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Section 1: 8-K (FORM 8-K)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported):   August 4, 2016

 

Cooper Tire & Rubber Company

 

(Exact name of registrant as specified in its charter)

 

Delaware   001-04329   344297750
(State or other jurisdiction   (Commission   (I.R.S. Employer
of incorporation)   File Number)   Identification No.)
         
701 Lima Avenue, Findlay, Ohio   45840
 (Address of principal executive offices)    (Zip Code)
         
Registrant’s telephone number, including area code:   419-423-1321

 

Not Applicable

 

Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On August 4, 2016, Cooper Tire & Rubber Company (the "Company") issued a press release reporting its financial results for the second quarter 2016. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 8.01.Other Events.

 

On August 4, 2016, the Company posted a summary slide presentation regarding second quarter 2016 (the “Slide Presentation”) on its corporate website. A copy of the Slide Presentation is attached hereto as Exhibit 99.2 and is incorporated by reference into this Item 8.01.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits

 

99.1Press release dated August 4, 2016

 

99.2Slide Presentation regarding second quarter 2016

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Cooper Tire & Rubber Company
       
       
August 4, 2016 By: /s/ Jack Jay McCracken  
    Name: Jack Jay McCracken
    Title: Assistant General Counsel and Assistant Secretary

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
     

99.1

 

Press release dated August 4, 2016

     
99.2   Slide Presentation regarding second quarter 2016

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

NEWS

 

 

Cooper Tire & Rubber Company Reports Second Quarter 2016 Results

Record second quarter operating profit of $110 million, or 14.8 percent of
net sales; a 10.5 percent year-over-year increase

 

FINDLAY, Ohio, Aug. 4, 2016 – Cooper Tire & Rubber Company (NYSE: CTB) today reported second quarter 2016 net income of $71 million, or diluted earnings per share of $1.27, compared with $60 million, or $1.03 per share, last year.

 

Second Quarter Highlights:

 

·Unit volume increased 0.9 percent year-over-year
·Net sales decreased 1.5 percent to $740 million
·Operating profit increased by 10.5 percent year-over-year to $110 million, or 14.8 percent of net sales; a record for the period
·Diluted earnings per share of $1.27 compared with $1.03 per share a year ago
·Repurchased $29.3 million of stock during the quarter

 

“Cooper closed the first half of 2016 with another outstanding quarter,” said Chairman, Chief Executive Officer and President Roy Armes. “We achieved record-setting second quarter operating margin, building upon the strong results we delivered in the first quarter.  The Americas segment posted another terrific quarter, generating operating margin of more than 17 percent.  Our International segment performed better than expected, moving from a loss to delivering an operating profit for the period.  Cooper continues to execute on our strategy to deliver shareholder value, including returning cash to shareholders through our quarterly dividend and share repurchases, which totaled more than $29 million during the second quarter,” Armes added.  “As my retirement will be effective Aug. 31, this is the final quarter I will report on behalf of Cooper.  It has been my honor to lead such a talented and committed team in transforming the Cooper business model to deliver outstanding results quarter after quarter, positioning the company for long-term success.”

 

Consolidated Results:

 

Cooper Tire Q2 2016 ($M) Q2 2015 ($M) Change
Net Sales $740 $752 (1.5%)
Operating Profit $110 $99 10.5%
Operating Margin 14.8% 13.2% 1.6 ppts

 

Consolidated Second Quarter Results:

 

·Second quarter net sales were $740 million, a decrease of 1.5 percent compared with $752 million in the second quarter of 2015. Second quarter results include $7 million of higher unit volume, with increases in the International segment partially offset by decreases in the Americas segment. The unit volume increase was more than offset by $11 million of negative currency impact and $8 million of unfavorable price and mix, primarily due to net price reductions related to lower raw material costs.

 

·Second quarter 2016 operating profit was $110 million compared with $99 million for the same period last year. Operating profit increased as a result of $23 million of favorable raw material costs, net of price and mix, $2 million of higher unit volume, and $1 million of lower other costs. These benefits were partially offset by $10 million of unfavorable SG&A expense and $5 million of higher manufacturing costs.

