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Section 1: 8-K (8-K)

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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):
 
April 29, 2019
Cooper Tire & Rubber Company 
(Exact name of registrant as specified in its charter)
Delaware
 
001-04329
 
344297750
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
 (I.R.S Employer 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨








Item 2.02 Results of Operations and Financial Condition.
On April 29, 2019, Cooper Tire & Rubber Company (the "Company") issued a press release reporting its financial results for the first quarter 2019. 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 April 29, 2019, the Company posted a summary slide presentation regarding first quarter 2019 (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
99.1 Press release dated April 29, 2019
99.2 Slide Presentation regarding first quarter 2019







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.
 
 
 
 
 
Dated:
 
 
Cooper Tire & Rubber Company
April 29, 2019
 
 
By: /s/ Jack Jay McCracken                                
 
 
 
Name: Jack Jay McCracken
 
 
 
Title: Vice President, Assistant General Counsel & Assistant Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

                            
                    

                                
                                


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
397698216_cooperstacked2017a11.jpg                      NEWS
____________________________________________________________________________________________________________________________________________

Cooper Tire & Rubber Company Reports First
Quarter 2019 Results

FINDLAY, Ohio, April 29, 2019 – Cooper Tire & Rubber Company (NYSE: CTB) today reported first quarter 2019 net income of $7 million, or diluted earnings per share of $0.14, compared with $8 million, or $0.16 per share, last year.
    
First Quarter Highlights
Net sales increased 2.9 percent to $619 million.
Consolidated unit volume decreased 0.7 percent compared to the first quarter of 2018.
Operating profit was $26 million, or 4.3 percent of net sales, despite $10 million in costs related to tariffs enacted in the quarter on truck and bus radial (TBR) tires imported into the United States from China and $5 million of restructuring charges in Europe.

“Operating profit in the first quarter was higher than we expected due to stronger than anticipated performance in North America and Asia," said Cooper President & Chief Executive Officer Brad Hughes. "Our Americas segment delivered an operating profit of $39 million, up $8 million from year ago, despite the $10 million impact of new TBR tariffs in the period this year. For the third consecutive quarter, we achieved unit volume growth in the U.S. In Asia, our business performed better than expected in what continues to be a challenging economic environment. In fact, third-party sales were up year over year in the region, but this was more than offset by lower intercompany shipments from China to North America.

“Moving forward, we will continue to make progress on our strategic priorities during 2019, and believe underlying macro-conditions will support growth in tire demand, particularly in the U.S. As a result, we continue to expect modest global unit volume growth for Cooper in 2019 and full year operating profit margin to improve compared with 2018. We are confident that our strategic plan remains the right path to achieve our goals and help drive shareholder value.”

Consolidated Results
Cooper Tire
Q1 2019 ($M)
Q1 2018 ($M)
Change
Net Sales
$
619
 
$
601
 
2.9
%
Operating Profit
$
26
 
$
26
 
(0.1
%)
Operating Margin
4.3
%
4.4
%
(0.1
) ppts.
First quarter net sales were $619 million, an increase of 2.9 percent, compared with $601 million
in the first quarter of 2018. Net sales included $24 million of favorable price and mix, which was partially offset by $4 million of lower unit volume and $2 million of unfavorable foreign currency impact.
Operating profit was $26 million, unchanged compared with the first quarter of 2018. The quarter included $14 million favorable price and mix, which was partially offset by $3 million of unfavorable raw material costs, $3 million of higher other costs and unfavorable volume of $2 million. Operating profit benefited from manufacturing improvements, including better utilization, of $5 million and reduced product liability costs of $4 million. Negatively affecting the quarter were $10 million of tariffs enacted in the first quarter of 2019 on TBR tires imported into the U.S. from China and $5 million of restructuring costs related to Cooper Tire Europe's decision to cease light vehicle tire production at its Melksham, England facility.

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Cooper Q1 2019—2
Cooper's first quarter raw material index increased 2.4 percent compared to the first quarter of 2018. The raw material index decreased sequentially from 165.1 in the fourth quarter of 2018 to 160.4 in the first quarter of 2019.

