All right. Good afternoon, everybody, and thank you so much for joining us on relatively short notice for this fireside chat with Goodyear. My name is Emmanuel Rosner, and I'm the Senior U.S. Autos and Auto Technology Analyst at Deutsche Bank. I'm very pleased to be joined by Darren Wells, the CFO of Goodyear, for this conversation. The format for this session will be a fireside chat around some of my prepared remarks, following up on Goodyear's recent earnings and guidance, but also questions from all of you on the call. To submit a question, please email it to me at emmanuel.rosner@db.com, and I will try my best to incorporate it into the conversation. We have an hour set up for this call, and so I hope we will get through most of what's on your mind. So with that, Darren, thanks so much for being with us, and let's get right to it. Okay. Thanks, Emmanuel. So before we dive into my questions, would you like to share some opening remarks about what you expect for 2022 and perhaps clarify points that may not have been well understood? Yeah. No, listen, thanks for the opportunity, and I appreciate everybody being part of the call today. Yeah, I think in the end, Emmanuel, we feel very good about the results that we delivered in the fourth quarter, and in fact, very good about how 2021 evolved for us in general. Yeah, so I think we're feeling good about our results. We're feeling very good about the Cooper combination and where we are in that integration process. And yeah, I think we're particularly feeling good that we have expanded our presence so significantly in the U.S. replacement market because I think we're feeling right now like that is the best market to participate in right now. It's, in a lot of ways, the market that feels like it has the greatest opportunity for us globally. So I think that's feeling very good. And certainly, we have near-term some cost challenges, and those are things that we're going to have to deal with. But we've got strength in pricing, and we've got continued volume recovery that are real positives. And that, I think, makes us positive about what we're expecting for 2022 as well, and particularly in the Americas, and particularly given the strength in our competitive position here and the growing market share that we've had, even aside from the Cooper acquisition. Yeah, so I think there's a lot that we're feeling good about there. When we think about what we're trying to do in 2022, I think the real job we feel like is to make sure that we're finding ways to offset the inflation, the cost inflation that we're seeing, and that's both raw materials and other cost inflation, and make sure that as we're offsetting that, there's an opportunity for the benefit of volume recovery and the benefit of Cooper and all of the integration synergies to drop to the bottom line. That's what we're focused on delivering for 2022, and I feel like we're feeling like we're well positioned for that. So yeah, I think we feel good coming into the year. We feel good coming into the first half. And I think the start of the year has been good. I think we're certainly working like everybody else to understand all of the cost pressures that are out there, some of which are in areas that we have a lot of experience with, some of which are in areas or in amounts that we're not as experienced with. But right now, we feel very good about where we're positioned and particularly feeling good about our Americas business. Okay. I guess let's dive into some of the various puts and takes that you highlighted. Starting with your segment operating income, is it fair to say that even with the headwinds you've described, you're expecting decent growth in 2022? My own math around your break-even free cash flow outlook and the various cash items you quantify suggest implied range for SOI of maybe $1.5 billion-$1.7 billion for 2022, which would be up from the $1.3 billion last year. Am I thinking about this correctly? Yeah. Yeah, I think generally you are. I think the low end of your range is probably a little bit lower than what I could get to, but I think generally you're doing the math correctly. So I think we're expecting to be able to grow earnings, and that's one of the things that gives us some confidence that it's a good time for us to start to think about what we're going to want to do to continue to invest and grow the business. Okay, so let's please go over the puts and takes of the 2022 SOI. So first, your volume outlook. You called for continued recovery of replacement demand towards pre-COVID levels, as well as bounce back of OE demand in line with the auto and commercial industry recovery. Seems this could be a pretty meaningful year-over-year positive SOI driver from 2021. Would you agree, and any way to quantify this? I think what we saw in the fourth quarter was our volume, and we did not segregate this into replacement and OE when I make this comment. But our volume in aggregate was still about 4% below where it was in 2019. But that was after the first, second, and third quarters last year being down 7% or 8% versus 2019. So we felt like that did show some recovery, but still running below 2019 levels. And at least here in the U.S., we got miles driven above 2019 levels in November. So I think there's a lot of indicators that say we should be getting back to and beyond 2019. So I think what we're looking for is to close that remaining 4% gap that we still had in the fourth quarter and then see what the possibilities for growth are. But that's going to be both a combination of both the consumer replacement and the OE business. Okay. And then two specific points within your volume recovery outlook. Is the higher mix of volume coming from OE a headwind in 2022? And separately, how should we think about the off-highway tire recovery? Yeah. Yeah. So I think I'm glad you raised the off-highway business because it's one that we don't talk about that much, but it's one that had a fairly significant impact during COVID. But I think we will see gradual recovery in our OE volume during the course of 2022. I think I'm open about the fact that the margin on OE volume