MANUFACTURING QUARTERLY UPDATE Q4 2018...• Merger and acquisition (M&A) activity in the manufacturing industry within North America declined in the fourth quarter of 2018. Overall

QUARTERLY UPDATE Q4 2018

MANUFACTURING

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INDUSTRY OVERVIEWM&A TRANSACTIONS & PERFORMANCE

77.8

112.

1

130.

5

40.0

85.7

101.

8

116.

7

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78.8

170.

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111.

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46.4

79.4

62.5

77.9

74.9

131.

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86.2

32.9

183 174 166 164 166 168 166

193

159 158 155 171

156 142

129 147

105 100

129 125

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

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NORTH AMERICAN MANUFACTURING M&A TRANSACTIONS

Transaction value Transaction volume

Source: Capital IQ. Data as of December 31, 2018.

• Merger and acquisition (M&A) activity in the manufacturing industry within North America declined in the fourth quarter of 2018. Overall transaction volume decreased from 129 deals in third quarter of 2018 to 125 deals in fourth quarter 2018, and total transaction value decreased from $86.2 billion to $32.9 billion in the same period. Factors contributing to the decline in aggregate transaction value include:

• A decline in average transaction value between periods from $668 million to $264 million. This was largely attributable to Broadcom Inc. acquiring CA Technologies for $21.8 billion in the third quarter 2018. Relative to third quarter 2018, there were no transactions of similar size or scope which occurred in fourth quarter 2018.

• During the fourth quarter of 2018, North American capital markets experienced heightened levels of volatility due to a continuation of geopolitical tensions and trade frictions, further monetary tightening through the gradual increase of key benchmark interest rates, as well as a current U.S. government shut down which started towards the end of December. Collectively these factors contributed to a reduction in investor sentiment within the market.

• Overall transaction volume did not change significantly during the period. Consistent with third quarter 2018, the industrials subsector within the manufacturing industry continued to dominate the majority of transactions; however, declined modestly between periods, from 28 percent to 26 percent of total transaction volume. Transaction activity within the health care subsector declined 55 percent, from 22 transactions in third quarter 2018 to 10 transactions in fourth quarter 2018. The decline in health care transaction volume was partially offset by an increase in the consumer staples and consumer discretionary subsector which increased 34 percent, from 19 transactions in third quarter 2018 to 29 transactions in fourth quarter 2018.

M&A MARKET UPDATE FOR Q4 2018

2014 2015 2016 2017 2018

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MACRO ECONOMIC INDICATORS

Source: IBISWorld Industry Reports.F indicates forecast.

The key external drivers that affect the manufacturing industry in Canada include; industrial capacity utilization, the worldprice of crude oil, the Canadian-dollar effective exchange rate index and the consumer confidence index. Growth in the manufacturing industry in Canada is expected to be fueled by lower than historical crude oil prices, a depressed Canadian dollar relative to key trading partners and more stable industrial capacity utilization rates. It is important to note that uncertainty related to the recently adopted United States-Mexico-Canada Agreement (USMCA) and a projected global economic slowdown may impact consumer confidence levels and other macro economic indicators, which could restrict the Canadian manufacturing industry from reaching full potential.

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INDUSTRIAL CAPACITY UTILIZATION

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WORLD PRICE OF CRUDE OIL

85.00

90.00

95.00

100.00

105.00

110.00

115.00

Inde

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CANADIAN-DOLLAR EFFECTIVE EXCHANGE RATE INDEX

80.00

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90.00

95.00

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105.00

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CONSUMER CONFIDENCE INDEX

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SELECT RECENT M&A TRANSACTIONS

Source: Capital IQ.All figures are in $USD.

• Cleveland, Ohio based TransDigm Group Inc. engineers and manufacturers aviation components under its three divisions: power and controls, airframe, and non-aviation. Its components are used in commercial and military aircrafts.

• Esterline Technologies Corporation designs and produces aviation communication systems, power control systems, and avionic sensors for aerospace and military applications. The company is headquartered in Bellevue, Washington.

