Commercial Vehicle Group Inc
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
CVGI$3.15-3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001628280-24-034779
ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001628280-24-045013
ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 96 current paragraphs.
33 unchanged; 45 reworded; 18 added; 27 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
On July 31, 2024, the Company and SVO, LLC ("Buyer") entered into a purchase agreement pursuant to which the Company would sell substantially all of the assets of the Company's business of manufacturing and assembling structured products, including cabs for medium and heavy-duty vehicles, at its facility in Kings Mountain, North Carolina (the Cab Structures business). On September 6, 2024, the Company and Buyer entered into an Amendment to the Purchase Agreement whereby the transaction closed on September 6, 2024 with the Buyer paying the Company $20 million of the $40 million Purchase Price. Pursuant to the Amended Purchase Agreement, the Parties agreed (i) that the remaining $20 million of the Purchase Price would be paid on October 1, 2024, (ii) that the Assigned Contracts (as defined in the Purchase Agreement) and the employees of Seller would transfer to Buyer on October 1, 2024, and (iii) the inventory would be valued as of October 1, 2024, for purposes of determining any adjustment to the Purchase Price.The Company received the remaining portion of the Purchase Price on October 1, 2024. The net proceeds of the transaction were approximately $40 million. The Company used the proceeds for debt paydown and other general corporate purposes. The Company recorded an after-tax gain on the sale of the business of approximately $27.2 million for the three months ended September 30, 2024.
Current report
The cab structures and Industrial Automation segment divestitures represent a strategic shift in CVG's business and, in accordance with U.S. GAAP, qualified as discontinued operations. As a result, the operating results and cash flows related to the cab structures business and Industrial Automation segment have been reflected as discontinued operations in the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows. The assets and liabilities that are to be sold have met the requirements to be classified within the Condensed Consolidated Balance Sheets under a held for sale designation. See Note 18, Discontinued Operations, for additional information on the divestitures.
Current report
Certain indirect corporate costs included within the selling, general and administrative expense caption of the Condensed Consolidated Statements of Operations that were previously allocated to the Kings Mountain facility and Industrial Automation segment do not qualify for classification within discontinued operations and are now reported as selling, general and administrative expense within continuing operations on a consolidated basis and within the Corporate and other segment. CVG is implementing plans to eliminate these costs as part of its restructuring program.
Current report
Other Income. Other Income increased $1.4 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in other income primarily related to TSA fees of $2.0 million recognized during the three months ended September 30, 2024.
Current report
As a percentage of revenues, gross profit margin was 9.0% for the three months ended September 30, 2024 compared to 13.1% for the three months ended September 30, 2023. The decrease in gross profit margin was primarily due to lower sales volumes, restructuring activities and increased freight costs. The three months ended September 30, 2024 results include charges of $1.5 million associated with the restructuring program.
Current report
Selling, General and Administrative Expenses. SG&A expenses decreased $3.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily as a result of the gain on the sale of a building of $3.5 million. The three months ended September 30, 2024 results include charges of $0.7 million associated with the restructuring program.
Current report
As a percentage of revenues, gross profit margin was 5.1% for the three months ended September 30, 2024 compared to 14.6% for the three months ended September 30, 2023. The decrease in gross profit margin was primarily due to lower sales volumes, restructuring costs, and unfavorable foreign exchange impacts. The three months ended September 30, 2024 results include charges of $1.3 million associated with the restructuring program.
Current report
Selling, General and Administrative Expenses. SG&A expenses increased $0.6 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current report
As a percentage of revenues, gross profit margin was 17.6% for the three months ended September 30, 2024 compared to 19.0% for the three months ended September 30, 2023. The decrease in gross profit margin was primarily due to lower sales volumes, operational inefficiencies and restructuring related expenses. The three months ended September 30, 2024 results include charges of $0.8 million associated with the restructuring program.
Current report
Selling, General and Administrative Expenses. SG&A expenses increased $0.2 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current report
Not meaningful
Current report
Other Income. Other Income increased $1.1 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in other income primarily related to TSA fees of $2.0 million recognized during the nine months ended September 30, 2024.
Current report
Gross Profit. The decrease in gross profit of $17.1 million was primarily attributable to lower sales volume, restructuring activities and increased freight costs. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $24.0 million, or 12.0%, and a decrease in labor and overhead expenses of $8.9 million, or 7.9%.
