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Cooper Tire & Rubber Company (CTB)
Q4 2009 Earnings Call Transcript
March 2, 2010 11:00 am ET
Curtis Schneekloth – Director, IR
Roy Armes – Chairman, President and CEO
Brad Hughes – CFO
Tony Cristello – BB&T Capital Markets
Himanshu Patel – JPMorgan
Saul Ludwig – KeyBanc Capital Markets
John Murphy – Bank of America
Previous Statements by CTB
» Cooper Tire & Rubber Company Q3 2009 Earnings Call Transcript
» Cooper Tire & Rubber Q2 2009 Earnings Call Transcript
» Cooper Tire & Rubber Q1 2009 Call Transcript
Good morning, everyone. Thanks for joining the 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 today you may hear forward-looking statements related to future financial results and the business operations for Cooper Tire & Rubber Co.
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 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, Chief Executive Officer and President; and Brad Hughes, who serves as Chief Financial Officer. In association with the press release which was sent out earlier this morning, we’ll provide an overview of the company's fourth quarter operations and results, and the year-to-date operations and results. Following our prepared comment we will open the call to participants for a question-and-answer session.
The call will begin with Roy providing an overview of the results. He will then turn it over to Brad for a discussion of some of the details by segment and comments on other matters. Roy will then summarize and provide comments on outlook and we’ll finish with a question-and-answer period.
Now, let me turn the call over to Roy Armes.
Yeah. Thanks, Curtis. And good morning, and thanks to all of you for joining the call. During the fourth quarter we had a net income of $0.63 per share or $39 million. This includes restructuring charges, primarily related to the closure of the Albany, Georgia facility of about $12 million. This is a significant improvement over the prior year fourth quarter loss of $143 million or $2.44 per share.
The 2008 loss included 79, sorry, $76 million of restructuring charges and $31 million of goodwill write-off. Excluding these unusual items, our company operating profit improved by $129 million.
The demand for tires continued to stabilize during the quarter and the related indicator of miles driven in the United States our largest market showed positive improvement compared with the prior quarter.
Strong demand also continued in the Peoples Republic of China or PRC, as we continue to strengthen the foundation of our business and adapt to ever changing market conditions, we're still focused on our strategic plan. Improving our global cost structure, profitably increasing the topline and enhancing organizational capability should allow us to continue to deliver positive results.
We ceased production at our facility in Albany, Georgia in September and continue relocating equipment for installation in our other plants. Total restructuring charges are still expected to be around $135 to $140 million of which 60% to 70% should be non-cash.
To date we have incurred $125 million of restructuring costs, the majority of which were non-cash. The annual savings of the closure will be in the range of $75 to $80 million as previously communicated and this is being achieved by better optimization of the three remaining plants versus sub-optimizing the four U.S. facilities.
As we continue to move equipment and incur related expenses, there will be charges that continue into the second half of 2010. The majority of these charges are expected to be in the first quarter.
With that said, let me present an overview of the operations. On a consolidated basis, sales for the fourth quarter increased over the prior year fourth quarter by an impressive 22% to $773 million. Significant volume increases were offset by negative pricing and mix during the quarter and raw material costs were favorable during the fourth quarter on a year-over-year basis but have begun to increase markedly.
Our volume performance in the fourth quarter and second half was ahead of industry performance in the United States, this was a result of multiple factors, including the actions taken to better align ourselves with market demands. We have been actively been targeting new product launches into segments where we believe growth will occur. These new products have been well received by the market and in 2010, we plan to continue to release products in a rapid cadence. A good example of this is the new Weather-Master WSC snow tire where we recently completed a very successful ride and drive showcasing this product and we received extremely positive feedback about the performance from participants.
Operating profit for the fourth quarter was $60 million compared to operating losses of $164 million for the same period last year. Excluding the unusual items of goodwill write-off in 2008 and restructuring charges, our total company operating profit improved by $129 million. The largest drivers of this change were the impact of lower raw material costs, improved volumes and increased utilization of manufacturing capacity.