Shiloh Industries, Inc. (NASDAQ:SHLO) Q1 2018 Earnings Conference Call March 8, 2018 8:00 AM ET
Gary DeThomas – VP, Corporate Controller
Ramzi Hermiz – President & CEO
Jay Potter – SVP & CFO
Aileen Smith – Bank of America Merrill Lynch
Richard Carlson – BMO Capital Markets
Good day, ladies and gentlemen. Welcome to the Shiloh Industries’ First Quarter 2018 Results Conference Call. Today’s call is being recorded, and we will be conducting a question-and-answer session immediately following management’s prepared remarks.
I’d now like to turn the call over to Mr. Gary DeThomas, Vice President, Corporate Controller of the Company. Please go ahead, sir.
Good day. Thank you, operator and thank you all for participating in Shiloh Industries’ first quarter 2018 results conference call. I’m joined on today’s call by Ramzi Hermiz, our President and Chief Executive Officer; and Jay Potter, our Senior Vice President and Chief Financial Officer.
I will begin by reviewing our legal disclosure regarding forward-looking statements. I would like to remind all participants that certain statements made during this conference call may constitute forward-looking statements. Although such statements reflect our current reasonable judgment regarding the direction of our business, actual results might differ materially from those in the forward-looking statements. You can find information concerning why the actual results might differ from statements made today and in our management discussion and analysis of financial condition, as well as the results of operations in our Form 10-Q for the 3 months ended January 31, 2018 and other filings with the SEC.
Our earnings press release was issued today and has been posted to our website at shiloh.com on our Investor Relations page. The press release contains reconciliations of certain non-GAAP numbers presented on this call today, including adjusted EBITDA, adjusted EBITDA margin, and adjusted earnings per share. Our Form 10-Q will be filed later today with the SEC. A replay of today’s call will be available. Instructions for the replay are included in today’s press release.
I will now turn the call over to Ramzi Hermiz, our President and Chief Executive Officer. Ramzi?
Thank you Gary, good day and thank you for joining us on the call. Today we will review three main topics; our first quarter 2018 performance, our recent acquisition in Europe, and the Company’s profitable growth path and related market trends.
Starting with our financial highlights. Our first quarter results improved in many areas compared to the prior year, reinforcing our goal to be the leader in lightweighting technologies, along with the ability to deliver more profitable and value-added products. Our increasing margin performance highlights this progress; our gross margin improved 160 basis points to 11.3% compared to the first quarter of 2017, this level of improvement is on top of the strong margin expansion over the past several years realizing 100 basis points improvement in 2016, and an additional 200 basis points improvement in 2017.
Adjusted EBITDA margin expanded by 90 basis points to 6.7% for the quarter which is attributable to the active management of our product mix, phasing out of lower margin commodity products, the launching of new lightweight technologies, and better aligning our business with our customer’s needs which include the development of value-added products across all vehicle segments, and all forms of propulsion, from internal combustion to hybrid electric to full battery electric vehicles; in fact our content per vehicle is comparable across all three of these types of systems. This ability coupled with our multi-material strategy is unique and should continue to support our expanding margins and growth strategies.
We made meaningful progress on our growth strategy to expand our global presence with the recent acquisition of two European manufacturing facilities from Brabant Alucast which was funded through our revolving line of credit. This acquisition is significant both, operationally and strategically, starting with the addition of 600 talented employees and many advanced manufacturing technologies. The new facilities bring aluminum casting capabilities to our European operations enabling us to manufacture our leading aluminum structural components in the three major automotive markets of China, Europe and North America. In addition, the acquisition has doubled our production capacity of magnesium structural components making Shiloh one of the leading global manufacturers of magnesium cross car beams, and one of the largest automotive magnesium products suppliers worldwide.
