Good morning. My name is Keith, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Goodyear's Third Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]I will now hand the program over to Nick Mitchell, Senior Director, Investor Relations. Please go ahead.

Thank you, Keith, and thank you, everyone, for joining us for Goodyear's third quarter 2019 earnings call. I'm joined here today by Richard Kramer, Chairman and Chief Executive Officer; and Darren Wells, Executive Vice President and Chief Financial Officer. 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 statement 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, on non-GAAP basis. The non-GAAP financial measures discussed on the call are reconciled to the U.S. GAAP equivalent as part of our appendix to the slide presentation.And with that, I'll now turn the call over to Rich.

Great. Thanks, Nick. Good morning, everyone. During today's call, I'll share some highlights of our third quarter operating performance and discuss the key themes behind the results in each of our SBUs. Darren will follow with a review of our financial performance and offer perspective on our expectations for the fourth quarter.As we anticipated, the operating environment of the global tire industry improved during the quarter. The decreases in consumer OE demand that have weighed on the industry in recent quarters have stabilized albeit at lower levels. Consumer replacement demand was stronger in most major markets. And for the first time in three years our price versus raw materials equation turned positive, representing an inflection point in the industry cycle.Our teams in the Americas and Asia Pacific were able to capitalize on improving market conditions. We grew our volumes and gained market share in both business units. Segment operating income began stabilizing in these regions reflecting better demand trends, moderating raw material costs and the actions we've taken to capture more value in the market.However, our EMEA region experienced a more difficult industry environment than we expected as well as challenges with our channel distribution. Despite the challenges in Europe, our margins increased 170 basis points sequentially from the second quarter.In the Americas, we experienced continued strength in our U.S. consumer replacement business with shipments up 3% on top of double-digit growth in the previous year. This performance was driven by share gains in the high-margin premium segments of the market. Shipments of large rim diameter tires increased 10% significantly outpacing the industry.We're benefiting from our award-winning products and our best-in-class service offerings. Earlier this month, the Eagle Exhilarate earned the coveted number one rating in the ultrahigh performance all-season tire category from a leading consumer magazine. Outstanding, handling and…

Thanks Rich. While our results for the third quarter could best be characterized as mixed, I have to agree with Rich. We have a lot of strengths to build on and we can largely -- and we've largely achieved what we expected with better volume in Asia Pacific and the Americas and pricing finally ahead of raw materials.Also as expected, we saw some cost challenges including a negative impact from production cuts to balance out inventory levels. As you see in our presentation materials however, there are a couple of areas that were not aligned with the expeditions we discussed back in July.First volumes in Europe, particularly winter tire volumes were lower. This hurt our revenue per tire and therefore our mix. While the industry in Europe was weaker than forecast, we can't blame all of this on the industry. Our relative performance was weak as well, both in terms of volume and in terms of our share in premium tires.While this is only one weak quarter after several quarters of solid market share performance in Europe, we see in these results evidence of issues we know we need to address in our European consumer replacement business.While objectively, we know our product technology and quality is second to none and the Goodyear brand is a huge asset. We also know sales through our distribution channels remain problematic, making it difficult for us to move our product to market, difficult to get full value for our product and difficult to predict our sales volume.I'll come back to our action plan in a few minutes, but we're very focused on addressing this issue. The second area that differed from our expectations was our mixed performance. While our pricing remained solid, our revenue per tire remained essentially flat because of continued weakness in…

[Operator Instructions] We'll go first question to Ryan Brinkman with JPMorgan. Please go ahead. Your line is open.

Good morning, Ryan.

Hi. Thanks for taking my – good morning. Thanks for taking my question. Just relative to the helpful chart on slide 17, can you talk about your visibility into price/mix versus raw turning to higher in coming quarters? How much of the coming inflection is simply a reflection of the known previous trends in commodity prices and already announced price increases versus how much is maybe dependent upon the anticipated ability to realize further price increases? It'd be great if you would talk about sort of the broader macroeconomic environment, tire shipment, volume, backdrop, what competitors are doing and inventory in the channel as may impact your ability to guess if price versus raw spread turn positive here.

