MOSSADAMSCAPITALLLC
Paper,PlasticsandPackagingMarketMonitorSummer2016
2 MOSSADAMSCAPITALLLCPaper,Plastics&Packaging
(0.9%)
4.6%
4.3%
2.1%
0.6%
3.9%
2.0%
1.4%
0.8%Q12016
Q42015
Q32015
Q22015
Q12015
Q42014
Q32014
Q22014
Q12014
U.S. economic growth was revised upward to 0.8% from 0.5% inQ1 2016, amid increases in spending on home building and bybusinesses
Overall, U.S. GDP has been negatively impacted by a strongerdollar, lower oil prices, and lethargic global demand
However, early data points signal that the economy regainedsome momentum in Q2 2016, with retail sales, exports,industrial production, housing starts and home sales higher inApril 2016
The air of global market uncertainty continues to persistagainst the backdrop of multiple imminent interest rate hikesover the next 18 months, lower global growth, and the U.K.’spending decision to withdraw from the European Union
Public packaging companies’ enterprise valuations haverebounded from lows reached in the first two months of 2016
However, YTD 2016 global packaging deal volume is down~36% compared to the same period one year ago while dealvalues saw a decrease of ~79%
Shareholders of many packaging companies, both independentand financial sponsor‐backed, took advantage of historicallyhigh valuation multiples in 2014 and 2015
─ While the inventory of high‐quality assets is lower, acquirersremain highly interested in strategic M&A transactions
─ The window of opportunity remains open for packagingcompanies that are contemplating a transaction to garnerstrong valuation multiples with less marketplace competition
U.S. Gross Domestic Product
Global PPP M&A Deal Volume and Value
Sources: S&P CapitalIQ, Moss Adams Capital Research.
PackagingM&ALowerRelativetoSamePeriodOneYearAgo
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
0
200
400
600
800
2007
2008
2009
2010
2011
2012
2013
2014
2015
YTD2015
YTD2016
DealValue($inbillions)
DealVolum
e(#ofTransactions)
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EndMarketExposureisaSignificantValuationFactor
Food
Not all packaging companies are valued equally ‐‐‐ there are numerous factors that impact enterprise valuation (i.e. growth, margins,management, market environment, competition, etc.)
However, this Summer 2016 Paper, Plastics & Packaging issue examines several high‐growth and attractive end markets that favorablyimpact a packaging companies’ ultimate enterprise valuation by strategic and financial sponsor acquirers
All else equal, more exposure / customer accounts in these end markets tend to result in stronger enterprise valuation multiples
Beverage Healthcare
PetCare ConsumerElectronics Health&BeautyCare
Healthy, convenient snack foods
Organic, non‐GMO, whole foods
Locally sourced foods
Minimally processed foods
Protein: ethical, sustainable, plant
Craft, premium drinks
─ Craft beer
─ Wine
─ Spirits
─ Juices / cleansing
Less artificial, more natural
Medical devices
Pharmaceutical / pill packs
Medical disposables
Dental products & supplies
Sterile grade packaging
Traditional pet foods & snacks
Refrigerated pet foods
Grooming products
Pet health & beauty products
Mobile phones
Tablets
Laptops
Headphones
Internet‐of‐Things
Oral care
Fragrances
Make up
Skin care
Vitamins & supplements
Eye care
Bath & body
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Source: S&P CapitalIQ.
