CPS - Earnings call 3 2023 | Cooper-Standard Holdings Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Third Quarter 2023 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 conference over to Roger Hendriksen, Director of Investor Relations.

Roger Hendriksen

Thanks, Keith, and good morning, everyone. Thank you for spending some time with us this morning. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer; and Jon Banas, Executive Vice President and Chief Financial Officer. morning Officer. Couch, this and Vice us Technology Chief joining is Senior Chris President Also be to will Chris available Q&A during session. the address relevant topics

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

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

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

Jeffrey Edwards

performed We Good our forward. To provide review the results or third our quarter morning, Roger. you business key some around for outlook Thanks, an our our exceptional operations to quality everyone. the to and X, the have indicators we and dedication to in focus in how third delivering products certainly quarter. service customers our our on on maintained Slide employees and provide appreciate of safe and our highlights keeping We opportunity and world. update begin, going workplaces

green scorecards product of the were customer terms quality, In in our that you see of quarter. can XX%

launches. also green We new had XX% for scorecards product

customers. to exceptional to So value outstanding us to achieve our we deliver operational allowing performance, continue

excellent. of In to continues performance be addition, safety our plants

a leadership worked, extremely managers. benchmark company. that's these incidents record first incident Leading their to safety of of incidents big were as plant the X much. rate commitment plants outstanding of per to safety to global XX months zero have entire for well a below for zero our third the XXX,XXX certainly just of for workplace total want maintained we continue of world-class that During X.XX their plants of we year. X.XX. the teams performance strive perfect the this you through and the I and I'm had our ultimate proud ongoing reportable out our and hours all commitment to shout safety the very Thank certainly a goal the at continued team recognize for incidents quarter,

As vehicle third XX% in global solid volumes quarter, continued to our the production outpacing increased by significantly light improve the market. a sales year-over-year,

as we continued In focus become to possible. as commitment and our addition, operational lean and efficiency maximize

our savings delivered and quarter, During and million teams the purchasing $XX initiatives in other manufacturing programs. third through cost-saving lean

programs. Finally, on vehicle we're new innovations award-winning and existing new also content continuing electric to and to total programs, margin especially business, on win to vehicle new hybrids, on our vehicle our upgrade leverage

$XX in During existing recent the This third most new contracts awarded on quarter, for includes upgrades future annualized we innovations. technology sales that million programs on programs were well as our as programs. both include

design to for customers important electric we platforms. technologies Importantly, vehicle and most their to develop with continue partner our new

million million. $XX the quarter, in platforms $XX the year-to-date awards business New were total for to EV bringing

and see We volumes of our production is years, hard increasing improvement leveraged financial results. our meaningful across are over powerful. the to cost to The begin pleased past drive couple leaner of in structure certainly agreements enhanced work combination commercial our

Turning to Slide X.

of a stewards on this frankly, in good and which culture, and value, to providing our shareholders, being of of of the on Within based is culture all we live. the focus communities environment and stakeholders is extension. all kind a sustainability work our company natural Our

from percentile of Cooper-Standard continues in for sustainability. XXth experts. within in rating with metal this our from as Nissan garner learned We silver recently we Based on segment. areas recognition achieved the surprise to sustainability and again So as that sustainability recently well no have it performance responding which comes industry achievement that the our of rating, recognized in companies the outstanding EcoVadis, us also as places

to Jon and mention financial of to customers, that you for turn this And provide value the believe world's company sustained we on call fail of values type with the and creation. growth our continue a over the want now quarter. the the our not for will ultimately the priorities and part details work best to be brightest We of. I'll long-term give to opportunities aligning to certainly to

Jonathan Banas

flows, of quarter Thanks, cash some everyone. good I'll sheet. on the In discuss and results few morning, and provide and balance the aspects our next slides, Jeff, financial for liquidity our details our

We are of pleased quarter. a EBITDA operating that performance U.S. in the last Slide And importantly, adjusted summary X, income at show period year. positive positive company results delivered quarter XXXX regions once total net third our again, all we third was same four our GAAP the comparisons level. On for of to the of the with

increase of enhanced agreements The to compared the favorable XXXX. our North an third was commercial by million of quarter $XXX primarily driven and volume mix, and increase were sales and Europe, XX% quarter globally. in Third America

