Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and the webcast will be available for replay later today. I would now like to turn the conference call over to Roger Hendriksen, Director of Investor Relations.

Thank you, Jenny, and good morning, everyone. We appreciate your continued interest in Cooper-Standard, and we thank you for taking the time to join our call today. 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 these statements 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 3 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 to their most directly comparable GAAP measures are included in the appendix to the presentation. So with all of that out of the way, let me turn it over to Jeff Edwards.

Thanks, Roger, and good morning, everyone. We certainly appreciate the opportunity to review our fourth quarter and full year 2025 results and provide an update on the outlook for 2026. So let's begin on Slide 5, and I'd like to highlight some key data points that are reflective of our continued strong commitment to operational excellence and driving increasing value for our shareholders. In 2025, we continued to deliver world-class results in terms of product quality, program management and service for our customers. This is reflected by our 99% green product quality scorecards and 98% green program launch scorecards. Even more importantly, we had our best year ever in terms of employee safety. For the full year 2025, our safety incident rate was just 0.24 per 200,000 hours worked, surpassing our previous best from 2024 and well below the world-class benchmark of 0.47. We're especially proud of our 31 plants that completed the year with a perfect safety record of 0 reportable incidents. The dedicated teams in these plants continue to affirm that our long-term goal of 0 safety incidents is achievable. And as we usually do, a shout out to our plant managers here. Well done, and we really appreciate their personal commitment to our total safety culture. And for those of you that don't realize, about 85% of our 21,000 employees report into those plant managers. So amazing leadership, and keep up the great work guys. Next, some more information regarding ops, the combined efficiency improvements in our plants and lean initiatives in our supply chain generated $64 million in cost savings during the year. In addition, we realized $18 million in year-over-year savings primarily related to the salary reduction action we implemented in the second quarter of 2024. As a result of the increases in operating efficiency…

Thanks, Jeff, and good morning, everyone. In the next few slides, I'll cover the details of our quarterly and full year financial results, put some context around some of the key items that impacted our earnings and then provide some color on our cash flow, liquidity and balance sheet. So let's turn to Slide 8. On Slide 8, we show a summary of our results for the fourth quarter and full year 2025 with comparisons to the prior year periods. Fourth quarter 2025 sales totaled $672 million, an increase of 1.8% versus the fourth quarter of 2024. The improvement was despite the negative impact from a customer supply chain disruption that significantly reduced production volumes on 1 of our top platforms. The volume and mix, which is net of customer price adjustments and recoveries, was more than offset by favorable foreign exchange, mainly from the euro. Adjusted EBITDA for the fourth quarter 2025 was $34.9 million or 5.2% of sales. This compares to $54.3 million or 8.2% of sales in the fourth quarter of 2024. The decrease was primarily driven by the short-term industry disruptions impacting volume and mix and efficiencies, as well as inflationary and compensation-related costs year-over-year. On a U.S. GAAP basis, we generated net income of $3.3 million in the fourth quarter. This included a $45 million deferred tax asset valuation allowance release and $11.5 million in restructuring charges. Excluding these and other smaller noncash items, we recorded an adjusted net loss of $31 million or $1.73 per diluted share for the fourth quarter of 2025 compared to an adjusted net loss of $2.9 million in the fourth quarter of 2024. For the full year 2025, our sales totaled $2.74 billion, an increase of 0.4% versus 2024. The modest improvement was primarily due to favorable foreign exchange…

Thanks, Jon. And to wrap up our discussion this morning, I want to share a few thoughts regarding our outlook for 2026 and why I remain extremely optimistic about our opportunities this year and beyond. If we could move to Slide 13. The first reason for optimism is our continued success in executing our strategic plans. And based on the 4 key strategic imperatives you see on this slide, since we first defined these imperatives a couple of years ago, the alignment and the focus of our teams has enabled us to drive significant improvements in virtually every aspect of our business. And importantly, our operational improvements in our manufacturing facilities and investments in innovation are translating to improved financial results. Turning to Slide 14. The charts on this slide clearly illustrate strong trends in margin expansion and improved cash flow despite revenue declining due to lower industry production volumes over the past 3 years. As we've significantly reduced our fixed cost and continue to optimize manufacturing and purchasing efficiencies, we believe we can further accelerate margin expansion as our top line begins to grow. And we believe that both of our product segments are well positioned to grow significantly over the next few years. Turning to Slide 15. The strategy for our Fluid Handling Systems segment looks to unlock the full potential of the organization by expanding geographically in association with key fast-growing customers, leveraging the growth trends in hybrid vehicles to expand the content per vehicle and launching new innovative products and technologies, including thermal management solutions and our award-winning eCoFlow family of integrated coolant control products. Please turn to Slide 16. As the global leader, our Sealing Systems strategy is focused on sustaining the operational excellence that has reestablished the financial strength of the business and leveraging…

Jenny, can we open it up for Q&A, please?

