# Cooper-Standard Holdings Inc. (CPS) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Cooper-Standard Holdings Inc.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1320461/000132046122000038/cps-20211231.htm
Accession: 0001320461-22-000038
Filing date: 2022-02-18
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/CPS/
All MD&A years: /company/CPS/mda/
Next year: /company/CPS/mda/fy2022/ (FY 2022)

Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 Item 1. “Business—Forward-Looking Statements” 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 Item 1A. “Risk Factors.” Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those statements included in Item 8. “Financial Statements and Supplementary Data” of this Report.

Executive Overview

Our Business

We design, manufacture and sell sealing, fuel and brake delivery, and fluid transfer systems for use in passenger vehicles and light trucks manufactured by global OEMs. Prior to its divestiture on April 1, 2019, the Company also operated an AVS business. In 2021, approximately 82% of our sales consisted of original equipment sold directly to OEMs for installation on new vehicles. The remaining 18% of our sales were primarily to Tier I and Tier II suppliers and non-automotive manufacturers. Accordingly, sales of our products are directly affected by the annual vehicle production of OEMs and, in particular, the production levels of the vehicles for which we provide specific parts. Most of our products are custom designed and engineered for a specific vehicle platform. Our sales and product development personnel frequently work directly with the OEMs’ engineering departments in the design and development of our various products.

Although each OEM may emphasize different requirements as the primary criteria for judging its suppliers, we believe success as an automotive supplier generally requires outstanding performance with respect to quality, price, service, performance, design and engineering capabilities, innovation, timely delivery, financial stability and an extensive global footprint. Also, we believe our continued commitment to invest in global common processes is an important factor in servicing global customers with the same quality and consistency of product wherever we produce in the world. This is especially important when supplying products for global platforms.

In addition, to remain competitive and offset continued customer pricing pressure, we must also consistently achieve and sustain cost savings. In an ongoing effort to reduce our cost structure, we run a global continuous improvement program which includes training for our employees, as well as implementation of lean tools, structured problem solving, best business practices, standardized processes and change management. We also evaluate opportunities to consolidate facilities and to relocate certain operations to lower cost countries. We believe we will continue to be successful in our efforts to improve our design and engineering capability and manufacturing processes while achieving cost savings, including through our continuous improvement initiatives.

Our OEM sales are generally based upon purchase orders issued by the OEMs, with updated releases for volume adjustments. As such, we typically do not have a backlog of orders at any point in time. Once selected to supply products for a particular platform, we typically supply those products for the platform life, which is normally five to eight years, although there is no guarantee that this will occur. In addition, when we are the incumbent supplier to a given platform, we believe we have a competitive advantage in winning the redesign or replacement platform.

In 2021, approximately 54% of our sales were generated in North America. Because of our significant international operations, we are subject to the risks associated with doing business in other countries, such as currency volatility, high interest and inflation rates, and the general political and economic risk that are associated with some of these markets.

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 and production. Business conditions may vary significantly from period to period or region to region.

The COVID-19 pandemic created an unusually high degree of economic disruption and uncertainty during 2020. In 2021, global economic disruption was exacerbated by broad supply chain challenges caused, in part, by sharp increases in overall industrial demand and widespread labor shortages related to continuing COVID-19 restrictions and concerns. A considerable

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amount of economic uncertainty remains heading into 2022. Many industries, including the automotive industry, remain significantly impacted by supply chain disruptions, labor shortages and persistent inflationary pressure. In addition, the potential for changes in fiscal and monetary policies by governments and interest rate increases by central banks around the world adds to an already uncertain global economic environment.

In North America, U.S. consumer confidence has trended downward since the second quarter of 2021. Key drivers of the decline are inflation, continuing supply chain disruptions and prospective interest rate hikes. Persistent concerns over new variants of COVID-19 are also a factor. However, U.S. households have benefited from past economic stimulus actions and personal savings rates remain high. In addition, the unemployment rate in the U.S. is near an all-time low. Finally, in 2022, the United States government is expected to take actions to control inflation. The Federal Reserve Bank has announced intentions to implement multiple interest rate hikes during the year and begin tapering asset purchases. However, recently passed infrastructure legislation and pent-up consumer demand are expected to support continued economic growth.

In Europe, the Eurozone economy has rebounded to near its pre-pandemic size and employment rates have largely returned to pre-pandemic levels. However, persistent impacts of the COVID-19 pandemic, supply chain constraints and inflationary pressures continue to create an uncertain economic outlook. As a result, the European Central Bank (ECB) has announced its intent to maintain its asset purchase program through the first quarter of 2022 and then to end emergency economic support and stimulus after March. The ECB also announced plans to leave borrowing rates at current levels. Automotive production levels in the region are expected to improve modestly in 2022 as supply chain issues alleviate.

In Asia Pacific, China’s economy experienced a strong rebound in 2021 with year-over-year growth of approximately 8%. This growth was achieved through continued fixed asset investment in industrial technology and infrastructure and more liberal credit policies, despite persistent impacts of the COVID-19 pandemic and global supply chain disruptions. In 2022, targeted stimulus policy easing, reduced export demand and additional restrictions on polluting industries are expected to weigh on economic activity and growth in 2022. Geopolitical tensions, further contractions in the property sector and ongoing COVID-19 outbreaks could pose additional risk to the outlook.

In South America, consumer and capital spending are expected to slow and export growth is likely to moderate following the cyclical, post-pandemic rebound in 2021. In addition, higher energy costs, severe drought conditions and supply chain constraints created an inflationary environment in the later part of 2021 that will likely continue into 2022, putting downward pressure on consumer spending. The Brazilian Central Bank is expected to prioritize actions to control inflation rather than stimulating additional growth. We remain cautious for the economic outlook in this market given the long history of political instability and economic volatility in the region.

