An Introduction to RightPSITM
John K. Milanovich, President 1627 West Main Street – 331
Bozeman, MT 59715 [email protected], (406)219-3290
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RightPSI is an Auto Aftermarket company that produces user friendly tire pressure solutions.
Overview
• Our initial product is a patented tire cap that provides convenient, unobtrusive visual indication of proper tire inflation.
• Prototyping is complete, and the tire cap is production ready. • Intellectual Property:
• One auto aftermarket patent which is a fully articulated production ready product.
• Two OEM product patents ready for development. • Award Winning Product:
• Popular Mechanics Editor’s Choice Award Winner. • MSN Top Pick from the SEMA Show.
• Expressed interest from suppliers. • Huge potential for explosive growth.
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Why RightPSI?
• 1 in 4 cars is driving on at least one tire that is 25% or more below required tire
pressure
• People find the experience of filling tires cumbersome and inefficient.
• Crashes resulting from underinflated tires cause $600 million in damage every year.
• AAA reports 4 million tire service calls a year. Its no wonder that tire pressure is ranked as a top safety concern among motorists.
• Having properly inflated tires saves the average motorist $65 a year in fuel cost.
• In an era of high gas prices motorists are looking for a way to improve fuel efficiency and save money.
• The average car produces 1.5 tons of CO2 because of tire under inflation.
The Problem:
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Product
RightPSI Tire Pressure Indicator
• Patent number 5,386,794 • Product targeted to mass auto aftermarket retail. • We plan to sell to distributors, retail operators, and fleet operators. •Thanks to fill through feature, cap can be used as a gauge. • Shows an orange band when underinflated, yellow when overfilled, and a low-profile black when correctly pressurized. • Able to produce product in a wide range of PSI levels. • Company will develop a version that is to be incorporated in tires for OEM sales or license.
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OEM Products: Blow-off valve and valve stem indicator
• Products for license or sale to tire manufacturers. • Patent numbers 7,404,412 and 7,493,808 • One is a built in pressure gauge similar to our aftermarket product that is incorporated in the tire sidewall during manufacture • Potential for differentiation in tire industry • Second product is a valve that starts venting air as soon as the tire is properly filled. • Ease of use – fill until air blows off side • No need for gauge • Intuitive filling •Both products are still in the development stage
Products in Development
Impact of TPMS
• There are 180 million cars without TPMS on the road today.
• Federal Regulations beginning in 2008 mandated all new cars come equipped with TPMS.
– The standard is a light (shown on the left) on the dash.
• Schrader estimates that there are 100 million cars with TPMS on the road.
• 90% (90 million) of cars with TPMS show only an indication light and not until one tire is over 25% underinflated.
– RightPSI begins indicating when tires are 5% underinflated. – The standard TPMS does not indicate which tires are underinflated. – TPMS does not indicate overinflation. – RightPSI works as a gauge while pumping. – Close to half of drivers with TPMS do not know what the icon
means.
• For the 10 million cars that have full tire pressure indication on the dash RightPSI still adds value, working as a gauge.
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Tire Pressure Management System
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Saving Lives, Money, and the Environment
Saving Lives: • 9% of all crashes each year caused by tire problems. • AAA responds to 4 million motorists every year who are stranded from tire
problems. Saving Money: • Average US motorist’s would reap $65 a year in gas savings at $3.50/gallon. • RightPSI pays for itself in saved gas in four and a half months. • Running tires constantly underinflated by 20% reduces tire life by 30%. Tires
40% low reduce tire life by 50%. Saving the Environment: • 4 million gallons of gas a day are wasted by drivers with low tire pressure, or
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Marketing
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US Auto Market
• Annual US Auto Aftermarket Sales topped $307 Billion last
year. This market is growing at 3.4% annually. • 40% of US households purchase automotive accessories
annually. • Recession has prompted owners to prolong the life of their
cars leading to expanding auto aftermarket sales. • Average age of US auto fleet (280 Million cars) has climbed from 8.5
years two decades ago to 11.4 years today.
• All car tires worldwide have Schrader valves on them. • Over 1 billion cars worldwide.
• In 2012 the US tire industry had $43 Billion in revenue. • North American tire and wheel accessory sales were a $6
Billion dollar business in 2012
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Motorcycle Market
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• ~800 Million motorcycles in use worldwide.
• 7.8 Million motorcycles registered in the US.
• Global market forecast to grow to 130 million units sold and $90 billion in revenue worldwide by 2016.
• Industry is growing at a 7% rate internationally and at a sluggish 0.5% domestically.
• $6.7 Billion Industry with 450k units sold each year in the US.
Bike Market
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• Estimated 1.5 billion bikes worldwide • 140 Million sold world wide in each year. • 18.7 Million bikes sold each year in the US. • $60 billion world wide. • Industry - $7.3 Billion in sales in US • Focus Specialty stores (4,089 Locations in
US) • Account for 52% of bike sales by revenue.
Average store turnover $866,000 in 2012. • Trend is for higher per store revenue with
fewer stores. • Large potential market
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Distribution Strategy
• There are 232,111 auto aftermarket POS locations in the US.
• Substantial interest from buyers expressed from contacts cultivated at SEMA.
• Leverage distributor introductions into warehouse, auto parts store and tire dealership channels.
• Direct sales to large auto fleets. • The company will peruse sales to or
partnerships with tire manufactures for our OEM products.
• Interest expressed from many international buyers. (Israel, South Africa, Australia, France, etc…)
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Case Study: Tireflys
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• Manufacturer of tire cap novelty item that lights up via motion.
• Distribution reached 60,000 store locations within 4 yrs. This projects to 75,000 stores in year 5.
• Walmart, K-Mart and Target shelf space. • Sold 10 million Units of niche product.
Using same store growth rate, here is a projection for domestic sales figures after 5 years ± 10%:
Locations available
Total yearly sales
Sales per store per week
Revenue at $10/Unit Gross profit at $6/Unit
Plus 10% 82,500 8,250,000 1.9 $82,500,000 $49,500,000 Baseline 75,000 7,500,000 1.9 $75,000,000 $45,000,000 Minus 10% 67,500 6,750,000 1.9 $67,500,000 $40,500,000
Kickstarter
• Hit 20k goal in 5 days – 40k in the first 2 weeks – Campaign ended at $70k or at
350% funded • Over 1500 Backers • Social media engagement
– 750 FB likes on project – Social media engagement up
on all platforms significantly • Introductions to distributors
worldwide • Continued pre-sales on
website
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Kickstarter Raise
Press
RightPSI outreach was successful in reaching a large market in all targeted segments: •Dream Big America
•5th ranked radio show in the country •TechCrunch
•14.7 Million Unique visitors/month •Digital Trends
•50 Million Unique visitors/month •Tire Business Magazine •Overdrive Magazine •Sustainable America •Bike Rumor •Motorcycle.com •Etc..
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Exit Strategy
• 6 tire companies control 75% of market share, 95 others compete for remaining 25%. Economies of scale are a huge factor and product differentiation is minimal.
• US aftermarket industry attracting private equity. • $500 million in mergers and acquisitions of tire
distributors/companies in 2012. • 136 Automotive Aftermarket M&A transactions were concluded in
2012.
• Auto aftermarket M&A multiples in 2013 were 6x EBITDA and 1x Revenue.
Active M&A Market
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Questions?
Call us up in the office at (406)219-3290, check out our website rightpsi.com, or shoot us an email [email protected].
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