Current report
Selling, General and Administrative Expenses. SG&A expenses decreased $3.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily as a result of the gain on the sale of a building of $3.5 million. The nine months ended September 30, 2024 results include charges of $1.0 million associated with the restructuring program.
Current report
Gross Profit. The decrease in gross profit of $16.6 million is primarily attributable to lower sales volume, restructuring activities, labor inflation and unfavorable foreign exchange impacts. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $11.7 million, or 14.4%; offset by an increase in labor and overhead expenses of $5.4 million, or 8.4%.
Current report
Selling, General and Administrative Expenses. SG&A expenses increased $0.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to increased salaries.
Current report
Gross Profit. The decrease in gross profit of $3.0 million is primarily attributable to the lower sales volume. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $8.5 million, or 15.6%, offset by an increase in labor and overhead expenses of $2.7 million, or 8.6%.
Current report
Selling, General and Administrative Expenses. SG&A expenses increased $0.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Removed paragraphs (27)
Previous report
On July 31, 2024, the Company and SVO, LLC entered into a purchase agreement pursuant to sell its Cab Structures business with operations in Kings Mountain, North Carolina to a Volvo Group company, effective July 31, 2024. The net proceeds of the transaction are expected to be$40 million, with closure expected in the second half of 2024. The Company expects the majority of proceeds to be used for debt paydown and other general corporate purposes.
Previous report
•a $4.0 million, or 44.6%, decrease in industrial automation sales.
Previous report
As a percentage of revenues, gross profit margin was 8.2% for the three months ended June 30, 2024 compared to 13.7% for the three months ended June 30, 2023. The decrease in gross profit margin was primarily due to lower customer demand, restructuring activities and increased freight costs. The three months ended June 30, 2024 results include charges of $3.0 million associated with the restructuring program.
Previous report
Selling, General and Administrative Expenses. SG&A expenses decreased $0.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The three months ended June 30, 2024 results include charges of $0.3 million associated with the restructuring program.
Previous report
Gross Profit. The decrease in gross profit of $7.2 million is primarily attributable to lower customer demand, restructuring activities, labor inflation and unfavorable foreign exchange impacts. Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $7.1 million, or 22.8%; partially offset by an increase in labor and overhead expenses of $0.8 million, or 3.5%.
Previous report
As a percentage of revenues, gross profit margin was 6.3% for the three months ended June 30, 2024 compared to 16.3% for the three months ended June 30, 2023. The decrease in gross profit margin was primarily due to lower customer demand, restructuring costs, labor inflation, and unfavorable foreign exchange impacts. The three months ended June 30, 2024 results include charges of $1.4 million associated with the restructuring program.
Previous report
Selling, General and Administrative Expenses. SG&A expenses remained flat within the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous report
As a percentage of revenues, gross profit margin was 19.0% for the three months ended June 30, 2024 compared to 21.1% for the three months ended June 30, 2023. The decrease in gross profit margin was primarily due to lower sales volumes, product mix and higher labor and benefit costs. The three months ended June 30, 2024 results include charges of $0.2 million associated with the restructuring program.
Previous report
Selling, General and Administrative Expenses. SG&A expenses decreased $0.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous report
Industrial Automation Segment Results
Previous report
The table below sets forth certain Industrial Automation Segment operating data for the three months ended June 30 (dollars are in thousands):
Previous report
Revenues. The decrease in Industrial Automation Segment revenues of $4.0 million primarily resulted from lower sales volume due to decreased customer demand.
Previous report
Gross Loss. The decrease in negative gross profit of $0.4 million was primarily attributable to benefits from restructuring programs implemented in 2023. Cost of revenues decreased in line with the sales decrease of 44.6%, driven by a decrease in raw material and purchased component costs of $4.4 million, or 58.0%; and a decrease in labor and overhead expenses of $0.1 million, or 4.6%.
Previous report
As a percentage of revenues, negative gross profit margin was 3.8% for the three months ended June 30, 2024 compared to 7.1% for the three months ended June 30, 2023. The decrease in negative gross profit margin is primarily due to benefits from restructuring programs implemented in 2023. The three months ended June 30, 2024 results include charges of $0.1 million associated with the restructuring program.
