CVG - Commercial Vehicle Group Inc.

03/10/2026 | Press release | Distributed by Public on 03/10/2026 14:55

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis in conjunction with the information set forth in our consolidated financial statements and the notes thereto included in Item 8 in this Annual Report on Form 10-K. The statements in this discussion regarding industry outlook, our long-term strategy, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. See "Forward-Looking Information" on page ii of this Annual Report on Form 10-K. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under "Item 1A - Risk Factors." Our actual results may differ materially from those contained in or implied by any forward-looking statements.
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.
We have manufacturing operations in the United States, Mexico, China, United Kingdom, Czech Republic, Ukraine, Morocco, Thailand, India and Australia. Our products are primarily sold in North America, Europe, and the Asia-Pacific region.
We primarily manufacture customized products to meet the requirements of our customer. We believe our products are used by a majority of the North American Commercial Truck markets, many construction and agriculture vehicle OEMs, parts and service dealers and distributors.
Commercial Trends in the Global Seating and Trim Systems and Components Segments
Demand for our products may be driven by preferences of the end-user of the vehicle, particularly with respect to heavy-duty trucks in North America. Heavy-duty truck OEMs generally dictate the specifications of component parts that will be used to manufacture the vehicle, including a wide variety of cab interior styles and colors, brand and type of seats, type of seat fabric and color, and interior styling. Certain of our products are only utilized in heavy-duty trucks, such as our storage systems, sleeper boxes and privacy curtains. To the extent that demand for higher content vehicles increases or decreases, our revenues and gross profit will be impacted positively or negatively.
Current trends include future adoption of electric vehicles in the commercial truck segment. Commercial truck makers are developing electric models of all classes of trucks and buses in their fleets. This has created an increased number of platform opportunities relative to historical trends of platform changes. The Company competes to retain its existing positions on platforms that are getting refreshed, competitively win new positions on platforms on which it is not the incumbent supplier, and gain first fit positions on new Electric Vehicle platforms. The global truck market is evolving to include many offerings aimed at low emissions and less impact on the environment.
In general, demand for our heavy-duty (or "Class 8") truck products is generally dependent on the number of new heavy-duty trucks manufactured in North America, which in turn is a function of general economic conditions, supply chain constraints, interest rates, changes in government regulations, consumer spending, fuel costs, freight costs, fleet operators' financial health and access to capital, used truck prices and our customers' inventory levels. 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 251,247 units in 2025. According to a February 2026 report by ACT Research, a publisher of industry market research, North American Class 8 production levels are expected to increase to approximately 260,000 units in 2026. ACT Research estimated that the average age of active North American Class 8 trucks was 5.8 years in 2025. As vehicles age, maintenance costs typically increase. 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 195,522 units in 2025. According to a February 2026 report by ACT Research, North American Class 5-7 truck production is expected to increase to approximately 197,000 units in 2026. We primarily participate in the class 6 and 7 portion of the medium-duty truck market.
Commercial Trends in the Global Electrical Systems Segment
Demand for our Global Electrical Systems products, such as wire harnesses, is primarily driven by construction and agriculture equipment vehicle production. Demand for new vehicles in the global construction and agriculture equipment market generally follows certain economic conditions around the world. Our products are primarily used in the medium- and heavy-duty construction and agriculture equipment market (vehicles weighing over 12 metric tons). Demand in the medium- and heavy-
duty construction and agriculture equipment market is typically related to the level of large scale infrastructure development projects, such as highways, dams, harbors, hospitals, airports and industrial development, as well as activity in the mining, forestry and commodities industries.
A developing trend that may have a favorable impact on our Global Electrical Systems segment is the expectation that autonomous, self-driving cars are expected to become more common with continued advancements in technology, including applications such as last mile delivery. Demand for autonomous vehicles will contribute to higher electrical and electronic content per vehicle and increased complexity in vehicle wiring architectures. As vehicles incorporate additional sensors, connectivity features, and electronic systems, demand is expected to increase for more complex wire harness solutions supporting power distribution, data transmission, and safety-related functions. This trend may create opportunities for suppliers, like us, with capabilities in advanced design, engineering, and manufacturing of integrated wiring systems. The timing and extent of adoption of these technologies remain uncertain and are influenced by factors such as regulatory requirements, technology readiness, infrastructure development, and overall vehicle production levels. Changes in vehicle mix, platform design, or customer demand could impact volumes and content levels and, in turn, affect demand for the Company's products.
