The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2018 Earnings Presentation
30 slides from The Goodyear Tire & Rubber's earnings presentation, Oct 26, 2018
Slide 1: Third Quarter 2018 Conference Call
GOODFSYEAR. Third Quarter 2018 Conference Call October 26, 2018 7 \
Slide 2: Forward-Looking Statements
Forward-Looking Statements GOODFYEAR 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, tha
Slide 3: Third Quarter Highlights
Third Quarter Highlights GOODFYEAR ¢ Segment Operating Income stable, price and mix largely balance ¢ Global tire units rise 2%, with consumer replacement up 11% in the U.S. and 4% in EMEA ¢ Double-digit increases in the U.S. and European 217” consumer replacement segment ¢ Results reflect impact of
Slide 4: U.S. Industry Fundamentals: 17"+
U.S. Industry Fundamentals: 217” GOODJYEAR U.S. Consumer Replacement Industry 2018 vs 2017 Growth Rate®) * Goodyear volume up 11%, despite transition impact from TireHub USTMA Members (<17”) -10% 12% Significant share gains in the premium es 217” segment Total * Over 2 % times the market growth for
Slide 5: U.S. Market Share Recovery
U.S. Market Share Recovery GOODSYEAR. U.S. Consumer Replacement Volume Trailing 4 Quarters Impact of relative pricing in 2017 Q4 2014 Q3 2015 Q2 2016 Q1 2017 Q4 2017 Q3 2018 Industry ° =Goodyear (a) Source: U.S. Tire Manufacturers Association. (b) Goodyear U.S. consumer replacement volume excludes A
Slide 6: EMEA Industry Fundamentals: 17"+
EMEA Industry Fundamentals: 217” GOODJYEAR Europool & Turkey Consumer Replacement Industry 2018 vs 2017 Growth Rate®) Goodyear volume up 4% ETRMA Members (<17”) Total Share gains in the premium 217” segment, outpacing the industry both in Q3 and YTD Non-Members Total EU + Turkey Vector 4Seasons 3" p
Slide 7: Macro Environment in China
Macro Environment in China Near-Term Headwinds Persist * Credit environment continued to tighten over the past few months Weakening fundamentals weighing on replacement demand * Dealers destocking Reducing replacement volume, overhead absorption, and mix assumptions for Q4 Government Responding Cent
Slide 8: Financial Review
Financial Review avisgaoo?
Slide 9: Price vs Raws Over Time
Price vs Raws Over Time: Goongvean Price vs Raw Materials®) icker i ict 11 quarters to fully recover headwinds from 2010/2011 raw material cycle 2010-2012 Cycle 2H’18 Announced Pricing U.S. Consumer U.S. Commercial EMEA Commercial Emerging Markets a c 2 = 2 & ‘2 o £ 2 2 . i} 3 o o a £ 36 months Lag
Slide 10: Income Statement
Third Quarter 2018 E Income Statement GOODFYEAR. Terms: US$ millions Three Months Ended (except EPS) September 30, September 30, 2018 2017 Change Units 40.5 39.8 1.9% Net Sales 3,928 3,921 0.2% Gross Margin 22.9% 22.1% 0.8 pts SAG 553 545 1.5% Segment Operating Income 362 367 (1.4)% Segment Operatin
Slide 11: Segment Operating Results
Third Quarter 2018 Segment Operating Results Terms: US$ millions ($44) 2g Ea a Raw Inflation») Unabsorbed —yaterials(*) “PricelMix Cost Volume Fixed Cost Savings $35 ($12) $25 Total Volume Impact Net P/M vs Raws Net Cost Savings (2) Raw material variance of ($2) million excludes raw material cost sa
Slide 12: Balance Sheet
Third Quarter 2018 Balance Sheet GOODZYEAR. Terms: US$ millions September 30, June 30, December 31, September 30, 2018 2018 2017 2017 Cash and cash equivalents $ 896 975 $ 1,043 $ 822 Accounts receivable 2,670 2,388 2,025 2,672 Inventories 2,938 2,941 2,787 2,991 Accounts payable - trade (2,819) (2,
Slide 13: Free Cash Flow
Third Quarter 2018 Free Cash Flow GOODZYEAR. : ili Terms: US$ millions Three Months Ended Trailing Twelve September 30, Months Ended 2018 2017 September 30, 2018 Net Income $ 508 Depreciation and Amortization 784 Change in Working Capital 124 Pension Expense 105 Pension Contributions and Direct Paym
Slide 14: 2018 - Segment Results: Americas
Third Quarter 2018 - Segment Results Americas Terms: US$ millions Units in millions Third Quarter 2018 2017 Change Units AU (S) algal 3.7% Net Sales $2,107 $2,041 3.2% Operating Income $194 $196 (1.0%) Margin 9.2% 9.6% GOODFYEAR. Continued volume recovery; U.S. consumer replacement up 11% Brazil con
Slide 15: 2018 - Segment Results: Europe, Middle East & Africa
Third Quarter 2018 - Segment Results GOopfVEAR Europe, Middle East & Africa Terms: US$ millions Units in millions Third Quarter 2018 2017 Change Continued solid volume growth; Consumer replacement up 4% Units 15.2 14.9 2.8% Positive price/mix SOI includes negative impact of Net Sales $1,290 $1,311 (