Previous report
Selling, General and Administrative Expenses. SG&A expenses decreased $0.6 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily attributable to restructuring the business to be in line with decreased demand.
Previous report
•a $9.5 million, or 50.5%, decrease in industrial automation sales.
Previous report
Gross Profit. The decrease in gross profit of $12.6 million was primarily attributable to lower customer demand, restructuring activities and increased freight costs. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $17.8 million, or 9.8%; and a decrease in labor and overhead expenses of $4.1 million, or 4.5%.
Previous report
Selling, General and Administrative Expenses. SG&A expenses decreased $0.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The six months ended June 30, 2024 results include charges of $0.3 million associated with the restructuring program.
Previous report
Gross Profit. The decrease in gross profit of $10.9 million is primarily attributable to lower customer demand, restructuring activities, labor inflation and unfavorable foreign exchange impacts. Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $7.4 million, or 13.1%; offset by an increase in labor and overhead expenses of $5.9 million, or 13.7%.
Previous report
Selling, General and Administrative Expenses. SG&A expenses increased $0.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Previous report
Gross Profit. The decrease in gross profit of $2.1 million is primarily attributable to the lower sales volume. Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $5.3 million, or 13.9%, offset by an increase in labor and overhead expenses of $0.9 million, or 4.0%.
Previous report
Selling, General and Administrative Expenses. SG&A expenses for the six months ended June 30, 2024 remained consistent with the expenses incurred in the six months ended June 30, 2023.
Previous report
Industrial Automation Segment Results
Previous report
The table below sets forth certain Industrial Automation Segment operating data for the six months ended June 30, (dollars are in thousands):
Previous report
Revenues. The decrease in Industrial Automation Segment revenues of $9.5 million primarily resulted from lower sales volume due to decreased customer demand.
Previous report
As a percentage of revenues, negative gross profit margin was 8.0% for the six months ended June 30, 2024 compared to 2.2% for the six months ended June 30, 2023 due to the previously noted lower sales volume and fixed cost absorption. The six months ended June 30, 2024 results include charges of $0.2 million associated with the restructuring program.
Previous report
Selling, General and Administrative Expenses. SG&A expenses decreased $0.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by restructuring to be in line with the size of business partially offset by an investment in new product development.
Reworded paragraphs (45)
Previous wording
The discussion and analysis below described material changes in financial condition and results of operations as reflected in our condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.
Current wording
The discussion and analysis below described material changes in financial condition and results of operations as reflected in our condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.
Previous wording
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.
Current wording
CVG is a global provider of systems, assemblies and components to the global commercial vehicle market and the electric vehicle market. We deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve.
Previous wording
We primarily manufacture customized products to meet the requirements of our customers. 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
Current wording
We primarily manufacture customized products to meet the requirements of our customers. We believe our products are used by a majority of the North American Commercial Truck markets and many construction vehicle OEMs, parts and service dealers, and distributors.
Previous wording
On July 30, 2024, the Company and certain of its subsidiaries, as guarantors, entered into an Amendment No. 3, which amends the Credit Agreement. Amendment No.3 amends 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.
Current wording
On July 30, 2024, the Company and certain of its subsidiaries, as guarantors, entered into Amendment No. 3, to the Credit Agreement. Amendment No. 3 amended the terms of the existing Credit Agreement to limit the mandatory prepayment requirements for certain specified asset dispositions of the Company and certain of its subsidiaries. The Company repaid $20 million in accordance with Amendment No.3 during the three months ended September 30, 2024.
Previous wording
During the quarter ended June 30, 2024, the Company announced that it has retained an investment banking firm to explore strategic alternatives for its Industrial Automation business.
Current wording
During the quarter ended June 30, 2024, the Company announced that it has retained an investment banking firm to explore strategic alternatives for its Industrial Automation business. 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 $500 thousand and earn out potential of an additional $1.5 million subject to certain criteria. The Elkridge facility is the primary manufacturing facility of the Company's Industrial Automation segment. CVG recorded an estimated after-tax loss on the contemplated sale of the Industrial Automation business of approximately $7.8 million for the three months ended September 30, 2024.
Previous wording
During the year ended December 31, 2023 and the six months ended June 30, 2024, management approved restructuring programs to align the Company’s cost structure to support margin expansion in key focus areas. The programs include workforce reductions, footprint optimization, and fundamental reorganization initiatives that were implemented to drive efficiencies and reduce operating costs in line with our go-forward business and financial objectives. We incurred $6.8 million expense during the six months ended June 30, 2024, related to these programs.
