This week's Tuesday Ticker takes a closer look at the replacement parts, tariff costs and ADAS technology announcements that have shaped the performance of automotive aftermarket business in recent days.
Buyback build
Martinrea International Inc., a Vaughan, Ont.-based supplier of vehicle structures, chassis systems and propulsion components, received approval on May 25 to repurchase up to 6.9 million common shares through a normal course issuer bid.
The authorization represents approximately 10% of the company's public float and remains in place until May 2027. Martinrea had already repurchased more than 2.3 million shares under its previous buyback program at an average price of approximately $10.03 per share.
Martinrea supplies components used in vehicles produced by major automakers throughout North America and Europe. The company manufactures structural assemblies, lightweight components and propulsion products that become part of vehicles eventually entering the repair market.
Following the announcement, shares closed at $11.49, up $0.06 or 0.5% from $11.43.
Dealer ground
Automotive Properties Real Estate Investment Trust, a Toronto-based owner of dealership and automotive service properties, announced the results of its annual and special meeting on May 27.
Unitholders approved all business presented at the meeting, including the election of trustees. The announcement also provided an updated snapshot of the REIT's portfolio, which includes 95 income-producing properties comprising approximately 3.5 million square feet of gross leasable area across Canada and the United States.
The properties are leased primarily to dealership groups operating sales, service and parts facilities under a range of OEM brands. Many also house fixed operations that generate a significant portion of dealership profitability.
Following the announcement, units closed at $12.20, down $0.17 or 1.4% from $12.37.
Parts pressure
AutoZone Inc., a Memphis, Tenn.-based retailer and distributor of automotive replacement parts, accessories and repair software, reported third-quarter results on May 26, with net sales rising 8.4% to US$4.8 billion.
Domestic same-store sales rose 4.1%, operating profit rose 6.6% to US$923.8 million and diluted earnings per share rose to US$38.07 from US$35.36.
In a May 26 earnings release, Phil Daniele, president and chief executive officer of AutoZone Inc., stated, “domestically, both DIY and Commercial sales grew impressively this past quarter, while our international sales, in constant currency, continued to be challenged as both Mexico and Brazil performed similarly to last quarter.”
AutoZone also repurchased 164,000 shares during the quarter at an average price of US$3,582 per share and opened 82 net new stores globally.
The company supplies repair garages, dealerships, service stations and fleet operators throughout North America. AutoZone also owns ALLDATA, a major provider of repair information, collision procedures and shop management software.
Following the earnings release, shares fell 11% to US$3,035.19.
Sensor sales
Arbe Robotics Ltd., a Tel Aviv-based developer of automotive radar systems, reported first-quarter results on May 28.
Revenue rose to US$0.5 million from US$0.04 million a year earlier, while net loss narrowed to US$9.4 million from US$13.8 million. The company also raised US$18.5 million during the quarter and began selling complete radar systems in addition to chipsets.
In a May 28 earnings release, Kobi Marenko, president and co-founder of Arbe Robotics Ltd., stated, “we have already received orders for radar systems serving a range of applications. These are all important steps in our broadening from a pureplay automotive chipset company to a supplier of complete radar solutions.”
Radar sensors play an increasingly important role in advanced driver-assistance systems and automated driving technologies. Their growing use is expected to increase calibration and scanning requirements following vehicle repairs.
Following the earnings release, shares fell US$0.02, or 1.6%, to US$1.21.
Debt deal
Element Fleet Management Corp., a Toronto-based fleet management company that oversees more than one million vehicles worldwide, raised US$500 million through a private offering of 4.800% senior notes due 2029 on May 26.
Element provides vehicle acquisition, maintenance, accident management and fleet services to corporate, government and institutional customers across North America, Europe, Australia and New Zealand. Those customers represent a significant source of repair work for collision centres and other automotive service providers.
The financing is expected to support working capital requirements and other corporate needs, including the potential repayment of existing debt.
The announcement followed a strong first quarter for Element. Earlier this month, the company reported record net revenue of $324 million, up 17% from a year earlier, while adjusted diluted earnings per share rose 24% to $0.35.
Following the announcement, shares closed at $27.47, down $0.07 or 0.3% from $27.54.
