2013 Investor Day September 20, 2013

Transcription

1 2013 Investor Day September 20, 2013

2 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 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 realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; increases in the prices paid for raw materials and energy; pension plan funding obligations; actions and initiatives taken by both current and potential competitors; 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; a labor strike, work stoppage or other similar event; 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

3 Agenda Rich Kramer Overview Industry MegaTrends Strategy Steve McClellan Operational Update Darren Wells Financial Outlook Capital Allocation Plan Chairman and CEO President North America Executive Vice President and CFO Question/Answer Goodyear Management 3

4 Meeting Highlights Based on our confidence in the business Reconfirming 2013 outlook SOI of about $1.5 billion Positive cash flow (excluding pension pre-funding) Targets through 2016 Annual 10-15% SOI growth per year through 2016 Annual positive cash flow (excluding pension pre-funding) Targeting 2.5x Adjusted Debt / EBITDAP by 2016 Balanced Capital Allocation Plan Dividend and stock buy-back plan beginning Q4/2013 4

5 Shareholder Return Program Reinstating regular dividend: $55 million per year $0.05 per share quarterly dividend beginning in fourth quarter Anticipate increases over time Establishing share repurchase program: $100 million Shareholder return program demonstrates strong commitment to shareholders and confidence in strategy 5

6 Q2/2013 Highlights they are worth repeating Record segment operating income of $428 million (a) All business units achieved higher year-over-year SOI All-time records for North America and Asia Pacific Three business units posted higher tire unit volumes versus last year Strong cash flow Cash flow positive in Q2 and continued progress managing working capital Pension underfunded status benefitting from higher interest rates Increasing confidence in 2013 targets SOI expected of about $1.5 billion, at high end of original $1.4 - $1.5 billion range Cash flow positive (excluding pension pre-funding) (a) See Segment Operating Income reconciliation in Appendix on page 66. 6

7 Strategy Roadmap Where We Are # 1 Key Strategies # 2 Industry MegaTrends # 4 Key How To s # 5 Our Destination # 3 7

8 # 1 Where We Are March 2011 September Industry Growth = ~10% Natural Rubber = $2.38 Euro = $1.42, Real = 1.67 Weaker demand Lower raws Stronger $ Coming off of 2010 at $917 million of SOI with margin of 4.9% (a) North America at essentially breakeven SOI Pension risk over-shadowing the tire company China consumer capacity still under construction; truck not yet begun Targeting cash flow positive 13 Industry growth = ~1% Natural Rubber = $1.11 Euro = $1.35, Real = 2.21 Expect to finish 2013 at ~$1.5 billion SOI with margin of ~7.5% N. America approaching $600 million SOI and creating economic value Clear path forward on pension performance based on underlying tire business China consumer and truck plant fully operational, and Asia at record SOI Cash flow positive and dividend paying company Great progress.in challenging environment (a) See Segment Operating Income and margin reconciliation in Appendix on page 66. 8

9 # 2 Key Strategy: NA Profitability Terms: Trailing 4 Quarters of SOI in $ millions Record Strong business performance Trailing 4 quarters approaching $600 million of SOI, far exceeding original $450 million target Despite weak-volume tire industry Consistent business momentum 16 straight quarters of year-on-year SOI improvement Excellent execution of Goodyear strategy Market-back innovation excellence Target profitable market segments Operational excellence & enabling investments USW contract recently extended into 2017 Sustainable business that is creating value 9

10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 SOI in $ millions SOI as % of Revenue # 2 Key Strategy: Win in China $400 $350 $300 $250 $200 $150 $100 $50 $0 SOI: Asia Terms: Trailing 4 Quarters of SOI in $ millions Factory start-up Record 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Winning in China New passenger and truck plant fully operational Solid return on our CapEx investment Gaining share Record SOI in Asia After working through natural disaster (i.e., Thailand flood) and plant start-up costs Broad Asian business Growing consumer & commercial Solid off-the-road and farm (India) Restructuring in Australia/New Zealand in response to weak economic conditions High growth business (ex. ANZ)... with excellent long term prospects 10

