What changed in this filing

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Item 1. Business

2023-03-06 compared with 2022-03-02 · 43 added, 41 removed, 206 unchanged (29% of the section changed)

COMPANY OVERVIEW

CVG is a global provider of systems, assemblies and components to the global commercial vehicle market, the electric vehicle market, and the warehouse automation markets.

At Commercial Vehicle Group, Inc.

and its subsidiaries, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve.

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.

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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 manufacturers, many construction vehicle original equipment manufacturers ("OEMs") and top e-commerce retailers.

We believe our products are used by a majority of the North American Commercial Truck manufacturers, many construction vehicle original equipment manufacturers ("OEMs"), parts and service dealers, distributors, as well as top e-commerce retailers.

Our Long-term Strategy

Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

In the quarter ended December 31, 2021, we completed a strategic reorganization of our operations into four segments, Vehicle Solutions, Warehouse Automation, Electrical Systems and Aftermarket & Accessories.

The reorganization will allow the Company to better focus on growth opportunities, capital allocation and enhancing shareholder value.

As a result of the strategic reorganization, the prior period segment information has been reclassified to conform to the new organization structure.

See Note 16, Segment Reporting, to our consolidated financial statements in Item 8 in this Annual Report on Form 10-K.

Our segments offer various products which are sold into many end markets such as internal combustion commercial vehicles, electric vehicles, construction equipment, warehouse automation and military.

Contemporaneously with the filing of this Form 10-K, we updated our reportable segments to rename Warehouse Automation to Industrial Automation.

We continue to report our results in four segments - Vehicle Solutions, Electrical Systems, Aftermarket & Accessories and Industrial Automation.

The segment name change did not result in any change to the composition of the Company's segments and therefore did not result in any change to historical results.

Our segments offer various products which are sold into many end markets such as internal combustion commercial vehicles, electric vehicles, construction equipment, power sports, industrial automation and military.

Certain of our facilities manufacture and sell products through multiple business segments.

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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;

• Plastic components ("Trim") primarily for the North America commercial vehicle market and power sports 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.

The Electrical Systems segment designs, manufactures and sells the following products:

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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;

• Seats and components sold into the commercial vehicle channels that provide repair and refurbishing.

These channels include Original Equipment Service ("OES") centers and retail distributors, and are spread across North America, Europe and Asia-Pacific.

• Commercial vehicle accessories including wipers, mirrors, and sensors.

• Office seats primarily in Europe and Asia-Pacific.

These products are sold both as Original Equipment and as repair products.

• Office seats primarily sold into the commercial and home office furniture distribution channels in Europe and Asia-Pacific.

The Industrial 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.

The charts below display CVG's net sales by segment and geography for the year ended December 31, 2022.

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Our seats are designed to achieve a high level of operator comfort by adding a wide range of manual and power features such as lumbar support, cushion and back bolsters, and leg and thigh support.

Our seats are built to meet customer requirements in low volumes and produced in numerous feature combinations to form a full-range product line with a wide level of price points.

Our seats are built to meet customer requirements in low volumes and produced in numerous feature combinations to form a full-range product line with a wide range of price points.

Our seats are sold under multiple brands, including KAB Seating ™ , National Seating ™ , Bostrom Seating ® , and Stratos ™ .

Plastic Assemblies and Components .

We design, engineer and produce plastic components and assemblies for medium and heavy duty trucks, recreational vehicles, specialty vehicle applications, and diversified markets.

We design, engineer and produce plastic components and assemblies for MD/HD, power sports vehicles, specialty vehicle applications, and diversified markets.

We offer thermoformed products, injection molded products, reaction injection molded products (RIM), and decorated / hydrographic finished products.

We also assemble components and fabrics to these formed plastic parts and deliver complete subassemblies.

We also assemble components and fabrics to these formed plastic parts and deliver complete subassemblies in bulk and sequenced VIN specific.

Our principal products in this category include:

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We design, manufacture and provide a variety of interior design products including armrests, grab handles, storage systems, floor coverings, floor mats, sleeper bunks, headliners, wall panels, and privacy curtains that can be part of the overall cab structure or standalone assemblies depending on the customer application.

WAREHOUSE AUTOMATION SEGMENT OVERVIEW

Warehouse Automation Segment Products

Electrical Systems, Panel Assemblies, and Electro-Mechanical Assemblies .

We offer a wide range of material handling equipment, electrical distribution systems, and related assemblies primarily for the e-commerce, warehouse integration, transportation and the military/ defense markets.

Our principal products in this category include:

Panel Assemblies.

We offer integrated assemblies and cabinets that are installed in a vehicle or unit of equipment and may be integrated with our wire harness assemblies.

These components provide the user control over multiple operational functions and features.

Electro-Mechanical Assemblies.

We offer electro-mechanical assemblies, including box builds, complex automated and robotic assemblies, and large multi-cabinet control cabinets with power distribution and cabling.

Our service includes mechanical assembly, wire and cable routing, automated wire preparation capabilities, complex configurations, test and custom palletizing and crating solutions.

ELECTRICAL SYSTEMS SEGMENT OVERVIEW

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Aftermarket & Accessories Segment Products

We design, manufacture, and provide a variety of seats, mirrors, wipers and wiper systems sold into the commercial MD/HD truck, military and specialty recreational vehicles, electric vehicle, office and home office markets.

We design, manufacture, and provide a variety of seats, mirrors, wipers and wiper systems sold into the commercial MD/HD truck, military and specialty power sports vehicles, electric vehicle, office and home office markets.

