Quick Hits …
(A few short items to get us started this week)
• Dayco is now a certified vendor partner of the Automotive Parts Services Group. Members of The Group will get access to a full line of premium products, including poly v-belts and tensioners, as well as a soon-to-be-launched water pump program. Dayco’s offering also includes fill rate guarantees and access to market analytics.
• EnerSys is now an approved supplier partner of Automotive Parts Associates (APA). As such, EnerSys is able to offer its premium Odyssey batteries to APA’s warehouse distributor members.
• NUCAP’s NRS galvanized brake pads, which are designed and manufactured in Canada, are now available at Canadian Tire.
• AutoZone Inc. on Aug. 13 announced plans to hire more than 20,000 full- and part-time employees nationwide at the store and distribution center level, including delivery drivers, parts sales managers and sales associates.
• David Overbreeke, who was the president and CEO of Brake Parts Inc. (BPI), will serve as an adviser to the First Brands Group (formerly the Trico Group) for 90 days following First Brands’ acquisition of BPI.
• BBB Industries has promoted Kim Nolan to senior vice president of traditional sales, responsible for managing customer relationships, strategic sales growth and product line expansion for all of BBB’s U.S.-based traditional accounts. Nolan has been with the company since 2006.
• Frank Lam has joined Idemitsu Lubricants as division manager – aftermarket. Lam has spent the last five years with Motul USA, most recently as vice president of sales. His background also includes time as the BMW western regional chemical sales manager for the Excelda Manufacturing Company.
ASTE 2020 Cancelled
The Independent Garage Owners of North Carolina (IGONC) has canceled the 2020 Automotive Service & Technology Expo (ASTE 2020), citing gathering restrictions imposed by the state as well as uncertainty regarding the timeline for the coronavirus pandemic.
ASTE had been rescheduled from September to November with the hope of being able to host the show. For 2021, IGONC plans to host two ASTE events: a new spring event along with the fall expo.
AMRA Moving All Fall Events To Virtual Format
The Automotive Maintenance & Repair Association (AMRA) is moving its fall events to a virtual format following the cancelation of AAPEX and the SEMA Show as live events and with many organizations still under travel restrictions. This includes the Motorist Assurance Program (MAP) Fall Technical Conference, AMRA General Membership Meeting and AMRA Board of Directors Meeting.
To address both the Fall Technical Meeting and the General Membership Meeting, AMRA will host a series of webinars beginning in September and running through the end of 2020. These webinars will be 60 to 90 minutes in length and will cover a variety of topics, ranging from typical Technical Conference topics to more industry-related and consumer-facing themes similar to what would be covered at the General Membership Meeting.
AMRA is partnering with J.D. Power, IMR Inc. and Facebook on the consumer content and with Autel, DRiV Inc. and others on the technical topics. All webinars will be free to members.
2020 BigR Show Canceled
In light of health and safety concerns related to the coronavirus pandemic, the Automotive Parts Remanufacturers Association (APRA) has canceled the 2020 International BigR Show that was planned for Oct. 10-13 in Nashville. The event was to be held in conjunction with the Automatic Transmission Rebuilders Association’s Powertrain Expo, which has been canceled as an in-person show in favor of a virtual event.
APRA is now working on plans for the next BigR Show, which will take place Oct. 16-19, 2021 in Las Vegas.
The Network Plans Virtual Fall Shareholder Meeting
The Automotive Distribution Network plans to hold a virtual fall shareholder meeting Aug. 31 to Sept. 2 in partnership with AVI OnDemand. “AVI has done such a great job on the Network Academy launch,” said Vice President of Sales and Marketing Steve Tucker. “They were a natural choice for our first virtual meeting.”
The meeting will close with a trade-show-style event that will allow shareholders to participate in over 200 one-on-one meetings with Network suppliers. In addition to staff presentations, the meeting will include a supplier-only event Sept. 2.
The meeting is expected to draw more than 250 participants representing 37 shareholders and 59 supplier companies.
Jefferies Estimates June VMT Down 18%, July VMT Down 16%
In its August 2020 Monthly Tune-Up, Jefferies LLC issued U.S. vehicle miles traveled (VMT) estimates for June and July. According to Jefferies’ model — which it claims has shown a roughly 98% accuracy rate — June driving volume declined 18% year-over-year to 231.30 billion miles, with an upper limit of 243.80 billion and lower limit of 218.40 billion. July driving volume is estimated to have decreased 16% year-over-year to 249.70 billion miles, with an upper limit of 263.30 billion and a lower limit of 235.90 billion.
Employment trends will challenge further miles driven expansion in the short term, according to Jefferies. “As approximately 65% of miles driven are estimated to be employment-related (commuting and for work-related purposes), we see a COVID-related spike in unemployment limiting vehicle travel in 2020,” analysts Bret Jordan, Mark Jordan and Ethan Huntley wrote in their Aug. 10 report.
Jefferies’ Tune-Up also noted that channel feedback indicated robust June trends continued into July and early August. “While some industry participants have noted concerns regarding an uncertain stimulus outlook and increasing COVID infections, comments continue to point to [mid-single-digit percentage growth] in aftermarket parts and service demand — surprisingly, including COVID hotspots such as Florida, Texas and California,” the analysts wrote.
NPD: Aftermarket Sales Rose 4% During First Half
The automotive aftermarket turned in 4% dollar sales growth over the first six months of 2020, according to The NPD Group, with growth driven by second-quarter sales that were up 14% April through June versus 2019.
DIY and discretionary categories tied to at-home car projects were at the top of the performance chart and primary contributors. Among the fastest-growing categories were …
• Paint (+33%).
• Body repair (+27%).
• Light-duty shop equipment (+24%).
• Appearance accessories (+19%).
• Chemicals, including brushes, towels, polishing tools, waxes, polishes and vehicle wash (+16%)
Many of the core, as-needed aftermarket categories came in at the lower end of the spectrum, including …
• Washer fluid (-15%).
• Wipers (-10%).
• Lighting (-6%).
• Motor oil (-2%).
According to NPD, many of these aftermarket categories were among the top gainers at this point last year.
Nathan Shipley, NPD’s automotive analyst, wrote in an Aug. 18 report that there are a number of nice tailwinds in the air for the aftermarket. “Lower gas prices — coupled with an anti-viral society limiting mass transportation and favoring road over air travel — places greater reliance on car usage and health,” Shipley pointed out. “In addition, consumers tend to watch how they spend their dollars during economic uncertainty and often do more DIY — a sales generator and relationship builder for the aftermarket.”
The Group Honors Top Suppliers
APC/AP Centric took home the “Outstanding Vendor of the Year” award at the Automotive Parts Services Group’s virtual national conference and expo held last week. The following vendors also were honored …
• Gates Corp. as Sales Support Vendor of the Year.
• KYB Americas Corp. as Marketing Excellence Vendor of the Year.
• Timken as Excellence in Education & Training Vendor of the Year.
• FCS Automotive as Service Level Excellence Vendor of the Year.
• Standard Motor Products as Catalog & Product Data Excellence Vendor of the Year.
Parks Jr. Receives Federated’s Top Member Honor
Tim Parks Jr., director of information technology and product management for South Carolina-based Parks Auto Parts, has received the Art Fisher Memorial Award, Federated Auto Parts’ top member recognition. The award recognizes those who carry on Fisher’s legacy through outstanding dedication to the membership, the group and the industry.
Parks is the Federated representative for the family-owned business and a member of Federated’s executive committee. He also has served on the Federated co-man council and as a Federated Car Care adviser.
