Commercial Vehicle Group, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Documents Filed as Part of this Annual Report on Form 10-K Page Report of Independent Registered Public Accounting Firm 34 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 36 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 37 Consolidated Balance Sheets as of December 31, 2023 and 2022 38 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021 39 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 40 Notes to Consolidated Financial Statements 41 Item 15 - Exhibits 74 33 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Commercial Vehicle Group, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Commercial Vehicle Group, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 14, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Testing of revenue As discussed in Note 2 to the consolidated financial statements, revenue is recognized when a performance obligation has been satisfied and control of a product has been transferred to the customer, usually at a designated shipping point and in accordance with customer specifications. Revenue is measured based on the amount of consideration the Company expects to receive in exchange for the transfer of goods or services. For the year ended December 31, 2023, the Company recorded $994.7 million of revenue. We identified the testing of revenue as a critical audit matter due to the large volume of data and the number and complexity of the revenue accounting systems. While revenues consist of a large number of similar, individually low value transactions, the processing and recording of revenue is reliant upon multiple information technology (IT) systems used to process large volumes of customer billing data. Specialized skills and knowledge were needed to test the IT systems used for the processing and recording of revenue. 34 Table of Contents The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue. We evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of revenue. This included controls over the IT systems and automated and manual process level controls related to the processing and recording of revenue. We performed a software-assisted data analysis to assess certain relationships among revenue transactions. For a selection of transactions, we (1) compared the amount of revenue recorded to a combination of Company internal data, executed contracts, and/or other relevant and reliable third-party data, including cash received from customers and (2) evaluated the timing of revenue recognition based on the shipment date. In addition, we involved IT professionals with specialized skills and knowledge, who assisted in the identification and testing of certain IT systems used by the Company for the processing and recording of revenue. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of the audit effort. /s/ KPMG LLP We have served as the Company’s auditor since 2012. Columbus, Ohio March 14, 2024 35 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2023, 2022 and 2021 2023 2022 2021 (In thousands, except per share amounts) Revenues $ 994,679 $ 981,553 $ 971,578 Cost of revenues 860,956 895,048 852,591 Gross profit 133,723 86,505 118,987 Selling, general and administrative expenses 85,663 66,361 69,406 Operating income 48,060 20,144 49,581 Other (income) expense 1,195 10,463 ( 878 ) Interest expense 10,691 9,827 11,179 Loss on extinguishment of debt — 921 7,155 Income (loss) before provision for income taxes 36,174 ( 1,067 ) 32,125 Provision (benefit) for income taxes ( 13,237 ) 20,904 8,393 Net income (loss) $ 49,411 $ ( 21,971 ) $ 23,732 Earnings (loss) per common share Basic $ 1.50 $ ( 0.68 ) $ 0.75 Diluted $ 1.47 $ ( 0.68 ) $ 0.72 Weighted average shares outstanding Basic 33,040 32,334 31,501 Diluted 33,581 32,334 32,790 The accompanying notes are an integral part of these consolidated financial statements. 36 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2023, 2022 and 2021 2023 2022 2021 (In thousands) Net income (loss) $ 49,411 $ ( 21,971 ) $ 23,732 Other comprehensive income (loss): Foreign currency translation adjustments 1,584 ( 4,366 ) ( 1,421 ) Change in defined benefit plans, net of tax ( 384 ) 11,238 4,673 Derivative instruments, net of tax 66 4,016 ( 684 ) Other comprehensive income 1,266 10,888 2,568 Comprehensive income (loss) $ 50,677 $ ( 11,083 ) $ 26,300 The accompanying notes are an integral part of these consolidated financial statements. 37 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2023 and 2022 2023 2022 ASSETS (in thousands, except share and per share amounts) Current assets: Cash $ 37,848 $ 31,825 Accounts receivable, net of allowances of $ 208 and $ 306 , respectively 133,949 152,626 Inventories 128,082 142,542 Other current assets 27,863 12,582 Total current assets 327,742 339,575 Property, plant and equipment, net of accumulated depreciation of $ 188,041 and $ 184,131 , respectively 73,468 67,805 Operating lease right-of-use asset, net 31,165 26,372 Intangible assets, net of accumulated amortization of $ 24,515 and $ 21,148 , respectively 11,222 14,620 Deferred income taxes, net 33,568 12,275 Other assets 6,049 9,621 TOTAL ASSETS $ 483,214 $ 470,268 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 77,314 $ 122,091 Current operating lease liabilities 7,502 7,421 Accrued liabilities and other 45,060 35,388 Current portion of long-term debt 15,313 10,938 Total current liabilities 145,189 175,838 Long-term debt 126,201 141,499 Long-term operating lease liabilities 24,417 19,422 Pension and other post-retirement liabilities 9,196 8,428 Other long-term liabilities 5,279 5,041 Total liabilities 310,282 350,228 Commitments and contingencies (Note 15) 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; 33,322,535 and 32,826,852 shares issued and outstanding, respectively) 333 328 Treasury stock, at cost: 2,134,604 and 1,899,996 shares, respectively ( 16,150 ) ( 14,514 ) Additional paid-in capital 265,217 261,371 Retained deficit ( 46,184 ) ( 95,595 ) Accumulated other comprehensive loss ( 30,284 ) ( 31,550 ) Total stockholders’ equity 172,932 120,040 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 483,214 $ 470,268 The accompanying notes are an integral part of these consolidated financial statements. 38 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2023, 2022 and 2021 Common Stock Treasury Stock Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Loss Total CVG Stockholders’ Equity Shares Amount (In thousands, except share data ) Balance - December 31, 2020 31,249,811 $ 313 $ ( 11,893 ) $ 249,312 $ ( 97,356 ) $ ( 45,006 ) $ 95,370 Issuance of restricted stock 933,139 8 — — — — 8 Surrender of common stock by employees ( 148,358 ) — ( 1,279 ) — — — ( 1,279 ) Share-based compensation expense — — — 6,254 — — 6,254 Total comprehensive income — — — — 23,732 2,568 26,300 Balance - December 31, 2021 32,034,592 $ 321 $ ( 13,172 ) $ 255,566 $ ( 73,624 ) $ ( 42,438 ) $ 126,653 Issuance of restricted stock 983,275 10 — — — — 10 Surrender of common stock by employees ( 191,015 ) ( 3 ) ( 1,342 ) — — — ( 1,345 ) Share-based compensation expense — — — 5,805 — — 5,805 Total comprehensive income (loss) — — — — ( 21,971 ) 10,888 ( 11,083 ) Balance - December 31, 2022 32,826,852 $ 328 $ ( 14,514 ) $ 261,371 $ ( 95,595 ) $ ( 31,550 ) $ 120,040 Issuance of restricted stock 730,291 7 — — — — 7 Surrender of common stock by employees ( 234,608 ) ( 2 ) ( 1,636 ) — — — ( 1,638 ) Share-based compensation expense — — — 3,846 — — 3,846 Total comprehensive income — — — — 49,411 1,266 50,677 Balance - December 31, 2023 33,322,535 $ 333 $ ( 16,150 ) $ 265,217 $ ( 46,184 ) $ ( 30,284 ) $ 172,932 The accompanying notes are an integral part of these consolidated financial statements. 