The effective tax rate for the first quarter was 46.9 percent compared to 27.8 percent for the same period the prior year. The tax rate for the first quarter of 2019 includes the impact of final regulations related to U.S. income tax reform, while the first quarter 2018 rate included discrete items related to the accrual of additional uncertain tax positions pertaining to previous years. The effective tax rate is based on forecasted annual earnings and tax rates for the various jurisdictions in which the company operates.
At the end of the first quarter, Cooper had $212 million in cash and cash equivalents compared with $213 million at the end of the first quarter of 2018. Capital expenditures in the first quarter were $60 million, which was equal to the same period a year ago.
The company generated a return on invested capital, excluding the impact of the goodwill impairment charge in the fourth quarter of 2018, of 9.8 percent for the trailing four quarters.

Americas Tire Operations

Americas Tire Operations
Q1 2019 ($M)
Q1 2018 ($M)
Change
Net Sales
$
515
 
$
485
 
6.1%
Operating Profit
$
39
 
$
31
 
24.2%
Operating Margin
7.5
%
6.4
%
1.1 ppts.

First quarter net sales in the Americas segment increased 6.1 percent as a result of $31 million of favorable price and mix, which was partially offset by $1 million of unfavorable foreign currency impact. For the quarter, segment unit volume was flat compared to the first quarter of 2018 with a unit volume increase in North America that was offset by a decline in Latin America.

Cooper’s first quarter total light vehicle tire shipments in the U.S. increased 1.1 percent. The U.S. Tire Manufacturers Association (USTMA) reported that its member shipments of light vehicle tires in the U.S. were up 2.2 percent. Total industry shipments (including an estimate for non-USTMA members) increased 5.6 percent for the period.

First quarter operating profit was $39 million, or 7.5 percent of net sales, compared with $31 million, or 6.4 percent of net sales, in 2018. Operating profit included $15 million of favorable price and mix, which was offset by $4 million of unfavorable raw material costs. The quarter also included $6 million of manufacturing improvements, including better utilization, and $4 million of lower product liability costs. These were partially offset by $10 million of additional tariffs enacted on TBR tires imported into the U.S. from China, $2 million of unfavorable SG&A costs, and other costs that increased by $1 million compared to the same period a year ago.





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Cooper Q1 2019—3
International Tire Operations
International Tire Operations
Q1 2019 ($M)
Q1 2018 ($M)
Change
Net Sales
$
144
 
$
161
 
(10.8%)
Operating (Loss)/Profit
$
(1
)
$
7
 
(118.0
%)
Operating Margin
(0.9
%)
4.6
%
(5.5
) ppts.

First quarter net sales in the International segment decreased 10.8 percent as a result of $14 million of lower unit volume, $2 million of unfavorable foreign currency impact and $1 million of unfavorable price and mix. Segment unit volume decreased 9.1 percent, primarily due to lower intercompany sales.
The segment's first quarter operating loss was $1 million compared with operating profit of $7 million in the first quarter of 2018. The decrease included charges of $5 million related to the Melksham, England restructuring. Additionally, the segment experienced $2 million of lower unit volume, $2 million of unfavorable price and mix, and $1 million of higher manufacturing costs, which were partially offset by $2 million of lower raw material costs.

Outlook

"We are pleased that our first quarter results have helped position us well for the remainder of the year," said Hughes. "We expect to continue to improve results, building on our strategic initiatives as we continue to make tangible progress on the milestones communicated at our May 2018 Investor Day. Importantly, we remain focused on building our team's capabilities to advance our strategic initiatives and win in the marketplace."

For 2019, management continues to expect:
Modest unit volume growth compared to 2018.
Improving operating profit margin throughout the year, with the full year exceeding 2018.
Capital expenditures to range between $190 and $210 million. This does not include capital contributions related to Cooper’s pro rata share of the previously announced joint venture with Sailun Vietnam or other potential manufacturing footprint investments.

For 2019, management now expects:
Charges related to the Melksham, England restructuring to be in a range of $8 to $11 million, including $5 million already incurred in the first quarter.
Effective tax rate in a range between 23 and 26 percent.

The 2019 expectations include tariffs already in place, but do not include rate changes or additional tariffs that continue to be considered, but have not yet been imposed.


