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QUARTERLY UPDATE Q2 2019
WHOLESALE & DISTRIBUTION
Page 2
INDUSTRY OVERVIEWM&A TRANSACTIONS & PERFORMANCE
-
50
100
150
200
250
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
-
5
10
15
20
25
Tran
sact
ion
Volu
me
(Num
ber o
f Dea
ls)
*Tra
nsac
tion
Valu
e ($
Bill
ions
)
Transaction Value Transaction Volume
*All figures are in CAD unless otherwise stated.
Source: Capital IQ. Data as of June 30, 2019, based on publicly disclosed information.
• Our analysis includes the following sectors within the distribution industry: trading companies and distributors(machinery distribution, building product distribution, chemical distribution, electrical equipment distribution,transportation equipment and supplies distribution), retail distribution, food distribution, healthcare distribution andoffice product distribution.
• Overall M&A activity in the North American distribution industry, as measured by total reported transaction value,increased significantly quarter-over-quarter from Q1 2019 to Q2 2019. This increase was attributed to two largetransactions being announced within the quarter, which accounted for $12 million of the $19.5 million total reportedtransaction values. However, there was a decrease in the total reported transactions from 209 in Q1 2019 to 171 in Q22019.
• Of the transactions announced during the quarter that disclosed transaction value and additional target companyfinancials, the average EV/EBITDA multiple was 11.89x (6 transactions), while the EV/REV multiple averaged 7.18x (16transactions).
• Consolidation remains a key theme in the industry and has been fueling M&A activity, particularly within the wholesaleand distribution sector. Two notable transactions that occurred in Q2 2019, include:
• Kyocera Corporation acquired SouthernCarlson Inc for approximately $1.098 billion.• Littlejohn & Co LLC acquired Kaman Industrial Technologies for $918.74 million.
M&A MARKET UPDATE FOR Q2 2019
Number of M&A transactions in Canada in Q2 2019 in wholesale and distribution 171
NORTH AMERICAN WHOLESALE AND DISTRIBUTIONPUBLICLY DISCLOSED M&As
Page 3
INDUSTRY OVERVIEWINDUSTRIAL MACHINERY AND EQUIPMENT WHOLESALING IN CANADA
The industrial machinery and equipment wholesaling industry in Canada primarily distributes specialized machinery,equipment and related parts used in manufacturing, extraction and warehousing industries. These products includedrilling, refining and pipeline products for the energy sector; hoists and forklifts for the material handling sector; anddiesel engines, pumps and metalworking machinery for the manufacturing sector.
INDUSTRY GLANCE2018 Revenue
$24.0BAnnual Growth 2014–2019
0.7%Projected Annual Growth 2019–2024
0.4%Number of Businesses in 2019
4,709
40%
21%
14%
12%
10% 3%
PRODUCTS & SERVICES SEGMENTATION (2019)
General purpose machinery and equipment
Other industrial machinery and equipment
Materials handling equipment
Metalworking machinery and equipment
Hydraulic and pneumatic machinery and equipment
Food processing machinery
The industrial machinery and equipment wholesaling industryexperienced a modest growth of 4.3% in revenue over the five-yearperiod leading up to 2018.Increased level of manufacturing activity and industrial output in theCanadian economy are the key drivers for growth in this industry.Over the next five years to 2024, the industry is expected to continuegrowing at an annualized rate of 0.4% to $24.6 billion.Key external drivers:
1. Industrial capacity utilization2. Aggregate private investment3. Demand from wholesale trade, durable goods4. Overnight rate5. World price of steel
The industry has experienced structural change in recent years, including:• Recovered output – The industry saw a decline between 2014 and
2016, as decreasing industrial production and manufacturingpermitted downstream markets to purchase more manufacturingmachinery. Revenue is expected to recover in the second half of2019, as increased industrial output in recent years has led to anincrease in machinery-use rates.
• M&A activity – In an attempt to gain economies of scale, largeindustry operators have focused on M&A activity to lowerpurchasing costs and increase profit margins. As purchasing costsdecrease, other operating costs like wages have begun to increase.
