2018 Q2 CS Aviation Investment Banking Report

Aviation Investment Banking Q2 2018 Update

Member FINRA | SIPC

OUR TEAM

Aviation Investment Banking

James S. Cassel Chairman jcassel@cs-ib.com 305-438-7701

Scott E. Salpeter President ssalpeter@cs-ib.com 305-438-7702

Joseph “Joey” Smith Director Aviation Services jsmith@cs-ib.com 305-438-7706

Representative Assignments:

Representative Assignments:

Representative Assignments:

¡ Sale: Gulfstream International Airlines ¡ Sale: Tradewinds Engine Group

¡ Valuation: Flightstar Aircraft Services ¡ Valuation: Global Engine Mainenence ¡ Solvency: AmeriJet International ¡ Valuation: Avborne Heavy Maintenance

¡ Capital Raise: Avenger Flight Group ¡ Capital Raise: Diversified Aero Services ¡ Capital Raise: Alaris Aerospace Systems

Ira Leiderman Ranjini Chandirakanthan Managing Director Managing Director

Phillip Cassel Director

Marcus Wai Vice President

Chris Mansueto Vice President

Laura Salpeter Vice President

Julian Astrove Analyst

Includes projects by our professionals at prior firms.

1

Aviation Investment Banking

I

AEROSPACE & DEFENSE REVIEW

II

M&A & PRIVATE PLACEMENT TRANSACTIONS

III

PUBLIC MARKETS OVERVIEW

2

AEROSPACE & DEFENSE – 2018 Q2 REVIEW Competing with the Global Duopoly of Boeing & Airbus… ¡

¡

¡

¡

¡

¡

¡

¡

The Aerospace & Defense merger & acquisition activity is dominated by the Boeing/Airbus airframe duopoly, powered by legacy engine makers, and a massive consolidation within the growing OEM and after-market supply base.

Airbus and Boeing expanded their dominance through majority transactions respectively with Canada’s Bombardier and Brazil’s Embraer to control the smaller, regional passenger jet market. In addition, they appear to have boundless ambitions to expand their downstream service offerings, both organically and through M&A. Boeing’s goal is to capture more of the higher-margin services and spare-parts revenue after a plane is sold, and grow its services revenue to over $50B within the next decade from $15B last year.

In addition to manufacturing airframes, Boeing has made its largest foray into aviation services with the Q2/18 purchase of aerospace parts maker KLX for approx. $4.2B enterprise value ($3.2B cash), to be added to its existing Aviall distribution arm.

Airbus has set a goal of tripling services revenues from its commercial aircraft business to $10B within seven years and sharply reducing the number of times its jets are stranded on the ground for technical reasons.

Airbus has been busy expanding their service offerings with the Q1/18 purchase of Strategic Simulation Solutions (SSS), a privately held flight training center in Denver, CO, operating A320 flight simulators for pilot training to Frontier Airlines all-Airbus fleet.

Airbus plans to expand and transform the recently purchased SSS facility into its first ever West Coast training center to augment its primary in North American training facility in Miami, Florida.

Additionally, in late 2017, Airbus took full control over Sepang, a Malaysian repair company, having bought a 40% stake in 2011.

Forecast Sources: Oliver Wyman – Global Fleet & MRO Market Forecast Summary 2017-2027

Aviation Investment Banking

MRO & Aftermarket Parts Opportunity (Engines & Components) ¡

¡

¡

¡

The in-service commercial airline fleet is forecast to grow from approx. 25,000 aircraft today to over 35,000 by 2027, net of 10,000 retirement aircraft during that time. By 2027, 58% of the fleet will be new-generation aircraft, thus the massive opportunity.

The commercial airline MRO growth is projected to grow at a healthy 3.8% compound annual growth rate (CAGR) over the 10-year period, from approx. $75B today to $110B by 2027.

The commercial aircraft aftermarket parts market is expected to grow at a CAGR of about 6% until 2023. The average price of components in the last decade has increased by about 5% annually, which has considerably increased the value of the marketplace.

