The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2012 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Apr 27, 2012
Slide 1: First Quarter 2012 Conference Call
First Quarter 2012 Conference Call April 27, 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: First Quarter Summary
First Quarter Summary + = * Price/mix > raw material cost ° Volume softness across all increase regions ¢ European “green” winter ¢ Dealer destocking ¢ Other items ¢ Unabsorbed overhead ¢ Thailand flood recovery * China start-up * Pension ¢ Other tire related, including North American third party ch
Slide 4: Slide 4
Slide 5: Assurance family success
« Assurance family success Market Back Innovation . . ; _ ¢ Enhancing digital marketing capability ¢ Goodyear brand and technology Target Profitable Segments differentiation...strong price/mix realization * OE fitment selectivity ¢ Increased HVA capability Operational Excellence . ; ¢ Improving serv
Slide 6: Warm winter weather & weak economic conditions
¢ Warm winter weather & weak economic conditions ¢ Strong performance in targeted market segments EMEA ¢ Capacity expansions on track in Chile and Brazil Sain etiestes ¢ Continued volatility in business environment ¢ New China factory ramp up on track Asia ¢ Continued unit volume growth in China ¢ T
Slide 7: Strategy Roadmap
Strategy Roadmap Where We Are > Executing Plan > NAT Profitable > Innovation Leader > Investing to Grow > Record Earnings > Balance Sheet Improving Industry Key How To’ 7 MegaTrends aaa 1. North America: Profitability Fr athabie Market Senet 2. Asia: Winning in China 3 Operational Excellence egments
Slide 8: Total Company
Total Company (In millions, except Margin and EPS) First Quarter 2012 2011 Change Units 43.0 46.8 (8.1)% Net Sales $5,533 $5,402 24% Gross Margin 16.7% 17.4% (0.7) pts SAG $662 $668 (0.9)% Segment Operating Income) $292 $327 (10.7)% Segment Operating Margin® 5.3% 6.1% (0.8) pts Goodyear Net (Loss) I
Slide 9: First Quarter 2012 Segment Operating Results
First Quarter 2012 Segment Operating Results , oe ($ in millions) ¢ Yer $16 ($482) | $525 Other Tire Cost Related Savings (net of NAT fit sharing) Other Includes: *Unabsorbed FixedCost ($6) * Depreciation ($9) + China start-up ($7) + LAT farm sale ($4) + Pension‘) ($4) $(75) Materials‘) $29 a intoso
Slide 10: Balance sheet ($ in millions)
($ in millions) March 31, December 31, 2012 2011 Cash and cash equivalents $ 2,083 $2,772 Accounts receivable 3,530 2,849 Inventories 3,969 3,856 Accounts payable - trade (3,571) (3,668) Working capital‘? $ 3,928 $ 3,037 Total debt $ 5,631 $ 5,201 Net debt $ 3,548 $ 2,429 Working capital represents
Slide 11: Pro Forma Maturity Schedule
Pro Forma Maturity Schedule ($ in millions) | | New/Refinanced Debt $1,534 $1 ,200(9) $6040) ——— $5341) 2012 2013 2014 2015 2016 2017 2018 2019 2020 22021 Note: (a) (b) (c) (d) Based on March 31, 2012 balance sheet values and excludes notes payable, capital leases and other domestic and foreign debt
Slide 12: Segment results by region
(In millions) North American Tire Europe, Middle East and Africa Tire 2012 2011 Change 2012 2011 Change Units 15.8 17.1 (7.9%) Units 18.0 19.7 (8.5%) Net Sales $2,497 $2,307 8.2% Net Sales $1,938 $1,959 (1.1%) Operating Income $80 $40 100.0% Operating Income $90 $153 (41.2%) Margin 3.2% 1.7% Margin
Slide 13: Consumer and commercial industry volume guidance
Consumer Replacement Consumer OE Commercial Replacement Commercial OE April Full Year February Full Year. 2012: Guidance 2012: Guidance NAT: — (1)% to (3)% Flat to (2)% EMEA: (3)% to (5)% Flat to (2)% NAT: +2% to +7% Flat to +3% EMEA: (5)% to (9)% (5)% to (9)% NAT: — (2)% to +2% +2% to +6% EMEA: (3)
Slide 14: 2012 Key Segment Operating Income Drivers
2012 Key Segment Operating Income Drivers Global Tire Unit Volume + Lower EMEA industry demand ~ (2)% * Slightly lower North America replacement demand ¢ 2012 raw material cost increase of ~9% Raw Materials (assumes spot prices remain at recent levels) * Q2 increase of ~$250 mm year-over-year Unabso
Slide 15: 2012 Financial Outlook Items
Interest Expense Income tax Global Pension Working Capital * $360 - $385 million « 25% of International Segment Operating Income * $275 - $325 million Expense ¢ $550 - $600 million Cash Contribution ¢ Neither source nor use Capital Expenditures Depreciation & Amortization * $1.1 - $1.3 billion * $70
Slide 16: Appendix
—. Appendix —
Slide 17: First Quarter 2012 Tire Unit & Sales Summary
First Quarter 2012 Tire Unit & Sales Summary (in millions) 2012 Q1 Sales = $5,533 Q1 Unit/Sales Mix 2012 2011 % Change Consumer Units 39.1 42.5 (8.1%) Consumer Commercial 54% 20% = Sales $2,999 $2,901 3.4% Retail Commercial i Units 3.3 3.6 (8.0%) Sales $1,090 $1,054 3.4% Chemical 7% 17
