Goodyear Tire (GT) Announces Transformation Plan "Goodyear Forward"

The Goodyear Tire & Rubber Company (NASDAQ: GT) ("Goodyear" or the "Company") today announced a transformation plan – "Goodyear Forward" – to optimize its portfolio, deliver significant margin expansion and reduce leverage to drive sustainable and substantial shareholder value creation. This plan follows a comprehensive evaluation by the Strategic and Operational Review Committee (the "Review Committee") of the Board of Directors to evaluate all strategic, operational and financial opportunities to maximize value.

"Our transformation plan represents a clear path to create a more profitable and focused Goodyear," said Goodyear Chairman, CEO and President Richard J. Kramer. "The Review Committee explored all value maximizing opportunities and identified specific, detailed initiatives to streamline our portfolio, expand margins and fortify our balance sheet, and do so with expediency. Building on our strengths, this plan will enable Goodyear to enhance and expand our leadership position, deliver profitable growth across markets, create significant value for our shareholders and – ultimately – lay the foundation for success for the next 125 years."

"This plan is the result of a comprehensive, bottom-up assessment of Goodyear's business, led by the Review Committee," said Laurette T. Koellner, Independent Lead Director of Goodyear's Board. "The full Board supports this plan and is confident it will deliver substantial and durable value creation for shareholders. We appreciate the constructive input of our shareholders throughout this process."

On behalf of Elliott Investment Management, one of Goodyear's largest investors, Senior Portfolio Manager Marc Steinberg and Portfolio Manager Austin Camporin said, "We believe the 'Goodyear Forward' transformation plan represents a significant set of steps toward a stronger and more profitable Goodyear. We thank Rich for his leadership and the Review Committee for its collaborative engagement, and we look forward to continuing our dialogue with the Company as it implements these initiatives and works to deliver the substantial upside value that we see for all Goodyear shareholders."

The Review Committee consisted of five directors, including two new independent directors appointed in July 2023. Over the course of 16 weeks, the Review Committee engaged in deep analysis and deliberation with assistance from industry-leading financial advisors and consultants. The review culminated in a detailed and actionable plan to streamline the business, accelerate growth and enhance competitive positioning. The full Board will oversee the execution of the Goodyear Forward plan and remains committed to the ongoing assessment of value-enhancing opportunities. The Company will provide regular updates to shareholders on its progress executing the plan.

Goodyear Forward will deliver:

• Gross proceeds in excess of $2 billion from portfolio optimization. Following a comprehensive assessment of all assets, Goodyear has determined to actively pursue strategic alternatives for its Chemical business, the Dunlop brand and the Off-the-Road equipment tire business.
• Cost reduction actions driving an annual, run-rate benefit of $1 billion by the end of 2025. The Company has initiated a specific and actionable cost reduction plan encompassing footprint actions and plant optimization; purchasing; SAG; supply chain; and R&D. With many unique workstreams, Goodyear has a clear line-of-sight to 100% of the cost savings.
• Top line actions driving an annual, run-rate benefit of $300 million by the end of 2025. The Company has identified opportunities in North America to optimize brand and tier positioning, rationalize SKUs, increase customer and channel profitability and enhance coverage in premium product lines.
• Segment operating income margin doubling to 10% by the end of 2025. With the benefits of cost reduction and top line actions, and net of the impact of expected asset sales and inflation, the Company expects segment operating margin to double from approximately 5% in 2023 to 10% by the fourth quarter of 2025.
• Net leverage of 2.0x – 2.5x by the end of 2025. Goodyear will strengthen its financial profile through enhanced earnings, cash flow generation and debt reduction, moving the Company closer toward an investment-grade rating. The Company expects debt reduction of approximately $1.5 billion, net of approximately $1.1 billion for restructuring.

Evercore, Lazard and Goldman Sachs acted as financial advisors to Goodyear.

Investor Conference Call

Goodyear will host an investor call on Wednesday, Nov. 15, at 8:30 a.m. EST to discuss the transformation. The Company will also publish a related presentation 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; and Christina L. Zamarro, executive vice president and chief financial officer.

The investor call can be accessed on the website or via telephone by calling either (800) 579-2543 or (785) 424-1789 before 8:25 a.m. EST and providing the conference ID "Goodyear." A replay will be available by calling (888) 567-0679 or (402) 530-0421. The replay will also remain available on the website.

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