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  • Industrials M&A Report

    Q2 2016

    HYDE PARK CAPITAL

    Member FINRA/SIPC

    Investment Banking | Mergers & Acquisitions | Capital Raising

    Hyde Park Capital Advisors, LLC 701 N. Franklin Street

    Tampa, FL 33602 Tel: 813-383-0202

    www.hydeparkcapital.com

    John Hill Senior Managing Director hill@hydeparkcapital.com (813) 383-0205 John McDonald Senior Managing Director mcdonald@hydeparkcapital.com (813) 383-0206 Keith Hodgdon Managing Director hodgdon@hydeparkcapital.com (813) 383-0208 Greg Bosl Vice President bosl@hydeparkcapital.com (813) 597-2649 Jami Gold Vice President gold@hydeparkcapital.com (813) 383-0203 Jeffrey Hendricks Vice President jhendricks@hydeparkcapital.com (678) 523-3073 Kenneth Burnside Business Development Officer burnside@hydeparkcapital.com (864) 905-9633

  • HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising

    Industry Sector 3 Months 12 months Revenue EBITDA

    Construction 2.7% 11.5% 1.3x 10.1x

    Electrical Equipment (1.4%) (2.8%) 2.2x 12.1x

    Machinery (0.1%) (7.1%) 1.5x 10.6x

    Industrial Services 5.5% 14.6% 2.5x 11.2x

    Transportation (3.7%) (4.4%) 1.3x 7.6x

    Industrial Conglomerates 1.3% 10.6% 2.8x 13.7x

    Materials 3.0% (3.4%) 2.3x 9.8x

    Median

    Change in Stock Price Enterprise Value / LTM

    Offer Date Issuer Industry Sector

    Transaction

    Type

    Transaction

    Value

    04/04/16 FedEx Corp. Transportation Fixed-Income $3,402

    04/20/16Prime Security Services

    Borrower, LLCIndustrial Services Fixed-Income $3,140

    05/03/16 United States Steel Corp. Materials Fixed-Income $980

    05/25/16 TransDigm, Inc. Industrial Services Fixed-Income $950

    04/29/16 Reliance Worldwide Corp. Materials IPO $700

    05/11/16 SiteOne Landscape Supply, Inc. Materials IPO $210

    06/09/16 Atkore International Group, Inc. Electrical Equipment IPO $192

    05/25/16 GMS, Inc. Industrial Services IPO $147

    80%

    90%

    100%

    110%

    Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

    S&P 500 S&P Global Industrials Sector Index Nasdaq

    Capital Markets Overview

    2

    Public Market Performance (LTM)

    Select Public Offerings Industrials (Q2 2016)

    Public Company Market Performance by Sector

    Source: S&P Capital IQ

    The S&P Global Industrials Sector Index rose 2.2% over the last 12 month period ended June 30, 2016, while the Nasdaq declined 3.4% and the S&P 500 increased 1.0%.

    IPO activity in the Industrials industry improved in Q2 2016 after

    none were completed during Q1 2016. Reliance Worldwide Corp. (ASX: RWC), which provides water control and plumbing solutions, raised $700 million in the largest IPO during the quarter.

    The Industrial Conglomerates and Electrical Equipment sectors were the industrys leaders with respect to valuation during Q2 2016, trading at EBITDA multiples of 13.7x and 12.1x, respectively.

    Commentary

    2.2%

    ($ in millions)

    3.4%

    1.0%

  • HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising

    Deal Size Volume Value Volume Value Volume Value

    Less than $100M 116 $4.1 60 $2.2 (48%) (47%)

    $100 - $499M 36 $8.7 40 $10.6 11% 22%

    $500 - $999M 15 $10.4 6 $4.4 (60%) (57%)

    Total Middle Market 167 $23.2 106 $17.3 (37%) (26%)

    % of Middle Market

    Less than $100M 69% 18% 56% 13%

    $100 - $499M 22% 37% 38% 61%

    $500 - $999M 9% 45% 6% 26%

    Total Middle Market 100% 100% 100% 100%

    1H 2015 1H 2016 % Change

    402

    473

    550

    501

    250

    412

    525

    457

    398

    435

    336

    167

    106

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    500

    550

    600

    2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2015 1H 2016

    Middle Market M&A Transactions by Deal Size

    U.S. Middle Market M&A Activity Annual Trends: VOLUME U.S. Middle Market M&A Activity Annual Trends: VALUE

    To

    tal T

    ran

    sact

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    To

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    Val

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    ($ i

    n b

    illi

    ons)

    Annual Middle Market M&A Activity Industrials

    3

    As illustrated in the chart to the right, U.S. Middle Market M&A activity, or deal volume, in the Industrials industry decreased 37% to 106 closed transactions during the first half of 2016, down from 167 during the first half of 2015.

    The total value of completed Middle Market M&A transactions in the Industrials industry fell 26% during the first half of 2016 to $17.3 billion, down from $23.2 billion during the first half of 2015.