Parks Auto Parts has 14 locations across South Carolina.
PWI/Tri-States Transaction Complete
Little Rock, AR-based Replacement Parts Inc. — which goes to market as Parts Warehouse Inc. (PWI) and Crow-Burlingame — has completed its merger with Marianna, FL-based Tri-States Automotive Warehouse. The company, previously led by the Spence and Stephens families, adds 20 company stores to PWI’s operation, giving it a total of 194 company stores to go along with more than 210 independent jobbers.
The transaction gives PWI a presence in nine total states: Alabama, Arkansas, Florida, Georgia, Louisiana, Missouri, Mississippi, Oklahoma and Texas. PWI is a shareholder owner of the Aftermarket Auto Parts Alliance.
Advance Auto Parts Reports Highest Comp-Store Sales In Nearly 10 Years
For the second quarter ended July 11, 2020, Advance Auto Parts saw its net income rise 52.2% to $189.96 million and its gross profit increase 8.6% to $1.10 billion. Gross margin expanded from 43.3% to 43.8% on a year-over-year basis, and net sales rose 7.3% to $2.50 billion.
Comparable-store sales increased 7.5%, which marked Advance’s highest growth rate in close to 10 years.
President and CEO Tom Greco told analysts on the company’s Aug. 18 earnings call that nearly all regions had positive comp-store sales with the Gulf Coast, Central and Appalachia regions posting strong double-digit growth. “The Northeast, Mid-Atlantic and West Coast regions, which were more impacted by the pandemic, significantly trailed our other regions,” he said. “In fact, we had an extremely wide distribution performance geographically, with over 2,000 basis points separating the highest- and lowest-growth regions.”
Like other parts distributors, Advance’s professional business was more negatively impacted by the coronavirus pandemic than DIY in the second quarter. Professional sales were down slightly for the quarter, according to Greco.
“This was primarily due to the temporary closure of garages across North America,” he explained. “In addition, we have a disproportionate amount of our professional business in the Northeast, Mid-Atlantic and the West Coast. These regions represent over 30% of our pro sales, and they were all well behind the rest of the country in terms of their professional growth rate. However, as the quarter progressed and stay-at-home orders began to lift, we saw sequential improvement in our professional business each period. In the final four weeks of Q2, pro sales were up mid-single digits.”
Greco noted that the gap between the stronger and weaker geographies narrowed over time and that the company’s independent Carquest, WORLDPAC and Carquest Canada businesses also recovered as the quarter progressed.
Advance’s DIY omnichannel performance was meaningfully stronger than its DIFM business throughout the quarter, with strong ticket count growth along with gains in units per transaction and sales per ticket. According to Greco, Advance experienced double-digit growth in DIY omnichannel throughout the quarter.
He cited a number of external factors that drove this strong performance, including government stimulus. “Stimulus checks from the CARES Act, as well as extended unemployment benefits in Q2, provided incremental discretionary income, which we believe contributed to our DIY sales performance,” he told analysts on the call.
Advance’s DIY omnichannel momentum has continued into the current quarter, leading management to believe that there are factors driving DIY beyond stimulus.
“First, many consumers were continuing to spend more time at home and had more time to work on their vehicles. Secondly, we believe that, due to COVID-19, people were less likely to use public transportation. This includes ride-sharing, buses, trains and subways,” he said. “It also includes air travel, which was down significantly in the quarter. Airline leisure travel was, at times, replaced by a road trip in a personal vehicle. In total, mass transportation indices were well below a year ago all quarter. Meanwhile, personal vehicle miles driven climbed throughout Q2, according to Apple and Google mobility.
“Finally, according to our research, many of the large-box retailers, including online retailers, prioritized staples along with food and beverages in Q2. This resulted in long-tail items such as auto parts being de-prioritized, which temporarily opened the door.”
Greco didn’t speculate on the longer-term impact of these macroeconomic or pandemic-related variables but noted that past experience indicates that DIY typically performs better in a recessionary environment as consumers try to save money and keep their vehicles longer.
GAINING SHARE? … Greco did tell analysts that Advance gained share in the quarter. “We can see from the syndicated data that, inside of DIY, we gained share,” he said. “And on pro, we just look at what’s been reported, and we compare it to what we delivered, and we feel very confident that we gained share in DIFM also.”
“You have to keep in mind that this is a pretty fragmented industry. In a $150-billion segment, the big four players have $40 billion to $45 billion in sales, so roughly a third of the business,” Greco explained. “Is it conceivable in the middle of the global pandemic that large-scale players that have about a third of the business can take share from the smaller-scale players that are two-thirds? I think we just showed that that’s the case.
“Obviously, we’ve got capabilities that smaller players just don’t have: a great online portal, omnichannel capability, we can turn on a dime and do curbside delivery or contact-free delivery, our supply chains are robust. We’re confident that we gained share in the quarter. … As you’ve been seeing, the larger players are going to be doing well in a quarter like this.”
INITIATIVES … At the time of Advance’s first-quarter 2020 earnings release, management noted the need to delay or pause some of its key initiatives because of the coronavirus pandemic. Since then, as business has strengthened, a number of these initiatives are now back up and running, according to Greco.
“Cross-banner replenishment, which will integrate the supply chain within Advance and Carquest, is on track to deliver the original savings we planned in Q3 2021,” he told analysts on the Aug. 18 call. “This is slightly delayed from our original timeline, primarily due to factors related to COVID-19.
“Our single warehouse management system, or WMS, initiative was officially paused during the quarter. We’ve restarted this work and revised the timelines for WMS, which includes prioritizing our largest DCs. We expect to complete our WMS implementation in these large DCs by the end of 2021. We believe this will enable us to realize the vast majority of the planned savings in 2022.”
Greco added: “In terms of category management, we continue to work with suppliers on material cost optimization and own-brand expansion. We also began the implementation of a new pricing platform and expect, over time, this new tool will enhance our pricing management capabilities. Our next step is to begin the implementation of market-based or local-pricing strategies, which is something we cannot do efficiently today.”
MISCELLANEOUS … A few other items of interest from Advance’s second-quarter financial results and earnings conference call …
• In the early part of the second quarter, sales of brakes and undercar/chassis were soft, particularly on the professional said, according to Greco. However, momentum increased throughout the quarter, with these categories now showing mid-single-digit growth.
• Through the first five weeks of the current quarter, the company reported strong growth in DIY omnichannel and positive comp-store sales on the professional side.
• Management is not providing guidance at this time.
• In terms of sourcing, Greco told analysts that Advance has been successful in working with its suppliers across the globe on getting the SKUs it needs. “We have some in-stocks that are a little bit lower in some of our slower-velocity SKUs, but we intend to get that back on track in the second half of the year,” he noted. “We are not anticipating any significant decreases in the back half as we sit here today.”
• Greco said that the company signed up a record number of new TechNet customers, crossing over the 11,500 mark in total.
• He told analysts that Advance’s Speed Perks loyalty program has sustained continued momentum, with the number of active members growing to more than 13.50 million — an increase of nearly 30% year-over-year. “We’re also seeing growth in customers graduating to higher tiers within the program along with improved retention rates,” Greco said.
• The company launched DieHard nationwide on July 2. “While it’s too early to quantify the impact of DieHard, we believe this iconic brand will be a long-term differentiator for us,” Greco said. He also noted that management is “very bullish” on the company’s ability to drive market share gains in batteries in the second half of 2020.
• During the quarter, Advance repaid the $500 million outstanding under its revolving credit facility that was borrowed during the first quarter of 2020.
