Cooper Standard Reports Third Quarter Results; Continuing Lean Initiatives Delivering Cost Savings as Planned
NORTHVILLE, Mich., Oct. 31, 2024 /PRNewswire/ -- Cooper-Standard Holdings Inc. (NYSE:CPS) today reported results for the third quarter 2024.
Third Quarter 2024 Summary
Savings of $24.5 million realized from lean operations and cost initiatives
Net loss of $11.1 million, or $(0.63) per diluted share
Adjusted net loss of $12.0 million, or $(0.68) per diluted share
Adjusted EBITDA of $46.1 million, or 6.7% of sales
Net new business awards totaled $44.0 million
"Our intense focus on lean initiatives and operating efficiency is driving cost savings as planned," said Jeffrey Edwards, chairman and CEO, Cooper Standard. "This is helping to offset the headwinds from lower production volume and unfavorable foreign exchange that have persisted during the first nine months of the year. We are pleased that continued operational excellence has enabled us to keep our full year outlook for profit and cash flow essentially in line with our original expectations, despite the weaker market conditions."
Consolidated Results
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(dollar amounts in millions except per share amounts)
Sales
$ 685.4
$ 736.0
$ 2,070.1
$ 2,142.2
Net (loss) income
$ (11.1)
$ 11.4
$ (119.0)
$ (146.8)
Adjusted net (loss) income
$ (12.0)
$ 15.0
$ (53.9)
$ (51.2)
(Loss) income per diluted share
$ (0.63)
$ 0.65
$ (6.78)
$ (8.47)
Adjusted (loss) income per diluted share
$ (0.68)
$ 0.85
$ (3.07)
$ (2.95)
Adjusted EBITDA
$ 46.1
$ 79.1
$ 126.4
$ 139.5
The year-over-year change in third quarter sales was primarily attributable to the timing of commercial settlements that occurred in the third quarter of 2023, including approximately $30 million of settlements that were related to the first and second quarters of 2023, that did not recur at the same level in the third quarter of 2024. Other factors included unfavorable foreign exchange and lower production volume and mix.
Net loss for the third quarter 2024 was $11.1 million, including restructuring charges of $1.5 million and a pension settlement credit of $2.2 million. Net income for the third quarter 2023 was $11.4 million, including restructuring charges of $2.0 million and other special items. Excluding these special items and their related tax impact, adjusted net loss was $12.0 million in the third quarter 2024 compared to adjusted net income of $15.0 million in the third quarter of 2023. The year-over-year change was primarily due to the timing of commercial settlements in the third quarter of 2023, unfavorable foreign exchange, continuing general inflation and lower overall production volumes. These negative factors were partially offset by the savings generated from lean manufacturing and purchasing initiatives, and implemented restructuring actions.
Adjusted EBITDA for the third quarter of 2024 was $46.1 million compared to $79.1 million in the third quarter of 2023. The year-over-year change was primarily due to the timing of commercial settlements in the third quarter of 2023, unfavorable foreign exchange, continuing general inflation and lower overall production volumes. These negative factors were partially offset by the savings generated from lean manufacturing and purchasing initiatives, and implemented restructuring actions.
Adjusted net (loss) income, adjusted EBITDA and adjusted (loss) income 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 the United States ("U.S. GAAP"), are provided in the attached supplemental schedules.
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 OEM customers and capitalize on positive trends associated with hybrid and battery electric vehicles. During the third quarter of 2024, the Company received net new business awards totaling $44.0 million in anticipated future annualized sales. This included $32.3 million of net new business awards on battery electric vehicle platforms and $7.9 million of net new business awards on hybrid vehicle platforms.
Segment Results of Operations
Sales
Three Months Ended September 30,
Variance Due To:
2024
2023
Change
Volume/Mix*
Foreign Exchange
Divestitures
(dollar amounts in thousands)
Sales to external customers
Sealing systems
$ 353,365
$ 370,958
$ (17,593)
$ (15,279)
$ (2,314)
$ ,
Fluid handling systems
313,739
341,817
(28,078)
(26,795)
(1,283)
—
Total for reportable segments
$ 667,104
$ 712,775
$ (45,671)
$ (42,074)
$ (3,597)
$ ,
Corporate, eliminations and other
18,249
23,263
(5,014)
62
—
(5,076)
Consolidated
$ 685,353
$ 736,038
$ (50,685)
$ (42,012)
$ (3,597)
$ (5,076)
* Net of customer price adjustments, including recoveries.
