AEROSPACE, DEFENSE & GOVERNMENT SERVICES

Transcription

1 Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

2 HARRIS WILLIAMS & CO. ADG UPDATE ADG Group Overview Harris Williams & Co. s Aerospace, Defense & Government (ADG) Group combines deep industry knowledge and relationships with the best M&A advisory services in the middle market. As a pure-play advisor with no conflicts of interest, our ADG Group offers differentiated strategic advice and seamless execution to a global base of leading aerospace, defense, and government services clients. CONTENTS Market Updates: Aerospace Defense Government ADG CONTACTS Jon Nemo jnemo@harriswilliams.com +1 (267) Jon Nemo Chris Rogers Chris Rogers crogers@harriswilliams.com +1 (804) Doug Kinard Vice President dkinard@harriswilliams.com +1 (804) Industry Sectors Chris Smith Vice President csmith@harriswilliams.com +1 (804) Aerospace Aircraft Interiors Airframe and Engine Components Avionics & Electronics Electromechanical and Power Fixed Base Operations Maintenance, Repair & Overhaul Software and Information Specialty Materials & Metals Supply Chain Management & Distribution Meg McGurk Associate mmcgurk@harriswilliams.com +1 (804) David Jones Associate djones@harriswilliams.com +1 (804) Defense Air, Land, and Sea Platforms and Subsystems C4ISR Systems & Sensors Defense Electronics Satellite Equipment Homeland Security Technologies Supply Chain Management and Distribution Tactical Products & Accessories Unmanned Systems Weapon Systems & Munitions Government Cybersecurity Intelligence Simulation and Training Platform Maintenance & Modernization Software and Information Systems Engineering & Technical Assistance (SETA) Technical, Operations, and Logistics Support PAGE 1

3 Number of Deals EMBR3 BA BBD.B AIR TDG ROLL BEAV PCP ZC MGGT HEI HXL AIR HRX COL WAI R BBA SNR SAF TGI WWD ESL LMIA MAL B ATRO KAMN MOG.A DCO KLXI SPR GKN AME HON CW ETN TXT CR UTX RR. PH GE AEROSPACE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions) Aircraft OEMs LTM LTM Current Market % of Stock Price Revenue EBITDA Stock Price Cap 52-Wk High YoY Change Embraer $4,054 $4 $6.60 $4, %.3% Boeing 94,944 9, , % 6.5% Bombardier 19,883 1, , % (56.5%) Airbus 69,514 5, , %.2% Aerospace Equipment and TransDigm Group $2,540 $1,129 $218. $11, % 18.7% RBC Bearings , % 11.4% B/E Aerospace 2, , % (44.6%) Precision Castparts 9,897 2, , % 0.2% Zodiac Aerospace 5, , % (7.1%) Meggitt 2, , %.6% HEICO 1, , % 5.5% Hexcel 1, , % 17.3% AAR 1, % (12.4%) Heroux-Dev tek % 17.9% Rockwell Collins 5,262 1, , % 9.1% Wesco Aircraft Holdings 1, , % (27.5%) BBA Av iation 2, , % (21.7%) Senior 1, , % (3.5%) Safran 18,956 3, , % 44.7% Triumph Group 3, , % (32.6%) Woodward 2, , % (9.1%) Esterline Technologies 1, , % (32.3%) LMI Aerospace % (14.8%) Magellan Aerospace % 31.2% Barnes Group 1, , %.4% Astronics % (19.3%) Kaman 1, , % (5.4%) Moog 2, , % (16.3%) Ducommun % (21.6%) KLX Aerospace 1, , % N/A Spirit AeroSystems 6,708 1, , %.5% GKN 11,060 1, ,9 73.3% (8.9%) Diversified Industrial - Heavy Aerospace Exposure Ametek $4,044 $1,051 $54.79 $13,4 95.0% 9.2% Honeywell International 39,362 7, ,9 92.0% 7.4% Curtiss-Wright 2, , % (0.8%) Eaton 21,888 3, , % (16.0%) Textron 13,846 1, , % 11.9% Crane 2, , % (.5%) United Technologies 64,038 12, , % (11.2%) Rolls Royce 21,791 2, , % (23.1%) Parker-Hannifin 12,712 1, , % (8.1%) General Electric 147,0 28, ,6 92.8% 4.8% EV / Last Twelve Months EBITDA 7.3x 7.2x 13.5x.2x 13.5x 13.1x 12.6x 12.3x 12.3x 11.7x.8x.4x 9.7x 9.7x 9.7x 9.4x 9.2x 9.0x 8.8x 8.5x 8.4x 7.6x 7.2x 6.6x 6.1x 9.4x 9.3x 8.8x 8.2x 8.1x 8.1x Median: 8.4x 13.9x 17.1x Median: Median: 8.8x AEROSPACE M&A ACTIVITY Enterprise Value > $0 million 35.4x 9.8x 9.8x x 9.3x 9.2x 8.5x x 11.5x 11.5x x 4.0x 2.0x - Median EBITDA Multiple SELECT RECENT AEROSPACE M&A ACTIVITY Announced Date Target Subsegment Acquirer Sep- Landmark Aviation Fixed Base Operations BBA Aviation Sep- EDAC Composites Meggitt Aug- Cobham Composites Meggitt Aug- Precision Castparts Berkshire Hathaway Jul- Pneudraulics TransDigm Jul- Fokker Technologies GKN Jul- Noranco Precision Castparts Corp. Jul- Composites Horizons Precision Castparts Corp. May- CTC Aviation Pilot Training L-3 Strategic Financial PAGE 2

