The Goodyear Tire & Rubber Company (GT – Free Report) is one of the world’s leading tire companies, with operations around the world and one of the most recognized names in the business.

It operates through three segments—the Americas; Europe, the Middle East, and Africa; and Asia Pacific—developing, manufacturing, marketing, and distributing tires for most applications.

Goodyear also operates roughly 1,100 tire and auto service center outlets where the company offers customers products for sale and provides automotive repair and other services.

Sitting at a #5 (Strong Sell), Goodyear experienced unexpected headwinds this year that negatively impacted its performance.

Disappointing Third Quarter Results

Goodyear faced many challenges in its third quarter, including lower consumer replacement volumes, production cuts by automakers, and an over 30% increase in its raw material input costs.

As a result, adjusted earnings fell almost 40% year-over-year to 71 cents per share, though the bottom line surpassed the Zacks Consensus of 67 cents.

Revenues of $3.92 billion only marginally beat our consensus estimate as well. Breaking it down by segment, revenues in the Americas slipped 1%, but EMEA and Asia Pacific revenues grew 6% and 5%, respectively.

Goodyear said that tire unit volumes were 39.8 million, down 5% from 2016. Replacement tire shipments fell 4%, while original equipment unit volume declined 9% year-over-year due to lower volume sales.

And, segment operating income dropped to $357 million in the reported quarter from $556 million a year ago.

Hurricane Impact

The decline in Goodyear’s Americas segment was due to the major hurricanes that devastated large swaths of the country earlier this year.

It operates three chemical plants in Texas, and has tire distribution and retail operations in the affected areas that were either damaged or shut down.

In particular, sales at company-owned locations were negatively impacted by about $23 million, and Goodyear incurred roughly $12 million in hurricane-related costs during the quarter.