Goodyear Tire & Rubber Co: Form 10-Q for the period ended Mar 31, 2025

All per share amounts are diluted and refer to Goodyear net income (loss).

OVERVIEW

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 53 manufacturing facilities in 20 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.

Results of Operations

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 consisted 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 global 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, resulting in an expected annual run-rate benefit of approximately $200 million by the end of 2025. Our plans for margin expansion also include a reduction of our cost structure by approximately $1.3 billion by the end of 2025, 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 months ended March 31, 2025, the Goodyear Forward plan provided $200 million in benefits to segment operating income.

On January 7, 2025, we entered into a Purchase Agreement, dated as of January 7, 2025 (the "Dunlop Purchase Agreement"), with Sumitomo Rubber Industries, Ltd. ("SRI") relating to the sale of our rights to the Dunlop brand in Europe, North America and Oceania for consumer, commercial and other specialty tires, together with certain associated intellectual property and other intangible assets, for a purchase price of $526 million. SRI will also pay us an up-front transition support fee of $105 million for our support in transitioning the Dunlop brand, related intellectual property and Dunlop customers to SRI. SRI will also acquire our existing Dunlop tire inventory. The Dunlop Purchase Agreement also contemplates entering into a number of ancillary agreements, including (a) a transition license agreement, pursuant to which we will continue to manufacture, sell and distribute Dunlop-branded consumer tires in Europe from the closing of the transaction until December 31, 2025, and during which we will pay SRI a royalty on such Dunlop sales but will otherwise retain all profits therefrom; (b) a transition offtake agreement, pursuant to which we will sell to SRI certain Dunlop-branded consumer tire products for a period of up to five years, commencing after termination or expiration of the transition license agreement; and (c) we will license back the Dunlop brand from SRI for commercial tires in Europe on a long-term basis, subject to a royalty on sales. On May 7, 2025, we completed the sale of the Dunlop brand and related transactions and received gross cash proceeds of $735 million.

On February 3, 2025, we completed the sale of our OTR tire business to The Yokohama Rubber Company, Limited (“Yokohama”) pursuant to the terms of the Share and Asset Purchase Agreement, dated as of July 22, 2024 (the “OTR Purchase Agreement”). Yokohama acquired our OTR tire business for a purchase price of $905 million in cash, subject to certain adjustments set forth in the OTR Purchase Agreement. In conjunction with the sale of the OTR tire business, we entered into several ancillary agreements, including a trademark license agreement, whereby we license certain trademarks to Yokohama for an initial period of ten years from the date of the sale, and a product supply agreement, pursuant to which we will supply to Yokohama certain OTR tires for an initial period of up to five years, subject to the terms and conditions set forth therein, including an exit and asset relocation plan to be mutually agreed upon by the parties pursuant to which, beginning no earlier than the second anniversary of closing of the transaction, the production of those OTR tires will transition to Yokohama’s facilities. The cash received of $905 million included $185 million for deferred amounts related to the trademark license and product supply agreements that are presented in operating activities and $720 million for proceeds that are presented in investing activities on our Consolidated Statements of Cash Flows.

During the first quarter of 2025, we reached an agreement with the United Steelworkers and approved a rationalization plan to eliminate our production of commercial tires in our Danville, Virginia tire manufacturing facility ("Danville") in order to reduce our production cost per tire in Americas. The plan includes approximately 850 job reductions, including associates and contracted positions. Danville will continue to produce aviation tires and conduct mixing operations. We expect to substantially complete this rationalization plan by the end of 2025.

Our results for the first quarter of 2025 include a 4.8% decrease in tire unit shipments compared to 2024 due to lower global tire volume. In the first quarter of 2025, we experienced approximately $55 million of inflationary cost pressures.

Net sales in the first three months of 2025 were $4,253 million, compared to $4,537 million in the first three months of 2024. Net sales decreased in 2025 primarily due to lower global tire volume, the impact of changes in foreign exchange rates globally, driven by the strengthening of the U.S. dollar, and the impact of the sale of the OTR tire business, primarily in Asia Pacific. These decreases were partially offset by favorable price and product mix and higher sales in other tire-related businesses, primarily due to higher third-party chemical sales in Americas.

In the first three months of 2025, Goodyear net income was $115 million, or $0.40 per share, compared to Goodyear net loss of $57 million, or $0.20 per share, in the first three months of 2024. The change in Goodyear net income was primarily due to a gain on the sale of the OTR tire business, partially offset by higher rationalization charges, lower segment operating income and higher U.S. and Foreign Tax Expense.

Total segment operating income for the first three months of 2025 was $195 million, compared to $247 million in the first three months of 2024. The $52 million decrease was primarily due to higher raw material costs of $181 million, higher SAG of $43 million when excluding Goodyear Forward savings, lower tire volume of $33 million, other cost increases of $30 million, primarily due to a benefit received in 2024 related to a reduction in U.S. duty rates on various commercial tires from China and higher transportation costs in 2025, increased conversion costs of $18 million driven by the effect of lower tire production on fixed cost absorption, and the impact of the sale of the OTR tire business of $12 million. These decreases were partially offset by benefits from the Goodyear Forward plan of $200 million and global improvements in price and product mix of $68 million. Refer to "Results of Operations — Segment Information" for additional information.

Liquidity

At March 31, 2025, we had $902 million of cash and cash equivalents as well as $2,623 million of unused availability under our various credit agreements, compared to $810 million and $3,555 million, respectively, at December 31, 2024. The increase in cash and cash equivalents of $92 million was primarily due to cash provided by the sale of the OTR tire business of $720 million and net borrowings of $198 million, partially offset by net cash used for operating activities of $538 million and capital expenditures of $259 million. Net cash used for operating activities reflects cash used for working capital of $750 million, rationalization payments of $65 million, and pension contributions and direct payments of $41 million, partially offset by proceeds from the sale of our OTR tire business of $185 million for deferred income related to the trademark license and product supply agreements, as well as the Company's net income for the period of $118 million, which includes non-cash charges for depreciation and amortization of $270 million and a non-cash gain on asset sales of $262 million. Refer to "Liquidity and Capital Resources" for additional information.

Outlook

In the second quarter of 2025, we expect our global tire unit volume to decline approximately 2% compared to the second quarter of 2024 driven by elevated wholesale channel inventories in the United States and lower volume in Asia Pacific. We also expect unabsorbed overhead to be approximately $20 million higher in the second quarter of 2025 compared to the second quarter of 2024 due to lower production in the first quarter of 2025.

