Earnings call transcript Q4 2022

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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 Fourth Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After some opening remarks, there will be a question-and-answer session. Instructions]. [Operator

call, Christina Kramer, and Zamarro, Chief Officer.. the Chief Chairman Darren have Administrative Officer; Executive Chief we on Goodyear's Rich and Wells, Today Financial Officer

non-GAAP we'll forward-looking During refer call, Goodyear, statements this and financial measures. to

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

the on fourth significant refer with factors information will important disclosures which quarter the their to Investors SEC, section could and affect more this be also found website For Goodyear's be that the most of XXXX letter available. a call please on future investor.goodyear.com, at can results, replay filings their of where

included of call letter. in discussed non-GAAP the that measures on reconciliation to may GAAP today's comparable be also the A the investor financial is measures

Rich turn and now the Chairman to over call Kramer, will CEO. I

Richard Kramer

And Great morning, call both after we our today. quarter investors feedback for We Investor joining third format market from our Thanks received closed us everyone. Letter our fourth release. Q&A yesterday letter that and quarter good the Thanks, released following Ashley. very our good on

we did to questions. this time quarter, solely on So as your we focus last use again

opening want as heard Darren to that Now, line. you've today. and just on are both acknowledge Christina the me the earlier joining call before I

As but go in these your take us and of on Officer on excited given calls I'm new to in you role Christina both new today, Chief And joining joining became as transition, both saw of Darren questions to Christina as the with moved they're Financial the them a Darren into announcement them Officer. of me to of call will Chief to responding is replacing we our the in and December, I who with forward. their January partner continue one, lead again Administrative here. Congratulations the roles.

up for question. the So let's the with call first that, open Ashley,

Operator

ahead. Please Certainly. Rosner Emmanuel with Bank. Deutsche We'll take our first go question from

Emmanuel Rosner

and questions on for you Good call format. morning. much agree the feedback with Thank the so the

much favor of very So in it.

Richard Kramer

that We way. appreciate Emmanuel. us Christina pushed Thanks, the feedback and

appreciate So done, we well that.

Emmanuel Rosner

Great.

I think could us question, flow you of with full framing year, to case last guys what for the free around helped like sort had sort cash year time, of under I First for scenario out happen maybe a for certain think same ahead the base you conditions.

able all we slide. that appreciate into will So for Obviously, be to XXXX. in discussion this go this

curious knowing know, Just this you for request all look you? will what like

Christina Zamarro

Sure.

Christina. thanks have the been put that. the again, And saying So great our Investor all start to let Team, out we've for FPNA push that together. on on you Emmanuel. by thank teams, to comments send this our is feedback Relations I our the really received controlling And teams, Letter. Hi, this great has by me And Investor a

the about XXXX. was stay flow we've you to as in which And as was assumption, with in were laid billion. assumption our be free As you if take to flat EBIT the the look that and cash if of part out our with far EBIT $X.X and drivers, were in through just you if so our me the going take XXXX assumption, on to XXXX, letter,

year-over-year get in about that's a working flow of $XXX should cash improvement level billion. reflecting range free You the just to And capital. the of in

we're flat add targeting Emmanuel, is, earnings. not to what that I'd it's that

quarter. as meaningfully a increases remainder to improve in segment to goal is should our in tough lower quarter, really letter, of first the the expecting Our that raw in approach year-over-year with read second in XXXX's goal for the we second In operating move and stabilizing is after levels, you cost volume year. quarter, income given setup material we're the improve the the to earnings. And as the trajectory

our then prices, second the the we inflation levels tailwinds would then that of and has would benefits where our lower year. in recovery strong in Assuming volume we've cost benefits current recent and in either Historically, of raw growth growth spot And China outlook, as in been time at announced. We in first the from that course, on relatively stable expecting actions a and driven cost. higher a in in Asia-Pacific seen to material margins the the by we've half growth the we're also well. cycle economic of begin expect comparables, the see this our half earnings

