Cooper-Standard Holdings Inc. — Form 10-K Summary
Reporting-period note: The request identifies 2019 Q4, but the supplied filing is the Form 10-K for the fiscal year ended December 31, 2020, filed February 22, 2021. It reports annual results; the supplied text does not provide clear standalone fourth-quarter results.
Business context
Cooper-Standard manufactures automotive sealing, fuel and brake delivery, and fluid transfer systems. It reported four regional automotive segments—North America, Europe, Asia Pacific and South America—with Advanced Technology Group and other activities in Corporate, eliminations and other. Approximately 83% of 2020 sales were to OEMs; about 92% of global sales were tied to passenger and light-duty vehicles. The company completed divestitures of European rubber fluid transfer and specialty sealing operations and Indian operations in July 2020.
Financial performance
| Metric | 2020 | 2019 |
|---|---|---|
| Sales | $2,375.4 million | $3,108.4 million |
| Gross profit / margin | $147.5 million / 6.2% | $359.1 million / 11.6% |
| Operating profit (loss) | ($268.7 million) | $156.0 million |
| Net income (loss) attributable to Cooper-Standard | ($267.6 million) | $67.5 million |
| Diluted EPS | ($15.82) | $3.92 |
| Adjusted EBITDA (non-GAAP) | $35.7 million | $201.6 million |
| Cash from (used in) operating activities | ($15.9 million) | $97.7 million |
| Capital expenditures | $91.8 million | $164.5 million |
Sales fell 23.6%, mainly from pandemic-related production shutdowns and lower volume, with additional effects from divestitures, foreign exchange and customer price reductions. The $86.5 million non-cash impairment of assets held for sale and $39.5 million of restructuring charges contributed to the operating loss. The 2019 comparison included a $191.6 million gain on the sale of the anti-vibration systems business, which was divested in April 2019.
Year-end cash and cash equivalents were $438.4 million, compared with $359.5 million a year earlier. Total debt was $1,023.5 million, including $40.7 million current and $982.8 million long-term. The company issued $250 million of 13% Senior Secured Notes due 2024 in May 2020; the existing $400 million 5.625% Senior Notes are due 2026, and the Term Loan Facility matures in 2023. It reported no ABL borrowings and approximately $150.9 million of effective ABL availability at year-end. The company reported compliance with debt covenants at December 31, 2020.
Material changes and outlook
- All regions experienced pandemic-related shutdowns in 2020; global light-vehicle production declined an estimated 16.2%. Production resumed gradually, with recovery slower in South America.
- Automotive segment adjusted EBITDA was $50.3 million, down from $205.2 million. Regional results included North America $90.6 million, Europe loss of $39.0 million, Asia Pacific $12.5 million and South America loss of $13.8 million.
- Management said cash, expected operating cash flow, ABL availability and receivables factoring were expected to support funding needs for the next 12 months, while emphasizing continued liquidity monitoring. It forecast 2021 capital expenditures of approximately $100–$125 million.
- Management cited an uncertain 2021 recovery and relied on rising OEM production in its liquidity assessment. The filing does not provide company-specific revenue or earnings guidance.
- At year-end, pension plans were underfunded by $144.9 million. The company expected 2021 pension contributions of approximately $5.5 million and postretirement benefit payments of approximately $2.6 million.
- In January 2021, a major customer announced plans to cease manufacturing in Brazil; Cooper-Standard expected a significant impact on its Brazil operations and related sales but did not expect a material effect on consolidated results. The FCA–Groupe PSA merger into Stellantis was not expected to have a material impact.
Risks, contingencies and unusual items
- Key risks include renewed COVID-19 disruption, automotive demand and production declines, customer concentration, pricing pressure, supply-chain and raw-material volatility, foreign exchange, and execution of restructuring and new programs. Ford, GM and FCA together represented approximately 54% of 2020 sales.
- Liquidity is sensitive to operating performance and the ABL borrowing base. The company said it could not satisfy the ABL springing fixed-charge-coverage covenant if triggered, and intended to manage borrowings to avoid triggering it.
- The 13% secured notes increase interest costs; variable-rate debt represented approximately 37.9% of total debt at year-end. Contractual obligations included $1,012.4 million of debt principal and $275.7 million of interest, at nominal and undiscounted amounts.
- Environmental reserves were $13.3 million at year-end, versus $6.1 million in 2019. The company said it did not believe material loss beyond amounts accrued was reasonably possible for its other disclosed legal matters, while noting outcomes remain uncertain.
- The company recorded $86.5 million of impairment on divested assets. Goodwill impairment testing identified no 2020 charge; further deterioration in market conditions could lead to future impairment.
Most important facts for investors to verify
- Confirm the intended period: this filing covers fiscal 2020, not 2019 Q4.
- Review the pace of vehicle-production recovery, especially in Europe and South America, and the effect of the Brazil customer’s announced exit.
- Assess cash generation and accessible liquidity against debt service, the ABL borrowing-base restrictions and the 13% notes.
- Track regional profitability, restructuring savings and whether margins recover from the 6.2% gross margin and $35.7 million adjusted EBITDA.
- Review divestiture accounting and impairment assumptions, pension funding needs, and the environmental reserve exposure.