Production Levels

Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America. Beginning in the first quarter of 2020, as a result of COVID-19, we experienced the shutdown of effectively all of our facilities coinciding with the shutdown of our customer facilities in all regions. Production subsequently resumed in all regions, at steadily increasing rates throughout 2020.

In the first quarter of 2021 and continuing throughout the year, OEM production volumes were disrupted by the global shortage of semiconductors. The shortage has resulted in slowdowns and stoppages in the final production of vehicles. However, production volumes were more consistent in the fourth quarter. Further, current customer schedules and industry forecasts suggest production volumes will steadily increase throughout 2022. Therefore, we are collaborating closely with our customers to minimize production inefficiencies while supporting their needs.

According to the forecasting firm IHS Markit, global light vehicle production was approximately 76.4 million units in 2021. This reflects an increase of approximately 2.5% globally since 2020.

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Light vehicle production in certain regions for 2021 and 2020, as well as projections for 2022, are provided in the following table:

[[GREPCENT_TABLE]]
[["(In millions of units)","2022(1)","","2021(1)","","2020(1)","","Projected % Change 2021-2022","","% Change 2020-2021"],["North America","15.2","","13.0","","13.0","","16.6","%","","0.1","%"],["Europe","18.5","","15.7","","16.6","","17.5","%","","(5.0)","%"],["Asia Pacific","44.3","","43.1","","41.0","","2.8","%","","5.1","%"],["Greater China","24.7","","24.5","","23.6","","0.8","%","","4.0","%"],["South America","2.9","","2.6","","2.2","","12.8","%","","16.1","%"]]
[[/GREPCENT_TABLE]]

(1) Production data based on IHS Markit, January 2022.

In the Europe region in 2021, vehicle production decreased compared to the prior year, as a result of the impact of semiconductor supply issues in the current year. While there were lengthy facility shutdowns due to the initial impacts of COVID-19 in all regions in 2020, the semiconductor supply issues in 2021 resulted in shutdowns for intermediate periods of time and inconsistent production volumes that particularly disrupted Europe for much of the year. Similarly, the North America region experienced effectively no growth in vehicle production compared to the prior year. This was primarily a result of semiconductor supply issues, which also led to facility shutdowns for intermediate periods of time. Conversely, while the Asia Pacific and South America regions were impacted by supply issues in 2021, vehicle production increased in these regions, compared to 2020, which was largely impacted by lengthy facility shutdowns. Following the shutdowns in 2020, there has been strong demand in all regions. While supply issues caused variable production volumes throughout 2021, all regions are expected to experience strong growth in 2022, as supply chains return to more consistent volume and timing.

Industry Overview

Competition in the automotive supplier industry is intense and has increased in recent years as OEMs have demonstrated a preference for stronger relationships with fewer suppliers. Because of a growing emphasis on global vehicle platforms, automotive suppliers with a global manufacturing footprint capable of fully servicing customers around the world will typically have a competitive advantage over smaller, regional competitors. This dynamic is likely to result in further consolidation of competing suppliers within our industry over time.

OEMs have shifted some research and development, design and testing responsibility to suppliers, while at the same time shortening new product cycle times. To remain competitive, suppliers must have state-of-the-art engineering and design capabilities and must be able to continuously improve their engineering, design and manufacturing processes to effectively service the customer. Suppliers are increasingly expected to collaborate on, or assume the product design and development of, key automotive components and to provide innovative solutions to meet evolving technologies aimed at improved emissions and fuel economy.

Increased competitiveness in the industry, as well as customer focus on costs, has resulted in continued pressure on suppliers for price reductions, even in an inflationary environment, which reduces the overall profitability of the industry. Consolidations and market share shifts among vehicle manufacturers continue to put additional pressures on the supply chain. These pricing and market pressures will continue to drive our focus on reducing our overall cost structure through continuous improvement initiatives, capital redeployment, restructuring and other cost management processes. Nonetheless, we continue to negotiate with OEM customers to recover the costs associated with the significant commodity inflation that we have incurred during 2021 and anticipate to incur in 2022.

In addition to the above, other factors will present opportunities for automotive suppliers who are positioned for the changing environment, including autonomous and connected vehicles, evolving government regulation, and consumer preference for environmentally friendly products and technology, including hybrid and electric vehicle (EV) architectures.

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, which led to extended and magnified increases in these costs in 2021. Further, we expect these increases to have an impact on our results and cash flows in 2022. As such, on an ongoing basis, we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.

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Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in Note 2. “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. These policies require the most difficult, subjective or complex judgments that management makes in the preparation of the financial statements and accompanying notes. We consider an accounting estimate to be critical if (i) it requires us to make assumptions about matters that were uncertain at the time we were making the estimate, and (ii) changes in the estimate or different estimates that we could have selected could have had a material impact on our financial condition or results of operations. Such critical accounting estimates are discussed below. For these, materially different amounts could be reported under varied conditions and assumptions. While other items in our consolidated financial statements require estimation, however, in our judgment, they are not as critical as those discussed below.

Goodwill. Our organizational structure changed on January 1, 2020. Prior to this change in organizational structure, our North America operating segment was the only reporting unit in which goodwill was recorded. As a result of the change in organizational structure, a portion of the goodwill that was previously attributable to the North America reporting unit was reallocated to the Industrial Specialty Group reporting unit based on the relative fair value approach. The Industrial Specialty Group reporting unit is a component of the Advanced Technology Group operating segment, which is reflected in “Corporate, eliminations and other”. The change in organizational structure of the business represented a triggering event to test goodwill for impairment as of January 1, 2020. No impairment was identified as a result of completing the goodwill impairment test. Additionally, in the second quarter of 2021, we recorded goodwill as a result of purchasing a supplier in our Europe reporting unit for an immaterial purchase consideration. The incremental goodwill amount was tested as part of our annual impairment testing.

