Cooper-Standard’s Margins Dip, But 2026 EBITDA Hike Expected to Offset

Date of Call: Feb 13, 2026

Financials Results

• Revenue: Q4: $672M, up 1.8% YOY; Full Year: $2.74B, up 0.4% YOY
• EPS: Q4 adjusted net loss: $1.73 per diluted share; Full Year adjusted net loss: $1.73 per diluted share, improved from $3.23 loss YOY
• Operating Margin: Q4 Adjusted EBITDA margin: 5.2%, down from 8.2% YOY; Full Year Adjusted EBITDA: $209.7M, up from $180.7M YOY

Guidance:

• Revenue for 2026 expected to increase around 3% based on industry production outlook.
• Adjusted EBITDA target for 2026: $280M (implied ~34% YOY growth).
• Expect to achieve double-digit EBITDA margin for full year 2026, with Q1 weakest and improving thereafter.
• Free cash flow for 2026 expected to be positive again.
• Over the longer term, target net leverage ratio ~2x or lower by 2028 and triple return on invested capital by 2028.

Business Commentary:

Operational Excellence and Cost Savings:

• Cooper-Standard achieved a 99% green product quality scorecard and a 98% green program launch scorecard, indicating strong operational performance. The company also recorded a safety incident rate of 0.24 per 200,000 hours worked, surpassing previous records.
• The improvements were driven by efficiency enhancements in plants, lean initiatives in the supply chain, and a commitment to safety and quality.

Financial Performance and Margin Expansion:

• The company reported $2.74 billion in sales for 2025, reflecting a 0.4% increase year-on-year. Adjusted EBITDA for the full year was $209.7 million, up from $180.7 million in 2024.
• The financial improvements were achieved through operational efficiencies, restructuring initiatives, and favorable foreign exchange, despite challenges like inflation and customer production disruptions.

Strategic Growth and New Business Wins:

• Cooper-Standard received $298 million in net new business awards in 2025, driven by innovations like FlexiCore and eCoFlow products. Approximately 74% of these awards were related to battery electric or hybrid vehicle platforms.
• The growth strategy focuses on geographic expansion, especially in China, and leveraging hybrid vehicle trends to increase content per vehicle.

China Market Strategy:

• The company aims to increase its revenue from Chinese OEMs to over 60% of its total revenue in China by 2030, up from the current 36%. Revenue from China is expected to grow at a CAGR of over 15% between 2025 and 2028.
• This strategy is supported by strong local relationships, minimal incremental investment for scaling, and favorable returns on invested capital.

2026 Outlook and Strategic Targets:

• Cooper-Standard expects a 3% increase in sales for 2026, targeting a double-digit EBITDA margin. The company plans to hit this target by leveraging new business launches and operational efficiencies.
• The long-term outlook includes reducing the net leverage ratio to around 2x and tripling the return on invested capital by 2028, based on projected global production volumes.

Sentiment Analysis:

Overall Tone: Positive

• CEO states 'I remain extremely optimistic about our opportunities this year and beyond' and 'we expect to continue to build on the successes of 2025 to drive further margin expansion'. Highlights 'best operational performance in company history', 'strong trajectory of profitable growth', and 'amazing leadership'.

Q&A:

• Question from Kirk Ludtke (Imperial Capital): On Slide 20, the guide to the $280M of adjusted EBITDA, is the $90M lean contributor any significant initiatives, or is it business as usual?
  Response: CFO stated it is business as usual, driven by continuous improvement in manufacturing and supply chain, with high confidence as over 90% of initiatives already identified.

• Question from Kirk Ludtke (Imperial Capital): Are the new products (eCoFlow, etc.) included in the $10M volume mix and price?
  Response: CEO confirmed they are included, as they are part of the net new business booked in 2025 and launches from prior years.

• Question from Kirk Ludtke (Imperial Capital): With respect to the F-Series, is production back to normal?
  Response: CFO noted production is ramping up based on public releases, with no details provided on potential near-term drag.

• Question from Michael Ward (Citigroup): What are you seeing with manufacturer schedules, particularly for key models like F-Series?
  Response: CEO noted Ford's public plan implies a potential 60,000 unit increase above their plan, with schedules currently sticking and cautiously optimistic outlook.

• Question from Michael Ward (Citigroup): Have you seen any big lump sum cash inflows for BEV stuff, and do you expect any in 2026?
  Response: CEO indicated most negotiations are for lump sums, with some ongoing into 2026, calling it good news.

• Question from Michael Ward (Citigroup): Is there a sense of urgency to get refinancing done before the end of March when notes become current?
  Response: CFO stated preference to complete refinancing before the third lien notes become current in mid-March to avoid added pressure.

• Question from Nathan Jones (Stifel): What is the contribution from net new business wins in 2023/2024 to the 2026 guide, and how do they layer in?
  Response: CEO explained that 2025's $300M net new business typically takes 2-3 years to roll into revenue, with China business coming faster; new business continues to drive margin expansion.

