Industry Update October 2015...Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Economic Indicators...

INDUSTRIAL TECHNOLOGY TRACKER

Industry Update

October 2015

PROCESS

CONTROLS

ELECTRICAL &

ELECTRONICS

HIGHLY-

ENGINEERED

PRODUCTS

Michael Musser

Managing Director

Head of Industrial

Technology Practice

+1.704.916.3074

[email protected]

mailto:[email protected]

Industry Update – October 2015

Page 1

OCTOBER 2015


2

Contents

ECONOMIC INDICATORS

9 PROCESS CONTROLS

Flow

Control

Process Automation

Equipment

18 ELECTRICAL & ELECTRONICS

Electronic

Components

HIGHLY-ENGINEERED PRODUCTS 23

KeyBanc Capital Markets is a

leading middle-market

corporate and investment

bank offering full-service

capabilities to support

corporate and sponsor

clients.

Capital Markets Products &

Services include the

following:

- Mergers & Acquisitions

- Equity Capital Markets

- Debt Capital Markets

Over 640 bankers located in

12 offices across the U.S.

and in London. Bankers are

organized by industry focus

and transaction expertise.

Industrial Technology

universe is comprised of the

following sectors:

- Process Controls

- Electrical & Electronics

- Highly-Engineered Products

To receive this newsletter via

email subscribe online:

www.key.com/emailcenter

Filtration

3 END-MARKET FUNDAMENTALS 4 M&A MARKET TRENDS

Motion

Control

7

INDUSTRIAL TECHNOLOGY

SECTOR PERFORMANCE SUMMARY

Precision

Manufacturing

Test &

Measurement

Branded

Industrial Products

Electrical

Products

KEYBANC CAPITAL MARKETS OVERVIEW

CAPITAL MARKETS ISSUANCE ACTIVITY 30

32

http://www.key.com/emailcenter


93% 92% 91%95%

100% 100%106%

97% 97%

0%

50%

100%

150%

FlowControl

Filtration MotionControl

Test &Msmt.

ProcessAutomation

ElectricalProducts

ElectronicComponents

Highly-Eng>$10bn

Highly-Eng<$10bn

80

90

100

110

120

130

140

150

160

170

Oct-12 Jan-13 Apr-13 Jun-13 Sep-13 Dec-13 Mar-14 May-14 Aug-14 Nov-14 Feb-15 Apr-15 Jul-15 Oct-15

# of Agg. Mkt. Stock Price % Change EV / EBITDA LTM Margins

Cos. Cap ($bn) 1-Yr 3-Yr 5-Yr LTM Dec-15 GM EBITDA

Process Controls

Flow Control (FC) 32 $134 (11%) 21% 45% 9.4x 9.2x 34% 16%

Filtration (FI) 9 15 (3%) 28% 95% 10.4x 10.3x 33% 15%

Motion Control (MC) 17 78 (8%) 29% 38% 8.6x 8.6x 30% 15%

Test & Measurement (TM) 30 175 4% 32% 66% 11.7x 11.4x 45% 18%

Process Automation Equip. (PA) 12 35 21% 69% 84% 10.4x 9.6x 35% 12%

Electrical & Electronics

Electrical Products (EP) 19 158 (7%) 3% 15% 9.4x 9.2x 29% 11%

Electronic Components (EC) 22 58 8% 70% 63% 9.2x 8.6x 33% 16%

Highly-Engineered Products

Highly-Engineered >$10bn (HE>10) 10 303 0% 24% 36% 10.4x 9.6x 35% 17%

Highly-Engineered <$10bn (HE<10) 26 54 (6%) 29% 73% 9.2x 9.0x 30% 13%

41% Electrical &

Electronics

27% Highly-

Engineered

Products

Industrial Technology Universe

Sources: Capital IQ as of October 15, 2015.

(1) Represents Enterprise Value

Stock

Performance

3-Years

Performance Summary

Page 2

OCTOBER 2015


Stock

Performance,

EBITDA

Multiples, &

Margin Profile

EBITDA

Multiples vs.

5-Yr Average

Trading Metrics and Margins

Current Valuations vs. Historical Five-Year Averages

35% Process

Controls

39% S&P 500

(1) (1)

45

50

55

60

65

J M M J S N J M M J S N J M M J S

2013 2014 2015

50

60

70

80

90

100

110


2013 2014 2015

90

100

110

120

J M M J S N J M M J S N J M M J

2013 2014 2015

-3

-2

-1

0

1

2

3

4

5

6


2013 2014 2015

-1

0

1

2

3

4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

Economic Indicators

Sources: Federal Reserve, Institute of Supply Management, U.S. Census Bureau, Bloomberg, WSJ,

Econoday, Conference Board, European Commission.

Note: EU28 represents the European Union.

Gross Domestic

Product

Industrial

Production

Index L

evel

ISM

Manufacturing

Index

% C

ha

ng

e (

y/y

) %

Change (

y/y

)

Durable Goods

New Orders

Index L

evel

Expansio

n

Contra

ctio

n

The U.S. economy remained

healthy in 2Q15 on a Y-o-Y basis

driven by increased personal

consumption expenditures,

exports, and a deceleration in

imports. The Euro Zone is

expected to grow ~1.9% in 2015,

aided by healthy household

consumption and the ECB’s

monetary easing.

U.S. manufacturing continues to

face headwinds caused by a

strong dollar and weak overseas

economies.

Durable Goods Orders,

considered a proxy for business

investment, has remained weak

since the end of 2014. A

contributing factor to this

weakness has been a strong

U.S. dollar, China’s slowdown,

and a decline in oil prices.

The ISM manufacturing

survey hovered above 50 at

50.2 in September, marking

the 33rd consecutive month

of expansion in the

manufacturing sector.

Consumer

Sentiment

Index L

evel Consumer sentiment levels

remain strong in the U.S. and

Eurozone in 3Q15,

suggesting Main Street

consumers remain optimistic

with the overall economy,

despite Wall Street volatility

over the quarter.

US

EU28

Page 3

OCTOBER 2015


US

EU28

US

EU28

US

EU28

US

400

500

600

700

2013 2014 2015 2016 2017 2018 2019 2020

-

200

400

600

O N D J F M A M J J A S O N D J F M A M J J A S

2013 2014 2015

End-Market Fundamentals

Sources: Equity Research, Boeing, Airbus, U.S. DoD Green Book.

The Current

End-Market

Cycle

Oil & Gas has experienced sustained challenges in

addition to significant decline in oil rig count (down

56% YoY) due to persistent weakness in oil prices

General Industrial has experienced broadening

declines over the past six months primarily related

to indirect Oil & Gas exposure and off-highway

equipment

APRIL 2015

Select

End-Markets

Commercial

Aerospace

The OEM order books remains

lackluster, despite a firm

commitment from Wizz Air for 110

A321neo aircraft. Boeing and Airbus

have a total of 507 and 834 orders,

respectively, during the first nine

months of the year. Overall, total

orders are down ~25% versus

YTD14, although deliveries remain

strong.

Ord

ers

in U

nits

2013

Boeing Airbus

U.S. Defense

Spending

The defense-spending bill and

overall DoD budget continues to be

a topic of debate in Congress. An

impasse is likely to continue, with

the Senate and House signing the

2016 defense policy bill that is likely

to be vetoed, as promised, by

POTUS.

$ in b

illio

ns

Page 4

OCTOBER 2015


U.S. DoD Budget

Oil & Gas continues to negatively impact broader

markets including the “catch-all” General Industrial Resi. Constr.

Constr. Mach.

(Light)

Chemicals

Comm. Aero.

(OEM)

Automotive

Heavy Truck

Semi. Equip.

Water / Wastewater

Non-Res. Constr.

General Industrial

Comm. Aero. (AM)

Power Gen.

Military / Defense

Steel

Oil & Gas

Ag. Equip.

Mining Equip.

Constr. Mach. (Heavy)

Accelerating

Decline

Trough Decline

Accelerating

Growth

Peak Growth

Decelerating

Growth

Decelerating

Decline

Oil & Gas

Ag. Equip. Mining Equip.

Constr. Mach. (Heavy)

Power Gen.

Military / Defense

Steel

General

Industrial

Comm. Aero. (AM)

Semi. Equip.

Water / Wastewater

Non-Res. Constr. Automotive

Heavy Truck

Resi. Constr.

Constr. Mach. (Light)

Chemicals

Comm. Aero. (OEM)

OCTOBER 2015

North America

(5)

-

5

10

15

20


2013 2014 2015

-

15

30

45

O N D J F M A M J J A S O N D J F M A M J J A

2013 2014 2015

500

1,000

1,500

2,000

O N D J F M A M J J A S O N D J F M A M J J A S O

2013 2014 2015

-

5

10

15

20


2013 2014 2015

-

10

20

30


2013 2014 2015


Sources: Equity Research, Association of Equipment Manufacturers, U.S. Census Bureau, American

Institute of Architects, FTR Associates, Auto Associations and Government Data (Bloomberg), Baker &

Hughes Inc., and Oil & Gas Journal.

Agriculture

Construction

Major farm equipment

manufacturers are experiencing a

softened global market as

economies remain weak.

Alternatively, demand for U.S.

construction equipment is expected

to increase, despite agricultural and

mining equipment markets

remaining under pressure.

Through the eight months of 2015,

nonresidential construction

spending has realized its second

best year since the Census Bureau

began monitoring the metric in 2002

– approaching the level of activity

seen in 2007.

Ord

ers

in

Units

(000

’s)

% C

hange (

y/y

)

NA Tractor Sales

Heavy-Truck

Truck orders have remained

consistent over the past four

months, albeit ~20% below 2014

comparable periods. The overall

market remains cautiously optimistic

as orders are reflective of the

underwhelming activity in the

domestic economy. August Class 8

truck orders are near a two-year

low.

Ord

ers

in U

nits

(000’s

)

(continued)

Oil & Gas

The total rigs in the U.S. (those

actively searching for oil & gas)

have decreased to close to one-

third that of a year ago. U.S.

energy companies continue to cut

the number of oil rigs as the low

price of oil has kept drillers away

from the well pad.

Units

B&H U.S. Rig Count

Automotive

In September 2015, a SAAR

(seasonally-adjusted annual rate) of

17.2 million buoyed the highest nine

month rate in over 10 years. North

American auto markets are set for

growth through the remainder of

2015.

% C

hange (

y/y

)

2013 2014NA Auto Production

Page 5

OCTOBER 2015


NA Class 8 Truck Orders

2013 2014Non-Resi Contruction Spend

0.90

0.95

1.00

1.05

1.10

1.15

1.20


2013 2014 2015

100

125

150

175

200


2013 2014 2015

50

60

70

80

90

100

110

O N D J F M A M J J A S O N D J F M A M J J A S O

2013 2014 2015

20

25

30

35

40

45

O N D J F M A M J J A S O N D J F M A M J J

2013 2014 2015

100

103

106

109

112


2013 2014 2015


Sources: Equity Research, American Chemistry Council, Antaike, London Metal Exchange

(Bloomberg), International Monetary Fund, SEMI, Energy Information Administration.

Chemicals

Utilities / Power

Generation

Metals & Mining

The 3-month moving average

Chemical Activity Barometer shows

a deceleration over 2Q15 activity,

despite remaining 1.3% over this

time last year. Growth is not

expected to pick up through early

2016.

A structural shift to natural gas

power generation from coal is well

underway. In August, the Obama

administration unveiled sweeping

cuts to slash carbon emissions by

32% on 2005 levels by 2030.

Iron ore and copper prices extend

their skid as investors remain

concerned over slowing GDP

growth in China.

Inde

x

(3-M

o M

ovin

g A

vg.)

U.S

. P

ow

er

Gen.

by S

ourc

e (

%)

$ /

mt

(Indexed)

Chemicals Activity Barometer

Iron Ore Copper

(continued)

Food &

Beverage

The IMF Food & Beverage price

index continues to trend downward

headed into the final quarter of

2015, providing tailwinds for food

manufacturers and consequently

benefiting manufacturers of food

processing equipment.

