- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Third Quarter 2022 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 will now turn the call over to Roger Hendriksen, Director of Investor Relations.

Roger Hendriksen

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

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

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

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

Jeff Edwards

Roger. on some Thanks, year-to-date of an X, begin provide We provide slide to key opportunity or performed the and results quarter the update our on appreciate third how quarter. business going review our forward. and and we outlook the To morning, indicators operations in highlights our Good everyone. third

scorecards employees customer continue execute our the by our We safe. the our keeping XX% at delivering levels of At quality world-class quality to end to product and products and were customers, services quarter, for of green.

XX% were scorecards at performance green for launch quarter. the Our

of record a zero teams maintaining safe ultimate their of the to of plants proud have all. outstanding. incidents continued these our workplace achievements incidents. not in continues recognize plants be their in months I zero possible. the safety of for that perfect Through goal want our confirm first they achieving XX a be and I more global continued of the nine again we commitment the team performance world-class safety plants could commitment is importantly, still have once that at for the as More leadership year, to for

industry, across continuing reduced the While costs maintained inflationary on automotive focus company. reducing high production conditions our pressures. global remain chain in the supply We've challenging levels uncertainty, obviously, and with

operations deliver Our million initiatives in were deliver quarter. able -- were manufacturing to and through $XX lean in efficiencies to savings improving the

we Our SGA&E right-size our as expense restructuring costs. in quarter. year-over-year delivered down In benefits fixed continue was $X million million $X actions in past to the

concluded quarter commercial from incremental more negotiations saw enhanced were adjustments also were implemented realized. and and as benefits on and We in pricing recoveries agreements additional the our cost

Moving to slide X.

Our management finalist thermal groups new vehicles to that as recognition pleased well been solution named a trade our Plastics Society in the Annual Engineers for advanced garner of morning, product our innovation automotive continue customers. innovations electric I'm This has from to announce competition. as thermoplastic

Our specifically and a improve the to significant flow operating for the new electric required a assembly vehicles. battery also optimizing with XXXX PlastiCool ERGO tubing QuickConnect add efficiency. XX% glycol, weight improves temperature plus for compared helping locks and system to our value management overall our tubing more customers. for of technology OEM process, pressure traditional technology in thermal and was vehicle flexibility in reduction provides It systems aids developed technologies, EPDM the of the Combined efficiency also latest environments

pleased that innovation. Society driven awards focus by new the of by with even business our Engineers, us recognized value-add be to pleased more our on customers largely are giving the Plastic continued we're we're While

Continuing on of slide product to innovation. X. the topic Turning

connect, the fluid Internally, scope and our and to critical convey, four strategy During progress of our a which communicate. fluid our in in it conference last the business. call within refers August vehicle; handling early functions we're making I XC call our spoke control we about opportunities systems expanding in

Our traditional functions. focused the primarily on convey products of and suite has connect

and technically progressing a of rapidly of These agreement expected different single integrates discussed. sixth-generation record world-class technologies We have tubing and new Through technology vehicles. pumps in types and of joint of cost, of we're product that to advanced and in many [indiscernible], the I complexity business providing strategy the our in they systems technology with connectors driven efficiency comprehensive with connection we have into the development control, routing a management are related optimize the just advanced new announced fluid thermal track as established further development device. functionality and garnered in electric recognition August new

it simplification, efficiencies. management customer, light weighting OEM system and our value will enhanced fluid performance, through add For improved

For revenue and new offering our significantly will increase expand technology Cooper-Standard scope margin product the and our the opportunities. of

favorable new Our potential their with new about fluid and how and our them The expanded been early design agreements collaborating under multiple explore we'll already capabilities very response engineers system challenges. the provide. some of excited biggest growth are to capabilities OEM teams can non-disclosure technologies we're has systems solve patented opportunities design our help

Moving to X. slide

product systems. a market. Our rapidly expect these of higher electric technologies XX% for and differentiate represents per flush innovations These sealing Among team are content new this technology are as automakers range additional frameless more Of we in vehicle work seal to favored cases their And been options. XXX% than this significantly design electric recent vehicles becoming will also traditional as sealing systems. sealing markets premium for exciting for the most and vehicle continue. the awards higher vehicle choices business opportunity have delivering some frameless trend drives is growth through than and our the frameless sealing a technology, styling

technology to We growth. profitable driving investments are and believe the future innovation in product key our continue to

the and inflationary and We benefit us will pressures ahead, optimize as and our even in further we months this normalize. as expect years structure, production volumes cost

