Q2 2026 Cooper-Standard Holdings Inc Earnings Call

August 6, 2026

Operator: Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Q2 2026 earnings conference call. During the presentation, all participants will be in listen-only mode. Following the company-prepared comments, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press star one in your telephone keypad. To withdraw your question, please press star two. As a reminder, this call is being recorded, and the webcast will be available on the Cooper-Standard website for replay later today. I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations. Please go ahead.

Operator: Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Q2 2026 Earnings Conference Call. During the presentation, all participants will be in listen-only mode. Following the company-prepared comments, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press *1 in your telephone keypad. To withdraw your question, please press *2. As a reminder, this call is being recorded, and the webcast will be available on the Cooper-Standard website for replay later today. I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations. Please go ahead.

Speaker #1: Following the company prepared comments, we will conduct a question-and-answer session. At that time, if you have a telephone keypad. To withdraw your question, please press star 2.

Speaker #1: As a reminder, this call is being recorded and the webcast will be available on the Cooper-Standard website for replay later today. I would now like to turn the call over to Roger Hendriksen, Director of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Joining our call this morning. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer; and Jon Banas, Executive Vice President and Chief Financial Officer.

Roger Hendriksen: Joining our call this morning. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer, and John Banas, Executive Vice President and Chief Financial Officer. Before we begin, I need to remind you that this presentation contains forward-looking statements. While they are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties. For more information on forward-looking statements, we ask that you refer to slide three of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission. This presentation also contains non-GAAP financial measures. Reconciliations of the non-GAAP financial measures compared to their most directly comparable GAAP measures are included in the appendix to the presentation.

Roger Hendriksen: Joining our call this morning. The members of our leadership team who will be speaking with you on the call this morning are Jeff Edwards, Chairman and Chief Executive Officer, and Jon Banas, Executive Vice President and Chief Financial Officer. Before we begin, I need to remind you that this presentation contains forward-looking statements. While they are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties. For more information on forward-looking statements, we ask that you refer to slide three of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission. This presentation also contains non-GAAP financial measures.

Speaker #2: Before we begin, I need to remind you that this presentation contains forward-looking statements. While they are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties.

Speaker #2: For more information on forward-looking statements, we ask that you refer to slide 3 of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission.

Speaker #2: This presentation also contains non-GAAP financial measures. Reconciliations of the non-GAAP financial measures compared to their most directly comparable GAAP comparable GAAP measures are included in the appendix to the presentation.

Roger Hendriksen: Reconciliations of the non-GAAP financial measures compared to their most directly comparable GAAP measures are included in the appendix to the presentation. With those formalities out of the way, I'll turn the call over to Jeff Edwards.

Speaker #2: With those formalities out of the way, I'll turn the call over to Jeff Edwards.

Roger Hendriksen: With those formalities out of the way, I'll turn the call over to Jeff Edwards.

Speaker #3: Thanks, Roger, and good morning, everyone. Thank you for joining the call this morning. To begin on slide 5, I'd like to highlight some key second-quarter data points that we believe are reflective of our continued outstanding operational performance and our ongoing commitment to our core company values.

Jeff Edwards: Thanks, Roger, and good morning, everyone. Thank you for joining the call this morning. To begin on slide five, I'd like to highlight some key Q2 data points that we believe are reflective of our continued outstanding operational performance and our ongoing commitment to our core company values. In terms of operations and customer service, we continue to deliver excellent performance. For product quality and service, 99% of our customer scorecards were green in the quarter. For new program launches, we also continue to deliver strong performance with 97% of the customer scorecards being green. For the most important operating metric, safety performance continues to be excellent. A shout-out there to our plant employees. Thank you all. Just further on safety, listen to these stats. Pretty impressive. During Q2, we had a total incident rate of 0.17 reportable incidents per 200,000 hours worked.

Jeff Edwards: Thanks, Roger, and good morning, everyone. Thank you for joining the call this morning. To begin on slide 5, I'd like to highlight some key Q2 data points that we believe are reflective of our continued outstanding operational performance and our ongoing commitment to our core company values. In terms of operations and customer service, we continue to deliver excellent performance. For product quality and service, 99% of our customer scorecards were green in the quarter. For new program launches, we also continue to deliver strong performance with 97% of the customer scorecards being green.

Speaker #3: In terms of operations, end-customer service, we continue to deliver excellent performance. For product quality and service, 99% of our customers' scorecards were green in the quarter.

Speaker #3: For new program launches, we also continue to deliver strong performance with 97% of the customers' scorecards being green. And for the most important operating metric, safety performance continues to be excellent.

Jeff Edwards: For the most important operating metric, safety performance continues to be excellent. A shout-out there to our plant employees. Thank you all. Just further on safety, listen to these stats. Pretty impressive. During Q2, we had a total incident rate of 0.17 reportable incidents per 200,000 hours worked. That's well below the world-class benchmark of 0.35. Importantly, 44 of our plants have maintained a perfect safety record with a total incident rate of zero for H1. That's 75% of all of our production facilities achieving a perfect safety score and demonstrating that our ultimate goal of zero safety incidents is achievable.

Speaker #3: A shout-out there to our plant employees. Thank you all. Just further on safety, listen to these stats. Pretty impressive. During the second quarter, we had a total incident rate of 0.17 reportable incidents per 200,000 hours worked.

Speaker #3: That's well below the world-class benchmark of 0.35. Importantly, 44 of our plants have maintained a perfect safety record with a total incident rate of 0 for the first 6 months of the year.

Jeff Edwards: That's well below the world-class benchmark of 0.35. Importantly, 44 of our plants have maintained a perfect safety record with a total incident rate of zero for H1. That's 75% 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 $15 million of savings through lean initiatives and other cost-saving programs. These cost reductions and operating efficiencies are always important, but I would call them critical in periods of hyperinflation, such as we just experienced this quarter.

Speaker #3: That's 75% of all of our production facilities achieving a perfect safety score. And demonstrating that our ultimate goal of zero safety incidents is achievable.

Speaker #3: 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 15 million dollars of savings through lean initiatives and other cost-saving programs.

Jeff Edwards: 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 $15 million of savings through lean initiatives and other cost-saving programs. These cost reductions and operating efficiencies are always important, but I would call them critical in periods of hyperinflation, such as we just experienced this quarter. I want to give a special shout-out to our purchasing team and our manufacturing and engineering teams for their continued excellent work and achievements. We appreciate all you're doing.

Speaker #3: These cost reductions and operating efficiencies are always important, but I would call them critical in periods of hyperinflation such as we just experienced this quarter.

Speaker #3: So I want to give a special shout-out to our purchasing team and our manufacturing and engineering teams for their continued excellent work and achievements.

Jeff Edwards: I want to give a special shout-out to our purchasing team and our manufacturing and engineering teams for their continued excellent work and achievements. We appreciate all you're doing. In addition, we did a nice job managing working capital and spending in order to optimize cash flow. During the quarter, we were pleased to deliver a solid $16 million in free cash flow, a $40 million improvement over Q2 of last year. Finally, we're continuing to leverage our world-class service, technical capabilities, and our award-winning innovations to win significant new business. In fact, during Q2 2026, we received $118 million in net new business awards, which will drive additional profitable growth as they launch over the next few years.

Speaker #3: We appreciate all you're doing. In addition, we did a nice job managing working capital and spending in order to optimize cash flow. During the quarter, we were pleased to deliver a solid 16 million dollars in free cash flow.

Jeff Edwards: In addition, we did a nice job managing working capital and spending in order to optimize cash flow. During the quarter, we were pleased to deliver a solid $16 million in free cash flow, a $40 million improvement over Q2 of last year. Finally, we're continuing to leverage our world-class service, technical capabilities, and our award-winning innovations to win significant new business. In fact, during Q2 2026, we received $118 million in net new business awards, which will drive additional profitable growth as they launch over the next few years.

Speaker #3: 40 million dollar improvement over the second quarter of last year. Finally, we're continuing to leverage our world-class service technical capabilities and our award-winning innovations to win significant new business.

Speaker #3: In fact, during the second quarter of 2026, we received 118 million dollars in net new business awards which will drive additional profitable growth as they launch over the next few years.

Speaker #3: Turning to slide 6, putting this strong commercial performance in context, this brings the total net new business awards for the first half of the year to 246 million dollars.

Jeff Edwards: Turning to slide six, putting the strong commercial performance in context, this brings the total net new business awards for H1 to $246 million. This remains ahead of our plans for the year so far, which we believe puts us in a strong position to achieve the full year goal of over $400 million in 2026, topping $700 million when combined with last year's award. As you can see in the chart, our new business awards have been accelerating over the past few years as the financial strength of the company has been improving. The good news is that we will have available capacity to launch much of this new business over the coming years with minimal capital investment.

