The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Investor Presentation (March 2008)
41 slides from The Goodyear Tire & Rubber's investor presentation, Mar 13, 2008
Slide 1: Investor Meeting
Investor Meeting March 13, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation may constitute 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, which affe
Slide 3: Agenda
Agenda • Overview • Business Platforms • Economic / Industry Environment • Q&A 3
Slide 4: Leading Market Positions and Brands
Overview Leading Market Positions and Brands Europe, Middle East Latin Asia North America and Africa America Pacific Market Position(a) #1 #2 #1 #2 Brands 4 (a) Market positions by volume.
Slide 5: Investment Highlights
Overview Investment Highlights • Proven management team with a proven track record / innovative solutions • Market leader with strong momentum and attractive growth opportunities – attractive market trends – well-recognized brand portfolio – established dealer network • Intense focus on growing core
Slide 6: Differentiated Business Model
Overview Differentiated Business Model Typical Auto Supplier Valuable brand Not applicable World-renowned brand Aftermarket exposure <10% of sales >80% of sales Limited due to 11 price increases 2004 to present Pricing ability dependency on OEMs in U.S. consumer replacement market Time to market Mul
Slide 7: Revenue and Operating Income
Financial Overview Revenue and Operating Income Revenue Total Segment Operating Income(a) ($ in millions) ($ in millions) 36% 07 CAGR 9% – 2007 CAGR 3 – 20 2003 200 $1,269 $18,751 $19,644 $1,060 $ 1,025 $18,098 $16,885 $831 Strike $13,900 impact $1,230 $372 $712 2003 2004 2005 2006 2007 2003 2004 20
Slide 8: Segment Operating Income
Financial Overview Segment Results – Segment Operating Income ($ in millions) Eastern Europe, North American Tire European Union Tire Middle East & Africa Latin American Tire Asia Pacific Tire Tire $359 $317 $326 $302 $294 $286 $280 $253 $250 $229 $194$198 $167 $178 $147 $149 $150 $130 $104 $74 $80
Slide 9: Business Platforms
Business Platforms • Strong top-line growth capability • Step change improvement in cost structure • Stronger balance sheet • Focus on core businesses • Focus on speed 9
Slide 10: Top-Line Growth
Business Platforms Top-Line Growth • Tire markets are providing attractive growth opportunities • Impactful innovative new product/service offerings targeted at high margin market segments launched at high speed: – Eagle GT – Assurance – Eagle F1 All-Season (Tire Rack Award) Have the Leading – Eagle
Slide 11: Market-Focused Investment Plans
Business Platforms Market – Focused Investment Plans • CAPEX – Increase high-value added (HVA) capacity • Increase 50% by 2012 (achieved 15% increase in 2007) – Increase low-cost capacity to 50% of total by 2012 • Low cost capacity reached 40% of total at year-end 2007 • Considering new facilities i
Slide 12: Step Change Improvement in Cost Structure
Business Platforms Step Change Improvement in Cost Structure 4-Point Cost Savings Plan Continuous Improvement / USW savings Reduce Footprint • USW Contract Savings ($250 million by 2009) • Global high cost footprint strategy • Business Process Improvements (Productivity, – Target more than 25 millio
Slide 13: Structural Cost Savings
Structural Cost Savings Q4 2007 Run Rate vs. 2009 Run Rate ($ in millions) $485+ $110 VEBA $140 USW Productivity ~$235 $65 $150 Footprint + $85 Reduction Salaried $80 – $90 $80 – $90 Benefits Restructuring Q4 2007 Run Rate 2009 Run Rate Significant savings to come mainly NAT 13
Slide 14: Stronger Balance Sheet
Stronger Balance Sheet Debt and Legacy Obligations Addressed ($ in millions) $11,982 $12,106 $11,012 $3,201 $2,452 $2,610 $2,444 $7,945 $3,124 $3,006 $1,758 <$5,800 $1,462 < $600 c <$1,200b $7,210 $5,657 $5,396 d $4,725 < $4,000 2004 2005 2006 2007 2008E (a) Total Debt Unfunded Pension Obligations U