Current wording
During the year ended December 31, 2023 and the nine months ended September 30, 2024, management approved restructuring programs to align the Company’s cost structure to support margin expansion in key focus areas. The programs include workforce reductions, footprint optimization, and fundamental reorganization initiatives that were implemented to drive efficiencies and reduce operating costs in line with our go-forward business and financial objectives. We incurred $9.8 million of expense during the nine months ended September 30, 2024, related to these programs.
Previous wording
•a $25.3 million, or 11.7%, decrease in OEM and other revenues;
Current wording
•a $28.4 million, or 16.8%, decrease in OEM and other revenues;
Previous wording
•a $3.0 million, or 8.1%, decrease in aftermarket and OES sales; and
Current wording
•a $2.7 million, or 8.0%, decrease in aftermarket and OES sales; and
Previous wording
The decrease in revenues of 12.3% is due primarily to a softening in customer demand in our Electrical Systems and Vehicle Solutions segments, the wind-down of certain programs in our Vehicle Solutions segment, and a decline in our Industrial Automation and Aftermarket segments.
Current wording
The decrease in revenues of 15.3% is due primarily to a softening in customer demand in our Vehicle Solutions and Electrical Systems segments.
Previous wording
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 $17.4 million decrease in gross profit is primarily attributable to the impact of lower sales volumes, unfavorable mix and increased restructuring charges. Cost of revenues decreased $14.9 million, or 6.6%, as a result of a decrease in raw material and purchased component costs of $16.3 million, or 11.4%, offset by an increase in labor and overhead expenses of $1.4 million, or 1.7%. As a percentage of revenues, gross profit margin was 9.1% for the three months ended June 30, 2024 compared to 14.6% for the three months ended June 30, 2023. The three months ended June 30, 2024 results include charges of $4.7 million associated with restructuring programs.
Current wording
Gross Profit. Included in gross profit is cost of revenues, which consists primarily of raw materials and purchased components for our products, wages and benefits for our employees and overhead expenses such as manufacturing supplies, facility rent and utilities costs related to our operations. The $12.9 million decrease in gross profit is primarily attributable to the impact of lower sales volumes, unfavorable mix, operational inefficiencies and increased restructuring charges. Cost of revenues decreased $18.2 million, or 10.5%, as a result of a decrease in raw material and purchased component costs of $18.0 million, or 16.9%, and a decrease in labor and overhead expenses of $0.2 million, or 0.3%. As a percentage of revenues, gross profit margin was 9.6% for the three months ended September 30, 2024 compared to 14.4% for the three months ended September 30, 2023. The three months ended September 30, 2024 results include charges of $3.5 million associated with restructuring programs.
Previous wording
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 $2.2 million compared to the three months ended June 30, 2023, primarily as a result of 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 8.8% for the three months ended June 30, 2024 compared to 8.6% for the three months ended June 30, 2023. The three months ended June 30, 2024 results include charges of $0.2 million associated with restructuring programs.
Current wording
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 $2.9 million compared to the three months ended September 30, 2023, primarily as a result of the gain on the sale of a building of $3.5 million, offset by increased restructuring charges. As a percentage of revenues, SG&A expense was 10.2% for the three months ended September 30, 2024 compared to 10.0% for the three months ended September 30, 2023. The three months ended September 30, 2024 results include charges of $0.7 million associated with restructuring programs.
Previous wording
Interest Expense. Interest associated with our debt was $2.5 million and $2.8 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in interest expense primarily related to lower average debt balances offset by higher interest rates on variable rate debt during the respective comparative periods.
Current wording
Interest Expense. Interest associated with our debt was $2.4 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively. The decrease in interest expense primarily related to lower average debt balances offset by higher interest rates on variable rate debt during the respective comparative periods.
Previous wording
Provision for Income Taxes. Income tax benefit of $0.3 million was recorded for the three months ended June 30, 2024 compared to an income tax expense of $2.7 million recorded for the three months ended June 30, 2023. The period over period change in income tax was primarily attributable to a $14.8 million decrease in pre-tax income versus the prior year period.