    Transactions valued between $500 million and $1 billion declined the most during 1H 2016 as deal volume decreased 60% and total transaction value fell 57% compared with the prior year period.

    Commentary

    Source: S&P Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)

    ($ in billions)

    Less than $100M $100 - $499M $500 - $999M Less than $100M $100 - $499M $500 - $999M

    $48.6

    $52.5

    $75.2

    $54.4

    $21.6

    $43.3

    $56.4

    $51.7 $51.2

    $57.6

    $46.1

    $23.2

    $17.3

    $0

    $10

    $20

    $30

    $40

    $50

    $60

    $70

    $80

    2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2015 1H 2016

  • HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising

    Deal Size Volume Value Volume Value Volume Value

    Less than $100M 55 $1.8 31 $1.0 (44%) (45%)

    $100 - $499M 14 $3.4 21 $5.4 50% 60%

    $500 - $999M 10 $6.7 3 $2.6 (70%) (62%)

    Total Middle Market 79 $11.9 55 $8.9 (30%) (25%)

    % of Middle Market

    Less than $100M 70% 15% 57% 11%

    $100 - $499M 18% 28% 38% 60%

    $500 - $999M 12% 57% 5% 29%

    Total Middle Market 100% 100% 100% 100%

    Q2 2015 Q2 2016 % Change

    Quarterly Middle Market M&A Activity Industrials

    U.S. Middle Market M&A Activity Quarterly Trends: VALUE U.S. Middle Market M&A Activity Quarterly Trends: VOLUME

    Middle Market M&A Transactions by Deal Size

    ($ in billions)

    To

    tal T

    ran

    sact

    ion

    Vo

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    To

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    ($ i

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    4

    As detailed in the table on the right, Middle Market M&A activity in the Industrials industry decreased 30% to 55 completed transactions during Q2 2016 compared to Q2 2015; while the total value of completed transactions fell 25% to $8.9 billion.

    During Q2 2016, transactions valued at $500 to $999 million saw

    the largest decline compared with the prior year period as deal volume and value within this size range fell 70% and 62%, respectively.

    As evidenced in the charts on this page, increased volatility in the

    capital markets coupled with slow global growth had a negative impact on M&A activity within the Industrial industry during Q2 2016.

    Commentary

    Source: S&P Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)

    Less than $100M $100 - $499M $500 - $1,000MLess than $100M $100 - $499M $500 - $1,000M

    69

    100

    108

    121

    96

    131

    98

    110

    88

    7983

    86

    5155

    0

    25

    50

    75

    100

    125

    150

    Q1 '13 Q2'13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16

    $10.0 $9.7

    $14.8

    $16.7

    $13.1

    $16.9

    $14.5

    $13.2

    $11.4 $11.9

    $11.1

    $11.8

    $8.4 $8.9

    $0.0

    $3.0

    $6.0

    $9.0

    $12.0

    $15.0

    $18.0

    $21.0

    Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16

  • HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising

    Recent M&A Activity Industrials

    Select Announced M&A Transactions (Q2 2016)

    5

    Source: S&P Capital IQ.

    Announced

    Date Target Buyer Industry

    Enterprise

    Value ($mm)

    EV /

    Revenue

    EV /

    EBITDA

    06/21/16 SolarCity Corp. Tesla Motors, Inc. Electrical Equipment $6,921.4 12.9x NA

    06/21/16 American Science & Engineering, Inc. OSI Systems, Inc. Transportation $182.5 1.8x NA

    06/16/16 Dejana Truck & Utility Equipment Co. Douglas Dynamics, Inc. Machinery $206.0 1.4x NA

    06/14/16 DST Systems, Inc. Broadridge Investor Corp. Industrial Services $410.0 0.4x NA

    06/13/16 BWAY Parent Co., Inc. Stone Canyon Industries, LLC Materials $2,400.0 NA NA

    06/10/16 Axiall Corp. Westlake Chemical Corp. Materials $3,622.9 1.1x NA

    05/31/16 Vertellus Specialties, Inc. Black Diamond Capital Materials $453.8 NA NA

    05/27/16 Blue Bird Corp. American Securities Machinery $416.1 0.5x NA

    05/24/16 ILC Industries, LLC TransDigm, Inc. Transportation $1,000.0 NA NA

    05/24/16 American Covers, Inc. Energizer Reliance, Inc. Materials $340.0 NA NA

    05/23/16 Wyle, Inc. KBR Holdings, LLC Transportation $600.0 NA NA

    05/19/16 Lifestorage, LP Sovran Acquisition Ltd. Industrial Services $1,300.0 NA NA

    05/18/16 Monsanto Co. Bayer AG Materials $63,980.6 4.8x NA

    05/18/16 Cambridge International, Inc. Rexnord Corp. Machinery $210.0 NA NA

  • HYDE PARK CAPITAL Investment Banking | Mergers

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