• II-VI Incorporated develops and manufactures application-specific photonic, and electronic materials and components. Its products are used by customers in the automotive, military, medical, communication, and manufacturing industry. The company is headquartered in Saxonburg, Pennsylvania.

• Finisar Corporation manufactures optical communication components used in networking equipment, data centers, telecommunication systems, consumer electronics and automotive components. The company is headquartered in Sunnyvale, California.

• Luxfer Holdings PLC is a high tech components manufacturer that specializes in using bespoke alloys designed for highly specific applications within the medical, military, and aviation industries. The company operates 20 manufacturing facilities worldwide and is headquartered in Manchester, United Kingdom.

• Neo Performance Materials Inc. focuses on processing, engineering, and producing components using rare earth metals and zirconium based materials. The company had its IPO on the TSX during December 2017 and is headquartered in Toronto, Ontario.

• Sycamore Partners is a private equity firm based in New York City, NY. The firm specializes in consumer distribution and retail-related investments and partners with management teams to improve the operating profitability and strategic value of the business.

• Pure Fishing Inc. is a leading global provider of fishing tackle, lures, rods and reels with a portfolio of brands that include Abu Garcia, All Star, Berkley, Chub, Fenwick and many more. The company is headquartered in Columbia, South Carolina.

Announced Oct 10, 2018

TEV $4.367 billion

TEV/EBITDA 13.04x

TEV/Revenue 1.96x

Announced Nov 9, 2018

TEV $3.827 billion

TEV/EBITDA 36.95x

TEV/Revenue 1.79x

Announced Dec 18, 2018

TEV $606 million

TEV/EBITDA 8.74x

TEV/Revenue 1.10x

Announced Nov 7, 2018

TEV $1.3 billion

TEV/EBITDA Not Disclosed

TEV/Revenue 2.34x

Announced intention to

acquire


acquire


acquire

acquired

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PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS

Source: Capital IQ. Data as of December 31, 2018.LTM refers to last twelve months. NTM refers to next twelve months.

(Figures In $USD millions, except percentages and ratios)

LTM Operating Figures NTM Consensus Estimates Valuation

CompanyMarket

CapitalizationEnterprise

Value RevenueRevenue Growth EBITDA

EBITDA Margin

Revenue Growth

EBITDA Margin

NTM EV/EBITDA

LTM EV/EBITDA

LTM EV/REV

Auto Parts and EquipmentAptiv PLC $16,222 $19,760 $14,435 12.0% $2,281 15.8% 3.0% 16.8% 7.9x 8.7x 1.4xMagna International Inc. $15,192 $19,206 $42,732 18.2% $4,622 10.8% (4.2%) 10.6% 4.4x 4.2x .4xLear Corporation $7,884 $8,946 $21,149 3.3% $2,125 10.0% 1.2% 10.1% 4.1x 4.2x .4xBorgWarner Inc. $7,235 $9,114 $10,543 11.3% $1,788 17.0% 0.6% 16.5% 5.1x 5.1x .9xAutoliv, Inc. $6,120 $7,850 $8,678 (16.4%) $1,297 14.9% 4.7% 14.7% 6.1x 6.1x .9xMedian $7,884 $9,114 $14,435 11.3% $2,125 14.9% 1.2% 14.7% 5.1x 5.1x .9xMean $10,531 $12,975 $19,507 5.7% $2,423 13.7% 1.1% 13.8% 5.5x 5.6x .8x

Automobile ManufacturersGeneral Motors Company $47,211 $133,727 $146,365 (1.0%) $22,774 15.6% 0.8% 15.4% 5.9x 5.9x .9xTesla, Inc. $57,153 $69,094 $21,461 82.5% $1,648 7.7% 33.5% 13.6% 16.6x 41.9x 3.2xFord Motor Company $30,431 $160,385 $160,338 2.3% $11,678 7.3% (8.8%) 8.2% 14.0x 13.7x 1.0xMedian $47,211 $133,727 $146,365 2.3% $11,678 7.7% 0.8% 13.6% 14.0x 13.7x 1.0xMean $44,932 $121,069 $109,388 27.9% $12,033 10.2% 8.5% 12.4% 12.1x 20.5x 1.7x

