The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2016 Earnings Presentation
26 slides from The Goodyear Tire & Rubber's earnings presentation, Apr 27, 2016
Slide 1: First Quarter 2016 Conference Call
First Quarter 2016 Conference Call April 27, 2016
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: First Quarter Highlights
First Quarter Highlights • Record first quarter Segment Operating Income of $419 million with 11.4% SOI margin(a) • Core Segment Operating Income (excludes Venezuela) grew 14%(a) • Americas segment earnings of $260 million, SOI margin of 13% • Asia Pacific segment earnings of $79 million, SOI margin
Slide 4: Our Goal
OURSGOAL DELIVER SUSTAINABLE REVENUE AND PROFIT GROWTH WHILE INCREASING THE VALUE OF OUR BRAND [ | [ HOWWELLWIN | INNOVATION SALES & MARKETING ACTWITH EXCELLENCE EXCELLENCE INTEGRITY Develop gr ducts Build the value of our brand, and s that velp our ( ENERGIZE anticipate and respond to heir markets
Slide 5: Income Statement
First Quarter 2016 Income Statement In millions, except EPS Three Months Ended March 31, March 31, 3% 2016 2015 Change excluding Units 41.5 40.8 2% Venezuela Net Sales $ 3,691 $ 4,024 (8)% Gross Margin 26.8% 23.8% 3.0 pts Core SOI SAG $ 615 $ 608 1% growth of 14%(a) Segment Operating Income (a) $ 41
Slide 6: Segment Operating Results
First Quarter 2016 Segment Operating Results $ In millions $53 +14% ($30) $47 ($33) $68 ($12) ($34) $419 $388 $39 Inflation(c) $22 Price/Mix Cost Currency $366 $8 Raw Savings Materials(b) Other(d) Unabsorbed Q1 Venezuela Volume Q1 Q1 Fixed Cost 2016 2015 2015 Total Core SOI SOI(a) $47 $38 $14 Total
Slide 7: Balance Sheet
First Quarter 2016 Balance Sheet $ In millions March 31, December 31, March 31, 2016 2015 2015 Cash and cash equivalents $ 1,079 $ 1,476 $ 1,613 Accounts receivable 2,482 2,033 2,523 Inventories 2,636 2,464 2,538 Accounts payable - trade (2,653) (2,769) (2,612) Working capital(a) $ 2,465 $ 1,728 $ 2
Slide 8: Free Cash Flow from Operations
Free Cash Flow from Operations $ In millions Three Months Ended Trailing Twelve March 31, Months Ended 2016 2015 March 31, 2016 Net Income $ 189 $ 236 $ 329 Depreciation and Amortization 174 172 700 Change in Working Capital (611) (569) (84) Pension Expense 18 36 117 Provision for Deferred Income Ta
Slide 9: Segment Results: Americas
First Quarter 2016 Segment Results Americas In millions First Quarter 2016 2015 Change Units 18.0 19.2 (6.0%) Net Sales $1,951 $2,243 (13.0%) 15% excluding Venezuela Operating Income $260 $248 4.8% Margin 13.3% 11.1% • Strong SOI performance with income growth of 15% excluding Venezuela • Volume dec
Slide 10: Segment Results: Europe, Middle East and Africa
First Quarter 2016 Segment Results Europe, Middle East and Africa In millions First Quarter 2016 2015 Change Units 16.2 15.9 1.7% Net Sales $1,251 $1,331 (6.0%) Operating Income $80 $73 9.6% Margin 6.4% 5.5% • Consumer volume up 2%, with strong OE up 5% and Replacement up slightly • Winter channel i
Slide 11: Segment Results: Asia Pacific
First Quarter 2016 Segment Results Asia Pacific In millions First Quarter 2016 2015 Change Units 7.3 5.7 28.1% Net Sales $489 $450 8.7% Operating Income $79 $67 17.9% Margin 16.2% 14.9% • Volume growth of 28% driven by growth in key markets • 11% when excluding new Japanese replacement business • Do
Slide 12: 2016 Key Segment Operating Income Drivers
2016 Key Segment Operating Income Drivers 2015 Results Current Outlook Driver excluding Comments 2016 vs 2015 Venezuela • Core business unit volume of Global Volume +3% ~3% 164.8 million in 2015; no change Net Price/Mix vs. • Raw material costs down ~2%; prior $77 million ~$75 million Raw Materials
Slide 13: 2016 Outlook Other Financial Assumptions
2016 Outlook Other Financial Assumptions 2016 FY Assumption Interest Expense $350 - $375 million Financing Fees ~$45 million Expense: ~30% of global pre-tax operating income Income Tax Cash: 10-15% of global pre-tax operating income Depreciation & Amortization ~$700 million Global Pension Expense $6
