San Antonio David Roberts, Managing Director FOCUS LLC 1133 20 - PowerPoint PPT Presentation

Collision ¡Repair: ¡Private ¡Equity, ¡ Consolida7on, ¡Implica7ons ¡ Presentation for: San ¡Antonio ¡ David Roberts, Managing Director FOCUS LLC 1133 20 th Street NW May ¡2015 ¡ Suite 200 Washington, DC 20036

Disclaimer § This presentation was prepared by FOCUS Investment Banking LLC exclusively for the benefit and internal use of the Company, as herein defined, in order to discuss, on a preliminary basis, the feasibility of a possible transaction or transactions. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by FOCUS. The presentation is proprietary to FOCUS and may not be disclosed to any third party, other than the Company’s advisors, or used for any other purpose without the prior written consent of FOCUS. § The information in this presentation is based upon management forecasts and reflects prevailing conditions and our views as of this date, which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock or business of the Company. Even when this presentation contains a kind of appraisal, it should be considered preliminary, suitable only for the purpose described herein and not be disclosed or otherwise used without the prior written consent of FOCUS. § Securities transactions conducted by FOCUS Securities, LLC, an affiliated company, registered Broker Dealer and member FINRA/SIPC.

Who We Are • Middle market investment bank since 1982 • Specializing in transactions between $5 and $300 million • Serving sellers, buyers, and investors • Delivering a balanced mix of sell side and buy side M&A and corporate finance • Team includes 24 bankers, 19 senior advisors, three research analysts, five support—total staff of 51 • Offices—Washington DC HQ, Atlanta, and Los Angeles • Securities transactions conducted by FOCUS Securities LLC, an affiliated company, registered broker/dealer, and member FINRA/SIPC 3

David Roberts • David Roberts and his partner, Matthew Ohrnstein, created the idea, the business plan and raised the first $120 million of capital for Caliber Collision beginning in 1995. Originally an attorney, largest franchisee of Chuck E. Cheese’s, securities analyst and money manager and investment banker. • Investment banker for 11 years with FOCUS. • Lead a team of seven bankers focused on Automotive Services, leading with collision repairers but also mechanical providers, quick- lube, paint jobbers, parts distributors, equipment and allied firms • Graduate of Duke, MBA and JD from University of California, Berkeley • Domiciled in SF Bay Area 4

Agenda • Consolidation • Private Equity • Implications Focus ¡Investment ¡Banking ¡LLC ¡ 5

News Flash from 1995! 6

Collision Repair Ecosystem • External – Uncertainty of the current macroeconomic conditions • Interest rates, China’s economy, Ebola – US economy recovery uneven • Consumers have relatively less money to spend than investors – Technology is accelerating change in vehicles, insurance, marketing, communications, processes – Globalization of vendors, manufacturers, technology – Private equity investment in every sector of industry 7

Collision Repair Ecosystem • Industry Conditions – Continued declines in accident frequency and number of repairable claims – Average severity growing less than inflation – Fleet is older and need replacing which increases total losses – DRP share of repairs is increasing – Changes in marketing relationships with insurance companies – Increasing complexity in repairs, increasing investment required – Increasing management skills required 8

Concentration Among Insurers ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡2013 ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡2009 ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡2005 ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡1999 ¡ ¡% ¡change ¡ Source: ¡ ¡Na7onal ¡Assn. ¡of ¡Insurance ¡Commissioners; ¡SNL ¡ 9

Auto Physical Damage Market • Largest insurers gain market share • Top 5 control more than 50% • Changes from 1999 to 2013 – The top 10 insurance companies increased combined market share by 10 points – Top 67% of market has 6 fewer insurers – State Farm and Allstate, while down slightly during this time, still command over 28% of the market – BUT GEICO has now surpassed Allstate’s market share – Progressive has more than tripled its share Focus ¡Investment ¡Banking ¡LLC ¡ 10

$31 Billion Industry Today • Consolidators • 4 Multi Location Networks (MLNs) – CARSTAR, FixAuto, MAACO, – ABRA, Caliber, Gerber, ABRA franchisees Service King • Rest of industry • Other MSOs – 22,000 independent non- – 48 MSOs >$20 mm dealer shops – 73 MSOs > $10-20 mm – 90-120 MSOs - $5-10 mm • Dealers – 22 Multishop Dealers (MSDs)> $20 million – 61 Multishop dealers - $10-20 mm – 5,706 single dealer shops 11

