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What changed in Commercial Vehicle Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Commercial Vehicle Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+237 added−200 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-14)

Top changes in Commercial Vehicle Group, Inc.'s 2024 10-K

237 paragraphs added · 200 removed · 155 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

36 edited+7 added−14 removed46 unchanged
Biggest changeThe Company believes that such regulations would be enacted over time and would affect the industry as a whole. 6 Table of Contents Human Capital, Environmental, Social and Governance As of December 31, 2023, CVG employs approximately 8,200 employees of which 7,700 are permanent employees and 500 are temporary employees.
Biggest changeHuman Capital, Environmental, Social and Governance As of December 31, 2024, CVG employs approximately 6,900 employees of which 6,400 are permanent employees and 500 are temporary employees. Approximately 5,300 (83%) of the Company's permanent employees are located outside of the United States and 1,100 (17%) are located in the United States.
Demand in the medium and heavy construction equipment market is typically related to the level of larger-scale infrastructure development projects such as highways, dams, harbors, hospitals, airports and industrial development as well as activity in the mining, forestry and other commodities industries.
Demand in the medium and heavy construction and agriculture equipment market is typically related to the level of larger-scale infrastructure development projects such as highways, dams, harbors, hospitals, airports and industrial development as well as activity in the mining, forestry and other commodities industries.
Within the construction market, there are two classes of construction equipment markets: the medium and heavy construction equipment market (weighing over 12 metric tons) and the light construction equipment market (weighing below 12 metric tons). We primarily supply OEMs with our wire harness and seating products.
Within the construction and agriculture market, there are two classes of construction and agriculture equipment markets: the medium and heavy construction and agriculture equipment market (weighing over 12 metric tons) and the light construction and agriculture equipment market (weighing below 12 metric tons). We primarily supply OEMs with our wire harness and seating products.
New vehicle demand in the global construction equipment market generally follows certain economic conditions including gross domestic product, infrastructure investment, housing starts, business investment, oil and energy investment and industrial production around the world.
New vehicle demand in the global construction and agriculture equipment market generally follows certain economic conditions including gross domestic product, infrastructure investment, housing starts, business investment, oil and energy investment and industrial production around the world.
Purchasers of medium and heavy construction equipment include construction companies, municipalities, local governments, rental fleet owners, quarrying and mining companies and forestry related industries. Purchasers of light construction equipment include contractors, rental fleet owners, landscapers, logistics companies and farmers. Military Equipment Market.
Purchasers of medium and heavy construction and agriculture equipment include construction companies, municipalities, local governments, rental fleet owners, quarrying and mining companies and forestry related industries. Purchasers of light construction and agriculture equipment include contractors, rental fleet owners, landscapers, logistics companies and farmers. Military Equipment Market.
We believe CVG has a widely recognized brand portfolio and participates in most retail sales channels including original equipment dealer networks and independent distributors. Construction Equipment Market.
We believe CVG has a widely recognized brand portfolio and participates in most retail sales channels including original equipment dealer networks and independent distributors. Construction and Agriculture Equipment Market.
Item 1. Business COMPANY OVERVIEW Commercial Vehicle Group, Inc. and its subsidiaries, is a global provider of systems, assemblies and components to the global commercial vehicle market, the electric vehicle market, and the industrial automation markets. We deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve.
Item 1. Business COMPANY OVERVIEW Commercial Vehicle Group, Inc. and its subsidiaries, is a global provider of systems, assemblies and components to the global commercial vehicle market and the electric vehicle markets. We deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve.
Normally we do not carry inventories of raw materials or finished products in excess of what is reasonably required to meet production and shipping schedules, as well as service requirements. Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components comprise the most significant portion of our raw material costs.
Normally we do not carry inventories of raw materials or finished products in excess of what is reasonably required to meet production 4 Table of Contents and shipping schedules, as well as service requirements. Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components comprise the most significant portion of our raw material costs.
We offer customers a wide variety of cost-effective finishes in paint, ultra violet, hard coating and customized industrial hydrographic films (simulated appearance of wood grain, carbon fiber, brushed metal, marbles, camouflage and custom patterns), and other interior and exterior finishes. 2 Table of Contents Cab Interiors.
We offer customers a wide variety of cost-effective finishes in paint, ultra violet, hard coating and customized industrial hydrographic films (simulated appearance of wood grain, carbon fiber, brushed metal, marbles, camouflage and custom patterns), and other interior and exterior finishes. Cab Interiors.
We primarily participate in the Class 6 and 7 portion of the medium-duty truck market. The medium-duty truck market is influenced by overall economic conditions but has historically been less cyclical than the North American Class 8 truck market. Commercial Truck Aftermarket.
We primarily participate in the Class 6 and 7 portion of the medium-duty truck market. 3 Table of Contents The medium-duty truck market is influenced by overall economic conditions but has historically been less cyclical than the North American Class 8 truck market. Commercial Truck Aftermarket.
Our construction equipment products are primarily used in the medium and heavy construction equipment markets. The platforms that we generally participate in include: cranes, pavers, planers and profilers, dozers, loaders, graders, haulers, tractors, excavators, backhoes, material handling and compactors.
Our construction and agriculture equipment products are primarily used in the medium and heavy construction and agriculture equipment market. The platforms that we generally participate in include: cranes, pavers, planers and profilers, dozers, loaders, graders, haulers, tractors, excavators, backhoes, material handling and compactors.
This segment includes a portion of the company’s activities in the electric vehicle market. • Plastic & Trim components primarily for the North America commercial vehicle market and power sports markets; and Cab structures for the North American medium-duty/heavy-duty ("MD/HD") truck market.
This segment includes a portion of the Company’s activities in the electric vehicle market. • Plastic & Trim components primarily for the North America commercial vehicle market, medium-duty/heavy-duty ("MD/HD") truck market, and power sports markets.
Our electrical systems segment products are sold into the construction, agriculture, industrial, e-commerce and electric vehicles, traditional automotive, mining, rail, military end markets, marine, power generation and the military/defense industries in North America, Europe and Asia-Pacific.
Our electrical systems segment products are sold into the construction, agriculture, industrial and electric vehicles, traditional automotive, mining, rail, marine, power generation and the military/defense industries in North America, Europe and Asia-Pacific.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS See Item 10. Directors, Executive Officers and Corporate Governance" in Part III of this Annual Report on Form 10-K. 7 Table of Contents
INFORMATION ABOUT OUR EXECUTIVE OFFICERS See Item 10. Directors, Executive Officers and Corporate Governance" in Part III of this Annual Report on Form 10-K.
Safety - The safety of our workforce has always been a top priority and the Company is proud of our safety record, which includes three consecutive years of declining recordable incidents and five consecutive years of declining incident rates.
Safety - The safety of our workforce has always been a top priority and the Company is proud of our safety record, which includes four consecutive years of declining recordable incidents and six consecutive years of declining incident rates.
Our 2023 full year incident rate of 0.37 is below the industry benchmarks and a 19% decrease year over year while working approximately 72,000 fewer hours. CVG is committed to operating in an ethical and sustainable manner that benefits all our stakeholders including customers, employees, shareholders and the communities we serve.
Our 2024 full year incident rate of 0.34 is below the industry benchmarks and a 9% decrease year over year while working approximately 90,000 fewer hours. CVG is committed to operating in an ethical and sustainable manner that benefits all our stakeholders including customers, employees, shareholders and the 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 manufacturers, many construction vehicle original equipment manufacturers ("OEMs"), parts and service dealers, distributors, as well as top e-commerce retailers.
We primarily manufacture customized products to meet the requirements of our customer. We believe our products are used by a majority of the North American Commercial Truck manufacturers, many construction and agriculture vehicle original equipment manufacturers ("OEMs"), parts and service dealers and distributors.
We supply products for heavy- and medium-payload tactical vehicles and complex military communications equipment over multiple product lines that are used by various defense customers. Military equipment production is particularly sensitive to political and governmental budgetary considerations. 4 Table of Contents Industrial Automation Market.
We supply products for heavy- and medium-payload tactical vehicles and complex military communications equipment over multiple product lines that are used by various defense customers. Military equipment production is particularly sensitive to political and governmental budgetary considerations.
Research and development costs for the years ended December 31, 2023, 2022 and 2021 totaled $6.2 million, $7.1 million and $9.1 million, respectively.
Research and development costs for the years ended December 31, 2024, 2023 and 2022 totaled $8.3 million, $6.2 million and $7.1 million, respectively.
We design, manufacture and provide a variety of interior design products including armrests, grab handles, storage systems, floor coverings, floor mats, sleeper bunks, headliners, wall panels, and privacy curtains that can be part of the overall cab structure or standalone assemblies depending on the customer application.
We design, manufacture and provide a variety of interior design products including armrests, grab handles, storage systems, floor coverings, floor mats, sleeper bunks, headliners, wall panels, and privacy curtains that can be part of the overall cab structure or standalone assemblies depending on the customer application. 2 Table of Contents Our plastic products are sold under the AdvancTEK ™ brand name.
The products produced by each of 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.
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.
Environmental The Company is subject to changing federal, state, and local laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating air emissions, wastewater discharges, generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into the soil, ground or air; and the health and safety of our colleagues.
We own U.S. federal trademark registrations for several of our product brands. 5 Table of Contents Environmental The Company is subject to changing federal, state, foreign and local laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating air emissions, wastewater discharges, generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into the soil, ground or air; and the health and safety of our colleagues.
We are also reestablishing the connection to the communities where our employees live and work, enabling our teams to grow both professionally and personally.
We are also making a concerted effort to connect to the communities where our employees live and work, enabling our teams to grow both professionally and personally.
The following describes the major markets within the commercial vehicle market in which the Vehicle Solutions Segment competes: Class 8 Truck Market. The global Class 8 ("Class 8" or "heavy-duty") truck manufacturing market is concentrated in three primary regions: North America, Europe and Asia-Pacific.
The global Class 8 ("Class 8" or "heavy-duty") truck manufacturing market is concentrated in three primary regions: North America, Europe and Asia-Pacific.
Several of our manufacturing facilities are strategically located near our customers’ assembly facilities, which facilitates this process and minimizes shipping costs. We employ just-in-time manufacturing and sourcing in our operations to meet customer requirements for faster deliveries and to minimize our need to carry significant inventory levels.
We employ just-in-time manufacturing and sourcing in our operations to meet customer requirements for faster deliveries and to minimize our need to carry significant inventory levels.
Our aftermarket products are primarily sold through the Original Equipment Service (OES) sales channel and direct into the retail aftermarket as replacements for original equipment in North America, Europe and Asia Pacific. INDUSTRIAL AUTOMATION SEGMENT OVERVIEW Industrial Automation Segment Products Electrical Systems, Control Panel Assemblies, and Electro-Mechanical Assemblies .
Our aftermarket products are primarily sold through the Original Equipment Service (OES) sales channel and direct into the retail aftermarket as replacements for original equipment in North America, Europe and Asia Pacific. OUR CONSOLIDATED OPERATIONS Primary Industries Served Commercial Vehicle Market.
We have established company-wide environmental, human rights and labor rights policies that outline the Company’s standards for all business operations. More information on these policies can be found on our website under the caption “About Us - CVG Policies,” including highlights of our ongoing Environmental, Social and Governance (“ESG”) efforts related to safety, quality, environmental, community engagement and corporate governance.
More information on these policies can be found on our website under the caption “About Us - CVG Policies,” including highlights of our ongoing Environmental, Social and Governance (“ESG”) efforts related to safety, quality, environmental, community engagement and corporate governance. 6 Table of Contents AVAILABLE INFORMATION We maintain a website on the Internet at www.cvgrp.com.