The sales growth outlook for paper and rigid packagingcompanies is expected to grow at a faster rate over the next 12months compared to the S&P 500
Packaging companies’ EBITDA growth over the next 12 monthsis expected to out‐pace the overall market
Smaller, strategic acquisitions are expected to bolster lowerorganic growth expectations amid concerns about the slowingglobal economy
Public Company Packaging ValuationsNext 12 Months: Estimated Growth
Estimated NTM Sales Growth Estimated NTM EBITDA Growth
EBITDA multiples for packaging companies remain at elevatedlevels compared to historical data
Acquirers are anecdotally citing lower quality assets in the M&Amarketplace as many independent and financial sponsor‐backedcompanies took advantage of high valuation multiples in 2014and 2015
However, valuation multiples for top‐tier assets will continue tostand‐out amid less marketplace competition and readilyavailable financing
12MonthOutlookBrighter;ValuationsRemainElevated
PaperIndex7.7x
PlasticIndex12.0x
S&P50015.2x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
Jan‐07
Aug‐07
Mar‐08
Oct‐08
May‐09
Dec‐09
Jul‐10
Feb‐11
Sep‐11
Apr‐12
Nov‐12
Jun‐13
Jan‐14
Aug‐14
Mar‐15
Oct‐15
May‐16
EV/TTM
EBITD
A
RigidIndex10.4x
1.7%
6.0%
1.4%
4.0%
S&P500
RigidPackaging
PlasticPackaging
PaperPackaging
6.5%
9.8%
11.5%
6.3%
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TTM Data NTM Estimated Growth EV Multiple
Company NameSharePrice 52wk High / Low
MarketCap
EnterpriseValue Revenue EBITDA
EBITDAMargin Revenue EBITDA
TTMRevenue
TTMEBITDA
NTMRevenue
NTMEBITDA
Paper PackagingInternational Paper Company $42.16 $51.85 / $32.50 $17,630 $27,623 $22,865 $3,725 16.3% (7.5%) (3.5%) 1.21x 7.4x 1.31x 7.7xWestRock Company 39.61 66.40 / 29.73 10,086 15,644 11,381 1,850 16.3% 27.6% 24.5% 1.37x 8.5x 1.08x 6.8xSmurfit Kappa Group plc 27.29 32.07 / 20.28 6,454 9,928 9,071 1,232 13.6% 4.0% 15.7% 1.09x 8.1x 1.05x 7.0xPackaging Corporation of America 68.23 73.60 / 44.32 6,547 8,709 5,785 1,074 18.6% (0.1%) 0.8% 1.51x 8.1x 1.51x 8.0xGraphic Packaging Holding Company 13.40 15.28 / 10.71 4,406 6,318 4,136 725 17.5% 5.9% 11.3% 1.53x 8.7x 1.44x 7.8xSonoco Products Co. 47.67 49.35 / 34.68 4,883 5,913 5,014 636 12.7% 0.3% 5.6% 1.18x 9.3x 1.18x 8.8xMulti Packaging Solutions International Limited 15.82 18.81 / 13.20 3,388 4,499 1,683 238 14.2% 1.0% 14.7% 2.67x 18.9x 2.65x 16.5xMayr-Melnhof Karton AG 114.46 131.27 / 106.00 2,291 2,260 2,382 322 13.5% 9.8% 9.9% 0.95x 7.0x 0.86x 6.4xKapStone Paper and Packaging Corporation 15.25 27.38 / 8.95 1,488 3,074 2,589 405 15.6% 20.8% (3.5%) 1.19x 7.6x 0.98x 7.9xGreif, Inc. 35.86 39.41 / 23.88 1,715 2,890 3,617 401 11.1% (8.0%) 6.3% 0.80x 7.2x 0.87x 6.8xCascades, Inc. 7.58 10.42 / 5.24 718 2,092 2,811 320 11.4% 10.7% 1.7% 0.74x 6.5x 0.67x 6.4x
