Weekly Automotive Aftermarket Intelligence Report January 12, 2015
AUTOMOTIVE AFTERMARKET
Automotive Aftermarket Stock Performance*
20% SLIPPING LEADING
15% Cooper Tire
Remy
10% CarMax Pep Boys
Lithia Uni-Select
5% Goodyear S&P 500 Penske Last Month’s Return Solera Boyd Monro (0.7%) KAR Advance Auto Genuine Parts 0% AutoZone O'Reilly Snap-on Sonic AutoNation Tenneco Asbury Dorman Copart (5%)
Last Month’s Return Last Month’s Standard Motor LKQ
Federal-Mogul Group 1 (10%) MPA
(15%) U.S. Auto Parts
S&P 500 Rush (20%) Last Week’s Return (0.7%)
LAGGING IMPROVING (25%) (10%) (5%) 0% 5% Last Week’s Return
Percent Change Segment Index1 1 Week 1 Month LTM Suppliers (1.6%) 0.7% 11.6% Retailers & Distributors (2.1%) (0.7%) 30.9% Independent Service Providers & Dealers (2.1%) 2.6% 28.1% Collision (0.8%) (3.2%) (4.3%) BB&T Automotive Aftermarket Index (1.1%) 0.7% 21.7% S&P 500 (0.7%) (0.7%) 12.0%
1 Weighted by market capitalization *Size of the bubble represents relative market capitalization Source: Capital IQ
1 Automotive Aftermarket Stock Performance
40%
30%
20%
10%
0%
(10%)
(20%)
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
Suppliers Retailers & Distributors Independent Service Providers & Dealers Collision
Source: Capital IQ BB&T Automotive Aftermarket Index S&P 500 Index
Most Recent Quarter Sales Growth (Year-Over-Year)
50.6% 50% 45.8%
40% 35.9% 32.6% 30% 28.5%
21.3% 20% 17.5% 15.5% 12.2% 11.2% 10.7% 10% 10.5% 9.4% 10.4% 10.1% 9.8% 10.4% 7.1% 7.7% 8.2%8.0% 8.6% 8.3% 7.8% 6.0% 5.1% 2.1% 2.1% 3.8% 0.2% 0% (2.7%) (10%) (6.9%) LKQ Corp. LKQ Copart, Inc. Copart, CarMax Inc. Tenneco Inc. Tenneco Snap-on Inc. Uni-Select Inc. Uni-Select AutoZone, Inc. AutoNation Inc. Lithia Motors Inc. Solera Holdings Inc. Federal-Mogul Corp. Federal-Mogul Rush Enterprises, Inc. Sonic Automotive Inc. Dorman Products, Inc. Dorman Products, Advance Auto Parts Inc. Auto Parts Advance Remy International, Inc. Remy Genuine Parts Company Genuine Parts O'Reilly Automotive O'Reilly Inc. Group 1 Automotive Inc. 1 Group Monro Muffler Brake Inc. Muffler Brake Monro Cooper Tire & Rubber Co. & Rubber Tire Cooper Boyd Group Income Fund Group Boyd KAR Auction Services, Inc. KAR Auction Services, Inc. Goodyear Tire & Rubber Co. & Rubber Tire Goodyear U.S. Auto Parts Network, Inc. Auto Parts U.S. Standard Motor Products Inc. Motor Products Standard Pep Boys - Manny, Moe & Jack Moe & - Manny, Boys Pep Pep Boys - Manny, Moe & Jack Moe & - Manny, Boys Pep Motorcar Parts of America Inc. of Parts Motorcar Penske Automotive Group, Automotive Group, Inc. Penske Asbury Automotive Group, Asbury Automotive Group, Inc.
Suppliers Retailers & Distributors Independent Service Providers & Dealers Collision
Source: Capital IQ
2 Enterprise Value / Last 12 Months’ EBITDA Multiples1,2,3
SUPPLIERS RETAILERS & DISTRIBUTORS
10.0x 14.0x
8.6x 12.0x 12.4x 8.0x 12.2x 8.6x 8.7x 8.5x 11.1x 10.0x 9.8x
6.0x 8.0x
6.0x 4.0x 4.0x 2.0x 2.0x
0.0x 0.0x One Year Ago One Month Ago Current One Year Ago One Month Ago Current
5-Year Average 5-Year Average
INDEPENDENT SERVICE PROVIDERS & DEALERS COLLISION
14.0x 18.0x 16.0x 12.0x 13.0x 13.1x 11.6x 16.1x 12.7x 14.0x 10.0x 13.9x 13.9x 12.0x 12.1x 8.0x 10.0x 8.0x 6.0x 6.0x 4.0x 4.0x 2.0x 2.0x
0.0x 0.0x One Year Ago One Month Ago Current One Year Ago One Month Ago Current
5-Year Average 5-Year Average
TOTAL AUTOMOTIVE AFTERMARKET
14.0x
12.0x 12.0x 10.5x 10.0x 11.5x 11.9x
8.0x
6.0x
4.0x
2.0x
