Inter Cars is a leading auto parts distributor in Europe presenting its business to investors. The presentation discusses Inter Cars' leadership position in Europe as the #2 auto parts distributor, its attractive financial profile with a focus on profitability, and its unique distribution network supported by over 1,600 branches across 17 countries.
2. This presentation (the "Presentation") has been prepared by Inter Cars S.A. with its seat in Warsaw, Poland (the "Company). This presentation should not be treated as a part of any an
invitation or offer to sell any securities, invest or deal in or a promotion or a solicitation of an offer to purchase any securities or recommendation to conclude any transaction, in particular with
respect to securities of the Company. The information contained in this Presentation is derived from publicly available sources which the Company believes are reliable, but the Company
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assessments and judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sources will not differ materially
from the market information included herein.
1
5. Largest European listed auto parts distributor with presence in 17 countries
Inter Cars at a glance
Leadership Position
in Europe
Attractive Financial
Profile
#2 in the EU
2007–19
Sales CAGR
17%
Cash conversion2
LTM June – 2020
75%
1,600
100,000
350k
1,000
#8 worldwide
#1 in CEE trucks
#1 in CEE
passenger cars
Source: Corporate information. Note: Financials converted at EUR/PLN = 0.2352
1 Includes Germany where the company only operates online; 2 Cash conversion defined as (EBITDA – capex) / EBITDA
559
Affiliated garages
Regular customers
BranchesSKUs
Suppliers
LTM June -2020
Sales
PLN8.6bn
(€1.9bn)
17 countries
1
Equity
LTM June
2020
PLN2bn
(€491mln)
LTM June – 2020
EBITDA
PLN438 mlm
(€98.7mln)
2007–LTM June 2020
EBITDA CAGR
12,6%
4
6. Inter Cars covers the whole value chain for aftermarket
Inter Cars business model – positioning in the value chain
Source: Corporate information, Roland Berger, 2HM & Associates GmbH
1 As of 2016
‘
Parts manufacturers
OE aftermarket
OE dealer network
End-customers
OE: c.1–5 years
IAM: c.1–25 years
B2B IAM distributors
Affiliated
garages
Rental
services
Logistics
~13 avg. age of
cars in Poland1
Web
dealers
Inter Cars’ presence
ManufacturingDistributionRetail/Services
Illustrative
CarAge
1
Manufacturing
Trailers and semitrailers production
Spare parts remanufacturing
1
Affiliated garages
Nationwide garage chains
2
Rental Services
Car rental and maintenance for corporate
fleets
3
Logistics
Warehousing and last mile delivery to
garages
3PL services to other companies
4
Online service
Order assemble parts and find nearest
garages
5
2 3 4 5
Core segments
website
website
35% 65%
% Share of aftermarket
5
7. Broad range of complementary products making Inter Cars a one-stop shop for
traditional and hybrid/EV parts
Sales breakdown by product
Selected product portfolio brands
Current Inter Cars Future Inter CarsOld Inter Cars
54%
14%
33%
47%
21%
32%
42%
30%
28%
Category Product examples
Universal applications Accessories, car cosmetics, wiper blades, liquids, bearings
Future targets Tyres, air conditioning, batteries, sensors, body parts
Potentially disruptive Lubricants, engine parts, classic transmission, brakes
Inter Cars continues to invest in expanding product portfolio to be future ready
6
8. Path to higher profitability
Historical focus on volume growth
to gain market share, delivering
consistent double-digit sales growth
As focused on volume, sales grew
also among less profitable clients,
resulting in lowered margins
Having achieved a broad scale, on
Q3 2018 announced a shift to
focus on profitability (vs. volume)
Overview of strategic steps to increase profitability
Ongoing market consolidation in the CEE provides critical mass and improved pricing power
Different strategies on
each segments,
focused on volume
Less profitable
products gained
weight, reducing
overall margin
New focus on
profit per unit
Segment strategies
vs. profitability
Stock rotation
optimization
Third party logistics
Direct purchases
from factories
Direct deliveries
Limited investment in
new branches
Optimization of stock
rotation achieved with
a narrower supplier
base
Suppliers strategically
selected (low-tier
suppliers not kept),
increasing profit per
unit
