First Quarter 2019 Conference Call
April 26, 2019
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 our operations, performance, business strategy and results and could cause our
actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any
forward-looking statements. These factors include, but are not limited to: our ability to implement successfully our
strategic initiatives; actions and initiatives taken by both current and potential competitors; increases in the prices paid
for raw materials and energy; a labor strike, work stoppage or other similar event; foreign currency translation and
transaction risks; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial
difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; our failure to
comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the
company; as well as the effects of more general factors such as changes in general market, economic or political
conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities
and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should
not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-
looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates
change.
2
Of
Positives
• Global revenue per tire increased 4%
• U.S. consumer replacement volume growth
of 6%, led by outperformance in ≥17”
• Improving U.S. supply
• U.S. and EMEA commercial truck
businesses
• Announced plans to restructure/modernize
two manufacturing facilities in Germany
• Expanding portfolio of mobility and
technology partners
Reflecting on Q1 2019 Results
Negatives
• Higher raw material costs (including
costs driven by stricter enforcement of
environmental regulations in China)
• Volatility in emerging markets, including
China and Brazil
• Currency weakness in key markets
• Soft consumer demand in Europe
4
Making progress in a challenging environment
Consumer Replacement
Industry Fundamentals: ≥17”
(a) Source: U.S. Tire Manufacturers Association
(b) Source: European Tyre & Rubber Manufacturer’s Association
U.S. Replacement Industry
2019 vs. 2018 Growth Rate
(a)
Q1 19
USTMA
Members (>
17”)
8%
USTMA Members (<17”)
-6%
Total 2%
Non-Members 17%
Total U.S. 6%
Goodyear (>17”) 12%
Q1 19
ETRMA
Members (>
17”)
6%
ETRMA Members (<17”)
-8%
Total -4%
Non-Members 3%
Total EU + Turkey -2%
Goodyear (>17”) 7%
Europool & Turkey Replacement Industry
2019 vs. 2018 Growth Rate
(b)
5
Strong execution continues to drive market share gains
U.S. Market Share
(a) Source: U.S. Tire Manufacturers Association
(b) Goodyear U.S. consumer replacement volume excludes ATD sales volume and volume associated with ATD acquisitions. ATD delivery volume is included. Q3 18 – Q1 19 adjusted for transition to TireHub
98
99
100
101
102
103
104
105
106
107
108
Q4 2014 Q1 2019
U.S. Consumer Replacement Volume
Trailing 4 Quarters
Industry Goodyear
Impact of relative
pricing in 2017
(b)
(a)
(b)
6
Driven by continued market back innovation
EMEA Consumer Product Launches
7
1
st
category refresh in a
number of years
1st
2nd
2nd
2nd
Significant advances in wet braking and dry handling.
Award winning performance in 4 out of 4 magazine tests
Superior wet braking and
dry handling vs competition
EMEA Commercial Product Launches
8
Innovative products strengthen value proposition
Regional Haul service tire with focus on mileage
Long Haul service tire with focus on fuel economy
Collaborative partnerships driving innovation
Expanding Mobility and Technology Partners
9
Envoy Technologies
•
Pilot program launched in early 2019
•
Envoy Technologies will leverage
Goodyear’s predictive tire servicing
solution to minimize operational downtime
•
Goodyear.com added to YourMechanic’s
platform of mobility service and repair
solutions
•
YourMechanic enhances global innovation
network
•
Partnership revolves around autonomous
shuttle
•
Olli creates new learning opportunities
•
Goodyear selected as exclusive fitment
Local Motors YourMechanic
1010
• Advancing distribution and retail
- Leverage TireHub to fully capture the value of the Goodyear brand
- Enhance distributor alignment in key markets outside of the U.S.
