Q2 2024 The Goodyear Tire & Rubber Co Earnings Call

Operator: Please stand by; your program is about to begin. If you need audio assistance during your call today, please press star zero. Good morning. My name is Ashley, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Goodyear Second Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise.

Operator: Please stand by; your program is about to begin.

Operator: If you need audio assistance during your call today, please press star zero.

Speaker Change: Please stand by, your program is about to begin. If you need audio assistance during your call today, please press star zero.

Ashley: Good morning, my name is Ashley, and I'll be your conference operator today.

Ashley: Good morning, my name is Ashley and I'll be your conference operator today. At this time, I would like to welcome everyone to the Goodyear's second quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Ashley: At this time, I would like to welcome everyone to the Goodyear's second quarter of 2024 earnings call. 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 a question at any time by pressing the star, then one, on your telephone keypad. You may withdraw your question by pressing star two. Please note that this call may be recorded.

Operator: After some opening remarks, there will be a question and answer session. You may register to ask a question at any time by pressing the star, then 1, on your telephone keypad. You may withdraw your question by pressing star 2. Please note that this call may be recorded. It is now my pleasure to turn the conference over to Greg Shank, Senior Director of Investor Relations.

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

Ashley: You may register to ask a question at any time by pressing the star then 1 on your telephone keypad. You may withdraw your question by pressing star 2. Please note that this call may be recorded. It is now my pleasure to turn the conference over to Greg Shank, Senior Director, Investor Relations.

Greg Shank: It is now my pleasure to turn the conference over to Greg Shank, Senior Director and Vesta Relations.

Greg Shank: Thank you, Ashley.

Greg Shank: Thank you, Ashley. Good morning, and welcome to our second quarter 2024 earnings call. Today on the call, we have Mark Stewart, our CEO and president, and Christina Zamarro, our executive vice president and CFO. 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.

Mark Stewart: Good morning and welcome to our second quarter of 2024 earnings call. Today on the call, we have Mark Stewart, our CEO, President, and Christina Zimaro, our Executive Vice President and CFL. 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 Sign 20 of the supporting presentation for today's call and our filings of the SEC. These materials can be found on our website at investor.goodear.com, where a replay of this call will also be available.

Speaker Change: Thank you, Ashley. Good morning and welcome to our second quarter 2024 earnings call. Today on the call we have Mark Stewart, our CEO and President, and Christina Zamarro, our Executive Vice President and CFO .

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: These materials can be found on our website at www.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 measures is also included in the appendix of that presentation.

Mark Stewart: A reconciliation of non-GAAP financial measures discussed on today's call to the comparable GAAP measures is also included in the appendix of that presentation.

Mark Stewart: With that, I will now turn the call over to Mark.

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 measures is also included in the appendix of that presentation. With that, I will now turn the call over to Mark. Thank you, Greg. Good morning, everyone.

Mark Stewart: Thank you, Greg.

Speaker Change: With that, I will now turn the call over to Mark.

Mark Stewart: Thank you, Greg, and good morning, everyone. Welcome to our second quarter earnings call. Thank you for joining us, and thank you for your interest in Goodyear. I want to start this morning by saying we are clearly progressing on our goals as part of our Goodyear Forward Plan, and that is true on multiple fronts, as well as in each of our key work streams. In the second quarter, we achieved significant margin expansion, another strong quarter of year-over-year earnings growth. We have just recently announced the sale of our off-the-road, our OTR business, another important step as part of our overall transformation plan.

Mark Stewart: Good morning, everyone. Welcome to our second quarter of earnings call. Thank you for joining us, and thank you for your interest in Good Year. I want to start this morning by saying we are clearly progressing on our goals as part of our Good Year Forward Plan, and that is true on multiple fronts, as well as in each of our key work streams of the Good Year Forward Plan. In the second quarter, we achieved significant margin expansion, another strong quarter of year-over-year earnings growth. We had just recently announced the sale of our off-the-road or OTR business, another important step as part of our overall transformation plan.

Mark Stewart: Having said that, the industry environment in the first half has not been supportive, including downgrades to OEM production levels and significantly more challenging replacement markets, which have been saturated by low-end imports. We're anticipating that the industry challenge will continue through the second half. In that environment, and as a result, we will continue to focus on profitable volume segments of the market, as well as the areas that are generating the highest return for us, as well as continue the execution of our cost reduction effort.

Mark Stewart: Thank you, Greg. Good morning, everyone. Welcome to our second quarter earnings call. Thank you for joining us and thank you for your interest in Goodyear.

