Car Group Limited · ASX:CAR
Car — carsales.com — Merger or Acquisition (June 2022)
66 slides from Car's merger presentation, Jun 27, 2022
Slide 1: 51% Acquisition of Trader Interactive and Equity Raising
For personal use only 51% Acquisition of Trader Interactive and Equity Raising 27 June 2022 NOT FOR RELEASE OR DISTRIBUTION 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. For personal use only This presentation (“Presentation”) is dated 27 June 2022 and has been prepared by, and is the sole responsibility of, carsales.com Limited ACN 074 444 018 (“carsales”) (ASX: CAR). This
Slide 3: Disclaimer
Disclaimer This disclaimer applies to this Presentation and the information contained in it. For personal use only Forward looking statements: This Presentation contains forward looking statements and comments about future events, which reflect carsales’ intent, belief or expectation as at the date
Slide 4: Disclaimer
Disclaimer This disclaimer applies to this Presentation and the information contained in it. For personal use only Information relating to Trader Interactive: Information relating to Trader Interactive, including certain financial information, has been extracted from its audited financial statements
Slide 5: Disclaimer
Disclaimer This disclaimer applies to this Presentation and the information contained in it. For personal use only Disclosure: The Underwriters and their respective affiliates and related bodies corporate are full service financial institutions engaged in various activities, which may include tradin
Slide 6: Table of Contents
Table of Contents For personal use only Title Pages Transaction Summary 7 – 10 Strategic Rationale of Acquisition 11 – 22 Trader Interactive Overview 23 – 29 Acquisition Terms, Funding And Financial Impact 30 – 33 Trading Update 34 – 36 Equity Raising 37 – 39 Appendices 40 – 65 NOT FOR RELEASE OR DI
Slide 7: Transaction Summary
For personal use only Transaction Summary NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 7
Slide 8: Transaction Summary
Transaction Summary For personal use only • carsales has exercised its call option to acquire the remaining 51% of Trader Interactive (“Trader Interactive” or “TI”), Transaction (“Acquisition”), for USD$809 million1, or approximately AUD$1,172 million equivalent2 (“Acquisition Price”) Details • The
Slide 9: Transaction Summary (cont.)
Transaction Summary (cont.) For personal use only • carsales will report the results of TI on a consolidated basis post completion of the Acquisition in H1 FY23. Pro forma FY221 Revenue and EBITDA for the combined business is expected to be between AUD$700-704 million and AUD$379-383 million respect
Slide 10: Compelling Investment Opportunity
Compelling Investment Opportunity For personal use only We have strong conviction on the growth opportunity that TI represents following a highly successful first 12 months Key observations in the last 12 months Investment rationale: why now? • High quality management team with strong • Given strong
Slide 11: Strategic Rationale of Acquisition
For personal use only Strategic Rationale of Acquisition NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 11
Slide 12: Strategic, Highly Accretive Acquisition
Strategic, Highly Accretive Acquisition For personal use only Acquisition expected to deliver low double-digit EPS accretion in the first full year after completion1 1 2 3 TI has market-leading positions in TI’s strong business model delivering Significant future growth large, attractive US non-auto
Slide 13: TI Has Market-leading Positions In Large, Attractive US Non-auto Industries
1 TI Has Market-leading Positions In Large, Attractive US Non-auto Industries For personal use only TI operates in a very Where market share is low Benefiting from rising large US market relative to carsales Australia industry participation Total addressable market (AUD$bn)1 Market share2 % of US ho
Slide 14: TI Has Market-leading Positions In Large, Attractive US Non-auto Industries (cont.)
1 TI Has Market-leading Positions In Large, Attractive US Non-auto Industries (cont.) For personal use only TI is growing market leadership positions in recreational and closing the gap in commercial trucks TI is increasing audience market share And have more inventory in 3 of 4 markets (size of lea
Slide 15: TI's Strong Business Model Delivering Excellent Financial Performance
2 TI’s Strong Business Model Delivering Excellent Financial Performance For personal use only TI is heading into next year with excellent momentum TI Revenue (USD$m)1 TI EBITDA (USD$m)1 160 151 100 142 89 140 90 125 81 80 120 109 69 70 100 60 52 80 50 60 40 30 40 20 20 10 0 0 FY20 FY21 FY22 FC Q4 FY
Slide 16: Significant Future Growth Opportunities
3 Significant Future Growth Opportunities For personal use only Substantial dealer penetration upside TI fees as a % of unit gross margin are low Share of total addressable dealers subscribed to TI1 Share of dealer gross profit margin2 100% 2.5x 14% 90% 12% 80% 70% 10% 2.8x 60% 8% 1.5x 50% 40% 6% 2.