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Cooper Q1 2019—4
First Quarter 2019 Conference Call Today at 10 a.m. Eastern
Management will discuss the financial and operating results for the first quarter, 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 https://services.choruscall.com/links/ctb190429.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 U.S. 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 or services in accordance with contract specifications;
changes to tariffs or trade agreements, or the imposition of new or increased tariffs or trade restrictions, imposed on tires or materials or manufacturing equipment which the company uses, including changes related to tariffs on automotive imports, as well as on tires, raw materials and tire manufacturing equipment imported into the U.S. from China;
changes in economic and business conditions in the world, including changes related to the United Kingdom’s decision to withdraw from the European Union;
the inability to obtain and maintain price increases to offset higher production, tariffs or material costs;
the impact of the recently enacted tax reform legislation;
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 or supplier relationships or distribution channels, including the write-off of outstanding accounts receivable or loss of particular business for competitive, credit, liquidity, bankruptcy, restructuring or other reasons;
the failure to develop technologies, processes or products needed to support consumer demand or changes in consumer behavior, including changes in sales channels;
the costs and timing of restructuring actions and impairments or other charges resulting from such actions, including the possible outcome of the recently announced decision to cease light vehicle tire production in the U.K., or from adverse industry, market or other developments;
consolidation or other cooperation by and 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 or to realize the anticipated savings or benefits from strategic actions;



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Cooper Q1 2019—5
risks relating to investments and acquisitions, including the failure to successfully integrate them into operations or their related financings may impact liquidity and capital resources;
the ultimate outcome of litigation brought against the company, including product liability claims, 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 cybersecurity, could adversely affect the company’s business operations and financial performance;
government regulatory and legislative initiatives including environmental, healthcare, privacy and tax matters;
volatility in the capital and financial markets or changes to the credit markets and/or access to those markets, including access for refinancing the company's unsecured notes due in December 2019;
changes in interest or foreign exchange rates or the benchmarks used for establishing the 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 ERP systems;
the risks associated with doing business outside of the U.S.;
technology advancements;
the inability to recover the costs to refresh existing products or develop and test new products or processes;
the impact of labor problems, including labor disruptions at the company, its joint ventures, or at one or more of its large customers or suppliers;
failure to attract or retain key personnel;
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 or expected return on plan assets assumptions, or changes to related accounting regulations;
changes in the company’s relationship with its joint venture partners or suppliers, including any changes with respect to its former PCT joint venture’s production of TBR products;
the ability to find and develop alternative sources for products supplied by PCT;
a variety of factors, including market conditions, may affect the actual amount expended on stock repurchases; the company’s ability to consummate stock repurchases; changes in the company’s results of operations or financial conditions or strategic priorities may lead to a modification, suspension or cancellation of stock repurchases, which may occur at any time;
the inability to adequately protect the company’s intellectual property rights; and
the inability to use deferred tax assets.

It is not possible to foresee or identify all such factors. Any forward-looking statements 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 filings with the U.S. Securities and Exchange Commission (“SEC”).


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Cooper Q1 2019—6
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures as defined under SEC rules.  Non-GAAP financial measures should be considered in addition to, not as a substitute for, operating profit, net income, earnings per share 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.  As required by SEC rules, detailed reconciliations between the company’s GAAP and non-GAAP financial results are provided on the attached schedule.  The company believes return on invested capital (“ROIC”) provides additional insight for analysts and investors in evaluating the company’s financial and operating performance.  The company defines ROIC as the trailing four quarters’ after tax operating profit, exclusive of certain items affecting comparability of results from period to period and utilizing the company’s adjusted effective tax rate, 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.
###
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, light truck, 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:                        Media Contact:
Jerry Bialek                            Anne Roman
419.424.4165                            419.429.7189
[email protected]                    [email protected]





Cooper Tire & Rubber Company
Consolidated Statements of Operations
(Unaudited)
 
 
 
 
 
(Dollar amounts in thousands except per share amounts)
 
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net sales
 
$
619,163

 
$
601,496

Cost of products sold
 
530,904

 
517,011

Gross profit
 
88,259

 
84,485

Selling, general and administrative expense
 
56,855

 
58,031

Restructuring expense
 
4,973

 

Operating profit
 
26,431

 
26,454

Interest expense
 
(8,314
)
 
(7,691
)
Interest income
 
3,380

 
2,315

Other pension and postretirement benefit expense
 
(9,362
)
 
(6,986
)
Other non-operating income (expense)
 
