Proskauer IPO Database
2016: Six IPOs (9% of 2016)
2015: 10 IPOs (11% of 2015)
2014: 14 IPOs (12% of 2014)
2013: 10 IPOs (10% of 2013)
Total: 40 Industrials IPOs

IPOs in this sector represented a diverse range of industries, including two machinery and one of each in automotive, chemicals, construction / building and metals.

Continued Muted Pricing – No industrials IPOs priced above the range in 2016. This continues a pricing trend for IPOs in this sector, as no industrials IPO studied in 2015 priced above the range and only one IPO studied in 2014 priced above the range. A greater number of industrials IPOs priced within the range in 2016 than in 2015, but underwriters were less likely to exercise their over-allotment option.

Lowest Percentage of EGCs – The industrials sector had the lowest percentage of EGC issuers of any sector. After seeing the percentage of EGC industrials issuers increase to 70% in 2015 from about half in 2014, we noted a significantly lower percentage of industrials IPO issuers that were EGCs in 2016. Only 17% of industrials issuers in 2016 were EGCs, as compared to 84% for all other

Sponsor-backed and Controlled – Almost all of the industrials issuers in 2016 were sponsor-backed (83%) and qualified as controlled companies (83%). All of the industrials issuers that qualified as controlled companies elected to take advantage of some of the exemptions available to controlled companies.

Significant Disclosure of Adjusted EBITDA – Adjusted EBITDA continues to be a significant metric for industrials IPO issuers. In 2016, all industrials IPOs disclosed Adjusted EBITDA, compared to 43% for all other IPO issuers. This was also an area of significant focus for the SEC, as 83% of industrials issuers received a comment relating to their use of Non-GAAP measures. Typical addbacks to Adjusted EBITDA included compensation expenses, IPO and transaction (acquisition or disposition) related expenses, management and monitoring fees, restructuring and impairment costs.

Significant Disclosure of Operating Metrics – In addition to disclosure of non-GAAP metrics, such as Adjusted EBITDA, 83% of industrials issuers disclosed operating metrics in their summary financial statements. This was the second highest average of any sector, trailing only financial services. Operating metrics disclosed by industrials issuers included active customers, manufacturing line capacity, sales volume, same-store sales growth and vehicle units sold.

More Flash – Industrials IPOs were more likely to include preliminary financial results, or flash results, than any other sector. Half of industrials IPOs included flash results, as compared to an average of 21% for all other IPOs. Industrials issuers also provided rather fulsome disclosures of their preliminary financial results and included net sales, Adjusted EBITDA, total billings, cash and cash equivalents and debt. All of these issuers presented their flash results as ranges.

Higher Accounting Costs – Industrials IPOs had significantly higher accounting costs than other sectors. Average accounting costs were the highest as compared to other sectors and almost double the average for all other sectors.

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