GOODYEAR TIRE RUBBER CO OH

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 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.

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 ("OTR") 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 approximately $1.2 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 nine months ended September 30, 2024, the Goodyear Forward plan provided $123 million and $285 million, respectively, in benefits to segment operating income.

Previous wording

On July 22, 2024, we signed a definitive agreement to sell our off-the-road ("OTR") tire business to The Yokohama Rubber Company, Limited ("Yokohama") for $905 million in cash, subject to certain adjustments. Pursuant to a product supply agreement to be entered into with Yokohama in connection with the closing of the transaction, we will manufacture certain OTR tires for Yokohama at some of our manufacturing facilities for an initial period of up to five years after the closing of the transaction. The transaction is subject to regulatory approvals, other customary closing conditions and consultations and is expected to close by early 2025.

Current wording

On July 22, 2024, we signed a definitive agreement to sell our OTR tire business to The Yokohama Rubber Company, Limited ("Yokohama") for $905 million in cash, subject to certain adjustments. Pursuant to a product supply agreement to be entered into with Yokohama in connection with the closing of the transaction, we will manufacture certain OTR tires for Yokohama at some of our manufacturing facilities for an initial period of up to five years after the closing of the transaction. The transaction is subject to regulatory approvals and other customary closing conditions and consultations and is expected to close in early 2025.

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. 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.

Current wording

Our tire manufacturing facility in Debica, Poland (“Debica”) continues to recover from a fire in the third quarter of 2023 and achieved full ramp-up in the third quarter of 2024. During the nine months ended September 30, 2024, we received a benefit of $26 million ($17 million after-tax and minority) from insurance recoveries, net of fixed costs incurred during the ramp-up of the facility.

Previous 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.

Current wording

Our results for the third quarter of 2024 include a 6.2% decrease in tire unit shipments compared to 2023 due to lower global replacement tire volume, partially offset by growth in OE. In the third quarter of 2024, we experienced approximately $53 million of inflationary cost pressures.

Previous wording

Net sales in the second quarter of 2024 were $4,570 million, compared to $4,867 million in the second quarter of 2023. Net sales decreased in 2024 primarily due to lower tire volume in Americas, 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. These decreases were partially offset by sales lost during the second quarter of 2023 due to a storm at our tire manufacturing facility in Tupelo, Mississippi ("Tupelo") and higher sales in other tire-related businesses, primarily due to higher third-party chemical sales in Americas.

Current wording

Net sales in the third quarter of 2024 were $4,824 million, compared to $5,142 million in the third quarter of 2023. Net sales decreased in 2024 primarily due to lower global tire volume, the negative impact of changes in foreign exchange rates globally, driven by the strengthening of the U.S. dollar, and declines in price and product mix in Americas. These decreases were partially offset by higher sales in other tire-related businesses, primarily due to higher third-party chemical sales in Americas and Fleet Solutions in EMEA, and recovery of sales lost during the third quarter of 2023 due to a storm at our tire manufacturing facility in Tupelo, Mississippi ("Tupelo").

Previous wording

Total segment operating income for the second quarter of 2024 was $339 million, compared to $124 million in the second quarter of 2023. The $215 million increase was primarily due to lower raw material costs of $160 million, benefits from the Goodyear Forward plan of $90 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 $7 million, and a benefit of $20 million from insurance proceeds for business interruptions resulting from storm damage events in prior years. These increases were partially offset by higher conversion costs of $67 million, driven by the effect of lower tire production on fixed cost absorption and inflation, declines in price and product mix of $59 million, primarily in Americas and EMEA, and lower tire volume of $41 million, primarily in Americas. Refer to "Results of Operations — Segment Information" for additional information.

Current wording

Total segment operating income for the third quarter of 2024 was $347 million, compared to $336 million in the third quarter of 2023. The $11 million increase was primarily due to benefits from the Goodyear Forward plan of $123 million, improvements in price and product mix of $26 million primarily in EMEA and Asia Pacific, a benefit of $20 million from insurance proceeds for property damage and business interruptions resulting from storm damage events in prior years in Americas, and higher earnings in other tire-related businesses of $17 million, primarily related to an increase in third-party chemical earnings in Americas. These increases were partially offset by higher conversion costs of $87 million, driven by the effect of lower tire production on fixed cost absorption and inflation, lower tire volume of $74 million, primarily in Americas, and higher raw material costs of $19 million. Refer to "Results of Operations — Segment Information" for additional information.

Previous 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.

