CPS - Earnings call transcript Q2 2021 | Cooper-Standard Holdings Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Second Quarter 2021 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode.

Following the Company's prepared comments, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded and the webcast will be available on the Cooper-Standard website for replay later today. I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations.

Roger Hendriksen

good and Stacy, you, morning, everyone. Thank you appreciate spending some morning. this us with time We our who Jeff leadership with of Chief Jon members The team President Vice the Chief Officer; and this Banas, and Executive you Officer. will call morning Chairman are Edwards, Financial Executive and on speaking be

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

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

directly For and more also statements, presentation the measures and appendix I'll Jeff forward-looking measures. periodic we ask in the With included presentation. Slide turn comparable X Securities that to to GAAP This information of Reconciliations on Company's contains in you non-GAAP the their non-GAAP of the the to are Edwards. of also included formalities the Commission. financial those refer out measures over this way, statements financial with presentation call filings most to Exchange the

Jeffrey Edwards

Roger. to X, results or review appreciate update outlook. our the provide initiatives To of Slide highlights indicators Good operations our we the how in quarter. opportunity begin, on and some quarter provide an on and We key second morning, performed Thanks, ongoing our strategic everyone.

for a below our like in world-class XXX,XXX outstanding. for We safety of rate safety and half record zero performance end the incidents the incident our to the hours to teams first levels to quality Cooper-Standard have rate total of keeping continue of In worked, the quarter, our I'd maintained was to that just importantly, for plants plants the perform and green second the safe. X.XX XX at at our perfect of continues thank be reported launch. recognize were were year. X.XX. per At the green the well quarter, safety scorecards delivering service our customer products quality product world-class of and our Most of employees customers XX% and XX%

our our plants are costs increasing way results zero ultimate We zero are notice shutdowns financial lean factors areas efficiency achieving continually a Unfortunately, our and by locations were rapidly for and the our able From late striving facilities in the outside demonstrate million volatile we In impacted teams and improving at all our continued production possible. the continue that were operations throughout $XX perspective, to can continue volumes, goal our initiatives of and these of control, is incidents XX that success. and safety the schedules, drive incidents all quarter. to control. to lower-than-expected deliver through quarter. savings largely production manufacturing in Despite of leading

the Our in the $X was In in SGA&E of divestitures past down year-over-year. benefits expense combination strategic million and delivered $X actions quarter. restructuring million

While well our reduced faced we are volumes and we on production execute operating customer ongoing schedules, significant plans, to continuing challenges from inflation.

issues or mitigate use not these We of levels. business. the recover sheet supply due our at the actions our aggressive materials on inflation do balance to cost chain new imposed incremental respect, we are taking all intend the to With to finance raw or

Our customers. world-class technology, continue quality, service to and garner and awards from recognition innovative our

we two General we fourth quarter, product a by of second the recognized Year received the This have Motors these that year as again consecutive Supplier During were the in marks categories. honors.

recognized were with facilities Excellence Motors manufacturing our of XX Award. General Quality addition, In

professionalism our our for global of consistency their to and delivering team proud very value year-after-year. are We customers in

Our simply have been customer never better. relationships

suppliers a distinction Supplier achievement reserved our award, our the Award case, Fortrex value the safety, chemistry excellence, of nurturing award X. display for In launch Year profitability, receive total Overdrive Award. accelerating its to were relationships. and outstanding received sustainable The innovation pleased including and and conjunction streams, sustainability. areas, platform with also who cost significant In contribution priority we Motors the within Coveted Slide high to for General to Moving Overdrive is enterprise we

exposure offers durability, resistance sustainability even the rays superior from and Fortrex and ultraviolet product While performance in is to its set, resilience, impact areas that compression overall more degradation to of powerful. weatherability

reduction dramatic and to reduction pound offers elimination cycle capital total, carbon offers in traditional gas emissions use Fortrex high estimated of versus greenhouse improved savings, an equipment. manufacturing In life footprint through total in Fortrex weight XX% system materials. process efficiencies four the up energy

with of it footprint familiar Fortrex new inherent advantage and chemistry become competitive given will impact. our sustainability benefits significant customers continue and an growth as to We platform especially and driver advantages all provides, increasing current become its believe carbon the us that with for its