39 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2023, 2022 and 2021 2023 2022 2021 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 49,411 $ ( 21,971 ) $ 23,732 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,630 18,181 18,495 Noncash amortization of debt financing costs 303 350 1,008 Pension plan settlement 2,942 9,202 — Payment in kind interest expense — — 2,254 Shared-based compensation expense 3,846 5,805 6,254 Deferred income taxes ( 20,699 ) 12,480 2,078 Noncash gain on forward exchange contracts ( 535 ) ( 43 ) ( 788 ) Loss on extinguishment of debt — 921 7,155 Settlement of derivative contract — 3,900 — Change in other operating items: Accounts receivable 18,819 19,173 ( 23,569 ) Inventories 15,000 ( 3,675 ) ( 50,283 ) Prepaid expenses ( 5,123 ) 966 ( 1,910 ) Accounts payable ( 44,079 ) 21,842 ( 11,570 ) Accrued liabilities 11,078 ( 912 ) 4,438 Other operating activities, net ( 10,317 ) 2,728 ( 7,126 ) Net cash provided by (used in) operating activities 38,276 68,947 ( 29,832 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 19,696 ) ( 19,710 ) ( 17,653 ) Proceeds from disposal/sale of property, plant and equipment — — 87 Net cash used in investing activities ( 19,696 ) ( 19,710 ) ( 17,566 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under term loan facility — 30,625 150,000 Repayment of term loan facility ( 10,938 ) ( 24,375 ) ( 3,750 ) Repayment of 2023 term loan facility principal — — ( 152,654 ) Borrowings under revolving credit facility 25,000 65,200 86,200 Repayment of revolving credit facility ( 25,000 ) ( 114,600 ) ( 36,800 ) Borrowings under ABL revolving credit facility — — 11,300 Repayment of ABL revolving credit facility — — ( 11,300 ) Borrowings under China credit facility 4,368 — — Repayment of China credit facility ( 4,368 ) — — Surrender of common stock by employees ( 1,636 ) ( 1,342 ) ( 1,279 ) Debt extinguishment payments and early payment fees on debt — — ( 3,031 ) Debt issuance and amendment costs — ( 648 ) ( 2,333 ) Contingent consideration payment — ( 4,750 ) ( 5,000 ) Other financing activities, net ( 155 ) ( 201 ) ( 342 ) Net cash (used in) provided by financing activities ( 12,729 ) ( 50,091 ) 31,011 EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH 172 ( 2,279 ) 842 NET INCREASE (DECREASE) IN CASH 6,023 ( 3,133 ) ( 15,545 ) CASH: Beginning of period 31,825 34,958 50,503 End of period $ 37,848 $ 31,825 $ 34,958 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 12,849 $ 9,305 $ 8,460 Cash paid for income taxes, net $ 10,889 $ 4,041 $ 4,109 Unpaid purchases of property and equipment included in accounts payable $ 1,021 $ 1,701 $ 1,063 The accompanying notes are an integral part of these consolidated financial statements. 40 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2023, 2022 and 2021 1. Significant Accounting Policies Organization - Commercial Vehicle Group, Inc. and its subsidiaries is a global provider of systems, assemblies and components to the global commercial vehicle market, the electric vehicle market, and the industrial automation markets. 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, Czech Republic, Ukraine, Morocco, 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 manufacturers, many construction vehicle original equipment manufacturers ("OEMs"), parts and service dealers, distributors, as well as top e-commerce retailers. We report our financial results by business segment; more specifically, Vehicle Solutions, Electrical Systems, Aftermarket & Accessories and Industrial Automation. The Company’s Chief Operating Decision Maker (“CODM”), its President and Chief Executive Officer, reviews financial information for these four reportable segments and makes decisions regarding the allocation of resources based on these segments. See Note 16, Segment Reporting, for more information. Unless otherwise indicated, all amounts in the tables below are in thousands, except share and per share amounts. Principles of Consolidation - The accompanying consolidated financial statements include the accounts of our wholly-owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Certain prior period amounts have been reclassified to conform to footnote presentation for the current year. Cash - Cash consists of deposits with high credit-quality financial institutions. Accounts Receivable - Trade accounts receivable are stated at current value less allowances, which approximates fair value. We review our receivables on an ongoing basis to ensure that they are properly valued and collectible. The allowance for credit losses is used to record the estimated risk of loss related to our customers’ inability to pay. This allowance is maintained at a level that we consider appropriate based on factors that affect collectability, such as the financial health of our customers, historical trends of charge-offs and recoveries and current and expected economic market conditions. As we monitor our receivables, we identify customers that may have payment problems, and we adjust the allowance accordingly, with the offset to selling, general and administrative expense. Account balances are charged off against the allowance when recovery is considered remote. Inventories - Inventories are valued at the lower of first-in, first-out basis or market and are measured at the lower of cost or net realizable value. Inventory quantities on-hand are regularly reviewed and when necessary provisions for excess and obsolete inventory are recorded based primarily on our estimated production requirements, taking into consideration expected market volumes and future potential use. During the year ended December 31, 2022, we recorded an inventory charge of $ 10.4 million, which was primarily related to a decreased demand in the Industrial Automation segment. 41 Table of Contents Inventories consisted of the following as of December 31: 2023 2022 Raw materials $ 98,371 $ 108,417 Work in process 12,855 17,757 Finished goods 16,856 16,368 Total Inventories $ 128,082 $ 142,542 Property, Plant and Equipment - Property, plant and equipment are stated at cost, net of accumulated depreciation. Property, plant, and equipment, net consisted of the following as of December 31: 2023 2022 Land and buildings $ 34,072 $ 32,267 Machinery and equipment 220,901 212,352 Construction in progress 6,536 7,317 Property, plant, and equipment, gross 261,509 251,936 Less accumulated depreciation ( 188,041 ) ( 184,131 ) Property, plant and equipment, net $ 73,468 $ 67,805 For financial reporting purposes, depreciation is computed using the straight-line method over the estimated useful lives (generally 15 to 40 years for buildings and building improvements, three to 20 years for machinery and equipment, three to seven years for tools and dies, and three to five years for computer hardware and software). Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for major betterments and renewals that extend the useful lives of property, plant and equipment are capitalized and depreciated over the remaining useful lives of the asset. When assets are retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. Accelerated depreciation methods are used for tax reporting purposes. Depreciation expense for property, plant and equipment for each of the years ended December 31, 2023, 2022 and 2021 was $ 14.2 million, $ 14.8 million and $ 15.1 million, respectively. We review long-lived assets for recoverability whenever events or changes in circumstances indicate that carrying amounts of an asset group may not be recoverable. Our asset groups are established by determining the lowest level of cash flows available. If the estimated undiscounted cash flows are less than the carrying amounts of such assets, we recognize an impairment loss in an amount necessary to write down the assets to fair value as estimated from expected future discounted cash flows. Estimating the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. We base our fair value estimates on assumptions we believe to be reasonable, but that are inherently uncertain. Leases - The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company's accounting policy election is to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease. Revenue Recognition - We recognize revenue when our performance obligation has been satisfied and control of products has been transferred to a customer, which typically occurs upon shipment. Revenue is measured based on the amount of consideration we expect to receive in exchange for the transfer of goods or services. Refer to Note 2, Revenue Recognition, for our revenue recognition policies. Income Taxes - We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities based on enacted tax laws and rates expected to be in place when the deferred tax items are realized. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that a portion of the deferred tax assets will not be realized. We provide a valuation allowance for deferred tax assets when it is more likely than not that a portion of such deferred tax assets will not be realized. 