Good morning. My name is Keith and I’ll be your conference operator today. At this time, I’d like to welcome everyone to The Goodyear Tire & Rubber Company Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to hand the program over to Christina Zamarro, Goodyear's Vice President, Investor Relations.

Thank you, Keith, and thank you all for joining us for Goodyear’s 2014 Fourth Quarter Earnings Call. Joining me today are Rich Kramer, Chairman and Chief Executive Officer; and Laura Thompson, Executive Vice President and Chief Financial Officer. Before we get started, there are a few items we need to cover. The supporting slide presentation for today's call can be found on our website at investor.goodyear.com, and a replay of this call will be available later today. Replay instructions were included in our earnings release issued earlier this morning. If I could now draw your attention to the Safe Harbor statements on slide two. I would like to remind participants on today’s call that our presentation includes some forward-looking statements about Goodyear’s future performance; actual results could differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Goodyear's filings with the SEC and in our earnings release. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our financial results are presented on a GAAP basis and in some cases, a non-GAAP basis. The non-GAAP financial measures discussed on the call are reconciled to the U.S. GAAP equivalent as part of the appendix to the slide presentation. And with that, I'll turn the call over to Rich.

Thank you, Christina, and good morning, everyone. Today, I’ll discuss our fourth quarter and full-year results and touch on some of the highlights that helped us deliver full-year record segment operating income in 2014. I’ll also address our outlook for 2015. Laura will follow with the review of each of our businesses and a detailed outlook before we open the call four your questions. I’m extremely pleased with what our teams in all our regions accomplished over the past year, particularly in light of ongoing global economic volatility, which increased dramatically in the fourth quarter and was amplified by the strengthening U.S. dollar. In North America, our team delivered record earnings for the year. With steady execution of our strategy, North America continued to win with consumers. For example, our Assurance All-Season tire launched in 2014 will reach 1 million sold faster than any previous new product. Likewise, our commercial truck business had a strong year as fleets continue to embrace our outstanding products and business solutions model. Our Europe, Middle East and Africa business had year-over-year segment operating income growth of $140 million. Our product leadership in the region was confirmed by regular wins and podium finishes in the important magazine tests, in addition to setting the pace in European tire labeling. Latin America featured a steady roll out of new high value-added Goodyear products that were a hit with our customers. In Brazil and Mexico, we grew share by delivering a double-digit increase in consumer replacement volume, as we’ve completely revamped our portfolio to take advantage of the mega trend shift to HVA products. In the Asia-Pacific region, our volume growth in China and India contributed to record earnings in the fourth quarter. Our products won several awards and we are expanding our distribution to make the most…

Thank you, Rich, and good morning, everyone. Today, I’ll cover our fourth quarter results and provide more detail on key items in the quarter. I’ll also provide specifics regarding our outlook for 2015 before opening the call up for your questions. Turning to slide eight, I would like to highlight a few key items. In the fourth quarter, both our units sold and our net sales were significantly affected by a year-over-year decline in winter tires sold in EMEA, given the unseasonably warm weather in Europe during the quarter. While our winter tire sales through the third quarter were strong, dealer replenishment in the fourth quarter was severely impacted by very weak sell out, which had double-digit declines in some key markets. Our EPS on a diluted basics for the quarter was $7.68. Our results were influenced by certain significant items, notably the release of our U.S. tax valuation allowance of $2.2 billion, which was originally established in 2002. After significant items, our adjusted EPS was $0.59. More details can be found in the appendix of today’s presentation on slide 26. The step chart on slide nine walks fourth quarter 2013 segment operating income to fourth quarter 2014. Lower volumes in EMEA in the quarter and unabsorbed fixed cost due to lower production levels year-over-year reduced income by $53 million for the quarter. Milder winter weather in Europe versus last year drove reduced price mix of $81 million partially offset by lower raw material cost of $30 million. Driven by our operating excellence initiative, strong cost savings across all of our business units for the quarter of $105 million more than offset the $77 million negative impact of inflation. For the full-year, we achieved more than $500 million in cost savings, including $55 million from the closure of our Amiens,…

[Operator Instructions] We will take our first question from Robert Higginbotham with SunTrust. Your line is open.

Good morning, everyone.

Good morning, Robert.

Hey, first question on how you see global product flows post the tariffs on Chinese product coming here. Do you have any sense of where that product being made in China is going to now after you’ve already seen the big decline in imports in the U.S. in the December data? And if you can kind of walk-through how you’ve embedded or how you’ve contemplated that potential offsets in other markets outside of the U.S. into your price raw mat guidance?