is less than it is on replacement. But I also feel like we've got opportunities for additional volume in replacement and for continued improved mix in replacement. As the OE volume comes back, some of that will be better mix OE volume, so a larger mix of higher rim diameter, larger mix of SUV and light truck. The impact that that has, I think ultimately is going to be positive as the volume comes back. The off-highway business, and I guess we have the Off-the-Road business, which is the construction equipment and mining tire or mining equipment tires. And then we also have the aviation business. And those are two businesses that we talked about last. They tend to be longer-cycle businesses, but both took a very significant hit in 2020. And the airlines, for obvious reasons, but the Off-the-Road business, the OTR business, also very significant. We did see some recovery in those businesses last year, but we still have quite a bit of recovery opportunity in both aviation and particularly in the mining tire business. And I think in the second half, there was some good progress. But from what we lost, we probably have at least half of what we lost left to get as we work our way through 2022, 2023. So still some upside there. Okay. So that's the volume piece. Then I guess shifting to raw materials, you identified $700 million-$800 million potential headwinds from raw materials in the first half of 2022 alone and indicated there could be a couple hundred million more headwinds in the second half if spot prices stay at current levels. Can you maybe give us some specifics around what materials or commodities could constitute this additional headwind in the second half? As it seemed, a lot of the spot prices and of most relevant commodities we track have generally come down in the past few months. Yeah. Yeah. So, Emmanuel, I think if I look and I'll say that if I looked at just natural and synthetic rubber, then I think I would agree with your point because if I look at the natural rubber and synthetic rubber that we bought in 2021 that affected our earnings in the second half of 2021, and then I look at the spot prices today, natural rubber is up a little bit. Synthetic rubber is down a little bit. If I put the two of them together, relatively flat. However, if I look at the price of carbon black and I look at the price of some of the petrochemical-based pigments and oils that we buy, so petrochemical-based commodities, like the price of oil, those have stepped up quite a bit recently. So if we're looking at the spot prices of those commodities, those would also be creating some additional cost increases in the second half. So the other thing that is playing a role here is there is some impact of currency given that the U.S. dollar is in a stronger position than it was a year ago. And there's the impact of transportation, and particularly ocean freight, on raw material costs that is in the third quarter. I mean, the fourth quarter, I think, had. It was It was a fairly significant step up, but we've continued to see additional cost increases since then. So it would still be playing a role as we get into the second half of the year, as will the additional cost of energies that some of our suppliers are getting hit with that are getting passed through. Having said that, I think I'll stand by the first point that we made on the call, which is that we're not really sure what the picture is going to look like. So while we answer the question, what would the second half look like if spot prices held where they are today? I think for us, the reason that we really have focused on the first half in giving our comments is we think we have a good visibility to what our cost increases are going to be in the first half, and we have high confidence that we're going to be able to address those with the increased price and mix that we're going to be able to deliver in the first half. Second half, I think there are different scenarios that could play out. I have confidence we'll be able to deal with whichever of those scenarios we face. But that's really our comments at this stage are thinking really focused on the first half. Understood. And then you also mentioned large expected negative impacts from non-materials inflation, including labor costs in North America, energy in Europe, and also transport, which you said could be $20 million-$30 million higher than in the fourth quarter by itself. Now, you already incurred fairly meaningful excess inflation in the fourth quarter, which you quantified at $63 million versus your usual cost savings. Usually, this is a positive number. So how much worse can this get in 2022? And what sort of headwind have you assumed in your full-year outlook? Yeah. Yeah. So I think, and again, I'll focus on the first half here, I think, more than anything else because I do think there's some uncertainty. But as we look at the first half, I think now we're expecting that the impact we saw in the fourth quarter for those incremental cost increases to be similar to what it's similar in the first half to what we saw in Q4 and, in fact, probably a bit higher in the first quarter, just given that transportation cost is going to represent an additional $20 million-$30 million cost increase year- over- year. So if you think about the fourth quarter, we saw transportation cost increase something like $35 or $40 million year- over- year. So if it's $20 or $30 million higher than that, then you can think it's more like a $60 million cost increase in Q1. And then as we get to Q2, obviously, I think we're all looking for when ocean freight and inland transport rates start to come back down. I think now we're in the middle of the first quarter. It seems like a lot of those additional costs will be with us through Q2. But I think we're also expecting that at some point in the second half, we will start to again, different scenarios could play out, but I think we're expecting for transportation rates to normalize at some point. And at least in the second half, we're going to be anniversarying or lapping the cost increases from a year ago. So the base is going to be a lot