Current wording

Net sales in the first nine months of 2024 were $13,931 million, compared to $14,950 million in the first nine 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 globally, driven by the strengthening of the U.S. dollar. These decreases were partially offset by sales lost during the first nine months of 2023 due to the Tupelo storm and higher sales in other tire-related businesses, primarily due to Fleet Solutions in EMEA and higher third-party chemical sales in Americas.

Previous wording

In the first six months of 2024, Goodyear net income was $28 million, or $0.10 per share, compared to Goodyear net loss of $309 million, or $1.08 per share, in the first six months 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. These decreases were 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 first half of 2023 included the impact of the Tupelo storm, estimated to negatively impact earnings by $64 million ($52 million after-tax and minority).

Current wording

In the first nine months of 2024, Goodyear net loss was $6 million, or $0.02 per share, compared to Goodyear net loss of $398 million, or $1.40 per share, in the first nine months of 2023. The change in Goodyear net loss was primarily due to higher segment operating income, lower rationalization charges and higher other income, primarily due to lower pension expense and higher net gains on asset sales. These decreases were 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, an intangible asset impairment in the third quarter of 2024, and higher U.S. and Foreign Tax Expense as a result of improved operating results. Additionally, our results in the first nine months of 2023 included the impact of the Tupelo storm that negatively impacted earnings by $69 million ($56 million after-tax and minority).

Previous 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.

Current wording

Total segment operating income for the first nine months of 2024 was $933 million, compared to $585 million in the first nine months of 2023. The $348 million increase was primarily due to lower raw material costs of $402 million, benefits from the Goodyear Forward plan of $285 million, lower transportation costs of $67 million, $55 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 costs incurred during ramp-up of $20 million, a benefit of $39 million from insurance proceeds for business interruptions and property damage recoveries resulting from storm damage events in prior years, and a favorable $8 million tax item in Brazil. These increases were partially offset by increased conversion costs of $256 million driven by inflation and the effect of lower tire production on fixed cost absorption, declines in price and product mix of $167 million, primarily in Americas and EMEA, and lower tire volume of $143 million, primarily in Americas and EMEA. Refer to "Results of Operations — Segment Information" for additional information.

Previous 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.

Current wording

At September 30, 2024, we had $905 million of cash and cash equivalents as well as $2,508 million of unused availability under our various credit agreements, compared to $902 million and $4,247 million, respectively, at December 31, 2023. The increase in cash and cash equivalents of $3 million was primarily due to net borrowings of $1,366 million, proceeds from asset dispositions and sale and leaseback transactions of $126 million, primarily from the sale of a distribution center in Germany and the sale and leaseback of a warehouse in Americas, and insurance recoveries of $48 million for the replacement of equipment damaged in the Debica fire and Tupelo storm, partially offset by capital expenditures of $912 million, net cash used for operating activities of $591 million, and loans to TireHub LLC ("TireHub") of $28 million. Net cash used for operating activities reflects cash used for working capital of $1,124 million, rationalization payments of $149 million, and pension contributions of $45 million, as well as the Company's net loss for the period of $12 million, which includes non-cash charges for depreciation and amortization of $800 million, an intangible asset impairment of $125 million, net rationalization charges of $52 million, a non-cash gain on asset sales of $95 million, and a gain on insurance recoveries for damaged property, plant and equipment of $61 million. Refer to "Liquidity and Capital Resources" for additional information.

Previous 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.

Current wording

In the fourth quarter of 2024, we expect our unit volume will continue to be affected by weak underlying industry trends, including high distribution channel inventories of low-end imported products in the U.S. and Europe. We expect our global tire unit volume in the fourth quarter of 2024 to be lower compared to the fourth quarter of 2023 by approximately 4%. We also expect unabsorbed overhead to be approximately $40 million higher in the fourth quarter of 2024 compared to the fourth quarter of 2023 due to lower production in the third quarter of 2024.

Previous 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.

Current wording

As we continue to make progress on our Goodyear Forward transformation plan, we expect fourth quarter benefits from the program of approximately $165 million in segment operating income, and full year benefits of approximately $450 million.

Previous 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.

Current wording

We expect approximately $100 million of raw material headwinds in the fourth quarter of 2024 compared to the fourth quarter of 2023. We also expect price and product mix to be a headwind of approximately $15 million driven by higher OE sales volume in the fourth quarter of 2024 compared to the fourth quarter of 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 expect non-raw material inflation and other costs to be approximately $60 million higher in the third quarter of 2024 when compared with the third quarter of 2023. 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.

