DEUTSCHE BANK LEVERAGED FINANCE CONFERENCE 2018

Transcription

1 ACOUSTICS DEUTSCHE BANK LEVERAGED FINANCE CONFERENCE 2018 Brian Kobylinski, Chief Executive Officer Chad Paris, Chief Financial Officer John Hengel, Vice President, Finance

2 DISCLAIMER FORWARD LOOKING STATEMENTS This presentation includes forward looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of Forward-looking statements may be identified by the use of words such as anticipate, believe, expect, estimate, plan, outlook, and project and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward looking statements with respect to revenues, earnings, financial information, performance, strategies, prospects and other aspects of the businesses of Jason Industries, Inc. (the Company ) are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward looking statements. The forward looking statements contained in this presentation are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. The forward-looking statements are not guarantees of performance or results, as they involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward looking statements are based on reasonable assumptions, many factors could affect our actual results and cause them to differ materially from those anticipated in the forward-looking statements. More information on potential factors that could affect the Company s financial condition and operating results is included in Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in the Company s Annual Report on Form 10-K filed on March 1, 2018, and in the Company s other filings with the Securities and Exchange Commission. Any forward looking statement made by the Company in this presentation speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. NON-GAAP AND OTHER COMPANY INFORMATION Included in this presentation are certain non-gaap financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. Because the Company s calculations of these measures may differ from similar measures used by other companies, you should be careful when comparing the Company s non-gaap financial measures to those of other companies. A reconciliation of non-gaap financial measures to GAAP financial measures is included in an appendix to this presentation. JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 2

3 JASON INVESTMENT HIGHLIGHTS STRONG FUNDAMENTAL BUSINESS Diversified end market exposure Leader in target markets, scale versus competition Global manufacturing footprint, serving longstanding customer base Free cash flow generation MULTIPLE PATHS TO VALUE CREATION EBITDA growth Margin expansion Targeted sales growth Global cost reduction program generating $25M in annual savings Operational improvements Footprint optimization five facilities consolidated, more to come Focusing on the core, exiting noncore businesses, product lines, and customers Pricing opportunities Increasing intimacy with end-users to improve product portfolio positioning New product development through specific initiatives and investment JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 3

4 OUR SIMPLIFIED OPERATING MODEL Plant growth seeds Improve operations Generate cash De-lever balance sheet Simplification Prioritization Effort Execution Decisiveness Fund selfhelp projects JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 4

5 JASON OVERVIEW KEY COMPANY FACTS GEOGRAPHIC FOOTPRINT Employees ~4,000 Headquarters Milwaukee, WI 2017 Revenue $648.8 million 2017 Adjusted EBITDA $67.8 million Founded 1985 Listed on NASDAQ (JASN, JASNW) July 2014 Manufacturing 31 Sites in 12 Countries FINANCIAL PROFILE NET SALES ($ in Millions) ADJUSTED EBITDA ($ in Millions) $800 $700 $600 $500 $400 $702.5 $708.4 $705.5 $648.8 $600 - $615 ʼ14 ʼ15 ʼ16 ʼ17 ʼ18E $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $77.8 $81.2 $64.2 $67.8 $66 - $ % 11.5% 10.4% ~11% 9.1% ʼ14 ʼ15 ʼ16 ʼ17 ʼ18E JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 5

6 SEGMENT OVERVIEW SEGMENT KEY HIGHLIGHTS BRANDS TTM REVENUE % OF JASON TTM REVENUE TTM ADJUSTED EBITDA % FINISHING World s leading producer of industrial brushes, buffs and polishing compounds Used for surface preparation, cutting, finishing, polishing, and sealing Only global provider supplying full product portfolio range 85% consumable, high recurring revenue $210M 33% 14% COMPONENTS Expanded and perforated metal solutions Used in filter products, safety grating, security fencing, railcars, and other industrial equipment Industry-leading engineering, coupled with customized components and individualized solutions $87M 14% 13% JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 6

