Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Our historical results may not indicate, and should not be relied upon as an indication of, our future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. See Item 1. “Business—Forward-Looking Statements” for a discussion of risks associated with reliance on forward-looking statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed below and in Item 1A. “Risk Factors.” Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those statements included in Item 8. “Financial Statements and Supplementary Data” of this Report. References in this Annual Report on Form 10-K (the “Report”) to “we”, “our”, or the “Company” refer to Cooper-Standard Holdings Inc., together with its consolidated subsidiaries.
Executive Overview
Our Business
We design, manufacture and sell sealing systems and fluid handling systems (consisting of fuel and brake delivery systems and fluid transfer systems) for use primarily in passenger vehicles and light trucks manufactured by global OEMs. In 2025, approximately 86% of our sales consisted of original equipment sold directly to OEMs for installation on new vehicles. The remaining 14% of our sales were primarily to Tier I and Tier II suppliers and non-automotive manufacturers. Accordingly, sales of our products are directly affected by the annual vehicle production of OEMs, particularly the production levels of the vehicles for which we provide specific parts. Most of our products are custom designed and engineered for a specific vehicle platform. Our sales and product development personnel frequently work directly with OEM engineering departments in the design and development of our various products.
Although each OEM may emphasize different requirements as the primary criteria for judging its suppliers, we believe success as an automotive supplier generally requires outstanding performance with respect to quality, price, service, new program launches, design and engineering capabilities, innovation, timely delivery, financial stability, an extensive global footprint, and sustainability. Also, we believe our continued commitment to invest in global common processes is an important factor in servicing global customers with the same quality and consistency of product wherever we produce in the world. This is especially important when supplying products for global platforms.
In addition, to remain competitive and offset continued customer pricing pressure, we must also consistently achieve and sustain cost savings. In an ongoing effort to reduce our cost structure, we run a global continuous improvement program which includes training for our employees, as well as implementation of lean tools, structured problem solving, best business practices, standardized processes and change management. We also continually evaluate opportunities to optimize our manufacturing footprint by consolidating facilities and relocating production as appropriate. We believe we will continue to be successful in our efforts to improve our design and engineering capabilities and manufacturing processes while achieving cost savings, including through our continuous improvement initiatives.
Our OEM sales are generally based upon purchase orders issued by the OEMs, with updated releases for volume adjustments. As such, we typically do not have a defined backlog of orders at any point in time. Once selected to supply products for a particular platform, we typically supply those products for the platform life, which is normally five to eight years, though this term is not guaranteed. In addition, when we are the incumbent supplier to a given platform, we believe we have a competitive advantage in winning the redesign or replacement platform, although future awards are not guaranteed.
In 2025, approximately 59% of our sales were generated in North America. Because of our significant international operations, we are subject to the risks associated with doing business in other countries, such as increased trade restrictions, tariffs or taxes or the imposition of embargoes on imports, currency volatility, high interest and inflation rates, and the general political and economic risk that are associated with some of these markets.
Recent Trends and Conditions
General Economic Conditions and Outlook
The global automotive industry is susceptible to unpredictable economic conditions that can adversely impact new vehicle demand and production. Disruptions in the supply chains for certain critical materials and components can further exacerbate these challenges, and business conditions can fluctuate significantly across different regions and time periods. In 2023, light
vehicle production showed strong resilience and growth, supported by sustained consumer demand and OEM efforts to replenish depleted inventory levels. This resilience and growth occurred despite ongoing global economy uncertainty created by persistent inflation, rising interest rates and heightened geopolitical tension in key regions of the world. In 2024, light vehicle production slowed modestly, primarily due to rising inventory levels, relatively high interest rates, concerns about vehicle affordability, and ongoing geopolitical tensions around the world. In 2025, global light vehicle production returned to moderate growth despite lingering economic risks and uncertainties stemming from ongoing geopolitical conflicts and shifts in U.S. trade policy, including the implementation of significant new tariffs on many imported goods, autos among them. This global growth was primarily driven by strong production volume in China which more than offset declines in North America and Europe. In 2026, industry forecasts anticipate a 0.4 percent in global vehicle production compared to 2025.
In North America, consumer confidence in the United States remains subdued, with certain indices remaining near their lowest levels in over a decade. Ongoing uncertainty surrounding U.S. trade policy continues to create instability across capital and consumer markets. Persistently high interest rates, elevated prices for consumer goods, and rising consumer debt are further weighing on overall economic activity. Despite these headwinds, lower tax rates, reduced regulation, and other incentives included in recent legislation are expected to help stimulate both commercial investment and consumer demand in 2026. Economists at the International Monetary Fund (IMF) now project that the economies of the United States, Canada and Mexico will grow by 2.4 percent, 1.6 percent and 1.5 percent, respectively, in 2026.
