UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission File Number: 001-36127

______________________________

COOPER-STANDARD HOLDINGS INC.

(Exact name of registrant as specified in its charter)

______________________________


Delaware						20-1945088
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

40300 Traditions Drive

Northville, Michigan 48168

(Address of principal executive offices)

(Zip Code)

(248) 596-5900

(Registrant’s telephone number, including area code)

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

CPS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April~~July 30, 2021, there were ~~16,942,878~~16,989,177 shares of the registrant’s common stock, $0.001 par value, outstanding.

COOPER-STANDARD HOLDINGS INC.

Form 10-Q

For the period ended ~~March 31,~~June 30, 2021

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollar amounts in thousands except per share amounts)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Sales	Sales		$	668,967		$	654,890	Sales	$	533,185	$	340,467	$	1,202,152	$	995,357
Cost of products sold	Cost of products sold		600,675			611,747		Cost of products sold	534,118		400,838		1,134,793		1,012,585
Gross profit			68,292			43,143
Gross (loss) profit								Gross (loss) profit	(933)		(60,371)		67,359		(17,228)
Selling, administration & engineering expenses	Selling, administration & engineering expenses		58,054			70,671		Selling, administration & engineering expenses	50,085		68,271		108,139		138,942
Gain on sale of business			(891)			0
Gain on sale of business, net								Gain on sale of business, net	195		0		(696)		0

Amortization of intangibles	Amortization of intangibles		1,772			4,450		Amortization of intangibles	1,933		3,513		3,705		7,963
Restructuring charges	Restructuring charges		21,047			7,276		Restructuring charges	11,631		9,774		32,678		17,050
Impairment of assets held for sale			0			74,079
Other impairment charges			0			977

Impairment charges								Impairment charges	841		12,554		841		87,610
Operating loss	Operating loss		(11,690)			(114,310)		Operating loss	(65,618)		(154,483)		(77,308)		(268,793)
Interest expense, net of interest income	Interest expense, net of interest income		(17,784)			(10,237)		Interest expense, net of interest income	(18,125)		(12,771)		(35,909)		(23,008)
Equity in earnings of affiliates			786			1,431
Equity in earnings (losses) of affiliates								Equity in earnings (losses) of affiliates	393		(3,011)		1,179		(1,580)

Other expense, net			(5,089)			(3,440)
Other income (expense), net								Other income (expense), net	1,362		(4,701)		(3,727)		(8,141)
Loss before income taxes	Loss before income taxes		(33,777)			(126,556)		Loss before income taxes	(81,988)		(174,966)		(115,765)		(301,522)
Income tax expense (benefit)			936			(14,117)
Income tax benefit								Income tax benefit	(17,459)		(38,982)		(16,523)		(53,099)
Net loss	Net loss		(34,713)			(112,439)		Net loss	(64,529)		(135,984)		(99,242)		(248,423)
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		849			1,851		Net loss attributable to noncontrolling interests	918		1,765		1,767		3,616
Net loss attributable to Cooper-Standard Holdings Inc.	Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)		$	(110,588)	Net loss attributable to Cooper-Standard Holdings Inc.	$	(63,611)	$	(134,219)	$	(97,475)	$	(244,807)

Loss per share:	Loss per share:							Loss per share:
Basic	Basic		$	(2.00)		$	(6.55)	Basic	$	(3.73)	$	(7.93)	$	(5.74)	$	(14.49)
Diluted	Diluted		$	(2.00)		$	(6.55)	Diluted	$	(3.73)	$	(7.93)	$	(5.74)	$	(14.49)

The accompanying notes are an integral part of these financial statements.

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(Dollar amounts in thousands)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Net loss	Net loss		$	(34,713)		$	(112,439)	Net loss	$	(64,529)	$	(135,984)	$	(99,242)	$	(248,423)
Other comprehensive loss:
Other comprehensive income (loss):								Other comprehensive income (loss):
Currency translation adjustment	Currency translation adjustment		(6,572)			(28,889)		Currency translation adjustment	8,713		6,789		2,141		(22,100)
Benefit plan liabilities adjustment, net of tax	Benefit plan liabilities adjustment, net of tax		2,739			2,682		Benefit plan liabilities adjustment, net of tax	611		(716)		3,350		1,966
Fair value change of derivatives, net of tax	Fair value change of derivatives, net of tax		(571)			(10,076)		Fair value change of derivatives, net of tax	751		6,238		180		(3,838)
Other comprehensive loss, net of tax			(4,404)			(36,283)
Other comprehensive income (loss), net of tax								Other comprehensive income (loss), net of tax	10,075		12,311		5,671		(23,972)
Comprehensive loss	Comprehensive loss		(39,117)			(148,722)		Comprehensive loss	(54,454)		(123,673)		(93,571)		(272,395)
Comprehensive loss attributable to noncontrolling interests	Comprehensive loss attributable to noncontrolling interests		1,101			2,358		Comprehensive loss attributable to noncontrolling interests	727		1,675		1,828		4,033
Comprehensive loss attributable to Cooper-Standard Holdings Inc.	Comprehensive loss attributable to Cooper-Standard Holdings Inc.		$	(38,016)		$	(146,364)	Comprehensive loss attributable to Cooper-Standard Holdings Inc.	$	(53,727)	$	(121,998)	$	(91,743)	$	(268,362)

The accompanying notes are an integral part of these financial statements.

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands except share amounts)


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	398,847	$	438,438	Cash and cash equivalents	$	335,494	$	438,438
Accounts receivable, net	Accounts receivable, net	383,692		379,564		Accounts receivable, net	321,770		379,564
Tooling receivable, net	Tooling receivable, net	77,728		82,150		Tooling receivable, net	92,514		82,150
Inventories	Inventories	171,086		143,742		Inventories	186,422		143,742
Prepaid expenses	Prepaid expenses	30,639		29,748		Prepaid expenses	33,835		29,748
Income tax receivable and refundable credits	Income tax receivable and refundable credits	83,761		85,977		Income tax receivable and refundable credits	87,296		85,977
Other current assets	Other current assets	100,208		100,110		Other current assets	95,640		100,110

Total current assets	Total current assets	1,245,961		1,259,729		Total current assets	1,152,971		1,259,729
Property, plant and equipment, net	Property, plant and equipment, net	857,609		892,309		Property, plant and equipment, net	849,392		892,309
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	106,670		109,795		Operating lease right-of-use assets, net	103,228		109,795
Goodwill	Goodwill	142,307		142,250		Goodwill	142,769		142,250
Intangible assets, net	Intangible assets, net	65,863		67,679		Intangible assets, net	64,143		67,679

Other assets	Other assets	146,951		140,182		Other assets	164,794		140,182
Total assets	Total assets	$	2,565,361	$	2,611,944	Total assets	$	2,477,297	$	2,611,944

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities:	Current liabilities:					Current liabilities:
Debt payable within one year	Debt payable within one year	$	43,441	$	40,731	Debt payable within one year	$	55,738	$	40,731
Accounts payable	Accounts payable	364,168		385,284		Accounts payable	323,315		385,284
Payroll liabilities	Payroll liabilities	103,394		112,727		Payroll liabilities	109,326		112,727
Accrued liabilities	Accrued liabilities	124,469		110,827		Accrued liabilities	116,920		110,827
Current operating lease liabilities	Current operating lease liabilities	25,666		21,711		Current operating lease liabilities	23,514		21,711

Total current liabilities	Total current liabilities	661,138		671,280		Total current liabilities	628,813		671,280
Long-term debt	Long-term debt	981,486		982,760		Long-term debt	981,643		982,760
Pension benefits	Pension benefits	146,790		152,230		Pension benefits	147,870		152,230
Postretirement benefits other than pensions	Postretirement benefits other than pensions	49,735		49,613		Postretirement benefits other than pensions	50,539		49,613

Long-term operating lease liabilities	Long-term operating lease liabilities	86,113		90,517		Long-term operating lease liabilities	83,086		90,517
Other liabilities	Other liabilities	54,153		41,433		Other liabilities	52,177		41,433
Total liabilities	Total liabilities	1,979,415		1,987,833		Total liabilities	1,944,128		1,987,833

Equity:	Equity:					Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,008,361 shares issued and 16,942,552 shares outstanding as of March 31, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 2020		17		17
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,054,323 shares issued and 16,988,514 shares outstanding as of June 30, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 2020						Common stock, $0.001 par value, 190,000,000 shares authorized; 19,054,323 shares issued and 16,988,514 shares outstanding as of June 30, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 2020	17		17
Additional paid-in capital	Additional paid-in capital	499,671		498,719		Additional paid-in capital	501,348		498,719
Retained earnings	Retained earnings	316,406		350,270		Retained earnings	252,795		350,270
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(246,048)		(241,896)		Accumulated other comprehensive loss	(236,164)		(241,896)
Total Cooper-Standard Holdings Inc. equity	Total Cooper-Standard Holdings Inc. equity	570,046		607,110		Total Cooper-Standard Holdings Inc. equity	517,996		607,110
Noncontrolling interests	Noncontrolling interests	15,900		17,001		Noncontrolling interests	15,173		17,001
Total equity	Total equity	585,946		624,111		Total equity	533,169		624,111
Total liabilities and equity	Total liabilities and equity	$	2,565,361	$	2,611,944	Total liabilities and equity	$	2,477,297	$	2,611,944

The accompanying notes are an integral part of these financial statements.

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Dollar amounts in thousands except share amounts)


		Total Equity																Total Equity
		Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity			Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity
Balance as of December 31, 2020	Balance as of December 31, 2020	16,897,085	$	17	$	498,719	$	350,270	$	(241,896)	$	607,110	$	17,001	$	624,111	Balance as of December 31, 2020	16,897,085	$	17	$	498,719	$	350,270	$	(241,896)	$	607,110	$	17,001	$	624,111

Share-based compensation, net	Share-based compensation, net	45,467	—		952		0		—		952		—		952		Share-based compensation, net	45,467	—		952		0		—		952		—		952

Net loss	Net loss	—	—		—		(33,864)		—		(33,864)		(849)		(34,713)		Net loss	—	—		—		(33,864)		—		(33,864)		(849)		(34,713)
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(4,152)		(4,152)		(252)		(4,404)		Other comprehensive loss	—	—		—		—		(4,152)		(4,152)		(252)		(4,404)
Balance as of March 31, 2021	Balance as of March 31, 2021	16,942,552	$	17	$	499,671	$	316,406	$	(246,048)	$	570,046	$	15,900	$	585,946	Balance as of March 31, 2021	16,942,552	$	17	$	499,671	$	316,406	$	(246,048)	$	570,046	$	15,900	$	585,946

Share-based compensation, net																	Share-based compensation, net	45,962	—		1,677		0		—		1,677		—		1,677

Net loss																	Net loss	—	—		—		(63,611)		—		(63,611)		(918)		(64,529)
Other comprehensive income																	Other comprehensive income	—	—		—		—		9,884		9,884		191		10,075
Balance as of June 30, 2021																	Balance as of June 30, 2021	16,988,514	$	17	$	501,348	$	252,795	$	(236,164)	$	517,996	$	15,173	$	533,169


		Total Equity																Total Equity
		Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity			Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity
Balance as of December 31, 2019	Balance as of December 31, 2019	16,842,757	$	17	$	490,451	$	619,448	$	(253,741)	$	856,175	$	19,807	$	875,982	Balance as of December 31, 2019	16,842,757	$	17	$	490,451	$	619,448	$	(253,741)	$	856,175	$	19,807	$	875,982
Cumulative effect of change in accounting principle	Cumulative effect of change in accounting principle	—	—		—		(1,573)		—		(1,573)		—		(1,573)		Cumulative effect of change in accounting principle	—	—		—		(1,573)		—		(1,573)		—		(1,573)

Share-based compensation, net	Share-based compensation, net	41,785	—		1,874		0		—		1,874		—		1,874		Share-based compensation, net	41,785	—		1,874		0		—		1,874		—		1,874

Net loss	Net loss	—	—		—		(110,588)		—		(110,588)		(1,851)		(112,439)		Net loss	—	—		—		(110,588)		—		(110,588)		(1,851)		(112,439)
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(35,776)		(35,776)		(507)		(36,283)		Other comprehensive loss	—	—		—		—		(35,776)		(35,776)		(507)		(36,283)
Balance as of March 31, 2020	Balance as of March 31, 2020	16,884,542	$	17	$	492,325	$	507,287	$	(289,517)	$	710,112	$	17,449	$	727,561	Balance as of March 31, 2020	16,884,542	$	17	$	492,325	$	507,287	$	(289,517)	$	710,112	$	17,449	$	727,561

Share-based compensation, net																	Share-based compensation, net	9,548	—		2,303		0		—		2,303		—		2,303

Net loss																	Net loss	—	—		—		(134,219)		—		(134,219)		(1,765)		(135,984)
Other comprehensive loss																	Other comprehensive loss	—	—		—		—		12,221		12,221		90		12,311
Balance as of June 30, 2020																	Balance as of June 30, 2020	16,894,090	$	17	$	494,628	$	373,068	$	(277,296)	$	590,417	$	15,774	$	606,191

The accompanying notes are an integral part of these financial statements.

