university of texas - austin: short goodyear tire

8/18/2019 University of Texas - Austin: Short Goodyear Tire

1/108

11

The Goodyear Tire & RubberCo. (GT)SELL/SHORT, TP $17.78 (!".87#)

Reear%h TeaAnurag BansalAustin PartridgeHans Uy

Sunny Pamidimukkala


2/108

22

TableofCo'e'

COMPAN TH!S"S #A$UAT"ON %"S&S CONC$US"ON


3/108

'()(2*1C O M P A N T H ! S " S # A $ U A T " O N % " S & S C O N C $ U S " O N

$atin Ameri,a

Com-any O.er.ie/

0

One of the largest manufacturers of tires in the world

Nort Ameri,a

AsiaPa,i3,

!uro-e4 Middle !ast4and Afri,a

'56

1*6

126

016

%e.enue Breakdo/n


4/108


Per,entage of "n-uts

'

01

6

27

6

Based on ,rude-ri,es

1'

6

Based on,rude -ri,es

25

6

NaturalRubber

Based onrubber

,ommodity-ri,es

A business heavily dependent on raw material prices

Other Carbon Black SyntheticRubber

Steel4Cemi,als4

8abri,


5/108


*

9

1*

19

2*

29

0*

09

'*

Sto,k Pri,e History

9


6/108


Bullis Market #ie/

+

149**(*

14+**(*

145**(*

147**(*

14)**(*

24***(*

241**(*

242**(*

240**(*

24'**(*

19(**6

15(**6

1)(**6

21(**6

20(**6

29(**6

25(**6

!B"T:A ;ross Margins

18.7# ia/Pa%i*%

+'i Sae -'%reae

$.0T2 Pro3e%ed EPS

.s( 2*19A !PS of


7/108'()(2*1C O M P A N T H ! S " S # A $ U A T " O N % " S & S C O N C $ U S " O N

"n.estment Tesis

5

Shi5i'6 %o'uer re5ere'%eand i'e'e ia' %oeiio' a.eled to ,om-any=/ide ,ontra,tions

1

Poor %ah ao%aio' and oery

oiii%ear'i'6 targets -ro.ide negati.e,atalysts tatset te sto,k u- for disa--ointment

0

+'uai'abe 6ro ar6i' due to all=time lo/s in in-ut -ri,es a.e ,o.ered u-a6'a' ree'ue

2



Poor "ndustry Positioning

7

eavier O!" focus places #oodyear in the more stagnantsector

Oter%e-la,ement Tires

O!M Tires 71(560('6

1'()6

"ndustry Breakdo/n

> +)('6

> 0*(+6

$arger Portion of

Market ;ro/t

Pri,e "n,reasingly"m-ortant



Sifting Consumer Trends

)

94# 71#Baby Boomers ?

Pre=Boomers

$ikeliood of s/it,ing brands /en re-la,ingtires

;eneration @ ?

6% "arketconsumption sharegrowth rate

53% $ercent ofconsumption

Brand loyalty no longer locks in customers



Market Sare :e,line

1*

2*1* 2*11 2*12 2*10 2*1' 2*1919(*6

1+(*6

15(*6

17(*6

1)(*6

2*(*6

21(*6

;oodyear US Market Sare

#oodyear%s growth has signi&cantly underperformed theindustry

2*12 2*10 2*1' 2*19

=12(**6

=1*(**6

=7(**6

=+(**6

='(**6

=2(**6

*(**6

;T .s US "ndustry %e.enue ;ro/t

;oodyear "ndustry


11/108'()(2*1

C O M P A N T H ! S " S # A $ U A T " O N % " S & S C O N C $ U S " O N


12/108'()(2*1


O-erational "ne,ien,y

12

Competitors far outpace #oodyear%s margins and pro&tability

22(**6

2'(**6

2+(**6

27(**6

0*(**6

02(**60'(**6

0+(**6

07(**6

'*(**6

$TM ;ross Margin

;ross Margin:isad.antage:14#


13/108'()(2*1


"n-ut Pri,es

10

(he company has signi&cant e)posure to commodity pricing

Natural %ubber

Crude :eri.ed

9#of total CO;S

9***(**699**(**6+***(**6+9**(**6

5***(**659**(**67***(**679**(**6)***(**6)9**(**6

NaturalSynteti, Pri,e %atio

Tire manufa,turersare bene3tting far more

from lo/er natural rubber -ri,es

tan synteti,


14/108'()(2*1


Natural %ubber Produ,ers

1'

