aerospace, defense and government services 1st · 2016. 4. 25. · aerospace, defense and...

The McLean Group | 7900 Westpark Drive A320 | McLean, VA 22102 | www.mcleanllc.com | 877.843.0997

Aerospace, Defense and Government Services Quarterly Industry Update

1st Quarter 2014

http://www.mcleanllc.com

1

First Quarter 2014

% ChangeFour

WeeksQ1

201452

WeeksDefense Prime Index (0.8%) 2.4% 57.8%Defense Systems Index 0.4% 8.9% 50.5%Diversified Government Services Index (6.0%) (0.8%) 24.7%Middle Market Government Services Index 0.4% 18.4% 47.0%Large Cap Aerospace Index (0.9%) (2.0%) 32.5%Mid Cap Aerospace Index (1.7%) (7.6%) 34.5%Small Cap Aerospace Index (0.0%) 9.0% 54.6%International Aerospace Index 2.2% (5.8%) 29.4%S&P 500 1.4% 1.3% 19.3%

Notable Quarterly M&A Activity Capital Markets

L-3 acquired Data Tactics Lockheed Martin agreed to acquire Industrial Defender Precision Castparts acquired Aerospace Dynamics

International from The Marvin Group for $625 million Thales acquired LiveTV, LLC from JetBlue Airways

Corporation for $400 million Ultra Electronics acquired 3 Phoenix for $87 million Wesco Aircraft acquired Haas Group International

from The Jordan Company for $550 million

Industry News Quarterly Summary A Malaysia Airlines’ 777 jet carrying 239 people from Kuala Lumpur to Beijing vanished on March 8. Although the exact cause of the

crash is still undetermined, investigators were able to track the plane to a region some 2,000 miles west of Perth Australia where the search for wreckage is still underway.

Following Russia’s annexation of Crimea, tensions continue to escalate in several Eastern Ukrainian cities with multiple violent clashes between pro-government and anti-government protestors.

Boeing introduced the Boeing Black, a specialized smartphone designed for use by government agencies and contractors with high communication and data security requirements.

The Army announced that it is canceling existing procurement plans for the Ground Combat Vehicle (GCV) in favor of redirecting funds toward developing a next-generation platform.

Finmeccanica announced plans for a new organizational and operating model. The reforms are similar to those undertaken by Airbus Group and will focus the Company on aerospace, defense and space sectors in a bid to restore profitability.

Sikorsky signed agreements with the Turkish government and key Turkish aerospace contractors as part of a $3.5 billion program to produce up to 600 aircraft for both Turkish indigenous use and export over the next 30 years.

The US National Telecommunications and Information Administration (NTIA) announced that it intends to transition key Internet domain name functions to a global multi-stakeholder community.

Quarterly Industry Snapshot

Source: Public Filings; Capital IQ as of 03/31/14

2

First Quarter 2014

42 4829 35

46 45

30

?43

52

32

51

74

38

2011 2012 2013 2014 YTD

Q1 Q2 Q3 Q4

43

36

2931

28

40

28

3229

Q12014

Q42013

Q32013

Q22013

Q12013

Q42012

Q32012

Q22012

Q12012

Quarterly Aerospace Transaction Activity

M&A Analysis

The McLean Group tracked 35 announced Defense and Government

Services sector transactions during Q1 2014. Transaction activity in the

sector rebounded considerably after a slow 2013. While Q1 historically has

been the quietest quarter based on transaction volume, Q1 2014 volume

exceeded every quarter of last year, with the exception of Q4. Perhaps the

most encouraging Q1 trend was increased activity by public buyers.

Publicly traded buyers accounted for 17 announced transactions, or 49% of

total volume. This is a substantial increase from Q1 2013, when publicly

traded companies made only seven acquisitions and from 2013 cumulative

volume, when public buyers accounted for 29% of all activity. Notable

publicly traded companies that announced transaction during Q1 2014

include ManTech, Ultra Electronics, Cubic, L-3, Lockheed Martin, and ICF

International. Meanwhile, financial buyers accounted for 20% of Q1

acquisitions compared to 42% of total 2013 transactions, indicating that

increased strategic activity may be hampering private equity deal flow.

Aerospace transactions took off in Q1 with 43 total transactions

announced. Precision Castparts continued its acquisition streak with three

announced transactions, which included a $625 million purchase of

Aerospace Dynamics International from The Marvin Group. Both Safran

and Thales grew their positions in the US. Safran purchased Eaton’s

Aerospace Power Distribution Management Solutions and Integrated

Cockpit Solutions Businesses for $270 million and Thales paid $400

million to acquire LiveTV, LLC from JetBlue Airways Corporation. Wesco

Aircraft acquired Haas Group, a primary provider of chemical supply chain

management solutions to aerospace customers, from the Jordan

Company for $550 million. Also of note was Lockheed Martin’s continued

expansion into the commercial sector with its purchase of Beontra AG and

TransDigm’s acquisition of yet another dynamic system provider, Elektro-

Metall Export. Overall, Q1 transaction activity was heavily dominated by

strategic buyers with private equity acquisitions representing only 14% of

Q1 announced transactions, down from 20% in 2013.

