The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Q1 2023 Earnings Presentation
33 slides from The Goodyear Tire & Rubber's earnings presentation, May 5, 2023
Slide 1: Investor Letter Q1 2023
INVESTOR LETTER Q1 2023 125 YEARS May 4, 2023
Slide 2: Table of Contents
TABLE OF CONTENTS 03 Letter to Investors 19 Conference Call Details 05 Summary 20 Important Disclosures Forward-Looking Statements 06 Financial Results Non-GAAP Financial Measures 09 SBU Results Use of Hyperlinks 15 Outlook 21 Reference Tables Financial Tables (Unaudited) 17 Enabling Mobility Other
Slide 3: To Our Investors
TO OUR INVESTORS Over the next six months, we will celebrate two important milestones for Goodyear: the two-year anniversary of our acquisition of Cooper Tire and our 125th year as a company. We feel great pride and purpose in those achievements, which are happening in a year where--for the second y
Slide 4: To Our Investors: EMEA and Asia Pacific
TO OUR INVESTORS EMEA Segment The replacement industry in EMEA has been impacted by weaker demand due to the Russia / Ukraine conflict and higher energy costs for consumers. With announced price increases in January, EMEA returned to breakeven profitability during the quarter. The region has also co
Slide 5: Summary
SUMMARY First Quarter Financial Highlights Reflections on the Quarter • Net sales grew 1% compared with the first quarter of 2022, 4% excluding foreign currency Positives • Unit volume down 7% versus 2022, reflecting a • Strong price/mix of $418 million, exceeded raw material costs weaker replacemen
Slide 6: Financial Results
FINANCIAL RESULTS First quarter results were impacted by overall weaker industry volume and ongoing pressure from cost inflation, partly offset by continued strong price/mix. Global replacement industry volume was down 5.2% in the quarter, reflecting a strong comparable period and channel destocking
Slide 7: Financial Results: Segment Operating Income Drivers
FINANCIAL RESULTS Segment Operating Income Drivers Reported first quarter segment operating income was $125 million, Calculated inflation of ($126) million reflected a global inflation rate down $178 million compared to prior year. of ~7%. “Efficiency, Excess Inflation and Other Cost Increases” of (
Slide 8: Financial Results: Balance Sheet and Cash Flow
FINANCIAL RESULTS Financial Results Total Debt/Net Debt Balanc Balance Sheet and Cash Flow TOTAL DEBT $9,011 $8,370 +$641m YoY At the end of the first quarter, total debt was $9.0 billion compared to $8.4 billion at the same time last year. Net debt was $7.9 billion, compared to $7.3 billion at the
Slide 9: SBU Results - Americas
SBU RESULTS - AMERICAS First Quarter Highlights First quarter results were impacted negatively by softer industry volume and the ongoing effects of inflation. Americas consumer replacement volume declined approximately 9%, driven by a strong comparable period and channel destocking. Similarly, our c
Slide 10: SBU Results - Americas: Tire Volumes
SBU RESULTS - AMERICAS Tire Volumes Overall volume in Americas was down 1.7 million units, or 7.5% below Update on USTMA first quarter 2022 levels. Replacement volume was 9.9% lower Non-Member Imports (1.8 million units), while OE volume increased 4.8%, or 0.1 million units. During our two most rece
Slide 11: SBU Results - EMEA
SBU RESULTS - EMEA First Quarter Highlights The sequential improvement in EMEA’s segment operating income was driven by higher price/mix benefits and lower input costs. At the same time, earnings were still well below first quarter 2022 levels, mainly driven by persistently weak industry volume. Net
Slide 12: SBU Results - EMEA: Tire Volumes
SBU RESULTS - EMEA Tire Volumes Overall volume in EMEA was down 1.3 million units, or 9.1% below first Review of European Cost Structure quarter 2022 levels. Replacement volume was 16.1% lower (1.9 million In our fourth quarter investor letter, we shared that we had units), while OE volume increased
Slide 13: SBU Results - Asia Pacific
SBU RESULTS - ASIA PACIFIC First Quarter Highlights Asia Pacific results reflect growth in revenue and segment operating income compared to the prior year, driven by China. Results include stable share in both replacement and OE on slightly lower industry volume. Net Sales Segment Operating Income N
Slide 14: SBU Results - Asia Pacific: Tire Volumes
SBU RESULTS - ASIA PACIFIC SBU - AP Segment Tire Units Tire Volumes TIRE UNITS Overall volume in Asia Pacific was down 0.2 million units in the quarter, 8.3 (0.2)m or 2.2% below 2022 levels. Replacement volume was 5.2% lower (0.3 8.1 million units), while OE volume increased 2.4%, or 0.1 million uni
Slide 15: Outlook: Second Quarter 2023
OUTLOOK Second Quarter 2023 Second quarter results are expected to be impacted negatively by the effects of softer industry volume and the ongoing effects of inflation. Volume Considerations for the Second Quarter Having said that, we are expecting significant growth in Americas segment operating in
Slide 16: Outlook: 2023 Other Financial Assumptions
OUTLOOK 2023 – Other Financial Assumptions Overall costs have declined since our February investor update, including ~$100 million in raw materials and ~$50 million in other costs, driven by finished goods transportation and energy & utilities. Additional financial assumptions for the year follow. C
Slide 17: Enabling Mobility and Driving Sustainability
ENABLING MOBILITY AND DRIVING SUSTAINABILITY Driving excellence in innovation, sales and marketing and operations will continue to help us deliver sustainable revenue and profit growth while increasing the value of our brands. Goodyear Named Top Summer Tire Manufacturer for Second Consecutive Year G
Slide 18: Enabling Mobility and Driving Sustainability
ENABLING MOBILITY AND DRIVING SUSTAINABILITY ERG Spotlight: Engagement and Inclusion Foster Associate Connections Goodyear’s innovation and creativity is driven by the diversity of our associates and fostered by our inclusive environment. Our commitment to diversity is showcased by our eight employe
Slide 19: End Notes
END NOTES 1 Segment Operating Income (SOI) results first 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 20: Important Disclosures
IMPORTANT DISCLOSURES Forward-Looking Statements Free Cash Flow is the company’s Cash Flows from Operating Activities as determined in accordance with U.S. GAAP, less capital expenditures. Certain information contained in this Investor Letter constitutes forward- Management believes that Free Cash F
Slide 21: Reference Tables
REFERENCE TABLES TABLE OF CONTENTS Financial Tables (Unaudited) Table 1 Consolidated Statements of Operations................................................................................................................................................. 22 Table 2 Consolidated Balance Sheets.......
