Car Group Limited · ASX:CAR
Car — Investor Presentation (March 2023)
60 slides from Car's investor presentation, Mar 8, 2023
Slide 1: Acquisition of further 40% of webmotors and Equity Raising
Acquisition of further 40% of webmotors and Equity Raising 8 March 2023 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 1
Slide 2: Disclaimer
Disclaimer This disclaimer applies to this Presentation and the information contained in it. This investor presentation (“Presentation”) is dated 8 March 2023 and has been prepared by, and is the sole responsibility of, carsales.com Limited ACN 074 444 018 (“carsales”) (ASX: CAR). By attending an in
Slide 3: Disclaimer
Disclaimer Not a prospectus or an offer of securities: This Presentation is for informational purposes only and is not a prospectus or disclosure document or product disclosure statement under Australian law (or under the law of any other jurisdiction in which an offer of New Shares may be received)
Slide 4: Disclaimer
Disclaimer Pro forma financial information: This Presentation also includes pro forma financial information in relation to carsales Trader Interactive and webmotors following the Acquisition and the Entitlement Offer. The pro forma financial information for carsales on an LTM basis has been prepared
Slide 5: Disclaimer
Disclaimer Underwriting arrangements: To the maximum extent permitted by law, UBS Securities Australia Ltd (ABN 62 008 586 481) and Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897) who are acting as joint lead managers, bookrunners and underwriters to the Entitlement Offer (“Underwriters”) and t
Slide 6: Table of Contents
Table of Contents 1 Transaction Summary 7 – 11 2 webmotors Overview 12 – 16 3 Investment Highlights 17 – 26 4 Acquisition Terms, Funding and Financial Impact 27 – 30 5 Equity Raising 31 – 33 6 Appendices 34 – 60 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 6
Slide 7: Transaction Summary
Transaction Summary NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 7
Slide 8: Transaction Summary
Transaction Summary • Acquisition of further 40% of shares in webmotors S.A. (“webmotors”) from Banco Santander (Brasil) S.A. (“Santander”), (“Acquisition”), for BRL 1,240 million1, or AUD$ 353 million equivalent2 (“Acquisition Price”) Transaction • Increases carsales’ ownership from 30% to 70% with
Slide 9: Transaction Summary cont.
Transaction Summary cont. • Compelling transaction rationale with increased exposure to a large and appealing market in a business with a strong competitive position and track record of performance • Continuation of valuable contractual relationship with Santander Transaction Rationale • Strong pipe
Slide 10: Compelling Strategic Rationale for Increasing Ownership
Compelling Strategic Rationale for Increasing Ownership Significant monetisation Brazil is the fifth largest automotive market in the world1 and webmotors has a track 1 potential in attractive record of outstanding financial performance as the market leader2 market Strong pipeline Several exciting g
Slide 11: Continuing our Successful International Growth Strategy
Continuing our Successful International Growth Strategy Expanding into new geographies to access larger high growth addressable markets and leverage our leading IP and technology Pro forma Revenue (m)1 Pro forma EBITDA (m)1 Australia International Australia International 797 696 457 416 53% 46% 47%
Slide 12: webmotors Overview
webmotors Overview NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 12
Slide 13: webmotors Overview
webmotors Overview Business Summary Key Metrics 324 million 10.1 million Annual sessions3 Monthly unique audience4 • Founded in 1995 in São Paulo, webmotors is the number one automotive digital marketplace in Brazil1 Generated revenue of BRL$353m (AUD$100.5m) and 3.7 billion 430 thousand • EBITDA of
Slide 14: Excellent Key Metrics
Excellent Key Metrics webmotors’ outstanding operating metrics demonstrate strong market position Visits (m)1 Dealer leads (m)2 363 9.3 351 8.5 312 317 324 8.1 294 6.4 5.8 5.2 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Subscribed dealers (000)3 Inventory (000)4 17.3 Dealer Private 1
Slide 15: Track Record of Strong Financial Performance
Track Record of Strong Financial Performance Strong and resilient revenue growth With inherent operating leverage Revenue (BRLm)1 EBITDA (BRLm)1 400 160 350 140 353 143 300 120 120 250 278 100 101 232 95 200 80 212 150 165 60 66 100 127 40 42 50 20 0 0 2017 2018 2019 2020 2021 2022 2017 2018 2019 20
