The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2019 Earnings Presentation
28 slides from The Goodyear Tire & Rubber's earnings presentation, Oct 25, 2019
Slide 1: Third Quarter 2019 Conference Call
GOODSYEAR Third Quarter 2019 Conference Call October 25, 2019 4 i
Slide 2: Forward-Looking Statements
Forward-Looking Statements GOODFYEAR 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, tha
Slide 3: Our Goal
OURSGOAL WTH WHILE INCRI DELIVER SUSTAINABI UEAND PROFIT GRO} G THE VALUE OF OUR BRAND INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE | HOW WE'LL WORK | ACTWITH = E ( ce of others thr INTEGRITY y Our Good Na ENERGIZE THE TEAM PROMOTE COLLABORATION i Cc OPERATIONAL EXCELLENCE BE AGILE Embra DELIV
Slide 4: Reflecting on Q3 2019 Results
Reflecting on Q3 2019 Results GOODSYEAR Positives Negatives Strong volume growth in China, led by * Weak global light vehicle production double-digit increases in consumer OE & replacement * Soft demand and distribution Price versus raw materials positive for challenges in Europe the first time in 3
Slide 5: Consumer Replacement Industry Fundamentals: 17"+
Consumer Replacement Industry Fundamentals: 217” GOODFYEAR U.S. Replacement Industry Europool & Turkey Replacement Industry 2019 vs. 2018 Growth Rate®) 2019 vs. 2018 Growth Rate) USTMA Members (<17”) ETRMA Members (<17”) Total Non-Members Total Non-Members Total U.S. Total EU + Turkey (a) Source: US
Slide 6: Assurance MaxLife
wi 3 fa 2 Assurance MaxLife Top ranked Standard Touring All- Season tire on a leading U.S. e-commerce web site based on feedback from consumers with over 146,000 miles of real-world use
Slide 7: Financial Review
Financial Review avisgaooD
Slide 8: Income Statement
Third Quarter 2019 Income Statement GOODZYEAR. Terms: US$ millions Three Months Ended (except EPS) September 30, September 30, 2019 2018 Change Units 40.3 40.5 (1)% Net Sales 3,802 3,928 (3)% Gross Margin 22.0% 22.9% (0.9) pts SAG 572 553 3% Segment Operating Income” 294 362 (19)% Segment Operating
Slide 9: Segment Operating Results
Third Quarter 2019 Segment Operating Results GOODZYEAR Terms: US$ millions ($10) ($12) ($45) Volume — Ynabsorbed ($4) ($16) Fixed Cost Cost Raw Price/Mix (») Savings () Materials) } \ J \ Y ($22) ($21) ($5) Total Volume Impact Net P/M vs Raws Net Cost Savings Includes impact of $21M indirect tax set
Slide 10: Balance Sheet
Third Quarter 2019 Balance Sheet Terms: US$ millions Cash and cash equivalents Accounts receivable Inventories Accounts payable - trade Working capital Total debt” Net debt” September 30, 2019 June 30, 2019 December 31, 2018 GOODZYEAR. September 30, 2018 868 2,748 2,965 (2,651) 917 2,473 3,091 (2,75
Slide 11: Liquidity Profile
Third Quarter 2019 - Liquidity Profile Terms: US$ billions $3.4) Available Credit Lines Cash & Equivalents September 30, 2019 (a) Total liquidity comprised of $868 million of cash and c GOODZYEAR.
