The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2010 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Apr 28, 2010
Slide 1: First Quarter 2010 Conference Call
First Quarter 2010 Conference Call April 28, 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affec
Slide 3: Agenda
Agenda • Quarterly Highlights & Strategy Update • Q1 Financial Results • 2010 Outlook • Q&A 3
Slide 4: Executive Overview
Executive Overview • Strong first quarter performance • Industry trends continue to drive optimism – Tire unit growth in mature and emerging markets – Increased mix of high-value products (fuel efficiency) – Incoming tire labeling regulations – Evolving OE requirements • Strategic priorities aligned
Slide 5: First Quarter Highlights
First Quarter Highlights • Sales increased 21% to $4.3 billion • Tire shipments increased more than 14% • Favorable impact of price/mix and raw materials $246 million • Cost savings of $148 million • Segment operating income of $240 million, up more than $400 million 5
Slide 6: First Quarter Highlights
First Quarter Highlights • Pace of Consumer and Commercial new product launches continued, including Assurance ComforTred in North America • Multiple new product awards, including: − China “2010 Best Tire of the Year” awards in handling (Eagle F1 Asymmetric) and safety (Assurance) by Auto Sports Mag
Slide 7: Economic and Industry Environment
Economic and Industry Environment • Market indicators strengthening as global economic activity improves – Strong to moderate GDP growth – Increased industrial production – Improved consumer activity and freight movement • Uncertainty, challenges continue – High unemployment and fluctuating U.S. fue
Slide 8: Strategic Actions Address Challenges & Drive Upside
Strategic Actions Address Challenges Drive Upside • Focus on price/mix initiatives Raw Material • Maximize impact of new product engine Volatility • Pursue targeted volume opportunities • Focus on raw material cost-down activities • Achieve USW contract savings Manufacturing • Market-back producti
Slide 9: Closing Comments
Closing Comments • Success of strategy measured by: Higher levels of profitability Achievement of next stage metrics Improved business flexibility 9
Slide 10: Q1 Financial Results
Q1 Financial Results • Results reflect recovering markets and strong business performance • Significant improvement versus prior year • Markets improving, but uncertainty remains • Key challenges include raw materials and ensuring full benefit of market recovery 10
Slide 11: Income Statement
First Quarter 2010 Results Income Statement (In millions, except Margin and EPS) First Quarter 2010 2009 Change Units 43.9 38.4 14.2% Net Sales $4,270 $3,536 20.8% Gross Margin 19.1% 9.0% 10.1 pts SAG $605 $533 13.5% (a) Segment Operating Income (Loss) $240 ($176) (a) Segment Operating Margin 5.6% -
Slide 12: Segment Operating Results
First Quarter 2010 Segment Operating Results ($ in millions) 1. Raw material variance of $245 million excludes cost savings of $38 million, which is included in Cost Savings Plan 2. Estimated impact of inflation (wages, utilities, energy, transportation and other). 12
Slide 13: Commercial Tire Historical Demand Favorable Post Recovery
Commercial Tire Historical Demand Favorable Post Recovery US Commercial Replacement Tire Industry Size (millions of tires) 20 18 2002: +11% 16 14 2001: -7% 2008: -11% 12 2009: -13% 10 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Note: Recessionary periods highlighted in grey
Slide 14: Commercial Tires
Commercial Tires • Approximately 20% of total revenue in “normal” environment • 2009 global volume down about 30% from 2007 levels • High value of commercial tires magnifies impact of demand changes • Markets recovering globally; pace of recovery unclear 14
Slide 15: Balance Sheet
First Quarter 2010 Balance Sheet ($ in millions) March 31, December 31, 2010 2009 Cash and cash equivalents $ 1,774 $ 1,922 Accounts receivable 2,861 2,540 Inventories 2,708 2,443 Accounts payable - trade (2,549) (2,278) Working capital(a) $ 3,020 $ 2,705 Total debt (b) $ 4,594 $ 4,520 Net debt (b)
Slide 16: Liquidity Profile
First Quarter 2010 Liquidity Profile Liquidity Profile ($ in billions) $4.3(a) Pan European $0.2 Securitization (b) Available Credit Lines (c) $2.3 Cash & Equivalents(d) $1.8 $1 billion required for operations March 31, 2010 (a) Total liquidity comprised of $1,774 million cash and cash equivalents,
Slide 17: Segment Results: North American Tire
