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RPM Automotive Group acquires two tyre sales businesses and provides trading update

RPM Group held its first annual general meeting today as a listed company revealing acquisitions and a trading update.

RPM Automotive Group Ltd - RPM Automotive Group acquires two tyre sales businesses and provides trading update
The company generated EBITDA of $726,000 in the September quarter

RPM Automotive Group Ltd (ASX:RPM) will acquire Elite Tyre Group as well as Super Tyre Mart for $1.4 million comprising 30% cash and 70% shares.

The two businesses are expected to produce a combined revenue of $5.5 million with an EBITDA margin in the range of 8-10%.

Positively, this represents a purchase price of around 3x EBITDA.

The acquisitions were revealed today at the company’s first AGM as a listed company along with a trading update for the September quarter.

September quarter trading update shows profit

The company generated revenues of $7.75 million and EBITDA of $778,000 representing an EBITDA margin of 10%.

RPM’s CFO Dale Sinnott commented: “Our current results, achieved in soft trading conditions, in the aftermath of the RTO, have laid the foundations for the Group to achieve its forecast returns.

“We also find ourselves in a strong position to integrate these new businesses into our infrastructure, creating opportunities and economies of scale across the RPM.”

Notably, the September quarter, is historically the weakest period across the entire automotive industry but the company said it has seen a strong recovery in October and November.

Co-founder has been buying stock

Managing director Clive Finkelstein recently purchased 24,700 company shares through on-market trades.

The $3,851 purchase increased Finkelstein’s overall holding to 41.31 million shares.

He is a co-founder of the RPM Group and has over 20 years’ experience in the automotive sector, having built, managed and sold a number of automotive companies including a parts and accessories manufacturer and wholesaler and a 4WD franchise group.

Proactive caught up with the company for an overview of their business earlier this month.

Quick facts: RPM Automotive Group Ltd

Price: 0.135 AUD

ASX:RPM
Market: ASX
Market Cap: $12.17 m
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on 26/2/20

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