In Europe, rising real wages, increased employment, lower inflation (including reduced energy costs), and declining interest rates are driving stronger household consumption. Fiscal stimulus measures, particularly in Germany, along with increased investments in infrastructure and defense are also contributing to overall economic growth. Nevertheless, uncertainty remains regarding the implementation of recent trade agreements with the United States and their potential effects on the region. Amid this uncertain environment, economists at the IMF project that the Eurozone economy will grow by 1.3 percent in 2026.
In the Asia Pacific region, China’s economy has continued to grow steadily, supported by domestic stimulus measures and an increase in exports. However, weak domestic consumer demand, persistent declines in property values and mounting public debt are obscuring the prospects for future growth. Consumer confidence remains near its lowest point in a decade. Additionally, ongoing uncertainty surrounding trade relations with the United States has contributed to a slowdown in private industrial investment. Despite these challenges, economists at the IMF project that the Chinese economy will grow by 4.5 percent in 2026.
In South America, the Brazilian central bank has maintained interest rates at restrictive levels to combat persistent inflation. While these high interest rates, combined with a more conservative fiscal policy have resulted in lower inflation, it has not yet reached the target rate of 4.0 percent. Lower inflation, strong global demand for the country’s exports, and expectations of interest rate cuts later in 2026 as inflation nears the target rate are contributing to improved consumer confidence in the country. However, after two years of economic growth averaging roughly 3.0 percent, economists at the IMF project that Brazil's economic growth rate will slow modestly to 1.6 percent in 2026.
Production Levels
Our business is directly affected by the automotive vehicle production rates in North America, Europe, the Asia Pacific region and South America. These production rates can be impacted by changing macro-economic conditions, geopolitical actions, regional consumer sentiment, labor disruptions, supply chain disruptions and changing regulatory and trade requirements, among other factors.
According to estimates of S&P Global, global light vehicle production was approximately 92.9 million units in 2025. This reflects an increase of approximately 3.7% globally compared to 2024.
Light vehicle production in certain regions for 2025 and 2024, as well as projections for 2026, are provided in the following table:
(in millions of units)
Projected % Change 2026 vs. 2025
% Change 2025 vs. 2024
North America
Europe
Asia Pacific
Greater China
South America
(1) Production data based on S&P Global, January 2026.
Industry Overview
Competition in the automotive supplier industry is intense and has increased in recent years as OEMs have demonstrated a preference for stronger relationships with fewer suppliers. Because of a growing emphasis on global vehicle platforms, automotive suppliers with a global manufacturing footprint capable of fully servicing customers around the world will typically have a competitive advantage over smaller, regional competitors. This dynamic is likely to result in further consolidation of competing suppliers within our industry over time.
OEMs have shifted some research and development, design and testing responsibility to suppliers, while simultaneously shortening new product cycle times. To remain competitive, suppliers must have state-of-the-art engineering and design capabilities and continuously improve their engineering, design and manufacturing processes to effectively service the customer. Suppliers are increasingly expected to collaborate on, or assume the product design and development of, key automotive components. This shift requires suppliers to provide innovative solutions to meet evolving technologies aimed at improved emissions and fuel economy.
Increased competitiveness in the industry, as well as customer focus on costs, has resulted in continued pressure on suppliers for price reductions, even in an inflationary environment, which reduces the overall profitability of the supply industry. Consolidations and market share shifts among vehicle manufacturers continue to put additional pressures on the supply chain. These pricing and market pressures will continue to drive our focus on reducing our overall cost structure through continuous improvement initiatives, capital redeployment, restructuring and other cost management processes. In response to ongoing inflationary cost pressures, we have implemented aggressive lean and cost optimization initiatives to help mitigate their impact. In addition, we continue to actively pursue pricing adjustments from our customers to offset higher costs on our existing business, particularly where such costs are market driven and beyond our immediate control.
In addition to the above, other factors will present opportunities for automotive suppliers that are positioned to meet the demands of evolving automotive markets and operating environments. These include advancements in autonomous and connected vehicle technologies, shifting regulatory requirements, and growing consumer preferences for environmentally friendly products. Rapid developments in hybrid and electric vehicle (“EV”) architectures such as expanded global EV adoption, accelerating investment in charging infrastructure, and continued improvements in battery technology are reshaping industry expectations. EV sales continued to grow into 2025, supported by broader model availability and enhanced battery performance, while global forecasts project further expansion driven by regulatory pressure on emissions and ongoing electrification across major markets.
