www.harriswilliams.com Investment banking services are provided by Harris W illiams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris W illiams & Co. Ltd, which is authorised and regulat ed by the Financial Conduct Authority. Harris Williams & Co. is atrade name underwhich Harris Williams LLC and Harris Williams & Co. Ltd conduct business. TRANSPORTATION & LOGISTICS AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
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www.harriswilliams.com
Investment banking services are provided by Harris W illiams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris W illiams & Co. Ltd, which is authorised andregulat ed bythe Financial Conduct Authority. HarrisWilliams &Co.is atrade name underwhich HarrisWilliams LLC and HarrisWilliams &Co. Ltd conduct business.
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
PAGE |
www.harriswilliams.com
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
3D PRINTING IS REVOLUTIONIZING TRUCK PARTS
3D printing as of right now is bringing new possibilities and meaningful changes inareas like truck parts av ailability / inventory, production costs, and time-to-marketfor new ideas. The latest dev elopments in 3D printing hav e made replacementparts easily accessible and of “consistent manufacturer’s quality.” The ability tomake a single giv en part on-demand is exponentially less expensiv e than atraditional manufacturing run for that part, and once a 3D printer is in place for aspecific locality or region, it also eliminates the typical requisite supply anddistribution network to make such parts av ailable.
Fleet Owner
E-COMMERCE CONTINUES TO EXPAND IN THE AFTERMARKET
Consumers expect their auto parts buying experience to be enhanced withconv enient, online tools. Roughly half of 1,000 v ehicle owners surv eyed by eBayhad purchased auto parts online, and nearly one in fiv e have purchased av ehicle online in the last fiv e years. “Growth in v ehicle and auto parts sales online ismuch higher than for regula r e-commerce,” says Sree Menon, general managerof eBay Motors. “Automotiv e aftermarket retailers hav e to understand that theycan’t ignore hav ing a digital strategy in place… we’re in an era where online andoffline really hav e to come together.”
Jeffery PerkinsM anaging Director jperkins@harrisw illiams.com+49 (0) 69 3650638 00
Automotiv e dealerships only capture approximately 30% of total serv ice v isits, andare missing out on bill ions in serv ice rev enue annually, according to the CoxAutomotiv e 2016 Maintenance and Repair Study. The study found that 25% ofrespondents took their v ehicles to a general repair shop, while 14% utilized quicklube locations and 11% went to tire stores. The remaining 20% were split amongretailers, specialists (like Midas), body shops or “other.” The top fiv e reasons thatserv ice customers did not go to the dealer were total cost, fears they would beov ercharged, unreasonable labor charges, unreasonable parts charges anddistance/location.
Auto Serv ice World
MAINTENANCE & REPAIR STUDY REVEALS AN OFFER WORTH BILLIONS
DRIVERLESS CARS CAN DRIVE UP THE BOTTOM LINE AT REPAIR SHOPS
Repair shops, and the parts manufacturers, wholesalers and retailers that supplythem, will be among the beneficiaries of the shift to autonomous v ehicles. Today,the v ehicles entering shops for maintenance or repairs sit parked 95 percent of thetime. Tomorrow, fleets of driv erless cars will spend nearly all their time on the road,with an increase in wear and tear and a proportionate need for maintenanceand repair.
Aftermarket Business World
Between 2016 and 2020, automotiv e OEMs and other ecosystem players willcontinue to inv est heavily in dedicated connected car programs that go beyondtraditional telematics. Multiple automotiv e OEMs are beginning to integrate in-v ehicle payment capabilities with their connected car platforms to make itpossible for driv ers to pay for serv ices such as fuel, parking, food and tolling,without hav ing to leave their v ehicles. By the end of 2016, research estimates thatconnected car serv ices will account for $14 billion in annual rev enue. Although themarket is presently dominated by infotainment and telematics, connected driv erassistance systems and autonomous driv ing applications will witness the highestgrowth rate ov er the next four years.
Yahoo Finance
CONNECTED CAR MARKET EXPECTED TO GROW AT 31% CAGR TO 2020
7/25/2016 Rubber Enterprises, Inc. Manufactures a line of v ibration control products. Anand Nvh Products Private
Limited
7/21/2016 Novita Technologies, Inc. Manufactures automotive LED modules. Osram GmbH
7/6/2016 Baja Designs, Inc. Develops and manufactures specialty aftermarket motorcycle and
automotive lighting systems.
Bestop, Inc.
7/1/2016 ABC Group, Inc. (Canada) Designs, develops, and produces plastic automotive systems. Cerberus Capital
Management LP
7/1/2016 Jayco, Inc. Develops, markets, and manufactures recreational vehicles and
accessories.
Thor Industries, Inc.