X.X% the Adjusted and last driven $XX.X income a labor from the agreements the included sales primarily profit or was net net such and in quarter supply a and ongoing of $XXX.X restructuring $XX.X to the The commercial quarter well loss The for quarter $XX.X impact exchange. On basis, was by third was million lean current partially EBITDA million the a exchange. in million of favorable All energy GAAP net compared We XXXX. to million, of benefit was as foreign enhanced the areas manufacturing unfavorable of year. quarter small costs. in achieved million headwinds XXXX. as to XX.X% U.S. mix, of offset $X the favorable net foreign and of chain. costs $XX.X savings also as in a quarter of improvement This million gross inflation sales. third quarter $XX.X year-over-year third saw for million or in Gross third compares profit in quarter just by the of compared in volume

million Excluding $X.XX compared was or per the income periods, quarter impact adjusted items share, net tax and special from $XX.X of million third of primarily XXXX. interest net partially in $XX per resulted and higher higher from diluted or the gross third offset share sales loss by of adjusted The related expense. profit, both year-over-year for improvement XXXX improved the quarter to $X.XX

capital quarter quarter Our sales, million totaled of in year. third to the of the million in expenditures $XX.X or X.X% $XX.X third compared last

which continue We focused investments, remain customer on launch around discipline have primarily rapidiness. to capital

million first XX.X% X $XX.X quarters first X% the loss per increase million months CapEx was XXXX, target. $X.X year-over-year the million a $XX.X the of the billion, X was XXXX, share same or in year versus of the compared the totaled an months or million diluted per period in months of net in months For first $X.XX of in an XXXX was X in X first of of $XXX.X of million. to Adjusted the $XXX.X with first Adjusted EBITDA or $XXX.X million share $XXX.X sales, XXXX. and line in first $X.XX compared sales $XX.X of increase of XXXX. the months million net loss or adjusted X to year our of X full

X impacting results Slide Moving provide to factors charts the our on for quarter. of the X. third The key into additional Slide some insights

$XX price that This by For million $XX the a retroactive in increased settlements $XX year run recording increase sales quarter approximately of revenue, including had we amount pulled net into represented portion and forward start million and XXXX. to these of a anticipated that mix versus to million in smaller favorable Combined, customer of the the settling includes negotiation the volume and price sales were QX third QX above adjustments, normalized originally QX. rate.

RMB by our $X million to last exchange, a positive in sales year. quarter. versus Foreign rubber mainly movements, were positive million offset partially fluctuations, Europe sales increased the by euro same net to the divestiture of during business reduced by related These in negative technical factors the related $X partially offset Chinese period

portion peso. partially settlements by in the compensation-related $XX this manufacturing adjustment a reduced contributors was wages ongoing The quarter. adjusted purchasing $XX Mexican the price for adjusted by benefit EBITDA EBITDA, including and including favorable earlier, year-over-year million of of negative energy, in a year. the contributed mix quarter. and These were the exchange impact of improvement other last a the to headwinds General positive retroactive and $XX salaries, year strengthening quarter. efficiencies non-recurrence adjustments, cost $XX mentioned net and primarily For the of volume, $X improvements related negotiation initiatives certain drove inflation, Lean were the in material the of and million costs offset transportation million, foreign combined of and million million price

the of for Moving first XX look the months to Slide analysis the to year. at X

same the and For price sales, volume, period year. mix $XXX versus net added last adjustments million favorable

million. exchange reduction and was divestitures of an offset were $X million a Foreign $XX of

EBITDA, Net manufacturing offset favorable price efficiencies favorable economics mix year. adjustments and and added volume a material last $XXX These million $XX purchasing net were added and compared $XX million. adjusted For to $XX million $XX million impacts. negative transportation. as other and exchange million Negative were $XX foreign inflationary utilities factors various labor, by for items of significant million partially general headwinds and such of of