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.
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. 1 Table of Contents The charts below display CVG's net sales by segment and geography for the year ended December 31, 2024.
Approximately 6,200 (81%) of the Company's permanent employees are located outside of the United States and 1,500 (19%) are located in the United States. It is customary for the Company to employ temporary employees to both flex up/down to demand rates. Of our permanent workforce, approximately 1,000 (13%) are salaried and the remainder are hourly.
It is customary for the Company to employ temporary employees to both flex up/down to demand rates. Of our permanent workforce, approximately 1,000 (16%) are salaried and the remainder are hourly. As of December 31, 2024, all of the Company's U.S. employees are non-union and a majority of the Company's personnel in Mexico are unionized.
The Company cannot predict the precise effect such future requirements, if enacted, would have on the Company.
The Company cannot predict the precise effect such future requirements, if enacted, would have on the Company. The Company believes that such regulations would be enacted over time and would affect the industry as a whole.
When compared to the more traditional, less flexible assembly line process, cell manufacturing allows us to better maintain our product output consistent with our OEM customers’ requirements and minimize the level of inventory. 5 Table of Contents We have systems in place that allow us to provide complete customized interior kits in returnable containers and disposable dunnage that are delivered in sequence.
This provides flexibility by allowing efficient changes to the number of operations each operator performs. When compared to the more traditional, less flexible assembly line process, cell manufacturing allows us to better maintain our product output consistent with our OEM customers’ requirements and minimize the level of inventory.
Class 8 vehicles are trucks with gross vehicle weight in excess of 33,000 lbs. and Classes 5 through 7 vehicles are trucks with gross vehicle weight from 16,001 lbs. to 33,000 lbs. Separately, we are seeing changes in e-commerce behaviors that are driving increased demand for middle-mile and last-mile vehicles.
Class 8 vehicles are trucks with gross vehicle weight in excess of 33,000 lbs. and Classes 5 through 7 vehicles are trucks with gross vehicle weight from 16,001 lbs. to 33,000 lbs. The following describes the major markets within the commercial vehicle market in which the Vehicle Solutions Segment competes: Class 8 Truck Market.
The Company is committed to establishing and developing a workforce to support our long-term diversification and growth strategy through targeted external recruiting, and internal development and succession planning. We continue to develop our leaders and identify emerging leaders for targeted training opportunities and continue to leverage virtual learning platforms to make training more accessible for our global workforce.
Approximately 75% of our European, Asian and Australian operations are represented by some form of shop steward committees. The Company is committed to establishing and developing a workforce to support our long-term diversification and growth strategy through targeted external recruiting, and internal development and succession planning.
Compensation and Benefits - Our compensation programs reinforce a pay-for-performance philosophy with market-based compensation and benefits that are competitive for the manufacturing sector. Specific programs vary worldwide based on regional practices and benchmarks.
We continue to develop our leaders and identify emerging leaders for targeted training opportunities and continue to leverage virtual learning platforms to make training more accessible for our global workforce. Compensation and Benefits - Our compensation programs reinforce a pay-for-performance philosophy with market-based compensation and benefits that are competitive for the manufacturing sector.
We will focus on the role our culture plays in creating the right environment for diverse thinking and inclusive approaches to work. During regular engagements with our leadership teams, we are highlighting how our organizational evolution benefits from a culture of diversity.
Specific programs vary worldwide based on regional practices and benchmarks. Diversity of Thought and Inclusive Approach - The Company focuses on the role our culture plays in creating the right environment for diverse thinking and inclusive approaches to work that benefits our employees.
Our Long-term Strategy Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. SEGMENTS Our segments offer various products which are sold into many end user markets such as internal combustion commercial vehicles, electric vehicles, construction equipment, power sports, industrial automation and military. Certain of our facilities manufacture and sell products through multiple business segments.
The financial information reported for Vehicle Solutions and Aftermarket & Accessories excludes the activity from the Kings Mountain, North Carolina facility as a result of the divestiture. Our segments offer various products which are sold into many end user markets such as internal combustion commercial vehicles, electric vehicles, construction and agriculture equipment, power sports, and military.
Removed
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. 1 Table of Contents The charts below display CVG's net sales by segment and geography for the year ended December 31, 2023.
Added
Our Long-term Strategy Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. SEGMENTS During the year ended December 31, 2024, the Company sold its cab structures business with operations in Kings Mountain, North Carolina and its First Source Electronics (FSE) business with operations in Elkridge, Maryland.
Removed
Our plastic products are sold under several brand names including FinishTEK ™ and AdvancTEK ™ . CVG sold its FinishTEK business effective January 31, 2024. Cab Structures . We design, manufacture and assemble complete cab structures. Our cab structures, which are manufactured from both steel and aluminum, are delivered fully assembled and primed for paint.
Added
The FSE business was the Company's Industrial Automation segment. These divestitures represent a strategic shift in CVG's business and, in accordance with U.S. GAAP, qualified as discontinued operations. As a result, the operating results related to the cab structures business and Industrial Automation segment have been reflected as discontinued operations in the Consolidated Statements of Operations.
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We offer a wide range of material handling equipment, electrical distribution systems, and related assemblies primarily for the e-commerce, warehouse integration, transportation and the military/defense markets. Our principal products in this category include: Control Panel Assemblies.
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See Note 17, Discontinued Operations, for additional information on the divestitures. As a result of classifying the Industrial Automation reporting segment as a discontinued operation, CVG has three reportable segments for 2024: Vehicle Solutions, Electrical Systems and Aftermarket & Accessories.
Removed
We offer integrated assemblies and cabinets that are installed in industrial machinery equipment and transportation vehicles and may be integrated with our wire harness assemblies. These components provide the user control over multiple operational functions and features. Electro-Mechanical Assemblies.
Added
Certain of our facilities manufacture and sell products through multiple business segments. The products produced by each of our segments are more specifically described below.
Removed
We offer electro-mechanical assemblies, including box builds, complex automated and robotic systems, and large multi-cabinet control cabinets with power distribution, communication and cabling. Our service includes mechanical assembly, wire and cable routing, automated wire preparation capabilities, complex configurations, test and custom palletizing and crating solutions. 3 Table of Contents OUR CONSOLIDATED OPERATIONS Primary Industries Served Commercial Vehicle Market.
Added
We have systems in place that allow us to provide complete customized interior kits in returnable containers and disposable dunnage that are delivered in sequence. Several of our manufacturing facilities are strategically located near our customers’ assembly facilities, which facilitates this process and minimizes shipping costs.
Removed
Shifting retailer behavior and consumer expectations are creating a significant need for incremental automation within warehouses and other industrial facilities. Given consumer demands for next-day (and same-day) delivery, there has been a surge in demand for “last mile” urban fulfillment centers, which are typically supported by very large distribution centers located in the outer ring of a city.
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During regular engagements with our global leadership team, we highlight how our organizational evolution benefits from a culture of diversity. Among our global workforce, 51% is female, and among our domestic workforce, 32% is racially diverse.
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Additionally, increased throughput volume, a greater variety of order and package types, and more frequent product returns by end consumers, all support the rationale for continued investment in automated solutions by warehouse operators. We supply material handling subsystems incorporated into automated warehouses.
Added
We have established company-wide environmental, human rights and labor rights policies that outline the Company’s standards for all business operations.
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This provides flexibility by allowing efficient changes to the number of operations each operator performs.
Removed
We own U.S. federal trademark registrations for several of our product brands.
Removed
As of December 31, 2023, all of the Company's U.S. employees are non-union and a majority of the Company's personnel in Mexico are unionized. Approximately 74% of our European, Asian and Australian operations are represented by some form of shop steward committees.
Removed
Diversity, Equity and Inclusion - The Company is intentional in its commitment to diversity, equity and inclusion including ensuring a diverse Board of Directors and executive leadership team.
Removed
Approximately one-third of our current Board is diverse by race or gender and one-fourth of our current executive team – including our President and Chief Executive Officer James Ray – is diverse by race or gender with others bringing diversity of experience, thought and perspective to their leadership roles.
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Among our global workforce, 49% is female, and among our domestic workforce, 32% is racially diverse. The Company recognizes the importance of leveraging diversity, equity and inclusion in who we are and how we work. We continue to focus on expanding the diversity of our talent pipeline through our recruiting, development, communication, and retention.
Removed
AVAILABLE INFORMATION We maintain a website on the Internet at www.cvgrp.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+23 added−17 removed123 unchanged
Biggest changeIf we are unable to recruit or retain senior management and other skilled personnel, our business, operating results and financial condition could be adversely affected. Our operations depend to a large extent on the efforts of our senior management team as well as our ability to attract, train, integrate and retain highly skilled personnel.
Biggest changeIn recent years, we experienced supply chain disruptions (including longer lead-times to procure parts from China) that caused volatility on our customers' production schedules and had a negative impact on our results. If we are unable to recruit or retain senior management and other skilled personnel, our business, operating results and financial condition could be adversely affected.
Historically, the demand for MD/HD Truck commercial vehicles has declined during periods of weakness in the North American economy. ▪ Demand for our construction equipment products is dependent on vehicle demand for new commercial vehicles in the global construction equipment market. ▪ Demand in the medium and heavy-construction vehicle market, which is where our products are primarily used, is typically related to the level of larger-scale infrastructure development projects.
Historically, the demand for MD/HD Truck commercial vehicles has declined during periods of weakness in the North American economy. ▪ Demand for our construction and agriculture equipment products is dependent on vehicle demand for new commercial vehicles in the global construction and agriculture equipment market. ▪ Demand in the medium and heavy-construction vehicle market, which is where our products are primarily used, is typically related to the level of larger-scale infrastructure development projects.
There are certain risks inherent in our international business activities including, but not limited to: • the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; • foreign customers, who may have longer payment cycles than customers in the U.S.; • foreign currency exchange rate fluctuations affecting our ability to match revenue received with costs; • tax rates in certain foreign countries, which may exceed those in the U.S., withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation, of foreign earnings; • intellectual property protection difficulties; • general economic and political conditions, along with major differences in business culture and practices, including the challenges of dealing with business practices that may impact the company’s compliance efforts, in countries where we operate; 10 Table of Contents • exposure to local social unrest, including any acts of war, terrorism or similar events; • exposure to local minimum wage requirements; • the difficulties associated with managing a large organization spread throughout various countries; and • complications in complying with a variety of laws and regulations related to doing business with and in foreign countries, some of which may conflict with U.S. law or may be vague or difficult to comply with.
There are certain risks inherent in our international business activities including, but not limited to: • the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; • foreign customers, who may have longer payment cycles than customers in the U.S.; • foreign currency exchange rate fluctuations affecting our ability to match revenue received with costs; • tax rates in certain foreign countries, which may exceed those in the U.S., withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation, of foreign earnings; • intellectual property protection difficulties; • general economic and political conditions, along with major differences in business culture and practices, including the challenges of dealing with business practices that may impact the company’s compliance efforts, in countries where we operate; • exposure to local social unrest, including any acts of war, terrorism or similar events; • exposure to local minimum wage requirements; • the difficulties associated with managing a large organization spread throughout various countries; and • complications in complying with a variety of laws and regulations related to doing business with and in foreign countries, some of which may conflict with U.S. law or may be vague or difficult to comply with.
Factors that may be considered in assessing whether goodwill or other long-lived assets may not be recoverable include a decline in our stock price or market capitalization, reduced estimates of future cash flows, the general economic environment, changes or downturns in our industry as a whole, termination of any of our customer contracts, restructuring efforts and general workforce reductions.
Factors that may be considered in assessing whether long-lived assets may not be recoverable include a decline in our stock price or market capitalization, reduced estimates of future cash flows, the general economic environment, changes or downturns in our industry as a whole, termination of any of our customer contracts, restructuring efforts and general workforce reductions.
