construction, engineering, building materials & · pdf filegranite construction...

1 CONSTRUCTION,

ENGINEERING, BUILDING

MATERIALS & PRODUCTS

M A R K E T M O N I T O R

S U M M E R 2 0 1 4

Construction, Engineering, Building Materials & Products

2 CONSTRUCTION,



Contents

INDUSTRY UPDATE 3

PUBLIC STOCK PERFORMANCE & VALUATIONS 5

M&A ACTIVITY & VALUATIONS 9

OVERVIEW OF SELECTED TRANSACTIONS 11

MID-MARKET M&A OVERVIEW 12

MOSS ADAMS OVERVIEW 13

SELECTED MAC TRANSACTIONS 17

3 CONSTRUCTION,



Confidence in Growth Continues, Operating Margins Continue to Improve

Despite lower-than-expected growth in in the construction

industry most executives believe the recovery will continue,

and possibly accelerate, throughout the rest of the year,

according to the most recent ENR Construction Industry

Confidence Index (“CICI”) survey.

Industry executives believe that all construction market

sectors, as measured by the CICI, are in a growth mode, and

they expect operating margins to improve.

Confidence in a sustained recovery is evident from a lending

perspective as well: most larger contractors have noted that it

continues to get easier to obtain project financing from banks.

Despite the uptick in demand, pricing for materials has

remained moderate, easing fears from a year ago when prices

spiked along with the housing recovery.

Construction Spending Y/Y Growth

Materials and Construction Costs – Y/Y Growth

Source: US Census Bureau, Engineering News Record (ENR), Moss Adams Capital analysis.

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Construction Cost Index Materials Price Index

Private Non-

residential

Construction

10.9%

Private Residential

Construction

7.1%

Total Construction

6.7%

Public Non-

residential

Construction

1.5% -20%

-10%

0%

10%

20%

30%

40%

4 CONSTRUCTION,



Building Materials Sectors Continues to Lead, Engineering Sectors Underperforms

3-Year Indexed Stock Price Performance

Engineering Services remains as the only segment within the sector underperforming the S&P 500 over the past three years. Building Materials and Construction have outperformed the broader index by a meaningful amount while the Building Products segment is approximately even with the S&P 500.

Note: The Construction, Engineering, Building Products & Materials indices are market cap-weighted indices comprised of the public companies included on pages 5-7. Source: S&P Capital IQ

Building Materials

90%

Construction

63%

Building Products

45%

S&P 500

46%

Engineering

9%

-50%

-25%

0%

25%

50%

75%

100%

125%

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5 CONSTRUCTION,



Small Mid-Cap Public Company Valuations

Note: Not meaningful (NM) if EV/Sales is greater than 10x, or EV/EBITDA is greater than 50x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Source: S&P Capital IQ

($US in millions, except where noted and per share amounts) TTM Data EV Multiple

7/1/14 52 week Market Enterprise EBITDA TTM TTM NTM NTM

Company Name Share Price High/Low Cap Value Sales EBITDA Margin Sales EBITDA Sales EBITDA Sales EBITDA

Fluor Corporation $78.03 $83.93 / $57.50 $12,238 $10,582 $25,551 $1,356 5.3% 1.1% 1.8% 0.4x 7.8x 0.4x 7.7x

Jacobs Engineering Group Inc. 53.49 66.88 / 52.57 7,047 7,396 12,469 736 5.9% 11.9% 21.9% 0.6x 10.0x 0.5x 8.2x

Teledyne Technologies Inc. 98.64 102.40 / 76.26 3,646 4,178 2,343 338 14.4% 3.7% 15.8% 1.8x 12.4x 1.7x 10.7x

KBR, Inc. 24.23 36.70 / 22.48 3,467 2,451 7,018 115 1.6% (4.9%) 237.4% 0.3x 21.3x 0.4x 6.3x

Foster Wheeler AG 34.47 34.93 / 20.20 3,409 3,041 3,250 237 7.3% 26.0% 38.6% 0.9x 12.8x 0.7x 9.2x

AECOM Technology Corporation 32.42 35.24 / 27.35 3,196 3,879 7,973 441 5.5% (0.8%) 9.1% 0.5x 8.8x 0.5x 8.1x

URS Corporation 46.72 55.79 / 41.62 3,162 5,194 10,725 692 6.5% 1.4% 7.8% 0.5x 7.5x 0.5x 7.0x

