Cooper-Standard Holdings Inc. (NYSE: CPS) today reported record results for the fourth quarter and full year 2016.
Fourth Quarter 2016 Highlights
- Net income totaled $31.1 million or $1.65 per fully diluted share
- Adjusted net income totaled $48.1 million or $2.56 per fully diluted share
- Adjusted EBITDA totaled $103.8 million, up 13.7 percent year-over-year
- Cash flow from operations totaled $181.7 million; free cash flow generated was $134.1 million
Full Year 2016 Highlights
- Net income totaled $139.0 million or $7.42 per fully diluted share
- Adjusted net income totaled $194.9 million or $10.41 per fully diluted share
- Adjusted EBITDA totaled $416.7 million, up 15.0 percent year-over-year
- Cash flow from operations totaled $363.7 million; free cash flow generated was $199.3 million
“2016 was the best year in our Company’s history by nearly every measure,” stated Jeffrey Edwards, chairman and CEO of Cooper Standard. “We set new all-time highs in sales, gross profit margin, adjusted EBITDA and free cash flow while improving workplace safety, product quality and customer satisfaction. We are very proud of our culture of engagement that is driving innovation and excellence across all areas of the business and significantly contributing to our record results.”
During the fourth quarter 2016, Cooper Standard generated net income of $31.1 million, or $1.65 per diluted share, and adjusted EBITDA of $103.8 million on sales of $875.4 million. These results compare to a net income of $21.7 million or $1.16 per diluted share and adjusted EBITDA of $91.3 million on sales of $854.4 million in the fourth quarter of 2015. The Company’s adjusted EBITDA margin for the fourth quarter 2016 was 11.9 percent compared to 10.7 percent in the fourth quarter 2015.
Fourth quarter 2016 net income excluding restructuring and other special items (“adjusted net income”), totaled $48.1 million, or $2.56 per diluted share, compared to $56.2 million, or $3.01 per diluted share in the fourth quarter 2015. The year-over-year change is due largely to a one-time adjustment (benefit) to income tax expense recorded in the fourth quarter 2015.
For the full year 2016, the Company reported net income of $139.0 million, or $7.42 per diluted share, and adjusted EBITDA of $416.7 million on sales of $3.47 billion. By comparison, the Company reported net income of $111.9 million, or $6.08 per diluted share, and adjusted EBITDA of $362.4 million on sales of $3.34 billion in 2015. The Company’s adjusted EBITDA margin for 2016 was 12.0 percent compared to 10.8 percent in 2015.
Adjusted net income for 2016 was $194.9 million or $10.41 per diluted share. This compares to adjusted net income of $168.7 million or $9.16 per diluted share in 2015.
Adjusted net income, adjusted EBITDA 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.
Operational Overview
Consolidated
Fourth quarter 2016 sales increased by $21.0 million or 2.5 percent compared to the fourth quarter of 2015. The year-over-year increase is largely attributable to favorable volume and mix, additional revenue from the acquisition of AMI, and the consolidation of the Guangzhou joint venture in China, partially offset by customer price adjustments, the divestiture of the Company’s hard coat plastic exterior trim business and unfavorable foreign exchange. Excluding the impact from foreign exchange, sales in the fourth quarter of 2016 were $886.9 million, an increase of 3.8 percent over the fourth quarter of 2015.
Fourth quarter adjusted EBITDA increased by $12.5 million or 13.7 percent compared to the fourth quarter of 2015. The year-over-year variance is primarily attributable to improvements in operating efficiency, improved supply chain performance and favorable volume and mix. These favorable items were partially offset by customer price adjustments, higher compensation related costs and incremental expense related to growth.
North America
Cooper Standard’s North America segment reported sales of $455.3 million in the fourth quarter of 2016, an increase of 0.9 percent when compared to $451.4 million in sales recorded in the fourth quarter of 2015. The increase was attributable to the acquisition of AMI and improved volume and mix, partially offset by customer price adjustments and the sale of the hard coat plastic exterior trim business which occurred in December 2015.
North America segment profit was $49.9 million, or 11.0 percent of sales, in the fourth quarter of 2016. This compared to segment profit of $58.5 million, or 13.0 percent of sales in the fourth quarter of 2015. The year-over-year change was driven primarily by the non-recurrence of the gain on the sale of the hard coat plastic exterior trim business that was recorded in the fourth quarter of 2015.
