GT - Earnings call 1 2023 | The Goodyear Tire & Rubber Company

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Operator

Good morning. My name is Nicky, and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear's First Quarter 2023 Earnings Call. [Operator Instructions] Today on the call, we have Rich Kramer, Goodyear's Chairman and Chief Executive Officer; and Christina Zamarro, Chief Financial Officer.

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

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

be investor financial discussed on please also will website available. reconciliation where important SEC, measures be which information affect Chairman at Letter the that and First investor.goodyear.com, non-GAAP more GAAP call the be with included may factors Investor now significant For the filings that Quarter future and today's XXXX of results, is this call Kramer, the comparable on of section found A to on refer letter. I a call also the Rich disclosures the turn CEO. can replay their over to measures of Goodyear's most in will could on their the

Richard Krawmer

quarter Nicky. joining and Good our everyone, We released yesterday. investor morning, after Thanks, thanks letter us. Great. for the closed market first

of along which on our You on Investor a find hope you'll website, we Cooper copy the find valuable. Relations can update that Tire an with integration,

the As and to of Christina this format, today's newer devote will I questions. couple we've your last quarters with done time

of industry I'll in this year, year. costs should stabilizing while we through down the as been move early of just we with the expected, back in industry say as the along raw material volumes have this half benefits decrease year demand a improve margins

forward discussion We today. the to look

So now let's line open the questions. for

Operator

question our Ryan take [Operator with first from Instructions] will we And Brinkman JPMorgan.

Ryan Brinkman

the And that, in wholesale the the to the numbers been industry too, We've the a in in volume noting wanted comments the shareholder Just up softer that's U.S., letter I about on follow number. of is. some USTMA understand that Americas trend.

what might and to the more retail saw retail of ask you want of pricing around a be I some year-to-date the side note, get suggest if potentially encouraged be demand be you which, closely, what news also we're what the demand ahead in might softer XXXX to comments the and to hearing monitor hikes, slightly you course, outlook including destocking. And color curious price demand just looking might side of driven, up disruption driver reaction levels, channel sort Americas which to own the from bad the the be is related extent might the volume volume which to And because bit industry the the about the retail about that and of might you on just doing. good the So news better. But you're stores that customer and the of miles because the of these the section too little to on kind the maybe extent trends, might see. to with

Richard Krawmer

Yes.

we we think I the we a I'll And back saw Remember, start. coming strong comp I'll year, we that was mean, I a look, of strength again weaker of industry, Ryan, QX of on we as sort expected, it and a coming XXXX. in going say stocking and So off started had really right. tough from lot a you're really of that again, then industry as out COVID. had

dealers in our We weaker a showed as it took that. as saw coming and off kind back saw mentioned. you of step destocking industry well, we a The results. So of

the that. fourth decrease of that just the and quarter, first some representative And we're the took also We production in we that's volume some of quarter, again saw. doing cuts in

Europe is see, through in you in Europe, in trends is remarks, better said as X%. you as frankly, that U.S. VMT that up and the XXXX. as the just we as both volumes said opening my well. actually I I anticipated, about we up, as quarter-over-quarter think get get will the continue and But to said, we XX% U.S. about And

So we and pretty it, wanting where And we that's consumer, as as to people is we out get to continue I good out, still well. see and trend demand what will The travel, see situation actually toward shape. see volumes a people improve. that think of getting that points in

So that demand speaks again, year, the good a of balance of to the weaker coming QX. for out

think So we that's XX% over from -- we're we well. And about revenue years just about XX% X as back, pricing, about on as take our per a last tire. remember, positive a a And if lapped QX increase think year. step we price I up

out incremental So I those feel really material done costs there. capture to raw what good have the teams

the decreasing at even the think as costs starting of the well. we half year back of as also those in benefit lower see as costs are we've to a faster pace and material some well inflationary raw that those as seen I we'll QX get

pretty input So cost as the year. decreasing a environment, good pricing environment demand back a the get and a good environment of half we through

well bodes we we what said out. how terms last the filling in on quarter So year see I all of that think

Ryan Brinkman

synergies excellent. which synergies XX% more announced now will originally Okay. by hypertext the be quarter. details followed more with in that Great. integration. you're I even on increased the shareholder that for next saying looking is get the already. the integration, link And the I lastly to And letter me, the just Cooper understand more on then than to fully once PDF color you And just cost another achieved

