SECOND QUARTER 2017 EARNINGS CALL //// AUGUST 3, 2017

Transcription

1 FINISHING COMPONENTS SEATING ACOUSTICS SECOND QUARTER 2017 EARNINGS CALL //// AUGUST 3, 2017 Brian Kobylinski, Chief Executive Officer Sarah Lauber, Senior Vice President & Chief Financial Officer Chad Paris, Vice President, Investor Relations

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 2, 2017, 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 SECOND QUARTER 2017 EARNINGS CALL //// PAGE 2

3 AGENDA SECOND QUARTER RESULTS & FINANCIAL OUTLOOK BUSINESS UPDATE CLOSING COMMENTS Q&A JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 3

4 PROGRESS UPDATE Second Quarter Highlights Gross Profit Margin Expanded 70 bps Operating Income Increased 190 bps $14 Million Free Cash Flow Generated Net Debt To EBITDA Leverage Reduced 0.5X First Wave Of Self-Help Projects On-Track, Next Wave Of Initiatives Actioned Full Year 2017 Acoustics European Operations Sale In Third Quarter EBITDA Guidance For Ongoing Operations Reaffirmed Continued Operational Improvement & Commercial Wins JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 4

5 SECOND QUARTER 2017 FINANCIAL RESULTS

6 SECOND QUARTER RESULTS Financial Results Summary ($Ms) Q Q Change Net Sales $ $ $ (13.2) -7.1% Operating Profit $ % $ % $ bps Adjusted EBITDA $ % $ % $ bps NET SALES OF $172.5 MILLION, DECREASED 7.1% Organic Sales Decline Of 3.7% Non-Core Business Exit Negative Impact 2.1% Foreign Currency Translation Negatively Impacted Sales 1.3% OPERATING PROFIT OF $9.9 MILLION INCREASED $2.8 MILLION ADJUSTED EBITDA MARGINS OF 11.9%, INCREASED 180 BPS Realized $2.4M Cost Reduction Savings Continuous Improvement Projects And Plant Efficiencies Positively Contributed Lower SG&A Expenses JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 6

7 SECOND QUARTER SALES RESULTS Finishing Components Seating Acoustics Jason Consolidated Net Sales ($Ms): Q $53.1 $24.6 $44.7 $63.2 $185.7 Q $49.8 $21.7 $44.9 $56.1 $172.5 Change ($3.4) ($2.9) $0.2 ($7.1) ($13.2) Growth as reported -6.4% -11.9% 0.5% -11.3% -7.1% Organic sales growth -0.1% -2.0% 1.0% -11.0% -3.7% Currency impact -3.7% ---% -0.5% -0.3% -1.3% Divestiture & Non-Core exit -2.6% -9.9% ---% ---% -2.1% Finishing Organic Sales Decline Of 0.1% Driven By Exit Of Low Margin Customers And Products Offset By Strength In Industrial, Non-Core Exit Of 2.6% From Brazil Location Components Organic Sales Decline Of 2.0% Due To Expected Declines In Railcar Products, Partially Offset With Smart Meter Volume Growth. Non-Core Exit of 9.9% From Assembled Products Seating Organic Sales Increase Of 1.0% Driven By Improved Pricing And Gains In Heavy Industry And Power Sports, Offset By Declines In Heavy Motorcycle And Turf Care Acoustics Organic Sales Decline Of 11.0% Due To Weakening Light Vehicle Demand JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 7

8 SECOND QUARTER ADJUSTED EBITDA RESULTS Q Q Change Adjusted EBITDA ($Ms) % of % of $ Sales $ Sales $ Bps Finishing $ % $ % ($0.3) 30 Components % % (0.9) (220) Seating % % Acoustics % % Corporate (3.1) (4.6) Jason Consolidated $ % $ % $ Finishing Adjusted EBITDA Margin Improvement From Brazil Exit, SG&A Cost Reductions And 80/20 Initiatives Components Adjusted EBITDA Decline On Lower Rail Volumes, Lower Labor Productivity And Increased Steel Prices Seating Adjusted EBITDA Increase On Continuous Improvement Initiatives and SG&A Spend Controls Acoustics Adjusted EBITDA Increase On Reduced Material Spend And Labor Efficiencies Partially Offset By Lower Volumes Corporate Expenses Decreased $1.5M On Lower Professional & Consulting Spend Margin Expansion In Three Businesses JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 8

