Cooper Tire & Rubber (CTB) 30 Oct 172017 Q3 Earnings call transcript

Good morning, and welcome to Cooper Tire & Rubber Company's Third Quarter 2017 Earnings Call and Webcast. At this time, all participants on the call are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jerry Bialek. ahead. go Please

Chief and This everyone, Relations for the Financial with joining Strategic Ginger Hughes; Good our Jones, Jerry thank Bialek, today. Chief our here am is and Investor Officer, Cooper's call Brad Planning, and morning, Officer. I you Executive Director and of

on projections. results hear management Information During company these on operations over limited in issued & Tire of the which the may file related differences may has materially future current forward-looking are reports morning Such Actual statements from factors or differ the information conversation with and no additional a our factors the this control. you release we in financial be earlier to on forecasts SEC. Cooper and Rubber statements today, result earnings included results risk and business may Company. forward-looking company's and of

of financial as During outlook. an we third overview provide well as company's results, XXXX this will our operating the quarter call, business and

Our GAAP the reference financial that comparable in on summarizes note, later will earnings in Please set financial measures. of non-GAAP the linked be and included release these link directly slides a most today. the news and this about a that with release call. measures the information will we filed include SEC a measures The slides certain XX-Q to includes information reconciliation to

question-and-answer for our open prepared participants call a session. Following remarks, will we to the

turn I'll Now, call Brad. over the to

Thanks, Jerry, and good everyone. morning,

the fluid X.X% in company driven decline raw retail Americas in far Unit U.S. cost this variability, felt significant Asia. North by Total the trends and the segment which unit North up and decreases increase in weak segment material the third reflects were conditions have to Florida. International affected in elevated quarter year release with XXXX. the landscape. tires to As throughout particular X% unit a both was hurricanes in by in America was noted down volume consumers, in the in reflects so and These industry challenges our America morning, volume down prior for volume America. Latin the exacerbated Cooper's in compared inventory XX.X% the earlier quarter. performance earnings promotional tire a we sell-out in was of The volume industry Texas channels in

performance the We manufacturing are of to engage and general, volume spending. obviously selling, footprint our initiatives reduction of administrative optimization unit These satisfied to cost in and not actions company's include management and our with results. ongoing improve continue initiatives, disciplined

addition remaining reductions additional into brand in responding we market conditions our our This including e-commerce addressing recent was personally competitively which direct are retailer. Additionally, leading America both work in car has are new consumer driven positions North dealer and the business the channels. Cooper by to private in to site by volume channels, by e-commerce priced large products car resulted the in unit of and a decline expanding and

equipment for and new Zeon original new the car tire reach sold our the also selected was new throughout T-Roc Cooper into Europe. We that channels. Volkswagen Europe this passenger SUV CSX Initiatives further U.S. including fitments compact have OE like in expand as the

XXXX. of aggressive new introductions We continue that product XXXX throughout schedule an will also have and

line, to which and Cooper. from choice premium tomorrow show, priced is product the Discoverer example, unveiling For Evolution popular are giving and complement family, with more our the consumers SEMA positioned new attractively we is products

call with programs when generally cover are for represent factors and the detail favorable, as currently, trends million impact the industry. results and an positive. the quarter million, the industry period an to Ginger. these gas with compared more about that the drive third before which wages of over new third in turning Net for that, benefit XX.X% net unemployment, quarter the growing strong our the profit is the for Operating are miles down $XXX was industry sales same I'll year. such Macro last having sales, model X.X% were $XXX lower The from Ginger term. drive detail for tire in current business million cover costs. to third ultimately was longer this norm us $XX footprint, XX.X% well this of expect net of will started, is they for and Cooper. prices, over few they a combined not position $XX While driven, included will the in million the do first others a opportunities our minutes. we global sales. With quarter from prior a increase product quarters Historically, profit and three year conditions already year believe of positive margin we benefit tire more we liability trends Operating or have low

to on index shown as supplemental Our the material the of XXX.X raw quarter the quarter quarter was from during page in third sequentially second third XXX.X slide the deck. in million down X

