Standard Motor Products, Inc.
2009 Annual Automotive Aftermarket
Symposium
November 2 - 4, 2009
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
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 vehicle fleet
Closing car dealerships
Lower fuel prices leads to increased mileage
Most repairs are non-discretionary
Continued margin improvement driven by recent restructuring actions
Low-cost production in Mexico and closure of Puerto Rico and Long Island City
facilities
Production in low cost facilities expected to reach a goal of 46% in 2009 and 55% in
2010, up from 38% in 2008
Purchases from low cost suppliers expected to reach a goal of 50% in 2009 and
52% in 2010, up from 47% in 2008
3
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
Transaction gives SMP flexibility to pursue strategic opportunities
Financial flexibility will allow SMP to take full advantage of opportunities to acquire
products / production lines as other vendors rationalize their businesses
4
SMP is an Aftermarket Pure Play
2008 Sales
Export Special
Based on 250 million vehicles on the road
3% Markets
OES 5%
Highly stable 5%
Slow and steady growth
Tens of thousands of SKUs
OE Traditional
7% 47%
Not affected by rise and fall of new car Retail
production 33%
Higher margins
5
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
areas
Miles driven has begun to increase
Fuel Prices Stabilized
Increasing miles driven creates
demand for replacement parts
6
Focused Business Strategy
Focused on Two Major Product Lines
#1 in each
Temperature
European Control Engine Other
Group 25% Management 1%
6% 68%
7
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 Module
category
8
Focused Business Strategy
Temperature Control Division
#1 Position in Temperature Control
Business Strengths Temperature Control Products
#1 market position
Top-line growth
Recent wins in 2009
(AutoZone, CSK, Pep
Boys)
Cost reduction as a result of
plant relocations to
Reynosa, Mexico
Significant operating
leverage
9
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 remanufacturing compressors in Reynosa, MX
2009
Continued shift to three manufacturing facilities in Reynosa, MX
Acquired Federal Mogul Wire Product Line
Potential sale of European Distribution business
10
Move to Low Cost Environment
Manufacturing Purchasing
55%
52%
50%
46% 47%
42%
38% 38%
34%
29%
26%
20%
2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010
Estimate Goal Estimate Goal
% production labor hours in low cost facilities % purchased from low cost suppliers
11
2008 - 2009 Operational Improvements
Inventory Reduction
Reduced by 17%, or $40mm, over last 12 months
Accounts Receivable Reduction
Reduced by 28%, or $68mm, over last 12 months
SG&A Reduction
$18mm in savings achieved YTD
Reduced 10% of salaried positions over last 12 months
12
Financial Overview
13
September YTD Income Statement Non-GAAP
(Excluding Non-Operational Gains and Losses)
($ in Millions)
Sept. 2009 YTD Sept. 2008 YTD
Amount % of Sales Amount % of Sales
Net Sales $ 575.3 100.0% $ 626.4 100.0%
Gross Profit 137.1 23.8% 148.6 23.7%
SG&A Expenses 109.6 19.1% 127.5 20.4%
Operating Profit 27.5 4.8% 21.1 3.4%
Other Income/Loss 1.1 -
Interest Expense 7.2 11.0
Income Taxes 8.3 6.6
Earnings from Continuing Ops. $ 13.1 $ 3.5
Diluted EPS $ 0.70 $ 0.19
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Condensed Balance Sheet
($ in Millions)
Improved free cash flow Condensed Balance Sheet Sep '09
Inventory management – Reduced
by $40mm from Sep ‘08 Current Assets $ 410.5
A/R factoring – Reduced by $68mm PP&E 63.9
from Sep ‘08 Other Assets 63.3
Total Assets $ 537.7
Reduced debt by $119M
Retired $32mm balance of
Current Liabilities $ 186.2
convertible bonds Debt 110.9
Other Liabilities 67.5
Issued $12.3mm in convertible
