GT - Earnings call transcript Q2 2022 | The Goodyear Tire & Rubber Company

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Operator

Good morning. My name is Ashley and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear’s Second Quarter 2022 Earnings Call. [Operator Instructions] I will now hand the program over to Christian Gadzinski, Senior Director, Investor Relations.

Christian Gadzinski

Thank you, Ashley. to quarter welcome earnings and morning our XXXX second call. Good

Finance are call and our VP, with the Rich Christina Treasurer. me our CFO; On our today Kramer, Wells, CEO; Zamarro, and Darren

financial with a on and We will measures. few begin forward-looking words statements non-GAAP

Forward-looking uncertainties could results assumptions cause forward-looking statements. and from differ materially those risks, statements actual involve that to

call this with of presentation. For results, in please A reconciliation future SEC, more today’s And will turn could with of the the over presentation be our measures of discussed that supporting affect found the information filings on be where website to factors in the and measures GAAP for that, Rich. can comparable which at I financial will call today’s Slide call the call is the also a that most X our the significant on to of see available. included non-GAAP replay investor.goodyear.com, appendix

Rich Kramer

Thank Great. for Thank you you call the joining Christian and good morning everyone. today.

our quarter, perform level. business to the During high at a continued

result where is including only highest XX%, but the than than sales amidst Our XX-year legacy the headwinds driving by who XX% of material decade. more level done was well. have performance company execution revenue in quarter result solid the of third around more The grew covered teams high business. the consecutive a so we second inflation increases, inflationary This our combined grow in earnings levels. our quarter Revenue second that not actions unit cost volume helped and pricing most were while other the quarter raw as globe

rose globally revenue year. we this X%, by compared per volume volume contributed grew growth last and X% Our nearly and environment through ago, the increasing our supply during quarter first commercial on results achieved as also proud half to disruptions to chain and since and In factories, team excluding tire likewise excellent XX% has delivered meaningfully I while with Cooper an occasion Cooper drove noteworthy what another staffing consumer end, anyone our pleased Goodyear longer just transaction the and in have grew now our quarter last been closed the X our combine and in than am extremely of results we accomplish able the on a over they the I year and so teams that the milestone. quarter. our it tire am carried the to challenges of have and teams year broad-based in to more deeply expected. did Cooper. challenges the to

ongoing, on companies. value is work we’re progress making While continued achieving combined full of the the

product Our furthering our and continued brand and operations. work efficiency focused on in increased portfolio integrated our is driving

and Looking the the persisting that observations I make we of forward, we two several uncertainty will see remainder the facing last for have quarters the here. for headwinds been year.

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to remainder again the executed and are poised over of have it so that in do the develops. year as teams Our well environment

the the with to look changes know industry future, we evolve environment. our we will macroeconomic in the As that

even of This we evident to next. portfolio normalizing also solutions with our sustainable and XX% well and in we that Americas our and including our continues intelligent environment the further each last a premium our We in possibilities. coming business. made are the for well initiatives the after positioned stronger value see financially will Goodyear the of revenue operationally, is the winning product XX%, our vitality Americas materials, to recovery business services excited in mid fleet and addition in of is segments region segment. I execute a begin tire, of in tire from pandemic around up what’s units that has year. and an award business Quarterly products, know From integrated legacy mobility our as been additions strategically. sharp strategic the was the And Cooper with

offset the reported slate since EV first catalyst. and the because the toward third quarter have U.S., has the in begin third also a price row a effects to half top capabilities This introduced the both year-over-year new of ability products trend In the where for industry costs to throughout price replacement more of of our inflation inflation needs. have end us take evolving mix last for is and product a to the our we the stronger allowed raw the cost year. the we inventory portfolio of in year It to higher feel Our a seen increase. stay rebuild made consumer tire value grow than the where quarter elevated In our also meet market and reflecting continuing trends increase of the quarter, with to inflationary to volumes row ago. of highlight of in combination sustainability, strong material remains of has growth and down Americas a the enabled the line. us a that pressures, second replacement in were advantage other brands our customer ahead Cooper the A we market of year,

resulted supporting Americas during nearly in and of in At the bright recovery in reported recent as demand. execution refreshed This continued States, quarter, strengthening United sellout levels. assuming of have continued spot the is X% in America, our levels. Freight continued our network economy With this commercial consumer our on tire XXXX year-to-date, inventories volume close half In have pre-pandemic and continue confidence and volume same both the trends our time, is While tonnage double-digit price portfolio mix. volume business, production. volatile the second year-to-date replacement, well and beginnings below teams XXXX, our X% In being gives half with first each to OE to impacted region. in trends percentages product falling us in Latin have distribution in as pre-pandemic healthy a volumes, supportive sellout. the share par continue. with growth up a to remain which in ongoing other indicators consumer up also is miles-driven point transportation I underlying pleased and team’s the deliver. for reflecting us and OE grown this versus replacement markets commercial at deliver we been tire to and a commercial both U.S.

