1、ATLANTAAUSTINLOS ANGELES MINNEAPOLISNASHVILLENEW YORK SEATTLECascadia Capital2024Cascadia Aerospace and Defense Industry ReportDisclaimer2This presentation is being furnished by Cascadia Capital,LLC(“Cascadia”)to the recipient and is intended as an outline of matters for informational and discussion

2、 purposes only.The information contained in this presentation,including any market data and industry information,has been derived entirely from material supplied by public sources,which Cascadia believes to be accurate;however,no independent verification of such material has been made and any estima

3、tes made by Cascadia based on material from such sources are by their nature inherently inexact.Accordingly,Cascadia does not make any representation or warranty,nor is any such representation or warranty implied,as to the accuracy or completeness of the information contained herein,and Cascadia is

4、not responsible for any misstatements or omissions in this presentation.Cascadia has no obligation to update the information contained herein.This presentation may include certain statements,estimates and projections with respect to a company,or industry,including certain forward-looking statements.

5、Any such statements,estimates and projections reflect various assumptions,which may or may not prove to be accurate or correct,concerning anticipated results and are subject to significant business,economic and competitive uncertainties and contingencies,all of which are beyond the control of Cascad

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7、recast or prediction of the future and Cascadia does not represent or warrant that any estimates or projections will be achieved.Cascadia neither:(i)accepts responsibility for or makes representations as to the accuracy or completeness of any forward-looking statements,estimates or projections conta

8、ined in this presentation,nor(ii)undertakes any obligation to update or revise any forward-looking statements,estimates or projections for any reason after the date of this presentation.All financial data in this presentation is provided for informational and discussion purposes only.Past performanc

9、e is not necessarily indicative,or a guarantee,of future results.There can be no assurance that any Cascadia project will achieve comparable results as those presented herein.The information contained in this presentation is strictly confidential and may not be reproduced,distributed,disclosed or di

10、sseminated,in whole or in part,to any third party without the prior written consent of Cascadia.3Cascadia Capital OverviewCascadia is a national firm ranked as the second largest independent advisory only investment bank in the country.With this scale and a wide variety of backgrounds and perspectiv

11、es,we work together as a team in each deal for the common success of our client stakeholdersLeveraging deep sub-vertical industry knowledge,a unique process orientation that marries creative storytelling,modularity and traditional process rigor,and a long-term partnership approach,we aim to deliver

12、optimal value for our clients.We are not rooted in traditional methods and reliant on a one-size-fits-all methodology.Rather,we create a custom deal strategy designed to leverage your attributes and overcome impediments that,when effectively deployed,drives outcomes outside the norm on valuation,ter

13、ms and other qualitative aspects of your transactionAerospace,Space&Defense Industry CoverageThe Aerospace,Space&Defense(ASD)group has over 25+years of experience working with companies using the latest technology and best practices in areas that manufacture and assemble parts,produce and use new ad

14、vanced materials as well as support services for better end resultsPrincipal Sector FocusIndustry Insights and Landscape Overview1Table of ContentsM&A and Public Market Update2Cascadia Industry Team Overview3Cascadia Firm Overview4Appendix5Kevin FrischPractice Lead,Aerospace,Space&Defense Investment

15、 B917-584-7803 Additive Manufacturing Advance Materials Aerospace Electronics&Avionics Distribution Engineered Components&and Subsystems Engineering/Tactical&Support Services Maintenance Repair&Operations Modeling,Simulation&Training Munitions&Tactical Products Precision Machining&Assembly Space Sys

16、temsExecutive Summary4Notable M&A Transactions include:The Commercial Aerospace and Defense sector currently exhibits robustness and holds a favorable outlook,indicativeof its current state of strength and optimismThe commercial side recorded RPMs of$97.9 billion in August 2023,indicating the resurg

17、ence of air travel from thepandemic-induced slowdown;global air passenger traffic is projected to reach 9.4 billion in 2024This surge has,however,led to significant order backlogs,amplifying supply chain challengesAs of 2023,Airbus and Boeing face order backlogs of approximately 8,000 and 6,000 unit

18、s,respectivelyBesides the challenges,the situation presents an opportunity for manufacturers and service providers in the supplychain to differentiate themselves and in many cases,command premium pricingBoth the US Defense budget and global defense spending have witnessed a spike owing to the ongoin

19、g geopolitical conflicts inUkraine and the Middle East,and the prevailing tensions with China,Russia,and IranAt approximately$886 billion in 2024,the US defense budget is a result of the governments bipartisan dedication toheightened defense spending,which is not likely to change from the outcome of

20、 the 2024 US electionAmid supply chain challenges,demand for skilled labor and an overall desire for better end products,aerospace anddefense players are adopting automation,digital manufacturing,robotics,and model-based systems engineering(MBSE)techniquesThe Department of Defense(DoD)has been alloc

21、ating substantial funds to technologies such as drone,AR,and VRfor army personnel training,and advancements such as electronic deterrents against incoming attacksThe convergence of these trends,a more positive Federal Reserve outlook in 2024,and overall optimism is fostering afavorable environment f

22、or M&A across the A&D sector.North America alone witnessed over 200 transactions in 2023Driven by the demand for a more concentrated supply chain,continued consolidation is expected among traditionalentities supplying parts and services to major OEMs and tier 1 suppliers.Seizing the opportunity,priv

23、ate equity isconsolidating numerous privately owned businesses seeking an exitEntities involved in inventing field technologies(e.g.,drones and automation)and those leveraging Industry 4.0technologies are expected to experience heightened demand for their offerings and sustained growth in themarket.

24、Suppliers capable of delivering quality at competitive prices will be able to command premium pricingWith a significant amount of cash on the sidelines from private equity and healthy corporate balance sheets,the sectorholds ample opportunities for operators and investors to drive more M&AAs debt an

25、d equity markets recover,the A&D sector is poised to gain prominence as one of the most attractivedestinations for investmentNotable Capital raises include:$1,385M$200M Series F$50M Growth/Expansion$45M Series A$33M Series A$952M$2,050M$5,550MSection 1Industry Insights&Landscape Overview56Macroecono

26、mic Indicators(1/3)0.005000.0010000.0015000.0020000.0025000.0030000.0035000.0040000.00Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323Q423S&P 500NASDAQ Composite IndexDow Jones Industrial AverageEconomic Data OverviewEconomic Data OverviewAverage(%)20022202390-

27、day average SOFR*2.290.550.041.164.8510 Year Treasury Rate*(0.02)0.521.371.27(1.07)Unemployment Rate3.78.15.43.63.6*10-Year Treasury Constant Maturity Minus Federal Funds Rate;The unemployment rate represents the number of unemployed as a percentage of the labor force;NASDAQ-Index Feb 5,1971=100*Sec

28、ured Overnight Financing Rate Major IndicesReal GDP Growth in the USThe gradual increase in real GDP between Q2 2022 and Q3 2023 reflects growth across various sectors,including Aerospace and Defense(A&D)-10.0%-5.0%0.0%5.0%10.0%$17.0$18.0$19.0$20.0$21.0$22.0$23.0Q119Q219Q319Q419Q120Q220Q320Q420Q121Q

29、221Q321Q421Q122Q222Q322Q422Q123Q223Q323GDP($TN)Growth(%)Sources:Federal Reserve Economic Data-100000.00.0100000.0200000.0300000.0220.0230.0240.0250.0260.0270.0280.0290.0Q118Q218Q318Q418Q119Q219Q319Q419Q120Q219Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323PPI by Industry:Aircraft ManufacturingC

30、PI All Items:Total for US7Macroeconomic Indicators(2/3)Rising PPI trends suggest inflationary pressures,leading to higher costs for aircraft producers passed on to consumers,reflected in higher ticket prices.Despite increased ticket costs,demand for airline travel has risen due to the renewed import

31、ance of in-person meetings and leisure travelInflation Indicators:CPI and PPIAnnual Global Inflation RateIndustrial Production:Manufacturing:Durable Goods:Aerospace and Miscellaneous Transportation EquipmentIn November 2023,the production of aerospace and miscellaneous transportation equipment saw a

32、 1.2%rise.This increase was influenced by factors like heightened demand for aerospace products,technological advancements,and industry investments.This growth had a positive impact on the durable manufacturing sector,contributing to a 1.2%improvement.CPI:Average,Units,Index Jan 1960=100,Not Seasona

33、lly Adjusted;PPI:Average,Units,Index Dec 1985=100,Not Seasonally AdjustedPPI:Producer Price Index;CPI:Consumer Price Index Although inflation has slightly receded from its 2022 peak,it remains a persistent challenge for the A&D industry in terms of cost management,strategic planning,and adapting to

34、a dynamic economic environment.Nevertheless,the Aerospace supply chain is more resilient than many sectors in coping with inflationary pressures,especially for companies capable of delivering superior and/or timely products and services0.00%5.00%10.00%2002120222023 E2024EInflation Rate(%)

35、Sources:Federal Reserve Economic Data0.000050.0000100.0000150.0000Q118Q218Q318Q418Q119Q219Q319Q419Q120Q219Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323CPIPPI8Macroeconomic Indicators(3/3)4.24.34.44.54.54.64.73.94.04.14.24.34.44.54.64.74.8200224EGrowth in Urban Population

36、(Billion)Population$0.00$20.00$40.00$60.00$80.00$100.00$120.00Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323Q423Spot Crude Oil Price(WTI)($per barrel)*(Average)PricesUrbanization*WTI is the underlying commodity of the New York Mercantile Exchanges(NYMEX)

37、oil futures contract and is considered a high-quality oil that is easily refined.Sources:Federal Reserve Economic DataA slight decrease in spot crude oil prices in Q423 as compared with Q323 suggests market stabilization.Low oil prices benefit the civil aviation sector,leading to a significant incre

38、ase in profits for airlinesIn 2023,the global urban population grew to 4.6 billion,primarily due to migration and economic progress.The 2024 forecast shows a rise to 4.7 billion.This trend is likely to boost the A&D industry as Urbanization frequently results in population concentration in cities,le

39、ading to increased demand for air travelSpot Crude Oil Price/WTI*Aerospace and Defense Industry Insight9Growth DriversKey TrendsThe COVID-19 pandemic acted as a massive restraint on the A&D market in 2020 as supply chains were disrupted due to trade restrictions and A&D components manufacturing was

40、affected due to lockdowns imposed by governments globallyFollowing the pandemic,the industry began its recovery,and in 2023,there was a significant resurgence in product demandIn the aerospace sector,domestic commercial aviation revenue passenger miles(RPM)surpassed pre-pandemic levels in most count

41、ries.This surge in air travel resulted in increased demand for new aircraft and aftermarket products and servicesIn the defense sector,geopolitical challenges such as Russias invasion of Ukraine,US-China trade war and Israel-Hamas conflict,along with the prioritization of modernizing the military,dr

42、ove robust demand for weapons and next-generation capabilitiesRising air traffic:Rising passenger traffic has been benefitting the A&D industry by increasing demand for commercial aircraft.This surge in demand leads to higher production rates,aircraft sales,and associated servicesGeopolitical challe

43、nges:The rise of geopolitical challenges,such as Russias invasion of Ukraine and the trade tensions between the US and China,has led to immediate security concerns.This has driven increased demand for products and services for military purposesIncreased defense spending:Increased defense spending ha

44、s been leading to enhanced revenue,expanded contracts,and increased innovation within the sectorThe global aerospace and defense(A&D)market grew by 7.7%from$856.3 billion in 2022 to$922.2 billion in 2023.With increased defense spending,technological advancements,and higher demand for air travel due

