Strong Sales Growth and Continuing Margin Improvement Highlight Cooper Standard's Second Quarter 2023 Results
- Sales increase of 19.4% YoY
- Gross profit increase of 405.4% YoY
- Net loss improvement of $5.4M YoY
- Adjusted EBITDA increase of $58.3M YoY
- Net new business awards of $84.9M
- None.
Second Quarter 2023 Summary
- Sales totaled
, an increase of$723.7 million 19.4% compared to second quarter 2022 - Gross profit totaled
, an increase of$77.7 million 405.4% compared to second quarter 2022 - Net loss of
, or$27.8 million per diluted share, reflected an improvement of$(1.61) vs. the second quarter 2022$5.4 million - Adjusted EBITDA of
, or$47.9 million 6.6% of sales, increased by vs. the second quarter 2022$58.3 million - Net new business awards of
, including$84.9 million related to new electric vehicle programs$36.4 million
"Our second quarter results reflect continuing world-class operational execution and performance, improved and more stable production volumes, and the continuing implementation of our enhanced commercial agreements," said Jeffrey Edwards, chairman and CEO, Cooper Standard. "We believe these positive trends and margin expansion will continue through the second half of the year, putting us on track to achieve full year results in line with our initial 2023 guidance."
Consolidated Results
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(dollar amounts in millions except per share amounts) | |||||||
Sales | $ 723.7 | $ 605.9 | $ 1,406.2 | $ 1,218.9 | |||
Net loss | $ (27.8) | $ (33.2) | $ (158.2) | $ (94.6) | |||
Adjusted net loss | $ (20.0) | $ (58.5) | $ (66.1) | $ (109.9) | |||
Loss per diluted share | $ (1.61) | $ (1.93) | $ (9.15) | $ (5.51) | |||
Adjusted loss per diluted share | $ (1.15) | $ (3.40) | $ (3.83) | $ (6.40) | |||
Adjusted EBITDA | $ 47.9 | $ (10.4) | $ 60.4 | $ (10.2) |
The year-over-year increase in second quarter sales was primarily attributable to favorable volume and mix as well as realized recoveries of material cost inflation, which are reflected in customer price adjustments. These were partially offset by foreign exchange.
Net loss for the second quarter 2023 was
Adjusted EBITDA for the second quarter of 2023 was
Adjusted net loss, adjusted EBITDA and adjusted loss per diluted share are non-GAAP measures. Reconciliations to the most directly comparable financial measures, calculated and presented in accordance with accounting principles generally accepted in
Automotive New Business Awards
The Company continues to leverage its world-class engineering and manufacturing capabilities, its innovation programs and its reputation for quality and service to win new business awards with its customers and capitalize on positive trends associated with electric vehicles. During the second quarter of 2023, the Company received total net new business awards representing
Segment Results of Operations
Sales
Three Months Ended June 30, | Variance Due To: | |||||||||
2023 | 2022 | Change | Volume / | Foreign | ||||||
(dollar amounts in thousands) | ||||||||||
Sales to external customers | ||||||||||
North America | $ 368,810 | $ 331,687 | $ 37,123 | $ 39,691 | $ (2,568) | |||||
Europe | 177,897 | 126,287 | 51,610 | 47,513 | 4,097 | |||||
Asia Pacific | 111,222 | 85,779 | 25,443 | 31,750 | (6,307) | |||||
South America | 33,514 | 26,261 | 7,253 | 7,460 | (207) | |||||
Total Automotive | 691,443 | 570,014 | 121,429 | 126,414 | (4,985) | |||||
Corporate, eliminations and other | 32,297 | 35,903 | (3,606) | (3,905) | 299 | |||||
Consolidated sales | $ 723,740 | $ 605,917 | $ 117,823 | $ 122,509 | $ (4,686) |
* Net of customer price adjustments, including recoveries |
- Volume and mix, net of customer price adjustments including recoveries, was mainly driven by vehicle production volume increases due to the stabilization of the supply environment and elimination of prior year COVID-19 related restrictions in
China . - The impact of foreign currency exchange was primarily related to the Chinese Renminbi, Euro and Canadian Dollar.
