Cooper Standard Holdings Inc.'s reorganization plan has expanded a bit with the identification of a second technical center for closure, rather than just one site previously disclosed. The location of the facility was not released, and the Northville, Mich.-based company has not yet commented on the number of employees impacted nor the cost savings associated with the move.
In the third-quarter financial results statement where the closure was unveiled, Cooper Standard noted that the goal is to close the facility by the end of the calendar year.
The move expands a cost-savings plan unveiled in February that calls for closure of two manufacturing facilities and one technical facility by Dec. 31. That plan remains on track, Cooper Standard said in its third-quarter results, adding that one of the manufacturing facilities has been shuttered.
Cooper Standard is a supplier of plastic and rubber functional parts for the auto industry.
The cost-savings plan also calls for the sale of "non-strategic assets," and the company took a major step toward that end with the divestiture of assets in Europe and India to Mutares S.E. & Co. KGaA.
In July, Cooper Standard finalized the sale of three rubber fluid transfer systems plants — two in Poland and one in Spain — along with a factory in Italy that makes finished goods as well as compounds for specialty sealing products for the European operations.
In India, Mutares acquired seven locations that make sealing, fuel and brake products and systems.
Combined, the European and Indian divestiture impacted about 2,500 employees.
In its most recent financial report, Cooper Standard noted that the divested assets had combined revenue of about $200 million, adjusted EBITDA loss of about $14 million and a negative cash flow of around $20 million.
Those moves already look to be paying off, according to Jeffrey Edwards, Cooper Standard's chairman and CEO.
"We are beginning to see the positive impact of our ROIC improvement initiative," Edwards said in a statement. "We have taken significant steps to optimize our cost structure and operating footprint, leading to improved margins in the third quarter. Additional commercial and operational actions are planned over the next two years with the goal of achieving and sustaining double-digit returns on invested capital."
Overall, the third quarter was solid for Cooper Standard, which posted sales of $683.2 million and a net income of about $4.4 million, an improvement over the $4.9 million net loss posted in third quarter last year.
For the nine months ended Sept. 30, Cooper Standard recorded sales of about $1.68 billion, down from the $2.38 billion for the same time period a year earlier. Year-to-date, the company posted a net loss of $240.4 million, a significant swing from the net income of $134.9 million for the first three quarters of 2019.
By region, Europe and North America reported the biggest declines in third-quarter sales compared to the same time period in 2019. Meanwhile, the Asia-Pacific region showed a gain—the only region to do so.
During the three months ended Sept. 30, Cooper Standard reported European sales of $146 million and North American sales of $359 million, representing drops of $41.4 million and $13 million, respectively, when compared to the same quarter of 2019.
South America's sales fell by about $7.6 million to $17.6 in the quarter, while Asia increased sales by about $8 million to $131 million.
Adjusted EBITDA in the Asia-Pacific region increased $24.3 million to $12.2 million. The region showed a loss of about $12.1 million in 2019.
Third-quarter adjusted EBITDA in North America came in at about $58.1 million, down by about $1.7 million when compared to the same time period of 2019.
In South America, it amounted to a loss of $2.68 million, while Europe showed a loss of $1.47 million, representing swings of $2,000 and $7.7 million, respectively.
Despite the challenges faced in 2020, Cooper Standard remains optimistic about the road ahead. The company, as of Sept. 30, had cash and cash equivalent assets of about $462.7 million. It also reported $150.2 million available under its amended senior asset-based revolving credit facility, inclusive of outstanding letters of credit, for total liquidity of $612.9 million.
Cooper Standard's solid financial foundation and cost-saving initiatives combined with the overall resurgence of the auto industry in the wake of the COVID-19 pandemic, leaves the company optimistic about the road ahead.
"Based on our current expectations for light vehicle production and customer demand for our products," Cooper Standard said, "we expect our current strong cash balance and access to flexible credit facilities will provide sufficient resources to support ongoing operations and the execution of planned strategic initiatives for the next 12 months."
Because of looming pandemic and its uncertain impacts on the auto industry overall, Cooper Standard did not issue formal financial guidance.