Cooper-Standard Automotive Announces Third Quarter 2006 Results
NOVI, Mich., Nov. 14, 2006 -- Cooper-Standard Holdings Inc., the parent of Cooper-Standard Automotive Inc., today announced its third quarter 2006 financial results. The Company reported record third quarter sales of $505.5 million. The Company is a leading global manufacturer of body sealing, fluid handling, and noise, vibration, and harshness (NVH) control products and systems for the automotive industry.
A summary of the third quarter and year-to-date unaudited financial results follows:
$Millions Qtr-3 Qtr-3 YTD YTD
2005 2006 2005 2006
Net Sales $426.7 $505.5 $1,385.9 $1,638.3
Operating Profit / (Loss) $11.0 $(4.3) $56.7 $62.3
Net Income / (Loss) $(1.1) $(27.0) $6.1 $(1.5)
Sales in the third quarter 2006 were $505.5 million, $78.8 million higher than the same period in 2005. Year-to-date sales were $1.638 billion, an increase of $252.4 million over 2005. Both increases were primarily due to the inclusion of Fluid Handling Systems (FHS), which was acquired in February.
Net loss for the quarter was $27.0 million, primarily attributable to acquisition related amortization, increased restructuring expense, North American automotive industry issues, and higher interest expense. Year-to-date net loss was $1.5 million, down from a net income of $6.1 million in 2005, and is primarily related to higher restructuring costs and increased interest expense. Third quarter 2006 net interest expense was $22.7 million compared to 2005 net interest expense of $16.5 million, while year-to-date net interest expense was $64.9 million, compared to $49.4 million for the same period in 2005. Both the quarter and year-to-date increases were due to the incremental new debt associated with the FHS acquisition and slightly higher interest rates.
"Following a strong first half, the third quarter was a challenge because of vehicle mix and higher raw material costs, but we continue to be positive about the future. The domestic auto industry is undergoing significant restructuring. Abrupt North American OEM production cuts impacted our business, and we will face more challenges in the future," stated Jim McElya, Chairman and CEO of Cooper-Standard Automotive. "Nevertheless, we are confident in our ability to manage through these challenges, and our people will continue to focus on winning new business and on lowering our costs."
Highlights of the Third Quarter 2006
Significant product launches: During the quarter, Cooper-Standard successfully launched products on new OEM vehicle platforms, as well as new products and conquest business on OEM vehicle platforms currently in production:
-- DaimlerChrysler (Chrysler Sebring, Dodge Avenger and Nitro, and
Jeep Wrangler)
-- Ford (Ford Edge, Expedition, and Fusion, and Volvo C30)
-- General Motors (Chevrolet Cobalt and Holden Commodore V-Series)
-- Nissan (Altima, Maxima, and Sentra)
-- PSA (Peugeot 207)
-- Renault (Trafic)
-- Toyota (Aygo)
NISCO Joint Venture launches:
-- Nissan (Altima)
-- Honda (CR-V and Acura MDX)
Incremental new business awards: During the third quarter of 2006 the Company was awarded incremental annualized net new business of over $82 million, significantly higher than the $59 million awarded in the third quarter of 2005. This includes an award of $18 million to supply sealing products for the new Chevrolet Camaro. Year-to-date net new business totals $167 million.
Awards and recognitions: Cooper-Standard was once again recognized for its technical leadership and innovation by being selected for a 2007 Automotive News PACE Award Honorable Mention for the development of a unique metal-to- plastic fluid connection with industry-leading functionality and customer value.
Adjusted EBITDA Reconciliation
EBITDA during the third quarter of 2006 fell $13.4 million to $30.1 million, while for the nine months ended September 30th EBITDA increased $31.6 million to $169.9 million, compared to the same periods in 2005. After accounting for adjustments identified in the following table, Adjusted EBITDA for the third quarter of 2006 increased $2.5 million to $41.5 million, and for the nine months ended September 30, 2006 increased $36.2 million to $185.2 million, compared to the same periods in 2005.
Three Months Nine Months
Ended September 30, Ended September 30,
2005 2006 2005 2006
Net income (loss) $(1.1) $(27.0) $6.1 $(1.5)
Provision for income taxes 0.9 (1.6) 1.9 2.7
Net interest expense 16.5 22.7 49.4 64.9
EBIT 16.3 (5.9) 57.4 66.1
Depreciation and amortization 27.2 36.0 80.9 103.8
EBITDA $43.5 $30.1 $138.3 $169.9
Restructuring 0.6 9.1 1.0 15.1
Foreign exchange gain(1) (6.3) (0.1) (2.1) (5.2)
Inventory write-up(2) - - 9.8 2.1
Tooling write-up(3) 1.2 - 2.0 -
Transition and integration costs(4) - 0.3 - 1.2
Product remediation(5) - 2.1 - 2.1
Adjusted EBITDA $39.0 $41.5 $149.0 $185.2
(1) Unrealized foreign exchanges gain on indebtedness related to 2004
Acquisition.
(2) A write-up of inventory to fair value at the date of the acquisitions.
(3) Purchase accounting adjustment related to tooling projects at the date
of the 2004 Acquisition.
(4) Transition and integration costs related to the Acquisition of FHS.
(5) Product rework and associated costs.
Management uses Adjusted EBITDA as a measure of performance and to demonstrate compliance with certain debt covenants. The Adjusted EBITDA may vary slightly from the amount used in calculating covenant compliance due to the classification of joint venture equity earnings. EBITDA should not be construed as income from operations or net income, as determined by generally accepted accounting principles. Other companies may report EBITDA differently.
For further information, refer to Cooper-Standard's quarterly report on Form 10-Q filed with the Securities and Exchange Commission and posted on the company's Web site at: www.cooperstandard.com
About Cooper-Standard Automotive
Cooper-Standard Automotive Inc., headquartered in Novi, Mich., specializes in the manufacture and marketing of systems and components for the global automotive industry. Products include body sealing systems, fluid handling systems, and NVH control systems. Cooper-Standard Automotive Inc. employs more than 16,000 across 61 facilities in 14 countries. For more information, visit the company's Web site at: www.cooperstandard.com.
Cooper-Standard is a privately-held portfolio company of The Cypress Group and Goldman Sachs Capital Partners Funds.
The Cypress Group is a private equity investment firm managing more than $3.5 billion of capital. Cypress has an extensive track record of making growth-oriented investments in targeted industry sectors and building equity value alongside proven management teams.
The GS Capital Partners Funds are part of Goldman Sachs' Principal Investment Area in the Merchant Banking Division. Goldman Sachs is one of the oldest and largest investment banking firms and is also a global leader in private corporate equity and mezzanine investing. Goldman Sachs' Principal Investment Area has formed 12 investment vehicles aggregating over $36 billion of capital to date.