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

Jon Banas

of results On slide for on the to In for results last our quarter of financial our the next aspects Thanks, same period quarter, good show our provide Jeff, flows, cash comparisons and sheet. we the our morning, I'll summary some and of balance XXXX, slides, discuss third XX, year. with everyone. liquidity and a the few details

were gross compares costs, million of Third Gross loss XXXX. third of quarter the This or second XX% $XX.X for $XX.X XXXX. quarter sales. partially to in profit US XXXX. XXXX. million, other third a $XXX $XX.X material and loss volume and negative primarily XXXX for by the million to the the a continuing was pressures. the X.X% the versus $X favorable third net mix, in of manufacturing quarter quarter quarter nearly inflationary GAAP an recoveries, was EBITDA million, The million, compared of in the of basis, increase was cost $XXX compared quarter Adjusted quarter sales as and of On year-over-year driven of and a improvement higher labor million, efficiencies, energy offset of commodity, by cost net was quarter third in as loss million $XX.X well to headwinds,

quarter Excluding income primarily from XXXX. tax administrative $X.XX recorded per million, the charge general profit, assets in improved was related year-over-year lower engineering diluted restructuring million, improvement of other quarter valuation special to selling, and a per share expense, we expenses, and on resulted, net share United when of States. reductions or the items, deferred to significant XXXX, adjusted loss compared and allowances of expense in third the versus QX adjusted The $X.XX or XXXX, in tax for $XXX.X loss diluted $XX.X third net of gross

the expenditures quarter in compared capital in $XX.X a the third $XX.X to ago. totaled year million, Our period million same

below and CapEx on of X% continue to the capital track for to on keep as last investments, We quarter. have we're focus full year a committed disciplined sales we

on charts factors quarter. The insights third XX impacting results XX. the into slide slide additional some for to Moving provides our the key

net in price XXXX. the increased $XXX On Improving customer million recoveries versus by second volume top included quarter and year-over-year the category. sales the customer biggest of favorable the and cost line, volume and in of volume quarter, mix the production also driver, adjustments, was customer mix,

Foreign further first exchange the impacted which $X the last same of and Euro a the $XX million. joint completed by the versus year, sales in in quarter reduced period of venture sales was deconsolidation Asia, this year mainly by million,

adjusted For in and efficiency contributed from added Lean SGA&E reductions actions price purchasing savings another improvement and in the restructuring recoveries and $XX initiatives million adjustments, a of million, net past EBITDA, $XX $X million. million, including added manufacturing combined mix $X volume, for drove quarter.

$XX As the by EBITDA for amounted and higher the pressures, to compensation-related headwinds million, wages, adjusted in costs and costs, general inflationary in $XX the higher quarter, million quarter. reduced material items a other combined

Moving XX. to slide

joint foreign Asian of drivers net the in in partial for key at months compared unfavorable nine X.X% price first year increase and the first of same by deconsolidation these offsets mix improvements with period to Looking in sales from primarily the the was volume driven the XXXX. increased quarter, measures the The operating and adjustments, and exchange. same venture

significant general SGA&E, and EBITDA, positive from as which lower this improvements well net year, price restructuring wages more by $XXX were volume mix, nine than offset million inflation. as reached efficiencies, have savings adjustments, in For costs, increased and material now first the months and of purchasing adjusted manufacturing higher and

slide to Turning XX.

In $XX used inventory driven had increases approximately ended $XX million of the modest mentioned approximately September approximately by we was operations a primarily cash outflow terms million XX, free the by of and quarter. in net $XX receivables. in cash tooling of flows, cash as during CapEx With months earlier, three million

current million. $XXX refinance expectations remains alternatives. a not on and the certain the these is of to ongoing the sufficient requirements end, expect the refinancing ended the meet with debt September, Availability, structure in and such upon we refinancing its our can to We're have planned been for agreement revolving products, no ongoing an solid September to facilities still we for execution liquidity potential which XXXX. next facility. liquidity constructive, months capital yet provide demand an total was loan perspective, credit company's result, million reached and balance light resulting be our will of XX assurances has our operations, service discussions while million cash be for will and are balance as And based there initiatives credit for From continuing our agreement of undrawn, XX, vehicle future. and ability that our still a support to Separately, our of flexible contingent customer respect reached. with production term company to investors, a resources As discussions $XXX ability facility, at quarter with solid on current for $XXX access cash foreseeable its strategic

this won't remarks. providing that, at details That be any prepared my Beyond concludes we further time.