Other Key Developments
The Company announced on June 27, 2025, it had closed on $210 million in senior secured credit facilities, consisting of (i) a $95 million senior secured Term Loan with TCW Group, as agent, and (ii) a $115 million senior secured asset-based revolving credit facility with Bank of America, N.A., as agent. Obligations under the new senior secured credit facilities will mature on June 27, 2030, with the ABL revolving credit facility springing to 91 days prior to the maturity of the Term Loan or third-party subordinated debt.
In connection with the financing, TCW Group affiliates received five-year warrants for the purchase of up to 3,934,776 shares of the company's common stock, issued in two equal tranches. The tranches of warrants have an exercise price of $1.52 and $2.07 per share, respectively. Until the fourth anniversary after issuance, the Company has the right to repurchase up to 50% of each tranche of warrants at a price equal to $1.40 or $1.00 per share, respectively, above the applicable exercise price. Upon a refinancing of the new credit agreement, the holders can require the Company to repurchase up to 50% of each tranche at a price equal to the price of the common stock at the time of repurchase less the exercise price. The warrants contain customary anti-dilution adjustments. The Company has provided the holders with certain information and registration rights, including filing a registration statement within 45 days to register the resale of the shares underlying the warrants.
The Company announced a new organizational structure designed to enhance alignment with its customers and end markets, effective January 1, 2025. Under this new structure, CVG reorganized its vertical business units into the following three operating divisions and reporting segments: Global Electrical Systems, Global Seating, Trim Systems and Components. As part of this realignment, the Company's Aftermarket & Accessories business unit was absorbed in these three segments. Its seating and electrical portfolio transitioned to Global Seating and Global Electrical Systems, respectively. Its wiper systems became part of the newly formed Trim Systems and Components business unit in addition to the trim and components businesses from the prior Vehicle Solutions segment.
We are navigating through several challenging external factors which create uncertainty and volatility in our end markets, including, but not limited to, geopolitical dynamics, new and changing tariff actions and responses, tax regulation and fluctuating foreign exchange rates. We expect the Company's cost of goods sold will continue to be impacted by tariffs which increase the price of materials purchased and products sold to customers. In the past, we have negotiated with our customers in an attempt to pass on a portion of the increased costs resulting from the tariffs to our customers, although there is significant uncertainty as to our ability to pass these costs, or a portion of these costs, along to our customers. Geopolitical uncertainties will continue to create a challenging operating environment. We continue to closely monitor the situation and are prepared to remain agile in responding to any new developments. In addition, lower courts and administrative processes will need to provide guidance with respect to refund-related questions with respect to the IEEPA tariffs paid prior to the recent U.S. Supreme Court decision.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions, was signed into law in the United States. Key provisions of the bill include, but are not limited to, immediate expensing of R&D expenditures, restoration and expansion of 100% bonus depreciation and permanent reinstatement of the EBITDA limitation for the calculation of the 163(j) business interest expense deduction. Additionally, the bill extends and modifies certain international tax provisions of the 2017 Tax Cuts and Jobs Act that were set to expire at the end of 2025. The tax provisions in OBBBA did not have a material impact on the Company's consolidated financial statements or results of operations.
Our Long-term Strategy
The Company's long-term strategy is to increase our sales, profits and shareholder value by growing our Global Electrical Systems segment to be our largest business while financially optimizing its core legacy businesses, organically growing in targeted areas, strengthening our product portfolio, increasing our margins and evaluating opportunities to add to our businesses through a focused M&A program. The Company expects to diversify its revenue and profits by product, customer, platform, and end market with a goal of becoming less cyclical and less customer concentrated while strengthening / enhancing current positions, entering new markets, developing relationships with new customers, and enhancing service to our customers, leading to increased return to our stockholders. Our products include electrical wire harnesses, seating systems, plastic components, mirrors, wipers and other accessories.
We have a long-term strategy to globally optimize our cost structure through manufacturing process enhancements, low cost footprint and global sourcing. Our Board and management periodically and from time to time, review and evaluate our short-term and long-term strategies, as well as potential strategic alternatives, to enhance shareholder value. These strategic alternatives may include, among others, acquisitions, dispositions and other business combination transactions, recapitalizations, restructurings or other transactions, in each case, involving all or a portion of our business. There can be no assurance that any such transaction will be pursued or completed, or, if completed, that it will achieve the intended strategic or financial objectives.
