What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-02 · 180 added, 104 removed, 471 unchanged (38% 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,

2023 2022 2023 2022

(In thousands, except per share amounts)

6 unchanged sentences

Interest expense 2,804 2,118 5,694 4,079

Loss on extinguishment of debt — 921 — 921

Income before provision for income taxes 12,833 3,355 24,789 8,737

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,

2023 2022 2023 2022

(In thousands)

4 unchanged sentences

Derivative instrument, net of tax 1,298 ( 641 ) 2,641 2,173

Other comprehensive income 4,040 3,112

Comprehensive income $ 12,740 $ 7,094

Other comprehensive income (loss) 100 ( 4,688 ) 4,140 ( 1,576 )

Comprehensive income (loss) $ 10,240 $ ( 2,203 ) $ 22,980 $ 4,891

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

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(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

Pension cash reversion 2,942 —

Shared-based compensation expense 1,771 1,117

Share-based compensation expense 1,526 2,818

Deferred income taxes 201 ( 1,454 )

Non-cash loss (income) on derivative contracts ( 689 ) 34

Loss on extinguishment of debt — 921

Settlement of derivative contract — 3,900

Change in other operating items:

4 unchanged sentences

Other operating activities, net 6,935 10,113

Net cash (used in) provided by operating activities 58 ( 21,398 )

Net cash provided by (used in) operating activities 11,522 ( 4,507 )

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under term loan facility — 30,625

Repayment of term loan facility ( 4,375 ) ( 1,875 )

Borrowing under revolving credit facility 11,000 55,200

Borrowings under revolving credit facility 20,000 65,200

Repayment of revolving credit facility ( 11,000 ) ( 83,600 )

Surrender of common stock by employees ( 764 ) ( 464 )

Surrender of shares to pay withholding taxes ( 788 ) ( 912 )

Debt issuance and amendment costs — ( 648 )

Other financing activities 4,056 ( 131 )

1 unchanged sentence

EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH 380 ( 1,994 )

NET INCREASE IN CASH 9,659 3,250

NET INCREASE (DECREASE) IN CASH 10,616 ( 6,458 )

Beginning of period 31,825 34,958

13 unchanged sentences

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

Balance - December 31, 2022 32,826,852 $ 328 $ ( 14,514 ) $ 261,371 $ ( 95,595 ) $ ( 31,550 ) $ 120,040

2 unchanged sentences

Balance - March 31, 2023 32,991,468 $ 330 $ ( 15,278 ) $ 263,142 $ ( 86,895 ) $ ( 27,510 ) $ 133,789

Share-based compensation expense 101,524 — ( 24 ) ( 245 ) — — ( 269 )

Total comprehensive income — — — — 10,140 100 10,240

Balance - June 30, 2023 33,092,992 $ 330 $ ( 15,302 ) $ 262,897 $ ( 76,755 ) $ ( 27,410 ) $ 143,760

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

10 unchanged sentences

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 primarily manufacture customized products to meet the requirements of our customers.

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.

12 unchanged sentences

Revenue Recognition

We had outstanding customer accounts receivable, net of allowances, of $ 171.9 million as of March 31, 2023 and $ 152.6 million as of December 31, 2022.

We had outstanding customer accounts receivable, net of allowances, of $ 173.5 million as of June 30, 2023 and $ 152.6 million as of December 31, 2022.

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, 2023

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Total

Three Months Ended June 30, 2023

Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total

Seats $ 70,895 $ — $ 18,714 $ — $ 89,609

5 unchanged sentences

Total $ 152,730 $ 63,625 $ 36,829 $ 9,010 $ 262,194

Three Months Ended March 31, 2022

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Total

Three Months Ended June 30, 2022

Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total

Seats $ 65,304 $ — $ 20,884 $ — $ 86,188

5 unchanged sentences

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

Six Months Ended June 30, 2023

Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total

Seats $ 147,886 $ — $ 37,878 $ — $ 185,764

Electrical wire harnesses, panels and assemblies — 118,373 7,769 9,845 135,987

Trim 94,951 — 4,346 — 99,297

Industrial Automation — — — 8,912 8,912

Cab structures 65,718 — 1,565 — 67,283

Mirrors, wipers and controls 4,760 — 22,900 — 27,660

Total $ 313,315 $ 118,373 $ 74,458 $ 18,757 $ 524,903

Six Months Ended June 30, 2022

Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total

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

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

Trim 92,227 — 1,296 — 93,523

Industrial Automation — — — 55,480 55,480

Cab structures 54,377 — — — 54,377

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

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

Debt consisted of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Term loan facility $ 148,125 $ 152,500