Slide 15: Focus on Core Businesses
Focus on Core Businesses Non-Core Businesses Exited • Engineered Products Division (2007) • Tire and wheel assembly operations (2007) • Certain segments of private label tire business (2006 – 2007) • Tire fabric business (2006) • North American Farm Tire (2005) • Rubber plantation (2005) • Adhesive
Slide 16: Focus on Speed
Business Platforms Focus on Speed Recent Strategic Actions • Strengthened the leadership team with key • Multiple launches of impactful and additions innovative new products • Moved forward with investments to • New “Get There” advertising campaign support growth in high value • Goodyear brand share
Slide 17: Economic Environment
Economic Environment • Better positioned to deal with economic uncertainty than in recent past • Richer product, brand and customer mix – Branded products in high demand – Exited 8 million units of wholesale private label business – Selective OE fitments • Stronger balance sheet – Successful executi
Slide 18: NAT Consumer Replacement Industry Historical Trends
NAT Consumer Replacement Industry Historical Trends 300 250 Tire Units in Millions 200 150 100 50 0 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Only 5 previous times have we seen at least -3% 18
Slide 19: Industry Environment
Industry Environment North America • Industry outlook provided in February for U.S. and Europe indicated slow growth in Consumer Replacement and a decline in Consumer OE in the U.S. • U.S. OE Volumes have declined since then based on OE production. • We are monitoring industry conditions carefully a
Slide 20: Next Stage Metrics
Next Stage Metrics Next Stage Metrics North American Segment 5% Operating Margin Total Segment 8% Operating Margin Debt(a) 2.5x EBITDA Remain confident in ability to achieve Next Stage Metrics (a) EBITDA is calculated in accordance with the definition of Consolidated EBITDA in our prior principal cr
Slide 21: Summary
Summary • Proven management team with a proven track record / innovative solutions • Market leader with strong momentum and attractive growth opportunities • Intense focus on growing core consumer and commercial tire businesses • Strengthening balance sheet to capitalize on growth, improve competiti
Slide 22: Goodyear logo
a GOODSYEAR noel Get there
Slide 23: Appendix
Appendix
Slide 24: Strategic Drivers
Overview 7 Strategic Drivers Leadership Lower Cost Structure Cash is King Leveraged Distribution Build Brand Strength Product Leadership Advantaged Supply Chain 24
Slide 25: Overview of Goodyear's Sales
Overview of Goodyear’s Sales Goodyear tires are sold …available in a diverse ...and stretch around in two distinct tire markets... selection of products... the world E. Europe, European Union Middle Replacement Market Consumer 91% 27% East & 70% Africa 9% North America 45% Latin America OE Market Co
Slide 26: Full Year 2007 Performance
Full Year 2007 Performance Total Company (In millions, except Margin and EPS) 2007 2006 Change Units 201.7 215.0 -6% Net Sales $19,644 $18,751 5% Gross Margin 19.0% 16.1% 2.9 pts a Segment Operating Income $1,230 $712 73% a Segment Operating Margin 6.3% 3.8% 2.5 pts Income (Loss) from Continuing Ope
Slide 27: Full Year 2007 Performance
Full Year 2007 Performance North American Tire (In millions) 2007 2006 Change Units 81.3 90.9 -11% Net Sales $8,862 $9,089 -3% Segment Operating Income (Loss) $139 ($233) European Union Tire (In millions) 2007 2006 Change Units 59.4 63.5 -6% Net Sales $5,393 $4,990 8% Segment Operating Income $302 $
Slide 28: Full Year 2007 Performance
Full Year 2007 Performance Eastern Europe, Middle East and Africa Tire (In millions) 2007 2006 Change Units 20.2 20.0 1% Net Sales $1,824 $1,562 17% Segment Operating Income $280 $229 22% Latin American Tire (In millions) 2007 2006 Change Units 21.8 21.2 3% Net Sales $1,872 $1,607 16% Segment Operat
Slide 29: Balance Sheet
