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    CPS
    Earnings call· Jun 2026(Q2 FY26)

    Cooper-Standard Holdings Q2 FY26 earnings call CPS

    Aug 6, 2026 Source

    Executive summary

    Cooper Standard Q2 FY26 — Strong Operational Performance and New Business Wins Despite Cost Headwinds

    Cooper Standard demonstrated strong operational execution and secured significant new business awards in Q2 FY26, driving substantial free cash flow improvement. Despite facing elevated material, tariff, and wage costs that impacted profitability, the company expects to recover these headwinds in the second half of the year through contractual agreements and operational efficiencies, maintaining its full-year guidance for sales and profitability.

    Highlights

    5

    • Delivered $16 million in free cash flow, a $40 million improvement over Q2 FY25.

    • Achieved 99% green customer scorecards for product quality and service and 97% for new program launches.

    • Secured $118 million in net new business awards in Q2 FY26, bringing H1 FY26 total to $246 million, ahead of plan for the full-year goal of over $400 million.

    • Manufacturing and purchasing teams delivered $15 million in savings through lean initiatives and cost-saving programs in Q2 FY26.

    • Maintained excellent safety performance with a total incident rate of 0.17, well below the 0.35 benchmark, and 75% of plants achieving a perfect safety record.

    Concerns

    4

    • Reported an adjusted net loss of $2.3 million, or $0.13 per share, in Q2 FY26, compared to adjusted net income of $1 million, or $0.06 per share, in Q2 FY25.

    • Adjusted EBITDA decreased to $53.9 million in Q2 FY26 from $62.8 million in Q2 FY25, primarily due to $10 million higher material costs, $8 million increased wages/general inflation, and $8 million higher duties/tariffs.

    • Experienced a timing difference in recovering incremental input costs and tariffs, impacting Q2 FY26 results, though recovery is expected in H2 FY26.

    • Capital expenditures increased to $13.8 million in Q2 FY26 due to increased launch-related investments and automation.

    Guidance & targets

    13
    CategoryTargetConfidence
    Net new business awards
    over $400 million
    high materiality
    High
    Recovery of incremental input costs and tariffs
    recover most of these incremental input costs, as well as tariffs
    high materiality
    High
    Net effect of cost pressures on full-year results
    only a modest net effect
    high materiality
    High
    Free cash flow generation
    positive free cash flow generation
    high materiality
    High
    Full-year sales and profitability
    remain on track to achieve our full year plan for sales and profitability
    high materiality
    High
    Adjusted EBITDA
    midpoint of our guidance range, which we've kept unchanged
    high materiality
    High
    Capital spending
    small increase
    medium materiality
    Medium
    Restructuring expense
    increase
    medium materiality
    Medium
    Net interest expense
    decrease
    medium materiality
    Medium
    Longer-term strategic financial targets
    achieve our longer-term strategic financial targets that we've reviewed with you for adjusted EBITDA and return on invested capital
    high materiality
    High
    Fluid handling business growth
    double the fluid handling business
    high materiality
    High
    Gross profit margin expansion
    continue the trend of expanding margins
    high materiality
    High
    Profitability and returns from production volume increases
    leverage any increases in production volume to drive further profitability and returns
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Ceiling
    Leveraging leading technologies, expertise, and innovation to capture additional share and profitability. Deploying sophisticated digital tools and automation initiatives to drive efficiencies and improved asset utilization. Winning more new business by delivering exciting innovations.
    Flush seal system in production on >20 vehicle programsFlexiCore body seals in production on 2 vehicle programs later this year
    		————
    Fluid Handling System
    Unmatched portfolio of products and innovations to take advantage of increases in ICE and hybrid powertrains in the U.S., EV adoption in China, and evolving mix of hybrids and EVs in Europe. Flexibility around powertrains and ability to design engineered solutions creates opportunities for increasing content per vehicle and profitable growth. Current market challenges create opportunities to win business from competitors, contributing to the long-term target of doubling the business within 5-7 years.
    Conquest business awards: nearly 10 times in past 10 monthsConquest business annual sales: nearly $40 million (effective this year)
    		————

    Operational metrics

    25
    Total incident rate
    0.17well below world-class benchmark of 0.35
    Q2 FY26

    Safety performance continues to be excellent.

    Savings from lean initiatives and cost-saving programs
    $15 million
    Q2 FY26

    Another solid quarter with cost optimization.

    Net new business awards
    $118 million
    Q2 FY26

    Continuing to leverage world-class service, technical capabilities, and innovations to win significant new business.

    Capital expenditures as % of sales
    1.9%higher than prior year period
    Q2 FY26

    Higher due to increased launch-related investments and automation, but in line with full expected run rate.

