The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2022 Earnings Presentation
38 slides from The Goodyear Tire & Rubber's earnings presentation, May 6, 2022
Slide 1: First Quarter 2022 Conference Call
FIRST QUARTER 2022 CONFERENCE CALL MAY 6, 2022 GOODZYEAR
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: Enabling Mobility: How We Win, How We Work
GOODJYEAR. ENABLING MOBILITY HOW WE WIN HOW WE WORK ACT WITH We build trust and earn confidence throug esty and respect INNOVATION SALES & MARKETING INTEGRITY Wed the right thing, and we Protect Our Good Name EXCELLENCE EXCELLENCE We create leading We capture the value of our ENERGIZE We create an e
Slide 4: First Quarter Highlights
FIRST QUARTER HIGHLIGHTS f F¢ Net sales growth of 40% compared with the first quarter of 2021, 20% growth excluding the Cooper Tire transaction and foreign currency First quarter Goodyear net income of $96 million; adjusted net income of $105 million!) Merger-adjusted segment operating income of $31
Slide 5: Reflecting on First Quarter 2022
REFLECTING ON FIRST QUARTER 2022 meee Positives * Solid volume growth while delivering strong * Ongoing cost inflation (including energy, price/mix transportation, wages) ¢ Avoided supply disruption, demonstrating supply . Production efficiency negatively impacted by chain resilience staffing availa
Slide 6: Test wins 2022
[Test won 202] Salirad GOODYEAR alld GOODYEAR 1st PLACE EVALUATED BASED ON UP-TO-DATE TESTING OF TIRES (AUTO BILD, AUTO BELO ALLRAD and AUTO BILD SPORTSCARS) TESTED: 20 MANUFACTURERS, Issue 15/2022 Eagle Fl EfficientGrip 2 EfficientGrip Asymmetric 6 SUV Performance 2
Slide 7: Advancing Sustainable Commercial Mobility
ADVANCING SUSTAINABLE COMMERCIAL MOBILITY
Slide 8: Financial Review
FINANCIAL REVIEW GOODSYEAR
Slide 9: Income Statement First Quarter
Terms: in millions Three Months Ended (exgecterel March 31, March 31, 2022 2021 Change INCOME Units 45.0 35.0 29% Net Sales $ 4,908 $ 3.511 40% STATEM ENT Gross Margin 19.2% 21.6% (2.4) pts SAG $ 688 $ 564 22% Merger-Adjusted Segment Operating Income ®! $ 30 $ 226 Lao QUART! R Merger-Adjusted Segmen
Slide 10: Segment Operating Results First Quarter 2022 versus 2021
SEGMENT OPERATING RESULTS FIRST QUARTER 2022 VERSUS 2021 $510 Terms: US$ millions ($378) Increased ($91) transport costs Raw ~($40) million Materials (>) ($60) $28 $3 Calculated (s12) $226 MEN Unabsorbed | Price/Mix'*) inflation vee Volume —_ Fixed Cost (cpI) ‘iciency, Currency Q1 Excess 2021 Inflat
Slide 11: Balance Sheet First Quarter 2022
BALANCE SHEET FIRST QUARTER 2022 (b) Terms: USS millions Cash and cash equivalents Accounts receivable Inventories Accounts payable - trade i@) Working capita Total debt”? Net debt” Working capital repress See Totel Del { Includes impact of Cooper transaction } March 31, December 31, March 31, 2022
Slide 12: Cash Flow
( Reflects rebuild of working | capital following reduction of \___ $871 million in 2020 Three Months Ended \ Trailing Twelve March 31, \\ Months Ended 2022 2021 March 31, 2022 Net Income $ 96 S$ 18 $ ‘ | 858 | Depreciation and Amortization 244 197 930 , Non-cash Change in Working Capital (1,002) (5
Slide 13: Structural Cash Flow
STRUCTURAL CASH FLOW Feb. 11% '22 Break-even Year Ended December 31, Scenario 2010 2011 2012 2013 =2014 2015 2016 2017 +2018 2019 2020 2021 2022 Cash Flow from Operating Activities (GAAP) $ 773 $1,038 $938 $340 $1,728 $1557 $1158 $ 916 $1207 $1115 $1,062 | $1,350 Add Back: Pension Cash 103 89 90 74
Slide 14: Segment Results - Americas
SEGMENT RESULTS - AMERICAS ff « Terms: US$ millions Units in millions ( First Quarter \ 2022!) = 2021 Change Units 22.2 15.5 43.8% Net Sales $2,915 $1,787 63.1% Operating =» 9916 «= $114. s«89.5% Income Margin 74% 6.4% (6) The Cooper transaction closed on June 7, 2021, and segment results include Co