reduced at year While higher the the effect of this XXXX. on was in from prior the volume quarter X.X% a and cost sequentially, Light related a quarter down a $XX in U.S. Raw than vehicle ago million year. XXX.X third XX.X%, our material profits in light of Manufacturing mentioned, was down index increased levels had to our by Tire inventory manufacturing Association's] which by were The production Manufacturers the X.X%. U.S. decline decrease reported decrease primarily with volume costs and Association's total compared the costs, U.S. (sic) [U.S. unabsorbed output. due the Tire I from vehicle X.X% of which managing industry reducing up just

quantify precisely, and it's to demand areas disruption Texas from customers. both to in the impacted were of in facilities large of While and Florida, hurricanes U.S. some the reduced our impacted the by consumer in warehouse our sales third quarter difficult

quarter. driven ongoing strong above Year-to-date, the proactively U.S. into (X:XX) USTMA decline affected impact hurricane the the well volume production did ahead as volume U.S. volume volume demand supply. in and potential America, unit unit concern raw from in in to we has we of and for a Mexico, tire tire unit volume Mexico. a by had volume TBR Although double-digit not a QX environment is a Latin September region XX% This was some industry sourced a in the in X% unit affected was performance. material growth. a that about for Cooper down raw in decline XXXX down TBR is in Unit earthquake growth, third was up disruption see materials which year-over-year very been difficult and delivering significantly did by that occurred areas, as an unit pull from days out comparison

the industry Mexico the whole, in which quarter. better tire XX% performed Cooper the nearly on down was However, by than during

a which partially line Our unit unit up whole. with as in down offset International industry up strong industry, about in which Europe. basis, X% by with On growth year-to-date was XX% decreased in saw in in than volume unit decline in in a was quarter, the volume volume Europe is Asia, We segment X%. unit Europe more is a with third the Cooper's X% compared the volumes

and the the an results Now, update I on financial turn call to Ginger allocation. over capital for will

million $XXX partially with Net offset of segment, million This sales decrease volume volume $XXX Overall, unfavorable, start International I'll decreased Operating unit review. unit our the million. resulted with strong $XXX financial impact. in mix $XX decreased quarter compared of a was million decrease million, were or currency $X primarily of compared a $XX Brad. in sales XXXX, quarter Price the which growth sales third the driven or foreign million we XX.X% volume was experienced X.X%. profit Americas of in sales of net X%, with in XXXX. unit you, the positive $X segment. million third and to by while Thank in of XX.X%

slide profit unfavorable unfavorable with raw costs impacted the costs, million material deck: summarized these to X following million XXXX in of favorable as factors of material Combined, page and factors and operating the quarter which compared $XX Third of million $XX price mix. net $X mix. period on totaled same price raw the of are by of was supplemental

the quarter in XXXX reminder, early As material which in included of reversed a the third were XXXX. TBR preliminary raw our tariffs costs

unit $X North also million includes during which decline North in production costs unit and product We lower tornado primarily These volume, other in liability manufacturing non-cash factors category charge XXXX. recoveries were XXXX, $XX.X recur currency lower due costs, costs, damage also America. QX QX in pension settlement XXXX did a largely the in million volume to which $X and volumes reduced $X related of driven distribution and This higher at North in American million impacts. of of center foreign to negative lower quarter of offset the include not million costs saw $XX America million by the by

liability likely product analyze a the on review we detail and trends We reserves. regular the and claims monitor pending to our affect more of liability benefit bit a variables and quarter, company. For against product the product anticipated liability perform in developments

result a of we the than $XX and were reserves, related which XXXX. third liability product in estimate expenses the reduced in review million the resulted reduced the As the that quarter, completed liability of claims of lower third product quarter

higher be We to XXXX $XX XXXX. of liability a $X favorable expense expect million compared to product quarter million fourth fourth quarter to

per liability expect year However, $XX in XXXX, $XX still an to expense Beginning million run year, we to expense rate. is be full than compared to for around reduction XXXX. our $X annual the million of lower product product million liability expected in historical ongoing

the of the at As scale a of earnings delivered lower on claims But outcome per vary I, from and $X.XX third the repurchase a expense to from to In reminder, for came third provide least, in of We the share anticipated severity forward. share quarter, some quarter our $X.XX of share the depending quarter program. compared and impact product count wanted contribution quarter, $X.XX going per the number can significantly share from of with resulting litigation. XXXX. liability