Mark Stewart: To be very clear, we continue to make and execute the appropriate adjustments in our cost base to ensure we meet Goodyear Forward objectives and our operating plans. We are already making great progress, and these recent challenges mean that we will need to continue to dig deeper. We will continue to execute to continue to achieve our goals. Moving on to the financials. Our second quarter segment operating income was $339 million, and the segment operating income margin was 7.4%, which is almost triple the margin we delivered in the second quarter of 2023. EPS on a reported basis increased by over $1, and on an adjusted basis, EPS grew $0.53.

Mark Stewart: Clearly, our execution has been strong. Our results show a strong price mix versus raw materials and stepped-up results on Goodyear Forward Savings, with two of our business units demonstrating and contributing strong growth in earnings. Americas saw remarkable gains with SOI up nearly $140 million US dollars from last year. In the US, our volume performance in the 18-inch and greater segment was in line with industry standards. It was a different story in the smaller rim sizes, where imports have taken shelf space as well as liquidity from large distributors around the Americas. Magnifying this challenge, industry sellout in the U.S. retail channel was negative during the quarter, and down high single-digit to low double-digits at traditional retailers.

Mark Stewart: I want to start this morning by saying we are clearly progressing on our goals as part of our Goodyear Forward Plan, and that is true on multiple fronts, as well as in each of our key work streams of the Goodyear Forward Plan.

Mark Stewart: This has instigated heavy promotional activities by other manufacturers at the lower end of the market. We continue to focus on complexity reduction, our platforming, as well as looking at the blank spaces in the high end of the market. We are continuing to work in front of us as part of our plan to boost margins; we continue to execute SKU rationalizations, and margin enhancement actions to address profitability on low margin, low value products as part of our Goodyear Forward Plan.

Mark Stewart: This is important for us as we work to reduce our exposure to the increasingly competitive Tier 3 and Tier 4 segments of the market. In Latin America, we experienced some temporary volume softness in the quarter as a result of the changes we're making to distribution, as well as the flooding in Brazil that happened early in Q2. Earnings therefore remain strong, but we continue to feel very good about our market position in Latin America.

Mark Stewart: In the second quarter, we achieved significant margin expansion, another strong quarter of year-over-year earnings growth. We have just recently announced the sale of our off-the-road, our OTR business, another important step as part of our overall transformation plan.

Mark Stewart: Having said that, the industry environment in the first half has not been supportive, including downgrades to OEM production levels and significantly more challenging replacement markets, which have been saturated by low-end imports. We're anticipating that these industry challenges will continue through the second half. In that environment, and as a result, we will continue to focus on profitable volume segments of the market, as well as the areas that are generating the highest return for us, as well as continuing the execution of our cost reduction efforts. To be very clear, we continue to make and execute the appropriate adjustments in our cost space to ensure we meet Goodyear forward objectives and our operating plans.

Mark Stewart: In EMEA, results were relatively stable despite an OE industry that contracted 5%. Importantly, we continue to demonstrate industry-leading innovation and product technology. During the second quarter, our Goodyear Vector Gen 3 All-Season was awarded the test winner by ADAC.

Mark Stewart: Having said that, the industry environment in the first half has not been supportive, including downgrades to OEM production levels and significantly more challenging replacement markets, which has been saturated by low-end imports.

Mark Stewart: This should help drive price and mix for us in this fast-growing segment over the next several quarters. Like in the U.S., EMEA's lower-tier brands and product lines have been hurt by growth in imports, particularly in Eastern Europe. Over the past quarter, we were able to finalize the required consultations related to our previously announced factory closures in the region, which will help address our cost structure in EMEA. Asia-Pacific continued to see significant growth in both volume and earnings and turned its third consecutive quarter of SOI margin above 10 percent.

Mark Stewart: We're anticipating that the industry challenge will continue through the second half.

Mark Stewart: In that environment and as a result, we will continue to focus on profitable volume segments of the market, as well as the areas that are generating the highest return for us, as well as continuing the execution of our cost reduction efforts.

Mark Stewart: To be very clear, we continue to make and execute the appropriate adjustments in our cost base to ensure we meet Goodyear Forward objectives.

Mark Stewart: We are already making great progress, and these recent challenges means that we will need to continue to dig deeper. We will continue to execute, to continue to achieve our goals. Moving on to the financials, our second quarter segment operating income was $339 million, and segment operating income margin was 7.4%, which is almost triple the margin we delivered in the second quarter of 2023. EPS on a reported basis increased by over $1, and on an adjusted basis, EPS grew 53 cents. Americans. Clearly, our execution has been strong. Our results show strong price mix versus raw materials, and stepped up results on Goodyear Forward Savings with two of our business units, demonstrating and contributing strong growth in earnings.