We expect to continue progress on our Goodyear Forward transformation plan in 2025, with second quarter benefits from the program of approximately $190 million and full year benefits of approximately $750 million in segment operating income. The expected impact of the sale of the OTR tire business on our segment operating income is approximately $23 million in the second quarter.

We expect our raw material costs to increase approximately $180 million in the second quarter of 2025 compared to the second quarter of 2024, driven by natural rubber and foreign currency costs. These raw material cost increases are expected to be partially offset by approximately $135 million of price and product mix improvements, driven by previously implemented pricing actions and customer contracts indexed to changes in raw materials. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw materials 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 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.

We expect non-raw material inflation and other costs to be approximately $120 million higher in the second quarter of 2025 compared with the second quarter of 2024. These costs include the impact of inflation, tariffs, increased transportation costs and other manufacturing costs associated with announced rationalization plans. At the current tariff rates, we expect non-raw material and other costs to be approximately $175 million in the third and fourth quarters of 2025 as compared to the same quarters of 2024. 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 2025, we expect working capital to be a source of operating cash flows of approximately $50 million. We anticipate our capital expenditures to be approximately $950 million. We anticipate our cash flows will include rationalization payments of approximately $400 million, as we continue to implement elements of our Goodyear Forward plan to improve our cost structure.

Refer to "Item 1A. Risk Factors" in the 2024 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.

RESULTS OF OPERATIONS

CONSOLIDATED

Three Months Ended March 31, 2025 and 2024

Net sales in the first three months of 2025 were $4,253 million, decreasing $284 million, or 6.3%, from $4,537 million in the first three months of 2024. Goodyear net income was $115 million, or $0.40 per share, in the first three months of 2025, compared to Goodyear net loss of $57 million, or $0.20 per share, in the first three months of 2024.

Net sales decreased in the first three months of 2025 primarily due to lower global tire volume of $156 million, the impact of changes in foreign exchange rates globally of $140 million, driven by the strengthening of the U.S. dollar, and the impact of the sale of the OTR tire business of $49 million, including the product supply agreement. These decreases were partially offset by favorable price and product mix of $53 million and higher sales in other tire-related businesses of $19 million, primarily due to higher third-party chemical sales in Americas.

Worldwide tire unit sales in the first three months of 2025 were 38.5 million units, decreasing 1.9 million units, or 4.8%, from 40.4 million units in the first three months of 2024. Replacement tire volume decreased globally by 1.8 million units, or 6.3%. OE tire volume decreased globally by 0.1 million units, or 1.1%.

Cost of Goods Sold ("CGS") in the first three months of 2025 was $3,513 million, decreasing $202 million, or 5.4%, from $3,715 million in the first three months of 2024. CGS decreased primarily due to savings related to the Goodyear Forward plan of $152 million, lower tire volume of $123 million, foreign currency translation of $109 million and lower global mix of $34 million. These decreases were partially offset by higher raw material costs of $181 million, higher conversion costs of $18 million and higher costs in other tire-related businesses of $11 million, primarily related to third-party chemical sales in Americas. CGS in the first three months of 2024 included $14 million ($11 million after-tax and minority) as a result of a fire in the third quarter of 2023 that significantly damaged and caused a temporary shutdown of our tire manufacturing facility in Debica, Poland ("Debica") and a favorable $8 million ($6 million after-tax and minority) tax item in Brazil.

CGS in the first three months of 2025 and 2024 included pension expense of $2 million and $3 million, respectively. CGS in the first three months of 2025 included $9 million of incremental savings from rationalization plans. CGS was 82.6% of sales in the first three months of 2025, compared to 81.9% in the first three months of 2024.

SAG in the first three months of 2025 was $650 million, decreasing $46 million, or 6.6%, from $696 million in the first three months of 2024. SAG decreased primarily due to lower wages and benefits of $11 million, lower warehouse and retail expenses of $11 million, driven by Goodyear Forward plan actions, and a $9 million benefit as a result of the sale of the OTR tire business, partially offset by $11 million of other costs, primarily related to inflation. SAG in the first three months of 2025 also included costs related to the Goodyear Forward plan of $2 million ($2 million after-tax and minority) compared to $28 million ($21 million after-tax and minority) in the first three months of 2024, primarily related to third-party advisory, legal and consulting fees and costs associated with planned asset sales.

SAG in the first three months of 2025 and 2024 included pension expense of $3 million and $4 million, respectively. SAG in the first three months of 2025 included $3 million of incremental savings from rationalization plans, compared to $14 million in 2024. SAG was 15.3% of sales in both the first three months of 2025 and 2024.

We recorded net rationalization charges of $81 million ($64 million after-tax and minority) in the first three months of 2025 and $22 million ($17 million after-tax and minority) in the first three months of 2024. Net rationalization charges in the first three months of 2025 primarily related to the elimination of commercial tire production at Danville, the closures of our Fulda and Fürstenwalde, Germany tire manufacturing facilities, and the plan to reduce SAG headcount in Americas and Corporate. Net rationalization charges in the first three months of 2024 primarily related to the closures of our Malaysia tire manufacturing facility and Cooper Tire's Melksham, United Kingdom tire manufacturing facility ("Melksham"). For further information, refer to Note to the Consolidated Financial Statements No. 4, Costs Associated with Rationalization Programs.

CGS and SAG in the first three months of 2025 included $46 million ($39 million after-tax and minority) of asset write-offs, accelerated depreciation and accelerated lease charges, primarily related to the closures of our Fulda and Fürstenwalde, Germany tire manufacturing facilities and the elimination of commercial tire production at Danville. CGS and SAG in the first three months 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.

Interest expense in the first three months of 2025 was $115 million, decreasing $11 million, or 8.7%, from $126 million in the first three months of 2024. The average interest rate was 5.82% in the first three months of 2025 compared to 6.34% in the first three months of 2024. The average debt balance was $7,910 million in the first three months of 2025 compared to $7,945 million in the first three months of 2024.

The first three months of 2025 include a net gain on asset sales of $262 million ($237 million after-tax and minority), primarily due to an estimated gain of $260 million on the sale of the OTR tire business, compared to a net loss on asset sales of $2 million in the first three months of 2024.

Other Expense in the first three months of 2025 was $25 million compared to $28 million in the first three months of 2024. The decrease in Other Expense was primarily due to a pension settlement charge of $4 million ($3 million after-tax and minority) in the first three months of 2025 compared to a pension settlement credit of $5 million ($4 million after-tax and minority) in the first three months of 2024 and net foreign currency exchange gains of $4 million in the first three months of 2025 compared to net foreign currency exchange losses of $1 million in the first three months of 2024. The first three months of 2025 include transaction and other costs of $5 million ($3 million after-tax and minority) related to the sale of the Dunlop brand. The first three months of 2024 included an $8 million ($5 million after-tax and minority) loss related to the sale of receivables in Argentina and a favorable $2 million ($1 million after-tax and minority) tax item in Brazil.

