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Cooper-Standard Holdings Inc. (CPS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered robust operational performance and margin expansion: adjusted EBITDA rose to $58.7M (8.8% of sales) on $667.1M sales; adjusted diluted EPS was $0.19, and GAAP diluted EPS $0.09 .
  • Versus prior year, gross profit increased 25.2% to $77.2M, operating income surged to $22.3M, and adjusted net income improved by $34.1M to $3.5M, despite FX headwinds (-$15M sales impact) .
  • Management maintained FY 2025 guidance (adjusted EBITDA $200–$235M; sales $2.7–$2.8B; CapEx $45–$55M) and expects a fuller update with Q2 results; reiterated the goal to exit FY25 at double‑digit adjusted EBITDA margins .
  • Call catalysts: explicit tariff cost recovery capability (only ~$2M temporary impact in Q1), strong operations (99% product quality scorecards green), and innovation momentum (PACE Pilot award for eCoFlow Switch Pump) .

What Went Well and What Went Wrong

What Went Well

  • Operational excellence: 99% product quality and 97% launch scorecards “green”; safety TIR 0.30 with 47 plants at 0 incidents (82% of facilities) .
  • Cost actions and lean savings: $20M lean savings plus $8M restructuring savings YoY; SGA&E reduced by $2M; FX a $2M tailwind to EBITDA .
  • Innovation and awards: eCoFlow Switch Pump won Automotive News PACE Pilot; GM Supplier of the Year for the 8th consecutive year; USA TODAY Climate Leaders recognition .
  • Quote: “We are poised to return to double-digit adjusted EBITDA margins and double-digit returns on invested capital” — CEO Jeff Edwards .

What Went Wrong

  • FX headwinds reduced sales by ~$15M; general inflation added ~$7M costs; duties/tariffs added ~$2M in Q1 (temporary) .
  • Free cash flow was negative (-$32.4M) due to typical Q1 working capital drain (AR grew from $311M in Dec to ~$357M at Mar-end) .
  • Sales declined 1.4% YoY to $667.1M (FX-driven), with segment sales modestly lower .

Financial Results

Quarterly trend (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$0.685 $0.661 $0.667
GAAP Diluted EPS ($)$(0.63) $2.24 $0.09
Adjusted Diluted EPS ($)$(0.68) $(0.16) $0.19
Adjusted EBITDA ($USD Millions)$46.1 $54.3 $58.7
Adjusted EBITDA Margin (%)6.7% 8.2% 8.8%
Free Cash Flow ($USD Millions)$16.9 $63.2 $(32.4)

YoY comparison (Q1 2024 → Q1 2025)

MetricQ1 2024Q1 2025
Revenue ($USD Billions)$0.676 $0.667
Gross Profit ($USD Millions)$61.6 $77.2
Operating Income ($USD Millions)$3.5 $22.3
GAAP Diluted EPS ($)$(1.81) $0.09
Adjusted Diluted EPS ($)$(1.75) $0.19
Adjusted EBITDA ($USD Millions)$29.3 $58.7

Segment breakdown (Q1 2025)

SegmentSales ($USD Millions)Adjusted EBITDA ($USD Millions)
Sealing Systems$344.3 $32.3
Fluid Handling Systems$304.0 $21.0
Corporate, Eliminations & Other$18.8 $5.4
Consolidated$667.1 $58.7

KPIs (Q1 2025)

KPIValue
Net New Business Awards (annualized sales)$55.0M
Cash & Equivalents$140.4M
Total Liquidity (cash + ABL availability)~$300.1M
Net Cash Used in Operating Activities$(14.9)M
Capital Expenditures$17.5M
Free Cash Flow$(32.4)M
Product Quality Scorecards “Green”99%
Launch Scorecards “Green”97%
Safety TIR (per 200k hours)0.30; 47 plants at 0 incidents

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2025$2.7–$2.8 $2.7–$2.8 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$200–$235 $200–$235 Maintained; reiterated
CapEx ($USD Millions)FY 2025$45–$55 $45–$55 Maintained
Net Cash Interest ($USD Millions)FY 2025$105–$115 $105–$115 Maintained
Cash Restructuring ($USD Millions)FY 2025$20–$25 $20–$25 Maintained
Net Cash Taxes ($USD Millions)FY 2025$30–$35 $30–$35 Maintained

Note: Management plans to update guidance with Q2 results given tariff and production outlook uncertainty; trajectory remains toward double‑digit adjusted EBITDA margins exiting FY25 .

