AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
www.harriswilliams.com 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.
AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
AEROSPACE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions)
CY2016E
Aircraft OEMs
CY2016E
Rev enue
Bombardier Boeing Embraer Airbus
CY2016E
Current
Market
EBITDA EBITDA Margin Stock Price
$17,080 93,993 6,202 74,535
$724 10,470 849 7,256
4.2% 11.1% 13.7% 9.7%
Cap
$1.16 130.78 6.20 64.00
% of 52-Wk High
Stock Price
EV / CY 2016E EBITDA
YoY Change
$2,502 86,881 4,451 49,780
53.6% 84.9% 70.7% 83.0%
(42.5%) (14.6%) (9.9%) (7.0%)
$12,042 3,631 5,630 1,743 4,925 12,169 3,259 1,732 4,193 1,448 1,006 394 1,139 4,313 1,923 1,983 1,298 28,600 1,688 111 762 167 839 6,968 2,910 6,304 1,690
91.9% 97.9% 51.7% 95.8% 74.7% 93.6% 92.8% 71.2% 82.6% 89.1% 50.9% 99.7% 95.6% 70.8% 55.5% 88.6% 63.1% 84.3% 61.3% 69.4% 82.6% 46.1% 74.9% 76.7% 56.3% 81.1% 50.1%
1.3% 3.1% (41.5%) (3.4%) (23.2%) (4.7%) 6.4% N/A (12.3%) (7.5%) (47.6%) 39.5% (0.3%) (30.5%) (44.1%) (9.9%) (38.9%) (9.8%) (38.3%) (29.6%) 23.7% (54.2%) (19.2%) (19.2%) (41.5%) (9.6%) (43.6%)
$11,922 87,356 28,875 15,160 3,424 87,530 17,462 3,209 10,321 287,653
87.9% 99.5% 84.7% 89.6% 99.1% 87.6% 63.3% 87.8% 80.5% 96.7%
(4.3%) 10.8% (9.0%) (7.4%) (0.4%) (11.0%) (31.0%) (9.9%) (17.2%) 11.8%
12.7x
BBD.B
8.1x
BA
6.8x 6.0x
EMBR3
AIR
Median: 7.5x
Aerospace Equipment and Structural Components TransDigm Group HEICO Zodiac Aerospace RBC Bearings B/E Aerospace Rockwell Collins Woodward KLX Aerospace Hexcel Wesco Aircraft Astronics Heroux-Dev tek Kaman Meggitt Esterline Technologies Barnes Group Senior Safran Moog LMI Aerospace Magellan Aerospace Ducommun AAR GKN BBA Av iation Spirit AeroSystems Triumph Group
$3,210 1,388 5,660 625 2,808 5,432 2,088 1,498 2,009 1,538 687 330 1,843 2,590 1,944 1,232 1,233 20,302 2,475 371 794 584 1,749 11,869 2,695 6,703 3,861
$1,460 326 536 164 606 1,292 368 233 461 229 116 51 167 628 288 285 190 3,683 313 48 132 58 150 1,329 419 1,095 620
45.5% 23.5% 9.5% 26.3% 21.6% 23.8% 17.6% 15.6% 22.9% 14.9% 16.8% 15.5% 9.1% 24.2% 14.8% 23.1% 15.4% 18.1% 12.6% 12.9% 16.6% 9.9% 8.6% 11.2% 15.6% 16.3% 16.1%
$225.15 62.41 20.33 74.31 48.11 93.04 52.46 32.86 45.21 14.88 39.16 10.93 42.31 5.58 64.46 37.01 3.10 68.70 45.60 8.50 13.02 15.23 24.61 4.07 2.83 47.01 35.38
13.5x 13.4x 13.2x 12.7x
TDG
HEI
ZC
ROLL
11.2x 11.1x 11.0x 10.7x 10.2x 10.1x 10.0x 9.7x 9.3x 9.2x 9.0x 8.5x 8.3x 8.2x 8.0x 7.4x 7.3x 7.0x 6.3x 6.1x 5.9x 5.9x 5.4x
BEAV
COL
WWD
KLXI
HXL
WAI R
ATRO
HRX
KAMN
MGGT
ESL
B
SNR
SAF
MOG.A
LMIA
MAL
DCO
AIR
GKN
BBA
SP R
TGI
Median: 9.2x
Diversified Industrial – Heavy Aerospace Exposure Ametek Honeywell Eaton Parker-Hannifin Curtiss-Wright United Technologies Rolls Royce Crane Textron General Electric
$4,013 40,609 19,851 11,327 2,199 56,998 18,804 2,696 14,124 125,221
$1,090 8,427 3,375 1,602 417 10,738 2,114 444 1,659 22,188
27.2% 20.8% 17.0% 14.1% 19.0% 18.8% 11.2% 16.5% 11.7% 17.7%
$50.69 114.40 62.49 112.27 76.24 104.79 9.50 55.91 37.78 31.00
12.4x
AME
11.0x 10.9x 10.4x 9.8x 9.5x
HON
ETN
PH
CW
UTX
8.4x 8.2x 7.8x
RR.