1 unchanged sentence

China credit facility 4,135 —

Unamortized discount and issuance costs ( 60 ) ( 63 )

Unamortized issuance costs ( 57 ) ( 63 )

$ 161,203 $ 152,437

current portion of long-term debt and short-term debt

( 17,260 ) ( 10,938 )

Total long-term debt, net of current portion $ 143,943 $ 141,499

3 unchanged sentences

Subject to the terms of the Credit Agreement, the Revolving Credit Facility includes a $ 10 million swing line sublimit and a $ 10 million letter of credit sublimit.

The Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the “Incremental Facilities”), in a

maximum aggregate amount of (a) up to the date of receipt of financial statements for the fiscal quarter ending June 30, 2022, $ 75 million, and (b) thereafter, (i) $ 75 million less the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50 :1.0.

The Credit 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.

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.

5 unchanged sentences

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 twelve months ended December 31, 2022.

At March 31, 2023, we had $ 11.0 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 137.8 million.

Combined with availability under our newly established foreign credit facilities of approximately $ 8.7 million, total consolidated availability was $ 146.5 million as of March 31, 2023.

The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 1.2 million and $ 1.3 million as of March 31, 2023 and December 31, 2022, respectively, are being amortized over the remaining life of the Credit Agreement.

At June 30, 2023, we had $ 9.0 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 139.8 million.

Combined with availability under our newly established foreign credit facility (described below) of approximately $ 8.3 million, total consolidated availability was $ 148.1 million at June 30, 2023.

The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 1.1 million and $ 1.3 million as of June 30, 2023 and December 31, 2022, respectively, are being amortized over the remaining life of the Credit Agreement.

At December 31, 2022, we had no borrowings under the Revolving Credit Facility and we had outstanding letters of credit of $ 1.2 million.

23 unchanged sentences

grant certain liens on assets;

pay dividends or make

certain other distributions;

pay dividends or make certain other distributions;

make certain investments or acquisitions;

22 unchanged sentences

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 was subject to step-down to 3.50 :1.0 at the end of the fiscal quarter ending March 31, 2023;

and will be subject to step-downs 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 the covenants as of March 31, 2023.

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

and will be subject to step-downs 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 June 30, 2023.

Repayment and prepayment

2 unchanged sentences

The Credit Agreement also requires all outstanding amounts under the Credit Facilities to be repaid in full on the Maturity Date.

See Note 15, Commitments and Contingencies, for the future minimum principal payments due on long-term debt for the next five years.

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.

Foreign Facilities

Foreign Facility

In the quarter ended March 31, 2023, we established a credit facility in China with availability of approximately $ 12.4 million (denominated in the local currency) consisting of a line of credit which is subject to annual renewal (the "China Credit Facility").

We utilize the China Credit Facility to meet local working capital demands, fund letters of credit and bank guarantees, and support other short-term cash requirements in our China operations.

We had $ 4.4 million and $ 0 million outstanding under the China Credit Facility as of March 31, 2023 and December 31, 2022, respectively, which are included in Current portion of long-term debt and short-term debt on the Condensed Consolidated Balance Sheets.

At March 31, 2023, we had $ 8.7 million availability under the China Credit Facility.

We had $ 4.1 million and $ 0.0 million outstanding under the China Credit Facility as of June 30, 2023 and December 31, 2022, respectively, which are included in current portion of long-term debt and short-term debt on the Condensed Consolidated Balance Sheets.