Index

Semiconductor

The book-to-bill ratio in the N.A.

semiconductor market increased to

1.06 in August, the highest level

since March of this year.

Ratio

NA Semiconductor Eqmt. Book-to-Bill

Natural Gas

Coal

Page 6

OCTOBER 2015


IMF Food & BeveragePrice Index

-

30

60

90

120

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2013 2014 2015

$0

$150

$300

$450

$600

-

1,000

2,000

3,000

4,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2013 2014 2015

Highly-Engineered

Electrical &Electronic

ProcessControls

M&A Market Trends

Sources: Thomson Reuters, Capital IQ and KeyBanc Capital Markets.

(1) Control transactions in N.A., including U.S., Canada, and Mexico.

(2) Aggregate deal value represents the total of all disclosed transactions.

North American

M&A

Commentary

North American

Deal Activity

Deal C

ount

(1)

Deal C

ount

(1)

Aggre

gate

Deal V

alu

e ($

B)

North America

North American

Industrial

Technology

Deal Activity

Page 7

OCTOBER 2015


Consolidation and big ticket deals erupted in 3Q15 as the North American M&A market featured colossal

deal values. Headline deals include Dell’s $67 billion bid for EMC Corporation, Berkshire Hathaway’s $37

billion bid for Precision Castparts, and Teva’s $41 billion bid for Allergan. Interest rates remained low,

despite heavy anxieties and speculation over the moment for which the Fed will raise rates. Additional

merger-friendly characteristics remained intact including corporation’s war chest of cash and CEO

confidence. Global geopolitical and economic concerns remain prevalent in an environment where the

U.S. dollar continued to strengthen and China’s growth is watched closely. Nonetheless, the M&A

environment remains that of a “seller’s market”, where both transformative and bolt-on transactions are

expected to continue for the foreseeable future.

We observed 2,543 deals for 3Q15 versus 2,729 for 2Q14. During 3Q15, a total of 786 deal values were

disclosed for an aggregate value of $532 billion ($677mm average), compared to 945 for $401 billion

($424mm average) in 3Q14.

Following a robust CY2014 and 1H15, the Industrial Technology sector witnessed strong activity in 3Q15.

During 3Q15, North American M&A activity across the Industrial Technology sectors totaled 65

transactions and was largely supported by strategic acquirers. Process Controls accounted for 20 deals,

Electrical & Electronics totaled 9, while Highly-Engineered Products represented 36 of the transactions.

> $1 billion Middle-Market Undisclosed Agg. Deal Value(2)

-

30

60

90

120

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2013 2014 2015

$0

$125

$250

$375

$500

-

1,000

2,000

3,000

4,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2013 2014 2015

M&A Market Trends

Sources: Thomson Reuters, Capital IQ and KeyBanc Capital Markets.

(1) Control transactions in Europe.

(2) Aggregate deal value represents the total of all disclosed transactions.

Eurozone

M&A

Commentary

Eurozone

Deal Activity

Deal C

ount

(1)

Deal C

ount

(1)

Aggre

gate

Deal V

alu

e ($

B)

Eurozone

Eurozone

Industrial

Technology

Deal Activity

Page 8

OCTOBER 2015


> $1 billion Middle-Market Undisclosed Agg. Deal Value(2)

The stable Eurozone M&A environment features favorable credit conditions and strong corporate

earnings, despite increasing political and currency concerns. Several headline transactions were

announced including Anheuser-Busch InBev’s ₤69 billion ($106 billion) bid for SABMiller and Honeywell’s

$6.5 billion bid for Elster Group. Antitrust issues are expected to be at the forefront of discussion in the

Anheuser-Busch InBev deal as regulators assess what a combination may look like for the market.

Regulator approval can tie up deals for months as witnessed most recently in GE’s $17 billion acquisition

of Alstom’s Power business that received European Commission approval in early September for a deal

that was announced in June 2014. Regulatory matters aside, the European M&A market is expected to

remain stable, despite investors’ cautious sentiment around economic uncertainty in Greece and recent

decrease in GDP forecast by the European Central Bank.

We noted 2,117 deals for 3Q15 versus 2,796 for 3Q14. During 3Q15, a total of 401 deal values were

disclosed for an aggregate value of $165 billion ($411mm average), compared to 697 for $202 billion

($290mm average) in 3Q14.

Eurozone M&A activity across the Industrial Technology sectors totaled 63 transactions during 3Q15.

Process Controls accounted for 30 deals, Electrical & Electronics totaled 14, while Highly-Engineered

Products represented 19 of the transactions.

Highly-Engineered

Electrical &Electronic

ProcessControls

Understanding traceability

A traceability system can provide clear insight into the

various steps in the manufacturing process that impact a

finished product. That information can then be used for a

variety of purposes including process improvement, defect

resolution, regulation compliance, brand integrity, and direct

and indirect cost savings. [Read Full Article]

Gas-Lubricated Mechanical Seals for Improved

Reliability and Efficiency

Process Controls

Radars reliable on rivers

The sluices operate depending on the water level, this is a

key measurement point and the level monitoring needs to be

very accurate. – the navigation is closed to river traffic if the

water level is too high. [Read Full Article]

Sources: Connecting Industry – Processing Magazine and Automation Magazine, Water World

Magazine; Process Industry Informer.

Page 9

OCTOBER 2015


Salient

Industry

Topics

Government Scheme Allows Manufactures to Look

Past System Cost

The use of gas-lubricated mechanical seals in pumps has

increased for a variety of reasons. For example, they are

non-contacting and do not wear; they produce consistent seal

performance, even in a widely varying duty cycle; and they

reduce power consumption at the seal faces. The seals

generate little heat, and any gas leakage absorbs heat

through gas expansion. [Read Full Article]

Why industry needs to redefine solids filtration and

biological control in process water

Engineers, manufacturers, utilities, public and private

enterprise, commerce, in fact any one that uses water for

temperature control are, in the most part, quite comfortable in

the belief that they are operating an effective and safe water

system – but how safe are they really? [Read Full Article]

The ECA scheme allows businesses to write off the whole

cost of new equipment against taxable profits in the year of

purchase. This provides not only an incentive to invest in

energy-saving equipment, which normally comes at a higher

cost when compared to less efficient alternatives...

[Read Full Article]

http://www.connectingindustry.com/Automation/understanding-traceability.aspx



http://www.waterworld.com/articles/print/volume-31/issue-9/departments/pump-tips/gas-lubricated-mechanical-seals-for-improved-reliability-and-efficiency.html

http://www.connectingindustry.com/processcontrol/radars-reliable-on-rivers.aspx



https://www.processindustryinformer.com/latest-news/pumps-and-pumping/government-scheme-manufactures-look-past-system-cost



http://www.connectingindustry.com/ProcessControl/why-industry-needs-to-redefine-solids-filtration-and-biological-control-in-process-water.aspx





Process Controls

Waterjet

Cutting

Equipment

KFC FLOW CONTROL (“KFC”)

KMC

Pressure

Transducers

Flow

Meters

Laser

Profilers Machine

Vision

Gears Electric

Motors

Actuators Couplings Hydraulic

Cylinders

Process

Analyzers

Gearboxes VFD’s

Filtration

Media Filtration

Systems

Valves Seals Pumps

Automated Production

& CNC Equipment

Monitoring &

Control

Instruments

Conveyor

Technologies

Heat

Exchangers

Molding & Extrusion

Equipment

Temp.

Sensors

Lab

Equipment

Industrial Technology Indices

KFI FILTRATION (“KFI”)

KTM

KPA

MOTION CONTROL (“KMC”)

TEST & MEASUREMENT (“KTM”)

PROCESS AUTOMATION EQUIPMENT (“KPA”)

The KeyBanc Process Controls (“KPC”) index comprises 100 companies across

the five categories defined below:

Packaging

Equipment

Page 10

OCTOBER 2015


5x

7x

9x

11x

13x

15x

17x

Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15

9.4x

10.4x

8.6x

11.7x

10.4x

9.2x

10.3x

8.6x

11.4x

9.6x

4x

6x

8x

10x

12x

14x

Flow Control Filtration Motion Control Test & Msmt. Process AutomationEquipment

-20%

0%

20%

40%

60%

80%

100%

-20% -10% 0% 10% 20% 30%

8.6x MC

11.7x TM

Process Controls

Public Comps Performance & Valuation

LTM CY 2015

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

9.4x FC

10.4x FI 10.4x PA


Flow

Control Filtration

Motion

Control

Test &

Msmt.

Process

Automation

Current 9.4x 10.4x 8.6x 11.7x 10.4x

5-Yr Avg 10.2x 11.2x 9.5x 12.4x 10.3x

% of 5-Yr 93% 92% 91% 95% 100%

1-yr 3-yr 5-yr

Flow

Control (11%) 21% 45%

Filtration (3%) 28% 95%

Motion

Control (8%) 29% 38%

Test &

Msmt. 4% 32% 66%

Process

Automation 21% 69% 84%

(1-Yr

Return)

(3-Yr

Return)

Page 11

OCTOBER 2015


FC

FI TM

PA

MC

10/15/2015 OPERATING METRICS Net Debt / VALUATION

% of 52 52 Wk Mkt Ent LTM LTM EV / EBITDA Fwd PE

Ticker Price Wk High Return Cap Value Sales GM % EBITDA % Margin EBITDA LTM CY 2015 CY 2015

Flow Control (KFC)Atlas Copco AB OM:ATCO A $25.40 71% (2%) $30,270 $32,476 $12,150 39% $2,768 23% 0.6x 11.7x 11.6x 17.9x

Parker-Hannif in Corporation PH 102.37 77% (1%) 13,940 14,976 12,311 24% 1,845 15% 0.8 8.1 8.0 16.4

Pentair plc PNR 56.65 81% (7%) 10,200 13,319 6,491 35% 1,148 18% 4.2 11.6 11.4 14.9

Alfa Laval AB (publ) OM:ALFA 17.15 82% (14%) 7,193 9,024 4,732 33% 903 19% 2.0 10.0 10.2 15.1

Flow serve Corp. FLS 43.00 63% (30%) 5,735 7,135 4,762 34% 840 18% 1.6 8.5 8.5 13.7

Xylem Inc. XYL 34.74 89% 4% 6,305 6,982 3,762 38% 609 16% 1.1 11.5 11.3 18.9

IDEX Corporation IEX 74.87 93% 11% 5,794 6,358 2,045 45% 508 25% 1.1 12.5 12.6 21.3

The Weir Group PLC LSE:WEIR 19.21 54% (43%) 4,111 5,384 3,573 32% 581 16% 2.2 9.3 8.4 15.1

Colfax Corporation CFX 27.61 50% (48%) 3,430 4,959 4,112 32% 530 13% 2.5 9.4 8.3 18.0

Nordson Corporation NDSN 67.23 80% (2%) 4,051 4,934 1,711 55% 417 24% 2.1 11.8 12.1 17.9

IMI plc LSE:IMI 15.43 69% (15%) 4,170 4,645 2,604 44% 503 19% 0.8 9.2 10.2 15.0

Aalberts Industries NV AALB 32.05 95% 35% 3,544 4,469 2,663 61% 387 15% 2.2 11.5 10.9 17.3

Graco Inc. GGG 69.39 84% (2%) 4,006 4,272 1,301 53% 353 27% 0.9 12.1 12.0 20.8

Curtiss-Wright Corporation CW 65.57 85% (1%) 3,077 3,791 2,222 35% 397 18% 1.8 9.6 8.9 17.0

Crane Co. CR 48.51 69% (16%) 2,816 3,373 2,791 35% 458 16% 1.1 7.4 7.3 11.6

Spirax-Sarco Engineering plc LSE:SPX 45.61 79% 4% 3,359 3,278 1,068 74% 265 25% - 12.4 12.0 21.1

