Goodyear 3Q 2025 Earnings Call - Sequential Earnings Growth Amid Industry Volatility and Strategic Restructuring

Katie, Conference Operator: Good morning. My name is Katie, and I’ll be your conference operator today. At this time, I would like to welcome everyone to Goodyear’s Third Quarter twenty twenty five Earnings Call. Please note this call may be recorded. It is now my pleasure to turn the conference over to Ryan Reed, Vice President, Investor Relations.

Please go ahead, sir.

Ryan Reed, Vice President, Investor Relations, Goodyear: Thank you, and good morning, everyone. Welcome to our third quarter twenty twenty five earnings call. With me today are Mark Stewart, CEO and President and Christina Zamaro, Executive Vice President and CFO. A couple of notes before we get started. During this call, we’ll make forward looking statements and refer to non GAAP financial measures.

For more information on the most significant factors that could affect our future results and for reconciliations of non GAAP measures, please refer to today’s presentation and our filings with the SEC. All our earnings materials can be found on our website at investor.goodyear.com, where a replay of this call will also be available. I’ll now turn the call over to Mark.

Mark Stewart, CEO and President, Goodyear: Thank you, Brian, and good morning, everyone. Thank you for joining our call. As outlined in our press release, we delivered revenue of $4,600,000,000 and segment operating income of $287,000,000 in the quarter, results slightly ahead of the revised expectation we shared with you all on our last call. It’s important to view these results in the context of an industry environment that remained challenging, particularly given continued volatility and global trade flows. Even in that environment, we achieved meaningful sequential earnings and margin expansion driven by the continued strong execution of the Goodyear Forward initiatives.

Last quarter, I emphasized our focus on controlling the controllables and that approach continues to guide our actions here at Goodyear. With yesterday’s announcement on the Chemicals business, we’ve now completed our planned divestitures and we’re bringing the balance sheet back to a position of health. We’ve introduced more premium product lines than ever before while improving organizational agility and sharpening our focus on margin and profitability. We’re positioning the business to be able to leverage those strengths as the market environment begins to normalize. With the remainder of my time today, I’ll discuss what we’re seeing across the industry and in each of our business segments, also how we’re responding.

After that, I’ll hand it over to Christina to walk through our third quarter financial results and how we’re thinking about the outlook for the remainder of 2025. Let’s start with The Americas. In The Americas, the consumer replacement market continued to experience disruptions similar to last quarter. On the consumer OE side, volume performed well supported by strength in light truck and SUV fitments. Additionally, we’ve won additional fitments driven by OEM preferences for USMCA compliant supply.

We expect OEM resourcing to remain a positive contributor for us going forward. As you all know with U. S. Tariffs on consumer tires effective in May, the domestic replacement market saw a surge of low cost imports coinciding with the implementation of increased duties during the first half of this year. In the third quarter, U.

S. Non U. S. TMA member imports were up an estimated 2%, which is actually a positive development compared to the significant growth we saw in the first half of this year. More recently, we’re hearing that the low end imports may have slowed further, though it may take more time to confirm that trend given the current government shutdown, which impacts the reporting of the imports.

As we look at the drivers for the industry at a macro level, U. S. Vehicle miles traveled are trending up about one percentage point year to date, while industry sell out is roughly flat, suggesting consumers are extending the replacement cycle. Meanwhile, dealer and distributor channel inventories remain elevated with pre buy and we expect the consumer replacement environment to stay challenging in the near term. Our focus in that environment has been on introducing new high margin product lines, the 18 and above rim size and targeted product line extensions to drive our earnings in the coming year.

In October, we’ve revitalized our all terrain product portfolio with the launch of three new product lines that were designed for SUV, light truck and off road applications. The new lineup includes the Goodyear Wrangler Outbound AT, Goodyear Wrangler Workhorse AT2 and the Goodyear Wrangler Electric Drive AT. We’ve also revitalized our famous Goodyear Eagle F1 lines with our new all season tire for the high performance segment as well. Our products are absolutely second to none and the consumer feedback during launch events has been exceptionally strong. We’re also better aligning distribution and retailer partnerships to ensure priority availability and service for our most profitable products.

In our company owned retail stores, we are upgrading the store and the customer experience through multiple enhancements, including the addition of more products, more financing options and a complete refresh of the environment in select locations around the country. As I’ve mentioned previously, we’ve been able to achieve meaningful earnings growth in our retail business over the past year through increasing same store service revenues and through the addition of new last mile mega fleet business. With this proven success in our existing footprint, we plan to open a slate of new brick and mortar storefronts in the coming quarters. Strengthening our retail footprint will help our retail business be even more of a differentiator for us in the future. Conditions in The Americas truck business were similar to the second quarter.

