TRANSPORTATION & LOGISTICS

Transcription

1 Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins.

2 WHAT WE RE READING AUTOMOTIVE SECTOR M&A APPETITE REACHES ALL-TIME HIGH Growing confidence in the global economy and a relentless push for innovation will further support M&A in the automotive sector over the next 12 months, according to Ernst & Young s (EY) Automotive Global Capital Confidence Barometer. The biannual survey gauges the corporate confidence and acquisition intentions of global executives and reveals that automotive companies appetite for M&A is at an all-time high, with 70% of executives expecting to pursue acquisitions in the next 12 months the highest percentage since the survey began in Ernst & Young SAFETY TECHNOLOGIES CONTRIBUTE TO INCREASED VEHICLE APPEAL The safety-related technologies that manufacturers are increasingly equipping their new vehicles with are making those vehicles more appealing to vehicle owners, according to the J.D. Power 2015 U.S. Automotive Performance, Execution and Layout (APEAL) Study. The study finds that some safety features can contribute to a significant boost in APEAL scores. For example, the overall score among owners of vehicles with blind-spot monitoring and warning systems is 38 points higher than among those without them. J.D. Power TTIP HAS POTENTIAL TO BOOST AUTO TRADE BY 20% OR MORE For the automotive industry, TTIP (Transatlantic Trade and Investment Partnership) represents an opportunity to remove regulatory barriers, while maintaining high safety and environmental standards. A recent study by the Peterson Institute for International Economics concluded that the elimination of regulatory barriers could increase automotive trade by 20% or more, resulting in transatlantic income gains of more than $20 billion. Aftermarket News AUTONATION TO ACQUIRE DEALER GROUPS The nation s largest auto dealership chain purchased two smaller dealer groups on August 18 th, adding to a string of acquisitions among car retailers as U.S. lightvehicle sales head toward their highest levels in more than a decade. AutoNation Inc. agreed to acquire Carl Gregory Enterprises and Valley Motors Auto Group in deals that represent more than $600 million in annual revenue, the company said. The acquisitions further a torrid pace of similar deals among car dealers as auto sales take off amid low interest rates and cheaper gasoline. Wall Street Journal CONTENTS M&A TRANSACTIONS PUBLIC MARKETS OVERVIEW STOCK PRICE PERFORMANCE OUR GROUP CONTACTS UNITED STATES Frank Mountcastle Managing Director fmountcastle@harriswilliams.com +1 (804) Jason Bass Managing Director jbass@harriswilliams.com +1 (804) Joe Conner Managing Director jconner@harriswilliams.com +1 (804) Jershon Jones Director jjones@harriswilliams.com +1 (804) Jeff Burkett Director jburkett@harriswilliams.com +1 (804) Jeff Kidd Vice President jkidd@harriswilliams.com +1 (804) EUROPE Jeffery Perkins Managing Director jperkins@harriswilliams.com +49 (0) AVERAGE AGE OF LIGHT VEHICLES IN THE U.S. RISES SLIGHTLY IN 2015 Registrations for light vehicles in operation (VIO) in the U.S. reached a record level of million. That s an increase of more than 5.3 million (2.1%) since last year and the highest annual increase the auto industry has seen in the U.S. since IHS began tracking VIO growth. New vehicle registrations also outpaced scrappage by more than 42% the highest rate seen since the statistic has been tracked. Aftermarket News PAGE 1

