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RPM Automotive Group strengthens presence in North Queensland

RPM Automotive Group Limited (ASX: RPM) (“RPM” or the “Company”) is pleased to announce the acquisitions of Queensland businesses, Carline Automotive - Cairns, Carline  Automotive and Revolution Racegear - Townsville and leased anew warehouse. The  businesses will be integrated into RPM’s Performance and Accessories Division, effective 1 Aug 2021, while the FNQ warehouse expands RPM’s distribution footprint.

Commenting on the acquisitions, RPM CEO Clive Finkelstein said: 

“Providing a seamless customer experience serviced by our specialist staff across all our  integrated brands is key to the success of RPM Automotive Group. The recent acquisitions of  Carline Automotive - Cairns and Carline Automotive and Revolution Racegear - Townsville are  great examples of our next expansion phase, purchasing some of our franchisees and  members as part of our forward integration plan. While opening the RPM Autoparts  Townsville distribution centre enable us to improve our store supply capability in Far North  Queensland. Our new warehousing facility is fully equipped to support our vertical integration  model and house the breadth of products we offer.”

“The acquisitions of Carline Automotive - Cairns and Carline Automotive and Revolution  Racegear - Townsville (a Carline Group subsidiary) is part of our strategy outlined in our prospectus to acquire several Carline automotive outlets in the medium term and provides  an opportunity to add further value to the businesses through revenue synergies from cross selling products, and cost synergies from the scale benefits of a larger RPM Group.

“The acquisitions are value and earnings per share accretive, and well-funded from existing  cash balances and share issues follow RPM’s recent capital raising. We continue to evaluate  further bolt-on and strategic acquisitions in line with RPM’s focussed growth strategy.”

Carline Automotive - Cairns overview

Opened in 1990 as a Carline Automotive Store, Carline Cairns is one of the oldest as well as  one of the largest Auto repair centres in FNQ. The Store Manager brings 17 years of  experience with the business, while the vendor will continue to be involved as landlord of the  business’ operations.

Carline Automotive - Townsville and Revolution Racegear – Townsville overview The Townsville store opened in 2015, and immediately became a member of the Revolution  Racegear Franchise Group, and subsequently joined the Carline Group in 2019 and is well known and respected as a performance tuning centre and motorsport outlet. The Store  Manager has been with the business since its inception.

From a motorsport perspective, as the host of two rounds of the Supercars Championship,  Townsville is an important motorsport hub in North Queensland that will continue to grow  upon completion of the new purpose-built motorsport facility at Woodstock later this year.

RPM Autoparts Townsville distribution centre overview

RPM Autoparts Townsville distribution centre services all customers north of Rockhampton.  The business distributes a wide range of RPM’s extensive tyre categories and brands; however, the focus initially will be on commercial, industrial and 4x4 passenger tyres, with  significant opportunities to increase the group’s passenger tyre and offroad tyre turnover.  The business also distributes RPM’s Performance and Accessories Division’s products. With a  high concentration of RPM Autoparts customers, and Carline Automotive Stores in the  broader region, this new venture will enable RPM to more effectively provide logistics support  to its business network across the region while also significantly reducing logistics costs.

Strategic rationale
The acquisitions are strongly aligned with RPM’s existing strategy of expanding the business  through accretive acquisitions. 

The combined retail businesses are forecast to generate $3.5 million in revenue and $525k in  EBITDA in FY22. The two businesses will contribute around 15% to the Repairs & Roadside  Division in FY22.

RPM Autoparts Townsville distribution centre is expected to generate $3.75 million in  turnover and over $300k in EBITDA in its first 12 months of trading (expected opening date 1  October 2021).

Acquisition details

The total purchase price of is $500k, with consideration comprising of $125k cash and $375k  in RPM shares (valued at RPM’s 60-day weighted average price from signing of the sale and  purchase agreement). The cash payments will be funded from RPM’s existing cash reserves.

Conditions precedent to completion

The sale and purchase agreements contain standard conditions precedent for completion,  and RPM anticipates completing the acquisitions on or around 1 September 2021.

Ongoing Strategic Objective

RPM’s growth strategy remains on course, with strong organic growth and further potential  acquisitions in the pipeline.

RPM Automotive Group
RPM Automotive Group Limited is a leading player in the Australian Automotive Aftermarket,  comprising a number of businesses involved in importing, wholesaling and retailing of tyres,  mechanical repairs, motorsport apparel and safety equipment, niche manufacturing and a roadside  assistance service for the transport industry. RPM owns brands, such as: RPM Racewear, Carline,  Genie, Air Anywhere, Formula Off-Road, RPM Autoparts.

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This announcement may contain forward-looking statements, which include all matters that are not historical  facts. Without limitation, indications of, and guidance on, future earnings and financial positions and  performance are examples of forward-looking statements.

Forward-looking statements, including projections or guidance on future earnings and estimates are provided  as a general guide only and should not be relied upon as an indication or guarantee of future performance.  No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including RPM). In particular, no representations, warranty or assurance  (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking  statements in this announcement will occur. Actual results, performance or achievement may vary materially  from any projections and forward-looking statements and the assumptions on which those statements are  based.

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