Brakes To Go

Brakes To Go has a $9.8 million pre-money valuation. Based on the traction the company has achieved over time, our system has rated the pricing of this transaction to be slightly above average on our one-to-five scale.

Brakes To Go’s average ticket price per customer is $492, according to its raise page. With 22 million cars in Texas and an average brake replacement period of four years, the company’s free market opportunity is about $2.7 billion. Adding more services could allow Brakes To Go to grow its operations further, but it has expressed no interest in doing so. 

The auto mechanic industry is known to grow at a notoriously slow pace. According to IBISWorld, the industry is only expected to grow by about 3.2% in 2021. In fact, the market has actually shrunk over the past five years. In all, this has led our system to rate Brakes To Go’s market prospects below average.

Randall Huntsinger is Brakes To Go’s co-founder and CEO. He also serves as the company’s general counsel. Previously, he was a principal at the Law Office of Randall Huntsinger where he provided technical and consulting services to commercial and small business customers. Prior to that, he worked as an attorney at Godwin Gruber and an associate attorney general for the Texas Attorney General. He also has a degree in business administration and accounting from the University of Texas at Austin. Given Huntsinger’s extensive legal experience and business education, he seems to be a strong leader for the company.

Jonathan Ganther serves as the company’s COO and co-founder. His record shows no other relevant experience except for the fact that he is a graduate of Wyotech-Laramie, where he studied automotive technology and automotive engineering technology. These experiences from its co-founders led our system to rate the team aspect of the company above average on our scale.

Brakes To Go’s service offering is not particularly unique. Customers can find mechanics everywhere. And while mobile mechanics are less common, they still exist in every state across the country. Brakes To Go’s focus on mobile mechanics dedicated to brake repair is somewhat of a differentiator, but it is still not entirely unique. NuBrakes also focuses on mobile brake repair and currently operates in at least 14 markets throughout Texas as well as in two other states. Overall, though, Brakes To Go’s focus on brakes and customer service somewhat set it apart.

Because of this, our system has decided to rate the differentiation of the company above average on our scale.

In 2019, Brakes To Go generated sales of $1.9 million. Even during the COVID-19 pandemic, revenue inched up to $2.1 million in 2020. That said, the company’s fiscal year ends on April 30 of each year, so its 2020 fiscal year only bakes in two months of pain caused by the crisis. Net income in 2019 was a little under $4,000, while in 2020 the company generated a net loss of $146,249. Though it is discouraging to see its bottom line figures worsen, to see revenue continue to expand is a positive — especially revenue in the millions. Because of that — and the more than 16,000 customers that the company has serviced — our system has rated the performance of the enterprise near the high end of our scale.

All things taken together, our system has rated the risk profile of Brakes To Go near the low end of our scale. Only financial risk is elevated. In addition to Brakes To Go seeing its bottom line worsen from a net profit perspective, the company also has long-term debt of $968,495. Fortunately, some of this is offset by cash on hand of $360,711. However, having any large amount of debt at a time when the company is generating negative cash flow does make it a riskier investment.

Investors may be concerned that Brakes To Go’s market opportunity is fairly small and growing at a slow pace. The company’s lack of significant differentiation is another issue that could hinder future growth prospects. The team is fairly strong, but the company could use some additional people with experience in this space. Investors may also want to take note of the company’s elevated financial risk.

Brakes To Go’s pricing seems reasonable, all things considered. Its management team has some relevant experience, and the business has achieved undeniably impressive traction. This is especially true with the revenue it has generated despite being in just one core market. It’s very possible that the company could have 10 or 20 prime locations under its belt someday.

Brakes To Go offers mobile brake repair to drivers in the Austin, Texas area. The company has an overall low risk profile, offers a reasonable valuation, and has shown promising traction. It is far from being an early-stage prospect (having been founded in 2015), and that alone removes a great deal of uncertainty about whether or not it can survive in the long run. There are some concerns that investors should note, such as Brakes To Go’s small market opportunity, its lack of complete distinction, and its possible financial risks. On the whole, we believe that the good more or less offsets the bad. Because of this, our team has decided to rate the company a Neutral prospect.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Daniel Jones.