DEUTSCHE BANK LEVERAGED FINANCE CONFERENCE 2017

Transcription

1 FINISHING COMPONENTS SEATING ACOUSTICS DEUTSCHE BANK LEVERAGED FINANCE CONFERENCE 2017 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 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 - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 2

3 JASON INVESTMENT HIGHLIGHTS STRONG FUNDAMENTAL BUSINESS Diversified end-market exposure Leader in target markets with significant scale over direct competitors Global manufacturing footprint serving longstanding customer base Free cash flow generation POSITIONING FOR MARGIN EXPANSION AND GROWTH Global Cost Reduction And Margin Expansion Program Generating $25M In Annual Cost Savings Focusing On The Core, Exiting And Divesting Noncore Businesses, Product Lines, And Customers To Drive Margin Expansion Pricing And Operational Improvement Opportunities Leading To Margin Expansion And Earnings Growth Commercial Activity Driving Diversification And Future Growth Increasing Intimacy With End-users To Improve Product Portfolio Positioning JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 3

4 JASON BUSINESS OVERVIEW KEY COMPANY FACTS GEOGRAPHIC FOOTPRINT Employees ~4,300 Headquarters Milwaukee, WI 2016 Revenue $705.5 million 2016 Adjusted EBITDA $64.2 million Founded 1985 Listed on NASDAQ (JASN, JASNW) July 2014 Manufacturing 33 Sites in 12 Countries FINANCIAL PROFILE NET SALES* ($ in Millions) ADJUSTED EBITDA* ($ in Millions) $800 $700 $600 $500 $400 $702.5 $708.4 $705.5 $680.8 $625 - $640 ʼ13 ʼ14 ʼ15 ʼ16 ʼ17E $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $79.8 $77.8 $81.2 $64.2 $63 - $ % 11.1% 11.5% 10.0% 9.1% ʼ13 ʼ14 ʼ15 ʼ16 ʼ17E JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 4

5 SEGMENT OVERVIEW SEGMENT KEY HIGHLIGHTS BRANDS 2016 REVENUE % OF JASON 2016 REVENUE 2016 ADJUSTED EBITDA % FINISHING Used for surface preparation, cutting, finishing, polishing, and sealing World s largest producer of industrial brushes, buffs and buffing compounds Only business supplying global marketplace 85% consumable, high recurring revenue $197M 28% 12% COMPONENTS Products used in filter products, smart utility meters, railcars, and other industrial equipment Industry-leading engineering, coupled with customized components and individualized solutions $98M 14% 86% 15% JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 5

6 SEGMENT OVERVIEW SEGMENT KEY HIGHLIGHTS BRANDS 2016 REVENUE % OF JASON 2016 REVENUE 2016 ADJUSTED EBITDA % SEATING Leading commercial and industrial seat manufacturer Designs and manufactures a broad spectrum of seating systems for multiple vehicle platforms, including heavyweight motorcycles, turf care, heavy industry, and powersports Differentiated patents and IP filings 23% $161M 10% 23% ACOUSTICS North America s largest producer of acoustical fiber insulation Have product on 70% of the light vehicle platforms in North America Innovative solutions provider with brand recognition $250M 35% 11% JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 6

7 ACTIONS PROGRESS UPDATE FINISHING EXITED BRAZIL COMPLETE FACILITY SALE LEASEBACK o Executed Libertyville Site With $5.6M Of Net Proceeds ACOUSTICS SALE OF EUROPEAN OPERATIONS o Exits Approximately $30M Of Non-Core Revenue, Dilutive Margins o Sale Completed in 3Q17, Sale Price Of $10M o Cash Proceeds Of $6.9M, Net Of Debt Payoff And Transaction Costs COMPONENTS FACILITY CLOSURE o Consolidating Two Plants In Libertyville, IL o Annual Cost Savings Of $1.3M, ~$1.5M Of Restructuring Costs COMPLETE COMPLETE IN PROCESS / ON TRACK 4Q17 FINISHING FACILITY CLOSURE o o o Consolidating Richmond, VA Plant Into Existing Richmond, IN Facility Annual Cost Savings Of $0.6M, ~$1.7M Of Restructuring Costs Completed Facility Sale in 3Q17, $2.1M of Net Proceeds Funding Restructuring IN PROCESS / ON TRACK 4Q17 Monetizing Non-Core Assets And Reducing Cost Structure JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 7