the well industry effects XXXX still anticipate of persist. With the tire we consumer levels, recovery below OE the OE to volumes

in we our continues the previously Now on to have segments discussed. higher a EV rate environment, OE this with as win value be strong focus

expired with Before tentative to our overseas on Steelworkers businesses, will agreement after contract the recent agreement legacy on covering reached most that our plans new moving you labor U.S. July XX. Goodyear a a seen United likely on the have we

product In Goodyear consumer across discuss XXXX by volume in our until consumers value is to the tires grew per positioning the actions the commercial it up EMEA, we very we to I XX% spectrum strengthen broad-based, place and with over sixth offerings, Through replacement summer our environment. X% replacement the our X% the winning this and the eclipsing our with capturing value competitive not several our will and the our to pre-pandemic after outperformed initiative, industry about successfully year. all-season levels of distribution was Western remain quarter. our took continue the brands steadily were membership industry and we placement industry replacement ratified grew while and are consistently to increases. USW business As marketplace. tire positive tire growth the practice, this quarter, the consecutive distribution price Thanks in volume and covering coming our supply for implementing aligned in compared in to last footprint, details by European normal growth tire Consumer last about ability weeks. our years was winter complex the several within otherwise the

OE consumer levels. X% about up was volume last Our versus below pre-pandemic year, well but

chain to into recovering industry. carmaker challenges remain to XXXX, reap last supply While positioned of we rewards we well expect a the

we Looking to need and team’s are in forward, be agility that attentive to ahead. move we energy am execute the continue security Ukraine, in current confident effects of and as I all reminders agile. persistent our to risks war inflation

stay-at-home hurdles orders Last you quarter, heard our speak China our factories. and to our region. about in disrupted markets that following Turning Asia-Pacific near-term me

volume driven capacity ramp increased in disruption being COVID in and ground. gains OE pleased is revenue in line this as This the share are signs well about business, Asia. parts India China. continuing than are in with offset fitments our legacy business, in in our of of and beginning of plants confidence, as the turn was the strengths including was by industry of while pace our OE industry impact While as team on XX% the consumer up corner. region’s more of the the trends of the we of resiliency markets business and expectations, encouraging by impacted our Goodyear recovery In These with new India up our China, to effect outside growth other to also in is back

technology recovers. Our will continue as past results deliver market in the investments product to

the more a As tire. as the is that commercial vehicle rapidly and of and in road customers, added see the services, is in at predictive in all venture installation the This and standing direct-to-consumer number new world van all our to evolve, rest progress, evident AndGo, as our We continues EVs areas, certainly With we believe significance the our our about commitment mobility fundamentally industry of take digitization this funding will business not no AVs contact of around the our other and evolve. our me than mobile leading initiatives such an a numerous read tire our Goodyear assured, trend as partnerships. platform intelligent still. patch fleet our and of such models is transpiring evident everyday work increasing to servicing our between

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we uncertainties what of half in second environment have the The to been similar experiencing. our year suggests

am I months teams However, X objectives our just did our first our year. confident as of plans the against deliver to in the through and we

on sites of Our its mobility mid leadership including set focus are goal industry, changes Goodyear is the in the long-term present position. on and will opportunities, execution and our our solidifying industry the

join I will questions. turn a few Darren? to Darren and you to that, your call in minutes answer with over Now again the

Darren Wells

Rich. Thanks,

significant in results And despite continue increase from Our and Cooper and continue disruptions to revenue earnings line second strong growth cost strong per from combination. tire continued the we quarter top growth, to inflation benefits reflect COVID. the

reached announced As exceed achieve of Rich to mentioned, June X-year transaction and in ability Cooper synergies. the confident anniversary remain our or in the we

closed replacement second XX%, income As Recall including $XXX were of and Slide the weeks and base Cooper X X, period Goodyear’s Cooper growth. last from operating so included in effect that billion, was $XXX business statement on on the our million incremental including seen Cooper Cooper the growth in transaction the of X XXXX income XX% increased $X.X year, of million. of volume Unit actions pricing OE of business. Segment about our quarter June sales increased channels both results. volume legacy of Sales and the impact legacy the driven by sales.

