Cooper Standard Reports Continuing Year-over-year Margin Improvement in First Quarter 2024, Sees Upside to Full-year Guidance
First Quarter
2024 Summary
-
Gross profit totaled
$61.6 million , an increase of 47.4% compared to first quarter 2023 -
Operating income of
$3.5 million reflected an increase of$17.9 million vs. the first quarter of 2023 -
Net loss of
$31.7 million , or$(1.81) per diluted share, reflected an improvement of$98.7 million vs. the first quarter 2023 -
Adjusted EBITDA of
$29.3 million reflected an increase of$16.9 million vs. the first quarter of 2023 - New product-based segmentation and management structure expected to drive further operational improvements, optimize asset and resource allocation and accelerate value creation
"Our first quarter operational improvements and margin expansion set a solid foundation for a strong 2024," said
Consolidated Results
|
Three Months Ended |
||
|
2024 |
|
2023 |
|
(dollar amounts in millions except per share amounts) |
||
Sales |
$ 676.4 |
|
$ 682.5 |
Net loss |
$ (31.7) |
|
$ (130.4) |
Adjusted net loss |
$ (30.6) |
|
$ (46.2) |
Loss per diluted share |
$ (1.81) |
|
$ (7.57) |
Adjusted loss per diluted share |
$ (1.75) |
|
$ (2.68) |
Adjusted EBITDA |
$ 29.3 |
|
$ 12.5 |
The year-over-year change in first quarter sales was primarily attributable to the divestiture of our Technical Rubber business in the third quarter of 2023 and unfavorable foreign exchange. These were partially offset by favorable volume and mix, including sustainable price adjustments.
Net loss for the first quarter 2024 was
Adjusted EBITDA for the first quarter of 2024 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 the
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 first quarter of 2024, the Company received net new business awards totaling
Segment Results of Operations
As of the beginning of 2024, the Company has realigned its operating management structure on a product line basis rather than the prior geographic region basis. The new structure is expected to optimize asset and resource allocation, enhance operating efficiency and aid in accelerating growth. As a result of the structural change, the Company will now report financial results across two product line segments - Sealing Systems and Fluid Handling Systems. On this basis, the segment results for the first quarter are as follows:
Sales
|
Three Months Ended |
|
|
Variance Due To: |
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|
2024 |
|
2023 |
|
Change |
|
|
Volume / |
|
Foreign Exchange |
|
Divestitures |
|
(dollar amounts in thousands) |
|||||||||||
Sales to external customers |
|
|
|
|
|
|
|
|
|
|
|
|
Sealing systems |
$ 351,279 |
|
$ 348,980 |
|
$ 2,299 |
|
|
$ 2,433 |
|
$ (134) |
|
$ — |
Fluid handling systems |
305,515 |
|
300,598 |
|
4,917 |
|
|
5,878 |
|
(961) |
|
— |
Corporate, eliminations and other |
19,631 |
|
32,880 |
|
(13,249) |
|
|
(409) |
|
— |
|
(12,840) |
Consolidated |
$ 676,425 |
|
$ 682,458 |
|
$ (6,033) |
|
|
$ 7,902 |
|
$ (1,095) |
|
$ (12,840) |
|
* Net of customer price adjustments, including recoveries. |
- Volume and mix was mainly driven by customer price adjustments including recoveries.
- The net impact of foreign currency exchange was primarily related to the Chinese Renminbi and Euro.
Adjusted EBITDA
|
Three Months Ended |
|
|
Variance Due To: |
||||||||
|
2024 |
|
2023 |
|
Change |
|
|
Volume/ |
|
Foreign |
|
Cost |
|
(dollar amounts in thousands) |
|||||||||||
Segment adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Sealing systems |
$ 21,371 |
|
$ 11,716 |
|
$ 9,655 |
|
|
$ 4,508 |
|
$ (2,865) |
|
$ 8,012 |
Fluid handling systems |
10,982 |
|
4,203 |
|
6,779 |
|
|
9,732 |
|
(6,414) |
|
3,461 |
Corporate, eliminations and other |
(3,005) |
|
(3,462) |
|
457 |
|
|
340 |
|
248 |
|
(131) |
Consolidated |
$ 29,348 |
|
$ 12,457 |
|
$ 16,891 |
|
|
$ 14,580 |
|
$ (9,031) |
|
$ 11,342 |
|
* Net of customer price adjustments, including recoveries. |
** Net of divestitures. |
- Volume and mix was mainly driven by customer price adjustments including recoveries.
- The net impact of foreign currency exchange was primarily related to the Mexican Peso and Polish Zloty.
- The Cost Decreases / (Increases) category above includes:
- Commodity cost and inflationary economics; and
- Manufacturing and purchasing savings through lean initiatives.
