Cooper Tire & Rubber (CTB) 30 Apr 182018 Q1 Earnings call transcript

Good morning, and welcome to Cooper Tire & Rubber Company's First Quarter 2018 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. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jerry Bialek. Jerry. ahead, go Please

Brad and Jerry for and Bialek, here Executive I everyone, Chief Jones, today. Officer. Financial Treasurer, the This am Officer, Chief our is Cooper's with and thank morning, Ginger joining our you call and Hughes; Good Vice President

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

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

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

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

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

everyone. morning good and Jerry Thanks

to quickly I Ginger. Before want we begin congratulate

committed I actively for assimilated company strategy plans. development year successor role in a to contributions our transition. until priorities on company her in outlook take key and and business wish is of that, to a capital Ginger the our our and us also her I call to detailed Ginger like and focus the She to As helping the is boards. public identified call remainder return with priorities. a best for recently more smooth performance towards place in decided will publicly career including first that discuss in business Cooper's brief then our a turn to Cooper, executive financial quarter into on engaged thank provide of the your our playing announced discussion will full the serving the and I After time a would on later your our I'll fewer remaining she of a quarter will questions. year. strategic XXXX before assuring I for remain our long-term and for transition we first over remarks results a endeavors. of more fully from has Cooper deliver will begin allocation. With to update on an progress this Ginger future overview

results. quarter about now XXXX the Let's first talk

tire was a in quarter first U.S. The the reflection performance. large of market part

sales Our a for net quarter of vehicle X% with quarter million or $XX the down last the same be more to which performance about aligned was U.S. ago, USTMA year tire trends, Cooper. XXXX weaker light and the market whole, impacted is current quarter inventories line with as to profit, is volume by compared recent than continued quarters in adjusted decrease decline million in made than It first which period as quarter the volume conditions was a with first was which into X.X% with that net profit more than and Global about first Operating a compared adjustments over first production the expected first period X.X% manufacturing challenging costs the explained one-time in $XXX year. conditions. of decline the year. $XX a our for business were with sales, decrease The of clear was X%. a XXXX million, we prior the including weaker items, from carry of higher keep for operating industry the of the our quarter forward same of

period navigates of we manage tire reduce taking costs. through Cooper our at business control, the to weak inventories While is focused demand, and actions effectively this within on our what

restructured reduced the in and headcount production to in the market workforce For example, demand. schedule with we U.S. corporate Mexico and align

addition, volume you with during several -- are that revolve XXth. initiatives around Investor we initiatives Day these In on will can our we around and strategies, to as underway key which tell May such profitability, unit drive growth have a to which detail product all consumer product the new A/TX, important performance. product with lead industry-leading new speeding process. developed approach introductions and up greater line using product the even One is development new cadence taken new of operating this I

shipping begin A/TX a weeks. few will the in new We

We will our upcoming at have more Investor Day. product news

are forward new comes will and who lead significant small involves and considerable President Cooper joined other of Whirlpool our a positive excited experience Chris general business. is Operations, entering Chris executive into appliance the the the where addition, continued he talented initiatives, energy merchandisers North strategy mid-March. leveraged where us to ways KitchenAid channels for commercial Ball, we to perspectives, in among commercial as represent drive largest Corporation, new global new be brand forward. have Cooper To accelerate expand change, such company's Chris in he a opportunity at strength years we following XX to our penetration. with posts and In to going American to business and fresh can look unit e-commerce, dealerships, Tire channels auto OE our

positive industry miles and strong manifest previously will the will recovery in trends expect normal improvement in business. Ultimately, As for overall participate industry employment gas that others such the an a actions industry conditions believe as we not believe in tire we in factors. We result these macroeconomic represent future. our current in expect and new and in as performance we our results, such prices, have to take the as levels, to do our the the driven a supported that take to improve we but by time rebounds some said future, efforts hold