We are now well positioned to offer our structural products globally. In multi-material solutions across all production processes with Top Tier customer service. These acquired facilities are estimated to generate over $100 million of annual revenue with the opportunity to enhance our margins as we integrate them into our business and realize synergies. In addition, the acquisition was strategic and that the two acquired entities provide us with needed growth capacity to support recent business awards that would otherwise required us to invest in Greenfield capacity. It also creates the opportunity to optimize capacity across our European footprint by providing some relief to our Poland facility which is near full capacity utilization. Some customers are also likely to benefit from improved logistics costs due to closer proximity to their locations. We are excited about this highly strategic and a capital efficient way to capture meaningful new revenue stream and significant growth capacity.
The European region serves as an important growth opportunity for Shiloh. The region contributed nearly 20% of the revenue in the first quarter of 2018 compared to 2013 where we had no revenue coming from the region. Our customer concentration in Europe increases to approximately 30% on an annual basis if we include the facilities acquired from Brabant Alucast.
Looking at the European market in the first quarter, we grew revenue by nearly 20% compared to the light vehicle market which expanded by just 8.4%. Our review of the European automotive market indicates that our customers should continue to show positive year-over-year growth of nearly 2%. The outlook for North American production continues to be mixed; total OEM production for our customers declined by 2.6% during our first quarter and is forecasted to be flat for our 2018. Excluding that European acquisition, we expect top line to soften throughout the remainder of the year given market trends in our focus and exiting of lower margin revenue.
Last quarter we discussed how we are preparing ourselves for longer term market uncertainties by focusing on a leaner and more flexible structure, we therefore initiated restructuring actions such as consolidating manufacturing facilities, making geographical shifts to place production closer to customer facilities, and optimizing our product plan. We believe these strategic moves will result in a more efficient and more focused footprint allowing the company to operate with lower fixed costs. We’ve made progress on these initiatives in the first quarter of fiscal 2018 and they will continue over the next 18 to 24 months. We continue to anticipate an attractive payback from these actions.
We continue to prioritize our efforts on strengthening our technology and our customer profile while pursuing increased content per vehicles as a priority over unit volume. As mentioned earlier, we are well positioned as the industry continues to embrace new propulsion technologies. We made excellent progress over the last few years increasing our content per vehicle from $180 per targeted platform in 2016 to $195 in 2017, out of the approximately $1,500 market potential for our products. We expect our content per vehicle to increase as we continue to launch our new business wins and integrate the newly acquired entities into our business.
With that, I’ll turn it over to Jay.
Thank you, Ramzi. I am very excited about our margin expansion in the first quarter as our mix continued to shift towards higher margin value-added engineered products while revenue was flat at $247.7 million compared to $247.9 million in the first quarter of 2017.
Our customer’s production in North America decreased 2.6% as customers continue to align inventory and demand. In Europe, our customer’s production was higher and contributed to our 20% growth in the region. We generated $27.9 million of gross profit, an increase of $3.8 million or 16% with margin expansion of 160 basis points to 11.3% compared to Q1 of 2017 as our strategy to shift to higher value-added products continues to advance in addition to other operational improvements. We also expanded gross margin by 50 basis points sequentially from the fourth quarter of 2017 on seasonally lower Q1 2018 revenues.
As discussed on our Q4 conference call, we continue to drive our restructuring initiatives. During the quarter, we recognized an additional $1.5 million in costs related to these activities. As outlined last quarter, the total charge over the 24 four month period is expected to be approximately $17 million. The benefits from this initiative are expected to generate annualized savings of $7 million to $10 million by 2020 with savings beginning in 2019 providing less than a 3-year payback on a cash basis. For the first quarter, net income improved significantly and was $4.9 million or $0.21 per diluted share compared to a net loss of $0.11 per diluted share in the prior year quarter. Adjusted earnings per diluted share was $0.15 compared to a loss of $0.03 in the year ago quarter. A full reconciliation of these adjustments can be seen in our press release.
