Uni-Select — Investor Day (November 2017)
50 slides from Uni-Select's investor day presentation, Nov 28, 2017
Slide 1: The Parts Alliance Overview – 2017 Investor Day
The Parts Alliance Overview 2017 Investor Day November 28, 2017
Slide 2: Preliminary Comments
Preliminary Comments Forward-looking statements: The information provided in this presentation contains some forward-looking information, which includes certain risks and uncertainties, and may cause the final results to be significantly different from those listed or implied within this presentatio
Slide 3: The Parts Alliance is the #2 UK distributor of automotive parts
The Parts Alliance (TPA) is the #2 UK distributor of automotive parts for the independent aftermarket 1999 first established as a 2 distribution centers trading group 14 acquisitions since 2012 23,400 independent customers served $346M annual revenues 171 corporate stores operated #1 Technology lead
Slide 4: A world-class leadership team blending blue-chip experience with deep industry knowledge
A world-class leadership team blending blue-chip experience with deep industry knowledge Executive Team Peter Sephton Andrew Field Chief Executive Officer Chief Information Officer • 16+ years as President of EMEA, Brady • 30+ years Automotive industry experience Corporation (listed on NYSE) • Co-fo
Slide 5: Strength and depth of our senior leadership team
Strength and depth of our senior leadership team Senior Operating Management Team 5 members of the Executive Team + Director, H&S and PARC Sales Director – Nat. Accts M&A Director Commercial Director Product Director Operations Director Procurement Director Property Portfolio Director Store Optim. D
Slide 6: We demonstrate our industry leadership in 4 different ways
We demonstrate our industry leadership in 4 different ways Large store network 1 ● 171 owned stores giving wide geographic coverage ● 27 member-owned stores Wide parts offering ● 1.2M parts records in AlliCat 2 ● 122K SKUs held nationally ● Average of 15K SKUs held within 5 miles of customers ● Comp
Slide 7: We demonstrate our industry leadership in 4 different ways
We demonstrate our industry leadership in 4 different ways Large store network 1 ● 171 owned stores giving wide geographic coverage ● 27 member-owned stores p7
Slide 8: We demonstrate our industry leadership in 4 different ways
We demonstrate our industry leadership in 4 different ways Good Better Best Large store network Own After- 1 ● 171 owned stores giving wide geographic coverage brand market Premium ● 27 member-owned stores Engine Oil Own brand Wide parts offering Braking - ● 1.2M parts records in AlliCat Hydraulics
Slide 9: We demonstrate our industry leadership in 4 different ways
We demonstrate our industry leadership in 4 different ways Large store network 1 ● 171 owned stores giving wide geographic coverage ● 27 member-owned stores Wide parts offering ● 1.2M parts records in AlliCat 2 ● 122K SKUs held nationally ● Average of 15K SKUs held within 5 miles of customers ● Comp
Slide 10: We demonstrate our industry leadership in 4 different ways
We demonstrate our industry leadership in 4 different ways Large store network 1 ● 171 owned stores giving wide geographic coverage ● 27 member-owned stores Wide parts offering ● 1.2M parts records in AlliCat 2 ● 122K SKUs held nationally ● Average of 15K SKUs held within 5 miles of customers ● Comp
Slide 11: Agenda
Agenda ● UK industry landscape ● The Parts Alliance – Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p11
Slide 12: The UK aftermarket for automotive spare parts has grown at a historical CAGR of 3.5%
The UK aftermarket for automotive spare parts has grown at an historical CAGR of 3.5% and is now estimated to be worth £4bn at the distributor level UK aftermarket replacement parts: Note: Distributor market size calculated from retail market size (Castrol report) by assuming 30% (Frost and Sullivan
Slide 13: 4 main market drivers providing steady growth
4 main market drivers providing steady growth 1 2 Automotive technology Car parc size and age ● Increasing complexity of vehicles ● 3.0M more cars older than 5 years in driving demand for professional repairs 2016 vs 2008 vs DIY ● Car parc getting older, with average age ● More durable cars built si
Slide 14: MOT test includes a comprehensive inspection
MOT test includes a comprehensive inspection to ensure that the vehicle is in roadworthy conditions Lights Steering & suspension Fuel system Emissions Wheels and tires Brakes Bodywork Doors Seats & seatbelts Windscreen Horn Mirrors p14
Slide 15: Demand for aftermarket parts has been highly resilient during economic downturns
Demand for aftermarket parts has been highly resilient during economic downturns UK aftermarket replacement parts: market size at the distributor level1 £bn Last recession ● Market driven by size and age of car parc, NOT by new car registrations ● Decrease in new car registrations in a downturn 4.0
Slide 16: The portion of the UK car parc aged 3 to 10 years will continue to grow
The portion of the UK car parc aged 3 to 10 years will continue to grow from 2017 to 2020 UK car parc by age CAGR CAGR Number of cars, million Forecast Age of car 2008-16 2016-20 37.3 35.8 36.6 34.4 34.8 3.9 15+ yrs 8.9% 3.0% 33.5 3.9 31.3 31.0 31.3 31.4 31.5 31.9 32.6 3.7 3.8 3.0 3.5 15+ yrs 2.4 2.
