# Cooper-Standard Holdings Inc.: Form 10-Q for the period ended Mar 31, 2019

- Company: [Cooper-Standard Holdings Inc.](/companies/cps.md) (CIK 1320461)
- Form: 10-Q
- Filed: 2019-05-02
- Accepted by EDGAR: May 2, 2019, 17:09 ET
- Period: 2019-03-31
- Accession: 0001320461-19-000027
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1320461/000132046119000027/cps-q12019x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1320461/000132046119000027/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2019-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2019-01-01 to 2019-03-31 | $0 | us-gaap:Revenues |
| Cost of revenue | 3 months, 2019-01-01 to 2019-03-31 | $762.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2019-01-01 to 2019-03-31 | $117.5m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2019-01-01 to 2019-03-31 | $87.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2019-01-01 to 2019-03-31 | $9.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2019-01-01 to 2019-03-31 | $2.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2019-01-01 to 2019-03-31 | −$3.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2019-01-01 to 2019-03-31 | −$0.20 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2019-01-01 to 2019-03-31 | −$0.20 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2019-01-01 to 2019-03-31 | 17,535,195 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2019-01-01 to 2019-03-31 | −$1.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2019-01-01 to 2019-03-31 | $59.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Share repurchases | 3 months, 2019-01-01 to 2019-03-31 | $6.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2019-03-31 | $262.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2019-03-31 | $1.35bn | us-gaap:AssetsCurrent |
| Total assets | at 2019-03-31 | $2.81bn | us-gaap:Assets |
| Current liabilities | at 2019-03-31 | $940.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2019-03-31 | $1.96bn | us-gaap:Liabilities |
| Current portion of debt | at 2019-03-31 | $169.1m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2019-03-31 | $823.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,098 characters.

*This management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Our historical results may not indicate, and should not be relied upon as an indication of, our future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. See “Forward-Looking Statements” below for a discussion of risks associated with reliance on forward-looking statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the U.S. Securities and Exchange Commission (“2018 Annual Report”) see Item 1A. “Risk Factors.” The following should be read in conjunction with our 2018 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our 2018 Annual Report. References in this quarterly report on Form 10-Q (the “Report”) to “we,” “our,” or the “Company” refer to Cooper-Standard Holdings Inc., together with its consolidated subsidiaries.*

### Executive Overview

### Our Business

We design, manufacture and sell sealing, fuel and brake delivery, and fluid transfer systems for use primarily in passenger vehicles and light trucks manufactured by global automotive original equipment manufacturers (“OEMs”). We are primarily a “Tier 1” supplier, with approximately 85% of our sales in 2018 made directly to major OEMs. We operate our business along four segments: North America, Europe, Asia Pacific and South America.

During the first quarter of 2019 and in prior periods, the Company also operated an anti-vibration systems business. Subsequent to the end of the first quarter, on April 1, 2019, the Company completed the divestiture of the anti-vibration systems business.

### Recent Trends and Conditions

#### General Economic Conditions and Outlook

The global automotive industry is susceptible to uncertain economic conditions that could adversely impact new vehicle demand. Business conditions may vary significantly from period to period or region to region.

In North America in 2019, economic growth in the U.S. is expected to continue, albeit at a more modest rate than 2018. Continued uncertainty regarding global trade relationships, among other factors, could dampen economic momentum. Modest economic growth is also expected to continue in Canada and Mexico in 2019. The mix of vehicles produced and sold in the region continues to shift away from passenger cars in favor of crossover utility vehicles and light trucks.

In Europe, economic momentum slowed in the second half of 2018. Geopolitical concerns and the implementation of new environmental regulations in the automotive industry likely contributed to the slow-down. Looking ahead, we expect the continuation of global trade tensions, financial pressures within some of the key European Union member countries and Britain’s pending separation from the European Union (“Brexit”) will continue to create a high level of uncertainty and challenge the regional economic outlook in 2019.