At June 30, 2023, we had $ 8.3 million availability under the China Credit Facility.

Cash Paid for Interest

For the three months ended March 31, 2023 and 2022, cash payments for interest were $ 3.2 million and $ 1.6 million, respectively.

For the six months ended June 30, 2023 and 2022, cash payments for interest were $ 6.6 million and $ 3.5 million, respectively.

Intangible Assets

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amount Accumulated

2 unchanged sentences

Amortization Net

Definite-lived intangible assets:

Trademarks/tradenames 22 years $ 11,468 $ ( 5,562 ) $ 5,906 $ 11,487 $ ( 5,377 ) $ 6,110

3 unchanged sentences

$ 35,793 $ ( 22,869 ) $ 12,924 $ 35,768 $ ( 21,148 ) $ 14,620

The aggregate intangible asset amortization expense was $ 0.8 million for the three months ended March 31, 2023 and $ 0.9 million for the three months ended March 31, 2022, respectively.

The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended June 30, 2023 and 2022.

The aggregate intangible asset amortization expense was $ 1.7 million for the six months ended June 30, 2023 and 2022.

Fair Value Measurement

13 unchanged sentences

The gains and losses as a result of the changes in fair value of the hedge contract for transactions denominated in Mexican Pesos are deferred in accumulated other comprehensive loss and recognized in cost of revenues in the period the related hedge transactions are settled.

As of March 31, 2023, hedge contracts for transactions denominated in Czech Crown were not designated as a hedging instruments;

As of June 30, 2023, hedge contracts for transactions denominated in Czech Crown were not designated as a hedging instruments;

therefore, they are marked-to-market and the fair value of 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.

2 unchanged sentences

The interest rate swaps are intended to mitigate the impact of rising interest rates on the Company and covers approximately 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 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 consolidated statements of operations.

The fair values of our derivative assets and liabilities measured on a recurring basis are categorized as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

Foreign exchange contract $ 3,109 $ — $ 3,109 $ — $ — $ — $ — $ —

Foreign exchange contracts $ 3,599 $ — $ 3,599 $ — $ — $ — $ — $ —

Interest rate swap agreement $ 2,396 $ — $ 2,396 $ — $ 1,849 $ — $ 1,849 $ —

Foreign exchange contract $ — $ — $ — $ — $ 356 $ — $ 356 $ —

Foreign exchange contracts $ — $ — $ — $ — $ 356 $ — $ 356 $ —

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Equivalent U.S.

6 unchanged sentences

Location Fair Value

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Foreign exchange contracts Other current assets $ 3,599 $ —

3 unchanged sentences

Location Fair Value

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Foreign exchange contracts Accrued liabilities and other $ — $ 356

2 unchanged sentences

Location Fair Value

March 31, 2023 December 31, 2022

Derivative instruments Accumulated other comprehensive (loss) income $ 6,115 $ 3,777

June 30, 2023 December 31, 2022

Derivative instruments Accumulated other comprehensive income $ 7,414 $ 3,777

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,

2023 2022 2023 2022

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 $ 1,242 $ 844 $ 1,693 $ 1,300

Interest rate swap agreement Interest expense $ 454 $ ( 193 )

Interest rate swap agreement Interest and other expense $ 553 $ ( 84 ) $ 1,007 $ ( 277 )

Foreign exchange contracts Other (income) expense $ ( 157 ) $ 637 $ 312 $ ( 34 )

4 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amount Fair Value Carrying

3 unchanged sentences

Revolving credit facility $ 9,000 $ 9,000 $ — $ —

Presented in the Condensed Consolidated Balance Sheets are the current portion of long-term debt of $ 12.0 million and long-term debt of $ 149.2 million as of March 31, 2023, and current portion of long-term debt of $ 10.9 million and long-term debt of $ 141.5 million as of December 31, 2022.

Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 13.1 million and long-term debt of $ 143.9 million as of June 30, 2023 and current portion of long-term debt of $ 10.9 million and long-term debt of $ 141.5 million as of December 31, 2022.