The huge backlog of commercial jets in the market, and the failure of OEMs to deliver parts on time with competitive pricing, should give the aftermarket suppliers a chance to continue their rapid expansion.

Middle-Market Companies Need to find their Unique Value-Prop ¡

MROs, Distributors, Manufacturers, Cargo, FBO & Pilot Training companies can not only compete, but can thrive if they evolve to meet the ever changing needs and demands driven by the expanding geographic centers of influence, new fleet mix trends, and various technology upgrades currently in play. Some best practices for consideration: ¡ Well capitalized balance sheet & boardroom value – permanent capital with a creative focus and deep industry expertise, ¡ Global footprint – facilities based/boots on the ground or virtual sales team, along with corporate partnering opportunities (potential investment from a strategic industry player), and ¡ Utilization of technology – cost effective supply chain, just in time inventory, efficient service delivery options, and to proactively track the KPIs & data to best project future outcomes.

3

Aviation Investment Banking

I

AEROSPACE & DEFENSE REVIEW

II

M&A & PRIVATE PLACEMENT TRANSACTIONS

III

PUBLIC MARKETS OVERVIEW

4

M&A

Aviation Investment Banking Selected Transactions Review

($ in millions)

Transaction

Metrics

Date Annc.

Enterprise Closed

Target

Acquirer

Valuation Benchmarks

Target TTM

Value

Revenue

Implied EV /

EBITDA %

Revenue

Stock Price Premiums

EBITDA

1-Day

1-Month

2018 2nd Quarter M&A Transactions 18-Sep-17

6-Jun-18

Orbital Atk, Inc.

Northrop Grumman Corporation

$

9,327.0

$

4,991.0

14.1%

1.87x

13.21x

22.2%

28.0%

24-Sep-17

31-May-18

Chassis Plans LLC

Aeronautics Ltd.

$

6.0

$

15.0

na

0.40x

na

na

na

2-Jan-18

22-May-18

Enertec Systems 2001 Ltd.

Coolisys Technologies, Inc.

$

8.7

na

na

na

na

na

na

3-Jan-18

20-Apr-18

Magnetic MRO AS

Hong Kong Hangxin Aviation Technology Co., Ltd.

$

53.3

518.4

na

0.10x

na

na

na

12-Jan-18

26-Apr-18

GKN plc

Melrose Industries PLC

$

12,009.7

$ 13,071.6

9.8%

0.92x

9.06x

38.5%

54.4%

31-Jan-18

2-Apr-18

ECS Federal, LLC

On Assignment, Inc. (nka:ASGN Incorporated)

$

775.0

na

na

na

na

na

na

8-Feb-18

na

Aitech Defense Systems, Inc.

Hong Kong Hangxin Aviation Tech Co.

$

30.0

na

na

na

na

na

na

12-Feb-18

2-Apr-18

CSRA Inc.

General Dynamics Corporation

$

9,871.1

$ 13,071.6

9.8%

1.95x

11.73x

33.8%

28.6%

23-Feb-18

25-Apr-18

SGT, Inc.

ASGN Incorporated

$

355.0

27-Feb-18

3-Jul-18

Beaver Aerospace & Defense, Inc.

HĂŠroux-Devtek Inc.

$

23.5

11-Mar-18

na

IMI Systems Ltd.

Elbit Systems Ltd.

$

19-Mar-18

24-Apr-18

Extant Components Group Holdings, Inc.

TransDigm Group Incorporated

22-Mar-18

11-Apr-18

Universal Avionics Systems Corporation

29-Mar-18

na

10-Apr-18

$

na

na

na

na

na

na

30.0

na

0.78x

na

na

na

520.6

na

na

na

na

na

na

$

525.0

na

na

na

na

na

na

Elbit Systems Ltd.

