Standard Motor Products, Inc.

Transcription

1 Standard Motor Products, Inc. 23 rd Annual Wall Street Institutional Investor Conference September 6,

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 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. 2

3 Industry and Business Overview 3

4 Standard Motor Products, Inc. 90+ Years in Business Leading Automotive Aftermarket Company Net Sales: 2011: $875mm Employees: 3,400 Globally Locations: 20 Facilities Manufacturing, Distribution and Training Centers throughout North America, Europe, and Asia Key Divisions: Engine Management (70%) Temperature Controls (30%) Number One In Each Key Markets: Automotive Replacement High quality replacement parts for the traditional automotive marketplace, OE/OES, military, high-performance, agricultural, marine, industrial, heavy-equipment markets 4 Stock Symbol: SMP (NYSE)

5 Positive Demographics Trend Impact on Aftermarket Aging Fleet of Vehicles Increases demand for replacement parts Car Dealerships Closing Independent distributors and repair shops will become far better option in many areas 5

6 Positive Demographics Average Age of U.S. Light Vehicles Aging Vehicle Population Millions years old <7 years old '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11E 7+ Car Population Will Grow 3% Annually Next Five Years 6 Sources: U.S. Department of Transportation, AAIA, Ward s Data

7 Positive Demographics Dealership Consolidation 22 7 # U.S. New-Car Dealerships (Thousands) Source: NADA Data '06 '07 '08 '09 '10 '11

8 Strategic Initiatives 8

9 Strategic Initiatives 1) Cost Reduction 2) Strategic Acquisitions 3) Debt : EBITDA Improvement 4) Return to Shareholders 9

10 Cost Reduction Low Cost Manufacturing 49% 56% 56% 38% 21% 27% 28% % production labor hours in low cost facilities (Mexico and Poland) 10 Note: Prior years restated to exclude Europe

11 Cost Reduction 34% Low Cost Purchasing 52% 49% 47% 42% 38% 56% % purchased from low cost suppliers Hong Kong Purchasing Office Opened October

12 Strategic Acquisitions Criteria Clearly Defined Benefits Demonstrable and Measurable Synergies Minimal Risk 12

13 Strategic Acquisitions BLD Engine Control Business $27mm Acquisition, Closing Date 4/25/11 BLD/Novo - $18mm Revenue: Fuel Pressure Regulators, Air By-Pass Valves, Idle Air Controls, OE and Aftermarket PCV Valves, etc. Locations: Holland, Michigan and Ocala, Florida Customers - SMP $7mm, Third Party $11mm Benefits Vertical Integration Basic Manufacturer in Key Product Areas Relocate Product Lines to Reynosa for Additional Savings Accretive to Earnings Year One 13

14 Strategic Acquisitions Forecast Trading Corporation $44mm Acquisition, Closing Date 10/25/11 Business - $31mm Revenue: Engine Management Products Including Ignition Coils, Ignition Modules, Switches and Sensors and Filters Location: Ft. Lauderdale, Florida Customers - Other Manufacturers, Traditional and Retail Aftermarket Channels Benefits Key Player in Value Line Engine Management Products Potential for Additional Synergies Accretive to Earnings Year One 14

15 Strategic Acquisitions CompressorWorks $37mm Acquisition, Closing Date 4/30/12 Business - $60mm Revenue: New Compressors for the Automotive Aftermarket, Brands Include CompressorWorks, Cold Power and Torqflo Location: Dallas, Texas Customers Traditional and Retail Market Channels Benefits Basic Manufacturer of New Compressors Excellent Customer List Savings in Manufacturing Costs and SG&A Accretive to Earnings Year One 15

16 Debt : EBITDA Improvement Total Debt Total Debt : EBITDA Comparison * EBITDA (Millions) (Millions) Total Debt EBITDA Ratios TTM June :1 6:1 2:1 1:1 1:1 1.3: * Reconciliation of GAAP and Non-GAAP Measures in Appendix

