The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q3 2023 Earnings Presentation
31 slides from The Goodyear Tire & Rubber's earnings presentation, Nov 7, 2023
Slide 1: Investor Letter Q3 2023
INVESTOR LETTER Q3 2023 Nov. 6, 2023
Slide 2: Table of Contents
TABLE OF CONTENTS 03 Letter to Investors 04 Financial Results 07 SBU Results 13 Outlook 15 End Notes 15 Conference Call Details 16 Important Disclosures Forward-Looking Statements Non-GAAP Financial Measures Use of Hyperlinks 17 Reference Tables Financial Tables (Unaudited) Other Data Tables As part
Slide 3: Letter to Investors
LETTER TO INVESTORS Fellow Shareholders: Strong execution amid improving industry conditions enabled us The consumer replacement market in Europe, on the other to deliver solid operating results during the third quarter. At the hand, has remained weak, reflecting above-average channel same time, we
Slide 4: Financial Results: Tire Volumes and Net Sales
FINANCIAL RESULTS Tire Volumes Tire unit volume in the quarter totaled 45.3 million units, down 2.8% from prior year. Global replacement volume was lower by 5.3%, driven by Americas and EMEA. The Americas decline reflects the impact of increased low-cost imports in Latin America, the residual effect
Slide 5: Financial Results: Segment Operating Income Drivers
FINANCIAL RESULTS Segment Operating Income Drivers Reported third quarter segment operating income was $336 million, Calculated inflation of ($84) million reflected a global inflation down $37 million compared to prior year. Excluding the impact of the rate of approximately 4%, which was partly offs
Slide 6: Financial Results: Balance Sheet and Cash Flows
FINANCIAL RESULTS Financial Results Total Debt/Net Debt Balanc Balance Sheet and Cash Flows TOTAL DEBT $8,646 $8,666 +$20m YoY At the end of the third quarter, total debt was $8.7 billion compared to $8.6 billion at the same time last year. Net debt was $7.7 billion, compared to $7.4 billion at the
Slide 7: SBU Results - Americas
SBU RESULTS - AMERICAS Third Quarter Summary Americas third quarter segment operating margin of 8.3% represents a meaningful inflection from first half operating margin of approximately 3%. Overall volume in Americas was down 4.9%, driven by the impact of increased low-cost imports in Latin America,
Slide 8: SBU Results - Americas Tire Volumes
SBU RESULTS - AMERICAS SBU - Americas Tire Units Tire Volumes TIRE UNITS Overall volume in Americas was down 1.2 million units, or 4.9% below 24.1 22.9 (1.2)m third quarter 2022 levels. Replacement volume was 5.0% lower (1.1 million units), while OE volume was 4.3% lower (0.1 million units). • The d
Slide 9: SBU Results - EMEA
SBU RESULTS - EMEA Third Quarter Summary EMEA’s earnings remained below historical levels due to continued industry volume weakness and elevated inflation. At the same time, results also reflect strong price/ mix performance and the benefit of lower raw material costs – which helped drive a sequenti
Slide 10: SBU Results - EMEA Tire Volumes
SBU RESULTS - EMEA Tire Volumes Overall volume in EMEA was down 0.8 million units, or 4.9% below Update On Debica, Poland Operations third quarter 2022 levels. Replacement volume was 6.8% lower We previously shared that a fire at our Debica, Poland (0.8 million units), while OE volume was approximat
Slide 11: SBU Results - Asia Pacific
SBU RESULTS - ASIA PACIFIC Third Quarter Summary Asia Pacific results reflect continued growth in volume and segment operating income, driven by China. Strong volume and continued benefits from price/mix versus raw material and other cost increases drove operating margin to 8.6% in the quarter – the
Slide 12: SBU Results - Asia Pacific Tire Volumes
SBU RESULTS - ASIA PACIFIC Tire Volumes Overall volume in Asia Pacific was up 0.6 million units in the quarter, or 5.4% above 2022 levels. Replacement volume decreased 3.5% (0.1 million units), while OE volume increased 18.5% (0.7 million units). Replacement volume followed industry trends while the
Slide 13: Outlook: Fourth Quarter 2023
OUTLOOK Fourth Quarter 2023 Since our last update, our fourth quarter results are expected to be negatively impacted by a fire in our factory in Poland (~$20 million Volume Considerations for the Fourth Quarter discrete impact). Despite this development, we expect our fourth quarter volume to be the
Slide 14: Outlook: 2023 Other Financial Assumptions
OUTLOOK 2023 - Other Financial Assumptions Additional financial assumptions for 2023 follow. Current Assumption Prior Assumption Based on current spot rates, FY ~$25 Based on current spot rates, FY ~$40 million lower Raw Materials 3(a) million higher (Q3 ~$125 million lower and (Q4 ~$300 million low
Slide 15: End Notes
END NOTES 1 Segment Operating Income (SOI) results third quarter 2023 versus 2022: (a) Raw materials variance includes raw material cost saving measures; (b) Estimated impact of general inflation (wages, utilities, energy, transportation and other); (c) Includes the impacts of other tire-related bus
Slide 16: Important Disclosures
IMPORTANT DISCLOSURES Forward-Looking Statements Certain information contained in this Investor Letter constitutes forward- Free Cash Flow is the company’s Cash Flows from Operating Activities as looking statements for purposes of the safe harbor provisions of The Private determined in accordance wi
Slide 17: Reference Tables
REFERENCE TABLES TABLE OF CONTENTS Financial Tables (Unaudited) Table 1 Consolidated Statements of Operations..................................................................................................................................................18 Table 2 Consolidated Balance Sheets.......
