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LIGHT VEHICLE COMMERCIAL INDUSTRIAL
Metaldyne Performance Group
First Quarter 2015 Earnings Presentation
May 7, 2015
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DisclaimerThis presentation and any related statements contains certain “forward-looking statements” about MPG’s financial results and estimates and business prospects within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “project,” “believes,” “seeks,” “targets,” “forecast,” “estimates,” “will” or other words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company’s future business, prospects, and financial performance; the industry outlook, our backlog and our 2015 financial guidance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory, and other factors and risks, including, but not limited to, the following: volatility in the global economy impacting demand for new vehicles and our products; a decline in vehicle production levels, particularly with respect to platforms for which we are a significant supplier, or the financial distress of any of our major customers; seasonality in the automotive industry; our significant competition; our dependence on large-volume customers for current and future sales; a reduction in outsourcing by our customers, the loss or discontinuation of material production or programs, or a failure to secure sufficient alternative programs; our failure to offset continuing pressure from our customers to reduce our prices; our inability to realize all of the sales expected from awarded business or fully recover pre-production costs; our failure to increase production capacity or over-expanding our production in times of overcapacity; our reliance on key machinery and tooling to manufacture components for powertrain and safety-critical systems that cannot be easily replicated; program launch difficulties; a disruption in our supply or delivery chain which causes one or more of our customers to halt production; work stoppages or production limitations at one or more of our customer’s facilities; a catastrophic loss of one of our key manufacturing facilities; failure to protect our know-how and intellectual property; the disruption or harm to our business as a result of any acquisitions or joint ventures we make; a significant increase in the prices of raw materials and commodities we use; the damage to or termination of our relationships with key third-party suppliers; our failure to maintain our cost structure; the incurrence of significant costs if we close any of our manufacturing facilities; potential significant costs at our facility in Sandusky, Ohio; the failure of or disruptions in our information technology networks and systems, or the inability to successfully implement upgrades to our enterprise resource planning systems; the incurrence of significant costs, liabilities, and obligations as a result of environmental requirements and other regulatory risks; extensive and growing governmental regulations; the adverse impact of climate change and related energy legislation and regulation; the incurrence of material costs related to legal proceedings; our inability to recruit and retain key personnel; any failure to maintain satisfactory labor relations; pension and other postretirement benefit obligations; risks related to our global operations; competitive threats posed by global operations and entering new markets; foreign exchange rate fluctuations; increased costs and obligations as a result of becoming a public company; the failure of our internal controls to meet the standards required by Sarbanes-Oxley; our substantial indebtedness; our inability, or the inability of our customers or our suppliers, to obtain and maintain sufficient debt financing, including working capital lines; our exposure to a number of different tax uncertainties; the mix of profits and losses in various jurisdictions adversely affecting our tax rate; disruption from the combination of our operations and diversion of management’s attention; our limited history of working as a single company and the inability to integrate HHI, Metaldyne, and Grede successfully and achieve the anticipated benefits.
