Cooper-Standard Holdings Inc. (CPS) Bundle
Understanding Cooper-Standard Holdings Inc. (CPS) Revenue Streams
Understanding Cooper-Standard Holdings Inc.’s Revenue Streams
Cooper-Standard Holdings Inc. generates revenue primarily through two business segments: Sealing Systems and Fluid Handling Systems. The revenue contributions from these segments for the nine months ended September 30, 2024, are as follows:
| Segment | Revenue (in thousands) |
|---|---|
| Sealing Systems | $1,069,590 |
| Fluid Handling Systems | $941,996 |
| Other | $58,554 |
| Total Revenue | $2,070,140 |
For the three months ended September 30, 2024, the revenue breakdown was:
| Segment | Revenue (in thousands) |
|---|---|
| Sealing Systems | $353,365 |
| Fluid Handling Systems | $313,739 |
| Other | $18,249 |
| Total Revenue | $685,353 |
Year-over-Year Revenue Growth Rate
Comparing the nine months ended September 30, 2024, to the same period in 2023, total revenue decreased by 3.4%, from $2,142,236 to $2,070,140. The revenue changes by segment were:
| Segment | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Sealing Systems | $1,069,590 | $1,092,915 | $(23,325) | -2.1% |
| Fluid Handling Systems | $941,996 | $959,582 | $(17,586) | -1.8% |
| Total | $2,070,140 | $2,142,236 | $(72,096) | -3.4% |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of each segment to overall revenue was:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Sealing Systems | $1,069,590 | 51.7% |
| Fluid Handling Systems | $941,996 | 45.5% |
| Other | $58,554 | 2.8% |
Analysis of Significant Changes in Revenue Streams
Revenue for the three months ended September 30, 2024, decreased by 6.9% compared to the same period in 2023, primarily due to unfavorable volume and mix, as well as the divestitures of the European technical rubber products business and a joint venture in the Asia Pacific region. The revenue for the corresponding period was:
| Period | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Q3 2024 | $685,353 | $736,038 | $(50,685) | -6.9% |
The unfavorable foreign exchange impact was also significant, with the Brazilian Real and other currencies contributing to the revenue decline. Overall, the combination of lower customer volumes and the previous divestitures heavily influenced the revenue performance for 2024.
A Deep Dive into Cooper-Standard Holdings Inc. (CPS) Profitability
A Deep Dive into Cooper-Standard Holdings Inc.'s Profitability
Gross Profit Metrics:
For the three months ended September 30, 2024, the gross profit was $76.3 million compared to $106.5 million during the same period in 2023, representing a decrease of $30.2 million. The gross profit margin for this period was 11.1%, down from 14.5% in 2023. For the nine months ended September 30, 2024, the gross profit totaled $220.9 million, compared to $226.1 million in 2023, reflecting a decline of $5.2 million.
| Period | Gross Profit (in millions) | Gross Profit Margin |
|---|---|---|
| Q3 2024 | $76.3 | 11.1% |
| Q3 2023 | $106.5 | 14.5% |
| 9M 2024 | $220.9 | 10.7% |
| 9M 2023 | $226.1 | 10.6% |
Operating Profit:
The operating income for the three months ended September 30, 2024, was $23.5 million, a significant drop from $52.7 million in the same quarter of 2023. For the nine-month period, the operating income decreased to $38.1 million from $50.5 million year-over-year.
Net Profit Metrics:
Net loss for the three months ended September 30, 2024, was $(10.9) million, compared to a net income of $11.4 million in Q3 2023. For the nine months ended September 30, 2024, the net loss reached $(118.4) million, an improvement from $(148.1) million in 2023.
| Period | Net Profit (in millions) | Net Profit Margin |
|---|---|---|
| Q3 2024 | $(10.9) | (1.6%) |
| Q3 2023 | $11.4 | 1.5% |
| 9M 2024 | $(118.4) | (5.7%) |
| 9M 2023 | $(148.1) | (6.9%) |
Trends in Profitability:
The profitability metrics indicate a downward trend in gross, operating, and net profit margins over the reported periods. The gross profit margin decreased slightly from 10.6% in the nine months ended September 30, 2023, to 10.7% in 2024. The operating income has also shown a decline, reflecting challenges in cost management and operational efficiency.
