Michael F. Ciarmoli, Equity Research Analyst at KeyBanc Capital Markets Inc., Interviews with The Wall Street Transcript: Commercial Aerospace Continues Improving Fundamentals as Defense Faces Sequestration

Wall Street Transcript

67 WALL STREET, New York - May 28, 2013 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Commercial Aviation and Energy Expenditures - Industrial Restructuring - Emerging Markets Penetration - Heightened M&A Activity - Defense Budget Uncertainty - Capital Equipment Technology Investing

Companies include: Boeing Co. (BA), Lockheed Martin Corporation (LMT), BE Aerospace Inc. (BEAV), Triumph Group Inc. (TGI), Rockwell Collins Inc. (COL), Spirit AeroSystems Holdings In (SPR), Precision Castparts Corp. (PCP), TransDigm Group Incorporated (TDG), Alliant Techsystems Inc. (ATK), Orbital Sciences Corp. (ORB) and many more.

In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Are you expecting M&A activity in the commercial aerospace space?

Mr. Ciarmoli: We are, and we have been seeing elevated M&A there as well. Companies like Precision Castparts, TransDigm (TDG), Triumph Group have all been pretty active. It still is very much a seller's market.

Again, going back to the end-market drivers, the health of the market is very good, so the prices that are being asked tend to be pretty rich, in the 10- to 12-times EBITDA range. That is causing some hesitation for some potential acquirers out there, but overall we do expect to see continued consolidation in this market. I think that trend will continue.

In terms of opportunities for investors, probably not too many U.S. publicly traded companies would be out there on the hit list. I get the sense it's going to be a lot of smaller, private companies or international companies that would be the targets of consolidation.

TWST: Did anything in particular stand out for you from the most recent quarterly earnings calls; any particular themes or a tone among management comments?

Mr. Ciarmoli: There are a couple of big trends in commercial aerospace centered upon bullish optimism toward production, and what I will call some hesitation on the aftermarket side. We discussed earlier the bullish optimism on OE production, but there are some underlying trends that are getting talked about that are really having an impact on aftermarket and OE production.

The big theme rests on the aging of the global air transport fleet. We are starting to see aircraft retirements elevate to levels that we've never seen before, and what we are seeing occur is a lot of the aircraft that were delivered in the 1980s and 1990s...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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