standard motor products, inc. 2009 annual automotive aftermarket symposium november 2 - 4, 2009

21
Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

Upload: francine-griffin

Post on 27-Dec-2015

218 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

Standard Motor Products, Inc.2009 Annual Automotive Aftermarket

SymposiumNovember 2 - 4, 2009

Page 2: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

2

Forward Looking Statements

You should be aware that except for historical information, the matters discussed herein are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements, including projections and anticipated levels of future performance, are based on current information and assumptions and involve risks and uncertainties which may cause actual results to differ materially from those discussed herein. You are urged to review our filings with the SEC and our press releases from time to time for details of these risks and uncertainties.

Page 3: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

3

Investment RationaleCompany and Industry Fundamentals

Standard Motor Products is an aftermarket pure play 93% of sales are aftermarket

Attractive automotive aftermarket fundamentals provide stable growth, with potential upside driven by industry trends Declining new car sales Aging vehicle fleet Closing car dealerships Lower fuel prices leads to increased mileage Most repairs are non-discretionary

Continued margin improvement driven by recent restructuring actions Low-cost production in Mexico and closure of Puerto Rico and Long Island City

facilities Production in low cost facilities expected to reach a goal of 46% in 2009 and 55% in

2010, up from 38% in 2008 Purchases from low cost suppliers expected to reach a goal of 50% in 2009 and 52%

in 2010, up from 47% in 2008

Page 4: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

4

Investment RationaleOpportunity for Investor Returns

SMP market position yields attractive margins and high quality earnings Leading market positions in Engine Management and Temperature Control Strong customer relationships

Transaction gives SMP flexibility to pursue strategic opportunities Financial flexibility will allow SMP to take full advantage of opportunities to acquire

products / production lines as other vendors rationalize their businesses

Page 5: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

5

SMP is an Aftermarket Pure Play

Based on 250 million vehicles on the road

Highly stable

Slow and steady growth

Tens of thousands of SKUs

Not affected by rise and fall of new car

production

Higher margins

Traditional47%

Retail33%

OE7%

OES5%

Export3%

SpecialMarkets

5%

2008 Sales2008 Sales

Page 6: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

6

Favorable Macro Trends for Aftermarket

New Car Sales Down

Aging Fleet of Vehicles

Car Dealerships Closing

Fuel Prices Stabilized

Increases average age of vehicles driven

Increases demand for replacement parts

Independent distributors and repair shops will become only option in many areas

Miles driven has begun to increase

Increasing miles driven creates demand for replacement parts

TrendTrendTrendTrend Impact on AftermarketImpact on AftermarketImpact on AftermarketImpact on Aftermarket

Page 7: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

7

Focused Business Strategy

Focused on Two Major Product Lines

#1 in each

EngineManagement

68%

EuropeanEuropeanGroupGroup

6%6%

TemperatureTemperatureControlControl

25%25%

OtherOther1%1%

Page 8: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

8

Focused Business StrategyEngine Management Division

#1 market position

High brand loyalty

Predictable top-line performance

High margin product category

#1 Position in Engine Management#1 Position in Engine Management#1 Position in Engine Management#1 Position in Engine Management

Distributor Cap & RotorDistributor Cap & Rotor

Distributorless Ignition Distributorless Ignition System ModuleSystem Module

Business StrengthsBusiness Strengths

Fuel InjectorsFuel Injectors

Point Set and CondenserPoint Set and Condenser

Page 9: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

9

Focused Business Strategy Temperature Control Division

Temperature Control ProductsTemperature Control Products

#1 Position in Temperature Control#1 Position in Temperature Control#1 Position in Temperature Control#1 Position in Temperature Control

#1 market position

Top-line growth

Recent wins in 2009 (AutoZone, CSK, Pep Boys)

Cost reduction as a result of plant relocations to Reynosa, Mexico

Significant operating leverage

Business StrengthsBusiness Strengths

Page 10: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

10

Strategic Initiatives

2003-2005 Dana Engine Management Acquisition and Integration

2006-2007 Exit UK Manufacturing Establish Low Cost Poland Manufacturing Site

2007 - 2008 Exit high-cost manufacturing facilities (Puerto Rico & LIC) Expand low-cost manufacturing in Reynosa, MX Begin remanufacturing compressors in Reynosa, MX

2009 Continued shift to three manufacturing facilities in Reynosa, MX Acquired Federal Mogul Wire Product Line Potential sale of European Distribution business

Page 11: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

11

20%

26%29%

38%

46%

55%

2005 2006 2007 2008 2009Estimate

2010Goal

34%38%

42%

47%50%

52%

2005 2006 2007 2008 2009Estimate

2010Goal

Move to Low Cost Environment

PurchasingPurchasing

% purchased from low cost suppliers% production labor hours in low cost facilities

ManufacturingManufacturing

Page 12: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

12

2008 - 2009 Operational Improvements

Inventory Reduction Reduced by 17%, or $40mm, over last 12 months

Accounts Receivable Reduction Reduced by 28%, or $68mm, over last 12 months

SG&A Reduction $18mm in savings achieved YTD Reduced 10% of salaried positions over last 12 months

Page 13: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

13

Financial Overview

Page 14: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

14

September YTD Income Statement Non-GAAP (Excluding Non-Operational Gains and Losses)

($ in Millions)

