Q1 2024 The Goodyear Tire & Rubber Co Earnings Call

Speaker Change: [music].

Operator: Good morning, my name is Niki, and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear's first quarter 2020 earnings call.

Nikki: Morning, my name is Nikki, and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear's first quarter 2020 earnings call.

Good morning, My name is sneaky and it will be your conference operator today at this time I would like to welcome everyone to Goodyear's first quarter 2020 for earnings call.

Operator: All lines have been placed on mute to prevent any background noise. After some opening remarks, there will be a question and answer session. You may register to ask questions at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded. It is now my pleasure to turn the conference over to Greg Shank, Senior Director, Investor Relations. Please go ahead.

Sneaky: All lines have been placed on mute to prevent any background noise.

Sneaky: After some opening remarks, there will be a question and answer session.

Sneaky: Richard search ask questions at any time, a person to start and one on your telephone keypad.

Sneaky: You may withdraw yourself from the queue by pressing star two.

Sneaky: Please note. This call may be recorded it is now my pleasure to turn the conference over to Greg Shank Senior Director Investor Relations. Please go ahead.

Nikki: All lines have been placed on mute to prevent any background noise. After some opening remarks, there will be a question and answer session. You may register to ask questions at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded. It is now my pleasure to turn the conference over to Greg Shank, Senior Director, Investor Relations. Please go ahead.

Greg Shank: Thank you, Nikki. Good morning, and welcome to our first quarter 2024 earnings call. Today on the call, we have Mark Stewart, our Chief Executive Officer and President, and Christina Zamarro, our Executive Vice President and Chief Financial Officer. During this call, we will refer to forward-looking statements and non-GAAP financial measures. Forward-looking statements involve risks, assumptions, and uncertainties that could cause actual results to differ materially from those forward-looking statements. For more information on the most significant factors that could affect future results, please refer to slide 20 of the supporting presentation for today's call and our filings with the SEC.

Greg Shank: Thank you, Nicky. Good morning and welcome to our first quarter 2024 earnings call. Today on the call, we have Mark Stewart, our Chief Executive Officer and President, and Christina Zamarro, our Executive Vice President and Chief Financial Officer. During this call, we will refer to forward-looking statements and non-GAAP financial measures. Forward-looking statements involve risks, assumptions, and uncertainties that could cause actual results to differ materially from those forward-looking statements. For more information on the most significant factors that could affect future results, please refer to slide 20 of the supporting presentation for today's call and our filings with the SEC.

Greg Shank: Thank you Nikki good morning, and welcome to our first quarter 2024 earnings call today on the call. We have Mark Stewart, our Chief Executive Officer, and President and Kristina Tomorrow, Our executive Vice President and Chief Financial Officer.

Greg Shank: During this call we will refer to forward looking statements and non-GAAP financial measures.

Greg Shank: Forward looking statements involve risks assumptions and uncertainties that could cause actual results to differ materially from those forward looking statements for more information on the most significant factors that could affect future results. Please refer to slide 20 of the supporting presentation for today's call.

Greg Shank: And our filings with the SEC.

Greg Shank: These materials can be found on our website at investor.goodyear.com, where a replay of this call will also be available. A reconciliation of non-GAAP financial measures discussed on today's call to the comparable GAAP measure is also included in the appendix of that presentation. With that, I will now turn the call over to Mark.

Greg Shank: These materials can be found on our website at Investor Goodyear Dot Com, where a replay of this call will also be available <unk>.

Greg Shank: A reconciliation of non-GAAP financial measures discussed on today's call to the comparable GAAP measure is also included in the appendix of that presentation with that I will now turn the call over to Mark.

Mark Stewart: Thank you, Greg, and good morning, everybody. Thanks for joining us. Yesterday, after the market closed, we published our first quarter results. As you've seen, we've updated our quarterly earnings format with a goal to enhance our process, and provide information to the investors that they're most interested in. We are happy to take your feedback on our new format as we move forward.

Mark Stewart: Thank you, Greg and good morning, everybody. Thanks for joining us yesterday after the market close we published our first quarter results as you've seen we've updated our quarterly earnings format with a goal to enhance our process provide information to the investors, which theyre most interested and we're happy to take your feedback on our new form.

Mark Stewart: Matt as we move forward.

Mark Stewart: And to kick off with some reflections, I'd really like to begin today thanking the entire Goodyear team for delivering on our first quarter ahead of plan. We are fully engaged in executing the Goodyear Forward, and it is this level of momentum that is going to help us drive toward stronger results, stronger segment operating margins, and stronger free cash flow over the next couple of years. I do want to point out that it's not just what our associates have accomplished, but it's also about how they're doing it.

Matt: And this isn't kickoff with some reflections I'd really like to begin today. Thank you for your entire Goodyear team for delivering on our first quarter ahead of plan. We are fully engaged in executing the Goodyear forward and it is this level of momentum that is going to help us drive towards stronger results.

Matt: <unk> segment operating margins and stronger free cash flow over the next couple of years.

Matt: I want to point out that it's not just what our associates have accomplished it's also about how they're doing it we are focused on a very clear set of kpis to deliver the Goodyear forward, our operating plan and we have the governance and accountability very clear through our chain through my first months here a good year it is clear.

Mark Stewart: We are focused on a very clear set of KPIs to deliver the Goodyear Forward, our operating plan, and we have the governance and accountability very clear through our chain. During my first months here at Goodyear, it is clear our associates are committed to doing the right things and in the right way. This is why the company continues to be one of America's top trusted brands.

Matt: Our associates are committed to doing the right things and in the right way. This is why the company continues to be one of America's top trusted brands.

Mark Stewart: Since I joined Goodyear just over 90 days ago, it's been inspiring to engage in discussions with our associates in our plants, at our retail centers, at our tech center and headquarters, and all of our stakeholders as well, as I've worked to dive deep into understanding the business and making sure that I'm laser-focused, together with the team, to execute our Goodyear Forward transformation, as well as the annual operating plan we have in front of us. We now turn to the Q1 results.

Matt: I joined Goodyear just over 90 days ago, it's been inspiring to engage in discussions with our associates and our plans at our retail centers at our Tech center in headquarter in all of our stakeholders as well as that work to dive deep into understanding the business and making sure that I'm laser.

Matt: Focus together with the team to execute our Goodyear forward transformation as well as the annual operating plan, we have in front of us.

Matt: We turn to Q1 results as we look at our results for the first quarter. We delivered segment operating income of $247 million ahead of expectations and nearly doubling our earnings from last year.

Mark Stewart: As we look at our results for the first quarter, we delivered segment operating income of $247 million, ahead of expectations and nearly doubling our earnings from last year. This reflects a marked recovery in our Americas business, with SOI up $100 million from the prior year. Our Asia Pacific business also continued to see significant growth both in volume as well as earnings. EMAS results in the quarter were relatively stable, providing a good base for us to grow.

Matt: This reflects a marked recovery in our Americas business with Soi at $100 million from the prior year, Our Asia Pacific business also continued to see significant growth both in volume as well as earnings EMEA as a result in the quarter were relatively stable, providing a good base for us to grow.

Mark Stewart: All that said, as we see our overall volume softness in the quarter, partly driven by weaker industry members selling volumes, partly due to the very specific actions we're taking to increase profitability on low-margin, low-value ad products. This is a clear strategy of the Goodyear Forward Plan, something that will help us to increase our margins over the next couple of years. It's a focus by product line, profitability, and our product should cost analysis, which I'll cover more later. And at the end, it's always about our execution.

Matt: All that said as we see our overall volume softness in the quarter.

Matt: Partly driven by weaker industry members selling volumes, partly due to the very specific actions, we're taking to increase profitability on low margin low value add products. This is a clear strategy at the Goodyear forward plan something that will help us to increase our margins over the next couple of years.

Matt: It's a focus by product line profitability and our product should cost analysis, which I'll cover more later.

Matt: And at the end, it's always about our execution.

Mark Stewart: Like we've seen over the past several quarters, global consumer replacement industry volumes continue to be influenced by growth in low-end imports in both the U.S. as well as Europe. This dynamic was captured as part of our first quarter outlook. As we look at what is happening at the retail level, industry sellout was up slightly in the U.S. and up about 3% in Europe for our commercial truck business. And like we've seen over the last several quarters, a weak fleet industry condition continued to weigh on our business in the Americas as well as EMEA. For the Americas, while sellout conditions are stabilizing, the industry did see some pre-buy as a result of potential new tariffs on imported tires coming from Thailand.

Matt: Like we've seen over the past several quarters global Sim consumer replacement industry volumes continue to be influenced by growth in low in imports in both the U S as well as Europe. This dynamic was captured as part of our first quarter outlook as.

Matt: As we look at what is happening at the retail level industry sell out was up slightly in the U S and up about 3% in Europe.

In our commercial truck business and like we've seen over the last several quarters of weak fleet industry conditions continue to weigh on our business in the Americas as well as EMEA.

