Strategic Market Insights – Q1 2017 Report
Aerospace, Defense & Security
www.g2cap.com 2
G2 Capital Advisors is pleased to present its Aerospace, Defense & Security industry update for Q1 2017,
providing commentary and analysis on M&A and market trends within the Aerospace, Defense & Security
industry. We hope you find this report helpful and encourage you to contact us directly if you would like to
discuss our perspective on the current market environment, trends, or our relevant industry experience.
G2 offers clients an operational, experience-based approach within
each of its practice sectors.
G2 OverviewInvestment Banking and Restructuring Advisory
G2 is focused in four sectors; each practice group headed by a leader with 20+ years of C-level operating
experience. G2’s managing directors have navigated all stages of the corporate lifecycle, from growth to
maturity, and apply that experience to provide advisory services to our clients.
Sector-Focused; Experience-Based
Transportation &
Logistics / Supply Chain
Industrials /
Manufacturing
Technology /
Business Services
Aerospace & Defense /
Security
Led by Ron Lentz Led by Jack Shields Led by Matt Konkle Led by Bob Kinder
▪ Freight Forwarding
▪ Trucking / Final Mile
▪ Warehousing / Distribution
▪ Third Party Logistics (3PL)
▪ e-Commerce Fulfillment
▪ Manufacturing / Distribution
▪ Flooring
▪ Plastics / Packaging
▪ Consumer Products
▪ Metals
▪ Tech-enabled Services
▪ BPO
▪ Managed Services
▪ Internet & Digital Media
▪ Business Services
▪ Cyber Security
▪ Defense Robotics
▪ UAV, C4ISR, Hardware
▪ Aerospace Electronics
▪ Aerospace Components
THIRTY-FIVE professionals
across SIX offices
FOUR Sector Practice Groups
Transportation & Logistics / Supply Chain
Industrials / Manufacturing
Technology / Business Services
Aerospace & Defense / Security
FIVE Service Offerings
Securities
Sell-Side
Buy-Side
Operational
Restructuring
Financial
Restructuring
G2 Overview
www.g2cap.com 3
G2 Insights
Market Update
The U.S. Defense Industry remains optimistic about the administration’s “historic” military build-up with
the increase of $52.8 billion in the DoD base budget for FY2018. Given the current situation of North
Korea and the ongoing operations in Syria, Iraq and Afghanistan, we are taking a deeper look into recent
trends in the Overseas Contingency Operations (OCO) funding. Since 2001, approximately $1.7 trillion
has been spent under OCO (and its predecessor, the Global War on Terror Funds), representing 18% of
total DoD funding during this period.
The OCO budget request for FY2017 (revised, May 22, 2017 release reported amounts) and FY2018
(May 22, 2017 release) is approximately $65 billion, which is allocated for defense related activities.
▪ $11.6 billion for additional resources needed to maintain approximately 8,400 troops in
Afghanistan (recently announced to be increasing to 11,400 troops) and to fund additional troops
and requirements in Iraq / Syria.
▪ Other Host Nation Support by the State Department include to ‘respond to, recover from, or
prevent crises abroad, including armed conflict, as well as human-caused and natural disasters’
$B
N
Source: DOD National Defense Budget Estimates for FY2017 (table 2-1) and DOD Overview: Overseas Contingency Operations Budget Amendment FY2017
* Approximate OCO funding budget for 2018 from recently released budget
$23 $17
$73
$91
$76
$116
$166
$187
$146
$162 $159
$115
$82 $85
$63$59
$65
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
OCO/GWOT Budget Authority by Military Department
Air Force Defense-Wide Army Navy
$65
www.g2cap.com 4
G2 Case Study
Aerospace, Defense & Security
THE BUSINESS AND ASSETS OF AEROSPACE
HOLDINGS, INC. HAVE BEEN ACQUIRED BY HARLOW
AEROSTRUCTURES LLC
CLIENT
Aerospace Holdings, Inc. (“GroupAero”) is a critical provider of advanced engineering, design and
manufacturing services to the commercial and defense aerospace markets. GroupAero consists of three
companies, NC Dynamics located in Long Beach California; Valley Tool and Manufacturing located in
Orange, Connecticut and NCDM, a maquiladora located in Mexicali, Mexico. These three operating
companies have been providing aerospace components and assemblies, servicing military and civilian fixed
wing and helicopter markets for over 30 years to companies located in the USA, Europe, and Asia.
