More than 60 investors, analysts, composites industry suppliers and fabricators gathered in New York City Feb. 21-22 for the inaugural Composites Industry Investment Forum, hosted by COMPOSITESWORLD, publishers of High-Performance Composites and Composites Technology magazines. Speakers focused primarily on carbon fiber supply and demand, carbon fiber production costs and end market consumption estimates. Boeing’s 787 and Airbus’ A350 XWB were, of course, mentioned often, as were very light jets, general aviation, helicopters and the U.S. Navy’s DD(X) next-generation destroyer.
Trevor Bohn, vice president at RSM EquiCo Capital Markets (Costa Mesa, Calif.), who provides significant mergers and acquisition analysis for the aerospace industry, talked at length about aerospace supplier tiers, potential for sales and purchases, and strategic and private equity buyers in the aerospace and composites markets. He emphasized that Tier II and Tier III fabricators that have fixed aerospace contracts are attractive targets for buyers because they provide known quantities of orders, although a fabricator ripe for acquisition also must have a robust EBITDA (earnings before interest, taxes, depreciation and amortization), strong engineering and R&D and sales of at least $50 million (USD). He told the audience that most aerospace/Tier II and III sales in which his firm has been involved have been six to eight times EBITDA and range from $100 million to $1 billion (USD) in value. Bohn also pointed out that the current credit crunch in the U.S. is suppressing lender largesse and making it more difficult for private equity firms, in particular, to secure funds.
Bohn also addressed the issue of a potential “super cycle” in aerospace industry expansion — five-plus years of >10 percent growth. He says he believes aerospace growth will be higher than it has been historically, but short of a super cycle, adding that the composites industry is in the midst of a unique and unprecedented growth spurt, with multiyear demand forecast across multiple markets.