industrial investment banking round-up...industrial investment banking round-up industrial &...

Industrial Investment Banking Round-UpPaper and PackagingAs of February 12th, 2021

Earning Announcements• International Paper: Sales declined 5% to $5.2 billion; Adjusted EBITDA declined 22% to $754 million

• WestRock: Sales declined 1% to $4.4 billion; Adjusted EBITDA declined 1% to $670 million

• Berry: Sales increased 11% to $3.1 billion; Adjusted EBITDA increased 20% to $539 million

• Ball Corp.: Sales increased 14% to $3.1 billion; Adjusted EBITDA increased 5% to $492 million

• Amcor: Sales increased 2% to $3.1 billion; Adjusted EBITDA increased 5% to $469 million

• Crown Holdings: Sales increased 6% $3.0 billion; Adjusted EBITDA increased 28% to $461 million

• Avery Dennison: Sales increased 12% to $2.0 billion; Adjusted EBITDA increased 40% to $325 million

• Graphic Packaging: Sales increased 9% to $1.7 billion; Adjusted EBITDA increased 2% to $265 million

• Packaging Corp. of America: Sales were flat at $1.7 billion; Adjusted EBITDA declined 14% to $290 million

• O-I Glass: Sales declined 8% to $1.6 billion; Adjusted EBITDA increased 28% to $197 million

• Sonoco: Sales increased 5% to $1.4 billion; Adjusted EBITDA increased 3% to $179 million

• Sealed Air: Sales increased 3% to $1.3 billion; Adjusted EBITDA increased 3% to $279 million

• Silgan: Sales increased 17% to $1.2 billion; Adjusted EBITDA increased 33% to $177 million

• Domtar: Sales declined 10% to $920 million; Adjusted EBITDA increased 78% to $91 million

• Reynolds Consumer Products: Sales increased 6% to $888 million; Adjusted EBITDA declined 8% to $198 million

• Cimpress: Sales declined 4% to $786 million; Adjusted EBITDA declined 23% to $143 million

• Resolute Forest Products: Sales increased 15% to $769 million; Adjusted EBITDA was $129 million

• Deluxe: Sales declined 13% to $455 million; Adjusted EBITDA declined 27% to $95 million

• Glatfelter: Sales increased 2% to $235 million; Adjusted EBITDA declined 27% to $27 million

Mergers & AcquisitionsPrivate Equity

• Tank Holding, owned by Olympus Partners, acquired rotational molder Dura-Cast Products

• Balcan Plastics, owned by BDT Capital Partners, acquired Covertech Fabricating

• Astara Capital Partners acquired the flexible packaging operations of Garlock Printing & Converting

• IMAGINE Group was acquired by Cerberus Capital, Goldman Sachs Merchant Banking, and Arbour Lane Capital

• Justrite Manufacturing, owned by Audax Private Equity, acquired National Marker Company

• FCA Packaging, owned by Delos Capital, acquired Timber Creek Resource, d.b.a. Wisconsin Box

• Presco Polymers, owned by River Associates Investments, acquired William Frick & Company

• LongueVue Capital acquired Summit Plastics

• BBH Capital Partners acquired American Spraytech

• Bright International, owned by Aterian Investment Partners, acquired Bocchi Labs

• ProAmpac completed a new investment from Pritzker Private Capital and co-investors including Singapore’s wealth fund

• IPL Plastics, owned by Madison Dearborn Partners, acquired Tech II Inc.

Strategic

• Interfor reached an agreement to acquire WestRock’s sawmill in Summerville, SC for $59 million

• James Mulligan Printing agreed to transfer of its commercial printing and business operations to Modern Litho

• BR Printers acquired National Graphic Solutions of Appleton, WI

• BluEdge acquired Vernon Display graphics

• Smart Source acquired the majority of assets of Grandflow

• Mittera acquired the assets of Trend Offset Printing

• Lindenmeyr Munroe acquired Maine Shipping and Packaging Supply

• Karat entered a definitive merger agreement to acquire Pacific Cup

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-UpBuilding ProductsAs of February 12th, 2021

5.0x

10.0x

15.0x

Feb-21 Apr-16 Jun-10 Aug-04 Sep-28 Nov-22 Jan-16(60%)

(45%)

(30%)

(15%)

0%

15%

30%

45%

60%

Feb-21 Apr-16 Jun-10 Aug-04 Sep-28 Nov-22 Jan-16

Building Products Market Perspective• Economic conditions improved slightly last week as the Labor Department reported 793,000 new unemployment claims, above

economists’ estimates of 760,000, but below the prior week’s total of 812,000

– The total number of Americans receiving benefits across all unemployment programs jumped this week to 20.4 million due to a surge in filings for two pandemic compensation programs that had expired on December 26th but were renewed by Congress for 2021

– Overall, the unemployment rate fell to 6.3% as nonfarm payrolls increased and labor force participation declined slightly

• The Commerce Department announced last week that U.S. construction spending in December increased 1.0% from the prior month and 5.7% on a year-over-year basis to a record high of $1.5 trillion

– Spending on private construction projects rose 1.2%, driven by investments in single-family homebuilding amid low mortgage rates as well as a pandemic-fueled migration from cities to suburbs

– Spending on nonresidential structures rebounded in the fourth quarter after four straight quarterly declines

• The National Association of Home Builders is forecasting robust gains for single-family construction in 2021 following a strong 2020

– Production is expected to rise 5.0% to just over 1 million which would make 2021 the first year that total single-family housing production has exceeded 1 million since the Great Recession