For the first quarter, adjusted EBITDA was $16.6 million, nearly a 15% improvement compared to $14.4 million in the year ago quarter. First quarter adjusted EBITDA margin improved by 90 basis points to 6.7% versus 5.8% in Q1 of 2017. During the first quarter, we generated operating cash flow of $11.6 million and invested $9.9 million in capital expenditures. Net borrowings under our revolving line of credit were $168.5 million, a $1 million decrease from year-end 2017 and a $70.4 million decrease from Q1 of 2017. As a result, our leverage ratio reflects significantly deleveraging and remains at 2.2x compared to 3.4x a year ago.
With that, I’ll now turn the call back to Ramzi for commentary on our outlook and some summary remarks.
Thank you, Jay. Our results for the first quarter of 2018 demonstrate the progress of our strategic transformation and strengthens our confidence and our ability to deliver improved profitability and long-term growth as we continue to introduce higher value add and technology driven products.
We provided adjusted EBITDA guidance for 2018 in January along with the fourth quarter results. As a result of the recent European acquisition which occurred during our second quarter, we anticipate providing updated guidance in conjunction with our second quarter earnings release. As mentioned earlier, the acquisition is expected to generate annualized products sales of more than $100 million with the opportunity to enhance our margins as we integrate the business into our processes and culture. In addition, we expect to achieve additional synergies over the next two years. This acquisition gives us further confidence in our double digit adjusted EBITDA margin target for 2020.
Our strategy to transform Shiloh is delivering results. I’m pleased with the accomplishments the team has made in one, enhancing our product offering; two, strengthening of customer relationships; three, improving our profitability; and four, completing the exciting European acquisition which further expands our global presence; we are well positioned to succeed in this dynamic market.
Operator, we are now ready to go to Q&A.
[Operator Instructions] Our first question comes from the line of John Murphy with Bank of America. Please proceed with your question.
Good morning, this is Aileen Smith on for John. I appreciate you not updating your 2018 outlook at this point, but if we look at your adjusted EBITDA margin of 7.4% to 7.8% for 2018, it’s up about 40 to 80 basis points year-over-year from last year and you drove margin expansion of about 90 basis points in 1Q alone. So what factors in your view could drive margin performance for full year 2018 to the lower or the higher end of your range that you’ve established?
There is a lot going on obviously from an industry dynamics, I’m sure there’s going to be a couple questions on what our view is on tariffs and what we see with the market and how we will — how we’re prepared for that. But when you look to the accusation with Brabant Alucast; these operations really we’re in a restructuring before we purchased them, so there is a transition to get them to I’ll say a higher level of performance. We feel from our current guidance we’re not modifying our current guidance as we get into the acquisitions and we just closed the last — on the first, the last week Thursday. We want to get — we have our business models, we have our plans and we feel comfortable that they are accretive — confident they are accretive to our business going forward. But what we want to see exactly for 2018 taking into consideration uncertainties with current trade discussions, as well as with the launches that we’re going through with these facilities, we’ll get a stronger handle on it but we feel comfortable with our guidance; as it is, we don’t feel that we’re comfortable at the midpoint for sure, we would be looking at more of an upside opportunity than necessarily downside opportunity with the acquisition.
Ramzi, you alluded to that and I think it’s obviously very hot topic right now but you have an interesting position where you’re on the Board of the Original Equipment Suppliers Association; so this is a bit of a broader question but the auto industry and the supply base could find themselves in some new territory with a potential renegotiation of NAFTA or recently proposed steel and aluminum cast. You know, as you think about the landscape and maybe some of the other people that are on OESA with you — what are the biggest potential implications from the automotive value chain and how could these potential cost be shared across the automakers and suppliers?
