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 SeptemberJune 30, 20212022
or
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)
   ______________________________
Delaware20-1945088
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareCPSNew 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 filerAccelerated filer
Non-accelerated filerSmaller 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 OctoberJuly 29, 2021,2022, there were 16,991,21717,106,178 shares of the registrant’s common stock, $0.001 par value, outstanding.
1


COOPER-STANDARD HOLDINGS INC.
Form 10-Q
For the period ended SeptemberJune 30, 20212022
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 2.
Item 6.
2


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 September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202020212020 2022202120222021
SalesSales$526,690 $683,200 $1,728,842 $1,678,557 Sales$605,917 $533,185 $1,218,901 $1,202,152 
Cost of products soldCost of products sold534,817 598,714 1,669,610 1,611,299 Cost of products sold590,541 534,118 1,181,983 1,134,793 
Gross (loss) profit(8,127)84,486 59,232 67,258 
Gross profit (loss)Gross profit (loss)15,376 (933)36,918 67,359 
Selling, administration & engineering expensesSelling, administration & engineering expenses60,367 60,059 168,506 199,001 Selling, administration & engineering expenses52,282 50,085 104,186 108,139 
Gain on sale of business, net— (2,314)(696)(2,314)
Loss (gain) on sale of business, netLoss (gain) on sale of business, net— 195 — (696)
Gain on sale of fixed assets, netGain on sale of fixed assets, net(33,391)— (33,391)— 
Amortization of intangiblesAmortization of intangibles1,819 1,669 5,524 9,632 Amortization of intangibles1,737 1,933 3,483 3,705 
Restructuring chargesRestructuring charges1,573 6,186 34,251 23,236 Restructuring charges3,482 11,631 11,313 32,678 
Impairment chargesImpairment charges1,006 100 1,847 87,710 Impairment charges841 458 841 
Operating (loss) profit(72,892)18,786 (150,200)(250,007)
Operating lossOperating loss(8,737)(65,618)(49,131)(77,308)
Interest expense, net of interest incomeInterest expense, net of interest income(18,243)(17,985)(54,152)(40,993)Interest expense, net of interest income(18,454)(18,125)(36,631)(35,909)
Equity in (losses) earnings of affiliatesEquity in (losses) earnings of affiliates(1,114)738 65 (842)Equity in (losses) earnings of affiliates(3,446)393 (4,802)1,179 
Other (expense) income, netOther (expense) income, net(494)2,784 (4,221)(5,357)Other (expense) income, net(1,509)1,362 (2,720)(3,727)
(Loss) income before income taxes(92,743)4,323 (208,508)(297,199)
Loss before income taxesLoss before income taxes(32,146)(81,988)(93,284)(115,765)
Income tax expense (benefit)Income tax expense (benefit)32,121 (2,386)15,598 (55,485)Income tax expense (benefit)2,005 (17,459)2,657 (16,523)
Net (loss) income(124,864)6,709 (224,106)(241,714)
Net loss (income) attributable to noncontrolling interests1,691 (2,328)3,458 1,288 
Net (loss) income attributable to Cooper-Standard Holdings Inc.$(123,173)$4,381 $(220,648)$(240,426)
Net lossNet loss(34,151)(64,529)(95,941)(99,242)
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests904 918 1,334 1,767 
Net loss attributable to Cooper-Standard Holdings Inc.Net loss attributable to Cooper-Standard Holdings Inc.$(33,247)$(63,611)$(94,607)$(97,475)
(Loss) earnings per share:
Loss per share:Loss per share:
BasicBasic$(7.20)$0.26 $(12.96)$(14.22)Basic$(1.93)$(3.73)$(5.51)$(5.74)
DilutedDiluted$(7.20)$0.26 $(12.96)$(14.22)Diluted$(1.93)$(3.73)$(5.51)$(5.74)
The accompanying notes are an integral part of these financial statements.

3


COOPER-STANDARD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOMELOSS
(Unaudited)
(Dollar amounts in thousands) 
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net (loss) income$(124,864)$6,709 $(224,106)$(241,714)
Other comprehensive (loss) income:
Currency translation adjustment(6,215)17,488 (4,074)(4,612)
Benefit plan liabilities adjustment, net of tax4,978 (853)8,328 1,113 
Fair value change of derivatives, net of tax(2,132)2,072 (1,952)(1,766)
Other comprehensive (loss) income, net of tax(3,369)18,707 2,302 (5,265)
Comprehensive (loss) income(128,233)25,416 (221,804)(246,979)
Comprehensive loss (income) attributable to noncontrolling interests1,916 (2,970)3,744 1,063 
Comprehensive (loss) income attributable to Cooper-Standard Holdings Inc.$(126,317)$22,446 $(218,060)$(245,916)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net loss$(34,151)$(64,529)$(95,941)$(99,242)
Other comprehensive income (loss):
Currency translation adjustment(17,084)8,713 (8,719)2,141 
Benefit plan liabilities adjustment, net of tax2,063 611 3,047 3,350 
Fair value change of derivatives, net of tax(1,023)751 1,408 180 
Other comprehensive (loss) income, net of tax(16,044)10,075 (4,264)5,671 
Comprehensive loss(50,195)(54,454)(100,205)(93,571)
Comprehensive loss attributable to noncontrolling interests627 727 1,068 1,828 
Comprehensive loss attributable to Cooper-Standard Holdings Inc.$(49,568)$(53,727)$(99,137)$(91,743)
The accompanying notes are an integral part of these financial statements.

4



COOPER-STANDARD HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except share amounts)
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
(unaudited) (unaudited)
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$253,281 $438,438 Cash and cash equivalents$250,458 $248,010 
Accounts receivable, netAccounts receivable, net308,907 379,564 Accounts receivable, net350,001 317,469 
Tooling receivable, netTooling receivable, net97,500 82,150 Tooling receivable, net87,414 88,900 
InventoriesInventories198,180 143,742 Inventories183,568 158,075 
Prepaid expensesPrepaid expenses30,052 29,748 Prepaid expenses30,360 26,313 
Income tax receivable and refundable creditsIncome tax receivable and refundable credits83,089 85,977 Income tax receivable and refundable credits26,838 82,813 
Other current assetsOther current assets100,629 100,110 Other current assets70,467 73,317 
Total current assetsTotal current assets1,071,638 1,259,729 Total current assets999,106 994,897 
Property, plant and equipment, netProperty, plant and equipment, net808,666 892,309 Property, plant and equipment, net702,507 784,348 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net102,698 109,795 Operating lease right-of-use assets, net102,407 111,052 
GoodwillGoodwill142,668 142,250 Goodwill142,213 142,282 
Intangible assets, netIntangible assets, net61,980 67,679 Intangible assets, net51,015 60,375 
Other assetsOther assets130,941 140,182 Other assets143,134 133,539 
Total assetsTotal assets$2,318,591 $2,611,944 Total assets$2,140,382 $2,226,493 
Liabilities and EquityLiabilities and EquityLiabilities and Equity
Current liabilities:Current liabilities:Current liabilities:
Debt payable within one yearDebt payable within one year$40,102 $40,731 Debt payable within one year$51,016 $56,111 
Accounts payableAccounts payable336,440 385,284 Accounts payable357,327 348,133 
Payroll liabilitiesPayroll liabilities87,280 112,727 Payroll liabilities94,646 69,353 
Accrued liabilitiesAccrued liabilities122,400 110,827 Accrued liabilities121,416 101,466 
Current operating lease liabilitiesCurrent operating lease liabilities21,407 21,711 Current operating lease liabilities21,177 22,552 
Total current liabilitiesTotal current liabilities607,629 671,280 Total current liabilities645,582 597,615 
Long-term debtLong-term debt981,010 982,760 Long-term debt979,227 980,604 
Pension benefitsPension benefits141,562 152,230 Pension benefits120,438 129,880 
Postretirement benefits other than pensionsPostretirement benefits other than pensions49,936 49,613 Postretirement benefits other than pensions42,525 43,498 
Long-term operating lease liabilitiesLong-term operating lease liabilities84,891 90,517 Long-term operating lease liabilities84,940 92,760 
Other liabilitiesOther liabilities47,111 41,433 Other liabilities45,957 50,776 
Total liabilitiesTotal liabilities1,912,139 1,987,833 Total liabilities1,918,669 1,895,133 
Equity:Equity:Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,056,439 shares issued and 16,990,630 shares outstanding as of September 30, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 202017 17 
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,166,930 shares issued and 17,101,121 shares outstanding as of June 30, 2022, and 19,057,788 shares issued and 16,991,979 outstanding as of December 31, 2021Common stock, $0.001 par value, 190,000,000 shares authorized; 19,166,930 shares issued and 17,101,121 shares outstanding as of June 30, 2022, and 19,057,788 shares issued and 16,991,979 outstanding as of December 31, 202117 17 
Additional paid-in capitalAdditional paid-in capital502,864 498,719 Additional paid-in capital506,062 504,497 
Retained earnings129,622 350,270 
Retained (loss) earningsRetained (loss) earnings(69,054)25,553 
Accumulated other comprehensive lossAccumulated other comprehensive loss(239,308)(241,896)Accumulated other comprehensive loss(209,714)(205,184)
Total Cooper-Standard Holdings Inc. equityTotal Cooper-Standard Holdings Inc. equity393,195 607,110 Total Cooper-Standard Holdings Inc. equity227,311 324,883 
Noncontrolling interestsNoncontrolling interests13,257 17,001 Noncontrolling interests(5,598)6,477 
Total equityTotal equity406,452 624,111 Total equity221,713 331,360 
Total liabilities and equityTotal liabilities and equity$2,318,591 $2,611,944 Total liabilities and equity$2,140,382 $2,226,493 
The accompanying notes are an integral part of these financial statements.
5


COOPER-STANDARD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(Dollar amounts in thousands except share amounts)
 Total Equity
 Common SharesCommon StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossCooper-Standard Holdings Inc. EquityNoncontrolling InterestsTotal Equity
Balance as of December 31, 202016,897,085 $17 $498,719 $350,270 $(241,896)$607,110 $17,001 $624,111 
Share-based compensation, net45,467 — 952 — — 952 — 952 
Net loss— — — (33,864)— (33,864)(849)(34,713)
Other comprehensive loss— — — — (4,152)(4,152)(252)(4,404)
Balance as of March 31, 202116,942,552 $17 $499,671 $316,406 $(246,048)$570,046 $15,900 $585,946 
Share-based compensation, net45,962 — 1,677 — — 1,677 — 1,677 
Net loss— — — (63,611)— (63,611)(918)(64,529)
Other comprehensive income— — — — 9,884 9,884 191 10,075 
Balance as of June 30, 202116,988,514 $17 $501,348 $252,795 $(236,164)$517,996 $15,173 $533,169 
Share-based compensation, net2,116 — 1,516 — — 1,516 — 1,516 
Net loss— — — (123,173)— (123,173)(1,691)(124,864)
Other comprehensive loss— — — — (3,144)(3,144)(225)(3,369)
Balance as of September 30, 202116,990,630 $17 $502,864 $129,622 $(239,308)$393,195 $13,257 $406,452 
 Total Equity
 Common SharesCommon StockAdditional Paid-In CapitalRetained Earnings (Loss)Accumulated Other Comprehensive LossCooper-Standard Holdings Inc. EquityNoncontrolling InterestsTotal Equity
Balance as of December 31, 202116,991,979 $17 $504,497 $25,553 $(205,184)$324,883 $6,477 $331,360 
Share-based compensation, net69,716 — 437 — — 437 — 437 
Deconsolidation of noncontrolling interest— — — — — — (11,007)(11,007)
Net loss— — — (61,360)— (61,360)(430)(61,790)
Other comprehensive income (loss)— — — — 11,791 11,791 (11)11,780 
Balance as of March 31, 202217,061,695 $17 $504,934 $(35,807)$(193,393)$275,751 $(4,971)$270,780 
Share-based compensation, net39,426 — 1,128 — — 1,128 — 1,128 
Net loss— — — (33,247)— (33,247)(904)(34,151)
Other comprehensive income (loss)— — — — (16,321)(16,321)277 (16,044)
Balance as of June 30, 202217,101,121 $17 $506,062 $(69,054)$(209,714)$227,311 $(5,598)$221,713 
Total Equity Total Equity
Common SharesCommon StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossCooper-Standard Holdings Inc. EquityNoncontrolling InterestsTotal Equity Common SharesCommon StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossCooper-Standard Holdings Inc. EquityNoncontrolling InterestsTotal Equity
Balance as of December 31, 201916,842,757 $17 $490,451 $619,448 $(253,741)$856,175 $19,807 $875,982 
Cumulative effect of change in accounting principle— — — (1,573)— (1,573)— (1,573)
Balance as of December 31, 2020Balance as of December 31, 202016,897,085 $17 $498,719 $350,270 $(241,896)$607,110 $17,001 $624,111 
Share-based compensation, netShare-based compensation, net41,785 — 1,874 — — 1,874 — 1,874 Share-based compensation, net45,467 — 952 — — 952 — 952 
Net lossNet loss— — — (110,588)— (110,588)(1,851)(112,439)Net loss— — — (33,864)— (33,864)(849)(34,713)
Other comprehensive lossOther comprehensive loss— — — — (35,776)(35,776)(507)(36,283)Other comprehensive loss— — — — (4,152)(4,152)(252)(4,404)
Balance as of March 31, 202016,884,542 $17 $492,325 $507,287 $(289,517)$710,112 $17,449 $727,561 
Balance as of March 31, 2021Balance as of March 31, 202116,942,552 $17 $499,671 $316,406 $(246,048)$570,046 $15,900 $585,946 
Share-based compensation, netShare-based compensation, net9,548 — 2,303 — — 2,303 — 2,303 Share-based compensation, net45,962 — 1,677 — — 1,677 — 1,677 
Net lossNet loss— — — (134,219)— (134,219)(1,765)(135,984)Net loss— — — (63,611)— (63,611)(918)(64,529)
Other comprehensive incomeOther comprehensive income— — — — 12,221 12,221 90 12,311 Other comprehensive income— — — — 9,884 9,884 191 10,075 
Balance as of June 30, 202016,894,090 $17 $494,628 $373,068 $(277,296)$590,417 $15,774 $606,191 
Balance as of June 30, 2021Balance as of June 30, 202116,988,514 $17 $501,348 $252,795 $(236,164)$517,996 $15,173 $533,169 
Share-based compensation, net2,363 — 1,840 — — 1,840 — 1,840 
Deconsolidation of noncontrolling interest— — — — — — (2,112)(2,112)
Net income— — — 4,381 — 4,381 2,328 6,709 
Other comprehensive income— — — — 18,065 18,065 642 18,707 
Balance as of September 30, 202016,896,453 $17 $496,468 $377,449 $(259,231)$614,703 $16,632 $631,335 
The accompanying notes are an integral part of these financial statements.
6


