CPS - Earnings call transcript Q3 2021 | Cooper-Standard Holdings Inc.

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Operator

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

Thanks, Vic, and Good morning, everyone. We appreciate you spending some time with us this morning. 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 the appendix refer X statements, included presentation we GAAP Exchange measures. ask presentation financial are the financial more the of Commission. in Reconciliations non-GAAP For on the and non-GAAP comparable you this measures included measures information forward-looking in to that periodic Securities This Slide company’s presentation. their statements to directly of the contains filings also with and most

So the formalities turn the call way, over with I’ll out Edwards. Jeff those of to

Jeff Edwards

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

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

of leading at incidents demonstrate and achieving all dedicated, continue safety at and X the employees for striving way, continually focused facilities, are through plants to our of operations our are We in quarter. is and savings the locations, were and and $X our XX in that lean those Despite production volumes, goal lower-than-expected efficiency able initiatives X to purchasing million the improving manufacturing incidents deliver team possible.

and Our year-over-year. the divestitures, SGA&E of strategic widespread we’ve volatile in restructuring and this delivered volumes, to significant benefits challenges certain This, from not we’re was and expense reduced environment, in improved offset labor. $X our face down production materials, seeing million energy, able tight low $X In availability Unfortunately, labor quarter. transportation And million customer combination production the continued schedules, actions markets. despite been efficiency. volume to the in ongoing inflationary we operating impacts past in

our recover or I few more mitigate to actions will imposed costs aggressive taking in on a on color provide We’re business. minutes. incremental the this initiative

Slide X. to Moving

proud We’re established within company, sustainability. we’ve status, making respect we’re to progress world-class our toward and the of with the culture

Magazine far. progress are from for of the this recognized right direction. We in believe quarter, an our recent to were garner outside headed Corp! organizations the continue of we recognition that inclusion. we thus by is our We and indication culture diversity for recognition In type

in our continue and will this priorities of stakeholder hard growth term a success. our believe, We further play to to will X driving groups, we align work role because, with our long those critical

John turn financial the to to me it results over let Now of quarter. the discuss

Jon Banas

capital comparisons On for the show with results year. to third our some our quarter and detail year-to-date few slides, remainder of for morning, expectations for priorities, flow, Slide on I’ll and and everyone. our and we on the sheet, XXXX. provide then period, allocation Thanks, of Jeff, In X, cash a comment the and results the financial the quarter next our prior balance update Good summary liquidity

insufficient XXXX $XXX.X third was be roughly XXXX. year-over-year down of adjusted global EBITDA impacted quarter in decline and to positive million, quarter supply the were line continue production, The was Gross loss compared third by Third versus for $X.X sales million light the EBITDA XX.X% semiconductors. in quarter to of vehicle million, which $XX.X $XX.X XXXX. was of million the quarter negative with lower third adjusted of

schedules. sales, was volatile and lower customer As by profitability production volumes with hurt

in realizability deferred of tax X-year XX, historical on weighed our expense the losses, third commodity $XX incurred first tax quarter Tax benefits loss increasing were a In assets we of third million of recognition of tax which for higher deferred XXXX, recorded in $XXX.X basis, $XX.X net the the our includes U.S. on of addition, and tax the tax million general expense labor XXXX. income the and we of quarter the a cumulative relates increasing net Including on $X.X United the $XX.X assets. item, costs, on material net our net States. of headwinds, million charge, million in inflation, of of judgment led tax allowances in the by These results. months this driven to have a in valuation of adjustments million recorded to change the to December X reversal million for plus GAAP a quarter year, initial compared $XX.X which

impact, CapEx same be year. to the to expenditures keeping year. items, to $XX the quarter in business, X% per invested remain support we an ‘XX below in $X.XX launch of other ago. to should income period program associated sales remain $X.XX in year year expect, income net share solid diluted totaled for and this compared per we was third million have of the or diluted million significant adjusted XXXX. of full in million our quarter $XX.X as the a XXXX well million full which third we largely of expense tax up million or net adjusted Capital as for Year-to-date, XX% $XX.X in quarter launches, compared new for their approximately and Despite of committed activity, will last the share loss $XXX.X $X.X restructuring third the Excluding

X X. our charts provide The Slide and the clarity quantification of on Slide factors additional results. to Moving impacting key some

top the mix, XXXX. sales price the shortages. semiconductor of On driver the schedule of reduced versus biggest Again, unfavorable net third to adjustments, quarter $XXX by customer ongoing was line, volume and related million the reductions customer

Foreign million dollar, contributed exchange, quarter. mainly Canadian Chinese in the and the related to RMB, the Brazilian euro, to the the $X real sales

material volume million and well net partner reductions expectations $XX largely write-down and unrecoverable, mainly as of and as in million loss, year X For from million and costs $XX were credit year price, inflation proceedings million had of divested as be impact a the drivers in were JV receivables deemed customer expense for The Other of and adjusted $XX adjustments. price driven million of unfavorable a higher initial schedule EBITDA, the of we our SGA&E bankruptcy year-to-date customer when than certain expected $XX We semiconductor-related year-over-year, and accounts a just $XX inflation negative Commodity receivable than write-downs $XX to mix, began, to by of quarter input continued increase wage million to up to expect the compared full China. brings the months year impact to ago. of million in the which the related year. was negative we general ramp anticipated other recorded million. $XX approximately successive are $XX increases, a items. of now higher, had each Commodity has faster much

rate side, run savings positive drove expense SGA&E the for and million a and $X manufacturing On in million lean the in lower. quarter cost initiatives purchasing combined $X was

ended we months namely in with XX. Combined million. customer the cash volatile cash loss inventories, to of solid an resulting capital, XX, ended Moving of we million, million, was Cash production approximately the increases $XX quarter and million. Slide $XX from used with operations CapEx X of schedules. a the by September third total cash Despite the third net in quarter outflow driven balance had working $XX approximately a XXXX, outflow during $XXX approximately of incurred free outflow,

production total negotiations undrawn, as of million, on credit our our liquidity which will of cash strategic and liquidity initiatives. availability addition, ongoing to conservation With XX, million that remains $XXX September revolving expect and and In recover still $XXX planned with resulting of commodity we XXXX. execution to our from volatile operations the customers a of incremental level was inflation ongoing support sustain efforts costs in facility, schedules,