0.0x One Year Ago One Month Ago Current
5-Year Average
1 Enterprise Value = Market Capitalization + Debt – Cash; EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization 2 Pep Boys is included in both Retailers & Distributors and Independent Service Providers & Dealers 3 KAR is included in both Retailers & Distributors and Collision Source: Capital IQ
3 Valuation Metrics As of 1/9/2015 ($ in millions, except per share)
Stock 52 Week Market Price / P / E Forward PEG TEV / Revenue TEV / EBITDA Ticker Price High / Low Cap TEV TBV LTM CY 2015 CY 2016 CY 2015 CY 2016 LTM CY 2015 CY 2016 LTM CY 2015 CY 2016 SUPPLIERS Cooper Tire & Rubber Co. CTB $34.53 $35.31 / $21.95 $2,006 $2,407 2.8x 15.4x 12.8x 10.5x 0.8x 0.6x 0.7x 0.8x 0.8x 5.5x 6.1x 5.5x Dorman Products, Inc. DORM $47.63 $60.99 / $37.22 1,699 1,654 4.1x 19.4x 17.4x 14.6x 1.0x 0.9x 2.2x 1.9x 1.7x 10.6x 9.4x 8.7x Federal-Mogul Corp. FDML $14.27 $21.12 / $13.52 2,141 4,475 NM 16.5x 11.2x 7.3x NA NA 0.6x 0.6x 0.5x 6.8x 6.1x 5.1x Goodyear Tire & Rubber Co. GT $28.26 $28.98 / $18.87 7,759 13,706 7.0x 13.1x 9.1x 8.2x 0.8x 0.7x 0.7x 0.7x 0.7x 5.9x 5.4x 5.0x Motorcar Parts of America, Inc. MPAA $30.14 $36.43 / $18.56 540 534 3.0x 38.6x 16.9x 14.7x 0.7x 0.6x 1.9x 1.7x 1.4x NM 7.9x 6.5x Remy International, Inc. REMY $19.90 $20.24 / $18.65 637 897 14.4x 13.8x 12.2x 10.4x NA NA 0.8x 0.8x 0.7x 6.8x 6.3x 5.8x Snap-on, Inc. SNA $135.73 $140.22 / $96.24 7,887 8,699 6.4x 21.8x 17.8x 15.9x 1.4x 1.3x 2.5x 2.5x 2.4x 12.0x 11.4x 9.8x Standard Motor Products, Inc. SMP $35.88 $45.80 / $30.28 821 870 3.0x 14.7x 12.7x 11.2x 1.2x 1.1x 0.9x 0.9x 0.8x 7.9x 7.0x NA Tenneco, Inc. TEN $53.15 $69.22 / $46.64 3,246 4,332 6.2x 12.4x 10.5x 9.2x 0.7x 0.7x 0.5x 0.5x 0.4x 5.7x 5.1x 4.6x MEAN $2,971 $4,175 5.9X 18.4X 13.4X 11.3X 0.9X 0.8X 1.2X 1.2X 1.1X 7.7X 7.2X 6.4X MEDIAN $2,006 $2,407 5.2X 15.4X 12.7X 10.5X 0.8X 0.7X 0.8X 0.8X 0.8X 6.8X 6.3X 5.6X RETAILERS & DISTRIBUTORS Advance Auto Parts, Inc. AAP $160.30 $163.46 / $109.58 $11,701 $13,347 NM 23.6x 18.4x 15.8x 1.0x 0.9x 1.5x 1.3x 1.3x 11.8x 9.9x 9.0x AutoZone, Inc. AZO $606.02 $627.30 / $481.30 19,331 23,623 NM 19.1x 17.0x 15.1x 1.3x 1.1x 2.5x 2.3x 2.2x 11.1x 10.7x 10.1x Genuine Parts Company GPC $101.37 $109.00 / $76.50 15,495 16,206 7.5x 23.0x 20.1x 18.7x 2.5x 2.3x 1.1x 1.0x 1.0x 13.0x 11.3x 10.6x KAR Auction Services, Inc. KAR $34.69 $35.70 / $25.91 4,886 7,287 NM 43.9x 20.6x 18.9x 0.9x 0.8x 3.2x 2.9x 2.9x 15.8x 11.4x 11.2x O'Reilly Automotive, Inc. ORLY $187.81 $196.80 / $129.72 19,052 20,151 15.6x 27.4x 22.5x 19.9x 1.2x 1.1x 2.8x 2.6x 2.5x 14.3x 12.7x 11.8x Pep Boys - Manny, Moe & Jack PBY $9.48 $13.68 / $8.36 507 847 1.0x NM NM 33.3x NM NA 0.4x 0.4x 0.4x 9.4x 8.5x 6.1x U.S. Auto Parts Network, Inc. PRTS $2.21 $4.09 / $1.82 74 93 4.5x NM NM 44.2x NM 2.9x 0.3x 0.3x 0.3x 15.6x 8.8x 6.7x Uni-Select, Inc.1 UNS $25.95 $26.53 / $21.07 550 940 3.0x 16.3x 9.7x 9.3x 1.4x 1.3x 0.5x 0.5x 0.5x 11.1x 7.9x 7.9x MEAN $8,950 $10,312 6.3X 25.6X 18.0X 21.9X 1.4X 1.5X 1.5X 1.4X 1.4X 12.8X 10.1X 9.2X MEDIAN $8,293 $10,317 4.5X 23.3X 19.2X 18.8X 1.3X 1.1X 1.3X 1.2X 1.1X 12.4X 10.3X 9.6X INDEPENDENT SERVICE PROVIDERS & DEALERS Asbury Automotive Group, Inc. ABG $74.45 $78.73 / $45.31 $2,216 $3,370 4.8x 18.6x 15.3x 13.6x 0.9x 0.8x 0.6x 0.5x 0.5x 12.3x 10.7x 9.9x AutoNation, Inc. AN $58.95 $61.42 / $46.16 6,670 11,310 16.4x 18.3x 15.3x 13.6x 1.0x 0.9x 0.6x 0.6x 0.5x 13.1x 11.9x 10.9x CarMax, Inc. KMX $65.04 $68.71 / $42.54 13,659 22,285 4.3x 26.4x 25.1x 22.4x 1.8x 1.6x 1.6x 1.6x 1.4x 21.8x 20.7x 19.3x Group 1 Automotive, Inc. GPI $83.97 $93.23 / $59.37 2,041 4,302 NM 15.2x 13.1x 11.7x 0.9x 0.8x 0.4x 0.4x 0.4x 12.1x 11.6x 10.4x Lithia Motors, Inc. LAD $86.20 $97.20 / $53.57 2,263 3,255 4.7x 17.6x 14.5x 12.9x 0.7x 0.6x 0.7x 0.4x 0.4x 13.3x 9.8x 8.9x Monro Muffler Brake, Inc. MNRO $57.00 $62.11 / $46.93 1,800 2,081 23.8x 30.9x 29.3x 24.0x 1.6x 1.3x 2.4x 2.3x 2.1x 14.9x 14.5x 12.2x Penske Automotive Group, Inc. PAG $49.31 $51.44 / $36.36 4,449 8,049 28.7x 16.6x 13.3x 11.9x 0.9x 0.8x 0.5x 0.4x 0.4x 13.4x 12.6x 11.6x Pep Boys - Manny, Moe & Jack PBY $9.48 $13.68 / $8.36 507 847 1.0x NM NM 33.3x NM NA 0.4x 0.4x 0.4x 9.4x 8.5x 6.1x Rush Enterprises, Inc. RUSH.B $31.33 $31.64 / $19.58 1,333 2,464 3.6x 25.9x 16.1x 13.9x NA NA 0.7x 0.6x 0.5x 13.1x 14.0x 11.4x Sonic Automotive, Inc. SAH $26.09 $27.87 / $21.05 1,335 3,223 13.8x 13.2x 12.2x 10.8x 1.0x 0.9x 0.4x 0.3x 0.3x 10.7x 10.5x 9.7x MEAN $3,627 $6,119 11.2X 20.3X 17.1X 16.8X 1.1X 1.0X 0.8X 0.8X 0.7X 13.4X 12.5X 11.0X MEDIAN $2,129 $3,312 4.8X 18.3X 15.3X 13.6X 1.0X 0.9X 0.6X 0.5X 0.5X 13.1X 11.7X 10.6X COLLISION Boyd Group Income Fund1 BYD.UN $40.86 $42.04 / $25.07 $679 $752 NM NM 21.2x 19.5x NA NA 1.2x 0.9x 0.8x 16.3x 10.8x 9.8x Copart, Inc. CPRT $36.12 $37.81 / $29.93 4,563 4,646 6.2x 21.4x 20.8x 18.8x 1.5x 1.4x 4.0x 3.8x 3.6x 11.3x 11.3x 10.5x KAR Auction Services, Inc. KAR $34.69 $35.70 / $25.91 4,886 7,287 NM 43.9x 20.6x 18.9x 0.9x 0.8x 3.2x 2.9x 2.9x 15.8x 11.4x 11.2x LKQ Corp. LKQ $27.39 $32.89 / $24.46 8,300 9,959 43.8x 22.9x 16.6x 13.3x 0.8x 0.6x 1.6x 1.3x 1.2x 13.0x 10.2x 8.5x Solera Holdings, Inc. SLH $50.32 $70.82 / $45.69 3,433 5,202 NM 43.7x 15.6x 14.0x 1.3x 1.1x 5.0x 4.5x 4.2x 13.1x 11.0x 10.1x MEAN $4,372 $5,569 25.0X 33.0X 19.0X 16.9X 1.1X 1.0X 3.0X 2.7X 2.5X 13.9X 10.9X 10.0X MEDIAN $4,563 $5,202 25.0X 33.3X 20.6X 18.8X 1.1X 1.0X 3.2X 2.9X 2.9X 13.1X 11.0X 10.1X
1 Stock Prices, Market Cap, and Enterprise Values converted at the exchange rate as of the date above * Definitions: LTM = Last Twelve Months; EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization; P / E = Stock Price / Earnings Per Share; TEV = Total Enterprise Value TBV = Tangible Book Value; PEG = (Calendarized P / E) / Long Term Growth Rate Sources: Capital IQ, Company filings
4 Operating Results Last 12 Months as of 1/9/2015 ($ in millions, except per share)
Net Margins Sales Growth EBITDA Growth SSS Ticker LTM Date Revenue EBITDA EBIT Income Gross EBITDA EBIT NI 1 Year 5 Year 1 Year 5 Year Latest Q SUPPLIERS Affinia Group Intermediate Holdings, Inc.1 N/A 09/30/14 $1,398 $177 $159 $53 24.2% 12.7% 11.4% 3.8% 19.5% (2.0%) 36.2% 3.4% Cooper Tire & Rubber Co. CTB 09/30/14 3,466 438 297 151 16.1% 12.6% 8.6% 4.4% (4.8%) 5.6% (16.9%) 15.7% Dorman Products, Inc. DORM 09/27/14 747 155 144 92 38.3% 20.8% 19.2% 12.3% 18.7% 15.6% 20.6% 28.2% Federal-Mogul Corp. FDML 09/30/14 7,215 615 286 (2) 14.8% 8.5% 4.0% (0.0%) 8.8% 6.6% 28.1% 14.0% Goodyear Tire & Rubber Co. GT 09/30/14 18,573 2,310 1,574 558 23.3% 12.4% 8.5% 3.0% (6.2%) 3.0% 17.7% 32.8% Motorcar Parts of America, Inc. MPAA 09/30/14 276 39 37 10 30.1% 14.2% 13.3% 3.5% 22.6% 14.9% 23.6% 19.5% Remy International, Inc. REMY 09/30/14 1,179 131 93 25 19.3% 11.1% 7.9% 2.1% 7.6% 5.7% (0.8%) 2.5% Snap-on, Inc. SNA 09/27/14 3,421 722 659 400 49.6% 21.1% 19.3% 11.7% 7.3% 6.6% 13.0% 14.5% Standard Motor