For the first three months of 2025, we recorded income tax expense of $13 million on income before income taxes of $131 million.

In the first three months 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).

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 the three months ended March 31, 2025 is favorably impacted by gains recognized as a result of the sale of our OTR tire business in foreign jurisdictions where no taxes are recorded, net of losses in foreign jurisdictions in which no tax benefits are recorded. The difference between our effective tax rate and the U.S. statutory rate of 21% for the three months ended March 31, 2024 primarily relates to losses in foreign jurisdictions in which no tax benefits are recorded and the discrete items noted above.

The Organisation for Economic Co-operation and Development ("OECD") has published the Pillar Two model rules which adopt a global corporate minimum tax of 15% for multinational enterprises with average revenue in excess of €750 million. Certain jurisdictions in which we operate enacted legislation consistent with one or more of the OECD Pillar Two model rules effective in 2024. The model rules include minimum domestic top-up taxes, income inclusion rules and undertaxed profit rules, all aimed to ensure that multinational corporations pay a minimum effective corporate tax rate of 15% in each jurisdiction in which they operate. We do not expect the Pillar Two model rules to materially impact our annual effective tax rate in 2025. However, we are continuing to evaluate the Pillar Two model rules and related legislation and their potential impact on future periods.

At March 31, 2025 and December 31, 2024, we had approximately $1.3 billion of U.S. federal, state and local net deferred tax assets, inclusive of valuation allowances totaling $36 million and $26 million, respectively, primarily for state tax loss carryforwards with limited lives. As of March 31, 2025 and December 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 $24 million of foreign tax credits, and the majority do not start to expire until 2030. In the U.S., we have a cumulative loss for the three-year period ended March 31, 2025 primarily driven by non-recurring items such as rationalization charges, pension curtailments and settlements, one-time costs associated with the Goodyear Forward plan, and intangible asset impairments.

In assessing our ability to utilize our net deferred tax assets, we primarily considered objectively verifiable information, including the improvement of our U.S. income before income taxes during the first quarter of 2025 as a result of benefits from the Goodyear Forward plan compared to the first quarter of 2024, as well as non-deductible interest and future royalty income from foreign subsidiaries. In addition, we considered 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, tariff, 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.

We believe our improvement in U.S. income before income taxes for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, 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, 2025, our U.S. net deferred tax assets will be fully utilized. However, macroeconomic factors such as raw material, transportation, tariff, 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.

At March 31, 2025 and December 31, 2024, 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.

For further information regarding income taxes and the realizability of our deferred tax assets, including our foreign tax credits, refer to Note to the Consolidated Financial Statements No. 6, Income Taxes.

Minority shareholders’ net income in the first three months of 2025 was $3 million, compared to net loss of $1 million in the first three months of 2024.

SEGMENT INFORMATION

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition and are segmented on a regional basis.

Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net Sales less CGS (excluding asset write-off and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges, asset sales, goodwill and other impairment charges, and certain other items.

Total segment operating income for the first three months of 2025 was $195 million, a decrease of $52 million, or 21.1%, from $247 million in the first three months of 2024. Total segment operating margin in the first three months of 2025 was 4.6%, compared to 5.4% in the first three months of 2024.

Management believes that total segment operating income is useful because it represents the aggregate value of income created by our SBUs and excludes items not directly related to the SBUs for performance evaluation purposes. Total segment operating income is the sum of the individual SBUs’ segment operating income. Refer to Note to the Consolidated Financial Statements No. 8, Business Segments, for further information and for a reconciliation of total segment operating income to Income (Loss) before Income Taxes.

Americas

(In millions)

Three Months Ended March 31, 2025 and 2024

Americas unit sales in the first quarter of 2025 decreased 0.6 million units, or 3.1%, to 18.4 million units. Replacement tire volume decreased 0.5 million units, or 3.1%, primarily due to a decrease in our consumer business, driven by increased competitiveness in the U.S. from the lower tier market and the transitory impact of distribution changes in Latin America. OE tire volume decreased 0.1 million units, or 3.2%, primarily in the U.S.

Net sales in the first quarter of 2025 were $2,502 million, decreasing $86 million, or 3.3%, from $2,588 million in the first quarter of 2024. The decrease in net sales was primarily due to lower tire volume of $65 million and the negative impact of changes in foreign exchange rates of $60 million, primarily related to the weakening of the Brazilian real and Mexican peso. These decreases were partially offset by increased sales in other tire-related businesses of $30 million, primarily due to increased chemical sales, and a $13 million benefit related to the Goodyear Forward plan.

Operating income in the first quarter of 2025 was $155 million, decreasing $24 million, or 13.4%, from $179 million in the first quarter of 2024. The decrease in operating income was due to higher raw material costs of $106 million, higher SAG of $19 million, lower tire volume of $15 million, a $14 million benefit received in 2024 related to a reduction in U.S. duty rates on various commercial tires from China, higher conversion costs of $8 million, driven by the effect of lower tire production on fixed cost absorption and inflation, and unfavorable foreign currency translation of $7 million, primarily related to the weakening of the Brazilian real and Mexican peso. These decreases were partially offset by a $138 million benefit related to the Goodyear Forward plan and favorable price and product mix of $8 million. Operating income for 2025 includes incremental savings from rationalization plans of $8 million.

Operating income in the first quarter of 2025 excluded net rationalization charges of $62 million, asset write-offs, accelerated depreciation and accelerated lease costs of $28 million, and net gains on asset sales of $1 million. Operating income in the first quarter of 2024 excluded asset write-offs, accelerated depreciation and accelerated lease costs of $8 million and net rationalization charges of $5 million.

Europe, Middle East and Africa

(In millions)

Three Months Ended March 31, 2025 and 2024

EMEA unit sales in the first quarter of 2025 decreased 0.2 million units, or 2.0%, to 12.3 million units. Replacement tire volume decreased 0.3 million units, or 3.9%, primarily in our consumer business, reflecting increased competition. OE tire volume increased 0.1 million units, or 3.0%, primarily in our consumer business, reflecting share gains driven by new fitments.

Net sales in the first quarter of 2025 were $1,277 million, decreasing $70 million, or 5.2%, from $1,347 million in the first quarter of 2024. The decrease in net sales was primarily driven by the negative impact of changes in foreign exchange rates of $72 million, driven by a weaker euro and Turkish lira, lower tire volume of $23 million, and the impact of the OTR sale of $12 million, including the product supply agreement. These decreases were partially offset by favorable price and product mix of $43 million.

