 Cooper Standard
Second Quarter 2012 Earnings Call
August 10, 2012
Exhibit 99.1 |
 cooperstandard
Introduction & Agenda
2
•
Introduction:
Glenn
Dong,
Treasurer
•
Executive
Overview:
Jim
McElya,
CEO
•
Business
Highlights:
Keith
Stephenson,
COO
•
Financial
Review:
Allen
Campbell,
CFO
•
Questions & Answers |
 cooperstandard
Safe Harbor
3
This presentation includes forward-looking statements as contemplated by the 1995 Private
Securities Litigation Reform Act, reflecting management’s current analysis and
expectations, based on what are believed to be reasonable assumptions. The words
“estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs,
such as “will,” “should,” “could,” or “may,” and variations of
such words or similar expressions are intended to identify forward-looking
statements. Forward-looking statements may involve known and unknown risks, uncertainties and other
factors, which may cause actual results to differ materially from those projected, stated or implied,
depending on many factors, including, without limitation: our dependence on the automotive
industry; further restructuring of our customers; availability and cost of raw materials;
pricing pressures and volume requirements of our customers; the ability to meet significant
increase in customer demand; increased costs negatively impacting our profitability; competition in the automotive
industry; sovereign and other risks related to our conducting operations outside the United States;
foreign currency fluctuations; our ability to achieve benefits from our joint venture
operations not operated for our sole benefit; our exposure to the uncertainty of political
disruptions and increased violence in Mexico; the uncertainty of our ability to achieve expected
cost reduction savings; our dependence on certain major customers and platforms; our exposure to
product liability and warranty claims; labor conditions; our ability to attract and retain key
personnel; our ability to meet customers’ needs for new and improved products in a timely
manner; our ability to select and integrate attractive business acquisitions; our legal rights
to our intellectual property portfolio; environmental and other regulations; the outcome of legal
proceedings the Company is or may become party to; volatility in our expected annual effective
tax rate; impact of our capital structure on our financial condition and ability to
obtain financing in the future; our ability to generate cash to meet our debt and other cash obligations;
our pension plans; any impairment of a significant amount of our goodwill or other intangible asset;
potential conflicts of interest between our owners and us; limitations on flexibility in
operating our business contained in our debt agreements; our exposure to natural disasters; and
other risks described from time to time in the Company’s Securities and Exchange
Commission filings. There may be other factors that may cause the company’s actual results
to differ materially from those projected in any forward-looking statement. Accordingly,
there can be no assurance that Cooper Standard will meet future results, performance or
achievements expressed or implied by such forward-looking statements. This paragraph is included
to provide a safe harbor for forward-looking statements, which are not generally required to be
publicly revised as circumstances change and which Cooper Standard does not intend to
update. The forward-looking statements in this presentation are made as of the date
hereof, and the Company does not assume any obligation to update, amend or clarify them to
reflect events, new information or circumstances occurring after the date hereof.