- Challenge traditional retail tire business with innovative new concepts
• Advancing technology for the emerging mobility landscape
• Scaling commercial fleet solutions
• Building strong OE pipeline for 2020+
• Announced German modernization & restructuring program
- Increases ≥17” capabilities
- Significant conversion cost savings
Strengthening the Business for the Future
Continuing to build fundamental earnings power of our business
Financial Review
First Quarter 2019
Income Statement
(a) See Segment Operating Income and Margin reconciliation in Appendix on page 31
(b) See Adjusted Diluted Earnings Per Share reconciliation in Appendix on pages 32 and 33
12
Terms: US$ millions
(except EPS)
March 31, March 31,
2019 2018 Change
Units 38.0 39.0 (3)%
Net Sales 3,598$ 3,830$ (6)%
Gross Margin 20.0% 22.3% (2.3) pts
SAG 547$ 591$ (7)%
Segment Operating Income
(a)
190$ 281$ (32)%
Segment Operating Margin
(a)
5.3% 7.3% (2.0) pts
Goodyear Net Income (Loss) (61)$ 75$
Goodyear Net Income (Loss) Per Share
Weighted Average Shares Outstanding 232 240
Basic (0.26)$ 0.31$
Weighted Average Shares Outstanding - Diluted 232 244
Diluted (0.26)$ 0.31$
Cash Dividends Declared Per Common Share 0.16$ 0.14$
Adjusted Diluted Earnings Per Share
(b)
0.19$ 0.50$
Three Months Ended
First Quarter 2019
Segment Operating Results
(a) Raw material variance of ($137) million excludes raw material cost saving measures of $26 million, which are included in Cost Savings
(b) Estimated impact of inflation (wages, utilities, energy, transportation and other)
(c) Includes the impacts of other tire-related businesses, advertising and R&D
13
Q1
2018
SOI
Q1
2019
SOI
Volume
Unabsorbed
Fixed Cost
Raw
Materials
(a)
Price/Mix
Cost
Savings
Inflation
(b)
Other
(c)
Total Volume Impact Net P/M vs Raws Net Cost Savings
$281
($20)
$190
$18
($137)
$42
$55
($45)
$10
Terms: US$ millions
($2) ($95) $10
Currency
($14)
First Quarter 2019
Balance Sheet
(a) Working capital represents accounts receivable and inventories, less accounts payable – trade
(b) See Total Debt and Net Debt reconciliation in Appendix on page 35
14
Terms: US$ millions
March 31, December 31, March 31,
2019 2018 2018
Cash and cash equivalents 860$ 801$ 837$
Accounts receivable 2,446 2,030 2,509
Inventories 2,940 2,856 2,895
Accounts payable - trade (2,737) (2,920) (2,850)
Working capital
(a)
2,649$ 1,966$ 2,554$
Total debt
(b)
6,506$ 5,763$ 6,259$
Net debt
(b)
5,646$ 4,962$ 5,422$
First Quarter 2019
Free Cash Flow
(a) Other includes amortization and write-off of debt issuance costs, net pension curtailments and settlements, net rationalization charges, net (gains) losses on asset sales, compensation and benefits less pension expense, other
current liabilities, other assets and liabilities, operating lease expense and payments under the new accounting standard, and gain on TireHub transaction, net of transaction costs
15
Terms: US$ millions
Includes impact of
non-cash gain
on TireHub
transaction
2019 2018 March 31, 2019
Net Income (Loss) (44)$ 80$ 584$
Depreciation and Amortization 193 199 772
Change in Working Capital (589) (449) (260)
Pension Expense 34 28 116
Pension Contributions and Direct Payments (18) (21) (71)
Provision for Deferred Income Taxes (23) (17) 125
Rationalization Payments (18) (106) (86)
Other
(a)
101 (103) (239)
Cash Flow from Operating Activities (GAAP) (364)$ (389)$ 941$
Capital Expenditures (221) (248) (784)
Free Cash Flow (non-GAAP) (585)$ (637)$ 157$