• Maintenance of skilled staff – To achieve a higher bottom-line,industry operators must maintain knowledgeable and technicalstaff for sales, maintenance and repair, and customer relationswhich is essential in this industry as products and equipment soldby industry wholesalers require a great deal of technical expertise.
• Consumer trends and behaviors – Changing consumer behaviorhave made online channels a significant revenue segment foroperators in the industry. Wholesalers have made increasedinvestments in their online presence in order to drive sales.
Source: IBISWorld Report 41723CA Industrial Machinery & Equipment Wholesaling in Canada. Mieles, Carlos. April 2019.
Page 4
INDUSTRY OVERVIEWPLUMBING, HEATING AND AIR CONDITIONING EQUIPMENT WHOLESALING IN CANADA
The plumbing, heating and air-conditioning equipment wholesaling industry in Canada, is defined as distributing pipe,valves and fittings, plumbing fixtures, hydronics and heating, ventilation and air conditioning equipment. The industryincludes wholesale companies that purchase products directly from manufacturers and subsequently distribute productsto contractors, end-use businesses and retailers.
INDUSTRY GLANCE2018 Revenue
$14.6BAnnual Growth 2013–2018
4.1%Projected Annual Growth 2018–2023
2.3%Number of Businesses in 2018
1,393
50%
37%
13%
PRODUCTS & SERVICES SEGMENTATION (2018)
Heating, ventilation and air conditioning (HVAC)supplies
Plumbing supplies
Other
The plumbing, heating and air conditioning equipment wholesalingindustry in Canada performed well over the five-year period leading up to2017, with revenue growing at an annualized rate of 4.1% over the pastfive years.Strong growth in renovation activity coupled with demand from newconstruction markets has been the primary driver of industry growth overthe five-year period.Over the next five years to 2023, the industry is expected to continuegrowing at an annualized rate of 2.3% to $16.3 billion.Key external drivers:
1. Residential renovation expenditure2. Housing starts3. Value of non-residential construction4. Demand from hardware stores5. World price of crude oil
The industry has experienced structural change in recent years, including:• Overall housing starts – The industry has benefitted from rising
income levels and low interest rates. As a result, overall housingstarts and value of residential construction have risen, leading toincreased demand for industry products.
• Non-residential construction markets – The ripple effect fromdecreased revenues in downstream energy markets due to lowerprices of crude oil and natural gas has resulted in a decline in newnon-residential construction projects.
• Government and growing green movements – Increasedgovernment regulations, particularly at the provincial level,promoting energy efficiency by offering favorable tax incentiveshave resulted in increased demand for industry products.
• Changing consumer trends – Shifting consumer trends to consumelonger-lasting and more energy-efficient products will furtherbolster demand for such products.
• Competition and consolidation – In response to technologicalefficiencies resulting in improved margins and new entrants in theindustry, there has been increased acquisition activity in theindustry.
Source: IBISWorld Report 41612CA Plumbing, Heating, & Air-Conditioning Equipment Wholesaling in Canada. Leach, Nathaniel. August 2018.
Page 5
INDUSTRY OVERVIEWGENERAL LINE BUILDING SUPPLIES WHOLESALING IN CANADA
INDUSTRY GLANCE2018 Revenue
$6.2BAnnual Growth 2014–2019
4.1%Projected Annual Growth 2019–2024
1.0%Number of Businesses in 2019
683
11%
26%
37%
26%
PRODUCTS AND SERVICES SEGMENTATION (2019)
Plumbing, heating and air-conditioning equipment
Lumber, plywood and millwork
Roofing, siding and insulation
Other
Source: IBISWorld Report 41631CA General-Line Building Supplies Wholesaling in Canada. Ross, Olivia. January 2019.
The general-line building supplies wholesaling industry in Canadaperformed well over the 5-year period leading to 2019, with revenuegrowing at an annualized rate of 4.1% over the past 5 years.Solid growth in renovation and remodelling activity as well as positivetrends in residential construction activity are significant drivers of growth inthe industry over the five years to 2019, despite struggles in the non-residential construction market.Key external drivers:
1. Housing starts2. Residential renovation expenditure3. Value of non-residential construction4. Consumer confidence index5. Price of wood products
The industry has experienced structural change in recent years, including:• Competition and consolidation – Large manufacturers have started
developing in-house distribution divisions to replace wholesalers,which along with increased competition and operators seeking toboost profit margins, has pushed small and medium-sizedwholesalers to exit the industry or consolidate.
