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Cooper Tire & Rubber Company$31.03$.351.14%

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 Cooper Tire & Rubber Company Reports Fourth Quarter and Full Year 2018 Results
   Tuesday, February 19, 2019 7:00:00 AM ET

FINDLAY, Ohio--(BUSINESS WIRE)-- Cooper Tire & Rubber Company (NYSE:CTB) today reported full year 2018 net income of $77 million, or diluted earnings per share of $1.51, compared with $95 million, or $1.81 per share, last year. The 2018 results included a $34 million goodwill impairment charge. Excluding the charge, diluted earnings per share would have been $2.18.

Full Year 2018 Highlights

  • Consolidated unit volume decreased 2.4 percent compared to the prior year.
  • Net sales were $2.81 billion compared to $2.85 billion the prior year.
  • Operating profit was $165 million, or 5.9 percent of net sales. Excluding the goodwill impairment charge, operating profit would have been $199 million, or 7.1 percent of net sales.


Fourth Quarter Highlights

  • Consolidated unit volume decreased 1.8 percent compared to the fourth quarter of 2017.
  • Net sales increased 1.8 percent to $770 million.
  • Operating profit was $25 million, or 3.2 percent of net sales. Excluding the goodwill impairment charge, operating profit would have been $59 million, or 7.6 percent of net sales.
  • Diluted loss was $0.01 per share. Excluding the goodwill impairment charge, diluted earnings per share would have been $0.66.

"Our fourth quarter operating margin, excluding the goodwill impairment charge, exceeded what we achieved in the third quarter, excluding the benefit from an adjustment of our product liability reserve model in that quarter. As stated at the beginning of 2018, we expected operating margin improvement throughout the year, and we delivered on this expectation as our strategic initiatives took hold," said President & Chief Executive Officer Brad Hughes.

"As projected, in the fourth quarter we drove unit volume growth in the U.S., which was offset by volume declines in our other regions, reflecting economic and political factors. Raw material costs improved sequentially, but were up on a year-over-year basis by nearly 8 percent.

"Additionally, we successfully implemented our plan to right-size inventory levels, reducing the number of inventory units in the Americas by over 10 percent in 2018. While this plan impacted our 2018 results through higher manufacturing costs, we believe this positions Cooper with the right level of inventory as we enter 2019.

“Moving forward, we expect to make continued progress on our strategic priorities in 2019, and believe underlying macro-conditions will support growth in tire demand, particularly in the U.S. As a result, we expect modest global unit volume growth for Cooper in 2019 and full year operating profit margin to improve compared with 2018. We are confident that our strategic plan remains the right path to achieve our goals and help drive shareholder value.”

Consolidated Results

                         
Cooper Tire      

Q4 2018
($M)

   

Q4 2017
($M)

    % Change    

2018
($M)

   

2017
($M)

    % Change
Net Sales $ 770 757 1.8 % $ 2,808 $ 2,855 (1.6 %)
Operating Profit $ 25 56 (55.9 %) $ 165 309 (46.6 %)
Operating Margin 3.2 % 7.4 % (4.2 ) ppts. 5.9 % 10.8 % (4.9 ) ppts.

Fourth quarter net sales were $770 million, an increase of 1.8 percent compared with $757 million in the fourth quarter of 2017. Fourth quarter net sales included $33 million of favorable price and mix, which was partially offset by $14 million of lower unit volume and $6 million of unfavorable foreign currency impact.

Fourth quarter 2018 operating profit was $25 million compared with $56 million for the same period in 2017. Goodwill impairment testing in the fourth quarter of 2018 resulted in a non-cash impairment charge of $34 million. Operating profit also included $12 million favorable price and mix, which was partially offset by $11 million of unfavorable raw material costs. Operating profit also included lower product liability costs of $6 million, $2 million of lower unit volume, higher SG&A expense of $2 million, higher manufacturing costs of $1 million and lower other costs of $1 million.

