Cooper Tire & Rubber (CTB)

Jerry Bialek Vice President & Treasurer
Brad Hughes Chief Executive Officer
Chris Eperjesy Chief Financial Officer
Rod Lache Wolfe Research
James Picariello KeyBanc Capital Markets
Chris Van Horn B. Riley FBR
Bret Jordan Jefferies
John Healy Northcoast Research
Rajat Gupta JP Morgan Chase & Co.
Call transcript
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Good morning, and welcome to the Cooper Tire & Rubber Company Second Quarter Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Jerry Bialek. Please go ahead.

Jerry Bialek

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

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

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

Our and will earnings summarizes today. link in that a SEC the included the a the slides of later in to set release filed with includes news XX-Q release information be that

note financial non-GAAP the on directly linked GAAP call. The reconciliation about financial include and most we'll certain information Please this slides to these comparable measures measures reference measures. that a

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

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

Brad Hughes

And our always questions. for of to detail. Thank brief turn you, the over begin overview Jerry, call results. a will a financial -- by about I'll our review conclude taking we talk and as in of outlook. performance return few Then will our that, a good will your I morning, greater Chris of with quarter today everyone. I After our second to for

a XXXX. to quarter improvement quarter. Unit compared the Net Now compared decreased quarter. profit or net $XX million. first with let's $XXX million of was to sales, of volume the X.X% talk sales decreased sequential X.X% the X.X% second Operating about

up tariffs. despite of XX% operating The the was year-over-year, impact Americas segment profit new TBR

our replacement weak is result new vehicle the competitive. was out a market cost The in process of completion Melksham Europe. is by phasing that vehicle conditions and tire and tire nearing segment challenged production market Europe more within facility international light at China Cooper in Our a tire will

now are and construction Both sourcing new of China. in tire schedule. agreement production footprint on off TBR TBR take joint sourcing business with relationship tires is We more Vietnam Sailun is from progress of venture Vietnam our going our with actions our TBR tires, well. outside And our facility Mercedes-Benz diversify on

industry. the comment result, the unit Let underperformed specifically me U.S and which USTMA volume, the on the

we not strategic remain we confident we've result, satisfied Also, XXXX make as saying. performance in of the products. with we demand indicative growth is While for will quarter are a our that underlying believe not visible the been second do the initiatives are more we executing impact

do is data U.S we for sellout not sellout half believe information the industry the While the Cooper overall in was we have, of market with complete, line XXXX. first with

However, the as as make can from happened to in know, results which time sell-in impact quarter. you adjustments we second inventory time, customers believe

I it over to that, turn With Chris. will

Chris Eperjesy

Brad. you, Thank

in partially quarter and volume currency second price million of $X sales million, driven million and consolidated million mix. million X.X% were the foreign $XX This which Moving unit results, favorable by was lower $XXX from by to impact, unfavorable of $XXX of $XX were XXXX. down decrease offset

light in from into Tire imported products China Melksham vehicle production in decision as achieved million million related $XX was restructuring This margin well the in X.X% new to XXXX, of United Operating quarter as operating profit of England. tariffs $X Europe's $XX million Cooper costs was cease $XX an resulting second of related States on million to to tire of in compared to despite costs sales.

we XXXX, quarter provide we respect tariffs around the with expected the new implemented million. Let on the update Last be XX tariffs. to February $XX that of to an cost me full-year indicated TBR for

TBR be was increases expectation will price the these to there that on in tires U.S market offset Our help costs.

and see broad we that pricing implemented to have the we increases, expected. yet we industry others While price

TBR market Cooper demand tires that industry and we eventually will remain to strong phasing pricing will with continue believe result our relative TBR to in pricing. supply for

number However, receive we sourcing take good agreement beginning previously from quickly as with we are our tires pricing do our We're commercial of Vietnam. We're and expect actions TBR not that will received up to diversification. making on ramping assumed. footprint as occur the Sailun off tires progress

is half joint of continue Sailun in At on the and venture next track new to May, the same our the further U.S In from in TBR diversify production of XX% plant tire evaluate XX% to TBR we year Chinese the with with early commence expected first time, on opportunities section construction a announced the XXX imports. certain sourcing footprint. to administration tariffs to increase further

experienced we some TBR immediately. Given tariff This passenger from China was included on Cooper impact raw our imported LIFO our that increase method well tires rate incremental applies a in in previous accounting outlook. as is in This car tariff the not both negative materials. U.S., to the as

for updated for recent on fiscal rate $XX for all is newly million. our estimates and expectation our have sourcing full-year of the other impact variables, we XXXX implemented gross changes As and expenses tariffs

which charges projections amount transition charges Melksham restructuring our nearing As full-year million of ahead expect completion million with second restructuring XXXX of approximately in the little be and the was in schedule, in we continue Brad $X in line to quarter. indicated resulted to $XX $X is earlier, range a the million. This to

