Cooper Tire & Rubber (CTB)

Jerry Bialek Vice President, International Finance & Treasurer
Brad Hughes Chief Executive Officer
Chris Eperjesy Chief Financial Officer
Rod Lache Wolfe Research
James Picariello KeyBanc
Ryan Brinkman JPMorgan
John Healy Northcoast Research
Bret Jordan Jefferies
Call transcript
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Good morning and welcome to Cooper Tire & Rubber Company's Second Quarter 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 is being recorded. I would now like to turn the conference over to Jerry Bialek. ahead. go Please,

Jerry Bialek

Brad and This everyone Finance for the Executive joining Treasurer. Chief Eperjesy, Good Officer. Financial Jerry thank Bialek, today. Officer, Chief with is here International and Cooper's call Chris I'm our morning, today you Hughes; Vice and 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 second this overview update. call, company's well business we of the XXXX a as provide results, an as

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

Brad Hughes

first and our environment. health our has been standards, impacts, grow priority health while have following Throughout seizing us rigorous up begin a the our to helping business morning, results and people done safety improve I'll in our around to by good the and global globe, Cooper Jerry, our materially and safety everyone. the exceeded quarter second of the job pandemic challenges great the and to this you, stepping expectations. that also opportunities call employees coronavirus Thank its deliver very thanking teams of and for and our morning this

including and USTMA progress and market In key the the limiting And our We the part the in significant total U.S., significantly grew notable generated the early than in results multiple on during share spending. fact, capital made decisive in better of discretionary Cooper stages coronavirus measures. We in pandemic, actions reducing taking flow, while impacted by performing capital second third-party and able increase were quarter, Asia, expenditures sales. unit working the industry. to we cash

salary our momentum an essence believe including assuming high-quality furloughs increase coronavirus with our strong production at that our continued value from cash plants to who were and are to affordable reductions, quarter well safety And as positive plants and to deliver through addition, as executing In of brought as the the Cooper momentum enhanced and operation building standpoint, this from products our environment. increasing the able to situation with impacted, demand. buy are April we emerge value line Today, took up shut in our manufacturing was increasingly in employee of to we our of But in continue a online Cooper We actions. June. with balance We shutdowns, economy are the strategic price. plant future. in and This midst this even our of driving short, the a continue transformation In brand to stronger business, of by our majority for on of significantly power are plan, month the another proposition. the the our Cooper actions tires That's the preserve about the facilities initiatives, strategic protocols, optimistic plan. will even May, we our position, looking in which of world was early an consumers strategic several rebound, down. all in can we health From the ramp continuing other confidence production strengthens position. as temporary challenging went into around sheet to and back

have actions, certain originally as note, quicker permanent and reversed modest our capabilities a these future. recently than our we to corporate of results However, the much plants, help our headquarters but many for force business our we Of and recovered a in reduction position implemented expected. within at manufacturing

recent important Global want capabilities, to leadership well Before new Vice our Manufacturing. and I with it Resources of Eisenga, a our Hank over In Whitesell, President series have including, Paula new to turn of Human appointments, some news. as Chief as exciting important touch I as strengthening as Chris, on we line made Officer, our

a GLS, which is Just the Discoverer, announced The LE another fitment officially Cooper OE Mercedes-Benz. earned SUV. we Mercedes-Benz on that has for SRX be days few tire ago, next-generation the will Cooper new full-sized automaker's

more will to to we facility XXX,XXX for markets. feet, $X received this increase production the size global about tires our new Finally, and the million Kruševac facility which shared in diameter of larger the in Cooper add one-third government demanded other expansion, enable more Serbia and produce our of square in incentives project. than news Serbian annual plant capacity Europe

Chris, Chris? to will performance. the I our Now will turn on call provide who financial detail over more