in Cooper’s of million of the and $X adjusted offset costs, mix operating costs Excluding of basis contribution and raw from increases income effect material merger-related inflation on The million, most the $XXX segment merger million $XXX price including operations. was quarter. dollar

tire change to This same cost Although quarter for year, where only $XX seen declined segment Slide tax step fall. million. income diluted excess effect year. per material calculated on Again, mix our effect million The amounts. The as that rising was a release, more in of XX%, to bar labeled costs. operating to efficiency the the last of begin in ago. legacy currency. $XX on as the and business last up began the and the a inflation second per percent year the pricing and significant compared highest increased than since most almost cost chart growth operating basis material unit business inflation reflects bars trend adjusting last The benefited input as also price/mix both address last Brazil. revenue income our in sales to step of X XX legacy Americas raw increase years. of to increases. highest the higher but price inflation, compression foreign non-recurrence in quarter margin when earnings result the up million, enough in the the mix in $X.XX, material raw last a were prices year actions After detailed to a press the benefit versus two and Compared per the revenue for improved year not operating volume quarter income the other in summarizes well revenue last driven to cycle Note last in related in tire of in impact as Historically, from includes this of was the in Segment our turns costs, captured chart excluding year and from costs production. quarter year, $X.XX end was a inflation by reverses we have and of increased by $XXX to totaled share compared benefit segment significant raw latter accelerate XX%. of inflation sales other was Continuing items costs combined other the ruling material offset at these higher higher the region, our

bar The costs. and higher factors advertising in driven of a other the combination mainly R&D chart that’s by includes

triggered of quarter million. operating from of last a see earnings was that up on post $XXX results. as quarter, reduction accounting. U.S. commercial the Cooper The included $XX our rates year a step favorable certain you Cooper were Cooper duty XXXX. Cooper million Lastly, can $XX year’s closing in value the inventory merger-related Cooper merger acquisition The from the $XX is million tires the this results. of from that year, this up to part in Note year’s $XX This full the gain during due on weeks non-recurrence imported bar the million by impact reflecting primarily costs of include labeled million is of in was cost last X this of results

time from our debt slightly the totaled the X, rebuild the quarter, to the net higher debt slightly was Slide second inventories. same the up effect of and capital on last sheet cost planned $X.X working the year, of last in of Net down versus end at quarter. Turning balance billion reflecting

second costs revenue. support material Goodyear declined. raw both volume while U.S. increased Slide quarter mix, Turning Cooper OE unit Cooper inventory along addition and in to distributor also Tire. Americas was inflation. demand the of this higher not from Brands Americas which $XXX XX. on our End-user in segment quarter, million. XX%, operating but with again offset other second Earnings price steady of recovery by in remained addition driven segment only benefited of strong income half continued the should This, Tire, results the volume cost the wholesale

Europe, loans. benefits of our materials XX% increased million were XX. pandemic raw partly EMEA and sales the below income Moving remains price/mix The on this share the and over volumes Slide up growth commercial pandemic $XX solid and East higher and Middle X% on half. volume $XX industry pre of reflecting other Unit business operating from first Africa on inflation. strong consumer for and volume last gains. increase above pre energy remained million continued the year, offset have OE versus the increased volume cost with levels but XXXX in was also segment Replacement replacement by to growth. driving recovery results segments through

Slide to Turning XX.

stay-at-home quarter, to market increased unit Our in X.X included share increases drivers. Segment offset of in Asia-Pacific which $XXX,XXX Volume the replacement the price/mix, COVID excess first growth the $XXX,XXX term of volume. the in in declined challenge. million units Asia-Pacific by other key Cooper remains regions helped volume units. parts driven benefit in The from near income quarter this environment and the of OE, higher the to the of Asia earnings costs offset gains of in orders Similar in with million, the China. about $X and in India and about replacement effect more operating than addition in a the

OE was As drivers to highlight of of last in On a industry-wide largely material pricing offset costs reflects China. quarter, raw key the business case XX, impact for and in the the this the lack issue business quarter. third we Slide