Comparison with Industry Averages:
Industry averages for gross margins in the automotive parts sector typically range between 12% to 15%. The current performance metrics suggest that the company is operating below the industry average, indicating potential areas for improvement in cost management and pricing strategies.
Operational Efficiency Analysis:
Operational efficiency can be assessed through various metrics, including selling, administrative, and engineering expenses, which accounted for 7.3% of sales in Q3 2024, slightly up from 6.8% in Q3 2023. The restructuring charges increased by $7.5 million in 2024, which indicates ongoing adjustments to improve operational efficiency.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Selling, Admin & Engineering Expenses (% of Sales) | 7.3% | 6.8% |
| Restructuring Charges (in millions) | $20.4 | $12.9 |
Debt vs. Equity: How Cooper-Standard Holdings Inc. (CPS) Finances Its Growth
Debt vs. Equity: How Cooper-Standard Holdings Inc. Finances Its Growth
Cooper-Standard Holdings Inc. has a significant debt load as part of its capital structure. As of September 30, 2024, the company reported total long-term debt of $1,058,004 thousand and short-term debt of $49,167 thousand, resulting in a total debt of $1,107,171 thousand.
The debt-to-equity ratio stands at approximately 6.2, calculated by dividing total debt by total equity, which was reported as ($163,050) thousand as of the same date. This high ratio indicates that the company is heavily reliant on debt financing compared to equity, which is significantly below the industry average of around 1.5 for automotive suppliers.
Recently, the company has engaged in refinancing activities. In the nine months ended September 30, 2024, it recorded a loss on refinancing and extinguishment of debt amounting to $0 thousand, following a substantial $81,885 thousand in losses during the same period in the previous year. The net interest expense for the three months ended September 30, 2024, was $29,125 thousand, a decrease from $33,803 thousand in the same period in 2023.
To balance its financing strategy, Cooper-Standard utilizes a combination of debt and equity funding. The company has issued shares to raise capital; as of September 30, 2024, the total common stock outstanding was 17,326,531 shares, with an additional paid-in capital of $515,927 thousand. However, the retained deficit of ($510,776) thousand indicates ongoing challenges in profitability.
| Type of Debt | Amount (in thousands) |
|---|---|
| Short-Term Debt | $49,167 |
| Long-Term Debt | $1,058,004 |
| Total Debt | $1,107,171 |
| Total Equity | ($163,050) |
| Debt-to-Equity Ratio | 6.2 |
| Net Interest Expense (Q3 2024) | $29,125 |
| Loss on Refinancing (2023) | $81,885 |
The company's current capital structure reflects its strategic decisions in financing growth through debt, while also attempting to manage equity levels amid financial challenges. This dual approach highlights the delicate balance the company maintains between leveraging debt for growth and managing the risks associated with high leverage.
Assessing Cooper-Standard Holdings Inc. (CPS) Liquidity
Assessing Cooper-Standard Holdings Inc. (CPS) Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.35, calculated as total current assets of $872,036 thousand and total current liabilities of $648,190 thousand.
Quick Ratio: The quick ratio stands at 0.96, derived from current assets excluding inventories ($694,791) over current liabilities ($648,190).
Analysis of Working Capital Trends
Working Capital: The working capital as of September 30, 2024, is $223,846 thousand, a decrease from $247,343 thousand as of December 31, 2023.
| Period | Current Assets (thousands) | Current Liabilities (thousands) | Working Capital (thousands) |
|---|---|---|---|
| September 30, 2024 | $872,036 | $648,190 | $223,846 |
| December 31, 2023 | $900,586 | $653,243 | $247,343 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash provided by operating activities is $1,647 thousand, compared to $37,616 thousand for the same period in 2023.
