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Investment Add-On Memorandum
March 2016 Daniel Singer
Disclaimer
This Information Memorandum (the “Document”) concerning a proposed investment in the Vehicle Recovery industry has been compiled by Daniel Singer (the “author”) solely for information purposes. The information contained herein has been prepared to assist interested parties in making their own evaluation of the industry and does not purport to contain all the information that other parties may require. This Document includes certain statements, estimates, and projections with regard to the industry and market participants, which reflect various assumptions, all of which may or may not prove to be correct. The Document has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made by the author to its fairness, accuracy, completeness or correctness. To the fullest extent permitted by law, the author does not accept any liability whatsoever for any direct or consequential loss arising from any use of the information contained herein. All material presented in this document, unless specifically indicated otherwise, is under trademark and copyright to the author.
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Table of Contents
Contents
Page
Section A
Executive Summary 5
Company Profile 6
Section BIndustry Analysis
Automobile Towing in Canada 8
Competitive Dynamics 9
Demand Drivers 10
Regulatory Developments 12
Toronto Police Contracts 14
Rotational System 15
Competitive Landscape 16
Investment Thesis 18
Section C
Appendix
Competitive Landscape 20
Value Chain 22
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Section A: Executive Summary and Company Analysis
Executive SummaryRegulations Shift Dynamics Of Vehicle Recovery Industry Structure
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Consolidate Vehicle Recovery industry in Canada through expansion of City Wide Towing service platform
to Ontario. Make add-on acquisition of Ontario Vehicle Recovery company holding exclusive contracts and those
who are in favorable positions from ongoing spike in legislation.Investment
Thesis
Police-Towing Contracts – Cities across Ontario are increasingly adopting individual towing contracts per
police division and ending the traditional open-market for police-towing calls. The adoption of contracts has
potential to change a major revenue segment of the industry into monopoly and oligopoly competitions.
RationaleTowing Regulations – Amid new towing regulations in Ontario, such as Bill 15 and Bill 30, lobbying efforts for
further control are gaining traction, whereby the industry could reinstate new rotational systems. Towing
providers elected as a part of rotational system must meet strict capital and operational requirements.
2
1
Market Outcomes
Rising barriers to entry for two major revenue segments – government and individual sourced towing.
Reduction in number of establishments in vehicle recovery industry in Ontario.
Increasing operating margins from higher standards towing fees derived from police contracts.
Increasing concentration and reduced fragmentation from larger market share for fewer establishments.
Table of Contents
Headquarters Calgary, AB
Founding 1963
Owners Rob Voelk – CEOWendy Voelk – VP
Revenue Streams
Individuals – Accidents and vehicle troubleCommercial – Auto clubs, insurance companies, equipment rental companies, auto dealershipsGovernment and Municipalities – Police contracts, fire departments, transport authority
Service Offering
Towing and Recovery – Light, medium and heavy duty, boosting, lockouts, fuel deliveryEquipment Transportation – Industrial and construction equipment and vehicles, high-end vehiclesSpecialty Services – Air cushion recovery, extreme recovery
Capabilities Fleet Size ~90 – 24/7 services, tilt bed carriers, 3 to 5 ton trucks, heavy duty wreckers, tilt bed landoll trailer, GPS tracking
Acquired Companies
Buster’s Heavy Towing Service, ATO Towing, B “I” Towing, Able Towing, Big Hill Towing, Sicotte Towing
Summary
City Wide Towing is the leading provider of vehicle recovery services in Alberta and the largest operator in the greater Calgary area
Market reach
Company ProfileCity Wide Towing
The company serves eight areas in southern Alberta, measuring approximately 5.5 thousand squared kilometers in market reach surrounding the greater Calgary area
Non-conformity analysis
The company has bifurcated customer experiences and registered a weighted average customer service score of 3.6 stars1
1Total score is a weighted average of the score and number of ratings in combination between Facebook and GoogleSource: Google Reviews; Facebook.com
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Section B: Industry Analysis
Establishments in Canada
Industry AnalysisVehicle Recovery Services
Description
The industry tows light or heavy motor vehicles over short and long distances. Establishments may also provide incidental services, such as storage, emergency road repair, vehicle and equipment recovery and vehicle or equipment transport
Typically, a towing company charges a flat fee and mileage or an hourly rate based on the type of towing vehicle used Towing establishments must receive a towing license to service an area, such as a municipality in the province of Ontario
The industry is highly fragmented, where the top 50 companies account for 15% of revenue
In 2015, the industry generated US$6.1 billion, and is expected to increase at a CAGR of 5.0% over the next five years
There are approximately 8,000 towing providers in the US
Industry snapshot
Key Drivers
Number of vehicle accidents – the greater number of automobile accidents, the higher the demand for industry services to remove vehicles and clear highways and roads
Number of motor vehicle registrations – the number of vehicle registrations reflects the number of vehicles on the road, and thus potential breakdowns demanding towing service
Average age of vehicle fleet – the age of motor vehicles can influence the occurrence of breakdowns and accidents, as older vehicles suffer mechanical failure more often than newer and require towing services
Canadian marketAmerican market
23%
34%
43%
Commercial CustomersLocal and State GovernmentsIndividuals
$ 6.1 B
Source: IBISWorld Industry Report, Automobile Towing in the US; First Research Industry Profile, Motor Vehicle Towing Services; Statistics CanadaNote: American related figures in USDNote: Establishments in Canada are those that employ truck drivers. There are 1,500 non-employers and 1,018 employers for a total of 2,518 operators.