Cash and Liquidity
As of
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 are similar to levels realized in 2023. In this broad macro industry view, the Company expects to continue leveraging new program launches and enhanced commercial agreements to drive further growth above the market. In addition, the Company expects to continue driving operational efficiency and improvement through additional aggressive lean cost structure initiatives. As these initiatives were not contemplated when the 2024 business plan was developed, we believe successful implementation will drive meaningful additional margin expansion and should represent upside to the Company's original full-year guidance, assuming industry production volumes achieve planned levels. The Company expects to provide a formal update to full-year guidance when it reports second quarter results.
Conference Call Details
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
About
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: |
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|
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(248) 596-6465 |
(248) 596-6217 |
Financial statements and related notes follow:
|
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
(Unaudited) |
|||
(Dollar amounts in thousands except per share and share amounts) |
|||
|
|
|
|
|
Three Months Ended |
||
|
2024 |
|
2023 |
Sales |
$ 676,425 |
|
$ 682,458 |
Cost of products sold |
614,782 |
|
640,630 |
Gross profit |
61,643 |
|
41,828 |
Selling, administration & engineering expenses |
55,366 |
|
52,089 |
Amortization of intangibles |
1,661 |
|
1,807 |
Restructuring charges |
1,133 |
|
2,379 |
Operating income (loss) |
3,483 |
|
(14,447) |
Interest expense, net of interest income |
(29,281) |
|
(30,220) |
Equity in earnings (losses) of affiliates |
2,270 |
|
(198) |
Loss on refinancing and extinguishment of debt |
— |
|
(81,885) |
Other expense, net |
(3,649) |
|
(4,004) |
Loss before income taxes |
(27,177) |
|
(130,754) |
Income tax expense |
4,131 |
|
358 |
Net loss |
(31,308) |
|
(131,112) |
Net (income) loss attributable to noncontrolling interests |
(352) |
|
745 |
Net loss attributable to |
$ (31,660) |
|
$ (130,367) |
|
|
|
|
Weighted average shares outstanding: |
|
|
|
Basic |
17,462,136 |
|
17,229,423 |
Diluted |
17,462,136 |
|
17,229,423 |
|
|
|
|
Loss per share: |
|
|
|
Basic |
$ (1.81) |
|
$ (7.57) |
Diluted |
$ (1.81) |
|
$ (7.57) |
|
|||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(Dollar amounts in thousands except share amounts) |
|||
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 114,191 |
|
$ 154,801 |
Accounts receivable, net |
381,742 |
|
380,562 |
Tooling receivable, net |
77,291 |
|
80,225 |
Inventories |
172,522 |
|
146,846 |
Prepaid expenses |
24,616 |
|
28,328 |
Value added tax receivable |
62,061 |
|
69,684 |
Other current assets |
60,414 |
|
40,140 |
Total current assets |
892,837 |
|
900,586 |
Property, plant and equipment, net |
588,131 |
|
608,431 |
Operating lease right-of-use assets, net |
94,744 |
|
91,126 |
|
140,721 |
|
140,814 |
Intangible assets, net |
38,756 |
|
40,568 |
Other assets |
89,162 |
|
90,774 |
Total assets |
$ 1,844,351 |
|
$ 1,872,299 |
|
|
|
|
Liabilities and Equity |
|
|
|
Current liabilities: |
|
|
|
Debt payable within one year |
$ 49,909 |
|
$ 50,712 |
Accounts payable |
356,024 |
|
334,578 |
Payroll liabilities |
108,273 |
|
132,422 |
Accrued liabilities |
125,839 |
|
116,954 |
Current operating lease liabilities |
19,281 |
|
18,577 |
Total current liabilities |
659,326 |
|
653,243 |
Long-term debt |
1,051,600 |
|
1,044,736 |
Pension benefits |
98,347 |
|
100,578 |
Postretirement benefits other than pensions |
28,266 |
|
28,940 |
Long-term operating lease liabilities |
79,362 |
|
76,482 |
Other liabilities |
51,237 |
|
58,053 |
Total liabilities |
1,968,138 |
|
1,962,032 |
Equity: |
|
|
|
Common stock, |
17 |
|
17 |
Additional paid-in capital |
512,832 |
|
512,164 |
Retained deficit |
(423,476) |
|
(391,816) |
Accumulated other comprehensive loss |
(205,216) |
|
(201,665) |
|
(115,843) |
|
(81,300) |
Noncontrolling interests |
(7,944) |
|
(8,433) |
Total equity |
(123,787) |
|
(89,733) |
Total liabilities and equity |
$ 1,844,351 |
|