• On Aug. 11, the company declared a regular cash dividend of $0.25 per share to be paid Oct. 2 to all common stockholders of record as of Sept. 18.
• On Aug. 12, Advance lifted the temporary suspension of its share repurchase program.
• On Aug. 17, the company notified the trustee of its intent to redeem the $300 million aggregate principal of its 4.50% notes due 2022 using available cash on hand. — Marc Vincent
Advance Auto Adds Logistics, Vehicle Technology Experts To Board Of Directors
Advance Auto Parts has added two executives to its board of directors: Arthur Valdez Jr., executive vice president and chief supply chain and logistics officer at Target Corp.; and Carla Bailo, president and CEO of the Center for Automotive Research. Their appointments increased the size of Advance’s board to 11 directors.
According to Advance, there is no arrangement or understanding with any person pursuant to which either Bailo or Valdez was appointed as a director.
Valdez leads all functions of Target’s global supply chain and logistics network. Prior to joining the company in 2016, Valdez spent 17 years with Amazon in a variety of leadership roles, including vice president of operations – international expansion, as well as vice president of worldwide transportation. His background also includes time as area manager for Walmart de Mexico.
Bailo has more than 35 years of automotive industry experience. She joined the Center for Automotive Research — an independent, nonprofit research organization that supports technology advancements within the automotive industry — in 2017. Bailo’s career has included multiple leadership roles with Nissan Motor Corp., including senior vice president of R&D Americas. She began her career in 1983 with General Motors as an engineer.
As of Aug. 13, the board had not determined on which committees either Bailo or Valdez will serve.
Icahn Automotive Group Reports Wider Net Loss; Store Closures Accelerating
The Icahn Automotive Group’s net loss grew from $38 million a year ago to $50 million in the second quarter of 2020, while its adjusted EBITDA went from a loss of $3 million to a loss of $7 million.
Icahn Auto’s gross margin declined 28.5% to $153 million. As a percentage of net sales and other revenue from operations, gross margin slipped from 29% to 26% on a year-over-year basis.
A subsidiary of Icahn Enterprises, Icahn Auto is engaged in the retail and wholesale distribution of auto parts (AutoPlus and Pep Boys) as well as providing automotive repair and maintenance services (AAMCO, Precision Tune and Pep Boys).
For the quarter, Icahn Auto’s net sales decreased by $157 million (or 21.1%) to $587 million, as the coronavirus pandemic and related stay-at-home orders led to a steep decline in revenue, particularly on the automotive service side of the business. Taking a closer look, we see that …
• Net sales from automotive services decreased by $68 million (or 19.7%) to $277 million.
• Net sales from aftermarket parts sales declined by $89 million (or 22.3%) to $310 million.
On an organic basis, aftermarket parts sales decreased by $46 million, attributable to a $31 million (or 13%) drop in commercial sales and a $15 million (or 16%) decline in retail sales. Store closures related to management’s ongoing transformation plan accounted for another $43 million decrease in aftermarket parts sales.
Icahn Enterprises disclosed in a recent regulatory filing that the pandemic led to an acceleration in planned store closures during the quarter with additional closures coming over the remainder of 2020. Additionally, the group has adjusted its operating hours and staffing in response to lower demand resulting from the pandemic.
“Icahn Auto accelerated closures of certain parts stores, adjusted store hours and staffing to match reduced demand, implemented significant cost-savings measures and reduced capital spending to minimum levels,” Icahn Enterprises CFO SungHwan Cho told participants on an Aug. 7 conference call to discuss the quarter’s results. “All these initiatives helped Icahn Auto offset the impact of significant sales declines and position the company for profitability as sales return.”
As you may recall, Icahn Auto is in the midst of a multi-year transformation plan designed to restructure its operations and improve profitability. This endeavor includes …
• Facility closures, consolidations and conversions.
• Refocusing its auto parts business “on certain core markets.”
• Optimizing the value of the commercial parts distribution business in certain high-volume core markets.
• Exiting the auto parts distribution business in certain low-volume, non-core markets.
• Inventory optimization actions. (Inventory has already been reduced by $116 million since December 2019).
• Improving inventory management across the group’s parts and tire distribution network.
• Making investments in supply chain and information technology capabilities.
• Investing in customer experience initiatives like enhanced customer loyalty programs and facility upgrades.
• Streamlining Icahn Auto’s corporate and field support teams.
• Operating the automotive services and aftermarket parts businesses as separate entities.
“We have made significant progress separating our automotive service business from our aftermarket parts business and are on track to substantially complete the separation by the end of this year,” Keith Cozza, president and CEO of Icahn Enterprises, said on the aforementioned analyst call.
As of June 30, 2020, Icahn Auto had $108 million in revolving credit facilities available. — Marc Vincent
NPW Companies Acquires 13 Auto Plus Stores,
Two Pep Boys Retail Locations
The Icahn Automotive Group has sold 13 Auto Plus parts stores and two Pep Boys retail stores in Oregon and Washington to the NPW Companies.
Icahn Auto will continue to own and operate all of its service centers under the Pep Boys brand in both states.
Chris Cox, CEO – parts for Icahn Auto, said the transaction allows the company to focus on its store footprint in core growth markets. This is in keeping with Icahn Auto’s multiyear transformation program that includes refocusing its auto parts business on certain core markets, as well as exiting the auto parts distribution business in certain low-volume, non-core markets.
A shareholder owner of the Aftermarket Auto Parts Alliance, NPW plans to convert and rebrand the acquired Auto Plus and Pep Boys stores as Auto Value parts stores.
“This is a great opportunity to grow our parts business and increase our overall service levels in the Pacific Northwest,” said NPW President and CEO Larry Pacey, adding that the company has plenty of capacity in its Hillsboro, OR distribution center.
LKQ Corp. Reports Double-Digit Q2 Revenue Declines In North America, Europe
For the second quarter of 2020, LKQ Corp. reported $2.63 billion in consolidated revenue — a decline of 19.1% compared to the same period of 2019.
Total parts and services revenue decreased 18.9% to $2.50 billion (down 17.4% on a constant-currency basis). And, organic parts and services revenue declined 16.8%, primarily attributable to the impact of the coronavirus pandemic, which management indicated was not as severe as internal forecasts suggested at the beginning of the quarter.
President and CEO Nick Zarcone reminded analysts on LKQ’s July 30 earnings call that government efforts around the world to flatten the infection curve had a profound negative impact on mobility. “With the material drop in miles driven, activity levels at repair shops in North America and Europe dropped precipitously as did the demand for repair parts,” Zardone explained. “As economies around the globe began to open up and mobilities of all types increased, so did the demand for the parts we supply, and we ended the quarter on a much sweeter note than how it began.”
He said that the low point in second-quarter demand came in the first half of April. “While still below 2019 levels on a consolidated basis, we have seen continuous improvement with each passing month, with April same-day revenue being down approximately 30% compared to 2019, May down 13% and June down less than 8%,” Zarcone said.
LKQ’s consolidated gross margin decreased 18.9% to $1.01 billion; however, as a percentage of revenue, gross margin inched upward from 38.4% a year ago to 38.5% for the three months ended June 30, 2020.
The company’s income declined 21.9% to $118.77 million.
NORTH AMERICA … LKQ’s North American revenue fell 23.4% to $892.83 million. Organic revenue declined 22.5%, attributable to a drop in collision and liability repairable auto claims tied to the pandemic, partially offset by share gains, as well as an uptick in mechanical parts sales and self-service parts sales and admissions.
Segment EBITDA decreased 21.3% to $149.55 million, primarily because of volume declines. However, as a percentage of revenue, North American EBITDA increased from 14.4% to 14.8% on a year-over-year basis.