Yeah. Ryan, I'll start on price and we can jump into mix as well. But I would say, relative to price, particularly in the U.S., probably over the last 60 to 90 days, we've probably seen a healthier pricing environment particularly in our consumer replacement business.Remember, if we go back to Q -- around about Q3, Q4 last year, when we had some -- announced an effective price increases, we're actually experiencing the benefits of those right now as you would expect as well as some things that we've done over the last six months as well.So, I'm feeling pretty good about that. And remember we still have a lot of work to do. I mean I know, you know and others know if we go back to raw material increases to 2017, we're up about 1.3 billion. So we still have to overcome that as we move ahead, but positive momentum in that regard. We also announced a price increase of up to 5% beginning in September effective 1st of October as well.So, I think you'd see that we are still focused on making sure we get the value for our brand, the value for our investments in the marketplace. And again, I would tell you, when I look at things nothing makes me think any differently about this cycle than other cycles in terms of our ability to ultimately recover the costs of our products out in the marketplace. So again, if anything a bit more positive from where we were last year.

Yeah. So Ryan, maybe I'll jump in and just hit a point on mix here, because well -- I mean slide 17 really only addresses raw materials and price and are -- sort of getting to the point now where a little less headwind on raw materials some more momentum on price, and therefore we've sort of hit the point where price is at least a little ahead of raw materials for the quarter, which is obviously an inflection that we've been expecting and looking for.At the same time, the -- there are areas of mix that in the first half of the year and even again in the third quarter were adverse for us from a profitability perspective. And those are things that we expect to improve over time including in the fourth quarter.So, we - and we talked about that in the last call that we’ve had $20 million to $30 million of negative mix in the first two quarters of the year, and we expect that by the fourth quarter that we would get that to a point of being $20 million or $30 million positive. And while it doesn't directly address the chart 17, it's still an important part of what we do to get value for our products in the market.So when we got a significant price benefit in the quarter, we did have some things working against us on mix. And maybe just to hit those to put them in context, the soft winter market in Europe resulted in less winter tire shipments. Less winter -- we're down 5% or 6% in winter tire shipments. That's an adverse mix factor. Lower shipments of commercial tires in Brazil and a little bit of worse customer mix, in fact, in the commercial business in the U.S.…

Yeah. Excuse me, Ryan, maybe just to close out your last question on channel inventories. Overall, I would say, really they remain pretty healthy in the U.S. We see inventories about the same as they were a year ago and that they were down a year ago from the year prior, if my memory serves. And remember that's in an environment where there continues to be tight supply for certain premium tires out there as well.Same thing in -- as we look at China, days on hand there are really in good shape against significantly below where they were a year ago. And remember this is an environment where sales are up. So things are in pretty good balance there given the economic situation that we're facing there.And then finally in Europe, I think we're -- we have seen and are seeing a continuation of a bit of a trend I guess, where our sense is that wholesalers and dealers are really tending to buy a little closer to need now, which results in lower inventory in the channel meaning they're now below -- well below last year, a little bit lower selling as they're relying on -- or waiting I should say until they need the tires to purchase them. This is -- are low in the channel. And again should we have, for instance, a good snow in Europe I think that's going to pull some demand for it. But overall we would say inventories are looking pretty good.

Okay. That's great color. Thanks. And then just lastly as my follow-up, even though the U.S. commercial on highway OE market, it continues to track strong as measured by build, some who follow that industry closely are forecasting a potentially large decline next year, maybe concentrated in North America Class A truck. It will be great if you can share your own expectations for that market and also just generally remind us of the materiality of commercial truck tires in the context of your overall North America or Americas business and then again the materiality of OE versus replacement within Americas commercial vehicle.