Heavy truck builds in The U. S. Declined over 30 as OEMs adjusted production amid reduced end market demand driven by the uncertainty over EPA emissions mandates. In the replacement, imports remained elevated during the third quarter as the commercial tire IEPA tariffs were implemented in August. As we finish the year, we expect fourth quarter industry conditions in The U.

S. To broadly reflect the same dynamics as the third quarter with elevated channel inventories and potential for some incremental reductions in OE volume given multiple OEM customer supply chain challenges. We continue to expect momentum to return as we work through some of the transitory headwinds we’re seeing today. Let’s turn to EMEA. Similar to The U.

S. Dynamics, EMEA’s consumer replacement industry was driven by a pre buy of imports ahead of the tariffs expected early next year. While domestic manufacturers lagged the industry, we reached an important milestone for our EMEA business. We returned the business to profitability following a weak first half. This improvement was driven by 20% growth in our consumer OE volume representing more than three points of market share gain.

At the same time, OE profit per tire in EMEA is increasing, so we are making the right choices with our OE partners as well. Our OE portfolio is a testament to our industry leading tech as well as our product performance. We also completed two major factory restructuring actions in the region during the quarter, which strengthens the foundation for continued operational performance in EMEA. Looking ahead, our winter order book and channel inventories are healthy and we are optimistic as we think about EMEA’s earnings potential in the fourth quarter. Turning to Asia Pacific.

Execution in SOI margin remained strong. Over the course of this year, we’ve exited less profitable SKUs and continue to increase our mix of high margin product lines in the region. In the third quarter, we outpaced the consumer replacement industry as far as growth in our Goodyear brand 18 and above rim sizes in China. As our recent OE fitment wins with Geely, VW and Toyota ramp through the fourth quarter, we expect to return year over year OE growth and further improve SOI and margin from today’s levels. Before closing, I’d like to add that even with the uneven market backdrop, our steady and consistent execution of our Good Year Forward Plan has been even more important for us to position the business for near term stability as well as long term success.

I’d like again to acknowledge the efforts and the results of all of our associates around the world and thank them for what’s been accomplished thus far. Goodyear Forward is much more than numbers on a sheet of paper. This program defines the evolution of the company and how we will continue to create value going forward. With that, I’ll turn it over to Christina.

Christina Zamaro, Executive Vice President and CFO, Goodyear: Thank you, Mark, and good morning, everyone. Our third quarter results show lower costs with the benefit of Goodyear Forward and a significant reduction in debt. We are well positioned for growth as the broader economy strengthens in 2026, pre buy channel inventory tied to tariffs is depleted and the implementation of tariffs in The U. S. And potentially in Europe begins to reshape market dynamics in our favor.

Turning to the financial results on slide nine. Third quarter sales were $4,600,000,000 down 3.7% from last year given lower volume and the sale of OTR partly offset by price mix improvements. Unit volume declined 6% reflecting lower consumer replacement volume. Segment operating income was $287,000,000 decreasing from last year, but reflecting an increase of $128,000,000 compared to the second quarter. Goodyear net loss of $2,200,000,000 was driven by non cash non recurring items, including a deferred tax valuation allowance and a goodwill impairment in The Americas.

The valuation allowance against our tax assets does not limit our ability to utilize them in the future. After adjusting for significant items, our earnings per share were $0.28 compared to $0.36 last year. Turning to the segment operating income walk on slide 10. The sale of the off the road business reduced earnings by $10,000,000 After this change in scope, our segment operating income declined $49,000,000 versus last year. Lower tire unit volume and factory utilization were a headwind of 90,000,000 and price mix was a benefit of $100,000,000 driven by our recent pricing actions and RMI contracts.

Raw materials were a headwind of 81,000,000 Goodyear Forward contributed $185,000,000 of benefit during the quarter. Inflation and other costs were a headwind of $137,000,000 Other costs include approximately $40,000,000 of tariffs, dollars 25,000,000 of manufacturing inefficiencies related to factory closures and lower production and $20,000,000 of increased transportation and warehousing costs. The non recurrence of insurance proceeds received last year was $17,000,000 and other SOI was a headwind of $16,000,000 Turning to the cash flow and balance sheet on slide 11. Cash flow from operating activities was about flat for the quarter. Including third quarter CapEx, free cash flow was a use of 181,000,000 As I mentioned last quarter, our year to date free cash flow includes a portion of the proceeds from asset sales, reflecting the value of long term supply agreements and a prepaid for Dunlop inventory that will transfer at the end of the year.

The remaining amount will be amortized into SOI over roughly six years. We expect our year end benefit in operating cash flow related to the various supply, licensing and transition agreements to be approximately $370,000,000 inclusive of the Chemical sale. Pro form a for the Chemicals transaction, our third quarter debt declined about $1,500,000,000 which reflects asset sale proceeds net of fees, partly offset by cash used for working capital and restructuring over the last twelve months. We continue to expect to generate significant free cash flow in the fourth quarter consistent with our historical seasonality. Moving to the SBU results on slide 13.