4 Number of Deals RTN LMT NOC GD BA. HO BA FNC AIR HI AVAV CHG MRCY COB HRS OA ULE FLIR LLL TDY ESLT CUB CMTL DEFENSE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions) Defense Prime Contractors LTM LTM Current Market % of Stock Price Revenue EBITDA Stock Price Cap 52-Wk High YoY Change EV / Last Twelve Months EBITDA Raytheon $22,753 $3,336 $9.67 $33, % 11.5% Lockheed Martin 45,398 6, $65, % 19.8% Northrop Grumman 23,945 3, , % 33.7%.2x General Dynamics 31,779 4, , % 16.9% BAE Systems,647 2, , % (0.0%) 9.8x Thales,177 1, , % 54.7% Boeing 94,944 9, , % 6.5% Finmeccanica 16,784 1, , % 62.0% 7.3x Airbus 69,514 5, , %.2% 7.2x Huntington Ingalls 6,959 1, , % 6.4% 5.5x Defense Technologies Median: 9.7x AeroVironment $5 $7 $21.32 $ % (28.0%) 39.0x Chemring Group % 5.3% 17.2x Mercury Systems % 49.1% Cobham 3, , % 8.4% 13.2x Harris Corporation 5,083 1, , % 13.2% 12.7x Orbital ATK 3, , % N/A 12.2x Ultra Electronics Holdings 1, , % 1.1% 11.7x FLIR Systems 1, , % (6.6%).9x L-3 Communications Holdings 11,654 1, , % (4.8%).3x Teledyne Technologies 2, , % (6.1%) Elbit Systems 3, , % 26.5% Cubic 1, , % (.1%) 9.0x Comtech Telecommunications % (37.1%) 4.7x Median: 11.7x DEFENSE M&A ACTIVITY Enterprise Value > $50 million SELECT RECENT DEFENSE M&A ACTIVITY Announced Date Target Subsegment Acquirer 35 1 Sep- GE Embedded Systems Defense Electronics Veritas Capital x 12.4x x 29.5x.5x x 8.4x x 8.1x Strategic Financial 8.0x 4.0x 2.0x - Median EBITDA Multiple Jul- Sikorsky Helicopter OEM Lockheed Martin Jun- Vievu Tactical and Protection Equipment The Safariland Group Jun- Point Blank Enterprises Tactical and Protection Equipment JLL Partners Jun- Kratos Electronic Products Division (Herley) Defense Electronics Ultra Electronics Apr- Kutta Technologies Unmanned Systems Sierra Nevada Corp. Apr- Inmet and Weinschel Assets (Cobham) Defense Electronics API Apr- Semtech Corp (Defense and Microwave Business) Defense Electronics Jariet Technologies Apr- Hunter Technology Corporation Defense Electronics Sparton Corp. PAGE 3

