Transportation & Logistics

Transportation & Logistics

Automotive Aftermarket Sector Update

September 2021

What We're Reading

AUTOMOTIVE AFTERMARKET INDUSTRY NEWS & TRENDS

In this Sector Update, we have included a collection of articles focused on economic factors and trends that are impacting the automotive aftermarket industry: technology, supply chain constraints, and regulation. The COVID-19 pandemic accelerated the technological shift in the industry, with ecommerce and crowdsourced delivery becoming industry mainstays in a post-pandemic world. Supply chain bottlenecks have been driving up prices of both new and used vehicles as dealerships struggle to replenish their inventory, and recent regulation by the Biden administration solidifies consumers' "right to repair," a positive development for the automotive aftermarket.

TECHNOLOGY

Ford, Argo AI, Walmart Launch Autonomous Delivery Service ? Aftermarket News

9/15/2021

Ford Motor Co., Argo AI, and Walmart are teaming up to launch a multi-city autonomous delivery service across Miami; Austin; Texas; and Washington, D.C. Through the implementation of additional artificial intelligence into Ford's autonomous vehicles, the initiative aims to deliver key goods to customers across high-demand urban areas. The program will begin rolling out at the end of 2021 and will initially only be made available to select customers. This unique collaboration marks a step further toward scaling a commercial goods delivery service that offers customers their products both safely and efficiently.

Read the full article here.

Delphi Technologies Launches New E-Learning Platform ? Aftermarket News

9/16/2021

Delphi Technologies, part of the BorgWarner family, is launching a new e-learning platform in September to help make it easier for those in the automotive industry to enhance their skills and keep up to date with the latest technology developments. This e-learning platform is believed to be the most advanced online training facility available to those in the aftermarket, offering a "blended learning" experience in both the classroom and virtual setting. The platform will have eight training categories and offer 200 courses, catering to an audience from industry apprentices to master technicians.

Read the full article here.

SUPPLY CHAIN

Chip Shortage Drives Tech Companies and Car Markets Closer ? Wall Street Journal

9/12/2021

The yearlong chip crisis highlights the dependency that carmakers have on semiconductors. By 2030, 20% of the cost of the materials that go into making premium-segment cars is expected to come from semiconductors alone, up by 4% in 2019. While carmakers have relied on their vendors to purchase the chips needed for their vehicles in the past, experts expect manufacturers will have to purchase their own semiconductors going forward. While the length of the chip shortage is unknown, many chip makers expect a continued increase in demand. The largest U.S. chip maker (by market capitalization), Nvidia, reportedly invested in an $8 billion auto-business pipeline over the next six years to help satisfy projected customer demand.

Read the full article here.

Car Sales Continue Hot Streak, but Market Shows Signs of Cooling ? Wall Street Journal

9/5/2021

In addition to the worldwide chip shortage, many automakers are experiencing shortages with wiring harnesses, plastics, and glass products, thus compounding the present challenges for operators. Forced to conserve scarce resources, many automakers are prioritizing the production of higher-priced vehicles and simultaneously hampering the production of lower margin offerings. In August 2021, supply chain issues have reportedly contributed to an 18% pullback in vehicle sales and 1 million fewer new vehicles in U.S. dealer lots (72% lower than August 2019). Even if vehicle production regains speed, it would likely take over a year to achieve a more than normal 60-day supply of vehicles for sale.

Read the full article here.

REGULATION

Mexico Adopts Firm Stance on Auto Dispute Ahead of U.S. Talks ? Reuters

9/3/2021

International dispute exists regarding the United States-Mexico-Canada Agreement (USMCA) trade pact. Under the agreement, carmakers must meet a 75% threshold for North American content for vehicles in order to qualify for tariff-free trade within the region. These ongoing disputes pose a sense of uncertainty in the North American automarket and could potentially give a leg up to suppliers in other parts of the world with less stringent requirements.

Read the full article here.

