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What changed in Cooper-Standard Holdings Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cooper-Standard Holdings Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+331 added−328 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in Cooper-Standard Holdings Inc.'s 2023 10-K

331 paragraphs added · 328 removed · 255 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+15 added−14 removed28 unchanged
Biggest changeAmong other items, such factors may include: volatility or decline of the Company’s stock price, or absence of stock price appreciation; impacts, including commodity cost increases and disruptions related to the war in Ukraine and the COVID-related lockdowns in China; our ability to offset the adverse impact of higher commodity and other costs through negotiations with our customers; the impact, and expected continued impact, of the COVID-19 outbreak on our financial condition and results of operations; significant risks to our liquidity presented by the COVID-19 pandemic risk; 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 our diversification strategy through our Advanced Technology Group; 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 and variable rates of interest; 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 and regulatory proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, data privacy concerns, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges to our goodwill and long-lived assets; our ability to identify, attract, develop and retain a skilled, engaged and diverse workforce; our ability to procure insurance at reasonable rates; and our dependence on our subsidiaries for cash to satisfy our obligations.
Biggest changeAmong other items, such factors may include: volatility or decline of the Company’s stock price, or absence of stock price appreciation; impacts and disruptions related to the wars in Ukraine and the Middle East; our ability to achieve commercial recoveries and to offset the adverse impact of higher commodity and other costs through pricing and other negotiations with our customers; work stoppages or other labor disruptions with our employees or our customers’ employees; 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 our diversification strategy; 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 and variable rates of interest; 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; significant costs related to 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 and regulatory proceedings, claims or investigations against us; the potential impact of any future public health events on our financial condition and results of operations; the ability of our intellectual property to withstand legal challenges; cyber-attacks, data privacy concerns, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges to our goodwill and long-lived assets; our ability to identify, attract, develop and retain a skilled, engaged and diverse workforce; our ability to procure insurance at reasonable rates; and our dependence on our subsidiaries for cash to satisfy our obligations.
This evolution is being driven by many factors including consumer preferences and social behaviors, a competitive drive for differentiation, regulatory requirements, environmental impact and safety. Cooper Standard supports these trends by providing innovations that reduce weight, increase life-cycle and durability, reduce interior noise, enhance exterior appearance, simplify the manufacturing and assembly process, and help reduce a vehicle’s environmental impact.
This evolution is being driven by many factors including consumer preferences and social behaviors, a competitive drive for differentiation, regulatory requirements and environmental impact and safety. Cooper Standard supports these trends by providing innovations that reduce weight, increase life-cycle and durability, reduce interior noise, enhance exterior appearance, simplify the manufacturing and assembly process, and help reduce a vehicle’s environmental impact.
We are developing innovative technologies based on materials expertise, process know-how, and application vision, which may drive future product direction. An example is Fortrex™, the Company’s synthetic elastomer chemistry platform, offering reduced weight while delivering superior material performance and aesthetics. We have also developed several other significant technologies, especially related to advanced materials, processing and weight reduction.
We are developing innovative technologies based on materials expertise, process know-how, and application vision, which may drive future product direction. An example is Fortrex™, the Company’s synthetic elastomer chemistry platform, offering reduced weight while delivering superior material performance and aesthetics. We have also developed several other significant technologies, 4 especially related to advanced materials, processing and weight reduction.
We believe that our capabilities in these core competencies are integral to our position as a market leader in each of our product lines. Our sealing systems products compete with Toyoda Gosei, Henniges, Standard Profil, HSR&A, SaarGummi and JianXin, among others. Our fuel and brake delivery products compete with TI Automotive, Sanoh, Martinrea, Maruyasu and SeAH, among others.
We believe that our capabilities in these core competencies are integral to our position as a market leader in each of our product lines. Our sealing systems products compete with Toyoda Gosei, Henniges, Hutchinson Standard Profil, HSR&A, SaarGummi and JianXin, among others. Our fuel and brake delivery products compete with TI Automotive, Sanoh, Martinrea, Maruyasu and SeAH, among others.
The percentage of sales by product line and other markets for the years ended December 31, 2022, 2021 and 2020 are as follows: 7 Product Lines Market Position SEALING SYSTEMS Protect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment Global leader Products: – Obstacle detection sensor system – Fortrex ® – FlushSeal™ systems – Dynamic seals – Variable extrusion – Static seals – Specialty sealing products – Encapsulated glass – Stainless steel trim – Tex-A-Fib (Textured Surface with Cloth Appearance) – Frameless Systems FUEL & BRAKE DELIVERY SYSTEMS Sense, deliver and control fluid and fluid vapors for fuel and brake systems Top 2 globally Products: – Chassis and tank fuel lines and bundles (fuel lines, vapor lines and bundles) – Direct injection & port fuel rails (fuel rails and fuel charging assemblies) – Metallic brake lines and bundles – MagAlloy™ break tube coating – Quick connects – ArmorTube™ brake tube coating – Low oligomer multi-layer convoluted tube – Series 300 and S300LT (low temperature) quick connects – Brake jounce lines – Gen III Posi-Lock ® quick connects FLUID TRANSFER SYSTEMS Sense, deliver, connect and control fluid delivery for optimal thermal management, powertrain & HVAC operation Top 3 globally Products: – Heater/coolant hoses – Turbo charger hoses – Quick connects (SAE and VDA) – Charged air cooler ducts/assemblies – Diesel particulate filter (DPF) lines – Secondary air hoses – Degas tanks and deaerators – Brake and clutch hoses – Charged air cooling (air intake and discharge) – Easy-Lock™ quick connect – Transmission Oil Cooling Hoses – Ergo-Lock™ VDA quick connect – Multilayer tubing for glycol thermal management – Ergo-Lock™ + VDA quick connect – PlastiCool ® 5000 high temperature MLT – PlastiCool ® 2000 multi-layer tubing for glycol thermal management Competition We believe that the principal competitive factors in our industry are quality, price, service, launch performance, design and engineering capabilities, innovation, timely delivery, financial stability and global footprint.
The percentage of sales by product line and other markets for the years ended December 31, 2023, 2022 and 2021 are as follows: 6 Product Lines Market Position SEALING SYSTEMS Protect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment Global leader Products: – Fortrex ® – FlushSeal™ systems – Dynamic seals – Variable extrusion – Static seals – Specialty sealing products – Encapsulated glass – Stainless steel trim – Tex-A-Fib (Textured Surface with Cloth Appearance) – Frameless Systems – Obstacle detection sensor system FUEL & BRAKE DELIVERY SYSTEMS Sense, deliver and control fluid and fluid vapors for fuel and brake systems Top 2 globally Products: – Chassis and tank fuel lines and bundles (fuel lines, vapor lines and bundles) – Direct injection & port fuel rails (fuel rails and fuel charging assemblies) – Metallic brake lines and bundles – MagAlloy™ break tube coating – Quick connects – ArmorTube™ brake tube coating – Low oligomer multi-layer convoluted tube – Series 300 and S300LT (low temperature) quick connects – Brake jounce lines – Gen III Posi-Lock ® quick connects FLUID TRANSFER SYSTEMS Sense, deliver, connect and control fluid delivery for optimal thermal management, powertrain & HVAC operation Top 3 globally Products: – Heater/coolant hoses – Turbo charger hoses – Quick connects (SAE and VDA) – Charged air cooler ducts/assemblies – Diesel particulate filter (DPF) lines – Secondary air hoses – Degas tanks and deaerators – Brake and clutch hoses – Charged air cooling (air intake and discharge) – Easy-Lock™ quick connect – Transmission oil cooling hoses – Ergo-Lock™ VDA quick connect – Multilayer tubing for glycol thermal management – Ergo-Lock™ + VDA quick connect – PlastiCool ® 5000 high temperature MLT – PlastiCool ® 2000 multi-layer tubing for glycol thermal management Competition We believe that the principal competitive factors in our industry are quality, price, service, launch performance, design and engineering capabilities, innovation, timely delivery, financial stability and global footprint.
The supplier industry is a highly competitive industry and is generally characterized by high barriers to entry, significant start-up costs and long-standing customer relationships. The criteria by which OEMs judge automotive suppliers include quality, price, service, performance, design and engineering capabilities, innovation, timely delivery, financial stability and global footprint.
The supplier industry is a highly competitive industry and is generally characterized by high barriers to entry, significant start-up costs and long-standing customer relationships. The criteria by which OEMs judge automotive suppliers include quality, price, service, launch performance, design and engineering capabilities, innovation, timely delivery, financial stability and global footprint.
Cooper Standard earned an Environment + Energy Leader Award in 2022 for our Fortrex™ chemistry platform, in addition to being named a General Motors Overdrive Award winner in the category of ‘Sustainability’ in 2021, and a 2018 Automotive News PACE Award winner and a 2018 and 2019 Society of Plastics Engineers Innovation Award finalist.
Cooper Standard earned an Environment + Energy Leader Award in 2022 for our Fortrex™ chemistry platform, in addition to being named a General Motors Overdrive Award winner in the category of ‘Sustainability’ in 2021, a 2018 Automotive News PACE Award winner, and a 2018, 2019, and 2023 Society of Plastics Engineers Innovation Award finalist.
Leveraging Technology and Materials Science for Innovative Solutions We utilize our technical and materials science expertise to provide customers with innovative and sustainable product solutions. Our engineers use the results of advanced computational simulations and incorporate a broad understanding of materials science to design products which meet or exceed our customers’ stringent requirements.
Leveraging Technology and Materials Science for Innovative Solutions We use our technical and materials science expertise to provide customers with innovative and sustainable product solutions. Our engineers use the results of advanced computational simulations and incorporate a broad understanding of materials science to design products which meet or exceed our customers’ stringent requirements.
Other data is based on good faith estimates, which are derived from our review of internal analyses, as well as third party sources. Although we believe these third party sources are reliable, we have not 11 independently verified the information and cannot guarantee its accuracy and completeness.
Other data is based on good faith estimates, which are derived from our review of internal analyses, as well as third-party sources. Although we believe these third-party sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness.
They rely heavily on thousands of specialized suppliers to provide the many distinct components and systems that comprise the modern vehicle. They also rely on these automotive suppliers to develop technological innovations that will help them meet consumer demands as well as regulatory requirements.
They rely heavily on thousands of specialized suppliers to provide the many distinct components and systems that comprise the modern vehicle. They also rely on these automotive suppliers to develop technological innovations that will help them meet internal and consumer demands as well as regulatory requirements.
This Annual Report on Form 10-K 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. 12
This Annual Report on Form 10-K 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.
When obtaining or innovating materials for our products, we seek to sustainably source raw materials, increase the use of recycled content or recyclable material where feasible, decrease our use of hazardous chemicals where possible, and properly 9 disclose restricted materials to customers and regulators.
When obtaining or innovating materials for our products, we seek to sustainably source raw materials, increase the use of recycled content or recyclable material where feasible, decrease our use of hazardous chemicals where possible, and properly disclose restricted materials to customers and regulators.
We maintain good relations with both our union and non-union employees and, in the past ten years, have not experienced any major work stoppages. 10 Our people have always been the driving force of value at Cooper Standard.
We maintain good relations with both our union and non-union employees and, in the past ten years, have not experienced any major work stoppages. Our people have always been the driving force of value at Cooper Standard.
In addition, when we are the incumbent supplier to a given platform, we believe we have a competitive advantage in winning the redesign or replacement platform, although there is no guarantee that this will occur. Human Capital and Safety As of December 31, 2022, we had approximately 23,000 employees, including 3,000 contingent workers .
In addition, when we are the incumbent supplier to a given platform, we believe we have a competitive advantage in winning the redesign or replacement platform, although there is no guarantee that this will occur. Human Capital and Safety As of December 31, 2023, we had approximately 23,000 employees, including 3,000 contingent workers .
We are the largest global producer of sealing systems, the second largest global producer of the types of fuel and brake delivery products that we manufacture and the third largest global producer of the types of fluid transfer systems that we manufacture.
We believe that we are the largest global producer of sealing systems, the second largest global producer of the types of fuel and brake delivery products that we manufacture and the third largest global producer of the types of fluid transfer systems that we manufacture.
While our costs to defend and settle known claims arising under environmental laws have not been material in the past and are not currently estimated to have a material adverse effect on our financial condition, such costs could be material to our financial statements in the future. Further details regarding our commitments and contingencies are provided in Note 21.
While our costs to defend and settle known claims arising under environmental laws have not been material in the past and are not currently estimated to have a material adverse effect on our financial condition, such costs could be material to our financial statements in the future. Further details regarding our commitments and contingencies are provided in Note 20.
These awards are a further testament to Cooper Standard’s commitment to ESG (environmental, social and governance) topics, including our core value of integrity. Cooper Standard considers itself a steward of the environment, and we monitor the environmental impact of our business and products. We prioritize our environmental management as a means of driving and sustaining excellence.
These awards are a further testament to Cooper Standard’s commitment to ESG topics, including our core value of integrity. Cooper Standard considers itself a steward of the environment, and we monitor the environmental impact of our business and products. We prioritize our environmental management as a means of driving and sustaining excellence.
Markets Served Our automotive business is focused on the passenger car and light truck market, up to and including Class 3 full-size, full-frame trucks, better known as the global light vehicle market. This is our largest market and accounts for approximately 92% of our global sales.
Markets Served Our automotive business is focused on the passenger car and light truck market, up to and including Class 3 full-size, full-frame trucks, better known as the global light vehicle market. This is our largest market and accounts for approximately 94% of our global sales.
Cooper Standard utilizes its i 3 Innovation Process (Imagine, Initiate and Innovate) and CS Open Innovation as mechanisms to capture novel ideas while promoting a culture of innovation. Ideas are carefully evaluated by our global product 4 line teams and Global Technology Council, and those that are selected are put on an accelerated development cycle.
Cooper Standard uses its i 3 Innovation Process (Imagine, Initiate and Innovate) and CS Open Innovation as mechanisms to capture novel ideas while promoting a culture of innovation. Ideas are carefully evaluated by our global product line teams and Global Technology Council, and those that are selected are put on an accelerated development cycle.
In addition, local partners in these markets can provide knowledge and insight into local practices and access to local suppliers of raw materials and components. 8 The following table shows our significant unconsolidated joint ventures as of December 31, 2022: Country Name Product Line Ownership Percentage Thailand Nishikawa Tachaplalert Cooper Ltd.
In addition, local partners in these markets can provide knowledge and insight into local practices and access to local suppliers of raw materials and components. The following table shows our significant unconsolidated joint ventures as of December 31, 2023: Country Name Product Line Ownership Percentage Thailand Nishikawa Tachaplalert Cooper Ltd.
“Contingent Liabilities” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K (the “Report”). Market Data Some market data and other statistical information used throughout this Annual Report on Form 10-K is based on data from independent firms such as S &P Global and PwC.
“Contingent Liabilities” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K (the “Report”). Market Data Certain market data and other statistical information used throughout this Annual Report on Form 10-K is based on data from independent firms such as S &P Global .
Given the trajectory and anticipated future growth of electric vehicles, Cooper Standard has developed innovations to provide lightweight plastic tubing with our PlastiCool ® 2000 multilayer tubing, smooth and CVT mid-temperature multilayer tubing, and our next generation Ergo-Lock™ and Ergo-Lock™ + VDA quick connectors for glycol thermal management needs.
