Cooper Tire & Rubber (CTB)

Jerry Bialek Vice President, International Finance and Treasurer
Brad Hughes Chief Executive Officer
Chris Eperjesy Chief Financial Officer
Chris Van Horn B. Riley FBR
James Picariello KeyBanc Capital Markets
Ryan Brinkman JP Morgan
John Healy Northcoast Research
Rod Lache Wolfe Research
Brett Jordan Jefferies
Call transcript
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Good morning, and welcome to the Cooper Tire & Rubber Company's Fourth Quarter and Full Year 2019 Earnings Conference Call and Webcast. At this time all participants on the call are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions].

As a reminder, today's conference is being recorded.

At this time, I would like to turn the conference over to Jerry Bialek. ahead. go Please

Jerry Bialek

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

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

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

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

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

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

Brad Hughes

to May make shared about retail everyone. been in of available months on we our Investor over S., number which points an to increasing want last brands and on will tires. we've update thousands a greater find good products XX ways extremely you making In progressing well. at have talked Thank consumers is with presence, We where effort for our you, and with we we the the strategy Jerry additional products. of I to the retail to points sale access U. at our want to XXXX morning This start Cooper to provide is consumers added shop of Day. and the of progress continue with easier

Walmart business added retailers. have or Monro expanded others, and independent with addition including to in We

of In tires Walmart, fact all with the U. in retailers and now the available in Cooper addition top-five Monro S. are of the

about growth seen and we Additionally, note XXXX, larger supported you mix on to Investor walmart.com consumer platforms, high mix will by and results our strong our tiers. transition products. deliver At improvement, these added its tirerack.com Cooper in continued talked have capabilities among improving including e-commerce that Day, we others. for contributed our significantly also full to profit value year the to the rim diameter reported enhanced

for of For U. XX% our sales instance, of our tire end XX S. end of sales XX% higher. rims this or the in with diameters category. XXXX, At nearly of size were the inches XXXX, at of

Investor at Mercedes and Speaking luxury value talked S. specifically to about announced with at of it original be high U. multiple line Benz. auto pursuing have brand, equipment brand, the the overall selectively strategic with products approximately Day two-thirds. continues the market since OE in fitments added about fitments Cooper share We

a lineup Cooper brand talked and This to our got start. also radial to brand. launch Roadmaster truck bus strong augment We expanding tire to Cooper about our include brand off

school standard children Blue America. day In every equipment which original tires school Bird and buses, to on across are TBR fact, Cooper brand North transport from

cost in with we upgrading with were evaluating structure. how manufacturing a locations the right to the In and also our XXXX, have competitive global the footprint capabilities right capacity technology described we and production right

we other lower recently Europe, our cost bought cost shifted of Latin America, high at light Melksham joint full plant take in that production production facilities. facility. this better ownership there plant we and to our seized the Mexico Following leverage out player low venture to partner in In review, to vehicle cost

Asia, in venture Finally, we launched in tire Vietnam. a bus truck joint and plants

also we compelling fresh, products to Cooper with EnduraMax. cadence our new about launch segments been Investor that products the than out ensure for talked a know ATX, Cooper consideration accelerating not. At Cooper product running. is for replacement we've and capability, Day, Building Solaris like more and digital awareness, which has delivering tires, consumer and part marketing now we we the set brand is when Building of win up that often key

Uncle advertising, awareness brand print spokesperson. consumer in television, our are new Cooper efforts swing featuring full digital and Our and include

of be accomplishments management operations, appointments, of continues global Asia organization our our as and well including leadership new key finance by our achieved technical our All team, to which function. as were these strengthened with global

Corporate by additions recognized also board our we making score to organizations and succession. Directors. for on progress Directors We made on for process of representation of the we to diversity support Board were Equality inclusion. as two our Index, the Cooper Board refreshment planned of also is recently XXX% We earned on females different prepare our and

as Cooper, of under sustainable initiatives, Development initiatives are on members who of focus these and the the Business leading industry. tire momentum a Industry Sustainable strategic are Tire TIP of to these aggressively. proud is to sustainability founding to pleased we to efforts support well with the or very Project the tire a continue by together World manufacturers as initiative one are pursue global and We TIP. them at be important continuing work Overall, for Council

financial savings. XXXX the and flow net margin Importantly, new margin improved million rates were and interest and tariffs fourth profit versus operating senior financial to throughout of despite as the prior accomplishing profit quarter as profit XXXX, deliver well added notes, improved to headwinds from the cash the first $XXX in costs. in to of $XX restructuring from refinanced X.X% operating Operating year quarter. these our million we flexibility, specifically by as which our Operating improved our in we're X.X% year business, all teams compared future improved to improvements able results

in to We begin will see XXXX.