COOPER-STANDARD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)
Nine Months Ended September 30, Six Months Ended June 30,
20212020 20222021
Operating Activities:Operating Activities:Operating Activities:
Net lossNet loss$(224,106)$(241,714)Net loss$(95,941)$(99,242)
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:
DepreciationDepreciation99,497 107,095 Depreciation60,062 65,267 
Amortization of intangiblesAmortization of intangibles5,524 9,632 Amortization of intangibles3,483 3,705 
Gain on sale of business, netGain on sale of business, net(696)(2,314)Gain on sale of business, net— (696)
Gain on sale of fixed assets, netGain on sale of fixed assets, net(33,391)— 
Impairment chargesImpairment charges1,847 87,710 Impairment charges458 841 
Share-based compensation expenseShare-based compensation expense4,781 6,977 Share-based compensation expense1,625 3,002 
Equity in earnings of affiliates, net of dividends related to earnings2,146 6,087 
Equity in losses of affiliates, net of dividends related to earningsEquity in losses of affiliates, net of dividends related to earnings7,804 1,032 
Deferred income taxesDeferred income taxes9,785 (32,308)Deferred income taxes(5,096)(21,709)
OtherOther2,219 4,354 Other1,178 1,192 
Changes in operating assets and liabilitiesChanges in operating assets and liabilities(12,485)27,949 Changes in operating assets and liabilities59,583 (14,126)
Net cash used in operating activitiesNet cash used in operating activities(111,488)(26,532)Net cash used in operating activities(235)(60,734)
Investing activities:Investing activities:Investing activities:
Capital expendituresCapital expenditures(75,965)(73,407)Capital expenditures(44,278)(55,599)
Proceeds from sale of business, net of cash divested— (17,006)
Proceeds from sale of fixed assets and other3,130 963 
Net cash used in investing activities(72,835)(89,450)
Proceeds from sale of fixed assetsProceeds from sale of fixed assets52,633 3,000 
OtherOther32 35 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities8,387 (52,564)
Financing activities:Financing activities:Financing activities:
Proceeds from issuance of long-term debt, net of discount
— 245,000 
Principal payments on long-term debtPrincipal payments on long-term debt(4,227)(4,792)Principal payments on long-term debt(2,536)(2,895)
Decrease in short-term debt, net(597)(6,897)
(Decrease) increase in short-term debt, net(Decrease) increase in short-term debt, net(1,666)14,811 
Debt issuance costs— (6,722)
Taxes withheld and paid on employees' share-based payment awardsTaxes withheld and paid on employees' share-based payment awards(777)(533)Taxes withheld and paid on employees' share-based payment awards(526)(744)
OtherOther884 (925)Other651 532 
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(4,717)225,131 Net cash (used in) provided by financing activities(4,077)11,704 
Effects of exchange rate changes on cash, cash equivalents and restricted cashEffects of exchange rate changes on cash, cash equivalents and restricted cash7,853 (5,718)Effects of exchange rate changes on cash, cash equivalents and restricted cash7,103 4,179 
Changes in cash, cash equivalents and restricted cashChanges in cash, cash equivalents and restricted cash(181,187)103,431 Changes in cash, cash equivalents and restricted cash11,178 (97,415)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period443,578 361,742 Cash, cash equivalents and restricted cash at beginning of period251,128 443,578 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$262,391 $465,173 Cash, cash equivalents and restricted cash at end of period$262,306 $346,163 
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 ofBalance as of
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Cash and cash equivalentsCash and cash equivalents$253,281 $438,438 Cash and cash equivalents$250,458 $248,010 
Restricted cash included in other current assetsRestricted cash included in other current assets6,467 4,089 Restricted cash included in other current assets9,893 961 
Restricted cash included in other assetsRestricted cash included in other assets2,643 1,051 Restricted cash included in other assets1,955 2,157 
Total cash, cash equivalents and restricted cashTotal cash, cash equivalents and restricted cash$262,391 $443,578 Total cash, cash equivalents and restricted cash$262,306 $251,128 
The accompanying notes are an integral part of these financial statements.
7

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, 20202021 (the “2020“2021 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 SeptemberJune 30, 20212022 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. AcquisitionDeconsolidation and DivestituresDivestiture
20202022 Joint Venture Deconsolidation
In the thirdfirst quarter of 2020, management approved and completed a plan to sell the Company’s entire controlling equity interest of2022, a joint venture in the Asia Pacific region. Upon finalizingregion that was previously consolidated with a noncontrolling interest amended the sale,governing document underlying the joint venture. The amendment to the agreement did not change the Company’s 51% ownership. However, as a result of the amendment and effective as of January 1, 2022, the joint venture was deconsolidated and accounted for as an investment under the equity method. The Company remeasured the retained investment using the income approach method and performed a discounted cash flow analysis of the projected free cash flows of the joint venture. As a result of the deconsolidation, during the three months ended March 31, 2022, the Company recorded a gain on deconsolidation of the business of $1,334. In the third quarter of 2021, the Company recorded an allowance for credit loss of $11,218$2,257, included in selling, administration and engineering expenses. The credit loss resulted from the bankruptcy proceedings of the divested joint venture and represented accounts receivable balances with the divested joint venture. These accounts receivable amounts primarily represented sales to the joint venture prior to deconsolidationother income (expense), net in the third quartercondensed consolidated statements of 2020.operations.
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 six months ended June 30, 2020, the Company recorded non-cash impairment charges of $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.
Upon finalizing the sale duringDuring the three and six months ended September 30, 2020, the Company recorded a loss on deconsolidation of the business of $167. During the nine months ended SeptemberJune 30, 2021, the Company recorded subsequent adjustments resulting in a net gain of $696.
8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share$891 and share amounts)
2019 Divestiture
During the second quarter of 2019, the Company completed its sale of the AVS product line to Continental AG. In the third quarter of 2020, the Company finalized adjustments to the gain recorded in 2019 by recording an additional gain on divestiture of $1,147, primarily due to working capital adjustments.
Subsequent Event
In the fourth quarter of 2018, the Company acquired 80.1% of LS Mtron Ltd.’s South Korean automotive parts business. The acquisition agreement included an option for LS Mtron Ltd. to sell its remaining 19.9% noncontrolling interest to the Company, beginning three years from the acquisition date. Subsequent to the third quarter of 2021, LS Mtron Ltd. exercised its option, requiring the Company to purchase the remaining 19.9% interest. The transaction price is subject to adjustments that are expected to be finalized at closing in the fourth quarter of 2021.$696, respectively.
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 SeptemberJune 30, 20212022 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Passenger and Light Duty$262,821 $93,766 $109,187 $15,973 $— $481,747 
Commercial3,341 4,773 337 1,333 9,792 
Other4,430 143 — 30,576 35,151 
Revenue$270,592 $98,682 $109,526 $15,981 $31,909 $526,690 
Revenue by customer group for the nine months ended September 30, 2021 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Passenger and Light DutyPassenger and Light Duty$834,545 $380,519 $325,178 $45,597 $— $1,585,839 Passenger and Light Duty$323,532 $120,693 $85,338 $26,256 $— $555,819 
CommercialCommercial11,027 16,125 2,484 23 4,029 33,688 Commercial4,049 5,546 441 1,665 11,706 
OtherOther11,581 435 — 97,295 109,315 Other4,106 48 — — 34,238 38,392 
RevenueRevenue$857,153 $397,079 $327,666 $45,620 $101,324 $1,728,842 Revenue$331,687 $126,287 $85,779 $26,261 $35,903 $605,917 
98

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
Revenue by customer group for the threesix months ended SeptemberJune 30, 20202022 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Passenger and Light DutyPassenger and Light Duty$350,016 $141,754 $129,822 $17,558 $— $639,150 Passenger and Light Duty$638,119 $246,061 $188,742 $47,769 $— $1,120,691 
CommercialCommercial3,179 4,066 1,190 911 9,352 Commercial7,723 11,469 788 11 3,322 23,313 
OtherOther5,812 209 51 16 28,610 34,698 Other7,739 171 — 66,985 74,897 
RevenueRevenue$359,007 $146,029 $131,063 $17,580 $29,521 $683,200 Revenue$653,581 $257,701 $189,532 $47,780 $70,307 $1,218,901 
Revenue by customer group for the ninethree months ended SeptemberJune 30, 20202021 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Passenger and Light DutyPassenger and Light Duty$796,937 $383,288 $312,871 $41,878 $— $1,534,974 Passenger and Light Duty$240,111 $126,972 $102,950 $14,145 $— $484,178 
CommercialCommercial8,328 12,846 3,149 16 2,868 27,207 Commercial3,405 5,471 965 1,445 11,294 
OtherOther14,880 13,942 113 38 87,403 116,376 Other4,009 178 — — 33,526 37,713 
RevenueRevenue$820,145 $410,076 $316,133 $41,932 $90,271 $1,678,557 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 AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Passenger and Light Duty$571,724 $286,753 $215,991 $29,624 $— $1,104,092 
Commercial7,686 11,352 2,147 15 2,696 23,896 
Other7,151 292 — 66,719 74,164 
Revenue$586,561 $298,397 $218,140 $29,639 $69,415 $1,202,152 
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.
A summary of the Company’s products is as follows:
Product LineDescription
Sealing SystemsProtect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment
Fuel & Brake Delivery SystemsSense, deliver and control fluids to fuel and brake systems
Fluid Transfer SystemsSense, deliver and control fluids and vapors for optimal powertrain & HVAC operation
Revenue by product line for the three months ended SeptemberJune 30, 20212022 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Sealing systems$102,636 $75,824 $69,872 $12,114 $— $260,446 
Fuel and brake delivery systems80,549 18,989 23,446 2,286 — 125,270 
Fluid transfer systems87,407 3,869 16,208 1,581 — 109,065 
Other— — — — 31,909 31,909 
Consolidated$270,592 $98,682 $109,526 $15,981 $31,909 $526,690 
Revenue by product line for the nine months ended September 30, 2021 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Sealing systemsSealing systems$313,985 $310,063 $201,873 $34,921 $— $860,842 Sealing systems$127,345 $101,951 $49,874 $19,235 $— $298,405 
Fuel and brake delivery systemsFuel and brake delivery systems275,594 73,770 76,981 7,299 — 433,644 Fuel and brake delivery systems107,614 21,638 20,481 4,814 — 154,547 
Fluid transfer systemsFluid transfer systems267,574 13,246 48,812 3,400 — 333,032 Fluid transfer systems96,728 2,698 15,424 2,212 — 117,062 
OtherOther— — — — 101,324 101,324 Other— — — — 35,903 35,903 
Consolidated$857,153 $397,079 $327,666 $45,620 $101,324 $1,728,842 
RevenueRevenue$331,687 $126,287 $85,779 $26,261 $35,903 $605,917 
109

