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CALL PARTICIPANTS
- Chairman & Chief Executive Officer — Jeffrey S. Edwards
- Executive Vice President & Chief Financial Officer — Jonathan P. Banas
- Director, Investor Relations — Roger S. Hendriksen
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RISKS
- The company lowered its full-year 2025 guidance for sales and adjusted EBITDA, according to management, due to “various temporary reductions in customer production volume, including on some of our most important platforms.”
- “A much more significant impact unfortunately, in the fourth quarter, due to the aluminum supply chain disruption that’s hit our largest customer,” according to Jeffrey S. Edwards, is expected, with the precise impact to be seen in Q4 results.
TAKEAWAYS
- Revenue — $695.5 million in sales for Q3 2025, up 1.5%, driven by favorable foreign exchange and volume/mix, partially offset by customer price adjustments.
- Gross Margin — 12.5% gross margin in Q3 2025, an improvement of 140 basis points
- Adjusted EBITDA — $53.3 million, up more than 15.6% from the third quarter of last year, with margin expanded by 100 basis points in Q3 2025 despite modest revenue growth.
- GAAP Net Loss — $7.6 million net loss in the third quarter, improved from $11.1 million in the same period last year.
- Adjusted Net Loss — Adjusted net loss was $4.4 million, or $0.24 per share, in Q3 2025, compared to $12 million, or $0.68 per share, in Q3 2024.
- Cost Savings — $18 million in savings delivered in Q3 2025 from lean and cost-saving initiatives, with $5 million in incremental savings from prior-period actions during Q3 2025.
- SG&A Expense — Increased by $6 million in Q3 2025, mainly due to stock appreciation on equity-based awards; The share price rose about 72% during Q3 2025.
- Free Cash Flow — $27 million in net free cash flow for Q3 2025, over $11 million higher year over year, with operating cash flow at $39 million in Q3 2025 and capital spending of $11.2 million (1.6% of sales) in Q3 2025.
- Liquidity — $314 million in total liquidity as of Q3 2025, comprising a $148 million cash balance and $166 million undrawn ABL facility.
- Net New Business Awards — $96 million in the quarter and $229 million for the first nine months; 87% linked to innovation and 83% to battery electric or hybrid vehicle platforms in the first nine months of 2025.
- Safety Performance — Total incident rate of 0.28 per 200,000 hours worked in Q3 2025 (below the world-class benchmark of 0.47); 36 plants (60%) had zero incidents in the first nine months of 2025.
- Production Disruptions — Short-term customer disruptions (cyberattacks, weather events, labor) had a modest negative impact in Q3 2025, primarily reflected in lower volume/mix.
- Guidance — Management expects to deliver higher adjusted EBITDA and positive free cash flow for the full year on flat to slightly lower sales, despite anticipated fourth-quarter production headwinds.
- Capital Structure — The company intends to refinance its first and third lien notes in the coming months, monitoring credit market conditions.
SUMMARY
Cooper-Standard (CPS 15.52%) reported growth in revenue, margin, and adjusted EBITDA in Q3 2025 compared to the third quarter of last year, with disciplined cost efficiencies driving profitability despite flat sales and higher SG&A expense tied to share price appreciation. Management revised full-year 2025 guidance downward due to significant fourth-quarter 2025 volume losses from major customer disruptions, notably from an aluminum supply chain issue at its largest customer, which management views as temporary with future catch-up in production. The company achieved net new business awards primarily in electric and hybrid platforms and maintains confidence in achieving long-term financial targets, including deleveraging, through operational execution and margin expansion.
- Chief Executive Officer Edwards stated, “We ended the third quarter with 99% of our customer scorecards for quality and service being green,” highlighting strong operational execution.
- Chief Financial Officer Banas confirmed the need to “generate about $30 million plus of free cash flow in Q4” to offset a $55 million coupon payment, indicating expectations for positive year-end cash flow from working capital improvements.
- Management emphasized that “any reduction in production volumes related to this latest supply disruption to be temporary” and will not impact long-term margin targets.
- 87% of net new business awards in the first nine months of 2025 are innovation-driven, and 83% are for battery electric or hybrid vehicle platforms, aligning with evolving automotive demand trends.
- Chief Executive Officer Edwards noted “further improvements in margins,” expected from 2026 to 2030, based on booked business and faster-to-market Chinese launches.
INDUSTRY GLOSSARY
- Net New Business Awards: The total value of newly won contracts for future supply of components, net of any losses of expiring business.
- Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for items such as restructuring, one-time charges, and unusual gains or losses.
- SG&A: Selling, General, and Administrative Expenses; non-manufacturing operating costs, excluding R&D and cost of goods sold.
- ABL Facility: Asset-based lending credit facility, a revolving line of credit secured by company assets, typically accounts receivable and inventory.
Full Conference Call Transcript
Jeffrey S. Edwards: Thanks, Roger, and good morning, everyone. We certainly appreciate the opportunity to review our third quarter results and provide an update on our business and the outlook going forward. So to begin on Slide five, I’ll highlight some of the key third quarter data points that we believe are reflective of our continuing outstanding operational performance and our ongoing commitment to our core company values. In terms of operations and customer service, we’re on track to have possibly one of the best years in our company’s sixty-five-year history. We ended the third quarter with 99% of our customer scorecards for quality and service being green.
For new program launches, we also continue to deliver strong performance, with 97% of those scorecards green. Our plant managers and our plant employees continue to deliver outstanding performance and value for our customers through their dedication and commitment to excellence. Extremely proud of that. Also, in our plant operations, safety performance continues to be excellent. In fact, during the third quarter, we had a total incident rate of just 0.28 recordable incidents per two hundred thousand hours worked. That’s well below the world-class benchmark of 0.47. Importantly, 36 of our plants have maintained a perfect safety record, a total incident rate of zero for the first March of the year.
That’s 60% of all of our production facilities achieving a perfect safety score and demonstrating that our ultimate goal of zero safety incidents is achievable. We’re proud of our entire global team for their focus and achievement in this most important operating measure. In terms of cost optimization, we had another solid quarter, with our manufacturing and purchasing teams delivering $18 million of savings through lean initiatives and other cost-saving programs. These cost reductions and operating efficiencies combined with revenue growth in the quarter allowed us to achieve a solid 140 basis point improvement in gross margin versus the third quarter of last year.
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