The components of lease expense are as follows:

Three Months Ended March 31,

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

2023 2022 2023 2022

Operating lease cost

2 unchanged sentences

Short-term lease cost

1,994 913 3,925 2,438

Total lease expense $ 4,408 $ 3,534 $ 8,734 $ 7,713

Supplemental balance sheet information related to leases is as follows:

Balance Sheet Location March 31, 2023 December 31, 2022

Balance Sheet Location June 30, 2023 December 31, 2022

Operating Leases

8 unchanged sentences

Total finance lease liabilities $ 285 $ 270

For the three months ended March 31, 2023 and 2022, cash payments on operating leases were $ 2.7 million and $ 2.0 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:

For the six months ended June 30, 2023 and 2022, cash payments on operating leases were $ 4.7 million and $ 5.0 million, respectively.

Anticipated future lease costs, which are based in part on certain assumptions to approximate annual rental commitments under non-cancelable leases, are as follows:

Operating Financing Total

8 unchanged sentences

Present value of lease liabilities $ 29,435 $ 285 $ 29,720

For the three months ended March 31, 2023, we recorded a $ 3.3 million tax provision, or 27 % effective tax rate for the period, compared to a $ 1.4 million tax provision, or 26 % effective tax rate for the three months ended March 31, 2022.

Income tax expense for the three months ended March 31, 2023 and 2022 is based on an estimated annual effective tax rate, which requires management to make its best estimate of annual pretax income or loss.

We recorded a $ 2.7 million tax provision, or 21 % effective tax rate for the three months ended June 30, 2023, and $ 5.9 million tax provision, or 24 % effective tax rate for the six months ended June 30, 2023, compared to a $ 0.9 million and $ 2.3 million tax provision for the three and six months ended June 30, 2022, respectively, or approximately 26 % 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 2023 pretax results for U.S.

and foreign income or loss vary from estimates, the actual income tax expense recognized in 2023 could be different from the forecasted amount used to estimate the income tax expense for the three months ended March 31, 2023.

For the three months ended March 31, 2023 and 2022, cash paid for taxes, net of refunds received were $ 2.0 million and $ 1.4 million, respectively.

For the six months ended June 30, 2023 and 2022, cash paid for taxes, net of refunds received, were $ 5.9 million and $ 3.1 million, respectively.

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:

Three Months Ended March 31,

Three Months Ended June 30,

Interest cost $ 358 $ 200

3 unchanged sentences

Net cost $ 256 $ 108

Six months ended June 30,

Interest cost $ 705 $ 415

Expected return on plan assets ( 602 ) ( 533 )

Amortization of prior service cost 25 26

Recognized actuarial loss 377 317

Net cost $ 505 $ 225

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

2 unchanged sentences

Adjusted Award Value at December 31, 2022 $ 2,188

New grants 2,180

Forfeitures ( 1,139 )

1 unchanged sentence

Payments ( 1,159 )

Adjusted Award Value at March 31, 2023 $ 1,873

Unrecognized compensation expense was $ 5.0 million as of March 31, 2023.

Adjusted Award Value at June 30, 2023 $ 2,874

Unrecognized compensation expense was $ 5.2 million and $ 2.4 million as of June 30, 2023 and 2022, respectively.

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.

As of March 31, 2023, there was approximately $ 5.3 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans.

As of June 30, 2023, there was approximately $ 4.1 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans.

This expense is subject to future adjustments and forfeitures and will be recognized on a straight-line basis over the remaining period listed above for each grant.

A summary of the status of our restricted stock awards as of March 31, 2023 and changes during the three months ended March 31, 2023 are presented below:

A summary of the status of our restricted stock awards as of June 30, 2023 and changes during the six months ended June 30, 2023, are presented below:

(in thousands) Weighted-

3 unchanged sentences

Forfeited ( 3 ) 7.61

Nonvested - March 31, 2023 341 $ 7.52

As of March 31, 2023, a total of 2.1 million shares were available for future grants from the shares authorized for award under our 2020 EIP, including cumulative forfeitures.

