industrial investment banking round-up · 2021. 2. 1. · industrial investment banking round-up...

Industrial Investment Banking Round-UpCapital Markets Perspectives

As of November 13th, 2020

Sources: CNBC, WSJ, Dealogic, KeyBanc Capital Markets

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

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

licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our

research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete and it should not be relied

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

report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.

Real-Time Market Perspectives

• Both business and academic forecasts anticipate that the U.S. economic recovery will remain on track after the presidential

election, with a potential COVID-19 vaccine and a new fiscal stimulus package in sight

– Forecasts for year-end 2020 anticipate an unemployment rate of 6.7% versus the October estimate of 7.8%, while GDP is forecasted to

contract 2.7% versus the October estimate of 3.6%

▪ GDP expansions are forecasted in 2021 and 2022 for 3.6% and 2.9%, respectively, only slightly lower than the October estimate

• Consumer prices were flat in October following four straight months of gains, a sign of subdued inflation as COVID-19 cases

are resurging across the U.S.

– On a non-seasonally adjusted basis in October 2020, the overall consumer-price index rose 1.2% and core prices increased 1.6%

compared to the prior year

M&A Markets

• U.S. M&A activity continues to ramp up, with Q4 2020 already having $225.9 billion of M&A deals announced, raising

expectations of a strong finish to 2020 and a busy start to 2021

– U.S. sponsor-related M&A activity in Q4 2020 is at $26.6 billion of exits and $22.8 billion of entries

– SPACs continue to play an active role in M&A this year, with $94.4 billion of M&A activity recorded year-to-date, of which $19.6 billion

are sponsor to SPAC exits

Debt Capital Markets

• After a surge in deal flow over the past several weeks, leveraged loan new-issue activity came to a halt during the week of the

election, with few issuers electing to postpone their launch timelines due to the volatile market conditions

• Several LBO and M&A deals have been announced as arrangers started to line up transactions before the holiday weeks

– Total M&A volume this October was $17.0 billion with LBOs representing 56%, the most since January

– Dividend recap volume remains strong with a monthly total at $10.5 billion

• Leveraged loan transactions in the middle market are heavily skewed towards technology businesses that are considered

resilient to the pandemic, M&A activity continues to pick up with arrangers expecting Q4 pipeline to improve

• High yield bond issuance is at $393 billion year-to-date, which is up 70% over last year's comparable period, and is set to

surpass the prior record of $399 billion set in 2013

– The current dynamic of strong markets mixed with increased risk of shutting the economy down has incentivized issuers to borrow while

they still can, indicating a busy November until the Thanksgiving break

– High yield bond refinancings continue to lead new issuance with over half of the deals in October used to repay debt

• M&A accounted for 20% of high yield bond deals at this time last year, with only 8% accounting for year-to-date 2020

– The high yield bond market has recently been more receptive to M&A, a trend that continues to improve

• The investment grade fixed income market only had one deal come to market during the presidential election week, yet was still

well received

• Following the election, the investment grade fixed income market opened with a strong tone following the announcement of a

potential vaccine

– In addition to equities being up, U.S. treasury yields increased significantly with the 10-year treasury currently at 90 bps after getting

within 2 bps of the 1% level

– Credit spreads also came in at 8 bps, with the IG index closed out at 116 bps – the lowest level since February

– Monday and Tuesday of this week were both busy issuance days, totaling $34+ billion and surpassing weekly estimates

Equity Capital Markets

• Equity issuance slowed down leading up to the presidential election as volatility in the equity markets was elevated due to the

rise of COVID-19 cases worldwide, lack of stimulus and election outcome uncertainty

• Volatility has also subsided and the equity issuance market is expected to be robust to close out 2020 supported by several

IPOs and follow-on offerings anticipated

– Currently there are 59 SPAC IPOs filed in the pipeline, which accounts for 50% of the total current U.S. IPO pipeline

Industrial Investment Banking Round-UpBuilding ProductsAs of November 13th, 2020

(60%)

(45%)

(30%)

(15%)

0%

15%

30%

Feb-21 Apr-01 May-11 Jun-20 Jul-30 Sep-08 Oct-185.0x

10.0x

15.0x

Feb-21 Apr-01 May-11 Jun-20 Jul-30 Sep-08 Oct-18

Building Products Market Perspective• Employment conditions improved last week while the Labor Department recorded 709,000 new unemployment claims, just

above economists’ estimates of 740,000

– Last week represented the fourth straight week of declining new unemployment claims. Despite this, first-time unemployment claims remain well above the pre-pandemic record of 695,000 that was set in 1982

– Additionally, the Labor Department recorded a significant drop in continuing unemployment claims, which decreased by 436,000 this week to 6.8 million

• JELD-WEN reported earnings; revenue grew 1.9% to $112.9 million and adjusted EBITDA increased by 20.0% to $130.7 million compared to the third quarter of last year

– Gary S. Michael, CEO of JELD, reported strong growth in both the residential and new construction end markets during the Company’s Q3 earnings release, driven by “consumers' focus on their homes, coupled with [JELD’s] strategy to deliver profitable market share with key customers”

• BMC Stock Holdings reported a record third quarter performance, growing revenue by 13.1% to $1090.3 million and increasing adjusted EBITDA 32.9% to $99.2 million

– David Flitman, President and CEO of BMC, attributed the performance to robust demand in the Company’s single-family homes and pro remodel segments, as well as record high lumber prices. Mr. Flitman also noted strong results from BMC’s Operating System-led productivity and cost savings initiatives

• Pfizer’s vaccine announcement on Monday had an immediate impact on the homebuilding industry

― Rapidly decreasing mortgage demand has caused the rate to rebound from record lows, driving homebuilder’s cost of business higher

― Investors have demonstrated concern with the longevity of the suburban-flight trend that homebuilders have relied on throughout the pandemic, which may end with the successful distribution of a vaccine

― Notable homebuilding stocks such as D.R. Horton reeled on the vaccine news, despite posting a record third quarter performance

Sources: CNBC, Wall Street ResearchNote: Market data as of 11/11/2020; Manufacturing (Large Cap): ALLE, AOS, ASX:JHX, CSL, FBHS, HUBB, IR, LII, MAS, MHK, NYSE:CNR, OC, SHW, SWK; Manufacturing (Mid Cap): AAON, AMWD, AWI, AYI, BCC, CREE, CVCO, DOOR, FRTA, GFF, JELD, LPX, NYSE:LCII, PATK, ROCK, SSD, TILE, TREX, TSX:OSB, WMS; Manufacturing (Small Cap): AFI, APOG, CSTE, DXYN, IIIN, LYTS, NX, NYSE:SKY, PGTI, TGLS; Distribution / Installation: BECN, BLD, BLDR, BMCH, BXC, FBM, GMS, HDS, IBP, POOL, SIC, SITE, TSX:HDI, UFPI, WSO

Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member FINRA/SIPC and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.