higher. It won't be as much of a year-over-year effect. Then ultimately, I think we'd expect some cost decreases to come once we get through what feels like, at least in some cost areas, sort of a transitory situation. I guess if we focus on all three: transportation, but also labor, energy, essentially anything you would qualify as excess inflation, how large of a headwind should we expect it to be during the first half or on a full-year basis? Yeah. No. So I think that the fourth quarter, the last couple of quarters, I should say, have been between $60 million and $65 million a quarter. That average seems appropriate for us for the first half, although maybe a little bit more in the first quarter, a little bit less in the second quarter. So that's probably the best way to think about it. That's instead of cost of the usual cost savings? Yeah. Yeah. That is, instead of what that is, the category formerly known as cost savings. And I think in the future, it will again be cost savings. But I think right now we're getting a combination of these significant step-ups in categories like transportation that really haven't moved in recent memory. But right now, I think you're aware that for ocean freight lanes, I mean, we have rates that are generally below the average rates that get paid in the industry, but they're still two to four times the amount that we were paying a little over a year ago. So some very significant step-ups for prices that haven't changed in the last 10 years in a significant way. So I think we're saying, yeah, I mean, with those kind of cost increases, at least near-term, that's going to mask whatever benefits we get from our efficiency programs. And in fact, those efficiency programs near-term are being slowed down by the fact that we've got a lot of new people to train, at least at our North American factories. So a couple of things there that are transitory shouldn't be an issue for us in the same way in 2023. In fact, we'll probably start to get some improvement. But as we go through the early part of 2022, they're going to be with us. Let's turn to the offsets. Offsetting these inflation headwinds, a big factor is pricing. You signal confidence in your ability to offset all of your materials inflation and part of the other cost inflation, which is pricing in 2022. Now, just to clarify, is this only based on price increases that were already announced or are contractual, such as getting a full year of the 2021 increases and the ones effective in early 2022? Or have you also incorporated in this calculation potential additional price increases this year? In other words, if the industry is successful in passing additional price increases, would this represent upside versus your base case? Yeah. Yeah. So I think, first of all, I'm going to bring it back to the first half. And I'm going to say that we focused on the cost increases that we have in front of us for the first half. And I think, and we've said we are comfortable we're going to be able to cover those raw material costs that we see coming in the first half and more, and some of the inflationary pressure. And if I split it geographically, I think similar to what we saw in Q4, where we saw the Americas able to cover not only the raw material cost inflation, but also the other two categories of cost increases. I think the situation in the Americas, the pricing environment, has probably been most constructive. And therefore, I think that's probably the geography where we feel best. And obviously, and particularly with the Cooper combination, is the geography that we're most heavily weighted to. So I think that feels pretty good. If we look outside of the Americas, the situations are different, but certainly we aren't seeing the same level of pricing outside of North America that we're seeing in North America. And I think particularly in Asia, it's probably the location that we're seeing the most challenges. But I still think we feel well-positioned to handle what we see coming in the first half. And we don't tend to announce price increases with long lead times. We tend to announce them within about a month of when they take effect. So I think what you've seen so far is we announced pricing on January that was effective January 1st, and we're getting the benefit of that in the first quarter. I won't make specific comments, but I think as we think about that first half, we are considering what we feel like we need to do throughout the first half, given what we see in terms of material and non-material cost inflation. The scenarios that we might face for the second half, I think that's really still in front of us, and I think there is considerable uncertainty as to what direction raw materials and other costs might take in the second half, so I think we will continue and will continue through the second quarter thinking about what actions, pricing or otherwise, might make sense in order to make sure that we're properly addressing any cost increases or whatever environment we see in the second half. Okay. I think I understand the outlook, the industry environment, and the outlook for pricing environment that you're describing by geography. At the same time, I think a point that's of big focus to us and to investors is understanding how much of that was or wasn't assumed in your earnings outlook. Obviously, we saw Michelin announce already an increase for April 1st. You don't typically announce those so far in advance, but also Michelin just reported, just said they expect to be able to offset all of raw materials and non-raw materials pressure inflation with pricing. Is there any specific reason why you couldn't, and to the extent you were to pass price increases, would this be upside versus the guidance that you've communicated? Yeah. So I think the questions, I believe, largely revolve around what may happen in the second half. And I do think there are different scenarios that could play out. And those scenarios could be raw materials effectively staying where they are, and then we would face the need to take actions to offset those. I think there could be scenarios, and particularly given some