GT - Earnings call transcript Q3 2018 | The Goodyear Tire & Rubber Company

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Operator

Good morning. My name is Keith, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Goodyear's Third Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. now President program Relations. of will Zamarro, to I Vice Goodyear's FP&A Instructions] hand over the Christina [Operator and Investor go ahead. Please

Christina Zamarro

call future on differ X, participants today. our those some forward-looking comments like to statement call our a future for Wells, by performance. supporting earlier Harbor affect future materially Rich Thank a significant will revise for Chairman Officer. and be and Goodyear's can on earnings thank The company website filings replay The and release. or outlined Officer; results new found of Kramer, President I'm The Goodyear's whether and and Executive the could Goodyear's any most in Replay would us Slide Actual otherwise. SEC of Financial presentation intention remind earnings and our were that statements, as I now earnings this If available results for Darren call. in from forward-looking today's call today to you, could instructions statements be at includes to XXXX disclaims Vice update in any obligation our your events third factors today's with or that on slide by here today. or you, this result joined presentation Chief information, later our quarter the Executive Keith, investor.goodyear.com, joining attention I everyone, are draw included Chief release Safe morning. could suggested issued about

turn on appendix slide as call The U.S. some over Rich. in non-GAAP on part reconciled to equivalent now basis. the results to the presentation. that, non-GAAP are of the presented cases, are and financial basis, Our I'll with the the call GAAP financial And to measures discussed GAAP on a

Rich Kramer

Thank you morning, and good Christina, everyone.

back Financial to remarks, my beginning like our Chief recently I'd Officer. company the who as Darren welcome Wells Before rejoined

decisions. perspectives during and Darren. mid- his he prior segment the unfamiliar of With we're our our the with architect and instrumental add of has than a email goes several structure of his margin Darren of environment. the work excited to Welcome the bring operating Goodyear, can Darren the his third its without team. and tire capital in of Throughout who and through several tenure, totaled you Darren, to current cycles valuable it have that operations of quarter, investors, $XXX industry business. development income XXXXs business as was the stability our on and Goodyear, was also saying time of major deep experienced way during those For leader to served and our are was knowledge He with we with helped the familiarity strategy In very turnaround million X%. our more the back operating many analysts as segment

our shipments Our grew Americas and by consumer in driven commercial tire a replacement increased significant EMEA. by headwinds and year-over-year both global Globally significant China, X% commercial volumes in businesses. the by basis, we consumer OE despite gains our and the led on

improve and trends, the strong of solid our volume we the by quarter, operating the driven During benefits in to markets, mature mixed continued growth. key performance

largest fourth the a market and persisted operating China. relatively see our that segments teams quarter, of that to in income improving deteriorating into to dollar have second of to replacement stronger and stable operating in delivered began growth including period XXXX. issues performance contributed as delivered growth XX%, the momentum than Americas the in and its in outstanding premium regions in best total We're channels. consumer gains the pleased performance volatility. more increasing a in conditions of since was The Our two These the European year-over-year EMEA turned US emerge our US quarter

In have Latin in for trade incremental America, addition, a and the economic challenges standards changing environment emission global volatility growing added newly Europe, overall enacted in industry.

from While or these results, execution factors our have the a in traject do our not the long-term continued market the proposition value on impact near-term of our strategy. headwinds

in Our mix build markets, teams are in our growth. delivering to to on volume our mature on continuing opportunities for improvements while and our capabilities expand

new With longer-term on not does on mobility the our innovation, trajectory strength in our brand focus of perspective model current of our our products, my the environment and our people, change business business the the ecosystem.

selling comparison, in X. as an industry X% versus performance the of I'll the representing In than as consumer for our to acceleration Americas transition was adjusting US conditions when cover replacement the after shipments ATD second year. the the XX% demand industry the the the Slide to the consumer well up quarter higher Turning was half US to quarter related replacement X% the impact increased in region. significant up volume from first of Tire-Hub. our and

the pleased sales at the We're delivery and execution the And market growth the important retail once Our at increase dedication Industry we quarter. or again, continue in was outperforming grew X% transition XX by X.Xx. larger over the consumers this is initiative. came daily in segment buying segments this up X% progressing Goodyear's steadily. sellout US. -inch in Tire-Hub's and to rates share in smoothly to in strategic volume with in to team's Tire-Hub and

which inventory leaving quarters straight demand value has seen improved branded distributors excellent turns sellout digit now products. products to and retail demand with have shape. our strong inventory of of channel and The the three a testament is quality Goodyear mid-single our of wholesale growth in We in the

the milestone reached yet This weeks after month, achievement number few million sold. a in this just all more Touring ranked the than tire one among Grand was Just category. consumers weather-ready another comes latest one tire important season assurance Goodyear's

drive Max great season magazine again last week is SUV the In the This capitalize lean ranked assurance testament Fuel inventory channel a going forward. quality the mix enable proposition and highest combination addition, the strength us richer a value to in and among improve of CS to all with to leading our our products. tires. news of portfolio The consumer plans our a Goodyear's should product on

some rates leverage record business performance and continue our the industry robust, ramp replacement partially miles freight our remain up strong commercial truck Overall, of setting up inefficiencies for down in the to have operations U.S. Our volume than transitory volume reflecting only the Commercial the U.S. strong was to quarter. including spot OE U.S. outlook plants. truck constructive was environment drivers the ton more rates. demand a including ISA utilization and continue slightly orders; commercial in XX% we our as commercial