3 M&A TRANSACTIONS RECENT M&A TRANSACTIONS 1,2 Date Target Business Description Acquirer 8/18/2015 Carl Gregory Enterprises Owns and operates auto dealerships that offer new and used vehicles in Alabama and Tennessee. AutoNation, Inc. 8/18/2015 Valley Motors, Inc. Owns and operates auto dealerships that offer new and used vehicles in Maryland. AutoNation, Inc. 8/17/2015 Affinia Group Holdings Inc. Designs, manufactures, markets, and distributes a range of aftermarket products. Mann + Hummel Holding GmbH 8/10/2015 Stackpole International Inc. Manufactures powertrain systems and components for automotive original equipment manufacturers. Johnson Electric Holdings Ltd. 8/5/2015 Somerset Tire Service, Inc. Sells tires for cars, trucks, cross-utility vehicles, or sports utility vehicles and offers automotive maintenance and repair services. Mavis Tire Supply Corporation 8/3/2015 Bestop Inc. Manufactures and supplies jeep and truck tops and accessories. Kinderhook Industries 8/3/2015 Painters Supply Co., Inc. Distributes automotive paint. Finishmaster Inc. 8/3/2015 EiKO Global, LLC, Automotive Lighting Business Manufactures automotive lighting components. Old World Industries, LLC 7/17/2015 Covs Parts Pty Ltd Distributes auto parts, tools, equipment, and consumables to automotive, mining, truck and trailer and industrials in western Australia. GPC Asia Pacific Group Pty Ltd. 7/16/2015 Getrag Getriebe Manufactures transmission systems for passenger cars and light commercial vehicles in Germany and internationally. Magna International Inc. 7/13/2015 Remy International, Inc. Designs, manufactures, remanufactures, markets and distributes rotating electrical components for automobiles, light trucks and heavy duty trucks. 7/13/2015 Identifix, Inc. Operates an auto repair hotline which provides technical assistance to shop owners and technicians seeking additional expertise. BorgWarner Inc. Claims Services Group, Inc. 7/9/2015 Coast Distribution System Inc. Supplies replacement parts for RVs to retail parts and supply stores, repair establishment, and dealers. Keystone Automotive Operations, Inc. 7/8/2015 Power Train Company Remanufactures and distributes heavy duty truck parts. TruckPro, LLC 7/8/2015 PartsChannel Inc. Distributes aftermarket replacement parts for the collision repair industry in the United States. LKQ Corp. 6/26/2015 Kadel's Auto Body, LLC Provides auto body repair services across the United States. ABRA Auto Body & Glass LP 6/15/2015 Holding & Barnes Plc Provides online salvage auction services to buy accident damaged, theft-recovered, and used vehicles in the United Kingdom. ADESA (UK) Limited 6/11/2015 IVC Industrial Coatings, Inc. Manufactures and distributes powder, liquid, and specialty coating products for commercial and consumer applications. PPG Industries, Inc. PAGE 2

4 PUBLIC MARKETS OVERVIEW TEV / LTM EBITDA TEV / 2015E EBITDA Dealerships and Services Providers 12.6x Dealerships and Services Providers 12.1x 11.9x 11.6x 10.2x 9.9x 6.8x 7.1x AVERAGE REVENUE GROWTH ( ) AVERAGE REVENUE GROWTH ( P) Dealerships and Services Providers 14.2% Dealerships and Services Providers 10.7% 7.6% 3.0% 3.7% 1.4% 2.8% 0.1% AVERAGE EBITDA GROWTH ( ) AVERAGE EBITDA GROWTH ( P) Dealerships and Services Providers 13.5% Dealerships and Services Providers 10.9% 9.3% 7.1% 7.5% 5.6% 4.4% 4.4% PAGE 3

5 STOCK PRICE PERFORMANCE MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH) Distributors and Retailers 6.4% Distributors and Retailers 29.2% 4.4% Dealerships and Service Providers 20.6% Dealerships and Service Providers (1.4%) 0.7% Vehicle Manufacturers (3.6%) Vehicle Manufacturers (9.3%) TRAILING TWELVE MONTHS (Indexed to August 18, 2014) 40% 30% 20% 10% 0% (10%) (20%) (30%) Aug Nov Feb May Aug Dealerships and Service Providers S&P 500 Index (^SPX) - Index Value PAGE 4

6 OUR GROUP Harris Williams & Co. is a leading advisor to the transportation and logistics M&A market. Our Transportation & Logistics Group serves companies in a broad range of attractive niches, including third-party logistics (3PL), truck, rail, marine and air transportation, transportation equipment, and the automotive and heavy duty vehicle market. RECENTLY CLOSED T&L TRANSACTIONS has acquired RCL Services Group in partnership with and has sold and to DEEP EXPERIENCE ACROSS T&L SECTORS THIRD-PARTY LOGISTICS RAIL & RAIL SERVICES MARINE TRANSPORTATION TRANSPORTATION EQUIPMENT NICHE TRANSPORTATION AUTOMOTIVE & HEAVY DUTY VEHICLE AIR TRANSPORTATION PAGE 5