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

program With will average We equipment for launches. nearly full to for to we X% to of year X% over in anticipate focus, of new of range the and all on $XXX with and capital to disciplined launch continue a new that million make technologies CapEx sales within approximately important customers. dedicated of our the XXXX, time, modest programs investments

the ahead, from As time the we be we liquidity burden relation overall evaluating to conditions company, capital will are addressing needs the market said, our issued look That we senior adjust time notes our fluctuations. interest in light We secured priorities market and and opportunities. that of priority by continually to in may reduce to in structure, another XXXX. on

Turning to Slide XX.

We to light $XX EBITDA now into range of year loss to lower million fourth $X.XX the cost range rising for see pressures, We heading $X.XX our billion to other for volumes, commodity quarter. year $XX expectations full in the our adjusted and million. the and and have to guidance outlook sales vehicle quarter updated our production of reflect compared the as third billion, results, year-to-date in

be full fixed unchanged the quarter. taxes Our continue should With expect the to as planned Jeff. the year. approximately over outlook initiatives that, cost to restructuring for our cash million I’ll back $XX for And turn we fourth call cash throughout remains reduction

Jeff Edwards

our this additional our to wrap the strategies diversify John. Thanks, growth and and up long turn to in strategy, detail on to like invested in And leverage parts electric discussion return key provide vehicle diversification Innovation our XX. to I’d an market, our update morning, remain outlook capital we’re goals. to making business, our of some both progress Slide areas. good our Please related longer-term and term improvement and on Okay.

the this news morning. Moving category good to of

the the a In with is quarter, established footwear announce agreement receive financial very fees to the investments and and our will or business our customer though, Science to royalties their XX-year that accordance specific products. The the ongoing The manufacturer. we’ve first to footwear agreement, to identity Fortrex agreement to the an term can’t is we be Material license a the Cooper-Standard all say, I end we of commercial the Applied volume-based licensing We’re sufficient value. grants use manufacture terms. of and footwear subsequent fees pleased with finalized disclose global of in will that of with minimum in offset the royalties for made date. minimum of manufacturer the the terms non-exclusive. agreement the technology will third

with and work future development technology other footwear in the be catalyst continuing, a discussions that will this manufacturers hope first in footwear Our industry. agreement is we to opportunities

and to Beyond exploring of exciting Fortrex performance rolling footwear, reducing we’re including opportunities leverage a of technology, aspects sustainability resistance of number tires. the

We’re in shows but work good the stages, initial the development potential. early

chemistry opportunities We Fortrex and and advantage clear continue business business, specialty diverse to products We the lower our performance industrial as some platform Materials the physical in us to grow over our completed. footprint, markets and superior in represents carbon in automotive development projects a about that term, our as of Science these are well. characteristics remain believe longer optimistic business, for competitive

average transition the the rate approximately In XX. our this new over on reputation engineering million vehicle clear Slide and see market hyper estimates in electric service, to of customer were to total a Turning XXXX. in electric innovation, momentum for that net is segment. production an annualized awarded battery leveraging vehicle business We the market we’re years, by continuing. of reaching platforms. XX% the IHS as expertise opportunity, win third we market X increase will this of and next quarter, XX% significant vehicle growth electric at business world-class The $XX

at market our up over totaled products, our our expect first For of for which a temperatures, thermoplastic and new to an market. recyclability XX% of also This business on future months, awards, we to highly success reduced making in enabling Based PlastiCool emissions glycol X footprint, grow over desirable include EV is the tubing offers than grow market solutions million. improved highly Key our anticipated degrees overall faster the market. awards $XX offers it platforms more business and business book XX%. traditional centigrade. products, years wide PlastiCool X to option EV compared approximately next and us carbon existing a engineered EV innovation rate on growth to of compared to of sales the XXX type family this EV the for of applications innovations driving weight range reduced average annually expected the

outlook, automotive due our months. support volumes, over quarterly erratic significant X As schedules, face cost Virtually, delays reflected as in production in disruptions, has everything continue past results headwinds overall other to widespread we and inflation. to John suppliers persistent and lower and the supply operations, ongoing chain increased our described, production to price we buy and

We and initiatives. supply increases, price expanded commodity With are chain, negotiating including programs. these headwinds, approach and cost multifaceted a indexing commercial, taking further aggressive includes reduction concessions, we’re offset actions our internal delayed price customers, taking that reduced or to

partner, status position progress technology a We’ve us more a solid million but work have $XXX targeting recovery puts difficult in target. to believe as negotiations the our We’re have these made ahead to overall. supplier achieve a good preferred our date, of and to more in than We discussions.