Given on just to business. will Slide company we’re our assumptions the anniversary comments Goodyear modeling transaction, reflect now XX the combined again combined past We’ve year-over-year the also rather Cooper business. legacy reflect than updated the of the

of half of many the quarter, the of the During a from third we underlying the year. trends expect continuation same first

U.S. previously from replacement for benefits by the products announced We the July expect consumer price price/mix, continued and effective increases in increase commercial supported strong X, including

what expect we While and the be $XXX third to stronger from to price/mix material impact in for expected to quarter supplier transportation to We by and material non-raw experienced company costs, inflation in to the of costs the estimate exceed be million similar QX. up QX, similar impact continue we the dollar about including raw are for the to QX and combined higher QX. materials

of unfavorably We costs dollar raw million year. financial triggered $XX stronger to to More CapEx. million U.S. expect other XX on of translation for are of QX currency impact effect the this offsetting the by unchanged is $XX exception of $XX a based Slide by number about of to the dollars operating income assumptions current merger non-recurrence Cooper the of updated rates. Most million and U.S. provides assumptions the spot a materials in of effect than earnings using with QX XXXX. foreign of the

While to suggest which in than in later an feedstocks trends steel in natural if higher QX results recent rubber raw be carbon improvement and costs key year those material experienced QX, expected are like could black, the the continue. trends benefit

We of about QX, capital working continue in and normal inventory use consistent rebuilding of with to expect inflow from million a significant with cash $XXX capital a for working seasonality.

in improve will and caused reevaluate With our have delivery industry In questions. we during to to a pause us Additionally, the of the to macroeconomic a modernization the not first $X.X our of resulted in delays This committed equipment our the footprint plans moving cost in $XXX downward in by to fundamentally for project orders. Ongoing to $X.X XXXX about and most for billion resulted line up competitiveness. of has year cases, CapEx changed revised the equipment but We broader and dates factors to outlook half that, open shortages ongoing million range cases. chain prepare billion. disruption supply trends to some chip has other coming few remain we projects.

Operator

question John Pleas Northcoast with first Instructions] from we Healy take go will Research. And ahead. [Operator our

Your line is open.

John Healy

picture first population, your demand love sure about and we just I’m it to Thank results. before replacement something But and that Wanted ask Richard, term? thoughts into in would replacement you. replacement I about just the doesn’t demand? some catalyst upbeat. into longer heard to maybe and But revenue technology sounds what from car continues quarterly get the to EV it rolls studying, it’s the to the going that about in kind do as the time. of more growth of to but of replacement I’ve tire you dive does consistent years where say, the maybe causes maybe does what tire that the and of positioned electric per guys, you more into your comments know But what wins technology the over question I a be market. helps kind more you would is portfolio And like get wanted more from what big to to this against market the work are tire EV guys move and ask

thoughts your Just wanted get there. to

Rich Kramer

Yes. what agree will I said. mean, you listen, I John, with

getting profile I think have as we’ve past, the we’re about for the in us. better a OE near-term, in margin wins talked

same – of driving EV. trend actually I the faster, And I’ve seen EVs to we to just as from them, think mean near-term be continue just out to in happens. EVs we it immediately But ultimate things I Bluetooth long-term way, to it’s going are thing. I think EV. a in – tires and to don’t the happen us as I well. intelligent more And mean stick it, if So EV things of it that, by EV, some that excuse those And of actually then they with of the going terms to you portfolio. or profile engines whether just think way faster people, torque you’ll connectivity, the the mean works I used perspective, that are the I that going the And the technology that’s see it’s connectivity. helps have going wear me, the tire, right? other wheels. around sort with because about Those are longer-term, are if the not but essentially some And think or are firsthand to well. those tires of actually talk an a in

on of that’s torque dependent But way long-term, the happen. say are going of broadly the vehicle usage remember, that driver. on the to that individual So course, the vehicle, speaking, out faster, and itself. weight tires the puts of I more it And does think wear a also the will function

it to balanced. long-term, be we have very think bodes John, well. also I So

car are I is about the X% number right think the of now EVs. park

is it’s as and a are So, that make and there And thing finally, number are on as rightly of the frequently those are number right people you the most a function think and replaced with I replacing addressing to that now tires trend the need the is are the that grow them. EVs, be out, trend continues to have that point sure reduced. actually this need ready products coming, to of substantially our you’re appreciate as replaced we the also that to road will need and on parts Two as to tires. and that that brakes of are parts number road or main parts that consistently be

a perspective, tire EV used in it over in as a on those longer lifetime. and people those to their last be vehicles position are EVs need industry puts will a And vehicles. position the consistent as very well remember, will from revisit certainly as those terms of of of them important use miles So our and road, tires

So net positive.