Current wording
Provision (benefit) for Income Taxes. Income tax benefit of $1.5 million was recorded for the three months ended September 30, 2024 compared to an income tax expense of $1.4 million recorded for the three months ended September 30, 2023. The period over period change in income tax was primarily attributable to a $8.4 million decrease in pre-tax income versus the prior year period.
Previous wording
Net Loss. Net loss was $1.6 million for the three months ended June 30, 2024 compared to net income of $10.1 million for the three months ended June 30, 2023. The decrease in net income is attributable to the factors noted above.
Current wording
Net Income (Loss) from continuing operations. Net loss from continuing operations was $0.9 million for the three months ended September 30, 2024 compared to net income of $4.7 million for the three months ended September 30, 2023. The decrease in net income is attributable to the factors noted above.
Previous wording
Revenues. The decrease in Vehicle Solutions Segment revenues of $11.8 million was primarily driven by a lower customer demand and the wind-down of certain programs.
Current wording
Revenues. The decrease in Vehicle Solutions Segment revenues of $17.9 million was primarily driven by lower sales volume due to decreased customer demand and the wind-down of certain programs.
Previous wording
Gross Profit. The decrease in gross profit of $9.3 million was primarily attributable to lower customer demand, operational remediation investments and increased freight offset by a decrease in cost of revenues. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $2.2 million, or 2.5%, and a decrease in labor and overhead expenses of $0.3 million, or 0.7%.
Current wording
Gross Profit. The decrease in gross profit of $6.3 million was primarily attributable to lower sales volumes, operational remediation investments and increased freight offset by a decrease in cost of revenues. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $10.2 million, or 15.9%, and a decrease in labor and overhead expenses of $1.5 million, or 4.1%.
Previous wording
Revenues. The decrease in Electrical Systems Segment revenues of $13.5 million primarily resulted from a global softening in the Construction & Agriculture end-markets and phase out of certain lower margin business.
Current wording
Revenues. The decrease in Electrical Systems Segment revenues of $10.5 million primarily resulted from a global softening in the Construction & Agriculture end-markets.
Previous wording
Gross Loss. The increase in negative gross profit of $0.3 million is primarily attributable to lower sales volume. Cost of revenues decrease was driven by a decrease in raw material and purchased component costs of $8.6 million, or 60.0%, and a decrease in labor and overhead expenses of $0.5 million, or 10.9%.
Current wording
Gross Profit. The decrease in gross profit of $5.7 million is primarily attributable to lower sales volumes, restructuring activities, and unfavorable foreign exchange impacts. The decrease in cost of revenues was driven by a decrease in raw material and purchased component costs of $4.3 million, or 17.3%, and a decrease in labor and overhead expenses of $0.5 million, or 2.5%.
Previous wording
Revenues. The decrease in Aftermarket & Accessories Segment revenues of $3.0 million primarily resulted from lower sales volume due to decreased customer demand and the reduction of backlog in the prior period.
Current wording
Revenues. The decrease in Aftermarket & Accessories Segment revenues of $2.7 million primarily resulted from lower sales volume due to a reduction of backlog in the prior period as well as decreased customer demand.
Previous wording
Gross Profit. The decrease in gross profit of $1.3 million is primarily attributable to lower sales volume. Cost of revenues decreased in line with the sales decrease of 8.1%, driven by a decrease in raw material and purchased component costs of $2.6 million, or 14.3%; offset by an increase in labor and overhead expenses of $1.0 million, or 9.1%.
Current wording
Gross Profit. The decrease in gross profit of $0.9 million is primarily attributable to lower sales volume, operational inefficiencies and restructuring related expenses. The cost of revenues decreased in line with the sales decrease of 8.0%, driven by a decrease in raw material and purchased component costs of $3.5 million, or 20.4%; offset by an increase in labor and overhead expenses of $1.8 million, or 17.6%.
Previous wording
The table below sets forth certain consolidated operating data for the six months ended June 30, (dollars are in thousands):
Current wording
The table below sets forth certain consolidated operating data for the nine months ended September 30, (dollars are in thousands):
Previous wording
•a $46.9 million, or 10.9%, decrease in OEM and other revenues;
Current wording
•a $72.9 million, or 13.6%, decrease in OEM and other revenues; and
Previous wording
•a $6.5 million, or 8.8%, decrease in aftermarket and OES sales; and
Current wording
•a $8.7 million, or 8.2%, decrease in aftermarket and OES sales.
