The Goodyear Tire(US:GT)2025-05-08 15:56markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited consolidated financial statements for Q1 2025 and 2024, including operations, balance sheets, cash flows, and detailed accounting notes [Consolidated Statements of Operations](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Details the company's revenues, expenses, and net income (loss) for the three months ended March 31, 2025 and 2024 | (In millions, except per share amounts) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net Sales | $4,253 | $4,537 | | Cost of Goods Sold | 3,513 | 3,715 | | Selling, Administrative and General Expense | 650 | 696 | | Rationalizations | 81 | 22 | | Interest Expense | 115 | 126 | | Other (Income) Expense | 25 | 28 | | Net (Gain) Loss on Asset Sales | (262) | 2 | | Income (Loss) before Income Taxes | 131 | (52) | | United States and Foreign Tax Expense | 13 | 6 | | Net Income (Loss) | 118 | (58) | | Less: Minority Shareholders' Net Income (Loss) | 3 | (1) | | Goodyear Net Income (Loss) | $115 | $(57) | | Goodyear Net Income (Loss) — Per Share of Common Stock (Basic) | $0.40 | $(0.20) | | Goodyear Net Income (Loss) — Per Share of Common Stock (Diluted) | $0.40 | $(0.20) | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Presents the company's comprehensive income (loss) for Q1 2025 and 2024, including other comprehensive income (loss) components | (In millions) | 2025 | 2024 | | :------------ | :--- | :--- | | Net Income (Loss) | $118 | $(58) | | Other Comprehensive Income (Loss) | 60 | 13 | | Comprehensive Income (Loss) | 178 | (45) | | Less: Comprehensive Income (Loss) Attributable to Minority Shareholders | 6 | (4) | | Goodyear Comprehensive Income (Loss) | $172 | $(41) | [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Provides a snapshot of the company's assets, liabilities, and shareholders' equity as of March 31, 2025, and December 31, 2024 | (In millions, except share data) | March 31, 2025 | December 31, 2024 | | :------------------------------- | :------------- | :---------------- | | **Assets:** | | | | Cash and Cash Equivalents | $902 | $810 | | Total Current Assets | 8,369 | 7,632 | | Total Assets | $21,711 | $20,964 | | **Liabilities:** | | | | Total Current Liabilities | 6,856 | 7,337 | | Total Liabilities | 16,625 | 16,058 | | **Shareholders' Equity:** | | | | Goodyear Shareholders' Equity | 4,930 | 4,756 | | Total Shareholders' Equity | 5,086 | 4,906 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Outlines changes in shareholders' equity, including net income, other comprehensive income, and stock-based compensation, for Q1 2025 | (In millions, except share data) | Balance at Dec 31, 2024 | Net Income (Loss) | Other Comprehensive Income (Loss) | Stock-based compensation plans | Common stock issued from treasury | Balance at Mar 31, 2025 | | :------------------------------- | :---------------------- | :---------------- | :-------------------------------- | :----------------------------- | :-------------------------------- | :---------------------- | | Common Stock Amount | $285 | — | — | — | $1 | $286 | | Capital Surplus | $3,159 | — | — | $6 | $(5) | $3,160 | | Retained Earnings | $5,156 | $115 | — | — | — | $5,271 | | Accumulated Other Comprehensive Loss | $(3,844) | — | $57 | — | — | $(3,787) | | Goodyear Shareholders' Equity | $4,756 | $115 | $57 | $6 | $(4) | $4,930 | | Minority Shareholders' Equity — Nonredeemable | $150 | $3 | $3 | — | — | $156 | | Total Shareholders' Equity | $4,906 | $118 | $60 | $6 | $(4) | $5,086 | [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash inflows and outflows from operating, investing, and financing activities for Q1 2025 and 2024 | (In millions) Cash Flows from Operating Activities: | 2025 | 2024 | | :------------------------------------------------ | :--- | :--- | | Net Income (Loss) | $118 | $(58) | | Total Cash Flows from Operating Activities | $(538) | $(451) | | Total Cash Flows from Investing Activities | 432 | (231) | | Total Cash Flows from Financing Activities | 211 | 661 | | Net Change in Cash, Cash Equivalents and Restricted Cash | 114 | (31) | | Cash, Cash Equivalents and Restricted Cash at End of the Period | $978 | $954 | [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=8&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, divestitures, and other key financial items [NOTE 1. ACCOUNTING POLICIES](index=8&type=section&id=NOTE%201.