Europe in when experienced this leverage the more slightly manufacturing will fully this of in conclusion action completed, remaining our than manufacturing in network, and benefiting plants disruption Cooper approach Yet expected. we we volume more As globally. transition,

distribution volume of the $X cost $X related $X.XX higher higher the quarter mix; stock-based ceasing of quarter following favorable Now costs, enacted of let's at costs the was million the related take products liability a quarter XXXX $XX compared to impacted excluding raw by light tornado XXXX restructuring to $X million product vehicle Total tariffs on profit favorable non-recurrence share of primarily million XXXX. XXXX. included primarily incentive due tire into in also share with the United other costs price company including of walk. in higher $X second our SG&A million to million look million materials in from of million, tariffs; production factors: $XX operating $X.XX new of per the Albany to in of warehouse Melksham; and compensation; second profit in earnings million; Diluted increased imported compared China; States unfavorable operating $XX and recovery new of insurance was per $X of

$XX to operations. unit Now quarter of tire down volume, compared X.X% million turning our down the volume sales a by Americas second from as $XXX year-ago. to offset partially for $XX a unit result mix. X.X% million, of period was of Segment were XXXX Segment favorable the million and lower million in same price $XXX

Our by vehicle light U.S by the X.X%. unit decreased and volume industry while X%, increased USTMA X.X% total decreased

XXXX. price U.S operating million profit Operating $XX compared or million tariffs from costs raw of by mix, $X volume, with million to $XX million other XXXX of liability million favorable $X new on into unfavorable warehouse of million products insurance million the in SG&A recovery quarter XXXX. of $XX imported included or profit non-recurrence increased the tornado to Americas $XX in manufacturing excluding of higher lower the costs, costs costs and $X China, $XX primarily of of higher million material X.X% $X costs product new that of tariffs, of due Second distribution $X of and improvements, million in enacted Albany increased X% in million favorable sales net sales including

volume favorable our This of from second unit million result million XX.X% in to tire $XXX weakness vehicle of was international tire and Europe and with $X both of price by XXXX. in in decreased unit and replacement part unit the by foreign impact, Net market large offset currency China million new turning second business. partially sales driven were for of driven Now and mix. by decreases quarter down Asia million, in European lower quarter volume volume operations. challenging unfavorable Segment were XX.X% $X the the $XX which

million unfavorable $X million $X higher The decrease $X by unit in price profit $X other $X second of offset to which million million $X partially and and material $X of lower million costs, $X related international quarter mix, million were of lower operating and compared costs of The manufacturing of restructuring, volume, raw was million of lower in charges our England higher SG&A operations loss costs. million included $X XXXX. Melksham to of costs of operating million

our expectation slightly the quarter a XXX.X This from XXXX. XXX.X Raw be quarter second sequential slightly in XXXX. up material quarter from increased but index the second index down line first Raw sequentially was year-over-year. in with material X.X% basis, of in XXXX to of decreased the on to of

sequential the For expect a material our raw quarter, and on we third year-over-year down to basis. index be

corporate XXXX. to Other first estimated return now benefit year. versus planned increased expenses quarter, and increase $X.X Turning items. the of is postretirement lower compared this the the to prior on Similar million result primarily assets pension to

have to which expense. funding status funded in portfolio As our strides protect of is made we improving the quarterly in pension the result risk increased a status, net order in less taking plans, the

the million second accrual to quarter includes for the rate quarter of the tax pertaining The the year. compared last to effective for tax was additional of items XXXX The uncertain XX.X% related positions previous XX.X% discrete quarter for $X to years. XX.X% -- rate tax of