Average $5,419 $8,086 $6,485 $993 14.6% 5.9% 7.6% 1.29x 8.8x 1.24x 8.2xMedian $4,406 $5,913 $4,136 $636 14.2% 4.0% 6.3% 1.19x 8.1x 1.08x 7.7x
Plastic PackagingAmcor Limited $11.79 $12.06 / $8.73 $14,061 $17,019 $9,612 $1,381 14.4% 1.4% 5.4% 1.77x 12.3x 1.75x 11.7xSealed Air Corporation 46.44 55.84 / 38.02 9,428 13,744 7,251 1,111 15.3% (3.9%) 7.3% 1.90x 12.4x 1.97x 11.5xBemis Company, Inc. 50.34 54.19 / 38.91 4,892 6,113 4,141 573 13.8% (0.2%) 7.4% 1.48x 10.7x 1.48x 9.9xBerry Plastics Group, Inc. 39.17 39.47 / 27.79 4,845 8,353 4,881 771 15.8% 34.7% 54.5% 1.71x 10.8x 1.27x 7.0xHuhtamaki Oy 41.81 41.90 / 29.17 4,343 5,064 2,920 337 11.5% 11.6% 26.2% 1.73x 15.0x 1.55x 11.9xMulti Packaging Solutions International Limited 15.82 18.81 / 13.20 3,388 4,499 1,683 238 14.2% 1.0% 14.7% 2.67x 18.9x 2.65x 16.5xWinpak Ltd. 37.54 38.87 / 27.68 2,440 2,249 798 177 22.2% 2.5% 11.5% 2.82x 12.7x 2.75x 11.4x
Average $6,200 $8,149 $4,469 $655 15.3% 6.7% 18.1% 2.01x 13.3x 1.92x 11.4xMedian $4,845 $6,113 $4,141 $573 14.4% 1.4% 11.5% 1.77x 12.4x 1.75x 11.5x
Rigid PackagingBall Corporation $72.30 $76.69 / $57.95 $10,206 $13,134 $8,225 $1,101 13.4% (1.7%) 7.2% 1.60x 11.9x 1.62x 11.1xCrown Holdings Inc. 52.17 56.78 / 43.30 7,259 12,908 8,862 1,208 13.6% (1.7%) 9.8% 1.46x 10.7x 1.48x 9.7xCCL Industries Inc. 178.23 190.42 / 109.02 6,149 6,455 2,147 426 19.8% 48.4% 43.6% 3.01x 15.2x 2.03x 10.5xAptarGroup, Inc. 77.26 80.36 / 60.73 4,836 5,172 2,370 471 19.9% 3.5% 10.1% 2.18x 11.0x 2.11x 10.0xSilgan Holdings Inc. 51.14 56.06 / 47.00 3,094 4,922 3,845 491 12.8% (3.0%) 0.6% 1.28x 10.0x 1.32x 10.0xOwens-Illinois, Inc. 18.90 24.76 / 11.58 3,057 8,764 6,133 936 15.3% 4.7% 40.4% 1.43x 9.4x 1.36x 6.7xGreif, Inc. 35.86 39.41 / 23.88 1,715 2,890 3,617 401 11.1% (8.0%) 6.3% 0.80x 7.2x 0.87x 6.8x
Average $5,188 $7,749 $5,028 $719 15.1% 6.0% 16.8% 1.68x 10.8x 1.54x 9.3xMedian $4,836 $6,455 $3,845 $491 13.6% (1.7%) 9.8% 1.46x 10.7x 1.48x 10.0x
($ in millions, except where noted)
Note: Not meaningful (NM) if EV/Sales is greater than 5.0x, or EV/EBITDA is greater than 30.0x. NA if denominator is 0 for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.
Source: S&P CapitalIQ, company filings and Moss Adams Capital research.
ValuationsReboundFromLowsReachedinEarly2016
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Source: S&P CapitalIQ, company filings and Moss Adams Capital research.
