Cooper-Standard Holdings Inc. — FY2021 Form 10-K
Period note: The request identifies “2020 Q4,” but the supplied filing is the annual report for the fiscal year ended December 31, 2021. Figures below summarize FY2021 and compare with FY2020.
Business context
Cooper-Standard manufactures automotive sealing, fuel and brake delivery, and fluid transfer systems. It operates in 21 countries; about 82% of 2021 sales were to OEMs, and its three largest customers—Ford, GM and Stellantis—represented approximately 55% of sales. The 2020 divestitures of European businesses and Indian operations affect year-over-year comparability.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Sales | $2.330 billion | $2.375 billion |
| Gross profit / margin | $87.2 million / 3.7% | $147.5 million / 6.2% |
| Operating loss | $209.1 million | $268.7 million |
| Net loss attributable to Cooper-Standard | $322.8 million; $18.94 per diluted share | $267.6 million; $15.82 per diluted share |
| Adjusted EBITDA (non-GAAP) | $(8.0) million | $35.7 million |
| Cash from operations | $(115.5) million | $(15.9) million |
| Capital expenditures | $96.1 million | $91.8 million |
| Cash and cash equivalents at year-end | $248.0 million | $438.4 million |
| Total debt at year-end | $1.037 billion | $1.023 billion |
Year-end current assets were $994.9 million and current liabilities were $597.6 million. The company reported $147.5 million of effective ABL availability, with no ABL borrowings outstanding. Total debt included $396.5 million of 5.625% notes due 2026, $241.7 million of 13.0% secured notes due 2024, and $321.2 million under the term loan due 2023. The company reported compliance with its debt covenants at year-end.
Changes, outlook and key risks
- Sales declined 1.9%; lower vehicle production and divestitures outweighed favorable foreign exchange. Semiconductor-related production disruptions affected customer volumes.
- Gross margin fell to 3.7%, pressured by commodity and wage inflation, weaker volume and mix, and the non-recurrence of prior-year government incentives. Cost reductions and operational efficiencies provided partial offsets.
- Automotive segment adjusted EBITDA declined to a loss of $21.6 million from $50.3 million. Europe and Asia Pacific were loss-making; North America remained profitable but declined year over year.
- Management expected global vehicle production to improve in 2022 as supply constraints eased, while cautioning that COVID-19, supply-chain disruption, labor shortages and inflation kept the outlook uncertain. The company forecast 2022 capital expenditures of approximately $90–$100 million and stated it expected available liquidity sources to meet needs for the next twelve months.
- Liquidity and refinancing merit close attention: operating cash use increased, cash balances fell, and major debt maturities include the term loan in 2023 and 13.0% secured notes in 2024. ABL availability depends on the borrowing base; if availability falls below specified levels, a fixed-charge coverage covenant applies, which the company said it could not satisfy at year-end if triggered.
- Other notable items include a $25.6 million impairment charge, $37.0 million of restructuring charges, and an $11.2 million credit loss tied to a divested Asian joint venture’s bankruptcy. A European facility sale-leaseback was expected to close in Q2 2022, with an anticipated gain of $34–$37 million.
- The company reported $116.9 million of underfunding in non-U.S. pension plans, substantial customer concentration, limited ability to pass through input-cost increases, and exposure to warranty, environmental, cyber, foreign-exchange and automotive-cycle risks. No common dividends were anticipated in the foreseeable future.
Investor verification checklist
- Confirm the reporting period: this is FY2021, not a 2020 Q4 filing.
- Review the cash-flow outlook, ABL borrowing-base availability and covenant trigger, as well as the 2023 and 2024 debt maturities and refinancing plans.
- Assess whether 2022 production recovery and customer/supplier cost recoveries offset inflation, wage pressures and ongoing supply constraints.
- Check the timing and realized proceeds of the European sale-leaseback and any further impairment, restructuring or divestiture-related charges.
- Evaluate customer concentration, non-U.S. pension funding, and the quality and sustainability of adjusted EBITDA; it is a non-GAAP measure and was negative in 2021.
Ernst & Young issued an unqualified opinion on the financial statements and internal controls over financial reporting.