Good morning. My name is Katie, and I'll be your conference operator today. At this time, I would like to welcome everyone to Goodyear's Third Quarter 2025 Earnings Call. [Operator Instructions] Please note this call may be recorded. It is now my pleasure to turn the conference over to Ryan Reed, Vice President, Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. Welcome to our third quarter 2025 earnings call. With me today are Mark Stewart, CEO and President; and Christina Zamarro, Executive Vice President and 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 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. I'll now turn the call over to Mark.

Thank you, Ryan, and good morning, everyone. Thank you for joining our call. As outlined in our press release, we delivered revenue of $4.6 billion and segment operating income of $287 million in the quarter, results slightly ahead of the revised expectation we shared with you all on our last call. It's important to view these results in the context of an industry environment that remains challenging, particularly given continued volatility and global trade flows. Even in that environment, we achieved meaningful sequential earnings and margin expansion, driven by the continued strong execution of the Goodyear Forward initiatives. Last quarter, I emphasized our focus on controlling the controllables and that approach continues to guide our actions here at Goodyear. With yesterday's announcement on the Chemicals business, we've now completed our planned divestitures, and we're bringing the balance sheet back to a position of health. We've introduced more premium product lines than ever before while improving organizational agility and sharpening our focus on margin and profitability. We're positioning the business to be able to leverage those strengths as the market environment begins to normalize. With the remainder of my time today, I'll discuss what we're seeing across the industry and in each of our business segments, also how we're responding. After that, I'll hand it over to Christina to walk through our third quarter financial results and how we're thinking about the outlook for the remainder of '25. Let's start with the Americas. In the Americas, the consumer replacement market continued to experience disruption similar to last quarter. On the consumer OE side, volume performed well, supported by strength in light truck and SUV fitments. Additionally, we've won additional fitments driven by OEM preferences for USMCA compliant supply. We expect OEM resourcing to remain a positive contributor for us going forward.…

Thank you, Mark, and good morning, everyone. Our third quarter results show lower costs with the benefit of Goodyear Forward and a significant reduction in debt. We are well positioned for growth as the broader economy strengthens in 2026. Prebuy channel inventory tied to tariffs is depleted and the implementation of tariffs in the U.S. and potentially in Europe, begins to reshape market dynamics in our favor. Turning to the financial results on Slide 9. Third quarter sales were $4.6 billion, down 3.7% from last year, given lower volume and the sale of OTR, partly offset by price/mix improvements. Unit volume declined 6%, reflecting lower consumer replacement volume. Segment operating income was $287 million, decreasing from last year, but reflecting an increase of $128 million compared to the second quarter. Goodyear net loss of $2.2 billion was driven by noncash nonrecurring items including a deferred tax valuation allowance and a goodwill impairment in the Americas. The valuation allowance against our tax assets does not limit our ability to utilize them in the future. After adjusting for significant items, our earnings per share were $0.28 compared to $0.36 last year. Turning to the segment operating income walk on Slide 10. The sale off-the-road business reduced earnings by $10 million. After this change in scope, our segment operating income declined $49 million versus last year. Lower tire unit volume and factory utilization were a headwind of $90 million and price/mix was a benefit of $100 million, driven by our recent pricing actions and RMI contracts. Raw materials were a headwind of $81 million. Goodyear Forward contributed $185 million of benefit during the quarter. Inflation and other costs were a headwind of $137 million. Other costs include approximately $40 million of tariffs, $25 million of manufacturing inefficiencies related to factory closures and lower…

[Operator Instructions] Our first question will come from Itay Michaeli with TD Cowen.

First question, just on some of the consumer OE market share gains that you've been reporting. I'm just curious how we should think about that going forward? To what extent is it just a function of prior wins? And do you sort of have a view on kind of how your OE volume may track just relative to the industry going forward?

No. Thanks, Itay. As we look at it, OE has been one of the key focus areas since I joined the company and we looked across -- actually across the world and what was our current percentages of OE versus replacement. And so there was definitely an opportunity for us to move up in that and create that nice pull-through on those first and second replacement cycles. We had not had enough exposure to the premium, larger rim sizes. And the very best way for us to affect that change in a fast manner is through the enhanced OEM partnerships. And it absolutely is about more premium pricing, larger sizes, larger margins. We know we can get out there and win with OE. We've been really pleased. As Christina mentioned, we've got 7 quarters in a row of growth in both the Americas and in EMEA on that consumer OE business. And as we look to the partnerships that we've gotten with our strategic OEMs around the world continues to get stronger on the technology road map as well as winning on the right fitments and the right platforms around the world. The other piece as I mentioned in my opening part of the session, we've definitely seen a preference from the OEs in the Americas, specifically around the USMCA compliant. And so we've seen some nice tailwinds coming forward with that as well.

