Commercial Vehicle Group, Inc. 10-Q

ITEM 1 – FINANCIAL STATEMENTS COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (Unaudited) (In thousands, except per share amounts) Revenues $ 229,906 $ 262,194 $ 461,974 $ 524,903 Cost of revenues 208,927 223,793 414,330 451,293 Gross profit 20,979 38,401 47,644 73,610 Selling, general and administrative expenses 20,219 22,457 40,312 43,022 Operating income 760 15,944 7,332 30,588 Other expense 207 307 419 105 Interest expense 2,488 2,804 4,739 5,694 Income (loss) before provision for income taxes ( 1,935 ) 12,833 2,174 24,789 Provision (benefit) for income taxes ( 334 ) 2,693 836 5,949 Net income (loss) $ ( 1,601 ) $ 10,140 $ 1,338 $ 18,840 Earnings (loss) per Common Share: Basic $ ( 0.05 ) $ 0.31 $ 0.04 $ 0.57 Diluted $ ( 0.05 ) $ 0.30 $ 0.04 $ 0.57 Weighted average shares outstanding: Basic 33,393 33,051 33,359 32,960 Diluted 33,393 33,429 33,834 33,312 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (Unaudited) (In thousands) Net income (loss) $ ( 1,601 ) $ 10,140 $ 1,338 $ 18,840 Other comprehensive income (loss): Foreign currency exchange translation adjustments ( 1,297 ) ( 1,051 ) ( 3,856 ) 1,506 Minimum pension liability, net of tax ( 391 ) ( 147 ) ( 858 ) ( 7 ) Derivative instruments, net of tax ( 3,975 ) 1,298 ( 1,943 ) 2,641 Other comprehensive income (loss) ( 5,663 ) 100 ( 6,657 ) 4,140 Comprehensive income (loss) $ ( 7,264 ) $ 10,240 $ ( 5,319 ) $ 22,980 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2024 December 31, 2023 (Unaudited) (In thousands, except share and per share amounts) ASSETS Current Assets: Cash $ 39,341 $ 37,848 Accounts receivable, net of allowances of $ 177 and $ 208 , respectively 138,689 133,949 Inventories 132,556 128,082 Other current assets 35,634 27,863 Total current assets 346,220 327,742 Property, plant and equipment, net 75,530 73,468 Intangible assets, net 7,743 11,222 Deferred income taxes 34,158 33,568 Other assets, net 39,545 37,214 Total assets $ 503,196 $ 483,214 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 100,810 $ 77,314 Accrued liabilities and other 49,557 52,562 Current portion of long-term debt and short-term debt 17,500 15,313 Total current liabilities 167,867 145,189 Long-term debt 124,458 126,201 Pension and other post-retirement benefits 9,593 9,196 Other long-term liabilities 31,671 29,696 Total liabilities 333,589 310,282 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; 33,443,964 and 33,322,535 shares issued and outstanding respectively) 334 333 Treasury stock, at cost: 2,139,458 and 2,134,604 shares, respectively ( 16,170 ) ( 16,150 ) Additional paid-in capital 267,230 265,217 Retained deficit ( 44,846 ) ( 46,184 ) Accumulated other comprehensive loss ( 36,941 ) ( 30,284 ) Total stockholders’ equity 169,607 172,932 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 503,196 $ 483,214 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2024 2023 (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,338 $ 18,840 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 8,974 8,673 Noncash amortization of debt financing costs 151 151 Pension cash reversion — 2,942 Share-based compensation expense 2,013 1,526 Deferred income taxes 121 201 Non-cash loss (income) on derivative contracts ( 475 ) ( 689 ) Change in other operating items: Accounts receivable ( 5,555 ) ( 20,501 ) Inventories ( 5,456 ) 11,408 Prepaid expenses ( 3,688 ) ( 2,292 ) Accounts payable 24,414 ( 15,672 ) Other operating activities, net ( 11,605 ) 6,935 Net cash provided by operating activities 10,232 11,522 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 11,266 ) ( 9,179 ) Proceeds from sale of business 3,200 — Net cash used in investing activities ( 8,066 ) ( 9,179 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of term loan facility ( 6,563 ) ( 4,375 ) Borrowings under revolving credit facility 24,500 20,000 Repayment of revolving credit facility ( 17,500 ) ( 11,000 ) Surrender of shares to pay withholding taxes ( 20 ) ( 788 ) Other financing activities ( 62 ) 4,056 Net cash provided by financing activities 355 7,893 EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH ( 1,028 ) 380 NET INCREASE IN CASH 1,493 10,616 CASH: Beginning of period 37,848 31,825 End of period $ 39,341 $ 42,441 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Treasury Stock Additional Paid In Capital Retained Deficit Accumulated Other Comp. Loss Total CVG Stockholders’ Equity Shares Amount (Unaudited) (In thousands) Balance - December 31, 2022 32,826,852 $ 328 $ ( 14,514 ) $ 261,371 $ ( 95,595 ) $ ( 31,550 ) $ 120,040 Share-based compensation expense 164,616 2 ( 764 ) 1,771 — — 1,009 