The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2004 Earnings Presentation
23 slides from The Goodyear Tire & Rubber's earnings presentation, Nov 10, 2004
Slide 1: 2004 Third Quarter Conference Call
2004 Third Quarter Conference Call November 10, 2004 This presentation contains certain forward-looking statements based on expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed by such statements. These ris
Slide 2: Agenda
Agenda Bob Keegan • What’s new • What we have accomplished Rich Kramer • Third quarter 2004 financials - consolidated • Liquidity • Cash flow • Legacy cost update • Third quarter 2004 international and non-tire SBU performance Bob Keegan • Third quarter 2004 North American Tire SBU performance • Fou
Slide 3: Product Leadership Recognition
Product Leadership Recognition Fortera HL Dunlop Direzza Fortera SL 3 Dunlop Grandtrek AT20
Slide 4: Run-flat Update
Run-flat Update 4
Slide 5: Achievements/Challenges
Achievements/Challenges Achievements YTD Q404 and 2005 Challenges Revenue/tire up 11% (excl. exchange and FIN46) 0 OE cutbacks in North America Successful consumer product 0 Soft Chinese consumer market launches led by Assurance family 0 Tight commercial truck supply North American Tire positive seg
Slide 6: Third Quarter 2004 Performance
Third Quarter 2004 Performance ($ In millions, except EPS and gross margin) 2004 20031 Change Units 57.4 55.3 4% Net sales $4,714 $3,906 21% Gross margin 20.1% 18.2% 1.9 pts. Segment Operating Income $305 $151 102% Net Income/(Loss) $37 ($119) EPS, fully diluted $0.21 ($0.68) 1) as restated 6
Slide 7: Non-operating Items--Third Quarter
Non-operating Items--Third Quarter ($ in Millions) 2004 20031 Segment Operating Income $305 $151 Inter-SBU income (35) (23) Rationalizations, Asset Sales, & Accelerated Depreciation (32) (60) Foreign Currency Exchange (11) (11) Minority Interest in Net Income of Subsidiaries (18) (9) Interest Expens
Slide 8: Liquidity Update as of September 30, 2004
Liquidity Update as of September 30, 2004 ($ in millions) Global Domestic1 Cash $1,601 $796 Available under revolving credit facilities 630 630 Undrawn lines 201 - Total Liquidity $2,432 $1,426 1 Borrower and Guarantors in U.S. and Canada 8
Slide 9: Financial Restructuring Plan
Financial Restructuring Plan Status: Stage 1: Improve Near Term Liquidity and Bank Maturity Completed • April 2003 restructuring • Raised new $1.3 billion asset-based facility Stage 2: Improve Liquidity Completed • $650 million senior secured notes in 1Q 2004 • $650 million new ABL Term Loan Tranche
Slide 10: First Nine Months Cash Flow
First Nine Months Cash Flow ($ in millions) 2004 2003 Net loss $(12) $(372) Depreciation/amortization 460 461 Rationalizations/asset sales 30 46 Fire loss deductible expense 12 - Minority interest and equity earnings 39 36 Cash flow from sale of acct. receivables 41 (795) Changes in assets and liabi
Slide 11: Legacy Cost Update
Legacy Cost Update Legacy Legacy Costs Costs ($ in millions) YTD 2003 2004 2005 Pension expense $330 $284 Post retirement benefit expense 201 239 Domestic pension contribution $160 $425 to $450 Contributed YTD $ 74 Return on pension assets YTD 3.8% Sensitivity Sensitivity Discount Rate:
Slide 12: Third Quarter Segment Operating Results
Third Quarter Segment Operating Results ($ in millions) 70 64 60 $305 49 44 44 45 34 27 $151 19 14 10 14 (37) North European Eastern Latin Asia/Pacific Engineered Chemical Total America Union Europe, America Products Middle East & Africa 2003 2004 Total Segment Operating Income1 more than doubled 1)
Slide 13: 2004 Performance – European Union
