Cooper-Standard Holdings Inc.

Previous wording

The global automotive industry is susceptible to uncertain economic conditions that could adversely impact new vehicle demand and production. Business conditions may vary significantly from period to period or region to region. In 2024, light vehicle production slowed modestly due to rising inventory levels, relatively high interest rates and affordability concerns, and sustained geopolitical tensions throughout the world. Global commodity markets and pricing stabilized to a large degree in 2024, providing some support to the manufacturing environment. In 2025, we expect global production will slow further as inventory levels remain high, affordability concerns continue and global economic uncertainty persists. Ongoing changes in U.S. trade policy, including the imposition of significant tariffs on imported goods, is adding to economic risks and uncertainty globally, and could represent near-term challenges to the automotive industry.

Current wording

The global automotive industry is susceptible to unpredictable economic conditions that can adversely impact new vehicle demand and production. Business conditions can fluctuate significantly across different periods and regions. In 2024, light vehicle production experienced a modest slowdown, primarily due to rising inventory levels, relatively high interest rates, concerns about affordability, and ongoing geopolitical tensions worldwide. However, global commodity markets and pricing stabilized to a large degree in 2024, providing some support to the manufacturing sector. In the first half of 2025, global production increased by approximately 3% compared to the same period in 2024. Despite this positive trend in production for the first half of 2025, we expect global production for the full year 2025 will remain flat compared to full year 2024, with declines in North America and Europe being offset by increases in China. Additionally, ongoing changes in U.S. trade policy, including the implementation of significant tariffs on imported goods, are contributing to economic risks and global uncertainty, potentially posing further short-term challenges to the automotive industry.

Previous wording

In North America, U.S. consumer confidence has declined to the lowest levels since 2022. Uncertainty around U.S. trade policy, including the imposition of significant tariffs on imported goods, has unsettled the capital and consumer markets alike. Continuing high interest rates, stubbornly high prices on consumer goods, and increasing consumer debt continue to weigh on economic activity. Economists at the International Monetary Fund (IMF) are expecting the economies of the United States and Canada to grow by 1.8 percent and 1.4 percent, respectively, in 2025 while the Mexican economy is expected to contract by 0.3 percent in 2025.

Current wording

In North America, U.S. consumer confidence has started to improve but remains below the levels seen in December 2024 following the presidential election, and significantly lower than pre-global pandemic levels. Uncertainty surrounding U.S. trade policy, particularly the implementation of significant tariffs on imported goods, has created instability in both capital and consumer markets. Persistently high interest rates, elevated prices for consumer goods, and rising consumer debt continue to hinder economic activity. Economists at the International Monetary Fund (IMF) project the economies of the United States, Canada and Mexico will grow by 1.9 percent, 1.6 percent and 0.2 percent, respectively, in 2025.

Previous wording

In Europe, low unemployment, lower inflation and more stable energy costs are contributing to stronger household consumption. However, economic momentum slowed in the second half of 2024, especially in the manufacturing sector, due in part to declining export demand. In the first quarter of 2025, fresh concerns over tariffs and global trade relationships added another layer of uncertainty to the growth prospects in the region. Ongoing geopolitical tensions and the war in Ukraine also remain significant challenges to overall economic growth. Amid this uncertain environment, economists at the IMF are expecting the economy in the Eurozone region to grow by 0.8 percent in 2025.

Current wording

In Europe, rising real wages, increased employment, lower inflation (including reduced energy costs), and declining interest rates are driving stronger household consumption. Additionally, new fiscal stimulus measures, particularly in Germany, along with increased spending on infrastructure and defense are expected to enhance economic activity in the second half of 2025 and into 2026. However, emerging concerns regarding tariffs and global trade relations have introduced further uncertainty into the region's growth prospects. Ongoing geopolitical tensions and the war in Ukraine continue to pose significant challenges to overall economic growth. Amid this uncertain environment, economists at the IMF project that the Eurozone economy will grow by 1.0 percent in 2025.

Previous wording

In the Asia Pacific region, China’s economy continues to be burdened by a protracted property crisis, weak consumer and business confidence, and mounting local government debts. While year-over-year growth in the first quarter of 2025 was higher than expected on increased exports, tariffs and uncertainty around trade relationships with the United States are expected to weigh on economic activity and growth in the second quarter of 2025 and possibly beyond. Despite these risks, China’s economy could find strong footing with additional government stimulus actions, a rebound in private consumption and/or a favorable resolution to trade negotiations with the United States. Net of these factors, economists at the IMF are expecting the Chinese economy to grow at a rate of 4.0 percent in 2025.