So, let to me hand it Jeff. back over

Jeff Edwards

Jon. discussion to year. full I'd you this cost our efforts touch like on on then improve And for and to structure morning, our the further up update ongoing Thanks, to outlook wrap our the

have efforts turn year. please and These costs year million continuing slide XX. per delivered you'd rightsizing million of past than reducing and We're $XXX if more our savings the nine on months $XX the So over to three where in operations this in years focus already our first necessary.

in conditions further we're around clear, world ways are remain evaluating challenging, all continuing optimizing To markets table. on our the our and business footprint. our options operational improve the and to be As seeking

of XXXX slow and next allow year, progress good in year, XXXX. initiatives enhanced months made cost reductions, the cash expand should rate In have further to expect expect and cost of remaining reduction our and and rightsizing slide outlined the margins the and the we into and a We us as number commercial projects and to to manufacturing flow. this improve agreements, complete on inflation completed of efficiencies remaining we

slide XX. to Turning

volumes. trimming for due EBITDA sales In year the in original terms We the to continued $XX of months now our billion for of XXXX primarily expect year range our $X.X which in the to guidance, of weak the and of we're $X.X sales in year, full nine our expectations, factoring full $XX short of first customers' and million. adjusted to range results in EBITDA, our adjusted fell production estimate schedules variability billion the million and

near volume. So the EBITDA, production original revised guidance remains the end our range low range the despite disappointing very adjusted of for

and expect we suggest a fourth significant improvement EBITDA midpoint carry the ranges margin upon forward adjusted addition, for XXXX. into build quarter, these an In in to the improvement sequential of

we a the in and that uncertainty the continue is of control. industry, our aspects can manage lot economy still business in of we to there successfully While global our

has structure and significantly still improving. cost is Our improved

for also commitment with environment. their and our inflation. to continued our global I our employees in of customers, other want initiatives Our their continued of want our to quality manufacturing delivering ever and this and challenging continue bargain team as customers objectives innovation. thank and supporting for our our the have for stakeholders dedication operations their in time to and thank their their through trust, they on efficiently are products fulfill to customers running end with support technology and strategic delivering and as commodity we I managing confidence

our the weakness pursue noise related solutions industry, to and that further shortfalls continue, costs, as all the aggressively products, volume volatility of inflationary confident pressures. as volumes However, we'll the and and only increasing to will customer as innovative uncertainty enhancements for I'm concludes groups, production ongoing drive and Despite our in be stranded well ultimately but sustainable commercial offset employees', customers value value, our providing enable This investors. including will and that compensated. us our comments. not our we're to our our for all of prepared stakeholder This long-term communities, suppliers customers, fairly

up open let's Q&A. for So the call

Operator

coming question from line Now, with of the Instructions] [Operator Michael Ward Benchmark. first

Your is line open.

Michael Ward

$X Jeff, suppliers cited billion supplier settlements. everyone. fourth morning Thank call, company for on or sum the you, much. the to lump earnings payments very Good

was other things but disruption production for it addition, said In and for it commodities, not like schedules. just

of I think your implemented highest and mean, material or has I it us And straightforward. where basis. you that, that to highest some settlements like is buckets. I of part I costs through kind comments Am the those thing process? Ford a reading are then, with the exposure realized. of there disruption production freight, Cooper the type mentioned relative in you are several of walk the the among think sounds other the correctly? were Can stuff the and that on

Jeff Edwards

correct, You're Mike.

about material of the months. specifically surcharges buckets raw contracts bearing we've obviously Others, pleased really year negotiations for of inflation if now that indexing have will the cost have a been our we've that we've cost in is customers. the we of you that Many quite The first we in number place. with that component frankly we're bucket material completed those and quarterly place all address talking been this

the and the our related consider we've of -- had to at say, that recovery would material, negotiation high forward, be I the expect So, above we'll closed we going that historically. end

