CPS - Earnings call transcript Q4 2019 | Cooper-Standard Holdings Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator instructions] As a reminder, this conference call is being recorded, and the webcast will be available for replay later today.

I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations.

Roger Hendriksen

Thanks, Latif, and good morning, everyone. We appreciate your continued interest in Cooper-Standard and we thank you for taking the time to participate in our call today. Jon leadership call will Edwards, this Chief Officer; our you speaking Chairman of President Executive the Vice on morning and members team Financial be who with and and The Chief Executive Officer. Banas, are Jeff

I begin, you remind statements. to contains that need presentation forward-looking we Before this

involve current While currently reasonable, be believes on and risks uncertainties. assumptions factual do and they are made and certain to these information based plans management statements that

to filings refer X statements, company's Commission. we Securities ask presentation more also of and For on and you this information forward-looking statements that included with Exchange Slide to the in periodic the

This presentation the directly non-GAAP most comparable the also GAAP measures presentation. of in contains to financial Reconciliations are measures appendix their measures. financial to included non-GAAP the

I'll of the Edwards. way, those Jeff to out over With formalities call turn the

Jeff Edwards

morning, in some putting full Thanks, vehicles in impacting approximately X% I'll Roger, region. context year every world's XXXX, quarter challenging. negatively declined and by of the results. remain top fourth around good morning begin markets Production and major this by Conditions globally everyone. our light auto

other North not market, – decline top in was year UAW the was General The fourth down was part at X% Motors. OEMs. vehicle all decline more light X% due production for also our In the down by most and The quarter. to due the in than production part was nearly America, in the of work stoppage for

down down X% by vehicle the Europe estimated than of our Chinese for light some disproportionately production by customers than as for were production more the and by top industry overall China, In levels year, down versus platforms year. was market our for Production in more X% was IHS. the and

weaker the increased environment, negotiations of challenging. remain price concession context for continue and commercial the demands In production

$XX automotive the in production year, a creating costs throughout industries, lower commodity and market headwind. despite addition, million remain high other the In

we the challenging our discontinued believe Finally, China XX on customer the strike past that impact new to a the adding million XX We quarter in year. have the results that the the negative protracted impacts, UAW industry. are normal conditions for the one-time that normal relationship spoke adding to about months in auto – in had persisted market for to $XX the the last market combined new

an to providing focused on growth, In world-class to ever environment slow negative invested and have innovation we customers improve we be of and and flow to service improving cash on returns are. the to capital our business efficiency, quality, driving more before than and

best headwinds on tremendous a record year the continuous company practices, program operating volume we and through while Further, to launches, we entire $XX achievement results XX% new drive is scorecard, customers' our XXX were innovation, the which green our business improvement with launch the efficiency a able for Despite executing in the for year. record ended a million group.

new including $XXX the awarded quality, In and million awards, the continue net innovation quarter for totaled in an and total business the million. to demand for quarter $XXX annualized drive fourth Our customer bringing significant year world-class new products million innovation received we the replacement service fourth estimated and in business alone, for Contracts to million and year. awards. the business, our $XXX $XXX

our with future for new overhead We growth. us continuing reduce profitable expect these awards will and position combined help to cost effort

XXXX plant XX to down the and of senior reduced to the of Turning to we initiatives. closure facilities, cost management page executive X, most we In headcount level streamlined level structure our global completed SGA&E significant expense. address from reduction highlight some

for drive also in steel in the Mexico China materials two integration in We will fabrication for that beyond. XXXX completed vertical mixing initiatives; savings one significant one and tube and

materials and as and has chain a X% chain over spend on transform our supply launched significant supply commodities initiative will years. much the few huge next by help we that as direct And targeted

we to those we manage of So, we and can control, that business that aspects focus our continuing into are successfully continue XXXX.

of Now let Jon the and me quarter turn the details to financial the call over year. the to discuss

Jon Banas

good provide our some of outlook I'll I'll some our In of an Thanks, context everyone. detail XXXX. the Then, that full items next put morning, and our financial few and quarterly around and key for Jeff, the slides, on earnings. results, provide some year additional overview impacted

XXXX of X, prior to the results fourth slide summary for a show year quarter and year. our we the with On full comparisons

into the financial reported presentation results adjustments that previously this note press periods. has and to in getting details, the Before include release a provided quick the

QX As Pacific the in Asia region. customers timing certain we of pricing of recording to Form identified with XX-Q, and in the results our disclosed we errors related matters

During QX, to would was previously results, determined amounts material and it XXXX that be to that adjust periods. we these therefore, concluded reported necessary

