Standard Motor Products, Inc. · NYSE:SMP
Standard Motor Products — Q3 2018 Earnings Presentation
29 slides from Standard Motor Products's earnings presentation, 2018
Slide 1: Standard Motor Products, Inc. Q3 2018 Investor Presentation
Standard Motor Products, Inc. Q3 2018 Investor Presentation 1
Slide 2: Forward Looking Statements
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 1995. Forward looking statements, including projections and anticipated levels of f
Slide 3: Industry and Business Overview
Industry and Business Overview 3
Slide 4: Why Invest in SMP?
Why Invest in SMP? Longstanding business led by experienced management team Leader in engine management and temp control aftermarket Significant share of stable industry with positive outlook Proven strategy for long-term outperformance Superior shareholder returns Financial results demonstrate succ
Slide 5: SMP Snapshot
SMP Snapshot 99 Years in Business • Founded 1919 • $1.12 Billion 2017 Sales • 4,200 Employees Worldwide LAWRENCE I. SILLS ERIC P. SILLS JAMES J. BURKE DALE BURKS Executive Chairman Director, CEO EVP Finance and EVP and Chief Board of Directors and President Chief Financial Officer Commercial Officer
Slide 6: SMP Snapshot
SMP Snapshot Professionally Recognized Brands Significant Supplier to All Major Distributors 6
Slide 7: SMP Facilities – Worldwide
SMP Facilities – Worldwide Global Footprint 3 Million sq. ft. • 12 Manufacturing Plants • 5 Distribution Centers • 9 Offices 7
Slide 8: Favorable Industry Trends
Favorable Industry Trends Vehicle Population Continues to Age Miles Driven is Increasing Annual Miles Driven, 2006-2017 Average Age of Cars and Light (Percent Change from Previous Year) Trucks 4.0% 3.5% 12.0 11.0 11.2 11.4 11.5 11.6 11.7 10.4 10.7 3.0% 10.0 2.0% 8.0 1.3% 1.2% 1.2% 1.1% 1.0% 0.8% 6.0
Slide 9: Strategy Overview
Strategy Overview 9
Slide 10: Strategic Objectives
Strategic Objectives • External programs that provide real value to our customers Premium Value • Best-in-class full-line, full-service supplier of premium Proposition engine management and temperature control products • Internal programs that make us a stronger company Drive for • Investment in inc
Slide 11: SMP Core Strategy
SMP CORE STRATEGY To be the best full-line, full-service supplier of premium engine management and temperature control products The SMP Value Proposition Our suite of products and services is designed to provide all the needed support for our customers and the technicians who install our parts Premi
Slide 12: Drive for Continuous Improvement
Drive for Continuous Improvement • Increased Manufacturing – Engineering resources up >30% from 2013 – 80% of capital budget for tooling projects – Acquisitions: a great “shortcut” % of Hrs in Low Cost • Low Cost Manufacturing Plants 80% 56% 64% – Closure of Grapevine and Orlando 28% – China expansi
Slide 13: Successful Growth Programs
Successful Growth Programs Complementary Product Lines - Examples • Diesel / Turbochargers – The most comprehensive diesel / turbo program in the industry – Significant program expansion into Medium/HD trucks • Electronic Throttle Bodies (ETB) – 100% NEW (Not Reman) with the best coverage in the aft
Slide 14: Successful Growth Programs: Strategic Acquisitions
Successful Growth Programs Strategic Acquisitions • Ten Acquisitions in Recent Years • Primary Focus – Bolt-on: acquire competitors – Vertical integration: acquire suppliers – New but related business • Rationale – Demonstrable synergies with minimal risk – Contributes to other strategic objectives
Slide 15: Return to Shareholders
Return to Shareholders Dividend Increase Annual Dividend $0.84 $0.76 $0.68 $0.60 $0.52 $0.44 $0.36 $0.28 2011 2012 2013 2014 2015 2016 2017 2018 Forecast 2018 Note: $0.84 based on quarterly dividend of $0.21 announced Feb 2018 Treasury Stock Buyback Program Year Spend Shares Avg. Price 2011 $4.1M 32
Slide 16: Cash Uses ($M)