Given the trajectory and anticipated future growth of electric vehicles, Cooper Standard has developed innovations to provide lightweight plastic tubing with our PlastiCool ® 2000 multilayer tubing, smooth and clear vinyl tubing (“CVT”) mid-temperature multilayer tubing, and our next-generation Ergo-Lock™ and Ergo-Lock™ + VDA quick connectors for glycol thermal management needs.
Approximately 82% of our sales in 2022 were to OEMs, including Ford Motor Company (“Ford”), General Motors Company (“GM”), Stellantis, Volkswagen Group, Daimler, Renault-Nissan, BMW, Toyota, Volvo, Jaguar/Land Rover, Honda and various other OEMs based in China. The remaining 18% of our 2022 sales were primarily to Tier I and Tier II automotive suppliers, non-automotive customers, and replacement market distributors.
Approximately 84% of our sales in 2023 were to OEMs, including Ford Motor Company (“Ford”), General Motors Company (“GM”), Stellantis, Volkswagen Group, Daimler, Renault-Nissan, BMW, Toyota, Volvo, Jaguar/Land Rover, Honda and various other OEMs based in China. The remaining 16% of our 2023 sales were primarily to Tier I and Tier II automotive suppliers, non-automotive customers, and replacement market distributors.
This business also drives growth and diversification through the Company’s applied materials science offerings, which include the Fortrex™ chemistry platform that provides performance advantages over many other materials, as well as a significantly reduced carbon footprint.
Cooper Standard also drives growth and diversification through the Company’s applied materials science offerings, which include the Fortrex™ chemistry platform that provides performance advantages over many other materials, as well as a significantly reduced carbon footprint.
Amounts spent on engineering, research and development, and program management were as follows: Year Amount Percentage of Sales (Dollar amounts in millions) 2022 $ 80.5 3.2 % 2021 $ 90.0 3.9 % 2020 $ 101.6 4.3 % Intellectual Property We believe that one of our key competitive advantages is our ability to translate customer needs and our ideas into innovation through the development of intellectual property.
Amounts spent on engineering, research and development, and program management were as follows: Year Amount Percentage of Sales (Dollar amounts in millions) 2023 $84.1 3.0% 2022 $80.5 3.2% 2021 $90.0 3.9% Intellectual Property We believe that one of our key competitive advantages is our ability to translate customer needs and our ideas into innovation through the development of intellectual property.
Additionally, building an internal talent pipeline supports the achievement of this priority. In 2022, our internal fill rate was approximately 80%. This metric, which is based on salaried director level positions and above, helps us to understand where employees are advancing in their career and the effectiveness of our internal development programs.
Additionally, building an internal talent pipeline supports the achievement of this priority. In 2023, our internal fill rate was approximately 36%. This metric, which is based on salaried, director-level positions and above, helps us to understand where employees are advancing in their careers and the effectiveness of our internal development programs.
The emergence of new ways of working during the COVID-19 pandemic, a growing international movement for civil rights, and our unwavering dedication to keeping our employees healthy and safe has only made them more critical to our success. We accomplish this by developing the capabilities of our employees through continuous learning and performance management processes.
We continue to embrace new ways of working, a growing international movement for civil rights, and our unwavering dedication to keeping our employees healthy and safe has only made them more critical to our success. We accomplish this by developing the capabilities of our employees through continuous learning and performance management processes.
Cooper Standard’s fluid handling products were selected as the Society of Plastics Engineers 2022 Automotive Innovation Award winner for the Material category for our innovative battery electric vehicle thermoplastic thermal management solution utilizing PlastiCool ® 2000 multilayer tube and Ergo-Lock ® connectors.
Cooper Standard’s fluid handling products were selected as the Society of Plastics Engineers 2022 Automotive Innovation Award winner for the Material category for our innovative battery electric vehicle thermoplastic thermal management solution utilizing PlastiCool ® 2000 multilayer tube and Ergo-Lock ® connectors. Industry The automotive industry is one of the world’s largest and most competitive markets.
Our business with any given customer is typically split among several contracts for different parts on a number of platforms. 6 Products We currently have three distinct product lines: sealing systems; fuel and brake delivery systems; and fluid transfer systems. These products are produced and supplied globally to a broad range of customers in multiple markets.
Our business with any given customer is typically split among several contracts for different parts on a number of platforms. Products Our product lines include sealing systems and fluid handling systems (consisting of fuel and brake delivery and fluid transfer systems). These products are produced and supplied globally to a broad range of customers in multiple markets.
This operating structure allows us to offer our full portfolio of products and support our global and regional customers with complete engineering and manufacturing expertise in all major regions of the world. On an ongoing basis, we undertake restructuring, expansion and cost reduction initiatives to improve competitiveness.
ISG and all other business activities were reported in Corporate, eliminations and other. This operating structure allowed us to offer our full portfolio of products and support our global and regional customers with complete engineering and manufacturing expertise in all major regions of the world. On an ongoing basis, we undertake restructuring, expansion and cost reduction initiatives to improve competitiveness.
The following charts show the percentage of sales to our top customers for the years ended December 31, 2022, 2021 and 2020: (1) 2020 percentages include FCA and Groupe PSA Our other customers include OEMs such as Renault-Nissan, BMW, Toyota, Volvo, Jaguar/Land Rover, Honda and various other OEMs based in China.
The following charts show the percentage of sales to our top customers for the years ended December 31, 2023, 2022 and 2021: Our other customers include OEMs such as BMW, Toyota, Volvo, Jaguar/Land Rover, Honda and various other OEMs based in China.
In addition, as part of our continued focus on sustainability and corporate responsibility, in 2021, Cooper Standard formed a Global Sustainability Council to provide executive level oversight for the Company’s sustainability strategy and ensure alignment and integration with business goals and stakeholder priorities.
In addition, as part of our continued focus on sustainability and corporate responsibility, the Company’s Global Sustainability Council provides executive level oversight for the Company’s sustainability strategy to help ensure alignment and integration with business goals and stakeholder priorities.
Cooper Standard continues to progress its diversification strategy through its Advanced Technology Group, which is charged with accelerating and maximizing expertise in the Company’s core process types for applications in the industrial and specialty markets.
Cooper Standard continues to progress its diversification strategy through its ISG business, which is charged with accelerating and maximizing expertise in the Company’s core product types for applications in the industrial and specialty markets.
Cooper Standard’s global alignment around these imperatives continues to drive further value in many areas of the business, including: Operational and Strategic Initiatives As part of Cooper Standard’s world-class operations, the Company relies upon its CSOS (Cooper Standard Operating System) to fully position the Company for growth and ensure global consistency in engineering design, program management, manufacturing process, purchasing and IT systems.
Operational and Strategic Initiatives As part of Cooper Standard’s world-class operations, the Company relies upon its CSOS (Cooper Standard Operating System) to fully position the Company for growth and ensure global consistency in engineering design, program management, manufacturing process, purchasing and IT systems.
We conduct substantially all of our activities through our subsidiaries. Cooper Standard is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “CPS.” The Company has approximately 23,000 employees, including 3,000 contingent workers, with 132 facilities in 21 countries.
Cooper Standard is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “CPS.” The Company has approximately 23,000 employees, including 3,000 contingent workers, with 128 facilities in 21 countries.
The business and commercial environment in each region also plays a role in vehicle demand as it relates to fleet vehicle sales and industrial use vehicles such as light and heavy trucks.
Consumer demand for new vehicles largely determines sales and production volumes of global OEMs. The business and commercial environment in each region also plays a role in vehicle demand as it relates to fleet vehicle sales and industrial-use vehicles such as light and heavy trucks.
These include: FlushSeal™, an advanced integrated solution for frame under glass static sealing systems offering better appearance, improved aerodynamics, quieter ride and reduced weight; MagAlloy™, a processing technology for brake lines that increases long term durability through superior corrosion resistance; and Easy-Lock™, a small package coolant and fuel vapor quick connect.
These include: FlushSeal™, an advanced integrated solution for frame under glass static sealing systems offering better appearance, improved aerodynamics, quieter ride and reduced weight; TPV body seal, a next generation body seal that replaces traditionally less sustainable EPDM and metal with recyclable thermoplastic materials which save significant component weight; MagAlloy™, a processing technology for brake lines that increases long term durability through superior corrosion resistance; and Easy-Lock™, a small package coolant and fuel vapor quick connect.
Forward-Looking Statements This Annual Report on Form 10-K 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.
Neither the information on our website nor the information on the SEC’s website is incorporated by reference into this Report unless expressly noted. 10 Forward-Looking Statements This Annual Report on Form 10-K 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.
The council maintains a holistic look at the Company’s ESG (environmental, social and governance) initiatives, tracks rapidly-evolving best practices and further develops long-term goals to drive world-class ESG performance.
The council maintains a holistic look at the Company’s ESG (environmental, social and governance) initiatives, tracks rapidly-evolving best practices and further develops long-term goals as the Company strives for ESG excellence.
Our most significant opportunity to contribute to this low-carbon and circular economy is through reducing the environmental impact of our products and manufacturing processes. We purposefully apply sustainable principles in the design and production of our products, reducing the environmental impact from sourcing through end-of-life. These efforts also enable our customers to reduce their environmental impacts.
We purposefully apply sustainable principles in the design and production of our 8 products, reducing the environmental impact from sourcing through end-of-life. These efforts also enable our customers to reduce their environmental impacts.
Among our newer technologies is Cooper Standard’s artificial intelligence (A.I.)-enhanced development cycle for polymer compounds that has shortened material development times while realizing rapid discovery of new compounds that offer superior performance properties, which yield superior products. We have also developed proprietary technology for A.I.-enhanced processes control improvements.
We can provide up to 100% virtual testing for certain products. Among our newer technologies is Cooper Standard’s artificial intelligence (A.I.)-enhanced development cycle for polymer compounds that has shortened material development times while realizing rapid discovery of new compounds that offer superior performance properties, which yield superior products.
We design and manufacture our products in each major region of the world through a disciplined and sustained approach to engineering and operational excellence. We operate in 78 manufacturing locations and 54 design, engineering, administrative and logistics locations. Our organizational structure consists of a global automotive business (“Automotive”) and the Advanced Technology Group (“ATG”).
We design and manufacture our products in each major region of the world through a disciplined and sustained approach to engineering and operational excellence. We operate in 78 manufacturing locations and 50 design, engineering, administrative and logistics locations.
Seasonality Within the automotive industry, sales to OEMs are lowest during the months prior to model changeovers or during assembly plant shutdowns. Automotive production is traditionally reduced during July, August and year-end holidays, and our quarterly results may reflect these trends. However, economic conditions and consumer demand may change the traditional seasonality of the industry.
Global commodity markets and pricing have stabilized to a large degree in 2023 and into the beginning of 2024. Seasonality Within the automotive industry, sales to OEMs are lowest during the months prior to model changeovers or during assembly plant shutdowns. Automotive production is traditionally reduced during July, August and year-end holidays, and our quarterly results may reflect these trends.
The Company’s products can be found on over 440 nameplates globally. Corporate History and Business Developments Cooper-Standard Holdings Inc. was established in 2004 as a Delaware corporation and began operating on December 23, 2004 when it acquired the automotive segment of Cooper Tire & Rubber Company.
Corporate History and Business Developments Cooper-Standard Holdings Inc. was established in 2004 as a Delaware corporation and began operating on December 23, 2004 when it acquired the automotive segment of Cooper Tire & Rubber Company. Cooper-Standard Holdings Inc. operates the business primarily through its principal operating subsidiary, Cooper-Standard Automotive Inc. (“CSA U.S.”).
Our fluid transfer products compete with Conti-Tech, Hutchinson, Teklas, Tristone, Akwel and Fränkische, among others. Joint Ventures and Strategic Alliances Joint ventures represent an important part of our business, both operationally and strategically. We have utilized joint ventures to enter and expand in geographic markets such as China, India and Thailand, to acquire new customers and to develop new technologies.
Our fluid transfer products compete with Conti-Tech, Hutchinson, Teklas, Tristone, Akwel and Fränkische, among others. 7 Joint Ventures and Strategic Alliances Joint ventures represent an important part of our business, both operationally and strategically.
Item 1. Business Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company,” “Cooper Standard,” “we,” “our” or “us”) is a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems. Our products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets.
Item 1. Business Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company,” “Cooper Standard,” “we,” “our” or “us”) is a leading manufacturer of sealing and fluid handling systems (consisting of fuel and brake delivery and fluid transfer systems).
This technology enables full automation of polymer extrusion and other complex continuous processes, reducing process variation (a top driver of scrap), increasing product quality, improving operational metrics and reducing our carbon footprint. Our innovations are receiving industry recognition.
We have also developed proprietary technology for A.I. automated processes control improvements, called Liveline Technologies, a wholly owned subsidiary of Cooper Standard. This technology enables full automation of polymer extrusion and other complex continuous processes, reducing process variation (a top driver of scrap), increasing product quality, improving operational metrics and reducing our carbon footprint.
Community Involvement Supported by the Cooper Standard Foundation, our employees are highly engaged in their local communities. The Foundation’s mission is to strengthen the communities where Cooper Standard employees work and live through the passionate support of children’s charities, education, health and wellness, and community revitalization.
The Foundation’s mission is to strengthen the communities where Cooper Standard employees work and live through the passionate support of children’s charities, education, health and wellness, and community revitalization. The Cooper Standard Foundation is a 501(c)(3) organization with oversight by its Board of Directors, Board of Trustees and Philanthropic Committee.
We believe that our trademarks, including FlushSeal™, Gen III Posi-Lock ® , Easy-Lock ® , MagAlloy ® , Ergo-Lock ® , Ergo-Lock ® +, PlastiCool ® and Fortrex™, help differentiate us and lead customers to seek our partnership.
We believe that our trademarks, including FlushSeal™, Gen III Posi-Lock ® , Easy-Lock ® , MagAlloy ® , Ergo-Lock ® +, PlastiCool ® and Fortrex™, help differentiate us and lead customers to seek our partnership. We also have technology sharing and licensing agreements with various third parties, including Nishikawa Rubber Company, one of our joint venture partners in sealing products.
We furthered the expansion of our Industrial and Specialty Group through the acquisition of Lauren Manufacturing and Lauren Plastics in 2018, and signed multiple joint development agreements for our Fortrex™ chemistry platform throughout 2018 to 2021. We have also licensed Fortrex™ technology into the footwear industry, with the first mass production programs expected to launch in 2023.
We furthered the expansion of our ISG business through the acquisition of Lauren Manufacturing and Lauren Plastics in 2018. Cooper Standard signed multiple joint development agreements for our Fortrex™ chemistry platform throughout 2018 to 2021.
In 2020, we completed the divestiture of our European rubber fluid transfer and specialty sealing businesses, as well as our Indian operations. 3 Business Strategy At the beginning of 2022, the Company introduced a new Purpose Statement - Creating Sustainable Solutions Together - which represents the importance of sustainability for the long-term health of the business as a whole and the sustained value that we work each day to deliver to our stakeholders (customers, investors, employees, suppliers and communities).
In 2023, we finalized the divestiture of our European technical rubber products business and sold the Company’s entire controlling equity interest in a joint venture in the Asia Pacific region. 3 Business Strategy Cooper Standard’s Purpose statement - Creating Sustainable Solutions Together - represents the Company’s focus on creating solutions for the long-term health of the business as a whole and the sustained value that we work each day to deliver to our stakeholders (customers, investors, employees, suppliers and communities).