Cash Flow from Investing Activities (GAAP) (244)$ (248)$ (863)$
Cash Flow from Financing Activities (GAAP) 645$ 399$ 3$
Three Months Ended
March 31,
• Volume flat, with strong replacement
shipments in U.S., offset by weakness in
Brazil and U.S. consumer OE
• U.S. consumer replacement up 6%
• Strong commercial growth
• SOI decline driven by higher raw material
costs, lower earnings on third-party
chemical sales, and currency
First Quarter 2019 - Segment Results
Americas
16
Terms: US$ millions
Units in millions
First Quarter
2019 2018 Change
Units 16.7 16.7 -
Net Sales $1,876 $1,929 (2.7%)
Operating
Income
$89 $127 (29.9%)
Margin 4.7% 6.6%
• Volume decline driven by weaker
consumer replacement demand,
partially offset by strong commercial
truck performance
• Favorable momentum in fleet services
and freight trends contributing to
commercial truck growth
• SOI decline driven by higher raw
material and transportation costs,
and lower volume
First Quarter 2019 - Segment Results
Europe, Middle East & Africa
17
Terms: US$ millions
Units in millions
First Quarter
2019 2018 Change
Units 14.4 14.7 (2.5%)
Net Sales $1,221 $1,330 (8.2%)
Operating
Income
$54 $78 (30.8%)
Margin 4.4% 5.9%
• Volume declines driven by continued
weakness in China and weak OE in
India
• SOI decline driven by higher raw
material costs, lower volume and lower
factory utilization
First Quarter 2019 - Segment Results
Asia Pacific
18
Terms: US$ millions
Units in millions
First Quarter
2019 2018 Change
Units 6.9 7.6 (8.7%)
Net Sales $501 $571 (12.3%)
Operating
Income
$47 $76 (38.2%)
Margin 9.4% 13.3%
1919
2019 Segment Operating Income Outlook
Macro challenges continue, volume environment remains a risk
+ New Americas Plant – At full capacity
by year end (High-value/low-cost capacity)
+ TireHub – Reversal of 2018 volume loss
+ Price – Full-year benefit of 2H18 pricing
increases
+ Mix – Continued growth in ≥17”
+ Net cost savings – Savings continue,
but at a lower rate than recent years
– Raw Materials – Cost increases will
continue at least into Q3
– FX – Continued negative impact at
current spot rates
– OE – 2-3M unit volume reduction from
fitments we chose to exit (low value)
– China – Continued year-over-year decline
at least through 1
st
half (tough
comparison period)
– Latin America – Continued volatility
Positives
Negatives
2020
Second Quarter Puts and Takes
Challenges continue in Q2
Americas EMEA Asia Pacific
(-
) Price/Mix < Raw Materials
(-
) Foreign Exchange
(-
) Price/Mix < Raw Materials
(-
) Other Tire-
Related Businesses
(-
) Volume
(-
) Volume
(+)
Overhead Absorption
(-
) Cost / Inflation (wages,
energy, transportation)
(-
) Overhead Absorption
$42
$189
$300
$194
$93
$43
$2
$128
$137
$80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Raw Material Costs
(a)
2017 2019
+4%
2018
Raw material costs will remain a significant headwind in Q2
Raw Material Overview
(a) Impact to cost of goods sold versus prior period, excluding the impact of raw material cost saving measures
21
Full Year = $725
Full Year = $266
• Expecting raw material cost
increases of ~$300M in 2019
based on forecasted rates
• Feedstock ~$60M
• Transactional FX ~$120M
• Non-feedstock ~$120M
Terms: US$ millions
2019 Full-Year Industry Outlook
(a) For replacement, Western Europe is Europool and Turkey; for OE, Western Europe is total EMEA
22
Full-Year 2019 Guidance
United States Western Europe
(a)
Consumer Replacement ~Flat – 2% ~Flat – 2%
Consumer OE ~(4)% – Flat ~(3) – 1%
Commercial Replacement ~(2) – Flat ~1 – 3%