Fourth in on included be of Further XX.X% quarter million, down were information sales day the Form fourth of next in the quarter revision impact versus our so. XXXX. will will be this XXXX the or which $XXX filed XX-K,

recent The year-over-year sale mix reductions. in by our the and price These partially offset and were North and volume stoppage, business improved unfavorable America and in driven Asia, UAW and volume of by customer change Europe, sales work acquisitions. mix was the increased AVS foreign from exchange

compared $XX.X the million a of profit million million $XXX year was the Gross quarter fourth $XX X.X% in ago. compared for period Adjusted EBITDA in of to $XX.X sales the to or XXXX. million was same fourth quarter

acquisitions the offset impact key and decline our unfavorable These year. mix The and other EBITDA the operating by adjustments, general all savings in and material inflation were implemented drivers during adjusted improved partially the efficiency higher in divestitures. of cost only of customer volume price initiatives raw costs, regions, net most of were significant and

work in stoppage the to quarter quarter, relationship in were spoke results. related negative we the about some and full discontinued extended year fourth that factors addition, UAW write-offs China in In receivable U.S. our customer and the last

to a the bulk and quarter. million included the expense, This On a $XX policy impairments non-cash to in related incurred of U.S. insurance pension plan. U.S. settlement a GAAP of net purchase charges annuity derisk basis, our we restructuring loss pension

million Excluding these for and $X.XX adjusted was diluted quarter or $XX per net fourth share. other items, loss the

full year, the down XX% billion $X.X were versus For of XXXX. sales

volume main raw decline Adjusted sale in for in drivers volume of efficiencies the and savings exchange. at improved the regions The business, the other inflation higher and AVS unfavorable by weaker key were XXXX. costs, million and foreign $XXX.X general offset compared three initiatives. mix year drivers unfavorable decline came were operating of our and cost price and to of the The EBITDA million, mix, our largest $XXX.X partially adjustments, lean customer material and in

income net of From per loss the included of share. gain of or AVS our charges. incurred at a sale the $X.XX share, for diluted net was of year items, year the This Full other business, sales or asset the million per and which million of the XXXX. special sales. the and or on year, X.X% these impact CapEx we settlement a diluted perspective, of in $XX.X X% net we $XXX.X for Adjusted $XXX.X pension to compared ended -- million of or CapEx $X.X $X.XX million favorably impairments

EBITDA quantify year-over-year charts for changes Moving X. the the slide adjusted our of drivers X and sales the in on to fourth quarter. The significant slide

largest price certain reduced cancellation impact of or expected to typical key of and in by and America net out year-over-year. customer of volume announced programs and the replacement million largely slower $XX sales, ramp-up programs. sales North The run For normal reductions was previously mix due volume than mix

reduced and of out The decline. acquisitions by UAW sales as accounted The strike, item while which impact fluctuations revenue break of the approximately million. combined negative one-off million a for divestitures we a $XX $XX currency $XX million foreign was

price adjusted than million in our unfavorable savings the offset manufacturing by the items savings the $XX and For of typical in and volume $XX as the mix for drove as write-off and of million to more ongoing well cost quarter. related and efficiency of former $XX the UAW EBITDA, customer receivables China. were These of work lean reductions, impact efforts operational in million from one-off stoppage

AVS faced of negative business. headwinds primarily also commodity net the from million the acquisitions million and and $X sale divestitures, a We of $X

slide Moving to XX.

by from were and foreign mix primarily strike. UAW customer the the the of sales million of $XX year, RMB unfavorable and million Euro full the $XXX price, $XXX unfavorable the For sale from exchange, AVS million impacted $XX million from and volume business.

$XXX material positive costs million of in the the million million one-off net through for volume cost in offset but million $X the operating acquisitions year. $XX from side, impact from benefited million acquisitions and these by divestitures. mix, sales added savings from more items higher million negative mentioned, efficiency, $XX previously $XXX the EBITDA and than Full On in were year improved weaker adjusted $XX and savings

sorry, Moving to X, XX. slide

ago. million the million end on increased quarter, improvement of free year. And our third this strong remained $XX the from despite cash sheet quarter ended -- $XX XX of million fourth balance Our higher up credit actually and XXXX the a than $XXX lower year. at during than of flow in last We and more with more hand, more over an to million year $XXX earnings than of the QX of XXX% than profile cash year

and going forward. fully We accomplished management, this XXXX which intense intend working and laser through on capital capital focus continue an we spending positive to outcome in

