Goodyear reports results for the fourth quarter and full year of 2021

Akron, OH – Goodyear’s fourth quarter 2021 sales were $5.1 billion, up 38% from a year ago. The increase was driven by the Cooper Tire merger, improvements in price/mix, increased sales from other tire-related businesses and higher volume.

“We achieved our highest fourth quarter revenue in nearly 10 years as demand for our products remained strong and we captured higher selling prices,” said Richard J. Kramer, chairman, chief executive officer and president. “With the addition of Cooper Tire, our merger-adjusted segment operating income was significantly above last year and over 60% higher than fourth quarter 2019.”  

“Looking ahead, we expect inflationary pressures to persist over the next several quarters. We remain focused on executing strategies to capture value in the marketplace and managing our costs,” continued Kramer.

“We are pleased with the pace of our integration of Cooper Tire and we continue to make solid progress toward the increased synergy targets we shared in November,” added Kramer. “I am confident we have positioned our business to deliver strong sales and earnings growth over the long-term.”                                       

Tire unit volumes totaled 48.6 million, up 29% from the prior year’s period. Replacement tire unit volume increased 39%, reflecting the addition of Cooper Tire unit volume and market share gains. Original equipment unit volume decreased 1%, reflecting lower vehicle production, which continued to be affected by shortages of components and materials, partially offset by market share gains in the legacy Goodyear business.

Goodyear’s fourth quarter 2021 net income was $553 million ($1.93 per share) compared to net income of $63 million (27 cents per share) a year ago. There were several significant items in the period, including a non-cash net benefit of $379 million related to discrete income tax items, driven by a $325 million reduction in valuation allowances on certain U.S. deferred tax assets for foreign tax credits. The reduced valuation allowance reflected the benefit of Cooper Tire U.S. income and synergies, as well as tax planning actions.

Other significant items included, on a pre-tax basis, a gain of $20 million related to a tariff-rate change, an insurance recovery of $10 million, net gains of $10 million associated with asset sales, pension settlement charges of $13 million and rationalization charges of $12 million.

Fourth quarter 2021 adjusted net income was $162 million (57 cents per share) compared to adjusted net income of $103 million (44 cents per share) in the prior year’s quarter. Per share amounts are diluted.

The company reported segment operating income of $391 million in the fourth quarter of 2021, up $89 million from a year ago. The company also reported merger-adjusted segment operating income of $398 million, which excludes incremental amortization of Cooper Tire intangible assets. The increase in segment operating income primarily reflects improvements in price/mix, the Cooper Tire merger and impacts of higher volume, including increased factory utilization. These factors were partially offset by higher raw material costs, inflationary cost pressures in wages, benefits, transportation and energy, and increased U.S. manufacturing costs related to higher employee turnover. The reported results include Cooper Tire operating income of $149 million, which includes $7 million of incremental amortization of Cooper Tire intangible assets.

Goodyear’s 2021 net sales were $17.5 billion, a 42% increase from the 2020 period, primarily due to the Cooper Tire merger, higher volume, improvements in price/mix and increased sales from other tire-related businesses. 

Tire unit volumes totaled 169.3 million, up 34% from 2020. Replacement tire shipments increased 41%. This growth included additional tire unit volume related to the Cooper Tire merger, which closed on June 7, 2021, the benefit of stronger industry demand and improved market share. Original equipment volume increased 13%, driven by higher global vehicle production in the second quarter and market share gains.

Goodyear’s 2021 net income was $764 million ($2.89 per share) compared to a net loss of $1.3 billion ($5.35 per share) in the prior year’s period. The period included several significant items. Among these were a non-cash net benefit of $409 million related to discrete income tax adjustments, driven by a $325 million reduction in valuation allowances on certain U.S. deferred tax assets for foreign tax credits. Other significant items included, on a pre-tax basis, a $114 million benefit related to a Brazilian Supreme Court ruling with respect to indirect taxes, a gain of $20 million related to a tariff-rate change, net gains of $20 million associated with asset sales, an insurance recovery of $10 million, amortization of Cooper Tire inventory step-up adjustments of $110 million and transaction and other costs of $56 million (both in connection with the Cooper Tire merger), rationalization charges of $93 million, an estimated negative impact of $54 million related to a severe winter storm in the U.S., and pension settlement charges of $43 million.

Goodyear’s 2020 net income included a non-cash charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits and, on a pre-tax basis, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in the Europe, Middle East and Africa business, a non-cash asset impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $159 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama.

Full-year 2021 adjusted net income was $553 million ($2.09 per share), compared to an adjusted net loss of $448 million ($1.91 per share) in 2020. Per share amounts are diluted.

The company reported segment operating income of $1.3 billion in 2021, up $1.3 billion from a year ago. The company also reported merger-adjusted segment operating income of $1.4 billion, which excludes certain costs triggered by the Cooper Tire merger. The increase in segment operating income primarily reflects improvements in price/mix, the impacts of higher volume, including increased factory utilization, the Cooper Tire merger, higher earnings from other tire-related businesses, and the benefits of cost saving actions. These factors were partially offset by higher raw material costs, the nonrecurrence of benefits related to temporary cost reductions during last year’s pandemic shutdown, inflationary cost pressures in wages, benefits, transportation and energy, and increased U.S. manufacturing costs related to higher employee turnover. Segment operating income also benefited from $69 million related to a Brazilian Supreme Court ruling with respect to indirect taxes. This benefit was partly offset by the adverse effects of a severe winter storm in the U.S., which are estimated at $42 million. The reported results include Cooper Tire operating income of $181 million, which includes $110 million of amortization of Cooper Tire inventory step-up adjustments, $18 million incremental amortization of Cooper Tire intangible assets and $6 million of other transaction-related items.