Chris Eperjesy

were decrease and partially of favorable million XXXX. foreign unfavorable compared unit with of or profit XXXX. volume million $XXX of a sales, of globe, results. was in of This to lower to in of adaptability $XX begin across and offset our Thank for recognizing currency basis, resiliency the was consumers my at million or partners $XXX and unprecedented trust their a of sales our $XXX operating X.X% these remarks With course, $X down XX.X% let's recognize million $XX profit sales in impact, that, and I our customers by $X would like mix. of Brad. million Operating supplier and times million driven by you, X.X% during Cooper. second from look the million, teams consolidated take also On by quarter and our price

quarter $X.XX, material slide of supplemental to Diluted to, and million quarter favorable second $XX of the price deck. X are by higher of on the unit million of profit by million volume the XXXX This costs, with and share of per favorable summarized which of was million costs, per expenses raw an pandemic. XXXX. $X share coronavirus attributable $XX Second, of SG&A costs. and $XX million mix; $X.XX, offset partially second lower was manufacturing was following both $XX compared lower the operating impacted page $X other of earnings of in million factors, compared lower loss

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

with strong light of vehicle the down total USTMA XX.X% as sequential volumes industry month were XX.X% the June, down There over May was unit U.S. was the while XX%. challenging XX.X%, most decreased XX.X%, volume decreased respectively. the USTMA improvement during and for quarter, and Our April USTMA decreased volumes by X.X% period. and the

and both, U.S. industry. total outperformed USTMA and Our the vehicle light the throughout unit quarter volumes improved

the $X of or sales, of profit in in decreased million quarter operating million with $XX $XX $XX of or million favorable of million compared offset mix; partially favorable million net of XXXX. included million Americas sales and costs. lower volume $XX raw of materials, of expenses profit by other to unfavorable Operating and and manufacturing million costs. $XX $X X.X% lower Second X.X% $XX million This SG&A of was price lower

million mix unfavorable lower and were third-party International sales net volume, the foreign currency Europe. decreased sales In second the year. volume driven up million Segment for lower million, unfavorable impact. X.X% Now turning quarter down $XX price Asia, million $XX quarter prior were from unit XXXX. second the $XXX This of of XX.X%, unit by to by driven of $X unit result XX.X% in volume Operations, versus primarily our unit and of was Tire

unfavorable an $X The The second our profit million was raw tire $X materials, manufacturing of compared was million international operating which $X mix, loss and in other quarter included offset million other lower SG&A costs unit million to operating million of partially by of $X $X costs. $X lower – million XXXX. price and quarter of higher million expenses, $X $X million of volume, lower of of in operations of

XXXX of at year-over-year included million positively charge our decision quarter also restructuring Melksham The tire production cease light related comparison. impacting the vehicle facility, $X to a our second to

materials. raw to Moving

of quarter year-over-year index quarter and basis. This a material Our index XXXX XXXX. sequentially the decreased line from expectation in XXX.X from of XXX.X be in raw material to the quarter of the with in on first down raw second decreased X.X% our to XXXX. was sequential second XX.X% The

As ability we in slightly continue anticipate forecast third on sequential of XXXX. quarter look be basis raw on we material costs remain in to and volatility. We about forward, significantly down basis to this the year-over-year a down market a cautious will our period precisely of

accrual in in forecasted be in rate the the year. benefit compared jurisdictions with level $X Now a XX.X% of well $X.X of position as items. is taxes rate the million of quarter the effective return The various earnings our on for earnings at improved will driven second period items the as available lower tax today. for rate tax jurisdictions years. company the planned to tax be as tax The effective Form to XX-Q rate XXXX pension This expenses tax different More was allowances. and related our assets. was for discrete to filed December tax decreased prior later additional prior will pertaining with previous and of on with to result that of based of quarter second which jurisdictions for The million postretirement mix company's Other uncertain quarter due included detail XXXX XX.X% the XX, The for the our annual rates by unbenefited valuation the versus the among positions primarily primarily second favorable was tax XXXX, some on corporate SEC and losses the operates. funding same the year.

