pre-ipo investor presentation · this presentation has been prepared by the rpm group (the...
TRANSCRIPT
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Pre-IPO Investor Presentation
RPM Automotive Group Limited
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Disclaimer This presentation has been prepared by The RPM Group (the “Company”) solely for information purposes. The information is being furnished to recipients who have expressed an interest in the proposed investment in the Company (the
“Investment”). It is being furnished by the Company, solely to assist the recipient in deciding whether to proceed with further analysis of the Investment. Although the Company may provide additional information to interested parties concerning
the Company and its subsidiaries (the “Group”), the Company shall not be obligated to update, keep current, correct the information set forth in this presentation or to provide any additional information and any opinions expressed are subject to
change without notice.
This presentation does not constitute an offer or invitation or a solicitation of any offer or invitation for the sale or purchase of securities or of any of the assets, business or undertaking described herein. In addition, it is not intended to form the
basis of or act as a n inducement to enter into any contract or investment activity, and should not be considered as a recommendation by the Company, its directors, their affiliates or any other person in relation to the Company, the Group or its
business.
The information contained herein is preliminary, has been prepared to assist interested parties in making their own evaluatio n of the Investment and the Group and does not purport to contain all the information that such interested parties may
desire. In all cases, interested parties should conduct their own investigation and analysis of the Investment and the Group, its business, prospects, results of operations and financial condition. The Company has not independently verified any of
the information set forth herein, including any statements with respect to projections or prospects of the Group or the assumptions on which such statements are based, and does not undertake any obligation to do so.
Neither the Company, its directors, its affiliates or any other person makes any representation or warranty, express or impli ed, as to the accuracy, completeness or fairness of this presentation or the information contained herein and none of
such parties shall have any liability for the information contained in, or any omissions from, this presentation, nor for any of the written, electronic or oral communicat ions transmitted to the recipient in the course of the recipient's own
investigation and evaluation of the Investment and the Group. Only those particular representations and warranties, if any, which may be made to a third party in a definitive agreement when, as and if, execute d, and subject to such limitations
and restrictions as may be specified therein, will have any legal effect.
Neither the receipt of this presentation by any person, nor any information contained herein or supplied herewith or subsequently communicated in written, electronic or oral form to any person in connection with the Investment constitutes, or
shall be relied upon as constituting, the giving of investment or tax advice by the Company to any such person. Each person should make his or her own independent assessment of the merits of the Investment and should consult their own
professional advisors.
This Presentation is for the use to prospective investors to assist them in considering whether to invest in the Company. It is not, nor does it purport to be, all inclusive or to contain all the information that may be required by an investor to
evaluate the Offer, the value of the Company’s shares or the nature and prospects of Company’s business. It is not a regulated disclosure document under Chapter 6D or Chapt er 7 of the Corporations Act 2001 (Cth) (the “Corporations Act”) and
has not been lodged with the Australian Securities and Investments Commis sion. As such, this Presentation and the Offer are only available to prospective shareholders who are “sophisticated investors” or “professional investors” as referred to
in section 708 of the Corporations Act and such other persons to whom the Offer may be made without a disclosure document in accordance with the Corporations Act. By accepting the Offer, an investor represents and warrants that they are a
“sophisticated investor” or “professional investor” as defined in section 708 of the Corporations Act, or are otherwise able to receive and accept the offer without the requirement for a disclosure document.
Nothing in this presentation is, or should be relied on as, a promise or representation as to the future. Certain statements contained in this presentation include “forward-looking statements” and are not historic facts. Forward looking statements
are based on the Company’s present beliefs, expectations, intentions and projections as at the date of this presentation regarding the Group’s future performance, anticipated events or trends and other matters that are not historical facts. These
statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ material ly from those expressed or implied by such forward-looking
statements. No representations, warranties or assurances of any kind, express or implied, are made by the Company or any person acting on its behalf as to the accuracy of such statements, estimates or projections.
Recipients of this presentation should inform themselves about and observe any applicable legal requirements in their own jurisdiction. In particular, the distribution of this presentation in certain jurisdictions may be restricted by law and,
accordingly, recipients in such jurisdictions represent to the Company that they are able to attend this presentation without contravention of any unfulfilled registration requirements or other legal restrictions in the jurisdiction in which they reside
or conduct business.