Mark Stewart: We are already making great progress, and these recent challenges mean that we will need to continue to dig deeper, we will continue to execute, to continue to achieve our goals.

Mark Stewart: Moving on to the financials, our second quarter segment operating income was $339 million and segment operating income margin was 7.4%, which is almost triple the margin we delivered in the second quarter of 2023.

Mark Stewart: EPS, on a reported basis, increased by over $1, and on an adjusted basis, EPS grew $0.53.

Mark Stewart: Clearly, our execution has been strong.

Mark Stewart: Our results show strong price mix versus raw materials and stepped-up results on Goodyear Forward Savings, with two of our business units demonstrating and contributing strong growth and earnings.

Mark Stewart: America's sovereign marketable gains with SOI up nearly 140 million US dollars from last year. In the US, our volume performance in the 18 inch and greater segment was in line with industry. It was a different story in the smaller rim sizes, where imports have taken shelf space, as well as liquidity of large distributors around the Americas. Magnifying this challenge, industries sell out in the US retail channel was negative during the quarter, and down high single digit to low double digits at the traditional retailers. This instigated heavy promotional activities by other manufacturers at the lower end of the market.

Mark Stewart: America's saw remarkable gains with SOI up nearly 140 million US dollars from last year. In the U.S. our volume performance in the 18-inch and greater segment was in line with industry.

Mark Stewart: It was a different story in the smaller rim sizes where imports have taken shelf space as well as liquidity of large distributors around the Americas.

Mark Stewart: Magnifying this challenge, industry sellout in the U.S. retail channel was negative during the quarter and down high single digit to low double digits at the traditional retailers. This instigated heavy promotional activities by other manufacturers at the lower end of the market.

Mark Stewart: We continue to focus on complexity reduction, our platforming, as well as looking at the blank spaces in the high end of the market. We are continuing to work in front of us as part of our plan to boost margins. We continue to execute skew rationalizations, margin enhancement actions to address profitability on low margin, low value products, as part of our Goodyear Forward plan. This is important for us as we reach as we work to reduce, excuse me, our exposure to the increasingly competitive Tier 3 and Tier 4 segments of the market. In Latin America, we experience some temporary volume softness in the quarter as a result of the changes we're making to distribution, as well as the flooding in Brazil that happened early in Q2.

Mark Stewart: We continue to focus on complexity reduction, our platforming, as well as looking at the blank spaces in the high end of the market.

Mark Stewart: We are continuing to work in front of us as part of our plan to boost margins. We continue to execute SKU rationalizations, margin enhancement actions to address profitability on low margin, low value products as part of our Goodyear Forward Plan.

Mark Stewart: This is important for us as we reach, as we work to reduce, excuse me, our exposure to the increasingly competitive Tier 3 and Tier 4 segments of the market.

Mark Stewart: In Latin America, we experienced some temporary volume softness in the quarter as a result of the changes we're making to distribution as well as the flooding in Brazil that happened early in Q2. Earnings, therefore, remaining strong, but we continue to feel very good about our market position in Latin America.

Mark Stewart: Ertings therefore remaining strong, but we continue to feel very good about our market position in Latin America. In AMA, results were relatively stable, despite an early industry that contracted 5%. Importantly, we continue to demonstrate industry-leading innovation and product technology. During the second quarter, our Goodyear Vector Gen3 All Season was awarded the test winner by ADAC. This should help drive price and mix for us in this fast-growing segment over the next several quarters. Like in the US, AMA has lowered tier brands, and the product lines have been hurt by growth in imports, particularly in Eastern Europe.

Mark Stewart: In EMEA, results were relatively stable despite an OE industry that contracted 5%.

Mark Stewart: Importantly, we continue to demonstrate industry-leading innovation and product technology. During the second quarter, our Goodyear Vector Gen 3 All-Season was awarded the test winner by ADAC.

Mark Stewart: This should help drive price and mix for us in this fast-growing segment over the next several quarters.

Mark Stewart: Like in the U.S., EMEA's lower-tier brands and the product lines have been hurt by growth in imports, particularly in Eastern Europe .

