GOODYEAR TIRE RUBBER CO OH

Previous wording

The Goodyear Tire & Rubber Company (the "Company," "Goodyear," "we," "us" or "our") is one of the world’s leading manufacturers of tires, with one of the most recognizable brand names in the world and operations in most regions of the world. We have a broad global footprint with 55 manufacturing facilities in 22 countries, including the United States. We operate our business through three operating segments representing our regional tire businesses: Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific.

Current wording

The Goodyear Tire & Rubber Company (the "Company," "Goodyear," "we," "us" or "our") is one of the world’s leading manufacturers of tires, with one of the most recognizable brand names in the world and operations in most regions of the world. We have a broad global footprint with 54 manufacturing facilities in 21 countries, including the United States. We operate our business through three operating segments representing our regional tire businesses: Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific.

Previous wording

On November 15, 2023, we announced a transformation plan, Goodyear Forward, that is intended to optimize our portfolio of products, deliver segment operating margin expansion and reduce our leverage in order to drive sustainable, long-term shareholder value creation. Optimization of our portfolio consists of a strategic review of three major asset groups: our chemical operations which produces synthetic rubber and other chemical products in our Americas segment, the Dunlop brand for which we own rights in certain markets throughout the world, but is primarily used in our EMEA segment, and our off-the-road tire product operations. Our plans for margin expansion include brand optimization and tiering to capitalize on premium tire pricing and volume and a reduction of our overall exposure related to lower-tiered products either through margin expansion or product line rationalization. Our plans for margin expansion also include a reduction of our cost structure by $1 billion, including actions related to our manufacturing footprint, plant optimization, further improvement of our purchasing leverage, reduction of Selling, Administrative and General expenses (“SAG”) and improvements in our supply chain planning and logistics. We anticipate the accumulated benefit of these actions will improve our segment operating margin to 10% by the end of 2025. During the first quarter of 2024, the Goodyear Forward plan provided $72 million in benefits to segment operating income.

Current wording

On November 15, 2023, we announced a transformation plan, Goodyear Forward, that is intended to optimize our portfolio of products, deliver segment operating margin expansion and reduce our leverage in order to drive sustainable, long-term shareholder value creation. Optimization of our portfolio consists of a strategic review of three major asset groups: our chemical operations which produces synthetic rubber and other chemical products in our Americas segment, the Dunlop brand for which we own rights in certain markets throughout the world, but is primarily used in our EMEA segment, and our off-the-road tire business. Our plans for margin expansion include brand optimization and tiering to capitalize on premium tire pricing and volume and a reduction of our overall exposure related to lower-tiered products either through margin expansion or product line rationalization. Our plans for margin expansion also include a reduction of our cost structure by $1 billion, including actions related to our manufacturing footprint, plant optimization, further improvement of our purchasing leverage, reduction of Selling, Administrative and General expenses (“SAG”) and improvements in our supply chain planning and logistics. We anticipate the accumulated benefit of these actions will improve our segment operating margin to approximately 10% by the end of 2025. During the three and six months ended June 30, 2024, the Goodyear Forward plan provided $90 million and $162 million, respectively, in benefits to segment operating income.

Previous wording

Our tire manufacturing facility in Debica, Poland (“Debica”) continues to recover from a fire in the third quarter of 2023 and full ramp-up is expected in the third quarter of 2024. We estimate the negative impact on our earnings during the first quarter was approximately $14 million ($11 million after-tax and minority), including $3 million of corporate expense for an insurance deductible and an $11 million impact on EMEA’s segment operating income, primarily comprised of fixed costs incurred during the ramp-up of the facility. There were no significant lost sales during the first quarter as a result of leveraging existing inventory and increasing production at other facilities.

Current wording

Our tire manufacturing facility in Debica, Poland (“Debica”) continues to recover from a fire in the third quarter of 2023 and full ramp-up is expected in the third quarter of 2024. During the three and six months ended June 30, 2024, we received a benefit of $43 million ($30 million after-tax and minority) and $29 million ($19 million after-tax and minority), respectively, from insurance recoveries, net of fixed costs incurred during the ramp-up of the facility.

Previous wording

Our results for the first quarter of 2024 include a 3.3% decrease in tire unit shipments compared to 2023, primarily due to lower global replacement tire volume, partially offset by growth in OE, primarily in Asia Pacific. We experienced approximately $58 million of inflationary cost pressures, which were partially offset by lower costs of $25 million, excluding the impact of Goodyear Forward.

Current wording

Our results for the second quarter of 2024 include a 1.7% decrease in tire unit shipments compared to 2023, primarily due to lower global replacement tire volume, partially offset by growth in OE. In the second quarter of 2024, we experienced approximately $59 million of inflationary cost pressures, which were partially offset by lower costs of $34 million, excluding the impact of Goodyear Forward.

Previous wording

In the first quarter of 2024, Goodyear net loss was $57 million, or $0.20 per share, compared to Goodyear net loss of $101 million, or $0.35 per share, in the first quarter of 2023. The decrease in Goodyear net loss was primarily due to higher segment operating income, partially offset by rationalization actions and execution costs related to Goodyear Forward, including accelerated depreciation and accelerated lease costs related to announced facility closures in Americas and EMEA and third-party consulting costs.