Products, Inc. SMP 09/30/14 981 110 94 41 29.5% 11.2% 9.5% 4.2% 2.5% 6.3% 7.3% 23.8% Tenneco, Inc. TEN 09/30/14 8,447 760 566 259 16.9% 9.0% 6.7% 3.1% 9.9% 13.2% 15.3% 25.4% UCI Holdings Limited1 N/A 09/30/14 1,000 115 59 (43) 18.1% 11.5% 5.9% (4.3%) 1.1% 2.8% (12.2%) 13.7% MEAN $4,246 $507 $361 $140 25.5% 13.2% 10.4% 4.0% 7.9% 7.1% 12.0% 17.6% NA MEDIAN $1,398 $177 $159 $53 23.3% 12.4% 8.6% 3.5% 7.6% 6.3% 15.3% 15.7% NA RETAILERS & DISTRIBUTORS Advance Auto Parts, Inc. AAP 10/04/14 $9,015 $1,129 $863 $459 46.0% 12.5% 9.6% 5.1% 40.6% 10.5% 23.4% 12.4% 1.5% American Tire Distributors Holdings, Inc.1 N/A 10/04/14 4,724 212 77 (84) 17.3% 4.5% 1.6% (1.8%) 29.2% 17.7% 26.5% 18.4% AutoZone, Inc. AZO 11/22/14 9,642 2,120 1,855 1,090 52.1% 22.0% 19.2% 11.3% 4.2% 6.8% 4.5% 9.0% 4.5% Genuine Parts Company2 GPC 09/30/14 15,037 1,247 1,103 696 30.2% 8.3% 7.3% 4.6% 9.9% 8.3% 7.6% 10.7% 4.4% KAR Auction Services, Inc. KAR 09/30/14 2,299 461 268 101 42.4% 20.1% 11.6% 4.4% 8.1% NA (11.2%) NA O'Reilly Automotive, Inc. ORLY 09/30/14 7,073 1,414 1,223 749 51.1% 20.0% 17.3% 10.6% 8.5% 8.1% 13.0% 14.4% 5.1% Pep Boys - Manny, Moe & Jack3 PBY 11/01/14 2,078 90 16 (4) 23.5% 4.3% 0.8% (0.2%) (1.1%) 1.6% (22.1%) (1.3%) (0.2%) U.S. Auto Parts Network, Inc. PRTS 09/27/14 273 6 (4) (6) 28.4% 2.2% (1.3%) (2.1%) 5.7% 10.7% 248.6% 2.9% Uni-Select, Inc.5 UNS 09/30/14 1,783 88 66 49 NM 4.9% 3.7% 2.7% 0.1% 6.6% 17.2% (2.4%) 1.3% MEAN $5,769 $752 $607 $339 36.4% 11.0% 7.8% 3.9% 11.7% 8.8% 34.2% 8.0% 2.8% MEDIAN $4,724 $461 $268 $101 36.3% 8.3% 7.3% 4.4% 8.1% 8.2% 13.0% 9.8% 3.0% INDEPENDENT SERVICE PROVIDERS & DEALERS Asbury Automotive Group, Inc. ABG 09/30/14 $5,739 $274 $248 $127 16.5% 4.8% 4.3% 2.2% 10.8% 9.4% 10.4% 18.6% AutoNation, Inc. AN 09/30/14 18,585 862 758 411 15.6% 4.6% 4.1% 2.2% 8.3% 12.2% 5.5% 13.4% CarMax, Inc. KMX 11/30/14 14,189 1,020 907 553 15.2% 7.2% 6.4% 3.9% 12.1% 14.4% 8.5% 17.7% Group 1 Automotive, Inc. GPI 09/30/14 9,678 355 314 96 14.5% 3.7% 3.2% 1.0% 12.8% 16.5% 11.2% 19.4% Lithia Motors, Inc. LAD 09/30/14 4,622 245 223 125 15.6% 5.3% 4.8% 2.7% 19.8% 19.9% 26.5% 30.3% Monro Muffler Brake, Inc. MNRO 09/27/14 859 140 107 61 39.5% 16.3% 12.4% 7.0% 7.6% 11.4% 23.3% 14.7% (2.0%) Penske Automotive Group, Inc. PAG 09/30/14 16,839 565 495 274 15.2% 3.4% 2.9% 1.6% 20.2% 12.8% 18.3% 18.9% Pep Boys - Manny, Moe & Jack4 PBY 11/01/14 2,078 90 16 (4) 23.5% 4.3% 0.8% (0.2%) (1.1%) 1.6% (22.1%) (1.3%) 6.1% Rush Enterprises, Inc. RUSH.B 09/30/14 4,307 228 115 70 16.4% 5.3% 2.7% 1.6% 35.0% 27.1% 23.2% 31.7% Sonic Automotive, Inc. SAH 09/30/14 9,161 300 240 99 14.8% 3.3% 2.6% 1.1% 5.1% 7.5% 2.2% 8.3% MEAN $8,606 $408 $342 $181 18.7% 5.8% 4.4% 2.3% 13.1% 13.3% 10.7% 17.2% 2.1% MEDIAN $7,450 $287 $244 $112 15.6% 4.7% 3.7% 1.9% 11.4% 12.5% 10.8% 18.1% 2.1% COLLISION Boyd Group Income Fund5 BYD.UN 09/30/14 $645 $46 $32 ($10) 46.4% 7.2% 5.0% (1.5%) 43.9% 27.5% 55.6% 30.5% 7.6% Copart, Inc.6 CPRT 10/31/14 1,174 410 360 190 43.3% 34.9% 30.6% 16.2% 8.0% 9.8% 25.6% 9.2% 4.6% KAR Auction Services, Inc. KAR 09/30/14 2,299 461 268 101 42.4% 20.1% 11.6% 4.4% 8.1% NA (11.2%) NA LKQ Corp.7 LKQ 09/30/14 6,373 766 653 379 39.7% 12.0% 10.2% 5.9% 32.4% 26.6% 30.2% 25.8% 8.9% Solera Holdings, Inc. SLH 09/30/14 1,049 397 262 (10) 67.8% 37.8% 25.0% (1.0%) 22.0% 13.2% 16.2% 12.7% MEAN $2,308 $416 $315 $130 47.9% 22.4% 16.5% 4.8% 22.9% 19.3% 23.3% 19.5% 7.0% MEDIAN $1,174 $410 $268 $101 43.3% 20.1% 11.6% 4.4% 22.0% 19.9% 25.6% 19.3% 7.6%