Commercial OE ~(2) – 3% ~1 – 4%
2019 Outlook – Other Financial Assumptions
(a) Excludes one-time charges and benefits from pension settlements and curtailments
(b) Excludes one-time items
23
Current 2019 FY Assumption
Interest Expense ~$350 million
Other (Income) Expense
Financing fees: ~$40 million
Global pension related (excluded from SOI)
(a)
: $95 - $120 million
Income Tax
Expense: ~25% of global pre-tax operating income;
Cash: ~20% - 25% of global pre-tax operating income
(b)
Depreciation & Amortization ~$775 million
Global Pension Cash Contributions $25 - $50 million
Working Capital Use of less than $100 million
Capital Expenditures
~$900 million;
Driving >17” growth in volume & mix
Restructuring Payments ~$50 million
Corporate Other ~$100 million
24
Looking Beyond the Cyclicality
(a)
(a) For 2008-2009 and 2014-2018 see Segment Operating Income and Margin reconciliation in Appendix on page 31 and Adjusted EBITDA reconciliation on page 34
Great Recession
2008 – 2009
Earnings Power
2014 – 2016
• Average SOI $1.9
• Average SOI margin 12%
• Average Adj EBITDA $2.3
• Average SOI $0.6
• Average SOI margin 3%
• Average Adj EBITDA $1.1
Profitability will benefit as we work through the raw material cycle
Current Raw Mat Cycle
2017 – 2018
• Average SOI $1.4
• Average SOI margin 9%
• Average Adj EBITDA $2.1
$ in Billions
Appendix
2626
(a) See Segment Operating Income and Margin reconciliation in Appendix on page 31
Strategy Delivering Strong Results
Generating stronger earnings throughout the earnings cycle
Update for 2018
0%
2%
4%
6%
8%
10%
12%
14%
$-
$.5
$1.0
$1.5
$2.0
$2.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(in billions)
Segment Operating Income
(a)
Americas EMEA Asia Pacific SOI Margin
Modeling Assumptions
Note: Volume, pricing and raw materials modeling assumptions based on Goodyear's public disclosures. Currency, cost inflation, profit margin and overhead absorption figures based on internal estimates.
As shown in the fourth quarter 2018 earnings call presentation.
27
• 1% Δ in U.S. Consumer OE Industry ~120 • 1% Δ in U.S. Consumer Replacement
~$36M''
• +/- 0.01 Δ USD/BRL (e.g. R$3.79 to R$3.78 is favorable by 0.01) +/-$0.3M
• 1% Δ in U.S. Consumer Replacement Industry ~355 • 1% Δ in U.S. Commercial Replacement
~$12M''
• +/- 0.01 Δ USD/CNY
(e.g. ¥6.75 to ¥6.74 is favorable by 0.01)
+/-$0.2M
• 1% Δ in U.S. Commercial OE Industry ~10 • 1% Δ in European Consumer Replacement
~$31M''
• +/- 0.01 Δ USD/EUR
(e.g. €0.87 from €0.86 is favorable by 0.01)
+/-$3.1M
• 1% Δ in U.S. Commercial Replacement Industry ~30 • 1% Δ in European Commercial Replacement
~$10M''
• +/- 0.01 Δ USD/TRY
(e.g. ₺5.42 from ₺5.41 is favorable by 0.01)
+/-$0.1M
• 1% Δ in European Consumer OE Industry ~130
• 1% Δ in European Consumer Replacement Industry ~370
• 1% Δ in European Commercial OE Industry ~10
• 1% Δ in European Commercial Replacement Industry ~30
• Consumer OE ≥17"
~$19 • 1% Δ in Synthetic Rubber Prices (3 to 4 month lag)
~$9M''
• +/- 0.01 Δ USD/BRL (e.g. R$3.79 to R$3.78 is favorable by a 0.01) +/- $0.9M
• Consumer Replacement ≥17"
~$28 • 1% Δ in Natural Rubber Prices (4 to 6 month lag)
~$6M''
• +/- 0.01 Δ USD/CNY
(e.g. ¥6.75 to ¥6.74 is favorable by a 0.01)
+/- $0.2M
• Consumer OE <17"
$7 - $9 • 1% Δ in Pigment, Chemical, & Oil Prices (3 to 4 month lag)
~$6M''
• +/- 0.01 Δ USD/EUR
(e.g. €0.87 from €0.86 is favorable by a 0.01)
+/- $3.5M
• Consumer Replacement <17"
$7 - $9 • 1% Δ in Wire/Other Prices (3 to 4 month lag)