Securities and Exchange Commission (“SEC”). Our reports filed with the SEC also may be found on the SEC’s website at www.sec.gov. Neither the information on our website nor the information on the SEC’s website is incorporated by reference into this Report unless expressly noted.
Securities and Exchange Commission (“SEC”). Our reports filed with the SEC also may be found on the SEC’s website at www.sec.gov. We may also use our website as a distribution channel of material company information.
Under those agreements, each party pays for services provided by the other and royalties on certain products for which the other party provides design or development services. We also have licensing and joint development agreements for commercial applications of our Fortrex™ chemistry platform in non-automotive industries.
We have mutual agreements with Nishikawa Rubber Company for sales, marketing and engineering services on certain sealing products. Under those agreements, each party pays for services provided by the other and royalties on certain products for which the other party provides design or development services.
When entering new geographic markets, teaming with a local partner can reduce capital investment by leveraging pre-existing infrastructure.
We have utilized joint ventures to enter and expand in geographic markets such as China, India and Thailand, to acquire new customers and to develop new technologies. When entering new geographic markets, teaming with a local partner can reduce capital investment by leveraging pre-existing infrastructure.
In addition, we aim to diversify our workforce because we recognize the value of engaging different opinions and backgrounds in a global company. We are committed to recruiting, developing and retaining a high-performing and diverse workforce. A global measurement for our diversity is women in the company and women in leadership.
We are committed to recruiting, developing and retaining a high-performing and diverse workforce. A global measurement for our diversity is women in the company and women in leadership. In 2023, women made up approximately 40% of our workforce. Of our leadership positions, defined as vice president positions and above, women held approximately 24% of such roles.
The Cooper Standard Foundation is a 501(c)(3) organization with oversight by its Board of Directors, Board of Trustees and Philanthropic Committee. For more information on the Company’s community involvement, please visit our Corporate Responsibility Report located on the Cooper Standard website.
For more information on the Company’s community involvement, please visit our Corporate Responsibility Report located on the Cooper Standard website.
An emphasis on reducing workplace incidents helps Cooper Standard to maintain a safe workforce and continue to deliver world class results for product quality. In 2022, our total incident rate (“TIR”) was 0.33, which represents an Occupational Safety and Health Administration measurement of on-the-job injuries in relation to total hours worked.
Safety continues to be a top priority and primary focus of management. An emphasis on reducing workplace incidents helps Cooper Standard to maintain a safe workforce and continue to deliver world class results for product quality.
A joint development agreement has also been put in place for the collaborative creation of novel dynamic fluid control products and systems. Innovation, Materials, and Product Lifecycle The international response to risks and opportunities of climate change is transforming our global economy.
We also have licensing and joint development agreements for commercial applications of our Fortrex™ chemistry platform in non-automotive industries. A joint development agreement has also been put in place for the collaborative creation of novel dynamic fluid control products and systems.
Based on our review of industry peer sustainability reports, we have a lower TIR relative to our peer group. Additionally, throughout the COVID-19 pandemic, we have remained focused on protecting the health and safety of our employees while meeting the needs of our customers.
Additionally, throughout the COVID-19 pandemic, we have remained focused on protecting the health and safety of our employees while meeting the needs of our customers. Community Involvement Supported by the Cooper Standard Foundation, our employees are highly engaged in their local communities.
On July 1, 2020, we completed the divestiture of the European rubber fluid transfer and specialty sealing businesses, as well as our Indian operations. In addition to these product lines, we also sell our core products into other adjacent markets.
In addition to these product lines, we also sell our core products into other adjacent markets.
For 2022, our voluntary employee turnover rate was approximately 19%. While this metric has increased compared to prior years and despite the current competitive environment for talent, we believe that our culture and continued effort to provide our employees with growth opportunities contributes to retaining our strong talent.
For 2023, our voluntary employee turnover rate was approximately 15%. We believe that our culture and continued effort to provide our employees with growth opportunities contributes to retaining our strong talent. 9 In addition, we aim to diversify our workforce because we recognize the value of engaging different opinions and backgrounds in a global company.
Cooper-Standard Holdings Inc. operates the business primarily through its principal operating subsidiary, Cooper-Standard Automotive Inc. (“CSA U.S.”). Since the 2004 acquisition, the Company has expanded and diversified its customer base through a combination of organic growth and strategic acquisitions.
Since the 2004 acquisition, the Company has expanded and diversified its customer base through a combination of organic growth and strategic acquisitions. Our ISG business accelerates and maximizes the value stream of Cooper Standard’s materials science and manufacturing expertise in industrial and specialty markets.
Environmental, Social and Governance In 2022, the Company was named to Newsweek’s list of America’s Most Responsible Companies for the fourth consecutive year and was recognized as one of the 2022 World’s Most Ethical Companies by Ethisphere for the third consecutive year.
Environmental, Social and Governance (ESG) In 2023, the Company was named to Newsweek’s list of America’s Most Responsible Companies for the fifth consecutive year and achieved Ecovadis Silver Status for sustainability efforts that also earned the Company recognition from Nissan for sustainability and social responsible practices.
World-Class Functional Expertise and Execution: Attain world-class results across all functions allowing the Company to be the first choice of our stakeholders. Sustainability: Deliver value to all our stakeholders through Environmental, Social, and Governance (ESG) initiatives to ensure the long-term sustainability of the Company.
Profitable Growth Driven by Innovation: Leverage our materials science and product knowledge, innovation and manufacturing expertise across our product groups in the pursuit of organic and inorganic growth. Corporate Responsibility: Deliver value to all our stakeholders through our environmental, social and governance initiatives to ensure the long-term sustainability of the Company.
In 2022, disruptions stemming from the Russia-Ukraine crisis and lockdowns in key Chinese manufacturing and trading hubs such as Shenzhen and Shanghai further exacerbated supply chain disruptions and vehicle production levels. Backlog Our OEM sales are generally based upon purchase orders issued by the OEMs, with updated releases for volume adjustments.
Post-pandemic, global light vehicle production continued to be negatively impacted by widespread supply chain disruptions, limiting the global automotive OEM’s ability to rebuild inventory and meet pent-up consumer demand. Backlog Our OEM sales are generally based upon purchase orders issued by the OEMs, with updated releases for volume adjustments.
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Our business is organized in the following reportable segments: North America, Europe, Asia Pacific and South America. ATG and all other business activities are reported in Corporate, eliminations and other.
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Our products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets. We conduct substantially all of our activities through our subsidiaries.
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In 2018, we established ATG, which incorporated our Industrial and Specialty Group, to accelerate and maximize the value stream of Cooper Standard’s materials science and manufacturing expertise in industrial and specialty markets.
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The Company’s products can be found on over 440 nameplates globally. Our organizational structure primarily consists of a global automotive business (“Automotive”) and the Industrial and Specialty Group (“ISG”). For the periods presented herein, our business was organized in the following reportable segments: North America, Europe, Asia Pacific and South America.
Removed
In 2019, we finalized the divestiture of our anti-vibration systems business (“AVS”) product line within our North America, Europe and Asia Pacific segments.
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Consistent with our strategy to drive future profitable growth, the Company has increased and intensified management focus on its two global automotive product line businesses.
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Our key strategic imperatives are defined as: Financial Strength: Execute our strategic initiatives, achieving and maintaining sustainable profit margins and cash flows. Growth – Building For The Future: Leverage our materials science and manufacturing expertise. Pursue opportunities for both organic and inorganic growth. Continue to build an exceptional workforce.
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Effective January 1, 2024, the Company appointed a senior executive to lead each of our sealing and fluid handling systems businesses, and the chief operating decision maker will prospectively begin to assess operating performance by product line rather than geography.
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Leverage Acquisitions and Alliances to Enhance Capabilities and Accelerate Growth We may, from time to time, consider and selectively pursue complementary acquisitions and joint ventures to enhance our customer base, geographic penetration, scale and technology. Consolidation is an industry trend, which has been encouraged by the OEMs’ desire for global automotive suppliers.
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As a result, beginning with the first quarter of 2024, the Company expects to report its financial results in two reportable segments based on product line: Sealing Systems and Fluid Handling Systems.
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We believe we have a strong platform for growth through acquisitions based on our past integration successes, experienced management team, global presence and operational excellence. Industry The automotive industry is one of the world’s largest and most competitive markets. Consumer demand for new vehicles largely determines sales and production volumes of global OEMs.
Added
In 2021, the Company reached a long-term commercial agreement to license its Fortrex™ technology to NIKE, Inc., with the footwear manufacturer launching the first related mass production programs in 2023.
Removed
We also have technology sharing and licensing agreements with various third parties, including Nishikawa Rubber Company, one of our joint venture partners in sealing products. We have mutual agreements with Nishikawa Rubber Company for sales, marketing and engineering services on certain sealing products.
Added
Our key strategic imperatives are defined as: Financial Strength: Execute our business plans achieving and sustaining double-digit EBITDA margins, ROIC and strong free cash flow generation. World-Class Execution: Attain world-class results across all our business allowing the Company to Be the First Choice of the Stakeholders We Serve.
Removed
We continue to manage, with our supplier partners, short-term disruptions in production and logistics throughout our supply chain caused by the COVID-19 pandemic. Raw material prices are susceptible to fluctuations which may place operational and profitability burdens on the entire supply chain.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf such demand does not materialize, we may be unable to recover the costs incurred in the development of such technologies and capabilities. If we are unable to recover these costs or if any such programs do not progress as expected, our business, results of operations and financial condition could be adversely affected.
Biggest changeIf we are unable to recover these costs or if any such programs do not progress as expected, our business, results of operations and financial condition could be adversely affected. We may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against us.
For example, it could: • make it more difficult for us to satisfy our obligations; • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings accrues interest at variable rates; • require us to dedicate a substantial portion of our cash flows from operations to payments on our debt, which would reduce the availability of cash to fund working capital, capital expenditures, research and development efforts, acquisitions or other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete; • place us at a disadvantage compared to competitors that may have less debt; and • limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, research and development efforts, debt service requirements, acquisitions and general corporate purposes.
For example, it could: • make it more difficult for us to satisfy our obligations; • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings accrues interest at variable rates; • require us to dedicate a substantial portion of our cash flows from operations to payments on our debt and debt service obligations, which would reduce the availability of cash to fund working capital, capital expenditures, research and development efforts, acquisitions or other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete; • place us at a disadvantage compared to competitors that may have less debt; and • limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, research and development efforts, debt service requirements, acquisitions and general corporate purposes.
Such protections, however, vary among the countries in which we market and sell our products, and as a result, we may be unable to prevent third parties from using our intellectual property without authorization. Any infringement or misappropriation of our technology could have an adverse effect on our business and results of operations.
Such protections, however, vary among the countries in which we market and sell our products, and as a result, we may be unable to prevent third parties from using our intellectual property without authorization. Any infringement or misappropriation of our technology could have an adverse effect on our business and 20 results of operations.
Failure to maintain adequate, effective controls and procedures could result in potential financial misstatements or other forms of noncompliance that could have an adverse impact on our business, results of operations, financial condition or organizational reputation. 21 We operate as a holding company and depend on our subsidiaries for cash to satisfy the obligations of the holding company.
Failure to maintain adequate, effective controls and procedures could result in potential financial misstatements or other forms of noncompliance that could have an adverse impact on our business, results of operations, financial condition or organizational reputation. We operate as a holding company and depend on our subsidiaries for cash to satisfy the obligations of the holding company.
Also, while we possess considerable historical warranty and recall data with respect to the products we currently produce, we do not have such data relating to new products, assembly programs or technologies, including any new fuel and emissions technology and systems being brought into production, to allow us to accurately estimate future warranty or recall costs.
Also, while we possess considerable historical warranty and recall data with respect to the products we currently produce, we do not have such data relating to new products, assembly programs or 13 technologies, including any new fuel and emissions technology and systems being brought into production, to allow us to accurately estimate future warranty or recall costs.
If we are unsuccessful in negotiating pricing adjustments with our customers to raise the prices of our products sufficiently to keep up with the rate of inflation, our profit margins and cash flows may be adversely affected. Increases in the costs, or reduced availability, of raw materials and manufactured components may adversely affect our profitability.
If we are 11 unsuccessful in negotiating pricing adjustments with our customers to raise the prices of our products sufficiently to keep up with the rate of inflation, our profit margins and cash flows may be adversely affected. Increases in the costs, or reduced availability, of raw materials and manufactured components may adversely affect our profitability.
Many of our current and former facilities have been subject to certain environmental investigations and remediation activities, and we maintain environmental reserves for certain of these sites. Through various acquisitions, we 22 have acquired a number of manufacturing facilities, and we cannot assure that we will not incur material costs or liabilities relating to activities that predate our ownership.
Many of our current and former facilities have been subject to certain environmental investigations and remediation activities, and we maintain environmental reserves for certain of these sites. Through various acquisitions, we have acquired a number of manufacturing facilities, and we cannot assure that we will not incur material costs or liabilities relating to activities that predate our ownership.
If we are not able to offset price reductions through improved operating efficiencies and reduced expenditures, those price reductions may have a negative impact on our financial condition. Our business could be adversely affected if we lose any of our largest customers or significant platforms.
If we are not able 14 to offset price reductions through improved operating efficiencies and reduced expenditures, those price reductions may have a negative impact on our financial condition. Our business could be adversely affected if we lose any of our largest customers or significant platforms.
We rely upon information technology networks, systems and processes, including the information technology networks of third parties such as suppliers and joint venture partners, to manage and support our business. We have implemented a number of procedures and practices designed to protect against breaches or failures of our systems.
We rely upon information technology networks, systems and processes, including the information technology networks of third parties such as suppliers and joint venture partners, to manage and support our business. We have implemented a number 12 of procedures and practices designed to protect against breaches or failures of our systems.
Any such consequence could have a material adverse 19 effect on our existing facilities or our future debt linked to such a “benchmark” and our ability to service debt that bears interest at floating rates of interest. Our debt instruments impose significant operating and financial restrictions on us and our subsidiaries.
Any such consequence could have a material adverse effect on our existing facilities or our future debt linked to such a “benchmark” and our ability to service debt that bears interest at floating rates of interest. Our debt instruments impose significant operating and financial restrictions on us and our subsidiaries.
Our sales related to these new programs generally are dependent upon the timing and success of our customers’ introduction of new vehicles. Our inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our financial condition, operating results and cash flows.
Our sales related to these new programs generally are dependent upon the timing and success of our customers’ introduction of new vehicles. An inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our financial condition, operating results and cash flows.
We may be exposed to product liability and warranty claims in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage.
We may be exposed to product liability and warranty claims in the event that our products actually or allegedly fail to perform as specified or expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage.
Our operations may also be disrupted by other labor issues, including absenteeism, public health issues, and pandemic-related government restrictions; major equipment failure with prolonged downtime or a complete loss of critical equipment where either no other comparable equipment exists or the remaining equipment does not have enough capacity to pick up the demand; or natural disaster-related plant closures or disruptions.
Our operations may also be disrupted by other labor issues, including absenteeism, public health events and government restrictions; major equipment failure with prolonged downtime or a complete loss of critical equipment where either no other comparable equipment exists or the remaining equipment does not have enough capacity to pick up the demand; or natural disaster-related plant closures or disruptions.
