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Cooper-Standard (CPS) Reports Y/Y Improvement in Q2 Earnings
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Cooper-Standard Holdings Inc. (CPS - Free Report) delivered a mixed performance in the second quarter of 2024, highlighting a challenging market environment.
While the company saw a year-over-year decrease in sales due to strategic divestitures and unfavorable foreign exchange rates, improvements in operational efficiency and strategic price adjustments helped narrow losses. Cooper-Standard showed notable improvements in profitability metrics and continued its efforts in cost optimization and strategic realignment.
Cooper-Standard Holdings Inc. Price, Consensus and EPS Surprise
Here, we delved into the key financial metrics, segmental performances, profitability and management guidance, providing a comprehensive overview of Cooper-Standard’s recent financial performance and strategic direction.
Q2 Results
Cooper-Standard reported second-quarter 2024 adjusted loss per diluted share of 64 cents, narrower than a loss of $1.15 reported in the year-ago quarter.
However, total quarterly revenues of $708.4 million declined 2.1% from the $723.7 million reported in the year-ago quarter. The reduction was primarily due to the divestiture of the Technical Rubber business and unfavorable foreign exchange, offset partially by favorable volume and mix, and sustainable price adjustments.
Segment Performance
Sealing Systems: Sales decreased 2.2% year over year to $364.9 million primarily due to divestitures and unfavorable foreign exchange. Segmental adjusted EBITDA fell slightly to $35 million in the second quarter from $35.6 million reported in the prior year quarter, impacted by inflationary pressures and foreign exchange.
Fluid Handling Systems: Sales increased 1.8% year over year to $322.7 million, driven by favorable volume and mix. The segment’s adjusted EBITDA rose 19.4% to $16.3 million, reflecting higher volumes and cost-saving measures.
Profitability
Gross Profit: The company reported a gross profit of $82.9 million in the second quarter of 2024, up 6.7% from the $77.7 million in the prior-year quarter. The increase in gross profit was driven by strong operational performance, quality, delivery and safety metrics.
Adjusted EBITDA: Adjusted EBITDA increased 6.2% to $50.9 million from $47.9 million in the prior-year period. The rise in adjusted EBITDA reflects improved volume and mix, price adjustments, and cost savings from lean manufacturing and purchasing initiatives. These gains were partially offset by higher labor and energy costs due to inflation and unfavorable foreign exchange rates.
Adjusted net loss: The metric improved to $11.3 million from $20 million a year ago. This improvement is attributed to a favorable volume and mix, sustainable price adjustments, and cost-saving initiatives.
Operating Costs
Operating costs were significant factors, with the cost of products sold decreasing to $625.4 million from $646 million in the second quarter of 2023. Selling, administration and engineering expenses decreased to $52.4 million from $54.6 million in the year-ago quarter.
The reduction in operating costs was primarily due to the company's aggressive cost optimization initiatives.
Cash & Debt
Cooper-Standard reported cash and cash equivalents of $93.8 million as of Jun 30, 2024, down from $154.8 million at the end of 2023. The company's long-term debt stood at $1.06 billion, slightly up from $1.04 billion at the end of 2023.
Management Guidance
Cooper-Standard adjusted its 2024 guidance to reflect a challenging market environment. The updated guidance includes sales of $2.7-$2.8 billion, down from the initial $2.8-$2.9 billion. Adjusted EBITDA is expected between $180 million and $200 million, narrowed from the initial $180-$210 million.
Capital expenditure was reduced to $50-$60 million from $75-$85 million. Cash restructuring costs increased to $25-$30 million from $15-$20 million. Net cash interest is projected to be $93-$95 million, up from $70-$75 million. Net cash taxes are estimated at $25-$30 million, up from $20-$25 million.
Other Developments
Cooper-Standard secured business awards totaling $60.6 million in anticipated future annualized sales in the second quarter of 2024. This includes $25.1 million from hybrid vehicle platforms and $37.2 million from battery electric vehicles, partially offset by a $1.7-million reduction from traditional internal combustion engine platforms.
The company has also realigned its operating management structure to focus on product lines rather than geographic regions, aiming to optimize asset and resource allocation and enhance operational efficiency.
