Cooper-Standard Holdings Inc (CPS) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Cooper Standard Second Quarter 2023 Earnings Conference Call. (Operator Instructions). As a reminder, this conference call is being recorded, and a webcast will be available on the Cooper Standard website for replay later today.

早上好，女士們、先生們，歡迎參加庫珀標準 2023 年第二季度收益電話會議。 （操作員說明）。提醒一下，本次電話會議正在錄音，今天晚些時候將在庫珀標準網站上提供網絡廣播重播。

I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations. Please go ahead.

我現在想將電話轉給投資者關係總監 Roger Hendriksen。請繼續。

Thanks, Rocco, and good morning, everyone. Thank you for spending some time with us this morning. The members of our leadership team who will be speaking with you on the call this morning are: Jeff Edwards, Chairman and Chief Executive Officer; and Jon Banas, Executive Vice President and Chief Financial Officer.

謝謝羅科，大家早上好。感謝您今天早上花一些時間與我們在一起。今天早上將在電話會議上與您交談的領導團隊成員包括： 董事長兼首席執行官傑夫·愛德華茲 (Jeff Edwards)；和喬恩·巴納斯（Jon Banas），執行副總裁兼首席財務官。

Before we begin, I need to remind you that this presentation contains forward-looking statements. While they are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties. For more information on our forward-looking statements, we ask that you refer to Slide 3 of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission.

在開始之前，我需要提醒您，本演示文稿包含前瞻性陳述。雖然這些陳述是基於當前的事實信息以及管理層目前認為合理的某些假設和計劃而做出的，但這些陳述確實涉及風險和不確定性。有關我們前瞻性聲明的更多信息，我們請您參閱本演示文稿的幻燈片 3 以及公司定期向美國證券交易委員會提交的文件中的聲明。

This presentation also contains non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures are included in the appendix to the presentation.

本演示文稿還包含非公認會計準則財務指標。非公認會計原則財務指標與其最直接可比的公認會計原則指標的調節表包含在演示文稿的附錄中。

With those formalities out of the way, I'll now turn the call over to Jeff Edwards.

辦完這些手續後，我現在將把電話轉給傑夫·愛德華茲。

Thanks, Roger. Good morning, everyone. We appreciate the opportunity to review our second quarter results and provide an update on our business and outlook, going forward. To begin on Slide 5, we provide some highlights or key indicators of how our operations performed in the second quarter. We've maintained our focus and dedication to delivering quality products and exceptional service to our customers and to keeping our employees safe in our workplaces around the world.

謝謝，羅傑。大家，早安。我們很高興有機會回顧第二季度的業績，並提供有關我們未來業務和前景的最新信息。從幻燈片 5 開始，我們提供了一些有關第二季度運營表現的亮點或關鍵指標。我們始終專注於為客戶提供優質的產品和卓越的服務，並確保我們的員工在世界各地工作場所的安全。

In terms of product quality, 98% of our customer scorecards were green in the quarter. We also had 98% green scorecards for new program launches. We continue to achieve outstanding performance from our operations, delivering value to our customers. In addition, the safety performance of our plants continues to be outstanding. During the second quarter and through the first 6 months of the year, we had a total incident rate of just 0.33 reportable incidents per 200,000 hours worked, well below the world-class benchmark of 0.57.

在產品質量方面，本季度我們 98% 的客戶記分卡為綠色。我們還為新項目啟動提供了 98% 的綠色記分卡。我們繼續在運營中取得出色的業績，為客戶創造價值。此外，我們工廠的安全表現依然出色。在第二季度和今年前 6 個月，我們每 20 萬工作小時的可報告事件總數僅為 0.33 起，遠低於 0.57 的世界一流基準。

Leading this outstanding safety performance were the 37 plants that have maintained a perfect safety record of 0 reported incidents through the first 6 months of the year. I want to recognize the teams at these plants for their ongoing commitment and leadership as we continue to strive for the ultimate safety goal of 0 incidents for the company overall. I could not be more proud of our global team for their continued commitment and world-class achievements in this most important KPI.

領先這一出色安全表現的是 37 家工廠，今年前 6 個月保持了零事故報告的完美安全記錄。我想對這些工廠的團隊表示認可，感謝他們在我們繼續努力實現全公司零事故這一最終安全目標的過程中所做出的持續承諾和領導力。我為我們的全球團隊在這一最重要的 KPI 方面的持續承諾和世界級成就感到無比自豪。

As market conditions and production volumes are improving, we're not letting up on our efforts and commitment to maximize operational efficiency and become as lean as possible. During the second quarter, our manufacturing and purchasing teams delivered $16 million in savings through lean initiatives and improving efficiencies. We're also maintaining our focus on non-manufacturing fixed costs and keeping them as low as possible. And when you consider SGA&E expense, we were pleased to see more than a full percentage point decline as a percentage of sale.

隨著市場狀況和產量的改善，我們不會放棄最大限度提高運營效率並儘可能精簡的努力和承諾。第二季度，我們的製造和採購團隊通過精益計劃和提高效率節省了 1600 萬美元。我們還繼續關注非製造業固定成本，並儘可能將其保持在較低水平。當您考慮 SGA&E 費用時，我們很高興看到佔銷售額的百分比下降了超過一個百分點。

Finally, we're continuing to win new business awards, especially on electric vehicle programs. These wins are a result of our strong customer relationships and the value we provide through our advanced engineering and design capabilities, innovative technical solutions and world-class service. In the second quarter, our customers awarded us $84.9 million in net new business awards, including $36.4 million on their upcoming electric vehicle platforms. So we're very pleased to see our hard work drive meaningful improvement in our financial results. The combination of a leaner cost structure in our enhanced commercial agreements, leveraged across increasing production volumes is powerful.

