The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2011 Earnings Presentation
30 slides from The Goodyear Tire & Rubber's earnings presentation, Jul 28, 2011
Slide 1: Second Quarter 2011 Conference Call
Second Quarter 2011 Conference Call July 28, 2011
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: Agenda
Agenda • Business Review • Q2 Financial Results • 2011 Outlook • Q&A 3
Slide 4: Overview
Overview Key How To’s Key Accomplishments Record quarterly sales Target Profitable Price/mix > raw materials Segments Revenue per tire +18% Branded share gains Accelerated Union City closure Operational Excellence Launched 14 new products in Q2 Recovered unabsorbed overhead / delivered
Slide 5: North American Tire Business Highlights
Business Highlights North American Tire • Segment operating income increased substantially • Strong price/mix • Success in targeted segments • Branded share growth • Fixed cost recovery of $20 million • Union City plant closure effective July 11, 2011 • Further steps required to sustain this level o
Slide 6: Second Half Perspective
Second Half Perspective + - • Continued strong • Developed market consumer commercial vehicle demand replacement growth • Winter tires in Europe the • Recovery of consumer OE exception production • Actions to address inflation in emerging markets slowing consumer demand • Raw material costs continue
Slide 7: Second Quarter 2011 Results
Second Quarter 2011 Results
Slide 8: Financial Summary
Second Quarter 2011 Financial Summary Key themes generating improved results Revenue growth – Weighted to targeted segments Price/mix performance – Highest ever achieved Cost efficiency – Reduced unabsorbed overhead – Progress toward 3-year $1 billion savings plan – Union City closure accelera
Slide 9: Income Statement
Second Quarter 2011 Income Statement Total Company (In millions, except Margin and EPS) Second Quarter 2011 2010 Change Units 42.9 43.9 (2.2%) Net Sales $5,620 $4,528 24.1% Gross Margin 18.6% 18.6% 0.0 pts SAG $753 $670 12.4% Segment Operating Income(a) $382 $219 74.4% Segment Operating Margin(a) 6.
Slide 10: Segment Operating Results
Second Quarter 2011 Segment Operating Results ($ in millions) $163 $14 ($428) $39 $28 $78 $554 Currency Pension(1) Unabsorbed Fixed Cost Cost Savings (net of NAT ($80) profit sharing) ($12) ($30) $382 Raw Materials(2) Inflation(3) $219 Volume Other(4) Q2 Q2 Price/Mix 2011 2010 1. Reduction in NAT pe
Slide 11: Tire Unit & Sales Summary
Second Quarter 2011 Tire Unit & Sales Summary (in millions) 2011 Q2 Sales = $5,620 Q2 Unit/Sales Mix 2011 2010 % Change Consumer Commercial Units 38.6 39.8 (2.9%) Consumer 21% 51% Sales $2,873 $2,424 18.5% Other 12% Retail Commercial 8% Units 3.7 3.5 6.0% Sales $1,159 $838 38.3% Chemical 8% 11
Slide 12: Balance Sheet
Second Quarter 2011 Balance Sheet ($ in millions) June 30, March 31, December 31, 2011 2011 2010 Cash and cash equivalents $ 1,804 $ 2,215 $ 2,005 Accounts receivable 3,539 3,550 2,736 Inventories 4,032 3,337 2,977 Accounts payable - trade (3,515) (3,358) (3,107) Working capital(a) $ 4,056 $ 3,529 $
Slide 13: Segment Results
Second Quarter 2011 Segment Results (in millions) North American Tire Europe, Middle East and Africa Tire 2011 2010 Change 2011 2010 Change Units 15.7 16.6 (6.0%) Units 17.0 16.8 1.9% Net Sales $2,411 $2,049 17.7% Net Sales $1,943 $1,455 33.5% Operating Income $137 $16 Operating Income $126 $73 72.6
Slide 14: 2011 Full Year Industry Outlook
2011 Full Year Industry Outlook July vs. April July Full Year 2011 Guidance Guidance NAT: 0% to +2% Consumer Replacement No Change EMEA: +4% to +6% Consumer No Change NAT: +5% to +10% OE No Change EMEA: +4% to +8% Commercial NAT: +10% to +15% Replacement No Change EMEA: +7% to +11% Commercial No Cha
Slide 15: 2011 Key Outlook Items
2011 Key Outlook Items 2011 Outlook Global Tire Unit Sales • Increase 3% to 5% Raw • Increase of 25% to 30% Materials Interest • $325 to $350 million Expense • ~ 25% of international Tax Rate Segment Operating Income Capex • $1.1 to $1.2 billion 15
Slide 16: Appendix
Appendix
Slide 17: Price/Mix Improvements