45、to rising number of air passengers,the market is expected to continue the upward trend at a CAGR of 6.8%,recording$1,199.7 billion in 2027Global A&D Market Size and Projected Growth*20232027$922.2 BN$1,199.7 BN2022$856.3 BNInnovation and technological advancements:Companies have been investing lates

46、t technological concepts such as advanced air mobility(AAM),autonomous flights,digital manufacturing,and model-based systems engineering,etc.Supply chain recovery:The industry is anticipated to recover and continue growing,driven by trends like digitalization,automation,diversification of suppliers,

47、and sustainabilityTackling workforce challenges:The changing expectations of employees pose difficulties for A&D companies in attracting,retaining,and developing skilled personnel.To counter this,companies are leveraging compensation and flexible work arrangements to boost retention and reverse empl

48、oyee attritionSource:Industry reports;RPM is the number of paying passengers carried on scheduled flights multiplied by the number of miles those seats were flown*The market size and projected figures for A&D encompass the cumulative values of both the Aerospace and Defense sectors Aerospace and Def

49、ense Industry Overview10In 2021,M&A activity in North America increased substantially,driven by low interest rates and a catch up from the lows of Covid affected activityThe peak in M&A activity during 2021 was driven by a rebound in demand from the lows of 2020,coupled with assertive fiscal and mon

50、etary policies fostering economic resurgence and more favorable financing termsAfter an outsized 2021,the A&D M&A market has been one of the more stable and consistent ones over the last 2 years Despite the impact of rising interest rates and a slowing economy on M&A activity,it did not significantl

51、y decelerate the pace of transactionsSince the onset of the COVID-19 pandemic,private equity has been the dominant force in buy-side activities within the A&D sectorAerospace and Defense Industry:M&A Activity552845455485860484953Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323

52、Q423Component ManufacturingAerospace&Defense ElectronicsDefense IT&TechnologySupport Services&MROM&A HighlightsThe favorable dynamics within both the Aerospace and Defense sectors,coupled with the anticipated Federal Reserve rate cuts,are anticipated to foster a resilient M&A environment in the A&D

53、industryAdditionally,the presence of excess private equity dry powder are expected to drive heightened M&A activity within the sector,as PE aims to use its ample dry powder to leverage lower capital costs The focus is likely to be on transactions with a strategic emphasis on consolidation,integratin

54、g new technologies,and expanding market presence,allowing A&D companies to effectively enhance their capabilities and offerings2024 M&A OutlookImpact of Federal Funds Rate on A&D M&A ActivityA&D M&A Activity in North America,by Sub-sectors5528454554858604849530.001.002.003.004.005.006.000

55、07080Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323Q423North America M&A DealsFederal Funds Effective Rate%(Avg)Fund rate(%)No.of deals11The talent landscape in the A&D industry is changing,primarily due to escalating salary structures,heightened workforce mobility,reassessm

56、ent of employee affiliations with the workplace,and competitive job marketAs a result,despite a significant number of new hires,there were a multitude of job openings in the industry in 2022 and 2023In 2022,US A&D enterprises hired 101,700 people,expanding their workforce to 2.2 million employees o

57、This increase represented a 4.8%rise from 2021 and exceeds the levels observed before the COVID-19 in 2019,as leading companies continued to hire new staff in response to expanding productiono In January 2023,Boeing had revealed its intention to recruit 10,000 employees throughout the year,signaling

58、 a favorable upswing in sector employmento Airbus announced to employ 13,000 individuals globally in 2023,with a focus on hiring over 800 personnel in the US,encompassing more than 500 individuals for newly created rolesAerospace&Defense Industry Workforce TrendsAddressal of workforce-related challe

59、nges amid rising demand and changing workforce expectationsA&D Workforce in the USBy navigating workforce dynamics through use of technologyAs the ongoing shifts in workforce dynamics endure,A&D companies may encounter substantial challenges in scaling up production to meet rising demandTo navigate

60、challenges arising from labor constraints,the industry foresees an increased adoption of innovative manufacturing technologies and automation,such as AI,additive manufacturing,and augmented realityThis strategic realignment has the potential to enable the sector to enhance output levels while concur

61、rently reducing dependence on human resourcesBy implementing policies that prioritize employeesA&D companies are implementing strategies involving compensation and flexible work arrangements to boost employee retention and mitigate attritionNotably,the manufacturing sector within the A&D industry ha

62、s embraced this approachAccording to Deloittes 2024 Manufacturing Industry Outlook,there was a 4%increase in the average hourly earnings of A&D employees from the first quarter of fiscal year 2022 to the first quarter of fiscal year 2023Moreover,the manufacturing industry has experienced a noteworth

63、y transition to remote work in the past two years where it is permissible2,187,6952,096,8062,102,6672,204,409200222023*2024*Leading companies like Airbus and Boeing continue to hire new staff in response to expanding productionCOVID impactRecovery as demand and consequent production rampe

64、d upPre-Covid eraGrowth in the workforce;Positive outlook expectedAddressal of Employee Attrition in A&D*The figures have not yet been disclosed in the public domain.$0$500,000,000$1,000,000,000$1,500,000,000$2,000,000,000$2,500,000,000$3,000,000,000Defense Exports to the IPEF CountriesCivil Aircraf

65、t,Engines,&Parts Exports12Aerospace&Defense Import and Export Activity USIn 2022,A&D exports in the US rose by 4.4%to reach$104.8 billion.The US A&D industry exported to 213 countries,compared with 205 in 2021The growth was fueled by an increase in air travel to pre-COVID-19 pandemic levels,which dr

66、ove the demand for aircraft and related partsFurther,strong bipartisan support for increased defense investment in the US and abroad has contributed to the growth of exports in the industry The growth trend is expected to continue in the future In 2022,A&D imports declined to$27.5 billion as compare

67、d with$48.9 billion in 2021.The decline underscores the A&D industrys increasing focus on innovation and its heightened emphasis on exportsA&D companies can proactively navigate the evolving restrictions on vital imports and excel in the supply of sensitive items by adopting strategic solutionsRise

68、in Export,Decline in ImportsAs per SIPRI findings,the US holds a 40%market share in the global arms trade,and its share is on the riseDemand for American weapons has increased due to the aggressive behavior of Russia and China in their respective regions,and there is an opportunity for the US to sol

69、idify its leadership of the arms trade at the expense of RussiaHowever,delivery delays and federal inefficiency may cost the US jobs and compromise its reputation for reliability,allowing competitors such as South Korea to make gains in the marketThe US government needs to take steps to ensure the d

70、efense industry sector does not lose export businessUS Leads Global Arms Trade with Growing Market Share and Increased DemandA&D Imports and Exports($BN)100.4104.848.927.520212022ExportsImportsMonthly US Exports to IPEF Countries($)*Trade in A&D($BN)In 2022,the A&D industry achieved a favorable trad

71、e balance,totaling$77.3 billion-a 50%increase from 202189.879.440.051.577.3200212022Trade Balance*Monthly US Civil Aircraft,Engines,and Parts Exports to the IPEF Countries(2022-2023;USD);The Indo-Pacific Economic Framework for Prosperity(IPEF)member countries are:US,Australia,Brunei,Fiji,

72、India,Indonesia,Japan,South Korea,Malaysia,New Zealand,the Philippines,Singapore,Thailand,and Vietnam.DefenseAerospace&Defense Industry Overview Sub Sectors13Despite experiencing a significant downturn from 2019 to 2022 due to COVID,the Aerospace sector exhibited signs of recovery,with an estimated

73、market size reaching approximately$350 billion in 2023.The sector is anticipated to experience a CAGR of 7-8%from 2023 to 2032The expansion is attributed to the upswing in air travel,evident in the increase of revenue passenger miles(RPM)to$97.88 billion in August 2023.This marks a remarkable 22%gro

74、wth compared to the previous year,resulting in heightened demand for new aircraft and aftermarket products and servicesConsequently,in 2023,Airbus experienced a notable increase in net orders,rising by approximately 70%over the one-year period.Boeing also saw growth in orders,albeit at a slightly lo

75、wer rate of around 40%Key PlayersThe global military spending has consistently risen,reaching an estimated$2.34 trillion in 2023,up from$2.02 trillion in 2019This increased investment in the military has led to heightened demand for military equipment,technology,and services,benefiting defense contr

76、actors and manufacturers within the A&D sectorThe proposed FY2024 budget for the US DoD that stands at$842 billion constitutes nearly 56%of the total discretionary spending($1.5 trillion)to be spent on militaryThis positively impacts the stock performance of defense contractors,while investors are a

77、lso viewing these companies as attractive opportunities for potential returnsKey PlayersCommercial AerospaceThe PPI gauges the average fluctuations in selling prices for domestic producers output.A rise in the PPI for aerospace product and parts manufacturing,along with aircraft manufacturing,indica

78、tes increasing prices for manufacturers in these sectors.This suggests a potential surge in demand for aircraft and aerospace products,signaling growth in the aerospace industry 14Macroeconomic Indicators:Aerospace IndustryThe present upward trend indicates a post-COVID-19 resurgence in the aerospac

79、e industry,marked by increased production,job creation,and economic activity.Despite these positive aspects,challenges like supply chain disruptions and evolving market demands need careful navigation.Some suppliers have capitalized on disruptions to enhance market share and negotiate better pricing

80、 through reliable delivery performance0.020.040.060.080.0100.0120.0Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323IP*:Manufacturing:Durable Goods:Aerospace Product and Parts(Average)Units:Index 2017=100,Seasonally AdjustedIndustrial Production(IP)Index:Ae

81、rospace Product and Parts Manufacturing*The industrial production(IP)index measures the real output of all relevant establishments located in the US,regardless of their ownership,but not those located in US territoriesSources:Federal Reserve Economic DataProducer Price Index(PPI):Aerospace Products

82、and Parts Manufacturing210.0220.0230.0240.0250.0260.0270.0280.0Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323PPI:Aerospace Products and Parts Manufacturing(Average)Units:Index Jun 1985=100,Not Seasonally Adjusted15US Market overviewGlobal Market Size&For

83、ecast($BN)Aerospace Industry Insight321.5345.0370.5398.3428.6481.6497.6536.9579.8626.8678.220222023202420252026202720282029203020312032103.5111.1119.3128.3138.0148.6160.2172.9186.7201.8218.420222023202420252026202720282029203020312032Global Market OverviewIn 2022,the global aerospace industry faced

84、the economic impact of the war in Europe,aside from the disruptions in supply chain and labor force that had been caused by the pandemicHowever,the industry exhibited revival as airlines returned to profitability in 2023.Projections for 2024 suggest the sector is poised to surpass pre-pandemic reven

85、ue levels,indicating a robust recoveryFuture growth is expected to be driven by increased passenger miles and augmented by rapid technological advancements to enhance aircraft efficiency and performanceIndustry participants are anticipated to experience expanded order volumes,leading to potential en

86、hancements in both cash flow and profitabilityUS Market Size and Forecast($BN)The demand for products in the US aerospace sector has undergone a resurgence,with revenue passenger kilometers in domestic commercial aviation surpassing pre-pandemic levels across most marketsIn 2022,the industry witness

87、ed a robust recovery,as available seat miles(ASMs)reached 91.3%of 2019 levels,and a 5.2%increase in operating revenuesThere is a concerted effort within the industry to transform day-to-day operations by reducing flight time,shortening routes,and prioritizing sustainabilityDespite persistent challen

88、ges such as delays,cancellations,supply chain disruptions,and labor issues,the industry is anticipated to maintain its upward trajectory of recovery and growthForecast period 2023-2032Forecast period As is evident in the Revenue Passenger Miles(RPM)data,the US aerospace industry has witne

