The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2023 Earnings Presentation
34 slides from The Goodyear Tire & Rubber's earnings presentation, Aug 2, 2023
Slide 1: Investor Letter Q2 2023
INVESTOR LETTER Q2 2023 Aug. 2, 2023
Slide 2: Table of Contents
TABLE OF CONTENTS 03 Letter to Investors 04 Summary 05 Financial Results 08 SBU Results 14 Outlook Celebrating 125 Years 16 Enabling Mobility In 1898, Frank Seiberling borrowed $3,500 from his brother-in-law and used it on a down payment for an old strawboard factory on East 18 End Notes Market Stre
Slide 3: To Our Investors
TO OUR INVESTORS The 125th anniversary of Goodyear’s founding positive sign is that June was the first month Our Asia Pacific segment, meanwhile, is in August offers an incredible opportunity to this year where the U.S. consumer replacement benefitting from a recovery in replacement reflect on our r
Slide 4: Summary
SUMMARY Reflections on the Quarter Heading into the second quarter, we expected sequential quarterly improvement in our earnings. Instead, our second quarter segment operating income (“SOI”) was essentially flat with our first quarter results. Our results differed from our expectations primarily due
Slide 5: Financial Results: Income Statement
FINANCIAL RESULTS Financial Results NET SALES Income Statement Second quarter sales decreased 6.6% compared to prior year, NET SALES driven by lower volume and the impact of foreign exchange, $5,212 $4,867 ($ 345)m YoY partly offset by strong price/mix. Revenue per tire increased 6% excluding the im
Slide 6: Segment Operating Income Drivers
FINANCIAL RESULTS Segment Operating Income Drivers Reported second quarter segment operating income was higher manufacturing wages of $101 million, energy costs of $124 million, down $240 million compared to prior year. $23 million and transportation costs of $11 million. Nearly all of the increases
Slide 7: Balance Sheet and Cash Flows
FINANCIAL RESULTS Financial Results Total Debt/Net Debt Balanc Balance Sheet and Cash Flows TOTAL DEBT $8,810 $8,404 +$406m YoY At the end of the second quarter, total debt was $8.8 billion compared to $8.4 billion at the same time last year. Net debt was $7.8 billion, compared to $7.2 billion at th
Slide 8: SBU Results - Americas: Second Quarter Summary
SBU RESULTS - AMERICAS Second Quarter Summary Second quarter results were impacted by softer industry volume, the ongoing effects of inflation, and the storm-related interruption of operations at Tupelo. Americas consumer replacement volume declined approximately 13%, driven by a strong comparable p
Slide 9: SBU Results - Americas: Tire Volumes
SBU RESULTS - AMERICAS Tire Volumes Overall volume in Americas was down 2.5 million units, or 10.9% Update on Tupelo, MS Operations below second quarter 2022 levels. Consumer and commercial replacement volume combined was 12.8% lower (2.5 million units), We previously shared that a tornado impacted
Slide 10: SBU Results - EMEA: Second Quarter Summary
SBU RESULTS - EMEA Second Quarter Summary Second quarter results were driven by persistently weak consumer replacement industry conditions as a result of a high comparable last year and continued channel destocking. In addition, unit volume was impacted by accelerating commercial replacement industr
Slide 11: SBU Results - EMEA: Tire Volumes
SBU RESULTS - EMEA Tire Volumes Overall volume in EMEA was down 2.7 million units, or 19.1% below Review of European Cost Structure second quarter 2022 levels. Consumer and commercial replacement We previously shared that we have launched a review of our volume combined was 26.7% lower (3.0 million
Slide 12: SBU Results - Asia Pacific: Second Quarter Summary
SBU RESULTS - ASIA PACIFIC Second Quarter Summary Asia Pacific results reflect growth in revenue and segment operating income compared to the prior year, driven by China. Results included continued benefits from strong price/mix above raw material and other cost increases. As mentioned in our first
Slide 13: SBU Results - Asia Pacific: Tire Volumes
SBU RESULTS - ASIA PACIFIC Tire Volumes Overall volume in Asia Pacific was up 0.4 million units in the quarter, or 5.8% above 2022 levels. Replacement volume increased 3.6% (0.1 million units), while OE volume increased 9.2% (or 0.3 million units). • This result reflected recovery in the China consu
Slide 14: Outlook: Third Quarter 2023
OUTLOOK Third Quarter 2023 Third quarter volumes should be helped by improving comparisons. We expect the third quarter to be the first this year where the net Volume Considerations for the Second Half effect of price/mix, raw material costs and inflation will be positive. Volume Consumer and commer
Slide 15: Outlook: 2023 Other Financial Assumptions
OUTLOOK 2023 – Other Financial Assumptions Overall costs have declined since our May investor update, including ~$75 million in raw materials and ~$70 million in other costs. Additionally, at current spot rates, first half 2024 raw materials would decline approximately $400 million. We have updated
Slide 16: Enabling Mobility and Driving Sustainability
ENABLING MOBILITY AND DRIVING SUSTAINABILITY Global Aviation Takes Off With New Fitment During the Paris Air Show, Goodyear announced that our new Flight Radial Tire has been selected by Airbus as an approved fitment for its new aircraft, A321XLR, which will enter service in 2024. The ultra-lightwei
Slide 17: Goodyear Better Future: Corporate Responsibility
ENABLING MOBILITY AND DRIVING SUSTAINABILITY Goodyear Better Future: Corporate Responsibility Goodyear Better Future, our corporate responsibility framework, outlines Goodyear’s high-priority environmental, social and governance topics. The framework’s four pillars—Sustainable Sourcing, Responsible
Slide 18: End Notes
END NOTES 1 Segment Operating Income (SOI) results second 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 19: Important Disclosures
IMPORTANT DISCLOSURES Forward-Looking Statements Free Cash Flow is the company’s Cash Flows from Operating Activities as determined in accordance with U.S. GAAP, less capital expenditures. Certain information contained in this Investor Letter constitutes forward- Management believes that Free Cash F
Slide 20: Reference Tables
REFERENCE TABLES TABLE OF CONTENTS Financial Tables (Unaudited) Table 1 Consolidated Statements of Operations..................................................................................................................................................21 Table 2 Consolidated Balance Sheets.......