If successful, a claim of infringement against us and our inability to license the infringed or similar technology and/or product could have an adverse effect on our business, operating results and financial condition. 14 Table of Contents We may be subject to product liability claims, recalls or warranty claims, which could be expensive, damage our reputation and result in a diversion of management resources.
If successful, a claim of infringement against us and our inability to license the infringed or similar technology and/or product could have an adverse effect on our business, operating results and financial condition. We may be subject to product liability claims, recalls or warranty claims, which could be expensive, damage our reputation and result in a diversion of management resources.
While technology can streamline many business processes and ultimately reduce the 17 Table of Contents costs of operations, technology initiatives present short-term cost and also have implementation and operational risks. In addition, we may have inaccurate expense projections, implementation schedules or expectations regarding the effectiveness of the end product. These issues could escalate over time.
While technology can streamline many business processes and ultimately reduce the costs of operations, technology initiatives present short-term cost and also have implementation and operational risks. In addition, we may have inaccurate expense projections, implementation schedules or expectations regarding the effectiveness of the end product. These issues could escalate over time.
If we violate or fail to comply with these laws and regulations or do not have the requisite permits, we could be fined or otherwise sanctioned by regulators. In some instances, such a fine or sanction could have an adverse effect on our financial condition and results of operations.
If we violate or fail to comply with these laws and regulations or do 14 Table of Contents not have the requisite permits, we could be fined or otherwise sanctioned by regulators. In some instances, such a fine or sanction could have an adverse effect on our financial condition and results of operations.
Some of our competitors are companies that are larger and have greater financial and other resources than we do. In some cases, we compete with divisions of our OEM customers. Our products primarily compete on the basis of price, breadth of product offerings, product quality, technical 11 Table of Contents expertise, development capability, product delivery and product service.
Some of our competitors are companies that are larger and have greater financial and other resources than we do. In some cases, we compete with divisions of our OEM customers. Our products primarily compete on the basis of price, breadth of product offerings, product quality, technical expertise, development capability, product delivery and product service.
Risks Related to Our Indebtedness The agreements governing our credit facilities contain covenants that may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions. If we are unable to comply with these covenants, our business, results of operations and liquidity could be adversely affected.
The agreements governing our credit facilities contain covenants that may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions. If we are unable to comply with these covenants, our business, results of operations and liquidity could be adversely affected.
There can be no assurance that we will not incur charges in the future as changes in economic or operating conditions impacting 13 Table of Contents the estimates and assumptions could result in additional impairment. Any future impairments may adversely affect our results of operations.
There can be no assurance that we will not incur charges in the future as changes in economic or operating conditions impacting the estimates and assumptions could result in additional impairment. Any future impairments may adversely affect our results of operations.
A continued decline in our stock price may trigger an evaluation of the recoverability of the recorded goodwill and other long-lived assets. Any charge for impairment could adversely affect our reported net income and our stockholders’ equity.
A continued decline in our stock price 12 Table of Contents may trigger an evaluation of the recoverability of the recorded goodwill and other long-lived assets. Any charge for impairment could adversely affect our reported net income and our stockholders’ equity.
If 15 Table of Contents we are unable to borrow under our senior secured revolving credit facility, we will need to meet our capital requirements using other sources; however, alternative sources of liquidity may not be available on acceptable terms.
If we are unable to borrow under our senior secured revolving credit facility, we will need to meet our capital requirements using other sources; however, alternative sources of liquidity may not be available on acceptable terms.
An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed. A disruption in the financial markets could impair our banking or other business partners, on whom we rely for access to capital.
An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed. A disruption in the financial markets could impair our banking or other 7 Table of Contents business partners, on whom we rely for access to capital.
As of December 31, 2023, a majority of employees based in Mexico are unionized. In addition, approximately 74% of our employees of our European, Asian and Australian operations were represented by a shop steward committee, which may limit our flexibility in our relationship with these employees.
As of December 31, 2024, a majority of employees based in Mexico are unionized. In addition, approximately 75% of our employees of our European, Asian and Australian operations were represented by a shop steward committee, which may limit our flexibility in our relationship with these employees.
In addition, the agreements governing the senior secured revolving and term loan credit facilities contain covenants that, among other things, restrict our ability to: • incur liens; • incur or assume additional debt or guarantees or issue preferred stock; • prepay, or make redemptions and repurchases of, subordinated debt; • make loans and investments; • engage in mergers, acquisitions, asset sales, sale/leaseback transactions and transactions with affiliates; • place restrictions on the ability of subsidiaries to pay dividends or make other payments to the issuer; • change the business conducted by us or our subsidiaries; and • amend the terms of subordinated debt.
In addition, the agreements governing the senior secured revolving and term loan credit facilities contain covenants that, among other things, restrict our ability to: • incur liens; • incur or assume additional debt or guarantees or issue preferred stock; • prepay, or make redemptions and repurchases of, subordinated debt; • make loans and investments; • engage in mergers, acquisitions, asset sales, sale/leaseback transactions and transactions with affiliates; • place restrictions on the ability of subsidiaries to pay dividends or make other payments to the issuer; • change the business conducted by us or our subsidiaries; and • amend the terms of subordinated debt. 15 Table of Contents Our indebtedness may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness.
Any divestitures may result in significant write-offs, including those related to goodwill and other tangible and intangible assets, which could have an adverse effect on our results of operations and financial condition. Our customer base is concentrated and the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms could reduce our revenues.
Divestitures, have in the past, and may in the future, result in significant write-offs, including those related to goodwill and other tangible and intangible assets, and such write offs can have an adverse effect on our results of operations and financial condition. 8 Table of Contents Our customer base is concentrated and the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms could reduce our revenues.
In the event of a reduction or stoppage in production at any of our facilities, even if only temporary, or if we experience delays as a result of events that are beyond our control, delivery times to our customers could be severely affected. Any significant delay in deliveries to our customers could lead to increased returns or cancellations.
In the event of a reduction or stoppage in production at any of our facilities, even if only temporary, or if we experience delays as a result of events that are beyond our control, delivery times to our customers could be severely affected.
In 2023, the countries in which we operate experienced heightened inflationary pressures. We may not be able to fully mitigate the impact of inflation through price increases, productivity initiatives and cost savings, which could have an adverse effect on our results of operations.
In addition to inflationary pressures, we may not be able to fully mitigate the impact of inflation or increased tariffs through price increases, productivity initiatives and cost savings, which could have an adverse effect on our results of operations.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business and our results of operations.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business and our results of operations. 17 Table of Contents Our implementation of a new ERP system may adversely affect our business and results of operations or the effectiveness of our internal control over financial reporting.
We are committed 9 Table of Contents to supplying products to our customers at selling prices that may, with the benefit of hindsight, not be sufficient to cover the direct cost to produce such products, which may be as a result of among other factors, inflation or increased employment costs due to current labor markets or other factors, as we experienced in 2020, 2021, 2022 and 2023.
We are committed to supplying products to our customers at selling prices that may, with the benefit of hindsight, not be sufficient to cover the direct cost to produce such products, which may be as a result of among other factors, inflation, new tariffs or increased employment costs due to increasingly competitive labor markets or other factors.
Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components, semiconductor chips, electronics and electrical components account for the most significant portion of our raw material costs.
We purchase raw materials, fabricated components, assemblies and services from a variety of suppliers. Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components, semiconductor chips, electronics and electrical components account for the most significant portion of our raw material costs.
Generally, we must also carry the costs associated with “catching up,” such as overtime and premium freight. Additionally, if we are the cause for a customer being forced to halt production the customer may seek to recoup all of its losses and expenses from us. These losses and expenses could include consequential losses such as lost profits.
Additionally, if we are the cause for a customer being forced to halt production the customer may seek to recoup all of its losses and expenses from us. These losses and expenses could include consequential losses such as lost profits.
Our operating results, revenues and expenses have in the past varied and may in the future vary significantly from quarter-to-quarter or year-to-year. These fluctuations have in the past and could have in the future an adverse effect on the market price of our common stock. We base our operating expense budgets in large part on expected revenue trends.
These fluctuations have in the past and could have in the future an adverse effect on the market price of our common stock. We base our operating expense budgets in large part on expected revenue trends.
We are subject to certain risks associated with our foreign operations. We have operations in the Mexico, China, United Kingdom, Czech Republic, Morocco, Ukraine, Belgium, Australia, India and Thailand, which collectively accounted for approximately 24% of our total revenues for the year ended December 31, 2023.
We have operations in the Mexico, China, United Kingdom, Czech Republic, Morocco, Ukraine, Australia, India and Thailand, which collectively accounted for approximately 30% of our total revenues for the year ended December 31, 2024.
If we experience periods of low demand for our products or there is volatility in the commercial vehicle market in the future, it could have an adverse effect on our revenues, operating results and financial position. We face risks related to heightened inflation, recession, financial and credit market disruptions and other economic conditions.
When we experience periods of low demand for our products or volatility in the commercial vehicle markets our revenues, operating results and financial position are adversely affected. We face risks related to heightened inflation, recession, financial and credit market disruptions and other economic conditions.
Inflationary and other increases in costs or shortages of the various materials that are needed for us to produce our products are currently having an impact on our business which may continue for the foreseeable future.
We may be assessed surcharges on certain purchases of steel, copper and other raw materials. Inflationary and other increases in costs, including as a result of new or increased tariffs, or shortages of the various materials that are needed for us to produce our products are currently having an impact on our business which may continue for the foreseeable future.
As we diversify and globalize our geographic footprint, we may encounter laws and practices in emerging markets that are not as stringent or enforceable as those present in developed markets, and thus incur a higher risk of intellectual property infringement, which could have an adverse effect on our results of operations.
Such licenses may not be made available to us on acceptable terms, if at all, or we may not prevail in contesting the validity of third party rights. 13 Table of Contents As we diversify and globalize our geographic footprint, we may encounter laws and practices in emerging markets that are not as stringent or enforceable as those present in developed markets, and thus incur a higher risk of intellectual property infringement, which could have an adverse effect on our results of operations.
We may be unable to successfully implement price increases to offset inflation and, as a result, our businesses and financial position and results of operations could be adversely affected.
We may be unable to successfully implement price increases to offset inflation or new tariffs and, as a result, our businesses and financial position and results of operations could be adversely affected. We may not be able to implement customer price increases where margin on product is not meeting profitability targets.
Without any such financing, we could be forced to sell assets to make up for any shortfall in our payment obligations under unfavorable circumstances.
Without any such financing, we could be forced to sell assets to make up for any shortfall in our payment obligations under unfavorable circumstances. If necessary, we may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations.
Additionally, because of the limited number of shares being traded, and changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage, the price per share of our common stock is subject to volatility and may continue to be subject to rapid price swings in the future that may result in stockholders’ inability to sell their common stock at or above purchase price.
Additionally, because of the limited number of shares being traded, and changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage, the price per share of our common stock is subject to volatility and may continue to be subject to rapid price swings in the future that may result in stockholders’ inability to sell their common stock at or above purchase price. 16 Table of Contents Provisions in our charter documents and Delaware law could discourage potential acquisition proposals, could delay, deter or prevent a change in control and could limit the price certain investors might be willing to pay for our stock.
The Company has exposure to cost premiums as we use temporary labor during demand ramp-ups which carries with it a temporary premium cost. The Company is currently at high levels of temporary labor which could have an adverse effect on our business.
In the event that one or more of our customers or their suppliers experience a material work stoppage, such work stoppage could have an adverse effect on our business. The Company has exposure to cost premiums as we use temporary labor during demand ramp-ups which carries with it a temporary premium cost.