For additional information on KeyBanc Capital Markets, please contact any of the individuals listed below:Building Products Team

Public Company Stock Performance Since February 21 Public Company Trading Performance Since February 21

(6%)

12%7%

(2%)

14.2x

8.6x

Manufacturing (Large Cap) Manufacturing (Mid Cap) Manufacturing (Small Cap) Distribution / Installation S&P 500

12.5x

30%

Pat CurryManaging Director

Head of Building Products

212.476.7428

[email protected]

J.R. Doolos Managing Director

Industrial M&A

216.689.7674

[email protected]

Cole MorrisonAnalyst

Building Products

212.476.7477

[email protected]

Ali Zahrieh Associate

Building Products

212.476.7467

[email protected]

(Enterprise Value / Next-Twelve-Months EBITDA)(Indexed to 0%)

8.8x

Nov-11 Nov-11

Industrial Investment Banking Round-UpChemicals & MaterialsAs of November 13th, 2020

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

Nov-19 Nov-20

Specialties Commodities / Diversified

10-Yr. 1-Yr. 3-Mon. 1-Mon.Specialties 170.5% 17.6% 3.3% 0.9%

Commodities / Diversified 2.8% (6.6%) 8.3% 0.9%S&P 500 197.9% 15.7% 5.7% 1.1%

(50.0%)

(40.0%)

(30.0%)

(20.0%)

(10.0%)

-

10.0%

20.0%

30.0%

Nov-19 Nov-20

Specialties Commodities / Diversified S&P 500

Chemicals & Materials Market Perspectives• The Chemicals indexes net moved sideways in the last month, with Specialties up 0.86% and Commodities / Diversifieds up 0.90%

– US Presidential / national elections and Pfizer’s COVID vaccine announcement did not create a meaningful value change overall• M&A continued its strong momentum

– Materials Technologies made an unsolicited approach for Elementis– 40 North Management made an unsolicited approach for W.R. Grace– Recticel will acquire Fritz Nauer– Wynnchurch acquired Drew Foam– HIRSCH Servo acquired Novopol– Fuchs Petrolub acquired PolySi Technologies– Advanced Emissions Solutions will acquire the Activated Carbon Manufacturing business of Caddo Creek Resources– DuPont will sell its Biomaterials business to an un-named acquiror– The McGregor Company acquired HydroGro– Nucor will acquire a paint line facility in Armorel, AR from Precoat Metals– Pidilite industries acquired Huntsman Advanced Material Solutions– Ticer Technologies will acquire certain deposition / sputtering assets from Materion– Metrika SGA acquired Allegrini– Maven Capital Partners acquired FIS Chemicals– Atkore International acquired Queen City Plastics– ICP acquired Leeson Polyurethanes– Greenfield Global will acquire Corn Plus ethanol facility in Winnebago, MN– Cargill will acquire International Flora Technologies– Orchard Creek Capital acquired Advantage Plastics and Sherri Plastics– Akzo Nobel will acquire the Titanlux and Titan Powder Coatings divisions of Industrias Titan– Brenntag will acquire Comelt– Alpek will acquire the expandable styrenics business of NOVA Chemicals– Element Solutions acquired IWTS– AOC acquired the UPR business of Spolchemi

Sources: Capital IQ as of 11/12/2020Commodities / Diversified: ASIX, ENXTPA:AKE, ASH, XTRA:BAS, BOVESPA:BRKM5, CBT, SWX:CLN, CE, NYSE:CF, CINR, NYSE:CMP, XTRA:1COV, NYSE:UAN, Dow, EMN, XTRA:EVK,NYSE: FOE, HUN, IPHS, TASE: ICL, KPLUY, ENXTAM:DSM, KOP, KRA, KRO, LXS, LYB, TSX:MX, MTX, TSX:NTR, OLN, BMV:ORBIA *,AVNT, SASE:2010,SOLB, LSE:SYNT,CC,NYSE:MOS,NYSE:MOS,TSE,TROX,VNTR,WLK, XTRA:WCH,OB:YARSpecialty: NasdaqGS:AGFS, APD, ENXTAM:AKZA, ALB, AVD, AXTA, BCPC, CCMP, CBM,LSE:CRDA, NYSE:CTVA,NYSE:DD,ECL, ESI, ENTG, FMC, GIVN, FUL, HXL, XTRA:HEN3,NGVT, IFF, ENXTPA:AI, LIN, LONN, NEU, PPG, KWR, RPM, SXT, SY1, SHW, GRA


Trading Perspectives by Sector

Share Price Performance by Sector Enterprise Value / NTM EBITDA

For additional information on KeyBanc Capital Markets, please contact any of the individuals listed below:Chemicals and Materials Team

Chris HoganManaging Director

Chemicals M&A

216.689.3447

[email protected]

Luke KorneyAssociate

Chemicals & Materials

216.689.4716

[email protected]

Trent GlasserAnalyst

Chemicals & Materials

216.689.3318

[email protected]

David RufManaging Director

Head of Chemicals & Materials

212.476.7424

[email protected]

Share Price Performance by Sector Enterprise Value / NTM EBITDA

15.6x

7.0x

17.6%

(6.6%)

% of 52-Week High: 97.4%

% of 52-Week High: 92.4%

10.7x

8.8x

10-Yr. Avg.

10-Yr. Avg.

15.7%

10-Yr. Avg 1-Yr. Avg 3-Mon. Avg. 1-Mon. Avg.Specialties 10.7x 14.3x 15.6x 15.4x

Commodities / Diversified 7.0x 8.2x 8.8x 8.7x

Industrial Investment Banking Round-UpDiversified IndustrialsAs of November 13th, 2020

5.0x

10.0x

15.0x

20.0x

Sources: IHS Markit, Wall Street Research, Capital IQ market data as of 11/11/201 PMI shown is a GDP-weighted average of the survey manufacturing and services indices; readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 signal contractionCapital Goods: CFX, GNRC, LECO, MTW, THR, TNC; Construction: ASTE, CAT, DE, MTW, TEX; Engineered Components: EPAC, HI, KMT, NPO, NVT; Flow Control / Water: AOS, AQUA, BMI, FELE, PNR, WTS, XYL; Food Equipment: ITW, JBT, MIDD, WBT; Industrial Technology: CTS, GGG, IEX, LFUS, NDSN; Large Cap Diversifieds: AME, DOV, EMR, ETN, HON, ITW, JCI, PH; Power Transmission: AIMC, RBC, RXN, TKR; Diversified Index: Average of all indexes


Recent Trends in ManufacturingGlobal PMI Sees Strong Start to Q4

• Global PMI™ surveys, compiled by IHS Markit, indicated a solid start to the fourth quarter for the global economy, with October business activity rising at the fastest rate in more than two years

– PMI rose from 52.5 in September to 53.3 in October and has now indicated expanding business activity for four successive months; this reflects a rebound in economic activity in the third quarter and at the start of the fourth quarter, after the COVID-19 pandemic caused an unprecedented collapse during the second quarter

– However, the recovery signaled by the global PMI remains only modest in terms of GDP growth → the PMI is running at a level consistent with annualized GDP growth of just over 3%

Businesses Remain Cautious, but Confidence has Improved

• Business confidence improved as companies have grown more optimistic about the remainder of 2020 and the start of 2021

– The survey's gauge of firms' expectations for their own output in 12 months time rose sharply in October, reaching the highest level since June 2018 → positive sentiment was linked to encouraging vaccine development headlines as well as expectations of further government stimulus

• Firms remained cautious with regard to hiring, keeping payroll numbers steady on average amid worries about the impact of second COVID-19 waves, which has cast a shadow over recovery prospects in the coming months

– The reluctance to boost headcounts is unusual given the increase in backlogs of uncompleted work in recent months, and also hints at a reluctance to add to staff costs due to an uncertain near-term demand outlook

For additional information on KeyBanc Capital Markets, please contact any of the individuals listed below:Diversified Industrials Team

Marco PalacioVice President

216.689.3096

[email protected]

Luke KorneyAssociate

216.689.4716

[email protected]

Chris RoehmManaging Director

312.730.2708

[email protected]

TJ MonicoManaging Director

216.689.3079

[email protected]

Jeff JohnstonManaging Director, M&A

216.689.4115

[email protected]

Connor WillseyAnalyst

312.730.2790

[email protected]

20.9x

Diversified Industrials EV / LTM EBITDA Trading Dashboard

17.3x17.5x

22.3x

17.5x17.6x

11.0x

12.0x

17.3x

Overall, diversified industrials sector valuations have fully recovered, and in some cases exceeded pre-pandemic levels

Global Employment by Broad Sector

Category Current1-Month

Avg.r vs.