1

Public Markets1

TEV / LTM EBITDA

Technology & Emerging Trends Dealerships & Service Providers

Distributors & Retailers Enthusiast Suppliers

20.0x 12.5x 11.4x 7.7x 6.2x

TEV / 2021E EBITDA

Technology & Emerging Trends Dealerships & Service Providers

Distributors & Retailers Enthusiast Suppliers

19.4x 15.2x 12.7x 12.1x 6.9x

T R A I L I N G 12-M O N T H T E V / L T M E B I T D A

28.0x

26.0x

24.0x

22.0x

20.0x

18.0x

16.0x

14.0x

12.0x

10.0x

8.0x

6.0x

4.0x Sep-20

De c- 20

Ma r- 21

Jun-21

Technology & Emerging Trends

Dealerships & Service Providers

Distributors & Retailers

Enthusiast

Sep-21 Suppliers

Note: Figures as of 7/30/2021

2

Stock Price Performance1

MEDIAN % CHANGE (1 MONTH)

Dealerships & Service Providers

Distributors & Retailers

Enthusiast

(2.7%)

S&P 500

Technology & Emerging Trends

Suppliers

(4.2%) (1.3%) (0.1%)

2.5% 0.7%

MEDIAN % CHANGE (12 MONTH)

Enthusiast

Suppliers

Distributors & Retailers

Dealerships & Service Providers

S&P 500

Technology & Emerging Trends

50.4% 26.7%

44.2% 41.1% 29.0% 29.7%

T R A I L I N G 12-M O N T H S T O C K P R I C E

90%

70%

50%

30%

10%

(10%) Sep-20

Dec-20

Enthusiast Dealerships & Service Providers

Note: Figures as of 7/30/2021

Mar-21

Suppliers Technology & Emerging Trends

Jun-21

Distributors & Retailers S&P 500

Sep-21

3

M&A Transactions1,2,3,4

RECENT M&A TRANSACTIONS

Date

Target

9/20/2021

Sun Auto Tire & Service

Business Description Private Markets

Leading provider of quality aftermarket automotive repair, maintenance, and tire services in the Southwest

Acquirer Leonard Green & Partners

9/8/2021

Parts Plus (15 Locations)

Leading provider of automotive aftermarket parts, the acquisition includes 15 locations across New Mexico and Colorado

Parts Authority (Kohlberg & Co.)

9/8/2021

Kuryakin

One of the nation's leading developers and retailers of motorcycle accessories for the V-twin, cruiser, and touring motorcycle rider

Tucker Powersports (Motorsport Aftermarket Group)

9/7/2021

New England Auto & Truck Recyclers (NEATR)

Full-service automotive recycling facility servicing the greater New England markets

Fenix Parts (Stellex Capital Management LP)

9/3/2021

Xlerate Group

Full-service used-car auction services provider, delivering a critical liquidity function to enable the used car sales ecosystem

Brightstar Capital Partners (Majority Stake)

9/2/2021

Hoonigan

Leading automotive lifestyle brand

Wheel Pros (Clearlake Capital)

9/1/2021

Arrowhead Engineered Products

Global engineer and omnichannel distributor of aftermarket replacement parts for power equipment, powersports, specialty vehicles, agriculture and other diverse end-markets

Genstar Capital

9/1/2021

JMH Capital Partners

Manufactures and distributes high-quality replacement parts for domestic, European, and import vehicles

GWA Auto Parts (JMH Capital Partners)

8/25/2021

Driven Lighting Group

Digitally native designer and online retailer of aftermarket automotive lighting products

Wheel Pros (Clearlake Capital)

8/24/2021

Weaver Parts

Distributor of recycled OEM auto parts to collision and mechanical repair shops throughout the Southeastern United States

Incline Equity

8/23/2021

Covercraft Industries

Leading branded manufacturer of custom vehicle protection products

Audax Group, Inc.