Current wording

In the Asia Pacific region, China’s economy experienced steady growth in the first half of 2025, bolstered by stimulative measures and the front-loading of exports in anticipation of new tariffs. However, growth is expected to moderate in the second half of 2025 due to the effects of export front-loading, subdued domestic demand, and ongoing declines in property values. Continuing uncertainty surrounding trade relations with the United States is also expected to weigh on economic activity and growth in the second half of 2025 and potentially beyond. Despite these challenges, China’s economy could gain strong momentum through additional government stimulus, a rebound in private consumption, and/or a favorable resolution to trade negotiations with the United States. Taking these factors into account, economists at the IMF project the Chinese economy will grow at a rate of 4.8 percent in 2025.

Previous wording

Light vehicle production by region for the three months ended March 31, 2025 and 2024 was as follows:

Current wording

Light vehicle production by region for the three and six months ended June 30, 2025 and 2024 was as follows:

Previous wording

Current industry forecasts suggest global light vehicle production in the full year 2025 will be approximately 2% lower than full year 2024, followed by modest growth in 2026 and 2027. Ongoing changes in U.S. trade policy, including the imposition of significant tariffs on imported goods, is adding to economic risks and uncertainty globally, and could represent near-term challenges to the automotive industry. The anticipated growth in 2026 and 2027 is expected to be driven primarily by production increases in China, South Asia and South America. Actual production volumes have varied and may further vary from forecasted levels due to a number of factors including, but not limited to, consumer demand, the regulatory environment, incentives offered and industry competitiveness. The electric vehicle segment has been particularly challenged with regard to production volumes meeting forecasted levels.

Current wording

Current industry forecasts indicate global light vehicle production in the full year 2025 will be approximately in line with full year 2024, with declines in North America and Europe offset by increases in China, South America and South Asia. Global production is also expected to remain relatively flat in 2026, followed by modest growth of 2-3% in 2027. However, actual production volumes have varied and may fluctuate from forecasted levels due to various factors including, but not limited to, consumer demand, the regulatory environment, available incentives and industry competitiveness. The electric vehicle segment has been particularly challenged in achieving production volumes that meet forecasted levels.

Previous wording

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 largely stabilized in 2024, 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.

Current wording

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 largely stabilized in 2024 and have remained stable through the first half of 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.

Previous wording

Sales for the three months ended March 31, 2025 decreased 1.4% compared to the three months ended March 31, 2024. The decrease in sales was driven by the negative impact of foreign exchange, partially offset by favorable volume and mix, net of customer price adjustments including recoveries.

Current wording

Sales for the three months ended June 30, 2025 decreased 0.3% compared to the three months ended June 30, 2024. The decrease in sales was driven by the negative impact of volume and mix, net of customer price adjustments including recoveries, partially offset by favorable foreign exchange.

Previous wording

Cost of products sold is primarily comprised of materials, labor, manufacturing overhead, freight, depreciation and other direct operating expenses. Among these, materials represent the largest component, accounting for approxim ately 52% and 50%oftotal cost of products sold for the three months ended March 31, 2025 and March 31, 2024, respectively. The change in cost of products sold was impacted by manufacturing and purchasing savings through lean initiatives, favorable foreign exchange and savings from prior year restructuring initiatives, partially offset by higher inflation of labor and overhead, higher volume and mix net of recovery, and tariff expense incurred but not yet recovered.

Current wording

Cost of products sold is primarily comprised of materials, labor, manufacturing overhead, freight, depreciation and other direct operating expenses. Among these, materials represent the largest component, accounting for approxim ately 53% and 51%oftotal cost of products sold for the three months ended June 30, 2025 and June 30, 2024 respectively. The change in cost of products sold was impacted by manufacturing and purchasing savings through lean initiatives, and savings from prior year restructuring initiatives, partially offset by unfavorable volume and mix, net of recoveries, higher inflation of labor and overhead, unfavorable foreign exchange and increased tariff expense.

Previous wording

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 three months ended March 31, 2025 were $51.2 million, or 7.7% of sales, compared to $55.4 million, or 8.2% of sales, for the three months ended March 31, 2024. The decrease as a percentage of sales was primarily due to lower compensation-related costs driven by savings from prior year restructuring initiatives.

Current wording

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 three months ended June 30, 2025 were $51.2 million, or 7.3% of sales, compared to $52.4 million, or 7.4% of sales, for the three months ended June 30, 2024. The decrease as a percentage of sales was primarily due to lower compensation-related costs driven by savings from prior year restructuring initiatives.