最後，我們繼續贏得新的商業獎項，特別是在電動汽車項目方面。這些勝利是我們強大的客戶關係以及我們通過先進的工程和設計能力、創新的技術解決方案和世界一流的服務提供的價值的結果。第二季度，我們的客戶授予了 8490 萬美元的淨新業務獎勵，其中包括其即將推出的電動汽車平台的 3640 萬美元。因此，我們很高興看到我們的辛勤工作推動我們的財務業績取得有意義的改善。我們增強的商業協議中更精簡的成本結構與不斷增加的產量的結合是強大的。

I will now turn the call over to Jon to give you the financial details for the quarter.

我現在將把電話轉給喬恩，向您提供本季度的財務詳細信息。

Thanks, Jeff, and good morning, everyone. In the next few slides, I'll provide some details on our financial results for the quarter, discuss our cash flows, liquidity and aspects of our balance sheet.

謝謝杰夫，大家早上好。在接下來的幾張幻燈片中，我將提供有關本季度財務業績的一些詳細信息，討論我們的現金流、流動性和資產負債表的各個方面。

On Slide 7, we show a summary of our results for the second quarter of 2023 with comparisons to the same prior period last year. Second quarter 2023 sales were $723.7 million, an increase of 19.4% compared to the second quarter of 2022. The increase was driven by favorable volume and mix across all regions and our enhanced commercial agreements, primarily in Europe. The positive volume and mix were partially offset by unfavorable foreign exchange.

在幻燈片 7 上，我們展示了 2023 年第二季度的業績摘要，並與去年同期進行了比較。 2023 年第二季度銷售額為 7.237 億美元，比 2022 年第二季度增長 19.4%。這一增長是由所有地區有利的銷量和組合以及我們增強的商業協議（主要是在歐洲）推動的。積極的交易量和組合被不利的外匯匯率部分抵消。

Gross profit for the second quarter was $77.7 million or 10.7% of sales. This compares to a gross profit of only $15.4 million or just 2.5% of sales in the second quarter of 2022. Adjusted EBITDA in the quarter was $47.9 million compared to a negative $10.4 million in the second quarter of last year. The year-over-year improvement was driven primarily by favorable volume and mix, enhanced commercial agreements and lean savings achieved in manufacturing and supply chain, all partially offset by ongoing inflation headwinds in areas such as energy and labor costs as well as the impact of unfavorable foreign exchange.

第二季度毛利潤為 7770 萬美元，佔銷售額的 10.7%。相比之下，2022 年第二季度的毛利潤僅為 1540 萬美元，僅佔銷售額的 2.5%。本季度調整後 EBITDA 為 4790 萬美元，而去年第二季度為負 1040 萬美元。同比改善主要是由於有利的銷量和組合、增強的商業協議以及製造和供應鏈中實現的精益節約，所有這些都被能源和勞動力成本等領域持續的通脹逆風以及經濟的影響所部分抵消。外匯不利。

During the second quarter, we made further progress in our commercial negotiations to recover inflation and establish sustainable pricing overall and are seeing the incremental positive impact on our results. Negotiations with certain customers are ongoing and the timing for concluding them remains open. So similar to last quarter, we did conclude some negotiations shortly after the end of the reporting period. And as a result, we did not recognize the full pricing impact of these negotiations in Q2 as originally expected, but we will see the retroactive benefit in our results when we report on the third quarter.

在第二季度，我們在恢復通脹和建立可持續定價的商業談判方面取得了進一步進展，並看到了對我們業績的積極影響。與某些客戶的談判正在進行中，結束談判的時間仍然開放。與上季度類似，我們確實在報告期結束後不久完成了一些談判。因此，我們沒有像最初預期的那樣認識到這些談判在第二季度的全部定價影響，但當我們報告第三季度時，我們將在我們的業績中看到追溯效益。

As remaining negotiations are concluded successfully, we expect to see further improvements in top line growth and margin expansion in the remaining quarters of the year. On a U.S. GAAP basis, net loss for the quarter was $27.8 million compared to a net loss of $33.2 million in the second quarter of 2022. The current quarter included $8.5 million in restructuring costs. Excluding the special items and the related tax impact from both periods, adjusted net loss for the second quarter of 2023 was $20 million or $1.15 per diluted share compared to adjusted net loss of $58.5 million or $3.40 per diluted share in the second quarter of 2022.

隨著剩餘談判的成功結束，我們預計今年剩餘季度的營收增長和利潤率擴張將進一步改善。根據美國公認會計原則，本季度淨虧損為 2780 萬美元，而 2022 年第二季度淨虧損為 3320 萬美元。本季度包括 850 萬美元的重組成本。排除兩個時期的特殊項目和相關稅收影響，2023 年第二季度調整後淨虧損為2000 萬美元，即稀釋後每股1.15 美元，而2022 年第二季度調整後淨虧損為5850 萬美元，即稀釋後每股3.40 美元。

The year-over-year improvement resulted primarily from higher sales and improved gross profit, partially offset by higher interest expense. Our capital expenditures in the second quarter totaled $17.5 million or 2.4% of sales compared to $12 million or 2% of sales in the second quarter of last year. We continue to have discipline around capital investments, which remain primarily focused on customer launch readiness. We expect to keep our CapEx at around 3% of sales for the year as we committed in our full year guidance.

