Goodyear (GT) Q2 FY26 earnings call: guidance and Q&A

Can you discuss replacement versus OE volume expectations for Q3, assuming sustained OE growth and less pronounced replacement declines, and how you're thinking about Q4?

Mark Stewart noted significant sequential volume improvement from Q1 (down 12%) to Q2 (down 4%), with Q2's decline primarily due to low-end SKU rationalization. He stated that channel destocking is largely behind them, and the second half will benefit from easier comps due to SKU rationalization. OE growth, particularly in 18-inch+ premium rim sizes, is strong globally and setting up future replacement sales.

“In quarter 2, we're down to 4%, right, on that. So meaningful change in terms of the volume there. And 2/3 of that was really around the low-end SKU rationalization. So in terms of -- we've seen meaningful sequential improvement Q1 to Q2. Our outlook for the second half is not dependent on a sharp change in the market.”

asked by James Picariello · answered by Mark Stewart

Can you discuss major bucketed items for the full year, specifically Q4, regarding overhead absorption, price/mix versus raws, and non-raw material inflation?

Scott Deakin stated that raw materials are expected to be neutral for the full year, while price and mix should contribute over $200 million. Goodyear Forward benefits are anticipated to offset inflation and other cost increases. The largest headwind remains volumes and resulting fixed cost absorption, reducing SOI by about $350 million. Full-year SOI is expected to be "a touch higher than $600 million."

“Our take is that raw materials will be essentially neutral on a full year basis. Offsetting that, price and mix should contribute more than $200 million, that's bucket one. Bucket two is Goodyear Forward benefits are expected to offset inflation and other cost increases, which puts us with the largest headwind overall is volumes and the resulting impact on fixed cost absorption. That together, ultimately, we believe, is going to reduce SOI for the full year to the tune of about $350 million.”

asked by James Picariello · answered by Scott Deakin

Given past volume reductions and current overcapacity, what are the next moves being considered beyond Fayetteville, such as more plant closures, asset sales, or retail business monetization?

Mark Stewart reiterated that the Fayetteville closure is expected to provide a $270 million annual SOI lift by 2028, balancing supply with demand. He emphasized ongoing modernization and automation in other facilities (Lawton, Napanee, Americana, Debica) and the strategic shift of premium capacity to Eastern Europe. He highlighted that the Goodyear Forward program, exceeding $1.5 billion in savings, has embedded cost focus and operating discipline, which continues to drive productivity.

“So it really is about matching supply with demand. We continue to do all of the things that we need to do in terms of as we shared with you before, controlling the controllables. And again, on the Goodyear Forward, we clearly see we're going to trigger past $1.5 billion of savings in the coming couple of months here, which is great.”

asked by James Mulholland · answered by Mark Stewart

Is it fair to expect 2026 to be a cash burn year, and potentially 2027 as well, and when might we see a turnaround?

Scott Deakin confirmed an expected Free Cash Flow burn of $200 million to $300 million for fiscal 2026, including about $100 million for Fayetteville. He anticipates continued burn into 2027, but expects it to moderate, with Fayetteville's benefits of nearly $250 million flowing through in 2028.

“Yes. To your point, for fiscal 2026, we do expect it to be a burn year in the tune of about $200 million to $300 million. To your point, notable item in the mix being Fayetteville at about $100 million for the year. We would expect to have some continued burn into 2027 as well. But to your point, it will definitely start to moderate.”

asked by James Mulholland · answered by Scott Deakin

Given the 6-month lag effect, how should we think about raw material headwinds into the first half of next year, considering current spot rates?

Scott Deakin reiterated the expectation of a $200 million raw material headwind for the second half of 2026, noting that while there have been slight improvements, uncertainty remains. For 2027, he expects some benefit from stabilization in the Middle East and higher raw material indexes resetting for approximately one-third of the business.

“So on the last call, on the first quarter call, the company talked about an expectation that raw materials are going to be headwinds for the second half to the tune of about $200 million. And to your point, while we've seen some slight improvements, clearly, there's a lot of uncertainty that's still out there.”

asked by Yash Beswala · answered by Scott Deakin

How do you view the retail asset, especially with recent M&A activity, and does it help or hurt Goodyear's position in the replacement category?

Mark Stewart expressed satisfaction with the company-owned retail business, which is performing better than in two decades and provides direct consumer insight. He highlighted the upcoming launch of a new concept store in Detroit, aimed at car enthusiasts, to reinforce Goodyear's brand and consumer-centric approach. He also noted the Velocity program for smaller dealers and the focus on providing a refreshed, full portfolio for various channels, while rationalizing low-end SKUs.

“What I really enjoy about that business is it puts us direct consumer-facing and gives us a direct flavor of what all of our customers are going through as they are working with the end consumer. So for me and throughout my career, it's been an important point to have some of that so that we can stay close to customer and consumer at same time.”

asked by John Healy · answered by Mark Stewart