Previous wording

Income Tax Expense. Income tax expense for the three months ended March 31, 2025 was $2.7 million on earnings before income taxes of $4.3 million compared to an income tax expense of $4.1 million on losses before income taxes of $27.2 million for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 differed from the effective tax rate for the three months ended March 31, 2024 primarily due to the geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in the U.S. and certain foreign jurisdictions due to valuation allowances and other permanent items.

Current wording

Income Tax Expense. Income tax expense for the three months ended June 30, 2025 was $8.1 million on earnings before income taxes of $6.6 million compared to an income tax expense of $8.1 million on losses before income taxes of $68.1 million for the three months ended June 30, 2024. The effective tax rate for the three months ended June 30, 2025 differed from the effective tax rate for the three months ended June 30, 2024 primarily due to the geographic mix of pre-tax losses, the inability to record a tax benefit for pre-tax losses in the U.S. and certain foreign jurisdictions due to valuation allowances and other permanent items.

Previous wording

Gross profit for the three months ended March 31, 2025 increased $15.5 million compared to the three months ended March 31, 2024. The change was driven by manufacturing and purchasing savings through lean initiatives and savings from prior year restructuring initiatives, partially offset by higher inflation of labor and overhead and tariff expense incurred but not yet recovered.

Current wording

Gross profit for the six months ended June 30, 2025 increased $25.6 million compared to the six months ended June 30, 2024. The change was driven by manufacturing and purchasing savings through lean initiatives, savings from prior year restructuring initiatives andfavorable foreign exchange, partially offset by unfavorable volume and mix, net of recoveries, higher inflation of labor and overhead, and tariff expense incurred but not yet recovered.

Previous wording

Other Income (Expense), Net. Other income (expense), net, for the three months ended March 31, 2025 increased $12.5 million compared to the three months ended March 31, 2024. The increase was primarily driven by $10.0 million ofincome recognized in connection with certain royalty settlements, as well as the favorable impact of foreign currency exchange.

Current wording

Other Income, Net. Other income, net for the six months ended June 30, 2025 increased $14.0 million compared to the six months ended June 30, 2024. The increase was primarily driven by $10.3 million ofincome recognized in connection with certain royalty settlements.

Previous wording

Our business is organized in two reportable automotive 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.

Current wording

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.

Previous wording

Fluid handling systems. The variance in volume and mix, including customer price adjustments, was driven by higher customer volumes and customer recoveries. The favorable foreign currency exchange was primarily driven by a $6.0 million impact of the Mexican Peso. The cost decreases were driven by $4.3 million of favorable manufacturing and purchasing savings through lean initiatives and $2.8 million of all other operational savings, primarily from restructuring actions. These benefits were partially offset by $4.7 million of unfavorable inflationary costs (including salary, utilities, and other operational costs) and tariff expense incurred but not yet recovered.

Current wording

Fluid Handling Systems. The variance in volume and mix, including customer price adjustments, was driven by unfavorable volume and mix, and lower customer recoveries. The foreign currency exchange variance was primarily driven by a $7.6 million favorable impact of the Mexican Peso. The cost decreases were driven by $11.6 million of manufacturing and purchasing savings through lean initiatives and $2.3 million of all other operational savings, primarily from prior year restructuring actions. These savings were partially offset by $2.8 million of unfavorable inflation in labor and other operational costs.

Previous wording

Sealing systems. The variance in volume and mix, including customer price adjustments, was driven by higher customer volumes. The unfavorable foreign currency exchange impact was driven by a $3.7 million impact of the Brazilian Real, a $3.6 million impact of the Euro, a $2.3 million impact of the Canadian Dollar, and a $1.1 million unfavorable impact of all other currencies.

Current wording

Sealing Systems. The variance in volume and mix, including customer price adjustments, was driven by lower customer volumes and recoveries. The foreign currency exchange variance was driven by a $5.7 million unfavorable impact of the Brazilian Real, a $2.7 million unfavorable impact of the Canadian Dollar, and a $1.3 million favorable impact of all other currencies.

Previous wording

Fluid handling systems. The variance in volume and mix, including customer price adjustments, was driven by higher customer volumes and customer recoveries. The unfavorable foreign currency exchange impact was driven by a $1.7 million impact of the Korean Won, a $1.4 million impact of the Brazilian Real, and a $1.3 million unfavorable impact of all other currencies.

Current wording

Fluid Handling Systems. The variance in volume and mix, including customer price adjustments, was driven by favorable customer recoveries, partially offset by lower customer volumes. The foreign currency exchange variance was driven by a $2.1 million unfavorable impact of the Korean Won, a $2.1 million unfavorable impact of the Brazilian Real, and a $0.4 million favorable impact of all other currencies.