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
Revenue by product line for the threesix months ended SeptemberJune 30, 20202022 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Sealing systemsSealing systems$138,823 $116,640 $82,754 $11,045 $— $349,262 Sealing systems$254,897 $207,085 $112,910 $35,345 $— $610,237 
Fuel and brake delivery systemsFuel and brake delivery systems118,997 25,218 29,877 5,134 — 179,226 Fuel and brake delivery systems210,335 44,676 44,228 8,375 — 307,614 
Fluid transfer systemsFluid transfer systems101,187 4,171 18,432 1,401 — 125,191 Fluid transfer systems188,349 5,940 32,394 4,060 — 230,743 
OtherOther— — — — 29,521 29,521 Other— — — — 70,307 70,307 
Consolidated$359,007 $146,029 $131,063 $17,580 $29,521 $683,200 
RevenueRevenue$653,581 $257,701 $189,532 $47,780 $70,307 $1,218,901 
Revenue by product line for the ninethree months ended SeptemberJune 30, 20202021 was as follows:
North AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidatedNorth AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Sealing systemsSealing systems$312,331 $297,216 $201,295 $27,385 $— $838,227 Sealing systems$90,174 $104,878 $62,328 $11,533 $— $268,913 
Fuel and brake delivery systemsFuel and brake delivery systems266,203 65,078 75,061 11,707 — 418,049 Fuel and brake delivery systems82,389 23,991 25,166 2,148 — 133,694 
Fluid transfer systemsFluid transfer systems241,611 35,673 39,777 2,840 — 319,901 Fluid transfer systems74,962 3,752 16,421 472 — 95,607 
OtherOther— 12,109 — — 90,271 102,380 Other— — — — 34,971 34,971 
Consolidated$820,145 $410,076 $316,133 $41,932 $90,271 $1,678,557 
RevenueRevenue$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 AmericaEuropeAsia PacificSouth AmericaCorporate, Eliminations and OtherConsolidated
Sealing systems$211,349 $234,239 $132,001 $22,807 $— $600,396 
Fuel and brake delivery systems195,045 54,781 53,535 5,013 — 308,374 
Fluid transfer systems180,167 9,377 32,604 1,819 — 223,967 
Other— — — — 69,415 69,415 
Revenue$586,561 $298,397 $218,140 $29,639 $69,415 $1,202,152 
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 itsthe 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 ninesix months ended SeptemberJune 30, 2021.2022.
The Company’s contract liabilities consist of advance payments received and due from customers. Net contract assets (liabilities) consisted of the following:
September 30, 2021December 31, 2020ChangeJune 30, 2022December 31, 2021Change
Contract assetsContract assets$1,118 $777 $341 Contract assets$3,454 $— $3,454 
Contract liabilitiesContract liabilities(171)(27)(144)Contract liabilities(14)(143)129 
Net contract assets$947 $750 $197 
Net contract assets (liabilities)Net contract assets (liabilities)$3,440 $(143)$3,583 
10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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 SeptemberJune 30, 20212022 and December 31, 20202021 were current liabilities of $14,628$12,236 and $16,932,$12,045, respectively, and long-term liabilities of $7,020$6,485 and $6,828,$7,214, 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.
11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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”), along with other related exit costs and asset impairments related to restructuring activities.activities (collectively, “other exit costs”). Employee separation costs are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy.
Restructuring expense by segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
North AmericaNorth America$307 $3,721 $3,513 $10,468 North America$353 $843 $(86)$3,206 
EuropeEurope1,113 1,720 27,284 7,019 Europe1,704 9,774 10,135 26,171 
Asia PacificAsia Pacific282 552 1,265 3,264 Asia Pacific1,152 614 999 983 
South AmericaSouth America(129)316 1,858 2,367 South America69 400 105 1,987 
Total AutomotiveTotal Automotive1,573 6,309 33,920 23,118 Total Automotive3,278 11,631 11,153 32,347 
Corporate and otherCorporate and other— (123)331 118 Corporate and other204 — 160 331 
TotalTotal$1,573 $6,186 $34,251 $23,236 Total$3,482 $11,631 $11,313 $32,678 
Restructuring activity for the ninesix months ended SeptemberJune 30, 20212022 was as follows:
Employee Separation CostsOther Exit CostsTotalEmployee Separation CostsOther Exit CostsTotal
Balance as of December 31, 2020$15,029 $8,406 $23,435 
Balance as of December 31, 2021Balance as of December 31, 2021$20,957 $5,627 $26,584 
ExpenseExpense28,455 5,796 34,251 Expense7,150 4,163 11,313 
Cash paymentsCash payments(19,329)(8,031)(27,360)Cash payments(11,039)(1,409)(12,448)
Non-cash fixed asset impairments included in expense— (214)(214)
Foreign exchange translation and otherForeign exchange translation and other(994)475 (519)Foreign exchange translation and other(1,298)67 (1,231)
Balance as of September 30, 2021$23,161 $6,432 $29,593 
Balance as of June 30, 2022Balance as of June 30, 2022$15,770 $8,448 $24,218 
Other exit costs for the six months ended June 30, 2022 included an immaterial gain on sale of fixed assets related to a closed facility in the Asia Pacific region.
5. Inventories
Inventories consist of the following:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Finished goodsFinished goods$58,200 $39,136 Finished goods$50,188 $43,186 
Work in processWork in process46,437 35,477 Work in process44,301 37,045 
Raw materials and suppliesRaw materials and supplies93,543 69,129 Raw materials and supplies89,079 77,844 
$198,180 $143,742 $183,568 $158,075 
1211

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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 September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Operating lease expenseOperating lease expense$7,827 $8,065 $23,258 $24,484 Operating lease expense$7,238 $8,087 $14,624 $15,431 
Short-term lease expenseShort-term lease expense1,719 1,040 5,324 3,115 Short-term lease expense1,234 1,965 2,145 3,605 
Variable lease expenseVariable lease expense191 273 620 678 Variable lease expense178 181 466 429 
Finance lease expense:Finance lease expense:Finance lease expense:
Amortization of right-of-use assetsAmortization of right-of-use assets519 598 1,586 1,950 Amortization of right-of-use assets485 521 977 1,067 
Interest on lease liabilitiesInterest on lease liabilities356 384 1,094 1,169 Interest on lease liabilities330 372 662 738 
Total lease expenseTotal lease expense$10,612 $10,360 $31,882 $31,396 Total lease expense$9,465 $11,126 $18,874 $21,270 
Other information related to leases was as follows:
Nine Months Ended September 30,Six Months Ended June 30,
2021202020222021
Supplemental Cash Flows InformationSupplemental Cash Flows InformationSupplemental 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$25,641 $23,038  Operating cash flows for operating leases$15,037 $16,953 
Operating cash flows for finance leases Operating cash flows for finance leases1,093 1,188  Operating cash flows for finance leases668 734 
Financing cash flows for finance leases Financing cash flows for finance leases1,677 1,578  Financing cash flows for finance leases1,038 1,195 
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 leases14,968 47,176  Operating leases9,958 7,355 
Finance leases Finance leases606 549  Finance leases113 572 
Weighted Average Remaining Lease Term (in years)Weighted Average Remaining Lease Term (in years)Weighted Average Remaining Lease Term (in years)
Operating leasesOperating leases7.68.1Operating leases7.47.7
Finance leasesFinance leases9.910.7Finance leases9.310.1
Weighted Average Discount RateWeighted Average Discount RateWeighted Average Discount Rate
Operating leasesOperating leases5.7 %5.4 %Operating leases6.0 %5.5 %
Finance leasesFinance leases5.8 %5.7 %Finance leases5.9 %5.8 %
1312

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 SeptemberJune 30, 20212022 were as follows:
YearYearOperating LeasesFinance
Leases
YearOperating LeasesFinance
Leases
Remainder of 2021$7,456 $814 
202224,693 3,307 
Remainder of 2022Remainder of 2022$13,593 $1,542 
2023202320,512 3,218 202324,820 3,118 
2024202415,777 3,456 202418,858 3,348 
2025202512,588 3,503 202515,322 3,396 
2026202611,214 3,137 
ThereafterThereafter51,554 20,622 Thereafter49,149 17,025 
Total future minimum lease payments Total future minimum lease payments132,580 34,920  Total future minimum lease payments132,956 31,566 
Less imputed interestLess imputed interest(26,282)(8,584)Less imputed interest(26,839)(7,663)
Total Total$106,298 $26,336  Total$106,117 $23,903 
Amounts recognized on the condensed consolidated balance sheets as of SeptemberJune 30, 20212022 and December 31, 20202021 were as follows:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Operating LeasesOperating LeasesOperating Leases
Operating lease right-of-use assets, netOperating lease right-of-use assets, net$102,698 $109,795 Operating lease right-of-use assets, net$102,407 $111,052 
Current operating lease liabilitiesCurrent operating lease liabilities21,407 21,711 Current operating lease liabilities21,177 22,552 
Long-term operating lease liabilitiesLong-term operating lease liabilities84,891 90,517 Long-term operating lease liabilities84,940 92,760 
Finance LeasesFinance LeasesFinance Leases
Debt payable within one yearDebt payable within one year2,183 2,300 Debt payable within one year2,134 2,153 
Long-term debtLong-term debt24,153 26,152 Long-term debt21,769 23,590 

As of SeptemberJune 30, 20212022 and December 31, 2020,2021, assets recorded under finance leases, net of accumulated depreciation were $28,282$23,513 and $30,847,$25,690, respectively. As of SeptemberJune 30, 2021,2022, the Company had additional leases, primarily forone real estate lease that havehad not yet commenced with undiscounted lease payments of approximately $9,443. These leases will commence in 2021 with lease terms up to ten years.$423.
7. Property, Plant and Equipment
Property, plant and equipment consists of the following:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Land and improvementsLand and improvements$44,911 $61,226 Land and improvements$42,608 $44,495 
Buildings and improvementsBuildings and improvements285,904 298,431 Buildings and improvements263,685 285,240 
Machinery and equipmentMachinery and equipment1,308,453 1,277,624 Machinery and equipment1,231,726 1,269,330 
Construction in progressConstruction in progress76,467 96,706 Construction in progress71,884 80,868 
1,715,735 1,733,987 1,609,903 1,679,933 
Accumulated depreciationAccumulated depreciation(907,069)(841,678)Accumulated depreciation(907,396)(895,585)
Property, plant and equipment, netProperty, plant and equipment, net$808,666 $892,309 Property, plant and equipment, net$702,507 $784,348 
During the three and ninesix months ended SeptemberJune 30, 2022, the Company recorded impairment charges of $3 and $458, respectively, primarily due to idle assets in Europe. The fair value was determined using salvage value. During the three and six months ended June 30, 2021, the Company recorded impairment charges of $1,006 and $1,847, respectively,$841 each period due to idle assets, primarily in a certain North American and European locations.Europe location. The fair value was determined using salvage value.
The Company recorded impairment chargesdeconsolidation of $100 and $1,240a joint venture during the three and nine months ended SeptemberMarch 31, 2022 included the removal of property, plant and equipment with gross carrying value of $29,590 and accumulated depreciation of $11,625, which is reflected in the balance sheet as of June 30, 2020, respectively.2022.
1413

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
In the first quarter of 2022, the Company closed on a sale-leaseback transaction related to one of its European facilities. The sale-leaseback was effective and control transferred to the Company on April 1, 2022. During the three months ended June 30, 2022, the Company recorded a gain on the sale transaction of $33,391. The transaction included the removal of property, plant and equipment with a gross carrying value of $16,890 and accumulated depreciation of $4,013, which is reflected in the balance sheet as of June 30, 2022.
8. Goodwill and Intangible Assets
Goodwill
Changes in the carrying amount of goodwill by reporting unit for the ninesix months ended SeptemberJune 30, 20212022 were as follows:
North AmericaEuropeIndustrial Specialty GroupTotal
Balance as of December 31, 2020$128,214 $— $14,036 $142,250 
Acquisition (1)
— 408 — 408 
Foreign exchange translation19 (9)— 10 
Balance as of September 30, 2021$128,233 $399 $14,036 $142,668 
(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.
North AmericaIndustrial Specialty GroupTotal
Balance as of December 31, 2021$128,246 $14,036 $142,282 
Foreign exchange translation(69)— (69)
Balance as of June 30, 2022$128,177 $14,036 $142,213 
Goodwill is tested for impairment by reporting unit annually or more frequently if events or circumstances indicate that an impairment may exist.
During There were no indicators of potential impairment during the third quarter of 2021, the Company’s North America reporting unit continued to be negatively impacted by semiconductor-related customer schedule reductions and increasing material costs. After evaluating and weighing all relevant events and circumstances and considering the substantial excess fair value of the North America reporting unit, the Company concluded that it was more likely than not that the fair value of this reporting unit exceeded the carrying value. Consequently, the Company determined that it was not necessary to perform an interim impairment test for the North America reporting unit.six months ended June 30, 2022.
Intangible Assets
Intangible assets and accumulated amortization balances as of SeptemberJune 30, 20212022 and December 31, 20202021 were as follows:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationshipsCustomer relationships$154,651 $(125,397)$29,254 Customer relationships$152,827 $(127,439)$25,388 
OtherOther44,695 (11,969)32,726 Other38,699 (13,072)25,627 
Balance as of September 30, 2021$199,346 $(137,366)$61,980 
Balance as of June 30, 2022Balance as of June 30, 2022$191,526 $(140,511)$51,015 
Customer relationshipsCustomer relationships$155,409 $(122,657)$32,752 Customer relationships$154,767 $(126,626)$28,141 
OtherOther44,826 (9,899)34,927 Other44,955 (12,721)32,234 
Balance as of December 31, 2020$200,235 $(132,556)$67,679 
Balance as of December 31, 2021Balance as of December 31, 2021$199,722 $(139,347)$60,375 
The deconsolidation of a joint venture during the three months ended March 31, 2022 included the removal of intangible assets (primarily land use rights) with net carrying value of $5,258, which is reflected in the table above as of June 30, 2022.
1514

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 SeptemberJune 30, 20212022 and December 31, 20202021 is as follows:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Senior NotesSenior Notes$396,365 $395,829 Senior Notes$396,901 $396,544 
Senior Secured NotesSenior Secured Notes241,098 239,567 Senior Secured Notes242,981 241,683 
Term LoanTerm Loan321,818 323,636 Term Loan319,999 321,212 
ABL Facility— — 
Finance leasesFinance leases26,336 28,452 Finance leases23,903 25,743 
Other borrowingsOther borrowings35,495 36,007 Other borrowings46,459 51,533 
Total debtTotal debt1,021,112 1,023,491 Total debt1,030,243 1,036,715 
Less current portionLess current portion(40,102)(40,731)Less current portion(51,016)(56,111)
Total long-term debtTotal long-term debt$981,010 $982,760 Total long-term debt$979,227 $980,604 
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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $3,635$3,099 and $4,171$3,456 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.
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 may redeem all or part of the Senior Secured Notes prior to maturity at the prices (inclusive of any applicable premium) set forth in the indenture.
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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $4,931$3,856 and $5,828$4,594 of unamortized debt issuance costs, respectively, and $3,971$3,163 and $4,605$3,723 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $1,235$791 and $1,680$1,087 of unamortized debt issuance costs, respectively, and $796$509 and $1,084$701 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 result of the Amendment, the senior asset-based revolving credit facility (“ABL Facility”) maturity was extended to March
1615