Inter Cars holds
security stock for
suppliers
Transition to
consignation with third
party logistics will
allow to avoid
keeping a security
stock
Optimization of
purchase costs by
eliminating
intermediary
warehouses
Acquisition of
larger quantities of
stock index would
allow to fulfil factories
logistic quota
Reduction of touch
points of stock items
in the logistic process
(not from central
warehouse) will
minimize costs
No plans to open new
branches in
consolidated mature
markets
New focus on
optimization of the
existing logistics
process in those
markets
7
10. Key credit highlights
Largest European listed auto parts distributor
Resilient sector exposed to positive long term trends
Protected business model
Capillary network supported by unique last mile delivery capabilities
Strong and resilient financial track record with further upside to come
Incentivized management with proven track record
Leadership
Industry
Barriers to entry
Network
Financials
Management
1
2
3
4
5
6
1
9
11. 5,21
2,04 1,99 1,8 1.7
1,13 0,9 0.7
1,13
LKQ Europe Inter Cars GPC Parts Holding Europe WM Mekonomen SAG Inter Sprints
Largest European listed auto parts distributor and undisputed leader in Poland
(€bn)
Source: Corporate information; McKinsey; Inter Cars estimates
Note: 2019 sales; 1 AM–After Market=€150bn, including mechanical parts, tires, lubricants, garage equipment; 2 Latest available financials as per McKinsey Aftermarket report (June 2019) 3 Net sales, GPC2019 Annual Report, page 77;
8 players sales €13.5bn 9%
market share in AM1
Snapshot of the European competitive landscape
€92bn
European IAM estimated market size
60%
Share of independents
€23bn
CEE IAM estimated market size
3
2
2
12. IAM: Resilient, visible, growing and opportunities from long-term megatrends
Fundamental drivers OutlookData
IAM gaining share over OES
segment
IAM market share
Limited impact of internet pure
players
New distribution
channels
Increasing complexity
Technological
evolution
Declining due to improving qualityReplacement rates
Shift from PURE ICE to Hybrid and
EV
Powertrain
Benefiting IAM channelRegulation
Liberalization with dedicated repair clause by EU Commission and European Parliament
Introduction of tire pressure monitor systems
EV: 10% by 2025 (potential lower
content)
Hybrid: 40% by 2025 (potential
higher content)
E-commerce / online mainly impacts B2C
‘Stagnation’ for online B2C evolution due to:
High complexity of parts
Limited customer ability to repair complex defects
MileageDistributionTechnologyReg.
Stable with slight growthCar park size
Ageing car park
Car park average
age
Increasingly diversified car park
Car park
composition
“Mobility” to moveMobility
European car
park size (mm)
European average car
park age (yrs)
European IAM market
size (€bn)
Share of total sales to benefit from technological
evolutions
Market share of IAM vs. OES
56% 59%
2017 2025E
21%
Present
30
%
Future
Tires, suspension parts, air condition, batteries etc.
291
350
420
2008 2017 2025E
10.5 10.9 11.1
2013 2015 2017
68
92
120
2007 2017 2025E
2
Online impact
Leadership Industry
Barriers
to entry
Network Financials Management
Source: Roland Berger, LEK, GPC. BMI research
12
13. CEE market characteristics
Growing and aging fleet of motor vehicles
Low unemployment, growing salaries and
purchasing power leading to higher car penetration
Old car park – aged cars from West to East
Fragmented industry
Fragmented markets with “Country
Champions”
Limited threat from e-commerce
new entrants
CEE dominated by Inter Cars
Largest distributor in CEE
Limited presence of Western
players in CEE
Fast growing market but price
focused customers
Growth at faster pace than Western EU
Price focused customers compared to
Western Europe
Few independent garages associated
in chains
1,000 independent garages affiliated
Lack of critical scale among
independents
“Do it for me” – i.e., drivers served
by garages
Downward trend of self-reparations
“Do it for me” still outpaces “do it
yourself”
Source: Corporate information, Frost & Sullivan
3
Leadership Industry
Barriers
to entry
Network Financials Management
13
14. 56%
18%
16%
8%
Poland
Central and Southern Europe
Eastern Europe
Baltics
Expansion outside Poland: the foundation for uninterrupted high double-digit
sales growth
3,705
4,869
2016 2019
889
1,544
2016 2019
848
1,528
2016 2019
Sales contribution by region (2019)