-- quarter million net the items of tax discrete second included tax included The XXXX rate. of impacting $X a favorably

restructuring items and form the company the order range in full-year effectiveness More in Melksham tax between planning perspective. operates. on for on company discrete in with annual decision entity based be with in and to rates tax will our excluding from various effective jurisdictions, rate, tax effective conjunction region be available which XX-Q examining SEC rate significant will XXXX XX% is related the later the that earnings taxes estimate facility, We XX%. detail will be the tax its a filed a of In our the forecasted today. structure the to is ensure The

and its the highlights. $XX some at cash $XX Turning in invested to the $XXX impact XX, the June Vietnam. compared million quarter June balance million quarters. of cash XXXX. million X.X% Unrestricted Return second period XX, for goodwill new year-ago. XXXX expenditures has at on million of capital with charge joint compared fourth the quarter, the quarter flows were was XXXX and million second company Also, the same excluding impairment $XXX equivalents four in were invested a Sailun the in cash the of trailing with Capital with venture $XX in as sheet

comprised facility is credit its an to year. XX, credit existing XXXX senior and to amended June mature date maturity Cooper of to the the in and $XXX $XXX $XXX bank revolving June extended borrowing million existing a that of December executed loan. On million. amendment The be which XXXX agreement this capacity XX, the loan to draw million primarily facility, The to proceeds from retire used term new late X% a new will the notes increased

good additional very million the of able time, be The to attractive back At some save flexibility amendment annual interest we the opportunities rates, fund provides with savings XXXX. for given reinvestment beginning $X will financial same Cooper to the into borrowing in business. approximately

us. Before Brad, to it to priority remains capital for our reiterate that over turn an I returning want I to important shareholders

in As quarterly the the invest supporting we'll balance we repurchases our near-term our as business. pursue committed but to share opportunities in more in attractive opportunistically quarter, to demonstrated we're second dividend,

back call I'll Brad. the now to turn over

Brad Hughes

And Thanks, these Americas from Chris. the in headwinds by first segment, company year-over-year improved even some quarter described. we after the profitability absorbing improve toX.X% is XX% the challenges Yet we tariffs. Clearly near-term total in new able we've in with operating margin to were impact X.X% of the quarter. the as industry even the second profit facing

initiatives, efforts We in business including meaningful will executing and expect initiatives starting these expansion improvements to make progress that continue strategic in our XXXX. our drive retail more on our

well as and a impact margin. expected are of Increased commercial we The On are the in work of Europe in price tariffs remainder to have basis, to the China operating tire excluding delayed headed. U.S segment, anticipated throughout tariff future line and consolidated generally weakness the year. year we markets expectations. profit improvement Americas costs and vehicle with increases in where TBR remain is anticipate new tire still the replacement do, this previous We truck timing but confident as about

performance X.X%. capital of Vietnam pro throughout new margin profit $XXX joint Cooper full-year venture related and reported million. manufacturing improve is growth unit full-year XXXX. Cooper with to XXXX with its include rata or China for half lack share vehicle $XXX clarity with million regarding given Operating expenditures adjusting line will Capital contributions volume in will longer of year margin profit potential the operating of follows: market, Cooper's no the expects as expectations does between footprint first and full-year This compared margin range other the investments. the to not volume Sailun

Our items related charges to effective between XX% a will will be tax England the million. restructuring $X to range rate Melksham million and significant and discrete finally excluding of XX% range in $XX

short-term we which business by and positive will operating continue conditions into In build been momentum improvement the is profit described, affected right and while has outlook that to doing going the improvement, summary, drive this to XXXX. the sequential support margin things believe year we our Cooper

you question, With take the Operator, first that, let's questions. move please? to will your


Wolfe go Research. [Operator Today's question Instructions] comes Absolutely. of Rod Lache ahead. Please first from

Rod Lache

morning, everybody. Good

Brad Hughes

Good morning, Rod.

Rod Lache

just level. kind high One Had of a is questions. couple

goodwill variable If and a can year-over-year. raw tariffs so was other $XX those XX. and if and shouldn’t contribution talk you comping last this into million maybe quarter the bit flow a performance fourth be distribution facility think higher -- $XX the it about you by look I price costs about you into because will had Coast. materials more there year a of year-over-year which items, of offset recur. the was on hoping actually million you SG&A little And negative $X was how you which the for I West was half a you in And the divide was structural think that it as mix items those distribution costs on distribution was million other against, your restructuring impairment back up basis, year volume

