The Goodyear Tire & Rubber Company Q1 2010 Earnings Call Transcript

The Goodyear Tire & Rubber Company Q1 2010 Earnings Call Transcript
By Seeking Alpha ,

The Goodyear Tire & Rubber Company (GT)

Q1 2010 Earnings Call Transcript

April 28, 2010 10:00 am ET

Executives

Patrick Stobb – Director, IR

Rich Kramer – President & CEO

Darren Wells – EVP & CFO

Damon Audia – SVP, Finance & Treasurer

Analysts

Rod Lache – Deutsche Bank

Himanshu Patel – JP Morgan

Patrick Archambault – Goldman Sachs

John Murphy – Bank of America

Presentation

Operator

Compare to:
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Good morning. Welcome to the Goodyear quarterly results for the first quarter 2010. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. (Operator instructions) Mr. Stobb, Director of IR, you may begin your conference.

Patrick Stobb

Thank you and good morning, everyone, and welcome to Goodyear’s first quarter conference call. With me today are Rich Kramer, President and CEO, Darren Wells, Executive Vice President and CFO, and Damon Audia, Senior Vice President, Finance and Treasurer.

Before we get started there are a few items I would like to cover. To begin, the webcast of this morning’s discussion and supporting slides presentation can be found on our Web site at investor.goodyear.com. A replay of this call will be accessible later today. Replay instructions were included in our earnings release issued earlier this morning. The last item, we plan to file our 10-Q later today.

If I could now direct your attention to the Safe Harbor statement on Slide 2 of the presentation, our discussion this morning may contain forward-looking statements based on our current expectations and assumptions that are subject to risks and uncertainties that can cause actual results to differ materially.

These risks and uncertainties are outlined in Goodyear’s filings with the SEC and in the news release we issued this morning. 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.

Turning now to the agenda, on today’s call Rich will discuss strategy and provide quarterly highlights. After Rich’s remarks Darren will review the financial results and discuss outlook before opening the call to your questions. That finishes my comments. I will now turn the call over to Rich.

Rich Kramer

Thank you, Pat and good morning, everyone. Thanks for joining our call today as we address what was strong first quarter performance. This is my first conference call as Goodyear’s President and CEO. I thought it would be appropriate to begin with the few words about my predecessor, Bob Keegan, and his numerous contributions to Goodyear since 2003 when he was named to lead the company.

When you reflect on the many challenges the company faces that then and I know them well that they work side by side with Bob’s in the morning. The journey has been a remarkable one. The challenges were such that the strategy and ultimately the execution both had to be flawless.

So I think about the true measure of Bob’s leadership and the resulting success as he assumed the CEO role I ask myself two questions. Is Goodyear in better shape today as a company? And is Goodyear better positioned for the future? The answer to both of those questions is unequivocally yes.

The contributions that Bob made in developing industry’s best new product engine, building an outstanding and outstanding business team, revising the Goodyear brand and restoring the Goodyear’s spirit, have established a strong foundation to build upon with confidence and with optimism. So consequently, on behalf of the entire Goodyear team I’d like to thank Bob for his guidance and his leadership as CEO over the past seven years.

I recently had the opportunity to visit with the number of investors that allow me to reconnect but also more importantly, provided me a first-hand view into what investors were thinking about Goodyear. Now, of course, I received many questions concerning my new role, Goodyear’s direction and the state of the industry. I’d like to briefly elaborate on those topics before we get into our first quarter results which by the way I was very pleased with for a number of reasons including the beginnings of some positive trend.

When I think about the future I remain very optimistic about the transportation industry. Cars and wheels and consequently tires are going to be with us for a long time if there are no real alternative to personal and commercial travel on the horizon.

We will continue to see existing drivers drives more and we are only beginning to experience the explosion of new vehicles in the emerging markets such as China, just to name one.

And as I look into the future the industry will see larger percentage growth in smaller emerging markets and smaller percentage increases in larger more mature markets. Both, however, result in the opportunity to see significant tire unit growth.

And that growth will not be in simpler, smaller tires but in increasingly more complex tires requiring more innovative technology to support such trends as improved rolling resistance, higher performance captured by tire labeling and continually evolving OEM requirements. In other words, the opportunity for improved mix will continue.

In addition, strong brands and efficient supply chain and outstanding distribution network, all will continue to be inter grow and delivering these value propositions to consumers.

So when I think about those trends, I believe Goodyear with our brands, our global presence, our innovation track record, our unmatched beat to market, our advantage supply chain, our leading global distribution network, our superior sales and marketing capabilities, and the quality of our teams, I believe Goodyear is second to none in terms of our ability to lead the way. And that’s why I’m excited about my new role.

As we continue forward, my strategic priorities will be to drive our innovation engine with new products tack with technology developed from the market back. To drive operating efficiencies throughout our supply chain to higher levels of performance, to drive North American Tire first to breakeven and then to our next stage metric goal of 5% EBIT to sales. And we will drive this improvement in multiple ways through volume, price mix and cost actions.

Another strategic priority is to drive growth in the emerging markets, particularly, the high growth markets in Asia. Also, to protect and improve our balance sheet over time to ensure stable and cost-effective access to capital. And finally, of course, to continue to build upon the best team in the industry.

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