The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q4 2020 Earnings Presentation
33 slides from The Goodyear Tire & Rubber's earnings presentation, Feb 9, 2021
Slide 1: Fourth Quarter 2020 Conference Call
é a4 GOODSYEAR Fourth Quarter 2020 Conference Call February 9, 2021
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: Fourth Quarter Highlights
Fourth Quarter Highlights GOODZYEAR ¢ Segment Operating Income increased 25% to $302 million ¢ Volume improved sequentially; tire units down 5% year over year ¢ $70 million of net cost savings - a significant increase from Q3 * >$55 million contribution from price/mix vs. raws ¢ Free cash flow of $1
Slide 5: Reflecting on Q4 2020
Reflecting on Q4 2020 GOODFYEAR. Positives Negatives High single-digit growth in commercial volume, Lower vehicle miles traveled / mobility driven by strong performance in fleet business restrictions affecting consumer demand Consumer OE business outperformed industry Weak retail demand in U.S. mass
Slide 6: Product Vitality
Product Vitality GOODFYEAR Assurance MaxGuard Wrangler Workhorse Powerline - Delivers a smooth & quiet ride - Great solutions for consumers - Multi-biting edges provide & fleets enhanced wet grip for added - Built for longevity, utility & safety enhanced traction Fuel Max LHD2 Fuel Max RSD -TredLock
Slide 7: Financial Review
Financial Review avitgaooD
Slide 8: Q4 Financial Summary
Q4 Financial Summary GOODFYEAR ¢ Industry recovery solid, even excluding import pre-buy / restocking ¢ Strong consumer OE performance; rebuilding portfolio ¢ Some other tire-related businesses improving; negative aviation impact continues ¢ Production ~ full capacity ¢ Delivered significant savings
Slide 9: Fourth Quarter 2020 Income Statement
Fourth Quarter 2020 Income Statement Terms: US$ millions (except EPS) Units Net Sales Gross Margin SAG Segment Operating Income” Segment Operating Margin Goodyear Net Income (Loss) Goodyear Net Income (Loss) Per Share Weighted Average Shares Outstanding Basic Weighted Average Shares Outstanding - Di
Slide 10: Segment Operating Income Walk
($40) Volume A Materials) Unabsorbed _Price/Mix (*) Fixed Cost ($33) a — —<— Inflation’) Currency Other) Cost Savings Includes: Legal settlement $34M Environmental remediation ($13M) Other tire-related businesses ($20M) ($72) $58 Total Volume Impact Net P/M vs Raws $70 Net Cost Savings Includes savi
Slide 11: Fourth Quarter 2020 Balance Sheet
Fourth Quarter 2020 Balance Sheet Terms: US$ millions December 31, September 30, 2020 020 GOODSYEAR December 31, 2019 Cash and cash equivalents 1,539 $ Accounts receivable 1,691 $ Inventories 2,153 Accounts payable - trade (2,945) 1,057 2,251 2,152 (2,330) 908 1,941 2,851 (2,908) Working capital 2,0
Slide 12: Fourth Quarter 2020 Free Cash Flow
Fourth Quarter 2020 Free Cash Flow GOODSYEAR Terms: US$ millions Net Income (Loss) Depreciation and Amortization Change in Working Capital Pension Expense Pension Contributions and Direct Payments Provision for Deferred Income Taxes Rationalization Payments Other Three Months Ended December 31, 2020
Slide 13: Liquidity Profile
Fourth Quarter 2020 Fe one - GOODy YEAR. Liquidity Profile decd Terms: US$ billions $5.4) Available Credit Lines Cash & Equivalents December 31, 2020 (@) Total liquidity is comprised of $1,539 million of cash and cash equivalents, as well as $3,881 million of unused availability under various credit
Slide 14: Fourth Quarter 2020 - Segment Results: Americas
Fourth Quarter 2020 - Segment Results Americas Terms: US$ millions Units in millions GOODZYEAR. Fourth Quarter * Volume reflects continued impact of COVID-19 * Consumer OE business outperformed industry (units up 6%) 2020 2019 Change Units 17.5 18.7 (6.0)% ¢ U.S. consumer replacement share recoverin
Slide 15: Fourth Quarter 2020 - Segment Results: EMEA
Fourth Quarter 2020 - Segment Results Europe, Middle East & Africa GOODFYEAR Terms: US$ millions Units in millions Fourth Quarter * Volume reflects continued impact of COVID-19 2020 2019 Change ¢ Strong commercial volume growth, reflecting Units 12.4 13.0 (4.9)% innovative fleet service offering (un
Slide 16: Fourth Quarter 2020 - Segment Results: Asia Pacific
Fourth Quarter 2020 - Segment Results Asia Pacific GOODSYEAR Terms: US$ millions Units in millions Fourth Quarter 2020 2019 Change * Volume reflects continued impact of COVID-19 * China consumer replacement business continued to outperform industry (units up >10%) Units 7.8 7.9 (2.2)% Net Sales (1.6
Slide 17: Q1 Business Outlook