Yeah. So I guess just to put the business in context, we've got a -- approaching 20% of our top-line is related to the commercial truck business. And if we take the commercial truck business itself then we would have around 20% of that that would be OE related. The OE part of the business has been a little bit higher as we've gone through this year because of the strength of the commercial truck build and that's actually constrained our ability to serve the replacement market in the way that we want.We do understand the truck orders peaked last summer. The build remains strong right now but the backlog has been -- is being worked down. So we're expecting the OE commercial, OE industry shipments to decline in the fourth quarter and expect -- most projections are for them to be down into next year as well.Now I mean the first thing will allow us to do is to better serve the replacement business. So we think our replacement business is going to benefit from improved supply as the OE demand normalizes, so it comes off of the recent peak. And I think we've got our ability to ship premium truck tires. We actually think it was going to increase as a result of that.So we'll get some benefit from that at least initially. And then ultimately it's just going to be a question of where the level of freight goes that will determine that cycle. I mean, we understand it's a cyclical business but I think for right now, we've got some opportunities in replacement that'll help us address any decline in commercial OE build.

Yeah. And I'd just add Ryan we've -- Steve McClellan and his team in our Americas business in North America in particular have worked through a lot of the cycles of the tire -- or excuse me the commercial tire industry where you have OE builds go up and down. They're very good at managing through that.And I might also add that one of the things we're doing to Darren's point on the replacement side, we talked about goodyeartrucktires.com I think one or two calls ago and those are the type of initiatives that help us weather through better the cyclicality of the industry particularly on the replacement side. So we feel good about that.

Very helpful. Thanks.

We'll take our next question from John Healy with Northcoast Research. Please go ahead.

Hi, John.

Thank you. Hi, guys. I thought one of the most encouraging things in the release today was just the performance of Asia. Just kind of want to get your view if the performance of the segment kind of surprised you and the bounce back in volumes was maybe a little bit quicker than you thought?And then secondly, do you think that we've reached the bottom in that market and that the trend line in the Asia volumes as well as the Asia profits, we could probably start thinking moving higher rather than lower? Is it -- are you ready to make that call, or is it too early to do that?

Well, I'll start. I will tell you we're very encouraged and very pleased by the performance of the business in the quarter to be sure. Because as we look at it the industry still remains very challenging particularly in China, where as you know the OE business has been down now. I think it's about five quarters straight. It was down approximately 5% in the quarter. Remember that's annualizing the 5% down a year ago as well. So continues to be a tough environment.And remember I think we talked about it on the last call, our original planning assumption was that we'd see some of that bounce back in the OE business in the second half of the year. We said last quarter we didn't see that happening and it hasn't. And, of course, competition then amongst tire companies supplying those OEMs just gets a bit more intense because of that.If we look to our OE business and really to your point John, our OE business outperformed the industry by really a considerable margin. That's really a combination of two things, maybe three including the hard work of the team. But really being on a launch of some several new fitments out in the market that goes back to our focus on getting on the right fitments at OE.And secondly, it's really growing our business with more domestic manufacturers, really reflecting the steps we're taking to diversify our consumer base there. That's working. And we would continue that we would expect that that momentum would continue in Q4 as well.And on the replacement side again, we outperformed the industry. And we feel really good about that. And I think that's really benefiting from something that we did with a lot of intentionality in the past. And that's really making improvements…

Great and then just final question for me, the impact of the strike in the third quarter, is there a way to think about kind of what that caused you guys in terms of SOI dollars in the Americas? And is that recoverable in the fourth quarter?

So yeah John, the -- yeah so we estimate the first 15 days of the strike impacted our OE volume in the Americas by about 4% or about 160,000 units.And while our rule of thumb is that premium OE tires have sales margin just under $20, a lot of this GM business is large-diameter tires for SUVs and pickup trucks. So the per-unit impact is actually higher than that in the Americas business.

Thank you. We'll take our next question from Rod Lache with Wolf Research. Please go ahead.

Good morning, everybody.

Hi, Rod.

I was hoping, you can just elaborate a little bit more on the price/mix versus raw material expectations for Q4 and beyond. In the past you've provided what your view is on full year raw material impact.And if we keep raw materials at the spot prices that we see today and incorporating the lag, what kind of a tailwind -- magnitude of tailwind should we be thinking about based on spot for 2020?

