GOODYEAR TIRE & RUBBER CO /OH/ (GT)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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 48 manufacturing facilities in 19 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

Our results for the second quarter of 2026 include a 4.0% decrease in tire unit shipments compared to 2025 driven by planned rationalization of lower-tier product offerings, weakness in the replacement industry and increased competitiveness. In the second quarter of 2026, we also experienced approximately $53 million of inflationary cost pressures.

Net sales in the second quarter of 2026 were $4,250 million, compared to $4,465 million in the second quarter of 2025. Net sales decreased in 2026 primarily due to lower tire volume and the impacts of our divestitures. These decreases were partially offset by favorable price and product mix and the positive impact of changes in foreign exchange rates.

In the second quarter of 2026, Goodyear net loss was $204 million, or $0.71 per share, compared to Goodyear net income of $254 million, or $0.87 per share, in the second quarter of 2025. The change in Goodyear net income (loss) was primarily due to a gain on the sale of the Dunlop brand in 2025, lower segment operating income and higher U.S. and Foreign tax expense, partially offset by lower rationalization charges.

Total segment operating income for the second quarter of 2026 was $36 million, compared to $159 million in the second quarter of 2025. The $123 million decrease was primarily due to increased conversion costs of $165 million, driven by the effect of lower tire production on fixed cost absorption and inflation, the impact of our divestitures, including $32 million related to the sale of the chemical business and $17 million related to the sale of the Dunlop brand, excluding the favorable impact of the Dunlop offtake supply agreement of $5 million, lower tire volume of $34 million, higher tariff costs of $32 million and higher Selling, Administrative and General Expense ("SAG") of $28 million. These decreases were partially offset by benefits from our Goodyear Forward transformation plan ("Goodyear Forward") of $95 million and lower raw material costs of $91 million. Refer to "Results of Operations — Segment Information" for additional information.

Net sales in the first six months of 2026 were $8,131 million, compared to $8,718 million in the first six months of 2025. Net sales decreased in 2026 primarily due to lower tire volume and the impacts of our divestitures. These decreases were partially offset by the positive impact of changes in foreign exchange rates and favorable price and product mix.

In the first six months of 2026, Goodyear net loss was $453 million, or $1.57 per share, compared to Goodyear net income of $369 million, or $1.27 per share, in the first six months of 2025. The change in Goodyear net income (loss) was primarily due to a gain on the sale of the Dunlop brand and off-the-road ("OTR") tire business in 2025, lower segment operating income and higher U.S. and Foreign tax expense, partially offset by lower interest expense.

Total segment operating income for the first six months of 2026 was $131 million, compared to $354 million in the first six months of 2025. The $223 million decrease was primarily due to increased conversion costs of $320 million, driven by the effect of lower tire production on fixed cost absorption and inflation, lower tire volume of $121 million, the impact of our divestitures, including $62 million related to the sale of the chemical business and $30 million related to the sale of the Dunlop brand, excluding the favorable impact of the Dunlop offtake supply agreement of $11 million, higher SAG of $45 million and higher tariff costs of $90 million, offset by an estimated tariff refund of $46 million. These decreases were partially offset by benefits from the Goodyear Forward plan of $202 million and lower raw material costs of $179 million. Refer to "Results of Operations —Segment Information" for additional information.

On July 16, 2026, we reached an agreement with the United Steelworkers and approved a plan to permanently close our Fayetteville, North Carolina tire manufacturing facility to reduce our production capacity and production cost per tire in Americas. The plan includes approximately 1,750 job reductions. We expect to substantially complete this rationalization plan by the end of 2027 and estimate the total pre-tax charges associated with this action to be between $535 million and $565 million, of which $190 million to $210 million are expected to be cash charges primarily for associate-related and other exit costs, and the remaining costs are expected to be non-cash charges primarily for accelerated depreciation and other asset-related charges ($290 million to $310 million) and pension special termination benefits ($40 million to $50 million). We expect to record approximately $205 million to $225 million of pre-tax charges in the third quarter of 2026 and approximately $65 million to $85 million of pre-tax charges during the remainder of 2026.