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollar amounts in thousands)


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
Operating Activities:	Operating Activities:					Operating Activities:
Net loss	Net loss	$	(34,713)	$	(112,439)	Net loss	$	(99,242)	$	(248,423)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	Depreciation	31,756		33,313		Depreciation	65,267		72,260
Amortization of intangibles	Amortization of intangibles	1,772		4,450		Amortization of intangibles	3,705		7,963
Gain on sale of business		(891)		0
Gain on sale of business, net						Gain on sale of business, net	(696)		0

Impairment of assets held for sale		0		74,079
Other impairment charges		0		977

Impairment charges						Impairment charges	841		87,610
Share-based compensation expense	Share-based compensation expense	2,178		2,374		Share-based compensation expense	3,002		4,935
Equity in earnings of affiliates, net of dividends related to earnings	Equity in earnings of affiliates, net of dividends related to earnings	(786)		3,814		Equity in earnings of affiliates, net of dividends related to earnings	1,032		6,825

Deferred income taxes	Deferred income taxes	(1,434)		(20,191)		Deferred income taxes	(21,709)		(29,052)
Other	Other	130		1,138		Other	1,192		2,053
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(5,096)		10,455		Changes in operating assets and liabilities	(14,126)		(30,405)
Net cash used in operating activities	Net cash used in operating activities	(7,084)		(2,030)		Net cash used in operating activities	(60,734)		(126,234)
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(38,617)		(50,591)		Capital expenditures	(55,599)		(62,874)

Proceeds from sale of fixed assets and other	Proceeds from sale of fixed assets and other	2,363		482		Proceeds from sale of fixed assets and other	3,035		817
Net cash used in investing activities	Net cash used in investing activities	(36,254)		(50,109)		Net cash used in investing activities	(52,564)		(62,057)
Financing activities:	Financing activities:					Financing activities:

Proceeds from issuance of long-term debt, net of discount						Proceeds from issuance of long-term debt, net of discount	0		245,000
Principal payments on long-term debt	Principal payments on long-term debt	(1,797)		(1,498)		Principal payments on long-term debt	(2,895)		(3,081)
Increase in short-term debt, net		3,429		3,021
Increase (decrease) in short-term debt, net						Increase (decrease) in short-term debt, net	14,811		(3,042)

Debt issuance costs						Debt issuance costs	0		(4,904)

Taxes withheld and paid on employees' share-based payment awards	Taxes withheld and paid on employees' share-based payment awards	(729)		(512)		Taxes withheld and paid on employees' share-based payment awards	(744)		(516)
Other	Other	385		(625)		Other	532		(807)
Net cash provided by financing activities	Net cash provided by financing activities	1,288		386		Net cash provided by financing activities	11,704		232,650
Effects of exchange rate changes on cash, cash equivalents and restricted cash	Effects of exchange rate changes on cash, cash equivalents and restricted cash	5,358		(6,200)		Effects of exchange rate changes on cash, cash equivalents and restricted cash	4,179		(4,036)
Changes in cash, cash equivalents and restricted cash	Changes in cash, cash equivalents and restricted cash	(36,692)		(57,953)		Changes in cash, cash equivalents and restricted cash	(97,415)		40,323

Cash, cash equivalents and restricted cash reclassified to assets held for sale						Cash, cash equivalents and restricted cash reclassified to assets held for sale	0		(11,278)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	443,578		361,742		Cash, cash equivalents and restricted cash at beginning of period	443,578		361,742
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	406,886	$	303,789	Cash, cash equivalents and restricted cash at end of period	$	346,163	$	390,787

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:	Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:					Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
		Balance as of					Balance as of
		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	398,847	$	438,438	Cash and cash equivalents	$	335,494	$	438,438
Restricted cash included in other current assets	Restricted cash included in other current assets	6,801		4,089		Restricted cash included in other current assets	8,506		4,089
Restricted cash included in other assets	Restricted cash included in other assets	1,238		1,051		Restricted cash included in other assets	2,163		1,051
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	406,886	$	443,578	Total cash, cash equivalents and restricted cash	$	346,163	$	443,578

The accompanying notes are an integral part of these financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

1. Overview

Basis of Presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company” or “Cooper Standard”), through its wholly-owned subsidiary, Cooper-Standard Automotive Inc. (“CSA U.S.”), is a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems. The Company’s products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets. The Company conducts substantially all of its activities through its subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), as filed with the SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These financial statements include all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company. The operating results for the interim period ended ~~March 31,~~June 30, 2021 are not necessarily indicative of results for the full year. In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

2. ~~New Accounting Pronouncements~~

~~Recently Adopted Accounting Pronouncements~~

The Company adopted the following Accounting Standard Updates (“ASU”) during the three months ended March 31, 2021, which did not have a material impact on its condensed consolidated financial statements.


~~Standard~~	~~Description~~	~~Effective Date~~
~~ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~	~~Modifies ASC Topic 740 by removing certain exceptions and amending existing guidance in order to simplify the accounting for income taxes.~~	~~January 1, 2021~~
~~ASU 2021-01,~~ ~~Reference Rate Reform (Topic 848): Scope~~	Clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition and tailors the existing guidance to derivative instruments affected by the discounting transition.	~~January 1, 2021~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

3. Divestiture

2020 Divestiture

In the fourth quarter of 2019, management approved a plan to sell its European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations. The entities and the associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 2020, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

Upon meeting the criteria for held for sale classification and during the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company recorded non-cash impairment charges of ~~$74,079~~$86,470 to reduce the carrying value of the held for sale entities to fair value less costs to sell. Fair value, which is categorized within Level 3 of the fair value hierarchy, was determined using a market approach, estimated based on expected proceeds. The fair value less costs to sell were assessed each reporting period that the asset group remained classified as held for sale.

On July 1, 2020, the Company completed the divestiture of its European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations, to Mutares SE & Co. KGaA (“Mutares”). The transaction included payment denominated in Euro of €9,000, which consisted of €6,500 in cash paid and €2,500 in deferred payment obligations, payable in December 2021.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company recorded subsequent adjustments resulting in a net gain of ~~$891.~~$696.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

3. Revenue

Revenue is recognized for manufactured parts at a point in time, generally when products are shipped or delivered. The Company usually enters into agreements with customers to produce products at the beginning of a vehicle’s life. Blanket purchase orders received from customers and related documents generally establish the annual terms, including pricing, related to a vehicle model. Customers typically pay for parts based on customary business practices with payment terms generally between 30 and 90 days.

Revenue by customer group for the three months ended ~~March 31,~~June 30, 2021 was as follows:


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	Passenger and Light Duty	$	331,613	$	159,781	$	113,041	$	15,479	$	0	$	619,914	Passenger and Light Duty	$	240,111	$	126,972	$	102,950	$	14,145	$	0	$	484,178
Commercial	Commercial	4,281		5,881		1,182		7		1,251		12,602		Commercial	3,405		5,471		965		8		1,445		11,294
Other	Other	3,142		114		2		0		33,193		36,451		Other	4,009		178		0		0		33,526		37,713
Revenue	Revenue	$	339,036	$	165,776	$	114,225	$	15,486	$	34,444	$	668,967	Revenue	$	247,525	$	132,621	$	103,915	$	14,153	$	34,971	$	533,185

Revenue by customer group for the six months ended June 30, 2021 was as follows:


	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	$	571,724	$	286,753	$	215,991	$	29,624	$	0	$	1,104,092
Commercial	7,686		11,352		2,147		15		2,696		23,896
Other	7,151		292		2		0		66,719		74,164
Revenue	$	586,561	$	298,397	$	218,140	$	29,639	$	69,415	$	1,202,152

Revenue by customer group for the three months ended ~~March 31,~~June 30, 2020 was as follows:


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	Passenger and Light Duty	$	325,982	$	170,781	$	78,742	$	20,439	$	0	$	595,944	Passenger and Light Duty	$	120,939	$	70,753	$	104,307	$	3,881	$	0	$	299,880
Commercial	Commercial	3,178		5,557		546		10		1,134		10,425		Commercial	1,971		3,223		1,413		0		823		7,430
Other	Other	5,641		8,904		56		22		33,898		48,521		Other	3,427		4,829		6		0		24,895		33,157
Revenue	Revenue	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890	Revenue	$	126,337	$	78,805	$	105,726	$	3,881	$	25,718	$	340,467

Revenue by customer group for the six months ended June 30, 2020 was as follows:


	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	$	446,921	$	241,534	$	183,049	$	24,320	$	0	$	895,824
Commercial	5,149		8,780		1,959		10		1,957		17,855
Other	9,068		13,733		62		22		58,793		81,678
Revenue	$	461,138	$	264,047	$	185,070	$	24,352	$	60,750	$	995,357

The passenger and light duty group consists of sales to automotive OEMs and automotive suppliers, while the commercial group represents sales to OEMs of on- and off-highway commercial equipment and vehicles. The other customer group includes sales related to specialty and adjacent markets.

Substantially all of the Company’s revenues were generated from sealing, fuel and brake delivery and fluid transfer systems for use in passenger vehicles and light trucks manufactured by global OEMs.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

A summary of the Company’s products is as follows:


Product Line						Description
Sealing Systems						Protect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment
Fuel & Brake Delivery Systems						Sense, deliver and control fluids to fuel and brake systems
Fluid Transfer Systems						Sense, deliver and control fluids and vapors for optimal powertrain & HVAC operation

Revenue by product line for the three months ended ~~March 31,~~June 30, 2021 was as follows:


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	Sealing systems	$	121,175	$	129,361	$	69,673	$	11,274	$	0	$	331,483	Sealing systems	$	90,174	$	104,878	$	62,328	$	11,533	$	0	$	268,913
Fuel and brake delivery systems	Fuel and brake delivery systems	112,656		30,790		28,369		2,865		0		174,680		Fuel and brake delivery systems	82,389		23,991		25,166		2,148		0		133,694
Fluid transfer systems	Fluid transfer systems	105,205		5,625		16,183		1,347		0		128,360		Fluid transfer systems	74,962		3,752		16,421		472		0		95,607
Other	Other	0		0		0		0		34,444		34,444		Other	0		0		0		0		34,971		34,971
Consolidated	Consolidated	$	339,036	$	165,776	$	114,225	$	15,486	$	34,444	$	668,967	Consolidated	$	247,525	$	132,621	$	103,915	$	14,153	$	34,971	$	533,185

Revenue by product line for the six months ended June 30, 2021 was as follows:


	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	$	211,349	$	234,239	$	132,001	$	22,807	$	0	$	600,396
Fuel and brake delivery systems	195,045		54,781		53,535		5,013		0		308,374
Fluid transfer systems	180,167		9,377		32,604		1,819		0		223,967
Other	0		0		0		0		69,415		69,415
Consolidated	$	586,561	$	298,397	$	218,140	$	29,639	$	69,415	$	1,202,152

Revenue by product line for the three months ended ~~March 31,~~June 30, 2020 was as follows:


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	Sealing systems	$	124,556	$	127,246	$	49,024	$	13,549	$	0	$	314,375	Sealing systems	$	48,952	$	53,330	$	69,517	$	2,791	$	0	$	174,590
Fuel and brake delivery systems	Fuel and brake delivery systems	104,934		28,562		19,818		5,747		0		159,061		Fuel and brake delivery systems	42,272		11,298		25,366		826		0		79,762
Fluid transfer systems	Fluid transfer systems	105,311		21,945		10,502		1,175		0		138,933		Fluid transfer systems	35,113		9,557		10,843		264		0		55,777
Other	Other	0		7,489		0		0		35,032		42,521		Other	0		4,620		0		0		25,718		30,338
Consolidated	Consolidated	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890	Consolidated	$	126,337	$	78,805	$	105,726	$	3,881	$	25,718	$	340,467

Revenue by product line for the six months ended June 30, 2020 was as follows:


	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	$	173,508	$	180,576	$	118,541	$	16,340	$	0	$	488,965
Fuel and brake delivery systems	147,206		39,860		45,184		6,573		0		238,823
Fluid transfer systems	140,424		31,502		21,345		1,439		0		194,710
Other	0		12,109		0		0		60,750		72,859
Consolidated	$	461,138	$	264,047	$	185,070	$	24,352	$	60,750	$	995,357

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Contract Estimates

The amount of revenue recognized is usually based on the purchase order price and adjusted for variable consideration, including pricing concessions. The Company accrues for pricing concessions by reducing revenue as products are shipped or delivered. The accruals are based on historical experience, anticipated performance and management’s best judgment. The Company also generally has ongoing adjustments to customer pricing arrangements based on the content and cost of its products. Such pricing accruals are adjusted as they are settled with customers. Customer returns, which are infrequent, are usually related to quality or shipment issues and are recorded as a reduction of revenue. The Company generally does not recognize significant return obligations due to their infrequent nature.

Contract Balances

The Company’s contract assets consist of unbilled amounts associated with variable pricing arrangements in its Asia Pacific region. Once pricing is finalized, contract assets are transferred to accounts receivable. As a result, the timing of revenue recognition and billings, as well as changes in foreign exchange rates, will impact contract assets on an ongoing basis. Contract assets were not materially impacted by any other factors during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

The Company’s contract liabilities consist of advance payments received and due from customers. Net contract assets (liabilities) consisted of the following:

March 31, 2021 December 31, 2020 Change
Contract assets $ 5,274 $ 777 $ 4,497
Contract liabilities (21) (27) 6
Net contract assets $ 5,253 $ 750 $ 4,503

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~


	June 30, 2021		December 31, 2020		Change
Contract assets	$	418	$	777	$	(359)
Contract liabilities	(288)		(27)		(261)
Net contract assets	$	130	$	750	$	(620)

Other

The Company, at times, enters into agreements that provide for lump sum payments to customers. These payment agreements are recorded as a reduction of revenue during the period the commitment is made. Amounts related to commitments of future payments to customers on the condensed consolidated balance sheets as of ~~March 31,~~June 30, 2021 and December 31, 2020 were current liabilities of ~~$15,882~~$16,254 and $16,932, respectively, and long-term liabilities of ~~$6,427~~$6,818 and $6,828, respectively.

The Company provides assurance-type warranties to its customers. Such warranties provide customers with assurance that the related product will function as intended and complies with any agreed-upon specifications, and are recognized in costs of products sold.

5.4. Restructuring

On an ongoing basis, the Company evaluates its business and objectives to ensure that it is properly configured and sized based on changing market conditions. Accordingly, the Company has implemented several restructuring initiatives, including closure or consolidation of facilities throughout the world and the reorganization of its operating structure.