1 Affinia Group, American Tire Distributors, and UCI International have publicly traded debt only and thus are included in operating and performance metrics, but not valuation multiples 2 Same Store Sales for Genuine Parts reflects automotive segment only 3 Same Store Sales reflect Pep Boys’ merchandise business only 4 Same Store Sales reflect Pep Boys’ service business only 5 Reported results converted at the exchange rate as of the above date 6 Same Store Sales reflect Copart’s organic comp growth 7 Same Store Sales reflect LKQ’s organic growth for parts and services * Definitions: LTM = Last Twelve Months; EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization; EBIT = Earnings Before Interest & Taxes; NI = Net Income SSS = Same Store Sales, where applicable Sources: Capital IQ, Company filings
5 Balance Sheet Metrics As of 1/9/2015 ($ in millions, except per share)
Days Outstanding Cash Total Debt / Debt / Interest Current Quick S&P Debt Ticker A / R Inventory A / P Conversion Debt Capital EBITDA Coverage Ratio Ratio Rating Outlook SUPPLIERS Affinia Group Intermediate Holdings, Inc.1 N/A 46.1 91.7 56.8 81.0 $820 136.7% 4.6x 2.4x 2.1x 0.9x B Stable Cooper Tire & Rubber Co. CTB 51.6 74.6 41.4 84.8 526 32.3% 1.2x 10.1x 2.0x 1.0x BB- Stable Dorman Products, Inc. DORM 89.6 130.1 38.2 181.5 0 NA NA NA 5.3x 2.8x NA NA Federal-Mogul Corp. FDML 74.1 69.2 51.1 92.2 2,695 63.7% 4.4x 2.0x 1.8x 1.0x B Stable Goodyear Tire & Rubber Co. GT 61.1 75.2 75.8 60.4 6,855 71.8% 3.0x 3.0x 1.7x 1.0x BB- Positive Motorcar Parts of America, Inc. MPAA 1.8 93.5 84.2 11.1 84 31.4% 2.1x 2.2x 1.9x 1.0x NA NA Remy International, Inc. REMY 65.8 66.9 61.9 70.9 322 39.9% 2.5x 5.4x 1.7x 1.0x BB- Stable Snap-on, Inc. SNA 62.8 101.3 34.9 129.2 919 28.6% 1.3x 12.0x 2.5x 1.6x A- Stable Standard Motor Products, Inc. SMP 53.5 143.9 35.7 161.7 59 13.9% 0.5x NM 1.8x 0.6x NA NA Tenneco, Inc. TEN 53.4 37.8 69.7 21.5 1,298 65.8% 1.7x 5.5x 1.4x 0.8x BB+ Stable UCI Holdings Limited1 N/A 92.2 92.6 58.0 126.8 709 73.8% 6.2x 1.3x 2.1x 1.0x B- Stable MEAN 59.3 88.8 55.2 92.8 $1,299 55.8% 2.7X 4.9X 2.2X 1.2X MEDIAN 61.1 91.7 56.8 84.8 $709 51.8% 2.3X 3.0X 1.9X 1.0X RETAILERS & DISTRIBUTORS Advance Auto Parts, Inc. AAP 11.2 239.7 147.8 103.1 $1,736 47.4% 1.5x 13.9x 1.3x 0.2x BBB- Stable American Tire Distributors Holdings, Inc.1 N/A 31.8 89.4 55.8 65.3 1,939 75.4% 9.2x 1.4x 1.9x 0.6x NA NA AutoZone, Inc. AZO 7.0 245.5 261.0 NM 4,422 160.3% 2.1x 10.2x 0.7x 0.1x BBB Stable Genuine Parts Company GPC 45.3 101.6 81.4 65.6 835 19.2% 0.7x NM 1.5x 0.6x NA NA KAR Auction Services, Inc. KAR 252.4 NA 141.0 NA 2,616 63.0% 5.7x 4.1x 1.3x 1.2x B+ Stable O'Reilly Automotive, Inc. ORLY 7.6 257.7 226.7 38.7 1,397 41.4% 1.0x 19.2x 1.1x 0.2x BBB Stable Pep Boys - Manny, Moe & Jack PBY 5.0 152.5 53.8 103.6 377 40.7% 4.2x 1.4x 1.3x 0.1x B Stable U.S. Auto Parts Network, Inc. PRTS 6.0 79.3 38.5 46.8 20 52.6% 3.4x 0.1x 1.2x 0.1x NA NA Uni-Select, Inc. UNS 48.4 149.4 64.3 133.5 414 44.7% 4.7x 5.7x 2.0x 0.7x NA NA MEAN 46.1 164.4 118.9 79.5 $1,528 60.5% 3.6X 7.0X 1.4X 0.4X MEDIAN 11.2 151.0 81.4 65.6 $1,397 47.4% 3.4X 4.9X 1.3X 0.2X INDEPENDENT SERVICE PROVIDERS & DEALERS Asbury Automotive Group, Inc. ABG 5.4 57.8 15.4 47.9 $1,165 69.0% 4.3x 4.0x 1.4x 0.3x BB Positive AutoNation, Inc. AN 5.2 60.5 5.6 60.1 4,708 70.1% 5.5x 4.7x 1.0x 0.2x BBB- Stable CarMax, Inc. KMX 2.1 53.4 12.1 43.3 8,816 73.5% 8.6x NM 2.8x 0.3x