A continued focus on operational excellence has helped Cooper-Standard Holdings, Inc., the parent company of Cooper-Standard Automotive, Inc., increase its sales while undergoing a major restructuring initiative. The company, a tier one supplier to the global aftermarket, recently held a press conference to announce its second quarter 2007 financial results, and to answer questions from industry analysts as well as media representatives.
"Our sales growth and solid cash flow continues as strong sales in Europe and South America offset North American production volumes," says Jim McElya, the company's chairman and CEO.
Cooper-Standard reported sales of $624.0 million for the second quarter 2007, which is $31.5 million higher than the same period in 2006. Net income was $9.7 million, down $10.4 million from 2006, driven by a change in the effective tax rate and an increase in restructuring charges. The change in effective tax rate was due primarily to the non-recognition of income tax benefits on operating losses in the U.S. and certain foreign jurisdictions. Earnings before taxes (EBT) were $18.3 million, a decrease of $3.7 million compared to the same period in 2006. Second quarter 2007 net interest expense was $21.0 million compared to 2006 net interest expense of $21.9 million, resulting primarily from reduced debt levels, offset somewhat by higher short term interest rates.
According to McElya, the company remains pleased with its performance and encouraged by the second quarter results. McElya also points to the purchase of Europe's Metzeler Automotive Profile Systems (MAPS) as a way to continue to grow market share abroad and broaden its global customer base.
"We see it (MAPS) as a great acquisition, bought at a great price," McElya said during the conference call with investors. "(The company) is seen as a technology leader in Europe, and is well respected within the industry. The acquisition of this business is a strategic fit and will help us expand our operational footprint in low cost countries."
The company's expansion into low cost regions includes:
- Increasing the size of its sealing facility in Aguascalientes, Mexico, from 76,000 sq. ft. to 149,000 sq. ft. and adding four new extrusion lines.
- Increasing the size of its facility in the Czech Republic from 81,000 sq. ft. to 181,940 sq. ft. and explanding fluid operations.
- Building a new sealing facility in Myslenice, Poland, for two new plastic lines.
- Expanding its facility in Hubei, China, to 194,000 sq. ft.
- Building a new 18,000 sq. ft. facility in Pune, India.
"By staying focused on all elements of operational excellence, we continue to see lean savings that are on target and inline with historical performance," says Ed Hasler, the company's president and COO. "And by expanding our operations in low cost countries, we'll be able to provide customers with cost savings while optimizing our production capabilities."
The company's restructuring efforts in North America and Europe continued in 2007. The increase of $5.4 million over the same period in 2006 was primarily related to restructuring in the European and North American body and chassis business, and included the closure of plants in El Dorado, Ark.; Archbold, Ohio; Piedras Negras, Mexico; and Maestag; United Kingdom.
Overall, Cooper-Standard sees the company's financial position as doing very well. "The continued cash generation from our operations is $49.4 million for the quarter and $91.7 for year to date," says Alan Campbell, the company's CFO. "This has allowed us to sustain strong adjusted EBITDA margins and ensured that our liquidity position remains solid."
For further information on Cooper-Standard's second quarter report, visit the company's Web site.
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