Matt: For the Americas, while sellout conditions are stabilizing the industry did see some pre buy as a result of potential new tariffs on imported tires coming from Thailand.

Mark Stewart: With that said, we don't see this incremental import activity as a significant headwind to our plan. As we turn this good year forward, we delivered about $70 million in segment operating income improvements during the first quarter. In addition to what we captured in the P&L this quarter, we are executing actions to drive towards our $1.3 billion planned earnings improvement as part of Goodyear Forward. For example, in our footprint and plant optimization, we have put together very detailed plant-specific Factory Plans.

Matt: With that said, we don't see this incremental import activity as a significant headwind to our plan.

Matt: As you turn to Goodyear forward, we delivered about $70 million in segment operating income improvements during the first quarter in.

Matt: In addition to what we captured in the P&L. This quarter, we are executing actions to drive towards our one 3 billion planned earnings improvement as part of Goodyear forward.

Matt: In our footprint and plant optimization, we have put together a very detailed plant specific.

Mark Stewart: Going to the work center level to drive factory efficiencies across our footprint, we are reviewing the details of these efficiency plans with our plant operating teams together with the leadership team on a weekly basis. In addition, I spent the last month visiting our manufacturing sites in the U.S. to support both these initiatives, to get to know our teams, and to get to know the folks on our production floor. The work in our factories includes implementing improvements to drive increases in our operating equipment uptime and reliability. Reducing the complexity in our factories and reducing the number of configurations.

Matt: Factory plans going to the work center level to drive factory efficiencies across our footprint. We are reviewing the details of these efficiency plans with our plant operating teams together with the leadership team on a weekly basis. In addition, I spent the last months visiting our manufacturing sites in the U S to.

Matt: Both of these initiatives to get to know our teams and to get to know the folks on our production floor.

Matt: The work in our factories includes implementing improvements to drive increases in our operating equipment uptime reliability rich.

Matt: Reducing the complexity in our factories, reducing the number of configurations preparing to run several products uncommon.

Mark Stewart: Preparing to run several products on common product platforms, as well as rationalizing our materials. We are also working to reduce overtime and third-party contractor spend as we move forward. In addition, we've announced changes to our distribution strategy in Australia. Three planned factory closures, two in Germany, and one in Malaysia.

Matt: <unk> platforms as well as rationalizing our materials, we're also working to reduce over time.

Matt: And third party contractor spend as we move forward.

Matt: In addition, we have announced changes to our distribution strategy in Australia, three planned factory closures two in Germany, one in Malaysia.

Mark Stewart: In purchasing, we're negotiating with our suppliers using clean sheet and ship cost methodologies and analytics, which are aided by Tech Advancements. We are implementing enhanced spin control standards and control processes to get to a deeper level of visibility as well as very proactive management of our spend all the way down to the factory level. Given that procurement plays such an essential role in the success of Goodyear Forward, I have elevated the Chief Procurement Officer role to report directly to me on the leadership team. In our SAG areas, we previously announced a reduction of 1,200 positions in EMEA.

Matt: In purchasing we're negotiating with our suppliers using clean sheet and should cost methodologies and analytics, which are aided by tech advancements. We are implementing enhanced spend control standards and control processes to get to a deeper level of visibility as well as very proactive management of our spend.

Matt: All the way down to the factory level.

Matt: Given that procurement played such an essential role in the success of Goodyear forward.

Matt: We have elevated the chief procurement officer role to report directly to me on the leadership team.

Matt: And our S. A G area as we previously announced a reduction of 1200 positions in EMEA.

Mark Stewart: It will deliver $100 million in savings by 2025. In addition, we've also taken actions on an additional 135 positions in the U.S. and LATAM during the first quarter. While headcount reductions of any kind are always very difficult decisions that we can make as a management team, they are, in fact, required for us to right-size our cost structure and enable our long-term competitiveness as a company.

Matt: It will deliver $100 million in savings by 2025.

Matt: In addition, we've also taken actions on additional 135 positions in the U S and Latam during the first quarter.

While head count reductions of any of any kind are always very difficult decisions that we can make as a management team. They are in fact required for us to rightsize, our cost structure and enable our long term competitiveness of the company.

Mark Stewart: In the supply chain and research and development, we continue to optimize for best cost. As I mentioned earlier with respect to margin enhancements, we took actions in the first quarter to increase our price mix on our lowest margin accounts. At the same time, we are also working to industrialize a number of new products to bring to market and the SKUs associated with those. In the quarters ahead, we're going to broaden our product portfolio with increased premium Goodyear fitments for the high-end market as we continue to rationalize our portfolio and SKU count where appropriate.

Matt: In the supply chain and research and development, we continue to optimize for best cost as I mentioned earlier with respect to margin enhancement. We took actions in the first quarter to increase our price mix on our lowest margin accounts.

Matt: At the same time, we are also working to industrialize, a number of new products to bring to market in the skus associated with that in the quarters ahead, we're going to broaden our product portfolio with increased premium Goodyear fitments for the high end market as we continue to rationalize our portfolio and SKU count where.

Appropriate.

Mark Stewart: We continue to be very focused on the Cooper brand as well and continue to grow in that area. Our retail store network in the U.S. turned in its best first quarter in five years, driven by advancements in consumer insight and the actions we've taken to improve our price and our mix. Overall, as I reflect on the quarter, I am very encouraged by our execution, and I'm excited about the improvements that we are driving for the future.

Matt: We continue to be very focused on the Cooper brand as well and continuing to grow in that area.

Matt: Our retail store network in the U S turned in their best first quarter in five years, driven by advancements in consumer insight and the actions we've taken to improve our price and our mix.

Matt: Overall as I reflect on the quarter I am very encouraged with our execution and excited about the improvements that we're driving for the future.

Mark Stewart: And by now, I've been through the detailed makeup of the Goodyear Forward Plan, inside and out, and can confirm that we have the line of sight to the $1.3 billion run rate improvement and 10% segment operating income margin by the end of next year. We'll keep a close eye on industry volume and price mix over the next quarters to ensure we're managing the external environment while we execute our plan to drive value for our shareholders. Now, I'll ask Christina to take you through the first quarter financials in greater detail, and we'll move on to Q&A. Thank you, Christina.

Matt: By now I've been through the detailed makeup of the Goodyear forward plan inside and out.

Matt: And can confirm that we have the line of sight to the 1.3 billion dollar run rate improvements and 10% segment operating income margin by the end of next year.

Matt: We'll keep a close eye on the industry volume and price mix over the next quarters to ensure we're managing the external environment, while we execute our plan to drive value for our shareholders.

Matt: Now I'll ask Kristina to take you through the first quarter financials in greater detail and we'll move on to Q&A. Thank you Christina.

Christina L. Zamarro: Thank you, Mark. I'll start by echoing Mark's excitement about the execution we're seeing from our team on Goodyear Forward. With energy flowing throughout our organization, it's clear that the combination of this plan, our team's knowledge of the business, and their ability to drive results sets us up for success. I'll begin with our financial results, starting with the income statement on slide 8. Our sales totaled $4.5 billion, down 8% from last year, driven by lower tire volume and an unfavorable price mix.

Christina L. Zamarro: Thank you Mark.

Christina L. Zamarro: Start by echoing Mark's excitement about the execution, we're seeing for my team and Goodyear forward with energy carrying throughout our organization. It's clear that the combination of this plan our teams his knowledge of the business.

Christina L. Zamarro: And their ability to drive results sets us up for success.

Christina L. Zamarro: The unfavorable price mix was due to the impact of two factors, first, a weak commercial truck industry in our mix, and second, contractual price adjustments as feedstock prices have remained low over the last several quarters. Unit volume was down 3% from last year. Overall replacement volume declined 7%, partly offset by higher OE volume, which increased about 9%.

Speaker Change: I'll begin with our financial results starting with the income statement on slide eight.

Our sales totaled $4 5 billion down 8% from last year, driven by lower tire volume and unfavorable price mix.

Speaker Change: Price mix was due to the impact of two factors first a weak commercial truck industry on our mix and second contractual price adjustments as feedstock prices have remained low over the last several quarters.

Speaker Change: Volume was down 3% from last year overall replacement volume declined 7%, partly offset by higher OE volume, which increased about 9%.

Christina L. Zamarro: Segment operating income for the quarter was $247,000,000, up $122,000,000 from a year ago. After adjusting for significant items, our earnings per share was $0.10 of $0.39 versus last year. The year-over-year drivers of our earnings are shown on slide 9. The impact of lower tire unit volume was 28 million, reflecting a decline in shipments of 1.4 million units.

Speaker Change: Segment operating income for the quarter was $247 million up $122 million from a year ago. After adjusting for significant items. Our earnings per share was <unk> 10 cents of 39% versus last year.

Speaker Change: The year over year drivers of our earnings are shown on slide nine.

Speaker Change: The impact of lower tire unit volume with $28 million, reflecting a decline in shipments of one 4 million units factory utilization was a slight benefit there.