NA NA Group 1 Automotive, Inc. GPI 4.0 62.7 10.7 56.0 2,311 70.1% 6.5x 3.1x 1.1x 0.2x BB+ Stable Lithia Motors, Inc. LAD 13.2 79.4 4.8 87.8 1,014 61.9% 4.1x 8.6x 1.3x 0.2x NA NA Monro Muffler Brake, Inc. MNRO 1.3 92.3 43.9 49.7 289 39.3% 2.1x 9.8x 1.2x 0.1x NA NA Penske Automotive Group, Inc. PAG 13.7 61.0 9.6 65.0 3,733 69.3% 6.6x 3.1x 1.0x 0.2x BB Stable Pep Boys - Manny, Moe & Jack PBY 5.0 152.5 53.8 103.6 377 40.7% 4.2x 1.4x 1.3x 0.1x B Stable Rush Enterprises, Inc. RUSH.B 11.8 86.3 10.2 87.9 1,319 64.1% 4.4x NM 1.1x 0.3x NA NA Sonic Automotive, Inc. SAH 11.2 56.9 4.9 63.1 1,889 74.3% 6.3x 1.7x 1.1x 0.2x BB Stable MEAN 7.3 76.3 17.1 66.4 $2,562 63.2% 5.3X 4.5X 1.2X 0.1X MEDIAN 5.3 61.8 10.5 61.6 $1,604 69.1% 4.9X 3.5X 1.2X 0.1X COLLISION Boyd Group Income Fund BYD.UN 20.9 10.1 65.0 NM $124 0.5x 2.7x 6.7x 1.3x 1.1x NA NA Copart, Inc. CPRT 61.0 4.6 84.9 NM 282 0.2x 0.7x NM 1.8x 1.6x NA NA KAR Auction Services, Inc. KAR 252.4 NA 141.0 NA 2,616 0.6x 5.7x 4.1x 1.3x 1.2x B+ Stable LKQ Corp. LKQ 30.0 112.1 30.2 112.0 1,904 0.4x 2.5x 10.1x 3.0x 1.1x BB+ Stable Solera Holdings, Inc. SLH 51.6 NA 40.9 NA 1,867 0.7x 4.7x 3.3x 2.6x 2.4x BB- Stable MEAN 83.2 42.3 72.4 112.0 $1,358 48.5% 3.2X 6.1X 2.0X 1.5X MEDIAN 51.6 10.1 65.0 112.0 $1,867 51.2% 2.7X 5.4X 1.8X 1.2X
1 Affinia Group, American Tire Distributors, and UCI International have publicly traded debt only and thus are included in operating and balance sheet metrics, but not valuation multiples * Definitions: EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization; Acct. Rec. Days Outstanding = Accounts Receivable / Sales * Days; Inventory Days Outstanding = Inventory / Cost of Goods Sold * Days; Days Payable Outstanding = Accounts Payable / Cost of Goods Sold * Days; Cash Conversion = Acct. Rec. Days Outstanding + Inventory Days Outstanding - Days Payable Outstanding; Debt / Capital = Total Debt / (Total Debt + Book Value of Equity); Interest Coverage = EBITDA / Interest Expense Sources: Capital IQ, Bloomberg, Company filings
6 What We Are Hearing From the Road
MSD, LLC Acquires Ignition and Fuel Products Manufacturer ACCEL Performance Group: El Paso, TX-based ignition components developer and manufacturer MSD, LLC announced on January 5, 2015 that it had acquired ACCEL Performance Group, LLC, a Cleveland, OH-based manufacturer of ignition and fuel products for cars, trucks, and motorcycles. Founded in 1993, ACCEL manufactures performance aftermarket parts under the Mr. Gasket, Mallory Ignition, Lakewood, QuickTime, and Hays brands. The addition of ACCEL’s portfolio to MSD’s, which includes performance brands MSD, Racepak, Superchips, and Edge, enhances MSD’s position in ignition technology and will help the company expand its product offering aimed at diehard racing and street performance enthusiasts. Rick Ruebusch, Chief Executive Officer of MSD, said, “ACCEL complements our existing brands, providing us with both increased capability and an unmatched footprint in the aftermarket platform. With this complementary acquisition and ACCEL’s impressive portfolio of brands, MSD has an even greater ability to serve our customers with new, innovative product offerings and a higher level of personal service.” Financial terms of the transaction were not disclosed. Lake Forest, IL-based private equity firm Z Capital Partners purchased MSD out of bankruptcy in December 2013 for $78 million, according to court records.