 

-more-

 

Cooper Tire Q2 2016—2

 

 

·Second quarter SG&A expense was $70 million, which compares with $60 million in the second quarter of 2015. SG&A expense for the quarter increased to 9.4 percent of net sales, from 8.0 percent of net sales in the second quarter of 2015. The increase in SG&A was primarily the result of increases in brand and marketing program expense, estimated incentive compensation, and higher mark-to-market costs of stock-based liabilities.

 

·Higher manufacturing costs were concentrated in the Americas segment and were primarily related to the greater complexity of manufacturing more higher value, higher margin tires.

 

·The effective tax rate for the second quarter was 32.7 percent, compared with 36.5 percent last year. The reduction in the tax rate was primarily due to improved results in international locations that have lower tax rates, along with the release of certain tax contingencies due to statute lapses. The tax rate is based on forecasted annual earnings and tax rates for the various jurisdictions in which the company operates.

 

·At quarter end, Cooper had $412 million in cash and cash equivalents, compared with $408 million at June 30, 2015. Capital expenditures in the second quarter were $49 million compared with $41 million in the same period last year.

 

·In February 2016, the company announced an extended and increased $200 million share repurchase program. During the second quarter, 894,265 shares were repurchased for $29.3 million at an average price of $32.77 per share. Purchases have continued in the third quarter under this authorization with an additional 373,188 shares purchased at an average cost of $30.61 per share for $11.4 million through Aug. 3, 2016. The remaining repurchase authorization is $152 million and expires on Dec. 31, 2017. Since share repurchases began in August 2014, the company has repurchased a total of 11 million shares at an average price of $33.85 per share.

 

Americas Tire Operations:

 

Americas Tire Operations Q2 2016 ($M) Q2 2015 ($M) Change
Net Sales $655 $673 (2.7%)
Operating Profit $116 $109 6.9%
Operating Margin 17.7% 16.1% 1.6 ppts.


Second quarter net sales in the Americas segment declined 2.7 percent as a result of $12 million of lower unit volume, $5 million of negative foreign currency impact and $1 million of unfavorable price and mix. Segment unit shipments decreased 1.8 percent compared with the same period last year, with an increase in unit volume in Latin America that was more than offset by decreased unit volume in North America. Cooper’s total light vehicle tire shipments in the United States decreased 3.4 percent during the quarter due primarily to a decline in private label shipments. The Rubber Manufacturers Association (RMA) reported that its member shipments in the United States were down 3.5 percent. Total industry shipments (including an estimate for non-RMA members) decreased 3.9 percent for the period. Cooper’s commercial truck tire shipments for the United States were up 23.7 percent during the second quarter, outperforming both the industry and the RMA.

Second quarter operating profit was $116 million, or 17.7 percent of net sales, compared with $109 million, or 16.1 percent of net sales, in the second quarter of 2015. The higher operating profit primarily reflected $23 million of favorable raw material costs, net of price and mix, which was partially offset by $7 million of unfavorable SG&A costs, $6 million of unfavorable manufacturing costs, and $3 million due to lower unit volume.

 

-more-

 

Cooper Tire Q2 2016—3

 

 

International Tire Operations:

 

International Tire Operations Q2 2016 ($M) Q2 2015 ($M) Change
Net Sales $124 $125 (0.9%)
Operating Profit (Loss) $3 ($4) 186.8%
Operating Margin 2.5% (2.9%) 5.4 ppts

 

Second quarter net sales in the International segment declined 0.9 percent as a result of $5 million of negative foreign currency impact and $1 million of unfavorable price and mix, which was partially offset by $5 million from higher unit volume. International segment unit volume was up 2.5 percent driven by increased sales in the domestic China market for original equipment and replacement tires.

 

The second quarter operating profit was $3 million compared with an operating loss of $4 million in the second quarter of 2015. The improvement was driven by $6 million of favorable raw material costs, net of price and mix, and $1 million of favorable SG&A expense.