Mark Stewart: Over the past quarter, we were able to finalize the required consultations related to our previously announced factory closures in the region, which will help address our cost structure in AMA. Asia-Pacific continued to see significant growth in both volume and earnings, and turned its third consecutive quarter of SOI margin above 10%. Volume growth was driven by fitment winds and consumer OEM market, and primarily in the EV electric vehicle segment. Having said that, the considerable replacement industry in China was weaker than we expected, so Asia-Pacific continues to set the standard for performance. Starting to good your forward, it's clear that the speed of execution towards our good your forward plan is critical.

Mark Stewart: Over the past quarter, we were able to finalize the required consultations related to our previously announced factory closures in the region, which will help address our cost structure in EMEA.

Mark Stewart: Asia-Pacific continued to see significant growth in both volume and earnings and turned its third consecutive quarter of SOI margin above 10 percent.

Mark Stewart: Volume growth was driven by fitment wins in the consumer OE market and primarily in the EV electric vehicle segment. Having said that, the consumer replacement industry in China was weaker than we expected, so H-Pacific continues to set the standard for performance.

Mark Stewart: Volume growth was driven by fitment wins in consumer OE market and primarily in the EV electric vehicle segment. Having said that, the consumer replacement industry in China was weaker than we expected, so Asia-Pacific continues to set the standard for performance.

Mark Stewart: Turning to Goodyear Forward, it's clear that the speed of execution towards our Goodyear Forward plan is critical. In SAG, we've made great progress in EMEA with our transition to shared services. We've also recently announced a plan to open a new shared services center in Costa Rica for the Americas. In manufacturing, Christina and I are continuing to meet regularly with our factory leaders, reviewing progress against our efficiency plans, and making sure any roadblocks are removed.

Mark Stewart: Journey to Goodyear Forward. It's clear that the speed of execution towards our Goodyear Forward plan is critical.

Mark Stewart: In SAG, we've made great progress in AMA with our transition to shared services. We've also just recently announced a plan to open a new shared services center in Costa Rica for the Americas. In manufacturing, Christina and I are continuing to meet Greg and Oleg with our factory leaders, reviewing progress against our efficiency plans and making sure any roadblocks are removed. As just one example, the team has been able to achieve record levels of OLE yield over the last couple of months. We are concatenating our benchmark level performance by process across the world. We've also implemented tight controls and efficiency tools covering manufacturing and SHG spending, and we are seeing early returns.

Mark Stewart: In SAG, we've made great progress in EMEA with our transition to shared services. We've also just recently announced a plan to open a new shared services center in Costa Rica for the Americas.

Mark Stewart: In manufacturing, Christina and I are continuing to meet regularly with our factory leaders reviewing progress against our efficiency plans and making sure any roadblocks are removed. As just one example, the team has been able to achieve record levels of OE yield over the last couple of months.

Mark Stewart: As just one example, the team has been able to achieve record levels of OE yield over the last couple of months. We are cascading our benchmark level performance by process across the world. We've also implemented type controls and efficiency tools covering manufacturing and SAG spending, and we are seeing early returns. By June, we achieved a reduction in America's overtime hours by 15, over 15%. At the same time, we're optimizing our real estate portfolio, and as an example, we recorded the sale of a valuable piece of property in Germany this quarter.

Mark Stewart: We are cascading our benchmark level performance.

Mark Stewart: by process across the world.

Mark Stewart: We've also implemented tight controls and efficiency tools covering manufacturing and SAG spending, and we are seeing early returns. By June , we achieved a reduction in America's overtime hours of over 15%.

Mark Stewart: By June, we achieved a reduction in America's overtime hours of 15 over 15 percent. At the same time, we're optimizing our real estate portfolio, and in one example, we recorded the sale of a valuable piece of property in Germany in this quarter. These types of optimizations will continue going forward. In R&D, we've focused the team on industrializing premium skews for the market, executing on consolidating parts through using common product platforms to address our cost structure on lower tier skews. Finally, in our retail operations, our execution is ahead of plan as we have focused on driving incremental traffic into our base.

Mark Stewart: At the same time, we're optimizing our real estate portfolio, and in one example, we reported the sale of a valuable piece of property in Germany this quarter. These types of optimizations will continue going forward.

Mark Stewart: These types of optimizations will continue going forward. In R&D, we've focused the team on industrializing premium SKUs for the market, executing on consolidating parts through using common product platforms to address our cost structure on lower-tier SKUs. And finally, in our retail operations, our execution is ahead of plan as we have focused on driving incremental traffic into our bays. We're doing this by focusing our retail value proposition with both traditional customer base and new last mile fleet customers as well.

