What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-03-17 · 135 added, 140 removed, 223 unchanged (55% of the section changed)

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We believe our products are used by a majority of the North American Commercial Truck markets, many construction and agriculture vehicle OEMs, parts and service dealers and distributors.

Commercial Trends in the Vehicle Solutions and Aftermarket & Accessories Segments

Commercial Trends in the Global Seating and Trim Systems and Components Segments

Demand for our products may be driven by preferences of the end-user of the vehicle, particularly with respect to heavy-duty trucks in North America.

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North American heavy-duty truck production was 251,247 units in 2025.

According to a February 2025 report by ACT Research, a publisher of industry market research, North American Class 8 production levels are expected to decrease to 316,000 units in 2025.

According to a February 2026 report by ACT Research, a publisher of industry market research, North American Class 8 production levels are expected to increase to approximately 260,000 units in 2026.

ACT Research estimated that the average age of active North American Class 8 trucks was 5.8 years in 2025.

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North American medium-duty (or "Class 5-7") truck production was 195,522 units in 2025.

According to a February 2025 report by ACT Research, North American Class 5-7 truck production is expected to decrease to 226,000 units in 2025.

According to a February 2026 report by ACT Research, North American Class 5-7 truck production is expected to increase to approximately 197,000 units in 2026.

We primarily participate in the class 6 and 7 portion of the medium-duty truck market.

Commercial Trends in the Electrical Systems Segment

Demand for our Electrical Systems products, such as wire harnesses, is primarily driven by construction and agriculture equipment vehicle production.

Commercial Trends in the Global Electrical Systems Segment

Demand for our Global Electrical Systems products, such as wire harnesses, is primarily driven by construction and agriculture equipment vehicle production.

Demand for new vehicles in the global construction and agriculture equipment market generally follows certain economic conditions around the world.

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duty construction and agriculture equipment market is typically related to the level of large scale infrastructure development projects, such as highways, dams, harbors, hospitals, airports and industrial development, as well as activity in the mining, forestry and commodities industries.

A developing trend that may have a favorable impact on our Global Electrical Systems segment is the expectation that autonomous, self-driving cars are expected to become more common with continued advancements in technology, including applications such as last mile delivery.

Demand for autonomous vehicles will contribute to higher electrical and electronic content per vehicle and increased complexity in vehicle wiring architectures.

As vehicles incorporate additional sensors, connectivity features, and electronic systems, demand is expected to increase for more complex wire harness solutions supporting power distribution, data transmission, and safety-related functions.

This trend may create opportunities for suppliers, like us, with capabilities in advanced design, engineering, and manufacturing of integrated wiring systems.

The timing and extent of adoption of these technologies remain uncertain and are influenced by factors such as regulatory requirements, technology readiness, infrastructure development, and overall vehicle production levels.

Changes in vehicle mix, platform design, or customer demand could impact volumes and content levels and, in turn, affect demand for the Company’s products.

Other Key Developments

During the year ended December 31, 2024, the Company amended its credit agreement in the second and fourth quarters.

On July 30, 2024, the Company entered into Amendment No.

3, to the Credit Agreement.

Amendment No.

3 amended 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.

The Company repaid $20 million in accordance with Amendment No.3 during the three months ended September 30, 2024.

On December 19, 2024, the Company entered into Amendment No.

4 to its Credit Agreement.

Amendment No.

4 reduced the existing term loan facility to $85 million in aggregate principal amount, reduced the revolving credit facility commitments by $25 million to an aggregate of $125 million in revolving credit facility commitments, and revised the covenant calculation including increasing the maximum consolidated total leverage ratio to 4.25:1.0 (which will be subject to step-downs to 3.75:1.0 at the end of the fiscal quarter ending September 30, 2025;

and to 3.00:1.0 for each fiscal quarter thereafter).

On July 31, 2024, the Company and SVO, LLC ("Buyer") entered into a purchase agreement pursuant to which the Company would sell 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 cab structures business).

On September 6, 2024, the Company and Buyer entered into an amendment to the purchase agreement whereby the transaction closed on September 6, 2024 with the Buyer paying the Company $20 million of the $40 million purchase price.

Pursuant to the amended purchase agreement, the parties agreed (i) that the remaining $20 million of the purchase price would be paid on October 1, 2024, (ii) that the assigned contracts and the employees of Seller would transfer to Buyer on October 1, 2024, and (iii) the inventory would be valued as of October 1, 2024, for purposes of determining any adjustment to the purchase price.The Company received the remaining portion of the purchase price on October 1, 2024.

The net proceeds of the transaction were approximately $40 million.

The Company used the proceeds for debt paydown and other general corporate purposes.