Price/Mix Improvements Price/Mix vs. Raw Materials(a) ($ in millions) $942 $915 $829 (c) $746 $712 $733 $689 $639 $596 $526 $549 (b) $195 $207 ($115) 2005 2006 2007 2008 2009 2010 June YTD 2011 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Raw Materials include the impact
Slide 18: Eliminating Unabsorbed Fixed Costs
Eliminating Unabsorbed Fixed Costs ($ in millions) Recession Impact Market Recovery $863 $115 million previously reported fixed cost savings $115 in North America, Europe and Latin America $585 Unabsorbed $115 Fixed Cost $748 Recovery(a) Unabsorbed $373 Fixed Cost $175 Recovery & Footprint Reduction
Slide 19: Legacy Costs and Interest Expense
Legacy Costs and Interest Expense ($ in millions) 2007 2008 2009 2010 2011E Global pension contributions and direct payments (a) $719 $364 $430 $405 $250 - $300 Pension expense (global)(b) $276 $181 $387 $300 $250 - $300 Postretirement benefit payments (c) $225 $169(d) $64 $62 $55 - $65 Postretireme
Slide 20: Cash Flow
Second Quarter 2011 Cash Flow ($ in millions) Six Months Ended June 30, June 30, 2011 2010 Net Income $180 $15 Depreciation and amortization(a) 398 331 Working capital(b) (1,256) (518) Pension contributions and direct payments (106) (127) Venezuela currency devaluation - 110 Other (including compens
Slide 21: Maturity Schedule
Second Quarter 2011 Maturity Schedule ($ in millions) Undrawn Funded Debt Credit Lines $1,769(e) $1,500(a) $1,200 $652(b) $434(c) $767(d) $463 2011 2012 2013 2014 2015 2016 2017 2018 2019 & Beyond Note: Based on balance sheet values and excludes notes payable, capital leases and other domestic and f
Slide 22: Liquidity Profile
Second Quarter 2011 Liquidity Profile ($ in billions) Liquidity Profile $4.4(a) Pan European $0.2 Securitization (b) Available Credit Lines (c) $2.4 Cash & Equivalents(d) $1.8 $1 billion required for operations June 30, 2011 (a) Total liquidity comprised of $1,804 million cash and cash equivalents,
Slide 23: Second Quarter Significant Items
Second Quarter Significant Items (after taxes and minority interest) 2011 (See next page) • Rationalizations, asset write-offs and accelerated depreciation, $66 million (27 cents per share) • Financing fees related to the early partial redemption of 10.5% senior notes, $53 million (22 cents per shar
Slide 24: Second Quarter Significant Items
Second Quarter Significant Items (after taxes and minority interest) Second Quarter 2011 ($ in millions, except EPS) Significant Items Rationalizations & Accelerated Debt Fayetteville Reported Depreciation Redemption Tax Items Tornado Asset Sales Net Sales $ 5,620 - - - - - Cost of Goods Sold 4,572
Slide 25: 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% $16.00 3.1250 31,250,000 12
Slide 26: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin ($ in millions) Three Months Ended June 30, 2011 2010 Total Segment Operating Income $ 382 $ 219 Rationalizations (46) (6) Interest expense (81) (77) Other expense (48) (7) Asset write-offs and accelerated depreciation (25) (6) Corporate incentive
Slide 27: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt ($ in millions) June 30, March 31, December 31, 2011 2011 2010 Long term debt and capital leases $ 4,786 $ 4,795 $ 4,319 Notes payable and overdrafts 261 245 238 Long term debt and capital leases due within one year 257 244 188 Total debt $ 5,304 $ 5,284 $
Slide 28: Second Quarter 2011 Debt
Second Quarter 2011 Debt ($ in millions) June 30, March 31, December 31, 2011 2011 2010 Notes Payable: Notes Payable and Overdrafts $ 261 $ 245 $ 238 Long-Term Debt: Notes: 10.5% due 2016 $ 629 $ 967 $ 966 6.75% Euro Notes due 2019 362 - - 8.25% due 2020 994 994 993 8.75% due 2020 264 263 263 7% due
Slide 29: Reconciliation for Cash Flow
Reconciliation for Cash Flow Six Months Ended ($ in millions) June 30, 2011 2010 Cash Flows From Operating Activities: Net Income $ 180 $ 15 Adjustments to reconcile Net Income to cash flows from operating activities: Depreciation and amortization 374 321 Amortization and write-off of debt issuance
Slide 30: Goodyear
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