volatility challenging of backdrop in America, contributed region. to which more in improved impact conditions and for in These America. industry in a America While performance North growing Latin operations have Latin a our notable portion our the Brazil, dynamics accounts significant in political economic on

increased Our the Brazil six in volume year, in first lost when the and in the range. surrounding months deterioration businesses the of the the total Riyal and presidential fell weakness consumer We uncertainty the the X% third strike wake national commercial shipments through our momentum saw elections. in of economic reversing mid-single-digit seen quarter trends in reflecting in the both transportation

in XX-inch to our XX% during grow consumer the market particularly grew the greater OE continued quarter and new Brazil in platforms the segment. we've as our While is share with business replacement softening

have the we growth capture more expanded improve. as manufacturers our Latin plan, have of business the our and to coming Additionally, OE America as American modernization completed Brazilian years with in the and we economies Brazil

rate outperforming. aided members Turning EMEA industry industry. during In solid delivered quarter main industry ETR was grew of European comparison, X, performance X% Slide now The to consumer overall with our volume and conditions. the business improving our replacement growth the the by replacement double consumer

Our feel industry. operations services fleet we relative the all share and strength model shipments the final robust about XX% our the reflecting rose EMEA's industry versus party the the good commercial last We during strong X% year's ahead third truck increased test. our XX-inch of category winter delivered year, in given industry months results quarter growth, third across tire this the greater delivered performance basis OE the replacement gains XXX continued of points the conditions. favorable season board. and versus of position volume in XX% and as year and our

Vector including successes year which the finishes. tests six include finishes all Year in place IV Good first this seasons, podium three Our earned

our by European leading tire in and to segment. important this addition continue market grew recognized winter the we as be share tires third quarter place highly magazines In the during

Now will clearly products weather we buying winter Regardless, unpredictable us position the winter market affect the in are will patterns. award winning win confident place. to our

our technology in it's comfort job first the the team they're that Lastly, technology improve engineering I'd interior reducing fully for and the Goodyear's a fitted is Audi selected Asymmetric work use Being which vehicle tires X e-tron; rolling a electric Eagle to by e-tron significant the testament the OE levels. SUV. win acknowledge the while by These of region. sound the onto reduces doing noise Audi like SUV work our effectively great to The XX%. noise that teams, to handling resistance team. by and FX

Now operating turning on conditions in performance provide update to I'll China. X, Asia Slide an Pacific and cover

XX% China Asia more suggest declines passenger conditions continue market growth sales the OE ratchet respectively. Pacific and elevated shipments inventory their signs not are demand fell customers than in end it the forecast in production the and X% near countries and other vehicle that to offset substantial September, in softening China We're In response to the as X% industry any in seeing across likely declined and improve term. region. down levels. commercial

and replacement At the currently to activity in are very negatively on the of half quarter We're magnitudes deteriorating year China take call. to business made China. retail destocking in market the second significant, deceleration. impacted our the by tracking is the we decision that environment seeing to of demand. ongoing correct these the plan on line sharp shaping in the actions business While be market environment is ahead based turned allowed of we and for OE events the This time of in conditions. The consciously decision analysis our us some also a ROE offsetting out expressed difficult second view declines with being

we expected forecast in earlier We a the China, in weaker Market significantly when our replacement year. revised

are expectations primarily market below the trends. conditions due weaker-than-expected our to However, now sellout

continue in the credit and market weakening business all stock a factors. OE and believe to tighter consumer worsening channels fundamentals replacement that weak conditions, We and cyclical sentiment reflect

past. has the quickly China's to While has as economy it responded as stimulus in not

actions may rates easing cycle government's to market tax monetary out for business individual continued China take stronger. come fourth the positions time us to our by of the to and this income year. recent some encouraged our for are and through the to conditions create but in We even liquidity time improve, reduce investment It

performance the are regaining in we the both major our driving volume overall of with at I'm mix contributed back our US markets. Europe, share quarter. performance and gains quarter. the in to Looking and satisfied which In our strong

has the As industry U.S. final these expectations and changed a with successes have think XXXX, more conservative an enter XXXX in we in in with variety that a are trends volatility. of the we of that our it's moderation that our more will and will difficult continue continue albeit comparisons, face prudent We these to a given view we increasing take potential some of are landscape XXXX. to the months near-term in of as headwinds impact macroeconomic period especially Even

of current us short environment our track the have in the record run, full navigating potential will conditions through successfully the similar past. a While in reaching from keep strong we

ourselves manage look near-term markets are and take continue leverage to for challenges strengths our where the set to disciplined As a we'll healthy future and recovery. we approach up ahead,

value macro and our most we volatile and pursuing more unwavering ensuring brand While growth that will capture commitment our in quarters, the abandon market products we not of has industry's to recent attractive in marketplace. full the segments in the the environment become

see the importantly, disrupting business example the challenge competitive advantages. to build status to our perfect the Tire-Hub on us the you to More is enhance value in will strengthen quo continue our traditional industry's value to of a order our proposition models and brand of consumer.

confident that retail our markets a and designed to Additionally, that win improving enable just consumers. major launched new by long-term Goodyear, the our in are market. competitive is making strategic Roll to two plan in concept we investments were I'm the with month position this us

turn I'll call to Darren. the over Now,

Darren Wells

Thank you, morning, Rich and good everyone.