Goodwill is tested for impairment by reporting unit as of October 1 of each year or more frequently if events or circumstances indicate that an impairment may exist. For our goodwill analysis, fair value is based on the cash flows projected in the reporting units’ strategic plans and long-range planning forecasts, discounted at a risk-adjusted rate of return. Our long-range planning forecasts are based on our assessment of revenue growth rates generally based on industry specific data, external vehicle build assumptions published by widely used external sources, and customer market share data based on known and targeted awards over a three-year period. The projected profit margin assumptions included in the plans are based on the current cost structure and adjustments for anticipated cost reductions or increases. If different assumptions were used in these plans, the related cash flows used in measuring fair value could be different and impairment of goodwill might be recorded. The annual goodwill impairment analysis for 2021 resulted in no impairment for the North America and Industrial Specialty Group reporting units. Additionally, a hypothetical 10 percent decrease in the fair value of these reporting units would not impact our conclusion that goodwill was not impaired. However, as a result of our recent operating performance, we recorded an impairment on goodwill that was recognized in the second quarter of 2021 for our Europe reporting unit. See Note 9. “Goodwill and Intangible Assets” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.

Long-Lived Assets. We monitor our long-lived assets for impairment indicators on an ongoing basis. If impairment indicators exist, we analyze the undiscounted cash flows expected to be generated from the long-lived assets compared to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value of machinery and equipment is based upon either estimated salvage value or estimated orderly liquidation value. Fair value of leased buildings is based on a discounted cash flow approach. Fair value of owned buildings is based on a sales comparison approach or cost approach. Cash flows are estimated using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments, as well as assumptions related to discount rates. Changes in economic or operating conditions impacting these estimates and assumptions could result in the impairment of long-lived assets. In 2021 and 2020, we recorded impairment charges related to buildings and machinery and equipment in North America, Europe, Asia Pacific, and Corporate and other segments. See Note 8. “Property, Plant and Equipment” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.

Income Taxes. In determining the provision for income taxes for financial statement purposes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis. In completing this evaluation, we consider all available positive and negative evidence. Such evidence includes historical operating results, the existence of

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cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if permitted under the tax law, expectations for future pretax operating income which considers forecasted revenue trends within the automotive industry, the time period over which our temporary differences will reverse, and the implementation of feasible and prudent tax planning strategies. Deferred tax assets are reduced by a valuation allowance if, based on the weight of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future periods.

Concluding that a valuation allowance is not required is difficult when there is significant negative evidence which is objective and verifiable, such as cumulative losses in recent years. We utilize three years’ cumulative pre-tax book results adjusted for significant permanent book to tax differences as a measure of cumulative results in recent years. In certain jurisdictions, our analysis indicates that we have cumulative three-year historical losses on this basis. This is considered significant negative evidence which is difficult to overcome. However, the three-year loss position is not solely determinative, and, accordingly, management considers all other available positive and negative evidence in its analysis. In the U.S. and certain foreign jurisdictions, we concluded that it is more likely than not that the net deferred tax assets may not be realized in the future. Accordingly, we continue to maintain and adjust as appropriate the valuation allowance related to those net deferred tax assets. However, since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.

In addition, the calculation of our tax benefits and liabilities includes uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize tax benefits and liabilities based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these liabilities based on changing facts and circumstances; however, due to the complexity of some of these uncertainties and the impact of any tax audits, the ultimate resolutions may be materially different from our estimated liabilities. See Note 16. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.

Pensions and Postretirement Benefits Other Than Pensions. Included in our results of operations are significant pension and postretirement benefit costs, which are measured using actuarial valuations. Inherent in these valuations are key assumptions, including discount rates, mortality rates, expected returns on plan assets and health care cost trend rates. These assumptions are determined as of the current year measurement date. We consider current market conditions, including changes in interest rates, in making these assumptions. Changes in pension and postretirement benefit costs may occur in the future due to changes in these assumptions. Our net pension and postretirement benefit costs, which included non-cash pension settlement charges of $1.3 million, were approximately $3.4 million and $1.1 million, respectively, for the year ended December 31, 2021.

To develop the discount rate for each pension plan, the expected cash flows underlying the plan’s benefit obligations were discounted using a December 31, 2021 pension index to determine a single equivalent rate. To develop our expected return on plan assets, we considered historical long-term asset return experience, the expected investment portfolio mix of plan assets and an estimate of long-term investment returns. To develop our portfolio of plan assets, we considered the duration of the plan liabilities and gave more weight to fixed-income positions than to public and private equity investments.

Weighted average assumptions used to determine pension benefit obligations as of December 31, 2021 were as follows:

[[GREPCENT_TABLE]]
[["","U.S.","","Non-U.S."],["Discount rate","2.84","%","","1.83","%"],["Rate of compensation increase","N/A (*)","","1.44","%"],["Cash balance interest credit rate","4.50","%","","N/A"]]
[[/GREPCENT_TABLE]]

Weighted average assumptions used to determine net periodic benefit costs for the year ended December 31, 2021 were as follows:

[[GREPCENT_TABLE]]
[["","U.S.","","Non-U.S."],["Discount rate","2.48","%","","1.63","%"],["Expected return on plan assets","5.50","%","","2.48","%"],["Rate of compensation increase","N/A (*)","","1.99","%"]]
[[/GREPCENT_TABLE]]

*As the U.S. plans are frozen, the rate of compensation increase was not applicable.