Adjusted EBITDA
Three Months Ended June 30, | Variance Due To: | |||||||||||
2023 | 2022 | Change | Volume/ | Foreign | Cost | |||||||
(dollar amounts in thousands) | ||||||||||||
Segment adjusted EBITDA | ||||||||||||
North America | $ 23,849 | $ 15,441 | $ 8,408 | $ 11,632 | $ (8,280) | $ 5,056 | ||||||
Europe | 16,260 | (15,316) | 31,576 | 31,036 | (1,559) | 2,099 | ||||||
Asia Pacific | 7,194 | (7,799) | 14,993 | 9,700 | 2,093 | 3,200 | ||||||
South America | 3,375 | (1,298) | 4,673 | 2,194 | 1,679 | 800 | ||||||
Total Automotive | 50,678 | (8,972) | 59,650 | 54,562 | (6,067) | 11,155 | ||||||
Corporate, eliminations and other | (2,739) | (1,402) | (1,337) | 615 | 100 | (2,052) | ||||||
Consolidated adjusted EBITDA | $ 47,939 | $ (10,374) | $ 58,313 | $ 55,177 | $ (5,967) | $ 9,103 |
* Net of customer price adjustments, including recoveries |
- Volume and mix, net of customer price adjustments including recoveries, was driven by vehicle production volume increases due to the stabilization of the supply environment and elimination of prior year COVID-19 related restrictions in
China . - The impact of foreign currency exchange was primarily related to the Mexican Peso, Canadian Dollar and Polish Zloty.
- The Cost (Increases) / Decreases category above includes:
- Commodity cost and inflationary economics; and
- Manufacturing and purchasing savings through lean initiatives.
Cash and Liquidity
As of June 30, 2023, Cooper Standard had cash and cash equivalents totaling
Based on current expectations for light vehicle production and customer demand for our products, the Company believes it has sufficient financial resources to support ongoing operations and the execution of planned strategic initiatives for the foreseeable future. These financial resources include current cash on hand, continuing access to flexible credit facilities, and expected future positive cash generation.
Outlook
Industry projections for global light vehicle production anticipate continued modest growth through the remainder of the year. The Company expects to leverage incremental production volumes to drive further operating efficiencies. In addition, the Company expects to successfully conclude certain remaining commercial negotiations in the third quarter to drive additional inflation recovery and positive, sustainable price adjustments. As a result, the Company anticipates delivering further top line growth and margin expansion in the second half of the year. For the full year, Company management expects results for Sales and Adjusted EBITDA will be in line with the initial 2023 guidance it provided in February.
Initial 2023 Guidance1 (February 2023) | Current 2023 Guidance | |
Sales | ||
Adjusted EBITDA2 | ||
Capital Expenditures | ||
Cash Restructuring | ||
Cash Interest | ||
Net Cash Taxes | ||
Key Light Vehicle Productions | ||
| 15.1 million | 15.5 million |
| 16.5 million | 17.4 million |
| 26.6 million | 26.6 million |
| 3.0 million | 2.8 million |
1 Guidance is representative of management's estimates and expectations as of the date it is published. Current guidance as presented in this press release considers July 2023 S&P Global (IHS Markit) production forecasts for relevant light vehicle platforms and models, customers' planned production schedules and other internal assumptions. |
2 Adjusted EBITDA is a non-GAAP financial measure. The Company has not provided a reconciliation of projected adjusted EBITDA to projected net income (loss) because full-year net income (loss) will include special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end. Due to this uncertainty, the Company cannot reconcile projected adjusted EBITDA to |
Conference Call Details
Cooper Standard management will host a conference call and webcast on August 4, 2023 at 9 a.m. ET to discuss its second quarter 2023 results, provide a general business update and respond to investor questions. Investors and other interested parties may listen to the call by accessing the online, real-time webcast at
https://ir.cooperstandard.com/events.
To participate by phone, callers in
A replay of the webcast will be available on the investors' portion of the Cooper Standard website (https://ir.cooperstandard.com) shortly after the live event.
About Cooper Standard
Cooper Standard, headquartered in
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of
You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this press release and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except where we are expressly required to do so by law.
This press release also contains estimates and other information that is based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.