We also face competition for certain of our products from suppliers producing in lower-cost regions such as Asia and Eastern Europe. Our competitors’ efforts to grow market share could exert downward pressure on the pricing of our products and our margins. The benefits of our continuous improvement program and other cost savings plans may not be fully realized.
We also face competition for certain of our products from suppliers producing in lower-cost regions such as Asia and Eastern Europe. Our competitors’ efforts to grow market share could exert downward pressure on the pricing of our products and our margins. The benefits of our continuous improvement programs and other cost savings plans may not be fully realized.
While we employ financial instruments to hedge certain portions of our foreign currency exposures, our efforts to manage these risks may not be successful and may not completely insulate us from the effects of currency fluctuation. Impairment charges relating to our goodwill, long-lived assets or intangible assets could adversely affect our results.
While we employ financial instruments to hedge certain portions of our foreign currency exposures, our efforts to manage these risks may not be successful and may not completely insulate us from the effects of currency fluctuations. Impairment charges relating to our goodwill, long-lived assets or intangible assets could adversely affect our results.
Raw material costs can be volatile. The principal raw materials to produce our products include synthetic and natural rubber, carbon black, process oils, and plastic resins. Principal procured components are primarily made from plastic, carbon steel, aluminum and stainless steel. Material costs represented approximately 51% of our total cost of products sold in 2022.
Raw material costs can be volatile. The principal raw materials to produce our products include synthetic and natural rubber, carbon black, process oils, and plastic resins. Principal procured components are primarily made from plastic, carbon steel, aluminum and stainless steel. Material costs represented approximately 51% of our total cost of products sold in 2023.
Risks inherent in our international operations include: • currency exchange rate fluctuations, currency controls and restrictions, and the ability to hedge currencies; • changes in local economic conditions; • repatriation restrictions or requirements, including tax increases on remittances and other payments by our foreign subsidiaries; • global sovereign fiscal uncertainty and hyperinflation in certain foreign countries; • c hanges in laws and regulations, including laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs, or taxes or the imposition of embargoes on imports from countries where we manufacture products; • operating in foreign jurisdictions where the ability to enforce rights over intellectual property is limited as a statutory or practical matter; • exposure to possible expropriation or other government actions; • disease, pandemics or other severe public health events; and • exposure to local political or social unrest including resultant acts of war, terrorism, or similar events, including the war in Ukraine and the related sanctions imposed on Russia.
Risks inherent in our international operations include: • currency exchange rate fluctuations, currency controls and restrictions, and the ability to hedge currencies; • changes in local economic conditions; • repatriation restrictions or requirements, including tax increases on remittances and other payments by our foreign subsidiaries; • global sovereign fiscal uncertainty and hyperinflation in certain foreign countries; • c hanges in laws and regulations, including laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs, or taxes or the imposition of embargoes on imports from countries where we manufacture products; • operating in foreign jurisdictions where the ability to protect and enforce our intellectual property rights is limited as a statutory or practical matter; • exposure to possible expropriation or other government actions; • disease, pandemics or other severe public health events; and • exposure to local political or social unrest including resultant acts of war, terrorism, or similar events, including the wars in Ukraine and the Middle East and the related sanctions imposed on Russia.
In addition, the payment of funds in the form of dividends, intercompany payments, tax sharing payments and otherwise may be subject to restrictions under the laws of the countries of incorporation of our subsidiaries or their governing documents. We may not be able to procure insurance at reasonable rates to fully meet our needs.
In addition, the payment of funds in the form of dividends, intercompany payments, tax sharing payments and other payments may be subject to restrictions under the laws of the countries of incorporation of our subsidiaries or their governing documents. We may not be able to procure insurance at reasonable rates to fully meet our needs.
As further described in Note 13. “Pension” to the consolidated financial statements included under Item 8. “Financial Statements and Supplementary Data” of this Report, our Board of Directors approved a resolution to merge certain of the U.S. pension plans, and terminate the resulting merged plan effective December 31, 2022.
As further described in Note 12. “Pension” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report, our Board of Directors approved a resolution to merge certain of the U.S. pension plans, and terminate the resulting merged plan effective December 31, 2022.
While we provide parts to virtually every major global OEM for use on a wide range of different platforms, sales to our three largest customers, Ford, GM, and Stellantis, on a worldwide basis represented approximately 58% of our sales for the year ended December 31, 2022.
While we provide parts to virtually every major global OEM for use on a wide range of different platforms, sales to our three largest customers, Ford, GM, and Stellantis, on a worldwide basis represented approximately 55% of our sales for the year ended December 31, 2023.
The full impact of the COVID-19 pandemic or another health crisis on our financial condition and results of operations will depend on various factors, such as the ultimate duration and scope of the health crisis, its impact on our customers, suppliers and logistics partners, how quickly normal operations can resume and the duration and magnitude of the economic downturn caused by the health crisis in our key markets.
The full impact of another public health event on our financial condition and operations results will depend on various factors, such as the ultimate duration and scope of the crisis, its impact on our customers, suppliers and logistics partners, how quickly normal operations can resume and the duration and magnitude of the economic downturn caused by the health crisis in our key markets.
Our sales and manufacturing operations outside the United States expose us to currency risks. For our consolidated financial statements, our sales and earnings denominated in foreign currencies are translated into U.S. dollars. This translation is calculated based on average exchange rates during the reporting period.
Foreign currency exchange rate fluctuations could materially impact our operating results . Our sales and manufacturing operations outside the United States expose us to currency risks. For our consolidated financial statements, our sales and earnings denominated in foreign currencies are translated into U.S. dollars. This translation is calculated based on average exchange rates during the reporting period.
As a result of the impacts of the COVID-19 pandemic and global supply chain disruptions, we may be required to raise additional capital, and our access to and cost of financing will depend on, among other things, our performance, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings.
As a result of current ecomonic conditions and global supply chain disruptions, we may be required to raise additional capital, and our access to and cost of financing will depend on, among other things, our performance, changing global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings.
Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the effects of the COVID-19 pandemic and global supply chain disruptions on our customers and their production rates, the costs of raw materials, the state of the overall automotive industry, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and cash flows and our credit ratings.
Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, public health events and any global supply chain disruptions on our customers and their production rates, the costs of raw materials, the state of the overall automotive industry, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and cash flows and our credit ratings.
SOFR and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective, while others are still to be implemented.
Secured overnight financing rate (“SOFR”) and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective, while others are still to be implemented.
The Russia-Ukraine war and the resulting sanctions have caused, and are currently expected to continue to cause, significant disruptions to the global financial system, international trade, and the transportation and energy sectors, among others.
The ongoing military conflict between Russia and Ukraine and the resulting sanctions have caused, and are currently expected to continue to cause, significant disruptions to the global financial system, international trade, and the transportation and energy sectors, among others.
If these systems are not implemented successfully, our operations and business could be disrupted and our ability to report accurate and timely financial results could be adversely affected. Our inability to effectively manage the timing, quality and costs of new program launches could adversely affect our financial performance.
If these systems are not implemented successfully and in a timely, cost-effective, compliant and responsible manner, our operations and business could be disrupted and our ability to report accurate and timely financial results could be adversely affected. An inability to effectively manage the timing, quality and costs of new program launches could adversely affect our financial performance.
If our working capital needs exceed our cash provided by operating activities, we would look to our cash balances and availability under our borrowing arrangements to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all. 20 Foreign currency exchange rate fluctuations could materially impact our operating results .
If our working capital needs exceed our cash provided by operating activities, we would look to our cash balances and availability under our borrowing arrangements to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all.
As of December 31, 2022, our U.S. pension plans were underfunded by $16.3 million and our non-U.S. pension plans (which typically are pay-as-you-go plans) were underfunded by $83.8 million. If our cash flow from operations is insufficient to fund our worldwide pension liabilities, it could have an adverse effect on our financial condition and results of operations.
As of December 31, 2023, our U.S. pension plans were underfunded by $14.4 million and our non-U.S. pension plans (which typically are pay-as-you-go plans) were underfunded by $92.2 million. If our cash flow from operations is insufficient to fund our worldwide pension liabilities, it could have an adverse effect on our financial condition and results of operations.
In 2021, global automotive production was negatively impacted by lingering impacts of the COVID-19 pandemic and broad supply chain challenges stemming, in part, from a sharp rebound in overall industrial demand. In 2022, rising inflation, interest rates and continuing supply chain challenges are contributing to global economic uncertainty.
In recent years, global automotive production was negatively impacted by lingering impacts of the COVID-19 pandemic and broad supply chain challenges stemming, in part, from a sharp rebound in overall industrial demand. Further, rising inflation, interest rates and supply chain challenges contributed to global economic uncertainty.
A resurgence of COVID-19 or a new public health crisis and efforts to contain it (including, but not limited to, vaccination, social distancing policies, restrictions on travel and reduced operations and extended closures of many businesses and institutions), may cause shutdowns of our and our customers’ facilities, increased operating and production costs, disruptions and financial distress in the supply chain, disruptions in our production cycle, lost or absent members of the workforce, a decline in demand due to an economic downturn, and inability to access capital due to disruptions in the global financial markets, materially impacting our financial condition and results of operations.
Preventative measures taken to contain or mitigate public health events (including, but not limited to, vaccination, social distancing policies, restrictions on travel and reduced operations and extended closures of many businesses and institutions) may materially impact our financial condition and operations results due to shutdowns of our and our customers’ and suppliers’ facilities; increased operating and production costs; disruptions and financial distress in the supply chain; disruptions in our production cycle; lost or absent members of the workforce; a decline in demand due to an economic downturn; and inability to access capital due to disruptions in the global financial markets.
The current uncertain economic or industry conditions could result in financial distress within our supply base, thereby further increasing the risk of supply disruption.
Uncertain economic or industry conditions resulting from such supply chain constraints could result in financial distress within our supply base, thereby further increasing the risk of supply disruption.
We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business. We have a significant amount of indebtedness.
We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business. We have a significant amount of indebtedness. As of December 31, 2023, we had total indebtedness of $1,095 million.
We may not have, or be able to raise on acceptable terms, sufficient financial resources to make acquisitions. Our ability to make investments may also be limited by the terms of our existing or future financing arrangements.
We may not have, or be able to raise on acceptable terms, sufficient financial resources to make acquisitions. Our ability to make investments may also be limited by the terms of our existing or future financing arrangements. Any acquisitions or divestitures we pursue may not be successful or prove to be beneficial to our operations and cash flow.
To the extent that we incur additional indebtedness or incur such other obligations that may be permitted under our debt instruments, the risks associated with our substantial indebtedness described above, including our potential inability to service our debt, will increase. Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
To the extent that we incur additional indebtedness or incur such other obligations that may be permitted under our debt instruments, the 17 risks associated with our substantial indebtedness described above, including our potential inability to service our debt, will increase.
The borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
Work stoppages or other disruptions to our operations could negatively affect our operations and financial performance. We may experience work stoppages caused by labor disputes under existing collective bargaining agreements or in connection with the negotiation of new agreements given that we have a number of agreements that expire in any given year.
We may experience work stoppages caused by labor disputes under existing collective bargaining agreements or in connection with the negotiation of new agreements given that we have a number of agreements that expire in any given year.
We 18 do not have operations in Ukraine or Russia, nor do we sell there. Nonetheless, if the global economic slowdown and the Russia-Ukraine war continue, our liquidity, business, and results of operations may continue to be adversely affected.
We do not have operations in Ukraine, Russia or the Middle East, nor do we sell into these markets. Nonetheless, if the global economic slowdown and the Russia-Ukraine and Israel-Hamas wars continue, our liquidity, business, and results of operations may continue to be adversely affected.
As the uncertainty in the market conditions remain, any economic downturn or other unfavorable conditions in one or more of the regions in which we operate could cause further supply disruptions and thereby adversely affect our financial condition, operating results and cash flows.
Furthermore, any economic downturn or other unfavorable conditions in one or more of the regions in which we operate could cause supply disruptions and thereby adversely affect our financial condition, operating results and cash flows. Work stoppages or other disruptions to our operations could negatively affect our operations and financial performance.
A breach of our information technology systems, or those of the third parties on whom we rely, could result in theft of our intellectual property, disruption to business or unauthorized access to customer or personal information.
The preventative actions we take to reduce the risk of cyber incidents and protect our information may be insufficient. A breach of our information technology systems, or those of the third parties on whom we rely, could result in theft of our intellectual property, disruption to business or unauthorized access to customer or personal information.
In addition, while the use of index pricing adjustments may provide us with some protection from adverse fluctuations in commodity prices, by utilizing these instruments, we potentially forego the benefits that might result from favorable fluctuations in price.
In addition, while the use of index pricing adjustments may provide us with some protection from adverse fluctuations in commodity prices, by utilizing these instruments, we potentially forego the benefits that might result from favorable fluctuations in price. Disruptions in the supply chain could have an adverse effect on our business, financial condition, results of operations and cash flows.
Our expected annual effective tax rate and cash tax liability could be volatile and could materially change as a result of changes in many items including mix of earnings, debt and capital structure and other factors.
As a result, any default by us on our indebtedness could have a material adverse effect on our business, financial condition and results of operation. 18 Our expected annual effective tax rate and cash tax liability could be volatile and could materially change as a result of changes in many items including mix of earnings, debt and capital structure and other factors.
Our business is also directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America which have been adversely impacted by a series of events in recent years.
In addition, continuing military actions in Eastern Europe and the Middle East are having broad negative impacts on key sectors of the global economy. Our business is also directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America which have been adversely impacted by a series of events in recent years.
Such a 14 breach could adversely impact our operations and/or our reputation and may cause us to incur significant time and expense to cure or remediate the breach. Further, we continually update and expand our information technology systems to enable us to more efficiently run our business.
Such a breach could adversely impact our operations and/or our reputation and may cause us to incur significant time and expense to cure or remediate the breach.
In addition, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) and other laws which prohibit improper payments to foreign governments and their officials by U.S. and other business entities.
The occurrence of any of these risks may adversely affect the results of operations and financial condition of our international operations and our business as a whole. 15 In addition, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) and other laws which prohibit improper payments to foreign governments and their officials by U.S. and other business entities.
The COVID-19 pandemic or another health crisis may also exacerbate the other risks disclosed in this Item 1A. Risk Factors. Our business, financial condition and results of operations may be adversely impacted by the effects of inflation. Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure.
Operational Risks Our business, financial condition and results of operations may be adversely impacted by the effects of inflation. Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure.
Such capital may not be available on favorable terms or at all. The ongoing situation in Ukraine and Russia and related disruptions could adversely affect our liquidity, business, and results of operations. In February 2022, Russia launched a large-scale invasion of Ukraine that has resulted in an ongoing military conflict between the two countries.
Such capital may not be available on favorable terms or at all. 16 The ongoing situations in Ukraine and Russia and the Middle East and related disruptions could adversely affect our liquidity, business, and results of operations.
Any failure or delay in attracting, retaining and developing such a workforce, including the loss of key technological and leadership personnel, could adversely impact our business, financial condition and operating results. 15 Strategic Risks We are highly dependent on the automotive industry.
Any failure or delay in attracting, retaining and developing such a workforce, including the loss of key technological and leadership personnel, could adversely impact our business, financial condition and operating results. Our financial condition and results of operations have been previously, and may in the future be, adversely affected by public health events.
In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments. As a result, any default by us on our indebtedness could have a material adverse effect on our business, financial condition and results of operation.
In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.
The cost savings that we anticipate from these initiatives may not be achieved on schedule or at the level we anticipate.