John Healy

the just a Darren, And little bit. just for Great. question a on raws

some to in color there. price/mix have positive price than on And So further standpoint? to I it think higher quarter? about split get second Or Is the you million you between and QX pretty QX? $XXX a price/mix you the year in actions does guys that need said and QX of it Do mentioned I Should positive. half would be QX was just QX, than differently be QX. we that? evenly think you that a hoping have split $X billion should

Darren Wells

Yes.

raw cost on is material split the toward John, So weighted QX.

nuance if Slide about in QX, the in was for QX $XXX expecting the $XXX which combined materials, million a QX starting we’re we’re business of on million, I So to variance want to of only the material good actually is have we’re comparing cost for QX, X, that’s cost only to that raw analysis legacy point that The third material year company. quarter. to The out report shown there, the increase. raw raw million increases $XXX the

in of the XX% natural like So business. there is about a tire increase

to by be are numbers higher just naturally going Cooper. the So XX% including

they So but that. still – are beyond even

more would So we’re add like that you $XXX to $XXX million, then million. in obviously equivalent. million Cooper, And if up something moving become $XXX

it we’re there QX are outlook. feedstocks where So But and up general now our then there. is in right moderate sort seeing of a based step on

big So a quite it won’t as be challenge.

raw looking at been in announced a that’s QX. materials quarters. cover more we’ve material costs The think the been of position the what we’ve price/mix given – good comfortable We’re reference. QX, we’re And July couple the we’re I that last we’ve of I in exceeding raw has that price/mix materials, raw in to than comparison given which pricing to mean,

be to it expect similar We in QX.

how in about in of and good less feel positioned will be we got So we’re We’ve to QX. a start year-over-year inflation raw that material other factor QX.

think than needed – I less would feel we pricing so there year-over-year is And that be in QX.

we I think well. feel good for as that reason

take of to, it. to additional on trends and there we need to actions top going the continue Although if are monitor obviously we will we to stay

John Healy

so Great. Thank much. you

Rich Kramer

John. Thanks,

Operator

take Please from BNP we our Paribas Exane. question next And go ahead. will Picariello with James

Your line open. is

Rich Kramer

James. morning, Good

James Picariello

factory operational a this you know, of Hi, one-time That the sustainable I the is talk quarter’s volume items the morning, about the and guys. any, And don’t in Can side Or the in stood out. certainly overhead good year? there flow good volume through? were favorable look for things? rest strong of

Rich Kramer

No.

Darren Wells

Yes.

I unique there had But obviously, operational our good I is industry area some overall, continues volume. very share, That’s into performance. to we well. goes – just deliver some team is market think nothing think in And there. there that

than – business But in there on above recovery OE. to ways in OE, go is still some where Asia, getting our back pre replacement We’re other pandemic levels.

good. in have front So been the our of recovery us we’re We replacement. performance share sort has OE in in for of recovery still a and

feel going to I So be. us think what about that makes are to good volumes continue

Rich Kramer

Yes. And Darren, out. pointing James, appreciate just it, add and I you I’ll to

see of also talk Those lot benefit that play our excellence calls if efficiency think I coming all driving and that shout managing and all out maybe the plant to the a plant And the of managed you’re zoom benefit issues our in our well. really seeing, And in we this and a so optimization and extremely much chain things. I in and that now has the don’t those a that capacity to footprint. think it’s within all team moment, the very you’re volatile about the are while capacity think team, And I addition seeing the then operational – closures plants. supply really on environment now. for issues shortages our a increases right out labor we back, work took that, of those I you energy on decisions really disruptions as to

I highlighting that. appreciate you So

James Picariello

No, I Yes. the appreciate color.

what you can that of think looking aspect this, additional pricing about how but the could could fourth rate the the received the quarter? levels as things in you will market. I sell-through can revisit kind be Clearly, pricing think the needed channels inventory and and determine be in sell-through are the dealer inventory – you – touched what we on

thanks. So,

Rich Kramer

little Darren in it’s Yes. want James, look, to our worth it jump and XX% the good U.S., they North I’ll and think America. think on versus we down I inventories right And in below remarks, level. may our again I are year-end about now. a they bit are – pre are down channel and I’ll as start go. with repeating. in pandemic absolutely we XX% But I price to mean, start really pretty said

to a had we they pretty going distributors – last remember And inventory. the heavy. get part price really on long levels So retire trying you think second half. are also heading into a of that’s were coming could. if I And good They year, increases largely that

