Good morning ladies and gentlemen, and welcome to the Cooper-Standard Second Quarter 2015 Earnings Conference Call. During the presentation all participants will be in listen-only mode. Following management's prepared comments, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, and the webcast will be available for replay later today. I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations.

Thanks, Jackie, and good morning everyone. Thanks for taking the time to participate in our call today. We appreciate your continued interest in Cooper-Standard. As you know, we distributed our second quarter earnings press release last evening and filed our Q this morning, and they are available through the Investor Relations page of our Web site and through EDGAR. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer; and Matt Hardt, Executive Vice President and Chief Financial Officer. Before we begin, I need to remind you that the statements made in this presentation, which are not historical in nature are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. They are made based on current factual information and certain assumptions, plans, expectations, events, and market trends that management currently believes to be reasonable. Such statements involve risks and uncertainties, financial and operational results for future periods may differ materially from current management projections as a result of factors outside the company's control. For additional information on forward-looking statements and related risk factors, we ask that you refer to the company's statements included in our Form 10-K and on other periodic filings with the Securities and Exchange Commission. This call is intended to be in compliance with Regulation FD and is open to institutional investors, security analysts, media representatives and other interested parties. I'll also point out that there is a reconciliation of certain non-GAAP financial measures used during this call, and those reconciliations can be found in the appendix of the presentation. With that, I'll turn the call over to Jeff Edwards.

Thanks, Roger, and good morning everyone. Certainly thank you for joining the call this morning. We're going to start off the discussion today with a brief overview of some of the business highlights for the quarter, including the continued margin expansion in North America and Europe, our progress in optimizing the global footprint, as well as some comments on revenue growth in the quarter, with details on the impact of the Shenya acquisition versus organic growth. After that, Matt will go over the details of our financial results for the quarter. And then I'll come back to wrap up with some insights on our outlook, as well as plans and expectations for the remainder of the year. So let's start with margin improvement, on Slide 4. On a consolidated basis our adjusted EBITDA margin was 11.3% of sales. This represents a 60 basis point improvement over the second quarter of last year, and was our best quarter in more than three years. Each of the regions contributed to the overall improvement in the quarter. In terms of segment profit, North America achieved 130 basis point improvement; Europe was up 190 basis points; Asia Pacific increased sales by 92% year-over-year with 20% being organic growth. In South America we continue to face significant macroeconomic challenges and lagging consumer demand. But overall, this was a very good quarter. And our operating teams have reason to be proud of their accomplishments. And I'd also like to thank our customers for their continued support. The charts on Slide 5 illustrate how the implantation of our Cooper-Standard operating system initiatives are driving improved results. In just the past year, our product quality and customer satisfaction have improved significantly. As measured in PPMs, the first half of this year was 58% better than the full year…

Thanks, Jeff, and good morning everyone. Beginning on Slide 11, I'd like to provide an overview of the results for the quarter. In the second quarter of 2015, we generated total sales of $860.8 million, compared to $857.6 million in the second quarter of 2014. Gross profit was 154 million or 17.9% of sales. This is a 90 basis point improvement in gross margin year-over-year. Adjusted EBITDA was $97 million or 11.3% of sales, compared to $91.8 million or 10.7% of sales in the same period a year ago. On an FX neutral basis, adjusted EBITDA was 107 million or 16.6% higher than the second quarter of 2014. Net income for the quarter was $36.5 million or $1.98 per fully diluted share. And on an adjusted basis excluding restructuring, the 2Q '14 loss on the extinguishment of debt and the gain related to the Shenya acquisition, adjusted net income increased from 35.7 million or $1.94 per diluted share in the second quarter of last year, to $40.9 million or $2.22 per diluted share in the second quarter of this year. This is an increase of 14.4%. On Slide 12, we compare our adjusted EBITDA results in the second quarter to the same period a year ago, and breakout some of the key drivers of our 60 basis point improvement. Improved operating efficiencies provided a 22% increase, versus the second quarter of 2014. Improved volume and mix were strong as well in the quarter, and driving 17% adjusted EBITDA improvement year-over-year. Now, lower pricing, higher labor, and the effect of foreign exchange rates were significant negative factors, and that weighed heavily on our results. In spite of these, we were able to achieve a 60 basis point improvement in EBITDA margin, to 11.3%. Now, moving on to Slide 13, I'll cover…

Okay. Thanks, Matt. We will conclude our presentation this morning by sharing a few thoughts on our outlook for the rest of the year. So moving on to Slide 16, we've talked a lot this morning about our profitable growth strategy and how it's driving the decisions that we make. We've also talked about how the execution of the strategy is beginning to drive significant improvement in our operational and financial results. Our engaged workforce remains focused on our mission, or we strive everyday to deliver innovation, improve our operation, and increase customer satisfaction. We expect demand in our key markets to remain solid in spite of the recent dip in China. New product launches will continue to drive our top line growth at rates that exceed the industry, because we operate in the large highly segmented markets there will continue to be opportunities for consolidation in each of our businesses. We'll continue to pursue strategic acquisitions especially in high growth markets. Based on our results from the first half and our outlook for the rest of the year, we improved our guidance for 2015. The changes are shown in the table on Slide 17. We've reduced our plan to CapEx, cash taxes, and cash restructuring, and raised our expectations for full year margin improvement. Following on our solid first half results, we believe we are on track to meet or exceed our margin targets for the full year. I want to thank all of our employees around the world for their effort and personal commitment to achieving our 2015 top priorities. I would also like to thank our customers as well as our suppliers for their continued support. We'll now be happy to answer any questions you may have.

Thank you. [Operator Instructions] Our first question comes from the line of Trevor Young with Jefferies.

Good morning. Thanks for taking my questions, guys. My first question is on the Ford F-150. Now that Ford is at full production for the full up series of both of its factories, could you tell us how sales into the platform are looking in the back half of the year? Is it in line with expectations?

It is. Ford has, I think even most recently in their release talked about that. So they're on schedule. We're seeing that. We're very excited to be starting that next opportunity with that new F-150. So it's going very well.

Okay, great, thank you. And then my second question is on the 90 basis points gross margin improvement in 2Q. Can you provide some detail on what drove that, particularly since it looks like pricing continued to be a headwind to margins?

Yes, Trevor, there's a couple of things. This is Matt. In particular, our net operations and productivity cost actions in each one of our facilities are helping drive that expansion, as well as what we're seeing from a purchasing perspective. And some of the favorabilities from a commodities perspective are aiding in helping us expand some of our gross margin.

Great. Thanks, Matt. And then my last one is on the revised CapEx guidance, which looks to be down about 6% at the midpoint. Any detail on what's driving that change. Is it just that you're being more selective with which expenditures you undertake? Thank you.

Yes, I think, Trevor, it's a combination of things. I mentioned in the presentation that our -- we continue to drive significant improvement across our plants. So we are actually improving our capacity utilization at a significant rate. So there's quite a bit of capital avoidance that we're seeing there. I mentioned an example in our sealing business. This is all a result of driving our best business practices around the world. I think Matt mentioned as well that we are laser-focused on CapEx, and we're working with all of our teams from -- with the guys leading the operations in each of the regions all the way to the shop floor to better utilize the equipment that we have and look for ways to continue to improve on the utilization of all the equipment. So I think that's the biggest thing. And then the other is that we just continue to find more creative ways to avoid spending. So that's the -- there isn't any real secret here. It's just basically running the operations more effectively, more efficiently, and then challenging every dollar that we spend; how can we avoid it.

That's really helpful. Thanks, Jeff. Congrats on a great quarter.

Thanks, again.

Our next question comes from the line of Glenn Chin with Buckingham Research.

Good morning, gentlemen.

Good morning Glenn.

Hi, Glenn.

So another terrific quarter, so thank you and congratulations again. Can I ask you is it the topic du jour these days or one of them is China? So we're seeing a decline in, or a moderation in the sales growth for industry there, increasing capacity. We're hearing about production cuts, pressure on pricing. So a lot of just the dynamics in the market have changed unfavorably. Can you just speak to us about what you're seeing over there and how it might impact your growth ambitions in the region?

Well, I think strategically, Glenn, there's still no question that whether it's 23 million units this year or 24 million units this year in China, whatever the number ends up being, the future is still is very, very solid. I think short term there are certainly some challenges with the market. Some of it may in fact be industry challenge, some of them maybe more macroeconomic challenges. For us as we continue to build our footprint there, we're very committed to the market, number one. Number two, there's is no reason to believe that it's not going to still be 30 plus percent of the whole industry as we march towards the end of this decade. And so we tend to think about, if we've got 85 million to 86 million units today, the global industry is going to be well over 100 million units, 110 million units by 2020 or 2021. China is going to be 30% of that number. So for us it's the right time. We're scrutinizing all of our investments there just like we would anywhere else, but we're not necessarily looking at this short-term headwind that we're seeing as slowing down our strategic ambitions. We are, as you might expect, cutting costs where we can cut costs, as we speak, in order to respond to the reduction in volumes that you're speaking of. So we'll continue to manage our business that way when we have to flex for volume down, we do it in all markets, including China. And that's what we're doing, but strategically we're still very committed to investing there and making sure we're ready to respond to the customers that we have in that region.

Okay, very good. And so my next question is on sole sourcing. So I believe Cooper-Standard is sole source supplier for sealing for the F-150, as well as the K2XX, is that correct, Jeff?

No, we have -- we shared some of the components across those platforms, Glenn. It certainly is -- we've given you some pretty clear information around sales dollars per vehicle on F-150 for us. We put that out there, here at the beginning of the year, so that that information is available. But no we don't -- our customers tend to spread around a little bit as it relates to the products that we produce.

Okay very good. So you're not the sole source sealing supplier on the K2XX?

No, we're not.

Okay, very good. That's it from me, and congrats again.

Thank you.

Our next question comes from the line of Jim Marrone with Singular Research.

Yes, good morning gentleman, and again nice quarter, and nice to see a lot of organic growth in the company as well.

Thank you.

So maybe my question, it kind of reflects based on the improved cash generation and your liquidity of 351 million, what would be the focus with respect to that liquidity in cash flow? Is there any potential acquisitions that look attractive? I understand that you're going to reduce the CapEx, so cash flow won't be going towards that per se, or is the focus will it be on paying down the debt?

Thanks for calling in, Jim, and I appreciate the question. I think the main focus right now; we are actively in the market taking a look at potential M&A opportunities. And in the short-term we feel as we continue to scour the earth looking for potential partnerships and/or acquisitions, initially use of funds would be along those lines. And as we continue to grow our cash flow and generate more, we're weighing options across the board on uses of funds.

Jim, I would add this. As it relates to the growth of the company, I mean we're obviously a whole lot more focused on getting our innovation to market and growing the company organically. If there are opportunities to consolidate across our space, and there certainly are, as Matt just mentioned. We're going to be very careful to make sure that the type of tuck-unders, if you will, that don't require a huge distraction on the part of our teams around the world, so that we stay focused on executing the business that we have today, and growing it by offering our customers innovative solutions that today they don't have. I think that's the best way to hit the returns that we're looking for. However, we continue to look for smart acquisitions along that [indiscernible].

Okay, very well. Well done gentlemen.

Thank you.

Thanks, Jim.

It appears that there are no more questions. I will now like to turn the call back over to Roger Hendriksen.

Okay. Thanks a lot, Jackie. Jackie, it does look like one more question has come into the queue. Let's go ahead and take that question.

Okay. We have a question from the line of Angelo Rufino with Brookfield Asset Management.

Hey guys. How're you doing, Jeff? Nice quarter.

Good morning. Thank you.

Just was hoping to get a little more color from you on the uptick in labor. I know with Serbia starting to ramp, that's always been something I would expect to see tick down a little bit across the board. And just if you could put a little bit more color or meat on the bone around what happened there?

I think Angelo, this is Matt, what you'll end up seeing here as we continue to expand and transition from Western to Eastern Europe, part of the European improvement initiative that we announced in January we will grow as we're building that level of capacity in Eastern European production capability. And as we go throughout this year and next, you'll end up seeing a reduction in Western Europe. The other piece from the labor increased side that we had in the walk essentially was the impact of just a fact on payroll and in raises and stuff that you typically see at a year-over-year basis. But the bulk of that will be some increases that you'll see in the short-term as we grow our capacity as I mentioned in Eastern Europe versus the reductions that you'll see over the next period of time in the West.

Okay. And then also if you can just speak a little bit to some of the pricing pressure that you saw, I mean volume and mix were obviously nice, just what's [indiscernible] what product are you see pricing pressure on?

Sorry, I didn't get that, Angelo. Can you speak up a little bit?

I apologize, sorry. Yes, it was regarding pricing and the walk, I mean volume and mix looks good. I saw that there were some price pressures, if you could just speak to that a little bit.

Yes. I think. look, in our industry it isn't a secret that each year our customers expect us to be efficient enough to help them as well. I wouldn't consider at any unusual occurrence, it's fairly normal. And that's what you're seeing there, and nothing else.

Okay. Well, great, nice quarter. Good to see cash flow and the margin reflecting, that's what you guys have been working hard towards, so congrats.

Thank you.

And we have no further questions at this time. And I would now like to turn the call back over to Roger Hendriksen.

Okay. Thanks, Jackie, and thank you all for joining the call this morning. We look forward to speaking with you during the remainder of -- in the upcoming quarter, and our next quarter's call. Call me at any time with any questions. Thanks very much.

Thank you. This concludes today's conference call. You may now disconnect.