Slide 12: Free Cash Flow
Third Quarter 2019 Free Cash Flow Terms: US$ millions Three Months Ended Trailing Twelve September 30, Months Ended 2019 2018 September 30, 2019 Net Income $ 212 Depreciation and Amortization 773 Change in Working Capital (355) Pension Expense 127 Pension Contributions and Direct Payments (69) Provi
Slide 13: Segment Results: Americas
Third Quarter 2019 - Segment Results Americas Terms: US$ millions Units in millions Third Quarter 2019 2018 Change Units 17.9 17.8 0.9% Net Sales $2,049 $2,107 (2.8%) Operating neces $175 $194 (9.8%) Margin 8.5% 9.2% GOODFZYEAR. ¢ Strong growth in replacement more than offset weakness in OE * Consum
Slide 14: Segment Results: Europe, Middle East & Africa
Third Quarter 2019 - Segment Results Europe, Middle East & Africa GOODFYEAR. Terms: US$ millions Units in millions Third Quarter * Reduced volume driven by lower consumer 2019 2018 Change shipments Units 14.5 15.2 (5.6%) ¢ Consumer replacement business impacted by weak market conditions in Europe an
Slide 15: Segment Results: Asia Pacific
Third Quarter 2019 - Segment Results Asia Pacific Terms: US$ millions Units in millions Third Quarter 2019 2018 Units 79 Ties} Net Sales $548 $531 Operating Income $53 $57 Margin 9.7% 10.7% GOODFZYEAR. ¢ Strong growth in replacement and OE ¢ China consumer OE and replacement shipments both up double
Slide 16: Americas, EMEA and Asia Pacific Outlook
Americas Asia Pacific (+) Price > Raw Materials (+) Price > Raw Materials (+) Volume (+) Volume (-) Unabsorbed Overhead (+) Unabsorbed Overhead (-) Inflation (wages, utilities, ee etc.) (-) India OE (-) Brazilian VAT settlement (non-recurrence) Improving fundamental backdrop b a o aie sccaetinaacie
Slide 17: Price vs Raws Over Time: Current Cycle to Prior Cycle
Price vs Raws Over Time: Comparing Current Cycle to Prior Cycle GOODFYEAR Price vs Raw Materials‘) from price in 2011 Full recovery by 2013 raw material prices Q1 2017) a c 2 a iad & 2 G £ 8 . ic} a2] G a — ® Steeper raw material increase in 2010 36 months (a) Price changes versus prior year; exclud
Slide 18: 2019 Outlook - Other Financial Assumptions
2019 Outlook - Other Financial Assumption urrent 2019 FY Assumpti Interest Expense ~$350 million Financing fees: ~$40 million Cone pcome) Expense Global pension related (excluded from SOl)): $95 - $120 million Expense: ~25% of global pre-tax operating income; Cash: ~25% of global pre-tax operating i
Slide 19: Appendix
Appendix avisgaooD
Slide 20: Modeling Assumptions
Modeling Assumptions Volume Sensitivities (Impact on Goodyear's Annual Units in 000's) 1% A in US. Consumer OE Industry 1% A in U.S. Consumer Replacement Industry 1% A in U.S. Commercial OE Industry 1% A in U.S. Commercial Replacement Industry 1% A in European Consumer OE Industry 1% A in European C
Slide 21: 2019 Full-Year Industry Outlook
2019 Full-Year Industry Outlook ‘Full-Year 2019 G Western Europe Consumer Replacement Commercial OE (2) For replacement, Western Europe is Europool and Turkey; for OE, Western Europe is total EMEA - 3%
Slide 22: Maturity Schedule
Third Quarter 2019 - Maturity Schedule GOODSYEAR Terms: US$ millions i, 1 Undrawn Credit Lines | | Funded Debt 2019 2020 2021 2022 2023 2024 2 2025 Note: Based on September 30, 2019 balance sheet values and excludes notes payable, finance and operating leases and other domestic and foreign debt (a)
Slide 23: Use of Historical and Forward-Looking Non-GAAP Financial Measures
Use of Historical and Forward-Looking Non-GAAP Financial Measures This presentation contains historical and forward-looking non-GAAP financial measures, including Total Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income and Adjusted Diluted Earnings Per Share (EPS), which are i
Slide 24: Reconciliation for Segment Operating Income/Margin
Reconciliation for Segment Operating Income/Margin Terms: US$ millions Total Segment Operating Income Rationalizations Interest expense Other income (expense) Asset write-offs and accelerated depreciation Corporate incentive compensation plans Retained expenses of divested operations Other Income be
Slide 25: Significant Items
Third Quarter 2019 Significant Items (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizations, Indirect Tax Asset Write-offs, Beaumont, Settlements and and Accelerated Texas Flood Discrete Tax As Reported Depreciation Effect Items As Adjusted Net Sales Cost of Goods Sold G
Slide 26: 2018 Significant Items
Third Quarter 2018 Significant Items GOODZYEAR (After Tax and Minority Interest) Terms: US$ millions, (except EPS) Rationalizations, Gain on TireHub | Indirect Tax Legal Claims Asset Write- Transaction, Net ff Settlements and Related to of Tr: Discrete Tax Pension Discontinued Accelerated As Reporte
Slide 27: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt cGoop#vear Terms: US$ millions September 30, December 31, September 30, 2019 2018) 2018!) Long-Term Debt and Finance Leases 5,580 5,110 5,604 Notes Payable and Overdrafts 486 410 445 Long-Term Debt and Finance Leases Due Within One Year 610 243 471 Total De
Slide 28: GOODFYEAR.
GOODFYEAR.
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