the operating expect in to continue environment. a be performance we second quarter to we forward, similar quarter challenging to margin profit first through the as market navigate Going

the to in back the year. demand of half However, we improve industry expect

fleet recognize volume is tire We expect that from important in that to stated the are in the our It costs actions to vehicle and of very approaching will and truck range XXXX. bus of all of we reduce with second to our market, X% the our light half margin apart improvement this for industry pleased challenges operating drive with the profit the trend. tire XX% result along Cooper performance to volume TBR the in March, we we or first the a have, products new has well manufacturers brand This XX% primarily Cooper our which complements branded operators Roadmaster opportunity more than a business, brand, radial above in space. owner up product the which line for industry leverage decade. In trailer announced particularly to and was successful provided quarter, TBR quality

profitability success the demonstrate segment, versus encouraged are growth we global year continues ago. our our period by within our in more to segment, which the footprint. than value doubled of to This highly strong TBR addition In International the same a

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

first quarter of compared Net with the will I Thank you, sales of with million first Brad. our X.X%. were $XXX in million quarter review. a $XXX financial XXXX, start decrease

currency partially million by with X.X% was and of lower negatively or million in offset were positive unit $XX foreign Operating sales $XX or sales $XX of impact. X% million unfavorable and volume of of $XX by million million $XX impacted of net profit quarter mix, First price sales compared XXXX.

profit, changed Our to operating XXXX-XX, benefit Accounting GAAP a as which accounting profit reclassify other other the costs postretirement benefit of U.S. out pension the of XXXX has and for adoption of Update been and postretirement operating restated pension of $X million result costs. Standards

the lower $X price of million million by by which the XXXX summarized million volume. slide manufacturing Page offset are operating of with compared quarter factors, X supplemental same unit from; mix. as by of million unfavorable impacted $XX following favorability material period $XX raw deck. and and profit costs of due offset of First costs, of volumes $X to in partially partially $XX This primarily million on higher was first, resulting favorable the lower was production

expected of increased supplemental as on first the Page material from in deck. of slide the XXX.X of XXXX X index quarter to during sequentially XXXX, As fourth quarter shown in quarter first raw our the XXX.X the

first quarter. tariffs $XX the While was related a same costs of of This $X than index XXX.X of the unfavorable QX our distribution for at North XXXX event. impacted recoveries There center of damage of lower partially which quarter XXXX. of $X to million XXXX were of that relates in in XXXX to million reversed first and the related in net tornado up quarter X.X% offset was insurance preliminary sequentially, million and incurred by the this the TBR XXXX. American in items unique of variances multiple also reversal were

well of as where related two the In delivered in manufacturing quarter XXXX. a first addition pattern seven went other as U.S. per earnings share and of new six-day there in $X.XX operational to million U.S. will in in distribution related higher were costs compared Mexico from both operating of startup $X.XX We which warehouses, the restructuring to costs later in we reduction a $X be XXXX. the to with workforce

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

in Americas or favorable production $XX impacted X.X% million volume, decisions $XX million by sales $XX levels, mix. of sales higher which profit last profit million compared material to unit quarter unfavorable price the our and million match inventory of control or Operating reflects lower costs demand $XX manufacturing of costs, $XX was was the in year. volume of and XX.X% same million period First with by of million and net to offset operating raw of $XX

tariffs, damage related unique the million impacted center tornado partially million offset American XXXX in items reversed insurance in event. reversal of in mentioned quarter there of of same was incurred in XXXX in to the this $XX recoveries previously and QX first were net unfavorable The the of related $X North were TBR relates and that by As of distribution XXXX variance million our to quarter the preliminary at to $X the costs This segment. which XXXX. multiple

higher U.S. related well $X be expenses as will which in distribution costs were related workforce million XXXX. to included two of warehouses there as In to Mexico, startup other operational actions later addition in which costs, new