Slide 17: The Parts Alliance is a strong #2 player in the UK
The Parts Alliance is a strong #2 player in the UK Major player in the UK Rank Company Estimated market share # of corporate UK market Serving national by revenue(1) stores coverage(4) accounts #1 25%(2) 216(3) #2 7% 171 (5) #3 4% 109 Just bought by GPC #4 4% 26 Member of The Parts Alliance
Slide 18: UK industry landscape - Recap
UK industry landscape - Recap ● Highly resilient industry with favorable underlying demand drivers ● The Parts Alliance positioned as a strong #2 player, serving national accounts and independent garages ● Ample room for industry consolidation, with only 43% of the market controlled by the top 5 pla
Slide 19: Agenda
Agenda ● UK industry landscape ● The Parts Alliance - Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p19
Slide 20: Two phases in the history of The Parts Alliance Group
Two phases in the history of The Parts Alliance Group 1 2 1999 - 2012: Trading group only 2012 - Today: Distributor + Trading group Membership Acquisition 1999 2012 2014 2015 2016 2017 The Parts Alliance HgCapital HgCapital acquires GSF Car Parts SAS Autoparts Parts trading group formed acquires CES
Slide 21: Past acquisitions have been carefully targeted to provide national coverage
Past acquisitions have been carefully targeted to provide national coverage p21
Slide 22: Proven track-record of accelerating post-acquisition growth
Proven track-record of accelerating post-acquisition growth Acquisitions by current Management Team Growth track record Date Acquired Revenue growth CAGR Target acquired Branches Revenue (£m) Pre-acquisition Post-acquisition 15% Feb-16 6 £6m 4% 3 years 1 year Consistent Sep-15 69 £88m 6% above-marke
Slide 23: The Parts Alliance – Recap
The Parts Alliance – Recap ● First founded as a trading group in 1999 to service National Accounts ● Rapid growth through acquisitions as a distributor since 2012 ● Proven track-record of accelerating post-acquisition growth ● Regarded by UK targets as a winning platform in the consolidating UK mark
Slide 24: Agenda
Agenda ● UK industry landscape ● The Parts Alliance – Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p24
Slide 25: 6 keys to our success
6 keys to our success 1 Service-led culture 2 Leading parts catalogue and order fulfilment software 3 Data-driven approach to Sales & Marketing 4 High quality performance management systems 5 Systematised entrepreneurial acquisition platform 6 Tailored solutions for key customer segments p25
Slide 26: A strong service-led culture
1 A strong service-led culture ● Focused on providing “local service, national strength” ● “Never say no” attitude instilled from a branch-level upwards ● Leadership that grew up in the parts business and has helped shape the evolution of the industry ● Sales advisers trained both as sales experts a
Slide 27: Leading parts catalogue and order fulfilment system
2 Leading parts catalogue and order fulfilment system 1 2 3 4 AlliCat parts Integrated vehicle Easy access to Rich content Comprehensive identification extensive database product range catalogue recognition High resolution images, 1.2m parts references, reliability information Good, better, best fun
Slide 28: Data-driven approach to Sales and Marketing
3 Data-driven approach to Sales and Marketing GEO-MARKETING ANALYSIS to identify CUSTOMER SEGMENTATION to better tailor regional / local growth opportunities our service and offering Market potential + Competitive intensity 6 customer segments from A to F Geo-Marketing Example: High London Region Ma
Slide 29: Data-driven approach to Sales and Marketing
3 Data-driven approach to Sales and Marketing These analyses and tools are leveraged though locally-driven sales and marketing initiatives Acquisition & Share of wallet growth Loyalty & Retention Customer Loyalty acquisition program program Targeted Targeted back-end Garage / promotions rebates, l
Slide 30: High quality performance management systems based on a powerful technology infrastructure
High quality performance management systems 4 based on a powerful technology infrastructure Powerful ● £2m+ investment made to deploy a Highly structured performance scalable unified communications infrastructure management system technology across the network Monthly Weekly infrastructure ● Ample c
Slide 31: Systematised entrepreneurial acquisition platform
5 Systematised entrepreneurial acquisition platform Culture, systems, processes and tools aligned to facilitate acquisitions/integrations and existing store growth GSF Acquisition Case Study Institutional-quality systems, Sustaining an entrepreneurial culture processes and tools ● Retain talent, exp
Slide 32: Tailored solutions for key customer segments
6 Tailored solutions for key customer segments Needs Solutions ● Product availability ● High fill rates (Ranging/STARS) ● Close Proximity to customer ● Owned branch network Independent ● Accurate part identification ● Best-in-class parts catalog (AlliCat) Garages ● Multiple price points ● Tiered off
Slide 33: Keys to our success - Recap