Yes. So Rod the -- as you say, I mean, raw materials are moderating. And we're at a point where -- I mean, they'll still be a slight negative for us in the fourth quarter. So it's something with order of magnitude around 10 million negative. And then at current spot rates, we'd start to see benefit from feedstock costs in 2020.I guess the real question that we're asking ourselves is whether we see volume continuing to improve, which our volume has and I think we see some recovery in the industry. We're likely to see some commodity price recovery also. And then, that would then start to push raw materials the other way.And that's one scenario we're looking at for next year. In another scenario volumes could stay soft and we would get the benefit from the lower feedstock costs. But we'd be faced with a weaker demand and a little -- a lower volume would offset part of the benefit that we get.The other thing that I'll tell you that we're trying to get our minds around, as we look at feedstock costs for next year, is the possibility of higher carbon black prices, due to the International Maritime Organization's stricter sulfur emission standards, which will start on Jan 1, which may drive up the feedstock costs for carbon black suppliers.I think, that's still a question that's out there. So, I think, we're -- while I agree with your point that at spot prices we would have benefits next year that would be pretty significant. I think, we'd be balancing those against the expectation that if volumes stay stable, raws will come back up. And if raws stay down that probably implies that volumes are a bit weaker next year. So, yes, I think all of that will play into the way we think about 2020 and the way we come back and comment on it on our next call.

Yes. I understand the -- no one's got a crystal ball on commodity prices and there are a lot of factors that'll play a role. But just to kind of level set where we are right now. If these spot prices were to persist into next year, what is the magnitude of the tailwind based on your mix today?

Yes. So I think, in today's spot prices it would be around $200 million next year.

Yes. Okay. That makes sense. And then can you just, maybe, give us a little bit more color here on this EMEA business and when you're expecting this to get better? My memory is not that great for what happened 10 years ago in North America. But is this something that you're thinking, there's sort of a structural challenge for the company that could last a couple of years? Or is this something that can be fixed in relatively short order?

Yes. Well, so I think, I'd put this in the category of things that we'll be doing that are going to be positives for us as we look at the two to three-year time horizon, because it is something that will take longer than a year and it did for us in the Americas as well.I mean, we went through and I think you were with us along the way. We went through quite a turnaround in our earnings in the Americas business and the North America business. And part of what went on there, there were a number of different factors there, but certainly there were some real changes in our distribution approach and a significant reduction in the number of distributors that we were closely partnering with.And as a result of that, it helped us get better predictability and better value for our product in the marketplace. And so I think there are some lessons there that we would look to apply in Europe. And this is -- even in Europe the plan for this is not new, but we are getting ready to start some of these actions.And I think as we start these actions, we do recognize that any transition of volume from one supplier to another will often result in a reduction in sell-in temporarily, until the inventory gets realigned. So -- but I think that ultimately we need to get to the point where we've got distributors who are more focused on representing our brands at retail and who have a larger part of their business dedicated to Goodyear's brands. And that's ultimately what we're looking to do.Those transitions do require some changes for those distributors and they require some discussions between us and them in terms of how those transitions will work. So I think, we're certainly feeling strongly that we need to move forward on that. Some of the consolidation in the distribution channels in Europe probably make that even more urgent, yes, so we want to make sure that we've got a route to market using distributors who have objectives that are aligned with our objectives.So I think that we'll -- I mean, we'll get there. Our brands still play very well there. We've got great product technology there. So we got the building blocks to make that work. So we're confident that we're going to be able to do that.But clearly it was working against us in the third quarter and it's something that we think we can make some significant improvements on, while at the same time addressing the other big issue that we have in our European business which is our manufacturing cost structure. And we've got it -- and we're -- yes, we're continuing down the road of restructuring the two German factories and that will deliver some cost savings there.

Yes. That was -- for my last question, can you remind me what you've got kind of in the pipeline vis-à-vis restructuring savings?

Yes. Now, so we announced effectively rather than a plant closure, we've actually downsized and upgraded two German factories, which eliminated about 5.5 million of low-value capacity or will as we move through that. So it's a project that takes us a couple of years.We'll get $60 million to $70 million of savings from that project, in addition to getting some increased capacity for high-value tires. And the discussions with the Works Council in Germany have been successful there. So we've got alignment on those restructuring action. So we're going to be able to move forward on them. And over the next couple of years that's going to make a big difference for us in the EMEA business.