Previous wording
The decrease in revenues of $62.9 million is primarily driven by a softening in customer demand in our Electrical Systems and Vehicle Solutions segments, the wind-down of certain programs in our Vehicle Solutions segment, and a further decline in our Industrial Automation and Aftermarket segments.
Current wording
The decrease in revenues of $81.7 million is primarily driven by a softening in customer demand across all segments, and the wind-down of certain programs in our Vehicle Solutions segment.
Previous wording
Gross Profit. The $26.0 million decrease in gross profit is primarily attributable to the impact of lower sales volumes, unfavorable mix, and increased restructuring charges. Cost of revenues decreased $37.0 million, or 8.2%, as a result of a decrease in raw material and purchased component costs of $39.1 million, or 13.5%, offset by an increase in labor and overhead expenses of $2.1 million, or 1.3%. As a percentage of revenues, gross profit margin was 10.3% for the six months ended June 30, 2024 compared to 14.0% for the six months ended June 30, 2023. The six months ended June 30, 2024 results include charges of $6.4 million associated with the restructuring programs.
Current wording
Gross Profit. The $36.7 million decrease in gross profit is primarily attributable to the impact of lower sales volumes, unfavorable mix, and increased restructuring charges. Cost of revenues decreased $45.0 million, or 8.3%, as a result of a decrease in raw material and purchased component costs of $44.2 million, or 13.1%, and a decrease in labor and overhead expenses of $0.8 million, or 0.4%. As a percentage of revenues, gross profit margin was 10.7% for the nine months ended September 30, 2024 compared to 15.1% for the nine months ended September 30, 2023. The nine months ended September 30, 2024 results include charges of $8.6 million associated with the restructuring programs.
Previous wording
Selling, General and Administrative Expenses. SG&A expenses decreased $2.7 million compared to the six months ended June 30, 2023, primarily as a result of 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 8.7% for the six months ended June 30, 2024 compared to 8.2% for the six months ended June 30, 2023. The six months ended June 30, 2024 results include charges of $0.4 million associated with the restructuring programs.
Current wording
Selling, General and Administrative Expenses. SG&A expenses decreased $5.4 million compared to the nine months ended September 30, 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 9.9% for the nine months ended September 30, 2024 compared to 9.5% for the nine months ended September 30, 2023. The nine months ended September 30, 2024 results include charges of $1.2 million associated with the restructuring programs.
Previous wording
Interest Expense. Interest associated with our debt was $4.7 million and $5.7 million for the six months ended June 30, 2024 and 2023, respectively. The decrease in interest expense primarily related to lower average debt balances offset by higher interest rates on variable rate debt during the respective comparative periods.
Current wording
Interest Expense. Interest associated with our debt was $7.0 million and $7.9 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in interest expense primarily related to lower average debt balances offset by higher interest rates on variable rate debt during the respective comparative periods.
Previous wording
Provision for Income Taxes. An income tax provision of $0.8 million and $5.9 million were recorded for the six months ended June 30, 2024 and 2023, respectively. The period over period change in income tax was primarily attributable to the $22.6 million decrease in pre-tax income versus the prior year period.
Current wording
Provision (benefit) for Income Taxes. An income tax benefit of $1.1 million and income tax expense of $6.3 million were recorded for the nine months ended September 30, 2024 and 2023, respectively. The period over period change in income tax was primarily attributable to the $29.3 million decrease in pre-tax income versus the prior year period.
Previous wording
Net Income. Net income was $1.3 million for the six months ended June 30, 2024 compared to $18.8 million for the six months ended June 30, 2023. The decrease in net income is attributable to the factors noted above.
Current wording
Net Income (loss) from continuing operations. Net loss from continuing operations was $0.7 million for the nine months ended September 30, 2024 compared to net income of $21.1 million for the nine months ended September 30, 2023. The decrease in net income is attributable to the factors noted above.
Previous wording
The table below sets forth certain Vehicle Solutions Segment operating data for the six months ended June 30, (dollars are in thousands):
Current wording
The table below sets forth certain Vehicle Solutions Segment operating data for the nine months ended September 30, (dollars are in thousands):
Previous wording
Revenues. The decrease in Vehicle Solutions Segment revenues of $34.5 million was primarily driven by a lower customer demand and the wind-down of certain programs.
