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The COVID-19 pandemic has negatively impacted the global economy, disrupting the financial markets and increasing volatility, and has impeded global supply chains, restricted manufacturing operations and resulted in significantly reduced economic activity and higher unemployment rates.
−Removed: It has disrupted, and may continue to disrupt for an indefinite period of time, the global vehicle industry and customer sales, production volumes and purchases of automotive, commercial, off-highway, motorcycle and agricultural vehicles by end-consumers.
+Added: It has disrupted, and may continue to disrupt for an indefinite period of time, the global vehicle industry and customer sales, production volumes and purchases of automotive, commercial, off-highway and agricultural vehicles by end-consumers.
International, federal, state and local public health and governmental authorities have taken and may continue to take actions to contain the outbreak and spread of COVID-19 throughout most regions of the world, including travel bans, quarantines, "work-from-home"
orders and similar mandates that have caused many businesses to modify normal operations.
−Removed: During 2020 we took actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, obtaining a waiver on our existing 2019 Credit Facility through June 2021 and actively managing costs, capital spending and working capital to further strengthen our liquidity.
+Added: Beginning in 2020 we took actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, amending our existing Credit Facility twice providing covenant relief through March 2023 and actively managing costs, capital spending and working capital to further strengthen our liquidity.
Despite these measures, the ultimate impact to our business continues to remain highly uncertain and we have experienced, and may continue to experience, delays in the production and distribution of our products, supply chain disruptions impacting the availability of production materials and the loss or delay of customers’ sales.
−Removed: COVID-19 continues to spread in most regions of the world and the extent to which our financial performance will be adversely affected will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume.
−Removed: Our business may also be affected by the ultimate impacts of the pandemic on economic activity and whether recessionary conditions will persist or reoccur, consumer demand and vehicle production schedules and the ability of our supply chain to deliver in a timely and cost-effective manner.
−Removed: In addition, if a significant portion of our workforce or our customers’ workforce are affected by COVID-19, either directly or due to government closures or otherwise, associated work stoppages or facility closures could halt or further delay production in our facilities, including our manufacturing facilities in Juarez, Mexico and Manaus, Brazil which are currently producing at limited capacity due to governmental decrees.
−Removed: Our full year 2020 results of operations and financial condition were adversely affected by COVID-19, and the full extent of the effect of COVID-19 on our customers, our supply chain and our business, in either scope or duration, cannot be assessed at this time.
Uncertain Economic and Market Conditions
−Removed: Our business is cyclical and a downturn in the automotive, commercial, off-highway, motorcycle and agricultural vehicle markets as well as overall economic conditions could reduce the sales and profitability of our business.
−Removed: The demand for products is largely dependent on the domestic and foreign production of automotive, commercial, off-highway, motorcycle and agricultural vehicles.
+Added: Our business is cyclical and a downturn in the automotive, commercial, off-highway and agricultural vehicle markets as well as overall economic conditions could reduce our sales and profitability.
+Added: The demand for products is largely dependent on the domestic and foreign production of automotive, commercial, off-highway and agricultural vehicles.
The markets for our products have been cyclical, because new vehicle demand is dependent on, among other things, consumer spending and is tied closely to the overall strength of the economy.
−Removed: Because the majority of our products are used principally in the production of vehicles for the automotive, commercial, off-highway, motorcycle and agricultural vehicle markets, our net sales, and therefore our results of operations, are significantly dependent on the general state of the economy and other factors which affect these markets.
−Removed: In 2020, approximately 93% of our net sales were derived from automotive, commercial, off-highway, motorcycle and agricultural vehicle markets while approximately 7% were derived from aftermarket distributors, mass merchandisers and monitoring services markets.
−Removed: Due to the overall global economic conditions in 2020, largely as a result of COVID-19 pandemic, the automotive, commercial, off-highway, motorcycle and agricultural vehicle markets experienced a decline in global customer sales and production volumes.
+Added: Because the majority of our products are used principally in the production of vehicles for the automotive, commercial, off-highway and agricultural vehicle markets, our net sales, and therefore our results of operations, are significantly dependent on the general state of the economy and other factors which affect these markets.