The Company’s restructuring charges consist of severance, retention and outplacement services, and severance-related postemployment benefits (collectively, “employee separation costs”), other related exit costs and asset impairments related to restructuring activities. Employee separation costs are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Restructuring expense by segment for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 was as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
North America	North America		$	2,363		$	3,703	North America	$	843	$	3,044	$	3,206	$	6,747
Europe	Europe		16,397			2,193		Europe	9,774		3,106		26,171		5,299
Asia Pacific	Asia Pacific		369			133		Asia Pacific	614		2,579		983		2,712
South America	South America		1,587			1,202		South America	400		849		1,987		2,051
Total Automotive	Total Automotive		20,716			7,231		Total Automotive	11,631		9,578		32,347		16,809
Corporate and other	Corporate and other		331			45		Corporate and other	0		196		331		241
Total	Total		$	21,047		$	7,276	Total	$	11,631	$	9,774	$	32,678	$	17,050

Restructuring activity for the ~~three~~six months ended ~~March 31,~~June 30, 2021 was as follows:


		Employee Separation Costs		Other Exit Costs		Total			Employee Separation Costs		Other Exit Costs		Total
Balance as of December 31, 2020	Balance as of December 31, 2020	$	15,029	$	8,406	$	23,435	Balance as of December 31, 2020	$	15,029	$	8,406	$	23,435
Expense	Expense	18,152		2,895		21,047		Expense	27,746		4,932		32,678
Cash payments	Cash payments	(4,416)		(5,646)		(10,062)		Cash payments	(8,900)		(6,740)		(15,640)
Non-cash fixed asset impairments included in expense	Non-cash fixed asset impairments included in expense	0		(182)		(182)		Non-cash fixed asset impairments included in expense	0		(214)		(214)
Foreign exchange translation and other	Foreign exchange translation and other	(603)		1,928		1,325		Foreign exchange translation and other	(382)		699		317
Balance as of March 31, 2021		$	28,162	$	7,401	$	35,563
Balance as of June 30, 2021								Balance as of June 30, 2021	$	33,493	$	7,083	$	40,576

6.5. Inventories

Inventories consist of the following:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Finished goods	Finished goods	$	46,675	$	39,136	Finished goods	$	52,914	$	39,136
Work in process	Work in process	41,153		35,477		Work in process	45,193		35,477
Raw materials and supplies	Raw materials and supplies	83,258		69,129		Raw materials and supplies	88,315		69,129
		$	171,086	$	143,742		$	186,422	$	143,742

1112

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

7.6. Leases

The Company primarily has operating and finance leases for certain manufacturing facilities, corporate offices and certain equipment. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and long-term operating lease liabilities on the Company’s condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, net, debt payable within one year, and long-term debt on the Company’s condensed consolidated balance sheets.

The components of lease expense were as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Operating lease expense	Operating lease expense		$	7,344		$	8,605	Operating lease expense	$	8,087	$	7,814	$	15,431	$	16,419
Short-term lease expense	Short-term lease expense		1,640			1,010		Short-term lease expense	1,965		1,065		3,605		2,075
Variable lease expense	Variable lease expense		248			250		Variable lease expense	181		155		429		405
Finance lease expense:	Finance lease expense:							Finance lease expense:
Amortization of right-of-use assets	Amortization of right-of-use assets		546			681		Amortization of right-of-use assets	521		671		1,067		1,352
Interest on lease liabilities	Interest on lease liabilities		366			385		Interest on lease liabilities	372		400		738		785
Total lease expense	Total lease expense		$	10,144		$	10,931	Total lease expense	$	11,126	$	10,105	$	21,270	$	21,036

Other information related to leases was as follows:


		Three Months Ended March 31,							Six Months Ended June 30,
		2021			2020				2021			2020
Supplemental Cash Flows Information	Supplemental Cash Flows Information							Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	7,346		$	7,933		Operating cash flows for operating leases	$	16,953		$	15,794
Operating cash flows for finance leases	Operating cash flows for finance leases	362			410			Operating cash flows for finance leases	734			810
Financing cash flows for finance leases	Financing cash flows for finance leases	652			648			Financing cash flows for finance leases	1,195			1,095
Non-cash right-of-use assets obtained in exchange for lease obligations:	Non-cash right-of-use assets obtained in exchange for lease obligations:							Non-cash right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	2,932			37,205			Operating leases	7,355			38,652
Finance leases	Finance leases	0			61			Finance leases	572			61

Weighted Average Remaining Lease Term (in years)	Weighted Average Remaining Lease Term (in years)							Weighted Average Remaining Lease Term (in years)
Operating leases	Operating leases	7.6			8.2			Operating leases	7.7			8.1
Finance leases	Finance leases	10.4			11.1			Finance leases	10.1			10.9

Weighted Average Discount Rate	Weighted Average Discount Rate							Weighted Average Discount Rate
Operating leases	Operating leases	5.4		%	5.3		%	Operating leases	5.5		%	5.3		%
Finance leases	Finance leases	5.7		%	6.1		%	Finance leases	5.8		%	6.0		%

1213

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Future minimum lease payments under non-cancellable leases as of ~~March 31,~~June 30, 2021 were as follows:


Year	Year	Operating Leases		Finance Leases		Year	Operating Leases		Finance Leases
Remainder of 2021	Remainder of 2021	$	24,400	$	2,442	Remainder of 2021	$	14,610	$	1,660
2022	2022	22,224		3,181		2022	23,174		3,326
2023	2023	17,837		3,092		2023	18,892		3,236
2024	2024	13,616		3,370		2024	14,192		3,513
2025	2025	10,416		3,442		2025	11,107		3,585
Thereafter	Thereafter	50,890		21,120		Thereafter	51,408		21,178
Total future minimum lease payments	Total future minimum lease payments	139,383		36,647		Total future minimum lease payments	133,383		36,498
Less imputed interest	Less imputed interest	(27,604)		(9,624)		Less imputed interest	(26,783)		(9,370)
Total	Total	$	111,779	$	27,023	Total	$	106,600	$	27,128

Amounts recognized on the condensed consolidated balance sheets as of ~~March 31,~~June 30, 2021 and December 31, 2020 were as follows:


		March 31, 2021	December 31, 2020		June 30, 2021		December 31, 2020
Operating Leases	Operating Leases			Operating Leases

Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	106,670	109,795	Operating lease right-of-use assets, net	$	103,228	$	109,795
Current operating lease liabilities	Current operating lease liabilities	25,666	21,711	Current operating lease liabilities	23,514		21,711

Long-term operating lease liabilities	Long-term operating lease liabilities	86,113	90,517	Long-term operating lease liabilities	83,086		90,517

Finance Leases	Finance Leases			Finance Leases
Debt payable within one year	Debt payable within one year	2,193	2,300	Debt payable within one year	2,222		2,300
Long-term debt	Long-term debt	24,830	26,152	Long-term debt	24,906		26,152

As of ~~March 31,~~June 30, 2021 and December 31, 2020, assets recorded under finance leases, net of accumulated depreciation were ~~$29,837~~$29,324 and $30,847, respectively. As of ~~March 31,~~June 30, 2021, the Company had additional ~~operating and finance~~ leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately ~~$5,563.~~$12,266. These leases will commence in 2021 with lease terms up to ~~five~~ten years.

8.7. Property, Plant and Equipment

Property, plant and equipment consists of the following:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Land and improvements	Land and improvements	$	58,334	$	61,226	Land and improvements	$	58,979	$	61,226
Buildings and improvements	Buildings and improvements	291,272		298,431		Buildings and improvements	294,773		298,431
Machinery and equipment	Machinery and equipment	1,283,381		1,277,624		Machinery and equipment	1,315,550		1,277,624
Construction in progress	Construction in progress	78,362		96,706		Construction in progress	70,742		96,706
		1,711,349		1,733,987			1,740,044		1,733,987
Accumulated depreciation	Accumulated depreciation	(853,740)		(841,678)		Accumulated depreciation	(890,652)		(841,678)
Property, plant and equipment, net	Property, plant and equipment, net	$	857,609	$	892,309	Property, plant and equipment, net	$	849,392	$	892,309

~~Based on~~During the ~~Company’s interim~~three and six months ended June 30, 2021, the Company recorded impairment ~~assessment,~~charges of $841 due to idle assets, primarily in a certain Europe location. The fair value was determined using salvage value.

Other than the impairment noted above, the Company determined there were no other indicators of impairment identified during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

During the six months ended June 30, 2020, the Company recorded impairment charges of $1,140. During the three months ended March 31, 2020, ~~the Company recorded an~~ impairment ~~charge related to machinery and equipment~~charges of $977 were recorded due to the deterioration of financial results in a certain Asia Pacific location. The fair value ~~of machinery and equipment~~ was determined using estimated orderly liquidation ~~value, which was deemed the highest and best use of the assets.~~value. The Company also

1314

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

9.recorded an impairment charge of $163 due to idle assets in various locations during the three months ended June 30, 2020. The fair value was determined using salvage value.

8. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by reporting unit for the ~~three~~six months ended ~~March 31,~~June 30, 2021 were as follows:


		North America		Industrial Specialty Group		Total			North America		Europe		Industrial Specialty Group		Total
Balance as of December 31, 2020	Balance as of December 31, 2020	$	128,214	$	14,036	$	142,250	Balance as of December 31, 2020	$	128,214	$	0	$	14,036	$	142,250

Acquisition (1)								Acquisition (1)	0		408		0		408
Foreign exchange translation	Foreign exchange translation	57		0		57		Foreign exchange translation	111		0		0		111
Balance as of March 31, 2021		$	128,271	$	14,036	$	142,307
Balance as of June 30, 2021								Balance as of June 30, 2021	$	128,325	$	408	$	14,036	$	142,769

(1) During the second quarter of 2021, the Company purchased a supplier in its Europe reporting unit for an immaterial purchase consideration, resulting in tax deductible goodwill.

Goodwill is tested for impairment by reporting unit annually or more frequently if events or circumstances indicate that an impairment may exist. There were no indicators of potential impairment during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

Intangible Assets

Intangible assets and accumulated amortization balances as of ~~March 31,~~June 30, 2021 and December 31, 2020 were as follows:


		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	Customer relationships	$	154,510	$	(122,837)	$	31,673	Customer relationships	$	154,680	$	(124,267)	$	30,413
Other	Other	44,725		(10,535)		34,190		Other	45,014		(11,284)		33,730
Balance as of March 31, 2021		$	199,235	$	(133,372)	$	65,863
Balance as of June 30, 2021								Balance as of June 30, 2021	$	199,694	$	(135,551)	$	64,143

Customer relationships	Customer relationships	$	155,409	$	(122,657)	$	32,752	Customer relationships	$	155,409	$	(122,657)	$	32,752
Other	Other	44,826		(9,899)		34,927		Other	44,826		(9,899)		34,927
Balance as of December 31, 2020	Balance as of December 31, 2020	$	200,235	$	(132,556)	$	67,679	Balance as of December 31, 2020	$	200,235	$	(132,556)	$	67,679

~~10.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

9. Debt

A summary of outstanding debt as of ~~March 31,~~June 30, 2021 and December 31, 2020 is as follows:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Senior Notes	Senior Notes	$	396,008	$	395,829	Senior Notes	$	396,186	$	395,829
Senior Secured Notes	Senior Secured Notes	240,043		239,567		Senior Secured Notes	240,552		239,567
Term Loan	Term Loan	323,030		323,636		Term Loan	322,424		323,636
ABL Facility	ABL Facility	0		0		ABL Facility	0		0
Finance leases	Finance leases	27,023		28,452		Finance leases	27,128		28,452
Other borrowings	Other borrowings	38,823		36,007		Other borrowings	51,091		36,007
Total debt	Total debt	1,024,927		1,023,491		Total debt	1,037,381		1,023,491
Less current portion	Less current portion	(43,441)		(40,731)		Less current portion	(55,738)		(40,731)
Total long-term debt	Total long-term debt	$	981,486	$	982,760	Total long-term debt	$	981,643	$	982,760

5.625% Senior Notes due 2026

In November 2016, the Company issued $400,000 aggregate principal amount of its 5.625% Senior Notes due 2026 (the “Senior Notes”). The Senior Notes mature on November 15, 2026. Interest on the Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each year.

Debt issuance costs related to the Senior Notes are amortized into interest expense over the term of the Senior Notes. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$3,992~~$3,814 and $4,171 of unamortized debt issuance costs, respectively, related to the Senior Notes, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

13.0% Senior Secured Notes due 2024

In May 2020, the Company issued $250,000 aggregate principal amount of its 13.0% Senior Secured Notes due 2024 (the “Senior Secured Notes”). The Senior Secured Notes mature on June 1, 2024. Interest on the Senior Secured Notes is payable semi-annually in arrears in cash on June 1 and December 1 of each year.

The Company paid approximately $6,431 of debt issuance costs in connection with the transaction. Additionally, the Senior Secured Notes were issued at a discount of $5,000. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$5,547~~$5,248 and $5,828 of unamortized debt issuance costs, respectively, and ~~$4,410~~$4,200 and $4,605 of unamortized original issue discount, respectively, related to the Senior Secured Notes, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets. Both the debt issuance costs and the original issue discount are amortized into interest expense over the term of the Senior Secured Notes.

Term Loan Facility

In November 2016, the Company entered into Amendment No. 1 to its senior term loan facility (“Term Loan Facility”), which provides for loans in an aggregate principal amount of $340,000. On May 2, 2017, the Company entered into Amendment No. 2 to the Term Loan Facility to modify the interest rate. Subsequently, on March 6, 2018, the Company entered into Amendment No. 3 to the Term Loan Facility to further modify the interest rate. In accordance with this amendment, borrowings under the Term Loan Facility bear interest, at the Company’s option, at either (1) with respect to Eurodollar rate loans, the greater of the applicable Eurodollar rate and 0.75% plus 2.0% per annum, or (2) with respect to base rate loans, the base rate, (which is the highest of the then current federal funds rate plus 0.5%, the prime rate most recently announced by the administrative agent under the term loan, and the one-month Eurodollar rate plus 1.0%) plus 1.0% per annum. The Term Loan Facility matures on November 2, 2023, unless earlier terminated.

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$1,532~~$1,384 and $1,680 of unamortized debt issuance costs, respectively, and ~~$998~~$892 and $1,084 of unamortized original issue discount, respectively, related to the Term Loan Facility, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets. Both the debt issuance costs and the original issue discount are amortized into interest expense over the term of the Term Loan Facility.