17 Improved Returns to Shareholders Dividend Increase Quarterly Dividend $0.10 $0.08 $0.06 $0.09 $0.09 $0.07 $0.05 $0.04 $0.02 $0.00 Suspended Long Range Target: 1/3 of EPS Treasury Stock Buyback Program 703,027 Shares Repurchased from Sept 2011 thru May 2012 Total Cost $4.1mm $5.0mm 2012 = $9.1mm Average Share Price $

18 2011 Results 18

19 4 Year Performance Measures Consolidated Net Sales $880.0 $ % Gross Margin 26.2% $840.0 $800.0 $760.0 $775.2 $735.4 $ % 25.5% 25.0% 24.5% 24.0% 23.5% 23.8% 24.1% 25.6% $720.0 Full Year (Millions) EBITDA (w/o Special Items) $80.0 $ % Full Year Diluted EPS (w/o Special Items) $1.65 $1.57 $70.0 $60.0 $ $1.35 $1.05 $0.75 $0.70 $ $50.0 $40.0 $30.0 $31.1 $46.1 Full Year (Millions) $0.45 $0.15 -$0.15 ($0.11) Full Year

20 Substantial Margin Improvement Target Target Engine Management Gross Margin % 23.3% 24.7% 25.0% 25.6% 27-28% Temperature Control Gross Margin % 19.3% 19.7% 23.1% 23.5% 23-24% 20

21 2011 Income Statement Non - GAAP ($ in millions) FY 2011 FY 2010 Amount % of Sales Amount % of Sales Net Sales $ % $ % Gross Profit % % SG&A Expenses % % Operating Profit % % Other Income/(Loss) Interest Expense Income Taxes Earnings from Continuing Ops. $ 36.1 $ 24.2 Diluted Earnings Per Share: Continuing Operations $ 1.57 $ 1.07 Diluted Shares (000's) 23,228 22,634 21

22 June 2012 YTD Results 22

23 June YTD Performance Measures Consolidated Net Sales $500.0 $450.0 $400.0 $350.0 $300.0 $464.2 $410.4 $369.7 $ % Gross Margin 24.9% 25.0% 24.0% 23.6% 23.0% 22.0% 21.0% 25.1% 25.8% $250.0 June YTD (Millions) 20.0% June YTD EBITDA (w/o Special Items) $45.0 $40.0 $39.5 $39.8 $35.0 $30.5 $30.0 $25.0 $22.4 $ Diluted EPS (w/o Special Items) $1.00 $0.90 $0.80 $0.80 $0.82 $0.70 $0.60 $0.52 $0.50 $0.40 $ $15.0 $ $10.0 June YTD $0.20 June YTD

24 June 2012 YTD Income Statement Non - GAAP June 2012 YTD June 2011 YTD Amount % of Sales Amount % of Sales Net Sales $ % $ % Gross Profit % % SG&A Expenses % % Operating Profit % % Other Income/(Loss) (0.6) 0.5 Interest Expense Income Taxes Earnings from Continuing Ops. $ 19.0 $ 18.5 Diluted Earnings Per Share: Continuing Operations $ 0.82 $ 0.80 Diluted Shares (000's) 23,112 23,438 24

25 Condensed Balance Sheet Actual June YTD 2012, 2011 ($ in millions) Dollars Ratios Cash and Equivalents $ 9.2 $ 13.1 Accounts Receivable/DSO Inventory/Turns Other Assets Total Assets $ $ Current Liabilities $ $ Total Debt/Debt to Cap Ratio % 22.3% Other Liabilities Total Liabilities $ $ Equity/Debt to Equity Ratio Total Liabilities and Equity $ $

26 Condensed Statement of Cash Flows (IN MILLIONS) JUNE YTD NET INCOME $18.6 $20.0 DEPRECIATION & AMORTIZATION ACCOUNTS RECEIVABLE (44.5) (45.7) INVENTORY ACCOUNTS PAYABLE OTHER OPERATING ACTIVITIES NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES CAPITAL EXPENDITURES (5.3) (4.5) ACQUISITIONS (38.6) (27.0) OTHER INVESTING ACTIVITIES NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (43.9) (29.8) NET BORROWINGS (PAYMENTS) DIVIDENDS (4.1) (3.2) REPURCHASE OF COMMON STOCK (5.0) - OTHER FINANCING ACTIVITIES NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES NET CHANGE IN CASH $ (1.6) $ 1.0 FREE CASH FLOW