ITT Corporation ITT 37.01 82% (1%) 3,309 3,101 2,534 34% 404 16% - 7.7 7.4 14.7

Sulzer, Ltd. SWX:SUN 104.71 86% (1%) 3,561 2,970 3,325 31% 377 11% - 7.9 NA NA

SPX FLOW, Inc. FLOW 36.76 87% NA 1,507 2,340 2,590 34% 304 12% 2.7 7.7 8.3 13.0

Watts Water Technologies, Inc. WTS 55.95 86% 1% 1,942 2,236 1,496 36% 199 13% 1.5 11.3 11.5 24.0

Ebara Corp. TSE:6361 4.12 78% (24%) 1,917 1,936 4,262 26% 410 10% - 4.7 4.7 10.5

Interpump Group SpA BIT:IP 14.21 81% 21% 1,525 1,854 889 36% 195 22% 1.6 9.5 9.2 18.1

Mueller Water Products, Inc. MWA 8.38 80% (3%) 1,345 1,782 1,174 30% 183 16% 2.4 9.7 9.2 19.4

Mueller Industries Inc. MLI 31.78 85% 12% 1,811 1,770 2,165 14% 168 8% - 10.5 NA 19.9

Chart Industries Inc. GTLS 22.42 46% (50%) 685 835 1,135 30% 167 15% 0.9 5.0 7.0 15.5

CIRCOR International, Inc. CIR 46.00 61% (26%) 758 817 755 32% 92 12% 0.6 8.9 10.0 19.3

Lindsay Corporation LNN 66.19 72% (22%) 757 736 560 28% 69 12% - 10.7 9.9 23.4

Thermon Group Holdings, Inc. THR 21.86 82% (3%) 702 731 306 50% 78 25% 0.3 9.4 9.1 18.4

Gorman-Rupp Co. AMEX:GRC 26.11 79% (17%) 686 666 412 23% 56 14% - 11.9 11.5 24.2

KSB Aktiengesellschaft DB:KSB 461.72 82% (17%) 799 651 2,729 56% 194 7% - 3.4 3.3 13.3

Graham Corporation GHM 18.06 52% (40%) 183 120 134 31% 25 19% - 4.7 6.7 17.5

Ampco-Pittsburgh Corp. AP 11.52 52% (42%) 120 40 265 20% 15 6% - 2.8 NA NA

Median 80% (3%) $3,193 $3,190 $2,378 34% $382 16% 1.5x 9.4x 9.2x 17.7x

Filtration (KFI)Donaldson Company, Inc. DCI $28.72 66% (24%) $3,877 $4,238 $2,371 34% $363 15% 1.0x 11.7x 11.7x 19.1x

Essentra plc LSE:ESNT 13.18 80% 26% 3,457 4,021 1,871 62% 331 18% 1.7 12.2 12.2 18.0

CLARCOR Inc. CLC 49.91 73% (17%) 2,490 2,782 1,445 33% 268 19% 1.1 10.4 10.3 18.7

ESCO Technologies Inc. ESE 37.85 95% 12% 988 1,016 535 39% 84 16% 0.3 12.1 11.7 22.3

Calgon Carbon Corporation CCC 17.17 74% (10%) 899 939 549 36% 108 20% 0.4 8.7 8.3 17.8

Ahlstrom Oyj HLSE:AHL1V 8.07 85% (5%) 376 647 1,265 15% 98 8% 2.7 6.6 5.6 16.4

Lydall, Inc. LDL 32.89 98% 20% 559 526 524 22% 59 11% - 8.9 7.4 16.4

CECO Environmental Corp. CECE 8.64 54% (32%) 293 388 307 30% 38 13% 2.5 10.1 9.1 9.5

Porvair plc LSE:PRV 4.50 85% 1% 202 192 152 31% 17 11% - 11.5 10.5 19.2

Median 80% (5%) $899 $939 $549 33% $98 15% 1.1x 10.4x 10.3x 18.0x

Process Controls

Indices and Company Composition


Note: $ in millions

Page 12

OCTOBER 2015


Motion Control (KMC)Nidec Corporation TSE:6594 $71.76 75% 15% $21,335 $21,561 $9,397 22% $1,448 15% 0.1x 14.9x 13.0x NA

Rockw ell Automation Inc. ROK 105.24 83% 4% 14,113 13,460 6,482 43% 1,367 21% - 9.8 9.3 16.1

SKF AB OM:SKF B 18.85 67% (3%) 8,581 11,005 9,374 25% 1,434 15% 1.4 7.7 NA NA

GKN plc LSE:GKN 4.34 72% (5%) 7,436 8,551 11,060 56% 1,319 12% 0.8 6.5 6.3 10.6

WEG S.A. BOVESPA:WEGE3 4.21 80% (24%) 6,785 6,826 3,292 30% 542 16% 0.0 12.6 16.9 23.1

Regal Beloit Corporation RBC 60.83 75% (4%) 2,727 4,429 3,459 26% 489 14% 3.4 9.0 8.1 11.3

Rexnord Corporation RXN 17.60 59% (32%) 1,766 3,372 2,032 36% 324 16% 5.0 10.4 9.5 11.3

Yaskaw a Electric Corp. TSE:6506 10.75 70% (11%) 2,820 3,072 3,456 33% 413 12% 0.4 7.4 7.6 NA

Moog Inc. MOG.A 58.72 74% (16%) 2,191 2,990 2,574 29% 346 13% 2.3 8.6 8.6 15.2

The Timken Company TKR 30.33 68% (22%) 2,564 2,982 3,001 29% 422 14% 1.0 7.1 6.8 14.2

Rotork plc LSE:ROR 2.80 68% (26%) 2,435 2,377 930 47% 258 28% - 9.2 10.5 17.8

RBC Bearings Inc. ROLL 64.02 82% 19% 1,504 1,870 475 39% 118 25% 3.1 15.8 13.2 21.2

Franklin Electric Co., Inc. FELE 27.19 68% (24%) 1,294 1,465 1,005 32% 131 13% 1.2 11.2 11.2 19.4

NN Inc. NNBR 18.87 63% (16%) 506 1,309 910 22% 169 19% 2.1 7.7 7.7 14.0

Altra Industrial Motion Corp. AIMC 25.02 77% (8%) 658 864 784 30% 103 13% 2.0 8.4 8.2 15.2

RENK AG DB:ZAR 115.72 96% 18% 787 694 606 25% 132 22% - 5.2 NA NA

Columbus McKinnon Corporation CMCO 19.47 66% (6%) 391 457 573 32% 68 12% 1.0 6.8 6.4 11.9

Median 72% (8%) $2,435 $2,990 $2,574 30% $346 15% 1.3x 8.6x 8.6x 15.2x

Test & Measurement (KTM)Danaher Corp. DHR $89.06 96% 24% $60,871 $60,763 $20,288 53% $4,604 23% 0.0x 13.2x 12.7x 20.7x

Roper Technologies, Inc. ROP 174.64 98% 24% 17,580 19,426 3,585 60% 1,231 34% 1.5 15.8 15.4 26.2

Ametek Inc. AME 54.53 95% 17% 13,205 14,544 4,044 35% 1,051 26% 1.3 13.8 13.2 21.0

Hexagon AB OM:HEXA B 32.10 79% 13% 11,558 13,604 3,461 60% 1,019 29% 2.0 13.4 13.6 19.2

Rockw ell Automation Inc. ROK 105.24 83% 4% 14,113 13,460 6,482 43% 1,367 21% - 9.8 9.3 16.1

Sensata Technologies ST 47.41 80% 10% 8,065 10,585 2,804 34% 660 24% 3.8 16.0 13.9 16.5

Mettler-Toledo International Inc. MTD 288.01 82% 23% 7,978 8,457 2,444 56% 529 22% 0.9 16.0 NA NA

Melrose Industries PLC LSE:MRO 4.14 85% (1%) 4,118 5,260 2,093 36% 382 18% 3.0 13.8 11.7 16.9

Halma plc LSE:HLMA 11.34 93% 25% 4,294 4,450 1,172 53% 287 24% 0.5 15.5 15.3 22.2

FLIR Systems, Inc. FLIR 28.27 82% (4%) 3,965 3,771 1,547 49% 351 23% - 10.8 10.1 17.3

Teledyne Technologies Inc. TDY 84.37 75% (10%) 2,986 3,690 2,366 38% 389 16% 1.8 9.5 10.1 16.4

Spectris plc LSE:SXS 26.51 71% 0% 3,156 3,386 1,883 57% 338 18% 0.7 10.0 10.3 14.2

National Instruments NATI 28.48 85% 5% 3,670 3,247 1,238 74% 202 16% - 16.1 14.1 28.3

Cognex Corporation CGNX 35.60 68% (3%) 3,101 2,816 558 75% 184 33% - 15.3 18.9 28.9

Yokogaw a Electric Corp. TSE:6841 10.77 78% (10%) 2,774 2,769 3,399 42% 397 12% - 7.0 6.5 16.1

Renishaw plc LSE:RSW 31.49 76% 28% 2,292 2,161 778 55% 250 32% - 8.7 9.8 14.6

MSA Safety Incorporated MSA 44.10 75% (7%) 1,647 1,836 1,129 45% 180 16% 1.1 10.2 10.2 17.8

Itron, Inc. ITRI 35.10 80% (6%) 1,339 1,606 1,925 29% 120 6% 2.1 13.3 12.1 32.3

MKS Instruments, Inc. MKSI 34.92 88% 8% 1,864 1,508 844 45% 197 23% - 7.6 7.7 14.8

MTS Systems Corporation MTSC 64.02 83% (4%) 956 939 564 39% 86 15% - 10.9 10.9 21.8

Badger Meter Inc. BMI 60.52 92% 17% 878 939 371 36% 63 17% 1.0 14.9 15.9 32.1

Oxford Instruments plc LSE:OXIG 10.61 53% (31%) 606 790 661 44% 78 12% 2.3 10.2 9.1 13.8

Chroma ATE Inc. TSEC:2360 1.92 72% (22%) 723 657 335 41% 52 16% - 12.6 11.4 18.9

Mistras Group, Inc. MG 18.65 86% 13% 538 650 725 30% 67 9% 1.7 9.8 8.8 27.4

CTS Corporation CTS 19.76 100% 23% 649 591 399 33% 66 17% - 8.9 9.0 20.0

Landauer Inc. LDR 40.00 93% 22% 383 510 153 53% 38 25% 3.3 13.4 13.2 21.0

FARO Technologies Inc. FARO 36.55 56% (28%) 636 480 340 55% 38 11% - 12.6 12.2 30.2

Isra Vision AG. XTRA:ISR 61.43 81% 21% 269 296 131 56% 36 27% 0.7 8.3 7.9 15.2

First Sensor AG XTRA:SIS 13.27 90% (4%) 135 181 159 50% 18 11% 2.5 10.1 11.6 25.1

Vishay Precision Group, Inc. VPG 12.03 67% (26%) 158 114 241 36% 23 9% - 5.1 5.4 29.0

Median 82% 5% $2,533 $2,465 $1,150 45% $200 18% 1.6x 11.7x 11.4x 20.0x

Process Automation Equipment (KPA)Middleby Corp. MIDD $116.07 93% 45% $6,654 $7,191 $1,682 39% $373 22% 1.4x 19.3x 18.2x 29.3x

GEA Group DB:G1A 40.53 76% 0% 7,802 6,981 5,537 33% 553 10% - 12.6 10.9 19.1

Andritz AG WBAG:ANDR 48.29 74% 2% 4,984 4,075 6,921 45% 582 8% - 7.0 7.0 15.6

Metso Corporation HLSE:MEO1V 24.48 73% (26%) 3,671 3,976 3,512 31% 733 21% 0.4 5.4 6.8 14.3

