KAL Capital Year in Review 2018
Dear Friends,
We are pleased to present you with our 2018 Year in Review report. KAL Capital Markets finished the year with four closed transactions, all staying true to our core competency of exclusively advising firms within the greater aerospace and defense supply chain.
The transactions represented a broad mix of both business types as well as buyer profiles. Our clients for 2018 encompassed everything from a leading provider of aftermarket services (STS Aviation) to a manufacturer of proprietary motion control products (Beaver Aerospace). We worked diligently to provide our clients access to both international strategic buyers (Heroux-Devtek) as well as blue-chip, aerospace-focused private equity sponsors.
For the broader market, the close of 2018 was characterized by equity market volatility which overwhelmed financial headlines with a rather ambiguously-sourced pessimism. Diving into primary operations of key A&D OEMs like Boeing and Airbus the supply chain data tells a different story. Boeing and Airbus both wrapped up 2018 with record high annual aircraft deliveries – Airbus: 800, Boeing: 806. While the record high delivery numbers provide their own evidence of successful supply chain evolution and growth, the ratio of deliveries to current backlog for the OEMs implies long-lasting opportunities for the hundreds of suppliers throughout all tiers of the supply chain. At the time of this report Boeing 737 posts a backlog of 4,708!
Significant passenger travel demand in a time of globalization is a root cause for the ramped production rates, and with new aircraft and more flights we’ve witnessed a parallel demand for aftermarket and airline services in 2018.
Predicting 2019 M&A levels is a fool’s errand, but we will venture to say that, barring a recession, valuations and activity will remain high given the strong underlying growth dynamics of both the commercial aerospace as well as the defense end-markets.
As always, we encourage your thoughts and questions and hope to hear from you soon.
Please see the 2018 Aerospace and Defense Year in Review here..