AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

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AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

AEROSPACE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ( $ in millions)

CY2016E

Aircraft OEMs

Rev enue

Bombardier Boeing Airbus Embraer

CY2016E

CY2016E

Current

Market

EBITDA EBITDA Margin Stock Price

$17,013 94,092 74,182 5,992

$712 7,666 7,107 763

4.2% 8.1% 9.6% 12.7%

Cap

$1.56 132.75 60.44 5.29

% of 52-Wk High

Stock Price

EV / CY 2016E EBITDA

YoY Change

$3,481 83,867 43,628 3,333

85.6% 88.2% 81.3% 64.9%

67.2% (5.4%) (19.2%) (39.2%)

$4,425 15,202 3,798 1,836 392 5,028 1,364 11,056 1,941 1,270 4,672 4,177 2,232 1,107 1,211 2,200 99 2,235 28,997 251 767 1,587 829 5,874 6,928 3,455 6,341

88.5% 90.3% 94.5% 84.0% 94.3% 96.5% 92.3% 91.2% 80.1% 70.3% 75.4% 79.5% 65.4% 63.9% 95.2% 79.3% 70.0% 80.7% 82.1% 85.7% 91.5% 74.4% 86.3% 80.2% 91.0% 90.7% 76.8%

36.3% 18.4% 30.1% 17.2% 20.9% (2.7%) (5.9%) (2.7%) (2.9%) (22.5%) (5.3%) (16.0%) (10.8%) (10.1%) 13.5% (8.2%) (39.2%) 1.3% (12.7%) (5.2%) (1.3%) (39.1%) (7.7%) (17.7%) 7.3% 19.5% (31.1%)

$11,454 88,345 30,765 3,985 16,750 91,342 19,012 3,807 10,956 280,039

82.2% 97.5% 91.6% 94.3% 91.1% 92.6% 77.0% 90.1% 88.4% 93.4%

(13.0%) 11.0% 15.4% 32.3% 11.5% 10.5% 5.5% 19.4% (6.0%) 21.7%

15.1x

Bombardie r, Inc.

11.7x

TheBoeingC o.

7.1x 6.5x

Air bus GroupS E

Embra re SA

Median: 9.4x

Aerospace Equipment and Structural Components HEICO TransDigm Group Woodward RBC Bearings Heroux-Dev tek B/E Aerospace Wesco Aircraft Rockwell Collins KLX Aerospace Senior Meggitt Hexcel Esterline Technologies Astronics Kaman Moog LMI Aerospace Barnes Group Safran Ducommun Magellan Aerospace Triumph Group AAR Spirit AeroSystems GKN BBA Av iation Zodiac Aerospace

$1,386 3,189 2,006 631 326 2,873 1,505 5,299 1,571 1,162 2,509 2,018 1,971 667 1,855 2,422 349 1,227 20,289 558 788 3,625 1,761 6,745 11,233 2,741 5,852

$325 1,494 323 154 54 611 202 1,259 230 164 603 460 262 114 170 305 41 278 3,848 54 134 445 139 980 1,300 413 506

23.4% 46.9% 16.1% 24.4% 16.7% 21.3% 13.4% 23.8% 14.6% 14.2% 24.0% 22.8% 13.3% 17.1% 9.2% 12.6% 11.7% 22.7% 19.0% 9.7% 16.9% 12.3% 7.9% 14.5% 11.6% 15.1% 8.7%

$65.79 261.47 58.49 73.74 11.62 49.12 13.92 86.74 32.86 3.31 5.78 42.26 63.05 35.46 42.75 53.86 8.57 33.62 67.17 20.61 14.38 38.95 23.24 45.08 4.23 3.13 25.16

Tra nsDigmGr oup,I nc.

Woodward, Inc.

RBCBea r ings,I nc.

$3,864 40,280 19,963 2,155 11,361 57,279 17,507 2,713 14,160 126,180

$1,003 8,460 3,321 411 1,592 10,765 1,978 456 1,666 20,953

26.0% 21.0% 16.6% 19.1% 14.0% 18.8% 11.3% 16.8% 11.8% 16.6%

$46.84 117.06 62.29 85.18 113.78 101.70 9.32 59.21 38.85 30.83

BEAerospac e,I nc.

Wesc oAir rc fa t H ol idgns, I cn. Wesc oAir cr af t H ol dings, I nc.

Rockwel lColl ins, Inc.

