The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2021 Earnings Presentation
32 slides from The Goodyear Tire & Rubber's earnings presentation, Apr 30, 2021
Slide 1: First Quarter 2021 Conference Call
FIRST QUARTER 2021 CONFERENCE CALL APRIL 30, 2021 GOODZYEAR
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: Our Goal: How We'll Win, Work and Focus
—<———— OURSGOAL DELIVER SUSTAINABI AND PROFIT GROWTH WHILE INCREASING THE VALUE OF OUR BRAND HOW WE'LL WIN INNOVATION SALES & MARKETING EXCELLENCE EXCELLENCE = | OPERATIONAL EXCELLENCE HOW WE'LL WORK ACTWITH INTEGRITY ENERGIZE THE TEAM PROMOTE COLLABORATION BEAGILE [ DELIVER RESULTS Winning at the i
Slide 4: First Quarter Highlights
FIRST QUARTER HIGHLIGHTS ¢ First quarter segment operating income of $226 million, strongest first quarter since 2018 * Global consumer replacement volume significantly exceeded industry, driven by large-rim diameter segment - Record first quarter consumer replacement volume in Asia Pacific ¢« Ameri
Slide 5: Industry Fundamentals: Total Shipments
INDUSTRY FUNDAMENTALS 360 Total Shipments‘) Recovery underway 300 a e S COVID-19 250 Great Recession 200 2006 2007 2008 #2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 = 2021E
Slide 6: Reflecting on First Quarter 2021
REFLECTING ON FIRST QUARTER 2021 f F¢ * Continued recovering consumer replacement share in U.S. and EU « Consumer OE volume outperformed industry in Americas and EMEA * Continued recovery of pre-pandemic price versus raw material deficit ¢ Continued momentum in commercial fleet business * Continued
Slide 7: Consumer Replacement Industry
CONSUMER REPLACEMENT INDUSTRY U.S. Replacement Industry!) Europool & Turkey Replacement Industry (>) Q121 Q121 USTMA Members (217") ETRMA Members (217") USTMA Members (<17”) ETRMA Members (<17") Total Total Non-Members Non-Members Total U.S. Total EU & Turkey Goodyear (217") Goodyear (217")
Slide 8: Innovative Snow
Innovative Snow Grip, Dry Handling and Aqua Control technologies Complex rubber compound offers top performance in wet and dry conditions SEHR GUT + Aout ae lgaereS Excellent braking and wet road performance ideally suited for SUVs and EVs allrad Test Winner 2021 GOODYEAR suY
Slide 9: Financial Review
FINANCIAL REVIEW GOODSYEAR
Slide 10: Income Statement First Quarter 2021
Terms: US$ millions (except EPS) Three Months Ended INCOME March 31, March 31, 2021 2020 Change STATEMENT Units ; 35.0 31.3 12% Net Sales 3,511 $ 3,056 15% Gross Margin 21.6% 16.5% 5.1 pts FIRST QUARTER 2021 SAG $ 4 =C«*S 581 (3)% Segment Operating Income (Loss) ” Ss 226 S (47) Segment Operating Mar
Slide 11: Segment Operating Results Q1 2021 versus 2020
SEGMENT OPERATING RESULTS FIRST QUARTER 2021 VERSUS 2020 $91 ($30) Terms: USS millions ($4) Inflation () Currency Other!) $15 seo Cost Raw Savings Materials) Includes ($30) million of significant items, including the impact of a $51 severe U.S. winter storm Price/Mix (®) $67 Unabsorbed al Fixed Cost
Slide 12: Segment Operating Results Q1 2021 versus 2019
SEGMENT OPERATING RESULTS FIRST QUARTER 2021 VERSUS 2019 Terms: US$ millions el ($38) Inflation (°) Currency | $226 Cost Other! Savings $64 Raw Materials >) ($19) Unabsorbed —_Price/Mix'*) Fixed Cost Includes ($30) million of significant items, including the impact of a severe U.S. winter storm | T
Slide 13: Balance Sheet First Quarter 2021
BALANCE SHEET FIRST QUARTER 2021 Terms: USS millions Cash and cash equivalents Accounts receivable Inventories Accounts payable - trade Working capital® Total debt” Net debt”? March 31, December 31, March 31, 2021 2020 2020 1,223 $ 1,539 $ 971 2159 S$ 1691 S$ 2,025 2,359 2,153 2,919 (3,037) (2,945)
Slide 14: Cash Flow and Free Cash Flow
Three Months Ended Trailing Twelve March 31, Months Ended 2021 2020 March 31, 2021 Net Income (Loss) $ w $ (617) $ (615) Depreciation and Amortization 197 196 860 Change in Working Capital (563) (482) 730 Pension Expense 23 30 110 Pension Contributions and Direct Payments (9) (19) (46) Provision for
Slide 15: Segment Results - Americas
SEGMENT RESULTS - AMERICAS Terms: USS millions Units in millions ( First Quarter \ 2021 2020 Change Units 15.5 14.5 6.7% NetSales $1,787 $1,673 6.8% Operating . Income Si14 Margin 6.4% - /*+ Volume reflects partial recovery from \ COVID-19 related shutdowns « U.S. consumer replacement share recoveri
Slide 16: Segment Results - EMEA
SEGMENT RESULTS - EMEA ff £« Terms: US$ millions Units in millions / First Quarter \ { + Volume reflects partial recovery from \ 2021 2020 Change COVID-19 related shutdowns + EUconsumer replacement share recovering, Units 12.7 11.6 10.0% driven by impact of aligned distribution + Consumer OE volume
Slide 17: Segment Results - Asia Pacific