Jeff Edwards: Turning to slide 6, putting the strong commercial performance in context, this brings the total net new business awards for H1 to $246 million. This remains ahead of our plans for the year so far, which we believe puts us in a strong position to achieve the full year goal of over $400 million in 2026, topping $700 million when combined with last year's award. As you can see in the chart, our new business awards have been accelerating over the past few years as the financial strength of the company has been improving. The good news is that we will have available capacity to launch much of this new business over the coming years with minimal capital investment.

Speaker #3: This remains ahead of our plans for the year, so far, which we believe puts us in a strong position to achieve the full-year goal of over 400 million dollars in 2026.

Speaker #3: In topping 700 million dollars when combined with last year's award. As you can see in the chart, our new business awards have been accelerating over the past few years as the financial strength of the company has been improving.

Speaker #3: In the good news is that we will have available capacity to launch much of this new business over the coming years with minimal capital investment.

Speaker #3: We're certainly proud to be the supplier that our customers are increasingly turning to for quality components, consistency of delivery, and collaboration on the critical design and development of new technologies.

Jeff Edwards: We're certainly proud to be the supplier that our customers are increasingly turning to for quality components, consistency of delivery, and collaboration of critical design and development of new technologies. With these awards in hand, driving incremental variable contribution margins and a strong outlook for new business wins ahead, we're increasingly confident that we'll be able to execute our plans and achieve our longer-term strategic financial targets for growth, margins, and return on capital. Let me turn the call over to John to discuss the financial results for the quarter.

Jeff Edwards: We're certainly proud to be the supplier that our customers are increasingly turning to for quality components, consistency of delivery, and collaboration of critical design and development of new technologies. With these awards in hand, driving incremental variable contribution margins and a strong outlook for new business wins ahead, we're increasingly confident that we'll be able to execute our plans and achieve our longer-term strategic financial targets for growth, margins, and return on capital. Let me turn the call over to Jon to discuss the financial results for the quarter.

Speaker #3: With these awards in hand, driving incremental variable contribution margins, and a strong outlook for new business wins ahead, we're increasingly confident that we'll be able to execute our plans and achieve our longer-term strategic financial targets for growth, margins, and return on capital.

Speaker #3: Now, let me turn the call over to Jon to discuss the financial results for the quarter.

Speaker #4: Thanks, Jeff, and good morning, everyone. In the next few slides, I'll provide some details on our financial results for the quarter, and discuss our cash flows, liquidity, and aspects of our balance sheet and capital structure.

Jonathan Banas: Thanks, Jeff, and good morning, everyone. In the next few slides, I'll provide some details on our financial results for the quarter and discuss our cash flows, liquidity, and aspects of our balance sheet and capital structure. On slide eight, we show a summary of our results for Q2 and H1 of 2026, with comparisons to the same periods last year. Q2 2026 sales were $721.3 million, an increase of 2.2% compared to Q2 of 2025. The increase was driven primarily by favorable foreign exchange, and to a lesser extent, favorable volume, mix, and customer price adjustments and recoveries. Adjusted EBITDA in the quarter was $53.9 million, compared to $62.8 million we reported in Q2 of 2025. The year-over-year change was primarily due to higher costs for materials, duties, and tariffs, and other general inflationary pressures.

Jon Banas: Thanks, Jeff, and good morning, everyone. In the next few slides, I'll provide some details on our financial results for the quarter and discuss our cash flows, liquidity, and aspects of our balance sheet and capital structure. On slide 8, we show a summary of our results for Q2 and H1 of 2026, with comparisons to the same periods last year. Q2 2026 sales were $721.3 million, an increase of 2.2% compared to Q2 of 2025. The increase was driven primarily by favorable foreign exchange, and to a lesser extent, favorable volume, mix, and customer price adjustments and recoveries. Adjusted EBITDA in the quarter was $53.9 million, compared to $62.8 million we reported in Q2 of 2025. The year-over-year change was primarily due to higher costs for materials, duties, and tariffs, and other general inflationary pressures.

Speaker #4: On slide 8, we show a summary of our results for the second quarter and first half of 2026, with comparisons to the same periods last year.

Speaker #4: Second quarter 2026 sales were 721.3 million dollars. An increase of 2.2% compared to the second quarter of 2025. The increase was driven primarily by favorable foreign exchange and, to a lesser extent, favorable volume mix and customer price adjustments and recoveries.

Speaker #4: Adjusted EBITDA in the quarter was 53.9 million dollars, compared to 62.8 million dollars we reported in the second quarter of 2025. The year-over-year change was primarily due to higher costs for materials, duties, and tariffs, and other general inflationary pressures.

Speaker #4: On a US gap basis, we reported a net loss of 18.8 million dollars in the second quarter of this year, compared to a net loss of 1.4 million dollars in the second quarter of 2025.

Jonathan Banas: On a U.S. GAAP basis, we reported a net loss of $18.8 million in Q2 of this year, compared to a net loss of $1.4 million in Q2 of 2025. Adjusting for restructuring expense net of tax from both periods, adjusted net loss for Q2 was $2.3 million, or $0.13 per share, compared to adjusted net income of $1 million, or $0.06 per share in Q2 of 2025. Our CapEx in Q2 of 2026 totaled $13.8 million, or 1.9% of sales. This was higher than the prior year period due to increased launch-related investments and automation, but in line with our full expected run rate of 2% to 3% of sales. We continue to exercise discipline around our capital investments, consistent with our goals of maximizing returns on invested capital.

Jon Banas: On a U.S. GAAP basis, we reported a net loss of $18.8 million in Q2 of this year, compared to a net loss of $1.4 million in Q2 of 2025. Adjusting for restructuring expense net of tax from both periods, adjusted net loss for Q2 was $2.3 million, or $0.13 per share, compared to adjusted net income of $1 million, or $0.06 per share in Q2 of 2025. Our CapEx in Q2 of 2026 totaled $13.8 million, or 1.9% of sales. This was higher than the prior year period due to increased launch-related investments and automation, but in line with our full expected run rate of 2% to 3% of sales. We continue to exercise discipline around our capital investments, consistent with our goals of maximizing returns on invested capital.

Speaker #4: Adjusting for restructuring expense, net of tax from both periods, adjusted net loss for the second quarter was 2.3 million dollars, or 13 cents per share, compared to adjusted net income of 1 million dollars, or 6 cents per share in the second quarter of 2025.

Speaker #4: Our capital expenditures in the second quarter of 2026 totaled 13.8 million dollars, or 1.9% of sales. This was higher than the prior year period due to increased launch-related investments and automation, but in line with our full expected run rate of 2 to 3 percent of sales.

Speaker #4: We continue to exercise discipline around our capital investments consistent with our goals of maximizing returns on invested capital. For the first half of the year, sales were 1.4 billion dollars, up year-over-year primarily due to favorable foreign exchange.

Jonathan Banas: For H1 of the year, sales were $1.4 billion, up year-over-year, primarily due to favorable foreign exchange. Adjusted EBITDA for H1 was $104.9 million, and adjusted net loss was $7.6 million. I'll provide some additional detail on the drivers of the year-over-year changes for the quarter and H1 in the charts on the next couple of slides. Moving to slide nine. For Q2 sales, favorable foreign exchange was a tailwind of approximately $10 million in the quarter versus Q2 of 2025. Favorable volume and mix, net of customer price adjustments and recoveries, had a positive impact on sales of approximately $5 million compared to the same period a year ago. For Q2 Adjusted EBITDA, lean initiatives in purchasing and manufacturing positively contributed $15 million year-over-year, demonstrating continued strong performance from our global teams.

Jon Banas: For H1 of the year, sales were $1.4 billion, up year-over-year, primarily due to favorable foreign exchange. Adjusted EBITDA for H1 was $104.9 million, and adjusted net loss was $7.6 million. I'll provide some additional detail on the drivers of the year-over-year changes for the quarter and H1 in the charts on the next couple of slides. Moving to slide 9. For Q2 sales, favorable foreign exchange was a tailwind of approximately $10 million in the quarter versus Q2 of 2025. Favorable volume and mix, net of customer price adjustments and recoveries, had a positive impact on sales of approximately $5 million compared to the same period a year ago. For Q2 Adjusted EBITDA, lean initiatives in purchasing and manufacturing positively contributed $15 million year-over-year, demonstrating continued strong performance from our global teams.

Speaker #4: And adjusted EBITDA for the first six months was 104.9 million dollars, and adjusted net loss was 7.6 million dollars. I'll provide some additional detail on the drivers of the year-over-year changes for the quarter and the first half in the charts on the next couple of slides.

Speaker #4: So moving to slide 9. For second quarter sales, favorable foreign exchange was a tailwind of approximately 10 million dollars in the quarter, versus the second quarter of 2025.

Speaker #4: Favorable volume and mix net of customer price adjustments and recoveries had a positive impact on sales of approximately 5 million dollars, compared to the same period a year ago.

Speaker #4: For second quarter adjusted EBITDA, lean initiatives in purchasing and manufacturing positively contributed 15 million dollars year-over-year, demonstrating continued strong performance from our global teams.

