1st Quarter Conference Call
10:00 AM CDT
March 12, 2007
Safe Harbor Statement
SPARTECH: FORWARD-LOOKING STATEMENTS
This presentation includes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. “Forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 relate to future events and
expectations, include statements containing such words as “anticipates,” “believes,”
“estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,”
“projects,” and similar expressions. Forward-looking statements are based on
management’s current expectations and include known and unknown risks, uncertainties
and other factors, many of which management is unable to predict or control, that may
cause actual results, performance or achievements to differ materially from those
expressed or implied in the forward-looking statements. Important factors which have
impacted and could impact our operations and results include: (a) adverse changes in
economic or industry conditions generally, including global supply and demand conditions
and prices for products of the types we produce; (b) the ability to compete effectively on
product performance, quality, price, availability, product development, and customer
service, (c) material adverse changes in the markets we serve, including the
transportation, packaging, building and construction, recreation and leisure, and other
markets, some of which tend to be cyclical;
-continued2
Safe Harbor Statement
SPARTECH: FORWARD-LOOKING STATEMENTS, continued
(d) our inability to achieve the level of cost savings, productivity improvements, synergies,
growth or other benefits anticipated from acquired businesses and their integration; (e)
volatility of prices and availability of supply of energy and of the raw materials that are
critical to the manufacture of our products, particularly plastic resins derived from oil and
natural gas, including future effects of natural disasters; (f) our inability to manage or pass
through an adequate level of increases to customers in the costs of materials, freight,
utilities, or other conversion costs; (g) our inability to predict accurately the costs to be
incurred, time taken to complete, or savings to be achieved in connection with announced
production plant restructurings; (h) adverse findings in significant legal or environmental
proceedings or our inability to comply with applicable environmental laws and regulations;
(i) adverse developments with work stoppages or labor disruptions, particularly in the
automotive industry; (j) our inability to achieve operational efficiency goals or cost
reduction initiatives; (k) our inability to develop and launch new products successfully; (l)
restrictions imposed on us by instruments governing our indebtedness, and the possible
inability to comply with requirements of those instruments; (m) possible weaknesses in
internal controls; and (n) our ability to successfully complete the implementation of a new
enterprise resource planning computer system. We assume no duty to update our
forward-looking statements.
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1st Quarter Conference Call…
Presentation Content
 1st Quarter 2007 Performance
 Operating Highlights
 Details on Operating Results
 2007 Guidance and Outlook
Note: These slides should be read in conjunction with our 1st Quarter Earnings Release issued March 12, 2007.
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Abbreviations: M = amounts in millions
1st

Spartech Corporation…
Quarter Performance Highlights
Operating Results

Volumes were lower when taking into account the extra week
due to particularly weak November … growth in some key
markets helped mitigate weakness in Heavy Truck,
Manufactured Housing and RV

Material Margin/lb continued to be solid at 35 cents per pound…
stable with Q4 and Q1 last year

Conversion costs/lb down from Q1 2006…Q1 ’07=24.1 cents,
down from 25.1 cents in Q1 ’07, lower labor, freight, & utilities

Net Earnings increased to $8.1 million from $5.7 million last
year… EPS up to $0.25 from $0.18

Cash flow continued to be strong…setting a record for a first
quarter at $17.2 million, up 16% from the previous record set
last year
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1st Quarter Performance Highlights
 Custom Sheet and Rollstock


Earnings up to $16.0 million from $12.7 million
Comparable sales volume weak at -3%



Hard comparable with last year’s post Katrina surge
Packaging and material handling were very strong
Material margin and conversion cost both improved
 Color and Specialty Compounds


Earnings down from $4.5 million to $4.0 million
Comparable sales volume weak at -4%


Automotive weak, Film packaging weak, Roofing strong
Poor mix (less color due to year-end inventory destockings) drove lower material margins—partially
compensated for with better conversion costs
 Engineered Products