Keys to our success - Recap ● Service-led culture ● Tailored solutions for key customer segments ● Leading parts catalogue and order fulfilment software ● Data-driven approach to Sales & Marketing ● High quality performance management systems ● Systematised entrepreneurial acquisition platform p33
Slide 34: Agenda
Agenda ● UK industry landscape ● The Parts Alliance – Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p34
Slide 35: The Parts Alliance has built a comprehensive technological platform
The Parts Alliance has built a comprehensive technological platform providing clear competitive advantage Technology Description External users AlliCat ● Catalogue software system that matches parts to vehicle license plate Distributors ● Draws on multiple databases and uses algorithm to accurately
Slide 36: Our proprietary AlliCat software is the market-leading catalogue software system
Our proprietary AlliCat software is the market-leading catalogue software system Advantages confirmed 4 advantages of AlliCat vs 2 main competitive systems by a recent PwC survey 2017 survey of 11 catalogue system users Significant room Entirely meets Ease of use for improvement needs ● Simpler and
Slide 37: Leading telecoms solutions used to handle 92% of orders
Leading telecoms solutions used to handle 92% of orders Previous system New system New system ● Customer calls branch and if ● Customer calls branch and if sales redirects calls sales advisors are busy is advisors are busy, call is redirected to automatically kept on hold, resulting in a regional sa
Slide 38: Our technology platform provides seamless integration
Our technology platform provides seamless integration, to generate more sales and offer better service 1 2 3 4 5 Customer Screen based Inbound Filtering of Sale of purchase call Take call on VRM1 and results spare parts required part journey Typical Phone system Catalogue system Catalogue system com
Slide 39: GS OneStop is an ERP-like software for independent garages
GS OneStop is an ERP-like software developed specifically to secure business from independent garages Key features ● Customer / vehicle management ● Jobs cards, diary and scheduler ● Quotations and invoices ● Service schedules & repair times ● Sales & purchase controls “We have been using GS OneStop
Slide 40: TPA's systems are rich with data, providing opportunities to optimize pricing and range
TPA’s systems are rich with data, providing opportunities to optimize pricing and product range ~ 19M Line transactions Opportunities per year Customer segmentation Pricing algorithm 122,000 SKUs Big Data Predictive system Sales optimisation 23,400 Independent … and more… customers Significant oppor
Slide 41: Technological advantage Recap
Technological advantage Recap ● Comprehensive technological platform providing clear competitive advantage ● AlliCat is the market-leading catalogue software system ● Sophisticated telecom system integrates seamlessly with AlliCat to provide faster & better service ● GS OneStop and big data provide
Slide 42: Agenda
Agenda ● UK industry landscape ● The Parts Alliance – Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p42
Slide 43: 4 pillars of future earnings growth
4 pillars of future earnings growth 1 2 3 4 Store New Store Performance Acquisitions Technology Openings Optimisation p43
Slide 44: Earnings growth pillar #1 Store Performance Optimisation
Earnings growth pillar #1 Store Performance Optimisation 1 2 3 4 Store New Store Performance Acquisitions Technology Openings Optimisation ● Productivity and efficiency initiatives (e.g. standard operating processes and procedures) ● Organic sales growth using geomarketing and customer segmentation
Slide 45: Earnings growth pillar #2 New Store Openings
Earnings growth pillar #2 New Store Openings 1 2 3 4 Store New Store Performance Acquisitions Technology Openings Optimisation ● We open new stores in white spot areas where the opportunity to acquire existing businesses or adopt new members is limited ● 4 new stores were opened in 2017 ● 8 new gree
Slide 46: Earnings growth pillar #3 Acquisitions
Earnings growth pillar #3 Acquisitions 1 2 3 4 Store New Store Performance Acquisitions Technology Openings Optimisation ● Short-term focus on further consolidating the UK market ● Top 5 players control only 43% of the market ● Many independent motor factors meet our acquisition criteria ● Profitabl
Slide 47: Earnings growth pillar #4 Technology
Earnings growth pillar #4 Technology 1 2 3 4 Store New Store Performance Acquisitions Technology Openings Optimisation ● Continue to develop and promote our proprietary platforms as competitive differentiators ● AlliCat ● AlliCat Online ● GS OneStop ● Capitalise on big data opportunities p47
Slide 48: Agenda
Agenda ● UK industry landscape ● The Parts Alliance – Our track record ● Keys to our success ● Technological advantage ● Future earnings growth ● Conclusion p48
Slide 49: In summary…
In summary… Strong #2 player in the UK market • Tailored solutions for national accounts and independent garages Room for further industry consolidation • Top 5 players control only 43% of the market • TPA regarded as a winning consolidation platform Further earnings growth potential • Acquisitions
Slide 50: UNI-SELECT
UNI-SELECT.