Cooper Standard(US:CPS)2021-05-09 19:57Financial Data and Key Metrics Changes - First quarter 2021 sales were $669 million, up 2.1% compared to the first quarter of 2020, with organic sales increasing approximately 6.3% when excluding divestitures and foreign exchange impacts [19][20] - Gross profit for the quarter was $68.3 million, an increase of 58.3% year-over-year, with gross profit margin rising 360 basis points to 10.2% [21] - Adjusted EBITDA was $38.5 million or 5.8% of sales, compared to $8.3 million or 1.3% of sales in the first quarter of 2020 [21][22] - The net loss for the quarter was $33.9 million, an improvement from a net loss of $110.6 million in the first quarter of 2020 [22] - Adjusted net loss was $14.5 million or $0.85 per diluted share, compared to an adjusted net loss of $36.5 million or $2.16 per diluted share in the first quarter of 2020 [23] Business Line Data and Key Metrics Changes - Manufacturing cost savings of $18 million were achieved in the quarter, offsetting volume losses due to external challenges [11] - A $10 million improvement in SGA&E expense and $10 million in purchasing savings were realized compared to the first quarter of last year [11] Market Data and Key Metrics Changes - The company outperformed market growth in each of its three major regions, with North America production levels up about 1% despite a market decline of 4.5% [20][87] - In Asia, the overall market was up about 46%, with China specifically up about 77%, while the company was up about 50.5% overall in Asia Pacific [85] Company Strategy and Development Direction - The company is focused on diversifying its business and leveraging growth in the electric vehicle (EV) market, expecting a potential 20% increase in content per vehicle compared to internal combustion platforms [42] - The strategy includes fixing underperforming operations and ensuring they contribute positively to profitability [45] - The company aims to maintain a cash cushion for liquidity amid ongoing volatility in the industry [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the driving value plan and related initiatives to improve earnings and cash generation over the next two years [33] - The outlook for light vehicle production is expected to increase significantly by the fourth quarter, with full-year results anticipated to be within previously provided guidance ranges [56] Other Important Information - The company was recognized by Ethisphere as one of the world's most ethical companies for the second consecutive year [13] - The company is committed to sourcing 100% of its electricity from renewable energy sources by 2025 and achieving a 100% waste diversion rate globally by 2025 [15] Q&A Session Summary Question: How did the company mitigate the impact of production schedule volatility? - Management highlighted effective cost management and flexibility in operations as key strategies to mitigate impacts from customer plant shutdowns [58][59] Question: What is the status of the technology development phase with the footwear customer? - The technical phase was completed successfully, and commercial negotiations are expected to begin soon [61] Question: What is the revenue base related to the $100 million of new business in the EV market? - Management indicated that the content per vehicle is trending up, with new models driving organic increases in business [63][64] Question: How sustainable are the SGA&E savings? - Management confirmed that the SGA&E savings are sustainable and part of a long-term strategy to align costs with the company's revenue base [68] Question: What is the impact of the chip shortage on production? - Management noted that trucks and SUVs are prioritized, which aligns with the company's revenue focus, as over 80% of revenue comes from these segments [71] Question: What are the expected commodity inflation impacts? - Management anticipates commodity inflation headwinds to increase to $25 million to $30 million, with ongoing efforts to offset these through supply chain initiatives [74] Question: What is the strategy for achieving $40 million in cost savings in Europe? - Management indicated that the costs are included in the restructuring forecast for the year, with a focus on improving operations and profitability [76] Question: How does the company plan to renegotiate contracts for indexing? - Management is making progress in negotiations with both customers and suppliers to increase indexed contracts, aiming to double the current percentage [110][112]