Cooper Tire & Rubber Company Reports Fourth Quarter and Full Year 2019 Results

Cooper Tire & Rubber Company (NYSE: CTB) today reported full year 2019 net income of $96 million, or diluted earnings per share of $1.91, compared with $77 million, or $1.51 per share, last year.

Full Year 2019 Highlights

  • Unit volume decreased 3.9 percent compared to 2018.
  • Net sales were $2.75 billion compared to $2.81 billion the prior year.
  • Operating profit was $174 million, or 6.3 percent of net sales, compared to $165 million, or 5.9 percent of net sales, in 2018.

Fourth Quarter Highlights

  • Unit volume decreased 2.6 percent compared to the fourth quarter of 2018.
  • Net sales decreased 2.6 percent to $750 million.
  • Operating profit was $64 million, or 8.5 percent of net sales, compared to $25 million, or 3.2 percent of net sales, in 2018.
  • Net income was $51 million, or $1.02 per share.

“Cooper has made a great deal of progress on the strategic initiatives we outlined at our May 2018 Investor Day,” said President & Chief Executive Officer Brad Hughes. “With a focus on the consumer, we have continued to execute a physical and e-commerce retail expansion effort that now has Cooper products available in the top five tire retailers in the U.S. We have improved our product mix through a continued focus on high value-add tires, forged ahead into the original equipment (OE) space with Mercedes-Benz as a key customer, and delivered a strong cadence of compelling new products. To enhance the competitiveness of our global manufacturing footprint, we shifted production from our Melksham facility to other lower cost plants, acquired full ownership of our Mexico facility to further develop the full potential of the plant, and opened a new truck and bus radial tire (TBR) joint venture plant in Asia. In addition, we have enhanced our TBR tire business by launching the Cooper brand, which won key OE fitments with Blue Bird school buses. Cooper is also building out a digital marketing capability and increasing brand awareness through a new advertising campaign.

“Our teams around the globe are aligned in executing our strategic plan and delivered improved operating profit and operating profit margin, as well as increased cash flows in 2019, allowing us to continue to fund our strategic initiatives. All of this was achieved in the face of net new tariffs and restructuring costs resulting from our footprint actions.

“Focusing on the fourth quarter, our operating results were in line with our expectations. Operating profit margin improved on both a year-over-year and sequential basis. We saw volume declines in all regions as global tire markets continued to be affected by unfavorable economic and political factors. Yet, in our core U.S. market, light vehicle tire volume was in line with the industry, and in Asia, third party sales were up compared to last year. We have the momentum to continue to make even greater progress on our strategic initiatives and derive even more positive results in 2020. It’s an exciting time of positive transformation at Cooper, and we look forward to building on what we have achieved to deliver value in 2020 and beyond.”

Consolidated Results

Cooper Tire

Q4 2019 ($M)

 

Q4 2018 ($M)

 

Change

 

2019 ($M)

 

2018 ($M)

 

Change

Net Sales

$

750

 

$

770

 

(2.6

%)

$

2,753

 

$

2,808

 

(2.0

%)

Operating Profit

$

64

 

$

25

 

156.0

%

$

174

 

$

165

 

5.5

%

Operating Margin

8.5

%

3.2

%

5.3

ppts.

6.3

%

5.9

%

0.4

ppts.

Fourth quarter net sales were $750 million compared with $770 million in the fourth quarter of 2018, a decrease of 2.6 percent. Fourth quarter net sales were negatively impacted by $20 million of lower unit volume. Operating profit was $64 million compared with $25 million in the fourth quarter of 2018. Key drivers included:

  • $34 million benefit from non-recurrence of a goodwill impairment charge in the fourth quarter of 2018.
  • $10 million favorable net tariff impact, which included a $20 million benefit from duty drawbacks, partially offset by $10 million of higher costs related to new tariffs on products imported into the United States from China compared to the same period a year ago.
  • $24 million of favorable raw material costs (excluding the new tariffs) and $1 million of favorable price and mix.
  • $19 million of higher manufacturing costs, $3 million of lower volume, $3 million of higher product liability expense and $5 million of higher other costs.