SAME STORE SALES GROWTH*
15.0%
9.7% 10.0% 9.0% 7.7% 7.7% 8.3% 6.2% 7.0% 6.7% 5.4% 5.3% 5.0% 3.1% 3.3% 2.7% 2.8% 2.5% 3.1% 2.4% 1.5% 1.9% 2.3% 2.1% 0.6% 1.1% 1.0% 0.0% 0.4% 0.6% 0.4% 0.4% 0.3% 0.4% (0.2%) (0.3%) (0.6%) (0.5%) (2.1%) (2.2%) (2.8%) (2.3%) (5.0%) (3.3%)
(10.0%) Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Retailers and Distributors Independent Service Providers Collision
*Same Store Sales growth measures revenue growth for stores that have been open for at least one year Retailers & Distributors include: Advance Auto Parts, AutoZone, GPC (NAPA), O’Reilly Automotive, Uni-Select, and Pep Boys Independent Service Providers include: Monro Muffler Brake and Pep Boys Collision includes: Copart, Boyd Group, and LKQ. LKQ and Copart report organic comp sales – LKQ reports comp growth on a distribution center and Copart does so on an established, mature location that has repeat sales Sources: Capital IQ, Company filings
MILES TRAVELED AND AVERAGE GASOLINE PRICE PER GALLON1
3.0% 2.9% $5.00
2.0% 2.1% Average Gasoline Prices Per Gallon 2.0% $4.50 1.7% 1.5% 1.4% 1.3%
1.0% 0.8% $4.00
0.3% 0.1% 0.0% $3.50 (0.1%)
(1.0%) (0.9%) $3.00
(1.4%) (2.0%) $2.50 Year-Over-Year Change in Miles Traveled Year-Over-Year
(3.0%) $2.00
Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14
Vehicle Miles Traveled Gasoline Prices
1 Data computed with the Federal Highway Administration Statistics table focusing on highway-going registered motor vehicles Sources: FHWA, U.S. Energy Information Administration 7 Recent Mergers & Acquisitions
Close Date Target Buyer (Sponsor) Transaction Details Pending United Automotive Supply Auto-Wares Auto-Wares has entered into a definitive agreement to acquire United Automotive Supply, a leading family-owned automotive parts distributor. Pending Casco Automotive Group Amphenol Corporation Amphenol Corporation has entered into a definitive agreement to acquire the Casco Automotive Group, a division of Cap-Con Automotive Technologies Ltd, a portfolio company of The Jordan Company. Pending Trico Products Corporation Crowne Group, LLC Crowne Group has entered into a definitive agreement to acquire Trico Products, a windshield wiper blade supplier and manufacturer, from Kohlberg & Company. Pending Service King Paint & Body, LLC The Blackstone Group Blackstone has agreed to acquire a majority stake in Service King, a national collision repair operator, from The Carlyle Group. 1/6/2015 AxleTech International The Carlyle Group Carlyle Group has acquired AxleTech International, a global engineering and manufacturing company for both OE and aftermarket drivetrain systems and components from General Dynamics Corporation. 1/5/2015 ACCEL Performance Group, LLC MSD LLC (Z Capital Partners) MSD LLC, a portfolio company of Z Capital Partners, has acquired ACCEL Performance Group, a manufacturer of ignition and fuel products for cars, trucks, and motorcycles. 1/5/2015 Craftsman Auto Body Caliber Bodyworks, Inc. (OMERS) Caliber Bodyworks, Inc. has acquired Craftsman Auto Body, an automotive repair operator in Virginia. 1/5/2015 Pohanka Collision Centers Caliber Bodyworks, Inc. (OMERS) Caliber Bodyworks, Inc. has acquired Pohanka Collision Centers, an automotive repair operator in Maryland. 1/5/2015 Eagle Ottawa, LLC Lear Corporation Lear Corporation has acquired Eagle Ottawa, LLC, a leading leather supplier, from private equity firm the Everett Smith Group. 1/2/2014 Grand Sport Auto Body Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Grand Sport Auto Body, a multi-location collision repair operator in Philadelphia. 12/19/2014 Central Collision Centers Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Central Collision Centers, a collision repair operator in Utah. 12/12/2014 Rampage Products Lund International Lund International Holding Co. (a portfolio company of Highlander Partners L.P.), a supplier of accessories for the light and heavy duty truck markets, has acquired all of the operating assets of Rampage Products, a provider of soft tops, bumpers, and other accessories in the Jeep, SUV, and light truck market. 12/10/2014 Raben Holdings, LLC Palladium Equity Partners Palladium Equity Partners, has made a significant investment in Raben Holdings, LLC, a leading tire dealer and automotive services provider in the Midwest. 12/1/2014 Ridgeland Body Shop Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Ridgeland Body Shop, a collision repair operator in Mississippi. 11/30/2014 BBB Industries Pamplona Capital Pamplona Capital Management has acquired BBB Industries, a leading manufacturer and distributor of aftermarket replacement Management primarily remanufactured starters, alternators, brake calipers, and power steering products. 11/28/2014 Kirmac Collision Services Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Kirmac Collision Services, a collision repair operator in Washington. 11/24/2014 Auto Image Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Auto Image, a collision repair operator in Colorado. 11/20/2014 Complete Custom Wheels WELD Wheel company WELD has acquired Complete Custom Wheels (CCW), a manufacturer of premium forged road race, sports car, and luxury car wheels. 