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www.harriswilliams.com
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised andregulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
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www.harriswilliams.com
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
AAA TO MEET WITH CRITICS OF DATA PLAN
With the heat intensifying on AAA Inc. over its plan to cull data from memberautomotive service shops, the organization has agreed to meet with some of itscritics. Representatives of certain AAA Approved Auto Repair (AAR) shop owners,will gather sometime in May to discuss issues arising from AAA’s requirements forcustomer information sharing as part of the AAR agreement the group hasplanned for next year. The list of attendees is still being finalized, according toCathy Rossi, vice president of public and government affairs at AAA Mid-Atlantic.
Tire Business
WHAT WE’RE READING
CAR SALES, MILES DRIVEN, AND RECORD-BREAKING TEMPERATURES
The automotive aftermarket industry grew to $14.6 billion in 2015, with dollar salesincreasing by 3.9% and units/quarts by 1.7%, according to global informationcompany The NPD Group. While dollar sales have been accelerating since 2013,unit/quart sales have been down, and 2015 marked the first year in which bothended positively. New and used car sales, an increase in miles driven, andatypical weather were factors that influenced the aftermarket’s strongperformance during the year.
Jeffery PerkinsManaging Director [email protected]+49 (0) 69 3650638 00
Sales figures announced from GM, Ford, Toyota and Fiat Chrysler suggested thatabout 1.5 million light vehicles were sold during the month of April. That wouldproduce a seasonally adjusted annual rate of sales of 17.5 million, up 6% from April2015. Lackluster sales in March had stirred concerns that the long sales recoverymight finally be ending and that the market might be on the brink of a downturn.However, the new figures suggest that the industry could be on track to match oreven beat the all-time annual sales record of 17.5 million vehicles set in 2015.
Financial Times
STRONG U.S. CAR SALES IN APRIL REVIVE HOPES FOR FRESH RECORD
Johnson Controls Inc. had a logistics mystery on its hands: thousands of reusableshipping boxes and storage racks were disappearing every year. The auto-partsmaker, which was spending a small fortune to replace the equipment, launchedan investigation using RFID tags, attached to the containers. It showed some weresquirreled away at factories by Johnson Controls’ own plant managers, otherswere kept by customers. Auto-parts makers have mostly stuck with cheaperalternatives to RFID tags, like bar code stickers. Johnson Controls’ decision to startusing RFID could change that.
Wall Street Journal
JOHNSON CONTROLS UNRAVELS RIDDLE OF MISSING CRATES
LATIN AMERICA – OPPORTUNITIES FOR U.S. AUTOMOTIVE AFTERMARKET
The U.S. auto parts sector continues to be one of the largest contributors to totalU.S. exports. In 2015, the U.S. exported nearly $81 billion in auto parts worldwide.One of the promising, but overlooked regions for U.S. automotive aftermarket partsexports is Latin America, particularly Peru, Guatemala and El Salvador. Demandfor aftermarket auto parts and repair services in these three markets is increaseddue to aging vehicles (averaging 15.5 years for private and 22.5 years forcommercial vehicles). In addition, there is a high level of used-car sales anddeteriorating road conditions. US market share for auto parts in Guatemala is 31%,in El Salvador it is 26%, and US companies have a 19% share of the Peruvianmarket. Also worth noting: U.S. auto parts exports over the last five years grew 87%in Peru; 19% in Guatemala, and 50% in El Salvador.
Manufactures and supplies machined and forged components for
automotive, commercial vehicles, and bearing industries in Germany
and internationally.
Musashi Seimitsu Industry
Co., Ltd.
4/19/2016 Laydon Composites Ltd. Designs and manufactures aerodynamic devices for heavy-duty trucks
and trailers in North America and internationally.
WABCO Holdings Inc.
4/18/2016 Sperry & Rice Manufacturing
Company, LLC
Manufactures and markets rubber and sponge extrusions for appliance,
automotive, construction, and truck and bus industries.
Salt Creek Capital I I , LLC
4/15/2016 Zitco, Inc. Distributes automotive paints and coatings. Finishmaster Inc.
4/11/2016* Kovatch Mobile Equipment
Corporation
Designs, manufactures, and distributes customized specialty trucks,
chassis, and vehicles.
REV Group, Inc.
4/1/2016 DYK Automotive, LLC & AAHC,
Inc.
Distributes products to the automotive aftermarket throughout the
United States.
The Sterling Group
3/30/2016 Take 5 Oil Change LLC Provides oil change serv ices for vehicles in the United States. Driven Brands, Inc.
3/24/2016* ASIMCO NVH Technologies Co.,
Ltd.