Contact for Analysts: | Contact for Media: |
Roger Hendriksen | Chris Andrews |
Cooper Standard | Cooper Standard |
(248) 596-6465 | (248) 596-6217 |
roger.hendriksen@cooperstandard.com | candrews@cooperstandard.com |
Financial statements and related notes follow:
COOPER-STANDARD HOLDINGS INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Unaudited) | |||||||
(Dollar amounts in thousands except per share and share amounts) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Sales | $ 723,740 | $ 605,917 | $ 1,406,198 | $ 1,218,901 | |||
Cost of products sold | 646,026 | 590,541 | 1,286,656 | 1,181,983 | |||
Gross profit | 77,714 | 15,376 | 119,542 | 36,918 | |||
Selling, administration & engineering expenses | 54,605 | 52,282 | 106,694 | 104,186 | |||
Gain on sale of fixed assets, net | — | (33,391) | — | (33,391) | |||
Amortization of intangibles | 1,672 | 1,737 | 3,479 | 3,483 | |||
Restructuring charges | 8,499 | 3,482 | 10,878 | 11,313 | |||
Impairment charges | 654 | 3 | 654 | 458 | |||
Operating profit (loss) | 12,284 | (8,737) | (2,163) | (49,131) | |||
Interest expense, net of interest income | (34,034) | (18,454) | (64,254) | (36,631) | |||
Equity in earnings (losses) of affiliates | 656 | (3,446) | 458 | (4,802) | |||
Loss on refinancing and extinguishment of debt | — | — | (81,885) | — | |||
Other expense, net | (2,561) | (1,509) | (6,565) | (2,720) | |||
Loss before income taxes | (23,655) | (32,146) | (154,409) | (93,284) | |||
Income tax expense | 4,765 | 2,005 | 5,123 | 2,657 | |||
Net loss | (28,420) | (34,151) | (159,532) | (95,941) | |||
Net loss attributable to noncontrolling interests | 591 | 904 | 1,336 | 1,334 | |||
Net loss attributable to Cooper-Standard Holdings Inc. | $ (27,829) | $ (33,247) | $ (158,196) | $ (94,607) | |||
Weighted average shares outstanding | |||||||
Basic | 17,334,918 | 17,189,128 | 17,282,462 | 17,162,915 | |||
Diluted | 17,334,918 | 17,189,128 | 17,282,462 | 17,162,915 | |||
Loss per share: | |||||||
Basic | $ (1.61) | $ (1.93) | $ (9.15) | $ (5.51) | |||
Diluted | $ (1.61) | $ (1.93) | $ (9.15) | $ (5.51) |
COOPER-STANDARD HOLDINGS INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(Dollar amounts in thousands) | |||
June 30, 2023 | December 31, 2022 | ||
(unaudited) | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 73,063 | $ 186,875 | |
Accounts receivable, net | 390,033 | 358,700 | |
Tooling receivable, net | 94,579 | 95,965 | |
Inventories | 172,999 | 157,756 | |
Prepaid expenses | 25,779 | 31,170 | |
Income tax receivable and refundable credits | 13,315 | 13,668 | |
Other current assets | 114,108 | 101,515 | |
Total current assets | 883,876 | 945,649 | |
Property, plant and equipment, net | 624,073 | 642,860 | |
Operating lease right-of-use assets, net | 87,341 | 94,571 | |
Goodwill | 142,114 | 142,023 | |
Intangible assets, net | 43,702 | 47,641 | |
Other assets | 89,713 | 90,785 | |
Total assets | $ 1,870,819 | $ 1,963,529 | |
Liabilities and Equity | |||
Current liabilities: | |||
Debt payable within one year | $ 49,813 | $ 54,130 | |
Accounts payable | 357,682 | 338,210 | |
Payroll liabilities | 106,865 | 99,029 | |
Accrued liabilities | 141,956 | 119,463 | |
Current operating lease liabilities | 19,099 | 20,786 | |
Total current liabilities | 675,415 | 631,618 | |
Long-term debt | 1,012,289 | 982,054 | |
Pension benefits | 101,369 | 98,481 | |
Postretirement benefits other than pensions | 31,163 | 31,014 | |
Long-term operating lease liabilities | 72,156 | 77,617 | |
Other liabilities | 40,130 | 41,553 | |
Total liabilities | 1,932,522 | 1,862,337 | |
Equity: | |||
Common stock, | 17 | 17 | |
Additional paid-in capital | 509,106 | 507,498 | |
