db conference jan14 final
TRANSCRIPT
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Deutsche Bank 2014 Global Auto Industry Conference January 15, 2014
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FORWARDLOOKING STATEMENTThis presentation may contain forecasts, projections, expectations, or opportunities regarding Remy that are "forward lookin statements" as defined in the Private Securities Liti ation Act of 1995. Such forward lookin statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results, including, but not limited to, future financial results and liquidity, development of new products and services, the effect of competitive products or pricing, the effect of commodity and raw material prices, the
, , , uncertainties and warranty claims, conditions in the automotive industry, foreign currency fluctuations, costs related to re sourcing and outsourcing products, the effect of economic conditions, in addition to other factors
identified in Remy International statements. The Company undertakes no obligation to update this information .
This information contained herein is Confidential and may not be publicly disclosed without the permission of the Company.
CONFIDENTIAL - COPYRIGHT 2013 REMY INTERNATIONAL
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Business Overview
New and remanufactured starters and alternators
Aftermarket47% of Sales
Americas, Europe and China (emerging) Retail, OEM dealers, wholesalers and
,
Hybrid electric motors Global Growth (China, Korea, Brazil, India)Original
Equipment ,
4% CAGR Car production growth 5% CAGR Commercial vehicle growth
53% of Sales
4Source: 2012 Remy 10-K, IHS Global Insight: 2013 2017 CAGRBroad market coverage for diverse product applications
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Global Business
Production by GeographySales by Geography
Europe
South America
4%Brazil
4%Hungary 6%
Asia PacificChinaKorea
America67%
20%Mexico
56%
55
Make and sell globally . . . leveraging low cost
manufacturingSource: 2012 Remy 10-K,
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Balanced Business Mix
Sales by ApplicationSales by Channel
AftermarketLD OE Commercial
4%
OE 53%
38%e c e
30%
OES
9% LD AM 28%
66
Light Duty OE and Asia drive top-line growth;
Aftermarket and Commercial Vehicle drive bottom lineSource: 2012 Remy 10-K
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Marquee Customer Base
Aftermarket CustomersOE Customers
7Serving market leaders in all regions
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Brand Recognition / Technology
Remy and Delco Remy are globally recognized premier brands
Brand Recognition Technology
Start / Stop and Change of Mind starters High Efficiency Alternators Hybrid/Electric vehicle motors
Intellectual property portfolio a clear differentiator
25%
400+ core patents (granted or in process) Acquired Delphi and Visteon patent
portfolios
AlternatorsStarters
Recent Patent Distribution
50%
25%
Cross license agreement with Denso Aggressive enforcement of IP portfolio Hybrid/
888
Strong Brand with unique patented technologies
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Positioned for Growth
2012Rev: $1.1B
Double digit sales CAGR 8-10% Operating margins: .5
Net Debt / EBITDA: 1.2x
vehicle production growth
Capitalize on global commercialvehicle opportunities
Expand profitable aftermarketproduct portfolio
Complete several accretiveac uisitions
Maintain moderate leveragebelow 3.0x
Healthy mix of Organic Growth and Acquisitions 9
* Adjusted for reversal of an $89M valuation allowance on deferred tax asset balance
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Potential Cash Usage
Organic GrowthOrganic Growth Acquisitions Acquisitions DividendsDividends
Increase profitable Aftermarket product
Targets that expand our:
Grow Asia add
production capacity
Geographic footprint
End market
$0.10 per sharedividend
Maintain and ap a ze on o a
Commercial Vehicleopportunities
presence
Optimize supply chain
grow dividend
2012 Cash Balance = $1122012 Net Debt / EBITDA = 1.2x
10Balance Growth Investments and Shareholder Return
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China Growth Opportunity
China Light Duty Vehicle Production China Medium & Heavy Duty Production
24.626.3
27.8 35%30.0
1.2 1.1 1.2 1.2
1.2 40%1.25
18.6
20.7 22.5
23%
25%26% 27%
27% 28%
25%
30%
10.0
15.0
20.0
25.0 1.1
32%
34%
32%
31% 31% 30%
30%
35%
0.75
1.00
15%
20%
5.0
2012 2013 2014 2015 2016 2017
China LD Vehicle Production % of Global Total
20%
25%
0.50
2012 2013 2014 2015 2016 2017
China MD & HD Production % of Global Total
Worlds largest automotive market
1/3 of Global Commercial Vehicle Market
50% of Global Light Duty growth from 2012 2017 will come from China Current Remy sales over $90M and growing
11
ew u an p an more an ou es na pro uc on capac y
Source: IHS Global Insight: Nov./Oct. 2013 data for LD/HD respectivelyLeverage China Market for Growth
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Remy/USA Acquisition
Well recognized brand in Warehouse Distribution (WD)
ves emy grea er ep n o mpor an segmen doubles current WD business
Provides an entry into multiline components steering,brake cali ers and axles
New distribution centers improves customer service
Expands Product Portfolio and Channel Strength
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Future Growth Opportunity Hybrid
Business Description Platforms Under Contract
Automotive and Commercial Vehicles
Over 1 billion miles of Reliability High Performance Products
Representative Products Key Milestones
Largest North American Production capacity
2002 Produced 1st e Motor for electric bus
2003 Developed & patented HVH technology
2008 Contract for Daimler ML 450 & BMW X6
2009 Won U.S. Department of Energy Grant
13
2012 Completed Phase One of DOE grant
Global Leader in Hybrid Electric Motor Technology
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Performance Metrics
2007 2012 2017Yesterday Today Tomorrow
. . . .