$

120.0

na

na

na

na

na

na

Strategic Engineering Division of Tata Power

Tata Advanced Systems Limited

$

322.8

81.8

na

3.95x

na

na

na

2-May-18

Hawker Pacific Airservices Limited

Eagle Enterprises, Inc.

$

250.0

na

na

na

na

na

na

19-Apr-18

1-Jun-18

Cubic Global Defense, Inc.

Valiant Integrated Services LLC

$

138.0

$

378.0

-2.6%

0.37x

na

na

na

24-Apr-18

24-Apr-18

Precision Micro Ltd.

LDC (Managers) Limited

$

31.4

$

21.0

na

1.50x

na

na

na

24-Apr-18

na

E.I.S. Aircraft Operations of E.I.S. Group

QinetiQ Group plc

$

81.2

$

24.6

26.9%

3.48x

12.96x

na

na

1-May-18

29-Jun-18

L-3 Communications Vertex Aerospace LLC

American Industrial Partners

$

540.0

na

na

na

na

na

na

1-May-18

na

KLX Inc.

Boeing/Aviall Inc.

$

4,200.0

1,828.6

16.4%

2.30x

15.70x

na

na

2-May-18

na

S.R.I.F N.V.

Spirit AeroSystems Holdings, Inc.

$

650.0

na

na

na

na

na

na

22-May-18

na

Pulse Electronics Corporation

Yageo Corporation

$

740.0

401.5

na

1.84x

na

na

na

23-May-18

2-Jul-18

EPIC Aviation, LLC

BBA Aviation plc

$

88.1

na

na

na

na

na

na

24-May-18

31-May-18

IESA Limited

Electrocomponents plc

$

116.9

$

276.8

na

0.43x

na

na

na

28-May-18

na

HNA Cargo Co., Ltd.

Ccoop Group Co., Ltd

$

221.5

$

258.1

na

0.91x

na

na

na

19-Jun-18

na

WFS Global SAS

Cerberus Capital Management, L.P.

$

1,392.1

$

1,389.2

na

1.00x

na

na

na

21-Jun-18

na

SKY Aviation Leasing International Limited

Goshawk Aviation Limited

$

2,800.0

na

na

na

na

na

na

Mean

$

1,674.0

$

2,423.8

12.4%

1.45x

12.53x

31.5%

37.0%

Median

$

322.8

$

378.0

12.0%

1.00x

12.96x

33.8%

28.6%

$

$

$ $

Sources of information: S&P Capital IQ.

5

PRIVATE PLACEMENT

Aviation Investment Banking Selected Transactions Review

($ in millions)

Date

Target

Investors

Raise

Round

Round

Type

Number

2018 2nd Quarter Private Placements 9-Apr-18

Beijing Landspace Technology Co.

Xinjiang Goldwind Science & Technology Co., Ltd.; PGA China; Foundream

31.7

Series B

1

9-Apr-18

Efy Technology (Tianjin) Co., Ltd.

Aviation Industry Corporation of China

15.8

Series A

1

11-Apr-18

Turbotech S.A.S

Go Capital SAS; Safran Corporate Ventures; Go Capital Amorcage II, FPCI

3.7

Venture

1

11-Apr-18

Reaction Engines Ltd.

Rolls-Royce Holdings plc; BAE Systems plc; Mitsubishi UFJ Baillie Gifford Asset Management Limited; Woodford Investment Management Limited; Boeing HorizonX

37.6

Series B

2

16-Apr-18

Space BD, Inc.

Anniversaire Holdings Inc; Incubate Fund

1.9

Venture

1

18-Apr-18

Open Cosmos Ltd

Business Growth Fund plc; Entrepreneur First Operations Limited; BGF Ventures; Localglobe LLP

7.1

Series A

1

16-May-18

Aireon LLC

National Air Traffic Services Limited

69.0

Growth

3

17-May-18

Quingzhou Naiwei Avionics

Navtech Inc.

14.1

Venture

1

31-May-18

HM Dunn AeroSystems, Inc.