According to Zarcone, it was the highest second-quarter level achieved in the last five years.
“North American operational efficiency efforts have resulted in permanent cost reductions of approximately $80 million annually, which includes headcount reductions, closure of over 30 locations and the elimination of redundant or end-of-life fleet assets no longer needed,” he told analysts on the call. “Our North America team has done an outstanding job of managing their cost structure and being very disciplined on operational matters.”
EUROPE … LKQ’s European revenue declined 20.2% to $1.21 billion. Organic revenue decreased 16.6%, mainly related to pandemic disruptions, which adversely affected volumes in all of the company’s European operations. On a per-day basis, organic parts and services revenue improved sequentially, going from a year-over-year decrease of 28.9% in April to a decrease of 8.4% in June.
According to LKQ, not all regions were impacted by the pandemic at the same time and to the same degree, creating a different growth profile for each of its European businesses. For example, Germany and the Netherlands recovered at a faster rate, while the United Kingdom and Italy lagged.
“When COVID initially hit Europe, many countries within the European Union closed their borders to nonessential travel and implemented severe lockdown measures to combat the virus. As a direct result, travel demand fell across Europe, resulting in fewer cars on the road, almost no traffic congestion, and a corresponding decline in the demand for service and repair parts,” Zarcone pointed out to analysts on the call. “According to INRIX, a leading traffic analytics data provider, since the lowest point, every European country increased their rate of miles driven throughout Q2, with 10 out of the 19 countries analyzed getting back to pre-COVID levels of travel by mid-June.
“The pre-COVID levels of January and February reflect seasonal low points. So, while up on a pre-COVID basis, we are still below 2019 levels on a seasonally adjusted basis. That said, it’s good to be headed in the right direction.”
Segment EBITDA declined 23.1% to $89.39 million (down 20.1% on a constant-currency basis). And, as a percentage of revenue, European EBITDA slid from 7.7% to 7.4% on a year-over-year basis.
SPECIALTY … LKQ’s Specialty segment revenue decreased 1.5% to $404.00 million. Organic revenue declined 1.4%. While down on a year-over-year basis, segment revenue held near to the prior-year level because of strong demand for recreational vehicle products and high drop-ship fulfillment, according to LKQ. And, performance improved as the quarter progressed.
“When looking at April and May combined, Specialty witnessed a 10.4% organic revenue decline on a per-day basis, with June exhibiting organic growth of 14.1% on a per-day basis — a clear sign that April was the bottom,” Zarcone said. “SEMA estimates that the impact of COVID on industry sales will likely be down 12% for the full-year 2020. But clearly, our specialty segment is tracking far better when compared to this industry expectation.
“The RV side of the specialty business showed particular strength during the back half of the quarter. We believe the surge in demand for RV-related parts and accessories is due to customers looking for safer and alternative forms of outdoor and leisure travel. According to Ipsos research, 46 million Americans plan to take an RV trip within the next 12 months.”
Segment EBITDA decreased 0.3% to $52.23 million. However, as a percentage of revenue, Specialty EBITDA increased from 12.7% to 12.9% on a year-over-year basis.
On the call, Zarcone noted that the combination of certain Specialty segment suppliers being closed early in the second quarter because of the pandemic following by surprisingly strong industry demand has created “a bit of a backlog situation.”
“Our strong inventory position coming into the pandemic has been an advantage for Specialty,” he said, “and we’re working to rebuild our inventories to avoid any potential stockouts.”
LOOKING AHEAD … Zarcone stated that the pace of improvement has slowed recently, with the first few weeks of July having “stalled” and LKQ experiencing slight revenue declines on a week-over-week basis and year-over-year declines widening.
“In June, the organic revenue trends were down 14% for North America, down 8% for Europe and up 14% for Specialty. And, based on what we’ve seen thus far, July has given up a bit in both North America and Europe and even more so in Specialty,” he said. “If current trends persist, you’d be looking at an environment where North America is probably off 15% or so, Europe off 10% and Specialty flat with last year.
“We would hope, obviously, that the world will make continued progress both in terms of controlling the virus and opening economies. But, right now, there’s little hard evidence that that is going to happen.”
Zarcone cited a few factors that could hold back LKQ’s performance over the remainder of 2020. This includes potential decreases in unemployment assistance and schools opting for additional virtual learning, both of which could hamper mobility and consumer spending.
“While it is difficult to predict, we do not anticipate getting back to 2019 revenue levels in our North American and European segments until sometime in 2021, meaning continued negative revenue comparisons to 2019 levels over the back half of the year,” he told analysts on the call. “The Specialty business should track prior-year revenue levels in the third and fourth quarters.”
MISCELLANEOUS … Other items of interest from LKQ’s second-quarter 2020 quarterly report and earnings conference call …
• At the start of the second quarter, the company placed thousands of employees on furlough and had most of its salaried personnel take a 10% to 20% reduction in pay. LKQ has reversed those downward adjustments and moved forward with normal merit increases beginning in the third quarter, albeit on a delayed basis.
• Zarcoe said the majority of those furloughed are now back on the payroll so LKQ can serve the current level of demand.
• Varun Laroyia, executive vice president and CFO, said LKQ plans to increase the company’s inventory levels to support the service and fill rate requirements of its businesses. “While we expect to be able to operate effectively at a lower inventory balance than we exited 2019, the June figure is not sustainable for us to maintain our service levels based on what we’ve seen currently and coming off the low points in late March and early April,” Laroyia explained.
• LKQ is not providing full-year 2020 guidance at this time, citing uncertainty regarding the rate and shape of the pandemic recovery. — Marc Vincent
Hedges Raises Its U.S. Auto Parts E-Commerce Market Share Forecast
Hedges & Company’s 2020 online revenue forecast for the U.S. automotive aftermarket has been revised upward from $14 billion to $16 billion to account for an incremental $1.90 billion in revenue tied to the coronavirus pandemic. The Hudson, OH-based digital marketing agency notes that a major trend during the pandemic, in nearly any industry, has been a dramatic shift to e-commerce market share.
Online revenue of $16 billion represents a 30% increase in U.S. online consumer spending compared to 2019. This does not include revenue generated by third-party marketplace and auction sites. Hedges expects U.S. new auto parts and accessories e-commerce revenue to top $22 billion by 2023.
For Canada, Hedges projects US$3.70 billion (or CDN$4.90 billion) in online shopping for new auto parts and accessories in 2020. For Mexico, the forecast calls for just under $1.00 billion in auto parts e-commerce.
According to the agency, digital influence has a significant impact on both online and offline parts and accessories revenue. This occurs when consumers do online research before buying auto parts or accessories, such as responding to online advertising, reviews, “how to” content and videos. Hedges reports that more than nine out of 10 shoppers do online research even if planning to buy in a retail store.
The agency’s research indicates that consumers do most of their online research in four primary ways …
• Online search (74% of all parts and accessories consumers).
• Looking at auto parts retailer websites (73%).
• Visiting manufacturer websites (57%).
• Reading automotive forums (47%).
Hedges estimates that digital influence will impact the U.S. auto parts retail industry by over $140 billion in 2020, which is down from $148 billion in digital influence last year. The agency attributes the decrease to growth in e-commerce market share being offset by a reduction in brick-and-mortar retail sales.
Hedges expects digital influence to rebound to $168 billion by 2023 in the United States.
According to the agency, auto parts e-commerce market share transacted via mobile phones will account for $10.40 billion in revenue in the United States in 2020 — approximately a 40% increase when compared to 2019, when mobile reached $7.40 billion.