times equates and adjusted just $XXX at trailing million ratio Our X.X net This a total was debt year-end months leverage to debt million. $XXX EBITDA. was net of XX

liability to de-risk sheet, proactively of liquidity on million industry during of our current environment. of facility, credit And finally year-end. company, on the $XXX advantage this balance XX% availability ample the of take given pension We of we're and the hand on the provides conditions at quarter. the the our side favorable cash capital had total market revolving believe and we funding nearly needs U.S. able for plan With long-term

bulk relatively long-term This the overall which remains significantly to a funded XX% the incremental obligation $XX risk pension was that cash plan going contributions forward. this annuity great we no were million. the on a execute liabilities reduced assets, and impact result and nearly our benefit reduces We by able Using projected ratio funded. policy U.S. pension of with purchased our no of plan,

$XX affecting quarter actions a the first and ongoing are quarantine XXXX to sales in the AVS sale range the billion coronavirus in currently have as Europe This initial the XXXX. and range $X.XX formed vehicle customer some billion basis to to sales Moving light is the slide light for outbreak. Other of Asia the top business full in production overhang in related $X.XX assumptions guidance due forecast. key impacted We our and to reduction expect million continued remaining one-quarter XX. the We year plant for of adjustments. production the in well weakness our of by provide price closures for from line our and vehicle as of assumptions in

including approximately million, imply EBITDA estimated our Adjusted an quarter adjusted $XX the is $XXX for first expected of weaker as This a in be production the million to $XXX of the to the XX an the coronavirus. EBITDA than result China in margin XXXX due lower sales year at impact points range would midpoint basis and of in to ranges. of million

savings. operating incremental XXXX. of our improving points teams expected Combined, in again margin recent efficiency from XXX activities. represent successful will and expect restructuring We over basis also savings we be anticipate lean these And improvement

expect from continuing also we However, factors. market-driven headwinds

does on tariff outlook points purposes, any for expect commodity further see basis this an would our actions. material adverse not cost prices, raw pressure. in Given to And XX we planning anticipate

Much a the XX on XX points only we a adjusted is Note adjustments by comp, outbreak of year. approximate of basis margin of competitive our inflation driven XXX rent talented the whatever approximately The the energy, seeing is for all impact General in to wages price reward present markets. on expected items, well of of impact for currently we basis China impact positive net in negative customer headwind. to And and year-over-year. our will members to is EBITDA quarter to in and and EBITDA, as of are provide that compensation this other labor expected order utilities finally, first estimate retain need in of points team this the is coronavirus as margin points. tightening factoring have salaries, basis the

have outbreak to We believe of an normal are is market while drivers, creating impact the conservative a effect volatility the to automotive incorporated these We global coronavirus of relative current potential The could uncertainty. economy disrupt China that direct the that global in and and in market best into amount of have our ranges. unusual these impacts create forecasts the estimates spillover further general. believe the we guidance

estimate impossible is it to potential at impacts those this However, time.

continue we the So carefully. monitor to situation

and year significant million from XXXX million in Cash $XX last amortization. the and of million, efforts to lower and $XXX planned streamline to for million we be the as is CapEx be to between than our continue expected $XX to our right-size range $XXX depreciation million, expected and restructuring the business. $XXX down is

for million We expect credits range of and jurisdictions, in the taxes rates to cash given the opportunities overall, countries. million the various year varying tax mix prevailing our geographic the be planned $XX in the certain tax of in to $XX to utilize earnings

Lastly, free positive discipline optimizing XXXX flow industry in emphasis working it of will be area continued normal targets guidance the provided, on be focus meeting as new improving to cash despite the for intense With while XXXX CapEx capital, flow cash is. conditions. in we us on an always and expect we challenging

back over turn the me Jeff. let call Now, to

Jeff Edwards

Okay. Thanks Jon.

our believe for are innovation, to stakeholders. thoughts initiatives. will cost share for reduction Before a the relating few to also strategic sustained we some imperatives share key I delivering concluding morning, our I value that updates critical and our diversification, regarding discussion this want