Defense and Government Services Transaction Activity

Source: InfoBase; Capital IQ as of 03/31/14

3

First Quarter 2014

1.35 M

1.38 M

1.41 M

1.44 M

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Industry Trends (Defense and Gov. Services)

Source: DMDC Active Duty Military Personnel Reports

Recent international events in the Ukraine, Middle East, and North Korea have highlighted the need for an agile and responsive military force

and have accelerated the repositioning of US military assets. The US’ shifting military focus can be seen not only in the media headlines but

also in government generated raw data. For example, US Defense Secretary Chuck Hagel announced that two Navy destroyers equipped

with missile defense systems will be deployed to Japan by 2017 in response to provocations from North Korea and an increasingly assertive

China. The announcement followed other steps taken by the Pentagon to bolster its military position in Japan, including an October decision

to position a second X-band missile defense radar there. Additionally, President Obama recently announced a 10-year agreement to give

US warships, planes, and troops greater access to Philippines’ military bases. Meanwhile, the US is simultaneously reducing the number of

active duty military personnel and repositioning its forces internationally. Over the one year period ending 12/31/13, military personnel

declined 16% internationally and a 1% domestically. According to data published by the Defense Manpower Data Center (DMDC), there was

a 28% YOY decline of military personnel in the Middle East and South Asia, which balanced troop levels internationally as displayed in the

chart on the left below. The balancing act is further complicated by declining discretionary budgets and the evaporating OCO funds.

As a result of this budgetary and logistic balancing act, DoD contractors that provide innovative technologies, services, and logistics

processes will be in high demand during both government acquisition processes and M&A auctions. The essence of an agile military force is

the logistics processes, resources, and systems involved in generating, transporting, sustaining, and redeploying or reallocating material and

personnel. Contractors provide the full spectrum of the military’s logistics, acquisition, and technical services and logistics requirements

remain a high priority in both times of peace and war. As America’s military efforts continue to shift away from large-scale conflict in Iraq and

Afghanistan towards more small-scale, special operations, contractors that are nimble and able to quickly adapt to the military’s needs will

see demand for their services dramatically increase.

Year End Active Duty Military Personnel By Location Year End Active Duty Military Personnel Head Count

43%

36%

31%

35%

23%

27%

3%

3%

0% 20% 40% 60% 80% 100%

2012

2013

Middle East and South Asia Europe East Asia And Pacific Other

4

First Quarter 2014 Industry Trends (Aerospace)

Source: Facebook white paper “Connecting the World from the Sky”; Boeing and Airbus Public Filings; Industry Newswires

Unmanned Aircraft Systems (UAS) continue to expand in size and capability, ranging from the massive surveillance

and strike platforms able to land on an aircraft carrier to hand launched systems. Until recently, UAS application

beyond defense and security remained limited. Thanks to advances in High Altitude Long, Endurance (HALE) design

and solar power, UAS will now be able to function as atmospheric satellites, serving as low cost, mobile internet

providers to developing and rural regions where satellites are only able to offer slower, limited coverage. Solar

technology will allow the aircraft to stay aloft for months, even years while being controlled from the ground. Most

importantly, the new designs operate above FAA regulated airspace – Class A airspace ends at approximately

60,000 ft. Mean Sea Level (MSL) – bypassing the cumbersome regulations dogging UAS application potential in

commercial airspace. Meanwhile, the FAA is working to address UAS operation in commercial applications. Earlier in

Q1, the FAA selected six research and testing sites to study operational issues for commercial UAS applications.

However, with actionable policy still years away, the long-term, high altitude flight capability represents a crucial,

near-term growth opportunity for the industry.

According to a recent Facebook whitepaper, roughly 2.7 billion people globally have internet access. That is little

more than one third of the current population and access is growing only 9% annually. Recognizing UAS

technology’s potential to drive internet access, both Facebook and Google have made acquisitions in a new race for

sub-space supremacy. Facebook acquired UK-based Ascenta Limited for $20 million at the close of Q1 and Google

won a bidding war to acquire New Mexico-based Titan Aerospace just after Q1’s close. Ascenta is a small

engineering team founded by creators of the early generation Zephyr, the world’s longest flying solar-powered UAS

to-date. Ascenta team members will join the Facebook Connectivity Lab’s newly minted team of experts in aerospace

and communications technology recruited from NASA’s Jet Propulsion Lab and Ames Research Center. Meanwhile,

Titan boasts UAS designs able to ascend to 65,000 ft. MSL and remain airborne for five years without landing or

refueling. Both acquisitions are viewed as critical steps in the companies’ goal to bring affordable internet access to

the world.

UAS Acquisitions

Ascenta Limited

Est. EV $20M

ACQUIRED

March 27, 2014

April 4, 2014

ACQUIRED

Est. EV $60M

03/31/14 A320 Family A330/A340/A350 A380

5,521 4,247 1,078 196

Company as of Unfilled Orders by Aircraft Model Totals

03/31/14 737 747 767 777 787

5,154 3,794 52 49 360 899

Major Commercial Aircraft Backlog Boeing outpaced Airbus in new aircraft deals for Q1 following the

finalization of an Air Canada order for 61 narrow body jets. Boeing

reported 275 gross orders or 234 net orders in Q1. Meanwhile, Airbus

ended the quarter with 158 new orders or 103 net orders after

adjusting for cancellations. Overall backlog for Boeing and Airbus

grew roughly 1% and cancellations for both planemakers ran at similar

levels.

