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PF Capital Asbury Automotive 092214 Final

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Chand Sooran
Chand Sooran

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Strictly Confidential September 2014 Point Frederick Capital Point Frederick Capital Management, LLC Asbury Automotive: Car Dealers Are Now Where U.S. Home Builders Were In Mid-2008 And Asbury May Be The Most Cyclically Vulnerable In The Space Chand Sooran & Anand Kalola
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran Important Information 2 This material has been prepared by Point Frederick Capital Management, LLC (the “Investment Manager” or “Point Frederick”). The information in this material is for illustration and discussion purposes only. It is not intended to be, nor should it be construed or used as, investment, tax or legal advice, any recommendation or opinion regarding the appropriateness or suitability of any investment or strategy, or an offer to sell, or a solicitation of an offer to buy, an interest in any security, including an interest in the private fund described herein (the “Fund”) or any other private fund or pool advised by the Investment Manager or any of its affiliates. This information is qualified in its entirety by the information contained in the Fund’s confidential offering documents (the “Offering Memorandum”). Any offer or solicitation o f an investment in the Fund may be made only by delivery of the Offering Memorandum to qualified investors. Prospective investors should rely solely on the Offering Memorandum in making any investment decision. The Offering Memorandum contains important information, including, among other information, a description of the Fund’s risks, investment program, fees and expenses, and should be read carefully before any investment decision is made. This material does not take into account the particular investment objectives, restrictions, or financial, legal or tax situation of any specific investor. An investment in the Fund is not suitable for all investors. No representation is made that the Investment Manager’s or the Fund’s investment process, investment objectives, goals or risk management techniques will or are likely to be achieved or successful or that the Fund or any underlying investment will make any profit or will not sustain losses. An investment in the Fund involves risk, as disclosed in the Offering Memorandum. The Investment Manager may engage in investment practices or trading strategies that may increase the r isk of investment loss and a loss of principal may occur. The risk management techniques which may be utilized by the Investment Manager cannot provide any assurance that the Fund will not be exposed to risks of significant trading losses. Any descriptions involving investment process, investment examples, statistical analysis, investment strategies or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, may be changed in the discretion of the Investment Manager and are not intended to reflect performance. Any opinions, assumptions, assessments, statements or the like (collectively, “Statements”) regarding future events or which are forward-looking, including regarding portfolio characteristics and limits, constitute only subjective views, beliefs, outlooks, estimations or intentions of the Investment Manager, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions and economic factors, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond the Investment Manager’s or the Fund’s control. Future evidence and actual results (including actual composition and investment characteristics of a portfolio) could differ materially from those set forth in, contemplated by, or underlying these Statements, which are subject to change without notice. In light of these risks and uncertainties, there can be no assurance and no representation is given that these Statements are now, or wil l prove to be accurate, or complete in any way. The Investment Manager undertakes no responsibility or obligation to revise or update such Statements. Statements expressed herein may not necessarily be shared by all personnel of the Investment Manager and its affiliates. This material is not complete, is subject to change and does not contain material information regarding the Fund, including specific information relating to an investment in the Fund and related risks factors. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified. The Investment Manager is not responsible for errors or omissions from these sources. No representation is made with respect to the accuracy, completeness or timeliness of information and the Investment Manager assumes no obligation to update or otherwise revise such information. This information is confidential, is the property of the Investment Manager, is intended only for intended recipients and their authorized agents and representatives and may not be reproduced or distributed to any other person without prior written consent.
Strictly Confidential September 2014 Point Frederick Capital INVESTMENT THESIS AND CONCLUSION
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 4 Asbury Automotive Has Had A Terrific Run But Faces A Number Of Cyclical Challenges And One Structural Risk Recommendation: We contend that Asbury Automotive Group, Inc. is a compelling short investment for its pronounced and industry-leading exposure to the peaking North American new and used car cycles, and for its growing reliance on ancillary revenue, the most profitable of which is derived from marketing financial transactions to its customers on behalf of third party lenders and insurers. Industry Challenges Abound • Autos have made full V-shaped recovery from the post-2008 trough, erasing any pent-up demand for cars • US auto OEMs have pulled forward demand from subsequent periods, as they seek to justify their expansion of manufacturing capacity • Credit became steadily easier with longer lease terms, higher loan-to-value, inflated residual values, and a return to lending to subprime borrowers, taking consumer auto finance to peak levels • Higher interest rates, reduced/toppy credit availability, and persistent anemic economic growth weigh on future prospects • Easy financing led to bigger car purchases ; tighter financing suggests a move to less expensive auto purchases • Used car prices have started falling with greater supply coming off lease and may be the leading edge of broader price declines Company-Specific Issues • ABG is exposed to the recent decline in luxury / full-size used car pricing as 85% of the Company’s car sales are luxury / mid-line imports • 25% of ABG’s new financing arrangements are for subprime customers, much higher than peer auto dealers , suggesting the exhaustion of the buyer base in its geographies • The Company obtains a large and growing part of its gross margin from its financial services business, which may be restricted by potential CFPB proposals to cap all markups in a move to contain disparate impact • Any downturn in unit volumes has pronounced pejorative implications for its parts and service and financing gross profit • Margins have been declining steadily in new and used car sales • Lack of new dealer acquisitions at an attractive cash flow multiple may limit future growth
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 5 - 100.00 200.00 300.00 400.00 500.00 600.00 9/12/2008 9/12/2009 9/12/2010 9/12/2011 9/12/2012 9/12/2013 9/12/2014 Axis Title Post-Lehman Share Price Performance: ABG vs. Index Of Auto Dealers Auto Dealers ABG Reference: Bloomberg, Point Frederick Capital Asbury Automotive Stock Has Markedly Outperformed Its Peer Group In The Past Twelve Months
Strictly Confidential September 2014 Point Frederick Capital BUSINESS AND BUSINESS MODEL
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 7 Asbury Automotive Is One Of The Largest Auto Dealers In The US, Concentrated Principally In The US Southeast & NJ Company Description: Asbury Automotive Group (“Asbury”, “ABG”, or the “Company”) is the 7th largest U.S.-based franchised automotive retailer, operating 102 franchises with 81 dealership locations. Asbury sells and services 29 vehicle brands with 85% of new vehicle sales comprising luxury / mid-line imports. The Company has developed its dealership portfolio via acquisition of large, locally-branded dealerships, primarily in the South and Southeastern U.S. During fiscal year 2013, ABG sold over 150,000 retail vehicles and generated over $5.3 billion in sales. ABG has a market capitalization of $2.0 billion as of 9/22/2014. Reference: Company, Point Frederick Capital Business Model: Asbury has four business units: (i) sale of new cars; (ii) sale of used cars; (iii) finance and insurance; and (iv) parts and service. To become an authorized dealer, Asbury obtains franchise agreements from OEMs or acquires existing dealership franchises. The sale of new and used cars is typically a low margin business which allows the Company to establish a relationship with the customer as well as get the chance to arrange financing. As part of the finance and insurance unit and at the time of a sale of a vehicle, Asbury arranges financing and other prepaid services/guarantees (for roughly ¾ of auto sales) in partnership with OEM and non-OEM lenders. Asbury typically earns a marketing fee, net of a chargeback for contracts terminated or cancelled (usually within 90 days). Chargebacks amount to anywhere between 9-14% of financing revenue. The marketing fee may include spread income participation in excess returns on assets backing guarantees. The Company’s parts and service division provides replacement parts, collision repair services, or vehicle maintenance for cars it has sold and for other cars with whose owners they can establish relationships.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 8 Reference: Company The Business Model Is Co-Dependent: New/Used Vehicle Sales Lead to Incremental, Higher Margin Parts & Service and Finance & Insurance Revenue New Vehicle Sales: • 55% of total revenue and 21% of total gross profit → low margin business Used Vehicle Sales: • 26% of total revenue and 14% of total gross profit → low margin business Parts and Service: • 12% of total revenue and 42% of total gross profit → high margin business Finance and Insurance: • 4% of total revenue and 24% of total gross profit → high margin business
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 9 New Vehicle Sales Are A Gateway To More Lucrative Ancillary Revenue Acquire Dealership Purchase of existing dealership Utilize Floor-Plan / OEM-Provided Financing Purchase New Car Inventory Sale to Customer • New Vehicle Sales includes the arrangement of fixed-term leases • Leases give ABG dealership first option to purchase vehicles upon lease expiration (to build used car inventory) • Provides incremental parts & service and finance & insurance revenue • Customers who lease historically return to dealerships more often than purchasers of new vehicles Start-Up via New Franchise Agreement Incremental Parts & Service Revenue Arrangement of Finance & Insurance Reference: Company
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 10 Used Vehicle Sales Are Another Gateway To More Lucrative Ancillary Revenue Build Used Car Inventory Purchase Trade-Ins, Off-lease Vehicles or At Auctions Utilize Floor-Plan Financing Inventory Management Sale to Customer • Used vehicle inventory is typically sold as wholesale via auction if a vehicle is not sold at retail within 60 days Incremental Parts & Service Revenue Arrangement of Finance & Insurance Reference: Company
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 11 Parts And Service Is The Highest Gross Margin Segment And Caters To A Potentially Broader Population Of Drivers Car Owner In Need of Repair / Maintenance ABG Provides Maintenance, Collision Repair, or Replacement Part Bill to Customer or OEM Billed to OEM if Car is Under Warranty Customer Pays Cash If Not Covered by Warranty • 59% of divisional gross profit is customer pay • The customer does not need to be a pre-existing customer acquired through a car sale Reference: Company
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 12 Finance And Insurance Is A Pure Margin Business Segment Sale of New / Used Vehicles ABG Arranges Financing and Other Prepaid Services / Guarantees ABG Earns Marketing Fee, Including Spread Income Participation Service Contracts May Lead to Parts & Service Work Financing Provided by OEM Financing Provided by Third-Party Lender • Approximately 25% of financing arrangements are for subprime customers Reference: Company
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 13 Reference: Asbury Automotive Shareholder Presentation 04/16/14 Asbury Is Primarily A Southern Auto Dealer, Centered On Florida And Georgia
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 14 Reference: Asbury Automotive Shareholder Presentation 04/16/14 The Company Has A Mix Of Domestic And Foreign Brands Offering Luxury And Mid-Level Cars
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 15 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Company Opened Its First “Q Auto”, A Standalone Dealer Focused Exclusively On Used Cars There are 40 million used cars sold annually in the US.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 16 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 Auto Sales Margins Are Much Lower Than The Lucrative Parts and Services and Financing and Insurance Lines
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 17 The Bulk Of The Parts And Service Gross Profit Comes From Commoditized Routine Maintenance Activities Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 18 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 In Addition To Revenues From Arranging Financing, ABG Earns Revenue By Selling Other Services And Guarantees Other products include extended service contracts, guaranteed asset protection, prepaid maintenance, and credit life and disability coverage.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 19 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 Asbury Owns Roughly 60% Of Its Facilities And Looks To Increase That Ratio To 75% In The Current Environment
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 20 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Dealer Market Is Fragmented And Asbury Plans To Grow By Acquisition, Adding $500m Of Revenue From 2014-2017 The Company argues it has the systems to deal with complexity independent dealers do not have.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 21 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Asbury Board Recently Approved An Increase In The Buyback Program To $100m From $30m
Strictly Confidential September 2014 Point Frederick Capital INDUSTRY OVERVIEW The auto industry has fully recovered from the devastating trough conditions in the aftermath of the financial crisis. Numerous secular changes in the factors that drive auto demand suggests trend demand should be lower than the previous peak. These include weak scrappage, lower driver growth, and fewer miles driven. The combination of a large number of cars coming off-lease, increasing North American manufacturing capacity, and a weaker Japanese Yen only exacerbate this problem. Subprime lending has recovered to prior peak levels; it is becoming more and more difficult to find the incremental buyer. These factors translate to potentially significantly lower volumes and prices in the auto dealer industry.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 23 Reference: Morgan Stanley, “Auto Credit,” 8/21/14 Supportive Credit Conditions Since 2009 Have Pulled Forward Demand Through Low Monthly Payment Math
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 24 Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14 Generous Loans Via Higher Loan-to-Value Balances….