439 725
2016 2019
Poland 1 Eastern EU 4 Baltics 3
# Number of countries
Central and Southern EU1 9
Source: Corporate information
1 Includes Germany where the company is present only via online
(PLNmm) (PLNmm) (PLNmm) (PLNmm)
3
Leadership Industry
Barriers
to entry
Network Financials Management
14
15. Competitive edge through full integration and value-added services3
Leadership Industry
Barriers
to entry
Network Financials Management
Value levers The right parts, available at the right time, in the right place
Purchasing &
suppliers
Upstream logistics
control
Local distribution
Customers
Portfolio breadth
Purchasing and services to suppliers
Connectivity and digitalisation
Value-added services to customers
Network density and capillarity
Integrated upstream logistics
Entire spare part universe covered to drive customer
demand and superior private label
Structured relationships, self-perpetuating superior
purchasing conditions
Digitally enabled business model - strategic
initiatives seizing opportunities from long-term
megatrends
Branded network of 1,600 independent garages;
services embed Inter Cars with its 100,000
customers
Local presence, superior product availability, market
leading delivery times and unique last mile delivery
capabilities
Automation and operational efficiency driving value
for suppliers and increasing existing players’
profitability
Distributor of parts Value-added services driving own demand
Source: Corporate information
website
15
16. Warehouse setup in close proximity to branches enabling timely and low-cost
last mile delivery up to 5 times/day
4
Leadership Industry
Barriers
to entry
Network Financials Management
Source: Corporate information
17
Countries
6
Warehouses
abroad
535
Daily deliveries
11
Warehouses in
Poland
350k
SKUs
100,000
Regular customers
Main KPIs
Brasov/Romania
Zagreb/Croatia
Budapest/Hungary
Sosnowiec/Poland
Komorniki/Poland
Riga/Latvia
Zakroczym/Poland
Local logistic centre Large warehouseCountries with branches Countries with presence only via online
16
17. Bosnia and Herzegovina, 6
Croatia, 27
Itlay, 1
Slovenia, 4
Poland, 243
Czech Republic, 30
Slovakia, 23 Latvia, 17
Estonia, 5
Lithuania, 17
Ukraine, 37
Serbia, 1
Greece, 13
Romania, 68
Moldova, 5
Countries with branches Countries with presence only via online
Hungary, 33
4
Sources: Corporate information
17
Bulgaria, 29
A unique distribution model supported by the largest branch network in
the fast-growing CEE region
Owned network of branches
Operations conducted by independent
managers, who assume 100% of costs
Remuneration through distribution fee (50%
of gross profit)
Inter Cars contributes with product, brand,
logistics, IT system and know-how
Inter Cars’ network of partners
A win-win business model
Benefits for Inter Cars
“Variable cost” business model
Cost effectiveness
Minimised risk for Inter Cars
Low upfront capex
559
Branches
Leadership Industry
Barriers
to entry
Network Financials Management
18. Investment in Zakroczym: a state-of-the-art logistic centre
Located approximately 35km from Warsaw
Inter Cars’ main warehouse serving Poland and Lithuania / Ukraine
Accounts for 45% Inter Cars’ operations in Poland
European’s most modern warehouse in auto spare parts
Able to sort up 500k parts daily to be delivered with 99.9% accuracy
The new warehouse
In 2017, Inter Cars opened a new logistic centre in Zakroczym that doubled the company’s capacity
Source: Corporate information
Key benefits
Consolidated area – instead of running several smaller warehouses, a decision to run one larger, central warehouse
Optimize logistics costs – thanks to this decision, the increase in costs is slower than the increase in sales / margin
Increase logistics area – from 44,000 to 54,000sqm
Increase in efficiency thanks to modern sorters and warehouse systems
4
Leadership Industry
Barriers
to entry
Network Financials Management
PLN170mm
investment
+PLN3.5-6bn
estimated income increase
3x
throughput
>250
new jobs
+45,000
sqm storage space
18
19. 99 103
150 151
195 186
232
272
251
370 360
393
462
438
7.5%
5.9%
7.3%
6.2%
7.1%
6.2%
6.6%
6.9%
5.2%
6.2%
5.2%
4.9%
5.3%
5,1%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM
June
2020
EBITDA EBITDA margin
1,327 1,738
2,066
2,413
2,765
3,003
3,513
3,959
4,796
5,973
6,908
7,943
8,764 8 586
3.1%
0.4%
(4.4%)
2.0%
1.6% (0.8%)(0.2%)
1.4% 1.9% 1.9% 2.7%
