KAL Capital Naval M&A Focus 2018

Please see our overview of recent M&A and macroeconomic factors influencing the Naval supply chains.

KAL Capital Naval M&A Focus

 

Report Highlights:

M&A – Supply Chain Spotlight

  • May River Capital continues to build a strong defense focused portfolio of key naval valve and actuation providers
  • ESCO and CurtissWright acquire key sole-source providers in the Naval submarine supply chain
  • Mercury closes two Naval-focused COTS computing deals in less than 6-month period

While funding increases and production ramps, the greater naval supply chain has been
adapting through a series of M&A consolidations to help support the synergies to fully
capitalize on the long-term growth schedules set by current administration and DoD.

Key component and subsystems manufacturers have been a hot target for OEMs and other
private equity-backed businesses building naval-focused portfolios. In 2019 we expect a sharp
increase in new private equity entrants and continued platform growth. This means a more
competitive landscape for these high-value targets in the component supply chains, and
consequently competitive valuations when considering the strategic acquirers are looking for
the same growth opportunities.

Strategic acquirers like ESCO Technologies and established naval-focused platforms like May
River’s Hunt Valve and Precision Tech will be a few of the names to follow as buyer’s seek
invaluable cost and production synergies while the key manufacturers entertain the valuation
spikes and opportunities to integrate into the bigger picture of the production push.

Defense Focus – Naval Budget

  • 5% Real growth over FY’18 with a reverse in 7-year decline in spending
  • First time in over a decade that enacted appropriation will not be operating under continuing resolution
  • All service branches experience double digit YoY growth in budget
  • Naval Procurement funding witnesses an 18% YoY increase to support sizable shipbuilding production growth plans

Shipbuilding Rates – Increasing Production

  • Navy’s FY’19 Production Plan aims to creep closer towards a 355-ship goal
  • Over the next 5-years DDG-51 and SSBN-774s will increase at rates between 2-3 per year
  • Navy’s “NNN” (Navy the Nation Needs) Vision will increase ship platforms to double-digit production rates and rely on heavy supply chain ramping

Focus – Virginia Class

  • Supply chain optimism follows news of steady 2/year production and potential for further increases
  • Funding increases in Virginia AP and PC reflect the continued Block V’s higher cost and priority considering VPM integration
  • Virginia Payload Module to be incorporated onto all Block V submarines moving forward

Focus – Columbia Class

  • One of the top naval and DoD priorities for procurement
  • Funding receives a 3X increase to support design and development of first Columbia Class SSBN-826
  • Forecast plans for Columbia procurement at roughly 1/year from FY’24 to FY’35

Please see the full report for more details

KAL Capital Naval M&A Focus

KAL CAPITAL ADVISES BEAVER AEROSPACE AND DEFENSE ON ANNOUNCED SALE TO HÉROUX-DEVTEK

KAL Capital Markets LLC is the exclusive advisor to Phillips Service Industries, Inc. and their subsidiary, Beaver Aerospace and Defense, Inc. on the announced sale to Heroux-Devtek.

LONG BEACH, CALIF. (PRWEB) FEBRUARY 27, 2018

KAL Capital Markets (KAL Capital), a specialized investment banking company, is pleased to announce it served as the exclusive advisor to Phillips Service Industries (PSI), Inc. on the announced sale of their subsidiary, Beaver Aerospace and Defense, Inc. to Héroux-Devtek. The transaction is expected to close in the next 90 days, subject to customary closing adjustments and certain regulatory approvals.

“We’re very thankful to be trusted by the Phillips Family to assist them with the transaction for Beaver Aerospace and Defense. Given Beaver’s unique capabilities in actuation and ball screws, Héroux-Devtek was a natural fit,” Ryan Murphy commented.

When asked about the outlook for further cross-border M&A, Trevor Bohn replied, “The firm’s clientele continue to see strong interest from international acquirors across many sub-sectors. We’re expecting more announcements in 2018 by internationally based acquirors and facilitating cross-border transactions for privately held clients remains a key focus of our firm.”

 Founded by long-term partners Trevor Bohn and Ryan Murphy, KAL Capital serves entrepreneurs and private equity fund managers with companies in the middle market. The firm’s professionals assist clientele on all aspects of mergers, acquisitions and accessing the capital markets, with a focus on the Aerospace & Defense and Industrial Growth sectors.