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 25 …Longer Loan Terms… Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 26 …And Increased Subprime Lending… Roughly 25% of Asbury’s new financing arrangements are for subprime customers. This compares to 16% for CarMax and 12% for Lithia in their most recent quarters. Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 27 Reference: Manheim Used Car Report - Annual 2013 …Have Returned Auto Credit Issuance Close to Prior Peaks…
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 28 ...Driving A Full V-Shaped Auto Recovery Autos recovered earlier than expected but may also peak earlier than expected Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 29 Reference: Manheim Used Car Report - Annual 2014 Consumer Debt Remains At Low Levels
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 30 Reference: Manheim Used Car Report - Annual 2014 Credit Default Rates Remain At Low Levels
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 31 Reference: Manheim Used Car Report - Annual 2014 While At Low Levels, Repossessions Are Expected To Rise
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 32 Reference: Manheim Used Car Report - Annual 2014 Gasoline Prices Remain In Check
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 33 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Auto Originations Remain At High Levels With Subprime Taking a Larger Portion of New Loans
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 34 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Within New Subprime Loans, Credit Quality Is Holding Up
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 35 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Subprime Auto Loan Write-Offs Remain Low
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 36 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Low Subprime Write-Offs Will Lead to More Aggressive Lending
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 37 Easy Credit And Inflated Residual Values Lower Monthly Affordability, Sending TTM SAAR Values To Prior Peaks Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 38 Reference: Credit Suisse, "Sentiment on Auto Stocks Appears Cautious," 09/12/14 North American OEMs Are Running At Close To Maximum Capacity…
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 39 …But That Is Not Stopping Them From Adding Even More Manufacturing Capacity Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 40 Reference: Manheim Used Car Report - Annual 2013 New Vehicle Sales Have Recovered Much Faster Than New Home Sales, On A Relative Basis
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 41 Reference: Manheim Used Car Report - Annual 2013 Pent Up Demand Has Led Both New and Used Vehicle Sales Higher Since 2009
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 42 Reference: Manheim Used Car Report - Annual 2014 Used Vehicle Sales Have Benefited Both Franchised and Independent Dealers
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 43 Reference: Manheim Used Car Report - Annual 2013 Used Vehicle Sales As A Percent of Total Vehicles in Operation Continues to Fall
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 44 Reference: National Auto Dealers' Association - Used Car Guide - September 2014. Vehicle Forecasts Remain Bullish, As Light Vehicle Sales are Assumed to Decrease Only Slightly
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 45 However, Weak Scrappage, Driver Growth, and Miles Driven Suggest Trend Light Vehicle Demand Actually May Fall Weak light vehicle demand drivers suggest longer-term trend may be mid-15m or less Reference: Credit Suisse, "Sentiment on Auto Stocks Appears Cautious," 09/12/14; Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 46 Reference: Manheim Used Car Report - Annual 2013 Miles Driven Have Steadily Contracted
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 47 Reference: Manheim Used Car Report - Annual 2014 Scrappage Remains Relatively Low
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 48 Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14 Demand May Fall As The Incremental Light Vehicle Buyer Is Getting Harder to Find
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 49 The Manheim Used Vehicle Price Index Has Topped Out And Started to Fall – A Leading Indicator? The combination of rising used car supply from maturing post-crisis leases, aggressive new car incentives, and a potential crackdown on subprime lending may put pressure on used car pricing Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 50 Used Vehicle Prices Have Fallen for Four Consecutive Months Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 51 Importantly For Asbury, Used Luxury and Full-Size Cars Have Been Hit Disproportionately… Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 52 …While Used Truck Pricing Has Held Up Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 53 Since The Crisis, Strapped Consumers Have Been More Likely To Lease Than To Buy, A Secular Change Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 54 Reference: Manheim Used Car Report - Annual 2013 High Leasing Activity Will Flood Used Car Market Upon Lease Expirations, Pressuring Prices
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 55 A Higher USD/JPY Will Enable Japanese OEMS To Be Aggressive On New Car Pricing Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 56 Reference: National Auto Dealers' Association - Used Car Guide - September 2014 New Car Incentives Remain High and Continue to Grow at a Rapid Rate
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 57 Post-Crisis, Used Car and New Car Inflation Have Tracked One Another Reference: Morgan Stanley "Used Prices Drop Four Months Straight" 09/09/14
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 58 Reference: Manheim Used Car Report - Annual 2013 Used Vehicle Retail Gross Margins Have Been Steadily Declining
Strictly Confidential September 2014 Point Frederick Capital RISKS
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 60 ABG Is Exposed To Both Industry and Company-Specific Risks Go-forward auto sales fall more than expected due to demand exhaustion Geographic concentration in Florida, Georgia, and Texas Used car prices start to fall at a rapid rate due to oversupply, leading to gross margin compression Aggressive new car incentives further pressure used car pricing Lack of new dealer acquisitions at an attractive cash flow multiple may limit future growth Reduced credit availability and higher interest rates weigh on new car demand Large exposure to luxury / mid-line imports, categories that have seen recent pricing pressures
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 61 The CFPB Seeks To Contain The “Disparate Impact” Of Mark-Ups On Minorities And May Forbid All Mark-Ups “To prevent discrimination from recurring at these lenders, the CFPB has identified at least three possible ways institutions can limit their fair lending risk: • Conduct internal monitoring for discrimination…; • Limit discretionary markups…; • Eliminate dealer discretion for markups …” [Emphasis added] Implication: As finance and insurance represents 24% of total gross profit, a significant portion of Asbury’s high margin business could be in jeopardy. Reference: “CFPB Proposes New Financial Oversight Of Nonbank Auto Finance Companies,” 9/17/14 http://www.consumerfinance.gov/newsroom/cfpb-proposes-new-federal-oversight-of-nonbank-auto-finance-companies/
Strictly Confidential September 2014 Point Frederick Capital VALUATION AND REWARD/RISK ANALYSIS
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 63 Our Analysis Implies A Reward/Risk Ratio of 2.6x With A Downside Per Share Price Of $32 ($ in M, except for per share data) Base Upside Downside Lease-Adjusted EV $2,790 $3,192 $1,738 Less: 2015E Lease Expense @ 7x (210) (210) (210) Enterprise Value $2,580 $2,982 $1,528 Less: Net Debt (542) (542) (542) Less: Preferred SH - - - Less: Noncontrolling Interest - - - Equity Value $2,039 $2,440 $986 Per SH $66.84 $80.00 $32.34 2015E EBITDAR $331 $353 $306 2015E EBITDA $301 $323 $276 2015E EPS $4.54 $5.00 $4.04 Adj EV/2015E EBITDAR 8.4x 9.0x 5.7x EV/2015E EBITDA 8.6x 9.2x 5.5x P/2015E EPS 14.7x 16.0x 8.0x Consensus 2015E EBITDA $323 Consensus 2015E EPS $4.74 Reward/Risk 2.6x Target % Return -51.6%
Strictly Confidential September 2014 Point Frederick Capital FINANCIALS – BASE CASE
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 65 Base Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,377 25,245 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 53,506 55,173 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,237 11,237 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 89,121 91,656 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 91,893 94,428 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.5% 26.7% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 58.4% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.2% 11.9% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 97.1% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.7% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 10.8% 3.6% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 3.6% 3.1% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 1.4% 0.0% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 5.2% 2.8% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 6.9% 2.8%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 66 Base Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,330 $ 49,352 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,400 $ 25,608 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 39,059 $ 39,059 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,542 $ 33,797 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 33,946 $ 32,805 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 0.9% -1.9% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -1.5% -3.0% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 6.3% 0.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 1.3% -2.2% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -1.2% -3.4% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,647 $ 3,455 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,443 $ 1,408 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,396 $ 2,246 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,166 $ 2,075 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,124 $ 2,014 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% 0.9% -5.3% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 4.5% -2.4% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% 0.2% -6.2% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 3.5% -4.2% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% 0.7% -5.2%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 67 Base Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 89 87 Mid-line Import 80 64 60 64 68 71 74 77 78 Mid-line Domestic 20 17 22 24 25 27 27 27 25 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 193 190 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 195 190 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.2% 7.0% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.5% 5.5% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.1% 5.8% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.1% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.1%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 68 Base Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,702 70,702 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,908 70,702 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 4.3% 0.0% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 3.5% -1.7% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 19,824 $ 18,833 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 $ - Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 19,800 $ 18,833 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 0.2% -5.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 0.0% -4.9% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,402 1,332 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,424 1,332 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 4.6% -5.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 3.6% -6.5%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 69 Base Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,717 $ 1,536 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,710 $ 1,536 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% -3.0% -10.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% -2.7% -10.2% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 121 109 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 123 109 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.2% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.6% 8.2% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% 1.2% -10.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% 0.7% -11.7%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 70 Base Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,617 5,562 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 5.3% -1.0% EBITDA 150 123 153 155 211 250 278 296 301 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.3% 5.4% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 18.1% 1.6% EBIT 129 101 132 132 188 226 252 270 275 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.8% 4.9% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 19.5% 1.7% NOPAT 240 65 88 83 118 142 158 168 172 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 3.0% 3.1% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 18.3% 2.6% PF Net Income 198 31 55 48 86 108 124 135 139 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.4% 2.5% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 25.0% 3.0% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.41 $ 4.54 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 27.2% 3.0% Cash Flow from Operations 529 111 10 (181) (21) 51 107 204 198 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.6% 3.6% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 90.9% -2.8% CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.5% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 71 Base Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 157 168 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.8% 3.0% Growth % yoy -77.7% -119.7% 907.9% -61.7% -99.4% -31459.8% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (112) (272) Net Debt 508 453 523 447 460 549 542 436 277 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.9x 1.8x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 0.9x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.7x 5.7x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.63% 18.89% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.65% 16.64%
