The Goodyear Tire & Rubber Company (NASDAQ:GT) Q4 2022 Earnings Call Transcript

James Picariello : On the second quarter color of SOI approach a year ago levels potentially, what would be some of the key assumptions to get there? Correct me if I’m wrong here, but the second quarter, it should have a similar overhead absorption impact in the first quarter, and maybe that’s $60 million to $70 million. And then from there, the three buckets — key buckets as I see it would be unit volumes, price mix versus raws and then the non-raw materials inflation piece. Yeah, just any color on that would be super helpful.

Christina Zamarro: Yeah, sure. James, it’s Christina. So I guess I would start by saying, in the second quarter, we see volumes stabilizing. And I would have — and we have announced a 5% plus price increase in Europe consumer replacement beginning January 1. And so we expect Europe to begin to catch up to the increases in raw materials over the course of the first quarter and second quarter. Obviously, there’s a very significant step down in raw material price increases from Q1 to Q2. And so that should be a benefit for us as well.

James Picariello : Okay. And then just — well, then how to how do you foresee the elevated channel inventories in Europe, I think a 30% above year ago levels. With the price increase and with replacement sell-in demand down for the industry, a mid-teens entering ’23. Yeah, how do you see that unfolding? And do you — catching up?

Christina Zamarro: Yeah. It’s a great question, James. And the elevated channel inventory is actually all reflective of winter. And so what happened in the first quarter is, we see a shift from winter tire sell-in in the fourth quarter. In the first quarter, we shipped into a summer tire sell-in season. There, the inventory in this channel is much more balanced and even healthy. What I would tell you is that the energy prices in Europe have also abated significantly since the third and fourth quarters as well. And so expecting that to support consumers out over the course of the first and second quarters.

James Picariello : Thanks.

Christina Zamarro: Sure.

Operator: And there are no further questions at this time, and this will conclude today’s Goodyear fourth quarter 2022 earnings call. You may disconnect your line at this time, and have a wonderful day.