Slide 15: Segment Results - EMEA
SEGMENT RESULTS - EMEA ff £« Terms: US$ millions Units in millions / First Quarter \ 2022) 2021 Change Units 14.5 12.7 14.4% Net Sales $1,426 $1,231 15.8% Operating 9 icone $59 $74 (20.3%) Margin 4.1% 6.0% (6) The Cooper transaction closed on June 7, 2021, and segment results include Cooper operatio
Slide 16: Segment Results - Asia Pacific
SEGMENT RESULTS - ASIA PACIFIC Terms: US$ millions Units in millions ( First Quarter \ / \ + Volume growth in consumer OE and replacement, 2022!) 2021 Change reflecting the addition of Cooper Tire business and growth in legacy Goodyear business Units 8.3 6.8 21.5% Net Sales $567 $493 15.0% + Price /
Slide 17: Q2 Business Outlook
Q2 BUSINESS OUTLOOK Positive price/mix vs. raw material costs (similar to 01) Continued recovery in EMEA volume Continued inflationary cost pressures, including higher transportation, labor and energy costs * Transportation / Energy cost YoY impact $20-$30 million higher than Q1 Impact of China plan
Slide 18: 2022 Outlook: Other Financial Assumptions
2022 OUTL Raw Materials OK: OTHER FINANCIAL ASSUMPTION Current Assumpt Q2 ~$400 million higher than prior year; H2 similar to HI based on current spot rates!) Interest Expense $450 to $475 million») Other (Income) Expense Financing fees: ~$30 million) Global pension related (excluded from SOI) ‘$30
Slide 19: Appendix
APPENDIX GOODSYEAR
Slide 20: Legacy Goodyear Modeling Assumptions
LEGACY GOODYEAR MODELING ASSUMPTIONS Volume Sensitivities Pricing Translational Foreign Currency (Impact on Goodyear sAnnual Units in 000's) (Annual Impact of Effective Pricing Yield) (Annual | mpact on FX portion of SO! Walk) © 1% Ain U.S. Consumer OE Industry “85 * 1% in US. Consumer Replacement b
Slide 21: Reconciliation for Structural Cash Flow
RECONCILIATION FOR STRUCTURAL CASH FLOW Feb. 11%'22 Break-even Year Ended December 31, ‘Scenario 2010 20 2012 2013 «62014 2015 201 2017 2018 2019 2020 2021 2022 | Average” Cash Flow from Operating Activities (GAAP) $924 $ 773 $1,038 $ 938 $340 $1,728 $1557 $1158 $ 916 $1,207 $115 $ 1,062 | $1,350|/
Slide 22: Amiens Plant Modernization Economics
AMIENS PLANT MODERNIZATION ECONOMICS f F¢ Terms: USS millions Se INVESTMENT HIGHLIGHTS Year: 2022/2023 2024 2025 2026 2027 Run-Rate « Increase HVA EBIT $ (3) $ 10 $ 16 $ 27 $ 41 $55-$60 capability by ~3 Startup Costs (5) (3) (4) (3) (4) million tires / year sol $ (8)$ 7 $ 12 $ 24 $ 40 $55-S60 ¢« Noc
Slide 23: Plant Modernization Example
PLANT MODERNIZATION EXAMPLE f F¢ As presented February 24, 2022 Incremental Avg GP/Tire: +$20 Replacement +$100E Minus Other Incremental Costs (mainly D&A) Channel Mix: USD in millions EBIT Startup Costs Year: Run Ibs 2 = : Rate $- $ 16 $ 32 $66 $66 (8) (12) (12) INVESTMENT HIGHLIGHTS 80% Replacemen
Slide 24: Brownfield Expansion Example
BROWNFIELD EXPANSION EXAMPLE f F¢ As presented February 24, 2022 usp ia namie: Year: 1 2 3 4 bm INVESTMENT HIGHLIGHTS TotalAra OP/Tie: ~~ Brownfield 330 Replacement e ae er $- 9 9 $17 $36 536 expansions deliver Gosts{mainly DRA) Startup Costs (6) (6) (6) incremental value- poe Reaeeent added capacit
Slide 25: Goodyear Russia / Ukraine Overview
GOODYEAR RUSSIA / UKRAINE OVERVIEW Russia Ukraine 76 Associates 22 Associates TT | Soe Volume 936K 402K 1.3M Volume 592K 0.4K 621K Sales $59M $i1iM $43M $213M Sales $34M $™ $3M $44M EBIT $8M EBIT $4M « No manufacturing assets in Russia or Ukraine ¢ Potential for volume opportunity as we work to supp
Slide 26: Legacy Goodyear Raw Materials
LEGACY GOODYEAR RAW MATERIALS & Raw materials are ~47%' of tire COGS ~67% of raw materials are influenced by oil prices « P&Limpact lags spot rates by 1-2 quarters depending on commodity ~63% of raw materials are purchased in USD Customer agreements indexed to raw materials + OE customers * Certain