~$4M''
• +/- 0.01 Δ USD/TRY
(e.g. ₺5.42 from ₺5.41 is favorable by a 0.01)
+/- $0.2M
• Commercial - U.S. and Europe $50 - $60 • 1% Δ in Carbon Black (3 to 4 month lag)
~$4M''
• +/- 0.01 Δ EUR/TRY (e.g. ₺6.25 from ₺6.24 is favorable by a 0.01) +/- $0.2M
• 1% Δ in Fabric Prices (3 to 4 month lag)
~$3M''
• Americas Consumer $10 -$15 • 1% Δ in Global Inflation ~$55M
• Americas Commercial $50 - $60 • 1% Δ in Americas Inflation ~$25M
• EMEA Consumer $8 - $12 • 1% Δ in EMEA Inflation ~$25M
• EMEA Commercial $30 - $35
Translational Foreign Currency
(Annual Impact on FX portion of SOI Walk)
Transactional Foreign Currency
(Annual Impact on Raw Material portion of SOI Walk)
Volume Sensitivities
(Impact on Goodyear's Annual Units in 000's)
Approximate Profit Margin Per Tire
(Industry Estimate)
Pricing
(Annual Impact of Effective Pricing Yield)
Tire Raw Material Spend
(Annual Impact)
Cost Inflation
(Annual Impact)
Approximate OH Absorption Per Tire
(1 Quarter Lag)
~$25 Average
~$9 Average
First Quarter 2019 – Liquidity Profile
(a) Total liquidity comprised of $860 million of cash and cash equivalents, as well as $2,683 million of unused availability under various credit agreements
28
Available
Credit Lines
Cash &
Equivalents
$3.5
(a)
Terms: US$ billions
First Quarter 2019 – Maturity Schedule
Note: Based on March 31, 2019 balance sheet values and excludes notes payable, finance and operating leases and other domestic and foreign debt
(a) At March 31, 2019 our borrowing base, and therefore our availability, under the U.S. revolving credit facility was $382 million below the facility’s stated amount of $2.0 billion
At March 31, 2019 there were $285 million of borrowings and $37 million of letters of credit issued
(b) At March 31, 2019 the amounts available and utilized under the Pan-European securitization program totaled $246 million (€219 million)
(c) At March 31, 2019 there were $140 million (€125 million) of borrowings and no letters of credit issued under the €800 million European revolving credit facility
29
Terms: US$ millions
$-
$278
$285
$1,527
$140
$2,150
$1,715
(a)
$113
(b)
$759
(c)
2019 2020 2021 2022 2023 2024
≥ 2025
Undrawn Credit Lines
Funded Debt
Use of Historical and Forward-Looking
Non-GAAP Financial Measures
This presentation contains historical and forward-looking non-GAAP financial measures, including Total Segment Operating Income and Margin, Adjusted EBITDA, Free Cash Flow, Adjusted Net
Income and Adjusted Diluted Earnings Per Share (EPS), which are important financial measures for the company but are not financial measures defined by U.S. GAAP, and should not be
construed as alternatives to corresponding financial measures presented in accordance with U.S. GAAP.
Total Segment Operating Income is the sum of the individual strategic business units’ (SBUs’) Segment Operating Income as determined in accordance with U.S. GAAP. Total Segment
Operating Margin is Total Segment Operating Income divided by Net Sales as determined in accordance with U.S. GAAP. Management believes that Total Segment Operating Income and
Margin are useful because they represent the aggregate value of income created by the company’s SBUs and exclude items not directly related to the SBUs for performance evaluation
purposes. The most directly comparable U.S. GAAP financial measures to Total Segment Operating Income and Margin are Goodyear Net Income and Return on Net Sales (which is calculated
by dividing Goodyear Net Income by Net Sales).
