The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q2 2015 Earnings Presentation
26 slides from The Goodyear Tire & Rubber's earnings presentation, Jul 29, 2015
Slide 1: Second Quarter 2015 Conference Call
Second Quarter 2015 Conference Call July 29, 2015
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: Q2 Highlights
Q2 Highlights • Record second quarter segment operating income of $556 million • North America earnings of $321 million, up 54% and a record for any quarter • Segment operating margin of 13%; 3 of 4 business units above 10% • Repurchased $50 million in common stock • Company reaffirms 2015 financial
Slide 4: Strategy Roadmap
Strategy Roadmap Where We Are Executing Plan Value Creating Innovation Leader Investing for Growth Record Earnings US Pension Fully Funded Key Strategies Key How To’s Industry Market-Back Innovation Excellence 1. North America: Grow Profitably MegaTrends Sales & Marketing Excellence 2. Asi
Slide 5: Advantaged Value Proposition
Advantaged Value Proposition What does it take? Sales & Marketing Excellence Operational Excellence Iconic brand Right Tire Industry leading products Right Time AND Pervasive distribution Right Place Strong customer relations Right Cost Consumer-centric focus Market-Back Innovation
Slide 6: New Product Highlights
New Product Highlights North America Goodyear FuelMax S Asia Pacific launches Latin America introduces Goodyear truck tire wins Goodyear Assurance launches Goodyear Endurance WHA for Luxembourg Green TripleMax in India EfficientGrip waste haul fleets Product award in Performance EMEA Improving mix b
Slide 7: Income Statement
Second Quarter 2015 Income Statement In millions, except EPS Three Months Ended June 30, June 30, 2015 2014 Change Units 40.8 40.6 1% Net Sales $ 4,172 $ 4,656 (10)% Gross Margin 27.4% 24.1% 3.3 pts SAG $ 648 $ 698 (7)% Segment Operating Income (a) $ 556 $ 460 21% Segment Operating Margin (a) 13.3%
Slide 8: Segment Operating Results
Second Quarter 2015 Segment Operating Results ($ in millions) +21% $96 $101 ($71) ($35) $108 ($7) ($8) $556 Inflation(2) Price/Mix Cost Currency Other(3) $5 Savings $460 $3 Volume Unabsorbed Raw Fixed Cost Materials(1) Q2 Q2 $8 $101 $30 2014 2015 Note: Relative to guidance, Price / Mix versus Raw Ma
Slide 9: Balance Sheet
Second Quarter 2015 Balance Sheet $ In millions June 30, March 31, December 31, June 30, 2015 2015 2014 2014 Cash and cash equivalents $ 1,638 $ 1,613 $ 2,161 $ 1,637 Accounts receivable 2,476 2,523 2,126 2,841 Inventories 2,545 2,538 2,671 3,130 Accounts payable - trade (2,602) (2,612) (2,878) (3,0
Slide 10: Free Cash Flow from Operations
Free Cash Flow from Operations $ In millions Three Trailing Twelve Months Ended Months Ended June 30, 2015 June 30, 2014 June 30, 2015 Net Income $ 208 $ 232 $ 2,771 Depreciation and Amortization 177 188 710 Change in Working Capital 92 (18) 130 Pension Expense 36 38 142 Provision for Deferred Incom
Slide 11: Segment Results
Second Quarter 2015 Segment Results In millions North America Europe, Middle East and Africa 2015 2014 Change 2015 2014 Change Units 15.8 15.3 3.0% Units 14.8 15.1 (2.0%) Net Sales $2,026 $2,044 (0.9%) Net Sales $1,265 $1,580 (19.9%) Operating Income $321 $208 54.3% Operating Income $108 $117 (7.7%)
Slide 12: 2015 Key Segment Operating Income Drivers
2015 Key Segment Operating Income Drivers April Outlook Driver Current Outlook Comments 2015 FY vs 2014 Global Volume +1-2% +1-2% • No change Price/Mix vs. Raw • Only change related to ~$200 million ~$330 million Materials Venezuela Overhead Neutral Neutral • No change Absorption Cost Savings vs. •
Slide 13: 2015 Outlook: Other Financial Assumptions
2015 Outlook Other Financial Assumptions 2015 FY Assumption Interest Expense $415 - $440 million Financing Fees ~$80 million Expense: ~30% of global pre-tax operating income Income Tax Cash: ~15% of global pre-tax operating income Depreciation & ~$725 million Amortization Global Pension Expense $125