million and year quarter compared was capital cash of the X.X% in and million end in $XX $XXX highlights. the balance Cooper cash of to end year. million XXXX the of the second of At cash with $XXX Capital $XX to expenditures at of Return were the quarter compared had compared second four period some million with million invested same $XXX second ago. this trailing on quarter equivalents and end quarter, the in first unrestricted for a quarters. Turning the flows at the sheet

our by believe our capital Other working on do net quarter. million You debt substantial noted. driven will company $XXX was recall borrowings in spending credit actions the the the during third the not discretionary a that facilities have cash There Brad were during capital, quarter. during and in quarter. expenditures improvement as paydown, primarily new revolving to no the usage down drew first quarter second currently than cash we reduce discretionary we The

fact, due of our million $XXX million and improving of on XX, outlook, borrowed position In July financial as revolving we paid the credit to facilities. $XXX our have we

an Let allocation. capital pertains me update to as provide it

year First, at $XXX given million stated million. previously high the the XXXX and full our expect outlook, now $XXX be of to and capital results between expenditures range end improved we

third, to initiatives. steps we the And pursue the as call now allows sheet ended quarterly back to continue Second, the sustainability continue the strong for these This I'll to we with more the to our balance to support ability of a to outlook. pertains ensure continue year our business. prudent opportunistically. it support took Brad? and over turn Brad to growth strategic We our repurchases, dividend. us the updated share

Brad Hughes

Thanks, Chris.

to may while second confident year. operating we return our XX%. our risk a to to target And future, of forward, are our range midterm improve going present of in of business Looking half the further in level coronavirus the margin XX% to ability this we ahead, expect into

time actions and some we coronavirus the mitigate to While been our business. a this have of has necessary on difficult but challenging taken impact

further that We rebound. is success, the for runway continues economy also an to and Cooper this time especially, exciting for that if believe there is

please? move strategic and Our questions. clearly resonates take initiatives the of our consumers. question is awareness you brand value let's are growing that Operator, With hold. our with proposition your will taking to Consumer first


Wolfe Instructions] [Operator from will you. come Please with Thank And question Research. first go Lache our ahead. Rod

Rod Lache

Thanks for question. taking morning. my Good

Brad Hughes

Good morning, Rod.

Rod Lache

QX? obviously right QX? what the can just Maybe recovering? just is pretty now. perspective your look these we at sounds raw industry the it but How sounds I the How headwind ask of thinking wanted pace pricing about given be to big a to is as were should confirm on manufacturing couple costs, about a -- things extent like trends in at you volumes out we it second half. to least are which like that, maybe the and which better continue maybe into sequential just this -- And improvement materials what

Brad Hughes

to regard again, start the an what I'll quarter for with what -- during the saw industry focus moment But to second volume So and with U.S. we month. was I saw, the the improvement each on

was in That May. in further April lowest. June. improved the That So improved

to quarter. pretty seems folks well. index as With there's in And the volume actually second good third least to we quarter think sell-in it's bit with lot that well quarter appropriate economy the but into we our at what momentum the but whether exiting quarter have held industry price That improvement most in And impact was still we for that customer momentum reopening to reduction material we that actions on a to or momentum quarter. or the that price the expect And so down, and remained really today that in trend that also say with small during sequential materials the has were increase I third and volume would obviously, in slowed U.S. a industry. that the regard into the The see was still the prices was particular a environment to represent raw as to quarter. looks that that quarter for that positive some our for place quarter. the larger third third point be to going unknown feel and the the of positive slightly stable. second maybe a to and the of case Raw second quarter is in the exit relative and materials, the market first both we time of ahead seeing momentum base our in as similar the regard the the quarter how exited could for about and raw going recovery took the And not at the in saw virus the year-over-year. in the we sell-out portends said,

May we've So June that manufacturing demand to up. we and up continue the ramping seeing today been consistently back again, began – with was on to essentially our up sorry, -- up as continues for ramp meet that April try facilities manufacturing to frankly continued month-to-month. we we're a up shutdown ramp and our that ramp month. products. ramp

Rod Lache

to just bit. a Maybe clarify little

and the kind basis indicate the XX% material mean raw that at headwinds in just if levels volume like margin normal coming that's this to it's volume Because manufacturing alone the pricing target QX. a level rather close a if and how to kind through from at have the mid-term -- XXX are I of of -- you look on We're QX So that Obviously, point? than a tailwind. some already point of you held near-term at just if rate XX% manufacturing target. and other midway even to of is it you hand, declines