Third Quarter 2004 Performance – European Union (in millions) 2004 2003 Change 16.3 15.8 3% Units 15.8 16.0 -1% 20% Net sales $1,085 $986 10%176% Segment Operating Income $70 $49 42% Sales Profitability Consumer replacement industry up Price/mix accounted for $22 million 3%; Goodyear has improved mi
Slide 14: 2004 Performance – Eastern Europe, Middle East & Africa
Third Quarter 2004 Performance – Eastern Europe, Middle East & Africa (in millions) 2004 2003 Change Units 5.2 4.8 8% Net sales $345 $283 22% Segment Operating Income $60 $44 38% Sales Profitability Market share gains in consumer and Record quarterly segment operating commercial markets income Favor
Slide 15: 2004 Performance – Latin America
Third Quarter 2004 Performance – Latin America (in millions) 2004 2003 Change Units 4.9 4.7 5% Net sales $316 $262 21% Segment Operating Income $64 $44 45% Sales Profitability Record quarterly sales Positive price/mix impact of $30 million Price increases holding 0 Raw material costs Capacity expans
Slide 16: 2004 Performance – Asia/Pacific
Third Quarter 2004 Performance – Asia/Pacific (in millions) 2004 2003 Change* Units 4.8 3.2 0% Net sales $319 $140 8% Segment Operating Income $19 $10 33% *excl. FIN 46 Sales Profitability 0 Slower growth in China, Indonesia and Six Sigma programs, along with Philippines productivity improvements, c
Slide 17: 2004 Performance – Engineered Products
Third Quarter 2004 Performance – Engineered Products ($ in millions) 2004 2003 Change Net sales $377 $300 26% Segment Operating Income $34 $14 149% Sales Profitability Record quarterly sales Record quarterly segment operating North American market significant income contributor Higher volume account
Slide 18: 2004 Performance – Chemical
Third Quarter 2004 Performance – Chemical ($ in millions) 2004 2003 Change Net sales $396 $307 29% Segment Operating Income $45 $27 66% Sales Profitability Record quarterly sales Record quarterly segment operating 10% increase in tire polymer demand income 6% increase in natural rubber demand Price
Slide 19: 2004 Performance – North American Tire
Third Quarter 2004 Performance – North American Tire ( in millions) 2004 2003 Change* Units 26.7 26.6 0% Net sales $2,071 24.7 $1,792 24.8 7% 0% Segment Operating Income $14$1,764 ($37) $1,592 6% *excl. FIN 46 Sales Profitability Revenue/tire up 7% (excluding impact of Profitable for second consecut
Slide 20: Fourth Quarter 2004 Update
Fourth Quarter 2004 Update Industry Original Equipment Replacement Forecast Consumer Commercial Consumer Commercial North America (5 – 6)% ~30% 0% (.5 – 1)% European 0% 7 - 9% 0 - 1% 0% Union North America Continued demand for Goodyear branded and new products Selective private label business strate
Slide 21: 2005 Outlook
2005 Outlook Industry Original Equipment Replacement Forecast Consumer Commercial Consumer Commercial North America 1-1.5% >15% 2 - 2.5% 2.5 - 3% European 0 - 1% 5 - 10% 2 - 2.5% 1 - 1.5% Union Dunlop, light truck and SUV tire introductions Cost initiatives 0 Raw material costs rising 4 to 6% 0 Inte
Slide 22: Appendix: FIN 46 Consolidation
Appendix: FIN 46 Consolidation ($ in Millions) Q3 2004 YTD 2004 T&WA Sales $147 $373 Segment Operating Income $0 $0 SPT Units 1.6 4.7 Sales $168 $523 Segment Operating Income $5 $11 22
Slide 23: Non-operating Items--Nine Months
Non-operating Items--Nine Months ($ in Millions) 2004 20031 Segment Operating Income $811 $340 Inter-SBU income (99) (59) Rationalizations, Asset Sales & Accelerated Depreciation (66) (159) Foreign Currency Exchange (14) (30) Minority Interest in Net Income of Subsidiaries (44) (32) Interest Expense
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