Slide 17: Significant Future Growth Opportunities (cont.)
3 Significant Future Growth Opportunities (cont.) For personal use only 100% ownership expected to unlock significant new growth opportunities Dynamic • TI private ads employ a single price for all items 1 • Implementing the carsales dynamic pricing engine expected to drive large yield benefits Pric
Slide 18: Growth Initiatives
Growth Initiatives For personal use only Growth Initiative 1: Dynamic Pricing Growth Initiative 2: Digital Trade-ins Implement dynamic pricing on TI private ads Deploy a digital trade-in product • TI have a single price for all RVs • The US non-auto addressable market for digital trade-ins is • By c
Slide 19: Growth Initiatives (cont.)
Growth Initiatives (cont.) For personal use only Growth Initiative 3: Media Acceleration Growth Initiative 4: Dealer Systems Deploy key media products into TI platforms Achieve feature parity in dealer products • There is opportunity to expand TI’s media product offering and • TI dealers log in to ‘
Slide 20: TI Targeting Good Double-digit Revenue Growth With Continued EBITDA Margin Expansion
TI Targeting Good Double-digit Revenue Growth With Continued EBITDA Margin Expansion For personal use only TI revenue contribution TI vs. carsales Australia core EBITDA margin Dealer Private Data services Media carsales core margin H1 FY22: 64%3 57% 54% TI today1 TI in the future2 TI H1FY21 TI H1FY2
Slide 21: Building Scale in High Growth Markets
Building Scale in High Growth Markets For personal use only Diversifying our geographical mix Diversifying our industry mix Look-through Revenue Contribution1 Look-through Revenue Contribution1 Australia International Auto Non-auto 120% 120% 120% 120% 100% 100% 100% 100% 24% 80% 36% 80% 80% 80% 35%
Slide 22: Excellent Track Record of Delivering Growth in International Markets
Excellent Track Record of Delivering Growth in International Markets For personal use only Korea - Encar Brazil - webmotors Revenue (KRWbn)1 Revenue (BRLm, left)1 Brazilian federal funds rate (right) 90 350 16% 80 14% 300 70 12% 250 60 68 48% growth 254 10% through recession 50 56 200 219 49 8% 40 1
Slide 23: Trader Interactive Overview
For personal use only Trader Interactive Overview NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 23
Slide 24: Trader Interactive Overview
Trader Interactive Overview For personal use only Business Summary Key Metrics • Leading platform of non-auto marketplaces, providing digital marketing solutions and services across Power commercial truck, RV, powersports, and equipment RVs Trucks Equipment sports industries • Offers marketplace ser
Slide 25: An Experienced Management Team
An Experienced Management Team For personal use only • Appointed CEO in 2017 • Appointed CFO in 2017 • Joined TI in 1997 as a Sales Manager with Auto • Joined TI in 2000 as VP of Finance and Business Trader Systems • Held President and GM roles at Dominion • Previous experience with PwC as Audit Man
Slide 26: TI's Value Proposition is Strong
TI’s Value Proposition is Strong For personal use only Traffic is growing Leads per dealer is increasing Monthly visits1 Leads per dealer per month2 +28% 1.7x +35% +14% 1.9x 1.7x 2.1x +61% .9x +11% 19 22 19 22 19 22 19 22 19 22 19 22 19 22 19 22 19 22 19 22 RV Powersports Truck Equipment Total RV Po
Slide 27: TI Has Grown Through Economic Cycles
TI Has Grown Through Economic Cycles For personal use only Leading digital marketplaces perform well through economic cycles. TI has delivered 14% revenue CAGR over the last 15 years • Used transactions are less cyclical than new transactions • Dealers need to move inventory in any economic environm
Slide 28: TI Q4 Trading Update
TI Q4 Trading Update For personal use only Contribution to growth last twelve months (LTM)1 Published inventory (000)2 250 500 200 400 150 300 100 200 50 100 0 0 LTM LTM LTM LTM 400 160 300 120 200 80 100 40 0 0 Nov-18 Apr-19 Sep-19 May-21 Feb-20 Nov-18 Apr-19 Sep-19 Jan-18 Feb-20 May-21 Oct-21 Mar-
Slide 29: TI Q4 Trading Update (cont.)