11/18/2014 FCC Collision Centers Caliber Bodyworks, Inc. (OMERS) Caliber Bodyworks, Inc. has acquired FCC Collision Centers, an automotive repair operator in California. 11/17/2014 Rick's Body Shop Kadel's Auto Body Kadel's Auto Body, a collision repair operator focused on the Western United States, has acquired Rick's Body Shop, a collision repair operator in Idaho. 11/17/2014 Car West Auto Body, Inc. Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Car West Auto Body, Inc., a collision repair operator in Northern California. 11/3/2014 Qualitor Inc. Wellspring Capital Wellspring Capital Management has acquired Qualitor Inc. from HCI Equity Partners. Qualitor Inc. is a leading diversified supplier of Management aftermarket safety and wear parts for the automotive and heavy duty truck industries. 10/29/2014 Leading Edge Auto WESCO Corp. WESCO Corp, one of the largest privately-owned paint distributors in the U.S., has acquired Leading Edge Auto Refinishes, Inc., an Refinishes, Inc. Arizona-based distributor of automotive paints. 10/24/2014 International Collision Service King Paint & Body, LLC Service King, a national collision repair operator has acquired International Collision Repair Center, LLC, a collision repair operator in Repair Center, LLC Columbus, Ohio. 10/15/2014 Vehicle Safety Rostra Precision Controls Rostra Precision Controls has acquired Vehicle Safety Manufacturing, a manufacturer of heavy-duty lighting and safety components for Manufacturing, LLC both the OEM and aftermarket. 10/14/2014 Schrader International Sensata Technologies Sensata Technologies has acquired the Schrader group of companies, a leader in tire pressure monitoring sensors and valves, from Madison Dearborn Partners, LLC. 10/6/2014 Stag-Parkway, Inc. Keystone Automotive Keystone Automotive Industries Inc., an auto parts distributor (owned by LKQ), acquired Stag-Parkway, Inc., a distributor of RV aftermarket Industries, Inc. parts and accessories. 9/27/2014 Interamerican Motor AutoZone Inc. AutoZone has acquired Interamerican Motor Corporation, the second largest distributor of OE quality import replacement parts in the Corporation United States. 9/22/2014 Marco's Auto Body, Inc. Service King Paint & Body, LLC Service King, a national collision repair operator has acquired Marco's Auto Body Inc., a collision repair operator in Southern California. 9/22/2014 Palm Beach Spring Company TruckPro LLC TruckPro LLC, a distributor of heavy-duty truck and trailer parts and advanced repair services, has purchased Palm Beach Spring (Harvest Partners) Company (PBSC), an independent distributor of heavy-duty truck and trailer products and advanced repair services. 9/12/2014 Loop Road Auto Parts Auto Supply Company Auto Supply Company has acquired Loop Road Auto Parts, a auto parts retailer and service center in North Carolina. 9/11/2014 MEDCO United Stationers United Stationers has acquired MEDCO, a U.S. wholesaler of automotive aftermarket tools and supplies, and its affiliates including G2S Equipment de Fabrication et d'Entretien ULC (G2S), a Canadian wholesaler. 9/4/2014 The Lube Stop, Inc. Argonne Capital Group, LLC Argonne Capital Group has acquired The Lube Stop, an Ohio-based provider of oil change services. 8/21/2014 Race Render LLC HP Tuners HP Tuners has acquired Race Render LLC, a leader in the mobile marketplace with software products including Race Render, Track Addict, Bench Racer and Quick PIP. 8/21/2014 Mister Car Wash, Inc. Leonard Green & Partners Leonard Green has acquired Mister Car Wash, a national car wash operator, from ONCAP. 8/15/2014 The Tire Choice Monro Muffler Brake Inc. Monro Muffler Brake has acquired The Tire Choice from Hennelly Tire & Auto Inc., an automotive service operator in Florida.
8 Driven by success.
a portfolio company of a portfolio company of a portfolio company of a portfolio company of portfolio companies of
has been acquired by
has been acquired by has been acquired by has been acquired by have been acquired by
a portfolio company of
Audax Group
a portfolio company of a portfolio company of
has acquired has been acquired by
has been acquired by has been acquired by $250,250,000
Secondary Co-Manager
Contact our Automotive Aftermarket Investment Banking team to find out more.
Jonathan Carey Rex Green Joe Sparacino Treavor Hill Managing Director Managing Director Vice President Vice President 617-316-1336 617-316-1332 617-316-1334 617-316-1349 [email protected] [email protected] [email protected] [email protected]
BBTCAPITALMARKETS.COM/AUTO
The information contained herein has been obtained from sources we believe to be reliable and accurate, but we do not guarantee its accuracy or completeness. This material is not to be considered an offer or solicitation regarding the sale of any security. BB&T Capital Markets is a division of BB&T Securities, LLC, member FINRA/SIPC. BB&T Securities, LLC, is a wholly owned nonbank subsidiary of BB&T Corporation. Securities or insurance products and annuities sold, offered or recommended are not a deposit, not FDIC insured, not guaranteed by a bank, not guaranteed by any federal government agency and may go down in value. © 2015, Branch Banking and Trust Company. All rights reserved. Connect with us on
9