Cooper Tire misses by $0.12, misses on revs; updates on outlook (43.40)
- Reports Q1 (Mar) earnings of $0.57 per share, $0.12 worse than the Capital IQ Consensus of $0.69; revenues fell 1.0% year/year to $643.03 mln vs the $687.92 mln Capital IQ Consensus.
- Consolidated unit volume increased 2.9 percent compared with a year ago, led by strong growth in the International segment and Latin America.
- Outlook
- The first quarter raw material index increased 26.5 percent from the first quarter of 2016, which was in line with the company's expectations. Cooper's internal raw material index increased from 147.0 in the fourth quarter to 166.3 in the first quarter. Raw material costs are volatile and difficult to project, but the company's latest forecast anticipates raw material costs to be up modestly in the second quarter of 2017, and then will stabilize throughout the balance of the year.
Management expectations for the full year 2017 include:- Unit volume growth in all segments except North America. Unit volume in the U.S. is expected to improve relative to the industry for the second quarter and be in line with the industry in the second half of the year.
- Full year 2017 consolidated operating margin is expected to be at the high end of the company's previously announced mid-term target of 8 to 10 percent. This is based on operating margin around the low end of the range in the first half of the year, but exceeding 10 percent in the second half of the year.
- The International segment is expected to continue to improve profitability relative to 2016, inclusive of the recently acquired majority interest in Qingdao Ge Rui Da Rubber Company (GRT).
- The effective tax rate for full year 2017 is expected to be in a range of 30 percent to 33 percent.
- Capital expenditures are expected to range from $220 million to $250 million for the year.
- The first quarter raw material index increased 26.5 percent from the first quarter of 2016, which was in line with the company's expectations. Cooper's internal raw material index increased from 147.0 in the fourth quarter to 166.3 in the first quarter. Raw material costs are volatile and difficult to project, but the company's latest forecast anticipates raw material costs to be up modestly in the second quarter of 2017, and then will stabilize throughout the balance of the year.