TI Q4 Trading Update (cont.) For personal use only Current website traffic Key performance metrics Audience metrics exhibiting excellent growth1 Key indicators of performance are significantly ahead of pre- • All sites are consistently delivering traffic growth above pre- pandemic levels COVID level
Slide 30: Acquisition Terms, Funding and Financial Impact
For personal use only Acquisition Terms, Funding and Financial Impact NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 30
Slide 31: Transaction Funding and Terms
Transaction Funding and Terms For personal use only • Acquisition Price of USD$809 million1, or approximately AUD$1,172 million Acquisition equivalent2 for the 51% of the securities in Trader Interactive that carsales Price does not already own • The Acquisition Price, plus transaction costs, to be
Slide 32: Pro-forma Historical Profit and Loss
Pro-forma Historical Profit and Loss Last 12 Months Ended 31 carsales1 TI2 Pro forma Combined Basis of preparation Adjustments For personal use only December 2021, AUD$ millions Pro forma 100% Pro forma • The pro forma information is presented on a calendar year basis to show the impact of the Acqui
Slide 33: Pro-forma Balance Sheet
Pro-forma Balance Sheet Basis of preparation As at 31 December 2021, Trader For personal use only carsales1 Adjustments Pro-Forma3 AUD$ millions Interactive2 • The pro forma balance sheet is presented to show the impact of the Acquisition had it completed as at 31 December 2021, using USD / AUD exch
Slide 34: Trading Update
For personal use only Trading Update NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 34
Slide 35: Strong Trading Momentum
Strong Trading Momentum Carsales For personal use only FY21 FY22 FY22 pro We provide the following estimate of the FY22 results 1 AUD$ millions Actual Estimate Growth forma1 Adjusted Revenue2 438 507-509 16% 700-704 All numbers referenced are unaudited and will be subject to review as part of our ye
Slide 36: Current Trading Observations - carsales
Current Trading Observations - carsales For personal use only Overall The carsales business enters FY23 with strong momentum from both a domestic and international perspective. We expect to deliver double-digit growth across all three key financial metrics in H2 FY22 with Adjusted Revenue 1 up 16%,
Slide 37: Equity Raising
For personal use only Equity Raising NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 37
Slide 38: Overview of the Equity Raise
Overview of the Equity Raise • Fully underwritten 1 for 4.16 pro-rata accelerated non-renounceable entitlement offer to raise gross proceeds of approximately AUD$1,207 For personal use only Offer Size and million (“Entitlement Offer”) Structure • Approximately 68 million new ordinary shares (“New Sh
Slide 39: Equity Raising Timetable
Equity Raising Timetable1 For personal use only Event T+ Date Trading halt and announcement of Entitlement Offer 0 Monday, 27-Jun-22 Institutional Entitlement Offer opens 0 Monday, 27-Jun-22 Institutional Entitlement Offer closes 1 Tuesday, 28-Jun-22 Announcement of results of Institutional Entitlem
Slide 40: Appendix A Supplementary Financial Information
For personal use only Appendix A Supplementary Financial Information NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 40
Slide 41: Adjustments to Statutory Financials - carsales
Adjustments to Statutory Financials - carsales For personal use only FY22 Estimate1 Last 12 months Ended 31 December 2021 AUD$ millions Revenue EBITDA NPAT AUD$ millions Revenue EBITDA NPAT Statutory Financials 506-508 267-269 161-163 Statutory Financials 470.1 252.9 144.3 Dealer Support Package 0.4
Slide 42: Reported to Adjusted Financials - TI
Reported to Adjusted Financials - TI For personal use only Year Ended 31 December Management Normalisation Adjustments 2021, AUD$ millions Reported Adjustments Adjusted A. EBITDA: Adjustments to exclude non-operating, non-recurring EBITDA 76.0 33.9 A 109.9 items and new ventures EBITDA Margin % 38.6
Slide 43: Appendix B Key Risks
For personal use only Appendix B Key Risks NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 43
Slide 44: 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 For personal use only value of carsales’ shares. Before investing in carsales, you should be aw
Slide 45: Key Risks
Key Risks A. SPECIFIC RISKS RELATING TO THE ACQUISITION (CONTINUED) For personal use only 3. Future earnings risk carsales has undertaken financial and business analysis of Trader Interactive in order to determine whether to pursue the Acquisition and its attractiveness to carsales. It is possible t
Slide 46: Key Risks
Key Risks A. SPECIFIC RISKS RELATING TO THE ACQUISITION (CONTINUED) For personal use only 9. Historical liabilities If the Acquisition completes, carsales will have greater exposure to any liabilities that Trader Interactive has incurred or agreed to incur in the past. In addition, carsales will be
Slide 47: Key Risks