Slide 16: 2018 - Segment Results: Asia Pacific
Third Quarter 2018 - Segment Results Asia Pacific Terms: US$ millions Units in millions Third Quarter 2018 2017 Change Units 7.5 7.8 (3.8%) Net Sales (6.7%) Operating (29.6%) Income . Margin GOODFYEAR. ¢ Continued soft market conditions in China negatively impacting volume and price/mix ¢ SOI impact
Slide 17: 2018 Key Segment Operating Income Drivers
2018 Key Segment Operating Income Drivers GOODFYEAR iver Coren LOuue Comments 2018 vs 2017 18 vs 2017 Global Volume ~1.0% -1.5% ~1.0% Driven by continued softness in the a : : China and Brazil replacement markets : . Impact of announced pricing actions, partially P M ~$25 mill ~$45 mil is - Weyl $25
Slide 18: 2018 Outlook - Other Financial Assumptions
2018 Outlook - Ot Interest Expense Other (Income) Expense Income Tax Depreciation & Amortization Global Pension Cash Contributions Working Capital Capital Expenditures Restructuring Payments Corporate Other er Financial Assumption urrent 2018 FY Assumpti $320 - $330 million Financing fees: ~$30 mill
Slide 19: Our Goal
OURSGOAL G THE VALUE OF OUR BRAND DELIVER SUSTAINABI AND PROFIT GROWTH WHILEINCRI INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE HOW WE'LL WORK | ACTWITH ponfidencect others tht INTEGRITY y Our Good Na ENERGIZE THE TEAM PROMOTE COLLABORATION OPERATIONAL EXCELLENCE A DELIVER RESULTS Winning at th
Slide 20: Appendix
Appendix avisgaoo?
Slide 21: 2018 Raw Materials
2018 Raw Materials GOODSYEAR. Terms: US$ millions Raw Material Cost) 2018 vs 2017 Full Year Est Now expecting raw materials to be up ~$270 million for the year (a) Impact to cost of goods sold before raw material cost saving measures. Based on raw material input costs holding at October 19, 2018 spo
Slide 22: 2018 Full-Year Industry Outlook
2018 Full-Year Industry Outlook Commercial Replacement (a) For replacement, Western Europe is Europool and Turkey. For OE, Western Europe is total EMEA. a
Slide 23: 2018 - Liquidity Profile
Third Quarter 2018 - Liquidity Profile GOODJYEAR. Terms: US$ billions $3.0) Available Credit Lines $2.1 Cash & Equivalents $0.9 September 30, 2018 (a) Total liquidity comprised of $896 million of cash and cash equivalents. as well as $2.132 million of unused availability under various credit agreeme
Slide 24: 2018 - Maturity Schedule
Third Quarter 2018 - Maturity Schedule GOODJYEAR. Terms: US$ millions 1 “1 Undrawn Credit Lines i | Funded Debt $637 2018 2019 2020 2021 2022 2023 2 2024 Note: Based on September 30, 2018 balance sheet values and excludes notes payable. capital leases and other domestic and foreign debt. (a) At Sept
Slide 25: Use of Historical and Forward-Looking Non-GAAP Financial Measures
Use of Historical and Forward-Looking Non-GAAP Financial Measures This presentation contains historical and forward-looking non-GAAP financial measures, including Total Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income and Adjusted Diluted Earnings Per Share (EPS), which are i
Slide 26: 2018 Significant Items
Third Quarter 2018 Significant Items GOODZYEAR (After Tax and Minority Interest) Terms: US$ millions, (except EPS) Gain on TireHub Rationalizations, Transaction, Net la Write-offs, of Transaction ») ete Tax D t e and Ac rated Costs ations SEGERCuM | As Adjusted Net Sales - - - |$ 3,928 Cost of Goods
Slide 27: 2017 Significant Items
Third Quarter 2017 Significant Items (After Tax and Minority Interest) Terms: US$ millions, (except EPS) Net Sales Cost of Goods Sold Gross Margin SAG Rationalizations Interest Expense Other (Income) Expense Pre-tax Income Taxes Minority Interest Goodyear Net Income EPS As Reported Rationalizations,
Slide 28: Reconciliation for Segment Operating Income/Margin
Reconciliation for Segment Operati E Income/Margin GOODFYEAR. Terms: US$ millions Three Months Ended September 30, 2018 2017" Total Segment Operating Income $ 362 $ 367 Rationalizations (5) (46) Interest expense (82) (84) Other income (expense) 253 (30) Asset write-offs and accelerated depreciation
Slide 29: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt coop#vear Terms: US$ millions September 30, June 30, December 31, September 30, 2018 2018 2017 2017 Long-Term Debt and Capital Leases 5,604 5,726 5,076 5,737 Notes Payable and Overdrafts 445 335, 262 276 Long-Term Debt and Capital Leases Due Within One Year
Slide 30: GOODFYEAR
GOODFYEAR
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