Standard Motor Products, Inc. · NYSE:SMP
Standard Motor Products — Q3 2019 Earnings Presentation
27 slides from Standard Motor Products's earnings presentation, 2019
Slide 1: Q3 2019 Investor Presentation
Standard Motor Products, Inc. Q3 2019 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 100 Years in Business • Founded 1919 • $1.1 Billion 2018 Sales • 4,400 Employees Worldwide LAWRENCE I. SILLS Executive Chairman ERIC P. SILLS Director, CEO JAMES J. BURKE Chief Operating DALE BURKS EVP and Chief NATHAN ILES Chief Financial Board of Directors and President Officer Commer
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. • 13 Manufacturing Plants • 6 Distribution Centers • 9 Offices 7
Slide 8: Favorable Industry Trends
Favorable Industry Trends Vehicle Population is increasing 12-Years+ vehicles continues to grow U.S. Light Vehicle Parc Age Mix of Vehicles – Year Range Categories 280 100% Millions 278 270 272 80% 36% 38% 39% 40% 41% 42% 43% 44% 44% 264 258 253 60% 240 249 249 24% 24% 24% 23% 23% 21% 19% 17% 15% 40
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” • Low Cost Manufacturing % of Hrs in Low Cost Plants 82% – Closure of Grapevine and Orlando 56% 70% – China expansion (
Slide 13: Successful Growth Programs
Successful Growth Programs Committed to Growing Technology Categories • Electronic Throttle Bodies (ETB) – Basic manufacturing in Reynosa • EGT / ETS (Exhaust Gas Temperature) – Manufactured in Bialystok • Anti-lock Brake (ABS) Sensors – 4 per vehicle; 2400+ SKUs • TPMS – NSF registered, an aftermar
Slide 14: Successful Growth Programs: Strategic Acquisitions
Successful Growth Programs Strategic Acquisitions • 12 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 $0.92 $0.84 $0.76 $0.68 $0.60 $0.52 $0.44 $0.36 $0.28 2011 2012 2013 2014 2015 2016 2017 2018 2019 Forecast 2019 Note: $0.92 based on quarterly dividend of $0.23 announced Feb 2019 Treasury Stock Buyback Program Year Spend Shares Avg. Price 20
Slide 16: SMP Cash Utilization
SMP Cash Utilization 120 Buybacks 0.4 100 Cash Acquisitions 4.1 Cash Uses ($M) 80 Dividends 67.3 85.3 10.0 (Buybacks) 60 5.0 24.4 Capital 14.9 Expenditures 70.5 258.4 (Acquisitions) 37.7 6.8 9.9 40 38.6 19.6 6.9 17.3 106.4 12.8 15.4 18.9 (Dividends) 13.7 20 11.9 2.0 6.4 8.2 10.1 12.8 4.5 24.4 149.7
Slide 17: September 2019 YTD Results
September 2019 YTD Results 17
Slide 18: Year-Over-Year Performance Measures
Year-Over-Year Performance Measures Consolidated Net Sales ($M) Gross Margin $1,200 35.0% $1,000 $1,116.1 $1,092.1 30.0% $1,058.5 30.5% 29.3% UP 6.1% 28.9% 28.6% 28.9% $972.0 25.0% $800 $876.2 $896.7 $828.7 $845.1 $767.0 20.0% $600 15.0% $400 10.0% $200 5.0% $- 0.0% 2015 2016 2017 2018 2019 2015 201
Slide 19: Substantial Gross Margin Improvement
Substantial Gross Margin Improvement Engine Management Target: 29-30% (2019) 30% + (Future) 34% 32% 31.3% 30.7% 31.0% 30.4% 30.7% 30% 29.4%* 29.3% 28.2% 28.6%* 28.0% 28% 26.2% 25.3% 26.0% 25.6% 25.6% 26% 25.0% 26.7% 24.3% 24% 23.5% 23.1% 21.8% 22.1% 21.6%21.9% 23.5% 22% 19.7% 20% Temperature Control
Slide 20: Income Statement Non-GAAP
Income Statement Non-GAAP ($ in millions) September 2019 YTD September 2018 YTD Amount % of Sales Amount % of Sales Net Sales $ 896.7 100.0% $ 845.1 100.0% Gross Profit 259.0 28.9% 241.2 28.5% SG&A Expenses 180.5 20.0% 175.6 20.8% Operating Profit 78.5 8.8% 65.6 7.8% Other Income/(Loss) 2.3 0.9 Inte
Slide 21: Condensed Balance Sheet
Condensed Balance Sheet Actual Q3 2019, Q3 2018 ($ in millions) Dollars Ratios 2019 2018 2019 2018 Cash and Equivalents $ 13.3 $ 27.3 Accounts Receivable/DSO 169.0 163.3 50 51 Inventory/Turns 340.2 318.4 2.3 2.4 Unreturned Customer Inventory 20.3 21.3 Other Assets 377.9 306.1 Total Assets $ 920.7 $
Slide 22: Condensed Statement of Cash Flows
Condensed Statement of Cash Flows (IN MILLIONS) September YTD Full Year 2019 2018 2018 NET INCOME $46.4 $39.7 $43.0 DEPRECIATION & AMORTIZATION 19.3 17.7 24.1 ACCOUNTS RECEIVABLE (16.6) (23.4) (13.7) INVENTORY 11.8 2.8 (30.2) ACCOUNTS PAYABLE (24.1) 5.2 16.9 OTHER OPERATING ACTIVITIES 6.3 25.6 30.2
Slide 23: Appendix
Appendix Standard Motor Products, Inc. 23
Slide 24: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share amounts) NINE MONTHS ENDED SEPTEMBER 30, 2019 2018 2017 2016 2015 (Unaudited) EARNINGS FROM CONTINUING OPERATIONS GAAP EARNINGS FROM CONTINUING OPERATIONS $ 56,313 $ 44,697 $ 51,736 $ 53,573 $ 42,341 RESTRUCTURING AND INT
Slide 25: Reconciliation of GAAP and Non-GAAP Measures (cont’d)
Reconciliation of GAAP and Non-GAAP Measures (cont’d) ($ in thousands) NINE MONTHS ENDED SEPTEMBER 30, 2019 2018 2017 2016 2015 (Unaudited) EBITDA WITHOUT SPECIAL ITEMS GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES $ 74,952 $ 60,498 $ 82,204 $ 85,037 $ 65,110 DEPRECIATION & AMORTIZATION 19,2
Slide 26: 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 2019 2018 2019 2018 (Unaudited) (Unaudited) GAAP EARNINGS FROM CONTINUING OPERATIONS $ 22,654 $ 19,273
Slide 27: Thank You
Thank You Standard Motor Products, Inc. 27
Standard Motor Products — Q3 2019 Earnings Presentation on 6ix