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 SeptemberJune 30, 2021,2022, there were no loans outstanding under the ABL Facility. The Company’s borrowing base was $147,106.$180,000. 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 $5,224$5,753 of outstanding letters of credit, the Company effectively had $126,882$156,247 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $844$659 and $1,029,$782, 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 SeptemberJune 30, 2021.2022.
Other
Other borrowings as of SeptemberJune 30, 20212022 and December 31, 20202021 reflect borrowings under local bank lines classified in debt payable within one year on the condensed consolidated balance sheet.
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 SeptemberJune 30, 20212022 and December 31, 20202021 were as follows:
September 30, 2021December 31, 2020Input
Forward foreign exchange contracts - other current assets$490 $1,826 Level 2
Forward foreign exchange contracts - accrued liabilities(1,407)(750)Level 2
17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
June 30, 2022December 31, 2021Input
Forward foreign exchange contracts - other current assets$1,380 $647 Level 2
Forward foreign exchange contracts - accrued liabilities(923)(1,535)Level 2
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 2. “Acquisition“Deconsolidation and Divestitures”Divestiture” and Note 7. “Property, Plant and Equipment.”
16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
Items Not Carried at Fair Value
Fair values of the Company’s Senior Notes, Senior Secured Notes and Term Loan Facility were as follows:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Aggregate fair valueAggregate fair value$906,729 $965,052 Aggregate fair value$717,271 $899,909 
Aggregate carrying value (1)
Aggregate carrying value (1)
973,850 976,400 
Aggregate carrying value (1)
971,300 973,000 
(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 change in fair value of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) in the condensed consolidated balance sheet, to the extent that the hedges are effective, and reclassified into earnings when the 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 flowflows 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the notional amount of these contracts was $155,100$59,626 and $97,503,$136,103, respectively, and consisted of hedges of transactions up to December 2022.
Pretax amounts related to the Company’s cash flow hedges that were recognized in other comprehensive income (loss) (“OCI”) were as follows:
Gain (Loss) Recognized in OCI
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Forward foreign exchange contracts$(1,606)$1,051 $(964)$(8,448)
Gain (Loss) Recognized in OCI
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Forward foreign exchange contracts$(515)$1,190 $1,896 $642 
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 September 30,Nine Months Ended September 30,
2021202020212020
Forward foreign exchange contracts$508 $(1,764)$1,045 $(6,315)
Gain (Loss) Reclassified from AOCI to Income
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Forward foreign exchange contracts$519 $349 $562 $537 
1817

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 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.
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:
September 30, 2021December 31, 2020
Off-balance sheet arrangements$43,876 $85,108 
June 30, 2022December 31, 2021
Off-balance sheet arrangements$59,017 $52,743 
Accounts receivable factored and related costs throughout the period were as follows:
Off-Balance Sheet ArrangementsOff-Balance Sheet Arrangements
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Accounts receivable factoredAccounts receivable factored$68,897 $124,910 $286,214 $352,103 Accounts receivable factored$90,332 $100,046 $172,882 $217,317 
CostsCosts117 120 421 591 Costs114 150 239 304 
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, cash collections on behalf of the Factor that have yet to be remitted were $6,272$5,282 and $1,786,$673, respectively, and are reflected in other current assets as restricted cash in the condensed consolidated balance sheet.
1918

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 September 30,Three Months Ended June 30,
2021202020222021
 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Service costService cost$223 $878 $213 $884 Service cost$193 $692 $223 $913 
Interest costInterest cost1,629 659 2,033 736 Interest cost1,766 716 1,629 660 
Expected return on plan assetsExpected return on plan assets(3,564)(335)(3,421)(580)Expected return on plan assets(2,323)(252)(3,564)(344)
Amortization of prior service cost and actuarial lossAmortization of prior service cost and actuarial loss418 509 485 833 Amortization of prior service cost and actuarial loss222 396 418 933 
OtherOther— — — 125 
Net periodic benefit (income) costNet periodic benefit (income) cost$(1,294)$1,711 $(690)$1,873 Net periodic benefit (income) cost$(142)$1,552 $(1,294)$2,287 
 Pension Benefits Pension Benefits
Nine Months Ended September 30,Six Months Ended June 30,
2021202020222021
 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Service costService cost$669 $2,705 $639 $2,838 Service cost$386 $1,413 $446 $1,827 
Interest costInterest cost4,887 1,967 6,099 2,277 Interest cost3,532 1,449 3,258 1,308 
Expected return on plan assetsExpected return on plan assets(10,692)(1,013)(10,263)(1,716)Expected return on plan assets(4,646)(506)(7,128)(678)
Amortization of prior service cost and actuarial lossAmortization of prior service cost and actuarial loss1,254 2,374 1,455 2,417 Amortization of prior service cost and actuarial loss444 811 836 1,865 
OtherOther— 125 — — Other— — — 125 
Net periodic benefit (income) costNet periodic benefit (income) cost$(3,882)$6,158 $(2,070)$5,816 Net periodic benefit (income) cost$(284)$3,167 $(2,588)$4,447 
 
 Other Postretirement Benefits Other Postretirement Benefits
Three Months Ended September 30,Three Months Ended June 30,
2021202020222021
 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Service costService cost$26 $91 $26 $97 Service cost$22 $57 $26 $93 
Interest costInterest cost133 178 170 175 Interest cost140 167 133 183 
Amortization of prior service credit and actuarial (gain) lossAmortization of prior service credit and actuarial (gain) loss(349)191 (483)108 Amortization of prior service credit and actuarial (gain) loss(394)42 (349)196 
Net periodic benefit (income) costNet periodic benefit (income) cost$(190)$460 $(287)$380 Net periodic benefit (income) cost$(232)$266 $(190)$472 
Other Postretirement BenefitsOther Postretirement Benefits
Nine Months Ended September 30,Six Months Ended June 30,
2021202020222021
U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.
Service costService cost$78 $274 $78 $286 Service cost$44 $115 $52 $183 
Interest costInterest cost399 538 510 516 Interest cost280 335 266 360 
Amortization of prior service credit and actuarial (gain) lossAmortization of prior service credit and actuarial (gain) loss(1,047)577 (1,449)319 Amortization of prior service credit and actuarial (gain) loss(788)84 (698)386 
Net periodic benefit (income) costNet periodic benefit (income) cost$(570)$1,389 $(861)$1,121 Net periodic benefit (income) cost$(464)$534 $(380)$929 
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 income (expense) income,, net in the condensed consolidated statements of operations for all periods presented.
2019

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
13. Other Income (Expense) Income,, Net
The components of other income (expense) income,, net were as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Deconsolidation of joint venture (1)
Deconsolidation of joint venture (1)
$— $— $(2,257)$— 
Foreign currency (losses) gainsForeign currency (losses) gains$(1,396)$2,626 $(5,546)$(4,397)Foreign currency (losses) gains(1,136)1,114 344 (4,150)
Components of net periodic benefit income (cost) other than service cost531 (56)631 (165)
Components of net periodic (cost) benefit income other than service costComponents of net periodic (cost) benefit income other than service cost(480)(20)(995)100 
Factoring costsFactoring costs(117)(120)(421)(591)Factoring costs(114)(150)(239)(304)
Miscellaneous income (expense)488 334 1,115 (204)
Miscellaneous incomeMiscellaneous income221 418 427 627 
Other (expense) income, netOther (expense) income, net$(494)$2,784 $(4,221)$(5,357)Other (expense) income, net$(1,509)$1,362 $(2,720)$(3,727)
(1)Loss attributable to deconsolidation of a joint venture in the Asia Pacific region, which required adjustment to fair value.
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), (loss) incomeloss before income taxes and the corresponding effective tax rate for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Income tax expense (benefit)Income tax expense (benefit)$32,121 $(2,386)$15,598 $(55,485)Income tax expense (benefit)$2,005 $(17,459)$2,657 $(16,523)
(Loss) income before income taxes(92,743)4,323 (208,508)(297,199)
Loss before income taxesLoss before income taxes(32,146)(81,988)(93,284)(115,765)
Effective tax rateEffective tax rate(35)%(55)%(7)%19 %Effective tax rate(6)%21 %(3)%14 %
The effective tax rate for the three and ninesix months ended SeptemberJune 30, 20212022 varied compared tofrom the effective tax rate for the three and ninesix months ended SeptemberJune 30, 20202021 primarily due to the negative impacts of the COVID-19 pandemic and other supply chain issues driving the initial recognition of valuation allowances in the U.S., resulting in tax expense of $31,740 recorded in the three months and $13,278 recorded in the nine months ended September 30, 2021, the geographic mix of pre-tax losses, and the inability to record a benefit for pre-tax losses in the U.S. and certain foreign jurisdictions due to valuation allowances, discrete tax impacts of the gain on sale transaction in Europe, and U.S. states. Theother tax reserve changes during the three and ninesix months ended SeptemberJune 30, 2020 were impacted by discrete items related to the benefit 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%. Additionally, an incremental loss was recorded for impairment charges on held for sale entities for which no tax benefit was recognized, and a discrete expense of $13,414 for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the nine months ended September 30, 2020.2022.
The income tax rate for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 varied from the U.S. statutory rate primarily due to the initial recognition of valuation allowances in the U.S., the inability to record a tax benefit for pre-tax losses in the U.S. and 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
During the three and nine months ended SeptemberJune 30, 2020 varied2022, the Company received $51,396 in cash payments from the U.S. statutory rate as a result of benefits fromUnited States Internal Revenue Service for tax refunds related to net operating loss carry backs under the CARES Act.carrybacks.
The Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in the U.S. and certain countries.foreign jurisdictions. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among jurisdictions. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine, based on the weight of the evidence, if a valuation allowance for its deferred tax assets is necessary. Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income
21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
(exclusive (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a valuation allowance is recorded. If operating results improve or decline on a continual basis in a particular jurisdiction, the Company’s decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax
20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
expense in the period recognized and subsequent periods. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.
15. Net (Loss) IncomeLoss Per Share Attributable to Cooper-Standard Holdings Inc.
Basic net (loss) incomeloss per share attributable to Cooper-Standard Holdings Inc. was computed by dividing net (loss) incomeloss attributable to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding during the period. Diluted net (loss) incomeloss per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net (loss) incomeloss 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) incomeloss per share attributable to Cooper-Standard Holdings Inc. was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Net (loss) income available to Cooper-Standard Holdings Inc. common stockholders$(123,173)$4,381 $(220,648)$(240,426)
Net loss available to Cooper-Standard Holdings Inc. common stockholdersNet loss available to Cooper-Standard Holdings Inc. common stockholders$(33,247)$(63,611)$(94,607)$(97,475)
Basic weighted average shares of common stock outstandingBasic weighted average shares of common stock outstanding17,097,766 16,927,924 17,027,226 16,908,940 Basic weighted average shares of common stock outstanding17,189,128 17,031,113 17,162,915 16,991,372 
Dilutive effect of common stock equivalentsDilutive effect of common stock equivalents— 87,031 — — Dilutive effect of common stock equivalents— — — — 
Diluted weighted average shares of common stock outstandingDiluted weighted average shares of common stock outstanding17,097,766 17,014,955 17,027,226 16,908,940 Diluted weighted average shares of common stock outstanding17,189,128 17,031,113 17,162,915 16,991,372 
Basic net (loss) income per share attributable to Cooper-Standard Holdings Inc.$(7.20)$0.26 $(12.96)$(14.22)
Basic net loss per share attributable to Cooper-Standard Holdings Inc.Basic net loss per share attributable to Cooper-Standard Holdings Inc.$(1.93)$(3.73)$(5.51)$(5.74)
Diluted net (loss) income per share attributable to Cooper-Standard Holdings Inc.$(7.20)$0.26 $(12.96)$(14.22)
Diluted net loss per share attributable to Cooper-Standard Holdings Inc.Diluted net loss per share attributable to Cooper-Standard Holdings Inc.$(1.93)$(3.73)$(5.51)$(5.74)
Securities excluded from the calculation of diluted loss per share were approximately 169,00026,000 and 164,000 for the three months ended SeptemberJune 30, 2022 and 2021, respectively, and approximately 159,00067,000 and 53,000172,000 for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, because the inclusion of such securities in the calculation would have been anti-dilutive. There were no anti-dilutive securities during the three months ended September 30, 2020.
2221

