The Goodyear Tire & Rubber Company

Good morning. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Goodyear's second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question and answer session. You may register to ask a question at any time by pressing star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star and two. Please note this call may be recorded. It is now my pleasure to turn the conference over to Ryan Reed, Senior Director of Investor Relations.

Thank you and good morning, everyone. Welcome to our second quarter 2025 earnings call. With me today are Mark Stewart, CEO and President, and Christina Zamaro, Executive Vice President and CFO. A couple notes before we get started. During this call, we'll make forward-looking statements that involve risks, assumptions, and uncertainties that could cause actual results to materially differ from those forward-looking statements. We'll also refer to non-GAAP financial measures. For more information on the most significant factors that could affect our future results and for reconciliations of non-GAAP measures, please refer to today's presentation and our filings with the SEC. All our earnings materials can be found on our website at investor.goodyear.com, where a replay of this call will also be available. With that, I'll hand the call over to Mark.

Thank you, Ryan. Good morning, everyone, and thank you for joining our call today. Let me start by saying our second quarter results were below our expectations. and reflect an unprecedented level of industry disruption, given changes in global trade that negatively impacted our consumer and commercial businesses globally. At the same time, the midterm outlook is also turbulent, given what we're seeing in terms of industry environment. I'll talk about what we're seeing in detail before we move on to the financials and to your questions. While the near term has proved to be significantly more challenging, I am confident in our ability to regain our momentum once the market stabilizes and we worked through some of the transitory headwinds we're seeing today. Within the current environment, our focus continues to be on controlling that which we can control. We have executed consistently on Goodyear Forward, where P&L benefits continue to be achieved ahead of schedule. We've increased pricing in the U.S. and Canada in response to the tariffs. We've won significant share in consumer OE in the U.S. as well as in Europe. We've increased the vitality or the refreshing of our product portfolio. We grew in the greater than 18-inch segments of the market, and we're on track with our new 18-inch plus SKU developments and launch timing. We've expanded our margins in Asia Pacific. Our SG&A or SAG costs are down. And finally, we're on pace to deliver a strong balance sheet by the end of the year supported by the three divestitures we committed in Goodyear Forward. Net-net, we're paving the way for our organization to deliver increased value and focus on becoming number one in tires and service. Market factors, the things that we don't control. They certainly had an impact during the quarter, and I'll share more about that shortly. As we look ahead, once this turbulence around the pre-buy and the first half of the year settles down, we are well positioned with our U.S. footprint, with our product, and with our distribution, and we're also looking at raw material benefits beginning in quarter four. If we turn to the industry environment in the second quarter, several factors limited our ability to mitigate rising costs. First, the market continued to feel the effects of OEs navigating new complexities of the global supply chain. Specifically, we saw the consumer OE industry contract more than we anticipated in both the Americas and in Europe. In addition, we continue to see weakness in our Asia-Pacific OEMs volume, given our own premium mix of customer and fitments. Consumer preferences in Asia-Pacific, continued OEM price discounting, and favorable government incentives in China are leading to a disproportionate amount of sales of opening price point vehicles, which is well below where we focus in our targeted segments of the luxury and the SUV EV segments. Having said that, even while our OE volume was weaker than expected, we continued to register significant OE shares in the US and Europe, which is a relative sign of strength, highlighting our industry-leading technology and service. Moreover, we've recently seen increased demand from our OEs as they've sought to rebalance their tire supply with more focus on USMCA capacity. We believe we're in the early innings as it relates to this opportunity, and see positive momentum. Second, the consumer replacement market was characterized by increased competition, particularly in the Americas and in EMEA, which impacted our volume. Despite new installed tariffs, the second quarter U.S. non-member growth in imports was actually higher than in the first quarter, as dealers and distributors prioritized shelf space and liquidity to stockpile the imports. What's more, we've already seen some of this excess volume materialize in the U.S. sellout market. As you all know, we've announced broad-based price increases in the U.S. and Canada that became effective in the second quarter and remain intact today. It's clear that our relative positioning impacted our overall consumer replacement volume and the price mix, although we did continue to record gains in the 18-inch and above rim sizes. Another contributing factor influencing our views on the U.S. consumer replacement market is related to distribution. As many of you know, we made a strategic decision earlier in the quarter to rebalance our U.S. distribution to ensure high levels of customer service and mitigate credit risks following the second bankruptcy of ATD. Other manufacturers have taken similar actions. As distributor relationships are important for reaching in-customer accounts, Some manufacturers, as well as distributors operating in the U.S. market, introduced new and meaningful incentives during the quarter. These programs presumably shift retailers to new distribution networks. These actions serve to further increase competition in today's markets. There are two additional developments to highlight as we think about the outlook for our consumer business. First, North America consumer replacement margins steadily improved throughout the quarter as we implemented price and mix actions into the market. Second, U.S. growth in non-member imports started to ease recently, and we expect to see declines in the level of imports beginning as early as the third quarter. On a related note, the EU recently launched an investigation on imported tires from China. While we don't have any final second quarter data yet, we believe the announcement led to an increase in imports over the last several months as we have seen distributors prioritize liquidity and warehouse space for the imports. Our EMEA business is well positioned and should tariffs ultimately be implemented in Europe. Finally, turning to our commercial business, the truck tire market, which had been running at recessionary levels for the last couple years, took another significant leg down during the second quarter, positioning us now at a point where we expect our full year volume and mix to register below COVID year levels. As many of you know, the USOE industry fell nearly 30% on the back of uncertainty related to the implementation of the 27 EPA mandates. In addition, global replacement demand also contracted relative to our expectations as truck tire customers remained cautious about freight conditions and broader economic trends. In spite of these dynamics, U.S. non-member imports increased over 30% in the quarter and European imports rose as well. In summary, in the coming quarter, we expect market headwinds to persist as U.S. dealers work through elevated levels of low-end import inventory and weak demand in the global commercial truck market. We're making the necessary internal changes to drive performance and control the working capital. As we look at the second half, while global trade disruption is weighing on our full-year outlook, I assure you our team is positioned to win with customers and consumers as the turbulence dissipates. It isn't a matter of if, but when, as our fundamentals are strong and we have firmly positioned our business to deliver our targeted margin once the market conditions improve. And our organization isn't waiting passively for the upswing. We're continuing to develop new premium products to generate our own organic growth tailwinds. In May, we introduced the Eagle F1 Asymmetric 6, and in July, the Assurance MaxLife 2 in North America. In Europe, we've extended the lineup of our premium winter tire, the UltraGrip Performance 3. We will increase its total offering to over 250 SKUs this year, making it our most extensive winter offering to date. Additionally, within all season, we were recently awarded the top rating by Europe's largest auto association, ADAC, for the Vector 4 Seasons Gen 3 tire. These new product introductions and third-party reviews are crucial, because ultimately we expect the recent challenges we've experienced in our markets will give way to the opportunity. We continue to expect to realize benefits from trade policy changes over time, as well as to capitalize on our organizational focus on winning in the premium segment of the marketplace. Now I'll ask Christina to take you through the second quarter financials, and we'll move on to the Q&A.