Investor Presentation Cooper-Standard Holdings Inc. $175 million Senior Notes Safe Harbor
This presentation includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. We make forward-looking statements in this presentation and may make such statements in future filings with the SEC. We may also make forward-looking statements in our press releases or other public or stockholder communications. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends, and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, no assurances can be made that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this presentation. Important factors that could cause our actual results to differ materially from the forward-looking statements we make herein include, but are not limited to: cyclicality of the automotive industry with the possibility of further material contractions in automotive sales and production affecting the viability and financial condition of our customers; global economic uncertainty, particularly in Europe; loss of large customers or significant platforms; supply shortages; escalating pricing pressures and decline of volume requirements from our customers; our ability to meet significant increases in demand; availability and increasing volatility in cost of raw materials or manufactured components; our ability to continue to compete successfully in the highly competitive automotive parts industry; risks associated with our non-U.S. operations; foreign currency exchange rate fluctuations; our ability to control the operations of joint ventures for our benefit; the effectiveness of our lean manufacturing and other cost savings plans; product liability and warranty and recall claims that may be brought against us; work stoppages or other labor conditions; natural disasters; our ability attract and retain key personnel; our ability to meet our customers’ needs for new and improved products in a timely manner or cost-effective basis; the possibility that our acquisition strategy may not be successful; our legal rights to our intellectual property portfolio; environmental and other regulations; legal proceedings or commercial and contractual disputes that we may be involved in; the possible volatility of our annual effective tax rate; our ability to generate sufficient cash to service our indebtedness, obtain future financing, and meet dividend obligations on our 7% preferred stock; our underfunded pension plans; significant changes in discount rates and the actual return on pension assets; the possibility of future impairment charges to our goodwill and long-lived assets; the ability of certain stockholders to nominate certain members of the board of directors; and operating and financial restrictions imposed on us by our bond indenture and credit agreement.
There may be other factors that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
The historical and projected financial information in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles (GAAP), including Adjusted EBITDA. Non-GAAP financial measures such as Adjusted EBITDA may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. Non-GAAP measures in this presentation may be calculated in a way that is not comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA and Adjusted EBITDA to net income attributable to Cooper-Standard Holding Inc is provided in the appendix of this presentation.
cooperstandard 2 Company Participants
Jeffrey Edwards, Chief Executive Officer
Allen Campbell, Chief Financial Officer
cooperstandard 3 Agenda
Transaction Overview
Company Overview
Financial Review - FY 2012
Appendix
cooperstandard 4 Cooper Standard Transaction Overview Summary of Terms – HoldCo PIK Notes
Issuer: Cooper-Standard Holdings Inc.
Issue: Senior Unsecured PIK Toggle Notes (“HoldCo Notes”)