42 Table of Contents We evaluate tax positions for recognition by determining, based on the weight of available evidence, whether it is more likely than not the position will be sustained upon audit. Any interest and penalties related to our uncertain tax positions are recognized in income tax expense. Comprehensive Income (Loss) - Comprehensive income (loss) reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources including foreign currency translation, derivative instruments and pension and other post-retirement adjustments. See Note 13, Other Comprehensive (Income) Loss, for a rollforward of activity in accumulated comprehensive loss. Fair Value of Financial Instruments - The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (i.e., inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows: 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 and inactive markets. Level 3 - Significant unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. Concentrations of Credit Risk - Financial instruments that potentially subject us to concentrations of credit risk consist primarily of accounts receivable. We sell products to various companies throughout the world in the ordinary course of business. We routinely assess the financial strength of our customers and maintain allowances for anticipated losses. As of December 31, 2023, receivables from our five top customers represented approximately 49.3 % of total receivables. Foreign Currency Translation - Our functional currency is the local currency. Accordingly, all assets and liabilities of our foreign subsidiaries are translated using exchange rates in effect at the end of the period; revenue and costs are translated using average exchange rates for the period. The related translation adjustments are reported in accumulated other comprehensive income (loss) in stockholders’ equity. Translation gains and losses arising from transactions denominated in a currency other than the functional currency of the entity are included in the results of operations. Foreign Currency Forward Exchange Contracts - We use forward exchange contracts to hedge certain foreign currency transaction exposures. We estimate our projected revenues and purchases in certain foreign currencies or locations and hedge a portion of the anticipated long or short position. The contracts typically run from one month to eighteen months . All forward foreign exchange contracts that are not designated as hedging instruments have been marked-to-market and the fair value of contracts recorded in the Consolidated Balance Sheets with the offsetting non-cash gain or loss recorded in our Consolidated Statements of Operations. For forward contracts that are designated as hedging instruments, the gains and losses are recorded in accumulated other comprehensive income (loss) and recognized in the Consolidated Statement of Operations when the contracts are settled. We do not hold or issue foreign exchange options or forward contracts for trading purposes. Interest Rate Swap Agreement - We use an interest rate swap agreement to fix the interest rate on a portion of our variable interest debt thereby reducing exposure to interest rate changes. The interest rate swap agreement was formally designated at inception as a hedging instrument. Therefore, changes in the fair value of the interest rate swap are recorded in accumulated other comprehensive income (loss) and recognized in the Consolidated Statement of Operations when the contracts are settled. Share-Based Compensation - We recognize share-based compensation based on the grant-date fair value of the equity instruments awarded. Share-based compensation expense is recognized in the consolidated financial statements on a straight-line basis over the requisite service period for the entire award. We account for forfeitures of stock-based compensation awards as they occur. Refer to Note 11, Share-Based Compensation for additional discussion. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption 43 Table of Contents is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted. 2. Revenue Recognition Our products include seating systems, plastic components, cab structures, warehouse automation subsystems, electrical wire harnesses, mirrors, wipers and other accessories. We sell these products into multiple geographic regions including North America, Europe and Asia-Pacific and to multiple end markets. The nature, timing and uncertainty of recognition of revenue and associated cash flows across the varying product lines, geographic regions and customer end markets is substantially consistent. Contractual Arrangements - Revenue is measured based on terms and conditions specified in contracts or purchase orders with customers. We have long-term contracts with some customers that govern overall terms and conditions which are accompanied by purchase orders that define specific order quantities and/or price. We have many customers with which we conduct business for which the terms and conditions are outlined in purchase orders without a long-term contract. We generally do not have customer contracts with minimum order quantity requirements. Amount and Timing of Revenue Recognition - The transaction price is based on the consideration to which the Company will be entitled in exchange for transferring control of a product to the customer. This is defined in a purchase order or in a separate pricing arrangement and represents the stand-alone selling price. Our payment terms vary by customer. None of the Company's business arrangements as of December 31, 2023, contained a significant financing component. We typically do not have multiple performance obligations requiring us to allocate a transaction price. We recognize revenue at the point in time when we satisfy a performance obligation by transferring control of a product to a customer, usually at a designated shipping point and in accordance with customer specifications. Estimates are made for variable consideration resulting from quality, delivery, discounts or other issues affecting the value of revenue and accounts receivable. This amount is estimated based on historical trends and current market conditions, and only amounts deemed collectible are recognized as revenues. Other Matters - Shipping and handling costs billed to customers are recorded in revenues and costs associated with outbound freight are generally accounted for as a fulfillment cost and are included in cost of revenues. We generally do not provide for extended warranties or material customer incentives. Our customers typically do not have a general right of return for our products. We had outstanding customer accounts receivable, net of allowances, of $ 133.9 million as of December 31, 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: Twelve Months Ended December 31, 2023 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Total Seats $ 274,591 $ — $ 71,114 $ — $ 345,705 Electrical wire harnesses, panels and assemblies 2,985 228,424 13,967 26,258 271,634 Plastic & Trim components 186,816 — 7,604 — 194,420 Industrial Automation — — — 12,642 12,642 Cab structures 117,157 — 3,153 — 120,310 Mirrors, wipers and controls 5,570 — 44,398 — 49,968 Total $ 587,119 $ 228,424 $ 140,236 $ 38,900 $ 994,679 44 Table of Contents Twelve Months Ended December 31, 2022 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Total Seats $ 286,391 $ — $ 75,824 $ — $ 362,215 Electrical wire harnesses, panels and assemblies 89 179,849 10,316 14,927 205,181 Plastic & Trim components 179,910 — 5,552 — 185,462 Industrial Automation — 520 — 72,820 73,340 Cab structures 109,268 — 1,356 — 110,624 Mirrors, wipers and controls 4,073 35 40,623 — 44,731 Total $ 579,731 $ 180,404 $ 133,671 $ 87,747 $ 981,553 Twelve Months Ended December 31, 2021 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Total Seats $ 267,580 $ — $ 55,377 $ — $ 322,957 Electrical wire harnesses, panels and assemblies 2,682 168,108 11,214 25,329 207,333 Plastic & Trim components 154,205 — 2,555 — 156,760 Industrial Automation — — — 162,583 162,583 Cab structures 69,749 — 7,761 — 77,510 Mirrors, wipers and controls 4,697 863 38,875 — 44,435 Total $ 498,913 $ 168,971 $ 115,782 $ 187,912 $ 971,578 3. Debt Debt consisted of the following at December 31: 2023 2022 Term loan facility $ 141,563 $ 152,500 Unamortized discount and issuance costs ( 49 ) ( 63 ) $ 141,514 $ 152,437 Less: current portion ( 15,313 ) ( 10,938 ) Total long-term debt, net of current portion $ 126,201 $ 141,499 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. 