So all material raw think about recovery XX% forward. of going inflation

goes it other we when the back then the course, with Of way, share customer. that

with So as we us working our for transpired. where get And and very I a to allowing I how it's pleased thank think with us customers that's mentioned, to all sustainable. point

more continue. terms other and Your remarks. the continue freight to I more Those and bucket stop to typically are more of energy question 'XX. in to us surcharges expect costs related of like. Those labor into smart negotiations customers that is handled recover That and the in was with prepared would my

that with the that it. out I work have those think per in customers we're And recover more and us conversation that's very help hence with the causing the I shortfalls. releases headwind challenging really quarter, volumes we But So, it's going would the even different of confident if had continue would out are -- waive magic environment. fourth would third to have as be there, more a if We conversations unfortunately, the to like and hit they're and we'd said But our going our wand much challenging a releases my forward. volumes prepared remarks right in that short to just still now. we there

Michael Ward

recoveries -- Is will when bridge or because that is first analysis on months. is look the economics that million... you Chart be $XXX in mix I the through money think nine it So are material the that in correct? had the your XX $XXX recovered, volume at mentioned that Jon million and So I included

Jon Banas

of charts. commodity you're in in The as those mix is volume Mike. those $XXX we those page right, rows costs. bucket historically the million there recoveries, and included the bridge The price we've on gross Yeah, the include

So of million of on call as inflation as you in can catch-up percent being XX-plus well it perspective mentioned, around this from period terms recovery year. on that able that to we're think that current $XXX XXXX back Jeff both some commodity a as

Michael Ward

Okay.

of So you million, not recovered $XXX it. all but of part the

come will couple So quarters? over part of of the that next

Jon Banas

or Yeah. a do on recovery to as a two and period previous contracts two-quarter then delay delay look doing a There's those reset index perhaps kind back the quarter mechanism. of you're quarter

Michael Ward

on And any start-stop? the inflation Okay. million that general the that other would $XX of impact from and the include

Jeff Edwards

include are gather. would utility bucket. inflation, general stops degrade inherent transportation would What the sold be the in activities it going That start economics, not that bills is really labor of They goods up. we're The to in costs, necessarily bucket. able your your those the lean efficiencies cost manufacturing and

other that kind to as opposed they the against area So of go bucket.

Michael Ward

Okay.

could the cover that over quarters be and So material two the we XXXX. for above recoveries in as next

of north recoveries? $XXX up we're of million potential So

Jeff Edwards

That's the yeah. goal,

Michael Ward

last question. just one Okay. Jon,

significance as any -- refinancing current the the loan, activities? to relates there is On your it now that term is it

Jon Banas

loan those alternative. Today capital calendar. Mike with is the that's that. or current. structure engaged to the on because We're of constructive default term the technically a a at and now still agreements just the months -- But emphasize due. is impact that goes now that of conversations the it's look no arrive on there's that coming as date date our XX But right it's I'll like debt now There's in investors right potential anything current within -- situation. It's no at refinancing

Michael Ward

Okay. Thanks, Jon.

Jeff Edwards

Jon. Thanks,

Operator

question from Steve Sidoti. next Thank line with you. And the Ferazani of our coming

is open. Your line

Steve Ferazani

expecting? Trying pressures? continued stopping that just get of the you seeing and to volume getting I'm sense and were of you're get I America EBITDA margin a do color guys. would margin the and questions the sense a the a bit I line? trying more to some I'm in call. Appreciate previous see what expected starting little labor added a follow morning have on did you that improvement. at up want in not you've we're the looking that that all Is little where because Good is that to inflationary North bit the the growth

Jon Banas

take Yes, during certainly the in that uplift into North volume have this and the is was Steve, aide commodity the activity well pressured those the otherwise Jon. inflationary as other benefit along on you the company quarter side with of mix the pressures I'll America would what entire that. expected as from year-over-year. --

the if commodity $XX Similarly, in of than that for bridge minuses hitting pluses nearly the $X are million hit and because the market. row that North economics North there's that call there's million -- really the general other America. the million over wage/utilities/transportation $XX So across American inflation of in that the of inflationary was I'll I look that what on $XX within higher pressures normal million quarter,

doing when Jeff they're performance well other inflationary But pressures So there. into eating are the indicated. back as volumes coming the are those certainly

Steve Ferazani

pressures based coming see the You inventory easing easing out sense beyond any in what's quite I not that on are bridge just you you But not some place much getting this might seeing your can that point clear. you inflationary here be really up catching mean the you're where there's beyond contracts -- of now? start at to some have energy of

Jon Banas

Steve or inflationary commodities you speaking just of let in other all Are terms buckets? clarify. me the

Steve Ferazani

them you. for open it all I'll Throwing leave in.