%20ACCOUNTING%20POLICIES) Outlines the significant accounting policies, estimates, and new accounting pronouncements relevant to the financial statements - The financial statements are prepared in accordance with SEC rules and U.S. GAAP, with management making estimates and assumptions. Operating results for Q1 2025 are not indicative of future periods[25](index=25&type=chunk)[26](index=26&type=chunk) - New FASB ASUs on income tax disclosures (effective after Dec 15, 2024) and disaggregated income statement expenses (effective after Dec 15, 2026) are being assessed for impact[27](index=27&type=chunk)[28](index=28&type=chunk) - Assets and liabilities are classified as held for sale when specific criteria are met, such as management commitment to a sale plan and expectation of completion within one year. At March 31, 2025, **$197 million in assets related to the Dunlop brand sale were held for sale**[30](index=30&type=chunk) | (In millions) | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | Cash and Cash Equivalents | $902 | $893 | | Restricted Cash | 76 | 61 | | Total Cash, Cash Equivalents and Restricted Cash | $978 | $954 | [NOTE 2. DIVESTITURES](index=9&type=section&id=NOTE%202.%20DIVESTITURES) Details the completed sales of the OTR tire business and Dunlop brand rights, including associated gains and financial impacts | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Net gains (losses) on asset sales | $262 | $(2) | - On February 3, 2025, the Company completed the sale of its OTR tire business to Yokohama for **$905 million**, resulting in an estimated pre-tax gain of **$260 million in Q1 2025**. Ancillary agreements include a trademark license and product supply agreement[35](index=35&type=chunk)[36](index=36&type=chunk) - On May 7, 2025, the Company completed the sale of its rights to the Dunlop brand in Europe, North America, and Oceania to Sumitomo Rubber Industries, Ltd. (SRI) for **$526 million**, plus a **$105 million** transition support fee and **$104 million** for inventory. This is expected to result in an estimated pre-tax gain of approximately **$395 million in Q2 2025**[37](index=37&type=chunk)[38](index=38&type=chunk) [NOTE 3. NET SALES](index=10&type=section&id=NOTE%203.%20NET%20SALES) Analyzes net sales by reportable segment and tire unit sales for Q1 2025 and 2024, along with deferred revenue changes | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | **Net Sales by reportable segment:** | | | | Americas | $2,502 | $2,588 | | Europe, Middle East and Africa | $1,277 | $1,347 | | Asia Pacific | $474 | $602 | | **Total Net Sales** | **$4,253** | **$4,537** | | **Tire unit sales:** | | | | Americas | $2,008 | $2,122 | | Europe, Middle East and Africa | $1,116 | $1,186 | | Asia Pacific | $451 | $574 | | **Total Tire unit sales** | **$3,575** | **$3,882** | - Deferred revenue from contracts with customers increased from **$19 million at December 31, 2024, to $107 million at March 31, 2025**, primarily due to the product supply agreement from the OTR tire business sale[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 4. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS](index=11&type=section&id=NOTE%204.%20COSTS%20ASSOCIATED%20WITH%20RATIONALIZATION%20PROGRAMS) Discusses costs related to rationalization programs, including the Goodyear Forward plan and the Danville facility closure - The Company is implementing rationalization actions under the Goodyear Forward plan to reduce manufacturing capacity and operating/administrative costs. The total liability balance for rationalizations increased from **$397 million at December 31, 2024, to $422 million at March 31, 2025**[43](index=43&type=chunk) - A new rationalization plan was approved in Q1 2025 to eliminate commercial tire production at the Danville, Virginia facility, involving approximately **850 job reductions** and expected pre-tax charges of **$130 million to $140 million**[44](index=44&type=chunk) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Current Year Plans - Net Charges | $65 | $10 | | Prior Year Plans - Net Charges | $16 | $12 | | **Total Net Charges** | **$81** | **$22** | | Asset write-offs (recoveries), accelerated depreciation, and accelerated lease costs, net | $46 | $51 | - Approximately **950 associates will be released** under plans initiated in 2025, with **650 already released by March 31, 2025**. An additional **2,450 associates remain to be released** under all ongoing rationalization plans[53](index=53&type=chunk) [NOTE 5. OTHER (INCOME) EXPENSE](index=13&type=section&id=NOTE%205.%20OTHER%20%28INCOME%29%20EXPENSE) Breaks down other non-operating income and expenses, including pension costs, financing fees, and foreign currency impacts | (In millions) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Non-service related pension and other postretirement benefits cost | $26 | $23 | | Financing fees and financial instruments expense | 15 | 15 | | Net foreign currency exchange (gains) losses | (4) | 1 | | Interest income | (10) | (15) | | General and product liability expense - discontinued products | 2 | 2 | | Royalty income | (11) | (5) | | Miscellaneous (income) expense | 7 | 7 | | **Total Other (Income) Expense** | **$25** | **$28** | - Q1 2025 includes a **$4 million pension settlement charge** and **$5 million in transaction costs** related to the Dunlop brand sale. Q1 2024 included an **$8 million loss** from receivables sales in Argentina[55](index=55&type=chunk)[57](index=57&type=chunk) [NOTE 6. INCOME TAXES](index=13&type=section&id=NOTE%206.