working indexed-based surcharges. price terms, we contracts, back implement against and payment and also extended increases are are to suppliers pushing with We unjustified

future discretionary We’re can carefully ensure trying consistency by and levels. focused collections conserving Internally, doing near-term accelerating us launches investments of we’re supply, while remain weak program everything limiting These capital cash managing spending, funding the continue on by to to while business, suppressed and tooling to inflation. enable new ongoing the wave of production daunting we other of receivables. this sales our of impact actions and of growth limit

drive begin the a headwinds remaining we’re in consumer say, resolved. terms light widespread challenges end of chain will when that be supply the worst outlook, rebound but demand to In strong production, could rapid planning with for continuing, vehicle optimistic you

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

improvements more gains market made areas headwinds in in we’ve operational our have many quarters. of offset business, While, those substantial than current recent

just focus first we’ve laid plans. streams XX, X more work costs work critical Slide and clearly challenging are on highlighted than streams discussed. graphic commodity we managing material now the impacts as the On increasing the that when on value out of more driving and These

Given us market And these to we anticipated, take progress. but conditions, areas challenging cost margins. invested largely and remain and If still $XXX committed we a are digit capital that targets, -- longer long goals return recovery the could term the adjusted assure be achieve may achieving on than will to we I on of our reach double these EBITDA million had track. current little target, we maintain it you making we

the hard to We This want thank continued team for and would to global Next, their also as I’d through our our like prepared open of support, questions. these employees remarks. times trust concludes work and thank we I their for turbulent to together. now continued to commitment. work call like customers our

Operator

[Operator Instructions] Our first Mike from question with Benchmark. comes Ward

Mike Ward

doing, sneaker XXXX? you Jeff, guess, first started in development agreement. agreement I that with, the off, development the on company the -- technology this back Is

Jeff Edwards

Mike. right, about probably That’s

a been of we’ve… it’s couple that think I years now

Mike Ward

of Couple years.

Jeff Edwards

particular this has couple with Yes. of several, a we’ve had this been working particular but one and years. Been

Mike Ward

is the statements? timing you revenues the is what when you do your stove -- think up would What of financial in do

Jeff Edwards

plans Yes, now, difficult without disclosing XX that production probably the that they neighborhood is get Mike, of But to have, product into outlook. from in XX conversation. months to the it’s

Mike Ward

There’s cash. XXX% just the agreement nature of the the it’s straight no right? It’s margin, it? to with -- And cost

Jeff Edwards

into correct. fourth get quarter, details We’ll but more the Yes. those directionally of in that’s

Mike Ward

front. the on cost And material

vehicle of Now, you what some time? inflation with are a from couple through, largely Or does lessons some years you went of the how negotiations. commodity you’ve lessons hit learned? a were any Is the of Or back And the it manufacturers. where of Just your through? took successful some learned? this that in think there that were easier commercial I work getting ago, you

Jeff Edwards

Yes.

morning the think, I experienced I this it’s in automotive given sophisticated industry, different have what no audience you, in past. would the tell the than we you’ve

to a over months, for. be a us have would in have the that’s several I and where you the business way to to next that conversations they course tend certain hope don’t we customers ready of For sourced probably

us out. have where would we’ll we’ll know part new And as end X, most over that anticipate month exactly we that those coming But conversations business quite the in for customers or anyway, next I somewhere the several next For joyful. between, aren’t at it over months, up. the we’ll work

we’re in. So year, But trying some by and the Obviously, are, end too, in the of we’ll you I concrete time tough work give customers direction we’re it through think, regards. real, a to it’s all those our together.

Mike Ward

new agreements? that with they the pass-through on, stuck type more traditional kind contracts are you’re agreements be with these of type Now going to supplier come legacy

Jeff Edwards

Well, to we do. is current the at part commodity price of we’re for able rate indexing new and programs, obviously, what

the Your trying in And rears in, agree question the -- have, best can. really what we and is, we’re indexing had they is negotiate we the to we it’s whatever put those if of take to as you the a station, has good train have are at good already just deals, aren’t sort customer. sometimes one and by deals, time it sometimes to those left

Mike Ward

mentioned think you provision notes, it’s correct? mid-’XX, these expires, John, the no-call I Now that senior

Jon Banas

Yes, X, the Mike, it’s first for -- Yes. June date. opportunity non-call the is

Mike Ward

-- cash notes? to -- balance do to can part you Or to a you forward? is with balance Just of you there you the it all think Do the the them? minimum you have sheet… credit cash -- facilities And have on is call do cash go need call or to

Jon Banas

gist of that I Mike, question. Yes, got think I the

And not to But me this facility, into the past, million revolving $XXX access and million credit at point. said good our minimum we we still a $XXX we’re the is is in have tapped of up thinking comfortable the with little the on of start the of hand. we’re broke have to kind a which level, what end. in You I’ve still something let in at bit What then that range cash cash.

that’s cash we forward. to think minimum required going So the the business run

date, of partial, take can to we is that do XX% but our do intent the can As you really out see far as look what at it. non-call of expensive debt all to and

up-to-date keep the we’ll the developments at the you on X we capital over So look next opportunities within markets. here as months,

Operator

DiRubbio question comes Brian Baird. next with from Our

Brian DiRubbio

is, material question the timing raw of first us get you’re help my customers? of with a guess discussions of I the you $XXX plus your million in that sense recoveries can

Jeff Edwards

asked October And We’ve in to. want Jeff. cases, achieved is starting stage Obviously, in can are the this we cases, of some Brian. ongoing, -- clear. we’re we’ve whatever asked We’ve for to we negotiation ask is recoveries be other negotiations Yes. the that, X, in where, still

So do believe we year, calendar that’s us, of take will these each negotiations the a of I will end of so why I good end fourth by for by idea the have the that for us. where mentioned, the quarter very

of So the this there’s was, have you probably your the rest do -- the of in question any year? of gist The answer is guidance the this -- do we for not.