Retained deficit | (348,027) | (189,831) | |
Accumulated other comprehensive loss | (215,325) | (209,971) | |
Total Cooper-Standard Holdings Inc. equity | (54,229) | 107,713 | |
Noncontrolling interests | (7,474) | (6,521) | |
Total equity | (61,703) | 101,192 | |
Total liabilities and equity | $ 1,870,819 | $ 1,963,529 |
COOPER-STANDARD HOLDINGS INC. | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(Unaudited) | |||
(Dollar amounts in thousands) | |||
Six Months Ended June 30, | |||
2023 | 2022 | ||
Operating Activities: | |||
Net loss | $ (159,532) | $ (95,941) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 52,319 | 60,062 | |
Amortization of intangibles | 3,479 | 3,483 | |
Gain on sale of fixed assets, net | — | (33,391) | |
Impairment charges | 654 | 458 | |
Share-based compensation expense | 2,705 | 1,625 | |
Equity in losses of affiliates, net of dividends related to earnings | 720 | 7,804 | |
Loss on refinancing and extinguishment of debt | 81,885 | — | |
Payment-in-kind interest | 27,500 | — | |
Deferred income taxes | 20 | (5,096) | |
Other | 2,376 | 1,178 | |
Changes in operating assets and liabilities | 5,024 | 59,583 | |
Net cash provided by (used in) operating activities | 17,150 | (235) | |
Investing activities: | |||
Capital expenditures | (46,760) | (44,278) | |
Proceeds from sale of fixed assets | — | 52,633 | |
Other | 1,638 | 32 | |
Net cash (used in) provided by investing activities | (45,122) | 8,387 | |
Financing activities: | |||
Proceeds from issuance of long-term debt, net of debt issuance costs | 925,020 | — | |
Repayment and refinancing of long-term debt | (927,046) | — | |
Principal payments on long-term debt | (949) | (2,536) | |
Decrease in short-term debt, net | (1,240) | (1,666) | |
Debt issuance costs and other fees | (74,376) | — | |
Taxes withheld and paid on employees' share-based payment awards | (209) | (526) | |
Other | (238) | 651 | |
Net cash used in financing activities | (79,038) | (4,077) | |
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (4,565) | 7,103 | |
Changes in cash, cash equivalents and restricted cash | (111,575) | 11,178 | |
Cash, cash equivalents and restricted cash at beginning of period | 192,807 | 251,128 | |
Cash, cash equivalents and restricted cash at end of period | $ 81,232 | $ 262,306 | |
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets: | |||
Balance as of | |||
June 30, 2023 | December 31, 2022 | ||
Cash and cash equivalents | $ 73,063 | $ 186,875 | |
Restricted cash included in other current assets | 6,550 | 4,650 | |
Restricted cash included in other assets | 1,619 | 1,282 | |
Total cash, cash equivalents and restricted cash | $ 81,232 | $ 192,807 |
Non-GAAP Measures
EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted earnings (loss) per share and free cash flow are measures not recognized under
When analyzing the Company's operating performance, investors should use EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted earnings (loss) per share, free cash flow and net new business as supplements to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with
Reconciliation of Non-GAAP Measures
EBITDA and Adjusted EBITDA | |||||||
The following table provides a reconciliation of EBITDA and adjusted EBITDA from net loss: | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net loss attributable to Cooper-Standard Holdings Inc. | $ (27,829) | $ (33,247) | $ (158,196) | $ (94,607) | |||
Income tax expense | 4,765 | 2,005 | 5,123 | 2,657 | |||
Interest expense, net of interest income | 34,034 | 18,454 | 64,254 | 36,631 | |||
Depreciation and amortization | 27,816 | 31,412 | 55,798 | 63,545 | |||