With unit XXXX volume impact respect customer S. inventory volume, have the discussed as had U. on actions performance. to our we previously, in an

we which this party Excluding with challenging in third we a in despite us, XXXX compared unit had would have passenger Asia, full volume growth prior market, vehicle XXXX. year region were believe behind year. XXXX In the compared sales the impact, our is to flat

our a the quarter, were improved both our fourth and on Focusing margin basis. operating with in line results operating on Fourth sequential profit quarter year-over-year expectations.

volume industry. declines last In all to year. with was vehicle third saw our in the Asia, S. market, in compared up core volume regions we line While flat were party and tire U. light in about sales

team up our a challenging by XXXX and sum responded our well compared saying initiatives on results to deliver to XXXX. me improved with progress Let strategic

Chris review Eperjesy our I'll turn financial detail. that, over in the performance With to to call

Chris Eperjesy

you, Thank Brad.

lower fourth by Moving decrease results. of $XX XXXX. X.X% or million compared were profit was million $XX This volume. consolidated to sales was $XXX Sales million, to quarter XXXX. of in $XX or driven X.X% from Operating in down million unit million $XXX X.X%

from quarter U. offset of of a in tariff share net period to partially the higher and profit plus volume, are impact. favorable quarter by S. favorable the summarized of XXXX benefit impacted of tariffs by new million China duty of costs following the and million million quarter price deck; of impairment was XXXX. with product the will tariffs million was Fourth offset related drawbacks $X.XX Diluted costs, $XX compared $XX million liability same $XX impact X manufacturing loss of favorable higher of $X.XX discuss of from of fourth This ago. to compared million was moment. costs excluding charge million from on I million a and of the XXXX; This for per benefit operating $X a $X duty slide other drawbacks by partially imported Page the quarter near $X on non-recurrence $X higher million supplemental goodwill factors, lower earnings $XX to compared the $X in of costs. higher million $XX in million year raw fourth expense, in products $XX of material mix. restructuring which

regarding to more exports goods The as Previously goods. products few drawback there for of long from very little same were refunded drawbacks. the a also duty it benefit as provide me allows provision the Cooper import to Let be sort duty so the fees color or a manufacturer that duty for drawbacks. duties qualified

change late that a in Cooper be qualified eligible. XXXX policy there to was more products However,

benefit Our with in to team the applicable worked dating hard million quarter to we resulted to were able to and analyze drawback submit fourth this of $XX XXXX. XXXX. in it million $X This duty for back

we countervailing but expect the XXX Moving benefit under be duties applicable offset tariffs portion are to program, eligible to XXXX. Section and similar anti-dumping to not. would or annual this forward, The an

X.X% $XXX partially $XX $X unit of of year as with starting Tires fourth performance, a offset favorable sales $X primarily in from X.X% impact. by mix $XXX segment Now XXXX was million Segment million were unit moving onto million down price Latin the favorable America. and of quarter Segment result our Americas same million Operations. the volume period and volume, currency to for million, lower foreign ago, compared of the by down driven a

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

higher $XX million in costs, million volume to lower-than-expected sales million to to of included of year favorable XX.X% new manufacturing ago. profit and benefit from million XXXX. due maintenance of of of a The $XX $X was increased or $X excluding also quarter impact SG&A. unfavorable sales $XX and $XX $X year higher quarter net production billion drawbacks, with new by operating $XX or resulting million Fourth offset in favorable of the price related period profit million raw tariff compared offset to and tariffs. costs costs, million tariffs of lower million product favorable of end of same million Americas higher expense million $X by lower mix, net and from This duty compared liability the $XX XX.X% included $XX material Operating partially

