The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2024 Earnings Presentation
36 slides from The Goodyear Tire & Rubber's earnings presentation, Nov 5, 2024
Slide 1: Earnings Release Q3 2024
EARNINGS RELEASE Q3 2024 | NOVEMBER 5, 2024 Q3 2024 - 1
Slide 2: Reaffirming Commitment to Goodyear Forward; Increasing Targets
REAFFIRMING COMMITMENT TO GOODYEAR FORWARD; INCREASING TARGETS $1.5 BILLION OF GROSS ANNUAL RUN RATE BENEFITS; up $200 million versus initial target $450 million year-over-year SOI benefit in 2024; up $25 million versus prior estimate $750 million year-over-year SOI benefit in 2025 10% SOI MARGIN TA
Slide 3: Q3 2024 Highlights
Q3 2024 HIGHLIGHTS SEGMENT OPERATING INCOME of $347 million; SOI margin of 7.2%, up 70 bps YoY FOURTH CONSECUTIVE QUARTER of SOI margin expansion; TTM up ~ 300 bps YoY AMERICAS SEGMENT OPERATING INCOME of $251 million, SOI margin of 8.8% ASIA PACIFIC SEGMENT OPERATING INCOME of $72 million, SOI marg
Slide 4: Q3 2024 Key Metrics
Q3 2024 KEY METRICS Tire Units Net Sales Segment Operating Income 42.5 $4,824 $347 -6.2% YoY -6.2% YoY +3.3% YoY SOI Margin Free Cash Flow Adjusted EPS 7.2% ($340) $0.37 +0.7 pts YoY -729.3% YoY +2.8% YoY Terms: Units & $ in millions Quarter Highlights Financial Results SBU Results Outlook Important
Slide 5: Q3 2024 SBU Metrics
Q3 2024 SBU METRICS Net Sales Segment Operating Income SOI Margin AMERICAS $2,858 $251 8.8% -8.4% YoY -2.7% YoY +0.5 pts YoY $1,348 $24 1.8% EMEA -1.9% YoY +9.1% YoY +0.2 pts YoY $618 $72 11.7% AP -4.6% YoY +28.6% YoY +3.1 pts YoY Terms: Units & $ in millions Quarter Highlights Financial Results SBU
Slide 6: Accelerating Goodyear Forward
ACCELERATING GOODYEAR FORWARD Goodyear Forward is a transformation plan designed to deliver significant margin expansion and reduce leverage to drive substantial shareholder value creation. We expect this program to benefit segment operating income by $450 million in 2024. YoY BENEFITS; $1.5B COST A
Slide 7: Goodyear Forward
GOODYEAR FORWARD FY 24E Total TOTALActions ACTIONS $285 ~ $450 Footprint & Plant Optimization ~ $100 Purchasing ~ $145 SAG ~ $75 Supply Chain and R&D ~ $80 Margin Expansion ~ $50 Realized YTD SOI Impact Balance of 2024 Terms: $ in millions Quarter Highlights Financial Results SBU Results Outlook Imp
Slide 8: Financial Results
GOODJYEAR FINANCIAL RESULTS
Slide 9: Income Statement
INCOME STATEMENT Three Months Ended S eptember 30, 2024 2023 Change Tire Units 42.5 45.3 -6.2% Net Sales $ 4,824 $ 5,142 -6.2% Gross Margin 19.5% 18.9% 0.6 pts SAG $ 663 $ 673 -1.5% Segment Operating Income $ 347 $ 336 3.3% Segment Operating Margin 7.2% 6.5% 0.7 pts Goodyear Net Income (Loss) $ (34)
Slide 10: Segment Operating Results Q3 2024 vs 2023
SEGMENT OPERATING RESULTS THIRD QUARTER 2024 VERSUS 2023 $123 ($53) $25 $347 $336 ($74) $17 ($6) 1 (c) ($8) Other 1 (e) Calculated Other Inflation Costs 1 (d) (CPI) Foreign Insurance Currency Proceeds, Q3 Q3 Net of 2024 2023 Current $26 ($19) SOI SOI ($20) Year Expenses Volume 1 (a) 1 (b) Raw Goodye
Slide 11: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW Total Debt Cash Flow from Operating Activities (GAAP) $9,028 $8,666 ($73) $230 Three Months Ended Three Months Ended As of September 30, 2024 As of September 30, 2023 September 30, 2024 September 30, 2023 Net Debt Free Cash Flow (non-GAAP) $8,123 $7,664 ($340) ($41) Three M
Slide 12: SBU Results
SBU RESULTS Q3 2024 - 12
Slide 13: Q3 2024 SBU Results – Americas