Balance Sheet ($ in millions) December 31, December 31, 2007 2006 Cash and cash equivalents $3,463 $3,862 Accounts receivable 3,103 2,800 Inventories 3,164 2,601 Accounts payable - trade (2,422) (1,945) (a) Working capital $3,845 $3,456 (b) Total debt $4,725 $7,210 (b) Net debt $1,262 $3,348 Note: R
Slide 30: Cash Flow
Cash Flow ($ in millions) Twelve Months Ended December 31, December 31, 2007 2006 Income (Loss) from Continuing Operations $139 ($373) (a) Depreciation and amortization 659 656 (b) Working capital (205) 469 Pension contributions and direct payments (719) (708) Other, including net rationalization ch
Slide 31: Price/Mix Improvements
Top-Line Growth Price/Mix Improvements Price/Mix vs. Raw Materials ($ in millions) $829 $746 $639 $587 $596 $526 $268 $195 2004 2005 2006 2007 Price/Mix Raw Materials Note: Reflects tire businesses only 31 Reflects impact on Segment Operating Income
Slide 32: Raw Material Cost
Raw Material Cost Raw material cost breakdown Other(a) 18% Natural Rubber 25% Steel Cord 9% Fabrics(a) 12% Synthetic Rubber(a) 24% Note: As of FY 2007 Carbon Black(a) (a) Dependent upon oil 12% Raw materials make up nearly 40% of COGS 32
Slide 33: Revenue Per Tire Increase
Full Year 2007 Revenue Per Tire Increase (Y-o-Y, excluding impact of exchange) 10% 9% 9% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% 3% 2% 1% 0% North America European Union EEMEA Latin America Asia Pacific Total Company Driven by price/mix improvement 33
Slide 34: Legacy Costs and Interest Expense
Legacy Costs and Interest Expense ($ in millions) 2004 2005 2006 2007 2008E (Excludes VEBA Savings) (a) Global pension contributions and direct payments $265 $522 $708 $719 $350 – $400 (b) Pension expense (global) $344 $358 $388 $276 < $225 (c) Postretirement benefit payments $257 $259 $254 $266 < $
Slide 35: Fourth Quarter 2007 Performance
Fourth Quarter 2007 Performance Total Company (In millions, except Margin and EPS) Fourth Quarter 2007 2006 Change Units 50.0 51.2 -2% (b) Net Sales $5,160 $4,638 11% Gross Margin 19.4% 11.3% 8.1 pts (a)(b) Segment Operating Income (Loss) $313 ($86) (a) Segment Operating Margin 6.1% -1.9% 8.0 pts In
Slide 36: Fourth Quarter 2007 Segment Operating Income
Fourth Quarter 2007 Performance Segment Operating Income ($ in millions) $399 $175 ($39) ($100) Volume ($40) $111 Estimated ($66) Impact of 4-Point Inflation Transitional Cost Manufacturing $313 Savings Expenses $45 Plan(a) (Including Other unabsorbed (Incl. SAG $313 Price/Mix overhead) and R&D) Net
Slide 37: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin Full Year Segment Operating Income Reconciliation ($ in millions) Twelve Months Ended December 31, 2004 2005 2006 2007 Total Segment Operating Income $ 831 $ 1,060 $ 712 $ 1,230 Rationalizations (33) (7) (311) (49) Accelerated depreciation (7) (4)
Slide 38: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin ($ in millions) Fourth Quarter 2007 2006 Total Segment Operating Income (Loss) $313 ($86) Rationalizations (25) (101) Accelerated depreciation (6) (34) Interest expense (99) (137) Corporate incentive compensation plans (13) (26) Intercompany profi
Slide 39: Reconciliation for Net Debt
Reconciliation for Net Debt ($ in millions) December 31, December 31, December 31, December 31, 2007 2006 2005 2004 Long term debt and capital leases $4,329 $6,562 $4,741 $4,442 Notes payable and overdrafts 225 243 207 205 Long term debt and capital leases due within one year 171 405 448 1,010 Total
Slide 40: Reconciliation for Cash Flow
Reconciliation for Cash Flow Twelve Months Ended ($ in millions) December 31, 2007 2006 Cash Flows From Operating Activities: Net Income (Loss) $602 ($330) Less: Discontinued operations 463 43 Income (Loss) from Continuing Operations $139 ($373) Adjustments to reconcile net income (loss) from contin
Slide 41: Goodyear logo
a GOODSYEAR noel Get there
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