Sample automotive aftermarket overview

Page 1

Automotive Aftermarket – Overview

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2


Automotive Aftermarket Industry – Overview Size of Automotive Supplier Market Worldwide

Size of the US Automotive Aftermarket

($ billions)

($ billions)

900

$837

800

600

250

$695

700

$634

$210

150

500

100

400

50 2005

2010

2002

2015E

• The market for automotive supplies is expected to reach $837.0 billion in 2015, increasing at a CAGR of 3.8% from 2010 to 2015 • The global automotive supplier market is witnessing a surge in growth, driven by the strong rise in the number of vehicles around the globe, demanding increased maintenance and need for part refurbishment

2007

2012

2017E

• The US automotive aftermarket had an estimated market size of $238.4 billion in 2013 • The aftermarket industry is driving growth from increasing US vehicle sales, and is also fuelled by the rising number of car owners who have been holding on to their automobiles for longer periods – The avg. age of a passenger car in the US stood at about 11.4 years in 2013

US

Global

$230

$175

200

$567

2000

$270

300

Automotive Suppliers‘ Contribution to Vehicle Manufacturing

Number of Vehicles in Aftermarket ‘sweet spot’ (Ages 6-12 yrs) (millions)

100% 80%

120

69%

74%

78%

82%

60%

100 100

94

91

88

83

81

80

82

88

93

80 60

40% 20% 2000 2005 2010 2015E • Automotive suppliers have formed an integral part of the global automotive production and maintenance value chain • The market has seen consistent increase in supply of building blocks for global vehicle manufacturing

40 20 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E • The number of vehicles in the age group of 6-12 years is expected to decline temporarily in the near future • The decline is countered by the rise in 15+ year-old vehicles (~68.0 million in 2012), creating new opportunities for the US aftermarket

Source: Statista.com; AASA State of Aftermarket – May 2014

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3


Suppliers, Retailers, and Distributors Driving Aftermarket M&A Overview

Aftermarket Transactions (by Target Type) – 2013

 The year 2013 was relatively less active in terms of M&A, with closure of

Independent Servicer 5

only 88 deals during the year as compared to 136 in 2012

Retailer 6

 Deals in the ‘middle market’ (deal values < $1.0 billion) and specifically in the lower middle market ($10.0 - $250.0 million) remained the driver of deal volume in the industry

Collision 14

 Both strategic and private equity buyers lagged activity in 2013 – Strategic buyer transactions declined 38.0% – Private equity buyers completed 16 acquisitions during the year as against 20 in 2012

Number of Aftermarket Transactions (by Buyer Type) – 2013

140

3

2

140

120

18

20

120

100

4 5

80 40

2 2

20

44

0

2008

Supplier 41

Distributor 20

Number of Aftermarket Transactions (by Transaction Size) – 2013

60

Other 2

2 7 1 1 20

2009 $0 - $250m

114

114

79

43

135

20 42 88

100 80

16

60

48

52

40

15

17

20

33

0

2010

2011 $250 - $1b

2012

2013 >$1b

136

2008

22 10 12

116 93

72

35

2009 2010 Strategic Buyers

2011

2012 Financial Buyers

2013

Source: AASA M&A – 2013 Review

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4


Automotive Aftermarket – Comparables ($ Millions Except Per Share Data)

Company Name

Price as of 6/23/14

% of 52Week High

% of 52Week Low

Equity Market Cap

Total Enterpris e Value

CY '14 Rev.

CY '14 Rev. Growth

CY '15 Rev. Growth

LTM Gross Margin

CY '14 EBITDA Margin

TEV / CY '14 Rev.

TEV / CY '15 Rev.

TEV / CY '14 EBITDA

TEV / CY '15 EBITDA

CY '14 P/E

CY '15 P/E

Suppliers Snap-on Incorporated

$118.27

99%

137%

$6,987

$7,893

$3,235

1%

6%

50%

22%

2.4x

2.3x

10.9x

10.8x

17.7x

16.2x

The Goodyear Tire & Rubber Company

$27.57

97%

198%

$6,850

$13,461

$18,889

(3%)

3%

22%

12%

0.7x

0.7x

5.9x

5.3x

9.5x

8.5x

Tenneco, Inc.

$65.76

97%

157%

$4,044

$5,388

$8,644

9%

10%

17%

9%

0.6x

0.6x

6.9x

6.0x

14.8x

12.3x

Federal-Mogul Holdings Corporation

$20.28

86%

218%

$3,043

$5,830

$7,263

7%

8%

15%

9%

0.8x

0.8x

8.6x

7.6x

17.9x

13.3x

Cooper Tire & Rubber Co.

$29.73

87%

145%

$1,913

$2,674

$3,426

1%

4%

15%

13%

0.8x

0.7x

6.0x

5.9x

11.3x

11.3x

Dorman Products, Inc.