Christina L. Zamarro: Factory utilization was a slight benefit. Segment operating income benefited from favorable net price mix versus raw material cost of $127 million. Raw materials were a benefit of $261 million, and price mix was negative for the quarter due to commercial truck mix and contractual pricing adjustments. The negative impact of price mix was $134 million. Having said all that, sequential pricing from the fourth quarter was stable.

Speaker Change: Operating income benefited from favorable net price mix versus raw material cost of 127 million.

While materials were a benefit of $261 million and price mix was negative for the quarter due to commercial truck mix and contractual pricing adjustments.

Speaker Change: The impact of price mix was $134 million, having said all of that sequential pricing from the fourth quarter was stable.

Christina L. Zamarro: Goodyear Forward initiatives contributed $72 million in the quarter, with benefits driven by plan optimization and purchasing. Inflation in the quarter was $58 million, or about 3%, which was partly offset by favorable other costs of $25 million, driven by lower transportation rates. Other SOI primarily consists of the impact from the fire in our pull-in facility that occurred in August of last year.

Speaker Change: So do you forward initiatives contributed $72 million in the quarter with benefits driven by plant optimization and purchasing.

Speaker Change: Inflation in the quarter was $58 million or about 3%, which was partly offset by favorable other cost of $25 million driven by lower transportation rates.

Speaker Change: Other Soi primarily consists of the impact from the fire in our Polish facility that occurred in August of last year.

Christina L. Zamarro: Turning to slide 10, Net Debt totaled $7.4 billion at the end of the first quarter, down just over $550 million from the same time last year. Cash flow from operating activities is typically negative in the first quarter as activity ramps up following the holiday shutdown. Cash use decreased in the first quarter versus a year ago, given lower raw material costs in our inventory and increased earnings. Moving to our SBU results, and starting on slide 12, America's first quarter unit volume decreased 7%, or 1.5 million units, driven by replacement volume. These results are in contrast to the relatively strong U.S. industry in the first quarter, which was driven by an increase in low-end imports. However, industry member volume, primarily representing large branded tire companies, was lower year-over-year.

Speaker Change: Turning to slide 10, net debt totaled $7 4 billion at the end of the first quarter down just over $550 million from the same time last year.

Speaker Change: Cash flow from operating activities is typically negative in the first quarter as activity ramps up following the holiday shutdown cash use decreased in the first quarter versus a year ago, given lower raw material costs in our inventory and increased earnings.

Speaker Change: Moving to our SBU results and starting on Slide 12, America's first quarter unit volume decreased 7% or one 5 million units driven by replacement volume.

Speaker Change: These results are in contrast to the relatively strong U S industry in the first quarter, which was driven by an increase in LOE and importantly.

Speaker Change: Industry member volume, primarily representing large branded tire companies was lower year over year.

Christina L. Zamarro: Segment operating income totaled $179 million, or nearly 7% of sales, reflecting an increase of $100 million year-over-year. America's earnings benefited from lower transportation rates, the execution of Goodyear Forward, and from a net price mix versus raw materials, which more than offset inflation and volume headwinds. Moving to slide 13, EMEA's first quarter unit volume decreased 5%, or 700,000 units, driven by replacement. Like in the U.S., Europe's consumer replacement industry growth in the first quarter was driven by imports.

Speaker Change: Segment operating income totaled $179 million or nearly 7% of sales, reflecting an increase of $100 million year over year.

Speaker Change: Americas earnings benefited from lower transportation rates, the execution of Goodyear forward and from net price mix versus raw materials, which more than offset inflation and volume headwinds.

Speaker Change: Moving to slide 13, EMEA first quarter unit volume decreased 5% or 700000 units driven by replacement like in the U S. Europe's consumer replacement industry growth in the first quarter was driven by employees our premium segment share remained stay.

Christina L. Zamarro: Our premium segment share remained stable versus the prior year. Segment operating income was $8 million, and flat from a year ago. Favorable net price mix versus raw materials and Goodyear forward actions were offset by volume declines and inflation. Turning to Asia Pacific on slide 14, first quarter unit volume increased 10%, or 800,000 units, driven by OE growth in China. Segment Operating Income totaled $60 million and 10% of sales, with an increase of $22 million in SOI compared to the prior year.

Speaker Change: Versus prior year.

Speaker Change: Segment operating income was 8 million and flat from a year ago favorable net price mix versus raw materials and Goodyear forward actions were offset by volume declines and inflation.

Speaker Change: Turning to Asia Pacific on Slide 14.

Speaker Change: First quarter unit volume increased 10% or 800000 units driven by OE growth in China.

Speaker Change: Operating income totaled $60 million and 10% of sales with an increase of $22 million in soi compared to the prior year.

Christina L. Zamarro: Asia's earnings benefited from a favorable net price mix versus raw materials, volume, and Goodyear Forward initiatives. However, these benefits were partially offset by higher costs. Turning now to our second quarter outlook on the left-hand side of page 16, we expect second-quarter global unit volume to be about flat versus the prior year. I'll note that this excludes America's replacement unit volume recovery related to last year's tornado at our Tupelo facility, which I'll cover in SOI Other in just a moment.

Speaker Change: Asian earnings benefited from favorable net price mix versus raw materials volume and Goodyear forward initiatives.

Speaker Change: These benefits were partially offset by higher costs.

Christina L. Zamarro: Additionally, we expect higher unabsorbed fixed costs of about $30 million, driven by lower production volume during the first quarter. Lower raw materials will be a benefit of about $160 million, partially offset by about $70 million of lower-price mix, driven by raw material indexed agreements. We expect Goodyear Forward to deliver approximately $75 million of SOI benefits during the second quarter. Lower transportation rates will partly offset general inflation for a net headwind of about $10 million in costs.

Speaker Change: Turning now to our second quarter outlook on the left hand side of page 16.

Speaker Change: We expect second quarter global unit volume to be about flat versus prior year.

Speaker Change: Note that this excludes the Americas replacement unit volume recovery related to last year's tornado at our Tupelo facility, which I'll cover in Soi other in just a moment.

Speaker Change: Additionally, we expect higher unabsorbed fixed costs of about $30 million driven by lower production volume during the first quarter.

Speaker Change: Lower raw materials will be a benefit of about $160 million.

Speaker Change: Harshly offset by about $70 million of lower price mix, driven by raw material indexed agreements.

Speaker Change: We expect Goodyear forward to deliver approximately $75 million of soi benefits during the second quarter.

Speaker Change: Lower transportation rates will partly offset general inflation for a net headwind of about $10 million in costs.

Christina L. Zamarro: SOI other items to consider include a net benefit from the recovery from the 2023 storm at our Tupelo facility and the continuing impact from the fire at our Poland facility. The combination of these events reflects a net benefit of $35 million in the second quarter. On the right-hand side of the page, our four-year assumptions are relatively unchanged from our previous call, although I'll note we have increased our full-year outlook for Goodyear Forward given our first quarter performance and reflecting our confidence as we move through the execution of our plan. With that, we'll open the line for questions.

Speaker Change: Soi other items to consider include a net benefit of the recovery from the 2023 storm at our Tupelo facility and the continuing impact from the fire at our Polish facility. The combination of these events reflects the net benefit of $35 million in the second quarter.

Speaker Change: On the right hand side of the page our full year assumptions are relatively unchanged from our previous call. Although I will note. We have increased our full year outlook for Goodyear forward, given our first quarter performance and reflecting our confidence as we move through the execution of our plan.

Speaker Change: With that we'll open the line for questions.

Operator: And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw your question at any time by pressing star 2. Once again, to ask a question, please press the star and 1 on your telephone keypad. I will take our first question from James Picariello on BNP Paribas. Please go ahead.

Speaker Change: And at this time.

Speaker Change: Like to ask a question. Please press the star and one on your telephone keypad.

Speaker Change: You may withdraw your question at any time by pricing start to.

Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.

And we'll take our first question from James Picariello with DNP.

James Albert Picariello: BNP Paribas. Please go ahead.

Jaycom: Hi everyone, this is Jaycom for James. Uh, congrats on the great quarter, and uh, congratulations Mark. Could you guys just help me put a finer point on your full-year volume assumptions for Goodyear? Because if I work through the SOI bridge items you laid out, I get something at roughly $1.4 billion for the year. And I just wanted to see if there's any uptake on that.

James Albert Picariello: Hi, everyone. This is Jake on for James Congrats on a great quarter and congratulations Mark.

Jake: Could you guys just help me put a finer point on your full year volume assumptions for Goodyear.

Jake: I've worked through the Soi bridge items, you've laid out.

Jake: I guess something at roughly $1 4 billion of Euro at one <unk>.

Jake: Presenting.

Jake: Gossiping about.

Christina L. Zamarro: Yes, hi, good morning. So, our full year outlook on volume, as we laid out in the presentation, is to be slightly behind the industry in consumer replacement. That's all going to be driven by our first quarter experience. And so, when you look at the remainder of the year, what I would say, broadly speaking, is that, you know, we should be more in line with the industry as we look at what happened over the past few quarters.

Speaker Change: Yeah, Hi, good morning so.