Cooper's fourth quarter raw material index decreased 9.3 percent compared to the fourth quarter of 2018. The raw material index decreased 4.6 percent sequentially from 157.1 in the third quarter of 2019 to 149.8 in the fourth quarter of 2019.

The effective tax rate for the fourth quarter was (19.3) percent compared with 96.3 percent for the same period the prior year. The tax rate for the fourth quarter of 2019 included a $19 million discrete tax benefit resulting from planning actions involving the company's European tax structure. Excluding this discrete tax item, the effective tax rate would have been 22.7 percent in the fourth quarter of 2019. Excluding the goodwill impairment charge in the fourth quarter of 2018, the effective tax rate would have been 25.2 percent.

At the end of the fourth quarter, Cooper had $391 million in unrestricted cash and cash equivalents compared with $356 million at the end of the fourth quarter of 2018. Capital expenditures in the fourth quarter were $47 million, compared with $49 million in the same period a year ago. Full year capital expenditures were $203 million, which included investments in Serbia, compared with $193 million in the same period a year ago. In addition, during 2019, the company invested $49 million in ACTR Company Limited, its new joint venture with Sailun Vietnam.

Cooper generated a return on invested capital of 8.0 percent for the trailing four quarters.

Americas Tire Operations

 

Americas Tire Operations

Q4 2019 ($M)

 

Q4 2018 ($M)

 

Change

 

2019 ($M)

 

2018 ($M)

 

Change

Net Sales

$

655

 

$

664

 

(1.4

%)

$

2,354

 

$

2,363

 

(0.4

%)

Operating Profit

$

84

 

$

70

 

19.6

%

$

238

 

$

230

 

3.5

%

Operating Margin

12.9

%

10.6

%

2.3

ppts.

10.1

%

9.7

%

0.4

ppts.

 

Fourth quarter net sales in the Americas segment decreased 1.4 percent as a result of $15 million of lower unit volume, partially offset by $5 million of favorable price and mix and $1 million of favorable foreign currency impact. For the quarter, segment unit volume was down 2.2 percent compared to the same period a year ago.

Cooper’s fourth quarter total light vehicle tire shipments in the U.S. decreased 0.1 percent. The U.S. Tire Manufacturers Association (USTMA) reported that its member shipments of light vehicle tires in the U.S. were flat. Total industry shipments (including an estimate for non-USTMA members) increased 0.1 percent for the period.

Fourth quarter operating profit was $84 million, or 12.9 percent of net sales, compared with $70 million, or 10.6 percent of net sales, for the same period in 2018. Operating profit included $2 million of favorable price and mix, $16 million of favorable raw material costs (excluding the new tariffs), and $1 million of favorable SG&A. The quarter also included $10 million favorable net tariff impact resulting from a $20 million benefit from duty drawbacks, partially offset by $10 million of higher costs related to new tariffs. This was partially offset by $11 million of unfavorable manufacturing, $3 million of higher product liability expense, and $1 million of lower volume compared to the same period a year ago.

International Tire Operations

 

International Tire Operations

Q4 2019 ($M)

 

Q4 2018 ($M)

 

Change

 

2019 ($M)

 

2018 ($M)

 

Change

Net Sales

$

119

 

$

149

 

(20.1

%)

$

534

 

$

641

 

(16.7

%)

Operating Loss

$

(6

)

$

(33

)

82.1

%

$

(13

)

$

(14

)

4.7

%

Operating Margin

(5.0

%)

(22.2

)%

17.2

ppts.

(2.5

)%

(2.2

)%

(0.3

) ppts.

Fourth quarter net sales in the International segment decreased 20.1 percent as a result of $25 million of lower unit volume, $3 million of unfavorable price and mix and $2 million of unfavorable foreign currency impact. Segment unit volume decreased 16.9 percent driven primarily by lower intercompany shipments.

The segment's fourth quarter operating loss was $6 million compared with an operating loss of $33 million in the fourth quarter of 2018. The quarter included $7 million of favorable raw material costs, offset by $8 million of manufacturing, $2 million of volume, $1 million of price and mix, $1 million of restructuring and $2 million of other costs compared to the same period a year ago. The fourth quarter of 2018 also included a $34 million goodwill impairment charge, positively impacting the year-over-year comparison.

