Business Context and Reporting Period
Company: The Goodyear Tire & Rubber Company (Goodyear)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: Goodyear is a global tire manufacturer operating through three segments: Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific. The company is currently executing the "Goodyear Forward" transformation plan to reduce costs and rationalize capacity.
Key Financial Metrics
| Metric (in millions) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales | $4,250 | $4,465 | $8,131 | $8,718 |
| Goodyear Net Income (Loss) | $(204) | $254 | $(453) | $369 |
| Diluted EPS | $(0.71) | $0.87 | $(1.57) | $1.27 |
| Segment Operating Income | $36 | $159 | $131 | $354 |
| Operating Cash Flow | N/A | N/A | $(620) | $(718) |
| Cash & Equivalents | $861 | $785 | $861 | $785 |
| Total Debt (Long-term + Current) | $6,831 | $5,692 | $6,831 | $5,692 |
Note: Operating Cash Flow and Debt figures are presented for the six-month period or as of the balance sheet date where applicable.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 4.8% in Q2 and 6.7% YTD compared to 2025. This was driven by lower tire volumes (down 4.0% in Q2) and the impact of divestitures (Chemical business and Dunlop brand sales in 2025). Decreases were partially offset by favorable price/mix and foreign exchange rates.
- Profitability Reversal: The company reported a net loss of $204 million in Q2 2026, a significant swing from the $254 million net income in Q2 2025. The prior year included a $385 million gain on the sale of the Dunlop brand, which is not present in the current period.
- Cost Pressures: Conversion costs increased by $165 million in Q2 due to lower production volumes affecting fixed cost absorption and inflation. Tariff costs also increased by $32 million in Q2, though partially offset by a $46 million IEEPA tariff refund recognized in the first half of 2026.
- Segment Performance:
- Americas: Operating loss of $10 million in Q2 (vs. $141 million income in 2025) due to volume declines and higher conversion costs.
- EMEA: Operating loss narrowed to $17 million (vs. $25 million loss in 2025) due to price/mix improvements and Goodyear Forward savings.
- Asia Pacific: Operating income increased to $63 million (vs. $43 million in 2025) driven by volume growth and favorable mix.
Guidance, Outlook, and Risks
- Subsequent Event (Fayetteville Closure): On July 16, 2026, Goodyear agreed to permanently close its Fayetteville, North Carolina facility. This plan involves approximately 1,750 job reductions and is expected to incur total pre-tax charges between $535 million and $565 million. Approximately $205 million to $225 million of these charges are expected in Q3 2026.
- Q3 2026 Outlook: Management expects global unit volumes to be roughly flat versus Q3 2025. Unabsorbed overhead is expected to be approximately $70 million. The Goodyear Forward plan is expected to deliver $70 million in incremental savings, partially offset by $20 million in unfavorable raw material costs and $95 million in inflationary cost increases.
- Liquidity: On June 4, 2026, the company issued $1.05 billion of 8.875% senior notes due 2032. As of June 30, 2026, the company had $3.89 billion in unused credit availability. Management believes liquidity is adequate for the next 12 months.
- Risks: Key risks include continued volume declines in replacement markets, inflationary pressures on raw materials and labor, potential impairment of indefinite-lived intangible assets (Cooper Tire) if performance targets are missed, and uncertainties regarding the timing and amount of IEEPA tariff refunds.
Investor Verification Checklist
- Fayetteville Closure Impact: Verify the timing and magnitude of the $535-$565 million charge associated with the North Carolina plant closure announced in July 2026.
- Intangible Asset Impairment: Monitor the performance of the Cooper Tire indefinite-lived intangible assets ($425 million carrying value), as management noted sensitivity to revenue projections and potential future impairment charges.
- Tariff Refund Realization: Confirm the actual receipt and timing of the remaining IEEPA tariff refunds, as the $46 million recognized in H1 2026 was an estimate.
- Debt Covenants: Review compliance with the borrowing base on the $2.75 billion first lien revolving credit facility, which was $354 million below the stated amount as of June 30, 2026.
- Volume Trends: Assess whether the stabilization of channel inventories and new assortment wins will materialize to support the "flat volume" outlook for Q3 2026.