CONSOLIDATED RESULTS OF OPERATIONS
The table below sets forth certain operating data expressed as a percentage of revenues for the twelve months ended (dollars are in thousands):
2025 2024 2023
Revenues $ 649,002 100.0 % $ 723,355 100.0 % $ 835,469 100.0 %
Cost of revenues 580,617 89.5 650,236 89.9 714,378 85.5
Gross profit 68,385 10.5 73,119 10.1 121,091 14.5
Selling, general and administrative expenses 69,041 10.6 73,877 10.2 81,218 9.7
Operating income (loss) (656) (0.1) (758) (0.1) 39,873 4.8
Other (income) expense 1,593 0.2 (2,200) (0.3) 1,195 0.1
Interest expense 13,028 2.0 9,174 1.3 10,248 1.2
Loss on extinguishment of debt 460 0.1 509 0.1 - -
Income (loss) before provision for income taxes (15,737) (2.4) (8,241) (1.1) 28,430 3.4
Provision (benefit) for income taxes 4,740 0.7 27,493 3.8 (15,203) (1.8)
Net income (loss) from continuing operations $ (20,477) (3.2) % $ (35,734) (4.9) % $ 43,633 5.2 %
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Consolidated Results
The table below sets forth certain consolidated operating data for the twelve months ended indicated (dollars are in thousands):
2025 2024 $ Change % Change
Revenues $ 649,002 $ 723,355 $ (74,353) (10.3)%
Gross profit 68,385 73,119 (4,734) (6.5)
Selling, general and administrative expenses 69,041 73,877 (4,836) (6.5)
Other (income) expense 1,593 (2,200) 3,793
NM 1
Interest expense 13,028 9,174 3,854 42.0
Loss on extinguishment of debt 460 509 (49) (9.6)
Provision (benefit) for income taxes 4,740 27,493 (22,753) (82.8)
Net income (loss) from continuing operations (20,477) (35,734) 15,257 (42.7)
1.Not meaningful
Revenues. The decrease in consolidated revenues resulted from:
•a $69.4 million, or 11.7%, decrease in sales to OEM and a decrease in other revenues; and
•a $5.0 million, or 3.9%, decrease in aftermarket and OES sales.
The decrease in revenues of 10.3% was primarily driven by a softening in customer demand in the Global Seats and Trim Systems & Components segments.
Gross Profit.Included in gross profit is cost of revenues, which consists primarily of raw materials and purchased components for our products, wages and benefits for our employees and overhead expenses such as manufacturing supplies, facility rent and utilities costs related to our operations. The decrease in gross profit was primarily attributable to the impact of lower sales volumes. Cost of revenues decreased $69.6 million, or 10.7% as a result of a decrease in raw material and purchased component costs of $46.8 million, or 12.3%; a decrease in wages and benefits of $4.3 million, or 6.9%; and a decrease in overhead expenses of $18.4 million, or 8.9%. As a percentage of revenues, gross profit margin was 10.5% for the year ended December 31, 2025 compared to 10.1% for the year ended December 31, 2024.
Selling, General and Administrative Expenses.Selling, general and administrative ("SG&A") expenses consist primarily of wages and benefits and other expenses such as marketing, travel, legal, audit, rent and utilities costs, which are not directly or indirectly associated with the manufacturing of our products. SG&A expenses decreased $4.8 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to implementation of cost control measures designed to align with the magnitude of continuing operations and focus on leveraging existing resources to improve profitability in a low demand period. The twelve months ended December 31, 2024 results include a benefit of $3.5 million from the gain on the sale of a building. As a percentage of revenues, SG&A expense was 10.6% for the twelve months ended December 31, 2025 compared to 10.2% for the twelve months ended December 31, 2024.
Other (Income) Expense. Other expense increased $3.8 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024 due primarily to transition service fee income of $3.2 million recognized during the year ended December 31, 2024 which supported the transition of discontinued operations transactions.
Interest Expense.Interest associated with our debt was $13.0 million and $9.2 million for the years ended December 31, 2025 and 2024, respectively. The increase in interest expense was primarily attributed to higher weighted average margins on debt balances, partially offset by the impact of lower average debt balances during the respective comparative periods.