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Cooper-Standard (CPS) Reports Y/Y Improvement in Q2 Earnings
Cooper-Standard Holdings Inc. (CPS - Free Report) delivered a mixed performance in the second quarter of 2024, highlighting a challenging market environment.
While the company saw a year-over-year decrease in sales due to strategic divestitures and unfavorable foreign exchange rates, improvements in operational efficiency and strategic price adjustments helped narrow losses. Cooper-Standard showed notable improvements in profitability metrics and continued its efforts in cost optimization and strategic realignment.
Cooper-Standard Holdings Inc. Price, Consensus and EPS Surprise
Cooper-Standard Holdings Inc. price-consensus-eps-surprise-chart | Cooper-Standard Holdings Inc. Quote
Here, we delved into the key financial metrics, segmental performances, profitability and management guidance, providing a comprehensive overview of Cooper-Standard’s recent financial performance and strategic direction.
Q2 Results
Cooper-Standard reported second-quarter 2024 adjusted loss per diluted share of 64 cents, narrower than a loss of $1.15 reported in the year-ago quarter.
However, total quarterly revenues of $708.4 million declined 2.1% from the $723.7 million reported in the year-ago quarter. The reduction was primarily due to the divestiture of the Technical Rubber business and unfavorable foreign exchange, offset partially by favorable volume and mix, and sustainable price adjustments.
Segment Performance
Sealing Systems: Sales decreased 2.2% year over year to $364.9 million primarily due to divestitures and unfavorable foreign exchange. Segmental adjusted EBITDA fell slightly to $35 million in the second quarter from $35.6 million reported in the prior year quarter, impacted by inflationary pressures and foreign exchange.
Fluid Handling Systems: Sales increased 1.8% year over year to $322.7 million, driven by favorable volume and mix. The segment’s adjusted EBITDA rose 19.4% to $16.3 million, reflecting higher volumes and cost-saving measures.
Profitability
Gross Profit: The company reported a gross profit of $82.9 million in the second quarter of 2024, up 6.7% from the $77.7 million in the prior-year quarter. The increase in gross profit was driven by strong operational performance, quality, delivery and safety metrics.
Adjusted EBITDA: Adjusted EBITDA increased 6.2% to $50.9 million from $47.9 million in the prior-year period. The rise in adjusted EBITDA reflects improved volume and mix, price adjustments, and cost savings from lean manufacturing and purchasing initiatives. These gains were partially offset by higher labor and energy costs due to inflation and unfavorable foreign exchange rates.
Adjusted net loss: The metric improved to $11.3 million from $20 million a year ago. This improvement is attributed to a favorable volume and mix, sustainable price adjustments, and cost-saving initiatives.
Operating Costs
Operating costs were significant factors, with the cost of products sold decreasing to $625.4 million from $646 million in the second quarter of 2023. Selling, administration and engineering expenses decreased to $52.4 million from $54.6 million in the year-ago quarter.
The reduction in operating costs was primarily due to the company's aggressive cost optimization initiatives.
Cash & Debt
Cooper-Standard reported cash and cash equivalents of $93.8 million as of Jun 30, 2024, down from $154.8 million at the end of 2023. The company's long-term debt stood at $1.06 billion, slightly up from $1.04 billion at the end of 2023.
Management Guidance
Cooper-Standard adjusted its 2024 guidance to reflect a challenging market environment. The updated guidance includes sales of $2.7-$2.8 billion, down from the initial $2.8-$2.9 billion. Adjusted EBITDA is expected between $180 million and $200 million, narrowed from the initial $180-$210 million.
Capital expenditure was reduced to $50-$60 million from $75-$85 million. Cash restructuring costs increased to $25-$30 million from $15-$20 million. Net cash interest is projected to be $93-$95 million, up from $70-$75 million. Net cash taxes are estimated at $25-$30 million, up from $20-$25 million.
Other Developments
Cooper-Standard secured business awards totaling $60.6 million in anticipated future annualized sales in the second quarter of 2024. This includes $25.1 million from hybrid vehicle platforms and $37.2 million from battery electric vehicles, partially offset by a $1.7-million reduction from traditional internal combustion engine platforms.
The company has also realigned its operating management structure to focus on product lines rather than geographic regions, aiming to optimize asset and resource allocation and enhance operational efficiency.