1-MonthYTD Avg.

r vs. YTD

Industrial Technology 22.3x 21.7x 0.6x 18.2x 4.1x

Food Equipment 20.9x 19.4x 1.5x 15.7x 5.2x

Construction 17.6x 16.6x 0.9x 12.6x 4.9x

Flow Control / Water 17.5x 17.2x 0.3x 14.6x 2.9x

Large Cap Diversifieds 17.5x 15.8x 1.7x 13.3x 4.2x

Capital Goods 17.3x 16.4x 1.0x 13.0x 4.4x

Diversified Index 17.3x 16.0x 1.3x 13.1x 4.3x

Power Transmission 12.0x 11.5x 0.5x 9.3x 2.6x

Engineered Components 11.0x 10.5x 0.5x 9.8x 1.2x

Global PMI Output & Economic Growth 1

Global PMI by IHS Markit Global GDP annual % change

Industrial Investment Banking Round-UpIndustrial & Business Services








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

Industrial & Business Services Team

Ed Hertz

Director, I&BS

216.689.5006

[email protected]

Steve Meehan

Associate, I&BS

216.689.3494

[email protected]

Luke Korney

Associate, I&BS

216.689.4716

[email protected]

Industrial & Business Services Subsector Median Trading Multiples

Steve Hughes

Managing Director, I&BS

216.689.4101

[email protected]

Field Services Construction Services Engineering & Consulting

Waste & Environmental Staffing / Training / Security Rental Services

John Wen

Analyst, I&BS

216.689.5089

[email protected]

Jeff Johnston

Managing Director, M&A

216.689.4115

[email protected]

Industrial & Business Services Market Perspectives

Despite a recent increase in COVID-19 cases in the U.S., the construction sector and associated industrial & business services

industries continue to show signs of optimism. Construction added 84,000 jobs in October, the highest total since June and

Construction Starts are expected to rise 4% in 2021 after a 14% drop in 2020, due to the COVID shutdowns

• The Dodge Data & Analytics 2021 Construction Outlook predicts a 4% rise in construction starts in 2021, from $738 billion in

2020 to $771 billion in 2021

– The growth is expected to be driven by a rebound in residential and commercial starts, while the future of institutional and public works

construction is more ambiguous due to uncertainty around federal appropriations in 2021

• Waste management firms cited rebounding overall volumes in Q3 earnings results, but also noted that some shifts in type and

location of waste may be permanent

– Commercial volumes remain depressed by 5 to 10 percent, largely due to a drop in retail, restaurant and entertainment-related waste,

but the sharp increase in ecommerce has driven residential volumes higher

• The pandemic and associated demand for bandwidth has accelerated U.S. fiber-to-the-home trends to replace existing copper

– New Street Research expects the number of homes passed to increase from 40 million to 60 million over the next decade, improving the

percentage of homes passed from 25% to 35%

– The trend could be further aided by the Rural Digital Opportunity Fund (RDOF), which kicked off the Phase 1 auction on October 29

• The staffing industry added 108,700 jobs in October, the fastest growth among all of the 15 tracked industry groups

– The growth in temporary work, and increase in temp penetration indicates that employers are seeing an uptick in demand, but remain

cautious about the sustainability of the economic recovery

– Temporary worker growth was concentrated in industries particularly hard by the pandemic, including leisure & hospitality and retail

7.6x 7.4x 8.8x

9.7x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

4.9x 5.8x 5.6x

6.4x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

12.0x 11.8x 12.4x 12.5x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

11.4x 12.2x

13.2x 14.2x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

5.4x

10.2x 11.3x

13.3x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

8.7x 10.3x

11.5x 12.6x

3/31/2020 6/30/2020 9/30/2020 11/11/2020

Industrial Investment Banking Round-UpDistribution


Distribution Market Perspectives

• According to a recent MDM survey of more than 500 distributors, Q3 saw an average revenue decline of 3.2% YoY across

distribution as a whole, ~80 basis points higher than the forecasted revenue dip

– The continued recovery saw eight sectors posting YoY revenue growth for the third quarter, up from just two during Q2, with distributors of

outdoor living and building materials / home improvement products performing the strongest

▪ The remaining 12 sectors posting YoY revenue declines continue to moderate losses, with only four sectors seeing double-digit declines

▪ Forecasts continue to improve, with YoY revenue expected to decline just 0.3% overall across distribution during the fourth quarter

– Overwhelming industry sentiment is that the trough was not as deep as feared and the recovery was much quicker than expected

▪ One of the toughest challenges distributors faced during the peak of the pandemic was unpredictability around product sourcing and customer

demand

▪ Hiring trends remain mixed, with businesses whose performance remains soft slowing their hiring efforts, while other seek employees with digital skills

• FCH Sourcing Network’s monthly Fastener Distributor Index showed a seasonally adjusted reading of 56.5 during October, up

4.5 points MoM

– FDI’s forward-looking indicator, a measure of respondents’ expectations of future fastener market conditions, rose to 64.5 in October,

reaching a new year high and increasing 11.4 points since August

• In its most recent monthly trends report, Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) reported an

average sales increase of 13.9% for its members, driven by historically low mortgage rates, increased consumer confidence

and the continued employment recovery

• Distributors continue to see strong performance in the equity markets, up 145% on average from 52-week lows → oil & gas and

food / foodservice distributors, hit the hardest by COVID, are currently trading 61% and 244% above 52-week lows, respectively

– According to select industry participants, inventory levels and supply chains are in strong positions as the initial demand recovery appears

to be underway

Sources: MDM, Industrial Distribution1 Leverage = Index Average Net Debt / NTM EBITDA







Public Company 30-Day Stock Performance

(Indexed to 0.0%)

Public Company 30-Day Trading Performance

(EV / NTM EBITDA)

John EbertDirector

Distribution

216.689.3553

[email protected]

Will BeecherAssociate

Distribution

216.689.5683

[email protected]

Sam BeecherSenior Analyst

Distribution

216.689.5836

[email protected]

TJ MonicoManaging Director

Head of Distribution

216.689.3079

[email protected]

Jeff JohnstonManaging Director

Head of M&A

216.689.4115

[email protected]

For additional information on KeyBanc Capital Markets, please contact any of the Distribution Team individuals listed below:

Note: Market Data as of 11/11/2020; BL / Ind MRO: AIT, BOSN, FAST, GWW, HDS, LAWS, MSM, PKOH, SYX; O&G: DXPE, MRC, DNOW; Tech / E / E: ARW, AVT, BDC, ECM,

HWCC, RXL, SNX, TRNS, WCC; Food / Foods: BNZL, CHEF, CORE, PFGC, SYY, UNFI, USFD; Chem: BNR, DKSH, IMCD, UNVR; Vehicle: AAP, AZO, DORM, GPC, LKQ, MPAA,

ORLY, SMP, UNS; BP: BECN, BMCH, BLDR, BXC, FERG, FBM, GMS, HDI, RCH; Other: POOL, SITE, WSO

Broadline / Industrial MROOil & Gas

Technology / Electronics / ElectricalFood / Foodservice

ChemicalsVehicle Aftermarket

Building ProductsOther Specialty Distributors

S&P 500

1-Mo. 1-Wk. 1-Yr.