The Notes will rank senior with respect to all indebtedness of the Issuer and will be structurally subordinated to all Ranking: indebtedness and liabilities of the Issuer’s subsidiaries
Security/guarantees: None
Maturity: 5 year
Proceeds: $175 million
Optional redemption: NC-1, 102, 101
100% cash interest semi-annually required with ability to pay PIK interest if the Restricted Payments capacity under the OpCo debt agreement as a percentage of the cash interest due per annum is: Less than 25%, then will be able to pay 100% PIK Interest payments: More than or equal to 25% but less than 50%, then will be able to pay 75% PIK More than or equal to 50% but less than 75%, then will be able to pay 50% PIK More than or equal to 75% but less than 100%, then will be able to pay 25% PIK
Equity clawback: Upon certain equity offerings, up to 100% within the first year at 102
Upon a Change of Control, the Issuer will be required to make an offer to repurchase the HoldCo Notes at 101% of the Change of control: Accreted Value plus accrued interest
Covenants: Usual and customary high yield covenants
Distribution: 144A for life
Use of proceeds: Finance the Company’s announced equity tender
Escrow funding: Proceeds of the notes will be funded into escrow until completion of equity tender but no longer than 90 days
The Company may redeem a portion of the notes subject to final equity tender amount, subject to a minimum bond size Special redemption: of $150 million
cooperstandard 6 Sources & Uses and Pro Forma Capitalization (USD millions)
($ in millions)
Sources Uses
New HoldCo Senior Notes $175 Equity tender $200 Cash from Balance Sheet 31 Estimated Fees and Expenses 6
Total Sources $206 Total Uses $206
Pro forma capitalization
x Adjusted EBITDA (1) x Adjusted EBITDA (1) 12/31/12 Gross Net Adj. Pro forma Gross Net
Cash $271 ($31) $240
ABL Revolver -- -- Capital Leases 33 33 Total Secured Debt $33 0.1x - $33 0.1x -
8.50% Senior Notes due '18 450 450 Total Debt (through OpCo) $483 1.6x 0.7x $483 1.6x 0.8x
New HoldCo Senior Notes -- 175 175 Total Debt (through HoldCo) $483 1.6x 0.7x $658 2.2x 1.4x Net Debt (through HoldCo) $213 $419
Operating Statistics: LTM 12/31/12 Adj. EBITDA $298 $298 Interest Expense 45 13 58 Capital Expenditures 128 128
Credit Statistics: (1) Adjusted EBITDA / Interest Expense 6.7x 5.1x (1) (Adjusted EBITDA - CapEx) / Int. Exp. 3.8x 2.9x
(1) See the Appendix to this presentation for a reconciliation of EBITDA and Adjusted EBITDA to net income attributable Cooper-Standard Holding Inc
cooperstandard 7 Cooper Standard Company Overview Company Snapshot
Company Overview 2012 Revenue by Product Line
• 2012 Revenue : $2.88 Billion • Customers Sealing & Fluid Delivery Exterior Systems - 78% direct OEM (57% Detroit 3) Systems 36% - 22% Tier 1, Tier 2 and other markets 49% • Footprint - 69 manufacturing facilities - 9 design and engineering centers - 19 countries • Employees - ~22,000 employees Anti-Vibration • 2011 Top 100 Global Suppliers: Rank 63 Performance Systems 9% • 2011 Top 100 North American Suppliers: Rank 38 Products 6%
Product Portfolio
Fluid Delivery Systems Anti-Vibration Systems Performance Products Sealing & Exterior Systems Control, sense, measure and deliver fluids and vapors Control and isolate noise and Provides high quality engineered Protects vehicle interiors from throughout the vehicle. vibration in the vehicle to improve and catalog products and systems weather, dust and noise Heating and cooling management ride and handling. for a range of industries, including intrusion while enhancing systems for hybrids, electric commercial vehicle, off-highway, exterior appearance. vehicles and internal combustion power sports, marine, construction
engines. and other specialty markets.
Leading Global Provider of Leading supplier in North Leveraging existing products Leading Global Supplier Fluid Systems America and Europe and assets
. cooperstandard 9 Strategic Priorities
