Goodyear Tire & Rubber 2026 Q2 Earnings Call

Thank you and good morning, everyone. Welcome to our second quarter 2026 earnings call. With me today are Mark Stewart, CEO and President, and Scott Deakin, Interim CFO. A couple of notes before we get started. During this call, we'll make forward-looking statements and 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 our presentation and our SEC filings. Our earnings materials can be found at investor.goodyear.com. With that, I'll hand the call over to Mark.

Thank you, Ryan, and good morning, everyone. We appreciate you joining in with us today. Before we get started, I'd like to recognize and thank all of our associates around the world. This past year has brought its share of challenges for our industry, and the stabilization we're seeing at Goodyear is a result of our team's focus, execution, and commitment to our customers. To all of our associates, thank you for all that you do. Now we'll look at our performance for the quarter, and I'd like to spend some time discussing the actions we're taking to strengthen our competitive position and how we're setting Goodyear up for long-term success. Let's head into the quarter two recap. Overall, second quarter performance was in line with the expectations we shared on our last call with you.

Our global tire volumes stepped up sequentially, and though some pockets continued to be weak, we saw more market stability overall in Q2 compared to Q1. Additionally, channel destocking moderated from the first quarter as sell-in more closely reflected customer sell-out. EMEA and Asia Pacific both improved financial performance over the prior year. Asia Pacific was again a really bright spot for us, achieving volume growth across both consumer and commercial, as well as OE and replacement businesses. Asia Pacific also delivered both revenue growth and margin expansion during the quarter. Performance in the Americas remained challenging, driven by a competitive marketplace combined with soft consumer backdrop. However, as the channel destocking moderated, the region delivered sequential volume improvement in the quarter. As I reflect on the quarter operationally, two things stand out to me.

First, all regions continued to increase the share of 18-inch and above rim sizes in their consumer portfolios. Across Goodyear, that mix increased four percentage points year-over-year, matching the fastest pace of expansion since we started disclosing the metric. Additionally, we grew OE volumes as well as market share in all regions during the quarter. This OE growth in particular stands out against a weak consumer OE production backdrop across the regions. The greater stability we're seeing across the business gives us confidence in the step-up in the SOI we expect to deliver in the second half. Thinking longer term, it's clear to us that heightened competitive pressure isn't going away. This continues to validate the actions we're taking to strategically reposition our business. Our priorities are very clear.

We're working to strengthen our product portfolio, improve the competitiveness of our manufacturing footprint, and enhance our go-to-market strategy. Let me expand on each of these areas. First, on product portfolio. Over the past two years, we've made deliberate choices about where we believe Goodyear can contribute the greatest value within the marketplace. That means becoming more disciplined about retiring SKUs that do not generate acceptable returns. It means we're also continuing to invest in the products, brands, and innovation that differentiate Goodyear and align our offerings with the most attractive segments of the market. That strategy continues to take shape through product pipeline. In Q2, we brought products to market in EMEA, including our Vector All Season 4. This tire builds on our legacy of innovation in a category we helped pioneer nearly 50 years ago when we introduced the first all-season tire.

We've also expanded our Cooper portfolio in EMEA, introducing new all-season and winter tires across passenger cars, SUVs, and light commercial vehicles, as well as new summer tires for passenger cars in the SUV segments. This is where Goodyear science really comes in. The same innovation tested in some of the world's toughest environments, from commercial aviation and military aircraft to lunar missions and the racetrack, helps deliver the tires and solutions customers trust. We're proud that differentiated capability is being recognized in the industry. One of the ways we know we're on the right track is through the recognition of our products that we continue to receive. For example, Auto Bild named Goodyear the Top Manufacturer of the Year for summer tires. In a recent test, Tire Rack recognized Eagle F1 All Season as the leading ultra-high performance all-season tire in the market.