7 SEGMENT OVERVIEW SEGMENT KEY HIGHLIGHTS BRANDS TTM REVENUE % OF JASON TTM REVENUE TTM ADJUSTED EBITDA % Leading seating systems provider for niche applications Designs and manufactures comfort solutions for heavyweight motorcycles, turf care, heavy industry, and powersports Market-leading industrial design and rapid prototyping capability SEATING 90% $159M 25% 11% ACOUSTICS Leading manufacturer of lightweight molded fiber panels and accessories Provide content for over half of light vehicle platforms in North America Plastic to fiber technology conversion expertise $181M 28% 14% JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 7

8 BUILDING THE BRAND JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 8

9 DEVELOPING UNIQUE SOLUTIONS Common design language Rapid prototype to production capability Supports 10 models for compact, mid-sized, and full-sized tractor platforms 3-year agreement, significant volumes 4Q17 launch JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 9

10 LEAN TRANSFORMATION Safety Operations Before After Assembly cells Inventory kan ban Lost-time incident rate Footprint simplification Concepts, Tools And Execution Progressing JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 10

11 COST REDUCTION AND MARGIN EXPANSION PROGRAM SELF HELP PROGRAMS SG&A RESTRUCTURING Actions exceeded target EBITDA Impact Annual Savings Achieved Annual Savings Target Over 3 Years $8M $3M $11M $10M OPERATIONS OPTIMIZATION Supply chain project Footprint rationalization $2M $7M $3M $1M $13M $15M $10M $10M $3M $1M $24M $25M ACTIONS PROGRESS UPDATE FINISHING BRAZIL EXIT FACILITY SALE LEASEBACK COMPLETE COMPLETE UK FACILITY CLOSURE Consolidating Nuneaton, U.K. plant into existing facilities Annual cost savings of $0.1M, ~$0.7M of restructuring costs to be funded via expected net proceeds of $1.8M from facility sale IN PROCESS / ON TRACK 4Q18 ACOUSTICS SALE OF EUROPEAN OPERATIONS COMPLETE ADDITIONAL ACTIONS PENDING FINISHING VIRGINIA FACILITY CLOSURE COMPLETE COMPONENTS FACILITY CLOSURE COMPLETE ACOUSTICS FACILITY CONSOLIDATION COMPLETE JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 11

12 FINANCIAL POSITION LIQUIDITY, DEBT & LEVERAGE FREE CASH FLOW (in millions) L i q u i d i t y $120 $100 $80 $60 $40 $20 Cash Revolver Availability Debt $450 $440 $430 $420 $410 D e b t $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $2.6 $11.7 $14.2 $13 - $17 $0 Net Debt to Adj. EBITDA 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 5.6X 5.8x 6.2x 6.2x 5.7x 5.7x 5.5x 5.3x 5.2x $400 $ E Net Debt To Adj. EBITDA 5.2X As Of 2Q18 Moody s credit rating upgraded to B3 Revolver extended to June 2020 Debt repayments of $5.8M, including excess cash flow payment of $2.5M Focus On Debt Reduction & Free Cash Flow Generation *See Appendix for calculation of Net Debt to Adjusted EBITDA. JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 12

13 DEBT SUMMARY DEBT STRUCTURE COVENANTS (in millions) Non-U.S. Debt $404 $20 Maturity Springing first lien leverage ratio covenant only applicable when $10M borrowings on U.S. Revolver at quarter end Second Lien Term Loan $ % Variable Zero borrowings outstanding on U.S. revolver, strong liquidity with no expectation to use revolver First lien leverage ratio of 3.69x as of 2Q18 First Lien Term Loan $ % Fixed Effective Interest Rate ~ 7.0% Current covenant 4.50x (if applicable) 2Q18 Long-Term Maturities With Covenant-Lite Terms *Note the consolidated First lien net leverage ratio under the Company s senior secured credit facilities was 3.69x as of June 29, 2018, and excludes second lien term loan borrowings from net debt. See Form 10-Q for further discussion of the Company s senior secured credit facilities. JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 13