Current wording

In the second quarter of 2024, Goodyear net income was $85 million, or $0.30 per share, compared to Goodyear net loss of $208 million, or $0.73 per share, in the second quarter of 2023. The change in Goodyear net income was primarily due to higher segment operating income, which included the impact of insurance recoveries, higher other income, primarily due to lower pension expense and higher net gains on asset sales, and lower rationalization charges, partially offset by execution costs related to Goodyear Forward, including accelerated depreciation and accelerated lease costs related to announced facility closures and third-party consulting costs, and higher U.S. and Foreign Tax Expense as a result of improved operating results. Additionally, our results in the second quarter of 2023 included the impact of a severe storm at Tupelo, estimated to negatively impact earnings by $64 million ($52 million after-tax and minority).

Previous wording

Net sales in the first quarter of 2024 were $4,537 million, compared to $4,941 million in the first quarter of 2023. Net sales decreased in 2024 primarily due to lower tire volume in Americas and EMEA, partially offset by higher tire volume in Asia Pacific, a global decline in price and product mix, unfavorable foreign currency translation in EMEA and Asia Pacific, driven by the strengthening of the U.S. dollar, and a decrease in sales in other tire-related businesses, primarily related to a decrease in third-party chemical sales in Americas and declines in retail sales in EMEA and Asia Pacific, partially offset by growth in EMEA's Fleet Solutions.

Current wording

Net sales in the first six months of 2024 were $9,107 million, compared to $9,808 million in the first six months of 2023. Net sales decreased in 2024 primarily due to lower tire volume in Americas and EMEA, partially offset by higher tire volume in Asia Pacific, global declines in price and product mix and the negative impact of changes in foreign exchange rates in EMEA and Asia Pacific, driven by the strengthening of the U.S. dollar, partially offset by sales lost during the first half of 2023 due to the Tupelo storm.

Previous wording

Total segment operating income for the first quarter of 2024 was $247 million, compared to $125 million in the first quarter of 2023. The $122 million increase was primarily due to lower raw material costs of $261 million, lower transportation and imported tire costs of $75 million, benefits from the Goodyear Forward plan of $72 million, and a favorable $8 million tax item in Brazil. These increases were partially offset by declines in price and product mix of $134 million, primarily in Americas and EMEA, increased conversion costs of $102 million driven by inflation, lower tire volume of $28 million, primarily in Americas and EMEA, an $11 million negative impact due to the Debica fire, a $7 million lower benefit related to a reduction in U.S. duty rates on various commercial tires from China compared to 2023 in Americas, and unfavorable foreign currency translation of $2 million driven by the strengthening of the U.S. dollar. Refer to "Results of Operations — Segment Information" for additional information.

Current wording

Total segment operating income for the first six months of 2024 was $586 million, compared to $249 million in the first six months of 2023. The $337 million increase was primarily due to lower raw material costs of $421 million, benefits from the Goodyear Forward plan of $162 million, lower transportation costs of $87 million, $50 million related to the 2023 negative impact of the Tupelo storm, a benefit from insurance recoveries related to the Debica fire of $50 million, partially offset by the continued impact of the fire on Debica fixed cost absorption during ramp-up of $18 million, a benefit of $20 million from insurance proceeds for business interruptions resulting from storm damage events in prior years, and a favorable $8 million tax item in Brazil. These increases were partially offset by declines in price and product mix of $193 million, primarily in Americas and EMEA, increased conversion costs of $169 million driven by inflation and the effect of lower tire production on fixed cost absorption, and lower tire volume of $69 million, primarily in Americas and EMEA. Refer to "Results of Operations — Segment Information" for additional information.

Previous wording

At March 31, 2024, we had $893 million of cash and cash equivalents as well as $3,313 million of unused availability under our various credit agreements, compared to $902 million and $4,247 million, respectively, at December 31, 2023. The decrease in cash and cash equivalents of $9 million was primarily due to net cash used for operating activities of $451 million, capital expenditures of $318 million, loans to TireHub, LLC ("TireHub") of $21 million and accounts receivable factoring transactions of $18 million, partially offset by net borrowings of $684 million and proceeds from asset dispositions of $108 million, primarily from prepaid cash proceeds received from the sale of a distribution center in Germany. Net cash used for operating activities reflects cash used for working capital of $539 million and rationalization payments of $55 million, as well as the Company's net loss for the period of $58 million, which includes non-cash charges for depreciation and amortization of $284 million and net rationalization charges of $22 million. Refer to "Liquidity and Capital Resources" for additional information.

Current wording

At June 30, 2024, we had $789 million of cash and cash equivalents as well as $3,227 million of unused availability under our various credit agreements, compared to $902 million and $4,247 million, respectively, at December 31, 2023. The decrease in cash and cash equivalents of $113 million was primarily due to net cash used for operating activities of $518 million, capital expenditures of $634 million and loans to TireHub LLC ("TireHub") of $17 million, partially offset by net borrowings of $919 million, proceeds from asset dispositions and sale and leaseback transactions of $124 million, primarily from the sale of a distribution center in Germany and sale and leaseback of a warehouse in Americas, and insurance recoveries of $37 million for the replacement of equipment damaged in the Debica fire. Net cash used for operating activities reflects cash used for working capital of $788 million and rationalization payments of $105 million, as well as the Company's net income for the period of $22 million, which includes non-cash charges for depreciation and amortization of $546 million, net rationalization charges of $41 million and a non-cash gain on asset sales of $94 million. Refer to "Liquidity and Capital Resources" for additional information.