Earnings up to $1.6 million from $1.0 million

Benefited by improved conversion costs on sales down 2%
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Material Margin Trends
Price/Ib
$1.00
Sales Price
$0.80
$0.60
Material Costs
$0.40
Material Margin
$0.20
2004
2005
2006
2007
1st
2nd
3rd
4th
1st
2nd
3rd
4th
1st
2nd
3rd
4th
1st
0.792
0.795
0.821
0.834
0.896
0.973
0.954
0.967
1.024
1.013
1.014
1.019
1.001
Material Costs
0.461
0.464
0.488
0.511
0.566
0.633
0.616
0.627
0.672
0.655
0.662
0.665
0.648
Material Margin
0.331
0.331
0.333
0.323
0.330
0.340
0.338
0.340
0.352
0.358
0.352
0.354
0.353
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Sales Price
$0.00
Other Highlights

Plant Restructurings…We have sold all idle facilities resulting from
the 2005 and 2006 plant restructurings (last sale closing March ’07).

Planned Capital…We have made solid progress on three key
initiatives:



Greenville Consolidation
Ramos Mexico Expansion
Oracle ERP

Green Products Growth…Sales of 22.3M pounds in 1st Qtr of 2007
compared to 19.1M in 2006, up 17%

Working Capital Performance:




DSO improved 2.7 days from 1st qtr ‘06, 52.8 to 50.1 days
Inventory turns were 8.9x, down slightly from 2006 1st qtr of 9.4x
Net working capital represents 10.7% of Sales versus 12.9% at 1st qtr ‘06
Debt Position:



Despite higher capital expenditures ($10.2 versus $4.0) and repurchase of
shares of $10.4M, only borrowed $3.8M in qtr
Debt outstanding of $299M, represents .68 to 1 (Debt/Equity)
Availability totaling $241M
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2007 Initiatives and Outlook

Revised guidance of $1.55 to $1.62
 Without special items
 Compares to $1.44 per diluted share in 2006
 Weaker demand environment than 2006 (Auto, Housing,


Heavy Truck)
Benefits from 2006 cost reduction efforts and improved
freight and utilities
Some negatives from Greenville consolidation in advance
of 2008 benefits
 Growth & Improvement Initiatives