Slide 27: Legacy Goodyear Raw Material Overview
LEGACY GOODYEAR RAW MATERIAL OVERVIEW 2022 Outlook ‘») Raw Material Costs!) $378 ¢ ~$400 million 02 impact, (consistent with prior outlook) ¢ H2 similar to H1 based on current spot rates Fi -$2 -$7 -$15 $22 -$30 gig O1 02 03 04 01 02 03 04 O1 02 03 04 QI 02 03 04 OI Full Year=$186 Full Year=$185 Ful
Slide 28: Consumer Replacement Industry
CONSUMER REPLACEMENT INDUSTRY U.S. Replacement Industry!) Europool & Turkey Replacement Industry (>) Q122 Q122 USTMA Members (217”) ETRMA Members (217") USTMA Members (<17") ETRMA Members (<17") Total Total Non-Members Non-Members Total U.S. Total EU & Turkey Goodyear (217") °) Goodyear (217")°)
Slide 29: Maturity Schedule First Quarter 2022
Terms: USS millions Hl Zs Undrawn Credit Lines MAT U R ITY $2,135) | Funded Debt SCHEDULE FIRST QUARTER 2022 _ $1201 $1,047 $850 $594 2026 2027 2028 2029 22030
Slide 30: Liquidity Profile First Quarter 2022
Terms: USS billions LIQUIDITY $4,420 PROFILE FIRST QUARTER 2022 $3.37 $1.0! March 31, 2022 {e) Tote liquidity is comprised of $1,053 million of cesh end cesh equivalents, es well es $3,374 million of unused availability under verious credit agreements
Slide 31: Merger Synergies
MERGER SYNERGIES Original Forecast Upgraded Outlook (February 2021) (November 2021) ~§$250M Mix & Volume | Core Cost Synergies Estimated costs to achieve synergies: $150 to $175 million Estimated costs to achieve synergies: ~$200 million EXPECT TO ACHIEVE $250 MILLION OF RUN-RATE SYNERGIES BY MID-20
Slide 32: Working Capital Improvement and Tax Position
Estimated one-time working capital savings of ~$250 million from improvement in cash conversion cycle Accelerated utilization of available Goodyear tax attributes with estimated net present value of $450 million or more WORKING CAPITAL IMPROVEMENT AND ABILITY TO LEVERAGE GOODYEAR’S TAX POSITION EXPE
Slide 33: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income and Margin, Merger-Adjusted Segment Operating Income and Margin, Free Cash Flow, Structural Cash Flow, Adjusted Net Income and Adjusted Diluted Earnings Per
Slide 34: Reconciliation for Merger-Adjusted Segment Operating Income / Margin
RECONCILIATION |) iiaanae FOR MERGER- A D J U Ss T E D Merger-Adjusted Segment Operating Income (Loss) SEGMENT ees OPERATING Retonatzatone Interest Expense INCOME / oer nee ese Asset Write-offs and Accelerated Depreciation MA RG | N & Corporate Incentive Compensation Plans Retained Expenses of Dives
Slide 35: First Quarter 2022 Significant Items
FIRST QUARTER 2022 SIGNIFICANT ITEMS Terms: US§ millions (except EPS) Rationalizations, As Asset Write-offs, Discrete Tax As Asset Sales . Reported and Accelerated Items Adjusted Depreciation Net Sales $ 4,908 = S - $ = $ = $ 4,908 Cost of Goods Sold 3,966 = 7 = 3,966 Gross Margin 942 - - - 942 SAG
Slide 36: First Quarter 2021 Significant Items
FIRST QUARTER 2021 SIGNIFICANT ITEMS Terms: US$ millions Americas (except EPS) Rationalizations, Acquisition a Inventory Americas . As Asset Write-offs, Related Discrete Tax As Valuation and Winter Storm Reported and Accelerated Transaction Items Adjusted . Other Impact Depreciation . Costs Adjustme
Slide 37: Reconciliation for Total Debt and Net Debt
RECONCILIATION FOR TOTAL DEBT AND NET DEBT FIRST QUART 2022 Terms: USS millions March 31, December 31, March 31, 2022 2021 2021 Long-Term Debt and Finance Leases $ 7,450 §$ 6648 =§ 5,326 Notes Payable and Overdrafts 570 406 390 Long-Term Debt and Finance Leases Due Within One Year 350 343 386 Total
Slide 38: Goodyear
GOODFSYEAR
The Goodyear Tire & Rubber Company — Q1 2022 Earnings Presentation on 6ix