UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34365

COMMERCIAL VEHICLE GROUP, INC.

(Exact name of Registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)			41-1990662 (I.R.S. Employer Identification No.)
7800 Walton Parkway New Albany, Ohio (Address of principal executive offices)			43054 (Zip Code)

(614) 289-5360

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value ~~$0.1~~$0.01 per share	CVGI	The NASDAQ Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the Registrant’s common stock, par value $.01 per share, at ~~August 4, 2022~~May 2, 2023 was ~~33,405,217~~33,473,336 shares.

Table of Contents

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q



PART I FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS			1
Condensed Consolidated Statements of Operations			1
Condensed Consolidated Statements of Comprehensive Income (Loss)			2
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statements of Stockholders’ Equity			5
Notes to Condensed Consolidated Financial Statements			6
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			2219
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3124
ITEM 4 – CONTROLS AND PROCEDURES			3124

PART II OTHER INFORMATION			3325

ITEM 1 Legal Proceedings			3325
ITEM 1A Risk Factors			3325
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds			3325
ITEM 3 Defaults Upon Senior Securities			3325
ITEM 4 Mine Safety Disclosures			3425
ITEM 5 Other Information			3425
ITEM 6 Exhibits			3426

SIGNATURE			3527

Table of Contents

PART I. FINANCIAL INFORMATION

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,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(Unaudited) (In thousands, except per share amounts)									(Unaudited) (In thousands, except per share amounts)
Revenues	Revenues	$	250,849	$	257,941	$	495,223	$	503,063	Revenues	$	262,709	$	244,374
Cost of revenues	Cost of revenues	228,970		223,573		447,961		437,574		Cost of revenues	227,500		218,991
Gross profit	Gross profit	21,879		34,368		47,262		65,489		Gross profit	35,209		25,383
Selling, general and administrative expenses	Selling, general and administrative expenses	15,652		18,039		32,651		33,757		Selling, general and administrative expenses	20,565		16,999

Operating income	Operating income	6,227		16,329		14,611		31,732		Operating income	14,644		8,384
Other (income) expense	Other (income) expense	(167)		(285)		874		(941)		Other (income) expense	(202)		1,041
Interest expense	Interest expense	2,118		2,818		4,079		7,859		Interest expense	2,890		1,961
Loss on extinguishment of debt		921		7,155		921		7,155
Income before provision for income taxes	Income before provision for income taxes	3,355		6,641		8,737		17,659		Income before provision for income taxes	11,956		5,382
Provision for income taxes	Provision for income taxes	870		1,546		2,270		4,074		Provision for income taxes	3,256		1,400

Net income	Net income	$	2,485	$	5,095	$	6,467	$	13,585	Net income	$	8,700	$	3,982
Earnings per Common Share:	Earnings per Common Share:									Earnings per Common Share:
Basic	Basic	$	0.08	$	0.16	$	0.20	$	0.43	Basic	$	0.26	$	0.12
Diluted	Diluted	$	0.08	$	0.16	$	0.20	$	0.42	Diluted	$	0.26	$	0.12
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	32,237		31,458		32,152		31,361		Basic	32,868		32,065
Diluted	Diluted	33,039		32,674		33,009		32,654		Diluted	33,182		32,685

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

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,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(Unaudited) (In thousands)									(Unaudited) (In thousands)
Net income	Net income	$	2,485	$	5,095	$	6,467	$	13,585	Net income	$	8,700	$	3,982
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency exchange translation adjustments	Foreign currency exchange translation adjustments	(5,523)		1,488		(5,196)		(584)		Foreign currency exchange translation adjustments	2,557		327
Minimum pension liability, net of tax	Minimum pension liability, net of tax	1,476		387		1,447		673		Minimum pension liability, net of tax	140		(29)
Derivative instrument, net of tax	Derivative instrument, net of tax	(641)		(77)		2,173		(503)		Derivative instrument, net of tax	1,343		2,814
Other comprehensive income (loss)		(4,688)		1,798		(1,576)		(414)
Other comprehensive income										Other comprehensive income	4,040		3,112

Comprehensive income (loss)		$	(2,203)	$	6,893	$	4,891	$	13,171
Comprehensive income										Comprehensive income	$	12,740	$	7,094

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

Table of Contents

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
		(In thousands, except per share amounts)					(In thousands, except per share amounts)
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash	Cash	$	28,500	$	34,958	Cash	$	41,484	$	31,825
Accounts receivable, net of allowances of $485 and $243, respectively		219,312		174,472
Accounts receivable, net of allowances of $192 and $306, respectively						Accounts receivable, net of allowances of $192 and $306, respectively	171,878		152,626
Inventories	Inventories	150,025		141,045		Inventories	139,553		142,542

Other current assets	Other current assets	19,066		20,201		Other current assets	20,112		12,582
Total current assets	Total current assets	416,903		370,676		Total current assets	373,027		339,575
Property, plant and equipment, net	Property, plant and equipment, net	65,275		63,126		Property, plant and equipment, net	68,939		67,805

Intangible assets, net	Intangible assets, net	16,416		18,283		Intangible assets, net	13,791		14,620
Deferred income taxes	Deferred income taxes	24,470		24,108		Deferred income taxes	10,996		12,275
Other assets, net	Other assets, net	33,508		31,500		Other assets, net	31,087		35,993
Total assets	Total assets	$	556,572	$	507,693	Total assets	$	497,840	$	470,268
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	125,450	$	101,915	Accounts payable	$	119,057	$	122,091

Accrued liabilities and other	Accrued liabilities and other	58,337		50,840		Accrued liabilities and other	47,340		42,809
Current portion of long-term debt		8,750		9,375
Current portion of long-term debt and short-term debt						Current portion of long-term debt and short-term debt	16,399		10,938
Total current liabilities	Total current liabilities	192,537		162,130		Total current liabilities	182,796		175,838
Long-term debt	Long-term debt	197,157		185,581		Long-term debt	149,221		141,499

Pension and other post-retirement benefits	Pension and other post-retirement benefits	7,043		9,905		Pension and other post-retirement benefits	8,470		8,428
Other long-term liabilities	Other long-term liabilities	26,381		23,424		Other long-term liabilities	23,564		24,463
Total liabilities	Total liabilities	423,118		381,040		Total liabilities	364,051		350,228
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value (5,000,000 shares authorized; no shares issued and outstanding)	Preferred stock, $0.01 par value (5,000,000 shares authorized; no shares issued and outstanding)	$	—	$	—	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; 32,447,768 and 32,034,592 shares issued and outstanding respectively)		325		321
Treasury stock, at cost: 1,832,518 and 1,708,981 shares, respectively		(14,084)		(13,172)
Common stock, $0.01 par value (60,000,000 shares authorized; 32,991,468 and 32,826,852 shares issued and outstanding respectively)						Common stock, $0.01 par value (60,000,000 shares authorized; 32,991,468 and 32,826,852 shares issued and outstanding respectively)	330		328
Treasury stock, at cost: 2,009,162 and 1,899,996 shares, respectively						Treasury stock, at cost: 2,009,162 and 1,899,996 shares, respectively	(15,278)		(14,514)
Additional paid-in capital	Additional paid-in capital	258,384		255,566		Additional paid-in capital	263,142		261,371
Retained deficit	Retained deficit	(67,157)		(73,624)		Retained deficit	(86,895)		(95,595)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(44,014)		(42,438)		Accumulated other comprehensive loss	(27,510)		(31,550)
Total stockholders’ equity	Total stockholders’ equity	133,454		126,653		Total stockholders’ equity	133,789		120,040
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	556,572	$	507,693	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	497,840	$	470,268

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

Table of Contents

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
		(Unaudited)					(Unaudited)
		(In thousands)					(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	6,467	$	13,585	Net income	$	8,700	$	3,982
Adjustments to reconcile net income to cash flows from operating activities:	Adjustments to reconcile net income to cash flows from operating activities:					Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	9,006		9,308		Depreciation and amortization	4,262		4,432

Noncash amortization of debt financing costs	Noncash amortization of debt financing costs	199		781		Noncash amortization of debt financing costs	76		113

Pension cash reversion						Pension cash reversion	2,942		—

Payment in kind interest expense		—		2,254
Share-based compensation expense		2,818		3,165
Shared-based compensation expense						Shared-based compensation expense	1,771		1,117
Deferred income taxes	Deferred income taxes	(1,454)		1,819		Deferred income taxes	(467)		532
Non-cash loss (income) on derivative contracts	Non-cash loss (income) on derivative contracts	34		(424)		Non-cash loss (income) on derivative contracts	(658)		599
Loss on extinguishment of debt		921		7,155
Settlement of derivative contract		3,900		—

Change in other operating items:	Change in other operating items:					Change in other operating items:
Accounts receivable	Accounts receivable	(48,157)		(50,839)		Accounts receivable	(18,429)		(36,212)
Inventories	Inventories	(11,802)		(37,043)		Inventories	3,594		(17,502)
Prepaid expenses	Prepaid expenses	(2,743)		(4,931)		Prepaid expenses	(2,694)		(2,599)
Accounts payable	Accounts payable	26,191		28,874		Accounts payable	(4,340)		27,998

Other operating activities, net	Other operating activities, net	10,113		1,484		Other operating activities, net	5,301		(3,858)
Net cash used in operating activities		(4,507)		(24,812)
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	58		(21,398)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(8,616)		(6,944)		Purchases of property, plant and equipment	(3,321)		(3,590)
Proceeds from disposal/sale of property, plant and equipment		—		35

Net cash used in investing activities	Net cash used in investing activities	(8,616)		(6,909)		Net cash used in investing activities	(3,321)		(3,590)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan facility		30,625		150,000

Repayment of term loan facility	Repayment of term loan facility	(1,875)		—		Repayment of term loan facility	(2,188)		(1,875)
Repayment of 2023 term loan facility principal		—		(152,654)
Borrowings under revolving credit facility		65,200		35,500

Borrowing under revolving credit facility						Borrowing under revolving credit facility	11,000		55,200
Repayment of revolving credit facility	Repayment of revolving credit facility	(83,600)		—		Repayment of revolving credit facility	—		(24,400)
Borrowings under ABL revolving credit facility		—		11,300
Repayment of ABL revolving credit facility		—		(11,300)

Surrender of common stock by employees	Surrender of common stock by employees	(912)		—		Surrender of common stock by employees	(764)		(464)
Debt extinguishment payments and early payment fees on debt		—		(3,031)
Debt issuance and amendment costs		(648)		(2,333)
Contingent Consideration payment		—		(5,000)

Other financing activities	Other financing activities	(131)		(241)		Other financing activities	4,329		(55)
Net cash provided by financing activities	Net cash provided by financing activities	8,659		22,241		Net cash provided by financing activities	12,377		28,406

EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH	EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH	(1,994)		(52)		EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH	545		(168)

NET INCREASE (DECREASE) IN CASH		(6,458)		(9,532)
NET INCREASE IN CASH						NET INCREASE IN CASH	9,659		3,250

CASH:	CASH:					CASH:
Beginning of period	Beginning of period	34,958		50,503		Beginning of period	31,825		34,958
End of period	End of period	$	28,500	$	40,971	End of period	$	41,484	$	38,208

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

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, except per share amounts)
Balance - December 31, 2020		31,249,811	$	313	$	(11,893)	$	249,312	$	(97,356)	$	(45,006)	$	95,370
Share-based compensation expense		132,034	2		—		965		—		—		967
Total comprehensive income (loss)		—	—		—		—		8,490		(2,212)		6,278
Balance - March 31, 2021		31,381,845	$	315	$	(11,893)	$	250,277	$	(88,866)	$	(47,218)	$	102,615
Share-based compensation expense		187,904	1		(73)		2,201		—		—		2,129
Total comprehensive income		—	—		—		—		5,095		1,798		6,893
Balance - June 30, 2021		31,569,749	$	316	$	(11,966)	$	252,478	$	(83,771)	$	(45,420)	$	111,637

																Common Stock			Treasury Stock		Additional Paid In Capital		Retained Deficit		Accumulated Other Comp. Loss		Total CVG Stockholders’ Equity
																Shares	Amount
																(Unaudited) (In thousands, except per share amounts)
Balance - December 31, 2021	Balance - December 31, 2021	32,034,592	$	321	$	(13,172)	$	255,566	$	(73,624)	$	(42,438)	$	126,653	Balance - December 31, 2021	32,034,592	$	321	$	(13,172)	$	255,566	$	(73,624)	$	(42,438)	$	126,653
Share-based compensation expense	Share-based compensation expense	122,618	1		(464)		1,117		—		—		654		Share-based compensation expense	122,618	1		(464)		1,117		—		—		654
Total comprehensive income	Total comprehensive income	—	—		—		—		3,982		3,112		7,094		Total comprehensive income	—	—		—		—		3,982		3,112		7,094
Balance - March 31, 2022	Balance - March 31, 2022	32,157,210	$	322	$	(13,636)	$	256,683	$	(69,642)	$	(39,326)	$	134,401	Balance - March 31, 2022	32,157,210	$	322	$	(13,636)	$	256,683	$	(69,642)	$	(39,326)	$	134,401
Share-based compensation expense		290,558	3		(448)		1,701		—		—		1,256
Total comprehensive income (loss)		—	—		—		—		2,485		(4,688)		(2,203)
Balance - June 30, 2022		32,447,768	$	325	$	(14,084)	$	258,384	$	(67,157)	$	(44,014)	$	133,454

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

Share-based compensation expense															Share-based compensation expense	164,616	2		(764)		1,771		—		—		1,009

Total comprehensive income															Total comprehensive income	—	—		—		—		8,700		4,040		12,740
Balance - March 31, 2023															Balance - March 31, 2023	32,991,468	$	330	$	(15,278)	$	263,142	$	(86,895)	$	(27,510)	$	133,789

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

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

At Commercial Vehicle Group, Inc. and its subsidiaries, ~~we deliver real solutions~~is a global provider of systems, assemblies and components to ~~complex design, engineering~~the global commercial vehicle market, the electric vehicle market, and ~~manufacturing problems across a range of global industries by innovating, constantly adding value, and treating our customer's bottom line as if it were our own.~~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, ~~Belgium,~~ Czech Republic, Ukraine, Thailand, India, Australia and ~~Australia.~~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 customer. We believe our products are used by a majority of the North American Commercial Truck ~~markets,~~manufacturers, many construction vehicle ~~OEMs~~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, ~~2021~~2022 (the ~~"2021~~"2022 Form 10-K"), which includes a complete set of footnote disclosures, including the Company's significant accounting policies.