Just lot to that, follow up the in though, here cost on savings. a about there's

combined unquantified it's to or revenue frame, how from that position further and about announcement was these talk of and it's a put or just what if closure are in synergies, I you company maybe et which that's some the more the think the go-to-market forward, that was operate now to expect time now time going I'm around synergies. potential the benefit revenue benefits, numbers cetera. out maybe at a if to left curious you going the

Richard Krawmer

Well and jump want to Christina, start. -- I'll well. as here may you in

both be the continues that path Goodyear of go-to-market say expected. of we brand strategy or brands Cooper family the Goodyear the First on all, to the would plus I

that negatives no So from forward. going

We you, around at when all tell as we very industry line But put in we in would acquisition, terms what light that segments, expected segments of I truck, one look of have share, tell the did we very particularly what any we look performance that much be transaction. of is would which around I did to you, we not the would and attributes numbers that the our to quantifying biggest across the be continues like. got strong continues with when the

those again performing us, very down as some Additionally, bit. have from softened that economy a X we Tier particularly that still see are well we as at channels some exited X the may Tire was businesses of as still the Tier for X, we Tier that look us to has in, were or new to channels movement Cooper

So that has worked actually very well out us for as well.

I Ryan. will there we tell no that not I that, there's So have highlight. But you, negative would quantified

In fact, it's going and planned in as better say even I would certain segments.

Christina Zamarro

to about in a presentation, upgraded and been product Yes. can just distributors. bar our had has a Cooper we of sales opportunities, availability say, see within the jump Ryan, and outlook, I'll that just broadening for with of Goodyear-aligned lot you in initial manufacturing

expect U.S. the for second good. portfolio in have end really contemplated this also that's the deliver $XXX the by That's of And in million introduced sales dealers all to the combined new We distributors quarter. upgraded and which of our for programs all incentive we here outlook,

just way thing XXXX, integration add the that about in I delivery really The If -- began after is reopen Cooper on in overall COVID. on we're more after on other just good material of middle synergies. economies to would the took I the a feeling the Cooper we the

I delivered earnings. I example, XXXX Americas then million $XXX OI. XXXX, SOI million in out so And look Cooper comp business can't We in XXXX. But at our about versus was And margin. X% if was as $XXX at in an

XXXX, taken earned of so X something XXXX, million moved businesses would fact, assumed together years billion. combined made we million. our and the $X.X would $XXX And have $XXX you have in or volatile But in so like through or and XXXX

did on cost some COVID the own benefit the in XXXX on close in execution So versus as of also by team over-delivering during well. good factory in Gadsden, And that's in the Americas particular, our self-help, synergies really of we price the Americas, Alabama.

So feeling business. the momentum the Americas in good about

Operator

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

Rod Lache

wanted about ask bit first. a you pricing I little to

you some announcements price public be mentioned You give us anything would back some Europe have Can current seen others, some North peers half sense Goodyear. you also do year-over-year, index you but earlier of at know frozen there's a just yet in kept that were a OEM look of to increases do that how pricing from kind year. of haven't year, this in if levels? I'm here pricing, were in things think taken seen in related the complexity referring We've to to, I increases this price you America? agreements. And at we pace few with least your you've pricing from because about for

Richard Krawmer

to gone I'll only pleased material Rod, those way very to X inflation and teams over say, Again, past raw with I'm teams the those cover point, the that per the I over say but question. start again, material on price costs XX% were on incremental So market that's that And we've actually -- we years, not on the mean, actually raw in X up I'm seen very we're front-footed last recovering the to last the maybe needed tire. years. -- increases it out And again, about revenue the the I'll costs. have get incremental let's go

have countries. we Europe in right, announced other and You're price increases

So we're certainly on still of that. mind top

Americas, of this need been on, that price sure team last increases a the the into on came just remember, increase it, increases, basis across-the-board make doing year. we to that quarter As cost that forward. recovering from we instead the And SKU-by-SKU we lap focused price we're very in call QX going to has did price essentially dynamic XX%

been and balance quarter while, the offset back the the those didn't year to inflation. see, did We We see QX a do in and this certainly price/mix as covering for getting that. where incremental had think, America's raws of the that and was, come first costs actually down. North in I doing again You

think we to are to good Christina, that. we don't from you know want feel now. add if standpoint pretty where pricing I I So a right

Christina Zamarro

Yes. No, little maybe, bit with just I'll the Rod, a modeling. help

in this time increase in consumer in on on the have replacement. by we'll increase XX% increase most QX devaluations our about of in some be price There's we markets at the the up emerging least always And economies, a from things doing a There's X% last last increase the in to QX, Europe. replacement, by price installed, at and to that's XX% only the get July recent, year to the So QX, have year in from we're we in beginning replacement. only consumer then commercial. U.S., but in because the QX, QX European it, X% major price X.X% call of in flight Europe, would increase also couple a related a commercial would in

Rod Lache

Okay.

