The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q4 2021 Earnings Presentation
35 slides from The Goodyear Tire & Rubber's earnings presentation, Feb 11, 2022
Slide 1: Fourth Quarter 2021 Conference Call
FOURTH QUARTER 2021 CONFERENCE CALL FEBRUARY 11, 2022 GOODZYEAR
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: Goodyear: Enabling Mobility
GOODJYEAR. ENABLING MOBILITY HOW WE WIN HOW WE WORK ACT WITH We build trust and earn confidence throug esty and respect INNOVATION SALES & MARKETING INTEGRITY Wed the right thing, and we Protect Our Good Name EXCELLENCE EXCELLENCE We create leading We capture the value of our ENERGIZE We create an e
Slide 4: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS ¢ Net sales growth of 38% compared with the fourth quarter of 2020, 12% growth excluding the Cooper Tire transaction ¢ Fourth quarter Goodyear net income of $553 million; adjusted net income of $162 million * Merger-adjusted segment operating income of $398 million, up 32%
Slide 5: Reflecting on Fourth Quarter 2021
REFLECTING ON FOURTH QUARTER 2021 meee Positives ¢ Price/mix benefits continued to outpace « Manufacturing cost inflation (including energy; accelerating raw material cost increases COLA adjustments) * Continued volume recovery driven by global ¢ Higher transportation costs consumer replacement busi
Slide 6: Consumer Replacement Industry
CONSUMER REPLACEMENT INDUSTRY U.S. Replacement Industry!) Europool & Turkey Replacement Industry (>) 0421 YTD 21 0421 YTD 21 USTMA Members (217") ETRMA Members (217") USTMA Members (<17”) ETRMA Members (<17") Total Total Non-Members Non-Members Total U.S. Total EU & Turkey Goodyear (217") ©) Goodyea
Slide 7: Sensing the Future
@ e TACTILE @ @ MOBILITY SENSING THE FUTURE autofleet STARSHIP . wd Gatik ooncien Connected Mobility Materials Transport Infrastructure Technologies Autonomous Electric seed Aero = events
Slide 8: Sustainability Ambitions
SUSTAINABILITY AMBITIONS f F¢ COMMITTED TO ACHIEVING NET-ZERO GREENHOUSE GAS EMISSIONS BY 2050 CH, N.0 ¢ Goal supported by 2030 emission-reduction targets based on SBTIi standards * Adoption of TCFD-aligned disclosures planned for 2022 COMMITTED TO CREATING 100% SUSTAINABLE-MATERIAL TIRE BY 2030 * A
Slide 9: Financial Review
FINANCIAL REVIEW GOODSYEAR
Slide 10: Fourth Quarter 2021 Income Statement
Terms: in millions (except EPS) Three Months Ended December 31, December 31, 2021 2020 Change INCOME Units 48.6 37 29% Net Sales $ 5,054 $ 3,656 38% STATEM ENT Gross Margin 21.5% 23.6% (2.1)pts SAG $ 750 $ 605 24% FOURTH QUARTER Merger-Adjusted Segment Operating Income” $ 398 $ 302 2021 Merger-Adjus
Slide 11: Segment Operating Results Q4 2021 versus 2020
SEGMENT OPERATING RESULTS FOURTH QUARTER 2021 VERSUS 2020 Terms: US$ millions $419 ($308) Includes staffing/training & energy and transportation in excess of general inflation Retail. warehousing, Mone, =) aa ($81) recurrence of fr + _ Net Cooper acd + ~I legal settlement | Raw eo | $156 ($7) | g3a1
Slide 12: Segment Operating Results Q4 2021 versus 2019
SEGMENT OPERATING RESULTS FOURTH QUARTER 2021 VERSUS 2019 Terms: US$ millions $452 ($263) = Other ti businesses a ~~ ~~~ —sSK ia ri Net Cooper $149 fo (s114) |__ $156 ($7) Costs Cost Triggered I gg! rateict Savings ($6) | by Cooper Merger Inflation ©) “Currency | $242 ($30) i a | oc | Cooper 04 Volu