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 45 Table of Contents receipt of financial statements for the fiscal quarter ending June 30, 2022, $ 75 million, and (b) thereafter, (i) $ 75 million less the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50 :1.0. Further, separate from the Company’s annual $ 35 million capital spending cap, a one-time $ 45 million capital project basket was included in the Amendment. All other key provisions, including the $ 75 million accordion, acquisition holiday, and other baskets remain unchanged. The Credit Facilities mature on May 12, 2027 (the “Maturity Date”). The Amendment resulted in a loss on extinguishment of debt of $ 0.9 million, including $ 0.6 million non-cash write off relating to deferred financing costs and unamortized discount of the Term Loan Facility and $ 0.3 million of other fees associated with the Amendment, recorded in our Consolidated Statements of Operations for the twelve months ended December 31, 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 December 31, 2023 we had no borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.2 million and availability of $ 148.8 million. Combined with availability under our China Credit Facility (described below) of approximately $ 11.3 million, total consolidated availability was $ 160.1 million at December 31, 2023. The unamortized deferred financing fees associated with the Revolving Credit Facility were $ 1.0 million and $ 1.3 million as of December 31, 2023 and December 31, 2022, respectively, and 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 outstanding letters of credit of $ 1.2 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 46 Table of Contents 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. 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-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 the covenants as of December 31, 2023. 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. Foreign Facility In the quarter ended March 31, 2023, we established a credit facility in China consisting of a line of credit which is subject to annual renewal (the "China Credit Facility"). China Credit Facility was renewed in the quarter ended December 31, 2023, with availability of approximately $ 11.3 million (denominated in the local currency). 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 no outstanding borrowings under the China Credit Facility as of December 31, 2023 and December 31, 2022. At December 31, 2023, we had $ 11.3 million of availability under the China Credit Facility. 4. Intangible Assets Our definite-lived intangible assets were comprised of the following: December 31, 2023 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets: Trademarks/tradenames 22 years $ 11,485 $ ( 5,758 ) $ 5,727 Customer relationships 15 years 14,132 ( 10,071 ) 4,061 Technical know-how 5 years 9,790 ( 8,403 ) 1,387 Covenant not to compete 5 years 330 ( 283 ) 47 $ 35,737 $ ( 24,515 ) $ 11,222 December 31, 2022 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets: Trademarks/tradenames 22 years $ 11,487 $ ( 5,377 ) $ 6,110 Customer relationships 15 years 14,161 ( 9,109 ) 5,052 Technical know-how 5 years 9,790 ( 6,445 ) 3,345 Covenant not to compete 5 years 330 ( 217 ) 113 $ 35,768 $ ( 21,148 ) $ 14,620 47 Table of Contents The aggregate intangible asset amortization expense was $ 3.4 million for the fiscal year ended December 31, 2023, 2022 and 2021. The estimated intangible asset amortization expense for each of the five succeeding fiscal years ending after December 31, 2023 is $ 2.9 million for the year ending December 31, 2024 and $ 1.4 million for the years ending December 31, 2025 through 2028. 5. 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 that are designated as cash flow hedge instruments, which are recorded in the Consolidated Balance Sheets at fair value. 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 December 31, 2023, hedge contracts for transactions denominated 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 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 Consolidated Statements of Operations. Interest Rate Swaps. To manage our exposure to variable interest rates, we have entered into interest rate swaps to exchange, at a specified interval, the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount. The interest rate swaps are intended to mitigate the impact of rising interest rates on the Company and covers 50 % of outstanding debt under the Term Loan Facility. Any changes in fair value are included in earnings or 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. During the second quarter ended June 30, 2022, the Company entered into transactions to cash settle existing interest rate swaps ("Interest rate swap agreements settled in 2022") 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. 48 Table of Contents The fair values of our derivative assets and liabilities and Contingent Consideration measured on a recurring basis as of December 31 and are categorized as follows: December 31, 2023 December 31, 2022 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Foreign exchange contract designated as hedging instruments $ 1,318 $ — $ 1,318 $ — $ — $ — $ — $ — Interest rate swap agreement $ 1,073 $ — $ 1,073 $ — $ 1,849 $ — $ 1,849 $ — Liabilities: Foreign exchange contract designated as hedging instruments $ — $ — $ — $ — $ 246 $ — $ 246 $ — Foreign exchange contract not designated as hedging instruments $ 304 $ — $ 304 $ — $ 110 $ — $ 110 $ — The following table summarizes the notional amount of our open foreign exchange contracts at December 31: 2023 2022 U.S. $ Equivalent U.S. $ Equivalent Fair Value U.S. $ Equivalent U.S. $ Equivalent Fair Value Commitments to buy or sell currencies - Foreign exchange contract designated as hedging instruments $ 56,741 $ 58,094 $ 41,049 $ 40,797 Commitments to buy or sell currencies - Foreign exchange contract not designated as hedging instruments $ 16,608 $ 16,806 $ 14,171 $ 13,050 We consider the impact of our credit risk on the fair value of the contracts, as well as the ability to execute obligations under the contract. The following table summarizes the fair value and presentation of derivatives in the Consolidated Balance Sheets at December 31 : Derivative Asset Balance Sheet Location Fair Value 2023 2022 Foreign exchange contract designated as hedging instruments Other current assets $ 1,179 $ — Foreign exchange contract designated as hedging instruments Other assets $ 139 $ — Interest rate swap agreement Other assets $ 1,073 $ 1,849 Derivative Liability Balance Sheet Location Fair Value 2023 2022 Foreign exchange contract designated as hedging instruments Accrued liabilities and other $ — $ 246 Foreign exchange contract not designated as hedging instruments Accrued liabilities and other $ 304 $ 110 Derivative Equity Balance Sheet Location Fair Value 2023 2022 Foreign exchange contract designated as hedging instruments Accumulated other comprehensive (loss) income $ 1,354 $ ( 235 ) Interest rate swap agreements Accumulated other comprehensive (loss) income $ 3,484 $ 4,012 49 Table of Contents The following table summarizes the effect of derivative instruments on the Consolidated Statements of Operations: 2023 2022 Location of Gain (Loss) Recognized on Derivatives Amount of Gain (Loss) Recognized in Income on Derivatives Foreign exchange contract designated as hedging instruments Cost of revenues $ 5,339 $ 3,236 Interest rate swap agreements Interest expense $ 1,466 $ ( 458 ) Interest rate swap agreements settled in 2022 Interest expense $ 756 $ 378 Foreign exchange contract not designated as hedging instruments Other (income) expense $ ( 220 ) $ ( 334 ) 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: December 31, 2023 December 31, 2022 Carrying Amount Fair Value Carrying Amount Fair Value Term loan and security agreement 1 $ 141,514 $ 139,213 $ 152,437 $ 143,477 1 Presented in the Consolidated Balance Sheets as the current portion of long-term debt of $ 15.3 million and long-term debt of $ 126.2 million as of December 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. 