The Goodyear Tire & Rubber Company (NASDAQ:GT) Q4 2017 Earnings Conference Call - Final Transcript

Feb 08, 2018 • 08:30 am ET

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The Goodyear Tire & Rubber Company (NASDAQ:GT) Q4 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear's Fourth Quarter and Full Year 2017 Earnings Call. [Operator Instructions] After the speakers remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the program over to Christina Zamarro, Goodyear's Vice President, Investor Relations. Please go ahead.

Executive
Christina Zamarro

Thank you, Keith, and thank you, everyone, for joining us for our conference call this morning. Joining me today are Rich Kramer, Chairman and Chief Executive Officer; and Laura Thompson, Executive Vice President and Chief Financial Officer.

The supporting slide presentation for today's call can be found on our website at investor.goodyear.com and a replay of this call will be available later today. Replay instructions were included in our earnings release issued earlier this morning.

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

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

And with that, I'll turn the call over to Rich.

Executive
Richard Krame

Thank you, Christina, and good morning, everybody. Thanks for joining us today. This morning, I will review our fourth quarter and full-year highlights and then ask Laura to walk us through the fourth quarter results. Then I'll come back to discuss each of our business units and lay out our 2018 plan and our longer-term targets. Laura will finish with a detailed review of our financial targets and our capital allocation plan before opening the call for your questions.

Our fourth-quarter results were highlighted by strong volume recovery in consumer replacement in the U.S. and EMEA. We were particularly pleased with our performance in 17-inch-and-greater rim size segments where we grew almost double the rate of the market. These results reflect the power of the Goodyear brand across our regions. Our fourth quarter segment operating income was $419 million, which was strengthened by this volume performance. In addition, our runrate improved significantly during the fourth quarter with consumer tire margins increasing 250 basis points sequentially from the third quarter.

Two of our three business units showed year-over-year growth in segment operating income despite continuing significant raw material headwinds. Moreover, our Asia-Pacific business unit saw all-time records in both volume and segment operating income in the quarter driven by our continuing strength in China. On a