electrical & highly engineered process controls ... musser managing director head of industrial...

Michael MusserManaging DirectorHead of Industrial

Technology Practice+1.704.916.3074

[email protected]

Process ControlsElectrical &Electronics

Highly EngineeredProducts

mailto:[email protected]

KeyBanc M&A Accolades

Recent Awards

Ke

yB

an

cM

&A

Ac

co

lad

es

2015 Investment Bank of the Year

KeyBanc Capital Markets – InvestmentBank of the Year: Recognizing theinvestment bank that differentiated itselfwithin the middle market through its ability tostay active and demonstrate creativity ingetting deals to the finish line

2015 U.S. M&A Advisor of the Year

Global M&A Network’s prestigious M&A AtlasAwards honor top deals, star dealmakers andfirms from North and South America active inthe mergers, acquisitions, corporate andprivate equity deal communities. Winners areselected independently for successfullyclosing the best value-generatingtransactions with the best deal teamexpertise and execution.

Mergers & Acquisitions is a prominent digitalinformation and news service and monthlymiddle-market dealmaking. It covers allaspects of middle-market dealmaking.

2015 Deal of the Year Awards

KeyBanc Capital Markets, along with our distinguished clients,was honored for top achievements in three deal categories

Page 1

SPRING 2016

INDUSTRIAL TECHNOLOGY TRACKER

North America Private EquityDeal of the Year, Large Markets

Buy-Side Advisor

has acquired

$692,000,000Transaction Value

June 2015


a portfolio company of

has been acquired by

Sell-Side Advisor

June 2015

North AmericaDeal of the Year, Large Markets

a portfolio company of

has been acquired by

Sell-Side Advisor


December 2015

Deal of the Year, Small Markets

SPRING 2016


3

Industry Update – Spring 2016

Contents

ECONOMIC INDICATORS

10 PROCESS CONTROLS

FlowControl

Process AutomationEquipment

19 ELECTRICAL & ELECTRONICS

ElectronicComponents

HIGHLY-ENGINEERED PRODUCTS24

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

4END-MARKET FUNDAMENTALS5M&A MARKET TRENDS

MotionControl

8

INDUSTRIAL TECHNOLOGY

SECTOR PERFORMANCE SUMMARY

PrecisionManufacturing

Test &Measurement

BrandedIndustrial Products

ElectricalProducts

KEYBANC CAPITAL MARKETS OVERVIEW

CAPITAL MARKETS ISSUANCE ACTIVITY30

32

http://www.key.com/emailcenter


80

90

100

110

120

130

140

May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16

108%

96% 97% 97%102%

107%

98%

110%105%

0%

50%

100%

150%

FlowControl

Filtration MotionControl

Test &Msmt.

ProcessAutomation

ElectricalProducts


Highly-Eng>$10bn

Highly-Eng<$10bn

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

Cos. Cap ($bn) 1-Yr 3-Yr 5-Yr LTM Dec-16 GM EBITDA

Process Controls

Flow Control (FC) 31 $137 (6%) 15% 22% 11.1x 11.0x 34% 16%

Filtration (FI) 9 15 (7%) 13% 57% 10.7x 9.5x 34% 16%

Motion Control (MC) 18 81 (16%) 25% 21% 9.0x 9.2x 30% 16%

Test & Measurement (TM) 30 181 (3%) 23% 35% 11.8x 11.2x 46% 17%

Process Automation Equip. (PA) 12 38 7% 55% 63% 10.4x 9.0x 35% 15%

Electrical & Electronics

Electrical Products (EP) 19 175 (9%) (6%) (4%) 10.1x 9.4x 30% 10%Electronic Components (EC) 22 53 (7%) 41% 34% 8.5x 8.3x 33% 14%

Highly-Engineered Products

Highly-Engineered >$10bn (HE>10) 12 367 (0%) 29% 28% 11.5x 10.8x 37% 18%

Highly-Engineered <$10bn (HE<10) 29 72 (7%) 16% 38% 10.1x 9.8x 30% 13%

28% Electrical &Electronics

21% Highly-EngineeredProducts

Industrial Technology Universe

Sources: Capital IQ as of May 2, 2016.

(1) Represents Enterprise Value

Stock

Performance

3-Years

Performance Summary

Page 3

SPRING 2016


Stock

Performance,

EBITDA

Multiples, &

Margin Profile

EBITDA

Multiples vs.

5-Yr Average

Trading Metrics and Margins

Current Valuations vs. Historical Five-Year Averages

11% ProcessControls

30% S&P 500

(1) (1)

-1

0

1

2

3

4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015

US

EU28

-3

-2

-1

0

1

2

3

4

5

6

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

2013 2014 2015 2016

45

50

55

60

65


2013 2014 2015 2016

50

60

70

80

90

100

110


2013 2014 2015 2016

90

100

110

120

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

2013 2014 2015 2016

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

Ind

ex

Le

vel

ISM

Manufacturing

Index

%C

ha

ng

e(y

/y)

%C

ha

ng

e(y

/y)

Durable Goods

New Orders

Ind

ex

Le

vel

Exp

ansio

nC

ontra

ctio

n

The U.S. GDP decreased in 4Q15

on a Y-o-Y basis driven by

declines in manufacturing

outweighing increases in

consumption. The Euro Zone

GDP increased in 4Q15 on a Y-o-

Y basis driven by increases in

Gross Fixed Capital spending.

U.S. Industrial production declined

in March ’16 on a Y-o-Y basis

following a brief spike in January.

Appreciation of the dollar makes

imports cheaper and will continue

to create a headwind for industrial

production.

Despite a decrease in U.S.

Durable Goods Orders from

Jan’16 to Feb’16, the index

remained flat Y-o-Y. The

strength of the U.S. Dollar and

plunging oil prices have

contributed to recent declines.

Manufacturing expanded in

Mar ‘16 for the first time in

seven months, led by an

increase in factory bookings

indicating U.S. manufacturing

will continue to expand in

2Q16.

Consumer

Sentiment

Ind

ex

Le

vel Consumer sentiment levels

remain strong in the U.S. and

Eurozone, further continuing

consumers optimistic view on

the overall economy, despite

volatility in global financial

markets.

Page 4

SPRING 2016


US

EU28

US

EU28

US

EU28

US

400

500

600

700

2013 2014 2015 2016 2017 2018 2019 2020

-

200

400

600

J FMAM J J A SOND J FMAM J J A SOND J FM

2014 2015 2016

End-Market Fundamentals

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

The Current

End-Market

Cycle

Persistent weakness in oil prices has led to capex

curtailments, which places a continued strain on

companies with direct oil & gas exposure and those

selling into second- and third- derivative applications

Heavy-truck industry fundamentals are believed to

have peaked in 2015, evidenced by weak demand

and high inventory levels in 1Q16, resulting in the

current slowdown of the Class 8 truck market

OCTOBER 2015

Select

End-Markets

Commercial

Aerospace

The OEM order books remain

lackluster, despite Boeing’s orders

75% Y-o-Y increase. Airbus saw

negative orders in Mar ‘16 as

cancellations outpaced new orders.

Both Boeing and Airbus continue to

struggle to sell their largest aircraft,

the 747-8 jumbo jet and the A380,

respectively.

Ord

ers

inU

nits

Boeing Airbus

U.S. Defense

Spending

Despite congress reaching an

agreement for a two-year DoD

budget deal in Dec ‘15, defense

spending continues as a hot topic in

Congress amidst a wide array of

military challenges including

terrorism, regional instability in

MENA, globalization, and cyber

defense.

$in

bill

ion

s

Page 5

SPRING 2016


U.S. DoD Budget

Oil & Gas continues to negatively impact broader

markets; Heavy-truck faces overcapacity concerns Resi. Constr.Constr. Mach.(Light)

ChemicalsComm. Aero.(OEM)

AutomotiveHeavy Truck

Semi. Equip.

Water / Wastewater

Non-Res. Constr.

GeneralIndustrial

Comm. Aero.(AM)

Power Gen.

Military / Defense

Steel Oil & GasAg. Equip. Mining Equip.

Constr. Mach. (Heavy)

AcceleratingDecline

Trough Decline

AcceleratingGrowth

Peak Growth

DeceleratingGrowth

DeceleratingDecline

Oil & GasAg. Equip.

Mining Equip.

Constr. Mach. (Heavy)

Power Gen.

Military / Defense

Steel

GeneralIndustrial

Comm. Aero. (AM)

Semi. Equip.

Water / Wastewater

Non-Res. Constr.Automotive

Heavy Truck

Resi. Constr.

Constr.Mach. (Light)

Chemicals

Comm. Aero. (OEM)

MARCH 2016

North America

400

800

1,200

1,600

2,000


2014 2015 2016

(5)

-

5

10

15

20


2014 2015 2016

-

15

30

45

J F M AM J J A S ON D J F MAM J J A S ON D J F

2014 2015 2016

-

5

10

15

20

J F MAM J J A S ON D J F MAM J J A S ON D J F

2014 2015 2016

-

10

20

30


2014 2015 2016


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. During

1Q16 retail buying under-preformed

expectations, while field inventories

continued to build, further

pressuring dealers to move

merchandise quickly.

Nonresidential construction

spending dipped in February,

following a strong increase in Jan

’16. Recent growth in construction

employment suggests there is no

cause for alarm in the recent dip.

Ord

ers

inU

nits

(00

0’s

)%

Ch

an

ge

(y/y

)

NA Tractor Sales

Heavy-Truck

Truck orders declined during the

first two months of ’16, and

preliminary data for March indicates

~15,800 units, the lowest since Sep

’12. Economic uncertainty

continues to cause Fleets to

proceed with caution, resulting in

delayed orders.

Ord

ers

inU

nits

(00

0’s

)

(continued)

Oil & Gas

The total rigs in the U.S. (those

actively searching for oil & gas)

have decreased by 57% Y-o-Y.

U.S. Oil and Gas companies

continue to cut the number of rigs

as the world oil market remains

plagued by depressed oil prices.

Un

its

B&H U.S. Rig Count

Automotive

NA Auto production slipped ~1%

Y-o-Y in Mar ’16. The decline in

production is attributed to the

Sterling Heights, Michigan Fiat

Chrysler Automobiles car production

plant closing for inventory control

and a large decline in Mexican auto

production.

%C

ha

ng

e(y

/y)

2013 2014NA Auto Production

Page 6

SPRING 2016


NA Class 8 Truck Orders

2013 2014Non-Resi Contruction Spend

100

103

106

109

112


2014 2015 2016

20

25

30

35

40

45

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

2014 2015 2016

405060708090

100110


2014 2015 2016

100

125

150

175

200


2014 2015 2016

0.90

0.95

1.00

1.05

1.10

1.15

1.20

J F MAM J J A S ON D J F MAM J J A S ON D J F

2014 2015 2016


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 (CAB)

expanded 0.1% in Mar ’16. The

CAB is a leading economic indicator

with an average lead of eight

months at cycle peaks.