9 FINANCIAL POSITION LIQUIDITY & DEBT FREE CASH FLOW (in millions) L i q u i d i t y $120 $100 $80 $60 $40 $20 $0 2Q16 3Q16 4Q16 1Q17 2Q17 $450 $440 $430 $420 $410 $400 Cash Revolver Availability Debt D e b t (in millions) Net Debt To Adj. EBITDA 5.7X As Of 2Q17 Key Drivers: Sale Leaseback Net Proceeds - $5.6M 2 nd Lien Debt Repurchase of $8M for $6.1M Free Cash Flow Generation - $14.2M Improved Leverage On Debt Reduction & Free Cash Flow Generation *See Appendix for calculation of Net Debt to Adjusted EBITDA. JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 9

10 FISCAL 2017 GUIDANCE PREVIOUS GUIDANCE 2017 CURRENT GUIDANCE Revenue (in millions): $705.5 $650 - $670 $625 - $640 Adjusted EBITDA (in millions): $ % $64 - $67 ~10% $63 - $66 ~10% Cap Ex As % Of Sales: 2.8% ~2.8% ~2.6% Free Cash Flow (in millions): $11.6 $9 - $13 $9 - $13 Net Debt to Adjusted EBITDA: 6.2X 5.7X 6.1X 5.6X 6.0X Adjusted 2017 Guidance For Planned Bavaria Divestiture JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 10

11 BUSINESS UPDATE

12 END MARKET DEMAND & ORGANIC GROWTH Key End Markets General Industrial Heavy Fabrication Oil & Gas Construction Auto Heavy Industry Equipment Rail Turfcare Motorcycle & Powersports Finishing Components Seating Acoustics Organic Growth % 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q 4Q YTD Finishing (1.8)% (1.5)% (5.1)% (7.3)% (4.1)% 1.9% (0.1)% 1.5% Components (13.7) (25.3) (16.8) (14.2) (17.7) (8.0) (2.0) (5.1) Seating 2.1 (13.7) (12.5) (11.8) (8.5) (8.1) 1.0 (3.9) Acoustics (7.1) (11.0) (9.0) Jason 4.1% (4.9)% (0.2)% (5.8)% (1.7)% (5.1)% (3.7)% (4.3)% *Organic sales refers to year over year change in net sales from existing operations excluding acquisitions, divestitures and exited non-core businesses, and the impact of foreign currency translation. JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 12

13 ACTIONS PROGRESS UPDATE FINISHING EXITED BRAZIL COMPLETE FACILITY SALE LEASEBACK o Monetizing Select Real Estate Assets To Accelerate Net Debt Reduction o Executed Libertyville Site With $5.6M Of Net Proceeds COMPLETE COMPONENTS FACILITY CLOSURE o Consolidating Two Plants In Libertyville, IL o Annual Cost Savings Of $1.3M, ~$1.5M Of Restructuring Costs IN PROCESS / ON TRACK 4Q17 ACOUSTICS SALE OF EUROPEAN OPERATIONS o Exits Approximately $30M Of Non-Core Revenue, Dilutive Margins o Sale Price Of ~$10M o Cash Proceeds Of ~$7M, Net Of Debt Payoff And Transaction Costs PLANNED SALE IN 3Q17 Increased Level Of Execution JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 13

14 NEW LEAN ACTIONS FINISHING FACILITY CLOSURE o Consolidating Richmond, VA Plant Into Existing Richmond, IN Facility o Annual Cost Savings Of $0.6M, ~$1.7M Of Restructuring Costs o Restructuring Funded By Expected Proceeds From Facility Sale OFFSITE FACILITY CLOSURES o Jackson, MI Warehouse (Seating) o Burgwald, Germany Warehouse (Finishing) AUTOMATION PROJECTS o Finishing Core Production Lines o Components Flow Lines o Acoustics Assembly Testing JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 14

15 COST REDUCTION AND MARGIN EXPANSION PROGRAM SELF HELP PROGRAMS SG&A RESTRUCTURING o Actions Exceeded Target 2017 EBITDA Impact Annual Savings Achieved Annual Savings Target Over 3 yrs $3M $11M $10M OPERATIONS OPTIMIZATION o Supply Chain Project Target Impacted By Lower Volumes o Footprint Rationalization Buffalo Grove Facility Closed In 4Q16 Libertyville Facility Consolidation 4Q17 Richmond, VA Facility Closure in 4Q17 Targeting Additional Footprint Actions In 2017 $8M $11M $15M $11M $22M $25M PORTFOLIO OPTIMIZATION OPTIMIZE PRODUCT LINES, CUSTOMERS & LOCATIONS SKU REDUCTION IN FINISHING AND SEATING EXITING LOW MARGIN BUSINESS AND CUSTOMERS EXITED FINISHING BRAZIL IN 1Q17 ACOUSTICS SALE OF EUROPEAN OPERATIONS IN 3Q17 JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 15