Moving to X. Slide

We continue alignment and performance integration and with that a continued sustainability. will and our long-term places provide to level ESG the strategy build oversight Global our a assure for goals company's Sustainability ensure on high-value executive stakeholder To Council sustainability priorities. corporate and progress, culture business

standard toward to in Cooper-Standard best measures drive In practices performance track addition, evolving rapidly and world-class will global help Council the sustainability. the

of proud the we've believe of our factor success those be stakeholders. our growth our further key it long-term company. priorities are We as We with established in and culture we a within will align our

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

Jonathan Banas

results for slides, capital results our liquidity provide our on Thanks, the Jeff, quarter everyone. our outlook we an second and financial quarter and to comment XX, on few and comparisons prior some a the on our morning, for year. of good priorities with In the show provide I'll the sheet, and then XXXX. allocation balance next remainder detail for of Slide the summary update On

the certain customer second positive sales Despite were extremely in primarily in foreign often approximately Other due up our Second and plans, of Legacy below XX.X% XXXX. sales last short divestiture our significantly growth, on factors business impacting July, partially by came to shortages offset the and in our quarter businesses shutdowns our semiconductor sales quarter. exchange. announced continuing notice by $XXX production the impact the unprofitable of million on Europe impacted quarter India our were sales the year-over-year These sporadic million, XXXX $XXX.X schedules. versus

of for was basis compared XXXX. of profit/loss adjusted to the the outpacing by growth quarter organic breakeven the divestitures quarter and exchange, quarter million Excluding impact sales Gross vehicle minus $XX.X minus million by XX%, the second EBITDA was in $XX.X points. second light approximately and increased total in XXX essentially

profitability of As fell year-over-year, million $XX.X loss compared improved due basis, a incurred loss of of On production with well quarter net schedules headwinds. to the a commodity a short customer sales, of volatile million for XXXX. net second quarter in but unanticipated we shutdowns, our to the U.S. $XXX.X GAAP plans and largely

per impact, as share million to their second second adjusted million or other was of loss for $XX.X and expense as items diluted loss well per XXXX diluted net of adjusted quarter restructuring the share the or Excluding special $X quarter net income $XXX.X XXXX. in associated tax of $X.XX compared

million capital to period expenditures, spending the quarter the a Regarding our in year-ago. $XX.X in million $XX same second compared was

focus on capital the continuing our business our below and to are of committed We sales disciplined full-year. in for we remain CapEx investment X% keeping

some Unfortunately, charts those are very Moving the semiconductor-related making shutdowns last unusual the virus-related business. in created and The by here variances obscured real shutdowns make really to market to year define, this provides improvements clarity. the year-over-year difficult dynamics dynamics we Slide Slide XX. XX year our on and the

price and offset to positive was industry-wide driver, favorable reduced of the million mix, the was COVID partially sales, by $XXX added biggest customer topline. production semiconductor shortages. non-recurrence net of but to volume volumes shutdowns the For the adjustments The the related

million. Foreign Canadian reduced while quarter, to sales the and million related $XX divestitures $XX euro, exchange RMB sales by mainly to Chinese contributed dollar in the

COVID volume and improved purchasing well operating as EBITDA, and of production lean for the price in $XX mix manufacturing by volumes adjusted the a For driven million reduced Improvements efficiency contributed initiatives net customer reductions. both semiconductor related disruption offset to shutdowns, savings cost by year-over-year, million the combined in price supply $XX and drove non-recurrence of in as quarter.