Jon Banas

of of benefits experiencing Well, the inflation and the subsiding certainly us down increase or is Okay. for not deflationary rate any it's not quarter. somewhat, tailwinds going you're in but certainly

down. inflation prices and labor those to in now, But don't And energy Looking revert terms that inflation there's as to still sticky you back and are are see we longer-term as natural ahead, know relative it. of gas deflate. some well and year-over-year as and to come is tend electricity certainly the of costs right high those perhaps running commodity projected

time facing a So those we'll be long and now. here for

Steve Ferazani

down you quarter. almost environment. higher stable remain challenging quarters about going it entirely talked you cash on bit about environment? we're a management this to the the sheet of of inventory. sort couple year quarters, looks balance are did cash It to How both previous thinking In this challenging over related see assuming next We a come the despite maintaining relatively

Jon Banas

cash we company. mind And expect Cooper-Standard cash EBITDA in flow the our you that for of don't typically the And notes characterize continuing flow, in million way a preserve the levels can we cash while down balance top everybody on to free as here. I'd year, have the in typical QX on our spending November to is benefit unsecured and production will. senior in But we payments draw sheet guidance do of provide keep do inventories interest We're and December. mind $XX towards an we'll positive obviously and the cash this to of seasonality monitor drop it in discretionary all secured tune end protect definitely the both increase in notes Steve if QX hit about be and where quarter. we the that

we'll QX. working capital So, have interest manage by those to in through coupons offset the side

Steve Ferazani

outside in And if just your Fortrex one could Great. updates of customer base? get terms then typical more of I in in any terms marketing of

Jeff Edwards

Jeff. Steve this is

continue march the launch towards deal. of We to shoe first the

related what think customer to the you about. quarter, those at happen been than specifically continue have discussions we continuing tell second to pushed And talked then we've good to opportunities that's anything into that about still other expanding don't conversations pace. basically that but pretty I with the early share having to target a that are on particular we but

Steve Ferazani

Appreciate the time.

Jeff Edwards

Okay.

Operator

our of Thank you. line Joe from Cantor. Farricielli next coming And from the question

open. is line Your

Joe Farricielli

plant expenses general? or and recall update there Good and some Brazil? restructuring morning. you to you a tell in on specific Ford was update in closing an us restructuring America. I Any had Could give that South

Jeff Edwards

there. upswing in position Brazil. that be encouraged to deals assuming we have is this price in do very forward they close healthy customers to can customers costs will profitability On potential job Jeff. they close XXXX they the from the of Brazil by look in expect here our have as in are done We reducing continue recoveries a quarter, the our the managing good a we teams with but Yes, that also the to and pretty

Joe Farricielli

was a that And co-located.

a in plan customer correct? -- customer a on You're

Jeff Edwards

is of We footprints history. manufacturing variety Ford you're one The of with have speaking there. a

work be year. we'll So, there on that's what fact I'm and been about XXXX this talking is profitable based that the done in all what's the left

that options there my footprint. Brazil in a to you're turned it's relates are here is previous forward directly way around. all management the it sit leadership encouraged think business and for about quarters comments related to that the table I'm what as on and I that I is to today get effort the as the of I team there think to us in business referring

that. pleased about we're So,

Joe Farricielli

And Is That's Goldman question. the last adviser engaged then Okay. your still as great. for refinancing?

Jeff Edwards

Yes.

Joe Farricielli

you Thank Perfect. guys.

Jeff Edwards

Joe. Thanks

Operator

Thank you. coming Brian line And DiRubbio our from next Baird. with the question of

Your line is open.

Brian DiRubbio

morning Jeff Good and Jon.

sense a questions Can the production or at couple the plants of Just operating get a of us worst me. the maybe what for help been Jeff, maybe have over cadence quarter you, operating versus issues? rate of the last point the

Jeff Edwards

volume releases. about think comments. lot and really versus we customers quarter in I And these Yes, frankly of of the saw fourth in XXXX the in fourth actual I'm there to the concern the and here Jon to with to both conversation considerably strength about a about. talked you our North and third My the it in reflected XXXX up third the fell related volumes short. is the especially over And that of talking was as the quarter the quarter quarter course continues biggest the from then America be was instances strength what of

out and didn't related an points particular number, be that that's expected from when it happen. revenue up were pulled the the and inventory the volumes on directly it's you there were would So considerably fact these releases what have at look we to then to

just And the I'm doing of are can, facts. that's stating they customers challenge. So, the that best our look know the we part

continues And so and the that we that that other really up that's and if that it suppliers really as the most releases. then will a -- I'm are. results get to stability where environment. impact not efficiencies the sure that to volatility healthier we if we relates if us you we much of it's out that's need in And stability importantly Unfortunately, then need

how XXXX So takes see let's off.