Operating loss in the first quarter of 2025 was $5 million, decreasing $13 million, from operating income of $8 million in the first quarter of 2024. The change in operating income was primarily due to higher raw material costs of $53 million, higher SAG of $23 million, primarily due to higher bad debt and inflation, higher conversion costs of $9 million, lower earnings in other tire-related businesses of $7 million, primarily due to lower Fleet Solutions and motorcycle earnings, and lower volume of $3 million. These decreases were partially offset by incremental savings from the Goodyear Forward plan of $43 million and favorable price and product mix of $38 million. Operating income in the first quarter of 2025 includes incremental SAG savings from rationalization plans of $4 million.

Operating income in the first quarter of 2025 excluded accelerated depreciation of $16 million, net rationalization charges of $12 million and a $1 million gain on asset sales. 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.

Asia Pacific

(In millions)

Three Months Ended March 31, 2025 and 2024

Asia Pacific unit sales in the first quarter of 2025 decreased 1.1 million units, or 12.4%, to 7.8 million units. Replacement tire volume decreased 1.0 million units, or 21.3%, driven by actions taken to reduce lower margin business and softness in consumer replacement. OE tire volume decreased 0.1 million units, or 2.4%, primarily in China.

Net sales in the first quarter of 2025 were $474 million, decreasing $128 million, or 21.3%, from $602 million in the first quarter of 2024. The decrease in net sales was primarily due to lower tire volume of $68 million, the impact of the OTR sale of $38 million, unfavorable price and product mix of $8 million and the negative impact of changes in foreign exchange rates of $8 million due to the strengthening of the U.S. dollar.

Operating income in the first quarter of 2025 was $45 million, decreasing $15 million, or 25.0%, from $60 million in the first quarter of 2024. The decrease in operating income was primarily due to higher raw material costs of $22 million, decreased earnings of $17 million due to the sale of the OTR tire business and lower tire volume of $15 million. These decreases were partially offset by favorable price and product mix of $22 million and a benefit related to the Goodyear Forward plan of $19 million.

Operating income in the first quarter of 2025 excluded asset write-offs, accelerated depreciation and accelerated lease costs of $2 million and net rationalization charges of $1 million. Operating income in the first quarter of 2024 excluded net rationalization charges of $11 million and accelerated depreciation and accelerated lease costs of $7 million.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash generated from our operating and financing activities. Our cash flows from operating activities are driven primarily by our operating results and changes in our working capital requirements and our cash flows from financing activities are dependent upon our ability to access credit or other capital.

At March 31, 2025, we had $902 million in cash and cash equivalents, compared to $810 million at December 31, 2024. For the three months ended March 31, 2025, net cash used for operating activities was $538 million, reflecting cash used for working capital of $750 million, rationalization payments of $65 million and pension contributions and direct payments of $41 million, partially offset by proceeds from the sale of our OTR tire business of $185 million for deferred amounts related to the trademark license and product supply agreements, as well as the Company's net income for the period of $118 million, which included non-cash charges for depreciation and amortization of $270 million and a non-cash gain on asset sales of $262 million. Net cash provided by investing activities was $432 million, primarily representing proceeds from the sale of our OTR tire business of $720 million, partially offset by capital expenditures of $259 million. Net cash provided by financing activities was $211 million, primarily due to net borrowings of $198 million.

At March 31, 2025, we had $2,623 million of unused availability under our various credit agreements, compared to $3,555 million at December 31, 2024. The table below presents unused availability under our credit facilities at those dates:

(In millions)

We have deposited our cash and cash equivalents and entered into various credit agreements and derivative contracts with financial institutions that we considered to be substantial and creditworthy at the time of such transactions. We seek to control our exposure to these financial institutions by diversifying our deposits, credit agreements and derivative contracts across multiple financial institutions, by setting deposit and counterparty credit limits based on long term credit ratings and other indicators of credit risk such as credit default swap spreads and default probabilities, and by monitoring the financial strength of these financial institutions on a regular basis. We also enter into master netting agreements with counterparties when possible. By controlling and monitoring exposure to financial institutions in this manner, we believe that we effectively manage the risk of loss due to nonperformance by a financial institution. However, we cannot provide assurance that we will not experience losses or delays in accessing our deposits or lines of credit due to the nonperformance of a financial institution. Our inability to access our cash deposits or make draws on our lines of credit, or the inability of a counterparty to fulfill its contractual obligations to us, could have a material adverse effect on our liquidity, financial condition or results of operations in the period in which it occurs.

We expect our 2025 full-year cash flow needs to include capital expenditures of approximately $950 million. We also expect interest expense to be $450 million to $475 million; rationalization payments to be approximately $400 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 a source of operating cash flows of approximately $50 million.

We are continuing to actively monitor our liquidity and intend to operate our business in a way that allows us to address our cash flow needs with our existing cash and available credit if they cannot be funded by cash generated from operating or other financing activities. We believe that our liquidity position is adequate to fund our operating and investing needs and debt maturities for the next twelve months and to provide us with the ability to respond to further changes in the business environment.

Our ability to service debt and operational requirements is also dependent, in part, on the ability of our subsidiaries to make distributions of cash to various other entities in our consolidated group, whether in the form of dividends, loans or otherwise. In certain countries where we operate, such as China, South Africa, Serbia and Argentina, transfers of funds into or out of such countries by way of dividends, loans, advances or payments to third-party or affiliated suppliers are generally or periodically subject to certain requirements, such as obtaining approval from the foreign government and/or currency exchange board before net assets can be transferred out of the country. In addition, certain of our credit agreements and other debt instruments limit the ability of foreign subsidiaries to make distributions of cash. Thus, we would have to repay and/or amend these credit agreements and other debt instruments in order to use this cash to service our consolidated debt. Because of the inherent uncertainty of satisfactorily meeting these requirements or limitations, we do not consider the net assets of our subsidiaries, including our Chinese, South African, Serbian and Argentinian subsidiaries, which are subject to such requirements or limitations to be integral to our liquidity or our ability to service our debt and operational requirements. At March 31, 2025, approximately $869 million of net assets, including approximately $182 million of cash and cash equivalents, were subject to such requirements. The requirements we must comply with to transfer funds out of China, South Africa, Serbia and Argentina have not adversely impacted our ability to make transfers out of those countries.