Emmanuel Rosner

the helpful. guidance. I Okay, guess, the following that's pieces cash guess on And of of free then some I up of that's, flow fruit, the

enabling like the What sort maintenance around I cutting billion? is where $X like, that of back at gathered This was need And XXXX. billion $X.X discussed sort you of CapEx is keep to investments you to roughly make CapEx? the that you maybe think back? a at, are gross. for billion you terms to previously, compares the $X in I you framework it cutting $X.X just Are of billion in guess,

Christina Zamarro

Yeah. Good Emmanuel. question

so tell back as is, we scale the expenditures, given outlook through plans capital XXXX, the just And we global will what went just for environment. macroeconomic I for you our

As to in given we investment current there. outlook decline, in look although will invest levels macroeconomic in at Americas XXXX, the and Asia-Pacific, just we expect the EMEA to continue

our return time. capital improve over allocate to that We competitiveness continue high overall projects to will

Richard Kramer

echo Christina's Yeah, points. just jump and I'll Emmanuel, in

do. really have And ourselves, when environment to the through through that on time think end we long-term us And lot in. I go we you me cycles shortchange on think to count don't we've worked those then excuse a lot to of we that plans. we what we adjust as do I a CapEx capital can projects of see we're take to growth and

with knowing and And feel projects to leading to things even are things you, that technological the around we you And projects, how of comfortable did spend. spend going to that. have. that forward intelligent just So continue if comfortable within the tell growth capacity industry I we we're move sort see of do of projects, that like CES we what around we There would tire. were at sustainable we tire

Emmanuel Rosner

to appreciate just bit little Okay. color. of then weakness Yeah, on every your through mentioning driving can guess. think about evolve market, some I perspective seems region, finally, And on guess, drivers demand across any see a just you're you the very XXXX since is major provide this that how the What How potentially I you this? side? to be every of demand that the region, the for environment, will And I implications then pricing? maybe

Richard Kramer

a I'll to the Maybe Yeah, coming start a in did not there. a We fourth into see with QX. think bit of Americas, weaker only the I lot see slowdown as we slowing reacted Americas. the as little making on that We and as a quarter Investor saw cash sure market and our focus on by Letter have through. production of a down Europe you don't well, with Christina went bit to market, inventory, but we excess just taking focus on

in with any is place of market rebuilding Emmanuel, also you the price the I buy really forward, their But healthy. saw inventory, you going and It's anything about didn't is the that's channel I 'XX. up pretty in our about any that as I think mean letter, that. would or XX%. Americas our But we say I reductions healthy ahead, anticipation saw in-line so going our we in are I'd tell would of pretty a like expectations what as inventories are see where distributors say

to but second balance fourth good slow think year. feel pretty we start, But well. a the have big pretty as the going was little quarter and half changes we quarter, feel out see we about fourth we're sell Picture, North good inventory And America. coming, A start, I in first to the the flat we quarter. into of costs slow into don't unobserved the because some in of sheet the demand. a year-over-year about So those any stronger little bringing about on

and the In take I think, down XXth Europe, board materials, price I bit good put had we tougher a volume, quarter working. got XXth the really little bit there. share a story. for got Aligned step the and of gains feel think Europe. Obviously, about mix we a the raw ahead we've different say a row. we in across place distribution is would back market a in quarter, in in initiatives, I again, or we

working So, things Europe. in are

you as get actions our in also took a there to line. know, lot We costs of

say particularly inventory. markets the of channel thinking in bills, as replacement we we business, slowing QX in to November where more good really consumer consumer buy base inflation really about by high war. energy energy driven of demand But big seen I we've those we feel would Europe, saw things. out saw sort and we costs, And the sort wanting obviously, and of the a consumer energy the about these December, in reduced really anticipation in in big on weak down there, saw

to little So is that's bit into We Europe case. a know different going for XXXX. a continue