SITUATION
Facing significant liquidity issues and a default with its secured and unsecured creditors, GroupAero sought
to restructure its capital structure, raise additional liquidity, or execute a full sale starting in late 2016.
GroupAero filed chapter 11 on March 28, 2017.
ENGAGEMENT
G2 served as the financial advisor to GroupAero pre-petition, providing M&A advisory services and served as
GroupAero’s investment banker post-petition during the initial 363 process and private sale proceedings.
OUTCOME
The transaction was successfully executed via a complex, multi-stage process that included Harlow
Aerostructures, LLC (“Harlow”) pursuing an acquisition of substantially all of GroupAero’s assets by credit
bidding their ownership of GroupAero’s first lien debt within the context of a 363 sales process during the
initial stages of the chapter 11. The proceedings were then converted to a private sale. "This transaction will
reposition and strengthen the business for future growth and continued high customer service. G2 played a
critical role in developing several transaction options as our financial advisor,” said Steve Woodhouse,
President, NC Dynamics, Inc.
www.g2cap.com 5
Company Title Role
Senior AdvisorDeveloped the training requirements for the 130,000+,
multi-national team in Afghanistan.
Senior Advisor
Directed and led a $72M, national security project in
Afghanistan. Won $250M contract away from a seven-
year incumbent.
PresidentEffected $15M+ YoY growth for a startup through joint
ventures and alliances.
Expert AnalystRegular expert analyst on national security issues for
major news outlets.
Published
Author
Published author in Boston Globe, New York Daily
News, Atlantic, the Harvard Gazette, and the Harvard
Kennedy School Review.
Aerospace, Defense & SecurityBob Kinder, Managing Director
G2 Capital Advisor’s Aerospace, Defense & Security industry practice leader, Bob Kinder, a retired military
officer with over 20 years of service in both the U.S. Air Force and Army special operations communities,
specializes in executing complex M&A transactions, restructurings, and strategic planning initiatives.
Alex Koblansky brings 10+ years of M&A transaction experience to G2’s Aerospace, Defense & Security
practice group. Prior to joining G2 Capital Advisors, Alex was Vice President in the Aerospace, Defense &
Government Services Industry Group at Stifel, Nicolaus & Company, Incorporated where he supervised and
led on all aspects of transaction execution and due diligence.
Alex Koblansky, Vice President
Aerospace, Defense & Security
Bob KinderPractice Leader
Aerospace, Defense &
Security
Company Title Role
Vice President
Aerospace, Defense and Government Services
industry expertise specializing in mergers,
acquisitions, and divestures transactions as well as
raising equity and debt in the public and private capital
markets.
AssociateOriginated structured and securitized lending solutions
for clients.
Analyst
Liaison representative between the Mayor and
international community (City of Charlotte, North
Carolina).
Alex KoblanskyVice President
Aerospace, Defense &
Security
www.g2cap.com 6
Aerospace, Defense & SecurityM&A Activity – Middle Market
M&A transaction multiples are the median North American M&A activity independent of target / acquirer industry and enterprise
value. The dataset has been restricted to multiples between 0.0x and 30.0x EBITDA; sourced through Pitchbook’s 2017 Q1 Report.
The U.S. Middle Market as shown in this chart has been defined as companies with an enterprise value between $25MM and
$1,000MM, and headquartered in the United States.
M&A Transaction Multiples
U.S. Middle Market Private Equity Activity
Data sourced through PitchBook 2017 Q1 Report
Total deal activity has remained steady since Q2 2013; overall deal multiples remain strong. Though
there has been some pullback in M&A, debt remains a strong driver of transaction valuations.