EBITDA | $ 38,786 | $ 18,624 | $ (33,021) | $ 8,226 | |||
Restructuring charges | 8,499 | 3,482 | 10,878 | 11,313 | |||
Deconsolidation of joint venture (1) | — | — | — | 2,257 | |||
Impairment charges (2) | 654 | 3 | 654 | 458 | |||
Gain on sale of fixed assets, net (3) | — | (33,391) | — | (33,391) | |||
Indirect tax adjustments (4) | — | 908 | — | 908 | |||
Loss on refinancing and extinguishment of debt (5) | — | — | 81,885 | — | |||
Adjusted EBITDA | $ 47,939 | $ (10,374) | $ 60,396 | $ (10,229) | |||
Sales | $ 723,740 | $ 605,917 | $ 1,406,198 | $ 1,218,901 | |||
Net loss margin | (3.8) % | (5.5) % | (11.2) % | (7.8) % | |||
Adjusted EBITDA margin | 6.6 % | (1.7) % | 4.3 % | (0.8) % |
(1) | Loss attributable to deconsolidation of a joint venture in the |
(2) | Non-cash impairment charges in 2023 related to certain assets in |
(3) | In the first quarter of 2022, the Company signed a sale-leaseback agreement on one of its European facilities, and a gain was recognized in the second quarter of 2022. |
(4) | Impact of prior period indirect tax adjustments. |
(5) | Loss on refinancing and extinguishment of debt relating to the Refinancing Transactions. |
Adjusted Net Loss and Adjusted Loss Per Share | |||||||
The following table provides a reconciliation of net loss to adjusted net loss and the respective loss per share amounts: | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net loss attributable to Cooper-Standard Holdings Inc. | $ (27,829) | $ (33,247) | $ (158,196) | $ (94,607) | |||
Restructuring charges | 8,499 | 3,482 | 10,878 | 11,313 | |||
Deconsolidation of joint venture (1) | — | — | — | 2,257 | |||
Impairment charges (2) | 654 | 3 | 654 | 458 | |||
Gain on sale of fixed assets, net (3) | — | (33,391) | — | (33,391) | |||
Indirect tax adjustments (4) | — | 908 | — | 908 | |||
Loss on refinancing and extinguishment of debt (5) | — | — | 81,885 | — | |||
Tax impact of adjusting items (6) | (1,284) | 3,768 | (1,355) | 3,184 | |||
Adjusted net loss | $ (19,960) | $ (58,477) | $ (66,134) | $ (109,878) | |||
Weighted average shares outstanding: | |||||||
Basic | 17,334,918 | 17,189,128 | 17,282,462 | 17,162,915 | |||
Diluted | 17,334,918 | 17,189,128 | 17,282,462 | 17,162,915 | |||
Loss per share: | |||||||
Basic | $ (1.61) | $ (1.93) | $ (9.15) | $ (5.51) | |||
Diluted | $ (1.61) | $ (1.93) | $ (9.15) | $ (5.51) | |||
Adjusted loss per share: | |||||||
Basic | $ (1.15) | $ (3.40) | $ (3.83) | $ (6.40) | |||
Diluted | $ (1.15) | $ (3.40) | $ (3.83) | $ (6.40) |
(1) | Loss attributable to deconsolidation of a joint venture in the |
(2) | Non-cash impairment charges in 2023 related to certain assets in |
(3) | In the first quarter of 2022, the Company signed a sale-leaseback agreement on one of its European facilities, and a gain was recognized in the second quarter of 2022. |
(4) | Impact of prior period indirect tax adjustments. |
(5) | Loss on refinancing and extinguishment of debt relating to the Refinancing Transactions. |
(6) | Represents the elimination of the income tax impact of the above adjustments by calculating the income tax impact of these adjusting items using the appropriate tax rate for the jurisdiction where the charges were incurred and other discrete tax expense. |
Free Cash Flow | |||||||
The following table defines free cash flow: | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net cash (used in) provided by operating activities | $ (13,229) | $ 11,978 | $ 17,150 | $ (235) | |||
Capital expenditures | (17,497) | (11,964) | (46,760) | (44,278) | |||
Free cash flow | $ (30,726) | $ 14 | $ (29,610) | $ (44,513) |
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SOURCE Cooper Standard