Krones AG XTRA:KRN 109.96 91% 32% 3,474 3,161 3,406 52% 310 9% - 10.2 9.2 20.0

Hillenbrand, Inc. HI 28.12 80% (9%) 1,770 2,266 1,674 36% 287 17% 1.7 7.9 8.3 13.5

I.M.A. IMA 51.64 91% 53% 1,937 2,249 1,157 47% 160 14% 1.8 14.0 12.5 NA

Milacron Holdings Corp. MCRN 17.66 82% NA 1,176 2,053 1,216 35% 198 16% 4.4 10.4 9.3 11.4

Marel hf ICSE:MARL 1.74 100% 104% 1,243 1,433 908 38% 113 12% 1.6 12.7 NA NA

John Bean Technologies JBT 40.21 100% 44% 1,174 1,312 1,018 27% 116 11% 1.2 11.4 11.8 22.8

Astec Industries, Inc. ASTE 35.22 77% (4%) 810 805 1,008 22% 82 8% - 9.8 9.9 21.7

Key Technology, Inc. KTEC 11.83 85% (9%) 75 72 105 29% 0 - - - NA NA

Median 83% 2% $1,853 $2,258 $1,445 35% $243 12% 1.6x 10.4x 9.6x 19.1x



Ticker Price Wk High Return Cap Value Sales GM % EBITDA % Margin EBITDA LTM CY 2015 CY 2015

Process Controls


Note: $ in millions

Page 13

OCTOBER 2015



10.7x

20.1x

16.2x

19.5x18.6x

11.5x

21.4x 20.7x

10.7x12.1x

10.0x8.9x

0x

5x

10x

15x

20x

25x

Ametek /

Zygo

Apr-2014

TE Conn. /

Meas.Specia lties

Jun-2014

NIBE /

WaterFurnace

Jun-2014

Sensata /

Schrader

Aug-2014

Siemens /

Dresser-Rand

Sept-2014

Regal Bel./

Emerson PT

Dec-2014

Asahi Kasei /

Polypore

Feb-2015

Danaher /

Pall Corp.

May-2015

Ametek /

Cognex, Surf.Insp.

May-2015

Columbus

McKinnon /Magnetek

July-2015

Timken /

Carlstar BeltsBus.

Aug-2015

Schlumberger

/ Cameron

Aug-2015

30-Sep-15 Process Sensors Corp Unity Scientif ic, LLC Moisture gauges and sensors to manufacturing companies - - -

14-Sep-15 Ian-Conrad Bergan, LLC TVV Capital Marine instrumentation and sensors for ships and barges - - -

31-Aug-15 Unity Scientif ic, LLC Union Park Capital Infrared spectrometers for food, agricultural, chem/industrial, and pharma - - -

26-Aug-15 Imtech Industry International Techim B.V. Analyzers and metering systems for the steel and cement industry - - -

28-Jul-15 Elster Group SE Honeyw ell International Gas, electricity, and w ater meters for residential, commercial and industrial customers $6,523.6 4.0x 14.3x

20-Jul-15 Adaptive Flight, Inc. Drone Aviation Holding Corp Avionics curveillance and sensor systems solutions for unmanned aerial vehicles 1.4 - -

14-Jul-15 Silex Microsystems AB Private Investment Group Micro electro mechanical systems for automotive, life science, and consumer electronics - - -

29-Sep-15 Fadoul Gilibert Industries SAS PICHON S.A. Spreaders, bennes and feed trays for agricultural and industrial industries - - -

22-Sep-15 A. Stucki Company Stone Canyon Industries Railcar dynamic control products to freight and industrial railroad markets - - -

3-Aug-15 OCS S.r.l. Duplomatic Oleodinamica Telescopic hydraulic cylinders for medium/heavy duty lif ting and stabilizing requirements - - -

3-Aug-15 Carlstar Belts Business The Timken Company Manufactures rubber belts used in industrial, commercial, and consumer applications $220.0 1.6x 10.0x

31-Jul-15 Motovario S.p.A. TECO Electric & Machinery Co Gear units for food, agricultural, machine, energy, and chemical industries 206.4 1.7x 9.8x

30-Jul-15 Delta Tau Data Systems, Inc. OMRON Corp Testing motion and control products for automation, robotics, semiconductor, and machine tools - - -

29-Jul-15 Davall Gears Limited SL Montevideo Technology Precision geared products for defense, aerospace, auto, industrial, O&G, medical, and robotics 20.4 - -

27-Jul-15 Magnetek Inc. Columbus McKinnon Corp Digital pow er control systems for material handling, elevator, and mining applications 165.4 1.5x 12.1x

28-Sep-15 President Engineering Group Parker Instrumentation Group Manufactures cryogenic valves for industrial gas and liquefied natural gas industries - - -

2-Sep-15 E.M.G. Elettromeccanica s.r.l. Nidec FIR Elettromeccanica Manufactures motors for pumps, pools, fans, and compressors - - -

2-Sep-15 ABEL GmbH & Co. KG Hillenbrand Reciprocating positive displacement pumps for mining, w ater, chemical, steel, and O&G $106.7 3.2x 11.9x

1-Sep-15 Groupe Compte.R Bpifrance; CM-CIC Biomass and w ood energy boilers for customers in Europe - - -

31-Aug-15 Seal & Design; Higbee Division Seal & Design Inc. Gaskets, Seals, and O-rings for OEM industries in the U.S and internationally - - -

28-Aug-15 Bifold Group Limited Rotork plc Hydraulic and pneumatic steel control valves for various industrial sectors 192.2 3.0x 12.3x

26-Aug-15 Cameron International Corp Schlumberger Limited Provides f low equipment products, systems and services for O&G and energy w orldw ide 14,830.0 1.5x 8.9x

25-Aug-15 DeLclima S.p.A. Mitsubishi Electric Corp Heating, ventilation, air conditioning for commercial buildings and industrial processes 790.6 2.0x 17.0x

20-Aug-15 SINGLE Temperiertechnik Tim Talaat Temperature control systems, heat transfer units, and w ater-to-w ater chillers - - -

5-Aug-15 Tecumseh Products Company Atlas Holdings; DENO Compressors, condensing units and pumps for commercial refrigeration 127.0 0.2x 6.5x

5-Aug-15 Nuaire Limited Polypipe Group plc Commercial ventilation solutions for commercial, residential buildings, and infrastructure projects 226.4 2.3x 11.3x

4-Aug-15 Wellman Furnaces Limited Almor Limited Boilers, furnaces and processed engineering tech systems for metal, automotive, and aerospace - - -

7-Jul-15 Delta Industrial Valves, Inc. The Weir Group Knife gate valves for steel mills, paper mills and chemical plants 47.0 - 7.6x

Process Controls

M&A Transactions

Sources: Capital IQ and KeyBanc Capital Markets.

Note: $ in millions.

Select Transactions: EV / LTM EBITDA

Median

$14,742

$mm Transaction Size

$288 $1,654 $352 $1,000 $7,600 $3,175 $1,440

Page 14

OCTOBER 2015


FC

FI

MC

PA

TRANSACTION METRICS

Ent. EV / EV /

DATE TARGET BUYER TARGET DESCRIPTION Value Sales EBITDA

$160 $165 $220

TM

10-Sep-15 Bilf inger Gerber GmbH BBM Akustik Technologies Noise control and filter systems for pow er stations, plant engineers, chemical and petrochemical - - -

3-Aug-15 BOFA International Ltd. LDC (Managers) Limited Fume extraction and filtration solutions for mechanical engineering applications $35.9 - -

$14,830

PA

Process Controls

M&A Transactions



TM

Page 15

OCTOBER 2015


TRANSACTION METRICS

Ent. EV / EV /


28-Sep-15 Rosenberger AG Christian Benzing Tube processing machinery and equipment for auto, climate, electronics, and industrial markets - - -

21-Sep-15 Klikw ood Corp Bosch Packaging Tech Seal packaging machinery for snack food, bakery, frozen food, and non-food industries - - -

8-Sep-15 Verdol Allma Volkmann GmbH Extrusion lines and tw isting cabling machinery for the f ilament yarn markets - - -

7-Sep-15 Omia SAS Naxicap Partners Surface treatment equipment for automotive and industrial sectors - - -

2-Sep-15 A&B Process Systems Corp John Bean Tech Corp. Process systems for beverage, chemical and industrial processing $102.0 - -

1-Sep-15 IMA Klessmann GmbH Schelling Anlagenbau GmbH Machines for w oodw orking and furniture industry - - -

25-Aug-15 ARISA, S.A. Nidec-Shimpo Corp Presses and accessories for customers in Spain and internationally - - -

24-Aug-15 Dubois Equipment Company Timesavers, Inc. Finishing equipment for prefinished w ood flooring - - -

20-Aug-15 Näscher-SNV GmbH Karl Georg mbH & Co Manufactures and markets drums, cylinders, and rollers and materials handling machinery - - -

11-Aug-15 MIAS Maschinenbau GmbH Jungheinrich AG Transport and load handling devices for automotive, chemical, steel, and textile industries - - -

6-Aug-15 Sovex Limited Transnorm GmbH Material handling products for blue-chip companies in the U.K. - - -

4-Aug-15 Rimrock Corporation Lincoln Electric Holdings Automation products for small to large foundries w orldw ide - - -

4-Aug-15 Prodomax Automation Ltd. Kensington Capital Partners Automated solutions for assembly, w elding, machining, material handling processes - - -

4-Aug-15 RJ Fullw ood & Bland Ltd Verder Holding B.V. Manufactures milking systems and storage equipment 31.6 0.3x -

31-Jul-15 Goss International Corp American Industrial Partners Web offset presses and print systems for printers and publishers - - -

21-Jul-15 Colgar S.p.A. Zhejiang RIFA Precision Metal Forming and metal cutting machines 6.6 - -

17-Jul-15 Stork Food & Dairy Systems John Bean Technologies Corp Integrated processing and filing lines for dairy, juice, food processing and pharmaceutical 51.0 - -

15-Jul-15 Milltronics Manufacturing Hurco USA, Inc. Manufactures machines for machine tool industry 13.3 - -

8-Jul-15 BTM Corporation CapitalSouth Grow th Fund Machines for fabrication and assembly of sheet metal and plastic products - - -

1-Jul-15 Reggiani Macchine SpA Electronics for Imaging Textile printing machines including rotary, f lat bed, and compact digital printing machines 138.5 - -

Process Controls

Selected Equity Research

Sources: KeyBanc Capital Markets Equity Research.

Flow Control

Commentary

Page 16

OCTOBER 2015


KeyBanc Capital

Markets’ Industrial

Research platform

has consistently

achieved a Top 2

ranking in Greenwich

Associates annual

survey of small / mid-

cap fund managers.

(1)

July 30, 2015

FLS: 2Q15 Results and Guidance

Reduction in Line with Expectations

August 5, 2015

THR: Canada Weakness Finally

Materializing; Trends Positive

Elsewhere

July 21, 2015

PNR: Tough Point of the Cycle;

Rightsizing & Optimizing Focus as

Earnings Trend Lower

August 2, 2015

ITT: 2Q15 Another Strong Quarter

August 30, 2015

GGG: Thoughts Following Recent

Management Meetings

July 29, 2015

CIR: Strong 3Q15 Reflects

Operational Improvements

October 19, 2015

IEX: 3Q15 - Weaker than Expected

Organic Revenue Growth Offset by

Strong Margin Performance

August 10, 2015

CW: Ongoing Operation

Improvements with an Atomic Kicker

Our top-ranked(1) equity research team covers numerous companies across the Process

Controls sector. Selected recent research notes are provided below. Click on the

respective “tear out” to read the entire note.

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Process Controls

Motion Control

Commentary

Test &

Measurement

Commentary


Sources: KeyBanc Capital Markets Equity Research.

.

Page 17

OCTOBER 2015


KeyBanc Capital


Research platform

has consistently

achieved a Top 2


Associates annual


cap fund managers.