$48.66

80%

111%

$1,779

$1,715

$762

15%

12%

39%

22%

2.3x

2.0x

10.4x

9.0x

18.1x

15.7x

Standard Motor Products, Inc.

$43.19

96%

154%

$1,003

$1,032

$1,025

4%

4%

30%

12%

1.0x

1.0x

8.6x

8.0x

16.0x

14.8x

Remy International, Inc.

$22.54

83%

127%

$721

$986

$1,194

7%

8%

20%

12%

0.8x

0.8x

7.1x

5.9x

13.0x

9.9x

Motorcar Parts of America, Inc.

$24.08

82%

291%

$381

$453

$293

(32%)

19%

32%

19%

1.5x

1.3x

8.1x

6.6x

16.3x

12.8x

Median

87%

154%

$1,913

$2,674

$3,235

4%

8%

22%

12%

0.8x

0.8x

8.1x

6.6x

16.0x

12.8x

Mean

90%

171%

$2,969

$4,381

$4,970

1%

8%

27%

14%

1.2x

1.1x

8.1x

7.2x

15.0x

12.8x

Retailors & Distributors AutoZone, Inc.

$532.94

95%

131%

$17,971

$22,118

$9,608

4%

4%

52%

22%

2.3x

2.2x

10.5x

10.0x

16.4x

14.5x

O'Reilly Automotive, Inc.

$149.82

96%

137%

$16,191

$17,076

$7,146

8%

6%

51%

20%

2.4x

2.3x

11.9x

11.0x

21.2x

18.7x

Genuine Parts Company

$86.94

97%

116%

$13,458

$14,402

$15,084

8%

4%

30%

9%

1.0x

0.9x

11.2x

10.6x

18.9x

17.6x

Advance Auto Parts, Inc.

$130.67

100%

166%

$9,586

$11,575

$9,842

52%

2%

48%

13%

1.2x

1.2x

9.3x

8.6x

17.1x

15.4x

KAR Auction Services, Inc.

$31.61

98%

147%

$4,454

$6,712

$2,302

6%

5%

43%

26%

2.9x

2.8x

11.4x

10.6x

22.3x

19.8x

Pep Boys – Manny, Moe & Jack

$11.22

80%

115%

$606

$906

$2,096

1%

3%

29%

6%

0.4x

0.4x

7.4x

6.5x

28.8x

22.9x

Uni-Select, Inc.

$26.66

91%

147%

$568

$991

$1,779

(1%)

3%

30%

6%

0.6x

0.5x

9.2x

8.3x

10.7x

9.7x

$3.63

91%

399%

$124

$133

$275

9%

9%

29%

3%

0.5x

0.4x

15.2x

10.7x

NM

NM

Median

95%

142%

$7,020

$9,144

$4,724

7%

4%

36%

11%

1.1x

1.0x

10.8x

10.3x

18.9x

17.6x

Mean

93%

170%

$7,870

$9,239

$6,017

11%

5%

39%

13%

1.4x

1.3x

10.8x

9.6x

19.3x

16.9x

U.S. Auto Parts Network, Inc.

Source: CapIQ

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5


Automotive Aftermarket – Comparables (Contd.) ($ Millions Except Per Share Data)

Company Name

Price as of 6/23/14

% of 52Week High

% of 52Week Low

Equity Market Cap

Total Enterpris e Value

CY '14 Rev.

CY '14 Rev. Growth

CY '15 Rev. Growth

LTM Gross Margin

CY '14 EBITDA Margin

TEV / CY '14 Rev.

TEV / CY '15 Rev.

TEV / CY '14 EBITDA

TEV / CY '15 EBITDA

CY '14 P/E

CY '15 P/E

Independent Service Providers & Dealers CarMax, Inc.

$51.91

97%

122%

$11,609

$18,749

$13,654

8%

12%

15%

7%

1.4x

1.2x

18.6x

16.8x

21.6x

19.4x

AutoNation, Inc.

$59.09

99%

141%

$7,168

$11,747

$18,703

7%

6%

16%

5%

0.6x

0.6x

13.0x

12.1x

17.3x

15.6x

Penske Automotive Group, Inc.

$47.75

97%

173%

$4,324

$7,640

$16,675

14%

6%

15%

3%

0.5x

0.4x

13.8x

12.5x

15.1x

13.5x

Lithia Motors, Inc.

$92.39

98%

192%

$2,432

$3,454

$4,870

21%

30%

16%

5%

0.7x

0.6x

13.5x

11.3x

19.4x

16.4x

Group 1 Automotive, Inc.

$81.72

99%

138%

$2,078

$4,169

$9,872

11%

6%

14%

3%

0.4x

0.4x

12.2x

11.2x

14.4x

12.8x

Asbury Automotive Group, Inc.

$66.10

99%

181%

$2,029

$3,150

$5,765

9%

6%

16%

5%

0.5x

0.5x

10.7x

10.1x

16.0x

14.4x

Monro Muffler Brake, Inc.