2. Recently Issued Accounting Pronouncements

~~In March 2020, the Financial Accounting Standards Board ("FASB")~~

New accounting pronouncements that have been issued ~~ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". The ASU provides optional expedients~~but not yet effective are currently being evaluated and ~~exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria~~at this time are met. Also, in January 2021, the FASB issued ASU No. 2021-01 "Reference Rate Reform (Topic 848): Scope", to clarify that certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company will apply the guidance to impacted transactions during the transition period. The Company does not ~~expect the adoption of this standard~~expected to have a material impact on ~~the Company’s Consolidated Financial Statements.~~our financial position or results of operations.

Table of Contents

3. Revenue Recognition

We had outstanding customer accounts receivable, net of allowances, of ~~$219.3~~$171.9 million as of ~~June 30, 2022~~March 31, 2023 and ~~$174.5~~$152.6 million as of December 31, ~~2021.~~2022. We generally do not have other assets or liabilities associated with customer arrangements.

Revenue Disaggregation - The following is the composition, by product category, of our revenues:

Three Months Ended June 30, 2022
Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total
Seats $ 65,304 $ — $ — $ 20,884 $ 86,188
Electrical wire harnesses, panels and assemblies — 5,397 47,345 1,813 54,555
Trim 47,469 — — — 47,469
Warehouse Automation — 23,150 — — 23,150
Cab structures 28,787 — — — 28,787
Mirrors, wipers and controls 1,225 — — 9,475 10,700
Total $ 142,785 $ 28,547 $ 47,345 $ 32,172 $ 250,849


	Three Months Ended March 31, 2023
	Vehicle Solutions		Electrical Systems		Aftermarket & Accessories		Industrial Automation		Total
Seats	$	76,990	$	—	$	19,164	$	—	$	96,154
Electrical wire harnesses, panels and assemblies	—		54,749		3,786		—		58,535
Trim	46,423		—		2,873		—		49,296
Industrial Automation	—		—		—		9,747		9,747
Cab structures	33,903		—		998		—		34,901
Mirrors, wipers and controls	3,268		—		10,808		—		14,076
Total	$	160,584	$	54,749	$	37,629	$	9,747	$	262,709


		Three Months Ended June 30, 2021											Three Months Ended March 31, 2022
		Vehicle Solutions		Warehouse Automation		Electrical Systems		Aftermarket and Accessories		Total			Vehicle Solutions		Electrical Systems		Aftermarket & Accessories		Industrial Automation		Total
Seats	Seats	$	68,958	$	—	$	—	$	13,517	$	82,475	Seats	$	69,808	$	—	$	15,788	$	—	$	85,596
Electrical wire harnesses, panels and assemblies	Electrical wire harnesses, panels and assemblies	614		2,784		43,842		2,937		50,177		Electrical wire harnesses, panels and assemblies	—		39,876		3,321		1,795		44,992
Trim	Trim	39,466		—		—		749		40,215		Trim	44,758		—		1,296		—		46,054
Warehouse Automation		—		51,540		—		—		51,540
Industrial Automation												Industrial Automation	—		—		—		32,331		32,331
Cab structures	Cab structures	19,454		—		—		2,234		21,688		Cab structures	25,591		—		—		—		25,591
Mirrors, wipers and controls	Mirrors, wipers and controls	1,738		—		353		9,755		11,846		Mirrors, wipers and controls	—		—		9,810		—		9,810
Total	Total	$	130,230	$	54,324	$	44,195	$	29,192	$	257,941	Total	$	140,157	$	39,876	$	30,215	$	34,126	$	244,374

Six Months Ended June 30, 2022
Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total
Seats $ 135,112 $ — $ — $ 36,671 $ 171,783
Electrical wire harnesses, panels and assemblies — 7,193 87,222 5,135 99,550
Trim 92,227 — — 1,296 93,523
Warehouse Automation — 55,480 — — 55,480
Cab structures 54,377 — — — 54,377
Mirrors, wipers and controls 1,225 — — 19,285 20,510
Total $ 282,941 $ 62,673 $ 87,222 $ 62,387 $ 495,223

~~Table of Contents~~

Six Months Ended June 30, 2021
Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Total
Seats $ 136,459 $ — $ — $ 27,594 $ 164,053
Electrical wire harnesses, panels and assemblies 1,309 6,035 89,970 6,409 103,723
Trim 76,223 — — 1,309 77,532
Warehouse Automation — 92,661 — — 92,661
Cab structures 37,367 — — 4,981 42,348
Mirrors, wipers and controls 3,214 — 687 18,845 22,746
Total $ 254,572 $ 98,696 $ 90,657 $ 59,138 $ 503,063

4. Debt

Debt consisted of the following:


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Term loan facility	Term loan facility	$	175,000	$	146,250	Term loan facility	$	150,312	$	152,500
Revolving credit facility	Revolving credit facility	31,000		49,400		Revolving credit facility	11,000		—
Unamortized issuance costs and discount		(93)		(694)
China credit facility						China credit facility	4,368		—
Unamortized discount and issuance costs						Unamortized discount and issuance costs	(60)		(63)
		$	205,907	$	194,956		$	165,620	$	152,437
Less: current portion		(8,750)		(9,375)
Less: current portion of long-term debt and short-term debt						Less: current portion of long-term debt and short-term debt	(16,399)		(10,938)
Total long-term debt, net of current portion	Total long-term debt, net of current portion	$	197,157	$	185,581	Total long-term debt, net of current portion	$	149,221	$	141,499

Credit Agreement

On April 30, 2021, the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”) between, among others, Bank of America, N.A. as administrative agent (the “Administrative Agent”) and other lenders party thereto (the “Lenders”) pursuant to which the Lenders made available a $150 million Term Loan Facility (the “Term Loan Facility”) and a $125 million Revolving Credit Facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”).Subject to the terms of the Credit Agreement, the Revolving Credit Facility includes a $10 million swing line sublimit and a $10 million letter of credit sublimit. The Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the “Incremental Facilities”), in a

Table of Contents

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

The proceeds of the Credit Facilities were used, together with cash on hand of the Company, to (a) fund the redemption, satisfaction and discharge of all of the Company’s outstanding secured credit facility due 2023 (the “2023 Term Loan Facility”) issued pursuant to a term facility agreement (the “Term Facility Agreement”) between, among others, Bank of America, N.A. as administrative agent and other lender parties thereto, (b) fund the redemption, satisfaction and discharge of all of the Company’s asset-based revolving credit facility (the “ABL Revolving Credit Facility”) issued pursuant to a facility agreement (the “ABL Facility Agreement”) between, among others, Bank of America, N.A. as agent and certain financial institutions as lenders, (c) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Credit Agreement, and (d) for working capital and other lawful corporate purposes of the Company and its subsidiaries.

On May 12, 2022, the Company and certain of its subsidiaries entered into a second amendment (the “Amendment”) to itsCredit Agreement pursuant to which the Lenders upsized the existing ~~term loan facility~~Term Loan Facility to $175 million in aggregate principal amount and increased the ~~revolving credit facility~~Revolving Credit Facility commitments by $25 million to an aggregate of $150 million in revolving credit facility commitments. The Revolving Credit Facility includes a $10 million swing line sublimit and a $10 million letter of credit sublimit. The ~~Amended~~amended Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the “Incremental Facilities”), in a maximum aggregate amount of (a) up to the date of receipt of financial statements for the fiscal quarter ending June 30, 2022, $75 million, and (b) thereafter, (i) $75 million less the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50:1.0. Further, separate from the Company’s annual $35 million capital spending cap, a one-time $45 million capital project basket was

~~Table of Contents~~

included in the ~~amendment.~~Amendment. All other key provisions, including the $75 million accordion, acquisition holiday, and other baskets remain unchanged. The Credit Facilities mature on May 12, 2027 (the “Maturity Date”).

The Amendment resulted in a loss on extinguishment of debt of $0.9 million, including $0.6 million non-cash write off relating to deferred financing costs and unamortized discount of the Term Loan Facility and $0.3 million of other fees associated with the ~~amended debt,~~Amendment, recorded in our Consolidated Statements of Operations for the ~~six~~twelve months ended ~~June 30,~~December 31, 2022.

The proceeds of the Credit Facilities will be used, together with cash on hand of the Company, to (a) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Amended Credit Agreement and (b) for working capital and other lawful corporate purposes of the Company and its subsidiaries.

At ~~June 30, 2022,~~March 31, 2023, we had ~~$31.0~~$11.0 million of borrowings under the Revolving Credit Facility, outstanding letters of credit of $1.2 million and availability of ~~$117.8~~$137.8 million. Combined with availability under our newly established foreign credit facilities of approximately $8.7 million, total consolidated availability was $146.5 million as of March 31, 2023. The unamortized deferred financing fees associated with the Revolving Credit Facility of ~~$1.4~~$1.2 million and $1.3 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, are being amortized over the remaining life of the Credit Agreement. At December 31, ~~2021,~~2022, we had ~~$49.4 million of~~no borrowings under the Revolving Credit Facility and we had outstanding letters of credit of ~~$1.4~~$1.2 million.

Interest rates and fees

Amounts outstanding under the Credit Facilities and the commitment fee payable in connection with the Credit Facilities accrue interest at a per annum rate equal to (at the Company’s option) the base rate or the Term Secured Overnight Financing Rate ("SOFR"), including a credit spread adjustment, plus a rate which will vary according to the Consolidated Total Leverage Ratio as set forth in the most recent compliance certificate received by the Administrative Agent, as set out in the following table:


Pricing Tier	Pricing Tier	Consolidated Total Leverage Ratio	Commitment Fee	Letter of Credit Fee	Eurodollar Rate Loans	Base Rate Loans	Pricing Tier	Consolidated Total Leverage Ratio	Commitment Fee	Letter of Credit Fee	Term SOFR Loans	Base Rate Loans
I	I	> 3.50 to 1.00	0.35%	2.75%	2.75%	1.75%	I	> 3.50 to 1.00	0.35%	2.75%	2.75%	1.75%
II	II	< 3.50 to 1.00 but > 2.75 to 1.00	0.30%	2.50%	2.50%	1.50%	II	< 3.50 to 1.00 but > 2.75 to 1.00	0.30%	2.50%	2.50%	1.50%
III	III	< 2.75 to 1.00 but > 2.00 to 1.00	0.25%	2.25%	2.25%	1.25%	III	< 2.75 to 1.00 but > 2.00 to 1.00	0.25%	2.25%	2.25%	1.25%
IV	IV	< 2.00 to 1.00 but > 1.50 to 1.00	0.20%	2.00%	2.00%	1.00%	IV	< 2.00 to 1.00 but > 1.50 to 1.00	0.20%	2.00%	2.00%	1.00%
V	V	< 1.50 to 1.00	0.15%	1.75%	1.75%	0.75%	V	< 1.50 to 1.00	0.15%	1.75%	1.75%	0.75%

Guarantee and Security

All obligations under the Credit Agreement and related documents are unconditionally guaranteed by each of the Company’s existing and future direct and indirect wholly owned material domestic subsidiaries, subject to certain exceptions (the “Guarantors”). All obligations of the Company under the Credit Agreement and the guarantees of those obligations are secured by a first priority pledge of substantially all of the assets of the Company and of the Guarantors, subject to certain exceptions. The property pledged by the Company and the Guarantors includes a first priority pledge of all of the equity interests owned by the Company and the Guarantors in their respective domestic subsidiaries and a first priority pledge of the equity interests owned by the Company and the Guarantors in certain foreign subsidiaries, in each case, subject to certain exceptions.

Covenants and other terms

The Credit Agreement contains customary restrictive covenants, including, without limitation, limitations on the ability of the Company and its subsidiaries to incur additional debt and guarantees; grant certain liens on assets; pay dividends or make

Table of Contents

certain other distributions; make certain investments or acquisitions; dispose of certain assets; make payments on certain indebtedness; merge, combine with any other person or liquidate; amend organizational documents; make material changes in accounting treatment or reporting practices; enter into certain restrictive agreements; enter into certain hedging agreements; engage in transactions with affiliates; enter into certain employee benefit plans; make acquisitions; and other matters customarily included in senior secured loan agreements.

The Credit Agreement also contains customary reporting and other affirmative covenants, as well as customary events of default, including, without limitation, nonpayment of obligations under the Credit Facilities when due; material inaccuracy of representations and warranties; violation of covenants in the Credit Agreement and certain other documents executed in connection therewith; breach or default of agreements related to material debt; revocation or attempted revocation of guarantees; denial of the validity or enforceability of the loan documents or failure of the loan documents to be in full force and effect; certain material judgments; certain events of bankruptcy or insolvency; certain Employee Retirement Income Securities Act events; and a change in control of the Company. Certain of the defaults are subject to exceptions, materiality qualifiers, grace periods and baskets customary for credit facilities of this type.