[Operator Instructions] Your first question is from Kirk Ludtke from Imperial Capital.

On Slide 20, the guide -- the bridge to the $280 million of adjusted EBITDA. Is there -- and lean is the big contributor there. Are there any significant initiatives worth mentioning that's included in that $90 million? Or is it more or less business as usual?

More of the latter, Kirk. This is Jon. It's business as usual for the team. They do this very, very well. As Jeff positioned in the beginning of this call as far as continuous improvement, whether it's in the manufacturing side of the business or the purchasing supply chain side. And as you can see from this bridge, they're signed up for considerable commitment again this year. But nothing in and of itself is unusual within that $90 million.

Okay. And then volume, mix and price. Are the new products, eCoFlow, et cetera, are they included in that $10 million?

This is Jeff, Kirk. Yes, everything that I talked about on the call today related to the net new business number that we've just booked last year in '25 and obviously, what we did in '23 and '24 that's in launch or already launched, it would be all inclusive. And the follow-up to your comment about the teams and lean, just to give you an idea of our confidence in that $90 million. As we head into '26, we've already identified well above 90% of all of that. And it's the -- that's the highest number in a decade in terms of already identified and being worked on. So the confidence level of the team executing that is very high. A lot of work gets done months in advance each year. And that list is very good and certainly is being managed on a daily basis by the 2 presidents of those businesses.

That's very helpful. And then on the volume mix bar, that includes the new products. It includes the shift to hybrids, all of those trends you've talked about?

It does. And obviously, as we put together our 3-year business plan, as you know, '26, '27 and '28, we've just completed it. So all of the business, the new business for '26 is already being produced in our factories. For '27 and '28, the book business there exceeds 95% already. So it makes it pretty easy for us to forecast what's coming out and what's going in and what those margins are. And that really drives the level of clarity, transparency around our 3-year plan for our business. So it's clear what we're going to do in '26, '27 and '28. Of course, the issue that always is, is what's the volume and mix going to be. Otherwise, we're pretty predictable in terms of what we're going to deliver.

Got it. Okay. I appreciate it. And then with respect to -- I know you're probably limited as to what you can say about this, but with respect to the F-Series, is that back to normal as far as you're concerned?

Kirk, it's Jon again. We're reading the kind of the same news you are, and based on the releases, some volumes are coming back online. You're right, we won't get into too much details or speak on behalf of our major customer, but we're seeing production continue to ramp up, and the releases are holding there.

Okay. So that could continue to be a drag in the first part of the year?

This is Jeff, Kirk. I don't know if this is going to be a drag. I think it's moving in the direction that we've predicted and I think the customer has predicted. So I'll just leave it at that.

Your next question is from Mike Ward from Citigroup.

And I guess, maybe another way around the F-Series discussion. What are you seeing with your schedules from the manufacturers, does that differ from what we're seeing like with IHS? It sounds like the first quarter is part of what you're looking at with your cadence of earnings is relatively soft production, but I think most manufacturers are talking about acceleration in the second half. And is that what you're seeing in particularly at some of those key models?

Yes. I saw the transcript like you did in terms of what the customer was predicting for '26 in terms of F-Series production, the 150,000 units over and above '25 that was just discussed publicly. I will tell you that, that would represent probably 60,000 units above what we have in our plan, Mike. Now the question becomes when those are going to be built, produced. There's additional shift that was talked about. There was a line speed that was talked about. So I don't have any insight into that. As our releases get adjusted accordingly, then that will reflect. But I can tell you that there's a potential increase of 60,000 units if those 150,000 increase year-over-year happen. It's not a secret. Our content per vehicle is $450 on those vehicles. So you can do the math.

Yes, it's a big number. It's -- yes, I think Ford is in the same boat you are. I think they're just -- in all fairness to Ford and to you, I think they managed the situation better than expected in 4Q. And I think that they're still trying to figure out on the supply side and the cost benefit and everything else. But inventory is in great shape, right? So right now, schedules are sticking, from what you've seen. Is that correct?