89、ssed significant recovery from the impact of the COVID-19 pandemic The industry witnessed a sharp decline in April 2020,with RPM at a mere 2.90 billion,marking the extent of the pandemics effectBy January 2023,RPM had soared to 76.67 billion,nearly tripling from 2021,fueled by renewed confidence amo

90、ng passengers and changing travel guidelines to ease restrictions on travelThe passenger count experienced a significant increase,rising from 99 million in 2021 to 853 million in 2022,marking a 30%increaseContributing factors such as economic growth,rising incomes,globalization,low-cost carrier expa

91、nsion,and ongoing investments in new aircraft and technologies underline the industrys resilience and recovery from the pandemicA notable uptick in RPM underscores the aerospace sectors incremental recovery and has catalyzed the demand for aircraft,leading to a subsequent surge in deliveriesUS Aeros

92、pace Revenue Passenger Miles Recovery80.384.178.982.376.771.689.688.193.698.7103.797.9Sep-22Oct-22Nov-22Dec-22Jan-23Feb-23Mar-23Apr-23May-23Jun-23Jul-23Aug-23Revenue Passenger Miles(RPM)for US Air Carrier Domestic and International,Scheduled Passenger Flights($BN)Surge in Demand for Revenue Passenge

93、r Miles(RPM)*Revenue Passenger Miles%Change,y-o-yJan 2021Jan 2022Jan 2023$27.8 BN$56.5 BN$76.7 BN103.1%35.89%*Revenue Passenger Miles(RPM)measure the total miles traveled by paying passengers,providing a key indicator of airline operational performance and passenger demand.17After a challenging 2020

94、 and 2021 due to the COVID-19 pandemic,the aerospace industry witnessed significant recovery in 2022 and 2023 as the two leading companies,Airbus and Boeing,recorded an increase in demand for aircraftThe surge in RPM during this period signaled a growing demand for air travelHowever,both Boeing and

95、Airbus have been dealing with acute backlogs,finding it difficult to reach pre-pandemic delivery levelsAs of July 2023,Boeings backlog is at its peak of 5,964 aircraft,while Airbus has a backlog equivalent to 9.2 years of shipments based on the 2022 totalThe lag indicates potential challenges such a

96、s supply chain constraints and operational issues,leading to increase in the time required to fulfill a backlog of existing orders,affecting timely aircraft deliveriesIn order to address supply chain requirements,certain aerospace companies are simultaneously collaborating with multiple suppliers,a

97、practice that has resulted in malfunctions within their aircraftThe recent incident involving Boeing and Alaska Airlines,where 171 Boeing Max 9 planes in the US were grounded on December 15,2022,due to a door plug loss,serves as a notable example of this*In 2024,despite the lingering economic and ge

98、opolitical challenges,both companies anticipate another year of industry revival with continued recoveryThis is also reflected in the global projections which indicated that the global commercial aviation fleet will expand to over 36,000 aircrafts by 2033,which currently stands between 28000-29000 a

99、ircraftsAerospace Giants:Navigating Demand Recovery and Future Growth*For 2023,11 months ended Nov 23;*Information presented on the subsequent slidePost-pandemic Demand of Airbus and Boeing AircraftNumber of Orders and Deliveries of Airbus and Boeing Aircraft,085-500-00

100、70090002002120222023(11M*)AirBus Net OrdersAirBus DeliveriesBoeing Net OrdersBoeing DeliveriesAviation Accident Causes*Supply Chain Disruption Caused by Mechanical Malfunction in the AircraftsA Case Study of Boeings Aircraft IncidentIn the world of commercial aviation,Boeing,a

101、stalwart in the aircraft industry known for its commitment to safety and quality,is currently grappling with a series of challenges that threaten its reputation and the reliability of its aircraftThe genesis of these concerns lies in a recent incident(dated Dec 15,2023)involving an Alaska Airlines 7

102、37 Max 9 aircraft,shedding light on ongoing safety issues within BoeingDespite its renowned commitment to safety,the company faces significant disruptions in its supply chain,a critical aspect of manufacturing that directly impacts the safety and quality of its planesUnited Airlines added fuel to th

103、e fire by reporting the discovery of loose bolts on the same part of some of its 737 Max 9 planesThe finding highlighted the potential installation or manufacturing issue that affected multiple aircrafts,raising questions about the robustness of Boeings quality control measuresManufacturing Challeng

104、es and Outsourcing RisksThis incident,however,is not isolated.It underscores broader industry issues,particularly the challenges associated with the manufacturing process and supply chain disruptions,highlighting the need for enhanced supply chain management and oversight in the industry to ensure t

105、he safety and quality of critical components and partsBoeings strategy of outsourcing production to multiple suppliers worldwide,a practice common among American manufacturers,has faced criticism due to its potential to lead to quality issues,increased costs,and supply chain disruptionsAs Boeing nav

106、igates these turbulent skies,the challenges it faces serve as a cautionary tale for the entire aircraft industryInvestigation by Federal Aviation Administration(FAA)In response to the alarming revelations,the FAA announced production audits of Boeings 737 Max 9 jetliner and its parts suppliers that

107、emphasized the necessity for compliance with quality system requirementsSource:National Transportation Safety Board(NTSB)US civil aviation accidents statistics18General aviation accident causes(Fixed wing),2020*Others include Fuel system failures,Landing gear failures,Instrument failures,Structural

108、failures As per NTSB data,in 2020,mechanical accidents constituted 17.2%of the causes of general aviation accidents,with engines emerging as a predominant factor,contributing to over 60%of such incidents during the same period69.1%13.7%17.2%Engines60%40%MechanicalPilot-RelatedOther/UnknownOthers*19S

109、upply Chain Challenges of Aerospace Sector and Demand Resurgence Over the Years202520212024As vaccination efforts progressed,countries started to ease travel restrictions,leading to a gradual recovery of the aviation sector.Airlines cautiously resumed operations but uncertainty and financial constra

110、ints persistedThe aerospace sectors recovery is expected to advance but supply chain challenges will still persist,causing potential delays and shortages in aircraft components.High demand for new aircraft will continue,putting further pressure on the supply chainAnticipated resolutions to supply ch

111、ain challenges are expected to contribute to a continued recovery in the aerospace sector.Companies can strategically position themselves to navigate ongoing supply chain fragility by establishing reserves of essential raw materials,engaging in bulk purchases of long lead time items,and exploring al

112、ternative supply sources to restore normalcy in both aircraft production and deliveriesThe COVID-19 pandemic emerged,causing a significant downturn in the global economy and severely impacting the aviation industry.Airlines grounded a large portion of their fleet,leading to a decrease in demand for

113、new aircraftDespite some improvements,the sector still faced supply chain disruptions,with about 50%of companies experiencing issuesWhile reports suggest a stabilization in supply chains,as evidenced by a reduction in lead times from 100 days in July 2022 to 87 days in August 2023,the average lead t

114、ime for production is yet to reach pre-pandemic levelsThe surge in demand post-COVID-19 pandemic continued,resulting in a 354%Y-o-Y increase in the global aircraft order backlog,which reached around 15,000 in November 2023 Leading companies,including Airbus and Boeing,have witnessed a rise in order

115、backlogs recently202020222023Airlines began expanding their fleet as passenger confidence and travel demand increased Aircraft manufacturers,such as Airbus and Boeing,experienced a surge in orders for new aircraft,signaling a positive turn for the industry Manufacturers ramped up production to meet

116、the rising demand,thereby boosting profitability In July 2022,lead times for production materials were higher than the pre-COVID-19 pandemic levels,standing at 100 daysSupply Chain Resurgence20Aircraft Backlogs Aircraft Backlog of Leading Aerospace Companies(in$and Units)Airbus and Boeing$475$325$34

117、5$390 NA377282297330392200222023(latestavailable data)$BNAirbusBoeing7,4827,1847,0827,2397,992NA4,0004,2004,5785,964200222023(latestavailable data)UnitsAirbusBoeingDelays in aircraft development,caused by backlogs,have led to setbacks such as postponed product deliveries,reduce

118、d customer satisfaction,and heightened costs incurred from overtime or the hiring of extra personnel.These challenges can be attributed to supply chain delays,shortages of skilled personnel,or quality-related issuesAdditionally,the backlog has influenced airlines and passengers by affecting pricing

119、and availability.Intense competition among airlines for a constrained number of aircraft has lead to price escalations,accompanied by extended wait times for order fulfillmentAs per the latest data available as of end of 2023,Airbus holds a record-high backlog of 7.992 jets,with majority belonging t

120、o the A220 and A320ceo/neo family.In comparison,Boeings backlog is 5,964 aircrafts,with three-fourths being 737 NG/MAX narrow bodies4.34.61.92.33.138.69.402468020202120222023E2024ETotal Passengers21The continuous rise in global air passenger traffic in 2023 and 2024,driven by the revival

121、of the travel sector and recent technological developments in the aerospace sector,has led to increased airfareTechnological progress,illustrated by the introduction of electric aircraft and sustainable fuels,coupled with improved operational efficiency,is shaping airfare and cost structuresAs per t

122、he Global Business Travel Forecast,average ticket costs increased by 48.5%during 202122 due to heightened demandProjections indicate that average ticket prices will reach$712 in 2024External Factors and Economic SensitivityTicket prices are sensitive to external factors and economic variables,partic

123、ularly fluctuating fuel prices,which are expected to account for 31%of airline expenses by 2024Air Passenger Traffic and Rising Ticket PricesFactors driving progress,technological shifts,and economic adaptability in the expenses linked to air travelGlobal Air Passenger Traffic(in Billion)Global Busi

124、ness Travel Prices(y-o-y)$657$670$587$435$646$700$7122.0%-12.4%-25.9%48.5%8.4%1.7%200224Average Ticket PriceAverage Ticket Price ChangeSource:Global Business Travel Forecast,published by CWT22Onshoring,Reshoring,and Nearshoring Trends and Strategies in AerospaceThe A&D industry

125、 is actively exploring onshoring,reshoring,and nearshoring to address the need for supply chain channelingIn 2020,Boeings nearshoring of its 787 Dreamliner production from Everett,Washington,to Wichita,Kansas,addressed supply chain risks and brought production closer to homeThe government is activel

126、y encouraging onshoring through initiatives like the US Inflation Reduction Act.The act involves providing incentives for investments in domestic manufacturing and supply chains,by offering targeted investments and tax credits to promote the onshoring of manufacturing activitiesThe Biden administrat

127、ion has been incentivizing companies to maintain excess production capacity.It has utilized federal purchasing power to boost domestic manufacturing and adopted a comprehensive strategy to ensure critical supply availabilitySuch support is essential for fortifying the A&D industrys supply chain resi

128、lience,addressing potential disruptions,and effectively navigating the challenges linked to off-shoring and managing long-distance supply chainsOnshoring,Reshoring,Nearshoring Dynamics in AerospaceImplicationsWhile the A&D industry has been exploring onshoring to strengthen supply chain resilience,i

129、t may also have to deal with increased costs due to the scale of A&D manufacturingThe concentration of raw materials such as titanium,semiconductors,and other critical components in a few countries poses a challenge for complete onshoring effortsIndependent production of these components is costly a

130、nd challengingStrategies and outlookA&D players are adopting friend-shoring by forging strategic relationships with suppliers in geopolitically stable and trusted regionsFor example,Boeings 2021 partnership with Israeli companies to co-develop technologies leveraging their expertise in cybersecurity