A structural shift to natural gas

power generation from coal is well

underway. Power Companies

continue to increase natural gas

burn, driven by low prices and

increased EPA regulations. A

record number of coal-fired plants

have been retired from service.

Iron Ore prices increased in 1Q16

driven by an increase in the

demand for steel. Copper prices

rallied in mid-march as producers

cutback the supply.

Ind

ex

(3-M

oM

ovin

gA

vg

.)

U.S

.P

ow

er

Ge

n.

by

So

urc

e(%

)$

/m

t(I

nd

exe

d)

Chemicals Activity Barometer

Iron Ore Copper

(continued)

Food &

Beverage

The IMF Food & Beverage price

index continues to trend slightly

upward in 1Q16. However, experts

believe an ample supply of food and

a slowing level of demand, the food

and beverage index is expected to

trend downward in Q216.

Ind

ex

Semiconductor

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

semiconductor market recovered to

1.05 in Feb ‘16, following a recent

trough in Nov ’15, driven primarily

by increasing economic confidence

in end-market users.

Ra

tio

NA Semiconductor Eqmt. Book-to-Bill

Natural Gas

Coal

Page 7

SPRING 2016


IMF Food & BeveragePrice Index

-

30

60

90

120

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

2013 2014 2015 2016

$0

$150

$300

$450

$600

-

1,000

2,000

3,000

4,000

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

2013 2014 2015 2016

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

De

alC

ou

nt

(1)

De

alC

ou

nt

(1) A

gg

reg

ate

De

alV

alu

e($

B)

North America

North American

Industrial

Technology

Deal Activity

Page 8

SPRING 2016


2015 was a record year for M&A activity in US; however, 1Q16 showed signs of a cooling off period as

Y-o-Y volume and value declined by 15% and 31%, respectively. As of 1Q16, tax inversion M&A deals,

which traditionally originate in pharma, medical, and biotech, appear to be trending towards the industrials

and chemicals industries. Johnson Controls $16.4B purchase of Ireland based Tyco was the top deal the

industrial sector during 1Q16. Private Equity buyout activity struggled to compete against strategic buyers

in 2015; however, 2016 has started off with a trend towards an increased number of leveraged buyouts.

This year is expected to see increased sponsor activity amidst heavy strategic competition.

We observed 2,201 deals for 1Q16 versus 2,577 for 1Q15. During 1Q16, a total of 566 deal values were

disclosed for an aggregate value of $254 billion ($448mm average), compared to 748 for $369 billion

($493mm average) in 1Q15.

Specific to the Industrial Technology sectors, the US market experienced strong activity in 1Q16. During

1Q16, North American M&A activity across the Industrial Technology sectors totaled 64 transactions and

was largely supported by strategic acquirers. Process Controls accounted for 31 deals, Electrical &

Electronics totaled 16, while Highly-Engineered Products represented 17 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 4Q 1Q

2013 2014 2015 2016

$0

$125

$250

$375

$500

-

1,000

2,000

3,000

4,000

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

2013 2014 2015 2016

M&A Market Trends

Sources: Thomson Reuters, Mergermarket, 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

De

alC

ou

nt

(1)

De

alC

ou

nt

(1) A

gg

reg

ate

De

alV

alu

e($

B)

Eurozone

Eurozone

Industrial

Technology

Deal Activity

Page 9

SPRING 2016


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

Eurozone M&A activity slowed during 1Q16, following a post-crisis high in 2015. M&A activity remains

relatively high, as Y-o-Y volume and value increased 7.2% and 3.3%, respectively. 1Q16 was primarily

driven by outbound Chinese M&A. ChinaChem’s acquisition of Sygenta for $45.1B was the largest

Chinese outbound acquisition on record and the largest Eurozone deal in 1Q16. UK inbound deal activity

dropped by 38.5% from Q415 to 1Q16 due to wavering confidence of foreign investors as a possible

“Brexit” from the EU awaits decision.

We noted 2,623 deals for 1Q16 versus 2,446 for 1Q15. During 1Q16, a total of 598 deal values were

disclosed for an aggregate value of $155 billion ($258mm average), compared to 548 for $150 billion

($273mm average) in 1Q15.

Eurozone M&A activity across the Industrial Technology sectors totaled 67 transactions during 1Q16.

Process Controls accounted for 32 deals, Electrical & Electronics totaled 15, while Highly-Engineered

Products represented 20 of the transactions.

Highly-Engineered

Electrical &Electronic

ProcessControls

Electric Actuator Technology Prospers in

Production FieldsA more current and growing solution is the use of electric

actuators to move the valve, eliminating the use of gas

altogether. For most production sites, the electric actuators

must be able to handle the forces required by the process

and be able to react quickly to process changes with a

100% continuous duty cycle. [Read Full Article]

How Electric Motors are Getting ‘Wearables’ to

Monitor their Health

Process Controls

1.3M Industrial Robots to Enter Service by 2018

The automation of the fourth industrial revolution is

accelerating: By 2018, around 1.3 million industrial robots will

be entering service in factories around the world. In the high-

revenue automotive sector, global investments in industrial

robots increased by a record-breaking 43 percent (2013-

2014) within one year. [Read Full Article]

Sources: Eweek, Sensors Online, Automation Online; Control Engineering, Connecting Industry. Page 10

SPRING 2016


Salient

Industry

Topics

Pressure Sensor Construction Addresses

Challenges in Wet Environments

Like a wearable on a user's wrist that can monitor heart rate

and calories burned, electric motor company ABB has

developed a Bluetooth-linked sensor that can be mounted on

any of its electric motors to tell users how the machines are

working and if problems are cropping up. [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]

Accurate measurement of low pressure with respect to

atmospheric reference (typically called vented or gauge

reference) requires that pressure sensors breathe under dry,

humid and wet conditions. [Read Full Article]

https://www.controleng.com/industry-news/more-news/single-article/electric-actuator-technology-prospers-in-production-fields/433adbd01489b9bb5ec0af6a139099e7.html



http://www.eweek.com/mobile/how-electric-motors-are-getting-wearables-to-monitor-their-health.html

http://www.automation.com/automation-news/industry/13-million-industrial-robots-to-enter-service-by-2018



http://www.sensorsmag.com/pressure-sensors/pressure-sensor-construction-addresses-challenges-wet-20562



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





Process Controls

WaterjetCutting

Equipment

KFCFLOW CONTROL (“KFC”)

KMC

PressureTransducers

FlowMeters

LaserProfilers

MachineVision

Gears ElectricMotors

ActuatorsCouplings HydraulicCylinders

ProcessAnalyzers

Gearboxes VFD’s

FiltrationMedia

FiltrationSystems

Valves SealsPumps

Automated Production& CNC Equipment

Monitoring &Control

Instruments

ConveyorTechnologies

HeatExchangers

Molding & ExtrusionEquipment

Temp.Sensors

LabEquipment

Industrial Technology Indices

KFIFILTRATION (“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:

PackagingEquipment

Page 11

SPRING 2016


11.1x10.7x

9.0x

11.8x

10.4x11.0x

9.5x 9.2x

11.2x

9.0x

4x

6x

8x

10x

12x

14x

Flow Control Filtration Motion Control Test & Msmt. Process AutomationEquipment

5x

6x

7x

8x

9x

10x

11x

12x

13x

14x

15x

May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16

-10%

10%

30%

50%

70%

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

11.1x FC

10.4x PA

9.0x MC

11.8x TM

Process Controls

Public Comps Performance & Valuation

LTM CY 2016

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

10.7x FI


FlowControl

FiltrationMotionControl

Test &Msmt.

ProcessAutomation

Current 11.1x 10.7x 9.0x 11.8x 10.4x

5-Yr Avg 10.2x 11.2x 9.3x 12.2x 10.2x

% of 5-Yr 108% 96% 97% 97% 102%

1-yr 3-yr 5-yr

FlowControl

(6%) 15% 22%

Filtration (7%) 13% 57%

MotionControl

(16%) 25% 21%

Test &Msmt.

(3%) 23% 35%

ProcessAutomation

7% 55% 63%

(1-YrReturn)

(3-YrReturn)

Page 12

SPRING 2016


FC

FI

TM

PA

MC

5/2/2016 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 2016 CY 2016

Flow Control (KFC)Atlas Copco AB OM:ATCO A $25.90 78% (17%) $30,735 $32,021 $12,410 40% $2,890 23% 0.4x 11.1x 11.4x 19.4x

Parker-Hannif in Corporation PH 115.50 92% (4%) 15,604 16,755 11,548 22% 1,511 13% 0.8 11.1 10.4 18.1

Pentair plc PNR 58.99 85% (5%) 10,660 15,340 6,550 34% 1,158 18% 4.0 13.3 12.5 14.4

Xylem Inc. XYL 42.25 98% 14% 7,554 8,148 3,663 39% 598 16% 1.1 13.6 12.5 20.6

Alfa Laval AB (publ) OM:ALFA 15.63 75% (16%) 6,557 8,036 4,798 33% 886 18% 1.6 9.1 10.3 15.9

Flow serve Corp. FLS 48.96 84% (14%) 6,383 7,727 4,494 34% 729 16% 1.8 10.6 11.8 19.6

IDEX Corporation IEX 82.47 95% 10% 6,260 6,997 2,021 45% 509 25% 1.4 13.7 13.4 22.1

Nordson Corporation NDSN 77.77 92% (4%) 4,432 5,512 1,682 54% 394 23% 2.7 14.0 13.4 19.5

Colfax Corporation CFX 32.05 60% (36%) 3,931 5,338 3,933 31% 469 12% 2.7 11.4 11.4 21.6

The Weir Group PLC LSE:WEIR 17.60 59% (38%) 3,752 4,968 2,828 33% 447 16% 2.7 11.1 13.2 19.9

Graco Inc. GGG 78.64 91% 8% 4,373 4,809 1,285 53% 344 27% 1.3 14.0 13.2 21.8

Aalberts Industries NV AALB 34.55 94% 11% 3,820 4,669 2,688 61% 408 15% 1.9 11.5 10.4 16.5

Curtiss-Wright Corporation CW 78.18 99% 8% 3,481 4,147 2,163 35% 411 19% 1.6 10.1 9.9 19.0

IMI plc LSE:IMI 13.71 73% (28%) 3,684 4,053 2,311 45% 424 18% 0.7 9.6 11.4 18.6

Crane Co. CR 56.32 88% (9%) 3,283 3,751 2,722 35% 450 17% 1.0 8.3 8.3 14.0

Spirax-Sarco Engineering plc LSE:SPX 50.08 91% (7%) 3,662 3,657 984 75% 263 27% - 13.9 13.4 22.9