So, Robert, I will start and Laura can jump in. I will tell you I think your assumption to start with is a good one that product will flow somewhere if it doesn’t come to the U.S. in this case, so those tires will end up somewhere. And you may recall, we’ve talked about it in the past when we had the 421 action that took place relative to Chinese imports into North America, we kind of had a bit of a perfect storm particularly in Brazil where we had a very strong currency and we saw available tires, if you will, and we saw Chinese imports in Brazil go up dramatically based on their availability and again the strength of the currency. So that phenomena did happen last time. I would suggest to you at this time, it’s a bit early to tell. I will say - you’ve heard Laura make a comment in her remarks that we are seeing increased flow of Chinese tires and Asian imports into particularly Eastern Europe, so certainly I would suggest there is probably some corollary there. I think as we get into 2015, we will have to see how the product flow moves, but we did see that already in Q4 and I imagine there is some sort of nexus between those. In terms of - and by the way, we will watch that very closely around the world. But I will tell you, how we build that into our business going forward, that low-end of the market, by and large, is not a market where we have played. Our value proposition, as you’ve heard us talk about, is playing in those targeted markets segments where we can capture the value of the Goodyear brand. Certainly, our North America business has been on the forefront of that, but also that’s true in our Asian businesses, in our Latin America businesses increasingly so, and in Europe as well. So while those tires will come in at the low-end and clearly by definition they are going to have an impact, remember that’s not the real part of the market that we tend to play in. So that's how I’d have you think about it.

Thanks. And then a separate topic. You got into another strong year of net cost savings above and beyond inflation and certainly follow-through of what you’ve accomplished in the past. Could you give us a little bit more color in terms of what is embedded in that number for this year, mechanically what you are changing, and then kind of what’s the runway to further savings beyond this year?

So we were very pleased, I was very pleased that now multiple years in a row, we’re getting cost savings ahead of inflation. And that’s been really linked back to something that we did. We started, frankly, when I took the job a while back, our operational excellence initiatives in driving efficiency through our business and I would say the result is what you’re seeing and remember that’s a verity of programs through material substitutions to enhanced more effective purchasing, let’s say, through getting our plants to run more efficiently by getting more production out of those factories at the same or lower cost and driving in very specific programs, driving a One Goodyear Way system throughout our manufacturing footprint around the globe, and driving it through transportation and warehousing to make sure that we are getting the right tires to the right customers at the right time. All those programs, I would say, will continue into 2015 and they will continue beyond that. And I would say we are really just getting stared in terms of driving these programs throughout the world. So you saw in our guidance, I think Laura mentioned we are forecasting about the same net cost out in 2015 as we did in 2014, about $165 million. That said, you can be pretty sure that our internal goals are to deliver more than that, although we certainly know the global economy is driving a few headwinds as well.

Great. Very helpful. I’ll let someone else. Thanks so much.

Thank you.

And our next question comes from Itay Michaeli with Citi. Your line is open.

Great, thanks. Good morning, everyone.

Good morning.

Good morning, Itay.

So just a question on volume in 2015 and beyond. I think, last month in Detroit, you expressed a little bit of caution on the 1% to 2% target for the year. It sound like you’re sticking to that. Maybe just talk us through kind of how your outlook and confidence level there spans and maybe also relative to what you’re assuming for pricing for the year? And then secondly to that, I think, in the 2013 plan, the annual volume growth assumption was like 2% to 3%. With some of the changes in the macro environment and the slight cut back in the growth CapEx, should we think about the next two years as more of that 1% to 2% as opposed to 2% to 3%? Just wanted to get your thoughts on that.

So, Itay, we have not given any guidance beyond 2015 at this point because we did see obviously some significant headwinds coming in. I wouldn’t say starting in the fourth quarter, but certainly making themselves more visibly present in the fourth quarter as we looked at the global economy. I would say, as we think about volumes for 2015, maybe just to start with that, and certainly Laura can jump in here as well, I would say that one of the elements driving headwinds in volume in 2015 is our European business. And remember what we have going on there is not only a more difficult economy at this point, but we have sort of the ever-present impact of warm winters. And as we look at 2015, while we see some growth in the summer markets, what’s going to happen again with now our third consecutive, in essence warm winter in Europe, we have a combination of the channels still being relatively full. And maybe if I go back just to shed a little bit more light on it, we planned for a green winter in 2014, so we didn’t plan on it being very robust. What we got is what we’ve internally sort of referred to as now a yellow winter because we saw sunshine in October and November. So what happened is we had the channels full and very little sell-outs going on and that’s continuing so far into 2015. We’ve got some warm weather there. But what’s going to happen is those channels are going to remain full. As we look at winter industry in 2015, we see it actually decreasing again. And on top of the decreasing industry, as dealers now have dealt with three years of green winters, psychologically, they are less inclined, if you…

Exactly.