Earnings Call Themes & Trends

TopicQ3 2024 (Nov-1)Q4 2024 (Feb-14)Q1 2025 (May-2)Trend
Tariffs / MacroMonitoring tariff risks; EBITDA headwinds from FX; planning for refinancing flexibility in early 2025 Discussed rate environment and no‑call expiry; proactive but prudent on capital structure ~$2M duties/tariffs in Q1 from brief implementation; expect real‑time recovery; majority of parts under free trade Improving clarity; recovery mechanisms in place
Hybrid / EV Content per VehicleInnovations (eCoFlow, FlexiCore) enable share gains; content higher on EV/hybrid 40% of net new awards tied to hybrids; fluids business targeted growth S&P hybrid production forecasts raised; hybrid could be ~80% higher content opportunity vs ICE; eCoFlow highlighted Positive; secular tailwind for fluids
FX & CostFX headwinds significant; cost‑only currencies exposure (MXN/PLN/CZK) Expect FX tailwinds in 2025; hedging and commercial recoveries in place FX reduced sales by $15M; FX +$2M to EBITDA; inflation +$7M cost Moderating FX; cost actions offset
Working Capital & FCFQ3 FCF positive $16.9M; liquidity ~$281M Q4 FCF $63.2M; FY positive FCF; liquidity ~$339M Q1 typical WC drain; AR seasonality drove outflow; FCF $(32.4)M; liquidity ~$300M Seasonal; improving through year
China Domestic OEM ExposureProfitable China business; shifting mix toward Chinese OEMs By 2027 mix could shift toward 80/20 Chinese vs Western; returns clear hurdle rates Not a focus this quarter; reiterated growth outlook broadly Structural shift continues
CapEx DisciplineCapEx lowered; reuse and design reduce capital intensity FY24 CapEx $50.5M (1.8% of sales); FY25 guide $45–$55M Q1 CapEx $17.5M (2.6% of sales); focused on launch readiness Sustained discipline

Management Commentary

  • “This quarter was arguably the best ever in terms of operations and customer service… 99% of our product quality scorecards being green… 97% customer scorecards being green” — Jeff Edwards .
  • “We are poised to return to double‑digit adjusted EBITDA margins and double‑digit returns on invested capital” — Jeff Edwards .
  • “Hybrid vehicles represent as much as an 80% in average content opportunity for our current commercialized product portfolio” — Jeff Edwards .
  • “We expect to be able to mitigate or recover the vast majority of all direct tariff impacts… provide a more meaningful update to our full year guidance… with Q2 results” — Jeff Edwards .
  • CFO detail: “Lean initiatives… $20M in savings… restructuring added $8M YoY… FX reduced sales $15M; FX tailwind $2M to EBITDA” — Jon Banas .

Q&A Highlights

  • Tariffs: ~$2M Q1 duties/tariffs from brief mid‑quarter uncertainty; expected to be reimbursed in real time; majority of parts under free trade .
  • Guidance: Not withdrawing FY25 guidance; reiterated adjusted EBITDA $200–$235M range .
  • Volume outlook: Releases and mix (trucks/SUVs) supportive near‑term; capacity to flex if volumes rise or fall .
  • Working capital: Q1 seasonality—AR increased to ~$357M from $311M in Dec; expected to normalize through Q2 .
  • Royalty income: ~$7M timing benefit in “other income” from prior divestiture IP license; recorded in corporate/other .
  • Leverage: Targeting ~2x net leverage by end of 2027 based on normalized volumes, execution, and profitable growth; assumes no refinancing .

Estimates Context

MetricConsensus* (Q1 2025)Actual
Revenue ($USD Millions)665.0*667.1
Primary EPS (Normalized) ($)(0.754)*0.19 (Adjusted diluted EPS)
EBITDA ($USD Millions)48.0*58.7 (Adjusted)
  • Result: Revenue slightly beat; EPS was a significant beat versus negative consensus; adjusted EBITDA substantially above consensus. Management’s reiterated FY25 adjusted EBITDA guidance (and pathway to double‑digit margins) likely drives estimate upward revisions .
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution quality remains a differentiator: operational scorecards and safety metrics at best‑ever levels underpin margin trajectory toward double‑digit adjusted EBITDA exiting 2025 .
  • Cost actions are compounding: $20M lean + $8M restructuring savings YoY, with lower SGA&E and FX tailwind to EBITDA helping offset inflation and temporary tariff costs .
  • Hybrid adoption is an underappreciated tailwind: raised S&P hybrid production forecasts and ~80% content uplift vs ICE support multi‑year fluids margin/volume expansion; innovation (eCoFlow) bolsters share gains .
  • Cash/liq. adequate through cycle: ~$300M liquidity and undrawn ABL provide runway despite Q1 working capital seasonality; expect FCF to improve as collections catch up .
  • Guidance intact: FY25 sales $2.7–$2.8B and adjusted EBITDA $200–$235M maintained; watch for tariff policy clarity and Q2 update as potential catalysts .
  • Trading implications: The substantial EPS/EBITDA beat versus consensus and maintained FY25 guide position CPS for estimate revisions and potential re‑rating; monitor FX trends and tariff headlines for near‑term volatility .
  • Medium‑term thesis: Structural mix shift to hybrids/EVs, China OEM penetration, and sustained CapEx discipline should support ROIC improvement and net leverage path to ~2x by 2027 .