Americas unit volume decreased 6.5% driven by consumer replacement. U. S. Consumer replacement industry sell in was down 4% during the quarter with industry members declining and low end imports up 2%. Importantly, year over year growth in imports has slowed from both Q1 and Q2.

Our Americas consumer OE volume grew 4% reflecting

Katie, Conference Operator: industry recovery in The U. S. Where we continue to outperform the industry in our share of fitments. Q3 marks the seventh consecutive quarter of OE share gains in The Americas. Americas commercial

Christina Zamaro, Executive Vice President and CFO, Goodyear: consumer OE volume declined 33% as OEMs decreased production given continued weakness in freight market conditions and uncertainty surrounding the implementation of twenty twenty seven EPA mandates. The U. S. Commercial replacement industry saw non member import growth of 64% during the quarter, just ahead of August effective date for IEEPA tariff implementation. Americas segment operating income was $2.00 $6,000,000 a decrease of $45,000,000 compared to last year, driven by lower volume and partly offset by Goodyear forward benefits.

Turning to slide 14, EMEA’s third quarter unit volume decreased 2%, driven by declines in replacement volume given pre buy of low end imports in The EU. We expect the EU to make its final tariff determination early next year. As a reminder, tariff rates are 41% to 104% and we expect that the tariffs may be applied retroactively through the October. During the third quarter, we announced the relaunch of the Cooper brand in EMEA to fulfill customer demand following the sale of Dunlop. The availability of the Cooper brand across our regional network will ensure our portfolio provides a comprehensive and competitive offering.

EMEA’s consumer OE continued to be a bright spot where volumes grew 20% reflecting continued OE share gains. Like in The Americas, this is the seventh consecutive quarter of OE share gains in EMEA. Segment operating income was $30,000,000 for the region, up $7,000,000 driven by price mix benefits. Turning to Asia Pacific on slide 15. Third quarter unit volume decreased 9% driven by consumer OE and replacement volume.

Lower consumer replacement volume was driven by actions we’ve taken to reduce low margin business and realign our distribution and retail strategy in the region. OE volume was lower given our customer mix with aggressive new car promotions in China mostly supporting opening price point vehicles. Segment operating income was $51,000,000 and over 10% of sales. As Mark mentioned earlier, for Asia Pacific, we expect to return to volume growth during the fourth quarter driven by the ramp up of new fitments and higher replacement volume. Turning to our fourth quarter outlook on slide 17.

We expect a meaningful sequential increase in SOI in the fourth quarter with all regions contributing to the step up in earnings. And on a year over year basis, we expect Q4 SOI growth in the mid single digit range excluding the impact of this year’s divestitures. In Consumer, we expect replacement volume to be impacted by high channel inventories in The U. S. And EU.

Consumer OE volume growth is expected to be consistent with the third quarter. Our expectation for commercial truck volume is extremely modest given ongoing industry challenges. Overall, we expect global volume to be down about 4%. In addition, we expect higher unabsorbed fixed costs of $70,000,000 reflecting lower production volume of 2,000,000 units in the third quarter. In addition, with the industry volatility we’ve experienced this year, we expect our fourth quarter production to be as much as 4,000,000 units lower than last year.

Fourth quarter price mix is expected to be a benefit of approximately 135,000,000 driven by pricing actions taken earlier in 2025. Raw material costs will be a slight benefit given current spot rates and Goodyear Forward will drive benefits of approximately $180,000,000 during the quarter. Inflation, tariff and other costs are expected to be a headwind of approximately $190,000,000 in the quarter, reflecting higher costs given U. S. Tariff impacts and a global inflation rate of about 3%.

This amount includes tariff costs of approximately $80,000,000 and above average increases in freight rates and increased manufacturing inefficiencies related to lower production. Based on rates in effect today, our annualized tariff costs are expected to be approximately $300,000,000 which is $50,000,000 lower than we cited last quarter as Canada eliminated tariffs on imports coming in from The U. S. Effective September 1. We continue to expect proceeds from business interruption insurance related to our fire at our factory in Poland in late twenty twenty three.

This benefit should mostly offset the non recurrence of $52,000,000 of insurance proceeds received last year. And finally, the sales of OTR and Chemical will be a headwind of approximately $30,000,000 in the fourth quarter. Turning to slide 18. Our other financial assumptions include some puts and takes including an update to our assumption for 2025 working capital given second half volume and an increase in restructuring given a new Q4 program. With all of the work we’ve done to improve the balance sheet this year, we are focused on driving strong free cash flow through the end of the fourth quarter.