If the expected synergies from acquisitions do not materialize or we fail to successfully integrate such new businesses into our existing businesses, our results of operations could be adversely affected. Circumstances associated with our acquisition and divestiture strategy could adversely affect our results of operations and financial condition.
There can be no assurance we will find attractive acquisition candidates or successfully integrate acquired businesses into our existing business. If the expected synergies from acquisitions do not materialize or we fail to successfully integrate such new businesses into our existing businesses, our results of operations could be adversely affected.
Future changes in the regulatory and business environments in which we operate, including increased trade protectionism and 8 Table of Contents tariffs, may adversely affect our ability to sell our products or source materials needed to manufacture our products.
Future changes in the regulatory and business environments in which we operate, including increased trade protectionism and tariffs such as those recently announced by President Trump, and any retaliatory counter measures by affected countries, may adversely affect our ability to sell our products and source materials needed to manufacture our products.
We seek to develop and retain an effective management team through the proper positioning of existing key employees and the addition of new management personnel where necessary.
Our operations depend to a large extent on the efforts of our senior management team as well as our ability to attract, train, integrate and retain highly skilled personnel. We seek to develop and retain an effective management team through the proper positioning of existing key employees and the addition of new management personnel where necessary.
In addition, to the extent we are unable to pass on the increased costs of raw materials, freight and labor to our customers, it could adversely affect our results of operations and financial condition.
In addition, to the extent we are unable to pass on the increased costs of raw materials, freight and labor to our customers, it could adversely affect our results of operations and financial condition. 10 Table of Contents We have invested substantial resources in markets where we expect growth and we may be unable to timely alter our strategies should such expectations not be realized.
Similarly, a potential quality issue could force us to halt deliveries. Even where products are ready to be shipped or have been shipped, delays may arise before they reach our customer. Our customers may halt or delay their production for the same reason if one of their other suppliers fails to deliver necessary components.
Any 11 Table of Contents significant delay in deliveries to our customers could lead to increased returns or cancellations. Similarly, a potential quality issue could force us to halt deliveries. Even where products are ready to be shipped or have been shipped, delays may arise before they reach our customer.
For example, customers may refuse to pay increased prices that meet our profitability targets, re-source from other suppliers, or not issue purchase orders to us with large volumes. Any failure to successfully implement price increases could have an adverse effect on our business, results of operations and growth potential.
Customers may refuse to pay increased prices that meet our profitability targets, re-source from other suppliers, or not issue purchase orders to us with large volumes.
Moreover, acquisition of businesses may require additional debt and/or equity financing, perhaps resulting in additional leverage and/or shareholder dilution. The covenants in our debt instruments further limit our ability to complete acquisitions. There can be no assurance we will find attractive acquisition candidates or successfully integrate acquired businesses into our existing business.
However, we expect to face competition for acquisition candidates, which may limit the number of our acquisition opportunities and may lead to higher acquisition prices. Moreover, acquisition of businesses may require additional debt and/or equity financing, perhaps resulting in additional leverage and/or shareholder dilution. The covenants in our debt instruments further limit our ability to complete acquisitions.
If necessary, we may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations. 16 Table of Contents Risks Related to Our Common Stock Our operating results, revenues and expenses may fluctuate significantly from quarter-to-quarter or year-to-year, which could have an adverse effect on the market price of our common stock.
Risks Related to Our Common Stock Our operating results, revenues and expenses may fluctuate significantly from quarter-to-quarter or year-to-year, which could have an adverse effect on the market price of our common stock. Our operating results, revenues and expenses have in the past varied and may in the future vary significantly from quarter-to-quarter or year-to-year.
Where a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all, and therefore our business and financial results could be adversely affected. 12 Table of Contents During 2021, 2022 and to a lesser degree during 2023, we experienced supply chain disruptions (including longer lead-times to procure parts from China) that caused volatility on our customers' production schedules and had a negative impact on our results.
Where a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all, and therefore our business and financial results could be adversely affected.
Our ability to implement customer price increases where margin on product is not meeting profitability targets is subject to a variety of factors, such as fluctuations in our material, freight and labor costs, inflation or other competitive conditions, which are beyond our control.
Failure to meet our profitability target may be the result of a variety of factors, such as fluctuations in our material, freight and labor costs, inflation, new or increased tariffs or other competitive conditions, which are beyond our control.
We pursue acquisition targets that will allow us to continue to expand into new geographic markets, add new customers, provide new products, manufacturing and service capabilities and increase penetration with existing customers. However, we expect to face competition for acquisition candidates, which may limit the number of our acquisition opportunities and may lead to higher acquisition prices.
We may be unable to complete strategic acquisitions, or we may encounter unforeseen difficulties in integrating acquisitions. We pursue acquisition targets that will allow us to continue to expand into new geographic markets, add new customers, provide new products, manufacturing and service capabilities and increase penetration with existing customers.
This may cause our customers to suspend their orders or instruct us to suspend delivery of our products, which may adversely affect our financial performance. When we cease timely deliveries, we have to absorb our own costs for identifying and solving the root cause problem as well as expeditiously producing replacement components or products.
When we cease timely deliveries, we have to absorb our own costs for identifying and solving the root cause problem as well as expeditiously producing replacement components or products. Generally, we must also carry the costs associated with “catching up,” such as overtime and premium freight.
Any failure to successfully implement our business strategy could have an adverse effect on our business, results of operations and growth potential. We may be unable to complete strategic acquisitions, or we may encounter unforeseen difficulties in integrating acquisitions.
Any failure to successfully implement our business strategy could have an adverse effect on our business, results of operations and growth potential. Circumstances associated with our divestiture strategy could adversely affect our results of operations and financial condition.
We are currently experiencing difficulty purchasing and obtaining timely delivery of certain raw materials required for our operations, which is having an adverse effect on our results of operations.
In addition, freight costs associated with shipping and receiving product are impacted by fluctuations in freight tonnage, freight hauler availability or capacity and the cost of oil and gas. We occasionally experience difficulty purchasing and obtaining timely delivery of certain raw materials required for our operations, which could have an adverse effect on our results of operations.
Decreased availability or increased costs of materials could affect both our ability to produce products as well as the cost of producing our products. We purchase raw materials, fabricated components, assemblies and services from a variety of suppliers.
Additionally, policies made by other countries, such as China, Mexico and Canada or their allies, could have an adverse effect on our results of operations and financial condition. Decreased availability or increased costs of materials could affect both our ability to produce products as well as the cost of producing our products.
Removed
Our inability to compete effectively in the highly competitive industrial automation industry could result in loss of market share and reduced gross margins, which could have an adverse effect on our revenues and operating results. The industrial automation industry is highly competitive.
Added
In addition, tariffs could increase our costs for materials sourced outside the US which we may not be able to pass along to our customers and would therefore adversely affect our results of operations.
Removed
Some of our competitors are companies that are larger and have greater financial and other resources than we do. Our products primarily compete on the basis of price, product quality, technical expertise, development capability, product delivery and product service. Increased competition may lead to price reductions or loss of business resulting in reduced gross margins and loss of market share.
Added
The U.S. government has taken actions or made proposals that are intended to address trade imbalances or trade practices, specifically with China, among other countries, which include encouraging increased production in the United States.
Removed
The invasion of Ukraine by Russia and the retaliatory measures taken by the U.S., NATO and other countries, and the war in the Middle East, have created global security concerns and economic uncertainty that could have a lasting impact on regional and global economies.
Added
Furthermore, the current administration has begun implementing a more protectionist trade environment, including through measures such as the imposition of higher tariffs on imports into the U.S., the renegotiation of some U.S. trade agreements and other government regulations affecting trade between the U.S. and other countries where we conduct our business, including announced tariffs on imports from China and Mexico, and threatened tariffs on imports from the EU.
Removed
We cannot be certain that similar international tensions will not affect our facility in the Ukraine, including due to the Russian invasion of Ukraine, electrical outages, cyber-attacks and periodic battles with separatists closer to our facility. In addition, certain of our employees in Ukraine are routinely conscripted into the military and/or sent to fight in the ongoing conflict.
Added
These actions and proposals have resulted or could result in retaliatory actions by affected countries.
Removed
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.
Added
Such changes could increase the price we pay for certain raw materials we import from such countries, for which we may not able to obtain alternative supply at equivalent or lower prices, reduce demand for our products in other countries and adversely impact the U.S. economy or certain sectors thereof or the economy of other countries in which we conduct operations, our industry and supply chain, all of which could have a material adverse effect on our business, financial condition and results of operations.
Removed
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.
Added
Any failure to successfully implement price increases in order to meet profitability targets could have an adverse effect on our business, results of operations and growth potential. 9 Table of Contents We are subject to certain risks associated with our foreign operations.
Removed
We may be assessed surcharges on certain purchases of steel, copper and other raw materials. Recently, there was a well-publicized global shortage of semiconductor chips and several of the raw materials we use.
Added
Our business has been impacted and may continue to be impacted by geopolitical conditions such as international trade wars (including between the United States and China, Mexico and Canada), the military conflict in Israel and Gaza, the Russia-Ukraine conflict, cyber-attacks and increased political tensions in Europe, the Middle East and Asia.
Removed
In addition, freight costs associated with shipping and receiving product are impacted by fluctuations in freight tonnage, freight hauler availability or capacity and the cost of oil and gas. Recently, we experienced freight related delays through the Suez Canal due to the Israel-Hamas war and through the Panama canal due to drought.
Added
Currently, significant uncertainty surrounds the future trade relationships among the United States, China, Mexico and Canada. The U.S. government continues to make significant changes in U.S. trade policies that could negatively affect our business.
Removed
We have invested substantial resources in markets where we expect growth and we may be unable to timely alter our strategies should such expectations not be realized.
Added
Our customers may halt or delay their production for the same reason if one of their other suppliers fails to deliver necessary components. This may cause our customers to suspend their orders or instruct us to suspend delivery of our products, which may adversely affect our financial performance.
Removed
In the event that one or more of our customers or their suppliers experience a material work stoppage, such work stoppage could have an adverse effect on our business. Additionally, the rapid recovery of certain COVID-19-impacted markets and locales and the low unemployment rate is causing spot shortages of labor.
Added
Risks Related to Our Indebtedness A credit rating downgrade could impair our ability to obtain additional debt financing on favorable terms, if at all, and significantly reduce the trading price of our common stock. We recently experienced a credit rating downgrade which is likely to affect the amount, type and terms of capital financings we obtain.
Removed
Such licenses may not be made available to us on acceptable terms, if at all, or we may not prevail in contesting the validity of third party rights.
Added
Factors affecting our credit rating include, among others, our financial performance, success in raising sufficient equity capital, adverse changes in our debt and fixed charge coverage ratios, our capital structure, level of indebtedness and future changes in the regulatory framework applicable to our operators and industry.
Removed
Our indebtedness may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness.
Added
We may be unable to maintain our current credit ratings, and in the event that our current credit ratings deteriorate, a ratings agency downgrades our credit rating or places our rating under watch or review for possible downgrade, we would likely incur higher borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments and the trading price of our common stock may decline.
Removed
Provisions in our charter documents and Delaware law could discourage potential acquisition proposals, could delay, deter or prevent a change in control and could limit the price certain investors might be willing to pay for our stock.
Added
We are in the process of implementing a new enterprise resource planning ("ERP") system, as part of a plan to integrate and upgrade our systems and processes. ERP implementations are complex, labor intensive, and time-consuming projects and involve substantial expenditures on system software and implementation activities.