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The sensitivity of our pension cost and obligations to changes in key assumptions, holding all other assumptions constant, is as follows:

[[GREPCENT_TABLE]]
[["Change in assumption","Impact on 2022 net periodic benefit cost","","Impact on PBO as of December 31, 2021"],["1% increase in discount rate","+$0.2 million","","-$46.3 million"],["1% decrease in discount rate","+$0.8 million","","+$57.0 million"],["1% increase in expected return on plan assets","-$3.1 million","","\u2014"],["1% decrease in expected return on plan assets","+$3.1 million","","\u2014"]]
[[/GREPCENT_TABLE]]

Aggregate pension net periodic benefit cost is forecasted to be approximately $6.0 million in 2022.

Health care cost trend rates are assumed to reflect market trend, actual experience and future expectations. Health care cost trend rate assumptions used to determine the postretirement benefit obligation as of December 31, 2021 were as follows:

[[GREPCENT_TABLE]]
[["","U.S.","","Non-U.S."],["Health care cost trend rate","5.19","%","","5.00","%"],["Ultimate health care cost trend rate","4.50","%","","5.00","%"],["Year that the rate reaches the ultimate trend rate","2027","","N/A"]]
[[/GREPCENT_TABLE]]

Aggregate other postretirement net periodic benefit cost is forecasted to be approximately $0.1 million in 2022.

The Company’s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements and contribute amounts deductible for United States federal income tax purposes or amounts required by local statute. The Company estimates it will make funding cash contributions to its U.S. and non-U.S. pension plans of approximately $1.0 million and $4.1 million, respectively in 2022.

The Company does not prefund its postretirement benefit obligations. Rather, payments are made as costs are incurred by covered retirees. We expect net other postretirement benefit payments to be approximately $2.4 million in 2022.

Historical Periods

Refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended December 31, 2020 for discussion of the Results of Operations, Segment Results of Operations, and Liquidity and Capital Resources for the year ended December 31, 2020 compared to the year ended December 31, 2019, which is incorporated by reference herein.

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Results of Operations

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","Change"],["","2021","","2020","","","","2021 vs. 2020"],["","(Dollar amounts in thousands)"],["Sales","$","2,330,191","","","$","2,375,439","","","","","$","(45,248)"],["Cost of products sold","2,242,963","","","2,227,892","","","","","15,071"],["Gross profit","87,228","","","147,547","","","","","(60,319)"],["Selling, administration & engineering expenses","227,110","","","263,611","","","","","(36,501)"],["Gain on sale of business, net","(696)","","","(2,834)","","","","","2,138"],["Amortization of intangibles","7,347","","","11,611","","","","","(4,264)"],["Impairment charges","25,609","","","104,363","","","","","(78,754)"],["Restructuring charges","36,950","","","39,482","","","","","(2,532)"],["Operating loss","(209,092)","","","(268,686)","","","","","59,594"],["Interest expense, net of interest income","(72,511)","","","(59,167)","","","","","(13,344)"],["Equity in (losses) earnings of affiliates","(1,728)","","","396","","","","","(2,124)"],["Pension settlement charges","(1,279)","","","(184)","","","","","(1,095)"],["Other expense, net","(4,842)","","","(2,580)","","","","","(2,262)"],["Loss before income taxes","(289,452)","","","(330,221)","","","","","40,769"],["Income tax expense (benefit)","39,392","","","(60,847)","","","","","100,239"],["Net loss","(328,844)","","","(269,374)","","","","","(59,470)"],["Net loss attributable to noncontrolling interests","6,009","","","1,769","","","","","4,240"],["Net loss income attributable to Cooper-Standard Holdings Inc.","$","(322,835)","","","$","(267,605)","","","","","$","(55,230)"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020.

Sales

Sales for the year ended December 31, 2021 decreased 1.9%, compared to the year ended December 31, 2020. The decrease in sales was driven by divestitures, and lower vehicle production volume due to the impact of semiconductor supply issues, partially offset by foreign exchange.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","Variance Due To:"],["","2021","","2020","","Change","","","Volume / Mix*","","Foreign Exchange","","Divestitures/Other"],["","(Dollar amounts in thousands)"],["Total sales","$","2,330,191","","","$","2,375,439","","","$","(45,248)","","","","$","(30,922)","","","$","50,182","","","$","(64,508)"]]
[[/GREPCENT_TABLE]]

* Net of customer price adjustments

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Gross Profit

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","Variance Due To:"],["","2021","","2020","","Change","","","Volume / Mix*","","Foreign Exchange","","Cost (Decreases) / Increases**"],["","(Dollar amounts in thousands)"],["Cost of products sold","$","2,242,963","","","$","2,227,892","","","$","15,071","","","","$","(23,967)","","","$","50,493","","","$","(11,455)"],["Gross profit","87,228","","","147,547","","","(60,319)","","","","(6,955)","","","(311)","","","(53,053)"],["Gross profit percentage of sales","3.7","%","","6.2","%"]]
[[/GREPCENT_TABLE]]

* Net of customer price adjustments

** Includes impact of divestitures

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. Cost of products sold for the year ended December 31, 2021 increased $15.1 million, or 0.7%, compared to the year ended December 31, 2020. Materials comprise the largest component of our cost of products sold and represented approximately 47% and 46% of total cost of products sold for the years ended December 31, 2021 and December 31, 2020, respectively. The change in the cost of products sold was impacted by higher commodity and material costs, wage inflation, foreign exchange, partially offset by vehicle volume and mix, divestitures, and continuous improvement, lean manufacturing and restructuring savings.

