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Seale &Associates
Business Insights
Global HVAC/R Industry:
Trends and M&A Update
January 2017© Seale & Associates, Inc., 2017
30.0
8.7 8.1
5.1 5.1 4.74.3 3.1 0.9
56%
28%
100%
13% 15%
78%
7% 10%
99%
0%
20%
40%
60%
80%
100%
0
5
10
15
20
25
30
China Asia (excl.China,Japan,
and India)
Japan Central &South
America
NorthAmerica
Europe MiddleEast,Africa
India Oceania
Units Sold (in millions) Penetration Rate
Single-Family Homes
28%
Apartment6%
Healthcare & Institutional
13%Education13%
Manufacturing & Industrial
11%
Office10%
Other19%
$15$12
$37
$4 $5 $4
$19
$12
$53
$5 $6 $6
$23
$14
$65
$6 $7 $8
$0
$10
$20
$30
$40
$50
$60
$70
North America WesternEurope
Asia/Pacific Central &South America
EasternEurope
Africa/Mideast
2010 2015 2020
Global HVAC/R Demand by End Market, 2015(% Market Share)
Air Conditioning Systems Market Revenue - Asia Pacific (in USD billions)
A rising middle-income group in emerging countries has
fueled a double-digit construction boom for buildings and
houses. Alongside improving living standards and growing
consumer demand, the growth in the HVAC/R market,
especially air conditioning, is expected to further accelerate.
By revenue, Asia Pacific is projected to dominate the global
market for air conditioning systems with a forecasted market
share of 55% in 2024. The key factors for this growth are a
growing urban population, increase in disposable income, and
varying climatic conditions.
In 2015, air conditioning was responsible for approximately
5% of global electricity consumption.
Industry Trends
The global HVAC/R equipment market, which was valued at $77.2 billion in 2015, is expected to grow 4.1% annually from 2015 to 2020
to a value of $122.1 billion. Equipment includes room air conditioners, unitary air conditioners, heat pumps, boilers, warm air furnaces,
and refrigerators. Sales of room air conditioners and heat pumps are expected to drive much of the growth. The residential market will
outpace the currently dominant nonresidential (commercial and industrial) segment. Increased construction activities, growing
replacement demand in developed countries, rising need for energy efficient HVAC/R systems, and developing infrastructure in emerging
economies will be the key driving factors for the industry.
Global HVAC/R Industry Overview
2
Global HVAC/R Demand by Geography(in USD billions)
Emerging Economies
Environmental awareness continues to grow in developed
countries, leading to a higher demand for energy-saving
HVAC/R technologies. Most notable is the growth seen in
inverter air conditioners, which lower energy consumption by
30%, and heat pumps, which reduce CO2 emissions by 60%
compared to fossil fuel-burning heaters that use oil or gas.
Although inverter air conditioners have a 100% penetration
rate in Japan, the rate is still low in the rest of the world; for
example, in North America, the rate is only about 15%.