• Downstream activity and economic context – Wholesalers competewith domestic manufacturers for downstream business, however,import competition for industry products has risen significantly andthese imports are handled by domestic wholesalers, since foreigncompetitors do not have footprints in the domestic markets.
• Non-residential construction markets – Growth has beenconstrained due to volatile performance in non-residentialconstruction markets, which can be explained by the collapse incommodity prices in 2015-2016 that slashed activity in industrialprojects. With the price of crude recovering, the value of non-residential construction is expected to rise.
• External Competition – Manufacturers that are able to providesimilar distribution services directly to clients have createdcompetition for wholesalers, who act as an intermediary betweenmanufacturers and markets and add relatively low value to thesupply chain.
• Green building supply revolution – Demand for green buildings hasrisen and is expected to support industry growth in the coming yearsfor building supplies wholesalers that can capitalize on this niche.
The general-line building supplies wholesaling industry in Canada is defined as establishments engaged in wholesaling abroad range of building supplies, including lumber, hardware, plumbing and electrical supplies, paint, glass and otherconstruction supplies.
Page 6
INDUSTRY OVERVIEWNEWS
2019 WHOLESALE DISTRIBUTION INDUSTRY TRENDS
The wholesale distribution industry is experiencing rapid change, as businesses explore new methods and processes.Many wholesale distributors are exploring incremental growth and cost-reduction opportunities. Operators within theindustry will be required to adopt key trends in order to remain competitive and profitable. These key wholesaledistribution trends going forward include:
CONTINUED TECHNOLOGICAL ADVANCES:
Companies that are able to deploy capital to leverage innovative technology are bound to be in a more competitiveposition. Emerging IT and tech innovations have and will continue to create opportunity for business model changes.Process automation allows companies the ability to streamline complex business processes in order to drive servicequality, customer satisfaction and efficiency. 2019 is likely to see increased investment in data and softwareenhancements to simplify workflow, refine logistics, and capitalize on big data to better serve customers.
REDEFINING SUPPLY CHAINS:
Given China’s large population and strength in production abilities, Canada and the U.S. have begun to grow dependentand accustomed to working with Chinese suppliers and manufacturers. As China makes a natural progression up the valuechain, production in the country has become more expensive. China itself is shifting some of their production toalternative developing countries and investing more in domestic research, development and design teams. Global supplychains are pivoting away from China and other Asian countries with the ability to produce similar goods like Thailand,Malaysia, Vietnam and the Philippines are going to see more business. In 2019, it is expected that distributors willdiversify production to lower-cost regions.
GREEN PROCESSES:
With environmental sustainability becoming a top concern for consumers and corporate social responsibility an integralpart of business today, more companies will invest in green processes in 2019. This could mean eco-friendly packaging,reduced paper and water use, or other instalments like solar panels and solar roofs on commercial and industrialbuildings. Not only is there increasing pressure from consumers for change, but the federal government has putrequirements and tax incentives in place for those who increase energy efficiency as well.
CONSOLIDATION AND INCREASED COMPETITION:
In an ever-changing business environment with increased competition, distributors are having more trouble maintainingmarket share. Manufacturers have begun to implement in-house distribution services that ultimately remove the needfor the functionality of distributors. In order to succeed, distributors need to increase operational efficiencies, invest innew technologies, develop innovative products and increase speed-to-market. These capabilities can only be fullyachieved by large companies with lots of capital. That being said, it has become more challenging for small or mediumsized distributors to survive, which has caused increased consolidation
Page 7
MACROECONOMIC INDICATORS
Source: IBISWorld Industry Reports.
The key external drivers that affect the distribution industry in Canada include: industrial capacity utilization, the worldprice of crude oil, the Canadian dollar effective exchange rate index, the world price of steel, housing starts, residentialrenovation expenditure, value of non-residential construction and aggregate private investment. Growth in thedistribution industry in Canada is expected to be fueled by lower crude oil and steel prices, a depressed Canadian dollarrelative to key trading partners and more stable industrial capacity utilization rates as a result of lower volatility in oilprices. It is important to note that if the uncertainty surrounding NAFTA negotiations and tariff disputes persist, consumerconfidence may decline which could restrict the Canadian distribution industry from reaching full potential.
