Standard Motor Products, Inc. Q1 2020 Investor Presentation 1 - PowerPoint PPT Presentation

Standard Motor Products, Inc. Q1 2020 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. Further, we expect the COVID-19 pandemic to impact our future sales and profitability as described in our 10-Q as of March 31, 2020 and filed with the SEC on April 30, 2020. You are urged to review this filing, and all of 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 101 Years in Business • Founded 1919 • $1.1 Billion 2019 Sales • 4,200 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 2019 Sales Engine Mgmt Aftermarket Breakdown 25% Temp Control 13% OE / OES 87% 75% 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, 2012-2019 DIFM DIY $238 3.5 $250 $228 $220 Millions 3.27 $212 Billions 3.22 3.21 $203 3.17 $196 $191 3.10 $200 3.03 2.99 2.97 3.0 $150 $100 2.5 $58 $57 $58 $54 $52 $50 $48 $50 $0 2.0 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 2019 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 • Quarterly dividends 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% – Operations in Mexico & Poland 74% 56% – China expansion (Gwo Yng, FGD, CYJ) 28% – Integration of General Cable 2007 2011 2015 2019 – 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 – GDI High Pressure Pumps – First to manufacture in aftermarket – ETB / ETB Kits – Gaskets Included, Manufactured in Mexico – EVAP Components – Manufactured in Independence and Greenville – Active Grill Shutters – Initial offering 12 units – CAPA Certified – Battery Management – Battery Current Sensors 100+ SKUs / 35M VIO – EGT / ETS – Manufactured in Bialystok – Diesel Nitrogen Oxide (NOx) Sensors – High failure OE part – ADAS Components – Market leader in ADAS, 30+ new categories targeted – Accelerator Pedal Sensors – Manufacturing in Mexico – Air Door Actuators – High OE-failure component, 300+ SKUs – Brushless Motors (BLDC) – Modular electronics adaptable to various models – Thermostat Assemblies and Housings – Improved design over the OE – Water Outlets – Industry-leading coverage – TCD Electric Compressors – for HEV and ICE vehicles 13

Successful Growth Programs 2011 Strategic Acquisitions • 12 Acquisitions in Recent Years 2012 • Primary Focus 2013 – Bolt-on: acquire competitors – Vertical integration: acquire suppliers 2014 – New but related business • Rationale 2016 – Provides enhanced value to our customers • Helps with Full-Line, Full-Service model 2017 • Rapid entry to new technologies • Economies of scale allows further investment 2019 • 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 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 2019 $10.7M 221,748 $48.43 2011 – 2019 $96.0M 2,834,509 15

SMP Cash Utilization 120 Capital Expenditures Dividends Cash Acquisitions Buybacks 0.4 100 4.1 10.7 Cash Uses ($M) 80 67.3 10.0 96.0 5.0 24.4 60 (Buybacks) 43.5 14.9 70.5 289.1 6.8 37.7 9.9 19.6 (Acquisitions) 40 38.6 6.9 17.3 18.9 15.4 12.8 127.0 20.6 13.7 20 (Dividends) 11.9 2.0 10.1 8.2 6.4 4.5 24.4 20.9 20.1 18.0 16.2 158.5 13.9 11.8 11.4 10.8 11.0 (CapEx) 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 '10-'19 Total Cash Usage 17.3 92.0 63.6 41.2 73.5 51.3 104.0 72.9 63.8 91.0 670.6 Uses of Cash: Invest for Growth 74% 89% 79% 59% 70% 35% 85% 43% 47% 66% 67% (Capex + M&A) Return to Investors 26% 11% 21% 41% 30% 65% 15% 57% 53% 34% 33% (Buybacks + Dividends) 16

March 2020 YTD Results 17

Year-Over-Year Performance Measures Consolidated Net Sales ($M) Gross Margin 35.0% $1,200 30.6% 29.8% $1,137.9 27.7% 27.7% 27.5% $1,092.1 30.0% $1,116.1 $1,000 $1,058.5 25.0% $800 20.0% $600 30.5% 15.0% 29.3% 29.2% 28.6% $400 10.0% $200 $282.4 $283.8 $261.8 $254.3 5.0% $238.9 $- 0.0% 2016 2017 2018 2019 2020 2016 2017 ǂ 2018 ǂ * 2019* 2020* Full Year Mar YTD Mar YTD Full Year EBITDA (w/o Special Items) ($M) Diluted EPS (w/o Special Items) $3.50 $140.0 $3.00 $120.0 $129.6 $125.5 $3.10 $123.5 $2.83 $2.77 $2.50 $100.0 $107.0 $2.55 $80.0 $2.00 $60.0 $1.50 $40.0 $1.00 $33.3 $20.0 $0.50 $0.74 $24.7 $24.8 $0.57 $0.55 $20.9 $20.5 $0.46 $0.43 $- $- 2016 2017 ǂ 2018 ǂ 2019 2020 2016 2017 ǂ 2018 ǂ 2019 2020 Mar YTD Full Year Mar YTD Full Year ǂ Includes Wire Integration Costs Incurred From Nogales to Reynosa Move * Includes Slight Dampening Effect on Margins as a Result of Tariffs 18

Substantial Gross Margin Improvement Engine Management 34% 32% 31.3% 31.0% 30.7% 30.4% 29.6% 29.4% ǂ 30% 28.6% ǂ 28.2% 28% 26.2% 25.3% 25.6% 25.2% 25.6% 26% 25.0% 24.3% 23.5% 24% 23.1% 21.6% 21.9% 22.1% 21.8% 22% 19.7% 20% Temperature Control 18% 16% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* ǂ Includes Wire Integration Costs Incurred From Nogales to Reynosa Move * Includes Slight Dampening Effect on Margins as a Result of Tariffs 19