 ) Amortization of actuarial gain (loss) ( 396 ) 34 ( 362 ) 989 96 1,085 Derivative instruments 2,494 ( 656 ) 1,838 5,460 ( 1,449 ) 4,011 Total other comprehensive income (loss) $ ( 2,395 ) $ ( 622 ) $ ( 3,017 ) $ ( 3,240 ) $ ( 1,353 ) $ ( 4,593 ) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Cumulative translation adjustment $ ( 1,225 ) $ — $ ( 1,225 ) $ ( 1,809 ) $ — $ ( 1,809 ) Amortization of actuarial gain 1,308 113 1,421 1,754 340 2,094 Derivative instruments ( 717 ) 168 ( 549 ) ( 1,373 ) 321 ( 1,052 ) Total other comprehensive income (loss) $ ( 634 ) $ 281 $ ( 353 ) $ ( 1,428 ) $ 661 $ ( 767 ) 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. 18 Table of Contents The changes in accrued restructuring balances are as follows: 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 ) 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 ) June 30, 2022 $ 34 $ — $ — $ — $ 123 $ 157 New charges 66 136 — 445 — 647 Payments and other adjustments ( 90 ) ( 46 ) — ( 445 ) ( 123 ) ( 704 ) September 30, 2022 $ 10 $ 90 $ — $ — $ — $ 100 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 New charges $ — $ — $ — $ — $ — $ — Payments and other adjustments $ ( 96 ) $ — $ — $ — $ ( 83 ) $ ( 179 ) September 30, 2021 $ — $ — $ — $ — $ — $ — Of the $ 0.6 million costs incurred in the three months ended September 30, 2022, $ 0.1 million primarily related to headcount reductions and $ 0.5 million related to facility exit and other costs. Substantially all costs incurred were recorded in cost of revenues. Of the $ 3.4 million costs incurred in the nine months ended September 30, 2022, $ 0.9 million primarily related to headcount reductions and $ 2.5 million related to facility exit and other costs. Of the $ 3.4 million costs incurred, $ 3.0 million was recorded in cost of revenues and $ 0.4 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 September 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. 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 September 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. 19 Table of Contents 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 September 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 nine months ended September 30, 2022: Balance - December 31, 2021 $ 1,490 Provision for warranty claims 491 Deduction for payments made and other adjustments ( 745 ) Balance - September 30, 2022 $ 1,236 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 $ 2,187 $ — $ 2,187 2023 $ 10,938 $ — $ 10,938 2024 $ 15,313 $ — $ 15,313 2025 $ 19,688 $ — $ 19,688 2026 $ 24,063 $ — $ 24,063 Thereafter $ 100,624 $ 11,588 $ 112,212 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 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. 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: • 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. 20 Table of Contents 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 September 30, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 154,024 $ 14,116 $ 46,129 $ 37,143 $ — $ 251,412 Gross profit 13,839 404 6,210 6,389 — 26,842 Selling, general & administrative expenses 4,279 1,371 1,055 1,436 9,163 17,304 Operating income (loss) $ 9,560 $ ( 967 ) $ 5,155 $ 4,953 $ ( 9,163 ) $ 9,538 Three Months Ended September 30, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 117,914 $ 51,681 $ 40,085 $ 29,930 $ — $ 239,610 Gross profit 10,143 9,486 6,633 3,885 ( 3 ) 30,144 Selling, general & administrative expenses 7,222 1,461 1,718 1,536 6,835 18,772 Operating income (loss) $ 2,921 $ 8,025 $ 4,915 $ 2,349 $ ( 6,838 ) $ 11,372 Nine Months Ended September 30, 2022 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 436,966 $ 76,789 $ 133,350 $ 99,530 $ — $ 746,635 Gross profit 35,657 8,249 16,857 13,341 — 74,104 Selling, general & administrative expenses 18,269 4,242 3,998 4,636 18,810 49,955 Operating income (loss) $ 17,388 $ 4,007 $ 12,859 $ 8,705 $ ( 18,810 ) $ 24,149 Nine Months Ended September 30, 2021 Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total Revenues $ 372,487 $ 150,378 $ 130,742 $ 89,066 $ — $ 742,673 Gross profit 38,914 24,612 17,545 14,605 ( 43 ) 95,633 Selling, general & administrative expenses 20,269 4,199 4,646 4,407 19,008 52,529 Operating income (loss) $ 18,645 $ 20,413 $ 12,899 $ 10,198 $ ( 19,051 ) $ 43,104 21 Table of Contents 17. Other Financial Information Items reported in inventories consisted of the following: September 30, 2022 December 31, 2021 Raw materials $ 119,361 $ 107,505 Work in process 16,688 21,671 Finished goods 14,298 11,869 Inventories $ 150,347 $ 141,045 Items reported in property, plant, and equipment, net consisted of the following: September 30, 2022 December 31, 2021 Land and buildings $ 32,158 $ 32,012 Machinery and equipment 204,436 194,828 Construction in progress 6,217 8,822 Property, plant, and equipment, gross 242,811 235,662 Less accumulated depreciation ( 178,056 ) ( 172,536 ) Property, plant and equipment, net $ 64,755 $ 63,126 Items reported in accrued expenses and other liabilities consisted of the following: September 30, 2022 December 31, 2021 Compensation and benefits $ 14,622 $ 16,677 Taxes payable 5,730 6,391 Operating lease liabilities 7,172 9,048 Accrued freight 7,094 5,628 Contingent Consideration 4,750 4,409 Deferred tooling revenue 1,401 851 Other 7,677 7,836 Accrued liabilities and other $ 48,446 $ 50,840