Gross profit for the year ended December 31, 2021 decreased $60.3 million compared to the year ended December 31, 2020. As a percentage of sales, gross profit was 3.7% and 6.2% for the years ended December 31, 2021 and 2020, respectively. The decrease was driven by commodity and wage inflation, volume and mix, and the non-recurrence of prior year government incentives primarily related to the COVID-19 pandemic. These items were partially offset by net favorable operational performance, lower variable employee compensation expenses, purchasing lean savings, restructuring savings, and divestitures.

Selling, Administration and Engineering. Selling, administration and engineering expense for the year ended December 31, 2021 was $227.1 million, or 9.7% of sales, compared to $263.6 million, or 11.1% of sales, for the year ended December 31, 2020. The decrease was primarily due to salaried headcount initiative savings, lower variable employee compensation expenses, lower professional fees, and divestitures.

Gain on Sale of Business, net. The gain on sale of business of $0.7 million for the year ended December 31, 2021 related to adjustments for the sale of our European fluid transfer and specialty sealing businesses and Indian operations. The gain on sale of business of $2.8 million for the year ended December 31, 2020 related to the net effect of our 2020 divestitures.

Amortization of Intangibles. Intangible amortization for the year ended December 31, 2021 decreased $4.3 million compared to the year ended December 31, 2020. The decrease was primarily driven by a customer relationship intangible asset in the North America region that was fully amortized during the second quarter of 2020.

Impairment Charges. Non-cash asset impairment charges of $25.6 million for the year ended December 31, 2021 related to property, plant and equipment and goodwill impairment charges. Non-cash asset impairment charges of $104.4 million for the year ended December 31, 2020 related to reducing the carrying value of our held for sale facilities to fair value less costs to sell, property, plant and equipment, and building operating lease impairment charges.

Restructuring. Restructuring charges for the year ended December 31, 2021 decreased $2.5 million compared to the year ended December 31, 2020. Our restructuring actions include plant and other facility closures and workforce reductions and are initiated to maintain our competitive footprint or in response to changes in global and regional automotive markets. The decreases were attributable to North America, Asia Pacific, and Corporate and other, and were primarily due to footprint rationalization actions that were completed in 2020. During 2021, increases attributable to Europe were primarily related to headcount initiatives and footprint rationalization.

Interest Expense, net. Net interest expense for the year ended December 31, 2021 increased $13.3 million compared to the year ended December 31, 2020, primarily due to higher outstanding debt balances including the Senior Secured Notes that were issued in the second quarter of 2020.

Pension Settlement Charges. Non-cash pension settlement charges of $1.3 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively, related to our non-U.S. pension plans.

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Other Expense, net. Other expense, net for the year ended December 31, 2021 increased $2.3 million compared to the year ended December 31, 2020. The increase was primarily due to higher foreign currency losses in the year ended December 31, 2021, partially offset by benefit related income.

Income Tax Expense (Benefit). Income tax expense for the year ended December 31, 2021 was $39.4 million on losses before taxes of $289.5 million. This compared to an income tax benefit of $60.8 million on losses before taxes of $330.2 million for the year ended December 31, 2020. The tax expense in 2021 differed from the statutory rate primarily due to incremental valuation allowances recorded on tax losses generated in the U.S. and certain foreign jurisdictions, the mix of income between the U.S. and foreign sources, tax credits and incentives, and other nonrecurring discrete items. The tax benefit in 2020 differed from the statutory rate due to incremental valuation allowances recorded on tax losses generated in certain foreign jurisdictions and U.S. states, permanent benefits generated by the ability to carry back net operating losses in the U.S. up to five years at the tax rates in effect during those periods under the business tax provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted during 2020, the mix of income between the U.S. and foreign sources, permanent impacts from the divestiture of our European rubber, fluid transfer, and specialty sealing businesses as well as our Indian operations, tax credits and incentives, and other non recurring discrete items.

Segment Results of Operations

Our business is organized into the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other. We use Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items.

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

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

Sales

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","Variance Due To:"],["","2021","","2020","","Change","","","Volume / Mix*","","Foreign Exchange","","Divestitures / Other"],["","(Dollar amounts in thousands)"],["Sales to external customers"],["North America","$","1,148,257","","","$","1,141,368","","","$","6,889","","","","$","2,118","","","$","4,771","","","$","\u2014"],["Europe","518,245","","","586,739","","","(68,494)","","","","(40,454)","","","21,177","","","(49,217)"],["Asia Pacific","458,306","","","468,042","","","(9,736)","","","","(20,362)","","","25,917","","","(15,291)"],["South America","61,713","","","60,754","","","959","","","","4,425","","","(3,466)","","","\u2014"],["Total Automotive","2,186,521","","","2,256,903","","","(70,382)","","","","(54,273)","","","48,399","","","(64,508)"],["Corporate, eliminations and other","143,670","","","118,536","","","25,134","","","","23,351","","","1,783","","","\u2014"],["Consolidated","$","2,330,191","","","$","2,375,439","","","$","(45,248)","","","","$","(30,922)","","","$","50,182","","","$","(64,508)"]]
[[/GREPCENT_TABLE]]

* Net of customer price adjustments

•Volume and mix, net of customer price adjustments, was driven by the decline in vehicle production volume caused by the impact of semiconductor and other OEM supply chain issues.

•The impact of foreign currency exchange was primarily related to the Euro and the Brazilian Real.