6. Leases The Company leases office, warehouse and manufacturing space and certain 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. Our leases have remaining lease terms of one year to nineteen years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the leases within one year . The components of lease expense are as follows: Twelve Months Ended December 31, 2023 2022 Operating lease cost $ 10,390 $ 10,283 Finance lease cost: Amortization of right-of-use assets 151 194 Interest on lease liabilities 14 13 Finance lease cost $ 165 $ 207 Short-term lease cost 1 6,860 5,406 Total lease expense $ 17,415 $ 15,896 1. Includes variable lease costs, which are not significant. 50 Table of Contents Supplemental cash flow information related to leases is as follows: Twelve Months Ended December 31, 2023 Twelve Months Ended December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 9,898 $ 10,022 Financing cash flows from finance leases $ 155 $ 205 Supplemental balance sheet information related to leases is as follows: Balance Sheet Location December 31, 2023 December 31, 2022 Operating Leases Right-of-use assets, net Operating lease right-of-use asset, net $ 31,165 $ 26,372 Current liabilities Current operating lease liabilities 7,502 7,421 Non-current liabilities Long-term operating lease liabilities 24,417 19,422 Total operating lease liabilities $ 31,919 $ 26,843 Finance Leases Right-of-use assets, net Other assets $ 205 $ 270 Current liabilities Accrued liabilities and other 108 131 Non-current liabilities Other long-term liabilities 107 139 Total finance lease liabilities $ 215 $ 270 Weighted Average Remaining Lease Term Operating leases 7.1 years 6.0 years Finance leases 3.0 years 2.3 years Weighted Average Discount Rate Operating leases 11.3 % 8.4 % Finance leases 6.6 % 3.9 % As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We utilize an incremental borrowing rate, which is reflective of the specific term of the leases and economic environment of each geographic region, and apply a portfolio approach for certain machinery and equipment that have consistent terms in a specific geographic region. 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: Year Ending December 31, Operating Financing Total 2024 $ 10,400 $ 117 $ 10,517 2025 9,195 78 9,273 2026 7,091 30 7,121 2027 4,130 7 4,137 2028 2,624 — 2,624 Thereafter 14,599 — 14,599 Total lease payments $ 48,039 $ 232 $ 48,271 Less: Imputed interest ( 16,120 ) ( 17 ) ( 16,137 ) Present value of lease liabilities $ 31,919 $ 215 $ 32,134 51 Table of Contents 7. Income Taxes Pre-tax income (loss) consisted of the following for the years ended December 31: 2023 2022 2021 Domestic $ 7,930 $ ( 30,401 ) $ 9,476 Foreign 28,244 29,334 22,649 Total $ 36,174 $ ( 1,067 ) $ 32,125 A reconciliation of income taxes computed at the statutory rates to the reported income tax provision for the years ended December 31 follows: 2023 2022 2021 Federal (benefit) provision at statutory rate $ 7,597 $ ( 224 ) $ 6,746 U.S./Foreign tax rate differential 855 2,320 696 Foreign non-deductible expenses ( 14 ) ( 1,084 ) 515 Foreign tax provision 821 1,734 739 State taxes, net of federal benefit 312 ( 297 ) 315 State tax rate change, net of federal benefit ( 201 ) ( 33 ) ( 432 ) Change in uncertain tax positions 209 38 74 Change in valuation allowance ( 21,750 ) 14,776 366 Tax credits ( 2,284 ) ( 1,244 ) ( 1,341 ) Share-based compensation ( 31 ) ( 91 ) ( 857 ) Executive compensation (IRC 162m) 226 871 1,128 Repatriation of foreign earnings 435 1,245 208 GILTI, net of related foreign tax credit 142 365 39 Pension settlement — 3,394 — Other 446 ( 866 ) 197 (Benefit) Provision for income taxes $ ( 13,237 ) $ 20,904 $ 8,393 The provision (benefit) for income taxes for the years ended December 31 follows: 2023 2022 2021 Current Deferred Total Current Deferred Total Current Deferred Total Federal $ ( 278 ) $ ( 18,166 ) $ ( 18,444 ) $ ( 338 ) $ 16,831 $ 16,493 $ 46 $ 2,377 $ 2,423 State and local 747 ( 3,355 ) ( 2,608 ) 276 4,039 4,315 152 ( 439 ) ( 287 ) Foreign 6,993 822 7,815 8,486 ( 8,390 ) 96 6,126 131 6,257 Total $ 7,462 $ ( 20,699 ) $ ( 13,237 ) $ 8,424 $ 12,480 $ 20,904 $ 6,324 $ 2,069 $ 8,393 52 Table of Contents A summary of deferred income tax assets and liabilities as of December 31 follows: 2023 2022 Noncurrent deferred tax assets: Amortization and fixed assets $ 11,070 $ 9,653 Inventories 5,184 8,514 Pension obligations 2,467 2,182 Warranty obligations 264 242 Accrued benefits 1,035 465 Operating leases 9,858 7,595 Tax credit carryforwards 6,073 6,703 Net operating loss carryforwards 10,705 11,809 Other temporary differences 8,787 3,797 Total noncurrent deferred tax assets $ 55,443 $ 50,960 Valuation allowance ( 9,342 ) ( 31,090 ) Net noncurrent deferred tax assets $ 46,101 $ 19,870 Noncurrent deferred tax liabilities: Amortization and fixed assets $ ( 1,309 ) $ ( 827 ) Inventories ( 8 ) 127 Operating leases ( 9,428 ) ( 7,585 ) Other temporary differences ( 2,061 ) ( 287 ) Total noncurrent tax liabilities ( 12,806 ) ( 8,572 ) Net noncurrent deferred tax liabilities $ ( 12,806 ) $ ( 8,572 ) Total net deferred tax asset $ 33,295 $ 11,298 Deferred taxes are reflected in the Consolidated Balance Sheet as follows: Net non-current deferred tax assets $ 33,568 $ 12,275 Non-current deferred tax liabilities (included in Other long-term liabilities) $ ( 273 ) $ ( 977 ) Total net deferred tax asset $ 33,295 $ 11,298 We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with unused tax attributes expiring and tax planning alternatives. In making such judgments, significant weight is given to evidence that can be objectively verified. During 2022, (1) the Company established a valuation allowance on its U.S. deferred tax assets of $ 24.5 million due to significant negative evidence including severity of recent losses, and (2) reversed the valuation allowance on its U.K. deferred tax assets of $ 9.9 million based on the weight of positive evidence, including the cumulative income position in the three most recent years and forecasts for a sustained level of future taxable income. During 2023, the Company reversed the valuation allowance on its U.S. deferred tax assets of $ 22.0 million as it believes that the weight of the positive evidence, including the cumulative income position in the three most recent years and forecasts for a sustained level of future taxable income, was sufficient to overcome the weight of the negative evidence during the year ended December 31, 2023. During 2023, we recorded an additional valuation allowance of $ 1.9 million primarily related to a $ 1.6 million increase in foreign tax credits. We expect to be able to realize the benefits of all of our deferred tax assets that are not currently offset by a valuation allowance, as discussed above. In the event that our actual results differ from our estimates or we adjust these estimates in future periods, the effects of these adjustments could materially impact our financial position and results of operations. 53 Table of Contents Activity for the years ended December 31 is as follows (in thousands): 2023 2022 2021 Balance - Beginning of the year $ 31,090 $ 18,371 $ 16,441 Provisions 1,883 24,506 2,529 Utilizations and reversals ( 23,631 ) ( 11,787 ) ( 599 ) Balance - End of the year $ 9,342 $ 31,090 $ 18,371 As of December 31, 2023, the Company had net operating loss carryforwards of $ 78.5 million, of which $ 36.5 million related to foreign jurisdictions and $ 42.0 million related to U.S. state jurisdictions, $ 4.8 million of U.S. foreign tax credit carryforwards, and $ 1.4 million of research and development tax credit carryforwards. The carryforward periods for these net operating losses range from five years to indefinite, foreign tax credits begin to expire in 2027, and research and development tax credits begin to expire in 2036. Utilization of these carryforwards is subject to the tax laws of the applicable tax jurisdiction and may be limited by the ability of certain subsidiaries to generate taxable income in the associated tax jurisdiction. We have established valuation allowance for certain U.S. foreign tax credits, State NOLs, and Foreign NOLs that we believe are more likely than not to expire before they can be utilized. As of December 31, 2023, cash of $ 37.8 million was held by foreign subsidiaries. During the year ended December 31, 2023, $ 7.0 million was repatriated from the Company's foreign subsidiaries. The Company had a $ 0.5 million deferred tax liability as of December 31, 2023 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected. We file federal income tax returns in the U.S. and income tax returns in various states and foreign jurisdictions. In the U.S., we