sales in million driven intercompany impact. mix million of unfavorable unit International primarily with of the by currency by $XXX Europe, Segment price volume, $XX Now down XX.X% driven for million, Tire XXXX. and result quarter This lower from decreases XX.X% quarter of Net to decreased our turning unfavorable $X was volume fourth $X Asia both were lower the million Operations. foreign of fourth unit shipments. volume and unit and

in year. In Asia sales prior fact, up slightly versus were third-party the

million operating quarter loss favorable our million cost, cost XXXX actions international XXXX. footprint of in loss offset primarily unfavorable operations an The fourth raw $X million included quarter manufacturing, to $X to million in The related $XX of was our of million operating by compared million $X of compared of a due million to the material included same $X million of and charge, and year-over-year ago. $X Europe, The fourth costs price of quarter of period $X other restructuring the comparison. impacting in also volume, million positively $X mix, to $XX impairment goodwill year

to raw Moving materials.

XXXX. the Our raw from XXX.X XXXX. index of from decreased sequentially index third the quarter X.X% fourth material to quarter The fourth decreased material XXXX raw XXX.X of X.X% the of in in quarter

the raw our to year-over-year first expect material basis slightly on of up XXXX, down sequentially. a we index but For quarter be

Now primarily to was This expenses million the some increased retirement charges $X.X year. settlement corporate items. versus pension and to actions post in pension benefit driven our restructuring Melksham. by Other related the prior

to to lower estimated on the assets quarters, due of increase prior Additionally, there an compared planned result similar was to XXXX. return

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

included for million actions rate fourth structure. tax involving from company's discrete tax XXXX benefit planning quarter resulted tax $XX European of The the the

rate for last negative the year. result, a XX.X% tax was XX.X% the quarter a with As compared effective

the tax in Excluding this item, rate XXXX. XX.X% quarter fourth effective have discrete the tax been of would

later our based in be the tax will company quarter annual for tax have the effective will earnings been forecasted filed operates. would impairment available today. with various the our More Excluding XXXX, and which is XX-K on Form charge SEC XX.X%. in that the in taxes the on effective goodwill jurisdictions rate The of tax be the rates fourth detail rate

some was period sheet cash quarter $XX $XXX year XXXX December at million balance XX, to compared December same the $XXX million Capital with fourth ago. flow cash highlights, $XX XXXX. in at were Turning the with equivalents expenditures compared million a million and XX, cash and in unrestricted

full were Our with in in $XXX which same investments compared Serbia capital ago. million a the $XXX million, included period expenditures year year

into million with In joint addition, our during Limited, Sailun XXXX, $XX invested new Vietnam. we ACTR Company venture

us. want priority on capital for X% our the Return trailing was returning quarters. important an that capital invested for shareholders four remains to I to reiterate

but dividend as near-term pursue opportunistically XXXX, demonstrated our supporting balance will business. attractive to to the As in are in our opportunities we in invest quarterly share committed repurchases more we

allow our our XX, extended have authorization. Approximately existing XXXX repurchase us December program $XXX through we on to flexibility. current million $XXX share board's remains million However,

a working capital ended indicated position. the to we Brad sheet hard As team and earlier, recognize want our the around our of I work strong year improvements in and refinancing. efforts balance

full was partially Net favorable lower XXXX. of or of our This from to by by profit $XX million sales XXXX Sales of a $X.XX $XXX offset currency foreign XXXX. X% of moving year or unfavorable Now price The operating of impact, company's X.X% operating million $XXX and billion, net net $XX profit million volumes for decrease in mix. sales of compares in unit and million $X.XX X.X% $XXX billion sales. XXXX with impacted were million were results.