CR
TXT
GE
NM
Median: 9.8x
AEROSPACE M&A ACTIVITY
SELECT RECENT AEROSPACE M&A ACTIVITY
Enterprise Value > $100 million
Announced
35
12.5x
30
Number of Deals
8.5x
9.8x 9.8x 23 9.0x 9.3x 9.2x
20 15 15 10 10
12
11
9.9x 26
11.5x 11.5x
12.0x 10.0x
21 17
18
8.5x
8.0x 6.0x
9
Mar-16
10 7
5
4.0x 2.0x
0
-
Mar-16
Median EBITDA Multiple
25
10.4x
Date
14.0x
Support
Ferco Aerospace Bromford Industries
Mar-16
SKF's Fly-By-W ire Systems
Mar-16
ACL Airshop
Mar-16
Av jet
Feb-16 Feb-16 Feb-16
Financial
Subsegment Av iation Serv ices and
FBO Assets
Mar-16
200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6
Strategic
Target Select Landmark Av iation
Airframe and Engine Components Airframe and Engine Components Av ionics and Electronics Av iation Serv ices and Support Av iation Serv ices and Support
Exelis Composites Business
Aerostructures
Lockheed Martin Commercial
Av iation Serv ices and
Flight Training QuEST Global Engineering
Support Av iation Serv ices and Support
Acquirer KSL Capital Nov aria Group Inc. Liberty Hall Capital Partners LORD Corporation Ranger Airshop Jet Av iation Albany International CAE Bain Capital
PAGE | 1
AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
DEFENSE VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions)
Defense Prime Contractors
CY 2016E
CY 2016E
Rev enue
EBITDA
Lockheed Martin
CY 2016E
Current
Market
EBITDA Margin Stock Price
% of
Cap
Stock Price
52-Wk High
EV / CY 2016E EBITDA
YoY Change
$50,347
$6,963
13.8%
$225.41
$69,157
98.9%
14.2%
LMT
Northrop Grumman
23,888
3,431
14.4%
199.97
36,439
98.1%
22.5%
NOC
Raytheon
24,334
3,666
15.1%
124.97
37,284
96.1%
15.2%
RTN
General Dynamics
31,820
4,727
14.9%
133.42
41,795
86.8%
0.2%
GD
Thales
16,592
1,909
11.5%
85.40
17,985
97.8%
39.5%
HO
Boeing
93,993
10,470
11.1%
130.78
86,881
84.9%
(14.6%)
BA
BAE Systems
25,595
3,010
11.8%
7.21
22,880
95.3%
(3.5%)
BA.
6,995
914
13.1%
143.47
6,764
100.0%
3.2%
HI
Airbus
74,535
7,256
9.7%
64.00
49,780
83.0%
(7.0%)
AIR
Finmeccanica
14,263
2,118
14.8%
12.23
7,070
95.4%
(6.8%)
FNC
Huntington Ingalls
12.0x
11.8x 10.9x 9.0x 8.5x 8.1x 8.3x 7.8x 6.7x 5.2x
Median: 8.3x
Defense Technologies Kratos
$660
$46
6.9%
$5.40
$316
75.8%
(4.4%)
293
58
19.9%
20.63
826
94.9%
34.6%
MRCY
Mercury Systems FLIR Systems
1,635
380
23.3%
32.75
4,495
96.5%
8.8%
FLIR
L-3 Communications
10,088
1,203
11.9%
122.86
9,341
93.5%
0.3%
LLL
Elbit Systems Holdings
3,263
424
13.0%
100.99
4,317
99.8%
22.8%
Teledyne Technologies
2,284
367
16.1%
90.28
3,096
80.7%
(15.8%)
Harris
7,654
1,517
19.8%
77.68
9,647
86.5%
(1.1%)
Orbital ATK
4,620
702
15.2%
86.89
5,114
91.5%
19.1%
Cubic
1,514
127
8.4%
40.49
1,094
79.5%
(17.7%)
Ultra Electronics Holdings
1,135
207
18.3%
25.32
1,774
86.8%
3.1%
Cobham
2,890
568
19.6%
2.97
3,338
67.3%
(30.5%)
Chemring
637
106
16.6%
1.94
543
56.7%
(36.5%)
Comtech Telecommunications
627
81
12.8%
22.40
367
69.7%
(27.5%)
AeroVironment
285
20
7.0%
28.58
650
93.2%
8.6%
DEFENSE M&A ACTIVITY
35
Number of Deals
20
29 12.0x 10.5x 10.5x
30 11.9x
20
19
14.0x 25 9.0x
9.9x 8.6x 8.4x
18 8.5x
16
9.4x
10.0x 16
8.0x
15
6.0x
11 10
12.0x
6
5
4.0x 2.0x
0
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
Median EBITDA Multiple
25
Mar-16
16.0x 27
11.5x 10.7x 10.6x
ESL T
10.3x
TDY
9.3x
HRS
9.3x
OA
9.0x
CUB
7.4x
ULE
6.3x
COB
5.0x
CHG
2.5x
Median: 9.3x
NM
Announced Date
13.4x
12.7x
SELECT RECENT DEFENSE M&A ACTIVITY
Enterprise Value > $50 million
30 30 12.4x
16.0x
KTOS
Target
Subsegment
Microsemi RF Integrated
Ground and Space-Based