SMP Cash Utilization 120 Buybacks Cash Acquisitions 0.4 100 Dividends 4.1 Cash Uses ($M) 80 Capital 10.0 67.3 Expenditures 60 5.0 24.4 70.5 37.7 6.8 40 38.6 19.6 6.9 17.3 12.8 15.4 13.7 20 11.9 2.0 6.4 8.2 10.1 12.8 4.5 24.4 18.0 20.9 10.8 11.0 11.8 11.4 13.9 7.2 - 2009 2010 2011 2012 2013 2014 2015
Slide 17: September 2018 YTD Results
September 2018 YTD Results 17
Slide 18: 5 Year Performance Measures
5 Year Performance Measures Consolidated Net Sales ($M) Gross Margin $1,200 31.0% Q3 ‘18 = $296.6 Q3 ‘18 = 29.4% Q3 ‘17 = $281.1 30.5% Q3 ‘17 = 29.4% $1,000 $1,116.1 30.0% $1,058.5 $980.4 $972.0 29.0% 29.5% 29.3% $800 $876.2 $845.1 28.9% $828.7 28.5% $762.3 $767.0 28.0% $600 27.0% $400 26.0% $200 25
Slide 19: Substantial Gross Margin Improvement
Substantial Gross Margin Improvement Engine Management 34% Target: 31-32% 32% 31.3% 30.7% 31.0% 30.4% 30% 29.4% 28.9% 28.2% 28.3% 28.4% 28% 26.2% 27.6% 25.6% 25.6% 26% 25.0% 24.3% 25.9% 24% 23.5% 23.1% 21.8% 22.1% 21.6%21.9% 22% 22.7% 19.7% Temperature Control 20% Target: 25-26% 18% 16% 2009 2010 20
Slide 20: Income Statement Non-GAAP
Income Statement Non-GAAP ($ in millions) September 2018 YTD September 2017 YTD Amount % of Sales Amount % of Sales Net Sales $ 845.1 100.0% $ 876.2 100.0% Gross Profit 241.2 28.5% 257.3 29.4% SG&A Expenses 175.6 20.8% 172.7 19.7% Operating Profit 65.6 7.8% 84.6 9.7% Other Income/(Loss) 0.9 2.5 Inte
Slide 21: Condensed Balance Sheet
Condensed Balance Sheet Actual Q3 2018, Q3 2017 ($ in millions) Dollars Ratios 2018 2017 2018 2017 Cash and Equivalents $ 27.3 $ 25.4 Accounts Receivable/DSO 163.3 163.2 51 53 Inventory/Turns 318.4 332.6 2.4 2.4 Unreturned Customer Inventory 21.3 - Other Assets 306.1 310.5 Total Assets $ 836.4 $ 831
Slide 22: Condensed Statement of Cash Flows
Condensed Statement of Cash Flows (IN MILLIONS) September YTD Full Year 2018 2017 2017 NET INCOME $39.7 $46.6 $38.0 DEPRECIATION & AMORTIZATION 17.7 17.4 23.9 ACCOUNTS RECEIVABLE (23.4) (27.8) (5.1) INVENTORY 2.8 (18.7) (13.9) ACCOUNTS PAYABLE 5.2 0.1 (7.2) OTHER OPERATING ACTIVITIES 25.6 19.2 28.9
Slide 23: Appendix
Appendix SMP Standard Motor Products, Inc. 23
Slide 24: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share amounts) NINE MONTHS SEPTEMBER 30, 2018 2017 2016 2015 2014 (Unaudited) EARNINGS FROM CONTINUING OPERATIONS GAAP EARNINGS FROM CONTINUING OPERATIONS $ 44,697 $ 51,736 $ 53,573 $ 42,341 $ 41,382 LITIGATION CHARGE - - - - 1
Slide 25: Reconciliation of GAAP and Non-GAAP Measures (cont'd)
Reconciliation of GAAP and Non-GAAP Measures (cont’d) ($ in thousands, except per share amounts) TWELVE MONTHS DECEMBER 31, 2017 2016 2015 2014 (Unaudited) EARNINGS FROM CONTINUING OPERATIONS GAAP EARNINGS FROM CONTINUING OPERATIONS $ 43,630 $ 62,412 $ 48,120 $ 52,899 CUSTOMER BANKRUPTCY CHARGE - -
Slide 26: Reconciliation of GAAP and Non-GAAP Measures (cont'd)
Reconciliation of GAAP and Non-GAAP Measures (cont’d) ($ in thousands) NINE MONTHS SEPTEMBER 30, 2018 2017 2016 2015 2014 (Unaudited) EBITDA WITHOUT SPECIAL ITEMS GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES $ 60,498 $ 82,204 $ 85,037 $ 65,110 $ 64,100 DEPRECIATION & AMORTIZATION 17,745 17,
Slide 27: Reconciliation of GAAP and Non-GAAP Measures (cont'd)
Reconciliation of GAAP and Non-GAAP Measures (cont’d) ($ in thousands) TWELVE MONTHS DECEMBER 31, 2017 2016 2015 2014 (Unaudited) EBITDA WITHOUT SPECIAL ITEMS GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES $ 96,442 $ 98,570 $ 74,103 $ 81,753 DEPRECIATION & AMORTIZATION 23,916 20,457 17,637 17
Slide 28: Reconciliation of GAAP and Non-GAAP Measures (cont'd)
Reconciliation of GAAP and Non-GAAP Measures (cont’d) ($ in thousands, except per share amounts) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, EARNINGS FROM CONTINUING OPERATIONS 2018 2017 2018 2017 (Unaudited) (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS $ 19,273 $ 17,108
Slide 29: Thank You
Thank You Standard Motor Products, Inc. 29
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