Cooper Tire & Rubber Company Reports Continued Strong Sales
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FINDLAY, Ohio, August 5, 2010: Net Sales of $804 million, an increase of 27 percent -- Operating profit of $34 million -- Net income (attributable to Cooper Tire) of $44 million -- Cash and cash equivalents of $379 million
Cooper Tire & Rubber Company today reported net income of $44 million for the quarter ended June 30, 2010, a $57 million improvement from the same period in 2009. Net sales were $804 million, an increase of $172 million, or 27 percent, from the prior year. Operating profit was $34 million for the quarter, a $7 million decrease compared with $41 million in 2009. The Company reported net income of 70 cents per share during the quarter on a diluted basis.
Results during the quarter included restructuring charges of $7 million, primarily related to the closure of the Albany, Ga., facility, a decrease of $1 million from the second quarter of 2009. During the quarter the Company recorded a $25 million benefit, net of income taxes, from discontinued operations. This benefit related to the final disposition of matters for Cooper Standard Automotive. This compares to a $37 million charge to discontinued operations during the second quarter of 2009. Excluding discontinued operations, restructuring charges, and adjusting for the non-recurrence of a $10 million pension curtailment benefit in 2009, net income attributable to the Company was approximately $3 million better than the prior year.
When compared to the prior year improved volumes and increased utilization of manufacturing capacity contributed favorably to earnings. The relationship of net price and mix to raw materials, and the non-recurrence of a benefit recorded during the prior year second quarter for the curtailment of pension-related costs were unfavorable.
Through the first six months of 2010, Cooper generated $1.6 billion in net sales, compared with $1.2 billion during the same period in the prior year. Net income attributable to Cooper Tire & Rubber Company was $56 million during the same period, compared to a net loss of $34 million in 2009.
The Company ended the quarter with $379 million of cash and cash equivalents, an increase of $77 million from the prior year balance of $302 million.
On July 27, 2010, the Company filed an 8-K regarding the necessity to file amended financial statements to correct the accounting treatment of Noncontrolling shareholder interest. These changes did not impact operating profit, cash flows or cumulative earnings per share for the Company. More information on this matter can be found in the filing with the SEC.
North American Tire Operations
North American Tire Operations sales were $575 million during the second
quarter, up from 2009 net sales of $427 million. Total light vehicle tire
shipments for Cooper's North America segment in the United States increased
by 25 percent, outpacing the total industry shipment increase of 7 percent
reported by the Rubber Manufacturers Association. This improvement
occurred across nearly all product segments as the Company was able to
increase market share. Sales also increased as the impact of price and mix
was favorable on the top line.
Operating profit was $20 million for the second quarter, a decrease of $8 million when compared with the same period in 2009. Favorable pricing and mix of $43 million was more than offset by $83 million of increased raw material costs. Higher volumes improved results by $19 million. Manufacturing operations improved by a net $10 million, driven by increased capacity utilization. Restructuring charges decreased by $2 million.
For the six months ended June 30, 2010, the segment had operating profit of $33 million, a $9 million improvement compared with the first six months of 2009.
International Tire Operations
The Company's International Tire Operations reported $312 million in net
sales, an increase of $55 million, or 21 percent, compared with the prior
year same quarter. This result reflected both increased volumes and
positive price and mix. Asian operations increased sales volumes by 24
percent, while European operations reported flat shipments compared to the
prior year.
The segment's operating profit increased to $21 million for the second quarter, an improvement of $2 million from the prior year. Favorable price and mix of $36 million were more than offset by higher raw material costs of $48 million. Increased volumes of $8 million, better production utilization and manufacturing costs of $3 million and other costs including currency impacts were favorable by $3 million.
For the six months ended June 30, 2010, the segment had operating profit of $43 million, a $27 million improvement over the first six months of 2009.
Management Commentary and Outlook
Roy Armes, Chief Executive Officer, commented, "While we were pleased
with the improved volumes and capacity utilization during the second
quarter of 2010, we are still committed to making improvements to the
operations. We believe the second quarter included the greatest pressure
during the year on margins from the relationship between prices and
elevated raw material costs. Our price increase of up to 7.5 percent was
effective June 1, 2010, and will take full effect in the third quarter. We
expect that raw material costs will continue to be elevated, but stable,
during the remainder of the year. We are pleased with the direction and
benefits of the actions we have taken to position ourselves for growth. The
recovery in demand for the global tire industry began in the second half of
2009 and will present more challenging comparables for growth during the
second half of 2010. Demand for our products should continue to be strong.
Our focus remains on profitable top line growth, improving our global cost
structure and developing organizational capabilities while prudently
managing our resources. We are confident about our abilities and have a
proven history of successful execution. These factors and industry
conditions leave us cautiously optimistic toward future results."
Cooper's management team will discuss the financial and operating results for the quarter in a conference call today at 11 a.m. Eastern time. Interested parties may access the audio portion of that conference call on the investor relations page of the Company's Web site at www.coopertire.com.
About Cooper Tire & Rubber Company
Cooper Tire & Rubber Company is a global company that specializes in the
design, manufacture, marketing and sales of passenger car and light truck
tires and has subsidiaries that specialize in medium truck, motorcycle and
racing tires. With headquarters in Findlay, Ohio, Cooper Tire has
manufacturing, sales, distribution, technical and design facilities within
its family of companies located in 10 countries around the world. For more
information on Cooper Tire, visit www.coopertire.com,
www.facebook.com/coopertire, or twitter.com/coopertire.
(Statements of income and balance sheets follow...)
