This sector review focuses on the opportunities within the automated material handling technologies (AMH) sector which includes software, hardware, sensing, and systems deployed in material handling, warehouse management, and parcel sorting applications.

The key themes developed in the following pages are as follows:

  • Software and tracking innovation remain strong: Industrial IoT (IIoT) to be major factor as warehouses and distribution centers transition towards interconnectivity, Industry 4.0, and smart logistics
  • Need for process automation remains a major driving factor due to rising labor costs, worker shortage, and worker safety concerns
  • Parcel handling and sortation will see sustained rapid growth due to e-commerce, which drives parcel volume growth and the need for faster and faster fulfillment times (see pg. 12)
  • Innovation expected to be robust: focus will be on automation, cost reduction, improved efficiency, and smart systems

Fundamentals for investment and transaction activity are compelling:

  • Based on Headwaters' involvement with companies and other industry activity, we see a prolonged cycle that fosters investment and transaction activity
  • Financial fundamentals are strong: EBITDA margins are at record levels and revenue growth returning to long-term averages
  • M&A activity is "red hot" and is already playing a key role in corporate growth via an expanding product portfolio
    • Development of new technologies by emerging operators as well as established players, need to expand geographic footprints and expand solution portfolio to offer comprehensive solutions to customers
    • Major recent transactions include Honeywell's acquisition of Intelligrated and KION's acquisition of Dematic - both of which are indicative of clear intent to have major revenue generation from this rapidly expanding, technology oriented sector