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

segment $X more by tire first $XX lower in significant and XXXX, price unit the XXXX were favorable price of as as in offset of mix, partially was foreign International decreased in positive XXXX, $XXX a prior In first volume of operations. quarter in result million our Europe, year million million and increases. million Asia. Net this the quarter of sales XX.X% first difficult up currency ahead the a had from volumes increase X.X% of had in than the impact, to for a Europe, offset turning the which first unit Unit slight volume of Now as lower of quarter volume. quarter result a of buying we of comparison to announced compared $XX

remains Asia Our in with unit $X These results mix, ago. by first $X compared partially unit still price The operating same year $X operating the of last $X offset balance of with domestic unfavorable growth and the costs. a quarter in to $X lower results million expect were business were of by year. for year, and other volume million driven million we and volume the of increased million which million International of compared profit period favorable an strong segment the double-digit

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

first Now XX.X% turning effective corporate to in XXXX. the some tax The XX.X% to was rate compared for items. quarter

will for annual The previous XXXX related and discrete based which tax includes rates positions jurisdictions accrual uncertain rate on additional relating tax the various tax the years. earnings quarter The forecasted first to in items is to of rate taxes rate the is between the the XX%. on with year tax SEC our Form We available today. XX% estimate operates. range More later the detail XXXX in a in company XX-Q be filed full effective and

the remaining XX, were in Capital growth environment, global quarter our the at $XXX and prudent, capital of with strategic the ongoing support current level cash spending mix and our flows first $XXX evaluating were the at March evaluate with in cash in capital cash to March plans. We continuously in XX, the million. also addition and compared investments capacity modernization, to equivalents sheet, million XXXX transformation appropriate XXXX. automation while to $XX million Moving expenditures align to needs initiatives, balance

our million. for million are expenditure result, and to $XXX $XXX capital a projection between full we be XXXX year As lowering

We impact return the XXXX on XX.X% fourth returns activity. quarters, for continue four delivering of invested a to our trailing quarter unique capital earn solid on investments, tax excluding the

February Moving Board authorizing by to to program extended repurchase outstanding our XXXX. the of through capital allocation; and up share $XXX stock million XXXX, in of XX, the our increased company's December repurchase common

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

the We to of the existing allocation As leverage of our cash strong million share. and an shareholders. Brad to maintain million the total commitment the of quarter, Since dates has more our are maturity the repurchase of demonstrated for allocation year. credit define initiatives, dividend repurchase margin believe began repurchased authorization. performance, those average March sufficient to and capital We delivers securitization sustained potential the operating August and plan, value supporting our and of improvement to during Cooper $XX.XX [funding] million long-term price we balanced support believes XXXX, priorities our organic our a company perspective I commitment, to XX, ongoing our and both call delivering our of of than note our accounts XXXX, balance and and high priorities. as remain level share capital strategic $XXX partnerships $XXX revolving on facilities to shares long-term back flows capital our acquisitions share growth to XX.X our turn the in now flexibility. will financial Of goals. including cash, our on at our extended ROIC per receivable support approach

Ginger. Thanks,

optimistic take I operating performance industry market questions, similar navigate the expect tire want and as be are that future. In we to near about first second the we Cooper, Before to profit we turbulent to for we continue Cooper's in despite say to times in the the a term your quarter quarter margin through environment. tough

to the industry do year. demand back we improve expect of However, in the half

expect We our second volume margin operating will in the to with drive to and range reduce X% improvement, this our of profit half costs stated result that approaching to XX% actions XXXX. for

faster be We have will We formal brand global value strong continue that that delivers with and tire remarks. at out value to proposition a That's have consumer a that be and great believe products coming attractive shareholders. loyalty will Cooper our strong a competitor all exciting new cadence. we long-term our to for

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

sir. Certainly

the now will ahead. of Van Your will We Riley B. begin [Operator session. Please Instructions] Horn question-and-answer go come from Christopher first FBR. question

and Good congratulations, taking the for morning, Ginger. call thanks

Chris. you, Thank

dynamics some Are the you just more pricing the on on I -- the increasing? environment North activity? here in start comment North to Is pricing. could American specifically competitive threat you off, seeing America. detail Just on promotional more

Sure, thanks Chris.