Tailand4 Malaysia4 and

"ndonesia form te "nternational Tri-artite %ubber OrganiDation

Combined /it #ietnam4 tey

-rodu,e 7*6of te /orldEs rubber

Higer

Trans-ort Costs

Higer

Storage Costs

Higer

$abor Costs

$o/er MarginstanCom-etitors

Rubber is incredibly concentrated in S! Asia


15/108'()(2*1


%ubber Pri,es

19

1**

19*

2**

29*

0**

09*

'**

'9*

9**

99* "T%O #ietnam a.ede,ided to ,ut-rodu,tion by +194***tons o.er te neFt siF

monts

"n.entories /ill beginto dro- lo/ le.els

"2 To'

Analysts a.e-redi,ted sar-

-ri,e in,reases attis le.el

G P - e r k g

Catalysts for price increases are already playing out

Natural %ubber 0 ITOCOMJ Pri,ing


16/108'()(2*1


%ubber "n.entories

1+

K' L10 K1 L1' K2 L1' K0 L1' K' L1' K1 L19 K2 L19 K0 L19 K' L19 K1 L1+ K2 L1+ K0 L1+ K' L1+ K1 L151***

19**

2***

29**

0***

09**

'***

'9**

Natural %ubber Synteti, %ubber Proe,ted N% Proe,ted S%

T 1 o u s a n d s o f m e t r

i , t o n n e s

Histori,al "n.entories Proe,ted "n.entories

*eclining rubber reserves point to drastically higher prices


17/108


;ross Margin "m-a,t

15

+ow inventories Supply Shock #oodyear "argin *ecline

oss of Market Sare %e.enue :e,line in

+S & E2E

:e,rease in -rodu,tion in.entories leads to

in,reasing'aura rubberri%e

2ar6i'Core

io'

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!19(**6

15(**6

1)(**6

21(**6

20(**6

29(**6

25(**6

;ross Margin Proe,tions


18/108


Current Portion of $T:ebt

eak Balan,e Seet

17

Accelerated debt maturation due to re&nancing inhibits short'term growth

Te in,rease in long term debt and ,a-ital leases due /itin one year/as due -rimarily to te 29* million +(596 senior notes due 2*1)

being ,lassi3ed as ,urrent at :e,ember 014 2*19 in ,onne,tion /it te

irreo%abe %a 5or heir redeio' in Ganuary 2*1+

2*12 2*10 2*1' 2*19*

1**

2**

0**

'**

9**

+**

5**

< m i l l i o n s

= ;oodyear 2*19 1*&

!Quity %esear, Calls

Hea.y :ebt%e3nan,ing

Hi6her ST ;ebReaye'


19/108


eak Balan,e Seet

1)

nsustainable leverage will bring further li-uidity issues

Ee' a5er a 'e $1< redu%io' i' deb a year=

R;oodyear still as te hi6he ;/E raio in te industry by far

K1 2*1' K2 2*1' K0 2*1' K' 2*1' K1 2*19 K2 2*19 K0 2*19 K' 2*19*(*6

9*(*6

1**(*6

19*(*6

2**(*6

29*(*6

0**(*6

:! %atios

;oodyear Coo-er Mi,elin Bridgestone Sumitomo

f d d i i bili


20/108


Unfunded Pension $iability

2*

$ast obligations continue to hamper the company

2013;e%eber 1

2014ri 4

2015;e%eber 1

$1.10


21/108


Poor Cas Allo,ation

21

2*10 2*1' 2*191***

19**

2***

29**

0***

09**

Cas and Cas !Qui.alents

< m i l l i o n s


22/108


"nated !F-e,tations

22

2*1* 2*11 2*12 2*10 2*1' 2*19 2*1+


23/108


Coa'y aeShare

Pri%e

2arAe Ca EB Traii'6 P/E or@ard P/E P/


24/108


"ntrinsi, #aluation

2'