8/19/2021

RepairSmith

Leading car repair and maintenance service provider, raised $42MM in funding

RepairSmith

8/18/2021 8/12/2021 8/11/2021 8/4/2021 8/3/2021 8/2/2021 7/20/2021 7/14/2021 7/13/2021

7/20/2021

National Truck Repair (Longview, TX) Collision Works

McSpadden (4 Locations) National Performance Warehouse (9

Locations) Carlisle Brake Central Auto Body (14 Locations) Fender Mender Collision (7 Locations)

Yost Vises Coney Island Auto Parts

DRB Tunnel Solutions

Provider of truck and trailer services in the Longview, TX, area

Multi-store operation consisting of 35 collision repair centers located in Kansas, Missouri, and Oklahoma

Four full-service automotive repair stores in the Austin, TX, area

Automotive and truck parts distributor in the Utah market

Leading global solutions provider of high performance and severe-duty brake, clutch, and transmission applications for a diverse range of markets

Collision repair business with a footprint covering the Portland, Seattle/Tacoma, and Medford markets

Collision repair centers in the South Carolina market

Provides bench vises, drill press vises, woodworking vises, and clamps through its ecommerce platform to auto enthusiasts, DIYers, metalworkers, and woodworkers Operates seven wholesale distribution locations throughout New York and New Jersey

offering a wide range of automotive aftermarket products Public Markets

Developer of point-of-sale (POS) software designed for the conveyorized car wash industry

Fleet Pride

The Boyd Group Inc.

Sun Auto Tire & Service (Greenbriar Equity)

Parts Authority (Kohlberg & Co.)

CentroMotion

Classic Collision (New Mountain Capital)

Classic Collision (New Mountain Capital)

The Eastwood Company (Kian Capital) Parts Authority

(Kohlberg & Co.)

4

Public Comparables1

(USD in millions except per share data)

Dealerships & Service Providers AutoNation, Inc. Boyd Group Services Inc. CarMax, Inc. Copart, Inc. Driven Brands Holdings Inc. KAR Auction Services, Inc. Mister Car Wash, Inc. Monro, Inc. Penske Automotive Group, Inc. Sonic Automotive, Inc. Valvoline Inc.

Distributors & Retailers Advance Auto Parts, Inc. AutoZone, Inc. , Inc. Genuine Parts Company LKQ Corporation O'Reilly Automotive, Inc. PARTS iD, Inc. Uni-Select Inc.

Suppliers BorgWarner Inc. Dorman Products, Inc. Modine Manufacturing Company Motorcar Parts of America, Inc. Standard Motor Products, Inc. Tenneco Inc. The Goodyear Tire & Rubber Company Valeo SE Visteon Corporation

Stock Performance

Stock Price

Change from

52-Week

TEV / LTM EBITDA as of

TEV / EBITDA

TEV

Current

Aug-21

Prior Month

Oct-20

Prior Year

Hi gh

% of High

Oct-20

Apr-21

Current

2021

2022

$12,339 4,636

36,628 32,647

7,109 5,449 6,875 2,760 14,614 4,067 7,487 Median

$15,770 42,080 825 19,789 18,640 46,902 140 1,025

Median

$13,907 2,935 1,003 572 1,154 6,146

13,429 11,549

2,844 Median

$119.42 191.33 127.18 139.93 28.85 16.39 19.14 57.57 102.09 52.97 31.77

109.09 194.82 125.21 144.32

29.88 16.91 19.19 56.91 89.93 50.54 30.16

$208.00 1,672.28

15.82 121.82

51.25 604.44

5.05 14.04

202.85 1,549.15

17.27 122.19

52.69 594.08

6.36 13.93

$43.83 95.98 11.94 19.75 44.65 15.00 18.60 27.65 96.43

42.68 93.86 12.44 19.82 42.89 15.60 15.84 28.42 105.68

9.5% (1.8%) 1.6% (3.0%) (3.4%) (3.1%) (0.3%) 1.2% 13.5% 4.8% 5.3% 1.2%

2.5% 7.9% (8.4%) (0.3%) (2.7%) 1.7% (20.6%) 0.8% 0.2%

2.7% 2.3% (4.0%) (0.4%) 4.1% (3.8%) 17.4% (2.7%) (8.8%) (0.4%)