CarParts.com Reports Record Q2 Revenue, Gross Profit
For the second quarter of 2020, CarParts.com Inc. delivered record net sales of $118.93 million (up 61.4%) and record gross profit of $40.83 million (up 87.6%) despite a drop in vehicle miles traveled brought about by coronavirus-related stay-at-home mandates, especially early in the quarter. The company, formerly known as U.S. Auto Parts Network, was able to ride a rising wave of DIY and online sales to this record-setting quarterly performance.
“The DIY auto parts market has performed exceptionally well, especially online,” CEO Lev Peker said on CarParts.com’s Aug. 10 earnings call. “We believe customers have grown increasingly comfortable buying their auto parts online.”
The company’s online sales — which include both the e-commerce and online marketplace sales channels — accounted for 94.7% of CarParts.com’s total net sales during the quarter. The company’s online sales increased 68.8% to $112.62 million compared to the same period last year, attributable to a rise in e-commerce sales, primarily driven by triple-digit sales growth from the company’s flagship website, CarParts.com.
Offline sales decreased 9.6% to $6.31 million, primarily because of a decline in sales from the company’s wholesale operations.
By category, the company’s second-quarter 2020 sales breaks down as …
• 68% private-label collision — up from 60% a year ago.
• 19% private-label engine — unchanged year-over-year.
• 6% branded engine — down from 10% a year ago.
• 5% branded performance — down from 9% a year ago.
• 1% branded collision — unchanged year-over-year.
• 1% private-label performance — unchanged year-over-year.
CarParts.com’s gross margin grew 480 basis points to 34.3%. COO and CFO David Meniane told analysts on the call that the increase came from product mix, as well as leveraging long-term strategic partnerships to buy premium-branded products directly from manufacturers, removing steps in the supply chain.
The company was able to turn away from a $1.46-million net loss a year ago and report $1.57 million in net income for the 2020 second quarter — an improvement of $3.03 million. CarParts.com’s adjusted EBITDA rose from $1.43 million to $5.56 million on a year-over-year basis, with adjusted EBITDA margin expanding from 1.9% to $4.7%.
INITIATIVES … On the call, Meniane emphasized that CarParts.com still has much left to accomplish. “Our most immediate area of focus will continue to be to optimize our inventories to keep up with the increase in consumer demand,” he said. “During the second quarter, customers were placing orders at such high volumes that we couldn’t replenish our inventory in time due to our longer lead times. Even with most of the United States opening up and easing stay-at-home orders, our demand continues to be strong. Demand is simply outpacing our supply.”
He told analysts that July’s net sales were up more than 60% year-over-year; however, inventory levels have started coming back up.
“As we continue to expand our product offering, we have begun to diversify our supply chain geographically with new partnerships in India, Korea and Mexico,” Meniane said.
“With the continued growth in our business, we also decided to accelerate the timing of our additional supply chain investments, as we strive to get closer to our customers and increase our footprint,” he stated. “As we recently announced, we will be opening a new distribution center in Grand Prairie, TX later this year. This opening will add 210,000 square feet of warehouse capacity and provide us with the ability to deliver to 61% of the country in one day.”
In July, CarParts.com also signed an amendment to its Las Vegas distribution center lease agreement, increasing the rentable space by approximately 68,000 square feet.
At the same time, the company is working on adding mechanical parts. “It’s about 10,000 new SKUs that should land sometime in Q4, and those will be launched under different brand names,” Peker said on the call. “We are working on some of that right now.
“As far as JC Whitney goes, JC Whitney is going to be our brand for performance and accessories. We have our first set of products that we already ordered, and that should be landing toward the end of this quarter or early Q4.”
RANSOMWARE ATTACK … On June 28, 2020, CarParts.com detected a ransomware attack on its network that disrupted access to some of its systems. “We immediately took steps to isolate the affected systems and contain the disruption to our information technology infrastructure, including taking some systems offline as a precautionary measure,” the company wrote in an SEC filing dated Aug. 10. “Our internal IT team subsequently restored and recovered the affected IT systems to full functionality. We engaged third-party consultants and law enforcement to investigate the incident, and we internally have found no evidence that sensitive customer data was compromised or stolen from the IT systems, although our investigation is continuing.
“We believe there has not been any current or expected future material impact to our business, results of operations or financial condition because of this ransomware attack. In order to mitigate the likelihood of similar future events, we have implemented enhanced security features and monitoring procedures.”
STOCK SALE … In related news, CarParts.com received $63.70 million in gross proceeds from a recent public offering of common stock (before underwriting discounts and commissions and offering costs). CarParts.com sold 4.90 million shares of its common stock, while a selling stockholder, Mehran Nia, sold 2.00 million shares. CarParts.com did not receive any proceeds from the sale of shares by the selling stockholder.
Nia, who has served as a CarParts.com director since May 2018, is one of the co-founders of the company and was its president and CEO. — Marc Vincent
ASC Airtex Plant In North Canton, Ohio To Close
ASC Airtex plans to permanently close its plant in North Canton, OH, resulting in the loss of an estimated 161 jobs, according to a Worker Adjustment & Retraining Notification Act (WARN Act) filing with the State of Ohio dated Aug. 4.
The mass layoff, which will be on a rolling basis, is scheduled for Oct. 1-14 but is subject to change or delay up to and including Dec. 31. The affected employees are not part of a union. Business currently being served at North Canton is to be moved to other locations, according to the WARN Act notification.
ASC Airtex is part of the First Brands Group (formerly the Trico Group).
The Greensheet reached out to a representative of First Brands for comment but received no response prior to publication.
B’laster Nearly Doubles Revenue With AC Avalanche Acquisition
B’laster Corp. has acquired the AC Avalanche division of TSI Products. Financial terms of the transaction were not disclosed. Based in Arlington, TX, AC Avalanche manufactures recharging systems for automotive air conditioners.
According to B’laster, the transaction nearly doubles its revenue and strengthens its portfolio of automotive aftermarket brands.
The AC Avalanche product lines include Avalanche Gold, Black Diamond Premium and A/C Avalanche automotive refrigerants, as well as recharging hoses and adapters. These products are available at various distributors, including AutoZone, NAPA Auto Parts, O’Reilly Auto Parts and Walmart.
The existing B’laster portfolio includes B’laster-branded penetrants, lubricants and greases, as well as Metal Rescue rust remover.
AC Avalanche will remain in Arlington, while B’laster will continue to operate out of the corporate headquarters in Valley View, OH. The company plans to add employees in Valley View to support both divisions.
Motorcar Parts Reports 12.6% Sales Decrease,
Able To Pare Down Its Net Loss
Motorcar Parts of America (MPA) reported $95.36 million in net sales for the fiscal first quarter ended June 30, 2020 — down 12.6% compared to the same period a year ago. The $13.80-million decrease came largely from the negative effects of the coronavirus pandemic. This was partially offset by the expansion of aftermarket brake-related product offerings introduced earlier in 2020, which contributed $2.93 million in net sales during the three months ended June 30, 2020.
After a sharp decline in sales to start the quarter, demand exceeded management’s expectations. “Our sales in April were down by approximately 50% on a year-over-year basis,” Selwyn Joffe, chairman, president and CEO, told analysts on MPA’s Aug. 10 earnings call. “We were encouraged, however, that drivers started to return to the roads in May, and sales for non-discretionary automotive parts were up strongly in June, continuing into July, preliminarily indicating a V-curve recovery.”
Joffe said May sales were down roughly 9% year-over-year, but June sales rose 25%.
By product category ….