Finally, as a reminder, the $2,200,000,000 in proceeds from asset sales will be reduced by fees and taxes. We previously guided total transaction fees, including indirect fees related to carve out administration as well as taxes at approximately $200,000,000 the majority of which will be paid this year. These costs will be included in operating cash flow. So as you think about how to account for asset sales in your modeling on our cash flow statement, We expect cash flow from investing activities to reflect proceeds of approximately $1,900,000,000 and cash flow from operating activities to reflect $370,000,000 of proceeds that will be amortized into SOI over roughly six years, offset by up to $200,000,000 in fees. With that, we’ll open the line for your questions.

Katie, Conference Operator: Thank you. Thank you. Our first question will come from Ittai Makati with TD Cowen. Your line is now open.

Ittai Makati, Analyst, TD Cowen: Thank you. Good morning, everybody. First question just on some of the consumer OE market share gains that you’ve been reporting. I’m just curious how we should think about that going forward? To what extent is it just a function of prior wins?

And do you sort of have a view on kind of how your OE volume may track just relative to the industry going forward?

Mark Stewart, CEO and President, Goodyear: No. Thanks, Vite. As we look at it, OE has been one of the key focus areas since I joined the company and we looked across actually across the world and what was our current percentages of OE versus replacement. And so there was definitely an opportunity for us to move up in that and create that nice pull through on those first and second replacement cycles. We had not had enough exposure to the premium larger rim sizes and the very best way for us to affect that change in a fast manner is through the enhanced OEM partnerships.

And it absolutely is about more premium pricing, larger sizes, larger margins. So know we can get out there and win with OE. We’ve been really pleased. As Christina mentioned, we’ve got seven quarters in a row of growth in both The Americas and in EMEA on that consumer OE business. And as we look to it, the partnerships that we’ve gotten with our strategic OEMs around the world continues to get stronger on the technology roadmap as well as winning on the right fitments and the right platforms around the world.

The other piece, as I mentioned in my opening part of the session, we’ve definitely seen a preference from the OEs in The Americas specifically around the USMCA compliance. And so we’ve seen some nice tailwinds coming forward with that as well.

Ittai Makati, Analyst, TD Cowen: Terrific. That’s great to hear. And just secondly, I appreciate the detail on the Q4 kind of SOI drivers. I was hoping we could talk a little bit about 2026 puts and takes particularly around kind of price mix and raws and what that might look like at the current steady state as well as any kind of early thoughts on some of the other cost movements we should kind of just be thinking about in our models for next year? Thank you.

Christina Zamaro, Executive Vice President and CFO, Goodyear: Hi, Itay. Good morning. So we’ll be able to be a lot more specific on ’20 ’26 on our conference call in February. But we do know a handful of factors based on our Goodyear Forward programs. And as you mentioned based on where current rates are today.

So as we think about SOI, I’d say Goodyear Forward carryover cost benefits should be at least $250,000,000 Of course, we’re looking at all levers to pull ahead cost reduction. Flow through pricing based on actions we’ve taken to date in the market will be around $100,000,000 That’s before RMI indexed agreements kicking in next year, which will reduce that somewhat. Of course, Mark mentioned a lot of the new SKUs coming in. So we will continue to push price mix in a positive direction next year as well. ROS at current spot rates will be a benefit of $200,000,000 and that’s inclusive of the Chemical transaction, meaning the portion of internal supply that moves external is now included in our raw material base.

But even with that headwind, raws should be a benefit of $200,000,000 And then inflation typically sits around on our cost base 200,000,000 to $225,000,000 of a headwind. I’d also expect tariff carryover costs at current rates. Of course, a lot is moving around, but tariff carryover in the range of $150,000,000 to $160,000,000 next year. And then we have an insurance collection we’re expecting in the fourth quarter, which we would have a non repeat. I think that gives you most of the puts and takes excluding the asset divestitures, which there are different impacts from most notably EMEA will have a headwind related to the sale of Dunlop in the range of $65,000,000 The reduction in our earnings related to Chemical is going to be about $35,000,000 plus some stranded overhead of about $15,000,000 Now all of that will be partly offset by amortization of that $370,000,000 that we talked about earlier in the prepared remarks, that should be a benefit of about $60,000,000 next year.

So a lot of puts and takes, a lot of reasons to believe that we have some tailwinds that we’ll be able to capitalize on in 2026.

Ittai Makati, Analyst, TD Cowen: Terrific. Appreciate all that detail. Thank you.

Christina Zamaro, Executive Vice President and CFO, Goodyear: Thank

Katie, Conference Operator: you. Our next question will come from James Mulholland with Deutsche Bank. Your line is open.

