Cooper-Standard Holdings has reported results for the second quarter 2019. Highlights include:
- Sales totaled $764.8 million
- Net income of $145.3 million or $8.36 per diluted share
- Adjusted EBITDA of $58.1 million or 7.6 percent of sales
- Adjusted net income of $5.4 million or $0.31 per diluted share
- Contract awards related to innovation products for annualized sales of $171 million
- Significant new Fortrex technology agreement signed subsequent to quarter end
“Our results for the quarter were once again negatively impacted by continuing weak production volume and mix in China and Europe, as well as the slower than expected ramp up of an important new vehicle platform in North America,” said Jeffrey Edwards, chairman and CEO, Cooper Standard. “Looking ahead, we expect these challenging market dynamics to continue at least through the end of the year, and we have revised our full-year outlook accordingly.
“We are working to mitigate these headwinds as much as possible by accelerating planned restructuring and further streamlining the business under our global management structure,” Edwards added. “We expect these actions will help us to improve our overall efficiency in the near-term and better position the Company for long-term profitable growth. We remain on track with our new program launches, cost reduction initiatives and the strategic diversification of our business.”
The year-over-year change in second quarter sales was primarily attributable to the sale of the company’s Anti-Vibration Systems (AVS) business, unfavorable volume and mix and foreign exchange.
Net income for the second quarter 2019 included a $189.9 million gain on the sale of the AVS business, certain project costs related to acquisitions and divestitures, and restructuring charges related to headcount reduction actions. Adjusted net income, which excludes these items and their related tax impact, declined in the second quarter 2019 compared to the prior year due largely to unfavorable volume and mix, general inflation, customer price adjustments and higher material costs, partially offset by operating efficiencies and other cost saving initiatives.
The company continues at a record pace for new program launches and contract awards related to recent product innovations. During the second quarter, the company successfully launched 84 new customer programs, an increase of 75 percent compared to the second quarter of 2018. Also during the quarter, the company received new contract awards related to product innovations, including both new and replacement business, totaling $171 million in annualized sales. These awards included the first production order for FlushSeal glass sealing technology on an all-new electric vehicle platform. In the first six months of the year, contract awards related to product innovations totaled $252 million in annualized sales. Net new business awards received during the second quarter and in the first six months of the year totaled $53 million and $129 million in annualized sales, respectively. Cooper Standard’s expanding portfolio of commercialized innovation products includes: MagAlloy; ArmorHose; ArmorHose TPV; LightHose; Gen III Posi-Lock; TP Microdense; Microdense EPDM; FlushSeal glass sealing technology; and Fortrex.
Subsequent to the end of the second quarter, Cooper Standard signed a new Fortrex technology agreement with a multinational industrial products manufacturer based in Asia. Under the agreement, the customer is expected to initially focus on developing three to four new product applications using Fortrex technology. The new agreement, which is the third the company has signed this year, is further demonstration of the versatility of the Fortrex chemistry platform and the diverse market applications that it can address.
On April 1, the company completed the sale of its AVS business. The total sale price of the transaction was $265.5 million and the company received $243.4 million in cash proceeds after adjusting for certain liabilities assumed by the purchaser. The estimated net cash proceeds after taxes and transaction-related expenses and fees are expected to be approximately $215 to $220 million.