Slide 13: Fourth Quarter 2021 Balance Sheet
Terms: USS millions Includes impact of Cooper transaction a December 31, September 30, December 31, BALANCE SHEET FOURTH QUARTER _ _ — 2021 Cash and cash equivalents $ 1,088 $ 1,187 $ 1,539 Accounts receivable $ 2,387 S$ 3193 S$ 1,691 Inventories 3,594 3,443 2,153 Accounts payable - trade (4,148) (3
Slide 14: Cash Flow
Net Income Depreciation and Amortization Change in Working Capital Pension Expense Pension Contributions and Direct Payments Provision for Deferred Income Taxes Rationalization Payments Other* Cash Flow from Operating Activities(GAAP) Capital Expenditures Free Cash Flow (non-GAAP) Cash Flow from Inv
Slide 15: Segment Results - Americas
SEGMENT RESULTS - AMERICAS Terms: US$ millions Units in millions ( Fourth Quarter \ 2021) 2020 Change Units 255 175 45.1% NetSales $3,041 $1,926 57.9% Operating =» -g308 «= $1906 2.1% Income Margin 10.1% 9.9% (6) The Cooper transaction closed on June 7, 2021, and segment results include Cooper opera
Slide 16: Segment Results - EMEA
SEGMENT RESULTS - EMEA Terms: US$ millions Units in millions / \ / + EUconsumer replacement business benefited \ Fourth Quarter from aligned distribution, temporary volume 2021/4) 2020 Change losses being recovered Units 13.8 12.4 11.2% + OE volume impacted by semiconductor shortage Net Sales $1,385
Slide 17: Segment Results - Asia Pacific
SEGMENT RESULTS - ASIA PACIFIC ft Terms: US$ millions Units in millions f Fourth Quarter \ / \ 20211) 2020 Change + Volume growth reflects the addition of Cooper Tire business (primarily OE) Units 9.5 78 19.9% - Volume up 0.2 million units excluding Cooper Net Sales $628 $837 6.9% + Record consumer
Slide 18: Business Outlook
01 BUSINESS OUTLOOK ¢ Markets continue stabilizing; volume above 01 2021 (pro forma) ') * Positive price/mix vs. raw material costs ¢ Continued inflationary cost pressures, including higher transportation, labor and energy costs - Transportation cost YoY impact $20 to $30 million higher than 04 ¢ In
Slide 19: 2022 Outlook: Other Financial Assumptions
2022 OUTLOOK: OTHER FINANCIAL ASSUMPTION Current Assumpt Raw Materials $700 to $800 million higher than prior year in 1H, net of raw material cost savings ‘*) Interest Expense $450 to $475 million °) Other (Income) Expense Global pension Ryne eetipeaprener to $40 million’) Income Tax Cash: $150 to $
Slide 20: Appendix
APPENDIX GOODSYEAR
Slide 21: Legacy Goodyear Modeling Assumptions
LEGACY GOODYEAR MODELING ASSUMPTIONS Volume Sensitivities Pricing Translational Foreign Currency (Impact on Goodyear sAnnual Units in 000's) (Annual Impact of Effective Pricing Yield) (Annual | mpact on FX portion of SO! Walk) © 1% Ain U.S. Consumer OE Industry “85 * 1% in US. Consumer Replacement b
Slide 22: Legacy Goodyear Raw Materials
LEGACY GOODYEAR RAW MATERIALS & Raw materials are ~47%' of tire COGS ~67% of raw materials are influenced by oil prices « P&Limpact lags spot rates by 1-2 quarters depending on commodity ~63% of raw materials are purchased in USD Customer agreements indexed to raw materials + OE customers * Certain
Slide 23: Full-Year 2021
FULL-YEAR 2021 Wd (2) Allpercentages are approximate
Slide 24: Legacy Goodyear Raw Material Overview