6.1
x
4.1
x
4.9
x
5.7
x
4.9
x
5.2
x
4.0
x 5.8
x
4.7
x
5.7
x
5.9
x
6.2
x
4.9
x
4.8
x
5.8
x
5.4
x
5.9
x
4.3
x
2.6
x
3.8
x 3.6
x
3.7
x
3.4
x
4.2
x
4.0
x
4.7
x 4.3
x
4.8
x
3.3
x
5.0
x
4.8
x
5.7
x
4.7
x
3.9
x
10.4x
6.7x
8.8x9.3x
8.6x 8.6x8.2x
9.8x9.3x
10.0x10.7x
9.5x9.9x
9.6x
11.5x
10.1x9.8x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013 2014 2015 2016 2017
Multip
les o
f E
BIT
DA
Debt/EBITDA Equity/EBITDA Valuation/EBITDA
$71
$59
$81
$89
$115
$104
$115
$113
$94
$102
$100
$104
$89
$96
$85
$87
$91
$364$333
$505 $507
$595
$518
$566
$507 $502$537
$571 $570 $559 $553
$469
$541
$422
0
100
200
300
400
500
600
700
$0
$20
$40
$60
$80
$100
$120
$140
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013 2014 2015 2016 2017*
Deal Value ($B) # of Deals Closed
Deal V
alu
e (
$B
N)
To
tal D
eal C
ount
www.g2cap.com 7
Selected Industry Deals Q1 2017
Aerospace, Defense & Security
Aerospace, Defense & Security
Key Trading Statistics
Sector Summary in Millions USD (converted where necessary)
Data sourced from S&P Capital IQ on Friday March 31, 2017
FY 20171 LTM2
SectorNumber of
Companies
Median Enterprise
Value (MM)
Median
Revenue
Growth
Median
EBITDA
Growth
EV /
Revenue
EV /
EBITDA
Aerospace Equipment & Structure 11 5,792 3.4% 12.5% 2.6x 11.6x
Aircraft OEM 6 51,297 4.7% 43.0% 1.2x 18.4x
Defense Prime Contractors 9 47,045 5.4% 26.8% 1.5x 14.6x
Defense Technologies 13 4,115 7.0% 17.5% 2.1x 15.0x
Government Services 10 3,088 5.6% 9.4% 1.0x 12.3x
Diversified Industrial (Aerospace) 10 20,270 4.1% 8.5% 2.1x 13.8x
MRO 3 1,259 3.3% 25.7% 1.0x 10.0x
1 Estimated – 2017 Fiscal Year2 LTM Multiples as at Friday, March 31, 2017
Several notable transactions have already been completed or announced in the Aerospace, Defense
& Security industry through 2017 Q1. G2 has outlined select transactions below, followed by a more
comprehensive list on the following tables.
▪ LMI Aerospace, Inc. to be acquired by Sonaca Group (Pending) – LMI Aerospace Inc. is a leading
supplier of structural assemblies, kits and components and provider of engineering services to the
commercial, business and regional, and military aerospace markets. Sonaca Group is a global
Belgian company active in the development, manufacturing and assembly of advanced structures
for civil, military and space markets. The transaction represents a 52% premium over LMI’s closing
price on Feb. 16, valued around $430MM with an EBITDA multiple of 12.5x.
▪ Sotera Defense Solutions acquired by The KeyW Holding Corporation (Apr 2017) – Sotera Defense
Solutions, Inc. (Sotera) is an agile, mid-size national security technology company that delivers
innovative systems, solutions and services. KeyW is a total solutions provider for the Intelligence,
Cyber and Counterterrorism Communities' toughest challenges. Together, KeyW and Sotera will
deliver an advanced portfolio of engineering and technology solutions, including cyber, cloud and
data analytics. The transaction is an all cash transaction of approximately $235MM.