• Question from Nathan Jones (Stifel): Given potential offsets, is the bottom end of the revenue guide conservative?
  Response: CEO defended the guide, noting revenue growth is significant on a down market, with EBITDA expanding; results could be better if volume exceeds S&P predictions.

• Question from Nathan Jones (Stifel): Any color on free cash flow expectations for 2026?
  Response: CFO detailed components: higher capital expenditures, increased cash taxes, working capital tie-up from new business tooling and higher sales; expects positive free cash flow again.

• Question from Brian DiRubbio (Baird): Clarify the target to increase Chinese OEM revenue share to 60%—is that of total revenue or within Asia Pacific?
  Response: CEO corrected it is within Asia Pacific revenue, aiming to increase Chinese OEM share in China to 60% from 36% over the next 3 years.

• Question from Brian DiRubbio (Baird): What contract and IP protections do you have with Chinese customers?
  Response: CEO stated relationships are strong, built over decades, with no IP issues; critical product performance ensures customer trust and retention.

• Question from Brian DiRubbio (Baird): What variables would have the biggest impact on the 2026 guidance?
  Response: CEO cited volume and mix as the primary factor, with some tariff uncertainty mainly affecting the Fluid business.

Contradiction Point 1

Production Disruption Impact and Recovery Timeline

Contradiction on whether production recovery is confirmed or still uncertain.

What are your thoughts on the recent earnings performance? - Kirk Ludtke (Imperial Capital)

2025Q4: Production appears to be ramping up based on public releases... The situation is moving in the direction predicted by the customer for 2026. - Jonathan Banas(CFO) and Jeffrey Edwards(CEO)

Is F-Series production back to normal? - Kirk Ludtke (Imperial Capital)

2025Q3: Yes, the disruptions (e.g., cyber attack, natural disasters) in September had a **meaningful impact** on Q3... For events #2 and #3, while the company hasn't received direct commentary on recovery timing, it is expected that these customers will compete for share and ramp production accordingly. - Jonathan Banas(CFO)

Contradiction Point 2

Financial Outlook and Guidance Confidence

Contradiction on the confidence level in achieving 2026 revenue guidance.

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2025Q4: The revenue guidance is based on the S&P Global market forecast... better results are possible if industry volumes exceed forecasts. - Jeffrey Edwards(CEO)

How should we think about the impact of 2023/2024 net new business wins on the 2026 revenue guide, and is the bottom end of the guidance conservative considering potential volume recovery (e.g., Ford)? - Nathan Jones (Stifel, Nicolaus & Company)

2025Q3: The company is on track to achieve its 2030 targets, with 2026 actually looking better than originally planned due to the expected make-up of lost production and anticipated increases in overall volume... - Jeffrey Edwards(CEO)

Contradiction Point 3

Timeline for New Business Revenue Contribution

Contradiction on how quickly new business wins translate into revenue.

What are your main concerns regarding the recent earnings report? - Nathan Jones (Stifel)

2025Q4: New business typically takes 2-3 years to roll into revenue. - Jeffrey Edwards(CEO)

What is the expected contribution of NMB from 2023/2024 to the 2026 revenue guide? - Michael Ward (Citi Research)

2025Q2: New programs booked today, which launch in 3 years, are already achieving the hurdle rates (margins) embedded in the long-term plan. - Jeffrey Edwards(CEO)

Contradiction Point 4

Impact and Management of Tariffs

Contradiction on the significance and handling of tariff-related financial impacts.

What are your thoughts on the company's Q4 performance? - Brian DiRubbio (Baird)

2025Q4: Tariffs remain a potential variable, more relevant to the Fluid Handling segment, and could be an issue mid-year. - Jeffrey Edwards(CEO)

Which variable (raw materials, production schedules, etc.) has the greatest potential impact (positive or negative) on 2026 guidance? - Kirk Ludtke (Imperial Capital)

2025Q2: Tariff impacts have been negotiated through with customers, allowing the company to focus on execution. - Jeffrey Edwards(CEO)

Contradiction Point 5

Production Schedule Outlook and Volume Forecast Confidence

Statements shift from cautious optimism to definitive confidence in production recovery.

What were the key points from the recent earnings call? - Michael Ward (Citigroup)

2025Q4: The potential large increase in F-Series volume (150,000 units over 2025) could occur, and Cooper-Standard would adjust its releases accordingly. - Jeffrey Edwards(CFO)

How do current manufacturer schedules compare to industry forecasts (e.g., IHS), and is acceleration expected in the second half? - Michael Ward (Citi Research)

2025Q1: Current customer releases for Q2 are consistent with or better than the original plan... The company is focused on managing tariff impacts and is confident in its systems... - Jeffrey Edwards(CFO)