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Discontinued Operations
 9 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
On July 31, 2024, the Company entered into a purchase agreement to sell its cab structures business with operations in Kings Mountain, North Carolina for approximately $40 million. On September 6, 2024, the Company entered into an Amendment to the Purchase Agreement whereby the transaction closed on September 6, 2024 with the Company receiving $20 million of the purchase price on September 6, 2024 and $20 million (subject to adjustment) on October 1, 2024. The decision to divest this business was part of our strategy to reduce our exposure to the cyclical Class 8 market, lower our customer concentration, remove complexity from our business, and improves our return profile. As a result of the transaction, CVG recorded an after-tax gain on the sale of the business of approximately $27.2 million for the three months ended September 30, 2024 and recorded a Note receivable of $20.0 million in its balance sheet as of September 30, 2024. The $20.0 million Note receivable was subsequently collected on October 1, 2024.

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. The decision to divest this business was part of our strategy to continually evaluate our portfolio of businesses and product lines for strategic fit and continued investment. As of September 30, 2024, the assets and liabilities of the Industrial Automation segment are classified as held for sale on the balance sheets, net of the
estimated write-down loss as of September 30, 2024. 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.

We determined that the sale of the cab structures and Industrial Automation businesses represent discontinued operations as they constitute disposals of a product line and an operating segment, respectively, meet the held for sale criteria, and are a strategic shift that will have a major effect on our operations and financial results (individually and collectively). As a result, we reclassified the related earnings (loss) from continuing operations to earnings (loss) from discontinued operations - net of income taxes on the consolidated statement of earnings (loss) for all the periods presented. No amounts for shared general and administrative operating support expense were allocated to the discontinued operation.

The Company has continuing involvement with the cab structures business through a transition services agreement (TSA), pursuant to which the Company and Buyer parties provide certain service to each other for a period of time following the disposition, up to one year. While the transition services are expected to vary in duration depending upon the type of service provided, the Company expects to reduce costs as the transition services are completed. The Company collected a total of $2.0 million related to the transition services agreement for the three and nine months ended September 30, 2024, which was recognized in Continuing operations, Other (income) expense in the Condensed Consolidated Statements of Operations.
The following table provides a reconciliation of the individual discontinued operations to the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Income (loss) from discontinued operations, net of tax
Cab structures business$18,814 $2,130 $22,327 $7,060 
Industrial Automation segment(8,417)479 (10,739)(1,991)
Total income from discontinued operations, net of tax$10,397 $2,609 $11,588 $5,069 
The following tables present reconciliations of the captions within CVG's Condensed Consolidated Statements of Operations attributable to each discontinued operation for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Income (loss) from discontinued operations attributable to Cab structures business:
Revenues$24,795 $30,770 $89,187 $98,066 
Cost of revenues33,627 27,970 93,367 88,745 
Gross profit(8,832)2,800 (4,180)9,321 
Income (loss) before provision for income taxes(8,832)2,800 (4,180)9,321 
Provision (benefit) for income taxes of discontinued operations(425)670 714 2,261 
Gain on disposition of discontinued operations, net of income taxes27,221 — 27,221 — 
Net income from discontinued operations, net of income taxes$18,814 $2,130 $22,327 $7,060 
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Income (loss) from discontinued operations attributable to Industrial Automation segment:
Revenues$5,350 $13,020 $14,641 $31,777 
Cost of revenues5,185 11,205 15,107 30,278 
Gross profit165 1,815 (466)1,499 
Selling, general and administrative expenses747 1,087 3,009 3,588 
Operating income (loss)(582)728 (3,475)(2,089)
Interest expense64 125 201 398 
Income (loss) before provision for income taxes(646)603 (3,676)(2,487)
Provision (benefit) for income taxes of discontinued operations(38)124 (746)(496)
Loss on disposition of discontinued operations, net of income taxes(7,809)— (7,809)— 
Net income (loss) from discontinued operations, net of income taxes$(8,417)$479 $(10,739)$(1,991)

The following table presents the major classes of assets and liabilities of the Industrial Automation segment as of September 30, 2024, and of the cab structures and Industrial Automation segment as of December 31, 2023 that are classified as held for sale in the accompanying Condensed Consolidated Balance Sheets (in thousands).
September 30, 2024December 31, 2023
Account receivable, net4,964 4,603 
Inventories3,710 10,815 
Other current assets— 185 
Property, plant and equipment, net232 — 
Intangible assets, net3,093 — 
Other assets, net1,156 — 
Write-down loss on disposal group(8,204)— 
Current assets held for sale4,951 15,603 
Property, plant and equipment, net— 4,545 
Intangible assets, net— 4,628 
Other assets, net— 1,957 
Non current assets held for sale— 11,130 
Total assets held for sale$4,951 $26,733 
Accounts payable2,069 2,068 
Accrued liabilities and other2,067 1,208 
Other long-term liabilities115 — 
Current liabilities held-for-sale4,251 3,276 
Other long-term liabilities— 870 
Noncurrent liabilities held-for-sale— 870 
Total liabilities held for sale$4,251 $4,146 
The following tables present reconciliations of the captions within CVG's Condensed Consolidated Statements of Cash Flows attributable to discontinued operations for the nine months ended September 30, 2024 and 2023. Net cash provided by operating activities for the nine months ended September 30, 2024 includes the gain and loss on the respective transactions, as noted above.

Nine Months Ended September 30,
20242023
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used in) operating activities(4,567)9,027 
Net cash provided by (used in) investing activities(838)(414)
Total cash provided by discontinued operations(5,405)8,613