8 LEAN ACTIONS FACILITY CLEANUP o Implementing LEAN Tools o Freeing Up Existing Space o Improving Manufacturing Flow 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 - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 8

9 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, Architectural 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 - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 9

10 FINISHING GROWTH ACTIVITY Dronco Integration Into Osborn Geography Vertical Markets New Product Development JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 10

11 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 $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 SALE OF EUROPEAN ACOUSTICS OPERATIONS IN 3Q17 JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 11

12 FINANCIAL POSITION LIQUIDITY & DEBT FREE CASH FLOW (in millions) (in millions) $120 $450 $16 $14 L i q u i d i t y $100 $80 $60 $40 $20 $440 $430 $420 $410 D e b t $12 $10 $8 $6 $4 $2 $0 $0 2Q16 3Q16 4Q16 1Q17 2Q17 $400 -$2 1Q 2Q 2Q YTD Cash Revolver Availability Debt Net Debt To Adj. EBITDA 5.7X As Of 2Q17 Reducing Debt and Leverage, and Improving Liquidity Sale Leaseback Net Proceeds - $5.6M Acoustics Europe Sale Net Proceeds - $6.9M Finishing Facility Sale Net Proceeds - $2.1M 2 nd Lien Debt Repurchases of $20.0M for $16.8M in 2017 Improving Operations Drive Free Cash Flow Free Cash Flow Generation - $14.2M YTD Improved Leverage On Debt Reduction & Free Cash Flow Generation *See Appendix for calculation of Net Debt to Adjusted EBITDA. JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 12

13 DEBT SUMMARY DEBT STRUCTURE COVENANTS (in millions) Non-U.S. Debt $29 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 U.S. Revolver, Strong Liquidity With No Expectation To Use Revolver First Lien Leverage Ratio of 3.89x As Of 2Q17 First Lien Term Loan $ % Fixed Effective Interest Rate 7.7% 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 - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 13

14 PATH FORWARD Investments In Operations Enhancing Plant-Level Management Talent Improving Operations Through LEAN Commercial Activity Driving Diversification & Future Growth Global Cost Reduction And Margin Expansion Program SG&A Restructuring Operations Optimization Supply Chain Footprint Rationalization Portfolio Optimization Non-core geographic and product line exits Capital Expenditures Maintenance Capital Cost Reduction Programs Investments in Automation Growth Projects Debt Reduction Free Cash Flow Growth And Working Capital Reduction Net Debt to Adjusted EBITDA Leverage Target of ~3.0x JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 14

15 CLOSING COMMENTS 2017 EXECUTION Execution On Restructuring Actions Improved Project Execution Improving Operations Through LEAN Profit Growth Despite Challenging Markets Free Cash Flow And Working Capital Reduction Driving Leverage Reduction Leverage Reduction One Half Turn Reduction POSITIONING FOR MARGIN EXPANSION AND GROWTH Global Cost Reduction And Margin Expansion Program Generating $25M In Annual Cost Savings Focusing On The Core, Exiting And Divesting Noncore Businesses, Product Lines, And Customers To Drive Margin Expansion Pricing And Operational Improvement Opportunities Leading To Margin Expansion And Earnings Growth Commercial Activity Driving Diversification And Future Growth Increasing Intimacy With End-users To Improve Product Portfolio Positioning JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 15

16 APPENDIX

17 FINISHING OVERVIEW 2016 REVENUE BY GEOGRAPHY EUROPE 57% U.S. 35% MEXICO 4% ROW 4% FINISHING S WELL-RECOGNIZED BRANDS MAINTAIN EXCEPTIONAL WORLDWIDE REPUTATIONS FOR QUALITY AND MARKET LEADERSHIP OVERVIEW Products used for finishing, preparation, metal removal, sealing, shielding and polishing Manufacturing, distribution and sales facilities in 14 countries 85% of revenue from consumables #1 manufacturer of industrial brushes, buffs and compounds in the world More than 30,000 customers worldwide; only business supplying global marketplace 2016 REVENUE BY END PRODUCT ADDRESSABLE MARKET (1) $8 BILLION WORLDWIDE $200 $160 $120 FINANCIAL PROFILE $188 $191 $197 $180 14% 14% 12% 10% INDUSTRIAL BRUSHES 44% INDUSTRIAL BUFFS & COMPOUNDS 22% ABRASIVES 24% OTHER 10% $80 $40 $0 ʼ13 ʼ14 ʼ15 ʼ16 Europe Adjusted EBITDA % 55% Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 17