6% 17% (59%)

3% 5% 21%

3% 12% (9%)

3% 11% 2%

3% 3% 0%

1% 4% 16%

1% 0% 25%

0% 0% 24%

(2%) (5%) 51%

Average

Today 1-Mo. 1-Wk. 1-Yr. Lev.1

24.1x 25.6x 24.6x 22.8x 1.7x

16.3x 22.7x 17.5x 15.8x 2.5x

16.3x 15.5x 15.9x 13.6x 1.5x

12.7x 12.7x 12.4x 12.9x 2.0x

12.2x 12.4x 12.2x 13.1x 3.7x

11.6x 11.6x 11.6x 10.5x 2.2x

10.6x 10.7x 10.6x 10.1x 3.0x

8.5x 8.5x 8.3x 8.6x 3.5x

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

Oct-12 Oct-22 Nov-01 Nov-11

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

Oct-12 Oct-22 Nov-01 Nov-11

1

Global metals & mining review

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

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

securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department.

The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete and it should not be relied upon as such. This report does

not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general

information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.

Aluminum

▪ On October 27, President Trump signed a proclamation ending the 10% duties on Canadian aluminum imports. The

tariffs, which were reinstated in August, were removed on the expectation that Canadian imports would decrease 50%

through the end of 2020. The proclamation also stated the U.S. would consider reinstating the duties if imports increased

above expectations

Steel

▪ U.S. Steel has announced the successful start-up of its electric arc furnace (‘EAF’) at its tubular steel plant in Fairfield,

AL. Part of $412 million investment at the facility, Fairfield EAF #1 is the first furnace of its kind for U.S. Steel

(independent from its investment in Big River Steel) and has an annual melting capacity of ~1.5 million metric tons. The

furnace will employ 150 full time employees and is expected to reach full capacity in 2021

▪ Ternium now plans to begin production at its hot-rolling mill in Pesquería, Mexico (near Monterrey) in July of 2021.

Start-up of the facility was previously planned for the 4Q of 2020, then delayed to April 2021 due to the Covid-19

pandemic. The mill will have an annual production capacity of 4.1 million metric tons, however the Company’s timeline

for a ramp-up to full production has not been disclosed

▪ Domestic steel production continues to ramp-up, driven by rebounding demand following Covid-19 shutdowns. U.S.

crude steel production increased for the seventh week in a row through the first week of November, increasing ~1.0%

WoW, with mills producing ~1.4 million metric tons at an average capacity utilization of 71.1% (see pg. 4)

Copper, Lead and Zinc

▪ U.S. premiums for special high-grade (‘SHG’) zinc ingot rose for the first time in five months, primarily driven by steadily

improving demand from the automotive sector, which is a major consumer of hot-dipped galvanized steel coil. In the first

week of November, the U.S. Midwest premium for SHG zinc ingot increased to 8 – 8.75 cents per pound from 8 – 8.5

cents per pound, a range which it held since late May

Specialty & Alloys

▪ U.S. ferro-titanium pricing has moderated on slowing volumes, following a six-week rally. Ferro-titanium markets have

faced a significant supply deficit, driven by a shortage in titanium scrap used to produce it. Sellers in the U.S. market are

holding out for higher prices, expecting improving demand from steel consumers and the historic scrap shortage

worsening to drive pricing

Mining, Scrap and Materials

▪ U.S. Steel has announced plans to restart Keetac, the Company’s iron ore mining and pelletizing operations located in

Keewatin, MN. The facility has an annual capacity of ~5.4 million metric tons and was idled in May 2020 due to a plunge

in demand for iron units for steelmaking linked to the Covid-19 pandemic. The restart will help the Company build pellet

inventories to feed U.S. Steel’s blast furnaces over the winter months, when locks on the Great Lakes are closed. The

Company plans to restart the plant by the end of 2020 and will collaborate with the United Steelworkers union to fill

nearly 400 full time positions

7.4%

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

Q3 2017 Q1 2018 Q3 2018 Q1 2019 Q3 2019 Q1 2020 Q3 2020

GD

P (

% c

ha

ng

e Q

oQ

)

59.3

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20

ISM

Pu

rch

as

ing

Ma

na

ge

rs I

nd

ex

(P

MI)

2

Economic commentary

Source: Bloomberg, U.S. Census Bureau, Institute for Supply Management, U.S. Bureau of Economic Analysis

Purchasing Managers Index (PMI) (through October 2020)

The U.S. manufacturing PMI

increased from 55.4 in

September to 59.3 in

October

The PMI was above 50.0 for

the 5th time since its April

low, driven by the on-going

recovery in the

manufacturing sector and

overall economy; An index

value over 50.0 indicates

expansion in the

manufacturing sector

Quarterly GDP – Annualized and Seasonally Adjusted (through 3Q of 2020)

According to the U.S. Bureau

of Economic Analysis,

annualized GDP increased

7.4% in the 3Q of 2020,

following a decrease of 9.0%

in the 2Q of 2020

Nominal GDP remains below

pre-pandemic levels, but is

expected to improve as the

economy recovers from the

Covid-19 induced recession

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2010 2012 2014 2016 2018 2020

Oil v

s. G

as

(R

ig C

ou

nt)

Oil Gas

3

Economic commentary (continued…)

Source: Bloomberg, U.S. Census Bureau, Institute for Supply Management1 Horizontal drilling data includes directional drilling wells

Construction Put In Place – Annualized and Seasonally Adjusted (through September 2020)

According to the U.S.

