TRANSPORTATION & LOGISTICS

Transcription

1 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 ). 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.

2 WHAT WE RE READING AAPEX 2017 KEYNOTE SPEAKER LOOKS AT THE AFTERMARKET In the first of three keynote sessions at AAPEX 2017, speaker Neal Ganguli, automotive supplier consulting leader, Deloitte Consulting LLP, focused on the future of mobility and the impact on the automotive aftermarket value chain. There are disruptive consumer, economic and technology trends that each of you have been dealing with for many years, said Ganguli. What is unique right now is that several key ones that drive transformation consumer preferences, regulatory forces, economics, and technological advancement are converging together, and that has the potential to drive huge transformation. Business Wire SEMA SEES PROFIT IN AFTERMARKET ADAS Compared with the wheel and tire companies, those with aftermarket advanced driver-assistance systems (ADAS) have had a relatively small presence at the annual SEMA show here. But their numbers are growing, says a top official of SEMA, which recently commissioned a study finding opportunities for companies to profit from the sale of aftermarket ADAS systems in the U.S. Yes, there is a market for aftermarket ADAS equipment to be retrofitted (and) that market is $1.5 billion out to the year 2022, John Waraniak, SEMA vice president-vehicle technology, tells Ward s Auto. Ward s Auto WHEELS DRIVE AUTO INDUSTRY FORWARD IN AFTERMARKET SHOPS Mr. Donnelly, who runs the American operation for the German wheel maker BBS, is driven by wheels: cast alloy, magnesium, forged aluminum, painted silver or black or titanium, large enough to fill a wheel well on a Ford truck or dainty enough to fit a decades-old MG sports car. BBS is one of several companies that cover both sides of the automotive wheel world: making flashy stock wheels built specifically for carmakers, as well as aftermarket replacements for car owners who are seeking better performance or more personality. And the buyers are not necessarily the hot-rodders and street racers you would expect. New York Times SENATE LEGISLATION INCLUDES AFTERMARKET PROVISION The Senate Commerce Committee has approved S. 1885, the AV START Act, to regulate the deployment and motor vehicle safety standards for Highly Automated Vehicles (HAV). Senator James Inhofe (R-OK) offered an amendment that was accepted which creates a Highly Automated Vehicle Data Access Advisory Committee to make recommendations to Congress with respect to the ownership of, control of, or access to, information or data that vehicles collect, generate, record, or store in an electronic form that is retrieved from a highly automated vehicle or automated driving system MEMA has been very involved in advancing this legislation and the Inhofe amendment is an important milestone for aftermarket access for highlyautomated vehicles. Motor & Equipment Manufacturers Association 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) James O Malley Vice President jomalley@harriswilliams.com +1 (804) EUROPE Jeffery Perkins Managing Director jperkins@harriswilliams.com +49 (0) PAGE 1

