The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Goodyear Tire & Rubber — Deutsche Bank Global Auto Industry Conference 2015
26 slides from The Goodyear Tire & Rubber's conference presentation, Jan 13, 2015
Slide 1: Deutsche Bank Global Auto Industry Conference
Exhibit 99.1 Deutsche Bank Global Auto Industry Conference January 13, 2015
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: Company Overview
Company Overview Goodyear tires are sold …available in a diverse ...and serve customers in two distinct tire markets... selection of products... around the world (% of 2013 Units of 162 million) (% of 2013 Revenue of ~$20 billion) (% of 2013 Revenue of ~$20 billion) Replacement Market Europe, Middle
Slide 4: Strategy Roadmap
Strategy Roadmap Where We Are Executing Plan Value Creating Innovation Leader Investing for Growth Record Earnings US Pension Fully Funded Key Strategies Industry Key How To’s MegaTrends Market-Back Innovation Excellence 1. North America: Grow Profitably “Long-term Growth Drivers” Sales & Marketing
Slide 5: Goodyear's Competitive Advantage
Goodyear’s Competitive Advantage Advantaged Value Proposition Operational Excellence Iconic brand Right Tire Industry leading products Right Time Pervasive distribution AND Right Place Strong customer relations Right Cost Consumer-centric focus Market-Back Approach Sufficient HVA Capacity For winner
Slide 6: Goodyear Then … And Now
Goodyear Then … And Now $ In billions Segment Operating Income Growth (a) North America Turnaround Segment Operating Income $1.8 $0.8 $1.6 $0.7 $1.4 $1.2 $0.3B $0.5 $0.9 loss in 2009 $0.3 ~$0 2010 2011 2012 2013 TTM(b) 2010 2011 2012 2013 TTM(b) Strong Free Cash Flow(c) Progress on Global Unfunded P
Slide 7: Preliminary View of 2014 Results
Preliminary View of 2014 Results • Record total company and North America segment operating income • Now expect 2014 FY SOI growth slightly below original 10-15% range, primarily due to a more challenging industry environment in Europe in Q4 and stronger dollar globally – Expect global volume to be
Slide 8: Q4 2014 EMEA Business Update
Q4 2014 EMEA Business Update • Industry negatively impacted by warmer than expected winter that lasted through the quarter; one of the warmest on record • While our winter premium brand sales through Q3 were strong, dealer replenishment was much weaker in Q4 than we expected – Industry sell-out was
Slide 9: 2015 Outlook Preliminary Planning Assumptions
2015 Outlook As previously presented during Q3 Earnings Call Preliminary Planning Assumptions (October 29, 2014) Positive Drivers Other Factors Global volume growth of 1-2% FX headwind (similar impact as 2014) Positive price mix vs. raw materials (~$50-$100 million) Venezuela uncertainty Cost saving
Slide 10: 2015 Outlook Preliminary Planning Assumptions (Call-Out Boxes)
2015 Outlook Will update at our Year-End Earnings Preliminary Planning Assumptions (Call-OutCall in February 2015 boxes reflect latest factors) Getting tougher Positive Drivers Other Factors Global volume growth of 1-2% FX headwind (similar impact Chinese tariffs as 2014) USD continues Positive pric
Slide 11: Recent Trends: Raw Materials
Recent Trends: Raw Materials • Spot prices down significantly YoY in 2014: Goodyear Global Raw Material Usage – Natural Rubber: ~32% 2014 FY Estimate – Synthetic Rubber: ~8% * – Carbon Black: ~53% – Oil (WTI): ~46% • Raw materials ~50% of tire business cost * of goods sold – Tires ~85% of total cost
Slide 12: Recent Trends: Potential US Tariffs on Chinese Consumer Tire Imports
Recent Trends: Potential US Tariffs on Chinese Consumer Tire Imports Several recent affirmative rulings by the Department of Commerce (DOC) and International Trade Commission (ITC) for anti-dumping (AD) and countervailing duty (CVD) investigations 7/22/14: ITC affirmative preliminary injury decision
