The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2020 Earnings Presentation
34 slides from The Goodyear Tire & Rubber's earnings presentation, Jul 31, 2020
Slide 1: Second Quarter 2020 Conference Call
é a4 GOODSYEAR Second Quarter 2020 Conference Call July 31, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements GOODSYEAR 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 DELIVER SUSTAIN EAND PROFIT GROWTH WHILEINCREASING THE VALUE OF OUR BRAND INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE ACTWITH Build trust and earn the confidence of athers th INTEGRITY — hor r ( ct Our Good Na ENERGIZE menvironme THETEAM | lIness ar PROMOTE COLLABORATION BE AGIL
Slide 4: Global Volume Recovery
Global Volume Recovery GOODFYEAR Total Sales Volume: 2020 vs 2019 Americas Sales Volume: 2020 vs 2019 Total Units Total Units EMEA Sales Volume: 2020 vs 2019 Asia Sales Volume: 2020 vs 2019 Total Units Total Units -17% -36% -54% April
Slide 5: Reflecting on Q2 2020
Reflecting on Q2 2020 GOODFYEAR. Positives Negatives Significantly reduced free cash flow usage Global vehicle production (slow restart) nelatineie initial tonecast Wholesalers / dealers destocking inventory Malia Ee aa Naas eae Temporary store closings in mass merchant / Aligned inventory with indu
Slide 6: E-Commerce / Mobile Install / Touch Free Service
E-Commerce / Mobile Install / Touch Free Service G00D#YEAR. ¢ New sales channels experiencing accelerated consumer adoption - E-commerce +15% YOY — Mobile install +150% YOY ¢ U.S. Retail stores seeing improving demand trends; increased profitability YOY in June Benefiting from best-in-class distribu
Slide 7: Leadership in Commercial Truck
Leadership in Commercial Truck GOODFYEAR * Goodyear Commercial Truck Service Centers sales increased high-single digits in 1H GOOD, YEAR ¢ Selected by Ryder to be Preferred Tire Supplier in North America ¢ Launched e-commerce partner program with Convoy ¢ EMEA signed first contract for new G v ; Goo
Slide 8: Financial Review
Financial Review avitgaooD
Slide 9: Q2 Response Actions
Q2 Response Actions GOODFYEAR ¢ Salaried payroll reduced by ~$65 million ¢ Manufacturing costs reduced by more than 35%; factories restarted with minimal disruption * Modified project plans to reduce capex by over $100 million ¢ Other SAG reduced by more than $75 million * Cash usage less than $500
Slide 10: Second Quarter 2020 Income Statement
Second Quarter 2020 Income Statement Terms: US$ millions (except EPS) Units Net Sales Gross Margin SAG Segment Operating Income (Loss) Segment Operating Margin” Goodyear Net Income (Loss) Goodyear Net Income (Loss) Per Share Weighted Average Shares Outstanding Basic Weighted Average Shares Outstandi
Slide 11: Second Quarter 2020 Segment Operating Results
Second Quarter 2020 Segment Operating Results GOODFYEAR Terms: US$ millions — ($338) ae sol ($299) Volume $96 ($35) $14 ($53) $2 ($37) cr = in ce core Currency NE sts) Currency Raw Cost Other'*) Q2 j\ Materials) Savings aat ($637) ($35) $61 Total Volume Impact Net P/M vs Raws Net Cost Savings Unabso
Slide 12: Second Quarter 2020 Balance Sheet
Second Quarter 2020 : Balance Sheet GOOD; YEAR. Terms: US$ millions March 31, December 31, June 30, 2020 2019 2019 Cash and cash equivalents 917 Accounts receivable 2,473 Inventories 3,091 Accounts payable - trade (2,750) Working capital 2,814 Total debt” 6,737 Net debt” $ 5,820 (a) Working capital
Slide 13: Second Quarter 2020 Liquidity Profile
Second Quarter 2020 4 ‘ ita ‘ GOOD, YEAR. Liquidity Profile “ Terms: US$ billions $3.9 Available Credit Lines Pees _availabl Cash & Equivalents $1.0 June 30, 2020 (2) Total liquidity is comprised of $1,006 million of cash and cash equivalents, as well as $2,938 million of unused availability under v
Slide 14: Second Quarter 2020 Maturity Schedule
Second Quarter 2020 GoopsVEAR Maturity Schedule A Terms: US$ millions i Undrawn Credit Lines Funded Debt $2,000! $7620) 135 ———| 2020 2021 2022 2023 2024 2025 2 2026 Note: Based on June 30, 2020 balance sheet values and excludes notes payable, finance and operating leases and other domestic and fore
Slide 15: Second Quarter 2020 Free Cash Flow
Second Quarter 2020 Free Cash Flow GOODSYEAR Terms: US$ millions Three Months Ended Trailing Twelve Months June 30, Ended 2020 2019 June 30, 2020 Net Income (Loss) (703) $ (1,629) Depreciation and Amortization 276 878 Change in Working Capital (38) 295 Pension Expense 30 125 Pension Contributions an
Slide 16: Second Quarter 2020 - Segment Results: Americas
Second Quarter 2020 - Segment Results Americas Terms: US$ millions Units in millions Second Quarter 2020 2019 Change Units 8.5 17.1 (50.4)% Net Sales $1,134 $1,971 (42.5)% Operating Income (Loss) ($287) $134 (314.2)% Margin (25.3)% 6.8% GOODZYEAR. * Consumer and commercial volume reflect lower indus
Slide 17: Second Quarter 2020 - Segment Results: EMEA
Second Quarter 2020 - Segment Results Europe, Middle East & Africa GOODFYEAR Terms: US$ millions Units in millions Second Quarter 2020 2019 Change * Consumer and commercial volume reflect lower industry demand (COVID-19) Units 7.3 13.3 (44.5)% ¢ EU consumer replacement volume also impacted by planne