The cost savings that we anticipate from these initiatives may not be achieved on schedule or at the level we anticipate. If we are unable to realize these anticipated savings, our operating results and financial condition may be adversely affected.
We may be unable to develop new products successfully or to keep pace with technological developments by our competitors and the industry in general. In addition, we may develop specific technologies and capabilities in anticipation of customers’ demands for new innovations and technologies.
We may be unable to develop new products successfully or to keep pace with technological developments by our competitors and the industry in general, which in recent years includes the rapid development and rising use of digital, A.I. and machine learning technologies.
We have significant manufacturing operations outside the United States, including joint ventures and other alliances. Our operations are located in 21 countries, and we export to several other countries. In 2022, approximately 77% of our sales were attributable to products manufactured outside the United States.
Such costs could negatively affect our cash flows, results of operations and financial condition. We are subject to other risks associated with our international operations. We have significant manufacturing operations outside the United States, including joint ventures and other alliances. Our operations are located in 21 countries, and we export to several other countries.
As of December 31, 2022, after giving effect to the Refinancing Transactions, we had total indebtedness of $1,056 million. Our substantial amount of debt and our debt service obligations could limit our ability to satisfy our obligations, limit our ability to operate our business and impair our competitive position.
Our substantial amount of debt and our debt service obligations could limit our ability to satisfy our obligations, limit our ability to operate our business and impair our competitive position.
If we are unable to realize these anticipated savings, our operating results and financial condition may be adversely affected. 16 We may continue to incur significant costs related to manufacturing facility closings or consolidation which could have an adverse effect on our financial condition.
We may continue to incur significant costs related to manufacturing facility closings or consolidation which could have an adverse effect on our financial condition. If we close or consolidate manufacturing locations, the exit costs associated with such closures or consolidation, including employee termination costs, may be significant.
In particular, significant disruptions in supply have occurred, are occurring, and are expected to continue in the automotive industry due to these industry-wide parts shortages and global supply chain constraints which have adversely affected our operations and financial performance.
In certain instances, entire industries may experience short-term capacity constraints. Any significant disruptions in the automotive industry due to industry-wide parts shortages and global supply chain constraints could adversely affect our operations and financial performance.
A prolonged or material contraction in automotive sales and production volumes could adversely affect our business, results of operations and financial condition.
A public health event may also exacerbate the other risks disclosed in this Item 1A. Risk Factors. Strategic Risks We are highly dependent on the automotive industry. A prolonged or material contraction in automotive sales and production volumes could adversely affect our business, results of operations and financial condition.
While we have experienced threats to our data and systems, to date, we are not aware that we have experienced a material cyber-security breach. Over time, however, the sophistication of these threats continues to increase. The preventative actions we take to reduce the risk of cyber incidents and protect our information may be insufficient.
While we have experienced threats to our data and systems, to date, we are not aware that we have experienced a cybersecurity incident that has materially affected our business strategy, results of operations, or financial condition. Over time, however, the sophistication of these threats continues to increase.
Such settlements will be funded primarily from plan assets, but may also require funding from the Company. Significant changes in discount rates, the actual return on pension assets and other factors could adversely affect our liquidity, results of operations and financial condition.
Ultimate settlement of the remaining benefit obligations is dependent upon market conditions at the time of settlement. Significant changes in discount rates, the actual return on pension assets and other factors could adversely affect our liquidity, results of operations and financial condition.
Furthermore, production shutdowns or disruptions will result in working capital swings which could result in increased outflows.
Net of $7.1 million of outstanding letters of credit, the Company effectively had $162.4 million available for borrowing under its ABL Facility. Furthermore, production shutdowns or disruptions will result in working capital swings which could result in increased outflows.
The effects of the COVID-19 pandemic and global supply chain disruptions on the Company’s business will adversely impact its ability to satisfy such covenant. As of December 31, 2022, there were no obligations outstanding under the ABL Facility and the Company’s borrowing base was $180.0 million.
As of December 31, 2023, there were no obligations outstanding under the ABL Facility, the Company’s borrowing base was $169.5 million and the monthly fixed charge coverage ratio was at a level that provided the Company full access to the borrowing base .
Removed
Operational Risks Our financial condition and results of operations have been, and may continue to be, adversely affected by a public health issue, such as the COVID-19 pandemic. We face risks related to public health issues, including epidemics and pandemics such as the global outbreak of COVID-19 and its related variants.
Added
Further, we continually update and expand our information technology systems to enable us to run our business more efficiently, including the potential incorporation of traditional and generative A.I. solutions into our information systems and processes.
Removed
The COVID-19 pandemic and preventative measures taken to contain or mitigate the COVID-19 pandemic have caused, and may continue to cause, business slowdowns or shutdowns and significant disruption in the financial markets both in the United States and globally.
Added
The increasing use and evolution of this technology creates potential risks for loss or misuse of sensitive Company data that forms part of any data set that was collected, used, stored, or transferred to run our business, and unintentional dissemination or intentional destruction of confidential information stored in our or our third party providers' systems, portable media or storage devices, which may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims.
Removed
In particular, the emergence of new variants of COVID-19 could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.
Added
In addition, if the content, analyses, or recommendations that A.I. programs assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations and our reputation may be adversely affected.
Removed
Further, government-sponsored liquidity or stimulus programs in response to the COVID-19 pandemic may not be available to our customers, suppliers or us and, if available, may nevertheless be insufficient to address the impacts of COVID-19. Therefore, it remains difficult to predict the extent or nature of these impacts at this time.
Added
In addition, we may develop specific technologies and capabilities in anticipation of customers’ demands for new innovations and technologies. If such demand does not materialize, we may be unable to recover the costs incurred in the development of such technologies and capabilities.
Removed
The recent disruptions to the global supply chain also have had an adverse impact on the cost and availability of raw materials, components, energy and other inputs used in our business, or in the businesses of our customers and suppliers, and has adversely affected and may continue to adversely affect our results of operations, financial condition and business. 13 Disruptions in the supply chain could have an adverse effect on our business, financial condition, results of operations and cash flows.
Added
We could face risks related to public health events, including epidemics and pandemics like the recent COVID-19 pandemic.
Removed
In certain instances, entire industries may experience short-term capacity constraints. The global economy has experienced an increased risk of shortages and other disruptions to global supply chains due to strong demand, the potential effects of trade laws and tariffs, capacity constraints, financial instability, public health crises, such as pandemics and epidemics, or other circumstances.
Added
In 2023, approximately 78% of our sales were attributable to products manufactured outside the United States.
Removed
Material supply shortages experienced by our customers either directly or as a result of a supply shortage at another supplier, such as the semiconductor shortage faced by the automotive industry, have caused customers to halt, delay or limit the purchase of our products, which have adversely affected and may continue to adversely affect our business, results of operations and financial condition.
Added
Financial Risks Global, market and economic conditions could impact our ability to access liquidity sources.
Removed
We may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against us.
Added
Any adverse effects on the Company’s business due to global, market and economic conditions may adversely impact the Company’s ability to satisfy such covenant.
Removed
If we must close or consolidate manufacturing locations, the exit costs associated with such closures or consolidation, including employee termination costs, may be significant. Such costs could negatively affect our cash flows, results of operations and financial condition. We are subject to other risks associated with our international operations.
Added
In addition, the recent Israel-Hamas war and escalating tensions in the Middle East could affect oil prices and have other, potentially recessionary, effects on the global economy. Prolonged inflationary conditions and periods of high interest rates could further negatively affect U.S. and international commerce and exacerbate or further extend the period of high energy prices and supply chain constraints.
Removed
The occurrence of any of these risks may adversely affect the results of operations and financial condition of our international operations and our business as a whole.
Added
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. The borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table summarizes our key property holdings: Segment Type Total Facilities* Owned Facilities North America Manufacturing (a) 35 21 Other (b) 24 1 Asia Pacific Manufacturing (a) 19 6 Other (b) 12 — Europe Manufacturing (a) 21 14 Other (b) 18 2 South America Manufacturing (a) 3 1 (a) Includes multi-activity sites which are predominantly manufacturing.
Biggest changeThe following table summarizes our key property holdings: Segment Type Total Facilities* Owned Facilities North America Manufacturing (a) 35 21 Other (b) 24 1 Europe Manufacturing (a) 21 12 Other (b) 17 2 Asia Pacific Manufacturing (a) 19 6 Other (b) 9 — South America Manufacturing (a) 3 1 (a) Includes multi-activity sites which are predominantly manufacturing.
Properties As of December 31, 2022, our operations were conducted through 132 wholly-owned, leased and consolidated joint venture facilities in 21 countries ( North America : Canada, Costa Rica, Mexico, United States; Asia Pacific : China, India, Japan, South Korea, Thailand; Europe : Czech Republic, France, Germany, Italy, Netherlands, Poland, Romania, Serbia, Spain, Sweden, United Kingdom; South America : Brazil), of which 78 are predominantly manufacturing facilities and 54 have design, engineering, administrative or logistics designations.
Properties As of December 31, 2023, our operations were conducted through 128 wholly-owned, leased and consolidated joint venture facilities in 21 countries ( North America : Canada, Costa Rica, Mexico, United States; Asia Pacific : China, India, Japan, South Korea, Thailand; Europe : Czech Republic, France, Germany, Italy, Netherlands, Poland, Romania, Serbia, Spain, Sweden, United Kingdom; South America : Brazil), of which 78 are predominantly manufacturing facilities and 50 have design, engineering, administrative or logistics designations.
(b) Includes design, engineering, R&D, administrative and logistics locations. (*) Excludes 3 unutilized facilities: 1 North America; 1 Europe; 1 South America
(b) Includes design, engineering, R&D, administrative and logistics locations. (*) Excludes 2 unutilized facilities: 1 in North America and 1 in Europe.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. See Note 21. “Contingent Liabilities” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for discussion of loss contingencies.
Biggest changeItem 3. Legal Proceedings The litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. See Note 20. “Contingent Liabilities” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for discussion of loss contingencies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCPS $ 100.00 $ 50.71 $ 27.07 $ 28.30 $ 18.29 $ 7.40 S&P 500 SPX $ 100.00 $ 93.95 $ 123.37 $ 145.64 $ 186.72 $ 152.51 S&P Supercomposite Auto Parts & Equipment Index S15AUTP $ 100.00 $ 68.31 $ 90.75 $ 111.55 $ 136.22 $ 92.03 * Represents last trading day of the year Item 6. [Reserved] 25
Biggest changeCPS $100.00 $53.38 $55.81 $36.08 $14.58 $31.46 S&P 500 SPX $100.00 $128.63 $151.90 $194.80 $159.15 $200.92 S&P Supercomposite Auto Parts & Equipment Index S15AUTP $100.00 $130.84 $161.12 $197.29 $133.20 $141.72 * Represents last trading day of the year. Item 6. [Reserved] 25
Additionally, our credit agreements governing our ABL Facility and our indentures governing our New Notes, 2026 Senior Notes, and 2024 Senior Secured Notes contain covenants that, among other things, restrict our ability to pay certain dividends and distributions subject to certain qualifications and limitations. See “Liquidity and Capital Resources” under Item 7.
Additionally, our credit agreements governing our ABL Facility and our indentures governing our New Notes and 2026 Senior Notes contain covenants that, among other things, restrict our ability to pay certain dividends and distributions subject to certain qualifications and limitations. See “Liquidity and Capital Resources” under Item 7.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been traded on the NYSE since October 17, 2013 under the symbol “CPS.” Holders of Common Stock As of February 8, 2023, there were approximately 6 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been traded on the NYSE since October 17, 2013 under the symbol “CPS.” Holders of Common Stock As of February 9, 2024, there were approximately 6 holders of record of our common stock.
The graph assumes an initial investment of $100 on December 29, 2017 and reflects the cumulative total return on that investment, including the reinvestment of all dividends where applicable, through December 31, 2022. Comparison of Cumulative Return Ticker 12/29/2017* 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/30/2022* Cooper-Standard Holdings Inc.
The analysis assumes an initial investment of $100 on December 31, 2018 and reflects the cumulative total return on that investment, including the reinvestment of all dividends where applicable, through December 31, 2023. Comparison of Cumulative Return Ticker 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/30/2022* 12/29/2023* Cooper-Standard Holdings Inc.
We did not repurchase any shares during the years ended December 31 2022, 2021, or 2020 under the 2018 Program.
We did not repurchase any shares during the years ended December 31, 2023, 2022, or 2021 under the 2018 Program.
As of December 31, 2022, we had approximately $98.7 million of repurchase authorization remaining. 24 Performance Graph The following graph compares the cumulative total stockholder return for Cooper-Standard Holdings Inc. to the Standard & Poor’s 500 Index and the Standard & Poor’s Supercomposite Auto Parts & Equipment Index based on currently available data.
As of December 31, 2023, we had approximately $98.7 million of repurchase authorization remaining. 24 Performance Graph The following graph and corresponding table compare the cumulative total stockholder return for Cooper-Standard Holdings Inc. to the Standard & Poor’s 500 Index and the Standard & Poor’s Supercomposite Auto Parts & Equipment Index based on currently available data.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended December 31, 2021 for discussion of the Results of Operations, Segment Results of Operations, and Liquidity and Capital Resources for the year ended December 31, 2021 compared to the year ended December 31, 2020, which is incorporated by reference herein. 31 Results of Operations Year Ended December 31, Change 2022 2021 2022 vs. 2021 (Dollar amounts in thousands) Sales $ 2,525,391 $ 2,330,191 $ 195,200 Cost of products sold 2,395,600 2,242,963 152,637 Gross profit 129,791 87,228 42,563 Selling, administration & engineering expenses 199,455 227,110 (27,655) Gain on sale of business, net — (696) 696 Gain on sale of fixed assets, net (33,391) — (33,391) Amortization of intangibles 6,715 7,347 (632) Impairment charges 43,710 25,609 18,101 Restructuring charges 18,304 36,950 (18,646) Operating loss (105,002) (209,092) 104,090 Interest expense, net of interest income (78,514) (72,511) (6,003) Equity in losses of affiliates (8,817) (1,728) (7,089) Pension settlement and curtailment charges (2,682) (1,279) (1,403) Other expense, net (5,485) (4,842) (643) Loss before income taxes (200,500) (289,452) 88,952 Income tax expense 17,291 39,392 (22,101) Net loss (217,791) (328,844) 111,053 Net loss attributable to noncontrolling interests 2,407 6,009 (3,602) Net loss attributable to Cooper-Standard Holdings Inc. $ (215,384) $ (322,835) $ 107,451 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021.
Biggest changeResults of Operations Year Ended December 31, Change 2023 2022 2023 vs. 2022 (Dollar amounts in thousands) Sales $ 2,815,879 $ 2,525,391 $ 290,488 Cost of products sold 2,525,103 2,395,600 129,503 Gross profit 290,776 129,791 160,985 Selling, administration & engineering expenses 215,741 199,455 16,286 Gain on sale of businesses, net (586) — (586) Gain on sale of fixed assets, net — (33,391) 33,391 Amortization of intangibles 6,804 6,715 89 Restructuring charges 18,018 18,304 (286) Impairment charges 4,768 43,710 (38,942) Operating profit (loss) 46,031 (105,002) 151,033 Interest expense, net of interest income (130,077) (78,514) (51,563) Equity in earnings (losses) of affiliates 3,281 (8,817) 12,098 Loss on refinancing and extinguishment of debt (81,885) — (81,885) Pension settlement and curtailment charges (16,035) (2,682) (13,353) Other expense, net (15,698) (5,485) (10,213) Loss before income taxes (194,383) (200,500) 6,117 Income tax expense 8,933 17,291 (8,358) Net loss (203,316) (217,791) 14,475 Net loss attributable to noncontrolling interests 1,331 2,407 (1,076) Net loss attributable to Cooper-Standard Holdings Inc. $ (201,985) $ (215,384) $ 13,399 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.