Slide 13: 2015-2016 Financial Targets
2015-2016 Financial Targets We remain confident in our strategy Reaffirming 2015-2016 targets – Annual 10-15% SOI growth per year – Annual positive free cash flow from operations – Adjusted Debt to EBITDAP (a) ratio of ~2.0x by the end of 2016 Reaffirming 2015-2016 targets; will update assumptions o
Slide 14: Capital Allocation
Capital Allocation
Slide 15: Sources and Uses of Cash
Sources and Uses of Cash 2014-2016 $ In billions 2014 - 2016 SOI Target $5.5 - $5.8 Adjustments for: Corporate Expense, Depreciation, and Pension Expense 2014 - 2016 EBITDAP ~ $7.8 - $8.2 Maintaining the Business Capital Allocation Plan • Interest Expense ~$1.2 - $1.4 Cash Available for Deployment •
Slide 16: Capital Allocation Plan – Driving Value 2014-2016
Capital Allocation Plan – Driving Value 2014-2016 Growth CapEx $1.5B Shareholder Return Program $0.6 - $0.9B* Restructurings $0.6B Debt Repayment / $0.8 - $0.9B Pension Funding $3.6 - $3.8B Balanced capital allocation plan * $0.65B approved by Board of Directors; increases dependent on Company perfo
Slide 17: Growth CapEx Investment
Growth CapEx Investment 2011-2013 2014-2016 ~$1.3 billion ~$1.5 billion Primarily investment in Includes Heavy investment HVA capacity new plant for in new China plant & tire labeling the Americas Americas and Europe tire capabilities ~$500 million labeling NA & LA ~ 30% EMEA & Asia Americas ~ 45% N
Slide 18: Balance Sheet Management – Leverage Targets
Balance Sheet Management – Leverage Targets Adjusted Debt/ EBITDAP (a) Leverage consistent with commitment to achieving investment grade metrics Reduces cost of capital Greater ability to move debt overseas Improves global access to credit Ability to reduce cash balances Committed to achieving inves
Slide 19: Shareholder Return Program
Shareholder Return Program Share repurchase program - $450 million authorized in 2014-2016 plan – Completed $150 million in Q4/14 – Approximately halfway through program in first year Dividend payment $0.06 per share per quarter, a 20% increase in first year Continued focus on shareholder returns 19
Slide 20: Q&A
Q&A
Slide 21: Appendix
Appendix
Slide 22: Use of Historical and Forward-Looking Non-GAAP Financial Measures
Use of Historical and Forward-Looking Non-GAAP Financial Measures This presentation contains our historical total segment operating income and free cash flow from operations for certain periods, our targeted total segment operating income growth rate for 2015-16, our historical ratio of Adjusted Deb
Slide 23: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin $ In millions Twelve Months Ended Twelve Months Ended September 30, December 31, 2014 2013 2012 2011 2010 Total Segment Operating Income $ 1,772 $ 1,580 $ 1,248 $ 1,368 $ 917 Rationalizations (97) (58) (175) (103) (240) Interest expense (420) (392
Slide 24: Reconciliation for Free Cash Flow From Operations
Reconciliation for Free Cash Flow From Operations The amounts below are calculated from the Consolidated Statements of Cash Flows except for pension expense, which is as reported in the pension- related note in the Notes to Consolidated Financial Statements. Trailing Twelve Months Year Ended Ended D
Slide 25: EBITDAP, Adjusted Debt & Leverage Ratio Reconciliations
EBITDAP, Adjusted Debt & Leverage Ratio Reconciliations $ In millions Year Ended December 31, 2013 2012 2011 2010 Net Income (Loss) $675 $237 $417 ($164) Interest Expense 392 357 330 316 Income Tax Expense 138 203 201 172 Depreciation and Amortization 722 687 715 652 (a) Net Periodic Pension Cost 28
Slide 26: Goodyear
GOODFYEAR
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