5

First Quarter 2014

GDRaytheon

Lockheed

TeledyneHarris

Northrop

L-3

BoozCACI

Engility

FLIR

ICF

Cubic

VSE

Boeing

ATKLeidos

-30.0%

30.0%

-5.0% 5.0%

EPS

Revenue

Defense Prime IndexDefense Systems IndexDiversified Government Services IndexMiddle Market Government Services Index

Company Quarter Ending Revenue EPS

3/31/2014 1.4% 17.4%

3/30/2014 1.7% 4.3%

3/30/2014 -2.2% 13.4%

3/31/2014 0.1% 22.3%

3/30/2014 0.3% 6.2%

12/31/2013 1.4% 22.4%

9/30/2013 -3.4% 6.1%

3/31/2014 -5.5% -12.9%

3/31/2014 1.8% -16.0%

3/28/2014 2.8% 7.6%

3/28/2014 0.3% 2.0%

3/30/2014 -1.6% 6.2%

12/31/2013 -3.1% -3.1%

3/31/2014 0.8% -1.7%

12/31/2013 1.5% -18.9%

1/31/2014 5.0% 24.4%

3/31/2014 -7.1% -21.2%

12/31/2013 -1.4% -5.0%

3/31/2014 -1.0% -33.3%

3/30/2014 -7.2% -36.8%

3/31/2014 14.8% -35.7%

3/31/2014 0.6% -19.2%

Most Recent Quarterly Financial Results (Defense and Gov. Services)

Most Recent Quarterly Earnings Suprise1


Most Recent Quarterly Earnings Suprise1

1Earnings Surprise is calculated as the difference of a Company’s most recent quarterly financial results from Capital IQ analyst consensus estimates

Kratos KEYW NCIT

ManTech

Exelis

6

First Quarter 2014

Precision Castparts

Boeing

AeroVironment

Hexcel

Spirit AeroSystems

B/E

Triumph

Astronics

LMI

Rockwell

HEICO

Wesco

UTCAmetek

Esterline

AAR

Curtis-Wright

Orbital

GenCorp

Textron

TransDigm

Moog

DigitalGlobe-30.0%

30.0%

-10.0% 10.0%

EPS

Revenue

Company Quarter Ending Revenue EPS

12/31/2013 3.6% 1.9%

3/31/2014 5.3% 4.0%

3/31/2014 1.4% 17.4%

12/29/2013 -4.2% -3.0%

3/31/2014 1.2% 0.9%

3/29/2014 -5.6% -11.4%

12/28/2013 5.4% 10.8%

3/31/2014 0.2% 3.1%

3/31/2014 2.9% 14.3%

3/31/2014 4.5% -91.7%

1/31/2014 7.1% -9.7%

1/31/2014 6.5% 17.1%

3/31/2014 1.9% 2.0%

3/29/2014 0.4% 3.8%

4/3/2014 8.4% 67.2%

12/31/2013 -5.1% -32.3%

2/28/2014 -7.4% -4.3%

1/25/2014 6.2% 157.9%

12/31/2013 -1.6% -10.5%

12/31/2013 NA NA

2/28/2014 -21.7% -133.3%

12/31/2013 -7.7% -133.3%

3/31/2014 -6.2% -8.0%

12/31/2013 -1.3% -7.4%

Most Recent Quarterly Financial Results (US Aerospace)

Most Recent Quarterly Earnings Suprise1 Most Recent Quarterly Earnings Suprise1

1Earnings Surprise is calculated as the difference of a Company’s most recent quarterly financial results from Capital IQ analyst consensus estimates


Large Cap Aerospace IndexMid Cap Aerospace IndexSmall Cap Aerospace Index

7

First Quarter 2014 Capital Markets: Overview (Defense and Gov. Services)

Last 52 Weeks Custom Index Performance

Index Constituents and Stock Price as a % of 52 Week High


Defense Prime Index 87% 96% 97% 98% 97%

Defense Systems Index 98% 90% 89% 100% 97% 99% 95%

Middle Market Index 90% 81% 82% 81% 99%

Diversified Government

Services Index 98% 91% 98% 72% 95% 94%

60.0%

23.9%

51.5%48.5%

19.9%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013 Jan 2014 Feb 2014 Mar 2014

Defense Prime Index Diversified Government Services Index Defense Systems Index Middle Market Index S&P 500

8

First Quarter 2014

33.8%35.8%

57.7%

29.3%19.9%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%


Large Cap Aerospace Index Mid Cap Aerospace Index Small Cap Aerospace Index International Aerospace Index S&P 500

Capital Markets: Overview (Aerospace)

Last 52 Weeks Custom Index Performance


Large Cap Aerospace

Index 83% 98% 87% 92% 95% 97% 99% 99%

Mid Cap Aerospace

Index 91% 67% 94% 92% 94% 94% 79% 76%

Small Cap Aerospace

Index 82% 97% 87% 93% 81% 62% 95% 95%

Index Constituents and Stock Price as a % of 52 Week High

International Aerospace

Index 91% 76% 90% 97% 83% 83% 92% 96%

9

First Quarter 2014

TDG AME PCP BEAV COL UTX BA TXT HEI HXL DGI ESL CW MOG.A TGI SPR AVAV ATRO WAIR ORB LMIA AIR GY

13.6x 9.4x12.2x12.3x 9.0x11.0x14.0x 10.2x 11.2x 10.2x14.2x 9.0x11.4x 5.9x8.0x9.4x 12.2x 6.9x10.8x 6.9x8.8x10.0x30.2x

