MaxiPARTS : MXI - Acquisition of Truckzone Business

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1 February 2022

ASX ANNOUNCEMENT

Acquisition of Truckzone Group and $25m equity raise

Highlights

• MaxiPARTS to acquire inventory and assets of Truckzone Group for an estimated $18.0m in cash, subject to customary working capital adjustments
• Truckzone Group is one of Australia's largest independent commercial vehicle parts businesses with FY21 revenue of $48m1 and 10 stores nationwide
• Cost synergies of $2.5m expected to be fully realised in FY24 plus additional revenue synergies
• The acquisition is expected to deliver mid-to-high single digit pro forma EPS accretion inclusive of full run rate cost synergies
• Acquisition fully aligned with MaxiPARTS acquisition criteria and values Truckzone Group at 10.6x FY21 EBITDA2,3 (before synergies) and 3.6x FY21 EBITDA2,3 (including anticipated cost synergies and realisation of excess inventory)
• $25m equity raise consisting of Institutional Placement to raise $15.4m and fully underwritten non-renounceable entitlement offer to raise $9.6m
• Transaction expected to close by end of February 2022
• Consistent revenue and profit growth in underlying MaxiPARTS operations in H1 FY22 despite COVID 19 challenges

MaxiPARTS Limited (ASX: MXI) ("MaxiPARTS", or the "Company") today announces that it has entered into an Asset Sale Agreement with Truckzone Pty Ltd, Gleeman Truck Parts Pty Ltd, Parts Peek (Aust) Pty Ltd and Coburg Truck Parts (VIC) Pty Ltd to acquire the businesses known as Truckzone (formerly Gleeman Truck Parts), Coburg Truck Parts and Parts Peek (together the "Truckzone Group") for an estimated $18.0m in cash, subject to customary working capital adjustments.

The acquisition price of $18.0m comprises an estimated $15.6m of inventory (which has had recent sales movement) and $3.0m of fixed assets, intellectual property and goodwill on acquisition. Approximately 80 Truckzone Group employees will also transfer to MaxiPARTS, and the acquisition price reflects a reduction related to outstanding employee entitlements for transferring employees.

The final purchase price is subject to adjustments for confirmation of final inventory value and employee leave entitlements. $10.0m of the acquisition price is payable on completion of the transaction, with the balance due 5 days after finalisation of the completion accounts which will follow a complete stocktake.

Inventory to be acquired includes estimated excess inventory of $3.0m which is not expected to be replaced. Realisation of this benefit is expected to be recovered over the first 18 months of trading due to enhanced inventory management processes and general supply consolidation.

The acquisition values Truckzone Group at 10.6x FY21 EBITDA2,3 (before synergies) and 3.6x FY21 EBITDA2,3 (after cost synergies and realisation of excess inventory).

Further details of the sale agreement are contained in Appendix 1.

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operates a network of 10 sites across Australia, stocks over 25,000 product lines and had FY21 revenue of $48m1 and underlying EBITDA of $1.7m1.

Strategic rationale

The combination of MaxiPARTS and Truckzone Group will position the Company as one of the largest independent multi-site truck and trailer parts businesses in Australia, with group pro forma sales approaching $200m.

The acquisition of Truckzone Group immediately expands MaxiPARTS' national network by 8 sites in key geographical locations (Wetherill Park, Campbellfield, Sunshine, Rockhampton, Townsville, Eagle Farm, Perth and Port Hedland), while also providing the opportunity to combine 2 Truckzone Group sites (Pakenham and Darra) with existing MaxiPARTS sites. The enlarged MaxiPARTS business will have a total of 27 sites after site consolidations.

In addition to allowing cost effective geographical expansion, Truckzone Group also brings significant product range enhancement and access to high quality products from globally recognised brands, most notably a mature Japanese parts program with an established overseas supplier base and comprehensive product cataloguing support.

Combining the core product range strengths of MaxiPARTS and Truckzone Group provides the opportunity to offer an expanded product range throughout the enlarged business.

Cost synergies of $2.5m related to site consolidation and supply chain savings (excluding implementation costs) are expected to be fully realised in FY24, along with additional revenue synergies from an enhanced core product range and network expansion.

The acquisition is expected to deliver mid-to-high single digit pro forma EPS accretion inclusive of full run rate cost synergies.

"The acquisition of Truckzone Group represents an exciting leap forward in the strategic development of MaxiPARTS and is fully aligned with our stated acquisition criteria" said MaxiPARTS Managing Director and CEO, Peter Loimaranta.

"We are delighted to welcome such a highly complementary business into the MaxiPARTS family, and I am excited about the significant benefits this combination will bring for our shareholders, customers, suppliers and employees."

Timing and conditions

Completion of the transaction is subject to certain conditions, namely:

• Implementation of additional licences for MaxiPARTS' current ERP system
• Assignment of various site and equipment leases
• Completion of the placement and the institutional entitlement offer which are described below.

No shareholder or regulatory approvals are required and there will be no changes to MaxiPARTS' board and senior management as a result of the transaction. Completion of the acquisition is expected to take place in late February 2022.

