Automotive Retail Industry Update March 2012

Transcription

1 Integrity Expertise Results John Hill (813) John McDonald (813) Automotive Retail Industry Update March 2012 Keith Hodgdon Senior Vice President (813) Jeffrey Bridge Vice President (813) Michael Mariani Associate (813) Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: Member FINRA/SIPC

2 Enterprise Value / EBITDA Automotive Retail Industry Update Commentary Stock Price Performance () As of March 1, 2012 each of the Automotive Retail industry s sectors: Vehicle Retailers (up 5.4%) and Parts & Service Retailers (up 45.3%), delivered positive public stock market performance over the past 12 months. The Parts & Service Retailers sector outperformed the S&P 500 by approximately 40% over the aforementioned period. 150% 140% 130% 120% 45.3% A number of debt transactions have been completed in the Automotive Retail sector in the past year as industry leaders look to strengthen their balance sheet, providing them flexibility to pursue both organic and acquisition growth strategies. The Vehicle Retailers and Parts & Service Retailers sectors continue to receive strong valuations. Over the two month period ending February 2012, these sectors were trading at an average Enterprise Value / EBITDA multiple of 12.5x and 9.7x, respectively. 110% 5.4% 100% 5.2% 90% 80% 70% 60% Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 S&P 500 Vehicle Retailers Parts & Service Retailers Source: S&P Capital IQ. Select Debt Transactions ($ in millions) Offering Date Issuer Transaction Type Transaction Size 01/27/12 AutoNation, Inc. Fixed-Income Offering $350 01/11/12 Advance Auto Parts, Inc. Fixed-Income Offering $300 12/21/11 Penske Automotive Group, Inc. Credit Facility $172 12/07/11 AutoNation. Inc. Credit Facility $1,700 10/17/11 Asbury Automotive Group, Inc. Credit Facility $900 10/03/11 Lithia Motors, Inc. Credit Facility $200 09/14/11 O'Reilly Automotive, Inc. Fixed-Income Offering $299 09/13/11 AutoZone, Inc. Credit Facility $1,000 08/12/11 Asbury Automotive Group, Inc. Fixed-Income Offering $200 07/11/11 Sonic Automotive, Inc. Credit Facility $755 07/06/11 Group 1 Automotive, Inc. Credit Facility $1,350 06/13/11 Monro Muffler Brake, Inc. Credit Facility $175 06/08/11 Advance Auto Parts, Inc. Credit Facility $750 01/11/11 O'Reilly Automotive, Inc. Fixed-Income Offering $ x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x Trading Multiples (Enterprise Value / EBITDA) 14.0x 13.4x 13.4x 12.6x 12.2x 12.5x 11.4x 11.7x 11.0x 9.7x 9.3x 8.4x 8.6x 8.9x 8.8x 8.8x 9.2x 7.9x Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Feb '12 Vehicle Retailers Parts & Service Retailers 2

3 Automotive Retail M&A Activity Commentary As detailed in the table on the right, in addition to positive stock price performance from the publicly traded companies over the past year, merger & acquisition activity remains strong across the Automotive Retail industry. Group 1 Automotive, Inc. ( Group 1 ) was one of the more active acquirers in the Automotive Retail industry during the past year. In 2011, Group 1 added 14 franchises with total estimated annual revenues of $563 million. Thus far in 2012, Group 1 has acquired Volkswagen and BMW franchises with total estimated revenues of $93.4 million 1. In addition to healthy activity from strategic buyers, financial sponsors have shown increased interest in the Automotive Retail industry as illustrated by The Gores Group s recently announced acquisition of Pep Boys (profiled below) and Altamont Capital Partners prior acquisition of J.D. Byrider Systems, Inc. Profiled Transaction Pep Boys (NYSE:PBY) to be acquired by the The Gores Group Announced Date: January 30, 2012 Financial Profile Transaction Analysis ($ in millions) Income Statement 10/29/11 Purchase Price (Equity) $802.7 Revenue $2,035.7 Total Rights/Warrants/Options $12.1 EBITDA $164.0 Net Debt $228.6 Net Income $41.9 Implied Enterprise Value $1,043.5 As of Balance Sheet 10/29/11 Implied Purchase Multiples Cash $80.7 Revenue 0.5x Debt $309.4 EBITDA 6.4x Net Debt $228.6 Net Income 19.2x Source: S&P Capital IQ. 1 Automotive News. Select M&A Transactions Closed Date Target Buyer Enterprise Value ($mm) Pending Pep Boys - Manny, Moe & Jack (NYSE:PBY) The Gores Group $1,043.5 Pending DriverSide, Inc. Advance Auto Parts, Inc. (NYSE:AAP) NA 06/30/2012 Seven Houston Area Service and Tire Locations Pep Boys - Manny, Moe & Jack (NYSE:PBY) NA 01/30/2012 Hitchcock Automotive Resources (BMW) Mossy Automotive Group, Inc. NA 01/26/2012 Hilton Head BMW Dealership Group 1 Automotive, Inc. (NYSE:GPI) NA 01/18/2012 Volkswagen of Alamo Heights Group 1 Automotive, Inc. (NYSE:GPI) NA 12/14/2011 West Texas Peterbilt, Inc. Rush Enterprises, Inc. (Nasdaq:RUSH.B) $ /11/2011 David Taylor Cadillac Buick GMC Group 1 Automotive Inc. (NYSE:GPI) NA 10/09/2011 Terry's Tire Town, Inc. (Seven Retail Tire Stores) Monroe Muffler Brake, Inc. (Nasdaq:MNRO) NA 09/30/2011 Honda Cars of Daytona Beach Hendrick Automotive Group, Inc. NA 08/30/2011 Brandon Honda, LLC Morgan Auto Group, LLC $ /22/2011 Harvest Ford of Klamath Falls Lithia Motors, Inc. (NYSE:LAD) NA 07/18/2011 Watson Enterprises, Inc. Penske Automotive Group, Inc. (NYSE:PAG) NA 07/12/2011 Crevier Motors, Inc. (BMW and MINI Dealership) Penske Automotive Group, Inc. (NYSE:PAG) NA 06/30/2011 Smart USA Distributor, LLC Daimler Vehicle Innovations, LLC $ /14/2011 Shamaley Buick-GMC and Shamaley Ford, Inc. Group 1 Automotive, Inc. (NYSE:GPI) NA 06/05/2011 Vespia Tire & Auto Service Centers, Inc. Monro Muffler Brake, Inc. (Nasdaq:MNRO) NA 05/23/2011 Fort Myers Toyota-Scion AutoNation, Inc. (NYSE:AN) NA 05/03/2011 J.D. Byrider Systems, Inc. Altamont Capital Partners $ /30/2011 Big 10 Tire, Inc. Pep Boys - Manny, Moe & Jack (NYSE:PBY) NA 04/21/2011 Earnhardt Motors Of El Paso Group 1 Automotive, Inc. (NYSE:GPI) NA 04/18/2011 Rasmussen BMW, Inc. and Mercedes-Benz Lithia Motors, Inc. (NYSE:LAD) $ /08/2011 Hoover Buick Hendrick Automotive Group, Inc. NA 03/14/2011 Asbury Automotive Atlanta, LLC Rush Enterprises, Inc. (Nasdaq:RUSH.B) $ /07/2011 Metro Volkswagen, LP Group 1 Automotive, Inc. (NYSE:GPI) NA 02/22/2011 Sterling McCall Ford Group 1 Automotive, Inc. (NYSE:GPI) NA 3