From OESA and NIMA’s [ph] position, I’ll start with that. I mean we have worked very much we’ve publicly said that we’re against — we’re free traders, we’re against the tariffs and the position that is there separating that, so making that comment and separating it and speaking towards, specifically to Shiloh. When we look at it, there is basically three actions I’ll say — we’ve been looking at this as not new, so it’s in essence three points, physician preparation and somewhat reaction, when you look at our preparation, when you look at our resale contracts with our OEM customers, so they are bringing pricing stability for us and most of our contracts, even if it’s not on resale, we have a longer term commitments through 2018 so no list there that our customers on a resale programs on multi-year.
When you look at our LME products; aluminum and magnesium, again, we have price adjustments every 60-90 days. And then when we launched our restructuring efforts last year in quarter four, where we announced it, they were specifically designed around three objectives. One, how do we align our production with where our customers consume. Two, the mid-shift of cars to trucks and where they’re being produced; and then how do we drive our fixed cost and flexibility of business. So our positioning of preparation was I’ll say not knowing that there was going to be tariffs but how does the market react. When you look at how Shiloh’s position is actually, as we’ve designed our portfolio — another three points; multi-product, multi-material and advanced product design.
We’re able to do — if a customer does have a significant price increase in steel for example, with our laser-welded technology we can take a monolithic door-inner and make it a laser-welded door-inner and we could literally offset a material price increase and still produce savings; so this in essence could be an enabler to any additional lightweighting activities. I talked about couple of examples on in prior calls, when we took an aluminum part for an electric vehicle, when we took 10 pounds out of an existing aluminum part, we made aluminum lighter. So these would be things that we’re doing from a positioning standpoint but to help — we feel we can offset the material increases to our customers if they were to occur.
And then from our reaction, we’re already preparing solutions for our customers on — again, let’s say a monolithic door-inner and how they can make it a laser-welded door-inner and we can offset a material price increase. So we’re putting those activities in place and that’s a big issue of why we wanted to move from a process company to a product company because that is what a product company would be doing, there will always be uncertainty in the market, there will always be changes; and if we can approach our customer base, now they have to make a change, you know what I mean — and, but — involved in cooperatively and collaboratively there is ways that we can lightweight without compromise.
We can bring a safer product, we can bring better performing product, we can bring a lighter product, and our view is we can do without compromising cost. So while there is a position of we believe in free and balanced trade, the reality is something else may come and we’re prepared for that action.
And last question to follow-up on your comments on your restructuring programs and apologies of I missed anything; how far along are you in the process of transitioning over some of the plans and consolidating capacity, especially with the recent acquisition you made and how long should we expect you to incur cash restructuring changes?
Quarter four was — last year of ’17 was primarily non-cash related. We look at — right now there is severance and project cost there are being involved, we’re looking at those would be over the next — primarily, over the next 12 to 18 months where we would see those, the benefits coming — starting already in 2019, we feel very confident on those. Projects are moving along, we’ve had good and positive movement, they are — the projects are designed to be able to be — able to be accelerated if the market was to turn quickly. We feel the projects can be accelerated or if the market was to expand for some reason, we would still move forward with our projects; actually, we would be able to better leverage those incremental volumes in a facility to continue to drive improved profitability. So projects are going as expected, as planned, we see that they’d be over the next 12 to 18 months.
Our next question comes from the line of Richard Carlson with BMO Capital Markets. Please proceed with your question.
I guess just on the guidance, I know you guys don’t want to get too specific with the changes with the acquisition but you’re on a pretty good streak of raising your gross margin or beating your gross margin and EBITDA year-over-year but you’re going to have a pretty big hurdle here in 2Q. So just — maybe some thoughts on kind of how you see the rest of the year progressing a little bit? And should we expect — will probably be a benefit from the acquisition, I mean is this — is this going be a pretty tough quarter if you guys continue that streak?
