Cooper-Standard Holdings Inc. has reported results for the third quarter 2017.
During the third quarter of 2017, the company generated net income of $24.6 million, or $1.32 per diluted share, and adjusted EBITDA of $96 million on sales of $869 million. These results compare to net income of $36.4 million, or $1.94 per diluted share, and adjusted EBITDA of $100.8 million on sales of $855.7 million in the third quarter of 2016. The company’s adjusted EBITDA as a percent of sales for the third quarter of 2017 was 11.1 percent compared to 11.8 percent in the third quarter of 2016.
“We set a new third quarter record for sales as increases in Europe, Asia and South America more than offset lower sales stemming from reduced light vehicle production in North America,” said Jeffrey Edwards, chairman and CEO of Cooper Standard. “While customer inventory adjustments in North America adversely impacted our mix and margins for the quarter, we are tracking ahead of our original full-year guidance for sales and in line with our full-year guidance for adjusted EBITDA as a percent of sales.”
The company’s third quarter net income, excluding restructuring and other special items (“adjusted net income”), totaled $39.5 million, or $2.11 per diluted share, compared to $46.5 million, or $2.48 per diluted share in the third quarter of 2016. The company said the change in adjusted net income was driven primarily by weakness in the North American automotive market, which resulted in lower production volumes, unfavorable product mix and price reductions. These were partially offset by savings from continued improvements in operating efficiencies globally.
For the first nine months of 2017, the company reported net income of $106.8 million, or $5.67 per diluted share, and adjusted EBITDA of $320.8 million on sales of $2.68 billion. By comparison, Cooper reported net income of $107.9 million, or $5.77 per diluted share, and adjusted EBITDA of $312.9 million on sales of $2.60 billion in the first nine months of 2016. The company’s adjusted EBITDA margin for the first nine months of 2017 was 12 percent, in line with the first nine months of 2016.
Adjusted net income for the first nine months of 2017 was $144.4 million or $7.66 per diluted share. This compares to adjusted net income of $146.9 million or $7.85 per diluted share in the first nine months of 2016.
Notable Developments
During the third quarter, Cooper Standard launched 47 new customer programs and was awarded $108.1 million in annual net new business. For the first nine months of the year, the company’s annual net new business awards totaled $345.3 million, an increase of 18.2 percent compared to the same period last year.
New contract awards for the company’s recent product innovations totaled $32 million in the quarter. Since the first quarter of 2016, contract awards for innovation products total $417 million. Commercialized innovation products include: MagAlloy; ArmorHose; ArmorHose TPV; Gen III Posi-Lock; TP Microdense; and Fortrex.
In August, Cooper Standard formally opened its new Global Technical Center in Livonia, Michigan. This state-of-the-art facility will serve as the hub for the company’s materials and product innovation endeavors. The optimized facility is dedicated to forward-looking developments, and is designed to enhance collaboration and accelerate innovation.
Subsequent to the end of the quarter, Cooper Standard was named a finalist for the Automotive News PACE Award for 2018 for its Fortrex lightweight elastomeric material. The 24th annual PACE (Premier Automotive Suppliers’ Contribution to Excellence) Awards honor supplier innovations that have entered the market and are delivering measurable customer benefits.
Consolidated Results
Third quarter 2017 sales increased by $13.4 million or 1.6 percent compared to the third quarter of 2016. The year-over-year variance was largely attributable to favorable volume and mix in Europe and Asia, and favorable exchange rates in Europe, partially offset by unfavorable volume and mix in North America and price reductions.
Third quarter adjusted EBITDA decreased by $4.7 million or 4.7 percent compared to the third quarter of 2016. The year-over-year variance was primarily attributable to price reductions, unfavorable vehicle production mix, commodity price pressure and inflation, partially offset by increased operating efficiencies and restructuring savings.
Outlook
Based on the results achieved in the third quarter and year-to-date, the company has raised full-year guidance for sales and tightened the guidance range for full-year adjusted EBITDA margin. The company expects sales between $3.48 billion and $3.53 billion for the year.