Slide 18: Consolidated Statements of Operations
FINANCIAL TABLES (UNAUDITED) Table 1 Consolidated Statements of Operations Three Months Ended Nine Months Ended September 30, September 30, (In millions, except per share amounts) 2023 2022 2023 2022 Net Sales $ 5,142 $ 5,311 $ 14,950 $ 15,431 Cost of Goods Sold 4,171 4,305 12,487 12,443 Selling, Ad
Slide 19: Consolidated Balance Sheets
FINANCIAL TABLES (UNAUDITED) Table 2 Consolidated Balance Sheets September 30, December 31, (In millions, except share data) 2023 2022 Assets: Current Assets: Cash and Cash Equivalents $ 1,002 $ 1,227 Accounts Receivable, less Allowance — $104 ($112 in 2022) 3,379 2,610 Inventories: Raw Materials 82
Slide 20: Consolidated Statements of Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 3 Consolidated Statements of Cash Flows Nine Months Ended September 30, (In millions) 2023 2022 Cash Flows from Operating Activities: Net Income (Loss) $ (391) $ 314 Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities: Depreciation an
Slide 21: Reconciliation of Segment Operating Income & Margin
FINANCIAL TABLES (UNAUDITED) Table 4 Reconciliation of Segment Operating Income & Margin Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2023 2022 2023 2022 Total Segment Operating Income $ 336 $ 373 $ 585 $ 1,040 Less: Rationalizations 198 45 302 82 Interest Expense 1
Slide 22: Reconciliation of Free Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 5 Reconciliation of Free Cash Flows Three Months Ended Trailing Twelve September 30, 2023 Months Ended (In millions) 2023 2022 September 30, 2023 Net Income (Loss) $ (84) $ 48 $ (496) Depreciation and Amortization 245 237 997 Change in Working Capital (261) (538) 2
Slide 23: Reconciliation of Total Debt and Net Debt
FINANCIAL TABLES (UNAUDITED) Table 6 Reconciliation of Total Debt and Net Debt September 30, June 30, December 31, September 30, (In millions) 2023 2023 2022 2022 Accounts Receivable $ 3,379 $ 3,033 $ 2,610 $ 3,560 Inventories 3,964 4,360 4,571 4,861 Accounts Payable — Trade (4,110) (4,361) (4,803)
Slide 24: Adjusted Net Income and EPS - Third Quarter 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Third Quarter 2023 Rationalizations, Indirect Tax Pension As Asset Write-offs, Debica Fire Settlements and Tupelo Storm Other Legal Asset and As Settlement Reported and Accelerat
Slide 25: Adjusted Net Income and EPS - Third Quarter 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share Third Quarter 2022 Rationalizations, Indirect Tax Pension As Asset Write-offs, Other Legal Settlements and As Settlement Reported and Accelerated Claims Discrete Tax Adjusted Cha
Slide 26: Adjusted Net Income and EPS - First Nine Months 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Nine Months of 2023 Rationalizations, Foreign Currency Indirect Tax Pension Environmental As Asset Write-offs, Tupelo Storm Asset and Debica Fire Translation Settlements an
Slide 27: Adjusted Net Income and EPS - First Nine Months 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Nine Months of 2022 Rationalizations, Indirect Tax Pension As Asset Write-offs, Other Legal Settlements and Asset As Settlement Reported and Accelerated Claims Discrete Tax
Slide 28: Industry and Goodyear Growth Rates
OTHER DATA TABLES Table 8 Industry and Goodyear Growth Rates Three Months Ended Nine Months Ended Industry & Goodyear Growth 2023 vs. 2022 September 30, 2023 September 30, 2023 Industry Goodyear Industry Goodyear Americas Consumer Replacement 3.8% -4.6% -3.5% -8.9% Consumer OE 1.7% -0.9% 8.8% 1.7% C
Slide 29: Foreign Currency Rate Assumptions
OTHER DATA TABLES Table 9 Foreign Currency Rate Assumptions October 27, FX Spot Rates 2023 2022 USD / BRL 5.015 5.341 USD / CNY 7.317 7.229 USD / EUR 0.945 1.003 USD / TRY 28.139 18.614 EUR / TRY 29.768 18.553 Q3 2023 - 29
Slide 30: Commodity Spot Rate Assumptions
OTHER DATA TABLES Table 10 Commodity Spot Rate Assumptions October 27, Commodity Rates 2023 2022 Modeling Assumption Comments Butadiene ($ / LB) $ 0.38 $ 0.56 Key driver of synthetic rubber prices Natural Rubber ($ / LB) 0.66 0.55 Driver of natural rubber prices Crude Oil ($ / BBL) 90.48 96.96 Proxy
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