Standard Motor Products, Inc. · NYSE:SMP
Standard Motor Products — Wall Street Analyst Forum (November 2010)
32 slides from Standard Motor Products's conference presentation, Nov 11, 2010
Slide 1: Standard Motor Products, Inc. Wall Street Analyst Forum
Standard Motor Products, Inc. Wall Street Analyst Forum November 11, 2010 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: Standard Motor Products, Inc.
Standard Motor Products, Inc. 90+ Years in Business A Leading Automotive Aftermarket Company Major Player in Two Product Segments Engine Management Temperature Control Well Positioned for the Future 3
Slide 4: Investment Rationale: Company and Industry Fundamentals
Investment Rationale Company and Industry Fundamentals Standard Motor Products is an aftermarket pure play 93% of sales are aftermarket Attractive automotive aftermarket fundamentals provide stable growth, with potential upside driven by industry trends Declining new car sales Aging vehicl
Slide 5: Investment Rationale: Opportunity for Investor Returns
Investment Rationale Opportunity for Investor Returns SMP market position yields attractive margins and high quality earnings Leading market positions in Engine Management and Temperature Control Strong customer relationships SMP has flexibility to pursue strategic opportunities Financial
Slide 6: SMP is an Aftermarket Pure Play
SMP is an Aftermarket Pure Play 2009 Sales Special Based on 250 million vehicles on the road Export 2% Markets OES 5% Highly stable 4% Slow and steady growth Tens of thousands of SKUs OE Traditional Not affected by rise and fall of new car 7% 44% Retail production 38% Higher margins 6
Slide 7: Favorable Macro Trends for Aftermarket
Favorable Macro Trends for Aftermarket Trend Impact on Aftermarket New Car Sales Down Increases average age of vehicles driven Aging Fleet of Vehicles Increases demand for replacement parts Car Dealerships Closing Independent distributors and repair shops will become only option in many
Slide 8: Large and Stable Market
Large and Stable Market Predictable Top-line Performance with Attractive Upside United States Vehicles in Use Average Age of U.S. Light Vehicles 280 10.2 250 10.5 10.0 250 10.0 9.7 9.8 9.4 9.5 220 205 9.5 (millions) 9.1 (years) 8.9 8.9 9.0 9.0 8.8 190 8.5 160 8.0 130 7.5 100 7.0 95 96 97 98 99 00 01
Slide 9: Focused Business Strategy
Focused Business Strategy Focused on Two Major Product Lines #1 in each Temperature Control Other 27% Engine Management 1% 72% Note: Based on 2010 Forecasted Revenues 9
Slide 10: Engine Management Division
Focused Business Strategy Engine Management Division #1 Position in Engine Management Point Set and Condenser Distributor Cap & Rotor Business Strengths #1 market position High brand loyalty Predictable top-line performance Distributorless Ignition Fuel Injectors High margin product System M
Slide 11: Temperature Control Division
Focused Business Strategy Temperature Control Division #1 Position in Temperature Control Business Strengths Temperature Control Products Condenser Fan #1 market position Evaporator Accumulator Hose Assembly Top-line growth Recent wins in 2009 (AutoZone, CSK, Pep Boys) Cost reduction as a re
Slide 12: Excellent Customer Relationships
Excellent Customer Relationships Traditional Retail Most Independents Car Dealerships 12
Slide 13: Key Priorities – As Per 2009
Key Priorities – As Per 2009 ► Generate ► Generate Cash ► Reduce Debt ► Redeem Convertible Debentures Original Issue $90 MM 6.75% Coupon 10 Year Life Due July 15, 2009 13
Slide 14: Actions Taken
Actions Taken ► Sold LIC Building ► Reduced Inventory $30 MM in 2009 $20 MM in 2008 ► Reduced Accounts Receivable $50 MM ► Suspended Dividend Reinstated in 2010 14
Slide 15: Actions Taken: Hiring Freeze and Reduced Capital Expenditures
Actions Taken ► Hiring Freeze/ Early Retirement Reduced Salaried Staff ► 100 People ► 10% of Total ► Reduced Capital Expenditures $7.2 MM 2009 $11.5 MM Historical Average 15