11 # 2 Renewed Key Strategy: Continued Success in LA Terms: Trailing 4 Quarters of SOI in $ millions Recovery underway Team responding to market transition Closed open markets - Primarily local manufacturing local and significant imports - Monobrand multibrand distribution Back to the basics of open market Innovation via exciting new products Increased HVA capability (Americana) Solid marketing programs Working through challenges of Venezuela and Argentina Evidence of recovery Experiencing volume growth 3 straight qtrs of yr-on-yr SOI growth High margin business on the road to recovery 11

12 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 SOI in $ millions SOI as % of Revenue # 2 Renewed Key Strategy: Continued Success in EMEA $800 $700 $600 $500 $400 $300 $200 $100 $0 SOI: EMEA Terms: Trailing 4 Quarters of SOI in $ millions Historical Margin (6-7%) Recovery (early signs) 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Struggling in weak economy Restructuring in response o Amiens North closure ($75 million) o Profit Improvement Plan 1. Target Market Segments 2. Emerging Market Growth 3. Productivity ($75-$100 million ) Not backing off innovation Technology strength evidenced by industry-leading Summer Tire labels Our recovery plan is targeting a return to historical margins by 2016 Developing recovery plan full journey will take several years 12

13 # 3 Our Destination Segment Operating Income (a) $ in millions Our performance provides confidence in achievability of Destination (a) See Segment Operating Income reconciliation in Appendix on page

14 # 3 Our Destination Creating Sustainable Economic Value by being. First with our customers Leader in our targeted segments The innovation leader Competitively advantaged As a result, we will be Profitable though economic cycles Cash flow positive Investment grade Strategy leads to sustainable growth 14

15 Strategy Roadmap Where We Are Executing Plan Innovation Leader Strong Earnings NA Adding Economic Value Weak Volume Pension Remains a Challenge Key Strategies 1. North America: Profitability 2. Asia: Winning in China 3. EMEA/LA: Continued Success Industry MegaTrends # 4 Key How To s # 5 Our Destination Creating Sustainable Value First with Customers Innovation Leader Leader in Targeted Segments Competitively Advantaged Profitable thru Economic Cycle Cash Flow Positive Investment Grade 15

16 # 4 Industry MegaTrends Significant GDP growth in emerging markets will provide impressive tire market growth Developed markets size, mix and drive for innovation provide profitable market segments 7 Industry MegaTrends Green (fuel efficiency) will be a growing and permanent global theme Tire performance labeling will become an industry standard High Value Added technology will continue to migrate into mid-tier cars/tires Unlikely to experience gamechangers. evolutionary, not revolutionary Internet and information technology will alter enduser buying behaviors MegaTrends Define Industry Growth and Profit Opportunities for Next Several Years 16

17 MegaTrend #1: Significant GDP growth in emerging markets will provide impressive tire market growth Global Tire Industry is a growth business led by Emerging Markets (a) CAGR Compound Annual Growth Rate (b) Estimates based on LMC Automotive forecast and internal Goodyear analysis 17

18 MegaTrend #2: Developed markets size, mix and drive for innovation provide profitable market segments North America Total Consumer Industry Segmentation Expected Cumulative Industry Growth: 2018 versus 2012 Market Memo: 2012 Cumulative Industry 2018 Segment Avg. Price Industry Mix Growth 2018 vs 2012 Industry Mix Premium ~$100 20% +19% 22% Mid-Tier ~$80 55% +8% 54% ~ 2x Economy ~$60 25% +7% 24% Total ~$79 100% +10% 100% Premium expected to grow at ~2X overall industry growth rate Note: Price of Premium tire ~25% more than average tire (a) Source: Internal Goodyear analysis and industry data sources 18

19 MegaTrend #3: High Value Added technology will continue to migrate into mid-tier cars/tires LVA Tire (Low-Value-Added) HVA Tire (High-Value-Added) Incremental $10 - $20 Margin Per Tire Dual Tread Zones with TredLock Technology Silica Tread Carbon Fiber Dual Reinforced Sidewalls Additional Components For Handling Consumer HVA tires incorporating one or more of the following features: Rim diameter 17 or greater Reduced sidewall height Speed-rated H or higher Segmented mold Advanced tread compounds Extra load constructions Commercial tires with specific performance characteristics (e.g., Fuel Max, DuraSeal) and retreadability Goodyear Capturing Higher Margins Through Improved Value Proposition for New Products 19

