AKRON, Ohio, April 28, 2017 /PRNewswire/ -- The Goodyear
Tire & Rubber Company (NASDAQ: GT) today reported results for
the first quarter of 2017.
"These results are a great outcome given an environment of
rising raw material costs and weaker demand," said Richard J. Kramer, chairman, chief executive
officer and president. "This solid performance is a result of the
disciplined execution of our strategy," he added.
"While raw material inflation has moderated in recent weeks, we
continue to expect a significant year-over-year headwind in 2017,"
said Kramer. "We remain confident in our ability to offset raw
material cost inflation over time."
Goodyear's first quarter 2017 sales were $3.7 billion, about even with a year ago, largely
due to improved price/mix and higher pricing of third-party
chemical sales partially offset by lower tire unit volume.
Tire unit volumes totaled 40.0 million, down 4 percent from
2016. Original equipment unit volume was down 8 percent, primarily
driven by lower U.S. auto production in the first quarter of 2017
and very strong volumes in the U.S. and China during the first quarter of 2016.
Replacement tire shipments were down 2 percent.
Goodyear's first quarter 2017 net income was $166 million (65
cents per share), down from $184
million (68 cents per share) a
year ago. First quarter 2017 adjusted net income was $189 million (74
cents per share), compared to $195
million (72 cents per share)
in 2016. Per share amounts are diluted.
The company reported first quarter segment operating income of
$385 million in 2017, down from
$419 million a year ago. The decrease
was driven by the impact of lower volume and unabsorbed overhead,
which were partially offset by favorable price/mix net of raw
material costs and net cost saving actions.
Reconciliation of Non-GAAP Financial Measures
See the note at the end of this release for further explanation
and reconciliation tables for Segment Operating Income and Margin;
Adjusted Net Income; and Adjusted Diluted Earnings per Share,
reflecting the impact of certain significant items on the 2017 and
2016 periods.
Business Segment Results
Americas
|
First
Quarter
|
(in
millions)
|
2017
|
|
2016
|
Tire Units
|
17.2
|
|
18.0
|
Sales
|
$ 1,958
|
|
$ 1,951
|
Segment Operating
Income
|
214
|
|
260
|
Segment Operating
Margin
|
10.9%
|
|
13.3%
|
Americas' first quarter 2017 tire unit volume was down 5
percent. Sales of $2.0 billion were
flat as higher chemical and tire pricing as well as favorable
foreign currency translation were partially offset by lower tire
unit volume. Replacement tire shipments were down 2 percent.
Original equipment unit volume was down 12 percent.
First quarter 2017 segment operating income of $214 million was down 18 percent from the prior
year. The decline was driven by the impact of unabsorbed overhead
and lower volume, which were partially offset by favorable
price/mix and lower raw material costs.
Europe, Middle East and Africa
|
First
Quarter
|
(in
millions)
|
2017
|
|
2016
|
Tire Units
|
15.5
|
|
16.2
|
Sales
|
$ 1,239
|
|
$ 1,251
|
Segment Operating
Income
|
98
|
|
80
|
Segment Operating
Margin
|
7.9%
|
|
6.4%
|
Europe, Middle East and Africa's first quarter 2017 sales decreased 1
percent from last year to $1.2
billion, which reflects a 4 percent decrease in tire unit
volume and unfavorable foreign currency translation partially
offset by improved price/mix. Replacement tire shipments were down
5 percent. Original equipment unit volume was down 1 percent.
First quarter 2017 segment operating income of $98 million was 23 percent above the prior year
due to favorable price/mix net of raw material costs and lower
selling, administrative and general expense partially offset by the
impact of lower volume.
Asia Pacific
|
First
Quarter
|
(in
millions)
|
2017
|
|
2016
|
Tire Units
|
7.3
|
|
7.3
|
Sales
|
$
502
|
|
$
489
|
Segment Operating
Income
|
73
|
|
79
|
Segment Operating
Margin
|
14.5%
|
|
16.2%
|
Asia Pacific's first quarter
2017 sales increased 3 percent from last year to $502 million primarily due to improved price/mix.
Tire unit volumes were flat. Replacement tire shipments were up 7
percent. Original equipment unit volume was down 9 percent.
First quarter 2017 segment operating income of $73 million was down 8 percent from last year as
lower income in other tire-related businesses and unfavorable
foreign currency translation offset favorable price/mix net of raw
materials.
Financial Targets
The company confirmed its 2017 segment operating income guidance
of approximately $2.0 billion and its
2020 financial targets and capital allocation plan.
