– Fourth quarter Goodyear net income of $63 million; adjusted net income of $103 million
– Fourth quarter segment operating income of $302 million, up 25% from the prior year
– Full-year cash flow from operations of $1.1 billion, reflecting strong working capital performance
– Robust cash and liquidity position of $5.4 billion
– Fourth quarter revenue per tire up 3%, excluding foreign currency
AKRON, Ohio, Feb. 9, 2021 – The Goodyear Tire & Rubber Company today reported results for the fourth quarter and full year of 2020.
“We delivered strong performance to end a challenging year,” said Richard J. Kramer, chairman, chief executive officer and president. “With a determination to win with our products in the marketplace and a relentless focus on cost and cash, we finished the year on a high note.
“We have good momentum as we enter 2021. Our commercial business continues to outperform the industry, our consumer replacement business is strengthening, and we are beginning to see the benefits of our robust consumer OE pipeline. I am confident we are positioned to capitalize on stronger industry fundamentals in 2021,” added Kramer.
Goodyear’s fourth quarter 2020 sales were $3.7 billion, down 2% from a year ago. The decline was driven by lower volume and unfavorable foreign currency translation. These factors were partially offset by improvements in price/mix.
Tire unit volumes totaled 37.7 million, down 5% from the prior year’s period. Industry demand during the quarter was affected by the continued economic disruption resulting from the COVID-19 pandemic. Replacement tire shipments declined 7%, reflecting the impact of lower consumer demand and actions taken to align European distribution. Original equipment unit volume increased 3%, reflecting increased market share in Americas and EMEA.
Goodyear’s fourth quarter 2020 net income was $63 million (27 cents per share) compared to a net loss of $392 million ($1.68 per share) a year ago. Fourth quarter 2020 adjusted net income was $103 million (44 cents per share) compared to adjusted net income of $45 million (19 cents per share) in 2019. Per share amounts are diluted.
The company reported segment operating income of $302 million in the fourth quarter of 2020, up $60 million from a year ago. The increase primarily reflects the benefits of cost saving actions, including ongoing rationalization plans, lower raw material costs, a one-time benefit related to a legal settlement and improvements in price/mix. These factors were partially offset by lower volume and the impact of reduced factory utilization.
Goodyear’s 2020 net sales were $12.3 billion, a 16% decline from the 2019 period, reflecting lower volume, reduced sales from other tire-related businesses and unfavorable foreign currency translation. These factors were partially offset by improvements in price/mix.
Tire unit volumes totaled 126.0 million, down 19% from 2019. Industry demand was affected by the economic disruption resulting from the COVID-19 pandemic, particularly during the first half of 2020. Replacement tire shipments decreased 17%, primarily reflecting lower industry demand. Original equipment volume declined 23%, driven by lower global vehicle production.
Goodyear’s net loss was $1.3 billion ($5.35 per share) compared to a net loss of $311 million ($1.33 per share) in the prior year’s period. The 2020 period included several significant items, including, on a pre-tax basis, a non-cash charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in the EMEA business, a non-cash impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $159 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama. Goodyear’s 2019 net loss included discrete tax adjustments of $386 million and pre-tax rationalization charges of $205 million, primarily related to a plan to modernize two tire manufacturing facilities in Germany and a plan to curtail production of tires for declining, less profitable segments of the tire market at our Gadsden, Alabama manufacturing facility. Full-year 2020 adjusted net loss was $448 million ($1.91 per share) compared to adjusted net income of $253 million ($1.08 cents per share) in the prior year. Per share amounts are diluted.
The company reported a segment operating loss of $14 million in 2020, down $959 million from a year ago. The decrease was primarily due to lower volume, reduced factory utilization and lower earnings from other tire-related businesses. These factors were partially offset by the benefits of cost saving actions, including ongoing rationalization plans, and lower SAG, driven by reduced payroll and advertising expenses.
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 (Loss) and Margin; Adjusted Net Income (Loss); and Adjusted Diluted Earnings (Loss) per Share, reflecting the impact of certain significant items on the 2020 and 2019 periods.