131、,AI,and autonomous systemsThe aerospace industrys recovery,characterized by OEMs increasing production,indicates a promising outlook for onshoring and reshoring in the sector in 2024The shift to onshoring opened 800,000 manufacturing jobs in the US between 2020 and 2022 The trend is expected to pers

132、ist with around 350,000+job announcements in 2024Job Announcements per Year,Reshoring+FDI,2010-225,77022,42449,92961,17395,67072,182110,848174,278146,235100,487155,333238,739364,904350,000Note:The combination of job announcements tied to foreign direct investment(FDI)and the process of reshoring thr

133、oughout the entire year suggests a favorable trend in the resurgence of manufacturing jobs within the US.23Adoption of Technological AdvancementsThe aerospace industry has witnessed an upward trend in digitalization as indicated by a 235%increase in digital mentions between July 2021 and June 2022 c

134、ompared with 2016,according to GlobalData.The increasing market size of the aerospace additive manufacturing industry and aerospace AI industry are further indicative of the rising trendRise of Digital Advancements in AerospaceAutomation and Robotics are enhancing manufacturing efficiency and precis

135、ion in the A&D industryCompanies like Mecaprotec Industries and Gillis Aerospace have automated parts handling Model-based systems engineering(MBSE)is helping engineers visualize and test aircraft systems in a virtual environmentCompanies adopting the technology include Airbus,Lockheed Martin,and No

136、rthrop GrummanAutonomous Flight is a rapidly evolving domain that is attracting significant investments and revolutionizing air travelBoeing is investing in autonomous flight technology to enhance the safety and efficiency of air travelAdditive Manufacturing is reshaping the aerospace industry with

137、the integration of 3D printing technologyAirbus and Boeing are using 3D printing technology to produce complex and lightweight components for aircraft.GKN Aerospace has recently established a 100,000-square-foot facility Additive Manufacturing Center of Excellence in TexasIoT is being used for real-

138、time monitoring and analysis of aircraft performanceGE Aviation offers several solutions that utilize IoT technology to monitor aircraft performance,e.g.,Flight Analytics,Fuel Insight,and Integrated Vehicle Health Management(IVHM)Artificial Intelligence is helping enhance aerospace efficiency,automa

139、te maintenance and reduce downtimeCompanies such as Lockheed Martin are investing in AI and ML for digital asset protectionLatest technological concepts,such as model-based systems engineering,industrial Internet of Things(IIoT),digital twins,and generative AI(encompassing generative design),are pro

140、gressively finding applications within A&D enterprises$3.56 BN$0.93 BN2030$6.02 BN2022$0.30 BNAerospace Artificial Intelligence IndustryThe fluctuation in the chart reflects a dynamic pattern in defense procurement,a common aspect of military spending trends24Macro Economic Indicators DefenseThe ris

141、e in expenditure in Q323 indicates sustained investment in the defense sector,likely driven by the ongoing security needs and military modernization efforts$615.78$627.76$641.08$649.86$659.98$677.35$682.50$686.88$697.09$688.70$693.90$710.39$711.76$710.68$709.76$704.18$705.43$723.20$731.85$743.56$759

142、.97$764.86$789.06$0$100$200$300$400$500$600$700$800$900Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323$0$10$20Manufacturers New Orders:Defense Capital Goods(Average)$BillionUS Government Consumption Expenditures:National Defense*Defense capital goods indu

143、stries include small arms and ordnance;communications equipment;aircraft;missiles,space vehicles,and parts;ships and boats;and search and navigation equipment.0100200Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223Q323Industrial Production:Defense and Space Eq

144、uipment(Average)Index 2017=100,Seasonally AdjustedOver the past few quarters,particularly from Q123 to Q323,the index has demonstrated a sharp increase.This surge indicates a robust expansion in the space and defense equipment output,likely driven by high demand and investment in industry capabiliti

145、esSources:Federal Reserve Economic DataUS Manufacturers New Orders:Defense Capital Goods*US Industrial Production:Defense and Space EquipmentGovernment consumption expenditures(Average)$Billion,Seasonally Adjusted Annual Rate25Defense Industry OutlookGlobal Market Size&Forecast($BN)US Market Overvie

146、wThe heightened demand for defense products and services such as weapons and products with next-generation capabilities in US,fueled by emerging geopolitical challenges and a focus on modernizing the military by the Countrys government,is expected to persist throughout 2024Policies such as aid for U

147、kraine and Israel and push-back against China are expected to bolster the revenue generation prospects for defense contractors in USThe industry is actively prioritizing innovation and gearing up to leverage emerging opportunities.This includes a focus on latest technological concepts such asThe tes

148、ting of robots like SPOT from Boston Dynamics for military purposes,including tasks such as supply delivery,bomb detection,and navigating challenging terrains,is underwayAdditionally,Additive Manufacturing(3D printing)is enhancing military operations by expediting and cost-effectively producing part

149、s,tools,and various assetsExplorations into Quantum Computing and Quantum Sensing are ongoing,as these technologies hold promise for military applications like secure communication and advanced sensing capabilitiesThese strategic moves aim to position the industry at the forefront of technological a

150、dvancements,ensuring readiness to capitalize on the changing landscape and stay competitive in dynamic marketsPlayers such as AeroVironment,L3Harris,Lockheed Martin,Northrop group are some of the leading companies in the sector that are adopting many latest technologiesDefense Industry Insight202320

151、31$577.2 BN$718.1 BN2022$534.8 BNThe global defense sector recorded a revenue of$534.79 billion in 2022.The revenue is projected to reach$677.2 billion by 2023 at a CAGR of 7.9%and$718.1 billion by 2027 at a CAGR of 5.6%Ongoing geopolitical events and conflicts have been instrumental in driving an i

152、ncrease in defense fundingFollowing this trend,the US Department of Defense(DOD)has proposed a budget of$842 billion for fiscal year 2024,marking a 3.2%increase from the enacted base level in fiscal year 2023In 2024,the surge in military spending is anticipated to fuel innovation,encouraging the int

153、egration of commercial technologies into defense applications26In 2022,global military expenditure reached an unprecedented peak of$2.24 trillion,with the US contributing approximately 40%to the total worldwide spendingIn the face of prevalent security challenges,including territorial disputes,regio

154、nal rivalries,and cross-border conflicts in many nations,governments are allocating significant portions of their financial resources to defenseThe escalation in US military spending has been driven by the presence of an advanced defense industry,and the countrys active military engagement and globa

155、l security responsibilitiesThe trend of investing in sophisticated,high-tech military capabilities aligns with the increase in spending,indicating ongoing defense modernizationGlobal and US Military Spending738.0752.3725.2679.2647.8633.8639.9646.8682.5734.3778.4806.2876.91881.71887.91871.31838.81834

156、.01862.01871.71893.11950.22028.62091.92104.12239.92346.12980.020000022 2023E*2028P*USGlobalGlobal and US Military Spending in($BN)Global Military Spending and Insights into US Dominance,Budget Proposals,and Bipartisan Commitment*US military spend 2023 and

157、2024 not forthcoming from public domainAnalyzing the Surge in US Military Spending for FY 2024In March 2023,the Biden-Harris Administration submitted to Congress a proposed Fiscal Year(FY)2024 Budget request of$842 billion for the Department of Defense(DoD),registering an increase of$26 billion over

158、 FY 2023 levels and$100 billion more than FY 2022Over two-thirds of the House of Representatives endorsed the defense policy bill,setting aside a record$886 billion for military spending in the FY starting October 1,2023The proposed budget reflects a 4.2%nominal and 1.5%real growth,indicating missio

159、n requirements,military readiness,and the well-being of service membersThis collaborative endeavor demonstrates a bipartisan dedication to heightened defense spending,surpassing the outcomes of the 2024 US election and projecting a sustained growth trajectory in defense expenditure27In delineating e

160、xpenditure limits for the fiscal year 2024,the DoD has designated nearly 56%of the total discretionary spending,amounting to$886 billion out of a comprehensive budget of$1.59 trillion to militaryIn the current FY2023 budget,military spending constituted 53%of discretionary spending,indicating a subs

161、tantial reallocation of resources from domestic programs to military sectorThis budget exemplifies the National Defense Strategys emphasis on fortifying the militarys posture,fostering increased collaboration with allies and partnersMoreover,the Russian-Ukraine and Israel-Hamas war has prompted nota

162、ble increments in US defense spending,primarily evident in direct war-related expenditures and enhancements to the Pentagons base budget by USUS Defense Budget AllocationSource:Congressional Budget Offices(CBOs)Estimate of the Budgetary Effects of H.R.3746,the Fiscal Responsibility Act of 2023There

163、is a concerted effort to maximize the funding for the development of emerging defense technologies and manufacturingSpecifically,the US DoD has earmarked approximately$1.8 billion for artificial intelligence applications,reflecting a substantial 63.6%increase compared to the fiscal year 2023 allocat

164、ionThe establishment of the Joint Artificial Intelligence Center(JAIC)and the Chief Digital and AI Office underscores the Departments substantial commitment,both organizationally and financially,to integrate AI technology into its operationsThis investment in AI and ML aligns with the broader strate

165、gy to rapidly adopt advanced AI capabilities,ensuring that US warfighters retain a competitive advantageAdditionally,significant allocations include$9.3 billion for advanced technologies and$0.69 billion for the experimentation and evaluation of advanced technologies for joint warfare in fiscal year

166、 2024US Defense(DoD)Spending BudgetShift in US DoD planned defense spendingAllocation of fundsCategoryPlanned Defense Spend FY2024 Budget*Procurement$315 billion is allocated for the development and purchase of new weaponsResearch,Development,Test,and Evaluation$150.4 billion is allocated for resear

167、ch and development activitiesSpace-related activities$177.5 billion is allocated for space-related activitiesPay and benefits$100 billion is allocated for pay raises and benefits for uniformed military and civil servantsOperating and maintenance$100 billion is allocated for operating and maintenance

168、 costsDefense-wide activities$100 billion is allocated for defense-wide activities85888620232024Military/Security($BN)76770420232024Non-Military/Non-Security($BN)Admin requested budget for DoD activites,$842 BNNuclear weapon for DoE,$33 BNDefense activities of other agencies,$12 BN*Every year US fed

169、eral agencies receive financial funding from Congress,referred to as budgetary resources.In Fiscal Year 2024,the Department of Defense(DOD)was allocated$1.54 trillion,of which above are few of the spending categories.28Impact of Increased Spending on Defense Companies Source:Invesco Aerospace&Defens

170、e ETF(Fund)based on the SPADE Defense Index(Index);as of 12/31/2023;Data beginning 10 years prior to 12/31/2023More than half of the Department of Defense(DoD)expenditure is directed toward defense contractors,resulting in significant contract revenue for these firmsFive leading contractors Lockheed

171、 Martin,Raytheon,Boeing,General Dynamics,and Northrop Grumman secure a considerable share of contracts from the PentagonIncreased military budgets have resulted in the rising interest of investors in defense companies,as demonstrated by substantial inflows into exchange-traded funds monitoring these

172、 entities since October 2023According to data released by Lipper,the Invesco Aerospace&Defense ETF recorded net inflows exceeding$100 million in November 2023,supplementing the nearly$180 million it attracted in October 2023Similarly,since October 2023,the iShares US Aerospace&Defense ETF,valued at$

173、5.5 billion,and the SPDR S&P Aerospace&Defense ETF,with assets totaling$1.78 billion,experienced net inflows of$178.4 million and$163.6 million,respectively,during November 2023The DoD 2024 budget allocation for procurement and modernization,which includes investment in new technologies and equipmen