Undisclosed

35.2

Growth

2

31-May-18

PD Aerospace, Ltd.

ANA Holdings Inc.; Mizuho Capital Co. Ltd.; H.I.S. Co., Ltd.; Optima Ventures Co., Ltd.

4.8

Growth

2

11-Jun-18

One Jet, Inc.

Undisclosed

10.0

Venture

4

11-Jun-18

Payload Aerospace S.L.

Grupo Tecnolรณgico e Industrial GMV S.A.; Aciturri Aeronรกutica S.L.; JME Venture Capital, SGEIC, S.A.

19.8

Series A

3

28-Jun-18

Duqueine Composites SARL

Undisclosed

9.3

Growth

3

Mean Median

$ $

20.0 14.1

Sources of information: S&P Capital IQ and Pitchbook

6

Aviation Investment Banking

I

AEROSPACE & DEFENSE REVIEW

II

M&A & PRIVATE PLACEMENT TRANSACTIONS

III

PUBLIC MARKETS OVERVIEW

7

SELECTED MARKET INDICES

Aviation Investment Banking June 30, 2017 to June 29, 2018 Relative Performance

160

150

140

130

120

110

100

90

80

70

60 Jun-17

S&P 500 NASDAQ Composite Index S&P Aerospace & Defense Select Industry Index Russell 2000 Aerospace Industry Nasdaq US Benchmark Aerospace Total Return Index Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

12.2% 22.3% 24.2% 26.1% 39.6% Jan-18

Feb-18

Mar-18

Apr-18

May-18

Sources of information: S&P Capital IQ.

8

SELECTED PUBLIC COMPANY TRADING DATA

Aviation Investment Banking

Selected Companies Review ($ in thousands, except per security)

Market Statistics Company

Ticker

Metrics

Closing Price

% of 52-week

Enterprise

Revenue

EBITDA

30-Jun-18

High-Low

Value

LTM

LTM

Valuation Benchmarks EBITDA

EBITDA

LTM Margin 2019 E Growth

EV / Revenue LTM

EV / EBITDA

2018 E

LTM

2018 E

Aerostructures & Component Manufacturers Air Industries Group

AIRI

$

1.80

90.0% - 156.5%

-8.5%

na

1.52x

1.44x

na

na

Allegheny Technologies Incorporated

ATI

$

25.12

83.0% - 152.1%

$

4,974.9

75.2

$

3,638.2

49.4

$

374.9

(4.2)

10.3%

21.3%

1.37x

1.27x

13.3x

10.2x

Arconic Inc.

ARNC

$

17.01

54.6% - 103.3%

13,431.0

13,213.0

1,756.0

13.3%

10.8%

1.02x

0.97x

7.6x

7.1x

Astronics Corporation

ATRO

$

35.97

72.7% - 150.2%

1,294.3

651.1

71.3

11.0%

19.3%

1.99x

1.64x

18.2x

12.8x

CPI Aerostructures, Inc.

CVU

$

10.50

89.4% - 134.6%

127.1

79.4

10.4

13.1%

19.3%

1.60x

1.38x

12.2x

10.4x

Hexcel Corporation

HXL

$

66.38

90.4% - 131.4%

6,783.0

2,034.6

464.3

22.8%

11.5%

3.33x

3.12x

14.6x

13.2x

Honeywell International Inc.

HON

$

144.05

87.2% - 108.1%

116,593.6

41,434.0

8,466.0

20.4%

5.7%

2.81x

2.70x

13.8x

12.6x

Ducommun Incorporated

DCO

$

33.09

92.2% - 132.0%

585.6

572.3

50.4

8.8%

17.2%

1.02x

0.97x

11.6x

9.5x

Esterline Technologies Corporation

ESL

$

73.80

73.4% - 109.9%

2,601.2

2,032.4

281.1

13.8%

6.3%

1.28x

1.29x

9.3x

8.6x

FACC AG

WBAG:FACC

$

18.56

76.4% - 226.8%

1,068.6

927.3

99.0

10.7%

15.7%

1.15x

1.16x

10.8x

9.9x

Héroux-Devtek Inc.