XX. Slide to Moving

at liquidity. flows Looking cash and

of $XX increased XXXX, approximately changes cash in provided by sales quarter only offset capital associated the operating million income Our volumes. partially operations with third reflecting by cash working not in was net improved

free activity. Because of to This on primarily the was our of this flow total anticipation ABL approximately our cash negotiations. With we which the cash we the mentioned uncertainty prior of $XX free remaining in take in of draw, cash effect sheet, related a launch approximately on September million due typically the $XXX to the production $XXX XX. million quarter of CapEx million opted would, approximately As $XXX positive in measure quarter, potential earlier, We we a OEM had to $XX included pleased not during million. approximately we the receivables cash balance timing our the and million this from as precautionary to quarter. We quarter of generate of million. did ABL reducing factor end of as approximately were September million, and draw solid a we $XX with facility disruptions flow of hand ABL had and reflecting Europe labor ended by on cash on to the had the balance $X program liquidity availability as

which on the positive cash from further in light commercial improving was further the morning. Based the reached customers. believe expectations has and enhanced borrowings $XXX this repaid recently OEMs benefit million and we longer risk incremental necessary, cash reduced current disruptions, the will be With for having agreements, agreements operating labor outlook flow quarter. of We efficiencies the production and UAW our significantly and the felt vehicle tentative we carrying our fourth we the ABL no the with from production,

of the our how my flow ramp-up will to our will impact the working cash credit that full affect our assessing will on prepared strike and capital and to resources support still cash comments. and concludes hand, we being believe the now year. are ongoing That operations. That We provide ample facilities on generation expected production future have cash current flexible said, access for

So let over me turn it Jeff. back to

Jeffrey Edwards

over and executing value increasing other a strategic full remainder minutes, Then our to our term you And a guidance. including the like with year, on on years few Jon. I'll and I'd in our commercial near the our ahead. few negotiations of outlook initiatives update we're in provide drive the the conclude pipeline Thanks, status to year and for the comments next with innovation

Slide to turn So XX. please

work the and term. During establish to engineering, over the inflationary continue value that support to customers customers we longer of with resulting The carry beyond. and the XX% the forward. year. of and anticipate value Through provide end agreements of adjustments enhance the as continue and forward in our will remaining negotiations, recover demonstrate are these negotiations negotiations Approximately to majority customer concluding to commercial XXXX quality achieved enhanced sustainable partnerships manufacturing of pricing creation that as inflation for customer the related all of and third of pricing our sustainable pressures recoveries innovation will to strategic these costs into our going recognize quarter, of recovery incremental earnings few our will before complete, well the now quality. We price significantly and

Turning XX. to Slide

are they our why -- us consider strategic Our reason partner. innovations customers key a industry-leading a

vehicle We reduce enhance aesthetics. customers' technologies to new in solve systems develop complexity and our and help continue deliver that their and problems, performance design,

and objectives through margin and growth innovations footprint In enhancement. Cooper-Standard to time, the vehicle helping are per addition, our by goals overall their and customers providing weight our for vehicle and increased content advance are range improving sustainability efficiency. and carbon reducing At opportunities these own vehicle innovations same

While in promise. soon of market pipeline holds unique we've product already launched and the sold be innovations, technologies great many our to new

Let me you a few. of remind just

Slide XX. to Turning

in pumps technology, functionality partnership we eCoFlow developed fluid Solari, single is that which revolutionary new system by and independent Our combining a with unit. valves eliminates integrated in

In technology is will the OEM reduce fluid will complexity, increased to overall margin and drop new for for expected routings. lower but of components provide system and management Cooper-Standard. addition the and systems The tube customer, cost and optimize system content reducing pressure the adapter to

technology this new on expect the of be beginning We to for quoting XXXX. quarter available in first programs

Turning to Slide XX.