18 COMPONENTS OVERVIEW 2016 REVENUE BY GEOGRAPHY U.S. 100% JASON COMPONENTS INNOVATIVE DESIGN AND MANUFACTURING CAPABILITIES HAVE ALLOWED IT TO SUSTAIN SUCCESSFUL, LONG-TERM CUSTOMER RELATIONSHIPS OVERVIEW North America s top independent manufacturer of rail safety products, expanded and perforated metal products and electric meter bases Components offers customized metal components and individualized engineered solutions Product categories are united by a common culture of maintaining industry-leading engineering capabilities 2016 REVENUE BY END PRODUCT ADDRESSABLE MARKET (1) $750 MILLION IN NORTH AMERICA // $2 BILLION WORLDWIDE $150 $120 FINANCIAL PROFILE $131 $124 $122 $98 RAIL 32% FILTRATION 29% ELECTRIC METERS 18% INDUSTRIAL 11% $90 $60 $30 17% 14% 17% 15% OTHER 10% $0 ʼ13 ʼ14 ʼ15 ʼ16 Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 18

19 2016 REVENUE BY GEOGRAPHY U.S. 94% EUROPE 6% 31% 2016 REVENUE BY END PRODUCT TURF EQUIPMENT 35% MOTORCYCLE OEM 18% MOTORCYCLE AFTERMARKET 10% CONSTRUCTION & AGRICULTURE 17% MATERIAL HANDLING 12% UTILITY VEHICLES 8% SEATING OVERVIEW SEATING S LONG-STANDING OEM CUSTOMERS REPRESENT SOME OF THE WORLD S BEST-KNOWN BRANDS, INCLUDING HARLEY-DAVIDSON MOTOR COMPANY, JOHN DEERE, MTD, POLARIS AND HUSQVARNA OVERVIEW Milsco brand maintains the #1 position in the global static seating market Primary product segments include heavyweight motorcycles, turf care, heavy industry and powersports 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 $50 $0 FINANCIAL PROFILE $165 15% 15% $172 $177 $161 11% 10% ʼ13 ʼ14 ʼ15 ʼ16 Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 19

20 ACOUSTICS OVERVIEW 2016 REVENUE BY GEOGRAPHY U.S. 70% MEXICO 17% EUROPE 13% 2016 REVENUE BY END PRODUCT TRUNK SYSTEMS 25% DIE CUT INSULATION 22% MOLDED INSULATION 21% IP CLOSEOUTS 10% CARPET SYSTEMS 8% ENGINE 3% ACOUSTICS HAS DEVELOPED EXTENSIVE DESIGN AND MANUFACTURING EXPERTISE TO PROVIDE CUSTOM ACOUSTICAL SOLUTIONS FOR EACH VEHICLE PLATFORM IT SERVES OVERVIEW Jason s Acoustics segment is 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 approximately 70% of light vehicles in North America today, including the majority of top platforms Jason s Acoustics segment product content per vehicle has increased by 48% since 2010 Future organic growth will be driven by innovative new products, including lightweightfiber automotive underbodies ADDRESSABLE MARKET (1) $2.5 BILLION IN NORTH AMERICA Wheelhouse/ Cowl Under Bonnet Dashboard Insulators (Interior & Exterior) Hush Panels // $12 BILLION WORLDWIDE Door Panel Insulation Underbody Floor/Carpet Underlayment Luggage Compartment $250 $200 $150 $100 $50 FINANCIAL PROFILE $204 11% $219 $218 9% 13% $250 11% WHEEL LINERS 2% OTHER 9% $0 ʼ13 ʼ14 ʼ15 ʼ16 Adjusted EBITDA % Revenue ($ in millions) (1) Management estimates JASON INDUSTRIES - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 20

21 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 - DB LEVERAGED FINANCE CONFERENCE 2017 //// PAGE 21

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