34

Segment adjusted EBITDA

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","Variance Due To:"],["","2021","","2020","","Change","","","Volume / Mix*","","Foreign Exchange","","Cost Decreases / (Increases)","","Divestitures / Other"],["","(Dollar amounts in thousands)"],["Segment adjusted EBITDA"],["North America","$","54,616","","","$","90,638","","","$","(36,022)","","","","$","3,668","","","$","(10,550)","","","$","(28,641)","","","$","(499)"],["Europe","(49,599)","","","(39,004)","","","(10,595)","","","","(15,306)","","","(1,717)","","","4,078","","","2,350"],["Asia Pacific","(16,756)","","","12,472","","","(29,228)","","","","(13,154)","","","(7)","","","(23,106)","","","7,039"],["South America","(9,852)","","","(13,841)","","","3,989","","","","3,361","","","4,293","","","(3,665)","","","\u2014"],["Total Automotive","(21,591)","","","50,265","","","(71,856)","","","","(21,431)","","","(7,981)","","","(51,334)","","","8,890"],["Corporate, eliminations and other","13,557","","","(14,588)","","","$","28,145","","","","14,476","","","(46)","","","13,715","","","\u2014"],["Consolidated adjusted EBITDA","$","(8,034)","","","$","35,677","","","$","(43,711)","","","","$","(6,955)","","","$","(8,027)","","","$","(37,619)","","","$","8,890"]]
[[/GREPCENT_TABLE]]

* Net of customer price adjustments

•Volume and mix, net of customer price adjustments, was driven by the decline in vehicle production volume caused by the impact of semiconductor and other OEM supply chain issues.

•Foreign currency exchange was impacted by the Mexican Peso, Canadian Dollar, Euro, Polish Zloty, Czech Koruna, Chinese Renminbi and the Brazilian Real.

•The Cost Decreases / (Increases) category above includes:

◦The one-time impact of an $11.2 million credit loss for certain accounts receivable related to the bankruptcy proceedings of a former joint venture in Asia;

◦Commodity cost, wage and allowance for credit loss increases;

◦The non-recurrence of prior year government incentives primarily related to the COVID-19 pandemic;

◦Reduction in compensation-related expenses, due to salaried headcount initiatives, purchasing savings through lean initiatives, variable employee compensation expenses, and restructuring savings; and

◦Net manufacturing efficiencies of $33 million, primarily driven by our European, North America and Asia Pacific segments.

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. We utilize intercompany loans and equity contributions to fund our worldwide operations. There may be country-specific regulations which may restrict or result in increased costs in the repatriation of these funds. See Note 10. “Debt” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report for a detailed discussion of terms and conditions related to our debt.

We continue to actively preserve cash and enhance liquidity, including decreasing our capital expenditures. Based on those actions and current projections of OEM customer production, 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, despite the challenges presented by the ongoing COVID-19 pandemic and supply chain issues facing the industry. We continuously monitor and forecast our liquidity situation, take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials and purchased components, the state

35

of the overall automotive industry and financial and economic conditions, including the continued impact of COVID-19, and other factors.

Cash Flows

Operating Activities. Net cash used in operating activities was $115.5 million for the year ended December 31, 2021, compared to net cash used in operating activities of $15.9 million for the year ended December 31, 2020. The change was primarily due to decreased cash earnings and accrued payroll liability outflows, partially offset by other working capital improvements.

Investing Activities. Net cash used in investing activities was $91.3 million for the year ended December 31, 2021, compared to net cash used in investing activities of $106.9 million for the year ended December 31, 2020. Cash used in investing activities consisted primarily of capital spending of $96.1 million and $91.8 million for the years ended December 31, 2021 and 2020, respectively. In response to the COVID-19 pandemic and subsequent supply chain issues, significant decreases in capital expenditures occurred throughout 2020 and 2021. We expect reduced capital expenditures will continue in 2022, primarily as part of initiatives to consistently lower overall capital spending. We anticipate that we will spend approximately $90 million to $100 million on capital expenditures in 2022.

Financing Activities. Net cash provided by financing activities totaled $3.2 million for the year ended December 31, 2021, compared to net cash provided by financing activities of $207.7 million for the year ended December 31, 2020. The inflow in 2021 was primarily due to increases in short-term debt, partially offset by payments on long-term debt and purchase of noncontrolling interest, while the inflow in 2020 was primarily due to proceeds from issuance of the Senior Secured Notes. There were also no share repurchases during the years ended December 31, 2021 or 2020.

Senior Notes

On November 2, 2016, the Company’s wholly-owned subsidiary CSA Inc. (the “Issuer”) completed a private offering of debt securities consisting of the issuance of $400.0 million aggregate principal amount of its 5.625% notes due 2026 (the “Senior Notes”). The proceeds from the sale of the Senior Notes were used to repay the non-extended term loans outstanding under the Term Loan Facility and to pay fees and expenses related to the refinancing. The Senior Notes are guaranteed by us, as well as each of CSA Inc.’s wholly-owned existing or subsequently organized U.S. subsidiaries, subject to certain exceptions, to the extent such subsidiary guarantees the ABL Facility and the Term Loan Facility. The Issuer may redeem all or part of the Senior Notes at various points in time prior to maturity, as described in the indenture. The Senior Notes will mature on November 15, 2026. Interest on the Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each year.

If a Change of Control (as defined in the indenture) occurs, we will be required to make an offer to repurchase all of the Senior Notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

Senior Secured Notes

On May 29, 2020, Cooper Standard Automotive Inc. (the “Issuer”) issued $250.0 million aggregate principal amount of its 13.0% Senior Secured Notes due 2024 (the “Senior Secured Notes”), pursuant to the Indenture, dated as of May 29, 2020 (the “Indenture”), by and among the Issuer, the other guarantors party thereto and U.S. Bank National Association, as trustee, in a transaction exempt from registration under Rule 144A and Regulation S of the Securities Act of 1933. Proceeds from the Senior Secured Notes were used to provide additional liquidity for the Company. The Senior Secured Notes are guaranteed on a senior secured basis by CS Intermediate HoldCo 1 LLC and each of the Issuer’s present and future subsidiaries that are obligors or guarantee the Term Loan Facility and each of the Issuer’s wholly owned domestic subsidiaries that are obligors under, or guarantee, certain other indebtedness, subject to certain exceptions. The notes are also guaranteed on a senior unsecured basis by Cooper-Standard Latin America B.V.