Strictly Confidential September 2014 Point Frederick Capital COMPARABLE ANALYSIS AND HISTORICAL TRADING RANGES
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 73 ABG Trades In-Line With Auto Dealer Comparables On A FWD P/E and EV/EBITDA Basis SUMMARY AUTO DEALER COMPARABLES ($ in M) LTM Market Cap. Enterprise Value(1) Revenue EBITDA FCF Yield % EBITDA % P / 2014E EV / 2014E Revenue EV / 2014E EBITDA 2014 PEG Asbury Automotive Group, Inc. $2,039 $2,580 $5,404 $267 1.9% 4.9% 15.5x 0.4x 8.5x 94.2% Lithia Motors Inc. $2,097 $2,340 $4,237 $235 (2.8%) 5.5% 15.9x 0.5x 8.6x 62.9% CarMax Inc. $11,954 $11,758 $13,013 $973 (8.9%) 7.5% 21.9x 0.9x 11.7x 159.7% Penske Automotive Group, Inc. $3,867 $4,912 $15,768 $543 1.5% 3.4% 13.1x 0.3x 8.5x 93.0% Sonic Automotive Inc. $1,274 $2,069 $8,763 $300 0.5% 3.4% 12.5x 0.2x 7.1x 96.5% AutoNation Inc. $6,113 $7,927 $17,238 $845 3.0% 4.9% 15.0x 0.4x 9.0x 94.2% MEDIAN (excl. ABG) $3,867 $4,912 $13,013 $543 0.5% 4.9% 15.0x 0.4x 8.6x 94.2% 2014E Growth 2015E Growth Rev EBITDA Rev EBITDA Asbury Automotive Group, Inc. 13.8% 24.3% 6.2% 6.4% Lithia Motors Inc. 33.2% 29.0% 44.9% 32.1% CarMax Inc. 10.9% 7.1% 12.0% 11.1% Penske Automotive Group, Inc. 18.7% 15.0% 6.8% 9.5% Sonic Automotive Inc. 8.4% (2.7%) 4.3% 12.2% AutoNation Inc. 12.4% 6.6% 5.6% 8.5% MEDIAN (excl. ABG) 12.4% 7.1% 6.8% 11.1% (1) Excludes floor plan financing.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 74 On A FWD P/E Basis, ABG Is Currently Trading Toward The High End Of Its Historically Range Of 7x – 16x
Strictly Confidential September 2014 Point Frederick Capital DEBT MATURITY SCHEDULE
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 76 The Company Has Pushed Out Its Debt Maturity Schedule Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14
Strictly Confidential September 2014 Point Frederick Capital DOWNSIDE FINANCIALS
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 78 Downside Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,076 23,626 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 52,998 52,401 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,141 10,960 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 88,214 86,987 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 90,986 89,759 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.5% 26.3% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 58.4% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.2% 12.2% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 96.9% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.8% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 9.5% -1.9% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 2.6% -1.1% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 0.5% -1.6% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 4.1% -1.4% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 5.8% -1.3%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 79 Downside Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,006 $ 49,067 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,595 $ 26,101 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 38,345 $ 38,348 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,468 $ 33,882 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 33,869 $ 32,835 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 0.2% -1.9% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -0.8% -1.9% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 4.4% 0.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 1.1% -1.7% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -1.4% -3.1% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,584 $ 3,309 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,415 $ 1,305 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,381 $ 2,234 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,129 $ 1,966 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,087 $ 1,905 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% -0.8% -7.7% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 2.5% -7.8% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% -0.4% -6.2% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 1.7% -7.7% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% -1.0% -8.7%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 80 Downside Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 86 78 Mid-line Import 80 64 60 64 68 71 74 75 68 Mid-line Domestic 20 17 22 24 25 27 27 27 24 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 188 171 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 190 171 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.2% 6.7% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.3% 5.0% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.2% 5.8% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.2% 5.8% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.2% 5.8%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 81 Downside Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,130 70,130 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,336 70,130 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 3.5% 0.0% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 2.7% -1.7% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 19,955 $ 19,556 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 19,929 $ 19,556 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 0.9% -2.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 0.7% -1.9% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,399 1,371 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,422 1,371 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 4.4% -2.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 3.4% -3.5%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 82 Downside Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,673 $ 1,467 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,667 $ 1,467 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% -5.5% -12.3% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% -5.2% -12.0% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 117 103 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 119 103 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.4% 7.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.4% 7.5% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% -2.2% -12.3% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% -2.6% -13.5%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 83 Downside Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,559 5,382 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 4.2% -3.2% EBITDA 150 123 153 155 211 250 278 288 276 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.2% 5.1% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 15.2% -4.3% EBIT 129 101 132 132 188 226 252 263 250 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.7% 4.7% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 16.3% -4.8% NOPAT 240 65 88 83 118 142 158 163 157 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 2.9% 2.9% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 15.0% -4.0% PF Net Income 198 31 55 48 86 108 124 130 124 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.3% 2.3% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 20.7% -5.2% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.26 $ 4.04 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 22.9% -5.2% Cash Flow from Operations 529 111 10 (181) (21) 51 107 207 200 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.7% 3.7% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 94.3% -3.7% CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.6% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 84 Downside Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 160 170 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.9% 3.2% Growth % yoy -77.7% -119.7% 5.8% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (112) (264) Net Debt 508 453 523 447 460 549 542 437 285 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.9x 2.0x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 1.0x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.5x 5.2x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.03% 17.28% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.22% 15.21%
Strictly Confidential September 2014 Point Frederick Capital UPSIDE FINANCIALS
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 86 Upside Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,696 27,533 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 53,896 56,808 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,237 11,237 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 89,829 95,577 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 92,601 98,349 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.7% 28.0% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 57.8% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.1% 11.4% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 97.2% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.6% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 12.3% 11.5% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 4.4% 5.4% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 1.4% 0.0% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 6.0% 6.4% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 7.7% 6.2%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 87 Upside Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,601 $ 51,363 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,595 $ 26,108 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 39,242 $ 41,204 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,777 $ 35,158 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 34,179 $ 34,167 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 1.4% 1.5% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -0.8% -1.8% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 6.8% 5.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 2.0% 1.1% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -0.5% 0.0% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,695 $ 3,728 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,454 $ 1,430 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,503 $ 2,634 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,201 $ 2,234 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,158 $ 2,171 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% 2.2% 0.9% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 5.3% -1.6% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% 4.7% 5.3% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 5.2% 1.5% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% 2.3% 0.6%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 88 Upside Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 91 103 Mid-line Import 80 64 60 64 68 71 74 78 81 Mid-line Domestic 20 17 22 24 25 27 27 28 30 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 198 213 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 200 213 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.3% 7.3% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.5% 5.5% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.4% 6.4% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.4% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.4%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 89 Upside Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,702 72,470 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,908 72,470 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 4.3% 2.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 3.5% 0.8% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 20,557 $ 21,071 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 20,521 $ 21,071 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 3.9% 2.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 3.7% 2.7% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,453 1,527 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,476 1,527 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 8.4% 5.1% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 7.3% 3.5%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 90 Upside Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,784 $ 1,791 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,776 $ 1,791 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% 0.8% 0.4% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% 1.0% 0.9% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 126 130 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 128 130 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.5% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% 5.2% 2.9% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% 4.6% 1.6%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 91 Upside Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,719 6,043 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 7.2% 5.7% EBITDA 150 123 153 155 211 250 278 300 323 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.2% 5.3% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 19.9% 7.5% EBIT 129 101 132 132 188 226 252 275 297 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.8% 4.9% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 21.5% 8.2% NOPAT 240 65 88 83 118 142 158 170 186 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 3.0% 3.1% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 20.2% 9.0% PF Net Income 198 31 55 48 86 108 124 138 153 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.4% 2.5% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 27.6% 10.9% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.51 $ 5.00 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 29.8% 10.9% Cash Flow from Operations 529 111 10 (181) (21) 51 107 188 143 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.3% 2.4% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 76.0% -23.7%
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 92 Upside Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.5% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2% Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 141 113 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.5% 1.9% Growth % yoy -77.7% -119.7% -19.5% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (107) (251) Net Debt 508 453 523 447 460 549 542 442 297 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.8x 1.7x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 0.9x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.7x 6.1x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.99% 20.32% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.91% 17.85%