KLX,I nc.

Senior Plc

Meggit t P lc

Hexcel Corp.

Est er line Tec hnologie s Corp. Est er lineTec hnologie s Corp.

Ast ronic sCorp.

KamanCorp.

Moog,Inc.

LMI Aer ospac e, I nc.

Bar nes Group,I nc.

Saf ra nSA

Ducommun,Inc.

Magel anAeros pace Corp.

Magel anAeros pace Corp.

Tri umphGroup,I nc.

AARCorp.

Spiri A t eroSyset ms Hlodigns I, cn. Spiri tAeroSyste ms Holdings ,I nc.

GKNPlc

BBAAvia tionPlc

Zodi ac Aerospac e SA

Number of Deals

8.5x

9.9x 9.8x 26

15 10 10

12

11

9

12.0x 10.0x

21

20 15

11.5x 11.5x

9.7x 17

18

8.0x

12

10

6.0x 4.0x

5

2.0x

0

Median EBITDA Multiple

25

14.0x

12.5x

9.8x 23 9.0x 9.3x 9.2x

Eat onCorp. Plc

Curti s -Wr ightCorp.

Par ker- Hannif inCorp.

Unite dTec hnologie sCorp. Unite dTec hnologie sCorp.

Rolsl -RoyceHoldinsgPlc Rolls -Royce HoldingsPlc

Cra ne C o.

Textr on,Inc.

Date

Target

Aug-16

Axiom Materials

Aug-16

ZTM, Inc.

NM

Jul-16

CTS Engines

Jul-16

Univ ersal Turbine Parts

Jul-16 Jul-16

200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6

Financial

SR Technics North Coast Composites & North Coast Tool and Mold

Jul-16

Moeller Aerospace

Jul-16

Vac Aero (Poland)

-

Strategic

12.9x 11.9x 11.1x 10.9x 10.5x 9.5x 8.8x 8.7x 8.3x

AMETEK,I nc.

Median: 10.5x

Announced

35

10.4x

Median: 9.7x

SELECT RECENT AEROSPACE M&A ACTIVITY

Enterprise Value > $100 million 30

NM NM

Honeywel I nter nati onal, Inc.Honeywel I nter nati onal, Inc.

Genera l E l ec tr ic Co.

AEROSPACE M&A ACTIVITY

11.5x 11.3x 11.0x 10.9x 10.6x 10.3x 10.2x 10.2x 9.7x 9.6x 9.5x 9.0x 8.8x 8.1x 7.7x 7.6x 7.5x 7.4x 6.6x 6.4x 6.3x

HEROUX-DEVTE K INC

HEROUXD - EVTE K INC

Diversified Industrial – Heavy Aerospace Exposure Ametek Honeywell Eaton Curtiss-Wright Parker-Hannifin United Technologies Rolls Royce Crane Textron General Electric

16.0x 15.0x 13.4x 13.4x

HEICOCorp.

Jul-16

Subsegment Airframe and Engine Structural Components (Composites) Airframe and Engine Structural Components Maintenance, Repair and Ov erhaul Supply Chain Management and Distribution Maintenance, Repair and Ov erhaul Airframe and Engine Structural Components (Composites) Airframe and Engine Structural Components Airframe and Engine Structural Components

Acquirer Sorenson Capital Accurus (Liberty Hall Capital Partners) Platte Riv er Equity ICV Partners HNA Av iation ACG AeroComposites AE Industrial Partners MB Aerospace

Pratt & W hitney (Two Polish

Airframe and Engine Structural

Consolidated Precision

Casting Facilities)

Components

Products (W arburg Pincus)

PAGE | 1

AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

DEFENSE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ( $ in millions)

Defense Prime Contractors

CY 2016E

CY 2016E

Rev enue

EBITDA

Northrop Grumman

CY 2016E

Current

EBITDA Margin Stock Price

Market Cap

% of

Stock Price

EV / CY 2016E EBITDA

52-Wk High YoY Change

$23,776

$3,428

14.4%

$215.16

$38,826

96.0%

24.3%

Northr opGr ummanCorp.

Lockheed Martin

50,900

7,038

13.8%

238.64

76,974

89.4%

20.3%

LockheedMar ti nC or p.

