THIRD QUARTER 2018 EARNINGS CALL //// OCTOBER 30, 2018

Transcription

1 ACOUSTICS THIRD QUARTER 2018 EARNINGS CALL //// OCTOBER 30, 2018 Brian Kobylinski, Chief Executive Officer Chad Paris, Chief Financial Officer Rachel Zabkowicz, 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 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 THIRD QUARTER 2018 EARNINGS CALL //// PAGE 2

3 Q RESULTS Revenue Adj. EBITDA Free Cash Flow Net Leverage $145.3M $15.2M, 10.5% $6.2M 5.1x 4.3% organic decline 10 bps expansion $5.7M 0.1x vs 2Q18 0.4x vs 4Q17 Organic sales decline in line with expectations Organic growth in Seating and Finishing segments Vehicle mix shift and platforms sunsets in Acoustics, volume softness in Components Continued adjusted EBITDA margin expansion Free cash flow impacted by timing of working capital changes, year-to-date in line with expectations Footprint consolidation initiatives progressing Acoustics Richmond operations consolidation complete Seating UK facility consolidation and sale on schedule for Q4 completion Third Quarter In Line With Expectations On Track To Deliver Full Year JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 3

4 THIRD QUARTER RESULTS ($Ms) Financial Results Summary Q Q Change Net Sales $ $ $ (10.1) (6.5)% Operating Income $ 2.9 $ 4.7 $ (1.8) % of net sales 2.0% 3.0% (100) bps Adjusted EBITDA $ 15.2 $ 16.1 $ (0.9) % of net sales 10.5% 10.4% 10 bps NET SALES OF $145.3 MILLION, DECREASED 6.5% Organic sales decline of 4.3% Divestiture and non-core business exit negative impact 1.7%, includes Acoustics Europe sale and smart meter products in Components Foreign currency translation negatively impacted sales 0.5% OPERATING INCOME OF $2.9 MILLION DECREASED $1.8 MILLION ADJUSTED EBITDA MARGINS OF 10.5%, INCREASED 10 BPS Acoustics Europe divestiture impact $0.6 million Continuous improvement projects, plant efficiencies, and pricing positively contributed, material and freight headwinds Realized $0.5M cost reduction savings JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 4

5 THIRD QUARTER SALES RESULTS Finishing Components Seating Acoustics Jason Consolidated Net Sales ($Ms): Q $51.1 $19.9 $33.0 $51.5 $155.4 Q $51.0 $21.4 $34.6 $38.3 $145.3 Change ($0.0) $1.5 $1.6 ($13.2) ($10.1) Growth as reported (0.1)% 7.3% 5.0% (25.6)% (6.5)% Organic sales growth 1.2% (9.4)% 5.0% (14.1)% (4.3)% Currency impact (1.3)% ---% ---% ---% (0.5)% Divestiture & Non-Core exit ---% 16.7% ---% (11.5)% (1.7)% Finishing organic sales growth of 1.2% driven by U.S. industrial markets growth and targeted growth initiatives Components organic sales decline of 9.4% primarily due to lower volumes on rail and expanded metal products Seating organic sales growth of 5.0% driven by higher volumes in construction, agriculture, and material handling markets, offset by declines in motorcycles Acoustics organic sales decline of 14.1% due to a net decrease in vehicle platforms JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 5

6 THIRD QUARTER ADJUSTED EBITDA RESULTS Q Q Change Adjusted EBITDA ($Ms) % of % of $ Sales $ Sales $ Bps Finishing $ % $ % $ Components % % 0.1 (30) Seating % % Acoustics % % (2.2) (120) Corporate (3.0) (3.1) 0.1 Jason Consolidated $ % $ % ($0.9) 10 Finishing Adjusted EBITDA margin improvement from pricing, impacted by freight and material inflation and investments in additional selling resources Components Adjusted EBITDA essentially flat on strategic pricing actions and headcount reductions offset by steel inflation Seating Adjusted EBITDA margin improvement on continuous improvement projects, manufacturing efficiencies, and pricing Acoustics Adjusted EBITDA decline on lower volumes and material inflation, partially offset by labor and material efficiencies Corporate expenses decreased $0.1M, essentially flat to last year Seventh Consecutive Quarter Of Margin Expansion JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 6

7 Liquidity FINANCIAL POSITION LIQUIDITY, DEBT & LEVERAGE FREE CASH FLOW (in millions) $120 $100 $80 $60 $40 Cash Revolver Availability Debt $450 $440 $430 $420 Debt 1Q18 2Q18 3Q18 YTD18 YTD17 Variance Adjusted EBITDA $ 19.7 $ 21.4 $ 15.2 $ 56.3 $ 55.3 $ 1.0 Cash Interest/Taxes (8.8) (9.8) (8.4) (27.1) (27.8) 0.7 Cash Restructuring - Net (1.5) (2.3) (1.7) (5.4) (4.2) (1.2) Changes In Working Capital (5.7) (1.9) 3.8 (3.8) 1.2 (5.0) Operating Cash Flow $ 3.8 $ 7.3 $ 8.9 $ 20.0 $ 24.5 $ (4.5) Less: Capital Expenditures (3.6) (3.3) (2.7) $ (9.6) (10.4) 0.8 Free Cash Flow $ 0.2 $ 4.0 $ 6.2 $ 10.4 $ 14.1 $ (3.7) $20 $0 Net Debt to Adj. EBITDA 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 5.8X 6.2x 6.2x 5.7x 5.7x 5.5x 5.3x 5.2x 5.1x Net Debt To Adj. EBITDA 5.1X As Of 3Q18 $410 $400 Free Cash Flow: Cash restructuring includes $1.5M YTD of Seating supplier force majeure costs, with insurance recovery expected in 4Q18 Working capital reductions expected in 4Q18 Moody s credit rating upgraded to B3 YTD net debt repayments of $6.8M 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 THIRD QUARTER 2018 EARNINGS CALL //// PAGE 7

