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HEATING, VENTILATION, AIR
CONDITIONING AND REFRIGERATION
OCTOBER
2018INDUSTRY REPORT
The HVAC/R industry (heating, ventilation, air conditioning and refrigeration) consists of a
central heating unit, force or displacement ventilation, and air conditioning equipment that is
meant to provide suitable indoor air quality environment in buildings, commercial places, or
residential houses, in addition to the thermal comfort
▪ The industry is under constant regulation in terms of energy efficiency and emission of pollutants
▪ The industry is closely linked to the construction industry and its risks that both industries share:
bad weather, delays, increased costs, etc.
At the global level, the HVAC/R equipment industry presented a size of US$115 billion during
2017 and a Compound Annual Growth Rate (CAGR 2013-2022) of 6.20% is expected.
Sources: Freedonia Group, Business Wire, ResearchMoz,
Transparency Market ResearchSeale & Associates
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Crecimiento de la Industria de Equipo HVAC/R
US$ Billion
GLOBAL HVAC/R INDUSTRY
HVAC/R Global 2018
ForecastHistorical$96$102
$108$115
$122$129
$138$146
$155
2014 2015 2016 2017 2018 2019 2020 2021 2022
Growth of ConstructionIndustry
US$ Billion
ForecastHistorical
0
1
2
3
4
5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2016 2017 2018 2019 2020 2021 2022
Value of the Construction Industry US$mm
Growth % y-o-y
Sources: BSRIA, Transparecy Market Research Seale & AssociatesCreative Solutions. Trusted Advice.
HVAC/R Global 2018
Air Conditioning Demand by Region 2017
The industry is very concentrated in a few players such as Lennox International, Carrier
Corporation, Haier, Daikin, Johnson Controls, etc.
▪ The Asia-Pacific region has approximately 50% market share
▪ Japan, the United States and Western Europe will have the slowest growth in the industry, these
areas already have an installed base of HVAC/R equipment that will generate the need for
maintenance and replacements
The heating equipment consists of: heat pumps, unit heaters, furnaces and boilers; the air
conditioning equipment is divided into equipment for rooms, unit equipment and coolers; of
ventilation is divided into fans / air pumps and in humidifiers / dehumidifiers
▪ During 2017, the volume of sales of heat pumps registered a growth of 32%, which is equivalent
to 4.5 million more units compared to 2016
▪ By the end of 2018, it is estimated that global sales of air conditioning will reach 137 million units,
equivalent to just over US$102 billion
CAGR 2016-2022
10 Main HVAC Markets by Volume
GLOBAL HVAC/R INDUSTRY
-1 1 3 5 7 9
Thailand
Indonesia
Japan
South Korea
Brazil
USA
China
Vietnam
Russia
India
41.6%
8.8%15.6%
4.6%
5.9%
13.9%
6.1%
2.3% 1.2%
China Japan
Asia (ex. Jpn y Chn) Middle East
Europe North America
Latin America Africa
Oceania
Sources: GineersNow
• Energy Efficiency: The HVAC/R industry seeks to optimize the efficiency of heating and cooling
systems, with methods and technology to reduce heat loss.
• A smarter industry: Sales processes and customer services are being automated, reducing
company costs; as well as the use of mobile applications connected with HVACR devices
• Intelligent thermostats: These are connected to the WIFI and it is easier to control the
temperature increasing the efficiency
• Data-driven decisions: New technologies allow better adaptation of HVACR systems to the needs
of customers and more extreme climates
• Heating and cooling by zones: Both the heating and the air conditioning systems work separating
certain location by "zones", having greater control of the temperature
• Sustainable and environmentally friendly HVAC / R systems: Less energy use and also keep the
air clean
INDUSTRY TRENDS
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HVAC/R Global 2018
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CURRENT MARKET SITUATIONCOMPARABLE PUBLIC COMPANIES - GLOBAL
Sources: Capital IQ, MergermarketHVAC/R Global 2018
Price
18-09-18 2015 2016 2017EV /
EBITDA
EV /
Revenue
Johnson Controls International plc IRL $37.11 $31,166 15.7% $34,324 $47,264 10.2x 10.6x 11.5x 9.2x 1.5x