TSX:HRX

$

11.53

68.9% - 93.4%

450.8

299.8

42.1

14.1%

29.8%

1.50x

1.33x

10.7x

8.7x

Innovative Solutions and Support, Inc.

ISSC

$

2.91

64.4% - 111.9%

25.6

15.6

(3.2)

-20.7%

na

1.64x

na

na

na

JAMCO Corporation

TSE:7408

$

22.77

0.8% - 1.1%

840.4

732.5

63.0

8.6%

na

1.15x

na

13.3x

na

Kaman Corporation

KAMN

$

69.69

92.8% - 146.2%

2,291.7

1,833.3

171.9

9.4%

12.6%

1.25x

1.21x

13.3x

13.1x

Latécoère S.A.

ENXTPA:LAT

$

5.34

89.1% - 136.0%

534.9

785.0

40.6

5.2%

48.6%

0.68x

0.71x

13.2x

11.0x

Lisi S.A.

ENXTPA:FII

$

37.86

79.6% - 128.1%

2,371.8

2,005.3

314.0

15.7%

11.4%

1.18x

1.21x

7.6x

7.9x

Magellan Aerospace Corporation

TSX:MAL

$

12.21

55.8% - 81.3%

764.9

748.6

116.1

15.5%

10.9%

1.02x

1.03x

6.6x

6.4x

Meggitt PLC

MGGT

$

6.51

122.8% - 156.7%

6,299.2

2,740.2

716.1

26.1%

6.6%

2.30x

2.45x

8.8x

10.6x

Moog Inc.

MOG.A

$

77.96

83.0% - 110.6%

3,464.3

2,592.0

328.9

12.7%

12.9%

1.34x

1.28x

10.5x

10.4x

RBC Bearings Incorporated

ROLL

$

128.81

92.0% - 128.5%

3,242.2

674.9

164.2

24.3%

11.3%

4.80x

4.54x

19.7x

18.4x

Rockwell Collins, Inc.

COL

$

134.68

96.5% - 128.4%

28,984.7

8,478.0

1,804.0

21.3%

7.7%

3.42x

3.26x

16.1x

13.8x

Senior plc

LSE:SNR

$

4.01

122.4% - 174.3%

1,879.8

1,383.3

162.6

11.8%

12.0%

1.36x

1.38x

11.6x

10.7x

SIFCO Industries, Inc.

SIF

$

5.42

68.2% - 108.5%

58.3

110.7

2.1

1.9%

na

0.53x

na

27.9x

na

Spirit AeroSystems Holdings, Inc.

SPR

$

85.91

81.7% - 148.1%

10,481.7

7,025.0

734.4

10.5%

9.4%

1.49x

1.45x

14.3x

9.3x

Triumph Group, Inc.

TGI

$

19.60

56.7% - 107.1%

2,377.0

3,199.0

251.1

7.9%

40.1%

0.74x

0.72x

9.5x

11.9x

TransDigm Group Incorporated

TDG

$

345.14

99.3% - 138.3%

28,818.7

3,602.6

1,698.8

47.2%

6.1%

8.00x

7.40x

17.0x

14.9x

Woodward, Inc.

WWD

$

76.86

86.1% - 116.9%

5,417.5

2,173.8

364.0

16.7%

17.9%

2.49x

2.38x

14.9x

13.3x

Mean

80.3% - 126.7%

$

9,105.1

$

3,816.0

$

686.7

12.7%

15.8%

1.93x

1.93x

13.0x

11.1x

Median

83.0% - 128.5%

$

2,371.8

$

1,833.3

$

171.9

12.7%

12.0%

1.37x

1.36x

13.2x

10.6x

Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash.

Sources of information: S&P Capital IQ.