The Canadian industry is highly fragmented and extremely competitive
55.0% of companies employ less than four workers, while 45.0% of companies employ between 5-99 employees
Operators are most concentrated in Ontario, where regulations are shifting the industry structure
Low to moderate concentration among participants with no industry incumbent
Low fuel prices expand operating margins
ABBC
MNNBNFNTNSNUONPEIQCSKYT
126158
3131
112
250
3637
22240
2
Towing Service Establishments per Province
Strict regulation gaining traction coupled with high fragmentation combine to present opportunity to build a growth platform and consolidate niche industry
Major market segmentation
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Industry AnalysisCompetitive Dynamics
Small number of established participants serve overall market: two national companies with extensive distribution networks – Miller Industries and Jerr-Dan – dominating the North American market
Many buyer segments for wreckers: towing and recovery agencies, automobile dealers, the salvage industry, equipment transport service providers and large vehicle fleet operations
Supplier Power: High
Source: Statistics Canada; Conference Board of Canada, Automated Vehicles; Financial Post, “Watch out CAA, New roadside assistance apps seeking to ‘revolutionize’ towing industry”, 2014
New regulations create monopoly and oligopoly for law enforcement market of towing calls
Capital intensity is moderate: fixed costs include vehicles, communication infrastructure, municipal licensing for towing in the greater Toronto area can exceed $80,000 per year
Licenses are required to service individual municipalities in Ontario
Threat of New Entrants: Low
• Significant breakdown in revenues between non-consent and consent towing makes buyer power low and high case by case
• Non-consent towing ordered by law enforcement – prices are high and non-negotiable
• Consent towing from individuals seeking towing on their account negotiate prices and shop for cheapest service across homogeneous, fragmented, and competitive market vendors
Buyer Power: Medium
Automated Vehicles (AVs) can reduce 93.0% of collisions that currently involve human error in Canada
Uber app for towing can disrupt the market for consent derived towing segment, driving prices down
Substitutes also include alternative forms of travel, such as bus, air and rail
Threat of Substitutes: Low
In Canada, the industry is highly fragmented, 1,018 establishments, and Ontario and Quebec account for approximately 65% operators
Heavy marketing to individual customer segment
Industry Rivalry: High
Truck Distributors
Truck Manufacturers/Up-Fitters
High barriers to entry from law enforcement contracts and regulation trends coupled with low buyer leverage for non-consent towing calls shifts industry structure into monopoly and oligopoly
Towing Services Apps
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British Columbia
Saskatchewan
Manitoba
Ontario
Quebec
Canada
11.1 years
11.3 years
10.0 years
8.6 years
7.2 years
9.3 years
Industry AnalysisDemand Driver Analysis – Size And Age Of Vehicle Fleet In Canada
Source: HIS Automotive, “Polk finds average age of light vehicles continues to rise”; Desjardins Economic Studies, Quebecers and their automobiles; Conference Board of Canada, Canada’s Motor Vehicle Parts Manufacturing Industry; Desrosiers Automotive Reports, Total Light Vehicles in Canada; Allstate, 2015 Safe Driving Study; Statistics Canada, Canadian Motor Vehicle Traffic Collision Statistics 2013; TD Economics, Canadian Auto Sales to Downshift From Fifth to Fourth Gear; Scotiabank, Global Auto Report, 20161Measured by replacement value of roads
In 2014, there were 21.7 million Canadian car and light truck registrations, representing a 2.2% growth rate over the previous period
Ontario and Quebec lead in vehicle sales
Vehicle registrations in Canada have risen steadily Auto sales in Canada set a record in 2015, with 1.89 million new
vehicles sales, and 1.9 million forecasted for the 2016 period
Strong Canadian vehicle sales outlook
Aging vehicle fleet of Canada In 2013, the average age of a Canadian passenger vehicles was 9.3
