Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cooper-Standard Holdings Inc (NYSE:CPS) achieved a 99% green score on product quality scorecards, indicating outstanding operational performance.
• The company reported a significant improvement in safety performance, with 82% of production facilities achieving a perfect safety score.
• Cost optimization efforts resulted in $20 million in savings through lean initiatives and an additional $8 million from restructuring efforts.
• CPS was awarded $55 million in net new business during the first quarter of 2025, showcasing strong customer trust and business growth.
• The company received recognition for its environmental stewardship, including being named one of America's climate leaders by USA Today.

Negative Points

• First quarter 2025 sales decreased by 1.4% compared to the same period in 2024, primarily due to unfavorable foreign exchange impacts.
• The company faced ongoing challenges from general inflation and higher costs for customs, duties, and tariffs.
• Net cash used in operating activities was $14.9 million, indicating a cash outflow consistent with the previous year.
• There is uncertainty around trade policies and tariffs, which could impact demand and production volumes for light vehicles.
• The company is cautious about potential indirect impacts of tariffs on overall demand and production volumes, which could adversely affect business.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Sign with CPS.

Q: On slide 10, there is a mention of $2 million in duties and tariffs. Is this a timing issue, and do you expect to recover that amount in future quarters? A: Yes, this is a minor impact from tariffs due to uncertainty about the implementation date, which was paused. We expect to recover this amount, as it was a temporary issue. (John Bani, CFO)

Q: With the trajectory of hybrid vehicles increasing, is this coming at the expense of electric vehicles? Why do you think this is happening? A: Consumers seem to prefer the hybrid approach, which offers increased content per vehicle for us. The significant increase in hybrid vehicle production is beneficial for Cooper Standard, as it increases our content per vehicle. (Jeff Edwards, CEO)

Q: Are you withdrawing guidance, or is there any change to your guidance for the year? A: No, we are not withdrawing guidance. We will reassess at the end of the second quarter when we have more information, but currently, we have not seen significant changes from our original plan. (Jeff Edwards, CEO)

Q: Can you explain the assumptions behind your expectation to reach a net leverage ratio of 2 times by the end of 2027? A: This assumes no refinancing activity and is based on normalized volume production, operational leverage from cost reduction initiatives, and profitable growth. Execution and sustainable profitability are key to achieving this target. (John Bani, CFO)

Q: Regarding the guidance, is it still for adjusted EBITDA in fiscal '25 at the low end of $200 million and at the high end of $235 million? A: Yes, that is correct. (Jeff Edwards, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.