Brian DiRubbio

we And where the are the some Or just be about flat rather amount? of of structure more contracts of these sort you’re indexed-based how you thinking base? now a recoveries? it should fixed Is changing price than

Jeff Edwards

It’s commodities. do. years, quoting, want our indexing company business the the in have customers what we’re our that we customer new certain and business indexing on a we into It’s the future is certain Each going objective cases, combination. come already that forward some In will new different. that to is with for

doesn’t that. give that of of the have hyperinflation XX% material recovery right historical we include to that is was recovered. But to in moment idea lot of rears, some what prior the now. rate. we’re Historically, raw have That we a said, in XX% the you For it this inflation to business we have

Brian DiRubbio

that the as or in exposure fuel growth But But results, EVs, brakes And by could sound in you be lines? your said -- lines? you’ve in your what with your declines is great. just offset you numbers about combined gains I in to right now see we EVs maybe feeling what and the some is thinking of think fuel that well.

Jeff Edwards

can content Brian. fluids. extent, large EV than the this We’ve some from a quarters. basically, given to fluid past engine XX% on systems the to be more But, anywhere ICE, XX% in color Yes,

we even from content course, And, larger SUVs, The EVs, take content is our vehicle, the of up that content the for up as for definitely the varies market large So you much you bigger us, the because the go want small line significantly. to the SUVs. passenger more -- if car mid the fuel SUVs, us. out,

the managing obviously, actually battery because, is into of to customers EVs, But segment. we so are got point good ICE hybrid powertrains electric to view. Obviously, substantially the we’re when to well. a a number the fluid And enjoy going news systems. actually from in from that with -- transition X the got that improve efficiency you’re you’ve you’ve working Hybrid you vehicle goes of to up move as doubling, those

vehicle we’ll specifics So as of closer these, on lot for the go forward, launch. to a we some you of insight more the on get per have content we as

Brian DiRubbio

X more. Just

quarter? You much free expect fourth you cash update in on flow. didn’t any, any the How to cash, burn provide if do

Jon Banas

million so see expenditures do I’ll are cash And is keep we as Brian, QX, in $XX QX We we outflow that $XX offset mind, coupon somewhat. have earlier, X squeeze capital a be cash year. given nature -- the Jeff will losses With for expect with favorable just But the Yes, some another modest the in do benefits that’s can all cash that. the described door. out spending. math at volumes, discretionary of on coming mitigated should December of Jon. worth the working interest capital one. we’re reduced about to significant up, going you on that million looking that guidance, But, levels. production take due We anticipate higher would in This free effectively

contracts. capital then renegotiate to can looking days also, see outstanding on area. other to looking these outstanding these And extend we get we side customer and part payment if We’re receivables as the accelerated And some of are of negotiations tooling those. expenditure payable the managing on at terms supply

a that cash QX, outflow. all free here in the in should told, result in So modest short-term

Brian DiRubbio

refinancing just finally, of the year we think the and about as next then notes. XX% And

B same time. You’re going have the Loan the to address Term probably to at

a you to B So could obviously, if right going now to your But situation able to you’re are term on first lien the you priced there. not you be close save in reprice is where may how thinking Term be coupon, Loan about on that sure $XXX. Because loan I’m timing? notes.

So of -- same process. you probably you -- are to going just how your to this sense approach that both Just the thinking thought if get attacking at a time? are love

Jon Banas

a never in good That’s your Sure. question. XXXX, on that current sheet. The Term and Loan due come balance B comes have to you want

mind So, to forward. at going top here for clearly, out figure best of months X over total the the it’s us for us alternative the look cap structure and next

in As subject I as market always. conditions, said prepared to remarks, my

see But the QX, is cap all starting at optimistic at if believe, situation we’ll then far looking -- overall the year. how we good pundits looking alternatives, the structure. say is the and in as total So our be production customers Brian. now, for it as in as environment a we’re should

Brian DiRubbio

And rolling you’re raise, correct? still out an equity

Jon Banas

always current that But and for watching to we’re lot debt. point, that we’ll doesn’t make an of with this price to and on refinance the At Yes. out the shareholders, use impact where really raise stock that. the alternative, any dilution an at, equity a it’s go us of with as keep sense

Operator

next Fitzgerald. Joseph comes Our Farricielli from with question Cantor

Joseph Farricielli

on But bit was million. it’s Slide $XX.X -- believe, $XX.X flow housekeeping. down of negative a question basis, free cash XX quarter-over-quarter First I shows by million. cash of

$XX-odd million So difference? what’s the

Jon Banas

when our see, full issue we you’ll later Joseph, Yes. XX-Q today.

in makes lines we -- around some the of have world, bank We debts that paydown we borrowing up most difference. just over and in some a simply had local China. This had

Joseph Farricielli

kind you drain, said things rather, And turn be of when your cash of see and minimum thinking start to where we or have position you investment for back time? about thought capital at are going then, liquidity that will liquidity, And working what what on? to