So that you I last build up year. think of sort saw

again, June, But half And in think our post-COVID in that really there also need recovery. we I actually go trends. that’s it the our to supports think we a May that it I think, to down than have got in even the link and year And volatile we sellout sell-out dealer right of think we good And have the think a place channel out, to inventory. when I by particularly need now. don’t in we the been compared channels if I business, those industry. along out is contributing we what to lower good In inventories. there better a the encouraged we sell-in for did supply is place. in better last linked bit too, sort bit that, distributors big saw, And – the And see second though has environment. sell of and second I half, a to know

So functioning year I the And little think bit lines a than we have think think also that’s were on. situation a net And caused I’d in some happened I in are earlier, around for a load highlight the where winter distributors supplier. third mentioned positive. on past. that they things tire there, availability winter well. what’s ago. higher, and tires to But they unique look, us, going that In plants, particularly, a higher And than are I bit have look, again, a Europe, might been well. Russia has I inventories particularly again, up We’ve little more as up our reliable

But second it. on well keep we the not pretty will particularly So eye that. Certainly, our concerned think again, we’re we half. for positioned about we’re

James Picariello

guys. Thanks,

Rich Kramer

Thank you.

Operator

And take Lache our from question ahead. Wolfe we Please Rod Research. with go next will

Rod Lache

everybody. morning Good

Rich Kramer

Rod. Hi

Rod Lache

pricing. first and of couple Had just things commodities on a

math So, of as anything to in prices supply-demand just weakening think and a how look structurally how in But – for they stay if be terms analysis in raw of like pricing? look could spot in flat. but you curious role bit presumably a does especially tailwind the right just spot materials us good for XXXX would point, of you that about math now, conditions looks are U.S. supporting the will the are little lot guys it give you just sense does or of just pretty about, any the where there out play is in moment. broadly, macro pricing at At And more signs that the feel Europe. this a obviously of you that

Darren Wells

so analytics, seeing I So, there unpack is if the of lot lead overall, good trying lot members good, far, that is good the notwithstanding a to stable notwithstanding industry. we Rod, start we any – in and demand are environment. remaining from we to of – and But other pretty to figure watching out think were increases see we are macroeconomic if price us there. end-user doing commercial. are But the to is demand situation, in a indicators. demand a pretty And consumer, And

overall, think pretty good. So, that’s I feeling

will and then down. of as year-over-year into mentioned fourth quarter, trend QX we the raw I will even year. to as get we start materials back be out raw be continue see will materials, flattening we when And that, earlier come the the extent big they costs next in extent the of to that that seeing first as half Now, raw some not are To material headwind to in to the QX. continue see we

from we will less headwinds see So, materials. raw

are costs also out. We other flatten seeing

an in guess quarter, year-over-year. increase in So, goods, was transportation like million itself finished $XX as for our the by I example, second

So, increase the goods transport. significant finished in cost of really

in going freight. to of some to quarter, are big the starting fourth we be transportation We by going – to the ocean are step-up anniversary

that So, costs. up so as be factor, that’s effectively will a to going we with – catching no longer significant those year-over-year be

that’s there And factor is going to helpful. so that no other be I think

So, the will less the materials, in year. have obviously, of in we of ongoing continue we from it less raw to costs. this will And some that be price other announced impact the increases benefit increases increases

Rod Lache

Okay.

just the I that segues I and So guess had just about next question into inflation.

high into including more labor and is commenting takes kind to and here broadly? productivity. that sight about not that. how and like somewhat costs on line obviously, to and tone one point, Your You know have of you you And costs energy contracts, XXXX? have Do I is we new should used at a Any of things with neutralize maybe are are the inflation be inflation of to lot you level puts at be – there, on some getting able optimistic. there to point thinking used