Current wording

We expect non-raw material inflation and other costs, net of other expected cost improvements, to be approximately $35 million higher in the fourth quarter of 2024 when compared with the fourth quarter of 2023. 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.

Previous 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.

Current wording

For the full year of 2024, we expect working capital to be a $150 million to $200 million use of operating cash flows. We anticipate our capital expenditures to be approximately $1,200 million, excluding approximately $50 million of capital expenditures covered by insurance. We anticipate our cash flows will include rationalization payments of approximately $225 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 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.

Current wording

Refer to "Item 1A. Risk Factors" in the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024 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

Net sales decreased in the second quarter of 2024 primarily due to lower tire volume of $216 million, representing lower tire volume in Americas, partially offset by higher tire volume in Asia Pacific, global declines in price and product mix of $134 million and the negative impact of changes in foreign exchange rates of $59 million, primarily in EMEA and Asia Pacific, driven by the strengthening of the U.S. dollar, partially offset by $77 million of sales lost during the second quarter of 2023 due to the Tupelo storm and higher sales in other tire-related businesses of $21 million, primarily due to increased third-party chemical sales in Americas.

Current wording

Net sales decreased in the third quarter of 2024 primarily due to lower tire volume of $333 million, representing lower tire volume globally, the negative impact of changes in foreign exchange rates globally of $73 million, driven by the strengthening of the U.S. dollar, and declines in price and product mix of $3 million, primarily in Americas, partially offset by higher sales in other tire-related businesses of $46 million, primarily due to increased third-party chemical sales in Americas and growth in Fleet Solutions in EMEA, and $33 million of sales lost during the third quarter of 2023 due to the Tupelo storm.

Previous 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%.

Current wording

Worldwide tire unit sales in the third quarter of 2024 were 42.5 million units, decreasing 2.8 million units, or 6.2%, from 45.3 million units in the third quarter of 2023. Replacement tire volume decreased globally by 3.1 million units, or 9.0%. OE tire volume increased globally by 0.3 million units, or 2.5%.

Previous wording

Cost of Goods Sold ("CGS") in the second quarter of 2024 was $3,622 million, decreasing $501 million, or 12.2%, from $4,123 million in the second quarter of 2023. CGS decreased primarily due to lower tire volume of $175 million, lower raw material costs of $160 million, lower global mix of $75 million, savings related to the Goodyear Forward plan of $61 million, foreign currency translation of $51 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 of $7 million, lower transportation costs of $38 million and a benefit of $20 million ($15 million after-tax and minority) from insurance proceeds for property damage and business interruptions resulting from storm damage events in prior years. These decreases were partially offset by higher conversion costs of $67 million driven by the effect of lower tire production on fixed cost absorption and inflation, an increase in accelerated depreciation and asset write-offs of $21 million primarily related to the announced plant closures in Asia Pacific and EMEA and a $3 million ($3 million after-tax and minority) charge related to a flood in South Africa. CGS in the second quarter 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 the permanent closure of our Gadsden, Alabama tire manufacturing facility (“Gadsden”).

Current wording

Cost of Goods Sold ("CGS") in the third quarter of 2024 was $3,881 million, decreasing $290 million, or 7.0%, from $4,171 million in the third quarter of 2023. CGS decreased primarily due to lower tire volume of $259 million, savings related to the Goodyear Forward plan of $77 million, foreign currency translation of $56 million, lower mix of $29 million in Americas and Asia Pacific, and a benefit of $20 million ($15 million after-tax and minority) from insurance proceeds for property damage and business interruptions resulting from storm damage events in prior years. These decreases were partially offset by higher conversion costs of $87 million driven by inflation and the effect of lower tire production on fixed cost absorption, higher costs in other tire-related businesses of $29 million, primarily related to Fleet Solutions in EMEA and higher third-party chemical and retail sales in Americas, higher raw material costs of $19 million, an increase in accelerated depreciation and asset write-offs of $11 million primarily related to the announced plant closures in EMEA and Asia Pacific, and $3 million ($2 million after-tax and minority) as a result of the Debica fire, primarily comprised of repair costs.

Previous wording

CGS in the second quarter of 2024 and 2023 included pension expense of $4 million for each period. CGS in the second quarter of 2024 included $6 million of incremental savings from rationalization plans. CGS was 79.3% of sales in the second quarter of 2024, compared to 84.7% in the second quarter of 2023.