Stantec Inc. 61.96 72.34 / 43.81 2,892 3,255 1,710 230 13.5% 26.8% 35.9% 1.9x 14.1x 1.5x 10.4x

McDermott International Inc. 8.06 9.36 / 6.58 1,922 2,049 2,455 (340) NA 8.9% NA 0.8x NA 0.8x 14.7x

Tetra Tech Inc. 27.63 30.92 / 22.21 1,786 1,827 1,946 122 6.3% 3.4% 89.1% 0.9x 15.0x 0.9x 7.9x

CACI International Inc. 70.98 80.77 / 60.52 1,650 2,922 3,572 328 9.2% (2.1%) (1.7%) 0.8x 8.9x 0.8x 9.0x

Tutor Perini Corporation 32.13 32.11 / 18.02 1,540 2,226 4,138 267 6.4% 11.6% 13.2% 0.5x 8.4x 0.5x 7.4x

VSE Corp. 72.60 70.35 / 39.98 377 479 472 65 13.8% (4.7%) 0.9% 1.0x 7.3x 1.1x 7.3x

Perma-Fix Environmental Services Inc. 4.59 5.86 / 1.96 53 70 65 (2) NA (11.9%) NA 1.1x NA 1.2x 13.6x

Median $2,981 $3,411 $252 6.4% 2.4% 14.5% 0.8x 9.5x 0.8x 8.2x

Average $3,539 $5,978 $328 8.0% 5.0% 39.1% 0.9x 11.2x 0.8x 9.1x

NTM Est. Growth

Engineering Firms

6 CONSTRUCTION,









Quanta Services, Inc. $35.04 $37.42 / $25.57 $7,534 $7,277 $6,700 $711 10.6% 16.4% 16.1% 1.1x 10.2x 0.9x 8.8x

Chicago Bridge & Iron Company N.V. 69.07 89.22 / 57.73 7,373 9,161 11,771 974 8.3% 14.1% 20.3% 0.8x 9.4x 0.7x 7.8x

EMCOR Group Inc. 45.15 48.00 / 36.26 2,996 2,952 6,448 311 4.8% 6.3% 23.7% 0.5x 9.5x 0.4x 7.7x

MasTec, Inc. 31.41 44.80 / 27.96 2,390 3,280 4,370 420 9.6% 7.4% 16.6% 0.8x 7.8x 0.7x 6.7x

Primoris Services Corporation 29.02 33.42 / 19.35 1,490 1,536 2,004 182 9.1% 10.3% 11.0% 0.8x 8.5x 0.7x 7.6x

Granite Construction Incorporated 36.66 40.55 / 27.88 1,407 1,278 2,268 60 2.7% 15.6% 192.4% 0.6x 21.1x 0.5x 7.2x

Dycom Industries Inc. 32.06 34.00 / 23.31 1,063 1,457 1,808 182 10.0% 3.0% 15.1% 0.8x 8.0x 0.8x 7.0x

Matrix Service Company 33.01 38.71 / 15.45 866 853 1,154 76 6.6% 25.4% 23.0% 0.7x 11.3x 0.6x 9.1x

Comfort Systems USA Inc. 16.24 20.95 / 14.04 592 579 1,353 61 4.5% 12.2% 27.7% 0.4x 9.5x 0.4x 7.4x

MYR Group, Inc. 25.89 27.30 / 18.86 540 485 917 87 9.5% 2.5% 0.3% 0.5x 5.5x 0.5x 5.5x

Great Lakes Dredge & Dock Corporation 8.10 9.44 / 6.28 478 706 726 67 9.2% 12.5% 52.1% 1.0x 10.6x 0.9x 6.9x

Orion Marine Group, Inc 10.98 13.77 / 9.20 297 282 361 23 6.4% 13.3% 45.9% 0.8x 12.1x 0.7x 8.3x

Sterling Construction Co. Inc. 9.34 12.37 / 6.72 176 199 580 (44) NA 16.9% NA 0.3x NA 0.3x 6.9x

Median $1,278 $1,808 $87 8.7% 12.5% 21.7% 0.8x 9.5x 0.7x 7.4x

Average $2,311 $3,112 $239 7.6% 12.0% 37.0% 0.7x 10.3x 0.6x 7.5x

NTM Est. Growth

Construction Firms

7 CONSTRUCTION,









Vulcan Materials Company $64.60 $69.50 / $46.21 $8,339 $10,077 $2,807 $463 16.5% 4.5% 45.2% 3.6x 21.7x 3.4x 15.0x