8 FISCAL 2018 GUIDANCE 2017 ACTUALS 2017 EXCLUDING ACOUSTICS EUROPE 2018 GUIDANCE Revenue (in millions): $648.6 $625.7 $600 - $615 Adjusted EBITDA (in millions): $ % $ % $66 - $70 ~11% Cap Ex As % Of Sales: 2.4% 2.5% ~2.6% Free Cash Flow (in millions): $14.2 $14.2 $13 - $17 Net Debt to Adjusted EBITDA: 5.5X 5.5X 4.9X 5.3X Reaffirming 2018 Guidance JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 8

9 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 $3.3M 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 THIRD QUARTER 2018 EARNINGS CALL //// PAGE 9

10 SEATING Quarterly organic sales growth and margin expansion Q1 Q2 Q3 Q4 Q1 Q2 Q3 Sales $ 47.4 $ 44.9 $ 33.0 $ 33.9 $ 47.0 $ 45.0 $ 34.6 Core growth % -8.1% 1.0% 1.8% 5.1% -1.6% -0.3% 5.0% Adj. EBITDA % 11.7% 13.1% 8.0% 6.8% 12.6% 15.3% 10.4% bps +/(-) (110) Seating solution manufacturer possessing nearly 100-year history and similarly long customer relationships with blue-chip customers Diverse applications, industries, and channels provide multiple avenues for growth Competitive advantage is solving customer problems and rapidly progressing from design concept to production Improved Operational Performance, Increased Commercial Activity JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 10

11 ENGAGED WORKFORCE Continued investment in talent Upgraded team comprised of longtenured performers and newly recruited expertise Increasing engagement with our customers, in our plants and in our communities Improved And Expanded Organizational Capabilities JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 11

12 CLOSING COMMENTS Third quarter performance in line with expectations Operational improvement focus remains Proactive customer relationships Continued focus on execution Remain In Position to Deliver 2018 Guidance JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 12

13 APPENDIX

14 DEBT SUMMARY DEBT STRUCTURE COVENANTS (in millions) Non-U.S. Debt $403 $20 Maturity Springing first lien net 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 net leverage ratio of 3.68x as of 3Q18 First Lien Term Loan $ % Fixed Effective Interest Rate ~ 7.0% Current covenant 4.50x (if applicable) 3Q18 Long-Term Maturities With Covenant-Lite Terms *Note the consolidated First lien net leverage ratio under the Company s senior secured credit facilities was 3.68x as of September 28, 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 THIRD QUARTER 2018 EARNINGS CALL //// PAGE 14

15 ADJUSTED EBITDA RECONCILIATION 3Q18 3Q17 (in millions) Net Income (Loss) $(5.5) $(1.6) Interest expense Tax provision (benefit) 0.6 (1.6) Depreciation and amortization EBITDA Adjustments: Restructuring Share-based compensation (Gain) loss on disposals of fixed assets net (0.1) (0.6) (Gain) loss on extinguishment of debt - (0.8) Loss on divestitures Total adjustments Adjusted EBITDA $15.2 $16.1 JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 15

16 ADJUSTED NET INCOME & ADJUSTED EARNINGS PER SHARE 3Q18 3Q17 (in millions, except per share amounts) GAAP Net Income (Loss) $(5.5) $(1.6) Adjustments: Restructuring Share-based compensation (Gain) loss on disposal of fixed assets-net (0.1) (0.6) (Gain) loss on extinguishment of debt - (0.8) Loss on divestitures Tax effect on adjustments (0.4) (0.2) Tax (benefit) provision 0.2 Adjusted Net Income (Loss) $(3.7) $(0.4) Diluted weighted average number of common shares outstanding (non-gaap) GAAP Net (loss) income per share available to Common shareholders of Jason Industries $(0.23) $(0.10) Adjustments net of income taxes: Restructuring Share-based compensation (Gain) loss on disposal of fixed assets-net - (0.01) (Gain) loss on extinguishment of debt - (0.02) Loss on divestitures Tax (benefit) provision GAAP to non-gaap impact per share Adjusted (loss) earnings per share $(0.12) $(0.01) JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 16

17 NET DEBT TO ADJUSTED EBITDA September 28, 2018 (in millions) Current and long-term debt $ Add: Debt discounts and deferred financing costs 7.3 Less: Cash and cash equivalents (51.4) Net Debt $ Adjusted EBITDA 4Q17 $ Q Q Q TTM Adjusted EBITDA $ 68.8 Net Debt to Adjusted EBITDA 5.1x JASON INDUSTRIES THIRD QUARTER 2018 EARNINGS CALL //// PAGE 17

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