The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2024 Earnings Presentation
36 slides from The Goodyear Tire & Rubber's earnings presentation, Aug 1, 2024
Slide 1: Earnings Release Q2 2024
EARNINGS RELEASE Q2 2024 | AUGUST 1, 2024 Q2 2024 - 1
Slide 2: Q2 2024 Highlights
Q2 2024 HIGHLIGHTS SEGMENT OPERATING INCOME more than double vs prior year AMERICAS SEGMENT OPERATING INCOME of $241 million, SOI margin of 8.9% ASIA PACIFIC SEGMENT OPERATING INCOME of $63 million, SOI margin of 10.6% DEFINITIVE AGREEMENT SIGNED for sale of Off-the-Road tire business GOODYEAR FORWA
Slide 3: Q2 2024 Key Metrics
Q2 2024 KEY METRICS Tire Units Net Sales Segment Operating Income 40.1 $4,570 $339 -1.7% YoY -6.1% YoY +173.4% YoY SOI Margin Free Cash Flow Adjusted EPS 7.4% ($346) $0.19 +4.9 pts YoY -460.4% YoY +155.9% YoY Terms: Units & $ in millions Quarter Highlights Financial Results SBU Results Outlook Impor
Slide 4: Q2 2024 SBU Metrics
Q2 2024 SBU METRICS Net Sales Segment Operating Income SOI Margin $2,697 $241 8.9% AMERICAS -8.2% YoY +134.0% YoY +5.4 pts YoY $1,279 $35 2.7% EMEA -4.6% YoY +284.2% YoY +4.1 pts YoY $594 $63 10.6% AP +1.2% YoY +57.5% YoY +3.8 pts YoY Terms: Units & $ in millions Quarter Highlights Financial Results
Slide 5: Goodyear Forward
GOODYEAR FORWARD Goodyear Forward is a transformation plan designed to 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 this program to benefit segment
Slide 6: Goodyear Forward
GOODYEAR FORWARD FY 24E Total Actions TOTAL ACTIONS $162 ~ $425 Footprint & Plant Optimization ~ $85 Purchasing ~ $145 SAG ~ $75 Supply Chain and R&D ~ $70 Margin Expansion ~ $50 Realized YTD SOI Impact Balance of 2024 Terms: $ in millions Quarter Highlights Financial Results SBU Results Outlook Imp
Slide 7: Financial Results
GoopsVEAR FINANCIAL RESULTS
Slide 8: Income Statement
INCOME STATEMENT Three Months Ended J une 30, 2024 2023 Change Tire Units 40.1 40.8 -1.7% Net Sales $ 4,570 $ 4,867 -6.1% Gross Margin 20.7% 15.3% 5.4 pts SAG $ 731 $ 708 3.2% Segment Operating Income $ 339 $ 124 173.4% Segment Operating Margin 7.4% 2.5% 4.9 pts Goodyear Net Income (Loss) $ 85 $ (20
Slide 9: Segment Operating Results
SEGMENT OPERATING RESULTS SECOND QUARTER 2024 VERSUS 2023 $14 $339 $63 1 (e) Other $50 $90 ($59) Insurance 1 (d) $34 Recoveries, Net of Expenses Non- Q2 Recurrence $158 Calculated Other of Tupelo 2024 $124 ($41) Inflation Costs SOI Goodyear 1 (b) (CPI) 1 (c) Forward ($35) Q2 2023 Volume ($59) SOI Un
Slide 10: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW Total Debt Cash Flow from Operating Activities (GAAP) $8,476 $8,810 ($67) $341 Three Months Ended Three Months Ended As of June 30, 2024 As of June 30, 2023 June 30, 2024 June 30, 2023 -3.8% YoY -119.6% YoY Net Debt Free Cash Flow (non-GAAP) $7,687 $7,761 ($346) $96 Three M
Slide 11: SBU Results
SBU RESULTS Q2 2024 - 11
Slide 12: Q2 2024 SBU Results – Americas
Q2 2024 SBU RESULTS – AMERICAS TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 19.6 $2,697 $241 8.9% -5.9% YoY -8.2% YoY +134.0% YoY +5.4 pts YoY • U.S. consumer replacement industry up 1% with members declining; nearly 20% growth in non-member imports • Traditional retailer sell-out volume dow
Slide 13: Q2 2024 SBU Results - EMEA
Q2 2024 SBU RESULTS - EMEA TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 11.6 $1,279 $35 2.7% -0.9% YoY -4.6% YoY +284.2% YoY +4.1 pts YoY • Consumer replacement industry growth of 2%; industry sell out similar • Consumer OE industry declined ~5% • Commercial truck replacement industry declin