~~Table of Contents~~

The Credit Agreement includes (a) a minimum consolidated fixed charge coverage ratio of 1.20:1.0, and (b) a maximum consolidated total leverage ratio of 3.75:1.0 (which ~~will be~~was subject to ~~step-downs~~step-down to 3.50:1.0 at the end of the fiscal quarter ending March 31, 2023; and will be subject to step-downs to 3.25:1.0 at the end of the fiscal quarter ending June 30, 2023; and to 3.00:1.0 for each fiscal quarter on and after the fiscal quarter ending September 30, 2023).

We were in compliance with the covenants as of ~~June 30, 2022.~~March 31, 2023.

Repayment and prepayment

The Credit Agreement requires the Company to make quarterly amortization payments to the Term Loan Facility at an annualized rate of the loans under the Term Loan Facility for every year as follows: 5.0%, 7.5%, 10.0%, 12.5% and ~~15%~~15.0%. The Credit Agreement also requires all outstanding amounts under the Credit Facilities to be repaid in full on the Maturity Date.

The Credit Agreement requires mandatory prepayments from the receipt of proceeds of dispositions or debt issuance, subject to certain exceptions and the Company's ability to re-invest and use proceeds towards acquisitions permitted by the Credit Agreement.

Voluntary prepayments of amounts outstanding under the Credit Facilities are permitted at any time, without premium or penalty.

~~Term Loan and Security Agreement~~

~~On April 12, 2017,~~Foreign Facilities

In the ~~Company entered into~~quarter ended March 31, 2023, we established a credit facility in China with availability of approximately $13.1 million (denominated in the ~~$175.0 million 2023 Term Loan Facility, maturing on April 12, 2023, pursuant~~local currency) consisting of a line of credit which is subject to ~~a term loan and security agreement~~annual renewal (the ~~“TLS Agreement”~~"China Credit Facility"). ~~On April 30, 2021,~~We utilize the ~~2023 Term Loan Facility was fully repaid and terminated as described below.~~

~~ABL Revolving Credit Facility~~

On September 18, 2019, the Company entered into an amendment of the Third Amended and Restated Loan and Security Agreement (the “Third ARLS Agreement”), dated as of April 12, 2017, which governed the Company’s ABL Revolving Credit Facility.

On March 1, 2021, the Company and certain of its subsidiaries entered into Amendment No. 3, which amended the terms of the Third ARLS Agreement, among other things, to extend the maturity date of the ABL RevolvingChina Credit Facility to ~~March 1, 2026~~meet local working capital demands, fund letters of credit and ~~to remove~~bank guarantees, and support other short-term cash requirements in our China operations. We had $4.4 million and $0 million outstanding under the ~~condition that the first $7.0 million of the $90.0 million Revolver Commitments are available as a first-in, last-out facility.~~

~~The Third ARLS Agreement, as amended, also allowed the Company to increase the size of the ABL Revolving~~China Credit Facility ~~by up to $50.0~~as of March 31, 2023 and December 31, 2022, respectively, which are included in Current portion of long-term debt and short-term debt on the Condensed Consolidated Balance Sheets. At March 31, 2023, we had $8.7 million ~~with the consent of Lenders providing the increase in the ABL Revolving Credit Facility. On April 30, 2021, the ABL Revolving Credit Facility was fully repaid and terminated as described below.~~

~~Termination of TLS Agreement and Third ARLS Agreement~~

Effective on April 30, 2021, the Company issued a notice of redemption in respect of its 2023 Term Loan Facility and the ABL Revolving Credit Facility and deposited with the Bank of America, N.A. as Administrative Agentavailability under the ~~TLS Agreement and the Third ARLS Agreement proceeds from the~~China Credit Facilities, together with cash on hand in an amount sufficient to discharge the Company’s obligations under the TLS Agreement and the Third ARLS Agreement and respective related agreements. All amounts under the 2023 Term Loan Facility and ABL Revolving Credit Facility were repaid and discharged in full on April 30, 2021 and the TLS Agreement and Third ARLS Agreement were terminated.

The discharge resulted in a loss on extinguishment of debt of $7.2 million, including $3.7 million non-cash write off relating to deferred financing costs and unamortized discount of the 2023 Term Loan Facility, a voluntary repayment premium of $3.0 million, and $0.5 million of other fees associated with the new debt, recorded in our Consolidated Statements of Operations for the six months ended June 30, 2021.Facility.

Cash Paid for Interest

For the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ cash payments for interest were ~~$3.5~~$3.2 million and ~~$5.4~~$1.6 million, respectively.

109

5. Intangible Assets

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


			June 30, 2022						December 31, 2021								March 31, 2023						December 31, 2022
		Weighted- Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted- Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:															Definite-lived intangible assets:
Trademarks/tradenames	Trademarks/tradenames	22 years	$	11,509	$	(5,202)	$	6,307	$	11,573	$	(5,043)	$	6,530	Trademarks/tradenames	22 years	$	11,474	$	(5,453)	$	6,021	$	11,487	$	(5,377)	$	6,110
Customer relationships	Customer relationships	15 years	14,430		(8,791)		5,639		14,770		(8,499)		6,271		Customer relationships	15 years	14,200		(9,381)		4,819		14,161		(9,109)		5,052
Technical know-how	Technical know-how	5 years	9,790		(5,466)		4,324		9,790		(4,487)		5,303		Technical know-how	5 years	9,790		(6,935)		2,855		9,790		(6,445)		3,345
Covenant not to compete	Covenant not to compete	5 years	330		(184)		146		330		(151)		179		Covenant not to compete	5 years	330		(234)		96		330		(217)		113
			$	36,059	$	(19,643)	$	16,416	$	36,463	$	(18,180)	$	18,283			$	35,794	$	(22,003)	$	13,791	$	35,768	$	(21,148)	$	14,620

The aggregate intangible asset amortization expense was $0.8 million for the three months ended March 31, 2023 and $0.9 million for the three months ended ~~June 30,~~March 31, 2022, ~~and 2021. The aggregate intangible asset amortization expense was $1.7 million for the six months ended June 30, 2022 and 2021.~~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 manage our risk for transactions denominated in Mexican Pesos and Czech Crown, ~~and Ukrainian Hryvnia,~~ we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed Consolidated Balance Sheets at fair value. The ~~hedge contracts for transactions denominated in Mexican Pesos are designated as cash flow hedge instruments and~~ 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, 2022, the~~March 31, 2023, hedge contracts for transactions denominated in ~~Ukrainian Hryvnia and~~ Czech Crown were not designated as a hedging instruments; therefore, they are marked-to-market and the fair value of ~~the~~ agreements is recorded in the Condensed Consolidated Balance Sheets with the offsetting gains and losses recognized in other (income) ~~expense. Settlements of hedge transactions are~~expense and recognized in cost of revenues in the period the related hedge transactions are settled in the Condensed Consolidated Statements of ~~Operations in the period they are settled.~~Operations.

Interest Rate ~~Swaps.~~ 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 ~~Condensed Consolidated Statements~~consolidated statements of ~~Operations.~~operations.

During the second quarter ended June 30, 2022, the Company entered into transactions to cash settle existing interest rate swaps and received proceeds of $3.9 million. The gain on the swap settlement has been recorded in Other comprehensive income (loss) and will be recognized over the life of the settled swaps. Following the settlement of the existing interest rate swaps, we entered into a new interest rate swap agreement to align with the SOFR rate and maturity date of the Credit Agreement.

~~Contingent Consideration.~~ As a result of the acquisition of First Source Electronics, LLC (“FSE”) on September 17, 2019, the Company agreed to pay up to $10.8 million in contingent milestone payments (“Contingent Consideration”). The Contingent Consideration is payable based on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") thresholds over the periods from (a) September 18, 2019 through September 17, 2020, (b) September 18, 2019 through March 17, 2021, (c) September 18, 2019 through September 17, 2022 and (d) March 18, 2021 through September 17, 2022. The payment amount will be determined on a sliding scale for reaching between 90% and 100% of the respective EBITDA targets. The fair value for the milestone payments is based on a Monte Carlo simulation utilizing forecasted EBITDA through September 17, 2022. As of June 30, 2022, the remaining undiscounted Contingent Consideration payment is estimated at $4.8 million and the fair value is $4.6 million, which is presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other. A payment of $5.0 million was made during the second quarter of 2021 based on achievement of the second EBITDA threshold.

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


		June 30, 2022								December 31, 2021									March 31, 2023								December 31, 2022
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:	Assets:																	Assets:
Foreign exchange contract	Foreign exchange contract	$	1,650	$	—	$	1,650	$	—	$	1,375	$	—	$	1,375	$	—	Foreign exchange contract	$	3,109	$	—	$	3,109	$	—	$	—	$	—	$	—	$	—
Interest rate swap agreement	Interest rate swap agreement	$	278	$	—	$	278	$	—	$	241	$	—	$	241	$	—	Interest rate swap agreement	$	954	$	—	$	954	$	—	$	1,849	$	—	$	1,849	$	—
Liabilities:	Liabilities:																	Liabilities:
Foreign exchange contract	Foreign exchange contract	$	1	$	—	$	1	$	—	$	—	$	—	$	—	$	—	Foreign exchange contract	$	—	$	—	$	—	$	—	$	356	$	—	$	356	$	—
Interest rate swap agreement		$	1,694	$	—	$	1,694	$	—	$	498	$	—	$	498	$	—
Contingent consideration		$	4,647	$	—	$	—	$	4,647	$	4,409	$	—	$	—	$	4,409

~~Details of the changes in value for the Contingent Consideration that is measured using significant unobservable inputs (Level 3) are as follows:~~


	~~Amount~~
~~Contingent consideration liability balance at December 31, 2021~~	$	~~4,409~~
~~Change in fair value~~	~~238~~

~~Contingent consideration liability balance at June 30, 2022~~	$	~~4,647~~

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

June 30, 2022 December 31, 2021
U.S. $
Equivalent U.S. $
Equivalent
Fair Value U.S. $
Equivalent U.S. $
Equivalent
Fair Value
Commitments to buy or sell currencies $ 24,743 $ 21,520 $ 49,601 $ 48,712


	March 31, 2023				December 31, 2022
	U.S. $ Equivalent		U.S. Equivalent Fair Value		U.S. $ Equivalent		U.S. Equivalent Fair Value
Commitments to buy or sell currencies	$	41,230	$	43,553	$	55,220	$	53,847

The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets:


		Derivative Asset										Derivative Asset
		Balance Sheet Location		Fair Value								Balance Sheet Location			Fair Value
			June 30, 2022			December 31, 2021								March 31, 2023			December 31, 2022

Foreign exchange contracts	Foreign exchange contracts		Other current assets			$	1,650			$	1,375		Foreign exchange contracts	Other current assets			$	3,109			$	—
Interest rate swap agreement										Interest rate swap agreement		Other assets, net			$	954			$	1,849

Interest rate swap agreement		Accrued liabilities and other		$	—			$	241

Derivative Liability
Balance Sheet
Location Fair Value
June 30, 2022 December 31, 2021
Foreign exchange contracts Accrued liabilities and other $ 1 $ —
Interest rate swap agreement Other long-term liabilities $ 1,133 $ —
Interest rate swap agreement Accrued liabilities and other $ 283 $ 498

Derivative Liability

Balance Sheet
Location

Fair Value

March 31, 2023

December 31, 2022

Foreign exchange contracts

Accrued liabilities and other

—

356

Derivative Equity
Balance Sheet
Location Fair Value
June 30, 2022 December 31, 2021
Derivative instruments Accumulated other comprehensive (loss) income $ 2,930 $ 757

Derivative Equity

Balance Sheet
Location

Fair Value

March 31, 2023

December 31, 2022

Derivative instruments

Accumulated other comprehensive (loss) income

6,115

3,777

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,						Three Months Ended March 31,
			2022		2021		2022		2021				2023		2022
		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)					Location of Gain (Loss) on Derivatives Recognized in Income	Amount of Gain (Loss) on Derivatives Recognized in Income
Foreign exchange contracts	Foreign exchange contracts	Cost of revenues	$	844	$	(540)	$	1,300	$	(847)	Foreign exchange contracts	Cost of revenues	$	451	$	456
Interest rate swap agreements		Interest and other expense	$	(84)	$	4	$	(277)	$	6
Interest rate swap agreement											Interest rate swap agreement	Interest expense	$	454	$	(193)
Foreign exchange contracts	Foreign exchange contracts	Other (income) expense	$	637	$	(41)	$	(34)	$	(223)	Foreign exchange contracts	Other (income) expense	$	469	$	(671)

We consider the impact of our credit risk on the fair value of the contracts, as well as our ability to honor obligations under the contract.

Other Fair Value Measurements

The fair value of long-term debt obligations is based on a fair value model utilizing observable inputs. Based on these inputs, our long-term debt fair value as disclosed is classified as Level 2. The carrying amounts and fair values of our long-term debt obligations are as follows:


											March 31, 2023				December 31, 2022
		June 30, 2022				December 31, 2021					Carrying Amount		Fair Value		Carrying Amount		Fair Value
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term loan and security agreement 1	Term loan and security agreement 1	$	174,907	$	164,188	$	145,556	$	142,265	Term loan and security agreement 1	$	150,252	$	144,052	$	152,437	$	143,477
Revolving credit facility 1		$	31,000	$	31,000	$	49,400	$	49,400
Revolving credit facility										Revolving credit facility	$	11,000	$	11,000	$	—	$	—

1.Presented in the Condensed Consolidated Balance Sheets asare the current portion of long-term debt of ~~$8.8~~$12.0 million and long-term debt of ~~$197.2~~$149.2 million as of ~~June 30, 2022~~March 31, 2023, and current portion of long-term debt of ~~$9.4~~$10.9 million and long-term debt of ~~$185.6~~$141.5 million as of December 31, ~~2021.~~2022.