+Added: In 2021, approximately 92% of our net sales were derived from automotive, commercial, off-highway and agricultural vehicle markets while approximately 8% were derived from aftermarket distributors, mass merchandisers and monitoring services markets.
+Added: Due to the overall global economic conditions in 2021 and 2020, largely as a result of COVID-19 pandemic and resulting supply chain issues, the automotive, commercial, off-highway and agricultural vehicle markets experienced a decline in global customer sales and production volumes.
As a result, we have experienced and may continue to experience reductions in orders from our customers in certain regions.
−Removed: An economic downturn or other adverse industry conditions that result in a decline in automotive, commercial, off-highway, motorcycle or agricultural vehicle production, or a material decline in market share by our significant customers, could adversely affect our results of operations and financial condition.
−Removed: Our business is very competitive and increased competition could reduce our sales and profitability.
−Removed: The markets for our products are highly competitive.
−Removed: We compete based on technological innovation, price, quality, performance, service and delivery.
−Removed: Many of our competitors are more diversified and have greater financial and other resources than we do.
−Removed: In addition, with respect to certain products, some of our competitors are divisions of our OEM customers.
−Removed: We cannot assure that our business will not be adversely affected by competition or that we will be able to maintain our profitability if the competitive environment changes.
+Added: An economic downturn or other adverse industry conditions that result in a decline in automotive, commercial, off-highway or agricultural vehicle production, or a material decline in market share by our significant customers, could adversely affect our results of operations and financial condition.
The loss or insolvency of any of our principal customers would adversely affect our future results.
We are dependent on several principal customers for a significant percentage of our net sales.
−Removed: In 2020, our top five customers were Ford Motor Company, Volvo, American Axle, Daimler and FCA Group which comprised 11%, 8%, 6%, 5% and 5% of our net sales, respectively.
+Added: In 2021, our top five customers were Volvo, VW Group, Ford Motor Company, PACCAR and American Axle which comprised 9%, 9%, 8%, 6% and 6% of our net sales, respectively.
In 2021, our top ten customers accounted for 55% of our net sales.
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Our debt obligations could limit our flexibility in managing our business and expose us to risks.
−Removed: As of December 31, 2020, there was $136.0 million in borrowings outstanding on our revolving credit facility, as amended, (the “2019 Credit Facility”).
+Added: As of December 31, 2021, there was $164.0 million in borrowings outstanding on our Fourth Amended and Restated Credit Agreement, as amended, (the “Credit Facility”).
In addition, we are permitted under our Credit Facility to incur additional debt, subject to specified limitations.
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● substantially change the nature of our business.
−Removed: During 2020 we amended the 2019 Credit Facility.
−Removed: As amended the 2019 Credit Facility provides for certain covenant relief restrictions during the Covenant Relief Period (the period ending on the date that the Company delivers a compliance certificate for the quarter ending June 30, 2021 in form and substance satisfactory to the administrative agent).
−Removed: During the Covenant Relief Period:
−Removed: ● the maximum net leverage ratio is suspended;
−Removed: ● the calculation of the minimum interest coverage ratio will exclude second quarter 2020 financial results effective for the quarters ended September 30, 2020 through March 31, 2021;
−Removed: ● the minimum interest coverage ratio of 3.50 is reduced to 2.75 and 3.25 for the quarters ended December 31, 2020 and March 31, 2021, respectively;
−Removed: ● the Company’s liquidity may not be less than $150,000;
−Removed: ● the Company’s aggregate amount of cash and cash equivalents cannot exceed $130,000;
−Removed: ● there are certain restrictions on Restricted Payments (as defined);
−Removed: ● a Permitted Acquisition (as defined) may be not consummated unless otherwise approved in writing by the required lenders.
−Removed: Following the Covenant Relief Period, the agreement governing our 2019 Credit Facility requires us to maintain a maximum leverage ratio of 3.50 to 1.00, and a minimum interest coverage ratio of 3.50 to 1.00 and places a maximum annual limit on capital expenditures.