EBITDA, as adjusted, represents Goodyear Net Income, as determined in accordance with U.S. GAAP (the most directly comparable U.S. GAAP financial measure to EBITDA), before interest
expense, income tax expense, depreciation and amortization expense, rationalization charges, and other (income) and expense. Management believes that Adjusted EBITDA is widely used by
investors as a means of evaluating the company’s operating profitability.
Free Cash Flow is the company’s Cash Flows from Operating Activities as determined in accordance with U.S. GAAP, less capital expenditures. Management believes that Free Cash Flow is
useful because it represents the cash generating capability of the company’s ongoing operations, after taking into consideration capital expenditures necessary to maintain its business and
pursue growth opportunities. The most directly comparable U.S. GAAP financial measure is Cash Flows from Operating Activities.
Adjusted Net Income is Goodyear Net Income as determined in accordance with U.S. GAAP adjusted for certain significant items. Adjusted Diluted EPS is the company’s Adjusted Net Income
divided by Weighted Average Shares Outstanding-Diluted as determined in accordance with U.S. GAAP. Management believes that Adjusted Net Income and Adjusted Diluted EPS are useful
because they represent how management reviews the operating results of the company excluding the impacts of rationalizations, asset write-offs, accelerated depreciation, asset sales and
certain other significant items.
It should be noted that other companies may calculate similarly-titled non-GAAP financial measures differently and, as a result, the measures presented herein may not be comparable to such
similarly-titled measures reported by other companies.
We are unable to present a quantitative reconciliation of our forward-looking non-GAAP financial measures, other than Free Cash Flow, to the most directly comparable U.S. GAAP financial
measures because management cannot reliably predict all of the necessary components of those U.S. GAAP financial measures without unreasonable effort. Those forward-looking non-GAAP
financial measures, or components thereof, would be reconciled to Goodyear Net Income, which includes several significant items that are not included in the comparable non-GAAP financial
measures, such as rationalization charges, other (income) expense, pension curtailments and settlements, and income taxes. The decisions and events that typically lead to the recognition of
these and other similar non-GAAP adjustments, such as a decision to exit part of our business, acquisitions and dispositions, foreign currency exchange gains and losses, financing fees, actions
taken to manage our pension liabilities, and the recording or release of tax valuation allowances, are inherently unpredictable as to if or when they may occur. The inability to provide a
reconciliation is due to that unpredictability and the related difficulty in assessing the potential financial impact of the non-GAAP adjustments. For the same reasons, we are unable to address
the probable significance of the unavailable information, which could be material to our future financial results.
30
Reconciliation for Segment Operating
Income/Margin
(a)
31