1,380

 
(1,658
)
Income before income taxes
 
13,515

 
12,434

Provision for income taxes
 
6,337

 
3,451

Net income
 
7,178

 
8,983

Net income attributable to noncontrolling shareholders' interests
 
199

 
698

Net income attributable to Cooper Tire & Rubber Company
 
$
6,979

 
$
8,285

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic
 
$
0.14

 
$
0.16

Diluted
 
$
0.14

 
$
0.16

 
 
 
 
 
Weighted average shares outstanding (000s):
 
 
 
 
Basic
 
50,100

 
50,838

Diluted
 
50,378

 
51,179

 
 
 
 
 
Segment information:
 
 
 
 
Net Sales
 
 
 
 
Americas Tire
 
$
514,936

 
$
485,392

International Tire
 
143,785

 
161,244

Eliminations
 
(39,558
)
 
(45,140
)
 
 
 
 
 
Operating profit (loss):
 
 
 
 
Americas Tire
 
$
38,789

 
$
31,236

International Tire
 
(1,339
)
 
7,434

Unallocated corporate charges
 
(10,453
)
 
(11,966
)
Eliminations
 
(566
)
 
(250
)



Cooper Tire & Rubber Company
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
(Dollar amounts in thousands)
 
 
 
 
 
 
March 31,
 
 
2019
 
2018
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
212,331

 
$
213,091

Notes receivable
 
12,514

 
66,073

Accounts receivable
 
540,813

 
499,130

Inventories
 
563,736

 
611,524

Other current assets
 
54,829

 
63,921

Total current assets
 
1,384,223

 
1,453,739

 
 
 
 
 
Property, plant and equipment, net
 
1,010,715

 
978,494

Operating lease right-of-use assets, net
 
97,646

 

Goodwill
 
18,851

 
56,056

Intangibles, net
 
117,433

 
126,143

Deferred income tax assets
 
26,923

 
57,057

Other assets
 
21,377

 
7,493

Total assets
 
$
2,677,168

 
$
2,678,982

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Notes payable
 
$
20,074

 
$
41,043

Accounts payable
 
268,780

 
268,556

Accrued liabilities
 
248,029

 
244,371

Income taxes payable
 
4,993

 
5,098

Current portion of long-term debt and finance leases
 
173,974

 
1,446

Total current liabilities
 
715,850

 
560,514

 
 
 
 
 
Long-term debt and finance leases
 
121,305

 
295,221

Noncurrent operating leases
 
72,730

 

Postretirement benefits other than pensions
 
235,974

 
256,188

Pension benefits
 
144,908

 
218,280

Other long-term liabilities
 
138,183

 
144,753

Total parent stockholders' equity
 
1,186,640

 
1,140,723

Noncontrolling shareholders' interests in consolidated subsidiaries
 
61,578

 
63,303

Total liabilities and equity
 
$
2,677,168

 
$
2,678,982




Cooper Tire & Rubber Company
Consolidated Statements of Cash Flows
(Unaudited)
 
(Dollar amounts in thousands)
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Operating activities:
 
 
Net income
 
$
7,178

 
$
8,983

Adjustments to reconcile net income to net cash from operations:
 
 
 
 
Depreciation and amortization
 
37,298

 
36,424

Stock-based compensation
 
869

 
1,280

Change in LIFO inventory reserve
 
(168
)
 
(9,900
)
Amortization of unrecognized postretirement benefits
 
9,131

 
9,210

Changes in operating assets and liabilities:
 
 
 
 
Accounts and notes receivable
 
2,278

 
(14,955
)
Inventories
 
(81,354
)
 
(81,156
)
Other current assets
 
(2,170
)
 
(5,532
)
Accounts payable
 
2,740

 
13,063

Accrued liabilities
 
(63,228
)
 
(34,778
)
Other items
 
(8,986
)
 
58

Net cash used in operating activities
 
(96,412
)
 
(77,303
)
Investing activities:
 
 
 
 
Additions to property, plant and equipment and capitalized software
 
(59,867
)
 
(59,722
)
Proceeds from the sale of assets
 
38

 
133

Net cash used in investing activities
 
(59,829
)
 
(59,589
)
Financing activities:
 
 
 
 
Net payments on short-term debt
 
6,608

 
(5,356
)
Repayments of long-term debt and finance lease obligations
 
(797
)
 
