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

• 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.

Comments

[pat45]

So GT is expecting $0.90 loss per share?? Why?? the quarter ended before corona shutdown.

[oldgofaster]

A buy at $3.00.

[ComputerBlue]

Stay away..no catalyst..no chance the previous div level will be achieved any time in the near future

[Dividend Pro]

$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]

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]

Make profits
Horrible 1T
Now imagine the 2Q
Go to 4 USA

[John Cirone]

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.