9

SELECTED PUBLIC COMPANY TRADING DATA

Aviation Investment Banking

Selected Companies Review ($ in thousands, except per security)

Market Statistics Company

Ticker

Metrics

Closing Price

% of 52-week

Enterprise

Revenue

EBITDA

30-Jun-18

High-Low

Value

LTM

LTM

Valuation Benchmarks EBITDA

EBITDA

LTM Margin 2019 E Growth

EV / Revenue LTM

EV / EBITDA

2018 E

LTM

2018 E

MRO, Parts & Supply Chain AAR Corp.

AIR

$

46.42

94.6% - 135.5%

143.3

7.5%

na

0.93x

0.91x

12.4x

10.8x

CPI Aerostructures, Inc.

CVU

$

10.50

89.4% - 134.6%

$

1,770.4 127.1

$

1,902.1 79.4

$

10.4

13.1%

19.3%

1.60x

1.38x

12.2x

10.4x

HEICO Corporation

HEI

$

72.87

93.6% - 155.3%

9,832.4

1,647.7

406.8

24.7%

8.5%

5.97x

5.56x

24.2x

21.7x

Hong Kong Aircraft (HAECO)

SEHK:44

$

8.70

12.5% - 20.8%

1,992.9

1,861.7

156.9

8.4%

na

1.07x

na

12.7x

na

KLX Inc.

KLXI

$

71.90

87.2% - 157.2%

4,535.0

1,828.6

300.4

16.4%

9.7%

2.48x

2.24x

15.1x

11.4x

Wesco Aircraft Holdings, Inc.

WAIR

$

11.25

94.1% - 186.0%

1,969.1

1,478.7

131.1

8.9%

12.5%

1.33x

1.30x

15.0x

11.7x

MTU Aero Engines AG

XTRA:MTX

$

192.04

113.9% - 167.4%

11,223.1

6,047.4

827.1

13.7%

6.5%

1.86x

2.20x

13.6x

12.4x

Singapore Technologies (ST Aerospace)

SGX:S63

$

2.41

62.7% - 76.4%

7,546.8

5,155.7

589.7

11.4%

8.8%

1.46x

1.48x

12.8x

12.2x

TAT Technologies Ltd.

TATT

$

7.75

66.5% - 103.3%

51.7

103.8

6.7

6.5%

na

0.50x

na

7.7x

na

VSE Corporation

VSEC

$

47.70

79.6% - 113.7%

701.3

739.7

77.4

10.5%

na

0.95x

na

9.1x

na

Mean

79.4% - 125.0%

$

3,975.0

$

2,084.5

$

265.0

12.1%

10.9%

1.81x

2.15x

13.5x

12.9x

Median

88.3% - 135.1%

$

1,981.0

$

1,738.2

$

150.1

10.9%

9.2%

1.40x

1.48x

12.7x

11.7x

$

34,673.6

$

4,970.1

$

Aviation Services AerCap Holdings N.V.

AER

$

54.15

96.2% - 117.1%

2,391.4

48.1%

2.9%

6.98x

7.19x

14.5x

8.7x

Aircastle Limited

AYR

$

20.50

81.0% - 108.1%

5,602.2

785.7

na

na

8.9%

7.13x

7.11x

na

7.6x

Air Lease Corporation

AL

$

41.97

82.8% - 112.4%

14,061.2

1,537.4

na

na

24.0%

9.15x

8.32x

na

9.2x

Air T, Inc.

AIRT

$

33.35

95.1% - 231.6%

112.5

194.5

6.9

3.6%

na

0.58x

na

16.2x

na

Air Transport Services Group, Inc.

ATSG

$

22.59

81.6% - 117.8%

1,874.5

1,033.3

267.6

25.9%

10.1%

1.81x

2.18x

7.0x

6.0x

Arotech Corporation

ARTX

$

3.75

86.2% - 138.9%

106.2

103.6

7.7

7.4%

53.2%

1.03x

1.03x

13.8x

13.4x

Atlas Air Worldwide Holdings, Inc.

