The Goodyear Tire & Rubber Company (GT) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $85 million, reversing a $208 million loss in Q2 2023, driven by higher segment operating income, transformation benefits, and insurance recoveries.

• Segment operating income more than doubled year-over-year to $339 million, with significant margin expansion across all regions.

• The Goodyear Forward transformation plan delivered $90 million in segment operating income benefits in Q2 and $162 million year-to-date, targeting $425 million SOI benefit in 2024 and $1 billion in cost reductions by end of 2025.

• A definitive agreement was signed to sell the Off-the-Road (OTR) tire business to Yokohama for $905 million, expected to close by early 2025.

• Adjusted EPS improved to $0.19 from a loss of $0.34 year-over-year.

Financial highlights

• Q2 2024 net sales were $4,570 million, down 6.1% year-over-year, with tire unit volume down 1.7%.

• Segment operating income reached $339 million, up $215 million from last year, with a margin of 7.4%, nearly triple the prior year.

• Q2 2024 net income: $85 million; Q2 2024 EPS: $0.30 (vs. $(0.73) in Q2 2023).

• Free cash flow was negative at $346 million, down from an inflow of $96 million last year.

• Gross margin expanded by 5.4 points to 20.7%.

Outlook and guidance

• Q3 2024 global unit volumes expected to decline ~4% due to weak industry trends and high distributor inventories.

• Full-year 2024 global unit volumes projected 3% lower; $95 million headwind in unabsorbed overhead.

• Goodyear Forward initiatives to deliver ~$120 million SOI benefit in Q3 and ~$425 million for full year 2024.

• Raw material costs projected to rise by $50 million in Q3, but full-year costs anticipated to be $260 million lower than 2023.

• Management remains confident in achieving a 10% segment operating income margin by the end of next year.