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Goodyear provides preliminary Q1 results, suspends dividend, trims capex, cuts salaries

Apr. 16, 2020 8:49 AM ETThe Goodyear Tire & Rubber Company (GT)GTBy: Niloofer Shaikh, SA News Editor7 Comments
  • The Goodyear Tire & Rubber Company (NASDAQ:GT) reports Q1 sales declined to $3B vs. consenus of $3.28B and $3.6B year ago, affected by the economic disruption associated with the COVID-19 pandemic.
  • Tire unit volume fell 18% to ~31M, reflecting declines in global OE shipments after auto manufacturers halted production and weak replacement demand following sweeping shelter-in-place mandates.
  • The company expects to report a loss before income taxes of $185M to $195M and an adjusted loss before income taxes of $175M to $185M for the quarter.
  • The company's plant in Pulandian, China is operating with 100% of its workforce and plans a phased restart of production during Q2 in the U.S. and Europe.
  • To mitigate COVID-19 impact, the company reduces FY2020 capital expenditures no more than $700M, furloughed employees, temporary salary reductions and salary deferrals covering over 9,000 of its corporate and business unit associates, CEO, officers and directors and reduced discretionary spending.
  • To enhance financial flexibility, the company will temporarily suspend its quarterly dividend, which will preserve ~$37M of cash on a quarterly basis and refinanced its $2B asset-based revolving credit facility, extending the maturity to 2025.
  • As of March 31, 2020, the company had total liquidity of ~$3.6B, including ~$970M of cash and cash equivalents and total debt of ~$6.5B unchanged Y/Y.
  • GT -9.97% premarket.

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Comments (7)

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pat45 profile picture
So GT is expecting $0.90 loss per share?? Why?? the quarter ended before corona shutdown.
oldgofaster profile picture
A buy at $3.00.
ComputerBlue profile picture
Stay away..no catalyst..no chance the previous div level will be achieved any time in the near future
Dividend Pro profile picture
$GT - crappy companies like this take any excuse to slash or eliminate dividends. They do not have a couple of months of money in the bank to survive a couple of months with (note: only slightly reduced) lower revenue.

The reason they cut now is a virus excuse. They should have cut a long time ago with crap revenues and no profit.

Why they are showing a loss, even before the slowdown makes my head spin.
Good tires, super crappy investment. Loser stock.

We have seen this with other companies, including $TJX and others. Any excuse to get out of paying a dividend. These guys run their business just like most people run their credit card, and that is TJ Maxed out all the time.

I worked at $GT warehouse in 1969, as a little kid, cleaning at night with some other adults. That was some massive warehouse. Goodyear was superior to all other companies at that time.

I remember dumping dozens of 8" ashtrays overflowing with butts. Somehow even then cigarettes seemed like a better investment. Had I started investing my money in PM/MO then, oh, today would be different.
bill h illify profile picture
I had been watching for a year...bought a fair position in late March...figured they would cut div in half...whoops!…so they still have management and problematic obligation issues...was on the fence...now I am out...
Little, Einstein profile picture
Make profits
Horrible 1T
Now imagine the 2Q
Go to 4 USA
John Cirone profile picture
Not surprised at all. The liquidity will keep the company safe through this, but hopefully they make some changes to improve operations after all of this is over.
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