The Company recorded an after-tax gain on the sale of the business of approximately $28.8 million for the year ended December 31, 2024.

On October 30, 2024, the Company entered into a purchase agreement to sell its First Source Electronics (FSE) business with operations in Elkridge, Maryland for approximately $1.5 million, with a note in the amount of $0.5 million and earn out potential of an additional $1.5 million subject to certain criteria.

The Elkridge facility is the primary manufacturing facility of the Company's Industrial Automation segment.

CVG recorded an estimated after-tax loss on the contemplated sale of the Industrial Automation business of approximately $7.9 million for the year ended December 31, 2024.

The cab structures and Industrial Automation segment divestitures represent a strategic shift in CVG's business and, in accordance with U.S.

GAAP, qualified as discontinued operations.

As a result, the operating results and cash flows related to the cab structures business and Industrial Automation segment have been reflected as discontinued operations in the Consolidated Statements of Operations.

Additionally, the results of operations in this section include retrospective changes for discontinued operations.

See Note 17, Discontinued Operations, for additional information on the divestitures.

Certain indirect corporate costs included within the selling, general and administrative expense caption of the Consolidated Statements of Operations that were previously allocated to the Kings Mountain facility and Industrial Automation segment do not qualify for classification within discontinued operations and are now reported as selling, general and administrative expense within continuing operations on a consolidated basis and within the Corporate and other segment.

Subsequent to December 31, 2024, the Company announced a new organizational structure designed to enhance alignment with its customers and end markets, effective January 1, 2025.

Under this new structure, CVG will reorganize its vertical business units into the following three operating divisions and reporting segments:

The Company announced on June 27, 2025, it had closed on $210 million in senior secured credit facilities, consisting of (i) a $95 million senior secured Term Loan with TCW Group, as agent, and (ii) a $115 million senior secured asset-based revolving credit facility with Bank of America, N.A., as agent.

Obligations under the new senior secured credit facilities will mature on June 27, 2030, with the ABL revolving credit facility springing to 91 days prior to the maturity of the Term Loan or third-party subordinated debt.

In connection with the financing, TCW Group affiliates received five-year warrants for the purchase of up to 3,934,776 shares of the company’s common stock, issued in two equal tranches.

The tranches of warrants have an exercise price of $1.52 and $2.07 per share, respectively.

Until the fourth anniversary after issuance, the Company has the right to repurchase up to 50% of each tranche of warrants at a price equal to $1.40 or $1.00 per share, respectively, above the applicable exercise price.

Upon a refinancing of the new credit agreement, the holders can require the Company to repurchase up to 50% of each tranche at a price equal to the price of the common stock at the time of repurchase less the exercise price.

The warrants contain customary anti-dilution adjustments.

The Company has provided the holders with certain information and registration rights, including filing a registration statement within 45 days to register the resale of the shares underlying the warrants.

The Company announced a new organizational structure designed to enhance alignment with its customers and end markets, effective January 1, 2025.

Under this new structure, CVG reorganized its vertical business units into the following three operating divisions and reporting segments:

Global Electrical Systems, Global Seating, Trim Systems and Components.

As part of this realignment, the Company’s Aftermarket & Accessories business unit will be absorbed in these three segments.

Its seating and electrical portfolio will transition to Global Seating and Global Electrical Systems, respectively.

Its wiper systems will become part of the newly formed Trim Systems and Components business unit in addition to the trim and components businesses from the prior Vehicle Solutions segment.

As part of this realignment, the Company’s Aftermarket & Accessories business unit was absorbed in these three segments.

Its seating and electrical portfolio transitioned to Global Seating and Global Electrical Systems, respectively.

Its wiper systems became part of the newly formed Trim Systems and Components business unit in addition to the trim and components businesses from the prior Vehicle Solutions segment.

We are navigating through several challenging external factors which create uncertainty and volatility in our end markets, including, but not limited to, geopolitical dynamics, new and changing tariff actions and responses, tax regulation and fluctuating foreign exchange rates.

We expect the Company’s cost of goods sold will continue to be impacted by tariffs which increase the price of materials purchased and products sold to customers.

In the past, we have negotiated with our customers in an attempt to pass on a portion of the increased costs resulting from the tariffs to our customers, although there is significant uncertainty as to our ability to pass these costs, or a portion of these costs, along to our customers.

Geopolitical uncertainties will continue to create a challenging operating environment.

We continue to closely monitor the situation and are prepared to remain agile in responding to any new developments.

In addition, lower courts and administrative processes will need to provide guidance with respect to refund-related questions with respect to the IEEPA tariffs paid prior to the recent U.S.

Supreme Court decision.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States.