– The multifamily construction market is expected to experience a slow start to 2021 as rent growth slows and vacancy rates rise before stabilizing in 2022

• American Securities completed its acquisition of Foundation Building Materials, a specialty distributor of wallboard, suspended ceiling systems, metal framing and related products, in an all-cash transaction valued at approximately $1.4 billion

• West Fraser Timber Company completed its $4.0 billion acquisition of Norbord Inc., creating a wood industry giant with ~$8.0 billion in combined sales

Sources: CNBC, Realtor.com, Wall Street ResearchNote: Market data as of 02/10/2021; 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


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

28%

16%17%23%

14.5x

10.3x

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

13.6x

54%

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%)

10.9x

Feb-10 Feb-10

Industrial Investment Banking Round-UpChemicals & MaterialsAs of February 12th, 2021

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

Feb-20 Feb-21Specialties Commodities / Diversified

10-Yr. Avg 1-Yr. Avg 3-Mon. Avg. 1-Mon. Avg.Specialties 10.8x 14.8x 15.9x 16.0x

Commodities / Diversified 7.0x 8.5x 9.2x 9.1x

(50.0%)

(40.0%)

(30.0%)

(20.0%)

(10.0%)

-

10.0%

20.0%

30.0%

Feb-20 Feb-21Specialties Commodities / Diversified S&P 500

Chemicals & Materials Market Perspectives• The Chemicals indexes softened mildly coming into the second month of the year giving up part of the prior month’s strong gains, with

Specialties down -4.8% and Commodities / Diversifieds down -0.4% in the past month

– Debt capital markets continue to benefit from government support and remain very strong, including with dividend recaps being completed

• M&A activity remains strong with both corporates and sponsors actively hunting and divesting. Deals in the past month include:

– Bain / Cinven will acquire Lonza Specialty Ingredients

– Pelsis acquired Edialux France

– Polytek acquired Endurance Technologies

– Sto SE will acquire JONAS Farbenwerke

– Dussur, Asia Green Fund and BroadPeak will acquire the Clean Technologies business of DuPont

– Meridian Adhesives acquired Convergent Concrete Technologies

– Stepan acquired the Aromatic Polyester Polyol business of Invista

– Schweitzer-Mauduit will acquire Scapa Group

– AEA will acquire Verdesian

– Benvic will acquire the Ferrara Marconi compounding activities of Celanese

– PPG increased its offer price for Tikkurila to EUR34.00 per share

– Lanxess will acquire Intace

– Starco acquired BlueDevil

9.1x

Sources: Capital IQ as of 2/11/2021Commodities / 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

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

17.8%23.7%

% of 52-Week High: 96.8%

% of 52-Week High: 98.5%

10.7x

10-Yr. Avg.

10-Yr. Avg.

16.6%

10-Yr. 1-Yr. 3-Mon. 1-Mon.Specialties 159.8% 17.8% 1.9% (4.8%)

Commodities / Diversified 9.4% 23.7% 17.6% (0.4%)S&P 500 194.2% 16.6% 9.4% 2.9%

Industrial Investment Banking Round-UpDiversified IndustrialsAs of February 12th, 2021

5.0x

10.0x

15.0x

20.0x

25.0x

Global PMI by IHS Markit Global GDP annual % change

20.5x

Diversified Industrials EV / LTM EBITDA Trading Dashboard

19.9x

18.3x

22.5x21.7x

20.0x

11.6x

12.6x

18.9x

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

Global PMI Output & Economic Growth 1

Sources: IHS Markit, Wall Street Research; Capital IQ market data as of 2/10/211 PMI shown is a GDP-weighted average of the survey manufacturing and services indices; readings above 50 indicates 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


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]

Recent Trends in ManufacturingGlobal Growth Slows in January amid COVID-19 Lockdowns and Supply Constraints

• Global PMI surveys edged down for a third successive month in January 2021 to 52.3 (from 52.7 in December 2020), its lowest level since July 2020 but nevertheless still indicative of solid annualized GDP growth of approximately ~3%

– The weaker reading was in part attributable to rising COVID-19 cases in many countries, which in turn often led to tighter social distancing restrictions

– However, reported COVID-19 cases have shown signs of slowing down during the past few weeks

• Globally, demand has been most resilient for manufactured goods, which has grown at a faster rate than services since the recovery from the initial pandemic downturn; the strongest growing manufacturing sectors were machinery & equipment, auto and

Category Current1-Month

Avg.r vs.

1-MonthLTM Avg.

r vs. LTM

Industrial Technology 22.5x 22.9x (0.4x) 19.3x 3.2x

Construction 21.7x 20.8x 0.9x 14.1x 7.6x

Food Equipment 20.5x 20.4x 0.1x 16.8x 3.7x

Flow Control / Water 20.0x 19.0x 1.0x 15.4x 4.6x

Capital Goods 19.9x 19.5x 0.4x 14.2x 5.7x

Diversified Index 18.9x 18.4x 0.5x 14.1x 4.8x

Large Cap Diversifieds 18.3x 17.6x 0.7x 14.2x 4.1x

Power Transmission 12.6x 12.9x (0.2x) 10.0x 2.6x

Engineered Components 11.6x 12.0x (0.4x) 10.2x 1.4x

tech equipment

• Rising near-term concerns over further waves of COVID-19 infections in many countries led to a pull back in employment growth in January

Research Analysts Outlook for Industrials

• Upside to outlooks for industrial activity, driven by optimism around federal stimulus and a vaccine-driven reopening, though corporate tax rates and other policy revisions provide some uncertainty