Terrific. That's great to hear. And just secondly, I appreciate the detail on the Q4 kind of SOI drivers. I was hoping we could talk a little bit about 2026 puts and takes particularly around kind of price mix and raws, and what that might look like at the current study state as well as any kind of early thoughts on some of the other cost movements we should kind of just be thinking about in our models for next year?

So we'll be able to be a lot more specific on 2026 on our conference call in February, but we do know a handful of factors based on our Goodyear Forward programs and as you mentioned, based on where current rates are today. So as we think about SOI, I'd say Goodyear Forward carryover cost benefits should be at least $250 million. Of course, we're looking at all levers to pull ahead cost reduction. Flow-through pricing based on actions we've taken to date in the market will be around $100 million. That's before RMI indexed agreements kicking in next year, which will reduce that somewhat. Of course, Mark mentioned a lot of the new SKUs coming in. So we will continue to push price mix in a positive direction next year as well. Raws at current spot rates will be a benefit of $200 million, and that's inclusive of the chemical transaction, meaning the portion of internal supply that moves external is now included in our raw material base. But even with that headwind, raws should be a benefit of $200 million. And then inflation typically sits around on our cost base, $200 million to $225 million of headwind. I'd also expect tariff carryover costs at current rates. Of course, a lot is moving around, but tariff carryover in the range of $150 million to $160 million next year. And then we have an insurance collection we're expecting in the fourth quarter, which we would have a nonrepeat. I think that gives you most of the puts and takes, excluding the asset divestitures, which there are different impacts from most notably, EMEA will have a headwind related to the sale of Dunlop in the range of $65 million. Reduction in our earnings related to chemical is going to be about $35 million plus some stranded overhead of about $15 million. Now all of that will be partly offset by amortization of that $370 million that we talked about earlier in the prepared remarks, that should be a benefit of about $60 million next year. So a lot of puts and takes, a lot of reasons to believe that we have some tailwinds that we'll be able to capitalize on in 2026.

Our next question will come from James Mulholland with Deutsche Bank.

I was wondering if you could give us an update on the commercial vehicle environment and whether you've seen any kind of improvement or stabilization? In the deck, you mentioned that U.S. commercial replacement was up, but it was driven pretty much entirely by low-cost imports. So I guess the question is, is the similar dynamic playing out there as in light vehicle for the last few years where low-cost imports are coming in, they're taking significant share. And would I guess, you expect that to eventually put margins on commercial vehicle, which has traditionally been very strong?

Yes. Maybe I can start and then we'll turn it to Christina. When we think about the commercial PV, you're right, right? There has been some trade down, particularly with smaller fleets or the 1z or 2z types of ownership, if you will. Our overarching fleet business, though, remains very strong, right, in the subscription market that we have as well as our rollout of the tires-as-a-service that is a little bit ahead of schedule when it comes to Europe and it's just coming to the U.S. market. But we think about in '24 overall unit sales of about 11 million units, including OE and replacement in that commercial market, we continue to focus on premium fleet customers that really drive that pull-through through the OEs. But we have seen as well through the marketplace, the typical prebuy we would see on the emission changes on engines, on the commercial truck world has been very low, right? And it's -- with the questions around the emissions and what is really happening with that. So a lot of the large fleets -- most of the large fleets have opted to extend the life of their current and some of the feedback we've gotten from customers that the cost of ownership for them at this moment is to hang on to those trucks that they have for an extra period of time, which in terms of our subscription modeling actually is okay for us for that side, right? But when we look at it over the last several years, peak margins were kind of high single digits during a 13.5 million to 14 million unit volume. And just given the current freight environment and this regulatory uncertainty I mentioned, it's been definitely a challenging marketplace for the entire industry globally, probably unprecedented, actually.

Got it. Okay. So I guess my second question is, I was wondering if you could just double click, I guess, on the broader channel dynamics and what you're seeing. A few months ago, we were sitting here, we were talking about the eventual low-cost inventory digestion following that massive inflow that we saw around tariffs on, but it doesn't feel like that digestion is really materializing yet. I know Christina said, we're probably going to see at least a little bit further before that starts to hit. Do we have any line of sight on when you think that might start to flow through? Or is that really going to be something that could be here for quite a bit longer?