 

The company continues to make progress on its planned acquisition of a majority interest in GRT, a joint venture in China to produce truck and bus radial tires for global markets. The transaction is expected to close by the end of this year pending certain permits and approvals by the Chinese government.

 

Outlook

 

Second quarter raw material costs increased 3 percent from the first quarter of 2016, in line with the company’s expectations. The company’s internal raw material index increased from 131.5 in the first quarter to 135.5 in the second quarter. Cooper anticipates third quarter raw material costs will be up modestly from the second quarter.

 

Management expectations for the full year 2016 are as follows:

 

·Unit volume growth is expected in each of the company’s segments in the second half.
·Total company operating margin, excluding the impact of acquisitions and non-cash pension settlement charges, is expected to be modestly above 2015 levels. This projection includes an estimate for the impact of the pending truck and bus radial tire tariffs, which was not included in Cooper’s previous margin outlook.
·The International segment, excluding the impact of acquisitions, is expected to perform better than originally anticipated for the full year 2016. Management now expects the segment to deliver a small profit for the full year 2016.
·The company expects a non-cash pension settlement charge of $14 million to $18 million in the third quarter of 2016 related to optional lump-sum payments of benefits offered to certain former employees. This option was offered to reduce the size and potential future volatility of Cooper’s domestic defined benefit pension plan obligations.
·Effective tax rate for full year 2016 is expected to be in a range of 33 percent to 35 percent.
·Capital expenditures, excluding the impact of acquisitions, are expected to range from $210 million to $240 million for the year.

 

“The Cooper business model continues to provide a solid foundation for growth,” Armes said.  “Looking ahead, while we expect that the benefit of lower raw material costs will moderate, and global markets will become more competitive in the back half of this year, we look forward to a strong second half and full year 2016. We are encouraged by the performance of our International segment, which continues to deliver volume growth and is expected to be profitable for the full year 2016. Overall, our strong first half performance makes us even more optimistic that our full year 2016 margins will be higher than where we ended 2015. I leave Cooper highly optimistic about the future with a great strategic plan in place that Brad Hughes, who takes the helm as President and CEO on Sept. 1, was instrumental in developing.  I have no doubt that Brad will lead with great energy, expertise, and a commitment to the long-term success of all Cooper stakeholders,” Armes concluded.

 

-more-

 

Cooper Tire Q2 2016—4

 

 

Second Quarter 2016 Conference Call Today at 10 a.m. Eastern

 

Management will discuss the financial and operating results for the second quarter of 2016, as well as the company’s business outlook, on a conference call for analysts and investors today at 10 a.m. EDT. The call may be accessed on the investor relations page of the company’s website at http://coopertire.com/Investors.aspx or at http://services.choruscall.com/links/ctb160804.html. Following the conference call, the webcast will be archived and available for 90 days at these websites.

 

A summary slide presentation of information related to the quarter is posted on the company’s website at http://investors.coopertire.com/Quarterly-Results.

 

Forward-Looking Statements

 

This release contains what the company believes are “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995, regarding projections, expectations or matters that the company anticipates may happen with respect to the future performance of the industries in which the company operates, the economies of the United States and other countries, or the performance of the company itself, which involve uncertainty and risk.

 

Such “forward-looking statements” are generally, though not always, preceded by words such as “anticipates,” “expects,” “will,” “should,” “believes,” “projects,” “intends,” “plans,” “estimates,” and similar terms that connote a view to the future and are not merely recitations of historical fact. Such statements are made solely on the basis of the company’s current views and perceptions of future events, and there can be no assurance that such statements will prove to be true.

