Cooper-Standard posts strong Q3 sales, manages UAW strike impact

NORTHVILLE, Mich.—The third quarter was kind to Cooper-Standard Automotive Inc., even if it did bring its fair share of challenges with it. And while the impact of the United Auto Workers' strike did slightly stymie sales for the quarter, the impact likely will be felt more in full in the months ahead.

As for now, though, the Northville-based automotive supplier is savoring a quarter that yielded a ledger with a whole lot of black.

Cooper-Standard recorded third-quarter sales of $736 million, an increase of 12 percent year-over-year and something the company attributed to favorable volume and mix, sustainable price adjustments, inflation recovery and favorable foreign exchange.

Gross profit for the quarter increased 176.3 percent year-over-year, reaching $106.5 million for the three months ended Sept. 30. Net income came in at $11.4 million, marking a $44 million improvement over the same period a year ago, when the company recorded a net loss of $32.7 million.

Adjusted EBITDA of $79.1 million—reflecting 10.7 percent of sales—increased by $58.6 million compared to Q3 2022.

Jeffrey Edwards, Cooper-Standard chairman and CEO, told investors during a recent earnings call that there is good reason for Cooper-Standard's ability to demonstrate improvements against headwinds that include—but are not limited to—the UAW strike.

And in the process, he said, the company is moving closer to its aims of double-digit margin performance.

"As we look at our three-year plan, it's clear that we can reach out and touch it," Edwards said of the goals. "Clearly the pricing and all of the negotiations that went into all of the enhanced commercial agreements this year help that, our focus on the cost side helped it even more."

Further, he said Cooper-Standard's new product launches—those set to hit the market 2024 and 2025—will be key in achieving financial targets. "Those products," Edwards noted, "will launch at better margins than they will replace."

There's also the hope that vehicle production will continue to ramp up, which would further boost the auto supplier, he said.

For the nine months ended Sept. 30, Cooper-Standard recorded $2.14 billion in sales (up from the $1.88 billion from the year-ago period) and a net loss of $146.8 million. This is about $19.5 million more than the net loss from the year-ago period.

Adjusted net income for the nine months improved year-over-year to a $51.2 million loss, compared to a $139.3 million loss in the first nine months 2022. Adjusted EBITDA also improved year-over-year to $139.5 million—up from the $10.3 million through the first three quarters of 2022, Cooper-Standard reported.

The impact of the UAW strike was "minor" in the third quarter according Jon Banas, executive vice president and chief financial officer. Much of that, he said, relates to the timing of the strike, which launched Sept. 15, just two about weeks before the quarter ended.

"The way the strike rolled out, it impacted us, but to a minor extent—less than $5 million in revenue for September," Banas said. "With the continued escalations that grew over time, actually, as of Oct. 31, the impact on us was closer to about $30 million in lost revenue. And therefore $8 (million) to $10 million in EBITDA lost."

Even with that impact, though, the company saw a strong third-quarter in North America. Sales in the region totaled $410.9 million, an improvement of $59.9 million year over year.

Adjusted EBITDA for North America was $60.2 million for the period, up $40.8 million from Q3 2022.

Moving forward, Cooper-Standard will continue to monitor the potential impact of the strike, particularly as production ramps up. And Cooper-Standard, Banas said, is ready to meet the return in demand.

"We continue to monitor the ramp back up and how that comes back online," Banas said, "so that number could grow the impact on us as we have full labor in the plants, and we are ready to deliver product to our customers as soon as they are ready to take it."

Cooper-Standard saw improved third-quarter results in both Europe and South America, which recorded sales of $147.5 million and $34.3 million respectively. This marked a $33.8 million year-over-year improvement in Europe and $7.2 million growth in South America.

Adjusted EBITDA for the regions improved as well. Europe recorded $10.1 million in adjusted EBITDA for the quarter, a year-over-year improvement of nearly $21 million. In South America, adjusted EBITDA improved by $1.87 million year-over-year to $2.64 million for Q3 2023.

Third-quarter sales in Asia-Pacific came in at $120.6 million, down from the $129.4 million for the same period a year ago. Adjusted EBITDA, however, improved for the region, coming in at $8.7 million, compared to $7.5 million a year earlier.)