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Actionable news in CTB: COOPER TIRE & RUBBER CO.,

Cooper Tire & Rubber Company Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

Net sales were $782 million

Operating profit was $82 million, or 10.5 percent of net sales, compared with $89 million, or 9.7 percent of net sales, a year ago; operating profit excluding CCT was up 25 percent from the prior year quarter

Diluted earnings per share were $0.93 compared with $0.77 per share a year ago

Unit volume was up 7 percent year over year, excluding CCT

Americas segment unit volume grew 2 percent with operating margin of 14.6 percent of net sales

– Cooper Tire & Rubber Company (NYSE: CTB) today reported third quarter 2015 net i ncome of $53 million, or diluted earnings per share of $0.93, compared with $48 million, or $0.77 per share, last year.

Third Quarter Highlights:

Net sales rose 2 percent excluding the impact of CCT, the company’s former joint venture in China that contributed sales of $150 million in the third quarter a year ago (net of company eliminations). CCT was divested by Cooper in the fourth quarter of 2014. Third quarter net sales as reported were $782 million, which compares with $920 million in the third quarter of 2014.

Third quarter results included higher unit volume of $50 million excluding CCT, with unit volume increases in both the Americas and International segments. The unit volume increase was partially offset by unfavorable price and mix of $32 million, primarily due to pricing and promotion actions related to raw material costs, and negative currency impact of $6 million.

Third quarter 2015 operating profit was $82 million compared with $89 million for the same period last year, which included $23 million from CCT. Excluding CCT, operating profit was up 25 percent from the prior year quarter. Third quarter operating margin was 10.5 percent versus 9.7 percent in 2014.

Excluding the impact of CCT, the operating profit increased as a result of favorable raw material costs of $55 million and higher volume of $6 million. These benefits were partially offset by unfavorable price and mix of $18 million, $13 million of unfavorable SG&A costs, $10 million of higher manufacturing costs, and $2 million of other costs.

Third quarter SG&A was $72 million, which compares with $68 million in the third quarter of 2014. The increase of $4 million in SG&A reflects the absence of $9 million in SG&A from the sale of CCT, which was more than offset by increases of $13 million. These increases included $8 million of higher estimated incentive costs based on the strong financial performance of the company and higher mark-to-market costs of stock based liabilities. In addition, the third quarter of 2015 included increased brand and product marketing costs due to the timing of programs, as well as continued SG&A spending in China, which is consistent with the company’s strategy to invest in the region for future growth.

The higher manufacturing costs were primarily experienced in the Americas segment where Cooper incurred costs associated with the greater complexity of manufacturing higher value, higher margin tires, as well as increased pension expense and higher estimated incentive costs based on the strong financial performance of the company.

-more-

Cooper Tire Q3 2015—2

Consolidated Results:

Q3 2015 ($M)

Q3 2014 ($M)

% Change

Net Sales

(15.0%)

Operating Profit

(8.1%)

Operating Margin

“Our third quarter performance was excellent, and continued the positive trends we drove in the first half of 2015. The Americas segment posted another quarter of outstanding results, with unit volume growth and an operating margin of 14.6 percent, which is well above our target. Importantly, we again saw unit volume growth in our International segment,” said Cooper Chairman, Chief Executive Officer and President Roy Armes.

The effective tax rate for the third quarter, including discrete items, was 31.4 percent compared with 32.9 percent last year. Discrete items during the quarter, which reduced the tax rate, included research and development tax credits and the release of reserves for effectively settled uncertain tax positions. The tax rate is based on forecasted annual earnings and tax rates for the various jurisdictions in which the company operates. SG&A expense for the quarter was $72 million, or 9.2 percent of sales, compared with $68 million, or 7.4 percent of sales, in the third quarter of 2014.

At quarter end, Cooper had $424 million in cash and cash equivalents, compared with $336 million at September 30, 2014. Capital expenditures in the third quarter were $40 million compared with $36 million in the same period last year.

In February 2015, the company announced a new $200 million share repurchase program. During the third quarter, 589,945 shares were repurchased under the program for $22.8 million. For the full year, 2,110,633 shares were repurchased under the program for $82.8 million, or an average price of $39.23 per share.

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

Americas Tire Operations:

Third quarter net sales in the Americas segment rose 1.2 percent as a result of higher unit volume of $14 million, which was partially offset by unfavorable price and mix of $6 million. Segment unit shipments increased 2.1 percent compared with the same period last year. Cooper’s total light vehicle tire shipments in the United States increased 1.5 percent during the quarter. The Rubber Manufacturers Association (RMA) reported that its member shipments were up 6.6 percent, and total industry shipments (including an estimate for non-RMA members) increased 1.7 percent for the period. Cooper’s year-to-date total light vehicle tire shipments in the United States increased 4 percent, outperforming total industry shipments, which decreased 0.1 percent for the same period.

Third quarter operating profit was $102 million, or 14.6 percent of net sales, compared with $76 million, or 10.9 percent of net sales, in the third quarter of 2014. The higher operating profit primarily reflected favorable raw material costs of $49 million and higher unit volume of $3 million. These items more than offset higher manufacturing costs of $9 million, unfavorable price and mix of $8 million, increased SG&A costs of $6 million and negative currency impact and other costs of $3 million.

Cooper Tire Q3 2015—3

International Tire...


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