20 MegaTrend #3: High Value Added technology will continue to migrate into mid-tier cars/tires Latin America Example: OE Requirements for Mid-Tier Vehicle Platforms (a) Mid-Tier Vehicle Examples GM Onix Hyundai - HB20 Fiat - UNO Sporting Ford - New Fiesta VW - GOL/ UP Industry continues to evolve towards HVA tires (a) Source: Internal Goodyear analysis and industry data sources 20

21 MegaTrend #4: Green (fuel efficiency) will be a growing and permanent global theme Global trends Oil prices Sustainability - Recycle/Reuse - Climate Change Governments Fuel Economy Mandates Safety Standards Vehicle OEMs CAFE Standards Advanced powertrains Total Cost of Ownership Increased electronic content (constrained for weight) Goodyear Consumer Fuel Efficient Tire Sales ~6M Growth Rate ~30% CAGR ~14M In millions of tires Includes FuelMax, EfficentGrip, TripleMax, BlueResponse Demand for Fuel Efficiency Growing Rapidly Across all Regions and Accelerating HVA Growth 21

22 MegaTrend #5: Tire performance labeling will become an industry standard European Label Global Tire Labeling Rollout Already implemented To be implemented Under consideration Fuel Efficiency Wet Grip Europe (mandatory) Brazil (2015) Argentina Australia Japan (voluntary) US (2016) Chile China Noise Korea (mandatory) Mexico Tire Labeling is a reality in several countries Testing protocols and implementation continue to be defined 22

23 MegaTrend #5: Tire performance labeling will become an industry standard EU Summer Replacement Market (a) % of Unit Volume 60% 40% Summer HP Market Rest of Summer Replacement Market And when Tire Labeling comes Goodyear has shown ability to lead (a) Passenger market based on Europool 2012 Total Europe (excl. Turkey and Ukraine). All grades based upon publicly available information on tires available for sale as at August HP segment covers H and V speed indexes. (b) B grade in Rolling Resistance Index / A grade in Wet Grip Index. (c) Competitors include Premium brands and best available reported grades by size. 23

24 MegaTrend #6: Internet and information technology will alter end-user buying behaviors Consumer Behavior 1 2 % Consumers using internet research prior to purchase (a) 2010 Now US 55% 70% Germany 20% 38% Brazil 51% 77% China 4% 10% Marketing Drive consumers to our website Web Traffic Goodyear.com in US (b) #1 in the US 2012: 11.4M unique visits (+28% vs 2011) 3 Drive Sales & Mix Customer Website Taking advantage of the trend to drive higher sales and richer mix (a) Source: Industry data sources (b) Source: Compete.com; Goodyear is #1 among North America tire manufacturer sites 24

25 MegaTrend #7: Unlikely to experience game-changers.evolutionary, not revolutionary 1904 Carbon black discovered as rubber reinforcement 1903 Bias-ply tires 1846 Tomas Hancock produces the first solid rubber tire 1845 Robert Thomson invents the pneumatic tire 1839 Charles Goodyear discovers vulcanization 1909 First winter tire 1937 First low profile tire 1947 Tubeless tires 1913 Radial ply tire patented by Christian Hamilton 1926 Drop-center, one piece rim adopted as standard equipment for automobiles 2007 Run-on-Flat Standard Equipment at BMW 1992 Goodyear introduces the Run-on-Flat 1986 Goodyear introduces the first HP All season tire 1979 Mini-spare 1966 First low profile for high performance tires 1948 The steel belted tire Evolutionary Pace of Technology Change Makes Investment Returns More Predictable 25

26 Strategy Roadmap Where We Are Executing Plan Innovation Leader Strong Earnings NA Adding Economic Value Weak Volume Pension Remains a Challenge Key Strategies Industry MegaTrends # 5 Key How To s 1. North America: Profitability 2. Asia: Winning in China 3. EMEA/LA: Continued Success 1. Market-Back Innovation Excellence 2. Target Profitable Segments 3. Operational Excellence 4. Enabling Investments 5. Top Talent/Top Teams Our Destination Creating Sustainable Value First with Customers Innovation Leader Leader in Targeted Segments Competitively Advantaged Profitable thru Economic Cycle Cash Flow Positive Investment Grade 26