September 10, 2015

AIMC: Key Takeaways from

Management Meetings

August 4, 2015

RXN: Modest F1Q16 Beat;

Guide Fine-Tuned

August 3, 2015

RBC: Strong 2Q15 Margins,

Simplification & PTS Integration

Ramping

July 31, 2015

MOG.A: FY16 Outlook Uninspiring;

Buyback Coming to a Close

August 4, 2015

AME: No Surprises

July 24, 2015

FLIR: Seeing Through the

Challenging Conditions

July 30, 2015

TDY: Energy Markets Remain a

Watch Item

October 12, 2015

MG: Key Takeaways from F1Q16

Results

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https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=a9cec8dc-388d-4993-8130-481d5429b876&mime=PDF&co=KBCM&[email protected]&source=libraryView&htmlToPdf=true








EPRI Maps Out Power System of the Future

Historically, capacity needs have been met by building new

power plants and transmission lines. But today, capacity

markets and demand response are alternatives.

[Read Full Article]

Facts & Figures: Cable Assemblies for the

Transportation Market

Transportation market sector sales for cable assemblies in

commercial aviation continue to ascend, as sales growth is

driven by regional air travel. [Read Full Article]

Sources: Transmission & Distribution World Magazine, Power Magazine, Connector & Cable

Assembly Supplier, Electronics Components World.

Behind-the-Meter Batteries Can Provide the

Greatest Value, Study Says

What it found is that customer-sited storage is potentially able

to provide all types of services, but that storage deployed by

other entities is unable to provide some of the most useful

services for customers: backup power, increased self-

consumption of distributed generation, demand charge

reduction, and time-of-use bill management.

[Read Full Article]

Page 18

OCTOBER 2015


Salient

Industry

Topics

DC power relays evolve to address new applications

DC power relays are evolving rapidly to address the very

different and very specific requirements of electric vehicles and

renewable energy applications. [Read Full Article]

Facts & Figures: First Half 2015 Connector Industry

Performance

After the strong performance in 2014, it is reasonable to

believe that year-over-year growth would be harder to achieve

in 2015, but that is a small part of this result. The main culprit

for this contraction is exchange rates of the weaker euro and

yen, in particular, when compared to the US dollar.

[Read Full Article]

http://tdworld.com/grid-opt-smart-grid/epri-maps-out-power-system-future



http://www.connectorsupplier.com/facts-figures-cable-assemblies-for-the-transportation-market/



http://www.powermag.com/behind-the-meter-batteries-can-provide-the-greatest-value-study-says/



http://electronicscomponentsworld.com/dc-power-relays-evolve-to-address-new-applications/



http://www.connectorsupplier.com/facts-figures-first-half-2015-connector-industry-performance/





KEP

Uninterruptible

Power Supplies

Electronic Control

Unit

Battery

Chargers

Industrial Control

Transformers

Fuses

Power

Converters

Electronic

Manufacturing

Services

Industrial

Connectors

Data, Audio

& Video Cable

Discrete

Connectors Enterprise Cable

& Connectivity

Fiber & Copper

Comms Cables

Electrical

Enclosures

Capacitors

Batteries Generators:

Stationary &

Portable

Inverters

Patch

Panels

Solid &

Stranded Wires

Joysticks &

Switches

Industrial Wireless

Connectivity

Hazardous

Duty Cables

Tubing &

Harnessing

Products

Circuit

Protection

KEC

ELECTRICAL PRODUCTS (“KEP”)

ELECTRONIC COMPONENTS (“KEC”)

The KeyBanc Electrical & Electronics (“KEE”) index comprises 41 companies

across the two categories defined below:

Industrial

Antennas

Electric

Power Cables

Automatic Transfer

Switches

Switchgear

Page 19

OCTOBER 2015


5x

7x

9x

11x

13x


9.4x9.2x9.2x

8.6x

4x

6x

8x

10x

Electrical Products Electronic Components

-20%

0%

20%

40%

60%

80%

100%

-25% -15% -5% 5% 15%



LTM CY 2015

9.4x EP

9.2x EC

66.2% KEP

89.9% KEC

63.7% S&P


Electrical

Products

Electronic

Components

Current 9.4x 9.2x

5-Yr Avg 9.4x 8.6x

% of 5-Yr 100% 106%

Page 20

OCTOBER 2015


1-yr 3-yr 5-yr

Electrical

Products (7%) 3% 15%

Electronic

Components 8% 70% 63%

EP

EC

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

(1-Yr

Return)

(3-Yr

Return)



Ticker Price Wk High Return Cap EV Sales GM % EBITDA % Margin EBITDA LTM CY 2015 CY 2015

Electrical Products (KEP)ABB Ltd. ABBN $18.57 79% (8%) $41,248 $44,467 $36,585 29% $5,318 15% 0.5x 8.4x 9.4x 16.3x

Schneider Electric SE SU 58.61 69% (16%) 33,660 41,485 29,058 37% 4,297 15% 1.7 9.7 9.1 13.7

Eaton Corporation plc ETN 52.10 71% (12%) 24,357 32,738 21,888 32% 3,562 16% 2.3 9.2 9.5 12.1

Mitsubishi Electric Corporation TSE:6503 10.33 72% (14%) 22,184 21,166 35,984 30% 3,872 11% - 5.5 5.2 12.1

Legrand SA ENXTPA:LR 54.09 83% 12% 14,414 15,568 5,220 51% 1,152 22% 1.0 13.5 12.7 21.1

Prysmian S.p.A. BIT:PRY 21.66 85% 32% 4,633 5,815 8,120 36% 529 7% 2.1 11.0 8.1 15.6

Hubbell Inc. HUB.B 88.98 76% (12%) 5,312 5,464 3,428 33% 600 17% 0.2 9.1 9.9 17.4

EnerSys ENS 64.16 88% 20% 2,976 3,184 2,433 26% 331 14% 0.6 9.6 9.8 15.5

Generac Holdings Inc. GNRC 28.00 55% (31%) 1,939 2,825 1,356 34% 271 20% 3.3 10.4 10.8 10.5

Nexans Société Anonyme ENXTPA:NEX 38.55 85% 26% 1,640 2,310 7,194 12% 349 5% 1.7 6.6 6.1 28.5

Crompton Greaves Limited BSE:500093 2.79 87% (17%) 1,747 2,043 2,215 - 88 4% 3.4 23.2 20.2 105.9

General Cable Corporation BGC 14.66 69% 13% 717 1,865 5,576 11% 313 6% 3.5 6.0 7.0 15.0

AZZ incorporated AZZ 53.20 94% 25% 1,372 1,712 850 26% 166 20% 2.0 10.3 10.3 18.4

LEM Holding SA SWX:LEHN 673.53 76% (4%) 768 746 272 46% 63 23% - 11.9 13.1 19.8

Pow ell Industries, Inc. POWL 33.51 65% (23%) 393 332 662 16% 31 5% - 10.6 9.0 18.1

Preformed Line Products PLPC 40.68 70% (21%) 219 222 372 31% 29 8% 0.1 7.6 NA NA

Volex plc LSE:VLX 0.91 67% (27%) 81 79 423 17% 15 4% - 5.2 4.2 13.3

Hammond Pow er Solutions Inc. HPS.A 4.98 85% (19%) 58 77 224 23% 12 5% 1.5 6.5 6.3 13.9

Pioneer Pow er Solutions, Inc. PPSI 3.90 39% (50%) 34 51 106 18% 3 3% 5.7 - 7.3 8.3

Median 76% (12%) $1,747 $2,310 $2,433 29% $313 11% 1.7x 9.4x 9.2x 15.6x

Electronic Components (KEC)TE Connectivity Ltd. TEL $63.14 86% 20% $25,407 $28,738 $14,260 34% $2,743 19% 1.2x 10.5x 10.8x 17.4x

Sensata Technologies ST 47.41 80% 10% 8,065 10,585 3,238 34% 721 22% 3.5 14.7 13.9 16.5

CommScope COMM 31.22 92% 55% 5,931 10,497 5,421 36% 1059 20% 4.3 9.9 9.3 16.2

Belden Inc. BDC 50.99 53% (15%) 2,176 3,889 2,352 38% 338 14% 5.1 11.5 9.6 10.7

Ultra Electronics Holdings plc LSE:ULE 27.46 93% 3% 1,918 2,150 1,108 31% 183 17% 1.3 11.8 10.3 14.8

Littelfuse Inc. LFUS 94.84 92% 17% 2,148 2,011 857 38% 178 21% - 11.3 10.9 19.6

Laird PLC LSE:LRD 5.44 85% 20% 1,449 1,685 931 45% 153 16% 1.5 11.0 9.9 15.5

AVX Corp. AVX 13.81 91% 13% 2,320 1,500 1,303 25% 248 19% - 6.1 6.4 17.4

Methode Electronics, Inc. MEI 33.75 69% (0%) 1,299 1,133 866 26% 150 17% - 7.6 8.5 15.9

Rogers Corporation ROG 54.58 64% (1%) 1,018 995 639 39% 130 20% - 7.7 7.7 13.6

Saft Groupe S.A. ENXTPA:SAFT 34.01 74% 13% 936 993 801 29% 124 15% 0.4 8.0 7.0 13.6

Advanced Energy Industries, Inc. AEIS 28.13 95% 65% 1,154 971 574 38% 86 15% - 11.3 11.7 13.9

Vishay Intertechnology Inc. VSH 10.74 74% (16%) 1,585 955 2,433 24% 391 16% - 2.4 2.9 16.7

CTS Corporation CTS 19.76 100% 23% 649 591 399 33% 66 17% - 8.9 9.0 20.0

KEMET Corp. KEM 2.79 53% (31%) 128 493 798 21% 76 9% 4.8 6.5 5.7 79.7

Stoneridge Inc. SRI 12.48 93% 12% 348 471 665 28% 50 8% 2.1 9.4 8.4 14.7

Sparton Corp. SPA 24.97 85% (7%) 247 386 450 20% 41 9% 3.4 9.5 8.6 17.6

Bel Fuse Inc. BELF.B 20.78 71% (14%) 240 375 593 21% 62 11% 2.2 6.0 5.9 8.6

TT Electronics plc LSE:TTG 2.06 78% (13%) 322 364 828 16% 60 7% 0.7 6.1 5.5 12.9

Vicor Corp. VICR 10.58 60% 8% 411 349 239 45% 20 8% - 17.4 NA NA

CyberPow er Systems, Inc. TSEC:3617 2.31 97% 16% 187 146 183 43% 20 11% - 7.2 6.0 10.7

SL Industries Inc. SLI 34.75 77% (3%) 138 130 201 32% 21 10% - 6.2 NA NA

Median 82% 9% $1,086 $982 $815 33% $127 16% 2.1x 9.2x 8.6x 15.7x



Note: $ in millions

Page 21

OCTOBER 2015



10.0x

12.6x

5.8x

10.8x

8.6x 8.2x

11.9x

10.2x

7.2x

12.1x

0x

5x

10x

15x

20x

ABB /Thomas

& BettsJan-2012

Eaton /Cooper

May-2012

ABB /Power-

OneApr-2013

Koch /Molex

Sept-2013

Southwire /Coleman Cable

Dec-2013

PSIX /Prof. Power

Prod.Apr-2014

Cobham /Aeroflex

May-2014

Key Tronic /CDR Mfg.

Jul-2014

TTMTech. /

ViasystemsSept-2014

Ultra Electr. /Kratos Electr.