Daikin Industries,Ltd. JPN $134.62 $21,298 15.2% $39,370 $41,286 10.3x 9.8x 11.4x 12.8x 2.0x
Ingersoll-Rand Plc IRL $103.41 $15,031 14.6% $25,367 $28,773 11.5x 10.7x 12.6x 13.1x 1.9x
Sandvik AB SWE $17.16 $10,650 22.5% $21,523 $23,690 11.0x 10.9x 11.9x 9.8x 2.2x
Alfa Laval AB (publ) SWE $26.26 $4,197 17.8% $11,015 $12,083 11.4x 9.8x 14.2x 16.1x 2.9x
Lennox International Inc. USA $223.49 $3,954 14.8% $8,997 $10,310 15.0x 15.3x 15.4x 17.1x 2.6x
A. O. Smith Corporation USA $59.32 $3,140 19.8% $10,120 $9,710 15.4x 14.5x 16.9x 15.6x 3.1x
Spirax-Sarco Engineering plc GBR $94.65 $1,475 25.4% $6,964 $7,456 14.0x 16.1x 19.0x NR NR
Toto Ltd. JPN $42.81 $5,351 12.5% $7,248 $6,820 10.4x 9.3x 10.7x 10.2x 1.3x
NIBE Industrier AB (publ) SWE $12.25 $2,258 15.3% $6,176 $6,993 17.7x 17.4x 17.3x 20.1x 3.1x
Aalberts Industries N.V. NED $42.48 $3,165 16.0% $4,697 $5,594 11.7x 10.9x 12.2x 11.0x 1.8x
IMI plc GBR $14.59 $2,398 18.0% $3,931 $4,521 10.0x 10.3x 12.6x 10.5x 1.9x
China Lesso Group Holdings
LimitedCHN $0.54 $3,298 15.8% $1,665 $3,325 6.0x 4.7x 5.8x 6.4x 1.0x
Reliance Worldwide Corporation
LimitedUSA $3.88 $569 19.6% $3,049 $3,328 0.0x 65.1x 60.5x NR NR
Valmet Oyj FIN $21.47 $3,918 8.1% $3,212 $3,220 10.5x 8.5x 9.8x 10.1x 0.8x
Watts Water Technologies, Inc. USA $82.00 $1,517 15.5% $2,799 $3,066 12.1x 17.5x 12.8x 13.0x 2.0x
Ebara Corporation JPN $34.36 $4,885 10.1% $3,495 $2,970 5.5x 5.3x 7.7x 5.9x 0.6x
BELIMO Holding AG SUI $4,961.30 $621 20.1% $3,050 $2,936 13.8x 17.3x 20.8x NR 4.6x
Chart Industries, Inc. USA $77.29 $1,146 12.1% $2,396 $2,762 5.9x 7.4x 14.6x 19.9x 2.4x
Franklin Electric Co., Inc. USA $51.05 $1,239 13.1% $2,385 $2,581 11.8x 12.8x 14.3x 15.9x 2.1x
AAON, Inc. USA $39.95 $426 18.0% $2,088 $2,064 14.5x 16.0x 19.7x NR 4.8x
Mueller Industries, Inc. USA $28.66 $2,377 8.4% $1,651 $2,002 10.2x 10.4x 11.1x 10.7x 0.8x
SPX Corporation USA $35.28 $1,467 6.3% $1,519 $1,926 8.8x 10.3x 15.2x NR 1.3x
NR: Not Relevant Mean 12.6x 2.1x
Median 11.9x 2.0x
Annual Average EV /
EBITDA18-09-18
Company CountrySales
US$M
EBITDA
Margin
Mkt. Cap.
US$M
Enterprise
Value
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CURRENT MARKET SITUATIONCOMPARABLE TRANSACTIONS - GLOBAL
Sources: Capital IQ, MergermarketHVAC/R Global 2018
Jul-18 ATCO Rubber Products, Inc. USA HVAC/R systems The Carlyle Group L.P. $163 - 1.0x
May-18 Carrier Commercial Refrigeration, Inc. USA Refrigeration equipment Middleby Marshall Inc. $1,000 15.4x 3.2x
May-18 John Guest Holdings Limited GBR Produces pipes Reliance Worldwide Corporation Limited $919 12.4x 4.1x
Mar-18Guangzhou Seagull Kitchen and Bath
Products Co., Ltd.CHN Plumbing
Shanghai Qiyu Information Technology
Co., Ltd.$18 15.0x 1.4x
Mar-18 Simx Limited NZL HVAC/R products Volution Group plc $52 - 2.0x
Oct-17 Much Asphalt (Pty) Limited RSA Equipment for the construction industry AECI Ltd $141 - 1.0x
Sep-17 William R Hague, Inc. USA Water treatment A. O. Smith Corporation $47 - 1.7x
Sep-17Integrated Cleanroom Technologies Pvt.,
Ltd.IND Installation of HVAC/R systems Takasago Thermal Engineering Co., Ltd. $20 - -
Mar-17Opimus Group Nyrt. (nka:OPUS GLOBAL
Nyrt.)HUN Heating accessories Konzum Private Equity $116 - 2.2x
Jul-16 Ontop B.V. NED Heating accessories Braas Monier Building Group S.A. $17 6.9x 0.7x
Jul-16 Nortek Inc. USA HVAC/R systems Melrose Industries PLC $2,673 9.9x 1.1x
Feb-16 FERRO S.A. POL installation of HVAC/R systems Palmyra Sp. z o.o. $88 9.2x 1.1x
Dec-15Beijing Shouhang Resources Saving
Co.,LtdCHN Cooling systems Undisclosed buyer $378 NR NR
Nov-15 J.A. Plastindustri A/S DEN Ventilation systems Braas Monier Building Group S.A. $22 - -
Aug-15 Lindab Inc. USA HVAC/R systems Ductmate Industries, Inc. $11 - 0.6x
Nov-14Mueller Primaflow Limited (nka:Primaflow
Limited)GBR Heating accessories The Carlyle Group L.P. $24 - 0.4x
Nov-14Guangzhou Seagull Kitchen and Bath
Products Co., Ltd.CHN Heating accessories Orient Securities CO $87 NR 1.9x
Jun-14 WaterFurnace Renewable Energy, Inc. USA HVAC/R systems NIBE Industrier AB (publ) $352 16.2x 2.8x
Mar-14 Lindab International AB SWE HVAC/R products Undisclosed buyer $102 11.2x 1.1x
NR: Not Relevant Mean 12.0x 1.6x
Median 11.8x 1.3x
Ç
BuyerSize
US$M
EV /
EBITDA
EV /
RevenueDate Target Country Description
Summary Target Buyer