James Mulholland, Analyst, Deutsche Bank: Great. Thanks for taking my questions guys. I was wondering if you could give us an update on the commercial vehicle environment and whether you’ve seen any kind of improvement or stabilization. In the deck, you mentioned that U. S.

Commercial replacement was up, but it was driven pretty much entirely by low cost imports. So I guess the question is, is a similar dynamic playing out there as in light vehicle for the last few years where low cost imports are coming in, they’re taking significant share? And would I guess you expect that to eventually put margins on commercial vehicle, which has traditionally been very strong?

Mark Stewart, CEO and President, Goodyear: Yes. Maybe I can start and then we’ll turn it to Kristina. When we think about the commercial PBU, you’re right, right? There has been some trade down particularly with smaller fleets or the 1Z2Z types of ownership if you will. Our overarching fleet business, though, remains very strong, right, in the subscription market that we have as well as our rollout of the tires as a service that is a little bit ahead of schedule when it comes to Europe and has just come into The U.

S. Market. But we think about in ’twenty four, overall unit sales about 11,000,000 units including OE and replacement in that commercial market. We continue to focus on premium fleet customers that really drive that pull through through the OEs. But we have seen as well in the marketplace, the typical pre buy we would see on the emission changes on engines on the commercial truck world has been very low, right?

It’s with the questions around the emissions and what is really happening with that. So, a lot of the large fleets, most of the large fleets have opted to extend the life of their current. And some of the feedback we’ve gotten from customers that the cost of ownership for them at this moment is to hang on to those trucks that they have for an extra period of time, which in terms of our subscription modeling actually is okay for us for that side, right? But when we look at it over the last several years, peak margins were kind of high single digits during the $13.5 to 14,000,000 unit volume. And just given the current freight environment and this regulatory uncertainty I mentioned, it’s been definitely a challenging marketplace for the entire industry globally, probably unprecedented actually.

James Mulholland, Analyst, Deutsche Bank: Got it. Okay. So I guess my second question is, I was wondering if you could just double click, I guess, on the broader channel dynamics and what you’re seeing. A few months ago, we were sitting here, we were talking about the eventual low cost inventory digestion following that massive inflow that we saw around Tariffon. But it doesn’t feel like that digestion is really materializing yet.

I know Christina said we’re probably going to see at least a little bit further before that starts to hit. But do we have any line of sight on when you think that might start to flow through? Or is that really going to be something that could be here for quite a bit longer?

Christina Zamaro, Executive Vice President and CFO, Goodyear: Dave, thanks for the question. I would say just given the fact that The U. S. Industry was negative in the third quarter, sellout continues to trend more positively. We’re beginning to see some of the channel inventory sell With the current data that we have, we’d say that the remaining excess in the channels would take at least through the end of the fourth quarter to sell through in consumer replacement.

To your point a little earlier, in commercial, there’s just been this continued glut of pre buy in through the third quarter. And I think that will take longer on into 2026. I think the commercial side of the business, as Mark was just mentioning, actually tends to see a significant portion of supply on a run rate basis coming from imports. And so over the longer term, I think commercial trends will be healthier, but will need to work through the excess imports over the course of the next couple of quarters in commercial.

James Mulholland, Analyst, Deutsche Bank: Great. Thank you very much guys.

Katie, Conference Operator: Thank you. Our next question will come from Ross MacDonald with Citi. Your line is open.

Ross MacDonald, Analyst, Citi: Yes. Thanks for taking my question. It’s Ross MacDonald at Citi. Two questions from me. First one on EMEA, it looks like very strong OE performance.

I know Itay already asked on this. But given the 20% volume growth in EMEA original equipment in 3Q, could you maybe just drill into if there’s any specific platforms or products that are taking the lion’s share of that volume growth? Or is this broad based market share gains you’re making in OE? It’d be very interesting, I think, to understand what’s underlying that. And then Mark, you mentioned that the profit per tire in EMEA is improving.

Could you just elaborate on how much of that reflects specifically the winter tire strength that you’ve called out in Europe versus how much of that improving profit per tire in EMEA should reasonably should we reasonably expect to carry over into 2026? So that’s my first question on EMEA. And then secondly, I see in your Q4 indications a comment around potential further rationalizations. Could you maybe elaborate on if there’s a new plan that we should expect in the fourth quarter? Any details of what that might look like and if that’s focused on any one particular region?

Thank you very much.

Mark Stewart, CEO and President, Goodyear: Sure. So maybe just to start, would say that to the first part of your question, I think you got three in instead of two, Ross, by the way. But I don’t know.

: Sorry about that.

Mark Stewart, CEO and President, Goodyear: No worries. No good. When you look at EMEA market, it’s actually broad. Have been moving up with the players. One of the differences that when we rolled into our longer range planning coming into the start of 2025, when we put David Ankhart in over our product tech and product planning roadmap in conjunction with Chris Helfel in engineering was really making sure that we’ve got the right relationships, the right OEM strategies and the right technological partnerships with those OEs.