Removed
Our financial condition and results of operations have been and will continue to be adversely affected by the coronavirus pandemic and similar health crises. The global spread of COVID-19 that was declared a pandemic by the World Health Organization and the preventative measures taken to contain or mitigate the outbreak caused significant volatility and uncertainty and economic disruptions.
Added
The ERP system is critical to our ability to provide important information to our management, obtain and deliver products, provide services and customer support, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, and otherwise operate our business.
Removed
The outbreak resulted in governments around the world implementing increasingly stringent measures to contain or mitigate the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, vaccine mandates and other measures.
Added
ERP implementations also require transformation of business and financial processes in order for the company to benefit from a robust ERP system. Any such implementation involves risks inherent in the conversion to a new computer system, including, but not limited to, loss of information and potential disruption to our normal operations.
Removed
The resulting financial impact of COVID-19 has adversely affected our business, supply chain, sales, results of operations, financial condition and cash flows. Even after the COVID-19 pandemic subsided, we continued to experience adverse impacts to our business due to resulting inflation and other economic conditions that impacted customer demand and the operations of our suppliers and customers.
Added
The implementation and maintenance of the new ERP system has required, and will continue to require, the investment of significant financial and human resources, the re-engineering of processes of our business, and the attention of many employees who would otherwise be focused on other aspects of our business.
Removed
A significant outbreak of any other contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and adversely impact our operating results. Item 1B. Unresolved Staff Comments None.
Added
Our results of operations could be adversely affected if we experience time delays or cost overruns during the ERP implementation process.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “Security breaches and other disruptions could compromise our information systems and expose us to liability, which could cause our business and reputation to suffer” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K.
Biggest changeWe describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of 18 Table of Contents operations, or financial condition, under the heading “Security breaches and other disruptions could compromise our information systems and expose us to liability, which could cause our business and reputation to suffer” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K.
To defend, detect and respond to cybersecurity incidents, we, among other things: conduct proactive 18 Table of Contents privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, conduct employee training, monitor emerging laws and regulations related to data protection and information security and implement appropriate changes.
To defend, detect and respond to cybersecurity incidents, we, among other things: conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, conduct employee training, monitor emerging laws and regulations related to data protection and information security and implement appropriate changes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate office is located in New Albany, Ohio. Several of our facilities are located near our OEM customers to reduce distribution costs, reduce risk of interruptions in our delivery schedule, further improve customer service and provide our customers with reliable delivery of products and services. We have seven owned and 23 leased principal facilities.
Biggest changeItem 2. Properties Our corporate office is located in New Albany, Ohio. Several of our facilities are located near our OEM customers to reduce distribution costs, reduce risk of interruptions in our delivery schedule, further improve customer service and provide our customers with reliable delivery of products and services. We have five owned and 22 leased principal facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased 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. 19 Table of Contents
Biggest changeBased 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth information in connection with purchases made by, or on behalf of, us or any affiliated purchaser, of shares of our common stock during the period ended December 31, 2023: Total Number of Shares (or Units) Surrendered Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs January 1, 2023 through January 31, 2023 4,591 $ 7.48 — — February 1, 2023 through February 28, 2023 1,429 $ 7.90 — — March 1, 2023 through March 31, 2023 104,575 $ 6.98 — — April 1, 2023 through April 30, 2023 242 $ 7.31 — — September 1, 2023 through September 30, 2023 3,984 $ 7.80 — — November 1, 2023 through November 30, 2023 20,047 $ 6.52 — — December 1, 2023 through December 31, 2023 99,740 $ 6.88 — — No other shares were surrendered during the year ended December 31, 2023.
Biggest changeThe following table sets forth information in connection with purchases made by, or on behalf of, us or any affiliated purchaser, of shares of our common stock during the period ended December 31, 2024: Total Number of Shares (or Units) Surrendered Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs January 1, 2024 through January 31, 2024 2,031 $ 6.71 — — April 1, 2024 through April 30, 2024 2,823 $ 6.43 — — July 1, 2024 through July 31, 2024 5,790 $ 5.15 — — September 1, 2024 through September 30, 2024 2,675 $ 3.49 — — December 1, 2024 through December 31, 2024 104,382 $ 2.48 — — No other shares were surrendered during the year ended December 31, 2024.
Unregistered Sales of Equity Securities We did not sell any equity securities during 2023 that were not registered under the Securities Act of 1933, as amended.
Unregistered Sales of Equity Securities We did not sell any equity securities during 2024 that were not registered under the Securities Act of 1933, as amended.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the NASDAQ Global Select Market under the symbol “CVGI.” As of March 14, 2024, there were approximately 136 holders of record of our outstanding common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the NASDAQ Global Select Market under the symbol “CVGI.” As of March 14, 2025, there were approximately 138 holders of record of our outstanding common stock.
The graph assumes that the value of the investment in the Company’s common stock, in the legacy peer group, in the new peer group, and the index (including reinvestment of dividends) was $100 on December 31, 2018 and tracks it through December 31, 2023.
The graph assumes that the value of the investment in the Company’s common stock, in the legacy peer group, in the new peer group, and the index (including reinvestment of dividends) was $100 on December 31, 2019 and tracks it through December 31, 2024.
We did not repurchase any of our common stock on the open market during 2023. Our employees surrendered 234,608 shares of our common stock in 2023 to satisfy tax withholding obligations on the vesting of restricted stock awards issued under our 2014 Equity Incentive Plan and the 2020 Equity Incentive Plan.
We did not repurchase any of our common stock on the open market during 2024. Our employees surrendered 117,701 shares of our common stock in 2024 to satisfy tax withholding obligations on the vesting of restricted stock awards issued under our 2020 Equity Incentive Plan.
Foster Company, Modine Manufacturing, Motorcar Parts of America, Inc., Myers Industries, Inc., NN Inc., Standard Motor Products Inc., Stoneridge Inc., Superior Industries International Inc., The Shyft Group Inc., and Wabash National Corp (the "New Peer Group"). 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Commercial Vehicle Group, Inc. 100.00 111.40 151.63 141.28 119.32 122.83 NASDAQ Composite 100.00 136.73 198.33 242.38 163.58 236.70 Legacy Peer Group 100.00 118.80 146.04 171.30 159.30 201.39 New Peer Group 100.00 119.96 142.38 158.09 151.91 190.44 22 Table of Contents The information in the graph and table above is not “solicitation material”, is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this annual report, except to the extent that we specifically incorporate such information by reference.
Foster Company, Modine Manufacturing, Motorcar Parts of America, Inc., Myers Industries, Inc., NN Inc., Standard Motor Products Inc., Stoneridge Inc., Superior Industries International Inc., The Shyft Group Inc., and Wabash National Corp (the "New Peer Group"). 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Commercial Vehicle Group, Inc. 100.00 136.11 126.82 107.10 110.26 39.12 NASDAQ Composite 100.00 145.05 177.27 119.63 173.11 224.34 Legacy Peer Group 100.00 122.93 144.20 134.09 169.53 204.98 New Peer Group 100.00 118.69 131.78 126.63 158.75 177.98 The information in the graph and table above is not “solicitation material”, is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as 21 Table of Contents amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this annual report, except to the extent that we specifically incorporate such information by reference.
Removed
Supreme Industries was purchased by Wabash National Corporation and is reported as part of the peer group only through 2017. American Railcar Industries, Inc. was purchased by ITE Management and is reported as part of the peer group only through 2018.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+52 added−13 removed24 unchanged
Biggest changeCONSOLIDATED RESULTS OF OPERATIONS The table below sets forth certain operating data expressed as a percentage of revenues for the twelve months ended (dollars are in thousands): 2023 2022 2021 Revenues $ 994,679 100.0 % $ 981,553 100.0 % $ 971,578 100.0 % Cost of revenues 860,956 86.6 895,048 91.2 852,591 87.8 Gross profit 133,723 13.4 86,505 8.8 118,987 12.2 Selling, general and administrative expenses 85,663 8.6 66,361 6.8 69,406 7.1 Operating income 48,060 4.8 20,144 2.1 49,581 5.1 Other (income) expense 1,195 0.1 10,463 1.1 (878) (0.1) Interest expense 10,691 1.1 9,827 1.0 11,179 1.2 Loss on extinguishment of debt — — 921 0.1 7,155 0.7 Income (loss) before provision for income taxes 36,174 3.6 (1,067) (0.1) 32,125 3.3 Provision (benefit) for income taxes (13,237) (1.3) 20,904 2.1 8,393 0.9 Net income (loss) $ 49,411 5.0 % $ (21,971) (2.2) % $ 23,732 2.4 % 25 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Consolidated Results The table below sets forth certain consolidated operating data for the twelve months ended indicated (dollars are in thousands): 2023 2022 Dollar Change % Change Revenues $ 994,679 $ 981,553 $ 13,126 1.3% Gross profit 133,723 86,505 47,218 54.6 Selling, general and administrative expenses 85,663 66,361 19,302 29.1 Other (income) expense 1,195 10,463 (9,268) (88.6) Interest expense 10,691 9,827 864 8.8 Loss on extinguishment of debt — 921 (921) (100.0) Provision (benefit) for income taxes (13,237) 20,904 (34,141) NM 1 Net income (loss) 49,411 (21,971) 71,382 NM 1 1.
Biggest changeCONSOLIDATED RESULTS OF OPERATIONS The table below sets forth certain operating data expressed as a percentage of revenues for the twelve months ended (dollars are in thousands): 2024 2023 2022 Revenues $ 723,355 100.0 % $ 835,469 100.0 % $ 782,583 100.0 % Cost of revenues 650,236 89.9 714,378 85.5 697,556 89.1 Gross profit 73,119 10.1 121,091 14.5 85,027 10.9 Selling, general and administrative expenses 73,877 10.2 81,218 9.7 60,206 7.7 Operating income (loss) (758) (0.1) 39,873 4.8 24,821 3.2 Other (income) expense (2,200) (0.3) 1,195 0.1 10,463 1.3 Interest expense 9,174 1.3 10,248 1.2 9,159 1.2 Loss on extinguishment of debt 509 0.1 — — 921 0.1 Income (loss) before provision for income taxes (8,241) (1.1) 28,430 3.4 4,278 0.5 Provision (benefit) for income taxes 27,493 3.8 (15,203) (1.8) 20,904 2.7 Net income (loss) from continuing operations $ (35,734) (4.9) % $ 43,633 5.2 % $ (16,626) (2.1) % Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Consolidated Results The table below sets forth certain consolidated operating data for the twelve months ended indicated (dollars are in thousands): 2024 2023 $ Change % Change Revenues $ 723,355 $ 835,469 $ (112,114) (13.4)% Gross profit 73,119 121,091 (47,972) (39.6) Selling, general and administrative expenses 73,877 81,218 (7,341) (9.0) Other (income) expense (2,200) 1,195 (3,395) NM 1 Interest expense 9,174 10,248 (1,074) (10.5) Loss on extinguishment of debt 509 — 509 100.0 Provision (benefit) for income taxes 27,493 (15,203) 42,696 NM 1 Net income (loss) from continuing operations (35,734) 43,633 (79,367) NM 1 1.
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.
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.
We intend to allocate resources consistent with the following priorities: (1) invest in growth; (2) invest in operational improvements; (3) manage working capital; (4) to reduce debt; and (5) other actions deemed appropriate by management to improve operational performance.
We intend to allocate resources consistent with the following priorities: (1) invest in growth; (2) invest in operational improvements; (3) manage working capital; (4) reduce debt; and (5) other actions deemed appropriate by management to improve operational performance.
We evaluate our estimates and assumptions on an ongoing basis, particularly relating to accounts receivable reserves, inventory reserves, goodwill, intangible and long-lived assets, income taxes, warranty reserves, litigation reserves and pension and other post-retirement benefit plans.