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On July 30, 2026, we reached a tentative agreement with the United Steelworkers ("USW") on a new master labor contract that will remain in effect through April 28, 2029, covering nearly 2,400 workers at three plants in the United States. The tentative agreement is subject to a ratification vote by USW members at the plants covered by the contract.

Liquidity

On June 4, 2026, we issued $1,050 million in aggregate principal amount of 8.875% senior notes due 2032. We intend to use the net proceeds from this offering to repay, redeem or repurchase our 4.875% senior notes due 2027 and our 7.625% senior notes due 2027 at or prior to their respective maturity. Pending such repayment, redemption or repurchase, we temporarily applied the proceeds to repay outstanding balances under certain revolving credit facilities.

At June 30, 2026, we had $861 million in cash and cash equivalents as well as $3,891 million of unused availability under our various credit agreements, compared to $801 million and $4,421 million, respectively, at December 31, 2025. For the six months ended June 30, 2026, net cash used for operating activities was $620 million, reflecting our cash used for working capital of $620 million. Net cash used for investing activities was $339 million, primarily representing capital expenditures of $342 million. Net cash provided by financing activities was $1,020 million, primarily due to net borrowings of $1,029 million, including the issuance of $1,050 million of new senior notes. Refer to "Liquidity and Capital Resources" for additional information.

Outlook

Despite macroeconomic, regulatory and geopolitical uncertainties, we expect global unit volumes in the third quarter of 2026 to be roughly flat versus the third quarter of 2025 due to new assortment wins, stabilization of the consumer replacement market in Americas and normalization of channel inventories. Given our production levels in the second quarter of 2026, we expect unabsorbed overhead to be approximately $70 million in the third quarter of 2026.

We expect our Goodyear Forward plan to deliver approximately $70 million of incremental savings in the third quarter of 2026 compared to the third quarter of 2025.

Based on current spot prices, we expect raw material costs to be unfavorable by approximately $20 million in the third quarter of 2026 compared to the third quarter of 2025. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future price fluctuations and changes in foreign exchange rates. We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, and to reduce the amount of material required in each tire to minimize the impact of higher raw material costs.

We expect inflation and other costs will increase approximately $95 million in the third quarter of 2026 compared to the third quarter of 2025.

Refer also to “Liquidity and Capital Resources” for commentary regarding our outlook on 2026 cash flow; “Forward-Looking Information – Safe Harbor Statement” for a discussion of our use of forward-looking statements; and “Item 1A. Risk Factors” in our 2025 Form 10-K for a discussion of the risk factors that may impact our business, results of operations, financial condition or liquidity.

RESULTS OF OPERATIONS

CONSOLIDATED

Three Months Ended June 30, 2026 and 2025

Net sales in the second quarter of 2026 were $4,250 million, decreasing $215 million, or 4.8%, from $4,465 million in the second quarter of 2025. Goodyear net loss was $204 million, or $0.71 per share, in the second quarter of 2026, compared to Goodyear net income of $254 million, or $0.87 per share, in the second quarter of 2025.

Net sales decreased in the second quarter of 2026 primarily due to lower tire volume of $177 million and the impacts of our divestitures, including $119 million related to the sale of the chemical business and $87 million related to the sale of the Dunlop brand, excluding the favorable impact of the Dunlop offtake supply agreement of $53 million. These decreases were partially offset by favorable price and product mix of $70 million and the positive impact of changes in foreign exchange rates of $57 million.

Worldwide tire unit sales in the second quarter of 2026 were 36.5 million units, decreasing 1.4 million units, or 4.0%, from 37.9 million units in the second quarter of 2025 due to planned rationalization of lower-tier product offerings, weakness in the replacement industry and increased competitiveness. Replacement tire volume decreased globally by 2.3 million units, or 8.6%. OE tire volume increased by 0.9 million units, or 7.0%, driven by Americas and EMEA.

