Cooper Standard(CPS) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2022 was $27.6 million, or 4.2$2 million, or 0.3% of sales in Q4 2021, driven by favorable volume and mix, improved operational efficiency, and lower SGA&E expenses [11][34] - Full year 2022 sales totaled $2.53 billion, an increase of 8.4$171.5 million for the year, or $9.98 per diluted share, compared to an adjusted net loss of$222.3 million, or $13.04 per diluted share in 2021 [14] Business Line Data and Key Metrics Changes - New business awards increased by 32$88 million in Q4 2022, including noncash asset impairments and restructuring charges, while adjusted net loss was $31.9 million, or$1.85 per diluted share, compared to $50.3 million, or$2.94 per diluted share in Q4 2021 [35] Market Data and Key Metrics Changes - 75% of 2023 global revenue is expected to come from trucks and SUVs, with nearly 90% in North America, benefiting from higher market growth rates and increased content per vehicle [24] - The company expects sales in 2023 to range from $2.6 billion to$2.8 billion, with adjusted EBITDA between $150 million and$175 million, reflecting conservative estimates due to ongoing uncertainties in the industry [18][66] Company Strategy and Development Direction - The company is focused on lean initiatives, manufacturing efficiencies, and optimizing its operating footprint to align with market demand [68] - The strategic focus on light trucks and SUVs positions the company to benefit from global market trends, with expected growth in the truck and SUV segment significantly outpacing passenger cars over the next five years [71] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, anticipating all four regions to be EBITDA positive, contingent on the completion of ongoing commercial negotiations [53] - The company has significantly reduced its cost structure over the past four years, with cumulative annual operating cost reductions exceeding $480 million, expected to carry forward into 2023 and beyond [21] Other Important Information - The company ended 2022 with total liquidity of$342 million, including cash on hand of $187 million and$155 million available on its revolving credit facility [17] - Cash restructuring in 2023 is estimated at $35 million to$40 million, focusing on rightsizing operations and fixed overhead [42] Q&A Session Summary Question: Will all regions be EBITDA positive in fiscal '23? - Management expects all regions to be EBITDA positive, pending the conclusion of commercial negotiations by the end of Q1 [53] Question: What is the liquidity situation post-refinancing? - Management is comfortable with the current liquidity situation and will provide detailed updates in the Q1 call [56] Question: What percentage of revenue will the footwear manufacturer contribute in 2023? - The footwear deal recorded a guaranteed minimum of around $12 million in Q4 2021, with no significant changes anticipated for 2023 [57] Question: How will working capital impact cash flow in '23? - Management expects working capital to be a source of cash, with better inventory management anticipated due to improved production schedules [91] Question: How much of the$150 million EBITDA benefit is subject to finalizing commercial agreements? - The $150 million includes expectations about ongoing negotiations, but not all agreements are solidified yet [93]