raw materials. just parts year-over-year provides moving along well costs, these but many volumes of favorable supplemental in SG&A higher other the increase items, experienced In as costs, coinciding by slide Slide to partially and each comparison. were as discuss profit compare an Factoring note. in This X and have was higher we XXXX XXXX, distribution. impacted both I mix XXXX with as item, significantly we and key would operating items lower profit that in trends operating unit experienced to offset deck the in such our will There XXXX. price manufacturing

these However, delivered a cost. from items, unique negatively $X there items higher with and impacting of were results, we and $XX operating our operating restructuring million two margin. impact XXXX Even higher profit million net tariffs profit additional

call our XXXX the to over I'll outlook. turn to now back Brad review

Brad Hughes

Chris. XXXX. our Thanks, Overall, execution pleased we were with in

model our and initiatives we our For strong XXXX, to gain momentum. as business ahead strategic the are optimistic about year remains continue

we the first half the the need However, beginning throughout unique to XXXX. and year profit there work the with margin year the full the of improve will some We through half will anticipate operating be items better to year. exceeding second in than

be We first XXXX expect profit our to margin, unique to which expect half by and seasonality include operating half manufacturing costs typical impacted both XXXX footprint higher of related first market operating the conditions margin certain actions. w and items, profit

in our noted, a America, As acquired Latin of operated have which previously facility, we as ownership COOCSA venture. joint previously full

by the the advantage down the As workforce of employees. facility, we full We opportunity the ownership the re-hired temporarily that have conversion. take assume of the therefore as and it important closed is shut Cooper presented deal after we plant

plant. We are up, in now production ramping the process back of as we relaunch the

part implemented be the will we fully this Cooper the be relaunch, and Throughout employees. As system also of processes to new and equipment employees adding trained. be upgrading requiring year, production will

we result, elevated As as costs up a expect some ramp we throughout XXXX. production

England Similarly addition production and transition, many plant of incur $XX units primarily to inefficiencies. plant. quarter related approximately expect Melksham, these costs the will we the in Europe, in our Serbia occur produce our which million vehicle also restructuring Mexico are of first and in We tire charges at at light the to ceased manufacturing to we'll

to to facility, expect to some these ramp Longer-term, As experience Serbia we in production lower we strategic expect move result manufacturing footprint we the costs. to up actions costs. continue

they a However, first particularly impact, of will short-term in year. the half negative be the

advertising In addition manufacturing and expenses as to accelerate campaign. timing the the we our impact of new the SG&A, charges, primarily we higher due higher anticipate of advertising to restructuring costs

midterm operating our Excluding XXXX profit we quarter profit first with XX% similar XX%. the Mexico approach first quarter, target of and first stated half restructuring be second of charges to margins operating to expect in XXXX the to to XXXX quarter margin

compared rate, corona these our and investments At volume This significant S., excluding in financial Serbia attempted an range have $XXX as not expenditures the will to cost we approximately expect million. In in include we of between that we discrete Mexico virus million modest includes of capital the including manufacturing XX% and and to XXXX, tax addition, footprint global year, for related effective both unit in facilities. any items increase $XXX to this enhance impact U. outlook. a the full point, low

Our employees. wellbeing first safety our of and concern is ensuring the

on week. limited limited on XXth restarted started we Our GRT a plant basis plant TBR on CKT operations February Meanwhile, to support manufacturing a manufacturing our last customers. operations basis

the expect or fluid. of the impact virus, size an very corona the cannot remains time, this from reasonably nature we impact we situation While because estimate of the

the surrounding virus update circumstances will corona As stabilize, provide we an as appropriate.

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


your Horn B. go Please instructions] ahead from [Operator with question. question Our Van Chris comes FBR. today from first Riley

Chris Van Horn

be number might view talked what of you was for a tire in system. of manufacturers So and some about the coming I how you your using increases those planning have price wondering And XXXX? through

Brad Hughes

Well, the about that way I pricing stable pricing both relatively environment now, the that's combination and actions the talking fourth market through the and quarter right Chris, describe I particular the been activities. think of is in has promotional

things stability. supported think has position have I So been -- market

have As for at opportunities quarter, competitive we to first announcements we're for customers. to some opportunities looking line move pricing regarding actively portfolio in into any with always for pricing and adjust our the look staying been there

Chris Van Horn

retail XX expand out lot the to there increase in plan. part still I'm wondering able of we XXXX you've past that that significant for as as And and past the through presence XXXX. and of as certainly XX over a months the your into space Is And even months? you maybe aggressively been been look has to have you strategic

Brad Hughes

believe strides. Clearly, a to over we've year made of good course and still year significant got opportunities last us. we the that the Yes, in of front we've half,

speak, base XXXX there as definitely we and through as forward opportunities we least. larger getting look is are So additional the at but into XXXX

