paper, plastics and packaging - moss adams · 2016-06-02 · paper, plastics and packaging market...

MOSSADAMSCAPITALLLC

Paper,PlasticsandPackagingMarketMonitorSummer2016

2 MOSSADAMSCAPITALLLCPaper,Plastics&Packaging

(0.9%)

4.6%

4.3%

2.1%

0.6%

3.9%

2.0%

1.4%

0.8%Q12016

Q42015

Q32015

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

U.S. economic growth was revised upward to 0.8% from 0.5% inQ1 2016, amid increases in spending on home building and bybusinesses

Overall, U.S. GDP has been negatively impacted by a strongerdollar, lower oil prices, and lethargic global demand

However, early data points signal that the economy regainedsome momentum in Q2 2016, with retail sales, exports,industrial production, housing starts and home sales higher inApril 2016

The air of global market uncertainty continues to persistagainst the backdrop of multiple imminent interest rate hikesover the next 18 months, lower global growth, and the U.K.’spending decision to withdraw from the European Union

Public packaging companies’ enterprise valuations haverebounded from lows reached in the first two months of 2016

However, YTD 2016 global packaging deal volume is down~36% compared to the same period one year ago while dealvalues saw a decrease of ~79%

Shareholders of many packaging companies, both independentand financial sponsor‐backed, took advantage of historicallyhigh valuation multiples in 2014 and 2015

─ While the inventory of high‐quality assets is lower, acquirersremain highly interested in strategic M&A transactions

─ The window of opportunity remains open for packagingcompanies that are contemplating a transaction to garnerstrong valuation multiples with less marketplace competition

U.S. Gross Domestic Product

Global PPP M&A Deal Volume and Value

Sources: S&P CapitalIQ, Moss Adams Capital Research.

PackagingM&ALowerRelativetoSamePeriodOneYearAgo

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

0

200

400

600

800

2007

2008

2009

2010

2011

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YTD2015

YTD2016

DealValue($inbillions)

DealVolum

e(#ofTransactions)


EndMarketExposureisaSignificantValuationFactor

Food

Not all packaging companies are valued equally ‐‐‐ there are numerous factors that impact enterprise valuation (i.e. growth, margins,management, market environment, competition, etc.)

However, this Summer 2016 Paper, Plastics & Packaging issue examines several high‐growth and attractive end markets that favorablyimpact a packaging companies’ ultimate enterprise valuation by strategic and financial sponsor acquirers

All else equal, more exposure / customer accounts in these end markets tend to result in stronger enterprise valuation multiples

Beverage Healthcare

PetCare ConsumerElectronics Health&BeautyCare

Healthy, convenient snack foods

Organic, non‐GMO, whole foods

Locally sourced foods

Minimally processed foods

Protein: ethical, sustainable, plant

Craft, premium drinks

─ Craft beer

─ Wine

─ Spirits

─ Juices / cleansing

Less artificial, more natural

Medical devices

Pharmaceutical / pill packs

Medical disposables

Dental products & supplies

Sterile grade packaging

Traditional pet foods & snacks

Refrigerated pet foods

Grooming products

Pet health & beauty products

Mobile phones

Tablets

Laptops

Headphones

Internet‐of‐Things

Oral care

Fragrances

Make up

Skin care

Vitamins & supplements

Eye care

Bath & body


Source: S&P CapitalIQ.

The sales growth outlook for paper and rigid packagingcompanies is expected to grow at a faster rate over the next 12months compared to the S&P 500

Packaging companies’ EBITDA growth over the next 12 monthsis expected to out‐pace the overall market

Smaller, strategic acquisitions are expected to bolster lowerorganic growth expectations amid concerns about the slowingglobal economy

Public Company Packaging ValuationsNext 12 Months: Estimated Growth

Estimated NTM Sales Growth Estimated NTM EBITDA Growth

EBITDA multiples for packaging companies remain at elevatedlevels compared to historical data