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
16. Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component, net of related tax, were as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Foreign currency translation adjustmentForeign currency translation adjustmentForeign currency translation adjustment
Balance at beginning of periodBalance at beginning of period$(134,377)$(175,616)$(136,579)$(153,933)Balance at beginning of period$(130,375)$(142,899)$(138,751)$(136,579)
Other comprehensive (loss) income before reclassificationsOther comprehensive (loss) income before reclassifications(6,134)(1)15,200 (1)(3,932)(1)(6,483)(1)Other comprehensive (loss) income before reclassifications(17,361)(1)8,522 (1)(8,691)(1)2,202 (1)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss144 1,646 144 1,646 Amounts reclassified from accumulated other comprehensive loss— — (294)— 
Balance at end of periodBalance at end of period$(140,367)$(158,770)$(140,367)$(158,770)Balance at end of period$(147,736)$(134,377)$(147,736)$(134,377)
Benefit plan liabilitiesBenefit plan liabilitiesBenefit plan liabilities
Balance at beginning of periodBalance at beginning of period$(102,729)$(98,194)$(106,079)$(100,160)Balance at beginning of period$(64,319)$(103,340)$(65,303)$(106,079)
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications4,119 (2)(2,422)(2)5,160 (2)(1,803)(2)Other comprehensive income (loss) before reclassifications1,831 (2)(602)(2)2,538 (2)1,041 (2)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss859 (3)1,569 (4)3,168 (5)2,916 (6)Amounts reclassified from accumulated other comprehensive loss232 (3)1,213 (4)509 (5)2,309 (6)
Balance at end of periodBalance at end of period$(97,751)$(99,047)$(97,751)$(99,047)Balance at end of period$(62,256)$(102,729)$(62,256)$(102,729)
Fair value change of derivativesFair value change of derivativesFair value change of derivatives
Balance at beginning of periodBalance at beginning of period$942 $(3,486)$762 $352 Balance at beginning of period$1,301 $191 $(1,130)$762 
Other comprehensive (loss) income before reclassificationsOther comprehensive (loss) income before reclassifications(1,760)(7)786 (7)(1,184)(7)(6,370)(7)Other comprehensive (loss) income before reclassifications(657)(7)1,008 (7)1,815 (7)576 (7)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss(372)(8)1,286 (8)(768)(8)4,604 (8)Amounts reclassified from accumulated other comprehensive loss(366)(8)(257)(8)(407)(8)(396)(8)
Balance at end of periodBalance at end of period$(1,190)$(1,414)$(1,190)$(1,414)Balance at end of period$278 $942 $278 $942 
Accumulated other comprehensive loss, ending balanceAccumulated other comprehensive loss, ending balance$(239,308)$(259,231)$(239,308)$(259,231)Accumulated other comprehensive loss, ending balance$(209,714)$(236,164)$(209,714)$(236,164)
(1)Includes other comprehensive (loss) income related to intra-entity foreign currency balances that are of a long-term investment nature of $(9,265)$(12,877) and $7,368$7,668 for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and $(5,986)$(4,235) and $(11,850)$3,279 for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.  
(2)Net of tax expense (benefit)benefit of $27$(63) and $57$(32) for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and $(250)$(244) and $347$(277) for the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively. Includes other comprehensive gain of $2,666 for each of the three and nine months ended September 30, 2021 related to benefit plan liability remeasurement due to a non-U.S. curtailment event. Includes other comprehensive loss of $371 for each of the three and nine months ended September 30, 2020 related to benefit plan liability remeasurement due to the divestiture of certain businesses in Europe and India.
(3)Includes the effect of the amortization of actuarial losses of $664,$192, and amortization of prior service cost of $41, and impact of curtailment of $193,$44, net of tax of $39.$4.
(4)Includes the effect of the amortization of actuarial losses of $982,$1,128, amortization of prior service cost of $25,$63, and net settlement lossimpact of $1,059, offset by net curtailment gain of $315 and$117, net of tax of $182.$95.
(5)Includes the effect of the amortization of actuarial losses of $2,916,$424, and amortization of prior service cost of $169, and impact of curtailment of $310,$93, net of tax of $227.$8.
(6)Includes the effect of the amortization of actuarial losses of $2,769,$2,252, amortization of prior service cost of $67,$128, and net settlement lossimpact of $1,059, offset by net curtailment gain of $315 and$117, net of tax of $664.$188.
(7)Net of tax expense (benefit) of $154$142 and $265$182 for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and $220$81 and $(2,078)$66 for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(8)Net of tax expense (benefit) of $136$153 and $(478)$92 for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and $277$155 and $(1,711)$141 for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
2322

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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 SeptemberJune 30, 2021,2022, 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 ninesix months ended SeptemberJune 30, 20212022 or 2020.2021.
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 2021,2022, the Company granted Restricted Stock Units (“RSUs”), and 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. The PUs tied to total shareholder return cliff vest at the end of a three year performance period. The PUs tied to ROIC cliff vest one year after the end of their individual performance periods. The RSUs vest ratably over three years.
Share-based compensation expense was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
PUsPUs$357 $127 $51 $346 PUs$242 $(645)$312 $(306)
RSUsRSUs873 1,305 3,004 4,715 RSUs497 885 621 2,131 
Stock optionsStock options549 610 1,726 1,916 Stock options302 584 692 1,177 
TotalTotal$1,779 $2,042 $4,781 $6,977 Total$1,041 $824 $1,625 $3,002 
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 SeptemberJune 30, 2021,2022, 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had approximately $10,477$12,490 and $13,302,$9,965, 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.
24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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.
23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
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.
Certain financial information on the Company’s reportable segments was as follows:
Three Months Ended September 30,Three Months Ended June 30,
2021202020222021
External SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDA
North AmericaNorth America$270,592 $2,711 $8,817 $359,007 $2,372 $58,115 North America$331,687 $2,747 $15,441 $247,525 $2,140 $756 
EuropeEurope98,682 1,903 (25,112)146,029 2,440 (1,466)Europe126,287 1,541 (15,316)132,621 2,836 (14,391)
Asia PacificAsia Pacific109,526 306 (14,274)131,063 1,008 12,246 Asia Pacific85,779 908 (7,799)103,915 858 (2,302)
South AmericaSouth America15,981 — (3,422)17,580 (2,680)South America26,261 — (1,298)14,153 (726)
Total AutomotiveTotal Automotive494,781 4,920 (33,991)653,679 5,824 66,215 Total Automotive570,014 5,196 (8,972)498,214 5,837 (16,663)
Corporate, eliminations and otherCorporate, eliminations and other31,909 (4,920)132 29,521 (5,824)(2,081)Corporate, eliminations and other35,903 (5,196)(1,402)34,971 (5,837)1,937 
ConsolidatedConsolidated$526,690 $— $(33,859)$683,200 $— $64,134 Consolidated$605,917 $— $(10,374)$533,185 $— $(14,726)
Nine Months Ended September 30,Six Months Ended June 30,
2021202020222021
External SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDAExternal SalesIntersegment SalesAdjusted EBITDA
North AmericaNorth America$857,153 $7,484 $50,806 $820,145 $8,968 $52,260 North America$653,581 $6,277 $32,937 $586,561 $4,773 $41,989 
EuropeEurope397,079 7,718 (40,992)410,076 6,755 (47,492)Europe257,701 3,910 (29,973)298,397 5,815 (15,880)
Asia PacificAsia Pacific327,666 1,794 (13,024)316,133 1,678 (6,983)Asia Pacific189,532 1,533 (8,541)218,140 1,488 1,250 
South AmericaSouth America45,620 15 (6,756)41,932 72 (11,608)South America47,780 (1,707)29,639 15 (3,334)
Total AutomotiveTotal Automotive1,627,518 17,011 (9,966)1,588,286 17,473 (13,823)Total Automotive1,148,594 11,725 (7,284)1,132,737 12,091 24,025 
Corporate, eliminations and otherCorporate, eliminations and other101,324 (17,011)(79)90,271 (17,473)(7,516)Corporate, eliminations and other70,307 (11,725)(2,945)69,415 (12,091)(211)
ConsolidatedConsolidated$1,728,842 $— $(10,045)$1,678,557 $— $(21,339)Consolidated$1,218,901 $— $(10,229)$1,202,152 $— $23,814 
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Adjusted EBITDA$(10,374)$(14,726)$(10,229)$23,814 
Restructuring charges(3,482)(11,631)(11,313)(32,678)
Deconsolidation of joint venture— — (2,257)— 
Impairment charges(3)(841)(458)(841)
(Loss) gain on sale of business, net— (195)— 696 
Gain on sale of fixed assets, net33,391 — 33,391 — 
Lease termination costs— (108)— (108)
Indirect tax adjustments(908)— (908)— 
EBITDA$18,624 $(27,501)$8,226 $(9,117)
Income tax expense(2,005)17,459 (2,657)16,523 
Interest expense, net of interest income(18,454)(18,125)(36,631)(35,909)
Depreciation and amortization(31,412)(35,444)(63,545)(68,972)
Net loss attributable to Cooper-Standard Holdings Inc.$(33,247)$(63,611)$(94,607)$(97,475)

2524

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(Unaudited)
(Dollar amounts in thousands except per share and share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Adjusted EBITDA$(33,859)$64,134 $(10,045)$(21,339)
Restructuring charges(1,573)(6,186)(34,251)(23,236)
Impairment charges(1,006)(100)(1,847)(87,417)
Gain on sale of business, net— 2,314 696 2,314 
Lease termination costs(322)(83)(430)(684)
Project costs— — — (4,234)
Divested noncontrolling interest debt extinguishment— (3,595)— (3,595)
EBITDA$(36,760)$56,484 $(45,877)$(138,191)
Income tax (expense) benefit(32,121)2,386 (15,598)55,485 
Interest expense, net of interest income(18,243)(17,985)(54,152)(40,993)
Depreciation and amortization(36,049)(36,504)(105,021)(116,727)
Net (loss) income attributable to Cooper-Standard Holdings Inc.$(123,173)$4,381 $(220,648)$(240,426)

September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Segment assets:Segment assets:Segment assets:
North AmericaNorth America$905,347 $907,652 North America$897,898 $885,517 
EuropeEurope473,071 465,031 Europe395,273 372,097 
Asia PacificAsia Pacific484,490 587,610 Asia Pacific445,606 510,524 
South AmericaSouth America61,815 64,800 South America76,679 61,479 
Total AutomotiveTotal Automotive1,924,723 2,025,093 Total Automotive1,815,456 1,829,617 
Corporate, eliminations and otherCorporate, eliminations and other393,868 586,851 Corporate, eliminations and other324,926 396,876 
ConsolidatedConsolidated$2,318,591 $2,611,944 Consolidated$2,140,382 $2,226,493 


2625


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, 20202021 filed with the U.S. Securities and Exchange Commission (“20202021 Annual Report”), including Item 1A. “Risk Factors.” The following should be read in conjunction with our 20202021 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our 20202021 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 20202021 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 globalIn 2020, the COVID-19 pandemic created an unusually high degree of economic disruption and uncertainty during 2020,globally which has continued into 2021. Although optimism foradversely impacted automotive production. In 2021, global automotive production was again negatively impacted by lingering impacts of the COVID-19 pandemic and broad supply chain challenges stemming, in part, from a sharp rebound in overall industrial demand. In 2022, rising inflation and continuing supply chain challenges are contributing to global economic recovery has continued throughuncertainty. In addition, recent pandemic related restrictions imposed in certain large population centers in China, the first nine monthsthreat of 2021, a considerable amount of uncertainty remains, including with respect to variant strainsadditional lockdowns, and continuing military actions in Eastern Europe are having broad negative impacts on key sectors of the virus, access to and acceptanceglobal economy.
In North America, U.S. consumer confidence has trended downward since the second quarter of effective vaccines and related governmental policies and restrictions. The rate2021. Key drivers of recovery has varied across regions, and, in some cases, rapid growth and spikes in consumer and industrial demand have outpaced production andthe decline are significant inflation, continuing supply chain capacity. These supply/disruptions and rising interest rates. Geopolitical tensions and persistent concerns over new variants of COVID-19 are also important factors. However, the U.S. economy is seeing some benefits from near all-time low unemployment rates and rising wages. In addition, current and future government spending authorized by recently passed infrastructure legislation and private spending related to pent-up consumer demand imbalances, primarily semiconductor supply issues, and related inflationary pressures have added another layer of uncertainty for the automotive industry and the broader economy around the world. Despite these uncertainties, economistscontinue to support economic growth. Economists at the International Monetary Fund (IMF) remain positive in their outlook. They are now expecting the globaleconomies of the United States, Canada and Mexico to grow by 2.3 percent, 3.4 percent and 2.4 percent, respectively, in 2022.
In Europe, the war in Ukraine and related sanctions imposed on Russia are having a dramatic impact on energy prices and energy security. This is translating into lower output and higher inflation for most Eurozone countries. Supply chain disruptions have also hurt certain industries including the automobile sector, with the war and sanctions hindering the production of key input materials. The easing of COVID-19 restrictions, tighter labor markets, pent-up spending and European Union fiscal policy changes should continue to sustain activity and support some growth in 2022. Economists at the IMF are currently expecting the economy in the Eurozone region to grow by approximately 5.9% 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. Unemployment levels improved during the third quarter of 2021, falling below 5.0% in September. At the same time, businesses are continuing to report shortages of labor and reduced output in many markets. Additionally, inflation has continued to ramp higher and is expected to continue throughout 2021. This is having a negative impact on consumer confidence and corporate earnings, which could reduce future economic activity and growth. Despite these adverse impacts, IMF economists currently expect economic growth of approximately 6.0%2.6 percent for the North America region in 2021.
In Europe, the economy bounced back robustly in the second quarter of 2021, as the lifting of pandemic-related restrictions in the region and expansionary fiscal and monetary policies bolstered household spending and investment activity. Available indicators suggest the recovery carried over into the third quarter, albeit at a softer pace. Consumer confidence improved in the third quarter and remains above pre-pandemic levels. However, unemployment in the region is currently estimated at 8.0%, still significantly higher than pre-pandemic levels. Based on improving health conditions and increasing consumer confidence, the IMF is projecting economic growth in the region of approximately 5.0% for 2021.year.
In the Asia Pacific region, China’s economy lost some momentumthe combination of more transmissible variants and the strict zero-COVID strategy in China has led to repeated mobility restrictions and localized lockdowns that have weighed on economic activity and private consumption. Recent lockdowns in key Chinese manufacturing and trading hubs such as Shenzhen and Shanghai compounded supply disruptions elsewhere in the thirdregion and beyond during the second quarter of 2021, impacted by supply disruptions, negative developments2022. Moreover, real estate investment in China, once a key driver of economic growth, has slowed significantly. As Chinese exports surged in June 2022 following the property sector, restraints on polluting industries, and some mobility restrictions. In August, creditend of the most recent round of COVID-related lockdowns, the Chinese government reaffirmed a GDP growth continued to moderate while the non-manufacturing Purchasing Managers’ Index declined. Consumertarget of “around of
2726