Martin Marietta Materials Inc. 133.35 $136.36 / $94.01 6,106 7,174 1,979 400 20.2% 21.0% 21.6% 3.6x 17.9x 3.0x 14.7x

Eagle Materials Inc. 95.69 $97.25 / $63.53 4,726 5,101 898 232 25.9% 23.6% 67.6% 5.7x 22.0x 4.6x 13.1x

Texas Industries Inc. 93.29 $95.35 / $53.23 2,665 3,276 863 88 10.2% 17.9% 107.8% 3.8x 37.3x 3.2x 18.0x

Headwaters Incorporated 13.97 $14.16 / $8.30 1,020 1,479 734 111 15.1% 11.9% 30.3% 2.0x 13.3x 1.8x 10.2x

United States Lime & Minerals, Inc. 65.42 $68.50 / $50.51 361 335 139 38 27.6% 5.6% NA 2.4x 8.7x 2.3x NA

Monarch Cement Co. 26.20 $27.24 / $21.55 68 83 130 18 13.9% NA NA 0.6x 4.6x NA NA

Median $3,276 $863 $111 16.5% 14.9% 45.2% 3.6x 17.9x 3.1x 14.7x

Average $3,932 $1,079 $193 18.5% 14.1% 54.5% 3.1x 17.9x 3.1x 14.2x

NTM Est. Growth




Masco Corporation $22.23 $23.73 / $18.27 $7,915 $10,370 $8,262 $909 11.0% 6.9% 18.1% 1.3x 11.4x 1.2x 9.7x

Owens Corning 39.12 46.64 / 34.41 4,555 6,915 5,223 734 14.1% 4.3% 8.2% 1.3x 9.4x 1.3x 8.7x

USG Corporation 30.23 36.22 / 22.55 4,352 6,450 3,606 431 12.0% 10.7% 39.7% 1.8x 15.0x 1.6x 10.7x

Armstrong World Industries, Inc. 57.79 61.90 / 45.81 3,148 4,136 2,732 288 10.6% 5.1% 50.7% 1.5x 14.3x 1.4x 9.5x

Simpson Manufacturing Co., Inc. 37.00 37.49 / 29.15 1,779 1,568 720 122 16.9% 9.1% 12.7% 2.2x 12.9x 2.0x 11.4x

NCI Building Systems Inc. 19.73 20.14 / 11.22 1,429 1,654 1,334 38 2.9% 10.7% 204.8% 1.2x 43.4x 1.1x 14.2x

Trex Co. Inc. 29.08 43.43 / 20.63 968 1,044 335 38 11.4% 25.5% 171.8% 3.1x 27.3x 2.5x 10.0x

Universal Forest Products Inc. 49.85 58.52 / 36.01 968 1,133 2,470 112 4.5% 15.4% 31.1% 0.5x 10.1x 0.4x 7.7x

Builders FirstSource, Inc. 7.80 9.40 / 5.15 733 1,024 1,516 61 4.0% 16.7% 63.8% 0.7x 16.8x 0.6x 10.3x

Quanex Building Products Corporation 18.35 21.84 / 15.66 670 544 983 58 5.9% (36.0%) 14.3% 0.6x 9.5x 0.9x 8.3x

Gibraltar Industries, Inc. 15.99 19.23 / 12.62 478 614 822 70 8.6% 7.2% 23.0% 0.7x 8.7x 0.7x 7.1x

Median $1,568 $1,516 $112 10.6% 9.1% 31.1% 1.3x 12.9x 1.2x 9.7x

Average $3,223 $2,546 $260 9.2% 6.9% 58.0% 1.3x 16.3x 1.2x 9.8x

NTM Est. Growth

Building Materials Firms

Building Products Firms

8 CONSTRUCTION,



Building Materials

19.8x

Building Products

12.2x

S&P 500

10.3x

Engineering

10.1x

Construction

9.3x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

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4.6%2.4%

12.5%

14.9%

9.1%

13.1%14.5%

21.7%

45.2%

31.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

S&P 500 Engineering Construction BuildingMaterials

BuildingProducts

Est. NTM Sales Growth

Est. NTM EBITDA Growth

EV/EBITDA multiples in the Construction and Engineering

segments continue to converge with the rest of the sector, as

well as the S&P 500 index.