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this press release and in our public filings, including under the heading “Risk Factors” in our filings that we make from time to time with the Securities and Exchange Commission. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.Non-GAAP Financial Measures
Combined Net Sales We define Combined Net Sales as the net sales of MPG plus the net sales of Grede prior to our acquisition of Grede. We present Combined Net Sales because our management considers it to be a useful, supplemental indicator of
our performance when comparing periods before and after our acquisition of Grede. For a reconciliation of Combined Net Sales to net sales, the most directly comparable GAAP measure, see Appendix to this presentation.Combined Non-GAAP Gross Profit
We define Combined Gross Profit as the gross profit of MPG plus the gross profit of Grede prior to our acquisition of Grede. We present Combined Gross Profit because our management considers it to be a useful, supplemental indicator of our performance when comparing periods before and after our acquisition of Grede. For a reconciliation of Combined Gross Profit to gross profit, the most directly comparable GAAP measure, see “ADJUSTEMENTS TO RECONCILE TO US GAAP”.Adjusted EBITDA and Combined Adjusted EBITDA
We define Adjusted EBITDA as net income (loss) before interest expense, provision for (benefit from) income taxes and depreciation and amortization, with further adjustments to reflect the additions and eliminations of certain income statement items, including (i) gains and losses on foreign currency and fixed assets and debt transaction expenses, (ii) stock-based compensation and other non-cash charges, (iii) sponsor management fees and other income and expense items that we consider to be not indicative of our ongoing operations, (iv) specified non-recurring items and (v) other adjustments. We define Combined Adjusted EBITDA as Adjusted EBITDA plus the Adjusted EBITDA of Grede prior to our acquisition of Grede. We believe Adjusted EBITDA is used by investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management uses Adjusted EBITDA (i) as a measurement used in comparing our operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes, including the preparation of our internal annual operating budget, (iv) to evaluate the performance and effectiveness of our operational strategies and (v) to assess compliance with various metrics associated with our agreements governing our indebtedness. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating performance in the same manner as our management. We present Combined Adjusted EBITDA because our management considers it to be a useful, supplemental indicator of our performance when comparing periods before and after our acquisition of Grede. For a reconciliation of Adjusted EBITDA and Combined Adjusted EBITDA to net income, the most directly comparable measure determined under U.S. generally accepted accounting principles (“GAAP”), see Appendix to this presentationAdjusted Free Cash Flow and Combined Adjusted Free Cash Flow
We define Adjusted Free Cash Flow as Adjusted EBITDA less capital expenditures. Capital expenditures can be found in our consolidated statements of cash flows as a component of cash flows from investing activities. We define Combined Adjusted Free Cash Flow as Adjusted Free Cash Flow plus the Adjusted Free Cash Flow of Grede prior to our acquisition of Grede. We present Adjusted Free Cash Flow because our management considers it to be a useful, supplemental indicator of our performance. When measured over time, Adjusted Free Cash Flow provides supplemental information to investors concerning our results of operations and our ability to generate cash flows to satisfy mandatory debt service requirements and make other non-discretionary expenditures. We present Combined Adjusted Free Cash Flow because our management considers it to be a useful, supplemental indicator of our performance when comparing periods before and after our acquisition of Grede. For a reconciliation of Adjusted Free Cash Flow and Combined Adjusted Free Cash Flow to net income, the most directly comparable GAAP measure, see Appendix to this presentation.Combined Non-GAAP CapEx