we're we terms better. areas. of in actions a efficiencies again, look of focus Africa footprint our especially second And make half First volume a France. And get excess in more did head done more we full in we we on sure taking be in as the cost remember said half at continue Europe, appropriate and cash to to build Christina inventory that don't sure make and some so value, business restructuring restructured and did sort restructuring add UK we've lot in South and We've Belgium. and some to some will in

path. that down continue we'll So

the makes with of the say COVID. continue get market. business win and good XXXX doubled XX%. well. win replacement have sort the particularly about focus Tough or And profitability fourth OEMs into in COVID, the But EVs create in to continue rate in pull And luxury of in key we ready here. we areas. pull really will reversing see second as on OEMs. COVID, the in is And half, One up higher if because we India, as that's as well. to in can then as in and in invest well in a we SUV high two it for we'll to we in in big in going get I the which Asia, And to win toward was truck, and a that distribution quarter now, EV China through We've a high as in That's be. see Chinese happen stronger a strong China domestic right and markets mix our to rate see replacement favor and higher that rate reversing and that OEs will our we OE

of got through as half first and So, some feel QX good. see beyond we see will, upside relatively if that, so overall, you we look, some get this do tumultuousness. But to we

Emmanuel Rosner

color. Thanks the for

Richard Kramer

Thank you.

Operator

Lache take our We'll question with next go Please from Wolfe ahead. Research. Rod

Rod Lache

Good morning. questions. Two quick

for expectations indicate the this year demand? other in other the week businesses, you're this a seeing the can anything you you clarify in that First, your than weak are just entering of fourth soft anything the would as bit pricing stable context tire-related looked quarter? has And

Richard Kramer

Rod, Sure. environment say guess, we're from the how and related to looking, at price that's obviously mix material I that. I'll we're looking raw how

that for materials. That's the know compression true and the of last earnings question of we've sort industry that. escalating quarters to these because raw as You we margin is your of the over seen and recover essence well, pressure the for need true Goodyear,

you, I our momentum very would been tell has good.

the being businesses increases material all in other one well. And with price of cost two not businesses of Our Europe we the offset some teams we across them, in all mix. also and offset as of our the headwinds had raw

So a job. done has team really good the

plan I marketplace. would that value out see improvements continue to And mentioned potential of raw in to tell we well, capture materials margin is Christina this the the and proposition in raw we as see as decrease Now our benefits as our materials. you, those capture for

demand with able a that in the what Rod, supply-demand is And what coming forward And say us means still we pull the we also back, I replacement on a -- so you we're raw be as see and the long, declining best driving OE market. to also to we tell equation And the our business well industry having in drop those materials, see that of as out period historically, earnings. benefits know and which sort margins, is into we're able we're can the they'll help making. through plan been this as think, me, for. to way grow how excuse of good about the our into for think I'd well, capacity that's the them, And there manage you a

issue in lower-tier what our tell not not Rod, we're we the at those U.S. And then the finally, decreased just seen is. of here Tier volumes demand I'll much backordered were you, as trade in all. of it price terms the marketplace, paid any hit the numbers. All cash bit and brands. the in distribution, tell of tires that's toward in sort in moving as Tier trade obviously that I'm docks seen that industry by or sort little I'm X upfront X you, But imported We've particularly talking the a down past drove a quarters, down seeing in or a the sure have in that I'll

All it paid was for. that came, it late, came

But think or what dynamic for push of X I the think that's to see a impact into doesn't turn that our we're you value so is again, of really it cash. lot of dealing I those back tires And with. tires a sort those. And Tier proposition

So I helps. that hope

Christina Zamarro

a chemical by in margin non-tire Betadine at quarter then that's pretty as market. performance jump in That fourth means precipitously. business fourth the real And higher the buying know, business. on prices Betadine in dropped time they're when our Yeah. driven That the in adjusting pass-through you But quarter. they're their principally the was business, pricing and I'll

So it's more issue. of a timing

strength As volumes, I XXXX, across seeing to mix. the strength by the and expecting in especially good and business, demand and And expecting areas, China. in out given that really portfolio, in pull our we're of driven reopening these growth aviation seeing pricing look

