The Goodyear Tire(GT) - 2025 Q2 - Quarterly Results

Financial Highlights Goodyear reported declining net sales and tire volumes in Q2 and H1 2025, with reported net income boosted by asset sales, while adjusted net income showed a loss Second Quarter 2025 Performance - The second quarter was challenging due to industry disruption from shifts in global trade, including a surge of low-cost imports, with conditions expected to stabilize in coming quarters[4] Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales (Million USD) | 4,500 | 4,600 | Down | | Tire Unit Volumes (Million Units) | 37.9 | N/A | N/A | | Net Income (Million USD) | 254 | 79 | +221.5% | | Diluted EPS (USD) | 0.87 | 0.28 | +210.7% | | Adjusted Net Income (Loss) (Million USD) | (48) | 48 | Down | | Adjusted Diluted EPS (Loss) (USD) | (0.17) | 0.17 | Down | | Segment Operating Income (Million USD) | 159 | 334 | -52.4% | - Q2 2025 net income was significantly boosted by a pre-tax gain of $385 million from the sale of the Dunlop brand, partially offset by rationalization charges of $59 million and Goodyear Forward costs of $5 million[4] - The decline in segment operating income was primarily driven by higher raw material costs, inflation, unfavorable price/mix, non-recurrence of 2024 insurance recoveries, and lower volume, partially offset by $195 million in benefits from the Goodyear Forward plan[6] Year-to-Date 2025 Performance First Six Months (H1) 2025 Key Financial Metrics | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales (Million USD) | 8,700 | 9,100 | -4.4% | | Tire Unit Volumes (Million Units) | 76.4 | N/A | N/A | | Net Income (Million USD) | 369 | 10 | +3590% | | Diluted EPS (USD) | 1.27 | 0.04 | +3075% | | Adjusted Net Income (Loss) (Million USD) | (59) | 65 | Down | | Adjusted Diluted EPS (Loss) (USD) | (0.21) | 0.23 | Down | | Segment Operating Income (Million USD) | 354 | 574 | -38.3% | - First half 2025 net income included a combined pre-tax gain of $645 million from the sales of the OTR tire business and the Dunlop Brand[8] - The decline in H1 segment operating income was driven by unfavorable price/mix vs. raw materials, inflation, non-recurrence of insurance recoveries, and lower volume, partially offset by $395 million in benefits from the Goodyear Forward plan[10] Business Segment Results All three business segments experienced declines in operating income for the second quarter, driven by various factors including lower volumes, higher costs, and asset divestitures Americas Americas Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales (Million USD) | 2,662 | 2,697 | -1.3% | | Tire Units (Million Units) | 19.1 | 19.6 | -2.6% | | Segment Operating Income (Million USD) | 141 | 241 | -41.5% | | Segment Operating Margin (Percentage Points) | 5.3% | 8.9% | -3.6 p.p. | - The sales decrease was driven by declines in replacement volume (-2.0%) and original equipment (OE) volume (-5.0%), partially offset by price/mix benefits[14] - The significant drop in operating income was attributed to higher raw material costs, inflation, and unabsorbed fixed costs, which were partly offset by Goodyear Forward benefits[15] Europe, Middle East and Africa (EMEA) EMEA Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales (Million USD) | 1,344 | 1,279 | +5.1% | | Tire Units (Million Units) | 11.3 | 11.6 | -2.0% | | Segment Operating Income (Loss) (Million USD) | (25) | 30 | Down | | Segment Operating Margin (Percentage Points) | (1.9)% | 2.3% | -4.2 p.p. | - Sales increased due to positive price/mix and growth in Fleet Solutions, despite lower overall tire volume, with OE volume growing 10.9% while replacement volume fell 7.3%[16] - The segment swung to an operating loss, driven by higher raw material costs, the non-recurrence of 2024 net insurance recoveries, and inflation[17] Asia Pacific Asia Pacific Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales (Million USD) | 459 | 594 | -22.7% | | Tire Units (Million Units) | 7.5 | 8.9 | -15.6% | | Segment Operating Income (Million USD) | 43 | 63 | -31.7% | | Segment Operating Margin (Percentage Points) | 9.4% | 10.6% | -1.2 p.p. | - The sharp decline in net sales was driven by lower volume and the sale of the OTR tire business, with replacement volume falling 18.2% and OE volume falling 13.0%[18] - Operating income decreased primarily due to the OTR business divestiture; however, the segment's operating margin grew by 150 basis points after adjusting for the sale[19] Goodyear Forward Transformation Plan The Goodyear Forward plan is delivering significant financial benefits through cost savings and strategic asset sales, contributing to operating income and reducing leverage - The plan delivered $195 million in benefits to segment operating income during the second quarter[20] - Key asset sales completed in 2025 include the OTR tire business for $905 million and the Dunlop brand for $735 million in gross cash proceeds[20] - A definitive agreement was reached to sell the majority of the Goodyear Chemical business, with proceeds expected to further reduce leverage upon closing in late 2025[20] Financial Statements (Unaudited) The unaudited financial statements detail the company's performance and financial position, showing increased net income from asset sales, changes in assets and liabilities, and cash flow dynamics Consolidated Statement of Operations Q2 2025 Statement of Operations Summary | Line Item | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--- | :--- | :--- | | Net Sales | 4,465 | 4,570 | | Cost of Goods Sold | 3,705 | 3,627 | | Net (Gains) on Asset Sales | (439) | (96) | | Income before Income Taxes | 305 | 133 | | Goodyear Net Income | 254 | 79 | Consolidated Balance Sheets Balance Sheet Summary | Line Item | June 30, 2025 (Million USD) | Dec 31, 2024 (Million USD) | | :--- | :--- | :--- | | Total Current Assets | 8,885 | 7,589 | | Total Assets | 22,259 | 20,921 | | Total Current Liabilities | 7,701 | 7,377 | | Total Liabilities | 16,965 | 16,098 | | Total Shareholders' Equity | 5,294 | 4,823 | Consolidated Statements of Cash Flows Six Months Ended June 30 Cash Flow Summary | Cash Flow Activity | 2025 (Million USD) | 2024 (Million USD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (718) | (518) | | Net Cash from Investing Activities | 837 | (488) | | Net Cash from Financing Activities | (107) | 896 | - The positive cash flow from investing activities in H1 2025 was primarily driven by $1,328 million in proceeds from asset dispositions, which more than offset capital expenditures of $466 million[36] Reconciliation of Non-GAAP Financial Measures This section reconciles non-GAAP measures to U.S. GAAP equivalents, adjusting reported figures for significant non-recurring items to provide a clearer view of underlying performance Reconciliation of Segment Operating Income & Margin - For Q2 2025, Total Segment Operating Income of $159 million was reconciled to Goodyear Net Income of $254 million, primarily by adding back a $439 million net gain on asset sales and subtracting other expenses[38] Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted EPS - For Q2 2025, reported Goodyear Net Income of $254 million was adjusted to a loss of ($48 million), primarily by removing a $393 million net benefit from asset sales[40] - For the first six months of 2025, reported Goodyear Net Income of $369 million was adjusted to a loss of ($59 million), primarily by removing a $630 million net benefit from asset sales and a $196 million charge for rationalizations[43]