BA LMT RTN GD NOC FLIR TDY CUB LLL ATK HRS XLS BAH LDOS SAIC CACI EGL MANT KEYW KTOS ICFI NCIT VSEC

9.4x 8.6x 8.9x9.4x 6.3x10.9x 8.4x8.7x 7.6x 7.4x8.4x 8.0x8.6x8.8x 7.6x 8.4x13.8x 9.1x 8.5x 8.1x27.4x 10.4x 6.1x

Public Market Valuations: EV/2014E EBITDA Multiples

Defense and Government Services

Defense Prime Index Defense Systems Index Diversified Government Services Middle Market Index

Aerospace

Large Cap Aerospace Index Mid Cap Aerospace Index Small Cap Aerospace Index

Average: 9.5x Median: 8.6x

Average: 11.2x Median: 10.2x

Average: 8.6x Average: 9.5x Average: 8.2x Average: 12.0x

Average: 11.5x Average: 9.9x Average: 12.3x


10

First Quarter 2014

(8.1%)

(3.0%)(1.8%)

(1.7%)

(0.3%)

0.8%

1.3%

4.8%

6.0%

7.7%

8.9%

9.8%

9.8%

10.6%

14.0%

14.7%

14.9%

16.8%

19.6%

34.9%

39.2%

60.6%

(20%) 0% 20% 40% 60% 80%

Boeing

Cubic

Kratos

ManTech

Exelis

CACI

S&P 500

Harris

Teledyne

Northrop Grumman

Raytheon

VSE

Lockheed Martin

L-3

General Dynamics

ICF

Booz

Alliant Techsystems

Flir

Engility

KEYW

NCI

First Quarter 2014

9.5%

16.0%

19.3%

19.5%

24.1%

27.5%

38.4%

46.0%

46.2%

46.4%

49.9%

54.5%

57.9%

63.7%

68.0%

69.1%

74.6%

75.9%

87.9%

96.3%

110.9%

119.6%

0% 25% 50% 75% 100% 125%

ManTech

KEYW

S&P 500

Cubic

Teledyne

CACI

Flir

L-3

Boeing

ICF

Kratos

General Dynamics

Harris

Booz

Raytheon

Lockheed Martin

Exelis

Northrop Grumman

Engility

Alliant Techsystems

VSE

NCI

Last 52 Weeks

Defense Prime Index Defense Systems Index Diversified Government Services Index

Middle Market Government Services Index S&P 500 Index

Capital Markets: Stock Performance (Defense and Gov. Services)


11

First Quarter 2014

(29.5%)(17.3%)(15.8%)(15.1%)

(10.8%)(9.0%)(8.1%)(7.4%)(6.8%)(6.1%)(4.3%)(3.6%)(2.6%)(2.2%)(0.4%)(0.3%)

0.4%1.3%1.4%2.1%2.7%2.8%3.8%4.5%5.7%6.9%7.8%10.3%

15.0%19.7%

24.3%30.2%

38.1%

(50%) (25%) 0% 25% 50%

DigitalGlobeSpirit AeroSystems

Rolls-RoyceTriumph

BombardierMeggittBoeing

AARAirbus Group

Precision CastpartsLMI Aerospace

MoogHexcel

AmetekSafran

B/E AerospaceWesco Aircraft Holdings

S&P 500GenCorp

Curtiss-WrightUTC

ThalesHEICO

EsterlineGilat

TextronRockwell Collins

EmbraerTransDigm

Orbital SciencesAstronics

FinmeccanicaAeroVironment

First Quarter 2014

(32.2%)(17.7%)(13.3%)

(5.0%)(2.3%)(0.5%)

0.3%2.0%

18.8%19.3%21.1%25.1%26.2%31.0%31.8%33.3%37.4%40.7%41.1%42.9%44.0%44.5%45.9%46.2%48.4%49.5%50.1%

67.2%73.2%

83.1%91.1%

112.6%122.0%

(100%) (50%) 0% 50% 100% 150%

LMI AerospaceTriumph

GilatRolls-Royce

MeggittEmbraer

DigitalGlobeBombardier

AmetekS&P 500

TransDigmUTC

Rockwell CollinsAirbus Group

TextronPrecision Castparts

GenCorpEsterline

AARMoog

B/E AerospaceSafranThalesBoeing

Spirit AeroSystemsWesco Aircraft Holdings

HexcelOrbital Sciences

HEICOCurtiss-WrightFinmeccanica

AstronicsAeroVironment

Last 52 Weeks

Large Cap Aerospace Mid Cap Aerospace Small Cap Aerospace S&P 500International Aerospace

Capital Markets: Stock Performance (Aerospace)


12

First Quarter 2014

2.3%2.2%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%


Defense and Government Services Aerospace

Short Interest (US Aerospace, Defense and Gov. Services)