years, and is trending higher• Duration of vehicle loan terms have lengthened as 80% of loans are
72 months or greater
Average age of vehicles in Canada
Despite constant growth in vehicle sales for Canada expected over the next year, Ontario and Quebec are forecast to grow by 1.4%, driven by stronger demographic and income trends
Approximately 85% of vehicles acquisitions in 2014 were purchased as opposed to leased, contributing to the aging fleet of Canadian vehicles
06 07 08 09 010 011 012 013 01417.00
18.00
19.00
20.00
21.00
22.00
-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%
Car and Light Duty Truck Registrations (millions)Growth (YoY)
Vehicle sales by province (thousands)
772,000 450,000
Ontario Quebec
2013 2014 2015 20160
100200300400500600700800900
Ontario Quebec Alberta British Columbia AtlanticManitoba Saskatchewan
06 07 08 09 010 011 012 013 014 015 0160
0.20.40.60.8
11.21.41.61.8
2
Vehicle sales in Canada (millions)
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Source: HIS Automotive, “Polk finds average age of light vehicles continues to rise”; Desjardins Economic Studies, Quebecers and their automobiles; Conference Board of Canada, Canada’s Motor Vehicle Parts Manufacturing Industry; Desrosiers Automotive Reports, Total Light Vehicles in Canada; Allstate, 2015 Safe Driving Study; Statistics Canada, Canadian Motor Vehicle Traffic Collision Statistics 20131Measured by replacement value of roads
Ages 15-19 – There are over 1.2 million licensed drivers under the age of 19 in Canada
This age group represents relatively inexperienced and skilled drivers, thereby increasing the risk of collisions
In 2013, the age cohort 15-19 years of age represented 15.2% of all passenger fatalities and 16.1% of all serious injuries to passengers in Canada
Ages +65 – On a per km basis, seniors are the most collision prone drivers In 2014, more than 3.5 million senior driver collisions were reported
In 2013, seniors aged 65+ represented 19.2% of all passenger fatalities and 11.7% of all serious injuries to passengers in Canada
Deteriorating road quality and growing cohort of poor drivers contributes to likelihood of vehicle damage and fuels demand for roadside assistance
Metropolitan population increasing in size and concentration
Car accidents in Canada on the rise, especially in Ontario Young and senior drivers most prone to collisions
Road quality in Canada deteriorating despite repairs
Very Good24%
Good37%
Fair23%
Poor10%
Very Poor6%
-1%
1%
3%
5%
7%
9%
11%
13%
15%
-80%-70%-60%-50%-40%-30%-20%-10%0%10%20%
7% 7% 7% 6% 6% 6% 6% 6% 6% 6% 5%
0%16% 12% 7% 2% 8% 5% 10%
1%9% 8%
Collision claims frequency (per 100 cars) 2015 Growth in Collisions from 2014 to 2015
39% of Canadian roads are classified as Fair to Very Poor physical condition. Fair to Very Poor indicates the structure requires immediate attention, or is unfit for sustained service
At the current reinvestment rate – 1.1%, Canadian road infrastructure will decline in the condition over time
The replacement value amounts to $40 billion
Car accidents are on the rise in Canada – there were 7.3% more reported collisions in Canada in 2015 compared to the previous year
Accident claims in Toronto grew by 2.0% over the same period
Growing population in metropolitan areas in Canada
Canada
Calgary
Saskatoon
Kelowna
Toronto
Vancouver
St. John's
Ottawa–Gatineau
Ottawa–Gatineau, Quebec part
0 0.5 1 1.5 2 2.5 3 3.5 4
Change in population size (%)
Population of Canadian city growth 2014 / 2015
Physical condition of Canadian roads1
Fair = requires attention, signs of deteriorationPoor = increasing potential affecting service, approaching end of service lifeVery Poor = unfit for sustained service
Industry AnalysisDemand Driver Analysis – Collisions And Repairs In Canada
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Source: CBC News, “Ontario aims for tougher tow truck rules”, 2015; CBC News, “Tow truck tricks can hit you after an accident”, 2015Note: License to tow in Toronto: Owners must provide a Certified copy of proof of insurance policies, including a minimum of $100,000 comprehensive general liability insurance and $50, 000 cargo liability insurance.
