Transcript: Goodyear Tire & Rubber Q2 2026 Earnings Conference Call

On Thursday, Goodyear Tire & Rubber (NASDAQ: GT ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

3 billion, down 5% year-over-year due to lower volumes and divestitures; however, excluding divestitures, sales were down 1%. The company is focusing on strategic initiatives to enhance its product portfolio, optimize its manufacturing footprint, and improve its go-to-market strategy, including the introduction of new products in various regions. Asia Pacific showed strong performance with volume growth and margin expansion, while Americas faced challenges due to a competitive market and soft consumer demand.

Goodyear is closing its Fayetteville facility to realign its manufacturing strategy, with expected cost savings of $90 million by 2027 and $270 million annually thereafter. The company's future outlook includes flat global unit volumes for Q3 and a focus on high-value segments like ultra-high-performance tires and larger rim sizes. 5 billion in savings. Financial guidance for Q3 includes a significant nonrecurring earnings impact due to divestitures, with anticipated benefits from price/mix improvements and Goodyear Forward savings.

Full Transcript Brittany, Operator Good morning. My name is Brittany and I will be your conference operator today. At this time I would like to welcome everyone to Goodyear Tire & Rubber second quarter 2026 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 star 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 Ryan Reed, Vice President, Investor Relations. Ryan Reed, Vice President, Investor Relations Thank you and good morning, everyone. Welcome to our second quarter 2026 earnings call. With me today are Mark Stewart, CEO and President, and Scott Deakin, Interim CFO.

A couple notes before we get started. During this call we'll make forward-looking statements and refer to non-GAAP financial measures. For more information on the most significant factors that could affect our future results and for reconciliations of non-GAAP measures, please refer to our presentation and our SEC filings. com.

With that, I'll hand the call over to Mark. Mark Stewart, CEO & President Thank you, Ryan, and good morning, everyone. We appreciate you joining in with us today. Before we get started, I'd like to recognize and thank all of our associates around the world.

This past year has brought its share of challenges for our industry, and the stabilization we're seeing at Goodyear Tire & Rubber is a result of our team's focus, execution, and commitment to our customers. To all of our associates, thank you for all that you do. Now we'll look at our performance for the quarter, and I'd like to spend some time discussing the actions we're taking to strengthen our competitive position and how we're setting Goodyear up for long-term success. Let's head into the quarter.

To recap, overall second quarter performance was in line with the expectations we shared on our last call with you. Our global tire volumes stepped up sequentially, and though some pockets continued to be weak, we saw more market stability overall in Q2 compared to Q1. Additionally, channel destocking moderated from the first quarter as sell-in more closely reflected customer sell-out. EMEA and Asia Pacific both improved financial performance over the prior year.

Asia Pacific was again a really bright spot for us, achieving volume growth across both consumer and commercial as well as OE and replacement businesses. Asia Pacific also delivered both revenue growth and margin expansion during the quarter. Performance in the Americas remained challenging, driven by a competitive marketplace combined with a soft consumer backdrop. However, as the channel destocking moderated, the region delivered sequential volume improvement in the quarter.

As I reflect on the quarter operationally, two things stand out to me. First, all regions continued to increase the share of 18-inch and above rim sizes in their consumer portfolios. Across Goodyear, that mix increased 4 percentage points year over year, matching the fastest pace of expansion since we started disclosing the metric. Additionally, we grew OE volumes as well as market share in all regions during the quarter.

This OE growth, in particular, stands out against a weak consumer OE production backdrop across the regions. The greater stability we're seeing across the business gives us confidence in the step-up in the SOI we expect to deliver in the second half. Thinking longer term, it's clear to us that heightened competitive pressure isn't going away. This continues to validate the actions we're taking to strategically reposition our business, and our priorities are very clear.

We're working to strengthen our product portfolio, improve the competitiveness of our manufacturing footprint, and enhance our go-to-market strategy. Let me expand on each of these areas. First, on product portfolio. Over the past two years, we've made deliberate choices about where we believe Goodyear can contribute the greatest value within the marketplace.

That means becoming more disciplined about retiring SKUs that do not generate acceptable returns. It means we're also continuing to invest in the products, brands, and innovation that differentiate Goodyear and align our offerings with the most attractive segments of the market. That strategy continues to take shape through product pipeline. In Q2, we brought products to market in EMEA, including our Vector All Season 4.