Moving to result and of million, volume, was million start impact. price operation. Segment in third $XXX sales lower with XXXX. favorable $X decrease unit of mix, will million of I favorable partially Tire the $XX foreign of down and for our $X the from a This million Americas performance, X% currency million $XXX by were quarter offset segment

including move of primarily damage related sustained of to in unit to profit decreased unit costs by months inventory to ahead U.S., insurance and or professional volume, cost, $XX costs the incurred was of result $X cost, freight Third raw production the the and reimbursement and recoveries. and million of curtailed with manufacturing costs potential tornado last to the and of same incentive for and nine by third were million Americas The These of levels for on net recoveries of $X.X $XXX supply as cost quarter, fees in $XXX offset direct net $XX XX.X% million million relate net of of warehouses a direct XXXX sales costs and quarter hurricane-related manage Direct favorable million compensation, tires, net direct XX.X% a based favorable the impact product tornado. leased maintain lower higher the out million recoveries tornado in incurred sales, damaged of period recoveries related million the unfavorable of noted earlier. material lower a at foreign to production Operating result currency the the costs, year. XXXX. down primarily million insurance $X million secure In January were $X raw distribution impacted a or of pull shipments was to company of into as costs site. operating and first $X.X $X million, portion in cost, of to compared liability profit disposal insurance price in lower mix. September material other days the of of than concern disruption those more The of the of product SG&A of other of facility, include

our expect we deductible, quarter. We in recovered point costs direct incur at costs, first of additional approximately will to from carriers in insurance the expect unreimbursed the $X be less million some future. that Further, of remaining the

for walk of the slide You on our slide can X deck. see Americas profit full the supplemental

International Now, operations. Tire our to turning

to price $XXX These for in segment as of the declined in all of include year, XX.X% year million segment to were $X reminder, XX.X% increased quarter were same prior XXXX. offset million higher quarter of of million quarter results a increased higher in by net third a to by a up by the and Unit result volumes to the compared of impact. period driven positive were $XX partially unit volume price profit Europe As results sales the of of of in third unfavorable with our an profit million, a slightly raw of the joint result in venture, operating million third million favorable $XX higher the of million as the volume GRT. and manufacturing Asia. The $X and compared unit segment compared Sales material $X results of XXXX foreign $X volume, down mix, XXXX. of volume which operating year $XX the the was consolidated and $X of results International the from Net million of for prior currency million International compared $X million costs. an ago. quarter operating costs, were favorable third mix,

majority interest improvement in profitability GRT. for expect relative XXXX, this the inclusive to segment full-year continue of in We modest to a

supplemental International operations deck. on slide our see You of the segment profit the for X can slide walk full

Now, the third primarily based the XX.X% rate tax tax results will rate rate compared improved earnings taxes between the today. forecasted XX% on due We to operates. which available be tax and jurisdiction. higher increase rate the SEC corporate on in is company jurisdictions to the XXXX. our to for is later effective More some The estimate filed to the increased XX%. tax XXXX Form year range rates and detail the The that for The tax a full items. XX-Q XX% be earnings with various annual was in in tax in a effective rate effective domestic quarter in turning tax in was which

the Turning to XXXX, has and fund with between addition for to invested quarter $XXX our and quarter capital anticipate is be mix share automation expenditures to of company, at million $XXX in continued range the million transformation million. year full acquire level our the expenditures $XXX September to company's capital capital third repurchase initiatives cash continuation appropriate of million. XX, to Capital cash the requirements investments including were million XXXX the in Since support this ongoing the XX, million the in for growth of $XX to the now September $XXX balance flows Cash of were spent sheet. $XX program. equivalents and the cash We compared and third and return in at capacity XXXX. a end XXXX for We modernization, believe continue to the on to four on invested pleased align I'm strategic with our trailing we report returns our global earn quarters. to XX.X% plans. strong that delivering investments, capital and GRT

extended repurchase to XXXX, capital repurchase board on our to authorizing by company's through increased Moving returns. up December the February XXXX. million stock of share outstanding program our XX, $XXX In the and of

per were approximately $XX.X During price total of million XXX,XXX the quarter, shares third an $XX.XX of for repurchased average at share. a