Outlook

“We are optimistic about 2020 as our business model remains strong and our strategic initiatives continue to gain momentum," said Hughes.

Full year 2020 expectations include:

  • A modest global unit volume increase compared to 2019, including in the U.S.
  • Operating profit margin that improves during the year, with the second half better than the first half, and the full year exceeding 2019.
  • An effective tax rate, excluding significant discrete items, of approximately 25 percent.
  • Capital expenditures that will range between $260 and $280 million. This includes investments in Serbia and Mexico.

Management anticipates first half 2020 operating profit margin to be impacted by typical seasonality and certain unique items which are included in the full year outlook:

  • Approximately $10 million of restructuring charges related to the transition at the company's Mexico manufacturing facility, which will occur primarily in the first quarter of 2020.
  • Higher manufacturing costs in Latin America, Europe and Asia related to both market conditions and the company's footprint actions.
  • Higher SG&A expenses, including the impact of the timing of advertising spend.

Expectations do not include tariff rate changes or additional tariffs that continue to be considered, but have not yet been imposed. The outlook for 2020 also does not include the impact of the coronavirus.

Fourth Quarter and Full Year 2019 Conference Call Today at 10 a.m. Eastern

Management will discuss the financial and operating results for the fourth quarter and full year, as well as the company’s business outlook, on a conference call for analysts and investors today at 10 a.m. EST. The call may be accessed on the investor relations page of the company’s website at http://coopertire.com/Investors.aspx or at https://services.choruscall.com/links/ctb200224.html. Following the conference call, the webcast will be archived and available for 90 days at these websites.

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

Forward-Looking Statements

This release contains what the company believes are “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995, regarding projections, expectations or matters the company anticipates may happen with respect to the future performance of the industries in which it operates, the economies of the U.S. and other countries, or the performance of the company itself, which involve uncertainty and risk. Such forward-looking statements are generally, though not always, preceded by words such as “anticipates,” “expects,” “will,” “should,” “believes,” “projects,” “intends,” “plans,” “estimates,” and similar terms that connote a view to the future and are not merely recitations of historical fact. Such statements are made solely on the basis of the company’s current views and perceptions of future events, and there can be no assurance that such statements will prove to be true.

It is possible that actual results may differ materially from projections or expectations due to a variety of factors, including, but not limited to:

  • volatility in raw material and energy prices, including those of rubber, steel, petroleum-based products and natural gas or the unavailability of such raw materials or energy sources;
  • the failure of the company’s suppliers to timely deliver products or services in accordance with contract specifications;
  • changes to tariffs or trade agreements, or the imposition of new or increased tariffs or trade restrictions, imposed on tires, raw materials or manufacturing equipment which the company uses, including changes related to tariffs on tires, raw materials and tire manufacturing equipment imported into the U.S. from China or other countries;
  • the impact of labor problems, including labor disruptions at the company, its joint ventures, or at one or more of its large customers or suppliers;
  • changes in economic and business conditions in the world, including changes related to the United Kingdom’s decision to withdraw from the European Union;
  • the inability to obtain and maintain price increases to offset higher production, tariffs, raw material or energy costs;
  • pandemics, such as a coronavirus, and the related impact on the company's operations, distribution channels, customers and suppliers;
  • a disruption in, or failure of, the company’s information technology systems, including those related to cybersecurity, could adversely affect the company’s business operations and financial performance;
  • increased competitive activity, including actions by larger competitors or lower-cost producers;
  • the failure to achieve expected sales levels;
  • changes in the company’s customer or supplier relationships or distribution channels, including the write-off of outstanding accounts receivable or loss of particular business for competitive, credit, liquidity, bankruptcy, restructuring or other reasons;
  • the failure to develop technologies, processes or products needed to support consumer demand or changes in consumer behavior, including changes in sales channels;
  • the costs and timing of restructuring actions and impairments or other charges resulting from such actions, including restructuring and related actions in Europe and at the company's manufacturing facility in Mexico, after the company's purchase of the remaining noncontrolling interest in such facility in January, or from adverse industry, market or other developments;
  • consolidation or other cooperation by and among the company’s competitors or customers;
  • inaccurate assumptions used in developing the company’s strategic plan or operating plans, or the inability or failure to successfully implement such plans or to realize the anticipated savings or benefits from strategic actions;
  • risks relating to investments and acquisitions, including the failure to successfully integrate them into operations or their related financings may impact liquidity and capital resources;
  • the ultimate outcome of litigation brought against the company, including product liability claims, which could result in commitment of significant resources and time to defend and possible material damages against the company or other unfavorable outcomes;
  • the failure to successfully ramp up production at the company's new ACTR joint venture to produce TBR tires according to plans, and the ability to find and develop alternative sources for TBR products;
  • government regulatory and legislative initiatives including environmental, healthcare, privacy and tax matters;
  • volatility in the capital and financial markets or changes to the credit markets and/or access to those markets;
  • changes in interest or foreign exchange rates or the benchmarks used for establishing the rates;
  • an adverse change in the company’s credit ratings, which could increase borrowing costs and/or hamper access to the credit markets;
  • failure to implement information technologies or related systems, including failure by the company to successfully implement ERP systems;
  • the risks associated with doing business outside of the U.S.;
  • technology advancements;
  • the inability to recover the costs to refresh existing products or develop and test new products or processes;
  • failure to attract or retain key personnel;
  • changes in pension expense and/or funding resulting from the company’s pension strategy, investment performance of the company’s pension plan assets and changes in discount rate or expected return on plan assets assumptions, changes to participant behavior, or changes to related accounting regulations;
  • changes in the company’s relationship with its joint venture partners or suppliers, including any changes with respect to its former PCT joint venture's production of TBR products;
  • tax-related issues, including the ability to support certain tax positions, the impact of tax reform legislation and the inability to utilize deferred tax assets;
  • a variety of factors, including market conditions, may affect the actual amount expended on stock repurchases; the company’s ability to consummate stock repurchases; changes in the company’s results of operations or financial conditions or strategic priorities may lead to a modification, suspension or cancellation of stock repurchases, which may occur at any time;
  • the inability to adequately protect the company’s intellectual property rights.

It is not possible to foresee or identify all such factors. Any forward-looking statements in this release are based on certain assumptions and analyses made by the company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Prospective investors are cautioned that any such statements are not a guarantee of future performance and actual results or developments may differ materially from those projected.

The company makes no commitment to update any forward-looking statement included herein or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement. Further information covering issues that could materially affect financial performance is contained in the company’s filings with the U.S. Securities and Exchange Commission (“SEC”).

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures as defined under SEC rules. Non-GAAP financial measures should be considered in addition to, not as a substitute for, other financial measures prepared in accordance with generally accepted accounting principles (“GAAP”). The company’s methods of determining these non-GAAP financial measures may differ from the methods used by other companies for these or similar non-GAAP financial measures. Accordingly, these non-GAAP financial measures may not be comparable to measures used by other companies. As required by SEC rules, detailed reconciliations between the company’s GAAP and non-GAAP financial results are provided on the attached schedule. The company uses an adjusted provision for income taxes to evaluate the performance of the company's operations exclusive of items affecting comparability of results from period to period. The company believes that information about the provision for income taxes exclusive of these items is useful to investors, particularly where the impact of the excluded items is significant in relation to reported earnings, because the measure allows for the comparability between periods of the operating performance of the company's business and allows investors to evaluate the impact of the excluded items separately from the impact of the operations of the business. The company believes return on invested capital (“ROIC”) provides additional insight for analysts and investors in evaluating the company’s financial and operating performance. The company defines ROIC as the trailing four quarters’ after tax operating profit, utilizing the company’s adjusted effective tax rate, divided by the total invested capital, which is the average of ending debt and equity for the last five quarters. The company believes ROIC is a useful measure of how effectively the company uses capital to generate profits.