Aerospace and DefenseThe Boeing Company $183,143 $185,109 $101,127 8.3% $13,915 13.8% 8.8% 15.9% 11.4x 13.3x 1.8xUnited Technologies Corporation $91,933 $120,346 $66,501 11.1% $11,749 17.7% 15.8% 17.8% 9.1x 10.2x 1.8x

Lockheed Martin Corporation $74,474 $88,362 $53,762 5.3% $8,591 16.0% 5.3% 16.0% 10.0x 10.3x 1.6x

General Dynamics Corporation $46,558 $58,629 $36,193 16.9% $5,265 14.5% 7.2% 13.9% 10.5x 11.1x 1.6x

Raytheon Company $43,640 $47,180 $27,058 6.7% $3,876 14.3% 7.3% 18.9% 8.6x 12.2x 1.7xNorthrop Grumman Corporation $42,519 $56,196 $30,095 16.6% $4,974 16.5% 13.9% 14.2% 11.8x 11.3x 1.9x

Median $60,516 $73,495 $44,978 9.7% $6,928 15.3% 8.1% 16.0% 10.3x 11.2x 1.8xMean $80,378 $92,637 $52,456 10.8% $8,062 15.5% 9.7% 16.1% 10.2x 11.4x 1.8x

Construction Machinery and Heavy TrucksCaterpillar Inc. $74,985 $103,612 $54,722 20.4% $11,067 20.2% 4.2% 20.6% 9.2x 9.4x 1.9xCummins Inc. $21,390 $23,317 $23,121 18.8% $3,309 14.3% 4.6% 16.1% 6.0x 7.0x 1.0xPACCAR Inc $19,967 $25,790 $23,496 20.8% $3,743 15.9% (2.5%) 12.5% 9.1x 6.9x 1.1xMedian $21,390 $25,790 $23,496 20.4% $3,743 15.9% 4.2% 16.1% 9.1x 7.0x 1.1xMean $38,781 $50,906 $33,780 20.0% $6,040 16.8% 2.1% 16.4% 8.1x 7.8x 1.3x

Electrical Components and EquipmentEmerson Electric Co. $37,413 $41,123 $17,408 14.0% $3,561 20.5% 8.4% 21.3% 10.2x 11.5x 2.4xEaton Corporation plc $29,757 $36,594 $21,609 5.9% $3,873 17.9% 3.4% 18.7% 9.0x 9.4x 1.7xRockwell Automation, Inc. $18,099 $18,989 $6,722 4.9% $1,476 22.0% 4.2% 23.0% 11.8x 12.9x 2.8xAMETEK, Inc. $15,714 $17,097 $4,718 14.2% $1,239 26.3% 9.6% 26.5% 12.5x 13.8x 3.6xMedian $23,928 $27,792 $12,065 10.0% $2,519 21.2% 6.3% 22.2% 11.0x 12.2x 2.6xMean $25,246 $28,451 $12,614 9.8% $2,537 21.6% 6.4% 22.4% 10.9x 11.9x 2.6x

Page 6

PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS

Source: Capital IQ. Data as of December 31, 2018.LTM refers to last twelve months. NTM refers to next twelve months.

(Figures In $USD millions, except percentages and ratios)

LTM Operating Figures NTM Consensus Estimates Valuation

CompanyMarket

CapitalizationEnterprise

Value RevenueRevenue Growth EBITDA

EBITDA Margin

Revenue Growth

EBITDA Margin

NTM EV/EBITDA

LTM EV/EBITDA

LTM EV/REV

Agricultural and Farm MachineryDeere & Company $47,521 $86,857 $37,318 28.4% $5,967 16.0% (4.3%) 16.8% 14.4x 14.6x 2.3xCNH Industrial N.V. $12,469 $32,994 $27,786 13.0% $3,255 11.7% 7.5% 9.2% 11.8x 10.1x 1.2xThe Toro Company $5,914 $5,937 $2,619 4.5% $446 17.0% 5.8% 17.0% 12.6x 13.3x 2.3xAGCO Corporation $4,358 $6,018 $9,287 18.0% $813 8.8% 2.7% 8.7% 7.3x 7.4x .6xMedian $9,191 $19,506 $18,537 15.5% $2,034 13.9% 4.3% 13.0% 12.2x 11.7x 1.7xMean $17,565 $32,951 $19,252 16.0% $2,620 13.4% 2.9% 12.9% 11.5x 11.4x 1.6x