Total comprehensive income — — — — 8,700 4,040 12,740 Balance - March 31, 2023 32,991,468 $ 330 $ ( 15,278 ) $ 263,142 $ ( 86,895 ) $ ( 27,510 ) $ 133,789 Share-based compensation expense 101,524 — ( 24 ) ( 245 ) — — ( 269 ) Total comprehensive income — — — — 10,140 100 10,240 Balance - June 30, 2023 33,092,992 $ 330 $ ( 15,302 ) $ 262,897 $ ( 76,755 ) $ ( 27,410 ) $ 143,760 Balance - December 31, 2023 33,322,535 $ 333 $ ( 16,150 ) $ 265,217 $ ( 46,184 ) $ ( 30,284 ) $ 172,932 Share-based compensation expense 3,438 — ( 2 ) 664 — — 662 Total comprehensive income (loss) — — — — 2,939 ( 994 ) 1,945 Balance - March 31, 2024 33,325,973 $ 333 $ ( 16,152 ) $ 265,881 $ ( 43,245 ) $ ( 31,278 ) $ 175,539 Share-based compensation expense 117,991 1 ( 18 ) 1,349 — — 1,332 Total comprehensive loss — — — — ( 1,601 ) ( 5,663 ) ( 7,264 ) Balance - June 30, 2024 33,443,964 $ 334 $ ( 16,170 ) $ 267,230 $ ( 44,846 ) $ ( 36,941 ) $ 169,607 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Amounts in thousands, except for share and per share amounts and where specifically disclosed) 1. Description of Business and Basis of Presentation 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, Thailand, India, Australia and Morocco. 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 customers. We believe our products are used by a majority of the North American Commercial Truck manufacturers, many construction vehicle original equipment manufacturers ("OEMs"), parts and service dealers, distributors, as well as top e-commerce retailers. The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and the rules and regulations of the Securities and Exchange Commission and include the accounts of the Company and its subsidiaries. Except as disclosed within these condensed notes to unaudited quarterly consolidated financial statements, the adjustments made were of a normal, recurring nature. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. The preparation of financial statements in conformity with GAAP in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. These condensed notes to unaudited quarterly consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"), which includes a complete set of footnote disclosures, including the Company's significant accounting policies. 2. 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 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. 6 Table of Contents 3. Revenue Recognition We had outstanding customer accounts receivable, net of allowances, of $ 138.7 million as of June 30, 2024 and $ 133.9 million as of December 31, 2023. We generally do not have material other assets or liabilities associated with customer arrangements. Revenue Disaggregation - The following is the composition, by product category, of our revenues: Three Months Ended June 30, 2024 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total Seats $ 66,239 $ — $ 15,465 $ — $ 81,704 Electrical wire harnesses, panels and assemblies 699 50,152 3,487 4,752 59,090 Plastic & Trim components 42,142 — 2,186 — 44,328 Industrial Automation — — — 238 238 Cab structures 30,624 — 629 — 31,253 Mirrors, wipers and controls 1,200 — 12,093 — 13,293 Total $ 140,904 $ 50,152 $ 33,860 $ 4,990 $ 229,906 Three Months Ended June 30, 2023 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total Seats $ 70,895 $ — $ 18,714 $ — $ 89,609 Electrical wire harnesses, panels and assemblies — 63,625 3,983 7,567 75,175 Plastic & Trim components 48,528 — 1,473 — 50,001 Industrial Automation — — — 1,443 1,443 Cab structures 31,815 — 567 — 32,382 Mirrors, wipers and controls 1,492 — 12,092 — 13,584 Total $ 152,730 $ 63,625 $ 36,829 $ 9,010 $ 262,194 Six Months Ended June 30, 2024 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total Seats $ 129,693 $ — $ 32,279 $ — $ 161,972 Electrical wire harnesses, panels and assemblies 1,229 105,947 6,418 9,034 122,628 Plastic & Trim components 82,008 — 3,975 — 85,983 Industrial Automation — — — 258 258 Cab structures 63,325 — 1,067 — 64,392 Mirrors, wipers and controls 2,559 — 24,182 — 26,741 Total $ 278,814 $ 105,947 $ 67,921 $ 9,292 $ 461,974 7 Table of Contents Six Months Ended June 30, 2023 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Total Seats $ 147,886 $ — $ 37,878 $ — $ 185,764 Electrical wire harnesses, panels and assemblies — 118,373 7,769 9,845 135,987 Plastic & Trim components 94,951 — 4,346 — 99,297 Industrial Automation — — — 8,912 8,912 Cab structures 65,718 — 1,565 — 67,283 Mirrors, wipers and controls 4,760 — 22,900 — 27,660 Total $ 313,315 $ 118,373 $ 74,458 $ 18,757 $ 524,903 4. Debt Debt consisted of the following: June 30, 2024 December 31, 2023 Term loan facility $ 135,000 $ 141,563 Revolving credit facility 7,000 — Unamortized issuance costs ( 42 ) ( 49 ) $ 141,958 $ 141,514 Less: current portion of long-term debt ( 17,500 ) ( 15,313 ) Total long-term debt, net of current portion $ 124,458 $ 126,201 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”). 