Cooper-Standard Holdings Inc. (CPS) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture. While there is revenue growth and margin improvement, the company reported a net loss and faced customer supply chain disruptions. New business awards and cost savings are positive, but the nonrecurrence of royalty payments and increased capital expenditures are concerns. The Q&A reveals some protection against input cost inflation and optimism about innovative products, but lacks clarity on profitability specifics and Chinese market awards. Overall, the sentiment is neutral as positive factors are balanced by negative financial results and uncertainties.
Key Financial Performance
Sales $686.4 million, an increase of 2.9% compared to the first quarter of 2025. The increase was driven primarily by favorable foreign exchange and partially offset by unfavorable volume and mix, net of customer recoveries.
Gross Margin Improved 40 basis points compared to the prior year, up to 12.0% of sales. This improvement was achieved despite production volume headwinds in North America, driven by cost reductions, operating efficiencies, and revenue growth.
Adjusted EBITDA $51 million compared to $58.7 million in the first quarter of 2025. The decrease was primarily due to the nonrecurrence of approximately $10 million of royalty payments received in the first quarter of 2025. Without this, adjusted EBITDA and margin would have improved.
Net Loss (GAAP) $33.3 million in the first quarter of 2026 compared to net income of $1.6 million in the first quarter of 2025. The loss was influenced by the refinancing of debt, restructuring, and other items.
Adjusted Net Loss $5.2 million or $0.29 per share compared to adjusted net income of $3.5 million or $0.19 per share in the first quarter of 2025. This was impacted by the same factors affecting the GAAP net loss.
Capital Expenditures $24 million or 3.5% of sales, slightly higher than the prior year period due to increased launch-related investments.
Cost Savings $17 million of savings achieved through lean initiatives and other cost-saving programs, contributing to improved gross margin.
New Business Awards $128 million in net new business awards during the first quarter of 2026, expected to drive profitable growth in the future.
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Operating Highlights
FlexiCore thermoplastic body seal technology: This innovation replaces the metal carrier in traditional dynamic body seals with a patented thermoplastic carrier, resulting in a lightweight, 100% recyclable body seal. It increases vehicle efficiency and reduces landfill waste. A FlexiCore front and rear closure seal application was successfully launched with a global automaker.
New business awards: The company received $128 million in net new business awards in Q1 2026, exceeding plans and contributing to a strong position to achieve the full-year goal of over $400 million in net new business awards.
Safety performance: Achieved a total incident rate of 0.18 per 200,000 hours worked, below the world-class benchmark of 0.35. 84% of production facilities maintained a perfect safety record in Q1 2026.
Cost optimization: Delivered $17 million in savings through lean initiatives and cost-saving programs, contributing to a 40 basis point improvement in gross margin compared to Q1 2025.
Financial performance: Sales increased by 2.9% to $686.4 million in Q1 2026 compared to Q1 2025. Gross margin improved to 12.0% of sales, despite production volume headwinds.
Sealing segment strategy: Focused on leveraging leading technologies and innovations to capture additional market share and profitability. Digital tools are being deployed to improve efficiencies and asset utilization.
Fluid Handling segment strategy: Positioned to capitalize on the growth of ICE, hybrid, and EV powertrains globally. The company aims to double the Fluids business within 5-7 years through new business wins and increased content per vehicle.
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Risk or Challenges
Production Volume Headwinds: The company faced production volume headwinds on certain key platforms in North America during the quarter, impacting sales and profitability.
Unfavorable Volume and Mix: Unfavorable volume and mix, net of customer price adjustments, negatively impacted sales by approximately $5 million compared to the same period a year ago.
Short-term Production Disruptions: Certain short-term production disruptions contributed to $7 million in unfavorable volume and mix impacts.
Increased Costs: Higher wages and general inflation increased costs by $7 million during the quarter.
Foreign Exchange Impact: Unfavorable foreign exchange negatively impacted adjusted EBITDA by $2 million.
Nonrecurrence of Royalty Payments: The nonrecurrence of approximately $10 million of royalty payments received in the first quarter of 2025 negatively impacted adjusted EBITDA.
Net Loss: The company reported a net loss of $33.3 million in the first quarter of 2026, compared to net income of $1.6 million in the first quarter of 2025.
Capital Expenditures: Capital expenditures increased to $24 million, or 3.5% of sales, due to launch-related investments.
Customer Supply Chain Disruption: A significant decline in production on one of the company's key platforms in North America resulted from a customer supply chain disruption beginning in the fourth quarter of last year.
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Guidance & Outlook
Revenue Growth: The company expects to achieve or exceed its full-year revenue targets set in February 2026, supported by $128 million in net new business awards in Q1 2026 and a full-year goal of over $400 million in net new business awards.
Margin Expansion: The company anticipates continued gross margin expansion in 2026 and beyond, even with flat production volumes, driven by sustainable efficiencies, fixed cost reductions, and the ramp-up of new programs with enhanced variable contribution margins.
Capital Expenditures: Capital expenditures for 2026 are expected to remain disciplined, with minimal incremental capital investment required for launching new business due to available capacity.