Last 52 Week Median Short Interest


Short Interest as of March 31, 2014

Defense and Government Services

1.4% 4.3% 1.6% 2.1% 1.4% 1.1% 21.2% 4.9%

9.8% 7.1% 3.5% 1.7% 18.3% 6.2% 0.3% 1.0%

4.3% 2.3% 0.4% 4.2% 1.7% 3.3% 1.2%

Aerospace

1.1% 1.3% 1.4% 1.0% 4.3% 3.7% 3.0% 0.7%

3.1% 12.2% 2.3% 2.9% 0.7% 1.1% 1.0% 3.9%

9.2% 4.1% 1.6% 0.2% 33.8% 10.2% 2.1% 1.5%

13

First Quarter 2014 Dry Powder Calculations (Defense and Gov. Services)


Middle Market Index

3x LTM EBITDA $256.2 $62.5 $198.3 $54.1 $195.7 Less LT Debt 40.0 85.0 642.0 0.0 102.9 Plus Cash 9.0 2.5 53.6 0.2 0.4

Dry Powder $225.2 ($20.1) ($390.1) $54.3 $93.1

Middle Market Defense & Government Services Index

3x LTM EBITDA $1,989.2 $358.1 $2,007.0 $941.4 $3,314.1 $4,485.0 $1,018.1 Less LT Debt 2,104.4 102.9 649.0 383.9 1,658.5 3,631.0 559.9 Plus Cash 189.8 203.9 469.0 584.1 349.6 227.0 73.7

Dry Powder $74.6 $459.0 $1,827.0 $1,141.6 $2,005.2 $1,081.0 $531.9

Defense Prime Index

3x LTM EBITDA $24,639.0 $12,852.0 $16,875.0 $11,109.0 $10,245.0 Less LT Debt 8,935.0 3,911.0 6,152.0 5,929.0 4,735.0 Plus Cash 6,942.0 4,296.0 3,264.0 3,885.0 3,036.0

Dry Powder $22,646.0 $13,237.0 $13,987.0 $9,065.0 $8,546.0

($ millions)

Middle Market Defense & Government Services Index

3x LTM EBITDA $1,687.2 $943.1 $384.6 $1,083.0 $464.6 $762.0 Less LT Debt 1,674.5 1,314.5 197.5 1,333.0 200.0 502.0 Plus Cash 403.2 48.4 29.0 430.0 275.6 254.0

Dry Powder $415.8 -$323.1 $216.1 $180.0 $540.2 $514.0

14

First Quarter 2014

Mid Cap Aerospace Index

3x LTM EBITDA $1,068.0 $740.4 $1,096.3 $698.5 $990.9 $1,109.4 -$705.3 $1,766.3 Less LT Debt 1,009.8 1,142.6 706.3 379.3 295.0 699.0 1,167.3 1,621.5 Plus Cash 175.3 229.1 208.4 15.2 65.5 179.6 420.7 25.4

Dry Powder $233.5 ($173.1) $598.5 $334.5 $761.4 $589.9 ($1,451.9) $170.2

Small Cap Aerospace Index

3x LTM EBITDA $588.9 $26.7 $182.0 $327.6 $42.1 $141.2 $442.6 $580.7 Less LT Debt 714.4 0.0 200.4 694.1 35.9 291.0 140.6 570.6 Plus Cash 114.7 92.7 54.6 144.1 58.4 1.6 350.8 55.5

Dry Powder ($10.8) $119.5 $36.2 ($222.4) $64.6 ($148.3) $652.8 $65.6

Dry Powder Calculations (US Aerospace)

Large Cap Aerospace Index

3x LTM EBITDA $2,801.2 $2,229.3 $24,516.0 $8,635.5 $3,240.0 $3,642.0 $2,685.2 $33,402.0 Less LT Debt 1,415.1 1,959.4 9,635.0 3,621.0 2,524.0 3,192.0 5,741.0 20,241.0 Plus Cash 295.2 637.8 9,088.0 337.0 410.0 1,163.0 410.9 4,619.0

Dry Powder $1,681.3 $907.7 $23,969.0 $5,351.5 $1,126.0 $1,613.0 ($2,644.9) $17,780.0

($ millions)


15

First Quarter 2014 Announced M&A Transactions

Closed Closed Closed

April 28, 2014* April 18, 2014* March 31, 2014

Notes Notes Notes Kaman Corporation acquired B.W. Rogers Company. Based in Ohio, B.W. Rogers, is a broad line distributor of fluid power products, including hydraulic hoses, fittings, pumps, motors, cylinders, valves, pneumatics, machine control and automation products. B.W. Rogers is one of largest distributors of Parker Hannifin motion and control products and operates 21 locations in seven states from the Northeast to the Midwest.

*Announced Q1, closed Q2

Sysorex acquired AirPatrol Corporation, a mobile location-based cybersecurity systems company. Based in Maple Lawn, Maryland, AirPatrol has 4 US and 11 foreign patent applications pending for its location, security and context awareness systems that can detect smartphones, tablets, laptops and other mobile devices.

*Announced Q1, closed Q2

Precision Castparts Corp (PCC) acquired California based Aerospace Dynamics International (ADI) from The Marvin Group for $625.0 million. ADI is a top aerospace industry supplier with 625 employees operating a wide range of high-speed machining centers. ADI has special expertise in large complex components, hard metal machining, and critical assemblies with strong positions across growing commercial platforms, including a significant presence on the Airbus A350.

acquired acquired acquired

Source: Capital IQ and InfoBase as of 03/31/14

16


Closed Announced Closed

March 27, 2014 March 20, 2014 March 19, 2014

Notes Notes Notes Facebook acquired the UK-based aerospace company Ascenta for $20.0 million as part of the company’s plan to deliver web access to remote areas via drones, satellites and lasers.

