www.pwc.

com

PwC Aerospace & Defense

Valuation Quarterly
Update

Q3 2014

Page 1 of 5
http://www.pwc.com/us/en/industrial-products/aerospace-defense
As of September 30, 2014
USD in millions, unless otherwise noted

Industrial Products Industry - Aerospace and Defense Valuation Quarterly Update (Q3 2014)
Recent Market Trends & Developments

A&D industry average returns vs. overall

market as of September 30, 2014
25.0%
US Chemicals Industry Advisory Leader

19.3%

20.0%

17.3%

15.0%
10.0%
5.0%
0.0%

0.6%

0.4%
S&P 500 A&D Index
Quarter-over-quarter

Notable metrics in Q3 2014 for the largest A&D companies

Change in market capitalization
Quarter-over-quarter
Year-over-year
Average
Median
Average
Median
3.0%
-1.1%
21.2%
11.8%
Average EV/EBITDA multiple
Quarteroverquarter
As of 9/30/2014
change
12.3
-5.0%

Year-overyear
change
0.4%

S&P 500 Index

Year-over-year

11 of the top 25 constituents of the Aerospace/Defense industry, based on market capitalization, saw increases in market capitalization during the third quarter of 2014.
19 of the top 25 constituents of the Aerospace/Defense industry saw increases in market capitalizations for the year ended September 30, 2014.
Xi'an Aero-Engine PLC experienced the largest increase in market capitalization over the last quarter with increases of 109.0 percent.

Xi'an Aero-Engine PLC also experienced the largest increase in market capitalization over the last year with an increase of 224.4 percent.
Overall, the top constituents of the Aerospace/Defense industry experienced average and median increases in market capitalization over the last year of
21.2 and 11.8 percent, respectively.
The three largest transactions involving public acquirers that closed during the second quarter of 2014 included
AECOM Technology Corporation's acquisition of URS Corporation, Alliant Techsystems Inc.'s acquisition of Orbital Sciences Corp., and
Babcock International Group plc's acquisition of Avincis Mission Critical Services Holdings, S.L.U.

Recent Developments:
According to PwC's Aerospace and Defense August 2014 M&A review, divestitures and spin-offs remain popular, with the volume of these types of deals on pace to hit a

record high in 2014.

The third quarter was a weaker quarter for deal volume and value relative to recent years within the Aerospace and Defense Industry, however thanks to more robust

M&A activity during the first half of the year, 2014 is still on pace to exceed 2013.
The government budget for 2013 helped to clarify the future of government spending in the sector and set overall defense demand in the market. This has led to higher
competition for major weapons programs which has been providing additional M&A catalysts to the market and should continue to fuel opportunities.
Unmanned Aerial vehicles ("UAV") have seen increased funding from both the military and commercial markets, as such growth could attract more interest in
acquisitions of small UAV companies.
Matching the overall sector trend, aerospace deal announcements were weaker in the third quarter, however aerospace targets still represent the largest segment
of the market and should continue to lead as higher commercial aircraft production rates make vertical integration of supply chains an attractive return.
M&A valuations remain robust across the sector, however some executives have specifically cited valuations as a source of concern when considering whether
their companies can create value from potential acquisitions.

Exhibits in This Quarterly Update

Market metrics of the largest global chemicals companies

Market metrics of the largest chemicals companies by region
Summary metrics of recent transactions

Citations

PwC study, Aerospace and Defense, September 2014

http://www.pwc.com/en_US/us/industrial-products/publications/assets/pwc-aerospace-defense-industry-mergers-acquisitions-q3-2014.pdf

Page 2 of 5
http://www.pwc.com/us/en/industrial-products/aerospace-defense
As of September 30, 2014
USD in millions, unless otherwise noted

Industrial Products Industry - Aerospace & Defense Valuation Quarterly Update

Top A&D Companies (1)
Company

Market Capitalization
9/30/2013
6/30/2014
9/30/2014

Price/Earnings (LTM)
9/30/2013
6/30/2014
9/30/2014

Enterprise Value/Revenue (LTM)