That’s very helpful. Thanks so much for that detail, Rich. Just a quick follow-up on capital deployment. Nice to see the increase in buybacks, or at least at the shareholder return program. I think in 2014, you were running kind of towards the high-end of that $600 million to $900 million previous range. You’ve raised that high-end to $1.25 billion. Should we assume that you’re going to be looking to accelerate that towards the high-end of that range now, and maybe if you could talk a bit about your preference for dividends versus buybacks?

Okay, very good. So, in the presentation, on page 15, we literally took that capital allocation plan that we updated in May of 2014, where our shareholder return bucket was $0.6 to $0.9, right, and right now, through 2014, we have about $650 million approved and around $450 million is our share repurchase program and about $200 million in dividends. Now as we go forward, right, we’ve shown that we can deliver very strong cash flows and what we’re saying today is based on now our ability to reduce our growth CapEx over the next couple of years that we see the high-end of that shareholder return bucket going to $1.25 billion. Now this is still dependant right, we’re one year into a three-year plan, so it’s still dependant on us making our targets, achieving our numbers and our performance in 2015 and 2016. But that’s really how we see kind of the cash under the capital allocation plan flowing out over the next couple of years.

Great, that’s very helpful, Laura. Thanks so much every one.

Okay. Thanks, Itay.

Thanks, Itay.

And we’ll take our next question from Emmanuel Rosner with CLSA. Your line is open

Hi, good morning, everybody.

Good morning, Emmanuel.

So, first of all, thank you very much for all the modeling detail behind the raw materials and pricing. This is really incredibly helpful in understanding better the dynamics here. I actually wanted to ask you about just a little bit more on that. When I look at your raw materials assumption, it looks like essentially you’re expecting about a 10% decline in overall raw materials costs, but the way it’s modeled, seems to be like about an 18% decline in your commodity costs. And I wanted to ask you where does the 18% essentially come from? Is it assuming that the current spot rates continue? Is there an easy rule of thumb in terms of, okay, if oil price comes down by certain amount, this is where our raw materials bill would sort of end up? And then on the second part of the equation, so raw materials is about a $600 million tailwind, which sort of implies that you’re planning for the gross pricing to be sort of like down $400 million in 2015. That seems to be the same performance as what you did in 2014 despite a potential help from the Chinese tires, so can you maybe also reconcile how you are thinking about the pricing for 2015?

Okay. Well, let me start, I guess, on the raw material piece. And you are right, with page 20, page 21 in the appendix, we really tired to give a lot more transparency about how commodity prices impact our income statement and cash flows as we go. And one of those new items that we made very transparent out there is that about 25% of our raw material costs aren’t affected by commodity prices, right. Those are things like R&D and conversion costs and the profits for the vendor as we go. And that helps to really walk us down to that 10%. Now the 18% is really our view. There is no rule of thumb on that 18%, it’s based on our planning assumptions, on the mix of the products that we will buy and it is based though on current spot rates as we go.

Okay, that’s helpful. And then on the pricing side of the equation, it seems like it’s roughly planning for $400 million headwinds this year. Seems to be about the same performance as what you’ve done in 2014. Any reason why the Chinese tires wouldn’t sort of like help you get a sort of better outcome?

Yeah, no, based on the impact of the tariffs we saw in 2009, we did back then see some help as we went on the pricing as it moved up the tiers. Our price mix raws performance when excluding OTR was essentially flat in 2014. So the $200 million for 2015 is a significant improvement over 2014. We know we can keep that $200 million, but I'd say between RMI contracts that we have around the world and the timing of those and our best estimate is that we met $200 million price mix versus raw. So we see the same positives that you see, we see some of the same negatives that are out there. And remember, our strategy is very focused on not necessarily what happens to raw material costs, up and down, it’s about pricing for the value of our brands in the marketplace and the whole kind of overall value proposition that we bring to a customer.

Great. Thank you very much.

And we’ll take our next question from Rod Lache with Deutsche Bank. Your line is open.

Good morning, everybody.

Good morning, Rod.

Good morning, Rod.

Couple things to clarify. If you thought about that $200 million net raw material benefit regionally, is it basically that you’re thinking that it’s almost entirely North America, as you look out to 2015? And maybe you can clarify that and maybe what your thoughts are for the net of price versus raw materials internationally and how we should be thinking about it first half versus second half for this year?