Developed Countries
$61
$74
$90
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2015 2020 2024
3.9%
CAGR
5.1%
CAGR
Global Residential Inverter Air Conditioning Demand, 2015
(%)
Business InsightsJanuary 2017
2012 2013 2014 2015 2016EV /
EBITDA
EV /
Sales
Amica S.A. Residential POL $43.11 $635 8.7% $335 $384 6.1x 7.2x 6.8x 7.3x 8.2x 7.5x 0.7x
Bajaj Electricals Limited Residential IND $3.37 $693 5.7% $341 $373 8.9x 16.2x NM NM 10.3x 9.6x 0.6x
Hefei Meiling Co., Ltd. Residential CHN $0.56 $1,771 1.3% $924 $102 16.4x 6.8x 6.2x 8.3x 7.8x 4.3x 0.1x
LU-VE S.p.A. Residential, Commercial, & Industrial ITA $11.99 $247 12.8% $238 $255 NM NM NM 6.1x 7.7x 8.4x 1.1x
SNC Former Public Company Limited Residential & Commercial THA $0.44 $216 9.3% $127 $136 10.4x 8.8x 7.5x 6.4x 6.1x 7.0x 0.6x
Taiwan Sanyo Electric Co.,Ltd. Residential TWN $0.76 $166 10.3% $197 $178 NM NM NM 15.5x 12.1x 10.6x 1.1x
TerraVest Capital Inc. Residential & Commercial CAN $6.61 $136 13.8% $121 $154 4.3x 5.1x 9.3x 5.2x 5.2x 8.2x 1.1x
Winix Inc. Residential KOR $7.49 $196 1.2% $115 $167 7.3x 11.3x 9.9x NM NM NM 0.9x
Mean 7.3x 8.4x 8.9x 9.0x 7.8x 8.0x 0.8x
Median 7.3x 8.8x 9.3x 6.4x 6.1x 8.2x 0.8x
EBITDA
Margin
Mkt. Cap
US$ MM
Enterprise
Value
Annual Avg. EV / EBITDA 1/16/2017Revenue
US$ MMCompany End Market(s) Country
Price
1/16/2017
2012 2013 2014 2015 2016EV /
EBITDA
EV /
Sales
A. O. Smith Corporation Residential & Commercial USA $48.46 $2,627 19.7% $8,428 $8,085 10.3x 12.9x 13.1x 15.4x 14.5x 15.6x 3.1x
AAON, Inc. Residential, Commercial, & Industrial USA $32.90 $390 24.2% $1,736 $1,694 11.8x 13.5x 14.6x 14.5x 16.0x 17.9x 4.3x
AB Electrolux (publ) Residential & Commercial SWE $25.15 $14,092 8.0% $7,245 $7,117 8.0x 7.7x 8.5x 9.6x 7.3x 6.6x 0.5x
Alfa Laval AB (publ) Residential, Commercial, & Industrial SWE $17.57 $4,264 17.4% $7,370 $8,752 10.1x 12.5x 14.2x 11.4x 9.8x 12.2x 2.1x
Arçelik Anonim Sirketi Residential TUR $5.47 $5,214 10.8% $3,694 $4,364 8.8x 10.6x 10.0x 10.6x 10.3x 9.5x 1.0x
Comfort Systems USA, Inc. Commerical & Industrial USA $33.80 $1,626 7.7% $1,248 $1,250 11.6x 11.1x 9.7x 11.7x 9.6x 10.0x 0.8x
Daikin Industries,Ltd. Residential, Commercial, & Industrial JPN $97.52 $19,845 15.8% $28,501 $31,110 6.7x 12.0x 10.1x 10.3x 9.8x 11.3x 1.8x
De'Longhi S.p.A. Residential & Commercial ITA $24.60 $2,055 15.8% $3,678 $3,521 5.9x 8.7x 10.1x 12.3x 10.9x 11.5x 1.8x
Gree Electric Appliances, Inc. of Zhuhai Residential & Commercial CHN $3.45 $14,792 12.4% $20,740 $8,290 8.0x 5.8x 3.3x 4.5x 4.0x 4.7x 0.6x
Guangdong Homa Appliances Co., Ltd. Residential CHN $9.12 $733 11.6% $1,508 $1,407 8.2x 10.1x 10.6x NM NM NM 2.0x
Ingersoll-Rand Plc Residential, Commercial, & Industrial IRL $77.27 $13,476 14.4% $19,961 $22,594 8.3x 10.7x 12.0x 11.5x 10.7x 11.7x 1.7x
Johnson Controls International plc Residential, Commercial, & Industrial IRL $43.66 $37,674 9.3% $40,857 $57,732 8.4x 10.5x 9.1x 10.2x 11.0x 14.3x 1.5x
Lennox International Inc. Residential, Commercial, & Industrial USA $149.38 $3,579 13.8% $6,430 $7,439 10.8x 12.7x 12.8x 15.0x 15.3x 14.6x 2.1x
LG Electronics Inc. Residential, Commercial, & Industrial KOR $44.78 $50,146 6.4% $7,659 $13,402 13.5x 8.5x 6.2x 4.4x 5.1x 5.1x 0.3x
Manitowoc Foodservice, Inc. Commerical USA $19.35 $1,470 17.6% $2,680 $3,956 NM NM NM NM 13.3x 15.3x 2.7x
Midea Group Co., Ltd. Residential & Commercial CHN $4.09 $21,510 12.0% $26,304 $25,522 NM 8.2x 6.7x 8.9x 9.1x 10.2x 1.2x
Mitsubishi Electric Corporation Residential, Commercial, & Industrial JPN $14.18 $42,492 10.2% $30,440 $29,377 4.9x 9.2x 8.3x 6.0x 5.6x 7.3x 0.8x