(809
)
Payment of financing fees
 

 
(1,230
)
Repurchase of common stock
 

 
(15,565
)
Payments of employee taxes withheld from share-based awards
 
(1,158
)
 
(1,891
)
Payment of dividends to Cooper Tire & Rubber Company stockholders
 
(5,262
)
 
(5,334
)
Excess tax benefits on stock-based compensation
 

 
270

Net cash used in financing activities
 
(609
)
 
(29,915
)
Effects of exchange rate changes on cash
 
(1,058
)
 
1,399

Net change in cash, cash equivalents and restricted cash
 
(157,908
)
 
(165,408
)
Cash, cash equivalents and restricted cash at beginning of year
 
378,246

 
392,306

Cash, cash equivalents and restricted cash at end of year
 
$
220,338

 
$
226,898









Cooper Tire & Rubber Company
 
 
Reconciliation of Non-GAAP Financial Measures
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollar amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETURN ON INVESTED CAPITAL (ROIC)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trailing Four Quarters Ended March 31, 2019
 
 
Calculation of ROIC
 
 
 
 
 
Calculation of Net Interest Tax Effect
 
 
Adjusted (Non-GAAP) operating profit
 
 
 
$
199,048

 
Provision for income taxes (c)
 
 
 
$
36,381

 
 
Adjusted (Non-GAAP) effective tax rate
 
24.4
%
 
 
 
Adjusted (Non-GAAP) income before income taxes (d)
 
 
 
$
148,967

 
 
Income tax expense on operating profit
 
48,612

 
 
 
Adjusted (Non-GAAP) effective income tax rate (c)/(d)
 
 
 
24.4
%
 
 
Adjusted operating profit after taxes (a)
 
 
 
150,436

 
 
 
 
 
 
 
 
Total invested capital (b)
 
 
 
$
1,541,940

 
 
 
 
 
 
 
 
ROIC, including noncontrolling equity (a)/(b)
 
 
 
9.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of Invested Capital (five quarter average)
Equity
 
Long-term debt and finance leases
 
Current portion of long-term debt and finance leases
 
Notes payable
 
Total invested capital
 
 
 
 
March 31, 2019
 
$
1,248,218

 
$
121,305

 
$
173,974

 
$
20,074

 
$
1,563,571

 
 
 
 
December 31, 2018
 
1,232,443

 
121,284

 
174,760

 
15,288

 
1,543,775

 
 
 
 
September 30, 2018
 
1,228,509

 
294,841

 
1,376

 
14,831

 
1,539,557

 
 
 
 
June 30, 2018
 
1,177,268

 
295,017

 
1,398

 
47,378

 
1,521,061

 
 
 
 
March 31, 2018
 
1,204,026

 
295,221

 
1,446

 
41,043

 
1,541,736

 
 
 
 
Five quarter average
 
$
1,218,093

 
$
225,534

 
$
70,591

 
$
27,723

 
$
1,541,940

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of Trailing Four Quarter Income and Expense Inputs
 
 
 
 
 
 
 
 
 
 
 
 
Quarter-ended:
 
Operating profit as reported
 
Goodwill impairment charge*
 
Adjusted operating profit
 
Provision for income taxes as reported
 
Income before income taxes as reported
 
Goodwill impairment charge*
 
Adjusted income before income taxes
March 31, 2019
 
$
26,431

 
$

 
$
26,431

 
$
6,337

 
$
13,515

 
$

 
$
13,515

December 31, 2018
 
24,826

 
33,827

 
58,653

 
11,550

 
11,989

 
33,827

 
45,816

September 30, 2018
 
81,201

 

 
81,201

 
16,227

 
71,660

 

 
71,660

June 30, 2018
 
32,763

 

 
32,763

 
2,267

 
17,976

 

 
17,976

Trailing four quarters
 
$
165,221

 
$
33,827

 
$
199,048

 
$
36,381

 
$
115,140

 
$
33,827

 
$
148,967

*The Company recorded a non-cash goodwill impairment charge of $33,827 in the fourth quarter of 2018 related to the Company's Chinese joint venture.