174、t,presents lucrative opportunities for defense companies and contractorsGrowth of Defense Companies Due to Rising Military ExpenditureInvesco Aerospace&Defense ETF(Growth of$10,000)15,00017,00019,00021,00023,00025,00027,00029,00031,00033,000Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q420182019202

175、0202120222023The defense sector is undergoing digital transformation,with a strong focus on incorporating AI,AR/VR,and blockchain technologies The DoD increased unclassified AI investments from$600 million in FY2016 to$1.1 billion in FY2023,with 685 AI projectsAs part of its digitalization strategy,

176、the DoD is adopting AI to develop advanced defense equipment,including energy weapons and hypersonic missilesLeading defense companies,such as BAE Systems,Boeing,Elbit Systems,Leidos,and Lockheed Martin,are actively integrating AI into various functions,including intelligence,surveillance,reconnaiss

177、ance(ISR),logistics,cyber operations,and command and controlFurthermore,the military is using advanced technologies to optimize its supply chain and digitalize manufacturing through techniques such as additive manufacturing,or 3D printingIn January 2022,the DoD unveiled its inaugural additive manufa

178、cturing strategy,urging the military to leverage 3D printing to manufacture new forms of munitions.It also plans to use 3D printing to create a military truck exteriorMoreover,the military is assessing the use of robotics and autonomous systems(RAS)across diverse scenarios,such as transporting milit

179、ary supplies,detecting explosives through sniffing mechanisms,and navigating challenging terrains to collect dataAdoption of Latest Technologies:Defense Industry(1/2)Digital Transformation of the Defense Sector$600 million$1.1 billion FY2016FY2023US DoD AI projects685 AI Projects28Adoption of Latest

180、 Technologies:Defense Industry(2/2)In recent years,the US military has embraced unmanned technology,incorporating drones and unmanned surface vessels(USVs)to enhance its surveillance and reconnaissance capabilitiesFor instance,the US Navys 5th Fleet has utilized USVs to bolster its surveillance in t

181、he Middle East,focusing on monitoring coastlines that have significant vessel traffic and are associated with the smuggling of drugs and weaponsThese advanced AI-driven systems,featuring swarm technology and stealth capabilities,are reshaping modern warfare,promising strategic advantages for armed f

182、orcesThe defense industry has adopted AR and VR technologies to train the personnel Augmented Reality(AR)and Virtual Reality(VR)are streamlining military training,providing efficient,cost-effective,and flexible solutionsThe US Armys Synthetic Training Environment has reduced soldiers prep time and r

183、esource useIn July 2023,the US Air Force stated that it has saved 40 training hours per user per year since deploying this VR trainingAs per an industry report,the DoD has allocated around$14 billion of the total military budget for synthetic digital trainingDefense IndustryAccording to a study cond

184、ucted by the University of Waterloo in 2023,VR-trained pilots show 4050%better performance than those trained using traditional methodsUse of Unmanned Technologies in WarfareUse of AR and VR in Training and Education29Industry Market Landscape31OEM ElectronicsDefense IT&TechnologyDefense FocusedOEM

185、ComponentsAircraft ProvidersA&D Aftermarket,MRO Services32PE:New Investments from 2020 4Q 2023CompanyName#of NewInvestmentsNew Investments6EMRC HeliMost Active Private Equity InvestorsTribologixTimken AerospacePremier ProcessingEB AirfoilsPower Connector LLCSocit AHEBase2 EngineeringSteal

186、th AerospaceSource:S&P Capital IQ and PitchbookMost Active Strategic Buyers33Strategic M&A:Acquisitions from 2020 4Q 2023CompanyName#of NewInvestmentsNew Investments986554433RPV AviationIntelligent Systems GroupSource:S&P Capital IQ and PitchbookSection 2M&A and Public Market Update34Industry M&A Ov

187、erview35M&A Activity OverviewMedian Multiples by YearM&A Transactions by Subsector,LTM 4Q23M&A transactions showed a slight decrease in 4Q2023,with 53 transactions compared to 58 transactionsin4Q2022,representinga9%yearoveryeardecrease in deal volumeOverall,deals in year 2023 stood at 206,compared t

188、oprevious years 215 transactionsThe valuation multiples in M&A transactions haveincreased due to the growing number of transactionswithin high-tech and high-growth subsectors in recentyearsM&A Transactions1.7x1.7x2.1x1.9x10.1x13.4x15.9x19.6x2020202120222023TEV/RevenueTEV/EBITDA38%38%16%8%ComponentMa

189、nufacturingSupport Services&MRODefense IT&TechnologyAerospace&DefenseElectronics552845455485858474853Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23Component ManufacturingAerospace&Defense ElectronicsDefense IT&TechnologySupport Services&MROSource:S&P Capi

190、tal IQNote:All values based on publicly available data as of 12/31/2023Industry Capital Raise Overview36Fundraising OverviewTotal Money Raised($M)Capital Raises by Subsector,LTM 4Q23Capital Raise Transactions1,5615,7695,7351,8582020202%20%19%5%ComponentManufacturingDefense IT&TechnologySu

191、pport Services&MROAerospace&DefenseElectronics292220223273528242522Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23Component ManufacturingAerospace&Defense ElectronicsDefense IT&TechnologySupport Services&MROCapital raise transactions continued to decline i

192、n 4Q 2023,with 22 transactions compared to 35 transactions in 4Q 2022,representing a 37%year over year decrease in deal volumeOverall capital raise deals in the year 2023 stood at 99,compared to the previous years 147 transactionsOverall decline in capital raise transactions,and lack of large value

193、capital raise transactions,total money raised in 2023 also fell significantly compared to 2022We anticipate this trend to reverse in 2024 and more available capitalSource:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Marquee M&A Transactions37Nov-23Aug-23May-23May-23

194、Mar-23Selected Market ActivityTransaction Size$1,385M$5,550M$952M$2,050M$729M$1,385MRevenue Multiple4.6x2.8x1.6xNANA2.8xTarget DescriptionElectron Device Business of Communications&Power Industries,Inc.manufactures electronic components and subsystems primarily serving the aerospace and defense mark

195、et.Ball Aerospace&Technologies Corp.develops and manufactures spacecraft,instruments and sensors,satellites,components,data exploitation systems,and RF solutions for strategic,tactical,and scientific applications.JBT AeroTech Corporation manufactures and services airport equipment and products.Wenco

196、r Group,LLC provides design,distribution,and repair solutions for airlines,repair stations,OEMs,personal aircraft,and militaries worldwide.Calspan Corporation provides engineering design,testing,and research services to automotive and aerospace industries.MedianAcquired byAcquired byAcquired byAcqui

197、red byAcquired byMarquee Capital Raises38Sep-23Jul-23May-23May-23Mar-23Selected Market ActivityAmount Raised$200M$45M$50M$33M$70MInvestorsTarget DescriptionShield AI Inc.develops and builds artificial intelligence software and systems for the national security sector and first responders.Impulse Spa

198、ce,Inc.manufactures space components.It designs maneuvering vehicles specifically for last-mile payload delivery.CleanJoule LLC produced industrial goods for aviation industry.Venus Aerospace Corp.develops spaceplanes.The company also develops aircraft shapes,heat shields,flight mechanics,and more.C

199、haos Industries LLC develops defense technology to make products in development,including sensors,detection systems,and radar services.Industry Public Company Performance39Since Dec 2023,the Aircraft Providers industry has significantly outperformed all the benchmark indices,with Aerospace OEM Manuf

200、acturing also registering a strong performance,while the rest of the industries have shown mild growth.Share Price Performance Chart Last 30 Days-4%-2%0%2%4%6%8%10%-4%-2%0%2%4%6%8%10%1 Dec3 Dec5 Dec7 Dec9 Dec11 Dec13 Dec15 Dec17 Dec19 Dec21 Dec23 Dec25 Dec27 Dec29 DecA&D Consulting Engineering 0.7%A

201、erospace Materials 2.8%Aerospace OEM Manufacturing 5.1%Aftermarket,MRO 2.9%Aircraft Providers 7.4%Defense Focused 1.4%Large Cap A&D 0.6%S&P 500 3.8%NASDAQ Composite Index 4.9%Dow Jones Industrial Average 4.0%Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Indust

202、ry Public Company Performance40Since Jan 2023,the Aerospace OEM Manufacturing industry has outperformed all three benchmark indices,with Aftermarket&MRO showing a strong performance by outperforming S&P 500 and Dow Jones indices,while Defense Focused stocks have resulted a negative growth.Share Pric

203、e Performance Chart Last 12 Months-30%-20%-10%0%10%20%30%40%50%-30%-20%-10%0%10%20%30%40%50%Jan 23Feb 23Mar 23Apr 23May 23Jun 23Jul 23Aug 23Sep 23Oct 23Nov 23Dec 23A&D Consulting Engineering 14.1%Aerospace Materials 18.6%Aerospace OEM Manufacturing 45.4%Aftermarket,MRO 38.6%Aircraft Providers 22.4%D

204、efense Focused-10.8%Large Cap A&D 12.6%S&P 500 22.5%NASDAQ Composite Index 42.0%Dow Jones Industrial Average 12.1%Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance41Since 2021,All the Aerospace&Defense industries have outperform

205、ed the three benchmark indices,with Large Cap A&D,Aerospace OEM manufacturing,Aftermarket&MRO,and Aerospace Materials industries significantly outperforming the benchmark indices.Share Price Performance Chart Last 3 Years-40%-30%-20%-10%0%10%20%30%40%50%60%70%-40%-30%-20%-10%0%10%20%30%40%50%60%70%J

206、an 21Feb 21Mar 21Apr 21May 21Jun 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 22Apr 22May 22Jun 22Jul 22Aug 22Sep 22Oct 22Nov 22Dec 22Jan 23Feb 23Mar 23Apr 23May 23Jun 23Jul 23Aug 23Sep 23Oct 23Nov 23Dec 23A&D Consulting Engineering 32.4%Aerospace Materials 48.6%Aerospace OEM Manufacturing

207、53.1%Aftermarket,MRO 51.2%Aircraft Providers 33.9%Defense Focused 26.5%Large Cap A&D 58.5%S&P 500 24.7%NASDAQ Composite Index 13.7%Dow Jones Industrial Average 21.2%Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)42Media

208、n TEV/RevenueMedian TEV/EBITDA1.3x1.3x1.4x1.3x1.2x2020 2021 2022 2023 2024E2.9x3.5x3.5x4.0 x3.4x2020 2021 2022 2023 2024E1.2x1.5x1.4x1.9x1.7x2020 2021 2022 2023 2024E1.9x2.7x1.5x2.1x1.5x2020 2021 2022 2023 2024E1.3x1.5x1.5x1.5x1.4x2020 2021 2022 2023 2024E3.2x2.7x2.4x2.6x2.3x2020 2021 2022 2023 2024

209、E1.3x1.5x1.8x1.8x1.6x2020 2021 2022 2023 2024E11.6x11.2x11.7x11.4x11.9x2020 2021 2022 2023 2024E15.1x19.9x16.8x19.5x15.7x2020 2021 2022 2023 2024E10.7x12.4x14.3x13.9x10.9x2020 2021 2022 2023 2024E16.7x19.9x9.1x22.3x10.4x2020 2021 2022 2023 2024E23.5x13.2x12.0 x12.7x10.4x2020 2021 2022 2023 2024E23.7

210、x18.6x22.4x21.0 x20.2x2020 2021 2022 2023 2024E9.8x9.7x11.7x11.4x11.7x2020 2021 2022 2023 2024EA&D Consulting EngineeringAerospace MaterialsAerospace OEM ManufacturingAftermarket,MROAircraft ProvidersDefence FocusedLarge Cap A&DA&D Consulting EngineeringAerospace MaterialsAerospace OEM Manufacturing