So, XX. slide to let's move

of the suppliers, we relation live Board recognize stakeholders; set team and the we all, communities, work. especially environment when to our Our including and an investors, impacted have are and responsibilities not of significant balance key a them and in our to with global leadership diverse Directors volatility. our It's our employees, simple markets where embrace customers, in

maximization in imperatives diversification aligned six this entered entire help organization to near strategic include imperatives cash in believe innovation, we drive and strong Year, and stakeholders both and These for that all and slides. world-class this the culture, I the our few and will improved maintain of our We improving areas term, increase around at As of results returns term. value we've a industry growth, New longer we will us global the profitable next to to sheet, to capital, least stable morning, imperatives in time try consolidation. outlook invested prudent go into balance have on some of longer relate XXXX don't but these the each

others that as people the It's talented and is foundation ethics. which It's the turning as serves includes and all for So culture organization an to impossible attract slide impeccable without run corporate to proud culture and part the XX, naturally imperative also integrity world-class retain impossible receiving that of that recognition and of right a foundation. corporate We're its to we to they way people talented a the the without several evolved want we years of. the are result. progressed as be has proud past culture over our are successfully

in process, are we on companies, public Institute Ethisphere pleased included many one and Most to as very the comparison been by morning, addition World's be Companies. recognized this of Responsible This Ethical our we this believe Newsweek of indication to Based analysis, their having track. extensive while work weeks to in terms World's of ESG that on in review we're Most Companies Magazine's long-term achieving right is ago, few List do we goals, recognition a the an of have

website published progress and our by our on CSR You XXXX more as XXXX our report be publishing initiatives spring. our about report can our this out we and later activities checking learn for ESG will

next slide profitable imperatives few strategic diversification, and XX, growth. slides relate to the Turning of the to innovation,

Our many and into that innovation business enhance customer production. continued on beginning value has new to to products roll awards that are now focus led

you we had record As for launches. XXXX, know year new in a program

We continue activity launch XXXX. huge with in

static Fortrex products Importantly, two program next planned are of major launches this for related XXX sealing launches, to innovation our includes our the the XX products.

improved believe products Our this evident traditional versus will sales are ramp up. We our innovation our driving more margins innovation become as products.

we're this shown Some vehicle on products of slide. year new the on this launching exciting platforms are

names XX, we images our platform. for The top Slide XXXX. and on planned a lead each list the reflect programs of vehicle vehicle Turning provide vehicle to XX

of over a and weighting continued product programs, increase with opportunity mix heavy strong sales mix our trucks This maintains on top the content vehicle which per We are SUVs. provides proud us strong of maximum time. to and

these XX% Combined planned approximately programs of revenue. represent stock XXXX our

high has F-Series. XXXX vehicle. of as again than Our production averages the on and higher our per CPV the $XXX. truck, volumes Ford planned AVS year once Even slightly content after Explorer sale even This given well our F-Series per content top all-new platform is as strong business the the vehicle the a F-Series its pickup nearly average

On sales increase programs, increase top $XXX we these of world-class approximately these CPV top as to believe XX but total there's basis have a our vehicle still most and innovation, chart to opportunity all on our product most expected content this our We that content focus in help will move is indicates three categories cases. of per be on us forward. year. weighted in across and XX The our service we customer platforms volume value content

Turning to XX. slide

build within automotive business the our progress advanced material science and expands We expertise make continue beyond to to opportunities leverages our and complementary that market manufacturing group technology a industry. our

to terms In earliest our licensing is over small, are this of we licensee. These time. customized business with and materials volumes expand there still sales, currently shipping material are our team to but potential

We track our the remain development and with other licensees. in and phase customers technology material on

Fortrex chemistry interest As platform the new surrounding creating material evolve, is the opportunities. continues to generating science it additional and

result, a in equipment and tooling year this speed up additional investing the to development we As be process. will and prototyping

to XXXX. we development In joint six new customers. development, business terms signed we agreements a of interest number of in potential see And continue from new

additional in to on primarily technology will expanding XXXX by sign and We existing agreements applications. continue

advanced into lineup our the On Fortrex-based the converted group, look to introduce converted XXXX. product product we materials technology in side of will material

this expand target additional We the and business differentiate advantage. to create competitive customers, and our expect markets further applications with

base. group advanced to model and we has light potential a income As licensing asset fees continue to we ahead, the sales, material look royalty high-volume the that drive business believe relatively technology with

deliver on overall. through company expect in returns growth improving invested to the capital diversify we As we ATG,

to want plans our completed into and morning, in in and organization remarks settling improved deliver this prepared structure and the call. I value the to an our is We've our near-term focus leadership opportunities return the discussed last the slide action rhythm. to to we as To to Moving effective our conference operating conclude XX. global transition team

and announced clearly plans XX now which our were it closure complete for significant to are in the more two execute our in near-term team facilities with where position that manufacturing We makes defined previously we identified recently clearly improved streamlining -- operations plans is objectives the Those closure including a include our strong largely and facilities sense of goals XXXX. with operating efficiency. and

facility the in expected $XX will represent savings year projects cost but annualized two to in million restructuring closures payback require The two expense, a approximately this years. related the approximately

component process our profit to improvement key Another we To strategic operations. is fix review last it end, is initiated plan of this quarter and exit or continuing. unprofitable a