Mark Stewart: In R&D, we've focused the team on industrializing premium SKUs for the market, executing on consolidating parts through using common product platforms to address our cost structure on lower tier SKUs.

Mark Stewart: And finally, in our retail operations, our execution is ahead of plan as we have focused on driving incremental traffic into our base. We're doing this by focusing our retail value proposition with both traditional customer base and through new last mile fleet customers as well.

Mark Stewart: We're doing this by focusing on our retail value proposition with both traditional customer base and through new last-mile fleet customers as well. We are fully committed to getting you forward.

Mark Stewart: We are fully committed to Goodyear Forward. We remain confident in delivering our targets of 10% SOI margins by the end of next year. Now, I'll turn it over to Christina to take you through the second quarter financials, and we'll move on to the Q&A section.

Mark Stewart: We remain confident and delivering our targets of 10 percent SOI margins by the end of next year.

Mark Stewart: We are fully committed to Goodyear Forward. We remain confident in delivering our targets of 10% SOI margins by the end of next year. Next, I'll turn it over to Christina to take you through the second quarter financials, and we'll move on to the Q&A section.

Christina Zimaro: Next, now it's turned over to Christina to take through the second quarter financials, and we'll move on to the Q&A section.

Christina Zimaro: Thank you, Mark.

Christina Zimaro: I'll begin with the income statement on slide 8. Sales totaled $4.6 billion, down 6 percent from last year, driven by lower volume and unfavorable price mix due to continuing weakness in commercial truck sales and OEMI indexed agreements. Unit volume was 2 percent lower versus last year. Overall replacement volume declined by 7 percent, driven by decreases in the Americas. Original equipment volume increased 13 percent. Segment operating income for the quarter was $339 million, up from $215 million from a year ago. After adjusting for significant items, our earnings per share was up 19 cents and up 53 cents on a year-a-year basis.

Christina L. Zamarro: I'll begin with the income statement on slide 8. Sales totaled $4.6 billion, down 6% from last year, driven by lower volume and an unfavorable price mix due to continuing weakness in commercial truck sales and OE-RMI indexed agreements. Unit volume was 2% lower versus last year. Overall replacement volume declined by 7%, driven by decreases in the Americas.

Christina Zamarro: Thank you, Mark.

Christina Zamarro: I'll begin with the income statement on slide 8. Sales totaled $4.6 billion, down 6% from last year, driven by lower volume and unfavorable price mix due to continuing weakness in commercial truck sales and OE-RMI indexed agreements.

Christina Zamarro: Unit volume was 2% lower versus last year. Overall replacement volume declined by 7%, driven by decreases in the Americas. Original equipment volume increased 13%.

Christina L. Zamarro: Original equipment volume increased 13%. Segment operating income for the quarter was $339 million, up $215 million from a year ago. After adjusting for significant items, our earnings per share was up $0.19 and up $0.53 on a year-over-year basis.

Christina Zamarro: Segment operating income for the quarter was $339 million, up $215 million from a year ago.

Christina Zamarro: After adjusting for significant items, our earnings per share was up $0.19 and up $0.53 on a year-over-year basis.

Christina Zimaro: The year-a-year drivers of our second quarter earnings are shown on slide 9. The impact of lower tire unit volume was 41 million, and factory utilization was a headwind of 35 million. Segment operating income benefited from favorable net price mix versus raw material costs of 99 million. Raw materials were a benefit of 158 million in the quarter. Price mix was negative for the quarter, driven by contractual pricing adjustments with our OE customers. To quench your pricing from the first quarter was stable. Good Year forward initiatives contributed 90 million in the quarter, with benefits driven largely by purchasing initiatives.

Christina L. Zamarro: The year-over-year drivers of our second quarter earnings are shown on slide 9. The impact of lower tire unit volume was 41 million, and factory utilization was a headwind of 35 million. Segment Operating Income Benefit is from a favorable net price mix versus raw material cost of $99 million. Raw materials were a benefit of $158 million in the quarter. Price mix was negative for the quarter, driven by contractual pricing adjustments with our OE customers. However, sequential pricing from the first quarter was stable.

Christina Zamarro: The year-over-year drivers of our second quarter earnings are shown on slide 9.

Christina Zamarro: The impact of lower tire unit volume was $41 million and factory utilization was a headwind of $35 million.

Christina Zamarro: Segment Operating Income Benefit is from favorable net price mix versus raw material cost of $99 million. Raw materials were a benefit of $158 million in the quarter.

Christina Zamarro: Price mix was negative for the quarter driven by contractual pricing adjustments with our OE customers.

