Cooper Tire & Rubber Company reported a first-quarter 2021 net income of $22 million, compared with a net loss of $12 million for the same period last year.
First-quarter net sales were $656 million compared with $532 million in the first quarter of 2020, an increase of 23.3%. The company says first-quarter net sales were positively impacted by $88 million of higher unit volume, $30 million of favorable price and mix, and $6 million of favorable foreign currency impact. Operating profit was $38 million compared with an operating loss of $6 million in the first quarter of 2020.
The quarter included $29 million of higher unit volume and $13 million of favorable price and mix, Cooper says. In addition, the first quarter included $7 million of lower raw material costs, which the company says is explained by lower tariff costs resulting from the company’s sourcing strategy. The quarter also included $3 million of decreased manufacturing costs and $2 million of lower product liability expense compared to the first quarter of 2020. These were partially offset by $20 million of higher selling, general and administrative expenses and $1 million of higher other costs. The first quarter of 2020 included $11 million of restructuring charges related to the transition at the company’s now wholly owned Mexico manufacturing facility.
The increase in selling, general and administrative expenses in the first quarter of 2021 included $11 million of costs associated with the proposed merger with Goodyear. This included $5 million of advisory, legal and other professional fees, as well as an increase of $6 million in mark to market costs of stock-based liabilities subsequent to the merger announcement.
The effective tax rate for the first quarter was 27.9%. The first quarter 2021 effective tax rate was impacted by $5 million of merger-related costs, which are not tax deductible. The effective tax rate is based on forecasted annual earnings and tax rates for the various jurisdictions in which the company operates.
At the end of the first quarter, Cooper had $460 million in unrestricted cash and cash equivalents. This compares with $433 million at the end of the first quarter of 2020, which included a $270 million draw on the company’s revolving credit facility.
First-quarter net sales in the Americas segment increased 23.0% as a result of $62 million of higher unit volume and $43 million of favorable price and mix. For the quarter, segment unit volume was up 13.6% compared to the same period a year ago.
Cooper’s first-quarter total light vehicle tire shipments in the U.S. increased 18.4%. The U.S. Tire Manufacturers Association (USTMA) reported that its member shipments of light vehicle tires in the U.S. increased 13.7%. Total industry shipments (including an estimate for non-USTMA members) increased 10.9% for the period.
First-quarter operating profit was $60 million, or 10.7% of net sales, compared with $10 million, or 2.3% of net sales, for the same period in 2020. Operating profit included $22 million of higher unit volume, $15 million of favorable price and mix, $4 million of lower raw material costs, $2 million of lower product liability expense and $1 million of decreased manufacturing costs compared to the first quarter of 2020. These were partially offset by $3 million of higher selling, general and administrative expenses and $2 million of higher other costs compared to the first quarter of 2020. Operating profit in the first quarter of 2020 also included $11 million of restructuring charges related to the transition at the company’s now wholly-owned Mexico manufacturing facility.