Boeing

94,092

7,666

8.1%

132.75

83,867

88.2%

(5.4%)

Raytheon

24,428

3,731

15.3%

134.80

42,051

94.0%

30.2%

General Dynamics

31,495

4,787

15.2%

140.92

46,518

91.6%

(0.3%)

BAE Systems

24,148

2,807

11.6%

7.27

21,921

92.6%

15.0%

7,048

982

13.9%

160.63

7,850

90.7%

42.4%

Thales

16,706

1,978

11.8%

84.39

19,510

90.5%

29.7%

Airbus

74,182

7,107

9.6%

60.44

43,628

81.3%

(19.2%)

Huntington Ingalls

13.0x

Northr opGr ummanCorp.

12.4x

LockheedMra ti nC or .p

11.7x

TheBoeingC o. TheBoeingC o.

11.7x

Rayt heonCo. Rayt heonCo.

9.5x

Genera l Dynami cs Corp. Genera l Dynami cs Corp.

8.9x

BAESyste ms Plc BAESyste ms Plc

8.2x

HuntingtonI ngal sI ndust ri es ,I nc. Huntni tgnoI ngal Is ndust ri se I, cn.

8.0x

Thale sSA Thale s SA

Air bus GroupS E

7.1x

Air bus GroupS E

Median: 9.5x

Defense Technologies Kratos

$659

$42

6.4%

$4.05

$415

59.0%

55.0%

Harris

7,467

1,153

15.4%

83.17

11,343

91.0%

11.3%

Harri s Corp.

Harri s Corp.

270

57

21.2%

23.79

935

90.2%

49.5%

Merc ruySyset ms, I cn.

Merc urySyste ms, I nc.

10,252

1,222

11.9%

143.37

11,496

92.8%

30.9%

Ultra Electronics Holdings

1,041

188

18.1%

25.38

1,574

82.6%

(2.1%)

11.8x

Teledyne Technologies

2,195

352

16.0%

100.19

3,744

91.6%

4.2%

11.8x

425

44

10.4%

13.86

299

50.3%

(53.0%)

FLIR Systems

1,642

366

22.3%

30.76

4,239

90.2%

2.2%

Orbital ATK

4,463

663

14.9%

88.58

4,280

93.3%

(6.1%)

Elbit Systems Holdings

3,263

424

13.0%

92.34

4,384

89.9%

26.5%

Cobham

2,574

481

18.7%

2.19

3,621

54.3%

(35.1%)

Cubic

1,520

138

9.1%

41.71

1,256

83.8%

9.3%

Chemring

577

92

16.0%

2.05

513

64.2%

(29.7%)

AeroVironment

270

20

7.3%

30.87

686

95.2%

14.7%

Mercury Systems L-3 Communications

Comtech Telecommunications

DEFENSE M&A ACTIVITY

16.0x

Number of Deals

20

29 12.0x 10.5x 10.5x

30 11.9x

20

19

lc Ult ra Ele ct ronic sHoldingsUP lltcra Ele ct ronic sHoldings P

Tel edyneTechnologie s, I ncTe . l edyneTechnologie s, I nc.

11.5x

terchp.Tele communica ti ons Corp. Comte chTele communica tiCom ons Co

FLIRSyst ems ,I nc.

Obr it la ATK, In.c

Elbit Syste ms Ltd.

11.2x

FLIRSyst m e s I, cn.

10.2x

Orbti al ATK, Inc.

9.8x

Elbit Syste ms Ltd.

9.7x

Cobham Plc

Cobham Plc

9.6x

Cubic C or p.

CubicC or p.

7.2x

Median: 11.5x

NM

9.0x

9.9x 8.6x 8.4x

18 8.5x

16

10.2x

10.0x 16

8.0x

15 11

12.0x

10

10

6.0x

4.0x

5

2.0x

0

Date

Target

Aug-16

5.11 Tactical

Aug-16

Aero Precision Industries

Jun-16

14.0x 25

Median EBITDA Multiple

25

27

12.6x 11.9x

L-3Communica ti ons HoldiLng3sCom ,I nc. munica ti ons Holdings ,I nc.

Announced

35 13.4x

12.9x

SELECT RECENT DEFENSE M&A ACTIVITY

Enterprise Value > $50 million

30 30 12.4x

15.8x

Kra tos Def ens e &Sec urit yKSo raltoutsioDnsef,Iennc s. e &Sec urit ySolutions,I nc.