同比改善主要歸因於銷售額的增加和毛利潤的提高，但部分被利息支出的增加所抵消。我們第二季度的資本支出總計 1,750 萬美元，佔銷售額的 2.4%，而去年第二季度的資本支出為 1,200 萬美元，佔銷售額的 2%。我們繼續遵守資本投資紀律，主要關注客戶推出準備情況。正如我們在全年指導中所承諾的那樣，我們預計今年的資本支出將保持在銷售額的 3% 左右。

In the first half of 2023, sales totaled $1.4 billion, an increase of $187.3 million or 15.4% versus the first half of 2022. Adjusted EBITDA was $60.4 million in the first half compared to negative $10 million in 2022. This year-over-year increase of $70.6 million is a clear sign of our continuing progress. Adjusted net loss for the first half was $66.1 million or $3.83 per share compared to a net loss of $109.9 million or $6.40 per share in the first half of 2022. CapEx in the first 6 months was $46.8 million or 3.3% of sales, which, again, is in line with our full year target of approximately 3% of sales.

2023 年上半年，銷售額總計 14 億美元，較 2022 年上半年增加 1.873 億美元，增幅為 15.4%。上半年調整後 EBITDA 為 6,040 萬美元，而 2022 年為負 1,000 萬美元。增加7,060 萬美元是我們持續進步的明顯標誌。上半年調整後淨虧損為6610 萬美元，即每股3.83 美元，而2022 年上半年淨虧損為1.099 億美元，即每股6.40 美元。前6 個月的資本支出為4680 萬美元，佔銷售額的3.3%，其中，再次符合我們約 3% 銷售額的全年目標。

Moving to Slide 8. The charts on Slide 8 provide additional insights into some key factors impacting our results for the second quarter. For revenue, favorable volume and mix, including net customer price adjustments, increased sales by $123 million versus the second quarter of 2022. Improving customer production volumes year-over-year were the biggest driver with customer price adjustments in the quarter also benefiting the volume mix category. Net foreign exchange, mainly related to the Chinese RMB and the Canadian dollar, reduced sales by a net $5 million versus the same period last year.

轉到幻燈片 8。幻燈片 8 上的圖表提供了對影響我們第二季度業績的一些關鍵因素的更多見解。就收入而言，有利的銷量和組合（包括淨客戶價格調整）使銷售額比2022 年第二季度增加了1.23 億美元。客戶產量同比提高是最大的推動因素，本季度客戶價格調整也有利於銷量混合類別。淨外匯交易（主要與人民幣和加元有關）導致銷售額比去年同期淨減少500萬美元。

For adjusted EBITDA, volume, mix and net price adjustments drove a combined $55 million of improvement for the quarter. Lean initiatives in purchasing and manufacturing efficiencies contributed $16 million year-over-year, and material cost improvements were a benefit of $9 million in the quarter. These positive contributors were partially offset by certain ongoing headwinds in the quarter. General inflation, including energy, salaries, wages and transportation and other costs reduced adjusted EBITDA by $15 million in the quarter. The impact of foreign exchange was $6 million, primarily related to the Mexican peso, Canadian dollar and Polish Zloty.

就調整後 EBITDA 而言，銷量、產品組合和淨價調整推動本季度總計 5500 萬美元的改善。採購和製造效率方面的精益舉措同比貢獻了 1600 萬美元，材料成本改善在本季度帶來了 900 萬美元的收益。這些積極貢獻被本季度持續存在的某些不利因素部分抵消。包括能源、薪資、工資和運輸及其他成本在內的總體通脹導致本季度調整後 EBITDA 減少 1500 萬美元。外匯影響為600萬美元，主要與墨西哥比索、加元和波蘭茲羅提有關。

Moving to Slide 9. Looking at the analysis for the first half of the year. For sales, favorable volume mix and net price adjustments added $209 million versus the same period last year, while foreign exchange was an offset of $21 million. For adjusted EBITDA, favorable volume, mix and net price adjustments added $95 million compared to last year. Manufacturing and purchasing efficiencies added $24 million and material economics were a favorable $5 million. These positive factors were partially offset by $33 million of general inflationary headwinds for items such as labor, utilities and transportation costs, $14 million of foreign exchange and $6 million in various other impacts.

轉到幻燈片 9。看看上半年的分析。就銷售而言，有利的銷量組合和淨價格調整與去年同期相比增加了 2.09 億美元，而外匯則抵消了 2100 萬美元。對於調整後的 EBITDA 而言，有利的銷量、組合和淨價調整與去年相比增加了 9500 萬美元。製造和採購效率增加了 2400 萬美元，材料經濟性增加了 500 萬美元。這些積極因素被勞動力、公用事業和運輸成本等項目的 3300 萬美元的總體通脹阻力、1400 萬美元的外彙和 600 萬美元的其他影響部分抵消。

Moving to Slide 10. Looking at cash flow and liquidity. Cash used in operations was approximately $13 million in the second quarter of 2023, which reflected semiannual cash interest payments made in June, the payout of prior year compensation-related accruals and other changes in working capital, all of which offset improved operating income. As mentioned earlier, CapEx was approximately $17 million in the second quarter, primarily reflecting the timing of program launch activity. Free cash flow was an outflow of approximately $31 million in the quarter.