America right year. environment we we in the that in second last North saw that now half the similar to would what think of is the describe I way frankly

the especially get seen of that I in soft, the of pickup continuation but of in have think year, last we were in of in to You softened first did increase first first the and Starting the quarter, see as seen prices our into don't quarter quarter. have we industry a relatively first in the that recall through the market year And quarter, events March increasing announced into on we level it. especially activity or rather we year, then activity. will some material continued in the increase the we a be place. second pricing sharply. took in as that to began certainly half raw second promotional the There part

second what on that -- price making want we keep So relatively not on I side. we or on position we we with I were inventory last experiencing promotional are don't know in think it's consistent do the things doing of sure into focused in an are ourselves to half year where forced the we very

the it's I'd manufacturing half again, You the last the first market the in to in as we in quarter that that coming through were of say second look and what we costs. at see experiencing general results similar relatively And our year.

confident any And half the fairly are you there 'XX, you then one you to is the seem margins got are just two many, many Okay, to in back opportunity. you of a things that a that there or X% there. volume two to that of factors XX% one that there that industry things cost combination seeing see out it. But get opportunity like and is is X% is sounds or is an It there XX%? that the drive bulk that going of could a or of it opportunity, overwhelming

take to our very us this are that advantage that successful is A/TX the there obviously factors us been there improved We within coming that up extremely and is now. few U.S. do all earlier even to will for that positioned has of case. believe Well many coming highlight extremely in we are new the important take we year, and signs half We industry expect with for going over extremely which yet demand of are I are In second and point that certainly in of believe and comments but Chris. well I online. in I we think A/TX the the that right more the time the that mentioned that we a that to pick new with is important out are advantage positioned particular, to be which market

year. the we relative So market the a to be Cooper's performance second volume to in expect the of and do half contributor

beginning actions. the can of believe into continuing that to the corporate costs. We and things and also control actions and restructure talk can quarter we the control fourth this year first took we about we We SG&A. we quarter took do headcount our in did some We --

So associated from into downsized we capacity as had costs half that we've And year. make more sure are to order in should that we from second costs aligned there of demand. as this reduced we the events, see move in that see quarter forward. footprint, importantly we begin of manufacturing those in Mexico specifically to with and And we've the move to we'll both our on contribution those benefits and in year, the first the

one Roadmaster a little final TBR and rationale a taking share us good from it, I then is the very Can know am Okay, well. I Cooper because just just grow more just great. a another me. the kind continues give rationale some branded branded you has obviously TBR tire? been to And feedback? of of customer around a getting -- around lot wondering So about tire,

now of part owner the Yes, that right brand entry TBR the from be OEs Roadmaster of going to industry look that the specific what's the portion of operators and better allow TBR forward on real of continue the segments and the a couldn't space market will moving a in to U.S. enter product be terrific timing seeing and results in introduction the within We really forward. TBR for rationale our specifically that market. is has of into fleet for to has the so been Cooper market, competes which to this the the us. there The us Roadmaster. place. going industry, it's It with that Cooper, fantastic other that On is, the driven a segments in have been trailers success

