Metaldyne Performance Group (MPG) is a leading provider of highly-engineered components for use in Powertrain and Safety-Critical Platforms for the global light, commercial and industrial vehicle markets. It is headquartered in Plymouth, MI.
Nine other companies are scheduled for the week of Dec. 8, 2014. The full IPO calendar is available at IPOpremium.
Manager, Joint-managers: BofA Merrill Lynch, Goldman Sachs, Deutsche Bank Securities
Co-managers: Barclays, Credit Suisse, RBC Capital Markets, Baird, KeyBanc Capital Markets/ Nomura
End of lockup (180 days): Wednesday, June 10, 2015
End of 40-day quiet period: Wednesday, January 21, 2015
MPG scheduled a $300 million IPO with a market capitalization of $1.3 billion at a price range midpoint of $19.50 for Friday, Dec. 12, 2014 on NYSE. SEC Documents
Metaldyne Performance Group IPO Report
Overview
MPG is a leading provider of highly-engineered components for use in Powertrain and Safety-Critical Platforms for the global light, commercial and industrial vehicle markets.
MPG produces these components using complex metal-forming manufacturing technologies and processes for a global customer base of vehicle OEMs and Tier I suppliers.
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Valuation Valuation Ratios |
Mrkt Cap (mm) |
Price /Sls |
Price /Erngs |
Price /BkVlue |
Price /TanBV |
% offered in IPO |
|
annualizing Sept 9 mos |
||||||
|
Metaldyne Performance Group (MPG) |
$1,307 |
0.4 |
10.5 |
2.6 |
-1.1 |
23% |
Conclusion
Neutral
100% to selling shareholder
Revenue +4%; 16% gross profit
10.5 P/E; .4 price-to-sales
-1.1 price-to-tangible book
Net income +73% (preparing for IPO), growth can't be sustained
.46% dividend rate, too low to be meaningful
Business
MPG is a leading provider of highly-engineered components for use in Powertrain and Safety-Critical Platforms for the global light, commercial and industrial vehicle markets.
MPG produces these components using complex metal-forming manufacturing technologies and processes for a global customer base of vehicle OEMs and Tier I suppliers.
MPG’s components help OEMs meet fuel economy, performance and safety standards. Given these increasingly stringent standards, components for Powertrain and Safety-Critical Platforms are among the largest and fastest growing dollar content categories within a vehicle.
At least one of MPG’s components was found in approximately 90% of the 16.2 million light vehicles built in North America during 2013.
Furthermore, MPG’s components were found on over 60% of the top 20 engine and transmission Platform total units produced in North America and Europe during 2013.
MPG’s metal-forming manufacturing technologies and processes include Aluminum Die Casting, Forging, Iron Casting and Powder Metal Forming as well as Advanced Machining and Assembly.
These technologies and processes are used to create a wide range of customized Powertrain and Safety-Critical components that address requirements for power density (increased component strength to weight ratio), power generation, power / torque transfer, strength and NVH.
For 2013, MPG generated on a pro forma basis:
Net sales of $3.05 billion;
Adjusted EBITDA of $508.8 million, or 17% of net sales;
Net income of $66.5 million; and
Adjusted EBITDA less capital expenditures, which MPG refers to as Adjusted Free Cash Flow, of $347.1 million.
MPG’s net sales, Adjusted EBITDA, net income and Adjusted Free Cash Flow were $2.0 billion, $363.1 million, $57.9 million and $240.8 million, respectively, for 2013.
Intellectual property
MPG pursues patents where specific technology or innovation is well positioned for protection under intellectual property laws.
While no individual patent or group of patents, taken alone, is considered material to MPG’s business, taken in the aggregate, these patents provide meaningful protection for its products and product innovations.
As of September 28, 2014, MPG held approximately 130 issued patents in the United States and foreign jurisdictions and continually make determinations as to whether a product or process is best protected through a patent application or other means.
Competition
The following table illustrates MPG’s primary competitors for its manufacturing technologies and value-added processes:
Portfolio of Manufacturing Technologies and
Value-Added Processes: Primary Competitors:
Advanced Machining and Assembly BorgWarner, GKN, Linamar and Magna
Aluminum Die Casting Aisin, Dongnam Precision and Ryobi
Cold and Warm Forging American Axle, Hirshvogel and Sona BLW
Hot Forging American Axle, Amtek and Hirshvogel
Iron Casting Metal Technologies, Inc., Neenah Enterprises and Waupaca
Powder Metal Forming BorgWarner, GKN and Mahle
Rubber and Viscous Dampening Assemblies Knorr Bremse, Vibracoustic and Winkelmann
5% shareholders pre-IPO
ASP MD Investco LP 95.8%
Dividends
MPG expects to pay a quarterly cash dividend on its common stock of $0.09 per share, or $25.0 million per annum, commencing in the first quarter of 2015, which is .46% at the price range mid-point of $19.50.
MPG will evaluate future quarterly dividend payment amounts based on its cash flow and liquidity position. The payment, including timing and amount, of such quarterly dividends and any future dividends will be at the discretion of MPG’s board of directors.
Use of proceeds
All of the shares of common stock offered are being sold by the selling stockholder. The selling stockholder in this offering is an affiliate of American Securities. MPG will not receive any of the proceeds from the sale of shares by the selling stockholder in this offering.
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