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Goodyear (GT) Q1 Loss Wider Than Expected, Revenues Beat

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The Goodyear Tire & Rubber Company (GT - Free Report) reported adjusted loss per share of 60 cents in first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 26 cents. The bottom line declined from earnings per share of 19 cents recorded in the prior-year quarter due to lower revenues across all segments. The company reported adjusted net loss of $140 million, deteriorating from net income of $45 million in the year-ago quarter.

It delivered net revenues of $3,056 million, lower than $3,598 million reported in the year-ago quarter. The year-over-year downside was due to lower industry volume and unfavorable foreign currency translation. However, revenues surpassed the Zacks Consensus Estimate of $2,972 million.

In the reported quarter, tire volume was 31.3 million units, down 18% from the year-ago quarter. Original equipment (OE) unit volume decreased 21% due to decline in demand, while replacement tire shipments declined 16% from the year-ago quarter due to lower demand following shelter-in-place mandates and sharp declines in consumer confidence amid the coronavirus pandemic.

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise


Segments in Detail

Revenues in the Americas segment declined year over year to $1.67 billion from $1.88 billion. The segment’s operating income was a breakeven, down from $89 million recorded in first-quarter 2019. The year-over-year decline was because of lower volume, unfavorable foreign currency translation and weaker factory utilization.

Revenues in the Europe, Middle East and Africa segment were $995 million, down year over year from $1.22 billion. The segment’s operating loss was $53 million against operating income of $54 million recorded in the year-ago quarter. Lower volume along with unfavorable currency translations and higher conversion costs resulted in the weak performance.

Revenues in the Asia Pacific segment fell 23% to $338 million. The segment’s operating income declined year over year to $6 million from $47 million amid lower volume and reduced price/mix.

Financial Position

Goodyear had cash and cash equivalents of $971 million as of Mar 31, 2020, up from $908 million as of Dec 31, 2019. As of Mar 31, 2020, long-term debt and finance leases amounted to $5.21 billion, up from $4.75 billion as of Dec 31, 2019. The long-term debt-to-capital ratio stood at 58.5.

The company has temporarily suspended its quarterly dividend due to the uncertainty caused by the coronavirus pandemic.

Zacks Rank & Stocks to Consider

Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Veoneer, Inc. (VNE - Free Report) , Unique Fabricating, Inc. and Modine Manufacturing Company (MOD - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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