Raw Materials
Our business is susceptible to inflationary pressures with respect to raw materials. Abrupt changes in the market prices or availability of certain key raw materials may result in operational and profitability challenges for the Company and the industry as a whole. Although global commodity markets and pricing remained stable in 2025, we continually work with our customers and suppliers to mitigate ongoing inflationary pressures and material-related cost exposures through a combination of expanded index-based agreements and other commercial enhancements.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in Note 2. “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. These policies require the most difficult, subjective or complex judgments that management makes in the preparation of the financial statements and accompanying notes. We consider an accounting estimate to be critical if (i) it requires us to make assumptions about matters that were uncertain at the time we were making the estimate, and (ii) changes in the estimate or different estimates that we could have selected could have had a material impact on our financial condition or results of operations. Such critical accounting estimates are discussed below. For these, materially different amounts could be reported under varied conditions and assumptions. While other items in our consolidated financial statements require estimation, however, in our judgment, they are not as critical as those discussed below.
Goodwill . Goodwill is tested for impairment as of October 1 of each year, or more frequently if an event occurs or circumstances indicate the carrying value of goodwill may be impaired. Our goodwill impairment testing is performed at the reporting unit level. We test goodwill for impairment by performing a qualitative assessment or using a quantitative test. We first assess qualitative factors to determine whether it is necessary to perform a more detailed quantitative goodwill impairment test. We would perform a quantitative test if the qualitative assessment determined it is more likely than not that a reporting unit’s carrying value is more than its fair value. We may also elect to bypass the qualitative assessment and proceed directly to the quantitative test for any reporting unit. If we elect to perform a quantitative test, fair value is based on the cash flows projected in
the reporting units’ strategic plans and long-range planning forecasts, discounted at a risk-adjusted rate of return. Our long-range planning forecasts are based on our assessment of revenue growth rates generally based on industry specific data, external vehicle build assumptions published by widely used external sources, and customer market share data based on known and targeted awards over a three-year period. The projected profit margin assumptions included in the plans are based on the current cost structure and adjustments for anticipated cost reductions or increases. If different assumptions were used in these plans, the related cash flows used in measuring fair value could be different and impairment of goodwill might be recorded. For the 2025 annual goodwill impairment test, we performed a quantitative assessment and determined that it is more likely than not that the fair values of our Sealing Systems, Fluid Handling Systems, and Industrial and Specialty Group reporting units exceeded their carrying values . See Note 9. “Goodwill and Intangible Assets” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Long-Lived Assets . We monitor our long-lived assets for impairment indicators on an ongoing basis. If impairment indicators exist, we analyze the undiscounted cash flows expected to be generated from the long-lived asset group compared to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value is determined by using various valuation approaches depending on the asset type. Fair value of machinery and equipment is based upon either estimated salvage value or estimated orderly liquidation value. Fair value of leased buildings is based on a discounted cash flow approach. Fair value of owned buildings is based on a sales comparison approach or cost approach. When determining fair value, cash flows are estimated using internal budgets based on recent sales data, independent automotive production volume estimates, and customer commitments. If applicable, discount rates are used in fair value calculations where required. Changes in economic or operating conditions impacting these estimates and assumptions could result in the of long-lived assets.
In 2025, 2024 and 2023, we recorded impairment charges related to buildings and machinery and equipment. The 2025 and 2024 impairments were related solely to idle assets and were based on internal assessments. In contrast, for 2023, we engaged a third-party valuation firm to determine fair values in order to calculate impairment charges. See Note 8. “Property, Plant and Equipment, Net” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Income Taxes. In determining the provision for income taxes for financial statement purposes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis. In completing this evaluation, we consider all available positive and negative evidence. Such evidence includes historical operating results, the existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if permitted under the tax law, expectations for future pretax operating income which considers forecasted revenue trends within the automotive industry, the time period over which our temporary differences will reverse, and the implementation of feasible and prudent tax planning strategies. Deferred tax assets are reduced by a valuation allowance if, based on the weight of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future periods.