Looking ahead, we remain focused on the fastest-growing, highest value segments in the market, including ultra-high performance tires, larger rim sizes of 18 and above, and strong product offerings in the all-weather and all-season segments. In fact, later this year, we have new Cooper products set to launch in the U.S. and Canada, and a new Goodyear product in Latin America to advance this strategy. Our new product introductions, coupled with continued portfolio optimization to eliminate the lower margin SKUs, demonstrates our commitment to investing in the products and segments where we can compete most effectively. As our portfolio evolves, our manufacturing footprint needs to evolve with it. The footprint actions we've taken over the last few years haven't solely been focused on reducing costs. They are a direct response to where we're headed.

In our portfolio-driven manufacturing strategy, we're aligning our footprint with the segments we believe Goodyear can most effectively compete in, strategically producing the right products in the right facilities. The decision to close our Fayetteville facility reflects this strategy. It's another step towards building a manufacturing network aligned with our portfolio and positions Goodyear to compete more effectively over the long term. We expect production to wind down by the end of 2027, with volume transitioning to other facilities across the network. That will improve utilizations, strengthen the competitiveness of our manufacturing footprint, and reduce structural costs to the Americas by $90 million in 2027 and $270 million thereafter. As we continue to reshape our portfolio, it's essential that our manufacturing capacity evolves alongside it. We'll continue evaluating our footprint to ensure it remains aligned with our portfolio strategy.

We're making targeted investments across our global manufacturing and supply chain network to strengthen critical capabilities. These investments will help us increase flexibility and resilience, improve efficiency, and better position Goodyear to meet customer demand in higher value segments, including the 18-inch and above market. At the same time, we're simplifying our network, expanding automation, and improving utilization and productivity, all to strengthen our competitiveness, support financial performance, and better serve demand in premium and high-value segments. Our goal is to have a manufacturing network that supports the long-term strategy by efficiently serving the growing demand in premium, high-value segments and positioning Goodyear to deliver stronger business performance over time. Building a stronger portfolio and a more competitive manufacturing footprint is only part of the story.

Our path to long-term value also depends on our ability to win with our customers and deliver the products and services they rely on every day. Central to that are our OE partners. When leading vehicle manufacturers choose our tires for their new vehicles, it expands our brand with millions of drivers, strengthens our competitive position, and creates a pipeline for replacement sales down the road. That's how a single OE win can become an important driver of sustainable value creation for many years to come. Additionally, we're continuing to strengthen how we compete across the replacement market through stronger channel partnerships and investments in digital capabilities, as well as tools that make it easier for customers to do business with Goodyear. You've heard me talk about our focus on our portfolio, manufacturing footprint, and go-to-market strategy. We see these priorities as deeply connected.

Progress in one area creates lasting value if it's matched by progress in the others. Over the past two years, we've taken meaningful actions to strengthen Goodyear and build a more focused company. Through Goodyear Forward, we did what we said we were going to do. We strengthened our balance sheet, we increased our strategic focus and operating discipline, and implemented opportunities to create the greatest value, and that work continues today. As we look ahead, we're focused on delivering the financial performance expected of an industry leader by building a more competitive, more profitable, and more resilient Goodyear. You'll continue to see us making deliberate choices about where we invest, where we compete, how we allocate capital, and always with the objective of improving returns and building a stronger Goodyear.

The imperative is to ensure every major decision, from product development to manufacturing investments to sales execution, supports the same strategy: concentrating our resources behind the markets, products, and opportunities where Goodyear can create the greatest long-term value. Together, these efforts and results, along with our commitment to innovation, serve to differentiate us in the marketplace. From our role in supplying advanced lunar tires for the Pegasus LTV as part of NASA's Artemis program, to creative collaborations like Toy Story 5 fitments with Porsche, we're bringing Goodyear science and technology to life in ways that capture attention and connect with customers. These moments do more than reinforce our brand. They show how we're leveraging our unique strengths to stand out in the marketplace. Finally, I'd like to welcome Scott Deakin as our interim CFO. Scott brings a deep public company finance and operating experience.

We're pleased to have him in the role and look forward to continuing to work closely with Scott. I'll now turn the call over to Scott.