Acquirers are anecdotally citing lower quality assets in the M&Amarketplace as many independent and financial sponsor‐backedcompanies took advantage of high valuation multiples in 2014and 2015

However, valuation multiples for top‐tier assets will continue tostand‐out amid less marketplace competition and readilyavailable financing

12MonthOutlookBrighter;ValuationsRemainElevated

PaperIndex7.7x

PlasticIndex12.0x

S&P50015.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

Jan‐07

Aug‐07

Mar‐08

Oct‐08

May‐09

Dec‐09

Jul‐10

Feb‐11

Sep‐11

Apr‐12

Nov‐12

Jun‐13

Jan‐14

Aug‐14

Mar‐15

Oct‐15

May‐16

EV/TTM

EBITD

A

RigidIndex10.4x

1.7%

6.0%

1.4%

4.0%

S&P500

RigidPackaging

PlasticPackaging

PaperPackaging

6.5%

9.8%

11.5%

6.3%


TTM Data NTM Estimated Growth EV Multiple

Company NameSharePrice 52wk High / Low

MarketCap

EnterpriseValue Revenue EBITDA

EBITDAMargin Revenue EBITDA

TTMRevenue

TTMEBITDA

NTMRevenue

NTMEBITDA

Paper PackagingInternational Paper Company $42.16 $51.85 / $32.50 $17,630 $27,623 $22,865 $3,725 16.3% (7.5%) (3.5%) 1.21x 7.4x 1.31x 7.7xWestRock Company 39.61 66.40 / 29.73 10,086 15,644 11,381 1,850 16.3% 27.6% 24.5% 1.37x 8.5x 1.08x 6.8xSmurfit Kappa Group plc 27.29 32.07 / 20.28 6,454 9,928 9,071 1,232 13.6% 4.0% 15.7% 1.09x 8.1x 1.05x 7.0xPackaging Corporation of America 68.23 73.60 / 44.32 6,547 8,709 5,785 1,074 18.6% (0.1%) 0.8% 1.51x 8.1x 1.51x 8.0xGraphic Packaging Holding Company 13.40 15.28 / 10.71 4,406 6,318 4,136 725 17.5% 5.9% 11.3% 1.53x 8.7x 1.44x 7.8xSonoco Products Co. 47.67 49.35 / 34.68 4,883 5,913 5,014 636 12.7% 0.3% 5.6% 1.18x 9.3x 1.18x 8.8xMulti Packaging Solutions International Limited 15.82 18.81 / 13.20 3,388 4,499 1,683 238 14.2% 1.0% 14.7% 2.67x 18.9x 2.65x 16.5xMayr-Melnhof Karton AG 114.46 131.27 / 106.00 2,291 2,260 2,382 322 13.5% 9.8% 9.9% 0.95x 7.0x 0.86x 6.4xKapStone Paper and Packaging Corporation 15.25 27.38 / 8.95 1,488 3,074 2,589 405 15.6% 20.8% (3.5%) 1.19x 7.6x 0.98x 7.9xGreif, Inc. 35.86 39.41 / 23.88 1,715 2,890 3,617 401 11.1% (8.0%) 6.3% 0.80x 7.2x 0.87x 6.8xCascades, Inc. 7.58 10.42 / 5.24 718 2,092 2,811 320 11.4% 10.7% 1.7% 0.74x 6.5x 0.67x 6.4x

Average $5,419 $8,086 $6,485 $993 14.6% 5.9% 7.6% 1.29x 8.8x 1.24x 8.2xMedian $4,406 $5,913 $4,136 $636 14.2% 4.0% 6.3% 1.19x 8.1x 1.08x 7.7x