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Section 3: EX-99.2 (EXHIBIT 99.2)

a20190331slides
Company Update First Quarter 2019 April 29, 2019


 
Safe Harbor Statement This 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 March 31, 2019 Financial Performance Highlights (millions USD, except EPS) Change from Prior Net Sales by Segment Q1 2019 Q1 2018 Year Americas Tire $ 515 $ 485 6.1% International Tire 144 161 (10.8%) Eliminations (40) (45) (12.4%) Total Company $ 619 $ 601 2.9% Operating Profit (Loss) by Segment OP % OP % Americas Tire $ 39 7.5 $ 31 6.4 $ 8 International Tire (1) (0.9) 7 4.6 (8) Corporate (10) (12) 2 Eliminations (1) — (1) Total Company $ 26 4.3 $ 26 4.4 $ — (Loss) earnings per share, diluted $ 0.14 $ 0.16 $ (0.02) Cash and cash equivalents $ 212 $ 213 $ (1) Amounts are unaudited and may not add due to rounding. 4


 
Operating Profit Walk Total Company Q1 2018 to Q1 2019 ($millions) $0 $50 4 5 14 (3) (10) 26 (5) 26 $25 (2) (3) $11 Net Price/Mix vs. Raw Materials $0 t * * r t fi ix ls g ty s * e e fi o a in li f g m h o r /M ri r i if n u t r P e e u b r ri l O P c t t ia a u o g ri a c L T t V g in P M fa t R c in t u c u t a w n B tr a r a a u T s r e d e e p R M ro p O P R O 8 9 1 1 0 0 2 2 Amounts are unaudited and may not add due to rounding. * Truck and Bus Radial (TBR) tires imported into the U.S. from China became subject to 42.16% of AD/CVD tariffs implemented on February 15, 2019. ** Restructuring charges related to Cooper Tire Europe's decision to cease light vehicle tire production at its UK facility. 5


 
CTB Raw Material Price Index North America 300 250 200 150 100 Q1 2019 Average = 160.4 50 0 9 0 1 2 3 4 5 6 7 8 9 0 1 1 1 1 1 1 1 1 1 1 Q Q Q Q Q Q Q Q Q Q Q 1 1 1 1 1 1 1 1 1 1 1 Q2 2019 is an estimate 6


 
Operating Profit Walk Americas Tire Operations Q1 2018 to Q1 2019 ($millions) $8 4 6 $50 15 39 (4) (10) 31 (2) (1) $25 ($11) Net Price/Mix vs. Raw Materials $0 t * r t fi ix ls g ty s A e fi o a in li f & h o r /M ri r i if t r P e e u b r G O P c t t ia a S g ri a c L T g in P M fa t R in t u c B t ra w n u T ra e a a d e p R M ro p O P O 8 9 1 1 0 0 2 2 Amounts are unaudited and may not add due to rounding. * Truck and Bus Radial (TBR) tires imported into the U.S. from China became subject to 42.16% of AD/CVD tariffs implemented on February 15, 2019. 7


 
Operating Profit Walk International Tire Operations ($millions) Q1 2018 to Q1 2019 $(8) $10 7 2 $5 (2) (5) $0 $0 (2) Net Price/Mix vs. Raw (1) (1) Materials -$5 t * fi ix ls g e g s o a m in s r /M ri in u r o P e e r l u L c t tu o t g g ri a c V c n in P M u fa ti t tr u a ra w s n r e a e a e p R R M p O O 8 9 1 1 0 0 2 2 Amounts are unaudited and may not add due to rounding. * Restructuring charges related to Cooper Tire Europe's decision to cease light vehicle tire production at its UK facility. 8


 
Non-GAAP Measures Non-GAAP financial measures should be considered in addition to, not as a substitute for, 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 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 March 31, 2019 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. 9


 
Non-GAAP Measures 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’ after tax operating profit, exclusive of certain items affecting comparability of results from period to period and utilizing the company’s adjusted effective tax rate, 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 April 1, 2018 – March 31, 2019 (millions USD) Adjusted (Non-GAAP) operating profit $ 199 Adjusted (Non-GAAP) effective tax rate 24.4% Income tax expense on operating profit 49 Adjusted operating profit after taxes $ 150 Total invested capital $ 1,542 Return on invested capital 9.8% 10 Amounts may not add due to rounding.