%20INCOME%20TAXES) Explains income tax expense, effective tax rates, and deferred tax assets, including impacts from asset sales and global minimum tax rules | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Income (Loss) before Income Taxes | $131 | $(52) | | United States and Foreign Tax Expense | $13 | $6 | - The effective tax rate for Q1 2025 was favorably impacted by gains from the OTR tire business sale in foreign jurisdictions with no taxes. For Q1 2024, it was primarily affected by losses in foreign jurisdictions where no tax benefits were recorded[60](index=60&type=chunk) - The Company does not expect the OECD Pillar Two model rules (global minimum tax of 15%) to materially impact its annual effective tax rate in 2025[61](index=61&type=chunk) - At March 31, 2025, the Company had **$1.3 billion in U.S. net deferred tax assets** (with **$36 million valuation allowance**) and **$1.5 billion in foreign net deferred tax assets** (with **$1.2 billion valuation allowance**). The Company believes its U.S. net deferred tax assets will be fully utilized due to improved U.S. income and future profitability forecasts[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [NOTE 7. EARNINGS PER SHARE](index=15&type=section&id=NOTE%207.%20EARNINGS%20PER%20SHARE) Presents basic and diluted earnings per share calculations for Q1 2025 and 2024, including factors affecting dilution | (In millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Goodyear net income (loss) | $115 | $(57) | | Weighted average shares outstanding (Basic) | 287 | 286 | | Earnings (loss) per common share — basic | $0.40 | $(0.20) | | Weighted average shares outstanding (Diluted) | 289 | 286 | | Earnings (loss) per common share — diluted | $0.40 | $(0.20) | - Diluted EPS for Q1 2025 excludes approximately **3 million equivalent shares** related to 'underwater' options. For Q1 2024, it excluded **1 million 'underwater' options** and **2 million other dilutive shares** due to the net loss being anti-dilutive[69](index=69&type=chunk) [NOTE 8. BUSINESS SEGMENTS](index=15&type=section&id=NOTE%208.%20BUSINESS%20SEGMENTS) Provides financial data for the Americas, EMEA, and Asia Pacific segments, including net sales, operating income, assets, and capital expenditures - The Company operates through three regional segments: Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific. Segment operating income is used by the CEO to allocate resources and evaluate performance, excluding rationalization charges, asset sales, and impairment charges[70](index=70&type=chunk)[71](index=71&type=chunk) | (In millions) | Americas | Europe, Middle East and Africa | Asia Pacific | Total | | :------------------------------------ | :------- | :----------------------------- | :----------- | :---- | | **Three Months Ended March 31, 2025** | | | | | | Net Sales | $2,502 | $1,277 | $474 | $4,253 | | Segment Operating Income (Loss) | $155 | $(5) | $45 | $195 | | **Three Months Ended March 31, 2024** | | | | | | Net Sales | $2,588 | $1,347 | $602 | $4,537 | | Segment Operating Income | $179 | $8 | $60 | $247 | | (In millions) | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | **Segment Assets:** | | | | Americas | $11,724 | $11,406 | | Europe, Middle East and Africa | $5,040 | $4,557 | | Asia Pacific | $2,349 | $2,610 | | Total Segment Assets | $19,113 | $18,573 | | Corporate | $2,598 | $2,391 | | **Total Assets** | **$21,711** | **$20,964** | | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | **Capital Expenditures:** | | | | Americas | $176 | $208 | | Europe, Middle East and Africa | $59 | $71 | | Asia Pacific | $21 | $32 | | Total Segment Capital Expenditures | $256 | $311 | | **Depreciation and Amortization:** | | | | Americas | $163 | $163 | | Europe, Middle East and Africa | $67 | $71 | | Asia Pacific | $31 | $40 | | Total Segment Depreciation and Amortization | $261 | $274 | [NOTE 9. FINANCING ARRANGEMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS](index=18&type=section&id=NOTE%209.%20FINANCING%20ARRANGEMENTS%20AND%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) Details credit arrangements, debt obligations, and the use of derivative instruments to manage interest rate, foreign exchange, and commodity risks - At March 31, 2025, total credit arrangements were **$10,537 million**, with **$2,623 million unused**. Approximately **33% of debt was at variable interest rates averaging 6.65%**[79](index=79&type=chunk) | (In millions) | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Notes Payable and Overdrafts | $436 | $558 | | Long Term Debt and Finance Leases due Within One Year | $300 | $832 | | Total obligations due within one year | $736 | $1,390 | | (In millions) | March 31, 2025 Amount | December 31, 2024 Amount | | :------------------------------------ | :-------------------- | :----------------------- | | Long Term Debt and Finance Leases | $7,302 | $6,392 | - The Company redeemed its remaining **$500 million 