Mueller Industries, Inc. Residential, Commercial, & Industrial USA $39.50 $2,055 8.9% $2,266 $2,244 9.0x 10.1x 10.1x 10.2x 10.4x 12.0x 1.1x
Polypipe Group plc Residential & Commercial GBR $4.08 $539 21.0% $809 $1,048 NM NM 10.5x 10.9x 10.1x 10.1x 2.1x
Qingdao Haier Co., Ltd. Residential CHN $1.46 $15,454 6.0% $8,907 $12,121 4.6x 4.5x 5.1x 7.9x 9.6x 13.6x 0.8x
Siemens Limited Residential, Commercial, & Industrial IND $17.27 $1,460 11.3% $6,149 $5,634 21.7x NM NM NM NM NM 3.9x
United Technologies Corporation Residential, Commercial, & Industrial USA $110.22 $56,885 17.9% $90,756 $108,206 8.5x 10.7x 10.5x 9.5x 9.8x 10.4x 1.9x
Vatti Corporation Limited Residential CHN $3.59 $630 8.1% $1,307 $1,207 9.2x 11.4x 11.9x 17.0x NM NM 2.0x
Watsco, Inc. Residential & Commercial USA $150.45 $4,211 8.6% $4,900 $5,352 12.1x 13.0x 12.5x 13.5x 13.8x 14.8x 1.3x
Whirlpool Corporation Residential USA $184.77 $20,622 10.6% $13,878 $19,205 5.1x 7.0x 6.9x 9.3x 8.3x 8.8x 0.9x
Mean 9.9x 9.5x 9.2x 10.3x 10.0x 11.2x 1.7x
Median 9.1x 9.7x 10.1x 9.5x 9.8x 11.4x 1.7x
EBITDA
Margin
Mkt. Cap
US$ MM
Enterprise
Value
Annual Avg. EV / EBITDA 1/16/2017Revenue
US$ MMCompany End Market(s) Country
Price
1/16/2017
NM = Not Meaningful
Public Comparable Companies – Enterprise Value > $1 Billion
Public Comparable Companies – Enterprise Value < $1 Billion
3Business InsightsJanuary 2017
NM = Not Meaningful
Nov-16 Kwikot Limited ZAFWater heating systems, solar collector panels, heat pumps, control valves,
water tanks, water purification filters, sinks, bowls, and other appliancesResidential & Commercial AB Electrolux (publ) $229 - 2.8x
Nov-16 PVI Industries, LLC USA Water heaters, hot water storage tanks, and water heater controls Residential & Commercial Watts Regulator Company $78 11.0x 1.6x
Aug-16 Nortek Inc. - 93% USARange hoods, exhaust fans, air exchangers, ventilators, central vacuum
systems, rooftop cooling and heating systems, and othersResidential, Commercial, & Industrial Melrose Industries PLC $2,673 9.9x 1.1x
Jul-16 LSB Industries (climate control business) USA Water source and geothermal heat pumps, and air handling products Residential & Commercial NIBE Industrier AB $364 11.4x 1.3x
Jun-16 United Refrigeration Industries Pvt. Limited PAKRefrigerators, freezers, air conditioners, washing machines, microwave
ovens, and related parts and accessoriesResidential Arçelik Anonim Sirketi $243 5.4x 1.1x
Jun-16 Haier US Appliance Solutions, Inc. USA Refrigerators, air conditioners, water heaters, and other home appliances Residential Qingdao Haier Co., Ltd. $5,400 10.0x -
May-16 Aupu Group Holding Company Limited - 45% CHNVentilation fans, water heaters, integrated ceiling solutions, downdraft range
hoods, and kitchen cabinetsResidential Crista Universal Company Limited $163 8.0x 2.0x
May-16 Service Experts LLC USA HVAC and plumbing equipment and services Residential & Commercial EnerCare Solutions Inc. $341 - 0.8x
Apr-16 Flanders Holdings LLC USAAir filters for industrial cleanrooms, such as those in the fields of
pharmaceuticals and food processing, and commercial and residential useResidential, Commercial, & Industrial American Air Filter Company, Inc. $430 - 1.4x
Mar-16 Talsar S.A. ARG Water heater production and distribution under the Señorial brand Residential Grupo Rotoplas, S.A.B. de C.V. $36 5.2x 1.8x
Dec-15 Elster Group SE DEU Heating systems and gas, water, and electricity meters Residential, Commercial, & Industrial Honeywell International Inc. $6,187 14.3x 3.1x