Q3 2024 SBU RESULTS – AMERICAS TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 21.0 $2,858 $251 8.8% -8.3% YoY -8.4% YoY -2.7% YoY +0.5 pts YoY • U.S. consumer replacement sell-in industry down 1.5% • USTMA members declines of more than four times total industry • Industry sell-out volume was f
Slide 14: Q3 2024 SBU Results - EMEA
Q3 2024 SBU RESULTS - EMEA TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 12.2 $1,348 $24 1.8% -2.9% YoY -1.9% YoY +9.1% YoY +0.2 pts YoY • Consumer replacement industry growth of ~8%, driven by growth in non-member imports of approximately 15% • ETRMA members sell out volume was up 3 percent
Slide 15: Q3 2024 SBU Results – Asia Pacific
Q3 2024 SBU RESULTS – ASIA PACIFIC TIRE UNITS NET SALES SEGMENT OPERATING INCOME MARGIN 9.3 $618 $72 11.7% -5.4% YoY -4.6% YoY +28.6% YoY +3.1 pts YoY • China consumer industry slowdown in replacement and OE driven by weaker consumer sentiment • Strongest quarterly performance in Australia/New Zeala
Slide 16: Outlook
OUTLOOK Q3 2024 - 16
Slide 17: SOI Assumptions
SOI ASSUMPTIONS 2(a) Q4 2024 Global unit volumes down 4% reflecting weaker sell-out trends and high levels of distributor inventories of low-end imports VOLUME ~ $40 million headwind in unabsorbed overhead driven by lower Q3 production ~ $15 million headwind, driven by OE share gains and a weak U.S.
Slide 18: Other Financial Assumptions
OTHER FINANCIAL ASSUMPTIONS 2 (a) FULL YEAR 2024 vs PRIOR OUTLOOK CORPORATE OTHER NORMAL OPERATING ~ $160 million; ~ $65 million in Q4 No change Goodyear Forward: ~ $125 million comprised of advisory, legal and CORPORATE OTHER GOODYEAR FORWARD* consulting fees and costs associated with planned asset
Slide 19: Industry Assumptions
INDUSTRY ASSUMPTIONS FULL YEAR 2024 CONSUMER COMMERCIAL - 2% to 2% - 2% to 2% REPL Growth driven by distortive effects given high level of low-end imports in Demand stabilizing in EMEA; Americas growth driven by H1 imports the US and Europe OE Weaker conditions driven by reduced demand with OEMs Wea
Slide 20: Important Disclosures
IMPORTANT DISCLOSURES Q3 2024 - 20
Slide 21: Important Disclosures: Forward-Looking Statements
IMPORTANT DISCLOSURES 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
Slide 22: Important Disclosures: Use of Non-GAAP Financial Measures
IMPORTANT DISCLOSURES USE OF NON-GAAP FINANCIAL MEASURES (Unaudited) This presentation presents non-GAAP financial measures, including Total Segment Operating Income and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share (EPS) which are important financial mea
Slide 23: Appendix
APPENDIX Q3 2024 - 23
Slide 24: Nine Months 2024 Key Metrics
NINE MONTHS 2024 KEY METRICS Tire Units Net Sales Segment Operating Income 123.0 $13,931 $933 -3.8% YoY -6.8% YoY +59.5% YoY SOI Margin Free Cash Flow Adjusted EPS 6.7% ($1,455) $0.66 +2.8 pts YoY -43.9% YoY +353.8% YoY Terms: Units & $ in millions Quarter Highlights Financial Results SBU Results Ou
Slide 25: Segment Operating Results Nine Months 2024 vs 2023
SEGMENT OPERATING RESULTS NINE MONTHS 2024 VERSUS 2023 $55 $26 $933 $285 $285 ($170) $69 (f) 1 (e) $285 Other Other $55 $54 ($10) Insurance 1 (d) Non- 1 (d) Proceeds, Foreign Foreign Non- Net of Calculated 1 (c) 1 (c) Cost Currency Recurrence Calculated Cost Recurrence of Tupelo Current Inflation In
Slide 26: Significant Maturities Schedule
SIGNIFICANT MATURITIES SCHEDULE AS OF SEPTEMBER 30, 2024 4 (a) $1,610 4 (b) 4 (c) $105 $358 $- $500 $2,040 $1,056 $1,135 $850 $- $1,600 2024 2025 2026 2027 2028 2029 2030 ≥ 2031 Funded Debt Undrawn Credit Lines Terms: in millions Quarter Highlights Financial Results SBU Results Outlook Important Dis