Building Materials is the exception, trading at almost twice the

EV/EBITDA multiple of the S&P 500.

Public Market Valuations Next 12 Months: Estimated Sales & EBITDA Growth

Valuations Continue to Converge While Growth Expectations Remain Strong

EBITDA growth in all four segments is expected to outpace the

S&P 500, ranging from 14.5% to more than 45%, versus 13%

for the broader index.

Note: The Construction, Engineering, Building Products & Materials indices are market cap-weighted indices comprised of the public companies included on pages 5-7. Source: S&P Capital IQ

9 CONSTRUCTION,



$ in millions

Announced Transaction

Date Acquirer/Investor Target Target Description Value Metric

6/23/2014 NIBE Industrier AB (publ) WaterFurnace Renewable Energy, Inc. Manufactures geothermal water source heating systems. $352.3 2.8x Rev; 16.3x EBITDA

5/12/2014 HC2 Holdings, Inc. Schuff International, Inc. Operates as a steel fabrication and erection contractor. $94.9 0.4x Rev; 5.3x EBITDA

4/7/2014 Comfort Systems USA Inc. DynaTen Corporation Provides engineering, mechanical contracting, and maintenance services. $41.5

3/26/2014 ForceField Energy Inc. American Lighting Supply Operates as a lighting retrofit contractor. $23.3

2/17/2014 Indiana Commercial Finance, LLC Victor Oolitic Stone Company Provides Indiana limestone for landscape designs. $26.0

1/27/2014 Martin Marietta Materials Inc. Texas Industries Inc. Engages in the manufacture and sale of heavy construction materials. $2,767.5 3.8x Rev; 37.2x EBITDA

1/14/2014 Insurance Services Office, Inc. EagleView Technologies, Inc. Operates as a provider of aerial imagery, data analytics, and GIS solutions. $637.0 5.3x Rev; 17.9x EBITDA

11/11/2013 John Wood Group PLC Elkhorn Holdings, Inc. Operates in industrial construction and fabrication businesses. $217.4 0.9x Rev

11/4/2013 AMEC plc Automated Engineering Services Corp. (nka:AMEC AES)Provides engineering and support services to the nuclear power industry. $35.0 1.2x Rev

10/8/2013 SolarCity Corporation Zep Solar, Inc. Designs mounting hardware for photovoltaic system applications. $158.0

9/13/2013 Atkore Plastic Pipe Corporation Heritage Plastics, Inc. Manufactures polyvinyl chloride conduit products. $89.5

9/3/2013 Versar Inc. Geo-Marine, Inc. Provides engineering, design and construction management services. $6.5 0.3x Rev

8/26/2013 Quikrete Holdings, Inc. Custom Building Products, Inc. Manufactures flooring products and tile and stone installation systems. $765.0

8/19/2013 Rockwool International A/S Chicago Metallic Corporation, Inc. Manufactures architectural building products and services. $140.0 1.0x Rev

8/10/2013 Rockwell Collins Inc. ARINC Incorporated Provides communications, engineering, and systems integration support. $1,390.0

7/24/2013 Golden Nugget, Inc. Ameristar Casino Lake Charles, LLC Develops casino resorts. $215.0

6/28/2013 LIXIL Corporation AS America, Inc. Manufactures bath and kitchen products. $542.0 0.6x Rev; 18.3x EBITDA

6/24/2013 Leonard Green & Partners, L.P. United States Infrastructure Corporation Operates as an underground utility damage prevention company. $700.0

6/24/2013 Lone Star Funds Lafarge North America Inc., Gypsum Division (nka:Continental Building Products, Inc.)Manufactures gypsum wallboard and complementary finishing products. $700.0

6/17/2013 EMCOR Group Inc. RepconStrickland, Inc. Provides recurring turnaround and specialty services. $455.0 1.1x Rev

Notable M&A Transactions

Highlighted in Overview of Selected Transactions on page 11. Source: S&P Capital IQ

Deal Revenue EBITDA

Size Multiple Multiple

Transactions Represented 18 10 5

High $3,305.6 5.3x 37.2x

Median $186.5 1.1x 17.9x

Mean $474.2 1.7x 19.0x

Low $6.5 0.3x 5.3x

10 CONSTRUCTION,



Recent M&A Transactions


$ in millions

Announced

Date Acquirer/Investor Target Target Description

6/26/2014 Empresas ICA, S.A.B. de C.V. Facchina Construction Company, Inc. Offers heavy highway, concrete frames, site development, and commercial building services.

