Cooper-Standard financial goals hinge on innovation, cost cutting

Northville, Mich. — As Cooper-Standard Automotive Inc. continues to manage its costs, it also continues to innovate. And it is this combination — innovation and cost management — that the company says ultimately will allow it to reach its financial aims.

For now, though, the auto supplier is finding its balance.

"While we certainly have more work to do, we are continuing to make progress toward our profitability targets," company Chairman and CEO Jeffrey Edwards said during a call with investors.

For the second quarter of 2024, the Northville-based sealing and fluid handling provider reported a net loss of $76.2 million. This, the company said, was impacted by a one-time non-cash pension settlement charge and restructuring expenses.

Cooper-Standard recorded a net loss of $107.9 million for the first half.

This compares to a $27.8 million net loss in the second quarter of 2023 and a net loss of $158.2 million for the first half of 2023.

Adjusted net loss for 2024 stood at $11. 3 million in the second quarter, and $41.9 million for the first half. Both are improvements over 2023.

Gross profit for the quarter totaled $82.9 million, a 6.7 percent increase over Q2 2023.

Sales for the second quarter were down slightly — about $15.3 million — year over year, coming in at $708.4 million in Q2 2024. This includes about $60.6 million in new business awards.

"Importantly," Edwards said, "we continue to work with our customers to design and develop new technologies for their most important new vehicle platforms, including ICE, hybrid and battery electric vehicles."

In its financial report, Cooper-Standard noted that the change in year-over-year, second-quarter sales was "primarily attributable to the divestiture of our Technical Rubber business in the third quarter of 2023 and unfavorable foreign exchange." This, the company said, was partially offset by favorable volume and mix, which includes more sustainable price adjustments.

Adjusted EBITDA for the quarter was up slightly year-over-year at $50.9 million. This compares to the $47.9 million in the second quarter of 2023. For the six months ended June 30, adjusted EBITDA was up year over year by almost $20 million to $80.3 million.

Cooper-Standard attributed this year-over-year improvement to favorable volume and mix, sustainable price adjustments and savings generated from its lean manufacturing and purchasing initiatives. This was offset by unfavorable foreign exchange and continuing inflationary pressures such as high labor and energy costs.

Last quarter, Cooper-Standard announced its plan to cut salaried staff globally.

These moves were intended to have both immediate and long-term impacts. The initiatives are well underway and the company is poised to realize the expected savings.

"We successfully implemented an aggressive cost optimization initiative during the second quarter that is expected to drive significant savings beginning with the third quarter of 2024," Edwards said in a statement. "We anticipate approximately $20 million of realized savings in the second half of 2024, and the full annualized savings of $45 million in 2025, significantly improving our outlook for future profitability and cash flow."

As of Jan. 1, Cooper-Standard has realigned its operating management structure to focus on product type — sealing systems and fluid handling systems — rather than geographic region.

For the second quarter, the sealing systems segment reported sales of $364.9 million, down just slightly from the $327.9 million during same period in 2023.

Second-quarter Adjusted EBITDA for the segment were down slightly year-over-year, coming in at just over $35 million.

Fluid handling, meanwhile, recorded improved year-over-year sales at $322.7 million, making a $5.5 million increase over the same period one year earlier.

Adjusted EBITDA in the quarter came in roughly $2.6 million higher at $16.3 million.