54.55 159.46

93.49 107.22

0.00 15.13

0.00 41.71 47.97 41.56 19.06

154.85 1,181.72

10.60 94.97 28.01 463.56

0.00 4.29

39.54 93.26

6.36 15.87 45.95

7.20 8.32 30.85 70.99

118.9% 20.0% 36.0% 30.5% NA 8.3% NA 38.0%

112.8% 27.5% 66.7% 36.0%

34.3% 41.5% 49.2% 28.3% 83.0% 30.4%

NA 227.5%

41.5%

10.8% 2.9%

87.7% 24.4% (2.8%) 108.3% 123.6% (10.4%) 35.8% 24.4%

$129.65 202.49 147.73 152.75 35.56 20.85 24.49 72.67 109.44 58.00 34.65

$220.12 1,738.78

23.26 135.93

53.17 629.40

10.82 15.53

$55.55 113.13

18.54 26.42 55.29 22.75 20.70 39.47 147.55

92.1% 94.5% 86.1% 91.6% 81.1% 78.6% 78.2% 79.2% 93.3% 91.3% 91.7% 91.3%

94.5% 96.2% 68.0% 89.6% 96.4% 96.0% 46.7% 90.4% 92.4%

78.9% 84.8% 64.4% 74.8% 80.8% 65.9% 89.9% 70.0% 65.4% 74.8%

9.2x 19.2x 18.9x 26.7x

NA 9.8x

NA 11.5x 11.0x

9.2x 10.2x 11.0x

8.1x 10.5x 66.7x 10.1x

7.7x 14.2x

NA 7.8x 10.1x

7.0x 17.4x

6.0x 12.0x 10.2x

7.7x 9.9x 17.6x 12.6x 10.2x

9.8x 18.6x 21.1x 25.1x

NA 12.8x

NA 17.7x 11.4x

9.4x 9.5x 12.8x

8.6x 11.1x 60.9x 12.3x

9.7x 13.0x 17.2x

9.6x 11.7x

8.7x 18.2x

6.5x 13.1x

6.6x 5.7x 11.9x 15.5x 18.3x 11.9x

7.1x 18.8x

NA 25.4x 18.7x 11.3x 60.5x 13.3x

8.2x 6.7x 9.8x 12.3x

8.3x 11.3x 68.5x 11.0x

8.6x 13.4x 11.6x 10.7x 11.1x

5.8x 13.5x

5.5x 7.9x 6.3x 3.9x 7.7x 5.7x 10.8x 6.3x

6.4x 18.8x 21.7x 25.4x 20.3x 12.7x 27.6x 14.8x

9.9x 6.7x 11.9x 14.8x

12.4x 11.3x 58.7x 12.8x 10.4x 15.7x 12.7x

8.3x 12.5x

5.9x 13.1x

5.7x 9.0x 8.0x 4.4x 7.0x 4.2x 12.1x 7.0x

7.4x 13.6x 19.5x 22.6x 18.4x 11.6x 24.9x 13.8x 10.9x

6.2x 10.8x 13.6x

11.4x 12.7x 41.2x 12.1x 10.1x 15.5x

8.1x 7.2x 11.8x

5.2x 11.7x

5.7x 6.7x 7.4x 4.0x 6.0x 3.6x 8.2x 6.0x

5

Public Comparables1

(USD in millions except per share data)

Enthusiast BRP Inc. Fox Factory Holding Corp. Harley-Davidson, Inc. Polaris Inc. Winnebago Industries, Inc.

Technology & Emerging Trends Aptiv PLC CCC Intelligent Solutions Holdings Inc. Fortive Corporation Gentex Corporation Tesla, Inc.