~~Table of Contents~~

7. Leases

The components of lease expense are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Operating lease cost	Operating lease cost	$	2,550	$	2,474	$	5,128	$	4,974	Operating lease cost	$	2,348	$	2,578

Finance lease cost	Finance lease cost	71		93		147		193		Finance lease cost	47		76
Short-term lease cost	Short-term lease cost	913		1,602		2,438		2,972		Short-term lease cost	1,931		1,525
Total lease expense	Total lease expense	$	3,534	$	4,169	$	7,713	$	8,139	Total lease expense	$	4,326	$	4,179

Supplemental balance sheet information related to leases is as follows:


		Balance Sheet Location	June 30, 2022		December 31, 2021			Balance Sheet Location	March 31, 2023		December 31, 2022
Operating Leases	Operating Leases						Operating Leases
Right-of-use assets, net	Right-of-use assets, net	Other assets, net	$	28,269	$	26,116	Right-of-use assets, net	Other assets, net	$	25,711	$	26,372

Current liabilities	Current liabilities	Accrued liabilities and other	7,480		9,048		Current liabilities	Accrued liabilities and other	6,537		7,421
Non-current liabilities	Non-current liabilities	Other long-term liabilities	21,409		18,519		Non-current liabilities	Other long-term liabilities	19,603		19,422
Total operating lease liabilities	Total operating lease liabilities		$	28,889	$	27,567	Total operating lease liabilities		$	26,140	$	26,843

Finance Leases	Finance Leases						Finance Leases
Right-of-use assets, net	Right-of-use assets, net	Other assets, net	$	321	$	468	Right-of-use assets, net	Other assets, net	$	221	$	270

Current liabilities	Current liabilities	Accrued liabilities and other	136		194		Current liabilities	Accrued liabilities and other	118		131
Non-current liabilities	Non-current liabilities	Other long-term liabilities	199		272		Non-current liabilities	Other long-term liabilities	112		139
Total finance lease liabilities	Total finance lease liabilities		$	335	$	466	Total finance lease liabilities		$	230	$	270

For the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ cash payments on operating leases were ~~$5.0~~$2.7 million and ~~$5.8~~$2.0 million, respectively.

Table of Contents

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


		Operating		Financing		Total			Operating		Financing		Total
Remainder of 2022		$	5,019	$	75	$	5,094
2023		8,444		136		8,580
Remainder of 2023								Remainder of 2023	$	7,279	$	97	$	7,376
2024	2024	4,648		89		4,737		2024	5,873		89		5,962
2025	2025	4,830		49		4,879		2025	5,856		50		5,906
2026	2026	4,218		2		4,220		2026	4,599		2		4,601
2027								2027	1,736		—		1,736
Thereafter	Thereafter	10,854		—		10,854		Thereafter	9,137		—		9,137
Total lease payments	Total lease payments	$	38,013	$	351	$	38,364	Total lease payments	$	34,480	$	238	$	34,718
Less: Imputed interest	Less: Imputed interest	(9,124)		(16)		(9,140)		Less: Imputed interest	(8,340)		(8)		(8,348)
Present value of lease liabilities	Present value of lease liabilities	$	28,889	$	335	$	29,224	Present value of lease liabilities	$	26,140	$	230	$	26,370

8. Income Taxes

For the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, we recorded a ~~$0.9 million and $2.3~~$3.3 million tax provision, ~~respectively,~~or 27% effective tax rate for the period, compared to a $1.4 million tax provision, or 26% effective tax rate for ~~each period, compared to a $1.5 million and $4.1 million~~the three months ended March 31, 2022. Income tax ~~provision~~expense for the three ~~and six~~ months ended ~~June 30, 2021, respectively, or 23% effective tax rate for each period. Income tax expense~~March 31, 2023 and 2022 is based on an estimated annual effective tax rate, which requires management to make its best estimate of annual pretax income or loss. 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 ~~2022~~2023 pretax results for U.S. and foreign income or loss vary from estimates, the actual income tax expense recognized in

~~Table of Contents~~

~~2022~~ 2023 could be different from the forecasted amount used to estimate the income tax expense for the three ~~and six~~ months ended ~~June 30, 2022.~~March 31, 2023.

For the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ cash paid for taxes, net of refunds received were ~~$3.1~~$2.0 million and ~~$1.7~~$1.4 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:

U.S. Pension and Other Post-Retirement Benefit Plans Non-U.S. Pension Plan
Three Months Ended June 30, Three Months Ended June 30,
2022 2021 2022 2021
Interest cost $ 193 $ 206 $ 200 $ 162
Expected return on plan assets (208) (553) (258) (254)
Amortization of prior service cost 2 2 13 14
Recognized actuarial loss 81 66 153 243
Net (benefit) cost $ 68 $ (279) $ 108 $ 165


		U.S. Pension and Other Post-Retirement Benefit Plans				Non-U.S. Pension Plan					Non-U.S. Pension Plan
		Six months ended June 30,				Six months ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Interest cost	Interest cost	$	388	$	414	$	415	$	323	Interest cost		347		215
Expected return on plan assets	Expected return on plan assets	(415)		(1,106)		(533)		(504)		Expected return on plan assets		(295)		(275)
Amortization of prior service cost	Amortization of prior service cost	4		4		26		28		Amortization of prior service cost		12		13
Recognized actuarial loss	Recognized actuarial loss	165		140		317		482		Recognized actuarial loss		185		164
Net (benefit) cost		$	142	$	(548)	$	225	$	329
Net cost										Net cost		$	249	$	117

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

During the year ended December 31, 2021, the Audit Committee of the Board of Directors approved amendments to the U.S. Pension Plan to terminate the plan. The plan participants were notified of the Company's intention to terminate the plan effective December 31, 2021 and settle plan liabilities through either lump sum distributions to plan participants or annuity contracts that cover vested benefits. The Company currently expects to complete the settlement of plan liabilities between the fourth quarter of 2022 and the first quarter of 2023.

~~10. Performance Awards~~

In 2020, the Company made awards, defined as cash, shares or other awards, to employees under the Commercial Vehicle Group, Inc. 2014 Equity Incentive Plan (the “2014 EIP”) and the Commercial Vehicle Group, Inc. 2020 Equity Incentive Plan (the “2020 EIP”). Effective June 15, 2020, as part of the Company’s stockholders’ approval of the 2020 EIP, the Company agreed that no more awards will be made under the 2014 EIP.

~~Restricted Cash Awards~~ – Restricted cash is a grant that is earned and payable in cash based upon the Company’s relative total shareholder return in terms of ranking as compared to the peer group and Return on Invested Capital ("ROIC") component established by the Compensation Committee of the Board of Directors.

~~Performance Stock Awards Settled in Cash~~ – Performance-based stock award is a grant that is earned and payable in cash. The total amount payable as of the award's vesting date is determined based upon the number of shares allocated to a participant, the Company’s relative total shareholder return in terms of ranking which can fluctuate as compared to the peer group over the performance period, ROIC performance, and the share price of the Company's stock.

Total shareholder return is determined by the percentage change in value (positive or negative) over the applicable measurement period as measured by dividing (A) the sum of the cumulative value of dividends and other distributions paid on the Common Stock for the applicable measurement period and the difference (positive or negative) between each such

Table of Contents

~~company’s starting stock price and ending stock price, by (B) the starting stock price.~~10. Performance ~~targets are based on relative total shareholder return in terms of ranking as compared to the peer group over the performance period.~~

ROIC is defined as adjusted net income plus interest expense (net of tax), divided by total assets less current liabilities plus current debt. A 5-point average is used to calculate the asset denominator.

These awards are payable at the end of the performance period in cash if the employee is employed through the end of the performance period. If the employee is not employed during the entire performance period, the award is forfeited. These grants are accounted for as cash settlement awards for which the fair value of the award fluctuates based on the change in total shareholder return in relation to the peer group.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, ~~2021~~2022	$	~~1,234~~2,188
New grants	~~2,101~~—
Forfeitures	~~(86)~~—
Adjustments	~~(1,595)~~844
Payments	~~(300)~~(1,159)
Adjusted Award Value at ~~June 30, 2022~~March 31, 2023	$	~~1,354~~1,873

Unrecognized compensation expense was ~~$2.4 million and $2.8~~$5.0 million as of ~~June 30, 2022 and 2021, respectively.~~March 31, 2023.

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.

~~Restricted Stock Awards~~ - Restricted stock is a grant of shares of common stock that may not be sold, encumbered or disposed of and that may be forfeited in the event of certain terminations of employment or in the case of the board of directors, a separation for cause, prior to the end of a restricted period set by the compensation committee of the board of directors. Forfeitures are recorded as they occur. A participant granted restricted stock generally has all of the rights of a stockholder, unless the compensation committee determines otherwise. Time-based restricted stock awards generally vest over the three-year period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period.

~~Performance Stock Awards Settled in Stock~~ – Performance-based stock awards have similar restrictions as restricted stock. They vest over the specified period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period if the Company meets the performance targets set at the time the award was granted. Performance targets are based on relative total shareholder return in terms of ranking as compared to the peer group over the performance period and ROIC performance.

As of ~~June 30, 2022,~~March 31, 2023, there was approximately ~~$6.4~~$5.3 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, 2022~~March 31, 2023 and changes during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023 are presented below:


		2022				2023
		Shares (in thousands)	Weighted- Average Grant-Date Fair Value			Shares (in thousands)	Weighted- Average Grant-Date Fair Value
Nonvested - December 31, 2021		783	$	5.68
Nonvested - December 31, 2022					Nonvested - December 31, 2022	383	$	7.68
Granted	Granted	580	7.85		Granted	233	6.98
Vested	Vested	(537)	3.77		Vested	(274)	7.28
Forfeited	Forfeited	(6)	7.61		Forfeited	(1)	8.45
Nonvested - June 30, 2022		820	$	7.18
Nonvested - March 31, 2023					Nonvested - March 31, 2023	341	$	7.52

As of ~~June 30, 2022,~~March 31, 2023, a total of ~~2.9~~2.1 million shares were available for future grants from the shares authorized for award under our 2020 EIP, including cumulative forfeitures.

~~Table of Contents~~

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;~~share, of which, ~~32,447,768~~32,991,468 and ~~32,034,592~~32,826,852 shares were issued and outstanding as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Preferred Stock — Our authorized capital stock also consists of 5,000,000 shares of preferred stock with a par value of $0.01 per ~~share. No~~share, with no preferred shares ~~were~~ outstanding as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Earnings (Loss) Per Share - Basic earnings (loss) per share is determined by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share presented is determined by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period as determined by the treasury stock method. Potential common shares are included in the diluted earnings per share calculation when dilutive.

Table of Contents

Diluted earnings per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ includes the effect of potential common shares issuable when dilutive, and is as follows:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net income $ 2,485 $ 5,095 $ 6,467 $ 13,585
Weighted average number of common shares outstanding (in '000s) 32,237 31,458 32,152 31,361
Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 802 1,216 857 1,293
Dilutive shares outstanding 33,039 32,674 33,009 32,654
Basic earnings per share $ 0.08 $ 0.16 $ 0.20 $ 0.43
Diluted earnings per share $ 0.08 $ 0.16 $ 0.20 $ 0.42


	Three Months Ended March 31,
	2023		2022
Net income	$	8,700	$	3,982
Weighted average number of common shares outstanding (in '000s)	32,868		32,065
Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s)	314		620
Dilutive shares outstanding	33,182		32,685
Basic earnings per share	$	0.26	$	0.12
Diluted earnings per share	$	0.26	$	0.12

There were 19134 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended ~~June 30, 2022~~March 31, 2023 as the effect would have been antidilutive and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2021. There were 21 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2022 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2021.March 31, 2022.

