The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2022 Earnings Presentation
34 slides from The Goodyear Tire & Rubber's earnings presentation, Aug 5, 2022
Slide 1: Second Quarter 2022 Conference Call
SECOND QUARTER 2022 CONFERENCE CALL AUGUST 5, 2022 GOODSYEAR
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
GOODFYEAR. ENABLING MOBILITY HOW WE WIN HOW WE WORK \d respect INNOVATION SALES & MARKETING ALT een mone EXCELLENCE EXCELLENCE te leading We capture the value of our ENERGIZE products and brands and grow our market THE TEAM icipate the share, helping our customers sustainability win in their markets
Slide 4: Second Quarter Highlights
SECOND QUARTER HIGHLIGHTS ¢ Net sales growth of 31% compared with the second quarter of 2021, over 15% growth excluding the Cooper Tire transaction * Second quarter Goodyear net income of $166 million; adjusted net income of $131 million + Merger-adjusted segment operating income of $372 million, up
Slide 5: Reflecting on Second Quarter 2022
REFLECTING ON SECOND QUARTER 2022 mee Positives * Solid volume growth while delivering strong Ongoing cost inflation (including energy, price/mix transportation, wages) Robust volume and share growth in Europe despite geopolitical uncertainty Production efficiency negatively impacted by staffing ava
Slide 6: Financial Review
FINANCIAL REVIEW GOODFYEAR
Slide 7: Income Statement Second Quarter 2022
Terms: in millions Three Months Ended Seeessere) June 30, June 30, 2022 2021 Change INCOME Units 45.6 375 21% Net Sales $ 5,212 s 3,979 31% STATEMENT cross Mein za. ex (2p SAG $ 717 $ 658 9% Merger-Adjusted Segment Operating Income” $ 372 $ 349 Lath ND QUARTER Merger-Adjusted Segment Operating Margi
Slide 8: Segment Operating Results Second Quarter 2022 versus 2021
SEGMENT OPERATING RESULTS SECOND QUARTER 2022 VERSUS 2021 $561 ($419) Terms: US$ millions Reflects impact of non- recurrence of costs triggered by the Cooper Reflects impact of non- recurrence of $69 million benefit in 2021 related to a court ruling on indirect taxes in Brazil transaction in 2021 (s
Slide 9: Balance Sheet Second Quarter 2022
Terms: USS millions BALANCE S | E ET June 30, March 31, December 31, June 30, 2022 2022 2021 2021 Cash and cash equivalents $ 1,248 § 1053 $ 1088 § 1,030 SECOND QUARTER Accounts receivable $ 3,306 $ 3,220 $ 2,387 $ 2,819 2022 Inventories 4,389 4,026 3,594 3,314 Accounts payable - trade (4,593) (4,33
Slide 10: Cash Flow Second Quarter 2022
Terms: US$ millions Includes rebuild of Three Months Ended Trailing Twelve working capital J following june 30, Months Ended reduction of $871 2022 2021 June 30, 2022 million in 2020 Net Income $ 70) OS 7” $ Depreciation and Amortization 237 208 NowSeen Change in Working Capital (240) 23 reversal of
Slide 11: Segment Results - Americas
SEGMENT RESULTS - AMERICAS Terms: US$ millions Units in millions / a) \ Second Quarter! * Consumer replacement industry above pre- 2022 2021 Change pandemic levels Units 23.3 19.0 22.4% * Volume growth driven by addition of Cooper Tire Net Sales $3,147 $2,256 39.5% * Price/mix more than offset raw m
Slide 12: Segment Results - EMEA