27 # 5 Five Key How To s 1. Innovation Excellence -- Market Back Product Innovation Aligning new product roadmap to our targeted market segments Driving performance evidenced by labeling scores North America Asia Pacific EMEA Dunlop Sport BlueResponse Goodyear Efficient Grip Latin America G686 MSS Plus & G677 MSD Plus G686 MSS Plus G677 MSD Plus Product launch test drive high marks 2013 Tire of the Year - China Launched September 2013 Tested at Bob Bondurant School of High Performance Driving, Phoenix, Ariz., May 30, 2013, by independent journalists. Tire dimension: 245/40R18 Tested by Motor Trend Magazine China against other global brands Tested by German magazine AUTOBILD June 2013 very recommended ranking; Tire dimension: 205/55R16 91V Test track: Goodyear Mireval, France 27

28 # 5 Five Key How To s 2. Target Profitable Segments Focus on segments/geographies that offer highest long-term profit potential Make smart choices that best utilize our advantages in brands, technology, etc while being cognizant of the capability of our existing footprint Examples of Success China SUV Russia Truck Large Mining Completed market-back analysis to understand consumer needs Developed technology to deliver features and benefits relevant to consumers Launched marketing programs to create word of mouth endorsements from key opinion leaders Won numerous product awards from print media Identified segment as large volume and profitability driver Redefined Go-to-Market strategy and strengthened commercial capabilities Significantly increased dealer network to expand distribution Doubled sales force and introduced dedicated training program Improved planning processes to ensure consistent supply Business model definition based on market-back analysis Defined and targeted strategic customers Developing integrated solutions to become leader in Customer Value Made to Order, Customized Product driven by customer s needs Investment in R&D and CapEx to support growth Focus in Target Market Segments drives profitable growth 28

29 # 5 Five Key How To s 3. Operational Excellence Utilizing best-in-class approaches to deliver continuous and sustainable results across end-to-end supply chain Suppliers Source Make Deliver Serve Customers Increased level of supplier collaboration Leverage full scale of our global operations Continue creating flexibility to substitute with lower cost materials Continue innovation of new materials Total productive maintenance Equipment reliability Lean run strategies Globally leverage asset base Customer service levels Reduce working capital (ours and customers ) Reduce cost to serve Contingency planning 29

30 # 5 Five Key How To s 4. Enabling Investments Segment Operating Income trajectory enabled by Growth Capex (a) See Segment Operating Income reconciliation in Appendix on page

31 # 5 Five Key How To s 5. Top Talent / Top Teams Leadership traits: Builders, problem solvers, courageous, deliver results (right way!) Goodyear s Leadership Team Experience Profile Top 130 Executives A balanced team of... We attract talent from Terms: years of Goodyear service >10 years 54% 27% 19% 0-5 years 6-10 years home grown talent and external hires many world class companies People make the difference and we have strong leadership that continues to get stronger 31

32 Key How To s Lead in innovation Target highly profitable market segments Supply reliability and leverage global scale High ROI to support targeted product market segments Best team WINNING FORMULA 32

33 Value of the Goodyear Brand Reliability Integrity Supplier of the Year Trust Innovation The Goodyear brand is a differentiator in a competitive market 33

34 Summary Our view of industry MegaTrends is unchanged and offers significant profit opportunities for Goodyear and the Industry Our strategy works and is delivering record results We are staying the course on our strategy and focusing our attention on execution We remain vigilant in a competitive, cyclical industry, but confidence in our brand, our strategy and our team allows us to Announce significant SOI growth targets Announce a balanced capital allocation plan that includes dividends and stock buy back Goodyear has a tremendous legacy but the best is yet to come 34

35 North America Operational Update Steve McClellan President North America

36 North America Path to Profitability $ In millions $514 Q TTM $577 $276 Margin 5.3% Margin 6.4% $18 Margin 2.8% March 2011 Investor Day Target $450M in $ M Units Flat Consumer Replacement Industry 239M Units Exceeded $450M SOI goal one year early, despite weak industry volumes Takeaway Message 36