The Issuer may redeem all or part of the Senior Secured Notes prior to maturity at the prices set forth in the Indenture. The Senior Secured Notes mature on June 1, 2024. Interest on the Senior Secured Notes is payable semi-annually in arrears in cash on June 1 and December 1 of each year.

ABL Facility

On November 2, 2016, CS Intermediate Holdco 1 LLC (“Parent”), CSA U.S. (the “U.S. Borrower”), Cooper-Standard Automotive Canada Limited (the “Canadian Borrower”), Cooper-Standard Automotive International Holdings B.V. (the “Dutch Borrower”, and, together with the U.S. Borrower and the Canadian Borrower, the “Borrowers”) and certain subsidiaries of the U.S. Borrower, entered into a third amendment of our ABL Facility. In March 2020, the Company entered into the First Amendment of the Third Amended and Restated Loan Agreement (“the Amendment”). As a result of the Amendment, the senior

36

asset-based revolving credit facility (“ABL Facility”) maturity was extended to March 2025 and the aggregate revolving loan commitment was reduced to $180.0 million.

In addition, our ABL Facility provides for an uncommitted $100.0 million incremental loan facility, for a potential total ABL Facility of $280.0 million.

The ABL Facility includes affirmative and negative covenants that impose substantial restrictions on our financial and business operations. The ABL Facility also contains various events of default that are customary for comparable facilities.

Loan and letter of credit availability under the agreement is subject to a borrowing base, which at any time is limited to the lesser of: (A) the maximum facility amount (subject to certain adjustments) and (B) (i) up to 85% of eligible accounts receivable; plus (ii) the lesser of 70% of eligible inventory or 85% of the appraised net orderly liquidation value of eligible inventory; plus (iii) up to the lesser of $30.0 million and 85% of eligible tooling accounts receivable; minus reserves established by the agent. The obligations under the ABL Facility and the related guarantees are secured by various assets, as detailed in Note 10. “Debt” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report.

Borrowings under the ABL Facility bear interest at a rate equal to, at the Borrowers’ option:

•in the case of borrowings by U.S. Borrower, London Inter-Bank Offered Rate (“LIBOR”) or the base rate plus, in each case, an applicable margin; or

•in the case of borrowings by the Canadian Borrower, bankers’ acceptance (“BA”) rate, Canadian prime rate or Canadian base rate plus, in each case, an applicable margin; or

•in the case of borrowings by the Dutch Borrower, LIBOR plus an applicable margin.

The applicable margin may vary between 1.50% and 2.00% with respect to the LIBOR or Canadian BA rate-based borrowings and between 0.50% and 1.00% with respect to U.S. base rate, Canadian prime rate and Canadian base rate borrowings. The applicable margin is subject, in each case, to quarterly pricing adjustments (based on average facility availability).

As of December 31, 2021, the Company had $147.5 million in availability. As of December 31, 2021 and 2020, the Company had $0.8 million and $1.0 million, respectively, in unamortized debt issuance costs related to the ABL Facility.

Term Loan Facility – Amendments

On November 2, 2016, CSA U.S., as borrower, entered into the first amendment of our Term Loan Facility. The Term Loan Facility provides for loans in an aggregate principal amount of $340.0 million. Subject to certain conditions, the Term Loan Facility, without the consent of the then existing lenders (but subject to the receipt of commitments), may be expanded (or a new term loan or revolving facility added) by an amount that will not cause the consolidated secured net debt ratio to exceed 2.25 to 1.00, plus $400.0 million, plus any voluntary prepayments (including revolving facility and ABL Facility to the extent commitments are reduced) not funded from proceeds of long-term indebtedness. The Term Loan Facility matures on November 2, 2023, unless earlier terminated.

The Term Loan Facility contains incurrence-based negative covenants customary for high yield senior secured debt securities. These negative covenants are subject to exceptions, qualifications and certain carveouts.

On May 2, 2017, CSA U.S. entered into Amendment No. 2 to the Term Loan Facility to modify the interest rate. Subsequently, on March 6, 2018, the Company entered into Amendment No. 3 to the Term Loan Facility to further modify the interest rate. In accordance with this amendment, borrowings under the Term Loan Facility bear interest, at the Company’s option, at either (1) with respect to Eurodollar rate loans, the greater of the applicable Eurodollar rate and 0.75% plus 2.0% per annum, or (2) with respect to base rate loans, the base rate, (which is the highest of the then current federal funds rate plus 0.5%, the prime rate most recently announced by the administrative agent under the term loan, and the one-month Eurodollar rate plus 1.0%) plus 1.0% per annum.

All obligations of the borrower under the Term Loan Facility are guaranteed jointly and severally on a senior secured basis by us and the wholly-owned U.S. restricted subsidiaries of CSA U.S.

As of December 31, 2021, the principal amount of $323.0 million was outstanding, and the Company had $1.1 million unamortized debt issuance costs and $0.7 million of unamortized original issue discount related to the Term Loan Facility.

Off-Balance Sheet Arrangements

As a part of our working capital management, we sell certain European customers accounts receivable through a third party financial institution in off-balance sheet arrangements. The amount sold varies each month based on the amount of

37

underlying receivables and cash flow needs. As of December 31, 2021 and 2020, we had $52.7 million and $85.1 million, respectively, of receivables outstanding under receivable transfer agreements entered into by various locations. For the years ended December 31, 2021 and 2020, total accounts receivable factored were $366.9 million and $476.4 million, respectively. Costs incurred on the sale of receivables were $0.5 million, $0.8 million and $1.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts are recorded in other expense, net in the consolidated statements of operations. These are permitted transactions under the credit agreements governing our ABL Facility and Term Loan Facility and the indenture governing the Senior Notes and Senior Secured Notes.