Previous wording

We expect our global tire unit volume in the second quarter of 2024 to be approximately flat compared to the second quarter of 2023, excluding the benefit of the recovery from the tornado that affected our Tupelo, Mississippi manufacturing facility in 2023. We also expect unabsorbed overhead to be approximately $30 million higher in the second quarter of 2024 compared to the second quarter of 2023 due to lower production in the first quarter of 2024.

Current wording

Our unit volume will be affected by weaker underlying industry trends, including high distribution channel inventories of low-end imported products in the U.S. and Europe and lower OE production levels. We expect our global tire unit volume in the third quarter of 2024 to be lower compared to the third quarter of 2023 by approximately 4%. We also expect unabsorbed overhead to be approximately $30 million higher in the third quarter of 2024 compared to the third quarter of 2023 due to lower production in the second quarter of 2024.

Previous wording

Looking ahead, we expect to continue progress on our Goodyear Forward plan and expect second quarter benefits from the program of approximately $75 million in segment operating income.

Current wording

As we continue to make progress on our Goodyear Forward transformation plan, we expect third quarter benefits from the program of approximately $120 million in segment operating income, and full year benefits of approximately $425 million.

Previous wording

We expect our raw material costs to be approximately $160 million lower in the second quarter of 2024 compared to the second quarter of 2023. We expect price and product mix, when netted with the raw material reduction, to be a benefit of approximately $90 million in the second quarter of 2024. Price and product mix are expected to reflect the negative impact of customers with contractual raw material index adjustments and foreign currency-related adjustments. For the full year of 2024, we expect our raw material costs to be $325 million to $350 million lower than in 2023. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future cost fluctuations and changes in foreign exchange rates. We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials to minimize the impact of higher raw material costs.

Current wording

We expect approximately $50 million of higher price and product mix to offset approximately $50 million of raw materials headwinds in the third quarter of 2024 compared to the third quarter of 2023. For the full year of 2024, we expect our raw material costs to be approximately $260 million lower than in 2023. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future cost fluctuations and changes in foreign exchange rates. We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials to minimize the impact of higher raw material costs.

Previous wording

We continue to focus on actions to offset costs other than raw materials through cost savings initiatives, including initiatives related to the Goodyear Forward plan, rationalization actions, and improvements in price and product mix. For the full year of 2024, we expect to benefit from Goodyear Forward by at least $375 million and expect working capital to be flat as compared to 2023. We anticipate our capital expenditures to be $1.2 billion to $1.3 billion, excluding repairs related to the Tupelo tornado and the Debica fire, which we expect to be funded by insurance claim recoveries. We anticipate our cash flows will include rationalization payments of approximately $300 million, as we continue to implement elements of our Goodyear Forward plan to improve our cost structure.

Current wording

For the full year of 2024, we continue to expect working capital to be flat as compared to 2023. We anticipate our capital expenditures to be approximately $1,250 million, excluding approximately $50 million of capital expenditures covered by insurance. We anticipate our cash flows will include rationalization payments of approximately $300 million, as we continue to implement elements of our Goodyear Forward plan to improve our cost structure.

Previous wording

Refer to "Item 1A. Risk Factors" in the 2023 Form 10-K for a discussion of the factors that may impact our business, results of operations, financial condition or liquidity and "Forward-Looking Information — Safe Harbor Statement" in this Quarterly Report on Form 10-Q for a discussion of our use of forward-looking statements.

Current wording

Refer to "Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q and in the 2023 Form 10-K for a discussion of the factors that may impact our business, results of operations, financial condition or liquidity and "Forward-Looking Information — Safe Harbor Statement" in this Quarterly Report on Form 10-Q for a discussion of our use of forward-looking statements.

Previous wording

Worldwide tire unit sales in the first quarter of 2024 were 40.4 million units, decreasing 1.4 million units, or 3.3%, from 41.8 million units in the first quarter of 2023. Replacement tire volume decreased globally by 2.3 million units, or 7.4%. OE tire volume increased by 0.9 million units, or 8.9%, driven by Asia Pacific, reflecting the impact of new electric vehicle consumer fitments.

Current wording

Worldwide tire unit sales in the second quarter of 2024 were 40.1 million units, decreasing 0.7 million units, or 1.7%, from 40.8 million units in the second quarter of 2023. Replacement tire volume decreased globally by 2.0 million units, or 6.7%. OE tire volume increased globally by 1.3 million units, or 12.8%.

Previous wording

SAG in the first quarter of 2024 was $696 million, increasing $32 million, or 4.8%, from $664 million in the first quarter of 2023. SAG increased primarily due to an increase in costs associated with the Goodyear Forward plan of $28 million ($21 million after-tax and minority), primarily related to third-party advisory, legal and consulting fees and costs associated with planned asset sales, the impact of recoveries in 2023 of accounts receivable and other assets in Russia of $10 million and accelerated lease costs of $8 million, primarily related to announced facility closures in Americas. These increases were partially offset by savings related to the Goodyear Forward plan of $8 million and foreign currency translation of $4 million.

Current wording

SAG in the second quarter of 2024 was $731 million, increasing $23 million, or 3.2%, from $708 million in the second quarter of 2023. SAG increased primarily due to an increase in costs associated with the Goodyear Forward plan of $40 million ($30 million after-tax and minority), primarily related to third-party advisory, legal and consulting fees and costs associated with planned asset sales, and an increase in accelerated lease costs and asset write-offs of $11 million. These increases were partially offset by savings related to the Goodyear Forward plan of $16 million and foreign currency translation of $8 million.