Slide 18: Second Quarter 2020 - Segment Results: Asia Pacific
Second Quarter 2020 - Segment Results Asia Pacific GOODSYEAR Terms: US$ millions Units in millions Second Quarter 2020 2019 Change * Consumer and commercial volume reflect lower industry demand (COVID-19) Units 46 7.0 (35.6)% * Delivered strong growth in China consumer Net Sales $334 (35.8)% replace
Slide 19: Q3 2020 Outlook
Q3 2020 Outlook GOODZYEAR. ¢ Assume industry down ~20%, similar to June ¢ Production volume forecasted down ~5M units ¢ Retail, chemical and aviation businesses will continue to be affected by market conditions (down $30M - $50M YOY) ¢ Raw material prices remain favorable; continue to expect full-ye
Slide 20: Full-Year 2020 Financial Assumptions
Raw Materials Interest Expense Other (Income) Expense Income Tax Depreciation & Amortization Global Pension Cash Contributions Working Capital Capital Expenditures Rationalization Payments Corporate Other (a) Excludes one-time charges and benefits from pension settlements and curtailments (b) Exclud
Slide 21: Appendix
Appendix avitgaooD
Slide 22: Modeling Assumptions
Modeling Assumptions GOODFYEAR. Volume Sensitivities (Impact on Goodyear's Annual Units in 000's) * 1% Ain U.S. Consumer OE Industry * 1% Ain U.S, Consumer Replacement Industry * 1% Ain U.S. Commercial OE Industry * 1% Ain U.S. Commercial Replacement Industry * 1% A in European Consumer OE Industry
Slide 23: Company Overview
Company Overview Industry Leader® Largest tire company in North America $14.7B in revenue 155M units 46 manufacturing facilities in 21 countries® 62K employees worldwide Innovation® 2 world-class innovation centers Innovation lab in San Francisco 7 tire proving grounds 5,200 patents 1,400 patents pe
Slide 24: Raw Materials
Raw Materials v Raw materials are ~44% of tire COGS ¥ ~68% of raw materials are influenced by oil prices - P&L impact lags spot rates by 1-2 quarters depending on commodity ¥ ~63% of raw materials are purchased in USD Y Customer agreements indexed to raw materials - OE customers - Certain large comm
Slide 25: Raw Material Overview
Raw Material Overview GOODZYEAR Terms: US$ millions serial Gaetal Outlook ¢ 2020 raw material costs ~$100 million benefit, excluding transactional foreign currency ¢ Brazilian Real and Turkish Lira drivers of unfavorable transactional foreign currency (2) impact to cost of goods sold versus prior pe
Slide 26: Feedstock Prices
Feedstock Prices PriceM ts of Key Feedstocks neo oenee encase * Prices) of key feedstocks remain well below Feb 2020 / pre-COVID-19 levels ¢ Natural rubber and carbon black prices are increasing, but the rate of recovery is less than we expected 8 8 i i ¢ Expect feedstock prices will gradually Natur
Slide 27: Price vs Raw Materials During the Great Recession
Price vs Raw Materials During the Great Recession GOOD#YEAR. Price and Raw Materials® Net Price vs Raw Materials® $354 a 2 g = bal 3 8 a E © » g = Margin Impact ($ Millions) $(200) ($200) ($162) m@ Raw Materials Price $(400) Qt ($400) 2009 2009 Pricing relative to raws resilient in economic downturn
Slide 28: Consumer Replacement Industry Fundamentals
Consumer Replacement Industry Fundamentals: >17” GOODSYEAR U.S. Replacement Industry Europool & Turkey Replacement Industry 2020 vs. 2019 Growth Rate®) 2020 vs. 2019 Growth Rate”) Q2 20 1H 20 USTMA Members (<17”) -35% ETRMA Members (<17”) Total -31% Total Non-Members -35% Non-Members Total U.S. -32%
Slide 29: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures GOODFYEAR. This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income (Loss) and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share (EPS), which are important financial
Slide 30: Reconciliation for Segment Operating Income (Loss)/Margin
Reconciliation for Segment Operating ? Income (Loss)/Margin GOOD/ YEAR Terms: US$ millions Three Months Ended June 30, 2020 2019 Total Segment Operating Income (Loss) $ (431) $ 219 Goodwill and Other Asset Impairments. (148) - Rationalizations (99) (4) Interest expense (85) (88) Other income (expens
Slide 31: Second Quarter 2020 Significant Items
Second Quarter 2020 Significant Items (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizations, Impairment of As Asset Write-offs, Discrete As TireHub Asset Sales ; Reported and Accelerated x Tax Items Adjusted Investment Depreciation Net Sales 2,144 Cost of Goods Sold 2,1
Slide 32: Second Quarter 2019 Significant Items
Second Quarter 2019 Significant Items GOoDZYEAR (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizations, Asset Write-offs, As and Accelerated As Reported Depreciation Adjusted Net Sales $ 3,632 - $ 3,632 Cost of Goods Sold 2,855 2,854 Gross Margin SAG Rationalizations Int
Slide 33: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt GOOD; YEAR. Terms: US$ millions March 31, December 31, 2020 2019 Long-Term Debt and Finance Leases 5,212 4,753 Notes Payable and Overdrafts 691 348 Long-Term Debt and Finance Leases Due Within One Year 621 562 Total Debt 6,524 5,663 Less: Cash and Cash Equi
Slide 34: GOODFSYEAR
GOODFSYEAR
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