British Columbia, Manitoba and Saskatchewan have provincially-run insurance companies that oversee towing services, regulate pricing and deter fraud Those centrally managed insurance models provide a greater degree of oversight
By contrast, the towing industry in Ontario is unregulated and towing across the province is marked by frequent horror stories of aggressive sales techniques and dishonesty Many collision victims fall prey to exorbitant storage and repair fees from towing operators who are affiliated with auto body shops
Exclusive Police
Contracts
Regulatory environment in Ontario
Collision chasing – Tow trucks race to collision scenes to get towing business from accident victims. Rampant across Ontario. Fines for chasing do not properly deter collision chasers
High towing rates – Exorbitant pricing schemes employed by various companies have shot up insurance premiums for drivers
Under insured/Under equipped – Significant amount of non-employed operators in towing industry with very few trucks are under insured and under equipped to conduct proper towing services
Kickback corruption – Tow trucks take towed cars to affiliated auto body and garages that provide cash kickbacks for referral of business. In many cases, the vehicle is not in need of repair or towing and the victim is ripped off
Resulting effect
Bill 15
Bill 30
CVOR
Industry problems Regulations
The Fighting Fraud and Reducing Automobile Insurance Rates Act, which was passed in 2014, provides legal protections against unethical business practices and accountability for the few tow truck drivers and owners who take advantage of unsuspecting consumers
Explanation
Reduction in number of towing operators due to increased storage and operating requirements
Lobbying efforts for police to arrive on an accident scene first can reduce the operators whose primary source of revenue is from collision chasing
The Highway Incident Management Act, which is under review, is intended to completely change the system in which tow trucks respond to collisions and relieve some of the gridlock traffic in the GTA
In effect Jan 1 2017, the Commercial Vehicle Operator’s Registration system will require vehicles commonly known as tow trucks and other vehicles used for towing, such as the flatbed trucks known as "tilt and loads", will require a CVOR certificate, where they become subject to inspection on hours on duty, and vehicle equipment inspections
New limitations on towing industry can hurt smaller operators who work beyond regulation hours and avoid capital expenditures for
Towing services receive exclusive contracts to tow and service police sourced roadside assistance, restricting access to significant market of other towing providers – as much as 80% of business can be derived from police-towing calls
Monopoly and Oligopoly industry structure for winners of police contracts
Increased margins Reduced establishments
Industry AnalysisOntario Regulatory Developments
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Police Contracts
Collision Chasing
Source: CTV News, “Towing company can no longer bid for London police contract”, 2014; The London Free Press, “Ross Towing monopoly still stands”, 2015; Canadian Towing and Recovery, “Bill 30 will change how to trucks respond in Ontario”, 2015; Metro New, “Ottawa police staging fake accidents to ticket tow truck collision chasers”, 2015
Timeline of developments in addressing Collision Chasing and Police Contracts
In 2012, Toronto Police award a lucrative 3-year towing contract to JP Towing
October 2015
Bill 30, the Highway Incident Management Act, aimed at improving highway driver behaviour relating to highway accidents and provide accurate and timely information about incidents to drivers to avoid paralyzing gridlock in the GTA
November 2014
Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, is passed to make tow providers to publish their rates, provide itemized invoices before receiving payment, to accept credit card payments, disclose their business relationships, give upfront written estimates of the repair costs and the final cost cannot be 10% above the initial written amount