Quarter two 2018 or 2017, that too was a very large quarter and there was some one-time add-backs that were included in those numbers. When you look at our full year guidance, and this is why we don’t provide quarterly guidance; when you look at our full year guidance as we just shared with Aileen, we’re confident with our guidance, we see that going forward, obviously there’s going to be initial integration costs associated with the acquisition, the teams are already in place, the teams have been already engaged. I mean the leadership of Brabant — again, we procure two other facilities, the rest of the Company’s remaining, but they’ve been very cooperative with us and very proactive in making sure there is a smoother transition, the teams — I must admit we’re really, really impressed with the quality of people that are at Brabant, the technology that they have is going to be a strong enabler for the business going forward.
So we’re confident that full year — as I said to Aileen, we feel good about it, we’re going to look at — coming back out in quarter two with a firmer view for the balance of ’18.
And then just on the acquisition; can you talk a little bit more about their actual product mix; is it all Europe? What’s the vehicle mix? And then, the custom mix and if you can’t share I guess too much detail on that; just how does it maybe strengthen your overall customer mix, does that make you stronger with current customers or does it expand it a little bit?
When you look at the customer base — when we look at an acquisition, we’re analyzing it from the standpoint of technology customer base, manufacturing capability and geographic footprint. And so if you look at those four points from a product and technology — leading technology from aluminum dye-casting standpoint, magnesium — they are strong product, so it aligns with our product strategy of cross-car beams, IP structures, engine cradles, areas that are agnostic to power train [ph]; so again one of the points that we’ve made is, our electric vehicle internal combustion hybrid electric — the content per vehicle is comparable and those products that they’ve produced are in line with that strategy, in line to support our multi-material strategy. So those as aluminum, magnesium complementing with what we have in Europe — the stamping and metals, we can make a steel cross-car beam, a magnesium cross-car beam, a hybrid solution of mag-steel cross-car beam with aluminum; so we have that capability and they bring their technology with them.
Customers are the type of customers that we want, the premium customers that we’ve been working with, the BMW to JLRs, the Audi’s, the Porsche’s; so very strong — actually a very strong customer base, primarily on the master ID [ph] front, very strong customer base. And the premium sector that wants the lightweight, so very much in the need for lightweighting, they are primarily European but we’ve already seen — we had a gap in Europe with aluminum casting capability from the structural side, this closes that gap. So now this — similar to our magnesium programs that we’re able to quote and perform globally, now we have that same capability in aluminum structural casting. So the acquisition also completes that technology in manufacturing footprint, so now we’re making magnesium in three continents, we’re making the aluminum structure in three continents, we have our stamping capabilities, so this is part of completing the footprint that we are looking for from a geography, with the technology, with the strong people, with the manufacturing process and a diversified customer base. So you could tell, we really like it.
And then just last one for me; of course your balance sheet is probably going to be levered up a little bit once we see the full results from this but how do you think about that M&A pipeline from here?
You know, this is our probably or sixth deal, so obviously we’re not afraid to do deals. When you look at, we like our technology, we like our footprint, we like our customer base; if there is an opportunity to continue to enhance that portfolio and drive further integration or integration opportunities, we’re going to definitely look at him, we don’t comment if there is something in the pipe but we’re definitely always keeping our eyes open to continue to strengthen the Company globally.
Our next question comes from the line of [indiscernible]. Please proceed with your question.
I may have missed this. On the acquisition, I guess two questions. One is, did you announce what you paid for — kind of going forward what the capital investments will be required? And I know you said, it’s $100 million or so of additional revenue; when you look at 3, 4, 5-years with core selling and products like that expansion, what do you think the potential revenue are/is from those — from the acquisition?
We did announce the acquisition prices, €53.4 million. And there was an 8-K that was filed. So from a capital investment side, we feel that we’ll be able to manage it within the same type of ratio of about 4% to 5% of capital to revenue and so they’ll be in that type of business or that range. The former owners of Brabant Alucast, they had made some nice investments in the business, so it would not be as distressed of an asset if you call when we procured the contract organization a few years ago, it had an immediate need for significant capital upgrades, these facilities are not in that condition, they have been very well maintained and invested in, and so we don’t see a change in outside our traditional type of investment.
