Cooper-standard Holdings (CPS) Prelim. Q3 Results Outpace Views

October 24, 2016 8:56 AM EDT

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Cooper-Standard Holdings Inc. (NYSE: CPS) announced preliminary estimates of its financial results as of and for the quarter ended September 30, 2016.

For the quarter ended September 30, 2016, Cooper Standard estimates that its sales will range from $850.0 million to $860.0 million, compared with sales of $827.5 million for the quarter ended September 30, 2015. The Company estimates that its net income attributable to Cooper-Standard Holdings Inc. will be between $35.0 million and $37.0 million for the quarter ended September 30, 2016, compared with net income attributable to Cooper-Standard Holdings Inc. of $32.7 million for the quarter ended September 30, 2015. The Company estimates that its Adjusted EBITDA will be between $100.0 million and $102.0 million for the quarter ended September 30, 2016, compared with Adjusted EBITDA of $93.3 million for the quarter ended September 30, 2015. As of September 30, 2016, Cooper Standard estimates that it had cash and cash equivalents of approximately $360.0 million.

(**** NOTE: The Street was looking for Q3 revenue of $825 million.)

The financial data presented above is preliminary, based upon the Company's estimates and currently available information and is subject to revision based upon, among other things, the Company's financial closing procedures and the completion of the Company's financial statements and other operational procedures. The Company's actual results may be materially different from its estimates, which should not be regarded as a representation by the Company or its management as to its actual results as of and for the quarter ended September 30, 2016. You should not place undue reliance on these estimates. All of the data presented above has been prepared by and is the responsibility of management. The Company's independent accountants, Ernst & Young LLP, have not audited, reviewed, compiled or performed any procedures, and do not express an opinion or any other form of assurance with respect to any of such data.

The table below provides a reconciliation of net income attributable to Cooper-Standard Holdings Inc. to EBITDA and Adjusted EBITDA for the quarter ended September 30, 2016 (at the mid-point of the estimated net income attributable to Cooper-Standard Holdings Inc. range) and the quarter ended September 30, 2015.

Quarter Ended September 30,

2016*

2015

Net income attributable to Cooper-Standard Holdings Inc

$ 36,000

$ 32,732

Income tax expense

12,000

12,869

Interest expense, net of interest income

10,300

9,487

Depreciation and amortization

32,000

29,303

EBITDA

$ 90,300

$ 84,391

Restructuring

10,000

8,540

Acquisition costs

--

353

Other

300

60

Adjusted EBITDA

$ 100,600

$ 93,344

* Reflects the mid-point of the estimated net income attributable to Cooper-Standard Holdings Inc.

range set forth above.

Non-GAAP Measures

In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:

  • because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;
  • in developing our internal budgets and forecasts;
  • as a significant factor in evaluating our management for compensation purposes;
  • in evaluating potential acquisitions;
  • in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and
  • in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.

In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. We define Adjusted EBITDA as net income (loss) attributable to Cooper-Standard Holdings Inc. plus income tax expense (benefit), interest expense, net of interest income, depreciation and amortization or EBITDA, as adjusted for items that management does not consider to be reflective of our core operating performance. These adjustments include, but are not limited to, restructuring costs, non-cash fair value adjustments and acquisition related costs.

We calculate EBITDA and Adjusted EBITDA by adjusting net income (loss) attributable to Cooper-Standard Holdings Inc. to eliminate the impact of items we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are not financial measurements recognized under accounting principles generally accepted in the United States ("U.S. GAAP"), and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:

  • they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;
  • they do not reflect changes in, or cash requirements for, our working capital needs;
  • they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our term loan facility and our asset based revolving facility;
  • they do not reflect certain tax payments that may represent a reduction in cash available to us;
  • although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and
  • other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the above presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual items.



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