37 North America Path to Profitability $ In millions 2009 Lower Cost Capture Brand Value Today s Focus 2012 Close Union City Reduce Supply Chain cost Addressed Legacy costs USW Contract Market Back Innovation Award Winning Products Transition to HVA Targeted Market Segments $514 -$305 Fundamental change drove North America turn around Takeaway Message 37

38 North America Sustainable Profitability Our business is fundamentally different: Consumer Replacement business Consumer OE business Commercial Truck business Shift from LVA to HVA driving sustained profitability 38

39 North America Consumer Replacement Where We Were Volume driven to fill the factories, primarily LVA Where We Are Market back strategy, majority HVA and Goodyear brand Multiple brands including private label Approaching 100% Branded portfolio Reliant on industry volume All things to all customers and consumers Profitable through all economic cycles Strategically focused in targeted market segments Fundamental changes have created a sustainable business 39

40 North America Consumer Replacement The Driving Force in the Industry Overall industry flat Targeted segments growing faster than industry, and those segments are HVA Goodyear brand is well positioned in these targeted segments Premium Mid-Tier Industry * Commuter Touring Performance +14% All- Terrain Winter - Invested in increased HVA capacity Economy Significant HVA growth in targeted segments * Source: Internal Modeling 40

41 North America Consumer Replacement Large Regional Retailer Historically focused primarily on the sales of private label tires Retailer s Needs Attract more customers Grow volumes in fastest growing HVA segments Increased sales, margins and profitability Response Innovative branded products to meet HVA market demand Goodyear brand generates demand for retailer Value of Goodyear brand realized through improved margins for both customer and Goodyear Capturing value through HVA branded products 41

42 North America Consumer OE Where We Were Where We Are Business not profitable Focused on driving volume to fill factories Long term fixed price contracts OE managed as standalone business Profitable business Market back strategy, focused on HVA targeted market segments Contracts reflect HVA products and raw material indexes Integrated approach; aligned with the replacement business Fundamental changes have created a sustainable business 42

43 North America Consumer OE business The Driving Force in the Industry Automotive Trends Registered vehicles (a) Fuel Efficiency 252M -86M +97M 263M Integrated Technology (navigation, Bluetooth, satellite radio, etc.) Retired New Vehicles Larger Rim Diameter/Low Profile Improved Handling & Styling HVA HVA impacting all classes of vehicles Essentially all new vehicles will be equipped with HVA tires Takeaway Message (a) Source: Global Insight May

44 North America Consumer OE business Original Equipment Manufacturer Seeking to respond to consumers needs for high-performance vehicle OEM s Needs Reduced tire weight Aggressive wet and dry grip Lower rolling resistance, less noise Extended mobility no spare tire Meet government regulations Response Next generation HVA tire with Fuel economy Enhanced traction New tread compound Run on Flat technology Capturing value through HVA branded products Takeaway Message 44

45 North America Commercial Truck business Where We Were Where We Are LVA products Incomplete service network Focused on volume to fill factories Not realizing value for our products and services Industry leading HVA products Complete service network largest in the U.S. Market back product portfolio aimed at targeted market segments Realizing value for our products and solutions Fundamental changes have created a sustainable business 45

46 North America Commercial Truck business The Driving Force in the Industry Truck Industry Slow growth industry 665M Class 4-8 Ton Miles (a) Quarterly Average 660M 720M Fragmented service and product providers Government regulations impacting emissions, fuel efficiency, and drivers Retired CAGR ~ 0% CAGR ~ +1% Economic uncertainty impacting investments Takeaway Need We ve for HVA Message created products value, and and solutions customers to improve are benefiting fleet profitability from it (a) Source: FTR & Associates and internal models 46

47 North America Commercial Truck business Large Fleet Seeking to improve profitability through lower cost/mile and increased uptime Fleet Needs Premium fuel efficient tires Response Integrated solution with tires & services.. Product durability Consistent billing & pricing Nationwide product & service availability Tire performance tracking HVA fuel efficient tires Complete product & service network Nationwide coverage with more than 2,000 Locations 24/7 service including roadside Takeaway Capturing Message value through HVA branded products and solutions 47

48 North America Summary North America aligned to the Goodyear Strategy Roadmap Path to profitability driven by execution against key strategies North America creating economic value Fundamental changes enabling sustainability 48

