Cooper Tire (CTB) Misses Q1 EPS by 41c, Miss on Revenues

Cooper Tire (NYSE: CTB) reported Q1 EPS of $0.16, $0.41 worse than the analyst estimate of $0.57. Revenue for the quarter came in at $601 million versus the consensus estimate of $641.2 million.

First Quarter Highlights:

• Consolidated unit volume decreased 6.1 percent compared to the prior year, with decreases in both the Americas and International segments.
• Net sales decreased 6.5 percent to $601 million.
• Operating profit was $26 million, or 4.4 percent of net sales, which is a decrease of $32 million from the prior year.
• The company repurchased $16 million of its common stock during the quarter at an average price of $33.15 per share.

“Cooper’s first quarter U.S. volume performance was generally aligned with USTMA trends, which were weaker than expected due to slow consumer sell-out within the industry that continued from 2017," said Brad Hughes, President & Chief Executive Officer. "The decrease in our first quarter operating profit, adjusted for one-time items, was more than explained by weaker volume and higher manufacturing costs as we made production adjustments to keep our inventories in line with current market conditions.

“As the tire business navigates through current weak U.S. demand and raw material prices inch up, we expect our performance to be choppy in the months ahead. However, we believe that underlying macroeconomic factors support improvement in tire industry demand within the second half of this year. We expect that this, together with our initiatives to increase unit volumes and reduce costs, will drive improvements in our operating profit in the second half of the year. Our initiatives will be detailed at our investor event on May 11. Cooper has a strong brand with great consumer loyalty and we are poised to succeed when conditions improve and our efforts take hold.

“We are pleased with the volume performance of our truck and bus radial tire (TBR) business, which was up 25 percent in the first quarter, well above the industry trend. In March, we announced a Cooper branded TBR product line to complement our successful Roadmaster brand, and it has been very well received. In addition, we are encouraged by the profitability within our International segment, which continues to grow and demonstrate the value of our flexible global footprint. In the long-term, we believe Cooper will continue to be a strong global tire competitor that delivers value to our shareholders."

Outlook

“Operating profit margin performance in the second quarter is expected to be similar to the first quarter, as we continue to navigate through a turbulent market environment. However, we expect industry demand to improve in the back half of the year. We expect that this, along with our actions to drive volume and reduce costs, will result in operating profit margin approaching our stated 9 percent to 11 percent range for the second half of 2018,” Hughes said. “In addition, with growth in the International segment, led by Asia, we expect Cooper to generate full-year unit volume growth on a consolidated basis compared to 2017.”

For earnings history and earnings-related data on Cooper Tire (CTB) click here.

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