Investing Cash Flow: Net cash used in investing activities is $38,727 thousand for the nine months ended September 30, 2024, down from $47,475 thousand in 2023.
Financing Cash Flow: Net cash used in financing activities is $6,790 thousand for the nine months ended September 30, 2024, compared to $39,370 thousand in 2023.
| Cash Flow Activity | 2024 (thousands) | 2023 (thousands) |
|---|---|---|
| Operating Activities | $1,647 | $37,616 |
| Investing Activities | ($38,727) | ($47,475) |
| Financing Activities | ($6,790) | $39,370 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents amount to $107,734 thousand, reduced from $154,801 thousand at the end of 2023, indicating a potential liquidity concern.
Total liabilities are recorded at $1,960,588 thousand, while total equity stands at ($163,050) thousand, suggesting a significant leverage position that may affect liquidity.
Debt Payable Within One Year: As of September 30, 2024, the short-term debt is $49,167 thousand, indicating a manageable short-term obligation.
Is Cooper-Standard Holdings Inc. (CPS) Overvalued or Undervalued?
Valuation Analysis
To assess whether Cooper-Standard Holdings Inc. (CPS) is overvalued or undervalued, we will analyze several key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The trailing twelve-month (TTM) P/E ratio for CPS is −6.63, indicating that the company is currently reporting a net loss, making the P/E ratio negative. This reflects the company's struggles to generate earnings in the recent financial periods.
Price-to-Book (P/B) Ratio
The P/B ratio for CPS stands at −0.30. This negative value indicates that the company's stock is trading below its book value, suggesting potential undervaluation in terms of assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio for CPS is −6.27, which is also negative due to the company's current net losses. This metric typically indicates how the market values the company relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, CPS has experienced significant fluctuations in its stock price. The stock price was approximately $10.50 a year ago, and as of the last trading session, it is at $3.68, representing a decline of 65%.
Dividend Yield and Payout Ratios
CPS does not currently pay a dividend, resulting in a dividend yield of 0%. The lack of dividend payments reflects the company's focus on stabilizing its financial position rather than returning capital to shareholders.
Analyst Consensus on Stock Valuation
According to recent analyst ratings, CPS has a consensus recommendation of Hold. Analysts express caution due to the company's ongoing financial losses and volatility, while some see potential for recovery.
| Metric | Value |
|---|---|
| P/E Ratio | −6.63 |
| P/B Ratio | −0.30 |
| EV/EBITDA Ratio | −6.27 |
| Stock Price (1 Year Ago) | $10.50 |
| Current Stock Price | $3.68 |
| Stock Price Decline | 65% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Cooper-Standard Holdings Inc. (CPS)
Key Risks Facing Cooper-Standard Holdings Inc.
Overview of Internal and External Risks: The company faces several internal and external risks that could significantly impact its financial health. Key risks include:
- Industry Competition: The automotive parts industry is highly competitive, with numerous players vying for market share. This competition can lead to price wars and reduced margins.
- Regulatory Changes: Changes in regulations regarding emissions and safety standards can require costly adjustments to manufacturing processes.
- Market Conditions: Economic downturns or shifts in consumer demand can adversely affect sales and profitability.
Operational Risks: Recent earnings reports have highlighted operational risks including:
- Cost Increases: The cost of products sold was $1,849,245,000 for the nine months ended September 30, 2024, a decrease of $66,915,000 from the previous year .
- Gross Profit Decline: Gross profit for the same period was $220,895,000, down from $226,076,000, indicating a decline in profitability.
- Restructuring Charges: Restructuring charges increased by $7,506,000, totaling $20,430,000 for the nine months ended September 30, 2024 .