ABL Facility

In November 2016, the Company entered into a Third Amended and Restated Loan Agreement of its ABL Facility, which provided an aggregate revolving loan availability of up to $210,000, subject to borrowing base availability. In March 2020, the Company entered into the First Amendment of the Third Amended and Restated Loan Agreement (“the Amendment”). As a

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

result of the Amendment, the senior asset-based revolving credit facility (“ABL Facility”) maturity was extended to March 2025 and the aggregate revolving loan availability was reduced to $180,000. The aggregate revolving loan availability includes a $100,000 letter of credit sub-facility and a $25,000 swing line sub-facility. The ABL Facility also provides for an uncommitted $100,000 incremental loan facility, for a potential total ABL Facility of $280,000, if requested by the borrowers under the ABL Facility and the lenders agree to fund such increase. No consent of any lender is required to effect any such increase, except for those participating in the increase.

As of ~~March 31,~~June 30, 2021, there were no loans outstanding under the ABL Facility. The Company’s borrowing base was ~~$163,208.~~$137,354. Net of the greater of 10% of the borrowing base or $15,000 that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and ~~$5,530~~$5,233 of outstanding letters of credit, the Company effectively had ~~$141,357~~$117,121 available for borrowing under its ABL facility.

Any borrowings under the ABL Facility will mature, and the commitments of the lenders under the ABL Facility will terminate, on the earlier of March 24, 2025 or the date 91 days prior to the maturity date of the Term Loan Facility (or another fixed asset facility replacing the Term Loan Facility).

As a result of the Amendment in March 2020, the Company wrote off $177 in unamortized debt issuance costs, which are presented in interest expense, net of interest income in the condensed consolidated statements of operations. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$967~~$905 and $1,029, respectively, of unamortized debt issuance costs related to the ABL Facility, which are presented in other assets in the condensed consolidated balance sheets.

Debt Covenants

The Company was in compliance with all covenants of the Senior Notes, Senior Secured Notes, Term Loan Facility and ABL Facility as of ~~March 31,~~June 30, 2021.

Other

Other borrowings as of ~~March 31,~~June 30, 2021 and December 31, 2020 reflect borrowings under local bank lines classified in debt payable within one year on the condensed consolidated balance sheet.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

~~11.~~10. Fair Value Measurements and Financial Instruments

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy is utilized, which prioritizes the inputs used in measuring fair value as follows:


Level 1:			Observable inputs such as quoted prices in active markets;
Level 2:			Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:			Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Items Measured at Fair Value on a Recurring Basis

Estimates of the fair value of foreign currency derivative instruments are determined using exchange traded prices and rates. The Company also considers the risk of non-performance in the estimation of fair value and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. In certain instances where market data is not available, the Company uses management judgment to develop assumptions that are used to determine fair value. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured or disclosed at fair value on a recurring basis as of ~~March 31,~~June 30, 2021 and December 31, 2020 were as follows:


		March 31, 2021		December 31, 2020		Input		June 30, 2021		December 31, 2020		Input
Forward foreign exchange contracts - other current assets	Forward foreign exchange contracts - other current assets	$	1,129	$	1,826	Level 2	Forward foreign exchange contracts - other current assets	$	1,339	$	1,826	Level 2
Forward foreign exchange contracts - accrued liabilities	Forward foreign exchange contracts - accrued liabilities	(788)		(750)		Level 2	Forward foreign exchange contracts - accrued liabilities	(141)		(750)		Level 2

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the table above. As these nonrecurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information on assets and liabilities measured at fair value on a nonrecurring basis see Note 3.2. “Divestiture” and Note 8.7. “Property, Plant and Equipment.”

Items Not Carried at Fair Value

Fair values of the Company’s Senior Notes, Senior Secured Notes and Term Loan Facility were as follows:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Aggregate fair value	Aggregate fair value	$	942,438	$	965,052	Aggregate fair value	$	978,177	$	965,052
Aggregate carrying value (1)	Aggregate carrying value (1)	975,550		976,400		Aggregate carrying value (1)	974,700		976,400

(1) Excludes unamortized debt issuance costs and unamortized original issue discount.

Fair values were based on quoted market prices and are classified within Level 1 of the fair value hierarchy.

Derivative Instruments and Hedging Activities

The Company is exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The Company enters into derivative instruments primarily to hedge portions of its forecasted foreign currency denominated cash flows and designates these derivative instruments as cash flow hedges in order to qualify for hedge accounting.

The Company formally documents its hedge relationships, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the cash flow hedges. The Company also formally assesses whether a cash flow hedge is highly effective in offsetting changes in the cash flows of the hedged item. Derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities. For a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) in the condensed consolidated balance sheet and reclassified into earnings when the

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

underlying hedged transaction is realized. The realized gains and losses are recorded on the same line as the hedged transaction in the condensed consolidated statements of operations.

The Company is exposed to credit risk in the event of nonperformance by its counterparties on its derivative financial instruments. The Company mitigates this credit risk exposure by entering into agreements directly with major financial institutions with high credit standards that are expected to fully satisfy their obligations under the contracts.

Cash Flow Hedges

Forward Foreign Exchange Contracts - The Company uses forward contracts to mitigate the potential volatility to earnings and cash flow arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. The principal currencies hedged by the Company include various European currencies, the Canadian Dollar, and the Mexican Peso. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the notional amount of these contracts was ~~$66,133~~$41,877 and $97,503, respectively, and consisted of hedges of transactions up to December ~~2021.~~2022.

Pretax amounts related to the Company’s cash flow hedges that were recognized in other comprehensive income (loss) (“OCI”) were as follows:

Gain (Loss) Recognized in OCI
Three Months Ended March 31,
2021 2020
Forward foreign exchange contracts $ (548) $ (12,871)


	Gain (Loss) Recognized in OCI
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Forward foreign exchange contracts	$	1,190	$	3,372	$	642	$	(9,499)

Pretax amounts related to the Company’s cash flow hedges that were reclassified from AOCI and recognized in cost of products sold were as follows:

Gain (Loss) Reclassified from AOCI to Income
Three Months Ended March 31,
2021 2020
Forward foreign exchange contracts $ 188 $ 115


	Gain (Loss) Reclassified from AOCI to Income
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Forward foreign exchange contracts	$	349	$	(4,666)	$	537	$	(4,551)

~~12.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

11. Accounts Receivable Factoring

As a part of its working capital management, the Company sells certain receivables through a single third-party financial institution (the “Factor”) in a pan-European ~~program (the “Factor”).~~program. The amount sold varies each month based on the amount of underlying receivables and cash flow needs of the Company. These are permitted transactions under the Company’s credit agreements governing the ABL Facility and Term Loan Facility and the indentures governing the Senior Notes and Senior Secured Notes. The European factoring facility, which was renewed in March 2020, allows the Company to factor up to €120 million of its Euro-denominated accounts receivable, accelerating access to cash and reducing credit risk. The factoring facility expires in December 2023.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

Costs incurred on the sale of receivables are recorded in other expense, net in the condensed consolidated statements of operations. The sale of receivables under this contract is considered an off-balance sheet arrangement to the Company and is accounted for as a true sale and is excluded from accounts receivable in the condensed consolidated balance sheet. Amounts outstanding under receivable transfer agreements entered into by various locations as of the period end were as follows:

March 31, 2021 December 31, 2020
Off-balance sheet arrangements $ 80,461 $ 85,108


	June 30, 2021		December 31, 2020
Off-balance sheet arrangements	$	66,367	$	85,108

Accounts receivable factored and related costs throughout the period were as follows:


			Off-Balance Sheet Arrangements				Off-Balance Sheet Arrangements
		Three Months Ended March 31,					Three Months Ended June 30,	Six Months Ended June 30,
			2021		2020					2021		2020		2021		2020
Accounts receivable factored	Accounts receivable factored		$	117,271	$	176,508			Accounts receivable factored	$	100,046	$	50,685	$	217,317	$	227,193
Costs	Costs		154		309				Costs	150		162		304		471

As of ~~March 31,~~June 30, 2021 and December 31, 2020, cash collections on behalf of the Factor that have yet to be remitted were ~~$6,174~~$7,636 and $1,786, respectively, and are reflected in other current assets as restricted cash in the condensed consolidated balance sheet.

~~13.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

12. Pension and Postretirement Benefits Other Than Pensions

The components of net periodic benefit (income) cost for the Company’s defined benefit plans and other postretirement benefit plans were as follows:


		Pension Benefits									Pension Benefits
		Three Months Ended March 31,									Three Months Ended June 30,
		2021				2020					2021				2020
		U.S.		Non-U.S.		U.S.		Non-U.S.			U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost	Service cost	$	223	$	914	$	213	$	989	Service cost	$	223	$	913	$	213	$	965
Interest cost	Interest cost	1,629		648		2,033		782		Interest cost	1,629		660		2,033		759
Expected return on plan assets	Expected return on plan assets	(3,564)		(334)		(3,421)		(577)		Expected return on plan assets	(3,564)		(344)		(3,421)		(559)
Amortization of prior service cost and actuarial loss	Amortization of prior service cost and actuarial loss	418		932		485		794		Amortization of prior service cost and actuarial loss	418		933		485		790
Other										Other	0		125		0		0
Net periodic benefit (income) cost										Net periodic benefit (income) cost	$	(1,294)	$	2,287	$	(690)	$	1,955
											Pension Benefits
											Six Months Ended June 30,
											2021				2020
											U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost										Service cost	$	446	$	1,827	$	426	$	1,954
Interest cost										Interest cost	3,258		1,308		4,066		1,541
Expected return on plan assets										Expected return on plan assets	(7,128)		(678)		(6,842)		(1,136)
Amortization of prior service cost and actuarial loss										Amortization of prior service cost and actuarial loss	836		1,865		970		1,584
Other										Other	0		125		0		0

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	(1,294)	$	2,160	$	(690)	$	1,988	Net periodic benefit (income) cost	$	(2,588)	$	4,447	$	(1,380)	$	3,943


		Other Postretirement Benefits									Other Postretirement Benefits
		Three Months Ended March 31,									Three Months Ended June 30,
		2021				2020					2021				2020
		U.S.		Non-U.S.		U.S.		Non-U.S.			U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost	Service cost	$	26	$	90	$	26	$	96	Service cost	$	26	$	93	$	26	$	93
Interest cost	Interest cost	133		177		170		173		Interest cost	133		183		170		168
Amortization of prior service credit and actuarial (gain) loss	Amortization of prior service credit and actuarial (gain) loss	(349)		190		(483)		107		Amortization of prior service credit and actuarial (gain) loss	(349)		196		(483)		104

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	(190)	$	457	$	(287)	$	376	Net periodic benefit (income) cost	$	(190)	$	472	$	(287)	$	365
											Other Postretirement Benefits
											Six Months Ended June 30,
											2021				2020
											U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost										Service cost	$	52	$	183	$	52	$	189
Interest cost										Interest cost	266		360		340		341
Amortization of prior service credit and actuarial (gain) loss										Amortization of prior service credit and actuarial (gain) loss	(698)		386		(966)		211

Net periodic benefit (income) cost										Net periodic benefit (income) cost	$	(380)	$	929	$	(574)	$	741

The service cost component of net periodic benefit (income) cost is included in cost of products sold and selling, administrative and engineering expenses in the condensed consolidated statements of operations. All other components of net periodic benefit (income) cost are included in other expense, net in the condensed consolidated statements of operations for all periods presented.

1820

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

~~14.~~13. Other ~~Expense,~~Income (Expense), Net

The components of other ~~expense,~~income (expense), net were as follows:

Three Months Ended March 31,
2021 2020
Foreign currency losses $ (5,264) $ (3,232)
Components of net periodic benefit income (cost) other than service cost 120 (63)
Factoring costs (154) (309)
Miscellaneous income 209 164
Other expense, net $ (5,089) $ (3,440)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Foreign currency gains (losses)	$	1,114	$	(3,791)	$	(4,150)	$	(7,023)
Components of net periodic benefit (cost) income other than service cost	(20)		(46)		100		(109)
Factoring costs	(150)		(162)		(304)		(471)
Miscellaneous income (expense)	418		(702)		627		(538)
Other income (expense), net	$	1,362	$	(4,701)	$	(3,727)	$	(8,141)

~~15.~~14. Income Taxes

The Company determines its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company records the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

Income tax ~~expense (benefit),~~benefit, loss before income taxes and the corresponding effective tax rate for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 were as follows:


		Three Months Ended March 31,				Three Months Ended June 30,								Six Months Ended June 30,
			2021				2020				2021			2020			2021			2020
Income tax expense (benefit)			$	936			$	(14,117)
Income tax benefit										Income tax benefit	$	(17,459)		$	(38,982)		$	(16,523)		$	(53,099)
Loss before income taxes	Loss before income taxes		(33,777)				(126,556)			Loss before income taxes	(81,988)			(174,966)			(115,765)			(301,522)
Effective tax rate	Effective tax rate		(3)		%		11		%	Effective tax rate	21		%	22		%	14		%	18		%

The effective tax rate for the three and six months ended ~~March 31,~~June 30, 2021 varied compared to the effective tax rate for the three and six months ended ~~March 31,~~June 30, 2020 ~~varied from prior periods~~ primarily due to the geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions and U.S. states, and due to a benefit in the three and six months ended ~~March 31,~~June 30, 2020 for net operating losses carried back up to five years at tax rates in effect during those periods under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), rather than carried forward at current federal tax rates of 21%. ~~The~~An incremental loss in the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~driven by~~recorded for impairment charges on held for sale entities for which no tax benefit was recognized. Additionally, a discrete expense of ~~$13,309~~$12,871 for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the ~~three~~six months ended ~~March 31,~~June 30, 2020.

The income tax rate for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 varied from the U.S. statutory rate primarily due to the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions and U.S. states, tax credits, the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, and other permanent items. Additionally, the income tax rate for the three months ended ~~March 31,~~June 30, 2020 varied from the U.S. statutory rate as a result of benefits from net operating loss carry backs under the CARES Act. Further, the Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these valuation allowances until it is more likely than not that the deferred tax assets will be realized.

1921

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

~~16.~~15. Net Loss Per Share Attributable to Cooper-Standard Holdings Inc.