YTD2016M&ADealVolume&ValueLowervs.YTD2015PaperPackagingTransactions($ in millions, except where noted)
CloseDate Acquirer/Investor Target TargetDescription ImpliedEnterpriseValue
EV/RevenueMultiple
EV/EBITDAMultiple
May‐16 HuhtamakiOyj(HLSE:HUH1V) DeltaPrintAndPackagingLimited Manufacturesfoldingcartonsandpaperboardpackaging
$117 ‐ ‐
Apr‐16 GraphicPackagingHoldingCompany(NYSE:GPK)
ColorpakLimited(ASX:CKL) Manufacturesfoldingcartonsandpaperboardpackaging
$64 0.60x 7.4x
Mar‐16 LibertyDiversifiedInternational,Inc. OmahaBoxCompany ManufacturescustomcartonsandPOPdisplays ‐ ‐ ‐
Mar‐16 SmurfitKappaGroupplc(ISE:SK3) ScopePackagingInc. Manufactureshighgraphicpackaginganddisplays
‐ ‐ ‐
Mar‐16 Georgia‐PacificLLC ExcelDisplays&Packaging ManufacturesPOPdisplaysandhigh‐graphicretailpackaging
‐ ‐ ‐
Feb‐16 BuckeyeCorrugated,Inc. TheDrakeCompany IntegratedcorrugatedpackagingandPOPdisplaysolutions
‐ ‐ ‐
Feb‐16 GraphicPackagingHoldingCompany(NYSE:GPK)
WalterG.Anderson,Inc. Manufacturesfoldingcartonsandpaperboardpackaging
‐ ‐ ‐
Jan‐16 SvenskaCellulosaAktiebolagetSCA(publ)(OM:SCAB)
WausauPaperCorp.(NYSE:WPP) Manufacturestowelandtissueproducts $689 1.90x 13.0x
Dec‐15 SmurfitKappaGroupplc(ISE:SK3) IndústriadeEmbalagensSantanaS.A.andPaemaEmbalagens
Manufacturespaper‐basedpackagingproductsinBrazil
$201 ‐ ‐
Nov‐15 W.&R.BarnettLimited LogsonGroup Manufacturesandsuppliescorrugatedsheetboard
‐ ‐ ‐
Nov‐15 CircleGraphics,Inc. Imagic,Inc. Providesdigitalprintingservicesformediacompanies
‐ ‐ ‐
Oct‐15 CepacLimited WoodhillPrintersLimited Manufacturescorrugatedpackagingsolutions ‐ ‐ ‐
Oct‐15 SupremexInc.(TSX:SXP) ClassicEnvelope,Inc. Manufacturesandprintsenvelopesandletterheads
‐ ‐ ‐
Oct‐15 WestRockCompany(NYSE:WRK) SPFiberHoldings,Inc. Producesrecycledcontainerboard,kraft,andbagpaper
$289 ‐ ‐
Sep‐15 HoodContainerCorporation KPAQIndustries,LLC Manufacturespulpandpaperproducts ‐ ‐ ‐
7 MOSSADAMSCAPITALLLCPaper,Plastics&Packaging
PlasticPackagingTransactions($ in millions, except where noted)
Source: S&P CapitalIQ, company filings and Moss Adams Capital research.
YTD2016M&ADealVolume&ValueLowervs.YTD2015
CloseDate Acquirer/Investor Target TargetDescription ImpliedEnterpriseValue
EV/RevenueMultiple
EV/EBITDAMultiple
May‐16 OliverProductsCompany MangarIndustries,Inc. Manufacturessterilebarrierpackagingformedicaldevicemanufacturers
‐ ‐ ‐
May‐16 Novolex HeritageBagCompanyInc. Manufacturescommercialplasticbagsandliners
‐ ‐ ‐
Apr‐16 OwensCorning(NYSE:OC) InterWrap,Inc. Coatedwovenpackagingproductsandmulti‐layerlaminatedplasticsubstrates
$450 1.80x ‐
Apr‐16 InlandLabel&MarketingServices,LLC
ValleyLabelCompany,LLC Providesflexographicprintingservicesforpackagingandlabelapplications
‐ ‐ ‐
Apr‐16 InfinitePackagingGroup,Inc. HydeParkLabelCorp. Manufactureslabelsandfilms ‐ ‐ ‐
Jan‐16 AmcorLimited(ASX:AMC) DeluxePackages Providesflexiblepackagingproductsforavarietyofendmarkets
$45 1.07x ‐
Jan‐16 AEAInvestorsLP InovarPackagingGroup,LLC Customlabelprinter/converterinthesouth‐centralUnitedStates
‐ ‐ ‐
Dec‐15 ProAmpacLLC CoatingExcellenceInternational,LLC Providesflexiblepackagingandtechnicalproducts
‐ ‐ ‐
Dec‐15 CharterNEXFilmsInc. BloomerPlastics,Inc. Manufacturescustomengineeredfilms ‐ ‐ ‐