 

It is possible that actual results may differ materially from projections or expectations due to a variety of factors, including but not limited to:

 

·volatility in raw material and energy prices, including those of rubber, steel, petroleum based products and natural gas or the unavailability of such raw materials or energy sources;
·the failure of the company’s suppliers to timely deliver products in accordance with contract specifications;
·changes to tariffs or the imposition of new tariffs or trade restrictions, including changes related to the anti-dumping and countervailing duties for passenger car and light truck tires imported into the United States from China; and any duties from the ongoing investigation into truck and bus tires imported into the United States from China
·changes in economic and business conditions in the world, including changes related to the United Kingdom’s referendum on withdrawal from the European Union
·increased competitive activity including actions by larger competitors or lower-cost producers;
·the failure to achieve expected sales levels;
·changes in the company’s customer relationships, including loss of particular business for competitive or other reasons;
·the ultimate outcome of litigation brought against the company, including stockholders lawsuits relating to the terminated Apollo merger as well as product liability claims, in each case which could result in commitment of significant resources and time to defend and possible material damages against the company or other unfavorable outcomes;
·a disruption in, or failure of, the company’s information technology systems, including those related to cyber security, could adversely affect the company’s business operations and financial performance;
·changes in pension expense and/or funding resulting from the company’s pension strategy, investment performance of the company’s pension plan assets and changes in discount rate, salary increase rate, and expected return on plan assets assumptions, or changes to related accounting regulations;
·government regulatory and legislative initiatives including environmental and healthcare matters;
·volatility in the capital and financial markets or changes to the credit markets and/or access to those markets;
·changes in interest or foreign exchange rates;
·an adverse change in the company’s credit ratings, which could increase borrowing costs and/or hamper access to the credit markets;

 

-more-

 

Cooper Tire Q2 2016—5

 

 

·failure to implement information technologies or related systems, including failure by the company to successfully implement an ERP system;
·the risks associated with doing business outside of the United States;
·the failure to develop technologies, processes or products needed to support consumer demand;
·technology advancements;
·the inability to recover the costs to develop and test new products or processes;
·the impact of labor problems, including labor disruptions at the company, its joint venture, or at one or more of its large customers or suppliers;
·failure to attract or retain key personnel;
·consolidation among the company’s competitors or customers;
·inaccurate assumptions used in developing the company’s strategic plan or operating plans or the inability or failure to successfully implement such plans;
·any unforeseen circumstances that arise that cause the Board of Directors to alter its succession plans for the leadership of the company;
·risks relating to acquisitions, such as the proposed acquisition of a majority interest in China based Qingdao Ge Rui Da Rubber Co., Ltd., including the failure to successfully complete acquisitions or integrate them into operations or their related financings may impact liquidity and capital resources;
·changes in the company’s relationship with its joint-venture partner or suppliers, including any changes with respect to the production of Cooper-branded products by CCT, the company’s former joint venture in China;
·the ability to find alternative sources for products supplied by CCT;
·the inability to obtain and maintain price increases to offset higher production or material costs;
·inability to adequately protect the company’s intellectual property rights; and
·inability to use deferred tax assets.

 

It is not possible to foresee or identify all such factors. Any forward-looking statement in this release are based on certain assumptions and analyses made by the company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Prospective investors are cautioned that any such statements are not a guarantee of future performance and actual results or developments may differ materially from those projected.

 

The company makes no commitment to update any forward-looking statement included herein or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement. Further information covering issues that could materially affect financial performance is contained in the company’s periodic filings with the U. S. Securities and Exchange Commission (“SEC”).

 

###



About Cooper Tire & Rubber Company

 

Cooper Tire & Rubber Company (NYSE: CTB) is the parent company of a global family of companies that specializes in the design, manufacture, marketing and sale of passenger car and light truck tires. Cooper and its subsidiaries also sell medium truck, motorcycle and racing tires. Cooper’s headquarters is in Findlay, Ohio, with manufacturing, sales, distribution, technical and design operations within its family of companies located in more than one dozen countries around the world. For more information on Cooper, visit www.coopertire.com, www.facebook.com/coopertire or www.twitter.com/coopertire.