• Rotating electrical products accounted for 72% of the company’s sales — down from 75% last year.
• Wheel hub products accounted for 18% of sales — unchanged year-over-year.
• Brake-related products accounted for 9% of sales — up from 4% last year.
• Other products accounted for 1% of sales — down from 3% last year.
MPA’s gross profit declined 23.9% to $13.39 million, while gross margin decreased from 16.1% to 14.0% on a year-over-year basis. Gross profit was negatively impacted by $1.84 million (or 1.9%) by pandemic-related costs alone. Additionally, there were higher transition expenses in connection with the expansion of MPA’s operations in Mexico, higher amortization of core premiums paid to customers related to new business and higher return accruals related to new business.
Nonetheless, the company reported a narrower net loss of $3.01 million compared to a loss of $6.15 million a year ago, and EBITDA increased from $671,000 to $2.93 million.
MISCELLANEOUS … Other items of note from MPA’s quarterly report and conference call with members of the financial community …
• MPA has begun selling its automotive aftermarket hard parts program into Mexico through its new EPICQ subsidiary. “While this is currently a small percentage of our business, we’re excited by the opportunities in this market and look to expand our sales in Mexico,” Joffe said on the call.
• Joffe told analysts that the company remains “essentially on target” to complete its strategic buildout in Mexico by the end of September.
• He said he expects MPA’s financial performance to benefit from the company’s new caliper production facility, as well as the relocation of additional product lines from higher-cost domestic production to operations in Mexico.
• Joffe said MPA’s facility expansion in Malaysia is complete and ramping up, which will allow the company to increase capacity and productivity for existing product lines as well as reduce its dependence on outsourcing certain products and components.
• He said MPA is making good progress on the integration of Dixie Electric and the roll out of its heavy-duty program.
• Despite favorable sales trends, the company has elected to not provide annual guidance at this time. — Marc Vincent
Changes Announced Within Akebono’s Aftermarket Sales Force
Akebono Brake Corp. has appointed Mike Eldard as national sales manager of the aftermarket. In this role, he leads all regional and district sales managers and sales agencies in the United States, Canada, Mexico and Latin America.
Eldard brings 18 years of Akebono sales experience to his new position, including time as the Pacific Northwest district and western region sales manager, as well as account manager for the Genuine Parts Company/NAPA.
He maintains his GPC/NAPA responsibilities.
Meanwhile, Mike Dunn has been elevated to fill the western region sales manager position vacated by Eldard. Dunn’s responsibilities now include all western and South-Central states. He will continue to manage all of his current customer accounts in the Pacific Northwest and Northern California territory where he resides.
Dunn joined Akebono last year from Federal-Mogul Motorparts, where he was a division sales manager.
Additionally, Brian Horvath’s national group sales manager duties will expand to support select regional customers, and Dom Ramirez, eastern region district sales manager, will continue to be based in Chicago and cover his Midwest territory as well as oversee key Akebono customers in Mexico and Latin America.
The remainder of the company’s aftermarket field sales force includes …
• Lane Zemba, based in Los Angeles, responsible for Southern California, Nevada and Arizona.
• Michael Bruening, based in Texas, responsible for all South-Central states.
• Mike Spain, based in North Carolina, covering all Southeastern states.
• Bill Perlmutter, based in Connecticut, covering Pennsylvania, New York and all Northeastern states.
A breakdown of territory responsibility and contact information for each can be found on at akebonobrakes.com/aftermarket.
Delphi’s Sales To Independent Aftermarket Customers Fell 42.1% In Q2
Delphi Technologies reported $128 million in total aftermarket revenue for the second quarter of 2020 — a decrease of $86 million, or 40.2%, compared to the same period a year ago. Delphi defines “aftermarket” as products and services sold to independent aftermarket customers as well as OES customers. Sales to independent aftermarket customers declined 42.1% to $92 million, and sales to OES customers decreased 34.5% to $36 million.
Total aftermarket gross margin fell from 21.5% to 15.6% on a year-over-year basis, while total operating income dropped from $20 million a year ago to $4 million for the three months ended June 30, 2020.
DMA Sales Adds Product Manager
DMA Sales LLC has added Tommy Rutherford as a product manager responsible for the company’s automotive ride control suspension program, including shocks, bare struts, complete strut assemblies and coil springs. Rutherford is responsible for the management and oversight of all aspects involving the product lines assigned under him. He also provides product support for several of DMA’s strategic and specialty engineered product customers.
Rutherford joins DMA from CRP Industries/Atlantic Automotive Engineering, where he was director of research and development for hydraulic programs.
Edelbrock Adds Two Product Managers
Edelbrock LLC has appointed William Philippin as its product manager for crate engines. Philippin’s duties include product planning and execution throughout the crate engine lifecycle, including gathering and prioritizing product and customer requirements; defining the crate engine product vision; and working with engineering, sales, marketing and support on revenue goals and customer satisfaction.
He worked at General Motors for the last nine years, including time as the performance parts crate engine product manager.
Edelbrock also has added David Page as its product manager for forced induction products. Page is tasked with coordinating efforts to grow Edelbrock’s presence and brand in the forced induction market. This includes casting a vision for the product line, identifying opportunities for new products and representing the group at trade shows.
Page brings more than three decades of hands-on and professional experience in the performance aftermarket. He spent the last 15 years with the COMP Performance Group, including time as its technical training director.
Lubrication Specialties Inc. Forms New Division
Lubrication Specialties Inc. (LSI) has announced a new division, LSI Chemical, as well as the appointment of Todd Cawley to lead this new entity as president.
According to the company, its goal for LSI Chemical is to become the premier international oil and fuel additive leader focused on nano additive technology and the development of innovative base oils through product development, partnerships and acquisition opportunities. The market focus will be additives and base oils for racing, engine, marine and industrial oils. For the diesel additive market, the focus will be on products for large trucking fleets, marine, mines and fuel jobbers around the world.
Cawley joined Mt. Gilead, OH-based LSI earlier this year as vice president of global sales, tasked with leading the company’s effort to capture market share in the lubricant and additive market abroad. Now, Cawley leads LSI Chemical, which will operate as a standalone business unit focused on developing products for new markets.
Cawley has extensive experience in chemicals, fuel and lubricant additives sales. This includes roughly 20 years with the Sinclair Oil Corp., where he was responsible for the development of new fuel and lubricant products and markets, as well as two years as the director of sales, global business development and blended lubes manager for the American Refining Group. Cawley’s background also includes time as vice president of global sales and marketing for Nanotech Industrial Solutions.
AC Hydraulic Picks Business Development Manager For North America Debut
The Danish lifting equipment company AC Hydraulic has announced Patrick Dubois as its business development manager for the U.S. and Canadian markets.
This marks AC Hydraulic’s official entry into the North American market.
Dubois was national director of business development for Groupe ISN Canada. His background includes time as Eastern Canada sales manager for the tools and equipment division of Vast-Auto Distribution and as a national sales manager with Bosch Automotive Service Solutions.
ACC Announces New Leadership Team, Board Members
Jim Merle of Babcox Media is now president of the Automotive Communications Council (ACC). He is joined by Jennifer Holland of ASE as vice president and Georgianne Dickey of NTN Bearing Corp. as immediate past president, rounding out ACC’s 2020-’21 leadership team.
New members include …
• Peter Bulmer of Turnkey Media.
• Shawn Collins of the Extend Group.
• Heather King of OEConnection.
• John McGrane of Sensata.
IMR Debuts Weekly Report Tracking Vehicle Maintenance, Repair Trends
IMR Inc. has launched a tracking study designed to distill the latest trends in automotive maintenance and repair on a weekly basis.