Amount % of Sales Amount % of Sales

Net Sales 575.3$ 100.0% 626.4$ 100.0%

Gross Profit 137.1 23.8% 148.6 23.7%

SG&A Expenses 109.6 19.1% 127.5 20.4%

Operating Profit 27.5 4.8% 21.1 3.4%

Other Income/Loss 1.1 -

Interest Expense 7.2 11.0

Income Taxes 8.3 6.6

Earnings from Continuing Ops. 13.1$ 3.5$

Diluted EPS 0.70$ 0.19$

Sept. 2009 YTD Sept. 2008 YTD

Page 15: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

15

Condensed Balance Sheet

Improved free cash flowInventory management – Reduced

by $40mm from Sep ‘08A/R factoring – Reduced by $68mm

from Sep ‘08

Reduced debt by $119M Retired $32mm balance of convertible bondsIssued $12.3mm in convertible subordinated debentures and $5.4mm in unsecured promissorynotesDebt to total capitalization ratio of

39.0% vs. 52.6% in Sep ‘08

($ in Millions)

Condensed Balance Sheet Sep '09

Current Assets 410.5$ PP&E 63.9 Other Assets 63.3

Total Assets 537.7$

Current Liabilities 186.2$ Debt 110.9 Other Liabilities 67.5 Shareholders Equity 173.1

Total Liabilities and Shareholders' Equity 537.7$

Page 16: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

16

Debt Reduction & Cash Flow

$255

$194

$111

Dec 2007 Dec 2008 3Q 2009

$45

($8)

$142

Dec 2007 Dec 2008 LTM 3Q 2009

Total Debt Total Debt Total Debt Total Debt

Cash Flow from OperationsCash Flow from OperationsCash Flow from OperationsCash Flow from Operations

(US$ in millions)

$97mm of operating cash flow in YTD 3Q 2009 driven by: Improved working capital position

Factoring program with key accounts

$86mm of liquidity as of 3Q 2009 $10mm in cash

$76mm available in revolver

Key AchievementsKey AchievementsKey AchievementsKey Achievements

Page 17: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

17

SMP Capitalization

GE Revolving Credit Facility $90.0 31.7% $66.3 23.4%

15% Convertible Subordinated Debentures 12.3 4.3 12.3 4.3

15% Unsecured Promissory Notes 5.4 1.9 5.4 1.9

Other (Europe 2.5, Other 0.7) 3.2 1.1 3.2 1.1

Total Debt $110.9 39.0% $87.2 30.7%

Book Value of Equity 173.1 61.0% 196.8 69.3%

Total CapitalizationTotal Capitalization $284.0$284.0 100.0100.0%% $284.0$284.0 100.0100.0%%

Debt / LTM EBITDA(a) 2.9x 2.2x

LTM Interest Coverage 4.0x 4.4x

% of Total % of Total

Amount Capitalization Amount Capitalization

As of September 30, 2009(US$ in millions)

Note: Assumes equity offering of 3.0mm shares at offering price of $8.50; 5.00% gross spread and $0.5mm of other fees

(a) LTM Adjusted EBITDA of $38.8mm as of 30-Sep-2009.

Pro Forma

Page 18: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

18

Appendix

Page 19: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

19

2004 2005 2006 2007 2008 LTM 9/09

Earnings from Continuing Operations $(8.9) $(1.8) $9.2 $5.4 $(21.1) $(22.9)

+ Income Taxes (3.6) 1.4 6.5 2.8 (8.1) (13.0)

+ Interest Expense 15.1 18.5 20.9 19.1 13.6 9.8

+ Depreciation & Amortization 19.0 17.4 15.5 15.2 14.7 14.8

== EBITDAEBITDA $21.6$21.6 $35.5$35.5 $52.1$52.1 $42.5$42.5 $(0.9)$(0.9) $(11.3)$(11.3)

+ Loss from Divestiture of Europe TC Business – – 3.2 – – –

- Gain on Sale of Fort Worth Texas Building – – – (0.8) – –

- Gain on Sale of LIC Building – – – – (20.4) (1.0)

- Gain from Repurchase of Bonds – – – – (3.8) (2.3)

- Gain on Sale of GPI Stock – – – – – (2.3)

+ Goodwill and Intangible Impairment Charge 6.4 – – – 39.3 39.3

+ Restructuring & Integration Expenses 11.4 5.3 1.8 10.9 16.9 16.4

== Adjusted EBITDAAdjusted EBITDA $39.4$39.4 $40.8$40.8 $57.1$57.1 $52.6$52.6 $31.1$31.1 $38.8$38.8

Reconciliation of EBITDA

Page 20: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

20

Reconciliation of GAAP and Non-GAAP Measures

($ in thousands, except per share amounts)

EARNINGS FROM CONTINUING OPERATIONS 2009 2008 2009 2008

GAAP EARNINGS FROM CONTINUING OPERATIONS 4,724$ 397$ 11,149 12,972

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) 2,042 1,204 3,871 3,734 GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (1,402) - LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) - - - 882 GAIN FROM SALE OF BUILDING (NET OF TAX) (157) (160) (472) (13,180) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) - (942) (24) (942) NON-GAAP EARNINGS FROM CONTINUING OPERATIONS 6,609$ 499$ 13,122$ 3,466$

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONSGAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS 0.25$ 0.02$ 0.59$ 0.70$ RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) 0.11 0.07 0.21 0.20 GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (0.07) - LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) - - - 0.05 GAIN FROM SALE OF BUILDING (NET OF TAX) (0.01) (0.01) (0.03) (0.71) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) - (0.05) - (0.05)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS 0.35$ 0.03$ 0.70$ 0.19$

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL

ITEMS, WHICH ARE NON-GAAP MEASUREMENTS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING

OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL

OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

NINE MONTHS ENDEDSEPTEMBER 30, SEPTEMBER 30,

(Unaudited)

THREE MONTHS ENDED

Page 21: Standard Motor Products, Inc. 2009 Annual Automotive Aftermarket Symposium November 2 - 4, 2009

Standard Motor Products, Inc.