 

Investor Contact:

Jerry Bialek

419.424.4165

investorrelations@coopertire.com

 

Media Contact:

Anne Roman

419.429.7189

alroman@coopertire.com

 

 

 

 

Cooper Tire & Rubber Company

Condensed Consolidated Statements of Income

(Unaudited)

 

(Dollar amounts in thousands except per share amounts)  Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2016   2015   2016   2015 
                 
Net sales  $740,294   $751,781   $1,390,069   $1,414,987 
Cost of products sold   560,625    592,089    1,059,971    1,123,340 
Gross profit   179,669    159,692    330,098    291,647 
                     
Selling, general and administrative expense   69,753    60,264    129,078    121,865 
Operating profit   109,916    99,428    201,020    169,782 
                     
Interest expense   (6,286)   (6,240)   (12,921)   (12,597)
Interest income   948    514    1,888    1,075 
Other non-operating income   1,427    1,592    2,888    1,672 
Income before income taxes   106,005    95,294    192,875    159,932 
                     
Provision for income taxes   34,654    34,818    62,752    57,294 
Net income   71,351    60,476    130,123    102,638 
                     
Net income attributable to noncontrolling shareholder interests   602    894    369    2,295 
                     
Net income attributable to Cooper Tire & Rubber Company  $70,749   $59,582   $129,754   $100,343 
                     
Basic earnings per share:                    
Net income attributable to Cooper Tire & Rubber Company common stockholders  $1.29   $1.04   $2.35   $1.74 
                     
Diluted earnings per share:                    
Net income attributable to Cooper Tire & Rubber Company common stockholders  $1.27   $1.03   $2.32   $1.72 
                     
Weighted average shares outstanding (000s):                    
    Basic   55,020    57,244    55,280    57,658 
    Diluted   55,602    57,778    55,852    58,291 
                     
Segment information:                    
    Net sales                    
    Americas Tire  $654,721   $673,016   $1,234,058   $1,271,530 
    International Tire   123,678    124,851    226,905    231,953 
    Eliminations   (38,105)   (46,086)   (70,894)   (88,496)
                     
Operating profit (loss):                    
    Americas Tire  $116,093   $108,566   $222,146   $198,564 
    International Tire   3,152    (3,633)   1,380    (6,426)
    Unallocated corporate charges   (8,730)   (5,782)   (21,749)   (24,668)
    Eliminations   (599)   277    (757)   2,312 

 

 

 

 

Cooper Tire & Rubber Company

Condensed Consolidated Balance Sheets

(Unaudited)

 

(Dollar amounts in thousands)  June 30, 
   2016   2015 
         
ASSETS          
Current assets:          
Cash and cash equivalents  $412,098   $408,057 
Notes receivable   5,886    10,658 
Accounts receivable   430,043    400,278 
Inventories   506,982    489,076 
Other current assets   49,085    49,952 
Total current assets   1,404,094    1,358,021 
           
Net property, plant and equipment   802,934    767,618 
Goodwill   18,851    18,851 
Intangibles   132,300    136,800 
Restricted cash   991    660 
Deferred income tax assets   127,998    179,590 
Other assets   17,306    16,122 
Total assets  $2,504,474   $2,477,662 
           
LIABILITIES AND EQUITY          
Current liabilities:          
Notes payable  $3,716   $15,049 
Accounts payable   214,961    236,939 
Accrued liabilities   208,416    197,026 
Income taxes payable   18,972    13,584 
Current portion of long-term debt   600    1,791 
Total current liabilities   446,665    464,389 
           
Long-term debt   295,853    296,595 
Postretirement benefits other than pensions   250,519    263,770 
Pension benefits   280,971    353,729 
Other long-term liabilities   143,008    148,505 
Deferred income tax liabilities   2,085    4,059 
Total parent stockholders’ equity   1,048,437    905,503 
Noncontrolling shareholder interest in consolidated subsidiary   36,936    41,112 
Total liabilities and equity  $2,504,474   $2,477,662 

 

 

 

 