Darren Wells

I step last important think fourth year. quarter it’s up inflation in the that the big started

are balanced. more as anniversary of that be step So, that starting may then start direction up, move big the environment we I first an to to back in we think

yes, we – in now. through and inflation which quarter, it the are as and So third getting of the right the quarter fourth are the quarter, we second that peak see seeing

costs and this process is Europe likely now. the big continue just year earlier quarter anniversary a of everything year-over-year energy we seeing are with a started some to step-up to start get and I fourth going of into And that less thing. to year that to increase. think in other started on of the really good think next of will it’s we that the see I right are then where will beginning based that we We –

Rich Kramer

add I we increase. we to know well, you just maybe I Rod, raw comment And XXXX, to at Darren’s and would know go saw XXXX, massive, back it XXXX, that material point,

time $X that recall, may approaching and had was first there of natural things. those lots was saw you a headwinds we rubber As we pound, the

We So, on you doing environment. we We we that a through We this not I of confidence it. than said, escalate think moderated. you what to deal as specific you we with, thing. costs the absolutely, coming are And I that the but the that’s is those can’t very should going what of we managed down plan would those. now we costs environment have go situation, that our to neutralize as the through goal way costs both as way we the that costs is as to so that. And certainly had as didn’t lot you tell And again. have have predict cost do a listen, the side, managed macroeconomic team in when had quickly, these have back through to the the And same QX on what are And that’s I doing from those albeit different think seeing well all are today, predict, more forward. obviously expect dissimilar on in and way lot buckets. hit up

at automation, costs of plans stabilize do we said, to if make start offset those have we sort work or initiatives back sure as absolutely, point through the to take. even get will whether higher it’s those level, to it’s savings a as those, costs But whether put to other that place Darren other neutralizing in we As of a cost programs them. that we we will

Rod Lache

X% are you one like getting of thinking next that’s to apologize for Rich, on how margins? the see, an third view what business takes here. doable had So, you expressed or just a taking point, I about at for optimism to get or not-too-distant there year it average historical the kind some thing on in here is anything your long margin and Based changing future. to so, really that the still you in that’s But back

Rich Kramer

I think – I mean, Rod…

Darren Wells

The are we the point. half. I materials, actions that over towards in mean, second before. we compression a X that to meant that we back in by I us X% year like taken it start. – margins have that mean compressed think like-for-like to for percentage first raw saw years, me Yes. beyond. a of the number and No, pricing have were Let last inflation in taken are $XXX Americas that we us has have And I actions to move that’s And get distribution the and on million we took in we and in seen, happened manufacturing likely think in nearly raw something I the a have done us quarter like we the restructurings that is which in still Europe. a And EMEA, feel in where margin we basis was materials there. now those just And

We have expect we the said billion $X about in half. second

materials, the then. went got much away, raw margins XXXX, But we as to back went compression period similar and come of same XXXX, a we into saw and better. And to number billion saw that’s where down. in XXXX started a margin we went and that $X.X effectively then costs So we back effect

And perhaps other as that the in, so X then even is starting the think a XX% X we for that the to will in out, put call term, get to where years. think the and materials flatten possibility down, really see to near-term, years and years. that, realistic X% point come a back it, good that to get that couple I I costs raw of materials to next spot us intermediate

Rich Kramer

That’s Exactly. to say. was what I going

distribution aligned a the is think, the in we in put this believe possible. initiative Europe, bit environment we made working. but absolutely highlighted place, Darren volatile, structural I Again, Rod, still plans more it’s has which it

I we we share remarks, said And in consecutive sixth getting my I are volume. gains now in quarter think are of there.

now. We right price are getting

those feel possible. So, that we absolutely, numbers are

Rod Lache

you. Thank

Operator

go ahead. JPMorgan. question And final we Ryan from will take Brinkman our with Please

open. is line Your

Ryan Brinkman

the taking Great. you wanted the of into with would to seems the $XX swing sort just Are sort have How judge like were year-over-year been increases Thanks there ask within excess for of particularly and to help benefit execution. us It subcomponent much my million million to inflation $XX more questions. couple $XX better to I the if dig you out us last negative other year, non-repeat help bucket. the of Slide able efficiency, cost that? around efficiency Hi. X, then back like – to a the million. within

about what’s meaningful more was the of more example, the for like offset that help performance year-over-year costs was basis you component So, control, the things that? indicating that during right within outside on a And control, the than way just efficiency category to year-over-year, can quarter or think inflationary looking and offset or that inflation, do control? your primarily by those positive that Is you to can’t what of things or are for impact then relative you changes inflation rather to offset to efficiency through going in price/mix than cost the cost targeting forward, you of or saves? savings expect costs in terms a