Loss on extinguishment of debt. On June 27, 2025, the Company recognized a loss on extinguishment of debt to reflect the write-off of deferred financing fees related to early repayment of the prior revolver of $0.5 million. On December 19, 2024, the Company refinanced its long-term debt, which resulted in a loss of $0.5 million, including a $0.3 million non-cash write off relating to deferred financing costs of the Term loan facility due 2027 and $0.2 million of other associated fees.
Provision (Benefit) for Income Taxes. Income tax expense of $4.7 million and $27.5 million were recorded for the years ended December 31, 2025 and 2024, respectively. The period over period change in income tax was primarily attributable to establishing a full valuation allowance on our U.S. deferred tax assets of $28.8 million in 2024.
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. 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. We continue to monitor the adoption of the OECD Pillar Two global minimum tax rules in each of our tax jurisdictions to evaluate its impact on our effective income tax rate. Pillar Two did not have a material impact to our effective tax rate for the year ended December 31, 2025.
Net Income (Loss) from continuing operations.Net loss from continuing operations was $20.5 million for the twelve months ended December 31, 2025 compared to net loss from continuing operations of $35.7 million for the twelve months ended December 31, 2024. The decrease in net income from continuing operations was attributable to the factors noted above.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Consolidated Results
The table below sets forth certain consolidated operating data for the periods 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 expense (2,200) 1,195 (3,395)
NM1
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
NM1
Net income (loss) from continuing operations (35,734) 43,633 (79,367)
NM1
1.Not meaningful
Revenues. The decrease in consolidated revenues resulted from:
•a $104.6 million, or 15.0%, decrease in sales to OEM and a decrease in other revenues; and
•a $7.5 million, or 5.5%, decrease in aftermarket and OES sales.
The decrease in revenues of 13.4% was primarily driven by a softening in customer demand across all segments, and the wind-down of certain programs in our Global Seating/ Trim Systems and Components segments.
Gross Profit.The decrease in gross profit was primarily attributable to the impact of lower sales volumes, unfavorable mix, and increased restructuring charges. Cost of revenues decreased $64.1 million, or 9.0% as a result of a decrease in raw material and purchased component costs of $54.9 million, or 12.6%; a decrease in wages and benefits of $6.9 million, or 9.9%; anda decrease in overhead expenses of $2.3 million, or 1.1%. As a percentage of revenues, gross profit margin was 10.1% for the year ended December 31, 2024compared to 14.5% for the year ended December 31, 2023.
Selling, General and Administrative Expenses.SG&A expenses decreased $7.3 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily as a result of the gain on the sale of a building of $3.5 million and reduced incentive compensation expense, partially offset by an increase in salary expense and consulting spend during the 2024 period. As a percentage of revenues, SG&A expense was 10.2% for the twelve months ended December 31, 2024 compared to 9.7% for the twelve months ended December 31, 2023.
Other (Income) Expense. Other expense increased $3.4 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 due primarily to transition service fees of $3.2 million recognized during the year ended December 31, 2024 which supported the transition of discontinued operations transactions as well as favorable change in foreign currency of $0.5 million.
Interest Expense.Interest associated with our debt was $9.2 million and $10.2 million for the years ended December 31, 2024 and 2023, respectively. The decrease primarily related to lower average debt balances, partially offset by higher interest rates on variable rate debt during the respective comparative periods.
Loss on extinguishment of debt. On December 19, 2024, the Company refinanced its long-term debt, which resulted in a loss $0.5 million, including a $0.3 million non-cash write off relating to deferred financing costs of the Term loan facility due 2027 and $0.2 million of other associated fees.
Provision (Benefit) for Income Taxes. Income tax expense of $27.5 million and income tax benefit of $15.2 million were recorded for the years ended December 31, 2024 and 2023, respectively. The period over period change in income tax was primarily attributable to the $36.7 million decrease in pre-tax income versus the prior year period which led to establishing a full valuation allowance on our U.S. deferred tax assets of $28.8 million in 2024. During 2023 the Company reversed the $22.0 million valuation allowance on our U.S. deferred tax assets that was established in 2022.
Net Income (Loss) from continuing operations.Net loss from continuing operations was $35.7 million for the twelve months ended December 31, 2024compared to net income from continuing operations of $43.6 million for the twelve months ended December 31, 2023. The decrease in net income from continuing operations was attributable to the factors noted above.