So even kind of as it year be like costs. look from benefits would wanted used productivity. half back I you out from those switch get to the Goodyear still to the tailwinds gears achieve sounds commodities. positive pricing as to of to routine of net-net you some just

it there'd factors to be excess impossible often, things understand inflation. kind inflation, then would led recently that the see. be an that So do made that that line that completely. And you this mitigated mitigated that inflation we that there'd of And and I

absorbing you and energy, just that if all kind had actually kind and to that's a in productivity visibility You sort rearview inflation. back that. getting on have in means I'm mirror a the of less lot freight that of of wondering a is can you when start point than turnover, Goodyear CPI of time employee

Christina Zamarro

Sure. Yes.

our it fourth would basis, And So inflation million. base, dropping quarter, by We've this we're to from the inflation this is going million you're CPI-based, driven that's look million fourth $XXX QX mean down half step some something the That's where close and year-over-year and in to in year, rates. a feels energy that for QX. another a $XX assuming Rod, be excess again by then $XX that with I'll feel guide about million. this give step excess the the energy is million forward down a start. on $XXX better cost basket. But on our last transportation, so in assuming The rates so year $XXX of I the something what by on inflation lot quarter, I wages. $XX back another right. seen excess year-over-year that would would million, XXXX part But and by $XX was that It's extent it see into And to for as driven to of inflation, big energy is the and a million. to mostly by But inflation. the excess -- in equation, start a essentially and excess all utility current million, neutral I dropping $XXX

we've a from So comparables last the lapped high year. lot very of

We are productivity the optimization. add through back beginning footprint to into plant

as that as move as the well. we So at we continue next -- year should benefit to and year us end of into the

Operator

And our James from Paribas. BNP next question with comes Picariello

James Picariello

of So right, units, overhead Cooper will the for the absorption is down in to addition plant. right, quarter you production commission will least headwind second months. lost be you're that by taking out that, hit Tupelo This to million in production just that I confirm X the because the the calling at third want out inherent at in X quarter.

few on just a So this. questions

do be levels of are year-over-year inventory at just in to XX%. second inventories I well? now So the levels in end flat sequential prior the inventory the the channel where the quarter? channel know could you speak the also your quarter trend And you up Can channel versus suspect as Americas

Christina Zamarro

Yes.

respond James, So happily to I'll that.

down the the what for pretty feeling in a it's and we've it's replacement That's overall, okay. expectation, out feeling Americas of in that's VMT consumer laid QX. like face Our X%

expectation we course in see the to in So of Europe over is do the quarter. continue the second destocking and Americas that the

basis on channel to as certainly So end QX. expecting a the levels of be inventory get to we year-over-year lower

James Picariello

to of first end this XQ from down the come inventories quarter? channel have And

Christina Zamarro

Yes.

And and -- the from the Americas change do year-end so in basis. we disclose channel year-over-year do we for EMEA, a disclose inventories and on

letter. the in are investor within And so those included the each results of segment

in inventories year-over-year year. you And And so of with inventory by at currently, is were were. in year, driven and for a about Americas they're the end in our In compares that was said up highlights basis. line we EMEA, XX%, in activity, on sell-out similarly, at the in all look And And weak where very seeing of when destocking. the that At XX%. the XX% sell-out up up a about by Europe winter. last inventories we Americas, end talk

helps. that hopefully, So

James Picariello

on Yes. Rod's No, to very helpful. then And follow-on tied just question a pricing.

to the now the that yours could Given pull the it -- shoe to that trend high-level demand, -- -- taking to dealer on still competitor get be the a drop for Yes, channel you're begin to they're begin still possible of kind more year-over-year? intensely the line waiting half, optimized -- production deflate, stimulate a rightsized. help price raw to inventories in on be a taking you're recently your clip is down for on right, channel of thoughts to topics to that in at You're that good pricing just focused that and restocking here. things down are back conceded going mix. materials and pricing Is lever is to anecdotally,

Richard Krawmer

I tires, and still in you on tires to I'll industry is say rim light short replacement large higher-performing jump James, tires, mean, truck have the mind the in that diameter, keep I'll the highest-end the market. Yes. the for in F-XXXs tires, like and

of So make, a also, capacity everybody's out remember, good helping to some dynamic we as that the and is tires really best And still our OE come that that of back, best is that dynamic. takes starting factory.