• 4Q results have so far reflected continued sequential demand recovery → Automotive, Medical, Short Cycle Industrial, CL8 Truck/Trailer end markets remain strong

• Inflation remains a near-term risk for names with commoditized products or limited pricing power

Industrial Investment Banking Round-UpIndustrial & Business Services

As of February 12th, 2021

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:

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

Trent Glasser

Analyst, I&BS

216.689.3318

[email protected]

Jeff Johnston

Managing Director, M&A

216.689.4115

[email protected]

Industrial & Business Services Market Perspectives

While January’s jobs report showed some signs of slowing employment growth across many industries, including a 3,000 job drop

in construction services, experts remain confident that the economy will recover by mid-2021, largely driven by infrastructure,

industrial and residential spending across the U.S. and Canada

• Former presidential candidate and South Bend, IN mayor, Pete Buttigieg was confirmed as Secretary of Transportation on

February 2 in an 86-13, bipartisan vote → construction and transportation industry groups believe that the vote is a good

indication for the Administration’s legislative initiatives in the transportation and infrastructure sectors

– The Biden Administration plans to unveil its Build Back Better recovery plan in late-February, including historic investments in

infrastructure

• A number of large transportation infrastructure projects impacted by COVID-19 took steps forward in early-2021

– Pittsburgh International Airport is ready to restart its $1.1 billion terminal modernization program following a nearly one-year delay

– California’s High-Speed Rail Authority released a revised schedule for its $12.4 billion construction project to accommodate delays

– Canada launched a $14.9 billion infrastructure spending plan focused on public transportation projects over the next eight years

• In late-January, OSHA released updated workplace safety guidance around COVID-19 protocols for companies in the industrial

& business services sectors

– The non-binding guidance is considered “advisory” and includes recommendations around hazard assessment, controls to limit virus

spread and policies to deal with sickness-related absences designed to not punish workers

• While the overall job growth was muted in January, the staffing industry showed strong gains with 81,000 new jobs (versus just

49,000 for the economy overall)

– Temporary roles have recovered more than 75% of the 1 million jobs lost during the initial COVID-19 shutdowns in March and April 2020

7.4x 8.8x

10.1x 11.7x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

5.8x 5.6x

7.8x 8.1x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

11.4x 11.9x 13.4x 13.9x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

12.2x 13.2x 13.5x 12.9x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

10.5x 11.3x

16.4x 16.8x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

10.3x 11.5x

13.3x 14.5x

6/30/2020 9/30/2020 12/31/2020 2/10/2021

Industrial Investment Banking Round-UpDistributionAs of February 12th, 2021

Distribution Market Perspectives• According to MDM’s most recent Industrial Distribution Survey, distributors have entered 2021 feeling optimistic about the

market following a strong fourth quarter in 2020

– Distributors saw ~10% revenue declines YoY at the height of the pandemic in Spring 2020, however they finished the year down just 1.5% YoY, with numerous end markets showing YoY growth in the fourth quarter

• As companies begin to report earnings for FY2020, improvement across industrial sectors continues to pick up while safety products remain in high demand

– Fastenal, North America’s largest fastener distributor, continued to see sequential improvement in non-safety categories in 4Q20, while safety daily sales grew 34.6% YoY during the quarter

• FCH Sourcing Network’s Fastener Distribution Index opened January 2021 lower than the month prior, however the index is stillin a growth range

– The index fell approximately five points, from 62.6 in December 2020 to 57.7 in January 2021, however January marks the fifth straight month of growth readings (readings above 50.0 represent overall sector growth)

Many respondents noted that the slowdown in growth can primarily be tied to logistics and transportation issues, heightened freight and steel prices, as well as raw material shortages driving pricing higher

• With consumer demand strengthening in recent weeks, the National Retail Federation (NRF) is projecting high import levels through June as retailers continue to buy goods early to ensure carrier space

– NRF import projections for January and February are currently up 15% and 26% YoY, respectively, which would both be record levels of growth in import volumes

– Import levels are largely being driven by an increase in spending on consumer goods, which was up 5.5% YoY in December and isexpected to remain strong as pandemic related travel restrictions reduce spending on services

• Warehouse hiring remains at strong levels, with employment up ~9% YoY in December to over 1.3 million workers

• Distribution equities declined slightly toward the end of January, but have since seen moderate improvements, with oil & gas significantly outpacing the broader distribution sector

Sources: MDM, Supply Chain Dive, Industrial Distribution, company filings1 Leverage = Index Average Net Debt / NTM EBITDADisclosure: 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.

Public Company 30-Day Stock Performance

(Indexed to 0.0%)

Public Company 30-Day Trading Performance

(EV / NTM EBITDA)

John [email protected]

Will [email protected]

Sam BeecherSenior [email protected]

TJ MonicoManaging DirectorHead of [email protected]

Jeff JohnstonManaging DirectorHead of M&[email protected]

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

Note: Market Data as of 2/10//2021; 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.

