Cooper-Standard Holdings Inc. has reported its results for the fourth quarter and full year 2017.
Fourth Quarter 2017 Highlights
- Sales increased 7.1 % to a record US$937.9 million
- Net income totalled US$28.5 million or US$1.53 per fully diluted share
- Adjusted net income totalled US$63.6 million or US$3.42 per fully diluted share
- Adjusted EBITDA totalled US$131.2 million, up 26.4 % year-over-year
- Cash flow from operations totalled US$208.9 million; free cash flow generated was US$159.6 million
Full Year 2017 Highlights
- Sales increased 4.2 % to a record US$3.62 billion
- Strong net income of US$135.3 million or US$7.21 per fully diluted share
- Adjusted net income totalled US$208.0 million or US$11.08 per fully diluted share
- Adjusted EBITDA totalled US$452.0 million, up 8.5 % year-over-year
- Cash flow from operations totalled US$313.5 million; free cash flow generated was US$126.7 million
“Cooper Standard had another outstanding year in 2017,” stated Jeffrey Edwards, Company chairman and CEO. “It was our best year ever in terms of employee safety and we set new all-time highs in sales, adjusted EBITDA and adjusted EBITDA margin. In addition, our progress in material science and product innovation and the establishment of our adjacent markets business are creating new and exciting opportunities for the future. Our outlook is positive and our global team of highly engaged employees remains focused on making further advancements toward world-class performance.”
During the fourth quarter 2017, Cooper Standard generated net income of US$28.5 million, or US$1.53 per diluted share on sales of US$937.9 million. These results included a US$33.5 million charge related to recent tax reform legislation in the United States. Adjusted EBITDA for the quarter was US$131.2 million. These results compare to a net income of US$31.1 millionor US$1.65 per diluted share and adjusted EBITDA of US$103.8 million on sales of US$875.4 million in the fourth quarter of 2016. The Company’s adjusted EBITDA margin for the fourth quarter 2017 was 14.0 % compared to 11.9 % in the fourth quarter 2016.
Fourth quarter 2017 net income excluding restructuring and other special items (“adjusted net income”) totalled US$63.6 million, or US$3.42 per diluted share, compared to US$48.1 million, or US$2.56 per diluted share in the fourth quarter 2016.
For the full year 2017, the Company reported net income of US$135.3 million, or US$7.21 per diluted share on sales of US$3.62 billion. These results included the US$33.5 million charge in the fourth quarter related to recent tax reform legislation in the United States. Adjusted EBITDA for the year was US$452.0 million. By comparison, the Company reported net income of US$139.0 million, or US$7.42 per diluted share, and adjusted EBITDA of US$416.7 million on sales of US$3.47 billion in 2016. The Company’s adjusted EBITDA margin for 2017 was 12.5 % compared to 12.0 % in 2016.
Adjusted net income for the full year 2017 was US$208.0 million or US$11.08 per diluted share. This compares to adjusted net income of US$194.9 million or US$10.41 per diluted share in 2016.
Adjusted net income, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share and free cash flow are non-GAAP measures. Reconciliations to the most directly comparable financial measures, calculated and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), are provided in the attached supplemental schedules.
Notable Developments
During the fourth quarter, Cooper Standard launched 42 new customer programs and was awarded US$107.6 million in annual net new business. For the full year 2017, the Company’s annual net new business awards totalled US$453.0 million, an increase of 13.8 % compared to 2016.
New contract awards for the Company’s recent product innovations totalled US$45.1 million in the quarter, including the Company’s fourth production contract for FortrexTM sealing products. Since the first quarter of 2016, contract awards for innovation products total US$464.0 million. Commercialized innovation products include: MagAlloy™; ArmorHose™; ArmorHose™ TPV; Gen III Posi-LockTM; TP Microdense; and Fortrex™.
Fourth Quarter Operational Overview
Consolidated
Fourth quarter 2017 sales increased by US$62.5 million or 7.1 % compared to the fourth quarter of 2016. The year-over-year increase is largely attributable to favorable volume and mix, favorable foreign exchange and the net positive impact of acquisitions and divestitures, partially offset by customer price adjustments.
