Cooper Tire has posted third quarter net income of US$53m up 10% compared with US$48m in the same period last year, with operating profit of US$82m, a rise of 25%.

Net sales rose 2% excluding the impact of CCT, the company’s former joint venture in China, which contributed sales of US$150m in the third quarter a year ago (net of company eliminations). CCT was divested by Cooper in the fourth quarter of 2014.

Third quarter net sales as reported were US$782m, which compares with US$920m in the third quarter of 2014.

 Third quarter results included higher unit volume of US$50m excluding CCT, with unit volume increases in both the Americas and International segments.

The unit volume increase was partially offset by unfavourable price and mix of US$32m, primarily due to pricing and promotion actions related to raw material costs, and negative currency impact of US$6m.

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COOPER TIRE & RUBBER COMPANY REPORTS THIRD QUARTER 2015 RESULTS

 Net sales were $782 million

 Operating profit was $82 million, or 10.5 percent of net sales, compared with $89 million, or 9.7 percent of net sales, a year ago; operating profit excluding CCT was up 25 percent from the prior year quarter

 Diluted earnings per share were $0.93 compared with $0.77 per share a year ago

 Unit volume was up 7 percent year over year, excluding CCT

 Americas segment unit volume grew 2 percent with operating margin of 14.6 percent of net sales

FINDLAY, Ohio, Nov. 2, 2015 – Cooper Tire & Rubber Company (NYSE: CTB) today reported third quarter 2015 net income of $53 million, or diluted earnings per share of $0.93, compared with $48 million, or $0.77 per share, last year.

Third Quarter Highlights:

 Net sales rose 2 percent excluding the impact of CCT, the company’s former joint venture in China that contributed sales of $150 million in the third quarter a year ago (net of company eliminations). CCT was divested by Cooper in the fourth quarter of 2014. Third quarter net sales as reported were $782 million, which compares with $920 million in the third quarter of 2014.

 Third quarter results included higher unit volume of $50 million excluding CCT, with unit volume increases in both the Americas and International segments. The unit volume increase was partially offset by unfavorable price and mix of $32 million, primarily due to pricing and promotion actions related to raw material costs, and negative currency impact of $6 million.

 Third quarter 2015 operating profit was $82 million compared with $89 million for the same period last year, which included $23 million from CCT. Excluding CCT, operating profit was up 25 percent from the prior year quarter. Third quarter operating margin was 10.5 percent versus 9.7 percent in 2014.

 Excluding the impact of CCT, the operating profit increased as a result of favorable raw material costs of $55 million and higher volume of $6 million. These benefits were partially offset by unfavorable price and mix of $18 million, $13 million of unfavorable SG&A costs, $10 million of higher manufacturing costs, and $2 million of other costs.

 Third quarter SG&A was $72 million, which compares with $68 million in the third quarter of 2014. The increase of $4 million in SG&A reflects the absence of $9 million in SG&A from the sale of CCT, which was more than offset by increases of $13 million. These increases included $8 million of higher estimated incentive costs based on the strong financial performance of the company and higher mark-to-market costs of stock based liabilities. In addition, the third quarter of 2015 included increased brand and product marketing costs due to the timing of programs, as well as continued SG&A spending in China, which is consistent with the company’s strategy to invest in the region for future growth.

 The higher manufacturing costs were primarily experienced in the Americas segment where Cooper incurred costs associated with the greater complexity of manufacturing higher value, higher margin tires, as well as increased pension expense and higher estimated incentive costs based on the strong financial performance of the company.

Consolidated Results:

Cooper TireQ3 2015 ($M)Q3 2014 ($M)% Change

Net Sales$782$920(15.0%)

Operating Profit$82$89(8.1%)

Operating Margin10.5%9.7%NA

“Our third quarter performance was excellent, and continued the positive trends we drove in the first half of 2015. The Americas segment posted another quarter of outstanding results, with unit volume growth and an operating margin of 14.6 percent, which is well above our target. Importantly, we again saw unit volume growth in our International segment,” said Cooper Chairman, Chief Executive Officer and President Roy Armes.

The effective tax rate for the third quarter, including discrete items, was 31.4 percent compared with 32.9 percent last year. Discrete items during the quarter, which reduced the tax rate, included research and development tax credits and the release of reserves for effectively settled uncertain tax positions. The tax rate is based on forecasted annual earnings and tax rates for the various jurisdictions in which the company operates. SG&A expense for the quarter was $72 million, or 9.2 percent of sales, compared with $68 million, or 7.4 percent of sales, in the third quarter of 2014.

At quarter end, Cooper had $424 million in cash and cash equivalents, compared with $336 million at September 30, 2014. Capital expenditures in the third quarter were $40 million compared with $36 million in the same period last year.

