Goodyear Forward program contributed $195 million in benefits during the quarter.
Gross margin declined by 360 basis points, with segment operating income at $159 million.
Net debt declined by over $600 million, supported by asset sales and working capital management.
Net income increased to $254 million, driven by a gain on the sale of the Dunlop brand.
Price/mix contributed $91 million benefit but was $44 million below prior guidance due to commercial truck headwinds and lower mix in the Americas.
Rationalization charges of $59 million impacted results; adjusted loss per share was $0.17.
Raw material costs were a $174 million headwind; inflation and other costs added $127 million in headwinds.
Second quarter sales were $4.5 billion, down 2% year-over-year due to lower volume and the sale of the Off-the-Road (OTR) business, partially offset by price/mix increases.
Unit volume declined 5%, impacted by global trade disruptions affecting OE production and consumer sell-out trends.
Industry Disruption Due to Global Trade and Tariffs
The company observed a surge in imports across key markets, contrary to expectations of import redirection due to tariffs.
Tariffs began to be collected in early May, but import surges persisted into the second quarter, driven by speculation and supply chain delays.
Management expects import levels to decline in the third quarter as the discourse around tariffs stabilizes, but potential new tariffs in Europe remain a concern.
Adjusted EBITDA increased 7% to $88 million with an adjusted EBITDA margin of 29.5%.
Cash flow from operations was $188 million year-to-date, with free cash flow of $175 million after CapEx of $13 million.
Europe and Rest of World net sales increased 3% to $44 million with gross profit margins increasing 390 basis points sequentially to 38.9%.
Gross profit margins increased to a record 52.7%, representing the 10th consecutive quarter of year-over-year gross margin expansion.
Net leverage was significantly reduced to 2.1x, near the low end of the targeted range of 2 to 3x and the lowest level in over 3 years.
Net sales increased 5% to approximately $300 million, driven by a 5% increase in net price, 2% lower volumes, and a 2% contribution from the ChlorKing acquisition.
North American net sales increased 6% to $255 million with a 220 basis point increase in gross profit margin to 55.1%.
Adjusted earnings per share were $0.17 in Q2 compared to $0.76 last year.
Adjusted SG&A increased 10% to $273 million in Q2, driven by higher store-related expenses and variable compensation.
Cash flow was negative year-to-date but expected to be positive for full year, with good liquidity and credit availability.
First half sales were $1.2 billion with reported operating income of $30 million including $17 million in charges.
Gross margin in Q2 was 48.1%, down 200 basis points primarily due to pricing investments in U.S. retail and other factors like excess inventory sales and tariffs.
International segment posted sales growth with Canadian business up 8% comp and Mexico up 19% comp; operating margin approximately 4%.
Inventory was up 3% year-over-year at quarter end, with $17 million higher costs due to tariffs; inventory units were down 1%.
Second quarter reported operating income was $4 million, including $8 million in charges; adjusted operating income was $12 million with a 2% margin.
Second quarter sales were $585 million, representing 4% growth over last year, driven by U.S. Retail and International segments.
U.S. retail sales grew $9 million with a 2% comp; international sales grew $11 million; wholesale sales were flat.
Wholesale segment had a 14% adjusted operating margin but profitability declined due to lower pricing and expense deleverage.
Adjusted EBITDA decreased 38% to $35.9 million, and adjusted net income declined 45% to $20.9 million.
Basic earnings per share decreased to $0.67, and adjusted EPS decreased 43% to $0.97 per share.
Branded Spirits sales declined 5%, with premium plus portfolio sales increasing 1%, while mid and value-tier brands experienced double-digit declines.
Capital expenditures were $10.6 million in Q2 and $18.7 million year-to-date, with full-year 2025 capex guidance reduced to approximately $32.5 million.
Consolidated sales decreased 24% to $145.5 million in Q2 2025 compared to the prior year, driven primarily by a 46% decline in Distilling Solutions segment sales.
Gross profit decreased 30% to $58.4 million, with gross margin declining 350 basis points to 40.1%.
Ingredient Solutions sales increased 5%, led by a 13% rebound in specialty protein sales and a 4% decline in Fibersym branded specialty wheat starch sales.
Net debt leverage remained stable at approximately 1.8x with a cash position of $17.3 million at quarter-end.
Year-to-date operating cash flow increased to $56.4 million from $29.6 million last year, driven by favorable working capital changes.