excited Let to the me team. Goodyear that start very I'm on back by be saying

to into days role, the couple to impression underlying as wanted XX stronger we're CFO. my I years impressed material My the pretty when I'm I take initial a this though times results in good should impressions. ago as talk While fundamentals that well to over cycles. overall impression gotten cycle change you in the cost are a in offer difficult don't minutes anything only lot economies; more is current increases of with they differences Even margins prior My some our but to raw through has return earnings five hasn't challenges the second ability about a some than near-term common see with adverse my of few I'll last call that going did is There financial to find conditions, of I easier first predict. macroeconomic me time. that our we minutes. some a tire any that industry being were recover as Even period business make

businesses years settles. few as strategy up past My is tell team. to about continue execution with distribution model, in navigate as it's multiple is company enthusiastic coming focus continue to as changing its years you that of automotive are by our progress connected on made excellence positioned for to positioned these Hopefully, that For reasons continued the capabilities the we to how on I'm Impression sure The and disciplined Goodyear, rejoined impressed the are reinventing one ecosystem. technology this the of initiatives, business well our am structure, I I've we as challenges. right prospects the our when the there on cost means U.S. third fronts. sets have us over possible that of volatility can investments making address in its are the operational current well

the on able to the the on get quarters the few weeks meantime, to with visibility year term back the and be next and with over perspective In XXXX we through views However, forward XXXX. dialogue I ahead you're how may I beyond. questions many Today, continuing to understanding in also beginning quarter. we near going should to realized as on you I to come full very we'll play last fourth look for better and focus next that having our I'm plan the out. point, at the of our your After and focused to that next results getting of start at work understand few year. look to

first to are see raw on raw experience our the material compares raw QX, remember QX. material of impact and the by I the I prior In the cost of the in the where price reflecting and back in start the the last Turning quarter well during to last XXXX. net Each step was which seven to prior this of similar I it starts The similarities cycle, chart Slide on in XXXX. cycle, and over costs. material XXXX-XXXX. quarter impact differences line cycle in saw quarter the we that was illustrates it where cycles. want and versus how In X up first the we quarters

of You to horizontal expansion margin think and start below of the relative can the the and compression above the area line line the at base cycle. as

margins price cycle, then to to taking nearly started increases compressed three five improve ultimately recover. the years that early during see prior and can were and fully You on

the that around. confident the but remain takes seems We of very margin You different this of recovery also focusing cycle fourth feel and but line in whether be couple a the These then were can straight time, but whether recovery remain now get the got there. XXXX. time. remembered during confident doesn't down loss last lot the costs. the could quarter questions back and of I the industry intense in the material are time probably see we which rate This back when that raw really we it dropped XXXX dynamics reflects on longer recover changed good, has questions we especially to later wasn't we over

we raw increased First versus eight last material is in about this over saw only million cycle's less cost when quarters. $XXX three the only severe $XXX million quarters, Goodyear for cycle

So and pricing impetus much last to time bigger industry quicker a move. for

three before three rising pricing. out in another raws Second XX again. direction driver of quarters, row. In raw the was in less after pricing would as materials last increase kept the difficult which This it decisions was starting raw more flattened initial increasing This for initial cycle cycle, quarters take. this ultimately make after a to materials the industry clear quarters

As in continue of and line getting recovering the the change. products I'll straight are begin the focus the shows, The review for with a but our line quarter, we during competitive full may we'll cycle performance a Slide recovery on statement Transitioning income current for our the to to XX. value doesn't marketplace. a be on not destination

from offset was higher our currency and slightly the sale price consistent quarter, relatively up of Segment substantially $XXX prior mix quarter was was volume as billion, favorable unfavorable translation. benefits both third and X.X%, Our the million income a foreign income margin ago operating year year. $X.X with segment by operating for were

last influenced step most we've were on per recorded items, Slide operating reflecting adverse the Tire-Hub third Adjusting for improved chart quarter as factory of essentially Raw a well on I reflects but The some notably favorable negative lowered basis. Price worse in $X.XX results on outlook Our Higher material pricing we impact volume in share other third diluted third and operating than quarter. of of generated flat by income. segment delivering resulted million. impact we the more inflation foreign transaction. and a respectively. quarter emerging during of the through cost by mix. and than the compares increase a utilization was earnings as XX we $XX This items, certain of million mix This income net the XXXX the negative offset offset these mostly significant $XX the costs on for markets year. flow quarter China exchange foreign in to last gain actions million. expected million currency exchange the fourth million benefit Cost $XX source talk totaled million review $XX more I'll effect $XX of taken of this year-over-year $XX and as The inputs savings year. about million decline for $XX impact was by were was

debt Slide volume Turning typical decreased cash of to line capital $XXX was ago. an quarter costs. raw reflecting flow the year-over-year, accounts but a basis. the balance similar were period. operating cash million Net billion million end increase higher ago, unchanged cash year-over-year our for and was quarter XX, given the the Cash in with flow from production million. XX and material the our summarizes on effectively $XXX sheet Slide year Working seasonality, equivalents payable year at and was versus and to activities in XX $X.X a month increase on trailing the $XX

we up X.X for it non-cash reversed reflection was cash Outside was activities. of stock flow, of income $XXX on calculating gain operating Those in third the out million or free net While million in flow a repurchased the largely shares. from quarter common our worth cash Tire-Hub, quarter, about

we've For million the just or over worth repurchased first shares. months X of million $XXX XXXX, nine

segment income operating than on Turning segment was increase favorable Revenue translation. offsetting stable currency X% volume Americas XXXX. versus non-tire now results higher and the more XX. Slide on higher revenue foreign with

for than part specific factory in $XX bad price mix, including consumer the by reserve received in U.S. increased favorable volume, higher utilization. The a trade X%, replacement Brazil. in tax final and at income While, two results third was impact XX%, negative replacement from this Americas, more volumes the were volumes debt by for impacted costs offset lower Brazil. benefit up strength the were million impact material Brazil of reflected of offsetting $XX higher point a raw in in higher One second, consumer we volume operating the U.S., million quarter Segment manufacturing of in benefit million And the first settlement a items, dispute higher $X costs. declined