Armasight

Subsegment Tactical Products & Accessories Supply Chain Management and Distribution Tactical and Protection Equipment and Systems Air, Land, and Sea Platforms

Acquirer Compass Group Oydessy Inv estment Partners FLIR Systems

May-16

Doosan DST

May-16

Thales Raytheon Systems SAS

C4ISR Systems and Sensors

Thales

May-16

QRC Technologies

C4ISR Systems and Sensors

DC Capital Partners

May-16

Data Dev ice Corporation

Defense Electronics

TransDigm

Herndon

Supply Chain Management

Aerospace and Defense

and Distribution

May-16 May-16

Vanguard Space Technologies

and Subsystems

Satellite Equipment

Hanwha

KLX SolAero Technologies

200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6

Strategic

Financial

PAGE | 2

AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

GOVERNMENT SERVICES VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ( $ in millions)

Government Services

CY2016E

CY2016E

Rev enue

EBITDA

CY2016E

Current

Market

EBITDA Margin Stock Price

% of

Cap

Stock Price

52-Wk High

YoY Change

KEYW

$298

$35

11.7%

$9.52

$417

84.5%

28.8%

CACI International

3,744

330

8.8%

100.61

2,375

90.5%

18.2%

ManTech International

1,611

124

7.7%

36.34

1,541

88.5%

43.8%

SAIC

4,571

340

7.4%

57.63

2,775

92.0%

20.9%

Booz Allen Hamilton

5,630

549

9.8%

28.91

4,428

91.8%

10.2%

Engility

2,117

188

8.9%

22.35

1,111

62.2%

3.5%

Leidos

5,183

416

8.0%

47.69

2,875

80.1%

(10.1%)

CSRA

5,041

874

17.3%

22.89

4,223

68.5%

NA

Vectrus

1,205

48

4.0%

26.54

350

79.8%

21.9%

326

29

8.9%

12.62

161

73.5%

(8.1%)

NCI, Inc

EV / CY 2016E EBITDA 13.7x 11.9x

10.6x 10.6x

10.5x 10.0x 9.6x

7.5x 7.4x 6.7x

Median: 10.2x

Diversified Services – Heavy Government Exposure Babcock International

6,735

870

12.9%

14.71

6,799

89.4%

7.1%

Serco

$3,910

$166

4.2%

$1.63

$1,857

87.8%

10.8%

10.5x

CGI

8,333

1,530

18.4%

46.03

14,856

92.6%

29.1%

10.4x

ICF

1,185

115

9.7%

40.85

765

95.1%

13.0%

9.7x

Jacobs

11,126

662

5.9%

52.39

6,524

93.7%

25.7%

9.6x

AECOM

17,739

1,061

6.0%

32.84

4,995

90.7%

10.8%

Fluor

19,156

1,033

5.4%

51.57

7,317

92.6%

10.1%

KBR

4,221

310

7.4%

13.90

2,191

69.7%

(16.6%)

GOVERNMENT SERVICES M&A ACTIVITY

18.0x 15.3x

Number of Deals

15

14

15

7.6x 18

9.4x

10.0x 10.0x 19

14

10.0x

12

8.0x 6.0x

10

7

5

4.0x 2.0x

0

Target Vistronix

Aug-16

Constellis Holdings

Jul-16

Median EBITDA Multiple

20

14.0x 12.0x

Date Aug-16

Aug-16

16.0x 26

12.2x 11.9x 24 23 10.5x 10.0x 11.1x 9.9x 22 18

7.0x

3.8x

Median: 9.7x

Announced

35

25

8.6x

SELECT RECENT GOVERNMENT SERVICES M&A ACTIVITY

Enterprise Value > $50 million

30

10.8x

Jun-16 Jul-16 Jun-16

Subsegment Software and Information Serv ices Technical and Security Serv ices

Honeywell Technology

Systems Engineering and

Solutions, Inc.

Technical Assistance

Intercom Consulting & Federal Systems Oceans Edge Cyber Unit Armed Forces Serv ices Corporation EOIR Technologies

May-16

W yle

May-16

Prime Solutions

Acquirer ASRC Federal Apollo Global Management KBR

Cybersecurity

Belcan (AE Industrial Partners)

Cybersecurity

ManTech

IT Serv ices and Consulting

Magellan Health

Systems Engineering and Technical Assistance Systems Engineering and Technical Assistance Cybersecurity

Arlington Capital Partners KBR Altamira Technologies

200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6

Strategic

Financial

PAGE | 3

AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

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AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ AUGUST 2016

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PAGE | 5