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. On July 30, 2024, the Company and certain of its subsidiaries, as guarantors, entered into an Amendment No. 3, which amends the Credit Agreement. Amendment No.3 amends the terms of the existing Credit Agreement to limit the mandatory prepayment requirements for certain specified asset dispositions of the Company and certain of its subsidiaries. At June 30, 2024, we had $ 7.0 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $ 1.1 million and availability of $ 141.9 million. Combined with availability under our China Credit Facility (described below) of approximately $ 11.0 million, total consolidated availability was $ 152.9 million at June 30, 2024. The unamortized deferred financing fees associated with the Revolving Credit Facility of $ 0.8 million and $ 1.0 million as of June 30, 2024 and December 31, 2023, respectively, are being amortized over the remaining life of the Credit Agreement. At December 31, 2023, we had no borrowings under the Revolving Credit Facility and we had outstanding letters of credit of $ 1.2 million. Covenants and other terms 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 3.00 :1.0. We were in compliance with these covenants as of June 30, 2024. 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 8 Table of Contents Credit Agreement also requires all outstanding amounts under the Credit Facilities to be repaid in full on the Maturity Date. See Note 15, Commitments and Contingencies, for the future minimum principal payments due on long-term debt for the next five years. Foreign Facility During 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"). The China Credit Facility was renewed during 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 of our China operations. We had no outstanding borrowings under the China Credit Facility as of June 30, 2024 and December 31, 2023. At June 30, 2024, we had $ 11.0 million (denominated in the local currency and this amount varies based on the currency conversion rate) of availability under the China Credit Facility. Cash Paid for Interest For the six months ended June 30, 2024 and 2023, cash payments for interest were $ 6.0 million and $ 6.6 million, respectively. 5. Intangible Assets Our definite-lived intangible assets were comprised of the following: June 30, 2024 December 31, 2023 Weighted- Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trademarks/tradenames 22 years $ 11,467 $ ( 5,942 ) $ 5,525 $ 11,485 $ ( 5,758 ) $ 5,727 Customer relationships 14 years 6,526 ( 4,730 ) 1,796 14,132 ( 10,071 ) 4,061 Technical know-how 5 years 9,790 ( 9,382 ) 408 9,790 ( 8,403 ) 1,387 Covenant not to compete 5 years 330 ( 316 ) 14 330 ( 283 ) 47 $ 28,113 $ ( 20,370 ) $ 7,743 $ 35,737 $ ( 24,515 ) $ 11,222 The aggregate intangible asset amortization expense was $ 0.7 million and $ 0.9 million for the three months ended June 30, 2024 and 2023, respectively. The aggregate intangible asset amortization expense was $ 1.5 million and $ 1.7 million for the six months ended June 30, 2024 and 2023 respectively. 6. Fair Value Measurement Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 - Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3 - Significant unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. Our financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, pension assets and liabilities. The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of the interest cost associated with such instruments. Recurring Measurements Foreign Currency Forward Exchange Contracts. Our derivative assets and liabilities represent foreign exchange contracts that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and counterparty credit risk. Based on the utilization of these inputs, the derivative assets and liabilities are classified as Level 2. To 9 manage our risk for transactions denominated in Mexican Pesos and Czech Crown, we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed 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 June 30, 2024, hedge contracts for transactions denominated in Czech Crown were not designated as a hedging instruments; therefore, they are marked-to-market and the fair value of agreements is recorded in the Condensed Consolidated Balance Sheets with the offsetting gains and losses recognized in other (income) expense and recognized in cost of revenues in the period the related hedge transactions are settled in the Condensed Consolidated Statements of Operations. 