Cooper-Standard Automotive Inc. J.P. Morgan Automotive Conference

Thank you. Good to be here.

Good to see everybody. Good to be here.

Yeah, I think as we looked at the second quarter results, clearly impacted for us was basically an inflation quarter. We actually suggested it would be at the end of the first quarter because oil prices impact our company in a big way. Every $1 a barrel of oil up is $450,000 of EBITDA, up or down. Our business plan for the year was at $65, and the average price of oil in the second quarter was over $90. Obviously a big impact. If you are just keeping it real simple, if you look at the impact that the commodities had, in addition to a little bit of tariff, it was around an $18 million hit to the quarter. If you add the 18 onto the 53 that we reported, we are probably ahead of everything that people said, but there is not much we can do about that.

The good news is we have indexed contracts with our customers. Effective July 1st, the price increases for oil went from 65 to, call it, low 90s, and we began to recover the monies in the third quarter that we gave away in the second. Assuming the conflict is over at some point in time here in the third quarter, we would recover most of what we inherited by the end of the year. Probably a little bit would spill over into the first quarter of next year as well. But I am done predicting the end to the Middle East conflict, so I will just leave it at that.

Yeah, I think start with the good news. I think our top line is basically what we've expected it would be for the first half of the year and is tracking as well. There's always puts and takes with volume and mix in our industry. There was a little bit of put and take in the first half. There'll probably be some of that in the second half. But I would use the word stable when I talk about the business, really in all the regions. So that's the good news. The intent with the second half guidance that we put out there is, in essence, we would recover virtually all of the inflation that hit us in the second quarter. We would recover all that in the third and then some into the fourth, and that's the reason for the increase.

If you go back and look at the business over the last three years and you look at the-- We ended last year just under our margins, anyway, or have expanded every year. We're at just under 12% in 2025. We're tracking above that this year. Our 2030 projections are 15%. So if you draw a line from 2023 to 2030, we're still right on that line. Obviously, you have virtually no volume uptick in those numbers. It's basically a flat 90 million units between now and 2030, is what the forecasting folks are saying. So that's what's in our numbers. If there's volume upside, then the numbers get better. In addition to that, we'll triple our return on invested capital over the course of the next three years. We were 7% last year. So you can do the math by the time we get to 2028.

We feel very positive about the health and the trajectory of the company. In fact, by 2030, we expect it to be about $3.8 billion on the top line. So up $1 billion from 2025 to 2030, all organic growth. So a lot of positives going on, and we feel very good about the cost base, the pricing that's been established in the world, and the indexing agreements that we have that allow us to really defend ourselves through times like this. Historically, that hasn't been the case. But with these new contracts, and for the first time, we put those in effect July 1st, and it's working. It just doesn't feel like that when you look at the quarterly result. But the overall health of the business is very good.