To your third question about where we see the opportunities with these operations, I will look at — I’ll answer you more broadly but I’ll get to your point. When you look at the products that we’re going after and the technologies that we’re going after, we feel that there is an opportunity for growth. One of these — the part of the purpose of these acquisitions is, we have won some significant business and continue to grow in Europe, but again if you think about 2013, zero revenue; right now if we look after Brabant acquisition, currently or about 20% after the Brabant acquisition we’re going to be almost 30% of our revenue inside Europe. With that growth that we’ve seen in Europe, we were running at full utilization or nearly full utilization in our Poland facility and we were winning and we have one new business and we were evaluating do we build a new plant or can we — or do we acquire so that invest or build or make — almost make to buy discussion was part of this.
So we see that these facilities have — will take on some of the new business that Shiloh has been winning over the past years, and also an opportunity to — similar to how we spoke about in Aileen’s question about distribution. There is some redistribution between our Poland facility and the new acquisitions that would also help our customers with print and logistics costs. So we do feel that there is growth opportunity, there is available capacity in these facilities; that is one of the reasons why we also brought value — it brings value to us because it offsets us building a new plant. And so we get a good book of business now with the opportunity to grow these facilities, and there is — let’s say that there are 30% to 40% available capacity inside the operation, so there is room for growth that we will be taking advantage of.
I guess you got to the next question often; when you’ve talk about the sun setting of some of the business — if you assume pricing flat, where do you stand in terms of the new business — adding on more in quarter-over-quarter versus what gets sunset?
I guess, I’ll go with — stay with my baseball analogy for the last few quarters. If last year we were in the fourth, then in this year we’re in the [indiscernible] of where we’re going from a sun setting. Again, there is a nice balance, we’re bringing on the new technology, we’re launching new technologies, so if you think about what’s going to happen this year in — from a newer investments, our car still — Tennessee magnesium cross-car beam products for BMW and Mercedes launched in start of production in September or so. We have the facility in China, our grand opening is April 18 and that production start — start of production will be in January of 2019; so that is starting to launch. So you are seeing that movement of the newer technologies starting with the phase out going forward.
If you think about even the past, another way look at the past four quarters or past five quarters, revenue has been down about 2%, gross profit has been up $22 million. So what we are continuing to demonstrate is that how do we get rid of the non-contributing type of revenue and replace it with the product that’s driving additional and profitability, both; it’s a better use of capital, as well as it’s adding and supporting our business growth.
[Operator Instructions] Our next question comes from the line of George [ph], private investor. Please proceed with your question.
On the acquisitions that had been talked to about significantly; what kind of volume were those plants doing shipped to China at this point?
They are primarily just European, inside the European Continent.
And I want to steer towards more to China here. You’ve got your facility pretty much completed, I assume you’re putting — starting to put equipment in there; and can you describe a little bit about between now and your introductory date or April 18 you’re talking about and production starting in 2019. What has to be accomplished going forward past the April 18 to get into production? And if you could comment on the market that you’re going to be steering towards? And if you could make any comments on the Geely’s China operation as to how — what that means at Volvo?
And this interconnection with Mercedes Benz that’s evolving and they’re talking about doubling production of automobiles from 1.5 million to 3 million cars into 2020. And you seem to have a pretty good interconnect with Mercedes; can you describe what could be unfolding for you going forward from a substantial production expansion point of view?
Alright, a number of questions in there, I’ll try — I think [indiscernible] if I missed one, bring me back to it. When you look at production about the Chinese facility, grand opening is April 18, we’ve already begun to make — produce samples and prototypes; so the equipment’s already in place and we are in the preparing mode of the facility. The April 18 grand opening is as much a customer event as well as for our suppliers and the local community that’s the — what we’ve done there. Between April and the start of production, again, it is working with our customers on the validation of processes and the product which would be a standard approach in any one of our customer launches. So we are — it is in the phase of real operation during that time, during that window before start of production. So that piece of the business is going forward.