Plastic PackagingAmcor Limited $11.79 $12.06 / $8.73 $14,061 $17,019 $9,612 $1,381 14.4% 1.4% 5.4% 1.77x 12.3x 1.75x 11.7xSealed Air Corporation 46.44 55.84 / 38.02 9,428 13,744 7,251 1,111 15.3% (3.9%) 7.3% 1.90x 12.4x 1.97x 11.5xBemis Company, Inc. 50.34 54.19 / 38.91 4,892 6,113 4,141 573 13.8% (0.2%) 7.4% 1.48x 10.7x 1.48x 9.9xBerry Plastics Group, Inc. 39.17 39.47 / 27.79 4,845 8,353 4,881 771 15.8% 34.7% 54.5% 1.71x 10.8x 1.27x 7.0xHuhtamaki Oy 41.81 41.90 / 29.17 4,343 5,064 2,920 337 11.5% 11.6% 26.2% 1.73x 15.0x 1.55x 11.9xMulti Packaging Solutions International Limited 15.82 18.81 / 13.20 3,388 4,499 1,683 238 14.2% 1.0% 14.7% 2.67x 18.9x 2.65x 16.5xWinpak Ltd. 37.54 38.87 / 27.68 2,440 2,249 798 177 22.2% 2.5% 11.5% 2.82x 12.7x 2.75x 11.4x

Average $6,200 $8,149 $4,469 $655 15.3% 6.7% 18.1% 2.01x 13.3x 1.92x 11.4xMedian $4,845 $6,113 $4,141 $573 14.4% 1.4% 11.5% 1.77x 12.4x 1.75x 11.5x

Rigid PackagingBall Corporation $72.30 $76.69 / $57.95 $10,206 $13,134 $8,225 $1,101 13.4% (1.7%) 7.2% 1.60x 11.9x 1.62x 11.1xCrown Holdings Inc. 52.17 56.78 / 43.30 7,259 12,908 8,862 1,208 13.6% (1.7%) 9.8% 1.46x 10.7x 1.48x 9.7xCCL Industries Inc. 178.23 190.42 / 109.02 6,149 6,455 2,147 426 19.8% 48.4% 43.6% 3.01x 15.2x 2.03x 10.5xAptarGroup, Inc. 77.26 80.36 / 60.73 4,836 5,172 2,370 471 19.9% 3.5% 10.1% 2.18x 11.0x 2.11x 10.0xSilgan Holdings Inc. 51.14 56.06 / 47.00 3,094 4,922 3,845 491 12.8% (3.0%) 0.6% 1.28x 10.0x 1.32x 10.0xOwens-Illinois, Inc. 18.90 24.76 / 11.58 3,057 8,764 6,133 936 15.3% 4.7% 40.4% 1.43x 9.4x 1.36x 6.7xGreif, Inc. 35.86 39.41 / 23.88 1,715 2,890 3,617 401 11.1% (8.0%) 6.3% 0.80x 7.2x 0.87x 6.8x

Average $5,188 $7,749 $5,028 $719 15.1% 6.0% 16.8% 1.68x 10.8x 1.54x 9.3xMedian $4,836 $6,455 $3,845 $491 13.6% (1.7%) 9.8% 1.46x 10.7x 1.48x 10.0x

($ in millions, except where noted)

Note: Not meaningful (NM) if EV/Sales is greater than 5.0x, or EV/EBITDA is greater than 30.0x. NA if denominator is 0 for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Source: S&P CapitalIQ, company filings and Moss Adams Capital research.

ValuationsReboundFromLowsReachedinEarly2016



YTD2016M&ADealVolume&ValueLowervs.YTD2015PaperPackagingTransactions($ in millions, except where noted)

CloseDate Acquirer/Investor Target TargetDescription ImpliedEnterpriseValue

EV/RevenueMultiple

EV/EBITDAMultiple

May‐16 HuhtamakiOyj(HLSE:HUH1V) DeltaPrintAndPackagingLimited Manufacturesfoldingcartonsandpaperboardpackaging

$117 ‐ ‐

Apr‐16 GraphicPackagingHoldingCompany(NYSE:GPK)

ColorpakLimited(ASX:CKL) Manufacturesfoldingcartonsandpaperboardpackaging

$64 0.60x 7.4x

Mar‐16 LibertyDiversifiedInternational,Inc. OmahaBoxCompany ManufacturescustomcartonsandPOPdisplays ‐ ‐ ‐

