The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2011 Earnings Presentation
27 slides from The Goodyear Tire & Rubber's earnings presentation, Oct 28, 2011
Slide 1: Third Quarter 2011 Conference Call
Third Quarter 2011 Conference Call October 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: Third Quarter 2011 Overview
Third Quarter 2011 Overview Key How To’s Key Accomplishments Record quarterly sales and earnings Target Profitable Price/mix > raw materials Segments Revenue per tire +18% Strong European consumer response Operational to award winning winter tire line-up Excellence Recovered unabsorbed ove
Slide 4: Segment Highlights
Segment Highlights • North American Tire • Price/mix improvements…success in targeted segments • Rebounding commercial tire industry • Europe, Middle East and Africa • Outstanding consumer response to innovative new products • Successful execution of supply chain initiatives • Latin American Tire •
Slide 5: Financial Highlights
Third Quarter 2011 Financial Highlights • Revenue growth – Weighted to targeted segments – 18% increase in revenue per tire excluding currency impact • Price/mix performance – Highest ever achieved – Significant benefit from strong European winter tire demand • Cost efficiency – Cost savings of $106
Slide 6: Income Statement
Third Quarter 2011 Income Statement Total Company (In millions, except Margin and EPS) Third Quarter 2011 2010 Change Units 47.7 47.7 - Net Sales $6,062 $4,962 22.2% Gross Margin 18.0% 17.0% 1.0 pts SAG $677 $640 5.8% Segment Operating Income(a) $463 $234 97.9% Segment Operating Margin(a) 7.6% 4.7%
Slide 7: Segment Operating Results
Third Quarter 2011 Segment Operating Results ($ in millions) 1. Reduction in NAT pension expense. 2. Raw material variance of $554 million excludes raw material cost saving measures of $48 million, which is included in Cost Savings above. 3. Estimated impact of inflation (wages, utilities, energy, t
Slide 8: Balance Sheet
Third Quarter 2011 Balance Sheet ($ in millions) September 30, June 30, December 31, 2011 2011 2010 Cash and cash equivalents $ 2,126 $ 1,804 $ 2,005 Accounts receivable 4,008 3,539 2,736 Inventories 4,037 4,032 2,977 Accounts payable - trade (3,371) (3,515) (3,107) Working capital(a) $ 4,674 $ 4,05
Slide 9: Working Capital Performance
Working Capital Performance Quarterly Working Capital as a Percent to Annualized Sales(a) 20% 2008 2009 10% 2010 2011 0% Q1 Q2 Q3 Q4 a) Working capital represents quarter-end balances for accounts receivable and inventories, less accounts payable – trade; Annualized sales calculated on a trailing 4
Slide 10: Maturity Schedule
Third Quarter 2011 Maturity Schedule ($ in millions) Undrawn Funded Debt Credit Lines $1,743(e) $1,500(a) $1,200 $1,167(c) $604(b) $1,154(d) $537 $200 2011 2012 2013 2014 2015 2016 2017 2018 2019 > & Beyond 2019 Note: Based on balance sheet values and excludes notes payable, capital leases and other
Slide 11: Segment Results
Third Quarter 2011 Segment Results (In millions) North American Tire Europe, Middle East and Africa Tire 2011 2010 Change 2011 2010 Change Units 16.6 18.0 (7.6%) Units 20.7 19.1 8.3% Net Sales $2,557 $2,176 17.5% Net Sales $2,226 $1,696 31.3% Operating Income $78 $5 Operating Income $260 $77 Margin
Slide 12: 2011 Full Year Industry Outlook
2011 Full Year Industry Outlook October Full Year July Full Year 2011 2011 Guidance Guidance Consumer NAT: ~ Flat 0% to +2% Replacement EMEA: ~ +4% +4% to +6% Consumer NAT: ~ +6% +5% to +10% OE EMEA: ~ +5% +4% to +8% Commercial NAT: ~ +13% +10% to +15% Replacement EMEA: ~ +1% +7% to +11% Commercial
Slide 13: 2011 Key Outlook Items
2011 Key Outlook Items 2011 Outlook Raw • FY increase of ~30%...including Q4 > 30% Materials Interest • FY ~$330 million Expense • Slightly under 25% of international Tax Rate Segment Operating Income Capex • $1.1 to $1.2 billion 13
