Cooper-Standard Holdings Inc.

Good morning, ladies and gentlemen, and welcome to the Cooper Standard second quarter 2022 earnings conference call. During the presentation, all participants will be in listen-only mode. Following the company's prepared comments, we will conduct a question and answer session. At that time, if you have a question, you will need to press the star followed by the one key. As a reminder, this conference call is being recorded, and the webcast will be available on the Cooper Standard website for replay later today. I would now like to turn the call over to Roger Hendrickson, Director of Investor Relations.

Roger Hendrickson Thanks, Brianna, and good morning, everyone. Thank you for spending some time with us 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 they 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. So with those formalities out of the way, I'll turn the call over to Jeff Edwards.

Thanks, Roger. Good morning, everyone. We appreciate the opportunity to review our second quarter and year-to-date results and provide an update on our business and outlook going forward. To begin, on slide five, we provide some highlights or key indicators of how our operations performed in the second quarter. We continued to execute at world-class levels in delivering quality products and services to our customers and keeping our employees safe. At the end of the quarter, 97% of our customer scorecards for product quality were green. Our launch performance scorecard We're also at 97% green for the quarter. Most importantly, the safety performance of our plants continues to be outstanding. In the second quarter, our total safety incident rate was just 0.31 per 200,000 hours worked, well below what is considered world-class and outperforming our target rate of 0.40. I would like to specifically recognize and thank our teams at the 41 Cooper Standard plants that have maintained a perfect safety record of zero reported incidents for the first six months of the year. Through their commitment, focus, and leadership, they continue to demonstrate that achieving our ultimate goal of zero incidents is possible. Our manufacturing operations have worked smart and extremely hard to overcome a number of market challenges, including continued erratic production schedules and a tight labor market availability. Despite the difficult operating environment, our operations were able to deliver $21 million in savings through lean initiatives and improving efficiencies in the quarter. Our SGA and E expense was down $4 million year over year as we continue to right-size our fixed cost. And past restructuring actions delivered $2 million in benefits in the quarter. In June, we started to see improvements in overall production volume and increased benefits from our cost recovery initiatives. Combined with our improved operating efficiency and lower fixed costs, The improved volume, mix, and net pricing enabled us to drive positive EBITDA margin and cash flow in the last month of the quarter, partially offsetting disappointing results in April and May. Moving to slide six, during the quarter, we continued our efforts to recover incremental costs imposed on our business by rising commodity prices and other market factors that are beyond our control. While the discussions and outcomes have been different with each customer, we have been able to implement either index-based agreements or some other form of price adjustment with most customers. We now have index-based agreements on material costs covering a significant majority of our revenue base. The index-based agreements cover critical oil-based commodities as well as metals, as they are already having a positive impact on our results as commodity costs continue to rise. Importantly, these agreements should significantly reduce the magnitude of commodity price impacts on our business in the future. In cases where our customers prefer quarterly surcharges or other periodic negotiations versus index-based agreements, We have implemented and negotiated PO price increases, delayed LTAs, reduced quick saving payments, and other adjustments. In total, our material cost recoveries will exceed the high end of our historical range. Our commercial team has done a great job to achieve these positive results in a very tough environment. And they've been able to do it in a way that does not compromise customer relationships or our ability to win new business. This was evidenced by the solid net new business awards we received in the second quarter. Also, frankly, none of it would have happened without our world-class operating performance and our engineering execution. Our customers support Cooper Standard because they trust us to deliver. As we continue to work together in a very challenging business environment, I want to thank our customers for their engagement in this process, for their ongoing commitment to mutually beneficial business relationships. Turning to slide seven. We're pleased with the recent recognition of our innovative Fortrex chemistry platform by environment and energy as a top product of 2022. This marks the fourth prestigious award granted to Fortrex since it was commercialized in 2018. Fortrex is the most sustainable material available within the automotive sealing industry as it provides significantly lower carbon footprint that is environmentally friendly and lighter weight with higher performance than traditional sealing material options. In addition, we are continuing to develop the material science around Fortrex to make it even lighter weight, higher performing, and potentially to use recycled post-consumer waste as feedstock material, all of which are highly valued characteristics with our customers. Our innovations are part of the value proposition we provide to our customers and a clear differentiator among our competition. We believe the new developments around Fortrex will create additional market opportunities in our sealing business going forward. Moving to slide eight, we're also making significant strides to ensure leadership in the EV market with new products for fluid handling. We've commercialized multiple innovations within our quick connect and lightweight tubing portfolios. and we hope to soon share exciting new advancements in fluid flow control, which will unlock opportunities to grow content per vehicle and expand margins in the EV space. These advancements, combined with our existing capabilities, allow our OEM customers to further optimize EV fluid architectures, given reduced complexity and increased vehicle performance and range. Now I'll turn the call over to John to discuss the financial details of the quarter.