9/30/2013
6/30/2014
9/30/2014

Enterprise Value/EBITDA (LTM)

9/30/2013
6/30/2014
9/30/2014

United Technologies Corporation

The Boeing Company
Honeywell International Inc.
Lockheed Martin Corporation
Airbus Group N.V.
General Dynamics Corporation
Precision Castparts Corp.
Raytheon Company
Rolls Royce Holdings plc
Northrop Grumman Corporation
Safran SA
BAE Systems plc
Dassault Aviation SA
Thales SA
Rockwell Collins Inc.
L-3 Communications Holdings Inc.
Textron Inc.
TransDigm Group Incorporated
Xi'an Aero-Engine PLC
Singapore Technologies Engineering Ltd
B/E Aerospace Inc.
Zodiac Aerospace
China AVIC Electronics Co., Ltd.
Embraer SA
Meggitt PLC

98,925.8
88,647.2
65,173.4
40,705.9
49,813.7
30,620.4
33,071.4
24,854.4
33,851.7
21,925.5
25,661.6
23,712.5
12,334.4
11,096.0
9,161.7
8,465.8
7,744.7
7,287.3
2,908.5
10,317.4
7,735.6
8,613.6
5,006.2
5,922.2
7,028.8

105,836.6
92,779.2
72,791.0
50,722.7
52,480.4
39,960.4
36,538.2
28,861.1
34,392.4
25,617.0
27,260.6
23,394.7
15,332.0
12,357.6
10,587.9
10,412.5
10,688.2
8,852.2
4,515.3
9,504.4
9,734.8
9,279.9
6,413.2
6,678.2
6,971.9

96,603.9
91,791.7
72,870.5
57,683.2
49,307.1
42,488.2
33,986.1
31,575.3
29,429.9
27,398.0
26,996.8
24,131.4
12,907.4
10,912.3
10,605.3
10,254.7
10,048.4
9,678.4
9,434.9
8,931.0
8,839.1
8,740.2
7,668.8
7,194.6
5,897.9

21.6x
23.5x
25.8x
15.5x
29.2x
16.6x
23.8x
14.6x
42.2x
12.8x
16.6x
19.6x
22.4x
16.1x
16.8x
12.2x
17.3x
24.0x
NMF
29.3x
25.2x
22.7x
NMF
21.0x
23.8x

21.0x
24.5x
22.8x
17.3x
26.9x
17.9x
22.9x
16.7x
22.1x
14.8x
18.4x
17.5x
27.0x
15.4x
19.4x
15.8x
24.8x
27.9x
NMF
26.8x
27.4x
19.8x
NMF
15.6x
21.2x

19.4x
24.0x
22.1x
19.1x
28.3x
19.6x
20.6x
18.2x
10.9x
15.7x
15.3x
18.8x
21.7x
14.1x
19.5x
16.1x
22.0x
29.3x
NMF
26.4x
23.3x
20.3x
NMF
14.7x
19.9x

1.9x
1.0x
1.8x
0.9x
0.6x
1.0x
4.1x
1.1x
1.5x
0.9x
1.4x
0.9x
2.2x
0.5x
2.2x
0.9x
0.9x
6.2x
2.6x
2.0x
2.8x
2.0x
6.6x
1.2x
3.1x

2.0x
1.0x
1.9x
1.2x
0.6x
1.3x
4.1x
1.3x
1.2x
1.1x
1.5x
0.9x
2.3x
0.6x
2.7x
1.1x
1.2x
6.6x
3.6x
1.7x
3.1x
1.9x
7.0x
1.1x
2.8x

1.8x
1.0x
1.8x
1.3x
0.6x
1.4x
3.8x
1.4x
1.2x
1.2x
1.6x
1.0x
2.3x
0.6x
2.6x
1.1x
1.1x
7.3x
7.5x
1.6x
2.9x
2.0x
8.2x
1.1x
2.7x

11.0x
10.5x
12.6x
8.0x
7.8x
8.3x
14.3x
7.8x
12.3x
6.4x
10.3x
7.9x
13.6x
6.2x
9.2x
7.6x
8.5x
14.0x
26.9x
15.1x
13.2x
13.1x
37.4x
11.8x
11.7x