|
 Jim
McElya Chairman & CEO
Executive Overview
Second Quarter 2012 |
 cooperstandard
5
Executive Overview
•
Solid results despite global economic challenges
–
Sales of $734.5 million
–
Adjusted EBITDA of $74.1 million
•
Proactively adjusting to changing vehicle
production volumes
•
Automakers in Europe beginning to address
overcapacity |
 cooperstandard
6
Executive Overview (continued)
•
Further investment in capital and infrastructure to
support global growth
•
Robust launch activity continues
•
Managing raw material costs and supply
–
Prices stabilizing
–
Successful management of emergency resin shortage |
 Business Highlights
Second Quarter 2012
Keith Stephenson
Chief Operating Officer |
 cooperstandard
8
Effectively Managing Industry Challenges
•
Europe
–
Combination of eliminating temporary workers, short
workweek programs and headcount reductions to match
capacity with demand
–
Transition of certain administrative functions to lower
cost countries
–
Start-up of Romanian facility
•
South America
–
New Brazil plant now fully operational
–
Significant launches in progress |
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9
Q2 2012 Operations Overview
•
Continued strong operating performance
–
Meeting customer and internal key metrics
–
Improved year-over-year lean savings performance
•
Higher operating costs associated with vehicle launches,
production transfers and expansion
–
Expenses associated with start-up and related launch costs of new
facility in Brazil
–
Costs
related
to
consolidation
of
Fluid
manufacturing
facilities
in
North
America
–
Extraordinary costs related to the launch of a new vehicle program in
North America |
 cooperstandard
10
Raw Materials Update
•
Moderating inflationary
pressure on key
commodities
•
Improving availability
•
Proactively developing
alternative materials
Top Five Purchased
Material Groups
Carbon black
EPDM
Plastic components
Plastic resin
Steel |
 cooperstandard
11
•
Launches across diverse customers and
geographies:
–
Chrysler –
Dodge Dart
–
BMW –
1 Series
–
Ford –
Fusion
–
Ford –
Escape
–
Renault
-
Duster
Q2 2012 Launches
Renault -
Duster
Chrysler –
Dodge Dart
Ford -
Escape
BMW –
1 Series
Note: Photos are representative and may not reflect final production models
Ford -
Fusion |
 cooperstandard
12
Investment in Technology and Capability
•
Significant progress with new generation thermal
management and emissions products
–
Valves and actuators
–
Electric water pumps
–
Exhaust gas recirculation modules
–
EDC product portfolio
•
Expanding capability of Fluid business in Asia |
 Financial Overview
Second Quarter 2012
Allen Campbell
Chief Financial Officer |
 cooperstandard
Q2 and Year-to-Date 2012 Performance
14
$ USD Millions, except per share amounts
Q2 2011
Q2 2012
YTD 2011
YTD 2012
Net Sales
North America
366.3
387.3
725.1
775.4
Europe
299.9
264.2
539.6
553.2
Asia Pacific
55.2
48.8
110.6
103.1
South America
39.0
34.2
73.9
68.1
Consolidated
760.5
734.5
1,449.2
1,499.8
Gross Profit
123.7
114.4
244.5
236.1
SGA
65.6
69.0
126.5
141.0
Operating Profit
17.2
42.1
68.6
81.8
Net Income
19.0
77.3
64.0
101.1
EPS
0.71
3.28
2.49
4.15
Adjusted EBITDA
90.3
74.1
182.2
157.3
% Margin
11.9%
10.1%
12.6%
10.5% |
 cooperstandard
EBITDA and Adjusted EBITDA Reconciliation
15
$ USD Millions
2011
2012
Net income
Provision (benefit) for income tax expense
EBITDA
Restructuring
Adjusted EBITDA
Six Months Ended June 30,
Net interest expense
Depreciation and amortization
Stock based compensation
EBITDA and Adjusted EBITDA are Non-GAAP measures. Reference comments on slide
20. Net gain on partial sale of joint venture
64.0
18.8
(38.2)
20.6
22.0
60.3
62.1
163.7
147.0
23.9
5.3
(11.4)
-
5.3
5.0
182.2
157.3
Inventory fair value
0.7
-
101.1
Note: Numbers subject to rounding |
 cooperstandard
16
Cooper
Standard