Okay. But that's over years, that $60 million to $70 million?

Yes. I think we look at that as something that starts to deliver benefits 2021, 2022.

Yes. Exactly.

Okay. Got you. All right. Thank you.

Great. Thanks Rod.

[Operator Instructions] We'll go next to James Picariello with KeyBanc Capital Markets. Please go ahead.

Hey, hello. Good morning, guys.

Good morning.

Just on the restructuring topic, can you provide any color on what your intentions are in the U.S.? We've obviously seen some news headlines on some initial actions related to severance, et cetera. So, yes, just wondering what the update is there.

Sure. Yes, I mean, we discussed on the second quarter call that we are looking at several options in the Americas that should deliver savings there at least as great as the ones that I just mentioned for the German restructuring and beyond a similar timetable. So as one step, we've offered voluntary buyouts to associates at one of our factories in the U.S.The eligible associates have until the end of the month or until November one to submit applications for those buyouts. So the amount of savings there is going to be determined by the size of the buyout. And obviously the – yes, that will be part of what we need to do in the Americas. There are additional actions that we'll have to look at but we've got a strong track record of delivering all that type of cost improvements. So we'll anticipate taking some additional actions, but nothing further to put forward today.

Okay. Got it. And then just on the U.S. channel mix, the lower-margin channel mix, the volumes there were I think maybe a little bit higher than what you were anticipating because I mean it's my understanding exiting last quarter that that dynamic in the U.S. was slated to be like largely behind Goodyear. So just wondering are those volumes now expected to be -- go away in the fourth quarter? What are the actions there?

Yes. So I do think that we -- I mean we saw some directional improvement in the third quarter and I think we're expecting improvement in the fourth quarter as well. There are a couple of things there that will have to be addressed through commercial discussions. So we're -- I mean, we need to be selling our tires through channels that are efficient in terms of distribution costs. And there have been some cases here where we've got a distribution taking place through some of our larger customers that get highest volume discounts and that which translates effectively to higher distribution cost for us and so a lower net.We also have a number of customers who have used what we refer to as secondary supply. So they're -- in order to keep their own inventories low, they are taking delivery not directly, but taking it through third parties and we pay those third parties for those deliveries. So I mean these are things that commercially we can work out.We understand that there are some of our customers who are looking to keep their own working capital in line. And I think there are things we do to help them do that, but we're going to have to figure-out a way to make that work while still getting the revenue per tire that we're targeting. And our team clearly focused on that. I think we see some progress. I think there's more opportunity for us to do that expect the mix to improve in the fourth quarter.

Got it. That's helpful. And maybe I just missed this but can you quantify what the TireHub -- equity loss was in the quarter and what the progress is regarding the distribution build-out within that JV? And more importantly maybe what you're expecting in terms of that level of spend for next year? Is that an incremental tailwind as that spend ramps down?

Yes. Well I think overall we expect to continue to get benefits from TireHub next year versus this year. So that will be in the category of things that will continue to help improve our performance in the Americas. So I think that -- and there are a couple of elements to that. One is reduced losses at TireHub itself. And obviously we get our 50% share of any losses that take place there. We also expect to continue to get synergies and those synergies come both in terms of volume and in terms of mix so improved channel mix for us. So both of those things, I think, are going to be benefits for us in 2020.If we look at the third quarter and I think this is the question you're asking, we actually did see reduced losses in TireHub and therefore our equity share of those losses was lower. In fact it was a couple of million better than last year. But maybe more importantly after first and second quarter where we had, sort of, double-digit losses -- equity losses in TireHub equity losses for Q3 were $4 million. So a couple of million down from last year and significantly better than the second quarter.

Got it. That's very helpful. And just last one. In the U.S. replacement market just wondering if you could square up how you would view the September volumes for the industry up over 6%. Would you say that -- would you agree that maybe there was some pre-buying ahead of the latest slate of price increases across a lot of the major suppliers? And I know you touched on channel inventories but just your general assessment of the inventories in this channel right now.