So $XX two a net items. million from positive these

the of the tire warm XX. but the consumer of relatively last winter. inventory revenue after the quarter, foreign Slide weather to Toward during remained end low Turning end of volume given impact reflecting third and solid currency. channel sales growth out replacement and relatively Winter EMEA robust sellout flat slowdown. started saw strong quarter, selling unfavorable delivered

were distributors waiting channel retail demand many increased As in for the deliveries. taking before further

volume our As a always contributor be to will EMEA. quarter key fourth in weather

were in performance by as XX% to business the Rich material commercial OE raw Our lower increased and Lira during was operating unfavorable by translation which said partially translation. deliver replacement in the euro continued foreign income EMEA. positive mix, offset primarily Turkish both a quarter. costs a weaker currency strong quarter, Segment and devaluation driven the The function and the price of of during

$XX declined replacement Asia A challenging XX, industry our Slide year-over-year decline environment XX%. operating in volumes Pacific's quarter to and income segment third China, of million. reflects where was excess each a Turning OE in

of smaller of region primarily million $X recorded in in a China in watch OE our consumer We though the expense OE volume and double-digit flat. out was of growth China, outside customers. see going also debt to quarter, as saw We only incremental Outside forward. placement India bad Japan China the related one India. essentially

and flooding. weakness continue was the growth transportation creating and strike are a OE recent in for tightening India. in environment, build liquidity, current future rising of sales challenges we costs insurance fuel a foundation further regulation China. While tough a for Despite to recently national More recent result

replacement drive volume years. vehicle will updates of operating year segment in the reflect the to We consumer Brazil. China fitments electric our over low unit the outlook Principally softening growing for volume our of OE full income at coming demand OE environment and help us Our continued Slide including end now demand and of drivers. segment pipeline XX see demand to replacement prior weaker range. in

on less expect factory absorption. overhead utilization We benefit from also

key As in a result markets. this volume of weakness our emerging

$XX million, China. in offset the the actions by mix driven of of announced the lower expect price increased reflecting by we partially have recently from We pricing benefit impact next weakness

our derivatives input The some our increase at unplanned also oil other prices and least impact year pricing, black cost on reflects plants, raw seeing takes due cost market emerging response of in curtailed full for as to the production we based cost taken of new we've $XXX million. investments as environmental well material carbon several QX. in for While This particularly higher source material that seen we've these of regulations in the currency raw our locations, in in China. increases impact to of steps standards. required partly to China. and suppliers Chinese meet from materials of the reinforcement environmental strict increases to cost cover closed We're the have this to enforcement The raised raws cost

increases to some still performance making Well related another is changes come to overcome. of commodity these about So prepare our when to we below and an we this we have cost our challenges factories some back is control. increasing is impact we have to having that about guidance purely forecast area outlook. for want to but material is I deterioration This $XX area the we're that XXXX. future; our related on talk we'll in situational they're regarding make talk and are you in spend. page The is that point last this million This on and previous

be While continue operating that first price continue incorporating to improve these appropriate is and higher we improve entered that the look this the we as we we The the volume but billion. a will best from focus market recent drive opportunities on steps can exceed addition challenge segment half. as on an into our look to businesses is $X.X improve income like all raw given emerging we've We will momentum to seen. to look deal will XXXX like materials there, take mix now our feel and changes factors even to as expectation look for

the we'll your Now open line questions. for

Operator

Please [Operator Instructions] Lache is ahead line We'll take our open. with Rod Research. first Wolfe your from question go

Rod Lache

morning. Good

shipments just changes benefit all channel for in the basis? Tire-Hub words and other pretty confirm consignment significant big some Can a material Turkish of first and point, Peso in moves still some you seen bucketing are raw In Just at filling accounting this Lira, of those bucket? that we've are there there's the two of you from housekeeping items. on the they other no

Darren Wells

Yes.

raw I'll in are think, materials in I have factories answer dollars yes, Rod, the buying first raw second currency. the question put our do in So, that denominated materials your devaluation say, or are Turkey extent transactional and in to we impact that non- Lira does

So one way. moving thinking benefit from think Tire-Hub. there's right And confirm that with you're about into I it no tires the the channel

Rich Kramer

and element Rod well. the and by it consignment not that's pretty of that's much quarter in certainly through definition we're it the as that's And happening the not of purpose