Operating Activities

Net cash used for operating activities was $538 million in the first three months of 2025, compared to net cash used for operating activities of $451 million in the first three months of 2024. The $87 million increase in net cash used for operating activities was primarily due to an increase in cash used for working capital of $211 million and lower earnings in our SBUs of $52 million, partially offset by proceeds from the sale of our OTR tire business of $185 million for deferred amounts related to the trademark license and product supply agreements.

The increase in cash used for working capital reflects an increase in cash used for Inventory of $198 million and Accounts Receivable of $106 million, partially offset by a decrease in cash used for Accounts Payable — Trade of $93 million. These changes were driven by lower sales volume and timing of accounts receivable collection in the first three months of 2025 compared to the first three months of 2024.

Investing Activities

Net cash provided by investing activities was $432 million in the first three months of 2025, compared to cash used of $231 million in the first three months of 2024. The $663 million increase in net cash provided by investing activities was primarily due to cash provided by asset dispositions of $720 million in the first three months of 2025, compared to $108 million in the first three months of 2024. Capital expenditures were $259 million in the first three months of 2025, compared to $318 million in the first three months of 2024.

Financing Activities

Net cash provided by financing activities was $211 million in the first three months of 2025, compared to net cash provided by financing activities of $661 million in the first three months of 2024. The $450 million decrease in cash provided by financing activities was primarily related to net borrowings of $198 million in the first three months of 2025, which included the redemption of the remaining $500 million 9.5% senior notes due 2025, compared to net borrowings of $684 million in the first three months of 2024.

Credit Sources

In aggregate, we had total credit arrangements of $10,537 million available at March 31, 2025, of which $2,623 million were unused, compared to $11,223 million available at December 31, 2024, of which $3,555 million were unused. At March 31, 2025, we had long term credit arrangements totaling $9,842 million, of which $2,382 million were unused, compared to $10,352 million and $3,263 million, respectively, at December 31, 2024. At March 31, 2025, we had short term committed and uncommitted credit arrangements totaling $695 million, of which $241 million were unused, compared to $871 million and $292 million, respectively, at December 31, 2024. The continued availability of the short term uncommitted arrangements is at the discretion of the relevant lenders and may be terminated at any time.

Outstanding Notes

At March 31, 2025, we had $4,756 million of outstanding notes compared to $5,240 million at December 31, 2024.

On February 19, 2025, we redeemed our remaining $500 million 9.5% senior notes due 2025 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

$2.75 billion Amended and Restated First Lien Revolving Credit Facility due 2026

Our amended and restated first lien revolving credit facility matures on June 8, 2026 and is available in the form of loans or letters of credit. Up to $800 million in letters of credit and $50 million of swingline loans are available for issuance under the facility. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million.

Our obligations under the facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries. Our obligations under the facility and our subsidiaries' obligations under the related guarantees are secured by first priority security interests in a variety of collateral. Based on our current liquidity, amounts drawn under this facility bear interest at SOFR plus 125 basis points. Undrawn amounts under the facility are subject to an annual commitment fee of 25 basis points.

Availability under the facility is subject to a borrowing base, which is based on (i) eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries, (ii) the value of our principal trademarks in an amount not to exceed $400 million, (iii) the value of eligible machinery and equipment, and (iv) certain cash in an amount not to exceed $275 million. To the extent that our eligible accounts receivable, inventory and other components of the borrowing base decline in value, our borrowing base will decrease and the availability under the facility may decrease below $2.75 billion. As of March 31, 2025, our borrowing base, and therefore our availability, under this facility was $47 million below the facility's stated amount of $2.75 billion. In addition, if the amount of outstanding borrowings and letters of credit under the facility exceeds the borrowing base, we would be required to prepay borrowings and/or cash collateralize letters of credit sufficient to eliminate the excess.

At March 31, 2025, we had $1,430 million of borrowings and $1 million of letters of credit issued under the revolving credit facility. At December 31, 2024, we had $700 million of borrowings and $1 million of letters of credit issued under the revolving credit facility.

€800 million Amended and Restated Senior Secured European Revolving Credit Facility due 2028

The European revolving credit facility matures on January 14, 2028 and consists of (i) a €180 million German tranche that is available only to Goodyear Germany GmbH and (ii) a €620 million all-borrower tranche that is available to Goodyear Europe B.V. ("GEBV"), Goodyear Germany and Goodyear Operations S.A. Up to €175 million of swingline loans and €75 million in letters of credit are available for issuance under the all-borrower tranche. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to €200 million. Amounts drawn under this facility will bear interest at SOFR plus 150 basis points for loans denominated in U.S. dollars, EURIBOR plus 150 basis points for loans denominated in euros, and SONIA plus 150 basis points for loans denominated in pounds sterling. Undrawn amounts under the facility are subject to an annual commitment fee of 25 basis points.

At March 31, 2025, there were $194 million (€180 million) of borrowings outstanding under the German tranche, no borrowings outstanding under the all-borrower tranche and no letters of credit outstanding under the European revolving credit facility. At December 31, 2024, we had no borrowings and no letters of credit outstanding under the European revolving credit facility.

Both our first lien revolving credit facility and our European revolving credit facility have customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in our business or financial condition since December 31, 2020 under the first lien facility and December 31, 2021 under the European facility.

Accounts Receivable Securitization Facilities (On-Balance Sheet)

GEBV and certain other of our European subsidiaries are parties to a pan-European accounts receivable securitization facility that expires in 2027. The terms of the facility provide the flexibility to designate annually the maximum amount of funding available under the facility in an amount of not less than €30 million and not more than €450 million. For the period from October 19, 2023 through October 16, 2024, the designated maximum amount of the facility was €300 million. For the period from October 17, 2024 through October 16, 2025, the designated maximum amount of the facility will remain €300 million.

The facility involves an ongoing daily sale of substantially all of the trade accounts receivable of certain GEBV subsidiaries. These subsidiaries retain servicing responsibilities. Utilization under this facility is based on eligible receivable balances.

The funding commitments under the facility will expire upon the earliest to occur of: (a) October 19, 2027, (b) the non-renewal and expiration (without substitution) of all of the back-up liquidity commitments, (c) the early termination of the facility according to its terms (generally upon an Early Amortisation Event (as defined in the facility), which includes, among other things, events similar to the events of default under our first lien revolving credit facility; certain tax law changes; or certain changes to law, regulation or accounting standards), or (d) our request for early termination of the facility. The facility’s current back-up liquidity commitments will expire on October 16, 2025.

At March 31, 2025, the amounts available and utilized under this program totaled $130 million (€120 million). At December 31, 2024, the amounts available and utilized under this program totaled $227 million (€218 million). The program does not qualify for sale accounting, and accordingly, these amounts are included in Long Term Debt and Finance Leases.