Rod Lache

more Thanks for if can one thing, ask. just that. And I

some you step obviously, versus a to peers? what back. can basis a Maybe elaborate on mix-adjusted capital the close bit the taking a little your it Just take will just on you gap, at of years? could in you here two you're year provide a were the maybe doing And for aimed or was that on bit planning what little just that. color of shooting Presumably spending next

Christina Zamarro

Yeah.

with lot the is outlook. call about by on obviously plans So start. bit I'll macroeconomic mean that earlier go I a ahead of talked and little and the the CapEx for we for a European influenced XXXX

that versus over years, would say, the I or feel tire last three cost do two say EMEA. tire. in to per had made we we've we the big our we $X of U.S., three conversion And around be a significant per to to the on cost high have restructuring gap very gap our I progress two that and closing with facility said Gaston in a today, ago, estimated years closure in in have competitors.

our into is competitors we a all nearly Europe what out three those many of or had disadvantage then, in add you of And course, our low-cost benefit supply coming half as Put and think years as much have now it of Western ago. of been, Russia. or right together, would say, two four

our part are and That footprint more forward very XXXX positioned cost and to plan in that well in we plants. forward. Asia-Pacific in as the feeling high relative we a they're do type That's Americas, move much year overall competitors of the we're percentage go. not move you I'll basis. So greenfield last have as as projects is And low the what our work continuing our we instead tell the in to will we're return on investments that and as of say not started to help expansionary going increase

Rod Lache

Okay. Thank you.

Operator

ahead. we'll Please Northcoast [Operator And with John next Instructions] Research. go to Healy go

John Healy

Thank question you. I the ask kind picture big Rich, changes about the to C-suite a recently. wanted in of

guys are over Just from might the of couple on the DNA into biggest the the the the Like love where the impact What strategy change we going with more business. of the have you you to perspective think to get elements years? organization? of the on move centric expect Darren of next is that what your areas

Richard Kramer

the team. operate one way as a is answer say I the I'd that, think I thing Well, we and John, would

Goodyear in one leading not the on -- I that makes person. it's what So is that reliant I'm proud what team of think

helping is units to and our I of the was role a can Christina Darren CTO, Helsel. if as long, elegant the worked in Darren whether and strategy CFO well together leaders have different So or Chris in business role, look I with think And so really natural I a our us where transition, say. as this for

is. I limit really won't look person. to you the that at is I any value it's it we're doing, think where team when what that the individual

highlight I not every get just say Christina I But to strategic cost say press get who from on in compression that But which pressure competitors to we your which would relative and we think, about, continuingly always perspective, have I what transparency talked every business to also better. of only are focused structure about keenly we in in the just our will inventory a I is that see trends marketplace puts industry. one, line, of. margin speak the about price availability

need operations factories we efficient footprint what day. our keenly on every do aware That get our are, in to of we that, factories taken and actions. means we've more make that it cost, conversion to We're where sure continue means our

then us return value-added can continue help to the to in and going take both to more You count do products on cost and high we to we to make. more the of structure investments efficiency those drive are that make

to -- to Darren, So that. we're will do need that say, did creative on we get that lot continue. get say going to capacity of use a Cooper, move to would as how think we And going ahead. we make continue I I'll And we're we we that the wisely capacity industry. like how about can more we manufacturing There's in with sure

products I industry. to think the have have I in tell Secondly, we the always my best team,

product in every summer. So worked. category We has innovation including podium Europe, high our product engine in were

ever the in the U.S., had and both that's America and We Latin in in in portfolio and consumer. commercial we've freshest have product and Asia

talk it are about working as as the We continue will a much, that well sure but our talk make are. as is to We that of they don't we lot engine about innovation working. things don't

continue to that. will So do we

is will, what systems, excited has this to mobility, terms moving revenue dumb but a trends of gets us today, vehicles. part technological a, actually role in the think the forward about it's about something and tire it business. of most has and a of And I tire They're gets not the forward. just vehicle making -- we're becomes is. thinking where in an the service on an the element the changes our performance that both place changes on operating that is safety it excited you seeing improves that are those the from generating that a of we're if of to connected vehicle, making actually intelligent that I tire, that integrated how think intelligent And and vehicles mobility role what a us deeply great tire the progress about is Goodyear and That's we're we're going something in going and

the things those number that Darren as that. us separates and the there's It's So our it's industry do trends what forward. help would go back. But ability execute to on that both going basics a forward us simultaneously continue I to a and technological going again, of is step on going, is the take we will of