Mar‐16 SmurfitKappaGroupplc(ISE:SK3) ScopePackagingInc. Manufactureshighgraphicpackaginganddisplays

‐ ‐ ‐

Mar‐16 Georgia‐PacificLLC ExcelDisplays&Packaging ManufacturesPOPdisplaysandhigh‐graphicretailpackaging

‐ ‐ ‐

Feb‐16 BuckeyeCorrugated,Inc. TheDrakeCompany IntegratedcorrugatedpackagingandPOPdisplaysolutions

‐ ‐ ‐

Feb‐16 GraphicPackagingHoldingCompany(NYSE:GPK)

WalterG.Anderson,Inc. Manufacturesfoldingcartonsandpaperboardpackaging

‐ ‐ ‐

Jan‐16 SvenskaCellulosaAktiebolagetSCA(publ)(OM:SCAB)

WausauPaperCorp.(NYSE:WPP) Manufacturestowelandtissueproducts $689 1.90x 13.0x

Dec‐15 SmurfitKappaGroupplc(ISE:SK3) IndústriadeEmbalagensSantanaS.A.andPaemaEmbalagens

Manufacturespaper‐basedpackagingproductsinBrazil

$201 ‐ ‐

Nov‐15 W.&R.BarnettLimited LogsonGroup Manufacturesandsuppliescorrugatedsheetboard

‐ ‐ ‐

Nov‐15 CircleGraphics,Inc. Imagic,Inc. Providesdigitalprintingservicesformediacompanies

‐ ‐ ‐

Oct‐15 CepacLimited WoodhillPrintersLimited Manufacturescorrugatedpackagingsolutions ‐ ‐ ‐

Oct‐15 SupremexInc.(TSX:SXP) ClassicEnvelope,Inc. Manufacturesandprintsenvelopesandletterheads

‐ ‐ ‐

Oct‐15 WestRockCompany(NYSE:WRK) SPFiberHoldings,Inc. Producesrecycledcontainerboard,kraft,andbagpaper

$289 ‐ ‐

Sep‐15 HoodContainerCorporation KPAQIndustries,LLC Manufacturespulpandpaperproducts ‐ ‐ ‐


PlasticPackagingTransactions($ in millions, except where noted)


YTD2016M&ADealVolume&ValueLowervs.YTD2015

CloseDate Acquirer/Investor Target TargetDescription ImpliedEnterpriseValue

EV/RevenueMultiple

EV/EBITDAMultiple

May‐16 OliverProductsCompany MangarIndustries,Inc. Manufacturessterilebarrierpackagingformedicaldevicemanufacturers

‐ ‐ ‐

May‐16 Novolex HeritageBagCompanyInc. Manufacturescommercialplasticbagsandliners

‐ ‐ ‐

Apr‐16 OwensCorning(NYSE:OC) InterWrap,Inc. Coatedwovenpackagingproductsandmulti‐layerlaminatedplasticsubstrates

$450 1.80x ‐

Apr‐16 InlandLabel&MarketingServices,LLC

ValleyLabelCompany,LLC Providesflexographicprintingservicesforpackagingandlabelapplications

‐ ‐ ‐

Apr‐16 InfinitePackagingGroup,Inc. HydeParkLabelCorp. Manufactureslabelsandfilms ‐ ‐ ‐

Jan‐16 AmcorLimited(ASX:AMC) DeluxePackages Providesflexiblepackagingproductsforavarietyofendmarkets

$45 1.07x ‐

Jan‐16 AEAInvestorsLP InovarPackagingGroup,LLC Customlabelprinter/converterinthesouth‐centralUnitedStates

‐ ‐ ‐

Dec‐15 ProAmpacLLC CoatingExcellenceInternational,LLC Providesflexiblepackagingandtechnicalproducts

‐ ‐ ‐

Dec‐15 CharterNEXFilmsInc. BloomerPlastics,Inc. Manufacturescustomengineeredfilms ‐ ‐ ‐