3 M&A TRANSACTIONS (1,2,3) RECENT M&A TRANSACTIONS Date Target Business Description Acquirer 10/17/2017* Omix-ADA World's largest independent developer and supplier of Jeep and offroad parts, accessories, and floor liners Truck Hero, Inc. 10/11/2017 Dallas Service Center, Inc. Provides truck repair services in the Dallas-Fort Worth area Ryder System, Inc. 10/9/2017 DRB Holdings Provides technology products to the car wash industry New Mountain Capital 10/3/2017 Hy-Per Lube Corporation Manufactures high-performance additives Bar's Products 10/2/2017 American Driveline Systems, Inc. Offers automotive aftermarket franchising services through its subsidiaries Icahn Enterprises LP 9/25/2017 Alliance Automotive Group Leading European distributor of vehicle parts, tools, and workshop equipment Genuine Parts Co. 09/13/2017 Newpark Auto Service Provides auto service and repairs Icahn Associates Holding LLC 9/11/2017 DuraFit Brand of OEM replacement diesel particulate filters (DPFs) and diesel oxidation catalysts (DOCs) APC Automotive Technologies 9/7/2017* Bosch Mahle Turbo Systems GmbH & Co. KG Manufactures and distributes exhaust gas turbochargers for passenger cars and commercial vehicles Fountainvest Partners (Asia) Ltd. 9/5/2017 Rack Attack Retails automotive racks and hitches Connor, Clark & Lunn Financial Group Ltd. 9/5/2017 Rolling Big Power (RBP) Premium truck accessories lifestyle brand Pilot Inc. 9/4/2017 Klapper Autoteile GmbH & Co. KG Full-line automotive parts wholesaler and distributor Alliance Automotive Group SAS 9/1/2017 Sternhammar AB Vehicle component distributor Axel Johnson International AB 8/31/2017 Advanced Auto Service & Tire Centers, Inc. Distributes tires and provides repair services Icahn Associates Holding LLC 8/30/2017* TASS International BV Develops automobile safety software Siemens AG 8/24/2017* R.H. Sheppard Co., Inc. Manufactures and supplies auto parts and technologies for transportation industry WABCO Holdings, Inc. 8/21/2017* Futuris Automotive (US), Inc. Designs and manufactures automotive interior products Adient plc 8/15/2017 Pentagon Motor Holdings Ltd. Operates as an automotive dealership company, offering used and new cars, vans, and body parts Imperial Holdings Ltd. *Denotes pending transactions PAGE 2

4 PUBLIC MARKETS OVERVIEW (1) TEV / LTM EBITDA TEV / 2017P EBITDA Dealerships and Services Providers 12.5x Dealerships and Services Providers 11.9x 11.2x 10.8x 10.2x 9.4x 8.4x 8.1x AVERAGE REVENUE GROWTH ( ) AVERAGE REVENUE GROWTH ( P) Dealerships and Services Providers 11.2% Dealerships and Services Providers 6.3% 6.2% 6.3% 0.1% 6.2% (1.1%) 2.0% AVERAGE EBITDA GROWTH ( ) AVERAGE EBITDA GROWTH ( P) Dealerships and Services Providers 12.0% 10.8% 11.1% 10.4% 4.6% Dealerships and Services Providers 8.8% 2.6% 1.8% PAGE 3

5 STOCK PRICE PERFORMANCE (1) MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH) 6.0% Vehicle Manufacturers 24.8% Dealerships and Service Providers 4.0% S&P % Vehicle Manufacturers 4.0% 12.4% Distributors and Retailers 3.3% Dealerships and Service Providers 9.9% S&P % Distributors and Retailers (8.0%) TRAILING TWELVE MONTHS (Indexed to October 16th, 2016) 30% 20% 10% 0% (10%) (20%) (30%) (40%) Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Dealerships and Service Providers S&P 500 Index 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 been recapitalized by is merging with has merged with an operating company of has acquired has merged with in a recapitalization by and 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 at 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 One International Place Suite 2620 Boston, Massachusetts Phone: +1 (617) Cleveland 1900 East 9th Street 20th Floor Cleveland, Ohio Phone: +1 (216) Minneapolis 222 South 9th Street Suite 3350 Minneapolis, Minnesota Phone: +1 (612) UNITED STATES Richmond (Headquarters) 1001 Haxall Point 9th Floor Richmond, Virginia Phone: +1 (804) San Francisco 575 Market Street 31st Floor San Francisco, California Phone: +1 (415) Washington, D.C th St. NW 2nd Floor Washington, D.C Phone: Beijing Hong Kong Mumbai EUROPE Frankfurt Bockenheimer Landstrasse Frankfurt Germany Phone: London 63 Brook Street London W1K 4HS, England Phone: +44 (0) NETWORK OFFICES New Delhi Shanghai PAGE 6