0
20
40
60
80
100
120
Pric
e pe
r Bar
rel (
USD
)
WORLD PRICE OF CRUDE
Historical Forecast
77
78
79
80
81
82
83
84
Util
izatio
n (%
)
INDUSTRIAL CAPACITY UTILIZATION
Historical Forecast
95
100
105
110
115
120
125
Inde
x
CANADIAN DOLLAR EFFECTIVE EXHANGE RATE
Historical Forecast
0
50
100
150
200
250
Inde
x
WORLD PRICE OF STEEL
Historical Forecast
Page 8
MACROECONOMIC INDICATORS
Source: IBISWorld Industry Reports.
Growth in the distribution industry in Canada is also expected to increase due to a projected rise in residential renovationexpenditure, value of private non-residential construction and increase in aggregate private investment, even thoughhousing start numbers are forecasted to decline.
0
10
20
30
40
50
60
Reno
vatio
n Ex
pend
iture
(U
SD b
illio
n)
RESIDENTIAL RENOVATION EXPENDITURE
Historical Forecast
0
5
10
15
20
25
30
Expe
nditu
re (U
SD b
illio
n)
NON-RESIDENTIAL CONSTRUCTION
Historical Forecast
170,000
180,000
190,000
200,000
210,000
220,000
230,000
Uni
ts
CANADIAN HOUSING STARTS
Historical Forecast
320330340350360370380390400410420430
Spen
ding
(CAD
bill
ion)
AGGREGATE PRIVATE INVESTMENT
Historical Forecast
Page 9
SELECT RECENT M&A TRANSACTIONS
Source: Capital IQ.All figures are in CAD.
• Nagase America Corporation signed a definitive agreementto acquire 93.6% of Prinova Group LLC from Prinova Corp,for approximately $836.9 million.
• Prinova Group LLC distributes functional ingredientsincluding flavors, essential oils, fiber, flavour enhancers andbotanic extracts as well as provides nutritional premixesand particle management services.
• Nagase America Corp imports, exports and sells chemicals,plastics, electronic materials, cosmetics and food materialsto customers internationally.
• Kyocera Corporation signed an agreement to acquireSouthernCarlson Inc from Kelso & Company and othershareholders for approximately $1.098 billion in cash.
• SouthernCarlson Inc, is a distributor of construction andpackaging machines, tools, and supplies.
• SouthernCarlson Inc will operate as a U.S. subsidiary ofKyocera, a developer and distributor of ceramic andelectrical components, as well as telecommunications andinformation equipment worldwide.
Announced Apr 25, 2019
TEV $169 million
TEV/EBITDA Not disclosed
TEV/Revenue Not disclosed
Announced Jun 26, 2019
TEV $919 million
TEV/EBITDA 10.6x
TEV/Revenue 0.6x
Announced Jun 3, 2019
TEV $837 million
TEV/EBITDA Not disclosed
TEV/Revenue 0.9x
Announced May 7, 2019
TEV $1.10 billion
TEV/EBITDA Not Disclosed
TEV/Revenue 1.5x
acquired
acquired
acquired
acquired
• Littlejohn & Co LLC entered into a definitive agreement toacquire Kaman Industrial Technologies from KamanCorporation for $918.74 million in cash consideration.
• Kaman Industrial Technologies Corporation distributesindustrial parts to original equipment manufacturers andmaintenance, repair and operations markets in the U.S. andinternationally.
• Littlejohn & Co is a private equity firm based in Connecticut,specializing in debt and equity investments.
• LG Household & Health Care Ltd signed a definitiveagreement to acquire New Avon LLC from Cerberus CapitalManagement, LP and Avon Products Inc for a total cashconsideration of $168.7 million.
• New Avon LLC is a manufacturer and distributor of skin careand beauty products, offering skincare, cosmetics,fragrance, personal care and health and wellness productsunder a number of brands via its online platform.
