The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2020 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Oct 30, 2020
Slide 1: Third Quarter 2020 Conference Call
é a4 GOODSYEAR Third Quarter 2020 Conference Call October 30, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements GOODSYEAR 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, tha
Slide 3: Our Goal
<——— OURSGOAL DELIVER SUSTAIN EAND PROFIT GROWTH WHILEINCREASING THE VALUE OF OUR BRAND INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE ACTWITH Build trust and earn the confidence of athers th INTEGRITY — hor r ( ct Our Good Na ENERGIZE menvironme THETEAM | lIness ar PROMOTE COLLABORATION BE AGIL
Slide 4: Global Volume Recovery
Global Volume Recovery Total Units Total Units Volume recovery continues in all regions
Slide 5: Reflecting on Q3 2020
Reflecting on Q3 2020 GOODFYEAR. Positives Negatives Returned to profitability / strong cash flow Temporary store closings in mass merchant / Delivered significant net cost savings (>$40M) Mhaleeal Sue Con miers . T i | forei h U.S. consumer / commercial OE outperformed FOnSEeI OND Tone an Sxonenee
Slide 6: European Consumer Replacement Portfolio
Slide 7: GOODSYEAR.
GOODSYEAR.
Slide 8: Financial Review
Financial Review avitgaooD
Slide 9: Q3 Financial Summary
Q3 Financial Summary GOODJSYEAR. ¢ Industry recovery solid, even excluding import pre-buy / restocking ¢ Strong consumer OE performance; rebuilding portfolio ¢ Some other tire-related businesses improving; negative aviation impact continues ¢ Production ended quarter ~ full capacity ¢ Delivered sign
Slide 10: Third Quarter 2020 Income Statement
Third Quarter 2020 : Income Statement GOOD; YEAR. Lite dil Three Months Ended September 30, September 30, 2020 2019 Change Units 36.6 40.3 (9)% Net Sales 3,465 3,802 (9)% Gross Margin 19.9% 22.0% (2.1) pts SAG 555 572 (3)% Segment Operating Income” 162 294 (45)% Segment Operating Margin 4.7% 7.7% (3
Slide 11: Segment Operating Income Bridge Q3 2019 to Q3 2020
$294 ($73) Q3 2019 Sol Volume ($121) 6 $1 $57 $ . “ Price/Mix @) Raw Materials") Unabsorbed Temporary Fixed Cost Fixed Cost Reductions $76 ($33) Inflation’) Cost Savings $7 Net P/M vs Raws $43 Net Cost Savings Includes savings plant closure = Currency Includes impact of lower earnings from other tir
Slide 12: Third Quarter 2020 Balance Sheet
Third Quarter 2020 Balance Sheet GOODSYEAR Terms: US$ millions September 30, June 30, December 31, September 30, 2020 2020 2019 2019 Cash and cash equivalents 1,057 1,006 $ 908 868 Accounts receivable 2,251 1,727 1,941 2,748 Inventories 2,162 2,474 2,851 2,965 Accounts payable - trade (2,330) (1,858
Slide 13: Third Quarter 2020 Free Cash Flow
Third Quarter 2020 ¢ Free Cash Flow Leth beri Terms: US$ millions Three Months Ended Trailing Twelve Months September 30, Ended 2020 2019 September 30, 2020 Net Income (Loss) (1,716) Depreciation and Amortization Change in Working Capital Pension Expense Pension Contributions and Direct Payments Pro
Slide 14: Third Quarter 2020 Liquidity Profile
Third Quarter 2020 Liquidity Profile Terms: US$ billions GOODSYEAR $4,210) Available Credit Lines Cash & Equivalents September 30, 2020 (@) Total liquidity is comprised of $1,057 million of cash and cash equivalents, as well as $3,098 million of unused availability under various credit agreements
Slide 15: Third Quarter 2020 Maturity Schedule
Third Quarter 2020 GoopsVEAR Maturity Schedule A Terms: US$ millions : - Undrawn Credit Lines i | Funded Debt $2,000) $8360 $100 2020 2021 2022 2023 2024 2025 2 2026 Note: Based on September 30, 2020 balance sheet values and excludes notes payable, finance and operating leases and other domestic and
Slide 16: Third Quarter 2020 - Segment Results: Americas
Third Quarter 2020 - Segment Results Americas Terms: US$ millions Units in millions GOODZYEAR. Third Quarter ¢ Volume reflects continued impact of COVID-19 2020 2019 Change * U.S. consumer OE business outperformed Units 16.2 17.9 (9.6)% industry * U.S. consumer replacement continues to be impacted b
Slide 17: Third Quarter 2020 - Segment Results: Europe, Middle East & Africa
Third Quarter 2020 - Segment Results ceon {VEAR. Europe, Middle East & Africa Terms: US$ millions Units in millions Third Quarter 2020 2019 Change * Volume reflects continued impact of COVID-19 * Commercial replacement outperformed industry, reflecting innovative fleet service offering Units a3.2 14