+Added: On February 28, 2022, we amended the Credit Facility.
+Added: As amended the Credit Facility provides for certain financial covenant relief and additional covenant restrictions during the “Specified Period” (the period from February 28, 2022 until the date that the Company delivers a compliance certificate for the quarter ending March 31, 2023 in form and substance satisfactory to the administrative agent).
+Added: During the Specified Period:
+Added: ● the maximum net leverage ratio is changed to 4.0x for the year ended December 31, 2021, suspended for the quarters ending March 31, 2022 through September 30, 2022 and cannot exceed 4.75 to 1.00 for the quarter ended December 31, 2022 or 3.50 to 1.00 for the quarter ended March 31, 2023;
+Added: ● the minimum interest coverage ratio of 3.50 is reduced to 2.50 for the quarter ended March 31, 2022, 2.25 for the quarter ended June 30, 2022 and 3.00 for the quarters ended September 30, 2022 and December 31, 2022;
+Added: ● an additional condition to drawing on the Credit Facility has been added that restricts borrowings if the Company’s total of 100% of domestic and 65% of foreign cash and cash equivalents exceeds $70.0 million;
+Added: ● there are certain additional restrictions on Restricted Payments (as defined);
+Added: ● a Permitted Acquisition (as defined) may not be consummated unless the net leverage ratio is below 3.50x during the Specified Period.
+Added: Following the Specified Period, the agreement governing our Credit Facility requires us to maintain a maximum leverage ratio of 3.50 to 1.00, and a minimum interest coverage ratio of 3.50 to 1.00.
Our ability to comply with these covenants as well as the negative covenants under the terms of our indebtedness, may be affected by events beyond our control.
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The adverse impacts of the COVID-19 pandemic led to a significant vehicle production slowdown in the first half of 2020, which was followed by increased consumer demand and vehicle production schedules in the second half of 2020.
−Removed: This surge in demand led to a worldwide semiconductor supply shortage at the end of 2020 and into early 2021, as semiconductor suppliers have been unable to rapidly reallocate production lines to serve the transportation industry.
+Added: This surge in demand led to a worldwide semiconductor supply shortage at the end of 2020 and throughout 2021, as semiconductor suppliers have been unable to rapidly reallocate production lines to serve the transportation industry.
In addition, we have experienced longer lead-times, higher costs and delays in procuring other component parts and raw materials.
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We are working closely with our suppliers and customers to minimize any potential adverse impacts, and we continue to closely monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules and any other supply chain inefficiencies that may arise, due to this or any other issue.
−Removed: However, any direct or indirect supply chain disruptions may have an adverse impact on our financial condition, results of operations or cash flows.
+Added: However, any direct or indirect supply chain disruptions may have an adverse impact on our business, financial condition, results of operations or cash flows.
The prices that we can charge our customers are typically predetermined and we bear the risk of costs in excess of our estimates, in addition to the risk of adverse effects resulting from general customer demands for cost reductions and quality improvements.
52 unchanged sentences
customers to shift preferences toward domestically manufactured or branded products and impact the competitive position of our products or prevent us from being able to sell products in certain countries.
−Removed: Our business benefits from free trade agreements, such as the new United States-Mexico-Canada Agreement and the U.S.
+Added: Our business benefits from free trade agreements, such as the United States-Mexico-Canada Agreement and the U.S.
trade relationship with China and Brazil and efforts to withdraw from, or substantially modify such agreements or arrangements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs import or export licensing requirements, exchange controls or new barriers to entry, could adversely impact our production costs, customer demand and our relationships with customers and suppliers.
46 unchanged sentences
We also may be required to indemnify customers or other third parties at significant expense in connection with such claims and actions.
−Removed: Recently, the Company has seen an increase in customer requests for indemnification in connection with third party patent claims related to connectivity-enabled products.
+Added: The Company has seen an increase in customer requests for indemnification in connection with third party patent claims related to connectivity-enabled products.
These claims are being made by patent-holders seeking royalties and who may enter into litigation based on patent infringement allegations.
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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.