Accounts Receivable Factoring Facilities (Off-Balance Sheet)

We have sold certain of our trade receivables under off-balance sheet programs. For these programs, we have concluded that there is generally no risk of loss to us from non-payment of the sold receivables. At March 31, 2025, the gross amount of receivables sold was $771 million, compared to $773 million at December 31, 2024.

Letters of Credit

At March 31, 2025, we had $217 million in letters of credit issued under bilateral letter of credit agreements and other foreign credit facilities. The majority of these letter of credit agreements are in lieu of security deposits.

Supplier Financing

We have entered into supplier finance programs with several financial institutions. Under these programs, the financial institutions act as our paying agents with respect to accounts payable due to our suppliers. We agree to pay the financial institutions the stated amount of the confirmed invoices from the designated suppliers on the original due dates of the invoices. Invoice payment terms can be up to 120 days based on industry norms for the specific item purchased. We do not pay any fees to the financial institutions and we do not pledge any assets as security or provide other forms of guarantees for these programs. These programs allow our suppliers to sell their receivables to the financial institutions at the sole discretion of the suppliers and the financial institutions on terms that are negotiated among them. We are not always notified when our suppliers sell receivables under these programs. Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers’ decisions to sell their receivables under these programs. The amounts available under these programs were $825 million and $775 million at March 31, 2025 and December 31, 2024, respectively. The amounts confirmed to the financial institutions were $682 million and $604 million at March 31, 2025 and December 31, 2024, respectively, and are included in Accounts Payable — Trade in our Consolidated Balance Sheets. All activity related to these obligations is presented within operating activities on the Consolidated Statements of Cash Flows.

Further Information

For a further description of the terms of our outstanding notes, first lien revolving credit facility, European revolving credit facility and pan-European accounts receivable securitization facility, refer to Note to the Consolidated Financial Statements No. 16, Financing Arrangements and Derivative Financial Instruments, in our 2024 Form 10‑K and Note to the Consolidated Financial Statements No. 9, Financing Arrangements and Derivative Financial Instruments, in this Form 10-Q.

Covenant Compliance

Our first lien revolving credit facility and some of the indentures governing our notes contain certain covenants that, among other things, limit our ability to incur additional debt or issue redeemable preferred stock, pay dividends, repurchase shares or make certain other restricted payments or investments, incur liens, sell assets, incur restrictions on the ability of our subsidiaries to pay dividends or to make other payments to us, enter into affiliate transactions, engage in sale and leaseback transactions, and consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications. Our first lien revolving credit facility and the indentures governing our notes also have customary defaults, including cross-defaults to material indebtedness of Goodyear and its subsidiaries.

We have an additional financial covenant in our first lien revolving credit facility that is currently not applicable. We become subject to that financial covenant when the aggregate amount of our Parent Company (The Goodyear Tire & Rubber Company) and guarantor subsidiaries cash and cash equivalents (“Available Cash”) plus our availability under our first lien revolving credit facility is less than $275 million. If this were to occur, our ratio of EBITDA to Consolidated Interest Expense may not be less than 2.0 to 1.0 for the most recent period of four consecutive fiscal quarters. As of March 31, 2025, our unused availability under this facility of $1,272 million, plus our Available Cash of $342 million, totaled $1,614 million, which is in excess of $275 million.

In addition, our European revolving credit facility contains non-financial covenants similar to the non-financial covenants in our first lien revolving credit facility that are described above, similar non-financial covenants specifically applicable to GEBV and its subsidiaries, and a financial covenant applicable only to GEBV and its subsidiaries. This financial covenant provides that we are not permitted to allow GEBV’s ratio of Consolidated Net GEBV Indebtedness to Consolidated GEBV EBITDA for a period of four consecutive fiscal quarters to be greater than 3.0 to 1.0 at the end of any fiscal quarter. Consolidated Net GEBV Indebtedness is determined net of the sum of cash and cash equivalents in excess of $100 million held by GEBV and its subsidiaries, cash and cash equivalents in excess of $150 million held by the Parent Company and its U.S. subsidiaries, and availability under our first lien revolving credit facility if the ratio of EBITDA to Consolidated Interest Expense described above is not applicable and the conditions to borrowing under the first lien revolving credit facility are met. Consolidated Net GEBV Indebtedness also excludes loans from other consolidated Goodyear entities. This financial covenant is also included in our pan-European accounts receivable securitization facility. At March 31, 2025, we were in compliance with this financial covenant.

Our credit facilities also state that we may only incur additional debt or make restricted payments that are not otherwise expressly permitted if, after giving effect to the debt incurrence or the restricted payment, our ratio of EBITDA to Consolidated Interest Expense for the prior four fiscal quarters would exceed 2.0 to 1.0. Certain of our senior note indentures have substantially similar limitations on incurring debt and making restricted payments. Our credit facilities and indentures also permit the incurrence of additional debt through other provisions in those agreements without regard to our ability to satisfy the ratio-based incurrence test described above. We believe that these other provisions provide us with sufficient flexibility to incur additional debt necessary to meet our operating, investing and financing needs without regard to our ability to satisfy the ratio-based incurrence test.

Covenants could change based upon a refinancing or amendment of an existing facility, or additional covenants may be added in connection with the incurrence of new debt.

At March 31, 2025, we were in compliance with the currently applicable material covenants imposed by our principal credit facilities and indentures.

The terms “Available Cash,” “EBITDA,” “Consolidated Interest Expense,” “Consolidated Net GEBV Indebtedness” and “Consolidated GEBV EBITDA” have the meanings given them in the respective credit facilities.

Potential Future Financings

In addition to the financing activities described above, we may seek to undertake additional financing actions which could include restructuring bank debt or capital markets transactions, possibly including the issuance of additional debt or equity. Given the inherent uncertainty of market conditions, access to the capital markets cannot be assured.

Our future liquidity requirements may make it necessary for us to incur additional debt. However, a substantial portion of our assets are already subject to liens securing our indebtedness. As a result, we are limited in our ability to pledge our remaining assets as security for additional secured indebtedness. In addition, no assurance can be given as to our ability to raise additional unsecured debt.

Dividends and Common Stock Repurchases

Under our primary credit facilities and some of our note indentures, we are permitted to pay dividends on and repurchase our capital stock (which constitute restricted payments) as long as no default will have occurred and be continuing, additional indebtedness can be incurred under the credit facilities or indentures following the payment, and certain financial tests are satisfied.