Regarding the goodwill impairment charge, the company announced in December a joint venture agreement with Sailun Vietnam to build a new truck and bus radial (TBR) tire production plant in Vietnam. The capacity created by this planned facility will decrease expected production requirements for Cooper’s Qingdao Ge Rui Da Rubber Co., Ltd. (GRT) joint venture in China, resulting in the goodwill impairment charge.

Cooper's fourth quarter raw material index increased 7.8 percent compared to the fourth quarter of 2017. The raw material index decreased sequentially from 168.8 in the third quarter of 2018 to 165.1 in the fourth quarter of 2018.

The effective tax rate for the fourth quarter was 96.3 percent, compared to 206.0 percent in the same period the prior year. Excluding the goodwill impairment charge, the effective tax rate would have been 25.2 percent in the fourth quarter of 2018. The effective tax rate for the fourth quarter of 2017, excluding discrete tax items, was 30.7 percent. The tax rate for the fourth quarter of 2018 includes the benefit of a lower blended U.S. statutory tax rate as a result of U.S. income tax reform, offset by approximately $2 million of net discrete expense items related to the accrual of additional uncertain tax positions.

Throughout 2018, the company focused on cash flow improvement by aligning production to demand, managing inventory levels, and taking other working capital actions. These actions resulted in improved cash flows, which enabled Cooper to improve the funding status of its U.S. pension plans.

At year end, Cooper had $356 million in cash and cash equivalents, compared with $372 million at the end of 2017. Capital expenditures in the fourth quarter were $49 million compared with $54 million in the same period the prior year.

The company generated a return on invested capital, excluding the impact of the goodwill impairment charge in the fourth quarter, of 10.0 percent for the trailing four quarters.

Americas Tire Operations

                         
Americas Tire Operations      

Q4 2018
($M)

   

Q4 2017
($M)

    % Change    

2018
($M)

   

2017
($M)

    % Change
Net Sales $ 664 $ 645 3.0% $ 2,363 $ 2,417 (2.2 %)
Operating Profit $ 70 $ 68 3.1% $ 230 $ 355 (35.4 %)
Operating Margin 10.6 % 10.6 % — ppts. 9.7 % 14.7 % (5.0 ) ppts.

Fourth quarter net sales in the Americas segment increased 3.0 percent as a result of $21 million of favorable price and mix, which was partially offset by $2 million of unfavorable foreign currency impact. For the quarter, segment unit volume was flat compared to the fourth quarter of 2017, with a unit volume increase in North America, which was offset by a decline in Latin America.

Cooper’s fourth quarter total light vehicle tire shipments in the United States increased 0.4 percent. The U.S. Tire Manufacturers Association (USTMA) reported that its member shipments of light vehicle tires in the U.S. were up 1.2 percent. Total industry shipments (including an estimate for non-USTMA members) increased 3.6 percent for the period.

Fourth quarter operating profit was $70 million, or 10.6 percent of net sales, compared with $68 million, or 10.6 percent of net sales in 2017. Operating profit was impacted by $9 million of favorable price and mix, which was offset by $9 million of unfavorable raw material costs. The quarter also included $6 million of favorable manufacturing costs and $6 million of lower product liability costs. These were partially offset by $11 million of unfavorable SG&A costs, including increased incentive compensation costs. Other costs decreased by $1 million.

International Tire Operations

                         
International Tire Operations      

Q4 2018
($M)

   

Q4 2017
($M)

    % Change    

2018
($M)

   

2017
($M)

    % Change
Net Sales $ 149 $ 162

(7.8

%)

$ 641 $ 619

3.6

%

Operating (Loss)/Profit $ (33 ) $ 7 (547.1 %)

$

(14

)

$ 15 (192.6 %)
Operating Margin (22.2 %) 4.6 % (26.8 ) ppts. (2.2 %) 2.5 % (4.7 ) ppts.

Fourth quarter net sales in the International segment decreased 7.8 percent as a result of $20 million of lower unit volume and $4 million of unfavorable foreign currency impact, which was partially offset by $11 million of favorable price and mix. Segment unit volume was down 12.3 percent, with decreased unit volume in both Asia and Europe.