We define Combined CapEx as the capital expenditures of MPG (“CapEx”) plus the capital expenditures of Grede prior to our acquisition of Grede. We present Combined CapEx because our management considers it to be a useful, supplemental indicator of our performance when comparing periods before and after our acquisition of Grede. For a reconciliation of Combined CapEx to CapEx, the most directly comparable GAAP measure, see “ADJUSTEMENTS TO RECONCILE TO US GAAP”.
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Agenda
Introduction Paul SuberVice President of Investor Relations
Q1 Highlights and Market Outlook George ThanopoulosChief Executive Officer
Financial Results and 2015 Guidance Mark Blaufuss Chief Financial Officer and Treasurer
Q & A SessionGeorge ThanopoulosMark BlaufussPaul Suber
FIRST QUARTER 2015 HIGHLIGHTS AND MARKET OUTLOOK
Metaldyne Performance Group
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Driving Value
o Secure growth through new business wins
o Execute on vertical integration/cross-selling
o Leverage cash flow model
o Ramp-up of new programs
o Capture value-added, powertrain content
o Continue global expansion
Focus on Strong
Profitability and Cash Flow
Generation
Debt Reduction
Maintain or Grow Dividend
Benefit from Expected Growth
in Powertrain and Safety-
Critical Components
Capitalize on Global Scale
and Capabilities
Take Advantage of Cross-Sell
Opportunities
2015 – 2017
Long – Term Net Sales Target of > $4 Billion
2018 and Beyond
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2015 First Quarter Highlights
1. Combined Adjusted EBITDA / % of Combined Net Sales (Non-GAAP)
Adjusted EBITDA Margin1
2012 2013 2014 Q1 2015
15.4%
16.7%17.3% 17.3%
o Financials Highlights
Net sales of $765.2 million
Adjusted EBITDA of $132.6 million
Continued trend of strong Adjusted EBITDA margins (17.3%)
Earnings Per Share (Fully-Diluted) of $0.47
o Robust overall market with slight headwinds in industrial and isolated light vehicle markets
o Macro trends of metals market and FX had expected impact
o Continuing Integration efforts
Emphasis on vertical integration/cross-selling products in powertrain
Executing on identified cost reduction and efficiency improvement opportunities
o First dividend declared - $0.09/share dividend payable on May 26, 2015 to shareholders of record as of May 12, 2015
o Continued voluntary pre-payment of debt - $10 million of Senior Term Loan in the first quarter of 2015
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Customer Recognition Awards
Metaldyne wins second consecutive GM Supplier of the Year Award (Powertrain Category)
Grede wins Meritor Foundry Supplier of the Year Award
Continuing Focus on Operational Excellence and Delivering Value to our Customers
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2014 2015 2016 2017 2018
17.0 17.4 17.9 18.3 18.6
North America Light Vehicle Production1
Market Outlook
2014 2015 2016 2017 2018
20.1 20.1 20.521.2
22.0
2014 2015 2016 2017 2018
296 325 287 275 268
226 230 235 247 250
522 555 522 522 518
FTR Class 8 ACT Class 5-7
European Light Vehicle Production1
North America Class 5-8 Vehicle Production2
2014 2015 2016 2017 2018
44.445.8
48.050
51.3
Asian Light Vehicle Production1
Positive Outlook for Primary Regions and Markets
1. Vehicle Production in millions: IHS April 20152. Vehicle Production in thousands: FTR and ACT March 2015
U.S.75%
Europe15%
Rest of World10%
MPG 2014 End Market Contribution
Light Ve-hicle78%
Commercial12%
Industrial9%
Other1%
MPG 2014 Geographic Contribution
FINANCIAL RESULTS Metaldyne Performance Group
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2015 First Quarter Financial Results by Segment
($ in Millions) HHI Metaldyne Grede MPG Cons.
Net Sales $244.1 $277.7 $243.4 $765.2
Gross Profit 42.3 42.6 43.6 128.5
% of Net Sales 17.3% 15.3% 17.9% 16.8%
Adjusted EBITDA1 46.8 47.1 38.7 132.6
% of Net Sales 19.2% 17.0% 15.9% 17.3%
1. See Appendix for reconciliation to GAAP
All MPG Companies had a Solid First Quarter Despite Metals Market and FX Undercurrents