Concluding that a valuation allowance is not required is difficult when there is significant negative evidence which is objective and verifiable, such as cumulative losses in recent years. We utilize three years’ cumulative pre-tax book results adjusted for significant permanent book to tax differences as a measure of cumulative results in recent years. In certain jurisdictions, our analysis indicates that we have cumulative three-year historical losses on this basis. This is considered significant negative evidence which is difficult to overcome. However, the three-year loss position is not solely determinative, and, accordingly, management considers all other available positive and negative evidence in its analysis. In the U.S. and certain foreign jurisdictions, we concluded that it is more likely than not that the net deferred tax assets may not be realized in the future. Accordingly, we continue to maintain and adjust as appropriate the valuation allowance related to those net deferred tax assets. However, since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.
In addition, the calculation of our tax benefits and liabilities includes uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize tax benefits and liabilities based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these liabilities based on changing facts and circumstances; however, due to the complexity of some of these uncertainties and the impact of any tax audits, the ultimate resolutions may be materially different from our estimated liabilities. See Note 15. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Pensions and Postretirement Benefits Other Than Pensions . Included in our results of operations are significant pension and postretirement benefit costs, which are measured using actuarial valuations. Inherent in these valuations are key assumptions,
including discount rates, mortality rates, expected returns on plan assets and health care cost trend rates. These assumptions are determined as of the current year measurement date. We consider current market conditions, including changes in interest rates, in making these assumptions. Changes in pension and postretirement benefit costs may occur in the future due to changes in these assumptions. Experience gains and losses as well as the effects of changes in actuarial assumptions are recognized in other comprehensive income. Cumulative actuarial gains and losses in excess of 10% of the projected benefit obligations or the fair value of plan assets for a particular plan are amortized over the average future service period of the employees in that plan. Our net pension and postretirement benefit costs (income), which included net pension settlement charges of $0.1 million, were approximately $7.3 million and $(0.9) million, respectively, for the year ended December 31, 2025.
To develop the discount rate for each pension plan, the expected cash flows underlying the plan’s benefit obligations were discounted using a December 31, 2025 pension index to determine a single equivalent rate. To develop our expected return on plan assets, we considered historical long-term asset return experience, the expected investment portfolio mix of plan assets and an estimate of long-term investment returns.
Weighted average assumptions used to determine pension benefit obligations as of December 31, 2025 were as follows:
Non-U.S.
Discount rate
Rate of compensation increase
* The U.S assumptions relate only to the Company’s U.S. SERP which is a frozen plan; therefore, the rate of compensation increase was not applicable.
Weighted average assumptions used to determine net periodic benefit costs for the year ended December 31, 2025 were as follows:
Non-U.S.
Discount rate
Expected return on plan assets
Rate of compensation increase
* There were no U.S. plan assets as of December 31, 2025; therefore, the expected return on plan assets was not applicable.
** The U.S assumptions relate only to the Company’s U.S. SERP which is a frozen plan; therefore, the rate of compensation increase was not applicable.
The sensitivity of our pension cost and obligations to changes in key assumptions, holding all other assumptions constant, is as follows:
Change in assumption
Impact on 2026 net periodic benefit cost
Impact on PBO as of December 31, 2025
1% increase in discount rate
- $0.6 million
- $11.3 million
1% decrease in discount rate
+ $0.6 million
+ $13.5 million
1% increase in expected return on plan assets
- $0.3 million
1% decrease in expected return on plan assets
+ $0.3 million
Aggregate pension net periodic benefit cost is forecasted to be approximately $6.7 million in 2026.
Health care cost trend rates are assumed to reflect market trend, actual experience and future expectations. Health care cost trend rate assumptions used to determine the postretirement benefit obligations as of December 31, 2025 were as follows:
Non-U.S.
Health care cost trend rate
Ultimate health care cost trend rate
Year that the rate reaches the ultimate trend rate
Aggregate other postretirement net periodic benefit income is forecasted to be approximately $0.5 million in 2026.
The Company’s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements and contribute amounts required by local statute. The Company does not anticipate making cash contributions to its
U.S. SERP in 2026 but does expect to make immaterial minimum funding cash contributions to its non-U.S. pension plans in 2026.
The Company does not prefund its postretirement benefit obligations. Rather, payments are made as costs are incurred by covered retirees. We expect net other postretirement benefit payments to be approximately $2.1 million in 2026.
Historical Periods
Refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended December 31, 2024 for discussion of the Results of Operations, Segment Results of Operations, and Liquidity and Capital Resources for the year ended December 31, 2024 compared to the year ended December 31, 2023, which is incorporated by reference herein.