(a) 2010 – 2015 have been restated for the new guidance on the presentation of debt issuance and amortization costs effective in 2016, 2003 – 2009 have not been restated. 2016 – 2017 have been restated in alignment with the
new pension accounting standard adopted in 2018, 2003 – 2015 have not been restated. 2003 - 2012 have not been restated for the Americas consolidation. In July 2007, the Engineered Products business was sold; in 2005 -
2007 results from Engineered Products have been included in discontinued operations, 2003 - 2004 includes income from Engineered Products in income from continuing operations. 2014 and prior includes results from
Venezuela. Venezuela was deconsolidated in 2015
Terms: US$ millions
2019 2018 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Total Segment Operating Income 190$ 281$ 1,274$ 1,556$ 1,996$ 2,020$ 1,706$ 1,577$ 1,248$ 1,368$ 917$ 372$ 804$ 1,230$ 710$ 1,060$ 946$ 419$
Rationalizations (103) (37) (44) (135) (210) (114) (95) (58) (175) (103) (240) (227) (184) (49) (311) (7) (56) (291)
Interest expense (85) (76) (321) (335) (372) (438) (444) (407) (385) (350) (335) (311) (320) (468) (447) (408) (369) (296)
Other Income (expense) (22) (37) 174 (70) (25) 141 (286) (82) (111) (53) (167) (40) (59) (9) 77 (62) (23) (317)
Asset write-offs and accelerated depreciation - (1) (4) (40) (20) (8) (7) (23) (20) (50) (15) (43) (28) (37) (88) (4) (10) (133)
Corporate incentive compensation plans (1) (4) (13) (33) (76) (103) (97) (108) (69) (70) (71) (41) 4 (77) (66) (28) (3) -
Pension curtailments/settlements - - - - - (137) (33) - 1 (15) - - (9) (64) - - - -
Intercompany profit elimination 4 3 (4) (2) (2) (3) 9 7 (1) (5) (14) (13) 23 (11) (9) 13 (6) 14
Loss on deconsolidation of Venezuelan subsidiary - - - - - (646) - - - - - - - - - - - -
Retained expenses of divested operations (3) (3) (9) (13) (18) (14) (16) (24) (14) (29) (20) (17) - (17) (48) (52) (12) -
Other (18) (13) (42) (50) (66) (90) (50) (69) (34) (75) (47) (37) (45) (53) (20) (60) (86) (53)
Income (Loss) from Continuing Operations
before Income Taxes
(38)$ 113$ 1,011$ 878$ 1,207$ 608$ 687$ 813$ 440$ 618$ 8$ (357)$ 186$ 445$ (202)$ 452$ 381$ (657)$
United States and Foreign Tax Expense (Benefit) 6 33 303 513 (77) 232 (1,834) 138 203 201 172 7 209 255 60 233 208 117
Less: Minority Shareholders Net Income 17 5 15 19 20 69 69 46 25 74 52 11 54 70 111 95 58 33
Income (Loss) from Continuing Operations (61)$ 75$ 693$ 346$ 1,264$ 307$ 2,452$ 629$ 212$ 343$ (216)$ (375)$ (77)$ 120$ (373)$ 124$ 115$ (807)$
Discontinued operations - - - - - - - - - - - - - 463 43 115 - -
Cumulative effect of account change - - - - - - - - - - - - - - - (11) - -
Goodyear Net Income (Loss) (61)$ 75$ 693$ 346$ 1,264$ 307$ 2,452$ 629$ 212$ 343$ (216)$ (375)$ (77)$ 583$ (330)$ 228$ 115$ (807)$
Net Sales (as reported) $3,598 $3,830 $15,475 $15,377 $15,158 $16,443 $18,138 $19,540 $20,992 $22,767 $18,832 $16,301 $19,488 $19,644 $18,751 $18,098 $18,353 $15,102
Return on Net Sales (as reported) (1.7)% 2.0% 4.5% 2.3% 8.3% 1.9% 13.5% 3.2% 1.0% 1.5% (1.1)% (2.3)% (0.4)% 3.0% (1.8)% 1.3% 0.6% (5.3)%
Total Segment Operating Margin 5.3% 7.3% 8.2% 10.1% 13.2% 12.3% 9.4% 8.1% 5.9% 6.0% 4.9% 2.3% 4.1% 6.3% 3.8% 5.9% 5.2% 2.8%
Three Months Ended
March 31,
Twelve Months Ended
December 31,
First Quarter 2019 Significant Items
(After Tax and Minority Interest)
32
Terms: US$ millions,
(except EPS)
As
Reported
