COSTA MESA, CA -- 06/20/08 --
While the domestic airline industry faces
severe challenges due to skyrocketing jet-fuel prices, the overall
commercial aviation sector should continue to thrive in 2008 and beyond.
Development of major new aircraft from Boeing and Airbus is keeping
suppliers busy, while demand remains strong for regional jets, business
jets and very light jets. Dealmaking activity is robust, with strategic
buyers pursuing acquisitions to control costs and secure new value-add
product lines and cash-rich private equity groups aggressively competing
for middle-market acquisition candidates.
These were among the observations shared by RSM EquiCo
Capital Markets LLC at the global investment bank's third annual
Aerospace & Defense Conference, held last week in Southern California. The
industry forecast was presented by Paul Weisbrich, senior managing director and head of
the firm's Aerospace & Defense Investment Banking Group.
Following are among the other forecasts offered by RSM EquiCo:
-- The outlook for the U.S. defense segment is mixed, with Department of
Defense spending expecting to peak in 2009 and decline in real terms after
that. The most attractive opportunities in the segment are in Future Combat
Systems and Reset Spending.
-- The aviation supply chain will continue to consolidate, particularly
within the subsystems and component manufacturing sub sectors.
-- Deal values in the second half of 2008 are expected to be 15-20
percent higher than the first half.
"Aerospace and defense continues to be one of the busiest sectors for
mergers and acquisitions," said Weisbrich. "U.K. and European companies
are actively seeking a broader U.S. footprint, softness in the U.S. dollar
has made American companies particularly attractive to international
buyers, and the regulatory environment has been relatively supportive. At
the same time, second- and third-tier suppliers are aggressively looking to
consolidate operations and expand capacity. Our A&D bankers are very busy
with projects that will impact the market over the next 12 months."
RSM EquiCo's Aerospace & Defense Conference, which attracted more than 60
senior-level industry executives, featured a keynote address by retired
British Maj. Gen. Charles Vyvyan, who framed the threat of terrorism in
international terms. Other participants included Joseph Berenato, chairman
and chief executive of Ducommun Inc., who discussed the globalization of
the A&D supply chain, and Dale Mizer, director of business development for
HITCO Composites Inc., who noted that his company's parent, SGL/HITCO,
recently committed to investing $80 million in capital equipment and plant
improvements in Southern California. Also featured was a panel discussion
featuring principals from three private equity firms active in the A&D
sector: Mark Jrolf, partner, Heritage Partners; Ted Kramer, partner,
Hammond, Kennedy, Whitney & Company; and Jeff Weber, principal, Veritas
Capital.
Copies of the Ducommun, HITCO and RSM EquiCo presentations can be found here.
About RSM EquiCo Capital Markets
RSM EquiCo Capital Markets LLC (www.rsmequico.com) is a global provider of
investment banking services to private and public companies with annual
revenues of up to $1 billion. The firm's services include mergers,
acquisitions, divestitures, recapitalizations, capital raising, fairness
opinions and restructurings. RSM EquiCo Capital Markets, which offers
in-depth expertise in 12 distinct industry sectors, brings together
companies, capital and creativity on a national and international scale to
help clients achieve their personal and strategic objectives.
RSM EquiCo Capital Markets is affiliated with RSM McGladrey Inc., a
professional services firm providing accounting, tax and business
consulting. Both firms are units of H&R Block Inc. (NYSE: HRB), the
world's preeminent tax services provider.
RSM EquiCo Capital Markets' international headquarters are located in Costa
Mesa, Calif. It also has offices in Chicago, Boston, New York and London.
The firm is a member of FINRA and SIPC.
CONTACT:
RSM EquiCo Inc.
Todd Cooley
Director of Communications
714.327.8865
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