Current wording

CGS in the third quarter of 2024 and 2023 included pension expense of $4 million and $3 million, respectively. CGS in the third quarter of 2024 included $3 million of incremental savings from rationalization plans. CGS was 80.5% of sales in the third quarter of 2024, compared to 81.1% in the third quarter of 2023.

Previous 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.

Current wording

SAG in the third quarter of 2024 was $663 million, decreasing $10 million, or 1.5%, from $673 million in the third quarter of 2023. SAG decreased primarily due to savings related to the Goodyear Forward plan of $33 million and lower advertising costs of $13 million. These decreases were partially offset by an increase in costs associated with the Goodyear Forward plan of $14 million ($10 million after-tax and minority), primarily related to third-party advisory, legal and consulting fees and costs associated with planned asset sales, increases in wages and benefits of $8 million, inflation on non-wage and benefits costs of $8 million, and an increase in accelerated lease costs and asset write-offs of $5 million.

Previous wording

SAG in the second quarter of 2024 and 2023 included pension expense of $2 million for each period. SAG in the second quarter of 2024 included $13 million of incremental savings from rationalization plans, compared to $12 million in 2023. SAG was 16.0% of sales in the second quarter of 2024, compared to 14.5% in the second quarter of 2023.

Current wording

SAG in the third quarter of 2024 and 2023 included pension expense of $3 million and $4 million, respectively. SAG in the third quarter of 2024 included $7 million of incremental savings from rationalization plans, compared to $12 million in 2023. SAG was 13.7% of sales in the third quarter of 2024, compared to 13.1% in the third quarter of 2023.

Previous 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.

Current wording

We recorded net rationalization charges of $11 million ($9 million after-tax and minority) in the third quarter of 2024 and $198 million ($177 million after-tax and minority) in the third quarter of 2023. Net rationalization charges in the third quarter of 2024 primarily related to a reduction in headcount in Americas, partially offset by reversals primarily related to our rationalization and workforce reorganization plan in EMEA due to voluntary attrition. Net rationalization charges in the third quarter of 2023 primarily related to the rationalization and workforce reorganization plan in EMEA and the exit of our retail operations in Australia and New Zealand. For further information, refer to Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs.

Previous wording

CGS and SAG in the second quarter of 2024 included $43 million ($34 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 and the exit of our retail operations in Australia and New Zealand. CGS and SAG in the second quarter of 2023 included $11 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.

Current wording

CGS and SAG in the third quarter of 2024 included $25 million ($23 million after-tax and minority) of asset write-offs, accelerated depreciation and accelerated lease charges, primarily related to plans to improve our cost structure through announced closures of our Fulda, Fürstenwalde and Malaysia tire manufacturing facilities, as well as the closure of a development center and warehouse in the U.S. CGS and SAG in the third quarter of 2023 included $8 million ($7 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 Cooper Tire's Melksham, United Kingdom tire manufacturing facility ("Melksham").

Previous 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.

Current wording

Interest expense in the third quarter of 2024 was $135 million, decreasing $3 million, or 2.2%, from $138 million in the third quarter of 2023. The average interest rate was 6.17% in the third quarter of 2024 compared to 6.32% in the third quarter of 2023. The average debt balance was $8,751 million in the third quarter of 2024 compared to $8,738 million in the third quarter of 2023.

Previous 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).

Current wording

In the third quarter of 2024, we recorded income tax expense of $9 million on a loss before income taxes of $25 million. Income tax expense for the three months ended September 30, 2024 includes net discrete tax expense of $7 million ($7 million after minority interest). In the third quarter of 2023, we recorded income tax expense of $25 million on a loss before income taxes of $59 million. Income tax expense for the three months ended September 30, 2023 includes a net discrete tax benefit of $8 million ($8 million after minority interest).

Previous 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.

Current wording

Net sales decreased in the first nine months of 2024 primarily due to lower tire volume of $736 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 $299 million and the negative impact of changes in foreign exchange rates of $168 million globally, driven by the strengthening of the U.S. dollar, partially offset by $110 million of sales lost during the first nine months of 2023 due to the Tupelo storm and higher sales in other tire-related businesses of $40 million, primarily driven by growth in Fleet Solutions in EMEA and increased third-party chemical sales in Americas.

Previous wording

Worldwide tire unit sales in the first six months of 2024 were 80.5 million units, decreasing 2.1 million units, or 2.5%, from 82.6 million units in the first six months of 2023. Replacement tire volume decreased globally by 4.3 million units, or 7.1%. OE tire volume increased globally by 2.2 million units, or 10.8%.