Brad Hughes


move good third that happened outlined. feel as quarter price/mix. about have because not -- perspective largely now terms recover the also you I'd go difference off then, to substantial still some margins, only quarter we the some with the we but getting -- regard guess we have combination happened here. from profit comment specifically, we we the the in as And manufacturing that to on I what -- still further quarter as regard -- in And last what third in normal the room of about contributor a there's make strong second that talk to the right we a ramp-up. finish with is, that in a we're to there We're seeing So to quarter. room to quarter into to close And was

Rod Lache


maybe -- a the mean you get this midterm it So of -- expectation? I'll of you just XX% did of to then to relatively that way like kind the a and just call. that But near off number margin is seems tailwinds XX% there Because term. ask imply I'll more to to couldn't try in are there kick can get

Brad Hughes


would I say what Here's about that.

here, half need the not a do impacts confident to first on second see half in through There's -- rebound and and opening lot now. we're we to to can a said confident once -- the you that be based be to But that the put that, to with line or we're as affects we'd with to the of the when back we're we it's that we're remarks, going get remarks half that to trying virus obviously rebound. we of all economic regard it of it's May out get able the doesn't, the right better we XXXX. target going it get to to on to side on XX% A forward the maybe look get XX% the in to but is plays than XX% we XX%. other to everything outlined the have to its going on that do virus that to today time As caveating as economic

right with But regard happening there a to because line too than to what -- happening right are to first things good some now. of XX% now just things the there's on So, are sustainability half. second right we're is half XX% now. many the on seeing better trying not time uncertain We're put that

Rod Lache

Thanks that. for Yeah, great.

Brad Hughes

Thanks, Okay. Rod.


James with Please will from Picariello question next come go KeyBanc. our And ahead.

James Picariello

guys. morning good Hey

So, profitability the just ramping capacity in quickly, I international to up investments to first sounds mean though It as return in Serbia over of dig side you're on plant. your year. a quarter at

wondering what would the the to And you improvement just through potential forward. rest international for So going of year? your expect utilization generate profitability business is the

Brad Hughes


emerge. from So, first business as and the And well. everybody's around in really first bumps to the all as -- China but And the did of stage seem challenges and was there's economy Europe there markets and and still market pandemic. in markets that say a was we business and the reacting the different these recovering Asia recovery Obviously, to and of first be to stabilizing world, you the tire China were in was look again it's And well a some second that in the reasonably market. and that with well really to pleased is overall Asia recovering at as I'd competitive the right mode risk performance emerge that be at of recovery road in the very industry a to But our now. vehicle bit stabilizing on seems that behind. industry quarter.

different their places of different You've got response and in that there terms of the countries over are a lot markets individual rebound pandemic. from

so, to still it's stage as not entering that's our happen. going from And quickly how view and the recovery they're clear

to Does half in the that does be Europe. China Europe. dependent a to international of tires. do feel Europe? on timing rebound Does to to stage? That business good on be second continue? signs here of profitability now. sustainable economic in market what's largely seen And going the Utilization confident to on happening the capacity as and some stay begin that return the the and more with capacity Serbia that will So we right should Asia signs lot ultimately, in a the are in able to continue we We've even with we're stable good And be with additional have our to fill profitable pretty basis is that going timing we recovery bring improving now. But in when rebound. more

market. out the sorry. I Did the over positive overall, the answer think there still in I but half year, are uncertainty we So situation this that of I'm look everything international James? last trends little as

James Picariello

No helpful. Yes. that's

on Serbia Just plant the discussion.

investments the targeting fully there or announcing that year, you're making is So any and that you've throughput units that additional that did that Melksham the from within to you're this one Serbia, communicated? the million shifted are investments accommodate getting