Slide 14: Appendix
Appendix
Slide 15: Tire Unit & Sales Summary
Third Quarter 2011 Tire Unit & Sales Summary (in millions) 2011 Q3 Sales = $6,062 Q3 Unit/Sales Mix 2011 2010 % Change Consumer Consumer Commercial Units 43.3 43.4 (0.2%) 54% 20% Sales $3,281 $2,738 19.8% Other 12% Commercial Retail 7% Units 3.9 3.7 3.9% Sales $1,227 $954 28.6% Chemical 7% 15
Slide 16: Price/Mix Improvements
Price/Mix Improvements Price/Mix vs. Raw Materials(a) ($ in millions) $1,654 (c) $1,239 $942 $829 $746 $712 $689 $639 (b) $549 $195 $207 ($115) 2006 2007 2008 2009 2010 September YTD 2011 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Raw Materials include the impact of raw
Slide 17: Eliminating Unabsorbed Fixed Costs
Eliminating Unabsorbed Fixed Costs ($ in millions) Recession Impact Market Recovery $863 $115 million previously reported fixed cost savings $115 in North America, Europe and Latin America Unabsorbed Fixed Cost Recovery(a) $585 $115 $748 $373 Includes $175+ Benefits of Footprint Reductions(a) 2011 –
Slide 18: Legacy Costs and Interest Expense
Legacy Costs and Interest Expense ($ in millions) 2007 2008 2009 2010 2011E Global pension contributions and direct payments (a) $719 $364 $430 $405 $225 -$250 Pension expense (global)(b) $276 $181 $387 $300 $250 - $275 Postretirement benefit payments (c) $225 $169(d) $64 $62 $60 - $65 Postretiremen
Slide 19: Cash Flow
Third Quarter 2011 Cash Flow ($ in millions) Nine Months Ended September 30, September 30, 2011 2010 Net Income $391 $2 Depreciation and amortization(a) 576 509 Working capital(b) (2,138) (806) Pension contributions and direct payments (221) (248) Venezuela currency devaluation - 110 Other (includin
Slide 20: Liquidity Profile
Third Quarter 2011 Liquidity Profile ($ in billions) Liquidity Profile $3.9(a) Pan European $0.1 Securitization(b) Available Credit Lines (c) $1.7 Cash & $2.1 Equivalents(d) $1 billion required for operations September 30, 2011 (a) Total liquidity comprised of $2,126 million cash and cash equivalent
Slide 21: Third Quarter Significant Items
Third Quarter Significant Items (after taxes and minority interest) 2011 (See next page) • Rationalizations, asset write-offs and accelerated depreciation, $35 million (13 cents per share) • Discrete tax charges, $4 million (1 cent per share) • Gain from asset sales, $5 million (2 cents per share) 2
Slide 22: Third Quarter Significant Items
Third Quarter Significant Items (after taxes and minority interest) Third Quarter 2011 ($ in millions, except EPS) Significant Items Rationalizations & Accelerated Reported Depreciation Tax Items Asset Sales Net Sales $ 6,062 - - - Cost of Goods Sold 4,973 (12) - - Gross Margin 1,089 12 - - 18.0% SA
Slide 23: 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% $16.00 3.1250 31,250,000 12
Slide 24: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin ($ in millions) Three Months Ended September 30, 2011 2010 Total Segment Operating Income $ 463 $ 234 Rationalizations (25) (8) Interest expense (86) (90) Other expense (income) 4 (62) Asset write-offs and accelerated depreciation (12) (4) Corpora
Slide 25: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt ($ in millions) September 30, June 30, December 31, 2011 2011 2010 Long term debt and capital leases $ 5,559 $ 4,786 $ 4,319 Notes payable and overdrafts 312 261 238 Long term debt and capital leases due within one year 212 257 188 Total debt $ 6,083 $ 5,30
Slide 26: Third Quarter 2011 Debt
Third Quarter 2011 Debt ($ in millions) September 30, June 30, March 31, December 31, 2011 2011 2011 2010 Notes Payable: Notes Payable and Overdrafts $ 312 $ 261 $ 245 $ 238 Long-Term Debt: Notes: 10.5% due 2016 $ 630 $ 629 $ 967 $ 966 6.75% Euro Notes due 2019 336 362 - - 8.25% due 2020 994 994 994
Slide 27: GOODS YEAR
GOODS YEAR
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