In Asia Pacific, the Chinese government continues to manage the nation’s economy with a goal of sustaining growth. For 2019, the official growth target was set at 6.0% - 6.5%. The range is lower than 2018 as rising debt, inflation and uncertainty are pressuring consumption and continuing tension within U.S.-China trade relationships is impacting exports. Fiscal tools such as tax cuts and increased investment in infrastructure may be used to in order to meet government growth targets.

In South America, the Brazilian economy is expected to grow by approximately 2.0% in 2019 compared to 1.1% in 2018. The stronger growth forecast is based on an improving labor market, rising credit growth and market-friendly government agenda. While our near-term outlook for South America is positive, we remain cautious for the mid to long-term outlook given the long history of political instability and economic volatility in the region.

The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade, tariffs and border enforcement, has resulted in increasing uncertainty surrounding the future state of the global economy. We continue to monitor the potential impacts of both foreign and domestic economic policies and we continue to expect adverse impacts to our material costs as a result of previously-announced and potential new tariffs.

#### 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 and oil-derived commodities, continue to be volatile. In addition, we continue to expect commodity cost volatility to have an impact on future earnings and operating cash flows. As such, on an ongoing basis, we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.

#### Production Levels

Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America. New vehicle demand is driven by macroeconomic and other factors, such as interest rates, manufacturer and dealer sales incentives, fuel prices, consumer confidence, employment levels, income growth trends and government and tax incentives. The industry could face uncertainties that may adversely impact consumer demand for vehicles as well as the future production environment.

Light vehicle production in certain regions for the three months ended March 31, 2019 and 2018 was:

*(In millions of units)*

|  | Three Months Ended March 31, 2019(1) | 2018(1) | % Change |
| --- | ---: | ---: | ---: |
| North America | 4.3 | 4.4 | (2.5)% |
| Europe | 5.6 | 5.9 | (4.9)% |
| Asia Pacific(2) | 11.5 | 12.5 | (7.5)% |
| South America | 0.8 | 0.8 | (4.7)% |

(1) Production data based on IHS Automotive, April 2019.

(2) Includes Greater China units of 5.9 million and 6.8 million for the three months ended March 31, 2019 and 2018, respectively.

In North America, first quarter total vehicle production declined slightly compared to the first quarter of 2018. Continuing recent trends in consumer demand, production of passenger cars declined while production of sport utility vehicles and crossover vehicles increased. We expect these trends to continue in North America throughout 2019.

European and Asia Pacific light vehicle production declined as well, reflecting geopolitical instability, including uncertainty around tariffs and global trade relations in both regions and Brexit uncertainty in Europe. Accordingly, we remain cautious on the impact through the remainder of the year.

### Results of Operations

*(dollar amounts in thousands)*

|  | Three Months Ended March 31, 2019 | 2018 | Change |
| --- | ---: | ---: | ---: |
| Sales | $880,038 | $967,391 | $(87,353) |
| Cost of products sold | 762,490 | 796,511 | (34,021) |
| Gross profit | 117,548 | 170,880 | (53,332) |
| Selling, administration & engineering expenses | 86,974 | 80,440 | 6,534 |
| Amortization of intangibles | 3,775 | 3,406 | 369 |
| Restructuring charges | 17,715 | 7,125 | 10,590 |
| Operating profit | 9,084 | 79,909 | (70,825) |
| Interest expense, net of interest income | (11,932) | (9,800) | (2,132) |
| Equity in earnings of affiliates | 2,358 | 1,687 | 671 |
| Loss on refinancing and extinguishment of debt | — | (770) | 770 |
| Other expense, net | (796) | (1,719) | 923 |
| (Loss) income before income taxes | (1,286) | 69,307 | (70,593) |
| Income tax expense | 2,331 | 11,891 | (9,560) |
| Net (loss) income | (3,617) | 57,416 | (61,033) |
| Net loss (income) attributable to noncontrolling interests | 157 | (624) | 781 |
| Net (loss) income attributable to Cooper-Standard Holdings Inc. | $(3,460) | $56,792 | $(60,252) |

29

### Three Months Ended March 31, 2019 Compared with Three Months Ended March 31, 2018

#### Sales

Sales for the three months ended March 31, 2019 decreased 9.0%, compared to the three months ended March 31, 2018.

