TRANSPORTATION & LOGISTICS AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018 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 a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized 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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TRANSPORTATION & LOGISTICS...instant accessibility, and diversity of form and function. SingularityHub ... received accolades for their achievements in tire technology, each taking
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TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
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 a private limitedcompany incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England andWales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which HarrisWilliams LLC and Harris Williams & Co. Ltd conduct business.
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www.harriswilliams.com
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
Jeffery PerkinsManaging Director [email protected]+49 (0) 69 3650638 00
WHAT WE’RE READING
GLOBAL TELEMATICS MARKET TO BE WORTH $233B USD BY 2022
According to Netscribes, the global telematics market is expected to grow at acompound annual growth rate (CAGR) of 28.5 percent between 2017 and 2022 toreach a global revenue of $233 billion USD by 2022. An increased need to trackvehicles in real time and monitor driver behavior, coupled with the rising demandfor onboard infotainment, is expected to drive the use of telematics technology.80-85 percent of the telematics solutions and devices that includes infotainmentand UBI cater to the automotive industry. North America is the highest revenue-generating region for the automotive telematics industry. The telematics market isat a mature stage in countries like the U.S. and Canada, where stable growth isforecasted until 2022.
Aftermarket News
RISE OF SELF-DRIVING VEHICLES WILL INCREASE CAR OWNERSHIP
When people predict the demise of car ownership, they are overlooking the realitythat the new autonomous automotive industry is not going to be just a re-hash oftoday’s car industry with driverless vehicles. Instead, the automotive industry of thefuture will be selling what could be considered an entirely new product: a widevariety of intelligent, self-guiding transportation robots. When cars become awidely used type of transportation robot, they will be cheap, ubiquitous, andversatile.
Several unique characteristics of autonomous vehicles will ensure that people willcontinue to buy their own cars: cost, personal belongings, frequent upgrades,instant accessibility, and diversity of form and function.
SingularityHub
THE HURDLES OF FIXING AUTOMATED VEHICLES
As automated vehicles slowly populate selected urban areas, the questionpersists: Who will repair and maintain these robotic and technological marvels?
"It's not something that immediately comes to mind when we think about all theresearch and development that comes with automated driving," says KayStepper, vice president of driver assistance systems and automated driving atRobert Bosch.
As a first mover in automated vehicle technology, Bosch is addressing a need thatmight be five or 10 years from reaching critical mass. But automakers, dealers,industry groups and academics agree that a significant gap exists in educationand marketing of careers for automated vehicle service technicians.
Classroom learning, reinforced by hands-on exposure to software and electricalintegration of sensors in automated vehicle prototypes, is creating jobopportunities beyond those that require four-year and graduate degrees. Boschhas hired about 10 Schoolcraft students with two-year associate degrees and iscontinuing their education.
Automotive News
TIRE INDUSTRY ADVANCEMENTS LAUDED AT TIRE TECH EXPO
Goodyear; Pirelli and C. S.p.A; Smithers Rapra; Versalis S.p.A.; and MegaRide S.r.l.received accolades for their achievements in tire technology, each taking homea Tire Technology International Award for Innovation and Excellence from the 2018Tire Technology Expo.
In addition, Ulf Sandberg, senior research scientist at the Swedish National Roadand Transport Research Institute (VTI), was presented with a Lifetime AchievementAward. He is one of the world's foremost experts on tire/road noise.
Goodyear's research and development efforts involving the use of soybean oil intire tread compounds earned the Akron-based tire maker the award in the"Environmental Achievement of the Year" category.
1/11/2018 Jett Express Car Washes LLC Provides car cleaning serv ices with a tunnel express conveyor Zips Car Wash LLC
1/9/2018 Safe Fleet Prov ides safety products for fleet vehicles Oak Hill
1/9/2018 Tiger Accessories Group Supplies vehicle lighting and cleaning products in North America Hopkins
1/8/2018 Levin’s Auto Supply Supplies automotive aftermarket products to retailers and automotive
parts stores
Highline Aftermarket
1/8/2018 Piston Rings Komarov Designers and manufacturers of piston rings for the OEM and
aftermarket channels
Hastings Manufacturing
1/4/2018 SARL Giraud-Garage du Bois de
la Chaize
Provides automotive repair serv ices Giraud-Garage du Bois de la
Chaize SARL /Monnier/
1/4/2018 Truck Parts & Equipment, Inc. Supplies new and used semi trailers and truck equipment FleetPride, Inc.
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PUBLIC MARKETS OVERVIEW(1)
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TRANSPORTATION & LOGISTICS
TEV / LTM EBITDA TEV / 2018P EBITDA
AVERAGE REVENUE GROWTH (2014 – 2017) AVERAGE REVENUE GROWTH (2017 – 2019P)
AVERAGE EBITDA GROWTH (2014 – 2017) AVERAGE EBITDA GROWTH (2017 – 2019P)
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
8.6x
10.0x
10.7x
12.6x
Suppliers
Vehicle Manufacturers
Distributors and Retailers
Dealerships and Services
Providers
7.2x
10.1x
10.2x
11.9x
Suppliers
Vehicle Manufacturers
Distributors and Retailers
Dealerships and Services
Providers
0.3%
0.8%
3.1%
8.8%
Vehicle Manufacturers
Suppliers
Distributors and Retailers
Dealerships and Services
Providers
2.9%
5.1%
8.6%
9.7%
Vehicle Manufacturers
Suppliers
Distributors and Retailers
Dealerships and Services
Providers
(7.0%)
1.0%
6.0%
8.1%
Distributors and Retailers
Vehicle Manufacturers
Dealerships and Services
Providers
Suppliers
(9.0%)
2.6%
5.0%
5.7%
Distributors and Retailers
Vehicle Manufacturers
Suppliers
Dealerships and Services
Providers
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STOCK PRICE PERFORMANCE(1)
4
TRANSPORTATION & LOGISTICS
(Indexed to February 26th , 2017)
TRAILING TWELVE MONTHS
MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH)
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
(30%)
(20%)
(10%)
0%
10%
20%
30%
Feb-17 May-17 Aug-17 Nov-17 Feb-18
Suppliers Distributors and Retailers Dealerships and Service Providers
Vehicle Manufacturers S&P 500 Index
(8.8%)
(7.9%)
(7.8%)
(4.2%)
(3.2%)
Dealerships and
Service Providers
Vehicle
Manufacturers
Distributors and
Retailers
Suppliers
S&P 500
(5.4%)
(4.6%)
3.3%
16.1%
19.1%
Distributors and
Retailers
Suppliers
Dealerships and
Service Providers
S&P 500
Vehicle
Manufacturers
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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.
OUR FIRM
TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
6
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PUBLIC COMPARABLES(1)
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TRANSPORTATION & LOGISTICS
AUTOMOTIVE AFTERMARKET SECTOR UPDATE │ FEBRUARY 2018
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 Feb-17 Aug-17 Current 2018P 2019P
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 a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK,registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulatedby the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conductbusiness.
THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US.
The information and views contained in this report were prepared by Harris Williams & Co. (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer 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 information 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 Williams 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 mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations 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, without Harris Williams’ prior written consent.