• Focus on our customers, develop deep insight into their needs and how to most effectively serve them
• Finalize product growth strategy
• Accelerate profitable growth in China/India/South East Asia & Brazil
• North America – continue to invest in infrastructure to support growth
• Restructure Europe manufacturing footprint – Romania (complete), Poland, Serbia, and others • Focus on building centers of excellence within our global functional organizations
• Invest in Russia and Indonesia footprint
cooperstandard 10 Breadth of Products
cooperstandard 11 Increasingly Diversified Revenue Mix
Region
2004A 2012A Asia Pacific Asia Pacific 8% South America 4% 3% South America 5%
Europe 23% North America 70% North America Europe 52% 35%
Ultimate customer
2004A 2012A Other 10% PSA Other 4% 22% Ford 29% Renault- Nissan 5% Ford VW 41% 7% Chrysler 16% Fiat 5% GM PSA 17% 8% Renault Chrysler GM Nissan 8% 24% 4%
Leading market positions
A = Actual 12 Note: Numbers subject to rounding cooperstandard Recent Footprint Expansion: Joint Venture Operation • Craiova, Romania Manufacturing • Czestochowa, Poland • Mumbai, India Technical Center Well Positioned Footprint • Nakhonratchasima, Thailand Sales / Administration • Sao Paulo, Brazil • Silao, Mexico Americas Europe Asia Pacific
• European restructuring focused on capacity optimization and lower costs
• Expanding into lower cost manufacturing locations in Eastern and Central Europe Strong regional leadership to facilitate growth cooperstandard Global Platform Outlook
120 80% ) Regional 73.7% Global 70% 64.6%
100 Global Share 000,000s 28
60% 80 50% 29 60 33.1% 40%
30%
40 78 Share of Volume (%) Volume of Share 37 52 20% 20 10%
18
0 0% Economies of Scale (Platforms >50K) ( >50K) (PlatformsScaleof Economies 2000 2012 2019
Trends toward global platforms Copyright © 2012 IHS Inc. All Rights Reserved. Global Platform Definition: Any platform with at least 25,000 of annual volume in a market for one or more years, in 2 or more markets, with a total global volume of 200,000 units per annum cooperstandard 14 Cooper Standard’s Top 20 Platforms FY 2012
#5 Ford & Volvo #1 Ford #3 GM #4 Ford #2 Ford S60/V50/ Silverado/Sierra Fiesta F-150 Flex/Explorer V70/Mondeo
#6 Ford #7 GM #8 GM #9 Fiat Chrysler #10 GM Escape/Focus Tahoe/Yukon/ LaCrosse/Insignia Journey/200 Cruze Escalade
#11 Ford #12 Fiat Ram #13 Peugeot #14 VW #15 GM Fusion / Edge 1500 408/C4 Jetta/Beduin Impala
#16 Fiat Chrysler #17 Ford #18 VW Porsche #19 Fiat #20 Fiat Chrysler Charger/300 F-Series Super Duty Q7/Cayenne Palio/Punto Caravan
Our products are consistently on the top selling global platforms
Denotes Global platform cooperstandard 15 Cooper Standard Strengths
Leading technology Extensive global and engineering footprint to capitalize capabilities to provide on attractive trends Strong customer innovative solutions Market leading positions relationships and in primary products program management capabilities
Proven track record of Experienced and operational excellence disciplined Strong platform for Strong cash flow management team growth in adjacent generation and flexible markets cost structure
cooperstandard 16 Cooper Standard Financial Overview – FY 2012 Financial Overview (USD millions)
Consolidated Revenue Adjusted EBITDA (1)
Adj. EBITDA margin (2)
11.5% 11.4% 10.3% $2,881 9.1% $2,854 8.4% $2,595 $2,414 $324 $1,945 $277 $298 $218 $177
2008A 2009A 2010A 2011A 2012A 2008A 2009A 2010A 2011A 2012A
• Recovering revenue level from organic and inorganic growth despite European challenges • Consistently generating double-digit adjusted EBITDA margins – Generated 8.4% and 9.1% adjusted EBITDA margin even during industry downturn in 2008 and 2009
(1) See the Appendix to this presentation for a reconciliation of EBITDA and Adjusted EBITDA to net income attributable Cooper-Standard Holding Inc (2) Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Consolidated revenue