27 Appendix 27

28 Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share amounts) TWELVE MONTHS ENDED DECEMBER 31, EARNINGS (LOSS) FROM CONTINUING OPERATIONS (Unaudited) GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS $ 64,327 $ 24,700 $ 5,906 $ (21,098) RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) 806 2,101 4,897 10,237 LOSS FROM EUROPE DIVESTITURE (NET OF TAX) ,772 - POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX) (2,188) GAIN FROM SALE OF JOINT VENTURE (NET OF TAX) (1,485) NONRECURRING INCOME TAX ADJ, INCL. VALUATION ALLOWANCE REVERSAL (24,755) (1,084) - - GAIN FROM SALE OF BUILDINGS (NET OF TAX) (629) (1,588) (629) (13,340) GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (1,402) - GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (NET OF TAX) ,632 LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) - - (24) (2,308) NON-GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS $ 36,076 $ 24,176 $ 13,520 $ (1,995) DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ 2.78 $ 1.09 $ 0.31 $ (1.14) RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) LOSS FROM EUROPE DIVESTITURE (NET OF TAX) POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX) (0.09) GAIN FROM SALE OF JOINT VENTURE (NET OF TAX) (0.06) NONRECURRING INCOME TAX ADJ, INCL. VALUATION ALLOWANCE REVERSAL (1.07) (0.04) - - GAIN FROM SALE OF BUILDINGS (NET OF TAX) (0.03) (0.07) (0.03) (0.73) GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (0.07) - GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (NET OF TAX) LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) (0.12) NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ 1.57 $ 1.07 $ 0.70 $ (0.11) 28

29 Reconciliation of GAAP and Non-GAAP Measures (cont d) ($ in thousands, except per share amounts) 6 MOS. JUNE 30, TWELVE MONTHS DECEMBER 31, EBITDA WITHOUT SPECIAL ITEMS (Unaudited) (Unaudited) GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES $ 30,772 $ 64,448 $ 40,091 $ 12,000 $ (29,203) DEPRECIATION & AMORTIZATION 7,898 14,145 13,574 14,354 14,700 INTEREST EXPENSE 1,555 3,821 7,127 9,215 13,585 EBITDA 40,225 82,414 60,792 35,569 (918) RESTRUCTURING AND INTEGRATION EXPENSES 137 1,344 3,502 7,386 16,858 LOSS FROM EUROPE DIVESTITURE ,608 - POSTRETIREMENT CURTAILMENT GAIN - (3,647) GAIN FROM SALE OF JOINT VENTURE - (2,475) GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (2,336) - GAIN FROM DEBENTURE REPURCHASE (40) (3,846) GOODWILL AND INTANGIBLE ASSET IMPAIRMENT ,387 GAIN FROM SALE OF BUILDINGS (524) (1,048) (2,646) (1,048) (20,401) SPECIAL ITEMS (387) (5,826) ,570 31,998 EBITDA WITHOUT SPECIAL ITEMS $ 39,838 $ 76,588 $ 61,727 $ 46,139 $ 31,080 TOTAL DEBT $ 97,246 $ 73,299 $ 65,596 $ 76,405 $ 194,157 DEBT TO EBITDA RATIO (TTM) 1:1 1:1 1:1 2:1 6:1 29 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.

30 Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share amounts) SIX MONTHS ENDED JUNE 30, EARNINGS (LOSS) FROM CONTINUING OPERATIONS (Unaudited) GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS $ 19,215 $ 20,704 RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX) - (2,188) GAIN FROM SALE OF BUILDINGS (NET OF TAX) (315) (315) NON-GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS $ 18,982 $ 18,482 DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ 0.83 $ 0.90 RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX) - (0.09) GAIN FROM SALE OF BUILDINGS (NET OF TAX) (0.01) (0.02) NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ 0.82 $ 0.80 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 30