▪ Harris Corporation’s Government IT Services Business acquired by Veritas Capital (Jan 2017) –
Harris Corporation is a leading technology innovator, solving customers’ toughest mission-critical
challenges Veritas Capital, a leading private equity investment firm, will acquire Harris’ government
IT services business for $690 million in cash. Proceeds from the transaction will be used to support
the company’s capital allocation strategy, including pension pre-funding and share.
www.g2cap.com 8
Aerospace, Defense & Security
Sector Summary in Millions USD (converted where necessary)
Data sourced from S&P Capital IQ on Friday, March 31, 2017
Recent Deal Activity – Pending & Closed
Date Closed Target Acquirer / InvestorImplied Enterprise
Value (MM)EV / EBITDA EV / Revenue
Pending Zodiac Aerospace Safran SA $10,373.6 35.4x 1.8x
Pending Nova-Tech Engineering, Inc.Advanced Integration
Technology, LP- - -
Pending LMI Aerospace, Inc. Sonaca SA $429.8 12.5x 1.2x
Mar-17 TP Aerospace Solutions Aps CataCap Management Aps - - -
Feb-17 ETI Tech, Inc.Soaring Pine Capital
Management- - -
Feb-17 Elimco Sistemas, S.L.GHENOVA Ingeniería,
S.L.U.- - -
Feb-17 Quatro Composites, LLC AIM Aerospace, Inc. - - -
Jan-17 AMK Welding, Inc. Meyer Tool, Inc. $6.0 - -
Date Closed Target Acquirer / InvestorImplied Enterprise
Value (MM)EV / EBITDA EV / Revenue
Pending Mega Machine Shop, Inc. ZEV Technologies Inc. - - -
Apr-17 Sotera Defense Solutions The KEYW Corporation $235.0 11.3x 1.0x
Feb-17 Ibis Tek, LLC Undisclosed - - -
Feb-17Aerojet Rocketdyne Coleman
Aerospace, Inc.Aerojet Rocketdyne, Inc. $15.0 - -
Jan-17Aegis Engineering Limited
and LBA International LimitedSafariland, LLC - - -
Jan-17 Sintel Group Inc. VOR Technology, LLC - - -
Dec-16 Aviation & Missile Solutions Dynetics, Inc. - - -
Aerospace Equipment & Structure
Defense Prime Contractors and Defense Technologies
MRO
Date Closed Target Acquirer / InvestorImplied Enterprise
Value (MM)EV / EBITDA EV / Revenue
Pending REVIMA SASArgos Soditic; Euroknights
VII- - -
Mar-17 Starport USA, Inc Constant Aviation, LLC - - -
Mar-17 Röder Präzision GmbH Undisclosed - - -
Jan-17Key Air, LLC and CIRRUS
Flight Operations, Inc.Lynx FBO Network - - -
Government Services
Date Closed Target Acquirer / InvestorImplied Enterprise
Value (MM)EV / EBITDA EV / Revenue
PendingHarris Corporation,
Government IT Services
Business
Veritas Capital $690.0 - 0.7x
www.g2cap.com 9
Public Trading Metrics – Aerospace Equipment & Structure
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 9,428 7,712 431 4,020 875 18.9% 1,869 2.2x 2.6x 11.6x
Median 5,792 4,952 215 2,433 451 20.8% 1,000 1.7x 2.4x 11.3x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Astronics
CorporationNasdaqGS:ATRO 1,055 925 18 633 99 15.6% 145 1.5x 1.7x 10.7x
HEICO
CorporationNYSE:HEI 5,938 5,380 46 1,413 348 24.6% 414 1.2x 4.2x 17.1x
Héroux-Devtek
Inc.TSX:HRX 404 315 14 300 44 14.6% 97 2.2x 1.3x 9.2x
Hexcel
CorporationNYSE:HXL 5,605 4,952 82 1,985 451 22.7% 837 1.9x 2.8x 12.4x
Meggitt PLC LSE:MGGT 5,792 4,318 215 2,460 511 20.8% 1,445 2.8x 2.4x 11.3x
Moog Inc. NYSE:MOG.A 3,091 2,416 332 2,433 330 13.5% 1,000 3.0x 1.3x 9.4x
Rockwell
Collins, Inc.NYSE:COL 14,657 12,683 281 5,314 1,237 23.3% 1,354 1.1x 2.8x 11.8x
Safran SA ENXTPA:SAF 33,538 31,131 2,033 17,546 3,849 21.9% 3,089 0.8x 1.9x 8.7x
Spirit
AeroSystems
Holdings, Inc.
