Cooper-Standard Holdings Inc.

Good morning, ladies and gentlemen, and welcome to the Cooper Standard fourth quarter and full year 2020 earnings conference call. During the presentation, all participants will be in listen only mode. Following company prepared comments, we will conduct a question and answer session. At that time, if you have a question, you'll need to press star followed by the one key. As a reminder, this conference call is being recorded and the webcast will be available for replay later today. I would now like to turn the call over to Roger Hendrickson, Director of Investor Relations.

Thank you, Kevin, and good morning, everyone. We appreciate your continued interest in Cooper Standard, and we thank you for taking the time to participate in our call this morning. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer, and John Banas, Executive Vice President and Chief Financial Officer. Before we begin, I need to remind you that this presentation contains forward-looking statements. While these statements are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties. For more information on forward-looking statements, we ask that you refer to slide three of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission. This presentation also contains non-GAAP financial measures. reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures are included in the appendix to the presentation. With those formalities out of the way, I'll turn the call over to Jeff Edwards.

Thanks, Roger, and good morning, everyone. We appreciate this opportunity to review our fourth quarter and full year 2020 results and provide an update on our outlook for 2020 and beyond. To begin on slide five, I'd like to highlight some of the key data points that we believe are reflective of our continued strong commitment to driving sustained value for all of our stakeholders. First, we're very pleased that our continuing focus and discipline around environmental, social, and governance excellence is driving action and improved results. In 2020, we meaningfully improved five of six priority ratings and began tracking a new rating from ISS. We believe that this same focus and discipline is directly related to our operating performance, which was again strong during the fourth quarter. We continue to deliver world-class results in product quality, customer service, and employee safety. At the end of the quarter, 97% of our customer scorecards for product quality were green and 98% were green for program launches. Even more importantly, we had a record year for safety performance. For the full year 2020, our safety incident rate was our best ever at just 0.32 per 200,000 hours worked. well below our world-class benchmark of 0.60 we're certainly proud of this outstanding result and we're particularly pleased that 29 of our plants completed the year with a perfect safety record of zero reported incidents from a financial perspective our initiatives to improve margins and return on invested capital continue to drive the expected improvements in our results. During the fourth quarter, our manufacturing teams delivered $18 million in cost savings through lean initiatives and improved operating efficiencies. For the full year, manufacturing cost savings totaled $65 million, which is an outstanding result when you consider all the unusual challenges presented by increased health and safety protocols lower production volumes and customer shutdowns the aggressive proactive actions we implemented to reduce administrative and overhead costs beginning in 2019 and throughout the year resulted in a 12 million dollar reduction in sga and e expense for the fourth quarter versus the same period last year For the full year, the reduction in SGA and E expense was $43 million. Our global supply chain optimization initiative continues to deliver as expected, driving $7 million in savings during the fourth quarter and $33 million for the full year. Combined, these initiatives were a significant factor in achieving 470 basis points improvement in our fourth quarter adjusted EBITDA margin, despite some significant one-time impacts that John will describe in a few minutes. Turning to page six, this slide provides details around the improving ESG ratings I mentioned. Our commitment and achievement in ESG is garnering prestigious recognition, including being named to Newsweek's list of America's most responsible companies for the second consecutive year. But more important than the recognition is the actual positive impact we're having on the environment, in our communities, and on the overall health and sustainability of our company. Turning to slide seven. We're continuing our aggressive actions to right-size the fixed cost overhead burden on our business and align it with our smaller revenue base. As a recap, in 2019, we closed 10 facilities, streamlined our global manufacturing structure, and significantly reduced SGA and E headcount. In 2020, we closed or exited 14 more underperforming facilities and initiated the closure of one more, which we expect to be completed in the first half of this year. We also continued with further rightsizing of our headcount and aggressive limits on discretionary spending in 2020. Combined, the actions we've taken in 2019 and 2020 reduced our total fixed cost in COGS and SGA&E by more than $80 million year over year. far exceeding the $50 million in savings that we'd committed to in early 2020. In summary, 2020 was a very challenging year, but our culture, focus, and discipline enabled us to manage through the crisis and the challenges and continue to execute well on our major strategic initiatives. Now let me turn the call over to John.