Dec-15 CEM S.A., Prior to Merger with Rheem Chile SpA CHLAutomatic water heaters, forced draft heaters, thermo-electric ponds, solar
systems, and dishwashersResidential Rheem Chile SpA (nka:CEM S.A.) $70 12.8x 2.2x
Oct-15Hitachi Appliances, Inc., Global Air Conditioning
Business - 60%USA
Refrigerant flow systems, residential air-conditioning solutions, chillers, and
rotary and scroll compressors Residential, Commercial, & Industrial
Johnson Controls Inc. (nka:Johnson Controls
International plc)$2,500 - 1.6x
Sep-15 Tecumseh Products Company USAHermetic compressors and condensing units for refrigeration and air
conditioning applicationsResidential & Commercial
Atlas Holdings LLC; DENO Investment Company
II, Inc.$127 6.5x 0.2x
Aug-15 Nuaire Limited GBRFans, ventilation systems, heat recovery systems, multi-point extract
systems, controls and ancillaries, and air handling unitsResidential, Commercial, & Industrial Polypipe Group plc $227 11.3x 2.3x
Jun-15 Purafil, Inc. and Kaydon Custom Filtration Corporation USA Air and chemical filtration systems, and liquid separation solutions Residential, Commercial, & Industrial Filtration Group Corporation $95 - 2.4x
Feb-15 Brivis Climate Systems Pty Ltd AUSHeating systems, air conditioning systems, ducted reverse-cycle inverters,
hi-wall inverter split systems, and combination climate systemsResidential Rinnai Australia Pty. Ltd. $38 - 0.8x
Jan-15Compagnie Industrielle d'Applications Thermiques SA -
46%FRA
Water chillers, heat pumps, precision air conditioning units, ventilation and
extraction fans, air heaters, and othersResidential, Commercial, & Industrial UTC Building & Industrial Systems, Inc. $140 - 0.6x
Dec-14 AERCO International, Inc. USABoilers, water heaters, energy recovery systems, venting systems, and
related accessoriesResidential, Commercial, & Industrial Watts Regulator Company $265 - 2.7x
Oct-14 Quinn Radiators Limited GBRPanel radiators, including round-top, compact, and low-surface temperature
radiators; towel radiators; and design radiatorsResidential RHP Bidco Limited $32 - 0.4x
Jun-14 Air Distribution Technologies, Inc. USA Air distribution, ventilation, movement, and control solutions Residential, Commercial, & IndustrialJohnson Controls Inc. (nka:Johnson Controls
International plc)$1,600 13.3x 1.7x
Feb-14 Gestion Jerico Inc. CANCommercial tanks and dispensers for oil and gas industry; residential tanks,
furnaces, boilers, and other HVAC productsResidential & Commercial TerraVest Capital Inc. $51 5.7x 1.0x
Sep-13 GD Midea Holding Co., Ltd. - 59% CHNHeating systems, ventilation and air-conditioning systems, compressors,
refrigerators, washing machines, and other appliances Residential & Commercial Midea Group Co., Ltd. $7,438 7.3x 0.7x
Mean 9.4x 1.5x
Median 9.9x 1.5x
Description BuyerSize
(US$MM)
EV/
EBITDA
EV/
Rev.End Market(s)Date Target Country
Nov-16 Luvata Heat Transfer Solutions Business USAHeat exchanger coils, commercial refrigerators, and industrial coolers,
complemented by anti-corrosion coating solutionsCommercial & Industrial Modine Manufacturing Company $424 7.2x 0.8x
Aug-16 MAHLE GmbH, Industrial Filtration Business DEUIndustrial filtration solutions for three primary segments: internal combustion
engine, air filtration, and fluid filtrationCommercial & Industrial Filtration Group Corporation $58 - 0.3x
Jul-16 SPIG S.p.A. ITACooling towers, condensers, heat exchangers, pumps, pipes, filters, and
dosing and auxiliary equipmentCommercial & Industrial Babcock & Wilcox Enterprises, Inc. $173 9.7x 0.9x