$ 1,872,299 |
|
|||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
(Unaudited) |
|||
(Dollar amounts in thousands) |
|||
|
|
|
|
|
Three Months Ended |
||
|
2024 |
|
2023 |
Operating activities: |
|
|
|
Net loss |
$ (31,308) |
|
$ (131,112) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
Depreciation |
24,802 |
|
26,175 |
Amortization of intangibles |
1,661 |
|
1,807 |
Share-based compensation expense |
2,700 |
|
1,467 |
Equity in (earnings) losses of affiliates, net of dividends related to earnings |
(693) |
|
198 |
Loss on refinancing and extinguishment of debt |
— |
|
81,885 |
Payment-in-kind interest |
6,787 |
|
11,392 |
Deferred income taxes |
(317) |
|
367 |
Other |
1,233 |
|
1,206 |
Changes in operating assets and liabilities |
(19,064) |
|
36,994 |
Net cash (used in) provided by operating activities |
(14,199) |
|
30,379 |
Investing activities: |
|
|
|
Capital expenditures |
(16,834) |
|
(29,263) |
Other |
165 |
|
232 |
Net cash used in investing activities |
(16,669) |
|
(29,031) |
Financing activities: |
|
|
|
Proceeds from issuance of long-term debt, net of debt issuance costs |
— |
|
927,450 |
Repayment and refinancing of long-term debt |
— |
|
(927,046) |
Principal payments on long-term debt |
(657) |
|
(755) |
Decrease in short-term debt, net |
(5) |
|
(1,312) |
Debt issuance costs and other fees |
— |
|
(73,965) |
Taxes withheld and paid on employees' share-based payment awards |
(549) |
|
(195) |
Other |
— |
|
163 |
Net cash used in financing activities |
(1,211) |
|
(75,660) |
Effects of exchange rate changes on cash, cash equivalents and restricted cash |
(3,855) |
|
(2,850) |
Changes in cash, cash equivalents and restricted cash |
(35,934) |
|
(77,162) |
Cash, cash equivalents and restricted cash at beginning of period |
163,061 |
|
192,807 |
Cash, cash equivalents and restricted cash at end of period |
$ 127,127 |
|
$ 115,645 |
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets: |
|||
|
Balance as of |
||
|
|
|
|
Cash and cash equivalents |
$ 114,191 |
|
$ 154,801 |
Restricted cash included in other current assets |
11,989 |
|
7,244 |
Restricted cash included in other assets |
947 |
|
1,016 |
Total cash, cash equivalents and restricted cash |
$ 127,127 |
|
$ 163,061 |
Non-GAAP Financial 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 Financial Measures
EBITDA and Adjusted EBITDA |
|||
|
|||
The following table provides a reconciliation of EBITDA and adjusted EBITDA from net loss: |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Net loss attributable to |
$ (31,660) |
|
$ (130,367) |
Income tax expense |
4,131 |
|
358 |
Interest expense, net of interest income |
29,281 |
|
30,220 |
Depreciation and amortization |
26,463 |
|
27,982 |
EBITDA |
$ 28,215 |
|
$ (71,807) |
Restructuring charges |
1,133 |
|
2,379 |
Loss on refinancing and extinguishment of debt (1) |
— |
|
81,885 |
Adjusted EBITDA |
$ 29,348 |
|
$ 12,457 |
|
|
|
|
Sales |
$ 676,425 |
|
$ 682,458 |
Net loss margin |
(4.7) % |
|
(19.1) % |
Adjusted EBITDA margin |
4.3 % |
|
1.8 % |
|
|
(1) |
Loss on refinancing and extinguishment of debt relating to refinancing transactions in 2023. |
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 |
||
|
2024 |
|
2023 |
Net loss attributable to |
$ (31,660) |
|
$ (130,367) |
Restructuring charges |
1,133 |
|
2,379 |
Loss on refinancing and extinguishment of debt (1) |
— |
|
81,885 |
Tax impact of adjusting items (2) |
(75) |
|
(71) |
Adjusted net loss |
$ (30,602) |
|
$ (46,174) |
|
|
|
|
Weighted average shares outstanding: |
|
|
|
Basic |
17,462,136 |
|
17,229,423 |
Diluted |
17,462,136 |
|
17,229,423 |
|
|
|
|
Loss per share: |
|
|
|
Basic |
$ (1.81) |
|
$ (7.57) |
Diluted |
$ (1.81) |
|
$ (7.57) |
|
|
|
|
Adjusted loss per share: |
|
|
|
Basic |
$ (1.75) |
|
$ (2.68) |
Diluted |
$ (1.75) |
|
$ (2.68) |
|
|
(1) |
Loss on refinancing and extinguishment of debt relating to refinancing transactions in 2023. |
(2) |
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 |
||
|
2024 |
|
2023 |
Net cash (used in) provided by operating activities |
$ (14,199) |
|
$ 30,379 |
Capital expenditures |
(16,834) |
|
(29,263) |
Free cash flow |
$ (31,033) |
|
$ 1,116 |
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