We do not currently pay a quarterly dividend on our common stock.

We may repurchase shares delivered to us by employees as payment for the exercise price of stock options and the withholding taxes due upon the exercise of stock options or the vesting or payment of stock awards. During the first three months of 2025, we did not repurchase any shares from employees.

The restrictions imposed by our credit facilities and indentures are not expected to significantly affect our ability to pay dividends or repurchase our capital stock in the future.

Asset Dispositions

Historically, the restrictions on asset sales and sale and leaseback transactions imposed by our material indebtedness have not affected our ability to divest non-core businesses or assets. We may undertake additional asset sales and sale and leaseback transactions in the future. The restrictions imposed by our material indebtedness may require us to seek waivers or amendments of covenants or alternative sources of financing to proceed with future transactions. We cannot assure you that such waivers, amendments or alternative financing could be obtained, or if obtained, would be on terms acceptable to us.

Supplemental Guarantor Financial Information

Certain of our subsidiaries, which are listed on Exhibit 22.1 to this Quarterly Report on Form 10-Q and are generally holding or operating companies, have guaranteed our obligations under the $900 million outstanding principal amount of 5% senior notes due 2026, the $700 million outstanding principal amount of 4.875% senior notes due 2027, the $850 million outstanding principal amount of 5% senior notes due 2029, the $550 million outstanding principal amount of 5.25% senior notes due April 2031, the $600 million outstanding principal amount of 5.25% senior notes due July 2031 and the $450 million outstanding principal amount of 5.625% senior notes due 2033 (collectively, the “Notes”).

The Notes have been issued by The Goodyear Tire & Rubber Company (the “Parent Company”) and are its senior unsecured obligations. The Notes rank equally in right of payment with all of our existing and future senior unsecured obligations and senior to any of our future subordinated indebtedness. The Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing that indebtedness. The Notes are fully and unconditionally guaranteed on a joint and several basis by each of our wholly-owned U.S. and Canadian subsidiaries that also guarantee our obligations under our first lien revolving credit facility (such guarantees, the “Guarantees”; and, such guaranteeing subsidiaries, the “Subsidiary Guarantors”). The Guarantees are senior unsecured obligations of the Subsidiary Guarantors and rank equally in right of payment with all existing and future senior unsecured obligations of our Subsidiary Guarantors. The Guarantees are effectively subordinated to existing and future secured indebtedness of the Subsidiary Guarantors to the extent of the assets securing that indebtedness.

The Notes are structurally subordinated to all of the existing and future debt and other liabilities, including trade payables, of our subsidiaries that do not guarantee the Notes (the “Non-Guarantor Subsidiaries”). The Non-Guarantor Subsidiaries will have no obligation, contingent or otherwise, to pay amounts due under the Notes or to make funds available to pay those amounts. Certain Non-Guarantor Subsidiaries are limited in their ability to remit funds to us by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries.

The Subsidiary Guarantors, as primary obligors and not merely as sureties, jointly and severally irrevocably and unconditionally guarantee on a senior unsecured basis the performance and full and punctual payment when due of all obligations of the Parent Company under the Notes and the related indentures, whether for payment of principal of or interest on the Notes, expenses, indemnification or otherwise. The Guarantees of the Subsidiary Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

Although the Guarantees provide the holders of Notes with a direct unsecured claim against the assets of the Subsidiary Guarantors, under U.S. federal bankruptcy law and comparable provisions of U.S. state fraudulent transfer laws, in certain circumstances a court could cancel a Guarantee and order the return of any payments made thereunder to the Subsidiary Guarantor or to a fund for the benefit of its creditors.

A court might take these actions if it found, among other things, that when the Subsidiary Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied:

• the Subsidiary Guarantor was insolvent or rendered insolvent by reason of the incurrence;
• the Subsidiary Guarantor was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
• the Subsidiary Guarantor intended to incur, or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured.

In applying the above factors, a court would likely find that a Subsidiary Guarantor did not receive fair consideration or reasonably equivalent value for its Guarantee, except to the extent that it benefited directly or indirectly from the issuance of the Notes. The determination of whether a guarantor was or was not rendered “insolvent” when it entered into its guarantee will vary depending on the law of the jurisdiction being applied. Generally, an entity would be considered insolvent if the sum of its debts (including contingent or unliquidated debts) is greater than all of its assets at a fair valuation or if the present fair salable value of its assets is less than the amount that will be required to pay its probable liability on its existing debts, including contingent or unliquidated debts, as they mature.

Under Canadian federal bankruptcy and insolvency laws and comparable provincial laws on preferences, fraudulent conveyances or other challengeable or voidable transactions, the Guarantees could be challenged as a preference, fraudulent conveyance, transfer at undervalue or other challengeable or voidable transaction. The test to be applied varies among the different pieces of legislation, but as a general matter these types of challenges may arise in circumstances where:

• such action was intended to defeat, hinder, delay, defraud or prejudice creditors or others;
• such action was taken within a specified period of time prior to the commencement of proceedings under Canadian bankruptcy, insolvency or restructuring legislation in respect of a Subsidiary Guarantor, the consideration received by the Subsidiary Guarantor was conspicuously less than the fair market value of the consideration given, and the Subsidiary Guarantor was insolvent or rendered insolvent by such action and (in some circumstances, or) such action was intended to defraud, defeat or delay a creditor;
• such action was taken within a specified period of time prior to the commencement of proceedings under Canadian bankruptcy, insolvency or restructuring legislation in respect of a Subsidiary Guarantor and such action was taken, or is deemed to have been taken, with a view to giving a creditor a preference over other creditors or, in some circumstances, had the effect of giving a creditor a preference over other creditors; or
• a Subsidiary Guarantor is found to have acted in a manner that was oppressive, unfairly prejudicial to or unfairly disregarded the interests of any shareholder, creditor, director, officer or other interested party.

In addition, in certain insolvency proceedings a Canadian court may subordinate claims in respect of the Guarantees to other claims against a Subsidiary Guarantor under the principle of equitable subordination if the court determines that (1) the holder of Notes engaged in some type of inequitable or improper conduct, (2) the inequitable or improper conduct resulted in injury to other creditors or conferred an unfair advantage upon the holder of Notes and (3) equitable subordination is not inconsistent with the provisions of the relevant solvency statute.

If a court canceled a Guarantee, the holders of Notes would no longer have a claim against that Subsidiary Guarantor or its assets.

Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor without rendering the Guarantee, as it relates to that Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

Each Subsidiary Guarantor is a consolidated subsidiary of the Parent Company at the date of each balance sheet presented. The following tables present summarized financial information for the Parent Company and the Subsidiary Guarantors on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the Subsidiary Guarantors and (ii) equity in earnings from and investments in any Non-Guarantor Subsidiary.