轉向幻燈片 10。看看現金流和流動性。 2023 年第二季度運營中使用的現金約為1300 萬美元，這反映了6 月份支付的半年度現金利息、上一年薪酬相關應計費用的支付以及營運資本的其他變化，所有這些都抵消了運營收入的增長。如前所述，第二季度資本支出約為 1700 萬美元，主要反映了計劃啟動活動的時間。本季度自由現金流流出約 3100 萬美元。

With this free cash result, we ended June with a cash balance of approximately $73 million. Our revolving credit facility was undrawn at quarter end, with $157 million of availability on our ABL and cash on the balance sheet, we had solid total liquidity of approximately $230 million as of June 30. We believe that the cash balance at the end of the quarter was likely the low point for the year based on seasonality, increasing sales volume and the timing of payments from our customers. So, we do expect stronger cash flow in the second half of the year, and it's important to note that during July, our cash balance had already significantly improved from June 30.

憑藉這一自由現金結果，截至 6 月份，我們的現金餘額約為 7,300 萬美元。我們的循環信貸安排在季度末未提取，我們的ABL 上有1.57 億美元的可用資金，資產負債表上有現金，截至6 月30 日，我們的總流動性約為2.3 億美元。我們認為，期末的現金餘額根據季節性、銷量增加和客戶付款時間，該季度可能是全年的最低點。因此，我們確實預計下半年的現金流將會更加強勁，而且值得注意的是，在 7 月份期間，我們的現金餘額較 6 月 30 日已經有了顯著改善。

Based on our current outlook and expectations for light vehicle production, improving operating efficiencies and subject to the successful completion of and the further benefit from enhanced commercial agreements from our customers, we believe that we'll be cash flow positive in the second half and for the full year. Further, we believe our current cash on hand, expected cash generation and access to flexible credit facilities will provide sufficient resources to support our ongoing operations.

基於我們目前對輕型汽車生產、提高運營效率的展望和預期，並根據客戶增強的商業協議的成功完成和進一步受益，我們相信下半年和今年的現金流將是正值。全年。此外，我們相信我們當前的手頭現金、預期的現金產生和獲得靈活信貸便利的機會將為我們的持續運營提供足夠的資源。

That concludes my comments, so let me hand it back over to Jeff.

我的評論到此結束，所以讓我把它交還給傑夫。

Thanks, Jon. Over the next few minutes, I'll provide you with a status update on our continuing commercial negotiations and other strategic initiatives we're executing to drive increasing value in the near term and in the years ahead. Then I'll conclude with a few comments on our outlook for the remainder of the year, including our full year guidance. So, please turn to Slide 12.

謝謝，喬恩。在接下來的幾分鐘內，我將向您提供有關我們持續的商業談判和我們正在執行的其他戰略舉措的最新狀態，以推動近期和未來幾年的價值增長。最後，我將對我們今年剩餘時間的前景發表一些評論，包括我們的全年指導。所以，請翻到幻燈片 12。

We're continuing to work with all of our customers to recover incremental costs related to inflationary pressures and establish sustainable pricing that will enhance quality of earnings and value creation over the long term. Last year, our commercial priority was to reduce and limit our risk exposure from commodity and material costs globally. Having successfully concluded those negotiations early this year, our focus is now on achieving fair and sustainable pricing that accounts for current input costs, market dynamics as well as the value we deliver for our customers. We prioritized our European business first to address negative margins and unsustainable cash flow. Most of our customers have been supportive, and we've successfully concluded negotiations with the majority of them. You saw the positive impact in our European segment results for the quarter.

我們將繼續與所有客戶合作，收回與通脹壓力相關的增量成本，並建立可持續的定價，以長期提高盈利質量和價值創造。去年，我們的商業重點是減少和限制全球商品和材料成本帶來的風險。在今年年初成功結束這些談判後，我們現在的重點是實現公平和可持續的定價，考慮到當前的投入成本、市場動態以及我們為客戶提供的價值。我們首先優先考慮歐洲業務，以解決負利潤和不可持續的現金流問題。我們的大多數客戶都給予了支持，我們已經成功地與其中大多數客戶完成了談判。您看到了我們本季度歐洲部門業績的積極影響。

Commercial negotiations with customers in other regions are progressing, as Jon already mentioned, we expect to conclude more negotiations in the third quarter. We're also advancing our commercial efforts to improve cash flow. Our progress to-date includes implementation of more favorable payment terms on trade receivables and customer-owned tooling as well as supplier-funded tooling. We expect these changes will have a meaningful positive impact on our cash flow going forward.

與其他地區客戶的商業談判正在取得進展，正如喬恩已經提到的，我們預計在第三季度完成更多談判。我們還在推進商業努力以改善現金流。我們迄今為止取得的進展包括對貿易應收款和客戶擁有的工具以及供應商資助的工具實施更優惠的付款條件。我們預計這些變化將對我們未來的現金流產生有意義的積極影響。

Turning to Slide 13. Concurrent with our commercial initiatives, we are continuing to optimize our operating footprint and business portfolio to accelerate value creation and improve profitability. We believe there are still opportunities to further improve our cost structure by directing more of our new business to advantage production facilities over time, and reducing our exposure to high-cost labor markets. We will also consider divesting noncore businesses that don't meet our strategic minimum rates for margins, ROI or future growth, similar to what we have done before. Our commitment to either fixing or exiting underperforming businesses remain a central part of our strategy to restore our margins and returns on invested capital to double-digit levels.