211、Aftermarket,MROAircraft ProvidersDefence FocusedLarge Cap A&DSource:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Section 3Cascadia Industrial Team Overview43Aerospace,Space&Defense Team Overview44The Diversified Industrials group delivers M&A and capital raising ser

212、vices to leading growth companies across the sector.Our team members are early pioneers on focusing on the various sub-verticals within the sector,particularly those driven by industry 4.0.Our core focus is on companies with a specialized defensible niche,proprietary technology or manufacturing proc

213、ess,or other intellectual property.We have had a track record of representing best-in-class growth companies,leveraging our relationships with strategic buyers and investors to effectively position our clients to achieve optimal outcomes.Leadership TeamFirdaus PohowallaManaging DirectorTransportatio

214、n&LogisticsSupply Chain TechnologyRobotics,Automation&AIKevin FrischManaging DirectorAdvanced Manufacturing Aerospace,Space and DefenseRobotics,Automation&AI23+years M&A experience6+years at CascadiaM.B.A.WhartonB.A.Carleton College25+years M&A experience1+years at CascadiaM.B.A University of Chicag

215、oB.A.Duke University11+years M&A experience5+years at CascadiaM.B.A.New York UniversityB.S.Tel Aviv U(917)584-(415)846-(347)504-4090OverviewNaaman HeymanManaging DirectorBuilding Products&MaterialsValue-add DistributionAerospace,Space&Defense Experience45Note:Some of the clients represent work condu

216、cted prior to Cascadia CapitalAn Introduction to Kevin FrischKevin FrischExperience25+years of M&A and Capital Raising ExperienceExpertise in the Aerospace,Space&Defense end market and Advanced ManufacturingPanelist,Speaker and Arranger of related ConferencesImperial Capital MD,Head of Industrials I

217、nvestment BankingFocused on Aerospace,Space&Defense and Advanced Manufacturing&Supply Chain that included hosting an Industry Conference 3 years in a row and a multitude of M&A and capital raising deals executedFBR Capital Markets MD,Industrials GroupFocused on Advanced Manufacturing M&A and Capital

218、 RaisingLehman Brothers Senior Vice PresidentFocused on Industrials M&AOppenheimer&Co.AnalystChase Securities Research AnalystEducationM.B.A.in Finance University of ChicagoB.A.in Economics,Public Policy Duke UniversitySelect ClientsAdditional Industry Leadership Through Conferences and Research46Ou

219、r work enhances market presence with potential buyers and keeps our team on top of the latest trendsCascadia Capital is hosting its annual Advanced Manufacturing&Industrial Technology(AMIT)on February 7th 8th at the Casa Del Mar in Santa Monica,CaliforniaThis will be the 4th conference of its kind h

220、osted by the teamExpecting 40 companies to present to 200+attendeesPrimary end market focus is Aerospace,Space,and DefenseMonthly reports are published covering the Advanced Manufacturing IndustryTracking of macroeconomic trendsRecent trends in acquisition activityM&A activity valuationsHistorical t

221、rading statisticsPublic comparableIndustry ExpertiseFocus on Aerospace,Space&DefenseDeep industry experience with proven track recordAnnual AMIT ConferenceMonthly Industry ReportSection 4Cascadia Firm Overview47About Cascadia Capital48Rooted in deep industry knowledge and transaction expertise,Casca

222、dia Capital has a proven track record of delivering successful outcomes for our clients.We are a trusted financial advisor and leading independent investment bank for founder,family-owned,and private equity-backed companies.We provide capital markets advisory,to fuel and finance growth,and manage fu

223、ll and partial liquidity transactionsThe tie that binds us together at Cascadia is the common focus across our industry teams on working with market leading growth businesses and their shareholders.Our core expertise is positioning growth and quality to drive optimal quantitative and qualitative out

224、comes for our clientsOverviewCascadia Capital offers a level of expertise and customization clients wont find elsewhere.Our team combines Wall Street experience with deep knowledge from the hundreds of transactions weve completedOur ExpertiseServicesMergers&AcquisitionsStrategic AdvisoryCapital Mark

225、etsFinancial Sponsors GroupCascadia Capital Services49We have completed M&A transactions across a wide variety of industry sub-verticals.Our customized approach to each client situation combines the integrated value of the platform delivered by your deal team,leveraging all aspects of Cascadias serv

226、ice and industry offerings to optimize the outcome of each transaction.Sell-Side RepresentationBuy-Side RepresentationManagement BuyoutsLeveraged BuyoutsMergers&AcquisitionsCascadias Capital Markets practice focuses on serving our private equity and private company relationships with full service ad

227、visory and execution of financing transactions to facilitate acquisitions,growth capital,structured capital,and internal recapitalizations.Our approach is differentiated given our professionals deep principal investment execution expertise,allowing us to take ownership and drive an engagement from m

228、arketing and term sheet all the way through document and terms negotiation and closing.We also integrate our industry bankers sub-vertical expertise to provide another layer of value add in effectively positioning our clients business to optimize market interest and terms.Acquisition financing for p

229、rivate equity and private companiesStructured capitalRecapitalizationsGrowth equityUnitrancheMezzanine/Subordinated DebtPreferred and Common EquityCapital MarketsStrategic AdvisoryWe provide our clients with specialized analytical data and insights to facilitate strategic decision-making at the boar

230、d and shareholder level.We advise financial sponsors and private and public companies on shareholder value maximization and provide support for transaction implementations.Fairness OpinionsCorporate ValuationsShareholder Rights PlanningShareholder Value AnalysisStrategic Partnerships&Joint VenturesC

231、ascadias Financial Sponsor Group focuses on developing and institutionalizing relationships with leading private equity firms,family offices and other capital providers.These long-standing partnerships provide us with senior-level access and credibility with key decision makers.Our team works closel

232、y with Cascadias industry and product bankers to make senior-level connections and effectively deliver Cascadias quality deal flow and leading investment banking services to the financial sponsor community.Financial Sponsors GroupSection 5Appendix50Select Industry M&A Activity(4Q 2023)51DateTargetAc

233、quirerTEVEV/RevenueEV/EBITDADescriptionDec-23Sierra Bullets,L.L.C./Barnes Bullets-Mona,LLC-$175.0 NM NM Barnes Bullets-Mona,LLC manufactures lead-free bullets and hunting,self-defense,and tactical ammunition.The company is based in USA.Dec-23South Breeze AviationAviation Integrated Services Group-NM

234、 NM South Breeze Aviation provides aircraft maintenance services.Dec-23Aircraft Maintenance Business of Aero Centers EppsPILATUS Flugzeugwerke AG-NM NM Aero Centers Pilatus maintenance business and personnel comprises maintenance and repair operations(MRO)business and personnel.The asset is located

235、in the United States.Dec-23Fenix Group,Inc.Nokia Oyj-NM NM Fenix Group,Inc.develops and provides equipment and services for handheld communication devices and broadband networks in support of the defense and intelligence industries.Dec-23M3 Aviation Group LLCAvtrac(UK)Limited-NM NM M3 Aviation Group

236、 LLC offers technical services,asset management,valuations,and engine management for aviation and aircraft leasing industries.Dec-23DCM Group Inc.Desjardins Capital;Qubec,Investment Arm Thrust Capital-NM NM DCM Group Inc.provides aircraft maintenance and repair services to aircraft manufacturers,equ

237、ipment suppliers,aircraft maintenance centres,and airlines.Dec-23Aviation Technologies,Inc.Hawthorne Global Aviation Services,LLC-NM NM Aviation Technologies,Inc.manufactures aerospace and defense electronics equipment.The Company produces liquid crystal displays and modules,power,audio and cabin el

238、ectronics,and connectors and cables.Dec-23Quick Turn Engine Center,LLCFTAI Aviation Ltd.-NM NM Quick Turn Engine Center,LLC provides aircraft engine maintenance services.The company was founded in 1946 and is based in Miami,Florida.Nov-23Pioneer Aerospace CorporationSpace Exploration Technologies Co

239、rp.$2.2 NM NM Pioneer Aerospace Corporation engages in the design and manufacture of aerodynamic deceleration systems that support specialized tactical,personnel,cargo,humanitarian,weapons,and space exploration programs.Source:S&P Capital IQNote:All values based on publicly available data as of 12/3

240、1/2023Select Industry M&A Activity(4Q 2023)(Cont.)52DateTargetAcquirerTEVEV/RevenueEV/EBITDADescriptionNov-23Votaw Precision Technologies,Inc.TechPrecision Corporation$110.0 NM NM Votaw Precision Technologies,Inc.designs and manufactures precision components,fixtures,tools,ground support equipment,p

241、ressure vessels,and other related items for aerospace,defense,and commercial industries in the United States.Nov-23Ipsolon Research,Inc.BlueHalo LLC-NM NM Ipsolon Research,Inc.manufactures ultra-small form factor Software Defined Radio products.The companys products include SDR modules,accessory mod

242、ules,RF modules,and custom SDR systems.Nov-23T2S,LLCMadison Dearborn Partners,LLC-NM NM T2S,LLC provides rapid prototyping and experimentation,systems development,integration,testing,and sustainability services.The company was incorporated in 2010 and is based in Belcamp,Maryland.Nov-23Atmosphere&Sp

243、ace Technology Research AssociatesArcfield-NM NM Atmosphere&Space Technology Research Associates,LLC,doing business as Orion Space Solutions,LLC,develops space mission capabilities and solutions.Nov-23Johnston Aircraft Service,Inc.Valley Air Crafts-NM NM Johnston Aircraft Service,Inc.distributes new

244、 and used aircraft and aircraft parts.The company also provides engine overhauls,repairs,and modification services.The company serves the agriculture and aviation industries.Nov-23SisTech Manufacturing,Inc.LFM Capital,LLC-NM NM SisTech Manufacturing,Inc.manufactures high-complexity printed circuit b

245、oard assemblies(PCBAs).The company offers services that include turnkey assembly,kitting services,mechanical design,and 3D modeling,obsolescence management.Nov-23Aerial Delivery Solutions,LLCLife Support International-NM NM Aerial Delivery Solutions,LLC designs and manufactures parachute systems.The

246、 company was incorporated in 2009 and is based in Kissimmee,Florida.Nov-23Assets of Kelly Aero LLCHartzell Engine Technologies,LLC-NM NM Assets of Kelly Aero LLC comprises aircraft engine accessories and cabin heating solutions.Nov-23Excet,Inc.Precise Systems Inc.-NM NM Excet,Inc.operates as a resea

247、rch and consulting services company that provides scientific research and engineering services to the department of defense.Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Select Industry M&A Activity(4Q 2023)(Cont.)53DateTargetAcquirerTEVEV/RevenueEV/EBITDADesc

248、riptionNov-23United Western Enterprises,Inc.PMA Industries,LLC-NM NM United Western Enterprises,Inc.manufactures and sells thin photochemically etched metal parts for aerospace,medical,and commercial electronics markets.Nov-23P3 Technologies,LLCGraham Corporation-NM NM P3 Technologies,LLC engages in

249、 the research,development,design,and analysis of existing,advanced,and emerging propulsion systems,including liquid propellant rocket engines of various cycles and propellants.Nov-23Business of Communications&Power IndustriesTransDigm Group Incorporated$1,385.0 NM NM Electron Device Business of Comm

