EX-99.1 2 a20181231pressreleaseearni.htm EXHIBIT 99.1 Exhibit
cooperstacked2017a11.jpg                      NEWS
____________________________________________________________________________________________________________________________________________


Cooper Tire & Rubber Company Reports Fourth
Quarter and Full Year 2018 Results

FINDLAY, Ohio, February 19, 2019 – 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.”


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Cooper Q4 and Full Year 2018—2
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.





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Cooper Q4 and Full Year 2018—3
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
%
—
 
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.


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Cooper Q4 and Full Year 2018—4
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;

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Cooper Q4 and Full Year 2018—5
•
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;


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Cooper Q4 and Full Year 2018—6

•
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.

Investor Contact:                        Media Contact:
Jerry Bialek                            Anne Roman
419.424.4165                            419.429.7189
investorrelations@coopertire.com                    alroman@coopertire.com




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
Calculation of ROIC
 
 
 
 
 
Calculation of Net Interest Tax Effect
 
 
 
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of Invested Capital (five quarter average)
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