1.5% 1.3%
(11,7%)
31.0%
18.9%
16.8%
14.6%
8.6%
17.0%
12.7%
21.1%
24.6%
15.7%15.0%
10.3%
(2%)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM
June
2020
Sales EU GDP growth Sales growth
Track record of strong and sustainable top-line growth
Proven track record of above market, through the cycle organic growth
Continued market share gains in core markets
Consolidated customer base ensuring recurrent sales
One-stop shop company in a low margin business vs. Western Europe
Historical focus on volume growth and cementing market leadership
positioning
Profitability improvement set as management’s priority at Q3 2018
Historical sales (PLNmm) Historical EBITDA (PLNmm)
Source: Corporate information, WOOD Research, World Development Indicators
5
Leadership Industry
Barriers
to entry
Network Financials Management
CAGR 2007–LTM June 2020: 12.6%CAGR 2007–LTM June 2020: 16,1%
EBITDA margin
avg (2010-LTM):
5.9%
19
20. 65
71
35 33
46
62
43
78
167
133
95
115
145
109
4.9%
4.1%
1.7%
1.4%
1.7%
2.1%
1.2%
2.0%
3.5%
2.2%
1.4%
1.4%
1.7%
1,3%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM
June
2020
Capex % of sales
34 32
115 118
149
124
189 194
84
237
265
278
317
329
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM
June
2020
Fully invested asset base driving low capex requirements and strong cash
generation
76% 81%67% 74%33%
Historical capital expenditure (PLNmm) Historical operating cash flow1 (PLNmm)
Major investments between 2015 and 2018 (12 logistics centres in 7
countries)
No major investment expected in near-term, with future investments
focused on selected strategic projects:
Expansion of central warehouse in Zakroczym
Development of B2C platforms both for cars and moto spare parts
Development for Fleet Service platform
Unified sales tool for Inter Cars’ Group
Operating cash flow improvement on the back of realization of major
expansion capex projects (limited future major investments)
Future cash flow generation underpinned by focus on profitability
through NWC improvement
Focus on profit per unit vs. historical volume growth
Optimization of stock rotation (supplier strategy, third party logistics)
Minimization of costs through direct purchases and deliveries
71% 75%64%
Source: Corporate information
1 Operating cash flow calculated as EBITDA – capex; 2 Cash conversion defined as (EBITDA – capex) / EBITDA
x% Cash conversion2
Leadership Industry
Barriers
to entry
Network Financials Management
77%34% 78%31% 69%
% of sales avg
(2010-2019): 1.8%
Cash conversion
avg (2010-2019): 68%
5
20
21. Seasoned and incentivized management team controlling ~35% of the
Company
Focused on creating value
and improve profitability over the
long term
Presence of active shareholders in
the board supports orientation to
sustainable organic growth
Fast decision-making and prudent
approach to financial policy
Leadership Industry
Barriers
to entry
Network Financials Management
Key management Ownership structure
Market cap1: PLN 2.8bn
Shareholder % of capital
Oleksowicz family 26%
Andrzej Oliszewski 9%
AVIVA 13%
National Nederlanden 10%
Immersion Capital 5%
Other 37%
Inter Cars
management
~35%
Source: Corporate information
1 As of August 27, 2019
Chairman of the
Supervisory Board
6
21
Maciej Oleksowicz
President of the Management Board
Krzysztof Oleksowicz
Founder of the Inter Cars
Krzysztof Soszyński
Vice-President of the Management Board
Piotr Zamora
Chief Financial Officer, Board Member
Wojciech Twaróg
Board Member
22. Strengthen market leadership
Focus on profitable growth
Optimize organisational efficiency
Focus on optimization of logistics
Growth in foreign markets
Strategic roadmap
Source: Corporate information
1
2
3
Warehouse management
Automation & robotization / wages optimization
Direct access to products purchased by intermediaries
4
5
22
23. Summary of Inter Cars’ key credit highlights
Largest EU
independent
distributor
Resilient sector
exposed to positive
long term trends
Protected business
model
Capillary network
supported by unique
last mile delivery
capabilities
Strong and resilient
financial track record
with further upside to
come
Incentivized
management with
proven track record
Leadership
Industry
Barriers
to entry
Network
Financials
Management
Strong track record of organic growth in Poland and foreign markets
Seasoned and incentivized management team controlling ~35% of the Company