Speaker #4: In addition, favorable foreign exchange added 2 million dollars, compared to the second quarter of last year. More than offsetting these improvements were 10 million dollars of higher material costs, around rubber, metals, and resins, as well as 8 million dollars in increased wages and general inflation, and 8 million dollars in higher duties, tariffs, and other costs.

Jonathan Banas: In addition, favorable foreign exchange added $2 million compared to the Q2 of last year. More than offsetting these improvements were $10 million of higher material costs around rubber, metals, and resins, as well as $8 million in increased wages and general inflation, and $8 million in higher duties, tariffs, and other costs. Most of the commodity inflation was driven by higher oil prices, which averaged about $30 per barrel higher in the Q2 than before the Middle East conflict began. As discussed during our Q1 conference call earlier this year, the gross commodity inflation incurred during the Q2 is really a timing difference based on the structure of our commercial agreements.

Jon Banas: In addition, favorable foreign exchange added $2 million compared to the Q2 of last year. More than offsetting these improvements were $10 million of higher material costs around rubber, metals, and resins, as well as $8 million in increased wages and general inflation, and $8 million in higher duties, tariffs, and other costs. Most of the commodity inflation was driven by higher oil prices, which averaged about $30 per barrel higher in the Q2 than before the Middle East conflict began. As discussed during our Q1 conference call earlier this year, the gross commodity inflation incurred during the Q2 is really a timing difference based on the structure of our commercial agreements.

Speaker #4: Most of the commodity inflation was driven by higher oil prices, which averaged about $30 per barrel higher in the second quarter than before the Middle East conflict began.

Speaker #4: As discussed during our first quarter conference call earlier this year, the gross commodity inflation incurred during the second quarter is really a timing difference based on the structure of our commercial agreements.

Speaker #4: We expect to recover most of these incremental input costs, as well as tariffs, in the second half of the year, according to the index-based contracts and agreements we have in place, as well as through typical commercial negotiations.

Jonathan Banas: We expect to recover most of these incremental input costs, as well as tariffs, in the H2 of the year according to the index-based contracts and agreements we have in place, as well as through typical commercial negotiations. This is really the first time that our index-based contracts have been significantly tested since we put them in place, and we're pleased that they are working as intended. Price increases have already gone into effect in the Q3, which will allow us to recover much of the material cost inflation we have seen. Moving to slide 10. Looking at Adjusted EBITDA for the H1 of the year, our teams have generated $31 million in savings or increased efficiencies in manufacturing and supply chain optimization, which continue to benefit our results. We have also seen $3 million in savings from past restructuring initiatives.

Jon Banas: We expect to recover most of these incremental input costs, as well as tariffs, in the H2 of the year according to the index-based contracts and agreements we have in place, as well as through typical commercial negotiations. This is really the first time that our index-based contracts have been significantly tested since we put them in place, and we're pleased that they are working as intended. Price increases have already gone into effect in the Q3, which will allow us to recover much of the material cost inflation we have seen. Moving to slide 10. Looking at Adjusted EBITDA for the H1 of the year, our teams have generated $31 million in savings or increased efficiencies in manufacturing and supply chain optimization, which continue to benefit our results.

Speaker #4: This is really the first time that our index-based contracts have been significantly tested since we put them in place, and we're pleased that they are working as intended.

Speaker #4: Price increases have already gone into effect in the third quarter, which will allow us to recover much of the material cost inflation we have seen.

Speaker #4: Moving to slide 10. Looking at adjusted EBITDA for the first half of the year, our teams have generated 31 million dollars in savings or increased efficiencies in manufacturing and supply chain optimization, which continue to benefit our results.

Speaker #4: We have also seen 3 million dollars in savings from past restructuring initiatives, nonetheless, these positive drivers were more than offset by 15 million dollars in wage increases and general inflation, 11 million dollars in higher duties and tariffs, and 10 million dollars of higher material costs, as well as 8 million dollars of unfavorable volume and mix, along with 6 million dollars of other costs.

Jon Banas: We have also seen $3 million in savings from past restructuring initiatives. Nonetheless, these positive drivers were more than offset by $15 million in wage increases and general inflation, $11 million in higher duties and tariffs, and $10 million of higher material costs, as well as $8 million of unfavorable volume and mix, along with $6 million of other costs. As mentioned, despite ongoing cost pressures from materials and tariffs, we remain confident in our ability to recover or mitigate the vast majority of these impacts through commercial recoveries and operational actions.

Jonathan Banas: Nonetheless, these positive drivers were more than offset by $15 million in wage increases and general inflation, $11 million in higher duties and tariffs, and $10 million of higher material costs, as well as $8 million of unfavorable volume and mix, along with $6 million of other costs. As mentioned, despite ongoing cost pressures from materials and tariffs, we remain confident in our ability to recover or mitigate the vast majority of these impacts through commercial recoveries and operational actions. Accordingly, we expect only a modest net effect on full-year results and will continue to proactively manage changing commodity conditions and recovery timing throughout the remainder of the year. Turning to slide 11. As Jeff mentioned earlier, we had a strong quarterly performance in terms of cash flow. Free cash flow, defined as cash provided by operations minus CapEx, was $16.3 million in the period.

Speaker #4: As mentioned, despite ongoing cost pressures from materials, and tariffs, we remain confident in our ability to recover or mitigate the vast majority of these impacts through commercial recoveries and operational actions.

Speaker #4: Accordingly, we expect only a modest net effect on full-year results and will continue to proactively manage changing commodity conditions and recovery timing throughout the remainder of the year.

Jon Banas: Accordingly, we expect only a modest net effect on full-year results and will continue to proactively manage changing commodity conditions and recovery timing throughout the remainder of the year. Turning to slide 11. As Jeff mentioned earlier, we had a strong quarterly performance in terms of cash flow. Free cash flow, defined as cash provided by operations minus CapEx, was $16.3 million in the period. This was an improvement of $39.7 million compared to the Q2 of last year, driven primarily by our successful refinancing in the Q1 and our continued focus on optimizing working capital.

Speaker #4: Turning to slide 11. As Jeff mentioned earlier, we had a strong quarterly performance in terms of cash flow. Free cash flow, defined as cash provided by operations minus capex, was 16.3 million dollars in the period.

Speaker #4: This was an improvement of 39.7 million dollars, compared to the second quarter of last year, driven primarily by our successful refinancing in the first quarter and our continued focus on optimizing working capital.

Jonathan Banas: This was an improvement of $39.7 million compared to the Q2 of last year, driven primarily by our successful refinancing in the Q1 and our continued focus on optimizing working capital. Year-to-date cash usage was higher than the prior year period, reflecting lower H1 earnings driven by elevated material and tariff costs, volume and mix dynamics, as well as increased capital investments supporting new program launches and automation initiatives. As material cost recoveries take effect and operational efficiencies ramp up further, we continue to expect positive free cash flow generation for the full year. We ended the Q2 with a cash balance of $126.6 million. Coupled with $167.6 million of availability on our ABL facility, which remains untapped, we had total liquidity of nearly $300 million as of 30 June 2026.

Speaker #4: Year-to-date cash usage was higher than the prior year period, reflecting lower first-half earnings driven by elevated material and tariff costs, volume and mix dynamics, as well as increased capital investments supporting new program launches and automation initiatives.

Jon Banas: Year-to-date cash usage was higher than the prior year period, reflecting lower H1 earnings driven by elevated material and tariff costs, volume and mix dynamics, as well as increased capital investments supporting new program launches and automation initiatives. As material cost recoveries take effect and operational efficiencies ramp up further, we continue to expect positive free cash flow generation for the full year. We ended the Q2 with a cash balance of $126.6 million. Coupled with $167.6 million of availability on our ABL facility, which remains untapped, we had total liquidity of nearly $300 million as of 30 June 2026.

Speaker #4: As material cost recoveries take effect, and operational efficiencies ramp up further, we continue to expect positive free cash flow generation for the full year.

Speaker #4: We ended the second quarter with a cash balance of 126.6 million dollars. Coupled with 167.6 million dollars of availability on our ABL facility, which remains untapped, we had total liquidity of nearly 300 million dollars as of June 30th, 2026.

Speaker #4: We believe that this current level of liquidity combined with expected future cash generation provides us with sufficient resources to support the continuing execution of our strategic plans to deliver profitable growth, lower our net leverage, and maximize returns on our invested capital.

Jonathan Banas: We believe that this current level of liquidity, combined with expected future cash generation, provides us with sufficient resources to support the continuing execution of our strategic plans to deliver profitable growth, lower our net leverage, and maximize returns on our invested capital. This concludes my prepared remarks. Let me turn it back over to Jeff.

Jon Banas: We believe that this current level of liquidity, combined with expected future cash generation, provides us with sufficient resources to support the continuing execution of our strategic plans to deliver profitable growth, lower our net leverage, and maximize returns on our invested capital. This concludes my prepared remarks. Let me turn it back over to Jeff.

Speaker #4: This concludes my prepared remarks, so let me turn it back over to Jeff.