This tire builds on our legacy of innovation in a category we helped pioneer nearly 50 years ago when we introduced the first all-season tire. We've also expanded our Cooper portfolio in EMEA, introducing new all-season and winter tires across passenger cars, SUVs, and light commercial vehicles, as well as new summer tires for passenger cars in the SUV segments. This is where Goodyear science really comes in. The same innovation tested in some of the world's toughest environments, from commercial aviation and military aircraft to lunar missions and the racetrack, helps deliver the tires and solutions customers trust.

We're proud that differentiated capability is being recognized in the industry. One of the ways we know we're on the right track is through the recognition of our products that we continue to receive. For example, Auto Bild named Goodyear the top manufacturer of the year for summer tires. In a recent test, Tire Rack recognized Eagle F1 All-Season as the leading ultra-high-performance all-season tire in the market.

Looking ahead, we remain focused on the fastest-growing, highest-value segments in the market, including ultra-high-performance tires, larger rim sizes of 18 and above, and strong product offerings in the all-weather and all-season segments. S. and Canada and a new Goodyear product in Latin America to advance this strategy. Our new product introductions, coupled with continued portfolio optimization to eliminate the lower-margin SKUs, demonstrate our commitment to investing in the products and segments where we can compete most effectively.

As our portfolio evolves, our manufacturing footprint needs to evolve with it. The footprint actions we've taken over the last few years haven't solely been focused on reducing costs. They are a direct response to where we're headed in our portfolio-driven manufacturing strategy. We're aligning our footprint with the segments we believe Goodyear can most effectively compete in, strategically producing the right products in the right facilities.

The decision to close our Fayetteville facility reflects this strategy. It's another step towards building a manufacturing network aligned with our portfolio and positions Goodyear to compete more effectively over the long term. We expect production to wind down by the end of 2027, with volume transitioning to other facilities across the network that will improve utilizations, strengthen the competitiveness of our manufacturing footprint, and reduce structural costs to the Americas by $90 million in 2027 and $270 million thereafter. As we continue to reshape our portfolio, it's essential that our manufacturing capacity evolves alongside it.

We'll continue evaluating our footprint to ensure it remains aligned with our portfolio strategy. We're making targeted investments across our global manufacturing and supply chain network to strengthen critical capabilities. These investments will help us increase flexibility and resilience, improve efficiency, and better position Goodyear to meet customer demand in higher-value segments, including the 18-inch and above market. At the same time, we're simplifying our network, expanding automation, and improving utilization and productivity—all to strengthen our competitiveness, support financial performance, and better serve demand in premium and high-value segments.

Our goal is to have a manufacturing network that supports the long-term strategy by efficiently serving the growing demand in premium, high-value segments and positioning Goodyear to deliver stronger business performance over time. Building a stronger portfolio and a more competitive manufacturing footprint is only part of the story. Our path to long-term value also depends on our ability to win with our customers and deliver the products and services they rely on every day. Central to that are our OE partners.

When leading vehicle manufacturers choose our tires for their new vehicles, it expands our brand with millions of drivers, strengthens our competitive position, and creates a pipeline for replacement sales down the road. That's how a single OE win can become an important driver of sustainable value creation for many years to come. Additionally, we're continuing to strengthen how we compete across the replacement market through stronger channel partnerships and investments in digital capabilities as well as tools that make it easier for customers to do business with Goodyear.

You've heard me talk about our focus on our portfolio, manufacturing footprint, and go-to-market strategy. We see these priorities as deeply connected. Progress in one area creates lasting value if it's matched by progress in the others. Over the past two years, we've taken meaningful actions to strengthen Goodyear and build a more focused company.

Through Goodyear Forward, we did what we said we were going to do. We strengthened our balance sheet, we increased our strategic focus and operating discipline, and implemented opportunities to create the greatest value. And that work continues today. As we look ahead, we're focused on delivering the financial performance expected of an industry leader by building a more competitive, more profitable, and more resilient Goodyear.

You'll continue to see us making deliberate choices about where we invest, where we compete, how we allocate capital, and always with the objective of improving returns and building a stronger Goodyear. The imperative is to ensure every major decision—from product development to manufacturing investments to sales execution—supports the same strategy, concentrating our resources behind the markets, products, and opportunities where Goodyear can create the greatest long-term value. Together, these efforts and results, along with our commitment to innovation, serve to differentiate us in the marketplace.

