Cooper-Standard Holdings Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Ward - Freedom capital - Analyst : Good morning, everyone. Just a couple of things. On the restructuring actions, those actions have been completed, correct?

Question: Mike Ward - Freedom capital - Analyst : Okay. The second thing on the, I mean, your margin performance, excluding FX was above 9%. And is that like kind of the go-to trend that we're at right now, we're getting towards that double-digit rate of margin?

Question: Mike Ward - Freedom capital - Analyst : Okay. Jon, I wonder if you can go over some of your cash flow comments and I just want to make sure I understood it. I think you said that you expect it to be cash flow neutral for the year. Is that correct?

Question: Mike Ward - Freedom capital - Analyst : And then there are other items. I think you see their net cash taxes $25 million, $30 million, and then you have the restructuring cash. I assume all that's in the second half. I didn't see anything in the second quarter. Is that cash restructuring $25 million, $30 million all in the second half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Mike Ward - Freedom capital - Analyst : Okay. In the first half. So, if I'm looking at the data that we see and you have that in the income statement that's been released thus far, does net cash used provided by our change in assets, operating assets and liabilities, and it was a negative $36 million in the first half. Normally, you would see some of that working capital turn positive in the second half. Some of these other items that are going to keep that. You won't get the normal recovery. Is that right?

Question: Mike Ward - Freedom capital - Analyst : Okay. All right. Well, thank you very much. Appreciate that.

Question: Kirk Ludtke - Imperial Capital - Analyst : Well, I wanted to follow up on Mike's question on the margins. I guess at least a 10% EBITDA margin without volume growth doing the math, that would imply $270 million of EBITDA exiting 2025. Am I doing the math right?

Question: Kirk Ludtke - Imperial Capital - Analyst : So, you've got another, so that's an $80 million increase from the fiscal '24 guidance. So I think you've mentioned at least $20 million of cost saves. What's the other 60%? Is that the new products you mentioned, mix? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Kirk Ludtke - Imperial Capital - Analyst : Right. Absolutely. So, it's really we're talking about $60 million of sales, at least $20 million in fiscal '24, another $40 million in fiscal '25.

Question: Kirk Ludtke - Imperial Capital - Analyst : Okay. Got it. And that's helpful. Thank you. And more net new business wins this quarter, how would you describe your organic growth rate? Is it

Question: Kirk Ludtke - Imperial Capital - Analyst : Got it. Thank you. That's helpful. And I think I heard you'll make cash payments on both bonds in December?

Question: Kirk Ludtke - Imperial Capital - Analyst : Great. Wonderful. I appreciate it. Thank you very much.

Question: Brian DiRubbio - Baird - Analyst : Good morning, gentlemen. Just a few questions for me. Just on the CapEx spend, going back to my model. The last time I think you guys had CapEx that low was back in 2009. It had $46 million, obviously, your $50 million to $60 million. But can you explain sort of what the thought process is in terms of how you're deploying capital differently today or maybe for 2024 versus prior years? And why it can be that low? And how long can it be at that low level?

Question: Brian DiRubbio - Baird - Analyst : Great. That detail was awesome. I appreciate all of that. Just as we think about next year, I know you said you still don't have plans on sort of the capital structure, but the notes do go full cash pay next year. I guess the immediate question here is, what is the current balance of the first lien and third lien notes so we can start figuring that out ahead of time what the cash interest will be?

Question: Brian DiRubbio - Baird - Analyst : Got it. Appreciate that. And then just a final question for me. Jeff, given some of the comments that you made, as I looked at the guidance and the estimates for US auto production, that obviously didn't change in your press release. Just trying to understand sort of where the risks are with your current guidance that you provided. Do you see US manufacturers cutting production between now and the end of the year? Or are they sort of reticent to do that just because of the impact that has on their business? I'd love to get your thoughts there.

Question: Brian DiRubbio - Baird - Analyst : Understood. Just a final question. Fortrex, any updates on any other deployments of that compound and any other wins that you see in the near future to be announced?

Question: Brian DiRubbio - Baird - Analyst : Great. Appreciate all the color. Thank you.

Question: Ben Briggs - StoneX Financial, Inc. - Analyst : Hey, good morning, guys. Thanks for taking the call and congratulations on the margins this quarter. The vast majority of my questions already got asked and answered. So, thank you. But just to confirm housekeeping. This is the last quarter that you had the pick option on either bonds, correct?

Question: Ben Briggs - StoneX Financial, Inc. - Analyst : Got you. And then just quickly on margins. So, gross margins came in at 11.7% this quarter, which is one of the highest numbers kind of excluding that third quarter of '23 when you had some retroactive payments. I think this 11.7% number is like the highest number since 2020. Should we expect on a gross margin basis, these double-digit, 11-ish, 12-ish kind of numbers going forward when we think about modeling this?

Question: Ben Briggs - StoneX Financial, Inc. - Analyst : Got you. And then last one for me and I know you kind of got asked this just a couple of different ways, but I'll try one more time. On the last call, I think you had talked that a global refi was potentially on the table in 2025. Would you refer to that as still potentially on the table?

Question: Ben Briggs - StoneX Financial, Inc. - Analyst : Understood. Thanks very much for taking the questions, guys