IPO Report: Fenix Parts (FENX)

Francis Gaskins |

Fenix Parts IPO, Fenix Parts IPO price, Fenix Parts IPO date, IPOs this week, stocks to buy now, small-cap stocks

Fenix Parts (FENX) is a leading recycler and reseller of OEM automotive products. It is based in Miami, FL. 

Four other companies are scheduled to IPO for the week of May 11. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: BMO Capital Markets and Stifel

Co-managers: None

End of lockup (180 days): Tuesday, November 10, 2015

End of 25-day quiet period: Monday, June 8, 2015

FENX scheduled a $110 million IPO with a market capitalization of $166 million at a price range midpoint of $10 for Thursday, May 14, 2015 on Nasdaq.

Fenix Parts (FENX) IPO Summary

FENX is a leading recycler and reseller of OEM automotive products. Fenix was founded in January 2014 to combine its eight Founding Companies and create a network that offers sales, fulfillment and distribution in key regional markets in the United States and Canada.

Fenix Parts (FENX) IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$3

     

Per share dilution

.

.

-$7.40

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Fenix Parts (FENX)

$166

1.5

-43.7

1.2

3.8

66%

             
             

Fenix Parts (FENX) IPO Conclusion

Neutral

Roll-up of 8 vehicle recyling & OEM businesses

Price to book of 1.2, price to tangible book of 3.8

Price to sales of 1.5.  P/E of -44, indicating relatively low cash burn rate relative to market cp

$108mm in revenue

Proceeds used to buy the companies, plus stock

Fenix Parts (FENX) Business

FENX is a leading recycler and reseller of OEM automotive products. Fenix was founded in January 2014 to combine its eight Founding Companies and create a network that offers sales, fulfillment and distribution in key regional markets in the United States and Canada.

FENX’s Founding Companies have been in business an average of 25 years and operate from 13 locations.

FENX’s primary business is auto recycling, which is the recovery and resale of OEM parts, components and systems reclaimed from damaged, totaled or low value vehicles. FENX’s customers include collision repair shops (body shops), mechanical repair shops, auto dealerships and individual retail customers.

FENX provides customers with high quality recycled OEM products, extensive inventory and product availability, responsive customer service and fast delivery. Upon receipt of vehicles, which FENX primarily purchases at auto salvage auctions, FENX inventories and then dismantles the vehicles and sell the recycled components.

FENX operates a hub and spoke distribution network allowing FENX to efficiently move products among its locations and expedite delivery to its customers.

The recycled OEM products that FENX sells include mechanical parts used to repair or replace worn or damaged components, such as engines and transmissions, and collision repair parts used to repair vehicles typically involved in a collision, such as door assemblies, trunk lids, lights, fenders and other products.

These products are “insurance quality” which means of a quality that is acceptable for use in a repair paid for by an insurance company.

Many consumers and repair facilities use recycled OEM products because they are less expensive than new OEM products and are perceived to be of higher quality and fit than aftermarket products.

Recycled OEM products often are sold as assemblies, which shorten repair times and help reduce labor costs.

In addition, insurance companies are increasingly influencing repair facilities to use recycled OEM products as a lower cost alternative to new OEM products.

Fenix Parts (FENX) Intellectual Property

FENX owns two registered trademarks in the United States and two registered trademarks in Canada. Such trademarks may endure in perpetuity on a country-by-country basis, provided that FENX complies with all statutory maintenance requirements, including continued use of each trademark in each such country.

FENX currently does not own any registered copyrights or patents.

Fenix Parts (FENX) Competition

The automotive recycling industry is highly fragmented, with few multi-facility operators.

According to the ARA, there are an estimated 9,000 vehicle recycling facilities in the United States and Canada.

FENX believes that LKQ Corporation, with what FENX believes is less than a 10% market share, is its only direct competitor with more than a 1% market share within the automotive recycling industry.

Fenix Parts (FENX) 5% Shareholders Pre-IPO

Kent Robertson             28.5%

Scott Pettit       8.8%

Steven Dayton 5.7%

Ross Berner      16.8%

Steven Colmar 11.3%

Fenix Parts (FENX) Dividends

No dividends are planned.

Fenix Parts (FENX) IPO Use of Proceeds

FENX expects to receive $101 million from its IPO and use it for the following:

plus, to the extent necessary, up to $6.0 million of borrowings or letter of credit utilization under the credit facility to be entered into with BMO Harris Bank N.A.,

to pay the approximately $93.2 million cash portion of the Combination Consideration in the Combinations with the Founding Companies.

Such cash portion of the Combination Consideration is subject to adjustment based upon the Founding Companies’ working capital on the closing date of the Combinations and certain other factors.

FENX estimates, based on December 31, 2014 balances, that the aggregate net adjustment for the cash portion of the Combination Consideration will be an increase of approximately $6.7 million.

FENX may also use a portion of the net proceeds from this offering to pay the installments of the promissory notes FENX issued in the aggregate principal amount of $200,000 in connection with the Combinations with the Founding Companies and to repay debt assumed in the Combinations, which FENX currently expects to be $0.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FENX Fenix Parts Inc. 3.24 -0.11 -3.28 226,175

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