Census Bureau, September

2020 construction spending

totaled $1,414.1 billion, up

1.5% YoY

Gains are attributable to an

10.0% increase and a (4.4%)

decrease in Residential

Construction and Non-

Residential Construction,

respectively

619.8

794.3

$30

$130

$230

$330

$430

$530

$630

$730

$830

$930

Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20

Billio

ns

of

Do

lla

rs

Residential Non-residential

Oil & Gas Drilling Activity – U.S. 1 (November 6, 2020)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2010 2012 2014 2016 2018 2020

% o

f T

ota

l R

ig C

ou

nt

% Horizontal % Vertical

Base Metals Aluminum Copper Nickel Zinc

End of Month Price ($ / lb) $0.83 $3.07 $6.86 $1.15

MoM % Change 7.6% 3.2% 5.9% 9.7%

YoY % Change 5.4% 16.6% 0.9% 4.1%

Steel HRC CRC HDG Plate Rebar Merchant Bar

End of Month Price ($ / Ton) $684 $840 $945 $620 $600 $720

MoM % Change 10.4% 7.7% 6.8% 6.9% 0.8% 0.7%

YoY % Change 29.9% 16.7% 16.0% 3.3% 0.8% 9.9%

$0.00

$2.50

$5.00

$7.50

$10.00

$12.50

$15.00

Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20

U.S

. $

/ l

b

Nickel

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00


U.S

.$ / l

b

Aluminum Copper Zinc

$0

$200

$400

$600

$800

$1,000

$1,200


U.S

. $

/ t

on

Rebar Merchant Bar

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600


U.S

. $

/ t

on

HRC CRC HDG Plate

4

Base Metals Prices (through November 6, 2020)

Steel Prices (through November 6, 2020)

Source: American Metal Market

Note: Midwest quotes used for steel pricing

Industry fundamentals

5

Source: American Iron and Steel Institute, Baker Hughes Investor Relations/Rig Data

Industry fundamentals (continued…)

U.S. Capacity Utilization (through October 31, 2020)

Idled N.A. Mill Operations (as of November 6, 2020)

Cleveland-Cliffs

▪ Cleveland, Blast Furnace No. 6

▪ Burns Harbor, Blast Furnace D

▪ Dofasco, Blast Furnace No. 3

▪ Hot strip mill in Dearborn, MI

▪ Stainless mill in Mansfield, OH

Evraz ▪ Seamless pipe mill in Pueblo, CO

JSW Steel ▪ EAF and mill in Mingo Junction, OH ▪ Plate mill in Baytown, TX

Liberty Steel ▪ Wire rod mill in Georgetown, SC ▪ EAF and mill in LaPlace, LA

Tenaris▪ Billet mill in Koppel, PA

▪ Tubular operations in Ambridge, PA▪ Tubular operations in Baytown, TX

U.S. Steel▪ Granite City, Blast Furnace A

▪ Gary Works, Blast Furnace No. 4

▪ Tubular operations in Lone Star, TX

▪ Tubular operations in Lorain, OH

0.0%

15.0%

30.0%

45.0%

60.0%

75.0%

90.0%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Jun-19 Aug-19 Nov-19 Feb-20 May-20 Jul-20 Oct-20

Cap

acity

Utiliz

atio

n (%

)

To

ns

(000s

)

Tota l Production Capacity Utilization

U.S. steel production

increased throughout

October with capacity

utilization at 71.1%, up from

66.1% in September

Mills have produced 66.1

million tons in 2020 at an

average capacity utilization

rate of 66.2%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

0

2,000

4,000

6,000

8,000

10,000

Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20

Av

g. D

aily

Sh

ipm

en

ts ('0

00

s T

on

s)

En

din

g In

ve

nto

ry (

'00

0s

To

ns

)

Ending Inventory Avg. Daily Shipments

6

Source: World Steel Association, Metals Service Center Institute

MSCI Ending Inventories & Average Daily Shipments (through September 30, 2020)

Monthly Steel Production (LTM through September 30, 2020)

('000s M T) U.S. China Rest of World World Total

LTM Production 75,091 1,029,387 693,197 1,797,675

MoM % Change (3.7%) (2.4%) 1.0% (1.2%)

YoY % Change (18.5%) 11.8% (5.5%) 3.4%

% of World Total 4.2% 57.3% 38.5% 100.0%


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20

Mo

nth

ly P

rod

uc

tio

n (

'00

0s

To

ns

)

U.S. China Rest of World

Ferrous ($ / ton) Non-ferrous ($ / lb)

Scrap Heavy Melt #1 Shredded Auto Aluminum Scrap Copper Scrap Nickel Scrap

End of Month Price $255 $290 $0.54 $2.88 $3.65

MoM % Change 4.1% 3.6% 6.9% 5.5% 0.7%

YoY % Change 6.3% 22.4% 0.9% 18.4% (8.2%)

Scrap Spread $429 $394 $0.29 $0.19 $3.21

$0.00

$3.00

$6.00

$9.00

$12.00


U.S

. $

/ l

b

Aluminum Scrap Copper Scrap Nickel Scrap

$0

$100

$200

$300

$400

$500


U.S

. $

/ t

on

Heavy Melt #1 Shredded Auto

130

180

(2)

($75)

$0

$75

$150

$225

$300

Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20

Aluminum Scrap Copper Scrap Nickel Scrap

7

Ferrous & Non-Ferrous Scrap Prices (through November 6, 2020)

Source: U.S. Census Bureau, American Metal Market1 Scrap trade data through 9/30/2020; $ in millions

Ferrous Monthly Scrap Net Exports 1 Non-Ferrous Monthly Scrap Net Exports 1

225

$0

$100

$200

$300

$400

$500

Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20


October 29, 2020

X - ALERT: 3Q20 Exceeds Expectations on

Volumes; FCFE + on NWC Release

November 3, 2020

TMST: Headwinds Remain Fierce; SW

October 28, 2020

RYI - ALERT: 3Q20 Beats via LIFO, Tax; FCFE

Robust on NWC Wizardry

8

1 KeyBanc Capital Markets’ Industrial Research platform has consistently achieved a Top 3 ranking in Greenwich Associates annual survey of small / mid-cap fund

managers. In its June 2019 Analyst Awards, ThomsonReuters recognized Phil Gibbs as the #1 earnings estimator in the Metals & Mining sector

KeyBanc Capital Markets’ top-ranked 1 equity research team covers numerous companies across the Metals and Mining

sector. Selected recent research notes are provided below. Click on the respective “tear out” to read the entire note.

Select KeyBanc Capital Markets’ equity research

Aerospace

October 29, 2020

ATI - ALERT: 3Q20 Beat on Cost Control;

Recovery Signs on the Horizon

October 28, 2020

Aerospace - ALERT: Aero Highlights from BA,

GE Calls

November 5, 2020

MT - ALERT: 3Q20 Sees Demand Recovery,

Focus Now on Shareholders

October 27, 2020

LXFR: Adjusting Estimates; SW

November 5, 2020

ZEUS - ALERT: Flat Rolled Volumes Drive Beat;

FCFE Harvested on Last Stage of NWC Purge

https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=b54605a4-3762-435b-9d58-8dfc8d94c315&mime=pdf&co=KBCM&[email protected]&source=libraryView

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9

Capital markets update

Source: Capital IQ

Investment Grade and High Yield Bond Spreads (through November 6, 2020)

A and BBB rated bond

spreads remained stable

into November. BB and B

rated spreads traded up

higher in the final days of

October, but ultimately fell

during the first week of

November

Index Performance (through November 6, 2020)

All KeyBanc metals

indices have

underperformed the

broader market over the

past 12 months

Global Producers,

Service Centers and

Specialty Metals are

down by (2.1%), (9.2%)

and (50.2%), respectively

124

192

364

583

0

200

400

600

800

1,000

1,200

1,400

Nov-15 Nov-16 Nov-17 Nov-18 Nov-19 Nov-20

Sp

rea

d t

o M

atu

rity

A Index BBB Index BB Index B Index

(2.1%)

(9.2%)

(50.2%)

12.0%

(80.0%)

(60.0%)

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20

Global Producers Service Centers Specialty Metals S&P 500

Friday Prior Week Change

1-Month LIBOR 0.13% 0.14% (0.01% )