SEGMENT RESULTS - EMEA Terms: US$ millions Units in millions / Second Quarter‘) \ 2022 2021 Change Units 14.5 12.0 20.8% Net Sales $1,497 $1,230 21.7% Operating =—§ 52, $43_—(20.9% Income 3.5% 3.5% Margin [2] The Cooper Tire transaction closed on June 7, 2021, and segment results include Cooper Tire
Slide 13: Segment Results - Asia Pacific
SEGMENT RESULTS - ASIA PACIFIC Terms: US$ millions Units in millions f Second Quarter‘) \ 2022 2021 Change Units 7.8 6.5 19.9% Net Sales $568 $493 15.2% Operating s ee $19 $23. (17.4%) Margin 3.3% 4.7% [2] The Cooper Tire transaction closed on June 7, 2021, and segment results include Cooper Tire op
Slide 14: Q3 Business Outlook
Q3 BUSINESS OUTLOOK Positive price/mix vs. raw material costs (similar to 01 and 02) Volume growth in EMEA and Asia Pacific") Continued inflationary cost pressures, including higher transportation, labor and energy costs (similar to 02 excluding impact of non-recurrence of indirect tax benefit in Br
Slide 15: 2022 Outlook: Other Financial Assumptions
2022 OUTLOOK: OTHER FINANCIAL ASSUMPTIONS Raw Materials H2 ~$1 billion higher 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 to $40 million'*) Income Tax Cash: $150 to $200 milli
Slide 16: Appendix
APPENDIX GOODFYEAR
Slide 17: Modeling Assumptions
MODELING ASSUMPTIONS Updated to reflect the inclusion of Cooper Tire Volume Sensitivities Pricing Translational Foreign Currency {Impact on Goodyear's Annual Units in 00's) (Annual Impact of Effective Pricing Yield) (Annual Impact on FX portion of SOI Walk) © 1% A inU.S. Consumer OE Industry “85 + 1
Slide 18: Raw Materials (Pro Forma)
RAW MATERIALS (PRO FORMA") Raw materials are ~47% of tire COGS Global Raw Material Spend v ~67% of raw materials are influenced FY 2021($6.2 Billion) by oil prices ¢ P&Limpact lags spot rates by 1-2 quarters depending on commodity * ¥ ~67% of raw materials are purchased in USD ¥ Customer agreements
Slide 19: Raw Material Overview
RAW MATERIAL OVERVIEW f Ff 2022 Outlook sa * H2~$1billion higher based on current spot rates * Q3~$600 million Raw Material Costs!) $378 -$22 “$2 539 “87-818 -$45 01 02 03 04 01 02 03 04 O1 02 03 04 1 02 03 04 O1 02 Full Year=$186 FullYear=$185 Full Year=($63) Full Year= $484 1H = $797 T T T T T 201
Slide 20: Maturity Schedule Second Quarter 2022
MATURITY SCHEDULE SECOND QUARTER 2022 Terms: USS millions |__| Undrawn Credit Lines $2,180) I Funded debt $522 (0) roo 2026 2027 2028 2029 22030 billion:
Slide 21: Liquidity Profile Second Quarter 2022
Terms: USS billions LIQUIDITY $4.46.) PROFILE SECOND QUARTER 2022 June 30, 2022 (2) Total liquidity is comprised of $1,248 million of cash and cesh equivalents, as well es $3,210 million of unused availability under various credit agreements
Slide 22: Structural Cash Flow
STRUCTURAL CASH FLOW Year Ended December 31, 2010 8=2011 2012 2013 «2014 2015 201 2017 2018 20 2020 2021 Cash Flow from Operating Activities (GAAP) $924 $ 773 $1,038 $ 938 $340 $1,728 $1557 $1158 $ 916 $1207 $115 $ 1,062 Add Back: Pension Cash 405 294 684 = =—-1,162 1,338 103 89 90 74 79 56 91 Pre-P
Slide 23: Merger Synergies
MERGER SYNERGIES Original Forecast Upgraded Outlook (February 2021) (November 2021) ~$250M _ ~$165M _ R&D SAG Estimated costs to achieve synergies: $150 to $175 million Estimated costs to achieve synergies: ~$200 million Core Cost Synergies EXPECT TO ACHIEVE $250 MILLION OF RUN-RATE SYNERGIES BY MID