A decentralised and entrepreneurial organisation leveraging the strengths of an industry leader
Uninterrupted double-digit sales growth (+17.7% CAGR 2007-18) driven by market share gain
Profitability and NWC improvement set as management’s top priorities – identified self-led efforts on logistics and marketing
Limited capex requirements to drive FCF generation and further deleveraging
Over 100,000 customers served through a network of 560 branches (o/w 249 in Poland)
Best-in-class, well invested, modern chain of 17 logistics centres – large warehouses located near Warsaw
Warehouse setup in close proximity to branches enabling flexible, timely, low-cost delivery up to 5 times/day
Unique distribution model (franchise partners)
High entry barriers – leadership in a highly fragmented market with high service standard levels required
A true “one-stop-shop” – unrivalled product breadth among European distributors with 350,000 SKUs
Close partnership with independent distributors (c.60% of total) translating into superior business proposition
Resilient and steadily growing market robustly supported by long term secular drivers
Ongoing car park expansion and high average age/utilisation
Increase in complexity and sophistication of components driving spare part prices up
Electric vehicles, autonomous drive and mobility to drive utilisation and offer opportunities in next 20y
Fragmented market
DIFM outpaces DIY in independent aftermarket in Europe
Largest European listed auto parts distributor by sales (€2.0bn LTM Sept-2019) with presence in 171 countries
#1 player for passenger car and truck parts in the fast growing CEE market
Undisputed market leader in Poland with >20% market share
1
2
3
4
5
6
Source: Corporate information
1 Includes Germany where the company is present only via online
23
25. Key financials
Continuous sales growth from 2016 to 2019 of 13,6% CAGR driven by:
Increased number of registered cars in Poland and other European countries
Expansion from 374 branches (of which 191 outside of Poland) in 2016 to 561 (of which 313 outside of Poland) in 2019
EBITDA margin diluted due to unfavourable FX movements and one-off costs related to the logistic services in Zakroczym warehouse, completed in mid-2017
Over 2018 and 2019, the Company has focused its priority on increasing market share, executing long-term strategic initiatives such as B2C in CEE and
Western Europe, entering into new segments in selected countries and developing logistics capabilities, which further pressured temporarily the margins
As of Q3 2018 shift in strategy to focus on profitability. To be implemented via focussing on improvement in logistics, suppliers and profitability per unit sold
Commentary
Source: Company filings
1 Calculated as EBITDA - Capex; 2 Calculated as Operating Cash Flow as a % of EBITDA
PLNmm 2016 2017 2018 2019 LTM June 2020
CAGR 2016-
LTM June 2020
Sales 5,973 6,908 7,943 8,764 8,586 10.9%
% growth 24.6% 15.7% 15.0% 10.3% (2.0%)
EBITDA 370 360 393 462 438 5.0%
% of Sales 6.2% 5.2% 4.9% 5.3% 5.1%
Capital Expenditure 133 95 115 145 109 (5.5%)
% of Sales 2.2% 1.4% 1.4% 1.7% 1.3%
Operating Cash Flow1 237 265 278 317 329 9.8%
Cash Conversion Rate2 64.1% 73.5% 70.8% 68,6% 75.1%
Summary of Financial Profile
25
26. Capital expenditure and net working capital requirements
Capital expenditure (PLNmm)
Capex in 2016, 2017 and 2018 primarily:
Finalising Zakroczym
Increasing regional distribution centres
Capex going forward to be on key strategic projects, namely:
Extension of Zakroczym
Development of B2C platforms for car and motorcycle spare parts
Net Working Capital (PLNmm)1
Q1 and Q3 tend to be seasonal peaks due to servicing cycle as users
tend to await post summer or Christmas period
Flattened by sales of products from variety of segments
Increased inventory from 2016 due to providing large product range
(i.e. trucks, tyres)
Improvement in NWC due to i) efficient inventory management as a
result of Zakroczym and improvement in logistics, ii) more narrow
range of stock and iii) reverse factoring
133
95
115
145
109
2.2%
1.4%
1.4%
1.7%
1,3%
0
20
40
60
80
100
120
140
160
gru.16 gru.17 gru.18 gru.19 LTM June
2020
Capex As a % of Sales
Commentary Commentary
1,676
2,020
2,369 2,438 2 259
28.1% 29.2% 29.8% 27.8% 26,3%
0
500
1,000
1,500
2,000
2,500
gru.16 gru.17 gru.18 gru.19 LTM June
2020
NWC As a % of Sales