Current wording

Worldwide tire unit sales in the first nine months of 2024 were 123.0 million units, decreasing 4.9 million units, or 3.8%, from 127.9 million units in the first nine months of 2023. Replacement tire volume decreased globally by 7.4 million units, or 7.7%. OE tire volume increased globally by 2.5 million units, or 8.0%.

Previous 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.

Current wording

CGS in the first nine months of 2024 was $11,218 million, decreasing $1,269 million, or 10.2%, from $12,487 million in the first nine months of 2023. CGS decreased primarily due to lower tire volume of $593 million, lower raw material costs of $402 million, savings related to the Goodyear Forward plan of $194 million, foreign currency translation of $137 million, lower global mix of $132 million, 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 costs during ramp-up and other property damage of $20 million, a benefit of $39 million ($30 million after-tax and minority) from insurance proceeds for property damage and business interruptions resulting from storm damage events in Americas 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 $256 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 $63 million primarily related to the announced plant closures in Asia Pacific and EMEA. CGS in the first nine 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 nine 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 the permanent closure of our Gadsden, Alabama tire manufacturing facility ("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

SAG in the first six months of 2024 was $1,427 million, increasing $55 million, or 4.0%, from $1,372 million in the first six months of 2023. SAG increased primarily due to an increase in costs associated with the Goodyear Forward plan of $67 million ($51 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 $28 million. These increases were partially offset by savings related to the Goodyear Forward plan of $24 million, foreign currency translation of $12 million and other reductions in wages and benefits of $12 million.

Current wording

SAG in the first nine months of 2024 was $2,090 million, increasing $45 million, or 2.2%, from $2,045 million in the first nine months of 2023. SAG increased primarily due to an increase in costs associated with the Goodyear Forward plan of $81 million ($61 million after-tax and minority), primarily related to third-party advisory, legal and consulting fees and costs associated with planned asset sales, an increase in accelerated lease costs and asset write-offs of $36 million, and inflation of $30 million. These increases were partially offset by savings related to the Goodyear Forward plan of $57 million, foreign currency translation of $21 million, and lower advertising costs of $15 million.

Previous 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.

Current wording

SAG in the first nine months of 2024 and 2023 included pension expense of $9 million for each period. SAG in the first nine months of 2024 included $33 million of incremental savings from rationalization plans, compared to $34 million in 2023. SAG was 15.0% of sales in the first nine months of 2024, compared to 13.7% in the first nine months of 2023.

Previous wording

We recorded net rationalization charges of $41 million ($31 million after-tax and minority) in the first six months of 2024 and $104 million ($84 million after-tax and minority) in the first six months of 2023. Net rationalization charges in the first six months of 2024 primarily related to the closure of Malaysia, the plan to open a new shared services center in Costa Rica, the announced closures of Fulda and Fürstenwalde and the closure of Melksham, partially offset by reversals related to our rationalization and workforce reorganization plan in EMEA due to voluntary attrition. Net rationalization charges in the first six months of 2023 primarily related to the plan to close Fulda, the plan to streamline our EMEA distribution network 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.

Current wording

We recorded net rationalization charges of $52 million ($40 million after-tax and minority) in the first nine months of 2024 and $302 million ($262 million after-tax and minority) in the first nine months of 2023. Net rationalization charges in the first nine months of 2024 primarily related to the closures of our Malaysia, Melksham, Fulda and Fürstenwalde tire manufacturing facilities, as well as the closure of a development center and warehouse in the U.S., and the plan to open a new shared services center in Costa Rica, partially offset by reversals related to our rationalization and workforce reorganization plan in EMEA due to voluntary attrition. Net rationalization charges in the first nine months of 2023 primarily related to the rationalization and workforce reorganization plan in EMEA, the plan to reduce production capacity at Fulda, the plan to improve profitability in our Australia and New Zealand operations, and the plan to streamline our EMEA distribution network. For further information, refer to Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs.

Previous 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.

Current wording

CGS and SAG in the first nine months of 2024 included $119 million ($101 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 nine months of 2023 included $21 million ($16 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 the closure of Melksham, including the impact of $10 million of recoveries of previously written-off accounts receivable and other assets in Russia.

Previous wording

Interest expense in the first six months of 2024 was $256 million, decreasing $9 million, or 3.4%, from $265 million in the first six months of 2023. The average interest rate was 6.28% in the first six months of 2024 compared to 6.11% in the first six months of 2023. The average debt balance was $8,158 million in the first six months of 2024 compared to $8,681 million in the first six months of 2023.

