Transportation & Logistics Automotive Aftermarket Sector Update May 2013

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Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Member FINRA/

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Greetings from theHW&Co.Transportation &Logistics TeamWelcome to the May issue of the Harris Williams & Co. Transportation & Logistics(T&L) Automotive Aftermarket Sector Update. We continue to use this forum to keepyou (investors, senior managers, entrepreneurs, and others focused on the autoaftermarket) up to speed on what we are seeing in our sector, apprised of industry newsand events, and connected to the auto aftermarket companies that we are fortunate towork with everyday.We continue to bring you transcripts of relevant discussions we have with seniorindustry professionals, like this month’s discussion with Jerry Riccioni, Senior VicePresident, Retail Sales for Old World Industries. We will keep you apprised of thetransactions we are executing in the various sub-sectors, including suppliers,distributors, retailers, and service providers.We hope you enjoy reviewing this newsletter, and please continue to email us yourthoughts and opinions. We want to ensure that this newsletter is informative and helpfulas you continue to focus on the automotive aftermarket space.Regards,ContactsContactsFrank F. Mountcastle, IIIJason D. BassManaging DirectorManaging DirectorJoseph H. Conner, 1 (804) 915-0124 1 (804) 915-0132 1 (804) iaRichmondSan FranciscoP: 1 (617) 482-7501F: 1 (617) 482-7503P: 1 (216) 222-9870F: 1 (216) 222-0158P: 44 203 170 8838F: 44 207 681 1907P: 1 (612) 359-2700F: 1 (612) 359-2701P: 1 (267) 675-5900F: 1 (267) 675-5901P: 1 (804) 648-0072F: 1 (804) 648-0073P: 1 (415) 288-4260F: 1 (415) 288-42691 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Aftermarket Talkwith Jerry Riccioni,SVP of Retail Sales,Old WorldIndustriesOld World Industries, LLC develops, manufactures, and markets automotive andheavy duty products. The company offers consumer, commercial, and industrialproducts for the aftermarket and other industrial applications.Bio: Jerry Riccioni is the Senior Vice President, Retail Sales for Old WorldIndustries. Jerry was hired in 1989 as a salesman and promoted in 1997 to his currentposition. Jerry is responsible for selling antifreeze (ten corporate brands—includingthe flagship, PEAK—and over 100 private labels), motor oil, diesel exhaust fluid,and windshield wash to the automotive, hardware, and mass merchant markets. Jerryhas helped Old World become the largest functional fluid supplier in the world.Previously, Jerry worked at Montgomery Ward as a store manager and buyer in theautomotive division.HW&Co.: Old World has some of the most recognizable brands in the automotive aftermarket. How valuable isOld World’s portfolio of brands to your customers? How have you been able to continue to differentiate yourbrand in the market?Jerry Riccioni (JR): Our portfolio of brands is very important to our customers. It gives them the ability toorder mixed truckloads of many different kinds of products, which in turn reduces inventory and increasesturnover, producing a better R.O.I. Additionally, our emphasis is not so much on differentiating our brand, butrather on the proliferation of the PEAK name. We have accomplished this by introducing new product linesunder the PEAK umbrella, which enables us to market our brand year round, and by utilizing Danica Patrick inour ads. As a result, PEAK has become a household name.HW&Co.: Old World has a long history of cutting-edge research and development which has continued to driveproduct innovation. With a rapidly evolving automotive aftermarket, how challenging is it to stay ahead of thecurve to continue to meet market needs? In what sectors do you expect to see the greatest rate of innovation goingforward?JR: When we were only selling antifreeze, developing a new formula that could be used for “all makes, allmodels” was fairly easy. However, now that we have expanded our product lines, meeting the market demand ismuch more difficult. For instance, our 12-volt PEAK electronics line changes weekly based on market trends,and we also devote a lot of effort into researching specialty items to add to our growing list of products in thiscategory. In order to continue to be an industry leader in innovation, we spend a substantial amount of timeevaluating the innovations that the market will demand over the next 12-18 months.The sector where we see the greatest rate of innovation is hands down our new BlueDEF product. In ten years,based on the diesel exhaust fluid requirements for new vehicles, we anticipate this will be a billion gallonindustry.HW&Co.: As the automotive