Increased competitiveness in the industry, as well as customer focus on costs, has resulted in continued pressure on suppliers for price reductions, even in an inflationary environment, which reduces the overall profitability of the industry. Consolidations and market share shifts among vehicle manufacturers continue to put additional pressures on the supply chain.
Increased competitiveness in the industry, as well as customer focus on costs, has resulted in continued pressure on suppliers for price reductions, even in an inflationary environment, which reduces the overall profitability of the supply industry. Consolidations and market share shifts among vehicle manufacturers continue to put additional pressures on the supply chain.
Borrowings under the ABL Facility bear interest at a rate equal to, at the Borrowers’ option: • in the case of borrowings by U.S.
Borrowings under the ABL Facility bear interest at a rate equal to, at the Borrowers’ option: • in the case of borrowings by the U.S.
(the “Issuer”), a wholly-owned subsidiary of the Company, and certain other of the Company’s direct and indirect subsidiaries completed certain refinancing transactions (the “Refinancing Transactions”) consisting of: (i) the exchange (the “Exchange Offer”) of $357.4 million aggregate principal amount of the Issuer’s then existing 5.625% Senior Notes due 2026 (the “2026 Senior Notes”) (representing 89.36% of the aggregate principal amount outstanding of the 2026 Senior Notes) for $357.4 million aggregate principle amount of the Issuer’s newly issued 5.625% Cash Pay / 10.625% PIK Toggle Senior Secured Third Lien Notes due 2027 (the “Third Lien Notes”), (ii) the issuance by the Issuer (the “Concurrent Notes Offering”) of $580.0 million aggregate principal amount of 13.50% Cash Pay / PIK Toggle Senior Secured First Lien Notes due 2027 (the “First Lien Notes” and, together with the Third Lien Notes, the “New Notes”) to holders of 2026 Senior Notes or their designees who participated in the Exchange Offer, including to certain backstop commitment parties who committed to purchase the First Lien Notes not otherwise subscribed for, (iii) the related consent solicitation (the “Consent Solicitation”) to remove substantially all of the covenants, certain events of default and certain other provisions contained in the 2026 Senior Notes and the indenture governing the 2026 Senior Notes and to release and discharge the guarantee of the 2026 Senior Notes by the Company, (iv) the effectiveness of the Third Amendment (as defined below) to the ABL Facility and (v) the use of proceeds from the Concurrent Notes Offering, together with cash on hand, to prepay all amounts outstanding under the Term Loan Facility (as defined below) at par, plus any accrued and unpaid interest thereon, to redeem the Issuer’s existing 2024 Senior Secured Notes (as defined below), including the prepayment premium and any accrued and unpaid interest thereon, and to pay fees and expenses related to the Refinancing Transactions.
(the “Issuer”), a wholly-owned subsidiary of the Company, and certain other of the Company’s direct and indirect subsidiaries completed certain refinancing transactions (the “Refinancing Transactions”) consisting of: (i) the exchange (the “Exchange Offer”) of $357.4 million aggregate principal amount of the Issuer’s then existing 5.625% Senior Notes due 2026 (the “2026 Senior Notes”) (representing 89.36% of the aggregate principal amount outstanding of the 2026 Senior Notes) for $357.4 million aggregate principal amount of the Issuer’s newly issued 5.625% Cash Pay / 10.625% PIK Toggle Senior Secured Third Lien Notes due 2027 (the “Third Lien Notes”), (ii) the issuance by the Issuer (the “Concurrent Notes Offering”) of $580.0 million aggregate principal amount of 13.50% Cash Pay / PIK Toggle Senior Secured First Lien Notes due 2027 (the “First Lien Notes” and, together with the Third Lien Notes, the “New Notes”) to holders of 2026 Senior Notes or their designees who participated in the Exchange Offer, including to certain backstop commitment parties who committed to purchase the First Lien Notes not otherwise subscribed for, (iii) the related consent solicitation (the “Consent Solicitation”) to remove substantially all of the covenants, certain events of default and certain other provisions contained in the 2026 Senior Notes and the indenture governing the 2026 Senior Notes and to release and discharge the guarantee of the 2026 Senior Notes by the Company, (iv) the effectiveness of the Third Amendment (as defined below) to the ABL Facility and (v) the use of proceeds from the Concurrent Notes Offering, together with cash on hand, to prepay all amounts outstanding under the Term Loan Facility (as defined below) 35 at par, plus any accrued and unpaid interest thereon, to redeem the Issuer’s existing 2024 Senior Secured Notes (as defined below), including the prepayment premium and any accrued and unpaid interest thereon, and to pay fees and expenses related to the Refinancing Transactions.
We define Adjusted EBITDA as net income (loss) 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, impairment charges, non-cash fair value adjustments and acquisition-related costs.
We define Adjusted EBITDA as net income (loss) 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, impairment charges, non-cash fair value adjustments and acquisition-related costs.
Although each OEM may emphasize different requirements as the primary criteria for judging its suppliers, we believe success as an automotive supplier generally requires outstanding performance with respect to quality, price, service, performance, design and engineering capabilities, innovation, timely delivery, financial stability and an extensive global footprint.
Although each OEM may emphasize different requirements as the primary criteria for judging its suppliers, we believe success as an automotive supplier generally requires outstanding performance with respect to quality, price, service, launch performance, design and engineering capabilities, innovation, timely delivery, financial stability and an extensive global footprint.
Borrower, the forward-looking secured overnight funding rate for the applicable interest period (“Term SOFR”) (including a credit spread adjustment of 0.11448% or 0.26161%, depending on the applicable interest period) or the base rate plus, in each case, an applicable margin; or 38 • in the case of borrowings by the Canadian Borrower, bankers’ acceptance (“BA”) rate, Canadian prime rate or Canadian base rate plus, in each case, an applicable margin.
Borrower, the forward-looking secured overnight funding rate for the applicable interest period (“Term SOFR”) (including a credit spread adjustment of 0.11448% or 0.26161%, depending on the applicable interest period) or the base rate plus, in each case, an applicable margin; or • in the case of borrowings by the Canadian Borrower, bankers’ acceptance (“BA”) rate, Canadian prime rate or Canadian base rate plus, in each case, an applicable margin.
Our long-range planning forecasts are based on our assessment of revenue growth rates generally based on industry specific data, external vehicle build assumptions published by widely used external sources, and customer market share data based on known and targeted awards over a three-year period.
Our long-range planning forecasts are based on our assessment of revenue growth rates generally based on industry specific data, external 28 vehicle build assumptions published by widely used external sources, and customer market share data based on known and targeted awards over a three-year period.
The applicable margin may vary between 2.00% and 2.50% with respect to the Term SOFR or Canadian BA rate-based borrowings and between 1.00% and 1.50% with respect to U.S. base rate, Canadian prime rate and Canadian base rate borrowings. The applicable margin is subject, in each case, to quarterly pricing adjustments (based on average facility availability).
The applicable margin may vary between 2.00% and 2.50% with respect to the Term SOFR or Canadian BA rate-based borrowings and between 1.00% and 1.50% with respect to U.S. base rate, Canadian prime rate and Canadian base rate borrowings. The applicable margin is subject, in each case, to quarterly pricing adjustments (based on average facility availability). Fees .
We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items. The following tables presents sales and segment adjusted EBITDA for each of the reportable segments.
We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items. 33 The following tables presents sales and segment adjusted EBITDA for each of the reportable segments.
Payment of interest on the Third Lien Notes and the First Lien Notes in payment-in-kind is at the Company’s discretion. In addition to our contractual obligations and commitments set forth in the table above, we have employment arrangements with certain key executives that provide for continuity of management.
Payment of interest on the Third Lien Notes and the First Lien Notes in payment-in-kind is at the Company’s discretion for the first four interest payments. In addition to our contractual obligations and commitments set forth in the table above, we have employment arrangements with certain key executives that provide for continuity of management.
The annual goodwill impairment analysis for 2022 resulted in no impairment for the North America and Industrial Specialty Group reporting units. Additionally, a hypothetical 10 percent decrease in the fair value of these reporting units would not impact our conclusion that goodwill was not impaired. See Note 9.
The annual goodwill impairment analysis for 2023 resulted in no impairment for the North America and Industrial Specialty Group reporting units. Additionally, a hypothetical 10 percent decrease in the fair value of these reporting units would not impact our conclusion that goodwill was not impaired. See Note 9.
The tax expense in 2022 and 2021 differed from the statutory rate primarily due to incremental valuation allowances recorded on tax losses generated in the U.S. and certain foreign jurisdictions, the mix of income between the U.S. and foreign sources, tax credits and incentives, and other nonrecurring discrete items.
The tax expense in 2023 and 2022 differed from the statutory rate primarily due to incremental valuation allowances recorded on tax losses generated in the U.S. and certain foreign jurisdictions, the mix of income between the U.S. and foreign sources, tax credits and incentives, and other nonrecurring discrete items.
These limitations include the following: • 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 ABL Facility, Term Loan Facility, 2026 Senior Notes, and 2024 Senior Secured Notes; • 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.
These limitations include the following: 40 • 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 ABL Facility, New Notes, and 2026 Senior Notes; • 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.
Cumulative actuarial gains and losses in excess of 10% of the projected benefit obligation or the fair value of plan assets for a particular plan are amortized over the average future service period of the employees in that plan.
Cumulative actuarial gains and losses in excess of 10% of the projected benefit obligations or the fair value of plan assets for a particular plan are amortized over the average future service period of the 29 employees in that plan.
Loan and letter of credit availability under the agreement is subject to a borrowing base, which at any time is limited to the lesser of: (A) the maximum facility amount (subject to certain adjustments) and (B) (i) up to 85% of eligible accounts receivable; plus (ii) the lesser of 70% of eligible inventory or 85% of the appraised net orderly liquidation value of eligible inventory; plus (iii) up to the lesser of $30.0 million and 85% of eligible tooling accounts receivable; minus reserves established by the agent.
As of the Settlement Date, the loan and letter of credit availability under the ABL Facility is subject to a borrowing base, which at any time is limited to the lesser of: (A) the maximum facility amount (subject to certain adjustments) and (B) (i) up to 85% of eligible accounts receivable; plus (ii) the lesser of 70% of eligible inventory or 85% of the appraised net orderly liquidation value of eligible inventory; plus (iii) up to the lesser of $30.0 million and 85% of eligible tooling accounts receivable; minus reserves established by the ABL Facility Collateral Agent.
These are permitted transactions under the credit agreements governing the ABL Facility and the indentures governing the New Notes, the 2026 Senior Notes and the 2024 Senior Secured Notes.
These are permitted transactions under the credit agreements governing the ABL Facility and the indentures governing the New Notes and the 2026 Senior Notes.
These arrangements include payments of multiples of annual salary, certain incentives and continuation of benefits upon the occurrence of specified events in a manner believed to be consistent with comparable companies. As of December 31, 2022, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $6.5 million.
These arrangements include payments of multiples of annual salary, certain incentives and continuation of benefits upon the occurrence of specified events in a manner 39 believed to be consistent with comparable companies. As of December 31, 2023, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $1.2 million.
Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions, including the continued impact of COVID-19, and other factors.
Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions, including work stoppages and the continued impact of public health events, and other factors.
Health care cost trend rate assumptions used to determine the postretirement benefit obligation as of December 31, 2022 were as follows: U.S. Non-U.S.
Health care cost trend rate assumptions used to determine the postretirement benefit obligations as of December 31, 2023 were as follows: U.S. Non-U.S.
In addition to the above, other factors will present opportunities for automotive suppliers who are positioned for the changing environment, including autonomous and connected vehicles, evolving government regulation, and consumer preference for environmentally friendly products and technology, including hybrid and electric vehicle (“EV”) architectures.
In addition to the above, other factors will present opportunities for automotive suppliers who are positioned to meet the demands of evolving automotive markets and operating environment, including autonomous and connected vehicles, evolving government regulation, and consumer preference for environmentally friendly products and technology, such as hybrid and electric vehicle (“EV”) architectures.
The Third Amendment provides for the ABL Facility to be amended to: • permit the U.S. Borrower to issue the New Notes in the Concurrent Notes Offering and Exchange Offer, including the granting of liens, subject to the restrictions set forth in the ABL Facility; • provide for certain of the U.S.
Borrower to issue the New Notes in the Concurrent Notes Offering and Exchange Offer, including the granting of liens, subject to the restrictions set forth in the ABL Facility; • provide for certain of the U.S.
Non-cash pension settlement and curtailment charges of $2.7 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively, related to a curtailment regarding the approved termination of a U.S. pension plan and settlements related to our non-U.S. pension plans. See Note 13. “Pension” to the consolidated financial statements included in Item 8.
Non-cash settlement and curtailment charges of $2.7 million for the year ended December 31, 2022 primarily related to a curtailment regarding the approved termination of the aforementioned U.S. pension plan and settlements related to our non-U.S. pension plans. See Note 12. “Pension” to the consolidated financial statements included in Item 8.
Based on those actions and current projections of light vehicle production and customer demand for our products, we believe that our cash flows from operations, cash on hand, borrowings under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital requirements, capital expenditures debt service and other funding requirements for the foreseeable future, despite the challenges presented by the COVID-19 pandemic and supply chain issues facing the industry. 35 Cash Flows Operating Activities.
Based on those actions and current projections of light vehicle production and customer demand for our products, we believe that our cash flows from operations, cash on hand, availability under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital requirements, capital expenditures, debt service and other funding requirements for the foreseeable future, despite the challenges facing the industry.
Income Tax Expense. Income tax expense for the year ended December 31, 2022 was $17.3 million on losses before taxes of $200.5 million. This compared to an income tax of $39.4 million on losses before taxes of $289.5 million for the year ended December 31, 2021.
Income tax expense for the year ended December 31, 2023 was $8.9 million on losses before taxes of $194.4 million. This compared to an income tax of $17.3 million on losses before taxes of $200.5 million for the year ended December 31, 2022.
Discount rate 4.55 % 4.45 % Rate of compensation increase N/A (*) 1.58 % Cash balance interest credit rate 2.41 % N/A Weighted average assumptions used to determine net periodic benefit costs for the year ended December 31, 2022 were as follows: U.S. Non-U.S.
Discount rate 4.70% 4.00% Rate of compensation increase N/A ( * ) 3.20% Cash balance interest credit rate 2.41% N/A Weighted average assumptions used to determine net periodic benefit costs for the year ended December 31, 2023 were as follows: U.S. Non-U.S.
Discount rate 2.84 % 2.39 % Expected return on plan assets 3.50 % 2.15 % Rate of compensation increase N/A (*) 2.39 % * As the U.S. plans are frozen, the rate of compensation increase was not applicable.
Discount rate 4.55% 4.45% Expected return on plan assets 4.50% 3.84% Rate of compensation increase N/A ( * ) 3.01% * As the U.S. plans are frozen, the rate of compensation increase was not applicable.