March 2015
Police are dispatching two officers for straightforward collision in Ottawa, - one to handle the people involved and the other to issue tickets to tow trucks who show up on the scene illegally and are within 100 metres of the scene. The police have issued 277 tickets to tow truck driers in Ottawa in 2015 for chasing collisions; the fine is $175
In 2015, new London Police exclusive towing contract awarded to Ross’ Services, ending a 35 year tradition or rotational system for police calls
In 2011, Downtown Towing Group goes bankrupt after new criteria for Toronto police-towing contract renders them unqualified
As many as 30 cities across Canada have police-towing contracts and over 16 cities in Ontario contract police related towing
January 2016
Tow truck fines for collision chasing quadrupled in last year
Industry AnalysisOntario Regulatory Developments
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Source: Toronto Police; The Star, “Your car’s just been towed. Now what?”, 2015; The Star, “Towing companies snub Toronto’s low-tow zone”, 2012; Toronto Star, “Cops trying to put me out of business”, 2011; Canadian Towing and Recovery, “Ontario’s proposed towing and storage rules to bring big changes”, 2015; RichmondHill Tow Truck Licensing Overview; CBC News, “What to do if your car is towed in Toronto”, 20151Toronto Star, “Tow-truck confidential”, 20142Toronto Star, “Relationship between towing companies, board under scrutiny”, 1999
District 1 JP Towing Divisions 11, 12, 13, 14, and 53 $160 for towing$70 per day for storage
12,775 – $3.0 million30 – 40 tows/day
District 2 Bill and Son Towing Divisions 22, and 23 $150 for towing$71 per day for storage
-
District 3 Abrams Towing Divisions 31, 32, 33, and 53 $165 for towing$65 per day for storage
-
District 4 Williams Towing Divisions 41, 42, 43, 54 $149 for towing$80 per day for storage
-
District 5 A-Towing Divisions 51, 52, and 55 $158 for towing$50 per day for storage
4,672400 tows/month
Toronto police-towing contracts
Toronto’s towing contracts for police tow calls is separated on contract by police districts – five districts with individual towing per district
3,000 vehicles towed daily in the Greater Toronto Area1
There were more than 50,000 vehicles towed in 2015 from by-law infractions and major accidents2
Over 16 cities in Ontario contract police related towing to an exclusive group of towing providers
Location Company Police Divisions Pricing Tows per year
Toronto City police-towing contracts restrict new entrants, resulting in a government-induced monopoly structure and a reduction in industry establishments
Toronto police-towingMarket size1
+$16.0 Million
Industry AnalysisToronto Police-Towing Contracts
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Rotational groups of towing providers are growing in popularity, screening members by criteria and limiting market-entry• Drivers need to have a certain amount of
equipment, insurance and training to qualify for the list and anyone caught collision chasing gets kicked off, forming a government controlled oligopoly
• In several cities, including Hamilton, Burlington, and Oakville, there’s a rotation system in place, so that all operators get a tow opportunity without chasing
Source: Toronto Police; The Star, “Your car’s just been towed. Now what?”, 2015; The Star, “Towing companies snub Toronto’s low-tow zone”, 2012; Toronto Star, “Cops trying to put me out of business”, 2011; Canadian Towing and Recovery, “Ontario’s proposed towing and storage rules to bring big changes”, 2015Note: District 6 is the most lucrative district. Unknown contract holder. Potentially A Towing or Downtown Group Towing and Storage. Monthly rent in District six averages at $10,000/acre
City police-towing contracts in Ontario
Police Contract Company
Ottawa District 1 Gervais Towing
Ottawa District 2 Ottawa Metro Towing
Barrie (Light Duty, Heavy Duty) Graves Towing, Currie Heavy Towing
11 Division, 12 Division (Heavy Duty) Lyons Auto Body
