Investor Presentation March Our Innovation. Your Advantage.

Transcription

1 Investor Presentation March 2019 Our Innovation. Your Advantage.

2 Forward-Looking Statements This presentation includes forward-looking statements within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words estimate, expect, anticipate, project, plan, intend, believe, outlook, guidance, forecast, or future or conditional verbs, such as will, should, could, would, or may, and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other items, such factors may include: prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of manufactured components and raw materials; disruption in our supply base; competitive threats and commercial risks associated with us entering new markets; possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations, and policies governing the terms of foreign trade such as increased trade restrictions and tariffs; foreign currency exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial amount of indebtedness; our ability to obtain adequate financing sources in the future; operating and financial restrictions imposed on us under our debt instruments; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; effectiveness of continuous improvement programs and other cost savings plans; manufacturing facility closings or consolidation; our ability to execute new program launches; our ability to meet customers needs for new and improved products; the possibility that our acquisitions and divestitures may not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; changes in our assumptions as a result of IRS issuing guidance on the Tax Cuts and Jobs Act; the possibility of future impairment charges to our goodwill and long-lived assets; and our dependence on our subsidiaries for cash to satisfy our obligations. You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this presentation and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except where we are expressly required to do so by law. This presentation also contains estimates and other information that is based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information. 2

3 Company Overview 3

4 Primary Product Lines 2018 Revenue by product / % of Total Revenue Sealing Sealing Systems Systems $1.8B / 50% #1 Globally Fuel & Brake Delivery Fuel Brake Delivery Systems Systems $0.8B / 22% #2 #2 Globally 1 Fluid Transfer Fluid Transfer Systems Systems $0.6B / 16% #3 Globally Anti-Vibration Anti-Vibration Systems Systems $0.3B / 9% North American Leader Sale Pending Market position data Boston Consulting Group (2018) and company estimates 1 Two companies tied at this level 4

5 Fragmented Markets Represent Significant Growth Potential 2018 Revenue by product / % of Total Revenue Key Competitors Sealing Sealing Systems Systems $1.8B / 50% #1 Globally Global Market Size: $9.2 billion CPS Current Share: 20% Market CPS Henniges Hutchinson Saar Gummi Standard Profil Toyoda Gosei Fuel & Brake Delivery Fuel Brake Delivery Systems Systems $0.8B / 22% #2 Globally 1 Global Market Size: $5.8 billion CPS Current Share: 13% Market CPS Martinrea Maruyasu Sanoh TI Automotive Fluid Transfer Fluid Transfer Systems Systems $0.6B / 16% #3 Globally Global Market Size: $4.2 billion CPS Current Share: 14% Market CPS ContiTech Hutchinson MGI Coutier/Avon Teklas Tristone Global Market Size based on IHS light vehicle production data and average content per vehicle 1 Two companies tied at this level 5

6 Products Well Represented on Key Global Vehicles Vehicle Global Platform Sealing Fuel and Brake Fluid Transfer Ford F-150 GM Equinox GM LaCrosse FCA 1500 Daimler C-Class Ford Ecosport Ford Explorer PSA 308 VW Lavida Ford Edge 6

7 Supporting Global Customers 2018 Revenue $3.63B RENAULT GM 21% Ford 30% FCA 11% PSA 7% Other 10% VW 5% Daimler 6% Renault Nissan 3% Tata 3% BMW 2% Geely 2% 7

8 Well Positioned to Capitalize on Industry Trends 8

9 Strong Content in the Right Segments Global Light Vehicle Production - Million Units 1 Projected Growth % CAGR Cooper Standard Advantaged Market Position 2 Cars Crossovers Light Trucks +3.8% CAGR % Revenue - Global 27% 44% 21% % Revenue - N. America 13% 38% 46% CPV (relative to cars) Global +58% +132% +0.8% CAGR CPV (relative to cars) N. America +104% +303% Car Crossover Truck 1 Source: IHS December Data based on Company estimates full year

10 Products Essential Across all Powertrains and Mobility Options Supplier on 7 of the Top 10 EV Platforms 1 Internal Combustion Hybrid All Electric Autonomous SEALING SYSTEMS INNOVATION ENHANCEMENTS FOR LIGHTER MATERIALS AND QUIET INTERIORS FLUID TRANSFER SYSTEMS ADDITIONAL COOLING LOOPS = HIGHER CPV FUEL & BRAKE DELIVERY SYSTEMS 1 Based on 2018 production data; source: IHS 10

11 Innovation Opportunity Increasing CPV Opportunity from Market Trends Fluid Transfer Systems Hybrid Electric Gas 11

12 Continuing Ramp Up of Asia Pacific 1 Business Projected Sales, USD millions 2 $0.6B ~$1.3B Asia Pacific Key Highlights Customer Mix 2 12% 23% Revenue expected to grow faster than market, on average, over next several years World-class manufacturing footprint in place to support significant growth Capacity utilization and overhead absorption expected to improve with increased sales Customer mix shifting toward local OEMs with China approaching 30% by 2023 Global OEMs Local OEMs Global OEMs Local OEMs Includes China, India and Korea 2 Estimates based on current management projections, IHS production estimates 12

13 Strong New Business Awards and Launches Net New Business Awards Quarterly Launch Cadence USD Millions $398 $453 $ $ Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q1E 2019 Q2E Q3E Q4E 2019 new launches expected to increase 32% vs

14 Accelerating Value Through Innovation 14

15 Providing Customer Solutions Through Innovation Driving Sustainable Competitive Advantage for Cooper Standard Fortrex Sealing Reduces weight, improves performance, and offers appearance options ArmorHose Family of Products Eliminates requirement for protective sleeves, reduces weight MagAlloy Coating Improves corrosion performance and product life utilizing proprietary technology Gen III Posi-Lock Quick Connector Simplifies systems; reduces mass and complexity 15