NYSE:SPR 7,290 6,900 672 6,805 916 13.5% 1,051 1.1x 1.1x 8.0x
TransDigm
Group
Incorporated
NYSE:TDG 21,521 11,634 972 3,284 1,511 46.0% 10,567 7.0x 6.6x 14.2x
Woodward, Inc. NasdaqGS:WWD 4,812 4,173 79 2,042 328 16.1% 562 1.7x 2.4x 14.7x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
12.9x
9.0x
6.9x
9.1x10.0x10.3x
13.5x13.4x
12.0x11.2x 11.6x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
EV
/ E
BIT
DA
S&P 500
2.2x
1.7x
1.4x
1.9x
2.1x2.0x
2.2x
2.6x 2.6x2.5x
2.6x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 10
Public Trading Metrics – Aircraft OEM
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 52,685 48,830 4,259 43,322 3,534 7.7% 8,963 6.9x 1.2x 18.4x
Median 51,297 50,222 2,552 36,378 2,698 8.0% 8,841 3.9x 1.0x 14.2x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Airbus SE ENXTPA:AIR 56,538 58,917 9,822 72,055 1,653 2.3% 8,950 5.4x 0.8x 34.2x
Bombardier Inc. TSX:BBD.B 10,602 3,395 2,887 16,001 449 2.8% 8,733 19.4x 0.7x 23.6x
Embraer S.A. BOVESPA:EMBR3 5,290 4,043 1,034 6,204 392 6.3% 4,326 11.0x 0.9x 13.5x
Lockheed
Martin
Corporation
NYSE:LMT 90,096 77,556 2,216 47,937 6,047 12.6% 14,276 2.4x 1.9x 14.9x
Northrop
Grumman
Corporation
NYSE:NOC 46,056 41,527 1,403 24,819 3,743 15.1% 7,060 1.9x 1.9x 12.3x
The Boeing
CompanyNYSE:BA 107,528 107,545 8,190 92,915 8,922 9.6% 10,432 1.2x 1.2x 12.1x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
13.2x
7.0x
5.3x
8.3x
7.3x 7.3x
8.4x
9.2x9.8x
11.6x
12.8x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
EV
/ E
BIT
DA
S&P 500
1.0x
0.7x
0.5x0.6x 0.6x 0.6x
0.8x
1.0x1.1x 1.1x 1.1x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 11
Public Trading Metrics – Defense Prime Contractors
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 51,257 49,146 3,901 37,539 3,748 11.3% 6,366 1.9x 1.5x 14.6x
Median 47,045 44,664 3,303 24,819 3,687 12.6% 5,464 1.4x 1.4x 12.3x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Airbus SE ENXTPA:AIR 56,538 58,917 9,822 72,055 1,653 2.3% 8,950 5.4x 0.8x 34.2x
BAE Systems
plcLSE:BA. 27,629 25,554 3,419 21,965 2,236 10.2% 5,464 2.4x 1.3x 12.4x
General
Dynamics
Corporation
NYSE:GD 58,345 56,791 2,334 31,353 4,763 15.2% 2,988 0.6x 1.9x 12.2x
Huntington
Ingalls
Industries, Inc.