And again, we’re seeing the benefit of that on the go forward. But in the here and now as well as we look at some of the OEMs coming back stronger in EMEA that we’re actually on some really good fitments broad based across Europe, which is why I think you see that seven quarters of growth in EMEA on the consumer OE. As well as it’s a conscious decision as well, right? We are continuing as we mentioned, not only in The Americas, but around the world as we globalized our product development to fill the blank spaces with premium product. And specifically, the larger rim sizes and we are deprecating the SKUs that are lower margin that we don’t make money on.

And so we are seeing a partial lift from that as well as the new SKUs coming in and also some of the OEs coming back in the second half. But as well, you are right. The second half and the winter mix, we’ve been really pleased with our order performance from our customers on the winter mix as well. So all of those are looking good. On the second piece, the rationalizations, we have completed basically, I call it a 4.5 I think is the right way to say that.

Three in EMEA, one in Asia, and a significant restructuring in one of The US plants to really focus from that side of it. So all of those actions are on track as we committed to the Goodyear Forward Plan and the restructuring activities. As we get into quarter four and get ready really as we go to probably the February results as we come and share that with you all, we’re continuing to top off and refill our Goodyear forward as we look to a two point zero. And it’s just embedded in our DNA of how we’re running the business. And we continue to look and scan at what other things we do to move things from a fixed cost environment to a flex cost environment.

So we’re working very diligently with that around the world.

Christina Zamaro, Executive Vice President and CFO, Goodyear: Just with respect to the guidance, the increase in the restructuring basket was for a new program in The U. S. In the fourth quarter.

: Very helpful. Thanks very much. Sure.

Katie, Conference Operator: Thank you. Our next question will come from James Picariello with BNP Paribas. Your line is open.

James Picariello, Analyst, BNP Paribas: Hey, good morning everybody.

: Good morning.

James Picariello, Analyst, BNP Paribas: Hoping to clarify the insurance collection

Ittai Makati, Analyst, TD Cowen: in

James Picariello, Analyst, BNP Paribas: the fourth quarter. Is this a new item or was this always embedded in the full year outlook?

Christina Zamaro, Executive Vice President and CFO, Goodyear: So James, we first brought up the insurance recovery in the fourth quarter on our second quarter conference call. So it’s not new. We didn’t have line of sight to it at the beginning of the year, however.

James Picariello, Analyst, BNP Paribas: Okay. And it’s about $50,000,000 or so?

Christina Zamaro, Executive Vice President and CFO, Goodyear: Correct. Yes, that’s related to business interruption from the Dubitsa fire back in 2023. And we had called out about that amount as part of the disruption related to the fire.

James Picariello, Analyst, BNP Paribas: Understood. Okay, thanks. And then with tariffs at an annualized rate of $300,000,000 can you just help us better understand what drives the seasonality to this? Because the third quarter was a full clean quarter of all tariffs and only came in at $4,000,000 The second quarter was, I think, 10,000,000. Like what’s implied for the fourth quarter?

And then, yes, just help us understand the seasonality to this.

Christina Zamaro, Executive Vice President and CFO, Goodyear: So broadly, the seasonality should follow our volumes, which tend to be a little lower in the first half, particularly the first quarter, and then seasonally stronger in the second half of the year. What I would say about the third quarter tariff amount coming in right around $40,000,000 a little bit less than we had expected. Some of that was a basketing issue as we look to pull tariffs out of raw materials. We overestimated the amount of tariffs for Q3 and underestimated raw materials. You can see it’s a net there.

Also because of days inventory, lower volume in Q2, lower volume in Q3, tariff costs a little pushed into Q4. So James, I would say right now based on rates we see today, fourth quarter tariff costs should be about $80,000,000 And then the flow through into next year looking around $160,000,000 mostly weighted to the first half. And so I’d say something on the order of 60,000,000 to $65,000,000 each in Q1 and Q2.

James Picariello, Analyst, BNP Paribas: Got it. If I

: could

James Picariello, Analyst, BNP Paribas: squeeze in one more, and I appreciate it. In regards to the Chemicals divestiture, I could see the guided $7,000,000 of lost EBIT for the two months post sale. Can you just clarify what the expected annualized impact is for that Chemical sale? Because it sounds as though there is an element of the divestiture and that will show up in a raw material headwind for next year. So just hoping to clarify what those internal versus internal buckets look like?

Yes.

Christina Zamaro, Executive Vice President and CFO, Goodyear: No, that’s right. So it’s going to show in a couple of different baskets, part lost earnings in SOI, part increase in raw materials as we move to third party sourcing. I think about this total impact of being something in the order of magnitude about $120,000,000 all in. Just the earnings, the lost earnings, James, be about $45,000,000 of a headwind on an annualized basis. You can think about doubling that and the other portion would then show up in raw materials maybe with some additional margin for our new supplier.