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 approximately 50 % of outstanding debt under the Term Loan Facility. Any changes in fair value are included in earnings or deferred through Accumulated other comprehensive loss, depending on the nature and effectiveness of the offset. Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the consolidated statements of operations. The fair values of our derivative assets and liabilities measured on a recurring basis are categorized as follows: June 30, 2024 December 31, 2023 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Foreign exchange contract designated as hedging instruments $ 151 $ — $ 151 $ — $ 1,318 $ — $ 1,318 $ — Interest rate swap agreement $ 1,889 $ — $ 1,889 $ — $ 1,073 $ — $ 1,073 $ — Liabilities: Foreign exchange contract designated as hedging instruments $ 1,704 $ — $ 1,704 $ — $ — $ — $ — $ — Foreign exchange contract not designated as hedging instruments $ 216 $ — $ 216 $ — $ 304 $ — $ 304 $ — The following table summarizes the notional amount of our open foreign exchange contracts: June 30, 2024 December 31, 2023 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 $ 83,055 $ 85,424 $ 56,741 $ 58,094 Commitments to buy or sell currencies - Foreign exchange contract not designated as hedging instruments $ 13,655 $ 14,197 $ 16,608 $ 16,806 10 The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets: Derivative Asset Balance Sheet Location Fair Value June 30, 2024 December 31, 2023 Foreign exchange contract designated as hedging instruments Other current assets $ 120 $ 1,179 Foreign exchange contract designated as hedging instruments Other assets, net $ 31 $ 139 Interest rate swap agreement Other assets, net $ 1,889 $ 1,073 Derivative Liability Balance Sheet Location Fair Value June 30, 2024 December 31, 2023 Foreign exchange contract designated as hedging instruments Accrued liabilities and other $ 1,548 $ — Foreign exchange contract designated as hedging instruments Other long-term liabilities $ 156 $ — Foreign exchange contracts not designated as hedging instruments Accrued liabilities and other $ 213 $ 304 Foreign exchange contracts not designated as hedging instruments Other long-term liabilities $ 3 $ — Derivative Equity Balance Sheet Location Fair Value June 30, 2024 December 31, 2023 Foreign exchange contracts designated as hedging instruments Accumulated other comprehensive loss $ ( 796 ) $ 1,354 Interest rate swap agreements Accumulated other comprehensive loss $ 3,692 $ 3,484 The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Location of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Amount of Gain (Loss) on Derivatives Recognized in Income (Loss) Foreign exchange contracts designated as hedging instruments Cost of revenues $ 513 $ 1,242 $ 602 $ 1,693 Interest rate swap agreement Interest expense $ 403 $ 365 $ 819 $ 630 Interest rate swap agreement settled in 2022 Interest expense $ 188 $ 188 $ 377 $ 377 Foreign exchange contracts Other (income) expense $ 304 $ ( 157 ) $ 98 $ 312 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. 11 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: June 30, 2024 December 31, 2023 Carrying Amount Fair Value Carrying Amount Fair Value Term loan and security agreement 1 $ 134,958 $ 133,946 $ 141,514 $ 139,213 Revolving credit facility $ 7,000 $ 7,000 $ — $ — 1. Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 17.5 million and long-term debt of $ 117.5 million as of June 30, 2024 and current portion of long-term debt of $ 15.3 million and long-term debt of $ 126.2 million as of December 31, 2023. 7. Leases The components of lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease cost $ 2,842 $ 2,373 $ 5,517 $ 4,721 Finance lease cost 31 41 65 88 Short-term lease cost 1,264 1,994 2,195 3,925 Total lease expense $ 4,137 $ 4,408 $ 7,777 $ 8,734 Supplemental balance sheet information related to leases is as follows: Balance Sheet Location June 30, 2024 December 31, 2023 Operating Leases Right-of-use assets, net Other assets, net $ 32,368 $ 31,165 Current liabilities Accrued liabilities and other 7,434 7,502 Non-current liabilities Other long-term liabilities 25,726 24,417 Total operating lease liabilities $ 33,160 $ 31,919 Finance Leases Right-of-use assets, net Other assets, net $ 144 $ 205 Current liabilities Accrued liabilities and other 94 108 Non-current liabilities Other long-term liabilities 60 107 Total finance lease liabilities $ 154 $ 215 Cash payments on operating leases