Cooper Standard Reports Fourth Quarter and Full Year 2018 Results
NOVI, Mich., February 14, 2019 — Cooper-Standard Holdings Inc. (NYSE: CPS) today reported preliminary results for the fourth quarter and full year 2018.
|•||Full year net income totaled $107.8 million or $5.89 per fully diluted share|
|•||Full year adjusted net income totaled $160.7 million or $8.79 per fully diluted share|
|•||Full year adjusted EBITDA totaled $376.5 million, or 10.4 percent of sales|
|•||Net new business awards totaled $64 million in the quarter and $441 million for the full year|
|•||Sales awards for innovation products totaled $70 million in the quarter and $287 million for the full year|
“Market conditions in Asia and Europe remained challenging during the fourth quarter and commodity costs continued to increase globally,” stated Jeffrey Edwards, chairman
The year-over-year change in fourth quarter sales was primarily attributable to unfavorable volume and mix, foreign exchange and customer price adjustments, partially offset by the net positive impact of acquisitions and divestitures. For the full year, favorable foreign exchange and the net positive impact of acquisitions and divestitures more than offset customer price adjustments and unfavorable volume and mix.
Net income for the fourth quarter and full year 2018 included the impact of non-cash impairment charges related to goodwill and other assets in the Company’s Asia Pacific and Europe reporting units. It also included the tax benefit related to the reversal of the Company’s valuation allowance on net deferred tax assets in France and on capital losses in the U.S. Adjusted net income, which excludes these and other special or non-operating items, was down in the fourth quarter and full year 2018 due largely to unfavorable volume and mix, customer price adjustments, higher material costs and general inflation, partially offset by operating efficiencies, lower sales, general, administrative and engineering (SGA&E) expense, and the lower statutory tax rate in the U.S.
The year-over-year change in fourth quarter and full year adjusted EBITDA is largely attributable to unfavorable volume and mix, customer price adjustments, higher raw material costs and general inflation, partially offset by operating efficiencies and lower SGA&E expense.Adjusted net income, adjusted EBITDA and adjusted earnings per diluted share are non-GAAP measures. Reconciliations to the most directly comparable financial measures, calculated and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), are provided in the attached supplemental schedules.
During the fourth quarter, Cooper Standard launched 56 new customer programs and was awarded $64 million in annual net new business. For the full year 2018, the Company’s annual net new business awards totaled $441 million. New contract awards related to the Company’s recent product innovations, including both new and replacement business, totaled $70 million for the quarter. Cooper Standard’s expanding portfolio of commercialized innovation products
During the fourth quarter, the Company announced an agreement to sell its anti-vibration systems business and the divestiture is expected to close early in the second quarter of 2019, subject to customary closing conditions.
Quarterly Segment Results
North America: Cooper Standard’s North America segment reported sales of $476.4 million in the fourth quarter of 2018 compared to $479.4 million in the fourth quarter of 2017. The change was primarily attributable to unfavorable volume and mix and customer price adjustments, offset by incremental sales related to acquisitions
Europe:Cooper Standard’s Europe segment reported sales of $230.2 million in the fourth quarter of 2018 compared to $267.4 million in the fourth quarter of 2017. The change was attributable to unfavorable volume and mix, customer price adjustments and foreign exchange.The Europe segment reported a segment loss of $57.2 million in the fourth quarter of 2018, compared to a segment profit of $1.8 million in the fourth quarter of 2017. The year-over-year change was largely attributable to $41.5 million of non-cash impairment charges related to goodwill, fixed assets and other intangible assets, unfavorable volume and mix, customer price adjustments, higher material costs and general inflation, partially offset by savings related to restructuring and other cost reduction initiatives.
Asia Pacific: Cooper Standard’s Asia Pacific segment reported sales of $143.1 million in the fourth quarter of 2018 compared to $163.2 million in the fourth quarter of 2017. The change was largely attributable to unfavorable volume and mix, customer price adjustments and foreign exchange, partially offset by incremental sales related to acquisitions
South America: Cooper Standard’s South America segment reported sales of $22.3 million in the fourth quarter of 2018 compared to $27.9 million in the fourth quarter of 2017. The change was primarily attributable to foreign exchange and unfavorable volume and mix
Liquidity and Cash
At December 31, 2018, Cooper Standard had cash and cash equivalents totaling $265.0 million. Net cash provided by operating activities in the fourth
OutlookThe Company has issued 2019 full year guidance as follows:
|Sales||$3.40 – $3.60 billion|
|Adjusted EBITDA1||$300 – $340 million|
|Capital Expenditures||$180 – $190 million|
|Cash Restructuring||$15 – $25 million|
|Effective Tax Rate||16% – 18%|
1 Adjusted EBITDA is a non-GAAP financial measure. We have not provided a reconciliation of projected adjusted EBITDA to projected net income because full-year net income will include special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end. Due to this uncertainty, we cannot reconcile projected adjusted EBITDA to U.S. GAAP net income without unreasonable effort.
Conference Call Details
Cooper Standard management will host a conference call and webcast on February 15 at 9 a.m. ET to discuss its fourth quarter and full year 2018 results, provide a general business update and respond to investor questions.To participate in the live question-and-answer session, callers in the United States and Canada should dial toll-free 877-374-4041 (international callers dial 253-237-1156) and provide the conference ID 9692137 or ask to be connected to the Cooper Standard teleconference. Callers should dial in at least five minutes prior to the start of the call. Financial and automotive analysts are invited to ask questions after the presentations are made.
The interactive webcast and slide presentation can be accessed live or in replay on the investor relations page of the Cooper Standard website at www.ir.cooperstandard.com/events.cfm.
About Cooper Standard
Cooper Standard, headquartered in Novi, Mich., is a leading global supplier of systems and components for the automotive industry. Products include rubber and plastic sealing, fuel and brake lines, fluid transfer hoses and anti-vibration systems. Cooper Standard employs approximately 32,000 people globally and operates in 21countries around the world. For more information, please visit www.cooperstandard.com.
This press release includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “outlook,” “guidance,” “forecast,” or future or conditional verbs, such as “will,” “should,” “could,” “would,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other items, such factors may include: prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of