Chris Van Horn

to for of reason maybe anything capital to cite management be strong really anything point out the to flow cash know well the for free free seems just that me, working to strong year. going cash flow? and if from wanted last there, And And

Brad Hughes

to Yes, has in inventory that working a is working an that of specifically, noted for last that I'm of an manufacturing, we're free hard fourth the the on so opportunities growth. unfavorable our to to XXXX. with into in we our improving first said position, year improving on quarter, inventories. flow have by free sure implemented work capital the much have lot flow compared identifying all coming the working positions folks and that to relative on, create our XXXX did that all, lot working we cash into reducing initiatives was make contribution trying for not opportunity all the Having capital continue that been we'll team towards had right mind, cash but of very that, identified and have sure profitability


from comes Capital question James of next Markets. Our Picariello KeyBanc

James Picariello

provided you’ve correctly. end I Brad, I I think sure important of remarks. some prepared that really heard to the detail that want your all make at just

be in and up So quarter $XX margins to consolidated second Mexico, first XX% excluding if XX%, for XX% spend we of XXXX, half margins that year-over-year the in restructuring in of to the range will targeted the expecting you're that exclude million XX%? margins, spend then consolidated

Brad Hughes

make did I it setting try stated clearly. be clearly to and what So sure and that I, and

First of fourth all, the for the the think same XXXX. restructuring margin be we that first about quarter quarter if you of will costs, exclude consolidated as

XXXX year XX margin. get XX you the that full course for provided in half wanted relative of XXXX year second guidance the citing margins the we profit profit will better We based the the the that I that lastly operating to in over some on we've have and items And profit I lot in of the you then Did margin expect the midterm was that with of we're of as approaching than to operating on be? a to where being referenced call. earlier second half, we first up improving that year to half the

James Picariello

this there? so that timing in Mexico expect U. that outlook we Mexico maybe restructuring volumes the the spend, just throughput to the actions can And facility? terms now S. What's tied you're the flowing more any of facility. renovating more And facility? through potential then of obviously look What’s in transitioning regarding formal restructuring general your like volumes benefits to

Brad Hughes

employees processes, understand cooperative So It an hire as with to representing work through required Mexico take facility, them the the way role institutionalize the to in to to go -- folks a the allowed we products do plant. there, Cooper that go We that to every that the people the begin of the venture, efficiency us employees then the we about operators, to process safety, it's effect on day joint had regard the the that. the joint those of venture. that the the were opportunity we're line manufacturing actually hard was here important off better and with employees

equipment Alongside position do will now. facility. so growing of they to add that that will right upgrade that expand that the through can to to And there, of add we're that introducing going And into portfolio manufacture be the as capability well team be making as more are we progress, and the more volume confident up we in process as new we products ramp we're employees and in of that we some and capability a facility. the

I of on of the second continue think second year into that future half over products portfolio half it the lot the year, next the can of course and this and will the in of will have increase but this and into of year. growth over happen a

so. was what we the we we've UK there done in to in execute if Mexico about going So some footprint at focused now that we're do that the what nothing of talk and point we're right we're to prepared sure to in certainly needs making now. and there's in point this We that anything to evaluate against continue doing time what on. and lot will future, in our right really look like on there's And Serbia a do at comment

James Picariello

that your actions any there. framework S.? year And for clarify the in regarding just U. expectation, include this pricing to Would second additional guidance

Brad Hughes

and so our half. best have would it on the in that in second market would included it where That view we going be see


JP Morgan. Please go with Ryan question. from Brinkman your next comes Our question from ahead

Ryan Brinkman

stable And maybe was couple I on includes X% amidst likely the to mix of a pricing, comments or a recently then EBIT margin price is that, is from XQ you relatively around TBR just increase maybe of but comment in to component? back that could assume call lower and know the earlier year-over-year of take on anticipated Michelin questions could pricing comparisons mix you additional rim it be on outlook, if size, or a today? view more curious color provide step if the know tires But And by so upside from if I just then the offsetting if impact if any including helpful. benefit there would XX, I'm the XXXX something the communicated there to XQ, another -- for any industry Thanks component. announced to so I don't pricing given tailwind. a price your environment. about recognize going being XQ March forward too, the effect you from year-over-year positive potential your scheduled mix that's But comments mix