Yes. Well I think -- and I think, you can probably tell this from the outlook we're giving for the consumer replacement business for the U.S. yes, you could tell after a strong industry in the third quarter we're expecting a little bit of giveback in the fourth quarter. So I think that may be along the lines of what you're suggesting.

Got it. Nice answer.

We'll take our next question from Itay Michaeli with Citi. Please go ahead.

Great. Thanks. Good morning, everyone.

Good morning.

My one question really was just on free cash flow. Anything you can do to help us kind of dimension the puts and takes in the fourth quarter and really that we step back whether you expect the free cash to ultimately cover the dividend this year on a full year basis? And then lastly, if you can just talk about given some of the initiatives that you're taking on, how we should think about cash restructuring or rationalization payments in the next couple of years.

Yeah. So yeah I think you've -- probably yeah I mean, you've seen that our restructuring cash estimate for this year has given the actions we've taken. We've bumped it up a little bit, from around $50 million to around $65 million.So allowing, obviously some cash related to the additional restructurings, we've announced. That restructuring cash in the past has been -- when we're going through restructurings has been $100 million or so. So I think, there's room that that could go up a bit, as we execute on these restructuring's we've discussed.If we come back to the cash flow for this year, I think I guess, bottom-line we continue to believe our cash flow for the year is going to allow us to cover our CapEx and our dividends, which means obviously that we'll continue to get some improvement in working capital in the fourth quarter.The fourth quarter is the -- is generally the quarter for return free cash flow positive for the year, as of our working capital comes down, related to some seasonality in cash flow. So I would say helping us further is earlier this year.We've put in place some programs to improve working capital management. And we did see some benefits of these initiatives in the third quarter. So working capital investments in the third quarter were better than they were a year ago, and we expect those to continue to benefit us in Q4.In addition, we took down our CapEx. So we've got some investments that we have pushed out, delayed a bit, given the industry environment that we have in a few markets, markets like India that Rich mentioned.So we've got investments lined up there that just don't need to take place as quickly. And so we have pushed those off a bit. And so I think you'd take all that together, I think we're comfortable that we'll be able to cover our CapEx, and our dividends this year without increasing our net debt.

That's very helpful. Maybe just a super quick follow-up on that, and maybe it's a early to talk about 2020. But these levels of CapEx are these sustainable? Or do you think at some point -- I guess what would you need to see to take that up?

Yeah. I mean, I think, as we start to look forward and consider the opportunity for some recovery, in some of these markets we're obviously going to want to invest, ahead of that recovery.We want to make sure we're able to take advantage of opportunities to grow in premium tires. The timing of that I suppose is the big question. And given we're still developing our 2020 plans, I don't -- I'm not in a position to give any specific guidance for next year.But I think going forward, I would expect that, as we think about what additional actions we want to take for growth in growth markets. And what additional actions we want to take to improve our manufacturing cost from a footprint perspective, there will be some additional investments we want to do.

Yeah. And Itay I would just add to that. If you think about how we've managed through cycles in the past. I mean, we've been able to manage levels of higher and lower spend.I think effectively relative to what's happening in the market and timing our investments, fairly well being prudent with how we spend. And I think this is just another example of it.We would expect that yes there are investments that we need to make in the future. And we feel that we'll be in a position to make them.

That's all very helpful. Thanks so much.

Thank you, Itay.

We'll take our next question from Ashik Kurian with Exane. Please go ahead.

Hi Ashik.

Hi.

Good morning.

Thanks for taking my question. Good morning. First one just trying to get your comments on expected demand in the U.S. for Q4, the SOI drivers and then on the free cash flow. It looks like to me at least that you would need a fairly significant improvement in your working capital in the fourth quarter to technically cover your dividend.And how much of that is being driven by some level of destocking? And I know you made comments earlier in your -- or the comments about trying to get inventories down.So just wondering whether, some of the free cash flow support that you will get in fourth quarter will come at the expense of destocking, and might limit some of the SOI recovery in the fourth quarter.