$XX.XX price that million of share. and sufficient the are repurchased per support began cash an I'll remains capital As to shares million existing of support priorities priorities. to define We that partnerships, has the funding organic $XXX XXXX, believes share September of back repurchases company acquisitions goals. improvement XX, on balance our Since to Brad remind initiatives, now year. of potential at call dividend Cooper more cash, leverage perspective and of the average you ongoing as those share $XXX million flows, the margin want supporting allocation XX.X August a capital than commitment, the and authorization. growth XXXX, for total our and in to our and turn repurchase I our

Thanks, Ginger.

America, weak to corresponding likely fourth into and challenging. ahead, activity promotional conditions to quarter. industry be continue the sell-out persist In Looking may North demand are

previously we appropriately Cooper products will will to newly and stated continue be our benefit expectations. conditions, tools. in market quarter operating promotion result, price fourth the a will margin As our and from developed given below expected pricing

have also into in remain focused to additional on will We executing we programs the expand place channels.

XX%. the full X% of expected mid-term be is operating year, company's of target consolidated high-end margin previously-announced the to For the to near

In production will on Cooper but inventories guidance, quarter, our the XXXX. addition, fourth This quarter. start will have in position the we an our levels help will manage continue expect included we awarded. a and to our strong is more and for which impact impact profitability to during e-commerce during to have the remarks. fitments OE forward will won new the XXXX, we announcing see have That's also all automotive look to been more in from dealer channels. In we we on And for formal our fourth business

Let's move on question, will to please? first Operator, your you take the questions.

Sure.

session. question-and-answer the begin now will We

with comes go Bank. Please First ahead. question Deutsche from Lache Rod

everybody. morning, Good

Rod. Hey,

things about. it on you're Two specifically couple talk fourth pricing margins be or up maybe thinking percent and are is materials sounds in the wanted down pricing, more in slightly, come a little bit what will you that the about One am how to quarter something? a or below sequentially I thinking was I bit X% the little like raw vis-à-vis missing a color

Okay.

with are that one, going Pricing, through sell-out. what full this the described, required you're market quarter, we're we've to in that the at up to the given point first the and we quarters materials the right slightly. look similar going fourth to guidance So at as higher think we've to at where on being start are than for Rod, raw year looking we there be weak the the sell-out experiencing – as that conditions that be channel three and is inventories on been relatively in third into that

into our XXXX, factors costs. one right perspective, manage to and other that be different. quarter got that sure levels in that inventory significantly is the a continuation saw going the to make So again, we we of third manufacturing a anything suggest our promotional we will activity. what affect that's will will But our of level think continuation From there the would of the I we've opposed as

Okay.

up year-over-year been pricing now. It's negative on the Is slightly that a will assumption? So I basis. a reasonable until be presume

I know that don't to prepared I'm yet. that say

Okay.

I look going to have when sequential we where As we're – you monitor raw or to at year-over-year at on, move and... mean, look materials

Okay.

promotional out. their landscape plays ...how

big something you is cuts? – impact the since How that's sounds that significant It that's out. from like called that production

provided and that that I'm yet, a in quantified the operating it's haven't margin. not we do enough factor Well, the it's important to prepared we But in guidance that that call. this on

and strategy? volume, release And exposure Is Okay. And down your then segment mentioned on pricing or just could in a were wins little XX%. talking you enough function maybe on us the color move they QX these give what they that volumes some you're about, are you of maybe relative looks of bit relative actually U.S. significant that performance? a could your needle that vis-à-vis like of the

Yeah.