Source: Company filings
1 Calculated as Inventories + trade receivables – trade liabilities
42
39
40
40
47
37
45
24
133 133
143
86
85
95
105
115
125
135
145
20
30
40
50
Dec-16 Dec-17 Dec-18
Receivable days Payable days Inventory days
Dec-19
26
27. Capital structure
Source: Company filings
1 FX PLN/€: Jun-19: 0.2352; 2 Bloomberg as of August 27, 2019; 3 Defined as Net Debt / EBITDA (pre-IFRS16); 4 Defined as EBIT / Interest (pre-IFRS16)
Main financial maintenance covenant in current capital structure:
3.50x Net Leverage Covenant3
Pre-IFRS 16 impact:
LTM Sept-19 EBITDA pre-IFRS 16: PLN 431mm / € 95mm
Sept-19 Net Debt pre-IFRS 16: PLN 1,206mm / € 265mm
Sept-19 Net Leverage pre-IFRS 16: 2.6x
Commentary
As 2019
PLNmm €mm1
xEBITDA ( Post IFRS 16) Maturity
Cash and cash equivalents (297) (67) (0.6x)
Bonds (floating) 0 0 0.0x
RCF - syndicated loans 323 72 0.7x Nov-20
TLB - ING Bank N.V. (PLN66mm) 101 23 0.2x Nov-20
TLB - Raiffeisen a.s. (PLN29mm) 96 21 0.2x Feb-21
TLB - Nova Kreditna Banka Maribor (PLN7mm) 0 0 0.0x Nov-20
Term loan 537 120 1.1x Nov-21
Net Lease Liabilities (IFRS 16) 258 58 0.5x
Financial leases 277 62 0.6x
Total debt 1,592 356 3.4x
Total net debt 1,295 290 2.8x
Market capitalisation2
2,975 666 6.3x
Total capitalisation 4,567 1,023 9.7x
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Key theme: Inter Cars is one of the leading auto parts distributor worldwide, and the largest listed company in the sector in Europe
Leadership across multiple products and regions: #1 in CEE passenger cars, #1 in CEE trucks, #2 in the EU, #8 worldwide
Operates a well-developed network of suppliers, branches and affiliated garages, serving ~100,000 regular customers annually
Attractive financial profile underpinned by an impressive and sustained Y-o-Y growth (17.7% sales and 13.3% EBITDA 2007-2018 CAGR)
Key theme: Inter Cars is present across the entire auto aftermarket value chain, following a one-stop shop strategy
Inter Cars is focused on two core segments (B2B independent aftermarket distribution and web dealership), where it has developed a loyal customer base
In addition to these core segments, is also present in manufacturing and retail segments, operating with its own brands
Operates in CEE, with older car average ages than in Western Europe, benefitting the aftermarket industry with higher demand
Key theme: Inter Cars has a well-diversified business model underpinned by a balanced product mix
Product offering evolving to accommodate for increasing demand of hybrid / EV parts, while still primarily covering traditional cars
Future target products (batteries, sensors, etc) are expected to progressively increase its weight in the product mix to a significant portion
Key theme: Inter Cars represents a solid auto distributor business with positive industry outlook
In a nutshell, our key attractions are
We are the largest listed auto parts distributor in Europe
We operate in a resilient sector, which is exposed to positive long term trends
Our business model is protected with high barriers to entry
We have a capillary network that is supported by a unique last mile delivery capabilities
We have shown a strong financial track record, underpinned by an outstanding and resilient growth since 2007, with further upside to come
Active shareholders have presence in our management team, providing with incentive for organic long term growth
Key theme: Inter Cars is a leader in the auto parts industry in Europe
It is the second largest player by sales, the largest listed player and the undisputed leader in Poland
In a fragmented industry where presence is key, Inter Cars has been able to become the largest player in the CEE
Key theme: Inter Cars operates in the independent aftermarket business, a resilient and growing industry presenting opportunities from long-term megatrends
The industry’s key topics are car parks, distribution, technology and regulation
IAM is supported by a majority of positive outlooks, such as an ageing and increasingly diversified car park, an increasing share of IAM vs OES or the increased complexity in auto technology, with a shift of pure ICE to hybrid and EV powertrains
Key theme: Inter Cars is the undisputed leader in the CEE IAM market
This constitutes an important barrier to entry given the CEE is composed of fragmented markets with country champions, with limited presence of Western players