Jon Banas

maintained inventory right? Yes. that good monitoring the we that story higher volatile levels the I guess, forward. in production is, working levels capital go Except, just time, have because news as production We’re we when schedules. is the of

a you you that levels significant -- So in see won’t production back, environment. seasonal the do you inventory for rise, buildup when typically see would won’t production outflow

those to inventory year, inventory. the of of still we’re level right-sized more down working bring to levels Now, the by end

sheet above I the $XXX million September. think we here balance on in ended

So we’ll those to in extend tooling at then, bring before, have and those said rather receivables, collections out. that as than And I’ve earlier, we’re number down. other also looking bring

So absolutely when right, industry case, it up, capital do in levels be a the this little do usage. I you’re than typically think more ramp typical. see production you a But moderated bit working will

Joseph Farricielli

last then And question.

what always trucks, looking auto your your generally, production, at just exposure a give line you isn’t good top have breakout and per Looking guide, a of platform at some SUVs, customers is? Could idled. what sedans,

Jeff Edwards

Joseph. Yes,

through of few been this think, we’ve percent trucks represent XX-plus our I revenue. those but times, a clearly, and SUVs, crossovers, type of vehicles

North America, crossovers. have I content business. a lot here it’s in and trucks mean, whole we’ve number. So just virtually And the a in important very and of it’s SUVs

So goes back Standard. American Cooper market, so North vehicles as pick up here the those in

Joseph Farricielli

and your expected, was towards truck Yes, vehicles. top profitable would sales, down that’s what line I thought. And honestly, SUV more thought given going more have the than chips, I this I quarter

confirming for you that. thank So,

Operator

next Capital. [Operator with Derrick Instructions] Wenger Our question comes Concise from

Jeff Edwards

please need the to you think into I the question move into Derrick Vic, out -- the current? queue, queue or of and

Operator

of to to And question. -- the that Amenta line will Bob come our with Let’s first Morgan. JP move from next the

Bob Amenta

A a that EBITDA? $XX in JV, couple putting million of non-cash, even clarification. it is you’re though The

Jon Banas

the process in could a we understand for out. non-cash we before issue The couple take of years, China that as see it, -- now, Bob. It’s settle bankruptcy

that $XX million. So for now, we’ve reserve put taken a a to up conservative position for

Bob Amenta

you to it that it? thought going Or collect money you is you’re to pay But collect, you out? would and it’s not have money

Jon Banas

we subject to It’s that going to -- is going collect, were question, the not. or thought raising that whether money we we’re or recovery get now

Bob Amenta

material guess, thing quarter. XX% in the other bridge, don’t EBITDA. we’ll the they there’s to some I is -- little lost clearly, should work, increases it? mix between are million have? assume get sales, that, pass-throughs unusual how in a in extreme XX% times, economics, percentage? there mean, $XX the do with seems the year-to-date it and you’re know decremental. could that’s normally -- the I recover? that items, there on you lost these a But million of mean, obviously, almost you volume historical all like then stuff to XX% And of I is time? maybe there -- not I lot general and of we the the I other you know How percent inflation But over X what $XXX we’re is see the going -- mechanisms general What a of usually are. does recover But if

Jon Banas

Bob, me mix quick comment when your Yes. price. volume does and Keep real observation. numbers, we in those include mind, let it customer present on

to in the it’s or just the would anywhere been side addressed utility initiatives. it, recovery volume those, cost-saving it straight do from normal production So that Jeff mind. XX% our not rent inflationary inflation with be, by Typically, has wage effect on keep our okay? would XX% materials. what through call So of in changes, flow already saying inflations, we commodity on times offset historical

through the far in rise et seeing outpacing at significant in the all own the away term that any all the in Here, -- short cetera, to cost initiatives. those levels we’re whittle ability the categories, input is costs, with reduction our

call still I how our about with indicated, number, big back. XX% the And we’re level. looking that for XX% to as conversations the to we’ve So in customers think, you’re

Bob Amenta

And of then. a ones couple quick

number. liquidity that $XXX know I On it minimum $XXX called you the I wanted the or just cash. million to if -- kind be be guess, unused thing, same minimum you availability? here. as availability? current Or minimum plus don’t guess, you X Or But I the cash your you it’s to just that to cash? of comparing cash Would million words and would parsing I the do view -- comparing those to your revolver

Jon Banas

overall Yes. that liquidity. Call

Bob Amenta

some the I And the interest payment so stuff. QX, you know other mentioned and of

or -- I CapEx to and million, everything. your we take. in obviously and couple all it all than or But $XX -- that’s But mean, I be modestly guide million, don’t -- guidance either outflow, give X of that’s modest with working for EBITDA, a implies all hundred to that’s give and mean, interest, year, capital, then way seems more that negative Your I take. know to yet me, -- next

seems you’re kind some And know just burn cut going things and year. of to fourth like it to cash costs. So I you’re doing next quarter

I know time there? you’re you disposal. not asset cutting it? I I your just you’re is didn’t best cut wonder the going like equity, time you’re and sales, if low to that’s guess, what not out But I close I But -- -- have what I for at things, any have know tell. mean, mean, why get million how it other the besides to maybe that. things some -- thoughts Or close to anything there, now -- if it on seems I mean, guess, I you be So, now. not, at about asking $XXX costs issue just but to just could I down mean, trying how will you’re to I that going XXXs. maybe other clearly was here number. is