UnitMay-2015

TRANSACTION METRICS

Ent. EV / EV /


30-Sep-15 American Control Electronics HTI Technology & Industries AC&DC electronic control systems for industrial, commercial, electric vehicle and automation - - -

17-Sep-15 Autrial S.L. WEG S.A. Electrical control panels for refrigeration, energy, petrochemical, naval, machinery sectors - - -

17-Sep-15 Marschner GmbH & Co KG Tabuchi Electric Co.,Ltd. Transformers and pow er supplies for medical, automation, mechanical, aerial, industrial sectors - - -

16-Sep-15 TES Transformer Electro Tamini Trasformatori S.r.l. Industrial transformers for electrical energy and industrial applications - - -

2-Sep-15 KB Electronics, Inc. Nidec America Corp AC&DC drives, automation and fan speed controls - - -

26-Aug-15 Seeo, Inc. Robert Bosch GmbH Lithium polymer batteries for transportation, electrical grid, and telecommunication markets - - -

12-Aug-15 Berkenhoff GmbH Pow erw ay Group Co.,Ltd. Precision w ires for connector industry, automotive, telecommunication, and consumer electronics - - -

6-Aug-15 ELOGIC a/s Micro Matic A/S Electrical boards, sw itchboards, and controls for the construction and building industry - - -

30-Jul-15 intelligent Energy Saving Intrinsic Equity Voltage optimization technology for energy regulator, electricity distributors, and retailers - - -

29-Jul-15 Van-System s.r.l. Radiall SA Circular electrical connectors for industrial applications in Italy and internationally - - -

21-Jul-15 Best Lighting Products, Inc. Corinthian Capital Group, LLC Emergency and exit lighting products for OEM customers and OEM lighting suppliers - - -

25-Sep-15 Densitron Technologies plc Quixant Plc Electronic displays for audio/visual display systems $14.2 0.4x 9.2x

17-Sep-15 ASC Signal Corporation Communications & Pow er Satellite communication for broadcast, military, government and enterprise satellite communication 50.0 - -

28-Aug-15 Draker Inc. BlueNRGY Group Limited Control products and commercial for PV developers to control their solar assets - - -

6-Aug-15 International Comm. Group Rockw ell Collins Inc Communication systems for aviation, air transport, business and military sectors 64.0 - -

5-Aug-15 EID Cohort PLC Electronic and control equipment for the defense industry w orldw ide 17.4 1.0x -

4-Aug-15 Montronic Ab Inission AB Provides electronic manufacturing services - - -

3-Aug-15 Premier Cables Ltd. IEWC Corp Low voltage pow er cables, instrumentation, elastomerics, data cables and accessories - - -

30-Jul-15 Webtech Wireless Inc BSM Technologies Inc Telematics, GPS and automatic vehicle location for commercial and government f leet operations 20.9 0.9x 15.7x

22-Jul-15 Procom A/S Amphenol Corporation Wireless radio antennas, f ilters and combiner system for defense, public safety, and industrial - - -

15-Jul-15 SPII S.p.A. Schaltbau GmbH Integrated systems for the railw ays sectors - - -

10-Jul-15 Southern California Braiding DCX-CHOL Enterprises, Inc. Custom cables and w ire harness assemblies for aerospace and defense sector 2.4 0.7x -

1-Jul-15 Linxens France SA CVC Capital Partners Limited Connectors for smart cards for consumer and industrial applications 2,217.7 7.2x -


M&A Transactions

$3,766 $12,272 $947 $7,229 $791 $75 $1,507 $64 $927

Page 22

OCTOBER 2015



$mm

EC

EP



Median Transaction Size

$265


Page 23

OCTOBER 2015


Sources: Aviation International News, Heavy-Duty Trucking, Machining News, Production

Machining, The Fabricator

Salient

Industry

Topics

Cutting Gears with Multitasking Machines Today’s multitasking machines continue to command a

presence in the world of gear cutting as viable processing

alternatives for low-to medium-volume production.

[Read Full Article]

Methodology could lead to more sustainable

manufacturing systems Engineers at Oregon State University have developed a new

“sustainable development methodology” to help address a

social and regulatory demand for manufacturing processes

that more effectively consider their economic, environmental

and social impacts. [Read Full Article]

Hexcel Prepares for More Composites in

Commercial Aircraft Carbon fiber supplier Hexcel Composites is preparing for a

predicted increase in composites demand, as current

programs see production accelerate and as future commercial

aircraft require more parts made of the material.

[Read Full Article]

A new spin on welding

SpinArc, a kind of gas metal arc welding, rotates the wire at a

controlled speed, diameter, and direction. This feature

reportedly improves weld quality and productivity, and it makes

more types of weld joints possible.

[Read Full Article]

House Highway Bill Promises Trucking Reforms

The House Transportation and Infrastructure Committee has

put together an ambitious long-term highway bill that would

deliver the certainty of several years in a row of investments in

highway and bridges as well as several regulatory provisions

hotly sought by trucking.

[Read Full Article]

http://www.productionmachining.com/articles/cutting-gears-with-multitasking-machines



http://www.machiningnews.com/2015/10/methodology-could-lead-to-more-sustainable-manufacturing-systems/



http://www.ainonline.com/aviation-news/aerospace/2015-09-22/hexcel-prepares-more-composites-commercial-aircraft



http://www.thefabricator.com/article/arcwelding/a-new-spin-on-welding



http://www.truckinginfo.com/news/story/2015/10/house-highway-bill-promises-trucking-reforms.aspx





PRECISION

MANUFACTURING

KHE

BRANDED INDUSTRIAL

PRODUCTS

Highly-Engineered Products (“KHE”)

The KeyBanc Highly-Engineered Products (“KEP”) index comprises 36

companies manufacturing products similar to those below. This company

universe is further divided by enterprise value on the following page:

Specialized

Technical Systems

Application-Specific

Tools & Equipment

Page 24

OCTOBER 2015


Assemblies &

Contacts

Moldings &

Security Seals

Fasteners

Precision

Stampings

Bearings, Closures

& Gaskets

Advanced Composite

Engineered Materials

Fabricated

Devices

Specialized

Assemblies Build-to-Print &

Customized Equipment

Mission- Critical

Parts

5x

7x

9x

11x

13x

15x


10.4x

9.2x9.6x

9.0x

4x

6x

8x

10x

12x

Highly-Engineered Products >$10bn Highly-Engineered Products <$10bn

-20%

0%

20%

40%

-20% -10% 0% 10%


LTM CY 2015

10.4x HE>10

66% KBP

56% KPM

64% S&P


(1) Represents Enterprise Value

Page 25

OCTOBER 2015


1-yr 3-yr 5-yr

Highly

Engineered

> $10bn

0% 24% 36%

Highly

Engineered

< $10bn

(6%) 29% 73%

HE

>$10

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

(1-Yr

Return)

(3-Yr

Return)

HE

<$10

Highly

Engineered

>$10bn

High

Engineered

<$10bn

Current 10.4x 9.2x

5-Yr Avg 10.6x 9.5x

% of 5-Yr 97% 97%

9.2x HE<10

(1) (1)




Ticker Price Wk High Return Cap EV Sales GM % EBITDA % Margin EBITDA LTM CY 2015 CY 2015

Highly Engineered Products >$10bn (KHE>10)Honeyw ell International Inc. HON $98.50 92% 16% $77,004 $77,316 $38,865 30% $7,222 19% 0.0x 10.7x 9.6x 16.1x

Danaher Corp. DHR 89.06 96% 24% 60,871 60,763 20,288 53% 4,604 23% - 13.2 12.7 20.7

ABB Ltd. ABBN 18.57 79% (8%) 41,248 44,467 36,585 29% 5,318 15% 0.5 8.4 9.4 16.3

Illinois Tool Works Inc. ITW 85.55 85% 6% 31,319 36,278 13,634 41% 3,350 25% 1.4 10.8 10.6 16.7

Emerson Electric Co. EMR 46.82 71% (21%) 30,767 34,893 22,847 41% 4,434 19% 0.9 7.9 7.5 15.2

Ingersoll-Rand Plc IR 54.25 76% 1% 14,395 18,070 13,114 30% 1,727 13% 2.1 10.5 9.6 14.7

Tyco International Ltd. TYC 36.46 81% (6%) 15,368 16,829 10,332 37% 1,557 15% 0.9 10.8 10.7 16.3

Sandvik AB OM:SAND 9.33 71% (10%) 11,699 16,628 11,145 34% 1,624 15% 3.0 10.2 9.8 15.9

Textron Inc. TXT 39.85 85% 18% 11,015 14,238 13,846 18% 1,606 12% 2.0 8.9 8.9 16.0

Dover Corporation DOV 59.80 72% (17%) 9,357 11,368 7,240 37% 1,381 19% 1.5 8.2 8.8 14.2

Median 80% (3%) $23,068 $26,482 $13,740 35% $2,539 17% 1.4x 10.4x 9.6x 16.1x

Highly Engineered Products < $10bn (KHE<10)WABTEC WAB $92.03 88% 25% $8,897 $9,034 $3,296 31% $642 19% 0.2x 14.1x 13.4x 22.4x

Carlisle Companies Incorporated CSL 91.00 87% 18% 5,936 6,455 3,457 28% 597 17% 0.7 10.8 10.3 19.2

Trelleborg AB OM:TREL B 16.25 77% 4% 4,405 5,434 2,914 35% 466 16% 2.1 11.7 11.1 13.3

Colfax Corporation CFX 27.61 50% (48%) 3,430 4,959 4,112 32% 534 13% 2.5 9.3 8.3 18.0

NIBE Industrier OM:NIBE B 31.68 96% 38% 3,492 4,284 1,594 36% 258 16% 3.0 16.6 16.8 24.5

Lincoln Electric Holdings Inc. LECO 55.41 73% (12%) 4,145 4,048 2,722 34% 465 17% - 8.7 9.1 15.3

BWX Technologies, Inc. BWXT 27.74 80% NA 2,982 3,274 2,898 18% 319 11% 0.9 10.3 10.1 20.7

Kennametal Inc. KMT 27.16 64% (29%) 2,161 2,837 2,647 31% 374 14% 1.7 7.6 8.1 13.0

Barnes Group Inc. B 38.30 92% 20% 2,095 2,511 1,217 35% 274 23% 1.5 9.2 9.0 15.8

Diebold, Incorporated DBD 32.90 84% (5%) 2,137 2,468 3,018 26% 244 8% 1.3 10.1 10.0 18.4

Senior plc LSE:SNR 4.09 74% 1% 1,715 1,940 1,344 24% 195 14% 1.2 10.0 9.0 13.8

ElringKlinger AG DB:ZIL2 21.38 60% (25%) 1,354 1,898 1,581 26% 239 15% 2.1 7.9 7.6 13.6

Actuant Corporation ATU 21.33 66% (27%) 1,269 1,688 1,249 37% 191 15% 2.2 8.8 9.0 14.0

EnPro Industries, Inc. NPO 46.45 66% (21%) 1,020 1,620 1,195 34% 155 13% 3.9 10.4 9.7 24.1

Brady Corp. BRC 22.51 78% 4% 1,154 1,293 1,172 48% 138 12% 1.0 9.3 10.0 20.2

TriMas Corporation TRS 17.66 53% (34%) 802 1,240 1,363 26% 196 14% 2.2 6.3 8.9 15.0

Briggs & Stratton Corporation BGG 20.82 98% 15% 919 1,026 1,895 20% 147 8% 0.7 7.0 6.9 17.4

Standex International Corporation SXI 78.53 90% 9% 1,003 1,010 772 32% 98 13% 0.1 10.3 9.9 16.9

Tennant Company TNC 55.97 75% (16%) 1,021 978 820 43% 90 11% - 10.9 10.8 21.8

Federal Signal Corp. FSS 14.70 84% 13% 919 931 936 27% 126 13% 0.1 7.4 7.9 14.7

SPX Corporation SPXC 11.80 11% NA 485 835 1,840 29% 141 8% 2.5 5.9 5.1 11.0

Park-Ohio Holdings Corp. PKOH 32.74 50% (30%) 413 826 1,470 16% 126 9% 3.2 6.6 5.9 7.7

Blount International Inc. BLT 6.32 35% (56%) 305 702 896 28% 113 13% 3.5 6.2 6.4 9.8

Babcock & Wilcox Enterprises BW 17.57 80% NA 945 636 1,785 16% 128 7% - 5.0 4.7 14.1