Joint
Venture
Sales
–
Q2
2012
•
6 Core Consolidated Joint Ventures
•
Locations
–
China, India
–
France, Poland
–
Mexico
•
Products
–
Sealing
–
Fluid
–
AVS
•
4 Unconsolidated Joint Ventures
•
Locations
–
US
–
Asia
•
Products
–
Sealing
–
AVS
Consolidated Joint Ventures
Unconsolidated Joint Ventures
Includes JV Sales with HASCO (SAIC), Sujan, Nisco N.A. and Nishikawa Thailand
CS France
$0
$30
$60
$90
$120
$150
Q2 2011
Q2 2012
$37
$39
$78
$81
$0
$30
$60
$90
$120
Q2 2011
Q2 2012
$70
$101 |
 cooperstandard
17
Cash Flow Q2 and Year-to-Date 2012
Note: Numbers subject to rounding
Cash Balance as of March 31, 2012
$ 296.0
Cash used
(43.9)
Cash Balance as of June 30 , 2012
$ 252.1
(
$ USD Millions
)
Q2 2012
YTD Q2 2012
Cash from business
61.8
123.0
Pension
funding
-
US
(3.3)
(23.5)
Changes in operating assets & liabilities
(58.7)
(134.3)
Cash used in operations
(0.2)
(34.8)
-
-
Capital expenditures
(29.3)
(58.5)
Cash used in operations including CAPEX
(29.5)
(93.3)
-
-
Acquisition of business, net cash acquired
0.6
(1.1)
Proceeds from sale of assets
4.1
8.3
Dividends
–
Preferred Stock
(1.8)
(3.5)
Financing activities
(3.2)
(2.6)
Repurchase of preferred stock
-
(4.9)
Repurchase of common stock
(13.6)
(13.6)
Foreign exchange/other
(0.5)
0.8
Net cash used
(43.9)
(109.7) |
 cooperstandard
18
Liquidity as of June 30, 2012
Cash on Balance Sheet
$252.1
ABL Revolver
125.0
Letters of Credit
(27.6)
Total Liquidity
$349.5
Strong balance sheet and liquidity to support growth
•
ABL Revolver undrawn
•
Net leverage = $233.7 million
•
Net leverage ratio = 0.8
•
Interest coverage ratio = 7.2
•
No major debt maturity until 2018
($ USD Millions)
$0
$100
$200
$300
$400
$500
Debt
Cash
485.9
252.1 |
 cooperstandard
19
2012 Guidance
* Sales guidance is based on North American production of 14.9 million, and
Europe (including Russia) production of 18.9 million.
$2.85
$2.85 -
$2.95
Revenue
$2.0
$2.3
$2.5
$2.8
$3.0
2011
2012
Revenue
$0
$20
$40
$60
$80
$100
$120
$140
Capital
Expenditure
Cash
Restructuring
Cash Taxes
$110-$120
$45-$55
$25-$30 |
 cooperstandard
Non-GAAP Financial Measures
20
EBITDA and adjusted EBITDA are measures not recognized under Generally
Accepted Accounting Principles (GAAP) which exclude certain non-cash and
non- recurring items.
When analyzing the company’s operating performance, investors should use
EBITDA and adjusted EBITDA in addition to, and not as alternatives for, net
income (loss), operating income, or any other performance measure derived in
accordance with GAAP, or as an alternative to cash flow from operating
activities as a measure of the company’s performance. EBITDA and
adjusted EBITDA have limitations as analytical
tools
and
should
not
be
considered
in
isolation
or
as
substitutes
for
analysis
of
the
company’s
results
of
operations
as
reported
under
GAAP.
Other
companies may report EBITDA and adjusted EBITDA differently and therefore
Cooper Standard’s results may not be comparable to other similarly titled
measures of other companies. |
 Questions & Answers |
 cooperstandard
Summary
22
Proactively addressing changing
global environment
•
Solid performance despite economic headwinds
•
Continued investment in technology and
capabilities
•
Adjusting to fluctuations in production volumes |
 Appendix |
 cooperstandard
24
Adjusted EBITDA Q2 2011 and 2012
Note: Numbers subject to rounding
Three Months Ended June 30,
2011
2012
Net income
$ 19.0
$ 77.3
Provision (benefit) for income tax expense
6.5
(46.2)
Interest expense, net of interest income
10.7
10.8
Depreciation and amortization
31.4
30.5
EBITDA
$ 67.6
$ 72.4
Restructuring
(1)
37.0
(0.5)
Noncontrolling
interest
restructuring
(2)
(17.7)
-
Stock-based
compensation
(3)
2.7
2.2
Inventory
write-up
(4)
0.7
-
Adjusted EBITDA
$ 90.3
$ 74.1
(1) Includes non-cash restructuring.