of the central bank actions, that might raise the question of whether or not some of these cost increases might moderate. And I think in those situations, historically, there has been an opportunity for some margin expansion as raw material costs moderate. Certainly, that happened for us in 2013, 2014. If, on the other hand, we see what's happened with oil recently, and we saw an additional significant step-up in raw material costs, then I think there'd be a lot more aggressive action required to handle it. And I think that the reason we focused on our point of view for the first half and not really gotten into a second-half discussion is I think we feel like there really is a lot of question around how these costs are going to develop over the next three or four months. Got it. And I guess just enough to spend a whole call on pricing, but still on the first half, I guess your view is still offsetting the raw materials increase and only part of the non-materials increase. Is pricing for the first half already called for? Or are you saying that additional increases in the first half would already be compensated in your guidance? Yeah. So I think we feel very comfortable we can more than offset raw material costs with price mix, and we can offset at least part of, if not all of, the additional cost increases that we're seeing. I think that the environment, in particular, I think the general inflation impact, which for us in the fourth quarter was about $80 million, I think that, which is sort of a CPI-calculated inflation rate, I think those costs, it's very clear that those costs are affecting the market broadly, and so I think we feel like every competitor is being hit with those equally, and so I think our confidence level that those are costs that, in today's environment, will need to work their way into the pricing equation. I think that's not hard for us to think through. That additional category of costs, part of which is transportation, which I could make the same argument about, is that should be impacting our competitors at least as much as it impacts us, and in some cases, more than it impacts us. I think those costs arguably are going to need to be recaptured broadly. The costs that I think the only reason that I think if you hear any hesitation, it's probably more about the more operational items that they're hitting our locations, and in this case, we think about the absenteeism and the increased turnover of personnel in the factories, and therefore, a more challenging environment in which to drive cost savings that we've traditionally driven. I might hypothesize that others will be experiencing the same thing, but it's not as easily discernible, so it's not as transparent what level of impact everyone's experiencing for those things. And I realize turnover is different, even within the U.S., is different in different geographies. So I think that we're really focused on getting past this training and hiring process so that we can get back to delivering our cost savings programs. But we realize that that's on us to manage our way through. And it may be that we're able to that those are general market costs, and we may be able to recover those. But I think it's a new enough environment that it doesn't have the it's hard to say it has the same predictable dynamics that some of these other areas have. Understood. Thank you. Very quickly, so we keep pace and get through all the questions. But Turkish lira was something investors were terrified about throughout the quarter, didn't even come up as a topic during the earnings call. Is that a big deal? Yeah. So I mean, we do have a large business in Turkey. It's a very important emerging market business for us. And it's been a business that we've got a team there that has done a really good job growing and expanding our business. So I think we feel very good about our business. Obviously, in a challenging environment, given what's happened with the currency and some of the macroeconomic disruptions, the good news is we've got a team there that's been pretty nimble at being able to address those. Outside of the pure local business environment, which I think we feel like we can manage through this, there's a bit of a dynamic that we've dealt with in other emerging markets. But there's a two-part impact that goes beyond just the local earnings in Turkey. One of those impacts is to our raw material costs because we buy a lot of raw material costs for our Turkish factories. Those factories serve the local market, but they also serve the European market. And that makes up part of that transactional currency effect that we reflect in our raw material guidance. So we expect about $70 million in the first half. A big chunk of that is from the impact of the Turkish lira. The other impact that we have, which is more of a favorable impact, is that to the extent the lira devalues, that means that the cost advantage that our factories in Turkey have vis-à-vis mature market locations can become even more significant. So it becomes an even more cost-effective place to manufacture. And these are already factories that are among our better factories in terms of our manufacturing cost per tire. So I think that balances out some of that raw material impact that appears as a negative. We get some benefit in the lower cost of the products that we ship into Europe. Understood. Now, turning to the Cooper acquisition. So you'll obviously get a full year of earnings contribution in 2022 and of cost synergies as well. Cooper contributed nearly $150 million of SOI in the fourth quarter. Is this a reasonable run rate? And how much of the $250 million in targeted cost synergies could be achievable this year? Yeah. They're both good questions, and understand that given that the results for Cooper historically were reported on a last-in-first-out inventory accounting basis, and Goodyear reports on a first-in-first-out inventory accounting basis, we have to translate their historical results to our accounting standards in order to make them comparable. But I'll say this just for, I guess, ease of use. The prior year Cooper results, when