Slide 16: High Quality Management Team
High Quality Management Team Eduardo Jurcevic Alexander Ortega Cris Rother Eduardo Campos Chief Executive Officer Chief Financial Officer Chief Marketing Officer Chief Commercial Officer • Joined Santander in 2008 • Joined Santander in 2006 • 26 years marketing • Joined Santander in 1998 • Appointed
Slide 17: Investment Highlights
Investment Highlights NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 17
Slide 18: webmotors Investment Highlights
webmotors Investment Highlights 1 2 3 The Brazilian auto market Significant upside to webmotors has clear is highly attractive penetration and monetisation audience leadership • Fifth biggest automotive market in the • Brazil market is underpenetrated with c. • Clear market leadership position9 with
Slide 19: The Brazilian Auto Market is Highly Attractive
1 The Brazilian Auto Market is Highly Attractive Automotive industry in Brazil is enormous with strong growth potential And large addressable market Annual Transactions (m)1 Car Parc (m)1 The Total Addressable Market of (new car sales + used car transactions) (total registered cars on the road) deal
Slide 20: Upside to Penetration and Monetisation
2 Upside to Penetration and Monetisation Scope to grow penetration, monetisation and to increase the contribution from other revenue sources Total Addressable Dealer Take Rates Revenue Contribution by Segment (CY22) Dealers (000)1 (Average fees per car sold/ average gross margin per car) 3% 11% 12%
Slide 21: Upside to Penetration and Monetisation cont.
2 Upside to Penetration and Monetisation cont. National expansion showing excellent progress with scope to expand further into new key states Fortaleza Population: 9mil Recife Market Share (%)1 Population: 10mil 80 Market Share (%)1 80 60 42 60 40 40 40 20 39 20 36 0 17 18 19 20 21 22 0 17 18 19 20
Slide 22: webmotors has Clear Audience Leadership
3 webmotors has Clear Audience Leadership webmotors has clear audience leadership over horizontal and vertical competitors Unique Audience (m)1 Visits (m)2 +41% 16.8 +24% +13% 8.4 11.9 7.4 6.7 N/A3 Horizontal #2 Auto web Horizontal #2 Auto web motors motors (1) Average monthly unique visitors Nov-22
Slide 23: Valuable Santander Partnership Continues
4 Valuable Santander Partnership Continues Santander is a clear market leader in the enormous Brazilian auto finance market aided by an advanced digital loan application integration with webmotors • More than 5 million cars were purchased under finance in 2022 in Brazil, nearly 50% of all transactio
Slide 24: Exciting Pipeline of Growth Initiatives
5 Exciting Pipeline of Growth Initiatives Key Marketplace Opportunities Emerging Digital Opportunities Media & Dynamic Servicing Car Membership Pricing & Repairs Auctions • webmotors’ media revenue • webmotors’ private seller model • Car10 is an automotive servicing • Loop is a digital automotive au
Slide 25: Strong EBITDA Margins with Significant Upside
6 Strong EBITDA Margins with Significant Upside High incremental margins expected Significant upside potential to margins from key growth areas relative to other carsales marketplaces EBITDA Margins (%)1 Margin Growth Area Comment Impact 64% 57% Dealer yield Low/no incremental 50% optimisation costs
Slide 26: Market Conditions
Market Conditions The used car market has shown resilience through the pandemic, with transaction volumes back to pre- pandemic levels and elevated prices delivering strong margins for dealers Brazil Used Car Sales (m)1 Average Car Price2 Median Time to Sell3 • The used car market has • Prices have
Slide 27: Acquisition Terms, Funding and Financial Impact
Acquisition Terms, Funding and Financial Impact NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 27
Slide 28: Acquisition Funding and Terms
Acquisition Funding and Terms Acquisition Price • Acquisition Price of BRL 1,240 million1, or AUD$ 353 million equivalent2 • The Acquisition will be funded by an approximate AUD$ 500 million fully Funding underwritten 1 for 14.01 pro-rata accelerated renounceable entitlement offer AUD$m Equity Raise
Slide 29: Pro forma Historical Profit and Loss
Pro forma Historical Profit and Loss CY22 Basis of preparation carsales1 webmotors Combined • The pro forma information is presented on an unaudited calendar year basis to show the impact of AUD$ millions Adjustments Pro forma Pro forma2 Pro forma the Acquisition had the incremental 40% been acquire