Slide 22: Consolidated Statements of Operations
FINANCIAL TABLES (UNAUDITED) Table 1 Consolidated Statements of Operations Three Months Ended March 31, (In millions, except per share amounts) 2023 2022 Net Sales $ 4,941 $ 4,908 Cost of Goods Sold 4,193 3,966 Selling, Administrative and General Expense 664 688 Rationalizations 32 11 Interest Expen
Slide 23: Consolidated Balance Sheets
FINANCIAL TABLES (UNAUDITED) Table 2 Consolidated Balance Sheets March 31, December 31, (In millions, except share data) 2023 2022 Assets: Current Assets: Cash and Cash Equivalents $ 1,082 $ 1,227 Accounts Receivable, less Allowance — $104 ($112 in 2022) 3,244 2,610 Inventories: Raw Materials 1,053
Slide 24: Consolidated Statements of Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 3 Consolidated Statements of Cash Flows Three Months Ended March 31, (In millions) 2023 2022 Cash Flows from Operating Activities: Net Income (Loss) $ (99) $ 96 Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities: Depreciation and Amo
Slide 25: Reconciliation of Segment Operating Income & Margin
FINANCIAL TABLES (UNAUDITED) Table 4 Reconciliation of Segment Operating Income & Margin Three Months Ended March 31, (In millions) 2023 2022 Total Segment Operating Income $ 125 $ 303 Less: Rationalizations 32 11 Interest Expense 127 104 Other (Income) Expense 25 5 Asset Write-Offs and Accelerated
Slide 26: Reconciliation of Free Cash Flows
FINANCIAL TABLES (UNAUDITED) Table 5 Reconciliation of Free Cash Flows Three Months Ended Trailing Twelve March 31, Months Ended (In millions) 2023 2022 March 31, 2023 Net Income (Loss) $ (99) $ 96 $ 14 Depreciation and Amortization 251 244 971 Change in Working Capital (859) (1,002) (546) Pension E
Slide 27: Reconciliation of Total Debt and Net Debt
FINANCIAL TABLES (UNAUDITED) Table 6 Reconciliation of Total Debt and Net Debt March 31, December 31, March 31, (In millions) 2023 2022 2022 Accounts Receivable $ 3,244 $ 2,610 $ 3,220 Inventories 4,553 4,571 4,026 Accounts Payable — Trade (4,452) (4,803) (4,339) Working Capital(a) $ 3,345 $ 2,378 $
Slide 28: Adjusted Net Income and EPS: First Quarter 2023
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Quarter 2023 Rationalizations, Foreign Currency As Asset Write-offs, Translation Other Legal As Reported and Accelerated Adjustment Claims Adjusted Depreciation Write-Off (
Slide 29: Adjusted Net Income and EPS: First Quarter 2022
FINANCIAL TABLES (UNAUDITED) Table 7 Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share First Quarter 2022 Rationalizations, As Asset Write-offs, Discrete Asset As Reported and Accelerated Tax Items Sales Adjusted Depreciation (In millions, except per share amounts)
Slide 30: Industry and Goodyear Growth Rates
OTHER DATA TABLES Table 8 Industry and Goodyear Growth Rates Three Months Ended March 31, 2023 Industry & Goodyear Growth Industry Goodyear Americas Consumer Replacement -7.4% -9.4% Consumer OE 7.2% 4.3% Commercial Replacement -6.6% -15.7% Commercial OE 5.5% 8.6% EMEA Consumer Replacement -5.6% -16.
Slide 31: Foreign Currency Rate Assumptions
OTHER DATA TABLES Table 9 Foreign Currency Rate Assumptions April 21, FX Spot Rates 2023 2022 USD / BRL 5.049 4.622 USD / CNY 6.894 6.450 USD / EUR 0.901 0.923 USD / TRY 19.402 14.709 EUR / TRY 21.531 15.939 Q1 2023 - 31
Slide 32: Commodity Spot Rate Assumptions
OTHER DATA TABLES Table 10 Commodity Spot Rate Assumptions April 21, Commodity Rates 2023 2022 Modeling Assumption Comments Butadiene ($ / LB) $ 0.45 $ 0.74 Key driver of synthetic rubber prices Natural Rubber ($ / LB) 0.62 0.77 Driver of natural rubber prices Crude Oil ($ / BBL) 81.66 108.33 Proxy
Slide 33: Goodyear
GOODS YEAR
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