Back To Resources
    Subscribe to PCE Communications
    Choose Your Subscription

    Diversified Industrials Q1 2020

    Q1 2020 Diversified Industrials

    Industry Trends

    U.S. Mask and Respirator Manufacturers Fill The Void After Disruption in Global Imports, High Demand From Hospitals

    Medical protective gear and N95 respirator makers are producing several times above capacity to meet the U.S. shortage for medical supplies due to coronavirus pandemic. Prestige Ameritech has ramped up production by 300% or 1 million masks a day. 3M has been manufacturing N95 masks since January yet still unable to meet hospital demands. The shortage comes amid a disruption in the global supply chain, where 95% of surgical masks and 70% of respirators used in the U.S. come from overseas – China being the largest producer.1

    Ford Producing Protective Respirators for Healthcare Workers

    Starting April 14th, the auto manufacture will begin producing air-purifying respirators at a plant in Detroit to assist in protecting healthcare workers. The respirators will be made by roughly 90 paid volunteers from their United Auto Workers Union. Ford will work with 3M to distribute the Respirators in the U.S. with a goal of producing 100,000 units.2

    U.S. Industrial Production Collapses in March

    U.S. industrial production dropped 5.4%  in March. Manufacturing production decline of 6.3% was lead by the shut down of auto production. The declines are the worst since 1946 and much larger than anticipated. Factories are running at 70.2% of capacity, the lowest level since 2010. The impacts from COVID-19 are not over yet and economists predict the industrial production index could drop a total of 15.3

    Automakers Halt Production

    Auto manufacturers unify in their decision to close plants due to COVID-19 as concerns for their employees’ welfare grow. General Motors, Ford Motors, Fiat Chrysler, Honda, Toyota, and Nissan all halted production in their North American and European plants. Honda and Fiat Chrysler aim to restart production in May. These closures will have huge impacts on producers of parts and components utilized by the auto industry.4 5

    Huge Need of Toilet Paper and Sanitizing Products, Leaves Atlanta, Georgia Company Struggling to Meet Demand

    Georgia-Pacific, an Atlanta-based paper products company that owns Angel Soft and Quilted Northern brands, has ramped up production to meet unprecedented demands from stores. The company has 14 facilities in 11 states. Georgia-Pacific recently shipped products 120% above normal capacity in response to a 100% and 900% increased demand for toilet paper and sanitizing products, respectively.6

    Illinois Lawmakers Propose Bills to Tax and Limit Plastic Use, Incentivize Recycling

    On February 17, a group of Illinois lawmakers proposed several bills to tax or limit single-use plastics in the state. House Bill 5169 will ban polystyrene foam by 2022. House Bill 3335 will tax each bag $0.10, excluding cities with 1 million people. House Bill 5552 will allow Illinois to have a container deposit program – glass or metal beverage containers can be refunded for $0.05 by businesses and redemption centers.7

    Potential Painful 2020 Ahead Due to Low Oil Prices

    Low oil prices are hurting more than oil companies. Many industrial companies generate revenues (approximately 10-20%) from the energy sector. The hit currently experienced by the oil companies will impact several companies that provide valves, seals, components, and other goods. Companies potentially impacted include, Flowserve, Ingersoll-Rand, Honeywell International and Rockwell Automation. Ironically, some companies that could have benefited from low input costs for their goods are now being impacted negatively as the demand for their goods has been eliminated due to COVID-19 (e.g. airlines).8

    High Demand and Low Supply in Niche Raw Metals, Causing Prices to Rise

    Niche raw materials used from electricity, fertilizer to steel production saw high demand after supply chain disruption in Chinese production and logistics. January 1 to February 11, manganese, ferrovanadium, ferromolybdenum and thermal coal prices rose by 26.1%, 25.7%, 10.4% and 3.8%, respectively. The supply squeeze was a result of a shortage of workers and logistical breakdown in trucking prior to exportation of goods.9

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Industrial Segment Business of Ingersoll-Rand plc
    • Ingersoll Rand, Inc.
    • $8,735.50
    • Aircastle Limited
    • Marubeni Corporation; Mizuho Leasing Company, Limited
    • $6,916.28
    • Three Sawmills of Conifex Timber, Inc.
    • Resolute FP US Inc.
    • $176.00
    • Non-Core Instrumentation and Sampling Buisness of CIRCOR International, Inc.
    • Crane Co.
    • $172.00
    • 630,000 acres of Timberland in Montana
    • Southern Pine Plantations
    • $145.00
    • Flow Management Devices LLC
    • IDEX Corporation
    • $125.00
    • Evoqua Water Technologies Membrane Systems Pty Ltd & MEMCOR Product Line
    • DuPont de Nemours, Inc.
    • $110.00
    • Spartan Motors USA, Inc.
    • REV Group, Inc.
    • $55.00
    • All Assets of Delta Separations, LLC & All Assets of Teaching Tech, LLC
    • Gibraltar Industries, Inc.
    • $50.00
    • Substantially All Operating Assets of Nortech Packaging
    • Intertape Polymer Group
    • $36.50

     

    Source S&P Capital IQ as of 4/13/2020 and PCE Proprietary Data

    New call-to-action

    Contacts

    Michael Poole

    Michael Poole

    Orlando Office

    407-621-2112

    Contact Me Now
    Michael Rosendahl

    Michael Rosendahl

    New York Office

    201-444-6280 Ext 1

    Contact Me Now

    Data Assumptions

    This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

    Glossary

    EBIT - Earnings Before Interest and Taxes
    EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
    LTM - Last Twelve Months
    TEV - Total Enterprise Value

    Sources:

    1. Martineau, Paris, “The ‘Surreal’ Frenzy Inside the US’ Biggest Mask Maker,” WIRED, Mar. 16, 2020.
    2. Wayland, Michael “Ford to begin producing respirators for healthcare workers at Michigan Plant,” CNBC.com, April 13, 2020.
    3. The Associated Press, “Factory Shutdowns Near WWII Demobilization Levels in U.S.,”  The New York Times, April 15, 2020.
    4. Boudette, Neal, “Automakers to Close Factories in North America,” The New York Times, Mar. 18, 2020.
    5. Shepardson, David, “Honda, Fiat Chrysler aim to restart US, Canada auto production in May,” Reuters, April 6, 2020.
    6. Yu, Janice, “Georgia-Pacific Working to Keep Up with Toilet Paper Demand,” Fox5 Atlanta, Mar. 18, 2020.
    7. Orner, Ben, “Lawmakers Take Aim at Plastic Pollution with Package,“ Capitol News Illinois, Feb. 18, 2020.
    8. Root, Al, “Oil Is Plummeting. Here Are Industrial Companies That Could Take A Hit – and a Couple That Could Benefit,” Barron’s , March 9, 2020.
    9. Wallace, Joe, “Coronavirus Spurs Demand for Niche Raw Materials,” Wall Street Journal, Feb. 12, 2020.

    Please Share This

    PCE logo

    PCE Investment Bankers, Inc. - member FINRA & SIPC
    PCE Valuations, LLC    |    PCE Advisory, LLC

    SITE MAP

    OFFICES

    [PCE was] completely responsive to our needs and [was] always two steps ahead, leading us expertly through a very complicated process. - Dennis Buhring, Physician Associates

    Copyright © 2023 PCE Companies | Business Continuity | Privacy Policy | FINRA BrokerCheck | Whitelist PCE