LEGACY GOODYEAR RAW MATERIAL OVERVIEW 2022 Outlook (>) Raw Material Costs!) $308 Raw material costs expected to increase $700 to $800 million in the first half of 2022, net of raw material cost savings $22 07 88 * Includes adverse transactional foreign currency impact of 01 02 03 04 O1 02 03 04 01 0
Slide 25: Maturity Schedule
Terms: USS millions 2 Undrawn Credit Lines Funded Debt MATURITY SCHEDULE FOURTH QUARTER 2021 2022
Slide 26: Pension Update
PENSION UPDATE Total Global Cash Flow Impact ©)) — Global Unfunded Obligations) Global Pension Expense )(c) $684 $606 $1 $132 $17 $7 $70-$80 $70-$80 $70-$80 = $270 $25-$50 $25-$50 $25-$50 — Sze Bass ez PRE, ol | | i 2019 2020 2021 42022E 2023E 2024E 2019 2020 2021 2022E 2023E 2024E 2019 2020 2021 20
Slide 27: Liquidity Profile
Terms: USS billions LIQUIDITY $5.41 PROFILE FOURTH QUARTER 2021 December 31, 2021 {s) Total liquidity is comprised of $1,088 million of cash and cash equivalents, as well as $4,345 million of unused availability under verious credit agreements
Slide 28: Merger Synergies
MERGER SYNERGIES Original Forecast Upgraded Outlook (February 2021) (November 2021) ~§$250M Mix & Volume | Core Cost Synergies Estimated costs to achieve synergies: $150 to $175 million Estimated costs to achieve synergies: ~$200 million EXPECT TO ACHIEVE $250 MILLION OF RUN-RATE SYNERGIES BY MID-20
Slide 29: Working Capital Improvement and Tax Position
Estimated one-time working capital savings of ~$250 million from improvement in cash conversion cycle Accelerated utilization of available Goodyear tax attributes with estimated net present value of $450 million or more WORKING CAPITAL IMPROVEMENT AND ABILITY TO LEVERAGE GOODYEAR’S TAX POSITION EXPE
Slide 30: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income and Margin, Merger-Adjusted Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share(EP
Slide 31: Reconciliation for Merger-Adjusted Segment Operating Income
RECON CILIATION Terms: USS millions FOR MERGER- Three Months Ended ADJ USTED Merger-Adjusted Segment Operating Income $ a $ — $ a SEGMENT Incremental Amortization of Intangible Assets (7) . . OPERATING i comm Interest Expense (107) (78) (79) INCOME / Other Income (Expense) (21) (26) (24) Asset Write
Slide 32: Fourth Quarter 2021 Significant Items
FOURTH QUARTER 2021 SIGNIFICANT ITEMS Tetewe NOE mr Rationalizations, . Winter Storm Impact Indirect Tax (except EPS) is Pension As Asset Write-offs, Settlement Assetand and Insurance Settlements and As Reported and Accelerated Charges Other Sales Recoveries from Discrete Tax Adjusted Depreciation T
Slide 33: Fourth Quarter 2020 Significant Items
FOURTH QUARTER 2020 SIGNIFICANT ITEMS Terms: US$ millions (except EPS) Net Sales Cost of Goods Sold Gross Margin SAG Rationalizations Interest Expense Other(Income)Expense Pre-tax Income Taxes Minority Interest Goodyear Net Income EPS Rationalizations, Indirect Tax Environmental Legal Claims As Asse
Slide 34: Reconciliation for Total Debt and Net Debt
Terms: USS millions RECONCILIATION FOR TOTAL December 31, September 30, December 31, DEBT AND NET sore oe D E B T Long-Term Debt and Finance Leases $ 6648 S$ 713 =«$ 5,432 Notes Payable and Overdrafts 406 497 406 Long-Term Debt and Finance Leases Due Within One Year 343 651 152 Total Debt $ 7.337 $
Slide 35: Goodyear
GOODFSYEAR
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