AAWW

$

71.70

95.2% - 141.6%

4,017.5

2,271.1

469.1

20.7%

10.7%

1.77x

1.54x

8.6x

7.8x

BBA Aviation plc

LSE:BBA

$

4.50

121.6% - 155.3%

5,775.8

2,370.6

442.2

18.7%

5.0%

2.44x

2.31x

13.1x

12.1x

CAE Inc.

TSX:CAE

$

20.76

73.8% - 106.1%

6,119.6

2,194.6

413.0

18.8%

8.1%

2.79x

2.69x

14.8x

11.6x

Gogo Inc.

GOGO

$

4.86

32.9% - 108.0%

1,131.9

765.5

99.2

13.0%

155.0%

1.48x

1.28x

11.4x

27.5x

Mean

84.7% - 133.7%

$

7,347.5

$

1,622.6

$

512.2

19.5%

30.9%

3.51x

3.74x

12.4x

11.6x

Median

84.5% - 117.5%

$

4,809.8

$

1,285.4

$

340.3

18.7%

10.1%

2.13x

2.31x

13.4x

9.2x

Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash.

Sources of information: S&P Capital IQ.

10

SELECTED PUBLIC COMPANY TRADING DATA

Aviation Investment Banking

Selected Companies Review ($ in thousands, except per security)

Market Statistics Company

Ticker

Metrics

Closing Price

% of 52-week

Enterprise

Revenue

EBITDA

30-Jun-18

High-Low

Value

LTM

LTM

Valuation Benchmarks

EBITDA

EBITDA

LTM Margin 2019 E Growth

EV / Revenue LTM

EV / EBITDA

2018 E

LTM

2018 E

Airframe & Engine OEM Airbus SE

ENXTPA:AIR

$

116.98

109.8% - 171.0%

5,628.9

7.0%

16.6%

1.13x

1.22x

16.1x

10.3x

The Boeing Company

BA

$

335.51

89.6% - 169.7%

$

199,264.1

90,817.7

$

80,625.8 94,813.0

$

12,829.0

13.5%

8.8%

2.10x

2.04x

15.5x

14.3x

Bombardier Inc.

TSX:BBD.B

$

3.95

73.8% - 201.7%

17,554.4

16,641.0

655.0

3.9%

38.6%

1.05x

1.04x

26.8x

14.1x

Dassault Aviation SA

ENXTPA:AM

$ 1,904.10

110.3% - 161.6%

14,705.1

5,803.0

535.0

9.2%

24.2%

2.53x

2.59x

27.5x

25.5x

Embraer S.A.

BOVESPA:EMBR3 $

6.30

25.0% - 41.8%

5,908.1

5,649.9

511.8

9.1%

28.7%

1.05x

1.05x

11.5x

9.7x

General Electric Company

GE

$

13.61

49.3% - 107.9%

252,151.5

123,031.0

5,526.0

4.5%

5.2%

2.05x

2.08x

45.6x

15.3x

Rolls-Royce Holdings plc

LSE:RR.

$

13.04

129.0% - 163.0%

24,978.6

22,041.0

2,349.1

10.7%

26.6%

1.13x

1.27x

10.6x

14.2x

Safran SA

ENXTPA:SAF

$

121.40

115.2% - 153.8%

51,149.6

20,509.1

4,232.7

20.6%

15.2%

2.49x

2.16x

12.1x

12.2x

Textron Inc.

TXT

$

65.91

95.0% - 140.2%

20,323.2

14,401.0

1,543.0

10.7%

8.5%

1.41x

1.40x

13.2x

12.7x

United Technologies Corporation

UTX

$

125.03

89.8% - 114.6%

122,699.2

61,264.0

10,377.0

16.9%

9.8%

2.00x

1.89x

11.8x

11.1x

Mean

88.7% - 142.5%

$

79,955.2

$

44,477.9

$

4,418.8

10.6%

18.2%

1.70x

1.67x

19.1x

14.0x

Median

92.4% - 157.7%

$

38,064.1

$

21,275.0

$

3,290.9

9.9%

15.9%

1.71x

1.65x

14.4x

13.4x

$

1,440.3

$

271.1

$

Defense Contractors AeroVironment, Inc.