• LG Household & Health Care Ltd operates in the personalproducts industry as a cosmetics, household goods andbeverage company in South Korea and Internationally.
Page 10
PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
Source: Capital IQ. Data as June 30, 2019.Estimates based on Capital IQ calendar year consensus.LTM refers to last twelve months. NTM refers to next twelve months.
(Figures in CAD millions, except percentages and ratios)
LTM Operating Figures NTM Consensus Estimates Valuation (LTM)
CompanyMarket
CapEnterprise
Value RevenueRevenue
Growth EBITDAEBITDA Margin
Revenue Growth
EBITDA Margin
NTM EV/EBITDA
EV/EBITDA
EV/Revenue
Trading Companies and Distributors
Fastenal Company $24,411 $25,099 $6,788 11.0% $1,537 22.6% 6.6% 22.7% 15.3x 16.3x 3.7x
W.W. Grainger, Inc. $19,453 $22,324 $15,042 5.7% $2,185 14.5% 3.5% 14.6% 9.8x 10.2x 1.5x
United Rentals, Inc. $13,640 $29,625 $11,549 20.7% $3,347 29.0% 6.6% 48.1% 5.0x 8.9x 2.6x
HD Supply Holdings, Inc. $9,001 $12,329 $8,257 16.2% $1,113 13.5% 0.8% 14.5% 10.2x 11.1x 1.5x
Watsco, Inc. $8,062 $8,731 $6,005 3.1% $502 8.4% 4.1% 8.8% 15.8x 17.4x 1.5x
MSC Industrial Direct Co., Inc. $5,359 $6,066 $4,540 7.7% $713 15.7% 1.5% 14.7% 8.9x 8.5x 1.3x
Toromont Industries Ltd. $5,060 $5,554 $3,527 34.9% $517 14.7% 6.2% 15.1% 9.8x 10.7x 1.6x
Univar Inc. $4,893 $8,980 $11,541 2.6% $790 6.8% 20.1% 7.5% 8.6x 11.4x 0.8x
Finning International Inc. $3,898 $5,856 $7,136 9.4% $616 8.6% 3.5% 10.5% 7.5x 9.5x 0.8x
Median $8,062 $8,980 $7,136 9.4% $790 14.5% 4.1% 14.6% 9.8x 10.7x 1.5x
Mean $10,420 $13,840 $8,265 12.4% $1,258 14.9% 5.9% 17.4% 10.1x 11.6x 1.7x
Retail Distributors
Genuine Parts Company $19,790 $25,108 $24,850 7.3% $1,859 7.5% 3.0% 7.9% 12.5x 13.5x 1.0x
LKQ Corporation $10,929 $17,896 $16,381 21.2% $1,692 10.3% 2.7% 10.6% 10.0x 10.6x 1.1x
Pool Corporation $9,937 $11,045 $4,020 6.1% $467 11.6% 7.5% 12.0% 21.3x 23.6x 2.7x
Core-Mark Holding Company, Inc. $2,383 $2,984 $17,235 3.5% $185 1.1% 29.1% 1.1% 12.5x 16.1x 0.2x
Funko, Inc. $947 $1,445 $957 29.1% $147 15.4% 15.4% 17.3% 7.6x 9.8x 1.5x
Uni-Select Inc. $526 $1,365 $2,339 11.2% $146 6.2% -0.1% 7.5% 7.8x 9.4x 0.6x
Weyco Group, Inc. $347 $361 $405 6.6% $41 10.2% N/A N/A N/A 8.7x 0.9x
AMCON Distributing Company $74 $101 $1,326 8.6% $17 1.2% N/A N/A N/A 6.1x 0.1x
Median $1,665 $2,214 $3,179 8.0% $166 8.9% 5.3% 9.3% 11.2x 10.2x 1.0x
Mean $5,617 $7,538 $8,439 11.7% $569 7.9% 9.6% 9.4% 11.9x 12.2x 1.0x
Office Distributors
Herman Miller, Inc. $3,439 $3,615 $3,470 7.8% $389 11.2% N/A 12.1% 8.4x N/A 1.0x
Acme United Corporation $99 $156 $180 1.5% $15 8.1% 4.2% 8.5% 9.8x 10.7x 0.9x
Median $1,769 $1,886 $1,825 4.7% $202 9.7% 4.2% 10.3% 9.1x 10.7x 1.0x
Mean $1,769 $1,886 $1,825 4.7% $202 9.7% 4.2% 10.3% 9.1x 10.7x 1.0x
Page 11
PUBLIC COMPARABLE ANALYSISTRADING MULTIPLES & OPERATING STATISTICS
Source: Capital IQ. Data as of June 30, 2019.Estimates based on Capital IQ calendar year consensus.LTM refers to last twelve months. NTM refers to next twelve months.
