The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2021 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Nov 5, 2021
Slide 1: Third Quarter 2021 Conference Call
THIRD QUARTER 2021 CONFERENCE CALL NOVEMBER 5, 2021 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: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS ‘a ¢ Net sales growth of 42 percent compared with the third quarter of 2020, 16 percent growth excluding the Cooper Tire transaction * Goodyear net income of $132 million; adjusted net income of $206 million * Merger-adjusted segment operating income of $449 million) ¢ Globa
Slide 4: Reflecting on Third Quarter 2021
REFLECTING ON THIRD QUARTER 2021 « Strongest price/mix performance in nearly a decade ¢ Favorable industry trends in key replacement markets * Continued recovering consumer replacement share in Europe « U.S. consumer replacement volume up 20%, well ahead of industry *« Commercial fleet business deli
Slide 5: Consumer Replacement Industry
CONSUMER REPLACEMENT INDUSTRY U.S. Replacement Industry!) Europool & Turkey Replacement Industry (>) Q3 21 YTD 21 Q3 21 YTD 21 USTMA Members (217”) 8% ETRMA Members (217") 8% USTMA Members (<17”) -2% ETRMA Members (<17") Total 5% Total Non-Members -28% Non-Members Total U.S. -4h Total EU & Turkey Go
Slide 6: EMEA: Renewable Electricity Commitment
EMEA: RENEWABLE ELECTRICITY COMMITMENT TARGETING 100% RENEWABLE ELECTRICITY ACROSS EMEA BY THE END OF 2022 ae 700,000 MEGAWATT- CO2 FOOTPRINT TO HOURS TO BE REDUCE BY 260,000 PURCHASED TONS by ZA v S, S WE WILL PROCURE HYDRO, WIND, SOLAR OR 0 GUARANTEE OF ORIGIN GEOTHERMIC BIOMASS ENERGY POWER
Slide 7: Powered by Goodyear SightLine
Powered by Goodyear SightLine Gatik’s medium-duty fleet will be equipped with Goodyear’s industry-leading tire intelligence technology Sustainable solutions for autonomous fleets Collaboration will contribute to more sustainable goods movement by autonomous middle-mile B2B fleets Enhances safety and
Slide 8: Financial Review
FINANCIAL REVIEW GOODSYEAR
Slide 9: Income Statement
Terms: in millions Three Months Ended (except EPS) September30, September 30, 2021 2020 Change INCOME = ee Net Sales 4,934 $ 3,465 42% STATEMENT Gross Margin 2% max pte n SAG $ 727 Ss 555 3% Merger-Adjusted Segment Operating Income $ 449 $ 162 Merger-Adjusted Segment Operating Margin a 9.1% 4.7% 4.4
Slide 10: Segment Operating Results Q3 2021 versus 2020
SEGMENT OPERATING RESULTS THIRD QUARTER 2021 VERSUS 2020 Terms: US$ millions $327 ($161) + Other Tire-Related Businesses + TireHub - Advertising - Warehousing Ea (b) cna ($57) E4 Fixed Cost Reductions $3 $-- Currency Other!) ion (°) $93 Inflation Price/Mix ®) $22 $162 EN Unabsorbed Volume —_ Fixed C
Slide 11: Segment Operating Results Q3 2021 versus 2019
SEGMENT OPERATING RESULTS THIRD QUARTER 2021 VERSUS 2019 Terms: US$ millions $333 ($154) ~ Other Tire-Related Businesses -Advertising | | [-—-~—-~—~— J - Warehousing + TireHub $62 Raw Materials") — Savings Cost $294 ($51) Cooper by Cooper | Operations Merger | 03 ($28) (ee eee 2019 Volume Sol Unabso
Slide 12: Balance Sheet
Terms: USS millions BALANCE can September 30, June 30, December 31, September 30, 2021 2021 2020 2020 Cash and cash equivalents $s 1,187 $ 1,030 $ 1539. «S$ 1,057 Accounts receivable $ 3,193 $ 2,819 $ 1691 $ 2,251 Inventories 3,443 3,314 2,153 2,152 Accounts payable - trade (3,962) (3,858) (2,945) (
Slide 13: Cash Flow
Includes $72M inventory fair value adjustment related to the merger Net Income Depreciation and Amortization Change in Working Capital Pension Expense Pension Contributions and Direct Payments Provision for Deferred Income Taxes Rationalization Payments Other? Cash Flow from Operating Activities (GA
Slide 14: Segment Results - Americas
SEGMENT RESULTS - AMERICAS Terms: US$ millions Units in millions [ Third Quarter \ 20212) 2020 Change Units 259 162 59.3% NetSales $2,967 $1,823 62.8% Operating =» g959 Ss $106. 144.3% Income Margin 8.7% 5.8% (6) The Cooper transaction closed on June 7, 2021, and segment results include Cooper opera
Slide 15: Segment Results - EMEA
SEGMENT RESULTS - EMEA ff £« Terms: US$ millions Units in millions / Third Quarter \ 2021) 2020 Change Units 14.2 132 7.7% NetSales $1,397 $1,156 20.8% Operating $81 $22 268.2% Income Margin 5.8% 1.9% , (6) The Cooper transaction closed on June 7, 2021, and segment results include Cooper operations
Slide 16: Segment Results - Asia Pacific