Slide 16: Actions Taken: Exited Businesses, Bonds, Equity
Actions Taken ► Exited Two Businesses Blue Streak Electronics European Distribution ► Rolled Over $17 MM Bonds 2 Years 15% Interest ► Raised Additional Equity 3,450,000 Shares $27.5 MM (Net of Expenses) 16
Slide 17: Result: Debt Reduction
Result ► 2009 Debt Reduction $118 MM ► Redeemed Balance of Bonds ► Debt : EBITDA Ratio 2008: 6.2 (x) 2009: 1.7 (x) 2010: 1.3 (x) (LTM 9/10) 17
Slide 18: Result: Total Debt
Result (Total Debt – US$ in millions) 18
Slide 19: Strategic Initiatives
Strategic Initiatives 2003-2005 Dana Engine Management Acquisition and Integration 2006-2007 Exit UK Manufacturing Establish Low Cost Poland Manufacturing Site 2007 - 2008 Exit high-cost manufacturing facilities (Puerto Rico & LIC) Expand low-cost manufacturing in Reynosa, MX Begin
Slide 20: Other Accomplishments: Low Cost Manufacturing
Other Accomplishments Low Cost Manufacturing 58% 55% 49% 38% 27% 28% 21% 2005 2006 2007 2008 2009 2010 2011 Est. Goal % production labor hours in low cost facilities (Mexico and Poland) 20 Note: Prior years restated to exclude Europe
Slide 21: Other Accomplishments: Low Cost Purchasing
Other Accomplishments Low Cost Purchasing 49% 49% 50% 47% 42% 38% 34% 2005 2006 2007 2008 2009 2010 2011 Est. Goal % purchased from low cost suppliers 21
Slide 22: 2010 Update
2010 Update Industry Having Strong Sales Year Ageing Car Population Pent Up Demand Closing Down Dealerships Standard Motor Products Increased Sales Reduced Costs Optimistic About Future 22
Slide 23: Future Planned Initiatives
Future Planned Initiatives Cost Reduction 1. Plant Rationalization 2. Global Sourcing 3. Poland/Mexico Revenue Enhancement 1. Increase OE/OES Business 2. Import Application Market Share 3. Selective Acquisitions 23
Slide 24: Financial Overview
Financial Overview 24
Slide 25: Continuous Improvement in Yearly Performance
Continuous Improvement in Yearly Performance 2 Consolidated Net Sales Gross Margin $798.1 25.5% 25.4% $800 $780 $775.2 25.0% $760 24.5% 2008 2008 24.1% 2009 2009 $740 $735.4 24.0% 23.8% 2010 2010 $720 23.5% $700 23.0% LTM LTM Full Year (Millions) Full Year 22 9% 25 27 7% 28% 23 9% 222 8% EBITDA (w/o
Slide 26: Substantial Margin Improvement
Substantial Margin Improvement 2008 2009 Target Engine Management 23.3% 24.7% 27-28% Gross Margin % Temperature Control 19.3% 19.7% 23-24% Gross Margin % 26
Slide 27: 9 Months 2010 Results
9 Months 2010 Results 27
Slide 28: September YTD Income Statement Non-GAAP
September YTD Income Statement Non-GAAP (Excluding Non-Operational Gains and Losses) ($ in Millions) Sept. 2010 YTD Sept. 2009 YTD Amount % of Sales Amount % of Sales Net Sales $ 637.9 100.0% $ 575.3 100.0% Gross Profit 162.2 25.4% 137.1 23.8% SG&A Expenses 120.5 18.9% 109.6 19.0% Operating Profit 4
Slide 29: Condensed Balance Sheet
Condensed Balance Sheet ($ in Millions) Condensed Balance Sheet Sep '10 Sep '09 Current Assets $ 442.4 $ 410.5 PP&E 62.1 63.9 Other Assets 51.8 63.3 Total Assets $ 556.3 $ 537.7 Current Liabilities $ 204.2 $ 186.2 Debt 74.3 110.9 Other Liabilities 68.5 67.5 Shareholders Equity 209.3 173.1 Total Liab
Slide 30: SMP Capitalization
SMP Capitalization (US$ in millions) As of September 30, 2010 % of Total Amount Capitalization Revolving Credit Facility $61.7 21.8% March 2013 Maturity 15% Convertible Subordinated Debentures 12.3 4.3 April 2011 Maturity Other 0.3 0.1 Total Debt $74.3 26.2% Book Value of Equity 209.3 73.8% Total Ca
Slide 31: Appendix
Appendix 31
Slide 32: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share amounts) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, EARNINGS FROM CONTINUING OPERATIONS 2010 2009 2010 2009 (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS $ 11,097 $ 4,724 22,025 11,149 RESTRUC
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