Fourth quarter operating loss was $33 million compared with operating profit of $7 million in the fourth quarter of 2017. The decrease was driven by the goodwill impairment charge of $34 million. Additionally, the segment experienced $2 million of favorable price and mix, which was more than offset by $3 million of increased raw material costs. The quarter also included $3 million of lower SG&A, $6 million of unfavorable manufacturing costs and $2 million of lower unit volume.

Outlook

Full Year 2019:

  • Modest unit volume growth compared to 2018,
  • Improving operating profit margin throughout the year, with the full year exceeding 2018,
  • Effective tax rate in a range between 22 and 25 percent, and
  • Capital expenditures to range between $190 and $210 million. This does not include capital contributions related to Cooper’s pro rata share of the previously announced joint venture with Sailun Vietnam or other potential manufacturing footprint investments.

Management expects first quarter 2019 operating profit margin to be lower than the first quarter of 2018 as a result of typical seasonality and some unique items which will impact the first part of the year, including:

  • $10 to $15 million in restructuring charges related to ceasing light vehicle tire production in England,
  • Recently enacted tariffs on tires and raw materials imported into the U.S. from China, and
  • Economic conditions in China that continue to be challenging.

The 2019 expectations include tariffs already in place, but do not include rate changes or additional tariffs that continue to be considered, but have not yet been imposed.

“We are optimistic about 2019 as our business model is strong and our strategic initiatives continue to gain momentum," said Hughes. "We anticipate operating profit margin to improve throughout the year, with the full year expected to be better than 2018."

Fourth Quarter and Full Year 2018 Conference Call Today at 10 a.m. Eastern
Management will discuss the financial and operating results for the fourth quarter and full year 2018, 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/ctb190219.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 and full year 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 that the company anticipates may happen with respect to the future performance of the industries in which the company 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 tariffs or trade restrictions, imposed on tires or materials or manufacturing equipment which the company uses, including changes related to tariffs on automotive imports, as well as on tires, raw materials and tire manufacturing equipment imported into the U.S. from China;
  • 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 or material costs;
  • the impact of the recently enacted tax reform legislation;
  • 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 the possible outcome of the recently announced decision to cease light vehicle tire production in the U.K., 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, including impairment of goodwill supported by such 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;
  • 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;
  • 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;
  • 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;
  • 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, 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;
  • the ability to find and develop alternative sources for products supplied by PCT;
  • 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; and
  • the inability to use deferred tax assets.

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, operating profit, net income, earnings per share or 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 adjusted operating profit, net income, the provision for income taxes and earnings per share to evaluate the performance of the company's operations exclusive of certain items affecting comparability of results from period to period. The company believes that information about operating profit, net income, the provision for income taxes and earnings per share 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’ operating profit, after tax, 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 Operations
                 
(Dollar amounts in thousands except per share amounts)
Three Months Ended December 31,
(Unaudited) Year Ended December 31,
2018 2017 2018 2017
Net sales $ 770,487 $ 757,035 $ 2,808,062 $ 2,854,656
Cost of products sold 645,849   637,273   2,364,769   2,303,261  
Gross profit 124,638 119,762 443,293 551,395
Selling, general and administrative expense 65,985 63,493 244,221 242,148
Goodwill impairment charge 33,827     33,827    
Operating profit 24,826 56,269 165,245 309,247
Interest expense (8,142 ) (8,419 ) (32,181 ) (32,048 )
Interest income 3,514 2,029 10,216 7,362
Other pension and postretirement benefit expense (6,921 ) (9,425 ) (27,806 ) (37,523 )
Other non-operating expense (1,288 ) (1,645 ) (1,416 ) (3,113 )
Income before income taxes 11,989 38,809 114,058 243,925
Provision for income taxes 11,550   79,929   33,495   147,180  
Net income (loss) 439 (41,120 ) 80,563 96,745
Net income attributable to noncontrolling shareholders' interests 858   1,038   3,977   1,345  
Net (loss) income attributable to Cooper Tire & Rubber Company $ (419 ) $ (42,158 ) $ 76,586   $ 95,400  
 
