Cooper First Quarter Earnings Per Share Rises 20% On Strong Sales
19 April 1999
Cooper First Quarter Earnings Per Share Rises 20 Percent On Strong Sales
FINDLAY, Ohio--April 19, 1999--
FIRST QUARTER HIGHLIGHTS:
-- All-time first quarter record sales and profits
-- Tire unit sales grow more than twice the industry rate
-- Engineered products sales boosted by strong light vehicle
market
-- Pirelli alliance met with enthusiasm by dealers
-- Successful ad campaign promotes national brand awareness
-- Texarkana plant to increase output
COOPER TIRE & RUBBER COMPANY today reported record results for the first quarter with sales of $467.9 million, an increase of 6.9 percent over 1998, and earnings of $31.4 million for the period ended March 31. Earnings per share on a diluted basis were 41 cents, up 20.6 percent over 1998, setting a new company record for the first quarter period. In comparison, first quarter sales and earnings were $437.6 million and $26.5 million, respectively, in the year earlier period.
Sales were strong for both segments of the company with tire division sales of $352.1 million, an increase of 6.6 percent over the 1998 period. Engineered products sales were $115.8 million or 8.0 percent greater than in the first quarter of 1998. Segment margins also showed improvement, with tire profit margin hitting 9.4 percent of sales, and engineered products' margin gaining more than two percentage points to 13.4 percent of sales. As a result, Cooper reported segment profits of $33.3 million in its tire business and $15.5 million in engineered products, increases of 11.6 percent and 30.0 percent, respectively.
In announcing the results, Cooper chairman and CEO, Patrick W. Rooney said, "Importantly, both our businesses continued their tradition of outperforming their respective industries. Our replacement tire unit sales grew at more than twice the industry rate. Engineered products sales, which are benefiting from a thriving auto market, also grew at a rate which surpassed the increase in production of North American light vehicles. These broad-based sales gains, combined with continued favorable raw material pricing and a company-wide efficiency program, made the quarter outstanding in both sales and profitability.
"During the quarter, tire unit shipments increased 10 percent when compared to last year's first quarter. Our new private brand business continued to grow as planned, while proprietary brand sales were strong for the quarter due, in part, to our normal spring promotions and the continued positive effects of the national advertising program," Rooney concluded.
"In our engineered products operation, sales were significantly stronger than estimated increases in North American light vehicle production for the quarter," commented Thomas A. Dattilo, Cooper's president and COO. "Build schedules for the second quarter appear to be strong. Our expansion at our Mexican facility is nearing completion and business has increased. We also began producing suspension components for heavy truck applications, a new market for our company, at that facility.
"An aggressive implementation plan was initiated during the quarter to realize the benefits of our strategic alliance with Pirelli Tyres North America. Immediately after the announcement on February 11, teams from both companies began the integration process for purchasing, marketing, distribution and technology-sharing. In late March, a veteran Cooper plant manager was appointed for the Pirelli Hanford, California manufacturing facility to immediately begin process improvements. We expect Cooper will begin marketing Pirelli products in North America by mid-May with a complete transition of accounts by early fourth quarter.
"Operationally, the company continues to post favorable results. We are well on track to meet our objectives in terms of our Cooper 21 cost reduction targets through operational excellence programs throughout the company. We were pleased to announce during the quarter that our Texarkana, Arkansas plant is converting to a seven-day operation. This increase in capacity, without significant investment, is needed to meet our sales objectives.
"Looking ahead, we are highly confident of the growth opportunities we are aggressively pursuing in both our tire and engineered products businesses," Dattilo concluded.
COMPANY DESCRIPTION
Founded in 1914, Cooper Tire & Rubber Company is a leading manufacturer of tires and engineered rubber products widely recognized for its strong customer service commitment. In tires, the company exclusively targets the larger, replacement market, with a mix divided between proprietary house brand and private label customers. Cooper markets its tires in more than 100 countries around the world. In engineered rubber products, the company serves virtually every light vehicle manufacturer in the U.S. and Canada, as well as an expanding number of European-based original equipment manufacturers. For more information on Cooper Tire & Rubber Company, visit the company's web site at www.coopertire.com.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements relating to future financial results. Actual results may differ materially as a result of factors over which the company has no control. These risk factors and additional information are included in the company's reports on file with the Securities and Exchange Commission.
(Statements of income and balance sheets follow...)
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except Three Months Ended
per share amounts) March 31
---------------------------
1999 1998
---------- ----------
Revenues:
Net sales $ 467,887 $ 437,558
Other income 859 578
---------- ----------
468,746 438,136
Costs and expenses:
Costs of products sold 383,127 363,470
Selling, general,
administrative 32,092 28,512
Interest 3,903 3,849
---------- ----------
419,122 395,831
---------- ----------
Income before income taxes 49,624 42,305
Provision for income taxes 18,233 15,780
---------- ----------
Net income $ 31,391 $ 26,525
---------- ----------
---------- ----------
Basic and diluted
earnings per share $ .41 $ .34
Weighted average
shares outstanding 75,877 78,848
Depreciation $ 25,650 $ 24,259
Capital expenditures $ 39,304 $ 27,382
CONSOLIDATED BALANCE SHEETS
March 31
---------------------------
1999 1998
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 23,294 $ 32,875
Accounts receivable 338,289 307,780
Inventories 191,912 206,102
Prepaid expenses and
deferred income taxes 21,729 17,923
---------- ----------
Total current assets 575,224 564,680
Property, plant and
equipment - net 897,008 863,937
Intangibles and other assets 93,935 81,440
---------- ----------
$1,566,167 $1,510,057
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 8,939 $ 11,538
Trade payables and
accrued liabilities 170,435 166,333
Income taxes 17,002 12,016
Current portion of debt 242 279
---------- ----------
Total current liabilities 196,618 190,166
Long-term debt 205,218 205,423
Postretirement benefits
other than pensions 153,001 146,709
Other long-term liabilities 48,497 38,452
Deferred income taxes 73,685 76,446
Stockholders' equity 889,148 852,861
---------- ----------
$1,566,167 $1,510,057
---------- ----------
---------- ----------
SEGMENT INFORMATION
Three Months Ended
March 31
--------------------------
1999 1998
---------- ----------
Net sales:
Tires $ 352,062 $ 330,326
Engineered products 115,825 107,232
Segment profit(1):
Tires 33,259 29,797
Engineered products 15,506 11,931
(1) Segment profit is defined as income before income taxes and
other income and includes allocation of corporate interest
expense.
These interim statements are subject to year-end adjustments.