*(dollar amounts in thousands)*

|  | Three Months Ended March 31, 2019 | 2018 | Change | Variance Due To: Volume / Mix\* | Foreign Exchange | Other\*\* |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total sales | $880,038 | $967,391 | $(87,353) | $(105,890) | $(36,540) | $55,077 |

\* Net of customer price reductions

\*\* Other includes the net impact of acquisitions

#### Gross Profit

*(dollar amounts in thousands)*

|  | Three Months Ended March 31, 2019 | 2018 | Change | Variance Due To: Volume / Mix\* | Foreign Exchange | Cost Increases / (Decreases)\*\* |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of products sold | $762,490 | $796,511 | $(34,021) | $(48,719) | $(33,635) | $48,333 |
| Gross profit | 117,548 | 170,880 | (53,332) | (57,171) | (2,905) | 6,744 |
| Gross profit percentage of sales | 13.4% | 17.7% |  |  |  |  |

\* Net of customer price reductions

\*\* Other includes the net impact of acquisitions

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately 52% of total cost of products sold for the three months ended March 31, 2019 and 51% of total cost of products sold for the three months ended March 31, 2018. Cost of products sold was impacted by vehicle production mix, commodity price, foreign exchange, and wage inflation. These items were partially offset by continuous improvement and lean manufacturing, restructuring savings and material cost reductions.

Gross profit for the three months ended March 31, 2019 decreased 31.2% compared to the three months ended March 31, 2018. The decrease in margin was driven by vehicle production mix, commodity price and foreign exchange pressures, and wage inflation. These items were partially offset by net favorable operational performance and acquisitions.

*Selling, Administration and Engineering Expense.* Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. Sales, administration and engineering expense for the three months ended March 31, 2019 was 9.9% of sales compared to 8.3% for the three months ended March 31, 2018. This increase was primarily due to additional costs for newly acquired businesses, general inflation and divestiture-related expenses for our AVS business, partially offset by savings from salaried employee initiatives.

*Restructuring.* Restructuring charges for the three months ended March 31, 2019 increased $10.6 million compared to the three months ended March 31, 2018. The increase was driven by higher restructuring charges in North America and Europe primarily related to salaried employee initiatives and in Asia Pacific mainly due to footprint rationalization.

*Interest Expense, Net.* Net interest expense for the three months ended March 31, 2019 increased $2.1 million compared to the three months ended March 31, 2018, primarily due to higher amounts of outstanding debt primarily related to the ABL Facility.

*Other Expense, Net.* Other expense for the three months ended March 31, 2019 decreased $0.9 million compared to the three months ended March 31, 2018 primarily due to lower foreign currency losses.

*Income Tax Expense.* Income tax expense for the three months ended March 31, 2019 was $2.3 million on loss before income taxes of $1.3 million. This compares to income tax expense of $11.9 million on earnings before income taxes of $69.3 million for the same period of 2018. The effective tax rate for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 differed primarily due to the geographic mix of pre-tax earnings and the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions.

### Segment Results of Operations

The Company operates in four reportable segments: North America, Europe, Asia Pacific and South America. Consistent with how management assesses performance of the segments, effective January 1, 2019, we changed the measurement of our segments to adjusted EBITDA. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items. The results of each segment include certain allocations for general, administrative, interest, and other shared costs.

The following tables present sales and segment adjusted EBITDA for each of the reportable segments.