Key provisions of the bill include, but are not limited to, immediate expensing of R&D expenditures, restoration and expansion of 100% bonus depreciation and permanent reinstatement of the EBITDA limitation for the calculation of the 163(j) business interest expense deduction.

Additionally, the bill extends and modifies certain international tax provisions of the 2017 Tax Cuts and Jobs Act that were set to expire at the end of 20 25.

The tax provisions in OBBBA did not have a material impact on the Company’s consolidated financial statements or results of operations.

Our Long-term Strategy

The Company's long-term strategy is to increase our sales, profits and shareholder value by growing our Electrical Systems segment to be our largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening our product portfolio, increasing our margins and evaluating opportunities to add to our businesses through a focused M&A program.

entering new markets, developing relationships with new customers, and enhancing service to our customers, leading to increased return to our stockholders.

The Company's long-term strategy is to increase our sales, profits and shareholder value by growing our Global Electrical Systems segment to be our largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening our product portfolio, increasing our margins and evaluating opportunities to add to our businesses through a focused M&A program.

The Company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening / enhancing current positions, entering new markets, developing relationships with new customers, and enhancing service to our customers, leading to increased return to our stockholders.

Our products include electrical wire harnesses, seating systems, plastic components, mirrors, wipers and other accessories.

We have a long-term strategy to globally optimize our cost structure through manufacturing process enhancements, low cost footprint and global sourcing.

We periodically evaluate our short-term and long-term strategies and may adjust actions in response to changes in our business environment and other factors including but not limited to, implementing restructuring as needed.

Our Board and management periodically and from time to time, review and evaluate our short-term and long-term strategies, as well as potential strategic alternatives, to enhance shareholder value.

These strategic alternatives may include, among others, acquisitions, dispositions and other business combination transactions, recapitalizations, restructurings or other transactions, in each case, involving all or a portion of our business.

There can be no assurance that any such transaction will be pursued or completed, or, if completed, that it will achieve the intended strategic or financial objectives.

CONSOLIDATED RESULTS OF OPERATIONS

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Loss on extinguishment of debt 460 509 (49) (9.6)

Provision (benefit) for income taxes 27,493 (15,203) 42,696 NM 1

Net income (loss) from continuing operations (35,734) 43,633 (79,367) NM 1

Provision (benefit) for income taxes 4,740 27,493 (22,753) (82.8)

Net income (loss) from continuing operations (20,477) (35,734) 15,257 (42.7)

Not meaningful

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• a $5.0 million, or 3.9%, decrease in aftermarket and OES sales.

The decrease in revenues of 13.4% was primarily driven by a softening in customer demand across all segments, and the wind-down of certain programs in our Vehicle Solutions segment.

The decrease in revenues of 10.3% was primarily driven by a softening in customer demand in the Global Seats and Trim Systems & Components segments.

Gross Profit.

Included in gross profit is cost of revenues, which consists primarily of raw materials and purchased components for our products, wages and benefits for our employees and overhead expenses such as manufacturing supplies, facility rent and utilities costs related to our operations.

The decrease in gross profit is primarily attributable to the impact of lower sales volumes, unfavorable mix, and increased restructuring charges.

The decrease in gross profit was primarily attributable to the impact of lower sales volumes.

Cost of revenues decreased $69.6 million, or 10.7% as a result of a decrease in raw material and purchased component costs of $46.8 million, or 12.3%;

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Selling, general and administrative ("SG&A") expenses consist primarily of wages and benefits and other expenses such as marketing, travel, legal, audit, rent and utilities costs, which are not directly or indirectly associated with the manufacturing of our products.

SG&A expenses decreased $7.3 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily as a result of the gain on the sale of a building of $3.5 million and reduced incentive compensation expense, partially offset by an increase in salary expense and consulting spend during the 2024 period.

SG&A expenses decreased $4.8 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to implementation of cost control measures designed to align with the magnitude of continuing operations and focus on leveraging existing resources to improve profitability in a low demand period.

The twelve months ended December 31, 2024 results include a benefit of $3.5 million from the gain on the sale of a building.

As a percentage of revenues, SG&A expense was 10.6% for the twelve months ended December 31, 2025 compared to 10.2% for the twelve months ended December 31, 2024.

Other (Income) Expense.

Other income increased $3.4 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 due primarily to transition service fees of $3.2 million recognized during the year ended December 31, 2024 which supported the transition of discontinued operations transactions as well as favorable change in foreign currency of $0.5 million.

Other expense increased $3.8 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024 due primarily to transition service fee income of $3.2 million recognized during the year ended December 31, 2024 which supported the transition of discontinued operations transactions.

Interest Expense.

Interest associated with our debt was $13.0 million and $9.2 million for the years ended December 31, 2025 and 2024, respectively.