We are details operations for alternatives are appropriate. and as exploring of a provide further will updates number

these Of we on our laser driving initiatives course, will are while mega underway, efficiencies. continue focus operating

optimization chain With our to to achieve usual to cost of scale related reduction cost new is structure, we supply economies SJ and further and and initiatives. -- expense. SGA&E manufacturing our global reductions reductions in addition This expect lean in

continuing Based year. Finally, X:X less and on focus investments amortization flow free the on be by in we earlier now this than optimizing cash metrics. further gave a working capital ratio expect capital depreciation to CapEx we're our to reducing you improving guidance Jon

continue to that and innovative total down, can While spending be scrap we improve going and invest reduce products forward. projects efficiency help will in

-- to efforts maximize key and flow. inventory up payables further in made cash working in XXXX our In free XXXX ramping and progress to terms we're extend capital, of reduce good we even

We to thank to that in the continuing customers strategic around closing, continued this to we core morning. values imperatives commitment of for want certainly our their to employees confidence to the our we So discussed conditions. world into despite value support. market the our remain for all delivering challenging want we've committed and trust, thank stakeholders, their And our

we This concludes into so comments, our can the prepared move Q&A session.

Operator

question first comes Clare from Our Partners. Instructions] of Capital ROTH Justin [Operator

Your line is open.

Justin Clare

Hey guys, my thanks questions. taking for

Jeff Edwards

Justin. morning, Good

Justin Clare

more off, as to could additional some looks about half. you like And you trending through cost the be It move first So here. toward through heavily XXXX. wondering see back initiatives if you work likely I how you're speak continuing was launches to weighted are profitability

and here? revenues margins higher moving should So we through the anticipate year

Jeff Edwards

is Jeff. this Justin, Yes

as will chain allow next the few ways if the that months or the important I the of think I we supply material to the the that overall couple is about we've going the improve over business, think initiative to last suppressed talked of clearly over a profitability lane talked about, here XX some have to economic claw so. margins years continue us to back inflation of you

thing. first So that's the

second of thing talk that about when And net the you we're confident to be quarter-after-quarter us of that business by exceed to all innovation the company The booking that's around about of the being including business we the allow we or new pricing. orders. booked cost amount continue think very the that points for capital company, price of is the those certainly wouldn't

we that if and you about plants our of as the effectiveness of organization improve we've the continue then will contribute go Cooper-Standard finally, our in all of to that the restructuring And done continues system and to and total think forward. those operating efficiency things overall

What for expect execution create customers deliver Cooper-Standard of be for to continue a to is world-class and supplier their we choice. demand our to

will address not weight on We of you That's that have provide going pricing. we some if issue. consolidation soon. mentioned continue the will It anytime earlier away industry type to to

the need However, addressed, be this agree suppliers segment need would they I'm that customers our to health in long-term soon. sure addressed of to be the

that's So question. way the I'd the answer

Jon Banas

cadence, I quarter coronavirus each will for QX the build you sequential profitability. on Justin, quarterly you us add see kind a launches are clearly mentioned I if the earlier. forward about most throughout you that the call And improvement here. of so given a Jon, in right, it's depressed situation going talk the just should year, And just of in When profitability, the the points could be terms few more

Justin Clare

all this affecting China is or expected you Is other it either EBITDA general Europe more to Okay. than or that Thank in North here America, you. affecting be inflation factor your Or XXXX. are Can more And places? seeing key inflation you then across a you indicated this about regions? margins talk specifically? is where

Jon Banas

world all When Justin, It really of around us. again. rent, lot pretty across the is year-over-year in in John think a about normal step-ups are bills, for regions significant in it's you utility regions. these

then I my the as in factors is the mentioned portion significant like inflation compensation-related And of a remarks, well. prepared

of about think exact X% X% average about you when coupled then the of makes about up portion a a XXX significant related So on wage points magnitude -- inflation we'll to inflation in the the know $XX all of global In basis margin don't of round million described. around total across incentive I that see the numbers compensation pressure. with that those buckets matters I

Justin Clare

Okay, up situation obviously, still your what plants got in it. here. your you supply your China, status seeing right are production? are? evolving And ramped to now you of that then affecting the you China? of manufacturing then Are is can current And outside chain any But with is the fully disruption share