confidence in China has been trending down in recent months, including during the third quarter of 2021. However, unemployment in the region’s largest economy remains at approximately 5.0%, similar5.5 percent” for 2022, implying that further stimulus measures may be implemented to pre-pandemic levels.sustain economic growth. Economists at the IMF currently expect China’sare expecting the Chinese economy to grow by 8.0% in 2021, fueled by pent-up domestic demand, as well as increasing export volumes.3.3 percent for the year.
In South America, the Brazilian economy continues to show mixed signalsexpand amid fiscal support and the lessening impact of riskthe COVID-19 pandemic. Increasing exports of goods and recovery. Unemploymentservices have provided strong support and the unemployment rate remains low. Tighter monetary policy, inflation and political uncertainty ahead of the October 2022 general elections are likely to temper investment and economic growth in the country recently improved to 13.7%,second half of the lowest level in more than a year, while consumer confidence ticked slightly lower in August following five consecutive months of improvement. The manufacturing PMI fell to a four-month low as output growth slowed.year. Economists at the IMF estimate thatare now estimating the Brazilian economy will grow by approximately 5.0%just 1.7 percent in 2021, underpinned by improving domestic and external demand, as COVID-19 vaccines continue broad distribution and related restrictions are gradually being lifted. However, frail fiscal accounts, a heavy debt burden and political polarization represent key risks. Given2022. We remain cautious for the economic outlook in this market 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, which has led to extended and magnifiedsignificant increases in these costs in 2021. We expect these increasesCurrent global events continue to have an impactadd further price pressure and uncertainty to raw material costs for 2022. In addition, we continue to see significant inflationary pressure on results for the remainder of the yearwages, energy, transportation and into 2022.other general costs. As such, we will continue to work on an ongoing basis we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.exposures through a combination of expanded index-based agreements and other commercial enhancements.
Production Levels
Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America.America which have been adversely affected by a series of events in recent years. Beginning in the first quarter of 2020, as a result of COVID-19, we experienced production shutdowns related to the shutdown of effectively all of our facilities coinciding with the shutdown of our customer facilitiesCOVID-19 pandemic. Beginning in all regions. Production subsequently resumed in all regions, at steadily increasing rates throughout the year.
In the first quarter of 2021, and continuing throughout the year, OEM production volumes were disrupted by the global shortage of semiconductors. The shortage has resultedIn 2022, disruptions stemming from the Russia-Ukraine crisis and lockdowns in slowdownskey Chinese manufacturing and stoppages in the finaltrading hubs such as Shenzhen and Shanghai have further exacerbated supply chain disruptions and vehicle production of vehicles. Current customer schedules and industry forecasts suggest production volumes will beginlevels. We continue to improve in the fourth quarter. Therefore, we are collaboratingcollaborate closely with our customers to minimize production inefficiencies while supporting their needs.
Light vehicle production in certain regions for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(In millions of units)(In millions of units)
2021(1)
2020(1)
% Change
2021(1)
2020(1)
% Change(In millions of units)
2022(1)
2021(1)
% Change
2022(1)
2021(1)
% Change
North AmericaNorth America3.0 4.0 (25.2)%9.8 9.2 6.8%North America3.6 3.2 11.7%7.1 6.8 4.7%
EuropeEurope3.1 4.4 (29.6)%12.0 11.3 5.7%Europe3.9 4.1 (4.9)%7.8 8.9 (11.8)%
Asia PacificAsia Pacific9.4 11.0 (15.1)%30.7 27.8 10.6%Asia Pacific10.0 10.3 (2.6)%21.3 21.4 (0.2)%
Greater ChinaGreater China5.3 6.4 (16.8)%17.0 15.8 7.8%Greater China5.5 5.8 (5.9)%11.7 11.6 0.6%
South AmericaSouth America0.6 0.7 (10.9)%1.9 1.5 28.6%South America0.7 0.6 12.9%1.3 1.3 (0.5)%
(1)Production data based on S&P Global (formerly IHS Automotive, October 2021.Markit), July 2022.
In all regions, duringproduction volumes were impacted by the nine months ended September 30, 2021, vehicle production increased compared to the comparable prior year period, despite the impactglobal shortage of semiconductor supply issuessemiconductors which began in the current year. The semiconductor supply issues in 2021 resulted in shutdowns at certain facilities, particularly in North America, for intermediate periods of time, as compared to the widespread and lengthy facility shutdowns in 2020 due to the initial impacts of COVID-19. During the thirdfirst quarter of 2021 decreased vehicle production in all regions comparedand deteriorated thereafter throughout the year. Production stoppages related to the thirdsemiconductor and other supply chain shortages continued into 2022, but have improved sequentially quarter of 2020 was the result of higher than normalover quarter. In Europe, vehicle production in the prior year period as production facilities re-opened after COVID-19 closures and met pent-up demand. Additionally, volumesix months ended June 30, 2022 was negatively impacted by additional supply chain issues related to the Russia-Ukraine crisis. In China, vehicle production in the third quarter of 2021 continued to be suppressedthree months ended June 30, 2022 was negatively impacted by semiconductor supply issues, which resulted in significant decreases in the quarter-over-quarter comparison across all regions.
Notable Events
Subsequent to the end of the third quarter, the Company finalized a long-term commercial agreement with a footwear manufacturer granting them license to use FortrexTM technology in the manufacture of their footwear products. The agreement calls for the payment of licensing fees and ongoing volume-based royalties with an established minimum value.COVID-19 related shutdowns.
2827


Results of Operations
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
20212020Change20212020Change 20222021Change20222021Change
(dollar amounts in thousands)(dollar amounts in thousands)
SalesSales$526,690 $683,200 $(156,510)$1,728,842 $1,678,557 $50,285 Sales$605,917 $533,185 $72,732 $1,218,901 $1,202,152 $16,749 
Cost of products soldCost of products sold534,817 598,714 (63,897)1,669,610 1,611,299 58,311 Cost of products sold590,541 534,118 56,423 1,181,983 1,134,793 47,190 
Gross (loss) profit(8,127)84,486 (92,613)59,232 67,258 (8,026)
Gross profit (loss)Gross profit (loss)15,376 (933)16,309 36,918 67,359 (30,441)
Selling, administration & engineering expensesSelling, administration & engineering expenses60,367 60,059 308 168,506 199,001 (30,495)Selling, administration & engineering expenses52,282 50,085 2,197 104,186 108,139 (3,953)
Gain on sale of business, net— (2,314)2,314 (696)(2,314)1,618 
Loss (gain) on sale of business, netLoss (gain) on sale of business, net— 195 (195)— (696)696 
Gain on sale of fixed assets, netGain on sale of fixed assets, net(33,391)— (33,391)(33,391)— (33,391)
Amortization of intangiblesAmortization of intangibles1,819 1,669 150 5,524 9,632 (4,108)Amortization of intangibles1,737 1,933 (196)3,483 3,705 (222)
Restructuring chargesRestructuring charges1,573 6,186 (4,613)34,251 23,236 11,015 Restructuring charges3,482 11,631 (8,149)11,313 32,678 (21,365)
Impairment chargesImpairment charges1,006 100 906 1,847 87,710 (85,863)Impairment charges841 (838)458 841 (383)
Operating (loss) profit(72,892)18,786 (91,678)(150,200)(250,007)99,807 
Operating lossOperating loss(8,737)(65,618)56,881 (49,131)(77,308)28,177 
Interest expense, net of interest incomeInterest expense, net of interest income(18,243)(17,985)(258)(54,152)(40,993)(13,159)Interest expense, net of interest income(18,454)(18,125)(329)(36,631)(35,909)(722)
Equity in (losses) earnings of affiliatesEquity in (losses) earnings of affiliates(1,114)738 (1,852)65 (842)907 Equity in (losses) earnings of affiliates(3,446)393 (3,839)(4,802)1,179 (5,981)
Other (expense) income, netOther (expense) income, net(494)2,784 (3,278)(4,221)(5,357)1,136 Other (expense) income, net(1,509)1,362 (2,871)(2,720)(3,727)1,007 
(Loss) income before income taxes(92,743)4,323 (97,066)(208,508)(297,199)88,691 
Loss before income taxesLoss before income taxes(32,146)(81,988)49,842 (93,284)(115,765)22,481 
Income tax expense (benefit)Income tax expense (benefit)32,121 (2,386)34,507 15,598 (55,485)71,083 Income tax expense (benefit)2,005 (17,459)19,464 2,657 (16,523)19,180 
Net (loss) income(124,864)6,709 (131,573)(224,106)(241,714)17,608 
Net loss (income) attributable to noncontrolling interests1,691 (2,328)4,019 3,458 1,288 2,170 
Net (loss) income attributable to Cooper-Standard Holdings Inc.$(123,173)$4,381 $(127,554)$(220,648)$(240,426)$19,778 
Net lossNet loss(34,151)(64,529)30,378 (95,941)(99,242)3,301 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests904 918 (14)1,334 1,767 (433)
Net loss attributable to Cooper-Standard Holdings Inc.Net loss attributable to Cooper-Standard Holdings Inc.$(33,247)$(63,611)$30,364 $(94,607)$(97,475)$2,868 

Three Months Ended SeptemberJune 30, 20212022 Compared with Three Months Ended SeptemberJune 30, 20202021
Sales
Sales for the three months ended SeptemberJune 30, 2021 decreased 22.9%2022 increased 13.6%, compared to the three months ended SeptemberJune 30, 2020.2021. The decreaseincrease in sales was driven by lowervolume and mix (higher net vehicle production volume due to the impact of lessening semiconductor supply issues in the current year and the prior year ramp up and strong production of vehicles following lengthy shutdowns from COVID-19, partially offset by the impact of COVID-19 related shutdowns in China and the Ukraine conflict in Europe and net customer price adjustments including recovery of cost increases). This was partially offset by the negative impact of foreign exchange.exchange, and the deconsolidation of a joint venture in the Asia Pacific region. See Note 2. “Deconsolidation and Divestiture” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for additional information.
Three Months Ended September 30,Variance Due To:
20212020ChangeVolume / Mix*Foreign ExchangeDivestitures
(dollar amounts in thousands)
Total sales$526,690 $683,200 $(156,510)$(165,348)$8,838 $— 
Three Months Ended June 30,Variance Due To:
20222021ChangeVolume / Mix*Foreign ExchangeDeconsolidation
(dollar amounts in thousands)
Total sales$605,917 $533,185 $72,732 $101,878 $(22,603)$(6,543)
* Net of customer price reductionsadjustments, including recoveries
2928


Gross (Loss) Profit
Three Months Ended September 30,Variance Due To:
20212020ChangeVolume / Mix*Foreign ExchangeCost Increases / (Decreases)
(dollar amounts in thousands)
Cost of products sold$534,817 $598,714 $(63,897)$(101,777)$10,315 $27,565 
Gross (loss) profit(8,127)84,486 (92,613)(63,571)(1,477)(27,565)
Gross (loss) profit percentage of sales(1.5)%12.4 %
Three Months Ended June 30,Variance Due To:
20222021ChangeVolume / Mix*Foreign ExchangeCost Increases/(Decreases)**
(dollar amounts in thousands)
Cost of products sold$590,541 $534,118 $56,423 $46,920 $(20,619)$30,122 
Gross profit15,376 (933)16,309 54,958 (1,984)(36,665)
Gross profit percentage of sales2.5 %(0.2)%
* Net of customer price reductionsadjustments, including recoveries
** Net of deconsolidation
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%50% and 49%45% of total cost of products sold for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. The change in the cost of products sold was impacted by vehiclehigher volume and mix, commodity inflation, higher commodity and materialcompensation related costs, higher labor and overhead costs due to inconsistent volume production schedules, and higher energy and transportation costs. These costs were partially offset by foreign exchange, purchasing lean and wage inflation.manufacturing efficiencies, and the deconsolidation of a joint venture in the Asia Pacific region.
Gross (loss) profit for the three months ended SeptemberJune 30, 2021 decreased $92.62022 increased $16.3 million, compared to the three months ended SeptemberJune 30, 2020.2021. The change was driven by volume and mix, net customer price adjustments including recovery of cost increases, manufacturing efficiencies, and purchasing lean and restructuring savings, partially offset by commodity and wage inflation, the non-recurrence of prior year government incentiveshigher energy and transportation costs and foreign exchange. These items were partially offset by lower variable employee compensation expenses, purchasing lean savings, and restructuring savings.
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 SeptemberJune 30, 20212022 was 11.5%8.6% of sales compared to 8.8%9.4% for the three months ended SeptemberJune 30, 20202021. The increasedecrease was primarily due to lower sales and the $11.2 million credit loss for certain accounts receivable deemedcompensation costs due to be unrecoverable. Excluding the bad debt reserve, the decrease in amount was attributable to lower variable employee compensation expenses, and salaried headcount initiative savings and foreign exchange, partially offset by general inflation and foreign exchange.higher compensation related costs.
GainLoss on Sale of Business, Net. The gainloss on sale of business of $2.3$0.2 million for the three months ended SeptemberJune 30, 20202021 related to the net effect of our 2020 divestitures. See Note 2. “Deconsolidation and Divestiture” to the unaudited condensed consolidated financial statements included in Part 1, Item 1 of this Report for additional information.
Gain on Sale of Fixed Assets, Net. The gain on sale of fixed assets for the three months ended June 30, 2022 was attributable to the gain on the sale-leaseback of a European facility of $33.4 million.
Amortization of Intangibles. Intangible amortization for the three months ended SeptemberJune 30, 2021 increased $0.2 million compared2022 was comparable to the three months ended SeptemberJune 30, 2020. The increase was attributable primarily to foreign exchange translation on our non-U.S. intangibles.2021.
Restructuring. Restructuring charges for the three months ended SeptemberJune 30, 20212022 decreased $4.6$8.1 million compared to the three months ended SeptemberJune 30, 2020.2021. The decrease was primarily driven by lower restructuring charges in North America and Europe, as certain headcount initiatives and footprint rationalization events neared completion.Europe.
Impairment Charges. Non-cash impairment charges for the three months ended SeptemberJune 30, 2021 increased $0.92022 decreased $0.8 million, comparedprimarily due to impairments in Europe in the three months ended September 30, 2020. The increase was driven by impairment charges related to idle assets, primarily at certain facilities in our North America and Europe regions.prior year period.
Interest Expense, Net. Net interest expense for the three months ended SeptemberJune 30, 2021 increased $0.32022 was comparable to the three months ended June 30, 2021.
Other Expense, Net. Other expense, net, for the three months ended June 30, 2022 decreased $2.9 million compared to the three months ended SeptemberJune 30, 2020, due to lower interest income amounts attributable to lower invested cash balances.
Other (Expense) Income, Net. Other (expense) income for the three months ended September 30, 2021, increased $3.3 million compared to the three months ended September 30, 2020, primarily due to higherthe unfavorable impact of foreign currency losses.exchange.
Income Tax Expense (Benefit).Expense. Income tax expense for the three months ended SeptemberJune 30, 20212022 was $32.1$2.0 million on losses before income taxes of $92.7$32.1 million compared to an income tax benefit of $2.4$17.5 million on earningslosses before income taxes of $4.3$82.0 million for the three months ended SeptemberJune 30, 2020.2021. The effective tax rate for the three months ended SeptemberJune 30, 20212022 differed primarily from the effective tax rate for the three months ended SeptemberJune 30, 20202021 primarily due to the negative impacts of the COVID-19 pandemic and other supply chain issues driving the initial recognition of valuation allowances in the U.S., resulting in tax expense of $31.7 million, which includes a reversal of tax benefits recorded for losses in the first six months of 2021. Geographicgeographic mix of pre-tax losses, and the inability to record a tax benefit for pre-tax losses in the U.S. and certain foreign jurisdictions and U.S. states drives a difference between reporting periods. Additionally, the periods vary due to benefits recordedvaluation allowances, discrete tax impacts on the gain on sale transaction in Europe, and other tax reserve changes during the three-month period ended June 30, 2022.
3029