And then stranded costs will be about $15,000,000 in conjunction with the transaction. Of course, we’re going to look to flex costs as part of our ongoing savings initiatives next year.

: Got it. Thank you.

Christina Zamaro, Executive Vice President and CFO, Goodyear: Sure.

Katie, Conference Operator: Thank you. Our next question will come from Ryan Brinkman with JPMorgan. Your line is open.

Ryan Brinkman, Analyst, JPMorgan: Hi. Thanks for taking my questions. You’ve gotten the one about low cost tire imports into The U. S. Maybe a similar one, but about Europe.

What I think can you provide there with regard to what you’re seeing with regard to potential tariffs that could be implemented in that market? And then as well as what might be happening with regard to the pre buy of those tires? Is it tracking any differently to what you saw in The U. S. Given the potential I think for tariffs to maybe be made retroactive to the date of the opening of the antidumping investigation?

Christina Zamaro, Executive Vice President and CFO, Goodyear: Hi, good morning, Ryan. I would say what we’re seeing in Europe feels a lot like The U. S. Just on a quarter or two leg because the tariff announcement came a little bit later. We have seen over the course of Q2 and on into Q3 a lot of pre buy of lower end tire imports.

And what this means is that our dealers and distributors are saving warehouse space and saving liquidity in order to stockpile these imports. I think as we look to the fourth quarter, not expecting so much of an impact, we do not see the same competitive dynamics necessarily on winter tires that we do in summer or all season. I think we still would say that the EU consumers are very sensitive to making sure that their winter tires come with a very high quality and performance. Expect that it will take on into 2026 to sell through some of that all season and summer pre buy because it’s again not really for winter tire selling.

Ryan Brinkman, Analyst, JPMorgan: Okay, then. And on the look ahead, thank you for 2026. I heard Christina, think you say $250,000,000 of savings from Goodyear Forward. I mean just looking at the numbers from Slide six, it seems like with Goodyear forward savings expected to be at an annualized run rate of $1,500,000,000 by 4Q this year and with $750,000,000 of SOI benefit in 2025 on top of $480,000,000 in twenty twenty four million And you should have like $270,000,000 I think year over year benefit in 2026 just from the anniversarying of what you’ve already accomplished without any incremental action required on your part. Is that the right way to think about that?

And then because I heard Mark reference I thought a two point zero I think a good year forward two point zero I presume. And Christina, did you say something about an incremental cost save program here in 4Q? So just curious if the overall cost saves could be maybe substantially greater than $250,000,000 in ’twenty six to help defray that $250,000,000 or $200,000,000 of inflation general inflation headwind to help ensure that some of these savings go through to the SOI line?

Christina Zamaro, Executive Vice President and CFO, Goodyear: Certainly looking ahead our goal is to make sure we’re never done with self help. And the $270,000,000 flow through is exactly the right number based on the math and the calculations for flow through. And as I mentioned earlier, we’re going to look to accelerate cost reduction into next year. I think we’ll be able to share more about our plans as part of our February conference call for 2026. But as Mark has mentioned in the past, this is a lot about making cost savings, a lot about the way we work, making it part of the company’s DNA and how we will position growth for the company going forward.

Ryan Brinkman, Analyst, JPMorgan: That’s helpful. And just lastly, I know you said strong cash flow in the fourth quarter. You always have extremely strong cash flow in the fourth quarter. Is there any sort of way to dimension that or provide an update on the puts and takes, how you expect the full year to shake out in 2025 here?

Christina Zamaro, Executive Vice President and CFO, Goodyear: Sure. So if you’re looking at the drivers of SOI, I think you should get to a level of about $370,000,003 $75,000,000 in the fourth quarter. That should bring you inclusive of corporate costs and D and A to an EBITDA of about $1,800,000,000 On the operating side, in our free cash flow drivers, there were several puts and takes, but everything we’ve laid out pretty much is a net. So on an operating basis, I would say free cash flow is about breakeven. And then what we said as part of this call is that our asset sale fees, which we’ve indicated will be about $200,000,000 are going to flow through operating cash flow this year.

And so as you think about the geography, we should show cash flow from investing activities, proceeds from our asset sales of about $1,900,000,000 and then breakeven cash from operations excluding $200,000,000 of fees that will also flow through there as well.

Ryan Brinkman, Analyst, JPMorgan: Very helpful. Thank you.

Katie, Conference Operator: Thank you. Our next question will come from Emmanuel Rosner with Wolfe Research. Your line is open.

