The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q4 2015 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Feb 9, 2016
Slide 1: Fourth Quarter 2015 Conference Call
Fourth Quarter 2015 Conference Call February 9, 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: Highlights
Highlights • Record full-year segment operating income tops $2.0 billion, an increase of more than 18%(a) • Full-year cash flow from operating activities of $1.7 billion • North America sets full-year earnings record of $1.1 billion • Asia Pacific sets full-year earnings record of $319 million • Inc
Slide 4: Strategy Roadmap
Strategy Roadmap Where We Are Executing Plan Value Creating Innovation Leader Investing for Growth Record Earnings US Pension Fully Funded Key Strategies Key How To’s Industry Market-Back Innovation Excellence 1. North America: Grow Profitably MegaTrends Sales & Marketing Excellence 2. Asi
Slide 5: North America Industry Leading Products
North America Industry Leading Products Goodyear products represented on 75% of 2015 Top 15 Selling SUVs and Light Trucks in the USA USA Light Truck & SUV Sales (in millions) 12 10 8 6 4 2 0 2010 2011 2012 2013 2014 2015 New Vehicle Sales Source: LMC International 5
Slide 6: Goodyear's Journey
Goodyear’s Journey Segment Operating Income (a) Target of 10-15% growth from core $2.1B to Achieved business $2.2B 2011-2013 $2.0B $1.6B target $1.9B Record! $1.7B Record! $119M Record! $1.6B Venezuela Record! $1.4B in 2015 Record! $1.2B Record! $0.9B 2010 2011 2012 2013 2014 2015 2015 2016 --------
Slide 7: Fourth Quarter 2015 Income Statement
Fourth Quarter 2015 Income Statement In millions, except EPS Three Months Ended December 31, December 31, 2015 2014 Change Units 42.1 39.5 7% Net Sales $ 4,063 $ 4,356 (7)% Gross Margin 24.4% 23.3% 1.1 pts SAG $ 725 $ 702 3% Segment Operating Income (a) $ 476 $ 359 33% Segment Operating Margin (a) 1
Slide 8: Fourth Quarter 2015 Segment Operating Results
Fourth Quarter 2015 Segment Operating Results $ In millions +33% $117 $80 ($87) $29 ($21) $79 ($36) Cost $476 Inflation(c) Currency Price/Mix Savings $31 $42 Other(d) $359 Raw Unabsorbed Materials(b) Fixed Cost Volume(a) Q4 Q4 2015 2014 $73 $108 ($7) Strong financial performance overcoming challengi
Slide 9: Fourth Quarter 2015 - Balance Sheet
Fourth Quarter 2015 - Balance Sheet Pro Forma to reflect Euro Note Redemption $ In millions Pro Forma December 31, September 30, December 31, 2015 2015 2014 Cash and cash equivalents (a) $ 1,195 $ 1,690 $ 2,161 Accounts receivable 2,033 2,616 2,126 Inventories 2,464 2,544 2,671 Accounts payable - tr
Slide 10: Free Cash Flow from Operations
Free Cash Flow from Operations $ In millions Year Ending December 31, 2015 2014 Net Income $ 376 $ 2,521 Depreciation and Amortization 698 732 Change in Working Capital (42) (1) Pension Expense 135 158 Provision for Deferred Income Taxes (a) 79 (1,970) Loss on Deconsolidation of Venezuelan Subsidiar
Slide 11: Fourth Quarter 2015 Segment Results
Fourth Quarter 2015 Segment Results In millions North America Europe, Middle East and Africa 2015 2014 Change 2015 2014 Change Units 15.4 16.0 (3.8%) Units 14.2 12.8 10.9% Net Sales $1,912 $2,105 (9.2%) Net Sales $1,191 $1,306 (8.8%) Operating Income $266 $229 16.2% Operating Income $100 $30 233.3%
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 164.8 Global Volume +3% ~3% million in 2015 Price/Mix vs. Raw $77 million ~$75 million • Raw material costs down ~5% Materials Overhead • Reflects in
Slide 13: 2016 Outlook Other Financial Assumptions
2016 Outlook Other Financial Assumptions 2016 FY Assumption Interest Expense $350 - $375 million Financing Fees ~$60 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: 2014-2016 Capital Allocation Plan Update
2014-2016 Capital Allocation Plan Update Delivering Shareholder Returns Prior Plan Update (Feb. 2015) (Feb. 2016) Growth CapEx ~ $1.15B ~$0.9B Dividends/ Share Repurchase $0.6 - $1.25B $1.1 - $1.3B(a) Restructurings ~ $0.6B ~ $0.7B Debt Repayment / Pension Funding $0.8 - $0.9B ~$0.9B $3.6 - $3.8B $3
Slide 15: Appendix
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Slide 16: 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 17: Pension Update
Pension Update $ in millions Total Global Cash Flow Impact (a) (c) Global Pension Expense (b) (c) (d) $1,500 $350 $1,338 $307 $300 $285 $1,200 $1,162 $250 $900 $200 $684 $158 $150 $135 $600 $100 $65-$85 $65-$85 $65-$85 $300 $50 $103 $50-$75 $50-$75 $50-$75 $- $- 2012 2013 2014 2015 2016E 2017E 2018E