AAR will acquire inventory and customer contracts from Sabena technics Brussels. The agreement includes ongoing power-by-the-hour support for 13 customers, which AAR's Aviation Supply Chain division will handle from its new facility at the Brussels Airport. In addition to supporting the customers that will transition from Sabena technics, this 24/7 facility will support AOG and other parts requirements for existing AAR customers in Europe, the Middle East and Africa.

National Technical Systems acquired Wyle’s test lab business. Wyle operates three test facilities and is a leader in environmental, dynamics, structural, EMI/EMC, fluid flow, and acoustics testing solutions, primarily serving the nuclear, space, and defense end markets. Wyle‘s testing laboratories are located in Huntsville, Alabama, El Segundo, California, and San Bernardino, California

acquired to acquire acquired


Brussels operations Test Lab Business

Ascenta Limited

17




Notes Notes Notes Lockheed Martin acquired BEONTRA, a provider of integrated planning and demand forecasting tools for airports around the world. BEONTRA’s capabilities expand Lockheed’s business in commercial airport information technology solutions. BEONTRA has more than 40 airport operator customers across five continents including some of the world’s major airports including Dubai, London Heathrow, Sydney, Copenhagen, Frankfurt, Schiphol and Munich.

Evoke Research and Consulting, acquired the Consulting Practice of Adrian Technologies (ATI). The ATI Consulting Practice has delivered more than 315 Lean Six Sigma projects over the past three years and has trained more than 1,300 customers in Lean Six Sigma Green, Black, and Master Black Belt. The acquisition of the ATI Consulting Practice matures the Organizational Improvement services offered by Evoke.

Hittite Microwave Corporation acquired substantially all the assets of Keragis Corporation, a provider of extremely high power, wideband amplifier modules. This acquisition combines Hittite's design and manufacture capabilities of high performance integrated circuits (ICs), modules and subsystems with Keragis' extremely wideband high power amplifier module products.



18


Closed Closed Announced

March, 17 2014 March 17, 2014 March 13, 2014

Notes Notes Notes ICF International acquired CITYTECH, a Chicago-based digital interactive consultancy specializing in enterprise application development, web experience management, mobile application development, cloud enablement, managed services, and customer experience management solutions. For 2013, CITYTECH had annual revenues of approximately $16.0 million and 100 employees.

Hunter Technology acquired the equipment and inventory assets of Spectral Response, an EMS supplier providing a broad range of product design and manufacturing solutions to electronics and RF OEM customers. With the acquisition of NBS’ assets, Hunter added significant engineering resources in PCB design, gained leading edge DF(x) review capability, doubled its floor space, and tripled its SMT capacity.

Thales signed a binding agreement to acquire LiveTV, JetBlue’s fully-owned subsidiary for a total of $400.0 million. LiveTV provides In-Flight Entertainment solutions and Regional Satellite Radio. With estimated revenues for 2014 projected at over $150.0 million, it employs around 450 people.

acquired acquired to acquire


19


Announced Announced Closed


Notes Notes Notes Lockheed Martin entered into a definitive agreement to acquire Industrial Defender, a provider of cyber security solutions for control systems in the oil and gas, utility and chemical industries. The Company’s solutions, including Industrial Defender Automation Systems Manager, help protect and manage critical infrastructure by reducing cyber risks, easing regulatory compliance and enhancing the efficiency of customers’ control environments.

Global Digital Solutions filed a Form 8-K with the SEC providing information regarding three proposed transactions, including an unsolicited letter of intent to acquire Remington Outdoor Company, also known as Freedom Group. Freedom Group designs, manufactures and markets firearms, ammunition and related products for the hunting, shooting sports, law enforcement and military markets.

LORD Corporation acquired the assets of Stellar Technology. Stellar Technology designs and manufactures custom sensing solutions for the oil and gas, aerospace and industrial markets. Its pressure, load, force, torque, displacement and temperature products are highly complementary to LORD Corporation's existing capabilities in sensing systems and motion control technologies.

to acquire to acquire acquired


20




Notes Notes Notes BRTRC, a mid-sized firm focused on providing integrated technical solutions to the government, acquired SecureForce. SecureForce is a leading provider of cybersecurity, risk and compliance and information assurance services to government agencies based in the DC area. The company’s customers include the VA, TSA, NASA, and Freddie Mac, among others.

TransDigm acquired Elektro-Metall Export (EME), for approximately $47.4 million made up of $40.3 million in cash plus the assumption of approximately $7.1 million of net indebtedness. EME, headquartered in Ingolstadt, Germany, manufactures proprietary, highly engineered aerospace electromechanical actuators, electrical and electromechanical components and assemblies primarily for commercial aircraft, helicopters and other specialty applications.

L-3 Communications acquired Data Tactics Corporation, a specialized provider of Big Data analytics and cloud computing solution services, primarily to the US Department of Defense. Data Tactics provides solutions that address the future of national security needs. The business is expected to generate sales of approximately $50.0 million for the year ending December 31, 2014.



21



March 3, 2014 February 28, 2014 February 28, 2014

Notes Notes Notes Cubic Corporation acquired Intific, a technology company focused on software and game-based solutions in modeling and simulation, training and education, cyber warfare, and neuroscience. The acquisition enables Cubic to broaden its presence in a variety of adjacent businesses in the cyber security and next generation defense technologies. Intific closed 2013 with approximately $14.0 million in revenue and employs 80 personnel primarily located in Texas and Virginia.

