Standard Motor Products, Inc. Q3 2019 Investor Presentation 1 - PowerPoint PPT Presentation

Standard Motor Products, Inc. Q3 2019 Investor Presentation 1

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 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

Industry and Business Overview 3

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 success 4

SMP Snapshot 100 Years in Business • Founded 1919 • $1.1 Billion 2018 Sales • 4,400 Employees Worldwide LAWRENCE I. SILLS ERIC P. SILLS JAMES J. BURKE DALE BURKS NATHAN ILES Executive Chairman Director, CEO Chief Operating EVP and Chief Chief Financial Board of Directors and President Officer Commercial Officer Officer Sales by Market Sales by Product Line 2018 Sales Engine Mgmt Aftermarket Breakdown 26% Temp Control 12% OE / OES 88% 74% Major Product Engine Management Temperature Control Categories • Ignition Products • A/C Compressors • Emissions Products • Other A/C System Components • Fuel Delivery • Engine Cooling Products • Vehicle Electronics • Blower & Radiator Fan Motors • Wire & Cable • Window Lift Motors 5

SMP Snapshot Professionally Recognized Brands Significant Supplier to All Major Distributors 6

SMP Facilities – Worldwide Global Footprint 3 Million sq. ft. • 13 Manufacturing Plants • 6 Distribution Centers • 9 Offices 7

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 278 272 270 36% 38% 39% 40% 41% 80% 42% 43% 44% 44% 264 258 253 60% 249 249 24% 240 24% 24% 23% 17% 15% 23% 21% 19% 40% 20% 22% 19% 25% 17% 19% 18% 24% 21% 20% 19% 19% 18% 19% 19% 17% 15% 16% 14% 200 0% 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Light Vehicles VIO 0-3 yrs VIO 4-7 yrs VIO 8-11 yrs VIO 12+ yrs Source: IHS Markit Source: IHS Markit Miles Driven is Increasing DIFM Revenue Continues to Grow Annual Miles Driven, 2011-2018 DIFM DIY $238 3.5 $250 $228 $220 Millions $212 Billions 3.22 3.21 $203 3.17 $196 $191 3.10 $200 3.03 2.99 2.97 2.95 3.0 $150 $100 2.5 $58 $57 $58 $54 $52 $50 $48 $50 $0 2.0 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Department of Transportation / Federal Highway Administration Source: Auto Care Association / Modern Tire Dealer 8

Strategy Overview 9

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 increased manufacturing Continuous • Increase in low-cost footprint Improvement • Global sourcing without compromise to quality • Strategic expansion of our business Successful • Complementary product lines Growth • Complementary markets, geographies and channels Programs • Strategic acquisitions Return to • Dividend Increase Shareholders • Treasury Stock Buyback Program 10

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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 70% 56% – China expansion (Gwo Yng, FGD, CYJ) 25% – Integration of General Cable 2006 2010 2014 2018 – Integration of Pollak (2019) • Low Cost Sourcing – Hong Kong Engineering & Sourcing Office – Rigorous U.S. product qualification 12

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 aftermarket exclusive • Evaporative Emissions Components (EVAP) – 1,000+ SKUs • ADAS Components – Market leader in ADAS • Interior Switches – 10,000 engine, multi-function, & driver-operated switches • Brushless Motors (BLDC) – Modular electronics adaptable to various models • Thermostat Assemblies and Housings – improved design over the OE • Water Outlets – Industry leading catalog and coverage • Blend Door Actuators – Multiple functionality with up to six per vehicle • Electric A/C Compressors for EVs – Manufactured by CYJ 13

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 • Growth and diversification / OES and Heavy Duty • Rapid entry to new technologies • Increased / low-cost manufacturing – Provides enhanced value to our customers • Helps with Full-Line, Full-Service model • Economies of scale allows further investment • Helps address part complexity / SKU proliferation 14

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 2011 $4.1M 322,250 $12.84 2012 $5.0M 380,777 $13.13 2013 $6.9M 209,973 $32.69 2014 $10.0M 284,284 $35.18 2015/16 $20.0M 561,926 $35.59 2017/18 $39.3M 853,551 $46.00 9/30/19 YTD $10.7M 221,748 $48.43 2011 – 9/30/19 $96.0M 2,834,509 15

SMP Cash Utilization 120 Buybacks 0.4 100 Cash 4.1 Acquisitions Cash Uses ($M) 80 Dividends 85.3 67.3 10.0 (Buybacks) 5.0 24.4 60 Capital 14.9 70.5 258.4 Expenditures (Acquisitions) 6.8 37.7 9.9 19.6 40 38.6 6.9 17.3 106.4 18.9 15.4 12.8 (Dividends) 13.7 20 11.9 2.0 10.1 8.2 6.4 12.8 4.5 149.7 24.4 20.9 20.1 18.0 13.9 11.8 11.4 10.8 11.0 (CapEx) 7.2 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 '09-'18 Total Cash Usage 20.0 17.3 92.0 63.6 41.2 73.5 51.3 104.0 72.9 63.8 599.8 Uses of Cash: Invest for Growth 100% 74% 89% 79% 59% 70% 35% 85% 43% 47% 68% (Capex + M&A) Return to Investors 0% 26% 11% 21% 41% 30% 65% 15% 57% 53% 32% (Buybacks + Dividends) 16

September 2019 YTD Results 17

Year-Over-Year Performance Measures Consolidated Net Sales ($M) Gross Margin 35.0% $1,200 30.0% $1,116.1 $1,092.1 $1,000 30.5% $1,058.5 29.3% UP 6.1% 28.9% 28.9% 28.6% $972.0 25.0% $896.7 $800 $876.2 $845.1 $828.7 $767.0 20.0% $600 15.0% $400 10.0% $200 5.0% $- 0.0% 2015 2016 2017 2018 2019 2015 2016 2017* 2018* 9/2019 YTD Sep YTD Full Year EBITDA (w/o Special Items) ($M) Diluted EPS (w/o Special Items) $3.00 $140.0 UP 23.6% $2.83 $2.77 $120.0 $129.6 $2.50 $123.5 $2.55 $2.51 UP 18.8% $2.35 $100.0 $2.28 $107.0 $104.6 $2.00 $102.4 $2.13 $100.0 $96.4 $2.03 $80.0 $84.2 $1.78 $1.50 $78.6 $60.0 $1.00 $40.0 $0.50 $20.0 $- $0.00 2015 2016 2017* 2018* 2019 2015 2016 2017* 2018* 2019 Sep YTD Full Year Sep YTD Full Year 18 * Includes Wire Integration Costs Incurred From Nogales to Reynosa Move

Substantial Gross Margin Improvement Engine Management Target: 29-30% (2019) 30% + (Future) 34% 31.3% 32% 31.0% 30.7% 30.7% 30.4% 29.4%* 29.3% 30% 28.6%* 28.0% 28.2% 28% 26.2% 25.3% 26.0% 25.6% 25.6% 26% 25.0% 26.7% 24.3% 23.5% 24% 23.1% 21.6%21.9% 22.1% 21.8% 23.5% 22% 19.7% 20% Temperature Control Target: 25-26% (2019) 18% 26% + (Future) 16% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3/19 6/19 9/19 19 * Includes Wire Integration Costs Incurred From Nogales to Reynosa Move

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 Interest Expense 4.3 3.1 Income Taxes 19.2 16.7 Earnings from Continuing Ops. $ 57.3 $ 46.7 Diluted Earnings Per Share: Continuing Operations $ 2.51 $ 2.03 Diluted Shares (000's) 22,814 22,955 20