Precision machined products M&A update - Fourth quarter 2015

Industry overview and indicators

The precision machined products industry consists of diversified manufacturing businesses producing highly engineered components to customer specifications using a variety of materials such as: steel, stainless steel, aluminum, brass, plastics, and various aerospace and medical grade metallic alloys.

Precision machined products industry sales for 2015 were up just 0.8 percent compared to 2014 with shipments also increasing 0.8 percent, consistent with Manufacturing Output as reported by the Federal Reserve. Positive indicators for growth in Automotive, Aerospace, Housing, and Medical Device Industry point to a busy first quarter of 2016 for precision machining.

Source: Precision Machined Products Association; Federal Reserve

Select public company metrics

Baker Tilly Capital reviewed publicly traded companies in the precision machining and fabricated metal parts industries. The identified comparable public companies are trading in a wide range; EV/EBITDA ranging from 5.5x to 13.5x with an adjusted mean of 6.4x. This compares favorably with the adjusted EV/EBITDA mean from December 2010 to December 2015. During this period the EV/EBITDA ranged from 5.9x (Sept. 2012) to 10.6x (Sept. 2014).

Comparable public company valuation summary

1Adjusted mean removes any outliers that skew the data
Source: Capital IQ and Baker Tilly Capital, LLC research (January 2016)

Comparable public company EV/EBITDA history

Note: Represents the average multiple over the annual period.
2Adjusted mean removes any outliers that skew the data
Source: Capital IQ, public news sources and Baker Tilly Capital, LLC research (Dec. 31, 2015)

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