Cooper Tire & Rubber Company

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

(Dollar amounts in thousands)  Six Months Ended 
   June 30, 
   2016   2015 
Operating activities:          
  Net income  $130,123   $102,638 
  Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   64,092    59,457 
Stock-based compensation   9,699    8,674 
Change in LIFO inventory reserve   (18,232)   (51,512)
Amortization of unrecognized postretirement benefits   21,586    23,074 
Changes in operating assets and liabilities:          
Accounts and notes receivable   (61,069)   (38,195)
Inventories   (82,909)   (18,131)
Other current assets   (17,193)   (10,087)
Accounts payable   6,898    (20,358)
Accrued liabilities   5,154    17,952 
Other items   10,929    (26,638)
Net cash provided by operating activities   69,078    46,874 
           
Investing activities:          
  Additions to property, plant and equipment and capitalized software   (85,479)   (88,598)
  Proceeds from the sale of assets   331    1,555 
Net cash used in investing activities   (85,148)   (87,043)
           
Financing activities:          
  Net payments on short-term debt   (9,200)   (43,554)
  Repayments of long-term debt   (600)   (1,708)
  Payment of financing fees   -    (2,586)
  Repurchase of common stock   (54,130)   (60,046)
  Payment of dividends to Cooper Tire & Rubber Company stockholders   (11,584)   (12,050)
  Issuance of common shares and excess tax benefits on stock options   3,525    17,441 
Net cash used in financing activities   (71,989)   (102,503)
           
Effects of exchange rate changes on cash   (5,000)   (923)
           
Net change in cash and cash equivalents   (93,059)   (143,595)
           
Cash and cash equivalents at beginning of year   505,157    551,652 
           
Cash and cash equivalents at end of period  $412,098   $408,057 

 

 

 

 

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

 

Exhibit 99.2

 

August 4, 2016

 
 

Safe Harbor Statement T his presentation contains what the company believes are forward - looking statements related to future financial results and business operations for Cooper Tire & Rubber Company. Actual results may differ materially from current management forecasts and projections as a result of factors over which the company may have limited or no control. Information on certain of these risk factors and additional information on forward - looking statements are included in the company’s reports on file with the Securities and Exchange Commission and set forth at the end of this presentation. 2

 
 

Available Information You can find Cooper Tire on the web at coopertire.com. Our company webcasts earnings calls and presentations from certain events that we participate in or host on the investor relations portion of our website (http://coopertire.com/investors.aspx). In addition, we also make available a variety of other information for investors on the site. Our goal is to maintain the investor relations portion of the website as a portal through which investors can easily find or navigate to pertinent information about Cooper Tire, including: • our annual report on Form 10 - K, quarterly reports on Form 10 - Q, current reports on Form 8 - K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material or furnish it to the Securities and Exchange Commission (“SEC”); • information on our business strategies, financial results and selected key performance indicators; • announcements of our participation at investor conferences and other events; • press releases on quarterly earnings, product and service announcements and legal developments; • corporate governance information; and • other news and announcements that we may post from time to time that investors may find relevant. The content of our website is not intended to be incorporated by reference into this presentation or in any report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only. 3

 
 

Three Months Ended June 30, 2016 Financial Performance Highlights 4 Amounts are unaudited and may not add due to rounding. (millions USD, except EPS) Net Sales by Segment Q2 2016 Q2 2015 Change from Prior Year Americas Tire $ 655 $ 673 - 2.7% International Tire 124 125 - 0.9% Eliminations (38) (46) 17.3% Total Company $ 740 $ 752 - 1.5% Operating Profit by Segment OP % OP % Americas Tire $ 116 17.7 $ 109 16.1 $ 7 International Tire 3 2.5 (4) - 2.9 7 Corporate (9) (6) (3) Eliminations (1) 0 (1) Total Company $ 110 14.8 $ 99 13.2 $ 11 Earnings Per Share (diluted) from continuing operations attributable to common stockholders $ 1.27 $ 1.03 $ 0.24 Cash and Cash Equivalents $ 412 $ 408 $ 4

 
 

