Sought confirmation on the second half outlook, specifically if adjusted EBITDA margins are expected to be 12%+ and free cash flow around $100 million, based on the guidance.

John Bannis confirmed the analyst's math, stating that the expectation is for EBITDA and cash flow to benefit significantly in the second half due to cost recoveries and continued strong performance from manufacturing and purchasing teams, which are expected to deliver over $50 million in incremental savings. “You are. Your math triangulates, Mike. That's the expectation. Certainly, when you think about these recoveries coming online, that'll benefit EBITDA and then fall through to cash flow both. So both of those metrics will benefit in the second half.”

Asked for more detail on the types of recoveries expected to drive the significant increase in EBITDA in the second half, given the first-half performance and negative volume/mix.

Jeff Edwards explained that a significant portion comes from the lag in oil price recovery, with price increases from customers effective July 1st to cover the difference between planned and actual oil prices (e.g., $65 vs. over $90). He also mentioned ongoing commercial negotiations and the execution of pre-identified cost initiatives (95% identified before January 2026) to offset wage inflation and leverage supply chain choices. “effective July 1st I mean we had a significant price increase from our customers that went in for all purchase orders to begin collecting the difference between what we had in in the plan with them which was I think around $65. to a price increase of over $90. So that's kind of how it works.”

Asked for a breakdown of the $37 million in net new business awards between EVs and hybrids, and if the trend of OEMs and consumers favoring hybrids is still observed in future awards.

John Bannis stated that the $30-some million is a combined bucket. He reiterated that content per vehicle increases for both BEVs and hybrids, with an even greater benefit for hybrids compared to traditional ICE engines. He confirmed that OEMs are throttling back EV investments in favor of hybrids, driven by consumer preferences globally, which is a positive development for Cooper Standard due to increased content per vehicle. “the content per vehicle increase is on both of those, right? So you do see a benefit compared to traditional ICE engines when you're talking full battery electric, but then even a greater extent. on hybrids. So we continue to see that market development.”

CPS

Cooper-Standard Holdings (CPS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 6, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Net new business awards	over $400 million high materiality	FY26	High
Recovery of incremental input costs and tariffs	recover most of these incremental input costs, as well as tariffs high materiality	H2 FY26	High
Net effect of cost pressures on full-year results	only a modest net effect high materiality	FY26	High
Free cash flow generation	positive free cash flow generation high materiality	FY26	High
Full-year sales and profitability	remain on track to achieve our full year plan for sales and profitability high materiality	FY26	High
Adjusted EBITDA	midpoint of our guidance range, which we've kept unchanged high materiality	FY26	High
Capital spending	small increase medium materiality	FY26	Medium
Restructuring expense	increase medium materiality	FY26	Medium
Net interest expense	decrease medium materiality	FY26	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	next four to five years	High
Fluid handling business growth	double the fluid handling business high materiality	next five to seven years	High
Gross profit margin expansion	continue the trend of expanding margins high materiality	2026 and beyond	High
Profitability and returns from production volume increases	leverage any increases in production volume to drive further profitability and returns medium materiality	2026 and beyond	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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)	—	—	—	—

Product announcements

Product	Type	Timeline
Flush seal system	milestone	in production
FlexiCore body seals	launch	later this year
FlexiFit glass	roadmap	very soon
FlexiFit hidden outer waist belt technologies	roadmap	very soon

Deals & partnerships

OEMs Conquest business awards in fluid handling nearly $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

Higher costs for materials, duties, and tariffs Q2 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 inflation Q2 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 programs Q4 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 mix H1 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

Recovery of incremental input costs and tariffs

H2 FY26

Current Timing difference impacted Q2 FY26 results

Target Most 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.

Find out whether CPS delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 7 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.