Speaker #1: Thanks, John. And in this last portion of our call, I'll comment on our high-level strategic comparatives and how we believe these are positioning us for continuing profitable growth over the next several years.

Jeff Edwards: Thanks, John. In this last portion of our call, I'll comment on our high-level strategic imperatives and how we believe these are positioning us for continuing profitable growth over the next several years. I'll wrap up with a few comments on our outlook for the business and our industry in general in 2026. If we can turn to slide 13. Our strategies and operating plans are built around the four key strategic imperatives that you see outlined on slide 13. By aligning the company around these common objectives, we continue to drive significant improvements in virtually every aspect of our business. By the continuing execution of our plans and strategies, we're positioning the company to deliver continued profitable growth, further improvements in margin, and significantly improve returns on invested capital. Slide 14.

Jeff Edwards: Thanks, Jon. In this last portion of our call, I'll comment on our high-level strategic imperatives and how we believe these are positioning us for continuing profitable growth over the next several years. I'll wrap up with a few comments on our outlook for the business and our industry in general in 2026. If we can turn to slide 13. Our strategies and operating plans are built around the four key strategic imperatives that you see outlined on slide 13. By aligning the company around these common objectives, we continue to drive significant improvements in virtually every aspect of our business. By the continuing execution of our plans and strategies, we're positioning the company to deliver continued profitable growth, further improvements in margin, and significantly improve returns on invested capital. Slide 14.

Speaker #1: Then I'll wrap up with a few comments on our outlook for the business and our industry in general, in 2026. So if we can turn to slide 13.

Speaker #1: Our strategies and operating plans are built around the four key strategic comparatives that you see outlined on slide 13. By aligning the company around these common objectives, we continue to drive significant improvements in virtually every aspect of our business.

Speaker #1: And by the continuing execution of our plans and strategies, we're positioning the company to deliver continued profitable growth, further improvements in margin, and significantly improve returns on invested capital.

Speaker #1: Slide 14. The charts on slide 14 provide concise, summary of the progress we've made in restoring the financial health of the company. Through our successful strategic execution, we've been able to increase our gross profit margins by 160 basis points over the past two years.

Jeff Edwards: The charts on slide 14 provide concise summary of the progress we've made in restoring the financial health of the company. Through our successful strategic execution, we've been able to increase our gross profit margins by 160 basis points over the past two years, despite reduced or flat production volumes in our two largest operating regions. This includes the impact from the significant decline in production on one of our key programs here in North America that resulted from a customer supply chain disruption beginning in the Q4 of last year and carrying into the H1 of this year. Because of our success in driving sustainable efficiencies and fixed cost reductions, we believe we will continue the trend of expanding margins in 2026 and beyond, even if production volumes remain flat. We would expect to leverage any increases in production volume to drive further profitability and returns.

Speaker #1: Despite reduced or flat production volumes in our two largest operating regions. This includes the impact from the significant decline in production on one of our key programs, here in North America, that resulted from a customer supply chain disruption beginning in the fourth quarter of last year, and carrying into the first half of this year.

Speaker #1: Because of our success in driving sustainable efficiencies and fixed-cost reductions, we believe we will continue the trend of expanding margins in 2026 and beyond, even if production volumes remain flat.

Speaker #1: And we would expect to leverage any increases in production volume to drive further profitability and returns. In addition to our cost optimizations, we're benefiting from continuing launches of new programs and products with enhanced variable contribution margins.

Jeff Edwards: We would expect to leverage any increases in production volume to drive further profitability and returns. In addition to our cost optimizations, we're benefiting from continuing launches of new programs and products with enhanced variable contribution margins. As the new programs ramp up, they're replacing older programs that have lower margins on average. Our book business launch cadence and the timing of run-out business give us a high degree of confidence in our expanding margin outlook.

Jeff Edwards: In addition to our cost optimizations, we're benefiting from continuing launches of new programs and products with enhanced variable contribution margins. As the new programs ramp up, they're replacing older programs that have lower margins on average. Our book business launch cadence and the timing of run-out business give us a high degree of confidence in our expanding margin outlook. In addition, our enhanced commercial agreements with top customers allow us to recover most material and tariff cost increases, such as those we experienced this quarter. This significantly reduces the risk for turbulent market conditions that might otherwise disrupt our strategic execution. Turning to slide 15. Both of our business segments are continuing to execute their sound strategies to drive profitable growth and improve returns on invested capital.

Speaker #1: As the new programs ramp up, the replacing older programs that have lower margins on average. Our book business, Launch Cadence, in the timing of runout business, give us a high degree of confidence in our expanding margin outlook.

Speaker #1: In addition, our enhanced commercial agreements with top customers allow us to recover most material and tariff cost increases such as those we experienced this quarter.

Jeff Edwards: In addition, our enhanced commercial agreements with top customers allow us to recover most material and tariff cost increases, such as those we experienced this quarter. This significantly reduces the risk for turbulent market conditions that might otherwise disrupt our strategic execution. Turning to slide 15. Both of our business segments are continuing to execute their sound strategies to drive profitable growth and improve returns on invested capital.

Speaker #1: This significantly reduces the risk for turbulent market conditions that might otherwise disrupt our strategic execution. Turning to slide 15. Both of our business segments are continuing to execute their sound strategies to drive profitable growth and improve returns on invested capital.

Speaker #1: Specifically, in our ceiling segment, where we're already global leader in the industry, we're leveraging our leading technologies, expertise, and innovation to capture additional share and profitability.

Jeff Edwards: Specifically, in our Sealing segment, where we're already a global leader in the industry, we're leveraging our leading technologies, expertise, and innovation to capture additional share and profitability. We've also deployed sophisticated digital tools, and we're in the process of implementing several automation initiatives within our manufacturing facilities to drive further efficiencies and improved asset utilization. Finally, as we continue to deliver exciting innovations that provide incremental value to our customers, we're winning more than our share of new business. Turning to slide 16. We provide a few examples of the Sealing innovations we've introduced into the market that are beginning to gain traction and drive sales. Our FlushSeal system has been very popular and is already in production on more than 20 vehicle programs.

Speaker #1: We've also deployed sophisticated digital tools and we're in the process of implementing several automation initiatives within our manufacturing facilities to drive further efficiencies and improved asset utilization.

Speaker #1: Finally, as we continue to deliver exciting innovations, that provide incremental value to our customers, we're winning more than our share of new business. Turning to slide 16.

Speaker #1: We provide a few examples of the ceiling innovations we've introduced into the market that are beginning to gain traction and drive sales. Our flush seal system has been very popular and is already in production on more than 20 vehicle programs.

Speaker #1: A more recent innovation, FlexiCore body seals, is an award-winning technology that we expect will be in production on two vehicle programs later this year.

Jeff Edwards: A more recent innovation, FlexiCore Body Seals, is an award-winning technology that we expect will be in production on two vehicle programs later this year. In addition, we're advancing development projects for FlexiFit Glass and FlexiFit Hidden Outer Waistbelt technologies with several customers and expect to add these innovations to our list of new business awards very soon. Turning to slide 17. In our Fluid Handling Systems segment, we believe we've unmatched portfolio of products and innovations that position us well to take advantage of increases in ICE and hybrid powertrains in the US, the continuing adoption of EVs in China, and the evolving mix of hybrids and EVs in Europe. This flexibility around powertrains, combined with our ability to design and deliver engineered solutions to optimize vehicle efficiency, is creating opportunities for increasing content per vehicle and profitable new growth.

Speaker #1: In addition, we're advancing development projects for FlexiFit glass and FlexiFit hidden outer waist belt technologies, with several customers and expect to add these innovations to our list of new business awards very soon.

Speaker #1: Turning to slide 17. In our fluid handling systems segment, we believe we've unmatched portfolio of products and innovations that position us well to take advantage of increases in ICE and hybrid powertrains in the US, the continuing adoption of EVs in China, and the evolving mix of hybrids and EVs in Europe.

Jeff Edwards: In our Fluid Handling Systems segment, we believe we've unmatched portfolio of products and innovations that position us well to take advantage of increases in ICE and hybrid powertrains in the US, the continuing adoption of EVs in China, and the evolving mix of hybrids and EVs in Europe. This flexibility around powertrains, combined with our ability to design and deliver engineered solutions to optimize vehicle efficiency, is creating opportunities for increasing content per vehicle and profitable new growth.

Speaker #1: This flexibility around powertrains, combined with our ability to design and deliver engineered solutions to optimize vehicle efficiency, is creating opportunities for increasing content for vehicle, and profitable new growth.

Speaker #1: Additionally, the current challenges in our market are creating difficulties for some of our competition, resulting in opportunities for us. Recently, we received a call from an OEM with whom we'd had traditionally stable business, but frankly, a lower level of revenue.