轉向幻燈片 13。在我們的商業計劃的同時，我們正在繼續優化我們的運營足跡和業務組合，以加速價值創造並提高盈利能力。我們相信，隨著時間的推移，我們仍然有機會進一步改善我們的成本結構，將更多的新業務引導到生產設施的優勢，並減少我們對高成本勞動力市場的敞口。我們還將考慮剝離那些不符合我們戰略最低利潤率、投資回報率或未來增長率的非核心業務，類似於我們之前所做的。我們對修復或退出表現不佳業務的承諾仍然是我們將利潤率和投資資本回報率恢復到兩位數水平的戰略的核心部分。

Turning to Slide 14. Another element of our strategy is to leverage our Fortrex technology and portfolio of products to extend our competitive advantage in automotive businesses and expand our business profitability through diverse market applications. In automotive applications, we're now able to go to market with micro-dense Fortrex, which provides even further weight reduction and lower carbon footprint while providing superior performance in sealing systems. In addition, we expect to begin the rollout and installation of equipment to optimize Fortrex production early next year. The manufacturing process improvements will give Fortrex further competitive advantage over traditional materials, and we expect it will drive further market penetration with our automotive customers.

轉向幻燈片 14。我們戰略的另一個要素是利用我們的 Fortrex 技術和產品組合來擴大我們在汽車業務的競爭優勢，並通過多樣化的市場應用擴大我們的業務盈利能力。在汽車應用中，我們現在能夠將微緻密 Fortrex 推向市場，它可以進一步減輕重量並降低碳足跡，同時在密封系統中提供卓越的性能。此外，我們預計將於明年初開始部署和安裝設備以優化 Fortrex 生產。製造工藝的改進將使 Fortrex 相對於傳統材料具有進一步的競爭優勢，我們預計它將進一步推動汽車客戶的市場滲透。

Beyond automotive markets, we're pleased to report that a new high-end line of running shoes with a Fortrex foam midsole is finally available for sale in stores and online. Our footwear customer remains pleased with the new technology, and they have praised the new line of shoes publicly. Ultimately, consumers will determine the future demand and production levels of the shoes, and we're excited that consumers will now be able to try them out.

除了汽車市場之外，我們很高興地報告，採用 Fortrex 泡沫中底的全新高端跑鞋系列終於在商店和網上出售。我們的鞋類客戶對新技術仍然很滿意，他們公開讚揚了新的鞋履系列。最終，消費者將決定鞋子的未來需求和生產水平，我們很高興消費者現在能夠試用它們。

Turning to Slide 15. To conclude our presentation this morning, let me reiterate that I'm proud of our team's accomplishments in the first half of the year and pleased with the progress we've made in improving the profitability of our company. We are in a far better position than we were a year ago, but we are still a long way from our objective with much more room for improvement. We believe we are in the early stage of margin inflection as all of our cost improvement efforts and enhanced commercial agreements come together with continued higher industry production volumes over the next few quarters.

轉向幻燈片 15。在結束今天上午的演示時，讓我重申，我對我們團隊在今年上半年取得的成就感到自豪，並對我們在提高公司盈利能力方面取得的進展感到滿意。我們的處境比一年前好得多，但距離我們的目標還有很長的路要走，還有很大的改進空間。我們相信，我們正處於利潤率拐點的早期階段，因為我們所有的成本改善努力和加強的商業協議與未來幾個季度行業產量的持續增長相結合。

If current production forecasts and schedules hold up, we expect our full year results to be within the ranges we provided in our original guidance. If actual production levels continue to exceed expectations as they did in Q2, there could be some upside to our ranges and outlook. But we are not predicting that at this time, given that there could also be risks to the downside due to any number of factors, including the timing for closing or implementing any achieved commercial agreements, the possibility of extended OEM labor negotiations or other market disruptions.

如果當前的生產預測和計劃保持不變，我們預計全年業績將在我們最初指導中提供的範圍內。如果實際產量水平繼續超出預期，就像第二季度那樣，我們的範圍和前景可能會有一些上行空間。但我們目前並不預測這一點，因為多種因素也可能存在下行風險，包括完成或實施任何已達成的商業協議的時間、延長 OEM 勞資談判的可能性或其他市場擾亂。

I want to thank our customers for their continued trust, confidence and support. We remain committed to supporting them with existing and exciting innovations, world-class design and engineering services; and as always, flawless program launches and quality products.

我要感謝我們的客戶一直以來的信任、信心和支持。我們仍然致力於通過現有的、令人興奮的創新、世界一流的設計和工程服務來支持他們；一如既往，完美的計劃發布和優質的產品。

This concludes our prepared comments. So, let's open the call for Q&A.

我們準備好的評論到此結束。那麼，讓我們開始問答環節。

Thank you. (Operator Instructions). Today's first question comes from Michael Ward with Benchmark.

謝謝。 （操作員說明）。今天的第一個問題來自 Benchmark 的 Michael Ward。

A couple of things. You talked about the commercial agreements, and it sounds like there are 2 parts to it. There's the retro benefit and then there's the new pricings that you have specifically. And I think all other suppliers are dealing with the retro and its pricing, and it sounds like you've prioritized different regionally. Is that what we're looking at?

有幾件事。您談到了商業協議，聽起來有兩個部分。有復古的好處，然後有您特有的新定價。我認為所有其他供應商都在處理復古及其定價，聽起來你們已經優先考慮了不同的地區。這就是我們正在看的嗎？

Yes. Mike, this is Jeff. Clearly, our priority as we started the year was to get Europe to a cash flow position that wasn't burning cash at the rate that we were talking about, right? And if you remember, we said that if we didn't get that fixed, we would burn $90 million between this year and next year in Europe. So that's why it was a priority, and we've gotten it fixed, and you can see that in our numbers. A few more negotiations will take place here the rest of the year. But for the most part, everybody has done a really good job in Europe.