8 PUBLIC COMPARABLES (1) 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 Sep-16 Mar-17 Current 2017P 2018P Automotive Aftermarket BorgWarner Inc. $12,846 $ % 49.1% $ % 6.6x 6.6x 8.4x 8.1x 7.6x Cooper Tire & Rubber Company 2, % 1.1% % 2.9x 4.1x 3.9x 4.7x 4.2x Dorman Products, Inc. 2, % 12.4% % 12.3x 12.9x 11.4x 11.0x 10.0x Goodyear Tire & Rubber Company 13, % 5.6% % 5.8x 5.5x 5.8x 6.2x 5.3x Modine Manufacturing Company 1, % 89.9% % 4.2x 7.9x 10.8x 8.2x 7.4x Motorcar Parts of America, Inc % 9.3% % 8.8x 8.8x 8.2x 6.2x 5.5x Standard Motor Products, Inc. 1, % (1.6%) % 9.9x 9.0x 9.0x 9.8x 8.2x Tenneco Inc. 4, % 12.6% % 5.2x 5.6x 7.5x 5.3x 4.9x Visteon Corporation 3, % 79.3% % 6.7x 8.7x 10.8x 10.2x 9.4x Median 6.0% 12.4% 88.7% 6.6x 7.9x 8.4x 8.1x 7.4x Advance Auto Parts, Inc. $7,083 $84.97 (14.6%) (42.1%) $ % 8.6x 10.6x 7.9x 7.7x 6.8x AutoZone, Inc. 22, % (21.6%) % 11.9x 10.5x 9.4x 9.4x 9.2x Genuine Parts Company 15, % (2.6%) % 12.3x 11.6x 12.3x 11.8x 10.3x LKQ Corporation 14, % 14.1% % 13.1x 10.8x 13.4x 12.9x 11.7x O'Reilly Automotive, Inc. 21, (0.2%) (25.0%) % 15.1x 13.4x 11.2x 11.0x 10.3x U.S. Auto Parts Network, Inc (2.1%) (8.0%) % 12.2x 17.2x 13.8x 8.1x 7.1x Uni-Select Inc. 1, % (4.5%) % 11.1x 12.0x 10.3x 9.1x 7.5x Median 3.3% (8.0%) 73.6% 12.2x 11.6x 11.2x 9.4x 9.2x Dealerships and Service Providers Asbury Automotive Group, Inc. $3,025 $57.15 (2.2%) 3.2% $ % 9.0x 8.8x 9.1x 9.3x 9.3x AutoNation, Inc. 6, (5.4%) (9.4%) % 7.7x 6.8x 7.6x 8.0x 7.7x Boyd Group Income Fund 1, % 16.0% % 14.5x 13.8x 14.9x 12.5x 10.3x CarMax, Inc. 26, % 46.3% % NM NM NM 19.1x 18.4x Copart, Inc. 8, % 34.0% % 15.6x 15.1x 16.7x 16.6x 15.1x Group 1 Automotive, Inc. 4, % 11.2% % 9.6x 9.8x 10.6x 11.9x 11.0x KAR Auction Services, Inc. 9, % 9.9% % 13.1x 12.1x 12.6x 11.9x 11.0x Lithia Motors, Inc. Class A 5, % 19.1% % 11.1x 10.4x 12.3x 11.6x 10.8x Monro Inc 2, % (13.2%) % 15.3x 13.3x 13.0x 11.8x 10.9x Penske Automotive Group, Inc. 9, % (0.1%) % 13.4x 13.6x 13.9x 12.7x 12.4x Sonic Automotive, Inc. Class A 3, % 7.0% % 10.1x 10.1x 10.8x 11.0x 11.3x Median 4.0% 9.9% 85.5% 12.1x 11.3x 12.5x 11.9x 11.0x PAGE 7