Strictly Confidential September 2014 Point Frederick Capital Red Team Analysis
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 94 What Does The Red Team Analysis Suggest How This Could Go Wrong? ABG is sold to a strategic buyer as part of a larger dealer roll-up strategy. Continued, unprecedented demand for high quality used vehicles results in the stabilization of used car pricing. ABG successfully completes a leveraged recapitalization, using excess cash proceeds for additional stock buybacks. ABG is able to consistently locate and acquire mildly underperforming independent dealerships at attractive cash flow multiples, thereby adding value to the enterprise.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 95 What Is The Market Missing? The price of used cars could come under severe pressure, the result of four years of extremely strong new car sales and leasing volumes as well as easy credit conditions. The market may be overestimating management’s ability to build enterprise value through small tuck-in acquisitions. With newly added car manufacturing capacity and a weak Japanese Yen, OEMs will maintain aggressive new car incentives. The market may be overlooking ABG’s exposure to subprime customers. As 25% of new loan originations are to subprime customers, ABG’s F&I and new/used car business would be materially impacted if U.S. regulators impose tighter lending standards as a preemptive measure to stem excessive lending.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 96 Fall in New Car Demand Used Car Over- Supply New Car Incentives Stricter Financing Negative Industry Dynamics Increased Rates End of Easy Credit Downside ABG Tremendous Downside Despite Fantastic Recent Performance
Strictly Confidential September 2014 Point Frederick Capital BIOS
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 98 Biographies Chand Sooran, Chief Investment Officer Chand has broad and deep experience investing across the capital structure. Most recently, he helped start up the distressed value team at CQS as the #2 with positions across the capital structure, eventually running a parallel long/short value equity book independently. His role as Portfolio Manager included membership in the HoldCo creditors’ committee in the Six Flags Chapter 11 case and membership in the steering committee and the creditors’ committee for Nell noteholders in the LyondellBasell Chapter 11 case. Prior to that, he worked as a Senior Analyst at Columbus Hill Capital Management, a high profile value fund, covering Airlines, Telecoms, Media and Technology in equities and in credit. Notably, he was a member of the ad hoc creditors’ committee in Delta Airlines. Before joining Columbus Hill, Chand was a research analyst for five years in an internal multi-strategy hedge fund at Lehman Brothers where he worked on a variety of strategies including distressed debt, deep value, special situations, long/short equity and emerging markets. This included work as an unsecured creditor in the UAL Chapter 11 case, special situations driven by litigation and other general value investing. Prior to going to business school at MIT Sloan, he spent approximately six years trading foreign exchange, principally as a market maker for foreign exchange options. In addition to being a graduate of MIT, Chand is a graduate of the University of Toronto Schools, the Royal Military College of Canada and Queen’s University, as well as being a CFA Charterholder and being certified as a Financial Risk Manager by the Global Association of Risk Professionals. After graduating from RMC, Chand was a commissioned officer in the Royal Canadian Navy.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 99 Biographies Anand Kalola, Senior Analyst Anand Kalola has over seven years of finance industry experience. Most recently, Anand was a Senior Associate at Prospect Capital where he was responsible for originating, executing, and managing middle-market investments. Prior to Prospect, he worked as a Senior Associate at Chanin Capital Partners/Duff & Phelps Restructuring with a focus on executing financial restructurings. Anand began his career as a Financial Analyst with the leveraged finance group at CIBC World Markets in Los Angeles. He holds a BS in Economics and a BA in Biological Basis of Behavior from the University of Pennsylvania. He is also a CFA Charterholder.
Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran Contact Information 100 Chand Sooran Chief Investment Officer, Manager & Founding Member chand.sooran@pointfrederickcapital.com 646.380.6675

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PF Capital Asbury Automotive 092214 Final

  • 1. Strictly Confidential September 2014 Point Frederick Capital Point Frederick Capital Management, LLC Asbury Automotive: Car Dealers Are Now Where U.S. Home Builders Were In Mid-2008 And Asbury May Be The Most Cyclically Vulnerable In The Space Chand Sooran & Anand Kalola
  • 2. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran Important Information 2 This material has been prepared by Point Frederick Capital Management, LLC (the “Investment Manager” or “Point Frederick”). The information in this material is for illustration and discussion purposes only. It is not intended to be, nor should it be construed or used as, investment, tax or legal advice, any recommendation or opinion regarding the appropriateness or suitability of any investment or strategy, or an offer to sell, or a solicitation of an offer to buy, an interest in any security, including an interest in the private fund described herein (the “Fund”) or any other private fund or pool advised by the Investment Manager or any of its affiliates. This information is qualified in its entirety by the information contained in the Fund’s confidential offering documents (the “Offering Memorandum”). Any offer or solicitation o f an investment in the Fund may be made only by delivery of the Offering Memorandum to qualified investors. Prospective investors should rely solely on the Offering Memorandum in making any investment decision. The Offering Memorandum contains important information, including, among other information, a description of the Fund’s risks, investment program, fees and expenses, and should be read carefully before any investment decision is made. This material does not take into account the particular investment objectives, restrictions, or financial, legal or tax situation of any specific investor. An investment in the Fund is not suitable for all investors. No representation is made that the Investment Manager’s or the Fund’s investment process, investment objectives, goals or risk management techniques will or are likely to be achieved or successful or that the Fund or any underlying investment will make any profit or will not sustain losses. An investment in the Fund involves risk, as disclosed in the Offering Memorandum. The Investment Manager may engage in investment practices or trading strategies that may increase the r isk of investment loss and a loss of principal may occur. The risk management techniques which may be utilized by the Investment Manager cannot provide any assurance that the Fund will not be exposed to risks of significant trading losses. Any descriptions involving investment process, investment examples, statistical analysis, investment strategies or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, may be changed in the discretion of the Investment Manager and are not intended to reflect performance. Any opinions, assumptions, assessments, statements or the like (collectively, “Statements”) regarding future events or which are forward-looking, including regarding portfolio characteristics and limits, constitute only subjective views, beliefs, outlooks, estimations or intentions of the Investment Manager, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions and economic factors, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond the Investment Manager’s or the Fund’s control. Future evidence and actual results (including actual composition and investment characteristics of a portfolio) could differ materially from those set forth in, contemplated by, or underlying these Statements, which are subject to change without notice. In light of these risks and uncertainties, there can be no assurance and no representation is given that these Statements are now, or wil l prove to be accurate, or complete in any way. The Investment Manager undertakes no responsibility or obligation to revise or update such Statements. Statements expressed herein may not necessarily be shared by all personnel of the Investment Manager and its affiliates. This material is not complete, is subject to change and does not contain material information regarding the Fund, including specific information relating to an investment in the Fund and related risks factors. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified. The Investment Manager is not responsible for errors or omissions from these sources. No representation is made with respect to the accuracy, completeness or timeliness of information and the Investment Manager assumes no obligation to update or otherwise revise such information. This information is confidential, is the property of the Investment Manager, is intended only for intended recipients and their authorized agents and representatives and may not be reproduced or distributed to any other person without prior written consent.
  • 3. Strictly Confidential September 2014 Point Frederick Capital INVESTMENT THESIS AND CONCLUSION
  • 4. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 4 Asbury Automotive Has Had A Terrific Run But Faces A Number Of Cyclical Challenges And One Structural Risk Recommendation: We contend that Asbury Automotive Group, Inc. is a compelling short investment for its pronounced and industry-leading exposure to the peaking North American new and used car cycles, and for its growing reliance on ancillary revenue, the most profitable of which is derived from marketing financial transactions to its customers on behalf of third party lenders and insurers. Industry Challenges Abound • Autos have made full V-shaped recovery from the post-2008 trough, erasing any pent-up demand for cars • US auto OEMs have pulled forward demand from subsequent periods, as they seek to justify their expansion of manufacturing capacity • Credit became steadily easier with longer lease terms, higher loan-to-value, inflated residual values, and a return to lending to subprime borrowers, taking consumer auto finance to peak levels • Higher interest rates, reduced/toppy credit availability, and persistent anemic economic growth weigh on future prospects • Easy financing led to bigger car purchases ; tighter financing suggests a move to less expensive auto purchases • Used car prices have started falling with greater supply coming off lease and may be the leading edge of broader price declines Company-Specific Issues • ABG is exposed to the recent decline in luxury / full-size used car pricing as 85% of the Company’s car sales are luxury / mid-line imports • 25% of ABG’s new financing arrangements are for subprime customers, much higher than peer auto dealers , suggesting the exhaustion of the buyer base in its geographies • The Company obtains a large and growing part of its gross margin from its financial services business, which may be restricted by potential CFPB proposals to cap all markups in a move to contain disparate impact • Any downturn in unit volumes has pronounced pejorative implications for its parts and service and financing gross profit • Margins have been declining steadily in new and used car sales • Lack of new dealer acquisitions at an attractive cash flow multiple may limit future growth
  • 5. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 5 - 100.00 200.00 300.00 400.00 500.00 600.00 9/12/2008 9/12/2009 9/12/2010 9/12/2011 9/12/2012 9/12/2013 9/12/2014 Axis Title Post-Lehman Share Price Performance: ABG vs. Index Of Auto Dealers Auto Dealers ABG Reference: Bloomberg, Point Frederick Capital Asbury Automotive Stock Has Markedly Outperformed Its Peer Group In The Past Twelve Months
  • 6. Strictly Confidential September 2014 Point Frederick Capital BUSINESS AND BUSINESS MODEL
  • 7. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 7 Asbury Automotive Is One Of The Largest Auto Dealers In The US, Concentrated Principally In The US Southeast & NJ Company Description: Asbury Automotive Group (“Asbury”, “ABG”, or the “Company”) is the 7th largest U.S.-based franchised automotive retailer, operating 102 franchises with 81 dealership locations. Asbury sells and services 29 vehicle brands with 85% of new vehicle sales comprising luxury / mid-line imports. The Company has developed its dealership portfolio via acquisition of large, locally-branded dealerships, primarily in the South and Southeastern U.S. During fiscal year 2013, ABG sold over 150,000 retail vehicles and generated over $5.3 billion in sales. ABG has a market capitalization of $2.0 billion as of 9/22/2014. Reference: Company, Point Frederick Capital Business Model: Asbury has four business units: (i) sale of new cars; (ii) sale of used cars; (iii) finance and insurance; and (iv) parts and service. To become an authorized dealer, Asbury obtains franchise agreements from OEMs or acquires existing dealership franchises. The sale of new and used cars is typically a low margin business which allows the Company to establish a relationship with the customer as well as get the chance to arrange financing. As part of the finance and insurance unit and at the time of a sale of a vehicle, Asbury arranges financing and other prepaid services/guarantees (for roughly ¾ of auto sales) in partnership with OEM and non-OEM lenders. Asbury typically earns a marketing fee, net of a chargeback for contracts terminated or cancelled (usually within 90 days). Chargebacks amount to anywhere between 9-14% of financing revenue. The marketing fee may include spread income participation in excess returns on assets backing guarantees. The Company’s parts and service division provides replacement parts, collision repair services, or vehicle maintenance for cars it has sold and for other cars with whose owners they can establish relationships.