Another options also is such a can the This which key reduction, anticipated new available seal, replaces is as full our new innovation weight integrity. exciting business dynamic color still enabler and new wide be recyclability, overall We enhanced of that enhance while traditional year. seal our energy aesthetics. this carrier features lower or steel next formally new consumption. a vehicle product full version will thermoplastic aluminum for full sustainability of offers A mechanical the thermoplastic that quotes early providing technology variety necessary offers dynamic proprietary

Turning XX. to Slide

the is carbon set Finally, enhanced this further provide to year XXXX enhancements formulations. overall It lower available and design provide improved Fortrex specific lower meet that XX and will customer dirometer Fortrex and our an expected overall requests durability for provide footprint. Fortrex greater its additional and also make new will introduced portfolio softer ED by we're even Micro in adding flexibility. feel lower than needs. to to Fortrex compression dense original weight formulations be was to technology and reduction benefit from continuing

development recycled consumer a sustainability. our for will up-cycled Finally, as materials carbon footprint advancing Fortrex we're of overall which use feedstocks lower enhanced and

technologies, milestone to sometime available market Live business commercialize technology own AI-based reducing this extrusion relating significant improving become the to efforts our controls Live diversification, in advanced means announce a XXXX. Also a Line to expect scrap our proprietary and efficiency and our in as system. our pleased Line to we're innovation to developed of process lines. on We We developments

technology through the years, wholly fiber on low order control more few validation we the wide relatively within be Line range accessible. contract internal and cost and developed making to this with technology and Technologies, but ahead. received on Over benefit optic we've savings in manufacturer. subsidiary, significant. affordable technology believe of owned Live stages countries. many past We've manufacturing industries, continue advanced that technology, and four begun AI been scalability, the process marketing and the in realized believe the initial still potential provides business just the model of a to the XX success The first commercial have technology lines have has a Based we systems of marketing start-up companies our first commercial this early opportunity large from the important We're we a efficient

XX. Slide to Turning

continue our invest reduce we costs. as need Even recognize innovation, exciting the to to overall in we

to continuing business to creation and portfolio our improve accelerate value progress, profitability. great operating made have we're we optimize and While footprint

our direct advantaged new We exposure over to our of business facilities time, markets. to more production labor reducing expect high-cost to

margins, strategic rates We that before. non-core divesting future we've will similar or also don't consider our ROI businesses to minimum meet what growth, done for

commitment Our our either double-digit levels. and invested central on to exiting businesses capital fixing or remains part underperforming margins strategy to restore returns to a our of

in full our benefits reflect the higher performance third improved expected to strikes, our the the on commercial from agreements year. recent adjusted enhanced and strong Turning Slide an outlook XX. have post Based guidance to our quarter, for we continuing production

the year for the with estimate, sales full expected of for original adjusted range range end bias EBITDA. the tightened we towards and high a have raised our We

taxes. restructuring of lowered proud teams we believe cash programs contribution our pre-pandemic and what also see that technology certainly We're this as continue beyond rebound so and we'll have for cash excited next to accomplished to continue have what we content and also can I'm confident vehicle our variable very And production margins I'm and forward. strong. far to achieve innovative per year levels. enhance year, finish going and year volumes new launch will we We to outlook the

customers Flawless to innovations, we concludes Finally, thank with for confidence support supporting them world-class our continued and trust, engineering to prepared launches and program remarks. exciting I want and committed services, products. This quality remain their and design our

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

Operator

Michael And question Benchmark. the [Operator Instructions] first comes with Ward from

Michael Ward

your X on $XX EBITDA. and Slide that for was of Jon, the adjusted retroactive? XX with bridge How much million

Jonathan Banas

was was $XX Mike, retroactive about the $XX million. you'll and sales I remarks, on both use mentioned to walking get and in EBITDA That my a the Say portion. that you're if across, you magnitude. prepared million impact

Michael Ward

Okay.

better X-month is standpoint, then it number, the performance that the probably a on that's is So we at correct? look where from read like if

Jonathan Banas

Correct. would the therefore, back have more X January run of months been to The the is rate. retroactive And representative X.

