Kohler
Kohler
Kohler
6.60%
43.40%
3.74%
(Exhibit 8)
6%
7.20%
Equity Beta
What is the equity beta for a private firm?
We use comparable firms. But, first we need to decompose Kohler into its various groups.
Exhibit 4
Kohler Co. Income Statements 1997 by Group (in $ thousands, as of December 31)
Kitchen & Bath
Group
Power
Systems
1,485,831
1,045,038
540,260
461,140
145,414
92,564
50,789
43,041
Gross Profit
440,793
79,120
52,850
7,748
284,097
156,696
44,600
###
34,520
45,580
7,270
4,872
2,876
-6,400
1,477
10,181
-269
180
2,428
514
142
1,633
0
12
1,040
Pretax Income
141,591
32,004
6,292
1,848
54,179
11,605
2,291
727
Net Income
87,411
20,398
4,001
1,121
Net Sales
Cost of Sales
67%
76%
77%
24%
14%
18%
7%
9%
4%
2%
1%
1%
Masco
Briggs &
Stratton
ASD
71,929
48.69
3,502.0
AMWD
7,811
30.25
236.3
MAS
169,634
58
9,838.8
BGG
24,514
45.25
1,109.3
2,762.9
0.82
82.0
0.76
5,937.3
1.28
1,210.0
0.66
2,404.0
6,139.5
699.3
462.5
292.6
13.4
327.0
37.6
27.4
17.1
1,187.9
3,945.0
838.4
553.4
437.3
259.6
1,327.2
178.3
127.2
80.4
2,216.6
5,767.8
667
420.9
263.5
12.3
262.7
30.7
22.1
13.7
1,341.3
3,414.0
721.9
473.6
367.4
155.4
1,282.2
187
132.1
87.1
5,906.0
0.59
0.49
249.7
0.95
0.72
11,026.7
0.89
1.14
1,368.9
0.81
0.53
V=D+E
E/V
Asset Beta = Equity Beta*(E/V)
538992
513056
Asset Beta
E/V
D/V
Equity Beta
0.78
0.78
0.81
0.77
0.19
0.23
0.97
1.02
0.78
0.80
0.20
0.98
WACC
D/V = 1-E/V
Use Asset Beta = Equity Beta*(E/V)
-8,891
(4,398)
-4,492
$
$
$
576,019
2,222,294
1,641,783
580,511
$
$
$
2,026,091
1,506,178
519,913
379,149
328,697
201,362
191,216
(6,155)
1,811
15,282
181,735
$
$
$
$
(6,669)
1,657
12,609
173,595
$
87,974 $
68,802
112,931
$
$
65,784
107,809
2,213,403
1,637,385
942
21,618
-27,052
380,091
###
174,310
409
426
(1,251)
-5,746 $
2,237 $
14,031 $
-24,965
156,770
(6)
68,796
-24,957
Cummins Engine
Detroit Diesel
CUM
42,036
54.38
2,285.7
DDC
24,701
23
568.1
2,053.6
1.09
502.5
1.3
1,250.0
5,821.0
487
390.2
224.2
107.4
2,233.0
105.5
82.8
41
686.7
5,431.0
448.3
377.5
221
127.3
2,090.7
100.2
78.2
40.5
3,535.7
0.65
0.70
Rf
MRP
A-T Rd
Cost of Equity
675.5
0.84
1.09 <----FILL THIS OUT
6.00%
7.20%
3.74%
12.95%
13.31%
3.74% 11.2%
3.74% 11.1%
13.02%
3.74% 11.2%
American Standard
American Woodmark
Masco
Briggs & Stratton
Cummins Engine
Detroit Diesel
Market
Total
Value of Equity Debt
3502
236.3
9,838.8
1,109.3
2,285.7
568.1
2404
13.4
1,187.9
259.6
1,250.0
107.4
Kohler Co. Total Enterprise Values Implied by Multiples for Comparable Companies (in $ millions)
Sales
Multiple
Kohler Co. Accounting Items for
12 Months ending 4/30/98
EBITDA
Multiple
2,270
194.04
3419.16
2179.20
1826.76
1639.64
1468.94
1378.81
1380.30
1408.76
2444.05
1956.30
1603.53
1449.25
3029.12
1737.47
EBITDA
Multiple
0.96
Cash Flow
EBIAT
Multiple
Multiple
12.77
20.18
9.11
14.60
19.93
25.22
10.76
17.03
9.06
15.77
8.16
16.48
2.80
1.03
0.61
0.30
8.45
6.64
13.15
7.68
7.26
6.40
1.51
0.96
9.41
8.45
13.94
12.77
20.00
20.18
0.65
0.61
7.11
7.26
9.33
9.06
16.42
16.48
1.08
0.86
8.26
7.47
11.63
9.94
18.21
16.75
1.33
8.95
13.01
19.28
0.76
n $ millions)
Cash Flow
Multiple
EBIAT
Multiple
Avearge of
4 Multiples
Median of
4 Multiples
119.13
98.34
1660.22
1521.29
1966.73
1984.50
2218.22
1831.16
1896.74
1812.07
1111.14
1079.47
1615.14
1620.21
1393.88
1371.81
1424.62
1393.78
1385.68
1183.85
1790.93
1647.28
1806.05
1559.17
1697.23
1548.27
1550.40
1896.41
2053.35
1816.94
11%
4%
1998
1999
2000
2001
$ 102,688
126,032
171,619
187,978
44.3%
43.42%
43.42%
43.42%
$
45,451
54,724
74,518
81,621
$
57,237 $
71,308 $ 97,101 $ 106,357
$
$
$
56,113
(87,691)
(1,435)
24,224
87,661
(97,205)
(5,762)
56,002
91,786
(96,971)
(27,705)
64,211
94,593
(96,811)
(17,702)
86,437
1.17
$49,565
2.17
$51,199
3.17
$62,091
0.33
$23,404
239,085
Terminal Value
Present Value of Terminal Value
874,192
$ 1,113,277
You can change the valuation by having a monority discount (start approx 20%) Al
2002
2002 Normalized
201,604
201,604
43.42%
43.42%
87,537
114,067
87,537
114,067
97,355
(106,647)
(23,145)
81,630
-23145
90,922
4.17
$52,827
4.17
$58,840
$1,350,840
onority discount (start approx 20%) Also tack on discount for market instability (start approx 40%)