From our role in supplying advanced lunar tires for the Pegasus LTV as part of NASA's Artemis program to creative collaborations like Toy Story 5 fitments with Porsche, we're bringing Goodyear science and technology to life in ways that capture attention and connect with customers. These moments do more than reinforce our brand. They show how we're leveraging our unique strengths to stand out in the marketplace. Finally, I'd like to welcome Scott Deakin as our Interim CFO.

Scott brings deep public company finance and operating experience. We're pleased to have him in the role and look forward to continuing to work closely with Scott. I'll now turn the call over to Scott. Thank you.

Scott Deakin, Chief Financial Officer Thank you, Mark, and good morning, everyone. Since joining the company, I've had the opportunity to spend time with a good many of the team up and down the organization. What stands out to me is the tight alignment and focus across Goodyear Tire & Rubber in addressing both the challenges and the opportunities ahead. The enthusiasm and urgency focused on continuous improvement and forward progress is compelling.

Now, turning to our results, I'll begin with our second quarter financial performance before discussing cash flow, the balance sheet, and our outlook. 3 billion, down about 5% from last year given lower volume and last year's divestitures of the chemicals business and the Dunlop brand, partially offset by price and mix improvements. Excluding the divestitures, sales were down about 1%. Organically, unit volume declined 4% driven by lower consumer replacement volume in the Americas and EMEA.

Although tire unit volumes remain down year over year, we saw improvements compared to the first quarter reflecting stabilizing industry demand and the benefit of lapping our product and SKU rationalization actions taken last year. Gross margin decreased by 1 percentage point, primarily due to lower volumes and unfavorable fixed cost absorption. 5%, which continued to be explained by the foreign exchange effects of the weaker US dollar on sales, particularly against the euro. Excluding currency, SG&A on a dollar basis was relatively flat.

All considered, segment operating income was $36 million, similar to the first quarter. One item to call out is our unusually high tax expense, which was driven by the regional mix of where earnings were generated during the quarter. 61. Turning to the segment operating income walk on slide 7, our 2025 earnings base was lower by $44 million due to the sales of the chemical business and the Dunlop brand last year.

After this change in scope, our 2025 segment operating income was $115 million. Lower tire unit volume and the associated pressure on factory utilization were a headwind of $132 million, driven principally by lower consumer replacement volume in the Americas. Price and mix versus raw materials was a benefit of $123 million. The continuing favorable contributions of Goodyear Forward accounted for $95 million of benefits during the quarter.

Inflation was an unfavorable impact of $53 million. Tariffs were a headwind of $32 million, and other operational costs were higher by $68 million. Finally, foreign currency and other were a combined headwind of $12 million. Turning to slide 8, free cash flow was a use of $69 million in the quarter, improving $318 million compared to the prior year, driven by both more efficient working capital and lower capex.

Net debt declined over $700 million versus a year ago, reflecting debt repayment at the end of last year. During the quarter we successfully issued approximately $1 billion of senior notes. We intend to use those cash proceeds to repay our 2027 senior notes, thereby extending our debt maturity profile and further strengthening our liquidity position. This transaction provides the financial flexibility to continue executing the actions we've outlined, including the manufacturing footprint optimization underway, without being constrained by near-term maturities.

We believe we position the company with the liquidity and runway necessary to execute our strategy, and the team is aligned around continuing to strengthen the balance sheet as those improvements are realized. Moving to the SBU results on slide 10, Americas unit volume decreased 9% driven principally by lower US consumer replacement volume. As Mark discussed, we continue to prioritize our strategic decision to exit low-margin product lines. These actions primarily drove our volume decline during the quarter.

Specifically within the US consumer replacement industry, we saw the rate of destocking improve as both consumer sell-in volumes and sell-out volumes were down between 1% and 2% during the second quarter. While Goodyear's consumer replacement volumes were down during the quarter, OE volumes grew despite market softness as we achieved market share gains. Commercial volume remained lower than last year driven by replacement. However, commercial OE volume grew in the mid-teens percent driven by rising freight rates and improving fleet confidence.

Americas segment operating income was a loss of $10 million, reflecting the impact of lower volume, tariff costs, and inflation, partly offset by price and mix versus raws together with the continuing benefits of Goodyear Forward savings. As Mark noted, we recently announced the closure of our Fayetteville, North Carolina facility.