Speaker Change: Our full year outlook on volume as we laid out in the presentation is to be slightly behind the industry in consumer replacement, that's all going to be driven by our first quarter experience. It. So when you look at the remainder of the year, what I would say broadly speaking is that we should be.

Speaker Change: Be in more in line with the industry as we look at what's happened over the past few quarters, we've seen a lot of the destocking that we needed to sell through in Europe complete and then the U S. In the first quarter, where we were cycling through a really easy comp on the <unk>.

Christina L. Zamarro: We've seen a lot of the de-stocking that we needed to sell through in Europe complete. And in the U.S., in the first quarter, we were cycling through a really easy comp on the import side of the house. But as we move into Q2, we've guided relatively flat volume. And in the back half of the year, yes, of course, depending on your assumptions for industry growth, but we see growth in volume, just given that, you know, the consumer sellout has trended positively here in the U.S., VMT up a couple of points, and Europe also up about 3% on a sellout basis. And so, hopefully, that it helps you with your model.

Speaker Change: Port side of the house, but as we move into Q2, we've guided relatively flat volume in the back half of the year, yes.

Speaker Change: Yes of course, depending on your assumptions for industry growth, but we see growth in volume just given that you know.

Speaker Change: The consumer sell out has trended positively here in the U S V M T of a couple of points.

In Europe also up about three.

Speaker Change: <unk>, 3% on a sell out basis and so.

Speaker Change: Hopefully that helps you with your modeling.

Speaker Change: Yeah.

Christina L. Zamarro: So it's very helpful. Thank you. And it looks like most of the upside in the restructuring phase of this year, from $350 million to about $375 million, was captured in the first quarter. Are there any other opportunities to potentially push that number higher through the rest of the year?

Speaker Change: That's very helpful. Thank you.

Speaker Change: And it looks like most of the upside in the restructuring savings this year from $350 million to about $375 million was capital first quarter.

Speaker Change: Arthur any other opportunities to potentially push that number higher through the rest of the year. Thank you.

Christina L. Zamarro: Yeah, sure. So, on our fourth quarter conference call, we had said that we should benefit from Goodyear Forward Actions in 2024 by about $350 million. And just given our experience, you're exactly right, in the first quarter, we increased that outlook to at least $375 million, which does mean that we have good reason to believe that we should be able to exceed that level. However, we need to continue to execute on our work streams real time to be able to increase that amount publicly here.

Arthur: Yeah sure. So on our fourth quarter Conference call. We had said that we should benefit.

Arthur: From Goodyear forward actions in 2024 of them by about $350 million is just given our experience you're exactly right in the first quarter, we've increased that outlook to at least $375 million, which does mean that we have good reason to believe that we should be able to exceed that level.

Arthur: Will.

Arthur: We need to continue to execute on our work streams in real time to be able to increase that amount.

Christina L. Zamarro: For now, we've increased both purchasing and supply chain. Based on savings, we do have a line of sight, too, that was over and above that initial plan. I'd say supply chain is higher on better utilization and network optimization and purchasing.

Arthur: Quickly here for now we've increased both purchasing and supply chain based on savings. We do have line of sight to that was over and above that initial plan I'd say supply chain is higher on better utilization and network optimization and in purchasing.

Christina L. Zamarro: You know, we have added some new work streams since Mark came on board to deliver more value in indirect spend. This includes new MRO work streams, gray stock, and other spend control programs in our factory. So, a lot of good successes there. You know, what I would say is, we'll give you an update in the next quarter. We should be pretty much locked in on knowing where we land on the savings by Q3, just given our FIFO accounting. But at least where we're comfortable right now is at that at least $375 million level. And I would just add to it a little bit, James, in terms of...

Arthur: We have added some new work streams since Mark came on board to deliver more value in indirect spend this includes new MRO work streams Gray stock and other spend control programs in our factory. So a lot of good successes there.

Arthur: I would say is yes, we will give you an update in in the next quarter, we should be pretty much locked in on them you know.

Arthur: Knowing where we land on the savings by Q3, just given our FIFO accounting, but at least where we're comfortable right now with at that at least $375 million level.

Mark Stewart: And I would just add a little bit, James, in terms of, you know, we've got really strong momentum, some great energy with each of our functional teams, with each of the forward teams. And as Christina mentioned, right, with this 72 million total actions already in place that demonstrate results in the first quarter. But as we go through it, right, I personally, as well as Christina, make sure that we meet across the work streams on a weekly basis with each of the functions, be it purchasing, be it manufacturing, across our retail, et cetera.

Speaker Change: I would just add to it a little bit James in terms of.

Speaker Change: We've got really strong momentum some great energy with a with each of our functional teams of each of the forward teams.

Speaker Change: And as Kristina mentioned right with this 72 million of total actions already already in that are demonstrated results in the first quarter, but as we look through it right.

Speaker Change: Personally as well as Christina we're meeting across the work streams on a weekly basis with each of the functions.

Speaker Change: Be it purchasing be it manufacturing.

Speaker Change: Across our retail et cetera, and as we look across each of the five five areas tying into that 375, plus number Kristina mentioned right. It really evolved it's our footprint and plant optimization and the work that we're doing.

Mark Stewart: And as we look across each of the five areas tying into that 375 plus number Christina mentioned, right, it really involves our footprint and plan optimization and the work that we're doing. And we can talk a bit about it later, other questions, but Christina and I and the staff have been going out to each of our plants in the U.S., deep diving with our plant leadership teams and our manufacturing, engineering, and purchasing groups, meeting weekly with purchasing in terms of due diligence.

Speaker Change: And we could talk a bit on it later on the questions that we've been doing Kristina and I am an assassin going out to each of our plants in the U S deep diving with our plant leadership teams and our manufacturing engineering and purchasing groups.

Speaker Change: Weekly with purchasing and sort of in terms of.

Mark Stewart: And really, we've tightened our KPIs across the organization, both at the staff level of what we're looking at on a monthly basis in diving, but within each of our teams with dedicated purchasing and manufacturing meetings weekly to ensure execution and also to add to those work streams. So I feel very good about that, along with, as we mentioned earlier, our SAG streams of getting that SAG out of the system around the world for better cost competitiveness for the future.

Speaker Change: The diligence and really we've tightened our kpis across the organization both at the staff level of what we're looking at on a monthly basis and diving, but within each of our teams with dedicated purchasing the manufacturer meetings weekly.

Speaker Change: To ensure execution and also to add to those work streams. So feel very good about that along with as we mentioned earlier our R. S. A G strains of get in getting that out of the system around the world for better cost competitiveness for the future state.

Mark Stewart: And then the supply chain and logistics cost savings are flowing through quite nicely, as well as the actions that we've taken around complexity reduction, commonality of platforms, and to enhance our margins, be it through repricing, or choosing not to run those other products that really don't fit into our portfolio.

Speaker Change: Then the supply chain and logistics cost savings are flowing through quite nicely.

Speaker Change: As well as the actions that we've taken around complexity reduction commonality of platforms.

Speaker Change: And to enhance our margins be it through repricing be it through choosing not to run those those are products that really don't fit into our portfolio.

Speaker Change: Got it thank you.

Operator: Our next question comes from John Healy with North Coast Research. Please go ahead, www.goodyear.co.uk John, your line is open.

Speaker Change: Our next question comes from John Healy with Northcoast Research. Please go ahead.

Speaker Change: John Healy your line is open.

John Michael Healy: Thank you. I wanted to ask about the volume side in North America. You talked about the low margin kind of low margin product kind of going away a bit. Could you talk about what sort of volume impact that has, maybe in terms of units, I assume on the replacement side, and maybe what areas of the market or retailers or brands like that those are disappearing from?

John Michael Healy: Thank you.

John Michael Healy: Wanted to ask about the volume side in North America, you talked about the low margin.

John Michael Healy: It's a low margin product kind of going away a bit could you talk to what sort of volume impact that it may be in terms of units I assume on the replacement side and maybe what areas of the market or retailers or brands like that those are disappearing.

Christina L. Zamarro: Yeah, John, so I'll start here and I'll just say we've certainly seen some volatility over the last several quarters with respect to low-end imports. And, you know, if you take a broad step back, what I'd say is that import activity was suppressed, you know, for the period immediately following COVID.

Speaker Change: Yes, John So I'm all set.

Speaker Change: Start here and I'll, just say, we've certainly seen some volatility over the last several core quarters with respect to LOE and imports.

Speaker Change: And if you take a broad set back what I'd say is that important.

Speaker Change: Import activity was depressed for the period immediately following COVID-19 and what we've seen is this year.

Christina L. Zamarro: And then what we've seen is this, you know, several quarters of overcompensation, if you will, over the next, you know, over the last several quarters. You know, if I think about our share in 2023, I'd say, broadly speaking, we're about where we expected to be. If I look at non-member imports over 2023, you know, that low-end part of the market, about 20%, 21% in 2023, that's about where it was for all of the last five years. So I think what we're seeing is a whole lot of choppiness.

