Automotive Aftermarket – Overview
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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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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 >$1b
136
2008
22 10 12
116 93
72
35
2009 2010 Strategic Buyers
2011
2012 Financial Buyers
2013
Source: AASA M&A – 2013 Review
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Automotive Aftermarket – Comparables ($ 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
$5,960
10%
8%
31%
13%
1.4x
1.3x
10.8x
9.6x
18.3x
15.7x
Source: CapIQ
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Selected M&A Transactions in Automotive Aftermarket Date
Acquirer/Target
Target Description
Rationale
Transaction Implied Value EV ($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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