是的。邁克，這是傑夫。顯然，今年年初我們的首要任務是讓歐洲達到現金流狀況，不要以我們所說的速度燒錢，對嗎？如果你還記得的話，我們說過，如果我們不解決這個問題，今年到明年我們將在歐洲燒掉 9000 萬美元。這就是為什麼它是一個優先事項，我們已經解決了它，你可以在我們的數據中看到這一點。今年剩下的時間裡還將在這裡進行一些談判。但在很大程度上，每個人在歐洲都做得非常好。

You know about the indexing that we exercised and executed during the first half of the year with all of our customers. So, that's basically done everywhere, and that addresses the material volatility that we've experienced in the past. And then finally, it was the -- what we call sustainable pricing, going forward. So in years past, I think some suppliers, including this one, would accept lump sum payments to try to bridge a short-term gap regarding inflation. Obviously, with 3 straight years of you could call record inflation across the board, that was no longer acceptable. So, we set out to put a negotiation in place, virtually with every customer in the world, to address pricing going forward. And that's the bucket we refer to as sustainable pricing.

您知道我們在今年上半年與所有客戶一起執行和執行的索引。所以，基本上到處都是這樣做的，這解決了我們過去經歷過的物質波動。最後，我們稱之為可持續定價，繼續前進。因此，在過去的幾年裡，我認為一些供應商，包括這家供應商，會接受一次性付款，以試圖彌合通貨膨脹方面的短期缺口。顯然，連續三年可以稱全面通脹創歷史新高，這不再是可接受的。因此，我們開始與世界上幾乎所有客戶進行談判，以解決未來的定價問題。這就是我們所說的可持續定價。

What I would tell you is by the end of the third quarter, Mike, that should basically all be completed for the most part and the retros will be accounted for accordingly. So, when you look at our results at the end of the third quarter, I'm quite sure that it will be a much easier thing for me to talk about and a much easier thing for you to see from an accounting point of view. So, I would just encourage everybody to wait for those results. And I think you'll see much of what you saw here in the second quarter, but everything should be much clearer as it relates to how much pricing we've gotten here in 2023.

我要告訴你的是，邁克，到第三季度末，基本上大部分工作都應該完成，並且將相應地考慮到回顧。因此，當你看到我們第三季度末的業績時，我很確定這對我來說會更容易談論，對你來說從會計的角度來看也更容易。所以，我只是鼓勵大家等待結果。我認為您會在第二季度看到大部分內容，但一切都應該更加清晰，因為這與我們在 2023 年獲得的定價有關。

And then for us, more importantly, is -- or at least equally important, I guess, is what is going to carry over into 2024. Hopefully, that was an explanation that answered all of your questions.

然後對我們來說，更重要的是——或者至少同樣重要的是，我想，將會延續到 2024 年。希望這是一個能夠回答你們所有問題的解釋。

Perfect. Yes. And then, you've been talking for several quarters that got to be great if we got industry volume back. And we're starting to get closer to more normalized levels. And we've seen this positive. I think, Jon, in your chart there, you had like a $95 million delta in the first half, and was still 10% or 15% below more normalized levels. Is that the type of the magnitude we can look at as far as delta as we go forward, get up to more normalized levels as far as impact? Or is that the first chunk of it and then maybe it cools down a little bit?

完美的。是的。然後，您已經討論了幾個季度，如果我們恢復行業銷量，那就太好了。我們開始接近更加正常化的水平。我們已經看到了這一積極的一面。我認為，喬恩，在你的圖表中，上半年的增量約為 9500 萬美元，但仍比正常水平低 10% 或 15%。就我們前進的三角洲而言，我們可以看到這種程度的類型嗎？就影響而言，達到更正常化的水平？或者這是它的第一塊，然後它可能會冷卻一點？

This is Jeff. Mike, I think that as we all have tried to predict volumes over the last couple of years, we find that that's been less than accurate, I guess. But what I'm very encouraged about now is that we have reached a point where the volumes are predictable, and we're starting to see a slight increase in those volumes here in 2023. And based on what our customers are saying about the next couple of years, we would expect that the volumes will continue to increase over that period of time. So, we're all encouraged by that.

這是傑夫。邁克，我認為，當我們都試圖預測過去幾年的交易量時，我們發現這不太準確，我想。但現在令我感到非常鼓舞的是，我們已經達到了銷量可預測的地步，並且我們開始看到 2023 年這些銷量略有增加。並且根據我們的客戶對未來的評價幾年後，我們預計在此期間銷量將繼續增加。所以，我們都為此感到鼓舞。

I think, we need to see a quarter or 2 of it, and we're hopeful that it will become a lot clearer as we get to the end of this year. So as we roll out guidance for '24 as we always do in January or February that we'll be able to predict your question. And I'm confident that we'll be a whole lot better at doing that this year than any of us have been in the last couple of years. That's what we're encouraged by, and I expect it to go up.

我認為，我們需要看到其中的四分之一或兩個，我們希望到今年年底它會變得更加清晰。因此，當我們像往常一樣在一月或二月推出 '24 指南時，我們將能夠預測您的問題。我相信今年我們會比過去幾年做得更好。這就是我們所受到的鼓勵，我希望它能夠上升。

Perfect. So in the '25-'26 time period, if we get back to more historical levels of production in North America, Europe, China -- well, China is [already there], but North America, Europe, is that we can expect operating income or EBITDA income north of $300 million or getting closer to the double-digit type margins that you're talking about?

