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» Cooper Tire & Rubber Co. Q2 2010 Earnings Call Transcript
» Cooper Tire & Rubber Company Q1 2010 Earnings Call Transcript
With me today are Roy Armes, Chairman, Chief Executive Officer and President; and Brad Hughes, who serves as our Chief Financial Officer. In association with the press release which was sent out earlier this morning, we will provide an overview of the company’s quarterly operations and results. The press release contains a link to a set of slides that are a summary of information, included in the press release and 10-Q.These slides available on coopertire.com are intended to help investors and analysts quickly obtain information. They will not be used as a focus of today’s call. Following our prepared comments, we’ll open the call to participants for a question-and-answer session. The call begins with Roy providing an overview of our results. He will then turn it over Brad for a discussion on some of the details by segment and comments on other matters. Roy will then summarize and provide comments on our outlook and open it up for questions and answers. Now let me turn the call over to Roy. Roy Armes Thanks Curtis and good morning to everyone. We successfully navigated a challenging environment during the quarter, and improved our results from the second quarter. While we are happy that we are able to move forward in most parts of our business, we continue to believe that there are still opportunities for meaningful improvements. Of course a rebound in the economy could help, but we are optimistic about our ability to continue with our momentum. And before I provide an overview of the results for the quarter, I want to make a comment regarding our contract with our employees at our (inaudible) location, who are represented by local 207L of the United Steelworkers. The contract is due to expire tonight, however, negotiations with the Union is continuing, and our objectives include reaching a fair and competitive agreement with our employees, ensuring both the short and long-term availability of great products for our customers and protecting the long-term interests of our business. There is always uncertainty around such negotiations with a variety of different possible outcomes, but as a result we don’t plan to publicly comment on the content or the status of the negotiations, but when there is something more to report, we plan to communicate appropriately.
Now consolidated sales were up 19% from the third quarter of 2010, reflecting higher prices and increased volumes. Net sales were a record for any quarter, and were over $1 billion for the first time. Overall our volume growth in the United States was higher than the industry in the third quarter, and demand for our products was particularly strong in the Ultra High Performance, light truck and commercial tire product lines. We performed generally in line with the industry for the broad line and value tires, but these product lines were weakest for the industry.We believe that pent up demand exists for broad line and value tires, and we can benefit when this one is released. It is just extremely difficult however to predict when and how this demand will manifest. Unit volumes were up 1.3% for the North American segment, and 2.3% for the international segment. Within the international segment, both Asian and European volumes increased. Operating profit for the third quarter was $47 million compared with $67 million for the same period last year, and the North American segment’s operating profit was $17 million or 2.3% of net sales, while the international segment operating profit was $30 million or 7.2% of net sales. We have commented during the second quarter conference call that we believe margins would improve in the second half of the year compared with the second quarter, and we were able to achieve that improvement in the third quarter. Of course we believe we still have opportunities to improve beyond this level. Higher sales volume improved profits by $5 million compared with the same period of the year ago, and also improving profit were $12 million of lower selling, general and administrative costs reflecting primarily incentive costs and $5 million of lower restructuring costs. Improved price and mix of $158 million during the quarter was more than offset by $194 million of higher raw material costs. Higher manufacturing costs decreased results by $6 million as we produced a more premium mix of tiers and curtailed production to balance inventory levels and demand. Read the rest of this transcript for free on seekingalpha.com