Slide 14: Appendix
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Slide 15: 2015 Venezuela Key Metrics
2015 Venezuela Key Metrics $ In millions Venezuela 2015 Q1 Q2 Q3 Q4 Full Year Units (000s) 377 318 385 312 1,392 Revenue $94 $115 $155 $167 $531 Operating $22 $36 $39 $22 $119 Income Foreign Currency ($1) ($12) ($8) ($5) ($26) Exchange(a) NOTE: The Venezuela subsidiary was deconsolidated effective D
Slide 16: First Quarter 2016 Significant Items
First Quarter 2016 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Rationalizations, Insurance Asset Write-offs, Recovery - As and Accelerated Debt Discontinued Discrete Tax Reported Depreciation Repayments Products Items As Adjusted Net Sales $ 3,691 $ - $
Slide 17: First Quarter 2015 Significant Items
First Quarter 2015 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Charges for Gain on Rationalizations, Labor Claims Recognition of Asset Write-offs, Related to a Deferred As and Accelerated Discrete Tax Closed Facility Royalty Reported Depreciation Items i
Slide 18: Liquidity Profile
First Quarter 2016 Liquidity Profile $ In billions Liquidity Profile $3.1(a) Available Credit Lines $2.0 Cash & Equivalents $1.1 March 31, 2016 (a) Total liquidity comprised of $1,079 million of cash and cash equivalents, as well as $1,988 million of unused availability under various credit agreemen
Slide 19: Maturity Schedule
First Quarter 2016 Maturity Schedule $ In millions U.S. revolving credit facility refinanced on April 7, 2016; maturity extended to 2021 Note: Based on March 31, 2016 balance sheet values and excludes notes payable, capital leases and other domestic and foreign debt. (a) At March 31, 2016, our borro
Slide 20: 2016 Full-Year Industry Outlook
2016 Full-Year Industry Outlook April Full-Year February Full-Year 2016 Guidance 2016 Guidance Western Western USA USA Europe Europe Consumer ~1% ~3% ~1% ~3% Replacement Consumer OE ~2% ~2%(a) ~2% ~2%(a) Commercial ~1% ~3% ~1% ~3% Replacement Commercial OE ~(11)% ~1%(a) ~(9)% ~1%(a) (a) The quoted i
Slide 21: Price/Mix vs. Raw Materials
Price/Mix vs. Raw Materials(a) $ in millions $2,356 $1,822 (c) $1,017 $689 $549 (b) (d) $327 ($10) ($30) ($107) (h) ($321) ($376) (f) ($553) ($594)(g) ($985)(e) 2010 2011 2012 2013 2014 2015 2016 Q1 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Includes Venezuela through 2
Slide 22: SOI Driver Detail
SOI Driver Detail Cost Savings vs Inflation - Excluding Venezuela Driver 2015 vs 2014 2016 vs 2015 Comments Underlying Net • Includes incremental SAG from the inclusion $176 million ~$160 million Cost Savings of the Japanese replacement business General & • 2015 includes a benefit resulting from Pro
Slide 23: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin $ In millions Three Months Ended March 31, 2016 2015 Core Segment Operating Income $ 419 $ 366 Venezuela subsidiary operating income - 22 Total Segment Operating Income $ 419 $ 388 Rationalizations (11) (16) Interest expense (91) (107) Other incom
Slide 24: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt $ In millions March 31, December 31, March 31, 2016 2015 2015 Long-Term Debt and Capital Leases $ 5,685 $ 5,074 $ 5,924 Notes Payable and Overdrafts 76 49 23 Long-Term Debt and Capital Leases Due Within One Year 314 585 238 Total Debt $ 6,075 $ 5,708 $ 6,18
Slide 25: Reconciliation for Free Cash Flow from Operations
Reconciliation for Free Cash Flow from Operations The amounts below are calculated from the Consolidated Statements of Cash Flows except for pension expense, which is as reported in the pension- related note in the Notes to Consolidated Financial Statements. Trailing Twelve Three Months Ended Months
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