10.8x
10.9x
11.3x
9.0x
8.0x
9.2x
13.4x
8.6x
9.6x
7.5x
10.5x
7.2x
16.4x
5.7x
11.7x
9.3x
12.0x
15.1x
38.8x
13.1x
14.5x
11.7x
40.5x
7.7x
10.9x

10.0x
10.8x
10.9x
9.9x
8.2x
10.0x
12.2x
9.5x
10.6x
8.0x
11.9x
8.3x
15.6x
6.1x
11.4x
9.5x
10.7x
16.4x
NMF
13.1x
13.5x
11.9x
47.5x
8.1x
10.5x

Average
Median

25,623.4
12,334.4

28,478.5
15,332.0

28,215.0
12,907.4

21.4x
21.6x

21.0x
21.0x

20.0x
19.6x

2.0x
1.5x

2.1x
1.5x

2.4x
1.6x

12.2x
11.0x

12.9x
10.9x

12.3x
10.6x

Notes:
(1) Market data provided by Capital IQ, Inc. Selected companies represent the largest global companies in the chemicals industry based on market capitalization.

Page 3 of 5
http://www.pwc.com/us/en/industrial-products/aerospace-defense
As of September 30, 2014
USD in millions, unless otherwise noted

Industrial Products Industry - Aerospace & Defense Valuation Quarterly Update

Top A&D Companies - Americas (1)
Company

Market Capitalization
9/30/2013
6/30/2014
9/30/2014

Price/Earnings (LTM)
9/30/2013
6/30/2014
9/30/2014

Enterprise Value/Revenue (LTM)

9/30/2013
6/30/2014
9/30/2014

Enterprise Value/EBITDA (LTM)

9/30/2013
6/30/2014
9/30/2014

United Technologies Corporation

The Boeing Company
Honeywell International Inc.
Lockheed Martin Corporation
General Dynamics Corporation
Precision Castparts Corp.
Raytheon Company
Northrop Grumman Corporation
Rockwell Collins Inc.
L-3 Communications Holdings Inc.

98,925.8
88,647.2
65,173.4
40,705.9
30,620.4
33,071.4
24,854.4
21,925.5
9,161.7
8,465.8

105,836.6
92,779.2
72,791.0
50,722.7
39,960.4
36,538.2
28,861.1
25,617.0
10,587.9
10,412.5

96,603.9
91,791.7
72,870.5
57,683.2
42,488.2
33,986.1
31,575.3
27,398.0
10,605.3
10,254.7

21.6x
23.5x
25.8x
15.5x
16.6x
23.8x
14.6x
12.8x
16.8x
12.2x

21.0x
24.5x
22.8x
17.3x
17.9x
22.9x
16.7x
14.8x
19.4x
15.8x

19.4x
24.0x
22.1x
19.1x
19.6x
20.6x
18.2x
15.7x
19.5x
16.1x

1.9x
1.0x
1.8x
0.9x
1.0x
4.1x
1.1x
0.9x
2.2x
0.9x

2.0x
1.0x
1.9x
1.2x
1.3x
4.1x
1.3x
1.1x
2.7x
1.1x

1.8x
1.0x
1.8x
1.3x
1.4x
3.8x
1.4x
1.2x
2.6x
1.1x

11.0x
10.5x
12.6x
8.0x
8.3x
14.3x
7.8x
6.4x
9.2x
7.6x

10.8x
10.9x
11.3x
9.0x
9.2x
13.4x
8.6x
7.5x
11.7x
9.3x

10.0x
10.8x
10.9x
9.9x
10.0x
12.2x
9.5x
8.0x
11.4x
9.5x

Average
Median

42,155.1
31,845.9

47,410.7
38,249.3

47,525.7
38,237.2

18.3x
16.7x

19.3x
18.7x

19.4x
19.4x

1.6x
1.0x

1.8x
1.3x

1.8x
1.4x

9.6x
8.8x

10.2x
10.0x

10.2x
10.0x

Top A&D Companies - Europe, Middle East, and Africa (1)