6/24/2014 ExTech Industries, Inc. Pasvalco Corp. Offers custom stone fabrication and natural stone distribution services.

6/24/2014 Private Investor International Glass Solutions LLC Offers film based glazing solutions.

6/24/2014 Dos Rios Partners Case Drilling & Pump Service, LLC Provides water well drilling and maintenance services.

6/23/2014 IWM Acquisition Corp. Ideal Window Manufacturing Inc. Manufactures and services replacement and new construction windows.

6/23/2014 Timmons Group, Inc. Development Consulting Services, Inc. Provides civil engineering services.

6/23/2014 NIBE Industrier AB (publ) WaterFurnace Renewable Energy, Inc. Manufactures geothermal water source heating, cooling, hot water, and control systems.

6/18/2014 Salas O'brien Engineers, Inc. Kalmans Marshall Engineering, Inc. Specializes in the design of mechanical, electrical, plumbing, and technology systems.

6/17/2014 Compagnie de Saint-Gobain Phoenix Coating Resources, Inc. Manufactures ceramic ingots used to produce high-resistance thermal coatings.

6/17/2014 Triton Glass LLC Albemarle Glass Company, Inc. Manufactures glass products.

6/17/2014 Seven Point Equity Partners, LLC The RiteScreen Company, Inc. Produces screens for the window and patio door industry.

6/16/2014 The Stellar Group, Inc. Industrial Refrigeration Svc. & Eng. Inc. Operates as an independent refrigeration contracting company.

6/13/2014 The Earthwise Group, LLC Advanced Window Products, Inc. Manufactures and installs windows, doors, vinyl sidings, and roofs.

6/10/2014 Hatch Ltd. Interralogic Inc. Provides feasibility studies, engineering, geochemistry, hydrology and systems optimization services.

6/9/2014 Bridger Steel, Inc. Metal Roofing & Trim Mfg., LLC Metal Roofing & Trim Mfg.

6/5/2014 CIVC Partners, L.P. Track Utilities, Inc. A utility installation company that provides preparation, installation, and testing services.

6/5/2014 Milliken Infrastructure Solutions, LLC Edge Structural Composites, Inc. Provides composite retrofitting and strengthening products for specialty contractors.

6/3/2014 United States Environmental Services, LLC K2 Industrial Services, Inc. Provides industrial coatings, insulation, fireproofing, roofing and metal building erection services.

6/2/2014 Baywa re GmbH Martifer Solar USA, Inc. Provides integrated solutions for the implementation of solar photovoltaic projects.

5/29/2014 Private Investor Hylan Provides fiber optic data communications contract services.

5/29/2014 KCI Technologies Inc. Redding Linden Burr Inc. Operates as a mechanical, electrical, and plumbing engineering company.

5/27/2014 Timmons Group, Inc. Baldwin & Gregg, Ltd. Provides land surveying services.

5/21/2014 Gac, Inc. Desert Valley Mechanical, LLC Operates as a heating, ventilation, and air conditioning contractor.

5/21/2014 Xentry Systems Integration, LLC Acree Daily Integrated Systems, Inc. Installs security, access control, fire alarm, asset tracking and other systems.

5/16/2014 Huntington Ingalls Industries, Inc. UniversalPegasus International, Inc. Provides project management, engineering, and construction services for the energy industry.

5/16/2014 CE Power Solutions, LLC Hope Engineering Services Co. Provides electrical services.

5/14/2014 POWER Engineers, Inc. Burns & Roe Enterprises Inc. Provides engineering services.

5/13/2014 Poten & Partners, Inc. Merlin Associates, LLC Offers technical consulting services for energy companies and commercial banks.

5/12/2014 HC2 Holdings, Inc. Schuff International, Inc. Operates as a steel fabrication and erection contractor.

5/8/2014 RIG Construction, Inc. Camelback Pools, LLC Builds swimming pools and spas.

11 CONSTRUCTION,



Overview of Selected Transactions

Source: S&P Capital IQ and company press releases

Comfort Systems USA, Inc. (NYSE: FIX, Houston, TX) acquires DynaTen Corporation (Fort Worth, TX)

May 1, 2014

Comfort Systems USA Inc. acquired DynaTen Corporation on May 1, 2014 for $41.5 million and an additional earn-out not to exceed $4 million. The acquisition is expected to be slightly accretive during the first 12 to 18 months.