We evaluate our estimates and assumptions on an ongoing basis, particularly relating to accounts receivable reserves, inventory reserves, intangible and long-lived assets, income taxes, warranty reserves, litigation reserves and pension and other post-retirement benefit plans.
Since December 31, 2023, there have been no material changes outside the ordinary course of business to our contractual obligations as set forth above. Generally, we enter into agreements with our customers at the beginning of a given vehicle platform’s life to supply products for the entire life of that vehicle platform.
Since December 31, 2024, there have been no material changes outside the ordinary course of business to our contractual obligations as set forth above. Generally, we enter into agreements with our customers at the beginning of a given vehicle platform’s life to supply products for the entire life of that vehicle platform.
As of December 31, 2023, we were not a party to significant purchase obligations for goods or services. 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”).
As of December 31, 2024, we were not a party to significant purchase obligations for goods or services. 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”).
Business Overview CVG is 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 while creating positive change for our customers, industries, and communities we serve.
Business Overview CVG is a global provider of systems, assemblies and components to the global commercial vehicle market, and the electric vehicle markets. We deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve.
The Company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening / enhancing current positions, entering new markets, developing relationships with new customers, and enhancing service to our customers, leading to increased return to our stockholders.
The Company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening / enhancing current positions, 24 Table of Contents entering new markets, developing relationships with new customers, and enhancing service to our customers, leading to increased return to our stockholders.
Interest associated with our debt was $10.7 million and $9.8 million for the years ended December 31, 2023 and 2022, respectively. The increase primarily related to higher interest rates on variable rate debt, offset by lower average debt balances during the respective comparative periods. Loss on extinguishment of debt.
Interest associated with our debt was $10.2 million and $9.2 million for the years ended December 31, 2023 and 2022, respectively. The increase primarily related to higher interest rates on variable rate debt, offset by lower average debt balances during the respective comparative periods. Loss on extinguishment of debt.
Revenue is measured based on the amount of consideration we expect to receive in exchange for the transfer of goods or services. We enter into agreements with certain customers in the Vehicle Solutions segment at the beginning of a vehicle platform’s life to supply products for that vehicle platform.
Revenue is measured based on the amount of 31 Table of Contents consideration we expect to receive in exchange for the transfer of goods or services. We enter into agreements with certain customers in the Vehicle Solutions segment at the beginning of a vehicle platform’s life to supply products for that vehicle platform.
Demand in the medium- and heavy-duty construction equipment market is typically 24 Table of Contents related to the level of large scale infrastructure development projects, such as highways, dams, harbors, hospitals, airports and industrial development, as well as activity in the mining, forestry and commodities industries.
Demand in the medium- and heavy- 23 Table of Contents duty construction and agriculture equipment market is typically related to the level of large scale infrastructure development projects, such as highways, dams, harbors, hospitals, airports and industrial development, as well as activity in the mining, forestry and commodities industries.
Our Long-term Strategy The Company's long-term strategy is to increase our sales, profits and shareholder value by growing our Electrical Systems segment to be our largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening our product portfolio, increasing our margins and adding to our businesses through a focused M&A program.
Our Long-term Strategy The Company's long-term strategy is to increase our sales, profits and shareholder value by growing our Electrical Systems segment to be our largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening our product portfolio, increasing our margins and evaluating opportunities to add to our businesses through a focused M&A program.
Income tax benefit of $13.2 million and expense of $20.9 million were recorded for the years ended December 31, 2023 and 2022, respectively.
Income tax benefit of $15.2 million and expense of $20.9 million were recorded for the years ended December 31, 2023 and 2022, respectively.
According to a February 2024 report by ACT Research, a publisher of industry market research, North American Class 8 production levels are expected to decrease to 285,000 units in 2024. ACT Research estimated that the average age of active North American Class 8 trucks was 5.7 years in 2023. As vehicles age, maintenance costs typically increase.
According to a February 2025 report by ACT Research, a publisher of industry market research, North American Class 8 production levels are expected to decrease to 316,000 units in 2025. ACT Research estimated that the average age of active North American Class 8 trucks was 5.8 years in 2024. As vehicles age, maintenance costs typically increase.
SG&A expenses increased $19.3 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to increased employee salaries, incentive compensation, recruitment costs, travel spending and professional services.
SG&A expenses increased $21.0 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to increased employee salaries, incentive compensation, recruitment costs, travel spending and professional services.
Our products include electrical wire harnesses, seating systems, plastic components, cab structures, industrial automation subsystems, mirrors, wipers and other accessories. We have a long-term strategy to globally optimize our cost structure through manufacturing process enhancements, low cost footprint and global sourcing.
Our products include electrical wire harnesses, seating systems, plastic components, mirrors, wipers and other accessories. We have a long-term strategy to globally optimize our cost structure through manufacturing process enhancements, low cost footprint and global sourcing.
New heavy-duty truck demand has historically been cyclical and is particularly sensitive to the industrial sector of the economy, which generates a significant portion of the freight tonnage hauled by commercial vehicles. North American heavy-duty truck production was 340,140 units in 2023.
New heavy-duty truck demand has historically been cyclical and is particularly sensitive to the industrial sector of the economy, which generates a significant portion of the freight tonnage hauled by commercial vehicles. North American heavy-duty truck production was 332,382 units in 2024.
As a percentage of revenues, SG&A expense was 8.6% for the twelve months ended December 31, 2023 compared to 6.8% for the twelve months ended December 31, 2022. Other (Income) Expense.
As a percentage of revenues, SG&A expense was 9.7% for the twelve months ended December 31, 2023 compared to 7.7% for the twelve months ended December 31, 2022. Other (Income) Expense.
ACT Research forecasts that the vehicle age will decline as aging fleets are replaced. North American medium-duty (or "Class 5-7") truck production was 266,784 units in 2023. According to a February 2024 report by ACT Research, North American Class 5-7 truck production is expected to decrease to 237,000 units in 2024.
ACT Research forecasts that the vehicle age will decline as aging fleets are replaced. North American medium-duty (or "Class 5-7") truck production was 274,135 units in 2024. According to a February 2025 report by ACT Research, North American Class 5-7 truck production is expected to decrease to 226,000 units in 2025.
As a percentage of revenues, gross profit for the years ended December 31, 2023 and 2022, was 11.6% and 7.9%, respectively. The increase in gross profit in 2023 from 2022 was primarily due to price increases with customers and cost reduction initiatives including lower freight costs, lower startup costs, and improved manufacturing efficiencies. Selling, General and Administrative Expenses.
The increase in 2023 gross profit of $16.3 million from 2022 was primarily due to price increases with customers and cost reduction initiatives including lower freight costs, lower startup costs, and improved manufacturing efficiencies.. As a percentage of revenues, gross profit for the years ended December 31, 2024 and 2023, was 9.7% and 12.6%, respectively.
In 2024, we expect capital expenditures to be in the range of $25 million to $30 million. Financing activities . For the year ended December 31, 2023, net cash used in financing activities was $12.7 million compared to $50.1 million for the year ended December 31, 2022.
In 2025, we expect capital expenditures to be in the range of $15 million to $20 million. Financing activities . For the year ended December 31, 2024, net cash used in financing activities was $7.1 million compared to $12.7 million for the year ended December 31, 2023.
As a percentage of revenues, gross profit margin was 13.4% for the year ended December 31, 2023 compared to 8.8% for the year ended December 31, 2022. Selling, General and Administrative Expenses.
As a percentage of revenues, gross profit margin was 14.5% for the year ended December 31, 2023 compared to 10.9% for the year ended December 31, 2022. Selling, General and Administrative Expenses.
We primarily participate in the class 6 and 7 portion of the medium-duty truck market. Commercial Trends in the Electrical Systems Segment Demand for our Electrical Systems products, such as wire harnesses, is primarily driven by construction equipment vehicle production. Demand for new vehicles in the global construction equipment market generally follows certain economic conditions around the world.
We primarily participate in the class 6 and 7 portion of the medium-duty truck market. Commercial Trends in the Electrical Systems Segment Demand for our Electrical Systems products, such as wire harnesses, is primarily driven by construction and agriculture equipment vehicle production.
The Company had a $0.5 million deferred tax liability as of December 31, 2023 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected.
As of December 31, 2024, cash of $26.6 million was held by foreign subsidiaries. The Company had a $0.1 million deferred tax liability as of December 31, 2024 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected.
Cost of revenues decreased $34.1 million, or 3.8% as a result of a decrease in raw material and purchased component costs of $50.0 million, or 8.4%; an increase in wages and benefits of $4.6 million, or 5.9%; and an increase in overhead expenses of $11.3 million, or 5.0%.
Cost of revenues increased $16.8 million, or 2.4% as a result of an increase in overhead expenses of $16.5 million, or 8.5%; an increase in wages and benefits of $4.2 million, or 6.4%; and offset by a decrease in raw material and purchased component costs of $3.9 million, or 0.9%.
We periodically evaluate our short-term and long-term strategies and may adjust actions in response to changes in our business environment and other factors including but not limited to, implementing restructuring as needed. We are also supplementing our organic strategies by evaluating strategic acquisition and divestiture opportunities.
We periodically evaluate our short-term and long-term strategies and may adjust actions in response to changes in our business environment and other factors including but not limited to, implementing restructuring as needed.
Our primary sources of liquidity during the year ended December 31, 2023 were operating income, cash and availability under our credit facility. We believe that these sources of liquidity will provide adequate funds for our working capital needs, capital expenditures and debt service throughout the next twelve months. However, no assurance can be given that this will be the case.
Our primary sources of liquidity during the year ended December 31, 2024 were proceeds from divestitures, cash and availability under our credit facility. We believe that these sources of liquidity will provide adequate funds for our working capital needs, capital expenditures and debt service throughout the next twelve months.
Not meaningful Revenues. The increase in consolidated revenues resulted from: • a $55.4 million, or 7.3%, increase in sales to OEM and other revenues; • a $6.6 million, or 4.9%, increase in aftermarket and OES sales; and • a $48.8 million, or 55.7%, decrease in industrial automation sales.
Not meaningful Revenues. The increase in consolidated revenues resulted from: • a $47.6 million, or 7.3%, increase in sales to OEM and other revenues; and • a $5.2 million, or 4.0%, increase in aftermarket and OES sales.
For the year ended December 31, 2023, net cash provided by operations was $38.3 million compared to $68.9 million for the year ended December 31, 2022.
For the year ended December 31, 2024, net cash used in operations was $33.5 million compared to net cash provided by operations of $38.3 million for the year ended December 31, 2023.
Cash Flows 2023 2022 2021 (In thousands) Net cash provided (used) by operating activities $ 38,276 $ 68,947 $ (29,832) Net cash used in investing activities (19,696) (19,710) (17,566) Net cash (used) provided in financing activities (12,729) (50,091) 31,011 Effect of currency exchange rate changes on cash 172 (2,279) 842 Net increase (decrease) in cash $ 6,023 $ (3,133) $ (15,545) Operating activities .
Cash Flows 2024 2023 2022 (In thousands) Net cash provided by (used in) operating activities $ (33,452) $ 38,276 $ 68,947 Net cash provided by (used in) investing activities 30,896 (19,696) (19,710) Net cash provided by (used in) financing activities (7,122) (12,729) (50,091) Effect of currency exchange rate changes on cash (1,540) 172 (2,279) Net increase (decrease) in cash $ (11,218) $ 6,023 $ (3,133) Operating activities .
We believe our products are used by a majority of the North American Commercial Truck markets, many construction vehicle OEMs and top e-commerce retailers. Commercial Trends in the Vehicle Solutions and Aftermarket & Accessories Segments Demand for our products may be driven by preferences of the end-user of the vehicle, particularly with respect to heavy-duty trucks in North America.