Speaker Change: Several quarters of Overcompensation, if you will.

Speaker Change: Over the next you know over the last several quarters.

Speaker Change: If I think about our share in 2023, I would say broadly speaking, we're about where we expected to see.

If I look at non member imports over over 2023 that low end part of the market.

Speaker Change: About 20%, 21% in 2023, that's about where it was for.

Speaker Change: All of the last five years, so I think what we're seeing is a whole lot of choppiness.

Christina L. Zamarro: In the first quarter, in particular, though, imports were 25% of the market, and that represented a pretty significant increase. Non-member imports, if you will, John, were up 100%, which was about a million and a half more units than what we would normally see in a quarter. I really believe that is lumpiness. When we think about a question maybe getting to, you know, the question of whether the consumer is really trading down, at least in the U.S., what I would say is we don't have evidence of a consumer trade-down, especially in branded Tier 1 tires.

Speaker Change: And in the first quarter in particular, though the imports were 25% of the market and that represented a pretty significant increase non member imports. If you will John we're up 100%, which was about $1 million and have more units than what we would normally.

Speaker Change: See in a quarter, but again.

Speaker Change: Really believes that has lumpiness when we think about a question maybe getting getting too.

Speaker Change: You know like the question on is the consumer really trading down at least in the U S. What I would say is we don't see we don't have evidence of a consumer trade down.

Speaker Change: Especially in branded tier one <unk>.

Christina L. Zamarro: So this would be all of the Tier 1 tire companies, including Goodyear. That share of the market has been very consistent over the last five years. I'd say more recently, you know, over the last couple of quarters, we have seen some weakness in Tier 2 and Tier 3, accreting to Tier 4 and share. And I think... At this point, it's really not clear, John, whether that...

Speaker Change: So this would be all of the tier one tire companies, including good year.

Speaker Change: That share of the market has been very consistent over the last five years I'd say.

Speaker Change: Recently, you know over the last couple of quarters, we have seen some weakness in tier two and tier three are creating to tier four and share.

Speaker Change: And I think.

Speaker Change: At this point, it's really not clear John whether that's <unk>.

Christina L. Zamarro: Weakness Driven by Consumer Preference, or whether that's something that's linked to distributor behavior, because historically, what we have seen is distributors going long on low-end tires in an inflationary environment, so this is one that we will continue to watch. I think what's different is what's happening with imports in Europe, and I think if you look at it this way, low-end imports as a percentage of the market have And so what that means is that our distributors are more willing to stock, and our consumers are more willing to bolt on these opening price point tires, and I think that's really a reflection of... You know, the impact of the very high inflation on consumers in Europe and also, you know, just the more recent macro events there. And so therein lies, you know, the rationale for a couple of the major restructurings we've announced in Europe. Hopefully, that helps.

Speaker Change: Weakness driven by consumer preference or whether that's something that's.

Speaker Change: Links to distributor behavior, because historically, what we have seen is distributors going long on low end tires in an inflationary environment. So this is one that we will continue to watch I think.

Speaker Change: You know what the difference is.

Speaker Change: What's happening with imports in in Europe, and I think if you look over the last five years.

Speaker Change: No the import low end imports as a percentage of the market have grown from something like 20% to 27% and so that what that means is that our distributors are more willing to stock our consumers are more willing to bolt on these opening price point tires and I think that's really reflects.

Speaker Change: <unk> of <unk>.

Speaker Change: The impact of the very high inflation on the consumers in Europe and also.

Speaker Change: So just to the more recent macro events there and.

Speaker Change: So there in lies the rationale for a couple of the major restructuring we've announced in Europe, hopefully that helps.

John Michael Healy: You know, it's super helpful, and then just some just a finer point I wanted to ask us about the price mix outlook. I think you guys are saying price mix will be positive in the second half of the year. Just thinking through some of the moving parts globally with the destocking or maybe growth in the import brand, to me, it seems like that has a little bit of a risk to it. Do you see that as an area with risk to the business, and how do you get confidence that price mix will be positive in the second half?

Speaker Change: No. That's super helpful. And then just on just a finer point I wanted to ask just about the price mix outlook. I think you guys are saying price mix would be positive in the second half of the year just thinking through some of the moving parts globally.

Speaker Change: With the Destocking or maybe growth in the import brand.

Speaker Change: It seems like that has a little bit of a risk to it.

Speaker Change: Be that as an area with risk to the business and how do you get confidence that price mix will be positive in the second half.

Christina L. Zamarro: Well, I think he has a good question, John. By the end of the second quarter, we'll have left. There's a commercial truck mix drag we've been seeing the last several quarters, actually that's mostly finished in the first quarter here. In Q2, we will test the impact of RMI indexed agreements on price mix. And so I think we get a clean base, if you will, for Q3 and Q4.

Speaker Change: Well I think yeah. Good question, John I would say.

Speaker Change: By the end of the second quarter, we will have lapped the.

Speaker Change: Commercial.

Speaker Change: Truck mix drag that we've been seeing the last several quarters actually that's mostly finished in the first quarter here in Q2, well, we will lap the impact of.

Speaker Change: Rmi indexed agreements on price mix.

Speaker Change: And so I'd say I think we get it.

Speaker Change: Clean base, if you will for Q3 and Q4 and then the volume you know I'm looking at and our back half of the year in the Americas really strong growth in our consumer OE business, we should.

Christina L. Zamarro: And then the volume, I'm looking at, in our back half of the year, in the Americas, really strong growth in our consumer OE business. We should outperform the market on share, just given our mix of fitments. Obviously, heavily geared to truck and SUV, which creates a lot of rich mix for us. We also expect winter inventories in Europe to be down 40% year-over-year, so they are really low. And that sets us up for a really good sell-in season in Q3 for EMEA mix also. So I think there are a lot of good reasons to believe in price mix in the back half of the year.

Speaker Change: Outperform the market share just given our mix of Fitments obviously.

Speaker Change: Heavily geared to truck and SUV, which.

Speaker Change: Creates a lot of rich mix for us and then.

Speaker Change: We also.

Speaker Change: You know winter inventories in Europe are down 40% year over year, so really low and and that sets us up for a really good selling season in Q3 in EMEA mix also so I think you know a lot of good reasons to believe in our price mix in the back half of the year.

Mark Stewart: I would just tack on one add-on, specifically around new products, John, and that's when we look at the premium products launching around the world. We've got some great products coming into the marketplace for the season, and it's for the Americas. We've got Weather Ready 2 launching, and the fitment filling out, the Electric Drive 2 as well, which is an all-season EV tire for us, and the Electric And on the AF side, we've got the Eagle F1 asymmetric, we've got six sizes coming out, filling out that fitment, and then on the AP, we've got our version of the Goodyear Electric Drive there, and we're seeing some really positive success in both the luxury, premium performance markets in Asia Pacific and the continued strength of our wins on the EV fitment, so all very positive trending news. Great Best of luck, guys!

Speaker Change: I would just tag on one specifically around new products and Thats. When you look at the premium products launching around the world. We've got some great products coming into the marketplace.

Speaker Change: If we're season and Thats for the Americas, We've got we're ready to.

Speaker Change: Launching in the shipments are filling out the electric drive too as well, which is an all season tire for us.

Speaker Change: Electric drive to and EMEA side, we've got the Eagle is one is the metric where you guys six sizes coming out so went out that statement.

Speaker Change: And then on the AP, we've got our version of the Goodyear Electric drive there we're seeing some really positive success in both luxury premium performance markets in Asia Pacific and.

Speaker Change: And we continue strengths of our wins on the <unk> statement says all very positive trending useless.

John Michael Healy: That's great. Best of luck, guys.

Speaker Change: Great Best of luck guys.

Speaker Change: Thanks, John.

Operator: We will move next with Emmanuel Rosner with Dutch Bank. Please go ahead.

Speaker Change: We will move next with Emmanuel.

Speaker Change: Emmanuel Rosner with Deutsche Bank. Please go ahead.

Emmanuel Rosner: Thank you very much, good morning. My first question is a follow-up on the volume question. So I think you've essentially identified two trends, right? Some of it is the lumpiness and the import dynamics in the U.S. and in Europe, and then some of it seems to be a little bit more deliberate as part of Goodyear's strategy, and you explained very, very well that lumpiness and the import dynamics and how that would, you know, move forward.

Emmanuel Rosner: Hi, Thank you very much good morning.

Emmanuel Rosner: My first question is.

Emmanuel Rosner: A follow up on the on the volume question. So I think youre essentially identified to translate some of it is the lumpiness in.

Emmanuel Rosner: This important dynamic in the U S and in Europe and in some of it seems to be a little bit more deliberate part of Goodyear strategy and you explained very well that lumpiness and the imports dynamic and how that was.

Emmanuel Rosner: Fourth I'm just wanted to focus on the second piece.

Emmanuel Rosner: I just want to focus on the second piece. I guess, how much more do you have to do in terms of the amount of business or tire volume that you're not really interested in or that's not, you know, profitable, and that will help your profitability from exiting? Just curious, when I'm looking at, I guess, your volume outlook for the rest of the year, will this be a meaningful factor of potential, you know, performance versus the industry, or are you mostly done with this?