7 OUR FIRM 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 and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website. Aerospace, Defense & Government Services Building Products & Materials Business Services Consumer Energy, Power & Infrastructure Healthcare & Life Sciences Industrials Specialty Distribution Technology, Media & Telecom Transportation & Logistics HARRIS WILLIAMS & CO. OFFICE LOCATIONS Boston Two International Place 24th Floor Boston, Massachusetts Phone: +1 (617) Fax: +1 (617) Cleveland 1900 East 9th Street 20th Floor Cleveland, Ohio Phone: +1 (216) Fax: +1 (216) Minneapolis 222 South 9th Street Suite 3350 Minneapolis, Minnesota Phone: +1 (612) Fax: +1 (612) UNITED STATES Richmond (U.S. Headquarters) 1001 Haxall Point 9th Floor Richmond, Virginia Phone: +1 (804) Fax: +1 (804) San Francisco 575 Market Street 31st Floor San Francisco, California 94105, USA Phone: +1 (415) Fax: +1 (415) EUROPE Frankfurt Bockenheimer Landstrasse Frankfurt Germany Phone: Fax: London 63 Brook Street London W1K 4HS, England Phone: +44 (0) Fax: +44 (0) Beijing Hong Kong Mumbai NETWORK OFFICES New Delhi Shanghai PAGE 6

8 PUBLIC COMPARABLES Stock Performance Stock Price Change from 52-Week TEV / LTM EBITDA as of TEV / EBITDA ($ in millions except per share data) TEV Current Prior Month Prior Year High % of High Aug-14 Feb-15 Current E Automotive Aftermarket BorgWarner Inc. $11,255 $46.45 (11.0%) (25.3%) $ % 10.9x 10.2x 8.4x 8.0x 8.3x Cooper Tire & Rubber Co. 2, % 31.0% % 4.5x 4.9x 4.2x 4.2x 5.0x Dorman Products, Inc. 1, % 21.1% % 9.9x 10.8x 11.9x 11.8x 11.0x Federal-Mogul Holdings Corporation 4, (7.9%) (41.0%) % 7.6x 7.6x 7.8x 7.3x 7.0x The Goodyear Tire & Rubber Company 13, % 30.2% % 5.8x 5.8x 5.9x 6.2x 5.5x Modine Manufacturing Company (7.0%) (33.2%) % 6.7x 6.0x 5.8x 4.8x 4.7x Motorcar Parts of America, Inc % 12.1% % 12.3x 12.0x 15.7x 17.1x 9.1x Standard Motor Products Inc % (4.2%) % 7.3x 7.5x 7.7x 6.9x 8.7x Tenneco Inc. 4, % (21.4%) % 6.8x 6.1x 5.6x 5.6x 5.3x Visteon Corporation 1, % 5.6% % 14.7x 8.5x 2.6x 2.8x 7.2x Median 4.4% 0.7% 84.5% 7.5x 7.5x 6.8x 6.5x 7.1x Advance Auto Parts Inc. $15,026 $ % 41.4% $ % 10.7x 10.1x 11.9x 12.1x 11.6x AutoZone, Inc. 27, % 40.3% % 10.3x 11.2x 12.5x 13.0x 12.2x Genuine Parts Company 14, (3.0%) 3.3% % 11.1x 12.2x 11.0x 11.0x 10.6x LKQ Corp. 11, % 18.1% % 13.7x 12.5x 13.4x 14.1x 13.0x O'Reilly Automotive Inc. 26, % 66.8% % 12.2x 15.0x 16.6x 18.0x 15.7x Pep Boys - Manny, Moe & Jack (4.5%) 7.6% % 9.0x 10.5x 11.7x 8.5x 9.3x U.S. Auto Parts Network, Inc % (23.4%) % 14.7x NM NM 16.6x 11.7x Uni-Select Inc. 1, % 75.6% % 11.3x 11.5x 11.1x 11.0x 11.1x Median 6.4% 29.2% 96.9% 11.2x 11.5x 11.9x 12.6x 11.6x Dealerships and Service Providers Asbury Automotive Group, Inc. $3,848 $83.45 (12.3%) 20.6% $ % 11.6x 11.9x 12.1x 13.0x 11.7x AutoNation, Inc. 12, (8.5%) 12.6% % 13.2x 13.5x 12.5x 13.4x 12.1x Boyd Group Income Fund % 19.8% % 14.8x 11.9x 12.6x 14.2x 11.7x CarMax Inc. 22, (7.6%) 24.6% % 19.0x NM 19.9x NM NM Copart, Inc. 4, (0.8%) 7.9% % 11.3x 11.8x 11.0x 11.7x 11.5x Group 1 Automotive Inc. 4, (1.4%) 20.7% % 12.9x 11.7x 11.7x 12.5x 12.0x KAR Auction Services, Inc. 8, % 32.4% % 13.4x 12.9x 13.1x 14.2x 12.5x Lithia Motors Inc. 4, (2.1%) 27.0% % 14.6x 12.5x 14.9x 18.4x 13.5x Monro Muffler Brake Inc. 2, % 28.6% % 13.5x 15.7x 15.6x 18.6x 16.5x Penske Automotive Group, Inc. 8, % 12.2% % 14.8x 14.8x 14.5x 15.6x 13.5x Sonic Automotive Inc. 3, (10.7%) (8.9%) % 10.9x 10.7x 11.2x 10.9x 11.4x Median (1.4%) 20.6% 94.4% 13.4x 12.2x 12.6x 13.8x 12.1x PAGE 7