Europe
Cooper Standard’s Europe segment reported sales of $237.1 million in the fourth quarter of 2016 compared to $249.2 million in the fourth quarter of 2015. The decrease was attributable to unfavorable volume and mix, customer price adjustments and unfavorable foreign exchange.
The Europe segment reported a segment loss of $8.5 million in the fourth quarter of 2016, compared to segment loss of $16.1 million in the fourth quarter of 2015. The segment results for the fourth quarter 2016 included restructuring expense of $11.8 million. Segment loss in the fourth quarter of 2015 included restructuring expense of $16.2 million. Excluding restructuring expense, Europe segment profit was $3.3 million in the fourth quarter of 2016 compared to a segment profit of $0.1 million in the fourth quarter of 2015. This improvement was largely attributable to increased operating efficiency and improved supply chain performance, partially offset by customer price adjustments, unfavorable volume and mix, and higher compensation related costs.
Asia Pacific
Cooper Standard’s Asia Pacific segment reported sales of $160.2 million in the fourth quarter of 2016, an increase of 18.2 percent compared to $135.5 million in the fourth quarter of 2015. The year-over-year increase is largely attributable to improved volume and mix and the consolidation of the Guangzhou joint venture in China, partially offset by customer price adjustments and unfavorable foreign exchange.
The Asia Pacific segment reported segment profit of $3.1 million in the fourth quarter of 2016, compared to segment profit of $0.3 million in the fourth quarter 2015. The year-over-year change was largely attributable to improved volume and mix, increased operating efficiency and improved supply chain performance, partially offset by higher expenses related to regional growth and unfavorable foreign exchange.
South America
Cooper Standard’s South America segment reported sales of $22.8 million in the fourth quarter of 2016 compared to $18.3 million in the fourth quarter of 2015. The increase was largely attributable to favorable foreign currency exchange rates.
The South America segment incurred a segment loss of $1.5 million in the fourth quarter of 2016 compared to a loss of $24.0 million in the fourth quarter of 2015. The improvement is largely attributable to the non-recurrence of an asset impairment charge recorded in the fourth quarter of 2015.
Liquidity and Cash Flow
At December 31, 2016, Cooper Standard had cash and cash equivalents totaling $480.1 million. Net cash provided by operating activities in the fourth quarter 2016 was $181.7 million compared to $160.4 million in the fourth quarter of 2015. Free cash flow (defined as net cash provided by operating activities minus capital expenditures) improved to $134.1 million in the fourth quarter of 2016 compared to $123.8 million in the fourth quarter of 2015. For the full year 2016, net cash provided by operating activities was $363.7 million compared to $270.4 million in 2015. Free cash flow for the full year 2016 improved to $199.3 million compared to $104.1 million in 2015.
In addition to cash and cash equivalents, the Company had $138.8 million available under its senior amended asset-based revolving credit facility (“ABL facility”) for total liquidity of $618.9 million at December 31, 2016.
Total debt at December 31, 2016 was $762.9 million compared to $777.9 million at December 31, 2015. Net debt (defined as total debt minus cash and cash equivalents) at December 31, 2016 was $282.8 million compared to $399.7 million at December 31, 2015. Cooper Standard’s net leverage ratio (defined as net debt divided by adjusted EBITDA) at December 31, 2016 was 0.7 times trailing 12 months adjusted EBITDA.
Outlook
The Company has issued 2017 full year guidance as follows:
|
Current Guidance |
|
|
Sales |
$3.48 – $3.53 billion |
|
Adjusted EBITDA Margin1 |
12.3% – 12.8% |
|
Capital Expenditures |
$165 – $175 million |
|
Cash Restructuring |
$45 – $55 million |
|
Effective Tax Rate |
26% – 29% |
1 Adjusted EBITDA Margin is a non-GAAP financial measure. We do not provide guidance on net income margin. Full-year net income will include special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end.
Conference Call Details
Cooper Standard management will host a conference call and webcast on February 17 at 9 a.m. ET to discuss its fourth quarter and full year 2016 results, provide a general business update and respond to investor questions.
To participate in the live question-and-answer session, callers in the United States and Canada should dial toll-free 800-949-4315 (international callers dial 678-825-8315) and provide the conference ID 95008470 or ask to be connected to the Cooper Standard teleconference. Callers should dial in at least five minutes prior to the start of the call. Financial and automotive analysts are invited to ask questions after the presentations are made.
The interactive webcast and slide presentation can be accessed live or in replay on the investor relations page of the Cooper Standard website at http://www.ir.cooperstandard.com/events.cfm.