Six Months Ended June 30, 2016 Financial Performance Highlights 5 Amounts are unaudited and may not add due to rounding. (millions USD, except EPS) Net Sales by Segment 6 Months Ended June 30, 2016 6 Months Ended June 30, 2015 Change from Prior Year Americas Tire $ 1,234 $ 1,272 - 2.9% International Tire 227 232 - 2.2% Eliminations (71) (88) 19.9 % Total Company $ 1,390 $ 1,415 - 1.8% Operating Profit by Segment OP % OP % Americas Tire $ 222 18.0 $ 199 15.6 $ 23 International Tire 1 0.6 (6) - 2.8 7 Corporate (22) (25) 3 Eliminations (1) 2 (3) Total Company $ 201 14.5 $ 170 12.0 $ 31 Earnings Per Share (diluted) from continuing operations attributable to common stockholders $ 2.32 $ 1.72 $ 0.60 Cash and Cash Equivalents $ 412 $ 408 $ 4

 
 

6 CTB Raw Material Price Index North America 0 50 100 150 200 250 300 Q2 2016 Average = 135.5 Q3 2016 is an estimate

 
 

32 2 1 99 110 9 10 5 - 50 100 150 ($millions) ($millions) Operating Profit Walk Total Company Q2 2015 to Q2 2016 Amounts are unaudited and may not add due to rounding. 7 23 Net Price/Mix vs. Raw Materials $11 +11%

 
 

26 109 116 3 7 6 3 - 150 ($millions) ($millions) Operating Profit Walk Americas Tire Operations Q2 2015 to Q2 2016 Amounts are unaudited and may not add due to rounding . 8 $7 +7% 23 Net Price/Mix vs. Raw Materials

 
 

7 1 (4) 3 1 (25) - 25 ($millions) Operating Profit Walk International Tire Operations Q2 2015 to Q2 2016 Amounts are unaudited and may not add due to rounding. 9 6 Net Price/Mix vs. Raw Materials $7 +187%

 
 

August 4, 2016

 
 

Non - GAAP Measures 11 Non - GAAP financial measures should be considered in addition to, not as a substitute for, net earnings, earnings per share, total debt or other financial measures prepared in accordance with generally accepted accounting principles (“ GAAP”). The Company’s methods of determining these non - GAAP financial measures may differ from the methods used by other companies for these or similar non - GAAP financial measures. Accordingly, these non - GAAP financial measures may not be comparable to measures used by other companies. Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company’s GAAP and non - GAAP financial results were posted, by incorporation within the appendix to this presentation, on the Company’s Investor Relations website at http://coopertire.com/investors.aspx on the day the Company’s operating and financial results were announced for the quarter ended June 30, 2016 and management presented certain non - GAAP financial measures during a conference call with analysts and investors. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company’s earnings releases and annual and quarterly SEC filings.

 
 

Non - GAAP Measures 12 Return on Invested Capital (ROIC) Management is using non - GAAP financial measures in this document because it considers them to be important supplemental measures of the Company’s performance. Management also believes that these non - GAAP financial measures provide additional insight for analysts and investors in evaluating the Company’s financial and operating performance. The Company defines ROIC as the trailing four quarters’ net income before interest, after tax, divided by the total invested capital, which is the average of ending debt and equity for the last five quarters. The Company believes ROIC is a useful measure of how effectively the Company uses capital to generate profits. Calculation of Return on Invested Capital July 1, 2015 – June 30, 2016 Operating profit $ 386 Provision for income taxes (124) Net interest tax effect (7) Net income before interest, after tax $ 255 Total invested capital $ 1,322 Return on invested capital 19.3 %

 
 

Non - GAAP Measures 13 Trailing Four Quarter Net Interest Tax Effect Calculation Income before income taxes $ 367 Provision for income taxes (124) Effective income tax rate 33.7 % Net interest expense ( 21) Net interest tax effect $ (7) Trailing Four Quarter Net Income before Interest Inputs Quarter - ended: Operating profit Provision for income taxes Income before income taxes Interest expense Interest income Net Interest Expense September 30, 2015 $ 82 $ (25) $ 78 $ (6) $ 1 $ (5) December 31, 2015 103 (36) 96 (5) 1 (5) March 31, 2016 91 (28) 87 (7) 1 (6) June 30, 2016 110 (35) 106 (6) 1 (5) Total $ 386 $ (124) $ 367 $ (24) $ 3 $ (21)