The decrease primarily related to lower average debt balances, partially offset by higher interest rates on variable rate debt during the respective comparative periods.

The increase in interest expense was primarily attributed to higher weighted average margins on debt balances, partially offset by the impact of lower average debt balances during the respective comparative periods.

Loss on extinguishment of debt.

On June 27, 2025, the Company recognized a loss on extinguishment of debt to reflect the write-off of deferred financing fees related to early repayment of the prior revolver of $0.5 million.

On December 19, 2024, the Company refinanced its long-term debt, which resulted in a loss of $0.5 million, including a $0.3 million non-cash write off relating to deferred financing costs of the Term loan facility due 2027 and $0.2 million of other associated fees.

Provision (Benefit) for Income Taxes.

Income tax expense of $27.5 million and income tax benefit of $15.2 million were recorded for the years ended December 31, 2024 and 2023, respectively.

The period over period change in income tax was primarily attributable to the $36.7 million decrease in pre-tax income versus the prior year period which led to establishing a full valuation allowance on our U.S.

Income tax expense of $4.7 million and $27.5 million were recorded for the years ended December 31, 2025 and 2024, respectively.

The period over period change in income tax was primarily attributable to establishing a full valuation allowance on our U.S.

deferred tax assets of $28.8 million in 2024.

During 2023 the Company reversed the $22.0 million valuation allowance on our U.S.

deferred tax assets that was established in 2022.

In 2021, as part of the Organization for Economic Co-operation and Development's ("OECD") Inclusive Framework, 140 member countries agreed to the implementation of the Pillar Two Global Minimum Tax ("Pillar Two") of 15%.

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Changes to these and other areas in relation to international tax reform, including future actions taken by foreign governments in response to Pillar Two, could increase uncertainty and may adversely affect our tax rate and cash flow in future years.

We continue to evaluate the potential impacts of Pillar Two through current and pending legislative adoption by individual countries.

We continue to monitor the adoption of the OECD Pillar Two global minimum tax rules in each of our tax jurisdictions to evaluate its impact on our effective income tax rate.

Pillar Two did not have a material impact to our effective tax rate for the year ended December 31, 2025.

Net Income (Loss) from continuing operations.

Net loss from continuing operations was $35.7 million for the twelve months ended December 31, 2024 compared to net income from continuing operations of $43.6 million for the twelve months ended December 31, 2023.

The decrease in net income from continuing operations is attributable to the factors noted above.

Net loss from continuing operations was $20.5 million for the twelve months ended December 31, 2025 compared to net loss from continuing operations of $35.7 million for the twelve months ended December 31, 2024.

The decrease in net income from continuing operations was attributable to the factors noted above.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

5 unchanged sentences

Selling, general and administrative expenses 73,877 81,218 (7,341) (9.0)

Other expense 1,195 10,463 (9,268) (88.6)

Other expense (2,200) 1,195 (3,395) NM 1

Interest expense 9,174 10,248 (1,074) (10.5)

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Not meaningful

The increase in consolidated revenues resulted from:

• a $47.6 million, or 7.3%, increase in sales to OEM and other revenues;

• a $5.2 million, or 4.0%, increase in aftermarket and OES sales.

The increase in revenues was primarily driven by increased pricing and increased sales volume from the Electrical Systems business, offset by lower sales volume in the Vehicle Solutions segments.

The decrease in consolidated revenues resulted from:

• a $104.6 million, or 15.0%, decrease in sales to OEM and a decrease in other revenues;

• a $7.5 million, or 5.5%, decrease in aftermarket and OES sales.

The decrease in revenues of 13.4% was primarily driven by a softening in customer demand across all segments, and the wind-down of certain programs in our Global Seating/ Trim Systems and Components segments.

Gross Profit.

The increase in gross profit is primarily attributable to price increases with customers and cost reduction initiatives.

Cost of revenues increased $16.8 million, or 2.4% as a result of an increase in overhead expenses of $16.5 million, or 8.5%;

an increase in wages and benefits of $4.2 million, or 6.4%;

and offset by a decrease in raw material and purchased component costs of $3.9 million, or 0.9%.

The decrease in gross profit was primarily attributable to the impact of lower sales volumes, unfavorable mix, and increased restructuring charges.

Cost of revenues decreased $64.1 million, or 9.0% as a result of a decrease in raw material and purchased component costs of $54.9 million, or 12.6%;

a decrease in wages and benefits of $6.9 million, or 9.9%;

and a decrease in overhead expens es of $2.3 million, or 1.1%.

As a percentage of revenues, gross profit margin was 10.1% for the year ended December 31, 2024 compared to 14.5% for the year ended December 31, 2023.