Nov‐15 CCLDesignGmbH WorldmarkInternationalLtd. Manufactureslabels,brandingproducts,andcustomengineereddiecutcomponents

$189 ‐ ‐

Oct‐15 Schweitzer‐MauduitInternationalInc.(NYSE:SWM)

ArgotecLLC Manufacturescustomengineeredpolyurethanefilmsandsheets

$280 ‐ 10.0x

Oct‐15 TranscontinentalInc.(TSX:TCL.A) UltraFlexPackagingCorp. Manufacturesflexiblepackagingproductsforvariousmarkets

$80 1.11x 6.7x

Sep‐15 HilexPolyCo.LLC WisconsinFilm&Bag,Inc. Custommanufacturesmono‐layerpolyethylenebagsandfilms

‐ ‐ ‐

Aug‐15 SunCoastPackaging,Inc. AmsAssociates,Inc. DoingbusinessasShapiroPackaging,providesplasticpackagingsolutions

‐ ‐ ‐

Aug‐15 ProlaminaCorporation AmpacHoldings,LLC Manufacturesflexiblepackagingsolutions,retailshoppingbags,andsecuritybags

‐ ‐ ‐



YTD2016M&ADealVolume&ValueLowervs.YTD2015RigidPackagingTransactions($ in millions, except where noted)

CloseDate Acquirer/Investor Target TargetDescriptionImpliedEnterprise

ValueEV/RevenueMultiple

EV/EBITDAMultiple

Pending BallCorporation(NYSE:BLL) Rexamplc(LSE:REX) Manufacturesandsellsbeveragecans $9,112 1.50x 10.2x

May‐16 AmcorLimited(ASX:AMC) PlasticMouldersLimited Customprecisionmouldingproductsandassemblies

$30 ‐ ‐

Apr‐16 TricorBraun,Inc. ThePackagingDesignGroupInc. Providespackagingsolutionsforpharma,personalcare,andF&Bindustries

‐ ‐ ‐

Jan‐16 GruppoASA CrownSpecialityPackagingItaliaSrl Manufacturesmetalpackagingproducts ‐ ‐ ‐

Nov‐15 BerlinPackaging,LLC DiabloValleyPackaging,Inc. Providesfood,beverage,beer,liquor,andwinepackagingsolutions

‐ ‐ ‐

Oct‐15 WadinkoN.V. EuroMouldingsB.V. Manufacturesbottles,jerrycans,stackablecontainers,andtechnicalparts

‐ ‐ ‐

Sep‐15 GerresheimerAG(DB:GXI) Centor,Inc. Manufacturesclosures,snapcaps,ointmentjars,andovalbottles

$725 ‐ ‐

Sep‐15 Owens‐BrockwayGlassContainer,Inc. FoodAndBeverageContainerBusiness

Manufacturesfoodandbeveragecontainers $2,150 ‐ ‐

Aug‐15 BerlinPackaging,LLC VividPackaging,Inc. Manufacturescontainersandpackagingsolutions

‐ ‐ ‐

Aug‐15 ConsolidatedContainerCompanyLLC PrecisionPlastics,Inc. Manufactureshigh‐densitypolyethyleneplasticcontainers

‐ ‐ ‐

Jun‐15 CCIndustries,Inc. J.L.Clark,Inc. Specialtypackagingdesignandmanufacturingcompany

$48 0.62x ‐

Apr‐15 PrattIndustries,Inc. RobertMannPackaging,Inc. Providesabroadrangeofplasticandrigidpackagingproducts

$60 0.40x ‐

Mar‐15 OriconEnterprisesLimited(BSE:513121)

OrientalContainersLtd. Manufacturespackagingproductsprimarilyforliquor,beverage,andcosmeticindustries

$24 ‐ ‐

Feb‐15 Owens‐BrockwayGlassContainer,Inc. BennuGlassLLC Manufacturesglassbottles,includingbordeauxandburgundyglassbottles

‐ ‐ ‐

Feb‐15 CrownHoldingsInc.(NYSE:CCK) Empaque Producesmetalbeveragecans,glassbottles,andothercomponents