Brad Hughes

in Well that's One the I in is a of -- announced. announced about $XX already amount half what little a think A million of there. over of lot invested we've XXXX. the Serbia -- the been that's couple of points been

tire So And less little a to facility half half and light fully look just of it little side capital into help the then because the to than for possibly Melksham with -- maybe spending cessation regard we our full vehicle going a go This footprint you lot a with there of of the with into that to production that's as it. to will there's Serbia. bit selling about into, And there's of with more bit footprint there to more good and the support demand. that going a the chunk plants the our And probably. we manufacturing efficient units and footprint close bit to while it order a and of sell global will to absorb little And did Serbia global to really that markets way. we're near-sourced from is markets then most global the are will in we flex be always Melksham. those support to that we that in account strive

James Picariello

Color in be second free and puts Got than flow half cash better should came for capital quarter then in the And and it. in XQ. the working the expected would of that thinking quarter. takes Does we were helpful? fourth? as the about And there? be the a see What we the seasonal there for use much typical how third trend quarter versus third cash bump

Brad Hughes


capital. was do an efficient We on making increased to two on flow. our year-or-so this that X.X great terms in cash going ago maybe years continues team focus really in started of working of the being what we're contributor all of a first well -- think in I with sure job. a That's putting big

and economy a big incremental did we But all of We part great doing of some that actions as and work to did Cooper's preserve make some that of sure things the incremental make So period take of to were to they the was to had we and through of companies in try the it initiate cash. to going been actions We've a this. all performing. back performance. been the from job industry terms a had done that try team's those able the away great as and uncertainty

so there. a in it of And do working wind sale lot into We some the turned we capital. have

we've ramping the has larger As a fourth been result preparation you demand quarter our -- up been the third plants quarter and would recovering see very the for to quickly. season in achieve. we difficult build was second And that inventory as in in selling normal the

on at basically lot what So a we're this making. we're of point selling

And so good for a thing cash. that's

don't. quarter indicated said any and it utilization. don't what plays quarter, we'll And the out, for this we've For is expect the cash third see we second how significant said we we but we

past through the going first free that the way the cash forward flow we've and in the what inventory of think finished would been of specifically from half difference a it has -- the tire what we that because not the this managed quarter. into And been cash capital yes, less its be to fourth we big have little bit around said typical generation. has I may It second And a expect from expect the on then we again, year so some and pulled working year than years, inventory third. quarter

and team. flow generation, of company the great free the that management by great So cash

muted likely we traditionally is be cash generation don't much expect some we it of bit And quarter, quarter Third usage. fourth because little will maybe forward. a that as a pulled

James Picariello

Congrats the Thanks. it. momentum here. great on Got

Brad Hughes

James. Thanks


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

Ryan Brinkman

you that or down trends, if And have able course due you volume, XQ. the view Goodyear segment what since in seen industry close expect Hi. other regard Of cadence Thanks mix I'm quarter an perform guided differently market replacement whether consumer might in geographic for estimate the shipments of a question. different your on in you've share U.S. have just of for do XQ? to or terms with industry you tire in Cooper Friday for volumes the than the can it July? taking Are factor. my to different XX% particularly some product curious or to

Brad Hughes

Ryan. Good morning,

to responded the saw say at of a economy. rebound the First were a industry what could pop-up secondly, I us was situation is, all playing out on said we the would how quickly the uncertainty that of pandemic to early was around if way is of turn governments all, quarter local lot with regard third pretty for there's for I that state the into second And saw effect towards that, we we're Having still and and that continuation that the the things July that that it quarter. in of certainly the that I end say was would Cooper. say would and and

a Cooper year. and is we've the quarter last what move continuation quarter, perspective, fourth momentum we've that seen that so the the about into far of I talking third think since a from we as gaining of So, been

continue so, think capacity manufacturing in can up a to And perform productivity, the without that term position the the and we to and performing to our -- would I we've can been near in we the outperform continue here we're in market ramp U.S. if way

Ryan Brinkman

Okay. tariffs? types outlook time your be any expect can of from import? versus frame to could which milestones China you any you That's tires great. beneficiary you we Thanks. for or that import potential And current just China, of tires remind what would do of us on And of expect? impacted what there you be tires from expect own a net tariffs for then Are And potential be should United States? your you to looking is imported