Discrete Tax
Items
Asset Sales
Insurance
Recovery
Transaction
Costs
Hurricane Effect
Brazil
Transportation
Strike
Pension
Settlement
As Adjusted
Net Sales 3,841$ -$ -$ -$ -$ -$ -$ -$ 3,841$
Cost of Goods Sold 2,949 - - - - - (7) - 2,942
Gross Margin 892 - - - - - 7 - 899
SAG 588 - - - - - - - 588
Rationalizations (2) - - - - - - - (2)
Interest Expense 78 - - - - - - - 78
Other (Income) Expense 45 - 2 2 (11) (8) - (3) 27
Pre-tax Income 183 - (2) (2) 11 8 7 3 208
Taxes 19 28 (1) (1) 3 - 2 1 51
Minority Interest 7 - - - - - - - 7
Goodyear Net Income 157$ (28)$ (1)$ (1)$ 8$ 8$ 5$ 2$ 150$
EPS 0.65$ (0.10)$ (0.01)$ (0.01)$ 0.03$ 0.03$ 0.02$ 0.01$ 0.62$
Terms: US$ millions,
(except EPS)
As
Reported
Rationalizations,
Asset Write-offs,
and Accelerated
Depreciation
Indirect Tax
Settlements and
Discrete Tax
Items
Legal Claims
Related to
Discontinued
Operations
Asset Sales
Net Insurance
Recovery from
Hurricanes
As Adjusted
Net Sales 3,598$ -$ -$ -$ -$ -$ 3,598$
Cost of Goods Sold 2,879 - - - - - 2,879
Gross Margin 719 - - - - - 719
SAG 547 - - - - - 547
Rationalizations 103 (103) - - - - -
Interest Expense 85 - - - - - 85
Other (Income) Expense 22 - - (5) 5 3 25
Pre-tax Income (Loss) (38) 103 - 5 (5) (3) 62
Taxes 6 18 (7) 1 (1) (1) 16
Minority Interest 17 - (16) - - - 1
Goodyear Net Income (Loss) (61)$ 85$ 23$ 4$ (4)$ (2)$ 45$
EPS (0.26)$ 0.36$ 0.10$ 0.02$ (0.02)$ (0.01)$ 0.19$
First Quarter 2018 Significant Items
(After Tax and Minority Interest)
33
Terms: US$ millions,
(except EPS)
As
Reported
Rationalizations,
Asset Write-offs,
and Accelerated
Depreciation
Discrete Tax
Items
Pension
Standard
Change
TireHub
Transaction
Costs
Hurricane
Effect As Adjusted
Net Sales 3,830$ -$ -$ -$ -$ -$ 3,830$
Cost of Goods Sold 2,976 (1) - - - - 2,975
Gross Margin 854 1 - - - - 855
SAG 591 - - - - - 591
Rationalizations 37 (37) - - - - -
Interest Expense 76 - - - - - 76
Other (Income) Expense 37 - - (9) (4) (3) 21
Pre-tax Income 113 38 - 9 4 3 167
Taxes 33 11 (7) 2 1 - 40
Minority Interest 5 - - - - - 5
Goodyear Net Income 75$ 27$ 7$ 7$ 3$ 3$ 122$
EPS 0.31$ 0.11$ 0.03$ 0.03$ 0.01$ 0.01$ 0.50$
Reconciliation for Adjusted EBITDA
34
(a) Other includes rationalization charges, other income and expense and the loss on the deconsolidation of our Venezuela subsidiary effective December 31, 2015
(b) 2009-2008 have not been restated for the guidance on the presentation of debt issuance and amortization costs effective in 2016. 2015-2014 and 2009-2008 have not been restated for the pension accounting standard adopted in 2018
($ in millions)
2018 2017 2016
2015
(b)
2014
(b)
2009
(b)
2008
(b)
Goodyear Net Income (Loss) $693 $346 $1,264 $307 $2,452 ($375) ($77)
Interest Expense 321 335 372 438 444 311 320
Income Tax Expense (Benefit) 303 513 (77) 232 (1,834) 7 209
Depreciation and Amortization 778 781 727 698 732 636 660
Other
(a)
(130) 205 235 619 381 267 243
EBITDA, as adjusted $1,965 $2,180 $2,521 $2,294 $2,175 $846 $1,355
Year Ended December 31,
Reconciliation for Total Debt and Net Debt
35
Terms: US$ millions
March 31, December 31, March 31,
2019 2018 2018
Long-Term Debt and Finance Leases 5,545$ 5,110$ 5,600$
Notes Payable and Overdrafts 495 410 332
Long-Term Debt and Finance Leases Due Within One Year 466 243 327
Total Debt 6,506$ 5,763$ 6,259$
Less: Cash and Cash Equivalents 860 801 837
Net Debt 5,646$ 4,962$ 5,422$