The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q4 2011 Earnings Presentation
31 slides from The Goodyear Tire & Rubber's earnings presentation, Feb 14, 2012
Slide 1: Fourth Quarter 2011 Conference Call
Fourth Quarter 2011 Conference Call February 14, 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation constitutes 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 affect o
Slide 3: Path to Segment Operating Income Target
Path to Segment Operating Income Target ($ in millions) $1,600 Int’l $1,368 $1,150 $917 Int’l Int’l $1,092 $899 NAT NAT $450 $276 2010 2011 2013 Target 2011 Marks Strong Progress Toward 2013 Target 3
Slide 4: Fourth Quarter Summary
Fourth Quarter Summary + - • Price/mix > raw material cost • Volume softness across all increase regions • European “green” winter • Branded share performance • Q4 cost savings < inflation • Cash flow performance • Union City closure transition inefficiencies • Continued issues at Amiens, France fac
Slide 5: 2011 Strategy Execution
2011 Strategy Execution Key How To’s 2011 Progress • Strong price/mix realization Target Profitable Segments • Consumer response to new product launches • Branded share improvement • Increased HVA capability Operational Excellence • Reduced high-cost footprint (Union City closure) • Improving servic
Slide 6: Strategy Roadmap
Strategy Roadmap Starting Line (2010) Executing Plan NAT Profitable Innovation Leader Investing to Grow Profit Recovery Balance Sheet Improving Industry Key Strategies MegaTrends Key How To’s 1. North America: Profitability 1. Target Profitable Segments 2. Asia: Winning in China 2. Opera
Slide 7: Income Statement
Fourth Quarter 2011 Income Statement Total Company (In millions, except Margin and EPS) Fourth Quarter 2011 2010 Change Units 43.2 45.3 (4.6)% Net Sales $5,683 $5,072 12.0% Gross Margin 15.3% 17.4% (2.1) pts SAG $724 $715 1.3% Segment Operating Income(a) $196 $224 (12.5)% Segment Operating Margin(a)
Slide 8: Segment Operating Results
Fourth Quarter 2011 Segment Operating Results ($ in millions) Q4 2011 1. Reduction in NAT pension expense. 2. Raw material variance of $631 million excludes raw material cost saving measures of $48 million, which is included in Cost Savings above. 3. Estimated impact of inflation (wages, utilities,
Slide 9: Balance Sheet
Fourth Quarter 2011 Balance Sheet ($ in millions) December 31, September 30, December 31, 2011 2011 2010 Cash and cash equivalents $ 2,772 $ 2,126 $ 2,005 Accounts receivable 2,849 4,008 2,736 Inventories 3,856 4,037 2,977 Accounts payable - trade (3,668) (3,371) (3,107) Working capital(a) $ 3,037 $
Slide 10: Maturity Schedule
Fourth Quarter 2011 Maturity Schedule ($ in millions) Undrawn Funded Debt Credit Lines $1,731(e) $1,500(a) $1,200 $1,150(c) $584(b) $537 $631(d) $393 2012 2013 2014 2015 2016 2017 2018 2019 > 2019 & Note: Based on balance sheet values and excludes notes payable, capital leases and other domestic and
Slide 11: Segment Results
Fourth Quarter 2011 Segment Results (In millions) North American Tire Europe, Middle East and Africa Tire 2011 2010 Change 2011 2010 Change Units 16.6 16.9 (1.8%) Units 16.9 17.7 (4.8%) Net Sales $2,584 $2,201 17.4% Net Sales $1,912 $1,727 10.7% Operating Income $21 $11 90.9% Operating Income $88 $6
Slide 12: 2012 Full Year Industry Outlook
2012 Full Year Industry Outlook Full Year 2012 Guidance NAT: Flat to (2)% Consumer Replacement EMEA: Flat to (2)% Consumer NAT: Flat to +3% OE EMEA: (5)% to (9)% Commercial NAT: +2% to +6% Replacement EMEA: (3)% to (8)% Commercial NAT: +10% to +15% OE EMEA: (20)% to (25)% 12
Slide 13: 2012 Key Segment Operating Income Drivers
2012 Key Segment Operating Income Drivers Global Tire Unit Volume • Lower EMEA industry demand ~ Flat • Modestly positive industry demand in other regions • 2012 raw material cost increase of ~5% Raw Materials (assumes spot prices remain at recent levels) • Q1 increase of ~$500 mm year-over-year Una
Slide 14: Financial Assumptions
2012 Outlook Financial Assumptions Interest Expense • $360 - $385 million Income tax • 25% of International Segment Operating Income Global Pension • $275 - $325 million Expense • $550 - $600 million Cash Contribution Working Capital • Neither source nor use Capital Expenditures • $1.1 - $1.3 billio
Slide 15: Achieving $1.6 Billion Segment Operating Income in 2013
Achieving $1.6 Billion Segment Operating Income in 2013 Key Drivers Risk Factors • NAT ~5% SOI margin • Economic environment • Global industry growth resumes – Macroeconomic challenges to 3% to 5% growth in 2013 – Goodyear volume growth of 3% to • Achieve price/mix ≥ raw material cost 5% in 2013 i
Slide 16: Appendix
Appendix
Slide 17: Tire Unit & Sales Summary
