Cooper Tire & Rubber Company (CTB)

CTB 
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Cooper Tire & Rubber Co. (CTB)

Q4 2012 Results Earnings Call

February 25, 2013 11:00 AM ET

Executives

Jerry Long - Assistant Treasurer, IR

Roy Armes - Chairman, President and CEO

Brad Hughes - Chief Financial Officer

Analysts

Pat Nolan - Deutsche Bank

Ravi Shanker - Morgan Stanley

Aditya Oberoi - Goldman Sachs

Bret Jordan - BB&T Capital Markets

John Murphy - Merrill Lynch

Anthony Deem - KeyBank Capital Markets

Presentation

Operator

Good morning. My name is Lacy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cooper Tire Fourth Quarter 2012 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I would now like to turn the call over to Jerry Long of Investor Relations. Please go ahead, sir.

Jerry Long

Thank you, Lacy. Good morning everyone and thank you for joining our call today. My name is Jerry Long and I serve as the company's Assistant Treasurer responsible for Investor Relations.

To begin with, I would like to remind you that during our conversation today, you may hear forward-looking statements related to the future financial results and business operations of Cooper Tire & Rubber Company. Actual results may differ materially from current management forecasts and projections.

Such differences may be a result of factors over which the company has limited or no control. Information on these risk factors and additional information on forward-looking statements are included in the press release and in the company's reports on file with the Securities and Exchange Commission.

With me today are Roy Armes, Chairman, CEO and President; and Brad Hughes, our Chief Financial Officer.

In association with the press release, which was sent out earlier this morning, we will provide an overview of the company's quarterly operations and results. The press release contains a link to a set of slides that are a summary of information included in the press release and 10-K that will be filed with the SEC. These slides are intended to help investors and analysts quickly obtain information. They will not be used as the focus of today's call.

Following our prepared comments, we will open the call to participants for a question-and-answer session. Questions may also be directed to our email address, which is investorrelations@cooppertire.com.

Today's call will begin with Roy providing an overview of our results. He will then turn it over to Brad for a detailed review of our quarterly results. Roy will then summarize and provide comments on our outlook.

Now, let me turn the call over to Roy Armes.

Roy Armes

Yeah. Thanks, Jerry, and good morning. I’m pleased to report Cooper finished 2012 with a strong fourth quarter which capped off a great year for the company. While it was a challenging time in our industry and the global -- and in the global economy, I’m proud to say that Cooper Tire rose to the challenge in 2012 and continue to deliver strong results for our stakeholders.

In fact, we generated record net sales and operating profits for the fourth quarter and for the full year 2012, and demonstrated that our company can achieve growth in less than ideal market condition by being focused, agile and pursuing our goals with a sense of urgency.

Our people around the world stepped up and performed despite many obstacles. I want to start out today by thanking our employees for supporting our strategic plan and continuing to effectively execute against that plan throughout 2012.

Our record results continue to display this execution and performance. Consolidated net sales for the quarter were $1.1 billion, a 2% increase over the fourth quarter last year and a company record for any fourth quarter.

This increase was driven by 4% increase in total company unit volumes, compared to the same period last year. And on a full year basis we achieved record net sales of $4.2 billion, an increase of 7% over 2011.

North America unit volumes increased 2% compared with prior year fourth quarter and growth was driven primarily by increased shipment volumes in Mexico. U.S. total light vehicle units were about flat compared to RMA member shipments declining 3% and total industry volumes increasing 2%. The TBR unit volumes increased 12% outpacing the performance of the industry and our RMA member companies.

Unit volumes in our International segment increased 8% from the same period a year ago and within this segment European volumes increased 23% compared to the same period last year let by incremental volumes from our operation in Serbia.

Total Asia unit volumes declined by 2% in the fourth quarter reflecting primarily lower passenger tire exports, including intercompany shipments and despite overall slow growth conditions in China, our domestic PCR volumes outpaced the industry driven by our house brand products. TBR unit shipments including export and intercompany increased 6% in the fourth quarter.

Operating profit for the total company in the fourth quarter was a record $124 million, or 11.7% of net sales, compared with $60 million or 5.7% for the same period last year and for the full year, operating profit was $397 million or 9.5% of net sales.

North America segment operating profit was $103 million or 12.7% in net sales and International segment operating profit was $32 million or 9.4% of net sales.

Earnings were $1.15 per share, compared to $0.51 per share for the same period last year and this includes the one-time non-cash net income increase of $177 million, or $2.82 per share in 2011 that was due to the release of most of the valuation allowance against our U.S. deferred tax asset and related expense effects.

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