18% 7% (11%)

3% 2% 16%

1% 3% 34%

1% 2% 12%

1% (1%) 3%

(2%) (0%) 35%

(3%) 2% 27%

(3%) 1% 53%

(4%) 3% 15%

Average

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

26.0x 26.3x 26.1x 24.2x 1.2x

19.5x 18.5x 19.5x 17.6x 2.2x

15.4x 15.8x 15.3x 14.5x 1.5x

13.8x 13.8x 13.9x 13.2x 4.0x

12. 4x 12.4x 12.3x 12.8x 1.9x

12.1x 12.3x 12.3x 10.9x 2.2x

10.6x 10.5x 10.6x 10.4x 2.7x

9.4x 9.7x 9.6x 8.7x 3.2x

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

25%

Jan-11 Jan-21 Jan-31 Feb-105.0x

10.0x

15.0x

20.0x

25.0x

30.0x

Jan-11 Jan-21 Jan-31 Feb-10

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▪ The Biden Administration has reinstated aluminum tariffs on the United Arab Emirates (‘UAE’), less than two weeks after the

tariffs were removed. Since the Section 232 tariffs were announced aluminum imports have decreased substantially, while pre-

pandemic domestic production increased >20% through 2019. In the case of the UAE, the Administration noted “…maintaining

the tariff is likely to be more effective in protecting our national security than the untested quota…,” a message which has

convinced some the Administration would leave the broader Section 232 tariff program in place. However, manufacturing groups

including the Coalition of American Metal Manufacturers & Users (‘CAMMU’), are calling on Biden to end the Section 232 tariffs

Steel▪ Tex-Isle has announced plans to open an electric resistance welded (‘ERW’) tube mill at its facility in Robstown, TX. The new

tube mill will be housed in a ~60,000 sq. ft. expansion, adjacent to the Company’s existing OCTG heat treating, inspection and

threading facility. The mill will produce steel tubes ranging from 2.375” – 8.625” outer diameter at an annual capacity of 350,000

tons. Approximately ~250,000 tons of capacity will be dedicated to American Petroleum Institute (‘API’) grade material for O&G

pipelines and ~100,000 tons will be for structural products. The tube mill is expected to open in the 3Q of 2021

▪ Stelco has commissioned a new pig iron caster at its Lake Erie Works in Nanticoke, Ontario. The new pig iron caster has an

annual production capacity of ~1.0 million tons and aligns with Stelco’s strategy of investing in ‘tactical flexibility.’ The caster

provides incremental production flexibility for the facility’s blast furnace, which was upgraded in 2020

▪ Steel Dynamics (‘SDI’) expects to commission two coil coating lines, ahead of the electric-arc furnace at the Company’s flat-

rolled steel mill currently under construction in Sinton, TX. SDI expects to start a hot dipped galvanizing (‘HDG’) line with an

annual capacity of ~500,000 tons and a paint line with an annual capacity of ~250,000 tons, in the 3Q of 2021, while the mill’s

hot-end is not expected to come online until the 3Q of 2021

▪ JDF / HDM Spiralweld Mill, a joint venture (‘JV’) between JD Fields & Co. and Turkish piling producer HDM Tubes, has

announced plans to construct a spiral-weld pipe mill adjacent to SDI’s flat-rolled steel mill in Sinton, TX. JM Steel (also on the

SDI campus) will slit coil for the JV, which will produce spiral-welded steel pipe, tubulars and other structural steel products for

the transportation, marine and infrastructure markets. The JV will employ 50 people and is expected to open in the 4Q of 2021

Copper, Lead and Zinc▪ The United States Commerce Department has announced preliminary anti-dumping duties on refined seamless copper pipe and

tube from Vietnam. The agency set duties at 8.05% for all Vietnamese exports to the United States, according to a Federal

Register notice. The Agency found that no ‘critical circumstances’ exist, but a ‘critical circumstances’ finding would have applied

the duties retroactively. Following the Commerce Department action, the United States International Trade Commission can now

make a preliminary injury determination

Specialty & Alloys▪ Early in 2021, ferro-vanadium pricing continues to recover from July 2020 lows, reaching a one year high with pricing up ~26%

YTD. Pricing has primarily been driven by a rebound in demand from steel producers, with steel production capacity utilization up

25% from May 2020 lows (see pg. 5). Demand dynamics remain bullish, with a renewed focus on U.S. infrastructure investment

and the anticipated adoption of vanadium-redox flow batteries, used in grid-scale storage applications for renewable energy

Mining, Scrap and Materials▪ The Resolution Mine, a 55/45 joint venture between Rio Tinto and BHP Billiton, has been granted authorization by the USDA’s

Forest Service for a land swap deal involving Native American land near Superior, AZ. The decision marks the first step in

developing the underground copper project, but the deal still faces resistance from indigenous groups due to its religious

importance to local Native American tribes. If developed, the mine would be capable of satisfying ~25% of U.S. copper demand

2

Economic commentary

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

Purchasing Managers Index (PMI) (through January 2021)

The U.S. manufacturing PMI

decreased slightly to 58.7 in

January, but remained above

50 for the 8th consecutive

month

An index value over 50.0

indicates expansion in the

manufacturing sector

Quarterly GDP – Annualized and Seasonally Adjusted (through the 4Q of 2020)

According to the U.S. Bureau

of Economic Analysis, in the

4Q of 2020 GDP grew at an

annualized rate of 4.0%.

Growth remains strong, but

fell following an inflated

figure in the 3Q of 2020

Nominal GDP remains below

pre-pandemic levels, but is

expected to improve as the

economy recovers from the

Covid-19 induced recession

58.7

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21

ISM

Pu

rch

as

ing

Ma

na

ge

rs I

nd

ex

(P

MI)

4.0%

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

Q4 2017 Q2 2018 Q4 2018 Q2 2019 Q4 2019 Q2 2020 Q4 2020

GD

P (

an

nu

ali

ze

d %

ch

an

ge

)

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 December 2020)

According to the U.S.