Industrial MachineryIllinois Tool Works Inc. $42,036 $47,855 $14,817 5.2% $4,053 27.4% 0.3% 27.8% 11.5x 11.8x 3.2xParker-Hannifin Corporation $19,739 $23,861 $14,518 8.7% $2,589 17.8% 1.5% 18.0% 9.0x 9.2x 1.6xStanley Black & Decker, Inc. $18,088 $23,714 $13,982 9.7% $2,129 15.2% 3.7% 16.3% 9.6x 11.1x 1.7xFortive Corporation $22,596 $26,472 $7,244 11.8% $1,731 23.9% (0.2%) 24.8% 15.0x 15.3x 3.7xIngersoll-Rand Plc $22,411 $25,514 $15,668 10.4% $2,279 14.5% 4.9% 15.8% 10.1x 11.2x 1.6xMedian $22,411 $25,514 $14,518 9.7% $2,279 17.8% 1.5% 18.0% 10.1x 11.2x 1.7xMean $24,974 $29,483 $13,246 9.2% $2,556 19.8% 2.0% 20.5% 11.0x 11.7x 2.4x

PharmaceuticalsJohnson & Johnson $346,109 $358,004 $81,581 6.7% $28,205 34.6% (0.3%) 36.9% 12.0x 12.7x 4.4xPfizer Inc. $252,318 $277,056 $53,647 2.1% $22,705 42.3% (0.4%) 40.7% 12.2x 12.2x 5.2xMerck & Co., Inc. $198,695 $212,376 $41,729 4.8% $14,095 33.8% 3.8% 37.5% 12.5x 15.1x 5.1xBristol-Myers Squibb Company $84,842 $85,429 $22,561 8.6% $7,208 31.9% 7.4% 31.6% 11.8x 11.9x 3.8x

Eli Lilly and Company $113,733 $118,504 $24,278 8.0% $7,789 32.1% 2.1% 33.6% 14.2x 15.2x 4.9xAllergan plc $45,082 $67,468 $15,787 (1.0%) $7,093 44.9% (3.8%) 48.0% 8.8x 9.5x 4.3xMedian $113,733 $118,504 $24,278 4.8% $7,789 33.8% 2.1% 37.5% 12.2x 12.2x 4.9xMean $138,934 $152,166 $31,600 4.5% $11,778 37.0% 1.8% 38.3% 11.9x 12.8x 4.6x

Diversified ChemicalsDowDuPont Inc. $122,696 $152,344 $85,977 37.6% $15,809 18.4% 4.2% 22.3% 7.8x 9.6x 1.8xEastman Chemical Company $10,238 $16,746 $10,137 8.1% $2,350 23.2% 2.4% 22.6% 7.1x 7.1x 1.7xThe Chemours Company $4,828 $7,558 $6,749 13.8% $1,693 25.1% 1.3% 24.6% 4.5x 4.5x 1.1xHuntsman Corporation $4,597 $7,635 $9,346 16.0% $1,533 16.4% (1.1%) 14.7% 5.4x 5.0x .8xMedian $7,533 $12,191 $9,742 14.9% $2,022 20.8% 1.8% 22.4% 6.3x 6.1x 1.4xMean $35,590 $46,071 $28,052 18.9% $5,346 20.8% 1.7% 21.0% 6.2x 6.6x 1.3x