Brad Hughes

of a we et responding fairly been that high TBR mix very a tariffs not as First announced, spot have regard of anticipated fourth over did did a we were tires course recurrence year. of well quarter and price the the with in to Mix ago been a ‘XX. had year cetera. And this pretty have tariffs, people compared and that of to you're all, In with the fourth quarter fourth quarter strong XXXX tailwind mix. of has on the

comparative more mix and environment as be we XXXX. into get a so moving And stable into we'll

overall that was think assessment your So situation I correct. of

opportunities. our a good marketplace folks market in we're regard helping anything to again, With environment North competitive stable going pricing, looking for to at in that and are American the drive set, with pricing market that's always we're now. those the the on looking Again, in on right

the And creates a pricing. so can it industry backdrop consider where

people have we our same our competitive keeping we think will making can, for position sure do we the as customers. we that we're acted and Some as

Ryan Brinkman

just in when just Thanks. of North there I you you in source because corona finally some not is impact, been countries? of in there've to then time the sourcing what your of elsewhere? from what about it virus, which latest, back then seeing America, TBR tires to it’s from if over of the could circling And or tires us, changes know remind me, from your terms Could comments terms comes ability in the also on guide. you're ground different demand terms any, know And talk from for to I the the export Asian know you

Brad Hughes

So with to I for a of couple relatively regard at look business, financial here. smaller think extremely is and -- our results. an important especially points make of overall is contributor Right is it the the to growth to a part you when Asia opportunity important One it's in future. business our now

much more a support want which that to tires, we become so And of CKT, we're plant our makes light plant markets. to perspective vehicle market. in keep as has the looking at that local Also, over time

the for of most opposed markets. and other Cooper is Asia So as be to of China to sale exported it there parts in is production other

from the that impacts we affecting mostly be the likely so business virus overtime And the better will will Asia there. understand corona

see, can talked a what radial got joint of line tires ramp I to facility, which guess a back to on vehicle XXth. our plants week. venture, the starting up is sight about of that running light we've went regard truck white now. produces CKT, and I our Kunshan produce to as to last in up February referred as GRT our good we plant With and bus fact and

that on feel and line our on of confident sight So online. a those relatively good good got facilities we've handle how got we've we bring can

regard affect of over elements a what there, there, difficult on environment at the right over put the point. it this to makes of are to estimate it will as chain clear what parts demand some other not over and reasonable with The now this supply quite all of business

So that's corona virus.

we to to continue regard TBR from do bring tires the United joint footprint, States our GRT to With our in China. venture

that we we've we the S. the to as there we're of Vietnam, tires of time bringing both joint ramp in in period from up from ramp the beginning had take venture for Vietnam. up the that are to agreement we U. the However, and importantly process that place a in off have

course to from year. that over and the facility We receive the begin of more will more tires

So I hope that answers your questions.


Our John with Please next from question your question. comes from ahead go Research. Northcoast Healy

John Healy

on guys ask on feel lot I have question last like you a just the wanted over global XX to going the manufacturing. I had months. a

think from kind and facility in think market I UK to the on going about when China then volumes of the I Mexico, with Serbian about So the even when Vietnam. the what's and in of moves movement the

If of you positive? costs a net or realignments the what flow will of put manufacturing the be you what impact together, And positive on negative be you is kind do think be for think minute still camp? it at a basis do will these terms it in net points XXXX all in net

Brad Hughes

to we our going footprint. obviously, be favorable think Overall, these are the towards future of

we laid markets. our plants Day, out our the we making right the at servicing we really right were Investor the right that that have focused have As in sure we on capabilities plants

to we that competitive. with got so to earthquakes that sure make footprint we've a that support we've or a whether diversified that flex and great products viruses or can are footprint customers cost continue trying tariffs, our that We’re it's got

one of each at step making is in a direction. that did these And

that as look these inefficiencies having through some year over we start of the we half of that we're I should market get to those some Vietnam but relative flow with better, those as where out they positives of duty of the regard been of the because And the by getting United we movements the terms cost going think will not States, in still see more footprint. clearly, on with affected tires half this second tires from to that be for our we related be TBR coming the into first manufacturing to to we've bring the hump in the heavy through China. to the year

be from we a So, yet to year to think little begin that again, half, still the get of the the course it's up over footprint. see it benefits to all a first favorable second drag but the do the half the we I contributions going of as bit