Emmanuel Rosner: I guess, how much more do you have to do in terms of.

Emmanuel Rosner: The amount of business with higher volume desktop, you're not really interested in or that's nox.

Emmanuel Rosner: <unk> that will help your profitability from exiting just curious when im looking at I guess your volume outlook for the rest of the year will this be a meaningful factor.

Emmanuel Rosner: Potential.

Emmanuel Rosner: Performance versus the industry or are you mostly done with this.

Mark Stewart: Yeah, thanks for the question. And it's, you know, I would start with your last statement, and that's, you know, we've taken the actions through the first quarter that we needed to do with that. We're really using a should cost and profitability in conjunction, you know, obviously with the cost structure by tire basis and across our customer platforms. And so we've gone through to take a look at it. And it doesn't always mean that we're walking away, right?

Speaker Change: Yeah, Matt Thanks for the question and it's a.

Speaker Change: I guess I would start with your last statement and that's where we've taken the actions through the first quarter that that we needed to do with that we're really using our should cost in our profitability in conjunction.

Speaker Change: With the cost structure by tier basis.

Speaker Change: And across our customer platforms, and so we've gone through to take a look at it and it doesn't always mean that we're walking away right. We're just working with those customers for the right price point for that product at that performance level.

Mark Stewart: We're just working with those customers to find the right price point for that product at that performance level. And so it's not a matter of everything totally going away. In some cases, it's just a reset of the price to the market based on the performance of those individual SKUs or tires. So we actually feel very, very positive about it that we've taken the actions we needed to take with it. And as we move forward, you know, again, we've worked with some customers in terms of getting the price points reset.

Speaker Change: So it's not a matter of.

Speaker Change: Of everything totally gone away in some cases, it's just a reset of the price to the market based on the performance of.

Speaker Change: Those individual skus retires, so we actually feel very very positive on it that we've taken the actions we needed to take with it.

Speaker Change: As we move forward.

Speaker Change: Again, we've worked with some customers in terms of getting the price points reset and thats actually been happening before my time, I think over really the last four or five months or so.

Mark Stewart: And that's actually been happening before my time, I think over the last four or five months or so. But we took the final actions on that towards the first quarter and expect those things to be relatively stable on that, as Christina mentioned before.

Speaker Change: But we took the final actions to that towards the first quarter and expect those things to be.

Speaker Change: Particularly stable on that as Kristina mentioned before.

Emmanuel Rosner: Okay, that's great. That's a great color.

Speaker Change: Okay, that's great that's great color.

Speaker Change: Had a question about the Goodyear for its Glenn.

Speaker Change: So it seems in the quarter <unk> Americas profitability quite a bit.

Speaker Change: I'm curious when could we expect to start seeing it helping EMEA profitability is this going to be still within this year or is it a little bit more backend or data as a result of policies work.

Speaker Change: In Europe.

Speaker Change: Yes, as we mentioned at the opening really there.

Speaker Change: C G actions.

Speaker Change: Then well implemented and we're on track to fully execute.

Speaker Change: The 200 roles which were identified.

Speaker Change: Or are coming out on plan, if you will and if we look at it year to year as we said with EMEA really being about flat in terms of the earnings but with all of you get your forward restructuring activities done.

Speaker Change: As well as the two plants that were announced late last year in terms of full done first of all that.

Speaker Change: Going through.

Speaker Change: And that is also proceeding to plan so from that aspect of it we are absolutely on track with the actions we've got in EMEA.

Speaker Change: Christina.

Emmanuel Rosner: Then I have a question about the Goodyear Ford plan. So, it seems in the quarter that it helps America's profitability quite a bit. I'm curious, when can we expect to start seeing it helping EMEA's profitability? Is this going to be still within this year? Or is it a little bit more back-ended as a result of how things work in Europe?

Christina: Emmanuel I would just add that when we when we announced the plan in November.

Christina: We did we did say that the majority of the actions would benefit our Americas business. It was a split of like 70% of the $1 $3 billion was going to be accretive to the Americas.

Christina: And you know the rest split between EMEA and Asia Pac I think we should expect improving margins in EMEA over the course of the year and then as Mark mentioned, you know with the factory restructurings.

Christina: Coming more to go next year.

Christina: Then again another step up in 2025.

Speaker Change: That's super helpful would you think that 70% holds also for the.

Speaker Change: $375 million in benefits expected for this year or is that.

Speaker Change: Yes, I would use the same the same math.

Speaker Change: Okay and then one final quick one if I may.

Speaker Change: I guess, what can you tell us about the process.

Christina: To divest the <unk>.

Christina: Non core assets and that's actually growing.

Christina: Any new or updated timeline around.

Christina: Potential future updates.

Speaker Change: Yeah. So we.

Christina: This is regarding the strategic review on our portfolio and Emmanuel I would say that.

Christina: The process for each one of these assets is well underway.

Christina: It's exactly where we expect it to be at this point in time and if you remember on our fourth quarter call. We said that we should be in a position to offer a more fulsome update on one or more of these processes by mid year. So you can think about that being our second quarter conference call. We are still working towards that timeline.

Christina: So.

Christina: No other update other than things are progressing and progressing well.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Ryan Brinkman with JP Morgan. Please go ahead.

Ryan Joseph Brinkman: Good morning, and thanks for taking my questions Christy.

Mark Stewart: As we mentioned at the opening, the SAG actions have already been well implemented, and we're on track to fully execute the 1,200 jobs that were identified. They are coming out on plan, if you will, and if we look at year-to-year, as we said, with AMEA really being about flat in terms of earnings, but with all of the Good Year Forward restructuring activities done, as well as the two plans that were announced late last year in So from that aspect of it, we are absolutely on track with the actions we've got in AMEA. I don't understand anything else you want to say.

Ryan Joseph Brinkman: Firstly, Mark it was great to hear in your introductory remarks that you were able to come in initially with an outside bug into deeply into the Goodyear forward plan.

Christina L. Zamarro: You know, Emmanuel, I just said that when we announced the plan in November... We did say that the majority of the actions would benefit our America's business. It was a split of like 70% of the $1.3 billion was going to be accretive to the Americas... And, you know, the rest split between EMEA and Asia-Pac. I think we should expect improving margins in EMEA over the course of the year. And then, as Mark mentioned, with the factory restructuring coming more to bear next year, then, again, another step up in 2020.

Ryan Joseph Brinkman: So you were able to independently confirm for yourself for line of sight into the operating equipment that the rest of the management team had identified at the same time I recall you on the last call, saying that <unk> been extremely early days in your listening tour et cetera that you were needing to also identify some quick and easy wins are low hanging fruit.

Ryan Joseph Brinkman: In terms of how the plan, which you said.

Ryan Joseph Brinkman: Good bones.

Ryan Joseph Brinkman: Augmented or accelerated I'm, just curious I know the last 90 days with incremental op.

Ryan Joseph Brinkman: More pound or are looking into that you think might have the most potential.

Emmanuel Rosner: That's super helpful. Would you think that 70% holds also for the $375 million in benefit expected for this year? Yes, I would use the same math.

Christina L. Zamarro: Okay, and then one final quick one, if I may, I guess, what can you tell us about the process to divest the non-core assets and how that's actually going? Any new or updated timeline around potential future updates? Yeah, so we, um, this is

Speaker Change: Sure. Thanks, Brian.

Christina L. Zamarro: Yeah, so this is regarding the strategic review of our portfolio, and Emmanuel, I'd say that... The process for each one of these assets is well underway, exactly where we expect it to be at this point in time. If you remember, on our fourth-quarter call, we said that we should be in a position to offer a more fulsome update on one or more of these processes by mid-year, so you can think about that being our second-quarter conference call. We are still working towards that timeline, so no other update other than things are progressing.

Speaker Change: As you said I.

Speaker Change: Many of the.

Speaker Change: Sometimes have a big mouth, but I definitely listened a lot. The first five weeks one of the things I went in the first five weeks, which we did execute very quickly was a was too.

Operator: Our next question comes from Ryan Brinkman with J.P. Morgan. Please go ahead.

Speaker Change: Two to Sean <unk>, our chief procurement officer on the senior leadership team staff reporting directly to myself, it's very important that we have.

Ryan Joseph Brinkman: Good morning. Thanks for taking my questions. You know, firstly, Mark, it was great to hear in your introductory remarks that you were able to come in initially as an outsider, and you dug deep into that Goodyear forward plan so that you were able to independently confirm for yourself the line of sight into the operational improvements that the rest of the management team had identified. At the same time, I recall you on the last call saying that while it was then extremely early days in your listening tour, et cetera, that you were hoping to also identify some quick and easy wins or low-hanging fruit in terms of how the plan, which you said had, like, good bones, you know, how it might be augmented or accelerated in some ways. I'm just curious, you know, in the last 90 days, what incremental opportunities might you have found or are looking into that you think might have the most impact?

