Sign in
CH

Cooper-Standard Holdings Inc. (CPS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 showed continued margin expansion and positive free cash flow, but headline numbers missed consensus: revenue $695.5M vs $705.2M and adjusted EPS $(0.24) vs $0.22, while adjusted EBITDA $53.3M trailed $60.5M; management cut FY25 guidance on expected Q4 customer production disruptions, including ~$25M lost profit impact. Bold misses below .*
  • Year-over-year gross margin improved 140 bps to ~12.5%, and adjusted EBITDA margin rose 100 bps to 7.7%, driven by manufacturing/purchasing efficiencies and FX tailwinds, partially offset by unfavorable volume/mix, higher SGA&E from equity comp, and inflation .
  • Free cash flow was $27.4M in Q3 as cash from operations rose to $38.6M; liquidity stood at $313.5M ($147.6M cash plus undrawn ABL) .
  • FY25 guidance lowered: sales to $2.68–$2.72B (from $2.7–$2.8B) and adjusted EBITDA to $200–$210M (from $220–$250M); capex trimmed to $45–$50M .
  • Near-term stock narrative hinges on the magnitude/timing of Q4 production impacts (aluminum supply chain at largest customer) and management’s stated intent to refinance first- and third-lien notes “in the next several months,” alongside sustained margin gains and hybrid/EV award momentum .

What Went Well and What Went Wrong

What Went Well

  • Manufacturing and purchasing delivered ~$18M YoY savings in Q3; adjusted EBITDA margin expanded to 7.7% (+100 bps YoY), and gross margin improved ~140 bps to ~12.5% .
  • Net new business awards of $96.4M in Q3 (YTD $228.5M), largely tied to hybrid/BEV platforms, underpin forward profitability and content-per-vehicle expansion .
  • Liquidity robust ($313.5M); Q3 free cash flow positive at $27.4M, driven by improved operating earnings and working capital .

Management quote:

  • “Our operating performance continues to be outstanding... We expect our execution will enable us to successfully navigate [temporary] customer production disruptions in the fourth quarter and continue to drive higher margins...” — Jeff Edwards, CEO .

What Went Wrong

  • Revenue and earnings missed consensus (revenue $695.5M vs $705.2M; adjusted EPS $(0.24) vs $0.22; adjusted EBITDA $53.3M vs $60.5M), reflecting unfavorable volume/mix and customer price adjustments; higher SGA&E from stock price-linked equity accruals also weighed .*
  • FY25 guidance cut on expected Q4 production cuts and aluminum supply chain disruptions at the largest customer, reducing full-year sales and adjusted EBITDA ranges .
  • Net loss persists (GAAP $(7.6)M; $(0.43) diluted EPS), with net loss margin at (1.1)% despite operating income improvement YoY .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$667.1 $706.0 $695.5
Diluted EPS (GAAP) ($USD)$0.09 $(0.08) $(0.43)
Adjusted EPS ($USD)$0.19 $0.06 $(0.24)
Net Loss Margin % (GAAP)0.2% (0.2)% (1.1)%
Adjusted EBITDA ($USD Millions)$58.7 $62.8 $53.3
Adjusted EBITDA Margin %8.8% 8.9% 7.7%
Cash from Operations ($USD Millions)$(14.9) $(15.6) $38.6
Free Cash Flow ($USD Millions)$(32.4) $(23.4) $27.4

Q3 2025 vs Wall Street Consensus (S&P Global)

MetricActual Q3 2025Consensus Q3 2025Surprise
Revenue ($USD Millions)$695.5 $705.2*Miss
Adjusted EBITDA ($USD Millions)$53.3 $60.5*Miss
Adjusted EPS ($USD)$(0.24) $0.22*Miss

Values retrieved from S&P Global.*

Segment Breakdown (Q3 2025)

SegmentSales ($USD Thousands)YoY Change ($)Volume/Mix ($)FX ($)
Sealing Systems$348,778 $(4,587) $(10,665) $6,078
Fluid Handling Systems$328,566 $14,827 $13,195 $1,632
SegmentAdjusted EBITDA ($USD Thousands)YoY Change ($)Volume/Mix ($)FX ($)Cost Decreases/(Increases) ($)
Sealing Systems$30,853 $949 $(8,828) $(681) $10,458
Fluid Handling Systems$29,029 $5,940 $4,154 $3,583 $(1,797)

KPIs (Q3 2025)

KPIQ3 2025
Cash and Equivalents ($USD Millions)$147.6
Total Liquidity ($USD Millions)$313.5
Net New Business Awards ($USD Millions)$96.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2025$2.7 – $2.8 $2.68 – $2.72 Lowered
Adjusted EBITDA ($USD Millions)FY 2025$220 – $250 $200 – $210 Lowered
Capital Expenditures ($USD Millions)FY 2025$45 – $55 $45 – $50 Lowered (upper bound)
Cash Restructuring ($USD Millions)FY 2025$20 – $25 $20 – $25 Maintained
Net Cash Interest ($USD Millions)FY 2025$105 – $115 $105 – $115 Maintained
Net Cash Taxes ($USD Millions)FY 2025$25 – $30 $20 – $25 Lowered
Key Assumption – North America LVP (units)FY 202514.9M 15.0M Slightly Raised
Key Assumption – Europe LVP (units)FY 202516.7M 16.9M Slightly Raised
Key Assumption – Greater China LVP (units)FY 202531.2M 32.0M Raised
Key Assumption – South America LVP (units)FY 20253.2M 3.2M Maintained