ITT Corporation ITT 39.26 89% (3%) 3,527 3,650 2,506 32% 470 19% - 7.8 9.0 15.8

Ebara Corp. TSE:6361 4.53 75% 3% 2,109 2,406 4,148 27% 435 10% 0.4 5.5 5.2 NA

Watts Water Technologies, Inc. WTS 56.78 94% 4% 1,941 2,222 1,456 38% 198 14% 1.4 11.2 10.6 21.6

Mueller Water Products, Inc. MWA 10.90 98% 13% 1,760 2,155 1,139 31% 188 16% 2.1 11.5 10.5 21.8

SPX FLOW, Inc. FLOW 30.44 72% NA 1,264 2,087 2,322 33% 255 11% 3.2 8.2 8.5 16.5

Interpump Group SpA BIT:IP 14.25 78% (15%) 1,536 1,836 972 35% 196 20% 1.4 9.4 8.7 15.6

Mueller Industries Inc. MLI 31.86 87% (10%) 1,820 1,794 2,096 14% 162 8% - 11.1 NA 20.6

CIRCOR International, Inc. CIR 61.38 100% 10% 1,008 1,039 641 32% 73 11% 0.4 14.1 14.2 28.3

Chart Industries Inc. GTLS 25.77 68% (30%) 788 858 989 28% 117 12% 0.6 7.4 10.6 45.1

Lindsay Corporation LNN 76.64 83% (2%) 826 853 526 28% 69 13% 0.4 12.4 14.3 30.4

Gorman-Rupp Co. AMEX:GRC 29.16 89% 7% 761 720 407 22% 55 14% - 13.0 NA 32.4

KSB Aktiengesellschaft DB:KSB 358.44 65% (30%) 621 683 2,541 55% 200 8% - 3.4 4.1 12.5

Thermon Group Holdings, Inc. THR 18.95 74% (17%) 610 638 284 47% 60 21% 0.4 10.6 10.4 22.3

Ampco-Pittsburgh Corp. AP 18.91 98% 18% 231 149 238 18% 17 7% - 8.9 NA NA

Graham Corporation GHM 19.38 81% (17%) 190 117 105 30% 16 16% - 7.1 12.8 56.2

Median 87% (5%) $3,481 $3,657 $2,163 34% $394 16% 1.4x 11.1x 11.0x 19.9x

Filtration (KFI)Donaldson Company, Inc. DCI $32.80 88% (13%) $4,360 $4,784 $2,241 34% $348 16% 1.2x 13.8x 12.9x 20.6x

Essentra plc LSE:ESNT 11.91 78% (20%) 3,097 3,653 1,727 57% 296 17% 1.9 12.3 11.0 15.5

CLARCOR Inc. CLC 59.04 91% (9%) 2,863 3,166 1,408 33% 247 18% 1.2 12.8 12.5 22.0

ESCO Technologies Inc. ESE 38.66 97% 5% 998 1,029 560 37% 90 16% 0.7 11.4 9.5 19.1

Calgon Carbon Corporation CCC 16.25 72% (28%) 822 880 520 36% 100 19% 0.6 8.8 8.3 18.2

Ahlstrom Oyj HLSE:AHL1V 9.09 96% 6% 424 653 1,215 15% 121 10% 1.8 5.4 5.2 19.6

Lydall, Inc. LDL 37.44 96% 39% 641 585 527 24% 70 13% - 8.4 7.3 16.3

CECO Environmental Corp. CECE 6.53 52% (45%) 222 371 367 30% 47 13% 3.1 8.0 6.9 8.5

Porvair plc LSE:PRV 4.74 94% 3% 212 196 144 34% 18 13% - 10.7 11.1 20.5

Median 91% (9%) $822 $880 $560 34% $100 16% 1.2x 10.7x 9.5x 19.1x

Process Controls

Indices and Company Composition


Note: $ in millions

Page 13

SPRING 2016


Motion Control (KMC)Nidec Corporation TSE:6594 $75.68 71% 0% $22,446 $22,475 $10,487 23% $1,682 16% - 13.4x 11.3x NA

Rockw ell Automation Inc. ROK 113.24 89% (7%) 14,882 14,363 6,050 42% 1,214 20% - 11.8 11.3 19.2x

SKF AB OM:SKF B 18.11 68% (26%) 8,247 10,255 9,166 25% 1,465 16% 1.2x 7.0 8.1 13.5

GKN plc LSE:GKN 4.09 74% (23%) 6,981 8,140 10,664 56% 1,175 11% 1.0 6.9 5.9 10.0

WEG S.A. BOVESPA:WEGE3 4.35 75% (17%) 7,017 7,911 2,831 28% 450 16% 1.9 17.6 17.1 20.3

Regal Beloit Corporation RBC 65.04 80% (17%) 2,905 4,428 3,510 27% 544 15% 2.7 8.1 8.6 13.1

Rexnord Corporation RXN 21.98 79% (18%) 2,228 3,717 1,950 35% 356 18% 4.2 10.4 9.7 15.2

The Timken Company TKR 35.81 88% (9%) 2,837 3,414 2,834 27% 447 16% 1.2 7.6 8.8 18.4

Yaskaw a Electric Corp. TSE:6506 11.86 71% (12%) 3,159 3,330 3,688 33% 427 12% 0.3 7.8 7.7 NA

Moog Inc. MOG.A 51.17 71% (26%) 1,877 2,643 2,437 30% 308 13% 2.5 8.6 8.5 14.6

Rotork plc LSE:ROR 2.74 70% (24%) 2,378 2,482 806 46% 199 25% 0.5 12.5 13.4 20.9

RBC Bearings Inc. ROLL 73.58 96% 1% 1,721 2,061 549 38% 134 24% 2.5 15.4 12.6 22.4

Franklin Electric Co., Inc. FELE 32.78 90% (9%) 1,513 1,678 918 33% 135 15% 1.2 12.5 11.5 19.9

NN Inc. NNBR 15.18 51% (40%) 407 1,217 910 23% 170 19% 4.8 7.2 7.4 9.1

Altra Industrial Motion Corp. AIMC 29.28 98% 6% 761 951 734 31% 106 14% 1.8 9.0 9.9 19.7

RENK AG DB:ZAR 112.82 92% 1% 767 632 529 23% 132 25% - 4.8 NA NA

Columbus McKinnon Corporation CMCO 16.53 64% (35%) 332 563 591 31% 59 10% 3.9 9.6 8.0 11.7

Allied Motion Technologies Inc. AMOT 22.22 70% (28%) 207 255 237 29% 28 12% 1.7 9.0 NA NA

Median 75% (17%) $2,303 $2,986 $2,194 30% $332 16% 1.8x 9.0x 9.2x 16.8x

Test & Measurement (KTM)Danaher Corp. DHR $97.39 100% 18% $67,072 $78,872 $21,256 53% $4,961 23% 2.4x 15.9x 14.7x 19.8x

Roper Technologies, Inc. ROP 177.50 91% 5% 17,961 20,549 3,620 61% 1,181 33% 2.2 17.4 15.0 25.4

Hexagon AB OM:HEXA B 39.94 94% 8% 14,396 16,263 3,306 60% 972 29% 1.8 16.7 14.8 21.8

Rockw ell Automation Inc. ROK 113.24 89% (7%) 14,882 14,363 6,050 42% 1,214 20% - 11.8 11.3 19.2

Ametek Inc. AME 48.46 84% (8%) 11,355 13,186 3,935 36% 1,094 28% 1.7 12.1 12.5 19.7

Mettler-Toledo International Inc. MTD 362.99 99% 13% 9,754 10,246 2,399 56% 554 23% 0.9 18.5 16.8 25.3

Sensata Technologies ST 37.67 66% (32%) 6,425 9,639 3,021 35% 865 29% 3.7 11.1 11.8 13.1

Halma plc LSE:HLMA 13.08 96% 22% 4,944 5,080 1,164 55% 283 24% 0.5 18.0 16.4 26.8

FLIR Systems, Inc. FLIR 30.56 90% (2%) 4,204 4,048 1,592 47% 357 22% - 11.3 10.8 18.8

Teledyne Technologies Inc. TDY 93.52 84% (9%) 3,224 3,920 2,264 38% 372 16% 1.9 10.5 10.7 18.3

Spectris plc LSE:SXS 26.71 75% (19%) 3,174 3,319 1,755 57% 293 17% 0.5 11.3 11.1 16.0

National Instruments NATI 27.92 88% (2%) 3,569 3,265 1,223 74% 211 17% - 15.5 13.8 24.5

Yokogaw a Electric Corp. TSE:6841 10.87 70% (6%) 2,901 2,822 3,543 43% 486 14% - 5.8 5.6 NA

Cognex Corporation CGNX 35.21 68% (23%) 2,993 2,644 445 77% 137 31% - 19.2 19.6 28.6

MSA Safety Incorporated MSA 49.14 90% 9% 1,836 2,201 1,153 44% 186 16% 2.0 11.8 10.8 17.9

Renishaw plc LSE:RSW 27.81 71% (27%) 2,020 1,967 692 53% 189 27% - 10.4 11.9 19.4

Itron, Inc. ITRI 41.23 95% 15% 1,563 1,821 1,878 30% 149 8% 1.6 12.2 9.5 19.4

MKS Instruments, Inc. MKSI 36.53 92% 2% 1,947 1,280 783 44% 181 23% - 7.1 6.5 16.6

Badger Meter Inc. BMI 71.92 94% 15% 1,046 1,097 395 37% 63 16% 0.8 17.4 16.6 30.1

MTS Systems Corporation MTSC 56.56 78% (20%) 835 817 562 38% 80 14% - 10.2 9.4 18.5

Chroma ATE Inc. TSEC:2360 2.22 95% (8%) 837 790 323 44% 49 15% - 16.2 13.3 17.9

Mistras Group, Inc. MG 24.20 91% 34% 700 787 710 31% 97 14% 0.9 8.1 8.8 26.5

Oxford Instruments plc LSE:OXIG 9.63 59% (34%) 549 753 568 45% 70 12% 3.0 10.8 9.0 13.2

INFICON Holding AG IFCN 323.53 88% (15%) 761 697 279 49% 48 17% - 14.4 12.7 20.5

CTS Corporation CTS 16.22 80% (10%) 531 465 381 34% 65 17% - 7.1 6.6 15.6

Landauer Inc. LDR 35.25 82% 7% 338 457 150 52% 36 24% 3.3 12.8 12.7 20.6

Isra Vision AG. XTRA:ISR 71.95 94% 10% 315 351 124 56% 37 30% 0.9 9.5 8.3 18.9

FARO Technologies Inc. FARO 29.21 60% (28%) 486 336 323 53% 24 8% - 13.8 9.5 23.3

Vishay Precision Group, Inc. VPG 14.93 95% 3% 197 168 232 36% 23 10% - 7.2 5.5 15.5