  • 8. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 8 Reference: Company The Business Model Is Co-Dependent: New/Used Vehicle Sales Lead to Incremental, Higher Margin Parts & Service and Finance & Insurance Revenue New Vehicle Sales: • 55% of total revenue and 21% of total gross profit → low margin business Used Vehicle Sales: • 26% of total revenue and 14% of total gross profit → low margin business Parts and Service: • 12% of total revenue and 42% of total gross profit → high margin business Finance and Insurance: • 4% of total revenue and 24% of total gross profit → high margin business
  • 9. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 9 New Vehicle Sales Are A Gateway To More Lucrative Ancillary Revenue Acquire Dealership Purchase of existing dealership Utilize Floor-Plan / OEM-Provided Financing Purchase New Car Inventory Sale to Customer • New Vehicle Sales includes the arrangement of fixed-term leases • Leases give ABG dealership first option to purchase vehicles upon lease expiration (to build used car inventory) • Provides incremental parts & service and finance & insurance revenue • Customers who lease historically return to dealerships more often than purchasers of new vehicles Start-Up via New Franchise Agreement Incremental Parts & Service Revenue Arrangement of Finance & Insurance Reference: Company
  • 10. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 10 Used Vehicle Sales Are Another Gateway To More Lucrative Ancillary Revenue Build Used Car Inventory Purchase Trade-Ins, Off-lease Vehicles or At Auctions Utilize Floor-Plan Financing Inventory Management Sale to Customer • Used vehicle inventory is typically sold as wholesale via auction if a vehicle is not sold at retail within 60 days Incremental Parts & Service Revenue Arrangement of Finance & Insurance Reference: Company
  • 11. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 11 Parts And Service Is The Highest Gross Margin Segment And Caters To A Potentially Broader Population Of Drivers Car Owner In Need of Repair / Maintenance ABG Provides Maintenance, Collision Repair, or Replacement Part Bill to Customer or OEM Billed to OEM if Car is Under Warranty Customer Pays Cash If Not Covered by Warranty • 59% of divisional gross profit is customer pay • The customer does not need to be a pre-existing customer acquired through a car sale Reference: Company
  • 12. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 12 Finance And Insurance Is A Pure Margin Business Segment Sale of New / Used Vehicles ABG Arranges Financing and Other Prepaid Services / Guarantees ABG Earns Marketing Fee, Including Spread Income Participation Service Contracts May Lead to Parts & Service Work Financing Provided by OEM Financing Provided by Third-Party Lender • Approximately 25% of financing arrangements are for subprime customers Reference: Company
  • 13. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 13 Reference: Asbury Automotive Shareholder Presentation 04/16/14 Asbury Is Primarily A Southern Auto Dealer, Centered On Florida And Georgia
  • 14. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 14 Reference: Asbury Automotive Shareholder Presentation 04/16/14 The Company Has A Mix Of Domestic And Foreign Brands Offering Luxury And Mid-Level Cars
  • 15. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 15 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Company Opened Its First “Q Auto”, A Standalone Dealer Focused Exclusively On Used Cars There are 40 million used cars sold annually in the US.
  • 16. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 16 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 Auto Sales Margins Are Much Lower Than The Lucrative Parts and Services and Financing and Insurance Lines
  • 17. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 17 The Bulk Of The Parts And Service Gross Profit Comes From Commoditized Routine Maintenance Activities Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14
  • 18. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 18 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 In Addition To Revenues From Arranging Financing, ABG Earns Revenue By Selling Other Services And Guarantees Other products include extended service contracts, guaranteed asset protection, prepaid maintenance, and credit life and disability coverage.
  • 19. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 19 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 Asbury Owns Roughly 60% Of Its Facilities And Looks To Increase That Ratio To 75% In The Current Environment
  • 20. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 20 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Dealer Market Is Fragmented And Asbury Plans To Grow By Acquisition, Adding $500m Of Revenue From 2014-2017 The Company argues it has the systems to deal with complexity independent dealers do not have.
  • 21. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 21 Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14 The Asbury Board Recently Approved An Increase In The Buyback Program To $100m From $30m
  • 22. Strictly Confidential September 2014 Point Frederick Capital INDUSTRY OVERVIEW The auto industry has fully recovered from the devastating trough conditions in the aftermath of the financial crisis. Numerous secular changes in the factors that drive auto demand suggests trend demand should be lower than the previous peak. These include weak scrappage, lower driver growth, and fewer miles driven. The combination of a large number of cars coming off-lease, increasing North American manufacturing capacity, and a weaker Japanese Yen only exacerbate this problem. Subprime lending has recovered to prior peak levels; it is becoming more and more difficult to find the incremental buyer. These factors translate to potentially significantly lower volumes and prices in the auto dealer industry.
  • 23. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 23 Reference: Morgan Stanley, “Auto Credit,” 8/21/14 Supportive Credit Conditions Since 2009 Have Pulled Forward Demand Through Low Monthly Payment Math
  • 24. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 24 Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14 Generous Loans Via Higher Loan-to-Value Balances….
  • 25. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 25 …Longer Loan Terms… Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 26. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 26 …And Increased Subprime Lending… Roughly 25% of Asbury’s new financing arrangements are for subprime customers. This compares to 16% for CarMax and 12% for Lithia in their most recent quarters. Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 27. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 27 Reference: Manheim Used Car Report - Annual 2013 …Have Returned Auto Credit Issuance Close to Prior Peaks…
  • 28. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 28 ...Driving A Full V-Shaped Auto Recovery Autos recovered earlier than expected but may also peak earlier than expected Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 29. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 29 Reference: Manheim Used Car Report - Annual 2014 Consumer Debt Remains At Low Levels
  • 30. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 30 Reference: Manheim Used Car Report - Annual 2014 Credit Default Rates Remain At Low Levels
  • 31. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 31 Reference: Manheim Used Car Report - Annual 2014 While At Low Levels, Repossessions Are Expected To Rise
  • 32. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 32 Reference: Manheim Used Car Report - Annual 2014 Gasoline Prices Remain In Check
  • 33. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 33 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Auto Originations Remain At High Levels With Subprime Taking a Larger Portion of New Loans
  • 34. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 34 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Within New Subprime Loans, Credit Quality Is Holding Up
  • 35. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 35 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Subprime Auto Loan Write-Offs Remain Low
  • 36. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 36 Reference: Equifax, "Not Yesterday's Subprime Auto Loan," Economic Trends Commentary 08/26/14 Low Subprime Write-Offs Will Lead to More Aggressive Lending
  • 37. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 37 Easy Credit And Inflated Residual Values Lower Monthly Affordability, Sending TTM SAAR Values To Prior Peaks Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 38. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 38 Reference: Credit Suisse, "Sentiment on Auto Stocks Appears Cautious," 09/12/14 North American OEMs Are Running At Close To Maximum Capacity…
  • 39. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 39 …But That Is Not Stopping Them From Adding Even More Manufacturing Capacity Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 40. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 40 Reference: Manheim Used Car Report - Annual 2013 New Vehicle Sales Have Recovered Much Faster Than New Home Sales, On A Relative Basis
  • 41. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 41 Reference: Manheim Used Car Report - Annual 2013 Pent Up Demand Has Led Both New and Used Vehicle Sales Higher Since 2009
  • 42. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 42 Reference: Manheim Used Car Report - Annual 2014 Used Vehicle Sales Have Benefited Both Franchised and Independent Dealers
  • 43. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 43 Reference: Manheim Used Car Report - Annual 2013 Used Vehicle Sales As A Percent of Total Vehicles in Operation Continues to Fall
  • 44. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 44 Reference: National Auto Dealers' Association - Used Car Guide - September 2014. Vehicle Forecasts Remain Bullish, As Light Vehicle Sales are Assumed to Decrease Only Slightly
  • 45. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 45 However, Weak Scrappage, Driver Growth, and Miles Driven Suggest Trend Light Vehicle Demand Actually May Fall Weak light vehicle demand drivers suggest longer-term trend may be mid-15m or less Reference: Credit Suisse, "Sentiment on Auto Stocks Appears Cautious," 09/12/14; Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 46. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 46 Reference: Manheim Used Car Report - Annual 2013 Miles Driven Have Steadily Contracted
  • 47. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 47 Reference: Manheim Used Car Report - Annual 2014 Scrappage Remains Relatively Low
  • 48. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 48 Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14 Demand May Fall As The Incremental Light Vehicle Buyer Is Getting Harder to Find
  • 49. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 49 The Manheim Used Vehicle Price Index Has Topped Out And Started to Fall – A Leading Indicator? The combination of rising used car supply from maturing post-crisis leases, aggressive new car incentives, and a potential crackdown on subprime lending may put pressure on used car pricing Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 50. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 50 Used Vehicle Prices Have Fallen for Four Consecutive Months Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
  • 51. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 51 Importantly For Asbury, Used Luxury and Full-Size Cars Have Been Hit Disproportionately… Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