49 Financial Summary Darren Wells Executive VP and CFO

50 Our Financial Journey Our Journey Survival Turnaround Great Recession Record Results Consistent SOI Growth Avg SOI (a) $350M Avg SOI (a) $960M Avg SOI $590M 2013 SOI Outlook ~$1.5B SOI Grow 10-15%/yr Financial restructuring Leadership changes Asset sales 4-point cost savings plan New product engine Exit wholesale private label New products Increase cost savings Constrain CapEx Reduce inventory Price/mix Selective approach on volume Cost savings Invest for growth Growth & cost Investment grade Balance Sheet Balanced Capital Allocation Multi-stage Journey Positions the Business for Value Creation (a) Segment Operating Income for utilized in the averages represents the sum of the individual tire business unit SOI amounts. 50

51 Segment Operating Income Target $ In millions ~$1,500 Part Growth Sales margin and overhead absorption on sales growth (3-5 million units / year) Part Cost Structural cost savings (focus in EMEA) Cost savings > inflation o Offset by added investments in R&D and advertising / marketing Balanced plan to grow SOI at 10% to 15% per year based on growth and cost 51

52 Capital Allocation Plan - Cumulative Sources / Uses of Cash Flow $ In billions SOI Target $5.5 - $5.8 ~ (0.4) Corporate Other ~ (400) EBIT ~ Depreciation ~ 2.1 EBITDA ~ Pension Expense ~ EBITDAP ~ $7.8 - $8.2 Maintaining the Business Interest Expense ~$1.2 - $1.4 Taxes Paid ~ $0.8 - $1.0 Sustaining CapEx ~ $2.0 - $2.2 Working Capital ~ $0.0 ~$4.0 - $4.6 Cash Available for Deployment Dividends / Share Repurchase Growth CapEx Debt Reductions (incl. Pension) Restructurings Driving Value ~$3.6 - $3.8 Significant cash available for deployment to further enhance shareholder value Note: All estimates based on current assumptions and available data 52

53 Capital Allocation Plan Driving Value $ In billions Cumulative Cash Available for Deployment $3.6 - $3.8B Shareholder Return Program $0.3 - $0.4B Growth Capex $1.1 - $1.3B Debt Repayment / Pensions $1.4 - $1.7B Restructurings $0.5 - $0.7B Capital allocation plan provides immediate returns to investors while strengthening the balance sheet and continuing investment for future growth 53

54 Capital Expenditures Continue to get strong returns from past growth capex investments Ongoing projects discussed at 2011 investor day on track helping drive earnings growth 2013 capex for sustaining (excluding growth projects) consistent with / slightly below assumption of ~$700 million Several large projects complete / nearly complete in 2013 Growth capex likely down in 2014 Continued growth capex required (especially 2015 & beyond) as added capacity is required for growth in HVA (excluding Western Europe) Continued growth capex required albeit at lower levels for

55 Ongoing Growth Capex Projects Enabling Investments Investments focused on supporting, driving and sustaining profitable growth North America Lawton Modernization CapEx ( ): ~$150 million Benefit: Convert 5 mil LVA consumer tires to HVA Fayetteville Modernization CapEx ( ): ~$175 million Benefit: Convert 4 mil LVA consumer tires to HVA Asia Pulandian (China) Plant CapEx ( ): ~$775 million (net of incentives) Benefit: 5 mil tires/year consumer HVA & 0.6 mil truck Japan OTR Plant Expansion CapEx ( ): ~$250 million (funded by customers) Benefit: Add large Earthmover tire capacity EMEA Equipment Upgrades (multi-plant) CapEx ( ): ~$400 million Benefit: Lead performance in tire labeling Furstenwalde (Germany) Expansion CapEx ( ): ~$150 million Benefit: Add 1 mil tires/year consumer HVA Latin America Chile Expansion CapEx ( ): ~$475 million Benefit: Add 7 mil tires/year consumer HVA Brazil Expansion/Modernization CapEx ( ): ~$250 million Benefit: Add 2 mil tires/year consumer HVA Driving successful completion of growth projects we announced at 2011 Investor Day 55