Previous wording

We recorded net rationalization charges of $22 million ($17 million after-tax and minority) in the first quarter of 2024, primarily related to the plan to close a plant in Malaysia and the closure of Cooper Tire's Melksham, United Kingdom tire manufacturing facility ("Melksham"). We recorded net rationalization charges of $32 million ($26 million after-tax and minority) in the first quarter of 2023 primarily related to the plan to streamline our EMEA distribution network, the plan to reduce salaried staffing globally and the plan to reduce staffing and capacity in certain of our EMEA manufacturing facilities. For further information, refer to Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs.

Current wording

We recorded net rationalization charges of $19 million ($15 million after-tax and minority) in the second quarter of 2024 and $72 million ($58 million after-tax and minority) in the second quarter of 2023. Net rationalization charges in the second quarter of 2024 primarily related to the plan to open a new shared services center in Costa Rica, the plan to close our Fulda, Germany tire manufacturing facility (“Fulda”) and our Fürstenwalde, Germany tire manufacturing facility (“Fürstenwalde”) and closure of Cooper Tire's Melksham, United Kingdom tire manufacturing facility ("Melksham"), partially offset by reversals related our rationalization and workforce reorganization plan in EMEA due to voluntary attrition. Net rationalization charges in the second quarter of 2023 primarily related to the plan to close Fulda and the plan to reduce global operations and technology costs. For further information, refer to Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs.

Previous wording

Interest expense in the first quarter of 2024 was $126 million, decreasing $1 million, or 0.8%, from $127 million in the first quarter of 2023. The average interest rate was 6.34% in the first quarter of 2024 compared to 6.01% in the first quarter of 2023. The average debt balance was $7,945 million in the first quarter of 2024 compared to $8,451 million in the first quarter of 2023.

Current wording

Interest expense in the second quarter of 2024 was $130 million, decreasing $8 million, or 5.8%, from $138 million in the second quarter of 2023. The average interest rate was 6.21% in the second quarter of 2024 compared to 6.19% in the second quarter of 2023. The average debt balance was $8,371 million in the second quarter of 2024 compared to $8,911 million in the second quarter of 2023.

Previous wording

For the first quarter of 2024, we recorded income tax expense of $6 million on a loss before income taxes of $52 million. Income tax expense for the three months ended March 31, 2024 was favorably impacted by a net discrete tax benefit of $1 million ($1 million after minority interest). In the first quarter of 2023, we recorded an income tax benefit of $1 million on a loss before income taxes of $100 million. Income tax expense for the three months ended March 31, 2023 includes net discrete tax expense of $1 million.

Current wording

For the second quarter of 2024, we recorded income tax expense of $60 million on income before income taxes of $140 million. In the second quarter of 2023, we recorded an income tax benefit of $2 million on a loss before income taxes of $210 million. Income tax benefit for the three months ended June 30, 2023 includes net discrete tax expense of $2 million ($2 million after minority interest).

Previous wording

Net sales decreased in the first quarter of 2024 primarily due to lower tire volume of $187 million, representing lower tire volume in Americas and EMEA, partially offset by higher tire volume in Asia Pacific, global declines in price and product mix of $162 million, unfavorable foreign currency translation of $36 million, primarily in EMEA and Asia Pacific, driven by the strengthening of the U.S. dollar, and a decrease in sales in other tire-related businesses of $27 million, primarily related to a decrease in third-party chemical sales in Americas and declines in retail sales in EMEA and Asia Pacific, partially offset by growth in EMEA's Fleet Solutions.

Current wording

Net sales decreased in the first six months of 2024 primarily due to lower tire volume of $403 million, representing lower tire volume in Americas and EMEA, partially offset by higher tire volume in Asia Pacific, global declines in price and product mix of $296 million and the negative impact of changes in foreign exchange rates of $95 million in EMEA and Asia Pacific, driven by the strengthening of the U.S. dollar, partially offset by $77 million of sales lost during the first half of 2023 due to the Tupelo storm.

Previous wording

Cost of Goods Sold ("CGS") in the first quarter of 2024 was $3,715 million, decreasing $478 million, or 11.4%, from $4,193 million in the first quarter of 2023. CGS decreased primarily due to lower raw material costs of $261 million, lower tire volume of $159 million, primarily in Americas and EMEA, lower transportation and imported tire costs of $75 million, primarily in Americas, savings related to the Goodyear Forward plan of $56 million, foreign currency translation of $30 million, primarily in EMEA and Asia Pacific, lower costs in other tire-related businesses of $29 million, driven by a decrease in third-party chemical sales in Americas, and a favorable $8 million ($6 million after-tax and minority) tax item in Brazil. These decreases were partially offset by higher conversion costs of $102 million driven by inflation, an increase in accelerated depreciation and asset write-offs of $31 million primarily related to the closure of a development center in the U.S. and announced plant closures in EMEA, higher costs related to product mix of $28 million, primarily in EMEA and Asia Pacific, $14 million as a result of the Debica fire, and a $7 million lower benefit related to a reduction in U.S. duty rates on various commercial tires from China compared to 2023. CGS in the first quarter of 2023 was favorably impacted by a successful legal claim of $3 million ($3 million after-tax and minority) related to a 2005 warehouse fire in Spain.

