Cooper Standard(US:CPS)2023-08-03 16:00Financial Performance - Sales for the three months ended June 30, 2023, increased by 19.4% to $723,740,000 compared to $605,917,000 in the same period of 2022, driven by higher vehicle production volume and net customer price adjustments [141][143]. - Gross profit for the three months ended June 30, 2023, was $77,714,000, a significant increase from $15,376,000 in the same period of 2022, resulting in a gross profit margin of 10.7% [141][145]. - For the three months ended June 30, 2023, gross profit increased by $62.3 million compared to the same period in 2022, driven by volume and mix, net of customer price adjustments, and manufacturing savings [147]. - Sales for the six months ended June 30, 2023, increased by 15.4% to $1,406.2 million, driven by higher vehicle production volume and net customer price adjustments [155]. - Gross profit for the six months ended June 30, 2023, increased by 223.8% compared to the same period in 2022, reflecting improved volume and mix [158]. - Adjusted EBITDA for the six months ended June 30, 2023, was $60,396,000, compared to an Adjusted EBITDA of $(10,229,000) for the same period in 2022 [210]. Production and Sales - Light vehicle production in North America increased by 14.9% to 4.1 million units in Q2 2023 compared to 3.5 million units in Q2 2022, while production in Europe rose by 14.3% to 4.5 million units [137]. - Total sales to external customers increased to $1,406,198, a 15.3% increase from $1,218,901 in the same period last year [172]. - North America sales rose by $80,356 to $733,937, while Europe saw an increase of $82,051 to $339,752 [172]. Losses and Expenses - The company reported a net loss of $28,420,000 for the three months ended June 30, 2023, an improvement from a net loss of $34,151,000 in the same period of 2022 [141]. - Selling, administration, and engineering expenses for the three months ended June 30, 2023, were 7.5% of sales, down from 8.6% in the same period of 2022, primarily due to headcount initiative savings [148]. - Net interest expense for the three months ended June 30, 2023, increased by $15.6 million compared to the same period in 2022, primarily due to higher interest rates on new debt [151]. - Restructuring charges for the three months ended June 30, 2023, increased by $5.0 million compared to the same period in 2022, mainly in North America and Europe [150]. - The company recognized a loss of $81,885 on refinancing and extinguishment of debt during the six months ended June 30, 2023 [178]. Economic Outlook - The global automotive industry is expected to see modest increases in light vehicle production through at least 2025, supported by low inventory levels [138]. - Economists at the IMF project the U.S. economy to grow by 1.8% in 2023, which may positively influence automotive demand [130]. - In South America, Brazil's economy is projected to grow by 2.1% in 2023, driven by agricultural output, which may impact automotive demand positively [134]. Cost Management - The company has implemented index-based commercial agreements to mitigate raw material cost fluctuations, which have stabilized in the first half of 2023 [135]. - The company continues to face inflationary pressures on wages, energy, and transportation costs, necessitating ongoing negotiations for pricing adjustments with customers [139][140]. Debt and Liquidity - The company issued $580,000 aggregate principal amount of 13.50% First Lien Notes due 2027, with interest payable semi-annually [179]. - The Third Lien Notes issued amounted to $357,446, bearing interest at 5.625% per annum, also due in 2027 [182]. - As of June 30, 2023, the Company had $156,525 available for borrowing under its ABL Facility after accounting for outstanding letters of credit and reserves [193]. - The Company continues to actively preserve cash and enhance liquidity, decreasing capital expenditures as a percentage of sales [176]. - The Company expects to spend approximately $70 - $80 million on capital expenditures in 2023 [205]. Risks and Forward-Looking Statements - Significant risks include commodity cost increases, disruptions related to the war in Ukraine, and COVID-19 impacts on financial condition [214]. - The company has substantial indebtedness and faces risks associated with variable interest rates [214]. - The company does not guarantee future performance due to significant risks and uncertainties [215]. - Estimates and information based on industry publications have not been independently verified [216]. - The company undertakes no obligation to update forward-looking statements unless required by law [215].