from lower in unprofitable million divestiture expense of $X SGA&E the million from benefited also and businesses. $X We

plans million the our when year On our side, had items began. in general full-year inflation year. impact we compared inflation impact. now while other $XX costs increasing anticipated material and million the has quarter, expectations $XX further $X approximately increase We wage much to ramped in faster $XX and the a of the Commodity a a were increases, up expect were operating million negative negative than initial commodity million of increase for

working are on impact the continuing offset increases results the a our supply be will we inflation through half to While this of our second chain in initiatives, year. the

aggressive recover As mitigate Jeff taking earlier, costs. are to suppliers actions mentioned with we these customers and incremental or

XX, during three net with quarter the to Cash June $XX $XX $XXX ended of Combined of a quarter the of balance was $XX and outflow, months cash by working used we capital. we second the strong million, Moving an outflow CapEx the in total XXXX temporary changes driven loss million. outflow in incurred XX. had operations ended second with a million. Despite continuing of million, cash Slide

revolving facility, XX, on credit which of availability $XXX $XXX undrawn In June addition, remains liquidity million, total as resulting in XXXX. million of our was

strong and resources operations of flexible ample year ongoing second will to initiatives. execution access our strategic to facilities planned expect positive the our anticipated cash generation We of cash in half balance, and provide the credit support the

with liquidity outlook. and position comfortable our current So we are

going our grow allocation profitably. to our business top to forward, Regarding continues and sustain priority capital be

of to in XXXX investments We $XXX technologies for will the $XXX programs equipment sales X% new time. CapEx our in to modest customers. anticipate continue and within for important of the make the of X% over launch million average to on capital million full-year of and to We range range

That in year, the relation look year senior expires, of our interest confident opportunities. from and secured issued the we no market continually provision remain of fluctuations. a to structure We we overall call may market initial before conditions priority we are and our XXXX capital priorities liquidity time-to-time paydown burden to our in needs reduce With notes said, adjust less to out be plans in on that and the the light than debt in business. during to paydown a we the height evaluating As conditions now our the pandemic. and next will

to XX. Turning Slide

of partially guidance of saw cost we increases in fell release, nearly expected carrying course, reduction million increase half results, our is America, driver, Based wage to schedules decline commodities FX which our change rates general to the we production do our reflects will forward broad current year. have full-year important to QX. improve $XX in also adjusted range and which volumes to full-year We Strengthening North updated and schedules is on down almost a guidance. XX% first The from platforms. overall. original EBITDA begin related in As materials, change the latter continue production customer already in in left incremental plan reflected of our pressure press light part and you production the the customer are most remainder fairly volume daily significant on guidance by the our of on of coming biggest some industry short our The guidance, through as revenue continue of with and through Much the to much expect original masking the the revision more in vehicle than of significantly inflation decline QX EBITDA. basis. adjusted is in forecasts,

our past sales the over has for fact, outlook In QX declined alone. three million $XX weeks nearly

concludes of are still are can uncertainty to planned, of this margins realized high-single we If QX initiatives still execution prepared in value That quarter. facing and digits in successful EBITDA degree So current continue as adjusted anticipate that we year. reach high our forecasts comments. the driving a we of my the production current

it So turn let Jeff. me to back

Jeffrey Edwards

and Thanks, to of I'd to the XX. to our detail improvement like diversify leverage key long-term discussion related some diversification strategy. parts Innovation on remain provide on electric near-term goals. outlook this growth turn an Please invested update additional our Slide To business, our wrap-up in and to and longer market return term strategies Jon. morning, vehicle our our our capital

and have Applied continue to our technology Science diverse both. business. development markets our we group on the are that with progress we In in to manufacturing advanced material phase concluded successfully with negotiations with business, customers make Material complement footwear commercial working leverage our industrial and two technology expertise automotive science We our

the continuing and materials for phase also space. in commercial products are in the We technology building our

but it certainly tell, too focus soon might on our work end While the when discussions, and is to these commercial continues. we conclude

some We and in which have customers some merit. our development other initial footwear regarding have received are space opportunities the we work with continuing we inquiries industries, believe in new technology

with We lower steady. as and driving As business, I mentioned clear Specialty Specialty remains products earlier, for much in our our almost our materials business Automotive desire our alternative its in as business our Industrial competitive is for interest Fortrex, customer and Within carbon Products overall footprint believe Materials physical lower footprint as Industrial superior performance us carbon the and for a advantage Science Group, represents in demand characteristics. well.