About Cooper Tire & Rubber Company

Cooper Tire & Rubber Company (NYSE: CTB) is the parent company of a global family of companies that specializes in the design, manufacture, marketing and sale of passenger car, light truck, medium truck, motorcycle and racing tires. Cooper's headquarters is in Findlay, Ohio, with manufacturing, sales, distribution, technical and design operations within its family of companies located in more than one dozen countries around the world. For more information on Cooper, visit www.coopertire.com, www.facebook.com/coopertire or www.twitter.com/coopertire.

Cooper Tire & Rubber Company

Consolidated Statements of Income

 

 

 

 

 

 

 

 

 

(Dollar amounts in thousands except per share amounts)

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

(Unaudited)

 

Twelve Months Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Net sales

 

$

750,212

 

 

$

770,487

 

 

$

2,752,639

 

 

$

2,808,062

 

Cost of products sold

 

618,688

 

 

645,849

 

 

2,319,349

 

 

2,364,769

 

Gross profit

 

131,524

 

 

124,638

 

 

433,290

 

 

443,293

 

Selling, general and administrative expense

 

66,599

 

 

65,985

 

 

250,017

 

 

244,221

 

Restructuring expense

 

1,342

 

 

 

 

8,818

 

 

 

Goodwill impairment charge

 

 

 

33,827

 

 

 

 

33,827

 

Operating profit

 

63,583

 

 

24,826

 

 

174,455

 

 

165,245

 

Interest expense

 

(7,590

)

 

(8,142

)

 

(31,189

)

 

(32,181

)

Interest income

 

2,571

 

 

3,514

 

 

9,458

 

 

10,216

 

Other pension and postretirement benefit expense

 

(13,355

)

 

(6,921

)

 

(41,567

)

 

(27,806

)

Other non-operating expense

 

(892

)

 

(1,288

)

 

(1,485

)

 

(1,416

)

Income before income taxes

 

44,317

 

 

11,989

 

 

109,672

 

 

114,058

 

Income tax (benefit) provision

 

(8,554

)

 

11,550

 

 

11,355

 

 

33,495

 

Net income

 

52,871

 

 

439

 

 

98,317

 

 

80,563

 

Net income attributable to noncontrolling shareholders' interests

 

1,612

 

 

858

 

 

1,913

 

 

3,977

 

Net income attributable to Cooper Tire & Rubber Company

 

$

51,259

 

 

$

(419

)

 

$

96,404

 

 

$

76,586

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.02

 

 

$

(0.01

)

 

$

1.92

 

 

$

1.52

 

Diluted

 

$

1.02

 

 

$

(0.01

)

 

$

1.91

 

 

$

1.51

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (000s):

 

 

 

 

 

 

 

 

Basic

 

50,189

 

 

50,073

 

 

50,159

 

 

50,350

 

Diluted

 

50,420

 

 

50,344

 

 

50,378

 

 

50,597

 

 

 

 

 

 

 

 

 

 

Segment information:

 

 

 

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

Americas Tire

 

$

654,526

 

 

$

664,138

 

 

$

2,353,726

 

 

$

2,362,646

 

International Tire

 

119,434

 

 

149,492

 

 

534,003

 

 

640,976

 

Eliminations

 

(23,748

)

 

(43,143

)

 

(135,090

)

 

(195,560

)

 

 

 

 

 

 

 

 

 

Operating profit (loss):

 

 

 

 

 

 

 

 

Americas Tire

 

$

84,209

 

 

$

70,432

 

 

$

237,753

 

 

$

229,500

 

International Tire

 

(5,924

)

 

(33,124

)

 

(13,390

)

 

(14,044

)

Unallocated corporate charges

 

(15,186

)

 

(13,376

)

 

(49,968

)

 

(51,564

)

Eliminations

 

484

 

 

894

 

 

60

 

 

1,353

 

Cooper Tire & Rubber Company

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

(Dollar amounts in thousands)

 

 

 

 

 

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

391,332

 

 

$

356,254

 

Notes receivable

 

535

 

 

5,737

 

Accounts receivable

 

544,257

 

 

546,905

 

Inventories

 

464,221

 

 

479,980

 

Other current assets

 

52,635

 

 

67,856

 