Selling, General and Administrative Expenses.

SG&A expenses increased $21.0 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to increased employee salaries, incentive compensation, recruitment costs, travel spending and professional services.

Sell ing, General and Administrative Expenses.

SG&A expenses decreased $7.3 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily as a result of the gain on the sale of a building of $3.5 million and reduced incentive compensation expense, partially offset by an increase in salary expense and consulting spend during the 2024 period.

As a percentage of revenues, SG&A expense was 10.2% for the twelve months ended December 31, 2024 compared to 9.7% for the twelve months ended December 31, 2023.

Other (Income) Expense.

Other expense decreased $9.3 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022 due primarily to the settlement of the Company's U.S.

Pension Plan liabilities of $9.2 million completed during the year ended December 31, 2022.

Other expense increased $3.4 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 due primarily to transition service fees of $3.2 million recognized during the year ended December 31, 2024 which supported the transition of discontinued operations transactions as well as favorable change in foreign currency of $0.5 million.

Interest Expense.

Interest associated with our debt was $9.2 million and $10.2 million for the years ended December 31, 2024 and 2023, respectively.

The increase primarily related to higher interest rates on variable rate debt, offset by lower average debt balances during the respective comparative periods.

The decrease primarily related to lower average debt balances, partially offset by higher interest rates on variable rate debt during the respective comparative periods.

Loss on extinguishment of debt.

On May 12, 2022, the Company refinanced its long-term debt, which resulted in a loss of $0.9 million, including a $0.6 million non-cash write off relating to deferred financing costs of the Term loan facility due 2026 and $0.3 million of other associated fees.

On December 19, 2024, the Company refinanced its long-term debt, which resulted in a loss $0.5 million, including a $0.3 million non-cash write off relating to deferred financing costs of the Term loan facility due 2027 and $0.2 million of other associated fees.

Provision (Benefit) for Income Taxes.

Income tax benefit of $15.2 million and expense of $20.9 million were recorded for the years ended December 31, 2023 and 2022, respectively.

The period over period change in income tax was primarily attributable to the reversal of $22.0 million valuation allowance on our U.S.

deferred tax assets during 2023 versus the 2022 establishment of a full valuation allowance on our U.S.

deferred tax assets of $24.5 million, offset by the reversal of a $9.9 million valuation allowance on our United Kingdom (U.K.) deferred tax asset.

Income tax expense of $27.5 million and income tax benefit of $15.2 million were recorded for the years ended December 31, 2024 and 2023, respectively.

deferred tax assets of $28.8 million in 2024.

During 2023 the Company reversed the $22.0 million valuation allowance on our U.S.

deferred tax assets that was established in 2022.

Net Income (Loss) from continuing operations.

The decrease in net income from continuing operations was attributable to the factors noted above.

SEGMENT RESULTS OF OPERATIONS

Vehicle Solutions Segment Results

Global Seating Segment Results

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The table below sets forth certain Vehicle Solutions Segment operating data for the twelve months ended, (dollars are in thousands):

The table below sets forth certain Global Seating Segment operating data for the twelve months ended, (dollars are in thousands):

2025 2024 $ Change % Change 2023 $ Change % Change

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7,846 4,030 3,816 94.7 9,125 (5,095) (55.8)

The decrease in Vehicle Solutions Segment revenues in 2024 of $65.8 million from 2023 primarily resulted from lower sales volume due to decreased customer demand and the wind-down of certain programs.

The decrease in 2023 revenues of $0.4 million from 2022 primarily resulted from increased pricing which more than offset lower sales volume.

The decrease in Global Seating Segment revenues in 2025 of $27.4 million from 2024 primarily resulted from lower sales volume due to decreased customer demand in North America.

The decrease in 2024 revenues of $34.0 million from 2023 primarily resulted from lower sales volume due to decreased customer demand and the wind-down of certain programs.

Gross Profit.

The decrease in 2024 gross profit of $20.1 million from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs, and a decrease in cost of revenues driven by a decrease in raw material and purchased component costs of $29.0 million, or 11.2%;

The decrease in 2025 gross profit of $2.3 million from 2024 was primarily due to lower sales volume and restructuring activities, offset by lower freight costs and improved operational efficiency, and a decrease in cost of revenues driven by a decrease in raw material and purchased component costs of $22.3 million, or 13.0%;

a decrease in overhead expenses of $2.1 million, or 2.6%;

and a decrease in wages and benefits of $0.8 million, or 3.6%.

The increase in 2023 gross profit of $16.3 million from 2022 was primarily due to price increases with customers and cost reduction initiatives including lower freight costs, lower startup costs, and improved manufacturing efficiencies..