AVAV

$

71.43

97.0% - 194.6%

38.6

14.3%

-38.4%

5.31x

4.35x

37.3x

29.7x

BAE Systems plc

LSE:BA.

$

8.53

129.4% - 160.0%

28,466.6

24,764.5

2,539.7

10.3%

5.8%

1.15x

1.15x

11.2x

9.8x

Elbit Systems Ltd.

TASE:ESLT

$

117.35

21.8% - 29.3%

5,455.1

3,447.2

407.3

11.8%

na

1.58x

na

13.4x

na

General Dynamics Corporation

GD

$

185.50

80.7% - 100.7%

57,992.2

31,067.0

4,578.0

14.7%

11.2%

1.87x

1.61x

12.7x

11.3x

Harris Corporation

HRS

$

144.54

84.8% - 132.5%

21,144.1

6,058.0

1,440.0

23.8%

13.5%

3.49x

3.33x

14.7x

14.7x

Huntington Ingalls Industries, Inc.

HII

$

216.79

78.4% - 116.6%

10,399.3

7,591.0

1,101.0

14.5%

-0.7%

1.37x

1.37x

9.4x

9.4x

Kratos Defense & Security Solutions, Inc.

KTOS

$

11.51

82.6% - 129.3%

1,357.2

762.9

46.1

6.0%

29.3%

1.78x

2.11x

29.4x

24.4x

L3 Technologies, Inc.

LLL

$

192.32

87.9% - 115.1%

18,305.3

9,623.0

1,346.0

14.0%

9.2%

1.90x

1.83x

13.6x

13.6x

Leonardo S.p.a.

BIT:LDO

$

9.88

61.5% - 122.1%

10,095.9

14,311.9

1,448.8

10.1%

4.3%

0.71x

0.74x

7.0x

5.3x

Lockheed Martin Corporation

LMT

$

295.43

81.4% - 106.6%

96,701.7

51,471.0

6,836.0

13.3%

7.9%

1.88x

1.88x

14.1x

11.9x

Mercury Systems, Inc.

MRCY

$

38.06

69.2% - 126.4%

1,986.1

455.9

87.4

19.2%

15.7%

4.36x

3.69x

22.7x

16.4x

Northrop Grumman Corporation

NOC

$

307.70

85.3% - 119.9%

58,549.0

26,128.0

3,922.0

15.0%

15.6%

2.24x

1.95x

14.9x

13.6x

Raytheon Company

RTN

$

192.33

83.7% - 118.8%

58,286.0

25,615.0

3,863.0

15.1%

6.9%

2.28x

2.18x

15.1x

11.9x

Thales S.A.

ENXTPA:HO

$

128.75

113.8% - 154.7%

24,236.9

18,966.6

2,114.0

11.1%

18.0%

1.28x

1.31x

11.5x

10.2x

Mean

82.7% - 123.3%

$

28,172.5

$

15,752.4

$

2,126.3

13.8%

7.6%

2.23x

2.12x

16.2x

14.0x

Median

83.2% - 121.0%

$

19,724.7

$

11,967.5

$

1,444.4

14.1%

9.2%

1.87x

1.88x

13.9x

11.9x

Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash.

Sources of information: S&P Capital IQ.

11

CONTACT INFORMATION

Aviation Investment Banking

James S. Cassel

Scott E. Salpeter

Joseph “Joey” Smith

Chairman

President

Director, Aviation Services

jcassel@cs-ib.com

ssalpeter@cs-ib.com

jsmith@cs-ib.com

305-438-7701

305-438-7702

305-438-7706

801 Brickell Ave. Suite 1900 Miami, Florida 33131 Telephone 305-438-7700 Fax 305-438-7710 www.casselsalpeter.com

12