adjusted to our accounting basis, would have been something more like between $80 million and $90 million last year. So the fourth quarter was a strong quarter, a strong quarter for Cooper. That had been true in the prior year as well. First quarter not generally as strong. So yeah, if that was your first question. Second question was the synergies. Now, we continue to feel very good about the synergies, but understanding when we talk about our $250 million run rate target, that's something that we expected to meet within two years of closing. So that's where we'll be running when we get to the middle of 2023. And in fact, it's a little bit back-end weighted because some of the cost savings we're going to get will only be possible once we move the Cooper business onto the Goodyear ERP systems. And so we don't have to maintain two separate sets of systems and business processes. That planning process is well underway. We'll get those transitions done by the end of this year. So that's end of 2022. And then we can get the full benefit in 2023. But some of the synergies that are available we'll still get this year. So we're expecting on a year-over-year basis to benefit somewhere $15 million-$20 million a quarter this year. That's over and above about $20 million of savings that we got during the second half of 2021. Great. And then on the European side of your business, profitability seems to have taken a step back in the fourth quarter, in part due to energy cost inflation. But you also been in the process of restructuring your business there, the footprint closing plants in Germany. You're also revamping your distribution channels. What sort of upside potential is there this year from these actions? Yeah. Yeah. So I mean, first of all, I guess I thank you for acknowledging the work the team is doing there because I think there really is a lot of very good work being done, both in distribution and in manufacturing within the European business, and certainly a lot of great work on product and technology as well. So I think that they're doing all of the right things. If I look back, almost a year ago, we were announcing first quarter 2021. We had some discussion on the conference call with investors about where Europe was at the time because they had delivered a couple of quarters of $70 million or $75 million of segment operating income. And what we said at that time was that there were a couple of non-recurring items that were part of that. We had some write-backs of some accruals for customer incentives. That really the view we had at the time was their underlying run rate was still more like $50 million of operating income per quarter, which is similar to what we had in 2019 pre-pandemic. And in fact, over the last three quarters, their average operating income has been $53 million. So I mean, very much in line with that. Now, having said that, we are continuing to get benefit from the restructuring of our distribution system. And we've been recovering the market share that we gave up. We will get benefit from that going into the first and second halves of 2022. And we'll get the final benefit of the manufacturing restructuring this year as well. So I mean, we're entering 2022, still running a little bit above that $50 million, but not as high as we'd like to see. But I think we feel confident we're going to exit 2022 running at a higher level than that. So I think this year, I think as we exit this year and get into 2023, I think we are optimistic about where our European earnings are going to be. Okay. So let's put it all together since we've been through a bunch of puts and takes. So now, on the one hand, generating $1.5 billion-$1.7 billion of sorry, generating this kind of SOI optically is decent growth from the $1.3 billion that did it last year. But then in 2021, you only had half a year of Cooper contribution. One may argue that your pro forma 2021 SOI was already $1.6 billion. Could you please explain why you're essentially guiding for limited growth on an underlying basis? I understand the inflation factor net of pricing is a headwind, but you're also getting much higher volume, a full year of cost synergies from the acquisition, as well as the benefit from any restructuring you're doing in Europe and elsewhere. In other words, is your outlook particularly conservative? Yeah. So I think that really our outlook, when we're thinking about the drivers of earnings, has really at this point been and consciously so focused on the first half of the year. Now, as we looked at what our planned and our needed investments are for the full year, and that is the need to rebuild some inventory and the fact that we see some very value-adding investment opportunities that we want to get started on, has meant that we had $300 million of working capital reinvestment and an additional $200 million-$300 million of capital expenditures that we felt like were going to make sense this year above where we were last year. And because we're looking at those additional investments, I think we wanted to be clear that we feel like we can generate cash to take those investments. That's really the point that we intended to make, nothing more than that. That we still feel good about. The fact is that we generated some cash in 2021 that we would have originally expected in 2022 because our inventories just didn't recover last year. Our level of sales remained high enough that we just couldn't rebuild the inventories. Originally, we expected for some of the $300 million of working capital rebuild to happen last year in the fourth quarter. Instead, it's going to happen this year. I think absent that working capital rebuild delay, we would have been expecting to be able to generate positive cash flow this year. There's just a little bit of a timing or a one-time impact there. Yeah. And I definitely want to dive deeper into the free cash flow dynamics of a whole bunch of questions on this. But just final, maybe one or two points on the implied, I guess, operating income view for this year. Is it fair to say that with all these puts and takes, you ought to be able to grow earnings even on