250、unications&Power Industries,Inc.manufactures electronic components and subsystems primarily serving the aerospace and defense market.Nov-23Astra Space,Inc.-NM NM Astra Space,Inc.designs,tests,manufactures,and operates launch services,and space products and services in the United States of America.It

251、 operates through Launch Services and Space Products segments.Nov-23All American Racers,Inc.Charger Investment Partners LP-NM NM All American Racers,Inc.engages in the designing and construction facility for aviation and aerospace component.The company was incorporated in 1962 and is headquartered i

252、n Santa Ana,California.Nov-23Unitech Aerospace CompanyCharger Investment Partners LP-NM NM Unitech Aerospace Company designs and develops military and commercial aerospace parts and assemblies.Nov-23Meeker AviationSignia Aerospace Holdings,Inc.-NM NM Meeker Aviation designs and manufactures aircraft

253、 external payload mounts for electro-optical and infrared(EO/IR)sensors,cinematography camera systems,searchlights,light detection and ranging(LiDAR)laser scanners,and speaker systems.Nov-23Modern Aviation Inc.Apollo Global Management,Inc.;Tiger Infrastructure-NM NM Modern Aviation Inc.develops fixe

254、d base operators for the aviation industry.It also offers a hanger complex,which includes hangers,an FBO terminal,office space,and an expanded ramp.Oct-23Allied Associates International,Inc.Redhorse Corporation-NM NM Allied Associates International,Inc.provides technical products and services to the

255、 defense,federal law enforcement,and intelligence communities.Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Select Industry M&A Activity(4Q 2023)(Cont.)54DateTargetAcquirerTEVEV/RevenueEV/EBITDADescriptionOct-23Superior Technical Ceramics Corp.IDEX Corporation

256、$206.0 NM NM It offers standard products,such as alumina tubes and rods,and plates and disks;bolts,nuts,and washers;standoff ceramic insulators;fishspine beads;and machinable ceramics.Oct-23American Fan business of Chart Industries,Inc.Fairbanks Morse Defense$111.0 NM NM As of October 26,2023,Americ

257、an Fan business of Chart Industries,Inc.was acquired by Fairbanks Morse Defense.American Fan business of Chart Industries,Iprises cryogenic equipment.Oct-23Q Microwave,Inc.Amphenol Corporation-NM NM Q Microwave,Inc.manufactures microwave and RF filter wireless products for the military industry.The

258、company was incorporated in 1998 and is based in El Cajon,California.Oct-23Iris Automation Inc.uAvionix Corporation-NM NM Iris Automation Inc.develops and operates collision avoidance systems for industrial drones.It offers an artificial intelligence computer that blends real-time images and 3D maps

259、 to track incoming objects.The company serves the avionics industry.Oct-23Cybersecurity,Intelligence&Services of Raytheon-$1,300.0 NM NM Cybersecurity,Intelligence and Services Business within Raytheon Segment of RTX Corporation comprises cybersecurity and intelligence services.Oct-23Mid-Canada Mod

260、CenterDe Havilland Aircraft Of Canada Limited-NM NM Mid-Canada Mod Center provides aircraft maintenance and modification services.The company was founded in 1996 and is based in Toronto,Canada.Oct-23Jet East Corporate Aviation,LLCWest Star Aviation,LLC$131.7 NM NM Jet East Corporate Aviation,LLC pro

261、vides business aviation aircraft maintenance services.The company was founded in 2006 and is based in Trenton,New Jersey.Oct-23Plane View Partners LLCSeabury Capital Group LLC-NM NM Plane View Partners is a company that provides bespoke solutions to address critical business needs in the aviation in

262、dustry.Oct-23Alto Technologies,LLCHeads Up Technologies,Inc.-NM NM Alto Technologies,LLC manufactures audio and cabin management systems for aircrafts.The company was founded in 1997 and is based in Sterling,Massachusetts.As of October 17,2023.Source:S&P Capital IQNote:All values based on publicly a

263、vailable data as of 12/31/2023Select Industry M&A Activity(4Q 2023)(Cont.)55DateTargetAcquirerTEVEV/RevenueEV/EBITDADescriptionOct-23Military/Aerospace Division of West PenetoneIntegrity Partners Group,LLC-NM NM As of October 17,2023,Military/Aerospace Division of West Penetone was acquired by Integ

264、rity Partners Group,LLC.Military/Aerospace Division of West Penetone comprises military/aerospace division.Oct-23BP Aerospace,LLCITP Aero US-NM NM BP Aerospace,LLC manufactures aviation products,such as engine teardowns,engine part overhaul,accessory overhaul,engine,hospital,and shop repairs.BP Aero

265、space,LLC is based in Irving,Texas.Oct-23Illinois Aviation Academy,Inc.Spartan Education Group,LLC-NM NM Illinois Aviation Academy,Inc.offers flight training services.The company was founded in 1993 and is based in West Chicago,Illinois.Oct-23Hartzell AviationArcline Investment Management LP-NM NM H

266、artzell Aviation designs and manufactures proprietary aircraft subsystems and aftermarket components.The company was founded in 2022 and is based in Piqua,Ohio.Oct-23Airspace Experience Technologies,IncShoulderUp Technology Acquisition Corp.-NM NM Airspace Experience Technologies,Inc operates as an

267、aviation company that provides personal air transportation services that connect cities,suburbs,and surrounding airports.Oct-23Onamac Industries Inc.Due West Partners LLC-NM NM As of August 4,2014,Onamac Industries Inc.was acquired by Selmet,Inc.Onamac Industries Inc.engages in the production and sa

268、le of milled,turned,combo,and assembled precision components for aerospace,commercial,and military markets.Oct-23Compaero,Inc.Isodyne,Inc.-NM NM Compaero,Inc.manufacturers back shells,adapters,protective covers,termination bands and other connector accessories used in aerospace and defense Industry.

269、The company was founded in 1989 and is based in Mooresville,North Carolina.Oct-23Flight Training Division of Azure Flight SupportNashville Flight School LLC-NM NM Flight Training Division of Azure Flight Support comprises flight training business.The asset is located in the United States.Oct-23Pax A

270、ero Solutions LLCAIRtec Inc.-NM NM Pax Aero Solutions LLC provides aviation maintenance,repair,and overhaul services.The company was incorporated in 2015 and is based in California,Maryland.Pax Aero Solutionsm LLC is based in California,Maryland.Source:S&P Capital IQNote:All values based on publicly

271、 available data as of 12/31/2023Select Industry M&A Activity(4Q 2023)(Cont.)56DateTargetAcquirerTEVEV/RevenueEV/EBITDADescriptionOct-23Lancair International,Inc.JetEXE Aviation Corporation-NM NM Lancair International,Inc.manufactures advanced aviation composite structures.It offers aircraft kits,air

272、craft turbines,aircraft pistons,airframe components,avionics and instruments,builder supplies,electrical products and more.Oct-23teKnoluxion Consulting LLCBridge Core LLC-NM NM teKnoluxion Consulting LLC operates as an IT consulting company that provides software and systems engineering,cloud servic

273、es,and data analytics solutions to the defense and intelligence communities.Oct-23HAECO Cabin Solutions,LLCZim Aircraft Seating Gmbh-NM NM HAECO Cabin Solutions,LLC manufactures passenger seats for aircraft.Oct-23Airline Strategy Group,Inc.Seabury Capital Group LLC-NM NM Airline Strategy Group,Inc.p

274、rovides network planning,revenue management,strategic partnership,and operations management services to airlines.Oct-23Sierra Technical Services,Inc.Kratos Defense&Security Solutions,Inc.$27.3 NM NM Sierra Technical Services,Inc.designs and manufactures composite aircraft and components for governme

275、nt and commercial customers.Oct-23CFN Precision/Tecnickrome AeronautiqueMagnaghi Aeronautica S.p.A.-NM NM Tecnickrome Aeronautique provides surface treatments and processes to the aerospace manufacturers and their supply chain.CFN Precision and Tecnickrome Aeronautique are based in Canada.Oct-23Asse

276、ts of Honeywell International Inc.VSE Aviation,Inc$105.0 NM NM Assets of Honeywell International Iprises diversified aftermarket products and services.The asset is located in the United States.Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Select Industry Capit

277、al Raises(4Q 2023)57DateTargetInvestorsAmount RaisedDescriptionDec-23Shield AI Inc.-$200.0 Shield AI Inc.develops and builds artificial intelligence software and systems for the national security sector and first responders.It offers Hivemind,an artificial intelligence autonomy stack,for a variety o

278、f applications across the defense landscape to train unmanned systems to execute missions.Dec-23South Florida Aviation Investments,Inc.Skyservice Business Aviation Inc.-South Florida Aviation Investments,Inc.as a private corporate jet center.The company offers service,state-of-the art amenities,and

279、benefits to other company flight departments.Dec-23Bantec,Inc.1800 Diagonal Lending,LLC$0.0 Bantec,Inc.operates as a product and service company in the United States and internationally.The company provides drones,drone accessories,accident reconstruction software,drone training,drone services,count

280、er-drone technology,certificates of authorization,and waivers.Dec-23Cognitive Space,Inc.-Cognitive Space,Inc.develops machine learning systems for automation and predictive analytics for the operations of aerospace vehicles,industrial machines,and software driven devices.Dec-23Bright Silicon Technol

281、ogies,Inc.-$1.0 Bright Silicon Technologies,Inc.develops and commercializes light field directing array for precision digital control of light to defense applications in the United States.The company offers custom services for the development and deployment of microfabrication-based technologies.Dec

282、-23Horizon Aircraft,Inc.-$4.9 Horizon Aircraft,Inc.operates as an aerospace engineering company that manufactures eVTOL(hybrid-electric Vertical Takeoff and Landing)aircraft.Nov-23Pipeline2Space,Inc.-$4.6 Pipeline2Space,Inc.designs and develops an underground pipe for firing small capsules into the

283、atmosphere and suborbital space offering aerospace solutions.The company was incorporated in 2021 and is based in Seattle,Washington.Nov-23X-Bow Launch Systems Inc.CrossLink Capital;Capital Factory;Razors Edge;Lockheed Martin Ventures;-The company offers customizable propellants,motors,With rapid an

284、d responsive motor design,prototyping,test,and production of short lead times and rapid design cycles for vehicles production.Nov-23Boom Technology,Inc.Neom Investment Fund-Boom Technology,Inc.,doing business as Boom Supersonic,designs and manufactures commercial airplanes.It also offers air and spa

285、cecraft programs.The company was incorporated in 2014 and is based in Centennial,Colorado with an additional location in Greensboro,North Carolina.Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Select Industry Capital Raises(4Q 2023)(Cont.)58DateTargetInvestors

286、Amount RaisedDescriptionNov-23Synergy ECP,LLC.Falfurrias Capital Partners,LP-Synergy ECP,LLC.provides IT solutions for military,defense,intelligence,and healthcare industries.The companys services include cybersecurity,software engineering,system engineering,IT services,and audio-video multimedia.No

287、v-23Enduralock,LLC-Enduralock,LLC designs and manufactures fastening solutions for the aerospace industry.It offers radial lock,axial ratcheting,and radial ratcheting fasteners.It serves defense,spacecraft,aircraft,and oil and gas industries.The company was incorporated in 2011 and is based in Lenex

288、a,Kansas.Nov-23Uni Robotics,Inc.(nka:Air Space Intelligence,Inc.)Spark Capital,Andreessen Horowitz,Bloomberg Beta,Renegade Partners Group$34.0 Air Space Intelligence,Inc.,doing business as Air space Intelligence,develops an artificial intelligence solution for autonomous vehicles.It applies artifici