Basic net loss per share attributable to Cooper-Standard Holdings Inc. was computed by dividing net loss attributable to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net loss available to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding, including the dilutive effect of common stock equivalents, using the average share price during the period.

Information used to compute basic and diluted net loss per share attributable to Cooper-Standard Holdings Inc. was as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020

Net loss available to Cooper-Standard Holdings Inc. common stockholders	Net loss available to Cooper-Standard Holdings Inc. common stockholders		$	(33,864)		$	(110,588)	Net loss available to Cooper-Standard Holdings Inc. common stockholders	$	(63,611)	$	(134,219)	$	(97,475)	$	(244,807)

Basic weighted average shares of common stock outstanding	Basic weighted average shares of common stock outstanding		16,951,190			16,883,717		Basic weighted average shares of common stock outstanding	17,031,113		16,914,971		16,991,372		16,899,344
Dilutive effect of common stock equivalents	Dilutive effect of common stock equivalents		0			0		Dilutive effect of common stock equivalents	0		0		0		0
Diluted weighted average shares of common stock outstanding	Diluted weighted average shares of common stock outstanding		16,951,190			16,883,717		Diluted weighted average shares of common stock outstanding	17,031,113		16,914,971		16,991,372		16,899,344

Basic net loss per share attributable to Cooper-Standard Holdings Inc.	Basic net loss per share attributable to Cooper-Standard Holdings Inc.		$	(2.00)		$	(6.55)	Basic net loss per share attributable to Cooper-Standard Holdings Inc.	$	(3.73)	$	(7.93)	$	(5.74)	$	(14.49)

Diluted net loss per share attributable to Cooper-Standard Holdings Inc.	Diluted net loss per share attributable to Cooper-Standard Holdings Inc.		$	(2.00)		$	(6.55)	Diluted net loss per share attributable to Cooper-Standard Holdings Inc.	$	(3.73)	$	(7.93)	$	(5.74)	$	(14.49)

~~Approximately 189,000 and 13,000 securities were~~Securities excluded from the calculation of diluted loss per share were approximately 164,000 and 45,000 for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and approximately 172,000 and 40,000 for the six months ended June 30, 2021 and 2020, respectively, because the inclusion of such securities in the calculation would have been anti-dilutive.

2022

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

~~17.~~16. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of related tax, were as follows:


		Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020					2021			2020			2021			2020
Foreign currency translation adjustment	Foreign currency translation adjustment									Foreign currency translation adjustment
Balance at beginning of period	Balance at beginning of period		$	(136,579)		$	(153,933)			Balance at beginning of period	$	(142,899)		$	(182,315)		$	(136,579)		$	(153,933)
Other comprehensive loss before reclassifications			(6,320)		(1)	(28,382)			(1)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	8,522		(1)	6,699		(1)	2,202		(1)	(21,683)		(1)

Balance at end of period	Balance at end of period		$	(142,899)		$	(182,315)			Balance at end of period	$	(134,377)		$	(175,616)		$	(134,377)		$	(175,616)
Benefit plan liabilities	Benefit plan liabilities									Benefit plan liabilities
Balance at beginning of period	Balance at beginning of period		$	(106,079)		$	(100,160)			Balance at beginning of period	$	(103,340)		$	(97,478)		$	(106,079)		$	(100,160)
Other comprehensive income before reclassifications			1,643		(2)	2,024			(2)
Other comprehensive (loss) income before reclassifications										Other comprehensive (loss) income before reclassifications	(602)		(2)	(1,405)		(2)	1,041		(2)	619		(2)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss		1,096		(3)	658			(4)	Amounts reclassified from accumulated other comprehensive loss	1,213		(3)	689		(4)	2,309		(5)	1,347		(6)
Balance at end of period	Balance at end of period		$	(103,340)		$	(97,478)			Balance at end of period	$	(102,729)		$	(98,194)		$	(102,729)		$	(98,194)
Fair value change of derivatives	Fair value change of derivatives									Fair value change of derivatives
Balance at beginning of period	Balance at beginning of period		$	762		$	352			Balance at beginning of period	$	191		$	(9,724)		$	762		$	352
Other comprehensive loss before reclassifications			(432)		(5)	(9,984)			(5)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	1,008		(7)	2,828		(7)	576		(7)	(7,156)		(7)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss		(139)		(6)	(92)			(6)	Amounts reclassified from accumulated other comprehensive loss	(257)		(8)	3,410		(8)	(396)		(8)	3,318		(8)
Balance at end of period	Balance at end of period		$	191		$	(9,724)			Balance at end of period	$	942		$	(3,486)		$	942		$	(3,486)
Accumulated other comprehensive loss, ending balance	Accumulated other comprehensive loss, ending balance		$	(246,048)		$	(289,517)			Accumulated other comprehensive loss, ending balance	$	(236,164)		$	(277,296)		$	(236,164)		$	(277,296)

(1)Includes other comprehensive ~~loss~~income (loss) related to intra-entity foreign currency balances that are of a long-term investment nature of ~~$4,389~~$7,668 and ~~$22,703~~$3,485 for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $3,279 and $(19,218) for the six months ended June 30, 2021 and 2020, respectively.

(2)Net of tax (benefit) expense of ~~$(245)~~$(32) and ~~$337~~$(47) for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $(277) and $290 for the six months ended June 30, 2021 and 2020, respectively.

(3)Includes the effect of the amortization of actuarial losses of ~~$1,124 and~~$1,128, amortization of prior service cost of ~~$65,~~$63, and impact of curtailment of $117, net of tax of ~~$93.~~$95.

(4)Includes the effect of the amortization of actuarial losses of ~~$872~~$915 and amortization of prior service cost of $21, net of tax of ~~$235.~~$247.

(5)Includes the effect of the amortization of actuarial losses of $2,252, amortization of prior service cost of $128, and impact of curtailment of $117, net of tax of $188

(6)Includes the effect of the amortization of actuarial losses of $1,787 and amortization of prior service cost of $42, net of tax of $482.

(7)Net of tax ~~benefit~~expense (benefit) of ~~$116~~$182 and ~~$2,887~~$544 for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $66 and $(2,343) for the six months ended June 30, 2021 and 2020, respectively.

~~(6)~~(8)Net of tax expense (benefit) of ~~$49~~$92 and ~~$23~~$(1,256) for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $141 and $(1,233) for the six months ended June 30, 2021 and 2020, respectively.

~~18.~~17. Common Stock

Share Repurchase Program

In June 2018, the Company’s Board of Directors approved a common stock repurchase program (the “2018 Program”) authorizing the Company to repurchase, in the aggregate, up to $150,000 of its outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by management and in accordance with prevailing market conditions and federal securities laws and regulations. The Company expects to fund any future repurchases from cash on hand and future cash flows from operations. The Company is not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at the Company’s discretion. The 2018 Program became effective in November 2018. As of ~~March 31,~~June 30, 2021, the Company had approximately $98,720 of repurchase authorization remaining under the 2018 Program.

The Company did not make any repurchases under the 2018 Program during the ~~three~~six months ended ~~March 31,~~June 30, 2021 or ~~during the three months ended March 31,~~ 2020.

2123

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

~~19.~~18. Share-Based Compensation

The Company’s long-term incentive plans allow for the grant of various types of share-based awards to key employees and directors of the Company and its affiliates. The Company generally awards grants on an annual basis.

In February 2021, the Company granted Restricted Stock Units (“RSUs”), Performance Units (“PUs”) and stock options. The RSUs cliff vest after three years, the PUs vest ratably over three years after the initial two-year performance period, and the stock options vest ratably over three years. The number of PUs that will vest depends on the Company’s achievement of target performance goals related to the Company’s return on invested capital (“ROIC”) and total shareholder return, which may range from 0% to 200% of the target award amount.

Share-based compensation expense was as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
PUs	PUs		$	339		$	74	PUs	$	(645)	$	145	$	(306)	$	219
RSUs	RSUs		1,246			1,643		RSUs	885		1,767		2,131		3,410
Stock options	Stock options		593			657		Stock options	584		649		1,177		1,306
Total	Total		$	2,178		$	2,374	Total	$	824	$	2,561	$	3,002	$	4,935

~~20.~~19. Commitments and Contingencies

The Company is periodically involved in claims, litigation and various legal matters that arise in the ordinary course of business. The Company accrues for litigation exposure when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. As of ~~March 31,~~June 30, 2021, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for claims, litigation and various legal matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company’s financial condition, results of operations or cash flows could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

In addition, the Company conducts and monitors environmental investigations and remedial actions at certain locations. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had approximately ~~$12,012~~$11,444 and $13,302, respectively, reserved in accrued liabilities and other liabilities on the condensed consolidated balance sheets on an undiscounted basis. While the Company’s costs to defend and settle known claims arising under environmental laws have not been material in the past and are not currently estimated to have a material adverse effect on the Company’s financial condition, such costs may be material to the Company’s financial statements in the future.

~~21.~~20. Segment Reporting

The Company’s business is organized in the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other. The Company’s principal products within each of the reportable segments are sealing, fuel and brake delivery, and fluid transfer systems.

The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. The results of each segment include certain allocations for general, administrative and other shared costs. Segment adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

2224

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Certain financial information on the Company’s reportable segments was as follows:


		Three Months Ended March 31,													Three Months Ended June 30,
		2021						2020							2021						2020
		External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA			External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA
North America	North America	$	339,036	$	2,633	$	41,233	$	334,801	$	4,468	$	37,019	North America	$	247,525	$	2,140	$	756	$	126,337	$	2,128	$	(42,874)
Europe	Europe	165,776		2,979		(1,489)		185,242		3,091		(4,623)		Europe	132,621		2,836		(14,391)		78,805		1,224		(41,403)
Asia Pacific	Asia Pacific	114,225		630		3,552		79,344		457		(17,057)		Asia Pacific	103,915		858		(2,302)		105,726		213		(2,172)
South America	South America	15,486		12		(2,608)		20,471		68		(4,577)		South America	14,153		3		(726)		3,881		0		(4,351)
Total Automotive	Total Automotive	634,523		6,254		40,688		619,858		8,084		10,762		Total Automotive	498,214		5,837		(16,663)		314,749		3,565		(90,800)
Corporate, eliminations and other	Corporate, eliminations and other	34,444		(6,254)		(2,148)		35,032		(8,084)		(2,483)		Corporate, eliminations and other	34,971		(5,837)		1,937		25,718		(3,565)		(2,952)
Consolidated	Consolidated	$	668,967	$	0	$	38,540	$	654,890	$	0	$	8,279	Consolidated	$	533,185	$	0	$	(14,726)	$	340,467	$	0	$	(93,752)

															Six Months Ended June 30,
															2021						2020
															External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA
North America														North America	$	586,561	$	4,773	$	41,989	$	461,138	$	6,596	$	(5,855)
Europe														Europe	298,397		5,815		(15,880)		264,047		4,315		(46,026)
Asia Pacific														Asia Pacific	218,140		1,488		1,250		185,070		670		(19,229)
South America														South America	29,639		15		(3,334)		24,352		68		(8,928)
Total Automotive														Total Automotive	1,132,737		12,091		24,025		934,607		11,649		(80,038)
Corporate, eliminations and other														Corporate, eliminations and other	69,415		(12,091)		(211)		60,750		(11,649)		(5,435)
Consolidated														Consolidated	$	1,202,152	$	0	$	23,814	$	995,357	$	0	$	(85,473)


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
			2021		2020				2021		2020		2021		2020
Adjusted EBITDA	Adjusted EBITDA		$	38,540	$	8,279		Adjusted EBITDA	$	(14,726)	$	(93,752)	$	23,814	$	(85,473)
Restructuring charges	Restructuring charges		(21,047)		(7,276)			Restructuring charges	(11,631)		(9,774)		(32,678)		(17,050)
Gain on sale of business			891		0
Impairment of assets held for sale			0		(74,079)
Impairment charges								Impairment charges	(841)		(12,554)		(841)		(87,317)
Gain on sale of business, net								Gain on sale of business, net	(195)		0		696		0
Lease termination costs								Lease termination costs	(108)		(81)		(108)		(601)

Project costs	Project costs		0		(2,425)			Project costs	0		(1,809)		0		(4,234)
Other impairment charges			0		(684)
Lease termination costs			0		(520)
EBITDA	EBITDA		$	18,384	$	(76,705)		EBITDA	$	(27,501)	$	(117,970)	$	(9,117)	$	(194,675)
Income tax (expense) benefit			(936)		14,117
Income tax benefit								Income tax benefit	17,459		38,982		16,523		53,099
Interest expense, net of interest income	Interest expense, net of interest income		(17,784)		(10,237)			Interest expense, net of interest income	(18,125)		(12,771)		(35,909)		(23,008)
Depreciation and amortization	Depreciation and amortization		(33,528)		(37,763)			Depreciation and amortization	(35,444)		(42,460)		(68,972)		(80,223)
Net loss attributable to Cooper-Standard Holdings Inc.	Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)	$	(110,588)		Net loss attributable to Cooper-Standard Holdings Inc.	$	(63,611)	$	(134,219)	$	(97,475)	$	(244,807)

March 31, 2021 December 31, 2020
Segment assets:
North America $ 941,996 $ 907,652
Europe 447,340 465,031
Asia Pacific 543,970 587,610
South America 61,714 64,800
Total Automotive 1,995,020 2,025,093
Corporate, eliminations and other 570,341 586,851
Consolidated $ 2,565,361 $ 2,611,944

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)


	June 30, 2021		December 31, 2020
Segment assets:
North America	$	885,744	$	907,652
Europe	442,122		465,031
Asia Pacific	525,560		587,610
South America	62,386		64,800
Total Automotive	1,915,812		2,025,093
Corporate, eliminations and other	561,485		586,851
Consolidated	$	2,477,297	$	2,611,944

2326

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Our historical results may not indicate, and should not be relied upon as an indication of, our future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. See “Forward-Looking Statements” below for a discussion of risks associated with reliance on forward-looking statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (“2020 Annual Report”), including Item 1A. “Risk Factors.” The following should be read in conjunction with our 2020 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our 2020 Annual Report. References in this quarterly report on Form 10-Q (the “Report”) to “we,” “our,” or the “Company” refer to Cooper-Standard Holdings Inc., together with its consolidated subsidiaries.