Slide 18: Full Year 2011 Tire Unit & Sales Summary
Full Year 2011 Tire Unit & Sales Summary (in millions) 2011 Sales = $22,767 2011 Unit/Sales Mix 2011 2010 % Change Consumer Units 163.6 164.4 (0.5%) Consumer Commercial 53% 20% BD sai $12,065 $10,343 16.6% Commercial Retail 8% Units 14.8 14.0 5.5% Sales $4,588 $3,501 31.0% Chemical 7% 18
Slide 19: Price/Mix vs. Raw Materials
Price/Mix vs. Raw Materials) ($ in millions) $2,356 $1,822) t $420° $942 $712 689 $639 $ $549 — — ($115) 2007 2008 2009 2010 2011 Q1 2012 ti Price/Mix @ Raw Materials (a) Reflects impact on Segment Operating Income. Raw Materials include the impact of raw material cost savings measures. fe) Raw mate
Slide 20: Eliminating Unabsorbed Fixed Costs
Eliminating Unabsorbed Fixed Costs ($ in millions) Recession Impact Market Recovery and Footprint Actions $863 $115 million previously reported fixed cost savings —» in North America, Europe and Latin America Unabsorbed Fixed Cost Recovery") $585 Union City _ nion Ci $373 benefit offset by productio
Slide 21: Pension, postretirement and interest expense
($ in millions) 2008 2009 2010 2011 2012E Global pension contributions and direct payments® $364 $430 $405 $294 $550 - $600 Pension expense (global) ” $181 $387 $300 $266 $275 - $325 Postretirement benefit payments‘) $169 $64 $62 $59 $50 - $60 Postretirement benefit expense”) $78 $4 $9 $9 $10-$15 In
Slide 22: Cash flows from operating activities
($ in millions) Three Months Ended March 31, March 31, 2012 2011 Net Income $8 $124 Depreciation and amortization® 203 187 Working capital (767) (770) Pension contributions and direct payments (114) (17) Other (including compensation and benefits) (84) 43 Total Cash Flows from Operating Activities (
Slide 23: Liquidity Profile
(a) (b) (c) (d) Liquidity Profile $4.5) Pan European $0.2 Securitization (S in billions) Available Credit Lines © Cash & Equivalents) $1 billion required for operations March 31, 2012 Total liquidity comprised of $2,083 million cash and cash equivalents, $2,207 million of unused availability under v
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 $500 $3,000 $2,748 $2,715 $2,549 $2,600 ra $430 5 $405 % $2,500 =$400 ; $364 5 3 000 $2,000 — $294 = 82, _ 9300 E $1,500 $200 & $1,000 $100 $500 $0 r 1 $0 r r : : 2008 2009 2010 2011
Slide 25: Significant items 2012 and 2011
2012 (See next page) Charges resulting from the early redemption of senior notes, $86 million (35 cents per share) Rationalizations, asset write-offs and accelerated depreciation charges, $14 million (6 cents per share) Discrete tax charges, $3 million (1 cents per share) Net insurance recoveries re
Slide 26: First Quarter Significant Items
First Quarter Significant Items (after taxes and minority interest) ($ in millions, except EPS) First Quarter 2012 Significant Items Charges Resulting Rationalizations, from Early Asset Write-offs & Gains from Net Redemption of Accelerated Discrete Tax Impact of Thailand Net Gains on Asset Reported
Slide 27: Common Conversion
Common Conversion Common Shares Issuable upon Common Share 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 12.8% 10% $17.00 2.9412 29,411,765 12.1% 17% $18.00 2.7778 27,777,778 11.4%
Slide 28: Industry MegaTrends
Industry MegaTrends Significant GDP growth in “Green” (fuel efficiency) will emerging markets will provide impressive tire be a growing and permanent market growth 7 global theme Industry —_ MegaTrends Developed markets’ size, mix and drive for innovation ) Tire performance labeling will provide pro
Slide 29: Segment operating income reconciliation
($ in millions) Total Segment Operating Income Rationalizations Interest expense Other expense Asset write-offs and accelerated depreciation Corporate incentive compensation plans Intercompany profit elimination Retained expenses of divested operations Other Income before Income Taxes United States
Slide 30: Net debt reconciliation
($ in millions) Long term debt and capital leases Notes payable and overdrafts Long term debt and capital leases due within one year Total debt Less: Cash and cash equivalents Net debt Change in Net Debt vs December 31, 2011 March 31, December 31, 2012 2011 $ 5,186 $4,789 291 256 154 156 $ 5,631 $5,
Slide 31: Outstanding debt detail
($ in millions) Notes Payable: Notes Payable and Overdrafts Long-Term Debt: Notes: 10.5% due 2016 6.75% Euro Notes due 2019 8.25% due 2020 8.75% due 2020 7% due 2022 7% due 2028 Credit Facilities: $1.5 billion first lien revolving credit facility due 2013 $1.2 billion second lien term loan facility
Slide 32: Goodyear
GOODS YEAR
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