In February 2015, the company announced a new $200 million share repurchase program. During the third quarter, 589,945 shares were repurchased under the program for $22.8 million. For the full year, 2,110,633 shares were repurchased under the program for $82.8 million, or an average price of $39.23 per share.

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

Americas Tire Operations:

Americas Tire OperationQ3 2015 ($M)Q3 2014 ($M)% Change

Net Sales$702$6941.2%

Operating Profit$102$7635.5%

Operating Margin14.6%10.9%NA

Third quarter net sales in the Americas segment rose 1.2 percent as a result of higher unit volume of $14 million, which was partially offset by unfavorable price and mix of $6 million. Segment unit shipments increased 2.1 percent compared with the same period last year. Cooper's total light vehicle tire shipments in the United States increased 1.5 percent during the quarter. The Rubber Manufacturers Association (RMA) reported that its member shipments were up 6.6 percent, and total industry shipments (including an estimate for non-RMA members) increased 1.7 percent for the period. Cooper’s year-to-date total light vehicle tire shipments in the United States increased 4 percent, outperforming total industry shipments, which decreased 0.1 percent for the same period.

Third quarter operating profit was $102 million, or 14.6 percent of net sales, compared with $76 million, or 10.9 percent of net sales, in the third quarter of 2014. The higher operating profit primarily reflected favorable raw material costs of $49 million and higher unit volume of $3 million. These items more than offset higher manufacturing costs of $9 million, unfavorable price and mix of $8 million, increased SG&A costs of $6 million and negative currency impact and other costs of $3 million.

International Tire Operations:

International Tire OperationsQ3 2015 ($M)Q3 2014 ($M)% Change

Net Sales$119$313(62.1%)

Operating Profit($5)$23(123.4%)

Operating Margin(4.5%)7.3%NA

Third quarter net sales in the International segment declined to $119 million from $313 million in 2014. The decrease mainly reflected $183 million, before intercompany eliminations, from the absence of CCT. Excluding CCT, sales decreased $11 million, as increased volume of $8 million was more than offset by $13 million of unfavorable price and mix and $6 million of negative currency impact in the third quarter of 2015. Unit volume in Europe increased compared with the third quarter of 2014 based on higher year-over-year sales of winter tires along with increased exports to the United States. Unit volume in China, excluding CCT, was slightly higher than a year ago based on increased sales in the domestic China market for both replacement and original equipment tires, which offset the decline in exports to the United States due to the tariffs.

International operations recorded a third quarter operating loss of $5 million compared with an operating profit of $23 million for the same period a year ago. The drivers of the operating loss were the absence of CCT, which contributed $23 million to 2014 third quarter operating profit, unfavorable price and mix of $13 million and other costs of $3 million. These unfavorable items more than offset the benefits of lower raw material costs of $8 million and increased volume of $3 million.

Outlook

Third quarter raw material costs increased 2.1 percent from the second quarter of 2015, with the company’s internal raw material index increasing from 153.5 in the second quarter to 156.7 in the third quarter. The company anticipates fourth quarter raw material costs will be down slightly from the third quarter.

The company outlined the following for the full year 2015:

 Tax rate in the range of 34 percent to 37 percent

 SG&A forecast in the range of $265 million to $275 million

 Capital expenditures expected to be between $195 million and $205 million

“For the full year, we continue to expect that Cooper will exceed industry unit volume growth in the U.S. Our new products and improving mix of sales to higher value, higher margin tires position us well in an extremely competitive market. Our success in growing unit volume in the International segment is encouraging, and we expect to continue this unit volume growth in our international markets. Cooper remains committed to making the appropriate investments to support our strategic growth plans, particularly in the growing markets of Asia and Latin America,” Armes noted.

“We expect a strong fourth quarter compared to the fourth quarter of last year and expect to benefit overall from slightly lower raw material costs when compared to the third quarter. We expect this benefit to be offset in the Americas segment from normal, seasonally higher costs related to employee compensation and scheduled plant downtime. We anticipate that profitability will improve in the fourth quarter in our International segment, while still generating an operating loss for the full year. We continue to expect that full company operating margin for 2015 will be above the high end of our mid-term target of 8 percent to 10 percent, but below the year to date results due to the expected cost increases described in this release,” Armes concluded.

Third Quarter 2015 Conference Call Today at 10 a.m. Eastern

Management will discuss the financial and operating results for the third quarter of 2015 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://investors.coopertire.com or at http://services.choruscall.com/links/ctb151102. Following the conference call, the webcast will be archived and available for 90 days at these websites.

Original source: http://coopertire.com/News/Corporate-News-Releases/Cooper-Tire-Rubber-Company-Reports-Third-Quarter-2.aspx

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