:is,ounted Cas 8lo/ AnalysisI< in millions4 8is,al ear ends :e,ember 01J

Hiori%a Pro3e%ed

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!

Ree'ue2*))2(* 1)9'*(* 17107(* 1+''0(* 19+5+(' 19222(5 19*99(1 1')70(9 19*05(5

6 ;ro/t'/0123 '40563 '10783 '90//3 '20613 '505:3 ':0963 :07/3

$ess CO;S151'2(* 19052(* 107))(* 1219+(* 115)9(' 11)1'(5 11)7)(7 12*+'(+ 12129(9

CO;S 6 of %e.enue650//3 460/43 4/0/73 470173 480293 460243 410/93 6:0823 6:0/73

Gro Pro*

079*(* '1+7(* '20)(* '275(* 0771(* 00*7(* 0*+9(0 2)17() 2)12(2 6 Margin

560793 250773 270743 2/0:43 2904/3 250473 2:07/3 510963 510743

$ess S;?A2*01(* 2*0+(* 1)77(* 1)91(* 1)*+(0 1770(* 1)25(* 1)''() 1)9+('

S;?A 6 of %e.enue 10/63 5:0923 5:01/3 550643 5205/3 520743 5206:3 520163 570:53

" t i i # l ti


25/108


"ntrinsi, #aluation

29

Hiori%a Pro3e%ed

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!

E


26/108


"ntrinsi, #aluation

2+

Terminal #alue


27/108


BaseBullBear Cases

25


28/108


%isks and Mitigants

27

Brand image as a igQuality tire

manufa,turer is toolo,ked in

Cost of o-erational,anges is far too

-roibiti.e

Still ,anEt ,om-eteagainst Asian tire

manufa,turersE lo/er,osts

%ubber -rodu,inga,reage as been

slased due too.ersu--lyW ,ouldnEtin,rease -rodu,tion

e.en if tey /anted to

To- ' rubber -rodu,ing,ountries signed anagreement to not

eliminate tese Quotas

Management is,ommitted to redu,ing

debt

!F,essi.e le.erageraises ,ost of debtW

defeats te -ur-ose of

re3nan,ing

Out of


29/108


Negati.e Catalysts

2)

#oodyear faces many obstacles that should send the stocktumbling

* ' 7 12 1+

Continued re.enue de,line due to intense ,om-etition and market

sare loss

Margin ,om-ression from in-ut -ri,e re,o.ery redu,es earnings and,as o/

14F 14

or earnings disa--ointmentsW ,anEt meet o.erly o-timisti, ,onsensus NTM !PS

Analyst do/ngrades4 maorsello

Monts Sin,e "n.estment

14F 14F 14F

T di C id ti


30/108


Trading Considerations

0*

;nvestment recommendation is a very feasible short position

"n.estment HoriDon

8loat

Sort 6 of 8loat

Borro/ %ate

:ays to Co.er

Monitor to Maintain !Fit Strategy

8 > 19 2o'h

.9#

9.!#

4."0# (4.4# ;i Iied)

!.8


31/108

'()(2*101


PPE;-D

A--endi Contents


32/108

'()(2*102

A--endiF Contents52(%e.enue Proe,tions IBaseJ50(%e.enue Proe,tions IBullJ5'(%e.enue Proe,tions IBearJ59(CO;S Proe,tions IBaseJ5+(CO;S Proe,tions IBullJ55(CO;S Proe,tions IBearJ57(:e-re,iation S,edule5)(AmortiDation S,edule

