Cooper Standard(CPS) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited Q1 2022 financial statements show decreased sales, widened net loss, and negative operating cash flow Condensed Consolidated Statements of Operations Q1 2022 vs Q1 2021 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Sales | $612,984 | $668,967 | | Gross Profit | $21,542 | $68,292 | | Operating Loss | $(40,394) | $(11,690) | | Net Loss Attributable to Cooper-Standard | $(61,360) | $(33,864) | | Diluted Loss Per Share | $(3.58) | $(2.00) | Condensed Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $252,911 | $248,010 | | Total current assets | $1,093,850 | $994,897 | | Total assets | $2,283,136 | $2,226,493 | | Long-term debt | $979,922 | $980,604 | | Total liabilities | $2,012,356 | $1,895,133 | | Total equity | $270,780 | $331,360 | Condensed Consolidated Statements of Cash Flows Q1 2022 vs Q1 2021 Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,213) | $(7,084) | | Net cash provided by (used in) investing activities | $20,071 | $(36,254) | | Net cash (used in) provided by financing activities | $(2,973) | $1,288 | | Change in cash, cash equivalents and restricted cash | $10,008 | $(36,692) | - The significant positive cash flow from investing activities in Q1 2022 was primarily driven by $50.0 million in proceeds from the deferred sale of fixed assets, related to a sale-leaseback transaction[20][42] Notes to Condensed Consolidated Financial Statements - In Q1 2022, a joint venture in the Asia Pacific region was deconsolidated and is now accounted for as an equity method investment, resulting in a loss of $2.3 million[24] Revenue by Product Line (Q1 2022 vs Q1 2021, in thousands) | Product Line | Q1 2022 Revenue | Q1 2021 Revenue | | :--- | :--- | :--- | | Sealing systems | $311,832 | $331,483 | | Fuel and brake delivery systems | $153,067 | $174,680 | | Fluid transfer systems | $113,681 | $128,360 | - Restructuring charges for Q1 2022 were $7.8 million, a decrease from $21.0 million in Q1 2021, with the majority of current charges occurring in Europe[36] - As of March 31, 2022, total debt was approximately $1.03 billion, consisting mainly of Senior Notes, Senior Secured Notes, and a Term Loan[47] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A attributes Q1 2022 sales decline to production issues and FX, with gross profit sharply down due to inflation Recent Trends and Conditions - The company's performance is being impacted by significant global economic uncertainty, including inflation, supply chain disruptions (semiconductor shortages, Russia-Ukraine crisis), and lingering effects of the COVID-19 pandemic[84][86] Light Vehicle Production Change (Q1 2022 vs Q1 2021) | Region | % Change | | :--- | :--- | | North America | (1.8)% | | Europe | (18.3)% | | Asia Pacific | 0.2% | | South America | (12.7)% | Results of Operations Sales Variance Analysis (Q1 2022 vs Q1 2021, in thousands) | Metric | Amount | | :--- | :--- | | 2021 Sales | $668,967 | | Volume / Mix | $(37,454) | | Foreign Exchange | $(10,059) | | Deconsolidation | $(8,470) | | 2022 Sales | $612,984 | - Gross profit decreased by $46.8 million year-over-year, primarily driven by commodity and wage inflation, unfavorable volume/mix, and foreign exchange[92] - Restructuring charges decreased by $13.2 million compared to Q1 2021, mainly due to lower charges in Europe[92] Segment Results of Operations Segment Sales (Q1 2022 vs Q1 2021, in thousands) | Segment | Q1 2022 Sales | Q1 2021 Sales | Change | | :--- | :--- | :--- | :--- | | North America | $321,894 | $339,036 | $(17,142) | | Europe | $131,414 | $165,776 | $(34,362) | | Asia Pacific | $103,753 | $114,225 | $(10,472) | | South America | $21,519 | $15,486 | $6,033 | Segment Adjusted EBITDA (Q1 2022 vs Q1 2021, in thousands) | Segment | Q1 2022 Adj. EBITDA | Q1 2021 Adj. EBITDA | Change | | :--- | :--- | :--- | :--- | | North America | $17,496 | $41,233 | $(23,737) | | Europe | $(14,657) | $(1,489) | $(13,168) | | Asia Pacific | $(742) | $3,552 | $(4,294) | | South America | $(409) | $(2,608) | $2,199 | | Consolidated | $145 | $38,540 | $(38,395) | Liquidity and Capital Resources - The company believes cash from operations, cash on hand, and borrowings under its ABL Facility will be sufficient to meet funding requirements for the next twelve months[97] - Capital expenditures for the full year 2022 are anticipated to be between $90 million and $100 million[98] - As of March 31, 2022, the company had approximately $98.7 million of authorization remaining under its common stock repurchase program[99] Non-GAAP Financial Measures Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss attributable to Cooper-Standard | $(61,360) | $(33,864) | | Income tax expense | $652 | $936 | | Interest expense, net | $18,177 | $17,784 | | Depreciation and amortization | $32,133 | $33,528 | | EBITDA | $(10,398) | $18,384 | | Restructuring charges | $7,831 | $21,047 | | Deconsolidation of joint venture | $2,257 | — | | Impairment charges | $455 | — | | Gain on sale of business, net | — | $(891) | | Adjusted EBITDA | $145 | $38,540 | Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's quantitative and qualitative market risk disclosures since the 2021 Annual Report - There have been no material changes to the Company's market risk disclosures since the 2021 Annual Report[108] Controls and Procedures CEO and CFO concluded disclosure controls were effective as of March 31, 2022, with no material changes to internal controls - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[110] - There were no material changes in the Company's internal control over financial reporting during the quarter ended March 31, 2022[111] PART II. OTHER INFORMATION Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchase program, including remaining authorization and shares repurchased for employee tax obligations - As of March 31, 2022, approximately $98.7 million of repurchase authorization remained under the company's common stock share repurchase program[114] Share Repurchases in Q1 2022 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2022 | 1,310 | $22.41 | | February 2022 | 29,777 | $16.88 | | March 2022 | — | — | | Total | 31,087 | N/A | Exhibits Lists exhibits filed with Form 10-Q, including management compensation agreements and required CEO/CFO certifications