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Cooper Tire (CTB) Beats on Q2 Earnings, Misses Revenues
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Cooper Tire & Rubber Co.’s shares gained 7.5% to close at $34.45 on Aug 4, after the company reported earnings of $1.27 per share in the second quarter of 2016 that topped the Zacks Consensus Estimate of $1.07. Moreover, earnings were higher than $1.03 per share recorded in the year-ago quarter. Net income amounted to $71 million compared with $60 million in the second quarter of 2015.
Cooper Tire reported revenues of $740 million that fell short of the Zacks Consensus Estimate of $755.52 million as well as the year-ago figure of $752 million. Revenues declined due to the adverse impact of price and mix, and currency changes, partially offset by an increase in unit volume.
Operating profit was $110 million (14.8% of sales) in second-quarter 2016 compared with $99 million (13.2% of sales) a year ago. Operating profit benefited from favorable raw material costs, lower other costs, and higher unit volume, partially offset by higher manufacturing costs and selling, general and administrative expenses (SG&A).
Americas Tire Operations recorded a 2.7% decrease in revenues to $655 million, due to unfavorable price and mix, negative foreign currency impact, and lower unit volume. Operating profit in the segment improved to $116 million (17.7% of sales) in the reported quarter from $109 million (16.1% of sales) a year ago. The increase was driven by favorable raw material costs, which offset higher manufacturing costs, increased SG&A expenses, lower unit volume and other costs.
International Tire Operations reported a 0.9% fall in revenues to $124 million, mainly due to unfavorable price and mix and negative foreign currency impact, partially offset by higher unit volume. Operating profit amounted to $3 million, versus operating loss of $4 million recorded a year ago. The improvement was backed by favorable raw material costs and SG&A expenses.
Financial Position
Cooper Tire had cash and cash equivalents of $412 million as of Jun 30, 2016, up from $408 million as of Jun 30, 2015. Long-term debt was $296.5 million as of Jun 30, 2016, compared with $298.4 million as of Jun 30, 2015.
In the first half of 2016, Cooper Tire had cash flow of $69.1 million from operating activities compared with $46.9 million in the year-ago period. Capital expenditures increased to $49 million in the second quarter of 2016 from $41 million a year ago.
Share Repurchases
In Feb 2016, Cooper Tire authorized the repurchase of shares worth up to $200 million. During the second quarter of 2016, the company repurchased 894,265 shares for $29.3 million.
From Jul 1 through Aug 3, 2016, Cooper Tire repurchased another 373,188 shares for $11.4 million.
Outlook
Cooper Tire expects operating margin, excluding the impact of acquisitions and non-cash pension settlement charges, to increase marginally from 11.9% recorded in 2015. The International Tire Operations segment is expected to improve significantly and generate profits this year. The company expects unit volumes to increase in both segments in the second half of the year.
For 2016, capital expenditures are expected between $210 million and $240 million.
Cooper Tire expects raw material costs in the third quarter to increase marginally from the second quarter of 2016. The company also expects to record a non-cash pension settlement charge of $14–$18 million in the third quarter related to optional lump-sum payments of benefits offered to certain former employees.
At present, Cooper Tire carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) , Visteon Corporation (VC - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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Cooper Tire (CTB) Beats on Q2 Earnings, Misses Revenues
Cooper Tire & Rubber Co.’s shares gained 7.5% to close at $34.45 on Aug 4, after the company reported earnings of $1.27 per share in the second quarter of 2016 that topped the Zacks Consensus Estimate of $1.07. Moreover, earnings were higher than $1.03 per share recorded in the year-ago quarter. Net income amounted to $71 million compared with $60 million in the second quarter of 2015.
Cooper Tire reported revenues of $740 million that fell short of the Zacks Consensus Estimate of $755.52 million as well as the year-ago figure of $752 million. Revenues declined due to the adverse impact of price and mix, and currency changes, partially offset by an increase in unit volume.
Operating profit was $110 million (14.8% of sales) in second-quarter 2016 compared with $99 million (13.2% of sales) a year ago. Operating profit benefited from favorable raw material costs, lower other costs, and higher unit volume, partially offset by higher manufacturing costs and selling, general and administrative expenses (SG&A).
Segment Details
Americas Tire Operations recorded a 2.7% decrease in revenues to $655 million, due to unfavorable price and mix, negative foreign currency impact, and lower unit volume. Operating profit in the segment improved to $116 million (17.7% of sales) in the reported quarter from $109 million (16.1% of sales) a year ago. The increase was driven by favorable raw material costs, which offset higher manufacturing costs, increased SG&A expenses, lower unit volume and other costs.
International Tire Operations reported a 0.9% fall in revenues to $124 million, mainly due to unfavorable price and mix and negative foreign currency impact, partially offset by higher unit volume. Operating profit amounted to $3 million, versus operating loss of $4 million recorded a year ago. The improvement was backed by favorable raw material costs and SG&A expenses.
Financial Position
Cooper Tire had cash and cash equivalents of $412 million as of Jun 30, 2016, up from $408 million as of Jun 30, 2015. Long-term debt was $296.5 million as of Jun 30, 2016, compared with $298.4 million as of Jun 30, 2015.
In the first half of 2016, Cooper Tire had cash flow of $69.1 million from operating activities compared with $46.9 million in the year-ago period. Capital expenditures increased to $49 million in the second quarter of 2016 from $41 million a year ago.
Share Repurchases
In Feb 2016, Cooper Tire authorized the repurchase of shares worth up to $200 million. During the second quarter of 2016, the company repurchased 894,265 shares for $29.3 million.
From Jul 1 through Aug 3, 2016, Cooper Tire repurchased another 373,188 shares for $11.4 million.
Outlook
Cooper Tire expects operating margin, excluding the impact of acquisitions and non-cash pension settlement charges, to increase marginally from 11.9% recorded in 2015. The International Tire Operations segment is expected to improve significantly and generate profits this year. The company expects unit volumes to increase in both segments in the second half of the year.
For 2016, capital expenditures are expected between $210 million and $240 million.
Cooper Tire expects raw material costs in the third quarter to increase marginally from the second quarter of 2016. The company also expects to record a non-cash pension settlement charge of $14–$18 million in the third quarter related to optional lump-sum payments of benefits offered to certain former employees.
COOPER TIRE Price, Consensus and EPS Surprise
COOPER TIRE Price, Consensus and EPS Surprise | COOPER TIRE Quote
Zacks Rank
At present, Cooper Tire carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) , Visteon Corporation (VC - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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