: Great. Thank you so much. I was actually hoping to pick it up right here, which is you were very helpful with the puts and takes early puts and takes of SOI into 2026. Just curious about how to think about the early puts and takes on the free cash flow compared to what you just described for 2025. It sounded like at least on an SOI basis, the expectation of modest growth this year when I quickly added your puts and takes.

But anything to think of in terms of the free cash flow items? And in particular that portion of the asset sales that flows into the cash flow from operations this year, would it be missing next year?

Christina Zamaro, Executive Vice President and CFO, Goodyear: So Emmanuel, on cash for 2026, we know that restructuring flow through from Goodyear forward should be about 200,000,000 to $250,000,000 so significantly less cash outlay than we saw in 2025. Also interest expense will be a lot lower. Obviously, we’ve been doing a lot of hard work to get to the lower leverage And we would expect then interest expense to fall in the range of $425,000,000 That’s down about $100,000,000 since the 2023 and since we first started Goodyear Forward. When I look at the amortization of the $370,000,000 I’d expect about $60,000,000 beginning in 2026.

: Okay. And so I guess putting it all putting that all together compared to that breakeven on an operating basis that you’re speaking about for 2025 directionally, Where would that leave us to 26,000,000

Christina Zamaro, Executive Vice President and CFO, Goodyear: So Emmanuel, we’ll be able to be a lot more specific as to our drivers of SOI, drivers of free cash flow on our February conference call. We have volumes down in the second and third quarter, also anticipating that in the fourth quarter, to see some of this industry disruption work its way through the channels before we guide into next year.

: Okay, understood. And then one question on tariffs please. So I appreciate all the color on the impact this year and sort of like the annualization into next year. Can you talk about is there any room for mitigation efforts in terms of either moving things around or just sourcing it differently? Just a quick update please on annuity sort of like reduced that loan on a go forward basis.

Mark Stewart, CEO and President, Goodyear: Yes. So we’re really working on it on all fronts on it when you think about Emmanuel from first of all, we’re super active in D. C. On a regular basis, making sure that we’ve got our viewpoints and fact points in and we’ve got really strong working relationships with the right folks in D. C.

Around that can help us on the right implementation of the tariffs and how to do that to have best foot forward for Goodyear and our strong U. S. Footprint. On the EMEA side as well, I think our lobbying efforts there also to the really the anti dumping, I would call it, but really the tariff impact there. The teams have been working very hard with the EU on that and cooperating with that aspect.

When it comes to the rest of your question, right, we absolutely it’s one of the reasons we created and I did the move to get us set up under Don Metzler for global manufacturing so that we can constantly be pulling and looking at best landed cost around the world. As we’ve shared on earlier calls, we continue the journey of moving from a cost center approach to a P and L approach at each of our factories around the world to make sure that we’re flexing cost structures that we are absolutely the most competitive we can be. And so as I mentioned before, I think we saw a lot of positive momentum and sourcing from OEMs in The U. S. Market preferring that USMCA compliant footprint that takes effect going into next year and then in the coming years as well when we look at that sourcing of that preferential really more preferred to the USMCA side.

So absolutely, we’re doing all those things and relocating things to moving within the footprint to have the best landed cost in the region or in some cases it is still shipping from other locations. But we try to preference for in the region for the region wherever possible.

: Great. Thank you. Thank

Katie, Conference Operator: you. This concludes our question and answer session. I will now turn the meeting back to Mark Stewart for any final or closing remarks.

Mark Stewart, CEO and President, Goodyear: Thank you. Thank you all for joining the call today. So that’s a wrap for Christina and I. I’m sure we’ll have some other conversations with you guys over the course of the week. Clearly, the short term conditions have been pretty turbulent, right, with a lot of global trade volatility, but we are absolutely laser focused on controlling the controllables, right?

That is absolutely our mantra. It is about us continuing to drive the good year forward to conclusion and keep the pipeline refilled and making sure that we are staying absolutely on our toes and all of our folks around the world continue to implement and make sure that we’re monitoring our cost. At the same time, making sure that we are being absolutely focused on bringing the new SKUs into the marketplace around the world of the higher rim size, the premium rim sizes and deprecating low end volume in terms of the margin play. We’ve completed our planned divestitures. We’ve restored our balance sheet to health and we for sure are driving sequential earnings growth through our cross actions as well as our share gains.

Our OEM volume growth as we’ve talked a lot about on the call today outpacing our 18 inches and above around the world particularly in China. And then we’re really excited about the new Wrangler and the Eagle F1 launches here in The U. S. Marketplace and the strength of our winter tire orders in EMEA as we mentioned. So we’re sharpening the portfolio.

We’re expanding our retail operations. And we can continue to position ourselves to leverage as the markets resume a normalcy. So thank you guys for joining today.

Katie, Conference Operator: That brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect. Thank you.