cooperstandard 18 Non-Consolidated Joint Venture Sales (USD millions)
Joint Venture Partner Product Country $3,288 $3,166 Huayu-Cooper Sealing SAIC/HASCO Sealing China $3,500
$407 Nishikawa Cooper Nishikawa Rubber Sealing U.S. $312 $3,000 $218 $213 Nishikawa Tachaplalert Cooper Nishikawa Rubber Sealing Thailand $2,500
Sujan CSF India Magnum Elastomers AVS India $2,000 $2,854 $2,881 $1,500 $2,636 $2,668
$1,000
$500
$0 2011 2012
Non-Consolidated JV Sales in Asia Pacific, as reported Sales in other regions, as reported
Note: Numbers subject to rounding Non-Consolidated Sales up 30% on an annual basis
cooperstandard 19 FY 2012 Performance (USD millions)
FY 2011 FY 2012 FY 2011 Revenue: $2,853.5 $1,800 FY 2012 Revenue: $2,880.9 $1,503.7 Sales 2,853.5 2,880.9 $1,417.3 $1,500 Gross Profit 450.6 438.9
$1,078.2 SGA 257.6 281.3 $1,200 $1,016.6 Operating Profit 125.2 103.3 $900 Net Income 102.8 102.8
$600
(1) $218.5 $213.2 Adjusted EBITDA 324.1 298.0 $300 $139.5 $147.4 % Margin 11.4% 10.3% $0 North Europe Asia Pacific South America America
Note: Numbers subject to rounding
(1) See the Appendix to this presentation for a reconciliation of EBITDA and Adjusted EBITDA to net income attributable Cooper-Standard Holding Inc
cooperstandard 20 Cash Flow Full Year 2012 (USD millions)
$600 $94.8 $6.1 $30.1 Tooling $27.0
$500 $67.8 $209.3
$400 $131.1
$300 $43.7 $6.8
$200 $361.7
$270.6
$100
$0 Cash Balance as Cash from Others Pension funding - Changes in Capital Repurchase of Preferred stock Cash Balance as of 12/31/2011 business US operating assets expenditures common/preferred dividend of 12/31/2012 and liabilitlies securities
cooperstandard 21 Liquidity as of December 31, 2012 (USD millions)
$500 $483 Cash on Balance Sheet $270.6 $400 ABL Revolver 125.0 $300 $271 Letters of Credit (27.0) $200
Total Liquidity $368.6 $100
$0 Debt Cash
• ABL Revolver undrawn • Net Debt (1) = $212.8 million • Net Debt ratio (2) = 0.7 (3) • Interest coverage ratio = 6.7 • No major debt maturity until 2018
Strong balance sheet and liquidity to support growth
(1) Net Debt is defined as Total Debt minus Cash and cash equivalents (2) Net Debt ratio is defined as Net Debt divided by Adjusted EBITDA (3) Interest coverage ratio is defined as Adjusted EBITDA divided by interest expense
cooperstandard 22 2013 Guidance
• Sales growth: 1% to 2%
• Capital expenditures: $150 million - $170 million
• Cash restructuring: $40 million - $50 million
• Cash taxes: $35 million - $45 million
Guidance assumptions: • North American production: 15.6 million units • Europe (including Russia) production: 18.7 million units • Average full exchange rate: $1.25 / 1 Euro
cooperstandard 23 Cooper Standard Firm Financial Foundation
Solid cash flow model Maintained strong financial generating ample liquidity performance through industry cycle • Support growth • European restructuring
Strong financial metrics with new debt Capital investments to •Net Debt: $419 million service global growth and •Net Debt/Adj.EBITDA: 1.4x improve footprint •Adj.EBITDA/Interest Expense: 5.1x •Adj.EBITDA-CapEx/Interest Expense: 2.9x
cooperstandard 24 Cooper Standard Appendix Summary of Terms – Tender
Issuer: Cooper-Standard Holdings, Inc.
Ticker / Exchange: COSH / OTC
Size: Up to $200mm (plus additional 2% of outstanding shares) with a $150mm minimum
Tender Price: $43 per share
Funding: Cash on balance sheet / High Yield Issuance
Announcement: March 19th, concurrent with HY offering and pricing
Expected Tender Launch Date: Week of April 1, 2013
Tender open period: 20 business days
cooperstandard 26 2012 EBITDA & Adjusted EBITDA Reconciliation and Pro Forma Interest Coverage Ratio
Twelve Months Three Months Ended Ended Mar 31, Jun 30, Sep 30, Dec 31, Dec 31, 2012 2012 2012 2012 2012 (USD millions)