Total current assets

 

1,452,980

 

 

1,456,732

 

 

 

 

 

 

Property, plant and equipment, net

 

1,047,242

 

 

1,001,921

 

Operating lease right-of-use assets, net

 

80,752

 

 

 

Goodwill

 

18,851

 

 

18,851

 

Intangibles, net

 

111,356

 

 

120,321

 

Deferred income tax assets

 

29,336

 

 

28,146

 

Investment in joint venture

 

48,912

 

 

 

Other assets

 

12,909

 

 

8,234

 

Total assets

 

$

2,802,338

 

 

$

2,634,205

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Notes payable

 

$

12,296

 

 

$

15,288

 

Accounts payable

 

276,732

 

 

286,671

 

Accrued liabilities

 

302,477

 

 

282,650

 

Income taxes payable

 

2,304

 

 

975

 

Current portion of long-term debt and finance leases

 

10,265

 

 

174,760

 

Total current liabilities

 

604,074

 

 

760,344

 

 

 

 

 

 

Long-term debt and finance leases

 

309,148

 

 

121,284

 

Noncurrent operating leases

 

55,371

 

 

 

Postretirement benefits other than pensions

 

227,216

 

 

236,454

 

Pension benefits

 

126,707

 

 

147,950

 

Other long-term liabilities

 

149,065

 

 

135,730

 

Deferred income tax liabilities

 

3,024

 

 

 

Total parent stockholders' equity

 

1,264,625

 

 

1,172,043

 

Noncontrolling shareholders' interests in consolidated subsidiaries

 

63,108

 

 

60,400

 

Total liabilities and equity

 

$

2,802,338

 

 

$

2,634,205

 

Cooper Tire & Rubber Company

Consolidated Statements of Cash Flows

 

(Dollar amounts in thousands)

 

 

 

 

 

 

Twelve Months Ended December 31,

 

 

2019

 

2018

Operating activities:

 

 

Net income

 

$

98,317

 

 

$

80,563

 

Adjustments to reconcile net income to net cash provided by operations:

 

 

 

 

Depreciation and amortization

 

148,054

 

 

147,161

 

Deferred income taxes

 

1,746

 

 

30,519

 

Stock-based compensation

 

4,362

 

 

4,852

 

Change in LIFO inventory reserve

 

2,548

 

 

(3,026

)

Amortization of unrecognized postretirement benefits

 

36,446

 

 

36,662

 

Goodwill impairment charge

 

 

 

33,827

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts and notes receivable

 

8,980

 

 

(19,729

)

Inventories

 

14,355

 

 

27,438

 

Other current assets

 

15,261

 

 

(2,080

)

Accounts payable

 

9,809

 

 

10,646

 

Accrued liabilities

 

(4,517

)

 

7,635

 

Pension and postretirement benefits

 

(49,714

)

 

(77,883

)

Other items

 

4,946

 

 

(18,147

)

Net cash provided by operating activities

 

290,593

 

 

258,438

 

Investing activities:

 

 

 

 

Additions to property, plant and equipment and capitalized software

 

(202,722

)

 

(193,299

)

Investment in joint venture

 

(49,001

)

 

 

Proceeds from the sale of assets

 

119

 

 

160

 

Net cash used in investing activities

 

(251,604

)

 

(193,139

)

Financing activities:

 

 

 

 

Issuances of short-term debt

 

12,296

 

 

15,288

 

Repayment of short-term debt

 

(15,288

)

 

(39,450

)

Issuance of long-term debt

 

200,000

 

 

 

Repayment of long-term debt and finance lease obligations

 

(177,251

)

 

(1,395

)

Payment of financing fees

 

(2,207

)

 

(1,230

)

Repurchase of common stock

 

 

 

(30,183

)

Payments of employee taxes withheld from share-based awards

 

(1,376

)

 

(2,111

)

Payment of dividends to Cooper Tire & Rubber Company stockholders

 

(21,068

)

 

(21,138

)

Issuance of common shares related to stock-based compensation

 

232

 

 

306

 

Net cash used in financing activities

 

(4,662

)

 

(79,913

)

