The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2016 Earnings Presentation
30 slides from The Goodyear Tire & Rubber's earnings presentation, Oct 28, 2016
Slide 1: Third Quarter 2016 Conference Call
Third Quarter 2016 Conference Call October 28, 2016
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 and Year-to-Date Highlights
Third Quarter and Year-to-Date Highlights • Record year-to-date core segment operating income(a) of $1.5 billion • Third quarter segment operating margin of 14.5% (a) • Americas third quarter income of $305 million, 14.7% operating margin • Europe, Middle East and Africa third quarter income of $152
Slide 4: 2020 Segment Operating Income Plan
2020 Segment Operating Income Plan (a) September Investor Meeting Impacts on our 2020 Plan SOI Changes ($M) 2016 2020 Long-term Temporal industry and Outlook customer issues in -65 No Change Unchanged (+Tariffs) Commercial Truck(b) Declining <17” markets Already in EMEA -20 No Change contemplated in
Slide 5: U.S. Industry Fundamentals: >17"
U.S. Industry Fundamentals: >17” U.S. Consumer Replacement Industry 2016 vs 2015 Growth Rate(a) Q3 YTD • Goodyear outpacing industry in >17” segment; margin expansion in RMA Members (>17”) 8% 8% consumer of 200 bps in Americas RMA Members (<17”) -11% -11% • Non-members’ growth driven by weak Total -
Slide 6: EMEA Industry Fundamentals: >17"
EMEA Industry Fundamentals: >17” Europool & Turkey Replacement Industry 2016 vs 2015 Growth Rate(a) Q3 YTD • Strong growth in >17” segment ETRMA Members (>17”) 12% 10% • September <17” industry down 8% ETRMA Members (<17”) -7% -5% • Increased competition in <17” summer Total -1% 1% segment Non-Membe
Slide 7: Our Goal
OURSGOAL DELIVER SUSTAINABLEREVEN AND PROFIT GROWTH WHILE INCREASING THE VALUE OF OUR BRAND. HOW WE'LL WIN HOW WE'LL WORK INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE ft, OPERATIONAL EXCELLENCE ACTWITH INTEGRITY ENERGIZE THE TEAM PROMOTE COLLABORATION BE AGILE DELIVER RESULTS Winning at the in
Slide 8: Income Statement
Third Quarter 2016 Income Statement Terms: US$ millions Three Months Ended (except EPS) September 30, September 30, ~Flat 2016 2015 Change excluding Venezuela(c) Units 42.0 42.5 (1)% Net Sales $ 3,847 $ 4,184 (8)% Gross Margin 28.9% 28.3% 0.6 pts SAG $ 599 $ 633 (5)% Segment Operating Income (a) $ 5
Slide 9: Segment Operating Results
Third Quarter 2016 Segment Operating Results Terms: US$ millions $93 ($33) $602 ($39) ($5) ($40) $41 ($38) Inflation(c) Currency $563 ($19) $556 Q3 ($6) 2015 Venezuela Q3 Other(d) Total Price/Mix Cost Q3 SOI 2015 Volume Unabsorbed Raw Fixed Cost Materials(b) Savings 2016 Core SOI SOI(a) Motorcycle (
Slide 10: Balance Sheet
Third Quarter 2016 Balance Sheet Terms: US$ millions September 30, June 30, December 31, September 30, 2016 2016 2015 2015 Cash and Cash equivalents $ 975 $ 1,138 $ 1,476 $ 1,690 Accounts receivable 2,649 2,475 2,033 2,616 Inventories 2,754 2,686 2,464 2,544 Accounts payable - trade (2,600) (2,643)
Slide 11: Free Cash Flow from Operations
Third Quarter 2016 Free Cash Flow from Operations Terms: US$ millions Three Months Ended Trailing Twelve September 30, Months Ended 2016 2015 September 30, 2016 Net Income $ 320 $ 305 $ 344 Depreciation and Amortization 181 173 712 Change in Working Capital (264) (231) (284) Pension Expense 19 36 81
Slide 12: Americas - Segment Results
Third Quarter 2016 - Segment Results Americas Terms: US$ millions Third Quarter • Volume impact of 2016 2015 Change deconsolidation of Venezuela (0.4 million units) and sale of Units 18.6 20.3 (8.1%) GDTNA (0.2 million units) • U.S. total Consumer ~flat, U.S. Net Sales $2,070 $2,398 (13.7%) Commerci
Slide 13: Europe, Middle East & Africa - Segment Results
Third Quarter 2016 - Segment Results Europe, Middle East & Africa Terms: US$ millions Third Quarter • Decline in summer segment 2016 2015 Change (<17”) resulting from increased competition Units 15.4 16.2 (4.5%) • Lower OE volume, driven primarily by OE selectivity and Net Sales $1,236 $1,328 (6.9%)
Slide 14: Asia Pacific - Segment Results
Third Quarter 2016 - Segment Results Asia Pacific Terms: US$ millions Third Quarter • Strength in China; volume growth 2016 2015 Change of 25% Units 8.0 6.0 32.6% • India volume growth of 9% Net Sales $541 $458 18.1% • Japan volume increase of 1.3 million units Operating $99 $72 37.5% • Record third
Slide 15: 2016 Key Segment Operating Income Drivers
2016 Key Segment Operating Income Drivers 2015 Results July Outlook Current Outlook Driver excluding Comments 2016 vs 2015 2016 vs 2015 Venezuela Global Volume +3% ~3% +1% to 2% Q4 about flat Net Price/Mix vs Raw Raw material costs unchanged at down 4%; $77 million ~$75 million ~$55 million Material