we to However, limiting which challenges are segments chain like disruptions, many market supply related our facing other industry, of labor near-term and are availability, growth.

additional in capacity COVID production optimistic enable is over a within to begin disruptions. Europe market of We the markets over our the term from and longer diverse to the opportunities as remain term. investment rebound expected in return ISG other grow Our impacts about group to in markets the the growth longer to

news to expect definitive to near-term. We have in more share the

new momentum traditional electric growth It customers opening and continuing. is of opportunities with The for market XX. with Slide customers. our is vehicle to us creating us doors many Turning for

significant advantage are win to In opportunity new customers is the year, the with much first vehicle year. in leverage continue significant XX we of last were a for service is vehicle electric groups. as and terms for same on our business higher and $XX us upside vehicle include than this the in million vehicles to higher versus of electric content customer business represents of in for vehicle upside segment. growth annualized per awarded This hybrid new even internal for expertise as The engineering our to XX% half in comparable innovation, The net platforms. reputation per combustion vehicles. product the We awards period battery content all awards hyper XX% transition world-class and platform, electric in different

presentation conclude want on brief and To initiative our morning, driving update progress to XX. double-digit capital. I sustainable toward our this value Slide achieving a invested to provide Turning on our return

issues, talked improvements year's the statements. continued between the to and really the lower efficiency difficult semiconductor-related progress in Given the made costs. we've all looking financial noise comparative Jon last just see COVID the this at year's and shutdowns by SGA&E about it’s manufacturing significant

of impacts think manufacturing excellence. will semiconductor when we our the continuing you have I of you do cost have of price the And it restored the to by don't initiatives or streamlining add-back on combined far give come absorbing intend the math the impacts viability the how by concessions and outlook costs focus company. certainly issues, and schedules back material to overhead our increases. long-term through understand These we to and

changes prices. to recover engaging incurred costs late and commodity rapidly in are rising negotiations from schedule We commercial

customers expand indexing We commodity are also working aggressively suppliers. to our programs with and

the these Of current activities don't and get easier market volatility uncertainty. with course, any

are we overall have in as our deliver outstanding continue However, innovation, to to value believe these and service customers terms positioned to of we quality, conversations. we well product

globally. continue new to new the vehicle in vehicles fill help about. We contribution and platforms Asia margins that just win I will content to capacity business per in us quality that Central are programs and enhance spoke electric this on

we market. Finally, made have America our in good of the progress evaluation South

these of turbulent their continued We open would I to support our This future continuing execution in and value as times thank reach work hard of work driving for prepared I stated to its the to of think employees their couple want focus streams, goals to track I we for and continued our on we'll within concludes double-digit and like driving the achieving customers and call years. successful next decision a summary, by year-end. we also company. strong EBITDA trust margins ROIC sustaining In be are thank on our are ready our to our improvements through with want final our we across comments. believe related on that questions. we and the our to make region together. now work plan

Operator

Our comes Benchmark. Mike Instructions] Thank of Ward first from you. [Operator question

Michael Ward

Is bit that on the everyone. of And much material little and is so commercial there a is? $X morning, around some on to indexed? to negotiation? recover? To it, are where that Good to to focus you is the issues. for you've percentage cost commodity this purchase parameters not how is that would a those on Maybe targeted subject billion. And million year, expect exposure number material things And some $XX already commodity try put I'm your Thanks. somewhere just guessing