Nonvested - June 30, 2023 648 $ 7.86

As of June 30, 2023, a total of 2.5 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, 32,991,468 and 32,826,852 shares were issued and outstanding as of March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022.

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, 33,092,992 and 32,826,852 shares were issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.

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.

1 unchanged sentence

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, 2023 and 2022 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, 2023 and 2022 includes the effect of potential common shares issuable when dilutive, and is as follows:

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

2023 2022 2023 2022

Net income $ 10,140 $ 2,485 $ 18,840 $ 6,467

4 unchanged sentences

Diluted earnings per share $ 0.30 $ 0.08 $ 0.57 $ 0.20

There were 134 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2023 as the effect would have been antidilutive and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2022.

There were no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2023 and 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.

There were 11 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2023 and 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.

Other Comprehensive Income (Loss)

4 unchanged sentences

comprehensive

income (loss)

Balance - December 31, 2022 $ ( 24,811 ) $ ( 11,512 ) $ 4,773 $ ( 31,550 )

1 unchanged sentence

Derivative instruments — — 2,641 2,641

Balance - March 31, 2023 $ ( 22,254 ) $ ( 11,372 ) $ 6,116 $ ( 27,510 )

Balance - June 30, 2023 $ ( 23,305 ) $ ( 11,519 ) $ 7,414 $ ( 27,410 )

currency translation adjustment Pension and

2 unchanged sentences

comprehensive

income (loss)

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

1 unchanged sentence

Derivative instruments — — 2,173 2,173

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

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

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

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Amount Tax Expense After Tax Amount Before Tax

Amount Tax Expense After Tax Amount

Cumulative translation adjustment $ ( 1,051 ) $ — $ ( 1,051 ) $ 1,506 $ — $ 1,506

Amortization of actuarial losses $ 137 $ 3 $ 140

Amortization of actuarial gain (loss) ( 145 ) ( 2 ) ( 147 ) ( 8 ) 1 ( 7 )

Derivative instruments 1,871 ( 573 ) 1,298 3,686 ( 1,045 ) 2,641

Total other comprehensive income $ 4,509 $ ( 469 ) $ 4,040

Three Months Ended March 31, 2022

Total other comprehensive income (loss) $ 675 $ ( 575 ) $ 100 $ 5,184 $ ( 1,044 ) $ 4,140

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

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

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

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 $ 4,080 $ ( 968 ) $ 3,112

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

Cost Reduction and Manufacturing Capacity Rationalization

2 unchanged sentences

The changes in accrued restructuring balances are as follows:

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total

December 31, 2022 $ ( 5 ) $ — $ — $ 458 $ — $ 453

2 unchanged sentences

March 31, 2023 $ — $ — $ — $ 711 $ — $ 711

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/

New charges 340 — — 378 — 718

Payments and other adjustments ( 340 ) — — ( 391 ) — ( 731 )

June 30, 2023 $ — $ — $ — $ 698 $ — $ 698

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total

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

2 unchanged sentences

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

Of the $ 0.7 million costs incurred in the three months ended March 31, 2023 for restructuring, $ 0.5 million related to facility exit and other costs and $ 0.2 million related to headcount reductions were recorded in cost of revenues.

Of the $ 0.7 million costs incurred in the three months ended March 31, 2023 for restructuring, $ 0.6 million primarily related to the Industrial Automation segment and were recorded in Cost of revenues in the Condensed Consolidated Statements of Operations.

New charges — 571 560 314 306 1,751

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

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

Of the $ 0.7 million costs incurred in the three months ended June 30, 2023, $ 0.3 million primarily related to headcount reductions and $ 0.4 million related to facility exit and other costs.

Substantially all costs incurred were recorded in cost of revenues.

Of the $ 1.4 million costs incurred in the six months ended June 30, 2023, $ 0.5 million primarily related to headcount reductions and $ 0.9 million related to facility exit and other costs.

Substantially all costs incurred were recorded in cost of revenues.