9.5% senior notes due 2025** on February 19, 2025[82](index=82&type=chunk) - The **$2.75 billion First Lien Revolving Credit Facility** (due 2026) had **$1,430 million in borrowings** and **$1 million in letters of credit outstanding at March 31, 2025**. Availability is subject to a borrowing base, which was **$47 million below the stated amount**[84](index=84&type=chunk)[87](index=87&type=chunk) - The **€800 million European Revolving Credit Facility** (due 2028) had **$194 million (€180 million) in borrowings outstanding** under the German tranche at March 31, 2025[91](index=91&type=chunk) - The pan-European accounts receivable securitization facility had **$130 million utilized at March 31, 2025**, which is included in Long Term Debt and Finance Leases as it does not qualify for sale accounting[95](index=95&type=chunk) - Off-balance sheet accounts receivable factoring facilities had **$771 million in gross receivables sold at March 31, 2025**[97](index=97&type=chunk) - Supplier finance programs had **$682 million confirmed to financial institutions at March 31, 2025**, included in Accounts Payable — Trade[98](index=98&type=chunk) - The Company uses derivative financial instruments to manage interest rate, foreign exchange, and commodity price risks, not for trading purposes. Foreign currency contracts had notional amounts of **$1,951 million at March 31, 2025**, primarily related to intercompany loans[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [NOTE 10. FAIR VALUE MEASUREMENTS](index=25&type=section&id=NOTE%2010.%20FAIR%20VALUE%20MEASUREMENTS) Presents fair value measurements for financial assets and liabilities, including investments, foreign exchange contracts, and debt instruments | (In millions) | March 31, 2025 Total Carrying Value | December 31, 2024 Total Carrying Value | | :------------------------------------ | :---------------------------------- | :----------------------------------- | | **Assets at Fair Value:** | | | | Investments | $16 | $16 | | Foreign Exchange Contracts | $12 | $28 | | **Total Assets at Fair Value** | **$28** | **$44** | | **Liabilities at Fair Value:** | | | | Foreign Exchange Contracts | $22 | $3 | | **Total Liabilities at Fair Value** | **$22** | **$3** | | (In millions) | March 31, 2025 Carrying Amount | March 31, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :------------------------------------ | :----------------------------- | :------------------------ | :-------------------------------- | :--------------------------- | | Fixed Rate Debt | $4,892 | $4,670 | $5,367 | $5,076 | | Variable Rate Debt | $2,448 | $2,408 | $1,600 | $1,590 | [NOTE 11. PENSION, SAVINGS AND OTHER POSTRETIREMENT BENEFIT PLANS](index=26&type=section&id=NOTE%2011.%20PENSION%2C%20SAVINGS%20AND%20OTHER%20POSTRETIREMENT%20BENEFIT%20PLANS) Outlines costs associated with pension, savings, and other postretirement benefit plans, including net periodic pension cost and settlement charges | (In millions) | U.S. Three Months Ended March 31, 2025 | U.S. Three Months Ended March 31, 2024 | Non-U.S. Three Months Ended March 31, 2025 | Non-U.S. Three Months Ended March 31, 2024 | | :------------------------------------ | :------------------------------------- | :------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net periodic pension cost | $15 | $18 | $11 | $14 | | Net curtailments/settlements/termination benefits | $8 | $(5) | $1 | — | | Total defined benefit pension cost | $23 | $13 | $12 | $14 | - In Q1 2025, a **$4 million pension settlement charge** was recorded, along with **$4 million and $1 million in pension termination benefits** related to rationalization and the OTR tire business sale, respectively[113](index=113&type=chunk) - The expense for defined contribution savings plans was **$32 million in Q1 2025**, down from **$37 million in Q1 2024**[116](index=116&type=chunk) [NOTE 12. STOCK COMPENSATION PLANS](index=26&type=section&id=NOTE%2012.%20STOCK%20COMPENSATION%20PLANS) Details stock-based compensation expense, restricted stock units, and performance share units granted, along with unearned compensation costs - The Board granted **1.6 million restricted stock units** and **1.0 million performance share units** in Q1 2025. Stock-based compensation expense was **$6 million in Q1 2025**, up from **$3 million in Q1 2024**[117](index=117&type=chunk)[118](index=118&type=chunk) - Unearned compensation cost related to unvested stock-based awards was approximately **$36 million at March 31, 2025**, expected to be recognized through Q1 2028[118](index=118&type=chunk)[119](index=119&type=chunk) [NOTE 13. COMMITMENTS AND CONTINGENT LIABILITIES](index=27&type=section&id=NOTE%2013.