That's what we've seen. Yes. That's what we're seeing. We're cautiously optimistic, how about that.

Yes. The -- [ Magna ] this morning reported that it got a pretty good lump sum of cash for some of the BEV stuff. How do you expect to see it, lump sum, piece price, all of the above? Have you seen any big cash contribution yet or lump sum cash inflow yet? Or do you expect one in '26?

Yes and yes. So we finished some negotiations in '25. And those are behind us, and we've got others that we're expecting to go through in '26. And it seems that most are talking lump sums, Mike. That's my...

Interesting.

That's my view as I sit here today anyway. Yes.

That's good news. That's a difference than in the past. Jon, is there any sense of urgency to get the refi done before the end of March when you become current?

Mike, what I've talked about in the past is we certainly would prefer to get something done prior to the first lien and third lien notes coming current. Those milestones are middle of May and middle of March, respectively. So if you think about it in that kind of time frame, certainly, we don't want to have that added pressure of the notes coming current.

Your next question is from Nathan Jones from Stifel.

I guess I'll start with some questions around the net new business wins. Obviously, very strong in '25 again on the back of some good new business wins in '23 and '24. Can you talk about kind of what's in the '26 guide from net new business wins in '23 and '24? And how we should think about those layering in over the next few years?

Yes, Nathan, this is Jeff. So I can tell you that the $300 million that we booked in '25 that we just discussed this morning, those typically take a couple of years, call it between 2 and 3 years on average to roll into the portfolio. The $400-plus million that we expect to book in '26 will be similar. Now keep in mind that 51% of that net new business was China, and it's a lot faster to the market than is traditionally seen by our other customers. So I would just temper it by saying that. It could be faster -- it will be faster related to the China portion than the rest. So we're very positive about what's happened in '23, '24 and '25. Obviously, the margin expansion, our ability to execute those launches, it's really showing up in our financials, right? And I expect, based on all the new business that we just booked in '25 and our targeted business for '26 across both Fluids and Sealing will continue to drive the type of margin expansion that we've talked about in our longer-term strategy numbers for 2030.

I guess given the net new business wins kind of from '23 and '24, depending on how long they take to start reading through into revenue, maybe potential for Ford to catch up some production this year. The revenue guidance looks maybe a little bit lower than we were expecting, and I think some of the other folks that cover you were expecting for '26. Can you talk about what the -- some of the offsets maybe are for that? You should have some tailwinds from FX. Is the bottom end of that range really a bit conservative? Just any further color you could give us on that?

Well, we stick with the S&P numbers for the market, Nathan. So I'll read you what the slide says: North America, we were at 15.3 in '25, we're going to 15 in '26; Europe at 17 in '25, we're going to 16.9 in '26. China is up -- is down from 33 to 32. South America is up from 3 to 3.2. So the fact that we're generating the additional revenue year-over-year that we are with the down volume that's being predicted by the people that predict, it's actually a pretty amazing story from a margin expansion, and that's what we tried to show you on the slides that we walked through today. And if you look at the midpoint, $2.8 billion on top line, up significantly over what we just finished '25 on a down market, EBITDA from $210 million to $280 million on a down market, sounds pretty good to me. But obviously, if we get more volume than what is being predicted by S&P towards the end of last year, then these numbers are going to be a lot better. So anyway, I guess time will tell.

Yes, the EBITDA growth is great. Maybe just a last one on free cash flow. It comes down a little bit in -- from '23, '24 and '24 to '25. I know you said you expect it to be positive again in '26. Any more color you can give us on an expectation of around where you expect free cash flow to come in or what kind of conversion of EBITDA or something like that we should think about as we're thinking about free cash flow?

Yes, Nathan, thank you. It's Jon again. We give you a lot of the main components of our free cash flow build on the guidance table. So you can see from last year to this year, we're going to invest more in capital expenditures certainly, about $15 million or so at the midpoint. We do expect cash taxes to go up based on increasing profitability around the world. So that will be a drain on free cash flow as well. But then with the new business that we've just been discussing, there is an element of getting ready to launch new programs. So we see investments in tooling to support net new business wins. With the global perspective on this, some of those get recovered right around the time the tools are approved for production. Others are amortized over the life of the program. So we're seeing some balance sheet tie-up of working capital for some of those amortized programs when you think about tooling. And then with the typical build in revenue, you do have an increase in working capital as well. If sales are up $60 million to $100 million or so, you'll see more accounts receivable building by the end of the year than you've got today. You typically need to have a little bit more inventory throughout the cycle. We do a good job of bringing it down at year-end, but with a higher revenue base, you expect some working capital tie up overall. So that's why you'll see the year-over-year comp on cash flow being generally what it is on the page.