NYSE:HII 9,823 9,265 608 7,029 1,008 14.3% 1,280 1.3x 1.4x 9.7x
Lockheed
Martin
Corporation
NYSE:LMT 90,096 77,556 2,216 47,937 6,047 12.6% 14,276 2.4x 1.9x 14.9x
Northrop
Grumman
Corporation
NYSE:NOC 46,056 41,527 1,403 24,819 3,743 15.1% 7,060 1.9x 1.9x 12.3x
Raytheon
CompanyNYSE:RTN 47,045 44,664 3,303 24,069 3,687 15.3% 5,335 1.4x 2.0x 12.8x
Thales S.A. ENXTPA:HO 18,257 20,498 3,818 15,713 1,672 10.6% 1,513 0.9x 1.2x 10.9x
The Boeing
CompanyNYSE:BA 107,528 107,545 8,190 92,915 8,922 9.6% 10,432 1.2x 1.2x 12.1x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
1.0x
0.8x
0.6x 0.6x 0.6x 0.6x
0.8x
1.0x
1.2x1.3x
1.4x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
10.9x
6.9x
5.9x
8.3x
7.0x
5.7x
7.0x
8.5x9.2x
10.0x
11.0x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
EV
/ E
BIT
DA
S&P 500
www.g2cap.com 12
Public Trading Metrics – Defense Technologies
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 5,256 4,350 192 2,804 454 11.9% 1,046 3.3x 2.1x 15.0x
Median 4,115 2,823 200 1,690 170 13.9% 452 2.3x 1.7x 12.7x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
AeroVironment,
Inc.NasdaqGS:AVAV 450 644 73 224 (7) -3.1% NA NA 2.0x NM
Chemring
Group plcLSE:CHG 781 671 77 583 81 13.9% 148 1.8x 1.3x 9.7x
Cobham plc LSE:COB 4,115 2,823 292 2,400 (667) -27.8% 1,487 -2.2x 1.7x NM
Cubic
CorporationNYSE:CUB 1,695 1,431 168 1,460 73 5.0% 200 2.7x 1.2x 23.1x
Elbit Systems
Ltd.TASE:ESLT 5,056 4,881 223 3,260 411 12.6% 172 0.4x 1.6x 12.3x
FLIR Systems,
Inc.NasdaqGS:FLIR 5,102 4,946 397 1,690 359 21.3% 495 1.4x 3.0x 14.2x
Harris
CorporationNYSE:HRS 17,889 13,849 302 7,366 1,579 21.4% 3,859 2.4x 2.4x 11.3x
Kratos Defense
& Security
Solutions, Inc.
NasdaqGS:KTOS 1,023 660 73 684 22 3.3% 369 16.5x 1.5x NM
L3
Technologies, NYSE:LLL 15,907 12,861 230 10,827 1,236 11.4% 3,326 2.7x 1.5x 12.9x
Mercury
Systems, Inc.NasdaqGS:MRCY 2,017 1,872 270 378 69 18.3% 176 2.5x 5.3x 29.2x
Orbital ATK,
Inc.NYSE:OA 7,173 5,640 200 4,455 631 14.2% 1,399 2.2x 1.6x 11.4x
Teledyne
Technologies
Incorporated
NYSE:TDY 4,974 4,454 99 2,150 360 16.8% 510 1.4x 2.3x 13.8x
Ultra
Electronics
Holdings plc
LSE:ULE 2,144 1,822 92 970 170 17.5% 409 2.4x 2.2x 12.6x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
12.8x
11.3x
9.1x9.4x 9.0x
7.3x
9.8x
10.6x
14.0x 13.6x14.4x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
EV
/ E
BIT
DA
S&P 500
2.0x1.9x
1.5x1.5x 1.5x
1.3x
1.4x
1.7x 1.7x1.8x
1.9x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 13
Public Trading Metrics – Government Services
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 3,722 2,720 127 3,321 317 7.6% 1,335 3.8x 1.0x 12.3x
Median 3,088 2,102 106 3,185 263 8.8% 1,126 3.3x 1.0x 11.0x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Booz Allen
HamiltonNYSE:BAH 6,521 5,307 350 5,647 520 9.2% 1,485 2.9x 1.2x 12.5x
CACI
International
Inc
NYSE:CACI 4,155 2,861 54 4,331 377 8.7% 1,231 3.3x 1.0x 11.0x
CSRA Inc. NYSE:CSRA 7,440 4,777 162 5,029 746 14.8% 2,550 3.4x 1.5x 10.0x
Engility
Holdings, Inc.NYSE:EGL 2,096 1,064 25 2,039 192 9.4% 1,010 5.3x 1.0x 10.9x
Leidos
Holdings, NYSE:LDOS 10,619 7,696 206 8,311 779 9.4% 3,188 4.1x 1.3x 13.6x
ManTech
International
Corporation
NasdaqGS:MANT 1,277 1,342 92 1,629 125 7.7% NA NA 0.8x 10.2x
NCI, Inc. NasdaqGS:NCIT 203 204 2 318 28 8.9% NA NA 0.6x 7.2x
Science
Applications
International
Corporation
NYSE:SAIC 4,079 3,242 210 4,450 334 7.5% 1,022 3.1x 0.9x 12.2x
The KEYW
Holding
Corporation