56 Capital Expenditures $ In millions Current Growth Projects Lawton Modernization 5 Fayetteville Modernization 15 EMEA Modernization (multi-plant) 65 Furstenwalde Expansion 45 Chile Expansion 45 Brazil Modernization 105 Pulandian (China) Plant 25 OTR (Japan) Expansion 150 Total Current Projects 455 Future Growth Projects 2013E n/a Total Growth CapEx to 300/yr 400 to 500/yr Replace worn out equipment, support of Complete or Nearly Completed in 2013 Sustaining CapEx owned Retail stores, IT, 645 ~700/yr ~700/yr environmental, safety, memo: Depreciation ~700 ~700 ~700 molds, etc Total CapEx ~$1,100 $900 to $1,000/yr $1,100 to $1,200/yr Investing consistent with our business plans 56

57 Balance Sheet Management 3 Focus Areas: 1. Target leverage of 2.5x Adjusted Debt / EBITDAP by Continue to pursue long-term pension strategy Will consider pre-funding beginning in Continue to reduce need for balance sheet cash Addressing balance sheet to get to investment grade is a key priority 57

58 Balance Sheet Management Leverage Targets $ In millions $7,294 Adjusted Debt (a) $8,298 $8,608 $8,300 $6,600 - $6, x Adjusted Debt (a) / EBITDAP (b) 3.9x 4.1x 3.6x 2.3x 2.5x E 2016T E 2016T Leverage target of ~2.5x Adjusted Debt / EBITDAP consistent with commitment to achieving investment grade metrics o Reduces cost of capital o Improves global access to credit o o Greater ability to move debt overseas Ability to reduce cash balances Pension / debt drives improvements to earnings and cash flow while strengthening the balance sheet a) Adjusted Debt is Total Debt plus Global Pension Liability. b) EBITDAP is EBITDA plus Global Pension Expense. Note: See reconciliations in Appendix on page

59 Balance Sheet Management U.S. Pension Strategy In February announced intention to freeze / fund / de-risk our remaining U.S. defined benefit pension plans In Q1 Q2, completed funding / de-risking of previously frozen U.S. plans In Q3, announced agreement with USW that gives us ability to freeze the remaining plans within the life of the contract Requires plans to be fully funded Will evaluate appropriate timing to pre-fund / freeze USW plans beginning in 2014 Interest rate increase has reduced unfunded obligation during 2013 Additional interest rate increases have modest impact on required contributions over next 5 years Asset returns versus plan assumptions remain a risk 59

60 Goodyear U.S. Hourly Pension Plans: Discount Rate Scenarios $ in millions Assumes target asset return achieved Estimated 5-Year Cash Contributions Current Discount Rate Scenario: Estimated Pre-Funding Amount (a) 4.5% Discount Rate (b) $1,030 ~$1,100 Increasing Discount Rate Scenario: 6.0% Discount Rate $815 Impact of Rising Rates ($215) Pre-funding provides stability / avoids discount rate and asset return risk; rising rates provide limited benefit to required contributions (a) Assumes 8.5% asset returns, decreasing over time as assets shift toward a greater mix of fixed income as the U.S. hourly plans become more fully funded (b) Discount rate as of June 30,

61 Shareholder Return Program Regular Dividend $55 million per year $0.05 per share quarterly dividend beginning in the fourth quarter First dividend has been declared for shareholders of record on November 1 to be paid December 1 Share Repurchase $100 million Repurchases to offset new shares issued under equity compensation programs Anticipate increases over time as cash flow and leverage improves Shareholder return program demonstrates strong commitment to shareholders and confidence in strategy 61

62 Meeting Recap Based on our confidence in the business Reconfirming 2013 outlook SOI of about ~$1.5 billion Positive cash flow (excluding pension pre-funding) New Targets through 2016 Annual 10-15% SOI growth per year through 2016 Annual positive cash flow (excluding pension pre-funding) Targeting 2.5x Adjusted Debt / EBITDAP Balanced Capital Allocation Plan Dividend and stock buy-back plan beginning Q4/2013 Goodyear committed to creating sustainable value for shareholders 62