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, 2021 $ (20,445) $ (22,750) $ 757 $ (42,438)
Net current period change (5,196) — — (5,196)
Derivative instruments — — 2,173 2,173
Amortization of actuarial gain — 1,447 — 1,447
Balance - June 30, 2022 $ (25,641) $ (21,303) $ 2,930 $ (44,014)


	Foreign currency translation adjustment		Pension and post-retirement benefits plans		Derivative instruments		Accumulated other comprehensive loss
Balance - December 31, 2022	$	(24,811)	$	(11,512)	4,773		$	(31,550)
Net current period change	2,557		140				2,697
Derivative instruments	—				1,343		1,343

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

Foreign
currency translation adjustment Pension and
post-retirement
benefit plans Derivative instruments Accumulated other
comprehensive
income (loss)
Balance - December 31, 2020 $ (19,024) $ (27,423) $ 1,441 $ (45,006)
Net current period change (584) — — (584)
Derivative instruments — — (503) (503)
Amortization of actuarial gain — 673 — 673
Balance - June 30, 2021 $ (19,608) $ (26,750) $ 938 $ (45,420)


	Foreign currency translation adjustment		Pension and post-retirement benefit plans		Derivative instruments		Accumulated other comprehensive loss
Balance - December 31, 2021	$	(20,445)	$	(22,750)	$	757	$	(42,438)
Net current period change	327		(29)		—		298
Derivative instruments	—		—		2,814		2,814

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

~~Table of Contents~~

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


		Three Months Ended June 30, 2022						Six Months Ended June 30, 2022							Three Months Ended March 31, 2023
		Before Tax Amount		Tax Expense		After Tax Amount		Before Tax Amount		Tax Expense		After Tax Amount			Before Tax Amount		Tax Expense		After Tax Amount
Cumulative translation adjustment	Cumulative translation adjustment	(5,523)		—		(5,523)		(5,196)		—		(5,196)		Cumulative translation adjustment	2,557		—		2,557
Amortization of actuarial gain		$	1,384	$	92	$	1,476	$	1,385	$	62	$	1,447
Amortization of actuarial losses														Amortization of actuarial losses	$	137	$	3	$	140
Derivative instruments	Derivative instruments	(786)		145		(641)		2,966		(793)		2,173		Derivative instruments	1,815		(472)		1,343
Total other comprehensive income (loss)		$	(4,925)	$	237	$	(4,688)	$	(845)	$	(731)	$	(1,576)
Total other comprehensive income														Total other comprehensive income	$	4,509	$	(469)	$	4,040


		Three Months Ended June 30, 2021						Six Months Ended June 30, 2021							Three Months Ended March 31, 2022
		Before Tax Amount		Tax Expense		After Tax Amount		Before Tax Amount		Tax Expense		After Tax Amount			Before Tax Amount		Tax Expense		After Tax Amount
Cumulative translation adjustment	Cumulative translation adjustment	1,488		—		1,488		(584)		—		(584)		Cumulative translation adjustment	327		—		327
Amortization of actuarial gain (loss)		$	654	$	(267)	$	387	$	1,053	$	(380)	$	673
Amortization of actuarial gains														Amortization of actuarial gains	$	1	$	(30)	$	(29)
Derivative instruments	Derivative instruments	(100)		23		(77)		(656)		153		(503)		Derivative instruments	3,752		(938)		2,814
Total other comprehensive income (loss)		$	2,042	$	(244)	$	1,798	$	(187)	$	(227)	$	(414)
Total other comprehensive income														Total other comprehensive income	$	4,080	$	(968)	$	3,112

Table of Contents

14. Cost Reduction and Manufacturing Capacity Rationalization

During 2019, the Company began implementing cost reduction and manufacturing capacity rationalization initiatives (the "Restructuring Initiatives") in response to declines in end market volumes. Furthermore, in 2020 the Company began implementing additional cost reduction initiatives and further manufacturing capacity rationalization initiatives in response to the COVID-19 pandemic ("the 2020 Initiatives"). The Restructuring Initiatives and 2020 Initiatives consist primarily of headcount reductions in each segment and at corporate, as well as other costs associated with transfer of production and subsequent closure of facilities, and expansion of production footprint to manufacture warehouse automation subsystems.

~~On November 1, 2021, the~~ Company's ~~Board of Directors approved a~~ restructuring program ~~to align the Company's~~includes aligning cost structure to support margin expansion. The program includes workforce reductions and footprint optimization across segments. ~~We expect the restructuring cost to be between $4.6 million to $6.0 million for the entire program.~~

The changes in accrued restructuring balances are as follows:

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
December 31, 2021 $ 230 $ 417 $ — $ — $ (161) $ 486
New charges 204 350 — 435 — 989
Payments and other adjustments (309) (770) — (435) 422 (1,092)
March 31, 2022 $ 125 $ (3) $ — $ — $ 261 $ 383
New charges — 314 571 560 306 1,751
Payments and other adjustments (91) (311) (571) (560) (444) (1,977)
June 30, 2022 $ 34 $ — $ — $ — $ 123 $ 157


	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

~~Table of Contents~~


	Vehicle Solutions		Electrical Systems		Aftermarket & Accessories		Industrial Automation		Corporate/ Other		Total
December 31, 2021	$	230	$	417	$	—	$	—	$	(161)	$	486
New charges	204		—		435		350		—		989
Payments and other adjustments	(309)		(417)		(435)		(353)		422		(1,092)
March 31, 2022	$	125	$	—	$	—	$	(3)	$	261	$	383

Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
December 31, 2020 $ 349 $ — $ — $ 40 $ 290 $ 679
Payments and other adjustments (186) — — (40) (36) (262)
March 31, 2021 $ 163 $ — $ — $ — $ 254 $ 417
Payments and other adjustments (67) — — — (171) (238)
June 30, 2021 $ 96 $ — $ — $ — $ 83 $ 179

Of the ~~$1.8~~$0.7 million costs incurred in the three months ended ~~June 30, 2022, $0.6 million primarily related to headcount reductions and $1.2~~March 31, 2023 for restructuring, $0.5 million related to facility exit and other ~~costs. Of the $1.8~~costs and $0.2 million ~~costs incurred, $1.5 million was~~related to headcount reductions were recorded in cost of ~~revenues and $0.3 million was recorded in selling, general and administrative expenses.~~

revenues. Of the ~~$2.7~~$0.7 million costs incurred in the ~~six~~three months ended ~~June 30, 2022, $0.7~~March 31, 2023 for restructuring, $0.6 million primarily related to ~~headcount reductions~~the Industrial Automation segment and ~~$2.0 million related to facility exit and other costs. Of the $2.7 million costs incurred, $2.3 million was~~were recorded in ~~cost~~Cost of revenues ~~and $0.4 million was recorded~~ in ~~selling, general and administrative expenses.~~the Condensed Consolidated Statements of Operations.

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, 2022,~~March 31, 2023, our equipment leases did not provide for any material guarantee of a specified portion of residual values.

Guarantees - Costs associated with guarantees are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of available facts; where no amount within a range of estimates is more likely, the minimum is accrued. As of ~~June 30,~~March 31, 2023 and December 31, 2022, ~~and 2021,~~ 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,~~March 31, 2023 and December 31, 2022, ~~and 2021,~~ are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets.

Table of Contents

The following presents a summary of the warranty provision for the ~~six~~three months ended ~~June 30, 2022:~~March 31, 2023:


Balance - December 31, ~~2021~~2022	$	~~1,490~~1,433
Provision for warranty claims	~~158~~393
Deduction for payments made and other adjustments	~~(473)~~(227)
Balance - ~~June 30, 2022~~March 31, 2023	$	~~1,175~~1,599

~~Table of Contents~~

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:~~years. The existing long-term debt agreement matures in 2027; no payments are due thereafter:


		Term loan facility		Revolving credit facility		Total			Total
Remainder of 2022		$	4,375	$	—	$	4,375
2023		$	10,938	$	—	$	10,938
Remainder of 2023								Remainder of 2023	$	8,750
2024	2024	$	15,313	$	—	$	15,313	2024	$	15,313
2025	2025	$	19,688	$	—	$	19,688	2025	$	19,688
2026	2026	$	24,063	$	—	$	24,063	2026	$	24,063
2027								2027	$	93,498
Thereafter	Thereafter	$	100,623	$	31,000	$	131,623	Thereafter	$	—

16. Segment Reporting

In the quarter ended December 31, 2021, we completed a strategic reorganization of our operations into 4 segments, Vehicle Solutions, Warehouse Automation, Electrical Systems and Aftermarket & Accessories. The reorganization has allowed allow the Company to better focus on growth opportunities, capital allocation and enhancing shareholder value. As a result of the strategic reorganization, the prior period amounts have been reclassified to conform to the new organization structure.

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;~~market.

•Plastic components ("Trim") primarily for the North America commercial vehicle market and ~~recreational vehicle~~power sports markets; and Cab structures for the North American medium-duty/heavy-duty ("MD/HD") truck market.

~~The Warehouse 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.~~

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,~~warehouse, automotive (both internal combustion and electric vehicles), truck, mining, rail 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 ~~markets in~~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;~~Asia-Pacific.

•Commercial vehicle accessories including wipers, mirrors, and ~~sensors;~~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.

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.~~

~~Table of Contents~~

reporting

The following tables present financial information for the Company's reportable segments for the periods indicated:


		Three Months Ended June 30, 2022													Three Months Ended March 31, 2023
		Vehicle Solutions		Warehouse Automation		Electrical Systems		Aftermarket and Accessories		Corporate/Other		Total			Vehicle Solutions		Electrical Systems		Aftermarket & Accessories		Industrial Automation		Corporate/Other		Total
Revenues	Revenues	$	142,785	$	28,547	$	47,345	$	32,172	$	—	$	250,849	Revenues	$	160,584	$	54,749	$	37,629	$	9,747	$	—	$	262,709
Gross profit	Gross profit	8,912		2,855		7,245		2,867		—		21,879		Gross profit	19,471		8,297		7,227		214		$	—	35,209
Selling, general & administrative expenses	Selling, general & administrative expenses	7,403		1,547		1,303		1,735		3,664		15,652		Selling, general & administrative expenses	6,077		2,227		1,650		1,076		$	9,535	20,565

Operating income (loss)		$	1,509	$	1,308	$	5,942	$	1,132	$	(3,664)	$	6,227
Operating income														Operating income	$	13,394	$	6,070	$	5,577	$	(862)	$	(9,535)	$	14,644


		Three Months Ended June 30, 2021													Three Months Ended March 31, 2022
		Vehicle Solutions		Warehouse Automation		Electrical Systems		Aftermarket and Accessories		Corporate/Other		Total			Vehicle Solutions		Electrical Systems		Aftermarket & Accessories		Industrial Automation		Corporate/Other		Total
Revenues	Revenues	$	130,230	$	54,324	$	44,195	$	29,192	$	—	$	257,941	Revenues	$	140,157	$	39,876	$	30,215	$	34,126	$	—	$	244,374
Gross profit	Gross profit	14,963		9,686		4,588		5,135		(4)		34,368		Gross profit	12,907		3,401		4,086		4,991		(2)		25,383
Selling, general & administrative expenses	Selling, general & administrative expenses	6,721		1,206		1,459		1,449		7,204		18,039		Selling, general & administrative expenses	6,588		1,640		1,465		1,324		5,982		16,999

Operating income (loss)		$	8,242	$	8,480	$	3,129	$	3,686	$	(7,208)	$	16,329
Operating income														Operating income	$	6,319	$	1,761	$	2,621	$	3,667	$	(5,984)	$	8,384

Six Months Ended June 30, 2022
Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
Revenues $ 282,941 $ 62,673 $ 87,222 $ 62,387 $ — $ 495,223
Gross profit 21,817 7,846 10,647 6,952 — 47,262
Selling, general & administrative expenses 13,990 2,871 2,942 3,199 9,649 32,651
Operating income (loss) $ 7,827 $ 4,975 $ 7,705 $ 3,753 $ (9,649) $ 14,611

Six Months Ended June 30, 2021
Vehicle Solutions Warehouse Automation Electrical Systems Aftermarket and Accessories Corporate/Other Total
Revenues $ 254,572 $ 98,696 $ 90,657 $ 59,138 $ — $ 503,063
Gross profit 28,771 15,126 10,912 10,720 (40) 65,489
Selling, general & administrative expenses
13,046 2,738 2,927 2,871 12,175 33,757
Operating income (loss) $ 15,725 $ 12,388 $ 7,985 $ 7,849 $ (12,215) $ 31,732

~~Table of Contents~~

17. Other Financial Information

Items reported in inventories consisted of the following:

June 30, 2022 December 31, 2021
Raw materials $ 116,572 $ 107,505
Work in process 19,490 21,671
Finished goods 13,963 11,869
Inventories $ 150,025 $ 141,045


	March 31, 2023		December 31, 2022
Raw materials	$	103,506	$	108,417
Work in process	18,045		17,757
Finished goods	18,002		16,368
Total Inventory	$	139,553	$	142,542

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


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Land and buildings	Land and buildings	$	32,215	$	32,012	Land and buildings	$	32,599	$	32,267
Machinery and equipment	Machinery and equipment	201,100		194,828		Machinery and equipment	214,324		212,352
Construction in progress	Construction in progress	8,911		8,822		Construction in progress	5,548		7,317
Property, plant, and equipment, gross	Property, plant, and equipment, gross	242,226		235,662		Property, plant, and equipment, gross	252,471		251,936
Less accumulated depreciation	Less accumulated depreciation	(176,951)		(172,536)		Less accumulated depreciation	(183,532)		(184,131)
Property, plant and equipment, net	Property, plant and equipment, net	$	65,275	$	63,126	Property, plant and equipment, net	$	68,939	$	67,805

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


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Compensation and benefits	Compensation and benefits	$	17,040	$	16,677	Compensation and benefits	$	16,822	$	13,370
Taxes payable	Taxes payable	9,053		6,391		Taxes payable	9,426		5,092
Operating lease liabilities	Operating lease liabilities	7,480		9,048		Operating lease liabilities	6,537		7,421
Accrued freight	Accrued freight	5,677		5,628		Accrued freight	4,298		4,225
Contingent Consideration		4,647		4,409
Deferred tooling revenue		4,071		851
Warranty costs						Warranty costs	1,599		1,433
Other	Other	10,369		7,836		Other	8,658		11,268
Accrued liabilities and other		$	58,337	$	50,840
							$	47,340	$	42,809

Table of Contents

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis below ~~describes~~describe material changes in financial condition and results of operations as reflected in our condensed consolidated financial statements for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2021~~2022 Form 10-K.

Business Overview

CVG weis a global provider of systems, assemblies and components to the global commercial vehicle market, the electric vehicle market, and the industrial automation markets. We deliver real solutions to complex design, engineering and manufacturing problems ~~across a range of global~~while creating positive change for our customers, industries, ~~by innovating, constantly adding value,~~ and ~~treating our customer's bottom line as if it were our own.~~communities we serve.

We primarily manufacture customized products to meet the requirements of our customer. We believe our products are used by a majority of the North American Commercial Truck markets, many construction vehicle OEMs parts and service dealers distributors, as well as top e-commerce retailers.