完美的。因此，在 25-26 年間，如果我們回到北美、歐洲、中國的歷史生產水平——嗯，中國已經[已經存在了]，但北美、歐洲是我們可以預期的營業收入或EBITDA 收入超過3 億美元或接近您所說的兩位數類型的利潤率？

Yes, Mike, you see that what we believe is that we have done a great job reducing our fixed costs. Our company is continuing to find other ways to take those costs down. So as the volumes increase, we clearly expect to see that fall to the bottom line. And as I've said publicly several times, we expect double-digit EBITDA, double-digit return on invested capital to be back in our corner over the next couple of years here as those volumes increase, yes.

是的，邁克，你看，我們相信我們在降低固定成本方面做得很好。我們公司正在繼續尋找其他方法來降低這些成本。因此，隨著銷量的增加，我們顯然預計銷量會下降到底線。正如我多次公開說過的那樣，隨著交易量的增加，我們預計未來幾年，兩位數的 EBITDA、兩位數的投資資本回報率將重新回到我們的角落，是的。

Okay. And just lastly on Page 14, as it relates to Fortrex. There were 2 things [that you turn] out. The first one with the sneakers, congratulations on finally getting on the market. Is the sneaker company, APL? Is that the brand?

好的。最後是第 14 頁，因為它與 Fortrex 相關。 [你發現]了兩件事。第一個有球鞋的，恭喜終於上市了。運動鞋公司是APL嗎？是那個品牌嗎？

Sorry, Mike, I didn't hear your question. What was the specific?

抱歉，邁克，我沒有聽到你的問題。具體是什麼？

As it relates to the shoes, the sneakers, is it APL? Is that the brand?

說到鞋子、運動鞋，是 APL 嗎？是那個品牌嗎？

No.

不。

Okay. Can you tell us what the brand is? Or are you still restricted?

好的。你能告訴我們這個品牌是什麼嗎？或者你仍然受到限制？

We're still restricted, but we're working on that. I bought a pair I can tell you that.

我們仍然受到限制，但我們正在努力解決這個問題。我買了一雙我可以告訴你。

I'd love to be able to find them. Just lastly, you mentioned their tire applications. I don't know if, that may be the first time I've seen that, is that going back to your old partner days with Cooper Tire? Or where is -- what are you looking at with that?

我很想能夠找到他們。最後，您提到了他們的輪胎應用。我不知道，這可能是我第一次看到這樣的情況，是不是又回到了你和固鉑輪胎的老搭檔時代？或者你在看什麼？

What we can tell you about the tire application is that a customer has asked us to work with a couple of the tire manufacturers to see if by utilizing Fortrex in the compound that we can help address the friction component as they go forward and produce tires for EVs, that is a big issue related to battery life. And so, we're working on some advanced projects there. So that's what that refers to.

關於輪胎應用，我們可以告訴您的是，一位客戶要求我們與幾家輪胎製造商合作，看看通過在化合物中使用 Fortrex，我們是否可以幫助解決摩擦問題，因為他們繼續生產輪胎電動汽車，這是與電池壽命相關的一個大問題。因此，我們正在那裡開展一些高級項目。這就是它所指的。

The other conversation that I had with you today regarding Fortrex was related to automotive sealing and we're extremely excited about that. Today, we have, let's call it, $50 million or so in Fortrex sealing already in the automotive industry. As we move forward and apply what I just discussed with you this morning, we see the revenue opportunity there somewhere in the neighborhood of $150 million. So tripling the amount of product that we have in the marketplace over the next couple of years, that's going to be engineered into product here, starting beginning of the year. We're really excited because that will help not only reduce weight, but it also addresses emissions as it relates to us producing that product for our customers. So, I think there's going to be a big benefit for all of our customers around the world as we introduce that improved product to each of them here in January of '24. So those are the 2 discussions regarding Fortrex.

今天我與您就 Fortrex 進行的另一場對話與汽車密封有關，我們對此感到非常興奮。如今，我們已經在汽車行業的 Fortrex 密封領域投入了約 5000 萬美元的資金。當我們繼續前進並應用我今天早上剛剛與您討論的內容時，我們看到了大約 1.5 億美元的收入機會。因此，未來幾年我們市場上的產品數量將增加兩倍，從今年年初開始，這些產品將被設計到這裡的產品中。我們真的很興奮，因為這不僅有助於減輕重量，而且還可以解決排放問題，因為這與我們為客戶生產該產品有關。因此，我認為當我們於 2024 年 1 月向全球所有客戶推出改進的產品時，這將為他們帶來巨大的好處。這就是關於 Fortrex 的 2 次討論。

(Operator Instructions). Today's next question comes from Brian DiRubbio with Baird.

（操作員說明）。今天的下一個問題來自 Baird 的 Brian DiRubbio。

A few questions for you. Maybe just starting off on Jon or Jeff, now there is a small divestiture earlier this week. I guess, you're not going to disclose what that was, the proceeds on the call. But are there any other small divestiture opportunities that you see that you can enact on over the next year or so?

有幾個問題想問你。也許只是從喬恩或傑夫開始，現在本週早些時候進行了一次小規模的剝離。我想，你不會透露電話會議的收益是什麼。但您認為還有其他小型剝離機會可以在未來一年左右實施嗎？

Yeah, I'll take that one. Since you're correct, we aren't going to disclose the amount. But, this is Jeff. So what we have always done is identify the non-strategic, so that's what this is. And we've also addressed underperforming businesses in certain regions. We either get them fixed or they end up going someplace else. And so, the answer -- short answer is yes, there are still some that fall into that category. But as we work our way through this year, we are hopeful that we're at the end of those, at least for the foreseeable future here.