%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) Discusses liabilities for environmental matters, workers' compensation, general and product liability, asbestos claims, and off-balance sheet commitments - Liabilities for environmental matters totaled **$78 million at March 31, 2025**. Management believes potential losses in excess of current reserves will not have a material adverse effect[120](index=120&type=chunk)[121](index=121&type=chunk) - Workers' compensation liabilities, on a discounted basis, were **$160 million at March 31, 2025**. It is reasonably possible the liability could exceed recorded amounts by approximately **$25 million**[122](index=122&type=chunk) - Liabilities for general and product liability and other tort claims, including asbestos, totaled **$402 million at March 31, 2025**. Management does not believe estimated reasonably possible losses in excess of recorded amounts will have a material adverse effect[123](index=123&type=chunk) - Asbestos claims activity: **200 new claims filed**, **2,600 settled/dismissed in Q1 2025**. Pending claims decreased from **35,400 to 33,000**. Payments were **$3 million**. Gross liabilities for asbestos claims were **$116 million**, with an insurance receivable of **$64 million at March 31, 2025**[125](index=125&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - Off-balance sheet financial guarantees and other commitments totaled **$29 million at March 31, 2025**. A guarantee related to SRI's workers' compensation obligation was reduced to **$15 million**[137](index=137&type=chunk)[138](index=138&type=chunk) - The Company has a revolving loan commitment to TireHub, LLC of up to **$130 million**, with **$125 million drawn at March 31, 2025**[140](index=140&type=chunk) [NOTE 14. CAPITAL STOCK](index=29&type=section&id=NOTE%2014.%20CAPITAL%20STOCK) Provides information on capital stock, including common stock repurchases, for the first three months of 2025 - No common stock repurchases were made from employees during the first three months of 2025[141](index=141&type=chunk) [NOTE 15. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=30&type=section&id=NOTE%2015.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Details changes in accumulated other comprehensive loss, including foreign currency translation and unrecognized actuarial losses | (In millions) | Balance at Dec 31, 2024 | Other comprehensive income (loss) before reclassifications | Amounts reclassified from accumulated other comprehensive loss | Balance at Mar 31, 2025 | | :------------------------------------ | :---------------------- | :--------------------------------------------------------- | :------------------------------------------- | :---------------------- | | Foreign Currency Translation | $(1,705) | $16 | $10 | $(1,679) | | Unrecognized Net Actuarial Losses and Prior Service Costs | $(2,140) | $10 | $21 | $(2,109) | | Total AOCL | $(3,844) | $26 | $31 | $(3,787) | | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total reclassifications from AOCL | $31 | $18 | | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Comprehensive Income (Loss) Attributable to Minority Shareholders | $6 | $(4) | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides management's perspective on the company's financial condition and results for Q1 2025, covering transformation plans, divestitures, and financial outlook [OVERVIEW](index=32&type=section&id=OVERVIEW) Summarizes the Goodyear Forward plan, recent divestitures, rationalization efforts, and key financial highlights for Q1 2025 - The Goodyear Forward transformation plan aims to optimize the portfolio, expand segment operating margin to **~10% by end of 2025**, and reduce leverage. It provided **$200 million in benefits to segment operating income in Q1 2025**[148](index=148&type=chunk) - The sale of the OTR tire business to Yokohama was completed on February 3, 2025, for **$905 million cash**, including **$185 million for deferred amounts** related to trademark license and product supply agreements[150](index=150&type=chunk) - The sale of the Dunlop brand rights in Europe, North America, and Oceania to SRI was completed on May 7, 2025, for **$526 million**, plus a **$105 million transition support fee** and **$104 million for inventory**[149](index=149&type=chunk) - A rationalization plan was approved in Q1 2025 to eliminate commercial tire production at the Danville, Virginia facility, involving **~850 job reductions**[151](index=151&type=chunk) | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Net Sales | $4,253M | $4,537M | $(284)M (-6.3%) | | Goodyear Net Income (Loss) | $115M | $(57)M | $172M | | EPS | $0.40 | $(0.20) | $0.60 | | Total Segment Operating Income | $195M | $247M | $(52)M (-21.1%) | - Q1 2025 tire unit shipments decreased by **4.8%** due to lower global tire volume. The Company experienced approximately **$55 million of inflationary cost pressures**[153](index=153&type=chunk) - The increase in cash and cash equivalents of **$92 million** was primarily due to **$720 million from the OTR tire business sale** and **$198 million in net borrowings**, partially offset by **$538 million used in operating activities** and **$259 million in capital expenditures**[157](index=157&type=chunk) [RESULTS OF