Cost of Goods Sold ("CGS") in the second quarter of 2026 was $3,569 million, decreasing $136 million, or 3.7%, from $3,705 million in the second quarter of 2025. CGS decreased primarily due to lower tire volume of $143 million, impacts related to divestitures, including $82 million related to the sale of the chemical business and $70 million related to the sale of the Dunlop

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brand, excluding increased offtake supply agreement costs of $48 million, lower raw material costs of $91 million, savings related to the Goodyear Forward plan of $81 million, and a decrease in asset write-offs, accelerated depreciation and accelerated lease charges of $40 million. These decreases were partially offset by higher conversion costs of $165 million, an increase in other costs of $48 million, primarily related to inflation, foreign currency translation of $43 million, unfavorable product mix of $38 million, higher tariff costs of $32 million and the negative impacts of a national strike in Colombia of $7 million ($7 million after-tax and minority).

CGS in the second quarter of 2026 and 2025 included pension expense of $3 million and $4 million, respectively. CGS was 84.0% of sales in the second quarter of 2026, compared to 83.0% in the second quarter of 2025.

SAG in the second quarter of 2026 was $703 million, increasing $11 million, or 1.6%, from $692 million in the second quarter of 2025. SAG increased primarily due to increased advertising expenses of $13 million, foreign currency translation of $10 million

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

OVERVIEW

The Goodyear Tire & Rubber Company 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 49 manufacturing facilities in 19 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.

This management's discussion and analysis provides comparisons of material changes in the consolidated financial statements for the years ended December 31, 2025 and 2024. For a comparison of the years ended December 31, 2024 and 2023, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Goodyear Forward

Our multi-year transformation plan, called “Goodyear Forward,” that was intended to optimize our portfolio, deliver margin expansion and reduce leverage was completed in 2025. In furtherance of the goals set out in our Goodyear Forward plan, key activities included delivering gross proceeds of approximately $2.2 billion from portfolio optimization by completing the sales of our off-the-road (“OTR”) tire business, the Dunlop brand and our polymer chemicals business during 2025. In addition, we executed margin enhancement actions driving an annual, run-rate benefit of approximately $1.5 billion, including actions related to our manufacturing footprint, plant optimization, further improvement of our purchasing leverage, reduction of Selling, Administrative and General expenses (“SAG”), improvements in our supply chain planning and logistics, and brand optimization and tiering. We also improved our leverage, utilizing proceeds from divestitures to reduce our debt.

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.

On May 7, 2025, we completed 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 to Sumitomo Rubber Industries, Ltd. ("SRI") pursuant to the terms of the Purchase Agreement, dated as of January 7, 2025 (as amended, the "Dunlop Purchase Agreement"). SRI also paid 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 also acquired our existing Dunlop tire inventory for approximately $104 million. We also entered into a number of ancillary agreements, including (a) a transition license agreement, pursuant to which we continued 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 paid SRI a royalty on such Dunlop sales; (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.

As a result of the transaction, we received gross proceeds of $735 million at closing for the Dunlop brand, related intellectual property and other intangible assets, the transition support fee and the tire inventory. We allocated $105 million of those proceeds related to the up-front transition support fee to deferred income, which will be recognized over the combined lives of the transition license and transition offtake agreements. We also allocated $86 million of those proceeds to deferred income for tire inventory in Europe, which will be recognized upon transfer of title. The deferred amounts related to the transition agreements and inventory are presented in operating activities and the $526 million purchase price is presented in investing activities on our Consolidated Statements of Cash Flows.

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On October 31, 2025, we completed the $650 million sale of our polymer chemicals business (the “Chemical Business”) pursuant to the Asset Purchase Agreement (the “Chemical Purchase Agreement”) with G-3 Chickadee Purchaser, LLC, a Delaware limited liability company (the “Purchaser”). At the closing, we received gross cash proceeds of approximately $580 million, which reflects working capital adjustments, including an adjustment for intercompany receivables. The purchase price remains subject to customary post-closing adjustments as set forth in the Chemical Purchase Agreement. The assets acquired and the liabilities assumed by the Purchaser are generally those primarily related to the Chemical Business, including our chemical plants in Houston, Texas and Beaumont, Texas and a research and development facility in Akron, Ohio.