Total (All Verticals) S&P 500

TEV

Median

$8,971 6,355

11,804 8,531 2,765

Median

$43,025 $7,708 26,658 7,624

763,391 Median

Median

Stock Price

Current

Aug-21

$93.32 147.50

36.83 121.25

78.00

83.60 153.67

39.53 119.76

69.62

$152.70 $10.57 71.02 33.43 774.74

152.19 11.60 73.87 30.80

735.72

$4,357.04 $4,522.68

Prior Month

Stock Performance

Change from

Oct-20

Prior Year

(0.4%)

24.4%

11.6% (4.0%) (6.8%) 1.2% 12.0% 1.2%

54.40 76.43 25.16 94.54 52.97

71.5% 93.0% 46.4% 28.3% 47.3% 47.3%

0.3% (8.9%) (3.9%) 8.5% 5.3% 0.3%

0.5% (3.7%)

93.96 0.00

75.34 26.04 448.16

$3,380.80

62.5% NA

(5.7%) 28.4%

NA 28.4%

37.0% 28.9%

52-Week

Hi gh

% of High

74.8%

$102.96 172.25 52.06 147.73 87.53

90.6% 85.6% 70.7% 82.1% 89.1% 85.6%

$170.47 $12.07 82.12 37.75 NA

$4,536.95

89.6% 87.6% 86.5% 88.6% 94.6% 88.6%

87.0% 96.0%

TEV / LTM EBITDA as of

Oct-20

Apr-21

Current

10.2x

11.9x

6.3x

11.0x 25.3x 32.7x 11.4x 14.2x 14.2x

10.9x 33.5x 41.2x 10.3x

9.8x 10.9x

7.5x 27.4x 12.7x

7.1x 6.9x 7.5x

18.6x NA

18.4x 13.7x

NA 18.4x

11.2x 15.4x

24.9x NA

23.7x 16.5x

NA 23.7x

12.3x 18.0x

18.7x 39.4x 21.2x 11.9x

NA 19.9x

11.0x 16.2x

TEV / EBITDA

2021

2022

7.0x

6.0x

11.7x 24.2x 12.5x

8.0x 6.6x 11.7x

8.0x 21.4x 12.1x

7.5x 6.4x 8.0x

18.2x 31.3x 20.4x 12.7x

NA 19.3x

12.4x 14.4x

14.9x 27.1x 18.7x 10.8x

NA 16.8x

11.2x 13.0x

6

Public Comparables1

(USD in millions) Automotive Aftermarket

Dealerships & Service Providers AutoNation, Inc. Boyd Group Services Inc. CarMax, Inc. Copart, Inc. Driven Brands Holdings Inc. Mister Car Wash, Inc. KAR Auction Services, Inc. Monro, Inc. Penske Automotive Group, Inc. Sonic Automotive, Inc. Valvoline Inc.

Total

Distributors & Retailers Advance Auto Parts, Inc. AutoZone, Inc. , Inc. Genuine Parts Company LKQ Corporation O'Reilly Automotive, Inc. PARTS iD, Inc. Uni-Select Inc.

Total

Suppliers BorgWarner Inc. China CITIC Bank Corporation Limited Dorman Products, Inc. Modine Manufacturing Company Motorcar Parts of America, Inc. Standard Motor Products, Inc. Tenneco Inc. The Goodyear Tire & Rubber Company Valeo SE Visteon Corporation

