Cooper Standard Reports Strong Second Quarter 2015 Results on Margin Improvement in North America and Europe

Second Quarter 2015 Highlights

• Net income totaled $36.5 million or $1.98 per diluted share
• Adjusted EBITDA totaled $97.0 million or 11.3 percent of sales, up 60 basis points
• Excluding the impact of foreign currency exchange rates, adjusted EBITDA was $107.0 million
• Guidance improved for 2015

Cooper-Standard Holdings Inc. (NYSE: CPS), the parent company of Cooper Standard Automotive, today reported net income of $36.5 million, or $1.98 per diluted share, and adjusted EBITDA of $97.0 million on sales of $860.8 million for the second quarter of 2015. These results compare to net income of $13.2 million or $0.72 per diluted share and adjusted EBITDA of $91.8 million on sales of $857.6 million in the second quarter of 2014.

“Our second quarter results represent another solid step toward achieving our 2015 objectives. In terms of adjusted EBITDA margin, it was our best quarter in more than three years,” stated Jeffrey Edwards, chairman and CEO of Cooper Standard. “We are particularly pleased with the continued strong performance in our North American operations, the margin improvements we are making within our European operations and our profitable growth in Asia. In addition, our increased focus on cash generation is driving positive change that is enhancing our ability to improve shareholder value going forward.”

Net income of $36.5 million for the second quarter of 2015 included after tax amounts of a $2.6 million gain related to the acquisition of Huayu-Cooper Standard Sealing Systems Co. (Shenya) (see Note 1) and $7.0 million in restructuring expense. Net income of $13.2 million in the second quarter of 2014 included after tax amounts of $18.8 million of loss on extinguishment of debt and $3.7 million in restructuring expense. Excluding these items, adjusted net income for the second quarter of 2015 was $40.9 million or $2.22 per diluted share, up 14.4 percent when compared to adjusted net income of $35.7 million or $1.94 per diluted share in the second quarter of 2014.

For the first six months of 2015, the Company reported net income of $57.5 million, or $3.14 per diluted share, and adjusted EBITDA of $177.7 million on sales of $1.66 billion. By comparison, the Company reported net income of $32.9 million, or $1.82 per diluted share, and adjusted EBITDA of $172.3 million on sales of $1.70 billion in the first six months of 2014. The Company’s adjusted EBITDA margin for the first half of 2015 was 10.7 percent compared to 10.2 percent in the first half of 2014. Excluding the impact of foreign currency exchange rates, adjusted EBITDA in the first half of 2015 was $196.0 million or 10.8 percent of sales.

Operational Overview

Consolidated

Second quarter 2015 sales increased by $3.2 million or 0.4 percent compared to the second quarter of 2014. The year-over-year variance is largely attributable to favorable volume and mix and additional revenue from the Shenya acquisition, partially offset by an $85.3 million impact from unfavorable foreign currency exchange rates. Excluding the impact from foreign currency exchange rates, sales in the second quarter 2015 were $946.1 million, an increase of 10.3 percent over the second quarter of 2014.

Second quarter adjusted EBITDA increased by $5.2 million or 5.7 percent compared to the second quarter of 2014. The year-over-year variance is primarily attributable to improvements in operating efficiency, favorable volume and mix, and lower raw material costs. These favorable items were partially offset by wage increases, unfavorable price adjustments and a $10.0 million negative impact from unfavorable foreign currency exchange rates. Excluding the impact from foreign currency exchange rates, adjusted EBITDA was $107.0 million.

North America

Cooper Standard’s North America segment reported sales of $453.5 million in the second quarter of 2015 compared to $452.2 million in the second quarter of 2014. The increase was attributable to improved volume and mix offset primarily by the impact of foreign currency exchange rates and unfavorable price adjustments. Excluding the impact of exchange rates, North America segment sales were $463.7 million, an increase of $11.5 million or 2.5 percent higher than the second quarter of 2014.