Commercial Trends in the Vehicle Solutions and Aftermarket & Accessories Segments Demand for our products may be driven by preferences of the end-user of the vehicle, particularly with respect to heavy-duty trucks in North America.
We recognize tax positions initially in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. We provide a valuation allowance for deferred tax assets when it is more likely than not that a portion of such deferred tax assets will not be realized. 31 Table of Contents
We recognize tax positions initially in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Judgment is required in estimating valuation allowances for deferred tax assets.
These changes, when enacted by various countries in which we do business, may increase our taxes in these countries. Changes to these and other areas in relation to international tax reform, including future actions taken by foreign governments in response to Pillar Two, could increase uncertainty and may adversely affect our tax rate and cash flow in future years.
Changes to these and other areas in relation to international tax reform, including future actions taken by foreign governments in response to Pillar Two, could increase uncertainty and may adversely affect our tax rate and cash flow in future years. We continue to evaluate the potential impacts of Pillar Two through current and pending legislative adoption by individual countries.
The increase in 2023 revenues of $48.0 million from 2022 is primarily attributable to sales volume and increased pricing to offset material cost pass-through and other inflationary items. Gross Profit. The increase in 2023 gross profit of $11.4 million from 2022 was primarily attributable to volume leverage and increased pricing to offset material cost pass-through and other inflationary items.
The increase in 2023 gross profit of $11.4 million from 2022 was primarily attributable to volume leverage and increased pricing to offset material cost pass-through and other inflationary items. As a percentage of revenues, gross profit for the years ended December 31, 2024 and 2023, was 5.6% and 15.5%, respectively.
The increase in 2023 SG&A expenses of $1.2 million from 2022 was primarily due to an increase in system implementation costs and employee benefit costs including salaries and incentive compensation expenses. 27 Table of Contents Electrical Systems Segment Results Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Electrical Systems Segment operating data for the twelve months ended, (dollars are in thousands): 2023 2022 Dollar Change % Change Revenues $ 228,424 $ 180,404 $ 48,020 26.6% Gross profit 35,397 23,993 11,404 47.5 Selling, general & administrative expenses 9,107 5,775 3,332 57.7 Operating income 26,290 18,218 8,072 44.3 Revenues.
Electrical Systems Segment Results Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 and Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Electrical Systems Segment operating data for the twelve months ended, (dollars are in thousands): 2024 2023 $ Change % Change 2022 $ Change % Change Revenues $ 189,626 $ 228,424 $ (38,798) (17.0)% $ 180,404 $ 48,020 26.6% Gross profit 10,701 35,397 (24,696) (69.8) 23,993 11,404 47.5 Selling, general & administrative expenses 10,252 9,107 1,145 12.6 5,775 3,332 57.7 Operating income 449 26,290 (25,841) (98.3) 18,218 8,072 44.3 28 Table of Contents Revenues.
As a percentage of revenues, gross profit for the years ended December 31, 2023 and 2022, was 19.4% and 14.1%, respectively. The increase in 2023 gross profit margin is primarily due to increased pricing offsetting moderating cost inflation and cost reduction initiatives including lower freight costs.
The increase in 2023 gross profit of $8.1 million from 2022 is primarily due to increased pricing to offset material cost inflation and other inflationary items and cost reduction initiatives. As a percentage of revenues, gross profit for the years ended December 31, 2024 and 2023, was 18.0% and 19.3%, respectively.
Our products are primarily used in the medium- and heavy-duty construction equipment markets (vehicles weighing over 12 metric tons).
Demand for new vehicles in the global construction and agriculture equipment market generally follows certain economic conditions around the world. Our products are primarily used in the medium- and heavy-duty construction and agriculture equipment market (vehicles weighing over 12 metric tons).
Cost of revenues decreased in line with the sales decrease of 55.7%, driven by a decrease in raw material and purchased component costs of $43.7 million, or 61.8%; a decrease in overhead expenses of $8.7 million, or 55.8%; and a decrease in wages and benefits of $1.7 million, or 46.9%.
Cost of revenues decreased in line with the revenues, decrease of 17.0%, driven by a decrease in raw material and purchased component costs of $16.6 million, or 15.6%; a decrease in wages and benefits of $4.1 million, or 12.3%; offset by an increase in overhead expenses of $6.6 million, or 12.3%.
We also rely on the timely collection of receivables as a source of liquidity. As of December 31, 2023, we had outstanding letters of credit of $1.2 million and borrowing availability of $160.1 million from our U.S. and China credit facilities. As of December 31, 2023, cash of $37.8 million was held by foreign subsidiaries.
However, no assurance can be given that this will be the case. We also rely on the timely collection of receivables as a source of liquidity. As of December 31, 2024, we had outstanding letters of credit of $1.1 million and borrowing availability of $84.4 million from our U.S. and China credit facilities.
Selling, General and Administrative Expenses. 2023 SG&A expenses increased $3.3 million from 2022, primarily driven by increased headcount and incentive adjustments based on performance.
The increase of $3.3 million in 2023 from 2022, was primarily a result of increased headcount and incentive adjustments based on performance.
The increase in 2023 revenues of $7.4 million from 2022 primarily resulted from increased pricing which more than offset lower sales volume. Gross Profit.
The decrease in Vehicle Solutions Segment revenues in 2024 of $65.8 million from 2023 primarily resulted from lower sales volume due to decreased customer demand and the wind-down of certain programs. The decrease in 2023 revenues of $0.4 million from 2022 primarily resulted from increased pricing which more than offset lower sales volume. Gross Profit.
Not meaningful Revenues. The decrease in 2023 revenues of $48.8 million from 2022 primarily resulted from lower sales volume due to decreased customer demand. Gross Profit.
Gross Profit. The decrease in 2024 gross profit of $3.2 million from 2023 is primarily due to the lower sales volume.
The twelve months ended December 31, 2022 results include charges of $1.9 million associated with the restructuring program. 28 Table of Contents Selling, General and Administrative Expenses. The increase in 2023 SG&A expenses of $1.2 million from 2022, is primarily driven by commissions expense increase and is consistent with the prior year on a percent of sales basis.
The increase in 2023 SG&A expenses of $1.2 million from 2022, is primarily driven by commissions expense increase and is consistent with the prior year on a percent of sales basis. 29 Table of Contents Liquidity and Capital Resources At December 31, 2024, the Company had $50.5 million borrowings under its revolving credit facility.
Aftermarket & Accessories Segment Results Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Aftermarket & Accessories Segment operating data for the twelve months ended, (dollars are in thousands): 2023 2022 Dollar Change % Change Revenues $ 140,236 $ 133,671 $6,565 4.9% Gross profit 27,187 18,836 8,351 44.3 Selling, general & administrative expenses 8,144 6,925 1,219 17.6 Operating income 19,043 11,911 7,132 59.9 Revenues.
Aftermarket & Accessories Segment Results Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 and Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Aftermarket & Accessories Segment operating data for the twelve months ended, (dollars are in thousands): 2024 2023 $ Change % Change 2022 $ Change % Change Revenues $ 129,565 $ 137,083 ($7,518) (5.5)% $ 131,845 $ 5,238 4.0% Gross profit 23,348 26,514 (3,166) (11.9) 18,461 8,053 43.6 Selling, general & administrative expenses 8,322 8,144 178 2.2 6,915 1,229 17.8 Operating income 15,026 18,370 (3,344) (18.2) 11,546 6,824 59.1 Revenues.
The increase in 2023 gross profit of $22.2 million from 2022 was primarily due to price increases with customers, cost reduction initiatives, and a decrease in cost of revenues driven by a decrease in raw material and purchased component costs of $25.8 million, or 7.1%; offset by an increase in overhead expenses of $7.9 million, or 5.8%; and an increase in wages and benefits of $3.1 million, or 9.1%.
The decrease in 2024 gross profit of $20.1 million from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs, and a decrease in cost of revenues driven by a decrease in raw material and purchased component costs of $29.0 million, or 11.2%; a decrease in overhead expenses of $12.8 million, or 10.4%; and a decrease in wages and benefits of $3.8 million, or 13.4%.
The increase in 2023 gross profit of $8.4 million from 2022 is primarily due to increased pricing to offset material cost inflation and other inflationary items, cost reduction initiatives, and a decrease in cost of revenue driven by a decrease in wages and benefits of $2.5 million, or 23.4%; offset by an increase in raw material and purchased component costs of $0.6 million, or 0.9%; and an increase in overhead expenses of $0.2 million, or 0.5%.
Cost of revenues decrease is driven by a decrease in raw material and purchased component costs of $9.3 million, or 13.4%; offset by an increase in overhead expenses of $4.0 million, or 12.2%; and an increase in wages and benefits of $1.0 million, or 12.3%.
The increase in 2023 revenues of $6.6 million from 2022 resulted from increased pricing to offset material cost pass-through and other inflationary items. Gross Profit.
The decrease in Electrical Systems segment revenues in 2024 of $38.8 million from 2023 is primarily attributable to lower sales volume driven by global softness in Construction & Agriculture end-markets. The increase in 2023 revenues of $48.0 million from 2022 is primarily attributable to sales volume and increased pricing to offset material cost pass-through and other inflationary items. Gross Profit.
In 2021, as part of the Organization for Economic Co-operation and Development's ("OECD") Inclusive Framework, 140 member countries agreed to the implementation of the Pillar Two Global Minimum Tax ("Pillar Two") of 15%. The OECD continues to release additional guidance, including administrative guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as they adopt Pillar Two.
During 2023 the Company reversed the $22.0 million valuation allowance on our U.S. deferred tax assets that was established in 2022. In 2021, as part of the Organization for Economic Co-operation and Development's ("OECD") Inclusive Framework, 140 member countries agreed to the implementation of the Pillar Two Global Minimum Tax ("Pillar Two") of 15%.
Twelve months ended December 31, 2023 revenues were favorably impacted by foreign currency exchange translation of $2.0 million, which is reflected in the change in revenues above. The increase in revenues was primarily driven by increased pricing and increased sales volume from the Electrical Systems business, offset by lower sales volume in the Industrial Automation and Vehicle Solutions segments.
The increase in revenues was primarily driven by increased pricing and increased sales volume from the Electrical Systems business, offset by lower sales volume in the Vehicle Solutions segments. Gross Profit.
As a percentage of revenues, gross profit for the years ended December 31, 2023 and 2022, was 7.7% and (2.6)%, respectively. The increase in gross profit as a percentage of revenues in 2023 from 2022 was due to nonrecurring costs recognized in 2022, including a $10.4 million inventory charge. Selling, General and Administrative Expenses.
As a percentage of revenues, gross profit margin was 10.1% for the year ended December 31, 2024 compared to 14.5% for the year ended December 31, 2023. Selling, General and Administrative Expenses.
As a percentage of revenues, gross profit for the years ended December 31, 2023 and 2022, was 15.5% and 13.3%, respectively. The increase in 2023 gross profit margin was primarily due to volume leverage and increased pricing, more than offsetting inflationary items.
The increase in 2023 gross profit margin was primarily due to volume leverage and increased pricing, more than offsetting inflationary items. Selling, General and Administrative Expenses. 2024 SG&A expenses increased $1.1 million from 2023, primarily driven by increased salaries.
Net cash provided by operating activities is primarily attributable to an increase in working capital offset by the improved financial results during the year ended December 31, 2023 as compared to the prior year period. Investing activities . Net cash used in investing activities was $19.7 million for the year ended December 31, 2023 and 2022.