are generally no longer subject to tax assessment for tax years prior to 2018. In our major non-U.S. jurisdictions including China, Czech Republic, Mexico and the United Kingdom, tax years are typically subject to examination for three to five years. As of December 31, 2023, and 2022, we provided a liability of $ 1.3 million and $ 1.1 million, respectively, for unrecognized tax benefits associated with our U.S. federal and state, and foreign jurisdictions. The majority of these unrecognized tax benefits are netted against their related non-current deferred tax assets. We accrue interest and penalties related to unrecognized tax benefits through income tax expense. We had $ 1.2 million and $ 0.9 million accrued for the payment of interest and penalties as of December 31, 2023 and December 31, 2022, respectively. Accrued interest and penalties are included in the $ 1.3 million of unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits (including interest and penalties) at December 31 follows: 2023 2022 2021 Balance - Beginning of the year $ 1,089 $ 1,093 $ 1,006 Gross increase - tax positions in prior periods 60 426 75 Gross decreases - tax positions in prior periods — — — Gross increases - current period tax positions 149 — — Lapse of statute of limitations — ( 389 ) — Currency translation adjustment 40 ( 41 ) 12 Balance - End of the year $ 1,338 $ 1,089 $ 1,093 54 Table of Contents 8. Accrued and Other Liabilities Accrued and other liabilities consisted of the following as of December 31: 2023 2022 Compensation and benefits $ 23,659 $ 13,370 Taxes payable 5,018 5,092 Accrued freight 2,679 4,225 Accrued legal and professional fees 1,535 1,027 Warranty Costs 1,458 1,433 Other 10,711 10,241 $ 45,060 $ 35,388 9. Defined Contribution Plan, Pension and Other Post-Retirement Benefit Plans Defined Contribution Plan - We sponsor a defined contribution plan covering eligible employees. Eligible employees can contribute on a pre-tax basis to the plan. In accordance with the terms of the 401(k) plan, we elect to match a certain percentage of the participants’ contributions to the plan, as defined. We recognized expense associated with the plan of $ 4.8 million, $ 4.6 million and $ 4.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. Pension and Other Post-Retirement Benefit Plans - We sponsor pension and other post-retirement benefit plans that cover certain hourly and salaried employees in the U.S. and United Kingdom. Each of the plans are frozen to new participants and to additional service credits earned. Our policy is to make annual contributions to the plans to fund the minimum contributions, as required by local regulations. As of December 31, 2022, the Company settled its U.S. Pension Plan liabilities through lump-sum payments and purchase of an annuity contract. The lump-sum payments of $ 4.4 million and the annuity contract totaling $ 25.2 million were paid out of plan assets and resulted in an $ 9.2 million non-cash settlement charge, which was recorded in Other comprehensive income in the Consolidated Statements of Comprehensive Income (Loss) during the year ended December 31, 2022. The change in benefit obligation, plan assets and funded status as of December 31 is as follows: Non-U.S. Pension Plan 2023 2022 Change in benefit obligation: Benefit obligation — Beginning of the year $ 29,885 $ 48,545 Interest cost 1,418 785 Benefits paid ( 1,801 ) ( 1,744 ) Actuarial (gain) loss 1,087 ( 12,931 ) Exchange rate changes 1,583 ( 4,770 ) Benefit obligation at end of the year $ 32,172 $ 29,885 Change in plan assets: Fair value of plan assets — Beginning of the year $ 21,537 $ 38,640 Actual return on plan assets 1,053 ( 12,631 ) Employer contributions 1,125 1,016 Benefits paid ( 1,801 ) ( 1,744 ) Exchange rate changes 1,138 ( 3,744 ) Fair value of plan assets at end of the year 23,052 21,537 Funded status $ ( 9,120 ) $ ( 8,348 ) Actuarial Gain - The projected Non-U.S. benefit obligation includes a net loss of $ 1.1 million for the year ended December 31, 2023 driven primarily by a decrease in the discount rate assumption. 55 Table of Contents Amounts recognized in the Consolidated Balance Sheets at December 31 consisted of: Non-U.S. Pension Plan 2023 2022 Noncurrent liabilities ( 9,120 ) ( 8,348 ) Amount recognized $ ( 9,120 ) $ ( 8,348 ) The components of net periodic cost (benefit) for the years ended December 31 were as follows: U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan 2023 2022 2021 2023 2022 2021 Interest cost $ — $ 617 $ 827 $ 1,418 $ 785 $ 638 Expected return on plan assets — ( 681 ) ( 2,212 ) ( 1,221 ) ( 1,016 ) ( 1,000 ) Amortization of prior service cost 1 — 9,208 6 48 48 54 Recognized actuarial loss — 373 283 757 603 953 Net periodic cost (benefit) $ — $ 9,517 $ ( 1,096 ) $ 1,002 $ 420 $ 645 1 Includes $ 9.2 million non-cash settlement charge arising from the early payout of the U.S. defined benefit plan benefits in the year ended December 31, 2022. Net periodic cost (benefit) components, not inclusive of service costs, are recognized in Other (income) expense within the Consolidated Statements of Operations. Amounts Recognized in Other Comprehensive Income (Loss) - Amounts recognized in Other comprehensive income (loss), before taking into account income tax effects, at December 31 are as follows: U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan 2023 2022 2021 2023 2022 2021 Net actuarial loss $ — $ ( 148 ) $ 10,875 $ 14,165 $ 13,603 $ 13,923 Prior service cost — 27 33 572 618 687 $ — $ ( 121 ) $ 10,908 $ 14,737 $ 14,221 $ 14,610 Other Changes in Plan Assets and Benefit Obligations Recognized in Comprehensive Income (Loss) - Amounts recognized as other changes in plan assets and benefit obligations in comprehensive income (loss), before taking into account income tax effects, for the year ended December 31 are as follows: U.S. Pension and Other Post-Retirement Plans Non-U.S. Pension Plan 2023 2022 2023 2022 Actuarial (gain) loss $ — $ ( 1,435 ) $ 1,186 $ 615 Amortization of actuarial (loss) gain — ( 9,575 ) ( 716 ) ( 672 ) Prior service credit — ( 6 ) ( 46 ) ( 54 ) Total recognized in other comprehensive income (loss) $ — $ ( 11,016 ) $ 424 $ ( 111 ) Weighted-average assumptions used to determine benefit obligations at December 31 were as follows: Non-U.S. Pension Plan 2023 2022 Discount rate 4.45 % 4.75 % 56 Table of Contents Weighted-average assumptions used to determine net periodic benefit cost at December 31 were as follows: Non-U.S. Pension Plan 2023 2022 2021 Discount rate 4.45 % 1.80 % 1.20 % Expected return on plan assets 5.65 % 2.90 % 2.60 % The rate of return assumptions are based on projected long-term market returns for the various asset classes in which the plans are invested, weighted by the target asset allocations. An incremental amount for active plan asset management and diversification, where appropriate, is included in the rate of return assumption. Our pension plan investment strategy is reviewed periodically, but no less frequently than annually. We employ a total return investment approach whereby a mix of equities, fixed income and real estate investments are intended to maximize the long-term return of plan assets taking into consideration a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. The investment portfolio contains a diversified blend of equity, balanced, fixed income and real estate investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value and large and small capitalizations. Other assets, such as real estate, are used judiciously to perhaps enhance long-term returns and to improve portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis in light of annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews. We expect to contribute approximately $ 1.1 million to our non-U.S. pension plan and our other post-retirement benefit plans in 2024. Our investment allocation target for our non-U.S. pension plan for 2023 and our weighted-average asset allocations of our pension assets for the years ended December 31, by asset category, are as follows: Target Allocation % Actual Allocations % 2023 2022 2023 2022 Cash and cash equivalents — — 1 — Equity/Balanced securities 23 42 23 42 Fixed income securities 77 58 76 58 100 % 100 % 100 % 100 % The non-U.S. pension plan assets are held in a pooled separate account which represents an insurance contract under which plan assets are administered through pooled funds. The contract portfolio includes cash and