Cooper Standard(CPS) - 2023 Q4 - Annual Report

Sales and Customer Base - In 2023, approximately 84% of Cooper Standard's sales were to OEMs, with Ford and GM being significant customers, accounting for 25% and 17% of sales respectively[22][34] - Sales to the three largest customers, Ford, GM, and Stellantis, represented approximately 55% of total sales for the year ended December 31, 2023, highlighting customer concentration risk[84] - Approximately 78% of the company's sales in 2023 were attributable to products manufactured outside the United States, indicating significant international exposure[86] - 55% of sales were generated in North America, highlighting the company's significant international operations[130] Financial Performance - Total sales for the year ended December 31, 2023, were $2,815,879 thousand, an increase of$ 290,488 thousand or 11.5% compared to 2022[144] - Gross profit for 2023 was $290,776 thousand, up from$ 129,791 thousand in 2022, indicating an increase of $160,985 thousand[143] - Operating profit for 2023 was$ 46,031 thousand, a significant improvement of $151,033 thousand compared to a loss of$ 105,002 thousand in 2022[143] - The net loss for 2023 was $203,316 thousand, which is an improvement of$ 14,475 thousand compared to a net loss of $217,791 thousand in 2022[143] Operational Strategy and Innovations - Cooper Standard aims to achieve and sustain double-digit EBITDA margins and strong free cash flow generation as part of its financial strength strategy[25] - The company expects to report its financial results in two segments: Sealing Systems and Fluid Handling Systems, starting from Q1 2024[22] - Cooper Standard's ISG business has been expanded through strategic acquisitions, including Lauren Manufacturing and Lauren Plastics in 2018[23] - The company has developed innovative technologies such as Fortrex™, which offers reduced weight and superior material performance, and has received multiple industry awards for its innovations[29] Research and Development - In 2023, the company spent 3.0% of sales on engineering, research and development, down from 3.2% in 2022 and 3.9% in 2021[48] - The company is strategically integrating digital tools and advanced analysis to enhance product development and sustainability, including a 100% virtual testing capability for certain products[29] Workforce and Safety - The company operates 128 facilities in 21 countries and employs around 23,000 people, including 3,000 contingent workers[22] - As of December 31, 2023, the company employed approximately 23,000 individuals, with a voluntary employee turnover rate of about 15%[56] - The total incident rate for workplace injuries in 2023 was 0.32, indicating a strong focus on employee safety compared to industry peers[58] - The company aims to diversify its workforce, with women representing approximately 40% of total employees and 24% of leadership positions[58] Environmental and Social Responsibility - The company has made efforts to reduce environmental impacts through sustainable sourcing and manufacturing practices[52] - The company was recognized on Newsweek's list of America's Most Responsible Companies for the fifth consecutive year in 2023[60] Risks and Challenges - The company faces significant risks related to inflation, which could adversely affect profit margins and cash flows if pricing adjustments cannot be negotiated[66] - Disruptions in the supply chain could negatively impact operations and financial performance, particularly due to industry-wide parts shortages[68] - The automotive parts industry is highly competitive, with numerous competitors exerting downward pressure on pricing and margins[77] - The company is exposed to risks associated with cybersecurity threats, which could disrupt operations and impact financial performance[71] Debt and Financial Obligations - As of December 31, 2023, the company had total indebtedness of$ 1,095 million, which could adversely affect its financial condition and ability to obtain future financing[92] - The company faces significant operating and financial restrictions due to covenants in its credit agreements, limiting its ability to incur additional debt or pay dividends[96] - The company incurred a settlement loss of $16.3 million during the year ended December 31, 2023, related to pension plan obligations[103] Pension and Retirement Plans - As of December 31, 2023, the company's U.S. pension plans were underfunded by$ 14.4 million, and non-U.S. pension plans were underfunded by $92.2 million[101] - The funded status of the plans showed a deficit of$ 14,356 million for U.S. plans and $92,245 million for Non-U.S. plans, leading to a total deficit of$ 106,601 million[169] Market Trends and Economic Outlook - Global light vehicle production in 2023 was approximately 90.1 million units, reflecting an increase of about 9.4% compared to 2022[135] - The company expects the Brazilian economy to grow by 1.7% in 2024, influenced by a slowdown in agricultural exports[134] - Economists at the IMF project the U.S. economy to grow by 2.1% in 2024, with consumer confidence trending downward since July 2023[134]