Previous wording

Sealing systems. The variance in volume and mix, including customer price adjustments, was driven by unfavorable mix. The unfavorable foreign currency exchange was driven by a $2.2 million impact of the Canadian Dollar. The cost decreases were primarily driven by $13.7 million of favorable manufacturing and purchasing savings through lean initiatives, and $3.4 million of all other operational savings, primarily from restructuring actions. These benefits were partially offset by $3.7 million of unfavorable inflationary costs (including salary, utilities and other operational costs).

Current wording

Fluid Handling Systems. The variance in volume and mix, including customer price adjustments, was driven by unfavorable volume and mix, and lower customer recoveries. The foreign currency exchange variance was primarily driven by a $13.5 million favorable impact of the Mexican Peso. The cost decreases were primarily driven by $15.8 million of manufacturing and purchasing savings through lean initiatives and $3.4 million of all other operational savings, primarily from prior year restructuring actions. These savings were partially offset by $5.6 million of unfavorable inflationin labor and other operational costs.

Previous wording

Investing Activities. Net cash used in investing activities was $15.2 million for the three months ended March 31, 2025, compared to net cash used in investing activities of $16.7 million for the three months ended March 31, 2024. The net change was primarily due to proceeds of $2.4 million related to the 2024 divestiture of our non-core Canadian tooling business received during the three months ended March 31, 2025. We expect continued disciplined overall capital spending and anticipate that we will spend approximately $45.0 to $55.0 million on capital expenditures in 2025.

Current wording

Investing Activities. Net cash used in investing activities was $22.8 million for the six months ended June 30, 2025, compared to net cash used in investing activities of $27.8 million for the six months ended June 30, 2024. The net change was primarily due to lower capital expenditures, as well as proceeds of $2.6 million related to the 2024 divestiture of our non-core Canadian tooling business received during the six months ended June 30, 2025. Capital expenditures were $25.3 million for the six months ended June 30, 2025 compared to $28.1 million for the six months ended June 30, 2024. We expect continued disciplined overall capital spending and anticipate that we will spend approximately $45 to $55 million on capital expenditures in 2025.

Previous wording

Financing Activities. Net cash used in financing activities totaled $2.5 million for the three months ended March 31, 2025, compared to net cash used in financing activities of $1.2 million for the three months ended March 31, 2024. The net change was primarily due to payments of tax withholding amounts related to employees’ share-based payment awards.

Current wording

Financing Activities. Net cash used in financing activities totaled $4.4 million for the six months ended June 30, 2025, compared to net cash used in financing activities of $3.5 million for the six months ended June 30, 2024. The net change was primarily due to payments of tax withholding amounts related to employees’ share-based payment awards. Payments of tax withholding amounts related to employees’ share-based payment awards were $1.7 million for the six months ended June 30, 2025 compared to $0.6 million for the six months ended June 30, 2024.

Previous wording

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 us 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 became effective in November 2018. As of March 31, 2025, we had approximately $98.7 million of repurchase authorization remaining under the 2018 Program. We did not make any repurchases under the 2018 Program during the three months ended March 31, 2025 or 2024.

Current wording

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 us 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 became effective in November 2018. As of June 30, 2025, we had approximately $98.7 million of repurchase authorization remaining under the 2018 Program. We did not make any repurchases under the 2018 Program during the six months ended June 30, 2025 or 2024.

Previous wording

In the third quarter of 2023, we designated Liveline Technologies, Inc. (“Liveline”) an unrestricted subsidiary under the terms of certain of its debt agreements, but Liveline remains a wholly-owned subsidiary of Cooper-Standard Automotive Inc. Liveline incurred a net loss of $0.4 million and had net income of $0.3 million during the three months ended March 31, 2025 and March 31, 2024, respectively. As of March 31, 2025, Liveline had approximately $1.2 million of gross assets. Liveline will look to the Company for necessary funding until it is able to sustain itself through sales of its products and services.

Current wording

In the third quarter of 2023, we designated Liveline Technologies, Inc. (“Liveline”) 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 $0.6 million and $1.0 million during the three and six months ended June 30, 2025, respectively, compared to a net loss of $0.7 million and $0.4 million during the three and six months ended June 30, 2024, respectively. As of June 30, 2025, Liveline had approximately $1.1 million of gross assets. Liveline will look to the Company for necessary funding until it is able to sustain itself through sales of its products and services.

Previous wording

The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net income (loss), which is the most comparable financial measure in accordance with U.S. GAAP:

Current wording

The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net (loss) income, which is the most comparable financial measure in accordance with U.S. GAAP:

Previous wording

There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2025.

Current wording

There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2025.