Rod Lache

some reduction. mean that that and Potosi Luis San and can past Okay these in price making us for just cost to ramp XXXX? now pricing about that preliminary is, on hold one a be really wondering that $XXX color mix few right XXXX accelerating things in other of of you about of you've any basis? other the on hoping And thinking how mix you help look the the and a of we to I'm can fourth provide kind I'm items, would How non-recurrence like just what adjustments us you're some raw is million should we with quarter? perspective the for the should think about mentioned and Tire-Hub materials? a And If things we out then

things as out today of are looking XXXX? to they Some those stand

Darren Wells

Yes, Rod, that let is I me, I won't, I'll what first say I guess thing I offer the can XXXX. you on

think I understand. that still better plan our is try the team for to with I'm something working certainly to XXXX

over that quarter elements million of on the one. fourth point a achieving won't be imply the that mix some performance $XX on be there's today. based full that fourth is for does And your think to price the But fair price the going on mix XXXX I for of comment to I impact but positive So prepared going year, is be to something from is as that having that And big go very turnaround ourselves negative positive mix going a to for think us up to a having I quarter QX. quarters of effect set we're last is price XXXX. price the three we so in of mix a significant for

some both and positives high of be of that Mexico this of that to we a Tire-Hub. are some that would XXXX Then of is, we continued the look yes, - I the will we've cost out that additional in factories. factory ramp factory getting units units point and clarity which margin on these you've impact have the other got structure. cost our up The better guess and of reversal pointed some of as high The I at out think out

in the have year, some So unwind and will some to for And Tire-Hub hit we'll we've net think I year, will taken reduced next we'll cost positives. that have, volume continue of obviously, provide savings. this

I'm is longer being fully But good and discussion the look than I discussion year. not think yet. some our savings having for being rest about a doesn't for that in think net a has of we've it's ready the quarter it fourth that not we I a worth this but at concern mean cost And me. lower that's for it's reasons, bit ultimately, done been got,

supply changes mentioned and view, our cost say exchange related a should than I remarks. in raw prepared I And that our material million today include side, we effect negative make we're And where does the includes view today. next that and where increase. is the exchanges that that currency given the you the $XXX are On having prices today China as I foreign or obviously materials million referenced. foreign our what foreign to out look raw think exchange year of to rather raw to today my be material sit of $XXX that would in issues view

So fairly increasing with an that hurdles.

at we out I million Rich were million $XXX Christina Laguna. and in when think were to looking $XXX

million Now next going at $XXX we're looking to into year. $XXX million

China be obviously Foreign half year's exchange another today's so. first And this look we The going last a at is or pretty negative. tough spot rates would million environment, of good. be a to the the was be against year would would next in in China conditions as also current then $XX and be first pretty continue, If up half continue comps China headwind. to

we'd profitable OE fitments working million volumes. in less out question think next be facing there can that the even if were part that I grow some going down So units to that stay we mix that number our front, some the on. do the be even we we're against because stable the going industry year. as million or a on Obviously, on things We're to on well of as X OE be But selectivity of for X volume OE. volumes what challenges getting to are as of price

that. our mature market on businesses Focusing

got that some there to good. freeze we've going come is for volumes for to tires out look going which to up we're have still some So volume But some us. it is replacement

And we'll number So account that those I and about will when together all our those we at of get we're talk together XXXX that view think pull And for take view of a we pull are pass as overall the our factors. XXXX. factors looking into year-end. the

Rod Lache

and Is equal. Okay, clarify being that just something price that to things that thanks. if in turnaround the, mix. of on And kind all

that quarter have of more the that sort next would year that fourth there this that through quarters X is that You number? level year unusual something of is in or was occurring

Darren Wells

and that's decreases of of some obviously I pass price Yes. we're the helpful. the mean, anniversary getting

--obviously we on think that mix including taking QX point I giving to making last U.S. benefiting we into Continuing going some it XXXX. Some took forward. going us for where price start be price just a that continued we're place Rod, of price really be year. where comfortable the you I'm increase That's somewhat balance helpful deliver there. clear the progress strong announced benefiting not to at in started that I'm view QX. of in very a helpful going and will us is price will mix are action But and the

Operator

go We'll take question from John ahead. Northcoast next Please with Research. our Healy

line is Your open.

John Healy

there? you for guys. how few US, market your sustainable this understand in help in might changed? quarters sustained row expect with side, growth, to to not sustained the clearly growth you next of a point confidence that. growth can and a a economy of replacement to And three question level quarters say replacement us morning, wanted ask on maybe will? so I can obviously the volume we kind XX% of a the big-pictured the but what's view the on side, driving Good But

Rich Kramer

was be said I go channels demand as out, of was think was was. the X% that year, volumes the going was exactly I that's out emptying. because that sentiment questions what volumes refer top to back it is question in very that I as we a in it not that you And when and X% economy about but very and in year pent-up And sellout seeing. such our said the about what QX we've And can't you weren't to second very, America and back And down And demand to we in QX remember. number everything think, down many and was we've go $X and remember, now. relative volumes. think robust think And inventory a very, I else. I sell had lot quarter to what back John, we a then then were a come going at maybe on forward channels when as in Europe that I were the I'll we what saw shape that the about when good said, is And that seeing Yes, consumers think suspect demand I last if. million, robust And marketplace. VMT time. were We remember we well. to is And up what since and this third got robust had seeing you're quarter of North just are you're or think

to script quarters good, we've three we're ending we And digit sellout, into are, Darren getting good going had volume, about the And benefit about if price as shape. the And out our my sell on for October. in is you trend So channels getting mid-single is said just that and in I now. speaks as we're quarter. fourth had where come continues the think are October we've we're into of mentioned, that to that

So the then of exactly momentum now to got out XXXX. in want lot which that into all take working together a is we year and right take you've end the to things those

demand economy, really rubber demand our the burning it's the for think the product, I coming So to tread to support fruition. finally and VMT

John Healy

of slide you raw I the increase. I X And then slide recover cycles previous the highlight illustrating that helpful. at look in Okay, but to increases, it raw the quarters eleven and great thought was took when terms

that on you like guys timeframe. be recovering the environment terms the XX seems to potentially seem raw actually And that the net healthy. period you Given play quarter shorter think how of you prices the might out? volume can of do continue, do time And in expected you think