### Three Months Ended March 31, 2019 Compared with Three Months Ended March 31, 2018

#### Sales

*(dollar amounts in thousands)*

| Sales to external customers | Three Months Ended March 31, 2019 | 2018 | Change | Variance Due To: Volume / Mix\* | Foreign Exchange | Other |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | $474,707 | $499,178 | $(24,471) | $(56,899) | $(3,440) | $35,868 |
| Europe | 254,599 | 292,401 | (37,802) | (17,456) | (21,169) | 823 |
| Asia Pacific | 127,495 | 149,175 | (21,680) | (31,965) | (8,101) | 18,386 |
| South America | 23,237 | 26,637 | (3,400) | 430 | (3,830) | — |
| Consolidated | $880,038 | $967,391 | $(87,353) | $(105,890) | $(36,540) | $55,077 |

\* Net of customer price reductions

- The impact of foreign currency exchange primarily relates to the Euro, Chinese Renminbi, Brazilian Real, Mexican Peso and the Canadian Dollar.
- Other includes the net impact of acquisitions.

#### Segment adjusted EBITDA

*(dollar amounts in thousands)*

| Segment adjusted EBITDA | Three Months Ended March 31, 2019 | 2018 | Change | Variance Due To: Volume / Mix\* | Foreign Exchange | Cost (Increases) / Decreases | Other |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | $57,564 | $86,776 | $(29,212) | $(29,496) | $(2,631) | $(1,768) | $4,683 |
| Europe | 9,441 | 22,968 | (13,527) | (10,299) | (1,930) | (964) | (334) |
| Asia Pacific | 767 | 13,490 | (12,723) | (17,908) | 1,255 | 2,878 | 1,052 |
| South America | (1,386) | (597) | (789) | 532 | (324) | (997) | — |
| Consolidated adjusted EBITDA | $66,386 | $122,637 | $(56,251) | $(57,171) | $(3,630) | $(851) | $5,401 |

\* Net of customer price reductions

- The impact of foreign currency exchange is primarily driven by the Canadian Dollar, Mexican Peso, Chinese Renminbi and Euro.
- The Cost (Increases) / Decreases category above includes:
- The increase in material cost pressure and general inflation;
- Launch related activity for engineering, prototypes and tooling;
- Net operational efficiencies of $25.0 million primarily driven by our North America and Europe segments;
- Other includes the net impact of acquisitions.

### Liquidity and Capital Resources

### Short and Long-Term Liquidity Considerations and Risks

We intend to fund our ongoing working capital, capital expenditures, debt service and other funding requirements through a combination of cash flows from operations, cash on hand, borrowings under our senior asset-based revolving credit facility (“ABL Facility”) and receivables factoring. The Company utilizes intercompany loans and equity contributions to fund its worldwide operations. There may be country-specific regulations which may restrict or result in increased costs in the repatriation of these funds. See Note 11. "Debt" to the unaudited condensed consolidated financial statements included in Part 1, Item 1 of this Report for additional information.

Based on our current and anticipated levels of operations and the condition in our markets and industry, 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, capital expenditures, debt service and other funding requirements for the next twelve months. However, 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 flow 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 and other factors.

### Subsequent Event

Subsequent to the end of the first quarter, on April 1, 2019, we completed the sale of our anti-vibration systems product line to Continental AG. The estimated net cash proceeds after taxes and transaction-related expenses and fees are expected to be approximately $220 million to $225 million.

### Cash Flows

*Operating Activities.* Net cash used in operations was $1.8 million for the three months ended March 31, 2019, compared to net cash used in operations of $10.6 million for the three months ended March 31, 2018. The lower outflow was primarily due to timing of accounts payable and changes in accrued liabilities, partially offset by decreased earnings and the timing of customer payments.

*Investing Activities.* Net cash used in investing activities was $60.0 million for the three months ended March 31, 2019, compared to $70.2 million for the three months ended March 31, 2018. Cash used in investing activities consisted primarily of capital spending of $59.6 million and $67.9 million for the three months ended March 31, 2019 and 2018, respectively. We anticipate that we will spend approximately $180 million to $190 million on capital expenditures in 2019.

*Financing Activities.* Net cash provided by financing activities totaled $57.4 million for the three months ended March 31, 2019, compared to net cash used in financing activities of $15.0 million for the three months ended March 31, 2018. The cash inflow was primarily due to the increase in short-term debt, partially offset by the repurchase of common stock during the first quarter of 2019.