works billion. raw up to quarters, supply-demand So also seen I the our keep just about last back dynamic and let's thing we've I -- that under the over materials favor. And still mind, in look go in say, our $X mean, one X

cost it, $X a under are raw that little of portion small increases Now some of only these material see call they're abating bit, out billion that, a as increases there. we of

excuse a have costs value the we I it, you lots against the see that increases look $XXX see of just So around quarter. you'll $XXX But of mean, numbers, -- the that you see And billion that our investor putting just that but from call expect I you tailwind you'll recover at under over that, or quarters cost to materials think million. about if we terms the -- -- in we're in fourth X me, $XXX have if we raw $X reduced million, billion of have in it's of look what $X think letter, marketplace. I you. capturing the it's at last million,

So there's lots make alone of the we we're put think we're in I not marketplace. reasons that sure we And have recovering that. to what in

Operator

with next John our from Northcoast question Healy Research. take will We

John Healy

of ask Curious the in the are intelligence others are maybe something you to guys question or your QX. wanted to just rationally we Just and a be industry competitive you decision for a production -- others that think doing? maybe is what acting are make the telling where And on to you situation in going Is aren't. there. realignments

was just thoughts curious there. I So your

Richard Krawmer

flow, putting can cash impact I'm speak I Yes. They're not our inventory on sure supply-demand that focus decisions not could I tell that you our many working our that on said. that making negatively would we with that rational are to focus equation just focus exactly the spoke in that as make on to we're we capital, competitors. our as sure well. you tires too

I pretty business, our doing speak But and know feel to I we do confident to So that. we manage can't what in them.

John Healy

quarter. a Understood. little that thought just big picture the had business OE And we Frankly, I better than just this ask a wanted did to bit question business. I on expected

start could in on position? about minuses of you some business. we yourself OE was maybe of maybe by that think Do and about the I start for your expectations see gain pluses thinking just we And geography So as XXXX. curious share kind a of to

Richard Krawmer

will start, know well. Christina and as jump I'll I Yes. in

making a while, our -- personally probably And we've I for for we need the about been what OE fitments. have now in very deliver portfolio feel having been particularly time. I'll -- better they OE I in customers' speak a long our tires think solving always than around been of around to each myself, OE, I problems deliver their in strong sure for

mix faster Remember, we're is I think any in of trending China, now, EV probably right our toward fitments if our And and changed well producers where well. there from has EV a on that have number profile in the the tire other local world. higher regions, transplants as domestic we you the at lot region growing revenue EV look all customer business getting. the sort per as that as higher the margin of to we're there business, particularly higher across a our than much of fitments in

all So that well. bodes

again, for as been, these think well, us. well where you look I go numbers as going also which production to has bodes you at OE have up, it's

good get So increasing iterations had we've profile. better doing, relative went maybe would submission say, less to one to margin of that's as tires -- on development tell as one we had And the a that the a that, but virtual from like reduced we first to volumes those teams actually they've where on things top a it. you, submission with where ever the are basis. virtual OEs tangible is I our call, to faster can doing done production I and

time, a over about significant think If -- cost an that, the over OE well. you that's portfolio reduction as spreading that over

well bit new both a So get is process to think, as a that with using ideally and at that do us better will well. higher business the higher margin OEMs a our as I also is and of using cost new and but that frontier it technology, something partners, even price simulator works working a

and So we're it's portfolio. the on business. competitive about we focused that sure because we're that internally, saying, margin are an ourselves in headed profile we're where focused each tires OE making we the just really a target end by always selling even we're fact, improved feel getting always something for good of with OE -- I certainly I'll to

Christina Zamarro

double and to growth gains right say the to by going follow is see driven going now. some It's share overall Asia revenue John, Europe here strong won. in EV in on yet comments their are our jump good, market share that Americas to OE just where strong fair here, of of engine revenue mean, in per Richard's where Pacific underline quarter, I that's fitments EV. winning the was I'll not the EV we Maybe Richard's Yes. on U.S. But wins particularly in our tire for just because growth as ICE comments, this here, the is you're the all that portfolio more to and in just than

go-forward high-value a the at that's rebuilding trend margin been And portfolio business, we've and this OE quarter. electric double, for been about was -- And that's been as more fitment. least talking so same, all vehicle but so gross towards we've our