First Sensor AG XTRA:SIS 12.31 83% 7% 124 163 163 48% 18 11% 2.0 9.1 7.1 17.1

Median 89% (2%) $1,983 $2,084 $968 46% $183 17% 1.8x 11.8x 11.2x 19.4x

Process Automation Equipment (KPA)GEA Group DB:G1A $46.88 91% (3%) $8,808 $7,640 $4,995 32% $680 14% - 11.2x 9.1x 19.9x

Middleby Corp. MIDD 110.85 88% 8% 6,379 7,090 1,827 39% 395 22% 1.8x 18.0 15.5 25.0

Andritz AG WBAG:ANDR 55.75 85% (5%) 5,705 4,717 7,131 46% 602 8% - 7.8 7.3 16.1

Metso Corporation HLSE:MEO1V 23.80 75% (16%) 3,569 3,697 2,879 31% 427 15% 0.3 8.7 9.4 17.6

Krones AG XTRA:KRN 114.98 85% 4% 3,633 3,345 3,652 99% 359 10% - 9.3 9.0 19.3

Hillenbrand, Inc. HI 30.27 93% 4% 1,907 2,488 1,529 37% 238 16% 2.4 10.4 8.7 14.4

I.M.A. IMA 58.48 97% 15% 2,193 2,413 1,225 46% 462 38% 0.4 5.2 4.3 24.8

Marel hf ICSE:MARL 2.03 94% 53% 1,456 2,026 945 40% 152 16% 3.7 13.3 NA NA

Milacron Holdings Corp. MCRN 17.08 80% NA 1,148 2,020 1,178 34% 213 18% 4.1 9.5 9.0 11.3

John Bean Technologies JBT 52.42 86% 36% 1,531 1,800 1,149 29% 126 11% 2.1 14.3 NA NA

Astec Industries, Inc. ASTE 49.05 99% 16% 1,128 1,063 973 23% 81 8% - 13.1 10.3 21.9

Key Technology, Inc. KTEC 8.88 67% (32%) 55 57 115 29% - - - NA NA NA

Median 87% 4% $2,050 $2,450 $1,377 35% $359 15% 2.1x 10.4x 9.0x 19.3x



Ticker Price Wk High Return Cap Value Sales GM % EBITDA % Margin EBITDA LTM CY 2016 CY 2016

Process Controls


Note: $ in millions

Page 14

SPRING 2016


Indices andCompany Composition

19.5x18.6x

11.5x

21.4x 20.7x

10.7x 10.0x8.9x

10.6x8.8x

0x

5x

10x

15x

20x

25x

Sensata /Schrader

Aug-2014

Siemens /Dresser-

RandSept-2014

Regal Bel./Emerson PT

Dec-2014

Asahi Kasei /Polypore

Feb-2015

Danaher /Pall Corp.

May-2015

Ametek /Cognex, Surf.

Insp.May-2015

Timken / CarlstarBelts Bus.

Aug-2015

Schlumberger /Cameron

Aug-2015

Hillenbrand /Red Valve

Dec-2015

IDEX /Akron Brass

Feb-2016

28-Mar-16 Bluff ton Motor Works LLC WEG Electric Corp. Manufactures mission-critical fractional horsepow er AC and DC electric motors - - -

17-Feb-16 Fulton Bellow s, LLC US Hose Corporation Manufactures precision metal bellow s, bellow s assemblies, and thermal actuators - - -

14-Jan-16 Laulagun Bearings S.A. Portobello Capital Gestión Manufactures large diameter bearings for infrastructure, energy, and industrial applications - - -

12-Jan-16 GEFEG-NECKAR Antriebsytm Stemas AG Manufactures motors, synchronic generators, and braking systems - - -

21-Mar-16 Ati Environnement SAS Cathay Capital Private Equity Manufactures filtration systems, cremation furnaces, and remote supervision solutions - - -

15-Mar-16 Neptune-Benson, Inc. Evoqua Water Technologies Manufactures w ater filtration products for commercial aquatics, food & bev, and pharma - - -

16-Feb-16 Schroeder Industries, Inc. Aalberts Industries Manufactures filtration solutions for hydraulic, lubrication, fuel, and process systems - - -

6-Feb-16 Bilf inger Water Tech GmbH Chengdu Techcent Environment Manufactures w ater treatment and sew age f iltration equipment $222.8 0.7x -

1-Feb-16 Nordic Air Filtration A/S Hengst Automotive SE Manufactures air f iltration equipment for heavy industry and defense applications 11.0 0.7x -

22-Jan-16 General Ecology, Inc. Loar Group, Inc. Manufactures proprietary w ater purification systems for commercial and business aircrafts - - -

15-Jan-16 Acticon AB Vattern Industrier AB Manufactures ventilation products including exhaust air systems for food and beverage industries - - -

29-Mar-16 Hagie Manufacturing Company Deere & Company Manufactures high-clearance spraying equipment for the agriculture industry - - -

1-Mar-16 Heatron, Inc. NIBE Industries Manufactures thermal management solutions for A&D, 3D, medical, industrial, and energy industries - - -

29-Feb-16 Building Turbines, Inc. HempTech Corp Manufactures rooftop mounted w ind turbines for commercial applications - - -

19-Feb-16 PartnerTech Aerodyn AB Private Investor Group Manufactures turbines, pumps, and mechanical propellers $0.4 0.1x -

17-Feb-16 Texas Hydraulics, Inc. Wynnchurch Capital, LLC Manufactures custom w elded hydraulic cylinders for infrastructure, utilities, and transportation - - -

16-Feb-16 Millennium Industries Corp TI Group Automotive Systems. Manufactures fuel rails and pow er steering components for pow ertrain and automotive applications - - -

16-Feb-16 WORGAS Bruciatori s.r.l. Beckett Gas, Inc. Manufactures burners and combustion systems for energy transformation applications - - -

5-Feb-16 Akron Brass Company IDEX Corporation Manufactures hose f ittings and safety equipment for emergency response applications 224.0 1.9x 8.8x

1-Feb-16 Lakeshore Fittings, Inc. Alco Manufacturing Corp Manufactures brass and aluminum machined components and f ittings - - -

1-Feb-16 Diverse Energy Systems, LLC Cimarron Energy, Inc. Manufactures production, processing, and environmental equipment - - -

1-Feb-16 TRS Transportkoeling B.V. Carrier Transicold Netherlands Manufactures refrigeration systems for trucks, containers, and controlled atmosphere transport - - -

26-Jan-16 F.I.A.C. S.p.A. Atlas Copco AB Manufactures piston, rotary screw ,& air compressor pumps, valves oil separators,& air receivers - - -

26-Jan-16 Greens Pow er Limited RCapital Partners LLP Manufactures heat transfer products for industrial, pow er gen, and petrochem 1.0 - -

25-Jan-16 Pump House Pumps Ltd DiversiTech Corporation Manufactures pumps and accessories for the HVAC and refrigeration markets - - -

22-Jan-16 Calorex Heat Pumps Ltd. Procuritas Partners AB Manufactures air and ground source heat pumps and dehumidif iers - - -

18-Jan-16 Rapid Climate Control Ltd Ashtead Plant Hire Co Ltd. Manufactures air conditioners, heaters, and dryers - - -

15-Jan-16 Equipment Technologies Exel Industries Manufactures mechanical drive sprayers for the agriculture industry - - -

13-Jan-16 Atherm S.A. Apicap Manufactures electrical immersion heaters and coolers for A&D, medical, and industrial markets - - -

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

$224$1,000 $7,600 $3,175$1,440

Page 15

SPRING 2016


FC

FI

MC

TRANSACTION METRICS

Ent. EV / EV /

DATE TARGET BUYER TARGET DESCRIPTION Value Sales EBITDA

$160 $220 $14,830 $128

31-Mar-16 System Logistics Spa Krones AG (XTRA:KRN) Manufactures automatic storage & retrieval systems including stacker cranes & vertical lift equip - - -

25-Mar-16 INDCO, Inc. Janel Corporation Manufactures specialty industrial mixers for industrial applications $11.3 - -

23-Mar-16 The Paslin Company Zhejiang Wanfeng Tech Manufactures and integrates full-service robotics for the automotive industry 302.0 - -

21-Mar-16 Morbark, Inc. Stellex Capital Management Manufactures tree chippers, tree grinders, and flails for w ood cutting applications - - -

18-Mar-16 Elliott Manufacturing Comp Massman Automation Designs Manufactures modular case packaging systems, case packers, and automatic hot melt sealers - - -

16-Mar-16 Rofin-Sinar Technologies Coherent, Inc. Manufactures laser technology for industrial cutting systems 780.0 1.5x 10.6x

15-Mar-16 Torninova S.r.l. Gruppo Colines Holding S.R.L. Manufactures plastic material extrusion lines including air bubble film and PE-foam machinery - - -

14-Mar-16 telerobot s.p.a Industria Macchine Automatiche Manufactures advanced robotics and specialized machines for assembly, handling, and production 3.3 - -

9-Mar-16 Sur-Form Corporation Big 3 Precision Products, Inc. Manufactures material handling solutions for the packaging industry - - -

7-Mar-16 Mould & Matic Solutions Gmbh Kiefel GmbH Manufactures thermoforming molds and injection molds for the packaging industry - - -

29-Feb-16 Corima Intl Machinery Srl Suzhou SLAC Precision Equipt Manufactures electro coaters, unw rappers, and conversion line products for the packaging industry 0.9 - -

18-Feb-16 TECHMATIK SA Columbia Machine, Inc. Manufactures molds, production machines, and batching & mixing solutions for dry cast concrete - - -

15-Feb-16 Stork Fabricators, Inc. Pro Mach, Inc. Manufactures fully automatic shrink w rapping systems - - -

15-Feb-16 Hymmen Industrieanlagen Private Investor Group Manufactures industrial printing lines, process automation equipment and machinery - - -

12-Feb-16 J. Bonals, S.A. Eurotab SA Manufactures compressing, compacting, granulation, and drying machines for industrial applications - - -

2-Feb-16 IMAFORNI INT'L S.p.A. GEA Group Manufactures mixers, dough feeding, forming items, ovens, and auxiliary equipment for food & bev - - -

1-Feb-16 Synerlink Iberica Synerlink SA Manufactures dairy packaging and filling machines that include form, f ill and seal machines - - -

1-Feb-16 SVM Automatik A/S Stevanato Group S.p.A. Manufactures automated assembly machines for the pharmaceutical industry - - -

27-Jan-16 Fabryka Urzadzen Gornictw a Zamet Industry S.A. Manufactures conveyor belt coilers, transport craw lers, spreaders, and excavators 11.2 - -

18-Jan-16 KUNZMANN Maschinenbau WEILER Werkzeugmaschinen Manufactures milling machines for tool & mold production and industrial markets - - -

14-Jan-16 elumatec AG EMMEGI S.p.A. Manufactures machines for processing aluminum, PVC, and steel prof iles 83.6 - -