Earnings (loss) per share:
Basic $ (0.01 ) $ (0.82 ) $ 1.52   $ 1.83  
Diluted $ (0.01 ) $ (0.82 ) $ 1.51   $ 1.81  
 
Weighted average shares outstanding (000s):
Basic 50,073 51,173 50,350 52,206
Diluted 50,344 51,566 50,597 52,673
 
Segment information:
Net Sales
Americas Tire $ 664,138 $ 644,639 $ 2,362,646 $ 2,416,778
International Tire 149,492 162,189 640,976 618,869
Eliminations (43,143 ) (49,793 ) (195,560 ) (180,991 )
 
Operating profit (loss):
Americas Tire $ 70,432 $ 68,333 $ 229,500 $ 355,059
International Tire (33,124 ) 7,410 (14,044 ) 15,168
Unallocated corporate charges (13,376 ) (19,060 ) (51,564 ) (59,153 )
Eliminations 894 (414 ) 1,353 (1,827 )
 
 
Cooper Tire & Rubber Company
Condensed Consolidated Balance Sheets
         
(Dollar amounts in thousands)
December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 356,254 $ 371,684
Notes receivable 5,737 13,753
Accounts receivable 546,905 528,250
Inventories 479,980 511,757
Other current assets 67,856   63,063
Total current assets 1,456,732 1,488,507
 
Property, plant and equipment, net 1,001,921 966,747
Goodwill 18,851 54,613
Intangibles 120,321 133,256
Restricted cash 2,025 1,422
Deferred income tax assets 28,146 58,665
Other assets 6,209   4,715
Total assets $ 2,634,205   $ 2,707,925
 
Liabilities and Equity
Current liabilities:
Notes payable $ 15,288 $ 39,450
Accounts payable 286,671 277,060
Accrued liabilities 282,650 280,666
Income taxes payable 975 6,954
Current portion of long-term debt 174,760   1,413
Total current liabilities 760,344 605,543
 
Long-term debt 121,284 295,987
Postretirement benefits other than pensions 236,454 256,888
Pension benefits 147,950 219,534
Other long-term liabilities 135,730 144,217
Total parent stockholders' equity 1,172,043 1,127,096
Noncontrolling shareholders' interests in consolidated subsidiaries 60,400   58,660
Total liabilities and equity $ 2,634,205   $ 2,707,925
 
 
Cooper Tire & Rubber Company
Consolidated Statements of Cash Flows
 
(Dollar amounts in thousands)          
Year Ended December 31,
2018 2017
Operating activities:
Net income $ 80,563 $ 96,745
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 147,161 140,228
Deferred income taxes 30,519 61,571
Stock-based compensation 3,868 4,009
Change in LIFO inventory reserve (3,026 ) 2,981
Amortization of unrecognized postretirement benefits 36,662 42,004
Goodwill impairment charge 33,827
Changes in operating assets and liabilities:
Accounts and notes receivable (19,729 ) (18,646 )
Inventories 27,438 (31,820 )
Other current assets (2,080 ) (15,648 )
Accounts payable 10,646 (31,217 )
Accrued liabilities 7,635 (12,226 )
Pension and postretirement benefits (77,883 ) (54,385 )
Other items (21,298 ) (5,972 )
Net cash from operating activities 254,303 177,624
Investing activities:
Additions to property, plant and equipment and capitalized software (193,299 ) (197,186 )
Proceeds from the sale of assets 160   278  
Net cash used in investing activities (193,139 ) (196,908 )
Financing activities:
Net payments on short-term debt (20,027 ) (1,507 )
Repayments of long-term debt (1,395 ) (2,421 )
Payment of financing fees (1,230 )
Repurchase of common stock (30,183 ) (90,868 )
Payments of employee taxes withheld from share-based awards (2,111 ) (7,002 )
Payment of dividends to noncontrolling shareholders (282 )
Payment of dividends to Cooper Tire & Rubber Company stockholders (21,138 ) (21,914 )
Issuance of common shares related to stock-based compensation 306   4,224  
Net cash used in financing activities (75,778 ) (119,770 )
Effects of exchange rate changes on cash 554   7,111  
Net change in cash, cash equivalents and restricted cash (14,060 ) (131,943 )
Cash, cash equivalents and restricted cash at beginning of year 392,306   524,249  
Cash, cash equivalents and restricted cash at end of year $ 378,246   $ 392,306  
 