Current wording

CGS in the first six months of 2024 was $7,337 million, decreasing $979 million, or 11.8%, from $8,316 million in the first six months of 2023. CGS decreased primarily due to lower raw material costs of $421 million, lower tire volume of $334 million, savings related to the Goodyear Forward plan of $117 million, lower global mix of $103 million, lower transportation costs of $87 million, foreign currency translation of $81 million, primarily in EMEA and Asia Pacific, a benefit from insurance recoveries related to the Debica fire of $50 million, partially offset by the continued impact of the fire on Debica fixed cost absorption during ramp-up and other property damage of $21 million, a benefit of $20 million ($15 million after-tax and minority) from insurance proceeds for business interruptions resulting from storm damage events in prior years, and a favorable $8 million ($6 million after-tax and minority) tax item in Brazil. These decreases were partially offset by higher conversion costs of $169 million driven by inflation and the effect of lower tire production on fixed cost absorption and an increase in accelerated depreciation and asset write-offs of $53 million primarily related to the announced plant closures in Asia Pacific and EMEA and closure of a development center in the U.S. CGS in the first six months of 2024 includes a $3 million ($3 million after-tax and minority) charge related to a flood in South Africa. CGS in the first six months of 2023 included a $5 million ($4 million after-tax and minority) benefit related to the reversal of a portion of the estimated cleanup costs associated with Gadsden and the favorable impact of a successful legal claim of $3 million ($3 million after-tax and minority) related to a 2005 warehouse fire in Spain.

Previous wording

CGS in the first quarter of 2024 and 2023 included pension expense of $3 million and $4 million, respectively. CGS in the first quarter of 2024 included $4 million of incremental savings from rationalization plans. CGS was 81.9% of sales in the first quarter of 2024, compared to 84.9% in the first quarter of 2023.

Current wording

CGS in the first six months of 2024 and 2023 included pension expense of $7 million and $8 million, respectively. CGS in the first six months of 2024 included $9 million of incremental savings from rationalization plans. CGS was 80.6% of sales in the first six months of 2024, compared to 84.8% in the first six months of 2023.

Previous wording

SAG in the first quarter of 2024 and 2023 included pension expense of $4 million and $3 million, respectively. SAG in the first quarter of 2024 included $14 million of incremental savings from rationalization plans, compared to $10 million in 2023. SAG was 15.3% of sales in the first quarter of 2024, compared to 13.4% in the first quarter of 2023.

Current wording

SAG in the first six months of 2024 and 2023 included pension expense of $6 million and $5 million, respectively. SAG in the first six months of 2024 included $27 million of incremental savings from rationalization plans, compared to $22 million in 2023. SAG was 15.7% of sales in the first six months of 2024, compared to 14.0% in the first six months of 2023.

Previous wording

CGS and SAG in the first quarter of 2024 included $51 million ($42 million after-tax and minority) of asset write offs, accelerated depreciation and accelerated lease charges related to the closure of a development center in the U.S. and announced plant and facility closures in Americas and EMEA. CGS and SAG in the first quarter of 2023 included $2 million ($0 million after-tax and minority) of accelerated depreciation and asset write-offs related to rationalization activities.

Current wording

CGS and SAG in the first six months of 2024 included $94 million ($76 million after-tax and minority) of asset write-offs, accelerated depreciation and accelerated lease charges, primarily related to plant closures in Asia Pacific and EMEA, closure of a development center in the U.S. and the exit of our retail operations in Australia and New Zealand. CGS and SAG in the first six months of 2023 included $13 million ($10 million after-tax and minority) of accelerated depreciation and asset write-offs related to rationalization activities, primarily related to the integration of Cooper Tire and closure of Melksham.

Previous wording

Other (Income) Expense in the first quarter of 2024 was $30 million of expense, compared to $25 million of expense in the first quarter of 2023. The increase in Other (Income) Expense was primarily due to a loss on asset and other sales of $10 million ($7 million after-tax and minority) primarily related to the sale of receivables in Argentina, compared to net gains of $2 million in the first quarter of 2023 and a $3 million increase in fees related to accounts receivable factoring programs driven by higher interest rates, partially offset by pension settlement income of $5 million ($4 million after-tax and minority) and a favorable $2 million ($1 million after-tax and minority) tax item in Brazil. Other (Income) Expense for the three months ended March 31, 2023 also includes $11 million ($9 million after-tax and minority) of expense for non-indemnified costs for product liability claims related to products manufactured by a formerly consolidated joint venture entity, $11 million ($8 million after-tax and minority) of income related to a favorable court decision setting aside a previous unfavorable verdict on intellectual property-related legal claims, and $5 million ($5 million after-tax and minority) of income related to the write-off of accumulated foreign currency translation in Russia.