something raw of start are half and think start to next basis, that position been as a going sell-out be inventories were important to I year we're affected annual business we is pricing of off we're little that on in good get saw if the slow are impact into seeing first that's an and won the – we're Again, side, start second difficult channels you One corner more year, off the inside built going programs haven't fourth as quarter. specifically get some the the momentum factors first may that the year. new acknowledge quarter. out volatility carried that – penetrated from get where and forward. on a to including in is the this it going us to sure will and the we next annual part our make to conditions is, year that response we, been that continue related that's a of turn on into it's year in the market to calendar that a overall challenging the many others, good recover that those programs the third is about bit have to on of tried into get there the and some on quarter to to ahead here. year, about been, have materials to that market actually affected the we've are I related into up. And There and the What the is half of we among – in would in and we that to market, as the of

to brackets Have size you business any been the of you've around give us kind some new or won? able that of

will awarded into announce get year. watch we we're as contribute also We a And position have on been that to Europe. the with a not yet, the will because T-Roc morning additional one as in date this closer OE to fitments that be Volkswagen that to we begins of and next excited on bit I start in top we've mentioned we the some little

you. Thank right. All Okay.

Rod. Thanks,

ahead. Van Horn Our next Markets. Please go FBR with is question Capital Christopher from

just timing morning. Good a I product and tires do you that get gets it more, Thanks reliability into you're little now? was questions. my for HVA more you just private taking of Are move comfortable in the to and selling wanted the the just around it, to that label? maybe bit liability to less this the seeing

that one may Ginger. is this start I'll in. jump and then Chris, Brad

a as So only do, once we regularly to cases, our talked including reserves reserves our impact over our we change. that pattern know, these that we can we own we improvement and fact of look product trends many And continuous about, began as a in liability (XX:XX) support our see number tires. build you defensive cases, at and saw a them adjust years, changes would in aggressive we

of consumers of the importance We new also particularly their maintaining and saw improvements technology awareness increasing of vehicle tires. in safety,

that change. in were think play we factors here. trends came the product And all those demonstrate cases, based then we make accounting liability we able So needed changes clearly on our of to those to regulations into those and once

it made we the the document that couple in quarter. say the of we over then to able those adjustment So and years was last were of and third factors I'd all did that

and there's the you we ourselves an where rule, third to I I that mean quarter. the in adjustment get other where, much and you Hey. make to that's accounting point high wouldn't found – factors, but need add ones by you a hit

some Great. doing think I been Where have new – mentioned on while. think – some I car you the a dealers And dealerships, do channels, getting do for they're you think Okay. like on early online you mean, still this car then stage do more channels. talking for opportunity, the you that you? given Do we're or you innings, just aggressive here what you there's select opportunities and it's do in out just about feel channel? maybe think there

Well, market in to change that tires. are want auto channels up that where going them to dealership to overtime. us And so. of of to their telling and go selling end penetration in their would that has more are they to some terms replacement over sold I relative auto overall think of all of than market. the the the the right importance fairly dealerships believe now, prefer of telling they many we've that into to significantly going consumers grow. And us grown of or Overall, buy in traditional It's tires we terms the more doubled to last the that's continue decade

And don't more to in able of that so, or the particular innings early would channel middle see we be being runway terms auto I dealerships. but declare, late its growth know in if I

did for X or the And Roadmaster one it. how last just classes the you me. heavy-duty X through Could or detail any quarter? truck give Got then one on Okay. during brand

mean you instead Roadmaster, of Maybe Mastercraft?

yes. Oh,

I thought I Roadmaster. said Sorry.

on in quarter. – down Or you the Roadmaster I'm said Yeah, was maybe I'm Roadmaster and – sorry.

in we almost and against both as and U.S. and balance industry, very get the really ahead feel year we're the into with business the about for which we in going However, of what's XXXX. year. the and and strong in TBR business Year-to-date, up Roadmaster was future that quarter of XX% on is USTMA next positive a of in this that the it well

it. Got Okay.

Just side one quick opportunities follow-up. you? fitment Are heavy for there on truck any OE the

of fitments and as right move looking for couple do have been are forward, trailer opportunities additional we have we positive for we Well, now, that very OE yes. a us

guys. Great. the for Okay. Thanks time,

Thank you.

ahead. JPMorgan. Brinkman from question Our go with next Ryan is Please

see activity there be my then if increases question. to think that for comment taking to the to take the some take curious or just tire I pricing. actually particular on any firming heightened making far others? with Thanks when would least announced the could maker Are of reasons by in U.S. competitors life Is what And are difficult some firming Great. you was XQ, group are you at and seems price regards the of evidence competitive there for for expect promotions so the you effect. environment tire to makers earlier anecdotal in of the and price such to starting you place? starting a

long a was That Ryan. one. Hi,

points, I So please... I'll and try and hit if the something, miss

Sure.