Executive Overview

Our Business

We design, manufacture and sell sealing, fuel and brake delivery, and fluid transfer systems for use primarily in passenger vehicles and light trucks manufactured by global automotive original equipment manufacturers (“OEMs”). We are primarily a “Tier 1” supplier, with approximately 83% of our sales in 2020 made directly to major OEMs. We operate our business along the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other.

Recent Trends and Conditions

General Economic Conditions and Outlook

The global automotive industry is susceptible to uncertain economic conditions that could adversely impact new vehicle demand and production. Business conditions may vary significantly from period to period or region to region. The global COVID-19 pandemic created an unusually high degree of economic disruption and uncertainty during 2020, which has continued into 2021. Although optimism for ana global economic recovery has increased in the first ~~quarter~~half of 2021, a considerable amount of uncertainty ~~remains.~~remains, including with respect to variant strains of the virus. The rate of recovery has varied across regions, and, in some cases, rapid growth and spikes in consumer and industrial demand have outpaced production and supply chain capacity. These supply/demand imbalances have added another layer of uncertainty for the broader economic outlook and for the automotive industry around the world. Despite these uncertainties, economists at the ~~International Monetary Fund (IMF)~~World Bank remain positive in their outlook and have recently increased their forecasts for global economic growth. They are now expecting the global economy to grow by approximately ~~6.0%~~5.6% in 2021.

In North America, the United States government has injected historic levels of fiscal stimulus into its economy to sustain businesses, create jobs and drive consumer confidence and spending. In addition, rapid distribution and administration of COVID-19 vaccines have enabled large segments of the economy to return to near normal levels of activity, spurring growth. ~~IMF~~Unemployment levels remained stable during the second quarter of 2021 at approximately 6.0% even though businesses have broadly reported shortages of labor in many markets. Inflation is also recently a factor that may weigh on future economic activity and growth. Despite these possible adverse impacts, World Bank economists ~~now~~currently expect economic growth of approximately 6.0% for the North America region in 2021. ~~Further, the IMF expects unemployment to decline to approximately 6.0% in 2021, compared to more than 8.0% in 2020.~~

In Europe, ~~the IMF is projecting economic growth of approximately 4.4% for 2021. The region continues~~certain areas continue to experience recurring outbreaks of COVID-19 and some localized increases in pandemic related restrictions. However, vaccinations are increasing throughout the region, and this is expected to drive additional economic activity in the second half of the year. ~~Despite~~Unemployment in the region has been trending lower since the end of 2020 but at 7.3%, it remains significantly higher than pre-pandemic levels. Based on the improving health ~~outlook,~~and employment outlooks, the ~~IMF expects unemployment~~World Bank is projecting economic growth in the region ~~to increase to 8.0% in 2021, keeping consumer confidence and economic growth rates below those~~ of ~~other developed regions.~~approximately 4.2% for 2021.

In the Asia Pacific ~~the IMF expects China’s economy to grow by 8.4% in 2021. Unemployment is expected to decline slightly to 3.6%.~~region, China’s central government has pledged to maintain continuity of macroeconomic policies during ~~2021. In addition, it~~2021 to support investment and growth in the post-pandemic period. Unemployment in the region’s largest economy has ~~extended certain loan repayment deferral policies for small~~declined to approximately 5.0%, similar to pre-pandemic levels. By the end of the second quarter, the Chinese central government was beginning to moderate credit support to business and ~~medium businesses, an~~infrastructure spending, a likely indication that ~~it does not yet believe its~~the government believes the post pandemic ~~economic~~ recovery in the country is largely complete. Economists at the World Bank currently expect China’s economy to grow by 8.5% in 2021, fueled by pent-up domestic demand, as well as increasing export volumes.

In South America, the ~~IMF estimates~~Brazilian economy continues to face significant challenges from high COVID-19 infection rates, with the peak occurring during the second quarter of 2021. Unemployment in the country also rose to a record 14.7% in the quarter. Inflation rates increased to 8.6% in June 2021, the highest level since 2016. Despite these negative factors, the Brazilian economy is showing signs of growth as vaccinations against COVID-19 are now increasing and sections of the economy are beginning to re-open. Economists at the World Bank estimate that the Brazilian economy will grow by approximately ~~3.7%~~4.5% in 2021. Unemployment is expected to decline slightly to 10.6% from 11.4% in 2020. Despite the high unemployment rate and continuing regional outbreaks of COVID-19, Brazil is beginning to experience upward price pressures. With inflation now expected to exceed 4.5%, the country’s central bank has recently raised its benchmark interest rate to 2.75% from 2.00%,

~~suggesting that aggressive monetary incentives are no longer necessary to support economic activity.~~ Given the long history of political instability and economic volatility, we remain cautious for the mid to long-term economic outlook in the region.

Raw Materials

Our business is susceptible to inflationary pressures with respect to raw materials which may place operational and profitability burdens on the entire supply chain. Costs related to raw materials, such as steel, aluminum, and oil and oil-derived commodities, continue to be volatile. In addition, due to increases in commodity costs in the first half of 2021, we ~~continue to~~ expect ~~commodity cost volatility~~these increases to have an impact on ~~future earnings and operating cash flows.~~results in the second half of 2021. As such, on an ongoing basis, we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.

Production Levels

Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America. Beginning in the first quarter of 2020, as a result of COVID-19, we experienced the shutdown of effectively all of our facilities coinciding with the shutdown of our customer facilities in all regions. Production subsequently resumed in all regions, at steadily increasing rates throughout the year. We collaborate closely with our customers as production volumes continue to increase and approach pre-COVID-19 levels, while also adhering to enhanced safety standards and measures to protect our employees.

In the first quarter of 2021 and continuing into the second quarter, OEM production volumes were disrupted by the global shortage of ~~semiconductors, as well as weather-induced shutdowns in North America and the resulting chemical shortages.~~semiconductors. The shortage ~~of semiconductors and chemicals~~ has resulted in slowdowns and occasional stoppages in the final production of vehicles. While the supply issues are expected to improve in the second half of 2021, particularly in the fourth quarter of 2021, we are collaborating closely with our customers to minimize production inefficiencies while supporting their needs.

Light vehicle production in certain regions for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 was as follows:


		Three Months Ended March 31,		Three Months Ended June 30,					Six Months Ended June 30,
(In millions of units)	(In millions of units)		2021(1)		2020(1)	% Change	(In millions of units)	2021(1)	2020(1)	% Change	2021(1)	2020(1)	% Change
North America	North America		3.6		3.8	(4.5)%	North America	3.2	1.4	132.2%	6.8	5.2	32.0%
Europe	Europe		4.7		4.7	(0.9)%	Europe	4.2	2.3	86.4%	8.9	7.0	28.4%
Asia Pacific	Asia Pacific		10.9		8.2	32.6%	Asia Pacific	10.3	8.5	20.0%	21.3	16.8	27.2%
Greater China	Greater China		5.8		3.3	77.1%	Greater China	5.9	6.1	(3.6)%	11.7	9.3	25.4%
South America	South America		0.7		0.7	3.9%	South America	0.6	0.2	300.5%	1.3	0.8	61.5%

(1)Production data based on IHS Automotive, ~~April~~July 2021.

In North America and Europe, ~~first quarter~~ vehicle production ~~declined~~increased significantly compared to the prior year period for both the second quarter and the first half of 2021, despite the impact of semiconductor supply issues in the current year. The semiconductor supply issues in 2021 resulted in shutdowns at certain facilities, particularly in North America, for brief periods of time, as compared to the widespread and lengthy facility shutdowns in 2020 due to the initial impacts of COVID-19. In Asia Pacific, vehicle production increased in the first half of 2021 compared to the prior year ~~period, primarily due to the impact of semiconductor supply issues. In Asia Pacific, first quarter vehicle production increased significantly in 2021 compared to the prior year period~~periods primarily due to the impact of COVID-19 plant shutdowns in the prior year, which affected the region ~~for much of~~primarily in the first quarter of 2020. ~~The largest increases in~~Decreased vehicle production ~~have been~~ in China ~~which has had strong~~in the second quarter of 2021 was the result of higher than normal vehicle production ~~volumes since industry wide shutdowns~~ in the prior ~~year.~~year period as production facilities re-opened after COVID-19 closures and met pent-up demand. In South America, vehicle production ~~slightly~~significantly increased, as the region ~~continues steady~~is approaching more normalized volume ~~increases~~ after industry wide shutdowns in the prior year.

2528

Results of Operations


		Three Months Ended March 31,			Three Months Ended June 30,								Six Months Ended June 30,
			2021			2020		Change			2021		2020		Change		2021		2020		Change
			(dollar amounts in thousands)								(dollar amounts in thousands)
Sales	Sales		$	668,967		$	654,890	$	14,077	Sales	$	533,185	$	340,467	$	192,718	$	1,202,152	$	995,357	$	206,795
Cost of products sold	Cost of products sold		600,675			611,747		(11,072)		Cost of products sold	534,118		400,838		133,280		1,134,793		1,012,585		122,208
Gross profit			68,292			43,143		25,149
Gross (loss) profit										Gross (loss) profit	(933)		(60,371)		59,438		67,359		(17,228)		84,587
Selling, administration & engineering expenses	Selling, administration & engineering expenses		58,054			70,671		(12,617)		Selling, administration & engineering expenses	50,085		68,271		(18,186)		108,139		138,942		(30,803)
Gain on sale of business			(891)			—		(891)
Gain on sale of business, net										Gain on sale of business, net	195		—		195		(696)		—		(696)
Amortization of intangibles	Amortization of intangibles		1,772			4,450		(2,678)		Amortization of intangibles	1,933		3,513		(1,580)		3,705		7,963		(4,258)
Restructuring charges	Restructuring charges		21,047			7,276		13,771		Restructuring charges	11,631		9,774		1,857		32,678		17,050		15,628
Impairment of assets held for sale			—			74,079		(74,079)
Other impairment charges			—			977		(977)

Impairment charges										Impairment charges	841		12,554		(11,713)		841		87,610		(86,769)
Operating loss	Operating loss		(11,690)			(114,310)		102,620		Operating loss	(65,618)		(154,483)		88,865		(77,308)		(268,793)		191,485
Interest expense, net of interest income	Interest expense, net of interest income		(17,784)			(10,237)		(7,547)		Interest expense, net of interest income	(18,125)		(12,771)		(5,354)		(35,909)		(23,008)		(12,901)
Equity in earnings of affiliates			786			1,431		(645)
Other expense, net			(5,089)			(3,440)		(1,649)
Equity in earnings (losses) of affiliates										Equity in earnings (losses) of affiliates	393		(3,011)		3,404		1,179		(1,580)		2,759
Other income (expense), net										Other income (expense), net	1,362		(4,701)		6,063		(3,727)		(8,141)		4,414
Loss before income taxes	Loss before income taxes		(33,777)			(126,556)		92,779		Loss before income taxes	(81,988)		(174,966)		92,978		(115,765)		(301,522)		185,757
Income tax expense (benefit)			936			(14,117)		15,053
Income tax benefit										Income tax benefit	(17,459)		(38,982)		21,523		(16,523)		(53,099)		36,576
Net loss	Net loss		(34,713)			(112,439)		77,726		Net loss	(64,529)		(135,984)		71,455		(99,242)		(248,423)		149,181
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		849			1,851		(1,002)		Net loss attributable to noncontrolling interests	918		1,765		(847)		1,767		3,616		(1,849)
Net loss attributable to Cooper-Standard Holdings Inc.	Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)		$	(110,588)	$	76,724	Net loss attributable to Cooper-Standard Holdings Inc.	$	(63,611)	$	(134,219)	$	70,608	$	(97,475)	$	(244,807)	$	147,332

Three Months Ended ~~March 31,~~June 30, 2021 Compared with Three Months Ended ~~March 31,~~June 30, 2020

Sales

Sales for the three months ended ~~March 31,~~June 30, 2021 increased ~~2.1%~~56.6%, compared to the three months ended ~~March 31,~~June 30, 2020. ~~Vehicle~~The increase in sales was driven by vehicle production volume increases ~~in China,~~ due to non-recurrence of lengthy shutdowns in the prior year from COVID-19, offset in part by the impact of ~~COVID-19 plant shutdowns~~semiconductor supply issues in ~~2020, and foreign~~the current year. Foreign exchange ~~drove~~also contributed to the increase in sales, ~~which were~~ partially offset ~~by customer shutdowns in North America and Europe primarily due to semiconductor supply shortages in 2021, and~~ by the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations.

Three Months Ended March 31, Variance Due To:
2021 2020 Change Volume / Mix* Foreign Exchange Divestitures
(dollar amounts in thousands)
Total sales $ 668,967 $ 654,890 $ 14,077 $ 40,941 $ 20,081 $ (46,945)


	Three Months Ended June 30,						Variance Due To:
	2021		2020		Change		Volume / Mix*		Foreign Exchange		Divestitures
	(dollar amounts in thousands)
Total sales	$	533,185	$	340,467	$	192,718	$	186,279	$	24,002	$	(17,563)

* Net of customer price reductions

2629

Gross Profit


		Three Months Ended March 31,								Variance Due To:							Three Months Ended June 30,								Variance Due To:
		2021			2020			Change		Volume / Mix*		Foreign Exchange		Cost Increases / (Decreases)**			2021			2020			Change		Volume / Mix*		Foreign Exchange		Cost Increases / (Decreases)**
		(dollar amounts in thousands)															(dollar amounts in thousands)
Cost of products sold	Cost of products sold	$	600,675		$	611,747		$	(11,072)	$	34,786	$	18,655	$	(64,513)	Cost of products sold	$	534,118		$	400,838		$	133,280	$	121,303	$	23,800	$	(11,823)
Gross profit		68,292			43,143			25,149		6,155		1,426		17,568
Gross loss																Gross loss	(933)			(60,371)			59,438		64,976		202		(5,740)
Gross profit percentage of sales	Gross profit percentage of sales	10.2		%	6.6		%									Gross profit percentage of sales	(0.2)		%	(17.7)		%

* Net of customer price reductions

** Includes the net impact of divestitures

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately ~~48%~~45% and ~~47%~~39% of total cost of products sold for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively. The change in the cost of products sold was impacted by vehicle volume and mix, the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations, continuous improvement and lean manufacturing, ~~material cost reductions,~~net commodity price fluctuations, foreign exchange and wage inflation.