three month period ended September 30, 2020 as a result of the Coronavirus Aid, Relief, and Economic Security Act (“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%.
NineSix Months Ended SeptemberJune 30, 20212022 Compared with NineSix Months Ended SeptemberJune 30, 20202021
Sales
Sales for the ninesix months ended SeptemberJune 30, 20212022 increased 3.0%1.4%, compared to the ninesix months ended SeptemberJune 30, 2020.2021. The increase in sales was driven by volume and mix (higher net vehicle production volume increases due to non-recurrence of lengthy shutdowns in the prior year period from COVID-19, offset in part by the impact of lessening semiconductor supply issues in the current year. Foreign exchange also contributed toyear, partially offset by the increaseimpact of COVID-19 in sales, whichChina and the Ukraine conflict in Europe and net customer price adjustments, including recovery of cost increases). This was partially offset by foreign exchange, and the prior year divestituredeconsolidation of our European rubber fluid transfera joint venture in the Asia Pacific region. See Note 2. “Deconsolidation and specialty sealing businesses and Indian operations.Divestiture” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for additional information.
Nine Months Ended September 30,Variance Due To:
20212020ChangeVolume / Mix*Foreign ExchangeDivestitures
(dollar amounts in thousands)
Total sales$1,728,842 $1,678,557 $50,285 $61,872 $52,921 $(64,508)
Six Months Ended June 30,Variance Due To:
20222021ChangeVolume / Mix*Foreign ExchangeDeconsolidation
(dollar amounts in thousands)
Total sales$1,218,901 $1,202,152 $16,749 $64,424 $(32,662)$(15,013)
* Net of customer price reductionsadjustments, including recoveries
Gross Profit
Nine Months Ended September 30,Variance Due To:Six Months Ended June 30,Variance Due To:
20212020ChangeVolume / Mix*Foreign ExchangeCost Increases / (Decreases)**20222021ChangeVolume / Mix*Foreign ExchangeCost Increases / (Decreases)**
(dollar amounts in thousands)(dollar amounts in thousands)
Cost of products soldCost of products sold$1,669,610 $1,611,299 $58,311 $54,312 $52,770 $(48,771)Cost of products sold$1,181,983 $1,134,793 $47,190 $13,588 $(28,035)$61,637 
Gross profitGross profit59,232 67,258 (8,026)7,560 151 (15,737)Gross profit36,918 67,359 (30,441)50,836 (4,627)(76,650)
Gross profit percentage of salesGross profit percentage of sales3.4 %4.0 %Gross profit percentage of sales3.0 %5.6 %
* Net of customer price reductionsadjustments, including recoveries
** Includes the net impactNet of divestituresdeconsolidation
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%50% and 45%47% of total cost of products sold for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. The change in the cost of products sold was impacted by vehiclecommodity inflation, higher volume and mix, the prior year divestiture of our European rubber fluid transferhigher compensation related costs, increased labor and specialty sealing businessesoverhead costs due to inconsistent volume production schedules, and Indian operations, continuous improvementhigher energy and lean manufacturing, higher commodity and materialtransportation costs. These costs were partially offset by foreign exchange, purchasing lean and wage inflation.manufacturing efficiencies, restructuring savings and the deconsolidation of a joint venture in the Asia Pacific region.
Gross profit for the ninesix months ended SeptemberJune 30, 20212022 decreased 11.9%45.2%, compared to the ninesix months ended SeptemberJune 30, 2020.2021. The change was driven by commodity and wage inflation and the non-recurrence of prior year COVID-19 government incentives. These items were partially offset by volume and mix, net favorable operational performance, lower variable employee compensation expenses, purchasing lean savings, restructuring savings, and the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations.
Selling, Administration and Engineering Expense. Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. Sales, administration and engineering expense for the ninesix months ended SeptemberJune 30, 20212022 was 9.7%8.5% of sales compared to 11.9%9.0% for the ninesix months ended SeptemberJune 30, 2020.2021. The decrease was primarily due to salaried headcount initiative savings, lower variable employee compensation expenses, lower professional fees,customer recovery of engineering expense, and divestitures,foreign exchange, partially offset by the $11.2 million credit loss for certain accounts receivable deemed to be unrecoverable and foreign exchange.higher compensation related costs.
GainLoss (Gain) on Sale of Business, Net. The gain on sale of business, net of $0.7 million for the ninesix months ended SeptemberJune 30, 2021 related to deconsolidation adjustments for the sale of our European fluid transfer and specialty sealing businesses and Indian operations. The gain on sale of business of $2.3 million for the nine months ended September 30, 2020 related to the net effect of our 2020 divestitures.
31


Gain on Sale of Fixed Assets, Net.
The gain on sale of fixed assets for the six months ended June 30, 2022 was attributable to the gain on the sale-leaseback of a European facility of $33.4 million.
Amortization of Intangibles. Intangible amortization for the ninesix months ended SeptemberJune 30, 2021 decreased $4.1 million compared2022 was comparable to the ninesix months ended SeptemberJune 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 2020.2021.
30


Restructuring. Restructuring charges for the ninesix months ended SeptemberJune 30, 2021 increased $11.02022 decreased $21.4 million compared to the ninesix months ended SeptemberJune 30, 2020.2021. The increasedecrease was primarily driven by higherlower restructuring charges in Europe, primarily related to headcount initiatives and footprint rationalization.Europe.
Impairment Charges. Impairment charges of $1.8 million duringfor the ninesix months ended SeptemberJune 30, 2021 related2022 decreased $0.4 million, as compared to idle assets, primarily at certain facilities in our North America and Europe regions. Impairment charges of $87.7 million during the ninesix months ended SeptemberJune 30, 2020 primarily related to reducing2021. The decrease was driven by lower impairment charges in Europe in the carrying value of our held for sale facilities to fair value less costs to sell.current year period.
Interest Expense, Net. Net interest expense for the ninesix months ended SeptemberJune 30, 2021 increased $13.2 million compared to2022 was relatively consistent with the nine months ended September 30, 2020, primarily due to a full nine months of interest expense for our Senior Secured Notes, which were issued in May 2020.prior year period.
Other Expense, Net. Other expense for the ninesix months ended SeptemberJune 30, 20212022 decreased $1.1$1.0 million compared to the ninesix months ended SeptemberJune 30, 2020,2021, primarily due to higher benefit income and miscellaneous income amounts.favorable foreign currency, offset by a loss on deconsolidation.
Income Tax Expense (Benefit). Income tax expense for the ninesix months ended SeptemberJune 30, 20212022 was $15.6$2.7 million on losses before income taxes of $208.5$93.3 million compared to income tax benefit of $55.5$16.5 million on losses before income taxes of $297.2$115.8 million for the ninesix months ended SeptemberJune 30, 2020.2021. The effective tax rate for the ninesix months ended SeptemberJune 30, 20212022 differed primarily from the effective tax rate for the ninesix months ended SeptemberJune 30, 20202021 due to the negative impacts of the COVID-19 pandemic and other supply chain issues driving the initial recognition of valuation allowances in the U.S resulting in net tax expense of $13.3 million, geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in the U.S. and certain foreign jurisdictions due to valuation allowances, discrete tax impacts of the gain on sale transaction in Europe, and U.S. states, as well as benefits recorded inother tax reserve changes during the nine-monthsix-month period ended SeptemberJune 30, 2020 as a result of the CARES Act net operating loss carry back provision. Additionally, a discrete expense of $13.4 million for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the nine months ended September 30, 2020.2022.
32


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 SeptemberJune 30, 20212022 Compared with Three Months Ended SeptemberJune 30, 20202021
Sales
Three Months Ended September 30,Variance Due To:Three Months Ended June 30,Variance Due To:
20212020Change
Volume/ Mix*
Foreign ExchangeDivestitures20222021Change
Volume/ Mix*
Foreign ExchangeDeconsolidation
(dollar amounts in thousands)(dollar amounts in thousands)
Sales to external customersSales to external customersSales to external customers
North AmericaNorth America$270,592 $359,007 $(88,415)$(89,665)$1,250 $— North America$331,687 $247,525 $84,162 $85,220 $(1,058)$— 
EuropeEurope98,682 146,029 (47,347)(48,118)771 — Europe126,287 132,621 (6,334)10,499 (16,833)— 
Asia PacificAsia Pacific109,526 131,063 (21,537)(27,813)6,276 — Asia Pacific85,779 103,915 (18,136)(6,741)(4,852)(6,543)
South AmericaSouth America15,981 17,580 (1,599)(2,042)443 — South America26,261 14,153 12,108 10,319 1,789 — 
Total AutomotiveTotal Automotive494,781 653,679 (158,898)(167,638)8,740 — Total Automotive570,014 498,214 71,800 99,297 (20,954)(6,543)
Corporate, eliminations and otherCorporate, eliminations and other31,909 29,521 2,388 2,290 98 — Corporate, eliminations and other35,903 34,971 932 2,581 (1,649)— 
ConsolidatedConsolidated$526,690 $683,200 $(156,510)$(165,348)$8,838 $— Consolidated$605,917 $533,185 $72,732 $101,878 $(22,603)$(6,543)
* Net of customer price reductionsadjustments, including recoveries
Volume and mix, net of customer price reductions,adjustments, including recoveries, was driven by vehicle production volume decreasesincreases due to the lessening impact of semiconductor-related customer schedule reductions.supply issues, partially offset by the impact of COVID-19 shutdowns in China and the Ukraine conflict in Europe.
The impact of foreign currency exchange was primarily related to the Euro, Chinese Renminbi, Canadian Dollar, EuroKorean Won and Brazilian Real.
31


Segment adjusted EBITDA
Three Months Ended September 30,Variance Due To:Three Months Ended June 30,Variance Due To:
20212020Change
Volume/ Mix*
Foreign ExchangeCost (Increases)/ DecreasesDivestitures20222021Change
Volume/ Mix*
Foreign ExchangeCost (Increases)/ Decreases**
(dollar amounts in thousands)(dollar amounts in thousands)
Segment adjusted EBITDASegment adjusted EBITDASegment adjusted EBITDA
North AmericaNorth America$8,817 $58,115 $(49,298)$(33,462)$(3,606)$(12,230)$— North America$15,441 $756 $14,685 $34,180 $(723)$(18,772)
EuropeEurope(25,112)(1,466)(23,646)(18,621)(197)(4,828)— Europe(15,316)(14,391)(925)11,328 2,096 (14,349)
Asia PacificAsia Pacific(14,274)12,246 (26,520)(12,204)(2,015)(12,301)— Asia Pacific(7,799)(2,302)(5,497)3,862 (2,688)(6,671)
South AmericaSouth America(3,422)(2,680)(742)(322)529 (949)— South America(1,298)(726)(572)2,967 (2,297)(1,242)
Total AutomotiveTotal Automotive(33,991)66,215 (100,206)(64,609)(5,289)(30,308)— Total Automotive(8,972)(16,663)7,691 52,337 (3,612)(41,034)
Corporate, eliminations and otherCorporate, eliminations and other132 (2,081)2,213 1,038 (162)1,337 — Corporate, eliminations and other(1,402)1,937 (3,339)2,621 (124)(5,836)
Consolidated adjusted EBITDAConsolidated adjusted EBITDA$(33,859)$64,134 $(97,993)$(63,571)$(5,451)$(28,971)$— Consolidated adjusted EBITDA$(10,374)$(14,726)$4,352 $54,958 $(3,736)$(46,870)
* Net of customer price reductionsadjustments, including recoveries
** Net of deconsolidation
Volume and mix, net of customer price reductions,adjustments, including recoveries, was driven by vehicle production volume decreasesincreases due to a lessening impact on customer production schedules for semi-conductor-related customer schedule reductions.supply issues in the current year period partially offset by the impact of COVID-19 shutdowns in China and the Ukraine conflict in Europe.
The impact of foreign currency exchange was driven byprimarily related to the Euro, Chinese Renminbi, Mexican Peso, Canadian Dollar, Euro, Polish Zloty, Czech Koruna,Korean Won and Brazilian Real.
33