Sparton Corp. SPA 24.97 85% (7%) 247 386 450 20% 41 9% 3.4 9.5 8.6 17.6

AQ Group AB (publ) OM:AQ 13.87 89% 34% 250 249 338 45% 31 9% - 8.0 NA NA

Median 77% (5%) $1,211 $1,654 $1,525 30% $193 13% 1.9x 9.2x 9.0x 15.8x



Note: $ in millions

Page 26

OCTOBER 2015



TRANSACTION METRICS

Ent. EV / EV /


30-Sep-15 LumeJet Print Technologies Paul Anson Ultra-high resolution printers for production environments - - -

28-Sep-15 Plasco Energy Group Inc. RMB Advisory Services Inc. Waste conversion technology and products for light-industrial and commercial zones - - -

25-Sep-15 Truck-Lite Co., LLC BDT Capital; Koch Equity Vehicular safety lighting for trucking, marine, military and recreational vehicles - - -

22-Sep-15 EDAC Composites LLC Meggitt (Rockmart), Inc. Composites and components for aerospace and defense industry $340.0 - -

22-Sep-15 MSD LLC Holley Performance Products Ignition components for the automobile industry - - -

18-Sep-15 StraightLine HDD, Inc. Source: HDD, Inc. Horizontal directional drilling equipment for the industrial sector - - -

18-Sep-15 ASCANIA nonw oven GmbH Mondi plc Non-w oven fabric components for hygiene, medical, cleaning and cosmetic products 61.4 - -

17-Sep-15 InterMetro Industries Corp Ali S.p.A Storage and transport equipment for food service, commercial, and healthcare sectors - - -

14-Sep-15 Werner GmbH Nimbus Bv Tractors and attachments including cable w inches for forestry, industrial, energy and construction - - -

11-Sep-15 Brenta P.C.M. SpA Assietta Private Equity Manufactures moldings for automotive and appliances sector 10.0 0.3x 2.9x

10-Sep-15 Cameron-Price Limited Barry Moor Thermo plastic injection moldings for automotive, medical, electronics and domestic products - - -

10-Sep-15 Manufacturas Alfe, SA WOLCO Group Manufactures cutting and machine tools for industrial machinery - - -

9-Sep-15 RF IDeas Inc. Roper Technologies ID card reader solutions for healthcare, manufacturing, physical security, govt, and f inancial - - -

9-Sep-15 Greydon, Inc. ID Technology, LLC Printing equipment for form, f ill and seal packaging machine applications - - -

9-Sep-15 Action Fabricators, Inc. River Associates Converts adhesive backed foams, plastic and tapes for industrial, medical and manufacturing - - -

8-Sep-15 PMI Industries, Inc. BAM Enterprises, Inc. Plastic injection molds and die cast tools for auto, construction, medical/dental, and appliances - - -

8-Sep-15 A & E Custom Manufacturing Bennett Tool & Die Co., Inc. Metal fabrication, w elding, and stamping for customers in the U.S and internationally - - -

7-Sep-15 Tokheim S.A.S., Dispenser Biz OPW Fueling / Dover Fuel dispenser and payment solutions for retail fueling 474.5 - -

3-Sep-15 Cut Tech USA, Inc Burton Saw & Supply Company Manufactures saw s for the w ood and metal industry in North America - - -

2-Sep-15 Huron Inc. Seven Mile Capital Partners Tubular assemblies and precision machined components for the automotive industry - - -

1-Sep-15 Impulse Manufacturing BTD Manufacturing, Inc. Metal fabrication services for construction, agriculture, defense, automotive, energy 30.5 1.1x -

1-Sep-15 Porter's Group, LLC Resilience Capital Partners Fabricated metal parts for industrial applications - - -

1-Sep-15 LEWIS Industrie SA Bpifrance Investissement Precision sheet metal parts for medical, lighting, IT, heating, heating, and instrumentation sectors - - -

1-Sep-15 Latchw ays plc MSA Safety Industrial safety products for aerospace, commercial, industrial, O&G, and telecom 174.5 3.5x 20.6x

31-Aug-15 Wolverine Advanced Materials ITT Corporation Elastomer-coated metals for automotive brake, NVH and sealing industries globally 300.0 - -

28-Aug-15 HWS Enterprises, Inc. ARCH Global Precision LLC Machining services for the industrial production, plastic, energy, and automotive sectors - - -

24-Aug-15 Valpar Industrial Limited Micro Matic A/S Tubes for the automotive, beverage, w ater, gas, marine and industrial sectors - - -

21-Aug-15 American Roll Formed Products Hynes Industries, Inc. Metal fabrication for aerospace, agriculture, O&G, and solar industries - - -

20-Aug-15 Vytran, LLC Thorlabs, Inc. Fiber automation, splicing, and preparation systems for WDM system and component manufacturers - - -

19-Aug-15 Morton Machining LLC The Marion Manufacturing Co Machining, technical support, prototype machining, and f inish and assembly services - - -

17-Aug-15 ERICO Global Company Pentair plc Precision-engineered metal products for electrical, commercial, industrial, utility and rail sectors 1,800.0 - 12.0x

17-Aug-15 Precision Engineered Products NN Inc Metal stampings and formed metal parts for transportation, energy, electronics, automotive 615.0 2.5x -

12-Aug-15 Planar Systems Inc Leyard American Corp Electronic displays for commercial, advertising, and industrial display markets 140.5 0.7x 19.0x

11.7x

9.9x

13.0x

15.0x

9.5x

6.8x

9.9x 10.0x

8.2x

15.3x

12.0x

13.9x

0x

5x

10x

15x

20x

Barnes /Synventive

MoldingJul-2012

GreenbrierEq. /

Edac Tech.Mar-2013

Triumph /General

DonleeAug-2013

SKF /Kaydon

Sep-2013

Colfax /Victor Tech.

Feb-2014

QuinparioAcq. /

JasonMar-2014

Teledyne /Bolt Tech.

Sept-2014

Carlisle Co. /Graco Liquid

FinishingOct-2014

Senior plc /Lymington

PrecisionApr-2015

Wabtec /Faiveley

TransportJuly-2015

Pentair /ERICO

Aug-2015

BerkshireHathaway /

PCCAug-2015


M&A Transactions

Page 27

OCTOBER 2015


$351 $145 $109 $1,246 $947 $325 $168 $590


$mm



Median Transaction Size

$115 $1,800 $36,861

EP

$1,873


M&A Transactions (continued)

Page 28

OCTOBER 2015


EP



TRANSACTION METRICS

Ent. EV / EV /


12-Aug-15 Heavy Metal Fabricators LLC American Tank & Fabricating Machined w eldments for marine, paper, crane, foundry, petro, and construction equipment - - -

10-Aug-15 Precision Castparts Corp Berkshire Hathaw ay Inc Metal components for aerospace, pow er, and general industrial markets $36,860.7 3.7x 13.9x

10-Aug-15 Monforts Werkzeugmaschinen Anderson Industrial Corp Machining, turning, milling and drilling for aerospace, energy and automotive sectors - - -

3-Aug-15 GI Plastek Wolfeboro Gladstone Investment Corp Structural foam and injection molding for military, industrial, construction and renew able energy 20.9 - -

31-Jul-15 AVINTIV Inc. Berry Plastics Group Nonw oven products for consumer and industrial markets 4,020.7 2.0x 17.1x

30-Jul-15 Wakol Gmbh ARDEX GmbH Laying materials, adhesives and sealing components for industrial applications - - -

28-Jul-15 LaCroix Industries, Inc. Accurus Aerospace Corp. Manufactures precision sheet metal fabrication products for the aerospace sector - - -

27-Jul-15 Noranco Inc. Precision Castparts Corp Aero-structures, landing gear, aero engine components for commercial and military aerospace 560.0 - -

27-Jul-15 ASG (Essex) Ltd DIO Ltd. Manufactures signage solutions for automotive, commercial, retail, and leisure sectors - - -

27-Jul-15 Faiveley Transport S.A. Wabtec Pantographs, energy meters, sw itches, mobility systems, and brakes for the railroad industry 1,873.4 1.6x 15.3x

24-Jul-15 Tecnoexpress, S.L.U. intimus International GmbH Physical security products for banking including recyclers and certif ied safes for ATMs - - -

17-Jul-15 Knudsen Køling A/S Epta S.p.a. Manufactures refrigerated equipment for the broad industrial market - - -

16-Jul-15 Abby Manufacturing Anchor Fabrication, Ltd. Fabricated steel and aluminum products to agriculture, construction, and transportation industries - - -

15-Jul-15 Vari-Form Holding US Corp. Crow ne Group, LLC Pressure sequence hydro forming parts for the automotive industry - - -

15-Jul-15 Etablissements Caillau SAS CM-CIC Investissement SA Hose clamps for automotive, aerospace, industries, and ironmongery applications - - -

15-Jul-15 Aga Rangemaster Group plc Middleby Corp Range cookers and kitchen appliances for residential and commercial markets 222.3 0.5x 20.2x

13-Jul-15 Composites Horizons, Inc. Precision Castparts Corp Aerospace composite structures for commercial, military, spacecraft, and industrial applications - - -

10-Jul-15 Vikoma International Limited Agathos Management LLP Oil and chemical pollution control systems for O&G and governments - - -

3-Jul-15 IPL Inc. Caisse dépôt placemnt Québec Injection-molded plastic products for industrial and agri-food markets 223.1 1.3x 9.2x

2-Jul-15 Ben Machine Products Co Exchange Income Corp Machining, turning, and sheet metal operations for military, aerospace, and commercial 36.5 1.8x -

1-Jul-15 Quality Metalcraft, Inc. The Watermill Group Automotive sheet metal stampings for defense, automotive, agricultural, and industrial lighting - - -

1-Jul-15 Metalliset Oy HANZA AB Manufactures sheet metal and machining parts for heavy industry applications 8.4 - -

Highly-

Engineered

Products

Commentary



Sources: KeyBanc Capital Markets Equity Research. Page 29

OCTOBER 2015


KeyBanc Capital


Research platform

has consistently

achieved a Top 2


Associates annual


cap fund managers.

(1)

September 30, 2015

ATU: Good Communication a

Positive; Right-Sizing for the Next

Upturn

August 2, 2015

NPO: Intact LT Thesis Despite Some

NT Demand/Margin Pressure

September 29, 2015

CSL: We See Positives Priced-in,

thus Offering Limited Upside to

Consensus

August 2, 2015

KMT: Lowering Estimates to Reflect

Mgmt’s FY16 Guidance

September 21, 2015

B: Thoughts Following Recent NDR

July 28, 2015

FSS: Limited ESG Order and

Backlog Visibility Keep Us Cautious

July 28, 2015

WAB: Faiveley Plan Makes

Strategic Sense; Integration

Scenario Model Included

July 28, 2015

IR: Outperformance Drivers Intact

Our top-ranked(1) equity research team covers numerous companies across the Highly-

Engineered Products sector. Selected recent research notes are provided below. Click

on the respective “tear out” to read the entire note.

https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=38710aa9-2d58-435e-bc35-43b0645f0185&mime=PDF&co=KBCM&[email protected]&source=libraryView&htmlToPdf=true

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Capital Markets Issuance Activity (3Q 2015)

Sources: Capital IQ, Bloomberg and LoanConnector.

