The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q4 2023 Earnings Presentation
31 slides from The Goodyear Tire & Rubber's earnings presentation, Feb 13, 2024
Slide 1: Investor Letter Q4 2023
INVESTOR LETTER Q4 2023 Feb. 12, 2024
Slide 2: Table of Contents
TABLE OF CONTENTS 03 Goodyear Forward 05 Financial Results 08 SBU Results 13 Outlook 15 End Notes 15 Conference Call Details 16 Important Disclosures Forward-Looking Statements Non-GAAP Financial Measures Use of Hyperlinks 17 Reference Tables Financial Tables (Unaudited) Other Data Tables Reconcilia
Slide 3: Goodyear Forward: Driving Shareholder Value
FORWARD DRIVING SHAREHOLDER VALUE In November of 2023, we announced a transformation plan – “Goodyear Forward” – which leverages our existing strengths to position us for future growth with higher profitability and greater financial flexibility. BY THE END OF 2025 OUR PLAN IS EXPECTED TO DELIVER … S
Slide 4: Goodyear Forward by the Numbers
FORWARD BY THE NUMBERS Goodyear Forward is a transformation plan designed to optimize our portfolio, deliver significant margin expansion and reduce leverage to drive substantial shareholder value creation. During 2023, we began laying the foundation to drive the execution of that plan. We expect th
Slide 5: Financial Results: Tire Units and Net Sales
FINANCIAL RESULTS Fourth quarter earnings were ahead of the expectations we outlined during our announcement on November 15, 2023, driven by strong operating results in Americas and Asia Pacific. These results reflected our strongest price/mix versus raw materials since the fourth quarter of 2012. A
Slide 6: Financial Results: Segment Operating Income Drivers
FINANCIAL RESULTS Segment Operating Income Drivers Reported fourth quarter segment operating income was $383 Net cost savings of $10 million was driven by the benefits of lower million, up $147 million compared to prior year. Excluding the impact transportation rates, which exceeded the negative imp
Slide 7: Balance Sheet and Cash Flows
FINANCIAL RESULTS Financial Results Total Debt/Net Debt Balanc Balance Sheet and Cash Flows TOTAL DEBT $7,890 $7,624 ($266m) YoY At the end of the fourth quarter, total debt was $7.6 billion compared to $7.9 billion at the same time last year. Net debt of $6.7 billion was relatively unchanged. $6,66
Slide 8: SBU Results - Americas
SBU RESULTS - AMERICAS Fourth Quarter Summary Americas fourth quarter segment operating margin of 10.1% was the highest quarterly result since 2021. This is evident in our consumer replacement margins, which expanded significantly during the fourth quarter. Americas volume was 8.8% lower than prior
Slide 9: SBU Results - Americas Tire Units
SBU RESULTS - AMERICAS SBU - Americas Tire Units Tire Volumes TIRE UNITS Overall volume in Americas was down 2.3 million units, or 8.8% below (2.3)m fourth quarter 2022 levels. Replacement volume was 8.9% lower 25.4 (1.9 million units), while OE volume was 8.6% lower (0.4 million units). 23.1 • The
Slide 10: SBU Results - EMEA
SBU RESULTS - EMEA Fourth Quarter Summary EMEA’s earnings recovered compared to a low base in the prior year. Results reflect continued destocking in consumer replacement, which was more than offset by strong price/mix performance and the benefit of lower raw material costs. The European consumer re
Slide 11: SBU Results - EMEA Tire Volumes
SBU RESULTS - EMEA Tire Volumes Sell-Out Activity Overall volume in EMEA was down 0.4 million units, or 3.7% below Industry retail sales to end consumers (i.e., “sell out”) increased fourth quarter 2022 levels. Replacement volume was 5.8% lower slightly during the quarter. Goodyear-branded sell-out
Slide 12: SBU Results - Asia Pacific
SBU RESULTS - ASIA PACIFIC Fourth Quarter Summary Segment Operating Income Asia Pacific delivered quarterly segment operating income Segment operating income in Asia Pacific was $68 million compared margin above 10% for the first time since 2018. The region’s solid with $37 million a year ago – an i
Slide 13: Outlook: First Quarter 2024
OUTLOOK First Quarter 2024 Volume • Global unit volumes are expected to be down approximately Volume Considerations for the First Quarter 2%, driven by replacement. Raw Materials First quarter industry volume is expected to reflect growth in mature • We expect raw material costs to be lower than pri
Slide 14: Outlook: Other Financial Assumptions
OUTLOOK Other Financial Assumptions Additional financial assumptions for 2024 follow. Current Assumption Raw Materials 3(a) Based on current spot rates, H1 ~$375 million lower (Q1 ~$245 million lower) (Excludes Goodyear Forward) Interest Expense 3(b) $520 to $540 million Other (Income) Expense Inter
Slide 15: End Notes
END NOTES 1 Segment Operating Income (SOI) results fourth quarter 2023 versus 2022: (a) Raw materials variance includes raw material cost saving measures; (b) Estimated impact of general inflation (wages, utilities, energy, transportation and other); (c) Includes the impacts of other tire-related bu
Slide 16: Important Disclosures
IMPORTANT DISCLOSURES Forward-Looking Statements Certain information contained in this Investor Letter constitutes forward- Free Cash Flow is the company’s Cash Flows from Operating Activities looking statements for purposes of the safe harbor provisions of The Private as determined in accordance wi
Slide 17: Reference Tables
REFERENCE TABLES TABLE OF CONTENTS Financial Tables (Unaudited) Table 1 Consolidated Statements of Operations..................................................................................................................................................18 Table 2 Consolidated Balance Sheets.......