14 CAPITAL STRUCTURE (in millions) As of x LTM Adj. 6/29/18 % of EV EBITDA Cash & cash equivalents $ $34.3m revolver $ % 0.0x 1st Lien Term Loan $ % 4.3x Foreign Debt $ % 0.3x Capital lease obligations $ % 0.0x 1st Lien Debt $ % 4.6x Net 1st Lien Debt $ % 3.9x 2nd Lien Term Loan $ % 1.3x Total Debt $ % 5.9x Total Net Debt $ % 5.2x Market value of $3.40 $ % Market value of preferred $3.40 $ % Total equity market value $ % 1.6x Total market capitalization / EV $ % 6.7x LTM Adjusted EBITDA $69.1 Maturities As of June 29, 2018 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 $289 $93 $3 $7 $7 $ Thereafter Current as of 10/1/18 Facility Maturity Amount at Issuance Coupon LIBOR Floor Issue Price Issue Yield Amount Outstanding Corp. Rating Issue Rating Bid Price Simple Yield Years to Maturity 1st Lien TLB 6/30/2021 $310 L % % $294 B3 / B B2 / B % nd Lien TLB 6/30/2022 $110 L % % $90 B3 / B Caa2 / CCC % 3.75 JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 14

15 OUR JOURNEY FORWARD Reduce Debt Leverage Grow Revenues Adjusted EBITDA Free Cash Flow Debt Leverage 2016A 2017A 2018E E $64M $68M $66 - $70M > $75M $12M $14M $13 - $17M ~$20M 6.2x 5.5x x ~ 4.0x Facilities < 25 Improve Operations Targeted Growth Organizational Capability Lean Transformation Self-help Projects Cash Generation Note: Excluding Acoustics Europe divestiture, 2016 and 2017 Adjusted EBITDA were $60M and $66M, respectively JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 15

16 SUMMARY ONGOING EXECUTION Additional restructuring actions Continuous operational improvements via Lean Strong free cash flow with working capital management Leverage reduction through EBITDA growth and lower net debt MULTIPLE PATHS TO VALUE CREATION EBITDA growth Margin expansion Targeted sales growth Global cost reduction program generating $25M in annual savings Operational improvements Footprint optimization five facilities consolidated, more to come Focusing on the core, exiting noncore businesses, product lines, and customers Pricing opportunities Increasing intimacy with end-users to improve product portfolio positioning New product development through specific initiatives and investment Did What We Said We Were Going To Do, Creating Future Value JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 16

17 APPENDIX

18 FINISHING OVERVIEW 2017 REVENUE BY GEOGRAPHY EUROPE 60% U.S. 34% MEXICO 4% ROW 2% GLOBALLY RECOGNIZED BRAND, WITH EXCEPTIONAL REPUTATION FOR QUALITY, PERFORMANCE, AND MARKET LEADERSHIP OVERVIEW Global manufacturer of products used for finishing, preparation, metal removal, sealing, shielding and polishing; manufacturing, distribution and sales facilities in 13 countries #1 manufacturer of industrial brushes, buffs and polishing compounds in the world; 85% of revenue is recurring in nature (consumable) Improving profit margins by consolidating facilities and employing 80/20 techniques to portfolio of products and customers Targeted growth initiatives through new product development, select geographies, and end-user demand generation 2017 REVENUE BY END PRODUCT ADDRESSABLE MARKET (1) $8 BILLION WORLDWIDE $200 $160 $120 FINANCIAL PROFILE $188 $191 $197 $200 14% 14% 14% 12% INDUSTRIAL BRUSHES 44% ABRASIVES 24% INDUSTRIAL BUFFS & COMPOUNDS 22% OTHER 10% $80 $40 $0 ʼ14 ʼ15 ʼ16 ʼ17 Europe Adjusted EBITDA % 55% Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 18