Adjusted EBITDA
Three Months Ended September 30,
Variance Due To:
2024
2023
Change
Volume/Mix*
Foreign Exchange
Cost Decreases/(Increases)**
(dollar amounts in thousands)
Segment adjusted EBITDA
Sealing systems
$ 29,904
$ 39,620
$ (9,716)
$ (16,863)
$ (6,578)
$ 13,725
Fluid handling systems
23,089
41,292
(18,203)
(25,670)
(2,746)
10,213
Total for reportable segments
$ 52,993
$ 80,912
$ (27,919)
$ (42,533)
$ (9,324)
$ 23,938
Corporate, eliminations and other
(6,848)
(1,809)
(5,039)
92
(1,687)
(3,444)
Consolidated
$ 46,145
$ 79,103
$ (32,958)
$ (42,441)
$ (11,011)
$ 20,494
* Net of customer price adjustments, including recoveries.** Net of divestitures and restructuring savings.
Additional detail on our quarterly segment variance analyses is available in our periodic filings with the Securities and Exchange Commission.
Cash and Liquidity
As of September 30, 2024, Cooper Standard had cash and cash equivalents totaling $107.7 million. Total liquidity, including availability under the Company's amended senior asset-based revolving credit facility, was $280.8 million at the end of the third quarter of 2024.
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 full-year global light vehicle production in 2024 have been softening since the beginning of the year and are now slightly lower than levels realized in 2023. While the Company expects to continue leveraging new program launches and enhanced commercial agreements to drive growth, inflation and unfavorable foreign exchange are expected to continue as headwinds. Despite this continued slow growth environment, the Company expects the savings from implemented aggressive lean cost structure initiatives will help drive improvements in profit margins and cash flow in the fourth quarter of 2024 and continuing into 2025.
Reflecting these market dynamics, the Company has updated its full-year 2024 guidance as follows:
Initial 2024 Guidance1
Current 2024 Guidance1
Sales
$2.8 - $2.9 billion
$2.70 - $2.75 billion
Adjusted EBITDA2
$180 - $210 million
$180 - $195 million
Capital Expenditures
$75 - $85 million
$45 - $50 million
Cash Restructuring
$15 - $20 million
$25 - $30 million
Net Cash Interest
$70 - $75 million
$95 - $100 million
Net Cash Taxes
$20 - $25 million
$20 - $25 million
Key Light Vehicle Productions Assumptions (Units)
North America
15.8 million
15.5 million
Europe
17.4 million
17.1 million
Greater China
28.9 million
29.3 million
South America
3.0 million
2.9 million
1 Guidance is representative of management's estimates and expectations as of the date it is published. Initial guidance was first presented in our earnings press release published on February 15, 2024. Current guidance as presented in this press release considers October 2024 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 U.S. GAAP net income (loss) without unreasonable effort.
Conference Call Details
Cooper Standard management will host a conference call and webcast on November 1, 2024 at 9 a.m. ET to discuss its third quarter 2024 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 the United States and Canada can dial toll-free at 800-836-8184 (international callers dial 646-357-8785) and ask to be connected to the Cooper Standard conference call. Representatives of the investment community will have the opportunity to ask questions during Q&A. Participants should dial-in at least five minutes prior to the start of the call.
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 Northville, Mich., with locations in 21 countries, is a leading global supplier of sealing and fluid handling systems and components. Utilizing our materials science and manufacturing expertise, we create innovative and sustainable engineered solutions for diverse transportation and industrial markets. Cooper Standard's approximately 22,000 employees are at the heart of our success, continuously improving our business and surrounding communities. Learn more at www.cooperstandard.com or follow us on LinkedIn, X, Facebook, Instagram or YouTube.
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "outlook," "guidance," "forecast," or future or conditional verbs, such as "will," "should," "could," "would," or "may," and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other ...