Jeff Edwards: Additionally, the current challenges in our market are creating difficulties for some of our competition, resulting in opportunities for us. Recently, we received a call from an OEM with whom we'd had traditionally stable business, but frankly, a lower level of revenue. They shared that they had a problem with a direct fluids competitor and asked if we'd be interested and willing to invest in growing our relationship with them, beginning immediately. Together, we moved fast to make modest capital investments and preparations in our plant, and this customer moved business that was already in production and awarded it to our Fluids group. This was not a one-time event. Over the past 10 months, our Fluids group have been awarded mid-production conquest business nearly 10 times, with the awards totaling nearly $40 million in annual sales, and that's effective this year.

Speaker #1: They shared that they had a problem with a direct fluids competitor and asked if we'd be interested and willing to invest in growing our relationship with them.

Speaker #1: Beginning immediately. Together, we move fast to make modest capital investments and preparations in our plant, and this customer moved business that was already in production and awarded it to our fluids group.

Speaker #1: And this was not a one-time event. Over the past 10 months, our fluids group have been awarded mid-production Conquest business nearly 10 times, with the awards totaling nearly $40 million in annual sales, and that's effective this year.

Speaker #1: So our continued commitment to providing world-class quality, service, and overall value to our customers is certainly being recognized, making us the clear supplier of choice for vehicle fluid handling systems.

Jeff Edwards: Our continued commitment to providing world-class quality, service, and overall value to our customers is certainly being recognized, making us the clear supplier of choice for vehicle fluid handling systems. As we've said in the past, our longer-term strategic target, make no mistake, is to double the fluid handling business within the next five to seven years. With recent new business wins and a long list of target business opportunities coming up, we believe we're on track to achieve this goal. Turning to slide 18. To conclude our prepared remarks this morning, I'll shift focus to the near term and our outlook for the rest of 2026. As we look forward to the remaining five months of the year, we're optimistic that certain headwinds we've faced over the past few quarters will be resolved or mitigated in the back half of the year.

Speaker #1: As we've said in the past, our longer-term strategic target: make no mistake, is to double the fluid handling business within the next 5 to 7 years.

Speaker #1: With recent new business wins and a long list of target business opportunities coming up, we believe we're on track to achieve this goal. Turning to slide 18.

Speaker #1: To conclude our prepared remarks this morning, I'll shift focus to the near-term and our outlook for the rest of 2026. As we look forward to the remaining 5 months of the year, we're optimistic that certain headwinds we've faced over the past few quarters will be resolved or mitigated in the back half of the year.

Speaker #1: We are seeing more normalized production volume on certain key platforms, and we expect that to continue. Additionally, while our cost for materials remain elevated due to oil prices and disruptions in the Middle East, we've begun recovering these incremental costs for the terms of our commercial agreements and through further commercial negotiations.

Jeff Edwards: We are seeing a more normalized production volume on certain key platforms, we expect that to continue. Additionally, while our costs for materials remain elevated due to oil prices and disruptions in the Middle East, we've begun recovering these incremental costs per the terms of our commercial agreements and through further commercial negotiations. It's important to note, with the enhanced commercial agreements and index-based contracts that we've put in place over the past few years, we've structurally improved the business to limit the potential risks in precisely these types of hyperinflationary markets. Meanwhile, we're focusing on delivering high value for our customers, optimizing our operations around the world, and successfully executing our strategic plans to drive profitable growth, further expand our margins, and once again maximize return on invested capital. Turning to slide 19.

Speaker #1: It's important to note, with the enhanced commercial agreements and indexed-based contracts that we've put in place over the past few years, we've structurally improved the business to limit the potential risks and precisely these types of hyper-inflationary markets.

Speaker #1: Meanwhile, we're focusing on delivering high value for our customers, optimizing our operations around the world, and successfully executing our strategic plans to drive profitable growth, further expand our margins, and once again maximize return on invested capital.

Speaker #1: Turning to slide 19. So despite the higher material costs that we've discussed and the timing of commercial recoveries that impacted our results here in the second quarter, we believe we remain on track to achieve our full-year plan for sales and profitability.

Jeff Edwards: Despite the higher material costs that we've discussed and the timing of commercial recoveries that impacted our results here in Q2, we believe we remain on track to achieve our full-year plan for sales and profitability. In terms of Adjusted EBITDA, this was reflected in the midpoint of our guidance range, which we've kept unchanged, even though we tightened the upper and lower ends of the range to reflect better visibility mid-year, which is traditionally how we've done it. We did make a few minor adjustments to other elements of our guidance, including a small increase in capital spending, reflecting incremental investments for the unplanned new business launches that I described earlier, an increase in restructuring expense as we accelerate initiatives to optimize fixed costs in our overall operating footprint, and a decrease in expected net interest expense to reflect the terms of our successful refinancing.

Speaker #1: In terms of adjusted EBITDA, this was reflected in the midpoint of our guidance range. Which we've kept unchanged. Even though we tightened the upper and lower ends of the range to reflect better visibility mid-year, which is traditionally how we've done it.

Speaker #1: We did make a few minor adjustments to other elements of our guidance, including a small increase in capital spending, reflecting incremental investments for the unplanned new business launches that I described earlier.

Speaker #1: An increase in restructuring expense as we accelerate initiatives to optimize fixed costs in our overall operating footprint, and a decrease in expected net interest expense to reflect the terms of our successful refinancing.

Speaker #1: So in summary, we're confident and believe that we will deliver strong full-year results in 2026. And importantly, we believe we are solidly on track to achieve our longer-term strategic financial targets that we've reviewed with you, for adjusted EBITDA and return on invested capital, as we continue to grow and improve the business over the next 4 to 5 years.

Jeff Edwards: In summary, we're confident and believe that we will deliver strong full-year results in 2026. Importantly, we believe we are solidly on track to achieve our longer-term strategic financial targets that we've reviewed with you for Adjusted EBITDA and return on invested capital as we continue to grow and improve the business over the next four to five years. As we wrap up, I certainly want to thank our customers, our suppliers, and all of our stakeholders for your continued confidence and support. We also want to thank all of our employees for their continued hard work, dedication, and their commitment to driving sustainable long-term value. This concludes our prepared remarks, let's move into Q&A.

Speaker #1: As we wrap up, I certainly want to thank our customers, our suppliers, and all of our stakeholders for your continued confidence and support. We also want to thank all of our employees for their continued hard work, dedication, and their commitment to driving sustainable, long-term value.

Speaker #1: This concludes our prepared remarks, so let's move into Q&A.

Speaker #2: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your telephone keypad. If you're using a speakerphone, please pick up the handset before entering your request.

Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad. If you're using a speakerphone, please pick up the handset before entering your request. To withdraw from the queue, please press star two. One moment, please, for your first question as we assemble the queue. Your first question comes from Michael Ward of Citi. Your line is already open.

Speaker #2: To withdraw from the queue, please press star two. One moment, please, for your first question as we assemble the queue. Your first question comes from Michael Ward of Citibank.

Speaker #2: Your line is already open.

Speaker #3: Thank you. Good morning, everyone.

Michael Ward: Thank you. Good morning, everyone.

Speaker #4: Good morning, Mike.

Jeff Edwards: Good morning, Mike.

Speaker #3: Jeff, when you talk about these Conquest awards, is that unique to the fluids business where you can pick it up that quickly? Normally, you hear about Conquest ones, and they're 1, 2, 3 years down the road.

Michael Ward: Jeff, when you talk about these conquest awards, is that unique to the Fluid Business where you can pick it up that quickly? Normally, you hear about conquest wins, and they're one to two, three years down the road. For it sounds like it's impacting business today.

Speaker #3: But for it to it sounds like it's impacting business today.

Speaker #4: Yeah, that's right, Mike. As I said, it is unique. We are well-positioned with technology and with our ability to execute. And as we've talked many times, the fluid business is critical components, right?

Jeff Edwards: Yeah, that's right, Mike. As I said, it is unique. We are well-positioned with technology and with our ability to execute. As we've talked many times, the Fluid Business is critical components, right? If it leaks, it shows up in your driveway or your garage, and there's a big problem. I think customers are really taking a look at the innovation we have, the technology we have, how well we're executing in that business. When they have issues, they're addressing them quickly. I thought it was important this morning to share that because it is different. It is unique. That's happened actually to our Sealing Teams a couple of times as well here in the past 12 months. We're proud of the fact that we have those relationships. Our footprint allows us to be nimble and quick and flexible.

Speaker #4: I mean, if it leaks, it shows up in your driveway or your garage, and there's a big problem. So I think customers are really taking a look at the innovation we have, the technology we have, how well we're executing in that business.

Speaker #4: And so when they have issues, they're addressing them quickly. So I thought it was important this morning to share that, because it is different, it is unique.

Speaker #4: That's happened, actually, to our ceiling teams a couple of times as well here in the past 12 months. But we're proud of the fact that we have those relationships, our footprint allows us to be nimble and quick and flexible.

Speaker #4: Obviously, move-in ceiling programs is more challenging. Some than some of the fluid businesses, Mike. So I think both of those things play a role.