The decrease in 2024 gross profit of $5.6 million from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs, partially offset by a decrease in cost of revenues driven by a decrease in raw material and purchased components costs of $20 million, or 10.5%;

a decrease in overhead expenses of $6.8 million, or 7.5%;

and a decrease in wages and benefits of $1.6 million, or 6.9%.

As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 12.3% and 12.0%, respectively.

The decrease in gross profit in 2024 from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs.

The decrease in gross profit in 2025 from 2024 was primarily due to lower sales volume.

The twelve months ended December 31, 2025 results include charges of $2.3 million associated with the restructuring program.

The increase in gross profit in 2023 from 2022 was primarily due to price increases with customers and cost reduction initiatives including lower freight costs, lower startup costs, and improved manufacturing efficiencies.

The decrease in gross profit margin in 2024 from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs.

The twelve months ended December 31, 2024 results include charges of $1.5 million associated with the restructuring program.

Selling, General and Administrative Expenses.

The decrease in 2024 SG&A expenses of $4.8 million from 2023 was primarily a result of the gain on the sale of a building of $3.5 million.

The decrease in 2025 SG&A expenses of $6.1 million from 2024 was primarily a result of reduced payroll and benefits expense.

The twelve months ended December 31, 2025 results include charges of $0.2 million associated with the restructuring program.

The increase in 2023 SG&A expenses of $2.6 million from 2022 was primarily due to an increase in system implementation costs and employee benefit costs including salaries and incentive compensation expenses.

Electrical Systems Segment Results

The decrease in 2024 SG&A expenses of $0.5 million from 2023 was primarily a result of reduced incentive compensation expense.

Global Electrical Systems Segment Results

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The table below sets forth certain Electrical Systems Segment operating data for the twelve months ended, (dollars are in thousands):

The table below sets forth certain Global Electrical Systems Segment operating data for the twelve months ended, (dollars are in thousands):

2025 2024 $ Change % Change 2023 $ Change % Change

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Selling, general & administrative expenses 19,443 17,742 1,701 9.6 17,088 654 3.8

Operating income 449 26,290 (25,841) (98.3) 18,218 8,072 44.3

The decrease in Electrical Systems segment revenues in 2024 of $38.8 million from 2023 is primarily attributable to lower sales volume driven by global softness in Construction & Agriculture end-markets.

The increase in 2023 revenues of $48.0 million from 2022 is primarily attributable to sales volume and increased pricing to offset material cost pass-through and other inflationary items.

Operating income 2,049 (4,560) 6,609 NM 1

22,557 (27,117) NM 1

Not meaningful

The Global Electrical Systems segment revenues in 2025 were flat from 2024.

The decrease in 2024 revenues of $39.3 million from 2023 was primarily attributable to lower sales volume driven by global softness in Construction & Agriculture end-markets.

Gross Profit.

The decrease in 2024 gross profit of $24.7 million from 2023 was primarily attributable to lower sales volume, restructuring activities, labor inflation and unfavorable foreign exchange impacts.

Cost of revenues decreased in line with the revenues, decrease of 17.0%, driven by a decrease in raw material and purchased component costs of $16.6 million, or 15.6%;

The increase in 2025 gross profit of $8.3 million from 2024 was primarily attributable to mix and improved operational efficiency, and a decrease in cost of revenues driven by a decrease in overhead expenses of $7.0 million, or 10.8%;

a decrease in wages and benefits of $0.8 million, or 2.8%;

offset by an increase in overhead expenses of $6.6 million, or 12.3%.

The increase in 2023 gross profit of $11.4 million from 2022 was primarily attributable to volume leverage and increased pricing to offset material cost pass-through and other inflationary items.

and a decrease in raw material and purchased component costs of $0.5 million, or 0.5%.

The decrease in 2024 gross profit of $26.5 million from 2023 was primarily attributable to lower sales volume, restructuring activities, labor inflation and unfavorable foreign exchange impacts.

As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 10.6% and 6.5%, respectively.

The increase in 2025 gross profit margin was primarily due to mix and improved operational efficiency.

The twelve months ended December 31, 2025 results include charges of $1.6 million associated with the restructuring program.

The decrease in 2024 gross profit margin was primarily due to lower sales volume, restructuring activities, labor inflation, and unfavorable foreign exchange impacts.

The twelve months ended December 31, 2024 results include charges of $3.7 million associated with the restructuring program.

The increase in 2023 gross profit margin was primarily due to volume leverage and increased pricing, more than offsetting inflationary items.

Selling, General and Administrative Expenses.

2024 SG&A expenses increased $1.1 million from 2023, primarily driven by increased salaries.

The increase of $3.3 million in 2023 from 2022, was primarily a result of increased headcount and incentive adjustments based on performance.