The IMR Weekly Vehicle Maintenance Monitor seeks to document trends in performed and delayed maintenance and repair, as well as other vehicle maintainer behaviors, attitudes and sentiments. The goal of the study is to help companies understand marketplace movements, give context to sales performance and provide input for tactical or strategic actions.
According to IMR, subscribers to this new study will get information and trends — both nationally and regionally — covering such topics as …
• Maintainers choosing DIY versus DIFM.
• The channels from which consumers are purchasing.
• Consumers driving more or less than the previous week.
• Whether consumers are delaying maintenance.
• Consumer fear of having their vehicle repaired at a shop.
• Impressions on the pandemic and the nation’s economic performance.
The automotive market research firm also offers additional analytical and data to accompany its new Weekly Vehicle Maintenance Monitor, including …
• The ability to add custom/proprietary survey questions to the Weekly Vehicle Maintenance Monitor to track over time or for one-time use.
• Custom data aggregations and custom insight reports.
• Insights on parts and service trends.
For more information, visit AutomotiveResearch.com.
Goodyear Reports 7.2% Dip In U.S. Retail Services, Service-Related Sales
At a time when the company sold 45% fewer tires and built 75% fewer tires, The Goodyear Tire & Rubber Company’s U.S. retail services and service-related sales declined only 7.2% in the second quarter of 2020. The business consists of automotive services performed for customers through Goodyear-owned retail channels and includes service-related products.
Constraints placed upon U.S. motorists by coronavirus-related stay-at-home orders were the main catalyst for the decrease in retail services and service-related sales. However, new sales and service offerings saw accelerated adoption rates during the quarter, as the pandemic led consumers to shift their spending online and away from traditional brick-and-mortar locations.
Chairman, President and CEO Rich Kramer told analysts on Goodyear’s July 31 earnings call that the momentum behind this digital transition has continued even as economies have begun to reopen.
“These dynamics helped drive volume growth of approximately 15% through our e-commerce site and 150% through our mobile installation business,” Kramer said. “Consumers are also responding favorably to our zero-contact service offering at our U.S. retail stores, with sales improving throughout the quarter and profitability increasing in June relative to the prior year.”
“We’re investing to support the robust growth we’re seeing in e-commerce and mobile installation business,” he stated. “These investments will allow us to expand our mobile installation capabilities into new markets by the end of the year and lay the groundwork for further expansion in 2021.”
In related news, Goodyear’s U.S. consumer replacement tire business took a hit during the quarter when Walmart opted to temporarily close its auto care centers.
“They’ve only opened now about a third of those, so we were disproportionally affected by Walmart temporarily closing those auto service centers,” Kramer said on the call. “[Until they] open up — and they will be opening up, and they will thrive again — we’re feeling a little bit of the negative of that right now.”
Across other distribution channels, Goodyear reports that its U.S. consumer replacement shipments outpaced the industry and that retail sell-out improved steadily over the last eight weeks of the quarter. Nonetheless, industry shipments were down 70% year-over-year due, in part, to inventory destocking by distributors.
Advance Auto Parts Launches New Version
Of Its MotoLogic Technology
Advance Auto Parts has unveiled a new version of its proprietary MotoLogic Repair & Diagnostics tool. MotoLogic allows technicians to search for repair information by keyword, through traditional OEM table of contents and via an expanded set of vehicle subsystem menus. New features include …
• Mobile-friendly architecture that allows users to access MotoLogic via any device with an internet connection.
• A new license plate lookup feature that connects to repair information, as well as active and historic recalls.
• Coverage of OEM information that maintains hyperlinks within articles and wiring diagrams to provide one-click access to additional information.
• Late-model repair and diagnostics data with coverage for 2020-model-year vehicles from many major manufacturers.
MotoLogic also now includes MotoVisuals, a proprietary database of more than 400 vehicle repair animations. MotoVisuals is now available to all existing and new MotoLogic subscribers at no additional costs.
MotoLogic is offered by Advance Auto Parts, Carquest U.S. and Canada, and Autopart International.
Over 900 Instructors Participated In ASE Virtual Training Conference
According to event organizers, more than 900 instructors participated in one or more sessions during ASE’s Virtual Instructor Conference early this month — up 150% when compared to last year’s record-setting attendance. Sessions covered a wide range of topics, including macro trends in education, the coronavirus pandemic’s impact on program accreditation, developing students’ employability skills and how to engage distance learners.
The event hosts high school and post-secondary instructors from automotive, truck and collision repair programs across the United States.
ASE reports that educators who participated in the conference received a total of 5,700 hours of professional development specifically geared toward training programs coping with the effects of the pandemic. On average, each instructor participated in more than six hours of virtual training during the two days of the conference, all of which are applicable to the 20-hour annual training requirement.
Instructors who were not able to attend the live conference can view recorded sessions, download handouts and receive certificates of completion by visiting the “Events” section of the ASE Education Foundation website.
Painters Supply Expands Into Mid-Atlantic
An affiliate of the Painters Supply & Equipment Company (Taylor, MI) has acquired Baltimore-based Nyquist Inc. Financial terms of the transaction were not disclosed. Nyquist has five branch locations that service customers across Maryland, Delaware, Virginia, North Carolina and Pennsylvania.
Painters Supply, which is a PPG Platinum Distributor, has 50 branch locations and two distribution centers located in Michigan, Georgia, Illinois, Indiana, Maryland, Missouri, Ohio, Pennsylvania and Virginia. The company services more than 8,000 collision repair shops, auto dealerships, fleet operators, and various commercial, industrial and aerospace businesses.
AutoNation To Exit Aftermarket Collision Parts Biz.
AutoNation Inc. on Aug. 19 announced plans to close its aftermarket collision parts business, AutoNation Collision Parts, by year’s end in an effort to reduce costs and increase efficiencies. The company will continue its PrecisionParts business, which includes the sale of branded maintenance and repair parts.
According to the Fort Lauderdale, FL-based car dealer, AutoNation Collision Parts represented less than 1% of the company’s parts and service gross profit in the first half of 2020.
Meritor’s Aftermarket/Industrial Sales Decreased 28%
The Aftermarket & Industrial segment of Meritor Inc. generated $203 million in total sales for the fiscal third quarter ended June 30, 2020 — a decrease of 28% compared to the same period in 2019. While Meritor’s aftermarket facilities continued to operate during the quarter, sales were lower in comparison to last year because of changes in customer demand and the impact from the termination of the WABCO distribution arrangement, which reduced sales by $28 million.
U.S. Aftermarket & Industrial sales declined 35.2% to $149 million.
Aftermarket & Industrial adjusted EBITDA fell 38% to $31 million, while segment-adjusted EBITDA margin decreased from 17.7% to 15.3% on a year-over-year basis. According to Meritor, the decreases were driven primarily by lower volume, partially offset by cost reductions.
Enhancements Made To MeritorPartsXpress.com
Meritor Inc. has augmented its aftermarket service tool, MeritorPartsXpress.com, with real-time product inventory messaging regarding availability and delivery specifications, such as “get it by” date and “want it by” date. Additionally, the site now provides detailed in-stock and out-of-stock messages, as well as a price and availability lookup that’s compatible with copy-and-paste functionality for quick part number searches.
Primary responsibilities: Lead nationwide sales team members to achieve sales targets. Communication and team management skills are essential for this position. Should be able to … (more) … Click here to find out more.