3-Month LIBOR 0.21% 0.22% (0.01% )

SOFR 1 0.11% 0.09% 0.02%

Fed Funds 0.25% 0.25% 0.00%

Fed Discount 2.75% 2.75% 0.00%

Prime 3.25% 3.25% 0.00%

US Treasury Yields

2-year Treasury 0.15% 0.16% (0.01% )

5-year Treasury 0.36% 0.39% (0.03% )

10-year Treasury 0.82% 0.88% (0.06% )

Swaps vs. 3M LIBOR

2-year 0.24% 0.24% 0.00%

5-year 0.42% 0.45% (0.03% )

10-year 0.84% 0.90% (0.06% )

10

Source: Bloomberg, Federal Reserve1 SOFR is a secured overnight rate, currently without a term structure

FED Speak & Economic News

• The Democratic president-elect, Joe Biden, is projected to be the 46th president of the United States. However, the Trump campaign has

initiated multiple voter fraud complaints and filed lawsuits within critical swing states that could drag the election until mid-December. Despite

the election uncertainty, all major U.S. equity indices posted sizable gains in the first week of November on better-than-anticipated labor

market results and a continued accommodative stance from the FED per the statement released following the conclusion of its November

policy meeting on November 5th

• On the data front, the October jobs report reflected the labor market’s resiliency, despite worsening Covid-19 conditions across many states.

The unemployment rate dropped to 6.9% in October, an improvement from the expected 7.7%. Additionally, the U.S. added roughly 638,000

jobs in October, beating the consensus expectation by over 100,000 jobs. Despite labor market improvement, FED Chairman Jerome Powell

made it very clear to market participants that overall economic output in the U.S. remains well below levels seen before the pandemic began.

Powell also stated that the recent spike in Covid-19 cases poses a significant threat to the economic health of the U.S. over the ‘medium

term.’ Lastly, the Federal Open Market Committee met expectations and left the FED’s current target rate unchanged. This decision was

paired with a statement revealing that the FED will continue to purchase bonds and mortgage-backed securities to support economic recovery

• The strong bid in U.S. Treasuries in the first week of November was due to the continued safe-haven demand from investors, as well as

ongoing purchases by the FED in its effort to keep markets functioning throughout the pandemic. Both the U.S. Treasury yield and USD swap

curves flattened out, with most of the movement taking place at the long end of both curves. Despite the dip, the U.S Treasury yield curve is

steeper compared to levels seen thus far in 2020. The YTD average of the spread between the 2- and 10-year U.S. Treasury yields was 51

bps, since the FED cut its target rate to near zero in March; the spread finished the November 6th session at 66 bps. Additionally, 3-month

LIBOR is currently 0.21%. Only 13 bps above the current FED funds rate of 0.08%

Capital markets update (continued…)

Current Rate Snapshot (as of November 9, 2020) 10-Year Swap Premium

Source: Bloomberg

The 10-year swap premium, reflecting the difference between

the 10-year USD pay-fixed swap rate and the industry-standard

3-month LIBO rate, currently sits at 64 bps. Although this level is

~21 bps above the 4-year historical average, this premium is still

‘cheap’ for fixed rate seekers. The spread has hovered between

100 – 150 bps in 2016 – 2017. This was at a time when the 10-

year U.S. Treasury yield traded between 1.50% – 2.50% in a

steep yield curve environment

43 bps

(100)

(50)

0

50

100

150

200

Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20

Historical 10-Year Hedge Premium 4Yr Average

(bps)

Announced ClosedAcquirer

(Parent)

Target

(Seller)Highlights

11/8/2020 PendingAmerican Industrial

Partners

Aleris Lewisport Facility

(Novelis)

▪ American Industrial Partners has acquired Aleris’ Lewisport, KY facility.

The transaction consideration was ~$171.0 million

▪ Novelis was ordered by the DOJ to divest these assets in conjunction

with its acquisition of Aleris in April of 2020

11/2/2020 11/2/2020 Liberty SteelSolon Specialty Shaped

Wire

▪ Liberty steel has acquired Solon Specialty Wire. The transaction

consideration was not disclosed

▪ This transaction compliments Liberty’s existing North America wire

operations. Solon Specialty Shaped Wire will be managed under

Liberty’s Johnstown Wire business which the company acquired in

June of 2019

10/28/2020 10/28/2020 Nucor

Precoat Metals Paint Line

Facility

(Precoat Metals Corp.)

▪ Nucor has acquired Precoat Metals’ paint line facility in Armorel, AK.

The transaction consideration was not disclosed

▪ This transaction enhances to Nucor’s value-added finishing

capabilities and is part of a broader, long-term growth strategy to

invest in capabilities

10/28/2020 10/28/2020 ALMAG AluminumAssets of Shoals

Extrusion

▪ ALMAG Aluminum has acquired the Shoals Extrusion assets of

Alabama Extrusions, located in Florence, AL. The transaction


▪ The acquisition will expand ALMAG’s press capacity and provide

additional space for value-added operations

10/20/2020 10/20/2020Auxo Investment

Partners GC Dies

▪ Auxo Investment Partners has acquired GC Dies. The transaction


▪ This transaction expands Auxo’s portfolio and marks its third

investment in a tool & die manufacturer

11

Source: American Metal Market, The Daily Deal, MergerMarket

Select recent transaction activity

Closed Company Gross Offering Size Highlights

10/19/2020Periama Holdings

(JSW Steel)

$500 million Convertible

Senior Eurobond

▪ $500 million, 5.950% convertible senior Eurobond due 2026

▪ The proceeds will be used to for general corporate purposes

10/14/2020 Argonaut Gold$57.5 million Convertible

Senior Unsecured Bond

▪ $57.5 million, 4.625% convertible unsecured bond due 2025

▪ The proceeds will be used to fund construction of its Magino, Ontario mine

12

Source: American Metal Market, The Daily Deal, MergerMarket

Recent capital markets’ activity

13

Source: CapitalIQ, ThomsonReuters, SEC Filings

Note: Outlying EV/EBITDA and P/E multiples were excluded from average and median calculations

Metals public operating & trading statistics

$ in millions, except per share data Prices

as of Market Enterprise LTM CY 2021 LTM CY 2021

Company Ticker 11/9/2020 Cap Value Sales EBITDA % Margin EPS EBITDA EPS EV / EBITDA P/E Ratio EV / EBITDA P/E Ratio

ArcelorMittal ENXTAM:MT $16.05 $17,644 $27,386 $57,968 $3,738 6.4% ($2.22) $5,569 $1.06 7.3x NM 4.9x 15.1x

Companhia Siderúrgica Nacional BOVESPA:CSNA3 3.97 5,483 10,905 5,267 1,285 24.4% 0.59 1,439 0.31 8.5x 6.7x 7.6x 12.7x

Gerdau S.A. BOVESPA:GGBR3 3.39 5,802 8,153 7,434 1,037 13.9% 0.16 1,386 NA 7.9x 21.0x 5.9x NA

Grupo Simec, S.A.B. de C.V. AMEX:SIM 9.26 1,431 1,096 1,627 257 15.8% 0.29 220 NA 4.3x NM 5.0x NA