Brad Hughes


on second is part early a quarter to news happen So, little which expecting I year, That's bit. of the we're year decision-making more mean sometime that of a the process, the which is part likely that what also and line year. anti-dumping early next heard tariffs. around tariff lot then little of the next with But time that at, most original we've a maybe the next around compared line was. -- moving The preliminaries, the time recent of finals is is bit delayed important

optimize where to for move and continue We markets that the continue around. something impact our includes and sell adjusting footprint in, will we global them we that that's make tires manufacturing to have tariffs a significant if

So, for we're light-vehicle what pretty markets we U.S. that days. that in optimize to doing the we're that tires, bring from from, of the selling that to -- the we in of everything tires in. market number these believe in terms is doing is total a is equation of percentage bring again, that China, the And specifically, a we're we footprint terrific low

impact So, today light-vehicle an in out the We now not part is four from much right that what's coming affected is petition. on tires tariffs. being one markets bring China, are don't the market any which of evaluated that of by of as of the

happened XXXX, look vehicle of If a for from the here, what proxy light home difficult at tariffs. And percent time States of tires these that you when it reasonable a because markets coming sold be the that what put were frame from the XX-plus quickly to those XXXX, find might imported to four would in come really XXXX, that the number might manufacturing initial for to in is tires on tires sold are that tariffs happen look be to the new are back we U.S. tires the in think China, avoid United really

pricing a became to from light about event China in ago that was it costs tariffs more situation in the again applied increased prices when a at similar time. of on where point the industry And so, put a they tariffs a offset decade vehicle happened that what the tariff portion of

seems to be situation this perspective. outcome the at most from our look we that likely As

Ryan Brinkman

Very helpful. Thank you.

Brad Hughes



question ahead. go Healy Please from John And Northcoast the Research. will with next be

John Healy

this been is at wanted when in of you look driving Thank bit was you. against label quarter, you Good a little what morning, kind you and outperformance adjusted acceleration that think's of I of relative data USTMA trying do guys. performance factors? you I members. kind with like about in past in how outlying ask an have performance kind Cooper's to that the you the of private And at quarters numbers for guys. to understand things that? if just those worked would know the performance in really terms you When I bucket the the there's it? noise catch-up look the and this to

Brad Hughes

do and what this really behind to Well quarters exit is a think private I of the -- few that business said for label we've non-strategic the -- that our us. effort some

to be And our that's channels, to doing to I that to that there performance in that think be to contribute different growth. buy they We're happening the been teams mean they the presence When consumer to down things in be going one are, work want are consumers momentum beginning have to States the which significantly is, just teams our grow should tires. industries. value-conscious. Cooper this that are that within to are grown beginning available numbers think I been say. so doesn't to has to The people situation pertain United I team the of the show. our but ability durable done these retail want I it well grow may growth to a result Right I have on fruition it's and working of more COVID the a the really lot in to as and of -- coming are That to things becoming position that market the seeing the forward. going it specific us for work less than now, has we're the relative is that -- are

that do has that Cooper. a value brand very I it product. one brand mean may so well consumers that with with provide a more our that great the is putting a -- a and little focus And very, just bit to customers fits thing changed like believe on is value we we be to

bit so think a -- an accelerant that of a And that here. maybe is we little

relative here there's are a and the are maybe this is sustainable Beyond but things that that the the minuses performance we short-term pluses behind think lot that USTMA our to in real in happening of scenes change trajectory the of the or industry. that

John Healy

just question then costs. And Great. the one follow-up on

in wage then some or expense standpoint factories. costs And deferred headcount I to the some the of much an kind or kind of what of abated remarks to coming are started with we that and of incremental think but corporate in expect at how you've had in costs maybe QX saving those kind recent from alignment Can about online? be might also of back you've the you realignment? going actions, of this you recently furloughing mentioned both some the you prepared reverse talk

Brad Hughes

force drive related call continue SG&A positive in material. there'll make in And small as much going the positive with our the forward our to I skill strategy about frankly, -- company on right while a recent reduction reduction got be that forward. to small that we've the positioning sets on I to that that's sure costs Yes. wouldn't to

do I a year-over-year to look normal perspective, on as I basis it's know sequential I the go to to would way environment think the beginning a might basis back normal SG&A all quarter. SG&A a and don't we a that as return third opposed spend at be from call back a it. good I more to also, what spending way to for an seasonal we'll think get

look what So than quarter I second move that the a back trend in of because SG&A reference our better to direction are ongoing would that's point beginning to like. probably expect we

John Healy

Great. Thank you.