5-Jan-16 Gemcor II, LLC Ascent Aerospace Manufactures automated fastening systems for the aerospace industry 44.0 - -

31-Mar-16 Cincinnati Sub-Zero Prods Gentherm Incorporated Manufactures temperature management equipment for the medical and industrial industries - - -

31-Mar-16 AICON 3D Systems GmbH Hexagon AB Manufactures measuring machines for vehicle testing and tube manufacturing - - -

18-Mar-16 Senmatic A/S Indutrade AB Manufactures sensors to measure temperature, humidity and gases - - -

11-Mar-16 Cruise Automation, Inc. General Motors Company Manufactures automated driving technology including precision steering and collision avoidance - - -

10-Mar-16 Tolteq Group, LLC National Oilw ell Varco Manufactures drilling measurement systems and solutions for the O&G industry - - -

2-Mar-16 MCC Control Systems LP S.J. Electro Systems, Inc. Manufactures integrated automation solutions for the w aste and w astew ater industries - - -

16-Feb-16 Speno International S.A. Private Investor Group Provides measurement, ultrasound, and detection of rail faults - - -

5-Feb-16 Brookfield Engineering Labs Ametek Inc Manufactures texture analyzers and pow der testing products - - -

4-Feb-16 Tideland Signal Corporation Xylem Inc Manufactures audible aids, buoys, helidecks, lanterns, and remote monitoring for marine navigation - - -

4-Feb-16 Cascade Microtech Inc FormFactor Inc Manufactures precision electrical test and measurement for semiconductor devices - - -

7-Jan-16 DIT-MCO International Sage Capital, LLC Manufactures w iring analyzers for automated testing solutions - - -

4-Jan-16 Klein Associates Mitcham Industries Manufactures sonar equipment and w aterside security/maritime domain aw areness systems - - -

PA

Process Controls

M&A Transactions



TM

Page 16

SPRING 2016


TRANSACTION METRICS

Ent. EV / EV /


May 5, 2016

CW: Free Cash Flow Continues toShine

January 27, 2016

IEX: 4Q15 Operationally in Line

May 1, 2016

CIR: Encouraging Signs in 1Q16 fromRevenue and Margin Resilience

Process Controls

Selected Equity Research

Sources: KeyBanc Capital Markets Equity Research.

Flow Control

Commentary

Page 17

SPRING 2016


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)

April 28, 2016

FLS: Strong EPD Volume in 1Q16;Aftermarket Stabilizing

February 3, 2016

THR: Valuation Interesting, butUncertainty Over Trough Balances

Current/Risk Reward….

April 26, 2016

PNR: Well Diversified Mix and V&CCost-Outs Holding the Line

May 6, 2016

ITT: Continued MT Strength Offsetby Worse than Expected IP End

Markets

April 20, 2016

GGG: 1Q16 Miss on Weak Process;Full-Year MSD Organic Growth

Guide Reaffirmed

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 18

SPRING 2016


KeyBanc Capital


Research platform

has consistently

achieved a Top 2


Associates annual


cap fund managers.

April 29, 2016

AIMC: Decrementals Continue toImprove; Ample 2H Contingency in

Reaffirmed Guide

February 2, 2016

RXN: Solid Margin Beat inF3Q16; Guide Fine-Tuned

February 8, 2016

RBC: 4Q15 Weaker on Soft PTSAftermarket; 2016 Guide Likely

Includes Refi

April 29, 2016

MOG.A: 2Q Marks Solid SequentialImprovement

April 28, 2016

AME: We Think Selloff De-Risks theFY16 Story

April 26, 2016

FLIR: Are Margin HeadwindsStructural?

May 2, 2016

MKS: Completes NewportAcquisition, Moves Up a Weight…

April 7, 2016

MG: Downgrading to Sector Weighton Valuation

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Making Electronics out of CoalJeffrey Grossman thinks we’ve been looking at coal all wrong.

Instead of just setting it afire, thus ignoring the molecular

complexity of this highly varied material, he says, we should

be harnessing the real value of that diversity and complex

chemistry. [Read Full Article]

Thermoelectric Modules Market to grow 9.50% by

2023

Thermoelectric modules refer to a circuit comprising

thermoelectric materials, which directly generate electricity

from heat. A thermoelectric module involves two dissimilar

thermoelectric materials joined at their ends in either the

negatively charged (n-type) form or the positively charged (p-

type) form of semiconductors. [Read Full Article]

Sources: ECN Magazine, Power Magazine, Automation Magazine, Connector & Cable

Assembly Supplier.

Scoping Out the Future of Battery Storage

Battery storage has emerged from the fringes of the power

sector to challenge both industry conventions and traditional

generation. Where it goes from here, however—the future of

battery storage technology—is a matter of some debate.

[Read Full Article]

Page 19

SPRING 2016


Salient

Industry

Topics

Americans Used Less Energy in 2015 According to

AnalysisAmericans used less energy overall in 2015 than the previous

year, according to the most recent energy flow charts released

by Lawrence Livermore National Laboratory. Each year, the

Laboratory releases energy flow charts that illustrate the

nation's consumption and use of energy. [Read Full Article]

Complex Underwater Connectivity Calls for Custom

SolutionsSometimes focusing on hurdle rates, internal rate of return,

and the short-sighted bottom line can lead to disaster. This is

often the case when making “apples-to-oranges” comparisons.

While engineered products can have a marginally higher price

versus off-the-shelf parts and appear more attractive initially, it

is vital to be aware of the longer-term hidden dangers of

decision-making based on price alone. [Read Full Article]

http://www.ecnmag.com/news/2016/04/making-electronics-out-coal-0



http://www.automation.com/automation-news/industry/thermoelectric-modules-market-to-grow-950-by-2023



http://www.powermag.com/the-future-of-battery-storage/



http://www.ecnmag.com/news/2016/04/americans-used-less-energy-2015-according-analysis



http://www.connectorsupplier.com/complex-underwater-connectivity-calls-for-custom-solutions/





KEP

UninterruptiblePower Supplies

Electronic ControlUnit

BatteryChargers

Industrial ControlTransformers

Fuses

PowerConverters

ElectronicManufacturing

Services

IndustrialConnectors

Data, Audio& Video Cable

DiscreteConnectors

Enterprise Cable& Connectivity

Fiber & CopperComms Cables

ElectricalEnclosures

Capacitors

Batteries Generators:Stationary &

Portable

Inverters

PatchPanels

Solid &Stranded Wires

Joysticks &Switches

Industrial WirelessConnectivity

HazardousDuty Cables

Tubing &HarnessingProducts

CircuitProtection

KEC

ELECTRICAL PRODUCTS (“KEP”)

ELECTRONIC COMPONENTS (“KEC”)

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

across the two categories defined below:

IndustrialAntennas

ElectricPower Cables

Automatic TransferSwitches

Switchgear

Page 20

SPRING 2016


6x

8x

10x

12x

May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16

-20%

0%

20%

40%

60%

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

10.1x

8.5x

9.4x

8.3x

4x

6x

8x

10x

12x

Electrical Products Electronic Components


Public CompsPerformance & Valuation

LTM CY 2016

10.1x EP

8.5x EC


ElectricalProducts


Current 10.1x 8.5x

5-Yr Avg 9.4x 8.7x

% of 5-Yr 107% 98%

Page 21

SPRING 2016


1-yr 3-yr 5-yr

ElectricalProducts

(9%) (6%) (4%)


(7%) 41% 34%

EP

EC

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

(1-YrReturn)

(3-YrReturn)



Ticker Price Wk High Return Cap EV Sales GM % EBITDA % Margin EBITDA LTM CY 2016 CY 2016

Electrical Products (KEP)ABB Ltd. ABBN $21.25 92% (4%) $45,998 $48,161 $34,829 29% $4,462 13% 0.4x 10.8x 10.3x 18.5x

Schneider Electric SE SU 65.29 79% (13%) 37,920 43,711 28,933 37% 4,139 14% 1.2 10.6 10.0 15.4

Eaton Corporation plc ETN 63.46 86% (10%) 29,065 37,189 20,445 32% 3,443 17% 2.3 10.8 11.2 14.8

Mitsubishi Electric Corporation TSE:6503 11.16 69% (14%) 23,957 23,287 39,110 30% 3,910 10% - 6.0 5.3 NA

Legrand SA ENXTPA:LR 57.51 87% (1%) 15,346 16,281 5,506 52% 1,204 22% 0.7 13.5 13.1 22.4

Hubbell Inc. HUBB 106.14 94% (3%) 5,872 6,538 3,416 33% 625 18% 1.1 10.5 11.3 20.0

Prysmian S.p.A. BIT:PRY 23.58 92% 15% 5,046 6,100 7,995 38% 587 7% 1.4 10.4 7.6 15.0

Generac Holdings Inc. GNRC 37.85 87% (5%) 2,512 3,458 1,292 35% 249 19% 4.1 13.9 11.8 12.4

EnerSys ENS 58.36 80% (14%) 2,535 2,849 2,335 26% 340 15% 0.9 8.4 8.9 13.6

Nexans Société Anonyme ENXTPA:NEX 46.56 95% 19% 1,984 2,278 6,776 13% 310 5% 0.7 7.4 5.5 15.1

General Cable Corporation BGC 15.97 75% (4%) 786 1,880 4,028 - 262 7% 4.0 7.2 8.5 16.4

AZZ incorporated AZZ 56.82 94% 22% 1,473 1,759 903 26% 175 19% 1.6 10.1 9.4 17.3

LEM Holding SA SWX:LEHN 905.67 100% 2% 1,032 1,060 260 46% 66 25% 0.4 16.0 16.9 24.6

Crompton Greaves Limited BSE:500093 0.86 28% (68%) 538 776 1,514 - 149 10% 1.6 5.2 7.2 11.0

Pow ell Industries, Inc. POWL 31.26 79% (6%) 355 299 641 18% 30 5% - 9.9 10.1 34.5

Preformed Line Products PLPC 42.20 92% (1%) 220 222 355 30% 28 8% 0.1 7.9 NA NA

Hammond Pow er Solutions Inc. HPS.A 5.43 90% (3%) 64 76 198 24% 14 7% 0.7 5.5 NA NA

Pioneer Pow er Solutions, Inc. PPSI 5.41 65% (33%) 47 64 107 20% 4 4% 4.6 17.0 7.4 9.3

Volex plc LSE:VLX 0.48 37% (58%) 43 48 392 16% 13 3% 0.4 3.6 2.3 NA

Median 87% (4%) $1,984 $2,278 $2,335 30% $262 10% 1.1x 10.1x 9.4x 15.4x

Electronic Components (KEC)TE Connectivity Ltd. TEL $59.80 84% (12%) $21,385 $24,119 $11,887 33% $2,608 22% 1.0x 9.2x 9.2x 14.4x