NasdaqGS:KEYW 552 461 120 283 19 6.7% 134 7.1x 2.0x 29.2x
Vectrus, Inc. NYSE:VEC 280 244 54 1,170 47 4.0% 63 1.3x 0.2x 5.9x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
11.2x
15.5x
12.3x
8.3x
6.6x 6.4x7.6x
10.6x 9.6x10.4x
11.9x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
EV
/ E
BIT
DA
S&P 5001.4x
1.3x
1.1x
1.4x
0.9x
0.5x0.6x
0.7x0.9x
1.0x1.0x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 14
Public Trading Metrics – Diversified Industrial (Aerospace)
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 71,958 55,025 2,969 28,922 4,475 14.2% 15,361 2.6x 2.1x 13.8x
Median 20,270 19,366 978 16,126 1,626 16.7% 4,558 2.1x 2.0x 12.8x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
AMETEK, Inc. NYSE:AME 14,063 12,439 570 3,903 1,021 26.2% 2,077 2.0x 3.6x 13.8x
Crane Co. NYSE:CR 4,696 4,449 505 2,761 473 17.1% 746 1.6x 1.7x 9.9x
Curtiss-Wright
CorporationNYSE:CW 4,456 4,044 273 2,129 399 18.7% 815 2.0x 2.1x 11.2x
Eaton
Corporation plcNYSE:ETN 40,843 33,260 222 19,782 3,207 16.2% 6,687 2.1x 2.1x 12.7x
General Electric
CompanyNYSE:GE 389,900 259,520 7,875 119,929 17,641 14.7% 99,674 5.7x 3.3x 22.1x
Honeywell
International
Inc.
NYSE:HON 101,096 94,991 7,710 39,272 7,823 19.9% 11,181 1.4x 2.6x 12.9x
Parker-Hannifin
CorporationNYSE:PH 22,403 21,370 820 11,490 1,665 14.5% 5,255 3.2x 1.9x 13.5x
Rolls-Royce
Holdings plcLSE:RR. 18,138 17,363 3,421 18,465 827 4.5% 3,861 4.7x 1.0x 21.9x
Textron Inc. NYSE:TXT 15,396 12,853 1,137 13,788 1,586 11.5% 2,414 1.5x 1.1x 9.7x
United
Technologies
Corporation
NYSE:UTX 108,587 89,957 7,156 57,702 10,111 17.5% 20,898 2.1x 1.9x 10.7x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
12.0x
9.9x
9.1x
11.9x
10.9x10.9x
12.2x12.4x
11.3x11.9x
12.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
EV
/ E
BIT
DA S&P 500
1.9x
1.6x
1.3x
1.6x 1.7x 1.7x
2.0x2.1x
2.0x2.0x
2.0x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 15
Public Trading Metrics – MRO
Aerospace, Defense & Security
IndustryEnterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA
EBITDA
MarginLT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
Mean 1,290 901 22 1,299 125 8.5% 387 2.9x 1.0x 10.0x
Median 1,259 1,126 10 1,445 131 10.5% 194 2.5x 0.9x 9.6x
Company Ticker
Size (Millions USD)EBITDA
Margin
Leverage Valuation
Enterprise
ValueMarket Cap Cash
LTM
RevenueLTM EBITDA LT Debt
LT Debt /
EBITDA
EV / LTM
Revenue
EV / LTM
EBITDA
AAR Corp. NYSE:AIR 1,259 1,126 10 1,708 131 7.7% 169 1.3x 0.7x 9.6x
VSE
CorporationNasdaqGS:VSEC 677 441 0 745 78 10.5% 194 2.5x 0.9x 8.7x
Wesco Aircraft
Holdings, Inc.NYSE:WAIR 1,933 1,135 54 1,445 166 11.5% 799 4.8x 1.3x 11.6x
Sector Summary in Millions USD (converted where necessary)
Charts show average daily multiples for each year
Data sourced from S&P Capital IQ on Friday, March 31, 2017
10.9x
6.5x
5.2x
6.0x
7.1x7.0x
8.1x
9.3x10.5x
14.4x
13.2x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
EV
/ E
BIT
DA
S&P 500
0.9x
0.6x0.4x
0.5x
1.1x 1.2x
1.3x1.4x
1.2x1.1x 1.1x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
EV
/ T
OT
AL
RE
VE
NU
E
S&P 500
www.g2cap.com 16
Trends
Last 5 Year EV / LTM EBITDA Trend by Industry
Aerospace, Defense & Security
Data sourced through S&P Capital IQ on Friday, March 31, 2017
Economic Index Trends
The Aerospace and Defense Industry has outperformed the S&P 500 index over the last 5 years
Data sourced through S&P Capital IQ on Friday, March 31, 2017
-20
0
20
40
60
80
100
120
140