16 TARGETED GROWTH INITIATIVES Finishing Geography Middle East, APAC, Mexico Vertical Markets Oil & Gas, Heavy Fab, Automotive, Process New Product Development Components Geography Core Product Refreshment True, Differentiated Products/Systems Mexico, Southern US Market Diversification Safety Grating, Security Fencing Seating Understand The End-User Better Than The OEM Does Platform Placement Aftermarket Support Globalization Of Customers Acoustics Build Bridge From Old To New Platforms Diversifying Customer Base Continued Market Share Gains Wheel Liner, Underbody Panels JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 16

17 FINISHING GROWTH ACTIVITY Dronco Integration Into Osborn Geography Vertical Markets New Product Development 17 JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE

18 CLOSING COMMENTS 2017 PRIORITIES 2Q UPDATE Leverage Reduction One Half Turn Reduction Execution On Restructuring Actions Improved Project Execution Improving Operations Through LEAN Profit Growth Despite Challenging Markets Commercial Activity Driving Diversification & Future Growth Planting The Seeds Free Cash Flow And Working Capital Reduction Driving Leverage Reduction We Have Made Progress, But More Work Remains JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 18

19 APPENDIX

20 DEBT SUMMARY (in millions) Non-U.S. Debt $29 DEBT STRUCTURE Maturity COVENANTS 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 U.S. Revolver, Strong Liquidity With No Expectation To Use Revolver First Lien Term Loan $ % Fixed Effective Interest Rate 7.7% First Lien Leverage Ratio of 3.89x As Of 2Q17 Covenant (if applicable): 2Q x 4Q x 2Q17 Long-Term Maturities With Covenant-Lite Terms *Note the consolidated First lien net leverage ratio under the Company s senior secured credit facilities was 3.89x as of June 30, 2017, 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 SECOND QUARTER 2017 EARNINGS CALL //// PAGE 20

21 ADJUSTED EBITDA RECONCILIATION 2Q17 2Q16 (in millions) Net Income (Loss) $(3.5) $(2.4) Tax provision (benefit) Interest expense Depreciation and amortization EBITDA Adjustments: Restructuring Integration and other restructuring costs - - Share-based compensation 0.3 (1.9) Loss (gain) on disposals of fixed assets net Gain on extinguishment of debt (1.5) - Loss on divestitures Total adjustments 6.1 (0.1) Adjusted EBITDA $20.6 $18.8 JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 21

22 ADJUSTED NET INCOME & ADJUSTED EARNINGS PER SHARE 2Q17 2Q16 (in millions, except per share amounts) GAAP Net Income (Loss) $(3.5) $(2.4) Adjustments: Restructuring Integration and other restructuring costs - - Share-based compensation 0.3 (1.9) Loss (gain) on disposal of fixed assets-net Gain on extinguishment of debt (1.5) - Loss on divestitures Tax effect on adjustments (0.6) 0.6 Adjusted Net Income (Loss) $2.0 $(1.9) Diluted weighted average number of common shares outstanding (non-gaap) GAAP Net (loss) income per share available to Common shareholders of Jason Industries $(0.17) $(0.13) Adjustments net of income taxes: Restructuring Integration and other restructuring costs - - Share-based compensation 0.02 (0.04) Loss (gain) on disposal of fixed assets-net - - Gain on extinguishment of debt (0.04) - Loss on divestitures GAAP to non-gaap impact per share Adjusted (loss) earnings per share $0.07 $(0.07) JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 22

23 NET DEBT TO ADJUSTED EBITDA June 30, 2017 (in millions) Current and long-term debt* $ Add: Debt discounts and deferred financing costs 10.9 Less: Cash and cash equivalents* (55.0) Net Debt $ Adjusted EBITDA 3Q Q Q Q TTM Adjusted EBITDA 66.2 Net Debt to Adjusted EBITDA 5.7x *Includes cash ($0.03M) and debt ($2.1M) associated with the Acoustics Europe sale classified as assets and liabilities held-for-sale, respectively JASON INDUSTRIES SECOND QUARTER 2017 EARNINGS CALL //// PAGE 23

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