SEGMENT RESULTS - ASIA PACIFIC ft Terms: US$ millions Units in millions ( First Quarter \ / \ 2021 2020 Change + Volume reflects partial recovery from COVID-19 related shutdowns + Consumer replacement business delivered arecord performance, driven by strong growth in China and India Units 6.8 5.2 29
Slide 18: Q2 Business Outlook
Q2 BUSINESS OUTLOOK * Volume continues to trend back toward 2019 levels (expect smaller decline than in 01) ¢ Tire production at 2019 levels, rebuilding inventories ¢ Positive price/mix vs. raw material costs ¢ Minimal cost savings given non-recurrence of COVID-19 response actions
Slide 19: 2021 Outlook: Other Financial Assumptions
2021 OUTLOOK: OTHER FINANCIAL ASSUMPTIONS Current Assumption Raw Materials $325 to $375 million higher than prior year based on current spot rates, net of raw material cost savings Interest Expense $350 to $375 million Other (Income) Expense Financing fees: ~$35 million Global pension related (exclu
Slide 20: Appendix
APPENDIX GOODSYEAR
Slide 21: Modeling Assumptions
MODELING ASSUMPTIONS Volume Sensitivities Pricing Translational Foreign Currency (impact on Goodyear 's Annual Unitsin 00's) (Annual Impact of Effective Pricing Yield) (Annual Impact on FX portion of SOL Walk) + 1% Ain US. Consumer OE Industry ~90 + 1%A inUS. Consumer Replacement ‘~S29M=—# +/- 0.01
Slide 22: Raw Materials
RAW MATERIALS Raw materials are ~36%'® of tire COGS Global Raw Material Spend Y ~67% of raw materials are influenced FY 2020 ($3.2 Billion) ‘) by oil prices « P&Limpact lags spot rates by 1-2 quarters depending on commodity & ¥ ~61% of raw materials are purchased in USD ¥ Customer agreements indexed
Slide 23: Raw Material Overview
RAW MATERIAL OVERVIEW 2021 Outlook Raw Material Costs!) $300 - Raw material costs expected to increase $325 to $375 million based on current spot rates, net of raw material cost savings _ Modest increase in 1H21 $13 -$25 -$15 . ; 01 02 03 04 01 02 03 04 01 02 03 04 O1 02 03 04 01 — Adverse transacti
Slide 24: Feedstock Prices
FEEDSTOCK PRICES Price Movements of Key Feedstocks ¢ Recovery in global tire production continues to impact feedstock prices 6 °o 8 ¢ Natural rubber and butadiene prices remain above pre-COVID-19 levels 8 Index Value — Winter storm impacted supply of butadiene x ° ¢ Carbon black prices fully recover
Slide 25: Pro Forma Maturity Schedule
Terms: USS millions ' A Undrawn Credit Lines HB Funded debt PRO FORMA MATURITY a SCHEDULE i FIRST QUARTER 2021 $938) “1 ' : $1,203 ' $900 er \ : 150 2023 2024 2025 2026 2027 «2028 2029 22030 edon redemption o (a) (b) valu and planned Senior Notes du proforma 1023 on May 6, utilized under
Slide 26: Liquidity Profile
Terms: US$ millions LIQUIDITY $4.6 ©) PROFILE FIRST QUARTER 2021 $3.4 $1.2 March 31, 2021 {s) Total liquidity is comprised of $1,225 million of cash and cash equivalents, as well as $3,396 million of unused evailability under various credit agreements
Slide 27: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation contains historical non-GAAP financial measures, including Total Segment Operating Income (Loss) and Margin, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share (EPS), which are important financial measures fo
Slide 28: Total Segment Operating Income (Loss) Reconciliation
Total Segment Operating Income (Loss) Goodwill Impairment Rationalizations Interest expense Other income (expense) Asset write-offs and accelerated depreciation Corporate incentive compensation plans Retained expenses of divested operations Other Income (Loss) before Income Taxes United States and F
Slide 29: First Quarter 2021 Significant Items
FIRST QUARTER 2021 SIGNIFICANT ITEMS Terms: US$ millions ‘except EPS Inventory . Acquisition - =e? pee, = Rationalizations Valuation & Other Sormiveet Related Diserete Tax A a ao Adjustments Transaction Costs Net Sales $ 35m S = $ = $ 24 § = $ a $ 3,535 Cost of Goods Sold 2,751 bl (13) 1 = ad 2,739
Slide 30: First Quarter 2020 Significant Items
FIRST QUARTER 2020 SIGNIFICANT ITEMS Terms: USS millions Rationalizations, (except EPS) As Discrete Goodwill Asset Write-offs, As Reported Tax Items Impairment and Accelerated Adjusted Depreciation Net Sales $ 3,056 = $ - § - § ° $ 3,056 Cost of Goods Sold 2,552 = = (4) 2,548 Gross Margin 504 - - 4
Slide 31: Reconciliation for Total Debt and Net Debt
Terms: USS millions RECONCILIATION FOR TOTA DEBT AND NET DEBT FIRST QUARTER 2021 Long-Term Debt and Finance Leases Notes Payable and Overdrafts Long-Term Debt and Finance Leases Due Within One Year Total Debt Less: Cash and Cash Equivalents Net Debt March 31, December 31, March 31, 2021 2020 2020 $
Slide 32: Goodyear
GOODFSYEAR
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