a pro forma basis? So essentially, if we sort of view last year as having had Cooper for a full year, this year should still be better than this because of the ability to offset costs with pricing because of such a large volume tailwind, because of cost synergies, all the things that you did not have last year? Or are these cost inflations so large that it sort of erases that? Yeah. So I'm going to go again. I'm going to go back to the points that I made at the beginning of the call and say that we're really focused on what it takes, whether through price, mix, or cost, to manage our way through and to offset the cost increases so that the benefits of Cooper and the benefits of the volume recovery have a chance to drop to the bottom line. And we fully understand and embrace the fact that that does give a view that we're going to be able to increase earnings from pro forma 2021 levels. And that is our expectation. And I think that we feel really good about our fourth quarter results. We feel very good about the outlook that we have for our ability to manage through the first half and the way that the markets are positioned for the start of the year. We have some questions about how things may play out in the second half, but we'll ultimately get to those. We're actually feeling very good, feel well-positioned, very well-positioned with the acquisition of Cooper and that business combination of what we're going to be able to achieve. So I think overall, really positive outlook, and we're feeling very good about how we can manage through it, even though there's some new factors being thrown at us here. Yeah. Now, even at the high end of the range I sort of backed into on the SOI of $1.7 million, it would still represent only 8.5% SOI margin. I think in the recent past, you had indicated a credible path towards going back to 10% margins in relatively near term, possibly even more towards previous peak margin after that. What is the path from here to go there beyond 2022? Yeah. And we are focused on getting ourselves initially consistently running above that 8%. And then eventually, and we think it is very realistic intermediate term to get to that double-digit type margin again. And I think there are three elements that are going to be important for us there, one of which is continued improvement in mix. And I think that opportunity is there. And it continues to be there for movement toward larger rim diameter. But I think the electric vehicle tires are going to be the next seed that helps us continue in that direction because there are going to be tires that have greater complexity, greater technology associated with them. So I think we'll continue to be able to move our mix up. The second thing is continuing to improve our distribution. And aligned distribution is a big part of how we run our business. The most visible and quantifiable is the work that we're doing in Europe, where we said that by restructuring our distribution, we felt like between 2021 and 2024, we'd be able to add $2-$4 per tire of incremental margin. I think we still feel very good about that. We started to make progress there in 2021 while recovering the market share that we initially gave up in order to reposition our distribution. But we also have expansion of our distribution in China and India. That's going to be important. And we continue to improve and focus on aligned distribution in our Americas business. So I think there's a number of initiatives in our businesses around the world that will continue to help us capture more of the value of our brands in the market. The final one, and one that we can't overlook, is we have to continue to make progress on the cost efficiency of our manufacturing operations. This is why I feel like technology, I feel very good about our competitive position, distribution. We are taking actions. But generally, I think we feel very good. In Europe, I think we're trying to address a historical disadvantage, but I think we're feeling good about where we're headed. Manufacturing has been more of a disadvantage in that we have higher manufacturing costs per tire than many of our competitors because our factories are in locations that have been there longer and are in higher cost locations. We have, in the last three years of about a $4 per tire disadvantage, we've eliminated about $1 of that. So by the end of last year, we had gotten that disadvantage from $4 to $3. But we still have that $3 at least and maybe more beyond it that we need to get at. And so we continue to work on our internal plant optimization and efficiency programs, continue to look at the run strategy of our factories. But now we also have the opportunity to leverage the combination of the Goodyear and Cooper footprints to make further progress and make sure that we're leveraging the low-cost locations that Cooper has in order to help accelerate that journey. So I think we're feeling good about it. But all three of those areas are going to contribute to how we continue to move up toward those double-digit segment operating margins. Let's turn to your free cash flow guidance for break-even in 2022, which definitely caught many by surprise. Did you really feel the balance sheet in such a good shape that investors will be willing to forego free cash flow generation in favor of investments? Or are these investments urgently needed? Or how should we think about it? Yeah. So I think that the way to think about this is that we're seeing, as we come out of the pandemic market reduction, I think that we are seeing a number of factors, and I think particularly acute in the Americas that are just presenting us with some significant economic value opportunities. We are in a constant state of review and thinking about how to balance improvement of our balance sheet and moving toward our leverage target, which has been a long-time objective and something we take very seriously. Balancing that against opportunities we have for investment that we know are good for the business and also good economic value opportunities for our investors. If we think about that because there are some parallels between where