Mark Stewart: Sure. Thanks, Ryan.

Speaker Change: Real time visibility and ability to to help Sean in the purchasing team too in terms of the speed of execution.

Mark Stewart: And as you said, many know I sometimes have a big mouth, but I definitely listened a lot the first five weeks. One of the things we did in the first five weeks, which we did execute very quickly, was to put Sean Pace, our Chief Procurement Officer, on the Senior Leadership Team staff and reporting directly to myself. It's very important that we have real-time visibility and the ability to help Sean and the purchasing team in terms of speed of execution, and so we absolutely have done that.

Speaker Change: So we absolutely have done that we've identified some additional savings trends in that area.

Mark Stewart: We've identified some additional savings streams in that area, and quite a few. They've actually increased the speed of going through some of the global bid process, starting here in the Americas, but looking as well into both from the raw material stream, but as well into our MRO, where we've identified quite a few additional opportunities. MRO, contract employees, the way our contracts are set up, we're going through basic manufacturing one-on-ones, if you will, such as our overtime planning, and our scheduling within our manufacturing facilities with our plant leadership teams. We've brought in all of our plant leaders across the Americas, and I've had some sessions with those guys face-to-face, as well as we do weekly sessions with them.

Speaker Change: And quite a few they've actually increased the speed of going through some of the global bid process.

Speaker Change: You started here in the Americas, looking as well into both from the raw material stream, but as well onto our MRO, which we've identified quite a few additional opportunities MRO contract employees.

Speaker Change: The way our contracts are set up we're going through.

Speaker Change: <unk> basic manufacturing one on ones, if you will such as our overtime overtime planning our scheduling within our manufacturing facilities with our plant leadership teams.

Speaker Change: Brought in all of our plant leaders across the Americas.

Speaker Change: Had some sessions with those guys a face to face as well as we do weekly sessions with them.

Mark Stewart: And we've really got ourselves lined up slightly differently across process streams so that we can take our best-in-class performance benchmark and ensure that those are copied across the network in order to capture those savings, whether they were already in a plan, but maybe the timing was different. So we've been able to pull those in faster in terms of our execution this year and next, as well as things that maybe weren't on the radar screen for a particular plant.

Speaker Change: And we've really got ourselves lined up slightly differently across process streams. So that we can take our best in class performance benchmark and ensure that those are hobbies.

Speaker Change: Ross the network in order to capture those savings whether they were already in our plan, but maybe the timing was different so we've been able to pull those in faster in terms of our execution within this year and next as well as things that maybe you weren't on the radar screen for particular plant. We're also moving resources across plants.

Mark Stewart: We're also moving resources across plants, both engineering as well as our manufacturing resources, to speed those execution pieces as well, Ryan. So those are just a couple of highlights of what we've been doing with that. The other thing we're in the process of now is more of a centralized manufacturing footprint for consistency and for us to be able to gain efficiencies in terms of OEE, reducing our scrap, commonality, and complexity, all tied in with our ship cost activities.

Speaker Change: Okay engineering as well as our manufacturing resources to speed those execution pieces.

Speaker Change: Well Ryan So those are a couple just a couple of highlights of what we've been doing with that the.

Speaker Change: The other thing we're in the process now is more of a centralized manufacturing footprint for consistency and for us to be able to see efficiencies in terms of are we reducing our scrap a car.

Speaker Change: Commonality and complexity reduction I'll tie it in with our should cost activity. So we've got ourselves lined up for that we have reduced the number of kpis that we're looking at into the important the top important ones for us that has the biggest lever for impact.

Mark Stewart: So we've got ourselves lined up for that. We have reduced the number of KPIs that we're looking at into the important ones, the top important ones for us that have the biggest lever for impact, and we're driving those on a week-by-week basis to make sure that we have clarity with the teams, that we have ownership with the teams, and we have timing for when to do those things.

Speaker Change: And we're driving those on a week by week basis to make sure that we we have clarity with the teams that we have ownership with the teams and we have timing of when to do those things.

Speaker Change: Okay. Thanks, and then lastly from me.

Speaker Change: But the plan on significantly increasing site map become debt free cash flow will naturally follow and benefit also of course from the deleverage enabled by the nonoperating or divestiture aspect of the plan, but im curious how youre thinking about other opportunities to improve free cash flow relative to EBITDA.

Mark Stewart: increasing segmented income that, you know, pre-cash flow will naturally follow and benefit also, of course, from the deleverage enabled by the non-operating or divestiture aspect of the plan. But I'm curious how you're thinking about other opportunities to improve pre-cash flow relative to EBITDA and how important that is or should be as a part of the plan. We've sometimes seen big inflections in cash flow after management has changed the way in which their employees are incentivized, thinking of LOKQ as one example in this industry.

Speaker Change: And how important that is or should be as a part of the plan. We've sometimes seen big inflections in cash flow. After managements have changed the way in which they are employees or incentivize taking the Q is one example in this industry.

Mark Stewart: And I know there's likely a ton of focus on driving margin and then getting those divestitures done to pay down the debt. But how large of an opportunity might there be around working capital efficiency, CapEx discipline, CapEx reusability, anything that you can, I think, bring from your former employment, et cetera. And how are you thinking about, you know, the cadence of, you know, operating earnings versus the cash flow increase as you progress through the plan? Maybe that one's more interesting.

Speaker Change: I know theres likely I tend to focus on driving margin and then getting those divestitures was done but to pay down the debt, but how large of an opportunity might there be around working capital efficiency Capex disciplined capex were usability or anything that you can I think to bring to your former employment et cetera, and how are you thinking about.

Speaker Change: The cadence of.

Speaker Change: The operating operating earnings versus the cash flow.

Speaker Change: Requests through the plan maybe that one's Margaret.

Mark Stewart: Sure. Let me start on it, Christina, and I will add to it. But when we think about the, you know, again, things kind of coming from my past, right, of also highly capital-intensive businesses as well. So we've already got a very clear line of sight to the R&D that we have planned for as part of the Goodyear Forward program and then in the years following as well, right? So a very disciplined approach to that.

Speaker Change: Sure maybe let me start on Christina.

Speaker Change: That onto it but when we think about the.

Speaker Change: You know again things things kind of coming from my past rate of are also highly capital intensive businesses.

Margaret: As well so we've already got a very clear line of sight to the to the R&D that we have planned for as part of that Goodyear forward and then in the years following as well right. So a very disciplined approach on that another reason why we put purchasing to the leadership team of us working together with purchasing and engineering look into what.

Mark Stewart: Another reason why we put purchasing on the leadership team of us working together with purchasing and in engineering, looking at what is our manufacturing equipment strategy, looking at the items, again, on a payback analysis of that best return on capital for the modernization activities. We have a tremendous amount of modernization going on this year, as an example, in our Lawton facility, but as well as many of the other facilities to get our cost basis to a very, very competitive level, if you will, and then balancing our products across the network to look at the best cost.

Margaret: As our manufacturing equipment strategy looking at the items again on a payback analysis on that best return on capital for the modernization activities, we have tremendous amount of monetization going on this year. As example in in our lawn facility as well as many of the other facilities to get our cost basis.

Margaret: <unk>, a very very competitive level, if you will and then balancing our products across the network for looking at the best cost. So in terms of how to do that right. At all these things are tied into that working capital as you mentioned right. So investing in the right things at the right time looking with purchasing in terms of how.

Margaret: We're negotiating that.

Margaret: Just the 123 is around negotiation process, how we're bundling when we know we're going through a modernization period here across our equipment. If we know for example, we're gonna go from you know.

Mark Stewart: If we know, for example, we're going to go from, you know, replacing 10 machines to possibly 30, 50, et cetera, but negotiating that in up front so that we can get the best price on that. So we're setting up our depreciation schedule and conserving cash up front, but also making sure the cost structure is right. Also, where that equipment is being placed. So it's about changing patterns and behavior while putting the system in discipline, which we already have those systems in place, but getting the robustness of that really, really strong. Christina, would you like to add to that?

Margaret: From replacing 10 machines to possibly at $30 50, et cetera, but are negotiating that in upfront. So that we can get the best price on that so we're setting up our depreciation schedule and conserving cash.

Margaret: Upfront, but also making sure the cost structures right also where does that equipment is being place.

Margaret: The other thing is really working with our individual plant leadership teams.

Margaret: Around the world.

Margaret: Looking at that cost efficiency level, and really where we're starting to talk to the plant leadership teams not only on a cost center basis, but also on a P&L basis in their window right sort of things that they can impact and it is things like MRO. It ties up a lot of cash in a crib, if you will around the world.

Margaret: So the things such as shared shared spare part resources around the network and things like that but again more more basic discipline items. When it comes to our spending we have a weekly spend control as well quite frankly that we've installed.

Margaret: If anything triggers higher than that escalates, we talked through it so its about changing patterns and behavior, while putting the system and discipline, which we already have the systems in place, but getting the robustness of that really really strong kristina if you'd like to add onto that.