    Sales impact from foreign exchange
    $10 millionfavorable
    Q2 FY26

    Tailwind for Q2 sales compared to Q2 FY25.

    Sales impact from volume, mix, and customer price adjustments
    $5 millionpositive impact
    Q2 FY26

    Positive impact on Q2 sales compared to Q2 FY25.

    Adjusted EBITDA impact from lean initiatives and purchasing/manufacturing
    $15 millionpositively contributed
    Q2 FY26

    Demonstrating continued strong performance from global teams.

    Adjusted EBITDA impact from foreign exchange
    $2 millionadded
    Q2 FY26

    Compared to Q2 FY25.

    Adjusted EBITDA impact from higher material costs
    $10 millionoffsetting improvement
    Q2 FY26

    More than offsetting improvements in Q2 FY26.

    Adjusted EBITDA impact from increased wages and general inflation
    $8 millionoffsetting improvement
    Q2 FY26

    More than offsetting improvements in Q2 FY26.

    Adjusted EBITDA impact from higher duties, tariffs, and other costs
    $8 millionoffsetting improvement
    Q2 FY26

    More than offsetting improvements in Q2 FY26.

    Adjusted EBITDA impact from manufacturing and supply chain efficiencies
    $31 milliongenerated
    H1 FY26

    Teams have generated savings in the first half of the year.

    Adjusted EBITDA impact from past restructuring initiatives
    $3 millionsavings
    H1 FY26

    Benefited results in the first half of the year.

    Adjusted EBITDA impact from wage increases and general inflation
    $15 millionoffsetting improvement
    H1 FY26

    More than offset positive drivers in the first half of the year.

    Adjusted EBITDA impact from higher duties and tariffs
    $11 millionoffsetting improvement
    H1 FY26

    More than offset positive drivers in the first half of the year.

    Adjusted EBITDA impact from higher material costs
    $10 millionoffsetting improvement
    H1 FY26

    More than offset positive drivers in the first half of the year.

    Adjusted EBITDA impact from unfavorable volume and mix
    $8 millionoffsetting improvement
    H1 FY26

    More than offset positive drivers in the first half of the year.

    Adjusted EBITDA impact from other costs
    $6 millionoffsetting improvement
    H1 FY26

    More than offset positive drivers in the first half of the year.

    Cash balance
    $126.6 million
    Q2 FY26

    Ended the second quarter with a strong cash balance.

    ABL facility availability
    $167.6 millionuntapped
    Q2 FY26

    Combined with cash balance for total liquidity.

    Total liquidity
    nearly $300 million
    Q2 FY26

    Sufficient resources to support strategic plans.

    Gross profit margin expansion
    160 basis pointsincrease
    past two years

    Made progress in restoring the financial health of the company.

    Fluid handling conquest business annual sales
    nearly $40 millioneffective this year
    annual

    Won mid-production conquest business from competitors.

    Content per vehicle increase
    greater extent on hybridscompared to traditional ICE engines
    future

    Market development for BEVs and hybrids continues to show increased content per vehicle.

    F-150 production volume
    no uptick in releases
    Q4 FY26

    Despite positive OEM statements, no additional volume is included in the forecast for Q4.

    Industry KPIs

    8
    MetricValueDetails
    EPS$0.13per share
    Revenue$721.3 millionUSD
    Net income$18.8 millionUSD
    Gross margin160 basis pointsbps
    Adjusted EBITDA ebita$53.9 millionUSD
    Operating income EBIT$53.9 millionUSD
    Cash investments balance$126.6 millionUSD
    Tariff impact mitigation$8 millionUSD

    Product announcements

    4
    ProductTypeDetails
    Flush seal systemmilestone
    FlexiCore body sealslaunch
    FlexiFit glassroadmap
    FlexiFit hidden outer waist belt technologiesroadmap

    Deals & partnerships

    1
    OEMsConquest business awards in fluid handlingnearly $40 million in annual sales

    Fluid handling group awarded mid-production conquest business nearly 10 times over the past 10 months, totaling nearly $40 million in annual sales, by addressing OEM problems with direct fluids competitors.

    Risks & headwinds

    5
    Higher costs for materials, duties, and tariffsQ2 FY26, expected to be recovered in H2 FY26

    $10 million higher material costs, $8 million higher duties/tariffs in Q2 FY26 YoY

    Mitigation: Index-based contracts and commercial negotiations; price increases effective Q3 FY26; proactive management of commodity conditions.

    Increased wages and general inflationQ2 FY26, H1 FY26

    $8 million in Q2 FY26 YoY, $15 million in H1 FY26 YoY

    Mitigation: Lean initiatives and cost-saving programs; 95% of cost initiatives for FY26 identified and being executed.