May-16 Follett Corporation USAIce storage bins, transport systems, and dispensers; medical-grade
refrigerators and freezers for the foodservice and healthcare industriesCommercial & Industrial The Middleby Corporation $209 - 1.5x
May-16 Thermal Dynamics International Corporation USA Heat exchangers, radiators, and charge air cooling products Commercial & Industrial Zhejiang Yinlun Machinery Co.,Ltd. $57 9.9x 1.1x
Apr-16 Hussmann Corporation USADisplay cases, refrigeration systems, LED lighting, glass doors and lids,
walk-in products, and digital shopper engagement platform Commercial & Industrial Panasonic Corporation of North America, Inc. $1,545 - 1.4x
Dec-15 Kysor Panel Systems, inc. USA Coolers, freezers, and insulated panel and refrigeration systems Commercial & Industrial D Cubed Group, LLC $85 - 0.7x
Mar-15 FRIGOBLOCK Grosskopf GmbH DEURefrigeration machines, evaporators, compartment technology products,
and alternator systemsCommercial & Industrial Ingersoll-Rand Plc $111 - 2.4x
Oct-14 Eclipse, Inc. USABurners, heat exchangers, shutoff and control valves, process measurement
and control solutions, and related accessoriesCommercial & Industrial Elster Group SE $158 - 1.3x
Jul-14 Sabiana S.p.a. - 90% ITAHeaters, radiant heating panels, air handling units, fan converters, water
chillers, and other appliancesCommercial & Industrial AFG Arbonia-Forster-Group AG (nka:Arbonia AG) $121 - 1.4x
Mean 8.9x 1.2x
Median 9.7x 1.2x
End Market(s) BuyerSize
(US$MM)
EV/
EBITDA
EV/
Rev.DescriptionDate Target Country
Recent M&A Transactions – Residential HVAC/R
*Announced; not yet closed
Recent M&A Transactions – Commercial & Industrial HVAC/R
*
*
*
*
*Announced; not yet closed
Sources: S&P Capital IQ, Mergermarket, Freedonia, MarketsandMarkets, Research Nester, Daikin Industries, Transparency Market Research, Research and Markets,
International Institute of Refrigeration
4Business InsightsJanuary 2017
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Representative Engagements
5Business InsightsJanuary 2017
Attending AHR Expo 2017
and interested in learning
more? Schedule a one-on-one
session with one of our
industry professionals.
Please contact Mike Hong at:
(571) 482-3436
Since 1999, Seale & Associates has been the trusted advisor to highly
respected public and private companies from around the world, with a
track record of success in a diverse range of industries. Seale is an elite
boutique global investment banking firm with extensive experience in
mergers and acquisitions (M&A), corporate finance advisory, and
enterprise level strategy consulting. Our experienced team of
professionals are committed to serving clients with excellence and
integrity, while offering innovative ideas and solutions to address
complex dealings. All securities related transactions are cleared through
Seale Capital, Inc., a registered broker dealer and member of FINRA
and SIPC.
Leadership Team
James A. Seale
Founder and President
Brett M. Carmel
Managing Director
Felipe Bueno Viesca
Managing Director
Sergio Garcia del Bosque
Managing Director
Adrian E. Llerena
Managing Director
Robert E. Whitney
Managing Director
www.sealeassociates.com
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Suite 950
Arlington, Virginia 22203
Phone: +1 (703) 294 6770
Robert Whitney
Managing Director
O: +1 (703) 294-6490
M: +1 (703) 801-8939
FOR MORE INFORMATION, PLEASE CONTACT:
Tom Clancy
Vice President
O: +1 (571) 482-3433
M: +1 (215) 869-0902
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