the industry and our business are today and where they were in sort of 2011, 2012 timeframe. I think we look at some of the investments that we made at that point in time, and the benefit that we got from those investments as we went through 2014, 2015, 2016. I think we're feeling good that we have some of those same opportunities now. And I guess just as an example or two, I mean, we upgraded our Lawton, Oklahoma factory in that timeframe, and we spent about $135 million of capital in Lawton in order to upgrade from small rim diameter to large rim diameter, about 4.4 million units of capacity. And we know that making that move from smaller rim to larger rim diameter in the replacement business is the difference between $10 of margin and $30. So it's an incremental $20 of margin. Even if some of that volume goes to OE, in the OE business, it's the difference between about $5 of margin and $15. So even if it's OE business, it would be an incremental $10 of margin. Our business is about 80% replacement, 20% OE. For an investment like that, what that results in is for a $135 million investment, there's an opportunity for about $80 million of EBITDA generation. Now granted, the investment takes about three years to do the investment. Year one, year two, year three of investing, year four ramping up, and year five is the full run rate benefit. Even with that time, and even if you assume you have to pay taxes on the additional $80 million of EBITDA, that kind of investment is still around about 30% internal rate of return investment. Given that it's in the U.S. and we're not paying taxes, then I suppose you could argue it's maybe even a little bit higher. When we look at investment opportunities like that, we feel strongly that those are opportunities we need to take advantage of. We don't want to miss those opportunities. There are other opportunities that are brownfield expansion of existing facilities. The most recent one of those we did was in Slovenia, where we invested about $110 million for an additional 1.8 million of large rim diameter capacity. In that case, similar math, we invest $110 million of CapEx, and it yields about $50 million of incremental EBITDA if we mix it across replacement and OE. There, it's probably the internal rate of return is probably more low 20s, but still very strong return profile. So I mean, if we're looking at these types of investments and we see that our products are well-positioned and there is strong demand, including over the next couple of years, the expected recovery of OE volume that is going to pull at industry supply, I think we feel like we're at a good moment in time to make these investments and feel like the probability of getting strong returns is very high. So I think ultimately, that's the balance that we're trying to strike. And I think we went through that period of time, 2011, 2012, and 2013, where we ramped up our CapEx. We got the benefit of that CapEx in 2013, 2014, 2015. And in fact, after those three years, our CapEx came back down. And so I think that we can evaluate it in timeframes like that. But when we start projects, they do tend to take, call it, three years to go through the investment cycle and to get ourselves to the point of getting the benefit. But I mean, the benefits, I mean, as you see, the benefits here can be very significant. And so that, I think, is part of what convinces us that we need to allocate some of the capital to these value-enhancing investments while at the same time making sure that we're on the path to hit our leverage targets. So I guess specifically in this current time period, so you indicated CapEx will increase to a range of $1.3 billion-$1.4 billion, up from $1.1 billion last year on a pro forma basis, partly in order to support capacity for EV tires. Can you give us a sense of how you plan to use this capital? In this particular case, is it new plants, new incremental capacity at existing plants, or conversion of existing line to support EV tires? Can you tell us how much capacity you're adding or converting? Yeah. So I guess we're not at a point of articulating the specific volumes. And I think that that's something that will come in the near term. I think once we have completed all of our internal reviews, we will finalize these individual projects and be able to communicate some of what I communicated on these historical projects. So in other words, how much incremental capacity for large rim diameter and maybe even how much capacity for electric vehicle tires, which do include some unique attributes, including noise cancellation technologies that are unique to some of those equipment. So we'll be able to communicate those. I think the idea for us initially was to just give investors a picture of what we expect those to add up to once they are all individually gated. Okay, so more details to come, basically. Yep. Okay. Can you give us a sense of the expected return on investment on this additional CapEx? Is it similar to the ones you mentioned from a decade ago? And how sticky will this elevated run rate of investment be? Yeah. So I think good guidance is what we went through from 2011 to 2013, as we went through a three-year period of increased CapEx. That allowed us to execute on a number of programs that we planned and executed during that time. Then I think the three years after that will be subject to a different set of analysis, so a different set of decisions. We'll have to take a look at what we think the opportunities are at that time. So I think that probably answers the last question. In terms of returns, the reference projects that we just talked our way through, those are projects that we chose because we think they're representative of the type of economic opportunity that brownfield expansions and brownfield modernizations have. Most of the capital that we're talking about fits in one of those two categories. I think that they are probably representative in terms of return profile. With the inflation over the years, the absolute dollars may look a little bit different, but I think the returns are representative. Those are the types of returns that we're