Slide 30: Pro forma Balance Sheet
Pro forma Balance Sheet As at 31 Dec-22 Basis of preparation Combined AUD$ millions carsales1 webmotors2 Adjustments • The pro forma balance sheet is presented to show the impact of the Acquisition had it completed Pro forma3 as at 31 December 2022, using BRL / AUD exchange rate of 3.51 as at 05/03/
Slide 31: Equity Raising
Equity Raising NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 31
Slide 32: Overview of the Equity Raise
Overview of the Equity Raise • Fully underwritten 1 for 14.01 pro-rata accelerated renounceable entitlement offer (with retail entitlements trading) to raise gross proceeds of approximately AUD$500 Offer Size and Structure million (referred to throughout this Presentation as “Entitlement Offer” or “
Slide 33: Equity Raising Timetable
Equity Raising Timetable1 Event T+ Date Trading halt and announcement of Entitlement Offer 0 Wednesday, 8 March 2023 Institutional Entitlement Offer opens 0 Wednesday, 8 March 2023 Institutional Entitlement Offer closes 1 Thursday, 9 March 2023 Institutional Entitlement Offer shortfall book closes 2
Slide 34: Appendix A Supplementary Financial Information
Appendix A Supplementary Financial Information NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 34
Slide 35: carsales P&L Reconciliation
carsales P&L Reconciliation CY22 Basis of preparation AUD$ millions Revenue EBITDA NPAT • carsales prepares its financial statements in accordance with Reported Financials 599.1 309.4 502.7 Australian Accounting Standards, which conform to International Financial Reporting Standards (“IFRS”) and has
Slide 36: webmotors Financial Information
webmotors Financial Information AUD$ millions BRL millions 1 1 CY2022 webmotors Subsidiaries Consolidated webmotors Subsidiaries Consolidated Revenue 100.5 12.2 112.7 352.8 42.8 395.5 Expenses (59.8) (13.7) (73.6) (210.1) (48.2) (258.3) EBITDA 40.7 (1.6) 39.1 142.7 (5.5) 137.3 EBITDA Margin % 40.5%
Slide 37: Appendix B Key Risks
Appendix B Key Risks NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 37
Slide 38: Key Risks
Key Risks This section describes the key risks to carsales’ business associated with the Acquisition together with the risks relating to participation in the Entitlement Offer that may affect the price or value of carsales’ shares. Before investing in carsales, you should be aware that an investment
Slide 39: Key Risks
Key Risks 3. Future earnings risks carsales has undertaken financial and business analysis of webmotors in order to determine whether to pursue the Acquisition and its attractiveness to carsales. It is possible that such analysis, and the best estimate assumptions made by carsales, draw conclusions
Slide 40: Key Risks
Key Risks 7. Economic instability in Brazil Despite being one of the largest economies in Latin America and a major player in the global economy, Brazil has faced several economic challenges in recent decades. Brazil has a history of high inflation and interest rates, currency devaluation, exchange
Slide 41: Key Risks
Key Risks While carsales has certain rights to terminate the SPA in the event that the Underwriting Agreement is terminated, termination of the Underwriting Agreement could materially adversely affect carsales. 13. Anticipated benefits There is a risk the anticipated benefits and efficiencies, inclu
Slide 42: Key Risks
Key Risks B. OFFFER SPECIFIC RISKS 16. Dilution risk Eligible retail shareholders who do not take up their full Entitlements under the Entitlement Offer, as well as shareholders who are ineligible to participate in the Entitlement Offer, will have their percentage holding in carsales diluted as a re
Slide 43: Key Risks
Key Risks 20. Risks associated with an investment in shares There are general risks associated with investments in equity capital such as carsales shares and the stock market. The trading price of carsales shares may fluctuate with movements in equity capital markets in Australia and internationally
Slide 44: Key Risks
Key Risks C. RISKS RELATED TO INVESTMENT IN CARSALES, INCLUDING POST COMPLETION OF THE TRANSACTION 23. Cyber security The cyber threat to companies around the world is growing and unrelenting. As an online business, carsales is not immune to these risks. As a result of this growing threat, there has
Slide 45: Key Risks
Key Risks 27. Downturn in economy or advertising market The performance of carsales will continue to be influenced by the overall condition of the motor vehicle, commercial truck, recreational vehicle, powersports and equipment markets. These markets are influenced by the general condition of the ec