SEGMENT RESULTS - ASIA PACIFIC ft Terms: US$ millions Units in millions f Third Quarter \ / \ 2021) 2020 Change * Volume growth reflects the addition of Cooper Tire business Units 8.1 %2 12.6% + China consumer replacement business Net Sales $570 $486 17.3% impacted by COVID-19 lockdowns and flooding
Slide 17: 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 18: Business Outlook
04 BUSINESS OUTLOOK ¢ Markets continue stabilizing, volume comparison similar to 03 (vs. 2019) (2) * Positive price/mix vs. raw material costs ¢ Continued inflationary cost pressures, including higher transportation, labor and energy costs - Transitory cost pressures in our U.S. factories (~$50M) -
Slide 19: 2021 Outlook: Other Financial Assumptions
2021 OUTLOOK: OTHER FINANCIAL ASSUMPTIONS Includes impact of Cooper transaction except as noted Current Assumpt Raw Materials $450 to $475 million higher than prior year, net of raw material cost savings '*) Interest Expense ~§400 million Other (Income) Expense Financing fees: ~$40 million, includin
Slide 20: Appendix
APPENDIX GOODSYEAR
Slide 21: Legacy Goodyear Modeling Assumptions
LEGACY GOODYEAR MODELING ASSUMPTIONS Volume Sensitivities Pricing Translational Foreign Currency (impact on Goodyear 's Annual Unitsin 00's) (Annual Impact of Effective Pricing Yield) (Annual Impact on FX portion of SOL Walk) + 1% Ain US. Consumer OE Industry ~90 + 1%A inUS. Consumer Replacement ‘~S
Slide 22: Legacy Goodyear Raw Materials
LEGACY GOODYEAR RAW MATERIALS & Raw materials are ~36%') of tire COGS ~67% of raw materials are influenced by oil prices « P&Limpact lags spot rates by 1-2 quarters depending on commodity ~61% of raw materials are purchased in USD Customer agreements indexed to raw materials + OE customers * Certain
Slide 23: Legacy Goodyear Raw Material Overview
LEGACY GOODYEAR RAW MATERIAL OVERVIEW 2021 Outlook ‘») Raw Material Costs!) $268 Raw material costs expected to increase $450 to $475 million, net of raw material cost savings ¢ Includes adverse transactional -$22 Ag | a foreign currency impact of ~$40 million©) Q1 02 03 04 O01 02 03 04 O1 02 03 04
Slide 24: Pro Forma Maturity Schedule
Terms: USS millions PR 0 FO R MA i a Undrawn Credit Lines MATURITY Il Funded Debt SCHEDULE THIRD QUARTER 2021 2021 2022 2023 2024 2025 2026 2027 2028 2029 22030
Slide 25: Liquidity Profile
Terms: USS billions LIQUIDITY $5.4 (a) PROFILE THIRD QUARTER 2021 September 30, 2021 {e) Tote liquidity is comprised of $1,187 million of cesh and cash equivelents, es well es $4,195 million of unused evailebility under verious credit agreements
Slide 26: 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 $450 million or more WORKING CAPITAL IMPROVEMENT AND ABILITY TO LEVERAGE GOODYEAR’S TAX POSITION EXPE
Slide 27: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income and Margin, Merger-Adjusted Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share(EP
Slide 28: Reconciliation for Merger-Adjusted Segment Operating Income
RECONCILIATION FOR MERGER- ADJUSTED SEGMENT OPERATING INCOME / MARGIN & SEGMENT OPERATING INCOME / MARGIN THIRD QUARTER 2021 Terms: USS millions Merger-Adjusted Segment Operating Income Amortization of Cooper Tire Inventory Step-up Adjustments Incremental Amortization of Intangible Assets Total Segm
Slide 29: Third Quarter 2021 Significant Items
THIRD QUARTER 2021 SIGNIFICANT ITEMS Terms: US$ millions Amortization of Rationalizations, . . (except EPS) As AcquisitionRelated Asset Write-offs, Piva nt Colombia National Pata! oe Asset and As Reported InventoryFairValue andAccelerated Charges Strike Impact Other Sales Adjusted Adjustment Depreci
Slide 30: Third Quarter 2020 Significant Items
THIRD QUARTER 2020 SIGNIFICANT ITEMS Terms: US$ millions Rationalizations, . sence 8) Asset Write- Pension insirect Tax As Settlements and As offs, and Settlement 2: = Reported Discrete Adjusted Accelerated Charges ee Tax items Depreciation Net Sales $ 34685 S$ = $ - § = $ 3,465 Cost of Goods Sold 2
Slide 31: Reconciliation for Total Debt and Net Debt
Terms: USS millions RECONCILIATION FOR TOTAL DEBT AND NET September 30, June 30, December 31, | September 30, 2021 2021 2020 2020 DEBT Long-Term Debt and Finance Leases s 7.183 $ 6978 $ 5,432 $ 5,708 Notes Payable and Overdrafts 497 459 406 529 Long-Term Debt and Finance Leases Due Within One Year 6
Slide 32: Goodyear
GOODFSYEAR
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