Shareholder Returns
The company paid a quarterly dividend of 10 cents per share of common stock on
March 1, 2017. The Board of Directors
has declared a quarterly dividend of 10
cents per share payable June 1,
2017, to shareholders of record on May 1, 2017.
As a part of its previously announced $2.1 billion share repurchase program, the
company repurchased 0.7 million shares of its common stock for
$25 million during the first quarter.
Since its inception, purchases under the program total 31.9 million
shares for $938 million.
Conference Call
Goodyear will hold an investor conference call at 9 a.m. today. Prior to the commencement of the
call, the company will post the financial and other related
information that will be presented on its investor relations Web
site: http://investor.goodyear.com.
Participating in the conference call will be Richard J. Kramer, chairman, chief executive
officer and president; and Laura K.
Thompson, executive vice president and chief financial
officer.
Investors, members of the media and other interested persons can
access the conference call on the Web site or via telephone by
calling either (800) 895-1715 or (785) 424-1059 before 8:55 a.m. and providing the Conference ID
"Goodyear." A taped replay will be available by calling (800)
839-2457 or (402) 220-7217. The replay will also remain available
on the Web site.
Goodyear is one of the world's largest tire companies. It
employs about 66,000 people and manufactures its products in 48
facilities in 21 countries around the world. Its two Innovation
Centers in Akron, Ohio and
Colmar-Berg, Luxembourg strive to
develop state-of-the-art products and services that set the
technology and performance standard for the industry. For more
information about Goodyear and its products, go to
www.goodyear.com/corporate. GT-FN
Certain information contained in this press release
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.
(financial statements follow)
The Goodyear Tire
& Rubber Company and Subsidiaries
Consolidated Statements of Operations (unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
(In millions,
except per share amounts)
|
2017
|
2016
|
|
|
|
NET
SALES
|
$
3,699
|
$
3,691
|
|
|
|
Cost of Goods
Sold
|
2,765
|
2,701
|
Selling,
Administrative and General Expense
|
579
|
615
|
Rationalizations
|
29
|
11
|
Interest
Expense
|
87
|
91
|
Other (Income)
Expense
|
--
|
6
|
|
|
|
Income before Income
Taxes
|
239
|
267
|
United States and
Foreign Tax Expense
|
70
|
78
|
|
|
|
Net Income
|
169
|
189
|
Less: Minority
Shareholders' Net Income
|
3
|
5
|
|
|
|
Goodyear Net
Income
|
$
166
|
$
184
|
|
|
|
Goodyear Net
Income - Per Share of
Common Stock
|
|
|
|
|
|
Basic
|
$
0.66
|
$
0.69
|
|
|
|
Weighted
Average Shares Outstanding
|
252
|
267
|
|
|
|
Diluted
|
$
0.65
|
$
0.68
|
|
|
|
Weighted
Average Shares Outstanding
|
256
|
271
|
|
|
|
Cash Dividends
Declared Per Common Share
|
$
0.10
|
$
0.07
|
|
|
|
|
|
|
The Goodyear Tire
& Rubber Company and Subsidiaries
Consolidated Balance Sheets
|
|
|
(In
millions)
|
March
31,
|
December
31,
|
|
2017
|
2016
|
Assets:
|
|
|
Current
Assets:
|
|
|
Cash and Cash
Equivalents
|
$
961
|
$
1,132
|
Accounts
Receivable, less Allowance - $105 ($101 in 2016)
|
2,270
|
1,769
|
Inventories:
|
|
|
Raw Materials
|
479
|
436
|
Work in Process
|
148
|
131
|
Finished Products
|
2,218
|
2,060
|
|
2,845
|
2,627
|
Prepaid
Expenses and Other Current Assets
|
249
|
190
|
Total Current
Assets
|
6,325
|
5,718
|
Goodwill
|
545
|
535
|
Intangible
Assets
|
136
|
136
|
Deferred Income
Taxes
|
2,371
|
2,414
|
Other
Assets
|
682
|
668
|
Property, Plant and
Equipment
less
Accumulated Depreciation - $9,361 ($9,125 in 2016)
|
7,135
|
7,040
|
Total Assets
|
$
17,194
|
$
16,511
|
|
|
|
Liabilities:
|
|
|
Current
Liabilities:
|
|
|
Accounts
Payable-Trade
|
$
2,631
|
$
2,589
|
Compensation
and Benefits
|
568
|
584
|
Other Current
Liabilities
|
1,040
|
963
|
Notes Payable
and Overdrafts
|
217
|
245
|
Long Term Debt
and Capital Leases due Within One Year
|
459
|
436
|
Total Current Liabilities
|
4,915
|
4,817
|
Long Term Debt and
Capital Leases
|
5,257
|
4,798
|
Compensation and
Benefits
|
1,392
|
1,460
|
Deferred Income
Taxes
|
86
|
85
|
Other Long Term
Liabilities
|
584
|
626
|
Total Liabilities
|
12,234
|
11,786
|
|
|
|
Commitments and
Contingent Liabilities
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
Goodyear
Shareholders' Equity:
|
|
|
Common Stock, no par
value:
|
|
|
Authorized, 450
million shares, Outstanding shares – 252 million (252 million in
2016) after deducting 26 million treasury shares (26 million in
2016)
|
252
|
252
|
Capital
Surplus
|
2,635
|
2,645
|
Retained
Earnings
|
5,949
|
5,808
|
Accumulated Other
Comprehensive Loss
|
(4,103)
|
(4,198)
|
Goodyear Shareholders' Equity
|
4,733
|
4,507
|
Minority
Shareholders' Equity – Nonredeemable
|
227
|
218
|
Total
Shareholders' Equity
|
4,960
|
4,725
|
Total
Liabilities and Shareholders' Equity
|
$
17,194
|
$
16,511
|
|
|
|
The Goodyear Tire
& Rubber Company and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
|
|
(In
millions)
|
Three Months
Ended
|
|
March
31,
|
|
2017
|
2016
|
Cash Flows from
Operating Activities:
|
|
|
Net Income
(Loss)
|
$
169
|
$
189
|
Adjustments to
Reconcile Net Income (Loss) to Cash Flows from Operating
Activities:
|
|
|
Depreciation and
Amortization
|
185
|
174
|
Amortization and Write-Off
of Debt Issuance Costs
|
3
|
7
|
Provision for Deferred
Income Taxes
|
40
|
46
|
Net Rationalization
Charges
|
29
|
11
|
Rationalization
Payments
|
(18)
|
(24)
|
Net (Gains) Losses on Asset
Sales
|
(1)
|
(1)
|
Pension Contributions and
Direct Payments
|
(25)
|
(25)
|
Changes in
Operating Assets and Liabilities, Net of Asset Acquisitions and
Dispositions:
|
|
|
Accounts
Receivable
|
(478)
|
(399)
|
Inventories
|
(191)
|
(116)
|
Accounts Payable -
Trade
|
73
|
(96)
|
Compensation and
Benefits
|
(61)
|
(100)
|
Other Current
Liabilities
|
18
|
24
|
Other Assets and
Liabilities
|
(29)
|
(62)
|
Total Cash Flows from
Operating Activities
|
(286)
|
(372)
|
Cash Flows from
Investing Activities:
|
|
|
Capital
Expenditures
|
(271)
|
(253)
|
Asset
Dispositions
|
1
|
1
|
Short Term
Securities Acquired
|
(11)
|
(12)
|
Short Term
Securities Redeemed
|
11
|
--
|
Total Cash Flows from
Investing Activities
|
(270)
|
(264)
|
Cash Flows from
Financing Activities:
|
|
|
Short Term
Debt and Overdrafts Incurred
|
51
|
26
|
Short Term
Debt and Overdrafts Paid
|
(82)
|
(2)
|
Long Term Debt
Incurred
|
1,838
|
1,085
|
Long Term Debt
Paid
|
(1,369)
|
(822)
|
Common Stock
Issued
|
9
|
2
|
Common Stock
Repurchased
|
(25)
|
(50)
|
Common Stock
Dividends Paid
|
(25)
|
(19)
|
Transactions
with Minority Interests in Subsidiaries
|
--
|
(6)
|
Debt Related
Costs and Other Transactions
|
1
|
(10)
|
Total Cash Flows from
Financing Activities
|
398
|
204
|
Effect of Exchange
Rate Changes on Cash, Cash Equivalents and Restricted
Cash
|
20
|
28
|
Net Change in
Cash, Cash Equivalents and Restricted Cash
|
(138)
|
(404)
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of the
Period
|
1,189
|
1,502
|
Cash, Cash
Equivalents and Restricted Cash at End of the Period
|
$
1,051
|
$
1,098
|
|
|
|
|
|
|
Non-GAAP Financial Measures (unaudited)
This earnings release presents Total Segment Operating Income
and Margin, 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 measure to
Total Segment Operating Income is Goodyear Net Income and to Total
Segment Operating Margin is Goodyear Net Income as a percent of
Sales (which is calculated by dividing Goodyear Net Income by Net
Sales).