Slide 18: Third Quarter 2020 - Segment Results: Asia Pacific
Third Quarter 2020 - Segment Results Asia Pacific Terms: US$ millions Units in millions GOODZYEAR. Third Quarter 2020 2019 Change * Volume reflects continued impact of COVID-19 Units C2 7.9 (8.7)% : : * China consumer replacement business outperformed industry (units up 19%) Net Sales (11.3)% * OE b
Slide 19: Full Year 2020 Outlook
Raw Materials Interest Expense Other (Income) Expense Income Tax Depreciation & Amortization Global Pension Cash Contributions Working Capital Capital Expenditures Rationalization Payments Corporate Other (a) Excludes one-time charges and benefits from pension settlements and curtailments (b) Exclud
Slide 20: Appendix
Appendix avitgaooD
Slide 21: Modeling Assumptions
Modeling Assumptions GOODFYEAR. Volume Sensitivities (Impact on Goodyear's Annual Units in 000's) * 1% Ain U.S. Consumer OE Industry * 1% Ain U.S, Consumer Replacement Industry * 1% Ain U.S. Commercial OE Industry * 1% Ain U.S. Commercial Replacement Industry * 1% A in European Consumer OE Industry
Slide 22: Company Overview
Company Overview Industry Leader® Largest tire company in North America $14.7B in revenue 155M units 46 manufacturing facilities in 21 countries® 62K employees worldwide Innovation® 2 world-class innovation centers Innovation lab in San Francisco 7 tire proving grounds 5,200 patents 1,400 patents pe
Slide 23: Raw Materials
Raw Materials v Raw materials are ~44% of tire COGS ¥ ~68% of raw materials are influenced by oil prices - P&L impact lags spot rates by 1-2 quarters depending on commodity ¥ ~63% of raw materials are purchased in USD Y Customer agreements indexed to raw materials - OE customers - Certain large comm
Slide 24: Raw Material Overview
Raw Material Overview GOODSYEAR. Terms: US$ millions . terial C ) Outlook ¢ 2020 raw material costs ~$125 million benefit, excluding transactional foreign currency ¢ Brazilian Real and Turkish Lira drivers of unfavorable transactional foreign currency (a) Impact to cost of goods sold versus prior pe
Slide 25: Feedstock Prices
Feedstock Prices Price Movements of Key Feedstocks ¢ Recovery in global tire production is impacting feedstock prices ¢ Natural rubber prices above Feb 2020 / pre-COVID-19 levels ¢ Butadiene and carbon black prices steadily rising Based on extemal tpt pring data and Goodyear estimates, 25 | {t)_ Oct
Slide 26: Consumer Replacement Industry Fundamentals
Consumer Replacement Industry Fundamentals: >17” GOODSYEAR U.S. Replacement Industry Europool & Turkey Replacement Industry 2020 vs. 2019 Growth Rate®) 2020 vs. 2019 Growth Rate”) USTMA Members (<17”) ETRMA Members (<17”) Total Total Non-Members Total U.S. Non-Members Total EU + Turkey (a) Source: U
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures GOODFYEAR. This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share (EPS), which are important financial measure
Slide 28: Reconciliation for Segment Operating Income/Margin
Reconciliation for Segment Operating GOODZYEAR. Income/Margin Terms: US$ millions Three Months Ended September 30, Total Segment Operating Income Rationalizations Interest expense Other income (expense) Asset write-offs and accelerated depreciation Corporate incentive compensation plans Retained exp
Slide 29: Third Quarter 2020 Significant Items
Third Quarter 2020 Significant Items GOopZYEAR (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizations, Indirect Tax As Asset Write-offs, ff Pension Settlement | Settlements and As Reported and Accelerated Charges Discrete Adjusted Depreciation Tax Items Net Sales 3,465 3
Slide 30: Third Quarter 2019 Significant Items
Third Quarter 2019 Significant Items GOoDZYEAR (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizations, Indirect Tax As Asset Write-offs, Settlements and As Reported and Accelerated | Beaumont, Texas Discrete Tax Adjusted Depreciation Flood Effect Items Net Sales 3,802 3,
Slide 31: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt GOOD; YEAR. Terms: US$ millions September 30, December 31, September 30, 2020 2019 2019 Long-Term Debt and Finance Leases 5,708 4,753 5,580 Notes Payable and Overdrafts 529 348 486 Long-Term Debt and Finance Leases Due Within One Year 411 562 610 Total Debt
Slide 32: GOODFSYEAR
GOODFSYEAR
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