(Figures in CAD millions, except percentages and ratios)LTM Operating Figures NTM Consensus Estimates Valuation (LTM)
CompanyMarket
CapEnterprise
Value RevenueRevenue
Growth EBITDAEBITDA Margin
Revenue Growth
EBITDA Margin
NTM EV/EBITDA
EV/EBITDA
EV/Revenue
Food DistributorsSysco Corporation $47,546 $58,290 $80,133 3.7% $4,546 5.7% 0.6% 5.9% 12.2x 12.8x 0.7xUS Foods Holding Corp. $10,220 $14,888 $32,589 0.8% $1,403 4.3% 2.1% 4.7% 9.5x 10.6x 0.5xPerformance Food Group Company $5,508 $7,048 $24,645 5.6% $566 2.3% 26.6% 2.1% 10.7x 12.5x 0.3xThe Chefs' Warehouse, Inc. $1,373 $1,888 $1,982 11.3% $93 4.7% 7.5% 5.8% 15.4x 20.2x 1.0xThe Andersons, Inc. $1,150 $3,226 $5,863 26.4% $200 3.4% 103.9% 2.8% 9.6x 16.1x 0.6xUnited Natural Foods, Inc. $618 $4,793 $23,649 76.2% $516 2.2% 37.0% 2.5% 5.9x 9.3x 0.2xSpartanNash Company $554 $1,955 $11,009 2.8% $243 2.2% 2.2% 2.3% 7.6x 8.0x 0.2xColabor Group Inc. $90 $199 $1,192 -0.8% $19 1.6% 2.1% 1.8% 8.9x 10.3x 0.2xMedian $1,262 $4,010 $17,329 4.7% $380 2.9% 4.9% 2.7% 9.6x 11.5x 0.4xMean $8,383 $11,536 $22,633 15.8% $948 3.3% 22.8% 3.5% 10.0x 12.5x 0.4x
Healthcare DistributorsMcKesson Corporation $32,764 $40,940 $286,450 2.9% $5,652 2.0% 1.0% 2.0% 7.2x 7.2x 0.1xAmerisourceBergen Corporation $23,440 $25,905 $234,100 9.9% $3,043 1.3% 2.5% 1.3% 8.3x 8.5x 0.1xCardinal Health, Inc. $18,363 $25,746 $191,836 6.8% $3,709 1.9% 1.6% 1.8% 7.1x 6.9x 0.1xHenry Schein, Inc. $13,630 $16,711 $17,761 12.5% $1,494 8.4% -25.3% 8.9% 14.1x 11.2x 0.9xPatterson Companies, Inc. $2,800 $3,664 $7,502 2.0% $345 4.6% -0.5% 4.4% 11.1x 10.6x 0.5xPetIQ, Inc. $964 $1,142 $751 78.6% $41 5.5% 10.0% 8.8% 15.8x 27.8x 1.5xHLS Therapeutics Inc. $492 $607 $82 -15.5% $52 63.8% -2.8% 50.7% 15.0x 11.6x 7.4xOwens & Minor, Inc. $263 $2,714 $13,269 6.0% $291 2.2% -2.7% 2.6% 8.0x 9.3x 0.2xMedian $8,215 $10,187 $15,515 6.4% $919 3.4% 0.2% 3.5% 9.7x 10.0x 0.3xMean $11,590 $14,678 $93,969 12.9% $1,828 11.2% -2.0% 10.1% 10.8x 11.7x 1.4x
Building Product DistributorsBuilders FirstSource, Inc. $2,550 $4,958 $10,232 6.3% $651 6.4% -4.5% 6.2% 8.1x 7.6x 0.5xBMC Stock Holdings, Inc. $1,844 $2,280 $4,910 6.7% $331 6.7% -3.8% 6.3% 7.6x 6.9x 0.5xRichelieu Hardware Ltd. $1,257 $1,279 $1,027 3.9% $106 10.3% 1.0% 9.9% 12.4x 12.1x 1.2xGMS Inc. $1,194 $2,624 $4,188 24.1% $378 9.0% 1.8% 9.4% 6.5x 6.9x 0.6xFoundation Building Materials, Inc. $1,000 $1,938 $2,801 18.1% $211 7.5% 4.9% 7.8% 8.4x 9.2x 0.7xCanWel Building Materials Group $377 $886 $1,278 5.8% $64 5.0% 2.6% 6.6% 10.2x 13.9x 0.7xBlueLinx Holdings Inc. $242 $1,282 $4,095 67.9% $71 1.7% -100.0% N/A N/A 17.9x 0.3xMedian $1,194 $1,938 $4,095 6.7% $211 6.7% 1.0% 7.2% 8.3x 9.2x 0.6xMean $1,209 $2,178 $4,076 19.0% $259 6.7% -14.0% 7.7% 8.9x 10.6x 0.6x