Slide 14: 2015-2016 Financial Targets
2015-2016 Financial Targets • Annual 10-15% SOI growth per year through 2016 • Annual positive free cash flow from operations • Adjusted Debt to EBITDAP(a) ratio of 2.0 to 2.1x by the end of 2016 (a) Total debt plus global pension liability, divided by net income before interest expense, income tax
Slide 15: Appendix
<< pendix Ap & o * > | 7 r ———
Slide 16: China Business
China Business • China has been primary growth driver of Asia Pacific business over last few years • Pulandian - World class facility with premium / HVA capability • Capacity ~11 million consumer units; ~0.5 million commercial units; some exports • Replacement industry still developing; OE sales uni
Slide 17: Price/Mix vs. Raw Materials
Price/Mix vs. Raw Materials(a) $ in millions $2,356 $1,822 (c) $1,017 $689 $549 (b) $327 (d) ($36) (g) ($321) ($376) ($268) ($553) (f) ($985) (e) 2010 2011 2012 2013 2014 2015 Q2 YTD Price/Mix Raw Materials (a) Reflects impact on Segment Operating Income. Raw materials include the impact of raw mate
Slide 18: Second Quarter 2015 Significant Items
Second Quarter 2015 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Rationalizations, US Tax Asset Write-offs, Transaction Tax Expense in Adjusted and Accelerated Costs and Net excess of US Diluted As Depreciation Discrete Tax Gains on Asset Cash Tax Earning
Slide 19: Second Quarter 2014 Significant Items
Second Quarter 2014 Significant Items (After Tax and Minority Interest) $ and shares in millions (except EPS) Charges for Rationalizations, Labor Claims US Tax Asset Write-offs, Related to a Tax Expense in Adjusted and Accelerated Closed Settlement of excess of US Diluted As Depreciation Facility in
Slide 20: Liquidity Profile
Second Quarter 2015 Liquidity Profile $ In billions Liquidity Profile $4.0(a) Available Credit Lines $2.4 Cash & $1.6 Equivalents(b) June 30, 2015 (a) Total liquidity comprised of $1,638 million of cash and cash equivalents, as well as $2,389 million of unused availability under various credit agree
Slide 21: Maturity Schedule
Second Quarter 2015 Maturity Schedule $ In millions Undrawn Credit Lines Funded Debt $2,000 (a) $150 (b) $616 (c) $900 $700 $1,552 $1,266 $150 2015 2016 2017 2018 2019 2020 2021 2022 ≥ 2023 Note: Based on June 30, 2015 balance sheet values and excludes notes payable, capital leases and other domesti
Slide 22: 2015 Full-Year Industry Outlook
2015 Full-Year Industry Outlook July Full-Year April Full-Year 2015 Guidance 2015 Guidance NA EMEA NA EMEA Consumer ~Flat ~Flat (2)-(3)% ~Flat Replacement Consumer OE ~2% ~2% +1-2% +1-2% Commercial +5-6% +0-1% +2-3% +0-1% Replacement Commercial OE +3-4% +3-4% +3-4% +1-2% 22
Slide 23: Reconciliation for Segment Operating Income / Margin
Reconciliation for Segment Operating Income / Margin $ In millions Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Total Segment Operating Income $ 556 $ 460 $ 947 $ 833 Rationalizations (46) (24) (62) (65) Interest expense (106) (102) (209) (207) Other income (expense) (17
Slide 24: Reconciliation for Total Debt and Net Debt
Reconciliation for Total Debt and Net Debt $ In millions June 30, March 31, December 31, June 30, 2015 2015 2014 2014 Long-Term Debt and Capital Leases $ 5,746 $ 5,965 $ 6,216 $ 6,677 Notes Payable and Overdrafts 36 23 30 7 Long-Term Debt and Capital Leases Due Within One Year 321 238 148 78 Total D
Slide 25: Reconciliation for Free Cash Flow from Operations
Reconciliation for Free Cash Flow from Operations 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 Months Ended Months
Slide 26: wo Oe a On
e e as wo Oe a On
The Goodyear Tire & Rubber Company — Q2 2015 Earnings Presentation on 6ix