SEGMENT RESULTS OF OPERATIONS
Global Seating Segment Results
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The table below sets forth certain Global Seating Segment operating data for the twelve months ended, (dollars are in thousands):
2025 2024 $ Change % Change 2023 $ Change % Change
Revenues $ 287,249 $ 314,682 $ (27,433) (8.7)% $ 348,690 $ (34,008) (9.8)%
Gross profit 35,281 37,551 (2,270) (6.0) 43,151 (5,600) (13.0)
Selling, general & administrative expenses 27,435 33,521 (6,086) (18.2) 34,026 (505) (1.5)
Operating income
7,846 4,030 3,816 94.7 9,125 (5,095) (55.8)
Revenues.The decrease in Global Seating Segment revenues in 2025 of $27.4 million from 2024 primarily resulted from lower sales volume due to decreased customer demand in North America. The decrease in 2024 revenues of $34.0 million from 2023 primarily resulted from lower sales volume due to decreased customer demand and the wind-down of certain programs.
Gross Profit.The decrease in 2025 gross profit of $2.3 million from 2024 was primarily due to lower sales volume and restructuring activities, offset by lower freight costs and improved operational efficiency, and a decrease in cost of revenues driven by a decrease in raw material and purchased component costs of $22.3 million, or 13.0%; a decrease in overhead expenses of $2.1 million, or 2.6%; and a decrease in wages and benefits of $0.8 million, or 3.6%. The decrease in 2024 gross profit of $5.6 million from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs, partially offset by a decrease in cost of revenues driven by a decrease in raw material and purchased components costs of $20 million, or 10.5%; a decrease in overhead expenses of $6.8 million, or 7.5%; and a decrease in wages and benefits of $1.6 million, or 6.9%.
As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 12.3% and 12.0%, respectively. The decrease in gross profit in 2025 from 2024 was primarily due to lower sales volume. The twelve months ended December 31, 2025 results include charges of $2.3 million associated with the restructuring program. The decrease in gross profit margin in 2024 from 2023 was primarily due to lower sales volume, restructuring activities and increased freight costs. The twelve months ended December 31, 2024 results include charges of $1.5 million associated with the restructuring program.
Selling, General and Administrative Expenses.The decrease in 2025 SG&A expenses of $6.1 million from 2024 was primarily a result of reduced payroll and benefits expense. The twelve months ended December 31, 2025 results include charges of $0.2 million associated with the restructuring program. The decrease in 2024 SG&A expenses of $0.5 million from 2023 was primarily a result of reduced incentive compensation expense.
Global Electrical Systems Segment Results
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The table below sets forth certain Global Electrical Systems Segment operating data for the twelve months ended, (dollars are in thousands):
2025 2024 $ Change % Change 2023 $ Change % Change
Revenues $ 203,186 $ 203,128 $ 58 -% $ 242,390 $ (39,262) (16.2)%
Gross profit 21,492 13,182 8,310 63.0 39,645 (26,463) (66.7)
Selling, general & administrative expenses 19,443 17,742 1,701 9.6 17,088 654 3.8
Operating income 2,049 (4,560) 6,609
NM1
22,557 (27,117)
NM1
1.Not meaningful
Revenues.The Global Electrical Systems segment revenues in 2025 were flat from 2024. The decrease in 2024 revenues of $39.3 million from 2023 was primarily attributable to lower sales volume driven by global softness in Construction & Agriculture end-markets.
Gross Profit.The increase in 2025 gross profit of $8.3 million from 2024 was primarily attributable to mix and improved operational efficiency, and a decrease in cost of revenues driven by a decrease in overhead expenses of $7.0 million, or 10.8%; a decrease in wages and benefits of $0.8 million, or 2.8%; and a decrease in raw material and purchased component costs of $0.5 million, or 0.5%. The decrease in 2024 gross profit of $26.5 million from 2023 was primarily attributable to lower sales volume, restructuring activities, labor inflation and unfavorable foreign exchange impacts.
As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 10.6% and 6.5%, respectively. The increase in 2025 gross profit margin was primarily due to mix and improved operational efficiency. The twelve months ended December 31, 2025 results include charges of $1.6 million associated with the restructuring program. The decrease in 2024 gross profit margin was primarily due to lower sales volume, restructuring activities, labor inflation, and unfavorable foreign exchange impacts. The twelve months ended December 31, 2024 results include charges of $3.7 million associated with the restructuring program.