Results of Operations
Year Ended December 31,
Change
(Dollar amounts in thousands)
Sales
Cost of products sold
Gross profit
Selling, administration & engineering expenses
Gain on sale of businesses, net
Gain on sale of buildings and land, net
Amortization of intangibles
Restructuring charges
Impairment charges
Operating income
Interest expense, net of interest income
Equity in earnings of affiliates
Pension settlement and curtailment charges
Other expense, net
Loss before income taxes
Income tax benefit
Net loss
Net loss (income) attributable to noncontrolling interests
Net loss attributable to Cooper-Standard Holdings Inc.
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Sales
Year Ended December 31,
Variance Due To:
Change
Volume / Mix*
Foreign Exchange
(Dollar amounts in thousands)
Total sales
* Net of customer price adjustments, including recoveries.
Sales for the year ended December 31, 2025 increased 0.4%, compared to the year ended December 31, 2024. The increase in sales was driven by favorable foreign exchange, partially offset by unfavorable volume and mix, net of customer price adjustments including recoveries.
Gross Profit
Year Ended December 31,
Variance Due To:
Change
Volume / Mix*
Foreign Exchange
Cost (Decreases) / Increases**
(Dollar amounts in thousands)
Cost of products sold
Gross profit
Gross profit percentage of sales
* Net of customer price adjustments, including recoveries.
** Net of savings from restructuring initiatives.
Cost of products sold is primarily comprised of direct materials, labor, manufacturing overhead, freight, depreciation, and other direct operating expenses. Among these, direct materials represent the largest component, accounting for approximately 52% and 51% of total cost of products sold for the years ended December 31, 2025 and December 31, 2024, respectively. The change in cost of products sold was impacted by manufacturing and purchasing cost savings through lean initiatives and savings from prior year restructuring initiatives, partially offset by unfavorable foreign exchange, unfavorable volume and mix, net of recoveries, and higher labor and overhead inflation.
Gross profit for the year ended December 31, 2025 increased 8.1% compared to the year ended December 31, 2024. As a percentage of sales, gross profit was 11.9% and 11.1% for the years ended December 31, 2025 and December 31, 2024, respectively. The change was driven by manufacturing and purchasing savings through lean initiatives, savings from prior year restructuring initiatives and favorable foreign exchange, partially offset by unfavorable volume and mix, net of recoveries, and higher labor and overhead inflation.
Selling, Administration and Engineering Expenses. Selling, administration and engineering expenses include administrative expenses as well as product engineering and design and development costs. Selling, administration and engineering expenses for the year ended December 31, 2025 were $214.4 million, or 7.8% of sales, compared to $207.6 million, or 7.6% of sales, for the year ended December 31, 2024. The increase, in both dollar terms and as a percentage of sales, was primarily due to higher stock-based compensation expense driven by stock price appreciation during the year ended December 31, 2025, partially offset by savings realized from restructuring actions and spending reductions initiated in 2024.
Gain on Sale of Businesses, Net. Gain on sale of businesses, net for the year ended December 31, 2024 was $2.0 million, resulting from the net effect of the sale of our Canadian tooling business. See Note 4. “Divestitures” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Gain on Sale of Buildings and Land, Net. Gain on sale of buildings and land, net for the year ended December 31, 2024 was $3.3 million, resulting from the sale of a building and land related to one of our Canadian facilities. See Note 8. “Property, Plant and Equipment, Net” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Restructuring Charges . Restructuring charges for the year ended December 31, 2025 decreased $3.6 million compared to the year ended December 31, 2024. Our restructuring actions, which include plant and facility closures as well as workforce reductions, are initiated to maintain a competitive footprint or in response to changes in global and regional automotive markets. The decrease was primarily driven by a cost optimization restructuring plan that was implemented in the second quarter of 2024, resulting in higher restructuring-related expenses recognized in the prior year. See Note 6. “Restructuring” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Impairment Charges. Non-cash asset impairment charges of $0.4 million and $0.7 million for the years ended December 31, 2025 and December 31, 2024, respectively, related to property, plant and equipment impairment charges.
Pension Settlement and Curtailment Charges. Non-cash settlement and curtailment charges for the year ended December 31, 2025 decreased $44.4 million compared to the year ended December 31, 2024. The decrease was primarily related to the termination of a certain U.S. pension plan that was completed during the year ended December 31, 2024. See Note 12. “Pensions” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Other Expense, Net. Other expense, net for the year ended December 31, 2025 decreased $17.0 million compared to the year ended December 31, 2024. The change was primarily driven by $10.3 million of income recognized in connection with certain royalty settlements during the year ended December 31, 2025 and a decrease in foreign currency losses by $5.7 million year-over-year.