In conjunction with the sale of the Chemical Business, we also entered into a number of ancillary agreements including (a) a master supply agreement, pursuant to which the Purchaser will, or will cause its affiliates to, supply to us certain polymer chemical products for a period of fifteen (15) years, (b) a transition services agreement, pursuant to which we will provide certain transition services to the Purchaser for the Chemical Business for a period of up to eighteen (18) months, and (c) a patent and know-how license agreement, pursuant to which the Purchaser will license back to us certain intellectual property related to the Chemical Business for use in connection with certain retained businesses. Under the terms of the master supply agreement we are required to purchase minimum quantities on a quarterly basis or we are subject to a shortfall fee. The cash received of $580 million included $110 million for deferred amounts primarily related to the master supply agreement that are presented in operating activities and $470 million for proceeds that are presented in investing activities on our Consolidated Statements of Cash Flows.

Results of Operations

Our results for 2025 include a 4.7% decrease in tire unit shipments compared to 2024 due to lower global replacement and OE tire volume. In 2025, we experienced approximately $211 million of inflationary cost pressures.

Net sales were $18,280 million in 2025, compared to $18,878 million in 2024. Net sales decreased in 2025 due to the impacts of our divestitures, primarily the sale of the OTR tire business, lower global tire volume and the negative impact of changes in foreign exchange rates. These decreases were partially offset by favorable price and product mix and benefits from the Goodyear Forward plan.

Goodyear net loss in 2025 was $1,721 million, or $5.99 per share, compared to Goodyear net income of $46 million, or $0.16 per share, in 2024. The change in Goodyear net income (loss) was primarily due to the change in U.S. and Foreign Tax Expense, driven by the establishment of a full valuation allowance on our net deferred tax assets in the U.S., a non-cash goodwill impairment charge in Americas and lower segment operating income, partially offset by gains on the sales of the OTR tire business, the Dunlop brand and the Chemical Business.

Our total segment operating income for 2025 was $1,057 million, compared to $1,302 million in 2024. The $245 million decrease was primarily due to higher raw material costs of $443 million, increased conversion costs of $402 million, driven by inflation, higher SAG of $199 million when excluding Goodyear Forward savings, lower tire volume of $148 million, increases in other costs of $135 million, primarily related to tariff and transportation costs, the impact of the sale of the OTR tire business of $80 million, and a net decrease of $62 million from insurance proceeds for property damages and business interruptions received in 2024 and 2025. These decreases were partially offset by benefits from the Goodyear Forward plan of $772 million and global improvements in price and product mix of $465 million. Refer to "Results of Operations — Segment Information" for additional information.

Liquidity

At December 31, 2025, we had $801 million of Cash and Cash Equivalents as well as $4,421 million of unused availability under our various credit agreements, compared to $810 million and $3,555 million, respectively, at December 31, 2024. Net cash used by financing activities was $1,770 million, primarily due to net debt repayments of $1,759 million. Cash provided by investing activities was $997 million, primarily representing proceeds from the sales of the OTR tire business, the Dunlop brand and the Chemical Business, as well as other asset dispositions, of $1,802 million, partially offset by capital expenditures of $826 million. Net cash provided by operating activities was $796 million, driven by current year segment operating income and deferred revenue and income from asset sales. Refer to "Liquidity and Capital Resources" for additional information.

Outlook

With a backdrop of current macroeconomic and regulatory uncertainties, we have limited visibility to global tire unit volumes for 2026.

We expect our Goodyear Forward plan to deliver approximately $300 million of incremental savings in 2026. In addition, the 2025 sales of the Dunlop brand and Chemical Business are expected to impact segment operating income by approximately $185 million in 2026.

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Based on current spot prices, we expect raw material costs to provide a benefit of approximately $300 million in 2026 compared to 2025. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future price fluctuations and changes in foreign exchange rates. We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, and to reduce the amount of material required in each tire to minimize the impact of higher raw material costs.

We also forecast an estimated annualized cost of tariffs on finished goods and raw materials of approximately $300 million in 2026, based on current tariff rates.

Refer also to “Liquidity and Capital Resources” for commentary regarding our outlook on 2026 c

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