Gross ~~profit~~loss for the three months ended ~~March 31,~~June 30, 2021 ~~increased $25.1~~decreased $59.4 million or ~~58.3%~~98.5% compared to the three months ended ~~March 31,~~June 30, 2020. The ~~increase~~change was driven by volume and mix, net favorable operational performance, lower variable employee compensation expenses, purchasing lean savings, restructuring savings, ~~and material cost reductions,~~ the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations. These items were partially offset by commodity and wage inflation ~~employee incentives~~ and ~~foreign exchange.~~the non-recurrence of prior year COVID-19 government incentives.

Selling, Administration and Engineering Expense. Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. Selling, administration and engineering expense for the three months ended ~~March 31,~~June 30, 2021 was ~~8.7%~~9.4% of sales compared to ~~10.8%~~20.1% for the three months ended ~~March 31,~~June 30, 2020. ~~Selling, administration and engineering expenses were lower by $12.6 million.~~The decrease was primarily due to ~~savings generated from~~lower variable employee compensation expenses, salaried headcount ~~initiatives, net~~initiative savings, and divestitures, ~~and lower travel expenses,~~ partially offset by foreign exchange and general ~~inflation and higher variable employee compensation expenses.~~inflation.

Gain on Sale of Business, Net. The adjustment to the gain on sale of business of ~~$0.9~~$0.2 million for the three months ended ~~March 31,~~June 30, 2021 related ~~primarily~~ to deconsolidation adjustments for the sale of our European fluid transfer and specialty sealing businesses and Indian operations. We completed the sale on July 1, 2020.

Amortization of Intangibles. Intangible amortization for the three months ended ~~March 31,~~June 30, 2021 decreased ~~$2.7~~$1.6 million compared to the three months ended ~~March 31,~~June 30, 2020. The decrease was ~~primarily~~ driven by a customer relationship intangible asset in the North America region that was fully amortized during the second quarter of 2020.

Restructuring. Restructuring charges for the three months ended ~~March 31,~~June 30, 2021 increased ~~$13.8~~$1.9 million compared to the three months ended ~~March 31,~~June 30, 2020. The increase was driven by higher restructuring charges in Europe, primarily related to headcount initiatives and footprint rationalization.

Impairment Charges. ~~There were no non-cash impairment~~Impairment charges ~~for the three months ended March 31, 2021. Impairment charges~~of $0.8 million during the three months ended ~~March 31,~~June 30, 2021 related to idle assets, primarily in a certain Europe location. Impairment charges of $12.6 million during the three months ended June 30, 2020 primarily related to reducing the carrying value of our held for sale facilities to fair value less costs to sell. ~~Other non-cash impairment charges also related to property, plant and equipment in the Asia Pacific region.~~

Interest Expense, Net. Net interest expense for the three months ended ~~March 31,~~June 30, 2021 increased ~~$7.5~~$5.4 million compared to the three months ended ~~March 31,~~June 30, 2020, primarily due to ~~higher outstanding debt balances.~~a full quarter of interest expense for our Senior Secured Notes, which were issued in May 2020.

Other ~~Expense,~~Income (Expense), Net. Other ~~expense~~income for the three months ended ~~March 31,~~June 30, 2021 increased ~~$1.6~~$6.1 million compared to the three months ended ~~March 31,~~June 30, 2020, primarily due to ~~higher~~ foreign currency ~~losses.~~gains.

Income Tax ~~Expense (Benefit).~~Benefit. Income tax ~~expense~~benefit for the three months ended ~~March 31,~~June 30, 2021 was ~~$0.9~~$17.5 million on losses before income taxes of ~~$33.8 million. This compares~~$82.0 million compared to an income tax benefit of ~~$14.1~~$39.0 million on losses before income taxes of ~~$126.6~~$175.0 million for the three months ended ~~March 31,~~June 30, 2020. The effective tax rate for the three months ended ~~March 31,~~June 30, 2021 ~~compared to~~differed primarily from the effective tax rate for the three months ended ~~March 31,~~June 30, 2020 ~~differed primarily~~ due to the geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions and U.S. states, as well as due to benefits recorded in the three month period ended ~~March 31,~~June 30, 2020 as a result of the Coronavirus Aid, Relief, and Economic Security Act ~~(“CARES~~

2730

(“CARES Act”) net operating loss (“NOL”) carry back provision that allows NOLs generated to be carried back up to five years at the tax rates in effect during those periods, rather than carried forward at current federal tax rates of 21%.

Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020

Sales

Sales for the six months ended June 30, 2021 increased 20.8%, compared to the six months ended June 30, 2020. The increase was driven by vehicle production volume increases due to non-recurrence of lengthy shutdowns in the prior year from COVID-19, offset in part by the impact of semiconductor supply issues in the current year. Foreign exchange also contributed to the increase in sales, which was partially offset by the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations.


	Six Months Ended June 30,						Variance Due To:
	2021		2020		Change		Volume / Mix*		Foreign Exchange		Divestitures
	(dollar amounts in thousands)
Total sales	$	1,202,152	$	995,357	$	206,795	$	227,220	$	44,083	$	(64,508)

* Net of customer price reductions

Gross Profit


	Six Months Ended June 30,								Variance Due To:
	2021			2020			Change		Volume / Mix*		Foreign Exchange		Cost Increases / (Decreases)**
	(dollar amounts in thousands)
Cost of products sold	$	1,134,793		$	1,012,585		$	122,208	$	156,089	$	42,455	$	(76,336)
Gross profit (loss)	67,359			(17,228)			84,587		71,131		1,628		11,828
Gross profit percentage of sales	5.6		%	(1.7)		%

* Net of customer price reductions

** Includes the net impact of divestitures

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately 47% and 44% of total cost of products sold for the six months ended June 30, 2021 and 2020, respectively. The change in the cost of products sold was impacted by vehicle volume and mix, the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations, continuous improvement and lean manufacturing, net commodity price fluctuations, foreign exchange and wage inflation.

Gross profit (loss) for the six months ended June 30, 2021 improved 491.0% compared to the six months ended June 30, 2020. The change was driven by volume and mix, net favorable operational performance, lower variable employee compensation expenses, purchasing lean savings, restructuring savings, the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations. These items were partially offset by commodity and wage inflation and the non-recurrence of prior year COVID-19 government incentives.

Gain on Sale of Business, Net. The gain on sale of business of $0.7 million for the six months ended June 30, 2021 related to deconsolidation adjustments for the sale of our European fluid transfer and specialty sealing businesses and Indian operations. We completed the sale on July 1, 2020.

Amortization of Intangibles. Intangible amortization for the six months ended June 30, 2021 decreased $4.3 million compared to the six months ended June 30, 2020. The decrease was driven by a customer relationship intangible asset in the North America region that was fully amortized during the second quarter of 2020.

Restructuring. Restructuring charges for the six months ended June 30, 2021 increased $15.6 million compared to the six months ended June 30, 2020. The increase was driven by higher restructuring charges in Europe, primarily related to headcount initiatives and footprint rationalization.

Impairment Charges. Impairment charges of $0.8 million during the six months ended June 30, 2021 related to idle assets, primarily in a certain Europe location. Impairment charges of $87.6 million during the six months ended June 30, 2020 primarily related to reducing the carrying value of our held for sale facilities to fair value less costs to sell.

Interest Expense, Net. Net interest expense for the six months ended June 30, 2021 increased $12.9 million compared to the six months ended June 30, 2020, primarily due to a full six months of interest expense for our Senior Secured Notes, which were issued in May 2020.

Other Income (Expense), Net. Other expense for the six months ended June 30, 2021 decreased $4.4 million compared to the six months ended June 30, 2020, primarily due to lower foreign currency losses.

Income Tax Benefit. Income tax benefit for the six months ended June 30, 2021 was $16.5 million on losses before income taxes of $115.8 million compared to income tax benefit of $53.1 million on losses before income taxes of $301.5 million for the six months ended June 30, 2020. The effective tax rate for the six months ended June 30, 2021 differed primarily from the effective tax rate for the six months ended June 30, 2020 due to the geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions and U.S. states, as well as benefits recorded in the six month period ended June 30, 2020 as a result of the CARES Act net operating loss carry back provision. Additionally, a discrete expense of $12.9 million for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the six months ended June 30, 2020.

Segment Results of Operations

Our business is organized into the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other. The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items.

The following tables present sales and segment adjusted EBITDA for each of the reportable segments.

Three Months Ended ~~March 31,~~June 30, 2021 Compared with Three Months Ended ~~March 31,~~June 30, 2020

Sales


		Three Months Ended March 31,						Variance Due To:							Three Months Ended June 30,						Variance Due To:
		2021		2020		Change		Volume/ Mix*		Foreign Exchange		Divestitures			2021		2020		Change		Volume/ Mix*		Foreign Exchange		Divestitures
		(dollar amounts in thousands)													(dollar amounts in thousands)
Sales to external customers	Sales to external customers													Sales to external customers
North America	North America	$	339,036	$	334,801	$	4,235	$	3,497	$	738	$	—	North America	$	247,525	$	126,337	$	121,188	$	118,962	$	2,226	$	—
Europe	Europe	165,776		185,242		(19,466)		279		14,077		(33,822)		Europe	132,621		78,805		53,816		57,827		11,384		(15,395)
Asia Pacific	Asia Pacific	114,225		79,344		34,881		40,087		7,917		(13,123)		Asia Pacific	103,915		105,726		(1,811)		(8,707)		9,064		(2,168)
South America	South America	15,486		20,471		(4,985)		(1,377)		(3,608)		—		South America	14,153		3,881		10,272		10,018		254		—
Total Automotive	Total Automotive	634,523		619,858		14,665		42,486		19,124		(46,945)		Total Automotive	498,214		314,749		183,465		178,100		22,928		(17,563)
Corporate, eliminations and other	Corporate, eliminations and other	34,444		35,032		(588)		(1,545)		957		—		Corporate, eliminations and other	34,971		25,718		9,253		8,179		1,074		—
Consolidated	Consolidated	$	668,967	$	654,890	$	14,077	$	40,941	$	20,081	$	(46,945)	Consolidated	$	533,185	$	340,467	$	192,718	$	186,279	$	24,002	$	(17,563)

* Net of customer price reductions

•Volume and mix, net of customer price reductions, was driven by vehicle production volume increases in ~~China~~all regions, except Asia Pacific, due to ~~the impact~~non-recurrence of ~~COVID-19 plant~~lengthy shutdowns in ~~2020, partially~~the prior year from COVID-19, offset in part by the impact of ~~customer shutdowns primarily due to~~ semiconductor supply ~~shortages~~issues in ~~both North American and Europe in 2021.~~the current year.

•The impact of foreign currency exchange primarily related to the Euro, Chinese Renminbi, and ~~Brazilian Real.~~Canadian Dollar.

2832

Segment adjusted EBITDA


		Three Months Ended March 31,						Variance Due To:									Three Months Ended June 30,						Variance Due To:
		2021		2020		Change		Volume/ Mix*		Foreign Exchange		Cost (Increases)/ Decreases		Divestitures			2021		2020		Change		Volume/ Mix*		Foreign Exchange		Cost (Increases)/ Decreases		Divestitures
		(dollar amounts in thousands)															(dollar amounts in thousands)
Segment adjusted EBITDA	Segment adjusted EBITDA															Segment adjusted EBITDA
North America	North America	$	41,233	$	37,019	$	4,214	$	(2,362)	$	(4,719)	$	11,295	$	—	North America	$	756	$	(42,874)	$	43,630	$	47,507	$	1,487	$	(4,865)	$	(499)
Europe	Europe	(1,489)		(4,623)		3,134		914		(860)		2,908		172		Europe	(14,391)		(41,403)		27,012		16,775		(348)		8,407		2,178
Asia Pacific	Asia Pacific	3,552		(17,057)		20,609		6,994		1,631		9,133		2,851		Asia Pacific	(2,302)		(2,172)		(130)		(4,423)		881		(776)		4,188
South America	South America	(2,608)		(4,577)		1,969		1,430		882		(343)		—		South America	(726)		(4,351)		3,625		3,152		3,246		(2,773)		—
Total Automotive	Total Automotive	40,688		10,762		29,926		6,976		(3,066)		22,993		3,023		Total Automotive	(16,663)		(90,800)		74,137		63,011		5,266		(7)		5,867
Corporate, eliminations and other	Corporate, eliminations and other	(2,148)		(2,483)		335		(821)		428		728		—		Corporate, eliminations and other	1,937		(2,952)		4,889		1,965		120		2,804		—
Consolidated adjusted EBITDA	Consolidated adjusted EBITDA	$	38,540	$	8,279	$	30,261	$	6,155	$	(2,638)	$	23,721	$	3,023	Consolidated adjusted EBITDA	$	(14,726)	$	(93,752)	$	79,026	$	64,976	$	5,386	$	2,797	$	5,867

* Net of customer price reductions

•Volume and mix, net of customer price reductions, was driven by ~~the regional mix of~~ vehicle production ~~in each of our segments and includes~~volume increases ~~in China~~ due to ~~the impact~~non-recurrence of ~~COVID-19 plant~~lengthy shutdowns in ~~2020, partially~~the prior year from COVID-19, offset in part by the impact of ~~customer shutdowns primarily due to the~~ semiconductor supply ~~shortages~~issues in ~~both North America and Europe in 2021.~~the current year.

•The impact of foreign currency exchange was driven by the Brazilian Real, Mexican Peso, Canadian Dollar, Euro, Polish Zloty, Czech Koruna, and Chinese Renminbi.