Income Tax Benefit. Income tax benefit for the year ended December 31, 2025 was $19.2 million on losses before taxes of $23.5 million. This compared to an income tax benefit of $23.3 million on losses before taxes of $101.5 million for the year ended December 31, 2024. The tax expense in 2025 and 2024 differed from the statutory rate primarily due to incremental valuation allowances recorded on tax losses generated in the U.S. and certain foreign jurisdictions, the mix of income between the U.S. and foreign sources, tax credits and incentives, and other nonrecurring discrete items. Additionally, the year ended December 31, 2025 included a $45.4 million benefit for valuation allowance reversals in France, Spain, and a Korean location while the year ended December 31, 2024 included a $41.5 million benefit for valuation allowance reversals in Brazil, Poland, and a Chinese location.
Segment Results of Operations
Our business is organized in two reportable segments: Sealing Systems and Fluid Handling Systems. All other business activities are reported in Corporate, eliminations and other. The Company uses segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items.
The following tables present sales and segment adjusted EBITDA for each of the reportable segments.
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Sales
Year Ended December 31,
Variance Due To:
Change
Volume / Mix *
Foreign Exchange
(Dollar amounts in thousands)
Sales to external customers
Sealing Systems
Fluid Handling Systems
* Net of customer price adjustments, including recoveries.
Sealing Systems. The variance in volume and mix was driven by lower customer volumes, unfavorable product mix and unfavorable customer price adjustments. Th e foreign currency exchange variance was primarily driven by the strengthening of the Euro relative to the U.S. dollar, which resulted in an $18.4 million favorable impact, partially offset by a $3.9 million unfavorable impact of the Brazilian Real, a $3.0 million unfavorable impact of the Canadian Dollar, and a $0.6 million unfavorable impact of all other currencies.
Fluid Handling Systems. The variance in volume and mix was driven by favorable customer price adjustments, including tariff recoveries and increased pass-through pricing associated with directed-buy components, partially offset by lower customer volumes and unfavorable product mix. Th e foreign currency exchange variance was primarily driven by the strengthening of the Euro relative to the U.S. dollar, which resulted in a $5.2 million favorable impact, partially offset by a $3.2 million unfavorable impact of the Korean Won, and a $1.1 million unfavorable impact of all other currencies.
Segment adjusted EBITDA
Year Ended December 31,
Variance Due To:
Change
Volume / Mix *
Foreign Exchange
Cost (Increases)/Decreases**
(Dollar amounts in thousands)
Segment adjusted EBITDA
Sealing Systems
Fluid Handling Systems
* Net of customer price adjustments, including recoveries.
** Net of savings from restructuring initiatives.
Sealing Systems. The variance in volume and mix, including customer price adjustments, was driven by lower customer volumes and unfavorable product mix. The foreign currency exchange variance was primarily driven by a $4.8 million unfavorable impact of the Canadian Dollar. The cost decreases were primarily driven by $43.4 million of manufacturing and purchasing savings through lean initiatives. These savings were partially offset by $12.9 million of unfavorable inflation in labor and $5.7 million of other operational cost increases.
Fluid Handling Systems. The variance in volume and mix was driven by lower customer volumes and unfavorable product mix, partially offset by favorable customer price adjustments. The foreign currency exchange variance was primarily driven by a $16.6 million favorable impact of the Mexican Peso. The cost increases were primarily driven by $11.3 million of unfavorable inflation in labor and other operational costs, $3.2 million of higher tariff-related costs incurred but not yet recovered, and $3.4 million of other operational cost increases. These cost increases were partially offset by $15.1 million of manufacturing and purchasing savings through lean initiatives.
Liquidity and Capital Resources
Short and Long-Term Liquidity Considerations and Risks
The sources to fund our ongoing working capital, capital expenditures, debt service and other funding requirements are a combination of cash flows from operations, cash on hand, borrowings under our senior asset-based revolving credit facility (“ABL Facility”) and receivables factoring. We utilize intercompany loans and equity contributions to fund our worldwide operations. However, certain country-specific regulations may impose restrictions or result in increased costs when repatriating funds. See Note 10. “Debt and Other Financing” to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
We continue to actively preserve cash and enhance liquidity, including proactively managing our capital expenditures. We continuously monitor and forecast our liquidity situation in light of automotive industry, customer and economic factors, and take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations under our ABL Facility, depends on our future operating performance and cash flows. These may be impacted by many factors outside of our control, including but not limited to industry production levels, the costs of raw materials, the state of the overall automotive industry, general financial and economic conditions, including global trade and tariff policies, work stoppages, and potential public health events. Considering these factors, current projections for light vehicle production and customer demand for our products, we believe that our cash flows from operations, cash on hand, availability under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital requirements, capital expenditures, debt service and other funding requirements for the foreseeable future, despite the facing the industry .