[Operator Instructions] And your next question is from Brian DiRubbio from Baird.

Just a couple of cleanup questions. Just -- Jeff, I want to make sure I heard this right. You said today, 36% of your revenues are from Chinese OEMs, and you want to get that to 60% of total revenues in the next 5 years?

What we were talking about was the shift from Western OEM business to the Chinese OEM business. And so our focus over the course of the next 3 years will be to increase the percentage of our Chinese OEM business in China to that number. That's what we're talking about.

Okay. So it's not a total revenue number, it's just what you're -- within Asia Pacific revenues, that's going to move from 36% to about 60%?

That's correct, Brian. Obviously, the Western OEMs have all announced significant volume reductions. The Chinese OEMs have announced significant volume increases. As that portfolio shifts, that's what we're booking. And so that's why -- and I wanted to make sure you understood, the 51% of our net new business that we just booked in '25 was exactly that. So to add to the credibility of that transformation. I mean back 5 years ago, Brian, I think we had 90% Western OEM business and 10% Chinese OEM business. And we have transitioned all of that to what I just said. So it's really been a tremendous effort by the teams there to adjust to the market and to win new business profitably and to get our innovation into that market in a way that's being valued not only for the locally produced vehicles, but also those vehicles that are being exported around the world, especially to Europe, has our parts on it. So we're very excited about that. We still have some open capacity in China that will fill up over the course of the next couple of years. So that's why I also mentioned that the return on invested capital kicker that we get from launching all that new China business with very little investment also is helping to put the numbers in front of you that we have for '26 through '30 in other conversations.

Got it. So I think just your total mix between Chinese OEs and U.S. And again, just trying to get a sense of the mix shift of your business over the last couple of years is really just looking at 36% of just that general Asia Pac bucket is China and the rest would be Western OEMs. Fair?

Correct.

Okay. Great. And just want to stick on China just for one more question. What contract protections do you have with those Chinese customers in terms of your products staying on that platform for a number of years, both either just for production perspective? And obviously, what IP protections do you guys have in China?

Yes. We've been at this for a couple of decades now. And so I think we have built the type of relationships that make us believe that we can make decisions with those particular partners. And I don't mean all 130, but the ones that we've chosen to do business with, we trust and they trust us. We have promised that we would put innovation into the product in China. We have. We've had 0 incidents of any issues with intellectual property. And we'll continue to, like everybody, trust that if we find an issue, we'll work it out, but it hasn't been a problem to date. And as I said, our product is really critical to the overall consumer satisfaction level, Brian. I mean our Sealing business, you drive your car through the car wash, you better not get wet. Our Fluid business, you park it in your garage or in your driveway, there better not be a spot underneath there. So it's really a big deal to the Chinese OEMs that, that level of performance is there, day 1. They're not willing to take risks as they export and build brand loyalty around the world. They want those products to be world-class quality and of the highest level that we can engineer them. So that's the bond, that's the relationship. That's why our products are working, and that's why the relationship has never been stronger and why we're convinced between now and 2030, that will continue to grow at a very high rate with fantastic margins. We've earned that, and we're delivering that, and the customers trust us.

Got it. And just a final question for me as we think about the guidance for '26. What of the various variables you can think about, raw materials, production schedules, so on and so forth would be -- sort of have the biggest impact positive or negative on your guide?

Yes. I guess -- this is Jeff. I would tell you that volume and mix is always the number 1 answer to that question. We have done a very good job with our contracts and the ability to index if there are raw material fluctuations. So those days are behind us in terms of having volatility really associated with raw material fluctuations. So that, for Cooper-Standard, is not such a big deal. I would say this year, like last year, there's still some question around tariffs. That's more for our Fluid business than it is for our Sealing business, Brian, but that's probably there on the list is something we'll have to work our way through. It sounds like midyear again, but who really knows. That's how I'd answer the question.

Yes. It appears that there are no more questions. I would now like to turn the call back over to Roger Hendriksen.

Thanks, Jenny, and thanks to all who participated this morning. We appreciate your time and your continued interest. If there were questions that didn't get asked or you want to have some follow-up conversations, please feel free to reach out to me directly, and we'll make sure that, that can happen. This concludes our call. Thank you very much.

Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.