Current wording

Interest expense in the first nine months of 2024 was $391 million, decreasing $12 million, or 3.0%, from $403 million in the first nine months of 2023. The average interest rate was 6.24% in the first nine months of 2024 compared to 6.18% in the first nine months of 2023. The average debt balance was $8,355 million in the first nine months of 2024 compared to $8,700 million in the first nine months of 2023.

Previous wording

Other (Income) Expense in the second quarter of 2024 was $72 million of income, compared to $36 million of expense in the second quarter of 2023. The change in Other (Income) Expense was primarily due net gains on asset and other sales of $96 million ($68 million after-tax and minority) in the second quarter of 2024, primarily due to the sale of distribution centers in EMEA and Americas, compared to net gains on asset and other sales of $51 million ($37 million after-tax and minority) in 2023, primarily related to a sale and leaseback transaction in Americas. Additionally, there were no pension settlement charges in the second quarter of 2024 compared to pension settlement charges of $36 million ($28 million after-tax and minority) in the second quarter of 2023. Also contributing to the change is a net foreign exchange gain of $4 million in the second quarter of 2024 compared to net foreign exchange losses of $29 million in the second quarter of 2023, which were driven by the weakening of the Turkish lira and Argentine peso. Other expense in the second quarter of 2023 also included $4 million ($2 million after-tax and minority) of expense in 2023 for non-indemnified costs for product liability claims related to products manufactured by a formerly consolidated joint venture entity.

Current wording

Other (Income) Expense in the first nine months of 2024 was $8 million of income, compared to $82 million of expense in the first nine months of 2023. The change in Other (Income) Expense was primarily due to net foreign exchange gains of $3 million in the first nine months of 2024 compared to net foreign exchange losses of $38 million in the first nine 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 nine months of 2024 compared to pension settlement charges of $40 million ($30 million after-tax and minority) in 2023. Additionally, the change in Other (Income) Expense reflects net gains on asset and other sales in the first nine months of 2024 of $87 million ($61 million after-tax and minority), primarily related to the sale of distribution centers in EMEA and Americas, compared to a net gain on asset and other sales of $58 million ($41 million after-tax and minority) in

Previous 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.

Current wording

2023, primarily related to a sale and leaseback transaction in Americas. Other (Income) Expense for the first nine months of 2024 had lower interest income of $14 million compared to the first nine months of 2023. Other (Income) Expense for the first nine months of 2024 also includes transaction costs of $11 million ($9 million after-tax and minority) related to the anticipated sale of the OTR business and a favorable $2 million ($1 million after-tax and minority) tax item in Brazil. Other (Income) Expense in the first nine months of 2023 also includes $19 million ($14 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

In the first six months of 2023, we recorded income tax benefit of $3 million on a loss before income taxes of $310 million. Income tax benefit for the six months ended June 30, 2023 was unfavorably impacted by net discrete tax expense of $3 million ($2 million after minority interest).

Current wording

For the first nine months of 2024, we recorded income tax expense of $75 million on income before income taxes of $63 million. Income tax expense for the nine months ended September 30, 2024 was unfavorably impacted by net discrete tax expense of $6 million ($6 million after minority interest).

Previous wording

For the first six months of 2024, we recorded income tax expense of $66 million on income before income taxes of $88 million. Income tax expense for the six months ended June 30, 2024 was favorably impacted by a net discrete tax benefit of $1 million ($1 million after minority interest).

Current wording

In the first nine months of 2023, we recorded income tax expense of $22 million on a loss before income taxes of $369 million. Income tax expense for the nine months ended September 30, 2023 was favorably impacted by a net discrete tax benefit of $5 million ($6 million after minority interest).

Previous wording

We record taxes based on overall estimated annual effective tax rates. The difference between our effective tax rate and the U.S. statutory rate of 21% for both the six months ended June 30, 2024 and 2023 primarily relates to losses in foreign jurisdictions in which no tax benefits are recorded and the discrete items noted above.

Current wording

We record taxes based on overall estimated annual effective tax rates. The difference between our effective tax rate and the U.S. statutory rate of 21% for both the nine months ended September 30, 2024 and 2023 primarily relates to losses in foreign jurisdictions in which no tax benefits are recorded and the discrete items noted above.

Previous 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.

Current wording

At September 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 $29 million and $22 million, respectively, in each period, primarily for state tax loss carryforwards with limited lives. As of September 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 2030. 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 2030. 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 September 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 nine months of 2024 have shown improvement when compared to the first nine months of 2023.