Brad Hughes

the of recur not exactly Yes, are the them have correct you that's in of going things correct, me math we Rod. around to structural in directionally some improvement front seem used, many And variable go are that don't the but it that I as does forward. of

there. of examples So a couple

year. million, I nonrecurring costs, insurance that we Within this recoveries results distribution $X.X on we there that last the had in are believe, have of year's don't

that’s almost So $X there's contributing million there that to distribution.

category. there I contributor began the piece half moves cost correct, tires not else a actually distribution distribution this some to a States in in and for on that's And reflect then little online, when differences of that those the were the year. recorded the this fourth are there. they we And of year is distribution was have number, you’re some last in United of costs in to and most not another were new we as actually less previously huge sea we Something of manufacturing we that on Mexico second where bigger costs the into will importantly warehouses freight costs and quarter to as that incur in imported same were being Not that obvious began and had we more forward move region. think the so the it but those

that year. we price SG&A category. is price in shares, and of you in shares down related did and move a that we One this the And stock side, things adjusting negative on payout there's the contributor a deferred move the price, was incentive year-ago, and the the On this the the the have and at compensation for a that to projection year-ago to couple frankly a reduction year compensation I full-year are our going a with look point versus comp the similar the were of on SG&A. out not

year-over-year your think and this see several the things would we we in into that that year, as recurring we'd point performance. are not a half second to there are So better of move there

Chris Eperjesy

Chris. is this Rod,

of one all that quarter thing that would be of Just adjustment in related add occurred items. so will model, year recall terms half $XX benefit kind was one-time in in reoccurring last the a items liability, to third second won't you our I is, of that year out other there million the the of product the rounds the

Rod Lache

right. Right,

two any ramps? agreement tires is, take ATD, in, coming and some in what of on ramping that off things. helpful. so Walmart units from Wouldn't be And those update ramp happened just to remind of of some extent the new other And to from commercial China. or be million you the that what seem you up on in That's accounts Vietnam offsetting once half the just will volume inventory? are you're from One the Okay. us be the aggregate what To can back the bringing year? on last that accounts other

Brad Hughes


in. haven't that the question tires -- on of on we’re the numbers about specific given bringing to Vietnam, we number So first

a joint are agreement more the produce with Vietnam of that to will over with had year, up see be the off next that's course we some certainly in and that were take units will because some of have and about of business on, seeing at a in we believe half. the that last we’re we will the coming those to putting growth. year, ultimately are seeing a the sellout, we against we look the some from as see we we We adjustments, on what we get U.S. the and we've start to came of the through there that meaningfully be highlight time, we the into impact that. against books continue benefits move longer-term that more of right of that then determines as is get on tires of right will around get really And that -- we costs we same opportunity But market venture that inventory over that period of ramping offsetting into over the longer got think a been now. you'll and in increasing have bottom certainly which tariff year as to from big new we the to impactful that and the year this timing the the half sell-in were as -- highlight second -- some previously compared But are contributions of and comments at some we inventory from as the tried actually quarter-to-quarter etcetera regard the with online the that we first of now coming that next the more begin is we you commercial business larger customers on the XXXX year portion from Unfortunately adjustments contribute will to number incurring that that then from level line

Rod Lache

Okay. Thank you.


next ahead. James Capital go today our comes And of from KeyBanc question Picariello Please Markets.

James Picariello

just Hey, kind from there, just greater look margin could raw impact the if revision netting good changed. It -- The materials volume, is little of on major terms we’ve help the guidance, to sounds the the got variance. better, the operating has than what got tariff we’ve the items, $XX bit delayed. a you remains Can we X.X% gross that a X.X%. guys. bit of bridge morning, so maybe going got lower buckets million, just are at We’ve curious so now focus in like pricing of

walk help expectation, the you So, that this just yes, variance be if in you. full-year helpful. Thank will could through

Brad Hughes

a in to though and we see revised a tariff to one supply situation is create that background the believe the of TBR market, in them, price the we we the factors pricing. tariffs. of ultimately there to moving a And very is But both that timing that specifically cost of of Yes, there's out. including from dynamics but there pricing that’s XX% XXX pricing and side, one which the the in again pieces there moving continue and lot gross combination those in for you’ve the to those identified going now outlook we're demand going James, be anticipate one the just even of favorable will are XX% increases,

element the that is an including So that. of the tariffs for timing pricing the

are China. seeing new vehicle in market the We continued slowdown a in

full-year. previously. which is the And to I replacement So to third the weakness from then, market the the bit that regard probably is that in the the in to a we've different with would affect for frankly, guidance full-year, refer little we expanded major in the slowness, Europe change had factor the