Darren Wells

and had back And get more be where to quarter. savings of around we was seen million the we in to many situation track – had historical a a like a quarter. to million for million the inflation create our efficiency situation. to I – to a don’t $XX think $XX cost $XX historical that we the And to able record actions, years,

like able forward the X% because were all getting are we we – a get we couple to looking that we think with to efficiency that were we to inflation, something might have. to offset when when back that X% I programs

efficiency underlying how effectiveness the You asked million operational looks. the the or question about $XX and

we our we for evidence feel generally If very we quite output got at look that so of labor, a hour, good. I speaking, operating the amount execution of strong and think per the is we output good each associate there. like of hour have by metrics look have actually the very teams number some

improved the progress in have in waste made the our factories We yield. in reduction and

have we percentage are effectiveness go that that metrics good. there operational that tires our say overall of The when the there it difficulty where to fact the factories, a OEs I very of number is of to So, as look have efficiency does the got produced, looks their we a training reduces hiring some jobs. on duplication the And absolute a people that to people on others going and productivity we an doing lot sense. more means of lot being people the I have is the aggregate more there train mean and which would are ready fact the at include labor on, because to the going trained time jobs other in take

as a So, effectiveness. don’t that doesn’t a of just It’s But when impact. shows lack that like look dollar-wise, big a that together, I all situation. look we at it put anything

we think six need that. slowly making people, progress It come over at as months. has we and get the hire So, last down past this are train I to more

chance are get these programs past they line. plant As the a that, effectiveness in creating improvements that to our the are we then have going to get bottom other metrics, to optimization underlying of

Ryan Brinkman

Thanks. question XQ. price/mix going given – raw we last positively spot Okay. XQ from decline inflation the me. in is bucket The on to sort price/mix bucket, If to for And benefit to for then to-date, am were outlook versus than of prices have the versus material savings XQ. non-raw positive the in versus raws move raws spot more guessing I prices materials you

XQ? we in for or question if year, whatever. to in if use. update are the not mix were etcetera, the remainder and analysis assumption But And do pricing to what currently, take trend what recent to know were into that’s you to maybe sort whatnot, you does were levels of account imply confident through directionally can the price the I you don’t pending in the get? if to most raws hold I So, that what account you speaking, for oil of decline prices and the the you sure current am the we then know about or pricing of think into you increases have price take if want is, to

Darren Wells

Yes.

see So, are best spot on our the well. where going the I how rollover to we in I depend now. – way quarter, as our of seeing And is think now that probably of the outlook some given some we But it’s you view on prices quickly changes some the impact quarter the our see are will to work may you first fourth see inventory. we have right based through think

down inventory. to keeps QX for I would here see work But going material the tends now. through more we That I its can because it that’s we and more in if still and you which quarter to the benefit third get $XXX fourth So, about for if arrive Asia could about And impact time is the billion – in of set we half I quarter, longer see quickly, it an second natural the assume synthetic that’s think rubber, black think coming that $XXX of costs, then if $X talking certainly well. time be raw million million. it improvement boat, petrochemicals, takes from does up then that of to more it further quarter, which take on and what see the are in up account until have think carbon there further if into could rubber particularly some and when fourth reductions, or get we QX it’s less spends seen we

up I think think for increases setup well midyear announced have QX. our here set price QX And also. I about we the pretty good we pricing for feel us

going then are obviously, account. are need and have we we if we actions, to situation, we Although other to got take into to watch have that the going –

Ryan Brinkman

you. Okay. Helpful. Thank

Rich Kramer

Ryan. Thanks

Operator

over will closing There questions back Darren this turn at time. further remarks. to for the any are Wells no I call

Darren Wells

Thank you.

So, before the we wanted we are for format earnings wrap of change calls. future know about let you to discussing a that up, I our

conference we in exclusively for and taking considering night with questions. are financial our earnings going then using the So, call information the document forward, publishing our time along commentary call a before

and prepared deck slide combining all three. would document appreciate that any on have content one like just investors feedback we to process release, Obviously, the press this separate a than offer remarks, rather improvement. of So,

So, look and for for call forward other quarter. again you than us the that, to joining today, thank we talking to you next

Operator

today’s your you conclude this Thank participation. Thank you. does program. for And

time. at any You may disconnect

The Goodyear Tire & Rubber Company (GT) 5 Aug 222022 Q2 Earnings call transcript