Christina L. Zamarro: No, Mark, I think you've covered a lot of it internally. To describe what it feels like, right, it is that behavioral change where, you know, what we're emphasizing to the teams is that when we get to a target, it's not that we've necessarily done the job. We're going to continue to look for what else we can do, and I think it's that never satisfied mentality. And as we put together this plan and as Mark has come in and added, you know, his experience and perspective to it, I think it's all about, you know, achieving that sustainability in cash flow, that sustainability in earnings.

Christina L. Zamarro: Margaret Thank you you've covered a lot of it I think internally.

Margaret: To describe with it.

Christina L. Zamarro: What it feels like Ryan. It is it is that behavior will change where you know what we're emphasizing to the teams is when we get to a target.

Margaret: It's not that we necessarily done that was done the job we're going to we're going to continue to look for what else. We can do and I think it's that it's that never satisfied mentality and as we've put together this plan and as Mark has come in and and added.

Margaret: His experience and perspective to it I think it's all about.

Margaret: TV that sustainability and cash flow that sustainability and earnings and when we when we look out to the fourth quarter of 2025, we would see an annualized cash flow on adjusted free cash flow basis of like 600 or $700 million in.

Christina L. Zamarro: And when we look out to the fourth quarter of 2025, we would see an annualized cash flow on an adjusted free cash flow basis of like $600 or $700 million, and that's on an adjusted year, as Neva does, say about 2.7. So, you know, our goal is not, obviously, to not have a good year or two, but we're really trying to structurally change, you know, the cash flow profile of the business.

Margaret: That's that's on an adjusted EBITDA of say about $2. Seven. So you know our goal is to not you know obviously do not have a good year or two but we're really trying to structurally change you know the the cash flow profile of the business.

Speaker Change: That's very helpful. Thank you.

Margaret: And as a reminder, it is.

Margaret: And one on your telephone keypad, if you would like to join the queue.

Margaret: And one.

Speaker Change: We will now connect with.

Citi: <unk> with Citi. Please go ahead.

Ryan Joseph Brinkman: That's very helpful. Thank you.

Citi: Great. Thank you good morning, everyone.

Citi: Just two questions from me firstly on the inflation and other cost.

Citi: Just maybe walk through the puts and takes for a second.

Speaker Change: Second half of the year that I think first half is implied at just over $40 million.

Speaker Change: You've got over $200 million of headwind for the full year.

Speaker Change: And then maybe going back on my second question on the assumptions for second half for volume and pricing.

Speaker Change: Kind of review.

Speaker Change: The underlying assumption for industry sell out trends.

Speaker Change: Your market share and then maybe the impact from some of the new products Mark that you alluded to before thank you.

Operator: And as a reminder, it is star and one on your telephone keypad. If you would like to join the queue, press star and one. We will move next with E. I. Michaeli and the city. Please go ahead.

Speaker Change: Yes.

Speaker Change: Third on the inflation question in full.

Speaker Change: Full year.

Mark Stewart: Cost headwinds for us of about $215 million you rightly point out this is weighted to the second half call base inflation every quarter about 50 or $55 million for us in the first half we had the benefit of some lower transportation rates, particularly in the U S pulling through we lapped that in there.

Itay Michaeli: On inflation and other costs, can you just maybe walk through the puts and takes for the second half of the year? I think the first half is implied at just over $40 million. I think you've got over $200 million of a headwind for the full year. And then maybe going back on my second question on the assumptions for the second half for volume and pricing, hoping you can just kind of review just the underlying assumptions for industry sell-out trends, maybe your market share, and then maybe the impact from some of the new products, Mark, that you alluded to before.

Christina L. Zamarro: Yeah, Itay, I'll start on the inflation question and, you know, full year cost headwinds for us of about $215 million. You rightly point out this is weighted to the second half, call base inflation every quarter, about $50 or $55 million for us. In the first half, we had the benefit of some lower transportation rates, particularly in the U.S., but we lapped that in the second half of the year, and then we will put on some additional costs because we've announced two factory closures in Europe, and we run that through our inefficiencies, if you will, as we scale those factories down and ready them for closure over the course of 2025 and 2026. We also have some insurance headwinds related to the tightness in the market and also some of the claims activity that we've had over the last year. So that's the first half, second half story on cost.

Mark Stewart: Second half of the year and then we will put on.

Mark Stewart: Additional costs, because we've announced two factory closures in Europe that we run that through.

Mark Stewart: Our our inefficiencies if you will as we scale those factories down is ready to ready them for closure over the course of 2025 and 2026, we also have some insurance headwind related.

Related to.

Greg Shank: The tightness in the market, but also some of the claims activity that we've had over the last year. So that's the that's the first half second half story on cost as I look at.

Christina L. Zamarro: As I look at volume more broadly, and we talked through this a little bit earlier, I'd say we have good expectations for stability, I guess I would say, in Q2. We've got volume about flat, and that's good growth in OE, still continuing, and maybe a little bit of weakness in replacements. And then, as we look to the back half of the year, I guess I would also say channel inventories in the U.S. and Europe are healthy.

Greg Shank: Volume more broadly and we talked to this a little bit earlier I'd say, we have good expectations for <unk>.

Greg Shank: Stability I guess I would say in Q2, we've guided volume about flat and that's good growth in OE still continuing and maybe a little bit of weakness in replacement.

Greg Shank: And then as we look to the back half of the year and I guess I would also say channel inventories.

Greg Shank: In the U S and Europe are healthy I would say the U S is down about 4% compared to year end EMEA was down 8% on a year over year basis year over year comp. There is more important because we have this different seasonality and and all of that time I'd say that the consumer has been resilient.

Christina L. Zamarro: I would say the U.S. is down about 4% compared to year-end. EMEA is down 8% on a year-over-year basis. Year-over-year comp is more important because we have these different seasonalities. And all of that time, you'd say that the consumer has been resilient.

Christina L. Zamarro: So sell out in Europe is up 3%. Sellout in the U.S. has been up a kind of 1% or so the last several quarters. So, I'm expecting a decent market in the back half of the year. Even coming into the year, our thoughts were that we would see stronger growth in the back half, in the first half, just knowing what we needed to move through as far as channel inventory. But we think the setup is good. Specifically, I will take you through a little bit of the regions, because that may be helpful, too.

Greg Shank: The sell out in Europe up 3% so out in the U S is up.

Greg Shank: It's been up kind of 1% or so the last several quarters so expecting.

Greg Shank: A decent market in the back half of the year, you know even coming into the year our.

Greg Shank: Thoughts were that we would see stronger growth in the back half than the first half just knowing what we needed.

Greg Shank: To move through as far as channel inventory, but we think the setup is good spin.

Greg Shank: Specifically, if I take you through a little bit of the regions because that may be helpful too.

Christina L. Zamarro: The Americas should have really good OE growth in the back half. That's our, you know, Goodyear-specific mix of fitments. So we'll gain a share. We talked about that earlier. And then in EMEA, I mentioned this earlier, too, winter tire inventory is down 40%, and just a very low level. So it should indicate a good restocking for us in the third quarter. In Asia-Pacific, it has just continued to see growth. We have some tougher comps, an OE in the second half, but replacement should still be pretty positive for us.

Greg Shank: The Americas should have really good OE growth in the back half.

Greg Shank: Sure.

Greg Shank: Goodyear specific mix of fitness, so we'll gain share we talked about that earlier.

Greg Shank: And then in EMEA.

Greg Shank: I mentioned this earlier to winter tire inventories down 40%.

Greg Shank: And just very low level, so should indicate a good restocking for us in the third quarter in Asia Pacific has just continued to see growth we have some tougher comps in OE in the second half, but replacement should still be.

Christina L. Zamarro: So feelings are good about volume and price mix in the second half. And then Mark talked you through some of the new product introductions. And a lot of that's, you know, kind of two things happening. One, we're releasing new products, sort of opening up the aperture on the SKU portfolio, the number of SKUs that we're offering at the more premium end of the market, and then rationalizing SKUs at the lower end, which is all really supportive of mix as well. Terrific, that's all there is.

Greg Shank: Pretty positive for us so feeling feeling good about.

Greg Shank: Volume price mix in the second half and then talk you through some of the new product introductions.

Greg Shank: And a lot of that.

Greg Shank: Kind of two things happening was where we're releasing new products you are sort of opening up the aperture on the SKU portfolio. The number of Skus that we're offering it to more premium in the market and then rationalizing skus at the lower end, which is all really supportive of mix as well.

Christina L. Zamarro: Terrific. That's all very, very helpful. Thank you. You're welcome. Thank you. And this will conclude our Q&A session as well.

Speaker Change: Terrific. That's all very very helpful. Thank you.

Nicky: Youre welcome.

Speaker Change: Thank you Andy.

Operator: Thank you. This will conclude our Q&A session as well as our conference call. Thank you all for your participation, and you may disconnect at any time.

Speaker Change: And this will conclude our Q&A session as well as our conference call. Thank you all for your participation and you may disconnect at any time.

Greg Shank: [music].

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