Slide 21: Consolidated Statements of Operations
FINANCIAL TABLES (UNAUDITED) Table 1 Consolidated Statements of Operations Three Months Ended Six Months Ended June 30, June 30, (In millions, except per share amounts) 2023 2022 2023 2022 Net Sales $ 4,867 $ 5,212 $ 9,808 $ 10,120 Cost of Goods Sold 4,123 4,172 8,316 8,138 Selling, Administrative a
Slide 22: Consolidated Balance Sheets
FINANCIAL TABLES (UNAUDITED) Table 2 Consolidated Balance Sheets June 30, December 31, (In millions, except share data) 2023 2022 Assets: Current Assets: Cash and Cash Equivalents $ 1,049 $ 1,227 Accounts Receivable, less Allowance — $104 ($112 in 2022) 3,033 2,610 Inventories: Raw Materials 918 1,1
Slide 23: Consolidated Statements of Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 3 Consolidated Statements of Cash Flows Six Months Ended June 30, (In millions) 2023 2022 Cash Flows from Operating Activities: Net Income (Loss) $ (307) $ 266 Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities: Depreciation and Amor
Slide 24: Reconciliation of Segment Operating Income & Margin
FINANCIAL TABLES (UNAUDITED) Table 4 Reconciliation of Segment Operating Income & Margin Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 Total Segment Operating Income $ 124 $ 364 $ 249 $ 667 Less: Rationalizations 72 26 104 37 Interest Expense 138 110 265 214
Slide 25: Reconciliation of Free Cash Flow
FINANCIAL TABLES (UNAUDITED) Table 5 Reconciliation of Free Cash Flow Three Months Ended Trailing Twelve June 30, Months Ended (In millions) 2023 2022 June 30, 2023 Net Income (Loss) $ (208) $ 170 $ (364) Depreciation and Amortization 255 237 989 Change in Working Capital 309 (240) 3 Pension Expense
Slide 26: Reconciliation of Total Debt and Net Debt
FINANCIAL TABLES (UNAUDITED) Table 6 Reconciliation of Total Debt and Net Debt June 30, March 31, December 31, June 30, (In millions) 2023 2023 2022 2022 Accounts Receivable $ 3,033 $ 3,244 $ 2,610 $ 3,306 Inventories 4,360 4,553 4,571 4,389 Accounts Payable — Trade (4,361) (4,452) (4,803) (4,593) W
Slide 27: Adjusted Net Income and EPS: Second Quarter 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Second Quarter 2023 Rationalizations, Indirect Tax Pension Environmental As Asset Write-offs, Tupelo Storm Asset and Other Other Legal Settlements and As Settlement Remediation R
Slide 28: Adjusted Net Income and EPS: Second Quarter 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Second Quarter 2022 Rationalizations, Indirect Tax As Asset Write-offs, Pension Settlement Settlements and Asset As Reported and Accelerated Charges Discrete Tax Sales Adjusted D
Slide 29: Adjusted Net Income and EPS: First Six Months 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Six Months of 2023 Rationalizations, Foreign Currency Indirect Tax Pension Environmental As Asset Write-offs, Tupelo Storm Asset and Other Translation Settlements and As Se
Slide 30: Adjusted Net Income and EPS: First Six Months 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Six Months of 2022 Rationalizations, Indirect Tax As Asset Write-offs, Pension Settlement Settlements and Asset As Reported and Accelerated Charges Discrete Tax Sales Adjus
Slide 31: Industry and Goodyear Growth Rates
OTHER DATA TABLES Table 8 Industry and Goodyear Growth Rates Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 Industry & Goodyear Growth Industry Goodyear Industry Goodyear Americas Consumer Replacement -9.4% -12.8% -8.7% -11.2% Consumer OE 8.7% 1.9% 10.0% 3.1% Commercial Replacement
Slide 32: Foreign Currency Rate Assumptions
OTHER DATA TABLES Table 9 Foreign Currency Rate Assumptions July 21, FX Spot Rates 2023 2022 USD / BRL 4.780 5.498 USD / CNY 7.188 6.767 USD / EUR 0.898 0.978 USD / TRY 26.974 17.729 EUR / TRY 30.031 18.122 Q2 2023 - 32
Slide 33: Commodity Spot Rate Assumptions
OTHER DATA TABLES Table 10 Commodity Spot Rate Assumptions July 21, Commodity Rates 2023 2022 Modeling Assumption Comments Butadiene ($ / LB) $ 0.25 $ 0.77 Key driver of synthetic rubber prices Natural Rubber ($ / LB) 0.58 0.71 Driver of natural rubber prices Crude Oil ($ / BBL) 81.07 103.86 Proxy f
Slide 34: (Wii VAR
(Wii VAR
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