Slide 18: Consolidated Statements of Operations
FINANCIAL TABLES (UNAUDITED) Table 1 Consolidated Statements of Operations Three Months Ended Year Ended December 31, December 31, (In millions, except per share amounts) 2023 2022 2 02 3 2022 Net Sales $ 5,116 $ 5,374 $ 20,066 $ 20,805 Cost of Goods Sold 4,070 4,510 16,557 16,953 Selling, Administr
Slide 19: Consolidated Balance Sheets
FINANCIAL TABLES (UNAUDITED) Table 2 Consolidated Balance Sheets December 31, December 31, (In millions, except share data) 2023 2022 Assets: Current Assets: Cash and Cash Equivalents $ 902 $ 1,227 Accounts Receivable, less Allowance — $102 ($112 in 2022) 2,731 2,610 Inventories: Raw Materials 785 1
Slide 20: Consolidated Statements of Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 3 Consolidated Statements of Cash Flows Year Ended December 31, (In millions) 2023 2 02 2 Cash Flows from Operating Activities: Net Income (Loss) $ (687) $ 209 Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities: Depreciation and Amor
Slide 21: Reconciliation of Segment Operating Income & Margin
FINANCIAL TABLES (UNAUDITED) Table 4 Reconciliation of Segment Operating Income & Margin Three Months Ended Year Ended December 31, December 31, (In millions) 2023 2022 2023 2022 Total Segment Operating Income $ 383 $ 236 $ 968 $ 1,276 Less: Goodwill Impairment 230 — 230 — Rationalizations 200 47 50
Slide 22: Reconciliation of Free Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 5 Reconciliation of Free Cash Flows Three Months Ended Trailing Twelve December 31, Months Ended (In millions) 2023 2022 December 31, 2023 Net Income (Loss) $ (296) $ (105) $ (687) Depreciation and Amortization 250 246 1,001 Change in Working Capital 1,110 1,091 29
Slide 23: Reconciliation of Total Debt and Net Debt
FINANCIAL TABLES (UNAUDITED) Table 6 Reconciliation of Total Debt and Net Debt December 31, September 30, December 31, (In millions) 2 02 3 2 02 3 2022 Accounts Receivable $ 2,731 $ 3,379 $ 2,610 Inventories 3,698 3,964 4,571 Accounts Payable — Trade (4,326) (4,110) (4,803) Working Capital(a) $ 2,10
Slide 24: Adjusted Net Income and EPS: Fourth Quarter 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Fourth Quarter 2023 Rationalizations, Indirect Tax Goodyear Environmental As Goodwill Asset Write-offs, Debica Fire Other Legal Settlements Asset and As Forward Remediation Repor
Slide 25: Adjusted Net Income and EPS: Fourth Quarter 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Fourth Quarter 2022 Rationalizations, Indirect Tax As Pension Settlement Asset Write-offs, and Settlements Insurance Asset and As Reported Charges Accelerated and Discrete Recove
Slide 26: Adjusted Net Income and EPS: 2023 Year to Date
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share 2023 Year to Date Rationalizations, Foreign Currency Indirect Tax Pension Goodyear Environmental As Asset Write-offs, Gooodwill Tupelo Storm Debica Fire Other Legal Translation S
Slide 27: Adjusted Net Income and EPS: 2022 Year to Date
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share 2022 Year to Date Rationalizations, Asset Indirect Tax Pension As Write-offs, Settlements and Other Legal Insurance Asset and As Settlement Reported and Accelerated Discrete Tax
Slide 28: Industry and Goodyear Growth Rates
OTHER DATA TABLES Table 8 Industry and Goodyear Growth Rates Three Months Ended Year Ended December 31, 2023 December 31, 2023 Industry Goodyear Industry Goodyear Americas Consumer Replacement 8.9% -8.6% 0.6% -8.8% Consumer OE 1.8% -7.3% 9.0% -0.5% Commercial Replacement -7.8% -12.2% -13.2% -12.7% C
Slide 29: Foreign Currency Rate Assumptions
OTHER DATA TABLES Table 9 Foreign Currency Rate Assumptions January 26, FX Spot Rates 2024 2023 USD / BRL 4.916 5.066 USD / CNY 7.097 6.784 USD / EUR 0.921 0.918 Q4 2023 - 29
Slide 30: Commodity Spot Rate Assumptions
OTHER DATA TABLES Table 10 Commodity Spot Rate Assumptions January 26, Commodity Rates 2024 2023 Modeling Assumption Comments Butadiene ($ / LB) $ 0.37 $ 0.45 Key driver of synthetic rubber prices Natural Rubber ($ / LB) 0.69 0.66 Driver of natural rubber prices Crude Oil ($ / BBL) 83.55 87.47 Proxy
Slide 31: Slide 31
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