Christina Zamarro: Sequential pricing from the first quarter was stable.

Christina L. Zamarro: Goodyear Forward initiatives contributed $90 million in the quarter, with benefits driven largely by purchasing initiatives. Inflation was $59 million, or about 3%, which was partly offset by favorable other costs of $34 million, driven by lower transportation. The non-recurrence of the 2023 Tupelo storm was a benefit of $50 million.

Christina Zamarro: Goodyear Forward initiatives contributed $90 million in the quarter, with benefits driven largely by purchasing initiatives.

Christina Zimaro: Inflating was $59 million, or about 3%, which was partly offset by favorable other costs of $34 million, driven by lower transportation. The non-recurrence of the 2023 Tupelo Storm was a benefit of $50 million. Insurance recoveries primarily related to the fire in our Dunbijah facility and the tornado that impacted our Tupelo facility, netted with related current period expenses, with a benefit of $63 million. Other SLI of $14 million reflects lower advertising, depreciation, and compensation expenses in the quarter. Printing the slide 10, net that totaled $7.7 billion at the end of the second quarter, relatively flat with last year.

Christina Zamarro: Inflation was $59 million, or about 3%. It was partly offset by favorable other costs of $34 million, driven by lower transportation.

Christina Zamarro: The non-recurrence of the 2023 Tupelo storm was a benefit of $50 million.

Christina L. Zamarro: Insurance recoveries, primarily related to the fire in our Debicha facility and the tornado that impacted our Tupelo facility, netted with related current period expenses, with a benefit of $63 million. Other SOI of $14 million reflects lower advertising, depreciation, and compensation expenses in the quarter. Turning to slide 10, net debt totaled $7.7 billion at the end of the second quarter, relatively flat with last year.

Christina Zamarro: Insurance recoveries, primarily related to the fire in our Debicha facility and the tornado that impacted our Tupelo facility, netted with related current period expenses, with a benefit of $63 million.

Christina Zamarro: Other SOI of $14 million reflects lower advertising, depreciation, and compensation expenses in the quarter.

Christina Zamarro: Turning to slide 10, Net Debt totaled $7.7 billion at the end of the second quarter, relatively flat with last year.

Christina Zimaro: Free cash flow was a use of $346 million during the quarter, compared to a cash inflow of $96 million last year. Working capital was a use of cash compared to an unusually strong inflow last year, which reflected the impact of declining raw materials and inventory reductions following the storm-related shutdown of our Tupelo factory.

Christina L. Zamarro: Free cash flow with a use of $346 million during the quarter compared to a cash inflow of $96 million last year. Working capital was a use of cash compared to an unusually strong inflow last year, which reflected the impact of declining raw materials and inventory reductions following the storm-related shutdown of our Tupelo factory. Moving to our SBU results and starting on slide 12, America's second quarter unit volume decreased 6%, or 1.2 million units, driven by replacement volume, while the overall U.S. replacement industry grew slightly during the second quarter. However, this result was distorted by an 18% increase in low-end imports. This year, non-member import volume has reached an all-time high.

Christina Zamarro: Free cash flow with a use of $346 million during the quarter compared to a cash inflow of $96 million last year.

Christina Zamarro: Working capital was a use of cash compared to an unusually strong inflow last year, which reflected the impact of declining raw materials and inventory reductions following the storm-related shutdown of our Tupelo factory.

Christina Zimaro: Moving to our SBU results, and starting on slide 12, America's second quarter unit volume decreased 6%, or 1.2 million units, driven by replacement volume. While the overall U.S. replacement industry grew slightly during the second quarter; this result was distorted by an 18% increase in low end imports. This year, non-member import volume has reached an all-time high. Industry member volume, which primarily is represented by large-branded tire companies, was lowered on a year-over-year basis. In addition, our volume in Latin America declined following deliberate shifts in our distribution and higher imports. statement offering income told 241 million, or nearly 9% to sales, reflecting an increase of $138 million.

Christina Zamarro: Moving to our SBU results and starting on slide 12, America's second quarter unit volume decreased 6% or 1.2 million units driven by replacement volume.

Christina Zamarro: While the overall U.S. replacement industry grew slightly during the second quarter, this result was distorted by an 18% increase in low-end imports.

Christina Zamarro: This year, non-member import volume has reached an all-time high.

