Cooper-Standard Cuts 2026 EBITDA Outlook as Q3 Margins Weaken

Cooper-Standard Holdings Inc. lowered its 2026 adjusted EBITDA outlook after third-quarter profitability weakened and free cash flow turned negative, even as sales increased and new-business awards reached a year-to-date record.

The automotive supplier now expects full-year adjusted EBITDA of $235 million to $245 million, down from its prior range of $265 million to $295 million. It narrowed its sales forecast to $2.75 billion to $2.85 billion from $2.7 billion to $2.9 billion. Management nevertheless expects margin expansion to accelerate in the fourth quarter.

For the three months ended Sept. 30, Cooper-Standard generated sales of $708.6 million, up 1.9% from $695.5 million a year earlier. Gross profit fell to $77.8 million from $87.1 million, reducing the gross margin to 11.0% from 12.5%.

Adjusted EBITDA was nearly flat at $52.8 million compared with $53.3 million, while the adjusted EBITDA margin slipped to 7.5% from 7.7%. The GAAP net loss widened to $20.4 million, or $1.13 per diluted share, from $7.6 million, or $0.43 per share. The quarter included $19.2 million of restructuring charges, up from $3.5 million a year earlier.

On an adjusted basis, the net loss narrowed to $2.1 million, or $0.11 per diluted share, from $4.4 million, or $0.24 per share.

Cash flow weakens as capital spending rises

Net cash provided by operating activities declined to $5.2 million from $38.6 million in the prior-year quarter. Capital expenditures increased to $16.0 million from $11.2 million, resulting in negative free cash flow of $10.8 million compared with positive free cash flow of $27.4 million a year earlier.

For the first nine months of 2026, sales rose to $2.12 billion from $2.07 billion. Adjusted EBITDA declined to $157.8 million from $174.7 million, and its margin contracted to 7.5% from 8.4%. The nine-month GAAP net loss widened to $72.6 million from $7.5 million, partly reflecting $40.9 million of restructuring charges and a $24.2 million loss related to refinancing and debt extinguishment.

Nine-month free cash flow was negative $87.6 million, compared with negative $28.3 million in the same period of 2025. As of Sept. 30, Cooper-Standard had $1.15 billion of total debt and $112.3 million of cash and cash equivalents. Its trailing-12-month net leverage ratio was 5.4 times adjusted EBITDA. The company said an amended asset-based lending facility enhanced liquidity, extended its maturity profile and improved financing economics.

New-business awards support longer-term plans

Cooper-Standard reported $149 million of net new-business awards during the third quarter, bringing the year-to-date total to a record $395 million. Of the 2026 award mix, 25% involved innovation products, 24% related to battery-electric or hybrid programs, and 21% involved high-growth Chinese automakers. The company said contribution margins associated with the awards remained aligned with its long-term financial targets, while quoting activity remained robust for the fourth quarter and into 2027.

Operational initiatives produced $9 million of manufacturing and purchasing lean savings and $4 million of fixed-cost and selling, general, administrative and engineering expense reductions during the quarter. Cooper-Standard is also deploying artificial intelligence across quoting, design and validation, purchasing, manufacturing and program management, with the objective of supporting growth without proportionate increases in headcount and costs.

Revised 2026 outlook

Alongside the lower adjusted EBITDA range, Cooper-Standard now expects capital expenditures of $65 million to $70 million, compared with its previous forecast of $60 million to $70 million. Expected net cash taxes were reduced to $15 million to $20 million from $30 million to $35 million. Guidance for cash restructuring costs remained at $30 million to $35 million, while expected net cash interest stayed at $90 million to $100 million.

The outlook incorporates October 2026 production forecasts, customer production schedules and internal assumptions. Cooper-Standard’s production assumptions are 15.0 million light vehicles in North America, 17.2 million in Europe, 31.0 million in Greater China and 3.2 million in South America.

Management said the company’s three-to-five-year targets remain on track, including sales of $3.8 billion, an adjusted EBITDA margin approaching 15%, return on invested capital of about 25% and net leverage below two times annual adjusted EBITDA. Those goals rely on booked business, growth in China, expansion of the fluids business, higher-value products, fixed-cost optimization and digital initiatives.

The company is also negotiating recoveries for commodity, inflation and tariff costs not covered by index-based agreements and refining commercial contracts to reduce future exposure. Cooper-Standard identified production weakness, pricing pressure, commodity and component costs, tariffs, customer recoveries, supply-chain disruptions, foreign-exchange movements and its substantial debt load among the uncertainties that could affect results.