Company
Airbus Group N.V.
Rolls Royce Holdings plc
Safran SA
BAE Systems plc
Dassault Aviation SA
Thales SA
Zodiac Aerospace
Meggitt PLC
Finmeccanica SpA
Cobham plc
Average
Median

Market Capitalization
9/30/2013
6/30/2014
9/30/2014

Price/Earnings (LTM)
9/30/2013
6/30/2014
9/30/2014

Enterprise Value/Revenue (LTM)

9/30/2013
6/30/2014
9/30/2014

Enterprise Value/EBITDA (LTM)

9/30/2013
6/30/2014
9/30/2014

49,813.7
33,851.7
25,661.6
23,712.5
12,334.4
11,096.0
8,613.6
7,028.8
3,460.0
4,962.4

52,480.4
34,392.4
27,260.6
23,394.7
15,332.0
12,357.6
9,279.9
6,971.9
5,496.7
6,029.9

49,307.1
29,429.9
26,996.8
24,131.4
12,907.4
10,912.3
8,740.2
5,897.9
5,621.8
5,330.6

29.2x
42.2x
16.6x
19.6x
22.4x
16.1x
22.7x
23.8x
16.4x
23.1x

26.9x
22.1x
18.4x
17.5x
27.0x
15.4x
19.8x
21.2x
NM
22.8x

28.3x
10.9x
15.3x
18.8x
21.7x
14.1x
20.3x
19.9x
NM
22.2x

0.6x
1.5x
1.4x
0.9x
2.2x
0.5x
2.0x
3.1x
0.5x
2.0x

0.6x
1.2x
1.5x
0.9x
2.3x
0.6x
1.9x
2.8x
0.6x
2.2x

0.6x
1.2x
1.6x
1.0x
2.3x
0.6x
2.0x
2.7x
0.6x
2.0x

7.8x
12.3x
10.3x
7.9x
13.6x
6.2x
13.1x
11.7x
5.9x
9.3x

8.0x
9.6x
10.5x
7.2x
16.4x
5.7x
11.7x
10.9x
11.2x
9.1x

8.2x
10.6x
11.9x
8.3x
15.6x
6.1x
11.9x
10.5x
11.6x
8.2x

18,053.5
11,715.2

19,299.6
13,844.8

17,927.5
11,909.8

23.2x
22.6x

21.2x
21.2x

19.1x
19.9x

1.5x
1.5x

1.5x
1.3x

1.5x
1.4x

9.8x
9.8x

10.0x
10.0x

10.3x
10.5x

Top A&D Companies - Asia/Pacific (1)

Company

Market Capitalization
9/30/2013
6/30/2014
9/30/2014

Price/Earnings (LTM)
9/30/2013
6/30/2014
9/30/2014

Enterprise Value/Revenue (LTM)

9/30/2013
6/30/2014
9/30/2014

Enterprise Value/EBITDA (LTM)

9/30/2013
6/30/2014
9/30/2014

Xi'an Aero-Engine PLC

Singapore Technologies Engineering Ltd
China AVIC Electronics Co., Ltd.
China Spacesat Co., Ltd.
AviChina Industry & Technology Company Limited
Korea Aerospace Industries Ltd.
Hafei Aviation Industry Co., Ltd.
AVIC Aero-Engine Controls Co., Ltd.
Jiangxi Hongdu Aviation Industry Co., Ltd.
China Aerospace Times Electronics CO., LTD.