5 Number of Deals GOVERENT SERVICES VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions) Government Providers LTM LTM Current Market % of Stock Price Revenue EBITDA Stock Price Cap 52-Wk High YoY Change EV / Last Twelve Months EBITDA Engility $1,643 $1 $27.78 $1, % (13.6%) 14.4x Booz Allen Hamilton 5, , % 8.9% SAIC 4, , % (.4%) CACI International 3, $1, %.1% Leidos 5, , % 24.2% ManTech International 1, % (4.2%) NCI, Inc % 51.2% VSE Corporation % (11.3%) Vectrus 1, % N/A.6x.3x 9.8x 9.3x 8.4x KEYW % (37.2%) Diversified Heavy Government Exposure Median: 9.3x Babcock International $5,938 $752 $14.59 $7, % (9.9%) 11.8x CGI 8,163 1, , % 24.2% AECOM, , % (8.8%) ICF 1, % 1.0% CSC 11,697 1, , % 6.5% 9.4x 9.1x 9.1x Jacobs 12, , % (.8%) Fluor,4 1, , % (31.4%) 4.2x Serco 5,847 (990) , % (62.3%) KBR 5,891 (133) ,5 87.3% (4.8%) Median: 9.1x GOVERENT SERVICES M&A ACTIVITY Enterprise Value > $50 million 35.3x x 11.9x x 11.1x x 9.4x x 1 8.0x 4.0x 2.0x - Median EBITDA Multiple SELECT RECENT GOVERENT SERVICES M&A ACTIVITY Announced Date Target Subsegment Acquirer Aug- SRA International CSC Aug- Novetta Soltutions Intelligence and Cyber The Carlyle Group Security Aug- Salient Federal Solutions CRGT 1 Jul- Alion Veritas Capital Jul- ManTech Cyber Intelligence and Cyber CounterTack Solutions International Security Jun- Knowledge Consulting Group Intelligence and Cyber ManTech Security Jun- STG Group Global Defense and National Security Systems May- Creative Computing Solutions Software Information and Triple-I (DFW Capital Partners) May- Vaxcom & Sage Management Xator Strategic Financial (1) Merger PAGE 4

6 OUR FIRM Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities. Our clients benefit from our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website at Aerospace, Defense & Government Building Products & Materials Business Consumer Energy & Power Healthcare & Life Sciences Industrials Specialty Distribution Technology, Media & Telecom Transportation & Logistics HARRIS WILLIAMS & CO. OFFICE LOCATIONS Boston Two International Place 24th Floor Boston, Massachusetts 021 Phone: +1 (617) Fax: +1 (617) Cleveland 1900 East 9th Street th Floor Cleveland, Ohio Phone: +1 (216) Fax: +1 (216) Minneapolis 222 South 9th Street Suite 3350 Minneapolis, Minnesota Phone: +1 (612) Fax: +1 (612) UNITED STATES Richmond (Headquarters) 01 Haxall Point 9th Floor Richmond, Virginia Phone: +1 (804) Fax: +1 (804) San Francisco 575 Market Street 31st Floor San Francisco, California 945, USA Phone: +1 (4) Fax: +1 (4) EUROPE Frankfurt Bockenheimer Landstrasse Frankfurt Germany Phone: Fax: London 63 Brook Street London W1K 4HS, England Phone: +44 (0) Fax: +44 (0) Beijing Hong Kong Mumbai NETWORK OFFICES New Delhi Shanghai PAGE 5

7 HARRIS WILLIAMS & CO. DISCLOSURES Harris Williams & Co. ( is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT THE ABOVE ADDRESSES OR NUMBERS. The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright Harris Williams & Co., all rights reserved. PAGE 6