S&P 500 S&P 500 Aerospace & Defense
Ind
ex
0.0x
5.0x
10.0x
15.0x
20.0x
Q1 '12 Q3 '12 Q1 '13 Q3 '13 Q1 '14 Q3 '14 Q1 '15 Q3 '15 Q1 '16 Q3 '16 Q1 '17
EV
/ E
BIT
DA
^SPX Aerospace Equipment & Structure
Aircraft OEM Defense Prime Contractors
Defense Technologies Government Services
Diversified Industrial (Aerospace) MRO
www.g2cap.com 17
ReferenceContact & Glossary of Terms
For more information about G2, please visit: www.g2cap.com
Our corporate headquarters is located at: 535 Boylston Street, Suite 701, Boston, MA 02116
Boston | Chicago | Indianapolis | Los Angeles | Naples | San Francisco
The information included in this Presentation is not a complete analysis of all material facts regarding any company,
industry, or security and does not constitute investment advice. Opinions expressed or implied by the materials here
presented reflect only the judgement of its author as of the date of the Presentation and is subject to change without notice.
The information in this Presentation has been obtained from sources which G2 generally considers reliable, but we make
no representation or warranty, express or implied, as to the accuracy or completeness of any information herein. This
Presentation has been prepared for informational purposes only and upon the express understanding that it will be used
only for the purposes set forth in the Section captioned G2 Overview above. G2 expressly disclaims any and all liability
which may be based on such information, errors therein or omissions there from. Securities offered through Western
International Securities, Inc. Member FINRA & SiPC. G2 Securities and Western International Securities are separate and
unaffiliated entities.
Bob Kinder, Managing Director Jeffrey Unger, CEO
[email protected] [email protected]
617.918.7940 617.918.7929
Alex Koblansky, Vice President Shubz Chandna, Analyst
[email protected] [email protected]
617.918.7971 617.417.5891
Term Definition
Revenue
Total revenue from the sale of goods and services rendered during the reporting period, in normal course of
business, reduced by sales returns and allowances, and sales discounts. For banks, this item is defined as net
interest income after loan loss provisions
EBITDAEarnings before interest, taxes, depreciation, and amortization. Calculated as Revenue – Expenses, excluding
interest, taxes, depreciation and amortization
Market CapMarket value of a company using most recently reported basic weighted average shares outstanding. Calculated
as Market Price (as of period end) * Basic Weighted Average Shares Outstanding
Long-Term DebtSum of the carrying values as of the balance sheet date of long-term debt with a maturity beyond one year or the
normal operating cycle, if longer
Net DebtNet Debt shows the company’s overall debt situation by netting the value of debts with cash and other similar
liquid assets. Calculated as Total Debt – Cash & Cash Equivalents and Short Term Investments
Enterprise Value
Enterprise Value represents the combined economic value of a company as of the most recent fiscal year end.
Calculated as Diluted Market Capitalization + Total Debt + Minority Interest + Preferred Stock – Cash and Short
Term investments
P/EA valuation ratio of a company stock price compared to its per share earnings. Calculated as Market Price /
Earnings per Share for the last annual period
Tangible Book Value Total Shareholder’s Equity – Goodwill and Intangible Assets