Census Bureau, November

2020 construction spending

totaled $1,490.4 billion, up

5.7% YoY

Gains are attributable to an

20.7% increase and only a

(4.8%) decrease in

Residential Construction and

Non-Residential

Construction, respectively

Oil & Gas Drilling Activity – U.S. 1 (January 31, 2021)

700.2

790.2

$30

$130

$230

$330

$430

$530

$630

$730

$830

$930

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

Billio

ns

of

Do

lla

rs

Residential Non-residential

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2011 2013 2015 2017 2019 2021

% o

f T

ota

l R

ig C

ou

nt

% Horizontal % Vertical

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2011 2013 2015 2017 2019 2021

Oil v

s. G

as

(R

ig C

ou

nt)

Oil Gas

Steel HRC CRC HDG Plate Rebar Merchant Bar

End of Month Price ($ / Ton) $1,179 $1,340 $1,445 $1,030 $795 $895

MoM % Change 13.1% 14.5% 13.3% 9.6% 5.3% 4.7%

YoY % Change 102.1% 74.0% 65.1% 66.1% 26.2% 26.1%

$0.00

$2.50

$5.00

$7.50

$10.00

$12.50

$15.00

Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21

U.S

. $ /

lb

Nickel

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00


U.S

.$ /

lb

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 February 9, 2021)

Steel Prices (through February 9, 2021)

Source: American Metal Market

Note: Midwest quotes used for steel pricing

Industry fundamentals

Base Metals Aluminum Copper Nickel Zinc

End of Month Price ($ / lb) $0.92 $3.73 $8.20 $1.20

MoM % Change (0.4%) 1.6% 1.0% (6.5%)

YoY % Change 19.6% 46.0% 41.5% 22.7%

5

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

Industry fundamentals (continued…)

U.S. Capacity Utilization (through January 31, 2021)

Idled North American Mill Operations (as of February 9, 2021)

ArcelorMittal ▪ Dofasco, Blast Furnace No. 3

Cleveland-Cliffs ▪ 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

▪ Tubular operations in Lone Star, TX▪ Tubular operations in Lorain, OH

U.S. steel production

increased in January with

capacity utilization ending

the month at 75.7%, up from

72.3% in December

Mills produced 78.8 million

tons in 2020 at an average

capacity utilization rate of

67.0% and started 2021

producing 6.8 million tons

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

Jan-20 Mar-20 May-20 Jun-20 Aug-20 Sep-20 Nov-20 Jan-21

Cap

acity

Utiliz

atio

n (%

)

To

ns

(000s

)

Total Production Capacity Utilization

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

LTM Production 72,690 1,054,429 701,640 1,828,759

MoM % Change 2.1% 4.1% 0.4% 2.5%

YoY % Change (11.8%) 8.3% 5.1% 6.1%

% of World Total 4.0% 57.6% 38.4% 100.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20 Aug-20 Dec-20

Mo

nth

ly P

rod

uc

tio

n (

'00

0s

To

ns

)

U.S. China Rest of World

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

Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20 Aug-20 Dec-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 December 31, 2020)

Monthly Steel Production (LTM through December 31, 2020)


$0.00

$3.00

$6.00

$9.00

$12.00


U.S

. $ /

lb

Aluminum Scrap Copper Scrap Nickel Scrap

$0

$100

$200

$300

$400

$500


U.S

. $

/ t

on

Heavy Melt #1 Shredded Auto

7

Ferrous & Non-Ferrous Scrap Prices (through February 9, 2021)

Source: U.S. Census Bureau, American Metal Market1 Scrap trade data through 12/31/2020; $ in millions

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

278

$0

$100

$200

$300

$400

$500

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20


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

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

End of Month Price $375 $400 $0.40 $3.49 $5.40

MoM % Change (11.8%) (13.0%) (38.5%) 2.5% 22.7%

YoY % Change 59.6% 44.4% (22.3%) 48.5% 51.0%

Scrap Spread $804 $779 $0.52 $0.24 $2.80

146

204

(4)

($75)

$0

$75

$150

$225

$300

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20

Aluminum Scrap Copper Scrap Nickel Scrap

Steel Weekend

Warrior

January 29, 2021

CRS: Profit Recovery More Muted; Sector Weight

January 28, 2021

NUE: Raising Estimates, Sector Weight

February 8, 2021

CLF: Opportunistically Reducing Leverage, MT

Selling Share Slug; OW

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

February 1, 2021

HAYN: Gradual Recovery Ahead; 777X Push Out

Weighs on FY22

February 2, 2021

X: Adjusting Estimates Post Secondary Equity

Offering; Sector Weight

January 31, 2021

Steel Weekend Warrior - ALERT: U.S. Ferrous

Scrap Market to Loosen in February

January 28, 2021

ATI: Execution Momentum Intact; OW with $25

Target

January 27, 2021

USAP: Adjusting Estimates; SW

https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=7ffda927-3a4f-4cd5-b854-c5bdb527f124&mime=pdf&co=KBCM&[email protected]&source=libraryView

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https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=6249fa86-b39e-4088-86fb-c0bb7ac0dbd9&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 February 9, 2021)

All bond spreads have

tightened YTD; however,

changes were minimal

Index Performance (through February 9, 2021)

KeyBanc’s Global

Producers and Service

Centers indices have

outperformed the S&P

500 over the LTM, up

39.4% and 27.0% YoY,

respectively

Specialty Metals are

down by (8.9%)

96144

282

462

0

200

400

600

800

1,000

1,200

1,400

Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21

Sp

rea

d t

o M

atu

rity

A Index BBB Index BB Index B Index

39.4%

27.0%

(8.9%)