7*(orking Ca-ital Assum-tions71(Cange in NC Cal,ulations72(Beta Cal,ulation70("n,ome Statement7'(Balan,e Seet79(Cas 8lo/ Statement IO-sJ

7+(Cas 8lo/ Statement I"n.?8inJ75(:ebt Outstanding77(Pro-erties7)(%e.enue Breakdo/n)*(To- Sareolders)1(Sort "nterest

)2(Sifting Consumer Trends)0(Com-arati.e Pri,ing)'(Cina To- Tiremakers)9(Cina Tire Produ,tion 8ore,ast)+(US Tire Trade Balan,e)5("m-orts by Country)7(US Tire "ndustry Breakdo/n))(Tire $o,ations Sour,es

1**(%ubber Si-ments1*1(%ubber Pri,ing1*2(Natural %ubber Produ,tion1*0(Synteti, %ubber Produ,tion1*'(Tire Materials Per,entage1*9(Unfunded Pension 2*10

1*+(Unfunded Pension 2*1'1*5(Unfunded Pension 2*191*7(Sare %e-ur,ases


33/108

'()(2*100


Reear%h TeaAnurag BansalAustin PartridgeHans UySunny Pamidimukkala


34/108

'()(2*1

Table

ofCo'e'

COMPAN TH!S"S #A$UAT"ON %"S&S CONC$US"ON

Com-any O.er.ie/


35/108


$atin Ameri,a

Com-any O.er.ie/

09

One of the largest manufacturers of tires in the world

Nort Ameri,a

AsiaPa,i3,

!uro-e4 Middle !ast4and Afri,a

'56

1*6

126

016

%e.enue Breakdo/n



36/108



0+

01

6

27

6

Based on ,rude-ri,es

1'

6

Based on,rude -ri,es

25

6NaturalRubber

Based on

rubber,ommodity

-ri,es

A business heavily dependent on raw material prices

Other Carbon Black SyntheticRubber

Steel4Cemi,als48abri,

Sto,k Pri,e History


37/108


*

9

1*

19

2*

29

0*

09

'*

Sto,k Pri,e History

05

Bullis Market #ie/


38/108


Bullis Market #ie/

07

149**(*

14+**(*

145**(*

147**(*

14)**(*

24***(*

241**(*

242**(*

240**(*

24'**(*

19(**6

15(**6

1)(**6

21(**6

20(**6

29(**6

25(**6

!B"T:A ;ross Margins

18.7# ia/Pa%i*%

+'i Sae -'%reae

$.0T2 Pro3e%ed EPS

.s( 2*19A !PS of


39/108


"n.estment Tesis

0)

Shi5i'6 %o'uer re5ere'%eand i'e'e ia' %oeiio' a.eled to ,om-any=/ide ,ontra,tions

1

Poor %ah ao%aio' and oery

oiii%ear'i'6 targets -ro.ide negati.e,atalysts tatset te sto,k u- for disa--ointment

0

+'uai'abe 6ro ar6i' due to all=time lo/s in in-ut -ri,es a.e ,o.ered u-a6'a' ree'ue

2



40/108



'*

eavier O!" focus places #oodyear in the more stagnantsector

Oter%e-la,ement Tires

O!M Tires 71(560('6

1'()6

"ndustry Breakdo/n

> +)('6

> 0*(+6

$arger Portion ofMarket ;ro/t

Pri,e "n,reasingly"m-ortant



41/108



'1

94# 71#Baby Boomers ?

Pre=Boomers

$ikeliood of s/it,ing brands /en re-la,ingtires

;eneration @ ?