Jonathan Banas

It’s for Hey Mike. Good morning. the question. Jon. Thanks

of indexing XX% on talked track year. purchasing. with material of had Last me progress. materials very and We spend that call to the Let up XX% indexed. we're direct And of call, with projection material both side, to our the sides suppliers, we're to ended inputs that's XX% customer which we're about finish making good And side $X.X last both our on to and indexed. only supplier markets. strategic the what approaching to those as about raw We're And $X.X year XX%. about on XX% by that equation, then and that spend about indexing grow we products for to are overall time, are we're our the last billion now side billion that. most provide of our evolution supplier the referring impacted the take on be We and of on significantly is going after us

of in overall we're build working think through initiatives there. terms to base supplier to I continue So that our the strategic

XX% the be with incurred that customer is going And for the we're we're on On we've contracts index to well inflation get about those addressed progress right now, to approaching index commodity by side, making XX% to as there of contracts. customers.

lag. Now typically, those are on a

can recover. of the get because arrangements going entry we how going the much above the quarter get two dictate on And going course, and we those effect recovery on you commodity, by vary certain So rates rate down those are across later and of also the to that points are of a fluctuate indices go industries when or beyond. recovery is road. recovery be commodities how different to types And depending to

The mechanisms going the going negotiation further of of more inflation items, So direct with place okay. our be will to on yield forward. in is be to customers those key rest those recovery getting

frames that hopefully, for Mike. the situation So you,

Michael Ward

Okay.

high the you north with but XX%? XX%, index? I fully mean, customer no you of get can is the so And covered, on to get up side, can how one

Jonathan Banas

lot of don't think other purchased Mike, value-add get indexing if those know high because aren't and of aren't we'll a of the additional that about I commodities, materials just so Yes. on weighting bill components that heavily our

Michael Ward

Right.

Jonathan Banas

us high nonetheless, doesn't to get working that needle to percentage. up we're But to There of move the allow upwards. a

Michael Ward

a manufacturers? recover the reason able Okay. you from sum why And any to be wouldn't normalized

Jeffrey Edwards

Yes. Mike, this is Jeff.

number, think I recover. a what said it’s I you anything XX% to where that's of to XX% a to historically, discussion. of we're much going And expect to than objective. our when guess, that's kind XX% that's its of like deal extensive certainly XX% is with to we XX% it, We've something require where higher that's really else, small its XX% at. number

said clearly, is I remarks, I is raising I good in think, unprecedented. As the are customers mean, our news our prices. this

supply receiving we'll we number. have base here to on lobbies But what all I challenges you'd I'm So be end and will I'm is through be full, and also expect, we taking together. think be work a will of certainly, sure help the that and similar some expect the the sure it

Michael Ward

mentioned the shutdowns. Okay. to I some get when disruption you just unplanned and be was the from you might surprised able that recovery

Jeffrey Edwards

is where Well, guess, it after going I it starts.

how see we go. we So

Michael Ward

it call they why That's negotiation.

Jeffrey Edwards

Right.

Michael Ward

Can a get little Jeff, you Now, to to XX% your the of ROIC? to the bit about one you're process going talk use things.

Jeffrey Edwards

years. now have our continue this cost certainly competitive been footprint certainly we working that. with business view. fixed have almost all years, issues attacking of Mike, more major the last It And we a to really of the on we point And from in been regions. starts the two X.X being for Yes. do

the China. closures the have. in and in in announced number given here volumes So we change America, Certainly Europe, a significant in we've Asia we then right-sized, of North

costs the weren't We that also the business cost capital company. our covering dramatically SGA&E those. reduced their peeled have of we've to support sold We've across away businesses and

we're the from on lean of execution. same at we've focused time, so And still much view. better position in point a a Yet

quality the in in or from So haven't appropriate issues we performance investors surprise don't our the launches. we surprise don't is trouble customers resources that have because We amount quarter-to-quarter don't surprises. with We bad of in invested with our company.