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First Quarter Financial Results - GAAP
($ in Millions) First Quarter
2015 2014 Difference
Net Sales $765.2 $540.5 $224.7
Adjusted EBITDA1 132.6 99.7 32.9
Capex 60.7 30.8 29.9
Adjusted Free Cash Flow 2 $71.9 $68.9 $3.0
1. See Appendix for reconciliation to GAAP
2. Defined as Adjusted EBITDA less CapEx
Strong First Quarter Results with Growth Driven by Grede Acquisition
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2015 First Quarter Results – Combined, Non-GAAP Results
($ in Millions) First Quarter
2015 20141 Difference
Net Sales $765.2 $790.6 $(25.4)
Adjusted EBITDA 132.6 137.4 (4.8)
% of Net Sales 17.3% 17.4%
Capex 60.7 38.3 22.4
Adjusted Free Cash Flow2 $71.9 $99.1 $(27.2)
1. Financial information for 2015 was prepared in accordance with GAAP except Adjusted EBITDA which is a Non-GAAP measure. 2014 is presented on a combined, Non-GAAP basis, to give effect to the combination of the three business segments as of January 1, 2014. See appendix for reconciliation to GAAP2. Adjusted EBITDA less Capex
Solid First Quarter Reflects Macro Metals Market/FX Impact and Capex Timing
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2015 First Quarter Cash Flow
o Strong Q1 Adjusted Free Cash Flow
o Timing of Interest and Income Tax Payments
o Voluntary Pre-Payment of Debt
o Seasonality of Working Capital/Other, Net
Strong Free Cash Flow in First Quarter
Adjusted EBITDA1 $ 132.6
Less Capex (60.7)
Adjusted Free Cash Flow1,2 $ 71.9
Memo Items
Cash Paid for Interest $ 16.0
Cash Paid for Income Taxes, Net $ 4.9
Term Loan Repayments $ 10.2
Increase in Working Capital/Other, Net $ 65.3
($ in Millions)
1. Non-GAAP, see Appendix for reconciliation to GAAP
2. Defined as Adjusted EBITDA less CapEx
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Q1 2014 Foreign Currency Movements
Surcharges Net Price Volume/ Mix/ Other Q1 2015
$790.6
$765.2
(18.4)
(14.1)
(2.0)9.1
Net Sales
Combined, Non-GAAP Q1 Bridge 2014 – 2015
Q1 2014 Foreign currency Movements
Surcharge/Scrap Sales Net Price Volume/Op. Perf./Other Q1 2015
$137.4 $132.6
(1.6) (4.5)(2.7) 4.0
Adjusted EBITDA
$ in millions
Macro Effects
Macro Effects
Solid First Quarter Impacted by Macro Metals Market/FX
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Proposed Term Debt Refinancing – Secured Credit Facilities
oMPG launched a refinancing process in April 2015Opportunistic credit markets, allowing for reduction in annual interest expense and
the creation of an FX hedgeo The proposed re-financing is expected to result in MPG
Reducing annual cash interest payments by $6 - 7 millionCreating an FX hedge by converting a portion of our USD denominated term loan
debt into Euro based term loan debt oAnticipated change to our go-forward interest rates
USD denominated tranche interest rate expected to be reduced 50 bps to LIBOR + 2.75%, 1.00% LIBOR floor
Euro denominated tranche interest rate is EUROBOR + 2.75%, 1.00% EUROBOR floor, issued at 99.5
o Estimated total fees and OID of ~ $3.0 million Payback of < 6 months
Opportunistic Cash Reduction in Debt Service
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2015 Guidance Ranges
Guidance 2015E 1
Net Sales $3.0 - $3.15 billion
Adjusted EBITDA2 $520 - $560 million
Capital Expenditures $210 - $220 million
Adjusted Free Cash Flow3 $310 - $340 million
1 Represents reaffirmation of guidance provided earlier this year
2 See Appendix for reconciliation to GAAP
3 Defined as Adjusted EBITDA less CapEx, utilizing high and low ends of Adjusted EBITDA and CapEx
o Incorporates assumptions included on page 20 of appendix
Assumption Updates
o USD to EUR 1.08 (changed from 1.12)
o Metals Market $236 per gross ton (changed from $250 per gross ton)
o Industrial Market volumes are soft
o Certain North American Passenger Car platform volumes are soft
o Commercial Vehicle volumes remain robust
MPG Reaffirming Earlier Guidance Despite Recent Market Moves
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Driving Value
o Secure growth through new business wins
o Execute on vertical integration/cross-selling
o Leverage cash flow model
o Ramp-up of new programs
o Capture value-added, powertrain content
o Continue global expansion