Net cash used in operating activities is primarily attributable to a lower net income from continuing and discontinued operations, including cash used to support restructuring programs for the twelve months ended December 31, 2024 as compared to higher net income offset by an increase in working capital for the twelve months ended December 31, 2023. 30 Table of Contents Investing activities .
Net cash used in financing activities for the year ended December 31, 2023 is primarily attributable to $10.9 million of net repayments under our credit facilities compared to net repayments of $43.2 million in the prior year.
Net cash used in financing activities for the year ended December 31, 2024 is primarily attributable to $56.6 million term loan repayment, offset by an increase of $50.5 million in borrowings under the revolving credit facility.
The increase in gross profit is primarily attributable to price increases with customers and cost reduction initiatives.
The increase in gross profit in 2023 from 2022 was primarily due to price increases with customers and cost reduction initiatives including lower freight costs, lower startup costs, and improved manufacturing efficiencies. Selling, General and Administrative Expenses.
The period over period change in income tax was primarily attributable to the reversal of $22.0 million valuation allowance on our U.S. deferred tax assets during 2023 versus the 2022 establishment 26 Table of Contents of a full valuation allowance on our U.S. deferred tax assets of $24.5 million, offset by the reversal of a $9.9 million valuation allowance on our United Kingdom (U.K.) deferred tax asset.
The period over period change in income tax was primarily attributable to the $36.7 million decrease in pre-tax income versus the prior year period which led to establishing a full valuation allowance on our U.S. deferred tax assets of $28.8 million in 2024.
Debt and Credit Facilities The debt and credit facility summaries described in Note 3, Debt, to our consolidated financial statements in Item 8 in this Annual Report on Form 10-K are incorporated in this section by reference. 30 Table of Contents Contractual Obligations and Commercial Commitments The following table reflects our contractual obligations as of December 31, 2023 (in thousands): Payments Due by Period Total 1 Year 2-3 Years 4-5 Years More than 5 Years (In thousands) Debt obligations $ 141,563 $ 15,313 $ 43,750 $ 82,500 $ — Estimated interest payments 28,939 10,332 16,426 2,181 — Leasing obligations 48,271 10,517 16,394 6,761 14,599 Non-U.S. pension funding 13,913 1,199 2,511 2,777 7,426 Total $ 232,686 $ 37,361 $ 79,081 $ 94,219 $ 22,025 We estimated future interest payments based on the effective interest rate as of December 31, 2023.
Contractual Obligations and Commercial Commitments The following table reflects our contractual obligations as of December 31, 2024 (in thousands): Payments Due by Period Total 1 Year 2-3 Years 4-5 Years More than 5 Years (In thousands) Debt obligations $ 135,500 $ 8,437 $ 127,063 $ — $ — Estimated interest payments 13,246 6,552 6,694 — — Leasing obligations 47,256 11,247 14,081 7,024 14,904 Non-U.S. pension funding 13,567 1,493 3,160 3,175 5,739 Total $ 209,569 $ 27,729 $ 150,998 $ 10,199 $ 20,643 We estimated future interest payments based on the effective interest rate as of December 31, 2024.
Cost of revenues increased in line with the sales increase of 26.6%, driven by an increase in raw material and purchased component costs of $19.1 million, or 21.8%; an increase in overhead expenses of $11.8 million, or 28.6%; and an increase in wages and benefits of $5.7 million, or 20.8%.
Cost of revenues decreased $64.1 million, or 9.0% as a result of a decrease in raw material and purchased component costs of $54.9 million, or 12.6%; a decrease in wages and benefits of $6.9 million, or 9.9%; and a decrease in overhead expenses of $2.3 million, or 1.1%.
SG&A expenses decreased $1.2 million in 2023 compared to 2022, primarily driven by overhead reduction. Liquidity and Capital Resources At December 31, 2023, the Company had no borrowings under its revolving credit facility. At December 31, 2023, the Company had liquidity of $197.9 million, including $37.8 million of cash and $160.1 million availability from its U.S. and China credit facilities.
At December 31, 2024, the Company had liquidity of $111.0 million, including $26.6 million of cash and $84.4 million availability from its U.S. and China credit facilities.
Removed
Discussion of 2022 results compared to 2021 results to the extent not included in this report can be found in Item 7 of our 2022 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 6, 2023.
Added
We believe our products are used by a majority of the North American Commercial Truck markets, many construction and agriculture vehicle OEMs, parts and service dealers and distributors.
Removed
Other Key Developments During the quarter ended March 31, 2023, we established two new plant locations: one in Tangier, Morocco, and another in Aldama, Mexico. These plants are a cornerstone in our strategy of globally expanding our electrical systems business.
Added
Other Key Developments During the year ended December 31, 2024, the Company amended its credit agreement in the second and fourth quarters. On July 30, 2024, the Company entered into Amendment No. 3, to the Credit Agreement.
Removed
During the quarter ended December 31, 2023, management approved restructuring programs to align the Company’s cost structure to support margin expansion. The programs include workforce reductions and footprint optimization across segments.
Added
Amendment No. 3 amended the terms of the existing Credit Agreement to limit the mandatory prepayment requirements for certain specified asset dispositions of the Company and certain of its subsidiaries. The Company repaid $20 million in accordance with Amendment No.3 during the three months ended September 30, 2024.
Removed
We incurred $1.1 million expense during the year ended December 31, 2023 related to this program and expect the cost to be between $3.0 million to $3.5 million for the entire program.
Added
On December 19, 2024, the Company entered into Amendment No. 4 to its Credit Agreement.
Removed
The company has many opportunities to accomplish this type of business improvement and is being selective.
Added
Amendment No. 4 reduced the existing term loan facility to $85 million in aggregate principal amount, reduced the revolving credit facility commitments by $25 million to an aggregate of $125 million in revolving credit facility commitments, and revised the covenant calculation including increasing the maximum consolidated total leverage ratio to 4.25:1.0 (which will be subject to step-downs to 3.75:1.0 at the end of the fiscal quarter ending September 30, 2025; and to 3.00:1.0 for each fiscal quarter thereafter).
Removed
We continue to evaluate the potential impact on future periods of Pillar Two, pending legislative adoption by individual countries.
Added
On July 31, 2024, the Company and SVO, LLC ("Buyer") entered into a purchase agreement pursuant to which the Company would sell substantially all of the assets of the Company's business of manufacturing and assembling structured products, including cabs for medium and heavy-duty vehicles, at its facility in Kings Mountain, North Carolina (the cab structures business).
Removed
SEGMENT RESULTS OF OPERATIONS Vehicle Solutions Segment Results Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Vehicle Solutions Segment operating data for the twelve months ended, (dollars are in thousands): 2023 2022 Dollar Change % Change Revenues $ 587,119 $ 579,731 $ 7,388 1.3% Gross profit 68,129 45,979 22,150 48.2 Selling, general & administrative expenses 26,109 24,930 1,179 4.7 Operating income (loss) 42,020 21,049 20,971 99.6 Revenues.
Added
On September 6, 2024, the Company and Buyer entered into an amendment to the purchase agreement whereby the transaction closed on September 6, 2024 with the Buyer paying the Company $20 million of the $40 million purchase price.
Removed
Industrial Automation Segment Results Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The table below sets forth certain Industrial Automation Segment operating data for the twelve months ended, (dollars are in thousands): 2023 2022 Dollar Change % Change Revenues $ 38,900 $ 87,747 $ (48,847) (55.7)% Gross profit 3,010 (2,303) 5,313 NM 1 Selling, general & administrative expenses 4,392 5,564 (1,172) (21.1) Operating income (loss) (1,382) (7,867) 6,485 (82.4) 1.
Added
Pursuant to the amended purchase agreement, the parties agreed (i) that the remaining $20 million of the purchase price would be paid on October 1, 2024, (ii) that the assigned contracts and the employees of Seller would transfer to Buyer on October 1, 2024, and (iii) the inventory would be valued as of October 1, 2024, for purposes of determining any adjustment to the purchase price.The Company received the remaining portion of the purchase price on October 1, 2024.
Removed
The increase in 2023 gross profit of $5.3 million from 2022 was primarily attributable to the inclusion of a $10.4 million inventory charge in the 2022 results which did not recur in 2023, and $1.2 million less restructuring costs in 2023 versus 2022.
Added
The net proceeds of the transaction were approximately $40 million. The Company used the proceeds for debt paydown and other general corporate purposes. The Company recorded an after-tax gain on the sale of the business of approximately $28.8 million for the year ended December 31, 2024.
Removed
Covenants 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.
Added
On October 30, 2024, the Company entered into a purchase agreement to sell its First Source Electronics (FSE) business with operations in Elkridge, Maryland for approximately $1.5 million, with a note in the amount of $0.5 million and earn out potential of an additional $1.5 million subject to certain criteria.
Removed
The 29 Table of Contents amendment provides the Company with additional capital flexibility to execute upon its transformation and growth initiatives.
Added
The Elkridge facility is the primary manufacturing facility of the Company's Industrial Automation segment. CVG recorded an estimated after-tax loss on the contemplated sale of the Industrial Automation business of approximately $7.9 million for the year ended December 31, 2024. The cab structures and Industrial Automation segment divestitures represent a strategic shift in CVG's business and, in accordance with U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccordingly, our stockholders’ investment will fluctuate depending upon the weakening or strengthening of the U.S. Dollar against the respective foreign currency. The principal currencies of exposure are the Mexican Peso, Chinese Yuan, British Pound, Euro, Czech Koruna, Australian Dollar, Indian Rupee, Thai Baht, Ukrainian Hryvnia and Moroccan Dirham.
Biggest changeAccordingly, our stockholders’ investment will fluctuate depending upon the 32 Table of Contents weakening or strengthening of the U.S. Dollar against the respective foreign currency. The principal currencies of exposure are the Mexican Peso, Chinese Yuan, British Pound, Euro, Czech Koruna, Australian Dollar, Indian Rupee, Thai Baht, Ukrainian Hryvnia and Moroccan Dirham.
Dollar against the respective foreign currency. A portion of our long-term assets and liabilities at December 31, 2023 are based in our foreign operations and are translated into U.S. Dollars at foreign currency exchange rates in effect as of the end of each period with the effect of such translation reflected as a separate component of stockholders’ equity.
Dollar against the respective foreign currency. A portion of our long-term assets and liabilities at December 31, 2024 are based in our foreign operations and are translated into U.S. Dollars at foreign currency exchange rates in effect as of the end of each period with the effect of such translation reflected as a separate component of stockholders’ equity.
Foreign Currency Risk A portion of our revenues during the year ended December 31, 2023 were derived from manufacturing operations outside of the U.S. The results of operations and the financial position of our operations in these other countries are primarily measured in their respective currency and translated into U.S. Dollars.
Foreign Currency Risk A portion of our revenues during the year ended December 31, 2024 were derived from manufacturing operations outside of the U.S. The results of operations and the financial position of our operations in these other countries are primarily measured in their respective currency and translated into U.S. Dollars.
In many cases, we have limited ability to pass through inflation-related cost increases due to the competitive nature of the markets that we serve. 32 Table of Contents
In many cases, we have limited ability to pass through inflation-related cost increases due to the competitive nature of the markets that we serve. 33 Table of Contents
A change in our variable interest rate of 100 basis points for a full twelve-month period would have an approximate $1.4 million impact on interest expense assuming approximately 50% of our average fiscal 2023 variable-rate term loan debt had not been hedged via an interest rate swap agreement.
A change in our variable interest rate of 100 basis points for a full twelve-month period would have an approximate $0.7 million impact on interest expense assuming approximately 50% of our average fiscal 2024 variable-rate term loan debt had not been hedged via an interest rate swap agreement.

Other CVGI 10-K year-over-year comparisons