aftermarket shifts to a recurring, routine preventative maintenance model from thehistorical component failure model, what opportunities does that create for Old World? Have you seen newproduct categories emerge that will continue to grow in importance over the next several years?2 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Aftermarket Talk(continued)JR: Synthetic and high mileage motor oils are examples of new product categories that have emerged as wedevelop new and improved products for the automotive industry. But new doesn’t always mean we throw awaythe old. I thought when we came out with our “long life” and “extended life” antifreeze formulas around 2003we would see conventional antifreeze sales decline, but this has not been the case. We have actually seen ournumbers continue to grow in this category year after year.HW&Co.: Are there changes in vehicle technology and/or regulations (decreased emissions, increased fueleconomy) that are influencing market needs for new products? If so, what areas of emerging product categorieshave you excited?JR: Yes, requiring diesel exhaust fluid in most medium and heavy duty trucks to meet EPA regulations is onesuch example. To address this need, we introduced BlueDEF, a solution of purified water and urea that not onlyreduces emissions but also helps improve fuel economy by 5%. We expect this product to grow exponentiallyover the next 20 years. This, by far, is the biggest change in vehicle technology / regulations that is influencingthe market needs of today and the future.HW&Co.: How has the evolving retail landscape in the automotive aftermarket impacted Old World over thelast several years? What changes have you made to your business to continue to be valuable to your customersand help them grow?JR: The landscape of the automotive aftermarket has changed drastically over the past 20 years. There havebeen great former customers like Murray’s, Western Auto, Chief, Hi-Lo and CSK that have all gone away, andnow the market has consolidated to a few major players. As a result, we have adjusted to meet the ever-changingneeds of these customers. Whether it is working more closely with our suppliers, strategically finding newdistribution facilities, or developing exciting marketing promotions, we are prepared to offer our customers acomprehensive program at a competitive price.HW&Co.: What key trends do you watch in the market for signs of overall market strength/weakness? Anysense for where the automotive aftermarket is headed?JR: The length of time that consumers keep their cars and the number of miles they drive per year are goodindicators of the strength / weakness of the automotive aftermarket. The older the car and the more miles on it,the more likely the owner will be purchasing automotive products. With 11.3 years as the average age of cars onthe road today and gas prices being relatively steady, the automotive aftermarket will continue to benefit fromthese factors.HW&Co.: Old World is a long-time sponsor of Danica Patrick. Will she win a Sprint Cup race this year?JR: Knowing Danica for almost ten years, I’m sure she would want me to say “absolutely!” She has been anawesome spokesperson for our company and just a delight to work with. She appeals to both men and women,and everyone wants Danica to win. As our company slogan says, “When you PEAK, you win!”3 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013What We’reReading Aftermarket industry expected to continue growth through 2016: The AAIA/AASA report that the U.S.automotive aftermarket industry is expected to grow 3.4% annually through 2016 to 263.8 billion, addinganother 33 billion in economic impact. Growth is expected to be driven by a combination of short-termaftermarket needs (the average car age is 11.3 years, the oldest in decades) as well as long-term demanddriven by population growth and improvements in income and employment which lead to increased milesdriven.New regulations could benefit the heavy duty aftermarket: Heavy Duty Trucking reports that the recentCompliance, Safety, and Accountability (“CSA”) regulations may provide profit opportunities for heavy dutyaftermarket repair and maintenance providers. As customers begin to be affected by increased scrutiny as partof CSA, they are more likely to seek inspections and repairs to avoid hefty fines. This is expected to directlybenefit both distributors and repair providers for the foreseeable future.OEMs reprioritize U.S. supplier relations as rapport hits a plateau: The Wall Street Journal reports thatafter years of progress, U.S. and Japanese OEMs failed to show significant year-over-year improvement indealing with suppliers, according to the annual Working Relations Index