Cooper Tire & Rubber Company reported full year 2016 net income of $248 million, or diluted earnings per share of $4.51, compared with $213 million, or $3.69 per share, one year ago.
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The full year results included non-cash pension settlement charges of $12 million.
Excluding these charges, diluted earnings per share for the full year would have been $4.66 per share.
Fourth quarter net sales were $784 million, an increase of 1.1 percent compared to a year ago.
Fourth quarter results included higher unit volume of $60 million, with increases in both the Americas and International segments.
The unit volume increase was partially offset by unfavorable price and mix of $35 million, primarily due to net price reductions related to lower raw material costs early in the quarter, as well as $17 million of negative foreign currency impact.
Fourth quarter operating profit was $105 million compared with $103 million for the same period last year.
Operating profit increased as a result of $6 million of higher unit volume, $6 million of favorable SG&A, and $3 million of lower product liability cost.
These benefits were partially offset by $8 million of unfavorable raw material costs, net of price and mix, $1 million of unfavorable manufacturing charges, and $4 million of other costs.
Raw material costs are inclusive of tariffs, including the preliminary duties on TBR tires. Fourth quarter SG&A was $63 million, which compares with $69 million in the fourth quarter of 2015.
The decrease was due primarily to lower incentive compensation costs.
SG&A expense for the quarter was 8.1 percent of sales, compared with 8.9 percent of sales, in the fourth quarter of 2015.
The effective tax rate for the fourth quarter was 29.3 percent compared with 38.0 percent in the prior year.
The effective tax rate decreased due to a more favorable mix of foreign earnings in lower rate jurisdictions.
In addition, there were discrete benefits recognized during the quarter of approximately $1 million
Capital expenditures in the fourth quarter were $49 million compared with $54 million in 2015.
At year end, Cooper had $504 million in cash and cash equivalents, compared with $505 million at Dec. 31, 2015.
During the fourth quarter, 678,155 shares of Cooper’s common stock were repurchased for $25.5 million at an average price of $37.62 per share.
Full year 2016 net sales were $2.92 billion. This represents a 1.6 percent decrease over the prior year.
While net sales were positively impacted by higher unit volume of $78 million, the increase was offset by $77 million of unfavorable price and mix, primarily due to pricing and promotion actions related to lower raw material costs, and $49 million of negative currency impact.
Operating profit was $384 million compared with $354 million for the same period last year.
Operating profit increased as a result of $48 million of favorable raw material costs, net of price and mix, $13 million of favorable product liability costs, $9 million of higher unit volume and $7 million of favorable SG&A.
These benefits were partially offset by $21 million of higher manufacturing costs, $12 million in non-cash pension settlement charges, $9 million of negative currency, and $5 million of other costs.
Higher manufacturing costs were concentrated in the Americas segment and were primarily related to the greater complexity of manufacturing more higher value, higher margin tires.
The effective tax rate for 2016 was 31.5 percent compared with 35.4 percent for 2015.
The effective tax rate decreased due to a more favorable mix of foreign earnings in lower rate jurisdictions.
Discrete tax amounts for 2016 were unfavorable compared with the prior year because 2015 included increased research and development credits and higher amounts for the lapse of statutes related to uncertain tax positions.
Full year capital expenditures were $175 million compared with $183 million in 2015.
For the full year, 3,127,527 shares of Cooper stock were repurchased for $108 million, or an average price of $34.53 per share.
Share repurchases continued in early 2017 with an additional 330,277 shares purchased at an average cost of $36.59 for $12.1 million through Feb. 14, 2017.
Since share repurchases began in August 2014 through Feb. 14, 2017, the company has repurchased 12.6 million of its shares at an average price of $34.15. ■