Jeff Edwards: Obviously, moving Sealing systems programs is more challenging than some of the Fluid Handling Systems businesses, Mike. I think both of those things play a role. Really, hats off to our manufacturing and engineering teams and obviously the commercial folks that are on the front end there making that happen, but we're pretty proud of that. Look, I said we're going to double the business in five to seven years, and we said that two years ago. We're on track to achieve that as well. Our Fluid Handling Systems team and our Sealing systems team are performing at a very high level, and we're proud of them.

Speaker #4: But really, hats off to our manufacturing and engineering teams and obviously the commercial folks that are on the front end there making that happen.

Speaker #4: But we're pretty proud of that. And look, I said we're going to double the business in 5 to 7 years, and we said that 2 years ago.

Speaker #4: So we're on track to achieve that as well. So our fluid team and our ceiling team are performing at a very high level. We're proud of them.

Speaker #3: So a combination of the product innovation as well as it sounds like some weakness on the competitive front. Where they're struggling about.

Michael Ward: A combination of the product innovation as well as sounds like some weakness on the competitive front where they're struggling a bit.

Jeff Edwards: Yeah, or decisions that they made. I'm not sure which it is. Maybe it's a combination of both. You know what I mean?

Speaker #4: Yeah, or decisions that they made. I'm not sure which it is. Maybe it's a combination of both. You know what I mean?

Speaker #3: Right. John, I just want to make sure confirm your second-half outlook based on your guidance and what it suggests. If I'm doing my math right, you're talking about adjusted EBITDA margins in the second half at the midpoint of the range, 12% plus.

Michael Ward: Right. John, I just want to make sure, confirm your H2 outlook based on your guidance and what it suggests. If I'm doing my math right, you're talking about Adjusted EBITDA margins in the H2 at the midpoint of the range, 12% plus. When I look at the cash flow numbers, $100 million in surplus cash or free cash flow. Am I looking at it in the right way?

Speaker #3: And when I look at the cash flow numbers—$100 million in surplus cash or free cash flow—is that, am I looking at it in the right way?

Speaker #4: Yeah, you are. Your math triangulates Mike. That's the expectation. Certainly, when you think about these recoveries coming online, that'll benefit EBITDA and then fall through to cash flow both.

Jonathan Banas: Yeah, you are. Your math triangulates, Mike. That's the expectation. Certainly, when you think about these recoveries coming online, that'll benefit EBITDA and then fall through to cash flow both. Both of those metrics will benefit in H2. All the focus that we put on the call today earlier about purchasing performance and the manufacturing team's performance. They had a strong H1, but they're looking forward to even better H2. As you look at the overall bridge going across the page, they're in line with another $50+ million in H2 of incremental savings year-over-year. That'll go a long way towards completing the walk in H2.

Jon Banas: Yeah, you are. Your math triangulates, Mike. That's the expectation. Certainly, when you think about these recoveries coming online, that'll benefit EBITDA and then fall through to cash flow both. Both of those metrics will benefit in H2. All the focus that we put on the call today earlier about purchasing performance and the manufacturing team's performance. They had a strong H1, but they're looking forward to even better H2. As you look at the overall bridge going across the page, they're in line with another $50+ million in H2 of incremental savings year-over-year. That'll go a long way towards completing the walk in H2.

Speaker #4: So both of those metrics will benefit in the second half. And all the focus that we put on the call today earlier about purchasing performance and the manufacturing team's performance they had a strong first half, but they're looking forward to even better half as you look at the overall bridge going across the page.

Speaker #4: They're in line with another 50-plus million dollars in the second half of incremental savings year over year. So that'll go a long way towards completing the walk in the second half.

Speaker #3: Okay. Now that's not going to be the run rate for next year, but it certainly is a next 6 months or so, you have a pretty positive outlook.

Michael Ward: Okay. Now that's not going to be the run rate for next year, but it certainly is next 6 months or so, you have a pretty positive outlook. That's good news.

Speaker #3: So that's good news.

Speaker #4: Yeah.

Jeff Edwards: Yep.

Speaker #3: Thank you very much.

Michael Ward: Thank you very much.

Speaker #4: Okay, Mike. Thanks.

Jeff Edwards: Okay, Mike. Thanks.

Speaker #2: Your next question comes from Dog Carson of Bank of America. Your line is already open.

Operator: Your next question comes from Doug Carson of Bank of America. Your line is already open.

Speaker #4: Thanks, guys. Thanks, Jeff, John, and Roger. You did a great job on the business wins—it's impressive. Year to date, that's a big number. I just want to maybe double-click on the guidance.

Doug Carson: Thanks, guys. Thanks, Jeff, John, and Roger. A great job on the business wins. It's impressive year to date. It's a big number. I just wanted to maybe double-click on the guidance. As we look at the $105 million you've done in the H1, that would suggest an $80-plus million EBITDA each quarter on the low end of the guidance and around $95 million a quarter to reach the high end. When you're trying to get that goal, I'm looking at the recoveries as a big part of that. Help me think about that a bit, of what type of recoveries would we be looking at? When I look at on slide 10, the kind of year to date bridge, where are we getting the recoveries? The duties and tariffs, the general inflation?

Speaker #4: As we look at the 105 million you've done in the first half, that would suggest an 80-plus million EBITDA each quarter on the low end of the guidance.

Speaker #4: And around 95 million a quarter to reach the high end. So when we try to get that goal, I'm looking at the recoveries as a big part of that.

Speaker #4: Help me think about that a bit. What type of recoveries would we be looking at? Because if I look at slide 10, the kind of year-to-date bridge, where are we getting the recoveries?

Speaker #4: The duties and tariffs, the general inflation, because that number's got to be kind of quite big. To get to your guidance, given the kind of unit volume and mix has been kind of negative year to date, negative 8.

Doug Carson: That number's got to be quite big to get to your guidance, given the unit volume and mix has been kind of negative year to date, -8.

Speaker #5: Yeah, Doug, I'll take it. This is Jeff. So clearly, the $30 in some cases higher variance that we had in oil that John spoke of in his prepared remarks, in essence, we've said this in the last quarter call, that there's a quarter or so lag in some cases, a little bit longer.

Jeff Edwards: Yeah, Doug, I'll take it. This is Jeff.

Doug Carson: Yeah

Jeff Edwards: clearly the $30, in some cases higher, variance that we had in oil that John spoke of in his prepared remarks. In essence, we said this in the last quarter call that there's a quarter or so lag, in some cases, a little bit longer. Effective 1 July, we had a significant price increase from our customers that went in for all purchase orders to begin collecting the difference between what we had in the plan with them, which was, I think, around $65, to a price increase of over $90. That's kind of how it works, and now we're collecting that back. Obviously, the price of oil is below that number today, but the way this works is, each quarter, that average gets adjusted into the price. We've been very clear about that really for a couple of years now.

Speaker #5: So effective July 1, I mean, we had a significant price increase from our customers that went in for all purchase orders to begin collecting the difference between what we had in the plan with them, which was, I think, around 65 dollars.

Speaker #5: To a price increase of over 90 dollars. So that's kind of how it works. And now we're collecting that back. Obviously, the price of oil is below that number today, but the way this works is each quarter that average gets adjusted into the price.

Speaker #5: So we've been very clear about that, really, for a couple of years now. And as I mentioned, and John mentioned, it's really the first time we've had to put it into action.

Jeff Edwards: As I mentioned and John mentioned, it's really the first time we've had to put it into action. It's working. It's working well. Our customers have lived up to every single deal they made with us. The rest is what we call the normal negotiation. Anytime you have energy costs spike like they have for everyone.

Speaker #5: It's working. It's working well. Our customers have lived up to every single deal they made with us. And the rest is what we call the normal negotiation.

Speaker #5: I mean, anytime you have energy costs spike like they have for everyone, there's negotiations that go on every single day. Either to offset get help in other ways to offset those.

Doug Carson: Right

Jeff Edwards: There's negotiations that go on every single day, either to offset those or get help in other ways to offset those, and that's what we refer to as other commercial negotiations. Most importantly, it isn't just all about that. We have to continue to execute on the cost side, and as we talked about in the beginning of the year, we had significant plans. We had 95% of our cost initiatives for the year already identified before we started January 2026. The teams are executing. That's what you heard us talk about in the Q1. That's what we quantified here in the Q2. We're well-positioned to continue to deliver. Most of those things have already been implemented, and we're reaping the benefits of those cost initiatives that were started last year, implemented beginning of this year, and paying bills as we go forward.

Speaker #5: And that's what we refer to as other commercial negotiations. And then most importantly, it isn't just all about that. We have to continue to execute on the cost side.

Speaker #5: And as we talked about in the beginning of the year, we had significant plans. We had 95% of our cost initiatives for the year already identified before we started January of '26.

Speaker #5: So the teams are executing. That's what you heard us talk about in the first quarter. That's what we quantified here in the second quarter.

Speaker #5: So we're well positioned to continue to deliver. Most of those things have already been implemented. And we're reaping the benefits of those cost initiatives that were started last year, implemented beginning of this year, and paying bills as we go forward.