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.
The company is unable to present a quantitative reconciliation
of its forward-looking non-GAAP financial measure, Total Segment
Operating Income, to the most directly comparable U.S. GAAP
financial measure, Goodyear Net Income, because management cannot
reliably predict all of the necessary components of Goodyear Net
Income without unreasonable effort. Goodyear Net Income includes
several significant items that are not included in Total Segment
Operating Income, 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 the company's business, acquisitions and dispositions,
foreign currency exchange gains and losses, financing fees, actions
taken to manage the company's 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, the company is
unable to address the probable significance of the unavailable
information, which could be material to the company's future
financial results.
See the tables below for reconciliations of historical Total
Segment Operating Income and Margin, Adjusted Net Income and
Adjusted Diluted EPS to the most directly comparable U.S. GAAP
financial measures.
Segment Operating
Income and Margin Reconciliation Table
|
|
Three Months
Ended
|
March
31,
|
|
|
(In
millions)
|
2017
|
2016
|
Total Segment
Operating Income
|
$385
|
$419
|
Rationalizations
|
29
|
11
|
Interest
Expense
|
87
|
91
|
Other (Income)
Expense
|
--
|
6
|
Asset
Write-offs and Accelerated Depreciation
|
8
|
2
|
Corporate
Incentive Compensation Plans
|
15
|
26
|
Intercompany
Profit Elimination
|
(3)
|
2
|
Retained
Expenses of Divested Operations
|
3
|
5
|
Other
|
7
|
9
|
Income before
Income Taxes
|
$239
|
$267
|
United States and
Foreign Taxes
|
70
|
78
|
Less: Minority
Shareholders Net Income
|
3
|
5
|
Goodyear Net
Income
|
$166
|
$184
|
|
|
|
Sales
|
$3,699
|
$3,691
|
Return on
Sales
|
4.5%
|
5.0%
|
Total Segment
Operating Margin
|
10.4%
|
11.4%
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income and Adjusted Diluted Earnings per Share Reconciliation
Table
|
|
|
|
|
|
|
|
First Quarter
2017
|
Income
Before
Income
Taxes
|
Taxes
|
Minority
Interest
|
Goodyear Net
Income
|
Weighted
Average Shares
Outstanding-
Diluted
|
Diluted
EPS
|
(In millions,
except EPS)
|
|
|
|
|
|
|
As
Reported
|
$
239
|
$70
|
$
3
|
$166
|
256
|
$
0.65
|
Significant
Items:
|
|
|
|
|
|
|
Rationalizations, Asset Write-offs,
and Accelerated
Depreciation
Charges
|
37
|
12
|
|
25
|
|
0.10
|
Discrete Tax Items
|
|
2
|
|
(2)
|
|
(0.01)
|
|
37
|
14
|
--
|
23
|
|
$ 0.09
|
As
Adjusted
|
$276
|
$84
|
$
3
|
$
189
|
256
|
$
0.74
|
|
|
|
|
|
|
|
First Quarter
2016
|
Income
Before
Income
Taxes
|
Taxes
|
Minority
Interest
|
Goodyear Net
Income
|
Weighted
Average Shares
Outstanding-
Diluted
|
Diluted
EPS
|
(In millions,
except EPS)
|
|
|
|
|
|
|
As
Reported
|
$267
|
$78
|
$5
|
$184
|
271
|
$0.68
|
Significant
Items:
|
|
|
|
|
|
|
Rationalizations, Asset Write-offs,
and Accelerated
Depreciation
Charges
|
13
|
1
|
|
12
|
|
0.05
|
Debt Repayments
|
12
|
|
|
12
|
|
0.04
|
Discrete Tax Items
|
|
12
|
(1)
|
(11)
|
|
(0.04)
|
Insurance Recovery – Discontinued
Products
|
(3)
|
(1)
|
|
(2)
|
|
(0.01)
|
|
22
|
12
|
(1)
|
11
|
|
$0.04
|
As
Adjusted
|
$289
|
$90
|
$4
|
$195
|
271
|
$
0.72
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/goodyear-reports-first-quarter-2017-results-300447938.html
SOURCE The Goodyear Tire & Rubber Company