PAO Severstal LSE:SVST 14.00 11,550 13,343 7,080 2,291 32.4% 1.08 2,639 1.80 5.8x 12.9x 5.1x 7.8x

SSAB AB (publ) OM:SSAB A 3.00 3,085 4,363 7,567 210 2.8% (0.23) 733 0.19 NM NM 6.0x 15.4x

Tata Steel Limited 500470 5.91 6,774 20,898 19,138 2,644 13.8% 0.59 3,346 0.79 7.9x 10.0x 6.2x 7.5x

thyssenkrupp AG XTRA:TKA 4.84 3,012 14,041 45,271 1,191 2.6% (2.23) 1,198 (0.78) 11.8x NM 11.7x NM

Average $6,848 $12,523 $18,919 $1,582 14.0% $2,066 7.6x 12.7x 6.5x 11.7x

Median $5,642 $12,124 $7,501 $1,238 13.9% $1,413 7.9x 11.5x 5.9x 12.7x

Commercial Metals Company CMC $20.79 $2,519 $3,061 $5,476 $606 11.1% $2.36 $535 $1.91 5.1x 8.8x 5.7x 10.9x

Nucor Corporation NUE 48.28 14,632 17,294 20,011 2,102 10.5% 2.38 NA 2.95 8.2x 20.3x NA 16.4x

Steel Dynamics, Inc. STLD 33.35 7,017 8,466 9,371 1,092 11.6% 2.30 1,134 2.60 7.8x 14.5x 7.5x 12.8x

United States Steel Corporation X 10.53 2,321 5,570 10,003 (78) (0.8%) (6.51) 636 (1.23) NM NM 8.8x NM

Average $6,622 $8,598 $11,215 $930 8.1% $768 7.0x 14.5x 7.3x 13.3x

Median $4,768 $7,018 $9,687 $849 10.8% $768 7.0x 14.5x 7.5x 12.8x

Olympic Steel Inc. ZEUS $12.99 $152 $342 $1,307 $24 1.8% ($0.29) NA $0.00 14.5x NM NA NA

Reliance Steel & Aluminum Co. RS 117.21 7,473 8,533 9,126 942 10.3% 7.49 1,013 8.82 9.1x 15.7x 8.4x 13.3x

Russel Metals Inc. TSX:RUS 14.95 943 1,311 2,396 106 4.4% 0.37 161 1.11 12.4x NM 8.1x 13.5x

Ryerson Holding Corporation RYI 9.09 346 1,045 3,575 151 4.2% (1.03) 168 0.88 6.9x NM 6.2x 10.3x

Worthington Industries, Inc. WOR 51.11 2,779 2,696 2,906 269 9.3% 0.26 299 3.71 10.0x NM 9.0x 13.8x

Average $2,339 $2,785 $3,862 $298 6.0% $410 10.6x 15.7x 8.0x 12.7x

Median $943 $1,311 $2,906 $151 4.4% $233 10.0x 15.7x 8.3x 13.4x

ALBA SE DB:ABA $76.21 $747 $665 $437 $6 1.3% $0.37 NA NA NM NM NA NA

Schnitzer Steel Industries, Inc. SCHN 22.26 603 694 2,133 79 3.7% 0.27 NA NA 8.8x NM NA NA

Sims Limited ASX:SGM 7.27 1,464 1,383 3,580 40 1.1% (0.62) 199 0.26 NM NM 7.0x 28.3x

Average $938 $914 $2,050 $41 2.0% $199 8.8x NM 7.0x 28.3x

Median $747 $694 $2,133 $40 1.3% $199 8.8x NM 7.0x 28.3x

Allegheny Technologies Incorporated ATI $11.63 $1,475 $2,560 $3,342 $269 8.0% ($0.88) $229 ($0.30) 9.5x NM 11.2x NM

Carpenter Technology Corporation CRS 17.88 864 1,339 1,949 183 9.4% 0.68 NA NA 7.3x 26.4x NA NA

Haynes International, Inc. HAYN 20.03 253 226 430 34 7.9% 0.84 NA NA 6.6x 23.9x NA NA

Kaiser Aluminum Corporation KALU 62.80 1,029 1,117 1,269 174 13.7% 3.61 197 6.33 6.4x 17.4x 5.7x 9.9x

Materion Corporation MTRN 51.28 1,078 1,109 1,184 161 13.6% 5.25 121 2.91 6.9x 9.8x 9.2x 17.7x

Universal Stainless & Alloy Products, Inc. USAP 6.50 57 119 204 8 3.9% (1.24) 13 (0.73) 14.9x NM 9.0x NM

Average $793 $1,078 $1,396 $138 9.4% $140 8.6x 19.3x 8.8x 13.8x

Median $946 $1,113 $1,227 $168 8.7% $159 7.1x 20.6x 9.1x 13.8x

Inte

rnati

on

al

Pro

du

cers

Do

mesti

c P

rod

ucers

Sp

ecia

lty M

eta

ls &

All

oys

Scra

p

Recycli

ng

Serv

ice C

en

ters

/

Pro

cesso

rs

14

Source: CapitalIQ, ThomsonReuters, SEC Filings

Metals public credit statistics

$ in millions

Total Net Total Debt / Net Debt / Total Debt / Net Debt / EBITDA /

Company Ticker Debt Debt EBITDA EBITDA Cap (book) Cap (book) Interest

ArcelorMittal ENXTAM:MT $13,548 $7,918 3.6x 2.1x 26.0% 15.2% 2.4x

Companhia Siderúrgica Nacional BOVESPA:CSNA3 6,766 5,170 NM 4.0x 87.9% 67.1% 3.8x