Michael Ward

Okay.

at numbers ramp-up, And what on for so minimal the the look year, now your in and guidance strike tell when content it can I then and was from the third on was right the about the impact to October the you with depending then key the vehicles, your think that that pace $XX it's Is of in to in revenue. on But impact million way $XX it? million somewhere significant quarter.

Jonathan Banas

strike Mike. Fortunately, million it's lower, you're in impacted extent, a $X way for minor QX. it on revenue a The us less touch rolled than the to but out, right September. But

over grew However, with obviously. the continued time, escalations that

revenue. about million So loss. October $X through us on to was therefore, $XX EBITDA the million $XX impact XX, closer lost in in and to million

Now that monitor comes up, back the we're how online. to back continuing ramp

it. We're to labor could the to as we've ready grow. full soon customers our plants. as to product The as So that in deliver number us they're take got impact ready on

Michael Ward

Okay.

of of Is up? a pace $XX to plan million your which million, the above looking in range, that ramp-up, $XX the how fast to ramp and depending be on that in somewhere obviously these -- million on depending at? included that's some you're impact, guidance, the could $XX So it

Jonathan Banas

The the impact goes see the included in of is brand pace to pop online. We'll have our guidance. how

Michael Ward

then, about performance, so you've getting it you're And looked quarter. Jeff, historically, every getting type like looks talked as margin and back to you've double-digit closer

take pricing are some 'XX? you've that You key take steps of away -- in in we are level level. if getting the so you're variables? XXXX. cost What so place? And as exit in then the the for impact, got strike to type the of double-digit place, what to the And Maybe we we're up X% new closer some that at got you

Jeffrey Edwards

Yes.

as time, clear X-year our we at I we mean reach look like Mike, touch it's year, plan we think we're and do this can out I each -- it. that

Let as me the into it say help focus all the and that. year helped negotiations this clearly, And they about been in we business cost enhanced then at more products the new 'XX. we've went of side 'XX all commercial pricing that launching that our that agreements better will the on and even at look launch that talking volume. finally, than Those those replace. And margins will the

to we volume all I to believe that is levels. pre-pandemic return think eventually going

combination I so those on a mentioned reduction. all of fixed cost And it's focus also And our things.

there but the of have ROIC that double-digit plan years. X left double-digit now, cement next EBITDA the couple go approaching us this then We we a really that little or And upon work left. right over help X bit the volume of that some on will forward we certainly we're will years work as executing over next and

Michael Ward

Line welcome yours. the is that And just your to responsibilities? that assume Is On party. part I Slide Chris, of Live lastly, XX,

Christopher Couch

It's it. Cooper-Standard. run Correct. I Yes,

Michael Ward

start? with -- how are plus bit the reduction? how numbers we chart, at me And these the in could came What it it little they looking represent? what What it evolved So do are up of you scrap -- from? XX popping there XX. plus process? Is efficiencies? What on Are this that a does the tell they does -- are kind how

Christopher Couch

saw a automation of We numbers our issues operating technology popping improve certainly the intelligently line solve those is you variety due up. the use as to which one scrap created problem, are a how metrics And performance another. the types lines of to is unplanned downtime to of from to

internal those we're are fruit within low-hanging from different to real and rollout this completed in basically our network. results out markets. broader We lines product So the now the taking Cooper-Standard across commercialize

Michael Ward

rates the that than materials uptime, scrap you lot producing, you're of up that's and believe the average. I there, a reduce those So higher rates. to the can the planned got industry -- for unplanned the scrap

X%. So it the cutting what to Are Is in expect? is whatever X% you we type can half? that of it thing

Christopher Couch

correct. in We see reductions half typically on scrap. That's controllable

Operator

It appears over no to Instructions] the more questions. Hendriksen. would [Operator are return back to floor like Roger there I

Roger Hendriksen

interest to out, free We Cooper-Standard. questions the that the your If joining there come happy everybody. and to call you call. joining feel Thanks Thanks, and appreciate later again be in are in continuing we'll reach further Okay. day, up for the connect.

disconnect. now You can

Operator

you. Thank

Cooper-Standard (CPS) 3 Nov 232023 Q3 Earnings call transcript