Darren Wells

space of I'll we a sort to where be market Yes, working that it And thought this the be easier. is And in but I work you're And And recover that's something time quarters. quarter. that it most competitive of we is flattening seven last particular think periods And been that going but a through think last make likely to above materials is be move direction. read period then experiencing, it us So, line makes we'll think in our And we're that continue to we to working the And we the raw to forward, raise the what what to went this I to under to out, we on to Yes, speak taken fact - year the we're other raw volume materials require if the demonstrate would back line. for pricing volume the watchful our a don't committed to so where I have we're going this that we're is of the marketplace. and recovering. to one. that got find would but the, cycle, to, the start take. through thing that share done because about got over the believed think about that third if way. position And in have point uncertainty are as on recover we're direction strong I We've those the of questions think we're we've area harder which I been Rich, go biggest a that that point, job things we're clearly I down. the to obviously there continues create some which

a business the As we last cycle going is work has away that to And these cycles. how we the it model, and to hammer that's did through that. at raw that is and we're continue material in that, that,

John Healy

installer any Great on and me, give final for has is to how one launch. color response you question been us this just could Tire-Hub, the

markets big the dealers the geographies may there just retention you in are network good out seeing prior. where past? been, in terms had of any that in are And seeing you wins had You your underserved be you or of

Rich Kramer

ramp perspective, get it's will, say what in all on working big And along intended. to a absolutely of that's the I think intentions its the been up some would very work I for basis we off customer it think startup strategic and at right our out And well And as that exceeded in terms our exactly of there's I and and think servicing John, our probably key I there's foot, are, from you any we in process none customer Yes, is strategies diligently so it's expectations way. frankly And as on was no to happened. through about really. by customer get the we terms a what hiccups Like if think losses there customer and no customers. losses, and line. us but

to growth, of we have ramped we never as in terms up. In significant growth intended XXXX it

our going say aligned partners expanding I whether the out we're that's it But working Tire the as ahead it's and what there, beyond, Hub's think concept in Washington and and well it's plan. And retail plan distributors, that with out on other called our I'd you on you're I new you initiatives that working dealers, also a markets Roll Goodyear, XXXX if look few if and see bit support out will we're of can goodyear.com, little on, like. new the our even of and in that's frankly to or the partner distribution. some benefits that and where by for, to of testing a elaborate

Operator

And Please ahead. we from Anthony question take go can next our with Research. Deem Longbow

open. is line Your

Anthony Deem

get the we lower morning, an for wondering ratio to today, Darren. I'm CFO on role, sit for investment we of and wondering EBITDA, This priority leverage versus one's grow to intention. outlook the over will in can down if grade paying more goal buybacks debt, your this so year Good Goodyear's taking At first questions. you was update ratio deleveraging? beginning and the remain Thanks leverage just it everybody. with where my

Darren Wells

Yes.

as have to go good I Anthony, return a raised results we question our you've still with would material objective has, So, investment to that to of obviously lot a meant And we and think type be are programs, the here, those a through mean reflection of long-term that has companies having the that of part cycle, to us. generation committed the our I grade here, for of cash look shareholder been do balance generate raw our always we is sheet, a that think, something compete and we ability cash. our when at balanced, were say DNA I programs part I always been types with. because a impacted. It's this

to So what that. so drive reasonable is have to access helps cycle, consistent sheet we through and balance need grade capital the investment cost the

but I different toward mid ratios we basis, into available EBITDA, has on in improvements were instead of the XXXX some Xs. continue the And nice moved down the don't having know, we've I debt-to-EBITDA And a leverage mean leverage Xx. there, around And obviously certainly our seen, to as to of still work the So, our up. your intention our question. ratio - in commitment debt results, XXXX, to and think back is I drop a answer because ratio was

shareholder keep to to need think desire and balance I strategic with our our to going return balance we're to sheet. our commitment programs have improving our

is mean there. clearly I that commitment So

we've balance repurchased had, Goodyear and think be have stock. to this of $XXX have million struck, we going I is year about so to So the far

honestly, moderate, our for We've our cash would a quite we're that's of the made to recently. to got sheet. fairly increase I that something things right business dividend no seen the that is. order the And in you for have So, result question, the what substantial have a flow amount, do that in as think our going long-term, to in balance we confidence in

but to we think like given in long it's how generate to we difficult can of this, lasts, or a through don't what I think can steps question long we your Anthony? that as cycle take the some to we Does the So answer balance protect cycle this going cash sheet. a run, have go to we're it's a the question, predict and like that do,

Anthony Deem

it's I Yes, previously to tough it's a that to commit does, point, XXXX. probably targeted because this right, timeframe, at assume,

Darren Wells

a we're back going to Yes, I where at going XXXX be beyond. I then XXXX think plan, mean, a to obviously look coming that's our be we take fair. and we're taking to look and hard at think

on So we I need on time to need that, some some to work that, just a work time level. from personal

listening So dialogue we obviously that will keep come the our have. understand and the and we'll they viewpoint question, back investors, on to I having and question. that

Anthony Deem

if more I I questions few a you. have may. Thank

quarter the if third second just sorry for commodity is And slightly $XX answered. was costs? cost Spot increases is transaction and quarter. pricing flat million down raw to how non of exactly XXXX material in this lower, the -commodity guide versus much you raw to material related specify of impact sort already versus Can

want just get to FX mostly So driven. that's

Darren Wells

Yes.