 
 

Non - GAAP Measures 14 Calculation of Total Invested Capital Trailing Five Quarters Equity Long - term Debt Current Portion of Long - term Debt Short - term Notes Payable Total Invested Capital June 30, 2015 $ 947 $ 297 $ 2 $ 15 $ 1,261 September 30, 2015 965 297 1 18 1,280 December 31, 2015 1,018 296 1 12 1,327 March 31, 2016 1,054 296 1 8 1,358 June 30, 2016 1085 296 1 4 1,386 Average Balance $ 1,014 $ 296 $ 1 $ 11 $ 1,322

 
 

Risks 15 It is possible that actual results may differ materially from projections or expectations due to a variety of factors, includ ing but not limited to: • volatility in raw material and energy prices, including those of rubber, steel, petroleum - based products and natural gas or the unavailability of such raw materials or energy sources; • the failure of the company’s suppliers to timely deliver products in accordance with contract specifications; • changes to tariffs or the imposition of new tariffs or trade restrictions, including changes related to the anti - dumping and cou ntervailing duties for passenger car and light truck tires imported into the United States from China; and any duties from the ongoing investigation into truck and bus tires imported into the United States from China; • changes in economic and business conditions in the world , including changes related to the United Kingdom’s referendum on withdrawal from the European Union ; • increased competitive activity including actions by larger competitors or lower - cost producers; • the failure to achieve expected sales levels; • changes in the company’s customer relationships, including loss of particular business for competitive or other reasons; • the ultimate outcome of litigation brought against the company , including stockholders lawsuits relating to the terminated Apollo merger as well as product liability claims, in each case which could result in commitment of significant resources and time to defend and possible material damages against the company or other unfavorable outcomes; • a disruption in, or failure of, the company’s information technology systems, including those related to cyber security, could adversely affect the company’s business operations and financial performance; • changes in pension expense and/or funding resulting from the Company’s pension strategy, investment performance of the Compan y’s pension plan assets and changes in discount rate, salary increase rate, and expected return on plan assets assumptions, or changes to related accounting regulations ; • government regulatory and legislative initiatives including environmental and healthcare matters; • volatility in the capital and financial markets or changes to the credit markets and/or access to those markets; • changes in interest or foreign exchange rates; • an adverse change in the company’s credit ratings, which could increase borrowing costs and/or hamper access to the credit markets; • failure to implement information technologies or related systems, including failure by the company to successfully implement an ERP system; • the risks associated with doing business outside of the United States; • the failure to develop technologies, processes or products needed to support consumer demand; • technology advancements; • the inability to recover the costs to develop and test new products or processes; • the impact of labor problems, including labor disruptions at the company , its joint venture, or at one or more of its large customers or suppliers; • failure to attract or retain key personnel; • consolidation among the company’s competitors or customers; • inaccurate assumptions used in developing the company’s strategic plan or operating plans or the inability or failure to successfully implement such plans; • any unforeseen circumstances that arise that cause the Board of Directors to alter its succession plans for the leadership of th e company; • risks relating to acquisitions, such as the proposed acquisition of a majority interest in China based Qingdao Ge Rui Da Rubber Co., Ltd., including the failure to successfully complete acquisitions or integrate them into operations or their related financings may impact liquidity and capital resources; • changes in the company’s relationship with its joint - venture partner or suppliers, including any changes with respect to the production of Cooper - branded products by CCT, the c ompany’s former joint venture in China; • the ability to find alternative sources for products supplied by CCT; • the inability to obtain and maintain price increases to offset higher production or material costs; • inability to adequately protect the company’s intellectual property rights; and • inability to use deferred tax assets.

 

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