Current wording

Other (Income) Expense in the first six months of 2024 was $42 million of income, compared to $61 million of expense in the first six months of 2023. The change in Other (Income) Expense was primarily due to net foreign exchange gains of $3 million in the first six months of 2024 compared to net foreign exchange losses of $41 million in the first six months of 2023, which were driven by the weakening of the Argentine peso and Turkish lira, and a pension settlement credit of $5 million ($4 million after-tax and minority) in the first six months of 2024 compared to pension settlement charges of $36 million ($28 after-tax and minority) in 2023. Additionally, the change in Other (Income) Expense reflects net gains on asset sales in the first six months of 2024 of $94 million ($66 million after-tax and minority), primarily related to the sale of distribution centers in EMEA and Americas, compared to a net gain on asset sales of $62 million ($46 million after-tax and minority) in 2023, primarily related to a sale and leaseback transaction in Americas, and a loss on the sale of receivables in Argentina of $8 million ($6 million after-tax and minority) in the first six months of 2024 compared to a loss on the sale of receivables in Argentina of $10 million ($9 million after-tax and minority) in the first six months of 2023. Other (Income) Expense for the first six months of 2024 also includes a favorable $2 million ($1 million after-tax and minority) tax item in Brazil. Other (Income) Expense in the first six months of 2023 also includes $15 million ($11 million after-tax and minority) of expense for non-indemnified costs for product liability claims related to products manufactured by a formerly consolidated joint venture entity, $11 million ($8 million after-tax and minority) of income related to a favorable court decision setting aside a previous unfavorable verdict on intellectual property-related legal claims, and $5 million ($5 million after-tax and minority) of income related to the write-off of accumulated foreign currency translation in Russia.

Previous wording

At March 31, 2024 and December 31, 2023, we had approximately $1.3 billion and $1.2 billion of U.S. federal, state and local net deferred tax assets, respectively, inclusive of valuation allowances totaling $22 million in each period, primarily for state tax loss carryforwards with limited lives. As of March 31, 2024, approximately $1.1 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2031. As of December 31, 2023, approximately $1.0 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2031. In the U.S., as of December 31, 2023, we emerged from a three-year cumulative loss which was driven by business disruptions created by the COVID-19 pandemic. Our U.S. cumulative income for the three-years ended March 31, 2024 is primarily a result of gains from other comprehensive income rather than consistently profitable U.S. operating results. Our U.S. operating results for the first quarter of 2024 have shown improvement when compared to the first quarter of 2023.

Current wording

At June 30, 2024 and December 31, 2023, we had approximately $1.3 billion and $1.2 billion of U.S. federal, state and local net deferred tax assets, respectively, inclusive of valuation allowances totaling $22 million in each period, primarily for state tax loss carryforwards with limited lives. As of June 30, 2024, approximately $1.1 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2031. As of December 31, 2023, approximately $1.0 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2031. In the U.S., as of December 31, 2023, we emerged from a three-year cumulative loss which was driven by business disruptions created by the COVID-19 pandemic. Our U.S. cumulative income for the three-years ended June 30, 2024 is primarily a result of gains from other comprehensive income rather than consistently profitable U.S. operating results. Our U.S. operating results for the first six months of 2024 have shown improvement when compared to the first six months of 2023.

Previous wording

In assessing our ability to utilize our net deferred tax assets, we primarily consider objectively verifiable evidence, including the improvement of our U.S. operating results during the first quarter of 2024 as a result of lower raw material and transportation costs and benefits from the Goodyear Forward plan compared to the first quarter of 2023. In addition, we consider our current forecasts of future profitability in assessing our ability to realize our deferred tax assets as well as the impact of tax planning strategies. These forecasts include the impact of recent trends and various macroeconomic factors such as the impact of raw material, transportation, labor and energy costs on our profitability. Our tax planning strategies include accelerating income on cross border transactions, including sales of inventory or raw materials to our subsidiaries, reducing U.S. interest expense by, for example, reducing intercompany loans through repatriating current year earnings of foreign subsidiaries, repatriation of certain foreign royalty income, and other financing transactions, all of which would increase our domestic profitability.

Current wording

In assessing our ability to utilize our net deferred tax assets, we primarily consider objectively verifiable evidence, including the improvement of our U.S. operating results during the first half of 2024 as a result of lower raw material and transportation costs and benefits from the Goodyear Forward plan compared to the first half of 2023. In addition, we consider our current forecasts of future profitability in assessing our ability to realize our deferred tax assets as well as the impact of tax planning strategies. These forecasts include the impact of recent trends and various macroeconomic factors such as the impact of raw material, transportation, labor and energy costs on our profitability. Our tax planning strategies include accelerating income on cross border transactions, including sales of inventory or raw materials to our subsidiaries, reducing U.S. interest expense by, for example, reducing intercompany loans through repatriating current year earnings of foreign subsidiaries, repatriation of certain foreign royalty income, and other financing transactions, all of which would increase our domestic profitability.

Previous wording

We believe our improvement in U.S. operating results for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, as well as forecasts of future profitability, provide us sufficient positive evidence to conclude that it is more likely than not that, at March 31, 2024, our U.S. net deferred tax assets will be fully utilized. However, macroeconomic factors such as raw material, transportation, labor and energy costs possess a high degree of volatility and can significantly impact our profitability. In addition, certain tax provisions, such as the annual interest expense limitation under Section 163(j) of the Internal Revenue Code of 1986, if amended, could impact our analysis of the realizability of our U.S. deferred tax assets. If our U.S. operating results significantly decline in the future, we may need to record a valuation allowance which could adversely impact our operating results. As such, we will closely monitor our U.S. operations as well as any tax law changes to assess the realizability of our U.S. deferred tax assets.

Current wording

We believe our improvement in U.S. operating results for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as well as forecasts of future profitability, provide us sufficient positive evidence to conclude that it is more likely than not that, at June 30, 2024, our U.S. net deferred tax assets will be fully utilized. However, macroeconomic factors such as raw material, transportation, labor and energy costs possess a high degree of volatility and can significantly impact our profitability. In addition, certain tax provisions, such as the annual interest expense limitation under Section 163(j) of the Internal Revenue Code of 1986, if amended, could impact our analysis of the realizability of our U.S. deferred tax assets. If our U.S.