DynaTen engages in a broad range of mechanical contracting projects, HVAC service and controls, in the Dallas/Fort Worth metroplex and in surrounding areas. Dyna Ten is expected to contribute annualized revenues of approximately $70 million to $80 million at profitability levels that are generally equal to or above those currently experienced by Comfort Systems.

Comfort Systems USA is a premier provider of business solutions addressing workplace comfort, with 89 locations in 80 cities around the nation. The company was founded in 1917.

ForceField Energy Inc. (NADAQCM: FNRG, New York, NY) acquires American Lighting & Distribution (San Diego, CA)

April 28, 2014

ForceField Energy Inc. announced that it has completed its acquisition of American Lighting & Distribution from private equity firm Forrest, Binkley & Brown. In consideration for the acquisition, ForceField paid $2.5 million in cash, 289,529 shares worth $1.7 million and $1.0 million in debt. The transaction also includes additional performance-based compensation.

American Lighting has successfully serviced thousands of satisfied clients since 1986. As an award winning, licensed electrical and commercial lighting contractor in the State of California, it has performed more than 2,500 installations over the past three years. Its geographic footprint covers much of the western US, and has reached as far east as Georgia. In 2013, it generated revenues of approximately $7.0 million with an adjusted EBITDA margin of 13%.

ForceField Energy Inc. produces alternative energy products and technologies, including LED lighting products and fixtures and trichlorosilane, a chemical used for the production of polysilicon that is utilized as a raw material in the production of solar cells for photovoltaic panels.

Announced Middle Market M&A Transactions

Note: Middle market M&A includes transactions with

EV < $500mm, and transactions with undisclosed EV.

YTD as of July 01, 2013.

202

176

228

215

237

199

101

107

60

9193

95

59

28

0

50

100

150

200

250

300

350

2008 2009 2010 2011 2012 2013 2014YTD *

Nu

mb

er

of

An

no

un

ced

Tra

nsa

ctio

ns

Building Products & Materials

Construction & Engineering

12 CONSTRUCTION,



2,855 2,953 2,927

3,080 2,984

3,682 3,681 3,852

3,539 3,453

3,622

3,986

3,134

3,319

4,092 4,054 3,997 4,095

$32

$43

$56 $55

$47

$71 $72 $70

$52$56

$52

$66

$44

$50

$65

$71

$55

$70

$0

$20

$40

$60

$80

$100

$120

$140

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2010 2011 2012 2013 2014

Transactio

n V

alue ($

bn

)Nu

mb

er o

f Tr

ansa

ctio

ns

Number Value

4.8x

6.7x

6.4x

7.0x6.7x 6.8x 6.8x 6.9x

5.9x

6.4x6.2x 6.2x 6.4x

6.0x6.2x

7.2x7.0x

6.1x

15.0%14.2%

15.3%14.5%

16.7% 16.6% 16.9%

15.0%

12.4% 13.0%14.6%

16.7%15.3% 14.8%

13.7%

10.6%

17.0% 17.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2010 2011 2012 2013 2014

EBITD

A M

argin

EV/T

raili

ng

EBIT

DA

Mu

ltip

le

EV/EBITDA EBITDA Margin

U.S. middle market M&A transaction volume in Q2 2014 rose 23% from one year ago and was up slightly compared to Q1 2014.

In deal value terms, U.S. middle market M&A activity in Q2 2014 grew approximately 40% from a year earlier and was up more than 27% compared to the prior quarter.

Significant amounts of cash on corporate balance sheets and in private equity funds, coupled with strong debt markets, continues to drive deal activity.

Q2 2014 EBITDA multiples of middle market transactions declined after enjoying two quarters of transactions that were valued almost one full turn of EBITDA higher.

EBITDA multiples are approximately where they were one year ago and inline with where they have been for most of the last two years.

Q2 2014 EBITDA margins of reportable transactions were virtually unchanged from last quarter but are still more than 2% higher than they were one year ago.

Middle Market M&A: Volume and Values Up Slightly Over Last Quarter, Up Significantly Over Last Year

U.S. Middle Market M&A 1 U.S. Middle Market M&A Valuations 2

1) Middle market M&A includes transactions with undisclosed values, and disclosed values where EV < $500 million. 2) Middle market M&A includes transactions with disclosed EBITDA, where EV < $500 million and EV/EBITDA < 10x. Note: transactions with disclosed EBITDA represent <5% of all transactions. Source: S&P Capital IQ.