6%"arket

consumption sharegrowth rate

53% $ercent ofconsumption

Brand loyalty no longer locks in customers

Market Sare :e,line


42/108


Market Sare :e,line

'2

2*1* 2*11 2*12 2*10 2*1' 2*1919(*6

1+(*6

15(*6

17(*6

1)(*6

2*(*6

21(*6

;oodyear US Market Sare

#oodyear%s growth has signi&cantly underperformed theindustry

2*12 2*10 2*1' 2*19

=12(**6

=1*(**6

=7(**6

=+(**6

='(**6

=2(**6

*(**6

;T .s US "ndustry %e.enue ;ro/t

;oodyear "ndustry

Pri,e Points


43/108



44/108


O-erational "ne,ien,y

''

Competitors far outpace #oodyear%s margins and pro&tability

22(**6

2'(**6

2+(**6

27(**6

0*(**6

02(**6

0'(**6

0+(**6

07(**6

'*(**6

$TM ;ross Margin

;ross Margin:isad.antage

:14#

"n-ut Pri,es


45/108


"n-ut Pri,es

'9

(he company has signi&cant e)posure to commodity pricing

Natural %ubber

Crude :eri.ed

9#of total CO;S

9***(**699**(**6+***(**6+9**(**6

5***(**659**(**67***(**679**(**6)***(**6)9**(**6

NaturalSynteti, Pri,e %atio

Tire manufa,turersare bene3tting far more

from lo/er natural rubber -ri,estan synteti,



46/108



'+

Tailand4 Malaysia4 and

"ndonesia form te "nternational Tri-artite %ubber OrganiDation

Combined /it #ietnam4 tey

-rodu,e 7*6of te /orldEs rubber

Higer

Trans-ort Costs

Higer

Storage Costs

Higer

$abor Costs

$o/er Margins

tanCom-etitors

Rubber is incredibly concentrated in S! Asia

Manufa,turing Ca-a,ity


47/108



'5

;oodyear X1)Mi,elin X 1'Continental =11

;oodyear X+

Mi,elin X 2Continental =9

;oodyear X )Mi,elin X 05

Continental =1'

;oodyear X +Mi,elin X 5Continental =

1*

#oodyear faces higher transportation costs due to plant positioning



48/108



'7

okoama X 0Hankook X 1Bridgestone X

'*Sumitomo = 2

okoama X *Hankook X *

Bridgestone X1+Sumitomo = 2

okoama X 1Hankook X 1Bridgestone X

19Sumitomo = 5

okoama X 15Hankook X +Bridgestone X)+

Sumitomo = 1'

Asian competitors bene&t from geographical factors

%ubber Pri,es


49/108


%ubber Pri,es

')

1**

19*

2**

29*

0**

09*

'**

'9*

9**

99*

"T%O #ietnam a.ede,ided to ,ut

-rodu,tion by +194***tons o.er te neFt siF

monts

"n.entories /ill beginto dro- lo/ le.els

"2 To'

Analysts a.e-redi,ted sar-

-ri,e in,reases attis le.el

G P - e r k

g

Catalysts for price increases are already playing out

Natural %ubber 0 ITOCOMJ Pri,ing

%ubber "n.entories


50/108


%ubber "n.entories

9*

K' L10 K1 L1' K2 L1' K0 L1' K' L1' K1 L19 K2 L19 K0 L19 K' L19 K1 L1+ K2 L1+ K0 L1+ K' L1+ K1 L151***

19**

2***

29**

0***

09**

'***

'9**

Natural %ubber Synteti, %ubber Proe,ted N% Proe,ted S%

T 1 o u s a n d s o f m e t r i , t o n n e s

Histori,al "n.entories Proe,ted "n.entories

*eclining rubber reserves point to drastically higher prices

;ross Margin "m-a,t


51/108


;ross Margin "m-a,t

91

+ow inventories Supply Shock #oodyear "argin *ecline

oss of Market Sare %e.enue :e,line in

+S & E2E

:e,rease in -rodu,tion in.entories leads to

in,reasing'aura rubberri%e

2ar6i'Core

io'