Aftermarket & Accessories Segment Results

2025 SG&A expenses increased $1.7 million from 2024, primarily driven by increased salaries and benefits.

The increase of $0.7 million in 2024 from 2023, primarily driven by increased salaries.

Trim Systems and Components Segment Results

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The table below sets forth certain Aftermarket & Accessories Segment operating data for the twelve months ended, (dollars are in thousands):

The table below sets forth certain Trim Systems and Components Segment operating data for the twelve months ended, (dollars are in thousands):

2025 2024 $ Change % Change 2023 $ Change % Change

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Selling, general & administrative expenses 12,402 10,698 1,704 15.9 17,399 (6,701) (38.5)

Operating income 15,026 18,370 (3,344) (18.2) 11,546 6,824 59.1

The decrease in Aftermarket & Accessories segment revenues in 2024 of $7.5 million from 2023 was driven by lower sales volume due to a decreased customer demand and the reduction of backlog in the prior period.

The increase in 2023 revenues of $5.2 million from 2022 resulted from increased pricing to offset material cost pass-through and other inflationary items.

Operating income (790) 11,846 (12,636) NM 1

21,079 (9,233) (43.8)

Not meaningful

The decrease in Trim Systems and Components segment revenues in 2025 of $47.0 million from 2024 was driven by lower sales volume due to a decreased customer demand in North America.

The decrease in 2024 revenues of $38.8 million from 2023 was driven by lower sales volume due to decreased customer demand and the reduction of backlog in the prior period.

Gross Profit.

The decrease in 2024 gross profit of $3.2 million from 2023 is primarily due to the lower sales volume.

Cost of revenues decrease is driven by a decrease in raw material and purchased component costs of $9.3 million, or 13.4%;

offset by an increase in overhead expenses of $4.0 million, or 12.2%;

and an increase in wages and benefits of $1.0 million, or 12.3%.

The increase in 2023 gross profit of $8.1 million from 2022 is primarily due to increased pricing to offset material cost inflation and other inflationary items and cost reduction initiatives.

The decrease in 2025 gross profit of $10.9 million from 2024 was primarily due to the lower sales volume.

Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $24.0 million, or 21.0%;

a decrease in overhead expenses of $9.3 million, or 16.1%;

and a decrease in wages and benefits of $2.7 million, or 24.8%.

The decrease in 2024 gross profit of $15.9 million from 2023 was primarily due to the lower sales volume.

As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 7.3% and 11.0%, respectively.

The decrease in 2024 gross profit margin is primarily due to lower sales volume and restructuring related expenses.

The decrease in 2025 gross profit margin was primarily due to lower sales volume.

The twelve months ended December 31, 2025 results include charges of $1.0 million associated with the restructuring program.

The increase in 2023 gross profit margin is primarily due to increased pricing offsetting moderating cost inflation and cost reduction initiatives including lower freight costs.

The decrease in 2024 gross profit margin was primarily due to lower sales volume and restructuring related expenses.

The twelve months ended December 31, 2024 results include charges of $3.9 million associated with the restructuring program.

Selling, General and Administrative Expenses.

SG&A expenses increased by $0.2 million in 2024 compared to 2023.

The increase in 2023 SG&A expenses of $1.2 million from 2022, is primarily driven by commissions expense increase and is consistent with the prior year on a percent of sales basis.

SG&A expenses increased by $1.7 million in 2025 compared to 2024 primarily as a result of the gain on the sale of a building of $3.5 million in the prior year period.

The decrease in 2024 SG&A expenses of $6.7 million from 2023 was primarily due to gain on the sale of a building of $3.5 million.

Liquidity and Capital Resources

At December 31, 2024, the Company had $50.5 million borrowings under its revolving credit facility.

At December 31, 2025, the Company had $16.8 million in outstanding borrowings under its revolving credit facility and outstanding letters of credit of $2.1 million.

At December 31, 2025, the Company had liquidity of $135.1 million, including $33.3 million of cash and $101.8 million availability from its U.S.

and China credit facilities.

and China credit facilities (subject to borrowing base and other conditions of the facilities).

We intend to allocate resources consistent with the following priorities:

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and (5) other actions deemed appropriate by management to improve operational performance.

Our primary sources of liquidity during the year ended December 31, 2024 were proceeds from divestitures, cash and availability under our credit facility.

Our primary sources of liquidity during the year ended December 31, 2025 were operating income, cash and availability under our credit facility.

We believe that these sources of liquidity will provide adequate funds for our working capital needs, capital expenditures and debt service throughout the next twelve months.

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We also rely on the timely collection of receivables as a source of liquidity.