13 CONSTRUCTION,



Moss Adams Business Segments

Moss Adams LLP

Founded in 1913 Focused on Middle Market & Emerging Cos. Headquartered in Seattle, Washington

2,000+ Employees 22 Offices in Western United States ~16,000 Corporate Clients

Moss Adams Accounting & Tax Practice

Moss Adams Capital LLC

Moss Adams Advisory Services

Information Technology

Group

Moss Adams Wealth

Advisors

Corporate Accounting Services Corporate Tax Services Internal Control Systems SALT Due Diligence

-

-

-

-

-

FINRA Broker/Dealer Sale of Private Companies Capital Formation Management Buyouts Evaluate Strategic Alternatives

-

- -

-

-

Business Consulting Compensation Planning Human Resources Planning Market Research Succession Planning

-

-

-

-

-

Technical Valuations Litigation Appraisals Estate Valuations Stock & Option Valuations

-

-

-

-

-

Information Technology Consulting Information Systems Design Financial Systems

-

-

-

Registered Investment Advisors Asset Management Investment Advisors Wealth Management

-

- -

-

Moss Adams Valuation

Group

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Expert Teams

I N D U S T R Y K N O W L E D G E M A T C H E D W I T H A N E X P E R I E N C E D T E A M

• Senior Level Attention

• Commitment to our Clients

• Professional Excellence

• Objective & Independent Advice

• Creating Value for Owners

• Global Presence & Capabilities

Premier accounting and financial services advice for middle market construction, engineering, building material & products companies.

Industry Expertise &

Relationships

Industry Specific

Accounting

Investment Banking &

Transaction Support

Relevant Tax Expertise

Strategic Planning & Exit Advice

Construction, Engineering, Building Materials & Products Knowledge

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In addition to direct international relationships; as a founding member of Praxity, AISBL, a global alliance of independent accounting firms, Moss Adams provides access to trusted expertise in 96 countries worldwide.

Latin America and Caribbean Argentina, Brazil, Cayman islands, Chile, Colombia, Mexico, Puerto Rico, Uruguay, Venezuela

Europe Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Jersey, Latvia, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom , Ukraine

Asia China, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan, Thailand, Vietnam

Africa Algeria, Angola, Benin, Botswana, Cameroon, Cape Verde, Djibouti, Egypt, Ghana, Ivory Coast, Lesotho, Madagascar, Mauritius, Morocco, Senegal, South Africa, Tunisia, Zambia

Middle East and Indian Subcontinent India, Israel, Lebanon, Pakistan, United Arab Emirates

Australasia Australia, New Zealand

North America United States, Canada

Global Reach

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CFxBorder- Global Reach with Local Relationships

Our Alliance with CFxB consists of 150+ M&A Professionals in more than 25 countries

Mazars Africa

40 offices

Mazars Asia

25 offices

Mazars Middle East

15 offices

Mazars Europe 140 offices

Mazars M&A 20 offices

Mazars South America

20 offices

Moss Adams Capital 3 offices

Moss Adams LLP 22 offices

MNP Corporate Finance 10 offices

MNP LLP 70 offices

BKD Corporate Finance 4 offices

BKD LLP 33 offices

William Buck CAA

6 offices

Weiser Mazars

6 offices

Mazars Canada

1 office CH Reynolds CF

1 office

http://www.mossadamscapital.com/

http://www.mnpcorporatefinance.ca/

https://ecollab.mazars.com/cfxb/

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Selected Moss Adams Capital Transactions

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Selected Moss Adams Capital Transactions

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Contact Us 999 Third Avenue

Suite 2800

Seattle, Washington 98104

2740 Main Street

Suite 900

Irvine, California 92614

Wiley P. Kitchell

Managing Director

(206) 302-6780

[email protected]

Richard M. Anderson

Managing Director

(949) 221-4006

[email protected]

Tyler M. Dale

Vice President

(949) 221-4030

[email protected]

Harman K. Wales

Managing Director

(206) 302-6770

[email protected]

Burr J. Dalton

Director

(949) 221-4007

[email protected]

Geoffrey B. Haydon

Vice President

949-221-4085

[email protected]

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