Thanks for the question. I would say just given the fact that the U.S. industry was negative in the third quarter, sellout continues to trend more positively. We're beginning to see some of the channel inventory sell-through at our -- with the current data that we have, we'd say that the remaining excess in the channels would take at least through the end of the fourth quarter to sell-through in consumer replacement to your point a little earlier in commercial, there's just been this continued glut of prebuy in through the third quarter. And I think that will take longer on into Q1 of 2026. I think the commercial side of the business, as Mark was just mentioning, actually tends to see a significant portion of supply on a run rate basis coming from imports. And so over the longer term, I think commercial trends will be healthier, but we will need to work through the excess imports over the course of the next couple of quarters in commercial.

Our next question will come from Ross MacDonald with Citi.

It's Ross MacDonald at Citi. Two questions for me. First one on EMEA. It looks like very strong OE performance. I know Itay already asked on this. But given the 20% volume growth in EMEA original equipment in 3Q, could you maybe just drill into if there's any specific platforms or products that are taking the lion's share of that volume growth? Or is this broad-based market share gains you're making in OE, it'd be very interesting, I think, to understand what's underlying that? And then, Mark, you mentioned that the profit per tire in EMEA is improving. Could you just elaborate on how much of that reflects specifically the winter tire strength that you've called out in Europe versus how much of that improving profit per tire in EMEA should we reasonably expect to carry over into 2026. So that's my first question on EMEA. And then secondly, I see in your Q4 indications, a comment around potential further rationalizations. Could you maybe elaborate on if there's a new plan that we should expect in the fourth quarter? Any details of what that might look like and if that's focused on any 1 particular region.

Sure. So maybe just to start, I would say that to the first part of your question -- I think you got 3 in instead of 2, Ross, by the way. But I don't know No worries, all good. When you look at the EMEA market, it's actually broad. We have been moving up with the players. One of the differences that when we rolled into our longer-range planning coming into the start of '25, when we put David Anckaert in over our product tech and product planning road map in conjunction with Chris Helsel in engineering was really making sure that we've got the right relationships, the right OEM strategies and the right technological partnerships with those OEs. And again, we're seeing the benefit of that on the go forward. But in the here and now, as well as we look at some of the OEMs coming back stronger in EMEA that we're actually on some really good fitments broad-based across Europe, which is why I think you see that 7 quarters of growth in EMEA on the consumer OE as well as it's a conscious decision as well, right? We are continuing, as we mentioned, not only in Americas but around the world as we globalize our product development to fill the blank spaces with premium product. And specifically the larger rim sizes and we're deprecating the SKUs that are lower margin that we don't make money on. And so we're seeing a partial lift from that as well as the new SKUs coming in and also some of the OEs coming back in the second half. But as well, you are right. The second half and the winter mix, we've been really pleased with our order performance from our customers on the winter mix as well. So all of those are looking good. On the second piece, the rationalizations, we've completed basically, call it, 4.5, I think, is the right way to say that, 3 in EMEA, 1 in Asia and a significant restructuring in one of the U.S. plants to really focus from that side of it. So all of those actions are on track as we committed to the Goodyear Forward Plan and the restructuring activities. As we get into quarter 4 and get ready really as we go to probably the February results as we come and share that with you all, we're continuing to top off and refill our Goodyear Forward as we look to a 2.0, and it's just embedded in our DNA of how we're running the business, and we continue to look and scan at what other things we do to move things from a fixed cost environment to a flex cost environment. So we're working very diligently with that around the world.

With respect to the guidance, the increase in the restructuring basket was for a new program in the U.S. in the fourth quarter.

[Operator Instructions] Our next question will come from James Picariello with BNP Paribas.

Just hoping to clarify the insurance collection in the fourth quarter. Is this a new item? Or was this always embedded in the full year outlook?

So James, we first brought up the insurance recovery in the fourth quarter on our second quarter conference call. So it's not new. We didn't have line of sight to it at the beginning of the year, however.

Okay. And it's about $50 million or so.

Correct. Yes. That's related to business interruption from the Debica fire back in 2023, and we had called out about that amount as part of the disruption related to the fire.

Understood. Okay. And then with tariffs at an annualized rate of $300 million, can you just help us better understand what drives the seasonality to this? Because the third quarter was a full clean quarter of all tariffs and only came in at $40 million. The second quarter was, I think, $10 million. Like what's implied for the fourth quarter? And then, yes, just help us understand the seasonality to this.