Key Developments

~~On May 12, 2022~~

During the ~~Company entered into an amendment~~quarter ended March 31, 2023, CVG established two new plant locations: one in Tangier, Morocco, and another in Aldama, Mexico. Both locations are expected to ~~increase~~be large scale facilities and production is targeted for third quarter of 2023. These plants are a cornerstone in CVG's strategy of expanding its existing senior secured credit facilities to $325 million from $275 million consisting of a $175 million Term Loan A (the “Term Loan A”) and a $150 million Revolving Credit Facility (the “Revolver” and together with the Term Loan A the “Senior Secured Credit Facilities”). The amendment provides the Company with additional capital flexibility to execute upon its transformation and growth initiatives. As part of the amended terms of the agreement, the maturity date of the Senior Secured Credit Facilities has been extended by twelve months

~~Table of Contents~~

to May 12, 2027, the interest rate decreased by 50 bps at various leverage ratios based on SOFR, and pro-forma leverage increased from 3.25x to 3.75x until December 31, 2022 with a quarterly step down of 25 bps to 3.00x leverage by September 30, 2023 and remain at this level thereafter. Further, separate from the Company’s annual $35 million capital spending cap, a one-time $45 million capital project basket was included in the amendment. All other key provisions, including the $75 million accordion, acquisition holiday, and other baskets remain unchanged.electrification systems business.

In the first quarter of 2022, Russian military forces invaded Ukraine. We have approximately 1,200 employees in the Ukraine located in our facility near L'viv. While the facility was temporarily shut-down, we have resumed operations in L'viv and also set up additional capacity in the Czech Republic. During both the six months ended June 30, 2022 and the twelve months ended December 31, 2021, our Ukraine facility represented approximately 1% of the Company's long-lived assets.

The invasion of Ukraine by Russia and the retaliatory measures taken by the U.S., NATO and other countries have created global security concerns and economic uncertainty that could have a lasting impact on regional and global economies. We cannot be certain that international tensions will not affect our facility in the Ukraine, including due to the Russian invasion, electrical outages, cyber-attacks and periodic battles with separatists closer to our facility. In addition, certain of our employees in Ukraine may be conscripted into the military and/or sent to fight in the ongoing conflict. Furthermore, most of our products manufactured in Ukraine are shipped across the border from Ukraine to the Czech Republic for further delivery to our customers. If that border crossing were to be closed or restricted for any reason, or if our customers decide to stop ordering from us or shift orders to our competitors, we would experience a loss of the use of our Ukrainian facility, which could have an adverse effect on our results of operations and financial condition.

During the six months ended June 30, 2022, we experienced shutdowns at our plant in Shanghai, China due to the COVID-19 pandemic. The COVID-19 pandemic has caused and continues to cause, significant volatility, uncertainty and economic disruptions to our business. While we continue to operate our facilities, we may experience production slowdowns and/or shutdowns at our manufacturing facilities in North America, Europe and Asia Pacific as a result of government orders, our inability to obtain component parts from suppliers and/or inconsistent customer demand. In addition, many of our suppliers and customers may experience production slowdowns and/or shutdowns, which may further impact our business, sales and results of operation. The extent of the adverse effect of the COVID-19 pandemic on our business results depends on a number of factors beyond our control.

While backlog continues to be strong in the truck markets, all markets we operate in were impacted by supply chain constraints which caused volatility on our customers' production schedules and had a negative impact on our results. Overall, we continued to experience global supply chain disruptions and significant inflation, including longer lead-times to procure parts from China and due to port backups, labor inflation, chip shortages, steel and other raw material inflation, and freight cost increases. The impact of the pandemic, the related economic recovery and global inflationary pressures continue to be uneven from period to period and across our global footprint based on local and regional outbreaks. We continue to proactively monitor, assess and minimize to the extent reasonably possible disruptions and delays in production due to labor shortages or customer schedules, focus on cost control and recovery through pricing adjustments, and take reasonable measures to protect our workforce.

On November 1, 2021, the Company's Board of Directors approved a restructuring program to align the Company’s cost structure to support margin expansion. The program includes workforce reductions and footprint optimization across segments. We incurred expenses totaling $1.8 million and $2.7 million during the three and six months ended June 30, 2022 and none in 2021, related to this program and expect the cost to be between $4.6 million to $6.0 million for the entire program.

On October 25, 2021, the Company provided notice to the Volvo Group (“Volvo”) of the Company’s intention to terminate its agreement with Volvo, with such termination to become effective twelve months from the date of notice, absent the parties reaching mutually agreeable terms upon which to continue their relationship. We completed the renegotiation of our agreement with Volvo during the second quarter ended June 30, 2022 and will continue the relationship based on the mutually agreed upon terms.

~~Table of Contents~~

Consolidated Results of Operations

Three Months Ended ~~June 30, 2022~~March 31, 2023 Compared to Three Months Ended ~~June 30, 2021~~March 31, 2022

The table below sets forth certain consolidated operating data for the three months ended ~~June 30~~March 31 (dollars are in thousands):


		2022		2021		$ Change		% Change		2023		2022		$ Change		% Change
Revenues	Revenues	$	250,849	$	257,941	$	(7,092)	(2.7)%	Revenues	$	262,709	$	244,374	$	18,335	7.5%

Gross profit	Gross profit	21,879		34,368		(12,489)		(36.3)%	Gross profit	35,209		25,383		9,826		38.7
Selling, general and administrative expenses	Selling, general and administrative expenses	15,652		18,039		(2,387)		(13.2)%	Selling, general and administrative expenses	20,565		16,999		3,566		21.0

Other (income) expense									Other (income) expense	(202)		1,041		(1,243)		NM 1
Interest expense	Interest expense	2,118		2,818		(700)		(24.8)%	Interest expense	2,890		1,961		929		47.4
Loss on extinguishment of debt		921		7,155		(6,234)		(87.1)%

Provision for income taxes	Provision for income taxes	870		1,546		(676)		(43.7)%	Provision for income taxes	3,256		1,400		1,856		132.6
Net income	Net income	2,485		5,095		(2,610)		(51.2)%	Net income	8,700		3,982		4,718		118.5

1.Not meaningful

Revenues. The ~~decrease~~increase in consolidated revenues resulted from:

•a ~~$6.1~~$40.0 million, or ~~3.5%~~24.1%, increase in sales to OEM;

•a ~~$25.8~~$21.9 million, or ~~47.5%~~(69.2)%, decrease in ~~warehouse~~industrial automation ~~revenues;~~sales;

•a ~~$14.7~~$0.4 million, or ~~57.6%~~(1.0)%, ~~increase~~decrease in aftermarket and OES ~~revenues;~~sales; and

•a ~~$2.1~~$0.7 million, or ~~92.2% decrease~~20.1%, increase in other revenues.

~~Second~~First quarter ~~2022~~2023 revenues were unfavorably impacted by foreign currency exchange translation of ~~$4.8~~$3.6 million, which is reflected in the change in revenues above. The ~~decrease~~increase in revenues iswas primarily driven ~~by volume decrease in Warehouse Automation, offset~~ by increased pricing to offset material cost increases ~~across all other segments.~~and increased sales volume, offset by sales volume decreases in the Industrial Automation segment.

Table of Contents

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 ~~$12.5~~$9.8 million ~~decrease~~increase in gross profit is primarily attributable to ~~cost~~the increase in sales volume. Cost of revenues ~~which~~ increased ~~$5.4~~$8.5 million, or ~~2.4%~~3.9%, as a result of an increase in raw material and purchased component costs of ~~$1.3~~$2.5 million, or ~~0.9%~~1.7%, and an increase in labor and overhead expenses of ~~$4.1~~$6.0 million, or ~~5.5%~~8.1%. As a percentage of revenues, gross profit margin was ~~8.7%~~13.4% for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~13.3%~~10.4% for the three months ended June 30, 2021. The decrease in gross profit margin is primarily due to global supply chain and market disruptions which have resulted in increased labor costs, raw material inflation, and freight cost increases. The three months ended June 30, 2021 results include charges of $1.5 million associated with the restructuring program.March 31, 2022.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ("SG&A”) consist primarily of wages and benefits and other expenses such as ~~Contingent Consideration,~~ marketing, travel, legal, audit, rent and utility costs which are not directly associated with the manufacturing of our products. SG&A expenses ~~decreased $2.4~~for the three months ended March 31, 2023 increased $3.6 million compared to the three months ended ~~June 30, 2021,~~March 31, 2022, primarily ~~due to lower~~as a result of higher incentive compensation ~~and health care expense.~~expenses. As a percentage of revenues, SG&A expense was ~~6.2%~~7.8% for the three months ended ~~June 30, 2022~~March 31, 2023 compared to 7.0% for the three months ended ~~June 30, 2021.~~March 31, 2022.

Other (Income) Expense. Other expenses decreased $1.2 million in the quarter ended March 31, 2023 as compared to the quarter ended March 31, 2022 due primarily to a favorable change in the fair value of foreign currency forward exchange contracts in 2023 versus an unfavorable change in the fair value of foreign currency forward exchange contracts in 2022.

Interest Expense. Interest associated with our debt, and other expense was ~~$2.1~~$2.9 million and ~~$2.8~~$2.0 million for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The ~~decrease~~increase in interest expense primarily related to ~~lower~~higher interest rates ~~resulting from the April 2021 and May 2022 debt refinancing and amendment, partially offset by a higher average debt balance 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 fees associated with the new debt. During the three months ended June 30, 2021 the Company refinanced its long-term debt, which resulted in a loss of $7.2 million, including a $3.7 million non-cash write off relating to deferred financing costs and unamortized discount of the 2023 Term Loan Facility, a voluntary repayment premium of $3.0 million and $0.5 million of other fees associated with the newvariable rate debt.

Provision ~~(Benefit)~~ for Income Taxes. An income tax provision of ~~$0.9~~$3.3 million and ~~$1.5~~$1.4 million were recorded for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The period over period change in income tax was primarily attributable to a ~~$3.3~~$6.6 million ~~decrease~~increase in pre-tax income versus the prior year period.

Net ~~Income (loss).~~Income. Net income was ~~$2.5~~$8.7 million for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$5.1~~$4.0 million for the three months ended ~~June 30, 2021.~~March 31, 2022. The ~~decrease in net income is attributable to the factors noted above.~~

~~Table of Contents~~

~~Segment Results~~

~~Vehicle Solutions Segment Results~~

~~Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021~~

~~The table below sets forth certain Vehicle Solutions Segment operating data for the three months ended June 30 (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 142,785 $ 130,230 $ 12,555 9.6%
Gross profit 8,912 14,963 (6,051) (40.4)%
Selling, general & administrative expenses 7,403 6,721 682 10.1%
Operating income 1,509 8,242 (6,733) (81.7)%

~~Revenues.~~ ~~The~~ increase ~~in Vehicle Solutions Segment revenues primarily resulted from increased pricing to offset material cost pass-through offset by lower shipments caused by the COVID shutdown in China.~~

~~Gross Profit.~~ The decrease in gross profit was primarily attributable to cost of revenues, which increased $18.6 million, or 16.1%, as a result of an increase in raw material and purchased component costs of $15.2 million, or 20.1%, and an increase in labor and overhead expenses of $3.4 million, or 8.6%.

As a percentage of revenues, gross profit margin was 6.2% for the three months ended June 30, 2022 compared to 11.5% for the three months ended June 30, 2021. The decrease in gross profit margin is primarily due to global supply chain and market disruptions which have resulted in increased labor costs, raw material inflation, and freight cost increases.

~~Selling, General and Administrative Expenses. SG&A expenses increased $0.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, consistent with the prior year amount on a percent of sales basis.~~

~~Warehouse Automation Segment Results~~

~~Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021~~

~~The table below sets forth certain Warehouse Automation Segment operating data for the three months ended June 30 (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 28,547 $ 54,324 $ (25,777) (47.5)%
Gross profit 2,855 9,686 (6,831) (70.5)%
Selling, general & administrative expenses 1,547 1,206 341 28.3%
Operating income 1,308 8,480 (7,172) (84.6)%

~~Revenues.~~ ~~The decrease in Warehouse Automation Segment revenues primarily resulted from lower sales volume due to decreased customer demand.~~

~~Gross Profit.~~ The decrease in gross profit is primarily attributable to the decrease in sales volume. Included in gross profit is cost of revenues, which decreased $18.9 million, or 42.4%, as a result of a decrease in raw material and purchased component costs of $15.5 million, or 43.1%, and a decrease in labor and overhead expenses of $3.4 million, or 39.6%.

As a percentage of revenues, gross profit margin was 10.0% for the three months ended June 30, 2022 compared to 17.8% for the three months ended June 30, 2021. The three months ended June 30, 2021 results include charges of $0.3 million associated with the restructuring program.

~~Selling, General and Administrative Expenses. SG&A expenses increased $0.3 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.~~

~~Table of Contents~~

~~Electrical Systems Segment Results~~

~~Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021~~

~~The table below sets forth certain Electric Systems Segment operating data for the three months ended June 30 (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 47,345 $ 44,195 $ 3,150 7.1%
Gross profit 7,245 4,588 2,657 57.9
Selling, general & administrative expenses 1,303 1,459 (156) (10.7)
Operating income 5,942 3,129 2,813 89.9

~~Revenues.~~ ~~The increase in Electric Systems Segment revenues primarily resulted from increased pricing to offset material cost pass-through and operational improvements.~~

~~Gross Profit.~~ The increase in gross profit is primarily attributable to cost of revenues, which increased $0.5 million, or 1.2%, as a result of a decrease in raw material and purchased component costs of $1.1 million, or 4.9%, and an increase in labor and overhead expenses of $1.6 million, or 9.2%.