CommScope COMM 30.34 89% 3% 5,822 10,377 4,601 38% 1043 23% 4.4 10.0 9.3 12.3

Sensata Technologies ST 37.67 66% (32%) 6,425 9,639 3,021 35% 719 24% 4.5 13.4 12.1 13.1

Belden Inc. BDC 63.95 73% (25%) 2,690 4,227 2,304 41% 401 17% 3.8 10.5 10.0 12.0

Littelfuse Inc. LFUS 117.99 95% 19% 2,638 2,476 877 40% 188 21% - 13.1 10.9 20.9

Ultra Electronics Holdings plc LSE:ULE 25.90 86% (1%) 1,811 2,243 1,071 31% 173 16% 2.5 13.0 10.6 13.9

Laird PLC LSE:LRD 5.11 84% (6%) 1,382 1,687 930 41% 92 10% 3.2 18.3 9.4 14.0

AVX Corp. AVX 13.17 89% (5%) 2,207 1,258 1,196 24% 162 14% - 7.8 6.3 17.6

Advanced Energy Industries, Inc. AEIS 33.30 93% 31% 1,328 1,158 408 52% 105 26% - 11.0 10.0 13.5

Vishay Intertechnology Inc. VSH 12.12 91% (5%) 1,790 1,138 2,278 23% 349 15% - 3.3 3.1 14.2

Rogers Corporation ROG 58.66 79% (21%) 1,056 1,036 637 37% 120 19% - 8.6 8.3 16.6

Methode Electronics, Inc. MEI 30.05 61% (31%) 1,109 962 824 25% 117 14% - 8.2 7.0 13.3

Saft Groupe S.A. ENXTPA:SAFT 30.50 65% (24%) 771 833 825 28% 114 14% 0.5 7.3 6.3 12.4

Stoneridge Inc. SRI 14.26 91% 17% 397 474 645 28% 56 9% 1.3 8.5 6.6 10.9

CTS Corporation CTS 16.22 80% (10%) 531 465 381 34% 65 17% - 7.1 7.4 15.6

KEMET Corp. KEM 2.33 55% (45%) 107 459 735 22% 76 10% 4.3 6.0 4.5 8.6

TT Electronics plc LSE:TTG 2.27 92% 15% 355 440 752 18% 52 7% 1.6 8.5 6.0 15.6

Sparton Corp. SPA 21.03 71% (17%) 206 335 450 20% 41 9% 3.2 8.2 8.8 21.0

Vicor Corp. VICR 9.77 66% (36%) 379 320 202 44% - - - - NA NA

Bel Fuse Inc. BELF.B 16.86 71% (20%) 196 299 546 21% 51 9% 2.0 5.8 NA 11.7

CyberPow er Systems, Inc. TSEC:3617 3.01 74% 45% 243 197 194 44% 22 12% - 8.8 6.7 11.0

SL Industries Inc. SLI 39.97 95% (4%) 159 161 203 34% 22 11% 0.1 7.4 NA NA

Median 82% (8%) $1,083 $999 $788 33% $114 14% 2.5x 8.5x 8.3x 13.7x



Note: $ in millions

Page 22

SPRING 2016



TRANSACTION METRICS

Ent. EV / EV /


31-Mar-16 HAUFE GmbH & Co KG Stemas AG Manufactures transducers and pow er transformers for high and low frequency divisions - - -

29-Mar-16 China Keli Electric Com Private Investor Group Manufactures electrical controllers, sw itchgears, and circuit breakers - - -

26-Feb-16 PJSC Zaporozhtransformator Svarog Asset Management LLC Manufactures oil-immersed pow er transformers, electrical reactors, and shunt reactors - - -

22-Feb-16 Bluef in Robotics Corp General Dynamics Manufactures pressure tolerant lithium polymer batteries for marine and defense end markets - - -

15-Feb-16 PR INDUSTRIAL s.r.l. Generac Holdings Manufactures generators and material handling equipment - - -

12-Feb-16 Plitron Manufacturing, Inc. Acal plc Manufactures custom toroidal transformers for trans, medical, and industrial applications $2.9 0.5x -

11-Feb-16 Warner Pow er, LLC Grand Transformers, Inc. Manufactures pow er conversion products - - -

10-Feb-16 Atlas Wire Corporation Spell Capital Partners LLC Manufactures battery cable, PVC, nylon, and cross-linked polyethylene w ire - - -

5-Feb-16 Electronic Systems Protection Ametek Inc Manufactures pow er protection, monitoring, and diagnostic solutions 130.0 3.3x -

4-Feb-16 Netw orked Energy Services Cedrus Enterprises Hldgs. Manufactures smart grid security equipment - - -

19-Jan-16 Heinrich Kopp GmbH Al Fanar Company Ltd. Manufactures electrical installation materials and electronic equipment - - -

14-Jan-16 Pow er Partners, Inc. OpenGate Capital, LLC Manufactures overhead, round tank, and submersible distribution transformers - - -

13-Jan-16 Accutronics Ltd. Ultralife Batteries Manufactures smart batteries and charging systems for handheld electronic devices 11.0 0.9x -

11-Jan-16 HeathCo LLC Transom Capital Group Manufactures outdoor security lighting, door chimes, and motion activated lighting - - -

11-Jan-16 Tripus systems GmbH Gorlan Team S.L.U. Manufactures complete sw itch systems for DIY and professional equipment - - -

5-Jan-16 Silverado Cable Company Inc. Phoenix Logistics Inc. Manufactures ruggedized, point-to-point electrical harnesses - - -

21-Mar-16 Airco Industries, Inc. FTG Aerospace Manufactures cockpit electronic assemblies and simulator solutions $2.7 - -

14-Mar-16 VM Industries ACG Capital Manufactures connectivity solutions for the automotive industry - - -

2-Mar-16 Checkpoint Systems Inc CCL Industries Inc Manufactures RF solutions for retail, high-thef t, and loss prevention 433.0 0.7x 9.5x

1-Mar-16 Accurate Technologies Inc. R.E. Warner & Associates, Inc. Manufactures control systems and data measurement tools for chassis electronics - - -

1-Mar-16 Union Four Electronics OSI Systems Manufactures printed circuit boards, full box builds, and testing and inspection products - - -

26-Feb-16 SKEAB Elektronik AB Inission AB Manufactures printed circuit boards and assembled electrical appliances 2.0 0.4x -

26-Feb-16 Alliansys SA Majest Provides electronic manufacturing services - - -

9-Feb-16 Prism Microw ave, Inc. Tongyu Communication Inc Manufactures RF filters for OEM's - - -

2-Feb-16 SOMACIS SpA Quadrivio SGR S.p.a. Manufactures printed circuit boards, RF/Microw ave products, and special materials - - -

1-Feb-16 Erw in Büchele GmbH Würth Elektronik iBEGmbH Manufactures electronic components for the automotive industry - - -

1-Feb-16 Electro System S.p.A. Novomatic Italia S.p.A. Manufactures electronic components and cables - - -

29-Jan-16 GPV International A/S Aktieselskabet Schouw & Co Provides electronic manufacturing services for cleantech, instrumentation, medical, and defense 58.0 0.5x 5.0x

28-Jan-16 Trans-Tech, Inc. Kyocera Corp Manufactures RF components, absorbers, and inductors, for comms, defense, and electronics 23.0 - -

19-Jan-16 Integrated Microw ave Tech xG Technology Manufactures advanced w ireless video systems for government, broadcast, and entertainment 2.0 - -

12-Jan-16 IKOR Sistemas ebm-papst Mulfingen Gmbh Manufactures electronic circuits and provides product development and implementation - - -

12.6x

5.8x

10.8x

8.6x 8.2x

11.9x

10.2x

7.2x

12.1x

10.0x

0x

5x

10x

15x

20x

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

Ametek /ESP

Feb-2016


M&A Transactions

$130$12,272 $947 $7,229 $791 $75 $1,507 $64 $927

Page 23

SPRING 2016



$mm

EC

EP



MedianTransaction Size

$265


Page 24

SPRING 2016


Sources: CMM Magazine, CTE Magazine, Control Engineering Magazine, Business Wire,

The Fabricator

Salient

Industry

Topics

Machining Process Targets Moldmakers and MoreImagine a machining process that removes material five times

faster than milling and 10 times faster than sinker EDMing,

machines Inconel and hardened steel with ease, holds

tolerances to ±0.0006" and utilizes the same tool to process

thousands of parts with virtually no tool wear.

[Read Full Article]

Growing Demand from End-user Industries to Drive

Global Laser Cutting Machine Market Through 2020Technavio analysts forecast the global laser cutting machine

market to grow at a CAGR of close to 9% during the forecast

period, according to their latest report. The research study

covers the present scenario and growth prospects of the global

laser cutting machine market for 2016-2020.

[Read Full Article]

High-End Micro Stamping Provides Smart Sourcing

OptionsOur world is getting smaller as design engineers create

increasingly challenging, more complex parts that require ever-

tighter tolerances. As component complexity increases,

precision micro stamping excels, it shouldn't be a complete

mystery micro stamping offers unique manufacturing benefits

including outstanding repeatability and low cost per piece.

[Read Full Article]

What’s Sizzling in Hot Stamping?

The popularity of high-strength parts continues to drive

increased demand for hot stamping presses, according to Josh

Dixon, director of sales and marketing for Beckwood, Fenton,

Mo. Stamping manufacturers using hot stamping technology to

reduce vehicle weight, fuel consumption, and environmental

impact fall into two categories, said Schuler Group Sales

Manager Hot Forming Jens Aspacher.

[Read Full Article]

Automate Product Support Through the IIoT

The Industrial Internet of Things (IIoT) is taking industrial

industries by storm, impacting everything from how products

are designed to how they're serviced to how organizations

interact with customers.

[Read Full Article]

http://www.ctemag.com/news-videos/headlines/machining-process-targets-moldmakers-and-more



http://www.businesswire.com/news/home/20160425005531/en/Growing-Demand-End-user-Industries-Drive-Global-Laser



http://www.cmmmagazine.com/cmm-articles/high-end-micro-stamping-provides-smart-sourcing-options/



http://www.thefabricator.com/article/stamping/what-s-sizzling-in-hot-stamping-



http://www.controleng.com/single-article/automate-product-support-through-the-iiot/ab0f2fe83500962870325ac40d40d082.html





PRECISIONMANUFACTURING

KHE

BRANDED INDUSTRIALPRODUCTS & TOOLS

Highly-Engineered Products (“KHE”)

The KeyBanc Highly-Engineered Products (“KEP”) index comprises 41

companies manufacturing products similar to those below. This company

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

SpecializedTechnical Systems

Application-SpecificTools & Equipment

Page 25

SPRING 2016


Assemblies &Contacts

Moldings &Security Seals

Fasteners

PrecisionStampings

Bearings, Closures& Gaskets

Advanced CompositeEngineered Materials

FabricatedDevices

SpecializedAssemblies

Build-to-Print &Customized Equipment

Mission- CriticalParts

5x

7x

9x

11x

13x

May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16

-20%

0%

20%

40%

-20% -10% 0% 10%

11.5x

10.1x

10.8x

9.7x

4x

6x

8x

10x

12x

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


LTM CY 2016

11.5x HE>10


(1) Represents Enterprise Value

Page 26

SPRING 2016


1-yr 3-yr 5-yr

HighlyEngineered> $10bn

0% 29% 28%

HighlyEngineered< $10bn

(7%) 16% 38%

HE>$10

Stock Price

Performance

EBITDA

Multiples

(LTM & Fwd.)