So broadly, the seasonality should follow our volumes, which tend to be a little lower in the first half, particularly in the first quarter and then seasonally stronger in the second half of the year. What I would say about the third quarter tariff amount coming in right around $40 million, a little bit less than we had expected. Some of that was a basketing issue as we look to pull tariffs out of raw materials. We overestimated the amount of tariffs for Q3 and underestimated raw materials, you can see it's a net there. Also, because of days inventory, lower volume in Q2, lower volume in Q3, tariff costs are little pushed into Q4. So James, what I would say right now, based on rates we see today, fourth quarter tariff costs should be about $80 million. And then the flow-through into next year, looking around $160 million, mostly weighted to the first half. And so I'd say something on the order of $60 million to $65 million each in Q1 and Q2.

Got it. If I could squeeze in 1 more. I appreciate that. In regards to the chemicals divestiture, I could see the guided $7 million of lost EBIT for the 2 months post sale. Can you just clarify what the expected annualized impact is for that chemical sale? Because it sounds as though there is an involvement of the divestiture, and that will show up in a raw material headwind for next year. So just hoping to clarify what those [ headwind ] versus internal buckets look like.

Yes. No, that's right. So it's going to show in a couple of different baskets, part lost earnings in SOI, part increase in raw materials as we move to third-party sourcing. I think about this total impact of being something in the order of magnitude about $120 million all in. Just the earnings, the lost earnings, James, will be about $45 million of a headwind on an annualized basis. You can think about doubling that. And the other portion would then show up in raw materials, maybe with some additional margin for our new supplier, and then stranded costs will be about $15 million in conjunction with the transaction. Of course, we're going to look to flex costs as part of our ongoing savings initiatives next year.

Our next question will come from Ryan Brinkman with JPMorgan.

You've gotten the one about low-cost tire imports into the U.S., maybe a similar one, but about Europe. What I think can you provide there with regard to what you're seeing, with regard to potential tariffs that could be implemented in that market? And then as well as what might be happening with regard to the prebuy of those tires? Is it tracking any differently to what you saw in the U.S. given the potential, I think, for tariffs to maybe be made retroactive to the date of the opening of the antidumping investigation?

Ryan, I would say what we're seeing in Europe feels a lot like the U.S. just on a quarter or 2 lag because the tariff announcement came a little bit later. We have seen over the course of Q2 and on into Q3 a lot of prebuy of lower-end tire imports. And what this means is that our dealers and distributors are saving warehouse space and saving liquidity in order to stockpile these imports. I think as we look to the fourth quarter, not expecting so much of an impact. We do not see the same competitive dynamics necessarily on winter tires that we do in summer or all-season. I think we still would say that the EU consumers are very sensitive to making sure that their winter tires come with a very high quality and performance. Expect that it will take on into 2026 to sell through some of that all-season and summer prebuy because it's, again, not really for winter tire selling.

Okay. And on the look ahead, thank you for 2026. I heard Christina, I think you said $250 million of savings from Goodyear Forward. I mean, just looking at the numbers, from Slide 6. It seems like with Goodyear Forward savings expected to be at an annualized run rate of $1,500 million by 4Q this year and with $750 million of SOI benefit in '25 on top of $480 million in '24. You should have like $270 million, I think, year-over-year benefit in '26 just from the anniversarying of what you've already accomplished without any incremental action required on your part. Is that the right way to think about that? And then because I heard Mark reference, I thought, 2.0, I think Goodyear Forward 2.0, I presume and Christina, did you say something about an incremental cost save program here in 4Q. So just curious if the overall cost saves could be maybe substantially greater than $250 million in '26 to help defray that $250 million -- or $200 million of inflation, general inflation headwind to help ensure that some of these savings go through to the SOI line?

Well, certainly, looking ahead, our goal is to make sure we're never done with self-help. And the $270 million flow-through is exactly the right number based on the math and the calculations for flow-through. And as I mentioned earlier, we're going to look to accelerate cost reduction into next year. I think we'll be able to share more about our plans as part of our February conference call for 2026. But as Mark has mentioned in the past, this is a lot about making cost savings a lot about the way we work, making it part of the company's DNA and how we will position growth for the company going forward.

That's helpful. And just lastly, I know you said strong cash flow in the fourth quarter. You always have extremely strong cash flow in the fourth quarter. Is there any sort of way to dimension that or provide an update on the puts and takes, how you expect the full year to shake out in '25?

Sure. So if you're looking at the drivers of SOI, I think you should get to a level of about $370 million, $375 million in the fourth quarter. That should bring you inclusive of corporate costs and D&A to an EBITDA of about $1.8 billion. On the operating side, and our free cash flow drivers, there were several puts and takes, but everything we've laid out pretty much is a net. So on an operating basis, I would say free cash flow is about breakeven. And then what we said as part of this call is that our asset sale fees, which we've indicated will be about $200 million are going to flow through operating cash flow this year. And so as you think about the geography, we should show cash flow from investing activities, proceeds from our asset sales of about $1.9 billion and then breakeven cash from operations excluding $200 million of fees that will also flow through there as well.