As a percentage of revenues, gross profit margin was 15.3% for the three months ended June 30, 2022 compared to 10.4% for the three months ended June 30, 2021. The increase in gross profit margin is primarily due to improved pricing. The three months ended June 30, 2021 results include charges of $0.6 million associated with the restructuring program.

~~Selling, General and Administrative Expenses. SG&A expenses decreased $0.2 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.~~

~~Aftermarket & Accessories Segment Results~~

~~Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021~~

~~The table below sets forth certain Aftermarket & Accessories Segment operating data for the three months ended June 30 (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 32,172 $ 29,192 $ 2,980 10.2%
Gross profit 2,867 5,135 (2,268) (44.2)
Selling, general & administrative expenses 1,735 1,449 286 19.7
Operating income 1,132 3,686 (2,554) (69.3)

~~Revenues.~~ ~~The increase in Aftermarket & Accessories Segment revenues primarily resulted from increased pricing to offset material cost pass-through.~~

~~Gross Profit.~~ The decrease in gross profit is primarily attributable to cost of revenues, which increased $5.2 million, or 21.8%, as a result of an increase in raw material and purchased component costs of $2.7 million, or 17.6%, and an increase in labor and overhead expenses of $2.5 million, or 29.4%.

As a percentage of revenues, gross profit margin was 8.9% for the three months ended June 30, 2022 compared to 17.6% for the three months ended June 30, 2021. The decrease in gross profit margin is primarily due to global supply chain and market disruptions which have resulted in increased labor costs, raw material inflation, and freight cost increases. The three months ended June 30, 2021 results include charges of $0.6 million associated with the restructuring program.

~~Selling, General and Administrative Expenses. SG&A expenses increased $0.3 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.~~

~~Table of Contents~~

~~Consolidated Results of Operations~~

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~The table below sets forth certain consolidated operating data for the six months ended June 30, (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 495,223 $ 503,063 $ (7,840) (1.6)%
Gross profit 47,262 65,489 (18,227) (27.8)%
Selling, general and administrative expenses 32,651 33,757 (1,106) (3.3)%
Other (income) expense 874 (941) 1,815
NM 1
Interest expense 4,079 7,859 (3,780) (48.1)%
Loss on extinguishment of debt 921 7,155 (6,234) (87.1)%
Provision for income taxes 2,270 4,074 (1,804) (44.3)%
Net income 6,467 13,585 (7,118) (52.4)%

1.~~Not meaningful~~

~~Revenues. The decrease in consolidated revenues resulted from:~~

•~~a $14.3 million, or 4.1%, increase in OEM;~~

•~~a $36.0 million, or 36.5%, decrease in warehouse automation revenues;~~

•~~a $12.5 million, or 24.0%, increase in aftermarket and OES revenues; and~~

•~~a $1.3 million, or 61.8% increase in other revenues.~~

Six months ended 2022 revenues were unfavorably impacted by foreign currency exchange translation of $5.9 million, which is reflected in the change in revenues above. The decrease in revenues is primarily driven by volume decrease in Warehouse Automation, offset by increased pricing to offset material cost increases.

~~Gross Profit~~. The $18.2 million decrease in gross profit is primarily attributable to cost of revenues, which increased $10.4 million, or 2.4%, as a result of an increase in raw material and purchased component costs of $1.9 million, or 0.6%, and an increase in labor and overhead expenses of $8.5 million, or 5.9%. As a percentage of revenues, gross profit margin was 9.5% for the six months ended June 30, 2022 compared to 13.0% for the six months ended June 30, 2021. The six months ended June 30, 2022 results include charges of $2.3 million associated with the restructuring program.

~~Selling, General and Administrative Expenses~~. SG&A expenses decreased $1.1 million compared to the six months ended June 30, 2021, primarily due to lower incentive compensation and health care expense. As a percentage of revenues, SG&A expense was 6.6% for the six months ended June 30, 2022 compared to 6.7% for the six months ended June 30, 2021.

~~Other (Income) Expense.~~ Other expenses increased $1.8 million in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due primarily to an unfavorable change in foreign currency of $0.9 million.

~~Interest Expense~~. Interest associated with our debt was $4.1 million and $7.9 million for the six months ended June 30, 2022 and 2021, respectively. The decrease in interest expense primarily related to lower rates resulting from the April 2021 and May 2022 debt refinancing and amendment, partially offset by a higher average debt balance 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 fees associated with the new debt. During the six months ended June 30, 2021 the Company refinanced its long-term debt, which resulted in a loss of $7.2 million, including a $3.7 million non-cash write off relating to deferred financing costs and unamortized discount of the 2023 Term Loan Facility, a voluntary repayment premium of $3.0 million and $0.5 million of other fees associated with the new debt.

~~Table of Contents~~

~~Provision (Benefit) for Income Taxes.~~ An income tax provision of $2.3 million and $4.1 million were recorded for the six months ended June 30, 2022 and 2021, respectively. The period over period change in income tax was primarily attributable to the $8.9 million decrease in pre-tax income versus the prior year period.

~~Net Income (loss).~~ ~~Net income was $6.5 million for the six months ended June 30, 2022 compared to $13.6 million for the six months ended June 30, 2021. The decrease~~ in net income is attributable to the factors noted above.

Segment Results

Vehicle Solutions Segment Results

~~Six~~Three Months Ended ~~June 30, 2022~~March 31, 2023 Compared to ~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022

The table below sets forth certain Vehicle Solutions Segment operating data for the ~~six~~three months ended ~~June 30,~~March 31 (dollars are in thousands):

2022 2021 $ Change % Change
Revenues $ 282,941 $ 254,572 $ 28,369 11.1%
Gross profit 21,817 28,771 (6,954) (24.2)%
Selling, general & administrative expenses 13,990 13,046 944 7.2%
Operating income (loss) 7,827 15,725 (7,898) (50.2)%


	2023		2022		$ Change		% Change
Revenues	$	160,584	$	140,157	$	20,427	14.6%
Gross profit	19,471		12,907		6,564		50.9
Selling, general & administrative expenses	6,077		6,588		(511)		(7.8)
Operating income	13,394		6,319		7,075		112.0

Revenues. The increase in Vehicle Solutions Segment revenues primarily resulted from increased sales volume and increased pricing to offset material cost ~~pass-through and new business wins offset by lower shipments caused by the COVID shutdown in China.~~increases.

Gross Profit. The ~~decrease~~increase in gross profit was primarily attributable to the increase in sales volume. Included in gross profit is cost of revenues, which increased ~~$35.3~~$13.9 million, or ~~15.6%~~10.9%, as a result of an increase in raw material and purchased component costs of ~~$26.7~~$10.1 million, or ~~17.8%~~11.8%, and an increase in labor and overhead expenses of ~~$8.6~~$3.8 million, or ~~11.3%~~9.1%.

As a percentage of revenues, gross profit margin was ~~7.7%~~12.1% for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~11.3%~~9.2% for the ~~six~~three months ended ~~June 30, 2021. The decrease in gross profit margin is primarily due~~March 31, 2022, driven by lower startup costs, improved manufacturing efficiencies, increased pricing to ~~global supply chain and market disruptions which have resulted in increased labor costs, raw~~offset material cost inflation and freight ~~cost increases. The six months ended June 30, 2022 results include charges of $0.1 million associated with the restructuring program.~~costs.

Selling, General and Administrative Expenses. SG&A expenses ~~increased $0.9~~decreased $0.5 million for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to the ~~six~~three months ended ~~June 30, 2021, consistent with the prior year amount on a percent of sales basis. The increase was~~March 31, 2022, primarily due to ~~legal expenses related to a customer dispute.~~overhead reductions.

~~Warehouse Automation~~Table of Contents

Electrical Systems Segment Results

~~Six~~Three Months Ended ~~June 30, 2022~~March 31, 2023 Compared to ~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022

The table below sets forth certain ~~Warehouse Automation~~Electrical Systems Segment operating data for the ~~six~~three months ended ~~June 30,~~March 31 (dollars are in thousands):


		2022		2021		$ Change		% Change		2023		2022		$ Change		% Change
Revenues	Revenues	$	62,673	$	98,696	$	(36,023)	(36.5)%	Revenues	$	54,749	$	39,876	$	14,873	37.3%
Gross profit	Gross profit	7,846		15,126		(7,280)		(48.1)%	Gross profit	8,297		3,401		4,896		144.0
Selling, general & administrative expenses	Selling, general & administrative expenses	2,871		2,738		133		4.9%	Selling, general & administrative expenses	2,227		1,640		587		35.8

Operating income	Operating income	4,975		12,388		(7,413)		(59.8)%	Operating income	6,070		1,761		4,309		244.7

Revenues. The ~~decrease~~increase in ~~Warehouse Automation~~Electrical Systems Segment revenues primarily resulted from ~~lower sales~~ volume, ~~due~~increased pricing to ~~decreased customer demand.~~offset material cost pass-through and new business.

Gross Profit. The ~~decrease~~increase in gross profit iswas primarily attributable to the ~~decrease~~increase in sales volume. Included in gross profit is cost of revenues, which ~~decreased $28.7~~increased $10.0 million, or ~~34.4%, as a result of a decrease in raw material and purchased component costs of $24.0 million, or 35.8%, and a decrease in labor and overhead expenses of $4.8 million, or 28.8%.~~

~~Table of Contents~~

As a percentage of revenues, gross profit margin was 12.5% for the six months ended June 30, 2022 compared to 15.3% for the six months ended June 30, 2021. The six months ended June 30, 2022 results include charges of $0.7 million associated with the restructuring program.

~~Selling, General and Administrative Expenses. SG&A expenses increased $0.1 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.~~

~~Electrical Systems Segment Results~~

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~The table below sets forth certain Electric Systems Segment operating data for the six months ended June 30, (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 87,222 $ 90,657 $ (3,435) (3.8)%
Gross profit 10,647 10,912 (265) (2.4)%
Selling, general & administrative expenses 2,942 2,927 15 0.5%
Operating income 7,705 7,985 (280) (3.5)%

~~Revenues.~~ The decrease in Electrical Systems Segment revenues resulted from lower sales volumes due to supply chain and semi-conductor chip shortages at our customer plants, and the disruption caused by the war in the Ukraine. The decreases were offset by increased pricing to offset material cost pass-through and operational improvements.

~~Gross Profit.~~ The decrease in gross profit is primarily attributable to the decrease in sales volume. Included in gross profit is cost of revenues, which decreased $3.2 million, or 4.0%, as a result of a decrease in raw material and purchased component costs of $4.4 million, or 9.6%, and an increase in labor and overhead expenses of $1.2 million, or 3.7%.

As a percentage of revenues, gross profit margin was 12.2% for the six months ended June 30, 2022 compared to 12.0% for the six months ended June 30, 2021. The six months ended June 30, 2022 results include charges of $0.6 million associated with the restructuring program.

~~Selling, General and Administrative Expenses. SG&A expenses were flat year over year and consistent with the prior year amount on a percent of sales basis.~~

~~Aftermarket & Accessories Segment Results~~

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~The table below sets forth certain Aftermarket & Accessories Segment operating data for the six months ended June 30, (dollars are in thousands):~~

2022 2021 $ Change % Change
Revenues $ 62,387 $ 59,138 $ 3,249 5.5%
Gross profit 6,952 10,720 (3,768) (35.1)%
Selling, general & administrative expenses 3,199 2,871 328 11.4%
Operating income 3,753 7,849 (4,096) (52.2)%

~~Revenues.~~ ~~The increase in Aftermarket & Accessories Segment revenues resulted from sales volume and pricing to offset material cost pass-through.~~

~~Gross Profit.~~ ~~The decrease in gross profit is primarily attributable to cost of revenues, which increased $7.0 million, or 14.5%~~27.4%, as a result of an increase in raw material and purchased component costs of ~~$3.6~~$5.2 million, or ~~11.4%~~25.8%, and an increase in labor and overhead expenses of ~~$3.4~~$4.8 million, or ~~20.1%~~29.4%.

~~Table of Contents~~

As a percentage of revenues, gross profit margin was ~~11.1%~~15.2% for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~18.1%~~8.5% for the ~~six~~three months ended ~~June 30, 2021. The decrease in gross profit margin is primarily due to global supply chain~~March 31, 2022, driven by volume, increased pricing and market disruptions which have resulted in increased labor costs, raw material inflation, and freight cost increases. The six months ended June 30, 2022 results include charges of $1.0 million associated with the restructuring program.manufacturing efficiencies.

Selling, General and Administrative Expenses. SG&A expenses increased ~~$0.3~~$0.6 million for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, consistent with the prior year amount on a percent of sales basis.

Aftermarket & Accessories Segment Results

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The table below sets forth certain Aftermarket & Accessories Segment operating data for the three months ended March 31 (dollars are in thousands):


	2023		2022		$ Change		% Change
Revenues	$	37,629	$	30,215	$	7,414	24.5%
Gross profit	7,227		4,086		3,141		76.9
Selling, general & administrative expenses	1,650		1,465		185		12.6
Operating income	5,577		2,621		2,956		112.8

Revenues. The increase in Aftermarket & Accessories Segment revenues primarily resulted from increased sales volume and increased pricing to offset material cost pass-through.

Gross Profit. The increase in gross profit is primarily attributable to the increase in sales volume. Included in gross profit is cost of revenues, which increased $4.3 million, or 16.4%, as a result of an increase in raw material and purchased component costs of $3.0 million, or 17.8%, and an increase in labor and overhead expenses of $1.3 million, or 14.0%.

