SYDNEY, AUSTRALIA: RPM Automotive Group has entered right into a binding settlement to buy the stock and assets of Metro Tyre Services (Metro) for total consideration of $4.5 million.
Total buy price of $4.5m (100% cash), implying an acquisition a number of of 3.9x FY22 EBITDA pre-synergies, together with $200K in inventory, $2.6m to be paid on settlement (60%) and two annual instalments of $860K (20% each), topic to EBITDA earn-out requirements, in March 2024 and March 2025.
Chief Executive Officer of RPM Automotive Group Limited, Clive Finkelstein, said: “We are very happy to announce the strategically important acquisition of Metro at attractive acquisition metrics. This acquisition will expand our nationwide footprint, increase our product vary and enhance our buyer worth proposition.
In addition, the debt refinance and fairness raise will guarantee that our enterprise is fully funded to execute on our natural growth plans moving forward. We are very assured within the outlook for the consolidated enterprise in FY23 and past as we leverage crosssell opportunities, realise synergies and expand margins throughout our vertically built-in enterprise model.”
Metro Tyre Services is a full-service tyre dealer, offering 24/7 onsite mobile tyre becoming repairs and servicing, specialising in earthmoving, forklift and commercial tyre sales, fitting, service and repairs. Metro is based in Penrith, NSW and generated income of $10m and EBITDA of $1.15m in FY22.
The strategic acquisition of Metro Tyre Services assists RPM Automotive in increasing its geographic footprint in NSW and will increase factors of presence to forty Australia wide. Whilst offering additional scale, the Acquisition will enhance RPM’s retail offering through the expansion of the product vary and can increase pull through from RPM’s new wholesale warehouse in Prestons, Sydney.
In addition to improving the buyer worth proposition, the Acquisition will drive extra aggressive pricing, enhance present chain efficiencies and present additional nationwide service capabilities for fleet operators.
The Acquisition is aligned with RPM’s core M&A technique and can aid in enhancing the Company’s vertically built-in enterprise model, resulting in additional margin expansion.
RPM expects FY23 income to be within the vary of $125m – $130m and FY23 EBITDA to be within the vary of $12m – $13m, on a consolidated basis. Revenue and earnings in 2H FY23 are each anticipated to be stronger than the primary half, with seasonally higher income in Q2 and Q3.
RPM is now focused on stock management, and stock turns are forecast to gradually increase from 2.3x in FY22 to 4x in FY24. In 2H FY23, it’s anticipated that there’ll be a positive impact on working capital and working money flow, as stock typically peaks in Q2 and declined through the second half.