是的，我會接受那個。既然你是對的，我們不會透露具體金額。但是，這是傑夫。所以我們一直做的就是識別非戰略性的東西，所以這就是這個。我們還解決了某些地區表現不佳的企業問題。我們要么把它們修好，要么它們最終會去別的地方。所以，答案——簡短的回答是肯定的，仍然有一些屬於這一類。但隨著我們今年的努力，我們希望我們能夠結束這些事情，至少在可預見的未來是如此。

I think, we've stabilized South America, as you've seen in the results. We've stabilized Europe, as you've seen in the results; and we're hopeful that North America and China will regain the type of volumes that make them the leaders that we've always expected them to be in our business and in the industry. And that's kind of where we are right now. So I wouldn't expect to see many more as we head forward, at least for the next year.

我認為，正如您在結果中看到的那樣，我們已經穩定了南美洲。正如您在結果中看到的那樣，我們已經穩定了歐洲；我們希望北美和中國能夠重新獲得銷量，使它們成為我們一直期望的業務和行業的領導者。這就是我們現在的處境。因此，我預計在我們前進的過程中不會看到更多，至少在明年是這樣。

Understood. Appreciate that color there. Just on the commercial agreements that you're renegotiating, I just want to make sure I got this correct. Is it safe to assume that you received a number of catch-up payments in 2023, and the results in 2024 will be absent those, and it will just be then on the go-forward commercial arrangements you have?

明白了。欣賞那裡的顏色。就你們正在重新談判的商業協議而言，我只是想確保我的理解是正確的。是否可以安全地假設您在 2023 年收到了一些追加付款，而 2024 年的結果將沒有這些付款，而這將取決於您的後續商業安排？

Yes. This is Jeff again. So just to be clear, the lump sum type of recoveries that we book in any particular year, obviously, don't carry forward. The sustainable price increases that I keep referring to, and the indexed contracts for the raw material that goes into the products, those 2 buckets will continue to create a sustainable and improving business for us, '24 and beyond. That's why we've negotiated it that way. We reached a point where we couldn't deal with anything other than that.

是的。這又是傑夫。因此，需要明確的是，我們在任何特定年份預訂的一次性回收類型顯然不會結轉。我一直提到的可持續價格上漲，以及產品原材料的索引合同，這兩個部分將繼續為我們創造一個可持續的、不斷改善的業務，24 年及以後。這就是我們以這種方式進行談判的原因。我們已經到了無法處理除此之外的任何事情的地步。

We've explained that to our customers. They have been, for the most part, extremely supportive of that. And that's why I mentioned before at the end of the third quarter, I think most of that will be clarified within our results and we will be able to explain the retro portion of it that hits in the third quarter. And then we're hopeful that things smooth out for the fourth quarter and for '24, and it will allow us to have a very intelligent conversation about it at the end of the third quarter. That's how I think it's going to work out at this stage.

我們已經向客戶解釋了這一點。在很大程度上，他們對此非常支持。這就是為什麼我之前在第三季度末提到的原因，我認為其中大部分內容將在我們的結果中得到澄清，我們將能夠解釋第三季度發生的複古部分。然後我們希望第四季度和 24 年的事情能夠順利進行，這將使我們能夠在第三季度末就此進行一次非常明智的對話。這就是我認為現階段的結果。

Great. That clarity would be phenomenal. Just on the guidance, you're seeing slightly better light vehicle production here in U.S. and in Europe, just -- but you didn't change the guidance, it's just your effort to be conservative at this point in time?

偉大的。這種清晰度將是驚人的。就指導意見而言，您看到美國和歐洲的輕型汽車生產略有好轉，但您沒有改變指導意見，這只是您在此時採取保守態度的努力？

This is Jeff. Yes.

這是傑夫。是的。

Okay. Fair enough. And then just finally, Jon, can you just remind me what the minimal liquidity is that you guys need to operate? I can't find that on my notes?

好的。很公平。最後，喬恩，你能提醒我你們運營所需的最低流動性是多少嗎？我在筆記上找不到這個？

Yes, Brian. What we've talked about in the past is having $100 million to $125 million of minimum liquidity. And when I define that, I include cash on the balance sheet as well as access to our ABL facility and other smaller revolving credit facilities around the world. So that's how I would continue to look at it today. Nothing has really changed in that perspective.

是的，布萊恩。我們過去討論的是最低流動性為 1 億至 1.25 億美元。當我定義這一點時，我將現金納入資產負債表，以及使用我們的 ABL 設施和世界各地其他較小的循環信貸設施。這就是我今天繼續看待它的方式。從這個角度來看，一切都沒有真正改變。

Excellent. Appreciate all the colors as always.

出色的。一如既往地欣賞所有的顏色。

Thank you. And it appears there are no more questions at this time. So, I'd like to turn the call back over to Roger Hendriksen.

謝謝。目前看來沒有更多問題了。因此，我想將電話轉回羅傑·亨德里克森 (Roger Hendriksen)。

Okay. Thanks, everybody. We appreciate the engagement in the call today. And if there are other questions that you didn't ask this morning, and would like to ask in a different environment. Please feel free to reach out to me directly, and we'll have any discussion that you'd like.

好的。謝謝大家。我們感謝您今天參與電話會議。如果還有其他問題你今天早上沒有問，並且想在不同的環境中問。請隨時直接與我聯繫，我們將進行您想要的任何討論。

Thanks again for joining the call, and we appreciate your participation. That will conclude our morning. Thank you.

再次感謝您參加此次通話，我們感謝您的參與。我們的上午就到此結束。謝謝。

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

謝謝你，先生。今天的電話會議到此結束。我們感謝大家參加今天的演講。您現在可以斷開線路，度過美好的一天。