Historical

EV / EBITDA

Multiples

(1-YrReturn)

(3-YrReturn)

HE<$10

HighlyEngineered

>$10bn

HighEngineered

<$10bn

Current 11.5x 10.1x

5-Yr Avg 10.4x 9.7x

% of 5-Yr 110% 105%

10.1x HE<10

(1)(1)

Public CompsPerformance & Valuation



Ticker Price Wk High Return Cap EV Sales GM % EBITDA % Margin EBITDA LTM CY 2016 CY 2016

Highly Engineered Products >$10bn (KHE>10)Honeyw ell International Inc. HON $114.67 98% 12% $87,392 $95,158 $40,526 31% $8,072 20% 0.9x 11.8x 11.1x 17.2x

Danaher Corp. DHR 97.39 100% 18% 67,072 78,872 21,256 53% 4,813 23% 2.4 16.4 14.7 19.8

ABB Ltd. ABBN 21.25 92% (4%) 45,998 48,161 34,829 29% 4,462 13% 0.4 10.8 10.3 18.5

Illinois Tool Works Inc. ITW 104.97 99% 10% 37,879 42,438 13,337 41% 3,346 25% 1.4 12.7 12.0 19.0

Emerson Electric Co. EMR 55.21 88% (7%) 35,506 39,890 20,958 41% 3,929 19% 1.0 10.2 9.9 17.7

Ingersoll-Rand Plc IR 66.14 93% (1%) 17,029 20,948 13,307 30% 1,860 14% 2.1 11.3 10.1 16.2

Stanley Black & Decker, Inc. SWK 112.08 99% 13% 16,825 20,888 11,214 36% 1,777 16% 2.3 11.8 11.2 17.7

Tyco International plc TYC 38.32 93% (3%) 16,305 18,499 9,701 37% 1,574 16% 1.4 11.8 12.3 18.2

Sandvik AB OM:SAND 10.17 77% (19%) 12,753 16,972 10,316 38% 1,694 16% 2.4 10.0 9.7 17.3

Textron Inc. TXT 39.01 83% (12%) 10,487 13,761 13,551 18% 1,601 12% 2.0 8.6 8.1 14.4

Dover Corporation DOV 65.50 84% (13%) 10,162 12,935 6,863 37% 1,303 19% 2.1 9.9 10.7 19.1

Snap-on Incorporated SNA 159.44 91% 5% 9,271 10,068 3,608 51% 858 24% 0.9 11.7 10.8 17.6

Median 92% (2%) $16,927 $20,918 $13,322 37% $1,819 18% 1.7x 11.5x 10.8x 17.7x

Highly Engineered Products < $10bn (KHE<10)WABTEC WAB $82.31 80% (18%) $7,417 $7,958 $3,261 32% $672 21% 0.8x 11.8x 12.0x 18.8x

Makita Corporation TSE:6586 62.70 89% 23% 8,510 7,028 3,770 36% 658 17% - 10.7 9.7 NA

Carlisle Companies Incorporated CSL 103.52 98% 6% 6,645 6,940 3,628 30% 691 19% 0.4 10.0 9.7 18.2

Trelleborg AB OM:TREL B 18.23 84% (6%) 4,941 5,816 3,027 34% 575 19% 1.5 10.1 8.9 16.1

Husqvarna AB (publ) OM:HUSQ B 7.95 94% 8% 4,557 5,455 4,518 29% 487 11% 1.8 11.2 10.0 17.1

Colfax Corporation CFX 32.05 60% (36%) 3,931 5,338 3,933 31% 485 12% 2.5 11.0 11.4 22.0

The Toro Company TTC 87.23 98% 28% 4,750 5,049 2,403 35% 371 15% 0.8 13.6 12.6 21.4

NIBE Industrier OM:NIBEB 34.76 92% 31% 3,833 4,478 1,569 36% 259 16% 2.4 17.3 15.8 22.9

Lincoln Electric Holdings Inc. LECO 62.65 88% (6%) 4,311 4,466 2,429 34% 394 16% 0.4 11.3 11.2 18.7

BWX Technologies, Inc. BWXT 33.28 96% 4% 3,472 3,627 1,445 27% 319 22% 0.7 11.4 12.1 21.9

Kennametal Inc. KMT 23.71 59% (33%) 1,889 2,486 2,215 29% 277 13% 2.0 9.0 10.1 22.0

Barnes Group Inc. B 33.22 80% (18%) 1,784 2,211 1,182 35% 251 21% 1.7 8.8 8.0 13.4

ElringKlinger AG DB:ZIL2 24.56 81% (11%) 1,556 2,154 1,637 25% 245 15% 2.1 8.8 7.3 12.5

Actuant Corporation ATU 26.37 96% 10% 1,553 1,986 1,189 36% 143 12% 3.0 13.9 12.1 21.4

Diebold, Incorporated DBD 25.65 66% (26%) 1,671 1,873 2,354 27% 235 10% 0.8 8.0 12.4 16.3

EnPro Industries, Inc. NPO 59.33 92% (4%) 1,292 1,857 1,204 33% 157 13% 3.6 11.8 10.5 25.4

Senior plc LSE:SNR 3.19 66% (33%) 1,336 1,620 1,253 24% 176 14% 1.6 9.2 8.6 12.4

Brady Corp. BRC 26.94 96% 2% 1,353 1,486 1,131 48% 137 12% 1.0 10.9 10.3 18.5

TriMas Corporation TRS 18.07 58% (36%) 822 1,242 843 27% 154 18% 2.7 8.1 8.3 13.1

Briggs & Stratton Corporation BGG 21.95 90% 11% 947 1,159 1,845 21% 146 8% 1.5 8.0 7.1 15.5

Standex International Corporation SXI 78.72 85% (2%) 1,010 1,015 761 33% 98 13% 0.1 10.4 9.5 15.3

Tennant Company TNC 53.22 79% (18%) 940 936 806 43% 85 11% - 11.0 11.1 22.5

SPX Corporation SPXC 16.34 21% NA 684 919 1,719 17% 141 8% 2.5 6.5 7.4 14.5

Federal Signal Corp. FSS 13.88 81% (10%) 866 835 768 29% 117 15% - 7.2 9.7 17.8

Babcock & Wilcox Enterprises BW 22.78 95% NA 1,167 800 1,757 18% 128 7% - 6.3 5.9 16.6

Park-Ohio Holdings Corp. PKOH 25.89 45% (44%) 325 712 1,417 16% 132 9% 2.9 5.4 5.1 8.7

AQ Group AB (publ) XSAT:AQ 20.43 94% 42% 366 376 373 50% 33 9% 0.3 11.2 NA NA

Sparton Corp. SPA 21.03 71% (17%) 206 335 450 20% 41 9% 3.2 8.2 8.8 13.9

The L.S. Starrett Company SCX 10.97 55% (41%) 77 74 216 29% 10 5% - 7.1 NA NA

Median 84% (6%) $1,553 $1,873 $1,569 30% $176 13% 1.7x 10.1x 9.7x 17.4x



Note: $ in millions

Page 27

SPRING 2016



9.5x

6.8x

9.9x 10.0x

8.2x

15.3x

12.0x

13.9x

7.9x

10.5x

0x

5x

10x

15x

20x

Colfax /Victor Tech.

Feb-2014

QuinparioAcq. /Jason

Mar-2014

Teledyne /Bolt Tech.

Sept-2014

Carlisle Co. /Graco Liquid

FinishingOct-2014

Senior plc /LymingtonPrecisionApr-2015

Wabtec /FaiveleyTransportJuly-2015

Pentair /ERICO

Aug-2015

BerkshireHathaway /

PCCAug-2015

ITT /Wolverine

Aug-2015

JohnsonControls /

TycoJan-2016

TRANSACTION METRICS

Ent. EV / EV /


30-Mar-16 SGS Tool Company Kyocera Corp. (TSE:6971) Manufactures solid carbide rotary cutting tools for turbine manufacturing - - -

25-Mar-16 PJSC Dneprometiz Private Investor Group Manufactures steel w ires, nails, fasteners, and fibers for construction and industrial applications - - -

21-Mar-16 Norafin Industries GmbH VR Equitypartner GmbH Manufactures engineered fabrics, specialty nonw oven and composites for the industrial market - - -

21-Mar-16 Plasticos Promex USA, Inc. Quantum Plastics, LLC Provides thermoplastic injection molding and tool design for the construction industry - - -

19-Mar-16 CHATAL S.A.S Farella SA Manufactures machined parts and components - - -

17-Mar-16 LB Steel, LLC Big Shoulders Capital LLC Provides machining, fabrication, burning and assembly services in North America $12.2 - -

14-Mar-16 3D Plastics, Inc. Quantum Plastics, LLC Manufactures blow and injection molded components for the auto, food/bev, & electronics industries - - -

14-Mar-16 Total Plastics, Inc. Prophet Equity LLC Manufactures plastic sheets, rods, tubes, and films for abrasion resistance & ballistic applications 55.0 - -

8-Mar-16 Breviglieri SpA Agrimaster S.r.l. Manufactures farm machinery and equipment for the agricultural industry - - -

4-Mar-16 Manifattura Fontana S.p.A. Sioen Industries NV Manufactures nonw oven geotextiles in polypropylene and polyester fibers for industrial markets - - -

4-Mar-16 SSW PearlFoam GmbH IZO-BLOK Spolka Akcyjna Manufactures expanded polypropylene molded parts for the automotive industry 23.7 - -

1-Mar-16 Johnson Precision, Inc. Molded Rubber & Plastic Corp Manufactures thermoplastic injection molded components and sub assemblies - - -

29-Feb-16 DJC S.A.S. Acrotec SA Manufactures precision turned parts form stainless steel, aluminum & brass for aeronautical - - -

19-Feb-16 Doncasters, Inc. PIETRO ROSA TBM Srl Manufactures turbine, compressor blades, compressor and turbine airfoils, and engine components - - -

18-Feb-16 Larzep S.A. Actuant Corporation Manufactures high pressure hydraulic equipment for the movement of heavy loads 15.0 2.1x -

12-Feb-16 Goshen Stamping Co. Inc. Private Investor Group Manufactures metal stampings for RV, auto, agriculture, and rubber industries - - -