Yeah, Rod, I’ll start and let Laura jump in. We don’t break it out by region. As you know, it’s something that we look at in the aggregate. And I will tell you, clearly, our North America business has an opportunity in that number for increased price mix over raw materials in 2015. And, Rod, I think you’re right to point out and I think, Laura, said it in her script a bit as well is that the price mix equation versus raw materials in some of the international markets is more challenged by a number of reasons or for a number of reasons, I would say. And one of those certainly is the decrease in raw materials turning up in our raw material indices, or our RMI contracts, with the OEMs and with fleets that, as you know, work up and in this case, they work down as prices go down. Secondly, as we look around the world, what we see are more competitive pressures in some of the sort of emerging market low-growth countries now, outside the U.S. in particular here, where we see more of the Asian imports that we see coming in like in Eastern Europe that Laura mentioned earlier. And you pair that up with sort of the depreciating for currencies they have as they buy raw materials or dollar-based raw materials that become more expensive, in those competitive markets what you see is a more difficult price mix versus raw materials in those places as well. And then something, Rod, you are familiar with as well, as we look around the world, we have that lag impact of when those decrease in raw material prices actually come into our cost of goods sold. And clearly we sort of catch up over time, but that has a headwind as we look around the world in those competitive markets, as well. But, again, I would go back to the fact that over a long period of time we have a very good track record of managing effectively price mix versus raw materials. We did it when raw materials were increasing 25%, 30% a year, and clearly, our intent is to manage that as we look at the environment we are in right now. And as you rightly point out, we have a positive opportunity to take advantage of that in North America as well.

Is the first half versus the second half, we should be thinking about that as more back-half weighted?

Yes, exactly.

Okay.

Exactly. And really it’s just the timing of when those raws that have declined sharply recently hit the P&L.

And just my last thing is, maybe it’s very difficult to sort of reconcile how market share is trending. There’s a lot of moving parts, but if you look at the market data that is available, obviously, it looks like the market was up in the fourth quarter by about 7% in North America. And if you extract the China imports from that, it looks like it may have actually been up even more than that 7%. How do we kind of square that against the 1% decline, especially considering that within North America you are like 70% HVA. How should we be thinking about your performance here? And it looks like similarly in Europe the performance versus the external market data looks a little bit adverse?

Yes, so, Rod, maybe let’s take North America and Europe separately. If we look at North America, I think when you look at 2014 what you have is the market, frankly, being skewed by the tariff actions as we look at the year. As you know, in Q3, we had some 25% increase in Chinese tire volumes coming in ahead of the potential tariffs coming into place. And in Q4, we saw albeit to a lesser degree, the same thing happen in October and November with the decrease coming in December. I think that decrease was almost like 40% as we went. So that tariff impact is still sort of clouding what’s really happening in the market, so to your point of - it’s hard to really see what’s going on. I would tell you, in that market, we have stayed true to our North America strategy or our company strategy of staying focused on our targeted market segments where we can maximize the value of the Goodyear brand. Even in that tough market, we haven’t changed and said, hey, the markets grow and let’s just go sell more tires for volume, for volumes sake. We haven’t done that and you see that in a record fourth quarter and you see it in a record full-year results. So we are managing it very well. Now having said that, Rod, to your point, as good as we feel about managing it, we still have more demands for those HVA tires that we are not fulfilling at the moment. So that’s something that we are sort of laser-focused on and what we are doing to get more tires to our customers, we’re getting more out of the existing North America footprint we have from our operational excellence initiatives. We are investing in…

Okay. So timing in Europe and capacity constraints in North America basically is what you’re talking about?

Yeah.

Okay. All right. Thank you.

Thanks, Rob.

Thanks, Rob.

And we will take our next question from David Tamberrino with Goldman Sachs. Your line is open.

Hey, great.

Good morning, David.

Good morning. Thanks for fitting me in here towards the end. As I think about the comments you guys have made so far and kind of the reiteration of your 10% to 15% SOI target for 2015, coming off a depressed base in 2014, and then thinking about some of the unusual winter seasonal patterns in Europe, which you just discussed, and the pricing environment in North America, wouldn't it seem that the low-end of that is conservative and that maybe you’re probably going to trend towards the higher end of that 10% to 15%?