Slide 14: Q2 2024 SBU Results – Asia Pacific
Q2 2024 SBU RESULTS – ASIA PACIFIC TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 8.9 $594 $63 10.6% +7.8% YoY +1.2% YoY +57.5% YoY +3.8 pts YoY • China consumer replacement industry slightly negative • China consumer OE industry up 3 percent, although trending negative Terms: Units & $ in mil
Slide 15: Outlook
OUTLOOK Q2 2024 - 15
Slide 16: SOI Assumptions
SOI ASSUMPTIONS 2(a) Q3 2024 FULL YEAR 2024 Global unit volumes down 4% reflecting weaker industry Global unit volumes 3% lower, reflecting weaker industry environment in OE and based on weaker sell-out trends environment in OE and based on weaker sell-out trends and and high levels of distributor i
Slide 17: Other Financial Assumptions
OTHER FINANCIAL ASSUMPTIONS 2(a) FULL YEAR 2024 CORPORATE OTHER NORMAL OPERATING $150 million to $175 million Goodyear Forward: ~ $125 million comprised of advisory, legal and consulting CORPORATE OTHER GOODYEAR FORWARD* fees and costs associated with planned asset sales INTEREST EXPENSE 2(c) $510 m
Slide 18: Industry Assumptions
INDUSTRY ASSUMPTIONS FULL YEAR 2024 CONSUMER COMMERCIAL - 2% to 2% - 2% to 2% REPL Slight growth driven by distortive effects given high level of low-end Demand stabilizing in EMEA; Americas growth driven by H1 imports imports in the US and Europe OE Weaker conditions driven by reduced demand with O
Slide 19: Important Disclosures
IMPORTANT DISCLOSURES Q2 2024 - 19
Slide 20: Important Disclosures: Forward-Looking Statements
IMPORTANT DISCLOSURES 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
Slide 21: Use of Non-GAAP Financial Measures
IMPORTANT DISCLOSURES USE OF NON-GAAP FINANCIAL MEASURES (Unaudited) This presentation presents non-GAAP financial measures, including Total Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share (EPS) which are important financial mea
Slide 22: Appendix
APPENDIX Q2 2024 - 22
Slide 23: Goodyear Forward: Off-the-Road
GOODYEAR FORWARD OFF-THE-ROAD OTR BUSINESS PROVIDES TIRES for surface and underground mining, construction and quarry, and port and industrial end markets ~$905 MILLION gross cash proceeds ANTICIPATED DEAL CLOSURE by early 2025, subject to customary regulatory approvals and other closing conditions
Slide 24: Six Month 2024 Key Metrics
SIX MONTH 2024 KEY METRICS Tire Units Net Sales Segment Operating Income 80.5 $9,107 $586 -2.5% YoY -7.1% YoY +135.3% YoY SOI Margin Free Cash Flow Adjusted EPS 6.4% ($1,115) $0.29 +3.9 pts YoY -14.9% YoY +146.0% YoY Terms: Units & $ in millions Quarter Highlights Financial Results SBU Results Outlo
Slide 25: Segment Operating Results Six Months 2024 vs 2023
SEGMENT OPERATING RESULTS SIX MONTHS 2024 VERSUS 2023 $52 $6 $586 $162 ($117) Other 1 (e) $50 $59 Insurance 1 (d) Non- Recoveries, $419 Recurrence of Net of Calculated Other Tupelo Storm Expenses Goodyear 1 (b) Inflation Costs (CPI) 1 (c) H1 Forward $249 ($69) 2024 SOI ($33) ($192) H1 Volume 2023 Un
Slide 26: Table A: Segment Operating Income Reconciliation
TABLE A: SEGMENT OPERATING INCOME RECONCILIATION Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Total Segment Operating Income $ 339 $ 124 $ 586 $ 249 Less: Rationalizations 19 72 41 104 Interest Expense 130 138 256 265 Other (Income) Expense (72) 36 (42) 61 Asset Write-Of
Slide 27: Table B: Reconciliation of Total Debt and Net Debt