Shareholders Equity 173.1
subordinated debentures and
$5.4mm in unsecured promissory Total Liabilities and
notes Shareholders' Equity $ 537.7
Debt to total capitalization ratio of
39.0% vs. 52.6% in Sep ‘08
15
Debt Reduction & Cash Flow
(US$ in millions)
Total Debt Key Achievements
$255
$97mm of operating cash flow in
$194
YTD 3Q 2009 driven by:
$111
Improved working capital position
Factoring program with key
accounts
Dec 2007 Dec 2008 3Q 2009
Cash Flow from Operations $86mm of liquidity as of 3Q 2009
$10mm in cash
$142
$76mm available in revolver
$45
($8)
Dec 2007 Dec 2008 LTM 3Q 2009
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SMP Capitalization
(US$ in millions) As of September 30, 2009 Pro Forma
% of Total % of Total
Amount Capitalization Amount Capitalization
GE Revolving Credit Facility $90.0 31.7% $66.3 23.4%
15% Convertible Subordinated Debentures 12.3 4.3 12.3 4.3
15% Unsecured Promissory Notes 5.4 1.9 5.4 1.9
Other (Europe 2.5, Other 0.7) 3.2 1.1 3.2 1.1
Total Debt $110.9 39.0% $87.2 30.7%
Book Value of Equity 173.1 61.0% 196.8 69.3%
Total Capitalization $284.0 100.0% $284.0 100.0%
Debt / LTM EBITDA(a) 2.9x 2.2x
LTM Interest Coverage 4.0x 4.4x
Note: Assumes equity offering of 3.0mm shares at offering price of $8.50;
5.00% gross spread and $0.5mm of other fees
(a) LTM Adjusted EBITDA of $38.8mm as of 30-Sep-2009.
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Appendix
18
Reconciliation of EBITDA
2004 2005 2006 2007 2008 LTM 9/09
Earnings from Continuing Operations $(8.9) $(1.8) $9.2 $5.4 $(21.1) $(22.9)
+ Income Taxes (3.6) 1.4 6.5 2.8 (8.1) (13.0)
+ Interest Expense 15.1 18.5 20.9 19.1 13.6 9.8
+ Depreciation & Amortization 19.0 17.4 15.5 15.2 14.7 14.8
= EBITDA $21.6 $35.5 $52.1 $42.5 $(0.9) $(11.3)
+ Loss from Divestiture of Europe TC Business – – 3.2 – – –
- Gain on Sale of Fort Worth Texas Building – – – (0.8) – –
- Gain on Sale of LIC Building – – – – (20.4) (1.0)
- Gain from Repurchase of Bonds – – – – (3.8) (2.3)
- Gain on Sale of GPI Stock – – – – – (2.3)
+ Goodwill and Intangible Impairment Charge 6.4 – – – 39.3 39.3
+ Restructuring & Integration Expenses 11.4 5.3 1.8 10.9 16.9 16.4
= Adjusted EBITDA $39.4 $40.8 $57.1 $52.6 $31.1 $38.8
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Reconciliation of GAAP and Non-GAAP
Measures
($ in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
EARNINGS FROM CONTINUING OPERATIONS 2009 2008 2009 2008
(Unaudited)
GAAP EARNINGS FROM CONTINUING OPERATIONS $ 4,724 $ 397 11,149 12,972
RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) 2,042 1,204 3,871 3,734
GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (1,402) -
LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) - - - 882
GAIN FROM SALE OF BUILDING (NET OF TAX) (157) (160) (472) (13,180)
GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) - (942) (24) (942)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS $ 6,609 $ 499 $ 13,122 $ 3,466
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 0.25 $ 0.02 $ 0.59 $ 0.70
RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX) 0.11 0.07 0.21 0.20
GAIN FROM SALE OF PREFERRED STOCK INVESTMENT (NET OF TAX) - - (0.07) -
LOSS FROM EXTINGUISHMENT OF DEBT (NET OF TAX) - - - 0.05
GAIN FROM SALE OF BUILDING (NET OF TAX) (0.01) (0.01) (0.03) (0.71)
GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) - (0.05) - (0.05)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 0.35 $ 0.03 $ 0.70 $ 0.19
MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL
ITEMS, WHICH ARE NON-GAAP MEASUREMENTS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING
OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL
OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.
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Standard Motor Products, Inc.