9 PUBLIC COMPARABLES (1) 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 Sep-16 Mar-17 Current 2017P 2018P Automotive Aftermarket Bayerische Motoren Werke AG $168,102 $ % 21.9% $ % 8.1x 8.7x 10.0x 9.5x 9.4x Daimler AG 200, % 14.3% % 6.9x 7.1x 8.6x 8.6x 8.5x Ford Motor Company 155, % 1.0% % 11.6x 12.2x 12.6x 13.6x 12.9x General Motors Company 130, % 42.9% % 5.3x 5.4x 5.7x 7.8x 8.0x Harley-Davidson, Inc. 14, (3.4%) (6.9%) % 10.3x 14.5x 12.5x 12.6x 12.0x Navistar International Corporation 8, % 88.5% % 11.0x 12.8x 16.9x 15.6x 10.7x Oshkosh Corp 7, % 65.7% % 8.6x 10.3x 11.8x 11.5x 10.9x PACCAR Inc 31, % 27.7% % 8.4x 9.7x 10.4x 10.4x 9.4x Toyota Motor Corp. 317, % 7.1% % 8.4x 8.5x 9.6x 11.2x 10.8x Volkswagen AG Pref 197, % 28.4% % 6.0x 5.3x 5.1x 5.0x 4.8x Median 4.0% 24.8% 98.3% 8.4x 9.2x 10.2x 10.8x 10.0x PAGE 8

10 PUBLIC COMPARABLES (1) Revenue Revenue Growth EBITDA EBITDA Growth ($ in millions) P 2018P '13-16 '16-18P P 2018P '13-16 '16-18P Automotive Aftermarket BorgWarner Inc. $7,435 $8,304 $8,025 $9,071 $9,342 $9, % 4.7% $1,224 $1,385 $1,330 $1,507 $1,583 $1, % 5.6% Cooper Tire & Rubber Company 3,439 3,421 2,959 2,925 2,970 3,139 (5.3%) 3.6% % (9.5%) Dorman Products, Inc % 7.5% % 10.0% Goodyear Tire & Rubber Company 19,540 18,138 16,443 15,158 15,318 15,667 (8.1%) 1.7% 2,107 2,251 2,349 2,520 2,217 2, % 1.2% Modine Manufacturing Company 1,478 1,496 1,353 1,503 1,930 2, % 16.0% % 28.6% Motorcar Parts of America, Inc % 9.7% % 26.4% Standard Motor Products, Inc ,058 1,137 1, % 5.6% % 7.7% Tenneco Inc. 7,964 8,420 8,209 8,599 9,101 9, % 5.2% % 11.7% Visteon Corporation 7,439 7,509 3,245 3,161 3,176 3,320 (24.8%) 2.5% (18.2%) 11.6% Total $49,202 $49,322 $42,377 $42,756 $44,365 $46, % 6.3% $5,433 $5,902 $5,684 $6,206 $6,091 $6, % 10.4% Advance Auto Parts, Inc. $6,494 $9,844 $9,737 $9,568 $9,414 $9, % 0.4% $901 $1,244 $1,147 $1,068 $909 $1, % (1.0%) AutoZone, Inc. 9,148 9,475 10,187 10,636 10,889 11, % 2.9% 2,048 2,089 2,223 2,358 2,403 2, % 2.1% Genuine Parts Company 14,078 15,342 15,280 15,340 15,990 16, % 3.8% 1,117 1,273 1,266 1,217 1,276 1, % 10.0% LKQ Corporation 5,063 6,740 7,193 8,584 9,470 10, % 8.1% ,007 1,109 1, % 10.2% O'Reilly Automotive, Inc. 6,649 7,216 7,967 8,593 8,982 9, % 4.9% 1,287 1,465 1,743 1,917 1,972 2, % 4.8% U.S. Auto Parts Network, Inc % 3.2% % 29.8% Uni-Select Inc. 1,788 1,784 1,355 1,197 1,425 1,735 (12.5%) 20.4% % 19.5% Total $43,474 $50,685 $52,010 $54,221 $56,482 $58, % 6.2% $6,077 $6,968 $7,331 $7,684 $7,808 $8, % 10.8% Dealerships and Service Providers Asbury Automotive Group, Inc. $5,335 $5,868 $6,588 $6,528 $6,552 $6, % 0.7% $270 $313 $331 $334 $324 $ % (0.9%) AutoNation, Inc. 17,518 19,109 20,862 21,609 21,547 21, % 0.8% % (3.5%) Boyd Group Income Fund ,047 1,275 1, % 18.6% % 23.3% CarMax, Inc. 12,574 14,269 15,150 15,875 17,135 18, % 6.9% ,376 1, % 41.2% Copart, Inc. 1,046 1,163 1,146 1,268 1,448 1, % 6.8% % 8.9% Group 1 Automotive, Inc. 8,919 9,938 10,633 10,888 10,730 10, % 0.5% % (4.8%) KAR Auction Services, Inc. 2,173 2,365 2,640 3,150 3,436 3, % 7.6% % 10.4% Lithia Motors, Inc. Class A 4,006 5,390 7,864 8,678 9,947 10, % 12.0% % 9.9% Monro Inc ,022 1,154 1, % 10.8% % 10.3% Penske Automotive Group, Inc. 14,705 17,177 19,285 20,119 21,091 21, % 3.4% % 6.7% Sonic Automotive, Inc. Class A 8,843 9,197 9,624 9,732 9,892 10, % 1.7% % (4.7%) Total $76,512 $86,134 $95,653 $99,915 $104,207 $107, % 6.3% $4,019 $4,617 $5,143 $5,276 $6,119 $6, % 8.8% PAGE 9