The Company’s securities have not been and will not be registered under the US Securities Act of 1933, as amended (the “Securities Act”) or under any relevant laws of any state or other jurisdiction of the United States and may not, directly or
indirectly, be offered, sold, transferred, exercised, renounced, taken up or delivered in, into or within the United States absent registration from the Securities Act or an available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and otherwise in compliance with applicable securities laws of any state or any other jurisdiction of the United States. There will be no public offer in the United States. The Company’s securities have not been
approved or disapproved by the US Securities an d Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits
of the Investment or the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offence in the United States.
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RPM Transaction Overview
RPM Automotive Group Ltd to list on the Australian Stock Exchange via a Reverse Take Over into Kairiki Energy Ltd (ASX: KIK)
RPM to be a micro-cap Australian wholesale and retail automotive aftermarket business, dealing in performance and emissions products, towing products, tyres and wheels, 4x4 accessories and specialist motorsport and racing products
Combined group revenue of $84 million
Forecast NPAT of $4.5 million
A capital raising of $10 million at 16c/share, with 1 attaching option for every 4 shares subscribed
Forecast PE at entry price of 7.25x Earnings (excluding option value)
ASX Listing planned for August 2018
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Reasons for an ASX Listing
The ASX listing will allow RPM to;
Providing RPM the capability to roll out their cradle to grave supply-chain strategy
Pursue acquisitions in the highly fragmented automotive aftermarket sector
Rationalise the supply chain through consolidation of products and services
Optimise product sourcing and manufacturing
Raise capital for organic growth
Retain and incentivise key staff
Pay down debt
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RPM Automotive Group Limited (ASX: RPM)
Powertorque Engines
RPM Automotive Group Structure
RW Tyres
SWD Revolution Racegear The Tyre Factory Wildcat Performance
Carline Automotive Aranda Towbars A1 Exhausts
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Board & Management
• Successfully Managed and Built Auto Businesses,
including the Opposite Lock 4WD Accessories chain
• Over 20 Years Automotive Industry Experience in:
• Manufacturing
• Development
• Importing
• Wholesale and Distribution
• Retail and Franchising
• Exporting
Clive Finkelstein CEO
Lawrence Jaffe Management
• Successfully Managed and Built Auto Businesses
• Strong Financial Background having worked for a major Australian institution in their private equity division in Mergers and Acquisitions
• Over 20 Years Automotive Industry Experience
• Chief Executive Officer of RPM Australasia
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RPM Revenue & EBITDA Company Activity Revenue CY18 EBITDA CY18
SWD Specialised Wholesale Distribution (Includes Aranda Towbars, Carline and A1 Automotive Retail Networks)
38 000 000 3 060 000
Wildcat Steel Fabrication / Wholesale / Retail (Performance Products/Auto Parts)
24000 000 300 000
Revolution Racegear Manufacture Wholesale Retail (Motorsport, including RPM Racegear Brand)
6 500 000 800 000
Powertorque Engines Performance engine and tuning 2 800 000 450 000
RW Tyres Tyres and accessories retail 5 800 000 550 000
The Tyre factory Import Wholesale Retail (Tyres and wheels) 30 000 000 2 500 000
At IPO 85 500 000 7 660 000
Source: RPM Management
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RPM COMPARABLES
Source: Company forecasts (ASX Website), Analyst consensus (FNArena)
ASX Code Share price Sales ($'M) EBITDA NPAT Mkt Cap.