Jeff Edwards

as plants Justin, our Yeah, to normal think relates this I big our certainly it near picture is nowhere a back plants. to we're of and view, Jeff. From point customers'

morning announcement a start-up an couple In XXth. until of fact, saw I just delayed this of March that customers

everyone. to supply this cut So We're job a region certain you mentioned doing parts country have terms to regions Chinese of great affecting fortunate just a that team us an of being in that chain certain address management the the situation. is who off local very from of for in in things place is is incredible some very in just fluid

doing support are where to a customers can job XX/X is businesses a get our whatever team we our point requiring our us working to marvelous to so And do.

good. so far so And

frankly new delta soon got over it to is period issue China. I months, do couple the at Frankly, of think The normal in be of a to probably we going least how right. return the next

of stage if date. this April a ask So towards end guess my be you the give at you to me would

Justin Clare

Thanks Okay. guys.

Jon Banas

Thanks, Justin.

Jeff Edwards

Thanks, Justin.

Operator

Thank you.

Our go Benchmark. comes next Please Ward ahead. from Michael question of

Michael Ward

following on up China. last the question about Just

current Jon think, mentioned quarter lost? your first being $XX I in the revenue million assumption of that you is So

Jon Banas

Mike Yeah, the we're QX. figure again frames But right seeing now. just that's ballpark

We that. haven't looked beyond

Michael Ward

said you ballpark. of is some there that year just and roughly causing the on Can What points And that from talk perspective was of that's Right. so for from Jeff your in you of million big the the profitability top so basis it about being No things EBITDA, then impact fine. that about on XX $XX on an long? impact side? maybe for that,

Jon Banas

first Mike, we're can not the I'll we're his looked still fully paying the then and wages. overall, workers you expert add at their Jeff producing, even though impact full-time When go insights.

a picture. even going we revenue to the the And the be that's drag big don't So ongoing overall. cost though, base really to have top line support that's

For the workers comes us and certainly, safety health of first.

spending and healthy come work money day. keep workers safe, we they to we're So, into need any as every

So between outsized of those million you revenue. $XX impact two things that's that profit on why see an

Michael Ward

Okay.

Jeff Edwards

this you And I Mike expect from incredible as my would constraints ethic side doing is is focused of continued of what it, situation. see work on everything that possible the given

there continue things some workforce proud that to like extremely a you resolve things certainly we exists can control you and the be things can't. within that of. So entire But many there's some

need And quickly customers safety health then Jon first going as us is we And it. us to is and for quarter how just So tough. do the support really they to really, our as do the of the employees. focus said, as primary our second, be

any the probably stage, will really before, mentioned aren't this I best part put extend the into As numbers we to trying situation is second early that. in a but of around guess that's quarter my at

sort of based asked that's So me. opinion you a what on personal

Michael Ward

there – from this recent business million is the you recent Appreciate $XXX When at new relates innovations. then business Right. that. from innovations, anything these it new and when look another of million $XXX to

Some of correct? that has already started to XXXX kick-in XXXX and in

Jon Banas

changes, able can innovative. we're legacy where These replace Mike. technology with running new existing Yeah, to be correct. That's or

Michael Ward

sealing. Fortrex On

on just sealing margins levels? the something or are Is had with Now learning historical one start-ups curve? think Is in scale XXXX. you there that taking programs like we of economies there need those new below a I two Fortrex

– sounds circumstances pressuring like in it Or you something lot the a Board? programs more XXXX. the margin speak that one-off it? all your control to margins that's is up as like a have Is of starting well? Now, there of two it these kind beyond side with Is curve on of so learning

Jeff Edwards

Jeff. is this Mike,

So of in a you there. asked lot questions

let those so And divide up. me try to

would is to So any with first like, there there go learning all Fortrex selling why it of at with rather in a we launching sort be one all, curve forward of a customers at time than once. chose associated factory. to That's

and I learning and are are continue learn margins improving improve, expect as business to that we we and expand. for will We do

raw over I we Fortrex to pricing type important of the the always that, note for the think improvement receive had in outgoing material, we it's product that also chemistry if did will the expected. you

So it's so good view, manufacturing as so the from be margin good. and that to is expansion point far of reduce can responsibility it cost that our to as continue so a

are really the hard. are working pleased extremely We teams

As us. help publicized you launch benefit Explorer, to all waters sale. certainly smoother has into well challenges But as it hopefully, given of the that's the it we much didn't last not And Ford us the year. with didn't anyone first know, with head reap can been behind most of it help XXXX we