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, 2023, our equipment leases did not provide for any material guarantee of a specified portion of residual values.

As of June 30, 2023, 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, 2023 and December 31, 2022, we had no such guarantees.

As of June 30, 2023 and 2022, we had no such guarantees.

Litigation - We are subject to various legal proceedings and claims arising in the ordinary course of business, including but not limited to product liability claims, customer and supplier disputes, service provider disputes, examinations by taxing authorities, employment disputes, workers’ compensation claims, unfair labor practice charges, OSHA investigations, intellectual property disputes and environmental claims arising out of the conduct of our businesses.

Management believes that the Company maintains adequate insurance and that we have established reserves for issues that are probable and estimable in amounts that are adequate to cover reasonable adverse judgments not covered by insurance.

Based upon the information available to management and discussions with legal counsel, it is the opinion of management that the ultimate outcome of the various legal actions and claims that are incidental to our business are not expected to have a material adverse impact on the consolidated financial position, results of operations, equity or cash flows;

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.

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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, 2023 and December 31, 2022, 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, 2023:

These amounts, as they relate to the periods ended June 30, 2023 and December 31, 2022, are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets.

On July 24, 2023, one of CVG’s customers issued a voluntary safety recall related to certain wiper system components supplied by CVG.

To the extent a loss occurs that is attributed to CVG, CVG believes that it has reasonable levels of insurance coverage to mitigate recall exposure risk.

It is reasonably possible that CVG will incur additional losses and fees above the amount accrued for warranty claims but we cannot estimate a range of such reasonably possible losses or fees related to these claims at this time.

There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued.

The following presents a summary of the warranty provision for the six months ended June 30, 2023:

Balance - December 31, 2022 $ 1,433

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Deduction for payments made and other adjustments ( 522 )

Balance - March 31, 2023 $ 1,599

Balance - June 30, 2023 $ 1,577

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.

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Segment Reporting

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker (“CODM”), which is our President and Chief Executive Officer.

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 Interim President and Chief Executive Officer.

Each of these segments consists of a number of manufacturing facilities.

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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, 2023

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total

Three Months Ended June 30, 2023

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

Revenues $ 152,730 $ 63,625 $ 36,829 $ 9,010 $ — $ 262,194

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Selling, general & administrative expenses 6,769 2,686 2,262 1,425 9,315 22,457

Operating income $ 13,394 $ 6,070 $ 5,577 $ ( 862 ) $ ( 9,535 ) $ 14,644

Three Months Ended March 31, 2022

Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total

Operating income (loss) $ 14,135 $ 7,659 $ 5,526 $ ( 2,061 ) $ ( 9,315 ) $ 15,944

Three Months Ended June 30, 2022

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

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

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Selling, general & administrative expenses

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

7,403 1,303 1,735 1,547 3,664 15,652

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

Six Months Ended June 30, 2023

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

Revenues $ 313,315 $ 118,373 $ 74,458 $ 18,757 $ — $ 524,903

Gross profit 40,374 18,643 15,015 ( 422 ) — 73,610

Selling, general & administrative expenses 12,847 4,914 3,913 2,501 18,847 43,022

Operating income (loss) $ 27,527 $ 13,729 $ 11,102 $ ( 2,923 ) $ ( 18,847 ) $ 30,588

Six Months Ended June 30, 2022

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

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

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

Selling, general & administrative expenses

13,990 2,942 3,199 2,871 9,649 32,651

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

Other Financial Information

Items reported in inventories consisted of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Raw materials $ 98,668 $ 108,417

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Finished goods 17,650 16,368

Total Inventory $ 139,553 $ 142,542

Inventories $ 131,695 $ 142,542

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Land and buildings $ 33,391 $ 32,267

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Compensation and benefits $ 24,435 $ 13,370

Taxes payable 9,426 5,092

Operating lease liabilities 8,723 7,421

Taxes payable 8,123 5,092

Accrued freight 2,856 4,225

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Other 8,966 11,268

$ 47,340 $ 42,809

Accrued liabilities and other $ 54,680 $ 42,809

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