•The Cost (Increases) / Decreases category above includes:

◦Reduction in compensation-related expenses due to salaried headcount initiatives, lower ~~travel~~variable employee compensation expenses, purchasing savings through lean initiatives, and restructuring savings;

◦Commodity cost, wage inflation increases and ~~variable employee compensation increases;~~the non-recurrence of prior year government incentives; and

◦Manufacturing efficiencies of ~~$18~~$12 million, primarily driven by our Europe and North America segments.

Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020

Sales


	Six Months Ended June 30,						Variance Due To:
	2021		2020		Change		Volume/ Mix*		Foreign Exchange		Divestitures
	(dollar amounts in thousands)
Sales to external customers
North America	$	586,561	$	461,138	$	125,423	$	122,459	$	2,964	$	—
Europe	298,397		264,047		34,350		58,106		25,461		(49,217)
Asia Pacific	218,140		185,070		33,070		31,380		16,981		(15,291)
South America	29,639		24,352		5,287		8,641		(3,354)		—
Total Automotive	1,132,737		934,607		198,130		220,586		42,052		(64,508)
Corporate, eliminations and other	69,415		60,750		8,665		6,634		2,031		—
Consolidated	$	1,202,152	$	995,357	$	206,795	$	227,220	$	44,083	$	(64,508)

* Net of customer price reductions

•Volume and mix, net of customer price reductions, was driven by vehicle production volume increases due to non-recurrence of lengthy shutdowns in the prior year from COVID-19, offset in part by the impact of semiconductor supply issues in the current year.

•The impact of foreign currency exchange primarily relates to the Euro, Chinese Renminbi, Canadian Dollar and Brazilian Real.

Segment adjusted EBITDA


	Six Months Ended June 30,						Variance Due To:
	2021		2020		Change		Volume/ Mix*		Foreign Exchange		Cost (Increases)/ Decreases		Divestitures
	(dollar amounts in thousands)
Segment adjusted EBITDA
North America	$	41,989	$	(5,855)	$	47,844	$	45,145	$	(3,232)	$	6,430	$	(499)
Europe	(15,880)		(46,026)		30,146		17,689		(1,208)		11,315		2,350
Asia Pacific	1,250		(19,229)		20,479		2,571		2,512		8,357		7,039
South America	(3,334)		(8,928)		5,594		4,582		4,128		(3,116)		—
Total Automotive	24,025		(80,038)		104,063		69,987		2,200		22,986		8,890
Corporate, eliminations and other	(211)		(5,435)		5,224		1,144		548		3,532		—
Consolidated adjusted EBITDA	$	23,814	$	(85,473)	$	109,287	$	71,131	$	2,748	$	26,518	$	8,890

* Net of customer price reductions

•The impact of foreign currency exchange is driven by the Brazilian Real, Chinese Renminbi, Euro, Polish Zloty, and Czech Koruna, Canadian Dollar and Mexican Peso.

•The Cost (Increases) / Decreases category above includes:

◦Reduction in compensation-related expenses, due to salaried headcount initiatives, purchasing savings through lean initiatives, lower variable employee compensation expenses and restructuring savings;

◦Commodity cost, wage inflation increases and the non-recurrence of prior year government incentives;

◦Net manufacturing efficiencies of $30 million, primarily driven by our North America, Europe and Asia Pacific segments.

Liquidity and Capital Resources

Short and Long-Term Liquidity Considerations and Risks

We intend to fund our ongoing working capital, capital expenditures, debt service and other funding requirements through a combination of cash flows from operations, cash on hand, borrowings under our senior asset-based revolving credit facility (“ABL Facility”) and receivables factoring. The Company utilizes intercompany loans and equity contributions to fund its worldwide operations. There may be country-specific regulations which may restrict or result in increased costs in the repatriation of these funds. See Note ~~10.~~9. “Debt” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for additional information.

We continue to actively preserve cash and enhance liquidity, including decreasing our capital expenditures. Based on those actions and current projections of OEM customer production, we believe that our cash flows from operations, cash on hand, borrowings under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital, capital expenditures, debt service and other funding requirements for the next twelve months, despite the challenges presented by the COVID-19 pandemic and supply chain issues facing the industry. We continuously monitor and forecast our liquidity situation, take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions, including the impact of COVID-19, and other factors.

2934

Cash Flows

Operating Activities. Net cash used in operations was ~~$7.1~~$60.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to net cash used in operations of ~~$2.0~~$126.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020. The net ~~outflow~~change was primarily due to working capital ~~outflows, partially offset by~~improvements and higher cash earnings.

Investing Activities. Net cash used in investing activities was ~~$36.3~~$52.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to net cash used in investing activities of ~~$50.1~~$62.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020. The reduction was primarily due to lower capital expenditures. In response to the COVID-19 pandemic, significant decreases in capital expenditures occurred throughout ~~2020.~~2020 and in the first and second quarters of 2021. We expect lower expenditures will continue in 2021, primarily as part of initiatives to consistently reduce overall capital spending. We anticipate that we will spend approximately $100 million to ~~$125~~$115 million on capital expenditures in 2021.

Financing Activities. Net cash provided by financing activities totaled ~~$1.3~~$11.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to net cash provided by financing activities of ~~$0.4~~$232.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020. The inflow ~~was primarily due~~in 2021 related to increases in short-term debt, ~~during~~while the ~~three months ended March 31, 2021.~~inflow in 2020 was primarily due to proceeds from issuance of our Senior Secured Notes.

Share Repurchase Program

In June 2018, our Board of Directors approved a new common stock repurchase program (the “2018 Program”) authorizing us to repurchase, in the aggregate, up to $150.0 million of our outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by us and in accordance with prevailing market conditions and federal securities laws and regulations. We expect to fund any future repurchases from cash on hand and future cash flows from operations. The specific timing and amount of any future repurchase will vary based on market and business conditions and other factors. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at our discretion. As of ~~March 31,~~June 30, 2021, we had approximately $98.7 million of repurchase authorization remaining under the 2018 Program.

We did not make any repurchases under the 2018 Program during the ~~three~~six months ended ~~March 31,~~June 30, 2021 or ~~during the three months ended March 31,~~ 2020.

Non-GAAP Financial Measures

In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:

•because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;

•in developing our internal budgets and forecasts;

•as a significant factor in evaluating our management for compensation purposes;

•in evaluating potential acquisitions;

•in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and

•in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.

In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), interest expense, net of interest income, depreciation and amortization or EBITDA, as adjusted for items that management does not consider to be reflective of our core operating performance. These adjustments include, but are not limited to, restructuring costs, impairment charges, non-cash fair value adjustments and acquisition-related costs.

EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:

•they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;

3035

•they do not reflect changes in, or cash requirements for, our working capital needs;

•they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our ABL Facility, Term Loan Facility, Senior Notes and Senior Secured Notes;

•they do not reflect certain tax payments that may represent a reduction in cash available to us;

•although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

•other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the below presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by special items.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net loss, which is the most comparable financial measure in accordance with U.S. GAAP:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
			(dollar amounts in thousands)						(dollar amounts in thousands)
Net loss attributable to Cooper-Standard Holdings Inc.	Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)		$	(110,588)	Net loss attributable to Cooper-Standard Holdings Inc.	$	(63,611)	$	(134,219)	$	(97,475)	$	(244,807)
Income tax expense (benefit)			936			(14,117)
Income tax benefit								Income tax benefit	(17,459)		(38,982)		(16,523)		(53,099)
Interest expense, net of interest income	Interest expense, net of interest income		17,784			10,237		Interest expense, net of interest income	18,125		12,771		35,909		23,008
Depreciation and amortization	Depreciation and amortization		33,528			37,763		Depreciation and amortization	35,444		42,460		68,972		80,223
EBITDA	EBITDA		$	18,384		$	(76,705)	EBITDA	$	(27,501)	$	(117,970)	$	(9,117)	$	(194,675)
Restructuring charges	Restructuring charges		21,047			7,276		Restructuring charges	11,631		9,774		32,678		17,050
Gain on sale of business (1)			(891)			—
Impairment of assets held for sale (2)			—			74,079
Project costs (3)			—			2,425
Other impairment charges (4)			—			684
Lease termination costs (5)			—			520
Impairment charges (1)								Impairment charges (1)	841		12,554		841		87,317
Gain on sale of business, net (2)								Gain on sale of business, net (2)	195		—		(696)		—
Lease termination costs (3)								Lease termination costs (3)	108		81		108		601

Project costs (4)								Project costs (4)	—		1,809		—		4,234
Adjusted EBITDA	Adjusted EBITDA		$	38,540		$	8,279	Adjusted EBITDA	$	(14,726)	$	(93,752)	$	23,814	$	(85,473)

(1)~~Gain~~Non-cash impairment charges in 2021 related to fixed assets. Non-cash impairment charges in 2020 included impairment of assets held for sale and other impairment charges, net of portion attributable to our noncontrolling interests.

(2)During 2021, we recorded subsequent adjustments to the net gain on sale of business, which related to ~~divestitures in 2020.~~

~~(2)Non-cash impairment charges related to reducing~~ the ~~carrying value~~2020 divestiture of ~~the held for sale entities to fair value less costs to sell.~~our European rubber fluid transfer and specialty sealing businesses.

(3)Lease termination costs no longer recorded as restructuring charges in accordance with ASC 842.

(4)Project costs recorded in selling, administration and engineering expense related to divestitures in 2020.

~~(4)Non-cash impairment charges of $684 related to fixed assets, net of approximately $293 attributable to our noncontrolling interests.~~

~~(5)Lease termination costs no longer recorded as restructuring charges in accordance with ASC 842.~~

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Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note ~~20.~~19. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report, is incorporated herein by reference.

~~Recently Issued Accounting Pronouncements~~

~~See Note 2. “New Accounting Pronouncements” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.~~

Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

Forward-Looking Statements

This quarterly report on Form 10-Q 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 items, such factors may include: the impact, and expected continued impact, of the ~~recent~~ COVID-19 outbreak on our financial condition and results of operations; significant risks to our liquidity presented by the COVID-19 pandemic risk; prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of manufactured components and raw materials; disruption in our supply base; competitive threats and commercial risks associated with our diversification strategy through our Advanced Technology Group; possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations, and policies governing the terms of foreign trade such as increased trade restrictions and tariffs; foreign currency exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial amount of indebtedness and variable rates of interest; our ability to obtain adequate financing sources in the future; operating and financial restrictions imposed on us under our debt instruments; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; effectiveness of continuous improvement programs and other cost savings plans; manufacturing facility closings or consolidation; our ability to execute new program launches; our ability to meet customers’ needs for new and improved products; the possibility that our acquisitions and divestitures may not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal and regulatory proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, data privacy concerns, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges to our goodwill and long-lived assets; our ability to identify, attract, develop and retain a skilled, engaged and diverse workforce; our ability to procure insurance at reasonable rates; and our dependence on our subsidiaries for cash to satisfy our obligations.

You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this quarterly report on Form 10-Q, 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 quarterly report on Form 10-Q 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously disclosed in the Company’s 2020 Annual Report.

3337

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on that evaluation, the Company’s Chief Executive Officer along with the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this Report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended ~~March 31,~~June 30, 2021 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

3438

PART II — OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company is authorized to purchase, in the aggregate, up to $150 million of our outstanding common stock under our common stock repurchase program, which was effective in November 2018. As of ~~March 31,~~June 30, 2021, we had approximately $98.7 million of repurchase authorization remaining under our ~~ongoing~~ common stock share repurchase program as discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Share Repurchase Program,” and Note ~~18.~~17. “Common Stock” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

A summary of our shares of common stock repurchased during the three months ended ~~March 31,~~June 30, 2021 is shown below:

Period
Total Number of Shares Purchased(1)
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
January 1, 2021 through January 31, 2021 — $ — — $ 98.7
February 1, 2021 through February 28, 2021 17,138 37.19 — 98.7
March 1, 2021 through March 31, 2021 5,324 42.69 — 98.7
Total 22,462 —


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
April 1, 2021 through April 30, 2021	230	$	30.88	—	$	98.7
May 1, 2021 through May 31, 2021	—	—		—	98.7
June 1, 2021 through June 30, 2021	108	28.83		—	98.7
Total	338			—

(1)Represents shares repurchased by the Company to satisfy employee tax withholding requirements due upon the vesting of restricted stock awards and the exercise of stock option awards.

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Item 6. Exhibits



Exhibit No.						Description of Exhibit

10.1*10.1†						~~Form of 2021~~ Cooper-Standard Holdings Inc. ~~2017~~2021 Omnibus Incentive Plan ~~Nonqualified Stock Option Agreement.~~(incorporated by reference to Exhibit 4.4 to Cooper-Standard Holdings Inc.’s Post-Effective Amendment No. 1 to Form S-8 filed on Form S-8POS on May 20, 2021).

10.2*†						~~Form~~Cooper-Standard Automotive Inc. Executive Severance Pay Plan, Amended and Restated as of ~~202~~1 ~~Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Performance Unit Award Agreement (cash-settled award).~~June 9, 2021.

10.3*†						~~Form of 202~~1 ~~Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (cash~~ ~~or stock-settled award)~~

10.4*						~~Separation Agreement between~~ ~~Jeffrey DeBest,~~ ~~Cooper-Standard Holdings Inc. and~~ Cooper-Standard Automotive Inc. ~~effect~~i ve Annual Incentive Plan Amended and Restated effective as of ~~March~~January 1, 2021.

31.1*						Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

31.2*						Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

32**						Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS***						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH***						Inline XBRL Taxonomy Extension Schema Document

101.CAL***						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF***						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB***						Inline XBRL Taxonomy Label Linkbase Document

101.PRE***						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104***						Cover Page Interactive Data File, formatted in Inline XBRL


*			Filed with this Report.
**			Furnished with this Report.
***			Submitted electronically with this Report in accordance with the provisions of Regulation S-T.
†			Management contract or compensatory plan or arrangement.

3640

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COOPER-STANDARD HOLDINGS INC.

~~May 7,~~August 5, 2021

/S/ JONATHAN P. BANAS

Date

Jonathan P. Banas
Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)

3741



		Page

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Changes in Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2427
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3337
Item 4.	Controls and Procedures	3438

	PART II. OTHER INFORMATION


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3539

Item 6.	Exhibits	3640
SIGNATURES		3741