When you look at the product type, again we’re already in China, we are producing our Shiloh core dash panel, innovative sound management lightweighting technology, we already have — we’re doing some magnesium cross-car beams with a joint relationship there; and now we’ll be doing the structural aluminum and transmission components in China. China is a 30-million vehicle market, we thought it’s a good market for us, a good potential, very much in the need of lightweighting when you look at it’s going to be one of the leading producers of electric vehicles, and again, we’re very strong in that segment. So we’re — we feel that we can bring additional value there.
On the comments of Geely — Geely and obviously owner of Volvo has — under Geely’s ownership Volvo has really flourished, when you look at the support. Similar to what you’ve seen with JLR under truck [ph], I mean these — these businesses are doing very, very well, they’re bringing excellent product, we’re excited about the Volvo portfolio that we have. When you look at our magnesium cross-car beam structural components, we’re — on Volvo, where steel, where aluminum stampings or that were magnesium castings; so we feel really good about that.
When it comes to discussing Mercedes and Geely’s investment, that I can’t make a comment, you’ll — there is nothing that I can add that anybody else hasn’t read. But when you look at the opportunity for Mercedes, when we look at Mercedes as a customer, we enjoyed that relationship, as we said we’re launching Clarksville [ph] to support them with the addition of our structure in Europe with aluminum and mag and steel capabilities; we feel that that is our relationship that can continue to floor. So we’re excited about the potential to expand that relationship globally.
A question regarding moving forward into 2019-20 period; a lot of the orders that you’ve taken over — even the last three years are way down going forward into new model runs, and it seems like you could have — some real momentum starting in 2019 and 2020 as you move forward with the new designs product getting into the market. And is there a way of measuring at this point how much you could project your total car sale to be — you mentioned some numbers earlier in this call, $180 per vehicle or $195. Can you give us some thoughts about where you potentially see the amount of sale that Shiloh could develop per automobile in let’s say going 2019 and 2020?
Well, the two numbers that you quoted, the $180 and the $195 are the content per vehicle that when saw in 1’6 and ’17 and we feel that there is still additional opportunity that we’re going to see increase in ’18. When we look at the market potential, that we see in a vehicle for the product portfolio that we have is roughly $1,500. So if we sold our whole portfolio of everything that we can manufacture to an OEM, that opportunity is $1,500. So when you look at — we’re at that $195 to $100 number to the potential of $1,500; so there’s clearly opportunity for growth, and that’s built on the need to lightweight, the capping [ph] standards, if pricing increases are on raw materials, again that would also drive lightweighting. So we see that growth potential.
You are correct when you’ve commented on the number of new product launches and the new technology that’s coming onboard; as I previously mentioned, we have a series of these products launching over ’19 and ’20 for business that we won in ’16 and ’17, so that 2 to 3-year from award to production. So we do feel confident in the ability for growth in ’19 and ’20 where again if I go back to Alan’s question about where we are in the sun setting aspect of that if we’re — you call that 6-7 ending at this point, we’ve really stopped the sun setting in that ’19 area and it really starts being the business awards are — what will drive that going forward, and the type of product that we’re winning is not commodity based product, it is more technology driven where we are having significant more technology and value put into the product which will part of our driving at double-digit EBITDA margin that we’ve talked about in the 2020 timeframe.
And so you see that inflection point drawing closer and closer to where we’re at. And as we saw both with Aileen and Richard’s questions about the margin expansion, we’re seeing that consistent cross margin expansion; again, we still need to — we are investing in our technology and our people early, so that comes now, so you see that in some of our internal investments or SG&A as how do we continue to make sure that we are building a global scalable company, a company that can take on this additional growth and support the growth in all other regions in the world, so when you look at our tax center in China, we’ve got our activities in Europe, and last quarter — last year we announced expansion of our customer service center in Germany on top of where we are now, we also have — we’re positioned in Italy as well with our customer support center and tech center or customer support center in Turin [ph] to support that market; so we are putting that longer term structure in place that will — well, as we would describe it a global scalable company going forward.
