Gabelli 41 st Annual Automotive Aftermarket Symposium. October 30 31, 2017

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1 Gabelli 41 st Annual Automotive Aftermarket Symposium October 30 31,

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 SMP Snapshot 98 Years in Business Founded 1919 $1.06 Billion 2016 Sales 4,100 Employees Worldwide LAWRENCE I. SILLS Executive Chairman Board of Directors ERIC P. SILLS Director, CEO and President JAMES J. BURKE EVP Finance and Chief Financial Officer DALE BURKS EVP and Chief Commercial Officer 2016 Sales Breakdown Sales by Market 89% 11% Aftermarket OE / OES Sales by Product Line 27% 73% Engine Mgmt Temp Control Major Product Categories Engine Management Ignition Products Emissions Products Fuel Delivery Vehicle Electronics Wire & Cable Temperature Control A/C Compressors Other A/C System Components Engine Cooling Products Blower & Radiator Fan Motors Window Lift Motors 3

4 SMP Snapshot Professionally Recognized Brands Global Footprint 3 Million sq. ft. 14 Manufacturing Plants 5 Distribution Centers 9 Offices 4

5 Favorable Industry Trends Vehicle Population Continues to Age Average Age of Cars and Light Trucks 4.0% Miles Driven is Increasing Annual Miles Driven, (Percent Change from Previous Year) 3.5% % 2.8% % 1.0% 0.9% 0.8% 0.5% 0.3% 0.3% 1.1% 1.3% % % -2.0% -1.9% -0.6% -0.7% DIFM Revenue Continues to Grow Age Mix of Vehicles Billions $250 $200 $150 $100 DIFM DIY 100% 80% 60% 40% VIO (11 and Older) VIO (6-10 yrs) VIO (0-5 yrs) 33.5% 32.0% 29.7% 27.6% 26.1% 25.1% 25.1% 27.1% 28.6% 29.7% 30.2% 30.8% 31.1% 30.9% 30.6% 30.1% 29.0% 25.9% 23.5% 21.8% $50 20% 36.3% 37.2% 39.2% 41.6% 43.2% 44.8% 45.9% 47.1% 48.0% 48.5% $ * 2017* 2018* 2019* 0%

6 Industry Outlook 2025 Industry Outlook 2025 Slow & steady revenue growth 2-3% per year All Growth in DIFM segment DIY is Flat 2013 Aftermarket Parts Size and Share by Segment 2025 Aftermarket Parts Size and Share by Segment DIY $20B 26% DIY $20B 22% DIFM New Vehicle Dealer $13B 17% 57% DIFM Non-Dealer $43B DIFM New Vehicle Dealer $18B 20% 58% DIFM Non-Dealer $52B Includes all categories Engine Management is even more skewed to DIFM Source: strategy& / Booz & Company 6

7 Premium Value Proposition Best-in-Class Full-Line, Full-Service Supplier Of Premium Engine Management and Temperature Control Products Our premium brands meet all the commercial customers needs Premium Quality Customer Training Premium Brands Field Sales Support Full-Line Coverage Marketing Support Supply Chain Excellence 7

8 Strategic Objectives Premium Value Proposition Drive for Continuous Improvement Successful Growth Programs External programs that provide real value to our customers Best-in-class full-line, full-service supplier of premium engine management and temperature control products Internal programs that make us a stronger company Investment in increased manufacturing Increase in low-cost footprint Global sourcing without compromise to quality Strategic expansion of our business Complementary product lines Complementary markets, geographies and channels Strategic acquisitions Return to Shareholders Dividend Increase Treasury Stock Buyback Program 8

9 5 Year Performance Measures Consolidated Net Sales ($M) Gross Margin $1,100 UP 8.9% 31.0% $950 $983.7 $980.4 $1,058.5 $972.0 UP 5.7% 30.0% 29.5% $800 $ % 29.5% $828.7 $765.0 $762.3 $767.0 $ % 28.9% 30.5% 29.4% $ % $ % $ % $ % /2017 YTD Sept YTD Full Year EBITDA (w/o Special Items) ($M) UP 28.1% $125.0 $123.5 UP 2.1% $100.0 $111.5 $106.8 $102.4 $104.6 $96.4 $86.0 $89.1 $75.0 $78.6 $50.0 $25.0 Diluted EPS (w/o Special Items) $3.00 UP 30.0% $2.50 $2.77 $2.52 $2.32 $2.35 $2.00 $2.28 $2.04 $2.13 $1.91 $1.50 $1.78 $1.00 $0.50 $ Sept YTD Full Year $ Sept YTD Full Year 9

10 Appendix 10

11 Reconciliation of GAAP and Non-GAAP Measures ($ in thousands) EBITDA WITHOUT SPECIAL ITEMS NINE MONTHS SEPTEMBER 30, (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES $ 82,204 $ 85,037 $ 65,110 $ 64,100 $ 69,479 DEPRECIATION & AMORTIZATION 17,439 14,829 13,042 12,889 13,203 INTEREST EXPENSE 1,785 1,206 1,238 1,205 1,621 EBITDA 101, ,072 79,390 78,194 84,303 LITIGATION CHARGE ,650 - RESTRUCTURING AND INTEGRATION EXPENSES 3,914 2,127 (49) 1,069 2,531 GAIN FROM SALE OF BUILDINGS (786) (786) (786) (786) (786) SPECIAL ITEMS 3,128 1,341 (835) 10,933 1,745 EBITDA WITHOUT SPECIAL ITEMS $ 104,556 $ 102,413 $ 78,555 $ 89,127 $ 86,048 TOTAL DEBT $ 73,137 $ 70,178 $ 24,583 $ 59,271 $ 32,292 DEBT TO EBITDA RATIO (TTM) 0.6:1 0.6:1 0.2:1 0.5:1 0.3:1 MANAGEMENT BELIEVES THAT EBITDA WITHOUT SPECIAL ITEMS, WHICH IS A NON-GAAP MEASUREMENT, IS MEANINGFUL TO INVESTORS BECAUSE IT PROVIDES 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. 11