James Picariello

U.S. Okay. How for in Does key persist Thank you well? realignment with the inventory as that. about that a customer the

Brad Hughes

or make And structural to wholesale sell -- relative one to the we of one us. that are that the that the trying be about just we we through and period right. to which sell-out it different selecting behind because timing was not and really the is brand to -- is about quarter, feel what were the saying we’re good private from market is focused change more that as year sellout all element. business, were which that’s sell-in, timing, a timing whom, can become pretty -- way to period, and tires tracking first were customer and in market a inventories I This adjusted on we to that we it's necessarily going on the The half from the quarter-to-quarter a comment U.S. we're And where

James Picariello

just side. Got it. tariffs a one And on the housekeeping

the tariff So to up XX% from did XX%. XXX step

to exposure $XX allowing million something as that higher. you what's to to oppose gross keep So guys tariff

Brad Hughes

products new lot pieces Also of that countries that by we moving and are continuing to -- restore tariffs. again, are -- there certain there's the the not a affected including fact to

But And lose didn’t -- within changes of all volume, which that. so sourcing that. to the into, them we that the are contribute we selling sight markets well

James Picariello


Brad Hughes

you. Thank


today Horn next go question Riley of Van our B. And comes Chris ahead. FBR. Please from

Chris Van Horn

the call. for Good morning. Thanks taking

Brad Hughes

Chris. Hi,

Chris Van Horn

of it other of think little than is or the I top in maybe on dig a moving to growth this we weighted see comment a just what pieces there that? XXXX. volume unit further growth, you that should Is half back bit for of into about just of reversal around or want the part unit that year, more

Brad Hughes

of customers going has in the -- America, year. expansion begin there been some to impact with more think a in things, to greater are have environment, year us consistent team also on with most get of next couple we to little certain retail in the and tailwind would specifically would with volume. that we is to give a of move numbers next North which themselves expect year bit certain regard next we combined on -- a the pursuing as sell-out/sell-in total into are But than the more overall I the is those thing most type that if importantly are around initiatives more they contribute year just important growth efforts expansion That to next the -- an to show date volume but that have a in retail changes into Well, new going to relationships. as we grow

Chris Van Horn

million then, And $XX you’ve out remind it. of controls benefit on us a of being spent to $X as the foresee you Melksham cost Can the that got you identified in what years additional restructuring. in on terms Okay, million and savings etcetera?

Brad Hughes

moved. into facility one put to a benefit Yes, haven't the to it's going going contribute the which absorb footprint, out rest it our benefit overall being to is But highest the Melksham numbers that's clearly into removing line also our given of that Serbia, of which volume, on to will that specific bottom utilization. of to cost most the of is additional but facilities, going yet, we our volume lowest-cost

lower for costs most begin as for you'll company next to obviously, and that total quantified contribute haven't and to but yet we into year more of get Europe. that clearly it we see importantly will So,

Chris Van Horn

foreseen the launch an me, on update last going here OEM And the got just Okay, U.S. costs just or then maybe unexpected update there? it. any in is it planned, Any as for

Brad Hughes

going No, Mercedes. The with planned. largely relationship very as is good

all we perform adding here as that received. move platforms to feedback well seemingly pretty based continue on and we’ve We along are additional the

Chris Van Horn

Okay, again Thanks time. for the great.

Brad Hughes

Thank you.


And Jefferies. our ahead. of Bret from Jordan comes question next today Please go

Bret Jordan

Good guys. morning, Hi.

Brad Hughes

Hi, Bret.

Bret Jordan

and I -- question Walmart obviously I of the on timing your guess guess, I expanded ATD with picked up the relationships. new you just volumes Monro. a mean, at

selling are fill-in now of As going new incremental far there as done that up you’re the list or matter out, to those relationships it's of forward. customers the loading new adding a most as and

