Cooper-Standard Holdings Inc. Q4 FY2025 earnings call

• Safety: 2025 was the best safety year ever with a safety incident rate of 0.24 per 200,000 hours worked, and 31 plants had zero reportable incidents.
• Cost Savings: Combined efficiency improvements and lean initiatives generated $64 million in cost savings in 2025, plus $18 million from salaried reduction actions.
• Operational Performance: Achieved 24% improvement in operating income, received $298 million in net new business awards in 2025.
• Awards: Received numerous awards for product quality, customer service, culture, and sustainability.

The company has two main product segments: Fluid Handling Systems and Sealing Systems. In 2025, sales totaled $2.74 billion. Adjusted EBITDA for the full year was $209.7 million. The Fluid Handling Systems segment focuses on expanding geographically, leveraging hybrid vehicle trends, and launching innovative products like thermal management solutions. The Sealing Systems segment is centered on operational excellence, using engineering capabilities to drive profitable growth and quickly bringing innovative products to market. Fourth quarter 2025 sales were $672 million, an increase of 1.8% vs 2024, with adjusted EBITDA for the quarter at $34.9 million (5.2% of sales).

• Expect increased profitability and further margin expansion in 2026.
• Sales expected to increase by around 3% based on industry production outlook.
• Aim for double-digit EBITDA margin for full year 2026, with first quarter likely weakest but improving later.
• Long-term goal: Reduce net leverage ratio to two times or lower by 2028 and triple return on invested capital by 2028.

• Production disruptions from customer supply chain issues.
• Tariffs and raw material fluctuations, particularly affecting the Fluid Handling Systems segment.
• Uncertainty around volume and mix changes in the market.

Q: Regarding the $280 million adjusted EBITDA guidance, is lean a big contributor?

A: More the latter, it's business as usual for the team, with over 90% of the work already identified.

Q: Are new products like EcoFlow included in volume mix and price?

A: Yes, all net new business is included, and 74% of new awards are related to value-add innovation and hybrid/BEV platforms.

Q: Thoughts on F Series production and its impact?

A: Production is ramping up, with potential for increased units if shifts and line speeds are adjusted.

Q: Net new business wins from China and their impact on revenue?

A: 51% of net new business is from Chinese OEMs, with faster deployment to market driving future growth.

Q: Free cash flow expectations for 2026?

A: Expect positive free cash flow, but impacted by capital expenditures, cash taxes, and working capital tied up in new business.