cash equivalents, equity/ balanced securities, and fixed income securities. The contract is valued daily based on the market value of the underlying net assets. The majority of the underlying net assets have observable Level 1 and/or 2 quoted pricing inputs which are used to determine the unit value of the contract, which is not publicly quoted and therefore classified as Level 2 of the fair value hierarchy. See Note 1, Significant Accounting Policies, for further detail on fair value hierarchy. The assets within the insurance contract can be described as follows: Equity Securities - Includes common stocks issued by U.S., United Kingdom and other international companies, equity funds that invest in common stocks and unit linked insurance policies. Equity investments generally allow near-term (within 90 days of the measurement date) liquidity and are held in issues that are actively traded to facilitate transactions at minimum cost. Balanced Securities - Includes funds primarily invested in a mix of equity and fixed income securities where the allocations are at the discretion of the investment manager. Investments generally allow near-term (within 90 days of the measurement date) liquidity and are held in issues that are actively traded to facilitate transactions at minimum cost. Fixed Income Securities - Includes U.S. dollar-denominated and United Kingdom and other international marketable bonds and convertible debt securities as well as fixed income funds that invest in these instruments. Investments generally allow near-term liquidity and are held in issues that are actively traded to facilitate transactions at minimum cost. 57 Table of Contents The fair values of our pension plan assets by asset category and by level as described in Note 1, Significant Accounting Policies, for the years ended December 31, 2023 and 2022 are as follows: December 31, 2023 Quoted Prices in Active Markets for Identical Assets Significant Observable Inputs Significant Unobservable Inputs Total Level 1 Level 2 Level 3 Insurance contracts and other $ 23,052 $ — $ 23,052 $ — Total pension fund assets $ 23,052 $ — $ 23,052 $ — December 31, 2022 Quoted Prices in Active Markets for Identical Assets Significant Observable Inputs 2 Significant Unobservable Inputs Total Level 1 Level 2 Level 3 Insurance contract and other $ 21,537 $ — $ 21,537 $ — Total pension fund assets 1 $ 21,537 $ — $ 21,537 $ — 1. Not included in the table are the remaining $ 4.0 million of plan assets under the U.S. pension plan which has been invested in Cash and cash equivalents (NAV) as of December 31, 2022. 2. During 2023, the Company corrected an immaterial error in the presentation of asset category and level of the non-U.S. pension plan assets as of December 31, 2022. The assets were previously disclosed as Net Asset Value per share (NAV) rather than Level 2. Additionally, the asset category previously disclosed was the underlying assets of the insurance contract rather than the insurance contract itself. The correction had no impact on investment values and had no impact on the consolidated balance sheets, statements of operations or statements of cash flows. The following table summarizes our expected future benefit payments of our pension and other post-retirement benefit plans: Year Ending December 31, Pension Plans 2024 $ 1,815 2025 $ 1,780 2026 $ 1,848 2027 $ 1,859 2028 $ 1,934 2029 to 2033 $ 9,703 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 58 Table of Contents 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, 2022 $ 2,188 New grants 2,180 Forfeitures ( 1,742 ) Adjustments 434 Payments ( 1,159 ) Adjusted Award Value at December 31, 2023 $ 1,901 The Company generally grants performance awards in the first quarter of each year. Unrecognized compensation expense was $ 1.6 million as of December 31, 2023. 11. Share-Based Compensation The compensation expense for our share-based compensation arrangements (see Restricted Stock Awards below) was $ 3.8 million, $ 5.8 million and $ 6.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. Share-based compensation expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. 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. As of December 31, 2023, there was approximately $ 3.8 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. 59 Table of Contents A summary of the status of our restricted stock awards as of December 31, 2023 and changes during the twelve-month period ending December 31, 2023, is presented below: 2023 Shares (in thousands) Weighted- Average Grant-Date Fair Value Non-vested - beginning of year 383 $ 7.68 Granted 988 7.33 Vested ( 729 ) 7.23 Forfeited ( 51 ) 7.66 Non-vested - end of year 591 $ 7.66 As of December 31, 2023, a total of 2.0 million shares were available for future grants from the shares authorized for award under our 2020 EIP, including cumulative forfeitures. Repurchase of Common Stock - We did not repurchase any of our common stock on the open market as part of a stock repurchase program during 2023; however, our employees surrendered 235 thousand shares of our common stock to satisfy tax withholding obligations on the vesting of the restricted stock awards. 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, with 33,322,535 and 32,826,852 shares were issued and outstanding as of December 31, 2023 and 2022, respectively. Preferred Stock - Our authorized capital stock includes preferred stock of 5,000,000 shares with a par value of $ 0.01 per share, with no shares outstanding as of December 31, 2023 and 2022. Earnings (Loss) Per Share - Basic earnings (loss) per share is determined by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share presented is determined by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period as determined by the treasury stock method. Potential common shares are included in the diluted earnings per share calculation when dilutive. Diluted earnings (loss) per share for years ended December 31, 2023, 2022 and 2021 includes the effects of potential common shares when dilutive and is as follows: 2023 2022 2021 Net income (loss) attributable to common stockholders $ 49,411 $ ( 21,971 ) $ 23,732 Weighted average number of common shares outstanding 33,040 32,334 31,501 Dilutive effect of restricted stock grants after application of the treasury stock method 541 — 1,289 Dilutive shares outstanding 33,581 32,334 32,790 Basic earnings (loss) per share attributable to common stockholders $ 1.50 $ ( 0.68 ) $ 0.75 Diluted earnings (loss) per share attributable to common stockholders $ 1.47 $ ( 0.68 ) $ 0.72 There were no anti-dilutive shares for the year ended December 31, 2023. There were 113 thousand anti-dilutive shares for the year ended December 31, 2022. There were no anti-dilutive shares for the year ended December 31, 2021. Dividends — We have not declared or paid any cash dividends in the past. The terms of our Credit Agreement restrict the payment or distribution of our cash or other assets, including cash dividend payments. 60 Table of Contents 13. Other Comprehensive Income (Loss) The activity for each item of accumulated other comprehensive income (loss) is as follows: Foreign currency items Pension and Other Post-Retirement Benefit Plans Derivative Instruments Accumulated other comprehensive loss Balance - December 31, 2021 $ ( 20,445 ) $ ( 22,750 ) $ 757 $ ( 42,438 ) Net current period change ( 4,366 ) 11,207 7,172 14,013 Amounts reclassified into earnings — 31 ( 3,156 ) ( 3,125 ) Balance - December 31, 2022 $ ( 24,811 ) $ ( 11,512 ) $ 4,773 $ ( 31,550 ) Net current period change $ 1,584 $ ( 178 ) $ 7,627 $ 9,033 Amounts reclassified into earnings — ( 206 ) ( 7,561 ) ( 7,767 ) Balance - December 31, 2023 $ ( 23,227 ) $ ( 11,896 ) $ 4,839 $ ( 30,284 ) The related tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2023 and 2022 are as follows: 2023 Before Tax Amount Tax Expense After Tax Amount Net current period change Cumulative translation adjustment $ 1,584 $ — $ 1,584 Net actuarial gain and prior service credit ( 438 ) 260 ( 178 ) Derivative instruments 9,792 ( 2,165 ) 7,627 Net unrealized gain (loss) 10,938 ( 1,905 ) 9,033 Amounts reclassified into earnings: Actuarial loss and prior service cost ( 206 ) — ( 206 ) Derivative instruments ( 10,085 ) 2,524 ( 7,561 ) Net realized loss ( 10,291 ) 2,524 ( 7,767 ) Total other comprehensive income $ 647 $ 619 $ 1,266 2022 Before Tax Amount Tax Expense After Tax Amount Net current period change Cumulative translation adjustment $ ( 4,366 ) $ — $ ( 4,366 ) Net actuarial gain and prior service credit 1 10,936 271 11,207 Derivative instruments 7,175 ( 3 ) 7,172 Net unrealized gain (loss) 13,745 268 14,013 Amounts reclassified into earnings: Actuarial loss and prior service cost 31 — 31 Derivative instruments ( 3,156 ) — ( 3,156 ) Net realized loss ( 3,125 ) — ( 3,125 ) Total other comprehensive income $ 10,620 $ 268 $ 10,888 1 Included in Net actuarial gain and prior service credit is $ 9.2 million US pension non-cash settlement charge as of December 31, 2022. The Company reclassified to earnings all residual tax amounts relating to its pension liability during the year ended December 31, 2022 as a result of plan termination. 