Brad Hughes

as our There's when there's to and category selling that are we're those year through to of right newer those serviced largely that right Well, distributors. and the we experience parts I serviced national the last an think building that there that still growing the resulted retail, matter and tires retailers points through here. independent and some as first sell-in of the the now. categories the of opportunity went Then by selling increase some from opportunities out selling opportunity additional Again some two That smaller number of dealers you've general points distributors. were last new are national use where of -- in that U.S retailers place those a the large are wholesale the now now. are some primarily retail dealers got and it's that of initial number through the larger retail used we merchandiser And that large added accounts distribution that that year. we to to we different we independent adding are is program of landscape tried the successfully with and started that -- had changes in conquest the

through depending go on the time really year on different line. show one think pilot of which which up to about, new phase, importantly to those some going more with you’re the is those lengths grow that year see continue bottom last of You but next start and will you're when we can and activity to progressing seemingly at talking this we're

Bret Jordan

business, the about forward I being your in more -- discussion here? share I with said from on buyback. question away is commentary the a think going the the near-term -- on What being more aggressive? guess more in take is then you’ve reinvesting And -- in repurchase share a repurchase the about great. Okay, conjunction would which theoretically on that opportunistic thought that program, the is

Brad Hughes


at to on think right opportunity to the that and But and we We to think we're reinvesting for where to need will is we've are few over the reinvest now, something -- buy are so back. that opportunities a going -- price the that to couple as in that obviously had that better new business we saying the the be any been at opportunities quarters we do. in some we’ve new for good business. do last are now look look to regard to that that So share considering with years there continue there and of

Bret Jordan

you. Thank great. Okay,


question from Northcoast next ahead. go John of Healy Research. our And today Please comes

John Healy

Thank you. segment. question about to I a want the Americas ask

It a terms like of million hoping little was I guys. color $X I SG&A what think out given give more going could you the you the of big of size cost in SG&A on a operating you there? number for relative just assuming, the bit seems the guys us for segment. just called income was

Brad Hughes

little the to Chris, this describe will what we but Look, here, period-by-period. a is pieces of stock again bit supplement if there missed I couple deferred something as are: big compensation. -- pieces as related one One -- anything mark Right. is I it a that's two of compensation you

meaningful first this price contributor the compared from to of the the quarter change in the the a quarter-to-quarter is year of share terms in with a so in the change the quarter price to year-ago And second that. magnitude share

to year-ago adjusted incentive that that, point. relative In this we this also compensation we outlook for at the addition the full-year for a year targets, doing on our based to -- year our accrual our are

this credit don't year. it and last And year was call that that albeit have -- reduction a so in that we SG&A

those else two Chris, there? big anything pieces in were So noting of it. of

Chris Eperjesy

compensation the No, based and Brad. the majority, accrual year. the and incentive stock comp was the It the last adjustment of was that overall

John Healy

on ask Got a broader maybe And just of just standpoint. then you. to I want picture base kind

and start given Just that you members ATD with maybe If think segment reasonable at of be in level we some when thing the good and of most you Monro a soft even frame to it and maybe to about overhang us the and perform than Cooper. are label just opportunities? of that you do really the volumes the USTMA be think done a that guys should you time business? time volumes we Walmart, maybe shouldn’t of Can a Americas that, a better this some surface think you should with help for is look on line and at gap or think side. kind close still of private trying understand when us the provide share the And Cooper for be growing might

Brad Hughes

on to to into begins quarter-to-quarter, think that we've Well, would level of been XXXX, but a -- to business as I start performance that we more. and I this different certainly get see definitely going on a as John, new we call think indicate hard it's contribute confirm you're to as saying

some I you move as at sell-in based on it's sell-out to just that, opposed the we're quarter-to-quarter sell-out you and -- ourselves and reports numbers as quarter-to-quarter compare that timing. would which is is USTMA we think up kind the on itself to down Before that We with as align look can is even and we to in much buy what doing of that year there sell-in activity, their managing for get of measuring the that say again, the inventories of through and activity we're move and better alone. customers both this We’ve lot better -- balance not of a will the the that job industry sell-out. of which the out will out. a

And some that our as the on year, what as new And think in that show [indiscernible]. sell-out we to report sell-in same will XXXX and reporting. that about it we we with the we that into improve in of as through of are itself against should were through, data forward demand initiatives the so the and the of we sell-in U.S., industry is move as the we the reflective be half we of trickle the the products think for first begins terms get

John Healy

then me. Great. question just for And last

opportunity, you be is you'll into of those do in a Vietnam the sourced Vietnam tires still you that look reasonable TBR at to On region the it when you the or U.S can that bring XXXX, into be those the U.S? approach dual bringing think using most tires through