First Quarter 2010 Segment Results North American Tire (In millions) First Quarter 2010 2009 Change Units 15.2 13.9 9.2% Net Sales $1,779 $1,544 15.2% Segment Operating Loss ($14) ($189) 92.6% Margin -0.8% -12.2% • Improved Consumer and Commercial volumes − Strong branded market share − Kelly brand
Slide 18: Segment Results: Europe, Middle East and Africa Tire
First Quarter 2010 Segment Results Europe, Middle East and Africa Tire (In millions) First Quarter 2010 2009 Change Units 18.4 16.2 13.6% Net Sales $1,529 $1,268 20.6% Segment Operating Income (Loss) $109 ($50) Margin 7.1% -3.9% • Improved Consumer and Commercial volumes – Strong winter tire market
Slide 19: Segment Results: Latin American Tire
First Quarter 2010 Segment Results Latin American Tire (In millions) First Quarter 2010 2009 Change Units 5.1 4.2 20.7% Net Sales $478 $383 24.8% Segment Operating Income $76 $48 58.3% Margin 15.9% 12.5% • Improved Consumer and Commercial volumes • Price/mix combined with lower raw material costs po
Slide 20: Segment Results: Asia Pacific Tire
First Quarter 2010 Segment Results Asia Pacific Tire (In millions) First Quarter 2010 2009 Change Units 5.2 4.1 26.8% Net Sales $484 $341 41.9% Segment Operating Income $69 $15 360.0% Margin 14.3% 4.4% • Strong industry growth, recovery in consumer and commercial • Price/mix combined with lower raw
Slide 21: 2010 Outlook
2010 Outlook 2010 Industry Outlook Original Equipment Replacement (year over year) Consumer Commercial Consumer Commercial North America: 20% - 30% 10% - 20% 1% - 3% 3% - 7% Europe: 0% - 10% 40% - 50% 1% - 3% 8% - 12% 2010 Full Year Outlook • Raw materials – Benefit of 5% first half – Cost increases
Slide 22: Appendix
Appendix
Slide 23: Price/Mix Improvements
Price/Mix Improvements Price/Mix vs. Raw Materials(a) ($ in millions) $942 Net Benefit $829 $746 $712 $639 $596 $526 $322 $246(b) $195 $207 $1 ($115) (b) ($245) 2005 2006 2007 2008 2009 Q1 2010 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. (b) Raw material variance of $245
Slide 24: 2010 Cash Flow
2010 Cash Flow ($ in millions) Three Months Ended March 31, March 31, 2010 2009 Net (Loss) ($24) ($348) (a) Depreciation and amortization 163 155 (b) Working capital (291) (99) Pension contributions and direct payments (39) (106) Venezuela currency devaluation 110 - Other (including compensation and
Slide 25: Debt Maturities
Management for Cash Debt Maturities ($ in millions) $1,273(b) $1,200 $1,368 $784 $962 $713 $682(a) $617 $260 $411 $669 $489(a) $357 2010 2011 2012 2013 2014 2015 2016 >2016 Utilized 1st Lien R/C Undrawn Euro R/C Facilities Undrawn 1st Lien R/C Utilized Euro R/C Facilities 2nd Lien TL Euro A/R Facili
Slide 26: Legacy Costs and Interest Expense
Legacy Costs and Interest Expense ($ in millions) 2006 2007 2008 2009 2010E (a) Global pension contributions and direct payments $708 $719 $364 $430 $275-$325 (b) Pension expense (global) $388 $276 $181 $387 $275-$325 (c) (d) Postretirement benefit payments $228 $225 $169 $64 < $60 (b) (d) Postretir
Slide 27: Unabsorbed Fixed Costs
Unabsorbed Fixed Costs (in millions) 2008 2009 2010 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Production Cuts 1.4 4.3 8.4 16.8 30.9 13.4 14.2 12.8 11.2 51.6 7.7 Unabsorbed Fixed Cost Realized from Current Period Production: - Result of Period Costing (formerly SFAS 151) $ - $ 2 $ 70 $ 155 $ 227 $ 134 $ 116 $
Slide 28: First Quarter Significant Items
First Quarter Significant Items (after-taxes and minority interest) 2010 • Charges resulting from Venezuelan currency devaluation, $99 million (41 cents per share) • Costs related to debt exchange offer, $5 million (2 cents per share) • Rationalizations, asset write-offs and accelerated depreciation
Slide 29: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin ($ in millions) Three Months Ending March 31, 2010 2009 Total Segment Operating Income (Loss) $240 ($176) Rationalizations (2) (55) Interest expense (74) (64) Other expense (104) (30) Asset write-offs and accelerated depreciation (3) (10) Corporat
Slide 30: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt ($ in millions) March 31, December 31, 2010 2009 Long term debt and capital leases $ 4,242 $ 4,182 Notes payable and overdrafts 199 224 Long term debt and capital leases due within one year 153 114 Total debt $ 4,594 $ 4,520 Less: Cash and cash equivalents
Slide 31: Reconciliation for Cash Flow
Reconciliation for Cash Flow Three Months Ended ($ in millions) March 31, 2010 2009 Cash Flows From Operating Activities: Net Loss $ (24) $ (348) Adjustments to reconcile Net Loss to cash flows from operating activities: Depreciation and amortization 159 152 Amortization and write-off of debt issuan
Slide 32: = GOODSYEAR
= GOODSYEAR ‘ane Get there’
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