61 Table of Contents 14. Cost Reduction and Manufacturing Capacity Rationalization During the quarter ended December 31, 2023, management approved restructuring programs to align the Company’s cost structure to support margin expansion. The programs include workforce reductions and footprint optimization across segments. We incurred $ 1.1 million expense during the year ended December 31, 2023 related to this program and expect the cost to be between $ 3.0 million to $ 3.5 million for the entire program. The changes in accrued restructuring balances are as follows: Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total December 31, 2022 ( 5 ) — — 458 — 453 New charges 809 8 — 486 983 2,286 Payments and other adjustments ( 676 ) ( 8 ) — ( 944 ) — ( 1,628 ) December 31, 2023 $ 128 $ — $ — $ — $ 983 $ 1,111 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total December 31, 2021 230 417 — — ( 161 ) 486 New charges 751 674 1,909 1,725 306 5,365 Payments and other adjustments ( 986 ) ( 1,091 ) ( 1,909 ) ( 1,267 ) ( 145 ) ( 5,398 ) December 31, 2022 $ ( 5 ) $ — $ — $ 458 $ — $ 453 Of the $ 2.3 million costs incurred in the twelve months ended December 31, 2023, $ 2.0 million primarily related to headcount reductions and $ 0.3 million related to facility exit and other costs. For the twelve months ended December 31, 2023, the Vehicle Solutions segment had new charges of $ 0.8 million related to headcount. The Industrial Automation segment had new charges of $ 0.2 million and $ 0.3 million related to headcount and facilities, respectively. Corporate had a new charge of $ 1.0 million related to headcount. Of the $ 2.3 million costs incurred, $ 1.3 million was recorded in cost of revenues and $ 1.0 million was recorded in selling, general and administrative expenses. Of the $ 5.4 million costs incurred in the twelve months ended December 31, 2022, $ 2.5 million related to headcount reductions and $ 2.8 million related to facility exit and other costs. For the twelve months ended December 31, 2022, Vehicle Solutions segment had new charges of $ 0.5 million and $ 0.3 million related to headcount and facilities, respectively. The Electrical Systems segment had a new charges of $ 0.7 million related to headcount. The Aftermarket & Accessories segment had new charges of $ 0.6 million and $ 1.3 million related to headcount and facilities respectively. The Industrial Automation segment had new charges of $ 0.5 million and $ 1.2 million related to headcount and facilities, respectively. Corporate had a new charge of $ 0.3 million related to headcount. Of the $ 5.4 million costs incurred, $ 4.0 million was recorded in cost of revenues and $ 1.4 million was recorded in selling, general and administrative expenses. 15. Commitments and Contingencies Leases - As disclosed in Note 6, 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 December 31, 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. 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 December 31, 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. 62 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 years ended December 31, 2023 and 2022, are included within accrued liabilities and other in the accompanying Consolidated Balance Sheets. On July 24, 2023, one of our customers issued a voluntary safety recall related to certain wiper system components supplied by us. To the extent a loss occurs that is attributed to us, we believe that we have reasonable levels of insurance coverage to mitigate recall exposure risk. It is reasonably possible that we 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 normally accrued. The following presents a summary of the warranty provision for the years ended December 31: 2023 2022 Balance - beginning of the year $ 1,433 $ 1,490 Provision for warranty claims 1,433 1,019 Deduction for payments made and other adjustments ( 1,408 ) ( 1,076 ) Balance - end of year $ 1,458 $ 1,433 Debt Payments - As disclosed in Note 3, 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. The existing long-term debt agreement matures in 2027; no payments are due thereafter: Year Ending December 31, 2024 $ 15,313 2025 $ 19,687 2026 $ 24,063 2027 $ 82,500 2028 $ — Thereafter $ — 16. 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. 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 & Trim components primarily for the North America commercial vehicle market and power sports markets; and Cab structures for the North American MD/HD truck market. 63 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, marine, power generation 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 channels that provide repair and refurbishing. These channels include OES centers and retail distributors, and are spread across North America, Europe and Asia-Pacific. • Commercial vehicle accessories including wipers, mirrors, and sensors. 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. 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: For the year ended December 31, 2023 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/ Other Total Revenues $ 587,119 $ 228,424 $ 140,236 $ 38,900 $ — $ 994,679 Gross profit $ 68,129 $ 35,397 $ 27,187 $ 3,010 $ — $ 133,723 Selling, general & administrative expenses 26,109 9,107 8,144 — 4,392 37,911 85,663 Operating income (loss) $ 42,020 $ 26,290 $ 19,043 $ ( 1,382 ) $ ( 37,911 ) $ 48,060 Capital expenditures and other items: Capital expenditures $ 8,509 $ 9,096 $ 1,762 $ 9 $ 320 $ 19,696 Depreciation expense $ 8,199 $ 3,972 $ 1,313 $ 288 $ 468 $ 14,240 For the year ended December 31, 2022 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/ Other Total Revenues $ 579,731 $ 180,404 $ 133,671 $ 87,747 $ — $ 981,553 Gross profit $ 45,979 $ 23,993 $ 18,836 $ ( 2,303 ) $ — $ 86,505 Selling, general & administrative expenses 24,930 5,775 6,925 5,564 23,167 66,361 Operating income (loss) $ 21,049 $ 18,218 $ 11,911 $ ( 7,867 ) $ ( 23,167 ) $ 20,144 Capital expenditures and depreciation expense: Capital expenditures $ 8,151 $ 3,936 $ 3,692 $ 3,702 $ 229 $ 19,710 Depreciation expense $ 8,343 $ 3,496 $ 1,323 $ 503 $ 1,105 $ 14,770 64 Table of Contents For the year ended December 31, 2021 Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/ Other Total Revenues $ 498,913 $ 168,971 $ 115,782 $ 187,912 $ — $ 971,578 Gross profit $ 50,608 $ 20,773 $ 17,980 $ 29,669 $ ( 43 ) $ 118,987 Selling, general & administrative expenses 26,959 6,213 5,889 6,106 24,239 69,406 Operating income (loss) $ 23,649 $ 14,560 $ 12,091 $ 23,563 $ ( 24,282 ) $ 49,581 Capital expenditures and depreciation expense: Capital expenditures $ 6,203 $ 5,976 $ 482 $ 4,480 $ 512 $ 17,653 Depreciation expense $ 7,911 $ 3,550 $ 1,240 $ 687 $ 1,671 $ 15,059 The following table presents revenues and long-lived assets for the geographic areas in which we operate: Years Ended December 31, 2023 2022 2021 Revenues Long-lived Assets Revenues Long-lived Assets Revenues Long-lived Assets United States $ 752,824 $ 72,272 $ 749,700 $ 70,047 $ 738,937 $ 60,260 All other countries 241,855 32,565 231,853 24,400 232,641 29,450 $ 994,679 $ 104,837 $ 981,553 $ 94,447 $ 971,578 $ 89,710 Sales to one of our customers was individually in excess of 10% of total Company revenues in each of the years ended December 31, 2023, 2022 and 2021, as noted in the table below. The following table presents revenue from the above mentioned customer as a percentage of total revenue: Years Ended December 31, Customer Primary Segment 2023 2022 2021 Customer A Vehicle Solutions 23 % 22 % 17 % Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no disagreements with our independent accountants on matters of accounting and financial disclosures or reportable events.