On July 6, 2016, Melrose Industries PLC, English
electricity generation equipment company,
announced the acquisition of Nortek, Inc., HVAC
systems in the United States, for US$2,673 million
representing implied multiples of 9.9x EBITDA and
1.1x revenue
On May 18, 2018, Middleby Marshall Inc., a US
company of kilns for kitchens, announced the
acquisition of Carrier Commercial Refrigeration,
Inc., a refrigeration equipment company in the
United States, for US$1,000 million representing
implied multiples of 15.4x EBITDA and 3.2x revenue
On May 24, 2018, Reliance Worldwide
Corporation Ltd., plumbing solutions company in
the United States, announced the acquisition of
John Guest Holdings Ltd., British construction
materials company, for US$919 million
representing implied multiples of 12.4 x EBITDA
and 4.1x revenue
On December 4, 2015, an undisclosed buyer
announced the acquisition of Beijing Shouhang
Resources Saving, Chinese cooling systems
company, for US$378 million
On June 23, 2014, NIBE Industrier AB, Swedish
HVAC/R system company, announced the
acquisition of WaterFurnace Renewable Energy,
Inc., a US company of air conditioning systems, for
US$352 million representing implied multiples of
16.2x EBITDA and 2.8x sales
Sources: Capital IQ, Mergermarket Seale & AssociatesCreative Solutions. Trusted Advice.
CURRENT MARKET SITUATIONREPRESENTATIVE TRANSACTIONS - GLOBAL
HVAC/R Global 2018
Undisclosed
Buyer
GLOBAL REPRESENTATIVE TRANSACTION
BUYER
Nortek Inc. has its offices in O'Fallon,
Missouri and has an 80% penetration
of American homes
The transaction represented implied multiples
of 9.9x EBITDA and 1.1x revenue
Melrose Industries PLC acquired
92.8% stake of Nortek Inc.
TARGET
MELROSE INDUSTRIES PLC ANNOUNCED THE ACQUISITION OF
NORTEK INC. FOR US$2,673 MILLION
Melrose Industries PLC is
specialized in buying and
restructuring companies and
then selling them with a profit
90% OF ITS SALES ARE
IN THE US
+11,400 EMPLOYEES
FOUNDED IN 1967FOUNDED IN 2003
+11,000 EMPLOYEES
AVERAGE ANNUAL
RETURN OF 25%*
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Sources: Melrose, Capital IQ, Nortek
*Since first acquisition
Melrose Industries PLC paid US$86
per share to Nortek Inc.
HVAC/R Global 2018
REPRESENTATIVE MEXICO ENGAGEMENTS
Washington, D.C. | Mexico City | Monterrey
to
Holding company of
merged its
beverage division
with
has merged with
a business of
has partnered with
a subsidiary of
has sold
to
its sanitaryware business
and
a business unit of
has sold
Cosmocel Química
to
intelectiva®
has acquired
KFC Costa Rica
from
sold
to
sold
to
Grupo Galaz, S.A de C.V.
dealers of
has partnered with
workshop and store in
Mexico City from
Acquisition
Advisory
Services
Corporate
Finance
Advisory
Services
has formed a partnership in
the casting tools business
between
and
has acquired
has acquired
has been acquired by
has been acquired by
has acquired
has acquired
has acquired
has been acquired by
has been acquired by
merged its
beverage division
with
Acquisition
Advisory
Services
has carved out and sold
its concrete pumping
assets in Mexico
has formed a
partnership to market
and develop oil storage
and distribution in
Mexico with
Corporate
Finance
Advisory
Services
Corporate
Finance
Advisory
Services
acquired a 61% stake on
Acquisition
Advisory
Services
Corporate
Finance
Advisory
Services
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.
ADVISOR TO LEADING COMPANIES WORLDWIDE
CONTACT INFORMATION
950 N. Glebe RoadSuite 950Arlington, Virginia 22203Phone: +1 (703) 294 6770
37, Moliere GranadaMexico City, 11520Phone: +52 (55) 8000 7463
Please contact us if you would like further information about M&A trends and/or specific transaction multiples for your industry.
Washington, D.C. | Mexico City | Monterrey
Mexico ContactInformation
Established presence in
Monterrey , Mexico
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Senior Managing Director
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Managing Director
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Vice President
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Associate
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Business Development
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