Slide 1: Growth Conference February 23, 2005
Growth Conference February 23, 2005
Slide 2: Investment Thesis
Investment Thesis "Institutional Grade" company Management-Shareholder alignment Leading positions in world markets Strong upside operating leverage
Slide 3: Forward-Looking Statements
Forward-Looking Statements The information provided at the conference today will include forward-looking statements relating to our sales, operating income, operating income per share, net income, net income per share, our worldwide markets and our growth in relation to end markets we serve. These s
Slide 4: Key Investor Highlights
Key Investor Highlights Design, manufacture and market highly engineered products, principally made from powder metals Friction Products Powder Metal Components Engineer, manufacture and market premium branded clutch, transmissions and driveline systems for the performance racing market 80% of sales
Slide 5: 2004 Highlights
2004 Highlights Sales of $241.2 million set record All segments reported double digit increases Operating income up 58.7% to $17.3 million Revenues from new product introductions exceed $15.0 million Friction China facility shipments rapidly increasing New long-term financing in place Construction o
Slide 6: HPCG Pioneer In PM Industry
HPCG Pioneer In PM Industry 1925 1950 1960 1970 1998 1999 1989 2000 Acquisition and Growth Phase HPCG Technology Initiatives 2001 Model T Clutch Disc Aerospace Brake Pads Hawk IPO Hawk Racing Group Heavy Equipment Brake/Transmission - Cat - Deere - Case MIM Technology Acquisition and Growth Phase Ha
Slide 7: Trends and Market Position
Trends and Market Position Industry growth trends and positions Leading position in friction technology enabling expanded market share and new customer opportunities Globalized manufacturing and distribution Precision component (PM and MIM) market share gains and global expansion Leader in new PM te
Slide 8: Business Strategies
Business Strategies Product innovation and R&D Friction - Technology improvements offering longer life, better friction qualities, lighter weight Powder Metal - Technology trends to strength, dimensional control and complex shapes Global manufacturing strategies Follow customer relationships - Europ
Slide 9: Established Global Presence
Established Global Presence Canada Argentina North Carolina Chigisaki, Japan Ohio (6) Illinois (2) Indiana Pennsylvania (2) Italy Suzhou, China (2) Georgia Oklahoma Over 2,500 customers around the world Singapore
Slide 10: Hawk Customers
HAWK Customers CATERPILLAR 473° €E:T-eN ===" GOopRICH ) Electrolux
Slide 11: Market recovery and NPI's drive sales increase
Market recovery and NPI's drive sales increase... 2003 2004 Q1 54.7 60 Q2 52.2 63 Q3 48.2 59 Q4 47.5 60 Quarterly Sales ($M) Sales increased 19.1% in 2004
Slide 12: Resulting in operating income leverage
....resulting in operating income leverage 2003 2004 Q1 3.7 5.9 Q2 4.5 6.2 Q3 3.5 4.2 Q4 -0.8 0.9 Quarterly Operating Income ($M) Operating income increased 58.7% in 2004
Slide 13: Wellman Products Group
Wellman Products Group Friction materials used in brakes, clutches and transmissions Products Markets Friction Materials Truck Components/Assemblies Aerospace Construction Agriculture Recreation and performance automotive Military Worldwide leader providing engineered solutions for original equipmen
Slide 14: WPG Market Position
WPG Market Position ($ in Millions) Market Size 2004 Hawk Sales Competition Customers Off-Highway $300 $80.2 Raytech Dynax Borg-Worner Caterpillar Deere Dana ZF Allison Aircraft $75 $24.0 Honeywell Goodrich ABS Parker Hannifin On-Highway $170 $21.1 Miba Eaton Sachs ZF Specialty $180 $22.9 Miba Carbo
Slide 15: Hawk Precision Components
Hawk Precision Components Conversioneering TM of components for pumps, motors, transmissions, brakes and other engineered products Products Markets Powder metal components Lawn and garden Metal injection molded (MIM) powder metal components Fluid Power Agricultural Truck Appliance Telecom Leading su
Slide 16: HPCG Market Position
HPCG Market Position ($ in Millions) Market Size 2004 Hawk Sales Competition Customers Industrial PM $1,500 $64.0 Burgess Norton GKN Keystone Hydro-Gear Parker Hannifin MTD Stihl Eaton Automotive PM $3,500 $12.3 GKN Stackpole Autoliv Deuer Second tier suppliers Metal Injection Molding $150 $2.3 Phil
Slide 17: Hawk Racing
Hawk Racing Gears, bearings, driveshafts, bellhousings and starters Products Markets Gear boxes, Transmissions & Clutches Motorsport - NASCAR, IRL, ASA, SCCA and street Manufacturer of high performance clutch and drive train components for motorsport applications
Slide 18: Segment Revenues
Segment Revenues 2004 Sales 2nd Qtr 3rd Qtr 4th Qtr Friction 148.2 27.4 90 20.4 Precision Components 78.6 38.6 34.6 31.6 Racing 14.3 46.9 45 43.9
Slide 19: Revenues by Market
Revenues by Market 2004 Sales Aerospace 24 Truck 23.1 Construction 55.4 Specialty Friction 16.1 Lawn & Garden 17.6 Agriculture 25.3 Pump & Motor 16.4 Hawk Performance 7 Hawk Racing 14.3 Appliance 6.7 Automotive 12.3 Other 23
Slide 20: Across the board market improvements
Across the board market improvements... 2002 2003 2004 2005 est Construction 6.2% 36.4% +40.8% +20.0% Truck 6.5% -1.3% +26.0% +17.0% Aerospace -16.0% 2.5% +6.8% +2.0% Agriculture 41.6% 42.2% +20.4% -2.0% Perform. Brake 6.3% 15.5% +45.4% +30.0% Pump & Motor 13.8% 13.8 +22.8% +20.0%
Slide 21: Lead to improved operating results
....Lead to improved operating results
Slide 22: New Financing
New Financing New Long-term financing completed 4th quarter 2004 $110.0 million Senior Unsecured Notes Interest rate 8.75% Due November 2014; 10 year term $30.0 million Bank Credit Facility Rate - Libor +175 bps; Prime Secured only by receivables and inventory Provides ample liquidity and flexibilit
Slide 23: Corporate Strengths
Corporate Strengths Top tier supplier in all of our end markets Balanced business mix Strong global customer relationships Growing aftermarket revenue base Proven cash flow management capability Long-term financing package in place
Slide 24: Business Strategies
Business Strategies New product innovation Carbon composite friction material High density powder metal components Focus on high margin opportunities Expand direct aftermarket sale opportunities Leading-edge technologies Cost reduction initiatives Expanding global presence
Slide 25: 2005 Strategic Initiatives
2005 Strategic Initiatives Sales growth Faster than our overall markets New product introductions Continued market share gains Aftermarket penetration Leverage the operations Resource allocation Technology introductions Customer alignment Operational excellence Lean manufacturing/Six Sigma Cost redu
Slide 26: 2005 Guidance
2005 Guidance Full year sales expected to increase 10% to 12% in 2005 compared to 2004 First quarter 2005 sales expected to increase 13% to 15% compared to the first quarter of 2004 Income from operations in 2005 expected to increase 7% to 9% from 2004 levels First quarter 2005 income from operation
Slide 27: CORPORA
CORPORA