Slide 16: 2016 Outlook – Other Financial Assumptions
2016 Outlook – Other Financial Assumptions July Outlook October FY Assumption Interest Expense $350 - $375 million $360 - $375 million Financing Fees ~$45 million ~$45 million Expense: ~28% of global pre-tax operating income Expense: ~28% of global pre-tax operating income Income Tax Cash: 10-15% of
Slide 17: Capital Allocation Plan: Sources / Use of Cash 2017-2020
Capital Allocation Plan Sources / Use of Cash – Cumulative 2017-2020 Creating shareholder value through capital allocation (a) Not yet authorized by the Board of Directors, dependent on Company performance including achievement of financial targets. (b) For information on our use of non-GAAP financi
Slide 18: Appendix
Appendix aviAgaooD
Slide 19: 2015 Venezuela Key Metrics
2015 Venezuela Key Metrics Terms: US$ millions Venezuela Q1 Q2 Q3 Q4 2015 Full Year Units (000s) 377 318 385 312 1,392 Revenue $94 $115 $155 $167 $531 Operating Income $22 $36 $39 $22 $119 Foreign Currency ($1) ($12) ($8) ($5) ($26) Exchange(a) Note: The Venezuela subsidiary was deconsolidated effec
Slide 20: Third Quarter 2016 – Liquidity Profile
Third Quarter 2016 – Liquidity Profile Terms: US$ billions $4.0(a) Available Credit Lines $3.0 Cash & Equivalents $1.0 September 30, 2016 (a) Total liquidity comprised of $975 million of cash and cash equivalents, as well as $3,005 million of unused availability under various credit agreements. 20
Slide 21: Third Quarter 2016 – Maturity Schedule
Third Quarter 2016 – Maturity Schedule Terms: US$ millions Undrawn Credit Lines Funded Debt $1,280 $113 (a) $1,690 (c) $1,050 $700 $475 (b) $864 $413 $310 2016 2017 2018 2019 2020 2021 2022 2023 ≥ 2024 Note: Based on September 30, 2016 balance sheet values and excludes notes payable, capital leases
Slide 22: 2016 Full-Year Industry Outlook
2016 Full-Year Industry Outlook October Full-Year 2016 Guidance July Full-Year 2016 Guidance U.S. Western Europe U.S. Western Europe Consumer YTD YTD ~1% ~2% ~1% ~2% Replacement 1.5% 1.4% YTD YTD Consumer OE (1%) - Flat ~3%(a) ~1% ~3%(a) 0.3% 2.4% Commercial YTD YTD ~2% ~3% ~1% ~3% Replacement 4.8%
Slide 23: Use of Historical and Forward-Looking Non-GAAP Financial Measures
Use of Historical and Forward-Looking Non-GAAP Financial Measures This presentation contains historical and forward-looking non-GAAP financial measures, including Total Segment Operating Income and Margin, Core Segment Operating Income and Margin, Free Cash Flow from Operations, Free Cash Flow, Adju
Slide 24: Significant Items (After Tax and Minority Interest)
Third Quarter 2016 Significant Items (After Tax and Minority Interest) Terms: US$ millions, Shares in millions (except EPS) Rationalizations, Asset Write-offs, As Discrete Tax Net Gains on and Accelerated Reported Items Asset Sales Depreciation As Adjusted Net Sales $ 3,847 $ - $ - $ - $ 3,847 Cost
Slide 25: 2015 Significant Items (After Tax and Minority Interest)
Third Quarter 2015 Significant Items (After Tax and Minority Interest) Terms: US$ millions, Shares in millions (except EPS) Rationalizations, Transaction Insurance Asset Write-offs, Costs and Net Recovery - As and Accelerated Gains on Asset Discontinued Discrete Tax Indirect Tax Reported Depreciatio
Slide 26: Reconciliation for Segment Operating Income/Margin
Reconciliation for Segment Operating Income/Margin Terms: US$ millions Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 Core Segment Operating Income $ 556 $ 563 $ 1,506 Venezuela subsidiary operating income - 39 - Total Segment Operating Income $ 556 $ 602 $ 1,506 Rat
Slide 27: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt Terms: US$ millions September 30, June 30, December 31, September 30, 2016 2016 2015 2015 Long-Term Debt and Capital Leases $ 5,446 $ 5,745 $ 5,074 $ 5,591 Notes Payable and Overdrafts 179 145 49 41 Long-Term Debt and Capital Leases Due Within One Year 403
Slide 28: Reconciliation for Free Cash Flow from Operations
Reconciliation for Free Cash Flow from Operations Terms: US$ millions The amounts below are calculated from the Consolidated Statements of Cash Flows except for pension expense, which is as reported in the pension-related note in the Notes to Consolidated Financial Statements. Trailing Twelve Three
Slide 29: Reconciliation for Free Cash Flow Target
Reconciliation for Free Cash Flow Target Terms: US$ billions 2017-2020 Cash Flows from Operating Activities $8.9 - $9.5 Capital Expenditures ($4.6) Free Cash Flow $4.3 - $4.9 29
Slide 30: Goodyear
GOODFYEAR
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