of costs. related of of China. carbon you black think the been carbon in earlier a in And the materials and derivatives change of black the category, related. of I exchange these and reflection several me is a commodity based fact of And over the a that oil categories the the million So the most in it about the foreign last heard are made that that to another has has in based of there Within it of here some increases is of China. significant exchange some supply years, not substantial fairly lot and purchase. of mention production we there foreign where is derivative $XX is that oil factor that availability There $XX the-- is shifted point and are million higher some that most

both policies, are that's suppliers to of investments us. to if and of therefore And you happen, regulations A supply you this make starts affecting forced to things so to which environmental through regulate of that other there starts material the or are comply for if China you're And environmental some One, the stop are to produced. amount a couple supply. then reduce higher customer required And standards. just with aren't supplier. changing you generally change a able cost there's are the

investment it, meeting the prices The recruit the standards. is in additional the for start environmental investment suppliers raise additional who the effect the to other in their able those to are to market make that all recoup

up pushes So these for it North for in we in is do business for that Asia-Pacific a our and even those America, China. materials our something materials and lot that our business of procurement

going it into year. into So for it, and outlook also that is playing raw next into cost material plays our

Anthony Deem

And I the outlook just give price prepared price fourth described know not you round year, next but another that given circumstances for to do undergoing mix in the Goodyear increases you you're see the quarter? here of maybe

Darren Wells

Yes.

doing we recovering probably that material recover the impact raw focused margins that we it to on of in. think, will operate the on in --we're to we're it the time. going costs fits I have our do over fact way a that and stand So marketplace we to going the on

that timing, us and particular to point to we're and making time from going it's but get a lot a forward. not I'm I So of forward step something big think we'll QX going attention in

Anthony Deem

buy about is growth. one, good a for pre X% last The one consumer shipment the X% XX%, Great, we US quick for then saw industry growth? replacement it's benefit estimate

maintain assuming to buy benefit So the percent-ish. share pre market X X was

Darren Wells

to of, I'm are So price Are increase? we want our benefit, the about pre question you pre, question are sure of I right talking make here or there buy question. the answering answering tires ahead the when you talk the buying right the people about

Anthony Deem

Yes.

somewhat September the first I in it increase was price it, third marketplace expected understood to the As that was quarter.

So I your for customers wondering that that to believe shipment. gave provided free your benefit you if some buy and I for opportunity was, a

Rich Kramer

our as been customers. multi been around at it's branded our say buys, customers, Frankly, that Yes. positive pre sense us, for really only very but significant there's in not look would the we no I

of time. perspective from a at seen lot an haven't that We industry this

and see to prices, material volumes of put say been that some are that increases going are raw volumes of that good. moderate, sell recoveries increases I back earlier we've in we very our in So volumes, some perspective, good, very the back these goes expected this of price We saw have in free Channel relative the think comments buy. question it's of sell they're again little inventories when favorably of might to and were you out certainly September sticking. some there of been so and from I received good our the went as price very Darren's before, past Xst through would some

Operator

our question Ashik with we'll go Jefferies. And Please next ahead. take Kurian from

Your line is open.

Ashik Kurian

from the time what big the This last around just I just industry following members. think Good impact sync it of QX, I up any increases out time price I effect on of development from mean think or I did increases imply start effective say, and pre pretty volumes pricing seeing for I most your and pricing of morning. the you is think you your are X, the line to price did on questions. September I no from you are slightly the QX which had Can between one with especially an in both industry your buy was is with distortions rest there your previous you with volumes. main much was because or understand other we probably around for ask the XXXX in volume were and because well Tier want think question

Rich Kramer

up our say again I directly, were didn't buy up two we in for said question mean Ashik, than see line. in North to those XX-inch volumes were XX, maybe now And industry volumes industry free seen tracking answer quarters greater I any for was eleven a you've and row. would that we was guess up I in significant America, up the XX. up we like five,

continues to volume the and wasn't caused the quarter And buy continues good October. sell be we increase announced that as drove that third that clear. it price be to pre out said our in So

have had be we volumes hasn't the move to been incremental pre-buy ahead we a been, So clear. the volume as not

Ashik Kurian

of And is Europe likely should that how just market we no reflection there. in there, worry of because increases mean price increase inventory thoughts price any the about high lackluster Europe? it a level I one's your the Is announced and

Rich Kramer

up business a replacement price talked on So, commercial markets is, a and OE and sort we Ashik, environmentally five if we did again here Europe increase And the from want in at call. quarter that think about in commercial for macro XX. you second remember, we corridor do the have this of perspective, least up and about the to

volumes --our at So the look on as the in knows well, we our look is particularly different set are pricing good. a much see market segments. good and is we industry good, year. Darren good; taking And Remember, as passenger we Europe pricing earlier in business market. this, the truck at tires winter is winter winter is pricing what as is on that's

we season, we set it's of as that as sort go. So selling go into

the over volumes the happen back September, on gained in know quarter. selling price warm incremental you but third in weather it of our went winter marketplace. So markets the start sell have Having have would said expect been October. we as we into didn't and we we there. now that, the that share some any We'll excellent happened been in remember did to good. very on hoped products see We out out as still in We said

into those pulled and snow see assuming ideally in have quarter, we'll restocking market. fourth out and see the we coming the into distribution a the tires getting market, coming then So of the

opportunity time will quarter late season said I to raw costs in summer well. Now, to the that this the will our start summer with last material tires fourth revisit tire remember the be new the or how and recover as

cost So as approach Darren how tires summer at given fourth in be high earlier, the we'll we the market set the get later as raw looking that we will market closely be material in quarter. said