These products are sold under various brands including, Bostrom ® , National Seating ™ , Moto Mirror ® , KAB Seating ™ (for both vehicles and Office markets), Sprague Devices ® and RoadWatch ® .

Our aftermarket products are primarily sold through the Original Equipment Service (OES) sales channel and direct into the retail aftermarket as replacements for original equipment in North America, Europe and Asia Pacific.

INDUSTRIAL AUTOMATION SEGMENT OVERVIEW

Industrial Automation Segment Products

Electrical Systems, Control Panel Assemblies, and Electro-Mechanical Assemblies .

Our principal products in this category include:

Control Panel Assemblies.

We offer integrated assemblies and cabinets that are installed in industrial machinery equipment and transportation vehicles and may be integrated with our wire harness assemblies.

These components provide the user control over multiple operational functions and features.

Electro-Mechanical Assemblies.

We offer electro-mechanical assemblies, including box builds, complex automated and robotic systems, and large multi-cabinet control cabinets with power distribution, communication and cabling.

Our service includes mechanical assembly, wire and cable routing, automated wire preparation capabilities, complex configurations, test and custom palletizing and crating solutions.

OUR CONSOLIDATED OPERATIONS

As a diverse global company, we are affected by economic and market developments around the world, supply chain disruptions, instability in certain regions, commodity prices, foreign currency volatility and policies regarding trade and imports.

As a diverse global company, we are affected by supply chain disruptions, instability in certain regions, commodity prices, foreign currency volatility and policies regarding trade and imports.

While we continue to operate, consistent with applicable government guidelines, we are experiencing, and may continue to experience, production slowdowns and/or shutdowns at our manufacturing facilities in North America, Europe and Asia Pacific as a result of government orders, our inability to obtain component parts from suppliers and/or unpredictable customer demand.

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Military equipment production is particularly sensitive to political and governmental budgetary considerations.

Warehouse Automation Market.

Industrial Automation Market.

Shifting retailer behavior and consumer expectations are creating a significant need for incremental automation within warehouses.

Given consumer demands for next-day (and same-day) delivery,

there has been a surge in demand for “last mile” urban fulfillment centers, which are typically supported by very large distribution centers located in the outer ring of a city.

Given consumer demands for next-day (and same-day) delivery, there has been a surge in demand for “last mile” urban fulfillment centers, which are typically supported by very large distribution centers located in the outer ring of a city.

Additionally, increased throughput volume, a greater variety of order and package types, and more frequent product returns by end consumers, all support the rationale for continued investment in automated solutions by warehouse operators.

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In general, these Commercial Arrangements provide that the customer can terminate them if we do not meet specified quality, delivery and cost requirements.

Although these Commercial Arrangements may be terminated at any time by our customers (but generally not by us), such terminations have historically been minimal and have not had a material impact on our results of operations.

Although these Commercial Arrangements may be terminated at any time by our customers (but generally not by us without advance notice), such terminations have generally been minimal and have not had a material impact on our results of operations.

Our Commercial Arrangements with our OEM customers may provide for an annual prospective productivity price reduction.

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Due to the volatility in pricing, we use methods such as market index pricing and competitive bidding to assist in reducing our overall cost.

The impact of the COVID-19 pandemic on raw materials has affected the supply and prices of certain of our products.

The impact of the COVID-19 pandemic and the global economy on raw material sourcing has affected the supply and prices of certain of our products.

We strive to align our customer pricing and material costs to minimize the impact of price fluctuations.

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The environmental laws continue to be amended and revised to impose stricter obligations, and compliance with future additional environmental requirements could necessitate capital outlays.

However, the Company does not believe that these expenditures will ultimately result in a material adverse effect on its financial position or results of operations.

However, the Company does not believe that these

expenditures will ultimately result in a material adverse effect on its financial position or results of operations.

The Company cannot predict the precise effect such future requirements, if enacted, would have on the Company.

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As of December 31, 2022, we had approximately 8,000 employees of which 7,600 were permanent employees and 400 (5)% were temporary employees.

6,100 (81%) of the Company's employees are international and 1,500 (20%) of the Company's

employees are in the United States.

6,100 (80)% of the Company's employees are international and 1,500 (20)% of the Company's employees are in the United States.

It is customary for the company to employ temporary employees to both flex up / down to demand rates.

Of our permanent workforce, approximately 1,000 (13%) were salaried and the remainder were hourly.

As of December 31, 2021, all of the Company's U.S.

Of our permanent workforce, approximately 1,000 (13)% were salaried and the remainder were hourly As of December 31, 2022, all of the Company's U.S.

employees were non-union and a majority of the Company's personnel in Mexico were unionized.

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Safety - The safety of our workforce has always been a top priority and the Company is proud of our safety record, which includes three consecutive years of declining recordable incidents and five consecutive years of declining incident rates.

Our 2021 full year incident rate of 0.63 is below the industry benchmarks and five of our global facilities were incident free in calendar year 2021.

The impact of the COVID-19 pandemic continues to require our focus and monitoring.

Our 2022 full year incident rate of 0.52 is below the industry benchmarks and a 20% decrease year over year while working approximately 300,000 more hours.

The impact of the COVID-19 pandemic during 2022 continued to require our focus and monitoring.

We continued the evolution of safety practices and procedures to protect our employees, ensuring our work continuity as an essential manufacturing employer.

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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-K

Item 1. Business