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Equity raising

MaxiPARTS also announces a $25m equity raise to be conducted via:

• An Institutional Placement of approximately $15.4m ("Placement")
• A fully underwritten accelerated pro-ratanon-renounceable entitlement offer of approximately $9.6m ("Entitlement Offer") at a ratio of 1 new share for every 9.7 existing shares held at the record date, comprising:
  o an accelerated institutional component ("Institutional Entitlement Offer"); and
  o a retail component ("Retail Entitlement Offer")

(together, the "Equity Raise")

All New Shares offered under the Equity Raise will be issued at a price of $2.50 per New Share ("Offer Price"), which represents a:

• 6.2% discount to the theoretical ex-rights price ("TERP") of $2.67
• 7.7% discount to the last traded price of $2.71 on 31 January 2022
• 10.9% discount to the 5-Day VWAP of $2.80

The Proceeds of the Equity Raise will fully fund the acquisition of Truckzone Group and associated transaction and integration costs, while also providing working capital flexibility and funding for further organic growth initiatives.

Approximately 10.0m new MaxiPARTS shares will be issued under the Equity Raise ("New Shares"). New Shares will rank equally with existing MaxiPARTS shares and MaxiPARTS will, upon issue of those shares, seek quotation of the shares on ASX.

Under the Entitlement Offer, eligible shareholders are invited to subscribe to 1 New Share for every

9.7 existing MaxiPARTS shares ("Entitlement") held as at 7.00pm (Sydney time) on Thursday, 3 February 2022. Eligible retail shareholders who take up their full Entitlement may also participate in a top-up facility by applying for additional New Shares in excess of their Entitlement at the Offer Price (as defined below), up to a maximum 100% in excess of their Entitlement.

Canaccord Genuity (Australia) limited are acting as Lead Manager and Bookrunner to the Equity Raising, and Underwriter to the Entitlement Offer.

Placement

Up to approximately 6.1m New Shares are expected to be issued to new institutional investors and existing institutional shareholders under the Placement at the Offer Price. The Placement will be conducted concurrently with the Institutional Entitlement Offer.

New Shares issued under the Placement will not be eligible to participate in the Entitlement Offer.

Institutional Entitlement Offer

Eligible institutional shareholders will be invited to participate in the Institutional Entitlement Offer, which is being conducted today, Tuesday, 1 February 2022.

Eligible institutional shareholders can choose to take up all, part or none of their Entitlement. Institutional Entitlements cannot be traded on ASX or transferred.

Institutional Entitlements that eligible institutional shareholders do not take up by the close of the Institutional Entitlement Offer, and institutional Entitlements that would otherwise have been offered to ineligible institutional shareholders, will be offered to new institutional investors and existing institutional shareholders concurrently with the Institutional Entitlement Offer.

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Retail Entitlement Offer

Eligible retail shareholders in Australia and New Zealand will be invited to participate in the Retail Entitlement Offer at the same Offer Price and offer ratio as the Institutional Entitlement Offer. The Retail Entitlement Offer will open on Monday, 7 February 2022 and close at 5.00pm (Sydney time) on Thursday, 3 March 2022.

Further details about the Retail Entitlement Offer will be set out in the Retail Entitlement Offer information booklet ("Retail Offer Booklet"), which MaxiPARTS expects to lodge with ASX and dispatch to eligible retail shareholders on 8 February 2022

Entitlements cannot be traded on ASX or transferred. Eligible retail shareholders who do not take up their entitlements under the Retail Entitlement Offer, in full or in part, will not receive any value in respect to those Entitlements not taken up.

MaxiPARTS directors who are eligible to participate in the Entitlement Offer intend to participate in line with their Entitlements.

Timetable

An indicative timetable, which is subject to change, is set out below:

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Outlook

Despite the global supply chain and staff availability impacts of COVID 19, based on unaudited management accounts, the underlying MaxiPARTS business (excluding sold Trailer business and corporate / admin support) has reported improved 1H FY22 sales and EBIT over prior corresponding period

• Sales revenue up 6.7% from $67.8m in 1H FY21 to $72.3m in 1H FY22
• Adjusted EBIT up 11.0% from $6.6m in 1H FY21 to $7.3m in 1H FY225

Corporate / Admin support costs6 are still rightsizing after the divestment of the Trailer business, with annualised pro forma run-rate currently tracking to $5.7m ($0.7m ahead of the previous pro forma estimate of $5.0m), and are expected to decline further in FY23.

Stock availability of aftermarket parts improved at the end of the half and MaxiPARTS has made additional investment in inventory to manage this ongoing risk.

Subject to no worsening of economic conditions, guidance for the full year FY22 (excluding the impact of the acquisition) remains in line with broker forecasts: Revenue $141m-$145m and Adjusted EBIT including corporate costs (full year pro forma) and inclusive of all lease depreciation and interest $8.1m-$8.7m5.

FY22 will see minor profit improvement from the acquisition given integration and transaction costs with focus on implementation of cost synergies and deployment of additional capital to drive both cost and revenue synergy benefit in FY23 and beyond.

For further information:

Peter Loimaranta

Managing Director & CEO

1. 9368 7000ea@maxiparts.com.au

The release of this announcement was authorised by the MaxiPARTS Limited Board of Directors