12 Division and Airport Division Atlantic Auto Body (Light Duty)
21 and 22 Division Hansen Auto Parts and Towing
Markham Cardinal Towing
Bradford Elliot's Towing
Richmond Hill York Regional Traffic Services
London Ross’ Towing
Toronto District 1 JP Towing
Toronto District 2 Bill and Son Towing
Toronto District 3 Abrams Towing
Toronto District 4 Williams Towing
Toronto District 5 A Towing
Rotational program consideration
Regulatory Development
Rotational System
Joey Gagne, owner of Abrams Towing has been mentioned in advisory of the current legislations, bill 15 and 40, and implementing a rotational system
In combat to collision chasing, Hamilton tow truck drivers caught soliciting services on the scene of an accident can face fines between $5,000 and $100,000
Industry AnalysisNew Regulations To Roadside Assistance
excluded
Provider #6
Provider #7
Provider #8
Provider #9
Provider #10
Provider #11
Provider #12
Provider #13
Provider #14
Provider #15
Provider #16
Provider #17
Provider #18
Provider #19
Provider #20
Provider #21
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Selected market participants
Fleet +160Employees 200Tows / year 200,000
Light, Medium, Heavy-duty
Flatbeds Tri-axle trucks 1-ton Wreckers
50-ton Peterbilt Challenger
Hydraulic float trailers GPs tracking
Corporate: Mark Motors, Penske, Ryder, Toronto Transit Commission (Toronto Public Transport)Contract: Police of Toronto
Toronto, Mississauga, Hamilton, North York, Oakville, Windsor, Ottawa, Burlington. BramptonAbram’s Towing Service
1972
Company Locations Size Clients Offering Suite & Equipment
Fleet +100 Flatbeds Heavy-duty (designated for Police)
Corporate: Major insurance companies, Major auto dealerships, vehicle fleetsContract: Peel Regional Police
Mississauga, Brampton, Wolfedale, Orangeville, Meadowvale, Oakville, Atlantic Collision Group
1975
Fleet +60Tows / year: ~14,000
Light, Medium, Heavy-duty
Chevy 3500 Vulcan F450 Wrecker 25-ton NRC
50-ton NRC 65-ton Rotator Slider Flatbeds Corporate: Cintas, Hydro
Contract: Toronto Police
Toronto, Brampton, Mississauga, Woodbridge, Richmond Hill, Newmarket, York, BarrieJP Towing
1988
Fleet +40 Medium, Heavy-duty FlatbedsContract: Toronto Police Service,
Toronto EMSGreater Toronto AreaWilliams Towing
1976
Fleet +25Employees ~20
Light, Medium, Heavy-duty (5) Flatbeds
Corporate: UPS, FedEx, PurolatorContract: Ottawa City Vehicles, OPP, RCMP
Toronto, Mississauga, Hamilton, North York, Oakville, Windsor, OttawaGervais Towing
1934
Fleet +30Employees 30Police tows / year 3,000Clients +1,000
Light, Medium, Heavy-duty (8)
60-ton, 75-ton Rotator Kenworth
Air cushion recovery Emergency spill
response
Corporate: Ryder, Penske, Herb, UPS, Fedex,Contract: London Police, Ontario Provincial Police
London, Southern Ontario
Ross’ Service1957
Source: Primary research from interviews with company employees; Capital IQ; Company Websites; Mergent Online Database; Privco Private Company Database;
Industry AnalysisCompetitive Landscape
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Selected market participants
Company Locations Size Clients Offering Suite & Equipment
Fleet +37Employees 30
Light, Medium, Heavy-duty
80-ton Rotator 3-5 ton Wreckers Flatbed
Air Cushion recovery
N/AWindsorBell River
Myers Towing1972
Fleet +60Employees Tows / year 36,500
Light, Medium, Heavy-duty
50-ton, 35-ton, 1-ton wreckers
Flatbeds
N/AGTASurrounding areas
KBW Towing1980
N/A
Towing Heavy Towing Specialized Towing Roll-off / Tilt & Load Flatbeds
Double Drop Float Covered Transport Extendable Trailers Dump Trucks
Waterloo, Kitchener, Cambridge, Guelph
Becker Bros. Towing1987
Fleet +50Storage 2.5 acresOffice 20,000 ft2
Light, Medium, Heavy-duty 50-ton, 20-ton Slider Flatbeds GPS communications Licensed to operate throughout Canada and US
Corporate: Greyhound, Bell, Fedex, UPS, Hertz, Mercedes Benz, Frito Lay, Hydro OneContract: Police of Toronto, Toronto Transit Commission
Toronto, Mississauga, Hamilton, North York, Oakville, Windsor, OttawaA Towing Services
1962
Fleet +50
Light, Medium, Heavy-duty 65-ton S/R Incident Manager 50-ton, 20-ton Slider 1-ton Wrecker