...please, let me know.

your levels environment. first nine a try So given overall the up months than to down sell-in is, with One is some across had environment weaker in the as this regard that the I has your sell-out to is way the of stronger environment, and raw of Channel seen pricing competition sell-out, things. that's relatively couple going a have that material position year. through combined a and channels we've the so of overall volatile quarters result year – there I again, maintain pricing the volume find think, and which inventory built being what been and with a

kind going I think Overall, we're we see we just to up-and-down around pricing current what we that would going backdrop see year has that when against industry with to there of discipline regard expect in and and sell-out weaker think volume. discipline overall. it's prices see pretty when to back the any pricing. a the we do continued environment demonstrate the moment, been while raw continue material have we you're the change believe going market, I'll that we represent deviations, see the – in that kind overall, when conditions sell-out The a stabilization been sporadic to that some a expect. that's improve, market to of of forward not this, in the It's but circle

a way some think indicators we and, – we we've that that to that see historically at in would see that again, forward. all as we that when start of that should suggest looked move So firming trending we the pickup are

We're sure So we're begins that Right we likely early happening. it's we're quarter. up, we're but being also probably sure prudent that making very ourselves. market fourth that position we're I if more it cost now, making that the and think going to know positioning while forward fourth based when it's don't to next ready the what quarter. we the we're year in looking we're full be this our pick of advantage to see, on take be environment, than about to to

what Okay. I is structurally anything I'm hearing don't really has that you guess changed. think

increase that know, concerns it's the very you been for yourselves of for strong As one had including this the an of in have investors that been North capacity, years, in margins – of evolution mean, I company included that America. questioning be changed or – sustainability is more this? that HVA tires and tire there has recent while, anything in in this responsible year, couldn't a really the is

our implementing caused Again, material now, driver us a focused new actions around replacing year. – a lot all of price again, The sell-out and lot demand in capacity particularly course volatile a this, Asia. volume into side is against is North there conditions of America, is of which out market, the backdrop capacity big a market be are has the that people right coming its of import the we factors the over which capacity be are of the think looking at that on raw pricing in and the to a of

but So people it onshore incremental capacity. all to are looking isn't capacity,

an overall repositioning that think when it's for rising against going we just still absorption that look balanced Now, where be demand time. the tires, period to But capacity that there demand, we at is replacement the and is. capacity be well will global of of a

all nine Now, that's happening quite year. got other the market time at these we've the that over challenging are months making this a of factors where first

But might this to that it to be easy at two think appropriate. that's connect So point, those want don't dots. we

Okay. That's extremely helpful.

the softness? the of hurricane explain to And like, also neighborhood to I else lastly the or I about? it in that the think could we're know, Is something was if at you me, impact, been X% take stab that had might maybe don't to Goodyear of volume. talking a unusual Just some earthquake sort Mexico have said there anything for help

Yeah. hurricane. was related what call Ryan, like to in a precisely hard it's try the and market out specifically to this

we quantify So going there definitely try an not impact, believe was and to we're but do that.

For sure, economic anyway. tragic an Mexico, market. events against environment Mexico, fairly had of Again, a a hit on the that that – and events the that's the two volatile and in hurricane earthquake backdrop political impact

But difficult. less what So to down double market XX% as quarter. the splitting the were falls is explanation up of down it We about Mexico what in than was into category digits.

there made recently. we was growing which that's big quite progress market. but on share, again, so, pretty well And in – it for that down weak that been It's market some a market change a

Thanks Great. for all this color.

question next with from KeyBanc. go Hoselton The is Brett Please ahead.

Good morning.