Our next question will come from Emmanuel Rosner with Wolfe Research.

I was actually hoping to pick it up right here, which is you were very helpful with the puts and takes -- early puts and takes of SOI into 2026. Just curious about how to think about the early puts and takes on the free cash flow compared to what you just described for 2025. It sounded like, at least on an SOI basis, the expectation of modest growth this year when I quickly added your puts and takes. But anything to think of in terms of the free cash flow items. And in particular, that portion of the asset sales that flows into the cash flow from operations this year, would it be missing next year?

So Emmanuel, on cash for 2026, we know that restructuring flow through from Goodyear Forward would be about $200 million to $250 million, so significantly less cash outlay than we saw in 2025. Also, interest expense will be a lot lower. Obviously, we've been doing a lot of hard work to get to the lower leverage, and we would expect net interest expense to fall in the range of $425 million. That's down about $100 million since the end of 2023 and since we first started Goodyear Forward. When I look at the amortization of the $370 million, I'd expect about $60 million beginning in 2026.

Okay. And so I guess putting that all together compared to that breakeven on an operating basis that you're speaking about for 2025 directionally, where would that leave us for '26?

So Emmanuel, we'll be able to be a lot more specific as to our drivers of -- SOI drivers of free cash flow on our February conference call. We have volumes down in the second and third quarter also anticipating that in the fourth quarter, wanting to see some of this industry disruption work its way through the channels before we guide into next year.

Understood. And then one question on tariff, please. So I appreciate all the color around the impact this year and sort of like the annualization into next year. Can you talk about -- is there any room for mitigation efforts in terms of either moving things around or just sourcing it differently? Just a quick update, please, on any way to sort of like reduce that load on a go-forward basis.

Yes. So we're really working on it on all fronts on it when you think about Emmanuel from we're -- first of all, we're super active in D.C. on a regular basis, making sure that we've got our viewpoints and fact points in. And we've got really strong working relationships with the right folks in D.C. around that can help us on the right implementation of the tariffs and how to do that to have best foot forward for Goodyear and our strong U.S. footprint. On the EMEA side as well, I think our lobbying efforts there also to the -- really the antidumping, I would call it, but really the tariff impact there. The teams have been working very hard with the EU on that. And cooperating with that aspect. When it comes to the rest of your question, right, we absolutely -- it's one of the reasons we created and I did the move to get us set up under Don Metzelaar for global manufacturing. So that we can constantly be pulling and looking at best landed cost around the world. As we've shared on earlier calls, right, we continue the journey of moving from a cost center approach to a P&L approach at each of our factories around the world to make sure that we're flexing cost structures that we are absolutely the most competitive we can be. And so as I mentioned before, I think we saw a lot of positive momentum and sourcing from OEMs in the U.S. market, preferring that USMCA compliant footprint that takes effect going into next year and then in the coming years as well when we look at that sourcing of that preferential really more preferred to the USMCA side. So absolutely, we're doing all those things and relocating things to moving within the footprint to have the best landed cost in the region or in some cases, it is still shipping from other locations, but we try to preference for in the region for the region wherever possible.

This concludes our question-and-answer session. I will now turn the meeting back to Mark Stewart for any final or closing remarks.

Thank you all for joining the call today. So that's a wrap for Christina and I, and I'm sure we'll have some other conversations with you guys over the course of the week. Clearly, while the short-term conditions have been pretty turbulent, right, with a lot of global trade volatility, but we are absolutely laser-focused on controlling the controllables, right? That is absolutely our mantra. It is about us continuing to drive the Goodyear Forward to conclusion and keep the pipeline refilled, and making sure that we are staying absolutely on our toes and all of our folks around the world continue to implement and make sure that we're monitoring our costs. At the same time, making sure that we are being absolutely focused on bringing the new SKUs into the marketplace around the world of the higher rim size, the premium rim sizes and deprecating low-end volume in terms of the margin play. We've completed our planned divestitures. We've restored our balance sheet to health, and we for sure are driving sequential earnings growth through our cost actions as well as our share gains. Our OEM volume growth, as we've talked a lot about on the call today, outpacing our 18-inch and above around the world, particularly in China. And then we're really excited about the new Wrangler and the Eagle F1 launches here. in the U.S. marketplace and the strength of our winter tire orders in EMEA, as we mentioned. So we're sharpening the portfolio. We're expanding our retail operations, and we continue to position ourselves to leverage as the markets resume a normalcy. So thank you guys for joining today.

That brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.