19 COMPONENTS OVERVIEW 2017 REVENUE BY GEOGRAPHY U.S. 100% INNOVATIVE DESIGN AND MANUFACTURING CAPABILITIES TO SUPPORT AND SUSTAIN SUCCESSFUL, LONG-TERM CUSTOMER RELATIONSHIPS OVERVIEW North America s top manufacturer of expanded and perforated metal products, used in filtration, safety grating, security fencing, and other industrial applications Exited dilutive non-core product lines in 2016 and 2017, consolidated footprint Targeting attractive growth markets including infrastructure security, architectural applications, and Mexico 2017 REVENUE BY END PRODUCT FILTRATION 36% RAIL 33% ELECTRIC METERS 21% INDUSTRIAL 8% ADDRESSABLE MARKET (1) $750 MILLION IN NORTH AMERICA // $2 BILLION WORLDWIDE $150 $120 $90 $60 $30 FINANCIAL PROFILE $124 $122 $98 $83 17% 15% 14% 12% OTHER 1% $0 ʼ14 ʼ15 ʼ16 ʼ17 Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 19

20 SEATING OVERVIEW 2017 REVENUE BY GEOGRAPHY U.S. 94% EUROPE 6% 31% 2017 REVENUE BY END PRODUCT TURF EQUIPMENT 33% CONSTRUCTION & AGRIGULTURE 20% LONG-STANDING OEM CUSTOMERS REPRESENTING SOME OF THE WORLD S BEST-KNOWN BRANDS, INCLUDING HARLEY-DAVIDSON, JOHN DEERE, MTD, POLARIS AND HUSQVARNA OVERVIEW Milsco brand maintains the #1 position in the global static seating market and growing presence in suspension seat systems; serving heavyweight motorcycles, turf care, heavy industry and powersports Enhancing operational performance through Lean manufacturing tools Positioned for future growth opportunities in global heavy construction and agriculture markets ADDRESSABLE MARKET (1) $1.5 BILLION WORLDWIDE United States 95% $200 $150 $100 FINANCIAL PROFILE $172 $177 15% $161 $159 11% 10% 10% MOTORCYCLE OEM 15% MATERIAL HANDLING 13% MOTORCYCLE AFTERMARKET 12% UTILITY VEHICLES 7% $50 $0 ʼ14 ʼ15 ʼ16 ʼ17 Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 20

21 ACOUSTICS OVERVIEW 2017 REVENUE BY GEOGRAPHY U.S. 69% MEXICO 20% EUROPE 11% EXTENSIVE DESIGN AND MANUFACTURING EXPERTISE TO PROVIDE CUSTOM ACOUSTICAL SOLUTIONS FOR EACH VEHICLE PLATFORM IT SERVES OVERVIEW North America s largest producer of acoustical fiber insulation and a leading producer of automotive fiber-based molded and die-cut products Products are used in greater than 50% of light vehicles in North America today, including the majority of top platforms Future organic growth will be driven by innovative new products, including lightweight-fiber automotive underbodies and wheel liners 2017 REVENUE BY END PRODUCT* TRUNK SYSTEMS 27% MOLDED INSULATION 27% DIE CUT INSULATION 18% IP CLOSEOUTS 8% CARPET SYSTEMS 8% WHEEL LINERS 3% ADDRESSABLE MARKET (1) $2.5 BILLION IN NORTH AMERICA Wheelhouse/ Cowl Under Bonnet Dashboard Insulators (Interior & Exterior) Hush Panels Door Panel Insulation Underbody Floor/Carpet Underlayment Luggage Compartment $250 $200 $150 $100 $50 FINANCIAL PROFILE $250 $219 $218 $207 13% 13% 11% 9% ENGINE 1% OTHER 8% $0 ʼ14 ʼ15 ʼ16 ʼ17 *North America only Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 21

22 NET DEBT TO ADJUSTED EBITDA June 29, 2018 (in millions) Current and long-term debt $ Add: Debt discounts and deferred financing costs 7.9 Less: Cash and cash equivalents (46.2) Net Debt $ Adjusted EBITDA 3Q17 $ Q Q Q TTM Adjusted EBITDA 69.7 Divestiture TTM Adjusted EBITDA* (0.6) Pro Forma TTM Adjusted EBITDA $ 69.1 Net Debt to Adjusted EBITDA 5.2x *Divestiture TTM Adjusted EBITDA excludes Adjusted EBITDA prior to the date of the divestiture during the trailing twelve months JASON INDUSTRIES DB LEVERAGED FINANCE CONFERENCE 2018 //// PAGE 22

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