8-Feb-16 Peerless Injection Molding IRP Medical Manufactures custom injection molding products - - -

3-Feb-16 AIM Aerospace, Inc. Northw estern Mutual Capital Manufactures composite ducting, sub structural, and interior parts for airlines and OEMs 220.0 - -

2-Feb-16 HPTec GmbH China Tungsten/Hightech Mat. Manufactures drills and micro cutting tools for aluminum, plastic, copper/brass, dental & ceramic 19.8 0.7x -

2-Feb-16 SAHLBERG GmbH & Co. KG Haberkorn GmbH Manufactures plastics, elastomers, hose / fittings, and vibration / noise control products - - -

2-Feb-16 Base Structures Ltd. The Solar Cloth Company Ltd. Manufactures tensile fabric structures, roof canopies, and demountable buildings - - -

2-Feb-16 Weissenfels tech-chains S.p.A. KITO Chain Italia S.r.l. Manufactures lifting chains and accessories 7.1 - -

1-Feb-16 Vogel Capital Inc. Acme United Corp Manufactures metal cutting tools and equipment 7.0 1.3x 7.0x

27-Jan-16 Corvaisier SA Galilé Sarl Manufactures blow , composite, and w ax molds, aircraft tools, and casting tools for aircraf t - - -

27-Jan-16 Phoenix Holding S.p.A. Chequers Capital Manufactures dies and equipment for aluminum prof ile extrusion - - -

25-Jan-16 Tyco International Johnson Controls Inc Largest pure-play fire and security company in the w orld 16,395.0 1.7x 10.6x

25-Jan-16 Ven-Tel Plastics Corporation National Molding, LLC Manufactures precision plastic products for the medical, industrial, and consumer industries - - -

22-Jan-16 Beta Utensili S.p.A. TIP SpA Manufactures professional hand tools 216.2 1.7x -

21-Jan-16 SAS Duo industrie Private Investor Group Manufactures modular display systems for tradeshow s, retail, & visual communication applications - - -

21-Jan-16 SouthEast ID, LLC Plasco, Inc. Manufactures ID cards for healthcare, education ,govt, municipalities, and corporate organizations - - -

20-Jan-16 Etablissements PL Maitre SA SOPREMA SAS Manufactures structured metal products for commercial buildings - - -

8-Jan-16 Federal Hose Manufacturing Hickok Inc Manufactures flexible interlocking metal hoses, reinforced ducting, and silicone hoses 6.2 - -

7-Jan-16 iMPREG GmbH BWB Partners Manufactures hose liner systems for pipe rehabilitation applications - - -

5-Jan-16 Thomas Storey Fabrications Private Investor Group Manufactures fabricated steel products for OEMs - - -

4-Jan-16 MSA Aircraf t Products, Inc. Aero Shade Technologies, Inc. Manufactures w indow systems and composite components for aircrafts - - -

4-Jan-16 Industrial Acoustics Comp United Process, Inc. Manufactures noise suppression equipment - - -

4-Jan-16 Adhesive Systems, Inc. Royal Adhesives & Sealants Manufactures adhesives for the consumer and industrial packaging industries - - -


M&A Transactions

Page 28

SPRING 2016


$947 325 168 $590 $115 $1,873 $1,800


$mm



MedianTransaction Size

$36,861 $300 $16,395

EP

Highly-

Engineered

Products

Commentary



Sources: KeyBanc Capital Markets Equity Research. Page 29

SPRING 2016


KeyBanc Capital


Research platform

has consistently

achieved a Top 2


Associates annual


cap fund managers.

(1)

March 16, 2016

ATU: Extent of Enerpac Weaknessthe Most Surprising

May 5, 2016

NPO: Low Visibility into ChallengedMarkets; GST Settlement Timing on

Track

April 27, 2016

CSL: 1Q16 Review: Margins WentThrough the Roof; Increasing

Estimates

May 3, 2016

KMT: Drilling Down on OperationalInitiatives While Waiting for

Revenue Growth

April 27, 2016

B: Weak Results, Bad OEM ShipsetOptics, but Minimal Collateral

Damage to Estimates

May 4, 2016

FSS: More Difficult Near-TermGrowth Outlook, but Lots of

Liquidity

April 26, 2016

WAB: Focus on Cost Control inTougher Revenue Environment

April 26, 2016

IR: Climate Backlog VisibilityGaining Steam

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=7cb54101-bafa-4d39-8300-2963cd290502&mime=PDF&co=KBCM&[email protected]&source=libraryView&htmlToPdf=true

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https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=3b1e40c1-c67f-4887-a1a1-909dfe7eca60&mime=PDF&co=KBCM&[email protected]&source=libraryView&htmlToPdf=true

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RegionSize

(mm)RCF TL

Tenor

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

Cambridge International Inc NA $92 $13 $79 39 550 bps 550 bps - - Dividend Recapitalization

Coherent Inc NA $850 $100 $750 60 / 84 475 bps 475 bps - - Acquisition

DMG Mori Seiki AG Europe € 500 € 200 € 300 60 - - WR - General Purpose

Erich Netzsch GmbH & Co Europe € 120 € 120 - 60 - - - - General Purpose

KraussMaffei AG Europe € 625 € 125 € 500 60 250 bps 250 bps - - Leveraged Buyout

LAP GmbH Laser Applikationen Europe € 33 € 3€12 /€18

72 / 72 /

84- - - - Leveraged Buyout

Mac Puar Corporacin SL Europe € 49 -€7.5 /€41.5

27 / 57 - - - - Restructuring

Morbark LLC NA $50 $40 $10 60 200 bps 275 bps - - Leveraged Buyout

Pepperl & Fuchs GmbH Europe € 70 - € 70 84 / 120 - - - - General Purpose

Salzgitter Kloeckner-Werke GmbH Europe € 200 -€169.5 /

$35

36 / 60 /

84- - - - General Purpose

Texas Hydraulics Inc NA $38 $14 $24 60 200 bps 650 bps - - Leveraged Buyout

Urschel Laboratories Inc NA $120 $25 $95 48 / 60 200 bps 200 bps - - General Purpose

Watts Water Technologies NA $800 $500 $300 60 125 bps 150 bps - - General Purpose

Amphenol Corp NA $2,000 $2,000 - 60 112.5 bps - Baa1 - General Purpose

FEI Co NA $200 $200 - 60 100 bps - - - General Purpose

Littelfuse Inc NA $700 $575 $125 60 150 bps 150 bps - - Acquisition

Rea Magnetic Wire NA $169 $120 $49 48 / 60 150 bps 175 bps - - General Purpose

Brighton-Best International Inc NA $140 $140 - 66 225 bps - - - General Purpose

Ingersoll-Rand NA $1,000 $1,000 - 60 125 bps - - - General Purpose

Manitowoc Foodservice Inc NA $1,200 $225 $975 60 / 84 275 bps 475 bps - B+ General Purpose

Newell Rubbermaid Co NA $10,500 - $10,500 11 / 38 - 150 bps WR BBB- Acquisition

Tyden Group Holdings Corp NA $103 $45 $58 60 300 bps 300 bps - - General Purpose

FACILITY PRICING RATINGS

Sources: Capital IQ, Bloomberg and LoanConnector.

Notes: (1) Credit backs Coherent’s acquisition of Rofin-Sinar; (2) Credit backs AGIC Capital’s acquisition of KraussMaffei

from Onex; (3) Credit backs capiton AG’s acquisition of LAP GmbH Laser Applikationen; (4) Credit backs Stellex Capital

Management’s acquisition of Morbark; (5) Credit backs Wynnchurch Capital’s acquisition of Texas Hydraulics; (6) Credit

backs Littelfuse’s acquisition of TE Connectivity’s Circuit Protection Business; (7) Credit backs Newell Rubbermaid’s

acquisition of Jarden

Select Credit

Financings

Page 30

SPRING 2016


Process Controls



(1)

(2)

(3)

(4)

(5)

(6)

(7)


Capital MarketsIssuance Activity (1Q 2016)

Ticker RegionAmount

(mm)Type Securities

Offer

PriceRev. EBITDA

Garo AB OM:GARO Europe SEK 335 IPO Common Stock SEK 73 1.9x 14.5x

Hexagon Composites ASA OB:HEX Europe NOK 667 FO Common Stock NOK 20 2.3x NM

The ExOne Company XONE NA $13 FO Common Stock $9.13 2.5x NM

OFFERING VALUATION


Capital MarketsIssuance Activity (1Q 2016)

Sources: Capital IQ, Bloomberg and LoanConnector.

Select Public

Debt Issuance

Page 31

SPRING 2016


Process Controls



Select Public

Equity Issuance

RegionAmount

(mm)Sec. Coupon Mat. Struct.

Issuance

PriceYield Spread Moody's S&P

Consilium AB Europe SEK 150Floating

MTN- Mar-20 Callable 100.000% 5.750% 575 bps NR NR

Xylem Inc. NA € 500Senior

Notes2.250% Mar-23 Callable 98.905% 2.422% - Baa2 BBB

Honeywell International NA € 1,000Floating

MTN- Feb-18 Bullet 100.000% 0.305% 50 bps A2 A

Honeywell International NA € 1,000Senior

Notes0.650% Feb-20 Callable 99.839% 0.691% - A2 A

Honeywell International NA € 1,250Senior


Honeywell International NA € 750Senior


RATINGSOFFERING PRICING

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 JohnstonManaging Director,Mergers &Acquisitions

(216) [email protected]

Michael MusserManaging Director,Head of IndustrialTechnology Practice


Craig BerichAssociate,IndustrialTechnology


Justin McClureAnalyst,IndustrialTechnology


Arindam BasuDirector,Mergers &Acquisitions


Charlotte Chicago Dallas

Cleveland (HQ)

Houston London

Portland San Francisco Seattle

Page 32

SPRING 2016


Atlanta Boston

New York

J.R. DoolosVice President,Mergers &Acquisitions


PROCESSCONTROLS

ELECTRICAL &ELECTRONICS

INDUSTRIAL TECHNOLOGY COVERAGE EXPERTISE

Industrial Technology Banking Practice

Coverage & Expertise

Michael MusserManaging Director,

Head of Industrial Technology Practice

+1.704.916.3074

[email protected]

18 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 ofdebt 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

SPRING 2016


HIGHLY-ENGINEEREDPRODUCTS


Thank you for reviewing our Industrial Technology quarterly newsletter.

Key’s Corporate Subscriptions allow you to choose helpful resources

to stay informed and effectively address business challenges.

If you would like to receive our Industrial Technology newsletter via

email, please visit us at the following website and sign up for a

quarterly subscription:

www.key.com/emailcenter

Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital MarketsInc., 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 becomplete, 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 anoffer 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 andparticular needs of any individual person or entity.


electrical & highly engineered process controls ... musser managing director head of industrial...

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