Study. Supplier relations are crucialto preventing disruptions and maintaining the welfare of automotive manufacturers. Industry-wideimprovements will require a focused effort by OEMs to improve relationships with suppliers.Expense may be the largest hurdle for connected cars: CBS reports that connected cars, which U.S.Transportation Secretary Roy LaHood says he has no doubt will save lives, may still be several years awayfrom being widely implemented due to the technology’s current affordability. The University of Michiganis currently conducting the world’s largest connected car study in Ann Arbor, where cars have beenoutfitted with sensors and communicate with each other on road and weather conditions. It is believedconnection could lead to fewer collisions and safer driving conditions.Date AnnouncedRecent M&ATransactionsAcquirerTargetSectorTarget Description5/16/2013Allied Specialty VehiclesTramec GroupVehicleManufacturersSuppliersManufactures motorized recreational vehicles.5/15/2013Navistar Monaco and HolidayRambler RV DivisionSloan Transportation5/14/2013NPW5/14/2013Snap-On Inc.Performance Warehouse ofPortlandChallenger LiftsDistributors andRetailersSuppliers5/13/2013Bain CapitalFTE Automotive GMBHSuppliers5/2/2013FEVDGE Inc.Suppliers4/24/2013LKQ Corp.Sator Holding B.V.4/23/2013Meineke Car Care CentersWalt's Auto Care Centers4/16/2013Prime Automotive PartsE&L Battery & Ignition Co.4/16/2013National 4WD Centres3/28/2013Transamerican Auto PartsSupplyAmerican Tire Distributors3/28/2013Cazenove Capital ManagementPendragon PLC3/25/20133/11/2013Wanxiang America Corporation / Brake Parts Inc.Torque Capital GroupGenuine Parts CompanyExego GroupDistributors andRetailersDealerships andService ProvidersDistributors andRetailersDistributors andRetailersDistributors andRetailersDealerships andService ProvidersSuppliers3/11/2013Lund International HoldingsEmpower GroupDistributors andRetailersSuppliers3/8/2013Kohlberg Kravis Roberts & Co.Gardner Denver Inc.Suppliers3/1/2013New Flyer Industries CanadaOrion Parts3/1/2013Hopkins ManufacturingCorporationTow DaddyDistributors andRetailersSuppliersRegional Tire DistributorsManufactures and supplies heavy duty truck andtrailer products to OEMs and the aftermarket.Provide logistics and distribution solutions foraftermarket products.Designs and manufactures car lifts, jacks, and autolift accessories.Develops and manufacturers drive train and brakesystem applications for vehicles worldwide.Provides electrical engineering design to automotiveOEMs and tier suppliers.Imports and distributes spare parts for theautomotive aftermarket.Provides auto repair and car services for customersin the Northwest U.S.Distributes automotive aftermarket products in thenortheast U.S.Retails four-wheel drive and truck accessories inCanada and the U.S.Distributes tires to tire and automotive repairretailers throughout Canada.Operates a network of franchised vehicledealerships in California and the U.K.Manufactures and markets brake systems for thetransportation industry.Operates as a reseller of automotive parts andaccessories in Australia and New Zealand.Designs, manufactures, and distributes fender flaresto the automotive aftermarket.Designs, manufactures, and markets engineeredproducts for automotive and industrial applications.Distributes and supplies heavy duty replacementparts for commercial buses.Designs and manufactures towing electricalproducts for the aftermarket.4 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013StockPerformanceOverviewTrailing Five Year Stock Price tors and RetailersNov-10May-11Nov-11Dealerships and Service ProvidersMay-12Nov-12May-13Vehicle ManufacturersSource: Capital IQKey Trading StatisticsStock Price % Change1 Month12 MonthTEV / LTM EBITDA as ofDec-11Jun-12CurrentTEV / EBITDA2012EP/E2012ECategoryDealerships and Service ProvidersDistributors and RetailersSuppliersVehicle 9.9x9.8x8.3x5.4x8.8x14.2x16.4x10.8x12.0xSource: Capital IQCurrent Valuations Versus Historical Five-Year Average(Current TEV/LTM EBITDA multiple as a % of Five-Year ehicle Manufacturers80.0%60.0%40.0%20.0%0.0%Dealerships and ServiceProvidersDistributors and RetailersSource: Capital IQ5 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013( in millions, except per share data)TradingStatistics DetailTickerPrice at5/15/13MarketCapDebtCash &Equiv.NetDebtEnterpriseValue (EV)EV/EV/LTM EBITDA 2013 EBITDAPrice/2013E EPSLTM MarginNet Debt/EBITDALTM rner Inc.NYSE:BWA 83.87 9,692 1,067 716 352 10,0439.0xCooper Tire & Rubber Co.NYSE:CTB24.391,5453872721151,6602.9xDorman Products, Inc.Exide 166608102880(28)7301,589797Federal-Mogul Corp.Goodyear Tire & Rubber ,0865412,2812,3022,8053,1416,107Modine Manufacturing CompanyNYSE:MOD9.8546516533132Motorcar Parts of