$1,225 1.86x 9.4x


OliverProductsCompany’sAcquisitionofMangarIndustries

SmurfitKappa’sAcquisitionsofEmpirePackaging&DisplaysandScopePackaging

Oliver‐Tolas® Healthcare Packaging, a wholly owned subsidiary of Oliver Products Company, is a leading supplier of sterile‐grade die‐cut lid, rollstock, and pouch products to the medical device and pharmaceutical markets

Mangar Industries, doing business as Mangar Medical Packaging, is a trusted partner of medical device manufacturers providing pouches, die‐cutlids and mounting cards for use in sterile barrier packaging solutions

“We are thrilled to have the opportunity to combine the extremely talented team and capabilities of Mangar with Oliver‐Tolas®…Our strategy is toleverage Mangar knowhow and capabilities with the Oliver‐Tolas® global footprint and ongoing investment capacity…An immediate benefit tocustomers will be a broader product offering and enhanced technical capabilities.” ‐‐‐ Jerry Bennish, President & CEO, Oliver Products Company

Smurfit Kappa is one of the leading providers of paper‐based packaging solutions in the world, with around 45,000 employees inapproximately 370 production sites across 34 countries

Empire manufactures premier corrugated packaging, point of purchase displays, custom corrugated boxes and folding cartons

Scope Packaging designs, manufactures, and fulfills custom packages and displays, including temporary & permanent displays and retail &protective packaging

“We are pleased to announce our acquisitions of Empire and Scope…I look forward to welcoming their teams into Smurfit Kappa…Empire has agreat reputation for being agile in terms of ‘speed to market’, while Scope’s high‐graphic capabilities are well‐known throughout theindustry…The acquisitions further enhance our capacity to provide innovative, insight‐led and value enhancing packaging solutions to bothcurrent and prospective customers.” ‐‐‐ Greg Hall, CEO, Smurfit Kappa North America

Source: Company press releases, S&P CapitalIQ.

OverviewofSelect,NotableTransactions


MossAdamsCapitalLLC

Full‐serviceinvestmentbankandstrategicadvisoryservices

Dedicatedindustryspecialists

Focusonprivately‐ownedandfamily‐heldcompanies

Mergersandacquisitions

Privatedebt&equityplacements

Mezzaninecapitalplacements

Duediligencepreparation&advisory

MossAdamsLLP

Fullyintegratedaccounting,tax,andbusinessadvisoryfirm

100+yearsold– foundedin1913

DominantinwesternU.S.

2,400employeesin28offices

Middle‐marketspecialists

Accounting,tax,andtransactionexperience

Leverage‐abletransactionresources

MossAdamsataGlanceLeadershipthroughExperienceandResults

International Presence

Major market affiliates throughout theU.S. and more than 100 countriesaround the globe


Local,NationalandGlobalReach

OuraffiliationwithCFxBconsistsof150+CorporateFinanceProfessionalsacrosstheU.S.andinover25countries

GlobalM&AReachThroughLocalRelationships

Mazars Africa40 offices

Mazars Asia25 offices

Mazars Middle East15 offices

Mazars Europe 140 officesMazars M&A 20 offices

Mazars South America20 offices

Moss Adams Capital 3 officesMoss Adams LLP 28 offices

MNP Corporate Finance 10 officesMNP LLP 70 offices

BKD Corporate Finance 4 officesBKD LLP 33 offices

William Buck CAA 6 offices

Weiser Mazars 6 offices

Mazars Canada 1 office CH Reynolds CF

1 office


ContributingAuthors:

RichardAndersonManagingDirector(949)221‐[email protected]

AndrewSuenVicePresident(949)517‐[email protected]

MossAdamsCapitalLLC

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Harman“Jet”WalesManagingDirector(206)306‐[email protected]

WileyKitchellManagingDirector(206)302‐[email protected]

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paper, plastics and packaging - moss adams · 2016-06-02 · paper, plastics and packaging market...

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