The gain on sale of fixed assets for the year ended December 31, 2022 was attributable to the gain on the sale-leaseback of a European facility of $33.4 million. Amortization of Intangibles . Intangible amortization for the year ended December 31, 2022 was relatively consistent compared to the year ended December 31, 2021. Impairment Charges.
Gain on Sale of Fixed Assets, Net. Gain on sale of fixed assets, net for the year ended December 31, 2022 was $33.4 million, due to the net gain on the sale-leaseback of a European facility. Amortization of Intangibles . Intangibles amortization for the year ended December 31, 2023 was relatively consistent compared to the year ended December 31, 2022.
Net cash used in investing activities was $17.9 million for the year ended December 31, 2022, compared to net cash used in investing activities of $91.3 million for the year ended December 31, 2021.
Net cash used in investing activities was $65.0 million for the year ended December 31, 2023, compared to net cash used in investing activities of $17.9 million for the year ended December 31, 2022.
In March 2020, the Borrowers entered into Amendment No. 1 of the Third Amended and Restated Loan Agreement (the “First Amendment”). As a result of the First Amendment, the ABL Facility maturity was extended to March 2025 and the aggregate revolving loan commitment was reduced to $180.0 million.
As a result of the First Amendment, the ABL Facility maturity was extended to March 2025 and the aggregate revolving loan commitment was reduced to $180.0 million. In May 2020, the Borrowers entered into Amendment No. 2 to the Third Amended and Restated Loan Agreement (the “Second Amendment”), which Second Amendment modified certain covenants under the ABL Facility.
Health care cost trend rate 6.17 % 5.00 % Ultimate health care cost trend rate 4.50 % 5.00 % Year that the rate reaches the ultimate trend rate 2028 N/A Aggregate other postretirement net periodic benefit cost is forecasted to be approximately $0.7 million in 2023.
Health care cost trend rate 6.50% 5.00% Ultimate health care cost trend rate 4.50% 5.00% Year that the rate reaches the ultimate trend rate 2031 N/A Aggregate other postretirement net periodic benefit income is forecasted to be approximately $1.3 million in 2024.
Non-cash asset impairment charges of $43.7 million and $25.6 million for the years ended December 31, 2022 and 2021, respectively, related to property, plant and equipment impairment charges. Restructuring . Restructuring charges for the year ended December 31, 2022 decreased $18.6 million compared to the year ended December 31, 2021.
Impairment Charges. Non-cash asset impairment charges of $4.8 million and $43.7 million for the years ended December 31, 2023 and 2022, respectively, related to property, plant and equipment impairment charges. Restructuring Charges . Restructuring charges for the year ended December 31, 2023 decreased $0.3 million compared to the year ended December 31, 2022.
During 2021, the Company recorded subsequent adjustments to the net gain on sale of business, which related to the 2020 divestiture of our European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations. In 2020, the gain on sale of business primarily related to divestitures. 4.
In 2021, the Company recorded subsequent adjustments to the net gain on sale of businesses, which related to the 2020 divestiture of our European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations. (4) In 2022, the Company recognized a gain on a sale-leaseback agreement on one of its European facilities.
“Financial Statements and Supplementary Data” of this Report for additional information. Pensions and Postretirement Benefits Other Than Pensions . Included in our results of operations are significant pension and postretirement benefit costs, which are measured using actuarial valuations.
See Note 15. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information. Pensions and Postretirement Benefits Other Than Pensions . Included in our results of operations are significant pension and postretirement benefit costs, which are measured using actuarial valuations.
Raw Materials Our business is susceptible to inflationary pressures with respect to raw materials which may place operational and profitability burdens on the entire supply chain. Costs related to raw materials, such as steel, aluminum, and oil-derived commodities, continue to be volatile, which led to extended and magnified increases in these costs in 2021.
Raw Materials Our business is susceptible to inflationary pressures with respect to raw materials which may place operational and profitability burdens on the entire supply chain. Costs related to raw materials, such as steel, aluminum, and oil-derived commodities, have historically been volatile.
Borrower’s wholly-owned subsidiaries organized in Costa Rica, France, Mexico, the Netherlands, Romania and certain other jurisdictions specified from time to time to become guarantors under the ABL Facility; • authorize the collateral agent under the ABL Facility to enter into an intercreditor agreement with the collateral trustees for the New Notes; and • remove the Dutch Borrower as a borrower under the ABL Facility.
Borrower’s wholly-owned subsidiaries organized in Costa Rica, France, Mexico, the Netherlands, Romania and certain other jurisdictions specified from time to time to become guarantors under the ABL Facility; • authorize the ABL Facility Collateral Agent to enter into an intercreditor agreement with the collateral trustees for the New Notes; and • remove the Dutch Borrower as a borrower under the ABL Facility. 37 The aggregate revolving loan availability includes a $100.0 million letter of credit sub-facility and a $25.0 million swing line sub-facility.
For the years ended December 31, 2022 and 2021, total accounts receivable factored were $355.3 million and $366.9 million, respectively. Costs incurred on the sale of receivables were $0.7 million, $0.5 million and $0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. These amounts are recorded in other expense, net in the consolidated statements of operations.
Costs incurred on the sale of receivables were $2.2 million, $0.7 million and $0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts are recorded in other expense, net in the consolidated statements of operations.
In determining the provision for income taxes for financial statement purposes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis.
“Financial Statements and Supplementary Data” of this Report for additional information. Income Taxes. In determining the provision for income taxes for financial statement purposes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities.
In 2022, approximately 57% of our sales were generated in North America.
In 2023, approximately 55% of our sales were generated in North America.
Net cash used in operating activities was $36.2 million for the year ended December 31, 2022, compared to net cash used in operating activities of $115.5 million for the year ended December 31, 2021.
Cash Flows Operating Activities. Net cash provided by operating activities was $117.3 million for the year ended December 31, 2023, compared to net cash used in operating activities of $36.2 million for the year ended December 31, 2022.
The change in the cost of products sold was impacted by higher volume and mix, commodity inflation, increased labor and overhead costs due to inconsistent volume production schedules, higher compensation related costs and higher energy and transportation costs.
The change in cost of products sold was impacted by higher volume and mix, inflation of labor and overhead cost, higher compensation-related costs, increased energy costs and the negative impact of foreign exchange.
As a result of the Refinancing Transactions, the Issuer extended the maturities of its indebtedness and reduced the amount of cash interest it is required to pay on such indebtedness for the next two years.
As a result of the Refinancing Transactions, the Issuer extended the maturities of its indebtedness and reduced the amount of cash interest it is required to pay on such indebtedness for the next two years. The Company recognized a loss on the refinancing and extinguishment of debt of $81.9 million during the year ended December 31, 2023.
Non-cash net pension settlement and curtailment charges and administrative fees incurred related to certain of our U.S. and non-U.S. pension plans. 8. Project costs recorded in selling, administration and engineering expense related to acquisitions and divestitures. Recent Accounting Pronouncements See Note 3. “New Accounting Pronouncements” to the consolidated financial statements included in Item 8.
(8) Non-cash net pension settlement and curtailment charges and administrative fees incurred related to certain of our U.S. and non-U.S. pension plans. Recent Accounting Pronouncements See Note 3. “New Accounting Pronouncements” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information. 41
The sensitivity of our pension cost and obligations to changes in key assumptions, holding all other assumptions constant, is as follows: Change in assumption Impact on 2023 net periodic benefit cost Impact on PBO as of December 31, 2022 1% increase in discount rate +$0.5 million -$22.7 million 1% decrease in discount rate -$0.7 million +$27.4 million 1% increase in expected return on plan assets -$2.2 million — 1% decrease in expected return on plan assets +$2.2 million — Excluding the impact of any potential settlement charges associated with the approved termination of certain U.S. pension plans, aggregate pension net periodic benefit cost is forecasted to be approximately $10.0 million in 2023. 30 Health care cost trend rates are assumed to reflect market trend, actual experience and future expectations.
The sensitivity of our pension cost and obligations to changes in key assumptions, holding all other assumptions constant, is as follows: Change in assumption Impact on 2024 net periodic benefit cost Impact on PBO as of December 31, 2023 1% increase in discount rate - $8.1 million - $26.1 million 1% decrease in discount rate + $12.2 million + $31.2 million 1% increase in expected return on plan assets - $0.7 million - 1% decrease in expected return on plan assets + $0.7 million - Excluding the impact of any future potential settlement charges associated with the termination of a certain U.S. pension plan (which the Company estimates will range from $50 million to $60 million), aggregate pension net periodic benefit cost is forecasted to be approximately $7.4 million in 2024.
Most of our products are custom designed and engineered for a specific vehicle platform. Our sales and product development personnel frequently work directly with the OEMs’ engineering departments in the design and development of our various products.
Our sales and product development personnel frequently work directly with the OEMs’ engineering departments in the design and development of our various products.
“Property, Plant and Equipment” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information. Income Taxes.
See Note 15. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Term Loan Facility On November 2, 2016, Cooper-Standard Automotive Inc., as borrower, entered into the first amendment to its senior term loan facility (the “Term Loan Facility”). The Term Loan Facility provided for loans in an aggregate principal amount of $340.0 million.
“Debt and Other Financing” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report. Term Loan Facility On November 2, 2016, Cooper-Standard Automotive Inc., as borrower, entered into Amendment No. 1 to its senior term loan facility (the “Term Loan Facility”), which provided for loans in an aggregate principal amount of $340.0 million.
The change was primarily due to increased cash earnings, working capital improvements and the receipt of $54.3 million in cash payments from the United States Internal Revenue Service for tax refunds related to net operating loss carrybacks. Investing Activities .
The net change was primarily due to improved operating performance partially offset by changes in working capital balances, including the receipt of $54.3 million in cash payments from the United States Internal Revenue Service for tax refunds related to net operating loss carrybacks in the year ended December 31, 2022. Investing Activities .
As such, we will continue to work on an ongoing basis with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures through a combination of expanded index-based agreements and other commercial enhancements. Critical Accounting Policies and Estimates Our significant accounting policies are more fully described in Note 2.
In addition, we continue to see significant inflationary pressure on wages, energy, transportation and other general costs. As such, we will continue to work on an ongoing basis with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures through a combination of expanded index-based agreements mentioned above and other commercial enhancements.
In May 2020, the Borrowers entered into Amendment No. 2 to the Third Amended and Restated Loan Agreement (the “Second Amendment”), which Second Amendment modified certain covenants under the ABL Facility. In December 2022, the Borrowers entered into Amendment No. 3 to the Third Amended and Restated Loan Agreement (the “Third Amendment”), which became effective on the Settlement Date.
In December 2022, the Borrowers entered into Amendment No. 3 to the Third Amended and Restated Loan Agreement (the “Third Amendment”), which became effective on the Settlement Date. The Third Amendment provides for the ABL Facility to be amended to: • permit the U.S.
Changes in economic or operating conditions impacting these estimates and assumptions could result in the impairment of long-lived assets. In 2022, 2021 and 2020, we recorded impairment charges related to buildings and machinery and equipment in North America, Europe, Asia Pacific, and Corporate and other segments. See Note 8.
Changes in economic or operating conditions impacting these estimates and assumptions could result in the impairment of long-lived assets. In 2023, 2022 and 2021, we recorded impairment charges related to buildings and machinery and equipment. See Note 8. “Property, Plant and Equipment” to the consolidated financial statements included in Item 8.
GAAP: Year Ended December 31, 2022 2021 2020 (Dollar amounts in thousands) Net loss attributable to Cooper-Standard Holdings Inc. $ (215,384) $ (322,835) $ (267,605) Income tax expense (benefit) 17,291 39,392 (60,847) Interest expense, net of interest income 78,514 72,511 59,167 Depreciation and amortization 122,476 139,008 154,229 EBITDA $ 2,897 $ (71,924) $ (115,056) Restructuring charges 18,304 36,950 39,482 Deconsolidation of joint venture (1) 2,257 — — Impairment charges (2) 43,710 25,609 103,887 Gain on sale of business, net (3) — (696) (2,834) Gain on sale of fixed assets, net (4) (33,391) — — Lease termination costs (5) — 748 771 Indirect tax and customs adjustments (6) 1,409 — — Pension settlement and curtailment charges (7) 2,682 1,279 184 Project costs (8) — — 5,648 Divested noncontrolling interest debt extinguishment — — 3,595 Adjusted EBITDA $ 37,868 $ (8,034) $ 35,677 1.
GAAP: Year Ended December 31, 2023 2022 2021 (Dollar amounts in thousands) Net loss attributable to Cooper-Standard Holdings Inc. $ (201,985) $ (215,384) $ (322,835) Income tax expense 8,933 17,291 39,392 Interest expense, net of interest income 130,077 78,514 72,511 Depreciation and amortization 109,931 122,476 139,008 EBITDA $ 46,956 $ 2,897 $ (71,924) Restructuring charges 18,018 18,304 36,950 Deconsolidation of joint venture (1) — 2,257 — Impairment charges (2) 4,768 43,710 25,609 Gain on sale of businesses, net (3) (586) — (696) Gain on sale of fixed assets, net (4) — (33,391) — Lease termination costs (5) — — 748 Indirect tax adjustments (6) — 1,409 — Loss on refinancing and extinguishment of debt (7) 81,885 — — Pension settlement and curtailment charges (8) 16,035 2,682 1,279 Adjusted EBITDA $ 167,076 $ 37,868 $ (8,034) (1) Loss attributable to deconsolidation of a joint venture in the Asia Pacific region, which required adjustment to fair value.
We also evaluate opportunities to consolidate facilities and to relocate certain operations to lower cost countries. We believe we will continue to be successful in our efforts to improve our design and engineering capability and manufacturing processes while achieving cost savings, including through our continuous improvement initiatives.
We also continually evaluate opportunities to optimize our manufacturing footprint by consolidating facilities and relocating production as appropriate. We believe we will continue to be successful in our efforts to improve our design and engineering capabilities and manufacturing processes while achieving cost savings, including through our continuous improvement initiatives.
Business conditions may vary significantly from period to period or region to region. In 2022, global automotive production continued to be negatively impacted by broad supply chain challenges, labor market disruptions and other lingering impacts of the COVID-19 pandemic.
Business conditions may vary significantly from period to period or region to region. In 2022, global automotive production was negatively impacted by broad supply chain challenges, labor market disruptions and other lingering impacts of the COVID-19 pandemic. In 2023, light vehicle production showed resilience and strong growth, supported by sustained consumer demand and OEM efforts to replenish depleted inventory levels.
In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the below presentation.
In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the below presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by special items.
The decrease was primarily due to the non-recurrence of a prior year credit loss, salaried headcount initiative savings, customer recovery of engineering expense, and foreign exchange, partially offset by higher compensation related costs . Gain on Sale of Business, net.
The increase was primarily due to higher compensation-related costs, partially offset by salaried headcount initiative savings and foreign exchange. Gain on Sale of Businesses, Net.
In connection with the issuance of the New Notes, the First Lien Collateral Agent, the Third Lien Collateral Agent, the collateral agent under the ABL Facility, the Issuer, Holdings and the several other parties named therein entered into the First Lien and Third Lien Intercreditor Agreement, providing for the relative priorities of their respective security interests in the assets securing the First Lien Notes, the Third Lien Notes and the ABL Facility, and certain other matters relating to the administration of security interests. 2026 Senior Notes On November 2, 2016, the Issuer issued $400.0 million aggregate principal amount of 2026 Senior Notes.