2,908.5
10,317.4
5,006.2
2,756.6
2,795.4
2,428.9
1,418.6
2,000.7
1,970.5
1,356.9

4,515.3
9,504.4
6,413.2
3,514.1
3,093.8
3,006.1
2,638.1
2,277.1
1,970.8
1,969.2

9,434.9
8,931.0
7,668.8
4,621.3
3,912.7
3,754.3
3,380.2
3,204.5
3,163.6
2,652.0

81.0x
29.3x
84.4x
83.3x
70.7x
76.6x
90.6x
75.6x
164.2x
49.3x

108.1x
26.8x
92.8x
150.2x
102.2x
43.6x
78.5x
97.1x
206.4x
74.8x

159.5x
26.4x
114.7x
195.7x
191.6x
51.5x
99.3x
137.5x
NM
108.4x

2.6x
2.0x
6.6x
3.4x
1.2x
1.7x
2.7x
5.5x
4.3x
2.4x

3.6x
1.7x
7.0x
3.9x
1.2x
1.5x
1.2x
5.4x
4.0x
3.2x

7.5x
1.6x
8.2x
5.2x
1.5x
1.8x
1.6x
7.2x
6.4x
4.3x

26.9x
15.1x
37.4x
44.9x
11.9x
N/A
49.2x
31.5x
73.5x
20.8x

38.8x
13.1x
40.5x
59.8x
11.4x
N/A
26.6x
35.2x
111.9x
29.8x

75.2x
13.1x
47.5x
78.1x
14.6x
15.8x
33.4x
48.6x
170.9x
37.9x

Average
Median

3,296.0
2,592.8

3,890.2
3,049.9

5,072.3
3,833.5

80.5x
78.8x

98.1x
94.9x

120.5x
114.7x

3.2x
2.7x

3.3x
3.4x

4.5x
4.8x

34.6x
31.5x

40.8x
35.2x

53.5x
42.7x

Notes:
(1) Market data provided by Capital IQ, Inc. Selected companies represent the largest companies in the chemicals industry in each region based on market capitalization.

Page 4 of 5
http://www.pwc.com/us/en/industrial-products/aerospace-defense
As of September 30, 2014
USD in millions, unless otherwise noted

Industrial Products Industry - Aerospace & Defense Valuation Quarterly Update

Recent Transactions in the A&D Industry (1)
Acquirer
Dongsung Holdings Co Ltd.
World Fuel Services Corp.
AECOM Technology Corporation
Cobham plc
Alliant Techsystems Inc.
SAAB AB (publ.)
Ametek Inc.
Babcock International Group plc
Global Digital Solutions Inc.
Senior plc
TransDigm Group Incorporated
RF Micro Devices Inc.
Astronics Corporation
Safran SA
TransDigm Group Incorporated
Astronics Corporation
TriMas Corporation
Hong Kong Aircraft Engineering Company Limited
Microsemi Corporation
CACI International Inc.

Target
Doha Industry Co., Ltd.
Colt International, Inc.
URS Corporation
Aeroflex Holding Corp.
Orbital Sciences Corp.
ThyssenKrupp Marine Systems AB
Zygo Corporation
Avincis Mission Critical Services
Remington Outdoor Company, Inc.
UPECA Technologies Sdn Bhd.
Elektro-Metall Export GmbH
TriQuint Semiconductor, Inc.
Astronics Test Systems Inc.
Eaton Corporation plc, Aerospace Power
Airborne Systems Inc.
PGA Electronic S.A.
Mac Fasteners, Inc.
TIMCO Aviation Services, Inc.
Symmetricom Inc.
Six3 Systems Inc.

Target
Country
South Korea
United States
United States
United States
United States
Sweden
United States
Spain
United States
Malaysia
Germany
United States
United States
United States
United States
France
United States
United States
United States
United States

Announce
Date
7/18/2014
7/14/2014
7/13/2014
5/20/2014
4/29/2014
4/14/2014
4/11/2014
3/27/2014
3/11/2014
3/10/2014
3/6/2014
2/24/2014
1/21/2014
1/20/2014
12/2/2013
11/4/2013
10/28/2013
10/23/2013
10/21/2013
10/9/2013

Total
transaction
value
62.5
63.0
5,861.1
1,507.2
3,978.7
51.9
385.9
2,700.0
1,689.2
126.4
47.4
1,593.6
53.0
270.0
250.0
37.4
40.0
392.8
323.1
1,052.7

Close Date
7/31/14
7/30/14
10/17/14
9/12/14
Pending
7/22/14
6/20/14
5/16/14
Pending
4/8/14
3/6/14
Pending
2/28/14
5/9/14
12/19/13
12/5/13
10/25/13
2/6/14
11/26/13
11/15/13
Average
Median

