MaxiPARTS buys IP and Förch Brisbane for $28.9mn, expects EPS growth in FY24

SYDNEY, AUSTRALIA: MaxiPARTS Limited (ASX: MXI), a leading distributor of truck and trailer parts in Australia, has announced two major acquisitions that will boost its scale and profitability.
The company has agreed to buy Nineteen Group Pty Ltd and its subsidiary Independant Parts Pty Ltd (IP), a large commercial truck and trailer parts distributor in Western Australia, for $27.0 million in cash, a statement noted.
The company has also agreed to buy Förch Brisbane, a branch of Förch Australia, a joint venture between MaxiPARTS and Förch GmbH, a German supplier of workshop consumables, for $1.9 million.

The acquisitions are expected to be completed by the end of CY2023 and will be funded by a $17.2 million institutional placement, existing cash and current debt facility which has been extended.
The acquisitions are expected to increase the earnings per share (EPS) of MaxiPARTS by mid single digit in FY24 on an annualised basis excluding synergies.

IP has over 450 customers and four regional retail centres in Perth, Port Hedland, Geraldton and Bunbury. It offers a range of products such as transmissions and differentials, drivelines, brake parts, trailer parts, general truck parts and accessories.
IP has a unique and scalable business model that involves embedding inventory and employees on customer sites, generating reliable and recurring revenue.
IP had a revenue of $45.4 million and an EBITDA of $3.4 million (before applying AASB 16) in FY23.

The IP acquisition will complement MaxiPARTS existing operations in Western Australia, adding three more stores and multiple embedded operations with leading national logistics and mining customers in key mining regions.
The acquisition will also provide an opportunity for MaxiPARTS to roll out the embedded platform on a national scale.
The acquisition is expected to generate cost and revenue synergies of around $400,000 annually, through supply chain efficiencies, site rationalisation and customer base and product portfolio expansion.

The Förch acquisition will strengthen the Förch Australian distribution model and establish a third warehouse facility in Brisbane, enabling faster growth with minimal investment required from MaxiPARTS.

MaxiPARTS also reaffirmed its full year guidance for the existing business, which remains in line with the outlook communicated in August 2023.

The company reported strong growth in Q1 FY24, with underlying revenue growing in the mid-teens year on year, Förch Australia contributing $3.35 million of revenue and EBITDA growing to $5.7 million (post-AASB 16).