DJ Cooper Standard Reports Second Quarter Results; Semiconductor-related Customer Shutdowns and Commodity Inflation Weigh on Sales and Profit
Cooper-Standard Holdings Inc. Cooper Standard Reports Second Quarter Results; Semiconductor-related Customer Shutdowns and Commodity Inflation Weigh on Sales and Profit 04-Aug-2021 / 23:45 CET/CEST -----------------------------------------------------------------------------------------------------------------------
Cooper-Standard Holdings Inc. (NYSE: CPS) today reported results for the second quarter 2021.
Second Quarter 2021 Summary . Sales totaled $533.2 million, reflecting a negative impact of approximately $200 million from semiconductor-related
customer shutdowns . Net loss amounted to $63.6 million or $(3.73) per diluted share . Adjusted EBITDA totaled $(14.7) million, including the negative impact of semiconductor-related customer shutdowns . Net new business awards totaled $91.8 million, including $28.0 million in new business awards on electric vehicle
platforms
'Our operating teams continue to perform well, delivering world-class products, technology and service to our customers around the world,' said Jeffrey Edwards, chairman and CEO, Cooper Standard. 'However, volatile customer production schedules and rising material costs significantly impacted our operating efficiency and results during the quarter. We are taking aggressive actions, including commercial negotiations with customers and suppliers, to mitigate these incremental costs. Based on current customer schedules, we expect to leverage higher production volumes to drive improved financial results in the second half of the year.'
Consolidated Results
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(dollar amounts in millions except per share amounts)
$ $ $ $
Sales
533.2 340.5 995.4
1,202.2
$ $ $ $
Net loss
(63.6) (134.2) (97.5)
(244.8)
$ $ $ $
Adjusted net loss
(51.1) (111.8) (65.6)
(148.3)
$ $ $ $
Loss per diluted share
(3.73) (7.93) (5.74)
(14.49)
$ $ $ $
Adjusted loss per diluted share
(3.00) (6.61) (3.86) (8.77)
$ $ $ $
Adjusted EBITDA
(14.7) (93.8) 23.8 (85.5)
The year-over-year change in second quarter sales was primarily attributable to the non-recurrence of COVID-related customer shutdowns and favorable foreign exchange, partially offset by semiconductor-related customer shutdowns and the divestiture of certain businesses in India and Europe in July 2020. Organic sales growth, which excludes the impacts of foreign exchange and divestitures, was 54.9 percent year-over-year.
Net loss for the second quarter 2021 included restructuring charges of $11.6 million and other special items. Net loss for the second quarter 2020 included asset impairment charges of $12.6 million, restructuring charges of $9.8 million and other special items. Adjusted net loss, which excludes these items and their related tax impact, was $51.1 million in the second quarter 2021 compared to $111.8 million in the second quarter of 2020. The year-over-year improvement was primarily due to the non-recurrence of COVID-related customer shutdowns, improved manufacturing efficiency, and lower selling, administrative and engineering (SGA&E) expense, partially offset by semiconductor-related customer shutdowns, higher commodity and material costs, higher interest expense, wage inflation and lower tax benefit.
In the first six months of the year, the year-over-year change in sales was primarily attributable to the non-recurrence of COVID-related customer shutdowns and favorable foreign exchange, partially offset by semiconductor-related customer shutdowns and the divestiture of certain businesses in India and Europe in July 2020. For the first half of the year, organic sales growth, which excludes the impacts of foreign exchange and divestitures, was 22.8 percent versus the same period in 2020.
Net loss for the first six months of 2021 included restructuring charges of $32.7 million and other special items. Net loss for the first six months of 2020 included asset impairment charges of $87.3 million, restructuring charges of $17.1 million and other special items. Adjusted net loss, which excludes these items and their related tax impact, was $65.6 million in the first six months of 2021 compared to $148.3 million in the first six months of 2020. The year-over-year improvement was primarily due to the non-recurrence of COVID-related customer shutdowns, improved manufacturing efficiency and lower SGA&E expense, partially offset by semiconductor-related customer shutdowns, higher commodity and material costs, higher interest expense, wage inflation and lower tax benefit.
Adjusted net loss, adjusted EBITDA, adjusted loss per diluted share and free cash flow 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.
New Business Awards
The Company continues to leverage its world-class engineering and manufacturing capabilities, its innovation programs and its reputation for quality and service to win new business awards with its customers. During the second quarter of 2021, the Company received net new business awards representing an incremental $91.8 million in anticipated future annualized sales. Importantly, these net new business awards included $28.0 million in new awards on electric vehicle platforms. For the first six months of 2021, the Company's net new business awards totaled $131.3 million, with $58.8 million in new awards on electric vehicle platforms.
New business awards related to the Company's innovation products were strong in the second quarter, with new contract awards, including both new and converted replacement business, totaling $93.8 million in anticipated future annualized sales. These awards are related to the Company's commercialized innovation products such as MagAlloy, Gen III Posi-Lock, Easy-Lock, PC2000, EPDM Microdense and TP Microdense. Additionally, the Company has introduced new technologies through our i^3 Innovation Process that are supporting future pursuits with Fortrex, FlushSeal, TUROS and next-generation connection technologies.
Continuing Execution of ROIC and Margin Enhancement Initiatives
The Company remains focused on improving returns on invested capital and adjusted EBITDA margins to above 10 percent. A defined, company-wide initiative to accomplish these goals was initiated in late 2019 and the execution on the defined workstreams is ongoing. Full execution of the "Driving Value Plan" is expected to take approximately three years from inception. We believe we are on track to achieve the stated goals of the initiative by the end of 2022 with the first full year of sustained double-digit ROIC and adjusted EBITDA margins expected to be in 2023.
Segment Results of Operations
Sales
Three Months Ended June 30, Variance Due To:
2021 2020 Change Volume / Foreign
Mix* Exchange Divestitures
(dollar amounts in thousands)
Sales to external customers
$ $ $ $ $ $
North America
-
247,525 126,337 121,188 118,962 2,226
Europe
132,621 78,805 53,816 57,827 11,384 (15,395)
Asia Pacific
103,915 105,726 (1,811) (8,707) 9,064 (2,168)
South America 254 -
14,153 3,881 10,272 10,018
Total Automotive
498,214 314,749 183,465 178,100 22,928 (17,563)
Corporate, - eliminations and other 34,971 25,718 9,253 8,179 1,074
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