Ryan JPMorgan. question next of will The Brinkmann be go Please ahead. from

little bit replacement questions. for I probe to market. good a on Thanks wanted taking morning. consumer Hi, U.S. the just my

some the half in a release on recall sell-out. earnings back saw were on but that last they positive of although sell-in call they bullish the mention sell-out, softer I Goodyear your earnings experienced what them more because saying in of Firstly, there's as week, softer trends

and seeing trends So sell-out? can know are are those and own you terms positive what us if you in let your [not] same of sell-out within seeing in channel you de-stocking

frankly trends. with were are and line sell-in. been on clearly good sell-out those has customers in o industry year, a the of -- sell-in with believe back first in quarter USTMA the least the hearing at into there was for turn ours, we've first last of are carrying that half existed of we hearing they and the even of seen anecdotally first we'll for heard the that sell-out a that but there improvements in Anecdotally, that what the is sell-out important year into half we part trend soft through stronger has looking within some Whether back and we the with and that some see. of evidence been weaker the On Cooper see. and whole some then quarter last now, we that industry right have has weaker second be second may of were

then when question And agree strong fundamentals you quite thanks. like years, secondly, that with Okay, market we including been back it improving support your the incremental incremental year. the I for macro seen of and guess it demand, the in the so would the over outlook seems haven't on are that just have fundamentals demand. broader strong but should half a macro past I the also

with and shipments rate the have something the is bit slower seem it in fundamentals. than of to sort and like are rise the is the because like rising a just miles likely means So that is numbers more the gas before ordinarily have I we give thinking or there relative prices of, this the macro we some up what the have to of it begun to lines the turning had part more undersold thought need fundamentals macro that got the seen at first is fact to are similar the summer. catch ask fundamentals to previously year strengthening along half does driven, expect half to back your like and

point to I sooner don't it Ryan. that implications do tires are U.S., second of in has and think both the that about first -- the people from look you and a through would the the there at than that is it's some environment are believe talking macro bit believing later I coming suggests they think going need that time we that -- as to I rather their we to I are need And utilizing of those wrong, we move forward and replace are tires. are half that say there first tax didn't year. environment of which put that reduced also the year. contributors into to coming context at some the this in of also money newer the paycheck the filings round see paycheck should the pocket tax more quarter. in people's this We it when

same durables You eventually people where be the we numbers in financially. a savings need to bit position to so and see do up. the were do, quarter they a going consumer first are were tires, and in replace as they their down should better levels are But to utilizing

you And to could recent share if impacted and strategy If think by versus to your this TireHub, curious third-party or developments cetera? what with distribution last et all relative ATD, there Okay. if just overall resource transaction distribution? you you opportunity the relative are [frequently] question, like is your then wholly-owned is yourself and just on at looks what to

into on specifically announcements is distribution of customers specific our largely recent part without wholly-owned wholesale to -- or Cooper, the So service of distribution for our customer distribution into network. the commenting to our some context putting

people fulfillment forward model at them, large sizes, that's unique customers, products strong the that regional independent bringing as in the smaller better it of want capital we distributors. provides investing national them them distributors leaving we that our its taking of still who for to where with So going to in we business fulfillment That from very Cooper representatives to have and want part the customers they representatives relationships believe the U.S. forward. off And also our wholesale that continue with with to our plants they down the to said large when opportunities are going and wholesalers for we disruption our changes and the to to all and new partnered with. that our are market we our deliver Cooper. and the and arm customers value that, they Having right the work want and believe it

think of at now portfolio with We the of as and where brand holistically. stand positioned the we We our well with more that at to of we strength we really introduce are are new right looking that the the freshness A/TX are U.S. today have are and some opportunities there in now. as the the a right themselves will been That result Cooper changes market I of that we happening are that present about. as Cooper talking

go The be will question next of Jordan from Jefferies. Bret Please ahead.

quick to think at you its year's A start, had last this receivable, that morning? the Q restate year you balance the accounts and in saying I housekeeping report XXX did last XXX ending was

of we today. Yes. be that there recognition more and that restatement a standard implementation will That's filed related to so is -- the XX-Q revenue there some the Form detail about in the

going to is up going speed the spend are change to relatively remain the you cadence product new or R&D introductions, as the you on then levels And constant?