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!19(**6

15(**6

1)(**6

21(**6

20(**6

29(**6

25(**6

;ross Margin Proe,tions

eak Balan,e Seet


52/108


Current Portion of $T:ebt

eak Balan,e Seet

92

Accelerated debt maturation due to re&nancing inhibits short'term growth

Te in,rease in long term debt and ,a-ital leases due /itin one year

/as due -rimarily to te 29* million +(596 senior notes due 2*1)being ,lassi3ed as ,urrent at :e,ember 014 2*19 in ,onne,tion /it te

irreo%abe %a 5or heir redeio' in Ganuary 2*1+

2*12 2*10 2*1' 2*19*

1**

2**

0**

'**

9**

+**

5**

< m i l l i o n s

= ;oodyear 2*19 1*&

!Quity %esear, Calls

Hea.y :ebt%e3nan,ing

Hi6her ST ;ebReaye'


53/108


eak Balan,e Seet

90

nsustainable leverage will bring further li-uidity issues

Ee' a5er a 'e $1< redu%io' i' deb a year=

R;oodyear still as te hi6he ;/E raio in te industry by far

K1 2*1' K2 2*1' K0 2*1' K' 2*1' K1 2*19 K2 2*19 K0 2*19 K' 2*19*(*6

9*(*6

1**(*6

19*(*6

2**(*6

29*(*6

0**(*6

:! %atios

;oodyear Coo-er Mi,elin Bridgestone Sumitomo



54/108



9'

$ast obligations continue to hamper the company

2013;e%eber 1

2014ri 4

2015;e%eber 1

$1.10


55/108


Poor Cas Allo,ation

99

2*10 2*1' 2*191***

19**

2***

29**

0***

09**

Cas and Cas !Qui.alents

< m i l

l i o n s


56/108


"nated !F-e,tations

9+

2*1* 2*11 2*12 2*10 2*1' 2*19 2*1+


57/108


Coa'y aeSharePri%e

2arAe Ca EB Traii'6 P/E or@ard P/E P/


58/108


"ntrinsi, #aluation

97

:is,ounted Cas 8lo/ AnalysisI< in millions4 8is,al ear ends :e,ember 01J

Hiori%a Pro3e%ed

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!

Ree'ue2*))2(* 1)9'*(* 17107(* 1+''0(* 19+5+(' 19222(5 19*99(1 1')70(9 19*05(5

6 ;ro/t'/0123 '40563 '10783 '90//3 '20613 '505:3 ':0963 :07/3

$ess CO;S151'2(* 19052(* 107))(* 1219+(* 115)9(' 11)1'(5 11)7)(7 12*+'(+ 12129(9

CO;S 6 of %e.enue650//3 460/43 4/0/73 470173 480293 460243 410/93 6:0823 6:0/73

Gro Pro*079*(* '1+7(* '20)(* '275(* 0771(* 00*7(* 0*+9(0 2)17() 2)12(2

6 Margin560793 250773 270743 2/0:43 2904/3 250473 2:07/3 510963 510743

$ess S;?A2*01(* 2*0+(* 1)77(* 1)91(* 1)*+(0 1770(* 1)25(* 1)''() 1)9+('

S;?A 6 of %e.enue 10/63 5:0923 5:01/3 550643 5205/3 520743 5206:3 520163 570:53

"ntrinsi, #aluation


59/108


"ntrinsi, #aluation

9)

Hiori%a Pro3e%ed

2*12 2*10 2*1' 2*19 2*1+! 2*15! 2*17! 2*1)! 2*2*!