Selling, General and Administrative Expenses.2025 SG&A expenses increased $1.7 million from 2024, primarily driven by increased salaries and benefits. The increase of $0.7 million in 2024 from 2023, primarily driven by increased salaries.
Trim Systems and Components Segment Results
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 and Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The table below sets forth certain Trim Systems and Components Segment operating data for the twelve months ended, (dollars are in thousands):
2025 2024 $ Change % Change 2023 $ Change % Change
Revenues $ 158,567 $ 205,545 ($46,978) (22.9)% $ 244,389 $ (38,844) (15.9)%
Gross profit 11,612 22,544 (10,932) (48.5) 38,478 (15,934) (41.4)
Selling, general & administrative expenses 12,402 10,698 1,704 15.9 17,399 (6,701) (38.5)
Operating income (790) 11,846 (12,636)
NM1
21,079 (9,233) (43.8)
1.Not meaningful
Revenues.The decrease in Trim Systems and Components segment revenues in 2025 of $47.0 million from 2024 was driven by lower sales volume due to a decreased customer demand in North America. The decrease in 2024 revenues of $38.8 million from 2023 was driven by lower sales volume due to decreased customer demand and the reduction of backlog in the prior period.
Gross Profit.The decrease in 2025 gross profit of $10.9 million from 2024 was primarily due to the lower sales volume. Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $24.0 million, or 21.0%; a decrease in overhead expenses of $9.3 million, or 16.1%; and a decrease in wages and benefits of $2.7 million, or 24.8%. The decrease in 2024 gross profit of $15.9 million from 2023 was primarily due to the lower sales volume.
As a percentage of revenues, gross profit for the years ended December 31, 2025 and 2024, was 7.3% and 11.0%, respectively. The decrease in 2025 gross profit margin was primarily due to lower sales volume. The twelve months ended December 31, 2025 results include charges of $1.0 million associated with the restructuring program. The decrease in 2024 gross profit margin was primarily due to lower sales volume and restructuring related expenses. The twelve months ended December 31, 2024 results include charges of $3.9 million associated with the restructuring program.
Selling, General and Administrative Expenses.SG&A expenses increased by $1.7 million in 2025 compared to 2024 primarily as a result of the gain on the sale of a building of $3.5 million in the prior year period. The decrease in 2024 SG&A expenses of $6.7 million from 2023 was primarily due to gain on the sale of a building of $3.5 million.
Liquidity and Capital Resources
At December 31, 2025, the Company had $16.8 million in outstanding borrowings under its revolving credit facility and outstanding letters of credit of $2.1 million. At December 31, 2025, the Company had liquidity of $135.1 million, including $33.3 million of cash and $101.8 million availability from its U.S. and China credit facilities (subject to borrowing base and other conditions of the facilities).
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.
Our primary sources of liquidity during the year ended December 31, 2025 were operating income, cash and availability under our credit facility. We believe that these sources of liquidity will provide adequate funds for our working capital needs, capital expenditures and debt service throughout the next twelve months. 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, 2025, cash of $33.0 million was held by foreign subsidiaries. The Company had a $0.1 million deferred tax liability as of December 31, 2025 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected.
Covenants and Liquidity
Our ability to comply with the covenants in the Term Loan and ABL Revolving Credit Facility, as discussed in Note 3, Debt,
may be affected by economic or business conditions beyond our control. Based on our current forecast, we believe that we will be able to maintain compliance with the financial maintenance covenants and the fixed charge coverage ratio covenant and other covenants in the Term Loan and ABL Revolving Credit Facility for the next twelve months; however, no assurances can be given that we will be able to comply. We base our forecasts on historical experience, industry forecasts and other assumptions that we believe are reasonable under the circumstances. If actual results are substantially different than our current forecast, we may not be able to comply with our financial covenants.
Cash Flows
2025 2024 2023
(In thousands)
Net cash provided by (used in) operating activities
$ 44,643 $ (33,452) $ 38,276
Net cash provided by (used in) investing activities
(10,606) 30,896 (19,696)
Net cash provided by (used in) financing activities
(29,233) (7,122) (12,729)
Effect of currency exchange rate changes on cash 1,848 (1,540) 172
Net increase (decrease) in cash
$ 6,652 $ (11,218) $ 6,023
Operating activities. For the year ended December 31, 2025, net cash provided by operations was $44.6 million compared to net cash used in operations of $33.5 million for the year ended December 31, 2024. Net cash provided by operating activities was primarily attributable to a decrease in working capital for the twelve months ended December 31, 2025 as compared to a loss from continuing and discontinued operations, including cash used to support restructuring programs for the twelve months ended December 31, 2024.