($'M) P/E
ARB Corp ARB $22.25 416 84.0 52.0 1,649 31.7
National Tyre & Wheel NTD $1.20 155.2 16.38 10.27 125 12.2
RPM Automotive RPM $0.16 84.0 7.6 4.5 35 7.8
Super Retail Group SUL $6.97 2,500 272 135.8 1,422 10.4
AMA Group AMA $0.96 400.0 55.5 24.4 502 20.5
Bapcor BAP $5.98 1,400 160 85 1,676 20.4
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3 Year EBITDA growth plan
Three areas to grow earnings
8 Identified
Avg Purchase Multiple
3-4 x EBIT
Logistics
Stock
Labour
Manufacturing
Importing
Wholesaling
Retailing
$3.0 M $20.0 M $3.2 M $26.2 M
Acquisitions Synergies Organic Growth
Base businesses
+ acquisions
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Synergies
Initial portfolio synergies to be extracted = $3.2 M EBIT growth
Vertical Integration
Consolidation of Purchasing /
Manufacturing / Importing
Labour Reduction
Consolidation of Distribution
and Administration
Revenue Growth
Leveraging of Existing
Infrastructure / Customer Base
$0.6 M EBIT
Value Creation
Synergies
+ $3.2 M
$1.6 M $1.0 M $3.2 M
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ORGANIC GROWTH
Improve our range Offering to win more
Sales to existing Customers
Manufacturing Importing
Wholesaling Retailing
Leverage existing
Customer Base cross sell
Cross sell Increase Offerings
Vertical Integration
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RPM Brands
Manufacturing Importing Wholesale Retail Tyres Motorsport/
Racing
Source: RPM Management
The RPM Group and combined entities have been in business for over 20 years and in that time developed significant goodwill and brand recognition with Australian consumers.
Commercial-In-Confidence
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Financial Summary Turnover (‘000)
2015 2016 2017 2018 2019
$44,767
$84,100
$53,050 $44,670
$97,560
2015 2016 2017 2018 2019
$3,340 M $2,835 M
$7,610 M
$8,385 M EBITDA
18 Market Leading Brands
5000+ customers
$3,698 M
• RPM Automotive is a rapidly expanding business with a solid history of growth
• Expansion led by a highly experienced management team
• Investment proposition underpinned by:
– Increasing growth in both turnover and profit
– Established distribution channels and leading market positions
• IPO capital raising requirement to partially pay down debt and fund further expansion via the acquisition of additional synergistic businesses
• Highly attractive sector
• Attractive entry price of 7.25 x PE for IPO investors
• Listing completed by August 2018.
National sales /
distribution
platform
“Cradle to Grave” Vertical Integration
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Key Investments Highlights Investment Highlight Key Observations
1 Favourable industry
fundamentals > • Stable and well accepted industry with revenue over $10 Billion
• Aftermarket auto parts demand has remained strong in the face of a growing Australian car park
• A shift in consumer vehicle preference has seen an increase in aftermarket accessories demand in the last 5 years
2 Leading market
positions in attractive
product categories >
• The RPM Group comprises Australia’s strongest companies in each of their sector of the motor industry
• A truly National Organisation with multiple operations in 5 states, cutting across manufacturing, wholesaling and retail
• A market leader in each of its divisions, boasting the best and most well-known brands available
• Growing market share within the emissions control space, as well as the vehicle performance and accessories sector
3 Vertically
integrated with control
over key supply chain
infrastructure
> • From primary production through our various manufacturing arms (both on-shore and abroad), a mature sourcing and
importation program (including in-house R&D and Engineering Department) as well as our market-leading “just-in-
time” wholesale and distribution capability (offering a full logistics function out of multiple warehouses in 5 states),
right through to our various company-owned and franchised and licensed / branded retail stores
4 Diversified business
model > • Revenue diversification across various products and services / various channel points / various sectors within the
aftermarket automotive space
• Strong and scalable business platform with multiple regional expansion opportunities
5 Management team with
deep industry
experience >
• Expansion led by Clive Finkelstein and Lawrence Jaffe (RPM Group founders) who have a successful track record in
the automotive industry
6 Robust financial profile
and highly attractive
potential returns >
• Sales of $84 Million (forecast) in CY18 with EBITDA of $7.6 million.
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RPM Group History
Mid 1970’s
Genie /
Performance
Wholesale
Established
Mid 1980’s
Manumatic /
Proex / AHS
Established
1990 - 1999
Spareco /
Revolution
Racegear /
Powertorque
Engines Established
2013
The RPM
Group
Established
2017 Established
SWD through a
merger between
Proex and Spareco
Through a solid platform and
vertical integration
RPM is taking a Leading
Position in the Auto
Aftermarket
Market Leader