Previous wording

At March 31, 2024 and December 31, 2023, we also had approximately $1.5 billion of foreign net deferred tax assets and related valuation allowances of approximately $1.2 billion. Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of these net foreign deferred tax assets. Most notably, in Luxembourg, we maintain a valuation allowance of approximately $1.0 billion on all of our net deferred tax assets. Each reporting period, we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize these existing deferred tax assets. We do not believe that sufficient positive evidence required to release valuation allowances on our foreign deferred tax assets having a significant impact on our financial position or results of operations will exist within the next twelve months.

Current wording

At June 30, 2024 and December 31, 2023, we also had approximately $1.5 billion of foreign net deferred tax assets and related valuation allowances of approximately $1.3 billion and $1.2 billion, respectively. Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of these net foreign deferred tax assets. Most notably, in Luxembourg, we maintain a valuation allowance of approximately $1.0 billion on all of our net deferred tax assets. Each reporting period, we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize these existing deferred tax assets. We do not believe that sufficient positive evidence required to release valuation allowances on our foreign deferred tax assets having a significant impact on our financial position or results of operations will exist within the next twelve months.

Previous wording

Minority shareholders’ net loss in the first quarter of 2024 was $1 million, compared to $2 million of income in the first quarter of 2023.

Current wording

Minority shareholders’ net loss in the first six months of 2024 was $6 million, primarily due to the plan to permanently close our Malaysia tire manufacturing facility, compared to net income of $2 million in the first six months of 2023.

Previous wording

Americas unit sales in the first quarter of 2024 decreased 1.5 million units, or 7.4%, to 19.0 million units. Replacement tire volume decreased 1.5 million units, or 9.2%, primarily in our consumer business, driven by increased competitiveness in the U.S. from the lower tier market. OE tire volume remained flat versus the first quarter of 2023.

Current wording

Americas unit sales in the second quarter of 2024 decreased 1.2 million units, or 5.9%, to 19.6 million units. Replacement tire volume decreased 1.4 million units, or 8.6%, primarily in our consumer business, driven by increased competitiveness in the U.S. from the lower tier market and the transitory impact from distribution changes in Latin America. OE tire volume increased 0.2 million units, or 6.7%, versus the second quarter of 2023.

Previous wording

Operating income in the first quarter of 2024 excluded asset write-offs, accelerated depreciation and accelerated lease charges of $8 million and net rationalization charges of $5 million. Operating income in the first quarter of 2023 excluded asset write-offs and accelerated depreciation of $8 million, net rationalization charges of $5 million and net gains on asset sales of $2 million.

Current wording

Operating income in the second quarter of 2024 excluded net gains on asset sales of $14 million, net rationalization charges of $11 million and asset write-offs, accelerated depreciation and accelerated lease charges of $2 million. Operating income in the second quarter of 2023 excluded net gains on asset sales of $60 million, asset write-offs and accelerated depreciation of $7 million and net rationalization charges of $3 million.

Previous wording

Net sales in the first quarter of 2024 were $2,588 million, decreasing $279 million, or 9.7%, from $2,867 million in the first quarter of 2023. The decrease in net sales was primarily due to lower tire volume of $176 million, unfavorable price and product mix of $104 million, and decreased sales in other tire-related businesses of $27 million, primarily due to lower third-party chemical sales. These decreases were partially offset by favorable foreign currency translation of $20 million, primarily related to the strengthening of the Brazilian real and Mexican peso, and $8 million related to the Goodyear Forward plan.

Current wording

Net sales in the first six months of 2024 were $5,285 million, decreasing $521 million, or 9.0%, from $5,806 million in the first six months of 2023. The decrease in net sales was primarily due to lower tire volume of $433 million, unfavorable price and product mix of $198 million and decreased sales in other tire-related businesses of $11 million, primarily due to lower third-party chemical sales. These decreases were partially offset by $77 million of sales lost during the first half of 2023 due to the Tupelo storm, favorable foreign currency translation of $23 million, primarily related to the strengthening of the Mexican peso and Brazilian real, and a $21 million benefit related to the Goodyear Forward plan.

Previous wording

EMEA unit sales in the first quarter of 2024 decreased 0.7 million units, or 5.2%, to 12.5 million units. Replacement tire volume decreased 0.7 million units, or 7.1%, driven by our consumer business, reflecting the impacts of competitiveness from the lower tier market, and industry declines in commercial. OE tire volume remained flat compared to the first quarter of 2023.

Current wording

EMEA unit sales in the first six months of 2024 decreased 0.9 million units, or 3.2%, to 24.1 million units. Replacement tire volume decreased 0.9 million units, or 4.5%, driven by our consumer business, reflecting the impacts of competitiveness from the lower tier market, lower tire volume in Eastern Europe, and industry declines in commercial. OE tire volume remained flat compared to the first six months of 2023.

Previous wording

Net sales in the first quarter of 2024 were $1,347 million, decreasing $145 million, or 9.7%, from $1,492 million in the first quarter of 2023. The decrease in net sales was primarily driven by lower tire volume of $65 million, unfavorable price and product mix of $41 million and unfavorable foreign currency translation of $40 million, driven by a weaker Turkish lira, partially offset by a stronger euro, Polish zloty and British pound.