Gerdau S.A. BOVESPA:GGBR3 3,657 2,309 3.5x 2.2x 38.5% 24.3% 3.8x

Grupo Simec, S.A.B. de C.V. AMEX:SIM 0 (337) NM NM 0.0% NM NM

PAO Severstal LSE:SVST 2,563 1,779 1.1x 0.8x 50.3% 34.9% 15.9x

SSAB AB (publ) OM:SSAB A 1,891 1,265 NM NM 22.0% 14.7% 1.0x

Tata Steel Limited 500470 15,305 13,774 NM NM 60.6% 54.6% 2.6x

thyssenkrupp AG XTRA:TKA 12,691 10,549 NM NM NM 86.5% 0.6x

Average $7,053 $5,304 2.8x 2.3x 40.7% 42.5% 4.3x

Median $5,211 $3,740 3.5x 2.2x 38.5% 34.9% 2.6x

Commercial Metals Company CMC $1,084 $542 1.8x 0.9x 36.5% 18.2% 9.8x

Nucor Corporation NUE 5,526 2,247 2.6x 1.1x 34.9% 14.2% 14.4x

Steel Dynamics, Inc. STLD 2,719 1,451 2.5x 1.3x 39.3% 21.0% 10.2x

United States Steel Corporation X 4,890 3,194 NM NM 58.6% 38.3% NM

Average $3,555 $1,859 2.3x 1.1x 42.3% 22.9% 11.5x

Median $3,804 $1,849 2.5x 1.1x 37.9% 19.6% 10.2x

Olympic Steel, Inc. ZEUS $197 $190 NM NM 39.6% 38.2% 2.6x

Reliance Steel & Aluminum Co. RS 1,644 1,053 1.7x 1.1x 24.6% 15.7% 14.8x

Russel Metals Inc. TSX:RUS 437 369 4.1x 3.5x 37.9% 31.9% 3.6x

Ryerson Holding Corporation RYI 961 839 6.4x 5.6x 87.9% 86.4% 1.8x

Worthington Industries, Inc. WOR 707 (230) 2.6x NM 46.3% NM 9.1x

Average $789 $444 3.7x 3.4x 47.3% 43.1% 6.4x

Median $707 $369 3.4x 3.5x 39.6% 35.1% 3.6x

ALBA SE DB:ABA $27 ($82) 4.6x NM 15.2% NM 4.5x

Schnitzer Steel Industries, Inc. SCHN 104 87 1.3x 1.1x 13.4% 11.1% 9.5x

Sims Limited ASX:SGM 85 (80) 2.1x NM 5.6% NM 3.5x

Average $72 ($25) 2.7x 1.1x 11.4% 11.1% 5.8x

Median $85 ($80) 2.1x 1.1x 13.4% 11.1% 4.5x

Allegheny Technologies Incorporated ATI $1,541 $969 NM 3.6x 47.1% 29.6% 2.9x

Carpenter Technology Corporation CRS 694 475 3.8x 2.6x 33.0% 22.6% 6.3x

Haynes International, Inc. HAYN 39 (27) 1.1x NM 11.6% NM NM

Kaiser Aluminum Corporation KALU 838 88 4.8x 0.5x 53.8% 5.6% 4.8x

Materion Corporation MTRN 149 31 0.9x 0.2x 19.6% 4.1% NM

Universal Stainless & Alloy Products, Inc. USAP 62 62 NM NM 21.0% 20.9% 2.5x

Average $554 $266 2.7x 1.7x 31.0% 16.6% 4.1x

Median $421 $75 2.5x 1.5x 27.0% 20.9% 3.9x

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Client Business Description

Deal Value

($ mm) Type Closed

American Securities -

NN Life Sciences

Manufactures high-precision metal and plastic

components $485 Buy-Side Advisor Oct-20

NN Life SciencesManufactures high-precision metal and plastic

components $485 Senior Secured Credit Facility Oct-20

Reliance Steel & Aluminum Processor and distributor of metals $900 Senior Notes Jul-20

Ryerson Inc. Processor and distributor of metals $500 Senior Secured Notes Jul-20

Kymera International Producer of specialty, non-ferrous metal powders $185Senior Secured Credit

FacilitiesMar-20

NN Inc.Manufacturer of metal bearing components, plastic and

rubber components, and precision metal components$345

Senior Secured Credit

FacilitiesDec-19

Zochem Manufacturer of zinc oxide $70Senior Secured Revolving

Credit FacilityDec-19

Navajo Transitional Energy Company Miner of coal reserves on the Navajo Nation $25 Senior Revolving Credit Facility Oct-19

Venture Metals LLC Processor of non-ferrous scrap metal $125+Senior Secured Revolving

Credit FacilitesSep-19

Versatile Processing Group Processor of non-ferrous scrap metal ND Sell Side Advisor Jul-19

Johnstown Wire Technologies Producer of cold-drawn steel wire products ND Sell Side Advisor Jun-19

ATI Manufacturer of complex forgings for blue-chip OEMs ND Sell Side Advisor Jun-19

Ellwood GroupGlobal manufacturer of high-quality, engineered, heavy

metal components$150

Senior Unsecured Revolving

Credit FacilitiesMay-19

Kymera International Producer of specialty, non-ferrous metal powders $275 Senior Secured Credit Facilites Oct-18

Palladium Equity Partners -

Kymera InternationalProducer of specialty, non-ferrous metal powders $275 Buy Side Advisor Oct-18

NN Inc.Manufacturer of metal bearing components, plastic and

rubber components, and precision metal components$230 Follow-On Sep-18

Aleris International Manufacturer of aluminum rolled products $400Senior Secured Junior Priority

NotesJun-18

Conuma Coal Resources Limited Miner of metallurgical coal in British Columbia $200 Senior Secured Notes Apr-18

Main Steel LLCWhite metals toll processor, specializing in stainless

steel coil polishing ND Sell Side Advisor Nov-17

15

Select transaction experience

For additional information about KeyBanc Capital Markets, contact:

Metals & Mining Team

Eric Klenz

216.689.3974

[email protected]

Arindam Basu

216.689.4262

[email protected]

Barry Stormer

216.689.7921

[email protected]

Alex Leszcz

216.689.5011

[email protected]

Donald Bleifuss

216.689.8404

[email protected]

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

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

securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department.

The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete and it should not be relied upon as such. This report does

not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general

information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.

Industrial Investment Banking Round-UpPaper and PackagingAs of November 13th, 2020

Earnings News• Public companies announced their earnings for the third quarter; weighted average year-over-year change was as follows:

– Rigid Packaging: Sales up 2%; Adj. EBITDA up 8%

– Paper-Based Packaging: Sales down 1%; Adj. EBITDA down 11%

– Flexible Packaging: Sales flat; Adj. EBITDA up 8%

– Labels: Sales down 2%; Adj EBITDA up 11%

– Pulp & Paper: Sales down 15%; Adj. EBITDA down 21%

– Commercial Printing: Sales down 18%; Adj. EBITDA down 3%

General News• Sonoco plans to close its Yakima plastic thermoforming plant in December

Mergers & Acquisitions• Westhook Capital made an investment in RainShadow Labs, which provides private label manufacturing services

• Wynnchurch Capital acquired Drew Foam from Branford Castle Partners

• Saothair Capital Partners acquired the assets of catalog printing specialist Arandell out of Chapter 11

• Qualfon acquired MAR Graphics, a print mail and digital solutions provider

• The BoxMaker has agreed to acquire Tango Press, an all-digital production plant for corrugated packaging and displays

• The Shamrock Companies acquired Cincinnati Print Solutions, a print management company

• Pregis, owned by Warburg Pincus, acquired Technical Machinery Solutions and the Graphic Innovators business

• Behrens Investment Group agreed to acquire the assets of Gorham Paper and Tissue and White Mountain Tissue out of Ch. 11

• Golden West Packaging, owned by Lindsay Goldberg, acquired Berry Pack and Progressive Packaging Group

• Berlin Packaging, owned by Oak Hill Capital, acquired Consolidated Bottle Corporation

• Quad/Graphics sold its two remaining book manufacturing facilities to Berryville Graphics, a division of Bertelsmann Printing

• ePost Global acquired the International Mail and Parcel Logistics Business of R.R. Donnelley & Sons Company

• Resource Label Group, owned by First Atlantic Capital, acquired McDowell Packaging & Advertising

• Revolution, owned by Arsenal Capital, acquired Polar Plastics Corporation from Spell Capital Partners

• DCG ONE, owned by Clavis Capital, acquired Vertigo Partners, a qualitative market and user research firm

• Vision Integrated Graphics, owned by H.I.G. Capital, acquired DX Marketing

• Brook and Whittle, owned by Snow Phipps, announced a partnership with Tri Print

• Western Shield Label Company, owned by ACI Capital, has acquired The Label Smith

• Wind Point Partners acquired Handgards, Inc., a manufacturer and supplier of foodservice disposable products


industrial investment banking round-up · 2021. 2. 1. · industrial investment banking round-up...

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