Jon Banas

Yes. into Clearly, you’re sales asset But play. come right. could

market. don’t of a the You bottom in sell

that So, bearing that. should here get savings looking cash top that and a about. through There start cost-cutting coupled as from it’s So we we’re there proceeds some above other some any not you But, at. at are in meaningful liquidity the taking manage at. talked initiatives we’ve assets we’re opportunities but of world, our outflow We’ve minimum looking for and already about But as with clearly, reduction level, us, only forward. go that we that’s area there, are other already alternatives single that that and options that around mind our other wouldn’t legacy the look in it’s spend, and clearly, restructuring why -- term of right? been on stay could have to that’s we’re talking short cash guidance, that every

going point not into get So I’m at XXXX time. this to in

top for you on us. So but say it’s for our any planning us color too early to in mind process just give there,

Bob Amenta

Europe even can Europe? you what just EBITDA of is there if go over there’s simple in kind back or sure it and why big versus EBITDA. margin-wise, U.S. mean positive issue the of million. -- Structurally like just there? $XX the XX%. is negative you kind what’s U.S. generally there I then of tomorrow. the answer where better But, that And leave was you million the -- generally or Or the reasons, clearly, $XX are negative good. North in than I’m was speaking, that years, time, doesn’t America, not is But couple X%, lastly, Obviously, can’t just what last enough before on I But it about just Europe. mean, it generically, -- you X%, there? generically that, I just are Clearly, really speaking, seem ever of XX%,

Jeff Edwards

this Bob, is Jeff. Yes,

issue in for us -- we’re about big really the small whether Cooper-Standard, think The on it I our of for business. the Europe. side fluid isn’t is or

lot challenge working On is do has to been Europe in for has That’s the positive. some the side, been forward fairly more through and in that. but about. actually go. going lot for Europe, sealing this to cost outlook a in we about always a savings of the well, is we’ve us There’s relationship fluid, we’re year, and there’s had taken conversations The restructuring sealing been, out

business in not We the hoses for rubber business Europe, also far the there -- back. over sold too rubber hose

to we’re we as there’s So stranded of business, get and need costs out doing some ‘XX, into to that. that head we that committed

the a bit year. the in we We’ll get be in talk but we profitable guidance going ‘XX when Europe we’ll will little forward. calendar for smaller, about early So into be more that more

Operator

Our next Zohair question Beach Capital. comes Azmi with from Point [ph]

Unidentified Analyst

update be the to able America if was business? Latin for wondering your an on provide I plan would you

Jeff Edwards

Jeff. is This Yes.

to parts think, plan conversation with to do assets, business terms that certain in what I just the fall we we that our of of and short. continues had

conversation business to now. get would Brazil dealing hyperinflation that a chain necessarily here, the with this that we’re didn’t to has I and been have of right the supply that we that end we’re conclusion. think from of part the and going Our challenges we said year, by

well So it might decisions. not Brazil terrific out and this, say But be the in best market. of the time, done as managing Jon teams that inflation as our costs of just those a said, in as job taking price to will I have make

investment, we that on. to it need owe probably is given year, of that on one have of the be good a variables we job. spoke But all self-help, driven that a this a So decision as fair to category still very I going to will little just into us least, a I they’ve bit return than more time ourselves, relates think, that Whether we of. enough done push the of at that’s end

Unidentified Analyst

$XX was could And results if and million, third EBITDA at we around down between quarter, was the just $X.X million look while revenue sequentially. down second quarter around

results? And so you bridge quick mind providing would those on a

Jon Banas

Sure. that layer the the with walk be it’s through, just so, the bad top then, in up million overall to that biggest But put when pressures, mix I right? calculation. and few you Then, is we’re all current we commodity $XX higher debt business other the a has the pull-through inflationary Zohair throw the or that’s and it said, to on But that down can [ph] the on dollars Jon that driver experience, on million. of -- run you for of other and driver about going volume -- that, compared commodity $XX or quarter pure second revenue but the million you facing. that here. reserve globally, just in $X we significant inflation as EBITDA acceleration million rate, almost inflation

being variance outsized X.X%. market up drivers were some to was details are American for you X%, But break down production that actually X.X%. let by So region, causing North almost down me the market Cooper-Standard big okay? So the degradation. down what’s those contrary volumes

question the and market about weighting in and an we’re customers we we’re platforms an Europe declines. of North indicates our what why the America. to right with have able and prioritization outsized actually it’s in So That were on, overall trucks, the SUVs there. outpace towards performance heavy line on Asia, the earlier when think you kind here market

fluctuated have volumes, so X% those right being favorable X%. both in volumes And accordingly while down terms Our the the or areas. we of market was market, up in of Brazilian were with actually

it’s and net paint you the debt of that So commodity bad about kind bridge but really picture, helps other all inflationary expense. hopefully, pressures and

Operator

Our question Josh from Suisse. comes with next Credit Taykowski

Josh Taykowski

had to If anything bucket versus X% were XX% estimate? what half X% in of the material XX% costs I look year, know at margin the quarter, you in versus how margins volatility that material EBITDA that the big volumes you the even versus a and doing split second this inflation is if between piece you that. negative X% swing? of last to you do be would But production else,

Jon Banas

track COVID keep say, Josh, the right the governmental variability the Hey, were due But the as commodity inputs to this and on benefiting biggest is we world you’re QX, as the year, mind, pandemic. production Yes, the I’d various Jon. being from in last driver QX around in also far and schedules. programs

away, year, And if And was again. back the last that’s last favorable of serves, about that points that our support, of the essentially through memory XXX that governments types gone were results. various basis in QX and year, So news. offering coming of as of in favorability you half had good don’t see QX

coupled drivers. biggest that commodity very overall and are stop-starts, the the us, with caused the environment, So your has inefficiencies inflations,