16.7%

(60.0%)

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

60.0%

Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

Global Producers Service Centers Specialty Metals S&P 500

10

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

FED Speak & Economic News

• Economic data in the U.S. was mixed to start February. While improvements were made in a few categories such as factory orders and

manufacturing surveys, the disappointing jobs report for January dominated headlines. Per the U.S. Department of Labor, the domestic

economy added ~49,000 private-sector jobs in the month of January and the unemployment rate improved slightly, to 6.3%. Many market

participants ignored the January unemployment rate data largely because the slight improvement from December was primarily driven by

Americans halting job searches as opposed to successful employment additions. The ~49,000 job additions reflect a figure that was roughly

half of the consensus expectation for January, giving market participants further reason to believe that the federal government will expedite

stimulus efforts. President Biden highlighted the disappointing jobs report in a press conference on February 5, stating that the economy is

“still in trouble” as the ongoing public health crisis continues to weigh on broad based labor market health

• The U.S. bond market’s result during the week ending February 5 was very similar to that of the week ending January 8, when the U.S.

Senate race in Georgia concluded. Treasuries sold off and investors completely disregarded the ongoing labor market vulnerability in both

instances. All four major equity indices advanced WoW and Treasuries sold off as market participants are expecting the $1.9 trillion fiscal aid

package to be passed into law soon. By February 5, U.S. Treasury yields saw a WoW increase of 4 – 10 bps, with the longer-end of the curve

seeing the brunt of the increase. USD pay-fixed swap rates followed suit with Treasury yields and saw a WoW increase of 1 – 13 bps with

longer-term swap rates seeing a larger movement. The 10-year U.S. Treasury yield finished the week at 1.17%, the highest level since March

2, 2020. The spread between the 2- and 30-Year U.S. Treasury yields reached 1.47% last week, a level not seen since 2015, while the

spread between the 2- and 10-Year U.S. Treasury yields finished the week at 1.06%, a level not seen since 2017. These spreads highlight

the ongoing steepening of the yield curve largely due to the upcoming issuances by the U.S. Treasury required to fund the expected fiscal

stimulus in combination with the anticipation of an up-tick in inflation throughout this year and beyond

Capital markets update (continued…)

Current Rate Snapshot (as of February 8, 2021) 10-Year Hedge Premium Widens, Swap Rate Still Low

Source: Bloomberg

Longer term U.S. Treasury yields have increased recently,

largely driven by ongoing accommodative fiscal and monetary

policies. USD pay-fixed swap rates have followed a like trend.

The spread between the 10-Year USD swap rate and 3-month

LIBOR finished in the week ending February 5 at 1.05%,

reflecting the ‘cost’ for borrowers to lock in LIBOR-based interest

costs at this time. This level is higher than spreads seen

throughout most of 2020, but not as high as previous years

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21

Spread 3-month LIBOR 10YR BBG Swap Rate

Friday Prior Week Change

1-Month LIBOR 0.12% 0.12% 0.00%

3-Month LIBOR 0.19% 0.20% (0.01% )

SOFR 1 0.05% 0.06% (0.01% )

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 0.10% 0.11% (0.01% )

5-year Treasury 0.46% 0.42% 0.04%

10-year Treasury 1.17% 1.07% 0.10%

Swaps vs. 3M LIBOR

2-year 0.20% 0.19% 0.01%

5-year 0.58% 0.52% 0.06%

10-year 1.24% 1.11% 0.13%

11

Source: American Metal Market, The Daily Deal, MergerMarket

Select recent transaction activity

Announced ClosedAcquirer

(Parent)

Target

(Seller)Highlights

1/25/2021 1/25/2021 TRM EquityElyria Foundry and Hodge

Foundry

▪ TRM Equity has acquired Elyria Foundry and Hodge Foundry

▪ The transaction aligns Elyria Foundry with a growth-oriented partner

to help navigate a challenging market environment for foundries

1/21/2021 1/21/2021 Triple-S SteelAlamo Iron Works

(Sonepar USA)

▪ Triple-S Steel has acquired Alamo Iron Works from Sonepar USA

▪ The acquisition adds to Triple-S’ 40 locations across the U.S.,

Canada and Colombia and expands coverage in Triple-S home state

of Texas

1/19/2021 1/19/2021 Fosbel Inc. Whal Refractory Solutions

▪ Fosbel has acquired Whal Refractory Solutions

▪ The transaction strengthens Fosbel’s platform by shortening

customer supply chains an increasing inventory capacity

12/8/2020 1/15/2021 U.S. Steel Big River Steel (‘BRS’)

▪ U.S. Steel has exercised its option to acquire the remaining 50.1% of

BRS for ~$774 million, implying an enterprise value of ~$1,545 million

▪ The transaction increases U.S. Steel’s EAF annual production

capacity and enhances the Company’s flexibility in lower volume

demand environments

1/11/2021 1/11/2021 MiddleGround Capital Attala Steel Industries

▪ MiddleGround Capital has acquired Attala Steel Industries

▪ MiddleGround expects to integrate Attala with their Edsco Fasteners

platform to target the power generation market

1/25/2021 1/11/2021 Wilse, Inc. Miller Consolidated

Industries (‘MCI’)