Michael Ward

XX where agreements. assume license or some lastly like Is just on advanced game. the And a looks those statement? new this the those are chart appliances fair different on programs – that you industries page have that It of Okay. are I technology. to

Jeff Edwards

business business intended to with that Cooper what Yeah, which Mike. made business with that with Lauren – ISG appliance the of historically the ISG we side represent. the our combining is familiar that The you're that's acquisition with and

million last generating the Lauren business, revenue the So Manufacturing under Cooper today year. combine ISG you the the when $XXX is with we for acquired business, that of that's that business just

Michael Ward

starting meaningful at group. type confident can that to in start on to for some point, Okay. And come non-automotive That's revenue Or in it, technology these of see -- you feel feel all. programs some the still into advanced leading XXXX? we

Jeff Edwards

With -- I two. the guess, let's separate

Michael Ward

Yeah.

Jeff Edwards

the technology to ISG is, that within well. business So you advanced have group under compounded that growth rate The of annual forward going continues XX%. perform just

not, I a think said, that's launched we'd have What details AMS external bit each to ATG, which around view. business. referring Jon any and going That's years to a longer-term our The as disclosing reporting as be, to be little business as few client, If of it have to still of pricing we well. I you're out. relates

to -- forward the into we'll end that we has But XXXX, So, be. about. talked a the Mike, about out to as said think disclosing, you chance before we more before business of you be timeframe you're in of type it, profitability of going able to talk publicly, going you towards go terms XXXX detail that what probably I to about, be were reporting the the to think the of

more and license of over we the that to sign XXXX. type business, in time expect of we end agreements heels be And do of XXXX, let's signed, XXXX that we But, the more launching, to the between, these in more on of expect through will say, we've XXXX.

period you're think you to average on it the of probably and they actually the then, that develop about, then, I mean a, the a And production. get earnings. you be going pricing. product into period where and if labs need. get time to it, And revenue XX-month XX-month So generating as into develop time, and get on that's it settle

So hopefully will... that

Michael Ward

Right, some agreements should we're but XX of old? turn some those -- getting to of So almost into... closer are license starting we months those to

Jon Banas

one those we Yeah. In clear. me real pricing, Yeah, on we -- just be and starting any I yet. of haven't that them let XXXX in mean still of bucket. to that every established are haven't --

So process. understand the we in helps that are where you hopefully

for even still So price give it's to you earnings, in when revenue an impossible indication the negotiations. we're of me and

Michael Ward

would that All still hasn't pressing the right. forward you're anything of back, a suggests it? step side with be it -- been there But, development still they're that,

Jon Banas

I remarks additional because demand there's just in we there such that address. investing in my process, up that speed and equipment we're the need to Yeah. to mentioned a tooling help, development actually prepared

And I you imagine if can capital, we're assure real. spending can so, you, it's

Michael Ward

Sounds Thank good. you.

Okay. Thanks very much.

Jon Banas

Michael. Thanks,

Operator

Thank Glenn Chin of Our you. question [Operator of comes Instructions] from Buckingham Research. the next line

line open. Your is

Glenn Chin

Great. morning, my gentlemen. for Thanks taking Good question.

several the factors XXXX. impacted So there that results, your half in of are back

strike We within cetera. the have pricing industry, the slow Explorer dynamics launch, et

XXXX your one in factors in But Should the non-recurrence a be I them walk. XXXX? to expect those of guidance see reflected don't tailwind,

Jon Banas

a the tailwind -- to about It's good it's Jon. you there be Glenn, when question. the GM Hey, will some Yeah. But strike. think a extent

the year. of we're built where of below the last seeing just QX, the below levels we little Jeff model where still in still being that bit certainly And planned talked to as about, that it's anticipated. However, prior Explorer, a levels had was you

significant Explorer as on figuring three still if So, the there. it be would won't shifts as they're a tailwind all through efficiencies you of there imagine out and working

and We're guidance will, are with you normal is then the for kind just what And now, the away. pricing other on us right dealing on the eat GM kind going headwinds walk, you good don't what if of the into Explorer. news we've that on for strike got levels in see of plan

Glenn Chin

to But Okay. And cash flow, it's then, implied so expected income. on, net this positive free presumably, be lower year.

mean, it's that -- implies -- the less sales. slightly X% offered slightly going I on first you than So, CapEx, guidance

So question And is is, maintenance that that my is level? sustainable?