N/A
Toronto, Mississauga, Hamilton, North York, Oakville, Windsor, Ottawa0Bill & Son
1982
Indication of fast growing towing company, with license growth from Ste-Catherine to BarrieClassic Towing
Industry AnalysisCompetitive Landscape
Source: Primary research from interviews with company employees; Capital IQ; Company Websites; Mergent Online Database; Privco Private Company Database; Private and Confidential | 17
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Investment Thesis
Investment Thesis
Regulations – New towing regulations to address collision chasing and other unscrupulous practices in the industry are expected to reduce the number of participants and limit entry
• Ontario’s towing industry is highly fragmented with low concentration, with approximately 1,100 towing providers in Ontario, of which, almost 750 are non-employers, servicing with one vehicle/wrecker
• Individual towers are dependent on towing calls from individuals in collisions and source these calls from intercepting collisions dialed to 9-11, and chasing those collisions, which now has become illegal and subject to fines
Police Contracts – Increasing number of cities abolishing traditional rotation system for police-towing calls and adopting the issuance of exclusive towing contract per police district
• There are already 16 cities in Ontario that contract towing services for police enforcement sourced towing calls, and over 30 in Canada
• The contracts are typically three years in length and are consistent to the contract winner, providing visibility on recurring yearly revenues
Rationale
Expand City Wide Towing service platform across Canada to Ontario through add-on acquisition of towing provider which is currently servicing police contracts, extensive corporate accounts, or individual towing calls
• Targeted towing company is the beneficiary of stable and quality cash flows from contracts, which can be enhanced through further consolidation across Ontario municipalities
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Section C: Appendix
Competitors list of towing establishments in Canada
Company HQ Employees Rev. Est. Tows/year Fleet size Associations Ownership
A Action Towing Burlington, ON 10 - 1995 - +10 STA -A Towing Services Toronto, ON - - 1962 - - ORG Alex AnnissimoffA&B Towing Grande Prairie, AB - - 1999 - +10 - - A-1 Towing Hannon, ON - - 1953 - - ORG Gail DaleyAbrams Towing Services Toronto, ON 200 - 1984 200,000 +160 ORG, PTAO Joey GagneAction Towing and Automotive Trenton, ON - - - - - ORG William McIntoshAggressive Auto Towing Abotsford, BC - - - - - ARA - Astro Towing Saskatoon SK - - 1988 - +10 STA -Atlantic Collision Group Mississauga, ON - - 1972 - +100 - -Bayview Towing Surrey, BC - - 1987 - +23 BCAA, WCABA, ARA -Becker Bros. Towing Kitchener, ON - - - - - ORG Henry BekerBig Rig Towing Calgary, AB - - - - +9 - -Bill & Son Towing Toronto, ON - - 1982 - - - -Brad's Towing Saskatoon SK 25 - 2001 22,500 +26 STA -CA Towing Milton, ON - - - - +14 ORG Anne AkkermanCardinal Towing Markham, ON - - 1995 - - - Doug CardinalCharette Service d'Auto Inc St-Hubert, QC 50 3 - 5 M 1981 - - - Pierre CharetteCity Wide Towing Calgary, AB - - 1963 - +90 - -Cliffs Towing Edmonton, AB - - 1953 - +80 - -Cornwall Towing Coornwall, ON - - 1984 - - ORG Duncan CooperCounty Towing Harrow, ON - - 1978 - - PTAO Derek DidoneCo-up Towing Toronto, ON 28 - 1980 - +17 PTAO Gadi CohenCoxon's Towing Services Maidstone, ON - - 1961 - +11 ORG Brad CoxonCurrie Heavy Towing Barrie, ON - - 1949 - - - Glen CurrieD&L Towing Timmins, ON - - - - - ORG Luc MigneaultDons Towing Kamloops, BC - - - - +16 BCAA -Drakes Towing Vancouver, BC - - - - - - -Dynamic Towing Toronto, ON - - - - - - -Edwards Towing and Recovery Huntsville, ON - - 1970 - +10 ORG Bill EdwardsElliots Towing Bradford, ON 22 - - - +19 - -Feenstra Towing Wyoming, ON - - 1957 - - ORG Jamie FeenstraG&W Jellys Towing New Liskeard, ON - - - - - ORG To JellyGervais Towing Gloucester, ON - - 1946 - +30 ORG Jamie GervaisGobbo Towing & Recovery Sudbury, ON - - - - - ORG Andy GobboGodbout Auto Services Kenora, ON - - 1983 - +37 ORG Anna GodboutGraves Towing Barrie, ON - - - - - - -Hansen Automotive Parts and Towing Brampton, ON - - 1969 - - - -Harolds Towing Grande Prairie, AB 12 - - - - - -Herb's Towing Vanleek Hill, ON - - - - +10 - -