Q1 Business Outlook GOODZYEAR. ¢ Anticipate volume to remain below 2019 levels, reflecting lower auto production and vehicle miles traveled ¢ Tire production forecasted to increase 3 million units compared to prior year ¢ Positive price/mix vs. raw material costs ¢ Continued recovery in other tire-r
Slide 18: 2021 Financial Assumptions
. $125 to $175 million higher than prior year based Raw Materials a M on current spot rates, net of raw material cost savings Interest Expense $350 to $375 million Othen (Income Exons Financing fees: ~$35 million Pi Global pension related (excluded from SO1): $45 to $65 million io a ° one ia Depreci
Slide 19: Appendix
Appendix avitgaooD
Slide 20: Modeling Assumptions
Modeling Assumptions GOODFYEAR. Volume Sensitivities Pricing Translational Foreign Currency (Impact on Goodyear's Annual Units in 000's) (Annual Impact of Effective Pricing Yield) (Annual Impact on FX portion of SO! Walk) + 1% A in U.S. Consumer OE Industry 1% A in U.S. Consumer Replacement *+/-O.01
Slide 21: Raw Materials
Raw Materials GOODFYEAR. v Raw materials are ~36% of tire COGS Global Raw Material Spend Y ~67% of raw materials are influenced by oil FY 2020 ($3.2 Billion) prices - P&L impact lags spot rates by 1-2 quarters Sy ete ues 249 depending on commodity ¥ ~61% of raw materials are purchased in USD Y Custo
Slide 22: Americas
Americas Total Company OE 80% +5% YOY 55% +10% YOY 60% +20% YOY 65% +10% YOY +5% YOY
Slide 23: Raw Material Costs
Raw Material Costs!) -$1 -$25 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Qi Q2 Q3 Q4 Qi Q2 QZ a4 ( Full Year = $725 int Full Year = $266 ) l Full Year = $278 | \ Full Year = ($2) ) Y 2017 2018 2019 2020
Slide 24: Feedstock Prices
Feedstock Prices® Price Movements of Key Feedstocks * Recovery in global tire production is impacting feedstock prices 8 — Natural rubber and butadiene prices above pre-COVID-19 levels = i=) g = 90 : 3 £ n o — Carbon black prices steadily rising (2) Based on external third-party pricing data and Goo
Slide 25: Consumer Replacement Industry Fundamentals
Consumer Replacement Industry Fundamentals: >17” GOODFYEAR. U.S. Replacement Industry®) Europool & Turkey Replacement Industry) USTMA Members (<17”) -10% ETRMA Members (<17”) Total -7% Total Non-Members 30% Non-Members Total U.S. Total EU + Turkey ¢ Full-year consumer replacement volume impacted by
Slide 26: Maturity Schedule
Fourth Quarter 2020 Maturity Schedule GOODZYEAR. Terms: US$ millions - 1 ' Undrawn Credit Lines | | Funded Debt $2,000 $982) 2021 2022 2023 2024 2025 2026 2 2027 Note: Based on December 31, 2020 balance sheet values and excludes notes payable, finance and operating leases and other domestic and fore
Slide 27: Pension Update
Pension Update Terms: US$ millions Total Global Cash Flow Impact @ (°) Global Unfunded Obligations © Global Pension Expense “) (©) $80-$100 $80-$100 $80-$100 $25-$50 $25-$50 $25-$50 ao18 a ah ica 2020 2021E = -2022E 2019 2020 2021 = 2022E-=—-2023E. BUS Plans Non-US Plans JS Plans ™Non-US Plans tans
Slide 28: 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 29: Reconciliation for Segment Operating Income/Margin
Reconciliation for Segment Operating GOODZYEAR. Income/Margin Terms: USS millions Three Months Ended December 31, 2020 2019 Total Segment Operating Income $ 302. $ 242 Rationalizations (26) (77) Interest expense (79) Other income (expense) (24) Asset write-offs and accelerated depreciation Corporate
Slide 30: Fourth Quarter 2020 Significant Items
Fourth Quarter 2020 Significant Items GOoDZYEAR (After Tax and Minority Interest) Terms: US$ millions (except EPS) Rationalizatio Indirect Tax Boece As Asset Write-offs, [| Settlements and Rie it Related to One-time Legal As Reported and Accelerated Discrete chee Discontinued Settlement Adjusted Tax
Slide 31: Fourth Quarter 2019 Significant Items
Fourth Quarter 2019 Significant Items GOopZYEAR (After Tax and Minority Interest) Terms: US$ millions (except EPS) Indirect Tax ff Rationalizations, Gain on Asset Write-offs, | Beaumont, e Acquisition, Net. otc As sset Sales crete T ated | Texas Flooding J Set s [| of Transaction Adjusted Items 2pre
Slide 32: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt GOOD; YEAR. Terms: US$ millions December 31, September 30, December 31, 2020 2020 2019 Long-Term Debt and Finance Leases 5,432 5,708 4,753 Notes Payable and Overdrafts 406 529 348 Long-Term Debt and Finance Leases Due Within One Year 152 411 562 Total Debt
Slide 33: GOODFSYEAR
GOODFSYEAR
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