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Cooper Tire & Rubber Co. (CTB)
Q2 2010 Earnings Call
August 5, 2010 11:00 am ET
Curtis Schneekloth - Director of IR
Roy Armes - Chairman, President and CEO
Brad Hughes - CFO
Rod Lache - Deutsche Bank Securities
Ravi Shanker - Morgan Stanley
John Murphy - Bank of America Merrill Lynch
Himanshu Patel - JPMorgan
Tony Cristello - BB&T Capital Markets
Derrick Winger - Jefferies & Co
Saul Ludwig - KeyBanc Capital Markets
Previous Statements by CTB
» Cooper Tire & Rubber Company Q1 2010 Earnings Call Transcript
» Cooper Tire & Rubber Company Q4 2009 Earnings Call Transcript
» Cooper Tire & Rubber Company Q3 2009 Earnings Call Transcript
Good morning everyone. Thanks for joining our call today. My name is Curtis Schneekloth and I serve as the company’s Director of Investor Relations. To begin with, I would like to remind you that during our conversation, you may hear forward-looking statements related to the future financial results and business operations of Cooper Tire. Actual results may differ materially from current management forecasts and projections as a result of factors over which the company has no control. Information on these risks and additional information on forward-looking statements are included in the press release in the company’s reports on file with the Securities and Exchange Commission.
With me today are Roy Armes, Chairman, Chief Executive Officer and President, and Brad Hughes, who serves as Chief Financial Officer and Vice President. In association with the press release which was sent out earlier this morning, we will provide an overview of the company’s second quarter operations and results. Following our prepared comments we’ll open the call to participants for a question-and-answer session.
Today’s call will begin with Roy providing an overview of the results. We’ll then turn it over to Brad for discussion on some of the detail by segment and comments on other matters. Roy will then summarize and provide comments on our outlook. Now let me turn the call over Roy Armes.
Thanks Curtis and good morning to everyone. Before we get into the review of the operations, I’ll mention that the impact of the 8-K we filed regarding re-statement of our financials will be covered a little bit later in the call by Brad Hughes. The re-statement is to comply with financial accounting and reporting requirements and it has no effect on the company’s assets, cash flow or net income. It also does not have a cumulative impact on the amount of earning per share available to common shareholders. This is also, there’s also no change to the operating performance result of any of Cooper’s joint ventures or the international segment.
Now with all that said, let me now start in with our comments on our operating results.
During the second quarter, we had a net income attributable to Cooper Tire & Rubber Company of $0.70 per share or $44 million. This amount includes $25 million of benefits related to discontinued operations and restructuring charges of $7 million, primarily related to the closure of the Albany, Georgia facility. This compares with a prior year second quarter loss of $13 million or $0.11 per share, which included $37 million of charges related to discontinued operations and $9 million of restructuring charges. 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.
Year-over-year results were impacted most significantly by volume improvements and increased raw material prices. We continue to have impressive growth in the top line as unit shipments increased 16% and revenues increased 27% on a year-over-year basis for the quarter. This is a result of our successful efforts to position the company for growth. We’re also pushing ahead in our efforts to improve our cost structure. The net benefit of improved leverage and manufacturing results were positive during the quarter versus the prior year. We operated at very high utilization rates during the quarter as we continued with the most aggressive volume ramp up in the company’s history.
We continue to be excited about the opportunities for Cooper going forward, but with that said, let me present our overview of the operations. On a consolidated basis, sales for the second quarter increased over the prior year’s second quarter by 27% to $804 million, driving the top line growth were significant volume increases and positive pricing and mix compared with the second quarter of 2009. We continued the positive sales trends started in the second half of 2009 and our volume performance was again ahead of the industry in the United States. This is the result of aligning ourselves with market demands through several different actions that we’ve taken. We’re benefiting from some of the positive industry trends that are occurring currently and have also launched new products that are achieving very solid market acceptance.
The international operations were also very positive in delivering a 13% growth in unit sales compared to the prior year. Operating profit for the second quarter was $34 million, compared with operating profit of $41 million for the same period last year.
Results for the quarter when compared with the prior year were driven by improved volumes which contributed $27 million and increased utilization and manufacturing capacity of $23 million. Partially offsetting the improvements were a negative net price and mix to raw materials relationship of $51 million and the non-recurrence of a $10 million benefit recorded during the prior year’s second quarter for the curtailment of pension related costs. Our international segment again provided strong results delivering $21 million in operating profit, an increase of $2 million over the second quarter of 2009.