it. third is see this have right-sized cost, challenging don't becoming we've albeit our indicator really don't right-sized that around we And if I this and of it. confident supply in have safety, I quality, don't many So just We year of think anything issues will delivery, we we've anything the I I'm too too think and a good right. less launch the have done and different. challenging that leading few it it fourth quarter be chain performance

and we very expect and costs to fact, restructuring our doing line. volumes and that a lines getting with strong up year, in nicely in very rebound the what be we're Next from

execute. be company We and ready XXXX to years expect XXXX the us really for strong and to is

rather first the that on that turning double-digit will we invested us year, I'm shown based quarters make with capital into go So how XXXX. inflation sure, in to wild And on XXXX fully the be doing line Clearly, way. than executing the committed transparency material we driving customers return right that where to But we now of we've that. level are you'll value indications be reaching an out a expect I plan. will item that level, have is see suppliers capital what the and ours raw affordable full-year card. to believe all I'm its next on our we're return invested showing it and our figure clear the sustainable that different around

Michael Ward

Perfect.

seen them? they a sounds managing But to you. production. allude, the handle they took like were doing for programs stability, Have seemed had toll have thing. they're important it ones I seen second going last you. your some stabilized, issue, quarter, customer, you July and one Just particularly and like Have They job do with on from other know really hard the into of better better you a its that big supply orders in their seen, hit in it the your have some on August and some you chip more with

Jeffrey Edwards

not. Unfortunately,

Michael Ward

It's still volatile?

Jeffrey Edwards

Right.

Michael Ward

very you much. Thank Okay.

Jeffrey Edwards

bet. You

Operator

Brian next Baird. [Operator Please go DiRubbio from from question Instructions] ahead. comes Our

Brian DiRubbio

Good morning.

the $XXX your At starting you. maybe Jon So with is EBITDA guidance down million. midpoint, by

are cited worse million just that sort help think costs? production million materials dissect $XXX other now of Can that us I and $XX you between labor you was raw than expected.

Jonathan Banas

impact into QX Brian. here prepared on how really impacting buckets, early whole main and is year's overall. Sure, that about down the right. couple going much from I the already and of in that in QX It’s It’s how that's we're the was lost remarks revenue really trickle a results. to And referenced my microchip much there overall chip shortage issue

when $XXX you So anywhere take XX% profit out in estimated was on you and the America, which million, on of from XX% pull-through average. that contribution to North range here XX% margin

midpoint. it’s by commodity is You expectations overall the variability. the see as as in is been talking caused what The lot our side next pretty the about degradation a production we've can well at a bucket main inefficiencies big

economics about to frankly, able and leading customers, think really, really the economics, the quite to being fast on all that So shortages not labor notices flex labor from on freight shop. of higher availability our enough tight labor economics side, side based on

So only million other the it’s not throughout inflationary the the all of it’s but effect commodities, $XX Board.

main then between gets the call way the microchip the you of plus general midpoint commodities most buckets, So it those two impact on degradation. there that and I'll inflation overall

Brian DiRubbio

Okay. That is helpful.

wage by issue, is troubled seeing people to my just until interest companies you issues your trying labor unemployment Are just a just the the On extra just just shortages. number have sense it – or it get of side, labor the a I'm have is been labor side. just the on end of their benefits expire? until waiting are potential people of there the are September what new

Jeffrey Edwards

Jeff. is This Yes.

are think certain seeing some in improvement I states. we

that. Let saying start by me

for improvement or money We a that staying policies of – feel home will. as we has don't almost and many workers, you locations just was the same have then driver anymore shown expect to would I think shortage issue have that we us if the I some anyway I and probably continue. think making there. changed, think same clearly money those that the the And are I

drove I think you've what seen. government policy of a lot

Brian DiRubbio

EV Understood. disclose about trying hearing of Jeff, talking is? base to that. the Yes, of I'm you I'm been lot that and growth sales are sense your today? what to able a some trying just a are the triangulate get to you've what