Manufactures automotive components such as bushings, body mounts,
and engine mounts.
Zhengzhou Coal Mining
Machinery Group Co., Ltd.
3/11/2016* Cruise Automation, Inc. Develops and manufactures autonomous vehicle technologies. General Motors Company
3/1/2016 Jiffy-tite Company Inc. Manufactures fluid hose couplers for the automotive industry. Oetiker Limited
2/29/2016 Pittsburgh Glass Works LLC Manufactures and distributes automotive glass in the United States and
internationally.
LKQ Corp.
2/17/2016 Texas Hydraulics, Inc. Operates as a custom manufacturer of fluid power components for
original equipment manufacturers.
Wynnchurch Capital, LLC
2/9/2016 Trans-Safety LOCKS GmbH Manufactures and markets anti-theft protection products for the
transport industry.
WABCO Holdings Inc.
2/3/2016* PurePOWER Technologies, LLC Offers research and development, engineering, and manufacturing of
engine control and emissions management solutions.
Smithfield Group LLP;
Kensington Capital Partners,
LLC
2/2/2016 UGN, Inc. Manufactures acoustic, interior trim, and thermal management
products for the automotive industry.
Angeles Equity Partners
2/2/2016* Key Safety Systems, Inc. Designs, develops, and manufactures automotive safety-critical
components and systems for automotive and non-automotive markets
worldwide.
Ningbo Joyson Electronic
Corp.
2/2/2016 MICO, Incorporated Manufactures and sells hydraulic components, controls, and brake
systems primarily for off-road vehicles worldwide.
WABCO Holdings Inc.
1/28/2016 Save-A-Load, Inc. Manufactures cargo load bars for tractor trailers, light duty/commercial
vehicles, sprinter vans, SUVs, and pick-up trucks.
Fleet Engineers, Inc.
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PUBLIC MARKETS OVERVIEW
3
TRANSPORTATION & LOGISTICS
TEV / LTM EBITDA TEV / 2016P EBITDA
AVERAGE REVENUE GROWTH (2012 – 2015) AVERAGE REVENUE GROWTH (2015 – 2017P)
AVERAGE EBITDA GROWTH (2012 – 2015) AVERAGE EBITDA GROWTH (2015 – 2017P)
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
7.1x
9.4x
12.0x
12.4x
Suppliers
Vehicle Manufacturers
Dealerships and Services
Providers
Distributors and Retailers
6.2x
9.0x
11.1x
11.4x
Suppliers
Vehicle Manufacturers
Dealerships and Services
Providers
Distributors and Retailers
0.7%
4.4%
6.6%
15.1%
Suppliers
Vehicle Manufacturers
Distributors and Retailers
Dealerships and Services
Providers
2.2%
4.5%
5.4%
7.5%
Vehicle Manufacturers
Suppliers
Distributors and Retailers
Dealerships and Services
Providers
2.4%
7.8%
12.1%
16.6%
Suppliers
Distributors and Retailers
Vehicle Manufacturers
Dealerships and Services
Providers
5.4%
7.2%
12.9%
17.8%
Vehicle Manufacturers
Dealerships and Services
Providers
Suppliers
Distributors and Retailers
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STOCK PRICE PERFORMANCE
4
TRANSPORTATION & LOGISTICS
(Indexed to May 11, 2015)
TRAILING TWELVE MONTHS
MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH)
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
(40%)
(30%)
(20%)
(10%)
0%
10%
20%
30%
40%
May-15 Aug-15 Nov-15 Feb-16 May-16
Suppliers Distributors and Retailers
Dealerships and Service Providers Vehicle Manufacturers
S&P 500 Index
(2.0%)
(0.6%)
1.1%
3.2%
5.2%
Suppliers
Distributors and
Retailers
S&P 500
Dealerships and
Service Providers
Vehicle
Manufacturers
(24.5%)
(22.1%)
(12.1%)
(1.6%)
16.9%
Dealerships and
Service Providers
Vehicle
Manufacturers
Suppliers
S&P 500
Distributors and
Retailers
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OUR GROUP
Harris Williams & Co. is a leading advisor to the transportation and logistics M&A market. Our Transportation & LogisticsGroup serves companies in a broad range of attractive niches, including third-party logistics (3PL), truck, rail, marineand air transportation, transportation equipment, and the automotive and heavy duty vehicle market.
Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit from our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries.
6
OUR FIRM
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
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PUBLIC COMPARABLES
7
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ MAY 2016
Stock Performance
Stock Price Change from 52-Week TEV / EBITDA EBITDA
($ in millions except per share data) TEV Current Prior Month Prior Year High % of High May-15 Nov-15 Current 2016P 2017P
Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
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