Fi First rst Qu Quart arter er 2019 9 Co Conference nference Ca Call ll 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
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Reflecting on Q1 2019 Results Positives Negatives • Global revenue per tire increased 4% • Higher raw material costs (including costs driven by stricter enforcement of • U.S. consumer replacement volume growth environmental regulations in China) of 6%, led by outperformance in ≥17” • Volatility in emerging markets, including • Improving U.S. supply China and Brazil • U.S. and EMEA commercial truck businesses • Currency weakness in key markets • Announced plans to restructure/modernize • Soft consumer demand in Europe two manufacturing facilities in Germany • Expanding portfolio of mobility and technology partners Making progress in a challenging environment 4
Consumer Replacement Industry Fundamentals: ≥17” U. U.S. Re Replacement placement Ind ndus ustry try Eu Europool ropool & Tu & Turkey rkey Re Replace placeme ment nt Ind ndust ustry ry 2019 20 19 vs vs. 20 2018 18 Gr Growth wth Ra Rate te (a) (a) 20 2019 19 vs vs. 20 2018 18 Gr Growth wth Ra Rate te (b) (b) Q1 19 Q1 19 Q1 19 Q1 19 USTMA TMA Mem ember ers s (> 17”) 8% 8% ETRMA ET RMA Mem ember ers s (> 17”) 6% 6% ET ETRM RMA Members (<17”) -8% 8% USTMA TMA Members (<17”) -6% 6% Tot otal al -4% 4% Tot otal al 2% 2% Non on-Mem Members bers 17% 17% Non on-Mem Members bers 3% 3% Tot otal al EU EU + Tur urkey key -2% 2% Tot otal al U.S .S. 6% 6% Good Go odye year ar (> 17”) 7% 7% Go Good odye year ar (> 17”) 12% 12% (a) Source: U.S. Tire Manufacturers Association 5 (b) Source: European Tyre & Rubber Manufacturer’s Association
U.S. Market Share U.S. S. Consumer onsumer Rep eplace lacement ment Volume olume Trail ailing ing 4 Qu Quar arter ers 108 108 107 107 106 106 105 105 104 104 103 103 102 102 101 101 100 100 99 99 Impact of relative (b) 98 98 pricing in 2017 Q4 2014 Q4 2014 Q1 2019 Q1 2019 (b) Industry Industry Goodyear Goodyear (a) Strong execution continues to drive market share gains (a) Source: U.S. Tire Manufacturers Association 6 (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
EMEA Consumer Product Launches Significant advances in wet braking and dry handling. Award winning performance in 4 out of 4 magazine tests 1 st category refresh in a Superior wet braking and 1st 1st 2nd 2n 2nd nd 2n 2nd dry handling vs competition number of years Driven by continued market back innovation 7
EMEA Commercial Product Launches Regional Haul service tire with focus on mileage Long Haul service tire with focus on fuel economy Innovative products strengthen value proposition 8
Expanding Mobility and Technology Partners Envoy Technologies Local Motors YourMechanic • Pa Part rtner nershi hip p re revolv lves es aro round und autonomou onomous s • Goodyear.com added to YourMechanic’s • Pi Pilot t pr program ram launche nched d in earl rly 2019 shuttle tle pl platform form of mobil ility ity serv rvice ice and re d repa pair ir • Envoy Te Techn hnologies ologies will leverage rage solution tions • Olli cre reates ates new learning rning opp pportunitie ortunities s Goodyear’s predictive tire re serv rvicing icing • YourMecha rMechanic nic enhances nces global bal innova vation tion solution tion to minimize mize ope peratio rational nal do downtime ime • Goody dyear ar selected ected as exc xclusiv sive e fitment ent network ork Collaborative partnerships driving innovation 9
Strengthening the Business for the Future • Adv Advanc ancing ing di dist stri ribution bution an and d ret retai ail - 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 Advanc Adv ancing ing tec techno hnology logy fo for the emer r the emerging ging mo mobil ility ity la land ndsc scap ape • • Sc Scal aling ing co comm mmercial ercial fl fleet eet so solu lutio tions ns • Buil Bu ilding ding st stron rong g OE OE pi pipel peline ine fo for 202 r 2020+ 0+ An Announced nounced Ge Germa rman n mo moder derniz nization ation & res & restru tructuring cturing pro progr gram am • - Increases ≥17” capabilities - Significant conversion cost savings Continuing to build fundamental earnings power of our business 10 10
Finan Financial R cial Revi eview ew
First Quarter 2019 Income Statement Terms: rms: US$ millions llions (exc xcept ept EPS) PS) Three Months Ended 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 (a) See Segment Operating Income and Margin reconciliation in Appendix on page 31 12 (b) See Adjusted Diluted Earnings Per Share reconciliation in Appendix on pages 32 and 33
First Quarter 2019 Segment Operating Results Terms: rms: US$ millions llions $281 ($20) ($137) $18 Q1 ($45) Unabsorbed $55 Volume 2018 Fixed Cost SOI ($14) $10 $190 $42 Inflation (b) Q1 Cost Currency Other (c) 2019 Savings SOI Raw Price/Mix Materials (a) ($2) ($95) $10 Total Volume Impact Net P/M vs Raws Net Cost Savings (a) Raw material variance of ($137) million excludes raw material cost saving measures of $26 million, which are included in Cost Savings 13 (b) Estimated impact of inflation (wages, utilities, energy, transportation and other) (c) Includes the impacts of other tire-related businesses, advertising and R&D
First Quarter 2019 Balance Sheet Terms: rms: US$ millions llions 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 (a) Working capital represents accounts receivable and inventories, less accounts payable – trade 14 (b) See Total Debt and Net Debt reconciliation in Appendix on page 35
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