Operating Income % 2% 9% 8 10%
u xOriginal Equipment 52% 53% 50%Aftermarket 48% 47% 50%
Reg ona M xAmericas 81% 71% 60%Europe 11% 9% 10%Asia 8% 20% 30%
Net Debt / EBITDA 6.8x 1.2x below 2.0x
EPS $1.59* $1.70 $1.90
14Poised for Top and Bottom Line Growth
* Adjusted for reversal of an $89M valuation allowance on deferred tax asset balance
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Strategy and Execution Drive Results
Global Business
Balanced Business PortfolioRemy Share Price30
Proven Track Record
Sustainable low cost structure
20
25
Strong Operating Cash Flows
Well Positioned for Growth
15
China Hybrid Aftermarket Strategic Acquisitions
5
Committed Ownership Directors and officers hold approximately
5% of Remy Stock
2010 2011 2012 2013
15Business Model Provides Superior Shareholder Returns
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Appendix
16
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NonNon--GAAP ReconciliationGAAP Reconciliation
Adjusted EBITDA and Total Debt / Adj. EBITDAThe following table reconciles the Companys net income (loss) attributable to common stockholders calculated in accordance with accounting principles generally accepted in the United States (U.S. GAAP) to the non U.S. GAAP financial measure of the Companys Adjusted EBITDA:
2008 2009 2010 2011 2012
Net income (loss) attributable to common stockholders (28.9)$ (14.8)$ (13.7)$ 62.2$ 138.6$ Adjustments:
ears n e ecem er ,
(in millions)
Interest expense 54.9 49.5 46.7 30.9 27.7 Income tax (benefit) expense 6.8 13.0 18.3 14.8 (71.2)
Depreciation and amortization 24.8 30.8 29.3 35.3 38.0 Stockbased compensation expense 1.8 1.8 1.2 6.9 7.3
Net income attributable to noncontrolling interest 1.4 3.3 4.3 3.4 2.8 . . . . .
Intangible asset impairment charges 1.5 4.0 5.6 Preferred stock dividends 23.1 25.6 30.6 2.1
Loss on extinguishment of preferred stock 7.6 Loss on extinguishment of debt 19.4
Reor anization items 2.8
Adjustments for one time gains (7.3) Other 0.4
Total adjustments 132.4 136.0 153.8 102.9 14.9 Adjusted EBITDA 103.5$ 121.2$ 140.1$ 165.1$ 153.5$
17
Total Debt 498.8$ 505.5$ 311.2$ 297.0$
Ratio of Total Debt to Adjusted EBITDA 4.1 x 3.6 x 1.9 x 1.9 x
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Non-GAAP Reconciliation
The following table reconciles the Companys ratio of debt to total capital calculated in accordance with accounting principles generally accepted in the United States (U.S. GAAP) to the non U.S. GAAP financial measure of the Com an s ratio of net debt to total ca ital:
2009 2010 2011 2012
Year End Balance as of December 31,
(in millions, exce t ercenta es)
Short term debt 23.0$ 18.3$ 14.2$ 9.1$ Current maturities of long term debt 2.3 3.3 10.3 3.4
Longterm debt, net of current maturities 337.9 317.8 286.7 284.5 Redeemable preferred stock 135.6 166.1
Total debt 498.8$ 505.5$ 311.2$ 297.0$ Less:
Cash and cash equivalents 30.2 37.5 91.7 111.7 e e . . . .
Net debt 468.6$ 468.0$ 219.5$ 185.3$ Total Stockholders' Equity 83.0 77.5 317.3 471.5
18
. . . .
Ratio of net debt to total capital 85.0% 85.8% 40.9% 28.2%