Purchase Price Allocation Benchmarking - Transactions in the A&D Industry

Target

Buyer

Zygo Corporation
UPECA Technologies Sdn. Bhd.
PGA Electronic s.a.
Symmetricom Inc.
Six3 Systems Inc.
AeroSat Corporation
Peco, Inc.
Primus Composites
Valent Aerostructures
Average

Ametek Inc.
Senior plc
Astronics Corporation
Microsemi Corporation
Caci International
Astronics Corporation
Astronics Corporation
Triumph Group, Inc.
LMI Aerospace

Closing
Date
20-Jun-2014
8-Apr-2014
5-Dec-2013
26-Nov-2013
15-Nov-2013
1-Oct-2013
18-Jul-2013
6-May-2013
28-Dec-2012

Notes:
(1) Includes recent acquisitions of Aerospace and Defense companies with purchase price greater than or equal to $30 million.
(2) Excess purchase price defined as total consideration less net tangible assets acquired.
(3) Purchase price and intangible asset percentages are based upon information obtained from acquirer's financial statements.

Purchase
Price ($ MM)
458.7
99.0
31.3
312.7
847.3
17.4
136.0
63.5
231.2

1,024.3
296.6

Implied
enterprise Implied equity Implied EV Implied EV
value
value
/ Revenue
/ EBITDA
74.4
47.1
0.8x
11.1x
63.0
63.0
0.2x
N/A
5,578.1
3,886.1
0.5x
7.3x
1,459.9
920.2
2.3x
11.9x
3,627.9
3,834.5
2.7x
24.6x
51.9
51.9
0.2x
N/A
288.8
365.7
1.7x
10.7x
2,700.0
1,528.6
3.3x
14.4x
1,419.7
865.8
1.1x
7.8x
126.4
97.5
2.7x
N/A
47.4
40.3
1.2x
N/A
1,514.6
1,593.5
1.7x
16.4x
53.0
53.0
0.8x
N/A
270.0
270.0
2.6x
19.3x
250.0
250.0
1.6x
N/A
37.4
37.4
0.8x
N/A
40.0
34.0
2.3x
N/A
392.2
371.0
1.1x
13.4x
243.3
317.3
1.2x
33.3x
1,032.5
780.0
2.3x
17.0x
963.5
260.0

770.3
293.6

1.6x
1.4x

Allocation of Purchase Price As a Percentage of Excess Consideration (2)(3)

Total
Intangible
Trade names
Customer
Assets
relationships Technology
Goodwill
/ trademarks
47.0%
66.1%
57.0%
34.4%
81.1%
10.4%
50.2%
89.2%
73.6%
56.6%

53.0%
33.9%
43.0%
65.6%
18.9%
89.6%
49.8%
10.8%
26.4%
43.4%

11.5%
0.0%
7.4%
2.5%
0.0%
5.2%
3.0%
0.0%
0.5%
3.3%

30.9%
33.9%
23.1%
19.2%
18.9%
50.0%
44.4%
10.8%
25.9%
28.6%

10.6%
0.0%
12.6%
43.8%
0.0%
34.4%
2.4%
0.0%
0.0%
11.5%

15.6x
13.9x

Other
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

Page 5 of 5
http://www.pwc.com/us/en/industrial-products/aerospace-defense
As of September 30, 2014
USD in millions, unless otherwise noted

Contacts
To have a deeper discussion about valuation developments and trends, please contact:
Steve Shanker
US Industrial Products Valuation Services Leader
steve.shanker@us.pwc.com
+1 312 298 6982
Brian McCann
US Industrial Products Deals Leader
brian.mccann@us.pwc.com
+1 617 530 6364

Authors
Steve Shanker
US Industrial Products Valuation Services Leader
steve.shanker@us.pwc.com
+1 312 298 6982
Jon Moulden
jonathon.e.moulden@us.pwc.com
+1 312 298 5248
Special Thanks To
Blaise Roth

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