17.3% Adjusted EBITDA Margin
and $71.9 million Adjusted Free
Cash Flow
$10 million in Debt Reduction
$0.09 Dividend per Share
Benefit from Expected Growth
in Powertrain and Safety-
Critical Components
Capitalize on Global Scale
and Capabilities
Take advantage of Cross-Sell
Opportunities
Q1 2015
Long – Term Net Sales Target of > $4 Billion
2018 and Beyond
Q & A SESSIONMetaldyne Performance Group
APPENDIXMetaldyne Performance Group
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Assumptions
Industry Production / Assumptions 2015E
Light Vehicle SAAR North America ~2.5%
Light Vehicle SAAR Europe ~0%
Light Vehicle SAAR Asia ~3.5%
NAFTA Heavy Truck Class 5-8 ~5%
FX Rates End of Q1 2015 February Month End 12/31/14 Rate
USD to Euro 1.08 1.12 1.22
Mexican Peso to USD 15.24 14.94 14.78
Chinese Yuan to USD 6.14 6.16 6.14
Korean Won to USD 1,111 1,100 1,096
Metals Market – Chicago #1 Bundles $236 per gross ton $250 per gross ton $347 per gross ton
IHS January 2015FTR and ACT December 2014FX Rates and Metals Market Rate March 2015
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GAAP Reconciliation Slide
Q1 Q1 2015 2014
Net income attributable to stockholders
$ 32.4 22.6
Income attributable to noncontrolling interest
0.2 0.1
Net income (loss)
32.6 22.7
Addbacks to Arrive at Unadjusted EBITDA Interest expense, net 27.6 19.4 Loss on debt extinguishment − 0.3
Income tax expense
17.3 10.5
Depreciation and amortization
56.4 42.7
Unadjusted EBITDA
133.9 95.6 Adjustments to Arrive at Adjusted EBITDA
Gain on foreign currency
(5.0)
(0.1)
Loss on fixed assets
0.2 0.7
Debt transaction expenses
0.1 1.2
Stock-based compensation expense
3.3 1.3
Sponsor management fees — 1.0 Non-recurring acquisition and purchase accounting related items
(0.3) —
Non-recurring operational items 0.4 — Adjusted EBITDA 132.6 99.7
Capital expenditures 60.7 30.8
Adjusted Free Cash Flow $ 71.9 68.9
METALDYNE PERFORMANCE GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
AND ADJUSTED FREE CASH FLOW (In millions)
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GAAP Reconciliation Slide
Q1 Q1 2015 2014
Net sales $ 765.2 540.5 Grede pre-acquisition net sales — 250.1 Combined Non-GAAP net sales 765.2 790.6
Adjusted EBITDA 132.6 99.7 Grede pre-acquisition Adjusted EBITDA — 37.7 Combined Adjusted EBITDA $ 132.6 137.4
METALDYNE PERFORMANCE GROUP INC. US GAAP RECONCILATION
(In millions except per share data)
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GAAP Reconciliation Slide
Q1 Q12015 2014
Net sales $ 765.2 540.5 Grede pre-acquisition net sales — 250.1 Combined Non-GAAP net sales 765.2 790.6
Gross Profit 128.5 83.3Grede pre-acquisition Gross Profit — 42.0Combined Gross Profit (Non-GAAP) 128.5 125.3
Adjusted EBITDA 132.6 99.7 Grede pre-acquisition Adjusted EBITDA — 37.7 Combined Adjusted EBITDA 132.6 137.4
CapEx 60.7 30.8 Grede pre-acquisition CapEx — 7.5 Combined CapEx 60.7 38.3 Adjusted Free Cash Flows 71.9 68.9 Grede pre-acquisition Adjusted Free Cash Flows — 30.2Combined Adjusted Free Cash Flows $ 71.9 99.1
METALDYNE PERFORMANCE GROUP INC. RECONCILIATION TO COMBINED NON-GAAP
(In millions)
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GAAP Reconciliation Guidance Slide
Consolidation 2015 Guidance 2015 Guidance
Low End of Range High End of Range
Net income attributable to stockholders $ 102.5 127.8
Income attributable to noncontrolling interest 0.4 0.5
Net income 102.9 128.3
Addbacks to Arrive at Unadjusted EBITDA
Interest expense, net 117.3 117.3
Income tax expense 50.5 65.1
Depreciation and amortization 234.2 234.2
Unadjusted EBITDA 504.9 544.9
Adjustments to Arrive at Adjusted EBITDA
Foreign currency gains (2.9) (2.9)
Stock-based compensation expense 16.6 16.6
Non-recurring operational items (1) 1.4 1.4
Adjusted EBITDA $ 520.0 560.0
(1) Non-recurring operational items including charges for disposed operations, restructuring costs and other.Note: The table does not include the impact of the previously announced repricing of our Senior Term Loan debt on the various line items above. The refinancing does not affect Adjusted EBITDA.
METALDYNE PERFORMANCE GROUP INC. US GAAP RECONCILATION
(In millions except per share data)