Notes: (1) Credit backs CECO’s acquisition of PMFG; (2) Credit is in the form of Schuldschein and backs the acquisition of

Newtech Filter India Private Ltd; (3) Credit is a bridge loan for the acquisition of Erico Global; (4) Credit is a $1.5B bridge

and $1.25B term loan for the acquisition of TE Connectivity’s Telecom, Enterprise, and Wireless business; (5) Credit backs

Advent International’s acquisition of Ammeraal Beltech Holding; (6) Credit backs Corinthian Capital’s acquisition of Best

Lighting Products; (7) Credit backs the acquisition of H&S Tool Ltd (8) Credit backs the acquisition of Port City Group; (9)

Credit backs Audax’s acquisition of Techniks Industries

Select Credit

Financings

Page 30

OCTOBER 2015


Process Controls



RegionSize

(mm)RCF TL

Tenor

(Mon.)RCF TL Moody's S&P Purpose

Aventics GmbH Europe € 150 € 20€ 30 /

€ 10072 / 84 350bps

350 / 450

bps- - General Purpose

CECO Environmental Corp NA $250 $80 $170 60 275 bps 275 bps - - Acquisition

FMC Technologies Inc NA $2,000 $2,000 - 60 125 bps - Baa2 BBB General Purpose

Hyva Global BV Europe $195 $20 $175 60 450 bps 450 bps - - General Purpose

MANN+HUMMEL Group Europe € 400 - € 40036 / 60 / 72 /

84 / 96 / 120-

125 / 150 /

160 / 175 /

185 / 200 bps- - Acquisition

Pentair Inc NA $1,800 - $1,800 12 - 125 bps WR BBB Acquisition

SPX Flow Inc NA $1,350 $950 $400 60 175 bps 175 bps - - General Purpose

Commscope Inc NA $2,750 -$1,500 /

$1,2506 / 90 -

600 / 300

bpsWR BB- Acquisition

CPI Acquisition Corp NA $475 $40 $435 60 / 84 325 bps 450 bps B2 B General Purpose

Ammeraal Beltech Holding BV Europe € 310 € 50 € 26072 / 84 /

96400 bps

425 / 800

bps- - Leveraged Buyout

Best Lighting Products Inc NA $55 $10 $45 60 425 bps 425 bps - - Leveraged Buyout

Climax Portable Machine Tools NA $63 $8 $55 60 475 bps 475 bps - - Leveraged Buyout

Consolidated Aerospace

Manufacturing LLCNA $265 $25 $240 60 / 84 375 bps 375 bps - - General Purpose

Danaher Corp NA $7,000 - $7,000 12 - 71 bps A2 ACommercial Paper

Backup

Pace Industries NA $345 $125 $220 60 175 bps 825 bps - - Acquisition

Pexco LLC NA $108 $15 $93 60 450 bps 450 bps - - Dividend Recapitalization

Rohrer Corp NA $85 $25 $60 60 450 bps 450 bps - - General Purpose

SPX Corp NA $1,200 $850 $350 60 175 bps 175 bps Ba3 - General Purpose

Tooling Acquisition Co NA $97 $15 $82 72 425 bps 425 bps - - Leveraged Buyout

FACILITY PRICING RATINGS

(1)

(3)

(2)

(4)

(5)

(6)

(7)

(8)

(9)


Capital Markets Issuance Activity (3Q 2015)

Sources: Capital IQ, Bloomberg and LoanConnector.

Select Public

Debt Issuance

Page 31

OCTOBER 2015


Process Controls



Select Public

Equity Issuance

(1)

(3)

(2)

RegionAmount

(mm)Sec. Coupon Mat. Struct.

Issuance

PriceYield Spread Moody's S&P

NN Inc. NA $300Senior

Notes10.250% Nov-20 Callable 100.000% 10.250% - Caa1 NR

Hexagon AB Europe SEK 1,150Senior

Notes1.625% Sep-20 Bullet 100.000% 1.625% - NR NR

Hexagon AB Europe SEK 900Floating

MTN- Sep-18 Bullet 100.000% 0.562% 85 bps NR NR

Hexagon AB Europe SEK 700Fixed

MTN0.750% Sep-18 Bullet 99.705% 0.850% - NR NR

Schneider Electric SE Europe € 800Fixed

MTN1.500% Sep-23 Callable 99.448% 1.573% 70 bps A3 A-

Danaher Corporation NA $500Senior

Notes1.650% Sep-20 Callable 99.866% 1.696% 65 bps A2 A







RATINGSOFFERING PRICING

Ticker RegionAmount

(mm)Type Securities

Offer

PriceRev. EBITDA

AFG Arbonia-Forster-Holding SWX:AFGN Europe $212 FO Common Stock $8.33 0.6x 10.1x

AAT Holding S.A. WSE:AHL Europe $15 IPO Common Stock $6.36 1.5x 9.4x

Pioneer Power Solutions, Inc. PPSI NA $5 FO Common Stock $4.00 0.5x 18.2x

OFFERING VALUATION

KeyBanc Capital Markets

Corporate & Investment Banking

For additional information on KeyBanc Capital Markets’ Industrial Technology Practice, please contact any of the individuals listed below:

- Team Contacts


Office Locations

Provides full-service investment banking expertise to clients in the Industrial, Energy, Consumer / Retail, Real Estate,

Healthcare and Technology industries

Corporate and Investment Bank focused on the middle market for both corporate and sponsor clients

Full-service Capital Markets capabilities:

- Mergers & Acquisitions

- Equity Capital Markets

- Debt Capital Markets

Banker expertise organized by industry focus with over 640 bankers in 12 offices

Consistently ranked as a top advisor for middle market M&A deals, with over 600 transactions completed since 2000,

of which ~60% have been sell-side assignments and ~50% have been industrial mandates

Nationally recognized institutional equities platform focused on small and mid-cap investors

Over 95 senior and associate equity research analysts covering ~750 companies across six major industry sectors

Top-ranked equity research team covers numerous companies across the Industrial sectors

KeyBanc Capital Markets' Industrial Research platform has consistently achieved a Top 2 ranking in Greenwich

Associates annual survey of small/mid-cap fund managers

Jeffrey Johnston

Managing Director,

Mergers &

Acquisitions

(216) 689-4115

[email protected]

Michael Musser

Managing Director,

Head of Industrial

Technology Practice

(704) 916-3074

[email protected]

Craig Berich

Senior Analyst,

Industrial

Technology

(704) 916-3079

[email protected]

Justin McClure

Analyst,

Industrial

Technology

(704) 916-3084

[email protected]

Arindam Basu

Director,

Mergers &

Acquisitions

(216) 689-4262

[email protected]

Charlotte Chicago Dallas

Cleveland (HQ)

Houston London

Portland San Francisco Seattle

Page 32

OCTOBER 2015


Atlanta Boston

New York

J.R. Doolos

Vice President,

Mergers &

Acquisitions

(216) 689-7674

[email protected]

PROCESS

CONTROLS

ELECTRICAL &

ELECTRONICS

INDUSTRIAL TECHNOLOGY COVERAGE EXPERTISE

Industrial Technology Banking Practice

Coverage & Expertise

Michael Musser

Managing Director,

Head of Industrial Technology Practice

+1.704.916.3074

[email protected]

16+ years of Industrial Investment Banking experience

Experience includes exclusive sales assignments, acquisitions assignments, fairness opinions,

leveraged buyouts, public equity offerings, high-yield bond offerings, private placements of

debt and equity capital, recapitalizations, and loan syndications

Joined in 2006 from Wachovia Securities and predecessor First Union Securities

Prior relevant industry experience at Emerson Electric, including corporate development,

strategic planning, and product line management for process controls equipment

Six years as a commissioned officer in the United States Navy’s nuclear submarine force

MBA: Northwestern University’s Kellogg Business School

BS in Ocean Engineering: United States Naval Academy

Professional Engineer’s license

Page 33

OCTOBER 2015


HIGHLY-ENGINEERED

PRODUCTS

Industrial Deal Experience

Select Transactions

Select KeyBanc Capital Markets Industrial Group Transactions

Select KeyBanc Capital Markets Industrial Technology Transactions

M&A ADVISORY

CAPITAL MARKETS

has been acquired by

Co-Sell-Side Advisor

a portfolio company of

$165,000,000 Senior Secured Credit Facilities

Joint Lead Arranger

Has acquired


Co-Documentation Agent


$300,000,000 5.875% Senior Notes

due 2022

Joint Bookrunner

&

Sell-Side Advisor



Buy-Side Advisor

has acquired


Sell-Side Advisor

has divested

to

$243,750,000 Initial Public Offering

Co-Manager



Co-Manager


Buy-Side Advisor

has acquired

Automotive

Sell-Side Advisor



Sell-Side Advisor



Sell-Side Advisor



Sell-Side Advisor



Sell-Side Advisor

has sold

to

$200,000,000 Senior Notes

Lead Manager



Joint Lead Arranger & Joint Bookrunner



Co-Manager


$1,500,000,000 Senior Notes

Senior Co-Manager


Joint Lead Arranger, Joint Bookrunner &

Administrative Agent

has acquired


Joint Lead Arranger, Joint Bookrunner & Co-

Syndication Agent

has acquired

M&A ADVISORY

CAPITAL MARKETS


Sell-Side Advisor


Fab-Tech


Joint Lead Arranger, Sole Bookrunner

& Administration Agent

to

Sell-Side Advisor

Has divested

Unifin International

Buy-Side Advisor

has acquired

Sell-Side Advisor


Sell-Side Advisor




Co-Sell-Side Advisor



Sell-Side Advisor


Fab-Tech

Buy-Side Advisor

has acquired


&

Sell-Side Advisor



Sell-Side Advisor

has sold

&

to

has divested

to

Sell-Side Advisor


Sell-Side Advisor


a wholly-owned subsidiary of

Cooper Industries, Inc.

Sell-Side Advisor


Cooper Industries, Inc.

Sell-Side Advisor



Financial Advisor Financial Advisor

has been

acquired by

Sell-Side Advisor


Sell-Side Advisor

has divested

to

$1,500,000,000

Senior Notes

Senior Co-Manager

$243,750,000

Initial Public Offering

Co-Manager



Joint Lead Arranger & Joint Bookrunner

$205,000,000 Senior Unsecured Notes

Joint Bookrunner

$120,000,000


Co-Manager

$210,000,000

Senior Secured Notes

Joint-Lead Manager

$60,000,000 ABL Facility

Joint Manager & Arranger


$600,300,000 Initial Public

Offering

Co-Manager

$211,887,500 Follow-On Offering

Co-Manager

$210,000,000

Senior Notes

Co-Manager

Merg

ers

& A

cq

uis

itio

ns A

dvis

ory

C

ap

ital

Mark

ets

Tra

nsacti

on

s

Page 34

OCTOBER 2015


Sell-Side Advisor

a wholly owned

subsidiary of


in a

$109,000,000 transaction

Sell-Side Advisor



Investment

Partners

$1,250,000,000

Senior Unsecured

Credit Facility

Joint Lead Arranger,

Joint Book Manager &

Documentation Agent

$285,714,280


Co-Manager


$40,500,000

Senior Secured

Credit Facility

Sole Lead Arranger,

Sole Bookrunner &



$158,400,000

Follow-On Offering

Sole Bookrunner

$3,000,000,000

₤3,300,000,000

Senior Secured

Credit Facilities

Joint Lead Arranger &

Joint Bookrunner

Intends to acquire


Joint Lead Arranger

Has acquired




$300,000,000 5.875% Senior Notes

due 2022

Joint Bookrunner Co-Manager

$508,875,000

Follow-On Offering





&

Sell-Side Advisor



Buy-Side Advisor

to acquire

Buy-Side Advisor

has acquired


&

$650,000,000

Senior Secured

Credit Facility

Joint Lead Arranger,

Sole Bookrunner &


http://images.google.com/imgres?imgurl=http://www.techquip.com/images/thermon/thermon-logo02.jpg&imgrefurl=http://www.techquip.com/productlines01.htm&usg=__LpgQfFTKf14XmoKt4oBtcOpz0iU=&h=69&w=70&sz=3&hl=en&start=6&um=1&itbs=1&tbnid=EzeVhwkNcuP8XM:&tbnh=67&tbnw=68&prev=/images?q%3Dthermon%2Blogo%26um%3D1%26hl%3Den%26tbs%3Disch:1


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Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets

Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc.

and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A..

This report was not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be

complete, and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an

offer to buy or sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and

particular needs of any individual person or entity.


Industry Update October 2015...Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Economic Indicators...

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