Nov‐15 CCLDesignGmbH WorldmarkInternationalLtd. Manufactureslabels,brandingproducts,andcustomengineereddiecutcomponents
$189 ‐ ‐
Oct‐15 Schweitzer‐MauduitInternationalInc.(NYSE:SWM)
ArgotecLLC Manufacturescustomengineeredpolyurethanefilmsandsheets
$280 ‐ 10.0x
Oct‐15 TranscontinentalInc.(TSX:TCL.A) UltraFlexPackagingCorp. Manufacturesflexiblepackagingproductsforvariousmarkets
$80 1.11x 6.7x
Sep‐15 HilexPolyCo.LLC WisconsinFilm&Bag,Inc. Custommanufacturesmono‐layerpolyethylenebagsandfilms
‐ ‐ ‐
Aug‐15 SunCoastPackaging,Inc. AmsAssociates,Inc. DoingbusinessasShapiroPackaging,providesplasticpackagingsolutions
‐ ‐ ‐
Aug‐15 ProlaminaCorporation AmpacHoldings,LLC Manufacturesflexiblepackagingsolutions,retailshoppingbags,andsecuritybags
‐ ‐ ‐
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Source: S&P CapitalIQ, company filings and Moss Adams Capital research.
YTD2016M&ADealVolume&ValueLowervs.YTD2015RigidPackagingTransactions($ in millions, except where noted)
CloseDate Acquirer/Investor Target TargetDescriptionImpliedEnterprise
ValueEV/RevenueMultiple
EV/EBITDAMultiple
Pending BallCorporation(NYSE:BLL) Rexamplc(LSE:REX) Manufacturesandsellsbeveragecans $9,112 1.50x 10.2x
May‐16 AmcorLimited(ASX:AMC) PlasticMouldersLimited Customprecisionmouldingproductsandassemblies
$30 ‐ ‐
Apr‐16 TricorBraun,Inc. ThePackagingDesignGroupInc. Providespackagingsolutionsforpharma,personalcare,andF&Bindustries
‐ ‐ ‐
Jan‐16 GruppoASA CrownSpecialityPackagingItaliaSrl Manufacturesmetalpackagingproducts ‐ ‐ ‐
Nov‐15 BerlinPackaging,LLC DiabloValleyPackaging,Inc. Providesfood,beverage,beer,liquor,andwinepackagingsolutions
‐ ‐ ‐
Oct‐15 WadinkoN.V. EuroMouldingsB.V. Manufacturesbottles,jerrycans,stackablecontainers,andtechnicalparts
‐ ‐ ‐
Sep‐15 GerresheimerAG(DB:GXI) Centor,Inc. Manufacturesclosures,snapcaps,ointmentjars,andovalbottles
$725 ‐ ‐
Sep‐15 Owens‐BrockwayGlassContainer,Inc. FoodAndBeverageContainerBusiness
Manufacturesfoodandbeveragecontainers $2,150 ‐ ‐
Aug‐15 BerlinPackaging,LLC VividPackaging,Inc. Manufacturescontainersandpackagingsolutions
‐ ‐ ‐
Aug‐15 ConsolidatedContainerCompanyLLC PrecisionPlastics,Inc. Manufactureshigh‐densitypolyethyleneplasticcontainers
‐ ‐ ‐
Jun‐15 CCIndustries,Inc. J.L.Clark,Inc. Specialtypackagingdesignandmanufacturingcompany
$48 0.62x ‐
Apr‐15 PrattIndustries,Inc. RobertMannPackaging,Inc. Providesabroadrangeofplasticandrigidpackagingproducts
$60 0.40x ‐
Mar‐15 OriconEnterprisesLimited(BSE:513121)
OrientalContainersLtd. Manufacturespackagingproductsprimarilyforliquor,beverage,andcosmeticindustries
$24 ‐ ‐
Feb‐15 Owens‐BrockwayGlassContainer,Inc. BennuGlassLLC Manufacturesglassbottles,includingbordeauxandburgundyglassbottles
‐ ‐ ‐
Feb‐15 CrownHoldingsInc.(NYSE:CCK) Empaque Producesmetalbeveragecans,glassbottles,andothercomponents
$1,225 1.86x 9.4x
9 MOSSADAMSCAPITALLLCPaper,Plastics&Packaging
OliverProductsCompany’sAcquisitionofMangarIndustries
SmurfitKappa’sAcquisitionsofEmpirePackaging&DisplaysandScopePackaging
Oliver‐Tolas® Healthcare Packaging, a wholly owned subsidiary of Oliver Products Company, is a leading supplier of sterile‐grade die‐cut lid, rollstock, and pouch products to the medical device and pharmaceutical markets