John Healy

helpful. love like on sounds in dealers thoughts to little just Thank dealer is going to one how more terms just super equal access start Cooper the distribution. X terms starting are kind I maybe can a somewhat are to to of to and market? continue bit vice And get It versa. X it we at in super We go X? your question a Goodyear Or each productive to you. had plus in be separated point Goodyear be of where of just connected terms maybe availability. That's of And other of and portfolios the

Richard Kramer

X taking those we're offering the in of stores sort plus they're Cooper the both. instance, So X care I and I the into operating, for turned and how now a product has -- bit that stores of a performance equals terms and say it's customers terms of our little is retail we're of X in it, of in that of that actually think products And them. have reason how

we how certain makes of to they to better to to wanted make we're that, than to of respect, reasons well We're and are we are market, those they we we combine In We're with were is to do well, the can and that best not to going elements what sell things going integrating the and they what there that the process same sense And touch some do. Cooper And at of Cooper are, how Goodyear. going distribution distributors. goes those. of while really candidly, did really keep where sure they are. it one

of both we going to bit think were I to So on would I think side, said anything rash get. of we're that weren't that the right terms rate little I the tell synergies, run we And it's the the do both. said of synergies we going actually a And box. the market we you, out

Cooper Goodyear into you'll in progress And XXXX. haven't. market We how see and continued together on equate the

come are. So I where but happy more to that, think with very I'm we on

John Healy

Okay. Thank you.

Operator

Picariello Paribas. And go Please we'll James our BNP take final question with from ahead.

James Picariello

the here, On would the second I'm be second quarter -- year approach volumes, that's SOI there? absorption quarter, would if maybe Yeah, from color that first million. $XX there, buckets raws see million the versus the and the just ago be of buckets any to some have mix quarter, potentially, similar non-raw piece. And wrong should unit Correct be and levels then price the materials a helpful. key would what super it key three inflation it overhead on $XX in impact I a of me get color as then to but assumptions

Christina Zamarro

sure. James, it's Yeah, Christina.

saying, have would have January quarter, by consumer volumes -- start price replacement announced X. I beginning the I plus would in a guess X% in I stabilizing. see Europe second we we And increase So and

course the price very increases quarter a the to second up increases in And QX there's raw and quarter. materials to of from first so material Obviously, step significant to the Europe we down expect QX. begin catch in to over raw

us that for should a be And well. benefit so as

James Picariello

in how Europe, levels. then to And then I elevated above do well, channel ago think XX% just you -- Okay. how inventories year foresee a the

demand how down for 'XX. the a up? see you unfolding? And -- with entering sell-in catching replacement you mid-teens that the do increase Yeah, do With price and industry,

Christina Zamarro

great a James. winter. It's Yeah. actually of the reflective all inventory And elevated question, channel is

winter happened so a sell-in the more energy we a into Europe tire the what inventory first is we season. There, that quarter, you quarter. in fourth from see healthy. tire have sell-in the in in the in And summer shift as In abated first the the is, quarter this fourth balanced I prices also well. channel significantly is and much tell What even third would quarters and since shipped

course consumers And so to that expecting out and of the first quarters. second over support the

James Picariello

Thanks.

Christina Zamarro

Sure.

Operator

And there are no further questions at this time, quarter and this will earnings XXXX conclude today's Goodyear call. fourth

disconnect may You have day. this and time, wonderful a your line at

The Goodyear Tire & Rubber Company (GT) 9 Feb 232022 Q4 Earnings call transcript