Slide 24: 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 25: Goodyear Russia / Ukraine Overview
GOODYEAR RUSSIA / UKRAINE OVERVIEW Russia Ukraine 76 Associates 22 Associates Ss | oT Volume 936K 402K 1.3M Volume 592K 0.4K 621K Sales S59M S111M $43M $213M Sales $34M S7M S3M $44M EBIT $8M EBIT $4M ¢« No manufacturing assets in Russia or Ukraine ¢ Potential for volume opportunity as we work to sup
Slide 26: Amiens Plant Modernization Economics
AMIENS PLANT MODERNIZATION ECONOMICS As presented May 6, 2022 Terms: USS millions Apniowmote INVESTMENT HIGHLIGHTS Year: 2022/2023 2024 2025 2026 2027 Run-Rate « Increase HVA EBIT S$ (3) $ 10 $ 16 $ 27 $ 41 $55-$60 capability by ~3 Startup Costs (5) (3) (4) (3) (1) million tires / year SOl $ (8)$ 7
Slide 27: Plant Modernization Example
PLANT MODERNIZATION EXAMPLE As presented February 24, 2022 Incremental Avg GP/Tire: +$20 Replacement USD in millions Run i 2 3 a Rate INVESTMENT HIGHLIGHTS sinus ofS EBIT S- S$ 16 $ 32 $66 S66 Costs (mainly D&A) Startup Costs (8) (12) (12) Channel Mix: 80% Replacement Sol $ (8) $ 4 $ 20 $ 66 $ 66 $1
Slide 28: Brownfield Expansion Example
BROWNFIELD EXPANSION EXAMPLE fF As presented February 24, 2022 usp in mons Year: 1 2 3 4 = INVESTMENT HIGHLIGHTS etal Aunpstice: ~~ Brownfield 330 Replacement e. a et $- $ 9 917 $36 $36 expansions deliver Costs (mainly D&A) Startup Costs (6) (6) (6) oe i li value- Channel Mix: added capacit baer sol
Slide 29: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income and Margin, Merger-Adjusted Segment Operating Income and Margin, Free Cash Flow, Structural Cash Flow, Adjusted Net Income and Adjusted Diluted Earnings Per
Slide 30: Reconciliation for Merger-Adjusted Segment Operating Income / Margin
RECONCILIATION FOR MERGER- ADJUSTED SEGMENT OPERATING INCOME / MARGIN & SEGMENT OPERATING INCOME / MARGIN SECOND QUARTE 2022 Terms: USS millions Merger-Adjusted Segment Operating Income Amortization of Cooper Tire Inventory Step-up Adjustments Other Transaction-related Items Incremental Amortization
Slide 31: Second Quarter 2022 Significant Items
SECOND QUARTER 2022 SIGNIFICANT ITEMS Terms: US$ millions (except EPS) Rationalizations, Indirect Tax Pension As Asset Write-offs, Settlement Settlements and Asset Sales As Reported and Accelerated Charges Discrete Tax Adjusted Depreciation Items Net Sales $ 5212 $ - $ - $ - $ - $ 5,212 Cost of Good
Slide 32: Second Quarter 2021 Significant Items
SECOND QUARTER 2021 SIGNIFICANT ITEMS Terms: US$ millions (except EPS) Acquisition Amortization of Rationalizations, Indirect Tax As Related ——_AcquisitionRelated vanes en Asset Write-offs, Colombia pesaatied wecouraat Settlements and As Reported Transaction and Inventory Fair Value impact Charges a
Slide 33: Reconciliation for Total Debt and Net Debt
Terms: US$ millions RECONCILIATION FOR TOTAL DEBT AND NET June 30, March 31, December 31, June 30, 1) E B T 2022 2022 2021 2021 Long-Term Debt and Finance Leases $ 7,569 =$ 7450 $ 6648 S$ 6,978 Notes Payable and Overdrafts 519 570 406 459 SECON QUARTER Long-Term Debt and Finance Leases Due Within On
Slide 34: Goodyear
GOODFSYEAR
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