Slide 46: Key Risks
Key Risks 31. Litigation or disputes In the ordinary course of business, carsales may be involved in possible disputes. These disputes could give rise to litigation, the outcome of which could have a material adverse effect on its operations, financial performance and/or financial position. While th
Slide 47: Key Risks
Key Risks 35. Shift away from car ownership carsales’ core business offering relies on the desire of individuals to own a vehicle. There is a risk that with the increase in alternative options to individual vehicle ownership, for example, vehicle sharing services, there may be a shift away from indi
Slide 48: Key Risks
Key Risks 41. Human resource risk Ongoing controversy in countries that carsales operates in on the subject of award and minimum conditions and payments (including wages and overtime) and the classification of persons as independent contractors or employees, including in Brazil, also raises risks fo
Slide 49: Key Risks
Key Risks Overall, carsales’ financial performance, financial position and the price of carsales’ shares may fluctuate due to various factors, including movements in domestic and international capital markets, recommendations by brokers and analysts, investor perceptions, interest and exchange rates
Slide 50: Key Risks
Key Risks 52. Trading patterns carsales’ financial performance depends in part on its ability to gauge and react to changing trading patterns in a timely manner. The change to trading patterns is further heightened as a result of the ongoing impact of COVID-19 and ongoing disruption which has create
Slide 51: Appendix C International Offer Restrictions
Appendix C International Offer Restrictions NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 51
Slide 52: International Offer Restrictions
International Offer Restrictions This Presentation does not constitute an offer of entitlements ("Entitlements") or New Shares of carsales in any jurisdiction in which it would be unlawful. In particular, this Presentation may not be distributed to any person, and the Entitlements and New Shares may
Slide 53: International Offer Restrictions
International Offer Restrictions Cayman Islands No offer or invitation to subscribe for Entitlements or New Shares may be made to the public in the Cayman Islands or in any manner that would constitute carrying on business in the Cayman Islands. European Union This Presentation has not been, and wil
Slide 54: International Offer Restrictions
International Offer Restrictions New Zealand This Presentation has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The Entitlements and the New Shares in the Entitlement Offer are not being offered to t
Slide 55: International Offer Restrictions
International Offer Restrictions United Arab Emirates This Presentation does not constitute a public offer of securities in the United Arab Emirates. The Entitlements and the New Shares may not be offered or sold, directly or indirectly, to the public in the UAE. Neither this Presentation nor any se
Slide 56: Appendix D Summary Of Underwriting Agreement
Appendix D Summary Of Underwriting Agreement NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 56
Slide 57: Summary of Underwriting Agreement
Summary of Underwriting Agreement carsales has entered into an underwriting agreement with the Underwriters in respect of the Entitlement Offer (the “Underwriting Agreement”). The Underwriting Agreement contains customary representation and warranties and indemnities in favour of the Underwriters. T
Slide 58: Summary of Underwriting Agreement
Summary of Underwriting Agreement In addition, the Underwriters may terminate their obligations under the Underwriting Agreement if any of the following events has, or is likely to have, a material adverse effect on the success, marketing or settlement of the Entitlement Offer, the likely market pri
Slide 59: Summary of Underwriting Agreement
Summary of Underwriting Agreement • an adverse change occurs in the financial position, results, operations or prospects of carsales from the position disclosed to the Underwriters or the information publicly available, or the offer documents prior to the date of the Underwriting Agreement (subject
Slide 60: Not for release or distribution in the United States
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 60