TABLE B: RECONCILIATION OF TOTAL DEBT AND NET DEBT June 30, March, 31 December 31, June 30, 2024 2024 2023 2023 Accounts Receivable $ 3,043 $ 3,033 $ 2,731 $ 3,033 Inventories 4,048 3,831 3,698 4,360 Accounts Payable — Trade (4,181) (4,223) (4,326) (4,361) Working Capital 3(a) $ 2,910 $ 2,641 $ 2,10
Slide 28: Table C: Significant Maturities Schedule
TABLE C: SIGNIFICANT MATURITIES SCHEDULE AS OF JUNE 30, 2024 (4b) $1,935 Undrawn Credit Lines Funded Debt (4c) $117 (4d) $616 (4a) $- $801 $1,715 $1,030 $819 $850 $- $1,600 2024 2025 2026 2027 2028 2029 2030 ≥ 2031 Funded Debt Undrawn Credit Lines Terms: in millions Quarter Highlights Financial Resu
Slide 29: Table D: Reconciliation of Free Cash Flow
TABLE D: RECONCILIATION OF FREE CASH FLOW Three Months Ended Six Months Ended Trailing Twelve June 30, June 30, Months Ended 2024 2023 2024 2023 June 30, 2024 Net Income (Loss) $ 80 $ (208) $ 22 $ (307) $ (358) Depreciation and Amortization 262 255 546 506 1,041 Change in Working Capital (249) 309 (
Slide 30: Table E: Adjusted Net Income and EPS, Q2 2024
TABLE E: RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE SECOND QUARTER 2024 Rationalizations, Americas Debica Fire Asset Write-offs, As Goodyear South Africa Storm Impact and Asset and As Accelerated Reported Forward Costs Flood Impact Insurance Insurance Other
Slide 31: Table E: Adjusted Net Income and EPS, Q2 2023
TABLE E: RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE SECOND QUARTER 2023 Rationalizations, Indirect Tax Pension Environmental As Asset Write-offs, and Tupelo Storm Asset and Other Legal Settlements As Settlement Remediation Reported Accelerated Impact Other S
Slide 32: Table E: Adjusted Net Income and EPS, First Six Months 2024
TABLE E: RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE FIRST SIX MONTHS 2024 Rationalizations, South Pension Indirect Tax Debica Fire Asset Write-offs, Goodyear Americas Storm As Africa Settlement Settlements and Impact and Asset and Other As Accelerated Forwar
Slide 33: Table E: Adjusted Net Income and EPS, First Six Months 2023
TABLE E: RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE FIRST SIX MONTHS 2023 Foreign Rationalizations, Indirect Tax Pension Currency Environmental As Asset Write-offs, and Tupelo Storm Asset and Settlements As Settlement Translation Remediation Reported Acceler
Slide 34: Table F: Historical Key Metrics – Income Statement
TABLE F: HISTORICAL KEY METRICS INCOME STATEMENT 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YTD GOODYEAR TIRE UNITS AMERICAS 22.2 23.3 24.1 25.4 95.0 20.5 20.8 22.9 23.1 87.3 19.0 19.6 38.6 EMEA 14.5 14.5 13.3 12.8 55.1 13.2 11.8 12.5 12.4 49.9 12.5 11.6 24.1 ASIA PACIFIC 8.3 7.8 9.3 9.0 34.
Slide 35: Table F: Historical Key Metrics – Balance Sheet and Cash Flow
TABLE F: HISTORICAL KEY METRICS BALANCE SHEET AND CASH FLOW 2022 2023 2024 Three Three Three Three Twelve Three Three Three Three Twelve Three Three Months Months Months Months Months Months Months Months Months Months Months Months Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended E
Slide 36: End Notes
END NOTES 1 Segment Operating Income (SOI) results second quarter and six months 2024 versus 2023: (a) Raw materials variance excludes raw material cost saving measures; (b) Goodyear Forward includes cost actions and margin expansion; (c) Estimated impact of general inflation (wages, utilities, ener
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