Fourth Quarter 2011 Tire Unit & Sales Summary (in millions) 2011 Q4 Sales = $5,683 Q4 Unit/Sales Mix 2011 2010 % Change Consumer Consumer Commercial Units 39.1 41.1 (4.8%) 53% 20% Sales $3,009 $2,756 9.2% Other 12% Retail Commercial 8% Units 3.6 3.7 (2.0%) Sales $1,148 $964 19.1% Chemical 7% 17
Slide 18: Tire Unit & Sales Summary (Full Year 2011)
Full Year 2011 Tire Unit & Sales Summary (in millions) 2011 Sales = $22,767 2011 Unit/Sales Mix 2011 2010 % Change Consumer Consumer Commercial Units 163.6 164.4 (0.5%) 53% 20% Sales $12,065 $10,343 16.6% Other 12% Retail Commercial 8% Units 14.8 14.0 5.5% Sales $4,588 $3,501 31.0% Chemical 7% 18
Slide 19: Price/Mix Improvements
Price/Mix Improvements Price/Mix vs. Raw Materials(a) ($ in millions) $2,356 $1,822(c) $942 $829 $746 $712 $689 $639 (b) $549 $195 $207 ($115) 2006 2007 2008 2009 2010 2011 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Raw Materials include the impact of raw material cost
Slide 20: Eliminating Unabsorbed Fixed Costs
Eliminating Unabsorbed Fixed Costs ($ in millions) Recession Impact Market Recovery and Footprint Actions $863 $115 million previously reported fixed cost savings $115 in North America, Europe and Latin America Unabsorbed Fixed Cost Recovery(a) $585 $115 $748 Union City $373 benefit net of $195 prod
Slide 21: Legacy Costs and Interest Expense
Legacy Costs and Interest Expense ($ in millions) 2008 2009 2010 2011 2012E Global pension contributions and direct payments (a) $364 $430 $405 $294 $550 - $600 Pension expense (global)(b) $181 $387 $300 $266 $275 - $325 Postretirement benefit payments (c) $169(d) $64 $62 $59 $50 - $60 Postretiremen
Slide 22: 2011 Cash Flow
2011 Cash Flow ($ in millions) Full Year Ended December 31, December 31, 2011 2010 Net Income $417 ($164) Depreciation and amortization(a) 749 679 Working capital(b) (650) 52 Pension contributions and direct payments (294) (405) Venezuela currency devaluation - 134 Other (including compensation and
Slide 23: Liquidity Profile
Fourth Quarter 2011 Liquidity Profile Liquidity Profile ($ in billions) $5.5(a) $0.2 Pan European Securitization(b) Available $2.5 Credit Lines (c) Cash & $2.8 Equivalents(d) $1 billion required for operations December 31, 2011 (a) Total liquidity comprised of $2,772 million cash and cash equivalent
Slide 24: Pension Update
Pension Update Total Global Cash Flow Impact (1) (2) Global Unfunded Obligations (1) (3) $600 $575 $575 $3,500 $3,097 $3,000 $2,748 $2,715 $2,549 $500 $2,600 $ in millions $430 $405 $ in millions $2,500 $400 $364 $2,000 $294 $2,000 $300 $1,500 $200 $1,000 $100 $500 $0 $0 2008 2009 2010 2011 2012E 20
Slide 25: Fourth Quarter Significant Items
Fourth Quarter Significant Items (after tax and minority interest) 2011 (See next page) • Rationalizations, asset write-offs and accelerated depreciation, $24 million (10 cents per share) • Loss related to business disruptions and costs resulting from the flooding in Thailand, $16 million (7 cents p
Slide 26: Fourth Quarter Significant Items
Fourth Quarter Significant Items (after taxes and minority interest) Fourth Quarter 2011 ($ in millions, except EPS) Significant Items Rationalizations, Asset Write-offs & Business Disruptions Accelerated and Costs Due to Reported Depreciation Flooding in Thailand Asset Sales Tax Items Net Sales $ 5
Slide 27: Mandatory Convertible Preferred Stock
Mandatory Convertible Preferred Stock Common Share Impact Upon Conversion Common Shares Common Share Common Conversion Issuable upon Price Share Price Rate Conversion % Dilution * Appreciation** $14.57 3.4317 34,317,000 14.1% 0% and below $15.00 3.3333 33,333,333 13.7% 3% $16.00 3.1250 31,250,000 12
Slide 28: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin ($ in millions) Three Months Ended December 31, 2011 2010 Total Segment Operating Income $ 196 $ 224 Rationalizations (23) (224) Interest expense (89) (75) Other expense (income) (25) (13) Asset write-offs and accelerated depreciation (4) (2) Corp
Slide 29: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt ($ in millions) December 31, September 30, December 31, 2011 2011 2010 Long term debt and capital leases $ 4,789 $ 5,559 $ 4,319 Notes payable and overdrafts 256 312 238 Long term debt and capital leases due within one year 156 212 188 Total debt $ 5,201 $
Slide 30: Fourth Quarter 2011 Debt
Fourth Quarter 2011 Debt ($ in millions) December 31, September 30, June 30, March 31, December 31, 2011 2011 2011 2011 2010 Notes Payable: Notes Payable and Overdrafts $ 256 $ 312 $ 261 $ 245 $ 238 Long-Term Debt: Notes: 10.5% due 2016 631 $ 630 $ 629 $ 967 $ 966 6.75% Euro Notes due 2019 324 336 3
Slide 31: GOODS YEAR
GOODS YEAR
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