Page 12
PUBLIC COMPARABLE ANALYSISGROWTH & MULTIPLES
10.7x
10.2x
11.5x
10.0x
10.7x
9.2x
0.0x 5.0x 10.0x 15.0x
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
EV/EBITDA (LTM)
9.8x
11.2x
9.6x
9.7x
9.1x
8.3x
0.0x 5.0x 10.0x 15.0x
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
EV/EBITDA (NTM)
15%
9%
3%
3%
10%
7%
0% 5% 10% 15% 20%
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
EBITDA Margin (LTM)
15%
9%
3%
4%
10%
7%
0% 5% 10% 15% 20%
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
EBITDA Margin (NTM)
4%
5%
5%
4%
1%
0% 2% 4% 6%
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
Revenue Growth (NTM)
9%
8%
5%
6%
5%
7%
0% 5% 10%
Trading Companies and Distributors
Retail Distributors
Food Distributors
Healthcare Distributors
Office Distributors
Building Product Distributors
Revenue Growth (LTM)
Source: Capital IQ. Data as of June 30, 2019.LTM refers to last twelve months. NTM refers to next twelve months.
Median 4.2%
Median 7.8%
Median 9.6x
Median 8.2%
Median 10.5x
Median. 6.6%
Page 13
PUBLIC COMPARABLE ANALYSISPERFORMANCE ANALYSIS
Source: Capital IQ. Data as of June 30, 2019.LTM refers to last twelve months. NTM refers to next twelve months.
10.9x
13.5x
11.5x
8.7x8.3x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
EV/N
TM E
BITD
A M
ultip
le
INDUSTRY PEER GROUPHISTORICAL EV/NTM EBITDA (3 Years)
Trading Companies & Distributors Retail Distributors Food Distributors
Healthcare Distributors Office Distributors Building Product Distributors
198%
279%
317%
222%226%
179%181%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
Pric
e Re
turn
(%)
BENCHMARK PERFORMANCE (Last 10 Years)
S&P 500 Trading Companies & DistributorsRetail Distributors Food DistributorsHealthcare Distributors Office DistributorsBuilding Product Distributors
Page 14
MNPCF – LEADERSHIP TEAM
DUE DILIGENCE LEADERSHIP
TRANSACTION LEADERSHIP
Aleem BandaliManaging Director
Dale AntonsenManaging Director
John CaggianielloManaging Director
[email protected] 416.513.4177
Brett FranklinPresident
Mike ReynoldsManaging Director
Johnny EarlManaging Director
[email protected] 604.637.1514
Dan PorterManaging Director
Stephen ShawManaging Director
Kevin TremblayManaging Director
Mark RegehrManaging Director
Craig MaloneyManaging Director
Patrick KhouzamManaging Director
Jason BurgessManaging Director
Erik St-HilaireManaging Director
Page 15
MNPCF – RECENTLY CLOSED DEALS
NATIONAL