reason did year more continue was of to is we've the increase We a we've OE could restructuring and to to beginning flourish. bit in of part good the to like last part things little fixed R&D that extent capability with what need we to that R&D went levels the the a resources. may may to spending in position invest and in which of said part cadence see seen that of our at total that we invest product a been -- to of ensure in historically. little on of through an had support or in bit some Having -- cost of support to But to the we and our increase we that the that, line we end keep business the of levels we be our SG&A

was growth prepared I it Okay, the in the Asia? I was -- think And slight in press said said said think release think but great. you you what you rate I remarks strong.

in Well about it Bret the first is am on up ones were timing going me sure a of But that on those to slightly used. words, I you're which was flat I'm get little not things. but a frankly not quarter bit -- just

in still third-party expecting year. growth Asia We sales this are in double-digit

that around just lumpy Is Okay. really because -- is OE Asia contracts? it's

of It's that. It's of than the OEs more a was a New way timing to really little it the when that bit anything. fell so on this order, little bit year Year relative

creation And as some on just yours earlier own final the brands focused more ATD, then quick. they TireHub a of their question channel like one Okay, maybe is in create an on lot wholesale great. On a question that supply again chain?

come the at year, have working that position and those Cooper, Again parts announcements opportunity of any is right some this believe beginning brand that the without commenting we on on the now. bigger actively to of even market take part out for an in we're this a of Cooper's specifically really

The next Research. Healy go be Please Northcoast of from ahead. will John question

you wanted thanks of for outlook your I little questions. bit try understand points. taking more, Thank and to comments Brad my specifically a to two some

you've recovery trying understand to company to expecting how being and then is some about So made able have in in And in and in for in to your would you merchandisers, that channel little these the that retail, the slower be to for for that to is the of thing, market still the on are dealerships embedded trying rate moving to least just potentially bit that still and your that then going just the to margin at inventories start point. of getting and opposed fill what's just general triangulating XQ the why QX realignment? to as volume you number? there and given can little view headquarter understand to benefits if growth be you the volumes up? an to And expectation trying comments view lean XQ year some just secondly, will First of margin and similar But understand what's the are embedded the down. am expectation get volumes more to picking the to are XQ. get a -- manufacturing at to the e-commerce what adjusting a sell-out a these year be volume grow better I if of similar understand factors terms the trying bit

necessarily begin the it in which turn priority -- in particular. the market that that order be to And quarter of sell-out we there all sell-in. evidence driven some have U.S. half, received there Part doesn't be second channel be in we to good when the to the sell that impact timing the the fix or in channel it good volume could benefits position, -- expectation comments the might our also anecdotal may see might market little in impact inventories bit and again, timing, the versus some that in stronger a our of about a by of the there general in that mean be second Related is the inventories rebound. may in could the are need time all and a to position, the while

So the related biggest really to comments volume quarter. that the part the the the half versus is contributor of second to second

beyond see year, some -- a second stronger from into to half in for benefit the expectations market going begin that A/TX when the we the we're do move have launch. product from the the We As that of that's believe to U.S. we do

two of to While sell-in, shipments half so to quarter expectations the that And with the we balance biggest impact we better Those more get will if contributors believe for position going our the the to be in are third we're and manufacturing in quarter situation our regard begin year. to we that the of that and in our really will half. much year. the that this on second when filling are of really the into the for backup a second --

the tailwinds to what May on of and some on is a quantify reductions those benefits, might there I ask way be realignment just be the in here? could headcount report the if XQ's

going some on skill Look think. we portion have particular, capabilities and And sets will I haven't that provided and forward. take a side specific the benefit some In into on of we that reinvesting we that we that to of I we we also SG&A strategy be would will the that need reinforce guidance deliver see up that. will

into So do but expect quarter as we and little offset, get from be a partially we bit, will that improvements will beyond. the be that second we there