 
Non-GAAP Measures Trailing Four Quarter Effective Tax Rate (millions USD) Provision for income taxes $ 36 Adjusted (Non-GAAP) Income before income taxes 149 Adjusted (Non-GAAP) effective income tax rate 24.4% Calculation of Total Invested Capital (five quarter average) (millions USD) Current Portion of Short-term Total Long-term Long-term Notes Invested Equity Debt Debt Payable Capital March 31, 2019 $ 1,248 $ 121 $ 174 $ 20 $ 1,564 December 31, 2018 1,232 121 175 15 1,544 September 30, 2018 1,229 295 1 15 1,540 June 30, 2018 1,177 295 1 47 1,521 March 31, 2018 1,204 295 1 41 1,542 Five Quarter Average $ 1,218 $ 226 $ 71 $ 28 $ 1,542 11 Amounts may not add due to rounding.


 
Non-GAAP Measures Calculation of Trailing Four Quarter Income and Expense Inputs Operating Goodwill Adjusted Provision for Income before Goodwill Adjusted income profit as impairment operating income taxes as income taxes as impairment before income Quarter-ended: reported charge* profit reported reported charge* taxes March 31, 2019 $ 26,431 $ — $ 26,431 $ 6,337 $ 13,515 $ — $ 13,515 December 31, 2018 24,826 33,827 58,653 11,550 11,989 33,827 45,816 September 30, 2018 81,201 — 81,201 16,227 71,660 — 71,660 June 30, 2018 32,763 — 32,763 2,267 17,976 — 17,976 Trailing four quarters $ 165,221 $ 33,827 $ 199,048 $ 36,381 $ 115,140 $ 33,827 $ 148,967 *The Company recorded a non-cash goodwill impairment charge of $33,827 in the fourth quarter of 2018 related to the Company's Chinese joint venture. 12 Amounts may not add due to rounding.


 
Risks 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 or services in accordance with contract specifications; • changes to tariffs or trade agreements, or the imposition of new or increased tariffs or trade restrictions, imposed on tires or materials or manufacturing equipment which the company uses, including changes related to tariffs on automotive imports, as well as on tires, raw materials and tire-manufacturing equipment imported into the U.S. from China; • changes in economic and business conditions in the world, including changes related to the United Kingdom’s decision to withdraw from the European Union; • the inability to obtain and maintain price increases to offset higher production, tariffs or material costs; • the impact of the recently enacted tax reform legislation; • 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 or supplier relationships or distribution channels, including the write-off of outstanding accounts receivable or loss of particular business for competitive, credit, liquidity, bankruptcy, restructuring or other reasons; • the failure to develop technologies, processes or products needed to support consumer demand or changes in consumer behavior, including changes in sales channels; • the costs and timing of restructuring actions and impairments or other charges resulting from such actions, including the possible outcome of the recently announced decision to cease light vehicle tire production in the U.K., or from adverse industry, market or other developments; • consolidation or other cooperation by and 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 or to realize the anticipated savings or benefits from strategic actions; • risks relating to investments and acquisitions, including the failure to successfully integrate them into operations or their related financings may impact liquidity and capital resources; • the ultimate outcome of litigation brought against the company, including product liability claims, 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 cybersecurity, could adversely affect the company’s business operations and financial performance; • government regulatory and legislative initiatives including environmental, healthcare, privacy and tax matters; • volatility in the capital and financial markets or changes to the credit markets and/or access to those markets, including access for refinancing the company's unsecured notes due in December 2019; • changes in interest or foreign exchange rates or the benchmarks used for establishing the 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 ERP systems; • the risks associated with doing business outside of the U.S.; • technology advancements; • the inability to recover the costs to refresh existing products or develop and test new products or processes; • the impact of labor problems, including labor disruptions at the company, its joint ventures, or at one or more of its large customers or suppliers; • failure to attract or retain key personnel; • 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 or expected return on plan assets assumptions, or changes to related accounting regulations; • changes in the company’s relationship with its joint venture partners or suppliers, including any changes with respect to its former PCT joint venture’s production of TBR products; • the ability to find and develop alternative sources for products supplied by PCT; • a variety of factors, including market conditions, may affect the actual amount expended on stock repurchases; the company’s ability to consummate stock repurchases; changes in the company’s results of operations or financial conditions or strategic priorities may lead to a modification, suspension or cancellation of stock repurchases, which may occur at any time; • the inability to adequately protect the company’s intellectual property rights; and • the inability to use deferred tax assets. 13


 
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