Josh Taykowski

And then primarily overseas revenue, $XX bigger just question. last Asia, quarter-over-quarter. swing EBITDA increase X% EBITDA charge in declined bad in you ago. a -- the clarification The yet to That’s on on negative XX% sequential touched it million negative was debt? minute that a

Jon Banas

$XX exactly. material debt It’s Yes, bad some economics. million plus

Josh Taykowski

outflow said XQ. of it Is should but modest How And the guide, tooling. capital. -- some it got bit range, million million just a that, some $XX then you’re just a inventory, it But still Maybe is $XX think we little pre-working million with burn do bit we you’ve little of less should capital to implies know bit it guess, you to about Is I looking you I million? a it how that $XX or burn? or a context that to working the for that? if a more? looking for unwind think about cash than math, in working be should at the close $XX

Jon Banas

give at point, just all to want I this the color the all Josh, pieces. given moving given I’ve Yes.

the -- initiatives puts world, on give it various around you I’ll comes given we’ve because qualitative got takes of aspects of going the a But lot there. So together. and of there’s the how

Josh Taykowski

question. next then And

rate, in in the you more that for out million these to cover, is that actual of context detail, that a to kind you that in got the XX% headwinds that there I frame wanted -- the for I Just faced How $XXX success settlements. historical guess, line? would little It’s guess, bit you the year-to-date, to now. compared goal commercial XX% of

Jeff Edwards

Yes. This Jeff. is

to target out letters our the of that reality the out we sent put the reflected there, business. think customers, and that our we I

teams the clear customers, So our and and we for in are our targets negotiating are as for the clear those to targets. our that speak, negotiation folks commercial are targets are

Josh Taykowski

this recovery that got million if is down set $XXX million, the but period all later retroactive for not subside? got the -- the versus starts of does that’s goal road $XXX asked -- you if get once how you you And out to the previously, is much inflationary

Jon Banas

it the company. Yes. our X of occurring the Again, was within $XXX inflation the required, on and reality million out was October went request of help as commodity based with that the

just we didn’t October date. again, So, X up the make

levers us recover of that pulled. parts those different so my in can each customer remarks. my to and costs. about be is of how I help those us about they in talked There’s bunch a talking bunch prepared And moving can a

one are different. And them so of each

the the mentioned think calendar by as idea negotiations. that, of I year, very the earlier, of a end of have result I will good those we

don’t stick review. performance I give any I calls provide customers’ want my just we’ll detail, use any and more So earnings to color. to to don’t that, more

given probably today. we’ve that So of enough

Josh Taykowski

labor, anything estimate it Or schedules material there incurred I whatever other besides out is recoup for the that? know to costs been just have inflationary production materials? things for talking about I else million does there’s they for the trying in like mean, suppliers costs? or volatility other include $XXX

Jon Banas

All in, everything you described. just

Operator

question with Capital. from next Patrick Sheffield Our Point Beach comes

Patrick Sheffield

Not to million. the here belabor try the on point. One last $XXX

an is to far it of improvement, there that price guys directional of much $XXX Is that right? is can any give price the different other the confirm would theoretically. you Is increases get I increases like expect mostly drive Is $XXX And that those million? categories annual from. EBITDA to just cost where as million initiatives? savings wanted an you like number, then guidance from as like You gave how versus

Jeff Edwards

Yes.

first all, the So price to increases. of the question answer yes, there’s is,

focused also very on We are cash.

absorb. about And that with so tooling absorb, I we’re there’s would going mentioned other as discussions that in any -- asking costs to on associated remarks, them and payments typically my business prepared we our

apt those where to And new business more that’s way. lot is your a they’re difficult. different customer have leverage -- on today, terms of each address win lot in to coming to try do slots you new I keep business then and of your different. based more negotiations different. So also you is want to coming that in of life, And we but probably would give on of business these Each tomorrow in the negotiations. status help that recovery us want a of tomorrow. when how way, have when you have they the those like a depending some you it’s that new we color are are business They’re business to also And don’t we

you also So know customers are. who largest our

So it’s pretty breakdown simple. that many given We’ve times.

focused we’re or And know you on. share here. X X what so to that got that we’ve need people And their fair pay that’s

about are negotiations. days. sitting these customers good help We So we’ll to else I’m everything sure I in of feel -- And we doing try our the the good lobby atmosphere to our about that’s the us, feel and appreciate everybody engagement. really

Patrick Sheffield

And We from lower ‘XX. or higher be preliminary see to XX% going for number XX%. in thoughts if to Any is or guide quickly the XX% restructuring on ‘XX? that

Jon Banas

and Yes. last current than the right I be nothing how significantly expect to that we our that On we’re viewing call, rate, mentioned it change now. lower spend would

Patrick Sheffield

going like debt else Is sort write-down. that, the -- any bad is there might of And anything there region? is then fully captured? others? the Or that that Or finally, on be in one-off? that a Are this on

Jon Banas

particular former just one This was with joint venture.

through in challenging So managing and region, there. industry we are, obviously, still the environment the

this that is else I not can’t our but whether know at we coming anything say So time. way,

Operator

Wang comes question from with next Barclays. Our Chris

Chris Wang

Most of my answered. question is

million that Just in from that October recovery your year-end, included to $XXX if is you’re wondering requesting or that guidance? shape form in any

Jeff Edwards

Jeff. Chris, this is

it’s I before, no, not. As said

Chris Wang

of of you COGS? me percentage raw then Can know back what And step your all the flavors, the give material, base. raws the us taking are kinds buckets sense in in is overall all rubber most Can a what like and you bit COGS terms And little sense I the are a have terms you? then, of overall for a kind of of a you as of what more derivatives. -- of give that kinds maybe are moving different