  • 52. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 52 …While Used Truck Pricing Has Held Up Reference: Morgan Stanley, "Used Prices Drop Four Months Straight," 09/09/14
  • 53. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 53 Since The Crisis, Strapped Consumers Have Been More Likely To Lease Than To Buy, A Secular Change Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 54. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 54 Reference: Manheim Used Car Report - Annual 2013 High Leasing Activity Will Flood Used Car Market Upon Lease Expirations, Pressuring Prices
  • 55. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 55 A Higher USD/JPY Will Enable Japanese OEMS To Be Aggressive On New Car Pricing Reference: Morgan Stanley, "Cutting U.S. Autos to Cautious," 09/08/14
  • 56. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 56 Reference: National Auto Dealers' Association - Used Car Guide - September 2014 New Car Incentives Remain High and Continue to Grow at a Rapid Rate
  • 57. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 57 Post-Crisis, Used Car and New Car Inflation Have Tracked One Another Reference: Morgan Stanley "Used Prices Drop Four Months Straight" 09/09/14
  • 58. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 58 Reference: Manheim Used Car Report - Annual 2013 Used Vehicle Retail Gross Margins Have Been Steadily Declining
  • 59. Strictly Confidential September 2014 Point Frederick Capital RISKS
  • 60. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 60 ABG Is Exposed To Both Industry and Company-Specific Risks Go-forward auto sales fall more than expected due to demand exhaustion Geographic concentration in Florida, Georgia, and Texas Used car prices start to fall at a rapid rate due to oversupply, leading to gross margin compression Aggressive new car incentives further pressure used car pricing Lack of new dealer acquisitions at an attractive cash flow multiple may limit future growth Reduced credit availability and higher interest rates weigh on new car demand Large exposure to luxury / mid-line imports, categories that have seen recent pricing pressures
  • 61. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 61 The CFPB Seeks To Contain The “Disparate Impact” Of Mark-Ups On Minorities And May Forbid All Mark-Ups “To prevent discrimination from recurring at these lenders, the CFPB has identified at least three possible ways institutions can limit their fair lending risk: • Conduct internal monitoring for discrimination…; • Limit discretionary markups…; • Eliminate dealer discretion for markups …” [Emphasis added] Implication: As finance and insurance represents 24% of total gross profit, a significant portion of Asbury’s high margin business could be in jeopardy. Reference: “CFPB Proposes New Financial Oversight Of Nonbank Auto Finance Companies,” 9/17/14 http://www.consumerfinance.gov/newsroom/cfpb-proposes-new-federal-oversight-of-nonbank-auto-finance-companies/
  • 62. Strictly Confidential September 2014 Point Frederick Capital VALUATION AND REWARD/RISK ANALYSIS
  • 63. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 63 Our Analysis Implies A Reward/Risk Ratio of 2.6x With A Downside Per Share Price Of $32 ($ in M, except for per share data) Base Upside Downside Lease-Adjusted EV $2,790 $3,192 $1,738 Less: 2015E Lease Expense @ 7x (210) (210) (210) Enterprise Value $2,580 $2,982 $1,528 Less: Net Debt (542) (542) (542) Less: Preferred SH - - - Less: Noncontrolling Interest - - - Equity Value $2,039 $2,440 $986 Per SH $66.84 $80.00 $32.34 2015E EBITDAR $331 $353 $306 2015E EBITDA $301 $323 $276 2015E EPS $4.54 $5.00 $4.04 Adj EV/2015E EBITDAR 8.4x 9.0x 5.7x EV/2015E EBITDA 8.6x 9.2x 5.5x P/2015E EPS 14.7x 16.0x 8.0x Consensus 2015E EBITDA $323 Consensus 2015E EPS $4.74 Reward/Risk 2.6x Target % Return -51.6%
  • 64. Strictly Confidential September 2014 Point Frederick Capital FINANCIALS – BASE CASE
  • 65. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 65 Base Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,377 25,245 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 53,506 55,173 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,237 11,237 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 89,121 91,656 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 91,893 94,428 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.5% 26.7% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 58.4% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.2% 11.9% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 97.1% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.7% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 10.8% 3.6% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 3.6% 3.1% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 1.4% 0.0% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 5.2% 2.8% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 6.9% 2.8%
  • 66. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 66 Base Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,330 $ 49,352 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,400 $ 25,608 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 39,059 $ 39,059 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,542 $ 33,797 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 33,946 $ 32,805 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 0.9% -1.9% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -1.5% -3.0% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 6.3% 0.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 1.3% -2.2% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -1.2% -3.4% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,647 $ 3,455 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,443 $ 1,408 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,396 $ 2,246 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,166 $ 2,075 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,124 $ 2,014 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% 0.9% -5.3% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 4.5% -2.4% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% 0.2% -6.2% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 3.5% -4.2% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% 0.7% -5.2%
  • 67. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 67 Base Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 89 87 Mid-line Import 80 64 60 64 68 71 74 77 78 Mid-line Domestic 20 17 22 24 25 27 27 27 25 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 193 190 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 195 190 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.2% 7.0% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.5% 5.5% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.1% 5.8% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.1% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.1%
  • 68. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 68 Base Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,702 70,702 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,908 70,702 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 4.3% 0.0% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 3.5% -1.7% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 19,824 $ 18,833 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 $ - Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 19,800 $ 18,833 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 0.2% -5.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 0.0% -4.9% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,402 1,332 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,424 1,332 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 4.6% -5.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 3.6% -6.5%
  • 69. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 69 Base Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,717 $ 1,536 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,710 $ 1,536 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% -3.0% -10.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% -2.7% -10.2% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 121 109 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 123 109 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.2% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.6% 8.2% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% 1.2% -10.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% 0.7% -11.7%
  • 70. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 70 Base Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,617 5,562 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 5.3% -1.0% EBITDA 150 123 153 155 211 250 278 296 301 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.3% 5.4% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 18.1% 1.6% EBIT 129 101 132 132 188 226 252 270 275 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.8% 4.9% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 19.5% 1.7% NOPAT 240 65 88 83 118 142 158 168 172 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 3.0% 3.1% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 18.3% 2.6% PF Net Income 198 31 55 48 86 108 124 135 139 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.4% 2.5% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 25.0% 3.0% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.41 $ 4.54 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 27.2% 3.0% Cash Flow from Operations 529 111 10 (181) (21) 51 107 204 198 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.6% 3.6% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 90.9% -2.8% CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.5% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2%
  • 71. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 71 Base Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 157 168 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.8% 3.0% Growth % yoy -77.7% -119.7% 907.9% -61.7% -99.4% -31459.8% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (112) (272) Net Debt 508 453 523 447 460 549 542 436 277 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.9x 1.8x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 0.9x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.7x 5.7x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.63% 18.89% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.65% 16.64%
  • 72. Strictly Confidential September 2014 Point Frederick Capital COMPARABLE ANALYSIS AND HISTORICAL TRADING RANGES
  • 73. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 73 ABG Trades In-Line With Auto Dealer Comparables On A FWD P/E and EV/EBITDA Basis SUMMARY AUTO DEALER COMPARABLES ($ in M) LTM Market Cap. Enterprise Value(1) Revenue EBITDA FCF Yield % EBITDA % P / 2014E EV / 2014E Revenue EV / 2014E EBITDA 2014 PEG Asbury Automotive Group, Inc. $2,039 $2,580 $5,404 $267 1.9% 4.9% 15.5x 0.4x 8.5x 94.2% Lithia Motors Inc. $2,097 $2,340 $4,237 $235 (2.8%) 5.5% 15.9x 0.5x 8.6x 62.9% CarMax Inc. $11,954 $11,758 $13,013 $973 (8.9%) 7.5% 21.9x 0.9x 11.7x 159.7% Penske Automotive Group, Inc. $3,867 $4,912 $15,768 $543 1.5% 3.4% 13.1x 0.3x 8.5x 93.0% Sonic Automotive Inc. $1,274 $2,069 $8,763 $300 0.5% 3.4% 12.5x 0.2x 7.1x 96.5% AutoNation Inc. $6,113 $7,927 $17,238 $845 3.0% 4.9% 15.0x 0.4x 9.0x 94.2% MEDIAN (excl. ABG) $3,867 $4,912 $13,013 $543 0.5% 4.9% 15.0x 0.4x 8.6x 94.2% 2014E Growth 2015E Growth Rev EBITDA Rev EBITDA Asbury Automotive Group, Inc. 13.8% 24.3% 6.2% 6.4% Lithia Motors Inc. 33.2% 29.0% 44.9% 32.1% CarMax Inc. 10.9% 7.1% 12.0% 11.1% Penske Automotive Group, Inc. 18.7% 15.0% 6.8% 9.5% Sonic Automotive Inc. 8.4% (2.7%) 4.3% 12.2% AutoNation Inc. 12.4% 6.6% 5.6% 8.5% MEDIAN (excl. ABG) 12.4% 7.1% 6.8% 11.1% (1) Excludes floor plan financing.