9 PUBLIC COMPARABLES Stock Performance Stock Price Change from 52-Week TEV / LTM EBITDA as of TEV / EBITDA ($ in millions except per share data) TEV Current Prior Month Prior Year High % of High Aug-14 Feb-15 Current E Automotive Aftermarket Bayerische Motoren Werke Aktiengesellschaft $148,616 $95.87 (7.8%) (17.7%) $ % 10.7x 10.5x 10.5x 10.2x 9.5x Daimler AG 178, (7.8%) 5.7% % 10.9x 11.8x 10.6x 11.3x 8.5x Ford Motor Co. 162, (0.3%) (15.4%) % 13.7x 14.5x 13.9x 14.5x 14.9x General Motors Company 81, % (7.5%) % 6.9x 9.1x 6.3x 8.9x 5.2x Harley-Davidson, Inc. 17, % (4.2%) % 12.1x 12.5x 12.7x 12.0x 11.6x Navistar International Corporation 5, (2.7%) (50.0%) % NM 19.8x 16.5x NM 10.7x Oshkosh Corporation 3, (4.5%) (18.7%) % 7.6x 7.5x 7.2x 6.3x 7.3x PACCAR Inc. 27, (2.7%) 0.8% % 12.6x 12.0x 10.0x 11.3x 10.4x Toyota Motor Corporation 329, (5.2%) 9.0% % 8.8x 10.4x 9.4x 9.6x 10.6x Volkswagen AG 191, (9.2%) (11.1%) % 7.7x 8.2x 7.7x 7.7x 6.2x Median (3.6%) (9.3%) 79.7% 10.7x 11.2x 10.2x 10.2x 9.9x PAGE 8