many last supply that based the be few chain that are on reports. issues us have that years expect We subsiding the of going most to hit

And the then efficient a manufacturing us right the helps will release to the of we stability that can amount hoping as be and labor of I'm of as get So, side. on right process. get that level the amount inventory add

your answers question. that hopefully So,

Brian DiRubbio

other last earnings helps. opportunities had that was for No, there Jon that potential call sale mentioned leasebacks. you

see there's updated want thoughts Just front? to that on if any

Jon Banas

front. new Yes, for to the Nothing on Brian. Thanks question. that report

We continue capital. those at to look to opportunities some unlock

But table entered if haven't the sense -- economically QX. the Europe are those But now our makes plug cap options for and into nicely did enter they capital are unlock operations the transactions into just any still expense significant such across sale-leaseback into ahead ongoing go with of We and us. cost we'll on And one and it entire in that we large in estate to opportunities in since then real that lease burn footprint. in to capital don't those. the for we're continuing investigate rates

Brian DiRubbio

cadence, or cost? it you're Is it just EBITDA Okay. operating a of And experiencing turning is to a switching gears that headwind energy to from you what get the need just positive? focusing on Europe for Just Europe get the occur second. sense Is trying biggest the to there?

Jeff Edwards

is Jeff. this Yes,

fixed in to before, do have said we address to need we've ultimately, as and plans that some So, cost have recognize we Europe we we that. issues

that's, the we of under control. what of, bucket kind can So,

challenge in have absorbed significant we we've margins a has away many at inflation a of have lot there and also prices frankly, with We eaten point as the our Europe. did I'm what really the of non-raw talking -- this about material

what volumes, relates can options The for They is having challenge us to a at for or a the the And cliff there And right? have in where see business. before Europe the talked we headwind Europe in will geopolitical significant us important so it pretty conversations XX the return on big over businesses to expect days clear. begin next these all for the look table we've pointed us dropped obviously in a a an everybody. macroeconomic I the I starting options you point challenges final said and extremely our as are here as much are to that improvement those quarter. the become getting like continues those generating for European off it a been least Brazil. point create Hence that's at extremely have to And Ultimately, we're challenges with third about when XX to customers.

And we'll that fair next are hopeful of to what we need goes so we you with while that posted. maintain in relationship see continue We'll the customers how several our And months. to the over will course a order there. keep agree

Brian DiRubbio

I'm Got just of other now commodities business? of Final hearing as the more inflation metal and sort from started peaks. that's pertinent labor correctly it that energy the impacting their off replace commodity prices decline question February it. me, have If and to the inflation you is

Jeff Edwards

to it. where those parts. We can't to going give point business going towards or way able not freight, happening. talk those at you just are It's away to allow there environment else. able talk we They're and we something when when least We -- just to about going And It's talk not hopeful feasible. Jeff. our buckets. labor, to And get Well, hole to energy costs But that to a about conversations talk are start we're It's with a when I that me, we're continue a that impacts a personal. us lot when either mean do Europe to make utilities to sustain that we get of we there. deal that up, got in we're about about to customers positive believe we money and do make hopefully get will we're obviously pointed.

Brian DiRubbio

all you. Appreciate Thank the points. Understood.

Jeff Edwards

You bet.

Operator

please our question. one And for next you. moment Thank

Kirk of next coming question Our the with from Imperial Ludtke line Capital.

is line open. Your

Kirk Ludtke

Hello call. everyone. you the Thank for

adjustments, one-time of are such customer as are you what the of these becoming a nature or negotiating with -- automatic relationships is changing would the Just couple respect pass-through? relationship the you're these negotiating -- of that material follow-ups, you price costs to describe are an more

Jeff Edwards

Yeah. for side our it, Kirk, related now talked is we have material so company portion. revenue raw to or of probably of total the material XX% cost the we've indexed before as

were. where that's significant over So a improvement we

a are that ones The similar quarterly way. other surcharges act in really

been the use that a said you going So we why rate. we've whereas recovery price that that the past cut used also that forward, sustainable we're at words feel that's, is in we're they've that confident I'll which XX% going earlier those ongoing automatic negotiations. are just forward we deals

at the that's freight, product, that's foundation and improvement new your that this business of separately business about share costs production that's those that you you really reflect what made similar things and today fair to in with going dealing look utilities we've to additional good costs. So business book going expect that buckets. yet at our very business those other and in that. substantial recoveries is as those on we're you And those negotiate launch, or in recovering everyone have we doing. XXXX results The of we'll those least Related other feel we've requires would in back change that go and while business to production forward the labor, substantial costs I our of of the quote we have to up, get those

Kirk Ludtke

Thank you. That's helpful.

similar? the And would it sounds margins the de-risked say So that like be you've you would business.