Speaker #5: So that helps offset some of the wage inflation that John spoke of. And it does every year. So that's not unusual. And then finally, the supply base.

Jeff Edwards: That helps offset some of the wage inflation that John spoke of, and it does every year. That's not unusual. Finally, the supply base. We're very engaged. This is just a really challenging time for any material science company, right? We're engaged with all of them, doing our best from a purchasing point of view to leverage supply and demand and scale, and we have choices, too. That's been going on here the last couple of months, and we expect that to pay dividends for us the H2 to help recoup what we funded for everybody in this Q2. I know that's a long explanation, but hopefully you get the context of there's two things that go on. We drive cost out, and we have to receive compensation back. Both of those things are happening.

Speaker #5: I mean, we're very engaged. This is just a really challenging time for any material science company, right? And so we're engaged with all of them, doing our best from a purchasing point of view to leverage supply and demand and scale and we have choices too.

Speaker #5: And so that's been going on here the last couple of months. And we expect that to pay dividends for us the second half to help recoup what we funded for everybody in this second quarter.

Speaker #5: So I know that's a long explanation, but hopefully you get the context of there's two things that go on. We drive cost out, and we have to receive compensation back, both of those things are happening.

Doug Carson: That was a very good summary. To kind of summarize for myself, driving the cost is the lean manufacturing improvement that we see in that big bar, and then capturing refunds and also the pricing coming through, and oil a lot different than it was at the beginning of the year, and there's a lag. We should expect a, not to get in front of it, but a Q3 that's going to look a lot different than Q2 as far as EBITDA.

Speaker #4: That's a very good summary. So to kind of summarize for myself, you're driving the cost is the lean manufacturing bar. And then capturing refunds and also the pricing coming through and oil a lot different than it was at the beginning of the year.

Speaker #4: And there's a lag. So we should expect not to get in front of it, but a Q3 that's going to look a lot different than Q2 as far as EBITDA.

Speaker #5: That's correct.

Jeff Edwards: That's correct.

Speaker #4: Okay.

Doug Carson: Okay.

Speaker #5: And again, that's what we sort of highlighted to you last quarter, Doug, that we expected these headwinds in Q2 and that we expected to recover in the Q3 and Q4.

Jeff Edwards: Again, that's what we-

Doug Carson: Thanks for that detail.

Jeff Edwards: sort of highlighted to you last quarter, Doug, that we expected these headwinds in Q2 and that we expected to recover in Q3 and Q4, and that's exactly the way it's playing out. I don't have any

Speaker #5: And that's exactly the way it's playing out, so. I don't have any magic beyond that. I mean, that's just what's happening.

Doug Carson: Okay

Jeff Edwards: magic beyond that. That's just what's happening.

Speaker #4: No, that's perfect. And you did say that. And it's helpful to kind of review it. And I appreciate the data and the slide deck.

Doug Carson: No, that's perfect. You did say that, and it's helpful to review it, and I appreciate the data and the slide deck. That's it from me.

Speaker #4: That's it for me. Thank you so much.

Speaker #5: Okay. All right. Thanks, Doug.

Jeff Edwards: Okay.

Doug Carson: Thank you so much.

Jeff Edwards: All right. Thanks, Doug.

Speaker #1: Ladies and gentlemen, as a reminder, if you have a question, please press star one. Your next question comes from Nathan Jones of Stiefel Financial.

Operator: Ladies and gentlemen, as a reminder, if you have a question, please press star one. Your next question comes from Nathan Jones of Stifel Financial. Your line is already open.

Speaker #1: Your line is already open.

Speaker #6: Good morning, everyone. This is Andres on for Nathan Jones. Just a quick question on 37 million net new business coming from hybrids and PVs.

[Company Representative] (Stifel Financial): Good morning, everyone. This is Andrés on for Nathan Jones. Just a quick question on $37 million in net new business coming from hybrids and EVs. Obviously, that presents a better opportunity from a higher content perspective. Can you break out the net new awards between how much traction you're getting on EVs, hybrids, Jeff, you've mentioned in the past, OEMs and consumers favoring hybrids. Is that still the case when you're looking at future net new business awards and how the market's trending?

Speaker #6: Obviously, that presents a content perspective. Can you kind of break out the net new awards between how much traction you're getting on EVs, hybrids, and if you've mentioned in the past kind of OEMs and consumers favoring hybrids?

Speaker #6: Is that still the case when you're looking at net future net new business awards? And how the market's trending?

Speaker #5: Yeah, Andres, thanks for the question. This is John. Think of the $30-some million in the combined bucket, essentially 50/50. But I'll remind you, going back to when we've talked to you about these new business awards before, the content for vehicle increases is on both of those, right?

Jonathan Banas: Yeah, Andrés, thanks for the question. This is John. Think of the 30-some million in the combined bucket, essentially 50/50. I'll remind you, going back to when we've talked to you about these new business awards before, the content per vehicle increase is on both of those, right? You do see a benefit compared to traditional ICE engines when you're talking full battery electric, but then even a greater extent on hybrids. We continue to see that market development. In fact, some of our major OEM customers are throttling back EV investments and new models there and going all in on hybrids. A lot of that is certainly driven by consumer preferences globally. It's not just a North American story, but Europe as well. In China, it's a combination of the both EV and hybrid story overall.

Jon Banas: Yeah, Andrés, thanks for the question. This is John. Think of the 30-some million in the combined bucket, essentially 50/50. I'll remind you, going back to when we've talked to you about these new business awards before, the content per vehicle increase is on both of those, right? You do see a benefit compared to traditional ICE engines when you're talking full battery electric, but then even a greater extent on hybrids. We continue to see that market development. In fact, some of our major OEM customers are throttling back EV investments and new models there and going all in on hybrids. A lot of that is certainly driven by consumer preferences globally. It's not just a North American story, but Europe as well. In China, it's a combination of the both EV and hybrid story overall.

Speaker #5: So you do see a benefit compared to traditional ICE engines when you're talking full battery electric. But then even a greater extent on hybrids.

Speaker #5: So we continue to see that market development. In fact, some of our major OEM customers are throttling back EV investments in new models there.

Speaker #5: And going all in on hybrids. A lot of that has certainly driven by consumer preferences globally. It's not just a North American story, but Europe as well.

Speaker #5: And in China, it's a combination of both the EV and hybrid story overall. So we continue to see that growing over time and getting more share of the overall market compared to the ICE engine variants.

Jonathan Banas: We continue to see that growing over time, and getting more share of the overall market compared to the ICE engine variants. A lot slower than, of course, anybody thought a couple of years ago, but certainly still a positive development for Cooper-Standard when you think about the increased content per vehicle that we would expect to see on those programs.

Jon Banas: We continue to see that growing over time, and getting more share of the overall market compared to the ICE engine variants. A lot slower than, of course, anybody thought a couple of years ago, but certainly still a positive development for Cooper-Standard when you think about the increased content per vehicle that we would expect to see on those programs.

Speaker #5: A lot slower than, of course, anybody thought a couple of years ago. But certainly still a positive development for Cooper Standard when you think about the increased content per vehicle that we would expect to see on those programs.

[Company Representative] (Stifel Financial): That is very helpful. Thank you. Then maybe just on the F-150, an update there. When you guys think about H2, we heard the OEM obviously talk pretty positively about a ramp. What are you seeing on your end, and how do you think about revenue in H2 with respect to that?

Speaker #6: That is very helpful. Thank you. And then maybe just on the F-150, kind of an update there. When you guys think about the back half of the year, we heard the OEM obviously talk pretty positively about a ramp.

Speaker #6: What are you seeing on your end? And how do you think about kind of revenue in the back half with respect to that?

Speaker #5: Yeah, this is Jeff. I think started off July strong, obviously, with additional production during what was intended to be a shutdown period. So that was positive.

Jeff Edwards: This is Jeff. I think started off July strong, obviously, with additional production during what was intended to be a shutdown period. That was positive for the quarter. As it relates to releases for Q4, we haven't really seen an uptick, we didn't include that in the forecast. If there's any additional volume up year-over-year, then that would be a positive for H2. We were hoping there would be about a 20% uplift H2 versus H1, we haven't seen that in the release yet, we didn't want to assume anything. Like you, we've heard all the positive statements. If it doesn't show up in the release, we don't put it in the forecast.

Speaker #5: For the quarter, as it relates to releases for the fourth quarter, we haven't really seen an uptick. So we didn't include that in the forecast.

Speaker #5: So if there's any additional volume up year over year, then that would be a positive for the second half. We were hoping there would be about a 20% uplift second half versus first half, but we haven't seen that in the release yet.

Speaker #5: And so we didn't want to assume anything. But like you, we've heard all the positive statements. But if it doesn't show up in the release, we don't put it in the forecast.

Speaker #6: Very fair point. Thank you. Thank you very much. Take my questions.

[Company Representative] (Stifel Financial): Very fair point. Thank you. Thank you very much for taking my questions.