Business Segment Results
|Fourth Quarter||Twelve Months|
|Segment Operation Income||190||152||9||550|
|Segment Operating Margin||9.9%||7.5%||0.1%||6.9%|
Americas’ fourth quarter 2020 sales of $1.9 billion were 5% lower than in the previous year, driven by lower volume and unfavorable foreign currency translation. These factors were partially offset by a one-time benefit related to a legal settlement and improvements in price/mix. Tire unit volume declined 6%. Replacement tire shipments decreased 9%, reflecting weak retail demand, particularly in the mass merchant channel in the U.S. Original equipment unit volume increased 6%, driven by strong growth in Brazil.
Fourth quarter 2020 operating income of $190 million was up $38 million from the prior year’s quarter. The increase was driven by a one-time benefit related to a legal settlement, the benefits of cost saving actions and improvements in price/mix. These factors were partially offset by lower volume, the impact of reduced factory utilization earlier in the year and the establishment of an environmental remediation reserve.
Europe, Middle East and Africa
|Fourth Quarter||Twelve Months|
|Segment Operation Income (Loss)||69||38||(72)||202|
|Segment Operating Margin||5.8%||3.3%||(1.8)%||4.3%|
Europe, Middle East and Africa’s fourth quarter 2020 sales increased 5% from last year to $1.2 billion due to improvements in price/mix, partially offset by lower volume. Tire unit volume decreased 5%. Replacement tire shipments fell 11%, driven by lower industry demand and the impact of the company’s previously announced initiative to align distribution in Europe. Original equipment unit volume increased 16%, reflecting share gains driven by the launch of new fitments.
Fourth quarter 2020 segment operating income of $69 million was up $31 million from the prior year’s quarter, driven by the impact of lower raw material costs, improvements in price/mix and the benefits of cost saving actions, partially offset by lower volume and reduced factory utilization.
|Fourth Quarter||Twelve Months|
|Segment Operation Income||43||52||49||193|
|Segment Operating Margin||8.0%||9.5%||2.8%||9.1%|
Asia Pacific’s fourth quarter 2020 sales decreased 2% to $537 million, driven by lower volume and unfavorable price/mix, primarily reflecting the impact of discontinued OE fitments in China. Tire unit volume declined 2%. Original equipment unit volume declined 13%. Replacement tire shipments increased 4%, driven by double-digit growth in China and India.
Fourth quarter 2020 segment operating income of $43 million was down $9 million from the prior year’s quarter. In addition to discontinued OE fitments in China, lower earnings reflected adverse results in other tire-related businesses, primarily aviation. These factors were partially offset by lower raw material costs.
Cash Flow and Liquidity
The company delivered strong cash flow during the fourth quarter, reflecting the benefit of working capital performance, a focus on managing costs and improved earnings. Cash generated through operating activities totaled $1.4 billion, up slightly from strong prior year performance. Capital expenditures of $160 million were $49 million lower than in 2019. Full-year cash flow from operations was $1.1 billion and capital expenditures were $647 million.
As of Dec. 31, 2020, the company had total liquidity of $5.4 billion, including $1.5 billion of cash and cash equivalents compared with total liquidity of $4.5 billion on Dec. 31, 2019.
Goodyear will hold an investor conference call at 9 a.m. EST 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 website: http://investor.goodyear.com.
Participating in the conference call will be Richard J. Kramer, chairman, chief executive officer and president; Darren R. Wells, executive vice president and chief financial officer; and Christina L. Zamarro, vice president, finance and treasurer.
Investors, members of the media and other interested persons can access the conference call on the website or via telephone by calling either (877) 876-9173 or (785) 424-1667 before 8:55 a.m. EST and providing the Conference ID “Goodyear.” A taped replay will be available by calling (800) 753-5207 or (402) 220-2156. The replay will also remain available on the website.
Goodyear is one of the world’s largest tire companies. It employs about 62,000 people and manufactures its products in 46 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: the impact on us of the COVID-19 pandemic; 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.