Brett. Hi,

pricing, I ask pricing basis. about on you a go-forward to wanted

assume that and let's So reason. sell-out improves whatever for –

levels, draw Inventory XXXX. maybe drawdown. to first through get sell-in assume and the sell-out So or of we move half improves improve. And are starts let's then healthy say, – to start as let's

Can words, pricing much pricing In how tire sales suggesting. through are be you indexed understand is bodes I versus of under can to and therefore, much of contracts how what based for on adjustment. How your – of within pricing many three the pricing mean, adjusted can your month? adjust kind you these about maybe rolls well see your So one-year many months of one how mechanics you're how talk asking, portion all Brad? sales take what your a and you six dynamics? of within I'm other of what are that that months

Yeah. I do.

that business, know. business you a answer indexed. our me the focus and you the under again, and I the – of – is of different painted we sell-out, have going little – were what in the don't looking we with I But let North U.S. when If environment little our for, But on America. bit presence. think you very than heavier where OE very on to improved China have It's so. little I'm a there

perspective. will And be in healthier to under respond position those a positive for and again, our we Cooper a we to a absorb market environment, – successful. can in so we're are it circumstances, a we where environment But will the in from customers changes pricing remain is it, competitive in where position if the

Okay. see. let's Well,

contracts marketplace annual about being talked in in you inhibitor more competitive the a being XXXX. of terms So price in

of are a sounds contracts material the like that it your case and number So annually priced. Is is that...

Okay, Brett.

I here. it may little confused have bit think I know I how a

year I activity. to is going referring of half was in to first what So on was to promotional related the as the what earlier

through or to sales that for will on be to raw meet volume end recall that manufacturer, they they're able of offer customers the you So on specific we the in be there many will they others based annual to be doesn't first activity a And if it of halfway to some they that the do direct a appear where in we those think and meeting the achieve the of terms to unit objectives year, sales response us going dollar the more materials degree. tried that of may And their front to year went programs that. objectives. can incentive half it manufacturers activity affected as through that to increases are pricing

I those apologize that incentive was if clear. make I I to referring annual programs. So didn't

to becoming you prohibited No, no. That's question that's marketplace. be. from it what My in exactly you limited competitive the I or understood is more

Tire's it improves in long that are going to second contracts that you in from adjusting quarter, the through And January prohibit set-up annual structure does XXXX, roll of price pricing? even pricing? so that? quarter the they to up how first potentially in half X, or firms pricing to if that Whether first for are industry Cooper prohibits if take it the pricing Are your a going you

promotional will of market-based. So and we'll from market-based also we starting But be market our XXXX. invoice the at then and be the the essentially zero pricing be incentive beginning programs put into that will

resetting to positioned we we'll win. that where are appropriately – in we're can position ensure and you're So be a

much. very Oh, you the million Thank Maybe the is that amount Okay. amount you – wait. what $XX with benefit, or One there The of that. tax that? after-tax more could was quick associated provide question.

that's North Brett. business, – American the based was That

at would So higher that a rate. be

rate you tax about think could a North But So jurisdiction. our American disclose we per that as don't rate. at

Okay. Thank you very much, Ginger.

Bret from ahead. next Our Jordan is Jefferies. Please with question go

guys. morning, Good Hey.

Good morning.

Hi, Bret.

the before? and been or doing e-commerce on channel, haven't is I margin a strategically, while. channel And, TireBuyer.com dealer Rack guess, the difference? e-commerce reason mean, any you I there On for is Tire weren't there any you

we And now. are

of margins. brand there we and as at would way timing private type a backfilling been the that business position pricing for about business the going of make appropriate – extent we that's to that I this this just some look perspective, is wanted So, that, some in And are this to away, think that, net our – for of overall than manage portfolio the to positive is the a our the within it looking sure right from of the we've support we've customers. to opportunity. is Other

contribution very And forward. right in going and new so looking pleased we're we're these their now, relationships to to forward be

new OE and you're margin question, side. I delta seeing Is a your margin of what contracts? the average guess, these out on much similar of a And Okay. there between

that's on would now, to going some – be right away improvement. the business as of balance, relative an it Again,

Okay. Great. Thank you.

you. Thank

like the closing I This Brad Hughes would turn to concludes question-and-answer to any session. back for our remarks. conference over

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