Investing activities. Net cash used in investing activities was $10.6 million for the year ended December 31, 2025 compared to net cash provided by investing activities of $30.9 million for the twelve months ended December 31, 2024. The change was mainly due to a targeted reduction of capital spending in the current year, compared with $23.0 million proceeds from the sale of the Company's cab structures and FinishTEK businesses during the prior year period and $4.5 million proceeds from the sale of a building during the 2024 period offsetting expenditures. In 2026, we expect capital expenditures to be in the range of $12 million to $18 million.
Financing activities. For the year ended December 31, 2025, net cash used in financing activities was $29.2 million compared to $7.1 million for the year ended December 31, 2024. Net cash used in financing activities for the year ended December 31, 2025 was primarily attributable to the net repayment of $23.7 millionof long-term debt and $6.1 million debt issuance and amendment costs to refinance our debt, compared to net repayment of $6.1 million during 2024.
Debt and Credit Facilities
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.
Contractual Obligations and Commercial Commitments
The following table reflects our contractual obligations as of December 31, 2025 (in thousands):
Payments Due by Period
Total
1 Year 		2-3 Years 4-5 Years More than
5 Years
(In thousands)
Debt obligations $ 111,365 $ 942 $ 8,102 $ 102,321 $ -
Estimated interest payments 54,766 12,952 24,890 16,924 -
Leasing obligations 58,076 11,929 15,710 10,718 19,719
Non-U.S. pension funding 12,791 1,674 3,348 3,454 4,315
Total $ 236,998 $ 27,497 $ 52,050 $ 133,417 $ 24,034
We estimated future interest payments based on the effective interest rate as of December 31, 2025. Since December 31, 2025, 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. These agreements generally provide for the supply of a customer's production requirements for a particular platform rather than for the purchase of a specific quantity of products. The obligations under these agreements and regulations are not reflected in the contractual obligations table above.
As of December 31, 2025, 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"). For a comprehensive discussion of our significant accounting policies, see Note 1, Significant Accounting Policies, to our consolidated financial statements in Item 8 in this Annual Report on Form 10-K.
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ materially from these estimates and assumptions. See Item 1A - Risk Factorsin this Annual Report on Form 10-K for additional information regarding risk factors that may impact our estimates.
Revenue Recognition -We recognize revenue when our performance obligation has been satisfied and control of products has been transferred to a customer, which typically occurs upon shipment. Revenue is measured based on the amount of consideration we expect to receive in exchange for the transfer of goods or services. We enter into agreements with certain customers in the Global Seating and Trim Systems and Components segments at the beginning of a vehicle platform's life to supply products for that vehicle platform. Once we enter into such agreements, fulfillment of our requirements is our obligation for the entire production life of the platform. Such contracts typically contain restrictive provisions related to termination. Management judgments and estimates must be made in estimating sales returns and allowances relating to revenue recognized in a given period.
Inventory- Inventories are valued at the lower of first-in, first-out cost or net realizable value. Cost includes applicable material, labor and overhead. We value our finished goods inventory at a standard cost that is periodically adjusted to approximate actual cost. Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based primarily on our estimated production requirements driven by expected market volumes.
Income Taxes -We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax laws and rates expected to be in place when the deferred tax items are realized. 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. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under tax law. 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. In our assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, (1) the cumulative three-year income position, (2) the nature, frequency and severity of any current and cumulative losses; (3) forecasts of future profitability; (4) the duration of statutory carryforward periods; (5) our experience with operating loss and tax credit carryforwards not expiring unused, and (6) tax planning alternatives. As of December 31, 2025 and 2024, the Company was in a cumulative three-year taxable loss position in the U.S. which was given the most weight in our analysis of all positive and negative evidence when determining whether to establish a valuation allowance. As of December 31, 2023, the Company was in a cumulative three-year taxable income position in the U.S. which was given the most weight in our analysis of all positive and negative evidence when determining whether to reverse the previously recognized valuation allowance.
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