OPERATIONS](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the consolidated and segment-specific financial performance for Q1 2025 compared to Q1 2024, detailing sales, costs, and operating income [Consolidated](index=36&type=section&id=Consolidated) Examines consolidated net sales, cost of goods sold, selling, administrative and general expenses, and net income (loss) for Q1 2025 - Net sales decreased by **$284 million (6.3%)** in Q1 2025 compared to Q1 2024, primarily due to lower global tire volume (**$156 million**), negative foreign exchange impact (**$140 million**), and the OTR tire business sale (**$49 million**), partially offset by favorable price/product mix (**$53 million**) and higher other tire-related sales (**$19 million**)[166](index=166&type=chunk)[167](index=167&type=chunk) - Worldwide tire unit sales decreased by **1.9 million units (4.8%) to 38.5 million units** in Q1 2025, with replacement tire volume down **6.3%** and OE tire volume down **1.1%**[168](index=168&type=chunk) - Cost of Goods Sold (CGS) decreased by **$202 million (5.4%) to $3,513 million** in Q1 2025, driven by Goodyear Forward savings (**$152 million**), lower tire volume (**$123 million**), and foreign currency translation (**$109 million**). This was partially offset by higher raw material costs (**$181 million**) and conversion costs (**$18 million**). CGS as a percentage of sales increased from **81.9% to 82.6%**[169](index=169&type=chunk)[170](index=170&type=chunk) - Selling, Administrative and General (SAG) expense decreased by **$46 million (6.6%) to $650 million** in Q1 2025, mainly due to lower wages/benefits and warehouse/retail expenses from Goodyear Forward actions, and a **$9 million benefit** from the OTR tire business sale. SAG as a percentage of sales remained at **15.3%**[171](index=171&type=chunk)[172](index=172&type=chunk) - Net rationalization charges increased to **$81 million in Q1 2025** from **$22 million in Q1 2024**, primarily due to the Danville commercial tire production elimination and German plant closures. Asset write-offs and accelerated depreciation were **$46 million in Q1 2025**[173](index=173&type=chunk)[174](index=174&type=chunk) - Interest expense decreased by **$11 million (8.7%) to $115 million** in Q1 2025, with the average interest rate falling to **5.82% from 6.34%**[176](index=176&type=chunk) - A net gain on asset sales of **$262 million** was recorded in Q1 2025, primarily from the **$260 million gain on the OTR tire business sale**, compared to a **$2 million net loss in Q1 2024**[177](index=177&type=chunk) - Income tax expense was **$13 million on $131 million income before taxes in Q1 2025**, compared to **$6 million expense on a $52 million loss in Q1 2024**. The Q1 2025 effective tax rate was favorably impacted by tax-free gains from the OTR tire business sale in foreign jurisdictions[179](index=179&type=chunk)[180](index=180&type=chunk) [Segment Information](index=39&type=section&id=Segment%20Information) Provides a detailed breakdown of financial performance for the Americas, EMEA, and Asia Pacific segments, including sales and operating income - Total segment operating income decreased by **$52 million (21.1%) to $195 million in Q1 2025**, with the operating margin declining from **5.4% to 4.6%**[190](index=190&type=chunk) [Americas](index=39&type=section&id=Americas) Analyzes the Americas segment's tire units, net sales, and operating income for Q1 2025, highlighting factors impacting performance | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Tire Units | 18.4M | 19.0M | (0.6)M (-3.1%) | | Net Sales | $2,502M | $2,588M | $(86)M (-3.3%) | | Operating Income | $155M | $179M | $(24)M (-13.4%) | | Operating Margin | 6.2% | 6.9% | -0.7% | - Operating income decreased due to higher raw material costs (**$106 million**), higher SAG (**$19 million**), lower tire volume (**$15 million**), and unfavorable foreign currency translation (**$7 million**). These were partially offset by a **$138 million benefit from the Goodyear Forward plan** and **$8 million from favorable price and product mix**[196](index=196&type=chunk) [Europe, Middle East and Africa](index=41&type=section&id=Europe%2C%20Middle%20East%20and%20Africa) Examines the EMEA segment's tire units, net sales, and operating income (loss) for Q1 2025, detailing drivers of financial results | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Tire Units | 12.3M | 12.5M | (0.2)M (-2.0%) | | Net Sales | $1,277M | $1,347M | $(70)M (-5.2%) | | Operating Income (Loss) | $(5)M | $8M | $(13)M (N/M) | | Operating Margin | (0.4)% | 0.6% | -1.0% | - Operating loss was primarily driven by higher raw material costs (**$53 million**), higher SAG (**$23 million**), higher conversion costs (**$9 million**), and lower earnings in other tire-related businesses (**$7 million**). These were partially offset by **$43 million in savings from the Goodyear Forward plan** and **$38 million from favorable price and product