Current wording
Revenues. The decrease in Vehicle Solutions Segment revenues of $50.0 million was primarily driven by lower sales volume due to decreased customer demand and the wind-down of certain programs.
Previous wording
As a percentage of revenues, gross profit margin was 10.0% for the six months ended June 30, 2024 compared to 12.9% for the six months ended June 30, 2023, driven by lower customer demand, restructuring activities and increased freight costs. The six months ended June 30, 2024 results include charges of $3.5 million associated with the restructuring program.
Current wording
As a percentage of revenues, gross profit margin was 10.3% for the nine months ended September 30, 2024 compared to 13.6% for the nine months ended September 30, 2023, driven by lower sales volume, restructuring activities and increased freight costs. The nine months ended September 30, 2024 results include charges of $3.9 million associated with the restructuring program.
Previous wording
The table below sets forth certain Electrical Systems Segment operating data for the six months ended June 30, (dollars are in thousands):
Current wording
The table below sets forth certain Electrical Systems Segment operating data for the nine months ended September 30, (dollars are in thousands):
Previous wording
Revenues. The decrease in Electrical Systems Segment revenues of $12.4 million resulted from lower customer demand and phase out of lower margin business.
Current wording
Revenues. The decrease in Electrical Systems Segment revenues of $22.9 million resulted from lower sales volume due to decreased customer demand and phase out of lower margin business.
Previous wording
As a percentage of revenues, gross profit margin was 7.3% for the six months ended June 30, 2024 compared to 15.7% for the six months ended June 30, 2023, driven by lower customer demand, restructuring activities, labor inflation, and unfavorable foreign exchange impacts. The six months ended June 30, 2024 results include charges of $2.5 million associated with the restructuring program.
Current wording
As a percentage of revenues, gross profit margin was 6.7% for the nine months ended September 30, 2024 compared to 15.4% for the nine months ended September 30, 2023, driven by lower sales volume, restructuring activities, labor inflation, and unfavorable foreign exchange impacts. The nine months ended September 30, 2024 results include charges of $3.7 million associated with the restructuring program.
Previous wording
The table below sets forth certain Aftermarket & Accessories Segment operating data for the six months ended June 30, (dollars are in thousands):
Current wording
The table below sets forth certain Aftermarket & Accessories Segment operating data for the nine months ended September 30, (dollars are in thousands):
Previous wording
Revenues. The decrease in Aftermarket & Accessories Segment revenues of $6.5 million primarily resulted from lower sales volume due to decreased customer demand and the reduction of backlog in the prior period.
Current wording
Revenues. The decrease in Aftermarket & Accessories Segment revenues of $8.7 million primarily resulted from lower sales volume due to an increase of backlog in the prior period as well as decreased customer demand.
Previous wording
As a percentage of revenues, gross profit margin was 19.0% for the six months ended June 30, 2024 compared to 20.2% for the six months ended June 30, 2023. This was primarily due to lower sales volume, product mix, and higher labor and benefit costs. The six months ended June 30, 2024 results include charges of $0.2 million associated with the restructuring program.
Current wording
As a percentage of revenues, gross profit margin was 18.5% for the nine months ended September 30, 2024 compared to 19.7% for the nine months ended September 30, 2023. This was primarily due to lower sales volume, product mix, higher labor and benefit costs, and restructuring related expenses. The nine months ended September 30, 2024 results include charges of $1.0 million associated with the restructuring program.
Previous wording
As of June 30, 2024, the Company hadtotal liquidity of $192.2 million, including $39.3 million of cash and $152.9 million of availability from its U.S. and China credit facilities.
Current wording
As of September 30, 2024, the Company hadtotal liquidity of $177.2 million, including $30.9 million of cash and $146.3 million of availability from its U.S. and China credit facilities.
Previous wording
Our primary sources of liquidity as of June 30, 2024 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 June 30, 2024, we had outstanding letters of credit of $1.1 million and borrowing availability of $152.9 million from our U.S. and China credit facilities.
Current wording
Our primary sources of liquidity as of September 30, 2024 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 September 30, 2024, we had outstanding letters of credit of $1.1 million and borrowing availability of $146.3 million from our U.S. and China credit facilities.
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