Key Risks A. SPECIFIC RISKS RELATING TO THE ACQUISITION (CONTINUED) For personal use only 12. Anticipated synergies and integration There is a risk the anticipated benefits, cost savings and efficiencies associated with the Acquisition, may be achieved only in part, or not at all. This could impact
Slide 48: Key Risks
Key Risks B. OFFFER SPECIFIC RISKS (CONTINUED) For personal use only 3. 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
Slide 49: Key Risks
Key Risks C. RISKS RELATED TO INVESTMENT IN CARSALES, INCLUDING POST COMPLETION OF THE TRANSACTION For personal use only 1. Cyber security The cyber threat to companies around the world is growing and unrelenting. As online businesses, carsales and Trader Interactive are not immune to these risks. A
Slide 50: Key Risks
Key Risks C. RISKS RELATED TO INVESTMENT IN CARSALES, INCLUDING POST COMPLETION OF THE TRANSACTION (CONTINUED) For personal use only 6. Information technology The performance of the Combined Business’s websites, apps, databases, IT and management systems is very important to the reputation of the Co
Slide 51: Key Risks
Key Risks C. RISKS RELATED TO INVESTMENT IN CARSALES, INCLUDING POST COMPLETION OF THE TRANSACTION (CONTINUED) For personal use only 10. Intellectual Property carsales and Trader Interactive regard substantial elements of their websites, software tools, applications, databases and underlying technol
Slide 52: Key Risks
Key Risks C. RISKS RELATED TO INVESTMENT IN CARSALES, INCLUDING POST COMPLETION OF THE TRANSACTION (CONTINUED) For personal use only 15. Expiry or termination of material contracts carsales and Trader Interactive rely on service providers for a number of ongoing services, which if terminated might h
Slide 53: Key Risks
Key Risks D. GENERAL RISKS For personal use only 1. Dividends The payment of dividends in respect of carsales’ shares is impacted by several factors, including carsales’ profitability, capital requirements and free cash flow. Any future dividends will be determined by carsales’ board having regard t
Slide 54: Key Risks
Key Risks D. GENERAL RISKS (CONTINUED) For personal use only 6. Force majeure In addition to the COVID-19 pandemic risks, events may occur within or outside Australia that could have an adverse effect on the global economies and carsales’ share price. The events include hostilities (including the re
Slide 55: Key Risks
Key Risks D. GENERAL RISKS (CONTINUED) For personal use only 13. General Operating Risks The performance of carsales may be subject to conditions beyond the control of its management, and these conditions may reduce sales of its services and/or increase costs of both current and future operations (e
Slide 56: Appendix C International Offer Restrictions
For personal use only Appendix C International Offer Restrictions NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 56
Slide 57: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document For personal use only may not be distributed to any person, and the New Shares may not be o
Slide 58: International Offer Restrictions
International Offer Restrictions For personal use only European Union This document has not been, and will not be, registered with or approved by any securities regulator in the European Union. Accordingly, this document may not be made available, nor may the New Shares be offered for sale, in the E
Slide 59: International Offer Restrictions
International Offer Restrictions New Zealand For personal use only This document 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 New Shares are not being offered to the public within New Zealand
Slide 60: International Offer Restrictions
International Offer Restrictions Switzerland For personal use only The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or m
Slide 61: International Offer Restrictions
International Offer Restrictions United Kingdom For personal use only Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Servi
Slide 62: Appendix D Summary Of Underwriting Agreement
For personal use only Appendix D Summary Of Underwriting Agreement NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 62
Slide 63: Summary Of Underwriting Agreement
Summary Of Underwriting Agreement SUMMARY OF UNDERWRITING AGREEMENT For personal use only carsales has entered into an underwriting agreement with the Underwriters in respect of the Entitlement Offer (the “Underwriting Agreement”). The Underwriting Agreement contains customary representations and wa
Slide 64: 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 For personal use only success, marketing or settlement of the Entitlement Offer,
Slide 65: Summary Of Underwriting Agreement
Summary Of Underwriting Agreement For personal use only • a representation, warranty or undertaking made or given by CAR under the Underwriting Agreement proves to be, or has been, or becomes, untrue or incorrect; • any information supplied to the Underwriters prior to the Underwriting Agreement for
Slide 66: For personal use only
For personal use only NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES 66