In connection with the issuance of the New Notes, the First Lien Collateral Agent, the Third Lien Collateral Agent, the collateral agent under the ABL Facility (the “ABL Facility Collateral Agent”), the Issuer, Holdings and the several other parties named therein entered into the First Lien and Third Lien Intercreditor Agreement, providing for the relative priorities of their respective security interests in the assets securing the First Lien Notes, the Third Lien Notes and the ABL Facility, and certain other matters relating to the administration of security interests. 36 For additional information regarding the guarantees, covenants and events of default with respect to the New Notes, see Note 10.
As of December 31, 2022, we had approximately $98.7 million of repurchase authorization under the 2018 Program.
As of December 31, 2023, we had approximately $98.7 million of repurchase authorization under the 2018 Program. We did not make any repurchases under the 2018 Program during the years ended December 31, 2023, 2022 or 2021.
These policies require the most 28 difficult, subjective or complex judgments that management makes in the preparation of the financial statements and accompanying notes.
Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. These policies require the most difficult, subjective or complex judgments that management makes in the preparation of the financial statements and accompanying notes.
The increase in sales was driven by volume and mix (higher net vehicle production volume due to the impact of lessening semiconductor supply issues in the current year, partially offset by the impact of COVID-19 related shut-downs in China and the Ukraine conflict in Europe) and net customer price adjustments including partial recovery of cost increases.
The increase in sales was driven by volume and mix, mainly higher vehicle production volume due to the stabilization of the supply environment, elimination of prior year COVID-19 related restrictions in China and net customer price adjustments including 31 recovery of cost increases.
Cost of products sold for the year ended December 31, 2022 increased $152.6 million, or 6.8%, compared to the year ended December 31, 2021. Materials comprise the largest component of our cost of products sold and represented approximately 51% and 47% of total cost of products sold for the years ended December 31, 2022 and December 31, 2021, respectively.
Materials comprise the largest component of our cost of products sold and represented approximately 51% of total cost of products sold for each of the years ended December 31, 2023 and December 31, 2022.
Our restructuring actions include plant and other facility closures and workforce reductions and are initiated to maintain our competitive footprint or in response to changes in global and regional automotive markets. The decrease was primarily attributable to Europe due to headcount initiatives and footprint rationalization actions that were completed in 2021. 33 Interest Expense, net.
Our restructuring actions include plant and other facility closures and workforce reductions and are initiated to maintain our competitive footprint or in response to changes in global and regional automotive markets. The decrease was primarily driven by lower restructuring charges in Asia Pacific and Europe, partially offset by higher restructuring charges in North America. 32 Interest Expense, Net.
(b) Assumes (i) interest on the Third Lien Notes is fully paid in payment-in-kind for the first four interest payments and (ii) 4.50% of the interest on the First Lien Notes is fully paid in payment-in-kind for the first four interest payments.
(b) Assumes (i) the Third Lien Notes interest payment on June 15, 2024 will be paid in cash and the interest payment on December 15, 2024 will be paid in payment-in-kind and (ii) 4.50% of the interest on the First Lien Notes payable on June 15, 2024 and December 15, 2024 will be paid in payment-in-kind.
These costs were partially offset by foreign exchange, manufacturing efficiencies, purchasing lean savings, restructuring savings and the deconsolidation of a joint venture in the Asia Pacific region. Gross profit for the year ended December 31, 2022 increased $42.6 million compared to the year ended December 31, 2021.
These costs were partially offset by manufacturing and purchasing savings through lean initiatives, favorable commodity costs and the divestitures of our European technical rubber products business and a joint venture in the Asia Pacific region. Gross profit for the year ended December 31, 2023 increased $161.0 million compared to the year ended December 31, 2022.
Excluded from the contractual obligations table above are open purchase orders as of December 31, 2022 for raw materials, supplies and capital expenditures in the normal course of business, supply contracts with customers, distribution agreements, joint venture agreements and other contracts without express funding requirements. 40 Non-GAAP Financial Measures In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance.
Excluded from the contractual obligations table above are open purchase orders as of December 31, 2023 for raw materials, supplies and capital expenditures in the normal course of business, supply contracts with customers, distribution agreements, joint venture agreements and other contracts without express funding requirements. Other Matters In the third quarter of 2023, we designated Liveline Technologies, Inc.
We may be required to make significant cash outlays due to our unrecognized tax benefits. However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities.
However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax benefits of $6.3 million as of December 31, 2023 have been excluded from the contractual obligations table above.
We did not make any repurchases under the 2018 Program during the years ended December 31, 2022, 2021 or 2020. 39 Contractual Obligations Our contractual obligations consist of legal commitments requiring us to make fixed or determinable cash payments, regardless of the contractual requirements of the vendor to provide future goods or services.
Contractual Obligations Our contractual obligations consist of legal commitments requiring us to make fixed or determinable cash payments, regardless of the contractual requirements of the vendor to provide future goods or services.
We adjust these liabilities based on changing facts and 29 circumstances; however, due to the complexity of some of these uncertainties and the impact of any tax audits, the ultimate resolutions may be materially different from our estimated liabilities. See Note 16. “Income Taxes” to the consolidated financial statements included in Item 8.
We recognize tax benefits and liabilities based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these liabilities based on changing facts and circumstances; however, due to the complexity of some of these uncertainties and the impact of any tax audits, the ultimate resolutions may be materially different from our estimated liabilities.
The remaining 18% of our sales were primarily to Tier I and Tier II suppliers and non-automotive manufacturers. Accordingly, sales of our products are directly affected by the annual vehicle production of OEMs and, in particular, the production levels of the vehicles for which we provide specific parts.
Accordingly, sales of our products are directly affected by the annual vehicle production of OEMs and, in particular, the production levels of the vehicles for which we provide specific parts. Most of our products are custom designed and engineered for a specific vehicle platform.
“Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
Critical Accounting Policies and Estimates Our significant accounting policies are more fully described in Note 2. “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report.
The change was primarily related to proceeds of $50.0 million related to the sale-leaseback of a certain European facility which were received in the year ended December 31, 2022 along with reduced capital spending in 2022. We expect reduced capital expenditures will continue in 2023, primarily as part of initiatives to consistently lower overall capital spending.
The net change was primarily related to proceeds of $50.0 million related to the sale-leaseback of a certain European facility which were received in the year ended December 31, 2022, compared with net proceeds of $15.4 million related to our 2023 divestitures which were received in the year ended December 31, 2023.
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by special items. 41 The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net loss, which is the most comparable financial measure in accordance with U.S.
The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net loss, which is the most comparable financial measure in accordance with U.S.
We continuously monitor and forecast our liquidity situation, take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise.
We continue to actively preserve cash and enhance liquidity, including decreasing our capital expenditures as a percent of sales. We continuously monitor and forecast our liquidity situation in light of automotive industry, customer and economic factors, and take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise.
Interest on the 2026 Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each year. 2024 Senior Secured Notes On May 29, 2020, the Issuer issued $250.0 million aggregate principal amount of its 13.000% Senior Secured Notes due 2024 (the “2024 Senior Secured Notes”), pursuant to an indenture, dated as of May 29, 2020, by and among the Issuer, the other guarantors party thereto and U.S.
As of December 31, 2023 and December 31, 2022, the Company had $0.2 million and $2.7 million, respectively, of unamortized debt issuance costs related to the 2026 Senior Notes, which is presented as a direct deduction from the principal balance in the consolidated balance sheets. 2024 Senior Secured Notes On May 29, 2020, the Issuer issued $250.0 million aggregate principal amount of its 13.000% Senior Secured Notes due 2024 (the “2024 Senior Secured Notes”), pursuant to an indenture, dated as of May 29, 2020, by and among the Issuer, the other guarantors party thereto and U.S.
The guarantees of the subsidiaries organized in France are limited guarantees. The Third Lien Notes will mature on May 15, 2027.
The Third Lien Notes will mature on May 15, 2027.
Our net pension and postretirement benefit costs, which included non-cash net pension curtailment and settlement gains and losses of $2.7 million, were approximately $8.3 million and $0.1 million, respectively, for the year ended December 31, 2022. Note that the curtailment charge resulted from the approved merger and termination of certain U.S. pension plans.
Our net pension and postretirement benefit costs (income), which included non-cash net pension settlement losses of $16.0 million, were approximately $26.1 million and $(0.7) million, respectively, for the year ended December 31, 2023.
“Debt” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report. Off-Balance Sheet Arrangements As a part of our working capital management, we sell accounts receivable from certain European customers through a third-party financial institution in off-balance sheet arrangements.
Off-Balance Sheet Arrangements As a part of our working capital management, we sell accounts receivable from certain European customers through a third-party financial institution in off-balance sheet arrangements. The amount sold varies each month based on the amount of underlying receivables and cash flow needs.
This reflects an increase of approximately 6.2% globally since 2021. 27 Light vehicle production in certain regions for 2022 and 2021, as well as projections for 2023, are provided in the following table: (In millions of units) 2023 (1) 2022 (1) 2021 (1) Projected % Change 2022-2023 % Change 2021-2022 North America 15.1 14.3 13.0 5.4 % 9.7 % Europe 16.5 15.7 15.9 5.3 % (1.3) % Asia Pacific 48.1 46.9 43.6 2.4 % 7.7 % Greater China 26.6 26.3 24.8 1.0 % 6.1 % South America 3.0 2.8 2.6 6.0 % 8.5 % (1) Production data based on S&P Global, January 2023.
Light vehicle production in certain regions for 2023 and 2022, as well as projections for 2024, are provided in the following table: (in millions of units) 2024 (1) 2023 (1) 2022 (1) Projected % Change 2023-2024 % Change 2022-2023 North America 15.8 15.6 14.3 1.1% 9.5% Europe 17.4 17.8 15.8 (2.0)% 12.5% Asia Pacific 51.1 51.4 47.2 (0.6)% 9.0% Greater China 28.9 28.9 26.4 —% 9.4% South America 3.0 2.9 2.8 3.0% 3.1% (1) Production data based on S&P Global, January 2024. 27 Industry Overview Competition in the automotive supplier industry is intense and has increased in recent years as OEMs have demonstrated a preference for stronger relationships with fewer suppliers.
Loss attributable to deconsolidation of a joint venture in the Asia Pacific region, which required adjustment to fair value. 2. Non-cash impairment charges in 2022 related to recent operating performance and idle assets in certain locations in North America, Europe and Asia Pacific. Impairment charges in 2021 related to fixed assets and goodwill.
(2) Non-cash impairment charges in 2023 related to certain assets in Europe and Asia Pacific. Non-cash impairment charges in 2022 related to operating performance and idle assets in certain locations in North America, Europe and Asia Pacific. Impairment charges in 2021 related to fixed assets and goodwill. (3) Gain on sale of businesses related to divestitures in 2023.
Subsequent to the year ended December 31, 2022, in connection with the Refinancing Transactions, the Issuer redeemed all of the outstanding 2024 Senior Secured Notes on the Settlement Date at the redemption price of 106.500% of the principal amount thereof, plus accrued and unpaid interest thereon. ABL Facility On November 2, 2016, Holdings, Cooper-Standard Automotive Inc. (the “U.S.
Bank National Association, as trustee. In the first quarter of 2023, in connection with the Refinancing Transactions, the Issuer redeemed all of the outstanding 2024 Senior Secured Notes on the Settlement Date at the redemption price of 106.500% of the principal amount thereof, plus accrued and unpaid interest thereon.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe have commodity price risk with respect to purchases of certain raw materials, including natural gas and carbon black. Raw material, energy and commodity costs have been extremely volatile over the past several years. We did not enter into any commodity derivative instruments in 2022.
Biggest changeAs of December 31, 2023, we did not have any outstanding debt at variable interest rates, and as of December 31, 2022, approximately 38.1% of our total debt was at variable interest rates. Commodity Prices . We have commodity price risk with respect to purchases of certain raw materials, including natural gas and carbon black.
Dollar + $21.4 million + $12.2 million These estimates assume a parallel shift in all currency exchange rates and, as a result, may overstate the potential impact to earnings because currency exchange rates do not typically move all in the same direction.
Dollar + $21.2 million + $21.4 million These estimates assume a parallel shift in all currency exchange rates and, as a result, may overstate the potential impact to earnings because currency exchange rates do not typically move all in the same direction.
Interest Rates . The Company historically used interest rate swap contracts to create fixed interest payments on variable rate debt instruments in order to manage exposure to fluctuations in interest rates. We did not enter into any interest rate swap contracts in 2022.
Interest Rates . The Company historically used interest rate swap contracts to create fixed interest payments on variable rate debt instruments in order to manage exposure to fluctuations in interest rates. We did not enter into any interest rate swap contracts in 2023 or 2022.
In addition to transactional exposures, our operating results are impacted by the translation of our foreign operating income into U.S. dollars. In 2022, net sales outside of the United States accounted for 77% of our consolidated net sales, although certain non-U.S. sales are U.S. dollar denominated. We do not enter into foreign exchange contracts to mitigate this exposure.
In addition to transactional exposures, our operating results are impacted by the translation of our foreign operating income into U.S. dollars. In 2023, net sales outside of the United States accounted for 78% of our consolidated net sales, although certain non-U.S. sales are U.S. dollar denominated. We do not enter into foreign exchange contracts to mitigate this exposure.
We use forward foreign exchange contracts to reduce the effect of fluctuations in foreign exchange rates on a portion of forecasted sales, material purchases and operating expenses. As of December 31, 2022, the notional amount of these contracts was $135.3 million.
We use forward foreign exchange contracts to reduce the effect of fluctuations in foreign exchange rates on a portion of forecasted sales, material purchases and operating expenses. As of December 31, 2023, the notional amount of these contracts was $207.1 million.
As of December 31, 2022, the fair value of the Company’s forward foreign exchange contracts was an asset of $8.6 million. The potential fair value of the forward foreign exchange contracts from a hypothetical 10% adverse or favorable movement in the foreign currency exchange rates in relation to the U.S.
As of December 31, 2023, the fair value of the Company’s forward foreign exchange contracts was an asset of $0.3 million. The potential fair value of the forward foreign exchange contracts from a hypothetical 10% adverse or favorable movement in the foreign currency exchange rates in relation to the U.S.
Dollar is as 42 follows: December 31, 2022 December 31, 2021 10% strengthening of U.S. Dollar ($1.6) million ($11.5) million 10% weakening of U.S.
Dollar is as follows: December 31, 2023 December 31, 2022 10% strengthening of U.S. Dollar - $16.4 million - $1.6 million 10% weakening of U.S.
We will continue to evaluate, and may use, derivative financial instruments to manage our exposure to raw material, energy and commodity price fluctuations in the future. 43
Raw material, energy and commodity costs have been extremely volatile over the past several years. We did not enter into any commodity derivative instruments in 2023 or 2022. We will continue to evaluate, and may use, derivative financial instruments to manage our exposure to raw material, energy and commodity price fluctuations in the future. 42
Removed
As of December 31, 2022 and 2021, approximately 38.1% and 38.4%, respectively, of our total debt was at variable interest rates.
Removed
The pre-tax earnings and cash flow impact of a 100 basis points increase or decrease in the interest rates on our variable rate debt outstanding at December 31, 2022 would be a $3.7 million increase or decrease, respectively, on an annualized basis. Commodity Prices .

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