So, David, I would say - and I’ll let, Laura, jump in as well. But remember, Laura, mentioned two particular headwinds that we have. One is at current spot rates, we estimate about $180 million of FX headwinds. And for modeling purpose we said with the sort of uncertainty that’s going on in Venezuela right now, we basically said, model it as essentially flat - or excuse me, zero for the year, away from about the $50 million that we had there last year. So when you add those headwinds in, I would just say those are extremely significant headwinds that we need to manage driving to our goal of 10% to 15%. And we’ve got a very good core business, it’s operating well and I think you’re right to point out that some of that positive momentum is being sort of muted by what are two very, very significant headwinds and of course foreign currency is something we’re going to continue to watch. That’s at current spot rates, but we don’t know where those will go. And obviously in Venezuela, we continue to monitor that literally on a daily basis to determine what are our next steps as we move ahead in Venezuela. So there are some headwinds in there that I think we shouldn't lose sight of in terms of working our way through 2015.

Okay. I understand that. But can you just kind of tell us what you’re seeing so far in the North American market for impact of pricing from the tariff. Obviously with, as you pointed out, December imports from China down 50%, you would expect to probably see similar numbers in January and into February here now, but have you seen anything in terms of firming prices or really price increases that have started to trickle up from the low end to the mid-tier and up to your premium priced offering so far?

David, we don’t comment on any of the pricing, so I’ll certainly refrain from commenting there. What I will say is that whatever the environment, our team’s focus is to go out and capture the value of what we bring to our dealers out there because that’s an enduring benefit that we need over the long term to drive this business, to drive it forward. We go out there and the value proposition we offer to our dealers, it’s about products, it’s about our brand, it’s about our marketing support, it’s about our customer service and it’s about bringing them business and we view that value proposition as what ultimately is going to win in this marketplace.

Thank you for that. And just lastly from me, can you talk about what you’re seeing in terms of the off-road market? I believe you are thinking it's going to be neutral so far. Other more global players one have said that they can see - think there is going to be a continued step-down in inventories, another out this morning as well or last night, thinking that, that inventory direction, at least in mining tires, is coming to an end. What are you seeing in the marketplace?

Okay. Our view is probably very similar, right. We still expect that commodity pricing will continue to be depressed in 2015. We are not saying will see any significant impact from OTR kind of on the positive or the negative year-over-year in 2015. We are seeing some of that mine tire inventory still at higher levels than really I think anybody expected by now, but we're really not seeing the draw-down as quickly as maybe as we thought. So we still anticipate inventories will decrease in 2015 versus 2014 of kind of all tires, especially, and just for us, in this business with our kind of very specific, unique customer mix and some of the demand opportunities we’ve created over the past year or two, again, we still see it as a tough market in 2015, but really just feel comfortable with kind of our outlook and our business, and again, it not been a significant driver of SOI year-over-year either way.

Great. Thanks for the color.

And we will take our final question from Ryan Brinkman with JPMorgan. Your line is now open.

Hey, thanks for squeezing me in.

Sure, Ryan.

Yeah, thanks. Just to follow-up on the earlier price mix to raws questions, we're really delving into only price mix for a second, and only in North America. Now that we know what the anti-dumping piece is versus when you spoke in Detroit in January and we weren't sure yet, I'm curious to think that the average price of a tire North America, what it does in 2015 relative to 2014. Could industry pricing remain roughly flat despite a big fall off in raw mats that would ordinarily be passed on through to distributors and the consumer?

Yeah, Ryan, I think again, the question on where price is going is something we are going to refrain from responding to you, that’s something we don’t talk about.

Correct.

Okay, maybe just separately then, North America margins are already at record high levels, or North America profit, as we enter into 2015, even before a raw mat benefit or a potential price mix benefit. Where do you think these margins could ultimately go? Is there any natural limit that we should be thinking about in our models of what you could possibly generate here?

Well, Ryan, we haven’t talked about – I guess number one, I’m really happy to have a discussion on how high your North American margins could go having had discussions on how low they were many years ago, so I feel good about talking about this. I think as we look at it, we haven’t thought about the business in terms of how high they can go. You can look around the tire industry globally and look at sort of the competitive landscape and see where margins are and that’s certainly a reasonable thing to do. I think our focus really is really consistent with what we talk about internally and that’s really creating value, sustainable value over the long-term and understanding the tire industry is a very cyclical industry and that our job is to grow this business, grow it profitability, win with our consumers in the marketplace and really help our partner dealers, our network dealers grow their business. Some periods those margins are going to go higher and some periods those margins are likely going to be more challenge, but over the long-term, our goal is to drive higher highs and higher lows in our North America business.

Okay. That’s helpful. Thanks for all the color today.

Thank you.

Thanks, Ryan.

Okay. Thanks everyone for joining us today. We appreciate it.

Thank you. Bye-bye.