Christina L. Zamarro: Industry member volume, which is primarily represented by large branded tire companies, was lower on a year-over-year basis. In addition, our volume in Latin America declined following deliberate shifts in our distribution and higher imports. Segment operating income totaled $241 million, or nearly 9% of sales, reflecting an increase of $138 million. America's earnings benefited from the execution of Goodyear Forward's initiatives, Net Price Mixed vs. Raw Materials, recovery from the Tupelo storm, and lower transportation rates, which more than offset lower volume. Moving to slide 13, EMEA's second quarter unit volume decreased 1%, or 200,000 units, driven by replacement.

Christina Zamarro: Industry member volume, which primarily is represented by large branded tire companies, was lowered on a year-over-year basis.

Speaker Change: In addition, our volume in Latin America declined following deliberate shifts in our distribution and higher imports.

Christina Zamarro: Segment operating income totaled $241 million, or nearly 9% of sales, reflecting an increase of $138 million.

Christina Zimaro: America's earnings benefited from the execution of Goodyear Forward initiatives, net price mix versus raw materials, recovered from the Tupelo storm, and lower transportation rates, which more than offset lower volume.

Christina Zamarro: America's earnings benefited from the execution of Goodyear Forward's initiatives, net price mix versus raw materials, recovery from the Tupelo storm, and lower transportation rates, which more than offset lower volume.

Christina Zimaro: Moving to slide 13, Amy's second quarter unit volume decreased 1%, or 200,000 units, driven by replacement. Our volume reflects growth in Western Europe, but declining volume in the East, particularly in Turkey, following our pricing actions in response to continued hyperinflation in the country. Statement operating income was 35 million, and up 54 million from a year ago. Favorable net price mix versus raw materials, insurance recovery, net of related current-parent expenses, and Goodyear Forward actions more than offset a favorable fixed overhead absorption and higher inflation.

Christina Zamarro: Moving to slide 13, EMU's second quarter unit volume decreased 1%, or 200,000 units, driven by replacement.

Christina L. Zamarro: Our volume reflects growth in Western Europe but declining volume in the East, particularly in Turkey, following our pricing actions in response to continued hyperinflation in the country. Segment operating income was $35 million, and up $54 million from a year ago. A favorable net price mix versus raw materials, insurance recoveries, net of related current period expenses, and Goodyear forward actions more than offset unfavorable fixed overhead absorption and higher inflation. Turning to Asia Pacific, on slide 14, second quarter unit volume increased 8% or 700,000 units, driven by OE growth in China.

Christina Zamarro: Our volume reflects growth in Western Europe , but declining volume in the East, particularly in Turkey, following our pricing actions in response to continued hyperinflation in the country.

Christina Zamarro: Segment operating income was $35 million, and up $54 million from a year ago.

Christina Zamarro: favorable net price mix versus raw materials, insurance recoveries, net of related current period expenses, and Goodyear forward actions more than offset unfavorable fixed overhead absorption and higher inflation.

Christina Zimaro: According to Asian Pacific on Slack 14, second quarter unit volume increased 8% or 700,000 units, driven by O.E. Growth in China. Stigman operating income totaled $63 million and 10.6% to sales, an increase of $23 million versus prior years. Aged earnings benefit is, from favorable net price mix versus raw materials, volume and good year forward initiatives. These benefits were partly offset by a higher inflationary cost.

Christina Zamarro: Turning to Asia-Pacific on slide 14, second quarter unit volume increased 8% or 700,000 units driven by OE growth in China.

Christina L. Zamarro: Figment operating income totaled $63 million and 10.6% of sales, an increase of $23 million versus the prior year. Agent Earnings Benefit is from favorable net price mix versus raw materials, volume, and Goodyear Forward initiatives. These benefits were partly offset by higher inflationary costs.

Christina Zamarro: Segment operating income totaled $63 million and 10.6% of sales, an increase of $23 million versus prior year.

Christina Zamarro: Agents' earnings benefited from favorable net price mix versus raw materials, volume, and Goodyear Forward initiatives. These benefits were partly offset by higher inflationary costs.

Christina Zimaro: Turn to our outlook on Slide 16. We have revised our full-year outlook for unit volume to be more reflective of our first-half experience. We have spent third quarter global unit volume to be down approximately 4%. In addition, we have spent higher unabsorbed fixed costs of $30 million, driven by lower production volume during the second quarter. Raw materials will increase approximately 50 million, which we expect to offset with improvements in price and mix. Strong execution on Goodyear Forward will drive approximately 120 million of an SLI benefit during the third quarter. And as Mark mentioned, we've increased our full year outlook for Goodyear Forward, reflecting the great progress we're seeing across each of our work streams. Inflation and other costs are expected to be a net headwind of approximately 60 million, reflecting 3% general inflation in the quarter.