Fourth quarter adjusted EBITDA increased by US$27.4 million or 26.4 % compared to the fourth quarter of 2016. The year-over-year variance is primarily attributable to favorable volume and mix, lower compensation related expense, restructuring savings and net material cost savings. These favorable items were partially offset by customer price adjustments and inflation.
North America
Cooper Standard’s North America segment reported sales of US$479.4 million in the fourth quarter of 2017, an increase of 5.3 % when compared to US$455.3 million in sales recorded in the fourth quarter of 2016. The increase was primarily attributable to improved volume and mix, and the acquisition of AMI, partially offset by customer price adjustments.
North America segment profit was US$65.2 million, or 13.6 % of sales, in the fourth quarter of 2017. This compared to segment profit of US$49.9 million, or 11.0 % of sales in the fourth quarter of 2016. The increase was primarily attributable to lower compensation related expense, favorable volume and mix, improved supply chain performance and net material costs, the acquisition of AMI and foreign exchange. These favorable items were partially offset by customer price adjustments, investments in innovation, and inflation.
Europe
Cooper Standard’s Europe segment reported sales of US$267.4 million in the fourth quarter of 2017 compared to US$237.1 million in the fourth quarter of 2016. The increase was attributable to favorable volume and mix, and foreign exchange, partially offset by customer price adjustments.
The Europe segment reported a segment profit of US$1.8 million in the fourth quarter of 2017, compared to a segment loss of US$8.5 million in the fourth quarter of 2016. The year-over-year improvement was largely attributable to favorable volume and mix, and cost reductions related to restructuring, partially offset by customer price adjustments, commodity price pressure and inflation.
Asia Pacific
Cooper Standard’s Asia Pacific segment reported sales of US$163.2 million in the fourth quarter of 2017, an increase of 1.9 % compared to US$160.2 million in the fourth quarter of 2016.
The Asia Pacific segment reported segment loss of US$1.1 million in the fourth quarter of 2017, compared to segment profit of US$3.1 million in the fourth quarter 2016. The year-over-year change was primarily attributable to fixed asset impairment charges, wage inflation and customer price adjustments, partially offset by improved supply chain performance and net material costs.
South America
Cooper Standard’s South America segment reported sales of US$27.9 million in the fourth quarter of 2017 compared to US$22.8 million in the fourth quarter of 2016. The increase was primarily attributable to favorable volume and mix.
The South America segment incurred a segment loss of US$2.6 million in the fourth quarter of 2017 compared to a loss of US$1.5 million in the fourth quarter of 2016. The year-over-year change is primarily attributable to expenses related to a tax amnesty program and foreign exchange, partially offset by improved operating efficiency and favorable volume and mix.
Liquidity and Cash Flow
At December 31, 2017, Cooper Standard had cash and cash equivalents totaling US$516.0 million. Net cash provided by operating activities in the fourth quarter 2017 was US$208.9 million compared to US$181.7 million in the fourth quarter of 2016. Free cash flow (defined as net cash provided by operating activities minus capital expenditures) improved to US$159.6 million in the fourth quarter of 2017 compared to US$134.1 million in the fourth quarter of 2016. For the full year 2017, net cash provided by operating activities was US$313.5 million compared to US$363.7 million in 2016. Free cash flow for the full year 2017 was US$126.7 million compared to US$199.3 million in 2016.
In addition to cash and cash equivalents, the Company had US$198.4 million available under its senior amended asset-based revolving credit facility (“ABL facility”) for total liquidity of US$714.3 million at December 31, 2017.
Total debt at December 31, 2017 was US$758.2 million compared to US$762.9 million at December 31, 2016. Net debt (defined as total debt minus cash and cash equivalents) at December 31, 2017 was US$242.3 million compared to US$282.8 million at December 31, 2016. Cooper Standard’s net leverage ratio (defined as net debt divided by adjusted EBITDA) at December 31, 2017 was 0.5 times trailing 12 months adjusted EBITDA.
(RJA)
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