Astronics Corporation, looking to boost its test systems business and expand into the commercial aerospace market, acquired EADS North America's Test and Services (EADS T&S) unit for $53.0 million. EADS T&S provides engineered Automatic Test Systems (ATS), subsystems and instruments for commercial aerospace and defense operators.

Wesco Aircraft Holdings has acquired Haas Group Inc. for $550.0 million in cash, subject to certain closing adjustments, from certain investment funds affiliated with The Jordan Company, L.P. With $573.5 million in 2012 revenues, Haas is a leading global provider of chemical supply chain management (CSCM) solutions to the commercial aerospace, airline, military, energy, and other markets.



Test and Services (EADS T&S) unit

http://www.haasgroupintl.com/index.html

22



February 27, 2014 February 26, 2014 February 25, 2014

Notes Notes Notes Zodiac Aerospace acquired Pacific Precision Products (PPP). Based in Southern California PPP employs a workforce of 40 people to develop and manufacture equipment for oxygen systems. Its products are used in business jet aviation and other specialized companies such as cabin completion centers. PPP directly compliments Zodiac’s Aircraft Systems segment’s existing oxygen activities.

Digital Globe acquired Spatial Energy. Based in Colorado, Spatial Energy helps companies in the energy industry to efficiently acquire and analyze complex geospatial information. Its cloud-based spatial data management and delivery platform, “Spatial on Demand”, integrates vast archives of geospatial data into a centralized easily accessible online database. Spatial Energy's customers include 12 of the top 20 largest oil and gas companies.

Versar acquired Lime Energy’s Facility Repair and Renewal (FRR) business unit. The acquisition represents five task orders with total revenue between $6.2 and $9.7 million and enhances Versar’s offerings in support of various DoD and other Federal agencies nationwide. FRR primarily serves the United States Army Corps of Engineers Huntsville Engineering Center customers providing a fast track, efficient method for design and execution of all types of facility repairs, renovations and minor construction.



Facility Repair and Renewal Business

23


Announced Announced Closed

February 24, 2014 February 19, 2014 February 19, 2014

Notes Notes Notes RF Micro Devices, a specialist in the design and manufacturing of high-performance radio frequency solutions, and TriQuint Semiconductor, a RF solutions supplier and technology innovator, announced a definitive merger agreement under which the companies will combine in an all-stock transaction. The merger will create new growth opportunities in three large global markets, mobile devices, network infrastructure and aerospace/defense.

Advanced Helicopter Services will acquire Cascade Airframe Repair, a longtime helicopter repair services company, based at Boeing Field in Seattle, Washington. Advanced Helicopter Services (AHS) will add Cascade to its growing list of highly successful helicopter related service companies in the Pacific northwest supporting a broad and diverse client base of multiple mission and model type helicopters.

Ultra Electronics Holdings has acquired 3 Phoenix Inc. in a $87.0 million deal that provides Ultra sonar, radar, intelligence, surveillance and reconnaissance products and solutions. 3 Phoenix has 182 employees, and its main customers are the Navy and the commercial sector. The company will be bolted onto Ultra’s Tactical and Sonar Systems Division, and integration will occur throughout 2014. The McLean Group advised 3 Phoenix on the deal.

to merge with to acquire acquired


24



February 3, 2014 January 29, 2014 January 27, 2014

Notes Notes Notes Héroux-Devtek acquired the entire share capital of U.K.-based APPH Limited and U.S.-based APPH Wichita from BBA Aviation. APPH is an integrated provider of landing gear and hydraulic systems and assemblies for original equipment manufacturer and aftermarket applications.

After 14 years as part of the Triumph Group, the Wichita, Kansas-based aircraft window, sheet metal, and composite structure operation known since 2000 as Triumph Aerospace Systems-Wichita was re-acquired by the firm’s founder and current president, Jim Lee. The “new” entity has revived its original brand and will again be known as Lee Aerospace.

MacAulay-Brown (MacB), a leading National Security company providing innovative engineering and technical solutions to Defense, Intelligence, Homeland Security and Federal agencies, has acquired Commonwealth Technology (CTI), a provider of specialized products and engineering solutions for National Security missions. CTI will now operate as a wholly-owned subsidiary of MacB.



Aerospace Systems-Wichita

http://www.herouxdevtek.com/home

25


Closed Announced Closed

January 24, 2014 January 20, 2014 January 16, 2014

Notes Notes Notes Precision Castparts acquired Trans World Alloys, a SOS-affiliated company, based in Gardena, CA. Trans World Alloys specializes in metal-products distribution.

Safran entered into a definitive agreement to acquire the Aerospace Power Distribution Management Solutions and the Integrated Cockpit Solutions business of Eaton. The acquisition of the Aerospace Power Distribution Management Solutions business brings key contactor and circuit breaker technologies to Safran. The business generated revenues of more than $100.0 million and EBITDA in excess of $14.0 million in 2013.