John Healy

about of bit initiatives. some the little And I growth wanted to ask a

I partners to platforms. has for Walmart some mentioned how You of is Walmart guys with performing curious with running been terms the stores. the And had if I know of you up been some relative of was But the you to how relationship, know place Can then potentially now maybe walmart.com you having in the Cooper kind other store Cooper additionally talk brands? base on success you the a sharing ecommerce know of product? what and maybe and broadly the have is you to are e-commerce

Brad Hughes

that on we that products we're selling our mix positively are generating, the feel were on those that. do even receive we about of selling and partners We we platforms. to that comparison to feel that types the regard just about And from information ecommerce the business. very would some about book business. in the that revenue of that positively that And say With we the tires We space. feel of about by had positive I profit positively base those platforms, feel overall,

I it exciting, to So a mean, happen us. watch that continues grows, for positive be to as it's

terms in the to to a we of We're customers terms to of partners. any year some of made in of our big forwards store activities ago. where those not step specifics of our in retail have get were Suffice that presence we with of going a lot big say relative into

We and that's XXXX to into believe continue continue going beyond. that to

good so we're to And it grow. for us there's growth forward, excited look as with those partners and that opportunities watch we


with go Research. Please comes Our Wolfe next question. question from from Lache your Rod ahead

Rod Lache

had couple a I’ve questions.

excitement First, can reason volumes line are the tailwind the that. us of U. have why you with And what the in be clarify high channel guys from accounts just a is significantly points unusual filling the actually they that of industry? can Have level, at you're about you if expansion? a then they then sense and volume the the her magnitude at you can maybe point? just just a the industry based also sense Should these give But I in just that S. distribution perspective. clearly from contributed on new that this expanding And new distribution. of any your outperforming performing

Brad Hughes

millions six, label nonstrategic that to private business, tires of of again, where had years had unique business fighting our coming behind customer some regard we base, in we wanted exit against. of relatively year, are seven beginning point our with So of impact, books Last adjustments terms think some obviously we off a big our brand as which a that five, was ago situation back in we we in to the restructured inventory volume this were at both us time.

think indicating materialize we in year now into move would consistent were like position course that volume feel pretty the begin we that we of are I the a that we over to last and XXXX. as So were growth we

where the market actually hitting we view of as positive we inflection with so opportunities quarter transition point an we see to in us a in step on that front And in were we the fourth as XXXX. the

I that they a distributor wholesale retailers, managing outstanding managing customers, of some or the Part retailers large some make that a have whether do are do piece any five wouldn't an three any one period of their them, and loading overloaded be of say a job meeting tire contributor. are consumer just on seen a to these inventory of what that's been terms if or job ago. to the some over independent something meaningful us at happens they see available of to practice of but none small inventories they're to inventory the of or in the -- adds, And relative going great of that significant a even that to partners that inventory there's the of one retailers big those, are we that builds lot just we’ve with retail of might requirements time so neither they're time with years kind independent

Rod Lache

a And just little bit talk inefficiencies. maybe could also manufacturing you about these

declined If manufacturing than million you million, this EBIT efficiencies. $XX explained from exclude from year's looks fourth more year's that's and the of but duty last drawback $XX like would quarter, this about by goodwill the have your quarter fourth

a step magnitude be into take of a you you you If back significant for inefficiency? would unusual that consider look the year, And the represent XXXX? was tailwind does to what as what

Brad Hughes

will moving footprint as that wind down through the into course Europe that would would Serbia over haven’t externally I inefficiencies and facility, highlight specifically product the But situation of the of with into efficiencies clearly I the the inventories some describe unusual of again, cost bit of be little then building going a of rest we We that at in Cooper which will new and And terms clearly lot think we the of a thing situation what footprint. end do and second up in there that created quantified year UK XXX% now in facility our the a at Melksham then we but went the being a half facility of going it be got year. with the that the unusual. within manufacturing that Mexico beginning that's of more very there year, half our good first this we've for to own

to transition actions year, first just I’d the are second guess of this earlier half a bit reiterate have half going start into the year. do a I these said contribute of to the So but we what when little I we in of headwind positively that