  • 74. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 74 On A FWD P/E Basis, ABG Is Currently Trading Toward The High End Of Its Historically Range Of 7x – 16x
  • 75. Strictly Confidential September 2014 Point Frederick Capital DEBT MATURITY SCHEDULE
  • 76. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 76 The Company Has Pushed Out Its Debt Maturity Schedule Reference: Asbury Automotive Investor Presentation 06/03/14-06/04/14
  • 77. Strictly Confidential September 2014 Point Frederick Capital DOWNSIDE FINANCIALS
  • 78. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 78 Downside Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,076 23,626 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 52,998 52,401 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,141 10,960 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 88,214 86,987 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 90,986 89,759 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.5% 26.3% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 58.4% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.2% 12.2% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 96.9% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.8% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 9.5% -1.9% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 2.6% -1.1% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 0.5% -1.6% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 4.1% -1.4% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 5.8% -1.3%
  • 79. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 79 Downside Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,006 $ 49,067 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,595 $ 26,101 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 38,345 $ 38,348 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,468 $ 33,882 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 33,869 $ 32,835 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 0.2% -1.9% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -0.8% -1.9% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 4.4% 0.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 1.1% -1.7% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -1.4% -3.1% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,584 $ 3,309 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,415 $ 1,305 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,381 $ 2,234 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,129 $ 1,966 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,087 $ 1,905 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% -0.8% -7.7% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 2.5% -7.8% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% -0.4% -6.2% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 1.7% -7.7% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% -1.0% -8.7%
  • 80. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 80 Downside Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 86 78 Mid-line Import 80 64 60 64 68 71 74 75 68 Mid-line Domestic 20 17 22 24 25 27 27 27 24 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 188 171 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 190 171 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.2% 6.7% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.3% 5.0% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.2% 5.8% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.2% 5.8% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.2% 5.8%
  • 81. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 81 Downside Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,130 70,130 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,336 70,130 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 3.5% 0.0% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 2.7% -1.7% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 19,955 $ 19,556 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 19,929 $ 19,556 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 0.9% -2.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 0.7% -1.9% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,399 1,371 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,422 1,371 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 4.4% -2.0% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 3.4% -3.5%
  • 82. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 82 Downside Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,673 $ 1,467 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,667 $ 1,467 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% -5.5% -12.3% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% -5.2% -12.0% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 117 103 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 119 103 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.4% 7.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.4% 7.5% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% -2.2% -12.3% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% -2.6% -13.5%
  • 83. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 83 Downside Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,559 5,382 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 4.2% -3.2% EBITDA 150 123 153 155 211 250 278 288 276 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.2% 5.1% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 15.2% -4.3% EBIT 129 101 132 132 188 226 252 263 250 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.7% 4.7% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 16.3% -4.8% NOPAT 240 65 88 83 118 142 158 163 157 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 2.9% 2.9% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 15.0% -4.0% PF Net Income 198 31 55 48 86 108 124 130 124 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.3% 2.3% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 20.7% -5.2% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.26 $ 4.04 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 22.9% -5.2% Cash Flow from Operations 529 111 10 (181) (21) 51 107 207 200 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.7% 3.7% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 94.3% -3.7% CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.6% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2%
  • 84. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 84 Downside Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 160 170 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.9% 3.2% Growth % yoy -77.7% -119.7% 5.8% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (112) (264) Net Debt 508 453 523 447 460 549 542 437 285 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.9x 2.0x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 1.0x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.5x 5.2x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.03% 17.28% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.22% 15.21%
  • 85. Strictly Confidential September 2014 Point Frederick Capital UPSIDE FINANCIALS
  • 86. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 86 Upside Case New Vehicle Economics NEW VEHICLES New Vehicle - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 18,663 14,248 16,371 16,712 19,429 21,994 23,330 24,696 27,533 Mid-line Import 48,435 38,766 42,431 40,560 48,136 51,632 52,354 53,896 56,808 Mid-line Domestic 9,277 7,234 8,181 9,353 10,147 11,082 11,141 11,237 11,237 Total New Vehicle Retail Units - SS 76,375 60,248 66,983 66,625 77,712 84,708 86,825 89,829 95,577 Plus: New Vehicle Units - Acquisitions 3,086 1,785 2,451 2,679 2,365 1,258 2,831 1,573 1,573 Total New Vehicle Units 79,461 62,033 69,434 69,304 80,077 85,966 90,173 92,601 98,349 New Vehicle - Units - Mix % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 23.5% 23.0% 23.6% 24.1% 24.3% 25.6% 25.9% 26.7% 28.0% Mid-line Import 61.0% 62.5% 61.1% 58.5% 60.1% 60.1% 58.1% 58.2% 57.8% Mid-line Domestic 11.7% 11.7% 11.8% 13.5% 12.7% 12.9% 12.4% 12.1% 11.4% Total New Vehicle Retail Units - SS 96.1% 97.1% 96.5% 96.1% 97.0% 98.5% 96.3% 97.0% 97.2% Plus: New Vehicle Units - Acquisitions 3.9% 2.9% 3.5% 3.9% 3.0% 1.5% 3.1% 1.7% 1.6% Total New Vehicle Units 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% New Vehicle - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -23.7% 14.9% 2.1% 16.3% 13.2% 12.3% 11.5% Mid-line Import -20.0% 9.5% -4.4% 18.7% 7.3% 4.4% 5.4% Mid-line Domestic -22.0% 13.1% 14.3% 8.5% 9.2% 1.4% 0.0% Total New Vehicle Retail Units - SS -21.1% 11.2% -0.5% 16.6% 9.0% 6.0% 6.4% Plus: New Vehicle Units - Acquisitions -42.2% 37.3% 9.3% -11.7% -46.8% 25.0% 0.0% Total New Vehicle Units -21.9% 11.9% -0.2% 15.5% 7.4% 7.7% 6.2%
  • 87. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 87 Upside Case New Vehicle Economics New Vehicle - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 46,938 $ 46,722 $ 48,665 $ 49,569 $ 49,596 $ 49,891 $ 53,292 $ 50,601 $ 51,363 Mid-line Import $ 24,747 $ 24,408 $ 25,140 $ 26,159 $ 26,392 $ 26,805 $ 27,068 $ 26,595 $ 26,108 Mid-line Domestic $ 32,036 $ 34,241 $ 37,673 $ 37,507 $ 36,888 $ 36,735 $ 38,549 $ 39,242 $ 41,204 Total New Vehicle Retail Units - SS $ 31,055 $ 30,866 $ 32,420 $ 33,624 $ 33,564 $ 34,098 $ 35,379 $ 34,777 $ 35,158 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 29,849 $ 29,978 $ 31,391 $ 32,324 $ 32,572 $ 34,341 $ 36,081 $ 34,179 $ 34,167 New Vehicle - Units - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury -0.5% 4.2% 1.9% 0.1% 0.6% 1.4% 1.5% Mid-line Import -1.4% 3.0% 4.1% 0.9% 1.6% -0.8% -1.8% Mid-line Domestic 6.9% 10.0% -0.4% -1.7% -0.4% 6.8% 5.0% Total New Vehicle Retail Units - SS -0.6% 5.0% 3.7% -0.2% 1.6% 2.0% 1.1% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total New Vehicle Units 0.4% 4.7% 3.0% 0.8% 5.4% -0.5% 0.0% NEW VEHICLES New Vehicle - Gross Profit - $ per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury $ 3,461 $ 3,530 $ 3,763 $ 3,812 $ 3,778 $ 3,615 $ 3,897 $ 3,695 $ 3,728 Mid-line Import $ 1,652 $ 1,656 $ 1,402 $ 1,585 $ 1,411 $ 1,381 $ 1,425 $ 1,454 $ 1,430 Mid-line Domestic $ 2,167 $ 2,322 $ 2,726 $ 2,555 $ 2,483 $ 2,391 $ 2,463 $ 2,503 $ 2,634 Total New Vehicle Retail Units - SS $ 2,156 $ 2,179 $ 2,141 $ 2,280 $ 2,143 $ 2,093 $ 2,203 $ 2,201 $ 2,234 Plus: New Vehicle Units - Acquisitions $ - $ - $ - $ - $ - $ - $ - $ - $ - Total New Vehicle Units $ 2,073 $ 2,117 $ 2,070 $ 2,192 $ 2,079 $ 2,109 $ 2,242 $ 2,158 $ 2,171 New Vehicle - Gross Profit - $ per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 2.0% 6.6% 1.3% -0.9% -4.3% 2.2% 0.9% Mid-line Import 0.3% -15.3% 13.1% -11.0% -2.1% 5.3% -1.6% Mid-line Domestic 7.2% 17.4% -6.3% -2.8% -3.7% 4.7% 5.3% Total New Vehicle Retail Units - SS 1.1% -1.8% 6.5% -6.0% -2.3% 5.2% 1.5% Plus: New Vehicle Units - Acquisitions Total New Vehicle Units 2.1% -2.2% 5.9% -5.1% 1.4% 2.3% 0.6%