looking for. Sort of that 20% plus returns, that's what we're looking to get when we're thinking about the projects that are really compelling. I think generally, we want to make sure that we remain relevant. We mentioned businesses outside consumer and commercial, and all of those have a little bit different profile as well. But I think a lot of the capital that we're looking at will be for the consumer business, and a lot of the projects are going to be in these same categories of modernizing or expanding existing sites. And so as you cycle past this working capital investment, which seems to be mostly a 2022 sort of catch-up, but then you still need to invest in this higher tire CapEx over years to come, would you expect still meaningful positive free cash flow from 2023 on? And beyond that, what is a reasonable normalized free cash flow target for Goodyear and Cooper combined? Yeah. So I'm not sure I have a definitive answer for the last question, Emmanuel, but I think for 2023, I think there's going to be immediately, there would be non-recurrence of the $300 million of working capital and the additional earnings improvement that we get in 2023, including but not limited to the additional synergies for the combination with Cooper. So I think that for 2023, there's already a couple of things that will be driving cash flow in the right direction. I think that is certainly an opportunity. I think the longer term, I think we feel very good about the ability of the Cooper and Goodyear combination to help us drive higher margin and better efficiency for the capital we do deploy. So I think there's some exciting possibilities out there, including the $250 million of run rate synergies we're going to hit by the middle of next year. But I think when we go beyond that initial two-year period, I think there are going to be some additional opportunities that are going to look pretty enticing as well. Then circling back on your focus on EV tires, can you please remind us why these are different from regular tires and what your economics are on them? Yeah. So the difference in electric vehicle tires really are a reflection of the difference in the vehicle itself in that it has two physical dynamics, which is higher weight and higher torque from the electric motor. And then there are a couple of, I guess I'll call them owner attributes, which is there will be a concern about the range of the vehicle and a concern about the noise that the tires make. And because the engine doesn't make any noise, you can hear the tire noise. And so deadening that tire noise becomes a much more significant factor than it was in internal combustion. For the extra weight and torque, normally what that drives, and in this case, what it will drive, is larger, heavier tires in order to bear the extra weight and handle the extra torque while remaining durable to make sure the tire doesn't wear out too quickly. Normally, when you add that durability and that extra weight and size, that decreases what we're traditionally just thinking of as fuel economy, but when it's an electric vehicle, it's the range of the vehicle, and so we have to work on what compounds and constructions offset the extra weight and size and make sure that we're not hurting the range of the vehicle, so all of those technical challenges get built into the work that we're doing on tires for electric vehicle fitments. The fact that we are talking about larger, more robust, durable tires that have these extra technical challenges is one of the reasons that the revenue per tire at OE is up about 30% from equivalent vehicles that are on internal combustion engine platforms. I think if I carry that out, I think if there's that extra 30% revenue per tire, and there's no question we'll have some additional challenges in producing these tires. If we're able to get an extra take that extra 30% revenue per tire and turn it into an extra 30% margin per tire, then I mean, that would be an extra $5 a tire at OE and an extra $9 or $10 a tire in replacement tires. So I mean, that's a fairly significant opportunity to the extent we're able to handle the operational challenges and get that brought to the bottom line. I guess just putting all together since we're almost at the top of the hour. Definitely appreciate all the color on SOI on free cash flow. Can you just please summarize and tell investors why they should stick with Goodyear? Yeah. Well, I think that Goodyear is obviously a top tire and automotive and, in fact, mobility technology company. And so we have great technical capability. We have a great product lineup. We have great distribution that makes our products available all over the world. We've just made a very significant value-adding acquisition and bringing together Cooper and Goodyear, which are two companies that have a significant presence in the North American market and Cooper being weighted toward replacement, toward the part of the North American market that has the most value creation opportunity. And it's also given us a significantly higher presence in the Chinese market, which is a market for which the replacement business is still in its relative infancy. So it's going to be long-term opportunities. And our team has been continuing to execute even as we went through a very difficult pandemic period. We are clearly seeing a lot of value creation opportunity in front of us, both for each of the two companies individually, but particularly as we bring the Cooper and Goodyear teams together and see what the benefits are, the interplay of ideas between the two companies. I think we're feeling very good feeling like we have a very strong platform and very excited for the opportunities we've got going forward. Great. Thank you so much. Yeah. On behalf of Deutsche Bank, definitely want to thank you, Darren, and the whole Goodyear team for making this conversation possible. Thank you to all the investors who tuned in and for sharing your questions. And obviously, we're here for any follow-ups. I'm sure the Goodyear team is there as well. And thanks for joining and have a good day. Absolutely. Thanks, Emmanuel. Thank you.