34,000 Total Shops 12

5,000 Important Shops 13

1,475 MSD and MSO Shops 14

930 Consolidator Shops 15

Industry is Contracting • 52,000 ¡shops ¡have ¡disappeared ¡since ¡1980 ¡ • 19,000 ¡shops ¡have ¡disappeared ¡since ¡1998 ¡ • There ¡are ¡fewer ¡than ¡34,000 ¡shops ¡today ¡ • Another ¡20,000 ¡may ¡disappear ¡by ¡2030 ¡ • Shops ¡owners ¡are ¡uncertain ¡and ¡afraid ¡ • How ¡many ¡shops ¡does ¡industry ¡really ¡need? ¡ 16

Best Shops Today • Larger • More productive • Better managers • Better systems • Higher margins • Organized around systems • Part of an MSO or Consolidator 17

Consolidation • Aggressive acquisition and organic growth by the consolidators and MSOs • Larger MSOs improving execution on decreased cycle time, average cost of repair, LOR, loss adjustment expense (LAE) and customer satisfaction/KPI scores • MSOs are differentiating themselves through initiatives such as self- management, electronic auditing, call centers, capacity utilization management, and geographic coverage • Aggressive MSO selling, marketing and branding of their competitive value propositions and performance 18

Accelerating Acquisitions • Large acquisitions completed in 2014 (all revenues are estimated) – ABRA • Wilburn, CCA – 38 shops, $95+ million in revenue • True Quality – 13 shops, $25+ million in revenue • Collision Center of America – 22 shops, $45+ million in revenue – Caliber • Haddocks – 5 shops, $26+ million in revenue • Pohanka, Craftsman – 25 shops, $90+ million in revenue – Service King • Sterling – 62 shops, $215+ million in revenue • Marco’s – 7 shops, $27+ million in revenue • Car West – 6 shops, $45+ million in revenue • Kirmac – 12 shops, $34+ million in revenue – Gerber • Collision Revision -24 shops, $50+ million in revenue • Collex – 22 shops, $46+ million in revenue • Champs – 7 shops, $37+ million in revenue • $800 million of revenue – 2.5% of entire industry! 19

Consolidator Growth 2013-2014 Year Year Year Year 2013 2013 2014 2014 Consolidator Consolidator 2013 % 2013 % Year End Year End 2014 % 2014 % End End End End Additional Additional Additional Additional (US only Shops) ¡ growth ¡ 2014 ¡ growth ¡ (US only Shops) growth 2014 growth 2012 ¡ 2013 ¡ Shops ¡ shops ¡ 2012 2013 Shops shops ABRA ¡ ABRA 81 ¡ 132 ¡ 51 ¡ 63% ¡ 205 ¡ 73 ¡ 55% ¡ 63% 55% Boyd ¡ Boyd 180 ¡ 220 ¡ 40 ¡ 22% ¡ 282 ¡ 62 ¡ 28% ¡ 22% 28% Caliber ¡ Caliber 112 ¡ 158 ¡ 46 ¡ 41% ¡ 232 ¡ 74 ¡ 47% ¡ 41% 47% Service King ¡ 63 ¡ 104 ¡ Service King 41 ¡ 65% ¡ 211 ¡ 107 ¡ 103% ¡ 65% 103% Total ¡ Total 436 ¡ 614 ¡ 178 ¡ 41% ¡ 930 ¡ 316 ¡ 51% ¡ 41% 51% 20

Markets are Rapidly Consolidating • Consolidators are focused on covering top 125 markets in US • Market by market – Unconsolidated markets • New York • Boston – Consolidating markets • Chicago, IL • Charlotte, NC – Consolidated markets • Denver, CO • Phoenix, AZ 21

Denver Market • $220-250 million: Denver MSA Collision Repair Volume – $120 million+: Current capacity of these 33 Consolidator shops and one remaining smaller 4 shop MSO – 100% of Denver MSA is within 20 minutes drive time of these 37 MSO shops 22

260 Shops in Denver Market Source: ¡IDSI ¡ 23

Denver Market 13 ¡Caliber ¡shops ¡ Source: ¡IDSI ¡ 24

Denver Market 9 ¡ABRA ¡shops ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡2 ¡Service ¡King ¡Shops ¡ Source: ¡IDSI ¡ 25

Denver Market 9 ¡Gerber ¡shops ¡4 ¡shops ¡in ¡last ¡remaining ¡MSO ¡ ¡ ¡ ¡ ¡ 37 ¡total ¡MSO ¡shops ¡ ¡ ¡ Source: ¡IDSI ¡ 26