       

Cooper Tire & Rubber Company

Reconciliation of Non-GAAP Financial Measures
(Unaudited)
                     
(Dollar amounts in thousands except per share amounts)
 
ADJUSTED EARNINGS
 
Three Months Ended December 31, 2018
Net Sales

Cost of
products
sold

Gross
profit

Selling,
general and
administrative
expense

Goodwill
impairment
charge

Operating
profit

Operating
profit %

Reported (GAAP) $ 770,487 $ 645,849 $ 124,638 $ 65,985 $ 33,827 $ 24,826 3.2 %
Goodwill impairment charge     (33,827 ) 33,827   4.4  
Adjusted (Non-GAAP) $ 770,487   $ 645,849 $ 124,638   $ 65,985 $   $ 58,653   7.6 %
 
 
Three Months Ended December 31, 2018

Income
before
income
taxes

Provision
for income
taxes

Effective
tax rate

Net income

Net income
attributable to
noncontrolling
shareholder
interests

Net (loss)
income
attributable
to Cooper
Tire &
Rubber
Company

Reported (GAAP) $ 11,989 $ 11,550 96.3 % $ 439 $ 858 $ (419 )
Goodwill impairment charge 33,827   71.1 % 33,827   33,827  
Adjusted (Non-GAAP) $ 45,816   $ 11,550 25.2 % $ 34,266 $ 858   $ 33,408  
 
 
Three Months Ended December 31, 2018

Net (loss)
income
attributable
to Cooper
Tire &
Rubber
Company

Weighted
average
number of
shares
outstanding
- Diluted

Diluted
earnings
(loss) per
share

Reported (GAAP) $ (419 ) 50,344 $ (0.01 )
Goodwill impairment charge 33,827   0.67  
Adjusted (Non-GAAP) $ 33,408   50,344 $ 0.66  
 
   
Cooper Tire & Rubber Company
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
                         
(Dollar amounts in thousands except per share amounts)
 
ADJUSTED EARNINGS
 
Year Ended December 31, 2018
Net Sales

Cost of
products
sold

Gross
profit

Selling,
general and
administrative
expense

Goodwill
impairment
charge

Operating
profit

Operating
profit %

Reported (GAAP) $ 2,808,062 $ 2,364,769 $ 443,293 $ 244,221 $ 33,827 $ 165,245 5.9 %
Goodwill impairment charge  

(33,827

)

33,827 1.2  
Adjusted (Non-GAAP) $ 2,808,062 $ 2,364,769 $ 443,293   $ 244,221 $   $ 199,072 7.1 %
 
 
Year Ended December 31, 2018

Income
before
income
taxes

Provision
for income
taxes

Effective
tax rate

Net income

Net income
attributable to
noncontrolling
shareholder
interests

Net income
attributable
to Cooper
Tire &
Rubber
Company

Reported (GAAP) $ 114,058 $ 33,495 29.4 % $ 80,563 $ 3,977 $ 76,586
Goodwill impairment charge 33,827 6.8 % 33,827   33,827
Adjusted (Non-GAAP) $ 147,885 $ 33,495 22.6 % $ 114,390 $ 3,977   $ 110,413
 
 
Year Ended December 31, 2018

Net income
attributable
to Cooper
Tire &
Rubber
Company

Weighted
average
number of
shares
outstanding -
Diluted

Diluted
earnings
per share

Reported (GAAP) $ 76,586 50,597 $ 1.51
Goodwill impairment charge 33,827 0.67  
Adjusted (Non-GAAP) $ 110,413 50,597 $ 2.18  
 
 
Cooper Tire & Rubber Company
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
                             
(Dollar amounts in thousands except per share amounts)
 