### Share Repurchase Program

In June 2018, our Board of Directors approved a new common stock repurchase program (the “2018 Program”) authorizing us to repurchase, in the aggregate, up to $150.0 million of our outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by us and in accordance with prevailing market conditions and federal securities laws and regulations. We expect to fund any future repurchases from cash on hand and future cash flows from operations. The specific timing and amount of any future repurchase will vary based on market and business conditions and other factors. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at our discretion.

During the three months ended March 31, 2019, we utilized $5.9 million of cash on hand to repurchase 85,000 shares of common stock. As of March 31, 2019, we had approximately $128.7 million of repurchase authorization remaining under the 2018 Program. We did not make any repurchases during the three months ended March 31, 2018.

### Non-GAAP Financial Measures

In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:

- because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;
- in developing our internal budgets and forecasts;
- as a significant factor in evaluating our management for compensation purposes;
- in evaluating potential acquisitions;
- in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and
- in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.

In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. 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.

EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:

- 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 and 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.

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 following table provides a reconciliation of EBITDA and Adjusted EBITDA from net income (loss), which is the most comparable financial measure in accordance with U.S. GAAP:

*(dollar amounts in thousands)*

|  | Three Months Ended March 31, 2019 | 2018 |
| --- | ---: | ---: |
| Net (loss) income attributable to Cooper-Standard Holdings Inc. | $(3,460) | $56,792 |
| Income tax expense | 2,331 | 11,891 |
| Interest expense, net of interest income | 11,932 | 9,800 |
| Depreciation and amortization | 36,605 | 36,259 |
| EBITDA | $47,408 | $114,742 |
| Restructuring charges | 17,715 | 7,125 |
| Project costs (1) | 1,263 | — |
| Loss on refinancing and extinguishment of debt (2) | — | 770 |
| Adjusted EBITDA | $66,386 | $122,637 |

(1) Project costs related to acquisitions and planned divestiture.

(2) Loss on refinancing and extinguishment of debt related to the applicable amendment of the Term Loan Facility entered into during such period.

### Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note 22. "Commitments and Contingencies" to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report, is incorporated herein by reference.

### Recently Issued Accounting Pronouncements

See Note 2. "New Accounting Pronouncements" to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

### Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2019.

### Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “outlook”, “guidance”, “forecast,” or future or conditional verbs, such as “will,” “should,” “could,” “would,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other items, such factors may include: prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of manufactured components and raw materials; disruption in our supply base; competitive threats and commercial risks associated with us entering new markets; possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations, and policies governing the terms of foreign trade such as increased trade restrictions and tariffs; foreign currency exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial amount of indebtedness; our ability to obtain adequate financing sources in the future; operating and financial restrictions imposed on us under our debt instruments; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; effectiveness of continuous improvement programs and other cost savings plans; manufacturing facility closings or consolidation; our ability to execute new program launches; our ability to meet customers’ needs for new and improved products; the possibility that our acquisitions and divestitures may not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; changes in our assumptions as a result of IRS issuing guidance on the Tax Cuts and Jobs Act; the possibility of future impairment charges to our goodwill and long-lived assets; and our dependence on our subsidiaries for cash to satisfy our obligations.

You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this quarterly report on Form 10-Q, and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except where we are expressly required to do so by law.

This quarterly report on Form 10-Q 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.

## Market risk

As filed, 184 characters.

There have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously disclosed in the Company’s 2018 Annual Report.

## Controls and procedures

As filed, 1,213 characters.

### Evaluation of Disclosure Controls and Procedures

The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on that evaluation, the Company’s Chief Executive Officer along with the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Report.

### Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

Filed May 2, 2019.
Source: SEC EDGAR, the filing index for accession 0001320461-19-000027. Last ingested by Listed: Nov 5, 2026, 16:52 ET. No prices; not investment advice.