$53.98

87%

131%

$1,769

$1,962

$885

7%

10%

38%

16%

2.2x

2.0x

13.5x

11.9x

26.9x

21.8x

Sonic Automotive, Inc.

$25.71

94%

130%

$1,361

$3,343

$9,287

5%

4%

15%

3%

0.4x

0.3x

10.7x

10.0x

12.9x

11.3x

Rush Enterprises, Inc.

$30.59

97%

156%

$1,239

$2,364

$4,202

34%

7%

17%

4%

0.6x

0.5x

13.4x

10.8x

15.7x

13.6x

Pep Boys – Manny, Moe & Jack

$11.22

80%

115%

$606

$906

$2,096

1%

3%

29%

6%

0.4x

0.4x

7.4x

6.5x

28.8x

22.9x

Median

97%

139%

$2,054

$3,398

$7,526

9%

6%

16%

5%

0.6x

0.5x

13.2x

11.3x

16.6x

15.0x

Mean

95%

148%

$3,461

$5,748

$8,601

12%

9%

19%

6%

0.8x

0.7x

12.7x

11.3x

18.8x

16.2x

29%

11%

41%

12%

1.5x

1.3x

11.7x

9.9x

19.0x

15.6x

Collision LKQ Corp.

$26.04

76%

106%

$7,955

$9,572

$6,551

Copart, Inc.

$34.96

93%

116%

$4,597

$4,785

$1,206

9%

8%

43%

34%

4.0x

3.7x

11.7x

10.3x

20.6x

17.9x

Solera Holdings, Inc.

$65.55

92%

130%

$4,553

$5,934

$1,075

21%

8%

68%

42%

5.5x

5.2x

13.2x

12.5x

20.7x

18.7x

KAR Auction Services, Inc.

$31.61

98%

147%

$4,454

$6,712

$2,302

6%

5%

43%

26%

2.9x

2.8x

11.4x

10.6x

22.3x

19.8x

Boyd Group Income Fund

$41.24

96%

205%

$631

$672

$721

34%

15%

46%

8%

0.9x

0.8x

11.1x

9.4x

26.1x

19.2x

Median

93%

130%

$4,553

$5,934

$1,206

21%

8%

43%

26%

2.9x

2.8x

11.7x

10.3x

20.7x

18.7x

Mean

91%

141%

$4,438

$5,535

$2,371

20%

9%

48%

24%

3.0x

2.8x

11.8x

10.5x

21.7x

18.2x

Total Median

96%

143%

$2,737

$4,477

$3,814

7%

6%

30%

11%

0.9x

0.8x

11.0x

10.0x

17.7x

15.6x

Total Mean

92%

159%

$4,578

$6,203

$5,960

10%

8%

31%

13%

1.4x

1.3x

10.8x

9.6x

18.3x

15.7x

Source: CapIQ

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6


Selected M&A Transactions in Automotive Aftermarket Date

Acquirer/Target

Target Description

Rationale

Transaction Implied Value EV ($m) ($m)

EV/ Revenue

03/10/14

Offers trade parts, after-sale services, and van rental services

This acquisition is an important development in the group's representation of the VW Group and Jaguar Land Rover brands in the South East US

55.9

55.9

NA

02/19/14

Operates as a distributor of replacement automotive parts, supplies and tools

The acquisition will enhance ATD’s ability to serve tire and automotive service retailers in the New Jersey, Long Island and New England markets

365.0

365.0

NA

01/02/14

Operates as a distributor of specialty aftermarket equipment and accessories

The acquisition will help LKQ become a leading player in the specialty aftermarket equipment and accessories business

450.0

450.0

NA

10/16/13

Distributes tires and provides sales and dealer support services

The acquisition is part of Advance Auto’s strategy to expand its geographic presence and commercial capabilities

2,040.0

2,040.0

NA

09/13/13

Operates as a designer, manufacturer and supplier of exhaust products

The acquisition is part of AP’s growth strategy to expand its product offerings

NA

NA

NA

07/23/13

Operates as a dealer of new and used trucks, and also provides preventative scheduled maintenance and electronic diagnosis

The acquisition provides Rush Enterprise an entry into the truck aftermarket

16.8

16.8

NA

04/24/13

Operates as a distributor of spare parts for the automotive aftermarket

The acquisition expands LKQ product offerings

272.8

272.8

0.7x

04/01/13

Operates as a reseller and supplier of automotive parts and accessories in Australia and New Zealand

The acquisition helps GPC expand its automotive parts service offerings

810.0

1,019.0

0.9x

03/28/13

Operates as a wholesale distributor of tires and services to retail tire locations in Canada

The acquisition expands TriCan’s product and service offerings

69.5

68.7

0.6x

Source: Capital IQ, Company Website

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Thank You

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