Slide 27: Segment Operating Income Reconciliation
SEGMENT OPERATING INCOME RECONCILIATION Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Total Segment Operating Income $ 347 $ 336 $ 933 $ 585 Less: Intangible Asset Impairment 125 — 125 — Rationalizations 11 198 52 302 Interest Expense 135 138 391 403 Other (Inc
Slide 28: Reconciliation of Total Debt and Net Debt
RECONCILIATION OF TOTAL DEBT AND NET DEBT September 30, June 30, December 31, September 30, 2024 2024 2023 2023 Accounts Receivable $ 3,380 $ 3,043 $ 2,731 $ 3,379 Inventories 3,812 4,048 3,698 3,964 Accounts Payable — Trade (4,050) (4,181) (4,326) (4,110) Working Capital 3(a) $ 3,142 $ 2,910 $ 2,10
Slide 29: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW Three Months Ended Nine Months Ended Trailing Twelve September 30, September 30, Months Ended 2024 2023 2024 2023 September 30, 2024 Net Income (Loss) $ (34) $ (84) $ (12) $ (391) $ (308) Depreciation and Amortization 254 245 800 751 1,050 Change in Working Capital (
Slide 30: Reconciliation of Adjusted Net Income and Adjusted Diluted EPS Q3 2024
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE THIRD QUARTER 2024 Rationalizations, Indirect Tax Debica Fire Americas Asset Write-offs, As Intangible Asset Goodyear Settlements Impact and Storm As Accelerated Reported Impairment Forward Costs and Discrete Insura
Slide 31: Reconciliation of Adjusted Net Income and Adjusted Diluted EPS Q3 2023
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE THIRD QUARTER 2023 Rationalizations, Indirect Tax Pension As Asset Write-offs, and Debica Fire Tupelo Storm Other Legal Asset and Settlements As Settlement Reported Accelerated Impact Impact Claims Other Sales and D
Slide 32: Reconciliation of Adjusted Net Income and Adjusted Diluted EPS First Nine Months 2024
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE FIRST NINE MONTHS 2024 Rationalizations, Pension Indirect Tax Debica Fire Asset Write-offs, Intangible Goodyear Americas Storm Asset and As South Africa Settlement Settlements and Impact and As Accelerated Asset For
Slide 33: Reconciliation of Adjusted Net Income and Adjusted Diluted EPS First Nine Months 2023
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE FIRST NINE MONTHS 2023 Foreign Rationalizations, Indirect Tax Tupelo Pension Debica Other Environmental Currency Asset and As Asset Write-offs, and Settlements As Storm Settlement Fire Legal Remediation Translation
Slide 34: Historical Key Metrics: Income Statement
HISTORICAL KEY METRICS INCOME STATEMENT 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD GOODYEAR TIRE UNITS AMERICAS 22.2 23.3 24.1 25.4 95.0 20.5 20.8 22.9 23.1 87.3 19.0 19.6 21.0 59.6 EMEA 14.5 14.5 13.3 12.8 55.1 13.2 11.8 12.5 12.4 49.9 12.5 11.6 12.2 36.3 ASIA PACIFIC 8.3 7.8 9.3 9.0
Slide 35: Historical Key Metrics: Balance Sheet and Cash Flow
HISTORICAL KEY METRICS BALANCE SHEET AND CASH FLOW 2022 2023 2024 Three Three Three Three Twelve Three Three Three Three Twelve Three Three Three Months Months Months Months Months Months Months Months Months Months Months Months Months Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended End
Slide 36: End Notes
END NOTES 1 Segment Operating Income (SOI) results third quarter and nine months 2024 versus 2023: (a) Raw materials variance excludes raw material cost saving measures; (b) Goodyear Forward includes cost actions and margin expansion; (c) Estimated impact of general inflation (wages, utilities, ener
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