Jon Banas

that's just it's No, level. -- not not maintenance strictly

of program-specific that related. is fact, In most

safety, maintenance call XX% in health the it regulatory bucket, You always activities. but would over and related or included have program rest and that I is ongoing maintenance-type

level. we a and that the that's restructuring the of we've equipment move best repurpose the around taken to activities So and lot can. certain a world there's we as reutilize/refurbish a sustainable it focus think world, With around

as is side that on disciplined of well, us a be helping capital spending more the Glenn. bit little things So

Glenn Chin

so Okay, levers very be just the positive cash broadly that presumably Jon? how at about you on, have back talk source pole, you year, capital good. Can free flow, And will of there cash. this working going a then, be to left it will more

Jon Banas

we inventory days. team on ended above and XX of towards and hand XX is touch a The about level. march take to is days Sure. world-class XXXX a with continuing out world-class days The bogey

levels sheet. So and inventory continue sequentially opportunity there's the down balance on significant put to those cash for to draw the team

with sorry, of earlier, chain we're every -- the well. about for about initiatives Jeff that is Similarly, supply cash talked Glenn around for that commonize payable day $X And the I'm optimization payable days million us. us, world as to looking

right So globally. about payables XX racked days up I now, of to we think

increases will, of funds we fact, it like us source for think it overall. And, in that can be a nice

we the So but on collecting accounts as optimistic too on we there. side, big not are the have receivables, is levers for as other long. tooling equation There are the leverage far of sheet side, we have to two normal the those balance money the much piece is, the of not leave receivable the that course,

Glenn Chin

Okay.

So on are XX Jon, at you guys payables, you days said globally?

Jon Banas

Yes, that's an approximation of XX days globally. Yes.

Glenn Chin

to, Okay. could that And what down potentially? get

Jon Banas

about But year. $X goal longer-term won't get happen But to us. it is all to be like said, for I the every the this day, Well, is goal XX would up million. that longer term days, actually

the suppliers So to world working standardize with the number up. very is that team hard and terms those around drive really

Glenn Chin

That’s Very Okay. it good. for me. Thanks.

Jon Banas

Thanks, Glenn.

Operator

you. Thank

ahead. Credit Our of Taykowski Please Suisse. comes next go Josh question from

Josh Taykowski

Thanks, Guys. Hey.

Just a couple me. for

Just a on working capital. follow-up

Just ballpark granular trying could on think more little a XXXX for to bit get inflow you be? what

Jon Banas

Josh, defer This actually that We on flow, come question. cash the is kind the time first guidance out that of to of don't just give answer directionally. we've I'll detail. level even with free

flow So leave year. be that I'll just at we'll that, it positive free cash the for

Josh Taykowski

Okay. That's fair.

for Next question, the on a plans more near-term balance cash? lot broadly, obviously, cash Any that of just sheet.

Jeff Edwards

as to talked some is successful talk always with of invest We've Certainly, we've this about well. in restructuring, been morning that very Now, what continue about, we Josh, innovation. that.

place to about don't And to a major break of the that consolidation within one that pressure think in occurs how other have when buckets very segment. mess. our we planned to our clean position want take we has market the this figure this as can to help industry customers so regions. here position anything cash maintain downward the to in strong take we up that's that see but we want be an all offensive As we that continues time and out a We

doing. are those things the some So of that we're

Josh Taykowski

Got it.

Jon Banas

again. And thought me. Jon Josh just It's for a concluding

the with we've would of other side Just balance got plans the we the the given industry sheet contemplate year balance this the no sheet. cash dynamic capital that on on and volatility,

Josh Taykowski

Sure.

Okay. now final you've The color throughout XXXX, facilities looks volumes the of XX those seemingly kind got targeted on one XXXX. are two guess me. targeted the And look I two what it two facilities by like additional for closure kind the of like facilities? other additional Any versus larger you've then that for those in

Jeff Edwards

we as second and Yes the we as streamline space. then and just generally don't And need customer-driven certainly one to one much more continue reason. get is consolidate efficient,

So of the combination those things. of both

Josh Taykowski

Okay. That’s it Thanks, for me. guys.

Jeff Edwards

Thanks, Josh.

Operator

there more to over call appears Hendriksen. are like the now would no turn back I to Roger questions. It

Roger Hendriksen

call Okay. interest in appreciate company everybody. the today. our your you joining continuing and Again we Thanks, we appreciate

call. the joining. If coming free our will have again you other out questions, for days. reach feel should Thanks please to in me This conclude to

Operator

conference gentlemen, for call. today's this Ladies you concludes participating. and Thank

You may now disconnect.

Cooper-Standard (CPS) 25 Feb 202019 Q4 Earnings call transcript