Cooper Standard(US:CPS)2023-08-04 18:31Financial Data and Key Metrics Changes - Second quarter 2023 sales were $723.7 million, an increase of 19.4% compared to the second quarter of 2022, driven by favorable volume and mix across all regions and enhanced commercial agreements primarily in Europe [15][41] - Gross profit for the second quarter was $77.7 million or 10.7% of sales, compared to $15.4 million or 2.5% of sales in the second quarter of 2022 [15] - Adjusted EBITDA in the quarter was $47.9 million compared to negative $10.4 million in the second quarter of last year, driven by favorable volume and mix, enhanced commercial agreements, and lean savings [16][42] - Net loss for the quarter was $27.8 million, compared to a net loss of $33.2 million in the second quarter of 2022 [19] Business Line Data and Key Metrics Changes - The company achieved $84.9 million in net new business awards in the second quarter, including $36.4 million on electric vehicle platforms, reflecting strong customer relationships and advanced engineering capabilities [11] - Manufacturing and purchasing teams delivered $16 million in savings through lean initiatives and improving efficiencies during the second quarter [10] Market Data and Key Metrics Changes - Favorable volume, mix, and net price adjustments added $209 million to sales compared to the same period last year, while foreign exchange negatively impacted sales by $21 million [21] - General inflation, including energy, salaries, and transportation costs, reduced adjusted EBITDA by $15 million in the quarter [42] Company Strategy and Development Direction - The company is focusing on recovering incremental costs related to inflation and establishing sustainable pricing to enhance quality of earnings and long-term value creation [25] - There is a commitment to divesting non-core businesses that do not meet strategic minimum rates for margins, ROI, or future growth [27] - The rollout and installation of equipment to optimize Fortrex production is expected to begin early next year, aiming to drive further market penetration with automotive customers [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving operating efficiencies and cash flow positive expectations for the second half of the year, supported by enhanced commercial agreements [23][30] - The company is in a better position than a year ago but acknowledges there is still room for improvement [29] - Management highlighted the importance of ongoing negotiations with customers to recover inflation and establish sustainable pricing [25][61] Other Important Information - The company ended June with a cash balance of approximately $73 million and expects stronger cash flow in the second half of the year [22][44] - The company has identified opportunities to further improve its cost structure by directing new business to advantageous production facilities [48] Q&A Session Summary Question: Can you elaborate on the commercial agreements and their impact? - Management clarified that the priority was to stabilize cash flow in Europe and that negotiations have been successful, leading to improved results [32][33] Question: What are the expectations for normalized production levels? - Management expressed encouragement about predictable volume increases and expects continued growth in production levels over the next few years [36][56] Question: Can you provide details on the Fortrex technology and its applications? - Management discussed the potential revenue opportunity in automotive applications and the introduction of Fortrex in running shoes, highlighting its benefits [58][71] Question: Are there any other divestiture opportunities? - Management confirmed ongoing identification of non-strategic and underperforming businesses for potential divestiture [73] Question: What is the minimum liquidity required for operations? - The minimum liquidity requirement is between $100 million to $125 million, including cash on hand and access to credit facilities [78]