RPM Automotive Group Ltd (ASX:RPM) recorded an 86% uptake in revenue over the December quarter as it expanded into the caravan and camper trailer sectors with investors responding positively, driving shares as much as 20.4% higher.
The ASX-lister, which operates automotive businesses across Australia’s east coast, brought in $20.3 million over the second quarter of FY22 — up from the $10.9 million counted in the previous corresponding period (PCP).
It means RPM’s year-to-date revenue is up 74% on the PCP to $35.5 million, while gross profit for the quarter totalled $7.5 million — more than double the second quarter metrics in FY21.
RPM’s bolstered financials come as the eastern states emerged from prolonged lockdowns and commuters took to the roads for the holidays.
The company enters 2022 with a bolstered executive team, having made a series of key appointments in the December quarter.
This striong quarterly report has seen shares as much as 20.4% higher intraday to $0.325.
What lies ahead?
Commenting on the outlook for the group’s Repairs & Roadside, Performance & Accessories, Wheels & Tyres and Motorsport divisions, RPM CEO Clive Finkelstein said: "With lockdowns now hopefully well behind us, a resumption of the motor racing calendar, and a significantly strengthened management team to match our strong growth profile, we are looking forward to delivering further growth in our businesses.
“We are well funded to support our acquisition growth strategy, and we will continue to position ourselves to capitalise on increased demand for automotive aftermarket products and services.
“We will continue to grow RPM into a leading Australian business operating well-known brands across the transport and automotive aftermarket sectors.”
December quarter financials
The calendar year’s final quarter saw RPM record double-digit growth across all four of its divisions.
Earnings were also strong, with group earnings before interest, taxes depreciation and amortisation (EBIDTA) after head office costs coming in at $2.2 million, representing a 174% jump on the PCP.
Financial breakdown across RPM’s four key divisions.
Speaking to the December quarter revenue, Finkelstein said: “As our two biggest markets, Sydney and Melbourne, emerged from extended periods of lockdown, the demand for our services increased, especially across our Repairs and Roadside division that increased sales by 183% on the prior year.
“Our Performance and Accessories division continues to grow and exceed expectations, where turnover has increased by 78% on the same period last year.
“Our Wheels and Tyres division returned excellent results mainly attributed to the improved gross margin as a result of our forward-thinking purchasing strategy.
“Our Motorsport division recovered well with sales increasing by 66% which then flowed through to the bottom line."
Safety Dave acquisition
Beyond growing its financials, RPM spent the December quarter completing a key acquisition that expands its business into the caravan and camper trailer market.
The group acquired Victoria’s Safety Dave brand in late December for $9.5 million, with 70% of the consideration made in cash and the remainder paid out in RPM shares.
“The addition of this iconic Australian brand sees us enter an industry that has experienced strong growth of 26.7% over the last five years and will underpin our Performance and Accessories division’s growth in the near future,” Finkelstein remarked.
“This quarter also saw us expand our product offering in our wholesale division, with RPM becoming a secondary distributor of Bridgestone Passenger Car Radial and Truck and Bus Radial tyres.
“Having a tier-one brand on offer should see our customer average order increase as they can purchase more of what they need conveniently through us – the diversity means we have more on offer with no extra selling expense."
Corporate moves
FY22’s second quarter was also punctuated by changes within RPM’s core leadership team.
Finkelstein concluded: “Our executive team has been significantly strengthened with the appointment of Malcom Noriskin as chief financial officer, Jennifer Manson as group operations manager, Joe De Sensi as general manager - wholesale for Wheels & Tyres and Perry Scarfe as general manager – retail for Repairs & Roadside.
“I am confident the combined experience and knowledge of this group will play a leading role in RPM’s growth moving forward.”