Jon Banas

Sure. can main kind in -- them Jon. is categorize you This that X inputs buckets. The main Yes. of

the full this for by clearly then largest rubber about the got, the And cost XX that area. $XX followed metals is that and we’ll the rubber incurred -- then, year think on is months, if we’ve of got XX% plastics. input you and plus already million about inflation You’ve we’ve $XX based million face the

on XX% is Another metals.

steel coming think out resins. aluminum I So and category, XX% then of in plastics about and and that

inflationary overall that how down. that’s I So kind -- the of impact the breaks think of

buying, it the a don’t down that our we’re raw materials, about -- of of in XX% it’s percent but terms is as sales more about -- materials XX-Q by XX%. materials, QX into that materials, direct the In break see that direct going We in direct our overall you’ll timeframe.

Chris Wang

Can lift And by about the bit talk visibility there of mean, continents? terms I sequentially. broken is and you probably in that of down a to a sales

Jon Banas

forecast overall America Asian then up compared so. another Yes. at and IHS and about QX; the continent-by-continent, to QX; about up North look XX%, is Europe has market be the to up When X% the to or you about XX.X% supposed QX

of the you customer IHS that too. overall then get our term our in kind forecast. we sales manage short here. factor And if with the revenue, we to is One that’s schools of also increase. X Clearly, you how weighting is So releases there have that

And so points we’re into range triangulating that you guidance those see. both of data the

Chris Wang

have modest capital, working cash you’re of is said things. you And I is, missed that with to XQ, couple right? outflow a going One on

Jon Banas

we’re we’re have offsets lot working Yes. that’s expenditures honest a to us. then positive we outflow got with the And in front down. that going got that be capital to bring But load, of I’m modest, you. with term enough the of interest that rethinking current outflow outlook, cash the cash towards, to we’ve the and

Chris Wang

noted I expectation and that quarter. a lot in of And get your little even sales a sort of going back, when you lower now bit in obviously, working be with, hopefully, sales XQ capital your recovery higher? ‘XX, the really to going didn’t is What’s phase, to into

Jon Banas

as few a we this ago, of that why working back. should QX a down, lower the inventory need was answered And and buy because front sales the reason get as working in to don’t on of I come minutes The we the didn’t higher environment, much revenue capital right? levels. some we biggest benefit those see in of Yes. capital rising

Operator

question Jared from comes Bank. next with Deutsche Our Weil

Jared Weil

the but about margin path like answered, talking been in questions this this. into year has the be -- coming was I the going identified, think didn’t was like improvement you’ve to think most material the of we it buckets inflation to

inflation, of material back back. yourself catch $XXX I on and back or on if sort do that those that customer if will negotiations, to and margins to But -- part you up if you on your on -- of costs you you year, cost How shooting able pull get material million So we the into think be of initiatives, is, mean, that sort question that maybe the its the of understand accrue on of for? to that other and right? own, cost the other to bucket this able part yourself to here you’ll progress bucket? these other inflation the grade you’ll -- you hold next do on you’re set of do executing were and I part part sort stuff? the my into you were margins -- all to all improvement, are to be how remove of where

Jeff Edwards

full first said as And this on the that. ‘XX, And capital EBITDA. was of said conversations we if in XXXX expected double number we Jared be to be digit Jeff. we that, to get able back return largely is timing. is a and year on remarks, exited then these at digit would double we our we’re said we that, invested in Yes. my what demonstrate I’ve I

We’ve talked causing pre lowest just standpoint about inventory was on chain that. of include all we profitable inventory start traps So the that vehicles, inflation. this shortages the costs talk we and full the didn’t that we Obviously, shutting a history labor significant and conversation and production most stop have in were is here, that If about having automotive that significant half the from the supply or down and then all all glass level industry. morning. of of is what regarding

the most vehicles think, I coming new we have market. the on

in are And that absorbing That’s a can to year than way we’ve have soon that’s that. been are We America, The given never increases. EVs pent-up in $XXX internally, real, we’re do we position profitable, that China, happens, have result. asked a been view is do to for of the Europe, still control. to through demand the see our these of feel inflation next customers as work material get and of up and sure I Cooper-Standard what clearly, continue supply a more raw And take real. and the demand. brand plan. chain create and costs in we’ll work that think get tremendous way. work and opportunities still believe, we why running. from price the to to million our we there, same better those challenges, result a And We incredible going is to cost has I’m as the as you’re point exact North I to plants have regions need to and going

terms what say and success about to I that’s this both extremely about in remain have confident it it. I up this so, point, company, been about the future. never our optimistic as industry set in I’ve And we more long-term of sustainability. and to simple as can for done

going customer talent best we is you have they the can I and our the big everything it. industry, going ever as them, we we’ll have the and deal, whine relationships it some continue And for we’re negotiate. to contracts that we that. have culture And we the think about And we done, to to confident better, stay I’m aren’t negotiate do of the can to with think a get want to that in been deliver toughest that had I here. to and we’ve never promise I

focus I We’re sort to just best the continue and going of customers to we that to can go know synopsis. the and will on us help things work That’s they the control, our can.

Operator

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

Roger Hendriksen

morning, everybody. we really appreciate We call. and insightful forward will your this you. to This certainly Thanks, engagement conclude look Thank future and questions our conversations.

Cooper-Standard (CPS) 6 Nov 212021 Q3 Earnings call transcript