Net income attributable to Cooper-Standard Holdings Inc $ 23.8 $ 77.3 $ 11.6 $ (9.9) $ 102.8 Provision (benefit) for income tax expense 8.1 (46.2) 5.4 1.2 (31.5) Interest expense, net of interest income 11.2 10.8 11.3 11.5 44.8 Depreciation and amortization 31.6 30.5 29.1 31.5 122.7 EBITDA $ 74.7 $ 72.4 $ 57.4 $ 34.3 $ 238.8
Restructuring 6.1 (0.5) 10.2 13.0 28.8 Noncontrolling interest restructuring (0.3) - (0.2) (2.5) (3.0) Stock-based compensation 2.7 2.2 2.4 2.5 9.8 Impairment charges 10.1 10.1 Payment to former CEO and transition cost - 11.5 11.5 Noncontrolling deferred tax valuation reversal - - - 2.0 2.0 Adjusted EBITDA $ 83.2 $ 74.1 $ 69.8 $ 70.9 $ 298.0
Net Debt Debt payable within one year 32.6 Long-term debt 450.8 Less: cash and cash equivalents (270.6) Net Debt 212.8
New $175 million HoldCo Notes 175.0 Use of Cash to finance the Transactions 31.0 Pro Forma Net Debt 418.8
Capital Expenditure 128.1 (a)
Pro Forma Adj. EBITDA / Interest Expense 5.1 x Pro Forma (Adj. EBITDA-CapEx) / Interest Expense 2.9 x Pro Forma Net Leverage/Adjusted EBITDA 1.4 x
(a) Excludes intangible assets Note: Numbers subject to rounding cooperstandard 27 2008 EBITDA and Adjusted EBITDA Reconciliation (USD millions)
Net loss $ (121.5) Provision for income tax expense 29.3 Interest expense, net of interest income 92.9 Depreciation and amortization 140.1 EBITDA $ 140.8 Restructuring (1) 30.6 Foreign exchange (gain) loss (2) 0.1 Transition and integration costs(3) 0.5 Net gain on bond repurchase(4) (1.7) Canadian voluntary retirement 1.8 Claim reserve(5) (0.6) Impairment charges(6) 36.0 Discontinuance costs(8) 7.7 Other 2.7 Adjusted EBITDA 217.9 EBITDA adjustment related to other joint ventures (7) 11.1 Pro forma adjustments related to product line organization discontinuance (8) 11.7 Consolidated EBITDA $ 240.7
(1) Includes non-cash restructuring charges. (2) Unrealized foreign exchange (gain) loss on acquisition-related indebtedness. (3) Transition and integration costs related to the acquisition of MAPS and MAP India. (4) Net gain on purchase of $7.2 million of Senior Subordinated (5) Reserve reflecting the Company's best estimate of probable liability in connection with U.S. Bankruptcy Court claim filed by a customer to recover payments made by the customer to the Company allegedly constituting recoverable "preference" payments. 2008 reflects reduction in estimated liability to settlement amount. (6) Impairment charges related to Fluid goodwill ($21.9 million),certain intangibles ($2.3 million) and fixed assets ($4.1 million), related to Body & Chassis goodwill ($1.2 million), certain intangibles ($1.6 million) and fixed assets ($2.3 million), Guyoung impairment ($2.6 million). (7) The Company's share of EBITDA in its joint ventures, net of equity earnings. (8) Pro forma adjustments to the Company's EBITDA for the initial phase of the Company's discontinuance of its global product line operating divisions and the establishment of a new operating structure organized on the basis of geographic regions.
cooperstandard 28 2009 EBITDA and Adjusted EBITDA Reconciliation (USD millions)
Net Income (Loss) $(356.1) Provision for income tax expense (benefit) (55.7) Net Interest expense 64.3 Depreciation and amortization 113.8 EBITDA $(233.7) Reorganization / Fresh Start/ Impairment 380.9 EBITDA excl. Reorg & Impairment 147.2 Restructuring 32.4 Bond repurchase (9.1) Foreign exchange (gains)/losses (4.1) Stock based compensation 1.4 Reorganization related fees 7.7 Other 1.0 Adjusted EBITDA $ 176.5
cooperstandard 29 2010 -2011 EBITDA and Adjusted EBITDA Reconciliation (USD millions)
2010 2011
Net income $ 320.3 $ 102.8 Provision for income tax expense 45.0 20.8 Net Interest expense 69.5 40.5 Depreciation and amortization 102.4 124.1 EBITDA $ 537.2 $ 288.2 Reorganization / Fresh Start 303.4 -- EBITDA excl. Reorganization 233.8 288.2 Restructuring 6.4 32.3 Inventory write-up 8.1 0.7 Stock based compensation 6.6 10.8 Other / foreign exchange 21.6 (7.9) Adjusted EBITDA $ 276.5 $ 324.1
cooperstandard 30