ADJUSTED PROVISION FOR INCOME TAXES AND EPS
 
Three Months Ended December 31, 2017

Income
before
income
taxes

Provision
for income
taxes

Net (loss)
income

Net income
attributable to
noncontrolling
shareholders'
interests

Net (loss)
income
attributable to
Cooper Tire
& Rubber

Company

Weighted
average
number of
shares
outstanding
- Diluted

Diluted
(loss)
earnings
per share

Reported (GAAP) $ 38,809 $ 79,929 $ (41,120 ) $ 1,038 $ (42,158 ) 51,566 $ (0.82 )
U.S. tax reform related items* 55,791 55,791 55,791 1.08
Tax valuation allowance related items** 12,243 12,243   12,243   0.24  
Adjusted (Non-GAAP) $ 38,809 $ 11,895 $ 26,914   $ 1,038 $ 25,876   51,566 $ 0.50  
 
* U.S. tax reform related items comprised of $35,378 of deemed repatriation tax and $20,413 for the re-measurement of deferred tax assets.
** Tax valuation allowance related items comprised of the U.K. valuation allowance charge of $18,915, less the reversal of an Asia valuation allowance of $6,672.
 
Year Ended December 31, 2017

Income
before
income
taxes

Provision
for income
taxes

Net income

Net income
attributable to
noncontrolling
shareholder
interests

Net income
attributable to
Cooper Tire
& Rubber

Company

Weighted
average
number of
shares
outstanding
- Diluted

Diluted
earnings
per share

Reported (GAAP) $ 243,925 $ 147,180 $ 96,745 $ 1,345 $ 95,400 52,673 $ 1.81
U.S. tax reform related items 55,791 55,791 55,791 1.06
Tax valuation allowance related items 12,243 12,243   12,243   0.23  
Adjusted (Non-GAAP) $ 243,925 $ 79,146 $ 164,779   $ 1,345 $ 163,434   52,673 $ 3.10  
 
 
Three Months Ended December 31, 2017 Year Ended December 31, 2017

Income
before
income
taxes

Provision
for income
taxes

Effective
tax rate

Income
before income
taxes

Provision
for income
taxes

Effective
tax rate

Reported (GAAP) $ 38,809 $ 79,929 206.0 % $ 243,925 $ 147,180 60.3 %
U.S. tax reform related items 55,791 143.8 % 55,791 22.9 %
Tax valuation allowance related items 12,243 31.5     12,243 5.0  
Adjusted (Non-GAAP) $ 38,809 $ 11,895 30.7 % $ 243,925   $ 79,146 32.4 %
 
 
Cooper Tire & Rubber Company
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
                         
(Dollar amounts in thousands)
 
RETURN ON INVESTED CAPITAL (ROIC)
 
Year Ended December 31, 2018 Year Ended December 31, 2018


Adjusted (Non-GAAP) operating profit $ 199,072

Provision for income
taxes (c)

$ 33,495
Adjusted (Non-GAAP) effective tax rate 22.6 %

Adjusted (Non-GAAP)
Income before income
taxes (d)

147,885  
Income tax expense on operating profit 45,089  

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

22.6 %
Adjusted operating profit after taxes (a) 153,983
Total invested capital (b) $ 1,533,747  
ROIC, including noncontrolling equity (a)/(b) 10.0 %
 
 

Equity

Long-term
debt

Current
portion of
long-term
debt

Notes
payable

Total
invested
capital

December 31, 2018 $ 1,232,443 $ 121,284 $ 174,760 $ 15,288 $ 1,543,775
September 30, 2018 1,228,509 294,841 1,376 14,831 1,539,557
June 30, 2018 1,177,268 295,017 1,398 47,378 1,521,061
March 31, 2018 1,204,026 295,221 1,446 41,043 1,541,736
December 31, 2017 1,185,756   295,987   1,413 39,450 1,522,606
Five quarter average $ 1,205,600 $ 260,470 $ 36,079 $ 31,598 $ 1,533,747

Investors:
Jerry Bialek
419.424.4165
investorrelations@coopertire.com

Media:
Anne Roman
419.429.7189
alroman@coopertire.com

Source: Cooper Tire & Rubber Company



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