were $ 5.2 million and $ 4.7 million for the six months ended June 30, 2024 and 2023 respectively. Anticipated future lease costs, which are based in part on certain assumptions to approximate annual rental commitments under non-cancelable leases, are as follows: 12 Table of Contents Operating Financing Total Remainder of 2024 $ 5,460 $ 51 $ 5,511 2025 10,354 78 10,432 2026 8,207 30 8,237 2027 5,244 7 5,251 2028 3,770 — 3,770 Thereafter 17,883 — 17,883 Total lease payments $ 50,918 $ 166 $ 51,084 Less: Imputed interest ( 17,758 ) ( 12 ) ( 17,770 ) Present value of lease liabilities $ 33,160 $ 154 $ 33,314 8. Income Taxes We recorded a $ 0.3 million tax benefit, or 17 % effective tax rate for the three months ended June 30, 2024, and $ 0.8 million tax provision, or 38 % effective tax rate for the six months ended June 30, 2024, compared to a $ 2.7 million tax provision, or 21 % effective tax rate for the three months ended June 30, 2023, and $ 5.9 million tax provision, or 24 % effective tax rate for the six months ended June 30, 2023. Income tax expense is based on an estimated annual effective tax rate, which requires management to make its best estimate of annual pretax income or loss. During the year, management regularly updates forecasted annual pretax results for the various countries in which the Company operates based on changes in factors such as prices, shipments, product mix, material inflation and manufacturing operations. To the extent that actual 2024 pretax results for U.S. and foreign income or loss vary from estimates, the actual income tax expense recognized in 2024 could be different from the forecasted amount used to estimate the income tax expense for the three and six months ended June 30, 2024. For the six months ended June 30, 2024 and 2023, cash paid for taxes, net of refunds received, were $ 3.6 million and $ 5.9 million, respectively. 9. Pension and Other Post-Retirement Benefit Plans The components of net periodic (benefit) cost related to pension and other post-retirement benefit plans is as follows: Non-U.S. Pension Plan Three Months Ended June 30, 2024 2023 Interest cost $ 347 $ 358 Expected return on plan assets ( 315 ) ( 307 ) Amortization of prior service cost 13 13 Recognized actuarial loss 199 192 Net cost $ 244 $ 256 Non-U.S. Pension Plan Six months ended June 30, 2024 2023 Interest cost $ 696 $ 705 Expected return on plan assets ( 632 ) ( 602 ) Amortization of prior service cost 26 25 Recognized actuarial loss 399 377 Net cost $ 489 $ 505 Net periodic cost components, not inclusive of service costs, are recognized in other (income) expense within the Condensed Consolidated Statements of Operations. 13 Table of Contents 10. Performance Awards 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, 2023 $ 1,901 New grants 3,002 Forfeitures ( 88 ) Adjustments ( 3,187 ) Payments ( 324 ) Adjusted Award Value at June 30, 2024 $ 1,304 Unrecognized compensation expense was $ 2.0 million and $ 5.2 million as of June 30, 2024 and 2023, respectively. 11. Share-Based Compensation The company's outstanding share-based compensation is comprised solely of restricted stock awards and performance stock awards to be settled in stock. As of June 30, 2024, there was approximately $ 5.7 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans. This expense is subject to future adjustments and forfeitures and will be recognized on a straight-line basis over the remaining period listed above for each grant. A summary of the status of our restricted stock awards as of June 30, 2024 and changes during the six months ended June 30, 2024, are presented below: 2024 Shares (in thousands) Weighted- Average Grant-Date Fair Value Nonvested - December 31, 2023 591 $ 7.66 Granted 490 6.15 Vested ( 126 ) 9.00 Forfeited ( 43 ) 6.92 Nonvested - June 30, 2024 912 $ 6.70 As of June 30, 2024, a total of 1.4 million shares were available for future grants from the shares authorized for award under our 2020 Equity Incentive Plan, including cumulative forfeitures. 12. Stockholders’ Equity Common Stock — Our authorized capital stock consists of 60,000,000 shares of common stock with a par value of $ 0.01 per share; of which, 33,443,964 and 33,322,535 shares were issued and outstanding as of June 30, 2024 and December 31, 2023, respectively. Preferred Stock — Our authorized capital stock also consists of 5,000,000 shares of preferred stock with a par value of $ 0.01 per share, with no preferred shares outstanding as of June 30, 2024 and December 31, 2023. Earnings (Loss) Per Share - Basic earnings (loss) per share is determined by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share presented is determined by dividing net income (loss) 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. 