Effects of exchange rate changes on cash

 

552

 

 

554

 

Net change in cash, cash equivalents and restricted cash

 

34,879

 

 

(14,060

)

Cash, cash equivalents and restricted cash at beginning of period

 

378,246

 

 

392,306

 

Cash, cash equivalents and restricted cash at end of period

 

$

413,125

 

 

$

378,246

 

 

 

 

 

 

Cash and cash equivalents

 

$

391,332

 

 

$

356,254

 

Restricted cash included in Other current assets

 

20,305

 

 

19,967

 

Restricted cash included in Other assets

 

1,488

 

 

2,025

 

Total cash, cash equivalents and restricted cash

 

$

413,125

 

 

$

378,246

 

Cooper Tire & Rubber Company

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

 

 

 

 

(Dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

ADJUSTED PROVISION FOR INCOME TAXES

 

 

 

 

 

Three Months Ended December 31, 2019

 

Income before
income taxes

 

Income tax (benefit)
provision

 

Effective tax rate

Reported (GAAP)

$

44,317

$

(8,554

)

(19.3

)%

Income tax overlay

18,606

 

 

Adjusted (Non-GAAP)

$

44,317

$

10,052

 

22.7

%

 

 

 

 

 

Year Ended December 31, 2019

 

Income before
income taxes

 

Income tax provision

 

Effective tax rate

Reported (GAAP)

$

109,672

$

11,355

 

10.4

%

Income tax overlay

18,606

 

 

Adjusted (Non-GAAP)

$

109,672

$

29,961

 

27.3

%

 

 

 

 

 

Three Months Ended December 31, 2018

 

Income before
income taxes

 

Income tax provision

 

Effective tax rate

Reported (GAAP)

$

11,989

$

11,550

 

96.3

%

Goodwill impairment charge

33,827

 

 

Adjusted (Non-GAAP)

$

45,816

$

11,550

 

25.2

%

 

 

 

 

 

Year Ended December 31, 2018

 

Income before
income taxes

 

Income tax provision

 

Effective tax rate

Reported (GAAP)

$

114,058

$

33,495

 

29.4

%

Goodwill impairment charge

33,827

 

 

Adjusted (Non-GAAP)

$

147,885

$

33,495

 

22.6

%

 

 

 

 

RETURN ON INVESTED CAPITAL (ROIC)

 

 

Trailing Four Quarters Ended December 31, 2019

Calculation of ROIC

 

 

 

 

 

Calculation of Net Interest Tax Effect

Operating profit

 

 

 

$

174,455

 

Adjusted (Non-GAAP) provision for income taxes (c)

 

$

29,961

 

Adjusted (Non-GAAP) effective tax rate

 

27.3

%

 

 

Income before income taxes (d)

 

$

109,672

 

Income tax expense on operating profit

 

47,659

 

 

 

Adjusted (Non-GAAP) effective income tax rate (c)/(d)

 

27.3

%

Adjusted operating profit after taxes (a)

 

 

 

126,796

 

 

 

 

 

 

Total invested capital (b)

 

 

 

$

1,582,749

 

 

 

 

 

 

ROIC, including noncontrolling equity (a)/(b)

 

 

 

8.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Invested Capital (five quarter average)

Equity

 

Long-term
debt and
finance leases

Current portion
of long-term
debt and finance
leases

 

Notes
payable

 

Total
invested
capital

 

 

December 31, 2019

 

$

1,327,733

 

$

309,148

 

$

10,265

 

$

12,296

 

$

1,659,442

 

 

September 30, 2019

 

1,268,463

 

120,657

 

173,578

 

16,188

 

1,578,886

 

 

June 30, 2019

 

1,254,026

 

120,624

 

173,766

 

19,656

 

1,568,072

 

 

March 31, 2019

 

1,248,218

 

121,305

 

173,974

 

20,074

 

1,563,571

 

 

December 31, 2018

 

1,232,443

 

121,284

 

174,760

 

15,288

 

1,543,775

 

 

Five quarter average

 

$

1,266,177

 

$

158,604

 

$

141,269

 

$

16,700

 

$

1,582,749