For additional information on KAL Capital’s transactions, professionals or perspectives, please visit the firm’s website at http://www.kalcapitalmarkets.com

For additional information on Phillips Service Industries (PSI), Inc. / Beaver Aerospace and Defense, please visit their website at http://www.beaver-online.com

ABOUT KAL Capital

KAL Capital Markets is a boutique investment banking company that advises middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience in several industry verticals, with a focus on companies in the Aerospace & Defense and Industrial Growth sectors. For additional information, please visit KAL Capital’s website at http://www.kalcapitalmarkets.com.

KAL Capital’s vision is to be the top provider of investment banking services to companies who are best in class and desire a liquidity event or have a need for growth capital. Situations range from raising private equity and debt capital to fund acquisitions, to advising on a full sale to a public company. The firm will delivers that vision by staying true to the three pillars of KAL Capital; Optimize Strategy, Execute Relentlessly, and Exceed Expectations.

CONTACT KAL Capital
http://www.kalcapitalmarkets.com

Trevor Bohn
Partner
Tel: 310-430-0634
Email: trevor(at)kalcap.com

Ryan Murphy
Partner
Tel: 310-972-1278
Email: ryan(at)kalcap.com

KAL CAPITAL ANNOUNCES FOUR TRANSACTIONS IN 2017

KAL Capital Markets (KAL Capital), a specialized investment banking company, is pleased to announce four transactions in 2017.

“We’re very thankful to all of the firm’s clients and very proud of those transactions announced publicly during 2017. In particular, we’re pleased that our clients completed transactions with leading firms such as The Carlyle Group, Norwest Equity Partners as well as private investors including Watson Family Investments and Holder Family Investments. We believe KAL Capital’s deep relationships materially enhanced valuations of the transactions announced and in crowded capital markets, relationships with private investors or family offices has become increasingly important,” Ryan Murphy commented.

When asked about KAL Capital’s outlook for 2018, Trevor Bohn replied, “The firm saw the number of transactions in development increase dramatically towards the second half of 2017 and we’re expecting 2018 to get off to a very quick start. With certainty on the Tax Cuts and Jobs Act now in hand, entrepreneurial clients of the firm are finalizing decisions on their capital and liquidity needs. Additionally, we experienced publicly traded companies increasing their willingness to pay more for acquisitions late last year and those first quarter announcements should set the tone for the year ahead.”

Founded by long-term partners Trevor Bohn and Ryan Murphy, KAL Capital serves entrepreneurs and private equity fund managers with companies in the middle market. The firm’s professionals assist clientele on all aspects of mergers, acquisitions and accessing the capital markets, with a focus on the Aerospace & Defense and Industrial Growth sectors.

For additional information on KAL Capital’s transactions, professionals or perspectives, please visit the firm’s website at http://www.kalcapitalmarkets.com

ABOUT KAL Capital
KAL Capital Markets is a boutique investment banking company that advises middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience in several industry verticals, with a focus on companies in the Aerospace & Defense and Industrial Growth sectors. For additional information, please visit KAL Capital’s website at http://www.kalcapitalmarkets.com.

KAL Capital’s vision is to be the top provider of investment banking services to companies who are best in class and desire a liquidity event or have a need for growth capital. Situations range from raising private equity and debt capital to fund acquisitions, to advising on a full sale to a public company. The firm will delivers that vision by staying true to the three pillars of KAL Capital; Optimize Strategy, Execute Relentlessly, and Exceed Expectations.

CONTACT KAL Capital
http://www.kalcapitalmarkets.com

Trevor Bohn
Partner
Tel: 562-269-4610
Email: trevor(at)kalcap(dot)com

Ryan Murphy
Partner
Tel: 562-269-4611
Email: ryan(at)kalcap(dot)com

KAL CAPITAL ADVISES ON THE SALE OF PRIMEFLIGHT AVIATION SERVICES TO THE CARLYLE GROUP

LONG BEACH, CA, November 13, 2017 — SMS Holdings Group and The Carlyle Group announced today the sale of PrimeFlight Aviation Services. KAL Capital Markets LLC (“KAL Capital”) provided advisory services to SMS Holdings to support the sale of PrimeFlight.

Under leadership of SMS Holdings, PrimeFlight has grown the number of locations to 49 throughout the U.S. and the Caribbean, while growing revenues by 64% between 2014-2016.