Total

2017

2018

Revenue

2019

2020

2021P

2022P

Revenue Growth '17-20 '20-22

2017

2018

EBITDA

2019

2020

2021P

2022P

EBITDA Growth

'17-20

'20-22

$21,535 1,251

16,637 1,448 NA NA 2,239 1,022

21,387 9,867 2,084

$77,470

$21,413 1,366

17,977 1,806 493 2,443 1,128

22,785 9,952 2,285

$81,647

$21,336 1,760

19,146 2,042 600 630 2,782 1,200

23,179 10,454

2,390 $85,520

$20,390 1,640

21,424 2,206 904 575 2,188 1,257

20,444 9,767 2,353

$83,147

$25,662 1,873

20,092 2,693 1,401 746 2,167 1,126

25,858 12,399

2,946 $96,963

$26,188 2,374

28,911 3,070 1,532 817 2,374 1,335

27,160 15,059

3,212 $112,032

(1.8%) 9.4% 8.8% 15.1%

NA NA (0.8%) 7.1% (1.5%) (0.3%) 4.1% 4.5%

13.3% 20.3% 16.2% 18.0% 30.2% 19.2%

4.2% 3.1% 15.3% 24.2% 16.8% 16.4%

$933 108

1,233 527 NA NA 498 161 707 311 562

$5,038

$895 123

1,313 658 78 513 179 769 307 433

$5,267

$963 165

1,371 794 106 118 503 182 762 425 402

$5,791

$1,168 149

1,454 907 181 151 356 173 754 392 599

$6,284

$1,915 247

1,285 1,249

351 249 428 150 1,477 609 627 $8,587

$1,675 341

1,953 1,444

385 276 471 200 1,337 652 691 $9,423

7.8% 11.5%

5.7% 19.8%

NA NA (10.6%) 2.5% 2.2% 8.0% 2.1% 5.5%

19.7% 51.0% 15.9% 26.2% 46.1% 35.1% 15.0%

7.3% 33.1% 29.1%

7.4% 26.0%

$9,374 10,889

303 16,309

9,737 8,978

245 1,448 $57,282

$9,581 11,221

289 16,832 11,877

9,536 289

1,752 $61,376

$9,709 11,864

281 17,522 12,506 10,150

288 1,740 $64,059

$10,106 12,632 444 16,537 11,629 11,604 401 1,472

$64,826

$10,823 14,630 554 18,451 12,983 12,659 473 1,629

$72,203

$11,023 14,792 639 18,968 13,435 13,093 535 1,741

$74,226

2.5% 5.1% 13.5% 0.5% 6.1% 8.9% 17.9% 0.5% 6.9%

4.4% 8.2% 20.0% 7.1% 7.5% 6.2% 15.6% 8.8% 9.7%

$833 2,403

11 1,187 1,097 1,959

6 114 $7,611

$856 2,479

1 1,289 1,241 2,086

4 114 $8,070

$1,006 2,579 (2) 1,325 1,313 2,194 5 96

$8,516

$1,050 2,899 8 1,275 1,348 2,737 14 59

$9,390

$1,271 3,358 14 1,552 1,791 2,991 11 124

$11,111

$1,379 3,315 20 1,640 1,846 3,033 17 142

$11,391

8.0% 6.5% (10.8%) 2.4% 7.1% 11.8% 32.2% (19.8%) 4.7%

14.6% 6.9%

57.7% 13.4% 17.0%

5.3% 12.6% 55.1% 22.8%

$9,799 16,308

903 1,503

422 1,116 9,274 15,377 22,195 3,146 $80,044

$10,530 15,685 974 2,103 428 1,092 11,763 15,475 21,896 2,984

$82,930

$10,168 15,930 991 2,213 473 1,138 17,450 14,745 21,857 2,945

$87,910

$10,165 17,205 1,093 1,976 536 1,129 15,379 12,321 20,105 2,548

$82,456

$15,190 32,400 1,251 1,808 541 1,221 18,121 17,124 21,003 2,832

$111,491

$16,953 35,144 1,394 2,104 603 1,243 18,942 19,591 23,231 3,409

$119,205

1.2% 1.8% 6.6% 9.5% 8.3% 0.4% 18.4% (7.1%) (3.2%) (6.8%) 2.9%

29.1% 42.9% 12.9%

3.2% 6.1% 4.9% 11.0% 26.1% 7.5% 15.7% 15.9%

$1,630

$1,729

$1,642

$1,500

$2,348

$2,653

NA

NA

NA

NA

NA

NA

198

200

132

166

224

250

128

184

196

133

155

176

77

56

24

44

50

86

127

106

123

138

145

155

719

894

1,241

871

1,393

1,553

2,134

1,823

1,483

521

1,908

2,236

2,504

2,283

2,230

1,050

2,763

3,219

360

305

206

156

235

347

$7,877

$7,579

$7,276

$4,578

$9,221

$10,675

(2.7%) NA

(5.8%) 1.3% (16.9%) 2.9% 6.6% (37.5%) (25.2%) (24.3%) (11.3%)

33.0% NA

22.8% 15.3% 38.8%

6.0% 33.5% 107.2% 75.1% 49.2% 42.3%

7

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