Sealing Segment Growth: The Sealing segment is expected to capture additional market share and profitability through leading technologies, innovations, and improved asset utilization.
Fluid Handling Segment Growth: The company aims to double the size of its Fluid Handling segment within the next 5 to 7 years, leveraging opportunities in ICE, hybrid, and EV powertrains globally.
Market Conditions: The company is optimistic about potential tailwinds in the second half of 2026, including resolution of global disruptions and improved consumer sentiment, which could positively impact demand.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide a split of the $128 million in new business booked in Q1 2025 between ceiling and fluid, and for 2025 as well?
A:The $128 million booked in Q1 2025 is split as 60% fluid and 40% ceiling. About 50% of it is North America-based, and a large percentage is China-based. Fluid is expected to benefit significantly from additional hybrid products entering the market, potentially doubling content per vehicle compared to traditional ICE programs.
Q:What is the impact of higher input costs on margins this year, and how do escalators and de-escalators address this?
A:The company is well-protected against higher input costs, with over 70% covered by contractual indexes or regular negotiations with customers. There is a lag in recovery due to quarterly index resets, but inflationary pressures from Q2 are expected to be recovered sequentially.
Q:Can you quantify how much more profitable innovative products are compared to existing average margins?
A:While specific profitability figures for innovative products were not provided, the company targets and achieves hurdle rates for all net new business. Innovative products are expected to contribute to margin expansion and higher returns on invested capital, with a forecast of over 20% ROIC by 2028.
Q:Have higher gasoline prices caused any changes in schedules or volumes?
A:No significant changes in schedules or volumes have been observed. The company expects the Middle East conflict to resolve soon, potentially creating a tailwind in the second half of the year. They are managing through increased oil prices and remain optimistic about the second half.
Q:What factors contribute to the bridge from 2025 to 2026, and how is the company addressing challenges in the market?
A:Margin expansion is driven by lean manufacturing, purchasing improvements, and business wins. The company has identified 90% of cost reduction ideas for 2026 in advance. With 85%-95% of 2027-2028 business already booked, they have confidence in forecasting margins and returns despite volume and mix uncertainties.
Q:How has the cadence of awards from high-growth Chinese OEMs been?
A:The company did not provide specific details on the cadence of awards from high-growth Chinese OEMs during the call.
Q:Review of Unclear Management Responses
A:The company avoided providing specific profitability figures for innovative products compared to existing margins and did not elaborate on the cadence of awards from high-growth Chinese OEMs.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America Climate
America change
Cash hand
Climate Leaders
Energy Leaders
Environment Energy
Leaders Award
Leaders recognition
Officer Banas
Relations today
SGAE improvement
Slide improvement
USA today
achievement responsibility
basis point
body seal
capital structure
carrier body
customer scorecard
headwind
income
interest rate
margin basis
material solution
minute
mix net
net customer
nonrecurrence royalty
refinancing
royalty payment
sale period
website
CPS Transcript
Cooper-Standard Holdings Inc. (CPS) Q1 2026 Earnings Call Transcript
Unknown5-9
The earnings call presents a mixed picture. While there is revenue growth and margin improvement, the company reported a net loss and faced customer supply chain disruptions. New business awards and cost savings are positive, but the nonrecurrence of royalty payments and increased capital expenditures are concerns. The Q&A reveals some protection against input cost inflation and optimism about innovative products, but lacks clarity on profitability specifics and Chinese market awards. Overall, the sentiment is neutral as positive factors are balanced by negative financial results and uncertainties.
Cooper-Standard Holdings Inc. (CPS) Q4 2025 Earnings Call Transcript
Unknown2-13
The earnings call presented mixed signals: improved net loss and positive free cash flow are offset by reduced guidance and supply chain disruptions. The Q&A highlighted management's cautious optimism, but also noted uncertainties in production and revenue guidance. The alignment with electric vehicle trends and strong relationships with Chinese OEMs are positive, yet the lack of specific guidance details and refinancing urgency create uncertainties. These mixed factors suggest a neutral stock price movement in the short term.
Cooper-Standard Holdings Inc. (CPS) Q3 2025 Earnings Call Transcript
Unknown10-31
The earnings call presents mixed signals. Financial performance shows slight improvement with increased sales and EBITDA, but higher costs and inflation pressures remain concerning. The Q&A highlights potential growth in 2026 and linear margin expansion, yet uncertainties like production delays and unclear guidance on new business breakdowns persist. Positive cash flow and liquidity are promising, but the lack of clear guidance on certain aspects tempers optimism. Thus, the overall sentiment is neutral, with no strong catalysts for significant stock price movement in either direction.
Cooper-Standard Holdings Inc. (CPS) Q2 2025 Earnings Call Transcript
Positive8-1
The company reported improved financial metrics, including a shift from a net loss to a positive adjusted net income, increased gross profit and EBITDA margins, and strong liquidity. The Q&A session confirmed significant new business and margin expansion potential, with conservative forecasts suggesting further upside. These factors, combined with a successful refinancing outlook, indicate a positive sentiment for the stock price over the next two weeks.
CPS Slides
CPS Report
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