Rod Lache

just any is the comes whether within of the last the to a the TBR year the then from in Vietnam hone broader implications and tires lastly China, of thoughts there's we're be what volume took market, any the lot inventory of think on to state expect TBR position the what wanted market. and about of what broadly, U. U. Was then on And S. you supply industry in year? ramp the you this more yours. just seeing of do S. China? that out you And when just including market, But

Brad Hughes

we Vietnam. this last of in Again, and tires so haven't we been wouldn't year from again year number specific brought do that about the

we I would year grow Vietnam our capacity the the And those impact in of say tires bringing from year. joint we comes course duty be will the production will relative as of that Vietnam. believe this tires definitely at in of the venture the without year online However, that that last more over the to number

to be volume benefit should the tariffs. So unaffected terms by year-over-year, in us it a of

the part OE last in began OE Overall, bit of year starting market similarly slow the strong the a TBR the be year, year U. for with on market year that through to off been it's real a not the very market S. -- went a tires of not going over a to it's -- this course TBR

demand vehicles begin be had that that that we new replacement they as in new because and think market participate building equipment some should so that all And do well wear, it, have being we're that in used to will impact. on are positioned But these that. the there to on the year tires tires some and brand this

Rod Lache

though It a significant doesn't aside just expect any broadly virus the market supply from sound disruptions S. like you from for corona U. Cooper?

Brad Hughes

to to Based no. on that's may At able both because to fluid in monitor, we're accomplish, GRT Vietnam now we've to our facility a environment that continue that pretty this change. going at point, what right been again have but importantly and


Jefferies. from Please Jordan Brett ahead from comes question next Our go question. with your

Bret Jordan

see up? imports some one Hankook I been some kind aggressive, or in of even of the tier that Do two, maybe looking at guess prices guess looking I price tier taking you anything guys at Yokohama we're hearing talk increases. about the the like have

Brad Hughes

anything seen some from tier not seen those but yet, we have two We have specifically other twos. from pricing

is that But our our And so again, is I market mean do stable, competitive saying brands think our see I the portfolio our our at there for that that actions, without moment to sure and disrupting opportunities opportunities either, are us good look or on able we other case the extent started we're position Cooper worst that within we're gives as it maybe at conservative position the these time. customers. it news that to in this with making it portfolio to to

Bret Jordan

new focus, you of in Riders first has the got it about I But marketing as through thinking media Are to Professional programs sounds new thinking a been major of lot you're think ‘XX? like going support go question like your then program. sort you are Bull the half of things historically. well? on And in I the like channels

Brad Hughes

other and to this in see television, that looking to digital the multimedia it hitting places forums we to saying ad are which including I the there be folks. think we where want as far approach, campaign new get at seem we're we out have, we Again, so going mark, that that really was

look least ahead got like. of that. in might calendarization work that at what strategy is to our We've part front are coming big season in at or of it We political trying relative at the later of looking some we as a getting at and pulling spending us out the that, year typical on to the

Bret Jordan

have you now And there. could ago, But Day of it what Investor put expansion about said you size maybe all capacity your you what unit potential think you that just was could of sort of of might've the years own an talked I was, Mexico that plant? you out like

Brad Hughes

today that the don't sized looked There with have with footprint today that we've relative we an probably there. and within suggest of clearly in previously. And more it I what own some that we there's opportunity have past. people I upgrade is there like would base opportunity we think that it XXX% additional the to the equipment given


the today's to And conference session. call any we'll like this point, end management Q&A for I’d over back gentlemen to and remarks. at turn closing ladies

Brad Hughes

the feel very last the was to Day the accomplishments just we've very we're it, with be year improve briefly. and that that efforts year to being even about at very positively all those feel see Again, work against strategy what that focused positively expect results we to we this in we laid had out our Yes, Investor that's financial project to about. able on XXXX,

your you thank So for time.

and have follow Jerry are available always, if questions. up Jacob As you


conference today's you for today's conclude joining We will presentation. that gentlemen, do and Ladies call. thank

your now lines. disconnect You may