Talented Sales Manager to develop product and account strategies to expand distribution within the aftermarket retailers, heavy-duty truck, online retailers, industrial aftermarket, industrial OE, motorcycle aftermarket and marine. … (more) … Click here to find out more.
Job Mart: Matthew Kenefick
Northwood University Aftermarket program graduate seeking a sales role within the Automotive Aftermarket. A top-performing team member with extensive experience combining sales, marketing and business development expertise to deliver revenue growth in highly competitive business markets. Results-oriented with the ability to develop strong client relationships quickly. Sales responsibilities have been in Traditional WD, Heavy Duty, E-Commerce, National accounts, Fleets, Import, and Performance markets. Areas of expertise are in Fluid Power, Power Transmission, Lighting, Filtration and Performance products. Matthewkenefick@outlook.com | 678-480-5115 | linkedin.com/in/matthew-kenefick-0a78515
Job Mart: Michael Cummings
Senior Technical Product Manager seeking employment with an automotive aftermarket company looking to start a “New Caliper” or boost a Remanufacturing Caliper program. I could also step in as your buyer of brake calipers for either aftermarket or introducing an OEM remanufacturing program. Please reach out via email at firstname.lastname@example.org. You can find him on LinkedIn at linkedin.com/in/michael-cummings-26256214.
People Watching 8/24/20
• Jordan Hettinga has joined 4 Wheel Parts as director of category management. Hettinga previously was senior director and general manager for motor parts and accessories at eBay, where he was the vertical lead for eBay Motors Parts & Accessories. Prior to eBay, Hettinga worked for Snap-on Business Solutions.
• FleetPride Inc. has appointed James Winton as its director of merchandising. Winton joined the company last year as a category manager. He is the former vice president of sales and marketing for Casite, as well as a former vice president of training and consumer support at Spectrum Brands.
• LKQ Corp. on Aug. 12 announced the appointment of Jake Welch of ValueAct Capital to its board of directors, effective immediately. ValueAct owns roughly 7% of LKQ’s outstanding common stock, making it one of LKQ’s largest stockholders.
• Former Remy Inc. President and CEO Jay Pittas has joined the board of directors at the Tecumseh Products Company, a commercial refrigeration compressor and condensing unit systems company. Pittas also served on the UCI Holdings board of directors.
• AkzoNobel has appointed John Griffin as the regional commercial director for automotive and specialty coatings in the Americas. Griffin has held various sales, management and executive roles for AkzoNobel’s global and regional automotive, aerospace, packaging, yacht and film coatings units. Most recently, he led the company’s aerospace and film coatings segments. In addition to his new role, Griffin continues to be AkzoNobel’s regional director for North America.
• Pietro Berardi — ex- CEO of Magneti Marelli Aftermarket and former vice president of aftersales for Nissan North America — has been elected to the U.S. Tire Manufacturers Association board of directors. Berardi currently leads Pirelli’s North American activities.
News Briefs 8/24/20
• Online retailer BuyBrakes.com added Akebono brake pads to its catalog.
• Keystone Automotive Operations has added products from A.R.E. to its truck and off-road category. A.R.E. is a manufacturer of truck caps and hard tonneau covers.
• Worksport (formerly Franchise Holdings International) has launched a new website, Worksport.com, that allows customers to place and manage orders, track shipments and pay account balances.
• Monotune, a provider of race engines and aftermarket performance parts, is seeking a potential sale or investment partner for its U.K. business, the company announced Aug. 17. Monotune has retained KPMG to help in its search.
• Les Schwab Tire Centers (Bend, OR), which has more than 480 locations across the United States, has joined the CarAdvise network. Using CarAdvise online marketplace for vehicle maintenance and repair, motorists can schedule appointments with any of Les Schwab’s tire shops, as well as approve and pay for services.
• Strickland Brothers 10 Minute Oil Change has announced a franchise development deal with Shane and Shannon Nelson to open five shops in the Katy, TX area, which is near Houston.
• ASE has upgraded its myASE.com dashboard with a number of new features, including a new shopping cart, lower registration fee, and new video tutorials and FAQs.
• Cragar now offers the ability to order custom offsets for some of its most popular wheels via a new Custom Offset Shop.
• Meritor Inc. reports that its Plainfield, IN manufacturing facility has produced its 100 millionth brake shoe.
• Vent Tabs has joined the OptiCat Network.
Financial Briefs 8/24/20
• Garrett Motion Inc. reported $70 million in total aftermarket sales for the second quarter of 2020 — a decrease of $28 million, or 28.6%, compared to the same period in 2019. U.S. aftermarket sales declined 34.7% to $32 million.
• Illinois Tool Works (ITW) reported a 14.4% decline in organic revenue for its automotive aftermarket businesses in the second quarter of 2020, mainly because of decreases in the car care and body repair businesses in North America and the additives businesses in Europe. According to management, retail sales improved “in a meaningful way” as stores opened back up as the quarter progressed.
• The Powered Vehicle segment of Fox Factory Holding Corp. reported $98.52 million in product sales for the second quarter of 2020 — a decrease of 14.5%, primarily attributable to the impacts of the coronavirus pandemic, including production shutdowns at the business’ OEM customers. This was partially offset by sales from SCA Performance Holdings, which Fox acquired earlier this year, as well as growth in aftermarket products.
• For the second quarter of 2020, Horizon Global Corp.’s net sales declined 37.5% to $120.49 million, and its net loss widened from $8.14 million a year ago to a loss of $16.72 million for the three months ended June 30, 2020. The company’s Horizon Americas unit reported $22.28 million in aftermarket sales (down 22.7%), $22.83 million in retail sales (down 31.2%) and $13.37 million in e-commerce sales (down 7.6%). The coronavirus pandemic was the principal catalyst from the downturn in sales. However, according to management, Horizon Americas’ sales rebounded in May and June as economies began to reopen.
• The Florida Pneumatic division of P&F Industries reported $2.93 million in automotive revenue for the second quarter of 2020 — a decrease of $831,000 (or 22.1%) when compared to the same period a year ago. Management pegged the decline to the adverse impacts brought about by the coronavirus pandemic and the loss “of a large domestic distributor/customer.” However, P&F Chairman, President and CEO Richard Horowitz noted that the company has seen some improvement. “Our retail and automotive orders have begun to rebound and have increased slightly from our historic lows reached during the height of the pandemic,” Horowitz said.
• Gates Industrial Corp. reported nearly flat core automotive replacement channel growth on a year-over-year basis in June. For the entire second quarter, sales improved sequentially after bottoming in April.
Event & Trade Show Briefs 8/24/20
• The Automotive Aftermarket Charitable Foundation (AACF) has canceled this year’s Bob Schoeberl Memorial Golf Tournament in Las Vegas. Organizers are considering replacing the in-person tournament with a virtual one. Funds from the event are used to help auto care industry people who are facing serious financial difficulties.
• For 2020, AWDA has lifted its policy that participating AWDA Conference vendors must have reserved an AAPEX both, and pricing for all vendors is now $2,600. The AWDA Virtual Experience is scheduled for Nov. 16-19. Click here for more information.
• The AASA Technology Council will host a webinar Sept. 1 featuring Eric Cole, founder and CEO of Secure Anchor Consulting, who will discuss how the coronavirus pandemic and new technology have accelerated efforts by hackers to penetrate corporate firewalls and access proprietary information. Click here for more information on Cole’s upcoming presentation.
• AASA has moved The Mobility Innovation Conference from late August to Oct. 20-22 “after reviewing potential conflicts with other industry events.” The virtual conference will cover ADAS, cybersecurity, telematics, sensors, diagnostics, emerging technology and more. Click here for registration information.