As of December 31, 2024, we had outstanding letters of credit of $1.1 million and borrowing availability of $84.4 million from our U.S.

and China credit facilities.

As of December 31, 2025, cash of $33.0 million was held by foreign subsidiaries.

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Covenants and Liquidity

During the year ended December 31, 2024, the Company amended its credit agreement in the second and fourth quarters.

On July 30, 2024, the Company entered into Amendment No.

3, to the Credit Agreement.

Amendment No.

3 amended 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.

The Company repaid $20 million in accordance with Amendment No.3 during the three months ended September 30, 2024.

On December 19, 2024, the Company entered into Amendment No.

4 to its credit agreement.

Amendment No.

and to 3.00:1.0 for each fiscal quarter thereafter).

Our ability to comply with the covenants in the credit agreement, as discussed in Note 3, Debt, may be affected by economic or business conditions beyond our control.

Based on our current forecast, we believe that we will be able to maintain compliance with the financial maintenance covenants and the fixed charge coverage ratio covenant and other covenants in the credit agreement for the next twelve months;

Our ability to comply with the covenants in the Term Loan and ABL Revolving Credit Facility, as discussed in Note 3, Debt,

may be affected by economic or business conditions beyond our control.

however, no assurances can be given that we will be able to comply.

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Operating activities .

For the year ended December 31, 2024, net cash used in operations was $33.5 million compared to net cash provided by operations of $38.3 million for the year ended December 31, 2023.

Net cash used in operating activities is primarily attributable to a lower net income from continuing and discontinued operations, including cash used to support restructuring programs for the twelve months ended December 31, 2024 as compared to higher net income offset by an increase in working capital for the twelve months ended December 31, 2023.

For the year ended December 31, 2025, net cash provided by operations was $44.6 million compared to net cash used in operations of $33.5 million for the year ended December 31, 2024.

Net cash provided by operating activities was primarily attributable to a decrease in working capital for the twelve months ended December 31, 2025 as compared to a loss from continuing and discontinued operations, including cash used to support restructuring programs for the twelve months ended December 31, 2024.

Investing activities .

Net cash provided by investing activities was $30.9 million for the year ended December 31, 2024 compared to net cash used in investing activities of $19.7 million for the twelve months ended December 31, 2023, primarily due to $45.0 million proceeds from sale of the Company's cab structures, Industrial Automation segment and FinishTEK businesses during the current period and $4.5 million proceeds from the sale of a building.

Net cash used in investing activities was $10.6 million for the year ended December 31, 2025 compared to net cash provided by investing activities of $30.9 million for the twelve months ended December 31, 2024.

The change was mainly due to a targeted reduction of capital spending in the current year, compared with $23.0 million proceeds from the sale of the Company's cab structures and FinishTEK businesses during the prior year period and $4.5 million proceeds from the sale of a building during the 2024 period offsetting expenditure s.

In 2026, we expect capital expenditures to be in the range of $12 million to $18 million.

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For the year ended December 31, 2025, net cash used in financing activities was $29.2 million compared to $7.1 million for the year ended December 31, 2024.

Net cash used in financing activities for the year ended December 31, 2024 is primarily attributable to $56.6 million term loan repayment, offset by an increase of $50.5 million in borrowings under the revolving credit facility.

The Company's term loan repayments included $20.0 million in accordance with Amendment No.3 and $30.0 million in accordance with Amendment No.

to its Credit Agreement.

The increase in borrowings under the revolving credit facility were related to funding the $30.0 million term loan repayment and to fund working capital.

Net cash used in financing activities for the year ended December 31, 2025 was primarily attributable to the net repayment of $23.7 million of long-term debt and $6.1 million debt issuance and amendment costs to refinance our debt, compared to net repayment of $6.1 million during 2024.

Debt and Credit Facilities

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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.

We enter into agreements with certain customers in the Vehicle Solutions segment at the beginning of a vehicle platform’s life to supply products for that vehicle platform.

Revenue is measured based on the amount of consideration we expect to receive in exchange for the transfer of goods or services.

We enter into agreements with certain customers in the Global Seating and Trim Systems and Components segments at the beginning of a vehicle platform’s life to supply products for that vehicle platform.

Once we enter into such agreements, fulfillment of our requirements is our obligation for the entire production life of the platform.

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(5) our experience with operating loss and tax credit carryforwards not expiring unused, and (6) tax planning alternatives.

As of December 31, 2024, the Company was in a cumulative three-year taxable loss position in the U.S.

As of December 31, 2025 and 2024, the Company was in a cumulative three-year taxable loss position in the U.S.

which was given the most weight in our analysis of all positive and negative evidence when determining whether to establish a valuation allowance.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis