Cooper-Standard Q2 Earnings Call Highlights

Cooper-Standard (NYSE:CPS) reported higher second-quarter sales but lower adjusted EBITDA as material inflation, tariffs and other cost pressures outweighed operational savings. Management said it expects commercial recoveries and continued cost actions to improve results in the second half while maintaining its full-year sales and profitability plan.

Second-quarter sales rose 2.2% from a year earlier to $721.3 million. Adjusted EBITDA declined to $53.9 million from $62.8 million in the prior-year quarter. The company recorded a GAAP net loss of $18.8 million, compared with a $1.4 million loss a year earlier. After adjusting for restructuring expense net of tax, Cooper-Standard posted an adjusted net loss of $2.3 million, or $0.13 per share, versus adjusted net income of $1 million, or $0.06 per share, in the second quarter of 2025.

Inflation and tariffs weigh on quarterly profitability

Executive Vice President and CFO Jon Banas said the year-over-year decline in adjusted EBITDA reflected higher costs for materials, duties and tariffs, wages, and general inflation. The company cited $10 million of higher material costs involving rubber, metals and resins; $8 million of wage and general-inflation costs; and $8 million of higher duties, tariffs and other costs.

Those pressures more than offset $15 million in savings from lean initiatives in purchasing and manufacturing, along with a $2 million benefit from foreign exchange. Sales also benefited from roughly $10 million of favorable foreign exchange and approximately $5 million from favorable volume and mix, net of customer price adjustments and recoveries.

Banas said commodity inflation was largely tied to higher oil prices, which averaged about $30 per barrel above levels seen before the Middle East conflict began. He described much of the second-quarter commodity impact as a timing issue under the company’s commercial agreements.

“We expect to recover most of these incremental input costs, as well as tariffs, in the second half of the year,” Banas said, citing index-based contracts, existing agreements and commercial negotiations. He said price increases had already taken effect in the third quarter.

Chairman and CEO Jeff Edwards said customer pricing for purchase orders beginning July 1 reflected the increase in oil prices, while further negotiations continue around energy-related costs. He also pointed to supply-chain actions and cost-reduction programs as contributors to the expected second-half improvement.

Cash flow, liquidity and capital spending

Cooper-Standard generated $16.3 million of free cash flow in the second quarter, a $39.7 million improvement from the same quarter last year. The company defined free cash flow as cash provided by operations less capital expenditures.

Capital expenditures totaled $13.8 million, or 1.9% of sales, as the company increased spending on program launches and automation. Banas said the quarterly spending level was consistent with its expected full-year run rate of 2% to 3% of sales.

As of June 30, Cooper-Standard had $126.6 million of cash and $167.6 million of unused availability under its asset-based lending facility, for total liquidity of nearly $300 million. Management said it expects positive free cash flow for the full year as material-cost recoveries take effect and operational efficiencies increase.

New business awards and operating performance

The company said it received $118 million in net new business awards during the second quarter, bringing first-half awards to $246 million. Edwards said the company remains ahead of plan toward its goal of more than $400 million in 2026 net new awards.

Management said much of the newly won business can be launched using available capacity with limited incremental capital investment. Edwards said the awards, coupled with higher variable contribution margins on newer programs, support the company’s longer-term targets for growth, margins and return on invested capital.

Cooper-Standard also reported that 99% of customer scorecards for product quality and service were rated green during the quarter, while 97% of new-program-launch scorecards were green. Its total incident rate was 0.17 reportable incidents per 200,000 hours worked, and 44 plants had no reportable incidents during the first six months of the year.

Fluid handling expansion and outlook

Edwards highlighted momentum in the company’s Fluid Handling Systems segment, where it has won nearly $40 million in annualized mid-production conquest business over the past 10 months. Those awards, which are effective this year, came from nearly 10 instances in which customers moved business from competitors, according to Edwards.

He said Cooper-Standard aims to double its fluid-handling business within five to seven years. Management sees opportunities from hybrid powertrains in the U.S., continued electric-vehicle adoption in China, and a mix of hybrid and electric vehicles in Europe.

During the question-and-answer session, Banas said approximately half of a cited $30 million-plus combined new-business opportunity related to hybrids and battery-electric vehicles was tied to each category. He said both vehicle types generally provide higher content per vehicle than traditional internal-combustion-engine programs, with hybrids offering an even greater content opportunity.

Management maintained the midpoint of its full-year adjusted EBITDA guidance, while narrowing the upper and lower ends of the range to reflect improved midyear visibility. The company also made minor changes to other guidance items, including higher expected capital spending for unplanned business launches, higher restructuring expense tied to footprint optimization, and lower expected net interest expense following its refinancing.

Edwards said Cooper-Standard has begun to see more normalized production on certain key platforms. However, he added that the company did not assume additional fourth-quarter production volume on the Ford F-150 in its forecast because it had not yet seen that increase in customer releases.

About Cooper-Standard (NYSE:CPS)

Cooper-Standard Holding Inc is a global supplier of sealing, fuel and brake delivery, and fluid transfer systems for the automotive industry. The company designs and manufactures engineered rubber, plastic and metal products, including sealing systems for doors, windows and powertrain assemblies, fuel and brake hoses and lines, and fluid transfer components such as coolant, refrigerant and washer fluid systems.

Founded in 1922 and headquartered in Novi, Michigan, Cooper-Standard operates manufacturing facilities and technical centers across North America, Europe, South America and Asia.

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