Cash Flows
Operating Activities. Net cash provided by operating activities was $64.4 million for the year ended December 31, 2025, compared to net cash provided by operating activities of $76.4 million for the year ended December 31, 2024. The net change was primarily due to lower net cash earnings year-over-year, changes in working capital and an increase in cash interest payments by $12.4 million year-over-year. Working capital was negatively impacted primarily by a larger increase in receivables, reflecting timing of collections from customers during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Investing Activities . Net cash used in investing activities was $45.6 million for the year ended December 31, 2025, compared to net cash used in investing activities of $45.1 million for the year ended December 31, 2024. The net change was primarily due to proceeds from the sale of fixed assets of $4.3 million received during the year ended December 31, 2024, partially offset by lower capital expenditures year-over-year, as well as a net increase in proceeds from the sale of businesses by $1.8 million year-over-year. Capital expenditures were $48.2 million for the year ended December 31, 2025 compared to $50.5 million for the year ended December 31, 2024. We expect to maintain disciplined capital spending and anticipate total capital expenditures of approximately $55 million to $65 million in 2026.
Financing Activities. Net cash used in financing activities totaled $4.0 million for the year ended December 31, 2025, compared to net cash used in financing activities of $9.6 million for the year ended December 31, 2024. The net change was primarily due to a net decrease in principal payments on outstanding debt by $7.5 million year-over-year and a net decrease in debt issuance costs by $1.9 million year-over-year. The prior year debt issuance costs were paid in connection with Amendment No. 4 to the Company’s ABL Facility, which was executed in May 2024. These changes were partially offset by a net increase in tax withholding amounts related to employees’ share-based payment awards by $1.1 million year-over-year.
Off-Balance Sheet Arrangements
As a part of our working capital management, we sell accounts receivable from certain European customers through a third-party financial institution in off-balance sheet arrangements. The amount sold varies each month based on the amount of underlying receivables and cash flow needs. As of December 31, 2025 and 2024, we had $70.7 million and $53.4 million, respectively, of receivables outstanding under receivable transfer agreements entered into by various locations. For the years ended December 31, 2025 and 2024, total accounts receivable factored were $463.0 million and $497.4 million, respectively. Costs incurred on the sale of receivables were $2.1 million, $2.9 million and $2.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. These amounts are recorded in other expense, net in the consolidated statements of operations. These are permitted transactions under the credit agreements governing the ABL Facility and the indentures governing the First Lien Notes, Third Lien Notes, and 2026 Senior Notes.
Other Capital Transactions Impacting Liquidity
Share Repurchase Program
In June 2018, our Board of Directors approved a common stock repurchase program (the “2018 Program”) authorizing us to repurchase, in the aggregate, up to $150.0 million of our outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by management and in accordance with prevailing market conditions and federal securities laws and regulations. We expect to fund any future repurchases from cash on hand and future cash flows from operations. The specific timing and amount of any future repurchase will vary based on market and business conditions, changes in tax laws and other factors. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at our discretion. The 2018 Program was effective beginning November 2018. As of December 31, 2025, we had approximately $98.7 million of repurchase authorization under the 2018 Program. We did not make any repurchases under the 2018 Program during the years ended December 31, 2025, 2024 or 2023.
The First Lien Notes, Third Lien Notes, and ABL Facility each contain covenants that restrict the Company’s ability to pay dividends or make distributions on, or repurchases of, the Common Stock, subject to certain exceptions.
Contractual Obligations
Our contractual obligations consist of legal commitments requiring us to make fixed or determinable cash payments, regardless of the contractual requirements of the vendor to provide future goods or services. Except as otherwise disclosed, this table does not include information on our recurring purchase of materials for use in production because our raw materials purchase contracts typically do not require fixed or minimum quantities.
The following table summarizes the total amounts due in future periods under all debt agreements at nominal value, undiscounted finance lease commitments and other contractual obligations as of December 31, 2025:
Payment due by period
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
(Dollar amounts in millions)
Debt obligations
Interest on debt obligations
Operating lease obligations
Finance lease obligations
Total
As of December 31, 2025, undiscounted lease payments of the Company’s future operating leases that have not yet commenced were immaterial.