Jeffrey Edwards

more way haven't as lot way start we've next work year detail around and that. broken we we'll close out as this down have provide year. that done We through our XXXX year, in we I'm the we'll how it you sure and a

Brian DiRubbio

Jon, And you. minimum needs? company's you then Okay. What back to the would cash say is

Jonathan Banas

Brian, about think this of obviously state and long new company the we with analyzing industry. the been the it Yes. of size and hard and

anywhere revolver, that million is million access current thinking that we from So have in we our minimum liquidity of can amount $XXX mind, operate significant adds $XXX to undrawn in tapping. to the of do we Keep cash. a our so that pipeline aren't typically

us. for used but a backstop it’s years, it nice haven't for fact, we several In

back secured back a I then in just will, obviously cetera. some of cash, you that disruptions, the terms we senior was if about out the fluctuations, et took through just reason, on of balance COVID-related. year excess to think industry Brian, do it because we're And ago, maintaining now work we the that, think for notes it So if have sheet it you

it’s plus Now COVID Microchip-related.

so that additional And is our us a assurance backstop situation just providing good one. that liquidity is

going as the capital fine-tune forward. next the work then XX months, So we'll we it toward and structure right-size

Brian DiRubbio

And hear it. year-end. me. to by then make you're South that going final for one Got America a on decision Nice to

versus in potentially be as about or that cash think costs, could XXXX lower Just higher restructuring XXXX? we

Jonathan Banas

cash down what we'll from to million $XX be this the decision cash. contemplated considerably the on But we year. might that haven't that in $XX in we place mean Well, final restructuring now, Brazil with we'll million spend to have the programs

Brian DiRubbio

Perfect. Thanks for the time.

Jonathan Banas

Brian. Thanks, Okay.

Operator

comes Cazayoux Please question Mike go Investment next from ahead. KDP from Advisors. Your

Michael Cazayoux

I'm of my earlier components to at And EBITDA. Hi. for basically related of decrease guidance question your just question. Thanks the down looking the This for X% and revenue taking midpoint. the asked about at kind maybe an it's in unchanged,

second. you third what in in catch-up quarter fourth you're from think going the and to have you implies some the that So lost

trying understand to EBITDA? how to I'm the reduced is decline So related in volume the

Jonathan Banas

Hi prepared foreign overall from is standpoint I question. the is remarks. Jon. in for this currencies. to production my volume revenue for a favorable the Mike. What's alluded Thanks us masking in This decline

you when to think shortages, earlier. dollar, So million of from so that's or to an range as our guidance tune the offset about $XX the we're I Chinese previous in appreciation, million seeing alluded Canadian euro well by that the But RMB obviously on Microchip the the $XXX sales the increase sales. as

on that's off, So how if two net you new those came the revenue. we range up with

associated revenue volume is with production our the coming well. So down

Michael Cazayoux

Thank you. Okay.

Jonathan Banas

Mike. Thanks,

Operator

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

Josh Taykowski

Hey but I I questions. on EBITDA. just, dig really taking sequential guess a for possible to or impacts million or sequential Thanks decline in do bit otherwise? environment decline there, the from the for more a little to that out just either wanted is bucket inflationary operating walk tough XQ decline approximate it guys. on XQ, EBITDA to the an Obviously, $XX between volume

Jonathan Banas

the overall. equally when in do about overall impacted inflation I of way for about walk and QX, the minute being all Microchip But out a off you the incurred regions. the all Josh, that But Yes. them think commodity good one here were think started can $XX dig a But through. in give across have or you shortages million it the then an by we another of Board. to analysis, I year spread state me then

then and South America. $X million China in $X a in in the Europe bit the rest in America, and more So million North