The Cost (Increases) / Decreases category above includes:
Commodity cost wage inflation increases and the non-recurrence of prior year government incentives;inflationary economics;
The one-time impact of Manufacturing efficiencies and purchasing savings through lean initiatives;
$11.2 million credit loss for certain accounts receivable related to the bankruptcy proceedings of a former joint venture in Asia;Increased compensation-related expenses; and
Reduction in compensation-related expenses dueDecreased costs related to lower variable employee compensation expenses,ongoing salaried headcount initiatives, purchasing savings through lean initiatives and restructuring savings.
NineSix Months Ended SeptemberJune 30, 20212022 Compared with NineSix Months Ended SeptemberJune 30, 20202021
Sales
Nine Months Ended September 30,Variance Due To:Six Months Ended June 30,Variance Due To:
20212020Change
Volume/ Mix*
Foreign ExchangeDivestitures20222021Change
Volume/ Mix*
Foreign ExchangeDeconsolidation
(dollar amounts in thousands)(dollar amounts in thousands)
Sales to external customersSales to external customersSales to external customers
North AmericaNorth America$857,153 $820,145 $37,008 $32,794 $4,214 $— North America$653,581 $586,561 $67,020 $68,396 $(1,376)$— 
EuropeEurope397,079 410,076 (12,997)9,988 26,232 (49,217)Europe257,701 298,397 (40,696)(14,121)(26,575)— 
Asia PacificAsia Pacific327,666 316,133 11,533 3,567 23,257 (15,291)Asia Pacific189,532 218,140 (28,608)(8,535)(5,060)(15,013)
South AmericaSouth America45,620 41,932 3,688 6,599 (2,911)— South America47,780 29,639 18,141 15,228 2,913 — 
Total AutomotiveTotal Automotive1,627,518 1,588,286 39,232 52,948 50,792 (64,508)Total Automotive1,148,594 1,132,737 15,857 60,968 (30,098)(15,013)
Corporate, eliminations and otherCorporate, eliminations and other101,324 90,271 11,053 8,924 2,129 — Corporate, eliminations and other70,307 69,415 892 3,456 (2,564)— 
ConsolidatedConsolidated$1,728,842 $1,678,557 $50,285 $61,872 $52,921 $(64,508)Consolidated$1,218,901 $1,202,152 $16,749 $64,424 $(32,662)$(15,013)
* Net of customer price reductionsadjustments, including recoveries
Volume and mix, net of customer price reductions,adjustments, including recoveries, was driven by vehicle production volume increases due to non-recurrencea lessening impact on customer production schedules for semi-conductor related supply issues in the
32


current year period partially offset by the impact of lengthyCOVID-19 shutdowns in China and the prior year from COVID-19, offsetUkraine conflict in part by semiconductor-related customer schedule reductions in the current year.Europe.
The impact of foreign currency exchange was primarily related to the Euro, Chinese Renminbi, Canadian DollarKorean Won and Brazilian Real.
Segment adjusted EBITDA
Nine Months Ended September 30,Variance Due To:Six Months Ended June 30,Variance Due To:
20212020ChangeVolume/ Mix*Foreign ExchangeCost (Increases)/ Decreases Divestitures20222021ChangeVolume/ Mix*Foreign ExchangeCost (Increases)/ Decreases**
(dollar amounts in thousands)(dollar amounts in thousands)
Segment adjusted EBITDASegment adjusted EBITDASegment adjusted EBITDA
North AmericaNorth America$50,806 $52,260 $(1,454)$11,683 $(6,838)$(5,800)$(499)North America$32,937 $41,989 $(9,052)$27,170 $(502)$(35,720)
EuropeEurope(40,992)(47,492)6,500 (932)(1,405)6,487 2,350 Europe(29,973)(15,880)(14,093)8,260 2,340 (24,693)
Asia PacificAsia Pacific(13,024)(6,983)(6,041)(9,633)497 (3,944)7,039 Asia Pacific(8,541)1,250 (9,791)4,019 (2,589)(11,221)
South AmericaSouth America(6,756)(11,608)4,852 4,260 4,657 (4,065)— South America(1,707)(3,334)1,627 4,529 1,121 (4,023)
Total AutomotiveTotal Automotive(9,966)(13,823)3,857 5,378 (3,089)(7,322)8,890 Total Automotive(7,284)24,025 (31,309)43,978 370 (75,657)
Corporate, eliminations and otherCorporate, eliminations and other(79)(7,516)7,437 2,182 386 4,869 — Corporate, eliminations and other(2,945)(211)(2,734)6,858 347 (9,939)
Consolidated adjusted EBITDAConsolidated adjusted EBITDA$(10,045)$(21,339)$11,294 $7,560 $(2,703)$(2,453)$8,890 Consolidated adjusted EBITDA$(10,229)$23,814 $(34,043)$50,836 $717 $(85,596)
* Net of customer price reductionsadjustments, including recoveries
** Net of deconsolidation
Volume and mix, net of customer price reductions,adjustments, including recoveries, was driven by vehicle production volume increases due to non-recurrencea lessening impact on vehicle manufacturers of lengthy shutdowns in the prior year period from COVID-19,semi-conductor related supply issues partially offset in part by the impact of semiconductor-related customer schedule reductionsCOVID-19 shutdowns in China and the current year.Ukraine conflict in Europe.
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The impact of foreign currency exchange was driven byprimarily related to the Canadian Dollar, Mexican Peso, Euro, Polish Zloty, Czech Koruna,Chinese Renminbi, Korean Won and Brazilian Real, and Chinese Renminbi.Real.
The Cost (Increases) / Decreases category above includes:
The Commodity cost and inflationary economics;
one-time impact ofManufacturing efficiencies and purchasing savings through lean initiatives;
$11.2 million credit loss for certain accounts receivable related to the bankruptcy proceedings of a former joint venture in Asia;Increased compensation-related expenses; and
Commodity cost, wage inflation increases and the non-recurrence of prior year government incentives; and
Reduction in compensation-related expenses, dueDecreased costs related to ongoing salaried headcount initiatives purchasing savings through lean initiatives, lower variable employee compensation expenses and restructuring savings; and
Net manufacturing efficiencies of $28 million, primarily driven by our North America, Asia Pacific and Europe segments.savings.
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 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.expenditures and improving working capital. 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 and 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 continued impact of COVID-19, and other factors.
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Our Term Loan Facility matures on November 2, 2023. The Company has retained Goldman Sachs & Co. LLC as its financial advisor to analyze, evaluate and help arrange a refinancing of the Term Loan Facility and possibly certain other debt instruments. To the extent the Company is not able to refinance its Term Loan Facility prior to the issuance of the financial statements for the year ended December 31, 2022, our independent auditors may issue an audit opinion including an explanatory paragraph that indicates there is substantial doubt about our ability to continue as a going concern. The inclusion of such an explanatory paragraph in the report of our independent auditors would breach a covenant under our Term Loan Facility which, unless cured, would constitute an event of default thereunder. Such an event of default would cause a cross-default or cross-acceleration of other indebtedness. In such a case, the Company would not expect that it would have sufficient liquidity to repay all of its outstanding indebtedness at such time. While there can be no assurance that the Company will be able to refinance its Term Loan Facility on acceptable terms or at all prior to the issuance of the financial statements for the year ended December 31, 2022, the Company believes its actions to improve financial performance, to maintain liquidity and current discussions with certain investors will enable the Company to refinance its Term Loan Facility.
Cash Flows
Operating Activities. Net cash used in operations was $111.5$0.2 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared to net cash used in operations of $26.5$60.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. The net change was primarily due to working capital outflows and reducedthe receipt of $51.4 million in cash earnings.payments from the United States Internal Revenue Service for tax refunds related to net operating loss carrybacks.
Investing Activities. Net cash used inprovided by investing activities was $72.8$8.4 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared to net cash used in investing activities of $89.5$52.6 million for the ninesix months ended SeptemberJune 30, 2020.2021. The larger outflowchange was primarily related to proceeds of $50.0 million related to the sale-leaseback of a certain European facility which were received in the ninesix months ended SeptemberJune 30, 2020 was primarily due to cash divested. In response to the COVID-19 pandemic and subsequent supply chain issues, significant decreases in capital expenditures occurred throughout 2020 and in the nine months ended September 30, 2021.2022. We expect lower expenditures willto continue in 2021, primarily as part of initiatives to consistently reduce overall capital spending. Wespending and anticipate that we will spend approximately $100$85 - $95 million on capital expenditures in 2021.2022.
Financing Activities. Net cash used in financing activities totaled $4.7$4.1 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared to net cash provided by financing activities of $225.1$11.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. The outflow in 20212022 primarily related to principal payments on debt, while the inflow in 20202021 was primarily due to proceeds from issuance of our Senior Secured Notes.an increase in short-term debt.
Share Repurchase Program
In June 2018, our Board of Directors approved a 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
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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 SeptemberJune 30, 2021,2022, 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 ninesix months ended SeptemberJune 30, 20212022 or 20202021.
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
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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;
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.
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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 September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
(dollar amounts in thousands)(dollar amounts in thousands)
Net (loss) income attributable to Cooper-Standard Holdings Inc.$(123,173)$4,381 $(220,648)$(240,426)
Net loss attributable to Cooper-Standard Holdings Inc.Net loss attributable to Cooper-Standard Holdings Inc.$(33,247)$(63,611)$(94,607)$(97,475)
Income tax expense (benefit)Income tax expense (benefit)32,121 (2,386)15,598 (55,485)Income tax expense (benefit)2,005 (17,459)2,657 (16,523)
Interest expense, net of interest incomeInterest expense, net of interest income18,243 17,985 54,152 40,993 Interest expense, net of interest income18,454 18,125 36,631 35,909 
Depreciation and amortizationDepreciation and amortization36,049 36,504 105,021 116,727 Depreciation and amortization31,412 35,444 63,545 68,972 
EBITDAEBITDA$(36,760)$56,484 $(45,877)$(138,191)EBITDA$18,624 $(27,501)$8,226 $(9,117)
Restructuring chargesRestructuring charges1,573 6,186 34,251 23,236 Restructuring charges3,482 11,631 11,313 32,678 
Impairment charges (1)
1,006 100 1,847 87,417 
Gain on sale of business, net (2)
— (2,314)(696)(2,314)
Lease termination costs (3)
322 83 430 684 
Deconsolidation of joint venture (1)
Deconsolidation of joint venture (1)
— — 2,257 — 
Impairment charges (2)
Impairment charges (2)
841 458 841 
Loss (gain) on sale of business, net (3)
Loss (gain) on sale of business, net (3)
— 195 — (696)
Gain on sale of fixed assets, net (4)
Gain on sale of fixed assets, net (4)
(33,391)— (33,391)— 
Lease termination costs (5)
Lease termination costs (5)
— 108 — 108 
Project costs (4)
— — — 4,234 
Divested noncontrolling interest debt extinguishment— 3,595 — 3,595 
Indirect tax adjustments (6)
Indirect tax adjustments (6)
908 — 908 — 
Adjusted EBITDAAdjusted EBITDA$(33,859)$64,134 $(10,045)$(21,339)Adjusted EBITDA$(10,374)$(14,726)$(10,229)$23,814 
(1)Loss attributable to deconsolidation of a joint venture in the Asia Pacific region, which required adjustment to fair value.
(2)Non-cash impairment charges in 2022 and 2021 related to fixed assets. Non-cash impairment chargesidle assets in 2020 included impairment of assets held for sale and other impairment charges, net of portion attributable to our noncontrolling interests.Europe.
(2)(3)During 2021, we recorded subsequent adjustments to the net gain on sale of business, which related to the 2020 divestiture of our European rubber fluid transfer and specialty sealing businesses.businesses, as well as its Indian operations.
(3)(4)In the first quarter of 2022, the Company signed a sale-leaseback agreement on one of its European facilities, and a gain was recognized in the second quarter of 2022.
(5)Lease termination costs no longer recorded as restructuring charges in accordance with ASC 842.
(4)(6)Project costs recorded in selling, administration and engineering expense related to divestitures in 2020.Impact of prior period indirect tax adjustments.





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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 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.
Critical Accounting Estimates
There have been no significant changes in our critical accounting estimates during the ninesix months ended SeptemberJune 30, 2021.2022.
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: Volatility or decline of the Company’s stock price, or absence of stock price appreciation; impacts, including commodity cost increases and disruptions related to the war in Ukraine and the current COVID-related lockdowns in China; our ability to offset the adverse impact of higher commodity and other costs through negotiations with our customers; the impact, and expected continued impact, of the 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 20202021 Annual Report.
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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 SeptemberJune 30, 20212022 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds
(c) Purchases of Equity Securities By the Issuer and Affiliated Purchasers
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 SeptemberJune 30, 2021,2022, we had approximately $98.7 million of repurchase authorization remaining under our 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 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 SeptemberJune 30, 20212022 is shown below:
Period
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
July 1, 2021 through July 31, 2021597 $29.00 — $98.7 
August 1, 2021 through August 31, 2021556 25.78 — 98.7 
September 1, 2021 through September 30, 202161 22.27 — 98.7 
Total1,214 — 
Period
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
April 1, 2022 through April 30, 2022706 $6.48 — $98.7 
May 1, 2022 through May 31, 2022833 5.18 — 98.7 
June 1, 2022 through June 30, 2022471 5.60 — 98.7 
Total2,010 — 
(1)Represents shares repurchased by the Company to satisfy employee tax withholding requirements due upon the vesting of restricted stock awards.
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Item 6.        Exhibits
Exhibit
No.
 Description of Exhibit
10.1*†
10.2*†
31.1* 
31.2* 
32** 
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.
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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.    
November 4, 2021August 5, 2022/S/ JONATHAN P. BANAS
DateJonathan P. Banas
Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
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