Yeah. So there's no question, we expect to have reduced inventory by the end of the year. And that's been part of our plan. We've taken production actions to help support that.And so that -- part of the benefit, or part of our progress in the fourth quarter would be improvements in inventory. I'll also say that the -- our level of accounts payable, given the recent production cuts has come down. So we're -- we've had less benefit from accounts payable.That's something we also expect improve by year-end, as we get ready to ramp up production a bit for the first quarter. So there are a couple of different things there that I think will be helpful for us, as compared to where they've been the last few quarters.The other thing is that and this is very typical our receivable balance tends to come down at the end of the year. And that generally is just timing of customer purchases.

Exactly yeah.

Okay. But there's no more than normal level of destocking that you plan to do in Q4. Because I know a couple of the peers have announced a fair bit of destocking.

Yes. So Ashik, the destocking that we're doing, I think it will be an improvement versus where are we have been the last couple of quarters. But it gets us back to levels that are more appropriate for the business. So, it is an improvement of where we are right now, more than it is an improvement compared to prior years.

Okay. And then just one last question, I know, you did put a positive spend on truck volumes coming -- potentially coming down next year in North America. But I mean the broad outlook for both North America and Europe for truck volumes doesn't seem too great. And again, I mean most people have much more bearish assumptions for both the OE and even the replacement market is likely to do in Europe and NAFTA. Just curious to know, what sort of contingency plans do you have if the truck tire volumes were to take a sharper downturn next year than what's in your plan? I mean, should we be looking at more restructurings especially on the truck tires side? Or will it be -- I mean what other means do you have to protect margins on the truck side if volumes do take a sharper downturn?

Ashik, I think it's a good question. I think, maybe a little context might help as well. And we've talked about in the past, where we look at a key element of how we manage our truck business is going to the fleet and selling that whole sort of cradle to grave our fleetHQ, our whole system of selling a new tire, selling a retread tires, selling a replacement tire being able to service them essentially anywhere in the U.S. and get them up and running in less than 90 minutes. I think, we're -- we've managed that. We've done over two million calls on that.And I think, if you think about the value of the fleet business, it certainly doesn't insulate from economic or cyclical changes in the truck tire markets, but it does act to be a lot more sticky and a lot more of a consistent business model than simply riding the waves of OE going up and down or truck build going up and down. And I think, we have I think very well sort of calibrated our business to make sure that we balance off and don't go too far in one direction or another.And what I mean by that is, in the past, I think we had dedicated a lot of capacity to the OEMs as truck build were going. That's good in the sense of selling volume. It also presents challenges in that -- it usually goes that the OE side runs at the same time as the replacement side. And that tends to be a mix down insofar as your capacity is going to OE and not available for the fleets.As we've balanced that off better, we're less susceptible to the OE swing, not that we won't have an impact, but dedicating less volume there means we have more dedicated to our replacement business. And I think, we've balanced of that off very well and I think that's how we better managed through these cycles.Now, if the volume downturn is more severe than we're anticipating, I think that we have I think shown very good foresight, a very good actions in terms of making sure that we're balancing off production with demand in the marketplace. And if that would happen, we would -- we'd really see no reason that we wouldn't be proactive to make sure that we're managing demand, managing the factory and managing cash properly. And again, it'll be temporal because, we know that volume will come back. But again, if you think about how we set ourselves up to win in that fleet side of the market with premium tires, I think that helps us weather a downturn much better.

Okay. Just last question from my side. A few tire makers have announced price increases with different timings in Europe on the consumer side. Anything from your side that you can comment and what you are planning to do or have done already in Europe, given that the markets are weak, so it is clearly a more challenging exercise to put through price increases?

Yes. No we've taken a price increase effectively be in effect starting in the fourth quarter in our European business.

Okay. Cool. Thank you.

Thank you, Ashik. Appreciate it.

And this will conclude today's Q&A session as well as concluding Goodyear's Third Quarter 2019 Earnings Call. We'd like to thank you for your participation and you may now disconnect. Have a great day.