North America segment profit was $55.6 million, or 12.3 percent of sales, in the second quarter of 2015. This compared to segment profit of $36.5 million, in the second quarter of 2014, which included $13.5 million in allocated loss on extinguishment of debt. Excluding the allocated loss on extinguishment of debt, segment profit was $49.9 million or 11.0 percent of sales in the second quarter of 2014. The 130 basis point improvement was driven primarily by improved volume and mix, gains in operating efficiencies and lower material costs partially offset by the impact of price adjustments, wage increases and unfavorable foreign currency exchange rates.

Europe

Cooper Standard’s Europe segment reported sales of $270.3 million in the second quarter of 2015 compared to $305.7 million in the second quarter of 2014. The decrease was attributable to unfavorable foreign currency exchange rates, partially offset by improvements in volume and product mix. Excluding the impact of foreign currency exchange rates, Europe segment sales were $335.0 million for the quarter, up 9.6 percent versus the prior year period.

Europe segment profit was $2.8 million in the second quarter of 2015, compared to a loss of $12.9 million in the second quarter 2014. Segment profit included restructuring expense of $6.1 million and a $2.6 million gain related to the acquisition of Shenya. Segment profit in the second quarter of 2014 included $3.5 million of restructuring expense and $10.9 million in allocated loss on extinguishment of debt. Excluding these items, Europe segment profit was $6.3 million in the second quarter of 2015 compared to $1.5 million in the second quarter of 2014. The improvement was attributable to operating efficiencies, lower material costs, higher sales volume and favorable product mix. These positive factors were partially offset by unfavorable foreign currency exchange rates and price adjustments.

Asia Pacific

Cooper Standard’s Asia Pacific segment reported sales of $111.9 million in the second quarter of 2015, an increase of 92.1 percent compared to $58.2 million in the second quarter of 2014. The year-over-year variance is largely attributable to the consolidation of the revenue from the Shenya acquisition and improved volume and mix. Excluding growth from acquisitions, sales in the Asia Pacific segment increased $11.1 million in the quarter, representing a solid 19.7 percent organic growth rate.

Asia Pacific segment profit was $2.0 million in the second quarter of 2015, compared to a loss of $0.6 million in the second quarter 2014. The year-over-year change was primarily the result of $3.6 million in allocated loss on extinguishment of debt included in the second quarter of 2014, improved volume and mix and lower raw material costs offset by higher depreciation, amortization and SGA&E expense.

South America

Cooper Standard’s South America segment reported sales of $25.1 million in the second quarter of 2015 compared to $41.4 million in the second quarter of 2014. The decrease was attributable to unfavorable foreign currency exchange rates and lower overall vehicle production in Brazil.

Primarily as a result of lower sales, the South America segment incurred a segment loss of $7.5 million in the second quarter of 2015 compared to a loss of $4.3 million in the second quarter of 2014.

Liquidity and Capital Resources

At June 30, 2015, Cooper Standard had cash and cash equivalents totaling $204.8 million, compared to $194.4 million at the end of the first quarter 2015 and $267.3 million at December 31, 2014. The sequential quarterly increase was driven by improved cash from operations and an intensified focus on capital spending and working capital. The cash balance decline in the first six months of the year is due primarily to seasonal changes in working capital and $34.4 million in cash payments made in connection with the acquisition of Shenya. In addition to its cash and cash equivalents, the Company had $146.9 million available under its senior amended asset-based revolving credit facility (“ABL”) for total liquidity of $351.7 million at June 30, 2015.

Total debt at June 30, 2015 was $803.7 million compared to $785.9 million at December 31, 2014. Cooper Standard’s total debt-to-book capitalization ratio was 57.6 percent at June 30, 2015 compared to 58.9 percent at December 31, 2014. Cooper Standard’s net debt-to-book capitalization ratio was 42.9 percent at June 30, 2015.

Outlook

The Company has reaffirmed or revised its 2015 full year outlook as follows:

Click here for related notes and financial statements.