Slide 18: Full Year 2015 Segment Operating Results
Full Year 2015 Segment Operating Results Pro Forma for Venezuelan Subsidiary Deconsolidation $ In millions +15% $251 $417 ($340) $369 ($142) ($142) Inflation(c) $8 $1,903 $1,712 ($60) $84 ($3) Currency Other $1,652 Price/Mix Cost Savings Unabsorbed Raw Venezuela Volume(a) Fixed Cost Materials(b) 201
Slide 19: Full Year 2015 Tire Unit & Sales Summary
Full Year 2015 Tire Unit & Sales Summary in millions Unit/Sales Mix 2015 Sales = $16,443 2015 2014 % Change Consumer Consumer Units 152.4 147.4 3.4% 60% Commercial Sales $9,907 $10,510 (5.7%) 20% Other 9% Commercial Chemical Retail Units 12.4 12.6 (2.1%) 3% 8% Sales $3,342 $3,849 (13.2%) 19
Slide 20: Price/Mix vs. Raw Materials
Price/Mix vs. Raw Materials(a) $ in millions $2,356 $1,822 (c) $1,017 $689 $549 (b) $327 (d) ($10) ($321) ($376) ($553) (f) ($594) (g) ($985) (e) 2010 2011 2012 2013 2014 2015 Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Includes Venezuela. Raw materials include the impac
Slide 21: Fourth Quarter 2015 Significant Items
Fourth Quarter 2015 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Tax Expense US Tax Loss on Rationalizations, Net Income Transaction (Benefit) in Adjusted Deconsolidation Asset Write-offs, and Other Costs and Net excess of US Diluted As of Venezuelan Pens
Slide 22: Fourth Quarter 2014 Significant Items
Fourth Quarter 2014 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Rationalizations, US Tax Asset Write-offs, Net Income Tax Expense in Adjusted and Accelerated and Other excess of US Diluted As Net Venezuelan Depreciation Net Gains on Discrete Tax Cash Tax
Slide 23: Full Year 2015 Significant Items
Full Year 2015 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Charges for Gain on US Tax Loss on Rationalizations, Labor Claims Insurance Transaction Net Income Recognition of Tax Expense in Adjusted Deconsolidation Asset Write-offs, Related to a Recovery -
Slide 24: Full Year 2014 Significant Items
Full Year 2014 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Charges for US Tax Rationalizations, Pension Labor Claims Net Income Tax Expense in Adjusted Asset Write-offs, Curtailments Related to a Government and Other excess of US Diluted As Net Venezuela
Slide 25: Fourth Quarter 2015 Liquidity Profile
Fourth Quarter 2015 Liquidity Profile $ In billions Liquidity Profile $4.2(a) Available Credit Lines $2.7 Cash & Equivalents $1.5 December 31, 2015 (a) Total liquidity comprised of $1,476 million of cash and cash equivalents, as well as $2,676 million of unused availability under various credit agre
Slide 26: Fourth Quarter 2015 - Maturity Schedule
Fourth Quarter 2015 - Maturity Schedule Pro Forma to reflect Euro Note Redemption $ In millions Undrawn Credit Lines Funded Debt $2,000 (a) $1,272 $900 $245 (b) $700 $598 (d) $723 (c) $271 $150 $- 2016 2017 2018 2019 2020 2021 2022 2023 ≥ 2024 Note: Based on December 31, 2015 balance sheet values an
Slide 27: 2016 Full-Year Industry Outlook
2016 Full-Year Industry Outlook Full-Year 2016 Guidance Western USA Europe Consumer ~1% ~3% Replacement Consumer OE ~2% ~2%(a) Commercial ~1% ~3% Replacement Commercial ~(9%) ~1%(a) OE (a) The quoted industry numbers for Western Europe for Consumer OE and for Commercial OE are for total EMEA and not
Slide 28: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin $ In millions Three Months Ended Twelve Months Ended December 31, December 31, 2015 2014 2015 2014 2013 2012 2011 2010 Total Segment Operating Income $ 476 $ 359 $ 2,022 $ 1,712 $ 1,580 $ 1,248 $ 1,368 $ 917 Rationalizations (32) (15) (114) (95) (
Slide 29: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt Pro Forma to reflect Euro Note Redemption $ In millions Pro Forma December 31, September 30, December 31, 2015 2015 2014 Long-Term Debt and Capital Leases $ 5,120 $ 5,591 $ 6,216 Notes Payable and Overdrafts 49 41 30 Long-Term Debt and Capital Leases Due Wi
Slide 30: EBITDAP, Adjusted Debt & Leverage Ratio Reconciliations
EBITDAP, Adjusted Debt & Leverage Ratio Reconciliations Pro Forma to reflect Euro Note Redemption $ In millions Year Ended December 31, 2015 2014 Net Income $376 $2,521 Interest Expense 412 428 Income Tax (Benefit) Expense 232 (1,834) Depreciation and Amortization 698 732 Pension Expense(a) 135 158
Slide 31: 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. Year Ended $ In millions Dec. 31, Dec. 31
Slide 32: wo Oe a On
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