14 Table of Contents Diluted earnings per share for the three and six months ended June 30, 2024 and 2023 includes the effect of potential common shares issuable when dilutive, and is as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) $ ( 1,601 ) $ 10,140 $ 1,338 $ 18,840 Weighted average number of common shares outstanding (in '000s) 33,393 33,051 33,359 32,960 Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) — 378 475 352 Dilutive shares outstanding 33,393 33,429 33,834 33,312 Basic earnings (loss) per share $ ( 0.05 ) $ 0.31 $ 0.04 $ 0.57 Diluted earnings (loss) per share $ ( 0.05 ) $ 0.30 $ 0.04 $ 0.57 There were 367 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2024 and no outstanding restricted shares awarded were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2023. There were 405 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2024 and 11 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2023. 13. Other Comprehensive Income (Loss) The after-tax changes in accumulated other comprehensive income (loss), are as follows: Foreign currency translation adjustment Pension and post-retirement benefits plans Derivative instruments Accumulated other comprehensive income (loss) Balance - December 31, 2023 $ ( 23,227 ) $ ( 11,896 ) $ 4,839 $ ( 30,284 ) Net current period change ( 3,856 ) ( 1,071 ) ( 145 ) ( 5,072 ) Amounts reclassified into earnings — 213 ( 1,798 ) ( 1,585 ) Balance - June 30, 2024 $ ( 27,083 ) $ ( 12,754 ) $ 2,896 $ ( 36,941 ) Foreign currency translation adjustment Pension and post-retirement benefit plans Derivative instruments Accumulated other comprehensive income (loss) Balance - December 31, 2022 $ ( 24,811 ) $ ( 11,512 ) $ 4,773 $ ( 31,550 ) Net current period change 1,506 ( 213 ) 5,341 6,634 Amounts reclassified into earnings — 206 ( 2,700 ) ( 2,494 ) Balance - June 30, 2023 $ ( 23,305 ) $ ( 11,519 ) $ 7,414 $ ( 27,410 ) 15 Table of Contents The related tax effects allocated to each component of other comprehensive income (loss) are as follows: Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Net current period change Cumulative translation adjustment $ ( 1,297 ) $ — $ ( 1,297 ) $ ( 3,856 ) $ — $ ( 3,856 ) Net actuarial gain and prior service credit ( 498 ) 1 ( 497 ) ( 1,073 ) 2 ( 1,071 ) Derivative instruments ( 3,880 ) 1,009 ( 2,871 ) ( 132 ) ( 13 ) ( 145 ) Net unrealized gain (loss) $ ( 5,675 ) $ 1,010 $ ( 4,665 ) $ ( 5,061 ) $ ( 11 ) $ ( 5,072 ) Amounts reclassified into earnings: Actuarial loss and prior service cost $ 106 $ — $ 106 $ 213 $ — $ 213 Derivative instruments ( 1,495 ) 391 ( 1,104 ) ( 2,370 ) 572 ( 1,798 ) Net realized gain (loss) $ ( 1,389 ) $ 391 $ ( 998 ) $ ( 2,157 ) $ 572 $ ( 1,585 ) Total other comprehensive income (loss) $ ( 7,064 ) $ 1,401 $ ( 5,663 ) $ ( 7,218 ) $ 561 $ ( 6,657 ) Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Before Tax Amount Tax Expense After Tax Amount Before Tax Amount Tax Expense After Tax Amount Net current period change Cumulative translation adjustment $ ( 1,051 ) $ — $ ( 1,051 ) $ 1,506 $ — $ 1,506 Net actuarial gain and prior service credit ( 250 ) ( 2 ) ( 252 ) ( 214 ) 1 ( 213 ) Derivative instruments 4,301 ( 1,208 ) 3,093 7,338 ( 1,997 ) 5,341 Net unrealized gain (loss) $ 3,000 $ ( 1,210 ) $ 1,790 $ 8,630 $ ( 1,996 ) $ 6,634 Amounts reclassified into earnings: Actuarial loss and prior service cost $ 105 $ — $ 105 $ 206 $ — $ 206 Derivative instruments ( 2,430 ) 635 ( 1,795 ) ( 3,652 ) 952 ( 2,700 ) Net realized gain (loss) $ ( 2,325 ) $ 635 $ ( 1,690 ) ( 3,446 ) 952 ( 2,494 ) Total other comprehensive income (loss) $ 675 $ ( 575 ) $ 100 $ 5,184 $ ( 1,044 ) $ 4,140 As of June 30, 2024, the Company estimates that net pre-tax derivative gains of $ 0.8 million included in Accumulated other comprehensive income (loss) will be reclassified into earnings within the next 12 months. 