  • 88. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 88 Upside Case New Vehicle Economics New Vehicle - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 65 50 62 64 73 80 86 91 103 Mid-line Import 80 64 60 64 68 71 74 78 81 Mid-line Domestic 20 17 22 24 25 27 27 28 30 Total New Vehicle Retail Units - SS 165 131 143 152 167 177 187 198 213 Plus: New Vehicle Units - Acquisitions - - 0 - - 4 6 2 - Total New Vehicle Units 165 131 144 152 167 181 193 200 213 New Vehicle - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Luxury 7.4% 7.6% 7.7% 7.7% 7.6% 7.2% 7.8% 7.3% 7.3% Mid-line Import 6.7% 6.8% 5.6% 6.1% 5.3% 5.2% 5.3% 5.5% 5.5% Mid-line Domestic 6.8% 6.8% 7.2% 6.8% 6.7% 6.5% 6.7% 6.4% 6.4% Total New Vehicle Retail Units - SS 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.4% Plus: New Vehicle Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.3% 9.6% 5.1% 0.0% Total New Vehicle Units 6.9% 7.1% 6.6% 6.8% 6.4% 6.1% 6.5% 6.3% 6.4%
  • 89. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 89 Upside Case Used Vehicle Economics USED VEHICLES Used Vehicles Retail - Units 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 44,241 39,373 46,329 54,009 57,434 67,768 69,859 70,702 72,470 Used Vehicle Retail Units - Acquisitions - - 144 - - 1,686 2,892 1,206 - Total Used Vehicle Retail Units 44,241 39,373 46,473 54,009 57,434 69,454 72,751 71,908 72,470 Used Vehicles Retail - Units - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -11.0% 17.7% 16.6% 6.3% 18.0% 4.3% 2.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Used Vehicle Retail Units -11.0% 18.0% 16.2% 6.3% 20.9% 3.5% 0.8% Used Vehicles Retail - Revenue per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 17,843 $ 18,251 $ 18,930 $ 18,923 $ 19,187 $ 19,778 $ 20,790 $ 20,557 $ 21,071 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ - $ 20,522 $ 33,689 $ 18,408 Total Used Vehicle Retail Units $ 17,843 $ 18,251 $ 18,936 $ 18,923 $ 19,187 $ 19,796 $ 21,103 $ 20,521 $ 21,071 Used Vehicles Retail - Revenue per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 2.3% 3.7% 0.0% 1.4% 3.1% 3.9% 2.5% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 2.3% 3.8% -0.1% 1.4% 3.2% 3.7% 2.7% Used Vehicles Retail - Revenue 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 719 877 1,022 1,102 1,340 1,409 1,453 1,527 Used Vehicle Retail Units - Acquisitions - 3 - - 35 57 22 - Total Used Vehicle Retail Units 719 880 1,022 1,102 1,375 1,466 1,476 1,527 Used Vehicles Retail - Revenue - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -9.0% 22.0% 16.5% 7.8% 21.6% 8.4% 5.1% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -9.0% 22.5% 16.1% 7.8% 24.8% 7.3% 3.5%
  • 90. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 90 Upside Case Used Vehicle Economics Used Vehicles Retail -Gross Profit per Unit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS $ 2,029 $ 2,001 $ 1,881 $ 1,819 $ 1,769 $ 1,818 $ 1,784 $ 1,791 Used Vehicle Retail Units - Acquisitions $ - $ - $ - $ - $ 1,305 $ 2,254 $ 1,327 $ - Total Used Vehicle Retail Units $ 2,029 $ 2,003 $ 1,881 $ 1,819 $ 1,758 $ 1,829 $ 1,776 $ 1,791 Used Vehicles Retail - Gross Profit per Unit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 0.1% -1.4% -6.0% -3.3% -2.8% 0.8% 0.4% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units 0.1% -1.3% -6.1% -3.3% -3.4% 1.0% 0.9% Used Vehicles Retail - Gross Profit 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 90 80 93 102 105 120 123 126 130 Used Vehicle Retail Units - Acquisitions - - 0 - - 2 4 2 - Total Used Vehicle Retail Units 90 80 93 102 105 122 127 128 130 Used Vehicles Retail - Gross Profit - Margin % 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.5% Used Vehicle Retail Units - Acquisitions 0.0% 0.0% 0.0% 0.0% 0.0% 6.4% 11.0% 7.2% 0.0% Total Used Vehicle Retail Units 11.4% 11.1% 10.6% 9.9% 9.5% 8.9% 9.2% 8.7% 8.5% Used Vehicles Retail - Gross Profit - Growth % yoy 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Used Vehicle Retail Units - SS -10.9% 16.0% 9.6% 2.9% 14.7% 5.2% 2.9% Used Vehicle Retail Units - Acquisitions Total Used Vehicle Retail Units -10.9% 16.5% 9.1% 2.9% 16.8% 4.6% 1.6%
  • 91. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 91 Upside Case Financials FINANCIAL RESULTS Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 Total Revenue 4,093 3,406 3,936 4,141 4,642 5,335 5,623 5,719 6,043 Growth % yoy -16.8% 15.6% 5.2% 12.1% 14.9% 7.2% 5.7% EBITDA 150 123 153 155 211 250 278 300 323 Margin % 3.7% 3.6% 3.9% 3.7% 4.5% 4.7% 4.9% 5.2% 5.3% Growth % yoy -18.0% 23.9% 1.2% 36.2% 18.8% 19.9% 7.5% EBIT 129 101 132 132 188 226 252 275 297 Margin % 3.2% 3.0% 3.3% 3.2% 4.1% 4.2% 4.5% 4.8% 4.9% Growth % yoy -21.7% 30.2% 0.4% 42.3% 20.1% 21.5% 8.2% NOPAT 240 65 88 83 118 142 158 170 186 Margin % 5.9% 1.9% 2.2% 2.0% 2.6% 2.7% 2.8% 3.0% 3.1% Growth % yoy -72.8% 35.6% -6.3% 42.9% 19.6% 20.2% 9.0% PF Net Income 198 31 55 48 86 108 124 138 153 Margin % 4.8% 0.9% 1.4% 1.2% 1.8% 2.0% 2.2% 2.4% 2.5% Growth % yoy -84.5% 79.7% -12.0% 76.9% 26.1% 27.6% 10.9% PF FD EPS $ 6.24 $ 0.93 $ 1.65 $ 1.48 $ 2.72 $ 3.47 $ 4.08 $ 4.51 $ 5.00 Growth % yoy -85.1% 77.6% -10.1% 83.0% 27.7% 29.8% 10.9% Cash Flow from Operations 529 111 10 (181) (21) 51 107 188 143 Margin % 12.9% 3.3% 0.3% -4.4% -0.4% 1.0% 1.9% 3.3% 2.4% Growth % yoy -79.0% -91.1% -1930.3% -88.6% -344.9% 76.0% -23.7%
  • 92. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 92 Upside Case Financials Financial Results 2008 2009 2010 2011 2012 2013 LTM 2014 2015 CapEx 69 8 30 22 56 50 65 46 30 Margin % 1.7% 0.2% 0.8% 0.5% 1.2% 0.9% 1.2% 0.8% 0.5% Growth % yoy -88.0% 262.7% -26.9% 156.4% -11.5% -7.2% -35.2% Levered Free Cash Flow 460 103 (20) (204) (78) (1) 40 141 113 Margin % 11.2% 3.0% -0.5% -4.9% -1.7% 0.0% 0.7% 2.5% 1.9% Growth % yoy -77.7% -119.7% -19.5% Total Debt 600 538 544 459 466 554 549 549 549 Less: Liquid Assets (92) (85) (21) (11) (6) (5) (7) (107) (251) Net Debt 508 453 523 447 460 549 542 442 297 Total Debt/EBITDA 4.0x 4.4x 3.6x 3.0x 2.2x 2.2x 2.2x 1.8x 1.7x Net Debt/EBITDA 3.4x 3.7x 3.4x 2.9x 2.2x 2.2x 2.2x 1.5x 0.9x Total EBITDA/Interest Expense 2.2x 2.2x 2.9x 2.8x 4.0x 4.6x 5.2x 5.7x 6.1x ROE % 0.0% 12.56% 19.16% 14.82% 21.25% 21.99% 25.38% 22.99% 20.32% RNOA % 0.0% 9.37% 10.93% 10.71% 13.73% 13.63% 15.16% 15.91% 17.85%
  • 93. Strictly Confidential September 2014 Point Frederick Capital Red Team Analysis
  • 94. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 94 What Does The Red Team Analysis Suggest How This Could Go Wrong? ABG is sold to a strategic buyer as part of a larger dealer roll-up strategy. Continued, unprecedented demand for high quality used vehicles results in the stabilization of used car pricing. ABG successfully completes a leveraged recapitalization, using excess cash proceeds for additional stock buybacks. ABG is able to consistently locate and acquire mildly underperforming independent dealerships at attractive cash flow multiples, thereby adding value to the enterprise.
  • 95. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 95 What Is The Market Missing? The price of used cars could come under severe pressure, the result of four years of extremely strong new car sales and leasing volumes as well as easy credit conditions. The market may be overestimating management’s ability to build enterprise value through small tuck-in acquisitions. With newly added car manufacturing capacity and a weak Japanese Yen, OEMs will maintain aggressive new car incentives. The market may be overlooking ABG’s exposure to subprime customers. As 25% of new loan originations are to subprime customers, ABG’s F&I and new/used car business would be materially impacted if U.S. regulators impose tighter lending standards as a preemptive measure to stem excessive lending.
  • 96. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 96 Fall in New Car Demand Used Car Over- Supply New Car Incentives Stricter Financing Negative Industry Dynamics Increased Rates End of Easy Credit Downside ABG Tremendous Downside Despite Fantastic Recent Performance
  • 97. Strictly Confidential September 2014 Point Frederick Capital BIOS
  • 98. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 98 Biographies Chand Sooran, Chief Investment Officer Chand has broad and deep experience investing across the capital structure. Most recently, he helped start up the distressed value team at CQS as the #2 with positions across the capital structure, eventually running a parallel long/short value equity book independently. His role as Portfolio Manager included membership in the HoldCo creditors’ committee in the Six Flags Chapter 11 case and membership in the steering committee and the creditors’ committee for Nell noteholders in the LyondellBasell Chapter 11 case. Prior to that, he worked as a Senior Analyst at Columbus Hill Capital Management, a high profile value fund, covering Airlines, Telecoms, Media and Technology in equities and in credit. Notably, he was a member of the ad hoc creditors’ committee in Delta Airlines. Before joining Columbus Hill, Chand was a research analyst for five years in an internal multi-strategy hedge fund at Lehman Brothers where he worked on a variety of strategies including distressed debt, deep value, special situations, long/short equity and emerging markets. This included work as an unsecured creditor in the UAL Chapter 11 case, special situations driven by litigation and other general value investing. Prior to going to business school at MIT Sloan, he spent approximately six years trading foreign exchange, principally as a market maker for foreign exchange options. In addition to being a graduate of MIT, Chand is a graduate of the University of Toronto Schools, the Royal Military College of Canada and Queen’s University, as well as being a CFA Charterholder and being certified as a Financial Risk Manager by the Global Association of Risk Professionals. After graduating from RMC, Chand was a commissioned officer in the Royal Canadian Navy.
  • 99. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran 99 Biographies Anand Kalola, Senior Analyst Anand Kalola has over seven years of finance industry experience. Most recently, Anand was a Senior Associate at Prospect Capital where he was responsible for originating, executing, and managing middle-market investments. Prior to Prospect, he worked as a Senior Associate at Chanin Capital Partners/Duff & Phelps Restructuring with a focus on executing financial restructurings. Anand began his career as a Financial Analyst with the leveraged finance group at CIBC World Markets in Los Angeles. He holds a BS in Economics and a BA in Biological Basis of Behavior from the University of Pennsylvania. He is also a CFA Charterholder.
  • 100. Point Frederick Capital No representation is made that the Investment manager’s or the Fund’s investment process, investment strategies, goals or risk management techniques will or are likely to be achieved or be successful. See Important Information on Page 2. Presentation for: Chand Sooran Contact Information 100 Chand Sooran Chief Investment Officer, Manager & Founding Member chand.sooran@pointfrederickcapital.com 646.380.6675