11 PUBLIC COMPARABLES (1) Revenue Revenue Growth EBITDA EBITDA Growth ($ in millions) P 2018P '13-16 '16-18P P 2018P '13-16 '16-18P Automotive Aftermarket Bayerische Motoren Werke AG $100,976 $106,648 $102,215 $104,163 $116,931 $120, % 7.5% $19,443 $21,734 $19,303 $19,370 $17,660 $17,924 (0.1%) (3.8%) Daimler AG 156, , , , , , % 7.9% 21,575 25,517 25,668 26,177 24,065 24, % (3.9%) Ford Motor Company 146, , , , , , % (2.4%) 13,183 11,324 15,079 12,296 11,219 12,539 (2.3%) 1.0% General Motors Company 155, , , , , , % (6.5%) 13,284 10,160 15,518 20,671 16,304 15, % (12.3%) Harley-Davidson, Inc. 5,900 6,229 5,995 5,996 4,922 5, % (8.2%) 1,324 1,452 1,330 1,240 1,143 1,192 (2.2%) (2.0%) Navistar International Corporation 10,775 10,806 10,140 8,111 8,207 8,940 (9.0%) 5.0% (192) NM 28.5% Oshkosh Corp 7,665 6,808 6,098 6,279 6,755 6,962 (6.4%) 5.3% (7.0%) 10.9% PACCAR Inc 17,124 18,997 19,115 17,005 17,095 18,222 (0.2%) 3.5% 2,436 2,899 3,198 2,939 3,023 3, % 6.0% Toyota Motor Corp. 256, , , , , ,286 (0.2%) 0.4% 35,160 38,164 36,457 34,060 27,148 28,656 (1.1%) (8.3%) Volkswagen AG Pref 261, , , , , ,678 (2.8%) 7.7% 30,822 36,343 26,777 37,788 37,169 39, % 2.2% Total $1,119,448 $1,138,291 $1,084,281 $1,124,689 $1,158,458 $1,183,070 (1.1%) 2.0% $137,679 $148,510 $144,420 $155,533 $138,870 $144, % 1.8% PAGE 10

12 TRANSPORTATION & LOGISTICS SOURCES 1. FactSet. 2. MergerMarket. 3. Pitchbook. DISCLOSURES Harris Williams & Co. ( 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 ). 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. 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. Copyright 2017 Harris Williams & Co., all rights reserved. PAGE 11