Page 7

PUBLIC COMPARABLE ANALYSISGROWTH, MARGINS & MULTIPLES

5.1x

6.1x

13.7x

7.0x

12.2x

11.2x

11.7x

12.2x

11.2x

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x

Auto Parts and Equipment

Diversified Chemicals

Automobile Manufacturers

Construction Machinery and Heavy Trucks

Pharmaceuticals

Aerospace and Defense

Agricultural and Farm Machinery

Electrical Components and Equipment

Industrial MachineryLTM EV/EBITDA

7.7%

14.9%

13.9%

15.9%

15.3%

17.8%

20.8%

21.2%

33.8%

0% 5% 10% 15% 20% 25% 30% 35% 40%






Industrial Machinery



PharmaceuticalsLTM EBITDA MARGIN

9.7%

9.7%

20.4%

11.3%

10.0%

15.5%

4.8%

2.3%

14.9%

0% 5% 10% 15% 20% 25%







Pharmaceuticals


Diversified ChemicalsLTM REVENUE GROWTH

Source: Capital IQ. Data as of December 31, 2018.LTM refers to last twelve months. NTM refers to next twelve months.Valuation details provided on page 5 and 6.

10.9%

17.9%

10.1x

Page 8

PUBLIC COMPARABLE ANALYSISGROWTH, MARGINS & MULTIPLES

13.6%

13.0%

14.7%

16.0%

16.1%

18.0%

22.2%

22.4%

37.5%

0% 10% 20% 30% 40%









PharmaceuticalsNTM EBITDA MARGIN

0.8%

2.1%

8.1%

1.8%

6.3%

1.2%

1.5%

4.2%

4.3%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%


Pharmaceuticals







Agricultural and Farm MachineryNTM REVENUE GROWTH

Source: Capital IQ. Data as of December 31, 2018.LTM refers to last twelve months. NTM refers to next twelve months.Valuation details provided on page 5 and 6.

3.4%

19.3%

10.0x

5.1x

6.3x

12.2x

9.1x

10.1x

10.3x

14.0x

11.0x

12.2x

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x



Pharmaceuticals






Agricultural and Farm MachineryNTM EV/EBITDA

Page 9

PUBLIC COMPARABLE ANALYSISPERFORMANCE ANALYSIS

Source: Capital IQ. Data as of December 31, 2018.Further details provided on page 5 and 6.

-20.5%

-2.9%

-21.3%

-15.5%

-20.9%

-6.4%

-15.5%

-4.3%

-18.9%

-30.00%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%MANUFACTURING PEER GROUP MARKET CAPITALIZATION

Auto Parts and Equipment Automobile Manufacturers Aerospace and DefenseConstruction Machinery and Heavy Trucks Electrical Components and Equipment Agricultural and Farm MachineryIndustrial Machinery Pharmaceuticals Diversified Chemicals

5.3x

9.6x

8.8x

11.4x

12.6x

11.5x

13.1x

7.8x

5.00x

7.00x

9.00x

11.00x

13.00x

15.00x

MANUFACTURING PEER GROUP EV/EBITDA MULTIPLES

Auto Parts and Equipment Automobile Manufacturers Aerospace and DefenseConstruction Machinery and Heavy Trucks Electrical Components and Equipment Agricultural and Farm MachineryIndustrial Machinery Pharmaceuticals Diversified Chemicals

Page 10

MNPCF – LEADERSHIP TEAM

DUE DILIGENCE LEADERSHIP

TRANSACTION LEADERSHIP

Aleem BandaliManaging Director

[email protected]

Dale AntonsenManaging Director

[email protected]

John CaggianielloManaging Director

[email protected] 416.513.4177

Brett FranklinPresident

[email protected]

Mike ReynoldsManaging Director

[email protected]

Johnny EarlManaging Director

[email protected] 604.637.1514

Dan PorterManaging Director

[email protected]

Stephen ShawManaging Director

[email protected]

Jason BurgessManaging Director

[email protected]

Mark RegehrManaging Director

[email protected]

Craig MaloneyManaging Director

[email protected]

Patrick KhouzamManaging Director

[email protected]

Page 11

MNPCF – RECENT TRANSACTIONS

NATIONAL

Documents

MANUFACTURING QUARTERLY UPDATE Q4 2018...• Merger and acquisition (M&A) activity in the manufacturing industry within North America declined in the fourth quarter of 2018. Overall