Christina L. Zamarro: Turn to our Outlook on slide 16. We have revised our full year outlook for unit volume to be more reflective of our first half experience. We expect third quarter global unit volume to be down approximately 4%.

Christina Zamarro: Turn to our Outlook on slide 16.

Christina Zamarro: We have revised our full year outlook for unit volume to be more reflective of our first half experience. We expect third quarter global unit volume to be down approximately 4%.

Christina L. Zamarro: In addition, we expect higher unabsorbed fixed costs of $30 million, driven by lower production volume during the second quarter. Raw materials will increase by approximately $50 million, which we expect to offset with improvements in price in May. Strong execution on Goodyear Forward will drive approximately $120 million of SOI benefit during the third quarter. And, as Mark mentioned, we've increased our full-year outlook for Goodyear Forward, reflecting the great progress we're seeing across each of our workstreams.

Christina Zamarro: In addition, we expect higher unabsorbed fixed costs of $30 million, driven by lower production volume during the second quarter.

Christina Zamarro: Raw materials will increase approximately $50 million, which we expect to offset with improvements in price and mix.

Christina Zamarro: Strong execution on Goodyear Forward will drive approximately $120 million of an SOI benefit during the third quarter. And as Mark mentioned, we've increased our full-year outlook for Goodyear Forward, reflecting the great progress we're seeing across each of our work streams.

Christina L. Zamarro: Inflation and other costs are expected to be a net headwind of approximately $60 million, reflecting 3% general inflation in the quarter. Other financial assumptions on slide 17 have also been updated to reflect our most recent expectations. With that, we'll open the line for your questions.

Mark Stewart: Inflation and other costs are expected to be a net headwind of approximately 60 million reflecting 3% general inflation in the quarter.

Christina Zimaro: Other financial assumptions on slide 17 have also been updated to reflect their most recent expectations.

Christina Zamarro: Other financial assumptions on slide 17 have also been updated to reflect our most recent expectations.

Christina Zimaro: With that, we'll open the line for your question. And at this time, if you would like to ask a question, please press star one on your telephone keypad. You may withdraw your questions at any time by pressing star two. Once again, that is star and one.

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

Operator: And at this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may withdraw your questions at any time by pressing star 2. Once again, that is star and 1.

Speaker Change: And at this time, if you would like to ask a question, please press star 1 on your telephone keypad.

John Healy: We will take our first question from John Healy with North Coast Research. Please go ahead. John Healy, your line is open.

Operator: We will take our first question from John Healy with North Coast Research. Please go ahead. John Healy, your line is open. Please check your mute function on your phone.

Operator: Please check your mute function on your phone. All right, and again, that is star and one for any questions. We'll pause another moment to allow questions to queue.

Christina Zamarro: John Healy, your line is open.

John Healy: Please check your mute function on your phone.

Operator: Alright, and again that is a star and one for any questions. We'll pause another moment to allow questions to queue. And there appear to be no questions at this time. I'll turn the call over to the speakers for any closing remarks.

Christina Zamarro: And again, that is star and one for any questions. We'll pause another moment to allow questions to queue.

Operator: And there appear to be no questions at this time. I'll turn the call to the speakers for any closing remarks.

Christina Zamarro: And there appear to be no questions at this time. I'll turn the call to the speakers for any closing remarks.

Mark Stewart: All right, now thank you, operator. We do have a handful of analysts who are transitioning between jobs and another one out. If you have any questions, we can certainly follow up with us later today and tomorrow.

Operator: All right. Thank you, operator. We do have a handful of analysts who are transitioning between jobs, and another one out.

Speaker Change: Thank you, Operator. We do have a handful of analysts who are transitioning between jobs and another one out.

Mark Stewart: If you have any questions, we can certainly follow up with you later today and tomorrow. Thank you for joining us. Goodbye. Thank you, and this will conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: ?? ?? ?? ??

Christina Zamarro: If you have any questions, we can certainly follow up with us later today and tomorrow. Thank you for joining.

Mark Stewart: Thank you for joining. Goodbye.

Mark Stewart: Thank you.

Operator: And this will conclude today's program. Thank you for your participation.

Christina Zamarro: Goodbye.

Operator: You may disconnect at any time.

Speaker Change: Thank you, and this will conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: Thank you for joining us on this edition of The Real Housewives of New York. We hope you'll join us again next week for a new episode of The Real Housewives of New York. Until then, good night.

Operator: ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