America Inc.NasdaqGS:MPAA6.289114425119Remy International, Inc.NasdaqCM:REMY17.6556529995Standard Motor Products Inc.Tenneco Visteon Corp.NYSE:VC63.443,157595932Distributors and RetailersAdvance Auto Parts Inc.NYSE:AAP 86.40 6,325 605 598 7 6,3327.5x7.0x14.1x13.6%0.0xAutoZone, Inc.Genuine Parts x16.4x21.6%2.0x8.6%0.1xLKQ Corp.O'Reilly Automotive 19.8x17.0x12.0%18.6%1.8x0.7xPep Boys - Manny, Moe & JackU.S. Auto Parts Network, elect 3%1.4xDealerships and Service Providers 42.1946.34 1,3155,622 8994,093 699 8933,995 7.4%1.2x6.4xCopart, Inc.Group 1 Automotive 11.0x34.5%3.6%0.9x5.5xKAR Auction Services, Inc.Lithia Motors 2.8%5.0%5.0x4.3xMonro Muffler Brake Inc.Penske Automotive Group, 1x14.8%0.9x3.2%6.4xSonic Automotive 4.2x5.0%5.0xAsbury Automotive Group, Inc.AutoNation Inc.NYSE:ABGNYSE:ANBoyd Group Income FundCarMax Inc.5.4xVehicle ManufacturersBMW AGDB:BMW 72.93 59,229 90,377 14,584 75,793 135,0229.9xNMNM14.0%5.6xDaimler 8.0x8.9xFord Motor Co.General Motors y-Davidson, Inc.NYSE:HOGNavistar International Corporation %NM3.7x0.0xOshkosh CorporationPACCAR 1.8x15.0x6.8%13.4%0.8x2.4xToyota Motor CorporationVolkswagen x11.0%10.0%4.3x3.8x11.4%11.0%6 of 83.1x3.7x

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Recent HW&Co.Tombstonesportfolio companies ofA portfolio company ofa portfolio company ofa portfolio company ofa portfolio company ofa portfolio company ofhas been acquired byhas been acquired byhas been acquired byhas been acquired byhave completed a mergerwithhas been acquired bya portfolio company ofOur professionals have deep expertise across the spectrum ofTransportation & Logistics Companies above represent select experience of Harris Williams & Co. professionals.7 of 8

Transportation & LogisticsAutomotive Aftermarket Sector UpdateMay 2013Contact UsFrank MountcastleManaging DirectorHarris Williams & Co.’s Transportation & Logistics Group has industry-leading experience in a broad range ofattractive niches, including automotive and heavy duty vehicles aftermarket, third party logistics, surfacetransportation, airport and aviation services, marine transportation, transportation equipment, and transportationinfrastructure. Our middle market leadership and sell-side execution excellence deliver unmatched results for ourclients. For more information, contact one of our 1 804-915-0124Jason BassManaging 1 804-915-0132Joseph 1 804-915-0151Jershon JonesVice 1 804-932-1356Sources:Jeff BurkettVice 1 804-932-1334 Capital IQThomson FinancialS&PReutersHarris Williams & Co. ( is a preeminent middle market investment bank focused on the advisoryneeds of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwaveringcommitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, boardadvisory, private placements, and capital markets advisory services.Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA andSIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN#540892). Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conductbusiness.THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BYTHIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THEOFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIALINSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY ORRESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIALPROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MOREINFfaORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT THE ABOVE ADDRESSESOR NUMBER.The information and views contained in this report were prepared by Harris Williams & Co. (“Harris Williams”). It is not a research report, as such term isdefined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation ofan offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by HarrisWilliams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or itsaffiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentionedherein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/orits affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financialproducts of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to changewithout notice. The financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisionsusing their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, pastperformance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed,without Harris Williams’ prior written consent.Copyright 2013 Harris Williams & Co., all rights reserved8 of 8

automotive aftermarket industry is expected to grow 3.4% annually through 2016 to 263.8 billion, adding another 33 billion in economic impact. Growth is expected to be driven by a combination of short-term aftermarket needs (the average car age is 11.3 years, the oldest in decades) as well as long-term demand

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