▪ Wilse has acquired Miller Consolidated Industries

▪ The transaction aligns MCI with a partner to pursue a amore

aggressive growth strategy

1/13/2021 1/1/2021 H Kramer & CoMetallurgical Products

Company

▪ H Kramer has acquired Metallurgical Products Company

▪ The transaction strengthens H Kramer’s presence on the East Coast

and expands the foundry’s product offering in specialized non-ferrous

master alloys

12

Source: American Metal Market, The Daily Deal, MergerMarket

Recent capital markets’ activity

Closed Company Gross Offering Size Highlights

Pending Cleveland-Cliffs

$1 billion Senior

Unsecured Guaranteed

Notes

▪ $500 million, 4.625% Senior Unsecured Guaranteed Notes due 2029 and $500

million, 4.875 Senior Unsecured Guaranteed Notes due 2031

▪ The proceeds are being used to redeem the Company’s outstanding 4.875%

Senior Secured Notes due 2024, 6.375% Senior Guaranteed Notes due 2025,

7.625% Senior Notes due 2021, 7.500% Senior Notes due 2023 and 6.375%

Senior Notes due 2025 and reduce borrowings on the Company’s ABL revolving

credit facility

Pending U.S. Steel

$750 million Senior

Subordinated Unsecured

Notes

▪ $750 million, 6.875% Senior Subordinated Unsecured Notes due 2029

▪ The proceeds are being used to redeem the Company’s remaining $687 million

of 2025 Senior Secured Notes and pay related transaction fees and expenses

2/5/2021 U.S. Steel~$699 Million Follow-on

Equity Offering

▪ 42 million shares of common stock offered in an underwritten offering, raising

~$699 million

▪ The proceeds are being used to redeem 35% of its outstanding 12.000% Senior

Secured Notes due 2025 and for general corporate purposes, which may include

future debt repayment

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 2/8/2021 Cap Value Sales EBITDA % Margin EPS EBITDA EPS EV / EBITDA P/E Ratio EV / EBITDA P/E Ratio

ArcelorMittal ENXTAM:MT $23.01 $26,544 $35,109 $54,600 $3,751 6.9% ($2.07) $8,066 $3.37 9.4x NM 4.4x 6.8x

Companhia Siderúrgica Nacional BOVESPA:CSNA3 6.50 8,973 14,416 5,287 1,290 24.4% 0.60 1,799 0.31 11.2x 10.9x 8.0x 20.9x

Gerdau S.A. BOVESPA:GGBR3 3.86 6,612 8,972 7,463 1,041 13.9% 0.16 1,527 NA 8.6x 23.9x 5.9x NA

Grupo Simec, S.A.B. de C.V. AMEX:SIM 12.16 1,879 1,540 1,643 213 12.9% 0.29 242 NA 7.2x NM 6.4x NA

PAO Severstal LSE:SVST 17.36 14,322 16,115 7,080 2,291 32.4% 1.08 3,167 1.89 7.0x 16.0x 5.1x 9.2x

SSAB AB (publ) OM:SSAB A 3.64 3,744 4,703 7,790 424 5.4% (0.04) 773 0.22 NM NM 6.1x 16.8x

Tata Steel Limited 500470 9.64 11,049 24,227 18,183 2,327 12.8% (0.35) 3,786 1.12 10.4x NM 6.4x 8.6x

thyssenkrupp AG XTRA:TKA 12.30 7,657 2,023 34,780 1,484 4.3% (4.65) 1,635 (0.34) NM NM NM NM

Average $10,097 $13,388 $17,103 $1,603 14.1% $2,624 9.0x 16.9x 6.0x 12.5x

Median $8,315 $11,694 $7,626 $1,387 12.9% $1,717 9.0x 16.0x 6.1x 9.2x

Commercial Metals Company CMC $22.41 $2,741 $3,362 $5,484 $621 11.3% $2.20 $455 $1.89 5.4x 10.2x 7.4x 11.9x

Nucor Corporation NUE 53.70 16,227 18,963 20,140 2,398 11.9% 3.98 2,646 4.17 7.9x 13.5x 7.2x 12.9x

Steel Dynamics, Inc. STLD 38.40 8,079 9,816 9,601 1,283 13.4% 3.00 1,543 4.49 7.7x 12.8x 6.4x 8.5x

United States Steel Corporation X 16.84 3,712 6,707 9,741 (91) (0.9%) (4.55) 1,859 2.86 NM NM 3.6x 5.9x

Average $7,690 $9,712 $11,241 $1,053 8.9% $1,626 7.0x 12.2x 6.1x 9.8x

Median $5,895 $8,262 $9,671 $952 11.6% $1,626 7.0x 12.8x 6.8x 10.2x

Olympic Steel Inc. ZEUS $15.39 $180 $346 $1,222 $20 1.7% ($0.57) $46 $0.80 NM NM 7.6x 19.2x

Reliance Steel & Aluminum Co. RS 124.53 7,940 9,000 9,126 942 10.3% 7.49 1,044 8.97 9.6x 16.6x 8.6x 13.9x

Russel Metals Inc. TSX:RUS 20.06 1,265 1,603 2,237 102 4.6% 0.32 139 1.36 NM NM 11.6x 14.7x

Ryerson Holding Corporation RYI 14.04 535 1,233 3,575 154 4.3% (1.03) 203 1.37 8.0x NM 6.1x 10.2x

Worthington Industries, Inc. WOR 59.35 3,131 3,279 2,810 314 11.2% 0.23 361 3.52 10.4x NM 9.1x 16.9x