Note: Guidance reduction reflects ~$25M expected lost profit from temporary Q4 customer production cuts and broader market disruptions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Operational ExcellenceRecord green customer scorecards; safety incident rates below world-class; ongoing lean savings ($20M in Q1; $25M in Q2) 99% scorecards green; ~140 bps gross margin improvement; ~$18M lean savings Sustained strength
AI/Digital ToolsRollout of CS Factorysis and AI-supported plant digital tools to boost efficiency Continued focus on efficiency and cost optimization driving margins Scaling execution
Tariffs/MacroSystems to analyze and recover direct tariff impacts; guidance to be revisited; pass-through agreements with customers largely complete Macro headwinds acknowledged; production disruptions in Q3/Q4; confidence in demand recovery Manageable, watch volumes
Hybrid/EV ContentHybrid content opportunity up to ~80% average content uplift; S&P hybrid forecast raised materially by 2030/35; eCoFlow innovation 83% of new awards YTD tied to BEV/hybrid platforms; positive launch cadence Increasing mix benefit
Supply Chain DisruptionsLimited timing impact in Q1; expected seasonality unwind; Q2 noted higher cash interest payments Q4 aluminum supply chain disruption at largest customer; temporary but impactful Near-term headwind
Capital StructureAim to reduce net leverage to ~2x by end-2027 (assuming normalization) Evaluating refinancing of first/third-lien notes “in the next several months” Improving trajectory

Management Commentary

  • “We are reducing our full-year guidance ranges for sales and adjusted EBITDA to reflect the expected impact of various temporary reductions in customer production volume... Importantly, even with [Q4] challenges, we still expect to deliver significantly higher adjusted EBITDA and positive free cash flow for the full year.” — Jeff Edwards, CEO .
  • “Net cash provided by operating activities was approximately $39M... resulting in net free cash flow of approximately $27M... We ended the third quarter with a cash balance of approximately $148M... total liquidity of approximately $314M.” — Jon Banas, CFO .
  • “During the third quarter of 2025, we received $96M in net new business awards... 83% were related to battery electric or hybrid platforms.” — Jeff Edwards, CEO .

Q&A Highlights

  • Customer production disruptions: Management expects significant Q4 impact due to an aluminum supply chain issue at the largest customer, with plans to make up lost production in early 2026; F-150 cited as highest-content vehicle .
  • Free cash flow cadence: CFO targets >$30M FCF in Q4 to offset ~$55M December coupon; working capital unwind (AR and inventory seasonality) expected to be a tailwind .
  • Leverage trajectory: Still targeting ~2x net leverage by end-2027, helped by margin expansion and normalized volumes; potential refinancing could lower interest costs depending on credit market conditions .
  • New business linearity: Margin and growth trajectory viewed as fairly linear through 2030, with faster ramp for certain Chinese OEM contracts; continued net new wins required and expected .
  • Third-quarter impact quantification: Q3 short-term disruptions modest relative to the ~$25M Q4 impact; Q3 EBITDA could have been a “couple of million higher” absent disruptions .

Estimates Context

  • The quarter missed consensus across revenue, EPS, and EBITDA. Revenue of $695.5M vs $705.2M; adjusted EPS $(0.24) vs $0.22; adjusted EBITDA $53.3M vs $60.5M. Management cited unfavorable volume/mix and customer price adjustments, higher SGA&E (equity-based comp accruals), and ongoing inflation as offsets to efficiency/FX tailwinds .*
  • Given the guidance cut and Q4 production impacts, Street models likely move down for FY25, particularly on EBITDA and revenue; focus should shift to FY26 recovery ramp and margins as lost production is made up and new higher-contribution programs launch .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term headwind: Expect a weak Q4 from temporary customer production cuts (aluminum supply chain) with ~$25M lost profit embedded; look for signals of production makeup in 1H 2026 .
  • Structural margin story intact: Efficiency gains and higher-contribution launches continue to lift margins; Q3 EBITDA margin 7.7% and gross margin +140 bps YoY despite modest revenue growth .
  • Cash discipline and liquidity: Positive Q3 FCF ($27.4M) and liquidity ($313.5M) provide cushion to navigate disruptions and fund launches; watch Q4 working capital unwind vs coupon .
  • Guidance reset: FY25 sales and adjusted EBITDA ranges lowered; monitor downside/upsides tied to LVP assumptions and tariff impacts that appear largely recoverable with customers .
  • Hybrid/EV content tailwind: High mix of hybrid/BEV awards (83%) supports multi-year content-per-vehicle growth and margin expansion; eCoFlow and vertical integration in fluid handling could add upside .
  • Capital structure optionality: Management evaluating refinancing “in the next several months”; improving operations and potential rating trajectory could reduce cash interest burden over time .
  • Trading implications: Expect volatility around Q4 results/guidance cadence; medium-term thesis hinges on 2026 recovery of lost production, continued margin expansion, and execution on booked business and refinancing .

Sources: Q3 2025 8‑K and press release, earnings call transcript, Q2/Q1 releases and calls as cited above.