    Customer supply chain disruption impacting key programsQ4 FY25 into H1 FY26

    Significant decline in production on one key North American program

    Mitigation: Driving sustainable efficiencies and fixed cost reductions to expand margins even with reduced volumes; enhanced commercial agreements to recover costs.

    Turbulent market conditions (hyperinflation)Q2 FY26

    Oil prices averaged $30 per barrel higher in Q2 FY26 than before Middle East conflict

    Mitigation: Enhanced commercial agreements and index-based contracts structurally improved business to limit potential risks; expected recovery of incremental costs in H2 FY26.

    Unfavorable volume and mixH1 FY26

    $8 million negative impact on adjusted EBITDA in H1 FY26

    Mitigation: Focus on new program launches with enhanced variable contribution margins; leveraging any increases in production volume for further profitability.

    What to watch in Q3 FY26

    5

    Recovery of incremental input costs and tariffs

    H2 FY26
    CurrentTiming difference impacted Q2 FY26 results
    TargetMost costs recovered

    Why it matters

    Crucial for achieving full-year profitability guidance and demonstrating effectiveness of new commercial agreements.

    We expect to recover most of these incremental input costs, as well as tariffs, in the second half of the year, according to the index-based contracts and agreements we have in place, as well as through typical commercial negotiations.

    Q&A highlights

    6

    Inquired if the quick capture of conquest business is unique to the fluid segment, given that such wins usually take years to materialize.

    Jeff Edwards confirmed it is unique, attributing it to technology, execution ability, and the critical nature of fluid components. He noted that customers are addressing issues quickly and turning to Cooper Standard, and that the company's footprint allows for nimble and flexible responses. He also mentioned similar instances in the ceiling teams.

    “As I said, it is unique. We are well positioned with technology and with our ability to execute. And as we've talked many times, the fluid business is critical components, right? I mean, if it leaks, it shows up in your driveway or your garage and there's a big problem.”

    asked by Michael Ward · answered by Jeffrey Edwards

    2 min read7 chapters

    Detailed Narrative

    01

    Operational Excellence and Safety

    Cooper Standard continues to demonstrate strong operational performance, achieving 99% green customer scorecards for product quality and service and 97% for new program launches. The company's safety record is world-class, with a total incident rate of 0.17 per 200,000 hours worked, significantly below the benchmark of 0.35. Notably, 75% (44 out of 59) of production facilities maintained a perfect safety record for the first six months of the year.

    02

    Cost Optimization and Efficiency

    The manufacturing and purchasing teams delivered $15 million in savings during Q2 FY26 through lean initiatives and other cost-saving programs. These efforts are critical in periods of hyperinflation and help offset increased costs. For the first half of the year, these teams generated $31 million in savings or increased efficiencies.

    03

    New Business Awards and Growth

    The company secured $118 million in net new business awards in Q2 FY26, bringing the first-half total to $246 million. This is ahead of the full-year goal of over $400 million for 2026. These awards are expected to drive profitable growth with minimal capital investment due to available capacity and enhanced variable contribution margins from new programs replacing older, lower-margin ones.

    04

    Financial Performance and Headwinds

    Q2 FY26 sales increased 2.2% YoY to $721.3 million, driven by favorable foreign exchange and volume/mix. However, adjusted EBITDA declined to $53.9 million from $62.8 million YoY, primarily due to $10 million higher material costs, $8 million increased wages/general inflation, and $8 million higher duties/tariffs. These cost increases were largely due to higher oil prices and are expected to be recovered in H2 FY26 through index-based contracts and commercial negotiations.

    05

    Free Cash Flow and Liquidity

    Cooper Standard delivered solid free cash flow of $16.3 million in Q2 FY26, a $39.7 million improvement YoY, driven by successful refinancing and focus on working capital optimization. The company ended the quarter with $126.6 million in cash and $167.6 million in ABL availability, totaling nearly $300 million in liquidity, which is deemed sufficient for strategic plans.

    06

    Strategic Imperatives and Margin Expansion

    The company's strategies are built around four key imperatives, aiming for continued profitable growth, margin improvements, and enhanced returns on invested capital. Gross profit margins have expanded by 160 basis points over the past two years, and further expansion is expected in 2026 and beyond, even with flat production volumes, due to sustainable efficiencies, fixed cost reductions, and enhanced commercial agreements that mitigate market volatility🌐.

    07

    Fluid Handling Segment and Conquest Business

    The fluid handling segment is leveraging its product portfolio to capitalize on increases in ICE and hybrid powertrains in the US, EV adoption in China, and evolving mix of hybrids and EVs in Europe. The company has won "conquest business" nearly 10 times in the past 10 months, totaling nearly $40 million in annual sales, by quickly addressing OEM problems with competitors. This contributes to the long-term goal of doubling the fluid handling business within 5-7 years.

    AI-generated summary of the company’s earnings call. Not investment advice.