E


60/108


"ntrinsi, #aluation

+*

Terminal #alue


61/108


BaseBullBear Cases

+1


62/108


BaseBullBear Assum-tions

+2

Bear Base Bull

MarketSare

Natural%ubber

CrudeOil

Hea.y $osses

Pri,e "n,reases

Pri,e "n,reases

Marginal $osses

Pri,e "n,reases

Pri,e Stable

Stable

Pri,e :e,reases

Pri,e :e,reases

%isks ? Mitigants


63/108


%isks ? Mitigants

+0

$O COST MA%&!T P!N!T%AT"ON

dyear ,ould sift more to/ards te -ri,e=sensiti.e re-la,ement marke

HOEBER

Brand image as a high qali!y tire manufa,turer is too lo,ked i

"o#!# asso,iated /it #hi!ing rod&! line /ould be .ery ig

Still ,anEt ,om-ete against low'&o#! (#ian !ire mana&!rer

%isks ? Mitigants


64/108


%isks ? Mitigants

+'

%UBB!% P%O:UCT"ON $"M"TS

y rubber -rodu,ers ,ould eliminate establised -rodu,tion Quotas

HOEBER

)bber rod&ing a&reage as been #la#hed due to o.ersu--l

8armers &oldn*! in&rea#e rod&!ion e.en if tey /anted t

' -rodu,ing ,ountries #igned an agreemen! to u-old tese Quotas

%isks ? Mitigants


65/108


s s ? ga s

+9

A::"T"ONA$ :!BT "N8US"ON

nagement ,ould fund obligations /it a maor in,rease in le.erage

HOEBER

Management is &ommi!!ed !o red&ing de

essi.e le.erage rai#e# &o#! o deb! W defeats te -ur-ose of re3nan,in

Out of


66/108


g

++

Any -otential u-side is sim-ly too little tore.erse te maor obsta,les fa,ing

;oodyear

Key Takeaway

Con,lusion


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'()(2*1C O M P A N T H ! S " S # A $ U A T " O N % " S & S C O N C $ U S " O N+5

Poor industry -ositioning

Pronoun,ed market sare deterioration

"ntense ,om-etition under,uts -ri,e -oints

%ising in-ut -ri,es in te near future

!F,essi.e le.erage

Unfunded -ension liability

Aggressi.e and im-rudent sare re-ur,ase -rogram

A multitude of red


68/108


g y

+7

#oodyear faces many obstacles that should send the stocktumbling

* ' 7 12 1+

Continued re.enue de,line due to intense ,om-etition and market

sare loss

Margin ,om-ression from in-ut -ri,e re,o.ery redu,es earnings and,as o/

14F 14

or earnings disa--ointmentsW ,anEt meet o.erly o-timisti, ,onsensus NTM !PS

Analyst do/ngrades4 maorsello

Monts Sin,e "n.estment

14F 14F 14F

Trading Considerations


69/108


g

+)

;nvestment recommendation is a very feasible short position

"n.estment HoriDon

8loat

Sort 6 of 8loat

Borro/ %ate

:ays to Co.er

Monitor to Maintain !Fit Strategy

8 > 19 2o'h

.9#

9.!#

4."0# (4.4# ;i Iied)

!.8


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'()(2*1*


PPE;-D

A--endiF Contents


71/108

'()(2*151

--52(%e.enue Proe,tions IBaseJ50(%e.enue Proe,tions IBullJ5'(%e.enue Proe,tions IBearJ

59(CO;S Proe,tions IBaseJ5+(CO;S Proe,tions IBullJ55(CO;S Proe,tions IBearJ57(:e-re,iation S,edule5)(AmortiDation S,edule7*(orking Ca-ital Assum-tions

71(Cange in NC Cal,ulations72(Beta Cal,ulation70("n,ome Statement7'(Balan,e Seet79(Cas 8lo/ Statement IO-sJ7+(Cas 8lo/ Statement I"n.?8inJ75(:ebt Outstanding77(Pro-erties7)(%e.enue Breakdo/n)*(To- Sareolders)1(Sort "nterest

)2(Sifting Consumer Trends)0(Com-arati.e Pri,ing)'(Cina To- Tiremakers

)9(Cina Tire Produ,tion 8ore,ast)+(US Tire Trade Balan,e)5("m-orts by Country)7(US Tire "ndustry Breakdo/n))(Tire $o,ations Sour,es1**(%ubber Si-ments