Jeff Edwards

Yeah.

reduced different we when forth historically customer. discussing positive. to are good and large this if such LTAs you as have Related fair. straightforward. believe Europe the terrible we table you having items sharing downs. the so reduce all freight in material we cost We all to certainly winter you as those And long-term continue we're to something it's up and are coming in of other And the initiatives on that that risk when keep believe and still is and of to for probably and contracts it's will we costs that's the it's We things for center that want believe ups thought fair and those when And and lean the to up. that good. think that's labor in environments. and the volatility going prices in costs raw are are that believe that's We have accepted Those the table the level us conversation. although this originally especially buckets have pretty they you're we've going are wouldn't good at VAVE I not increases energy seen reduced

Kirk Ludtke

you. helpful. it. Got That's Thank

Jeff Edwards

Great.

Kirk Ludtke

And do to any understands is have it's -- with of hard that to specifically curious there you -- other, there, of next are production think still energy you know of then risk? but in risks how about real in I'm the to just that a quarters Europe, have type one that just rationing I you thing. respect production like the don't type ball, inflation crystal couple

Jeff Edwards

going see have a I in don't you to statements. And that is financial I that's anything Yeah. tell crystal And revenue the future suppressed. ball, I my that. but the near change can I can read clearly don't current

we continue flow until do hence a Europe generate about getting get Europe is positive sustainable a where footprint recovery point us idea when that these things and is. cash so I conversations cash customers need allow that there from gains and to We flow positive foundation than no more related to ourselves. can our And return in normal. to will have by a make can to help to cost to

a just So it's going while. to as treating we're if be it for bad

Kirk Ludtke

terms by you Got about energy? schedules of your actual customers' being of are altered rationing it. in hearing But production levels,

Jeff Edwards

No.

Kirk Ludtke

Thank much. I Okay. appreciate it. you very

Operator

Thank you. next next from our line coming the question question. [indiscernible]. of And One moment for our

is open. line Your

Unidentified Analyst

Yeah. the Hi, Most answered for inflation surrounding guys. you already. taking were Thank of questions. mine

you. thank So

need to inflationary As employees of the are environments? number to able the the that to labor given wages just are hire it and relates at attractive you labor that you company though,

Jeff Edwards

is This Jeff.

long-term to those a we in but in think to that's think I around we addressed that clearly are the something and most markets regions in going have basis. world states certain need certain have, be we certain plants headwinds on

feeling think or that that's sure and the that And try future help employees we try to for make we sure of that our I in a whether provide that up. similar long-term their labor are competitive that manufacturing, whether fast they working What I tight. what in that's going working you to think support working So in you're type have Costs environment we food we a have is make you're right do. whether or is do families. that retail will you're now believe they

long pay We would to in competitive to say we I so people we aren't enough as we recognize us at the the have region have we we run of need and that up right all outside the pay pay lined that we that most, we like demanding where virtually to as wages now. facilities to wages run a increased. can to have a every gotten is can trying those them point willing that for have we're but the way feel least the market wage,

your answers that hopefully question. So

Unidentified Analyst

I Thank second had. as that then And you. Yeah, does. a That question does.

came you think So call about really in go forward? initiatives that's materially $XX going your lot we rate, at back million, it been new shows which going to million or is quarter this up fruit. a and of do this of cost-cutting $XX roughly historically it's Should where level as SG&A well-below a bearing run or it change think are

Jon Banas

ongoing. Jon. is all say ballpark. to and and in The costs SGA&E current for that efforts look be at sure footprint rationalized this and Ben, I'd continuing just size our it's described that it's you will we're not the make rightsized

rightsized you're have looking thing that full out of that I further make you in ago. we be bonus look we've opportunities, look to in continued continuing production not The talked mentioned. our at across we on at We'll call only at SG&A for the about the as And only and So pressure P&L. plan is to our with of I in When at rate, one all volumes won't drive structures minutes to the you lowering year XXX% down would run it overall continue compensation-related The sure that for to but were unfortunate quarter. the got the payout. row a place. that guidance also few the

down XX% would to it to go-forward your run in rate. So slight That the in related you do taking range. SGA&E not decline call be see a that bonus level