14. Cost Reduction and Manufacturing Capacity Rationalization The Company's restructuring program includes aligning cost structure to support margin expansion. The program includes workforce reductions and footprint optimization across segments. The changes in accrued restructuring balances are as follows: Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total December 31, 2023 $ 128 $ — $ — $ — $ 983 $ 1,111 New charges 533 1,090 34 75 164 1,896 Payments and other adjustments ( 533 ) ( 1,090 ) ( 34 ) ( 75 ) ( 540 ) ( 2,272 ) March 31, 2024 $ 128 $ — $ — $ — $ 607 $ 735 New charges 3,236 1,379 197 116 — 4,928 Payments and other adjustments ( 3,240 ) ( 1,379 ) ( 197 ) ( 116 ) ( 97 ) ( 5,029 ) June 30, 2024 $ 124 $ — $ — $ — $ 510 $ 634 16 Table of Contents Vehicle Solutions Electrical Systems Aftermarket & Accessories Industrial Automation Corporate/Other Total December 31, 2022 $ ( 5 ) $ — $ — $ 458 $ — $ 453 New charges 83 8 — 622 — 713 Payments and other adjustments ( 78 ) ( 8 ) — ( 369 ) — ( 455 ) March 31, 2023 $ — $ — $ — $ 711 $ — $ 711 New charges 340 — — 378 — 718 Payments and other adjustments ( 340 ) — — ( 391 ) — ( 731 ) June 30, 2023 $ — $ — $ — $ 698 $ — $ 698 Of the $ 4.9 million costs incurred in the three months ended June 30, 2024 for restructuring, $ 4.5 million related to headcount reductions and $ 0.4 million related to facility exit and other; $ 4.7 million were recorded in cost of revenue and $ 0.2 million were recorded in selling, general and administrative expenses. Of the $ 6.8 million costs incurred in the six months ended June 30, 2024 for restructuring, $ 6.0 million primarily related to headcount reductions and $ 0.8 million related to facility exit and other; $ 6.4 million were recorded in cost of revenues and $ 0.4 million were recorded in selling, general and administrative expenses. 15. Commitments and Contingencies Leases - As disclosed in Note 7, Leases, we lease office, warehouse and manufacturing space and equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees. As of June 30, 2024, 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 June 30, 2024 and 2023, we had no such guarantees. Litigation - We are subject to various legal proceedings and claims arising in the ordinary course of business, including but not limited to product liability claims, customer and supplier disputes, service provider disputes, examinations by taxing authorities, employment disputes, workers’ compensation claims, unfair labor practice charges, OSHA investigations, intellectual property disputes and environmental claims arising out of the conduct of our businesses. Management believes that the Company maintains adequate insurance and that we have established reserves for issues that are probable and estimable in amounts that are adequate to cover reasonable adverse judgments not covered by insurance. Based upon the information available to management and discussions with legal counsel, it is the opinion of management that the ultimate outcome of the various legal actions and claims that are incidental to our business are not expected to have a material adverse impact on the consolidated financial position, results of operations, equity or cash flows; however, such matters are subject to many uncertainties and the outcomes of individual matters are not predictable with any degree of assurance. Warranty - We are subject to warranty claims for products that fail to perform as expected due to design or manufacturing deficiencies. Depending on the terms under which we supply products to our customers, a customer may hold us responsible for some or all of the repair or replacement costs of defective products when the product supplied did not perform as represented. Our policy is to record provisions for estimated future customer warranty costs based on historical trends and for specific claims. These amounts, as they relate to the periods ended June 30, 2024 and December 31, 2023, are included within accrued liabilities and other in the accompanying Condensed 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. 17 Table of Contents The following presents a summary of the warranty provision for the six months ended June 30, 2024: Balance - December 31, 2023 $ 1,458 Provision for warranty claims 842 Deduction for payments made and other adjustments ( 1,114 ) Balance - June 30, 2024 $ 1,186 Debt Payments - As disclosed in Note 4, Debt, the Credit Agreement requires the Company to repay a fixed amount of principal on a quarterly basis and make voluntary prepayments that coincide with certain events. The following table provides future minimum principal payments due on long-term debt for the next five years. The existing long-term debt agreement matures in 2027; no payments are due thereafter: Total Remainder of 2024 $ 8,750 2025 $ 19,687 2026 $ 24,063 2027 $ 89,500 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 medium-duty/heavy-duty ("MD/HD") truck market. 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 Original Equipment Service ("OES") centers and retail distributors, and are spread across North America, Europe and Asia-Pacific. • Commercial vehicle accessories including wipers, mirrors, and sensors. 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. 