4 Automotive Retail Public Company Analysis Vehicle Retailers ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise Margins Company Ticker 3/1/12 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA CarMax, Inc. KMX $ % $7,068 $11,179 $10,031 $1,611 $ % 7.2% 1.1x 15.4x AutoNation, Inc. AN $ % $5,020 $8,479 $13,832 $2,304 $ % 4.7% 0.6x 13.0x Penske Automotive Group, Inc. PAG $ % $2,198 $4,742 $11,556 $1,825 $ % 3.0% 0.4x 13.7x Sonic Automotive, Inc. SAH $ % $1,128 $2,468 $7,645 $1,188 $ % 3.3% 0.3x 9.7x Group 1 Automotive, Inc. GPI $ % $1,156 $2,438 $6,080 $961 $ % 3.7% 0.4x 10.8x Asbury Automotive Group, Inc. ABG $ % $845 $1,766 $4,277 $721 $ % 3.2% 0.4x 12.9x Lithia Motors, Inc. LAD $ % $630 $1,240 $2,699 $458 $ % 4.8% 0.5x 9.5x Average 89% $2,578 $4,616 $8,017 $1,295 $ % 4.3% 0.5x 12.1x Median 89% $1,156 $2,468 $7,645 $1,188 $ % 3.7% 0.4x 12.9x Parts & Service Retailers ($ in millions, except per share) Closing Price % of 52 Equity Enterprise Enterprise Value / Margins Company Ticker 3/1/12 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA AutoZone, Inc. AZO $ % $15,882 $19,126 $8,206 $4,195 $1, % 21.1% 2.3x 11.1x O'Reilly Automotive, Inc. ORLY $ % $11,849 $12,285 $5,789 $2,837 $1, % 17.8% 2.1x 11.9x Advance Auto Parts, Inc. AAP $ % $6,580 $6,938 $6,170 $3,069 $ % 13.6% 1.1x 8.3x Monro Muffler Brake, Inc. MNRO $ % $1,476 $1,520 $666 $270 $ % 17.0% 2.3x 13.5x Pep Boys - Manny, Moe & Jack PBY $ % $805 $1,034 $2,036 $602 $ % 8.1% 0.5x 6.3x Average 98% $7,318 $8,181 $4,573 $2,195 $ % 15.5% 1.7x 10.2x Median 98% $6,580 $6,938 $5,789 $2,837 $ % 17.0% 2.1x 11.1x Source: S&P Capital IQ. 4

5 Integrity Expertise Results Recent Transactions John Hill (813) John McDonald (813) has been acquired by has been recapitalized by Harbert Mezzanine Partners has been acquired by has been acquired by has acquired ADG Acquisition Holdings, LLC Keith Hodgdon Senior Vice President (813) Jeffrey Bridge Vice President (813) has been acquired by has been acquired by has been acquired by has been recapitalized by has merged with Michael Mariani Associate (813) has been recapitalized by has acquired has been recapitalized by has been acquired by has been acquired by Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: Member FINRA/SIPC Sage Compliance Services, Inc.