Mangar Industries, doing business as Mangar Medical Packaging, is a trusted partner of medical device manufacturers providing pouches, die‐cutlids and mounting cards for use in sterile barrier packaging solutions
“We are thrilled to have the opportunity to combine the extremely talented team and capabilities of Mangar with Oliver‐Tolas®…Our strategy is toleverage Mangar knowhow and capabilities with the Oliver‐Tolas® global footprint and ongoing investment capacity…An immediate benefit tocustomers will be a broader product offering and enhanced technical capabilities.” ‐‐‐ Jerry Bennish, President & CEO, Oliver Products Company
Smurfit Kappa is one of the leading providers of paper‐based packaging solutions in the world, with around 45,000 employees inapproximately 370 production sites across 34 countries
Empire manufactures premier corrugated packaging, point of purchase displays, custom corrugated boxes and folding cartons
Scope Packaging designs, manufactures, and fulfills custom packages and displays, including temporary & permanent displays and retail &protective packaging
“We are pleased to announce our acquisitions of Empire and Scope…I look forward to welcoming their teams into Smurfit Kappa…Empire has agreat reputation for being agile in terms of ‘speed to market’, while Scope’s high‐graphic capabilities are well‐known throughout theindustry…The acquisitions further enhance our capacity to provide innovative, insight‐led and value enhancing packaging solutions to bothcurrent and prospective customers.” ‐‐‐ Greg Hall, CEO, Smurfit Kappa North America
Source: Company press releases, S&P CapitalIQ.
OverviewofSelect,NotableTransactions
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Focusonprivately‐ownedandfamily‐heldcompanies
Mergersandacquisitions
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MossAdamsLLP
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100+yearsold– foundedin1913
DominantinwesternU.S.
2,400employeesin28offices
Middle‐marketspecialists
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Leverage‐abletransactionresources
MossAdamsataGlanceLeadershipthroughExperienceandResults
International Presence
Major market affiliates throughout theU.S. and more than 100 countriesaround the globe
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Local,NationalandGlobalReach
OuraffiliationwithCFxBconsistsof150+CorporateFinanceProfessionalsacrosstheU.S.andinover25countries
GlobalM&AReachThroughLocalRelationships
Mazars Africa40 offices
Mazars Asia25 offices
Mazars Middle East15 offices
Mazars Europe 140 officesMazars M&A 20 offices
Mazars South America20 offices
Moss Adams Capital 3 officesMoss Adams LLP 28 offices
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Mazars Canada 1 office CH Reynolds CF
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12 MOSSADAMSCAPITALLLCPaper,Plastics&Packaging
ContributingAuthors:
RichardAndersonManagingDirector(949)221‐[email protected]
AndrewSuenVicePresident(949)517‐[email protected]
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