The Goodyear Tire & Rubber Company (GT)

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Goodyear Tire & Rubber (GT)

Q2 2013 Earnings Call

July 30, 2013 9:00 am ET


Damon J. Audia - Senior Vice President of Business Development

Richard J. Kramer - Chairman, Chief Executive Officer and President

Darren R. Wells - Chief Financial Officer and Executive Vice President


Patrick Nolan - Deutsche Bank AG, Research Division

Itay Michaeli - Citigroup Inc, Research Division

Aditya Oberoi - Goldman Sachs Group Inc., Research Division

Ravi Shanker - Morgan Stanley, Research Division

Brett D. Hoselton - KeyBanc Capital Markets Inc., Research Division



Good morning. My name is Tony, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Goodyear Tire & Rubber Company Second Quarter Earnings Conference Call. [Operator Instructions]

I would now like to hand the program over the Damon Audia.

Damon J. Audia

Thank you, Tony, and good morning, everyone. Welcome to Goodyear's second quarter conference call. Joining me today are Rich Kramer, Chairman and Chief Executive Officer; and Darren Wells, Executive Vice President and Chief Financial Officer. On today's call, Rich and Darren will provide perspective on our results and outlook for the remainder of the year.

Before we get started, there are few items I need to cover. To begin, the supporting slide presentation for today's call can be found on our website at A replay of this call will be available later today. Replay instructions were included in our earnings release issued earlier this morning.

If I could now draw your attention to the Safe Harbor statement on Slide 2. Today's presentation includes some forward-looking statements about Goodyear's future performance. Actual results could differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Goodyear's filings with the SEC and our earnings release. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The financial results are presented on a GAAP basis and in some cases, on non-GAAP basis. The non-GAAP financial measures discussed on the call are reconciled to U.S. GAAP equivalent as part of the appendix to the slide presentation.

With that, I will now turn the call over to Rich.

Richard J. Kramer

Thank you, Damon, and good morning, everyone. Thanks for joining us today. This morning, I want to start our call with a comment on our team's outstanding performance over the past 3 months. This performance resulted in the highest second quarter segment operating income in Goodyear's 115-year history. Record second quarter segment operating income in both North America and Asia Pacific, and year-over-year volume growth, which gives us confidence as we go into the second half of the year.

In what remains a tough global economy, our team delivered in the quarter. As I review the performance of each of our businesses this morning, you will see evidence of the disciplined execution of our strategy roadmap. We're delivering market-rack innovation and award-winning products, meeting customer needs and differentiating ourselves from the competition. We're winning in profitable market segments, focusing on the areas that have the potential to deliver the best returns and profitable growth for Goodyear and for our customers.

We're making progress toward our goal of being the best supplier in the industry. We're delivering more value for our customers by driving more efficient and productive operations through our operational excellence initiatives. We're executing on our significant capital investments, driving higher profitability and delivering the returns we targeted. And most importantly, we're executing our plans with strong commitment and alignment by our team.

As pleased as I am with the quarter, you've heard me say many times that we're not running our business for 1 good quarter. Our long-term objective is to achieve sustainable consistent earnings and cash generation, while providing the most innovative products to our customers with increasing efficiency and reliability. Our results are clear validation that our strategy is working. We're making the right decisions in building our businesses and we're seeing consistent, repeatable improvements in our results.

Before going into more detail on the quarter, I'd like to share some observations based on what I heard from our customers during my recent travels to our many markets around the globe. Their candid feedback is always valuable and instructive, and this time was very consistent. I heard repeatedly that the value of the Goodyear brand is as strong as ever and continues to pull customers into their stores.

The Goodyear brand is a differentiator, that's what they tell me. They told me that our products have a value proposition that resonates with consumers. Consumers recognize the value of Goodyear products even as new tire brands enter the market. And in Europe specifically, I heard that our leadership in tire labeling is a competitive advantage and is making a difference at the counter. It's clear that, just as magazine test influences winter tires sales, high-label scores have a positive impact on purchase decisions for summer tires. I also heard from our customers that they want even more of our branded products, making reliable supply a critical factor in their ability to serve their markets. This came through loud and clear as the #1 area of focus. It's an area where we continue to make improvements to deliver the best customer service in the industry.

And in my visits with truck tire customers, I heard specific examples of how our solutions are driving value, as measured by lower cost per mile. These customers praised the performance of our products and our cradle-to-grave service model, which is driving value for them and competitive advantage for us.

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