Acquirer Mercury Systems
Solutions
Satellite Techology
Mar-16
Airbus Defense Electronics
Defense Electronics
KKR
Feb-16
API Technologies
Defense Electronics
J.F. Lehman
Feb-16
Bluefin Robotics
Unmanned Systems
General Dynamics
Feb-16
United Uniform
Feb-16 Jan-16 Jan-16 Jan-16
iRobot (Defense & Security Business) Christie Digital Systems (Matrix Line) Cobham Surv eillance Business Ness Technologies (C4ISR & Cyber Businesses)
Tactical Products & Accessories
Safariland
Unmanned Systems
Arlington Capital Partners
Defense Electronics
Rockwell Collins
C4ISR Systems & Sensors C4ISR Systems & Sensors
Marlin Equity Partners Formula Systems / Israel Aerospace Industries
Financial
PAGE | 2
AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
GOVERNMENT SERVICES VALUATION AND M&A TRANSACTION DATA STOCK PERFORMANCE AND TRADING MULTIPLES ($ in millions)
Government Services
CY2016E
CY2016E
Rev enue
EBITDA
KEYW
310
CY2016E
Current
Market
EBITDA Margin Stock Price
% of
Cap
Stock Price
52-Wk High
YoY Change
34
10.9%
6.76
268
53.7%
(31.2%)
Booz Allen Hamilton
$5,473
$543
9.9%
$28.38
$4,220
90.5%
(0.1%)
Engility
2,091
182
8.7%
18.58
682
51.7%
(37.9%)
Leidos
5,188
431
8.3%
52.29
3,747
87.9%
27.8%
SAIC
4,513
334
7.4%
53.46
2,370
97.7%
5.8%
CACI International
4,315
372
8.6%
107.96
2,574
99.6%
25.6%
ManTech International
1,622
123
7.6%
32.03
1,183
94.0%
(0.9%)
CSRA
5,211
888
17.0%
27.16
4,409
81.2%
N/A
344
30
8.6%
14.62
195
85.1%
41.5%
1,170
48
4.1%
22.83
237
82.7%
(15.4%)
NCI, Inc Vectrus
EV / CY 2016E EBITDA 11.1x 10.4x 9.8x
9.7x 9.7x 9.4x
9.3x 8.2x 6.9x 6.5x
Median: 9.5x
Diversified Services – Heavy Government Exposure Serco
$4,059
$147
3.6%
$1.37
$1,486
64.4%
(35.0%)
Babcock International
7,183
941
13.1%
14.06
7,098
86.3%
(1.2%)
9.7x
CGI
8,496
1,643
19.3%
49.15
14,547
99.6%
11.3%
9.6x
ICF
1,167
118
10.1%
37.02
689
89.5%
(8.1%)
AECOM
18,530
1,073
5.8%
30.42
4,665
85.9%
(8.2%)
8.1x
Jacobs
11,489
687
6.0%
42.34
5,263
88.1%
(9.5%)
8.0x
Fluor
18,683
1,052
5.6%
52.85
7,400
86.1%
(10.5%)
KBR
4,369
309
7.1%
14.70
2,132
70.8%
(3.5%)
GOVERNMENT SERVICES M&A ACTIVITY
35
26
Number of Deals
14
15
7.6x 18
9.4x
19
14
6.9x
5 0
Jacbos
Technology and Professional
Clearsoft
Cybersecurity
Lockheed Martin IS&GS
Software and Information
8.0x
2.0x -
200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6
Acquirer
W av efront Technologies
4.0x 3
Group
Subsegment
Jan-16
10.0x
7
Strategic
Median: 8.3x
Cybersecurity
Feb-16
12.0x
10.0x 10.0x
Target The Van Dyke Technology
14.0x
6.0x
10
4.2x
16.0x
Median EBITDA Multiple
20 15
Apr-16
18.0x 15.3x 12.2x 11.9x 24 23 10.5x 10.0x 11.1x 9.9x 22 18
6.0x
Announced Date
25
8.4x
SELECT RECENT GOVERNMENT SERVICES M&A ACTIVITY
Enterprise Value > $50 million
30
11.1x
Jan-16 Jan-16
Business Unit PAE
Jan-16
Tetra Concepts
Jan-16
LDiscov ery
Dec-15 Nov -15
Serv ices
Serv ices Systems Engineering & Technical Operations Technology and Professional Serv ices Technology and Professional Serv ices
NSS (L-3)
Intelligence Serv ices
Certain Assets of
Technical, Operations, and
DRS Technologies
Logistics Support Serv ices
Battle Resource Management Ball Aerospace Leidos Platinum Equity Preferred Systems Solutions The Carlyle Group CACI IAP W orldwide Serv ices
Financial
PAGE | 3
AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
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AEROSPACE, DEFENSE & GOVERNMENT SERVICES INDUSTRY UPDATE │ APRIL 2016
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PAGE | 5