XX% of do Microchip of So it walk America. I've as earlier the impact, most when across North was in that you said

that can across us region, set in positive profitability overall. press and So manufacturing side, in America the declines of really Board, segment the see from – talked down would Equally on you very that favorable in the on results efficiencies overall QX to that the developments hit bring biggest QX North release about. the Jeff the equally the

America take in more become during quarter. continues out was to very, the same Europe North doing the and So successful very cost efficient.

offset working those those So sequentially, declines. improvements to Microchip COVID the in you shortage and see positive favor

Josh Taykowski

of include that net question very $XX on Does assumption it. a And million just on new the kind of XXXX. recovery some is Got or recovery? guide helpful. Thank that EBITDA That's range then the the of any for you.

Jonathan Banas

just minor portion. a Josh,

of negotiations we've timing we when received As be those really conclude. will turn can't this recoveries into will of or will predict those discussing, lot commercial when that a and been negotiations the

referred is known that that quarterly that this on lag. to is can we XX% expect around amount So index at contracts I the earlier, point, only on a

Josh Taykowski

Got it.

Okay.

Operator

It the call appears back have a Barclays. Wang from turn from there are now to more I Chris Roger over I'm we question would like Hendriksen. to sorry, no questions.

Chris Wang

I taking I different just to ask How you are way. a last on call. clarify the Hey. Thank the question, you? for want

more full-year we wage inflation to in, baked only of if the contract the thinking number? fully current any stays commodities, So high, your index the XX% on or high, there is recovered risk to guidance size downside kitchen of are if is a stays the that general XXX% table

Jonathan Banas

Chris, this it in is at all point.

these in of and pressures inflationary numbers. So about conclude negotiations But are faster. you'll them see terms upside as quick we now, are in those if of everything know we

Chris Wang

moving Got it. fast. you And things I are know said

peers, a So understandable, obviously, a little as bit of numbers trying doing understand and little better. to weaker just looking not your I'm for is peers? XQ similar really the I'm they're guys, half of differential happened with guys you you getting necessarily but for second at But what between your their bit well. What of kind sort some somewhat of just customer we're mix, OEM to some

Jonathan Banas

Hey, Chris.

I DX for think key us semiconductor us I in programs very, Like earlier, million overall. to XX% weighting of then of customer America very $X overall. comes that referred for for are is us, mix very it programs, profitable for down Microchip shortage the typically North which programs the and to impact us the that

those, lose it on profitability. So our an creates in you degradation outsized revenue when

Chris Wang

XX% Got then the a to just low of versus end end second it. is be high the going in And how XXX% is severe the half. is shortage semi matter

Jeffrey Edwards

Correct.

Chris Wang

Got right. you Thank All it. much. very

Jeffrey Edwards

Chris. Thanks

Operator

KDP follow-up a go Cazayoux have Mike question from We ahead. from Please Advisors. Investment

Michael Cazayoux

Thanks. Hi.

hard Ford have the your the hit What client? a do obviously is chip shortage. third Ford your by were biggest numbers a you if like particularly of customer, they look didn't as business would you think quarter to and

Jonathan Banas

XX%. we that, of XX% most that typically out of from breakdown you when North say overall standpoint. excess estimate, was individual I'd $XXX revenues obviously of just Mike, million sensitivity break the Yes. customer America in the Ford-related, don't But commercial like

So there. you own calculation I'll let do your

Michael Cazayoux

Perfect. Thank you.

Jonathan Banas

Okay, Mike.

Operator

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

Roger Hendriksen

to you feel This out so much call dialogue. for to and this as as Okay. any joining concludes we'd you. like this please questions, would Thanks again of our Should you reach free Thank certainly disconnect. everybody be may that you directly and us do continuing morning. have look additional morning, to me follow-ups forward happy to

Operator

you conference today's conclude your for does This participation. Thank call.

may now disconnect. You

Cooper-Standard (CPS) 8 Aug 212021 Q2 Earnings call transcript