(In millions)

(1) Includes receivables due from Non-Guarantor Subsidiaries of $1,808 million and $1,824 million as of March 31, 2025 and December 31, 2024, respectively.

(In millions)

(2) Includes income from intercompany transactions with Non-Guarantor Subsidiaries of $126 million for the three months ended March 31, 2025, primarily from royalties, intercompany product sales, dividends and interest, and $659 million for the year ended December 31, 2024, primarily from royalties, dividends, interest and intercompany product sales.

FORWARD-LOOKING INFORMATION — SAFE HARBOR STATEMENT

Certain information in this Form 10-Q (other than historical data and information) may constitute forward-looking statements regarding events and trends that may affect our future operating results and financial position. The words “estimate,” “expect,” “intend” and “project,” as well as other words or expressions of similar meaning, are intended to identify forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Such statements are based on current expectations and assumptions, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including:

• if we do not successfully implement the Goodyear Forward plan and our other strategic initiatives, including the sale of our chemical business, our operating results, financial condition and liquidity may be materially adversely affected;
• we face significant global competition and our market share could decline;
• raw material cost increases may materially adversely affect our operating results and financial condition;
• we have experienced inflationary cost pressures, including with respect to wages, benefits and energy costs, that may materially adversely affect our operating results and financial condition;
• delays or disruptions in our supply chain or in the provision of services, including utilities, to us could result in increased costs or disruptions in our operations;
• a prolonged economic downturn or economic uncertainty could adversely affect our business and results of operations;
• deteriorating economic conditions in any of our major markets, or an inability to access capital markets or third-party financing when necessary, may materially adversely affect our operating results, financial condition and liquidity;
• if we experience a labor strike, work stoppage, labor shortage or other similar event at the Company or its joint ventures, our business, results of operations, financial condition and liquidity could be materially adversely affected;
• financial difficulties, work stoppages, labor shortages, supply disruptions or economic conditions affecting our major OE customers, dealers or suppliers could harm our business;
• our capital expenditures may not be adequate to maintain our competitive position and may not be implemented in a timely or cost-effective manner;
• changes to tariffs, trade agreements or trade restrictions may materially adversely affect our operating results;
• our international operations have certain risks that may materially adversely affect our operating results, financial condition and liquidity;
• we have foreign currency translation and transaction risks that may materially adversely affect our operating results, financial condition and liquidity;
• our long-term ability to meet our obligations, to repay maturing indebtedness or to implement strategic initiatives may be dependent on our ability to access capital markets in the future and to improve our operating results;
• we have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materially adversely affect our financial health;
• any failure to be in compliance with any material provision or covenant of our debt instruments, or a material reduction in the borrowing base under our first lien revolving credit facility, could have a material adverse effect on our liquidity and operations;
• our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly;
• we have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales;
• we may incur significant costs in connection with our contingent liabilities and tax matters;
• our reserves for contingent liabilities and our recorded insurance assets are subject to various uncertainties, the outcome of which may result in our actual costs being significantly higher than the amounts recorded;
• environmental issues, including climate change, or legal, regulatory or market measures to address environmental issues, may negatively affect our business and operations and cause us to incur significant costs;
• we are subject to extensive government regulations that may materially adversely affect our operating results;
• we may be adversely affected by any disruption in, or failure of, our information technology systems due to computer viruses, unauthorized access, cyber-attack, natural disasters or other similar disruptions;
• we may not be able to protect our intellectual property rights adequately;
• if we are unable to attract and retain key personnel, our business could be materially adversely affected; and
• we may be impacted by economic and supply disruptions associated with events beyond our control, such as war, including the current conflicts between Russia and Ukraine and in the Middle East, acts of terror, political unrest, public health concerns, labor disputes or natural disasters.

It is not possible to foresee or identify all such factors. We will not revise or update any forward-looking statement or disclose any facts, events or circumstances that occur after the date hereof that may affect the accuracy of any forward-looking statement.

We utilize derivative financial instrument contracts and nonderivative instruments to manage interest rate, foreign exchange and commodity price risks. We have established a control environment that includes policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. We do not hold or issue derivative financial instruments for trading purposes.

Commodity Price Risk

The raw material costs to which our operations are principally exposed include the cost of natural rubber, synthetic rubber, carbon black, fabrics, steel cord and other petrochemical-based commodities. Approximately two-thirds of our raw materials are petroleum-based, the cost of which may be affected by fluctuations in the price of oil. We currently do not hedge commodity prices. We do, however, use various strategies to partially offset cost increases for raw materials, including centralizing purchases of raw materials through our global procurement organization in an effort to leverage our purchasing power, expanding our capabilities to substitute lower cost raw materials, and reducing the amount of material required in each tire.

Interest Rate Risk

We continuously monitor our fixed and floating rate debt mix. Within defined limitations, we manage the mix using refinancing. At March 31, 2025, approximately 33% of our debt was at variable interest rates averaging 6.65%.

The following table presents information about long term fixed rate debt, excluding finance leases, at March 31, 2025:

(In millions)

The pro forma information assumes a 100 basis point decrease in market interest rates at March 31, 2025, and reflects the estimated fair value of fixed rate debt outstanding at that date under that assumption. The sensitivity of our fixed rate debt to changes in interest rates was determined using current market pricing models.

Foreign Currency Exchange Risk

We enter into foreign currency contracts in order to reduce the impact of changes in foreign exchange rates on our consolidated results of operations and future foreign currency-denominated cash flows. These contracts reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade purchases and sales, equipment acquisitions, intercompany loans and royalty agreements. Contracts hedging short term trade receivables and payables normally have no hedging designation.

The following table presents net foreign currency contract information at March 31, 2025:

(In millions)

The pro forma decrease in fair value assumes a 10% adverse change in underlying foreign exchange rates at March 31, 2025, and reflects the estimated change in the fair value of contracts outstanding at that date under that assumption. The sensitivity of our foreign currency positions to changes in exchange rates was determined using current market pricing models.

Fair values are recognized on the Consolidated Balance Sheet at March 31, 2025 as follows:

(In millions)

For further information on foreign currency contracts, refer to Note to the Consolidated Financial Statements No. 9, Financing Arrangements and Derivative Financial Instruments. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a discussion of our management of counterparty risk.

Management’s Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” which, consistent with Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, we define to mean controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of March 31, 2025 (the end of the period covered by this Quarterly Report on Form 10-Q).

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.