Brad Hughes

be transition to during going Its a -- XXXX. definitely continued there's

coming exit everything on track year, majority well stays we in right As we now. the and a we're be on the that will -- no position is doubt where track there's assuming

time and confident or tires majority the Whether should use but exit the of the outside no XXXX, coming term not China. place. full-year, is it's be in track will tariff that of get will a doubt, the we're don't that next environment I big -- we I current the everything we there on for on know, remains that could by So year be help those but say from highly if

John Healy

Great. Thank you, guys.


from ahead. And our comes Brinkman go Ryan JPMorgan. today question Please of next

Rajat Gupta

Ryan. morning. good is on This Hi, for Gupta Rajat

particularly do saw volume improvements efforts. And draw How there. the had the from on And and quarter good especially follow-up. forward, the some some in you margin you in continued and highlighted the manufacturing a had growth to from down this about should improvement going bridge, we I Last weak the question inventory America, in currently? how easy second environment? a you you Just levels compares inventory see have about bucket think feel then, half benefits manufacturing

Brad Hughes


it of the consolidated in way well a specific, in to production that we complications end were we basis On experience going tail incur. thought the look what thing when minor manufacturing were cessation one a working note relative on tire Europe, the is at through question our vehicle we did of you to we light to as

achieve what sure not have the that pretty are cost along our did with done to in to the we're to there. an That China in production impact we offsetting And us with Now relative that. those market overbuilding much able we're Americas. schedule OE adjust on making combination,

in year half when the we forward, America, it we into get still for the North total that facilities and look we of will we do in better the continue As utilized balance you to so second see look the continuing. that think of when at have year, we

Rajat Gupta

for is in I to volumes industry just than range kind you company-specific full-year, give on that sensitivity or then or based as And expectations? mean, a expectation could the it. margin on? might Got margin that volume worse what better guidance there how come if move or the of is us --

Brad Hughes

stay then could happens impact some to -- there new replacement year continuation we right now global have we're in would the on we that -- would we've of for industry wouldn't now for our European what I that and And and the market, provided. change that relative -- industry about market globally. to be severity the balance that an America guidance viewing to will expectations, just so that guidance think vehicle how in any Well, The if volume the need range it we provided. are the those market as replacement are that suggest remain year. in North China we the of the OE soft that we indicated,

further just lastly, margin we Chris overcoming goodwill there's this the that costs that offsetting at write-off, those last and if This roughly the there I respectively. then, really So in in just made the profits which X.X% we've and achieve almost the new as we've in million pretty continued caveat is one being really, regard be to kind China and TBR highlights $XX be and same full-year weakness have year, talking noted are for incurring that are Europe $XX about, the would say $X of the as progress underlying with million, that might And -- of of still continue range with equally of it for timers the some one benefit impact. offsetting and of the $XX are -- million severe there the the that big were were overcome the in to to through million and report liability, to only business. the not that million tariffs to to earlier, $XX balance in year Americas product full-year, hurdles we guidance, restructuring Melksham two indicated operating profit got the China two

Rajat Gupta

Thank it. you. sense. Got Makes

Brad Hughes

you. Thank


our like for any the to turn over management back conference the would question-and-answer And session. team concludes I to remarks. final this

Brad Hughes

Thank you want points. key to before I some we much. reiterate And very close,

First, negatively I TBR describing, our was have affected Melksham as in tariffs new just costs the near-term restructuring results.

the Excluding for the have first profit these, and improved half. second operating operating and margin year-over-year both would profit quarter our

is while well weakness near-term be will XXXX, we vehicle for business our of replacement pricing. the the a strategically we’ve the be we In what continue our Regarding China, tariff move there in market. growing believe mitigate to been part initiatives as TBR size new in believe important that park growing and of and current the market market, to has car impact business, a future favorable into underway the given the should we China conditions sourcing

ultimately market cost more particularly replacement make the us we and will Moving Melksham believe we've will actions taken to Europe, improve near-term in softness the Europe. in at competitive,

expansion in in moving see and them XXXX. as expect Lastly, America, more plans to our retail we from said forward we are North

improve We will incremental continue for results and our evaluating the to implement while to our opportunities going Thank initiatives, on forward. being call strategic you today. business


you Thank you, sir. presentation. attending This conference. thank for conclude today’s We today's all

wonderful You may now disconnect your a lines have and day.