Speaker #5: Thanks, Andres.

Jonathan Banas: Thanks, Andrés.

Jon Banas: Thanks, Andrés.

Speaker #1: Your next question comes from Wolf Jove of EVR Research. Please go ahead.

Operator: Your next question comes from Wolf Joffe of EVR Research. Please go ahead.

Speaker #7: Gentlemen, how are you?

Wolf Joffe: Gentlemen, how are you?

Speaker #6: Good morning, Wolf.

Jeff Edwards: Good morning, Wolf.

Wolf Joffe: I just wanted to comment on the continued really impressive performance. The safety metrics that you guys continue to publish are just kind of astonishing. Congrats on all of that.

Speaker #7: I just wanted to comment on the continued really impressive performance. The safety metrics that you guys continue to publish are just kind of astonishing.

Speaker #7: So congrats on all of that.

Speaker #6: Thank you. Appreciate it.

Jeff Edwards: Thank you. Appreciate it.

Speaker #7: We've done a really nice job with respect to net new business awards over the last several years. Call it 250 million in '22, 180 million each year in '23 and 2024, roughly.

Wolf Joffe: We've done a really nice job with respect to net new business awards over the last several years. Call it $250 million in 2022, $180 million each year in 2023 and 2024, roughly. If global auto production is forecasted to be flat in 2027, how much could our production grow given past net new awards?

Speaker #7: If global auto production is forecasted to be flat in 2027, how much could our production grow given past net new awards?

Jeff Edwards: Wolf, I think if it's flat, the growth would obviously tend to trend in year-over-year, depending on the launch schedule of each of the awards. I think what we have to consider is what was the projected growth outlook when we won the awards, because that's really what those award totals are based on. We see it as positive. We see it lining up well, as we've said, to achieving our longer-term targets.

Speaker #6: Wolf, I think if it's flat, the growth would obviously tend to trend in year over year, depending on the launch schedule of each of the awards.

Speaker #6: I think what we have to consider is what was the projected growth outlook when we won the awards, because that's really what those award totals are based on.

Speaker #6: So, we see it as positive. We see it lining up well, as we've said, to achieving our longer-term targets. And all of those awards play into that.

Roger Hendriksen: All of those awards play into that.

Speaker #5: Wolf, this is Jeff. I would say even a little more specific than Roger just gave you, as we look forward to building the '27 plan, which isn't built yet, keep that in mind.

Jeff Edwards: Wolf, this is Jeff. I would say even a little more specific than Roger just gave you. As we look forward to building the 2027 plan, which isn't built yet, keep that in mind. Our forecasts on flat sales, I mentioned earlier in my prepared remarks that we would still be on target to hit the increased margin expectation that we put out there in our strategic outlook last year for you. That's point one. Point two, I would tell you that we would expect our revenue to just be under $3 million, assuming flat volume in the same mix. Rough numbers, of course, but hopefully that gives you some idea. There's no question that the net new business that we booked the last few years, we're launching it as we speak. We'll launch more as the year goes on.

Speaker #5: Regarding our forecast on flat sales, I mentioned earlier in my prepared remarks that we would still be on target to hit the increased margin expectation that we put out there in our strategic outlook last year for you.

Speaker #5: So that's 0.1. 0.2, I would tell you that we would expect our revenue to be just under $3 million, assuming flat volume and the same mix.

Speaker #5: Rough numbers, of course, but hopefully that gives you some idea. There's no question that the net new business that we booked the last few years we're launching it as we speak.

Speaker #5: We'll launch more as the year goes on. And then as we've also said, as hybrid comes on and as EVs come on, that helps drive our fluid revenue even further.

Jeff Edwards: As we've also said, as hybrid comes on and as EVs come on, that helps drive our fluid revenue even further. Much of which is not included in that original outlook because we obviously didn't have all of the North American manufacturing ins and outs related to what EVs were going out and what hybrids were coming in when we built that plan last year. We have a lot better idea of what that is as we sit here today. We'll be building our business plans for 2027, 2028, and 2029 over the next few months. That will dictate what I just said. I expect it to look very good. I expect it to be on those strategic targets that we provided last year. Hopefully, that helps.

Speaker #5: Much of which is not included in that original outlook because we obviously didn't have all of the North American manufacturing ins and outs related to what EVs were going out and what hybrids were coming in when we built that plan last year.

Speaker #5: So we have a lot better idea of what that is as we sit here today. We'll be building our business plans for '27, '28, and '29 over the next few months.

Speaker #5: And then that will dictate what I just said. I expect that it to look very good. I expect it to be on those strategic targets that we provided last year.

Speaker #5: Hopefully that helps.

Speaker #7: Yes, thank you for the additional color. As you mentioned, if revenue and production is sort of flattish, you guys should still show margin expansion.

Wolf Joffe: Yes, thank you for the additional color. As you mentioned, if revenue and production is sort of flattish, you guys should still show margin expansion. Can you provide any granularity around how much your margins should go up each year in a flat environment? Is it 20 basis points, 40 basis points, 5 basis points?

Speaker #7: Is there can you provide any granularity around how much your margins should go up each year in a flat environment? Is it 20 bips?

Speaker #7: 40 bips? 5 bips?

Speaker #5: Well, we're up 160 basis points the last two years. I think I said in my prepared remarks. So I'll just use that to tell you that we know how to do it.

Jeff Edwards: Well, we're up 160 basis points the last 2 years, I think I said in my prepared remarks.

Wolf Joffe: Yeah.

Jeff Edwards: I'll just use that to tell you that we know how to do it, and we're not going to forget over the course of the next couple of years. VCM is up on all business that we're booking across the board on average. We didn't just guess when we put together the forecast for the next several years that we've been talking to you guys about. As you know, we're booking business a couple years, in some cases, 3 years before we even launch it. We know our costs, we know our prices, we know the available capital, and the capacity that we have in the company. When we say that we don't need a whole lot of capital to do what we've already booked, that's the case. We know what the margins are because we know what our costs are.

Speaker #5: And we're not going to forget over the course of the next couple of years. So VCM is up on all business that we're booking across the board, on average.

Speaker #5: So we didn't just guess when we put together the forecast for the next several years that we've been talking to you guys about. As you know, we're booking business a couple years in some cases three years before we even launch it.

Speaker #5: So we know our costs. We know our prices. We know the available capital. And the capacity that we have in the company. And when we say that we don't need a whole lot of capital, to do what we've already booked, that's the case.

Speaker #5: And we know what the margins are because we know what our costs are. So the only thing I don't know is volume and mix, but beyond that, what we can control, controlling.

Jeff Edwards: The only thing I don't know is volume and mix, beyond that, what we can control, we're controlling.

Speaker #7: Okay. And you discussed the competitive benefits in the fluid segment. I'm wondering if those benefits are enough to signal that we should be toward the high end of the full-year guidance, or maybe it's not enough to move the needle?

Wolf Joffe: Okay. You discussed the competitive benefits in the fluid segment. I'm wondering if those benefits are enough to signal that we should be toward the high end of the full-year guidance? Maybe it's not enough to move the needle?

Speaker #5: Yeah, if somebody can tell me what's going to happen in the Middle East, then I'll answer that question. Otherwise, I got no idea.

Jeff Edwards: Yeah. If somebody can tell me what's going to happen in the Middle East, then I'll answer that question. Otherwise, I got no idea.

Speaker #7: I know a guy. I know a guy. He has the answers. I'll put you in touch with him.

Wolf Joffe: I know a guy. He has the answers. I'll put you in touch with him.

Speaker #5: Thanks, Wolf. I appreciate it.

Jeff Edwards: Thanks, Wolf. I appreciate it.

Speaker #7: Well, thanks so much. And congrats on just the continued operational performance and I imagine we're just really, really enjoying the new contracts. They're just great.

Wolf Joffe: Well, thanks so much, and congrats on just the continued operational performance. I imagine we're just really, really enjoying the new contracts. They're just great.

Speaker #5: All right. Thanks, Wolf. Appreciate the questions.

Jeff Edwards: All right. Thanks, Wolf. Appreciate the questions.

Speaker #1: It appears that there are no more questions. I'd now like to turn the call over back to Roger Hendriksen for closing comments. Please go ahead.

Wolf Joffe: Thank you.

Operator: It appears that there are no more questions. I would now like to turn the call over back to Roger Hendriksen for closing comments. Please go ahead.

Speaker #6: Okay. Thanks, everybody. Again, we appreciate you taking the time to join us this morning. We appreciate the engaging questions. If there are any topics or issues that weren't addressed this morning, please feel free to reach out to me directly, and we'll make sure that we get your questions answered.

Roger Hendriksen: Okay, thanks, everybody. Again, we appreciate you taking the time to join us this morning. We appreciate the engaging questions. If there are any topics or issues that weren't addressed this morning, please feel free to reach out to me directly and we'll make sure that we get your questions answered. Thanks again for joining our call.

Speaker #6: Thanks again for joining our call.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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