Source: Capital IQ; Company Websites; Mergent Online Database; Privco Private Company Database;
AppendixCompetitive Landscape
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Competitors list of towing establishments in Canada
Company HQ Employees Rev. Est. Tows/year Fleet size Associations Ownership
Jacks towing Service Kingston, ON 20 - 1986 - +20 - - Jamie Davis Motor Truck and Auto Towing Hope, BC - - - - - WCABA -Johnny's Boyuk Towing Lively, ON - - - - - ORG Robert BerthiaumeJohnnys Towing ON 55 - - - - - -JP Towing ON - - - +14,000 +60 ORG John Paul CruzKBW Towing Etobicoke, ON 42 - - 36,500 +35 ORG Dan HissonKells Services Collingwood, ON - - - - - ORG Tom KellsLakeland Towing Prince Albert, SK - - - - +20 - -Lyons Auto Body Shop Mississauga, ON - - - 4,260 +35 - -Maple Ridge Towing Maple Ridge, BC - - 1981 - - - -Marios Towing Kelowna, BC - - 1995 - +60 - -McMurray Towing Fort McMurray, AB - - 1970 - +64 - -Meteor Service de Remorquage QC 40 - 1970 - +52 - Rheal and Michelle LandryMyers Towing Belleriver, ON 30 - 1972 - +37 ORG Stan MyersOttawa Metro Towing Ottawa, ON - - - - - - - Pine Ridge Automotive & Towing Thessalon, ON 14 - 1998 - +17 ORG Mark GravesPreferred Towing Sarina, ON - - 1991 - +9 ORG Gary VandenheuvelReal Grand'Maison Inc QC 20 1 - 3 M 1965 - - - -Reid's Towing ON - - - - - - - Remorquage Belanger QC 30 1 - 3 M 1977 - - - -Remorquage longueuil QC 40 - 1979 - +35 - Roy NormandRemorquage Roubillard QC 17 1 - 3 M 1995 - - - Andre RobillardRemorque Betrand QC - - - - +8 - -Ross' Towing and Transportation London, ON 30 - 1957 3,000 +25 ORG Dave RossService de Remorquage Direct QC 80 10 - 25 M 1974 - +40 - Pierre DaneauServices Routiers Uni Pro QC 15 1 - 3 M 1982 - - - Stephane BerryStandish Towing Banff, AB - - 1950 - +15 - -Stellar Roadside North York, ON - - - - - - -Superior Towing Edson, AB - - - - - WCABA -Tonys Towing ON - - 1968 - - - -Totem Towing Victoria, BC - - - - +30 ARA, BCAA -Transport Specialise RDC QC 40 5 - 10 M - - +40 - Annie FortierUnited Towing Services Canmore, AB - - 1969 - - WCABA -West Island Towing Montreal, QC 15 - - - - - -Western Auto Wreckers and Towing Nelson, BC - - 1970 - +10 - -Williams Towing Service Toronto, ON - - 1976 - +40 ORG John BlueJacks towing Service Kingston, ON 20 - 1986 - +20 - -Jamie Davis Motor Truck and Auto Towing Hope, BC - - - - - WCABA -Johnny's Boyuk Towing Lively, ON - - - - - ORG Robert Berthiaume
Source: Capital IQ; Company Websites; Mergent Online Database; Privco Private Company Database;
AppendixCompetitive Landscape
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Tow truck Up-Fitters / Manufacturers and Distributors
Company Type HQ Employees Revenue Est. Comments
A&A Auto and Truck Mfg. FL 63 19 M - -
B&B Industries Mfg. IN 40 12 M - -
Danco Products Mfg. PA - - - -
Dual-Tech Mfg. TN - - - -
Dynamic Manufacturing Mfg. VA - - - -
Godwin Manufacturing Mfg. NC - - - -
Jerr-Dan Mfg. MD - ~ $100 - Purchased by Oshkosh Corp in 2004 for $80 million
Kilar Fabrication Mfg. OH - - - -
Ledwell Mfg. TX - - 1946 -
Metro Tow Truck Mfg. ON - - - -
Miller Industries Mfg. TN - 493 M - -
NRC Industries Mfg. QC 102 15 M 1995 -
Recovery Industries Mfg. MO - - - -
Valew Mfg. CA - - 1954 -
Canada DEL Equipment Dist. QC; NB - 2 M - -
Canada H.R. Runciman & Co. Dist. ON - - - -
Canada Towtruck Dist. BC - - - -
Canadian Towing Equipment Dist. ON - - - -
Commercial Truck Equipment Dist. AB - - - -
Eagle Towing Equipment Dist. ON - - - -
James Western Star Dist. AB - - - -
Les Equipments Twin Dist. QC - - - -
Nelson Truck Dist. AB - - - -
Northern Alberta Sales Dist. AB - - - -
PM Industries Dist. BC - - - -
Source: Capital IQ; Company Websites; Mergent Online Database; Privco Private Company Database;
AppendixValue Chain Analysis
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