6/28/2016 UQM Technologies Inc. Manufactures electrical motors, generators and hybrid systems for
passenger and commercial vehicles.
American Compass Inc.
6/21/2016* Auto-Camping Ltd. Distributes imported OEM automobile parts and fluids in Canada. Genuine Parts Co.
6/16/2016* Dejana Truck & Utility Equipment
Co., Inc.
Offers a variety of truck equipment. Douglas Dynamics, Inc.
6/2/2016* FTE Automotive GmbH Manufactures brake and clutch actuation systems. Valeo SA
6/2/2016* OEConnection LLC Provides original equipment replacement parts solutions. Prov idence Equity Partners,
Inc.
5/23/2016* Bridgestone Firestone
Venezolana CA
Offers tires and rubber products in Venezuela. Corimon CA
5/17/2016 4Knines Manufactures and supplies dog seat covers for cars. Hall Capital Partners
5/16/2016 Rear View Safety, Inc. Prov ides back up camera systems and v ideo-based road safety
solutions for passenger vehicles.
Safe Fleet Acquisition Corp.
5/11/2016 Grand Rapids Auto Auction, Inc. Prov ides dealer-to-dealer auto auction serv ices within the used car
remarketing industry.
XLerate Group / Huron
Capital Partners
5/9/2016 Johann Hay GmbH und Co. KG
Automobiltechnik
Manufactures and supplies machined and forged components for
automotive, commercial vehicles, and bearing industries in Germany
and internationally.
Musashi Seimitsu Industry
Co., Ltd.
M&A TRANSACTIONS
2
RECENT M&A TRANSACTIONS1,2,3
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
*Denot es pending t ransactions
PAGE |
(2.3%)
7.9%
10.7%
17.0%
Vehicle Manufacturers
Dealerships and Services
Providers
Suppliers
Distributors and Retailers
4.7%
5.9%
7.0%
16.1%
Vehicle Manufacturers
Suppliers
Distributors and Retailers
Dealerships and Services
Providers
(0.4%)
4.3%
5.1%
6.1%
Vehicle Manufacturers
Suppliers
Distributors and Retailers
Dealerships and Services
Providers
(1.8%)
(0.7%)
6.6%
13.9%
Suppliers
Vehicle Manufacturers
Distributors and Retailers
Dealerships and Services
Providers
6.3x
9.9x
11.7x
12.3x
Suppliers
Vehicle Manufacturers
Dealerships and Services
Providers
Distributors and Retailers
6.9x
8.2x
11.4x
12.7x
Suppliers
Vehicle Manufacturers
Dealerships and Services
Providers
Distributors and Retailers
PUBLIC MARKETS OVERVIEW
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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 │ AUGUST 2016
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(18.2%)
(8.7%)
(5.3%)
4.8%
11.5%
Dealerships and
Service Providers
Vehicle
Manufacturers
Suppliers
S&P 500
Distributors and
Retailers
(1.0%)
1.3%
2.3%
9.8%
10.2%
Distributors and
Retailers
Dealerships and
Service Providers
S&P 500
Suppliers
Vehicle
Manufacturers
STOCK PRICE PERFORMANCE
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TRANSPORTATION & LOGISTICS
(Indexed t o August 11th, 2015)
TRAILING TWELVE MONTHS
MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH)
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
(40%)
(30%)
(20%)
(10%)
0%
10%
20%
30%
40%
Aug-15 Nov-15 Feb-16 May-16 Aug-16
Suppliers Distributors and Retailers
Dealerships and Service Providers Vehicle Manufacturers
S&P 500 Index
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OUR GROUP
Harris Will iams & Co. is a leading adv isor to the transportation and logistics M&A market. Our Transportation & LogisticsGroup serv es companies in a broad range of attractiv e niches, including third-party logistics (3PL), truck, rail, marineand air transportation, transportation equipment, and the automotiv e and heav y duty v ehicle 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.
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OUR FIRM
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ AUGUST 2016
Harris W illiams & 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 t ransaction expertise, and an unw avering 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, w hich is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a t rade name under w hich Harris Williams LLC and Harris W illiams & Co. Ltd conduct business.
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The information and v iew s contained in this report w ere prepared by Harris Williams & Co. (“Harris Williams”). It is not a re search report, as such term is defined by applicable law and regulat ions, and is provided for informational purposes only. It is not to be construed as an o ffer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The i nformation contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris W illiams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies ment ioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addit ion, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securit ies, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report const itute Harris Williams’ judgment and are subject to change w ithout notice. The financial instruments discussed in this re port may not be suitable for all investors, and investors must make their ow n investment decisions using their own independent advisors as they believe ne cessary and based upon their specific financial situat ions and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, w ithout Harris Williams’ prior w ritten consent.