12 Reconciliation of GAAP and Non-GAAP Measures (cont d) ($ in thousands, except per share amounts) EARNINGS FROM CONTINUING OPERATIONS NINE MONTHS SEPTEMBER 30, (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS $ 51,736 $ 53,573 $ 42,341 $ 41,382 $ 43,652 LITIGATION CHARGE ,650 - RESTRUCTURING AND INTEGRATION EXPENSES 3,914 2,127 (49) 1,069 2,531 REVERSAL OF LT TAX LIABILITY (350) - CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD (463) (235) (571) (361) (374) GAIN FROM SALE OF BUILDINGS (786) (786) (786) (786) (786) INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (1,251) (536) 333 (4,373) (698) NON-GAAP EARNINGS FROM CONTINUING OPERATIONS $ 53,150 $ 54,143 $ 41,268 $ 47,231 $ 44,325 DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 2.22 $ 2.32 $ 1.82 $ 1.79 $ 1.88 LITIGATION CHARGE RESTRUCTURING AND INTEGRATION EXPENSES REVERSAL OF LT TAX LIABILITY (0.02) - CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD (0.02) (0.01) (0.03) (0.02) (0.02) GAIN FROM SALE OF BUILDINGS (0.03) (0.03) (0.03) (0.03) (0.03) INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (0.05) (0.02) 0.02 (0.19) (0.03) NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 2.28 $ 2.35 $ 1.78 $ 2.04 $ 1.91 MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, 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. 12

13 Reconciliation of GAAP and Non-GAAP Measures (cont d) ($ in thousands) EBITDA WITHOUT SPECIAL ITEMS TWELVE MONTHS DECEMBER 31, (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES $ 98,570 $ 74,103 $ 81,753 $ 84,962 $ 67,947 DEPRECIATION & AMORTIZATION 20,457 17,637 17,295 17,595 16,466 INTEREST EXPENSE 1,556 1,537 1,616 1,902 2,788 EBITDA 120,583 93, , ,459 87,201 CUSTOMER BANKRUPTCY CHARGE - 3, DEFERRED FINANCING FEE WRITE-OFF LITIGATION CHARGE , RESTRUCTURING AND INTEGRATION EXPENSES (INCOME) 3,957 (134) 1,197 3,357 1,437 GAIN FROM SALE OF PREFERRED STOCK INVESTMENT GAIN FROM DEBENTURE REPURCHASE GOODWILL AND INTANGIBLE ASSET IMPAIRMENT GAIN FROM SALE OF BUILDINGS (1,048) (1,048) (1,048) (1,048) (1,287) SPECIAL ITEMS 2,909 3,105 10,799 2, EBITDA WITHOUT SPECIAL ITEMS $ 123,492 $ 96,382 $ 111,463 $ 106,768 $ 87,351 TOTAL DEBT $ 54,975 $ 47,505 $ 56,816 $ 21,481 $ 40,648 DEBT TO EBITDA RATIO (TTM) 0.4:1 0.5:1 0.5:1 0.2:1 0.5:1 MANAGEMENT BELIEVES THAT EBITDA WITHOUT SPECIAL ITEMS, WHICH IS A NON-GAAP MEASUREMENT, IS MEANINGFUL TO INVESTORS BECAUSE IT PROVIDES 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. 13

14 Reconciliation of GAAP and Non-GAAP Measures (cont d) ($ in thousands, except per share amounts) EARNINGS FROM CONTINUING OPERATIONS TWELVE MONTHS DECEMBER 31, (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS $ 62,412 $ 48,120 $ 52,899 $ 53,043 $ 42,969 CUSTOMER BANKRUPTCY CHARGE - 3, DEFERRED FINANCING FEE WRITE-OFF LITIGATION CHARGE , RESTRUCTURING AND INTEGRATION EXPENSES (INCOME) 3,957 (134) 1,197 3,357 1,437 REVERSAL OF LT TAX LIABILITY - - (350) - - CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD (235) (571) (361) (374) (774) GAIN FROM SALE OF BUILDINGS (1,048) (1,048) (1,048) (1,048) (1,287) INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (1,164) (1,243) (4,320) (924) (60) NON-GAAP EARNINGS FROM CONTINUING OPERATIONS $ 63,922 $ 49,411 $ 58,667 $ 54,054 $ 42,285 DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 2.70 $ 2.08 $ 2.28 $ 2.28 $ 1.86 CUSTOMER BANKRUPTCY CHARGE DEFERRED FINANCING FEE WRITE-OFF LITIGATION CHARGE RESTRUCTURING AND INTEGRATION EXPENSES (INCOME) 0.17 (0.01) REVERSAL OF LT TAX LIABILITY - - (0.02) - - CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD (0.01) (0.03) (0.02) (0.02) (0.03) GAIN FROM SALE OF BUILDINGS (0.04) (0.04) (0.04) (0.04) (0.06) INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (0.05) (0.05) (0.19) (0.04) - NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 2.77 $ 2.13 $ 2.52 $ 2.32 $

15 Thank You 15