mix**[201](index=201&type=chunk) [Asia Pacific](index=42&type=section&id=Asia%20Pacific) Reviews the Asia Pacific segment's tire units, net sales, and operating income for Q1 2025, including impacts from asset sales | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Tire Units | 7.8M | 8.9M | (1.1)M (-12.4%) | | Net Sales | $474M | $602M | $(128)M (-21.3%) | | Operating Income | $45M | $60M | $(15)M (-25.0%) | | Operating Margin | 9.5% | 10.0% | -0.5% | - Operating income decreased due to higher raw material costs (**$22 million**), decreased earnings from the OTR tire business sale (**$17 million**), and lower tire volume (**$15 million**). These were partially offset by **$22 million from favorable price and product mix** and a **$19 million benefit from the Goodyear Forward plan**[206](index=206&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses the company's cash position, credit availability, cash flow activities, and capital expenditure plans for 2025 | Metric | March 31, 2025 | December 31, 2024 | | :----- | :------------- | :---------------- | | Cash and Cash Equivalents | $902M | $810M | | Unused Credit Availability | $2,623M | $3,555M | - Net cash used for operating activities increased by **$87 million to $538 million in Q1 2025**, primarily due to increased cash used for working capital (**$211 million**) and lower SBU earnings (**$52 million**), partially offset by **$185 million from the OTR tire business sale**[216](index=216&type=chunk) - Net cash provided by investing activities was **$432 million in Q1 2025**, a **$663 million increase from Q1 2024**, mainly due to **$720 million from asset dispositions** (OTR tire business sale), partially offset by **$259 million in capital expenditures**[218](index=218&type=chunk) - Net cash provided by financing activities decreased by **$450 million to $211 million in Q1 2025**, primarily due to lower net borrowings (**$198 million vs. $684 million in Q1 2024**), which included the redemption of **$500 million senior notes**[219](index=219&type=chunk) - For the full year 2025, the Company expects capital expenditures of approximately **$950 million**, rationalization payments of **$400 million**, and working capital to be a source of **$50 million in operating cash flows**[163](index=163&type=chunk)[213](index=213&type=chunk) - Approximately **$869 million of net assets**, including **$182 million of cash**, were subject to foreign government and/or currency exchange board requirements or credit agreement limitations at March 31, 2025, primarily in China, South Africa, Serbia, and Argentina[215](index=215&type=chunk) - The Company was in compliance with all currently applicable material covenants imposed by its principal credit facilities and indentures at March 31, 2025[241](index=241&type=chunk) [FORWARD-LOOKING INFORMATION — SAFE HARBOR STATEMENT](index=52&type=section&id=FORWARD-LOOKING%20INFORMATION%20%E2%80%94%20SAFE%20HARBOR%20STATEMENT) Cautions readers that forward-looking statements are subject to uncertainties and risks, which may cause actual results to differ materially - This section cautions readers that forward-looking statements are subject to inherent uncertainties and risks, and actual results may differ materially. Key risk factors include the successful implementation of the Goodyear Forward plan, global competition, raw material cost increases, inflationary pressures, supply chain disruptions, economic downturns, labor issues, and international operational risks[264](index=264&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=54&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Outlines the company's exposure to commodity price, interest rate, and foreign currency exchange risks, and its risk management strategies [Commodity Price Risk](index=54&type=section&id=Commodity%20Price%20Risk) Discusses exposure to volatile raw material costs, strategies to offset them, and the company's approach to hedging commodity prices - The Company is exposed to volatile raw material costs, with approximately **two-thirds being petroleum-based**. Strategies to offset costs include centralizing procurement, substituting lower-cost materials, reducing material per tire, and pursuing alternative raw materials. The Company does not currently hedge commodity prices[270](index=270&type=chunk) [Interest Rate Risk](index=54&type=section&id=Interest%20Rate%20Risk) Explains the company's exposure to variable interest rates and its strategy for managing the mix of fixed and floating rate debt - At March 31, 2025, approximately **33% of the Company's debt was at variable interest rates, averaging 6.65%**. The Company manages its fixed and floating rate debt mix using refinancing within defined limitations[271](index=271&type=chunk) | (In millions) | March 31, 2025 | | :------------------------------------ | :------------- | | Fixed Rate Debt Carrying amount — liability | $4,892 | | Fixed Rate Debt Fair value — liability | $4,670 | | Pro forma fair value — liability (100 bps decrease) | $4,804 | [Foreign Currency Exchange Risk](index=54&type=section&id=Foreign%20Currency%20Exchange%20Risk) Details the use of foreign currency contracts to manage exchange rate impacts on operations, cash flows, and intercompany transactions - The Company uses foreign currency contracts to manage the impact of exchange rate changes on operations and cash flows, hedging exposures from trade, equipment acquisitions, intercompany loans, and royalty agreements[272](index=272&type=chunk) | (In millions) | March 31, 2025 | | :------------------------------------ | :------------- | | Fair value — asset (liability) | $(10) | | Pro forma decrease in fair value (10% adverse change) | $(197) | | Contract maturities | 4/25-3/26 | [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting [Management's Evaluation of Disclosure Controls and Procedures](index=55&type=section&id=Management%27s%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) States that management concluded disclosure controls and procedures were effective as of March 31, 2025 - Management, with the participation of principal executive and financial officers, concluded that disclosure controls and procedures were **effective as of March 31, 2025**[276](index=276&type=chunk) [Changes in Internal Control Over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Reports no material changes in internal control over financial reporting during the first quarter of 2025 - There were no changes in internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[277](index=277&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Details ongoing legal proceedings, including asbestos litigation, a European Commission antitrust investigation, and other various legal actions [Asbestos Litigation](index=56&type=section&id=Asbestos%20Litigation) Provides an update on asbestos claims activity, including new filings, settlements, pending claims, and payments in Q1 2025 - Approximately **200 new asbestos claims were filed** and **2,600 were settled or dismissed in Q1 2025**. As of March 31, 2025, **33,000 asbestos claims were pending** against the Company. Payments for defense and claim resolution totaled **$3 million in Q1 2025**[280](index=280&type=chunk) [European Commission Antitrust Investigation](index=56&type=section&id=European%20Commission%20Antitrust%20Investigation) Discusses the European Commission's antitrust investigation and related civil lawsuits alleging antitrust violations in the tire industry - The European Commission conducted unannounced inspections at the Company's premises on January 30, 2024, as part of an investigation into potential antitrust violations in the tire industry. The Company is cooperating with the investigation[281](index=281&type=chunk) - Several civil lawsuits alleging antitrust violations have been filed in the U.S. and elsewhere against tire companies, including the Company. A motion to dismiss the U.S. lawsuits was **granted on February 25, 2025**, but plaintiffs filed motions for leave to file amended complaints[282](index=282&type=chunk) [Other Matters](index=56&type=section&id=Other%20Matters) Mentions various other pending legal actions, tax assessments, and governmental investigations, with management's assessment of their impact - Various other legal actions, indirect tax assessments, claims, and governmental investigations are pending. Management believes the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position or results of operations[283](index=283&type=chunk) [ITEM 1A. RISK FACTORS](index=56&type=section&id=ITEM%201A.%20RISK%20FACTORS) Refers to the comprehensive discussion of risk factors in the Company's 2024 Form 10-K, which may impact its business and financial condition - For a discussion of risk factors, refer to "Item 1A. Risk Factors" in the Company's 2024 Form 10-K[285](index=285&type=chunk) [ITEM 5. OTHER INFORMATION](index=56&type=section&id=ITEM%205.%20OTHER%20INFORMATION) States that no directors or officers reported changes in Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers reported adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[286](index=286&type=chunk) [ITEM 6. EXHIBITS](index=57&type=section&id=ITEM%206.%20EXHIBITS) Provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including purchase agreements, contracts, and certifications - The index includes Exhibit 2.1 (Purchase Agreement with Sumitomo Rubber Industries, Ltd.), Exhibit 2.2 (First Amendment to Purchase Agreement), Exhibit 22.1 (List of Subsidiary Guarantors), and various certifications (31.1, 31.2, 32.1) and Interactive Data Files (101.INS, 101.SCH, 104)[289](index=289&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) Contains the required signatures for the Quarterly Report on Form 10-Q, confirming its due authorization and filing - The report was signed on May 8, 2025, by Margaret V. Snyder, Vice President and Controller, as the Principal Accounting Officer[295](index=295&type=chunk)