(2) Proportionate share of restructuring costs related to FMEA joint venture.
(3) Non-cash stock amortization expense and non-cash stock option
expense for grants issued at emergence from bankruptcy. (4)
Write-up
of
inventory
to
fair
value
for
the
FMEA
joint
venture,
net
of
noncontrolling
interest
($ USD Millions) |
 cooperstandard
25
Net Leverage Ratio as of June 30, 2012
(1)
Includes cash and noncash restructuring.
(2)
Proportionate share of restructuring costs related to Cooper Standard France joint
venture. (3)
Non-cash stock amortization expense and non-cash stock option expense for
grants issued at emergence from bankruptcy. (4)
Costs incurred in relationship to the Cooper Standard France joint venture
agreement. (5)
Costs related to corporate development activities.
Note: Numbers subject to rounding
($ USD Millions)
Three Months Ended
Twelve
Months
Ended
Sep 30,
2011
Dec 31,
2011
Mar 31,
2012
Jun 30,
2012
Jun 30,
2012
Net income
$ 15.7
$ 23.2
$ 23.8
$ 77.3
$ 140.0
Provision for income tax expense
8.0
(6.0)
8.1
(46.2)
(36.1)
Interest expense, net of interest income
9.6
10.3
11.2
10.8
41.9
Depreciation and amortization
31.7
32.1
31.6
30.5
125.9
EBITDA
$ 65.0
$ 59.6
$ 74.7
$ 72.4
$ 271.7
Restructuring
(1)
6.5
4.1
6.1
(0.5)
16.2
Noncontrolling interest restructuring
(2)
(1.3)
(0.9)
(0.3)
-
(2.5)
Stock-based compensation
(3)
3.0
2.5
2.7
2.2
10.4
Acquisition costs
(4)
0.2
-
-
0.2
Other
(5)
-
1.3
-
-
1.3
Adjusted EBITDA
$ 73.4
$ 66.6
$ 83.2
$ 74.1
$ 297.3
Net Leverage
Debt payable within one year
32.8
Long-term debt
453.0
Less: cash and cash equivalents
(252.1)
Net Leverage
233.7
Net Leverage Ratio
0.8 |
 cooperstandard
26
Adjusted
EBITDA
as
a
percent
of
Sales
-
LTM
Note: Numbers subject to rounding
(1)
Includes cash and noncash restructuring.
(2)
Proportionate share of restructuring costs related to Cooper Standard France joint
venture. (3)
Non-cash stock amortization expense and non-cash stock option expense for
grants issued at emergence from bankruptcy. (4)
Costs incurred in relationship to the Cooper Standard France joint venture
agreement. (5)
Costs related to corporate development activities.
($ USD Millions)
Three Months Ended
Twelve
Months
Ended
Sep 30,
2011
Dec 31,
2011
Mar 31,
2012
Jun 30,
2012
Jun 30,
2012
Net income
$ 15.7
$ 23.2
$ 23.8
$ 77.3
$ 140.0
Provision for income tax expense
8.0
(6.0)
8.1
(46.2)
(36.1)
Interest expense, net of interest income
9.6
10.3
11.2
10.8
41.9
Depreciation and amortization
31.7
32.1
31.6
30.5
125.9
EBITDA
$ 65.0
$ 59.6
$ 74.7
$ 72.4
$ 271.7
Restructuring
(1)
6.5
4.1
6.1
(0.5)
16.2
Noncontrolling
interest restructuring
(2)
(1.3)
(0.9)
(0.3)
-
(2.5)
Stock-based compensation
(3)
3.0
2.5
2.7
2.2
10.4
Acquisition costs
(4)
0.2
-
-
0.2
Other
(5)
-
1.3
-
-
1.3
Adjusted EBITDA
$ 73.4
$ 66.6
$ 83.2
$ 74.1
$ 297.3
Sales
708.5
695.7
765.3
734.5
2,904.0
Adjusted EBITDA as a percent of Sales
10.2% |