The CEE has an increased car penetration on the back of low unemployment supported by an increased purchasing power, as well as an aging car park
In addition, Inter Cars’ garage chain benefits from a low association of independent garages associations and an upward trend of “do it for me” reparations
Key theme: Inter Cars has a diversified presence across Europe, delivering uninterrupted double-digit sales growth in each region
Inter Cars is present in 17 countries, all connected geographically
Consistent double digit growth in its core market (Poland), and >20% growth in the other regions since 2016
Key theme: Inter Cars is on the competitive edge thanks to full integration across the value chain, including the provision of value-added services
From purchasing and supplies to end-customers, including logistics and local distribution, Inter Cars is both present with its own brand and a market leader
This delivers a strong competitive position, underpinned by clear value levers in each of the value chain stages (portfolio breadth, automated logistics integrated in a dense network that allows for local presence)
On top of this, Inter Cars offers tailored value-added services through its network of 1,600 garages designed to match the demand of 100,000 customers, facilitating customer retention
Inter Cars is also digitally enabled, allowing it to benefit from, additional opportunities from long-term dynamics
Key theme: Inter Cars operates a network of 17 warehouses strategically located
It has 11 warehouses in Poland and 6 abroad, including local logistic centres as well as large warehousing handling deliveries to broader areas
The warehouses are strategically located close to branches, allowing for cost-efficient deliveries up to 5 times per day
Key theme: Inter Cars has a unique distribution model supported by the largest branch network across 17 countries
Has an owned network of branches operated by independent managers who bear 100% of costs and risks, while Inter Cars provides its platform of logistics, know-how and brand
The managers receive a distribution fee equal to 50% of gross profit
This cost-effective system allows for minimized corporate risk and low upfront capex
Key theme: Inter Cars recently finalized its strategic investment in a state-of-the-art warehouse that doubled its capacity
Opened in 2017, it is in a privileged position (35km from Warsaw) to serve its core market, Poland (handles 45% of the operations in the country)
It is Europe’s most modern warehouse in auto spare parts
Inter Cars benefits from a consolidated service area, an increased efficiency as well as optimized logistics costs, among others
Key theme: Inter Cars has delivered a continued and resilient double digit growth both in sales and EBITDA since 2007
With respect to sales:
Proven track record of resilient organic growth, outperforming GDP and the economic cycle
Resiliency achieved on the back of a consolidated customer base, underpinned by continued market share gains following a one-stop shop strategy
With respect to EBITDA:
Inter Cars is the market leader in the CEE, where margins are structurally lower compared to Western Europe
The recent decline in margins is partially explained by the historical focus on volume growth to gain market share, with less profitable clients driving part of the revenue growth
The company has also been affected by its product mix, with a higher YoY share in revenue of products with lower profitability
Key theme: Inter Cars benefits from a fully invested asset base delivering strong cash generation
Low capex requirements thanks to major investments undertaken between 2015 and 2018, with current levels (1.4%) below historical average (1.7%)
Limited future capex forecasted, except for selected strategic investments without requiring major investments
Operating cash flow driven by the capex cycle, and will benefit from the focus in profitability through NWC improvement
Key theme: Inter Cars management is formed by active shareholding (~35% stake), promoting better governance
Unlike a regular public company, the strong and committed shareholder base allows for fast-decision making and a better alignment of objectives
Management is incentivized to create value and focus on long term profitability as well as sustainable organic growth