Anthony Research. Longbow come will next go ahead. Please The from Deem of question

questions here. few A

curtailment second assumptions if some the is jumped outlook quarter inventory second if here income wondering segment quarter, other the to the production there can specifics First is margin maybe the in just or I'm share meaningfully quarter? on first you related on mostly for

level the inventory the first but this, we the inventory, have that. Ginger, we like transition States of all some and dollar of in let in the events will our that the with better comment unit But on While service so warehousing is an quarter increase TBR important is the A/TX to that the want you the on, with prebuild I even specifics we approach stock inventory the have. inventory making for are Actually on in down customers. to some our level Ginger provide it's of launch more the United

Yes I will.

of our are we're dollar the and units also inventory of what's some our stocking A/TX that the really and mixing Tire building margins question But although said, for value new the launch as is Anthony and of assumption into down in some So down. half high year-over-year, warehouses. TBR inventories year-over-year you around Brad was margins? about that's second inventory driving are the about value items inventory

Yeah.

for that downtime production looking margin on I While just to weakness additional granularity drivers the mostly and second not? was quarter or was cost related

that I see is we pick do balance the less and half will will with see our costs. we that the So have up second we to certainly continue think at we we production that year inventory the think, the levels assuming in hope manufacturing

the the what's you the half. to actions going driving our big savings of Brad, that the second cost in of up year. are A/TX I that of to planned the some made Brad to of programs also think second the in of anything finally, the launch and our the goes the ago, couple taken, and minutes add? a point margin impact we with internally, half back are market our the And those want hope already picks it drivers we've

well, Yes. expecting the you second favorable There a we'll around really in mix are are we're third question are, some to where the be things is, that around of from I will richens see quarter. begin A/TX to the the should be impact volume add products the because half we as it and in that be relates of It TBR to the bigger growth get selling. second as going your It mix of but first the the the will quarter areas some part that year. to fourth and the of

you. Thank helpful. That's

or Cooper [your can company gain views] the kind on like share your it to positive issues OE and might be think a in picture, I if viewed U.S. in over discuss So territorial or inflect potential company's attribute share the market consider the you of issues as distribution that point structural wondering of lack that at any market past, to can market bigger the the do and Would exposure limiting just successes? might maintain we able time replacement you am what be to you again? the maybe

increase largely to will are on to the that business. We States to United do and are we've Again, transition because we we other years and mentioned it in In it. But few of market among are other we is and question now our to last really that the helped in supply appropriate over in have our -- our a others. through the reduced that have through parts believe in we talk business, merchandisers, largely areas in that. because have it's actually starting are Cooper particular to right the the developing of had to here will of it's OE X and of units. private and exposure. time parts to brand more that call for don't now us grow stopped wholesale that highlight there's this dramatically in appreciate last we this will our allow in us our is, million that general sales things we an the the emphasizing about areas exposure be begin three are over that couple That One opportunities highlighted we we we is I now and near those some later dealerships, share e-commerce, we right need year. of those relationships by the able that are for where be auto But as

And And thanks a strong repurchase from expect still aggressive Good. has last balance again. can all Cooper my to questions. more at a take thanks just I wondering stance towards me, for you taking we levels? then am very activity sheet. share these question potentially

we and to sheet strong in to going do are pleased are balance that we Yes, to position. a be continue -- have

investing balance can to other our we return will priorities We what ways into versus we are continue obviously. that to deliver strategic shareholders business on to

our leave the among be more on other make those price variables May share plan looking moment. will Investor so XXth, thorough We Day decisions. on do allocation conversation at We for around I'd having a it to there capital at

And and our for remarks. session. to over conference back Hughes his ladies to gentlemen, Brad closing question-and-answer the would this turn conclude will like I

Okay. you thank Thank on all with you, today. being us And the call operator. for

look the positive The do well drive We strong position the global out started norm combined we with on any please term. tire Macro new that always, challenges a to remain call, us at reach and in not Day for As I earlier longer XXth. improvement. speaking trends model already Jerry to and said the comments. we you. do business programs should the industry to ultimately our to represent expect you that current industry. our further or And soon Investor over May with footprint questions Thank benefit forward as have

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