Other Capital Transactions Impacting Liquidity

Share Repurchase Program

In June 2018, our Board of Directors approved a 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 management 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. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at our discretion. The 2018 Program was effective beginning November 2018. As of December 31, 2021, we had approximately $98.7 million of repurchase authorization under the 2018 Program.

We did not make any repurchases during the years ended December 31, 2021 or 2020.

Contractual Obligations

Our contractual obligations consist of legal commitments requiring us to make fixed or determinable cash payments, regardless of the contractual requirements of the vendor to provide future goods or services. Except as otherwise disclosed, this table does not include information on our recurring purchase of materials for use in production because our raw materials purchase contracts typically do not require fixed or minimum quantities.

The following table summarizes the total amounts due as of December 31, 2021 under all debt agreements at nominal value, undiscounted finance lease commitments and other contractual obligations.

[[GREPCENT_TABLE]]
[["","Payment due by period"],["","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["","(Dollar amounts in millions)"],["Debt obligations","$","1,024.5","","","$","54.9","","","$","569.6","","","$","400.0","","","$","\u2014"],["Interest on debt obligations","212.2","","","66.0","","","101.2","","","45.0","","","\u2014"],["Operating lease obligations","144.4","","","28.3","","","41.4","","","25.8","","","48.9"],["Finance lease obligations","34.0","","","3.3","","","6.7","","","6.7","","","17.3"],["Total","$","1,415.1","","","$","152.5","","","$","718.9","","","$","477.5","","","$","66.2"]]
[[/GREPCENT_TABLE]]

In addition to our contractual obligations and commitments set forth in the table above, we have employment arrangements with certain key executives that provide for continuity of management. These arrangements include payments of multiples of annual salary, certain incentives and continuation of benefits upon the occurrence of specified events in a manner believed to be consistent with comparable companies. As of December 31, 2021, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $1.3 million.

We also have funding requirements with respect to our pension obligations. We expect to make cash contributions to our U.S. and foreign pension plans of approximately $1.0 million and $4.1 million, respectively, in 2022. Our minimum funding requirements after 2022 will depend on several factors, including the investment performance of our retirement plans and prevailing interest rates. Our funding obligations may also be affected by changes in applicable legal requirements. We also have payments due with respect to our postretirement benefit obligations. We do not prefund our postretirement benefit obligations. Rather, payments are made as costs are incurred by covered retirees. We expect net other postretirement benefit payments to be approximately $2.4 million in 2022.

We may be required to make significant cash outlays due to our unrecognized tax benefits. However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax

38

benefits of $3.6 million as of December 31, 2021 have been excluded from the contractual obligations table above. See Note 16. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.

Excluded from the contractual obligations table above are open purchase orders as of December 31, 2021 for raw materials, supplies and capital expenditures in the normal course of business, supply contracts with customers, distribution agreements, joint venture agreements and other contracts without express funding requirements.

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 the following:

•they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;

•they do not reflect changes in, or cash requirements for, our working capital needs;

•they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our ABL Facility, Term Loan Facility, Senior Notes, and Senior Secured Notes;

•they do not reflect certain tax payments that may represent a reduction in cash available to us;

•although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

•other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

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.

39

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:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2021","","2020","","2019"],["","(Dollar amounts in thousands)"],["Net (loss) income attributable to Cooper-Standard Holdings Inc.","$","(322,835)","","","$","(267,605)","","","$","67,529"],["Income tax expense (benefit)","39,392","","","(60,847)","","","36,089"],["Interest expense, net of interest income","72,511","","","59,167","","","44,113"],["Depreciation and amortization","139,008","","","154,229","","","151,953"],["EBITDA","$","(71,924)","","","$","(115,056)","","","$","299,684"],["Impairment charges (1)","25,609","","","103,887","","","23,139"],["Restructuring charges","36,950","","","39,482","","","51,102"],["Pension settlement charges (2)","1,279","","","184","","","15,997"],["Lease termination costs (3)","748","","","771","","","1,167"],["Gain on sale of business, net (4)","(696)","","","(2,834)","","","(191,571)"],["Project costs (5)","\u2014","","","5,648","","","2,090"],["Divested noncontrolling interest debt extinguishment","\u2014","","","3,595","","","\u2014"],["Adjusted EBITDA","$","(8,034)","","","$","35,677","","","$","201,608"]]
[[/GREPCENT_TABLE]]

(1)Non-cash impairment charges in 2021 related to fixed assets and goodwill. Impairment charges in 2020 included impairment of assets held for sale and other impairment charges related to fixed assets and right-of-use operating lease assets, net of portion attributable to our noncontrolling interests. Impairment charges in 2019 related to fixed assets.

(2)Non-cash pension settlement charges and administrative fees incurred related to certain of our U.S. and non-U.S. pension plans.

(3)Lease termination costs no longer recorded as restructuring charges in accordance with ASC 842.

(4)In 2021, subsequent adjustments were recorded to the net gain on sale of business, which related to the 2020 divestiture of our European rubber fluid transfer and specialty sealing businesses. In 2020, the gain on sale of business primarily related to divestitures. In 2019, the gain on sale of business related to the divestiture of the AVS product line.

(5)Project costs recorded in selling, administration and engineering expense related to acquisitions and divestitures.

Recent Accounting Pronouncements

See Note 3. “New Accounting Pronouncements” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.