18 Table of Contents Corporate expenses consist of certain overhead and shared costs that are not directly attributable to the operations of a segment. For purposes of business segment performance measurement, some of these costs that are for the benefit of the operations are allocated based on a combination of methodologies. The costs that are not allocated to a segment are considered stewardship costs and remain at corporate in our segment reporting. The following tables present financial information for the Company's reportable segments for the periods indicated: Three Months Ended June 30, 2024 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Corporate/Other Total Revenues $ 140,904 $ 50,152 $ 33,860 $ 4,990 $ — $ 229,906 Gross profit 11,557 3,167 6,447 ( 192 ) — 20,979 Selling, general & administrative expenses 6,480 2,660 1,993 823 8,263 20,219 Operating income (loss) $ 5,077 $ 507 $ 4,454 $ ( 1,015 ) $ ( 8,263 ) $ 760 Three Months Ended June 30, 2023 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Corporate/Other Total Revenues $ 152,730 $ 63,625 $ 36,829 $ 9,010 $ — $ 262,194 Gross profit 20,904 10,345 7,788 ( 636 ) — 38,401 Selling, general & administrative expenses 6,769 2,686 2,262 1,425 9,315 22,457 Operating income (loss) $ 14,135 $ 7,659 $ 5,526 $ ( 2,061 ) $ ( 9,315 ) $ 15,944 Six Months Ended June 30, 2024 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Corporate/Other Total Revenues $ 278,814 $ 105,947 $ 67,921 $ 9,292 $ — $ 461,974 Gross profit 27,785 7,721 12,886 ( 748 ) — 47,644 Selling, general & administrative expenses 12,357 5,202 3,900 2,262 16,591 40,312 Operating income (loss) $ 15,428 $ 2,519 $ 8,986 $ ( 3,010 ) $ ( 16,591 ) $ 7,332 Six Months Ended June 30, 2023 Vehicle Solutions Electrical Systems Aftermarket and Accessories Industrial Automation Corporate/Other Total Revenues $ 313,315 $ 118,373 $ 74,458 $ 18,757 $ — $ 524,903 Gross profit 40,374 18,643 15,015 ( 422 ) — 73,610 Selling, general & administrative expenses 12,847 4,914 3,913 2,501 18,847 43,022 Operating income (loss) $ 27,527 $ 13,729 $ 11,102 $ ( 2,923 ) $ ( 18,847 ) $ 30,588 19 Table of Contents 17. Other Financial Information Items reported in inventories consisted of the following: June 30, 2024 December 31, 2023 Raw materials $ 100,277 $ 98,371 Work in process 12,433 12,855 Finished goods 19,846 16,856 Inventories $ 132,556 $ 128,082 Items reported in property, plant, and equipment, net consisted of the following: June 30, 2024 December 31, 2023 Land and buildings $ 34,636 $ 34,072 Machinery and equipment 224,842 220,901 Construction in progress 7,486 6,536 Property, plant, and equipment, gross 266,964 261,509 Less accumulated depreciation ( 191,434 ) ( 188,041 ) Property, plant and equipment, net $ 75,530 $ 73,468 Items reported in accrued expenses and other liabilities consisted of the following: June 30, 2024 December 31, 2023 Compensation and benefits $ 20,754 $ 23,659 Operating lease liabilities 7,434 7,502 Customer tooling projects 3,775 1,303 Accrued freight 3,034 2,679 Taxes payable 2,932 5,018 Accrued legal and professional fees 1,688 1,535 Warranty costs 1,186 1,458 Other 8,754 9,408 Accrued liabilities and other $ 49,557 $ 52,562 18. Subsequent Event On July 31, 2024, the Company and SVO, LLC ("Buyer") entered into a purchase agreement to sell its cab structures business with operations in Kings Mountain, North Carolina. Under the terms of the purchase agreement, Buyer will purchase substantially all of the assets of the Company's business of manufacturing and assembling structured products, including cabs for medium and heavy-duty vehicles, at its facility in Kings Mountain, North Carolina. The agreement is subject to the satisfaction of customary closing conditions and is expected to close in the second half of 2024. In connection with entering into the purchase agreement, the parties contemplate entering into a negotiated transition services agreement. Pursuant to the terms of the purchase agreement, net proceeds of the transaction are expected to be $ 40 million, subject to adjustment for any variance of the actual value of inventory at closing from the estimated inventory value. The majority of the proceeds from the transaction will be used for debt paydown and other general corporate purposes. Upon closing of the transaction, the Company expects to record a gain on sale in the range of $ 25 million to $ 30 million. As a result of the proposed transaction, we expect our Kings Mountain business to be presented as a discontinued operation in the third quarter of 2024, its net assets classified as held for sale, and certain prior period amounts retrospectively revised to reflect these changes. 20 Table of Contents