Cooper Tire & Rubber Company
Consolidated Statements of Income
(Dollar amounts in thousands except per share amounts)
Quarter Ended
June 30
2009 2010
---- ----
Net sales $631,729 $803,959
Cost of products sold 531,269 708,577
------- -------
Gross profit 100,460 95,382
Selling, general and
administrative 50,278 54,274
Restructuring charges 8,709 7,426
Settlement of retiree
medical case - -
--- ---
Operating profit 41,473 33,682
Interest expense 12,097 9,149
Interest income (1,105) (771)
Other income (1,249) (988)
------ ----
Income from continuing 31,730 26,292
operations, before
income taxes
Income tax expense
(benefits) 967 1,247
--- -----
Income from continuing
operations 30,763 25,045
Income (loss) from
discontinued (37,085) 25,126
operations, net of
income taxes ------- ------
Net income (loss) (6,322) 50,171
Net income
attributable to 6,638 6,094
noncontrolling
shareholders' ----- -----
interests
Net income (loss)
attributable to $(12,960) $44,077
Cooper Tire & Rubber
Company ======== =======
Basic earnings (loss)
per share:
Income from continuing
operations available
to
Cooper Tire & Rubber
Company $0.52 1 $0.31
common stockholders
Income (loss) from
discontinued (0.63) 0.41
operations ----- ----
Net income (loss)
available to
Cooper Tire & Rubber
Company common
stockholders $(0.11) 1 $0.72
Diluted earnings
(loss) per share:
Income (loss) from
continuing $0.51 1 $0.30
operations
attributable to
Cooper
Tire & Rubber Company
Income (loss) from
discontinued (0.62) 0.40
operations ----- ----
Net income (loss)
available to
Cooper Tire & Rubber $(0.11) 1 $0.70
Company common
stockholders
Weighted average
shares
outstanding
Basic 58,958 61,292
Diluted 59,803 62,609
Depreciation $30,795 $29,132
Amortization $547 $496
Capital expenditures $25,389 $29,584
Segment information
Net sales
North American Tire $427,333 $574,968
International Tire 257,182 312,156
Eliminations (52,786) (83,165)
Segment profit (loss)
North American Tire 27,951 19,680
International Tire 19,204 20,528
Eliminations (786) 42
Unallocated corporate
charges (4,896) (6,568)
Six Months Ended
June 30
2009 2010
---- ----
Net sales $1,203,137 $1,558,402
Cost of products sold 1,052,408 1,377,848
--------- ---------
Gross profit 150,729 180,554
Selling, general and
administrative 95,384 98,879
Restructuring charges 23,061 15,038
Settlement of retiree
medical case 7,050 -
----- ---
Operating profit 25,234 66,637
Interest expense 24,752 17,879
Interest income (2,480) (1,984)
Other income (2,072) (1,225)
------ ------
Income from continuing 5,034 51,967
operations, before
income taxes
Income tax expense
(benefits) (2,806) 8,990
------ -----
Income from continuing
operations 7,840 42,977
Income (loss) from
discontinued (37,449) 24,366
operations, net of
income taxes ------- ------
Net income (loss) (29,609) 67,343
Net income
attributable to 4,618 11,690
noncontrolling
shareholders' ----- ------
interests
Net income (loss)
attributable to $(34,227) $55,653
Cooper Tire & Rubber
Company ======== =======
Basic earnings (loss)
per share:
Income from continuing
operations available
to
Cooper Tire & Rubber
Company $0.15 1 $0.51
common stockholders
Income (loss) from
discontinued (0.64) 0.40
operations ----- ----
Net income (loss)
available to
Cooper Tire & Rubber
Company common
stockholders $(0.49) 1 $0.91
Diluted earnings
(loss) per share:
Income (loss) from
continuing $0.14 1 $0.50
operations
attributable to
Cooper
Tire & Rubber Company
Income (loss) from
discontinued (0.63) 0.39
operations ----- ----
Net income (loss)
available to
Cooper Tire & Rubber $(0.48) 1,2 $0.89
Company common
stockholders
Weighted average
shares
outstanding
Basic 58,950 61,104
Diluted 59,610 62,453
Depreciation $61,346 $58,991
Amortization $1,113 $997
Capital expenditures $42,306 $45,048
Segment information
Net sales
North American Tire $866,650 $1,106,685
International Tire 423,394 605,713
Eliminations (86,907) (153,996)
Segment profit (loss)
North American Tire 24,331 33,282
International Tire 16,383 43,078
Eliminations (1,059) (467)
Unallocated corporate
charges (14,421) (9,256)
******************************
CONSOLIDATED BALANCE SHEETS
June 30
-------
2009 2010
---- ----
Assets
------
Current assets:
Cash and cash equivalents $302,459 $379,082
Accounts receivable 367,337 459,177
Inventories 377,080 387,350
Other current assets 65,008 51,761
------ ------
Total current assets 1,111,884 1,277,370
Net property, plant and equipment 886,549 835,682
Restricted cash 2,310 2,261
Intangibles and other assets 85,206 111,189
------ -------
$2,085,949 $2,226,502
========== ==========
Liabilities and Equity
----------------------
Current liabilities:
Notes payable $161,083 $155,891
Trade payables and accrued
liabilities 449,535 527,898
Income taxes 2,342 4,725
Liabilities of discontinued
operations 35,568 -
Current portion of long-term debt 118,841 5,019
------- -----
Total current liabilities 767,369 693,533
Long-term debt 325,469 326,853
Postretirement benefits other than
pensions 246,170 238,533
Pension benefits 263,940 259,469
Other long-term liabilities 123,583 177,913
Long-term liabilities of
discontinued operations 9,905 -
Redeemable noncontrolling
shareholders' interest 62,720 1 60,344
Equity 286,793 1 469,857
------- -------
$2,085,949 $2,226,502
========== ==========
1 Amounts have been restated
2 Amounts do not add due to rounding.
These interim statements are subject to year-end adjustments.