And if I could just elaborate a little bit more and that maybe — you don’t want to talk any more about this but I think strategically this company has moved through the acquisition mode for 3-4 years here; and strategically it’s cost you at the bottom line but it’s also put you into a significant expandable opportunity by Europe and now into China and back into the United States. And it would appear that you are now interconnected with all the major auto manufacturers in the world, and that you can — and when I look at what you’re doing in China and coming back into the United States in South Carolina with what’s going to take place in expansion there in new auto manufacturing production, and the companies involved that you have built strong relationships, it would appear that there is a huge payday out there for this company going into the 2020 period and going forward. Can you comment on that?
One, obviously I agree with you but if you if you look at where we were from basically at 12 to where we are now, if I look at the customer base, in 2012, over 50% of our customers — we have 3 customers that represented over 50% of our revenue. Today our Top 6 represent 50%, a little over 50% of our revenue. In 2012, they were both — 3 customers were all U.S. based or headquartered, now we have 2 Europeans, 2 Asians, 2 U.S. headquartered companies that represent our top customer base. So the diversification of our customer base; if we look at 2012, we were — 4% of our revenue, 5% of our revenue maybe was outside of the U.S., today we’ll be at 35% of our revenue outside the U.S. So we’ve diversified our customer base, we diversified the geographical footprint.
If you look at our products in 2012 primarily focused commodity based products, exclusively steel related. If you look at where we are today, we’re moving to where 30%, 40% of our product revenue is non-steel, be it aluminum, be it magnesium, so that product material diversification of being able to satisfy an application of steel, aluminum, magnesium type of products or a hybrid solution again driving that diversification of our vehicle — our customer base, vehicle base region. And then when you look at what we’re able to do, we were over — maybe almost 55% 60% of our sales were in cars, we proactively moved that to over 50% is with SUV trucks where the market is growing, so we can say we look like geniuses or we guessed right, whatever you want to say we’ve gone after programs and portfolios that needed lightweighting and so that helped drive that position.
So when you look at customer region products and vehicle type from where we started this journey in ’12-’13 to where we are completely diversified the company to drive and I’d say better position us for longer term growth. So we’re excited about that and then from the build out on that we have what booked almost $2.8 billion of new business awards that I obviously we’ve talked about we’re getting rid of some business as we bring some business on that those will be launching as we go forward. So we are excited about the opportunities and when we look back at the transition, and if you go back to what we talked about in early earnings calls in 2013 about what we were going to do and you reflect and — this is what we said we were going to do when you look at what we’ve done to this point. What we said in ’13 that what we could deliver, from a strategy we are delivering that.
And the most recent Brabant acquisition; last year I talked about the need to expand Europe, the need to continue to leverage our technology and now we can say that we’re the leading structural magnesium producer for cross-car beams in the world, we continue to strengthen that position, again, it’s — we can now talk about a product leadership where before as a commodity processor we could not; so this is all part of that strategy of building a global scalable diversified business we’re delivering it.
Ladies and gentlemen, we’ve reached the end of the question-and-answer session. And I would like to turn the call back to management for closing remarks.
Thank you. Again, it was a strong quarter. We’re excited about the opportunities that the business continue to has, the team’s doing a great job. There’s market uncertainties, there’s trade uncertainties, there’s volume uncertainties; those are the realities but when I look at what we’ve done and what we’ve put in position, I feel comfortable with those uncertainties. Shiloh has a strong position, we’ve prepared for that uncertainties, we have positions in place and actions in place that we feel comfortable that we can continue to deliver our — one, deliver our guidance, as well as create opportunities for the business going forward. So we’re excited about what we have, we look forward to speaking with you during the next call. Thank you very much.
This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
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