Ashik Kurian

is is trend? China. enough there One an well? also do we I your underlying your the more sell given you sales of been if on destocking credit the Chinese sellout mean replacements volume get Asia largely have OE you views demand to as weakness a weakness high in sellout weakness, side the are or due offset you And do issues by in What the seeing to on are it? in in think dealers proportion

Rich Kramer

as bottom you XX:XX And much as go. So, Ashik, OE found we we China you Clearly, out, is point higher, mix in to our and we're remember, hit the points. on we've deterioration seen in replacement. the yet haven't China both about

So think if OEM we you forecast order to we and of markets, to us to OE in be come said say the the our books QX. look where at in right both the leaned I have QX in market would I in orders, now they kind

I'll particularly diameter around have been it's been tires but good getting and OE, China we three months that feel OE pretty new XX%, domestic both and as pleased win with pretty business I'm severe as down the down So in said deteriorating, particularly know, on EVs a rate rim sales really on and comment row. large continue, just transplants you go. we're auto September in we very producers. as That with we

think the clearly but OE rebound will the in headwinds I are economy as better gets there. So China,

have replacement lot side, Ashik, small distributors to credit and acceptances, size access paying they was liquidity, the even right. of saw hit On you large they essentially can't don't a I think distributors, up. pay. when mid it you What Remember bank drying to those

or You they whether get them down pay have other tire essentially in business for businesses selling tires to that their owned. debt the it's they've to see cash

now. buying we into and the government work its that's through, cars there's think come And clearly a know puts of stimulus also we right inventory about going think through going a as that's slow And in tires. because there's way buying slow, to China all right the I past, and said economy clearly of the also Chinese the what seeing of the sort And sellout that in economy. purchases a derivative with the government, to now. but consumers lot is that's channel less has in, I we're in So

to thumb and the reserve it quarters the empty flowing see consumer two up took Despite business Our reducing of market, sort income benefit to going get sort the and still of about rule our of was reducing again. rates, taxes, turn in volumes government in the channels liquidity we yet more to the to putting again. of of sort buying get hitting that stimulus start end

taking bit China great the a and again view this We really it a down but to our doesn't I'll continue road. time. is that that --will say little it's deter longer be continue So market get

see sell to And that happen this. So but we'll more not us and just sell yes, OE work in that our replacement, demand way yet. seeing need in out less through gives we replacement to we're

Operator

our Goldman Sachs. take from we'll final go with David Tamberrino ahead. Please today And question

David Tamberrino

in of set a you Darren now table? of gentlemen. around we directly off morning, times, previously that I as on ask just kind view you with should board you good the figured the Great, couple was coming dancing XXXX guidance

Darren Wells

Yes.

as to think have now call, - in on is get sure up making understand yes, we mean are about we I be we're making soon where where the set going quarter. I on XXXX. been we for all David, focused as And today sure I So, fourth that focused I'm past work the right

the very look say it's degree to some be the cycle, we the environment. In the there past, a quick we have, that to could at going XXXX going think if external recovery. past was dependent I around is question on

last two period a of operating over year the jump segments out was time there saw coming of the we our cycle. income So dramatically,

So of I determination be, this are think be the where it cycle. is in we going to will material part raw

talk we're And not to XXXX. to we way other to position a that to once a comments lay we're get discussion robust the to we year-end any for about out XXXX, are we say to it view definitive today going than XXXX. by so and be through And make work where in in are really go of on a going going about in where

David Tamberrino

commentary the the were and do really that versus on surprised didn't like because I situation capacity today to or XXXX. that previously. trying by within growing your and recovering global you into What And was where the cycles. address industry X backdrop Okay topic fit prior we I from slide XXXX this really within to

on lot on declining projects that I'd So overlay we and that I'd from XXXX overlay tight capacity And to capacity tight different do that XXXX how had be be been curious cycle? love how comments demand, with time from because to we think on and this a prior lot utilization raw supply tires. period hear and had HBA online really great of you hear XXXX a than you that's greenlit. mat that that a capacity your the of might and with coming

Darren Wells

above point the a David I think the is the and competitors in new in here larger XX-inch discussion it future think do demand And or that balance factories And and some like supply there some dynamics that I constructed. are understand that I high in evolving value no, see on versus right Yes, clearly to how new There question. we the of market. there a some we'd been at tires. have lot the are

our that to and North the Europe, to a mix point I that you at that going oversupply. be real in a indicate an look to I As because situation in we're that's balance delivering that of we're two. where we're getting of reasonable And doesn't price performance And was the of XXXX-XXXX and is nothing businesses have America realized I in supply of a seem simultaneously. improvements for right delivering else product. the volume that now some think a between time shortage there high-end indication during

and cycle these capacity to think impacted have that's our tires. you the it's and question want higher some slower yes build And complexity of on question I I it's for think I additional about. we product inform still how has a end that true. and the by investors continue been Big to times about much that one

to expect see I I may an that complete can't there, clarity it evidence I'll I don't be the see give but situation. that would of So oversupply say

David Tamberrino

question. Look future as it. obviously look helpful. discussion fit that the that's in take and deeper into I a guys appreciate in to you Okay, the forward taking you me

Rich Kramer

David. Thanks

We are today. everyone for So, attention. Thanks appreciate listening thanks. you your

Operator

will Thanks this participation. And program. today's your conclude for

great now day. a disconnect. You Have may

The Goodyear Tire & Rubber Company (GT) 26 Oct 182018 Q3 Earnings call transcript