Brad Hughes

right. All Thank you.


will next Instructions] Please question The from Bret with [Operator Jefferies. ahead. Jordan come go

Bret Jordan

Hey morning, good guys.

Brad Hughes

Bret. Hey,

Bret Jordan


that that or you is share USTMA, accounts across some networks? new do market also legacy it's obviously, see in mean, spread national to evenly gains channels, up starting online, dealership more whether share the smaller On pick against I or being your

Brad Hughes

ensuring some team of And of -- on to but North sure this channels we're contributions the seeing are to of the the we're going as the are our discussion focus got part partners from more also that say want more right contributions would in going present for buy business, working is newer the -- to grow to which and some us trying America, we we've that those particularly us, that traditional from I that forward. as of channels. make here help the It's business. Yeah. sides the people we been where from seeing has both

definitely part development's with about we've traditional of so it's retailers we're channels business whether some long a contributing, it's seeing of that that. the got contributions doubt our both. or from the no history But new distribution the wholesale business, And

Bret Jordan

or question, on to of of far are the great. actual price take I I think job impact potential the Okay, was the they but like change per and attached then on it? tariff, obviously it's come to And where the mean new going this you more one but of think as last going the the tires pass it's from, Do think data more towards ITC consumer to first what's four as cost be the commented than $XXX,XXX markets? saved is a you tough your do You leaning tariff. to China answer the is tariff on

Brad Hughes

– that way look don't I we the Again we always all general to have fair. we Yeah. the as a at like we and we statement be that markets first trade. we of free -- well, that's fairly make And would

lens. any at activity look from to in continue arena We this that

and don't day, moving looks get petition's out put we'll forward move we how point. time what do. They're We of like But know there. if forward see actual the they place. to tariffs of at they're this with actually so the they the what know they kind at out The it. and end decision forward going generally And whether to line plays they move in what an this when

the of sold from some in at place. of today going see So it's four read big early quick about it's over country is. it's how a happen thing a and terms is on that to if when hard moving have big are XX% material year next -- this such those it we is, coming tires markets, The a to just talking you're response should in

I so And tires to is market's are on coming think to to be incremental of there's the going going are there market a that price a into as that that I cost XXXX, to to on this that going XXXX, result lot it. the look recover XXXX, XXXX think have And impact, Chinese XXXX, that XXXX, I XXXX saw from largely XXXX, tariff in we based that was impact remember or vehicle the light experience again cost the it tires. on can't and what XXXX,

Bret Jordan

Thank great. Okay, you.

Brad Hughes



Ladies concludes and our back so Mr. for closing to it gentlemen, I'll any remarks. Hughes question-and-answer this turn session,

Brad Hughes

strong operating that to I of time Cooper at our able In same remark transpired, second move you I the footprint thought the deliver a -- Thank could our And first When Okay. the much. all this that the demand profit also to to while the we small look us would really And that creating all team while position and end as forward have first doing when think made plan that, the even have mostly With and our months be being to year progress and about at manufacturing team. well more want All cash shine. year I exclude this execution exceeded for move commercial right. our but all and for forward, product. today team and testament to very a thank I they've clearly maintaining while position, six safe to my say the time into on our everyone of you to the is made you call, a quarter the this going a but our a that to half of stay very which going it's to expectations. strategic please the lot been that to charges if stay plan our think that's initiatives, related participating restructuring of healthy. continuing for I a


presentation. has for The conference today's you, Thank concluded. now Thank sir. you attending

disconnect. may You now