16 Delivering Breakthrough Innovations to the Market First Major Fortrex TM Launch 2020 Ford Explorer Spartanburg Plant Expansion Complete Fortrex - The Next Generation Lightweight Elastomer 16

17 Ramping Up Automotive Innovation Revenue 1 USD Millions 1 Estimates based on current management projections, IHS production estimates. Includes new and replacement business. Commercialized innovation products include: MagAlloy TM, ArmorHose TM, AmorHose TM TPV, Gen III Posi-Lock, TP Microdense and Fortrex TM 17

18 Better material properties Leveraging Advanced Data Analytics to Accelerate Innovation Using Artificial Intelligence to Accelerate Material Development A.I. finds answer in 5 steps, starting at same point as humans Data Analytics & Digital Tools Historical trials by humans; compound improving but not good enough A.I. training A.I. answers Reduces compound development time up to 80% Helps achieve higher product performance Developing additional A.I. applications 18

19 Advanced Technology Group - Strategic Diversification 19

20 Advanced Technology Group Driving Growth and Diversification Industrial and Specialty Group (ISG) Applied Materials Science Business (AMS) Leveraging Traditional Technologies in Non-automotive Markets Leveraging Fortrex TM Chemistry Platform in Diverse Industries and Applications 20

21 Industrial and Specialty Group Leveraging Traditional Technologies in Non-automotive Markets Air Intake Hose Turbo Coolant Lines Window & Door Seals Rubber Trim Seals AC Hose/Tube Assemblies Cowling Seal Auxiliary Cooling Assemblies Window & Door Seals Hydraulic Hose/ Tube Assemblies Breather Hose Cowling Seal Engine Cooling Hose Filter to Rail Hose Window & Door Seals Door Gaskets Encapsulated Glass Glass Run Seal Engine Oil Tube Radiator Hose QC Hood Seal AC Assemblies Trim Seals Coolant QC Engine Cooling Hose/Tube Assemblies Multi-layer EVAP Lines Fuel Rails Multi-layer Fuel Lines Fuel QC Engine Oil Tubes Fuel Assemblies Engine Cooling Hose/Tubes Structural Tube - Rails Fuel Feed Lines & QC Oil Pick-up Hose Water Pick-up Assemblies Fuel Vapor Lines & QC Sealing Systems Fuel & Brake Delivery Systems PVC Tube ASm Tube Drain Tube Suction Assemblies TOC Hose Assemblies & QC Transmission Cooler Coolant Hose/Tube(s) Overmolded Bracket Oil Pickup Tube Bulb Seal Brake & Fuel Tank Bundle Inner & Outer Belts Front Brake Line Assemblies Fluid Transfer Systems ISG Global Addressable Market of $3.2 Billion* *Source: Company estimates 21

22 Expanding Opportunities for Applied Materials Science Licensing of Fortrex TM Technology and Sale of Customized Materials Footwear Marine Defense Athletics Consumer Applications/ Wire and Cable Packaging Building / Construction Comfort Foams Global Non-automotive Rubber Market estimated at $76 Billion 22

23 Advanced Technology Group Driving Growth and Diversification USD Millions $191 ATG Revenue Outlook* ~$500 ISG Aggressively pursuing share of $3.2 billion global addressable market Leveraging recent acquisitions for additional technology, talent and scale AMS Existing licensees (INOAC, PolyOne) advancing toward start of production/commercialization Expecting to sign multiple new license agreements in E 2019E 2020E 2021E 2022E 2023E *Includes booked, planned replacement and targeted new business. Assumes no further acquisitions/divestitures beyond those previously announced. 23

24 Summary 24

25 Growth Outlook Outpacing Global Automotive Market Cooper Standard Revenue Outlook 1 USD Millions $3.6B ~$4.6B Projected 5.0% CAGR vs. global light vehicle growth 2 of 2.1% Net year-over-year impact of acquisitions / divestitures in 2019 is $(160)M or (4.4%) Asia sales expected to exceed $1B by 2021; China sales expected to exceed $1B by 2023 Anticipated strong revenue growth within the Advanced Technology Group E 2020E 2021E 2022E 2023E % Booked 99% 92% 78% 62% 48% 1 Includes booked, planned replacement and targeted new business. Assumes no acquisitions/divestitures. 2 Source: IHS December

26 Global Organization Aligned to Optimize Cash Flow Centralize equipment spec and sourcing decisions across all regions Evaluate and facilitate equipment redeployment opportunities Reduce spending overall and as a percent of sales Global business services unit to optimize receivables and payables Target inventory reduction of 2 days on hand vs Continued operating efficiency improvements, lean initiatives Benefit from proactive reductions of SGA&E, fixed overhead Leverage global innovations to reduce price pressures 26

27 Focused Near-term Actions Leverage innovation to offset price pressure and raw material cost increases Negotiate raw material cost recovery Optimize China manufacturing footprint Increase sales of value-add innovations Continued expansion of Advanced Technology Group (ATG) Reduce working capital and CAPEX to drive cash flow Close sale of AVS business Continue opportunistic share repurchases Global Organization Targeting Total Cost Savings Initiatives of More Than $130 Million in

28 Strategic Value Drivers Culture of innovation and sustainability Increasing innovation portfolio Continuing operational excellence Profitable growth of Asia Pacific business Continued strong net new business wins Leveraging material science capabilities Rapid growth in non-automotive business Pursue synergistic M&A opportunities 28