NORTHVILLE, Mich.—While the company may not be fully clear of the storm, the waters are calming for Cooper-Standard Automotive Inc., which continues to steady the financial ship and chart its growth path.
Jeffrey Edwards, Cooper-Standard chairman and CEO, credits the firm's steadfast focus on its recovery plan as a reason for the steady, continued turnaround.
"While there is still a lot of uncertainty in our industry and in the global economy, we continue to manage the aspects of our business that we can control," Edwards told investors during a conference call Nov. 2. "Our cost structure has improved significantly and is still improving. Our manufacturing operations are running as efficiently as they ever have, and we continue to fulfill our end of the bargain with our customers: delivering quality products—on time—and supporting their strategic initiatives and objectives with our technology and innovation."
In the third quarter alone, Edwards noted, the company realized $22 million in operational savings, primarily through lean initiatives and increased savings.
The net loss for the three months ended Sept. 30 came in at $32.7 million, down from the $123.2 million in the year-ago period. The FY22 Q3 losses include $1.7 million in restructuring charges and other special items.
Adjusted net loss, which excludes restructuring, special items and related impacts, was $29.5 million—or about $1.71 per diluted share. The gains, Cooper-Standard said in its financial report, were driven by improved volume and mix, lower income tax expense and improved operating efficiencies. Continuing material cost inflation, net of realized customer recoveries, higher labor costs and other inflationary headwinds partially offset the gains.
Adjusted EBITDA was $20.5 million, a more than $10 million improvement year-over-year.
"As for headwinds in the quarter, higher material costs amounted to $35 million," Jon Banas, executive vice president and chief financial officer, said during the Q3 investors call. "Higher wages, compensation-related costs, general inflationary prices and other items reduced adjusted EBITDA by a combined $10 million in the quarter."
For the quarter ended Sept. 30, sales topped $657 million, a 24.8 percent improvement over 2021's third-quarter sales of $526.7 million. Cooper-Standard attributed the gains to favorable volume and mix as well as realized recoveries from material cost inflation. These gains were partially offset by foreign exchange.
This year's third-quarter sales included roughly $66 million in incremental anticipated future annualized sales. About $27 million of awards were for electric vehicle platforms.
Year-to-date Cooper-Standard has garnered $124 million in business awards, including $72 million for electric vehicle platforms. Since the beginning of 2020, the company's net new business awards on electric vehicle platforms total more than $275 million in expected incremental annualized sales.
North America remains the company's strongest sales region, accounting for more than half of the third-quarter sales at $351 million. This marks an $80 million improvement year-over-year.
Sales were up across all other regions as well. Asia added $19.9 million in sales year-over-year for a total of more than $129.49 million in the quarter, while Europe added more than $14.9 million in year-over-year sales to bring in $113.67 million in the three-month period. South American sales were $27.1 million for the quarter, up more than $11 million year-over-year.
These increased sales trends are likely to continue in the months and years ahead, Edwards said, emphasizing Cooper-Standard's continued technology and product development strides.
"We continue to believe our investments in product and technology innovation are the keys to driving future profitable growth," Edwards said. "We expect this will benefit us even further in the months and years ahead as we optimize our cost structure and as inflationary and cost pressures normalize."
Heading into the fourth quarter, Cooper-Standard has adjusted its guidance slightly for the full year, mainly due to light vehicle production projections, macroeconomic uncertainties and customer production schedules.
North American light vehicle production, the company said, should be around 14.5 million vehicles, down about 200,000 from the previous estimates. Europe, meanwhile is expected to produce about 1 million fewer vehicles by the end of the year, about 16.5 million in total. China is on pace to produce about 2 million fewer vehicles than previously expected. Cooper-Standard expects the country to roll out 24.5 million vehicles this year.
With this in mind, sales—previously expected to be between $2.5 billion and $2.7 billion—now are expected at or below the low end of that projection. The latest financial report notes full-year sales between $2.45 billion and $2.55 billion.
Adjusted EBITDA, once believed to be between $50 million and $60 million, now is expected to be around $45 million to $50 million.
"So the revised range remains very near the low end (of) our original guidance range for adjusted EBITDA, despite the disappointing production volumes," Edwards said.
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