Carlyle is currently in partnership with the former Landmark Aviation team, an entity they previously sold to BBA Aviation in 2015 for $2B. Carlyle is primed to deploy a significant amount of capital as they pursue a buy and build strategy in the aviation services space.

About PrimeFlight Aviation Services:

PrimeFlight Aviation Services, Inc. (“PrimeFlight”) is a leading provider of ground handling, aircraft appearance, and terminal services to all major airlines and airports in the United States and the Caribbean. PrimeFlight has served the aviation industry for nearly two decades. PrimeFlight is headquartered in Nashville, TN, and boasts a national footprint with operations in 49 airports with more than 5,000 employees.

About The Carlyle Group:

The Carlyle Group (“Carlyle”) is a global alternative asset manager with over $174 billion of A.U.M. across over 300 investment vehicles. Carlyle has been an active investor in the aviation services space. Notable acquisitions include Wesco, Landmark Aviation, StandardAero.

About KAL Capital Markets:

KAL Capital Markets is a boutique investment banking company that advises middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience in several industry verticals, with a focus on companies in the Aerospace & Defense and Industrial Growth sectors. For additional information, please visit KAL Capital’s website at www.kalcapitalmarkets.com.

Contact:

www.kalcapitalmarkets.com
Trevor Bohn
Partner
Tel: 562-269-4610
Email: trevor@kalcap.com
Ryan Murphy
Partner
Tel: 562-269-4611
Email: ryan@kalcap.com

KAL ADVISES AMP’S ACQUISITION OF TRIUMPH PROCESSING – EMBEE DIVISION

LONG BEACH, CA, September 20, 2017 /24-7PressRelease/ — Triumph Group, Inc. (NYSE:TGI) and All Metals Processing of Orange County (“All Metals Processing”) announced today the sale of Triumph Processing – Embee Division, Inc. to All Metals Processing, a portfolio company of Watson Family Investments LLC. The Embee Division generated revenues of approximately $42 million in Triumph Group’s fiscal year ended March 31, 2017. The new company will operate as Embee Processing. KAL Capital Markets LLC (“KAL Capital”) provided advisory services to Watson Family Investments to support the acquisition of Embee Processing.

“KAL Capital is the most experienced advisor to the aerospace metal finishing industry,” said Derek Watson, a founder of Watson Family Investments. “The KAL Capital team was instrumental in helping us refine our growth strategy and execute this important transaction.”

“Doing our part to make sure All Metals and Watson Family Investments were successful in their acquisition of Embee was critically important to us,” said Trevor Bohn and Ryan Murphy, founders of KAL Capital. We’re very proud that this marks KAL Capital team’s eighth closed metal finishing acquisition transaction which now collectively include facilities in over thirteen locations throughout the US, Canada and Mexico.”

ABOUT TRIUMPH PROCESSING – EMBEE DIVISION:

Embee Processing is one of the nation’s leading aerospace metal finishing companies providing a broad menu of non-destructive testing and specialty coating services. Embee Processing provides more than 70 metal finishing, inspection and testing processes, including chrome, nickel and cadmium plating, high-velocity oxy-fuel (HVOF), IVD/Vac Cad, anodize/hard anodize, and paint and grinding services. The business is located in Santa Ana, California, and provides services to a variety of aerospace and defense customers across the United States.

ABOUT ALL METALS PROCESSING:

All Metals Processing of Orange County, located in Stanton, California, provides non-destructive testing, anodizing, plating, paint and coatings, and additional metal finishing services to the aerospace and defense sectors. More information about All Metals Processing of Orange County can be found on the company’s website at www.allmetalsprocessing.com.

ABOUT KAL CAPITAL MARKETS:

KAL Capital Markets is a boutique investment banking company that advises middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience in several industry verticals, with a focus on companies in the Aerospace & Defense and Industrial Growth sectors. For additional information, please visit KAL Capital’s website at www.kalcapitalmarkets.com.

CONTACT:
www.kalcapitalmarkets.com

Trevor Bohn
Partner
Tel: 562-269-4610
Email: trevor@kalcap.com

Ryan Murphy
Partner
Tel: 562-269-4611
Email: ryan@kalcap.com

Investment Banking Services and Securities offered through Independent Investment Bankers Corp. a broker-dealer, Member FINRA/SIPC. KAL Capital is not affiliated with Independent Investment Bankers Corp.