Cooper Tire & Rubber monitoring liquidity in light of cash needs ahead

By Jennifer Lanning Drey

Portland, Ore., Nov. 2 - Cooper Tire & Rubber Co. is tightly monitoring its cash position as the company approaches a series of near-term calls on its liquidity, Phil Weaver, Cooper's chief financial officer, said during the company's third-quarter earnings conference call held Monday.

Upcoming demands on Cooper's liquidity include $97 million of parent company debt maturing in December, $35 million of taxes payable related to discontinued operations, nearly $18 million for the expected exercise of a portion of the put option held by its partners at Cooper Chengshan Tire and $70 million to $100 million of inventory build expected in 2010 related to normal seasonality and inventory rebuilding, Weaver said.

During the third quarter, the company reduced capital expenditures to $22 million in order to conserve cash, he said.

"We have rigorously reviewed capital expenditures and spent only amounts that are absolutely critical to the business or have extremely quick pay-backs," he said.

Cooper ended the third quarter with $410 million of cash and cash equivalents at Sept. 30, up $162 million from the company's cash balance at Dec. 31, 2008, Roy Armes, Cooper's chief executive officer, said during the call.

The company also reported reducing debt by $77 million during the first nine months of 2009.

Its parent company's $200 million asset-backed revolving credit facility and accounts receivable securitization program were both undrawn at quarter end.

Net cash provided by continuing operations and operating activities was $304 million in the first nine months of 2009. The company reported net cash used by continuing operations of $155 million during the same period in 2008. The improvement was driven by changes in profitability and inventory balances, Weaver said.

Progressing toward goals

Cooper also made progress during the quarter in establishing a sustainable and cost-competitive supply of tires, profitably growing its top line and enhancing its organizational capabilities, as previously outlined in its strategic plan, Armes said during the call.

"While exciting, this progress is a part of our journey and not the goal. We realize we must continue to successfully execute changes to position the company for success while remaining realistic about the difficulties that can be posed by the global economic environment and factors outside of our control," he said.

Cooper reported net sales of $803 million for the third quarter, an increase of $9 million from the prior year. Net income was $47 million for the quarter, a $102 million improvement from a loss of $55 million in the same period of 2008.

The improved results were driven by lower raw material costs, the company said.

Cooper Tire & Rubber is a Findlay, Ohio-based manufacturer of replacement tires.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.