10 PUBLIC COMPARABLES Revenue Revenue Growth EBITDA EBITDA Growth ($ in millions) E 2016P '11-14 '14-16P E 2016P '11-14 '14-16P Automotive Aftermarket BorgWarner Inc. $7,115 $7,183 $7,437 $8,305 $7,961 $9, % 7.1% $1,073 $1,126 $1,224 $1,398 $1,348 $1, % 6.4% Cooper Tire & Rubber Co. 3,908 4,201 3,439 3,425 2,942 3,002 (4.3%) (6.4%) % (7.6%) Dorman Products, Inc % 8.4% % 11.7% Federal-Mogul Holdings Corporation 6,719 6,444 6,786 7,317 7,690 8, % 5.6% (0.6%) 8.8% The Goodyear Tire & Rubber Company 22,767 20,992 19,540 18,138 16,514 16,795 (7.3%) (3.8%) 1,893 1,819 2,105 2,251 2,533 2, % 9.2% Modine Manufacturing Company 1,448 1,577 1,376 1,478 1,513 1, % (1.9%) % 0.5% Motorcar Parts of America, Inc % 21.7% % NM Standard Motor Products Inc , % 3.1% % (2.2%) Tenneco Inc. 7,205 7,363 7,964 8,420 8,239 8, % 1.9% % 8.2% Visteon Corporation 7,532 5,715 6,371 7,509 3,050 3,222 (0.1%) (34.5%) % NM Total $58,243 $55,173 $54,774 $56,582 $50,007 $53, % 0.1% $5,319 $5,503 $6,023 $6,590 $6,444 $7, % 4.4% Advance Auto Parts Inc. $6,170 $6,205 $6,494 $9,844 $9,864 $10, % 1.6% $841 $847 $901 $1,243 $1,324 $1, % 9.6% AutoZone, Inc. 8,073 8,604 9,148 9,475 10,155 10, % 6.2% 1,691 1,841 2,002 2,089 2,229 2, % 6.7% Genuine Parts Company 12,459 13,014 14,078 15,342 15,603 16, % 2.9% 998 1,114 1,209 1,273 1,307 1, % 4.9% LKQ Corp. 3,270 4,123 5,063 6,740 7,288 7, % 8.3% % 10.6% O'Reilly Automotive Inc. 5,789 6,182 6,649 7,216 7,861 8, % 7.8% 1,030 1,159 1,291 1,468 1,682 1, % 12.5% Pep Boys - Manny, Moe & Jack 1,989 2,064 2,091 2,067 2,087 2, % 0.8% NA (11.3%) NA U.S. Auto Parts Network, Inc (4.7%) 5.2% NM NM Uni-Select Inc. 1,781 1,798 1,788 1,784 1,359 1, % (21.6%) (1.8%) (1.4%) Total $39,857 $42,293 $45,565 $52,751 $54,514 $56, % 1.4% $5,250 $5,687 $6,232 $7,069 $7,598 $8, % 7.1% Dealerships and Service Providers Asbury Automotive Group, Inc. $4,004 $4,475 $5,128 $5,639 $6,555 $6, % 11.2% $171 $210 $259 $297 $328 $ % 9.3% AutoNation, Inc. 13,305 15,020 16,674 18,180 20,862 22, % 10.1% ,019 1, % 8.6% Boyd Group Income Fund % 15.5% NM 16.7% CarMax Inc. 8,976 10,004 10,963 12,574 14,269 15, % 11.3% ,077 1, % 13.6% Copart, Inc ,046 1,163 1,145 1, % 1.3% % 4.2% Group 1 Automotive Inc. 5,884 7,216 8,607 9,571 10,696 11, % 9.1% % 5.5% KAR Auction Services, Inc. 1,886 1,963 2,173 2,365 2,575 2, % 7.8% % 10.8% Lithia Motors Inc. 2,549 3,204 3,867 5,200 7,752 8, % 27.4% % 23.1% Monro Muffler Brake Inc % 8.1% % 15.3% Penske Automotive Group, Inc. 10,769 12,584 14,074 16,741 19,088 20, % 10.6% % 11.3% Sonic Automotive Inc. 7,312 8,115 8,571 8,897 9,538 9, % 5.5% % 1.2% Total $56,545 $64,628 $72,380 $81,877 $94,246 $100, % 10.7% $3,398 $3,824 $4,208 $4,823 $5,396 $5, % 10.9% PAGE 9

11 PUBLIC COMPARABLES Revenue Revenue Growth EBITDA EBITDA Growth ($ in millions) E 2016P '11-14 '14-16P E 2016P '11-14 '14-16P Automotive Aftermarket Bayerische Motoren Werke Aktiengesellschaft $66,659 $75,546 $77,374 $96,471 $99,472 $102, % 3.2% $13,439 $13,956 $14,458 $15,627 $15,493 $16, % 2.0% Daimler AG 122, , , , , , % 11.0% 14,066 14,309 14,947 15,784 20,602 22, % 18.7% Ford Motor Co. 128, , , , , , % 3.1% 12,163 11,464 12,370 11,211 10,697 12,375 (2.7%) 5.1% General Motors Company 148, , , , , , % 0.2% 12,648 10,914 12,356 9,084 15,462 16,595 (10.4%) NM Harley-Davidson, Inc. 4,662 4,943 5,258 5,568 5,554 5, % 1.8% 1,078 1,198 1,317 1,460 1,487 1, % 5.1% Navistar International Corporation 13,441 12,527 10,617 10,653 11,099 11,451 (7.5%) 3.7% 958 (468) (375) NM NM Oshkosh Corporation 7,539 8,141 7,665 6,808 6,072 6,353 (3.3%) (3.4%) (2.3%) (4.1%) PACCAR Inc. 15,326 15,952 15,949 17,793 19,207 19, % 4.8% 1,807 1,927 2,047 2,446 2,595 2, % 3.1% Toyota Motor Corporation 215, , , , , , % (1.5%) 19,838 17,273 26,711 34,414 30,108 33, % (1.1%) Volkswagen AG 184, , , , , , % 7.2% 21,684 25,594 26,303 24,820 30,259 33, % 16.3% Total $907,026 $967,163 $1,013,833 $1,013,070 $1,052,092 $1,088, % 3.0% $98,348 $96,678 $110,773 $115,597 $127,798 $140, % 5.6% PAGE 10

12 SOURCES 1. Capital IQ. 2. MergerMarket. DISCLOSURES Harris Williams & Co. ( and 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. Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. 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. Copyright 2015 Harris Williams & Co., all rights reserved. PAGE 11