63 Question and Answer Session

64 APPENDIX 64

65 Use of Historical and Forward-Looking Non-GAAP Financial Measures This presentation contains our historical total segment operating income for certain periods, our total segment operating income outlook for 2013, our targeted total segment operating income growth rate for , our historical ratio of Adjusted Debt to EBITDAP for certain periods, and our targeted ratio of Adjusted Debt to EBITDAP for Total segment operating income and the ratio of Adjusted Debt to EBITDAP are important financial measures for the company but are not financial measures defined by U.S. GAAP, and should not be construed as an alternative to corresponding financial measures presented in accordance with U.S. GAAP. Total segment operating income is the sum of the individual strategic business units segment operating income as determined in accordance with U.S. GAAP. The most directly comparable GAAP financial measure is Income before Income Taxes. Management believes that total segment operating income is useful because it represents the aggregate value of income created by the company s SBUs and excludes items not directly related to the SBUs for performance evaluation purposes. Adjusted Debt is the sum of our total debt and our global pension liability, each as determined in accordance with U.S. GAAP, and EBITDAP, as adjusted, represents net income (the most directly comparable GAAP financial measure) before interest expense, income tax expense, depreciation and amortization expense, net periodic pension cost, rationalization charges and other (income) and expense. We present the ratio of Adjusted Debt to EBITDAP because we believe it is widely used by investors as a means of evaluating a company s leverage. It should be noted that companies may calculate the components of this ratio differently; as a result, the ratio of Adjusted Debt to EBITDAP as presented herein may not be comparable to similarlytitled measures reported by other companies. We are unable to present a quantitative reconciliation of our forward-looking non-gaap financial measures to the most directly comparable GAAP financial measures, because management cannot reliably predict all of the necessary components of those GAAP financial measures without unreasonable effort. These components could be significant to the calculation of those GAAP financial measures in the future. 65

66 Reconciliation for Segment Operating Income / Margin $ In millions Three Months Ended June 30, Twelve Months Ended December 31, Total Segment Operating Income $ 428 $ 336 $ 1,248 $ 1,368 $ 917 $ 372 $ 804 $ 1,230 Rationalizations (13) (26) (175) (103) (240) (227) (184) (49) Interest expense (102) (83) (357) (330) (316) (311) (320) (468) Other income / (expense) 14 (37) (139) (73) (186) (40) (59) (9) Asset write-offs & accelerated depreciation (5) (4) (20) (50) (15) (43) (28) (37) Corporate incentive compensation plans (35) (15) (69) (70) (71) (41) 4 (77) Corporate pension curtailments/settlements - - (1) (15) - - (9) (64) Intercompany profit elimination (5) (14) (13) 23 (11) Retained expenses of divested operations (6) (5) (14) (29) (20) (17) - (17) Other (28) (9) (34) (75) (47) (37) (45) (53) Income before Income Taxes $ 256 $ 166 $ 440 $ 618 $ 8 $ (357) $ 186 $ 445 United States and Foreign Taxes Less: Minority Shareholders Net Income Goodyear Net Income (Loss) $ 188 $ 92 $ 212 $ 343 $ (216) $ (375) $ (77) $ 120 Sales $4,894 $5,150 $20,992 $22,767 $18,832 $16,301 $19,488 $19,644 Return on Sales 3.8% 1.8% 1.0% 1.5% (1.1)% (2.3)% (0.4)% 0.6% Total Segment Operating Margin 8.7% 6.5% 5.9% 6.0% 4.9% 2.3% 4.1% 6.3% 66

67 EBITDAP, Adjusted Debt & Leverage Ratio Reconciliations $ In millions Year Ended December 31, Net Income (Loss) $237 $417 ($164) Interest Expense Income Tax Expense Depreciation and Amortization Net Periodic Pension Cost (a) Other (b) EBITDAP, as adjusted $2,105 $2,105 $1,702 December 31, Notes Payable and Overdrafts Long Term Debt / Capital Leases due Within a Year Long Term Debt and Capital Leases 4,888 4,789 4,319 Total Debt $5,086 $5,201 $4,745 Unfunded Pension Liability $3,522 $3,097 $2,549 Adjusted Debt $8,608 $8,298 $7,294 Adjusted Debt/EBITDAP 4.09x 3.94x 4.29x (a) Net periodic pension cost excludes curtailments/settlements and termination benefits. (b) Other includes rationalization charges and other (income) and expense. 67

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