In addition to our contractual obligations and commitments set forth in the table above, we have employment arrangements with certain key executives that provide for continuity of management. These arrangements include payments of multiples of annual salary, certain incentives and continuation of benefits upon the occurrence of specified events in a manner believed to be consistent with comparable companies.
We also have funding requirements with respect to our pension obligations. We do not expect to make cash contributions to our U.S. SERP in 2026, but we do expect to make immaterial minimum funding cash contributions to our foreign pension plans in 2026. Our minimum funding requirements after 2026 will depend on several factors, including the investment performance of our retirement plans and prevailing interest rates. Our funding obligations may also be affected by changes in applicable legal requirements. We also have payments due with respect to our postretirement benefit obligations. Unlike our pension obligations, we do not prefund our postretirement benefit obligations; instead, payments are made as costs are incurred by covered retirees. We expect net other postretirement benefit payments to be approximately $2.1 million in 2026.
We may be required to make significant cash outlays due to our unrecognized tax benefits. However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax benefits of $12.3 million as of December 31, 2025 have been excluded from the contractual obligations table above. See Note 15. “Income Taxes” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
Excluded from the contractual obligations table above are open purchase orders as of December 31, 2025 for raw materials, supplies and capital expenditures in the normal course of business, supply contracts with customers, distribution agreements, joint venture agreements and other contracts without express funding requirements.
Other Matters
We may, from time to time, seek to purchase our outstanding debt securities or loans, including the First Lien Notes, Third Lien Notes, and 2026 Senior Notes. Such transactions could be privately negotiated or open market transactions, pursuant to tender offers or otherwise. Any such purchases will be made in our sole discretion in light of market conditions, applicable limitations contained in the agreements governing our indebtedness and other relevant factors. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may equate to a substantial amount of a particular class or series of debt, which may reduce the trading liquidity of such class or series.
In the third quarter of 2023, we designated Liveline Technologies, Inc. (“Liveline”) as an unrestricted subsidiary under the terms of certain of its debt agreements. Liveline remains a wholly-owned subsidiary of Cooper-Standard Automotive Inc. Liveline incurred a net loss of $1.7 million, $2.5 million and $0.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, Liveline had approximately $1.0 million and less than $0.5 million of gross assets, respectively. Liveline will look to the Company for necessary funding until it is able to sustain itself through sales of its products and services.
Non-GAAP Financial Measures
In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:
• because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;
• in developing our internal budgets and forecasts;
• as a significant factor in evaluating our management for compensation purposes;
• in evaluating potential acquisitions;
• in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and
• in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.
In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), interest expense, net of interest income, depreciation and amortization or EBITDA, as adjusted for items that management does not consider to be reflective of our core operating performance. These adjustments include, but are not limited to, restructuring costs, certain impairment charges, non-cash fair value adjustments and acquisition-related costs.
EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include the following:
• they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;
• they do not reflect changes in, or cash requirements for, our working capital needs;
• they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our ABL Facility, First Lien Notes, Third Lien Notes, and 2026 Senior Notes;
• they do not reflect certain tax payments that may represent a reduction in cash available to us;
• although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and
• other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.
In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the below presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by special items.
The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net loss, which is the most comparable financial measure in accordance with U.S. GAAP:
Year Ended December 31,
(Dollar amounts in thousands)
Net loss attributable to Cooper-Standard Holdings Inc.
Income tax (benefit) expense
Interest expense, net of interest income
Depreciation and amortization
EBITDA
Restructuring charges
Impairment charges (1)
Gain on sale of businesses, net (2)
Gain on sale of buildings and land, net (3)
Loss on refinancing and extinguishment of debt (4)
Pension settlement and curtailment charges (5)
Adjusted EBITDA
(1) Non-cash impairment charges in 2025 and 2024 related to idle assets in certain locations in Asia Pacific. Non-cash impairment charges in 2023 related to certain assets in Europe and Asia Pacific.
(2) Gain on sale of businesses related to divestitures in 2024 and 2023. Gain recognized in 2025 related to final purchase price adjustments associated with the divestiture in 2024.
(3) In 2024, the Company recognized a gain on the sale of building and land related to a Canadian facility.
(4) Loss on refinancing and extinguishment of debt related to refinancing transactions in 2023.
(5) Non-cash net pension settlement and curtailment charges and administrative fees incurred related to certain of our U.S. and non-U.S. pension plans.
Recent Accounting Pronouncements
See Note 3. “New Accounting Pronouncements” to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Report for additional information.