Unidentified Analyst

very Got it. from helpful. That’s it that. I me. Thanks. That’s appreciate

Operator

Thank Point you. the in Beach with And from queue line question coming of Ameer our [ph] Sohail last Capital.

open. Your line is

Unidentified Analyst

taking initial Hi. can call. I might about, my addressed. guys just questions look. what about share, of how wanted Most Thanks you XXXX been talk to But for my have thought

during and forward. run the mention might might provide on if QX how wondering indication be of extrapolate rate call, we could better that You a guidance, you

Jeff Edwards

Jeff. is this Yes,

we bank versus hopeful, I'm off you the we've prepared of during We actual the to I XXXX. to lot take that's we in to it the to of the a about said need volume, can run release lot remarks, about in leaving fourth quarter, as production. that Clearly, our plans that That's We we've we're today, talked look talked that XXXX. build to relates if we're kind what of improvement stability expect a numbers and think XXXX. get. that I it where going need margin at continue in on

that what you the our originally to of some at to be. look So closer there forecasting us here for of going that know for little are quarter. was the softening customer do talk the hopefully, a folks allow accurate XXXX to out about thought you starts versus end a continue when the out to they some they living, year, Clearly, to when get put numbers

So to each customers us, really do. of to for too going it assume that's are we're be what seeing what right now. our early And would

XXXX call what to going February, going better we we'll so of to March usually, is the year-end talk and about and And understanding, wait like. top period then look the line have until to a time

Unidentified Analyst

the give how regards as and that's this incremental And releases don't a costs of, that a with us year? of match. you sense production to much been come actual Can headwind

Jeff Edwards

bit the right? inventory quarter, saw we that because that's you so Well, the releases large for were of one spent cash the And up.

just doesn't it make So itself.

me, describe it didn't and labor so. plants have building stuff we that That's way for ultimately one people to sell So for you. and running this

Unidentified Analyst

that this, are impact? inventory are in of more this other Are that there this related, timing or of think also like like by incremental working capital just should we a impacted costs cash as

Jeff Edwards

we are each we back everybody that can I on Again, suppressed and Now the don't well. those like. want you're is point and in you facts. customer when a our have doing don't from mean, with volume of to the in they manufacturing start just cost and stop highlighting quarter to regions. of I the rather overbuilding than our mean as We're fixed the and important. like base like that, best to now they need are inefficiencies volumes normal of operating, a inventories what way it depleting the get they're and have are view, those just next we they return to then volume the clearly, when have I harp

Unidentified Analyst

were I another in if guess, to rephrase I way. it

be the If sort given be still levels production the of but you reduction I'm realized you you knew releases, needed because or cost had expected if sort of like actual lower other to volumes decreases operating wondering years? and low, then some guys been buildup? how guys you would produce would higher, that are in much actual there didn't, guys how what cost guys, like like should Obviously, schedules ignoring that to are have I you levels. production were more in the wondering produce you I'm future because inventory like costs like potentially with better model

Jeff Edwards

I'm Yes, that breakdown. not to into going get

case, I that into But we that level assure that with you the take months. think each third the the get quarter Roger. in I offline, want you actual if to production of our clearly, in can

I think substantially clear be it's fourth the the that they going from what in we down far from the that too. are saw. up to were expectation so was quarter, And customer And

more asked Roger, detail for, and this more the a want in you just a hold you which after So, of surprise walk board. the the supplier side it's modeling, from what he terms call of you details. you isn't I suggest if get just it, is happened of across But can through

Unidentified Analyst

Thanks lot. right. All a

Operator

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

Roger Hendriksen

questions. Okay. insightful Thanks, good the and everybody. all call you appreciate We appreciate the joining

me that. to the As Jeff do free out feel to would and to reach engage further mentioned, to joining we'll call. or further, questions Again, arrangements if like thanks do have please for make you

You can disconnect and day. have a great

Operator

for concur Ladies participation. and gentlemen, for Thank your you does that today. conference our

now disconnect. may You

Cooper-Standard (CPS) 5 Nov 222022 Q3 Earnings call transcript