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Goodyear (GT) Beats on Q2 Earnings, Reaffirms 2016 View
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The Goodyear Tire & Rubber Company (GT - Free Report) reported a 38% increase in adjusted earnings per share to $1.16 in the second quarter of 2016 from 84 cents recorded a year ago (all excluding special items). Moreover, earnings surpassed the Zacks Consensus Estimate of $1.04. Adjusted net income surged 37.1% to $314 million from $229 million in the second quarter of 2015.
Including special items, the company reported a net income of $202 million or 75 cents per share in second-quarter 2016. In the year-ago quarter, it recorded a net income of $192 million or 70 cents per share.
Revenues in the reported quarter fell 7% year over year to $3.87 billion. The figure was in line with the Zacks Consensus Estimate. The year-over-year decline in the top line can be attributed to unfavorable foreign currency translation and deconsolidation of the company’s subsidiary in Venezuela.
Tire unit volumes improved 2% to 41.5 million in second-quarter 2016, driven by growth in the Asia Pacific, Europe, Middle East and Africa regions. Both original equipment unit volume and replacement tire shipments increased 4% year over year.
Segment operating income dropped to $531 million in the reported quarter from $550 million a year ago. The year-over-year decline was owing to the deconsolidation of the Venezuelan subsidiary, partially offset by cost-reduction strategies.
Revenues at the Americas segment fell 13% year over year to $2.09 billion. The deterioration was due to a 6% decrease in tire unit volumes to 18.8 million units. The decline in unit volumes primarily resulted from the deconsolidation of the Venezuelan subsidiary and the sale of the former Goodyear Dunlop Tires North America Ltd. business. Original equipment unit volume went down 15% year over year. Replacement tire shipments remained stable year over year. Segment operating income decreased 19% to $291 million due to the deconsolidation of the Venezuelan subsidiary, higher conversion costs and lower volume.
Revenues from the Europe, Middle East and Africa segment were $1.26 billion, flat year over year. Revenues were mainly hurt by unfavorable price/mix and foreign currency translation. Tire unit sales increased 4% to 15.4 million units. Original equipment unit volume was up 8%, while replacement tire shipments improved 3% year over year. Segment operating income increased 37% to $148 million, primarily backed by higher volume and lower selling, administrative and general expenses.
Revenues from the Asia-Pacific segment rose 8% to $528 million, driven by higher tire volume, partially offset by unfavorable foreign currency translation. Tire unit volume surged 21% year over year to 7.3 million units. Original equipment unit volume was up 1%, while replacement tire shipments increased 38% year over year. Segment operating income improved 10% to $92 million, primarily due to higher volume.
Financial Position
Goodyear had cash and cash equivalents of $1.14 billion as of Jun 30, 2016, down from $1.48 billion as of Dec 31, 2015. Long-term debt and capital leases amounted to $6.1 billion as of Jun 30, 2016, up from $5.66 billion as of Dec 31, 2015.
Cash outflow from operations amounted to $120 million in the first half of 2016 compared with cash flow of $274 million in the year-ago period. Meanwhile, capital expenditure was $466 million compared with $448 million a year ago.
Share Repurchase
During the reported quarter, Goodyear repurchased 3.6 million shares for $100 million under the previously announced $1.1 billion share repurchase program.
Guidance
Goodyear reaffirmed its previous guidance for full-year 2016. The company expects annual segment operating income to increase 10–15% in 2016. It also aims to generate positive free cash flow (excluding pension pre-funding) over this period.
Goodyear is one of the largest tire manufacturing companies in the world. It currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and U.S. Auto Parts Network, Inc. (PRTS - Free Report) , each carrying a Zacks Rank #2.
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Goodyear (GT) Beats on Q2 Earnings, Reaffirms 2016 View
The Goodyear Tire & Rubber Company (GT - Free Report) reported a 38% increase in adjusted earnings per share to $1.16 in the second quarter of 2016 from 84 cents recorded a year ago (all excluding special items). Moreover, earnings surpassed the Zacks Consensus Estimate of $1.04. Adjusted net income surged 37.1% to $314 million from $229 million in the second quarter of 2015.
Including special items, the company reported a net income of $202 million or 75 cents per share in second-quarter 2016. In the year-ago quarter, it recorded a net income of $192 million or 70 cents per share.
Revenues in the reported quarter fell 7% year over year to $3.87 billion. The figure was in line with the Zacks Consensus Estimate. The year-over-year decline in the top line can be attributed to unfavorable foreign currency translation and deconsolidation of the company’s subsidiary in Venezuela.
Tire unit volumes improved 2% to 41.5 million in second-quarter 2016, driven by growth in the Asia Pacific, Europe, Middle East and Africa regions. Both original equipment unit volume and replacement tire shipments increased 4% year over year.
Segment operating income dropped to $531 million in the reported quarter from $550 million a year ago. The year-over-year decline was owing to the deconsolidation of the Venezuelan subsidiary, partially offset by cost-reduction strategies.
GOODYEAR TIRE Price, Consensus and EPS Surprise
GOODYEAR TIRE Price, Consensus and EPS Surprise | GOODYEAR TIRE Quote
Segment Details
Revenues at the Americas segment fell 13% year over year to $2.09 billion. The deterioration was due to a 6% decrease in tire unit volumes to 18.8 million units. The decline in unit volumes primarily resulted from the deconsolidation of the Venezuelan subsidiary and the sale of the former Goodyear Dunlop Tires North America Ltd. business. Original equipment unit volume went down 15% year over year. Replacement tire shipments remained stable year over year. Segment operating income decreased 19% to $291 million due to the deconsolidation of the Venezuelan subsidiary, higher conversion costs and lower volume.
Revenues from the Europe, Middle East and Africa segment were $1.26 billion, flat year over year. Revenues were mainly hurt by unfavorable price/mix and foreign currency translation. Tire unit sales increased 4% to 15.4 million units. Original equipment unit volume was up 8%, while replacement tire shipments improved 3% year over year. Segment operating income increased 37% to $148 million, primarily backed by higher volume and lower selling, administrative and general expenses.
Revenues from the Asia-Pacific segment rose 8% to $528 million, driven by higher tire volume, partially offset by unfavorable foreign currency translation. Tire unit volume surged 21% year over year to 7.3 million units. Original equipment unit volume was up 1%, while replacement tire shipments increased 38% year over year. Segment operating income improved 10% to $92 million, primarily due to higher volume.
Financial Position
Goodyear had cash and cash equivalents of $1.14 billion as of Jun 30, 2016, down from $1.48 billion as of Dec 31, 2015. Long-term debt and capital leases amounted to $6.1 billion as of Jun 30, 2016, up from $5.66 billion as of Dec 31, 2015.
Cash outflow from operations amounted to $120 million in the first half of 2016 compared with cash flow of $274 million in the year-ago period. Meanwhile, capital expenditure was $466 million compared with $448 million a year ago.
Share Repurchase
During the reported quarter, Goodyear repurchased 3.6 million shares for $100 million under the previously announced $1.1 billion share repurchase program.
Guidance
Goodyear reaffirmed its previous guidance for full-year 2016. The company expects annual segment operating income to increase 10–15% in 2016. It also aims to generate positive free cash flow (excluding pension pre-funding) over this period.
Goodyear is one of the largest tire manufacturing companies in the world. It currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and U.S. Auto Parts Network, Inc. (PRTS - Free Report) , each carrying a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>