Green Products Initiative
Greenville Consolidation
Mexico Plant Expansion and Growth
TPO heavy truck initiative
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Supplemental Data
Company Overview…
Diversity of Markets
Lawn & Garden
Packaging & Material Handling
Other
Transportation
25%
21%
10%
4%
SPARTECH
16%
7%
7%
10%
Building &
Construction
Recreation & Leisure
Appliance & Electronics
Sign & Advertising
Packaging
Food
Consumer
Medical
Material Handling
Transportation
Automobile
Heavy Truck
Aerospace
Building & Construction
Roofing
Sanitaryware
Windows & Doors
Recreation & Leisure
Pool & Spa
RV
Power Sports
Marine
Appliances & Electronics
Refrigeration
Medical Equipment
Sign & Advertising
Outdoor Sign
POP Display
Graphic Arts
Lawn & Garden
Lawnmower Wheels
Agricultural Implement
Customer End Markets – 1st Quarter of 2007
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2007 Market Expectations…
Weak
Packaging & Material
Handling
Automotive
Medium Growth
High Growth
Food
Consumer
Medical
Material Handling
Automotive
Transportation
Aerospace
Heavy Truck
Sanitaryware
Building & Construction
Windows & Doors
TPO Roofing
Recreation & Leisure
RV
Pool & Spa
Marine
Power Sports
Outdoor Sign
Sign & Advertising
Lawn & Garden
POP Displays
Graphic Arts
Lawnmower Wheels
Agricultural Implements
Appliances & Electronics
Refrigeration
Medical Equipment
Refrigeration
Grey Names = General Market expectations compared to Spartech.
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Material/Gross/Operating Margins
Results Per Pound Sold
Quarterly Results:
2007
Year
Per Pound Sold
Sales
Material Cost
Material Margin
Conversion Cost
Gross Profit
SG&A
Amortization
Special Charges/Option Expense
Operating Earnings
Depreciation and Amortization
EBITDA (A)
1.001
0.648
0.353
0.241
0.112
0.057
0.003
0.003
0.049
0.030
0.079
1st Q
1.001
0.649
0.352
0.240
0.112
0.057
0.003
0.003
0.049
0.030
0.079
Year
1.017
0.663
0.354
0.233
0.121
0.050
0.003
0.005
0.063
0.028
0.091
4th Q
1.019
0.665
0.354
0.229
0.125
0.053
0.003
0.012
0.057
0.028
0.085
2006
3rd Q
1.014
0.662
0.352
0.222
0.130
0.050
0.003
0.003
0.074
0.028
0.102
2nd Q
1.013
0.655
0.358
0.233
0.125
0.045
0.002
0.003
0.075
0.026
0.101
1st Q
1.024
0.672
0.352
0.250
0.102
0.051
0.003
0.003
0.045
0.030
0.075
Year
0.949
0.612
0.337
0.233
0.104
0.048
0.003
0.014
0.039
0.027
0.066
4th Q
0.967
0.627
0.340
0.235
0.105
0.047
0.003
0.006
0.049
0.026
0.075
2005
3rd Q
0.954
0.616
0.338
0.229
0.109
0.046
0.003
0.023
0.037
0.027
0.064
2nd Q
0.973
0.633
0.340
0.223
0.117
0.049
0.004
0.024
0.040
0.026
0.066
1st Q
0.896
0.566
0.330
0.245
0.085
0.049
0.004
0.032
0.029
0.061
(A) We believe that EBITDA is a meaningful gauge of financial strength from continuing operations before financing costs, taxes on income, and
depreciation and amortization. However, it should be viewed as supplemental data, rather than as a substitute or alternative to GAAP performance
measures.
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Cash Flow Trends
From Operations and Free Cash Flow
Quarterly Results (In 000's):
Cash Flow Data (in 000's)
Net Income
Depreciation and Amortization
Change in Working Capital
Other Operating Cash flows
Cash Flows from Operations
Capital Expenditures
Free Cash Flow (A)
2007
1st Q
Year
8,065
10,387
(3,824)
2,535
17,163
(10,240)
6,923
38,798
40,698
31,551
16,496
127,543
(23,966)
103,577
4th Q
8,619
10,269
16,090
3,901
38,879
(9,581)
29,298
2006
3rd Q
10,614
10,261
19,474
7,389
47,738
(4,997)
42,741
2nd Q
13,909
10,119
(278)
2,360
26,110
(5,376)
20,734
1st Q
Year
5,656
10,049
(3,735)
2,846
14,816
(4,012)
10,804
18,263
39,380
25,163
22,212
105,018
(39,265)
65,753
4th Q
5,164
9,753
19,347
6,080
40,344
(7,998)
32,346
2005
3rd Q
4,289
9,894
31,013
5,749
50,945
(8,034)
42,911
2nd Q
5,680
9,940
(2,329)
9,203
22,494
(9,759)
12,735
1st Q
3,130
9,793
(22,868)
1,180
(8,765)
(13,474)
(22,239)
(A) We believe that free cash flow, a non-GAAP measure, is an important indicator of the Company's ability to generate excess cash above levels
required for capital investment to support future growth. However, it should be viewed as supplemental data, rather than as a substitute or
alternative to any GAAP performance measure.
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Non-GAAP Measures
GAAP to Non-GAAP Reconciliation
Three Months Ended
February 3, January 28,
2007
Operating Earnings (GAAP)
2006
$ 17,428
$ 14,871
238
466
Operating Earnings Excluding Special Item (Non-GAAP)
$ 17,666
$ 15,337
Net Earnings (GAAP)
$ 8,065
$ 5,656
148
289
Net Earnings Excluding Special Items (Non-GAAP)
$ 8,213
$ 5,945
Earnings Per Diluted Share (GAAP)
$
$
Restructuring and Exit Costs, net
Restructuring and Exit Costs, net
Special Items (Restructuring and Exit Costs)
Earnings Per Diluted Share Excluding Special Items (Non-GAAP)
.25
.01
- .
$
.25
.18
$
.19
We believe that operating earnings,
net earnings, and earnings per share
excluding special items, which are
non-GAAP measurements, are
meaningful to investors because they
provide a view of the Company’s
comparable operating results.
Special items (restructuring and exit
costs) represent significant charges
that we believe 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 (GAAP) and
should not be viewed as an
alternative to GAAP measures of
performance. The following
reconciles GAAP to non-GAAP
measures for operating earnings, net
income, and earnings per share
excluding special items used within
this release. Amounts are unaudited
and in thousands, except per share
data.
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