Current wording

Net sales in the first six months of 2024 were $2,626 million, decreasing $207 million, or 7.3%, from $2,833 million in the first six months of 2023. The decrease in net sales was primarily driven by the negative impact of changes in foreign exchange rates of $87 million, driven by a weaker Turkish lira, partially offset by a stronger Polish zloty, euro and British pound, lower tire volume of $67 million and unfavorable price and product mix of $57 million.

Previous wording

Operating income in the first quarter of 2024 excluded accelerated depreciation of $16 million, net rationalization charges of $6 million and a $2 million loss on asset sales. Operating income in the first quarter of 2023 excluded net rationalization charges of $24 million, recoveries of previously written off accounts receivable and other assets of $10 million in Russia and accelerated depreciation of $4 million.

Current wording

Operating income in the first six months of 2024 excluded an $80 million gain on asset sales, accelerated depreciation and accelerated lease charges of $33 million, and net rationalization charges of $10 million. Operating loss in the first six months of 2023 excluded net rationalization charges of $88 million, recoveries of previously written off accounts receivable and other assets of $10 million in Russia and accelerated depreciation of $8 million.

Previous wording

Asia Pacific unit sales in the first quarter of 2024 increased 0.8 million units, or 10.0%, to 8.9 million units. OE tire volume increased 0.9 million units, or 26.7%, primarily driven by an increase in consumer EV fitments in China. Replacement tire volume decreased 0.1 million units, or 1.6%, primarily driven by weakness in the Japanese consumer industry, partially offset by China.

Current wording

Asia Pacific unit sales in the second quarter of 2024 increased 0.7 million units, or 7.8%, to 8.9 million units. OE tire volume increased 1.1 million units, or 32.2%, driven by an increase in consumer EV fitments in China. Replacement tire volume decreased 0.4 million units, or 8.9%, due to the impact of the Australia transformation and softness in consumer replacement in most of our markets.

Previous wording

Operating income in the first quarter of 2024 was $60 million, increasing $22 million, or 57.9%, from $38 million in the first quarter of 2023. The increase in operating income was primarily due to lower raw material costs of $13 million, higher tire volume of $12 million and savings generated by the Goodyear Forward plan of $6 million. These increases were partially offset by higher SAG of $6 million and unfavorable foreign currency translation of $2 million.

Current wording

Operating income in the second quarter of 2024 was $63 million, increasing $23 million, or 57.5%, from $40 million in the second quarter of 2023. The increase in operating income was primarily due to higher tire volume of $12 million, savings generated by the Goodyear Forward plan of $7 million and lower raw material costs of $6 million. These increases were partially offset by unfavorable foreign currency translation of $2 million.

Previous wording

At March 31, 2024, we had $893 million in cash and cash equivalents, compared to $902 million at December 31, 2023. For the three months ended March 31, 2024, net cash used for operating activities was $451 million, reflecting cash used for working capital of $539 million and rationalization payments of $55 million, as well as the Company's net loss for the period of $58 million, which included non-cash charges for depreciation and amortization of $284 million and net rationalization charges of $22 million. Net cash used for investing activities was $231 million, primarily representing capital expenditures of $318 million, partially offset by proceeds from asset dispositions of $108 million, primarily from prepaid cash proceeds received from the sale of a distribution center in Germany. Net cash provided by financing activities was $661 million, primarily due to net borrowings of $684 million.

Current wording

At June 30, 2024, we had $789 million in cash and cash equivalents, compared to $902 million at December 31, 2023. For the six months ended June 30, 2024, net cash used for operating activities was $518 million, reflecting cash used for working capital of $788 million and rationalization payments of $105 million, as well as the Company's net income for the period of $22 million, which included non-cash charges for depreciation and amortization of $546 million, net rationalization charges of $41 million and a non-cash gain on asset sales of $94 million. Net cash used for investing activities was $488 million, primarily representing capital expenditures of $634 million and loans to TireHub of $17 million, partially offset by proceeds from asset sales of $124 million, primarily related to the sale of a distribution center in Germany and sale and leaseback of a warehouse in Americas, and insurance recoveries of $37 million for replacement of equipment damaged in the Debica fire. Net cash provided by financing activities was $896 million, primarily due to net borrowings of $919 million.

Previous wording

At March 31, 2024, we had $3,313 million of unused availability under our various credit agreements, compared to $4,247 million at December 31, 2023. The table below presents unused availability under our credit facilities at those dates:

Current wording

At June 30, 2024, we had $3,227 million of unused availability under our various credit agreements, compared to $4,247 million at December 31, 2023. The table below presents unused availability under our credit facilities at those dates:

Previous wording

We expect our 2024 full-year cash flow needs to include capital expenditures of $1.2 billion to $1.3 billion. We also expect interest expense to be $520 million to $540 million; rationalization payments to be approximately $300 million; income tax payments to be approximately $200 million, excluding one-time items; and contributions to our funded pension plans to be $25 million to $50 million. We expect working capital to be flat as compared to 2023.

Current wording

We expect our 2024 full-year cash flow needs to include capital expenditures of approximately $1,250 million, excluding approximately $50 million of capital expenditures covered by insurance. We also expect interest expense to be $510 million to $530 million; rationalization payments to be approximately $300 million; income tax payments to be approximately $200 million, excluding one-time items; and contributions to our funded pension plans to be $25 million to $35 million. We expect working capital to be flat as compared to 2023.