Average $2,610 $3,092 $3,794 $306 6.4% $358 9.3x 16.6x 8.6x 15.0x

Median $1,265 $1,603 $2,810 $154 4.6% $203 9.6x 16.6x 8.6x 14.7x

ALBA SE DB:ABA $80.64 $798 $712 $342 ($2) -0.5% ($1.33) NA NA NM NM NA NA

Schnitzer Steel Industries, Inc. SCHN 34.30 935 1,075 1,799 108 6.0% 0.95 151 NA 10.0x NM 7.1x NA

Sims Limited ASX:SGM 9.72 1,977 1,892 3,787 42 1.1% (0.65) 241 0.42 NM NM 7.9x 23.3x

Average $1,237 $1,226 $1,976 $49 2.2% $196 10.0x NM 7.5x 23.3x

Median $935 $1,075 $1,799 $42 1.1% $196 10.0x NM 7.5x 23.3x

Allegheny Technologies Incorporated ATI $19.01 $2,411 $3,453 $2,982 $290 9.7% ($3.11) $227 ($0.37) 11.9x NM 15.2x NM

Carpenter Technology Corporation CRS 34.34 1,649 2,072 1,725 88 5.1% (0.83) 154 (1.30) NM NM 13.5x NM

Haynes International, Inc. HAYN 23.63 302 250 344 13 3.9% (1.64) 7 NA NM NM NM NA

Kaiser Aluminum Corporation KALU 105.59 1,731 1,818 1,269 174 13.7% 3.61 237 6.03 10.4x 29.2x 7.7x 17.5x

Materion Corporation MTRN 72.01 1,513 1,545 1,184 96 8.1% 5.25 121 2.93 16.0x 13.7x 12.7x 24.6x

Universal Stainless & Alloy Products, Inc. USAP 8.24 73 123 180 8 4.3% (2.14) 6 (1.34) NM NM NM NM

Average $1,280 $1,543 $1,281 $112 7.5% $125 12.8x 21.5x 12.3x 21.1x

Median $1,581 $1,681 $1,227 $92 6.6% $138 11.9x 21.5x 13.1x 21.1x

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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 $13,384 $6,767 3.6x 1.8x 25.8% 13.0% 2.5x

Companhia Siderúrgica Nacional BOVESPA:CSNA3 6,792 5,190 NM 4.0x 87.9% 67.1% 3.8x

Gerdau S.A. BOVESPA:GGBR3 3,671 2,318 3.5x 2.2x 38.5% 24.3% 3.8x

Grupo Simec, S.A.B. de C.V. AMEX:SIM 0 (340) 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 1,786 946 4.2x 2.2x 21.7% 11.5% 1.4x

Tata Steel Limited 500470 15,276 12,838 NM NM 63.1% 53.0% 2.2x

thyssenkrupp AG XTRA:TKA 7,825 (6,072) NM NM 39.9% NM 0.8x

Average $6,412 $2,928 3.1x 2.2x 40.9% 34.0% 4.3x

Median $5,231 $2,049 3.5x 2.2x 39.2% 29.6% 2.5x

Commercial Metals Company CMC $1,086 $620 1.9x 1.1x 35.9% 20.5% 9.8x

Nucor Corporation NUE 5,341 2,293 2.2x 1.0x 33.1% 14.2% 15.7x

Steel Dynamics, Inc. STLD 3,103 1,734 2.4x 1.4x 41.7% 23.3% 13.5x

United States Steel Corporation X 4,887 2,902 NM NM 56.3% 33.5% NM

Average $3,604 $1,887 2.2x 1.1x 41.8% 22.9% 13.0x

Median $3,995 $2,013 2.2x 1.1x 38.8% 21.9% 13.5x

Olympic Steel, Inc. ZEUS $171 $166 NM NM 36.4% 35.3% 2.3x

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

Russel Metals Inc. TSX:RUS 434 338 4.3x 3.3x 37.6% 29.4% 3.5x

Ryerson Holding Corporation RYI 961 839 6.3x 5.5x 87.9% 86.4% 1.8x

Worthington Industries, Inc. WOR 708 (6) 2.5x NM 46.3% NM 9.5x

Average $783 $478 3.7x 3.3x 46.6% 41.7% 6.4x

Median $708 $338 3.4x 3.3x 37.6% 32.4% 3.5x

ALBA SE DB:ABA $22 ($86) NM NM 13.4% NM NM

Schnitzer Steel Industries, Inc. SCHN 143 136 1.3x 1.3x 17.3% 16.4% 11.9x

Sims Limited ASX:SGM 90 (85) 2.1x NM 5.6% NM 3.5x

Average $85 ($12) 1.7x 1.3x 12.1% 16.4% 7.7x

Median $90 ($85) 1.7x 1.3x 13.4% 16.4% 7.7x

Allegheny Technologies Incorporated ATI $1,568 $922 NM 3.9x 75.1% 44.1% 2.5x

Carpenter Technology Corporation CRS 694 423 NM 4.8x 34.2% 20.8% 3.7x

Haynes International, Inc. HAYN 8 (53) 1.9x NM 2.8% NM 3.2x

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 50 50 NM NM 18.2% 18.1% NM

Average $551 $243 2.5x 2.4x 33.9% 18.6% 3.6x

Median $422 $69 1.9x 2.2x 26.9% 18.1% 3.5x

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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.

Client Business Description

Deal Value

($ mm) Type Closed

American Securities -

NN Life Sciences

Manufactures high-precision metal and plastic

components $825 Buy-Side Advisor Aug-20

NN Life SciencesManufactures high-precision metal and plastic

components $485 Senior Secured Credit Facility Aug-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

industrial investment banking round-up...industrial investment banking round-up industrial &...

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