Operator

our we next will with Rosner take Emmanuel Bank. And question from Deutsche

Emmanuel Rosner

maybe with update for sort in around you've hoping I of free think flow certain for us your full assumptions. under like could I cash scenario So this sort positive shared outlook previous us quarters, thinking the was maybe kindly you year. year some of rest of of the light in

Christina Zamarro

we cost change setup overall sure. do And as the better material I puts material investor full And think our take well No, flow in that. part of well. of the as detail lot non-raw raw better half only guidance is as our on in back free takes the year letter. Yes, for the cash a I'll provide a and Emmanuel, the as real

of that's the for what a year. seeing back half of part So the we're

last year. the assumption we do get although coming earnings I'd million. pretty that should letter, But as our our with free take an and what I capital by working of change basis just costs confident this the were all on that if to at share that's about that last of or you about And $X.X a all to unchanged in part you used about from of just to and flow past, $XXX strong the driven this billion the a talked then you year been drivers call, the much we from flat year-over-year down, more say think given were in still is we're still have cash

year, want very don't flat if depending out And our to the free for strong that assumptions to or to earnings. even I we're And get that flat assumed lay you you the on earnings a development. just flow so, think goal for -- should you is targeting say how yes, cash

Of more synergies grow. course, transaction to want we for the expecting We're year. Cooper this

-- forecast corporate on basis. about other But a said you that, year-over-year think I'd our is even You'll down having that's all it. how our see have

Emmanuel Rosner

helpful. super That's

So the way -- that generally raw the direction. materials you gives in is more and a characterize sort would moderation you just better inflation of outlook more confidence in this

Christina Zamarro

Yes.

Emmanuel Rosner

in Okay. about guess, profitability And X% of I just you sort nonmaterial guess do see view important inflation. drivers are comments then margin, these which think in of which costs I as honing this as as particular, of and and moderation -- in half, moderating? approaching actually on improved you back maybe we the SOI drivers in on your the

Christina Zamarro

Emmanuel. Sure, Yes.

the year So bit showing and I of of P&L of inflation a of inflation. sort the earlier sort talked the excess and/or just in of we're offsetting by the Rod back little CPI-based year, with of in lapping the about seeing year-over-year in our development and half increases sort how end the inflation

we in our So been improving, a a the in we're trends really and energy saw seeing also, in third last us in spikes improving big back and in But by our through freight Europe, moderating high initiative year. where transportation for some big this taking part of year also seeing trends cost factories. That's this energy. quarter is of fourth productivity out

of own well pull some that initiatives our seeing our so could factories. through of as as all in And

Operator

our last And question from Nomura. we Das will Anindya with take

Anindya Ranjan Das

the mentioned you the So replacement that demand to recover rest of you year. through expect

as regions? is recovery, of running similarly some or the the Europe? in Asia would regions expect other as Now ahead such North think, that recovery paced be all do America across you such would you regions Or

Christina Zamarro

I through would say, trend similar because generally U.S. Europe. speaking, in this tough very cycling and is we're comparables. a And very the

think to but after supply -- the was back Europe just tires restock there chains you demand recovery a got the as lag, clamoring even not of bit for really a robust saw fulfill U.S. inventory. Europe And to through If the on was little demand a but tight. both also pandemic,

cycling our markets. we're mature comparables through So those in

outside trends So to And the should I'd of Pacific grow then expect similar year. Asia through of continue there. the very that, remainder

Anindya Ranjan Das

Okay. helpful. That's

material, raw So that in the from second continue and half, just you that the up have low for point you to on ease quarterly of look to would Would that, full right the tailwinds terms cadence, should the could a the follow Tire it the to become say should year-over-year quarter that considering possibly it? plus in the as way on progresses year mark the be headwinds year impact Cooper at second synergies.

Christina Zamarro

I say it is Well, QX, a think quarter in development material a low to we're that the so first is be QX volume I a better better raw as QX, to particular QX would point low the we're a about this to seasonally -- because see point. QX. dynamic. going for holidays. speaking, at the our quarter, bit SOI, sequentially pickup of we when generally see And looking more and it's Generally always a versus following little sell-in going

bit we I speaking, will, volumes. little see generally a think better

QX be the to for that point expect should XXXX. think I so we low And

Operator

as our And Thank you Thank does conclude as all for Q&A your disconnect this you. and participation, session well our at call. you conference any may time.

The Goodyear Tire & Rubber Company (GT) 5 May 232023 Q1 Earnings call transcript