Injection Molding Industry Update March 2019

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Valuations Remain Elevated as Industry Cycle Reaches Late Innings

 

EXECUTIVE SUMMARY

  • Public injection molding companies are currently trading at 8.7x EBITDA , up 61.1% from the most recent cycle trough of 5.4x in early 2016, and higher than the historical median
  • Innovative advancements like micro injection and eco-materials are expected to continue to shape the injection molding industry throughout 2019
  • Strong 2019 predictions and capital expenditure projections as technology drives opportunities and continued positive trends for the US injection molding industry
  • Injection molding companies with niche capabilities or customer bases are garnering premium valuations – cycle is late in its bull run

 

BIG PICTURE

  • Manufacturing valuations vary across specialties but injection molding companies are favorably priced with median public multiples at 8.7x EBITDA
  • Growth in injection molding is tightly connected to the growth of end-market industries such as packaging, automotive and construction
  • Environmental considerations could be drivers of change and firms must adapt quickly to remain competitive
  • Bridgepoint Investment Banking advises injection molding company owners seeking liquidity or growth financing that timing continues to be attractive to consider exploring monetization, financing and other capital options

 

 

 

KEY BUSINESS CONSIDERATIONS

  • Increased Production of Durable Goods (incl. Plastics) Driving Industrial Growth As Signaled by Job Growth
    • Growth in the plastic injection molding sector is expected to be elevated over the near term – driving high valuations
  • Manufacturers Are Turning to Niche Verticals to Retain Competitive Control

    • Private Equity Firms with record amounts of capital are targeting companies leading in unique verticals and increasing valuations from financial buyers
  • Demand for Industrial Plastics used In Automotive and Aerospace is high with a 14,000+ commercial aircraft backlog

    • Firms that leverage supply chain efficiencies and produce molds that were once infeasible will become more defensible with price control
  • Innovation in Injection Molding is Rapid and Companies Will Need to Continually Rethink Their Manufacturing Processes

    • Fluctuating raw material prices in addition to growing environmental concerns regarding disposal, could potentially hinder future market growth
  • Injection Molding Growth at 6.0% CAGR through the Forecast Period (2025)

    • Tailwinds favorable to plastics, such as an increase in the production of durable goods, are leading to high cash flow projections and elevated valuations

 

Contact Bridgepoint for more information on Industrials trends. 

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