As a percentage of revenues, gross profit margin was 19.2% for the three months ended March 31, 2023 compared to 13.5% for the three months ended March 31, 2022. This was primarily due to increased pricing offsetting moderating cost inflation.

Selling, General and Administrative Expenses. SG&A expenses increased $0.2 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Table of Contents

Industrial Automation Segment Results

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The table below sets forth certain Industrial Automation Segment operating data for the three months ended March 31 (dollars are in thousands):


	2023		2022		$ Change		% Change
Revenues	$	9,747	$	34,126	$	(24,379)	(71.4)%
Gross profit	214		4,991		(4,777)		(95.7)
Selling, general & administrative expenses	1,076		1,324		(248)		(18.7)
Operating income (loss)	(862)		3,667		(4,529)		NM 1

1.Not meaningful

Revenues. The modest decrease in Industrial Automation Segment revenues primarily resulted from lower sales volume due to decreased customer demand which was commensurate with market contraction.

Gross Profit. The decrease in gross profit is primarily attributable to lower sales volume. Included in gross profit is cost of revenues, which decreased $19.6 million, or 67.3%, as a result of a decrease in raw material and purchased component costs of $15.8 million, or 69.8%, and a decrease in labor and overhead expenses of $3.8 million, or 58.6%.

As a percentage of revenues, gross profit margin was 2.2% for the three months ended March 31, 2023 compared to 14.6% for the three months ended March 31, 2022 due to volume reduction and restructuring expenses.

Selling, General and Administrative Expenses. SG&A expenses decreased $0.2 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily driven by overhead reduction.

Liquidity and Capital Resources

As of ~~June 30, 2022,~~March 31, 2023, the Company had ~~$31.0~~total liquidity of $188.0 million, ~~of outstanding borrowings under its revolving credit facility, $28.5~~including $41.5 million of cash and ~~$117.8~~$146.5 million of availability ~~under the revolving~~from its US and China credit ~~facility, resulting in total liquidity of $146.3 million.~~facilities.

Our primary sources of liquidity as of ~~June 30, 2022~~ March 31, 2023 were cash reserves and availability under our ~~revolving~~ credit ~~facility.~~facilities. 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. However, no assurance can be given that this will be the case.

As of ~~June 30, 2022,~~March 31, 2023, cash of o~~$28.4~~f $41.5 million was held by foreign subsidiaries. The Company had a $1.3 million ~~$0.4 million~~deferred tax liability as of ~~June 30, 2022~~March 31, 2023 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which no indefinite reinvestment assertion has been made.

Covenants and Liquidity

Our ability to comply with the covenants in the Credit Agreement, as discussed in Note 4, 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, if applicable, and other covenants in the Credit Agreement for the next twelve months; however, no assurances can be given that we will be able to comply. We base our forecasts on historical experience, industry forecasts and other assumptions that we believe are reasonable under the circumstances. If actual results are substantially different than our current forecast we may not be able to comply with our financial covenants. If we do not comply with the financial and other covenants in the Credit Agreement, the lenders could declare an event of default under the Credit Agreement and our indebtedness thereunder could be declared immediately due and payable. If we are unable to borrow under the Credit Agreement, we will need to meet our capital requirements using alternative sources of liquidity which may not be available on acceptable terms. Any of these events would have a material adverse effect on our business, financial condition and liquidity.

On May 12, 2022, the Company entered into an amendment to increase its existing senior secured credit facilities to $325 million from $275 million consisting of a $175 million Term Loan A and a $150 million Revolving Credit Facility. The amendment provides the Company with additional capital flexibility to execute upon its transformation and growth initiatives. As part of the amended terms of the agreement, the maturity date of the Senior Secured Credit Facilities has been extended by twelve months to May 12, 2027, the interest rate decreased by 50 bps at various leverage ratios based on SOFR, and ~~pro-forma~~the maximum consolidated total leverage ratio increased from 3.25x to 3.75x until December 31, 2022 with a quarterly step down of 25 bps to 3.00x leverage by September 30, 2023 and the maximum consolidated total leverage ratio will remain at this level thereafter. Further, separate from the Company’s annual $35 million capital spending cap, a one-time $45 million capital project basket was included in the amendment. All other key provisions, including the $75 million accordion, acquisition holiday, and other baskets remain unchanged.

~~Sources~~Our ability to comply with the covenants in the Credit Agreement, as discussed in Note 4, 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 ~~Uses of Cash~~

June 30, 2022 June 30, 2021
(In thousands)
Net cash used in operating activities $ (4,507) $ (24,812)
Net cash used in investing activities (8,616) (6,909)
Net cash provided by financing activities 8,659 22,241
Effect of currency exchange rate changes on cash (1,994) (52)
Net decrease in cash $ (6,458) $ (9,532)
the fixed charge coverage ratio covenant and other covenants in the

3022

Table of Contents

Credit Agreement for the next twelve months; however, no assurances can be given that we will be able to comply. We base our forecasts on historical experience, industry forecasts and other assumptions that we believe are reasonable under the circumstances. If actual results are substantially different than our current forecast, we may not be able to comply with our financial covenants.

Sources and Uses of Cash


	March 31, 2023		March 31, 2022
	(In thousands)
Net cash (used in) provided by operating activities	$	58	$	(21,398)
Net cash used in investing activities	(3,321)		(3,590)
Net cash provided by financing activities	12,377		28,406
Effect of currency exchange rate changes on cash	545		(168)
Net increase in cash	$	9,659	$	3,250

Operating activities. For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, net cash provided by operating activities was $0.1 million compared to net cash used in operating activities ~~was $4.5 million compared to $24.8~~of $21.4 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Net cash ~~used in~~provided by operating activities is primarily attributable to a smaller increase in working capital for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 as compared to the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Investing activities. For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, net cash used in investing activities was ~~$8.6~~mainly due to capital expenditures and was $3.3 million compared to ~~$6.9~~$3.6 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. In ~~2022,~~2023, we expect capital expenditures to be in the range of ~~$22~~$20 million to $25 million.

Financing activities. For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, net cash provided by financing activities was ~~$8.7~~$12.4 million compared to ~~$22.2~~$28.4 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Net cash provided by financing activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 is attributable to $30.6 million of net borrowings under the amended credit facility offset by $18.4 million net repayments of the revolving credit facility and $1.9 million repayments of the credit facility. Net cash provided by financing activities for the six months ended June 30, 2021 is attributable to $35.5 million of borrowings under the revolving credit facility ~~offset by $8.0 million of costs attributed~~ to ~~debt amendment and extinguishment completed during~~fund the ~~six months ended June 30, 2021 and a $5.0 million Contingent Consideration payment.~~working capital increase.

Debt and Credit Facilities

The debt and credit facilities descriptions in Note 4, Debt are incorporated in this section by reference.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). For a comprehensive discussion of our significant accounting policies, see "Note 1. Significant Accounting Policies", to our consolidated financial statements in Item 8 in our ~~2021~~2022 Form 10-K.

Critical accounting estimates are those that are most important to the portrayal of our financial condition and results. These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors. For information about critical accounting estimates, see Critical Accounting Estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2021~~2022 Form 10-K. At ~~June 30, 2022,~~March 31, 2023, there have been no material changes to our critical accounting estimates from those disclosed in our ~~2021~~2022 Form 10-K.

Forward-Looking Statements

Table of Contents

vehicle markets, the Company’s initiatives to address customer needs, organic growth, the Company’s strategic plans and plans to focus on certain segments, competition faced by the Company, volatility in and disruption to the global economic environment, including inflation and labor shortages, financial covenant compliance, anticipated effects of acquisitions, production of new products, plans for capital expenditures and our results of operations or financial position and liquidity, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions, as they relate to us, are intended to identify forward-looking statements. The important factors discussed in “Item 1A - Risk Factors”, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Such forward-looking statements represent management’s current expectations and are inherently uncertain. Investors are warned that actual results may differ from management’s expectations. Additionally, various economic and competitive factors could cause actual results to differ materially from those discussed in such forward-looking statements, including, but not limited to, factors which are outside our control.

Any forward-looking statement that we make in this report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information relating to quantitative and qualitative disclosures about market risk, see the discussion under "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our ~~2021~~2022 Form 10-K. As of ~~June 30, 2022~~March 31, 2023, there have been no material changes in our exposure to market risk from those disclosed in our ~~2021~~2022 Form 10-K.

ITEM 4 – CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Our senior management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

We evaluated, the effectiveness of our disclosure controls and procedures as of ~~June 30, 2022.~~March 31, 2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of ~~June 30, 2022~~March 31, 2023 to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes during the quarter ended ~~June 30, 2022~~March 31, 2023 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

Inherent Limitations on Effectiveness of Controls. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

3224

Table of Contents

PART II. OTHER INFORMATION

ITEM 1 Legal Proceedings

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. 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, stockholders' 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.

ITEM 1A Risk Factors

You should carefully consider the information in this Form 10-Q, the risk factors discussed in "Risk Factors" and other risks discussed in our ~~2021~~2022 Form 10-K and our filings with the SEC since December 31, ~~2021.~~2022. These risks could materially and adversely affect our results of operations, financial condition, liquidity and cash flows. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any equity securities during the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 that were not registered under the Securities Act of 1933, as amended. We did not repurchase any equity securities during the three months ended March 31, 2023.

~~Forward-Looking Statements~~

This Quarter Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. For this purpose, any statements contained herein that are not statements of historical fact, including without limitation, certain statements under “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry outlook, the Company’s expectations for future periods with respect to its plans to improve financial results, the future of the Company’s end markets, including the short-term and long-term impact of the COVID-19 pandemic on our business and the global supply chain, changes in the Class 8 and Class 5-7 North America truck build rates, performance of the global construction equipment business, the Company’s prospects in the wire harness, warehouse automation and electric vehicle markets, the Company’s initiatives to address customer needs, organic growth, the Company’s strategic plans and plans to focus on certain segments, competition faced by the Company, volatility in and disruption to the global economic environment, including inflation and labor shortages, financial covenant compliance, anticipated effects of acquisitions, production of new products, plans for capital expenditures and our results of operations or financial position and liquidity, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions, as they relate to us, are intended to identify forward-looking statements. The important factors discussed in “Item 1A - Risk Factors”, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Such forward-looking statements represent management’s current expectations and are inherently uncertain. Investors are warned that actual results may differ from management’s expectations. Additionally, various economic and competitive factors could cause actual results to differ materially from those discussed in such forward-looking statements, including, but not limited to, factors which are outside our control.

ITEM 3 Defaults Upon Senior Securities

Not applicable.

~~Table of Contents~~

ITEM 4 Mine Safety Disclosures

Not applicable.

ITEM 5 Other Information

Not ~~applicable~~applicable.

Table of Contents

ITEM 6 Exhibits



~~10.1~~3.1			~~Second Amendment dated May 12, 2022 to the Credit Agreement, dated as~~Amended and Restated Bylaws of ~~April 30, 2021 between, among others, the Company, Bank of America, N.A. as administrative agent and other lenders party thereto~~Commercial Vehicle Group, Inc., effective February 1, 2023 (incorporated by reference to Exhibit ~~10.1~~3.1 to the Company’s Current Report on Form 8-K filed ~~with the Securities~~on February 2, 2023).
10.1*			Restricted Stock Agreement between Harold C. Bevis and ~~Exchange Commission on May 18, 2022).~~Commercial Vehicle Group, Inc. dated as of March 31, 2023
10.2*			Performance Award Agreement (ROIC cash) between Harold C. Bevis and Commercial Vehicle Group, Inc. dated as of March 31, 2023.
10.3*			Performance Award Agreement (ROIC stock) between Harold C. Bevis and Commercial Vehicle Group, Inc. dated as of March 31, 2023.
10.4*			Performance Award Agreement (TSR cash) between Harold C. Bevis and Commercial Vehicle Group, Inc. dated as of March 31, 2023.
10.5*			Performance Award Agreement (TSR stock) between Harold C. Bevis and Commercial Vehicle Group, Inc. dated as of March 31, 2023.
10.6*			Form of Restricted Stock Agreement pursuant to Commercial Vehicle Group, Inc. 2020 Equity Incentive Plan.
10.7*			Form of Performance Award Agreement (ROIC stock to cash) pursuant to Commercial Vehicle Group, Inc. 2020 Equity Incentive Plan.
10.8*			Form of Performance Award Agreement (TSR stock to cash) pursuant to Commercial Vehicle Group, Inc. 2020 Equity Incentive Plan.
31.1			302 Certification by Harold C. Bevis, President and Chief Executive Officer.
31.2			302 Certification by ~~Christopher H. Bohnert,~~Andy Cheung, Executive Vice President and Chief Financial Officer.
32.1			Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			Interactive Data Files


*			Management contract or compensatory arrangement.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COMMERCIAL VEHICLE GROUP, INC.

Date:

~~August 4, 2022~~May 2, 2023

/s/ ~~Christopher H. Bohnert~~Andy Cheung

~~Christopher H. Bohnert~~Chung Kin Cheung ("Andy Cheung")

Chief Financial Officer

(Principal Financial Officer)

Date:

~~August 4, 2022~~May 2, 2023

/s/ Angela M. O'Leary

Angela M. O'Leary

Chief Accounting Officer

(Principal Accounting Officer)

3527


	June 30, 2022		June 30, 2021
	(In thousands)
Net cash used in operating activities	$	(4,507)	$	(24,812)
Net cash used in investing activities	(8,616)		(6,909)
Net cash provided by financing activities	8,659		22,241
Effect of currency exchange rate changes on cash	(1,994)		(52)
Net decrease in cash	$	(6,458)	$	(9,532)