Precision Castparts Corporation acquired SOS Metals of Gardena, CA. SOS recycles metals including titanium, aluminum and high-temperature alloys at plants in the United States, Brazil, Britain and Asia. The purchase price was not disclosed.

acquired to acquire acquired


Aerospace Power Distribution Management Solutions and the

Integrated Cockpit Solutions

26




Notes Notes Notes Vanquish Worldwide, a Service Disabled Veteran Owned Small Business (SDVOSB) dedicated to providing Government and commercial contractor services since 2007 has acquired Front Range Training and Consulting, a SDVOSB specialized in training and program support for Government and commercial clients.

AMETEK acquired Teseq Group for $92.0 million. Teseq is a leading manufacturer of test and measurement instrumentation for electromagnetic compatibility (EMC) testing. Teseq manufactures a range of conducted and radiated EMC compliance testing systems and RF amplifiers for a wide range of industries, including aerospace, medical equipment, automotive and transportation. Teseq generates annual sales of approximately $53.0 million.

Curtiss-Wright Corporation acquired 100% of the shares of Component Coating and Repair Services Limited (CCRS) for approximately $25.0 million in cash, net of cash acquired. CCRS is a leading UK provider of ultra-smooth and corrosion resistant coatings and precision airfoil repair services for aerospace and industrial turbine applications. The acquired business will operate within Curtiss-Wright's Commercial/Industrial segment.



27




Notes Notes Notes Motorola Solutions acquired Twisted Pair Solutions, a recognized leader in push-to-talk over broadband applications for secure, real-time communication anywhere, on any device. Twisted Pair’s WAVE software transforms smartphones, tablets and PCs into powerful, secure communication solutions that provide integrated voice, text messaging, location and presence in one application that serves global public and private sector customers. The McLean Group advised Twisted Pair.

Huntington Ingalls Industries acquired The S.M. Stoller Corporation (Stoller), a leading provider of environmental, nuclear, and technical consulting and engineering services to the Department of Energy, Department of Defense and the private sector. Stoller provides a full range of services in support of managing environmental issues.

DAI acquired HTSPE. Based in Hemel Hempstead in the United Kingdom, HTSPE is currently implementing 200 projects around the world for clients such as the UK Department for International Development, EuropeAid, and the World Bank, in technical areas including climate change, land tenure, governance, education, and monitoring & evaluation. The McLean Group advised DAI on the transaction.



28

First Quarter 2014 The McLean Group Overview

An independent, industry-focused investment bank with deep expertise in mergers and acquisitions, corporate finance, capital raises, and business valuations.

– Founded in 1997

– Headquartered in McLean, Virginia with 20 offices nationwide; over 65 dedicated professionals

– The McLean Group is a licensed broker/dealer and all M&A professionals hold FINRA/SEC licenses

– Through our dedicated industry groups, we bring extensive domain and transactional expertise to every client engagement

– Largest valuation practice in the mid-Atlantic area, outside the Big 4 accounting firms

Deep Industry Expertise

Aerospace, Defense & Government (ADG) Investment Banking

Business Valuation Services

Core Capabilities

• Mergers & Acquisition (Private Company Sale, Public M&A Advisory, Buy-side Advisory, etc.)

• Corporate Divestitures • Private Equity Investments • Strategic Alternatives Analysis

• Financial Reporting (Purchase price allocation, goodwill impairment, stock option expense)

• Equity Incentive Plans and Tax • Litigation Support • Transaction Advisory (Fairness Opinion, Due

Diligence)

Agriculture & Food Processing

Business Services

Diversified Industrials

Energy & Clean Technologies

Healthcare Services

Technology & Telecommunications

Transportation & Logistics

Travel & Hospitality

29

First Quarter 2014 The McLean Group’s ADG Practice

The McLean Group’s Aerospace, Defense & Government (ADG) industry group is one of the largest, most experienced, and most capable investment banking teams focused exclusively on the defense and government services industry

Discriminators Deep Government Market Expertise

One of the largest ADG teams in the country – 15 bankers that cover the sector

Leadership team averages over 10 years of exclusive focus on the sector

Longstanding relationships with virtually every strategic and financial buyer in the sector

41 closed transactions in the government sector since 2010

As an independent investment bank, we avoid potential conflicts of interest and are able to provide honest advice to best support our clients

Aerospace Hardware & Services

Defense Electronics

C4ISR

Healthcare IT

Cyber Security Products & Services

Intelligence Community

IT, Software & Consulting Services

Logistics & Training

Technical & Professional Services

Recent Representative Buyers / Clients

http://www.raytheon.com/

30

First Quarter 2014 Recent ADG Advisory Experience

31

First Quarter 2014

Disclaimer: The McLean Group does not provide accounting, tax or legal advice. The contents of this document are believed to be reliable, however The McLean Group, LLC makes no representation as to the accuracy or completeness of this information.

Aerospace, Defense and Government Services Team

The McLean Group 7900 Westpark Drive, Suite A320 McLean, VA 22102 Main: 703.827.0200 Fax: 703.827.0175

Contact Information

Joe Golden Principal [email protected]

Cameron Hamilton Principal [email protected]

Mitch Martin Principal [email protected]

Greg Woodford Senior Managing Director [email protected]

Gregory Nossaman Managing Director [email protected]

Kathleen Crow Managing Director [email protected]

John Stack Managing Director [email protected]

Harry Ward Director [email protected]

Brent Lorenz Vice President [email protected]

mailto:[email protected]









aerospace, defense and government services 1st · 2016. 4. 25. · aerospace, defense and...

Documents