Financial Risks: Financial metrics reveal additional risks, such as:
- Net Loss: The company reported a net loss of $118,384,000 for the nine months ended September 30, 2024, compared to a loss of $148,149,000 in the same period of 2023.
- Debt Levels: Long-term debt stood at $1,058,004,000 as of September 30, 2024.
- Interest Expense: Net interest expense for the nine months ended September 30, 2024 was $87,041,000, reflecting a decrease of $11,016,000 from the previous year.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition leads to price reductions | Potential decrease in margins |
| Regulatory Changes | New regulations may increase production costs | Higher operational expenses |
| Market Conditions | Economic downturns impact sales | Revenue decline |
| Cost Increases | Increased cost of raw materials | Cost of products sold: $1,849,245,000 |
| Gross Profit Decline | Reduction in gross profit margins | Gross profit: $220,895,000 |
| Restructuring Charges | Costs associated with restructuring initiatives | Restructuring charges: $20,430,000 |
| Net Loss | Overall financial performance | Net loss: $118,384,000 |
| Debt Levels | Significant long-term debt obligations | Long-term debt: $1,058,004,000 |
| Interest Expense | Cost of servicing debt | Interest expense: $87,041,000 |
Mitigation Strategies: The company has implemented several strategies to mitigate risks:
- Cost Optimization Initiatives: Ongoing lean initiatives aim to reduce operational costs and improve efficiency.
- Pricing Adjustments: The company actively pursues pricing adjustments with customers to offset rising costs.
- Cash Flow Management: Emphasis on cash preservation and liquidity management to navigate market uncertainties.
Future Growth Prospects for Cooper-Standard Holdings Inc. (CPS)
Future Growth Prospects for Cooper-Standard Holdings Inc.
Analysis of Key Growth Drivers
Cooper-Standard Holdings Inc. is poised for growth through several key drivers:
- Product Innovations: The company is focusing on developing advanced sealing and fluid handling systems that enhance vehicle performance and sustainability.
- Market Expansions: There are strategic plans to expand into emerging markets, particularly in Asia-Pacific and South America, where automotive demand is growing.
- Acquisitions: The company has been exploring opportunities for acquisitions to bolster its product offerings and market share.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, Cooper-Standard is projecting a revenue of approximately $2.1 billion, with an expected growth rate of 3-5% over the next five years. Analysts estimate earnings per share (EPS) to improve to $1.50 in 2025, up from $0.63 in 2024.
Strategic Initiatives or Partnerships
The company has entered into strategic partnerships with key automotive manufacturers to co-develop innovative solutions aimed at increasing efficiency and reducing emissions. Additionally, the recent restructuring initiatives are designed to streamline operations, expected to yield cost savings of around $20 million annually.
Competitive Advantages
Cooper-Standard holds several competitive advantages, including:
- Strong R&D Capabilities: Investment in research and development has positioned the company to lead in product innovation.
- Global Footprint: The company operates in multiple regions, allowing it to cater to diverse market needs and mitigate regional risks.
- Established Relationships: Long-standing relationships with major automotive OEMs provide a stable revenue base and opportunities for collaboration on new projects.
| Metric | 2023 Actual | 2024 Projected | 2025 Estimate |
|---|---|---|---|
| Revenue ($ Billion) | 2.14 | 2.1 | 2.2 |
| EPS ($) | -8.47 | 0.63 | 1.50 |
| Cost Savings from Restructuring ($ Million) | N/A | 20 | 20 |
| Growth Rate (%) | N/A | 3-5 | 3-5 |
Cooper-Standard's focus on innovation, strategic market expansions, and operational efficiencies positions it favorably for future growth. The company's proactive approach in addressing market challenges and leveraging its strengths will be critical in navigating the increasingly competitive automotive industry landscape.
Cooper-Standard Holdings Inc. (CPS) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Cooper-Standard Holdings Inc. (CPS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cooper-Standard Holdings Inc. (CPS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cooper-Standard Holdings Inc. (CPS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.