1*1(%ubber Pri,ing1*2(Natural %ubber Produ,tion1*0(Synteti, %ubber Produ,tion1*'(Tire Materials Per,entage1*9(Unfunded Pension 2*101*+(Unfunded Pension 2*1'1*5(Unfunded Pension 2*191*7(Sare %e-ur,ases

%e.enue Proe,tions IBaseJ


72/108

'()(2*152

I J

%e.enue Proe,tions IBullJ


73/108

'()(2*150

%e.enue Proe,tions IBearJ


74/108

'()(2*15'

CO;S Proe,tions IBaseJ


75/108

'()(2*159

CO;S Proe,tions IBullJ


76/108

'()(2*15+

CO;S Proe,tions IBearJ


77/108

'()(2*155

:e-re,iation S,edule


78/108

'()(2*157

AmortiDation S,edule


79/108

'()(2*15)

orking Ca-ital Assum-tions


80/108

'()(2*17*

Cange in NC Cal,ulations


81/108

'()(2*171

Beta Cal,ulation


82/108

'()(2*172

"n,ome Statement


83/108

'()(2*170

Balan,e Seet


84/108

'()(2*17'

Cas 8lo/ Statement IO-sJ


85/108

'()(2*179

I"n.?8inJ


86/108

'()(2*17+

I"n.?8inJ

:ebt Outstanding


87/108

'()(2*175

Pro-erties


88/108

'()(2*177

%e.enue Breakdo/n


89/108

'()(2*17)

of tires

To- Sareolders


90/108

'()(2*1)*

Sort "nterest


91/108

'()(2*1)1



92/108

'()(2*1)2

Com-arati.e Pri,ing


93/108

'()(2*1)0

Cina To- Tiremakers


94/108

'()(2*1

8ore,ast


95/108

'()(2*1

8ore,ast

US Tire Trade Balan,e


96/108

'()(2*1

"m-orts by Country


97/108

'()(2*1

US Tire "ndustry Breakdo/n


98/108

'()(2*1

Tire $o,ations Sour,es


99/108

'()(2*1))

Continental =tt-///(,ontinental=

,or-oration(,om///-ortalY,omYentemes,ontinental,ontinentalYglobal

Mi,elin =tt-///(mi,elin(,omengmi,elin=grou-organiDationfa,ilities

I,ontinentJ)95ma-=an,or

Bridgestone =tt-///(bridgestone(,om,or-oratelo,ations

Sumitomo =tt-///(srigrou-(,o(-englis,or-orategrou-indeF(tml

okoama =tt-global(yokoamatire(net,or-orateo.erseasmanufa,turingfa,ilities(tml

%ubber Si-ments


100/108

'()(2*11**

tt-///(bloomberg(,omne/sarti,les2*1+=*0=*5rubber=enters=bull=market=as=to-=eF-orters=redu,e=

si-ments

%ubber Pri,ing


101/108

'()(2*11*1

tt-///(rubberstudy(,omdo,umentsebSite:ataY8eb2*1+(-df

Natural %ubber Produ,tion


102/108

'()(2*11*2

Synteti, %ubber Produ,tion


103/108

'()(2*11*0

Tire Materials Per,entage


104/108

'()(2*11*'

tt-infoouse(-2ri,(orgref111*9*'tmlintrotire(tm

Unfunded Pension 2*10


105/108

'()(2*11*9

tt-///(bene3ts-ro(,om2*10*70*goodyear=/ill=freeDe=-ension=on,e=its=fully=funded

Unfunded Pension 2*1'


106/108

'()(2*11*+

tt-///(-ionline(,omarti,le2*1'*210ON$"N!1'*21))29goodyear=freeDes=us=ourly=-ension=-lans=.ul,aniDes=db=-lans=/it=119=billion

Unfunded Pension 2*19


107/108

'()(2*11*5

8rom 1*&

Sare %e-ur,ases


108/108

university of texas - austin: short goodyear tire

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