289、al intelligence to help the complex air operations.Oct-23EOS Aircraft Inc.-$26.0 EOS Aircraft Inc.manufactures electric solutions for regional aviation.The company was founded in 2021 and is headquartered in Bend,Oregon.Oct-23ResilienX,Inc.-$0.9 ResilienX,Inc.develops software monitoring systems to

290、increase the resilience and reduce the maintenance costs of Universal Transverse Mercator systems.Oct-23Atlas Air Worldwide Holdings,Inc.-$61.4 Atlas Air Worldwide Holdings,Inc.,through its subsidiaries,provides outsourced aircraft and aviation operating services.It operates through two segments,Air

291、line Operations and Dry Leasing.Oct-23OpsLab,Inc.Storm Ventures LLC;Cultivation Capital,LLC$5.0 OpsLab,Inc.provides an AI solution for operational planning tracking and recovery problems.It caters to airline,department of defense,and road transport.The company was formerly known as SkySchedule.Oct-2

292、3Astra Space,Inc.ACME,LLC;SherpaVentures Fund II,LP;JMCM Holdings LLC$25.0 Astra Space,Inc.designs,tests,manufactures,and operates launch services,and space products and services in the United States of America.It operates through Launch Services and Space Products segments.Oct-23K2 Space Corporatio

293、nAlpine Space Ventures GP GmbH$7.0 K2 Space Corporation designs and manufactures space satellites and spacecraft.The company develops aerospace hardware products designed for space architecture.The company engages in satellite buses for spacecraft that provide power and movement.Source:S&P Capital I

294、QNote:All values based on publicly available data as of 12/31/2023Select Industry Capital Raises(4Q 2023)(Cont.)59DateTargetInvestorsAmount RaisedDescriptionOct-23Anysignal,Inc.Acequia Capital,Caffeinated Capital Management;Blue Yard Capital,Also Capital$5.0 Anysignal,Inc.develops RF solutions for a

295、erospace and defense.It provides full-stack connectivity solutions,covering flight and ground hardware,software modems,along with software for data management,ground station integration,and vehicle telemetry.Oct-23Antares Nuclear,Inc.-Antares Nuclear,Inc.manufactures transportable microreactors for

296、military.Antares Nuclear,Inc.was formerly known as Antares Industries,Inc.The company was incorporated in 2023 and is based in Redwood City,California.Oct-23Evolution Space-Evolution Space develops and manufactures solid rocket motors and suborbital launch vehicles for hypersonic testing,defense app

297、lications,and microgravity research.Oct-23Bantec,Inc.GHS Investments,LLC$10.0 Bantec,Inc.operates as a product and service company in the United States and internationally.The company provides drones,drone accessories,accident reconstruction software,drone training,drone services,counter-drone techn

298、ology,certificates of authorization,and waivers.Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance60A&D Consulting EngineeringEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenue

299、EBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM EBITDABooz Allen Hamilton Holding Corp.$16,677$19,7637%11%NA11%2.0 x 1.8x 1.8x 26.6x 16.3x 16.8x 4.1x Leidos Holdings,Inc.$14,884$19,4035%4%NA11%1.3x1.2x 1.2x 11.0 x 11.6x 11.7x 2.5x KBR,Inc.$7,481$9,12612%12%NA11%1.3x 1.2x 1.2x 9.2x 10.9x 11.3x 1.7x CACI I

300、nternational Inc$7,215$9,2094%13%NA11%1.3x 1.2x 1.3x 11.4x 11.2x 11.5x 2.5x Science Applications Int Corp.$6,472$8,5560%2%NA10%1.1x 1.2x 1.2x 11.4x 12.2x 12.4x 2.8x Parsons Corporation$6,578$7,4517%12%NA9%1.5x 1.3x 1.3x 16.3x 14.7x 15.2x 1.7x Mean6%9%NA10%1.4x 1.3x 1.3x 14.3x 12.8x 13.2x 2.6x Median

301、6%11%NA11%1.3x 1.2x 1.2x 11.4x 11.9x 12.1x 2.5x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)61Aerospace MaterialsEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenue

302、EBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM EBITDAHexcel Corporation$6,203$6,86012%21%NA22%3.9x 3.4x 3.5x 18.9x 15.7x 16.3x 1.8x Park Aerospace Corp.$298$224NMNMNANM4.0 x NMNM20.2x NMNMNMMean12%21%NA22%4.0 x 3.4x 3.5x 19.5x 15.7x 16.3x 1.8x Median12%21%NA22%4.0 x 3.4x 3.5x 19.5x 15.7x 16.3x 1.8x Sour

303、ce:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)62Aerospace OEM ManufacturingEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenueEBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM E

304、BITDAHowmet Aerospace Inc.$22,284$25,8247%11%NA24%4.0 x 3.7x 3.8x 17.7x 15.6x 16.1x 2.4x Rolls-Royce Holdings plc$31,923$35,7058%13%NA16%1.8x 1.8x 1.8x 13.5x 11.0 x 11.7x 1.4x MTU Aero Engines AG$11,602$12,43817%11%NA17%2.3x 1.6x 1.6x NM9.2x 9.4x NMRheinmetall AG$13,762$16,21723%34%NA18%2.2x 1.5x 1.

305、6x 14.8x 8.8x 9.4x 1.9x Melrose Industries PLC$9,632$10,5807%27%NA18%1.1x 2.3x 2.4x 8.3x 12.4x 13.9x 0.7x Curtiss-Wright Corporation$8,520$9,5396%7%NA22%3.4x 3.2x 3.3x 14.4x 14.7x 14.8x 1.5x Kongsberg Gruppen ASA$8,073$8,52810%11%NA15%2.4x 2.0 x 2.1x 15.3x 13.2x 13.8x 0.7x Woodward,Inc.$8,176$8,7857

306、%6%NA17%3.0 x 2.7x 2.7x 18.7x 15.5x 15.6x 1.3x Spirit AeroSystems Holdings,Inc.$3,687$7,28529%87%NA9%1.3x 1.0 x 1.0 x NM10.7x 7.6x NMMoog Inc.$4,886$5,8254%19%NA14%1.8x1.7x 1.7x 13.5x 11.7x 12.0 x 2.2x Mercury Systems,Inc.$2,168$2,7358%97%NA19%2.9x 2.8x2.8x 35.4x 14.8x 16.1x 7.3x Triumph Group,Inc.$

307、1,274$2,7637%22%NA17%2.0 x 1.8x1.8x13.6x10.8x 11.3x 7.3x Senior plc$926$1,1696%17%NA11%1.0 x 0.9x 0.9x 10.7x 8.2x8.8x 2.2x Ducommun Incorporated$760$1,0377%12%NA15%1.4x 1.3x 1.3x 11.0 x 8.7x 8.9x2.9x Astronics Corporation$591$78611%71%NA12%1.2x1.0 x 1.1x 40.5x 9.0 x 9.6x 10.0 x Magellan Aerospace Co

308、rporation$341$4008%23%NA10%0.6x 0.6x 0.6x 9.8x 5.4x 5.7x 1.4x Mean10%29%NA16%2.0 x 1.9x 1.9x 16.9x 11.2x 11.6x 3.1x Median8%18%NA16%1.9x 1.7x 1.8x 14.0 x 10.9x 11.5x 2.0 x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)

309、63Aftermarket,MROEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenueEBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM EBITDATransDigm Group Incorporated$55,956$72,24513%14%NA52%11.0 x 9.3x 9.5x 22.3x 17.9x 18.2x 5.0 x HEICO Corporation$21,686$24,53121%22%

310、NA25%8.3x 6.3x 6.4x 30.8x 24.7x 25.5x 3.1x AAR Corp.$2,180$2,4637%13%NA10%1.1x 1.1x 1.1x 11.5x 10.4x 10.4x 1.3x AerSale Corporation$652$69519%104%NA16%2.1x 1.5x 1.5x 42.2x 9.1x 9.3x 2.7x Hroux-Devtek Inc.$387$5487%19%NA14%1.3x 1.2x 1.2x 11.3x 8.2x 8.6x 3.2x Mean14%35%NA24%4.7x 3.8x 3.9x 23.6x 14.1x

311、14.4x 3.1x Median13%19%NA16%2.1x 1.5x 1.5x 22.3x 10.4x 10.4x 3.1x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)64Aircraft ProvidersEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:Equity

312、ValueValueRevenueEBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM EBITDAThe Boeing Company$157,693$196,60519%548%NA8%2.6x 2.2x 2.3x 59.7x 26.9x 32.6x 11.8x Airbus SE$121,931$118,37112%17%NA14%1.8x 1.5x 1.5x 15.1x 10.7x 11.1x NMTextron Inc.$15,763$17,9957%7%NA12%1.3x 1.2x 1.2x 10.9x 10.2x 10.3x 1.4x Bombar

313、dier Inc.$3,861$9,3645%14%NA16%1.2x 1.1x 1.1x 11.0 x 7.0 x 7.0 x 5.9x Mean11%146%NA13%1.7x 1.5x 1.5x 24.2x 13.7x 15.3x 6.4x Median9%15%NA13%1.6x 1.4x 1.4x 13.1x 10.4x 10.7x 5.9x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(

314、Cont.)65Defense FocusedEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenueEBITDAGrossEBITDALTM2024ENTMLTM2024ENTMLTM EBITDARTX Corporation$120,714$153,6918%8%NA18%2.3x 1.9x 2.0 x 16.2x 10.9x 10.9x 3.3x Lockheed Martin Corporation$112,448$126,2863%(

315、0%)NA14%1.9x 1.8x 1.9x 11.9x 12.8x 12.9x 1.3x AeroVironment,Inc.$3,523$3,53412%(12%)NA17%5.4x 4.6x 4.7x 25.8x 27.6x 31.3x 0.1x Kratos Defense&Security Solutions$2,616$2,9399%17%NA9%2.9x 2.7x 2.7x 41.2x 28.2x 30.8x 4.3x Mean8%3%NA15%3.1x 2.8x 2.8x 23.8x 19.8x 21.5x 2.2x Median8%4%NA15%2.6x 2.3x 2.4x

316、21.0 x 20.2x 21.9x 2.3x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023Industry Public Company Performance(Cont.)66Large Cap A&DEnterprise2024E Growth2024E MarginEV/RevenueEV/EBITDANet Debt/PublicComparables:EquityValueValueRevenueEBITDAGrossEBITDALTM2024ENTMLT

317、M2024ENTMLTM EBITDANorthrop Grumman Corporation$70,592$83,7855%9%NA14%2.2x 2.0 x 2.1x 11.1x 14.5x 15.0 x 1.7x General Dynamics Corporation$70,736$80,3817%14%NA13%1.9x 1.8x 1.8x 15.5x 13.4x 13.3x 1.9x Safran SA$74,041$74,48614%18%NA20%3.1x 2.5x 2.6x 15.8x 12.8x 13.3x NMBAE Systems plc$42,797$47,3947%

318、8%NA13%1.7x 1.4x 1.5x 11.7x 10.5x 10.9x 1.1x Thales S.A.$30,867$31,9709%12%NA16%1.6x 1.5x 1.5x 11.1x 9.2x 9.5x 0.3x Dassault Aviation socit anonyme$15,651$7,32713%16%NA12%1.1x 1.1x 1.2x 6.6x 8.9x 9.6x NMMean9%13%NA15%1.9x 1.7x 1.8x 11.9x 11.6x 11.9x 1.2x Median8%13%NA14%1.8x 1.6x 1.6x 11.4x 11.7x 12.1x 1.4x Source:S&P Capital IQNote:All values based on publicly available data as of 12/31/2023